Financial
Markets
Consulting
The power
of our people
Annual Report & Accounts 2023
Introduction
Annual Report & Accounts 2023
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Annual Report & Accounts 2023
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Welcome to Alpha’s 2023
Annual Report and Accounts
Headquartered in the UK and quoted on the AIM of the London Stock Exchange,
Alpha Financial Markets Consulting1 is a leading global provider of specialist
consultancy services to the asset management, wealth management and
insurance industries.
It has the largest dedicated team across those industries, with nearly 1,000
consultants globally, operating from 17 client-facing offices spanning the UK,
North America, Europe and APAC. Alpha has worked with all of the world’s top
20 and 80% of the world’s top 50 asset managers by AUM, along with a wide
range of insurance and other buy-side firms.
For more information, see the website: alphafmc.com/investors
Contents
Introduction
Welcome
1 Highlights
Strategic Report
4 At a glance
8
Investment case
9 Chairman’s report
12 Chief Executive Officer’s report
18 Business model
20 Market overview
24 Strategy
26 Looking after our people
28 Key performance indicators
30 Section 172 statement
34 Sustainable business
42 Chief Financial Officer’s report
47 Risk management
50 Principal risks and uncertainties
54 Non-financial information statement
Corporate Governance
Financial Statements
56 Chairman’s introduction
58 Board of Directors
60 Corporate Governance Code
62 Corporate governance report
68 Nomination Committee report
90
Consolidated statement of
comprehensive income
91 Consolidated statement
of financial position
92 Consolidated statement of cash flows
93 Consolidated statement of changes
70 Audit and Risk Committee report
in equity
73 Remuneration Committee report
78 Directors’ report
81
Statement of Directors’
responsibilities
82
Independent auditor’s report
94 Notes to the consolidated
financial statements
129 Company statement of
financial position
130 Company statement of changes
in equity
131 Notes to the Company
financial statements
SASB Disclosure
139 SASB Disclosure
Company Information
143 Directors and advisers
1 Alpha Financial Markets Consulting plc: “Alpha”, the “Company”, the “Group”.
Highlights
Financial highlights2
Revenue
£228.7m
(FY 22: £158.0m) +44.8%
Profit before tax
£25.8m
(FY 22: £14.9m) +73.2%
Gross profit
£80.4m
(FY 22: £59.4m) +35.4%
Adjusted profit before tax
£44.0m
(FY 22: £31.8m) +38.6%
Adjusted earnings per share
Adjusted cash conversion
29.27p
(FY 22: 21.46p) +36.4%
74.0%
(FY 22: 112.1%)
Operational highlights
For more information
go to pp 12–17
Adjusted3 EBITDA
£46.6m
(FY 22: £33.9m) +37.5%
Basic earnings per share
15.82p
(FY 22: 7.69p) +105.7%
Total dividend per share
14.20p
(FY 22: 10.40p) +36.5%
874
Clients4
(FY 22: 718)
Includes all of the world’s top
20 asset managers by AUM,
alongside a wide range
of insurance and other
buy-side firms
17
Offices5
(FY 22: 16)
Office network provides
ability to deliver an exceptional
service proposition across all
key markets; Melbourne office
added in the year
994
Consultants6
(FY 22: 760)
Continued investment in
the highest calibre
consultants globally
101
Directors7
(FY 22: 88)
Alpha continues to attract
top talent and expertise
to its global director team
—
Acquisitions
(FY 22: 1)
Post-year-end acquisition of
Shoreline8 strengthens Alpha’s
consultancy presence in APAC
2
3
4
All financial and operating highlights relate to the year ended 31 March 2023 (“FY 23”) and the comparative year is to 31 March 2022 (“FY 22”) unless otherwise specified.
All rounding and percentage change calculations are from the basis of the financial statements in £’000.
The Group uses alternative performance measures (“APMs”) to provide stakeholders further metrics to aid understanding of the underlying trading performance of the Group.
These measures exclude certain costs including acquisition and integration costs, earn-out and deferred consideration costs and share-based payment charges. Refer to the
Chief Financial Officer’s report and note 4 for further details.
Client numbers are cumulative and have been updated to include all client relationships from acquisitions. “World’s top 20” and “world’s top 50” refer to Investment & Pensions
Europe, “Top 500 Asset Managers 2022”.
5 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.
6 “Consultants” and “headcount” refer to fee-generating consultants at the year end: employed consultants plus utilised contractors in client-facing roles.
7 “Directors” refers to fee-generating directors at the year end. All director increases are presented as net.
8 “Shoreline” refers to Shoreline Consulting Pty Ltd, Shoreline Consolidated Pty Ltd and subsidiaries acquired by Alpha on 1 May 2023.
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Strategic Report
Strategic Report
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Annual Report & Accounts 2023
Annual Report & Accounts 2023
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Strategic Report
4 At a glance
8
Investment case
9 Chairman’s report
12 Chief Executive Officer’s report
18 Business model
20 Market overview
24 Strategy
26 Looking after our people
28 Key performance indicators
30 Section 172 statement
34 Sustainable business
42 Chief Financial Officer’s report
47 Risk management
50 Principal risks and uncertainties
54 Non-financial information statement
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Strategic Report
At a glance
Why we do what we do
Our purpose
To deliver outstanding outcomes for all our stakeholders: helping our
clients to make the most of the opportunities in their markets; providing
our people the best corporate experience possible; building a profitable
and sustainable business for our investors; and creating a positive impact
on our communities.
Our vision
To be the best consulting
firm in all the sectors in
which we operate.
How we do it
Attracting,
retaining and
developing the
best talent in
the market
What we do
Developing highly
focused sector
propositions with
the best
expertise
Nurturing the
best culture that
places people at
the heart of the
business
Prioritising
delivery
excellence and
the best service
for all our clients
Alpha is a leading consultancy to the asset management, wealth
management and insurance industries. We support the client
transformation lifecycle by providing management consulting
and complementary technology services that are highly focused
on the industries in which we operate.
We bring together the specialist industry knowledge, deep
expertise and outstanding focus on delivery excellence of
our global teams to help clients think smarter and shape
their businesses for the future.
Management consulting
Our management consulting teams are experts within
the asset management, wealth management and
insurance industries. Their goal is to help client
organisations make the most of the opportunities facing
them in a rapidly changing financial services landscape
of regulatory change, fee pressure, growth in assets and
insurance policies, and client and societal expectations.
Our consultants help clients to work more effectively
when requirements become more complicated, and to
excel against strong competition.
Technology consulting
Our technology consulting teams have unrivalled
knowledge and expertise in the technology platforms
and models used in the investment sectors. Our
consultants support our clients in leveraging technology
breakthroughs, and delivering high quality business value
through technology solutions, implementations and
software. Against an ever-changing backdrop of new
technology, digitisation and automation choices, we
help our clients deliver relevant outcomes that protect,
optimise and deliver positive results.
Our strategy
2
3
Roll out the client
proposition globally
Make selective
acquisitions
1
Scale up and
broaden the Group’s
client proposition
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Our global story
First, we:
— became known to our
Then we:
— capitalised on our reputation
We have:
— established a global
clients for the high quality
of our team; and
for market-leading
consulting advice; and
— focused on outsourcing,
operational change and
M&A integration, with
emerging distribution and
investment capabilities.
— continued to develop
consulting solutions across
the asset and wealth
management chain.
capability and reputation for
delivering some of the most
challenging and complex
projects in the industry; and
— committed to a growth
strategy that involves
expanding the business
organically, including
into the insurance
sector, and through highly
complementary acquisitions.
Now we will:
— continue to build scale both
globally and across a range
of existing markets by
growing and differentiating
the service offering; and
— pursue with momentum our
objective to be recognised
as the leading consultancy
to the asset management,
wealth management and
insurance industries globally
– and, ultimately, across
financial services worldwide.
North America
340+
consultants
New York (2009)
Boston (2015)
Toronto (2019)
Denver (2021)
San Francisco (2021)
United Kingdom
390+
consultants
London (2003)
Edinburgh (2016)
Europe
200+
consultants
APAC
50
consultants
Luxembourg (2008)
Singapore (2017)
Paris (2010)
Sydney (2021)
Amsterdam (2015)
Melbourne (2023)
Geneva (2017)
Zurich (2019)
Copenhagen (2019)
Frankfurt (2021)
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Strategic Report
At a glance continued
Building on our success
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Since joining London’s Alternative Investment Market (“AIM”)
in October 2017, Alpha has achieved an unbroken record of
growth in revenues and profits as a public company.”
Ken Fry
Chairman
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Alpha is launched, 2003
Alpha today
Our focus for the next five years
Management
consulting
UK
Asset &
Wealth
Management
Management
consulting
Technology
consulting
APAC
Europe
UK
North America
Management
consulting
Technology
consulting
APAC
Europe
UK
North America
Asset &
Wealth
Management
Insurance
Asset &
Wealth
Management
Insurance
Maturity key: Target markets Inception Scale-up Established Leading
Alpha’s history
2008
Europe presence
is established, with
the opening of the
Luxembourg office.
2013
First private equity
investment in Alpha
by Baird Capital.
2015
Alpha’s Diversity &
Inclusion programme
is launched.
2016
Investment in Alpha by Dunedin,
with Baird Capital exiting in full.
Alpha has c. 200 consultants
across seven offices.
2019
Creation of the Pensions & Retail Investments practice:
the start of Alpha’s expansion into insurance consulting.
Alpha acquires two more businesses:
Axxsys, technology specialists for investment
management clients; and Obsidian, expanding
the Aiviq solutions suite.
2023
Acquisition of Shoreline, a leading
APAC-based consultancy.
Alpha continues to grow, reporting the
most successful financial year to date,
with Group revenues of £228.7m.
2003
Alpha is founded in London
as a provider of specialist
consultancy services to the
asset management industry.
2009
US presence is
established, with
the opening of the
New York office.
2014
Creation of Alpha’s
first Technology
Services practice
in the UK.
2017
APAC presence is established, with the opening
of the Singapore office.
Alpha acquires its first complementary business in
TrackTwo, which becomes part of Aiviq.
Successful AIM admission with a market capitalisation of
£160m. Alpha has c. 300 consultants across nine offices.
2021
Acquisition of Lionpoint, extending
Alpha’s alternatives capabilities
and increasing the global footprint,
particularly in North America.
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Strategic Report
Investment case
A strong track record
We have a long history of achieving strong growth in net fee
income, cash generation and profitability thanks to our
market-leading consultancy expertise and successful business
model. This has generated attractive returns for our shareholders
since the Group’s AIM admission in October 2017.
28%
net fee income CAGR
since AIM admission
The best talent
We attract, develop and retain the highest calibre consultants
thanks to our competitive compensation framework, strong
corporate culture and commitment to learning and career
development. This allows us to achieve rapid organic growth
with low rates of attrition.
+226%
consultants since
AIM admission
The best expertise
We are highly specialised in the financial services sectors that we
focus on, unlike many of our competitors. Alpha’s experienced,
expert director team has demonstrated an incredible track record
of anticipating our client needs and developing our proposition
to best serve them.
+274%
directors since
AIM admission
The best culture
A very strong people culture creates an environment in which
Alpha’s employees feel passionate about their work, their
colleagues, their communities and serving clients to the best
of our collective ability.
The best service
We have a reputation for delivering complex and challenging projects
to the highest standards. Our record of delivery brings new client
relationships, significant repeat business and cross-selling
opportunities, which help drive market share gains.
+263%
new clients since
AIM admission
The growth opportunity
The global asset management, wealth management and insurance
markets that we service are expected to continue to grow strongly.
They remain subject to long-term trends such as fee pressures,
regulation, technology breakthrough and changing client and ESG
expectations, which underpin clients’ needs for support with their
advisory, change, implementation and technology projects.
2X
aim to double the business
again by 2028
1
2
3
4
5
6
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Chairman’s report
Alpha has demonstrated the strength of its strategy
and business model over the past year. We have a clear
and compelling set of objectives and are laying strong
foundations to achieve our ambitious growth plans.
Ken Fry
Chairman
9
The “Board” is Alpha’s Board of Directors, also referred to as
the “Board of Directors”, the “Alpha Board” and the “Directors”.
Since joining London’s Alternative Investment Market (“AIM”) in
October 2017, Alpha has achieved an unbroken record of growth
in revenues and profits as a public company. I am therefore
delighted to present the Group’s Annual Report and Accounts for
the year to 31 March 2023, which demonstrates another excellent
year across all activities and geographies. This outcome has been
delivered by the extraordinary skill and dedication of Alpha’s
employees all over the world.
But before I proceed to talk about governance, the year in
review and outlook, I must thank Euan Fraser for his outstanding
performance as Chief Executive Officer. He has presided over
another excellent year of growth – across our financial KPIs,
client relationships, business proposition and talent base.
The last 10 years under Euan’s leadership as CEO are a very
successful period in Alpha’s rich story in which the platform for
long-term growth for our investors, clients and Alpha’s people has
been built and proven. The Board9 and I are delighted to retain
Euan as a strategic adviser. I know that, in Luc Baqué, the Group
has chosen a very worthy successor with the vision, skills and
capabilities to take the business through its next chapter of growth.
Strategy
For the next phase of Alpha’s growth plan, the Group has set
the target of doubling the size of the business again by 2028,
leveraging the same growth strategy that has served it well so far:
scaling up and broadening the client proposition, rolling out the
client proposition globally, and making selective acquisitions.
The objective is to build out a multi-boutique model with a strong
culture of cross-selling the Group’s services so that it progressively
deepens its relationship with each client. The Board believes this
approach will deliver outstanding client service and provide the
best opportunities for long-term growth.
The Group has achieved the strategic
goal set in November 2020 to double
in size over the four years to
November 2024. Reaching this
target so quickly underlines the
strength and relevance of the
Group’s proposition.”
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Strategic Report
Chairman’s report continued
Annual Report & Accounts 2023
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Strategy continued
In delivering this strategy, Alpha’s ability to attract and retain the
world’s best specialist consulting talent remains fundamental to
the successful realisation of its ambitions. The Group therefore
provides a highly attractive offering encompassing competitive
compensation, career development, high-quality work in multiple
geographies, recognition and support. These factors, alongside
a focus on offering an excellent corporate culture and inclusive
working environment for all employees, have helped the Group to
increase its consultant numbers by 234 during the year, bringing
the total to 994.
Overview of the financial year
The Group has achieved the strategic goal set in November 2020
to double in size over the four years to November 2024. Reaching
this target so quickly underlines the strength and relevance of the
Group’s proposition, the market-leading expertise of its people
and the quality of the executive team.
During the past year, Alpha made excellent progress in all three
areas of its strategic growth agenda. The Group has further
broadened its proposition with particularly strong growth in
Insurance Consulting and, through Lionpoint, services for
alternatives clients. Geographic expansion is also progressing
well, with excellent progress in North America, the Group’s key
strategic growth region. Alpha’s third growth pillar, selective
acquisitions, made its latest advance following the year end with
the acquisition of Shoreline, an asset and wealth management
consultancy based in Sydney. The addition of Shoreline makes
Alpha the leading specialist asset and wealth management
consultancy in APAC.
The Group delivered an excellent trading performance during
FY 23, continuing the progress we reported at the half year and
achieving double-digit growth in revenues and profits. Net fee
income10 increased by 43.9% to £227.2m (FY 22: £157.8m), and
39.6% on an organic basis. Revenue also increased 44.8% to
£228.7m (FY 22: £158.0m). Adjusted EBITDA increased by 37.5%
to £46.6m (FY 22: £33.9m) and operating profit increased by
61.1% to £28.6m (FY 22: £17.8m), which fed through to the
Group’s healthy net cash position of £59.2m (FY 22: £63.5m)
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990+
consultants globally
at the year end, leaving the Group well positioned to fund its
growth initiatives over the coming year and beyond.
Governance and the Board
Strong governance, integrity and business ethics are critical to the
Group’s long-term success and its ability to generate sustainable
value for our investors and other stakeholders. These considerations
are fundamental to how the Board manages its discussions and
decisions both as a Board and as individual committees, and we
continue to improve governance aspects alongside the
Group’s growth.
The Board also considers ESG11 as an important aspect of the
Group’s governance and risk management framework, and
recognises its responsibility to guide Alpha’s approach, and
ensure it complies with regulatory requirements and meets the
expectations of its stakeholders. With this in mind, the Board has
now established an ESG Committee, which is chaired by Jill May.
The Committee oversees all components of Alpha’s corporate
ESG agenda, and we are delighted to have welcomed both a
dedicated Global Sustainability Manager and a Global Diversity
& Inclusion Manager to support our planning, progress and
reporting linked to this important area. Among the key topics that
the Group is currently focussing on are its preparations to start
reporting under the framework set out by the Task Force on
Climate-Related Financial Disclosures (“TCFD”), and the further
development and global roll-out of our Diversity & Inclusion (“D&I”)
programme and supporting disclosures.
For the next phase of Alpha’s
growth plan, the Group has set
the target of doubling the size
of the business again by 2028.”
Alpha ranked as the “14th Best
Large Company to Work For
in the UK” as well as a “World
Class Company to Work For”
in the Best Companies 2022
On 1 April 2023, Luc Baqué succeeded Euan Fraser as Chief
Executive Officer and joined the Board. On stepping down from
the CEO role, Euan became a strategic adviser to the Board
and we are delighted to maintain access to his strong industry
relationships and knowledge of the Group. Alongside the growth
of the Group, to ensure that the Board has suitable support and
advice, we are also very pleased to have appointed an internal
company secretary to work alongside Prism Cosec.
Dividend
Alpha performed ahead of market expectations in FY 23 and the
Board is therefore recommending a 40.0% increase in the final
dividend to 10.50p per share, bringing the total for the year to
14.20p, an increase of 36.5% compared with the 10.40p paid in
respect of FY 22, in line with the Group’s dividend policy. Subject
to shareholder approval at the Annual General Meeting (“AGM”),
to be held on 6 September 2023, the final dividend will be paid on
19 September 2023 to shareholders on the register at close of
business on 8 September 2023.
Outlook
The Board is delighted with the Group’s performance over the
past year. Alpha has delivered a set of excellent results against
a backdrop of macro-economic uncertainty, and has entered the
current year with both a good pipeline across the Group and
clear plans to achieve its strategic ambitions of doubling the
business by 2028.
Although we are facing continuing macro-economic uncertainty
and some increased competition in the global consulting market,
the structural drivers that underpin growth and demand for the
Group’s services over the medium to long term remain strong.
This, together with the Group’s market-leading consulting talent
and the growing number of client relationships, means the Group
remains confident of further progress. On behalf of the Board,
I would like to thank everyone at Alpha for their fantastic
contributions in another successful year.
Ken Fry
Chairman
22 June 2023
10 The Group uses alternative performance measures (“APMs”) to provide stakeholders
further metrics to aid understanding of the underlying trading performance of the Group.
These measures exclude certain costs including acquisition and integration costs,
earn-out and deferred consideration costs and share-based payment charges.
Refer to the Chief Financial Officer’s report and note 4 for further details.
11 Environment, social and governance (“ESG”).
Aiviq named in the
“WealthTech Top 100” (2023)
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Strategic Report
Chief Executive Officer’s report
Letter from Euan Fraser
Annual Report & Accounts 2023
13
We are delighted with the
progress in the year across
our three key growth pillars
and the wider business and
look forward to continuing
to progress globally in
delivering the next phase
of the Group’s growth.”
Luc Baqué
Chief Executive Officer
The Alpha story
This Annual Report, for the year to 31 March 2023, covers the
final year of my decade as Chief Executive Officer. The Group
that my successor, Luc Baqué, took over at the beginning of
April is the leading specialist consultancy in asset and wealth
management globally and is on its way to realising that
ambition in the adjacent insurance sector.
Since we created the Alpha business almost 20 years ago,
we have focused on building a reputation for service delivery
excellence in everything we do, underpinned by a global team
of the most talented and committed consultants.
Being at Alpha for nearly 20 years and Chief Executive Officer
for 10 years has been an incredible journey and a huge honour.
When I started my Alpha journey there was literally a handful
of us working and socialising together in London. Even from
these very early moments the culture, camaraderie and values
defined everything we did. It is incredibly humbling to have
watched the team prosper, to have seen so many fabulous
careers take shape and to become the market-leading
consulting firm it is today.
The qualities of passion, commitment and a never-ending
focus on achieving excellence for our clients has made this
team and this business unstoppable in its drive for success.
There are a number of wonderful highlights including two
private equity transactions and our AIM admission in the space
of a remarkable four-year period. The commercial success and
that market-leading reputation have of course been very
important but the real success has been creating a fabulous
culture that prioritises wellbeing and caring, and looking after
one another. That is by far the most important part of the Alpha
legacy and has been the undeniable driver of our success.
I am delighted that the Group has again performed so well this
year – delivering this level of growth is a fabulous achievement.
In November 2020 we set the ambition with our shareholders
that we would double the business over a four-year period and
to have achieved that target already is yet another testament to
the quality and ambition of our people. I am extremely proud of
everyone across the Group for reaching that landmark and I
am certain many more successes will follow.
I am delighted to be able to hand over the chief executive
office of a Group that has delivered another year of growth and
an outstanding set of financial results. I know that Alpha is in
excellent hands with Luc and the transition from me to him is
one of continuity of strategy. Luc is a very talented leader and
I count myself lucky to be succeeded in this role by someone
so well suited to lead the Group, supported by the Board and
such a high-quality management team.
I would like to thank Alpha’s clients, shareholders and
stakeholders for their fantastic support.
To the wonderful people of Alpha: a huge thank you from the
bottom of my heart. It is your talent, passion and values that
drive Alpha’s business forward in every corner of the world.
You define success and I cannot wait to see where your
dedication and commitments take Alpha next.
I wish Luc and the fabulous Alpha team every success as
they embark on the next chapter.
Euan Fraser
Chief Executive Officer to 31 March 2023
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Alpha’s teams around the world have delivered another
outstanding performance and record year of results. I want
to start by thanking our people everywhere for their fantastic
contribution and, on behalf of us all, to thank Euan Fraser for
his vision and leadership throughout the past decade. Euan
has successfully steered the Group through 10 years of growth,
including the excellent performance of the last financial year.
Since AIM admission, we have made great strides and have
doubled the size of the business since 2020. My intention as Chief
Executive Officer is to continue building on our successes to date.
As Euan led the Group as Chief Executive Officer during the
financial year under review, we have both contributed to this
report this year.
Our growth strategy
In meeting the Group’s previous target – to double the size of the
business by November 2024 – we diversified and strengthened
across multiple dimensions, by consulting activity, by client sector
and by geography, growing both organically and through
complementary acquisitions.
At our capital markets event in March 2023, we announced an
evolution of that strategy and a refreshed ambition to double the
size of Alpha again over the next five years, while maintaining our
record of profitable growth and targeting a consistent adjusted
EBITDA margin. The key pillars that will enable us to achieve that
strategic ambition are: further expansion in Asset & Wealth
Management Consulting, particularly in North America; the global
scale-up and roll-out of our Insurance Consulting business; and
making selective acquisitions.
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Annual Report & Accounts 2023
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Strategic Report
Chief Executive Officer’s report continued
Our growth strategy continued
Over the next five years, growth in these important areas and
markets will continue to be our focus and the potential further
opportunity is significant.
The year in review
The past year was one of strong performance across all regions
and business activities, despite the ongoing macro-economic
uncertainty. We saw further excellent progress across the key
growth pillars of North America, Insurance Consulting
and acquisitions.
We have continued to execute on our strategy of launching new
service areas and consulting practices, rolling them out globally
and delivering strong organic growth by investing in our people
and expertise. We have invested nearly 20 years in creating a
leading position as a consultancy and we see continued demand
to expand the business and provide an even more comprehensive
service to clients globally.
Net fee income
UK
North America
Europe & APAC
12 months to
31 March
2023
12 months to
31 March
2022
£87.1m
£91.1m
£49.0m
£72.1m
£46.9m
£38.8m
Year-end totals
£227.2m
£157.8m
Gross profit
UK
North America
Europe & APAC
Year-end totals
12 months to
31 March
2023
12 months to
31 March
2022
£35.0m
£30.0m
£15.4m
£80.4m
£30.6m
£15.4m
£13.4m
£59.4m
Change
20.9%
94.2%
26.0%
43.9%
Change
14.3%
95.7%
14.6%
35.4%
Regionally, we have achieved meaningful growth in all our
geographic regions, fuelled by the excellent reputation and appeal
of Alpha’s leading client proposition, which we continue to extend.
Thanks to the robust structural drivers of demand in the core
markets in which we operate, including growth in assets and
insurance policies, cost pressure, regulation, technology
breakthroughs, and changes in societal expectations, we believe
that the Group has the potential and the scope to continue to
grow and gain market share.
Continuing on the momentum of the previous year, North
America became our largest region by net fee income, achieving
net fee income growth of 94.2% overall, mostly organically, and
71.7% on a constant currency basis. This is a key pillar of our
growth strategy and we are delighted with our progress in the
very sizeable North America market. The strong progress is due
to our industry knowledge, deep expertise and highly talented
team, which encompasses consultants who are specialists in
asset and wealth management, technology and alternatives,
through the Lionpoint business.
We successfully grew our North America team by 32.0% to
342 consultants by the year end. We also expanded our
North America client base, across the traditional and private
markets, adding 72 clients in the year, including a number of the
world’s largest asset managers. The Group has now worked with
88% of the top 25 North America asset managers12 and continues
to broaden and deepen these relationships. We see significant
growth potential in the world’s largest asset management market
to continue to grow the Group’s market share in that region.
Our businesses in the UK and Europe & APAC also delivered
excellent performances, increasing net fee income by 20.9% and
26.0% respectively, while continuing to win and deliver market-
defining projects. We retain our market-leading position in the UK
as consultants to the asset and wealth management industry,
with the Group’s established practices, including Investments,
Operations and Client & Digital13, contributing well and adding
47 clients across the region. In Europe & APAC, our best-in-class
service offering continues to attract new clients, with 37 new
clients added in the year.
Our second key growth pillar, expanding our Insurance Consulting
business, also continued its strong momentum and ended FY 23
with 81 people across the UK and Europe, up from 50 in FY 22,
and added 10 clients in the year. The General Insurance &
Specialty offering launched last year has continued to gain
traction this year, and we were delighted to welcome a third
director dedicated to this client segment, to drive further growth.
The Group also made further progress in building out the
Insurance Consulting proposition with the launch of a Retail
Distribution & Advice practice, which helps financial advisers,
investment platforms and life and pensions providers transform
and grow their businesses.
We see significant market potential in the insurance industry and,
ultimately, believe that our offering could grow to a similar size to
Alpha’s Asset & Wealth Management Consulting business in the
medium to long term. In FY 24, we will also be progressing the
launch of our Insurance Consulting proposition in the US.
Other notable additions to the Group’s client proposition during
the past year include the Enterprise Transformation practice,
which helps asset and wealth management clients address issues
and challenges around reconfiguring global operating models and
cost structures. Meanwhile, the continued development of Alpha’s
data science proposition recognises the importance of data-driven
insights in differentiating and scaling our clients’ businesses.
We have also continued the ongoing development of our
technology services proposition, including Axxsys. Almost all the
consulting engagements we undertake with asset managers,
wealth managers and insurance clients lead to a requirement for
technology services and there is strong demand for software
solutions and technology experts with deep sector knowledge.
Aiviq presents an attractive data solutions and product proposition
for asset managers and continues to add clients. We see further
potential in this offering, although it remains currently a small part
of the Group.
12 “Top 25” refers to Investment & Pensions Europe, “Top 500 Asset Managers 2022” where the asset manager country is US or Canada, as defined in the report.
13 Practice name changed from Distribution to Client & Digital to better reflect the complete client proposition.
The past year was one of
strong performance across
all regions and business
activities, despite the ongoing
macro-economic uncertainty.”
Alongside the Group’s organic growth, we are very pleased with
the strong contributions from our acquisitions. Lionpoint, the
alternative assets consultancy acquired in May 2021, continued to
grow very strongly, benefiting from excellent synergies between
Lionpoint and our other businesses as alternatives become an
increasingly mainstream part of the asset management
landscape. Demonstrating this, Lionpoint added 93 new clients
globally in the year, including several of the largest alternative
investment Managers, and increased its headcount by 43.9%
to end the year with 285 consultants globally.
After the year end, we were delighted to acquire Shoreline, a
specialist APAC asset and wealth management consultancy
headquartered in Sydney. The acquisition, which included a team
of nearly 20 people, was completed smoothly after the year end
under the oversight of our Asset & Wealth Management
Consulting leadership team and the integration is now under
way and progressing well. Shoreline’s client base, capabilities
and company culture are highly complementary to Alpha,
strengthening the Group’s existing offerings and creating the
leading specialist asset and wealth management consulting firm
in the region. We look forward to working with the Shoreline team
and growing the APAC business further.
Alpha has been selected #1
Consulting Firm by Décideurs
Magazine in “asset
management” (2023)
We are delighted with the progress in the year across our three
key growth pillars and the wider business and look forward to
continuing to progress globally in delivering the next phase of the
Group’s growth.
Financial performance summary
This robust performance across all our business areas produced
full-year financial results that were ahead of market expectations.
Group net fee income increased 43.9% to £227.2m
(FY 22: £157.8m), on a mostly organic basis, and 36.1% on a
constant currency basis.
Adjusted EBITDA increased by 37.5% to £46.6m (FY 22: £33.9m)
and adjusted profit before tax rose 38.6% to £44.0m (FY
22: £31.8m), while achieving adjusted EBITDA margin at 20.5%
(FY 22: 21.5%). As expected, strong demand for our services
allowed us to balance rising costs and a gradual reduction in
our consultant utilisation towards more normal levels, alongside
increases in our day rates. Adjusted earnings per share (“EPS”)
also increased by 36.4% to 29.27p (FY 22: 21.46p).
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Strategic Report 16
Annual Report & Accounts 2023
Annual Report & Accounts 2023
17
Strategic Report
Chief Executive Officer’s report continued
Financial performance summary continued
On a statutory basis, revenue increased 44.8% to £228.7m
(FY 22: £158.0m), operating profit increased 61.1% to £28.6m
(FY 22: £17.8m) and profit before tax increased 73.2% to £25.8m
(FY 22: £14.9m). Basic EPS more than doubled in the year to
15.82p (FY 22: 7.69p). A reconciliation between these statutory
and adjusted performance measures is set out in the Chief
Financial Officer’s report and note 4 to the consolidated
financial statements.
Alpha continues to generate good cash flows and net cash ended
the year at £59.2m (FY 22: £63.5m). We are also delighted to
recommend a 10.50p full-year dividend in line with our policy to
pay out approximately 50% of adjusted profits.
Our people
To oversee the execution of our 2028 growth strategy, we have
strengthened our executive team. Joe Morant moves from Head
of Asset & Wealth Management Consulting in North America to
take global responsibility for this business. Nick Fienberg takes
charge of technology services and Lionpoint, which covers both
management consulting and technology services to the
alternatives sector. Stuart McNulty, who successfully led our UK
Asset & Wealth Management Consulting business for many years
and oversaw the launch of our Insurance Consulting business
there, becomes Global Head of Insurance Consulting.
Clients come to us because
of the specialist knowledge
and experience of our
consulting teams and their
determination to deliver
excellent outcomes that
solve clients’ problems.”
Our consultants are the best in our industry and are the key
to the Group’s success. Attracting, developing, motivating and
celebrating talented people at all levels are among our most
important strategic objectives and ones to which we give much
thought and attention. Over the past year we increased our global
consulting team to 994 (FY 22: 760), adding 234 new consultants
(FY 22: 189) and 13 new directors (FY 22: 20), excluding additions
as part of the Lionpoint acquisition in the prior year.
We have also strengthened our operational capabilities during
the past year to support the delivery of our growth targets by
appointing a Group Managing Director, a Global Operations
Director, a Global Head of Risk and a Group and Divisional
Finance Director.
UK
North America
Europe & APAC
Year-end totals
Consultant headcount
As at
31 March
2023
As at
31 March
2022
394
342
258
994
287
259
214
760
Change
37.3%
32.0%
20.6%
30.8%
Clients come to us because of the specialist knowledge and
experience of our consulting teams and their determination to
deliver excellent outcomes that solve clients’ problems. Thanks
to our market-leading talent and reputation for delivery excellence,
we build strong client relationships that yield major cross-selling
opportunities as we extend our range of practices and services.
This enables us to generate consistently strong organic growth
– a powerful business model that is the foundation of our plan to
achieve the ambitious goals we have set for 2028.
Maintaining our inclusive and meritocratic culture is therefore
essential and we are especially pleased that our emphasis on
people and culture has helped make the integration of Lionpoint
in the prior year, our largest acquisition to date, so successful.
We are also delighted to be welcoming 19 new consultants to the
Group as part of our recent acquisition of Shoreline.
Lionpoint named “Best Technology Advisory Firm”
at the Private Equity Wire European Awards (2023)
ESG focus
We continue to be very excited and supportive of the progress
that the asset management, wealth management and insurance
industries are making when it comes to both sustainable investing
and assessing broader ESG commitments. As a business, we are
sharpening our focus on ESG and enhancing our approaches,
operations and policies to be able to embrace the necessary
changes and report upon them effectively.
The Group adopted the SASB framework in 2019 and we have
reported on our adherence to those standards each year since.
We are continuing to advance our environmental work and
response to climate change. This includes improvements to our
data collection and analysis, which will support us in setting out
and progressing a journey towards net zero, a key focus of Alpha’s
ESG roadmap. To support this and ensure progress, we have
added responsible business oversight to our global business
operations team, including a Global Sustainability Manager and a
Global Diversity & Inclusion Manager, who took up their roles
during FY 23.
Current trading and outlook
FY 23 was a year of further strong growth globally. Substantial
progress was achieved across our three key growth pillars and
the business more generally, and we enter FY 24 as a leading
global management consultancy of almost 1,000 consultants.
We are mindful of the uncertainties presented by the global macro
picture, including the war in Ukraine and the recessionary outlook
in many economies. We have also recently seen a lengthening
sales cycle and increased competition as a result of the current
overcapacity in the global consulting market. This is expected to
be a short-term backdrop, while the consulting market balances
supply with overall demand. The medium to long-term outlook for
our key client markets is positive, with the structural drivers of
demand and growth remaining strong.
Against this backdrop, the Group enters FY 24 with resilient
current trading and a good pipeline of new business opportunities.
These factors, coupled with the Group’s compelling proposition to
clients, give us confidence in delivering full year results in line with
current market expectations and progressing towards our 2028
strategic goals.
We have a clear growth strategy, excellent client relationships
and the most talented group of consultants in our industry.
We therefore look to the future with great optimism.
Luc Baqué
Chief Executive Officer
22 June 2023
alphafmc.com
870+
clients globally
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Strategic Report 18
Annual Report & Accounts 2023
Strategic Report
Business model
Our resources
Annual Report & Accounts 2023
19
The best talent
Client
relationships
Industry
networks
Expertise
Financial
strength
Management consulting
Technology consulting
How we create value
We draw on the
market-leading
experience, knowledge
and highest delivery
standards of our people
to solve our clients’
problems and meet
their objectives.
We cultivate strong,
long-term relationships
with clients, leading to
high levels of repeat
business and
opportunities to
cross-sell multiple
service offerings.
We maintain close
contacts with vendors,
industry bodies,
regulatory authorities and
competitors to inform our
understanding of the
markets in which we
operate and support our
work for clients.
Our consultants
specialise exclusively in
particular sectors,
meaning we are fully
focused on each of the
client segments we
address. We offer insight,
methodologies and
thought leadership based
on our leading position in
the market.
We are a consistently
profitable and cash-
generative Group with
the financial resources
to invest in expanding
our activities globally
and to new client types
and consulting areas.
Our competitive advantages
— Ability to identify, attract and retain the
best talent
— A strong culture that fosters excellence,
collaboration and ethical conduct
— A focused, specialist proposition for the
asset management, wealth management
and insurance industries
— Ability to apply best practice, differentiating
intellectual property and data, technology
solutions and market-leading knowledge
developed over 20 years
— A multi-boutique structure with an extremely
solid cross-selling framework and culture
of collaboration
— Continuous development of the proposition
to anticipate client needs
— An emphasis on providing the highest quality
of service and, wherever possible, exceeding
clients’ expectations
How value is shared
Clients
We help asset and wealth
managers, insurance
companies, private market
firms, service providers,
platforms, intermediaries,
technology partners and
a range of other buy-side
firms solve their most
pressing strategic
problems and become
more successful.
Shareholders
We deliver long-term capital
appreciation for our
investors through share
price growth and regular
dividend payments,
supported by the Group’s
continued growth. We
preserve the value of their
investment by managing
risks appropriately.
Our people
We enable our people to
develop their careers by
working on high-impact
projects with the leading
companies in their
specialist area. We offer a
meritocratic and enjoyable
corporate culture alongside
incentive schemes, training
and support to facilitate
individual development
and career progression.
Community
We promote ethical
conduct and a corporate
culture that gives back to
the wider community and
values diversity and
inclusion in its broadest
sense. We contribute by
supporting charitable
initiatives including our
Charity of the Year
programme, and
region-specific volunteering
and mentoring.
Environment
We prioritise evaluating
meaningfully our impact
on the environment by
understanding our energy
usage and our carbon
footprint. We will contribute
to its protection by seeking
to reduce our greenhouse
gas emissions wherever
possible and continuing
to offset those that we
cannot reduce.
156
36.4%
new clients in the last
financial year
Adjusted EPS growth over
the last financial year
Over 75%
of director additions in FY 23
were promoted from within
£30,000+
raised for our Charity of the
Year in FY 23
100%
We have offset 100% of our
calculated carbon emissions
in line with our Annual
Report SECR statement for
the last three years
Asset and wealth management consulting
Technology consulting and implementations
Alternatives asset class
Insurance consulting
Data solutions and products
Platform for growth
Alpha grows in three dimensions
Sector
Consulting activity
Geography
Management philosophy
Alpha’s mantra supports strategic and management decisions
Best talent
Best expertise
Best culture
Best service
Strategy in action
1
Scale up and broaden the
client proposition by adding
services and consulting activities
2
Enhance and diversify our
offering in our existing
geographical markets
3
Make selective
acquisitions
Global operations model
Finance
Business management
and change
IT operations
Risk
Legal and
corporate affairs
Human resources
Recruitment
Responsible business
Read more about our stakeholders on pp 32–33
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Strategic Report
20
Annual Report & Accounts 2023
Strategic Report
Market overview
Long-term structural drivers are
shaping the asset management,
wealth management and
insurance markets that we
address. They include growth
in AUM, growth in insurance
policies, cost pressures,
regulatory demand, and client
and societal expectations.
Linked to this, the organisations
we work with are facing rapidly
changing expectations among
their clients, driving them to
focus on operational and
technological efficiency and
prioritise the use of data in
decision making.
Against this backdrop, the
Group’s specialist consultants
can provide deep expertise,
structured perspectives
and market experience to help
clients grasp opportunities and
adopt the right operational
advantages. We remain
extremely well placed to
address and navigate these
long-term structural trends by
developing effective solutions
from operating model design,
to technology selections and
implementations, to change
delivery and support; and
implementing strategies to
secure long-term growth
and profitability.
Trend: Growing client markets
Trend: Rise of alternatives
Impact and scale:
Today, the Group’s main client market is the asset and wealth
management industry, which has proven resilient in the face of
successive economic cycles and has doubled in size (as measured by
AUM) over the past decade. Multiple sources agree that the industry
continues to demonstrate strong long-term drivers of global growth14.
Growth has been particularly strong in North America and the Asia Pacific
region, which have both experienced annual growth of 13% between
2020 and 2021 and now account for $54tn and $25.4tn respectively15.
The Group has also begun to provide consultancy to the insurance
industry, where it serves the Life, Pensions & Retail Investments as well
as the General Insurance and Specialty lines segments. The insurance
industry is forecast to grow from $6.1 tn in gross written premium at the
start of 2020 to $7.5 tn by the end of 202516. Alpha already has a notable
presence in some of the industry’s most mature markets, including the
UK, Europe and, more recently, the US and we are supporting a range of
clients with their most complex change initiatives, including operations,
technology, M&A integration, platforms and more.
Alpha’s response:
With growth forecast to be sustained in the Group’s core client markets,
demand for consulting services is expected to expand commensurately
over the long term. This positive outlook for growth across the Group’s
main addressable markets offers strong underlying prospects for the
Alpha business globally.
To address this, Alpha continues to build out its competitive strengths
for the asset management, wealth management and insurance sectors,
including its sector specialism, regional presence and excellent
reputation based on deep expertise and knowledge, proven delivery
frameworks, expertise in technology transformation and industry
benchmarking information.
The Group’s consulting offering for asset management, wealth
management and insurance client markets, today and as it continues
to prepare for and respond in line with client demand, is described
throughout the Strategic Report. The Group’s strong growth, in which
net fee income has increased by £159.4m since AIM admission alone,
demonstrates its ongoing progress and success in developing its brand,
winning projects and increasing market share.
Impact and scale:
Alongside growth in traditional assets, global allocation
to alternative assets such as private equity, private credit,
infrastructure, real estate and fund of funds continues to
grow as investors seek additional ways to achieve their
investment performance objectives and asset managers
increasingly seek to provide diversification and risk mitigation
for their clients’ portfolios. Linked to this, alternatives AUM
are expected to rise from $13.7tn, as of year end 2021, to
$23.3tn in 202717, a compound annual growth rate of 9.3%.
Specialist alternatives asset managers are growing, and
alongside growth comes a need to invest in technology
to manage and scale their businesses. Traditional asset
managers are seeking to expand their book of alternative
investments, which also brings a need for technology
investment and operating model consolidation.
Alpha’s response:
The structural drivers shaping the alternatives market are
very similar to those in traditional asset and wealth
management, including cost pressure, changes to operating
models and technology in the search for outperformance,
increasing regulatory pressure and demands for greater
transparency. Alpha’s acquisition of Lionpoint in May 2021
added the leading global alternatives investment consultancy
to the Alpha Group. Since then, we have increased the
Lionpoint team’s headcount by 131.7% to address growing
demand among both alternative and multi-asset managers.
Furthermore, it has won 158 new clients.
Lionpoint’s team of specialists offers experience and
knowledge of cutting-edge operating models, and all key
platforms and technologies that service the sector. This
positions Lionpoint as the leading advisory and technology
implementation partner to alternatives managers globally.
By deploying expertise from Lionpoint and our Asset &
Wealth Management Consulting team, the Group can also
offer deep expertise to large institutional managers seeking
optimised operating models that span traditional and
alternatives asset classes.
Annual Report & Accounts 2023
21
Our business:
Insurance Consulting
Stuart McNulty
Global Head of Insurance Consulting
From a standing start in 2021, when we formally launched
a full Insurance Consulting offering, we have built a
team of over 80 consultants in the UK and France,
supporting insurance clients with a wide range of
change initiatives across all major parts of the value
chain. Our early successes came through a combination
of leveraging the relationships we already held with the
asset management arms of insurance companies, as
well as developing relationships with new firms, but
increasingly we are seeing demand coming from all
corners of the insurance industry. As a result, we are
now developing successful relationships with a wide
range of clients that are brand new to Alpha. Our work
spans all segments of the insurance industry, from pensions
and retail investment firms (those closest to the asset
and wealth management space), through life and health
insurers, and into the general and specialty markets.
We have been delighted by the traction we have achieved
in a relatively short period of time, and are excited by
the significant opportunities ahead – especially as we
turn our attention to other global insurance markets.
Our business:
Asset & Wealth
Management Consulting
Joe Morant
Global Head of Asset & Wealth
Management Consulting
We continue to enjoy strong growth in the asset and wealth
management markets across all of our regions. In particular,
as the largest financial services market in the world,
North America has been the fastest-growing part of the
Group’s management consulting business for the past
two years. Our more established businesses in the UK
and Europe are also performing very strongly and grew
around 20% last year. In addition, our offering in APAC
has been further enhanced through our recent acquisition
of Shoreline, which we welcome warmly to the team!
Alpha named “Best Performing
Company – IT Consulting” at the
Megabuyte Quoted 25 Awards (2023)
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alphafmc.com
14 BCG, “Double-Digit Growth Prolongs Winning Streak in Asset Management” (May 2022); Bain &
Company, “In a New World: Time for Wealth Management Firms to Shift Course” (July 2022).
15 BCG, “Global Asset Management 2022” (May 2022).
16 Accenture, “Insurance Revenue Landscape” (April 2021).
17 Prequin, “Global Report 2023: Alternative Assets” (January 2023).
Strategic Report 22
Annual Report & Accounts 2023
Strategic Report
Market overview continued
Annual Report & Accounts 2023
23
Trend: Addressing structural drivers of cost
Trend: Regulatory change
Trend: An emphasis on the ESG agenda
Trend: Data-driven decision making
Impact and scale:
Our clients operate in competitive markets and face ongoing
cost pressures and potential margin erosion as their fees
are squeezed. Many companies continue to run legacy
technology systems that are fragmented, expensive to
maintain and require users to complete many operations
manually. Some incumbent insurers are currently spending
70%–80% of their IT budget on maintaining legacy systems18.
Addressing their cost challenges requires clients to automate
manual processes and update technology to increase
productivity and accelerate growth.
Alpha’s response:
We have built a reputation among clients for market-leading
specialist management consultancy to support projects that
address structural cost drivers in their business. We expect
to see more clients laser focused on fund and client
profitability, rethinking their cost base front to back and
accelerating the streamlining of non-core capabilities.
Within Alpha’s comprehensive client proposition, we have
launched an Enterprise Transformation practice to help clients
consider and reconfigure operating models and address cost
structures across their organisations. Our technology consulting
services and data propositions provide end-to-end solutions
that our clients require when considering how to optimise
their operating models and processes, and invest in solutions
that derive greater value and efficiency.
Alpha received Bronze in the “UK’s Leading Management
Consultancies” by the Financial Times and Statista (2022)
18 InsurTech, “Digital Transformation and the Legacy of Insurance” (March 2023).
alphafmc.com
Impact and scale:
Global regulators continue to drive forward an aggressive
agenda of regulatory change, which is placing pressure on all
parts of our clients’ businesses to ensure timely compliance.
ESG regulation, in particular, is becoming more complex
and with divergence in regulatory approaches across
jurisdictions, clients with a global footprint face a challenge
to ensure consistency in approach to such regulations.
Emerging regulation is also accompanying a growing appetite
for crypto assets and for innovation-driven transformation.
Alongside this, operational resilience continues to be a global
theme and the focus on consumer outcomes and experience
is enhanced. Heads of Risk and Compliance need to ensure
the skillsets within their teams are keeping pace with not only
the actions of the business, but also the complexity of the
regulations. The use of fintech is becoming more pronounced
within the second line of defence.
Alpha’s response:
Alpha continues to support some of the world’s leading
asset and wealth managers and insurers to develop their
compliance, operational resilience and risk management
frameworks, with a particular focus on the efficient
implementation of regulatory change and, when things have
gone wrong, supporting our clients in their remediation
efforts. Looking forward, we expect these same trends to
apply to insurance clients.
Alpha’s Regulatory Risk & Compliance practice covers most
financial hubs and is led by six directors, working across the
UK, Europe and with strong capabilities in North America to
support our clients in regulatory impact assessment,
operational implementation and other regulatory-driven
transformation. That team also works closely with other areas
of the Alpha proposition, such as Alpha’s ESG & Responsible
Business practice and – in the case of leveraging fintech –
Alpha’s technology teams, to combine knowledge and
expertise in addressing our clients’ complex regulatory
challenges and obligations.
Impact and scale:
Despite the past year’s challenging economic conditions,
we have seen ESG and responsible investment remaining
a core priority for asset managers. Several impending
regulatory deadlines, including SFDR reporting for European
fund ranges and mandatory TCFD reporting for UK-based
asset managers, has driven significant operational and
delivery activity for clients.
ESG and responsible investment has remained a top
strategic priority and commercial opportunity for asset
managers to capture new asset flows and retain mandates
by aligning new product offerings with their clients’ goals.
Asset managers that are doing this well continue to clearly
differentiate themselves from their competitors. We also see
ESG and responsible investment rising on the agenda of
insurers, wealth managers and asset owners, as regulation
and client pressures increase.
Alpha’s response:
Since the launch of our dedicated ESG & Responsible
Investment practice in 2020, we have retained a busy and
varied portfolio of projects. To date, we have worked with
over 30 clients in multiple geographies to deliver ESG and
responsible investment projects, across public and private
assets, and across asset manager, asset owner, wealth and
insurance clients.
The consulting work we offer in this area remains
complementary to our core consulting capabilities, with work
across sustainability regulation, climate and TCFD, client and
product strategy, data and technology scalability, and client
reporting. New propositions such as sustainability risk and
greenwashing have also been launched in response to
meaningful client demand. These capabilities underpin our
core strategic offering of supporting clients to define their
ESG and responsible investment vision, strategy and roadmap
with market-leading assessments and peer insights.
Impact and scale:
Investment in improving operating models and processes
remains a priority as organisations seek to maintain a
competitive advantage in the face of further growth across
AUM, increasing disclosure requirements and ever-changing
investor expectations. This is resulting in the focus on
simplification of end-to-end operating models, digitisation
and automation, and the implementation of data strategies
to improve decision making and oversight.
In industries that are data rich, but where insight can be poor,
the opportunity to leverage data and technology to generate
meaningful insights is endless, and data can be used to drive
forward the next generation of decision making in asset
management and parts of the value chain. Most managers,
big and small, have invested in data platforms that range in
maturity. The time is now for all managers to refocus their
attention on their target operating models and increase
investment to leverage data for insight.
The trend of investing in data-driven decision making is likely
to continue in the future. As the amount of data available to
investment and insurance firms grows and the cost of collecting
and analysing data falls, our clients will be able to use data to
make better investment decisions. This will lead to improved
performance for investors and increased competition among
asset managers, wealth managers and other sectors.
Alpha’s response:
Through a combination of well-structured propositions
across management and technology consulting and data
solutions, Alpha is able to support clients in adapting to this
trend and support the growing uses of data in investment
and business processes.
Our Aiviq business offers a data-driven fintech platform that
turns disparate client investment information into enterprise-
wide data sets that help asset management clients define
relevant sales and marketing strategies. We also continue to
scale up and globalise other relevant practices such as data
and cloud services within our technology consulting
business, Axxsys, and expand our data science proposition
to meet new client demand to make data and analytics a key
business tool in delivering operational efficiency gains and
supporting strategic decision making.
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Strategic Report 24
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Annual Report & Accounts 2023
25
Strategic Report
Strategy
The principal activity of the Group is
the provision of professional consultancy
services to the asset management,
wealth management and insurance
industries. The Group’s goal is to cover
the full transformation lifecycle for
its clients from strategy and roadmap
initiation to the delivery of change
programmes and the technology that
supports them – and to provide its
expertise and services to a broader
range of clients within financial services.
We will achieve this through organic
growth and complementary acquisitions.
To continue to develop and succeed as
a leading consulting services group,
our strategy for growth includes the
following objectives:
Alpha ranked in “America’s Best Management
Consulting Firms” by Forbes and Statista (2023)
1
Scale up and broaden the
Group’s client proposition by
adding services and consulting
activities that together present
a differentiated and more
comprehensive offering
Key progress in FY 23
— Growth in overall consulting headcount by 234 to 994
at 31 March 2023
— Further progress in Insurance Consulting, with Alpha’s
dedicated team growing by 62.0% in the year. Expansion
of the General Insurance & Specialty team with the
addition of another experienced director in the UK
— Continued to expand the alternatives capability across
management consulting and technology through the
Lionpoint team
— Further development of the Group’s technology services
proposition – with Axxsys delivering across a range of
asset management focused practices
— Launched the Enterprise Transformation practice in the
UK, which focuses on supporting asset and wealth
management clients to map where transformation is
needed and address issues across their end-to-end
businesses and operating models
Areas of focus
— Continue to evaluate and respond to market demand for
new products and services – and add new propositions
that will attract new clients and enable the sale of
additional services to existing clients
— Continue to ensure enhanced cross-selling opportunities
through collaborative working across all our business
teams and sectors
— Continue to develop and extend the Group’s Insurance
Consulting and emerging Technology Consulting
capability, alongside providing dedicated software
solutions to the asset management sector through
the Aiviq business
— Continue to attract and appoint experienced directors
that can support and grow the Group’s client
proposition further
2
Roll out the client proposition
globally and progress opportunities
to grow further within our markets
3
Make selective acquisitions
Key progress in FY 23
— Continued to roll out Alpha’s consulting proposition and
activities globally – including strong progress from
Investments, Operations and Client & Digital practices
— Global leads in place for the Group’s key service areas
covering asset and wealth management, insurance and
technology consulting to oversee delivery excellence,
cross-selling and further growth across regions
— Double-digit organic growth in the world’s largest asset
management market, North America, with strong
contributions from the Asset & Wealth Management
Consulting and Lionpoint teams in the region
— Continued focus on developing the proposition, winning
new clients and growing market share in existing
markets, resulting in strong organic growth in the UK,
Europe and APAC
Areas of focus
— Roll out the Group’s existing business practices and
complementary offerings progressively across all regions
— Enhance opportunities from the acquisition of Shoreline
to extend local market presence reputation and grow
Alpha’s APAC business further
— Continue Alpha’s rapid growth in North America where
there is still significant opportunity to gain further market
share through the ongoing development and roll-out of
the Group’s service offering
— Continue to build on the momentum of Insurance
Consulting in France and extend into wider Europe, and
launch into new markets where there is demand such
as the US
Key progress in FY 23
— The Lionpoint business was fully integrated and
continues to grow rapidly – experiencing strong client
demand for its alternatives proposition and providing
cross-selling opportunities for the Group
— Alpha continues to review acquisitions that can
complement organic growth and maintains a healthy
acquisition pipeline
Areas of focus
— Integrate the Shoreline business with Alpha’s Asset
& Wealth Management Consulting team in APAC,
following the post-balance sheet acquisition of
Shoreline in May 2023
— Continue to review acquisition opportunities to
complement and grow the Group’s service offering
to deliver client and shareholder value
Our business:
Technology Consulting
Nick Fienberg
Global Head, Lionpoint and Axxsys
We are further expanding our technology consulting business
to complement our management consulting offering in all of
our client sectors across the Group. We have established
propositions that correspond to key services including data
and cloud, investment services technology and investment
management technology. The industries that we service are
going through continual technological renewal, developing
the platforms they operate on and optimising their data
architecture, so there is a huge amount of work to do. We are
unique in providing technologically capable people who also
have a deep understanding of the business.
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Looking after our people
The success of the Group’s business model depends
on the expertise and dedication of our people and
their delivery of high-quality consulting projects
to our clients. We therefore nurture this vital source
of differentiation and competitive advantage by doing
all we can to attract and retain the most talented
people. We want the years they spend working at Alpha
to be the best of their career, and we believe that
providing a positive and inspiring work environment will
help to foster a high-performance culture that delivers
exceptional outcomes for clients, as well as great
professional and personal fulfilment for our employees.
Our core values define who we are both as a company and as professionals
We pride ourselves
on working collaboratively
with our clients
We take accountability
for delivery – we own and
take responsibility
for outcomes
We are proactive –
we use our extensive personal
and corporate experience
to find solutions
We provide deep expertise
in our specialist areas
We provide
a meritocratic, sociable
and supportive environment
– we want to be recognised as
the best place to work in our
industry, with personal career
progression based on
transparent and
meritocratic
considerations
Everything we do is
defined by integrity –
we hold ourselves to the
highest standards of
transparency, honesty
and personal integrity
We are socially and
ethically responsible
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Annual Report & Accounts 2023
27
What we offer
The talented graduates and experienced consultants that
we target to join Alpha benefit from our distinctive and highly
attractive proposition, which is built on:
— a strong corporate culture that places people at the heart
of the business;
— our reputation as the leading consultancy in our sectors;
— opportunities to gain invaluable experience by working in
small teams on high-profile, industry defining projects;
— comprehensive training, development and feedback to build
consulting skills and specialist knowledge;
— career progression based on merit, with no fixed period at
any level;
— an open and inclusive environment with a strong employee
support framework for people of all levels and backgrounds;
— encouragement to contribute entrepreneurial ideas to develop
Alpha’s business;
— a highly competitive compensation and benefits package,
including participation in the Group’s profit-sharing or cash
bonus schemes; and
— management incentives that recognise and celebrate the
Group’s success.
Emphasis on culture and inclusion
We maintain an inclusive corporate culture based on integrity,
fairness, meritocracy and giving everyone the opportunity to feel
they have a part to play in the growth and success of the Group.
Championing diversity and fostering an inclusive culture in our
workplace are key elements of our approach to looking after our
people and, as part of these efforts, we have enhanced our global
equal opportunities survey so that we can better understand our
people and identify relevant actions. We operate a number of
employee-managed networks globally that champion ethnic and
cultural diversity, social mobility, gender equality, wellbeing,
disability confidence – including our accreditation as a Disability
Confident Level 2 employer – and pride (LGBTQ+).
Career progression
We do not believe in “fixed time” at each level, instead taking a fully
meritocratic approach where each person has the opportunity to
progress based on their performance and meritocratic considerations
alone. We are also strong believers in developing our people and
promoting from within – and we continue to focus on creating
opportunities for staff at all levels of the Group. Many of our
current director team joined Alpha as graduates or early in their
careers. The ability to take on responsibilities early and achieve
rapid progression is important in attracting the most talented
consultants to join us.
More recently, we were delighted to broaden our global consulting
leadership structures this year by adding four regional management
committees to work alongside the heads of region for our Asset &
Wealth Management Consulting business. Organisationally and
culturally, it aligns to our aims of ensuring a broad range of
progression paths at Alpha, and in creating the management
committee structures, we have been able to ensure long-term
access to a wide pool of Alpha talent for leadership roles.
Recognising that everyone’s career path is individual, we place
great importance on mentoring and feedback. Everyone is assigned
a mentor who helps guide their development, alongside formal
mid-year and annual performance reviews and regular feedback
touchpoints with project leads. We are also rolling out “360 feedback”
across the Group from direct reports as well as managers.
Training and development
We have training programmes that extend across all grades,
from analyst to director, and include topics such as coaching,
communication skills, feedback delivery, stakeholder management,
account management, sales and delivery excellence. During FY 23
we have invested in providing LinkedIn Learning to everyone in the
Group, to support their continued professional development.
In addition to internal training resources and curricula, employees
receive an annual allowance relevant to business role for external
training. Employees may use this to progress towards industry
leading certifications – examples include the Chartered Financial
Analyst (“CFA”) programme, the certificate in ESG investing from
the CFA Institute, certifications from the Chartered Institute of
Securities & Investment, and the Chartered Alternative Investment
Analyst (“CAIA”) charter from the CAIA Association.
We encourage all employees to take an entrepreneurial approach
to their career development by identifying the training that they
feel will be most relevant and useful. Alongside these formal
training initiatives, we also ensure that employees gain unique
knowledge and practical experience by working alongside more
experienced colleagues and attending meetings with some of the
most senior and influential people within our client organisations.
A strong record of recruitment and retention
Alpha is sought after as an employer in our industry thanks to its
excellent reputation, prestigious client relationships and the
increasing range of opportunities that our growth provides for
ambitious professionals. In hiring, we look for extremely talented
individuals from all backgrounds who show strong commitment
and the desire to succeed, and we review our recruitment
processes continually to ensure that they are thorough and
effective and integrate diversity considerations at every stage.
It is not easy to get a role at Alpha as we focus on the best talent
in the market but, once on board, our employees are provided with the
specialist knowledge, support and training that they need to thrive. Our
efforts to ensure an excellent working environment, exciting opportunities
for career development and highly competitive compensation
packages have been a critical factor in the Group’s rapid growth.
Over the past five years our headcount has grown by 26.7% a year
on average while maintaining low attrition rates for our industry.
Employee feedback
Maintaining a meritocratic, inclusive and supportive environment
depends on regular communication and a free flow of information
and feedback throughout the Group. We want everyone to be
aware of the Group’s progress and we organise monthly company
meetings for all our regions to ensure our employees are aware of the
Group’s progress, issues under consideration and key decisions and
can ask questions directly and contribute to the discussions.
We also provide a range of anonymised channels to facilitate
employee engagement, understand the team’s opinions about
working at Alpha and receive feedback on where change may
be required. Employee feedback has led to many new initiatives
that include changes to internal policy and communications,
technology and productivity improvements, and proposals to
create a more varied social calendar for teams across the Group.
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Key performance indicators
The Directors have defined the following key performance indicators
(“KPIs”). These KPIs link to the Group’s growth strategy and are used
to monitor the Group’s income statement and performance.
These are discussed further in the Chief Financial Officer’s report
on pp 42–46 which forms part of this Strategic Report.
£228.7m
£158.0m
£227.2m
£157.8m
Revenue
The revenue KPI measures how well
the Group has expanded its business
through organic and inorganic growth.
Net fee income19
Net fee income is revenue before
incidental expenses and is used
as an alternative KPI to indicate the
underlying productive operating
performance of the Group.
Gross profit
This KPI helps to measure the
profitability of the Group and the
success of the business model.
FY 23
FY 22
FY 21
FY 20
FY 19
FY 18
FY 23
FY 22
FY 21
FY 20
FY 19
FY 18
FY 23
FY 22
FY 21
FY 20
FY 19
FY 18
£98.1m
£90.9m
£77.7m
£67.8m
£98.0m
£88.9m
£76.0m
£66.0m
£34.8m
£34.4m
£29.1m
£25.3m
Annual Report & Accounts 2023
29
The Group delivered an excellent trading
performance during FY 23, continuing the
progress we reported at the half year and
achieving double-digit growth in revenues
and profits.”
Luc Baqué
Chief Executive Officer
Adjusted EBITDA
Earnings before interest, tax,
depreciation, amortisation and
adjusting items is a measure of the
underlying profitability of the Group.
Adjusted profit before tax
Adjusted profit before tax excludes
adjusting items and is used as an
alternative performance measure of the
underlying profitability of the Group.
£46.6m
£33.9m
£44.0m
£31.8m
994
760
FY 23
FY 22
FY 21
FY 20
FY 19
FY 18
FY 23
FY 22
FY 21
FY 20
FY 19
FY 18
FY 23
FY 22
FY 21
FY 20
FY 19
FY 18
£21.7m
£20.2m
£16.5m
£14.0m
£19.6m
£18.6m
£16.2m
£8.3m
448
436
362
305
£80.4m
£59.4m
Headcount
The year-end headcount KPI
measures the growth in the Group’s
fee-generating consultants globally.
19 Refer to the Chief Financial Officer’s report and to note 4 of the consolidated financial statements for further information on the adjusted performance measures: net fee income, adjusted
EBITDA and adjusted profit before tax.
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Section 172 statement
Under Section 172(1) of the Companies Act 2006, a director of a
company must act in the way that he or she considers, in good faith,
would be most likely to promote the success of the company for the
benefit of its members as a whole, and in doing so have regard
(amongst other matters) to:
The likely
consequence of
any decision in
the long term
The interests of
the company’s
employees
The need to foster
the company’s
business
relationships
with suppliers,
customers
and others
The impact of
the company’s
operations on the
community and
the environment
The desirability
of the company
maintaining
a reputation for
high standards
of business
conduct
The need to act
fairly as between
members of
the company
The following disclosure describes how the Directors have had regard to the matters set out
in Section 172(1)(a) to (f) and forms the Directors’ Statement under Section 414CZA of the
Companies Act 2006.
The Directors remain committed to engaging with all of the Group’s stakeholders and
considering their interests when making any strategic decisions.
Annual Report & Accounts 2023
31
Key Board decisions during the year
The Board considers the following to be the key decisions and considerations that it has made during the year to 31 March 2023:
Board decision
Considerations
April
The Directors considered the composition of
the Board and approved the appointment of an
additional independent Non-Executive Director.
— To continue to improve effectiveness by recruiting a
Non-Executive Director to add further experience across
a number of categories, including product development,
finance and audit, North America and M&A expertise.
— To recognise and address the interests and requirements
of the shareholders and market, including independence.
— To consider long-term succession planning when making
a Board appointment.
The Board considered and approved the FY 22
pre-close trading update to the market.
— To provide transparent, accurate and timely information
to the market.
June
The Board reviewed and approved the
FY 22 Full Year Results and the Annual Report
and Accounts.
The Board considered and agreed to
recommend a final dividend of 7.50p for FY 22.
— To provide transparent and accurate information to
the market.
— To address the interests of shareholders in the context of
the long term, whilst maintaining the Group’s policy of paying
approximately 50% of adjusted profits.
The Board approved the FY 23 equity incentive
awards to management and certain employees
of the Group.
— To reward and to incentivise the management of the Group
and ensure the alignment of interests between employees
and shareholders.
September
The Board considered the Group’s strategic
priorities at a dedicated strategy session.
— To ensure the ongoing review of the Group’s strategy
and progress against strategic goals.
October
The Board considered and approved the FY 23
interim pre-close trading update to the market.
— To provide transparent, accurate and timely information
to the market.
November
The Board reviewed and approved the FY 23
Interim Report and payment of the FY 23
interim dividend of 3.70p to shareholders.
— To provide transparent and accurate information to the
market and to address the interests of shareholders in the
context of the long term, whilst maintaining appropriate
levels of reserves to run the business effectively.
February
The Board approved the announcement of the
formal resignation of Euan Fraser with effect
from 31 March 2023 and approved the
appointment of Luc Baqué as Chief Executive
Officer with effect from 1 April 2023.
— To address the interests of clients, employees and
shareholders in providing effective leadership to ensure
the sustainable, long-term success of the Group.
— To provide transparent and accurate information to the market.
The Board approved the exercise of options that
had vested under the management incentive plan
and employee incentive plan to management
and certain employees of the Group.
The Board reviewed the results of the global
employee engagement survey and initiatives
carried out by the HR team to implement
positive changes to ensure the ongoing
engagement of Alpha’s employees.
— To reward and to incentivise the management and
employees of the Group and ensure the alignment
of interests between employees and shareholders.
— To understand the feedback provided by employees, to take
appropriate actions and to ensure the ongoing engagement
of Alpha’s employees in respect of implementing positive
changes. When reviewing the actions to be implemented,
the Board considered the financial consequences and the
impact on long-term value and growth for the shareholders.
At each meeting, the Chief Executive Officer updated the Board on the Group’s businesses, geographies, progress of key client
relationships and engagements across the Group.
Further details on the Group’s strategy and long-term decisions are set out in the Chairman’s report on pp 9-11, the Chief Executive
Officer’s report on pp 12-17 and in Strategy on pp 24-25.
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Section 172 statement continued
Engagement with key stakeholders
The Board considers its key stakeholders to be its employees,
shareholders, clients and the communities in which it operates.
The Board also recognises other stakeholder groups including
vendors and suppliers, industry bodies and competitors with
which Alpha works or associates in the marketplace.
Engaging effectively with these stakeholders strengthens
the Group’s business relationships and decision making
and therefore supports its long-term success.
Annual Report & Accounts 2023
33
Stakeholder group
Stakeholder key interests
How we engage
Stakeholder group
Stakeholder key interests
How we engage
Employees
Attracting, retaining and
developing the best talent
is essential to Alpha’s business
success. The Group is committed
to providing a highly rewarding
place to work, and to maintaining
a strong, meritocratic and
inclusive culture that recognises
the importance of our people
and encourages open
communication.
Shareholders
The Group prioritises open
communication and effective
engagement with its
shareholders, whose support
it considers to be integral to
long-term growth and success.
— Career progression
— Recognition
— Global employee feedback framework
— Leadership communications
— Training and development
— Monthly company meetings
— Morale and motivation
— Competitive remuneration package
— Engagement and feedback
— Professional qualification and other
— Reputation
— Wellbeing
— Health and safety
— Diversity and inclusion
— Sustainability
training opportunities
— Employee success framework
— Mentoring
— Management incentive programme
— D&I programme and networks
— CSR networks
— Financial performance
— Dedicated investor section on the website
— Governance and transparency
— Investor strategy updates
— Operating and financial information
— Capital markets days
— Confidence and trust in the Group’s
— Interim and preliminary results announcements
Directors
— Dividends
— Annual Report
— Annual General Meeting
— One-to-one meetings
— Investor conferences/roadshows
Clients
The Group’s success is based
on delivering a proposition that
helps its clients address their
challenges and capitalise on
their opportunities. The Group
works hard at developing and
sustaining long-term client
relationships, which it supports
through its global team of
consultants and by extending
the range of services it offers
and the types of projects it
carries out.
Communities
The Group is a growing,
profitable business, committed
to fostering the same growth
and success within the
communities in which it
operates, which includes
supporting organisations that
are relevant to or active in those
communities. As part of this
engagement, the Group also
considers how to maximise our
corporate responsibility and the
positive environmental and
social impacts of its activities,
and to minimise the downsides,
which will give us a solid
baseline for developing relevant
action plans and targets.
— Specialist industry proposition
— Senior level client relationship management
— Integrated end-to-end service offering
— Continuous client satisfaction monitoring
— Excellent service delivery
— Regular assessment of client demand
— Continuous development of practices,
and interests
products and services
— Industry round table discussions
— Subject matter expertise
— Dialogue with vendors, regulators and
— Emphasis on client satisfaction
— Ability and experience to help clients shape
industry bodies
— Publication of market and industry insights
their business for the future
— Alpha Outlook whitepapers and
thought leadership
— Effective and transparent engagement with
local communities
— Available ESG reporting and disclosures
— Working closely with charities, corporate
social responsibility (“CSR”) partners and
other organisations
— D&I networks and initiatives; developing and
empowering our people with knowledge,
toolkits and training that are shared
— Work on climate change and carbon offsetting
— Sustainability Accounting Standards Board
ESG reporting
— Contributing to awareness of diversity, inclusion
— Relevant sections within the Annual Report,
and other sustainability-related topics
such as sustainable business
— Taking effective action on climate change
— Energy usage and emissions reporting
— Pursuing a positive impact on local and
— Charity of the Year programme
global environments
— Taking appropriate steps where regulations
are introduced by establishing new policies
— Modern Slavery Statement and Living
Wage accreditation
— Tax evasion and anti-bribery policies,
supported by whistleblowing policy
— CSR schemes and initiatives, including
mentoring schemes for young people from
lower socioeconomic backgrounds and
team coordinated fundraising for charities
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Annual Report & Accounts 2023
35
1
Governance
We have updated
our Board and business
governance to support
our commitment
to embed and
progress a successful
ESG strategy.
Sustainable business
We are excited to be supporting the significant progress in the asset
management, wealth management and insurance industries around ESG
and responsible investing. Internally, we are progressing our own ESG
commitments and ensuring that we have in place the right governance,
objectives and actions to support this important agenda and to report
on it effectively and transparently.
We have established an internal Responsible Business function
within Alpha’s business operations and are developing an ESG
roadmap that will reflect the objectives of the ESG Committee
of the Board and the most material priorities of our investors,
employees, clients and wider stakeholder group.
The past year represents a pivotal moment in Alpha’s corporate
ESG journey. Our Group has a longstanding commitment to the
environment, community and social matters through our CSR
and Diversity & Inclusion programmes, and a history of related
team-based initiatives that reflect Alpha’s culture and values.
However, as a fast-growing, quoted company that aims to
be strong in corporate citizenship, enhance its reputation and
continue to build trust with stakeholders, we have reached a point
where our size and global reach require an ESG strategy that
reflects both the growing body of ESG regulation that applies to
our business and the views and expectations of our key stakeholder
groups. These include investors and their advisers, our clients,
employees and potential recruits, our supply chain and
industry bodies.
ESG is an increasingly regulated and data-driven domain
and one of our initial priorities is to ensure we have access
to comprehensive data sets for the major areas we intend to
focus on, notably diversity and inclusion and greenhouse gas
emissions. Our data gathering programmes are well advanced
and we are assembling detailed information relating to FY 23
that will give us a solid baseline for developing our action plans
and, in due course, proposed targets.
The past year represents
a pivotal moment in Alpha’s
corporate ESG journey.”
As a Group, we are committed to
the highest standards of corporate
governance, and we have extended our
frameworks in the year to formalise
and oversee Alpha’s ESG efforts.
Two major considerations inform our ESG strategy. Firstly, existing
and forthcoming regulation inevitably shapes our approach: we fully
comply with all mandatory requirements that apply to Alpha and are
preparing to start making disclosures as we come within the scope
of additional regulation. Secondly, we must implement a set of
strategic ESG objectives that reflect Alpha’s culture, the views and
expectations of our people and our wider group of stakeholders.
We are conducting a materiality assessment to understand the
range of stakeholder views and the developing consensus about
what constitutes best practice for companies such as Alpha.
This will help us to identify the key issues and opportunities that
we should prioritise in our roadmap and the practical steps required
to achieve these objectives. It will also help us form stronger
long-term relationships with our stakeholders.
Alpha awarded a “Gold” EcoVadis
rating in France (2022)
During the year, we focused on putting in place the foundations of
Alpha’s corporate ESG strategy. In September 2022, the Alpha
Board formed an ESG Committee, chaired by Jill May, to oversee
the development and execution of our ESG strategy and formalise
the governance around Alpha’s corporate ESG objectives, decisions
and actions. We intend to publish Alpha’s first standalone
Sustainability Report later in the financial year to detail our
initiatives, ambitions and performance in this area.
We have also formed a Responsible Business function within
Alpha’s business operations to work in conjunction with the
ESG Committee and Alpha’s executive team on these priorities.
Overseen by Eloise Lipkin, a director in our Operations team, the
team includes a recently appointed Global Sustainability Manager,
who is focussing on our environmental roadmap and sustainability
disclosures, and a Global Diversity & Inclusion Manager, who is
responsible for defining and executing on our social plan. We are
delighted that these dedicated Responsible Business roles can
provide subject matter expertise and work with our engaged
local teams to define and deliver meaningful changes as part of
our ESG agenda.
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Sustainable business continued
2
Social
Diversity and inclusion
Diversity and inclusion
are at the centre of our
social agenda.
As a professional services company that depends on its ability to
attract and retain talented people, we regard our standing on
issues of diversity and social inclusion as critical to our long-term
success. Ensuring that our teams reflect the communities in
which we operate and that all employees are empowered to thrive
in an inclusive environment are the ultimate aims of Diversity &
Inclusion (“D&I”) at Alpha.
Alpha is an equal opportunities employer that is committed to
providing a diverse, open and inclusive workplace. Our policy
is therefore to ensure that all job applicants and employees are
treated fairly and on merit regardless of background, experience
and any structural disadvantages an individual may have faced.
We consider the benefits of diversity and inclusion from potential
hires through all levels of the Group.
Core principles of Alpha’s D&I policy:
— educate and involve people from all backgrounds to
understand and promote gender, sexual orientation,
disability, cultural, ethnic and socioeconomic diversity
through the organisation;
— retain Alpha’s meritocratic culture of rewarding talent
regardless of what makes them unique, while continuously
challenging our understanding of meritocracy;
— improve the diversity of both our applicant pool and the
Alpha team at all levels;
— support external initiatives and organisations that raise
the profile of under-represented groups in business; and
— contribute to a positive environment for under-represented
communities at Alpha.
Achieving greater diversity across Alpha’s teams requires us to
make a sustained effort over a long period to change our culture,
policies, governance aspects and processes where appropriate.
Our work in this area historically has focused on issues of
inclusion through internal awareness raising, building allyship
and educational events and programmes. These involve a large
number of Alpha colleagues, who contribute voluntarily across
six networks:
1. Ethnic and cultural diversity
2. Social mobility
3. Gender equality
4. Wellbeing
5. Disability confidence
6. Pride
Alpha is proud that our people are passionate about different
inclusion agendas and work hard to be effective allies. However,
as the Group has grown, so too has the need for Alpha to develop
and progress its D&I work. A key element of this plan has been
our decision to hire a full-time Global Diversity & Inclusion Manager
to structure our initiatives, provide further awareness and subject
matter expertise and focus on impactful changes across the business.
As we continue to recognise the importance of a fairer and equal
society, we have focused on data collation and are in the process
of rolling out an enhanced global equal opportunities survey,
which we have worked on with a specialist third party, Empowered.
The results of this updated data collection exercise will enable us
to assess the Group’s diversity profile now and on an ongoing
basis, both to identify relevant strategies and approaches and to
support reporting requirements (including our SASB disclosure)
across different social indicators. In continuing to improve our
D&I initiatives, and creating relevant goals and reporting on this,
we intend to begin setting diversity targets for the Group during
the course of FY 24 and report our gender pay gap data.
The key focuses of our corporate D&I agenda are:
1. Data collection: to identify priority areas, inform updates
to policies and practices, and enable reporting.
2. Diversity and inclusion initiatives and approaches: to ensure
we have the right governance, actions and tracking processes
to assess how we hire, retain and develop our employees. In
preparing to set targets, we are ensuring we understand best
practices and promote awareness and engagement globally.
3. Reporting: to comply with required reporting and to provide
disclosures, such as the SASB report, that explain our
intentions and actions.
Annual Report & Accounts 2023
37
Community and social responsibility
We prioritise community and
our social responsibilities in
all places that we operate.
We take very seriously our social responsibilities and the impact
we have in the communities in which we operate. We promote
ethical conduct, social responsibility and a corporate culture that
values fairness and human rights at all times.
Alpha’s vision and activities in this area are executed mainly
through the work of our internal CSR team, which is made up
of employees from the UK, North America, Europe and APAC,
working on a voluntary basis, while supported by the Responsible
Business team.
Our community focused activities include fundraising, pro bono
consulting, volunteering and networking, and our main Group-wide
CSR initiative under this heading is our Charity of the Year programme.
In FY 23, Alpha’s Charity of the Year was Cities for Children,
which helps children living in poverty and without education in
Pakistan’s cities.
In FY 24, aware of our growing size and structure we have
updated our approach. Instead of one global charity of the year,
Alpha’s regional businesses will select charities with which to
work in the year ahead, enabling the teams to focus their efforts
locally and maximise their collective impact on organisations and
initiatives that have a strong local resonance. We look forward to
providing more information about our FY 24 Charity of the Year
programme as part of the Sustainability Report later this year.
Alpha’s CSR policy and priorities:
— understanding and reducing our emissions;
— seeking to minimise our impact on the environment over
the long term;
— promoting a good work/life balance: encouraging flexible
working patterns and parental leave allowance;
— working with ethical suppliers and local businesses which
have strong social and environmental values;
— commitment to the delivery of modern human rights;
— ensuring that our employees can participate in voluntary
charitable and community based activities;
— identifying pro bono consulting and project work that our
teams can support on a voluntary basis; and
— providing a framework for charitable fundraising
and payroll giving.
Suppliers
As part of our role as a responsible firm we ensure that our
supplier relationships are in line with legislation and best
practices. We assess the policies of our suppliers in areas such
as social policies, employee wellbeing and, in the UK, payment
of the Living Wage.
Modern slavery
We are committed to combating and preventing modern slavery,
human trafficking and exploitation. We have procedures and
policies in place throughout our own business and our supply and
procurement chains to support this. A copy of these can be found
on our website at alphafmc.com. These processes are reviewed
annually, and Alpha’s Modern Slavery Statement is ultimately
approved by the Board.
alphafmc.com
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Strategic Report 38
Annual Report & Accounts 2023
Strategic Report
Sustainable business continued
3
Environment
We are committed
to understanding
our environmental
impact and combatting
climate change.
Alpha is proud of its environmental
work and is committed to minimising
our environmental impacts over the
long term. Enhancing data collection
about our energy usage and emissions
is an important first step as we prepare
to make more climate-related
disclosures and develop Alpha’s
climate transition roadmap.
As a professional services firm, Alpha’s business model does
not have a major impact on the environment, compared to higher
emitting sectors. However, as an environmentally responsible
business, Alpha is committed to minimising its environmental
impacts and combatting climate change. Moreover, we recognise
the importance of reporting the Group’s environmental impacts to
help investors evaluate non-financial risks within their portfolios –
and we therefore keep our reporting outputs and approaches
under continual review.
Annual Report & Accounts 2023
39
Our people: case study
Chris Govier
Global Sustainability Manager
I joined Alpha in August 2022 as our first Global
Sustainability Manager in the Responsible Business
function, with a mandate to help implement the core
sustainability initiatives of an ESG roadmap that ensures
a positive impact over the long term. There has already
been some fantastic existing sustainability work by
consultants in the Alpha Group, which continues with
my support, and we are ensuring that there are exciting
opportunities for the teams to be involved in meaningful
sustainability projects. In our first Sustainability Report,
which will be released later in FY 24, we will set out the
direction of travel for Alpha and share the Group’s ESG
strategy pillars.
As a subject matter expert in ESG, sustainability and
climate change, Alpha has been a receptive and engaged
organisation to work for. Across the Group, I have been
warmly welcomed and empowered by senior leaders to
educate and engage people on what sustainability
means to them.
We continue to report our energy usage and greenhouse gas
(“GHG”) emissions. In the year, we have reviewed how we best
position ourselves to create emissions baselines and analyse our
GHG emissions globally. We are now working with a third party
(Normative) to support our GHG data collection methodology,
analysis and understanding.
Alpha’s Global Sustainability Manager oversees our environment
and climate-related initiatives, notably our work on carbon
reporting and reduction. Through this work, we continue to report
our energy usage and GHG emissions, which we have done since
our FY 20 Annual Report. Our Streamlined Energy and Carbon
Reporting (“SECR”) Statement can be found on pp 40-41
As we develop our data collection and analysis methodologies
to support TCFD reporting and plan for setting a net zero target,
we will review and where necessary update and enhance our
emissions calculation and disclosure. This may include bringing
new categories into scope that we consider appropriate for
assessing the impacts of our business model, geographic reach
and professional services profile. The most likely area of change
is in our scope 3 emissions as we review the materiality of our
supply chain, which could increase the total emissions on which
we report. We will transparently report and explain any changes.
While we intend to continue offsetting for the foreseeable future,
we will work to set out our overall reduction plan. Our enhanced
processes will facilitate validations and enable us to move towards
setting science-based targets under SBTi. Our intention is to set a
net zero timeline during the course of FY 24.
The key focuses of our environmental agenda are:
1. raising awareness: increasing awareness within Alpha of our
current global carbon footprint and the environmental effects
of our activities, such as plastic waste, and changing
behaviours to become more environmentally aware;
2. improving data capture processes and analysis methodologies
to enhance our climate-related reporting and disclosures,
and support our decision making on climate-related actions;
3. reducing our footprint: developing and implementing
measures to reduce our carbon footprint, whilst considering
our commitments to fulfilling client relationships and service
delivery; and
4. emissions offsetting: offsetting our unavoidable GHG
emissions globally using recognised and certified offsetting
projects, with a long-term net zero vision in mind.
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Strategic Report 40
Annual Report & Accounts 2023
Strategic Report
Sustainable business continued
4
ESG disclosure frameworks
and approaches
We have been making
ESG-related disclosures
since Alpha’s FY 20
Annual Report.
Alpha complies fully with all current
applicable ESG regulation, which
includes providing the following ESG
reporting and disclosures:
— energy use (GHG) reporting (UK);
— Modern Slavery Act;
— UK Companies Act and Climate Change Act; and
— governance, risk and compliance (“GRC”) requirement for a
reporting framework – Alpha has deemed the Sustainability
Accounting Standards Board (“SASB”) to be the most
appropriate disclosure framework for our organisation
and industry.
To provide further structure to its information sharing about ESG
matters, Alpha also aligns with the Carbon Disclosure Project
when engaged by clients.
alphafmc.com
Looking ahead, we will continue to evolve our governance and
disclosures to facilitate transparency around our objectives,
targets and progress. Linked to this, we intend to provide a
separate Sustainability Report during the course of FY 24, which
will create further transparency and confidence about Alpha’s
ESG agenda, targets and performance.
We are focussing on readiness to adopt the TCFD framework
and we are in the process of signing the UN Global Compact,
which openly commits us to continuing to integrate sustainable
practices into our Group operations.
SECR
Alpha has made significant efforts to improve the quality and
accuracy of data related to its carbon emissions, both to support
transparency for its stakeholders and to ensure a strong foundation
from which to base and measure its net zero progress in the
future. Each year, Alpha aims to have a more comprehensive
approach to measuring its environmental impact, seeking to
reduce assumptions and align our approach with the GHG
Protocol Corporate Reporting Standard methodologies.
For FY 23, Group emissions across scope 2 and scope 3 are
3,156.3 tCO2e, with an intensity of 13.8 tCO2e per £m revenue.
This larger increase than in previous years highlights a
combination of factors that include:
— the considerable growth of our business as we expanded
in headcount along with strengthening our client relationships
in all regions;
Annual Report & Accounts 2023
41
— the macro-environment and the influence of the pandemic
significantly reducing and limiting travel in FY 21 and FY 22;
— FY 23 client and Group operations in regards to travel
rebounding; and
— our ongoing efforts to improve the quality of our emissions
data analysis and reporting.
In anticipation of the next reporting period, we are in the process
of adopting the recommendations of the TCFD, which requires
alignment with the GHG Protocol methodologies. To facilitate this,
we have used a third-party platform, Normative, to calculate and
confirm our emissions. Spend-based emissions factors have
been applied while we are still improving our activity data, which
has increased the amount of data we can report on and,
consequently, the emissions reported for the year.
We are dedicated to our sustainability goals and will continue
to identify and implement measures to mitigate and offset our
environmental impact in the coming years. We will continue to
work on energy efficiency and pursue a focus on using renewable
energy throughout the Group’s offices wherever possible. We will
also look to ensure that our environmental objectives are reflected
in our supply chain, by engaging with our suppliers, and we will
consider appointing external providers where appropriate to audit
our broader methodology and approach. While we confirm an
intention to reduce our carbon footprint overall, the increase in
emissions reflects our commitment to transparent and accurate
reporting while continuing to improve methodologies.
Also, in line with GHG protocol, travel includes client travel where
it has been purchased by Alpha but charged back to the client.
We therefore remain mindful of the potential impact of our clients’
intentions around travel in this context and ensuring that we
estimate reasonably how this may evolve as we continue to
deliver client projects across our regions.
Scope
Description
Scope 1
Direct energy emissions – of which the Group does not have any to report.
Scope 2
Indirect energy emissions, including purchased electricity and heat throughout the Group’s operations.
Scope 3 Other indirect energy emissions that occur in the Group’s value chain through business travel and transportation.
SECR table
Scope
Activity
2
3
Scope
2
Intensity metrics
Scope
3
Notes
FY 23 tCO2e
FY 22 tCO2e
FY 21 tCO2e
Purchased heat
Purchased electricity
Total
67.7
32.5
Global
excl. UK
42.7
30.7
UK
25.0
1.8
Total
4.8
15.5
Global
excl. UK
3.0
12.4
UK
1.8
3.1
Flights
1,125.7
369.8
755.9
333.7
150.5
183.2
Public transport
1,566.7
655.8
910.8
Taxis/car mileage
89.1
36.3
52.8
12.3
22.3
Working from home
274.7
111.4
163.3
164.8
9.4
10.7
68.1
2.9
11.6
96.7
Total
3,156.3 1,200.0 1,956.3
553.4
243.6
309.8
141.8
Total
2.9
10.5
19.1
0.6
1.4
107.3
Global
excl. UK
2.3
8.2
12.4
0.5
1.2
52.6
77.2
UK
0.6
2.3
6.7
0.1
0.2
54.7
64.6
FY 23 MWh
FY 22 MWh
FY 21 MWh
Activity
Total
UK
Global
excl. UK
Purchased heat
358.6
122.5
236.1
Total
65.8
UK
50.1
Purchased electricity
221.5
80.2
141.3
158.7
104.9
Total
580.1
202.7
377.4
224.5
155.0
Global
excl. UK
15.7
53.8
69.5
Total
88.2
157.8
UK
74.2
117.5
246.0
191.7
Global
excl. UK
14.0
40.3
54.3
Activity
£m of revenue
tCO2e per £m revenue
FY 23
FY 22
FY 21
Total
228.7
13.8
Global
excl. UK
Total
141.3
158.0
13.8
3.5
UK
87.4
13.7
Global
excl. UK
85.9
3.6
UK
72.1
3.4
Total
98.1
1.4
Global
excl. UK
44.6
1.7
UK
53.5
1.2
1
2
3
4
Alpha does not have any offices where it owns or controls the boilers, but rather purchases heat from each building’s management; hence the consumption
of grid-supplied gas is classed as scope 2 emissions and the associated conversion factor has been used.
Normative, our third-party provider, has used Exiobase, BEIS, Defra, Ecoinvent and other sources for emissions factors. Alpha FMC plc supplied the working
from home calculation following the EcoAct Homeworking Emissions Whitepaper (2020).
Where we have not been able to obtain activity data we have used the floor space of our offices to calculate energy usage in line with the GHG Corporate
Reporting Methodology.
Where km travelled have not been recorded in our expense systems for travel receipts, we have used a spend-based methodology in line with the GHG
Corporate Reporting Methodology.
alphafmc.com
Strategic Report 42
Annual Report & Accounts 2023
Strategic Report
Chief Financial Officer’s report
John Paton
Chief Financial
Officer
Alpha has delivered another year of
strong growth, with net fee income
up by 43.9% and adjusted EPS
increasing by 36.4% in FY 23. The
Group has delivered double-digit
growth across all geographic regions
on an organic basis, with the
strongest growth in our key North
America region. The balance sheet
remains robust, with good cash
generation, and the Group ends
the year well positioned.
IFRS and alternative performance measures (“APMs”)
A range of results metrics are set out to demonstrate the Group’s
performance. These include measures presented in accordance
with International Accounting Standards (“IFRS”) and APMs,
which are provided to allow further understanding of the
underlying operating performance of the Group across financial
periods. The difference between IFRS and APMs arises from the
adjusting items, as set out in detail in note 4 to the consolidated
financial statements. The APMs presented are not considered
superior to IFRS measures; these should be considered together
for a full understanding of the performance of the Group.
The Group’s APMs have been presented consistently over time
to provide meaningful trend information, and there is no change
to their composition in FY 23.
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. The Board uses
adjusted profit measures to assess the performance of the Group
because it considers these measures aid understanding of the
underlying profitability of the business and allow for comparability
between periods. Note 4 to the consolidated financial statements
sets out further details of Alpha’s APMs and a full reconciliation to
the relevant statutory measures. These adjusting items increased
alphafmc.com
in the year, albeit by less than the underlying profits, reflecting an
increased earn-out and deferred consideration expense and a
higher share-based payment charge, partially offset by lower
intangible amortisation and acquisition-related costs.
As noted above, the share-based payment charge and related
social security taxes are excluded from adjusted profit measures.
The primary reason for this exclusion is to allow for comparability
between periods, as the Group’s share option plans were
established on AIM admission and have not yet fully settled into a
regular cycle of awards and vesting. The accounting treatment of
the Group’s share-based payments requires the charge for each
share option award to be recognised over the vesting period,
resulting in significant growth in the charge year on year as the
Group’s share option plans mature post-IPO. A more regular share
option award cycle is anticipated in the coming years, although the
charge is also subject to external factors, such as the Group’s
share price, over which the Directors have less day-to-day control.
If no adjustment was made for the share-based payment charge,
adjusted EBITDA would grow by 39.7% to £38.6m (FY 22: £27.7m),
at a margin of 17.0% (FY 22: 17.5%). Note 22 to the consolidated
financial statements sets out further details of the employee
share-based payment expense calculation under IFRS 2.
Annual Report & Accounts 2023
43
We are delighted with this year’s strong growth and
performance across all of the Group’s geographic regions,
mostly on an organic basis.”
Revenue
Net fee income
Gross profit
Operating profit
Adjusted EBITDA
Adjusted EBITDA margin
Adjusted profit before tax
Profit before tax
Adjusted earnings per share
Adjusted diluted earnings per share
Basic earnings per share
12 months to
31 March
2023
£228.7m
£227.2m
12 months to
31 March
2022
£158.0m
£157.8m
£80.4m
£28.6m
£46.6m
20.5%
£44.0m
£25.8m
29.27p
27.37p
15.82p
£59.4m
£17.8m
£33.9m
21.5%
£31.8m
£14.9m
21.46p
20.23p
7.69p
Change
44.8%
43.9%
35.4%
61.1%
37.5%
(100 bps)
38.6%
73.2%
36.4%
35.3%
105.7%
Group results
I am delighted to report another strong year of growth for the
Group across all regions, both organically and including Lionpoint,
which was acquired in the previous year.
Revenue
The Group delivered 43.9% net fee income growth in the year,
including a 39.6% organic contribution. Revenue also grew
44.8%, including increased rechargeable client expenses,
compared to the prior year.
21.3% growth overall. This growth was delivered across the region
with the Europe team generally well deployed, complemented by
further good progress growing the APAC business.
The UK business grew net fee income 20.9% overall and 19.3%
organically. This strong UK organic performance benefited from
solid client demand across the full range of Alpha practices,
including substantial contributions from our established Investments,
Client & Digital and Operations teams. Within the UK results, Alpha’s
data solutions business, Aiviq, increased its client base and revenue
in the year, and continues to focus on building further scale.
Overall, the Group’s revenue and net fee income growth reflects
average consultant headcount growth and average consultant
utilisation returning to target levels as planned, alongside improving
consultant day rates overall and some assistance from currency
translation. Revenue and net fee income grew in all geographic
regions, mostly on an organic basis with the remaining inorganic
contribution from the acquisition of Lionpoint in the prior year.
Alpha continues to support clients in some of the largest, most
challenging and interesting projects across the industry. Alpha’s
revenue is driven by continuing strong demand in its established
practices, as well as progress in newer areas. Alpha’s Insurance
and Technology Consulting businesses also made good progress
in the year by winning a number of projects both with existing and
new client relationships.
North America delivered the strongest regional growth, ending
the year as the largest geographic region in the Group by net fee
income. In the year, net fee income grew 94.2% overall and 83.3%
on an organic basis. On a constant currency basis North America
net fee income growth was 71.7% overall. Lionpoint continued to
perform well in the year and contributed significantly to North
America net fee income, adding a further 51 consultants to its
North America team in the year. The North America business
overall continued to expand its domestic client base, as well as
successfully capturing client demand through a number of
cross-selling opportunities with its existing clients. The strongly
growing consultant team was well deployed, while also improving
consultant day rates.
Europe & APAC also delivered another year of strong growth. The region
grew net fee income by 26.0% on the previous year, 24.4% on an
organic basis and, on a constant currency basis, the region reported
Alpha’s growth was supported by further investment in global
consultant headcount. The number of consultants reached 994
by the year end (FY 22: 760). Of this 234 consultant team
increase, Lionpoint added 87 to the Group globally.
Group profitability
Group profits also grew strongly. Group gross profit was £80.4m
(FY 22: £59.4m), increasing by 35.4% over the previous year, and
28.7% on a constant currency basis.
Gross profit margin was 35.4% (FY 22: 37.6%), mainly reflecting
the easing of utilisation to target levels, alongside continued
investment in our consultants while maintaining competitive
remuneration packages, partially offset by improving consultant
day rates across all regions.
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Strategic Report 44
Annual Report & Accounts 2023
Annual Report & Accounts 2023
45
Strategic Report
Chief Financial Officer’s report continued
deferred consideration expenses and share-based payment
charges. Further detail of these adjusting items is set out in note
4. If no adjustment had been made for the share-based payment
charge, adjusted EBITDA would have grown by 39.7% to £38.6m
(FY 22: £27.7m), at a margin of 17.0% (FY 22: 17.5%).
Currency
Currency translation had a noticeable effect on net fee income
and profits during the year. Through the year, British pound
sterling averaged $1.21 (FY 22: $1.37) and €1.16 (FY 22: €1.18),
which, with other similar currency movements, resulted in an
overall favourable net currency effect on net fee income of
£12.4m. On this basis, North America net fee income growth
would have been 71.7% and Europe & APAC would have reported
21.3% total net fee income growth.
Overall, the Group’s net fee income would have grown 36.1% to
£214.8m on this constant currency basis. On a similar basis the
Group’s gross profit would have been £76.4m and would have
grown 28.7% on a constant currency basis. With British pound
sterling strengthening towards the end of the second half, this
currency benefit has begun to unwind and continues to do so
into FY 24.
Net finance expense
Net finance costs remained flat in the year at £2.9m (FY 22: £2.9m),
primarily comprising non-underlying finance expenses relating to
acquisition consideration discount unwinding, as set out in note 4
and note 6.
Taxation
Adjusted profit before tax rose 38.6% to £44.0m (FY 22: £31.8m)
after charging depreciation, amortisation of capitalised
development costs and net underlying finance expenses.
Statutory pre-tax profit rose 73.2% to £25.8m (FY 22: £14.9m)
after charging adjusting items and non-underlying finance expenses.
The Group’s taxation charge for the year was £7.8m (FY 22: £6.4m),
reflecting the growth in taxable profits and the blended tax rate
of the increasingly international jurisdictions in which the Group
operates, as set out in note 8. The Group’s cash tax payment
in the year was £13.3m (FY 22: £4.8m), reflecting the growth in
profits and the Group moving to a quarterly tax payment cycle
in North America.
For further taxation details, see notes 8 and 9 to the consolidated
financial statements. Adjusted profit after tax is shown after
adjustments for the applicable tax on adjusting items as set out
in note 4.
Acquisition activity
Since the acquisition of Lionpoint in May 2021, the Group has
focused on the successful integration of its services and the team
into the Alpha Group, and has seen the benefits of the increased
service offering to the Group’s enlarged client base. Lionpoint has
integrated into the Group well and grown since acquisition, with
strong further expansion of the team.
After the year end, on 1 May 2023, the Group announced the
acquisition of Shoreline for a maximum consideration of AUD
13.0m (£6.8m). Shoreline enables Alpha to build upon a robust
platform in APAC and ensures that the Group can take advantage
of opportunities in one of the fastest growing regions in the asset
and wealth management sector. We are pleased to welcome
Shoreline into the Group and look forward to further regional
growth. Please refer to note 27 for further detail.
Earnings per share
Adjusted EPS improved 36.4% to 29.27p per share
(FY 22: 21.46p) and adjusted diluted EPS increased 35.3% to
27.37p (FY 22: 20.23p). After including the adjusting expense
items, both basic and diluted EPS more than doubled to
15.82p (FY 22: 7.69p) and 14.79p (FY 22: 7.25p), respectively.
As at 31 March 2023, 9,996,040 share options (FY 22: 9,504,379)
remained outstanding, with 2,108,886 share options exercised
during the year, as share option awards begin to settle into a
normal cycle of awards and vests. See note 22 for further detail.
Cash flow and net funds
Net cash generated from operating activities was £30.6m
(FY 22: £33.5m) and, after adjusting for employment-linked
acquisition payments and acquisition costs, was £32.9m
(FY 22: £36.0m). Working capital remains well managed with
debtor days reducing again this year. Operating cash generation
in the year reflected the payment of last year’s increased profit
share, given the strong FY 22 performance, as well as additional
North America tax payments as that business grows and moved
to quarterly payments in that region. The 74.0% adjusted cash
conversion rate from adjusted operating profit (FY 22: 112.1%)
reflects these specific cash outflows.
During the year, the Group made further payments of £22.6m
relating to deferred and contingent acquisition consideration,
including £1.8m of employment-linked amounts. Final Axxsys
and Obsidian payments were settled in full in the year. Please
see note 13 for further details.
The Group also provided £1.1m funding to Alpha’s employee
benefit trust (“EBT”) to purchase 266,922 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.
The Group’s income taxes paid totalled £13.3m (FY 22: £4.8m),
reflecting the Group’s profit growth, as well as the move to
quarterly tax payments in North America. Net interest paid was
£0.1m (FY 22: £0.3m), reflecting the cost of maintaining and
periodically drawing the Group’s revolving credit facility (“RCF”) in
the year to manage the Group’s ongoing currency requirements,
offset by interest income from cash balances held.
Dividends paid increased in the year to £12.8m (FY 22: £8.7m),
reflecting the Group’s dividend policy and the increase in the
Group’s adjusted profit after tax.
At the year end, the Group’s cash position was £59.2m (FY
22: £63.5m). This strong balance sheet provides Alpha funding
flexibility to continue to deliver on its acquisition strategy.
Group profitability continued
North America maintained a consistent gross profit margin of 32.9%
(FY 22: 32.7%) as the North America team grew substantially and
successfully normalised average utilisation back to target levels,
while balancing costs and consultant rates progress. The UK
business grew gross profit well and its 40.2% gross margin (FY
22: 42.5%) similarly reflects utilisation returned to target levels and
further rates progress ongoing. Europe & APAC also experienced
good gross profit growth, with a margin of 31.4% (FY 22: 34.5%)
reflecting utilisation and continued investment in the business,
partially offset by consultant day rate progression.
Adjusted administration expenses, as detailed in note 4, increased
by 32.5% or £8.3m to £33.8m (FY 22: £25.5m) in the year. Discretionary
spend returned to normalised levels following COVID-19, for
example across staff and client entertainment and travel spend,
and in recruitment spend as we grew our consulting teams
globally. We also continued to invest in the Group’s central team
through the year in areas such as finance, HR, legal, risk and
responsible business, alongside the Group’s expansion.
Including the adjusting expense items, which also rose, administration
expenses increased to £51.7m (FY 22: £41.6m) on a statutory
basis. The adjusting expense items, set out in note 4, increased in
the year to £15.8m (FY 22: £14.4m), reflecting increased earn-out
and deferred consideration and share-based payment charges,
partially offset by lower foreign exchange loss and acquisition
costs, which, in the prior year, mainly related to the acquisition
of Lionpoint.
The £0.3m (FY 22: £0.7m) acquisition costs include diligence and
legal fees incurred in connection with the Shoreline acquisition,
which completed after the year end in May 2023. The acquired
intangible asset amortisation charge was £4.6m (FY 22: £4.7m).
The share-based payment charge of £8.0m (FY 22: £6.2m)
continues to develop since Alpha’s share incentive plans were
established at AIM admission, with Alpha’s share price growth
and further new annual awards alongside relatively lower award
vests at this stage. Further detail of the share-based payment
charge is set out in notes 4 and 22.
The earn-out and deferred consideration charge of £2.5m
(FY 22: £1.4m) reflects employment-linked acquisition expenses
and two fair value adjustments. With Lionpoint’s continued strong
performance since acquisition and ongoing positive outlook, the
future performance assumptions have been uplifted to the maximum
earn-out payment for the final earn-out year in FY 24. This uplift is
partially offset by a scale-back fair value reduction in the liability
held for Obsidian as a lower, mutually agreed position was
reached with the original vendors, which was paid in full in the
year. Further details on the earn-out and deferred consideration
charges are set out in note 13.
The depreciation charge grew to £1.9m (FY 22: £1.2m) alongside
the growth of the Group, while the £0.2m (FY 22: £0.6m) amortisation
of capitalised development costs eased as the asset was fully
amortised in the year.
Adjusted EBITDA grew 37.5% to £46.6m (FY 22: £33.9m) and
adjusted EBITDA margin eased to 20.5% (FY 22: 21.5%), reflecting
the gross profit margin and the adjusted administration expenses.
Operating profit rose 61.1% to £28.6m (FY 22: £17.8m) after
charging the adjusting expense items, including earn-out and
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47
Strategic Report
Chief Financial Officer’s report continued
Statement of financial position
The Group’s net assets at 31 March 2023 totalled £149.3m
(FY 22: £132.7m). This increase principally arises from other reserves
movements including retained profits, foreign exchange gains on
overseas assets and additional share-based payment reserves.
The Group continues to maintain a strong financial position.
The Group’s non-current assets movement principally results
from foreign exchange gains on goodwill balances and increased
right-of-use assets on new leases entered into by the Group,
partially offset by ongoing amortisation charges for the year.
Working capital remains well managed. Trade and other
receivables balances increased in FY 23 through the ongoing
growth in the business. Debtor collections continued to be strong
during the year with debtor days falling again from the prior year.
The Group ended the year with £59.2m (FY 22: £63.5m) of cash.
The Group’s £20.0m RCF was undrawn at 31 March 2023 and,
alongside cash balances, ensures the Group’s funding flexibility.
Further details are set out in note 6. Following the year end, the
Group refinanced and upscaled its RCF to a £50.0m facility to
provide funding flexibility in line with the Group’s growth, as set
out in note 27.
Trade and other payables balances increased, representing an
increased level of trade payables and accruals alongside the
Group’s growth. This includes higher profit share bonus accruals
reflecting the enlarged team and the year’s strong performance.
Total acquisition-related deferred consideration and earn-out
liabilities decreased in the year, reflecting Lionpoint deferred
consideration payments and final Axxsys and Obsidian payments,
partially offset by the increase in the fair value of the Lionpoint
earn-out liability and employment-linked consideration as well as
the unwinding of discounting in the year, as disclosed in note 13.
Dividends
The Board is very pleased with FY 23 performance. As a result,
the Board is recommending a final dividend of 10.50p per share
(FY 22: 7.50p), bringing the total for the year to 14.20p (FY 22: 10.40p),
in line with the Group’s policy to pay out approximately half of
adjusted profit after tax. After approval at the AGM in September,
this final dividend should be paid on 19 September 2023 to
shareholders on the register at the close of business on
8 September 2023.
Total shareholders’ funds
Total shareholders’ funds increased to £149.3m (FY 22: £132.7m).
The changes in equity reserves reflect profit after tax for the year,
currency movements on net assets held overseas, goodwill and
intangible assets, the addition of further share-based payment
reserves and the payment of dividends.
Officer and the Chief Executive 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 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.
The Board is delighted with the Group’s progress in the year,
while remaining cognisant of the potential risks and uncertainties
ahead. The structural drivers in the asset management, wealth
management and insurance industries, which will drive ongoing
demand for Alpha’s services, remain prevalent. We are confident
that with the quality of our people, our excellent market reputation,
and business opportunities to extend the service offering, we are
in a good position to navigate further challenges ahead.
It is unclear how long the current macro uncertainty and
recessionary environment, which include a lengthening sales
cycle and higher levels of competition, may prevail and how
precisely they may affect local and global markets. However,
Alpha continues to enjoy a good pipeline of new business
opportunities and resilient current trading 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 currently, the Group’s talented people,
widening range of service offerings and international footprint, and
long-term structural drivers of growth position the Group well.
As at 31 March 2023, the Company had 120,509,736 ordinary
shares in issue (FY 22: 118,707,336), of which no shares were
held in treasury and 6,274,380 shares were held in the Company’s
employee benefit trust to satisfy future option exercises
(FY 22: 6,216,501).
John Paton
Chief Financial Officer
22 June 2023
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 has been reviewed during the
year, the senior leadership team, including me as Chief Financial
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Risk management
The Group continually strengthens its risk management to reflect its
growing scale and the changing external environment. Its risk management
framework combines clear governance, robust processes and controls,
and a strong culture of risk awareness among all employees.
Overview
Alpha is exposed to a range of risks through its business activities
that could negatively affect its ability to execute its strategy, impair
its financial performance and damage the interests of its shareholders.
We categorise these risks under four broad headings – operational;
industry; financial; and environmental and social – and manage
them by ensuring we have a solid risk management framework in
place to identify, assess and govern risks.
The main objectives of the risk management framework are to
ensure that there is:
— a strong corporate culture of risk awareness and responsibility
embedded at all levels of the organisation;
— reduction of ongoing risk as far as possible, without unduly
affecting the Group’s competitiveness and flexibility;
— proactive identification and reporting of risk information,
with clear management and mitigation responsibilities; and
— provision of a suitable basis upon which the Audit and Risk
Committee and, ultimately, the Board can assess the effectiveness
of the Group’s risk management and internal controls.
Risk governance
Overall responsibility for risk monitoring and management within
Alpha’s risk management governance framework rests with the
Board, with assurance provided by the Audit and Risk Committee.
In conjunction with the Audit and Risk Committee, the Board
reviews the key risks facing the business at least once a quarter
and decides whether they should be avoided, mitigated or tolerated.
The Group follows a “top-down” and “bottom-up” approach to
monitoring and managing risks. Top-down strategic risk
management is directed from the Board and applied through the
actions of the executive team and wider senior management
within operations. Bottom-up operational risk management is
implemented through the engagement, risk awareness and
corporate responsibility of all Alpha employees.
At the beginning of FY 23, the Group appointed a Global Head of
Risk to further enhance the management of its risk framework,
and provide additional oversight, reporting and monitoring as the
Group continues to pursue its growth strategy, diversify and expand.
Risk assessment
The Group reviews and closely monitors risk exposures, considering
their probability, potential impact and any management actions
required to mitigate them. The Group’s main tools for managing risks
are its Risk Register and its Statement of Risk Appetite.
Alpha’s Risk Register details risks that could have a material
impact on the Group’s performance, financial strength or
reputation. It is overseen by the Group Coordination Committee
and maintained using updated inputs from the core business
functions. Risks are assessed using a scoring system that
captures the likelihood of their occurrence and the impact that
would have on the Group. This approach allows the Group to
review risks, identify trends and respond.
The Statement of Risk Appetite defines the type and amount of
risk the Group is willing to tolerate in order to achieve its strategic
objectives. The Group assesses whether it is operating in line with
its stated risk appetite by monitoring movements in its key risk
indicators, which are incorporated in the Board’s risk reports.
Group risks are reviewed, discussed and challenged first by the
executive team through the Group Coordination Committee. The
risks that the Group Coordination Committee agrees are most
material are then escalated to the Board, with reporting decisions
documented so that the assessment and escalation approach can
be reviewed by the Audit and Risk Committee as part of its
assurance responsibilities. In exceptional circumstances, where
the risk is of a sensitive business nature, it may be raised on an
individual basis with the Chief Executive Officer, who can present
that risk directly to the Board.
While the Group Strategy Committee considers the strategy and
direction of the Group in conjunction with the Board, the Group
Coordination Committee encompasses all the areas in which
business-level risk may arise or apply, including finance, IT &
infrastructure, HR, business development and service delivery. The
executive teams of these committees have a direct reporting line into
the Board, principally via the Chief Executive Officer. However, any
member of the Group Strategy Committee and Group Coordination
Committee can be invited to present their risk management
activities, including risk escalation and risk monitoring processes.
The most material current risks to the Group are presented in the
Annual Report as the principal risks and uncertainties (see pp
50–53). The Board confirms that, having applied the approach
described above, a robust assessment of the principal risks and
uncertainties has been carried out.
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Risk management continued
Risk management governance
Corporate
accountability for risk:
— Assesses and reports
on principal risks
and uncertainties
— Agrees the risk appetite
— Agrees the key
risk indicators
— Determines strategic
action points
Executive
responsibility:
— Monitors external
environment
— Oversees business-level
risk management activities
— Monitors key risk
indicators
— Oversees strategic
action points
— Ownership of the
risk register
Operational risk
management:
— Monitor operating
environment
— Identify, assess and
mitigate operational risks
— Implement strategic
action points
— Execute policies, training
and controls
Board of
Directors
Audit and Risk
Committee
Group
Coordination
Committee
Group
Strategy
Committee
Corporate assurance:
— Oversight of risk
processes and procedure
— Internal control
— Assesses effectiveness
of risk management
framework and reporting
Strategic risk
management:
— Oversees definition of
the strategy
— Monitors execution to
strategic objectives
— Identifies and addresses
risk to business strategy
and direction
Business
units
Annual Report & Accounts 2023
49
Improvements to the risk management approach
The Group continues to review its risk management framework
every year and updates it to reflect changes in the Group’s risk
profile and its operating environment. During the past year, a
number of enhancements were introduced to Alpha’s risk
management framework. These include:
— appointment of a Global Head of Risk to support the
management and evolution of the Group’s risk management
framework and associated policies, training and awareness;
— following a number of business governance changes and
enhancements, the risk function has focused on inducting new
individuals in key roles into Alpha’s risk framework and
responsibilities, including the Chief Executive Officer, global
heads of Insurance Consulting, Technology Consulting and
Asset & Wealth Management Consulting, and incoming
management committee members;
— continuing to build positive engagement and nurture a risk
aware culture across the Alpha business through relevant
communications, attending Company meetings to spotlight
and support risk topics, and knowledge sharing on
business-related matters, including client service delivery
and new location due diligence;
— based upon the Group’s geographic expansion and commitment
to work with clients globally, selection and implementation of a
third-party risk tool to support risk assessment, awareness and
location training for consultants’ travel; and
— further development of governance with key operational teams
such as Legal & Corporate Affairs, IT Operations and Responsible
Business to ensure regular touchpoints, proactive risk-based
discussions and a consistent approach to business support that
successfully balances corporate growth and development with
the consideration and management of key risks.
Financial risk management
The Group has established internal control and risk management
structures in relation to the process for preparing the consolidated
financial statements. The key features of this framework are:
— the Group’s executive team understands the importance of
internal control and of adhering to the principles of risk
mitigation on a global, operational basis;
— the Audit and Risk Committee has primary responsibility for
reviewing the quality of internal controls and checks, to ensure
that the financial performance of the Group can be properly
measured and reported on;
— the Chief Financial Officer and finance team regularly monitor
and consider developments in accounting regulations and best
practice in financial reporting and, where appropriate, reflect
developments in the consolidated financial statements;
— the Group’s results are subject to various levels of review within
the Group’s finance and management teams;
— both the Audit and Risk Committee and the Board review the
draft consolidated financial statements;
— the Audit and Risk Committee receives reports from senior
management and the external auditor on significant
judgements or estimates, changes in accounting policies,
changes in accounting estimates and other pertinent matters
relating to the consolidated financial statements; and
— the annual financial statements are subject to external audit.
Environmental and social risk
The Group recognises the growing concerns and risks related to
climate change, and is committed to doing its part in addressing
this challenge. This focus includes monitoring, improving and
acting upon Alpha’s carbon footprint and the Group’s wider
impact on the environment. The Group is also committed to social
risk management as it aims to be strong in corporate citizenship,
to enhance its reputation, to impact positively the communities in
which it operates and to continue to build trust with its stakeholders.
Within the environmental and social risk category, the Group
monitors a number of individual risks including transition risk,
which is the risk inherent in any changing strategies, policies or
investments as part of the journey towards “net zero” or other
societal targets. The Group specifically acknowledges this area
and recognises that the Financial Stability Board (“FSB”) puts
transition risk on a par with physical climate risk.
In the context of environmental challenges, the main focus for the
Group is meeting the requirements of additional regulation and
reporting, their respective timelines and the ability to invest in
greener technologies. As the Group transitions to meet these
challenges, it will pay close attention to risks that may arise, most
specifically to areas where its physical climate and environment
priorities may have to be balanced with aspects of the social
agenda, for example activities that support employees and
wellbeing. The Group also recognises that these factors may
impact consumer behaviour and bring potential challenges as
well as opportunities, which must be considered and assessed.
Market-related and inflation risk
Continuing shifts in the macro-economic environment, including
elevated inflation, rapid increases in interest rates and the
possibility of economic downturn, are closely and proactively
monitored by the Group. Macro-economic conditions are
captured as a principal risk.
Inflation risk remains a material consideration and the Group
carefully considers the situation to ensure that costs, including
employee costs, are managed and offset by increases in client
rates. It continually benchmarks Alpha’s compensation levels
against the industry to ensure it can reliably attract and retain
the best talent.
Alpha’s global and regional heads of business, and the entire
executive team, monitor the markets closely with a view to
identifying and understanding any factors that might lead to
different levels of demand or competition in the market, and to
be able to respond accordingly. At the start of FY 24, we are
cognisant of increased levels of competition in the global consulting
market and a lengthening sales cycle, which we expect to be the
market backdrop in the short term. Against this backdrop, Alpha
continues to manage appropriately its discretionary spend and
hire selectively.
Unstable financial markets and deteriorating economic conditions
can have negative effects on Alpha’s clients and potential clients.
The Board and Alpha’s executive team therefore remain very alert
and monitor the market environment – globally and in all regions
– closely. However, they are confident that demand for Alpha’s
services and the long-term structural growth drivers in its markets
remain very strong.
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Principal risks and uncertainties
The table below outlines the principal risks and uncertainties faced by the Group. They are not the only
risks that may affect the Group, but they are the risks that the Board currently believes would have the
most significant impact on the Group’s strategy to achieve long-term profitable growth. There may be
additional risks that materialise over time that the Group has not yet identified or deemed to have a
potentially material adverse impact on the business and the business strategy.
Operational risk
The Group’s approach to minimising operational risk is to centralise relevant processes and oversight frameworks through the
leadership team, which includes the Group Managing Director, and global leads from Operations, IT & Infrastructure, HR, Responsible
Business, Legal & Corporate Affairs and Recruitment. Operational risks are mitigated accordingly through operational projects that are
designed to strengthen the control environment, manage the delivery of change effectively and protect Alpha’s competitive standing
with regard to people and quality of service.
Risk
Mitigating factors
1. People and resourcing
Failure to attract, incentivise
and retain the best people with
the right capabilities across all
levels and geographies.
2. Quality of service
Failure to maintain quality
of service on client
delivery engagements.
3. Data security
Risk of a security breach
leading to loss of integrity
or availability of core data.
— Uniquely attractive, meritocratic culture that places people at the heart of the business.
— Competitive, regularly benchmarked remuneration package including differentiating profit share or cash
bonus scheme.
— Equity participation offering through the management incentive plan for certain directors and senior management.
— In-house recruitment process, targeting top university graduates and experienced professionals.
— Comprehensive training and development programme, building consulting skills and industry knowledge.
— Broad and reactive support structure, including HR, individual mentors and external advice scheme.
— Clearly defined terms agreed up front, ensuring that each delivery framework is appropriate and the delivery
objectives are achievable.
— Clear senior individual responsibility and accountability for delivery on every engagement, with review from heads
of region.
— Internal service delivery function overseen by the Group Managing Director provides strong oversight and enables
early risk identification.
— Ongoing monitoring of client satisfaction and fulfilment of agreed delivery criteria through the Alpha engagement
lead, in addition to the Alpha client account owner, if also required.
— Close attention to client retention, reputation in the market and generation of re-sell and cross-sell opportunities.
— Comprehensive suite of information security policies and procedural controls to complement technical defences,
based upon best practices from the NIST framework.
— Adoption of industry-leading cloud security tools, with multi-layered controls around encryption, threat sandboxing,
data leak prevention, and social engineering protection.
— Intelligence and expertise led system monitoring and threat analytics function through a security operations centre
(“SOC”), for which Alpha leverages a qualified third party.
— Proactive annual testing of technical defences through external team exercises and internal phishing assessments.
— Regular promotion of good cyber hygiene across the global Alpha workforce with annual mandatory learning,
regular training campaigns and assessments.
— Appropriate due diligence, vetting and annual auditing of cloud providers to validate information security and
risk posture.
— Extensive cybersecurity insurance policy coverage.
Annual Report & Accounts 2023
51
Risk
Mitigating factors
4. Acquisition risk
Risk of failure of the Group to
select, complete and integrate
businesses that contribute
positively to the business model.
— Full acquisition due diligence and integration framework.
— Full business case required and built for every acquisition, subject to a number of checks and requirements.
— Detailed due diligence, analysis, planning and mitigation as part of the acquisition process, wherein a wide range
of factors are taken into consideration.
— The Group’s extensive experience of working with clients on high-profile acquisition and integration frameworks
(including key risk identification and mitigation approaches) is leveraged and refined through the Group’s own
acquisition activities.
— Dedicated integration project with workstreams across people, finance, IT and operations, products and
commercials for each acquisition.
— Continuous monitoring of business alignment, client satisfaction, performance and other KPIs.
— Clear and effective internal and external communications regarding acquisition and integration topics, overseen
by a member of the Group Coordination Committee.
Industry risk
The Group’s approach to minimising industry risk is to undertake a regular assessment of the market and its influencers, including
regulatory, political and structural change, and to maintain a close dialogue with market participants, such as clients, competitors
and industry bodies. This review is delivered through the Group’s defined corporate governance responsibilities, wherein the directors
manage those relationships on a day-to-day basis and communicate the key findings and perspectives to the Group Coordination
Committee and, in turn, to the Board of Directors.
Risk
Mitigating factors
5. Market strategy
Risk that the Group responds
inadequately to changing
market factors.
6. Strategic objectives
Risk that the Group fails to
meet its strategic aim to grow
the business.
— Heads of region and business practice leads are responsible for monitoring markets and client demand locally.
— Deep understanding of the markets is used to inform annual cycle of business planning and budgets,
and is tracked accordingly.
— Regular monitoring of the structural drivers within the marketplace, which include industry cost pressures,
growth in AUM and insurance policies, increasing regulation, technology breakthroughs, and an increased
client and market focus on ESG.
— Track record of assessing market conditions and drivers of change, and responding accordingly including the
implementation of relevant sector and client propositions across the investment management value chain.
— Business strategy review is assigned to the Group Strategy Committee to define, oversee and implement through
the heads of regions and practices.
— Business strategy is reviewed regularly (at least semi-annually) by the Group Strategy Committee and the Board
of Directors.
— Strategy informs annual business planning and budget, and is tracked accordingly.
— Strong visibility of growth opportunities and a roadmap to increase the business both organically and inorganically.
— Regular consideration of downside scenarios and readiness to apply relevant protective measures.
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53
Strategic Report
Principal risks and uncertainties continued
Industry risk continued
Risk
Mitigating factors
7. Macro-economic conditions
Risk that macro-economic factors
outside of the Group’s control
change, affecting its clients, their
demand for consultancy services and,
hence, the Group’s own performance
and financial position.
— Monitoring of the market to identify, and plan around, potential change in market conditions and volatility.
— Ensuring an effective, coordinated response to any macro-economic challenges that emerge.
— Flexible business model that is responsive to change and regularly reviewed.
— Record of identifying opportunities to provide consulting services and delivering successful projects in challenging
change conditions.
— Global nature of the business and range of business practices should reduce the risk of impact from volatility
in specific markets.
8. Political/regulatory environment
Risk that the Group’s business model
and strategy are materially impacted
by legal, political or regulatory
changes that restrict service offering
or access to markets.
— Diversification and expansion of service offering should reduce the particular impact of restrictions.
— Strategic geographical extension of business, overseen by the Board of Directors and executed by the Group
Coordination Committee.
— Regulatory, political and legal change horizon scanning, led by the Chief Executive Officer, in order to foresee
and plan appropriate responses.
— Dialogue with regulators, legal advisers and industry bodies.
— Regular review of the business model to ensure that it remains flexible and responsive to change.
9. Competitors
Risk that an existing competitor or new
entrant may over time be able to
achieve similar success and win work
from the Group’s existing clients.
— Monitoring of competitor positioning including Group client win/loss ratios.
— Proven ability to understand the structural drivers of the market, to innovate and develop the service
offering accordingly.
— Monitoring of the consulting market to assess any drivers of increased competition, including growth rates
and the link between demand and supply overall.
— Business strategy that focuses on providing a leading market proposition and gaining market share over time.
— Monitoring of and continual investment in key competitive differentiators:
— highly focused industry proposition, working exclusively in asset management, wealth management and
insurance industries;
— strong, increasingly global reputation amongst clients, with the very high quality of the team as a key differentiator;
— complementary technology and data solutions; and
— differentiating intellectual property and benchmarking data.
Risk
Mitigating factors
10. Client concentration
Failure to expand the client base or a
reduction in the number of key clients
due to consolidation in the industry,
including client concentration risk in
key relationships.
— Globally expanding team of consultants, able to attract new market entrants and new entities within existing
client structures.
— Growth objectives include increasing and diversifying the Group’s client base, and the Group regularly reviews
increase in client numbers (both organic and inorganic growth of client base).
— Regular monitoring of client concentration by revenues.
— Acquisition strategy that targets businesses with strong addressable client bases and cross-sell opportunity.
— Business strategy that includes extending the Group’s offering with new services and products, in order to cater
for different client segments.
11. Skills and subject matter expertise
Risk that over time the consulting
team does not maintain the right
expertise and skillsets to be able to
undertake a wide range of projects,
of any scale, across the marketplace.
— In-house recruitment process, targeting top university graduates and experienced professionals.
— Comprehensive training and development programme, which builds consulting skills and industry knowledge.
— Deep specialised industry expertise equips the Group to win and complete projects of all sizes and complexity.
— Proposition and delivery model structured around business practices and client segments, enabling any gaps
or weaknesses to be identified early.
— Business practices are led by directors who are experts in the area and are responsible for ensuring the right team
and skillsets when it comes to launching a new proposition, as well as monitoring expertise and skillsets over time.
— Continual review of win/loss rates as well as client satisfaction in delivery.
Financial risk
The Group’s approach to minimising financial risk is to manage utilisation, day rates, expenses and cash collection actively and closely.
The Group’s target is for client projects to be chargeable mainly on a time and materials basis, and to ensure that consultants’ time is
recorded and billed each month. A considerable amount of attention is paid to day rates and their alignment to budget, which are
reviewed and monitored by the heads of region and the Executive Directors.
Risk
Mitigating factors
12. Utilisation rates
Risk that utilisation rates, which drive
Group profitability, may be adversely
impacted by poorly timed headcount
growth or an unexpected decline in
client projects.
13. Cash collection
Failure to collect cash on client
invoices on a timely basis.
— Target utilisation rates agreed annually per region through the budget process.
— Oversight of delivery against resource utilisation by heads of region.
— Ongoing review of global utilisation by Chief Financial Officer, in conjunction with visibility of the pipeline of potential
new business and recruitment plans.
— Group-wide aim to sell consulting services mainly on a time and materials basis.
— As invoicing is typically on a time and materials basis, there is a requirement for all employees to submit their time
promptly. Prompt completion of time submission is monitored and forms part of annual performance reviews.
— The Group’s standard policy is for settlement of client invoices within 30–60 days.
— The Group Finance Director and the Chief Financial Officer assess the Group’s cash and debtors position on a
regular basis and escalate where necessary. This is also discussed with heads of region and at Board meetings.
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Annual Report & Accounts 2023
55
Corporate Governance
Non-financial information statement
The Group has complied with the requirements of Sections 414CA and 414CB of
the Companies Act 2006 by including certain non-financial information within the
Strategic Report. The following table constitutes our non-financial information
statement, and includes cross-references to where more detailed disclosures of
non-financial information can be found.
Reporting requirement
Principal locations in this
Annual Report
Page
Summary of business application
Corporate Governance
56 Chairman’s introduction
58 Board of Directors
60 Corporate Governance Code
62 Corporate governance report
68 Nomination Committee report
70
Audit and Risk Committee report
73 Remuneration Committee report
78 Directors’ report
81
Statement of Directors’ responsibilities
82
Independent auditor’s report
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
Business model
Principal risks
Business model – Strategic Report
18–19
Risk management and principal risks –
Strategic Report
Non-financial KPIs
Key performance indicators –
Strategic Report
47–49
28–29
Environmental matters
Sustainable business – Strategic Report
34–41
Employees
Looking after our people – Strategic Report
26–27
An explanation of the Group’s business model is given
in the business model section of the Strategic Report.
The Board’s process for considering and reviewing
principal risks is outlined in the risk management and
principal risks section of the Strategic Report.
The Board approves non-financial KPIs, such
as headcount and clients. More information on these can
be found in the key performance indicators section of the
Strategic Report.
Information on our corporate social responsibility
objectives, policy and the Group’s environmental focus,
including its climate-related disclosures, is provided in
the sustainable business section of the Strategic Report.
Our employee-related policies and procedures are
available to all employees – this includes policies around
wellbeing, 360 feedback, parental leave, etc.
More information on how we look after our people is
provided in the sustainable business and Section 172
statement sections.
Our anti-bribery and whistleblowing review processes
are set out in the Annual Report. The policies are
available to all employees.
Our human rights approach is detailed in our sustainable
business section in the Strategic Report.
Human rights,
anti-corruption
and anti-bribery
Social matters
Sustainable business – Strategic Report
Audit and Risk Committee report –
Corporate Governance
SASB Disclosure
34–41
70–72
139–142
Looking after our people – Strategic Report
26–27
Sustainable business – Strategic Report
34–41
Details around our corporate social responsibility approach
are explained in the sustainable business section.
The Strategic Report was approved by the Board of Directors on 22 June 2023.
By order of the Board.
Luc Baqué
Chief Executive Officer
22 June 2023
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Annual Report & Accounts 2023
Corporate Governance
Chairman’s introduction
The Board recognises the benefits
of a robust governance framework
and remains committed to strong
corporate governance, appropriately
aligned with the Group’s priorities to
manage risk, promote a responsible
corporate culture and deliver a
strategy for growth.
Ken Fry
Chairman
An introduction from the Chairman
As Directors of the Board, we understand that an engaged Board
and an effective committee structure facilitate the good governance
of the entire Group. As such, we have developed our governance
structure to support the Group’s continued success and growth.
The Board has an Audit and Risk Committee, a Remuneration
Committee, a Nomination Committee and, newly, an ESG
Committee, each with formally delegated duties and responsibilities.
The structure of the Board and its committees, together with the
executive management of the Group, is set out in the corporate
governance report on pp 62−67.
The role of the Chairman is to lead the Board and be responsible
for its governance, performance and effectiveness. The Chairman
sets the tone for the Company and ensures that the links between
the Board and the executive team, as well as between the Board
and the shareholders, are strong and efficient.
Compliance with the QCA Corporate
Governance Code
In recognising the importance of high standards of corporate
governance, integrity and business ethics, we continue to apply
the Quoted Company Alliance Corporate Governance Code
(the “QCA Code”). A description of how the Board complies
with the principles of the QCA Code is provided on pp 60–61.
The corporate governance report on pp 62–67 sets out further
information about the Group’s governance framework and how
the Board applies the recommendations of the QCA Code.
The Directors recognise the need to continue to develop the
corporate governance structure and processes in ways that
reflect the evolving requirements of the Group’s shareholders,
employees, clients and wider stakeholders. In doing so, the Board
can also ensure that the governance framework supports the
growth and strategic progress of the Group. The Directors and
I are fully committed to maintaining our compliance with the
principles of the QCA Code and providing clear disclosures
relating to the changes and developments that we make.
Annual Report & Accounts 2023
57
FY 23 in focus
As reported last year, following an external selection process,
Maeve Byrne joined the Board as an independent Non-Executive
Director on 16 May 2022. Following her appointment, the Board
considered the composition of the Board committees and agreed
that, following a period of induction, Maeve would become Chair
of the Audit and Risk Committee and Penny Judd would move to
Chair of the Remuneration Committee. These changes took effect
after the Company’s Annual General Meeting in September 2022.
Looking ahead, we also recognise the uncertainty of the
geopolitical and economic environment, including the ongoing
situation in Ukraine and the recessionary outlook in many places.
We are also monitoring a lengthening sales cycle and increased
competition in the global consultancy market. However, the
Group’s positive culture, robust governance framework and
strong financial health continue to give the Board confidence
and provide a very strong basis to support the executive team in
assessing the ongoing position of the business and making
effective decisions about the strategy and business model.
In November, we announced that Euan Fraser would step down
as a Director and Chief Executive Officer on 31 March 2023 and
that Luc Baqué would succeed Euan on 1 April 2023. In line with
the QCA Code, the Committee has been closely monitoring
succession plans and identifying possible internal candidates
for future Board roles. Further details on Luc’s background and
considerable experience as a member of Alpha’s senior
management team are set out in the Nomination Committee
report on p. 68. We are pleased that Euan Fraser will continue
to work with the Board as a strategic adviser.
As a Board, we are fully aware that corporate governance needs
to evolve in line with the regulatory landscape and the
expectations of our stakeholders. We understand that the topics
of environment and sustainability, social and governance are
closely linked to how we develop our frameworks and decision-
making approaches, which we have recognised with the
establishment of an ESG Committee in the second half of the
financial year. The Committee will be responsible for ensuring the
effective development and implementation of the Group’s ESG
strategy. The ESG Committee held its first meeting in April 2023,
based on the Committee’s agreed terms of reference, and will
release the first ESG Committee report in the 2024 Annual Report
and Accounts.
In prioritising strong corporate governance, and considering the
ongoing growth of the Group, the Board has concluded that the
resources and skills of a full-time in-house Company Secretary
would be appropriate. We are delighted to welcome an
experienced Company Secretary professional, who joins the
Group from June 2023 and will work closely with Prism Cosec
for a period of extended transition.
Stakeholders
The Board considers its key stakeholders to be its employees, its
shareholders, its clients and the communities in which the Group
operates, and that understanding these relationships facilitates its
decision making at an executive level. Our statement setting out
how the Directors have discharged their duties under Section 172
of the Companies Act 2006, including a description of how the
Group has engaged with its key stakeholders, is set out on pp 32–33.
Corporate culture
The Directors believe that the Group’s culture, together with a
strong emphasis on integrity, business ethics and good corporate
governance, ensures our ability to execute the strategy, to deliver
the right outcomes for the Group’s clients and to deliver value for
our shareholders and other stakeholders.
The Board is able to promote and monitor the desired corporate
culture across the Group through its engagement with employee
representatives, review of relevant policies and decision making at
an executive level. The Group’s culture and values are described
in the looking after our people section on pp 26–27.
Ken Fry
Chairman
22 June 2023
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Corporate Governance 58
Annual Report & Accounts 2023
Corporate Governance
Board of Directors
Annual Report & Accounts 2023
59
Committee membership key
A Audit and Risk Committee
E ESG Committee
N Nomination Committee
R Remuneration Committee
Chair
Ken Fry
Independent
Non-Executive Chairman
Luc Baqué
Chief Executive Officer
John Paton
Chief Financial Officer
Penny Judd
Senior Independent
Non-Executive Director
Jill May
Independent
Non-Executive Director
Maeve Byrne
Independent
Non-Executive Director
Euan Fraser
Strategic Adviser
to the Board
Committee membership
A
NE
R
Term of office: Ken joined the Alpha
Board as a Non-Executive Director in
2016 and was appointed as
Non-Executive Chairman of the
Group in 2018.
Committee membership:
Ken is Chair of the Nomination
Committee, and a member of
the Audit and Risk Committee,
the ESG Committee and the
Remuneration Committee.
Skills and experience: Ken was
Global Chief Operating Officer at
Aberdeen Asset Management for
nearly 10 years and has over
30 years’ experience in financial
services. He has considerable
experience integrating acquisitions
within the investment management
industry and a strong technology
and operations background, having
undertaken many transformational
projects during his career. He
directed the integration of major
acquisitions while at Aberdeen
Asset Management, including
assets acquired from Deutsche
Asset Management, Credit Suisse
Asset Management and Scottish
Widows Investment Partners.
Ken keeps the skills to support and
deliver the Group’s strategy up to
date by maintaining a wide network
of contacts within the financial
services industry globally. He
regularly attends conferences and
discussion forums to keep abreast
of industry issues and meets with a
range of clients, employees, advisers
and institutional investors. He also
advises on M&A strategy within the
investment management and
wealth industry.
External appointments: Ken is
currently a Director of Wealthtime
Limited and Novia Financial plc.
Term of office: Luc was appointed
as Chief Executive Officer of Alpha
on 1 April 2023.
Committee membership:
Luc attends meetings of the
Audit and Risk, ESG, Nomination
and Remuneration Committees
by invitation.
Skills and experience: Luc joined
Alpha in 2010 as Head of Asset &
Wealth Management Consulting –
France from 2010 to 2015, Head of
Asset & Wealth Management
Consulting – Europe from 2015 to
2020 and Global Head of Asset &
Wealth Management Consulting from
2020 until his appointment as Chief
Executive Officer of the Group. Luc
has over 20 years of experience in
the industry. Prior to joining Alpha, he
was Head of Change Management at
UBS Wealth Management in Paris for
five years and spent six years
specialising in financial services with
Solving International, a strategy
management consultancy.
Luc holds a Master’s degree in
Engineering from École Centrale de
Marseille and completed an Executive
Program at the Stanford University
Graduate School of Business.
In his role as Chief Executive
Officer, Luc has to understand
and manage the interests of a range
of stakeholders, including employees,
clients, competitors and investors.
Luc maintains a number of strong
industry relationships, which involves
sharing of knowledge and perspective
on current themes and topics.
External appointments: None.
Term of office: John joined Alpha
as Chief Financial Officer in 2018.
Committee membership:
John regularly attends meetings
of the Audit and Risk Committee.
Heis invited to join meetings of the
Nomination and Remuneration
Committees when appropriate.
Skills and experience: John is
a chartered accountant with 25 years’
finance, banking, corporate finance
and accountancy practice experience.
He started his career at KPMG,
working across financial services audit,
risk management, financial reporting
governance, risk and internal controls,
and systems implementations. John
joined Alpha from HSBC where he was
a Director in both the Global Banking &
Markets and Commercial Banking
divisions in London. Over his 11-year
tenure at HSBC, he advised on a
variety of M&A transactions and led
loan financings for UK corporates.
Prior to this, he focused on capital
raisings, including AIM IPOs. During
his Alpha tenure, John has managed
the financial aspects of the acquisitions
and integrations of Axxsys and
Obsidian Solutions in 2019, Lionpoint
in 2021 and Shoreline in May 2023.
He is a member of the Institute of
Chartered Accountants of Scotland,
graduated LLB (Hons) from the
University of Aberdeen and holds an
Executive MBA from the University
of Bristol and École Nationale des
Ponts & Chaussées, France.
John’s role involves deep knowledge
of the Group’s management, financial
and operational activities, as well as
important corporate and statutory
responsibilities. He also maintains a
detailed view of industry, financial
and regulatory changes and stays
updated through dialogue with
advisers, regular technical reading,
online courses and attending
relevant events.
External appointments: None.
Committee membership
A E N R
Committee membership
A E N R
Committee membership
A E N R
Term of office: Penny joined
the Alpha Board as Senior
Independent Non-Executive Director
in February 2018.
Committee membership:
Penny is Chair of the Remuneration
Committee and a member of the
Audit and Risk, ESG and Nomination
Committees.
Skills and experience: Penny has a
strong public markets and financial
services background, with over 30
years’ experience in compliance,
regulation, corporate finance and
audit and is a qualified chartered
accountant. Prior to joining Alpha,
Penny held the roles of Managing
Director and EMEA Head of
Compliance at both
Nomura International plc and UBS
AG. She was Non-Executive Chair of
Plus500 Limited from 2016 to 2021.
Penny maintains the skills to support
and deliver the Group’s strategy
through her experience gained on
other listed company boards and has
a wide network of contacts in
financial services and regulation. She
attends various conferences and
events covering relevant industry and
governance matters, and regularly
meets with a range of advisers and
institutional investors in AIM and
Main Market companies.
External appointments: Penny is
currently Non-Executive Director and
Chair of the Audit and Risk Committee
of LendInvest plc, Trufin plc and
Team17 Group plc.
Term of office: Jill joined the Alpha
Board as a Non-Executive Director in
July 2020.
Term of office: Maeve joined the
Alpha Board as a Non-Executive
Director on 16 May 2022.
Committee membership:
Jill is Chair of the ESG Committee
and a member of the Audit and
Risk, Nomination and Remuneration
Committees.
Committee membership:
Maeve is Chair of the Audit and
Risk Committee and a member
of the ESG, Nomination and
Remuneration Committees.
Euan was Chief Executive Officer of
Alpha from 2013. He stepped down
from the Board on 31 March 2023
and now acts as a strategic adviser
to the Board.
Skills and experience: Jill has over
20 years’ experience in investment
banking, with her executive career
spent working in corporate finance
for SG Warburg & Co. Ltd (1985–95)
and senior positions in group
strategy at UBS, where she was a
Managing Director from 2001
to 2012. She was a Panel Member
(2013–18) and a Non-Executive
Director (2013–16) of the Competition
and Markets Authority (“CMA”)
and a Non-Executive Director of the
Institute of Chartered Accountants in
England and Wales (“ICAEW”)
(2015–19).
Jill maintains a wide network of
contacts in financial services and
regulation. She attends various
conferences and events covering
relevant industry and ESG matters
and stays updated on developments
in ESG regulation and
reporting practice.
External appointments: Jill is
currently an External Member of the
Prudential Regulation Committee at
the Bank of England and a
Non-Executive Director of abrdn
Property Income Trust Limited and
JP Morgan Claverhouse Investment
Trust plc. She is also a Non-
Executive Board Member of the
Council of the Duchy of Lancaster
and a Trustee of Tusk, a charity
supporting progressive conservation
initiatives across Africa.
Skills and experience: Maeve is a
Fellow of the Institute of Chartered
Accountants in Ireland and has
over 30 years’ experience in
financial services. She started her
career as an auditor with KPMG
Ireland and worked in several other
KPMG international offices in
Europe and North America. Within
KPMG, Maeve moved from audit
to transaction services where she
was a Financial Services Partner
from 2002 to 2014. From 2010
to 2013, she was seconded to
Royal Bank of Scotland and the
Non-Core Division where she
was Chief Financial Officer and
a member of the Group Finance
Board and Risk & Control
Committee. From 2014 to 2017,
she held senior executive roles at
the Royal Bank of Scotland in
Capital Resolutions Group and
Williams & Glyn.
Since 2017, Maeve has focused on
transformation services, offering
board advisory services as an
independent consultant. She has
worked with financial services
companies including Santander and
clients in the fintech/neobank space.
She maintains the skills to support
and deliver the Group’s strategy
by attending events covering
relevant industry and governance
matters, particularly in relation to
her role as Chair of the Audit and
Risk Committee.
External appointments: None.
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Corporate Governance
60
Annual Report & Accounts 2023
Corporate Governance
Corporate Governance Code
The QCA Code requires the Group to apply the 10 principles of corporate
governance as set out below and to publish certain related disclosures in the
Annual Report, on the website, or a combination of the two. The Group has
followed the QCA Code’s recommendations and has provided disclosure
relating to all the principles in a corporate governance statement on its website,
alphafmc.com/investors, and, as well, summarises compliance with the principles
in this Annual Report:
Section 1: Deliver growth
Principle 1: Establish a strategy
and business model that
promote long-term value for
shareholders.
The business model is premised upon delivering growth
through the cross-sell and upsell of its high-quality service
offering to existing clients, and selling its services to new clients.
The Group’s business model and
strategy are described in the
Strategic Report on pp 18−19.
Links to the following report section
The strategy is to continue to grow in both existing and
new jurisdictions by developing the service proposition.
In seeking to implement its strategic aims, the Board
takes account of the expectations of the Group’s
shareholder base in addition to its wider stakeholder
and social responsibilities.
Good, consistent engagement with shareholders is given
a high priority by the Board. The principal methods of
communication with shareholders are through regular,
direct executive-level engagement at meetings and capital
markets events, the Annual Report and Accounts, the
interim and full-year results announcements, the Annual
General Meeting (“AGM”) and the Group’s website,
alphafmc.com/investors.
The Chairman and Non-Executive Directors are available
to meet with shareholders, if required, to discuss any
items of importance.
The Board, supported by the executive team, upholds a
commitment to operating a socially and ethically
responsible company.
Engagement with stakeholders and wider communities
ensures alignment of interests and facilitates good
decision making.
Principle 2: Seek to understand
and meet shareholder needs
and expectations.
Principle 3: Take into account
wider stakeholder and social
responsibilities and their
implications for long-term
success.
The Group’s approach to
shareholder communications is
described in the corporate
governance report on pp 62–67.
The Chief Executive Officer and the
Chief Financial Officer act as the
main point of contact for shareholders
(company.secretary@alphafmc.com).
The Group’s community and
corporate social responsibility
disclosure is provided as part of the
sustainable business section on
pp 34–41.
The Group’s engagement model
with clients and wider stakeholders
is described in the Strategic
Report on pp 32–33.
Principle 4: Embed effective
risk management, considering
both opportunities and threats,
throughout the organisation.
The Board has overall responsibility for the Group’s risk
management framework including internal control and risk
management systems. In executing this role, it regularly
considers and reviews the risks and opportunities facing
the Alpha business.
The Group’s risk management
framework is described in the
Strategic Report on pp 47−49 and
in the corporate governance
report on pp 66−67.
The goal of the Board is to set policies that seek to reduce
ongoing risk as far as possible, without unduly affecting
the Group’s competitiveness and flexibility.
Annual Report & Accounts 2023
61
Section 2: Maintain a dynamic framework
Principle 5: Maintain the Board
as a well-functioning, balanced
team led by the Chair.
Principle 6: Ensure that
between them the Directors
have the necessary up-to-date
experience, skills and
capabilities.
The Group believes that the Board’s composition brings
a desirable range of skills, personal qualities and
professional credentials. Suitable Board operations,
access to advice and administrative services, effective
induction of new Directors and a regular performance
assessment also ensure Board effectiveness.
As an AIM-quoted provider of specialist consultancy
services to the asset management, wealth management
and insurance industries, Alpha’s Board needs to
represent a range of skills and competencies. The Alpha
Board includes experience in public markets, financial
services, governance and audit, the consulting sector,
and business operations.
Links to the following report section
The Board’s composition and
operating framework are described
in the corporate governance
report on pp 62−67.
Biographical details of the Directors,
including relevant experiences and
how skill sets are kept up to date,
are provided on pp 58–59.
Principle 7: Evaluate Board
performance based on clear
and relevant objectives,
seeking continuous
improvement.
The objectives of the Board are to approve the Group’s
strategy, budgets and key corporate activities, and to
oversee the Group’s progress towards its goals.
The Group has a process for evaluating the performance
of the Board, committees and individual Directors in
respect of those objectives.
The Board’s evaluation framework
and FY 23 evaluation process are
described in the corporate
governance report on p. 65 and
in the Nomination Committee
report on p. 69.
Principle 8: Promote a
corporate culture that is based
on ethical values and
behaviours.
The Board is conscious of its role in fostering
and safeguarding a culture of inclusion, responsibility
and openness. These values are embedded across the
Group’s leadership and throughout the organisation.
The Group’s culture and values are
discussed in the looking after our
people section on pp 26–27.
Principle 9: Maintain
governance structures and
processes that are fit for
purpose and good decision
making by the Board.
The Group operates an effective, streamlined governance
framework. In this framework, the Board supports the
executive team to develop and execute the Group’s
strategy, and key decisions are reached through open
and constructive dialogue.
A governance chart is provided on
p. 66 and processes are described
on pp 62–67 of the corporate
governance report.
Section 3: Build trust
Principle 10: Communicate how
the Company is governed and
is performing by maintaining a
dialogue with shareholders and
other relevant stakeholders.
The Group places a great emphasis on high standards
of corporate governance and maintaining effective
engagement with its shareholders and stakeholders.
In addition to the Annual Report and Accounts, the
website is updated regularly with information regarding
the Group’s activities and performance.
Links to the following report section
The governance of the Company,
which is led by the Board, is
described in the corporate
governance report on pp 62–67.
The website, alphafmc.com/
investors, provides the Group’s
reports and presentations, notices
of AGM and results of voting on all
resolutions at AGMs.
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Corporate Governance 62
Annual Report & Accounts 2023
Corporate Governance
Corporate governance report
Board composition
The Board comprises six Directors: the independent Non-Executive
Chairman, three independent Non-Executive Directors and two
Executive Directors. Maeve Byrne joined the Board as an independent
Non-Executive Director on 16 May 2022. Euan Fraser stepped
down as a Director and Chief Executive Officer on 31 March 2023.
Luc Baqué succeeded Euan as Group Chief Executive Officer on
1 April 2023.
The independent Non-Executive Directors of the Board are Ken
Fry, Penny Judd, Jill May and Maeve Byrne. They were selected
with the objective of increasing the breadth of skills and experience
of the Board, bringing constructive and independent challenge to
the Executive Directors and monitoring their performance. The
Non-Executive Directors are also responsible for the effective
running of the Board’s committees and ensuring that the committees
support and facilitate the strategic priorities of the Board.
As a provider of specialist consultancy and complementary
services to the asset management, wealth management and
insurance industries, and an AIM-quoted company, Alpha requires
a range of skills, capabilities and competencies to be represented
on the Board, including experience in public markets, financial
services, governance and audit, the consulting sector and business
operations. The Board is confident that its members have the
appropriate balance of functional and sector experience, skills,
personal qualities and capabilities to provide constructive support
and challenge to the Executive Directors, and to deliver the strategy
of the Group for the benefit of the shareholders over the medium
to long term. The biographies of the Directors, including a summary
of their relevant skills and experience, can be found on pp 58–59.
The Board also recognises that, as the Group evolves, the mix of skills
and experience required on the Board may evolve and the Board
composition will need to reflect those changes. The Nomination
Committee has responsibility for succession planning. It considered
the succession plan and process for the new Chief Executive
Officer during the year and will continue its focus in this area as
the Board and senior leadership team develops.
A Board performance evaluation was undertaken in March 2023,
which assessed the Board’s composition and skills, in addition to
other factors such as strategy, performance and Board functioning
and dynamics. The results of Board performance evaluations are
used to inform the Company’s succession planning process.
Further details of the 2023 Board evaluation process can be
found on p. 65.
Roles of the Directors
The Group operates an effective, streamlined governance framework.
The Board has collective and ultimate responsibility for establishing
a strategy and business model that promote long-term value for
shareholders. The Board is supported by the Group’s executive
team, led by the Chief Executive Officer, in developing and
executing the Group’s strategy.
The Executive Directors that served on the Board during the year
were Euan Fraser, as Chief Executive Officer, and John Paton,
the Chief Financial Officer. Luc Baqué succeeded Euan Fraser
as Chief Executive Officer on 1 April 2023. The Executive Directors
have strong knowledge of the operations of the Group, the
interests of its stakeholders, and its market and financial positions.
Senior executives below Board level attend Board meetings upon
request to present and discuss business strategy and updates.
Penny Judd is the Senior Independent Non-Executive Director
(“SID”). The principal role of the SID is to act as a sounding board
for the Chairman and to serve as an intermediary for the other
Directors when necessary. Penny is also available to shareholders
should they wish to discuss concerns that they feel have not been
resolved through the normal channels of engagement with the
Chairman, Chief Executive Officer or Executive Directors, or for
which such contact is inappropriate.
At the head of the Group, there is a clear delineation of
responsibilities between the Chairman of the Board and the Chief
Executive Officer. The Non-Executive Chairman leads the Board
and is responsible for its governance, performance and effectiveness.
This includes ensuring that the dynamics of the Board are functional
and productive and that no individual Director dominates
discussion or decision making. In this role, the Chairman sets the
tone for the Company and ensures that the links between the
Board and the executive team, as well as between the Board and
the shareholders, are strong and effective. Meanwhile, the Chief
Executive Officer is responsible for the day-to-day management
of the Group’s global operations, for proposing the strategic plan
and focuses to the Board, and for implementing the strategic
goals agreed by the Board.
Board of Directors
Responsible for establishing
the Company’s strategic
direction and overseeing
a robust framework
of governance.
Executive Directors
Responsible for day-to-day
management of the
Company’s business
operations and delivery
of Group strategy.
Non-Executive
Directors
Responsible for providing
independent challenge to,
and oversight of the
performance of, the
Executive Directors.
Ken Fry
Independent
Non-Executive
Chairman
Euan Fraser –
resigned
31 March 2023
Luc Baqué –
appointed
1 April 2023
John Paton
Penny Judd
Jill May
Maeve Byrne
Chief Executive
Officer
Chief Financial
Officer
Senior Independent
Non-Executive
Director
Independent
Non-Executive
Director
Independent
Non-Executive
Director
Annual Report & Accounts 2023
63
Board independence
The Board considers an independent Non-Executive Director
to be free from any relationship that might materially interfere
with the exercise of independent judgement.
The Non-Executive Directors are considered to be independent
and therefore the Board is compliant with the QCA Code on the
topic of Director independence. All Directors are encouraged and
expected to use their independent judgement and to challenge all
matters, whether strategic or operational.
Appointments to the Board and re-election
The Board has delegated to the Nomination Committee the
task of reviewing Board composition, searching for appropriate
candidates and making recommendations to the Board on
candidates to be appointed to the Board. Decisions regarding
the appointment and removal of Directors are reserved for the
full Board. Further details are set out in the Nomination
Committee report on pp 68–69.
Under the Company’s Articles of Association, the Directors have
the power to appoint new Directors during the year, but any person
appointed by the Board since the last Annual General Meeting is
obliged to retire and offer themselves for re-election. Accordingly,
Luc Baqué will offer himself for election at the 2023 AGM. Furthermore,
in accordance with recommended best practice, all Directors will
offer themselves for re-election at the 2023 AGM. The Board
considers that each of the Directors offering themselves for election
or re-election makes a valuable contribution to the Board and
demonstrates commitment to the Group.
Diversity
The Board values diversity in its broadest sense and is committed
to creating an inclusive culture, free from discrimination of any
kind. When assessing new Director appointments, the Nomination
Committee considers the benefits of diversity for better decision
making and diversity of thought, in addition to looking at how to
maintain within the Board the appropriate balance of skills,
independence and knowledge of the Company, its services and
the industry as a whole. Recognising the benefits that diversity
can bring to all areas of the Group and noting the recommendations
in the reports of the Hampton-Alexander review and the FTSE
Women Leaders review20, women currently represent 50% of
Alpha’s Board.
The Group has a well-established Diversity & Inclusion programme,
which has been run voluntarily by members of the global consulting
team and is focused on key areas of diversity and inclusion. Alpha
is committed to a positive policy of promoting equality of opportunity
and diversity, providing an inclusive environment, and eliminating
any unfair or unlawful discrimination, which applies to all offices,
all business areas and all levels from graduate to the Chief
Executive Officer. In order to consider the effectiveness and
priorities of the Diversity & Inclusion programme, the Board
has requested to receive a regular update on the programme.
The Group has hired a Global Diversity Manager to help ensure
that Alpha’s governance, recruitment and internal processes are
managed and evolving appropriately to deliver a sufficiently
diverse group of candidates, hires and employees.
Further details on the Group’s approach to diversity and inclusion,
including its programme and policy, can be found in the sustainable
business section of this report.
50+
16+
33+
Gender
Male – 3
Female – 3
Role
Independent Non-Executive
Chairman – 1
Independent Non-Executive
Directors – 3
Executive Directors – 2
Length of tenure
0–1 years – 0
1–3 years – 2
3–5 years – 0
5–10 years – 4
10+ years – 0
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alphafmc.com
20 Refers to the Hampton-Alexander review and FTSE Women Leaders review (UK) into increasing the number of women on boards and in senior leadership positions.
The final report of the Hampton-Alexander review was published in February 2021; the latest report of the FTSE Women Leaders review was published in February 2023.
Corporate Governance50
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Annual Report & Accounts 2023
Corporate Governance
Corporate governance report continued
How the Board operates
The Board is responsible for the Group’s strategy
and overall management. The operation of the
Board is documented in a formal schedule of
matters reserved for its approval, which sets out
the Board’s responsibilities.
The Board is required to meet at least six times a
year. During the financial year, seven formal
scheduled Board meetings took place and a
number of ad-hoc calls were held to discuss
current matters and approve financial results
announcements and trading updates. The Board
also held dedicated strategy sessions in April and
September 2022, in line with the schedule of
annual Board activity. The Directors serving in the
year attended all meetings of the Board, and the
committees on which they sit, and ensure that
they allocate sufficient time to the Group as is
needed to enable them to carry out their
responsibilities as Directors.
The time commitment required of all Non-Executive
Directors is currently three days per month, which
is set out in their letters of appointment. During the
year, the Board reviewed the time commitment of
the Non-Executive Directors and is satisfied that
each of the Directors dedicates sufficient time to
the Group’s business.
The Board and committee schedules are planned
in advance of the financial year ahead, in order to
facilitate attendance and ensure that the appropriate
discussion time is available. A record of the
number of meetings of the Board during FY 23,
and the attendance by each Board member is
provided below:
The Board has an agenda of regular business, financial and operational matters for
discussion, as well as a review of each of the Board committee’s areas of work.
The key activities of the Board meetings during the year included the following:
Strategic
Discussed the strategy and reviewed the progress
of strategic priorities.
Discussed the Group’s capital structure and
financial strategy.
Consideration of succession planning for the
Chief Executive Officer.
Discussed the acquisition of Shoreline after the year end.
Performance
Approved the financial reporting, including interim and
full-year results.
Reviewed the dividend policy and approved a final
dividend of 7.50p per share in relation to the year ended
31 March 2022.
Considered and declared an interim dividend of 3.70p per
share for FY 23.
Governance
and risk
Considered financial and non-financial policies, including
the risk policy.
Reviewed the Group’s risk assessments and risk
management framework.
Discussed and monitored the regulatory and compliance
landscape and reviewed corporate governance
requirements and processes.
Approved the appointment of a new Executive Director
to the Board.
Established a new ESG Committee with effect from the
beginning of the second half.
Eligible to
attend
Attendance
Stakeholders
Continued an open dialogue with the investor community.
Board member
Ken Fry (Chairman)
Maeve Byrne*
Euan Fraser
Penny Judd
Jill May
John Paton
7
6
7
7
7
7
7
6
7
7
7
7
* Maeve Byrne was appointed during the year on 16 May 2022 and
attended all meetings which she was eligible to attend.
Reviewed the progress of key client relationships and
engagements across the Group.
Reviewed the actions taken by senior management to
review and support employee wellbeing.
The Chairman, aided by the Company Secretary (a role fulfilled by Prism Cosec),
is responsible for ensuring that the Directors receive accurate and timely
information for Board meetings. The Company Secretary provides minutes
of each meeting and every Director is aware of the right to have any concerns
documented. In addition, the Company Secretary ensures that any feedback or
suggestions for improvement of the Board papers are documented and evaluated
for amendment or enhancement with respect to future meetings of the Board.
Annual Report & Accounts 2023
65
Committees of the Board
The Board has in place Audit and Risk, Remuneration,
Nomination and ESG Committees, each with delegated
responsibilities and duties set out formally within terms of
reference. The terms of reference for the individual committees
are reviewed regularly and approved by the Board.
From time to time, separate committees may be set up by the
Board to consider and address specific issues or objectives,
when the need arises.
Audit and Risk Committee
Responsible for monitoring the integrity of the Company’s
financial statements and overseeing the effectiveness of
the Company’s systems of risk management and internal
control. The Audit and Risk Committee report can be found
on pp 70–72.
Nomination Committee
Responsible for the structure, size, composition and
succession planning of the Board. Further information can
be found on pp 68–69.
Remuneration Committee
Responsible for setting fixed and variable Executive Director
remuneration and monitoring senior management
remuneration levels. Further information can be found on
pp 73–77.
ESG Committee
Responsible for the effective development and implementation
of the Group’s ESG strategy and was established in the
second half of FY 23. An inaugural ESG Committee report will
be included in the Group’s 2024 Annual Report and Accounts,
after a full year of operation. Further information about the
Group’s corporate ESG priorities, efforts and progress can be
found in the sustainable business section on pp 34–41.
In line with the recommendations of the QCA Code, the Board
reviewed the structure and composition of the Board committees
and, after the AGM in September 2022, Maeve Byrne took on the
role of Chair of the Audit and Risk Committee and Penny Judd is
now the Chair of the Remuneration Committee.
During the year, the Board established the ESG Committee, which
is chaired by Jill May. The Committee will assist the Board on the
progression and development of the ESG strategy, agreeing
objectives and focus areas for, and receiving progress updates
from, the Group’s executive team and dedicated responsible
business roles.
External advisers
The Board members may seek the advice of the Group’s legal
advisers, corporate brokers, external auditor and the Nominated
Adviser (“NOMAD”) on matters within the Board or the committees’
terms of reference, or to provide recommendations on specific
corporate or governance events. Following his resignation as
Chief Executive Officer on 31 March 2023, Euan Fraser is now a
strategic adviser to the Board.
Investec is the Group’s NOMAD, as well as its joint broker
alongside Berenberg. The Directors have direct access to the
advice and services of Prism Cosec, which acts as Company
Secretary for the Group.
Development, information and support
The Company Secretary ensures that all Directors are kept
abreast of changes in relevant legislation and regulations, with
the assistance of the Group’s other advisers where appropriate.
Executive Directors are subject to the Group’s performance
development review process through which their performance
against predetermined objectives is reviewed and their personal
and professional development needs are considered. Non-Executive
Directors are encouraged to raise any personal development or
training needs with the Chairman or Company Secretary.
Board effectiveness
The objectives of the Board are to review, formulate and approve
the Group’s strategy, to review, discuss and agree budgets and
key corporate activities, and to oversee the Group’s progress
towards its goals. The Group has a process for evaluating the
performance of the Board, of its committees and of the Directors
individually in respect of these objectives. In addition, the Chairman
assesses the Board as a whole regularly to ensure that it is
functioning efficiently and productively.
A formal Board evaluation process was conducted in March 2023
by Prism Cosec, employing a detailed questionnaire completed
by members of the Board. The aim of the evaluation was to obtain
actionable views on the effectiveness of the Board, its committees
and key governance areas. The questionnaire focused on Board
and committee composition and skills, strategy and performance,
governance and organisation, Board functioning and dynamics,
stakeholder engagement and Director self-evaluation. A summary
of the results was presented to the Board for agreement on focus
areas and related actions.
The conclusions from the March 2023 evaluation confirmed
that the Board continues to function effectively as a unit and in
committees, and that the surrounding Board governance and
operations reflect the culture and values of the Group. Some
actions for further improvements in FY 24 were identified including
a review of the format and content of key Board reports.
alphafmc.com
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Corporate Governance 66
Annual Report & Accounts 2023
Corporate Governance
Corporate governance report continued
Board structure
Alpha Board
Agrees Group strategy
Oversees progress towards strategic goals
Shareholder and stakeholder engagement
Key
Ex Executive
A Audit and Risk Committee
E ESG Committee
N Nomination Committee
R Remuneration Committee
Chairman of the Board
Leadership of the Board
Reviews performance of the Board Directors
Ensures corporate governance
Ex
Ex
A
E
N
R
Group Strategy
Committee
Defines and proposes any
changes to the strategy
Execution of strategy
Monitors and addresses
strategic risk
Group
Coordination
Committee
Management of
business operations
Coordination of
commercial activities
Maintains Group
governance structure
Audit and Risk
Committee
Ensures effective systems
of internal control and
risk management
Oversees the Group’s
financial reporting
Environment,
Social and
Governance
Committee
Oversees development
of the ESG strategy and
agrees associated targets
Appoints and oversees
the relationship with
the external auditor
Reviews implementation
and progress of
the ESG strategy
Nomination
Committee
Reviews Board
composition and
balance of skills
Leads the process for
Board appointments
Ensures appropriate
succession planning
Ensures appropriate
ESG focuses within
Alpha’s governance and
business model
Remuneration
Committee
Agrees Group
remuneration policies
Ensures operation of
transparent, simple and
effective incentive
schemes
Considers alignment of
reward with long-term
shareholder value
Chief
Executive
Officer
Group
Managing
Director
Global Head,
AWM
Consulting
Global Head,
Insurance
Consulting
Chief
Financial
Officer
Global Head,
Aiviq
Global Head,
Lionpoint and
Axxsys
Conflicts of interest
The Company has effective procedures in place to identify,
monitor and manage any conflicts of interest. At each meeting of
the Board or its committees, the Directors are required to declare
any interests in the matters to be discussed and are regularly
reminded of their duty to notify any actual or potential conflicts of
interest. The Company’s Articles provide for the Board to authorise
any actual or potential conflicts of interest if deemed appropriate
to do so.
Internal controls and risk management
The Board has overall accountability for the systems of internal
control and risk management. The Audit and Risk Committee
reviews and assures the effectiveness of the Group’s internal
controls and risk management on the Board’s behalf.
As part of that duty, the Board determines the Group’s risk
management appetite and policies. In this respect, the objective
of the Board is to set policies that seek to reduce ongoing risk as
far as possible, without unduly affecting the Group’s competitiveness
and flexibility. The Board believes that this approach serves the
interests of creating sustainable shareholder value while also
protecting the Group’s corporate culture and other
stakeholder interests.
Annual Report & Accounts 2023
67
Engagement calendar FY 23
April 2022
Pre-close
investor
meetings
June 2022
Full-year results
virtual roadshow,
UK and Europe
September 2022
Private client broker
and shareholder
meetings, UK
October 2022
Pre-close
investor
meetings
March 2023
Trading update
and capital
markets day
April 2022
Pre-close
trading update
September 2022
Annual General
Meeting
October 2022
Pre-close
trading update
November 2022
Interim results
virtual roadshow,
UK and Europe
March–April 2023
Investor conference
calls, UK and Europe
The operational functions of the Group are carried out within a
practical and effective risk management framework. The Group
Coordination Committee has executive responsibility for identifying
and managing risk effectively across the business. Any material
operational decisions made by the Group Coordination
Committee in this respect are reviewed by the Board.
The identified material operational, industry, financial, and
environmental and social risks facing the Group are also reported
to the Board. A summary of the principal risks and uncertainties,
as well as mitigating actions, are provided in the principal risks
and uncertainties section of the Strategic Report. The Board
formally reviews, agrees and documents the principal risks to the
business at least annually.
Alpha appointed a full-time Global Head of Risk within Alpha’s
business operations at the start of the financial year to reinforce
oversight of Alpha’s risk framework and processes. During the
year, the Board reviewed the Group’s risk policy along with the
risk framework and internal controls, and agreed they were
appropriate for the operating context and business model.
Processes to embed risk management throughout the Group,
and opportunities to introduce further enhancements, continue to
be reviewed and changes are implemented as appropriate.
Shareholder communications
The Board places great emphasis on maintaining an effective
dialogue with shareholders, which it considers to be integral to
long-term growth and success. It is committed to communicating
consistently and openly with shareholders.
The principal methods of communication are the Annual Report
and Accounts, the interim and full-year results announcements,
the AGM and the Group’s investor website, alphafmc.com/
investors. The website is updated regularly with information
regarding the Group’s governance, activities and performance,
including both statutory and non-statutory regulatory news
announcements, which are issued throughout the year to update
on financial, operational and other matters.
The Chief Executive Officer and Chief Financial Officer meet with
the representatives of the Group’s institutional investors as well as
investment analysts to ensure that the Group’s corporate objectives,
strategies and operational developments are clear and understood.
Alpha held its annual virtual capital markets day in March 2023,
where the members of Alpha’s senior team shared with shareholders
its five-year strategic plan and key business updates including
North America and Insurance Consulting growth.
In-person and virtual investor roadshows are held following the
announcement of the final and interim results, attended by the
Chief Executive Officer and Chief Financial Officer, and there are
also ad-hoc investor meetings that are part of the building of
relationships with existing and future shareholders. Details of
investor relations activity and a review of the shareholder register
are shared with the Board on a regular basis during the year.
Understanding what analysts and investors think about the Group
is an equally important component of these interactions. The Board
as a whole is kept informed of their feedback and views by the
Chief Executive Officer and Chief Financial Officer. This includes
information provided by the Group’s joint corporate brokers,
Berenberg and Investec, following investor meetings. The
Chairman and Non-Executive Directors are also available to meet
with shareholders, if required, to discuss any items of importance.
Annual General Meeting
The Company’s sixth AGM is scheduled to take place on
Wednesday 6 September 2023 at the offices of Investec Bank
plc, 30 Gresham Street, London EC2V 7QN. Further details of the
arrangements for the AGM and voting procedures can be found in
the Notice of the 2023 Annual General Meeting, which is available
on the Group’s investor website, alphafmc.com/investors.
Voting results will be announced through the Regulatory News
Service and made available on the Group’s investor website,
alphafmc.com/investors.
By order of the Board.
Ken Fry
Chairman
22 June 2023
alphafmc.com
alphafmc.com
Corporate Governance 68
Annual Report & Accounts 2023
Corporate Governance
Nomination Committee report
Key responsibilities
The Committee’s main duties are set out in its terms of reference,
which are reviewed annually and are available on the Company’s
investor website (alphafmc.com/investors/board-committees).
The purpose of the Committee is to keep under review the
structure, size and composition of the Board, as well as
succession planning for the Directors. It leads the process for
identifying and nominating, for approval by the Board, candidates
to fill Board and committee vacancies.
The Committee follows a robust process for recommending
appointments and re-appointments to the Board. Its primary
responsibilities in this area include:
— regularly reviewing the structure, size and composition of the
Board to ensure that it has an appropriate balance of skills,
independence, knowledge, experience and diversity;
— considering succession planning for the Board Directors and
senior executives, taking into account the challenges and
opportunities facing the Company and wider Group, along with
skills and expertise that may be required in the future;
— identifying and nominating for approval by the Board
candidates to fill Board vacancies as and when they arise;
— ensuring that the necessary due diligence and conflicts of
interest checks have been undertaken before an appointment
is made;
— monitoring whether satisfactory induction is provided to new
Directors to develop their knowledge of the Group, and their
Board and committee responsibilities; and
— reviewing the results of the Board evaluation process and
ensuring that the conclusions are captured and actioned
where necessary.
A description of how the Committee has carried out its responsibilities
through the key activities of the year is provided below.
Chief Executive Officer succession
On 22 November 2022, we announced that Luc Baqué would
succeed Euan Fraser as Chief Executive Officer at the end of the
financial year. In line with the QCA Code, the Committee closely
monitors succession plans and identifies possible internal candidates
for future Board roles. In respect of Euan’s successor, the Committee
agreed that an external search process would not be necessary as
Luc Baqué had been identified, through the Committee’s succession
planning considerations, to succeed Euan.
Luc joined Alpha in 2010 to establish the Paris office and, after
successive promotions, became Global Head of Asset & Wealth
Management Consulting from 2020. He has been a key member
of the executive team and has made a significant contribution to
Alpha’s success. Luc became Chief Executive Officer and joined
the Board as an Executive Director on 1 April 2023.
Ken Fry
Chair of the Nomination Committee
On behalf of the Board, I am pleased to present the
Nomination Committee’s report for the year ended 31
March 2023.
The Nomination Committee leads the
process for Board appointments and
makes recommendations about Board
composition and succession planning.
Committee composition and governance
The Committee is composed wholly of independent
Non-Executive Directors. It is chaired by the Chairman of the
Board, Ken Fry, and its other members are Penny Judd, Jill May
and Maeve Byrne. All members served throughout the year, with
the exception of Maeve Byrne, who joined the Committee on her
appointment to the Board on 16 May 2022.
The Nomination Committee meets as and when necessary, but at
least twice a year. The Nomination Committee met formally three
times during FY 23 and the table below sets out the attendance
record of each member of the Committee.
Committee member
Ken Fry (Chair)
Maeve Byrne*
Penny Judd
Jill May
Eligible to
attend
Attendance
3
2
3
3
3
2
3
3
*
Maeve Byrne was appointed during the year and attended all meetings that she was
eligible to attend.
In the event that the matter under discussion relates to the
Chairman’s re-appointment or succession, the Committee is
chaired by an independent Non-Executive Director.
Alpha’s representative from Prism Cosec Limited, the Group’s
Company Secretary, attends each meeting and the Chief
Executive Officer and Chief Financial Officer are invited to join
meetings as appropriate.
Annual Report & Accounts 2023
69
Non-Executive selection and appointment
In the 2022 Annual Report and Accounts, we reported in detail on
the Committee’s work to identify and recruit a new Non-Executive
Director. This work culminated in the appointment of Maeve Byrne
to the Board with effect from 16 May 2022.
Board evaluation
As part of the Board’s commitment to maintaining a strong corporate
governance framework, the Committee reviews the approach to, and
results of, the Board’s performance evaluation process.
Board induction
In common with all new Director appointments, Maeve Byrne
benefited from a tailored induction programme that was designed
to ensure she developed an understanding of the business and of
the role and responsibilities of a Non-Executive Director. Maeve’s
induction included one-to-one meetings with other Directors,
members of the Group’s senior management team and external
advisers. It is planned that Luc Baqué will also go through a
detailed and tailored induction programme, which is ongoing
through FY 24.
Board committee structure
In the previous financial year, the Committee recommended
various changes to the composition of the Board’s committees.
These changes were approved by the Board and were implemented
following the Company’s AGM in September 2022. They included
Maeve Byrne becoming Chair of the Audit and Risk Committee
and Penny Judd becoming Chair of the Remuneration Committee.
The Committee also recommended the establishment of an ESG
Committee, to be chaired by Jill May. This recommendation has
been implemented and the ESG Committee was established in
the second half of FY 23 and held its first meeting as a full
committee on 27 April 2023.
All Board committees are composed of independent
Non-Executive Directors.
Succession planning
A key role of the Committee is to ensure that the Group has
appropriate succession planning in place. During the year, the
Committee reviewed and approved contingency and succession
plans for each member of the Board. Following the appointment
of Luc Baqué on 1 April, the succession plan for the role of Chief
Executive Officer will be refreshed.
Succession plans are reviewed by the Committee each year.
Renewal of appointment letter
The Committee considered the renewal of the appointments of Jill
May and Ken Fry, whose current terms of office are due to expire
at the 2023 AGM. The Committee recommended to the Board
that each appointment be renewed for a further three-year term
from the conclusion of the 2023 AGM. The Board approved the
recommendation and each appointment was renewed for three
years to expire at the conclusion of the 2026 AGM.
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
A formal Board evaluation process was conducted by Prism
Cosec in March 2023 by way of a detailed questionnaire
completed by the Directors. The aim of the evaluation was to
obtain actionable views on the effectiveness of the Board, its
committees and key governance areas. The responses were
collated and reviewed by the Chairman and a summary of the
results was presented to the Board in April 2023.
The conclusions from this evaluation confirmed that the Board
continues to function effectively as a unit and in committees, and
that its operation reflects the culture and values of the Group.
Actions arising from the process included a review of the format
and content of certain Board reports.
The Committee continues to believe that the Board, its sub-
committees and the Directors individually operate an optimal
structure to secure future growth, while maintaining the Group’s
unique culture.
Diversity
In executing its duties, the Nomination Committee objectively
considers candidates on merit and with due regard for the benefits
of diversity, including gender and ethnic diversity, on the Board.
Alpha is an equal opportunities employer and the Group’s policy is
to ensure that all employees, or those seeking employment, are
treated fairly. This policy applies at Board level and across the
Group. All decisions relating to recruitment, selection and promotion
are made objectively regardless of race, ethnicity, nationality,
gender, sexual orientation, religious belief, political opinion, age,
disability and educational or socioeconomic background.
Following the appointment of Maeve Byrne, and the succession
of Luc Baqué to the role of Chief Executive Officer, the Board
continues to exceed the gender diversity target set by the
Hampton-Alexander review and the FTSE Women Leaders review
2022, with women representing 50% of the Board. The Board will
continue to work to improve diversity within the Board and the
wider management team.
In order to consider the effectiveness and priorities of Alpha’s
Diversity & Inclusion programme, the Board receives updates on
the programme as part of the Board presentation schedule.
Following the establishment of the ESG Committee, review of the
Group’s diversity and inclusion strategy, policies and initiatives will
be covered within the scope of its meetings and discussions.
Further information about Alpha’s Diversity & Inclusion
programme, including Alpha’s Disability Confident accreditation,
is provided in both the looking after our people and the
sustainable business sections of the Annual Report.
Ken Fry
Chair of the Nomination Committee
22 June 2023
alphafmc.com
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Corporate Governance
70
Annual Report & Accounts 2023
Annual Report & Accounts 2023
71
Audit and Risk Committee report
Alpha’s representative from Prism Cosec Limited, the Group’s
Company Secretary, attends each meeting and the recently
appointed Global Head of Risk and Group Finance Director, and
the lead audit partner and members of the team from the Group’s
auditor, KPMG LLP, are invited to attend some meetings of the
Committee. The Committee has unrestricted access to the
Company Secretary and to the lead audit partner and other
members of the KPMG team.
At least once a year, the Committee meets with the auditor
without the presence of any Executive Director in order to discuss
independently the auditor’s remit and any other issues arising
from the audit; they met in this manner once during the year.
Key responsibilities
The purpose of the Audit and Risk Committee is to oversee the
Group’s internal financial controls and risk management systems,
to recommend the interim and full-year financial results to the
Board, and to monitor the integrity of all formal reports and
announcements relating to the Company’s financial performance.
In addition, the Committee is responsible for appointing the
external auditor of the Group, maintaining that relationship and
reporting the findings and recommendations of the external
auditor to the Board.
The main duties of the Committee are set out in its terms of
reference, which are reviewed annually and are available
on the Company’s investor website (alphafmc.com/investors/
board-committees).
The Committee’s key responsibilities include the following:
— monitoring the integrity of the Group’s financial statements,
including the full-year and interim reports, and other significant
announcements relating to financial performance, and
reviewing any significant reporting issues and judgements;
— advising on the clarity of disclosure and information contained
in the financial reports;
— ensuring compliance with relevant accounting standards and
reviewing the consistency of the methodology applied;
— reviewing the adequacy and effectiveness of the systems of
internal control and the risk management framework;
— overseeing the relationship with the external auditor, reviewing
performance and advising the Board members on the auditor’s
appointment and remuneration; and
Attendance
— reviewing and discussing the findings of the audit with the
3
3
3
3
external auditor.
A description of how the Committee has carried out its responsibilities
through the key activities of the year is provided below.
Activities during the year
During FY 23, the Committee reviewed and approved the
Group’s FY 22 preliminary and FY 23 interim results including
consideration of the significant accounting issues relating to
the financial statements and the going concern review.
Maeve Byrne
Chair of the Audit and Risk Committee
On behalf of the Board, I am pleased to present my first Audit
and Risk Committee report as Chair of the Committee for the
year ended 31 March 2023.
The Audit and Risk Committee provides
independent oversight of the Group’s
financial statements and performance
reporting, and of the Group’s systems
of internal financial control and
risk management.
Committee composition and governance
The Audit and Risk Committee is composed wholly of
independent Non-Executive Directors. It is chaired by Maeve
Byrne and its other members are Ken Fry, Penny Judd and Jill
May. Maeve Byrne joined the Committee on her appointment
to the Board on 16 May 2022 and took over the role of Chair
of the Committee from Penny Judd after the AGM on
13 September 2022. Penny Judd and Maeve Byrne have
recent and relevant financial experience with competence in
accounting or auditing. More information on the Committee
members’ skills and experience is provided in the Board of
Directors section on pp 58–59.
The Audit and Risk Committee meets as and when necessary,
but at least three times a year. The Committee met three times
during FY 23 and the table below sets out the attendance record
of each member of the Committee.
Committee member
Maeve Byrne (Chair)
Penny Judd
Ken Fry
Jill May
Eligible to
attend
3
3
3
3
The Chief Financial Officer and the Chief Executive Officer attend
meetings at the request of the Committee Chair to facilitate
discussion of the financial statements and systems of financial
control and risk management. Both Directors joined part of each
meeting held in FY 23.
alphafmc.com
In its responsibility to assure the Group’s financial control and risk
management environment, the Committee continued its focus on
risk and financial controls, monitoring progress against the plan
to implement refinements to systems and processes, to further
improve the financial control environment and to enhance team
operations. Status reports were reviewed and discussed at the
Committee’s meetings in November 2022 and February 2023.
Following a review of resourcing of the Group finance team in
FY 22, the finance team has been further strengthened in line with
the Group’s increasing complexity and accounting requirements
as it grows, including the appointment of a Group Finance
Director in FY 23. The Committee was kept updated on the
progress of the successful implementation of an upgrade to
the Group’s key accounting system and on financial control
improvements implemented during the year. The Committee also
reviewed and approved an updated treasury policy and limits.
On behalf of the Board, the Committee oversees and assures
the Group’s risk processes and risk reporting across all business
units. Alongside the audit process, there is an ongoing focus
to identify, assess and manage the risks faced by the Group
across a broad range of relevant topics that includes industry,
operational, financial, social and environmental risk. As part of the
annual agenda of risk review, a focused risk session took place at
the Committee’s meeting in February 2023 and the Group
Managing Director and the Global Head of Risk were invited to
attend the meeting. The Committee reviewed and discussed
updates to the risk policy, the risk management framework and
the risk report, which includes key risks identified across the Group.
The principal risks to the Group, along with the identified
mitigating actions, are set out in the principal risks and
uncertainties section of the Strategic Report on pp 50–53.
The Committee reviewed the year-end audit plan and considered
the scope of the audit as well as the external auditor’s fees.
The Committee also reviewed and updated its terms of reference
and these were approved by the Board.
External auditor appointment and tenure
The Committee oversees the relationship with the external auditor
and monitors all services that it provides and the fees payable,
to ensure that potential conflicts of interest are considered and
that an objective and professional relationship is maintained. In
particular, the Committee reviews and monitors the independence
and objectivity of the external auditor and the effectiveness of the
audit process.
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
KPMG LLP was first appointed as the Group’s external auditor in
2015. In line with the policy on lead partner rotation, the current
lead partner was appointed following completion of the FY 19
audit. The Committee has assessed the frequency of tendering
and the length of tenure of the external auditor in reviewing the
policy, and the Committee will consider the tenure of the external
audit contract at the end of the current lead partner’s tenure,
which concludes after the FY 24 financial year end.
KPMG LLP did not provide any non-audit services during the
year. An analysis of the remuneration to the external auditor in
respect of audit services during the year is set out in note 3 to
the consolidated financial statements.
The Committee seeks feedback from the Chief Financial Officer
and senior members of the finance team on the effectiveness
of the external auditor and the audit process. The Committee
continues to be satisfied with the scope of the external auditor’s
work and the effectiveness of the external audit process and is
satisfied that KPMG remains independent in the discharge of its
audit responsibilities. The Committee is, therefore, pleased to
recommend to the Board that a resolution to re-appoint KPMG
LLP as the Company’s auditor be proposed at the forthcoming AGM.
Audit process
The external auditor prepares an audit plan for its review of the
full-year financial statements, and the audit plan is reviewed and
agreed in advance by the Committee. Before the approval of
the financial statements, the external auditor presents its findings
to the Committee, highlighting areas of significant financial
judgement or estimation for discussion. The Committee also
reviews the external auditor’s management letter and detailed
presentations are made to the Committee by the auditor at least
twice a year. There is an active discussion between the
Committee and the auditor on any recommendations to improve
the efficiency of the audit process.
Significant accounting matters
In the year, the Audit and Risk Committee considered key
accounting issues and significant judgements and estimates in
relation to the Group’s FY 23 financial statements. These matters
were discussed and reviewed with the finance team and the
external auditor. The Audit and Risk Committee challenged
judgements and sought clarification where necessary.
The Committee received a report from the external auditor on the
work it had performed to arrive at its conclusions and discussed
any material findings contained within that report. The information
contained in the table on p. 72 should be considered together
with KPMG’s independent auditor’s report on pp 82–88 and the
accounting policies disclosed in the notes to the financial
statements as referenced in the table.
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73
Corporate Governance
Audit and Risk Committee report continued
Significant accounting matters continued
Area of focus
Revenue recognition
How it was addressed
Revenue is the most significant caption in the statement of comprehensive
income and, by its nature, revenue recognition is a key accounting policy.
Whilst the majority of Group revenue is contracted on a time and materials
basis, the Group also has some fixed-priced milestone contracts. The
recognition of revenue on such contracts in progress at the year end involves
consideration of the detailed contractual terms against the requirements of
IFRS 15 and an assessment of whether performance obligations under the
contract have been met at the balance sheet date.
Detailed revenue year-end cut-off procedures have been performed internally,
including a detailed review of relevant contractual client terms.
The Committee has discussed the design and application of the revenue
cut-off procedures performed and considered and agreed the
appropriateness of the disclosures in respect of revenue recognition in the
financial statements.
Alternative performance measures
To assist in understanding the underlying performance of the Group and to aid
comparability between accounting periods, some alternative performance
measures (“APMs”) are presented, which differ from measures presented in
accordance with International Financial Reporting Standards (“IFRS”). These
APMs exclude certain adjusting items. Judgement is required to identify those
adjusting items that are deemed to warrant exclusion from the calculation of
the Group’s adjusted measures due to either their nature or size.
The Committee has considered the appropriateness of each of the adjusting
items, ensuring that sufficient explanations are provided and that each APM
is clearly reconciled to the nearest IFRS measure.
The Committee has reviewed the balance of APMs and IFRS measures
presented in the Annual Report and Accounts and considered whether APMs
have been appropriately balanced with IFRS measures.
Share-based payments
Significant estimates are required in relation to the calculation of the
share-based payment expense under IFRS 2 and the associated social
security costs. These estimates include the assessment of the fair value
of share options at the date of grant, the probability that share options will
vest in the future and the future share price at the vesting date.
The calculation of the fair value of share options at each grant date has been
assisted by external professional experts.
The probability that share options will vest is assessed at each reporting date
by considering forecast staff attrition, time until vesting and achievement of
performance conditions. These key assumptions have been discussed with
the Committee.
Contingent consideration
Contingent consideration liabilities arising from earn-out arrangements are
initially measured at fair value on the acquisition date and are subsequently
remeasured at fair value at each balance sheet date. The fair value calculations
contain estimation uncertainty linked to the future performance of the acquired
businesses and the determination of an appropriate discount rate.
The fair value of contingent earn-out consideration is based on management’s
best estimate of cash flows arising from the future performance of the
acquired businesses, discounted to present value using an appropriate
discount rate.
The key assumptions and acquisition disclosures have been reviewed by
the Committee for appropriateness.
Internal audit
The Committee has considered the need for an internal audit
function during the year and continues to be of the view that,
given the size and nature of the Group’s operations and finance
team, there is no current requirement to establish a separate
internal audit function. Internal assurance is obtained through the
Group’s review of risks and controls as detailed on pp 70–72.
As part of this ongoing review of controls, it is planned that the
Group will engage an external, independent, third-party internal
audit firm to conduct an assessment of the Group’s current
internal control environment and a review report will be presented
to the Committee for its review in due course.
Share dealing, anti-bribery and whistleblowing
The Group has adopted a share dealing code in conformity with the
requirements of Rule 21 of the AIM Rules. All employees, including
new joiners, are required to agree to comply with the code.
The Group has in place a whistleblowing policy and anti-corruption
and bribery policy, which set out the formal processes to be
followed by employees and the procedures for reporting
incidents. These policies are provided to every employee of the
Group, principally through the Employee Handbook, and their
review is an annual item on the Committee’s agenda. The Audit
and Risk Committee reviews the policy to ensure that it remains
fit for purpose and provides guidance and support on any
whistleblowing related matters. In the event of a whistleblowing
event the Board would also be informed and kept up to date on
all developments as appropriate.
The Group operates an open and inclusive culture and employees
are encouraged to speak up if they have any concerns. The aim
of such policies is to ensure that all employees observe ethical
behaviours and bring matters that cause them concern to the
attention of either the Executive or Non-Executive Directors.
Maeve Byrne
Chair of the Audit and Risk Committee
22 June 2023
Remuneration Committee report
Alpha’s representative from Prism Cosec Limited, the Group’s
Company Secretary, attends each meeting and the Chief
Executive Officer and Chief Financial Officer are invited to join the
meeting as appropriate. The Committee has unrestricted access
to the Company Secretary throughout the year and has sought
advice from remuneration advisers as set out on p. 77.
Key responsibilities
The main duties of the Committee are set out in its terms of
reference, which are reviewed annually and are available on
the Company’s investor website (alphafmc.com/investors/
board-committees).
The Committee formulates and recommends to the Board the
remuneration policies for the Executive Directors, the Chairman of
the Board and senior management of the Group, having regard to
pay and employment conditions across the Group. The objective
of these policies is to:
— attract, retain and motivate employees of the quality required
to run the Group successfully;
— promote the long-term success of the Group; and
— ensure that the performance-related elements of remuneration
form a significant yet appropriate proportion of the total
remuneration package and are transparent, stretching and
rigorously applied.
The Committee determines the total remuneration package of the
Executive Directors and the Group’s senior management team.
The Board as whole sets the remuneration for the Non-Executive
Directors, including the Chairman. The Committee also reviews
and approves the design of all annual and long-term incentive
awards to Executive Directors and the Group’s senior
management team. It determines the targets and performance
conditions and monitors performance against those conditions,
approving the vesting and payment outcomes where appropriate.
It also reviews the performance-related pay and share incentive
schemes in use across the Group. The purpose of these reviews
is to ensure:
— the appropriateness of the targets and level of rewards set; and
— that the dilution of equity arising from such schemes does not
exceed the maximum 10% management incentive plan (“MIP”)
share incentive dilution limit defined at the point of the Group’s
admission to AIM.
Note 22 to the financial statements sets out further details of the
share-based payment schemes of the Group.
Penny Judd
Chair of the Remuneration Committee
On behalf of the Board, I am pleased to present my first
Remuneration Committee report as Chair of the Committee
for the year ended 31 March 2023.
The Remuneration Committee makes
recommendations on matters relating
to performance, remuneration and
terms of service for the Board and
senior management of the Group.
Committee composition and governance
The Committee is composed wholly of independent Non-Executive
Directors. As reported in last year’s report, Penny Judd took
over as Chair of the Committee after the Company’s AGM in
September 2022, and her fellow Committee members are Ken
Fry, Jill May and Maeve Byrne. All members served throughout
the year, with the exception of Maeve Byrne who joined the
Committee on her appointment to the Board on 16 May 2022.
The Committee meets as and when necessary, but at least twice
a year. The Committee met formally four times during FY 23 and
the table below sets out the attendance record of each member
of the Committee.
Committee member
Penny Judd (Chair)
Maeve Byrne*
Ken Fry
Jill May
Eligible to
attend
Attendance
4
3
4
4
4
3
4
4
*
Maeve Byrne was appointed during the year and attended all meetings which she was
eligible to attend.
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75
Corporate Governance
Remuneration Committee report continued
Company performance in FY 23
As noted previously in this report, the Board was pleased with
the continuing strong performance of the Group in FY 23. Net fee
income grew by 43.9% to £227.2m (FY 22: £157.8m) and adjusted
EBITDA grew by 37.5% to £46.6m (FY 22: £33.9m) at largely
consistent margins.
— recommendation to the Board to approve the purchase of
shares by the Company’s employee benefit trust to satisfy
the future exercises of share options by senior management
and employees;
— approval of grant of share incentive awards for the Executive
Directors and senior management in July 2022;
Activities during the year
During the course of the year, the main activities of the
Committee were:
— assessing the effectiveness and application of the
remuneration policy in light of the overall performance
of the business in FY 23 and future growth plans;
— approval of performance criteria for the MIP for Executive
Directors and senior management of the Group for FY 23;
— review of the Remuneration Committee report in the Annual
Report and Accounts 2022;
— approval of vesting of MIP share awards granted to the Chief
Executive Officer and Chief Financial Officer in July 2019 and
confirmation that the related performance conditions had
been met;
— approval of vesting of MIP share awards granted to certain
senior management in prior periods and confirmation that
the related performance conditions had been met;
— approval of the remuneration package for the new Chief
Executive Officer appointed on 1 April 2023;
— consideration of the post-employment conditions in respect
of outstanding incentive equity awards granted to Euan Fraser
as outgoing Chief Executive Officer;
— approval of amendments to update the rules of the Group’s
share incentive schemes; and
— annual review and approval of revised terms of reference for
the Remuneration Committee.
Further to the above, there were a number of year-end-related
activities that were concluded in the period after 31 March 2023
due to the need to have visibility of final figures; these included:
— confirmation that the initial performance conditions had been
met for the share options awarded under the MIP for Executive
Directors and senior management in respect of FY 23
performance; and
— approval of performance criteria for the MIP for Executive
Directors and senior management for FY 24 awards.
Remuneration policy
The key elements of remuneration of the Executive Directors and senior management of the Group are:
Key remuneration elements summary
Base salary
Pensions and
benefits
Annual bonus
Base salary is reviewed annually and takes account of the responsibilities, experience and performance of the individual and
competitive pressures. It is reviewed each year with any changes effective 1 April.
Benefits cover country-specific contributions, which may include contributions to a defined contribution pension scheme, private
medical expenses cover and life insurance cover, maternity/paternity pay and other ancillary benefits.
The purpose of annual bonus is to incentivise and reward performance, to align the interests of the Executive Directors, certain
senior management, the Group and shareholders in the short and medium term, and to promote retention.
The Committee introduced a performance-related cash bonus for Executive Directors and certain senior management of the Group
in FY 22, with the intention to transition to a more cash-based approach over time, with cash bonuses representing an increasingly
higher proportion of overall remuneration. As this transition to performance-related cash bonuses is made, it is anticipated that the
maximum 10% MIP share incentive dilution limit of issued share capital, set at the time of AIM admission, will decrease over time.
Cash bonus is subject to achieving annual regional and Group financial performance targets and personal objectives that are
reviewed annually. It is calculated as a percentage of base salary, normally 10% of base salary, although this may be exceeded
in the event of financial outperformance.
To encourage ongoing retention, an element of the bonus payments for Executive Directors and certain senior management may
be spread over two years, subject to ongoing employment or meeting other contractual requirements. The Committee deferred a
portion of bonus paid in respect of FY 22.
Share incentives
The purpose of share incentives is to incentivise and reward long-term performance and value creation, to align the interests of
the Executive Directors, certain senior management, the Group and shareholders in the long term and to promote retention.
Awards under the MIP are made each year, subject to achieving specified performance criteria. The Committee believes that
the substantial equity awards available under the MIP are an important element of remuneration and motivate the Group’s senior
management to drive the business forward and deliver the planned growth over the long term.
The Chairman of the Board and the Non-Executive Directors receive cash fees for their roles which are reflective of their level of
experience, knowledge, responsibility and expected time commitment. Fees are reviewed periodically and, from September 2022,
Non-Executive Directors have received additional fees for chairing Board committees.
Chairman and
Non-Executive
Director
remuneration
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The Committee has the ability under its terms of reference to use
discretion in order to achieve a fair remuneration outcome, taking
into account the Group’s performance. Further detail on how
discretion was applied during the year is set out below.
Directors’ service agreements
The Executive Directors as at the date of this report entered into
service agreements with the Company on the following dates:
Director
Date of service
agreement
Term
Luc Baqué
29 March 2023
Indefinite
John Paton
28 February 2018
Indefinite
Notice period by
Company and
by Director
6 months
6 months
The Non-Executive Directors do not have service agreements.
However, the Non-Executive Directors’ letters of appointment
provide that their tenure of office has an initial period of three
years, and will continue until terminated by the Non-Executive
Director or the Company on giving to the other three months’
prior written notice. Each Non-Executive Director is typically
expected to serve for two three-year terms, but may be invited
by the Board to serve for an additional period.
Director
Ken Fry
Date of service
agreement
Notice period by
Company and
by Director
Term expires
23 September 2020
2023 AGM
Penny Judd
23 September 2021
2024 AGM
Jill May
30 June 2020
Maeve Byrne
16 May 2022
2023 AGM
2025 AGM
3 months
3 months
3 months
3 months
The Board confirmed that Ken Fry’s appointment as independent
Non-Executive Chairman will be renewed for an additional period
of up to three years. It also confirmed that Jill May’s appointment
as an independent Non-Executive Director will be renewed for a
further three years. Both appointments will be renewed, subject
to re-election by shareholders at the AGM, with effect from the
date of the 2023 AGM.
Policy for the remuneration of employees
The Board recognises the vital importance of attracting and
retaining the highest calibre of consultants, and strongly supports
management’s remuneration policy for employees. Below the
senior management team, all employees receive a fixed salary
that is competitive with the market, and a profit share or cash
bonus scheme that is team or personal performance based,
linked to achieving financial targets, alongside other benefits.
The Board believes that this structure provides a compelling
remuneration package that reinforces teamwork, aligns the
employees with the Group’s objectives and helps to promote
a feeling of ownership amongst all employees.
FY 23 Executive Directors’ remuneration
The single figure table below summarises the remuneration of
the Directors who served for the years ended 31 March 2023
and 2022. The totals disclosed in the table and the aggregate
information in respect of the highest paid Director have been
audited and represent the disclosures required under Schedule 5
of The Large and Medium-sized Companies and Groups
(Accounts and Reports) Regulations 2008:
Salary and
fees 22
£’000
FY 23
Salary and
fees
£’000
FY 22
Pension
£’000
FY 23
Pension
£’000
FY 22
Bonus 23
£’000
FY 23
Bonus
£’000
FY 22
Gain on
share
options
exercised 24
£’000
FY 23
Gain on
share
options
exercised
£’000
FY 22
FY 23
£’000
FY 22
£’000
Executive Directors
Euan Fraser
John Paton
Non-Executive
Directors
Maeve Byrne21
Ken Fry
Penny Judd
Jill May
Total
631
300
56
93
63
63
587
275
–
90
60
60
19
–
–
–
–
–
17
–
–
–
–
–
63
30
–
–
–
–
264
124
1,260
388
–
205
1,973
718
–
–
–
–
–
–
–
–
–
–
–
–
56
93
63
63
868
604
–
90
60
60
1,206
1,072
19
17
93
388
1,648
205
2,966
1,682
21 Maeve Byrne was appointed on 16 May 2022; her annual fee for FY 22 of £60,000 was pro-rated accordingly.
22 From 13 September 2022, a fee of £5,000 per annum was paid to each Non-Executive Director for their work chairing a Board committee; this fee has been pro-rated accordingly.
23 The Committee approved the award of Executive Director bonuses for FY 23 at the equivalent of 10% of their respective base salaries. For FY 22, the Committee exercised its discretion
in awarding each Executive Director bonuses equivalent to 45% of their respective base salaries due to significant financial outperformance.
24 A total of 286,343 and 88,105 options granted to Euan Fraser and John Paton respectively under the MIP in July 2019 vested and were exercised during the year as set out on p. 76.
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77
Corporate Governance
Remuneration Committee report continued
FY 23 Executive Directors’ remuneration continued
Salary, benefits and pension
For FY 23, Euan Fraser’s salary was £631,000 and John Paton’s
salary was £300,000. Euan also received a pension contribution
of £18,930.
Annual bonus
Given the strong performance of the Group in the year, the
Committee awarded the Executive Directors FY 23 bonuses
equivalent to 10% of their respective base salaries paid in cash
as set out in the single figure table on p. 75.
Share incentive plan
The Committee approved the grant of annual incentive awards
to the senior management team globally, including the Executive
Directors, in July 2022, comprising UK joint share ownership plan
awards (“JSOP” shares) and MIP share options. Details of the
awards granted to the Executive Directors are set out below.
The performance criteria for FY 23 share incentive awards to
the Executive Directors and senior management of the Group
were four-fold and depended on the individual and their role:
— 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;
— 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;
— personal adherence to corporate values and risk policy; and
— specific business unit EBITDA, or other personal targets and goals.
The Committee considers the combinations of the above
performance criteria to continue to represent a stretching set of
targets against which to measure performance for the Group’s
MIP share option awards. The Committee also considers that the
performance criteria selected relate closely to the Group’s key
performance indicators. Refer to note 22 to the consolidated
financial statements for further details.
Vesting during FY 23
In June 2022, the Committee considered the MIP share awards
granted to Euan Fraser and John Paton in July 2019. The awards’
performance conditions, relating to EPS growth, total shareholder
return and financial and behavioural targets, were met in full.
These awards vested in July 2022 and were exercised in full on
24 August 2022.
286,343 options awarded to Euan Fraser under the MIP on
19 July 2019 vested on 19 July 2022, as did 88,105 options
awarded to John Paton under the MIP. The closing price of the
Company’s shares on the date of vesting was £4.15. The price
at award on 19 July 2019 was £2.03. Following the vesting,
John Paton sold 21,136 shares to cover the related tax liability
arising on exercise.
Details of Executive Directors’ share awards held as at 31 March
2023 are set out below:
Euan Fraser
Grant date
18/06/2019
22/07/2020
06/07/2021
01/07/2022
Total
John Paton
Grant date
18/06/2019
22/07/2020
06/07/2021
01/07/2022
Total
Options as at
1 April 2022
Granted
during the
year
Share price
at award
(p)
Exercise
price
(p)
Exercised
during
the year
Lapsed
during the
year
Options as at
31 March
2023
Vesting date
286,343
329,294
239,735
–
–
–
–
209,000
855,372
209,000
228
185
353
390
100
(286,343)
–
–
–
–
–
–
(286,343)
–
–
–
–
–
–
18/06/2022
329,294
22/07/2023
239,735
06/07/2024
209,000
01/07/2025
778,029
Options as at
1 April 2022
Granted
during the
year
Share price
at award
(p)
Exercise
price
(p)
Exercised
during
the year
Lapsed
during the
year
Options as at
31 March
2023
Vesting date
88,105
126,652
83,823
–
–
–
–
76,923
298,580
76,963
228
185
353
390
100
(88,105)
–
–
–
–
–
–
(88,105)
–
–
–
–
–
–
18/06/2022
126,652
22/07/2023
83,823
06/07/2024
76,923
01/07/2025
287,398
Non-Executive Directors’ fees
The Chairman of the Board received a fee of £90,000 and the
base fee for the three other Non-Executive Directors was set at
£60,000 during the year.
Following the changes to the composition of the Board
committees in September 2022, as set out in the Nomination
Committee report, the Board agreed that the Chair of each
committee of the Board would receive an additional annual
fee of £5,000 from 13 September 2022.
Payments for loss of office
There were no payments for loss of office during the year.
Euan Fraser stepped down from the role of Chief Executive
Officer and from the Board on 31 March 2023 and, as announced,
remains with the Group as a strategic adviser on a part-time basis.
The Group deems him a good leaver and, as such, he retains his
outstanding share awards, which will vest at the end of their vesting
periods subject to performance and other conditions.
Remuneration consultants
As previously disclosed, PwC and FIT Remuneration Consultants
advised the Group on certain remuneration policy matters in FY 22.
No fees were paid in relation to advice in FY 23. It is proposed
that another formal review of the Group’s remuneration policy is
performed in FY 24.
Directors’ share interests
The Directors’ interests in the share capital of the Company as
at 31 March 2023 and the movements during the year are set
out below:
Euan Fraser
John Paton
Maeve Byrne
Ken Fry
Penny Judd
Jill May
There were no changes in the Directors’ interests in shares
between 31 March 2023 and 22 June 2023.
Luc Baqué held 1,068,929 shares on his appointment to the
Board on 1 April 2023.
Remuneration in FY 24
The Committee has approved FY 24 remuneration for the
Executive Directors and the senior management team.
Salaries
For the newly appointed Chief Executive Officer, Luc Baqué,
from 1 April 2023, the Committee approved a base salary of
€600,000 (£530,000). The salary of the Chief Financial Officer
increased from 1 April 2023 to £325,000. In setting this
remuneration, the Committee considered the average salary
increases across the wider Group and benchmarking data of
similarly sized quoted companies.
Luc also participates in the Group’s French personal pension plan,
which applies to all French employees and includes an employer’s
contribution of approximately 10% of salary per annum.
Annual bonus
The transition of remuneration towards more variable cash-based
remuneration will also apply to the Executive Directors. In FY 24,
both of the Executive Directors will be able to earn a
performance-related cash bonus of 10% of base salary, with
the opportunity for higher bonuses in the event of financial
outperformance.
Number of
ordinary
shares as at
31 March
2022
(or date of
appointment)
Disposed of
during the
year
Acquired
during the
year
Number of
ordinary
shares as at
31 March
2023
Percentage
of total voting
rights as at
31 March
2023
563,485
(563,485)
286,343
286,343
91,772
(21,136)
88,105
158,741
–
184,070
–
12,307
–
–
–
–
–
–
–
–
–
184,070
–
12,307
0.24%
0.13%
0.00%
0.15%
0.00%
0.01%
MIP
In line with previous years, MIP share option awards will form part
of the remuneration of the Executive Directors, alongside their
base salary and bonus components.
FY 24 MIP awards to Executive Directors and senior management
will continue to be subject to the Group achieving a mix of
stretching targets, including adjusted EPS growth in the award
year, total shareholder return targets over a three-year period,
and specific personal and behavioural targets.
In addition, Luc Baqué will receive a further 179,487 MIP awards
in FY 24 in relation to deferred FY 23 share option awards.
These awards were simply deferred from FY 23 to comply with
the requirements of the French MIP rules, to which he was
previously subject.
Chairman and Non-Executive Director fees
The Board approved annual increases in Non-Executive Director
fees, taking into account the Group’s annual pay review.
The Chairman’s base fee from 1 April 2023 will be £95,400,
with Non-Executive Directors’ base fees at £63,600. Each
Non-Executive Director also chairs a Board committee and
receives an additional fee of £5,300 per annum.
Penny Judd
Chair of the Remuneration Committee
22 June 2023
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Corporate GovernanceCorporate Governance 78
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79
Directors’ report
The Directors present their Annual Report and the audited consolidated financial
statements of Alpha Financial Markets Consulting plc (the “Company”, the “Group”)
for the year ended 31 March 2023.
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 Company is a public limited company and is listed on AIM of the
London Stock Exchange.
The Directors believe that the requisite components of this report are set out elsewhere in the Annual Report and/or on the Company’s
website, alphafmc.com/investors. The table sets out where the necessary disclosures can be found.
Business performance
Principal activities
Alpha Financial Markets Consulting plc is the holding company for a global group of companies, the principal activity of
which is the provision of consulting and related services to clients in the asset management, wealth management and
insurance industries.
Results
Dividends
Strategic Report
Activities in research
and development
Future developments
Post-balance
sheet events
Going concern
Directors
Directors
A review of the performance and future development of the Group’s business is contained in the Chairman’s, the Chief
Executive Officer’s and the Chief Financial Officer’s reports on pp 9–11, pp 12–17 and pp 42–46 respectively.
The financial results for the year ended 31 March 2023 are set out in the Chief Financial Officer’s report on pp 42–46 and in
the consolidated statement of comprehensive income on p. 90 and further commented upon in the Chief Executive Officer’s
report on pp 12–17.
The Directors consider the current state of affairs of the Group to be satisfactory.
An interim dividend of 3.70p per share was paid in December 2022 (FY 22: 2.90p). The Board is recommending a final
dividend of 10.50p per share (FY 22: 7.50p). Subject to shareholder approval at the AGM to be held on Wednesday 6
September 2023, the final dividend will be paid on 19 September 2023 to shareholders whose names are on the Register
of Members at close of business on Friday 8 September 2023.
Information regarding dividend payments can also be found in note 10 to the consolidated financial statements.
The Strategic Report can be found on pp 2−54.
The Company did not engage in any material research and development activities in the year.
Details about the Company’s future developments can be found in the Strategic Report on pp 24−25.
Post-balance sheet events are disclosed in note 27 to the consolidated financial statements. The reports of the Chief
Executive Officer and Chief Financial Officer also update on trading after the balance sheet date.
The Directors have considered the going concern status of the Company and are satisfied that the Company remains
a going concern. Details of the going concern basis are set out in note 1 to the consolidated financial statements.
Further commentary can be found in the Chief Financial Officer’s report on pp 42–46.
Directors that have served during the year and summaries of the current Directors’ key skills and experience are set out in
the Corporate Governance section on pp 58–59.
Maeve Byrne was appointed as an independent Non-Executive Director on 16 May 2022.
Euan Fraser stepped down as Chief Executive Officer and from the Board on 31 March 2023. Luc Baqué was appointed
as Chief Executive Officer on 1 April 2023.
Directors’ indemnity
provisions
As permitted by the Articles of Association, the Directors have the benefit of an indemnity, which is a qualifying third-party
indemnity provision as defined by Section 234 of the Companies Act 2006. The indemnity was in force throughout the
financial period and at the date of approval of the financial statements.
Details of the Directors’ beneficial interests are set out in the Remuneration Committee report on p. 77.
The Group purchases and maintains Directors’ and Officers’ liability insurance for the benefit of its Directors, which was
in place throughout the year and remains in place at the date of this report.
Directors’ interests
Directors’ and Officers’
liability insurance
alphafmc.com
Constitution
Articles of Association
Any amendments to the Company’s Articles of Association may be made by special resolution of the shareholders.
A copy of the Articles of Association can be found on the Company’s website: alphafmc.com/investors/aim-rule-26.
The Company has only one class of ordinary share, which carries no right to fixed income, and each ordinary share is
entitled to one vote at general meetings of the Company.
Stakeholders and policies
Section 172 statement
Employee engagement
Employees with
disabilities
Stakeholder engagement
and key decisions
Modern Slavery
Statement
Political donations
The Company’s Section 172 statement and key Board decisions can be found in the Strategic Report on pp 30–33.
Details of how the Group engages with Alpha employees are set out in the Section 172 statement in the Strategic Report
on pp 30–33 and further described in the looking after our people section on pp 26–27.
Alpha is a Disability Confident Employer and further details of Alpha’s commitment to being an inclusive and disability
friendly organisation are set out under the looking after our people section on pp 26–27.
Details of the key decisions and discussions of the Board during the year and the main stakeholder inputs into those
decisions are set out in the Section 172 statement of the Strategic Report on pp 30–33.
The Company has approved and published on its website its Modern Slavery Statement in accordance with the Modern
Slavery Act 2015.
The Company made no political donations during the year to 31 March 2023.
Streamlined Energy
and Carbon Reporting
(“SECR”)
Under the Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018,
we are mandated to disclose our UK energy use and associated greenhouse gas (“GHG”) emissions. Specifically, Alpha is
required to report those GHG emissions relating to natural gas, electricity and transport fuel, as well as an intensity ratio,
under the SECR Regulations. Further details can be found in the Sustainable Business section on pp 34–41.
Financial risk
management
The Group has established internal control and risk management structures in relation to the process for preparing the
consolidated financial statements. The key features of this framework are described in the risk management section of
the Strategic Report on pp 47–49 and in note 23 to the consolidated financial statements.
Stakeholders and share capital
Share capital
The Company’s issued share capital as at 31 March 2023 was 120,509,736 ordinary shares of 0.075p each
(“Ordinary Shares”), none of which were held in treasury and 6,274,380 of which were held in the Company’s
employee benefit trust (“EBT”).
During the year, the EBT purchased a total of 266,922 Ordinary Shares in the Company. The shares are held in the EBT,
a discretionary trust, and are intended to be used to satisfy the exercise of share options by employees, including the
Executive Directors of the Company. A total of 6,274,380 Ordinary Shares were held by the EBT on 31 March 2023.
These Ordinary Shares hold voting rights, albeit the EBT does not exercise these voting rights, nor receive dividends
in respect of these shares.
Details of the issued share capital, together with movements in the Company’s issued share capital during the year, are
shown in the consolidated statement of changes in equity and note 21 to the consolidated financial statements.
The Company has only one class of Ordinary Share, which carries no right to fixed income, and each Ordinary Share is
entitled to one vote at general meetings of the Company.
Authority to purchase
own shares
The Company was authorised by a shareholders’ resolution passed at the Annual General Meeting held on 13 September
2022 to purchase up to 10% of its issued share capital. This authority will expire at the forthcoming Annual General Meeting
and a resolution to renew the authority for a further year will be proposed. No shares were purchased by the Company
during the year. During the year, the EBT purchased a total of 266,922 Ordinary Shares in the Company.
alphafmc.com
Corporate GovernanceCorporate Governance 80
Annual Report & Accounts 2023
Corporate Governance
Directors’ report continued
Annual Report & Accounts 2023
81
Statement of Directors’ responsibilities
Stakeholders and share capital continued
Major interests in shares
As at 22 June 2023, the Company had been notified, in accordance with chapter five of the Disclosure and Transparency
Rules, or was otherwise aware, of the following significant interests in the issued ordinary share capital of the Company:
The Directors are responsible for preparing the Annual Report and the Group
and parent company financial statements in accordance with applicable law
and regulations.
Name of person(s) subject
of notification
abrdn
Invesco
Janus Henderson Investors
BlackRock
Investec Wealth & Investment
NFU Mutual
M&G Investment Management
Percentage of
voting rights and
issued share
capital
9.91
8.62
7.12
5.01
4.56
3.77
3.31
Annual General Meeting
The 2023 AGM will be held on Wednesday 6 September 2023. The Notice of Annual General Meeting, including the
resolutions to be proposed, is available on the Company’s website, alphafmc.com/investors.
Auditor and audit
Disclosure of
information to auditor
In the case of each of the persons who are Directors of the Company at the date when this report was approved:
— so far as each of the Directors is aware, there is no information relevant to the audit of which the Company’s
auditor is unaware; and
— each of the Directors has taken all the steps that he or she ought to have taken as a Director to make him or
herself aware of any information relevant to the audit and to establish that the Company’s auditor is aware of
that information.
Auditor
The auditor, KPMG LLP, has indicated its willingness to continue in office and a resolution seeking to re-appoint KPMG LLP
as the Group’s auditor will be proposed at the AGM.
Company law requires the Directors to prepare Group and parent
company financial statements for each financial year. Under the
AIM Rules of the London Stock Exchange they are required to
prepare the Group financial statements in accordance with
UK-adopted International Accounting Standards and applicable
law and they have elected to prepare the parent company financial
statements in accordance with UK accounting standards and
applicable law, including FRS 101 Reduced Disclosure Framework.
Under company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Group and parent company and
of the Group’s profit or loss for that period. In preparing each of
the Group and parent company financial statements, the
Directors are required to:
— select suitable accounting policies and then apply them consistently;
— make judgements and estimates that are reasonable, relevant
and reliable;
— state whether they have been prepared in accordance
UK-adopted international accounting standards;
— assess the Group and parent company’s ability to continue as
a going concern, disclosing, as applicable, matters related to
going concern; and
— use the going concern basis of accounting unless they either
intend to liquidate the Group or the parent company or to
cease operations, or have no realistic alternative but to do so.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the parent company’s
transactions and disclose with reasonable accuracy at any time
the financial position of the parent company and enable them to
ensure that its financial statements comply with the Companies
Act 2006. They are responsible for such internal control as they
determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due
to fraud or error, and have general responsibility for taking such
steps as are reasonably open to them to safeguard the assets of
the Group and to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also
responsible for preparing a Strategic Report and a Directors’
report that comply with that law and those regulations.
The Directors are responsible for the maintenance and integrity of
the corporate and financial information included on the Company’s
website. Legislation in the UK governing the preparation and
dissemination of financial statements may differ from legislation
in other jurisdictions.
By order of the Board.
John Paton
Chief Financial Officer
22 June 2023
alphafmc.com
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Corporate GovernanceCorporate Governance 82
Annual Report & Accounts 2023
Corporate Governance
Independent auditor’s report
to the members of Alpha Financial Markets Consulting plc
Overview
Materiality:
Group financial
statements as
a whole
Coverage
Key audit
matters
Recurring risks
£1.5m (2022: £0.9m); 4.8% (2022: 4.6%) of Group
profit before tax adjusted for acquisition costs,
employment-linked and contingent consideration.
84% (2022: 83%) of Group absolute profit before tax.
Revenue recognition on contracts in
progress at year end, and recognition
of deferred and accrued income
Presentation and disclosure of
adjusting items (alternative
performance measures)
Recoverability of parent company’s
investments in subsidiaries and
receivables due from Group entities
(parent company only)
vs 2022
◄►
◄►
◄►
1. Our opinion is unmodified
We have audited the financial statements of Alpha Financial
Markets Consulting plc (“the Company”) for the year ended
31 March 2023, which comprise the consolidated statement of
comprehensive income, consolidated statement of financial
position, consolidated statement of cash flows, consolidated
statement of changes in equity, Company statement of financial
position, Company statement of changes in equity, and the
related notes, including the accounting policies in note 1.
In our opinion:
— the financial statements give a true and fair view of the state
of the Group’s and of the parent Company’s affairs as at 31
March 2023 and of the Group’s profit for the year then ended;
— the Group financial statements have been properly prepared in
accordance with UK-adopted international accounting standards;
— the parent Company financial statements have been properly
prepared in accordance with UK accounting standards,
including FRS 101 Reduced Disclosure Framework; and
— the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (“ISAs (UK)”) and applicable law.
Our responsibilities are described on p. 88. We have fulfilled our
ethical responsibilities under, and are independent of the Group in
accordance with, UK ethical requirements including the FRC
Ethical Standard as applied to listed entities. We believe that the
audit evidence we have obtained is a sufficient and appropriate
basis for our opinion.
Annual Report & Accounts 2023
83
2. Key audit matters: our assessment of risks of material misstatement
Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the financial
statements and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us,
including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit, and directing the
efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and
in forming our opinion thereon, and we do not provide a separate opinion on these matters. In arriving at our audit opinion on p. 82,
the key audit matters, in decreasing order of audit significance, were as follows:
The risk
Our response
Revenue recognition on
contracts in progress at
year end and
recognition of deferred
and accrued income
(Revenue £228.7m,
2022: £158.0m; Deferred
income £1.0m, 2022: £2.1m;
Accrued income £3.7m,
2022: £2.7m)
Refer to p. 99 (accounting
policy) and p. 102
(financial disclosures)
Inappropriate recognition
of revenue on contracts in
progress at year end by
error or fraud, and impact
on resulting deferred and
accrued income.
Billing of contracts is either on
a time and materials or
milestone basis. There is a risk
that revenue transactions
around the year end, including
the associated deferred and
accrued income, might be
incorrectly recorded, either in
error or fraudulently, such that it
does not reflect hours worked
or the services provided.
Our procedures included:
— Tests of detail (tracing and agreeing): we assessed the
appropriateness of revenue recognised by:
• selecting a sample of revenue transactions recognised in
March 2023 and April 2023 and obtaining the contract to
determine if time and expense or milestone;
• for time and expense engagements, agree to the invoice
and hours recorded on timesheet records to confirm that the
revenue has been recognised in the correct financial year;
• for milestone contracts, agree to the invoice and deliverable
specified in the contract to assess whether revenue has been
recognised in the correct financial year;
• selecting a sample of items included in deferred income at
31 March 2023 and agreeing that the amounts billed per the
invoice are in advance of the work being completed as
specified in the contract; and
• selecting a sample of items included in accrued income at
31 March 2023 and agreeing: that amounts accrued agree
to hours recorded on timesheet records that have not been
invoiced; that contracts with the customer are in place for
the work performed; and that amounts accrued have been
invoiced post-year end.
We performed the detailed tests above rather than seeking to rely
on any of the Group’s controls because our knowledge of the
design of these controls indicated that we would not be able to
obtain the required evidence to support reliance on controls.
— Assessing transparency: we considered the adequacy of the
Group’s disclosures in respect of revenue, deferred income and
accrued income.
alphafmc.com
alphafmc.com
Corporate Governance 84
Annual Report & Accounts 2023
Corporate Governance
Independent auditor’s report continued
Presentation and
disclosure of adjusting
items (alternative
performance measures)
(Adjusting items £15.8m,
2022: £14.4m)
Refer to p. 101 (accounting
policy) and pp 103–107
(financial disclosures)
Recoverability of parent
company’s investments
in subsidiaries and
receivables due from
Group entities (parent
Company only)
(Investment carrying value
£1.3m, 2022: £1.3m;
Receivables due from
Group entities £165.0m,
2022: £144.6m)
Refer to p. 132 (accounting
policy) and pp 133–135
(financial disclosures).
The risk
Our response
Inappropriate identification
of adjusting items, and
inappropriate presentation
and disclosure of
alternative performance
measures by error.
The disclosure of adjusting
items and alternative
performance measures
(“APMs”) is subjective.
There is a risk that items are
inappropriately identified as
adjusting items and/or items
classified as adjusting items
or APMs are disclosed on an
inconsistent basis (both within
the period and between
periods), and that clear
and accurate explanation
of adjusting items is not given
in order to manipulate the
presentation of the performance
of the business. There is also a
risk that undue prominence is
given to APMs.
Recoverability of parent
company’s investments in
subsidiaries and
receivables due from
Group entities.
The carrying amount of the
parent company’s investments
in subsidiaries and of the
intra-Group debtor balance
together represents 99%
(2022: 100%) of the parent
company’s total assets. Their
recoverability is not at a high
risk of significant misstatement
or subject to significant
judgement. However, due to
their materiality in the context
of the parent company financial
statements, this is considered
to be the area that had the
greatest effect on our overall
parent company audit.
Our procedures included:
— Tests of detail: we assessed the appropriateness of the
presentation of alternative performance measures and adjusting
items by:
• challenging the Group’s classification of adjusting items and
APMs through reference to external guidance and comparison
to competitors. Assessing whether the adjusting items met
the Group’s definition of adjusting items and whether that
presentation and the presentation of APMs is on a consistent
basis with prior periods;
• reviewing the Group’s calculations of alternative performance
measures to validate the accuracy of the disclosures; and
• agreeing items separately disclosed to supporting invoice or
Group’s calculation and assessing whether they have been
captured accurately.
We performed the tests above rather than seeking to rely on any of
the Group’s controls because the nature of the balance is such that
we would expect to obtain audit evidence primarily through the
detailed procedures described.
— Assessing transparency: reviewing the disclosure in the
Annual Report and Accounts and considering whether
appropriate prominence has been given to GAAP measures,
and whether explanations of adjusting items and reconciliations
of alternative performance measures and GAAP measures are
clear and accurate.
Our procedures included:
— Test of detail: we assessed the recoverability of the parent
company investments and intra-group receivables by comparing
the carrying amount of investments in subsidiaries and intra-
Group debtors with reference to the relevant subsidiaries’ draft
balance sheets to identify whether they have net assets, whether
their net assets, being an approximation of their minimum
recoverable amount, were in excess of their carrying amount and
whether those subsidiaries have historically been profit-making,
and comparing to the market capitalisation of the Group. We
have assessed whether the loans are in default after assessing
the financial position of the counterparties.
We performed the tests above rather than seeking to rely on any of
the Group’s controls because the nature of the balance is such that
we would expect to obtain audit evidence primarily through the
detailed procedures described.
— Assessing transparency: assessing the adequacy of the
parent company’s disclosures in respect of investments in
subsidiaries and Group debtor balances.
In the prior year, we reported a key audit matter in respect of the valuation of intangible assets acquired and contingent consideration
in relation to the acquisition accounting of Lionpoint. As there have been no material acquisitions in the current year, we do not consider
there to be a key audit matter in relation to the valuation of intangible assets acquired for the current year audit. We do continue to
perform procedures over the contingent consideration in relation to Lionpoint. However, as the uncertainty around the contingent
consideration potentially due upon the future performance of the acquired entity has reduced, we have not assessed this as one of
the most significant risks in our current year audit and, therefore, it is not separately identified in our report this year.
3. Our application of materiality and an overview
of the scope of our audit
Materiality for the Group financial statements as a whole was set
at £1.5m (2022: £0.9m), determined with reference to a benchmark
of Group profit before tax normalised to exclude acquisition costs,
employment- linked and contingent consideration as disclosed in
note 4, of which it represents 4.8% (2022: 4.6%).
Materiality for the parent Company financial statements as a
whole was set at £0.7m (2022: £0.3m), which is the component
materiality for the parent company determined by the group audit
engagement team. This is lower than the materiality we would
otherwise have determined with reference to a benchmark of
parent company total assets, of which it represents 0.3%
(2022: 0.2%).
In line with our audit methodology, our procedures on individual
account balances and disclosures were performed to a lower
threshold, performance materiality, so as to reduce to an acceptable
level the risk that individually immaterial misstatements in individual
account balances add up to a material amount across the
financial statements as a whole.
Performance materiality was set at 75% (2022: 75%) of materiality
for the financial statements as a whole, which equates to £1.13m
(2022: £0.68m) for the Group and £0.53m (2022: £0.23m) for the
parent Company. We applied this percentage in our determination
of performance materiality because we did not identify any factors
indicating an elevated level of risk.
We agreed to report to the Audit Committee any corrected
or uncorrected identified misstatements exceeding £0.08m
(2022: £0.05m), in addition to other identified misstatements
that warranted reporting on qualitative grounds.
Of the Group’s 34 (2022: 30) reporting components, we subjected
7 (2022: 6) to full scope audits for Group purposes and 1 (2022: 2)
to specified risk-focused audit procedures. The latter were not
individually financially significant enough to require a full scope
audit for Group purposes, but did present specific individual risks
that needed to be addressed. We subjected 1 (2022: 1) component
to specified risk-focused audit procedures over revenue, accrued
income and deferred income.
Annual Report & Accounts 2023
85
For the residual components, we performed analysis at an
aggregated Group level to re-examine our assessment that
there were no significant risks of material misstatement within
these. The component materialities ranged from £0.5m to
£1.0m (2022: £0.3m to £0.6m), having regard to the mix of
size and risk profile of the Group across the components.
The work on all of the components (2022: all of the components),
including the audit of the parent company, was performed by the
group team. The group team performed procedures on the items
excluded from normalised Group profit before tax. The scope of
the audit work performed was predominately substantive as we
placed limited reliance upon the Group’s internal control over
financial reporting.
The components within the scope of our work accounted for the
percentages illustrated below.
Group profit before tax
adjusted for acquisition costs,
employment-linked and
contingent consideration
£31.0m (2022: £19.5m)
Group profit before tax
adjusted for acquisition costs,
employment-linked and
contingent consideration
Group materiality
Group materiality
£1.5m (2022: £0.9m)
£1.5m
Whole financial
statements materiality
(2022: £0.9m)
£1.13m
Whole financial
statements
performance materiality
(2022: £0.68m)
£1.0m
Range of materiality
at 8 components
(£0.5m-£1.0m) (2022:
£0.3m to £0.6m)
£0.08m
Misstatements reported
to the Audit Committee
(2022: £0.05m)
3
8
79%
Group total assets
Group absolute profit before tax 88+
Group revenue71+
I91+
I74+
(2022: 78%) 79+
I75+
I88
I79
I71
84%
(2022: 83%)
91%
(2022: 92%)
Specified risk-focused audit procedures 2022
Full scope for Group audit purposes 2023
91
75
74
5
9
3
1
Specified risk-focused audit procedures 2023
Residual components
alphafmc.com
alphafmc.com
Full scope for Group audit purposes 2022
Corporate Governance
8
+
21
+
+
3
+
22
+
+
5
+
16
+
+
9
+
17
+
+
3
+
9
+
+
1
+
8
+
+
86
Annual Report & Accounts 2023
Corporate Governance
Independent auditor’s report continued
4. Going concern
The Directors have prepared the financial statements on the
going concern basis as they do not intend to liquidate the Group
or the Company or to cease their operations, and as they have
concluded that the Group and the Company’s financial position
means that this is realistic. They have also concluded that there
are no material uncertainties that could have cast significant
doubt over their ability to continue as a going concern for at
least a year from the date of approval of the financial statements
(“the going concern period”).
We used our knowledge of the Group, its industry, and the
general economic environment to identify the inherent risks to
its business model and analysed how those risks might affect
the Group’s and Company’s financial resources or ability to
continue operations over the going concern period. The risk
that we considered most likely to adversely affect the Group’s
and Company’s available financial resources and metrics
relevant to debt covenants over this period was:
— The impact of future cash payments in relation to
previous acquisitions.
We considered whether this risk could plausibly affect the liquidity
in the going concern period by assessing the degree of downside
assumption that, individually and collectively, could result in a
liquidity issue, taking into account the Group’s current and
projected cash and facilities (a “reverse stress test”).
We considered whether the going concern disclosure in note 1
to the financial statements gives a full and accurate description
of the Directors’ assessment of going concern, including the
identified risks and dependencies. We assessed the completeness
of the going concern disclosure.
Our conclusions based on this work:
— we consider that the Directors’ use of the going concern
basis of accounting in the preparation of the financial
statements is appropriate;
— we have not identified, and concur with the Directors’
assessment that there is not, a material uncertainty related to
events or conditions that, individually or collectively, may cast
significant doubt on the Group’s or Company’s ability to
continue as a going concern for the going concern period; and
— we found the going concern disclosure in note 1 to be acceptable.
However, as we cannot predict all future events or conditions
and as subsequent events may result in outcomes that are
inconsistent with judgements that were reasonable at the time
they were made, the above conclusions are not a guarantee
that the Group or the Company will continue in operation.
5. Fraud and breaches of laws and regulations
– ability to detect
Identifying and responding to risks of material misstatement
due to fraud
To identify risks of material misstatement due to fraud (“fraud
risks”) we assessed events or conditions that could indicate an
incentive or pressure to commit fraud or provide an opportunity to
commit fraud. Our risk assessment procedures included:
— enquiring of Directors and the Audit and Risk Committee, and
inspection of policy documentation as to the Group’s high-
level policies and procedures to prevent and detect fraud,
including the Group’s channel for “whistleblowing”, as well as
whether they have knowledge of any actual, suspected or
alleged fraud;
— reading Board and Audit and Risk Committee minutes;
— considering remuneration incentive schemes and performance
targets for management and Directors including the EPS target
for management remuneration; and
— using analytical procedures to identify any unusual or
unexpected relationships.
We communicated identified fraud risks throughout the audit team
and remained alert to any indications of fraud throughout the audit.
As required by auditing standards, and taking into account
possible pressures to meet profit targets and our overall
knowledge of the control environment, we perform procedures to
address the risk of management override of controls and the risk
of fraudulent revenue recognition, in particular:
— the risk that Group management may be in a position to make
inappropriate accounting entries;
— the risk of bias in accounting estimates and judgements such
as employment-linked acquisition payments, share-based
payments and contingent consideration; and
— the risk that revenue is recorded in the wrong period.
Further detail in respect of revenue recognition is set out in the key
audit matter disclosures in section 2 of this report.
We also performed procedures including:
— identifying journal entries and other adjustments to test for all
full scope components based on risk criteria and comparing
the identified entries to supporting documentation. These
included unusual pairings with a credit or debit to an account
above earnings before interest, tax, depreciation and
amortisation, (“EBITDA”), with the opposite entry below EBITDA
and unusual journals with a credit or debit entry to cash;
— identifying revenue transactions to test for all full scope
components based on unusual pairings with a credit or debit
to revenue; and
— assessing whether the judgements made in making
accounting estimates are indicative of a potential bias.
Annual Report & Accounts 2023
87
Identifying and responding to risks of material misstatement
due to non-compliance with laws and regulations
We identified areas of laws and regulations that could reasonably
be expected to have a material effect on the financial statements
from our general commercial and sector experience, and through
discussion with the Directors and other management (as required
by auditing standards), and from inspection of the Group’s legal
correspondence and discussed with the Directors and other
management, the policies and procedures regarding compliance
with laws and regulations.
We communicated identified laws and regulations throughout our
team and remained alert to any indications of non- compliance
throughout the audit.
The potential effect of these laws and regulations on the financial
statements varies considerably.
Firstly, the Group is subject to laws and regulations that directly
affect the financial statements including financial reporting
legislation (including related companies legislation), distributable
profits legislation and taxation legislation and we assessed the
extent of compliance with these laws and regulations as part
of our procedures on the related financial statement items.
Secondly, the Group is subject to many other laws and
regulations where the consequences of non-compliance could
have a material effect on amounts or disclosures in the financial
statements, for instance through the imposition of fines or
litigation. We identified the following areas as those most likely to
have such an effect: anti-bribery, data protection and employment
law recognising the financial nature of the Group’s activities.
Auditing standards limit the required audit procedures to identify
non-compliance with these laws and regulations to enquiry of the
Directors and other management and inspection of regulatory
and legal correspondence, if any. Therefore if a breach of
operational regulations is not disclosed to us or evident from
relevant correspondence, an audit will not detect that breach.
Context of the ability of the audit to detect fraud or breaches
of law or regulation
Owing to the inherent limitations of an audit, there is an unavoidable
risk that we may not have detected some material misstatements in
the financial statements, even though we have properly planned
and performed our audit in accordance with auditing standards.
For example, the further removed non- compliance with laws and
regulations is from the events and transactions reflected in the
financial statements, the less likely the inherently limited procedures
required by auditing standards would identify it.
In addition, as with any audit, there remained a higher risk of
non-detection of fraud, as these may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of
internal controls. Our audit procedures are designed to detect
material misstatement. We are not responsible for preventing
non-compliance or fraud and cannot be expected to detect
non- compliance with all laws and regulations.
6. We have nothing to report on the other
information in the Annual Report
The Directors are responsible for the other information presented
in the Annual Report together with the financial statements.
Our opinion on the financial statements does not cover the other
information and, accordingly, we do not express an audit opinion
or, except as explicitly stated below, any form of assurance
conclusion thereon.
Our responsibility is to read the other information and, in doing so,
consider whether, based on our financial statements audit work,
the information therein is materially misstated or inconsistent with
the financial statements or our audit knowledge. Based solely on
that work we have not identified material misstatements in the
other information.
Strategic report and Directors’ report
Based solely on our work on the other information:
— we have not identified material misstatements in the Strategic
Report and the Directors’ report;
— in our opinion the information given in those reports for the
financial year is consistent with the financial statements; and
— in our opinion those reports have been prepared in
accordance with the Companies Act 2006.
7. We have nothing to report on the other matters
on which we are required to report by exception
Under the Companies Act 2006, we are required to report to you
if, in our opinion:
— adequate accounting records have not been kept by the
parent company, or returns adequate for our audit have not
been received from branches not visited by us; or
— the parent company financial statements are not in agreement
with the accounting records and returns; or
— certain disclosures of Directors’ remuneration specified by law
are not made; or
— we have not received all the information and explanations we
require for our audit.
We have nothing to report in these respects.
8. Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on p. 81,
the Directors are responsible for: the preparation of the financial
statements, including being satisfied that they give a true and fair
view; such internal control as they determine is necessary to
enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error; assessing
the Group and parent Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern;
and using the going concern basis of accounting unless they
either intend to liquidate the Group or the parent Company or to
cease operations, or have no realistic alternative but to do so.
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Corporate Governance 88
Annual Report & Accounts 2023
Corporate Governance
Independent auditor’s report continued
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue our
opinion in an auditor’s report. Reasonable assurance is a high level
of assurance, but does not guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud
or error and are considered material if, individually or in aggregate,
they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial statements.
A fuller description of our responsibilities is provided on the FRC’s
website at www.frc.org.uk/auditorsresponsibilities.
9. The purpose of our audit work and to whom we
owe our responsibilities
This report is made solely to the Company’s members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might state
to the Company’s members those matters we are required to state
to them in an auditor’s report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the
Company’s members, as a body, for our audit work, for this report,
or for the opinions we have formed.
Craig Parkin (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
Nottingham
22 June 2023
Financial Statements
Financial Statements
90 Consolidated statement of comprehensive income
91 Consolidated statement of financial position
92 Consolidated statement of cash flows
93 Consolidated statement of changes in equity
94 Notes to the consolidated financial statements
129 Company statement of financial position
130 Company statement of changes in equity
131 Notes to the Company financial statements
Annual Report & Accounts 2023
89
i
F
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
alphafmc.com
alphafmc.com
90
Annual Report & Accounts 2023
Annual Report & Accounts 2023
91
Consolidated statement of comprehensive income
For the year ended 31 March 2023
Consolidated statement of financial position
As at 31 March 2023
Continuing operations
Revenue
Rechargeable expenses
Net fee income25
Cost of sales
Gross profit
Administration expenses
Operating profit
Finance income
Finance expense
Profit before tax
Taxation
Profit for the year
Exchange differences on translation of foreign operations
Total other comprehensive income
Total comprehensive income for the year
Basic earnings per ordinary share (p)
Diluted earnings per ordinary share (p)
Year ended
31 March 2023
£’000
Year ended
31 March 2022
£’000
Note
2
2
2
2
2
3
6
6
8
228,717
158,005
(1,562)
(196)
227,155
157,809
(146,796)
(98,452)
80,359
59,357
(51,723)
(41,582)
28,636
17,775
364
1
(3,229)
(2,894)
25,771
14,882
(7,810)
(6,370)
17,961
3,510
3,510
8,512
3,180
3,180
21,471
11,692
11
11
15.82
14.79
7.69
7.25
Assets
Non-current assets
Goodwill
Intangible fixed assets
Property, plant and equipment
Right-of-use asset
Deferred tax asset
Capitalised contract fulfilment costs
Total non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Current liabilities
Trade and other payables
Provisions
Corporation tax
Lease liabilities
Total current liabilities
Net current assets
Non-current liabilities
Deferred tax liability
Other non-current liabilities
Lease liabilities
Total non-current liabilities
Net assets
Equity
Issued share capital
Share premium
Foreign exchange reserve
Other reserves
Retained earnings
Total shareholders’ equity
As at
31 March 2023
£’000
As at
31 March 2022
£’000
Note
12
12
14
7
9
15
15
16
17
18
7
9
19
7
103,676
100,991
27,588
31,333
1,113
4,008
3,033
108
806
2,304
671
131
139,526
136,236
34,128
59,215
29,569
63,516
93,343
93,085
(60,539)
(56,671)
(3,326)
(1,321)
(2,104)
(3,277)
(4,788)
(1,134)
(67,290)
(65,870)
26,053
27,215
(2,783)
(4,331)
(11,400)
(25,100)
(2,057)
(1,275)
(16,240)
(30,706)
149,339
132,745
21
90
89
119,438
119,438
6,992
17,258
5,561
3,482
9,361
375
149,339
132,745
The notes on pp 94–128 form part of these consolidated financial statements. These financial statements were approved and
authorised for issue by the Board of Directors on 22 June 2023.
They were signed on its behalf by:
Luc MJ Baqué
Chief Executive Officer
John C Paton
Chief Financial Officer
25 Net fee income, adjusted EBITDA and other alternative performance measures are defined and reconciled in note 4.
alphafmc.com
alphafmc.com
Financial Statements
92
Annual Report & Accounts 2023
Consolidated statement of cash flows
For the year ended 31 March 2023
Cash flows from operating activities:
Profit for the year
Taxation
Finance income
Finance expenses
Profit from exchange rate movements on cash held
Depreciation charge
(Gain)/loss on disposal of fixed assets
Amortisation of intangible fixed assets
Share-based payment charge
(Decrease)/increase in provisions
Year ended
31 March 2023
£’000
Year ended
31 March 2022
£’000
Note
8
6
6
7,14
12
22
18
17,961
7,810
(364)
3,229
(2,364)
1,933
(14)
4,762
7,023
(19)
8,512
6,370
(1)
2,894
–
1,155
32
5,272
4,075
1,302
Operating cash flows before movements in working capital
39,957
29,611
Working capital adjustments:
Increase in trade and other receivables
Increase in trade and other payables
Tax paid
Net cash generated from operating activities
Cash flows from investing activities:
Interest received
Acquisition consideration payments, including deferred and contingent
Purchase of intangible assets
Purchase of property, plant and equipment, net of disposals
Net cash used in investing activities
Cash flows from financing activities:
Issue of ordinary share capital
Share issuance costs
Net settlement of vested share options
EBT purchase of Company’s own shares
Drawdown of revolving credit facility
Repayment of revolving credit facility
Interest and bank loan fees
Principal lease liability payments
Interest on lease liabilities
Dividends paid
Net cash (used in)/generated from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Effect of exchange rate movements on cash held
Cash and cash equivalents at end of the year
(3,834)
7,752
(13,285)
(7,066)
15,729
(4,767)
30,590
33,507
364
1
(20,829)
(23,796)
(319)
(860)
–
(684)
(21,644)
(24,479)
–
–
(343)
(1,139)
12,500
(12,500)
(482)
(1,315)
(216)
31,102
(1,053)
–
(205)
–
–
(285)
(814)
(111)
6
13
12
14
6
6
7
7
10
(12,774)
(8,678)
(16,269)
19,956
(7,323)
28,984
63,516
3,022
34,012
520
59,215
63,516
Consolidated statement of changes in equity
For the year ended 31 March 2023
Annual Report & Accounts 2023
93
As at 1 April 2021
Comprehensive income
Profit for the year
Foreign exchange differences on translation
of foreign operations
Transactions with owners
Shares issued (equity)
Purchase of own shares by the EBT
Share-based payment charge
Net settlement of vested share options
Current tax recognised in equity
Deferred tax recognised in equity
Dividends
As at 31 March 2022
Comprehensive income
Profit for the year
Foreign exchange differences on translation
of foreign operations
Transactions with owners
Shares issued (equity)
Purchase of own shares by the EBT
Share-based payment charge
Net settlement of vested share options
Current tax recognised in equity
Deferred tax recognised in equity
Dividends
As at 31 March 2023
Share
capital
£’000
80
Share
premium
£’000
89,396
Foreign
exchange
reserve
£’000
302
Other
reserves
£’000
4,044
Retained
earnings
£’000
Total
£’000
543
94,365
–
–
–
–
–
3,180
9
30,042
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(205)
4,075
(12)
220
1,239
8,512
–
8,512
3,180
(2)
30,049
–
–
–
–
–
(205)
4,075
(12)
220
1,239
(8,678)
–
(8,678)
89
119,438
3,482
9,361
375
132,745
–
–
1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
3,510
–
–
–
–
–
–
–
–
–
–
(1,139)
7,023
(343)
1,486
870
–
17,961
17,961
–
3,510
(1)
–
–
–
–
–
–
(1,139)
7,023
(343)
1,486
870
(12,774)
(12,774)
90
119,438
6,992
17,258
5,561
149,339
Share capital
Share capital represents the nominal value of share capital subscribed.
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 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 and deferred tax, 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 gains
and losses recognised in the consolidated statement of
comprehensive income less dividends paid.
alphafmc.com
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Financial Statements 94
Annual Report & Accounts 2023
Annual Report & Accounts 2023
95
Notes to the consolidated financial statements
1. Summary of significant accounting policies
General information
The principal activity of the Group is the provision of consulting
and related services to clients in the asset management, wealth
management and insurance industries, principally in the UK,
North America and Europe & APAC.
Alpha Financial Markets Consulting plc is incorporated in England
and Wales with registered number 09965297. The Company is
a public limited company and is listed on the AIM of the London
Stock Exchange. Its registered office is 60 Gresham Street,
London EC2V 7BB.
The consolidated financial statements were authorised for issue
in accordance with a resolution of the Directors on 22 June 2023.
Basis of preparation
The consolidated financial statements have been prepared in
accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006.
These financial statements have been prepared under the
historical cost basis, except for certain financial instruments
that are measured at fair value.
The presentational currency of these financial statements is pound
sterling. All amounts in these financial statements have been
rounded to the nearest £1,000, except where otherwise stated.
Going concern
In assessing the Group’s and the Company’s abilities to continue
on a going concern basis for a period of at least 12 months from
the approval of these financial statements (the “going concern
period”), the Directors considered the Group’s projected cash
flows, cash liquidity and existing undrawn borrowing facilities.
As at 31 March 2023, the Group held considerable financial
resources including cash balances of £59.2m. The Group also
has access, throughout the going concern period, to a revolving
credit facility (“RCF”) of £50.0m, providing further liquidity. See
notes 6 and 27 for details of the Group’s banking facility, and
also note 23 for details of the financial risks facing the Group.
The Group prepared cash-flow forecasts covering the going
concern period. The base case assumes trading performance
over the forecast period in line with the Board-approved budget,
below average revenue growth in recent years, at similar margins,
whilst incorporating future cash flows related to deferred
consideration and earn-out payments due. The Directors
considered the principal risks and mitigants (as set out on pp
50–53) and analysed a range of cash-flow downside scenarios
including a “reverse stress test” scenario. This models the decline
in sales that the Group would be able to absorb over the going
concern period before utilising all of the existing cash reserves
available, while assuming the maximum Lionpoint and Shoreline
acquisition payments. The Directors consider this scenario and
the sequence of events that could lead to it to be remote, as it
requires annualised revenue reductions of close to 40%
compared to the base case, before modelling any mitigating
actions, including cost reductions. The Group’s RCF remains
fully undrawn in the going concern scenarios.
The Directors have considered the Group’s continued growth, strong
cash conversion and new business pipeline, while also remaining
cognisant of the potential ongoing macro-economic uncertainty.
After careful consideration of the scenarios, the Directors have a
reasonable expectation that the Group’s existing resources are
adequate to meet its requirements over the going concern period.
On this basis, the Directors consider that it is appropriate to adopt
the going concern basis in preparing the financial statements.
Basis of consolidation
These financial statements consolidate the financial statements
of the Company and its subsidiary undertakings (the “Group”)
as at 31 March 2023.
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.
Principal accounting policies
The principal accounting policies adopted in the preparation
of these 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, liabilities, income and expenses.
Judgements
In the process of applying the Group’s accounting policies, the
Directors have made two judgements (excluding those involving
estimations), which are considered to have a significant effect on
the financial statements for the year ended 31 March 2023.
Alternative performance measures
To assist in understanding the underlying performance of the
Group, management presents various alternative performance
measures (“APMs”), which exclude certain adjusting items. APMs
are provided to allow stakeholders a further understanding of the
underlying trading performance of the Group and aid comparability
between accounting periods. Management applies judgement to
identify those income or expense items that are deemed to
warrant exclusion from the calculation of the Group’s adjusted
measures to allow stakeholders a further understanding of the
underlying performance of the business. These adjusting items
have been applied consistently across reporting periods.
A reconciliation to IFRS measures and explanation of each
adjusting item excluded are provided in note 4.
All adjusting items are considered individually for exclusion by
virtue of their nature or size. In the year ended 31 March 2023,
these items totalled £15.8m (FY 22: £14.4m) recognised in
administration expenses. A further £2.4m (FY 22: £2.5m)
was recognised within finance expenses.
Revenue recognition
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:
Tangible fixed asset
Useful economic life
Leasehold improvements
3–10 years
Fixtures and fittings
Computer equipment
3–4 years
3–6 years
Useful economic lives and estimated residual values are reviewed
annually and adjusted as appropriate.
Business combinations, goodwill and consideration
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. Identifiable assets acquired
and liabilities assumed in a business combination are measured
at their fair values at the acquisition date.
Goodwill arises when the fair value of the consideration for a business
exceeds the fair value of the identifiable net assets acquired.
In determining the fair value of intangible assets arising on a
business combination, management assesses the timing and
amount of future cash flows applicable to the intangible assets
being acquired, discounted using an appropriate discount rate.
The estimated cash flows are based on current budgets and
forecasts, extrapolated for an appropriate period, considering
growth rates and expected changes to selling prices and
operating costs. Management estimates an appropriate discount
rate using post-tax rates that reflect current market assessments
of the time value of money and the risks specific to the business
being acquired (see note 12).
In line with IAS 21 para 47, goodwill arising on the acquisition of a
foreign operation is held in local currency and is retranslated into
the Group’s presentational currency at each reporting date using
the closing foreign exchange rate.
Goodwill is initially recognised and measured as set out above.
Goodwill is not amortised but is reviewed for impairment at least
annually as described below.
Revenue is the Group’s most significant caption on the statement
of comprehensive income. Whilst the majority of the Group’s
revenue is contracted on a time and materials basis, the Group
also has some fixed-price milestone contracts. The recognition of
revenue on such contracts involves consideration of the detailed
contractual terms against the requirements of IFRS 15. The key
judgements include assessment of whether revenue should be
recognised over time or at a point in time, and whether the
performance obligations under the contract have been met at the
balance sheet date, to best reflect the transfer of services through
the life of each contract.
Further information regarding the methods used to recognise
revenue for both time and materials and milestone contracts
is provided in the Group’s accounting policy, as detailed on p. 99.
Estimates
A number of estimates have been made in the preparation of the
financial statements. The underlying assumptions in the Group’s
estimates are based on historical experience and various other
factors that are deemed to be reasonable under the
circumstances. These assumptions form the basis of developing
estimates of the carrying values of assets and liabilities that are
not apparent from other sources. Estimates and underlying
assumptions are reviewed on an ongoing basis. Revisions to
estimates are recognised in the year in which the estimate is
revised and any future years affected. Actual results can differ
from these estimates.
The Directors have identified the following areas as key estimates
that are considered to have a significant risk of resulting in a
material adjustment to the carrying amounts of assets or liabilities
within the next financial year.
Share-based payments (note 22)
Management has estimated the share-based payment expense
under IFRS 2. In determining the share-based payment expense
and the associated social security tax thereon, management has
considered several internal and external factors to judge the
probability that management and employee share incentives may
vest and to assess the fair value of share options at the date of
grant. Such assumptions involve estimating future performance,
share price and other factors. The fair value calculations have
been externally assessed for reasonableness in the current and
prior years. Refer to note 22 for sensitivity analysis.
Acquisition earn-outs (note 13)
Alpha’s acquisition earn-out liability calculations under IFRS 3
contain estimation uncertainty, as the earn-out potentially payable
in each case is linked to the future performance of the acquiree.
To determine the fair value of the earn-out liability at the balance
sheet date, management has assessed the potential future cash
flows of the acquired businesses respectively and the likelihood of
an earn-out payment being made and discounted using an
appropriate discount rate. These estimates could potentially
change because of events over the coming years. Refer to note
23 for sensitivity analysis.
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alphafmc.com
Financial Statements 96
Annual Report & Accounts 2023
Annual Report & Accounts 2023
97
1. Summary of significant accounting policies
continued
Impairment reviews – goodwill
For the purpose of impairment testing, goodwill is allocated to
each of the Group’s cash-generating units (“CGUs”) or groups of
cash-generating units expected to benefit from the synergies of
the combination. Goodwill is tested for impairment annually or,
more frequently, when there is an indication of impairment.
The Group performs impairment reviews at the reporting period
end to identify any goodwill assets that have a carrying value that
is in excess of its recoverable amount. Determining the recoverability
of goodwill requires judgement in both the methodology applied
and the key variables within that methodology. If it is determined
that an impairment is required, the carrying value of the goodwill
is reduced to its recoverable amount with the difference recorded
as an impairment charge in the income statement. An impairment
loss recognised for goodwill is not reversed.
In accordance with IAS 36, the Group has tested goodwill for
impairment at the balance sheet date. No goodwill impairment
was deemed necessary at 31 March 2023.
Contingent and deferred consideration on acquisition
Contingent and deferred consideration may arise on acquisitions.
Deferred consideration may arise when settlement of all or part of
the cost of business combination falls due after the acquisition
was completed. Contingent consideration may arise where
consideration is dependent on the future performance of the
acquired company.
Deferred and contingent consideration associated with business
combinations settled in cash is assessed in line with agreed
contractual terms. Consideration payable is discounted for the
time value of money and recognised as capital investment cost
at fair value when the deferred or contingent consideration is not
employment-linked. Alternatively, where amounts payable are
contingent upon future employment, these amounts are recognised
as a remuneration expense over the deferral or contingent
performance period.
In circumstances where there is an option to settle in the form
of cash or a variable number of shares, the Group recognises a
financial liability for the fair value of the discounted consideration.
Where consideration is settled in a fixed number of shares, the
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 deferred and contingent
consideration are recognised in the consolidated statement of
comprehensive income.
At each balance sheet date, consideration liabilities comprise
the fair value of the remaining contingent or deferred consideration
valued at acquisition, and the cumulative value of the employment-
linked amounts recognised through the consolidated statement of
comprehensive income since acquisition.
At each balance sheet date, the fair value of the liabilities initially
recognised at the acquisition date is measured using level 3
inputs in accordance with the fair value hierarchy and as such
these calculations contain estimation uncertainty, as they relate to
future performance. The key inputs associated with the valuation
of these liabilities include the potential future cash flows of each
acquired business, the likelihood of an earn-out payment being
made and developing an appropriate discount rate to apply to
alphafmc.com
these future cash flows. Changes in the carrying value of these
liabilities associated with the passage of time are recognised as
a finance cost, whereas changes in the underlying forecasts
supporting the fair value are recognised within administration
expenses as an adjusting item. For further detail see note 13.
Cash flows in relation to employment-linked amounts are
recorded within operating activities. All other consideration
payments, including any movements in contingent consideration
in the year, are recorded within investing activities.
Other intangible assets
Intangible assets acquired in a business combination are initially
recognised at their fair value at the acquisition date (which is
regarded as their cost). After initial recognition, intangible assets
acquired in a business combination are reported at cost less
accumulated amortisation and any impairment losses.
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 Group
and sold, transferred, licensed, rented or exchanged, either
individually or together with a related contract, identifiable asset
or liability, regardless of whether the Group intends to do so; or
— they arise from contractual or other legal rights, regardless of
whether those rights are transferrable 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.
These useful economic lives are reassessed at each reporting date:
Intangible asset
Useful economic life
Valuation method
Customer
relationships
Intellectual
property
11–17 years
Multi-period excess
earnings method
7 years
Relief from royalty method
Trade name
10–15 years
Relief from royalty method
Order backlog
1–2 years
Multi-period excess
earnings method
Internally developed intangible assets
Capitalised development costs represent the costs incurred in the
development of enhancements to internally generated software,
primarily within the Aiviq business.
A useful economic life of three years has been deemed
appropriate based on the expected project lifecycle in
development of new software. The amortisation charge is
recognised in administration expenses within the statement
of comprehensive income.
Foreign exchange
Trade and other receivables
Trade and other receivables are recognised initially at fair value,
equal to the transaction price, and subsequently measured at
amortised cost less provision for impairment. The trade
receivables balances recorded in the Group’s statement of
financial position are held until realised in cash.
The Group provides services to customers on credit terms with
mainly arrears billing. Certain receivables may not be paid.
The Group applies the IFRS 9 simplified approach to measuring
expected credit losses, which uses a lifetime expected loss
allowance for all trade receivables. To measure expected credit
losses, trade receivables have been grouped based on shared
credit characteristics and the days past due. The Group considers
historical loss rates for each ageing category as a starting point for
estimating the expected credit loss. This historical loss rate is
subsequently adjusted for macro-economic and customer-specific
factors of receivables within each ageing category. Characteristics
considered by the Group for these purposes include: historical
collection experience for each customer; the assessed liquidity of
key customers within the receivables balance; and other relevant
macro-economic factors in order to determine a reasonable and
supportable assessment of the expected lifetime credit risk in the
context of the overall year-end trade receivables due.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances that are
recorded and subsequently measured at amortised cost in line
with IFRS 9. 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 of the cash flow statement only.
Financial liabilities
Financial liabilities measured at fair value through profit or loss
Financial liabilities measured 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 IFRS 9. As at 31 March 2023,
the Group had no derivative financial instruments or designated
hedge relationships.
Trade and other payables
Trade and other payables are initially recognised at fair value,
equal to the transaction price, and are subsequently measured at
amortised cost. Trade payables due within one year are not discounted.
Refer to note 23 for the disclosure of financial liabilities measured
at amortised cost and fair value.
Transactions in foreign currencies are translated to the relevant
entity’s functional currency at the average foreign exchange rate
in the month 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 average exchange rate in the month of the
transaction and are not retranslated. Foreign exchange
differences arising on translation to functional currency are
recognised in administration expenses.
The revenues and expenses of foreign operations are translated
to the Group’s functional currency at the average foreign exchange
rate in the month of the date of the transactions. 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. Foreign exchange differences
arising on retranslation of assets and liabilities relating to foreign
operations are recognised in total comprehensive income.
Exchange differences on translation of foreign operations may
be reclassified subsequently to profit or loss when specific
conditions are met.
Financial instruments
The Group uses financial instruments comprising cash and
cash equivalents, borrowings, and other short-term instruments,
such as trade payables that 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
Financial assets are initially measured at fair value plus or minus,
in the case of a financial asset not at fair value through profit or
loss, transaction costs. The Group has not reclassified any
financial assets subsequent to initial recognition as at the balance
sheet date. Reclassification of classes of financial assets is
accounted for prospectively in accordance with IFRS 9, where
this is required. Any difference on reclassification from amortised
cost to fair value through profit or loss is recognised in the
statement of comprehensive income at the reclassification date.
Financial assets are assessed at each reporting date to determine
a lifetime expected credit loss that reflects the credit risk
associated with the portfolio of assets. A financial asset is
impaired in line with the simplified approach under IFRS 9,
which uses a lifetime expected loss allowance.
The Group recognises an expected credit loss provision in
relation to financial assets. The simplified method is applied to
the Group’s trade receivables as described below. The Group’s
expected credit loss provision on all other financial assets is
immaterial as the probability of default is low. Movements in
the expected credit loss provision are recognised in profit or loss.
Refer to note 15 for further details.
Refer to note 23 for the disclosure of financial assets measured
at amortised cost.
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Annual Report & Accounts 2023
99
1. Summary of significant accounting policies
continued
Provisions
Provisions are distinct from other liabilities as there is uncertainty
over the timing or amount of the cash outflow required to settle
the liability. Provisions are measured at the present value of the
expenditure expected to be required to settle the obligation.
These are discounted to present value using an appropriate
pre-tax discount rate, where the time value of money is material.
Refer to note 18 for detail of classes of provisions and further
detail on material assumptions.
Current and deferred tax
Taxation expense on the result for the year comprises current
and deferred tax. Current and deferred 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 year, 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
approach, 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 taxes levied by the same taxation authority and the
Group intends to settle its current tax assets and liabilities on a
net basis.
External borrowings
All loans and borrowings are initially recognised at fair value, equal
to the value of amounts received. Borrowings are subsequently
stated at amortised cost; any difference between the proceeds
and the redemption value is recognised in the statement of
comprehensive income over the period of the borrowings using
the effective interest method.
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 asset’s recoverable amount is
estimated. The recoverable amount of an asset or cash-generating
unit (“CGU”) 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 independent cash inflows (the CGU); that is,
cash inflows from continuing use that are largely independent of
the cash inflows of other assets or groups of assets.
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 the statement of comprehensive income.
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.
An impairment loss relating to non-financial assets, excluding
goodwill, is reversed if and only if the reasons for the impairment
have ceased to apply.
Impairment losses recognised in prior years are assessed at each
reporting date for any indication that the loss has decreased or no
longer exists. An impairment loss is only reversed 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.
Right-of-use assets are accounted for in line with the “Leases”
section below.
Leases
The Group leases office premises in various jurisdictions. Leases
are negotiated on an individual basis, and for a variety of terms
over which rentals are fixed with break clauses and options to
extend for a further period at the then prevailing market rate.
Rental agreements to which IFRS 16 has been applied span
anywhere between 12 months and 10 years. Contracts may
contain both lease and non-lease components. Non-lease
components are separately identifiable and excluded from the
recognition of the lease under IFRS 16.
The lease agreements do not impose any covenants other than the
security interests in the leased assets that are held by the lessor.
Leased assets may not be used as security for borrowing purposes.
Alongside the rental leases associated with the office spaces, the
Group also holds leases over associated car parking facilities and
leases associated with office equipment. These form the
population of leases subject to IFRS 16 accounting.
Measurement of lease liabilities
On initial recognition of a new lease, the lease liability is
recognised as the present value of future payments, discounted
using the incremental borrowing rate (“IBR”), unless the interest
rate implicit to the lease is available for use.
Lease payments to be made subsequent to optional termination
options have been included within the lease liability measurement,
where it is reasonably certain that such options will be exercised.
Lease payments are discounted using the interest rate implicit in
the lease. If that rate cannot be easily determined, the IBR is
applied, being the rate that the individual lessee would have to pay
to borrow the funds necessary to obtain an asset of similar value
to the right-of-use asset in a similar economic environment with
similar terms, security and conditions. In determining the IBR, the
Group has made adjustments for relevant factors such as lease
term, lease value and country and asset-specific considerations.
The Group accounts for lease payments by allocating them to a
finance cost element and against the lease liability. The finance
cost is charged to the statement of comprehensive income over
the lease period.
When the Group revises its estimate of the term of any lease (for
example, if a significant change in circumstances within the
Group’s control indicates a reassessment is appropriate), the
Group adjusts the carrying amount of the lease liability to reflect
the payments to make over the revised term, which are discounted
using a revised discount rate. In such cases, an equivalent
adjustment is made to the carrying value of the right-of-use asset,
with the revised carrying amount being amortised over the
remaining (revised) lease term. If the carrying amount of the
right-of-use asset is adjusted to zero, any further reduction is
recognised in the statement of comprehensive income.
The Group has no material exposure to variable lease payments
that qualify for accounting treatment under IFRS 16.
Measurement of right-of-use assets
The right-of-use asset for lease agreements entered into after
transition date is measured on initial recognition as the amount
equal to the lease liability, less any lease incentives, plus any initial
direct costs. Right-of-use assets are depreciated over the shorter
of the asset’s useful life and the lease term on a straight-line basis.
The Group has used the practical expedients permitted by
IFRS 16 in relation to accounting for leases with a lease term of
less than 12 months as “short-term leases”, and those with a low
value as “low-value leases”. Consequently, no lease liability or
right-of-use asset is calculated thereon. These leases are
expensed in the statement of comprehensive income. The Group
also applies the practical expedient to combine leases with similar
characteristics to a portfolio of leases for the purpose of applying
the requirements of IFRS 16.
See note 7 for further details on the Group’s leasing arrangements.
Revenue recognition
Recognition of revenue and client billing
Revenue consists of the value of work executed for clients during
the year and expenses recharged, exclusive of VAT. Revenue is
classified into net fee income and recharged expenses. Net fee
income represents the Group’s personnel, subcontractor and
related expertise and services sold to clients. Recharged
expenses are the recharge of costs incidental to fulfilling contracts
including flights, subsistence and accommodation on which nil or
negligible margin is earned by the Group.
The Group delivers services that have no alternative use to Alpha
(advice to clients, reports, etc.) as the services are specifically
tailored to clients’ projects and scope of work. The significant
majority of the Group’s revenue is contracted on a time and
materials basis, where the performance obligation is to provide
consultancy resources at agreed day rates. For such contracts,
revenue is recognised over time, as consultant days worked are
delivered. Modifications or extensions to such projects are
recognised as services are delivered. Significant extensions,
where the scope or price of the contract increases, are treated
as separate contracts. Contracts accounted for on a time and
materials basis are billed incrementally, typically monthly, for
incurred time and materials.
Revenue recognition for fixed-fee projects is based on the
satisfaction of performance obligations in line with contractual
project milestones, depending on the nature of the performance
obligations for the project. Material scope changes are managed
via a new agreement with the client. Fixed-fee projects are typically
billed in accordance with the nature of the performance
obligations when a right to payment crystallises.
For most fixed-fee milestone projects, revenue is recognised at a
point in time upon delivery of each performance obligation and
these projects are typically billed as contractual milestones are
delivered and the right to payment exists. Contractual milestones
are only treated as separate performance obligations by the Group
when they are distinct from the other elements in the contract
and could provide a benefit to the customer without further work
being completed. In limited circumstances, revenue from fixed fee
milestone projects is recognised over time where the Group has
an enforceable right to payment for performance completed to
date, before the contractual milestone has been fully delivered.
Revenue relating to right-to-access software licensing fees is
recognised over time, as the benefits of the software are
consumed by the customer over the licence period. Associated
implementation and other services are recognised in line with the
underlying performance obligation, either over the contractual
licence period where the associated service is not distinct from
the licence, or in line with the work performed where the service
provided is deemed distinct from the underlying licence. This
assessment is made at a contractual level based on the level of
interdependency between the promises in each related contract.
Revenue is wholly attributable to the principal activities of the
Group. For all revenue types, payment is typically due between 30
and 60 days after the invoice date or receipt of invoice, depending
on the client and geography.
Recognition of contract receivables
Activity performance recognised as revenue in excess of invoices
raised results in the recognition of a contract receivable, which is
included with accrued income, up to the value of the relevant
project delivery milestone where applicable.
Recognition of contract liabilities
Where amounts have been invoiced in excess of work performed
and revenue recognised, the excess is a contract liability and is
included within deferred income, valued in line with the nature of
the project and related performance obligations as described
above and recognised in future periods.
Cost of sales
Cost of sales is defined by management as the direct costs
associated with the generation of the Group’s revenue, including
staff payroll and contractor costs that are directly attributable to
the delivery of services and supporting growth.
Rechargeable expenses, including travel and subsistence directly
recharged to the Group’s clients as part of revenue generation,
are presented within the “rechargeable expenses” line within the
Group’s statement of comprehensive income.
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Financial StatementsNotes to the consolidated financial statements continued 100
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Annual Report & Accounts 2023
101
1. Summary of significant accounting policies
continued
Capitalised contract fulfilment costs
Costs directly attributable to the fulfilment of unsatisfied or
partially unsatisfied performance obligations on customer
contracts are recognised as an asset where these costs generate
or enhance resources of the Group and the costs are expected to
be recovered. These costs principally relate to partially completed
milestones on fixed-fee contracts and non-distinct software
implementation costs incurred in advance of the commencement
of the client’s licence period on Aiviq contracts. These costs are
recognised in the consolidated income statement at the point of
revenue recognition for fixed-fee milestone projects, or are
amortised to the consolidated income statement over the licence
period for non-distinct software implementation costs.
Administration expenses
Administration expenses are defined by management as costs
incurred by the Group that are not directly associated with the
generation of revenue. This includes items such as head office
staff costs, recruitment and professional fees and IT services,
which are expensed as incurred. Administration expenses exclude
finance income and expenses and taxation, which are presented
separately in the income statement.
Segmental reporting
An operating segment is a component of the Group:
(i)
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 Group);
(ii) 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
(iii) 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 is responsible for allocating resources and
assessing performance of the operating segments and 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 gross profit earned by each segment without
allocation of administration expenses, 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 Board regularly reviews consolidated operating results to
make decisions about the financial and organisational resources
of the Group and to assess overall performance.
Employee benefits
Defined contribution pension plan
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 paid are shown as either accruals or prepayments
in the consolidated statement of financial position.
Share-based payments
The cost of share-based employee compensation arrangements,
whereby employees receive remuneration in the form of shares
or share options, is recognised as an employee benefit expense
in the consolidated statement of comprehensive income.
The total expense to be apportioned over the vesting period of
the benefit is determined by reference to the fair value (excluding
the effect of non-market-based vesting conditions) at the date
of grant.
In determining the fair value of share-based payments under
IFRS 2, management has considered a number of internal and
external factors in order to judge the probability that management
and employee share incentives may vest. Such judgements
involve estimating future performance and other non-market-
based factors.
At the end of each reporting period the assumptions underlying
the number of awards expected to vest are adjusted for the
effects of non-market-based vesting conditions to reflect the
conditions prevailing at that date. The impact of any revisions
to the original estimates is recognised in the statement of
comprehensive income, with a corresponding adjustment to
equity. Fair value is measured by the use of a binomial model.
The assumptions have been adjusted, based on management’s
best estimate, for the effects of non-transferability, lack of
dividend until vesting and exercise restrictions.
The fair value calculations in both the current and prior years have
been externally assessed and deemed reasonable in the
circumstances.
After vesting, the Group satisfies share option exercises either
through the issuance of new ordinary shares, or through the
transfer of existing shares held in the Company’s EBT to the
employee. Any share options not exercised upon vesting remain
outstanding until the end of the contracted exercise period.
Other benefits
The Group operates a profit share bonus and other bonus
schemes that aim to pay employees a percentage of an
individual’s salary, subject to country or regional-level corporate
performance in the period. The profit share is accrued at each
reporting date, based on management’s best estimates of the
staff bonuses to be paid considering the overall financial
performance and is recognised as an employee benefit expense
in the consolidated statement of comprehensive income.
Short-term employee benefits, including holiday pay and medical
care, are accrued as services are rendered.
Earnings per share
New accounting standards and interpretations
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.
The Group applies the “treasury share method” in calculating the
weighted average number of dilutive ordinary shares used in the
calculation of diluted EPS, under which only the bonus element
of potentially dilutive shares is reflected in the denominator. Bonus
shares represent the number of shares that could be issued to
satisfy share option awards granted to employees under the
Group’s management incentive plan (“MIP”) and employee
incentive plan (“EIP”), net of shares covered by the assumed
proceeds to be received for these awards in the future. For further
detail on these plans, please see note 22.
These share options are only included in the calculation of dilutive
shares where the performance conditions, excluding employment
conditions, are deemed to be satisfied at the balance sheet date.
The inclusion of such potentially dilutive shares is weighted based
on the period in which the share options were outstanding in
the year. Potentially dilutive shares are only treated as dilutive
when their conversion to ordinary shares would decrease EPS
(or increase loss per share).
For the purpose of calculating adjusted EPS the same
adjustments as set out in note 4 are made to the Group’s profit
for the financial year.
Alternative performance measures
In order to provide further information on the underlying
performance of the Group, the Group uses alternative
performance measures (“APMs”). The measures are not defined
under IFRS and they may not be directly comparable with other
companies’ adjusted measures. These non-GAAP measures are
not intended to be a substitute for, or superior to, any IFRS
measures of performance, but have been included as the
Directors consider them to be helpful measures used within the
business for assessing the underlying performance of the Group’s
ongoing business across periods. The disclosure of these
measures within the financial statements is designed to provide
the user with equivalent information, and to supplement those
measures disclosed under IFRS. The Group performs a
reconciliation for each APM, which includes disclosure of the
most directly reconcilable line item, subtotal or total presented
under IFRS within the financial statements. For further details
please refer to note 4.
Dividends
Dividends proposed by the Board are recognised in the financial
statements when they have been approved by shareholders at
the AGM. Interim dividends are recognised when they are paid.
The following changes in accounting policies were applied by
the Group in these consolidated financial statements for the year
ended 31 March 2023. These included the adoption of new
standards and interpretations described below.
The International Accounting Standards Board (“IASB”) and IFRS
Interpretations Committee (“IFRIC”) have issued the following
standards, amendments and interpretations which are now effective:
— Reference to the Conceptual Framework (Amendments to
IFRS 3), effective from 1 January 2022;
— Property, Plant and Equipment – Proceeds before Intended
Use (Amendments to IAS 16), effective from 1 January 2022;
— Onerous Contracts – Cost of Fulfilling a Contract (Amendments
to IAS 37), effective from 1 January 2022; and
— Annual Improvements to IFRS Standards 2018–20 Cycle,
effective from 1 January 2022.
The Directors reviewed the nature and effect of these new
standards on the Group and noted no material impact on the
financial statements for the year ended 31 March 2023.
The following other standards, interpretations and amendments
to existing standards have been issued but were not mandatory
for accounting periods beginning on 1 April 2022 and are not
expected to have a material impact on the Group:
— Extension of the Temporary Exemption from Applying IFRS 9
(Amendments to IFRS 4), effective from 1 January 2023;
— Deferred Tax related to Assets and Liabilities arising from a
Single Transaction (Amendments to IAS 12), effective from
1 January 2023;
— IFRS 17 Insurance Contracts, effective from 1 January 2023;
— Amendments to IFRS 17, effective from 1 January 2023;
— Disclosure of Accounting Policies (Amendments to IAS 1 and
IFRS Practice Statement 2), effective from 1 January 2023
(not yet endorsed by the UK);
— Classification of Liabilities as Current or Non-Current –
Deferral of Effective Date (Amendments to IAS 1), effective
from 1 January 2023;
— Definition of Accounting Estimates (Amendments to IAS 8),
effective from 1 January 2023;
— Lease Liability in a Sale and Leaseback (Amendments to
IFRS 16), effective from 1 January 2024 (not yet endorsed by
the UK); and
— Non-Current Liabilities with Covenants (Amendments to IAS 1),
effective from 1 January 2024 (not yet endorsed by the UK).
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Financial StatementsNotes to the consolidated financial statements continued 102
Annual Report & Accounts 2023
Annual Report & Accounts 2023
103
2. Segment 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: consultancy and related services to the asset management, wealth management and insurance industries.
The Directors consider that there is a material level of operational support and linkage provided to the Group’s emerging territories
in Europe and APAC, as they develop their presence locally, and as such have been deemed to constitute one operating segment
(“Europe & APAC”).
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 the nature, amount, timing
and uncertainty of revenue and cash flows as may be affected by economic factors.
Segmental information
FY 23
Revenue
Rechargeable expenses
Net fee income
Cost of sales
Gross profit
Margin on net fee income26 (%)
Non-current assets
FY 22
Revenue
Rechargeable expenses
Net fee income
Cost of sales
Gross profit
Margin on net fee income26 (%)
Non-current assets
UK
£’000
87,467
(327)
North
America 27
£’000
91,815
(717)
Europe &
APAC 28
£’000
Total
£’000
49,435
228,717
(518)
(1,562)
87,140
91,098
48,917
227,155
(52,117)
(61,104)
(33,575)
(146,796)
35,023
29,994
15,342
80,359
40.2%
32.9%
31.4%
35.4%
69,445
46,721
23,360
139,526
UK
£’000
72,134
North
America
£’000
47,001
Europe &
APAC
£’000
Total
£’000
38,870
158,005
(71)
(80)
(45)
(196)
72,063
46,921
38,825
157,809
(41,419)
(31,594)
(25,439)
(98,452)
30,644
15,327
13,386
59,357
42.5%
32.7%
34.5%
37.6%
71,110
42,808
22,318
136,236
During the year, the Group did not have any customers that comprised more than 10% of the Group’s revenues (FY 22: nil).
The Group’s central non-current assets have been allocated to the UK operating segment, except for goodwill (see note 12),
intangible assets and right-of-use assets, which have been allocated to relevant operating segments.
3. Operating profit
Operating profit for the year is stated after charging:
Amortisation of intangible assets
Depreciation charge
Foreign exchange losses29
Rental expense
Impairment provision recognised on trade receivables
Defined contribution pension scheme costs
Share-based payment charge
Earn-out and deferred consideration30
Acquisition costs
Auditor’s remuneration:
Audit fees – parent company
Audit fees – subsidiary companies
Other assurance services
Note
12
7,14
7
15
5
22
13
FY 23
£’000
4,762
1,933
459
1,096
109
2,791
7,950
2,525
331
FY 23
£’000
123
370
–
FY 22
£’000
5,272
1,155
1,310
600
163
1,519
6,218
1,423
683
FY 22
£’000
112
284
–
All auditor remuneration relates to audit fees. There were no additional advisory services provided by the auditor to the Group in both
the current and prior years.
4. 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 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 applied consistently
across reporting periods. They are not considered a substitute for, or superior to, IFRS 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 on the face of
the consolidated statement of comprehensive income and by segment to revenue in note 2.
Profit margins
Margin on net fee income and adjusted EBITDA margin are calculated using gross profit and adjusted EBITDA, and are expressed as
a percentage of net fee income. These margins represent the margin that the Group earns on its productive output, excluding nil or
negligible margin expense recharges to clients over which the Group has limited control, and allows comparability of the business
output between periods. Such adjusted margins are used by the management team and the Board to assess the performance of
the Group.
26 Margin on net fee income is gross profit expressed as a percentage of net fee income. Please refer to note 4 for further detail.
27 Within North America, the United States is a material country and generated revenue of £77.1m (FY 22: £40.8m) and gross profit of £23.6m (FY 22: £12.9m).
28 Within Europe & APAC, France is a material country and generated revenue of £18.7m (FY 22: £17.8m) and gross profit of £7.0m (FY 22: £7.0m).
29 Foreign exchange losses of £0.5m in the year include £2.5m on the retranslation of the Lionpoint earn-out and deferred consideration liability, denominated in US dollars, which is
included within the trade and other payables increase in the consolidated statement of cash flows. This is largely offset by a gain of £2.4m on the retranslation of foreign currency cash
balances, primarily US dollar balances held by UK subsidiaries, which is shown separately in the consolidated statement of cash flows. The residual loss of £0.4m relates to other foreign
currency working capital balances.
30 The earn-out and deferred consideration expense in the period comprises a fair value adjustment of £0.7m and an employment-linked consideration charge of £1.7m as set out in note 13,
as well as an associated social security charge of £0.1m.
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Financial StatementsNotes to the consolidated financial statements continued 104
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Annual Report & Accounts 2023
105
4. Reconciliations to alternative performance measures continued
Reconciliation of adjusted profit before tax, adjusted operating profit and adjusted EBITDA
Profit before tax
Amortisation of acquired intangible assets
(Profit)/loss on disposal of fixed assets
Share-based payment charge
Earn-out and deferred consideration31
Acquisition costs
Foreign exchange losses
Adjusting items
Non-underlying finance expenses
Adjusted profit before tax
Net underlying finance expenses
Adjusted operating profit
Depreciation charge
Amortisation of capitalised development costs
Adjusted EBITDA
Adjusted EBITDA margin (%)
Adjusting items
Note
12
22
13
13
6
7,14
12
FY 23
£’000
25,771
4,576
(14)
7,950
2,525
331
459
15,827
2,417
44,015
448
FY 22
£’000
14,882
4,716
32
6,218
1,423
683
1,310
14,382
2,487
31,751
406
44,463
32,157
1,933
186
1,155
556
46,582
33,868
20.5%
21.5%
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 share-based payment charge and related social security taxes are excluded from adjusted profit measures. This allows comparability
between periods as the Group’s share option plans were established on AIM admission and have not yet fully settled into a regular cycle
of awards and vesting. The share-based payment charge is also subject to external factors, such as the Group’s share price, over which
the Directors have less day-to-day influence as compared to other more directly controllable factors. The accounting treatment of the
Group’s share options requires the charge for each share option award to be recognised over the vesting period, resulting in significant
growth in the charge in recent years as the Group matured post-AIM admission. The associated estimate of future employer’s social
security taxes payable on these options is closely linked to the share-based payment charge, and fluctuates with the assumed future
market value of shares, and has therefore also been treated as an adjusting item. This approach has been applied consistently across
reporting periods. Note 22 sets out further details of the employee share-based payment charge calculation under IFRS 2.
This cycle of share option awards and vesting is now beginning to settle following the vesting of substantially all the remaining options
issued at IPO, and as such this charge is expected to become more comparable year on year in future periods. The Group will
continue to assess the status of this charge as an adjusting item in the Group’s financial statements. If no adjustment was made
for the share-based payment charge, adjusted EBITDA for the year would be £38.6m (FY 22: £27.7m) and adjusted EBITDA margin
would be 17.0% (FY 22: 17.5%).
As per note 13, the acquisition of Lionpoint in the prior year involved both deferred and contingent payments. Part of the Lionpoint
acquisition payments is dependent on the ongoing employment of certain members of the senior Lionpoint management team,
and this element is expensed annually over several years until the date of payment. In prior years, the Group similarly recognised
employment-linked costs through the income statement relating to payments for the previous acquisitions of Axxsys and Obsidian,
or to reflect adjustments made to the fair value of the expected future payment. These costs have been treated as adjusting items as
they are considered to be part of the purchase price of the acquisition, rather than an ongoing expense item, and reflect the acquisition
terms rather than Group trading performance. Whilst these acquisition-related costs will recur in the short term through the earn-out
period, the adjustment allows comparability of underlying productive output and operating performance across reporting periods.
31 The earn-out and deferred consideration expense in the year comprises a fair value adjustment of £0.7m and an employment-linked consideration charge of £1.7m as set out in note 13,
as well as an associated social security charge of £0.1m.
Acquisition costs expensed in the year relate to the acquisition of Shoreline, which completed shortly after the reporting period as
disclosed in note 27. These costs include diligence and legal fees. In the prior year the acquisition costs related to the purchase of
Lionpoint. Whilst further similar acquisition 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 year to year and treating these as an
adjusting item allows comparability of the operating performance across reporting periods. There were no integration costs in the
current or prior year.
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 primarily relate to acquisition
liabilities denominated in US dollars and associated US dollar cash balances. The other foreign exchange gains and losses on foreign
currency working capital and cash balances across the Group are immaterial in both the current and prior year.
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 depreciation of property, plant and equipment. 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 and adjusted earnings per share metrics are also APMs, 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 allowable expenses that have been excluded as
adjusting items. An effective tax rate of 0% has been applied to earn-out and deferred consideration, acquisition costs and non-underlying
finance expenses totalling £5.3m as these items are treated as capital in nature and are therefore non-deductible for tax purposes. An
overall effective tax rate of 23% has been applied to all other adjusting items totalling £13.0m, reflecting the tax rates in the geographical
locations to which the items relate.
Adjusted profit before tax
Tax charge
Tax impact of adjusting items
Adjusted profit after tax
FY 23
£’000
FY 22
£’000
44,015
31,751
(7,810)
(2,976)
(6,370)
(1,624)
33,229
23,757
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Financial StatementsNotes to the consolidated financial statements continued 106
Annual Report & Accounts 2023
Annual Report & Accounts 2023
107
4. Reconciliations to alternative performance measures continued
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 11 for further detail.
Adjusted EPS (p)
Adjusted diluted EPS (p)
FY 23
29.27
27.37
FY 22
21.46
20.23
Constant currency growth
The Group operates in multiple jurisdictions and generates revenues and profits in various currencies. Those results are translated
on consolidation at the 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 volatility in
exchange rates.
Currency translation had a noticeable impact on both net fee income and gross profit in the year, as a result of a weakening British
pound sterling through the year against both the US dollar and against the euro. In the year, British pound sterling averaged $1.21
(FY 22: $1.37) and €1.16 (FY 22: €1.18).
On a constant currency basis, Group net fee income would be £214.8m which is growth of 36.1% overall. Similarly, North America net
fee income would be £80.6m and Europe & APAC would be £47.1m which would be growth of 71.7% and 21.3% respectively.
Reconciliation of adjusted administration expenses
On a similar basis the Group’s gross profit would have been £76.4m and would have grown 28.7% on a constant currency basis.
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.
5. Staff costs
The average number of employees employed by the Group, where “employees” includes Executive Directors but excludes contractors, was:
Administration expenses
Adjusting items
Depreciation charge
Amortisation of capitalised development costs
Adjusted administration expenses
Note
7,14
12
FY 23
£’000
FY 22
£’000
51,723
41,582
(15,827)
(14,382)
(1,933)
(186)
(1,155)
(556)
33,777
25,489
UK
North America
Europe & APAC
Administration
Average number of employees in the year
Adjusted cash generated from operating activities
Total staff costs included in the consolidated statement of comprehensive income were:
Adjusted cash generated from operating activities excludes any employment-linked acquisition payments and associated social security
taxes, as well as other acquisition costs paid in the year, treated as operating cash flows under IFRS, to reflect the Group’s underlying
operating cash flows, exclusive of cash payments relating to acquisitions.
Net cash generated from operating activities
Employment-linked acquisition payments32
Acquisition costs
Adjusted cash generated from operating activities
Adjusted cash conversion
FY 23
£’000
FY 22
£’000
30,590
33,507
1,981
331
1,848
683
32,902
36,038
Cash conversion is stated as net cash generated from operating activities expressed as a percentage of operating profit.
Adjusted cash conversion is stated as adjusted cash generated from operating activities expressed as a percentage of adjusted
operating profit.
Cash conversion
Adjusted cash conversion
Organic net fee income growth
FY 23
107%
74%
FY 22
189%
112%
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 39.6% (FY 22: 31.3%) for the current period represents FY 23 net fee income less £6.9m net fee
income attributable to Lionpoint, treated as inorganic as the portion of net fee income preceded the acquisition anniversary.
32 Of the £22.6m total deferred and contingent acquisition payments in the year as set out in note 13, £1.8m is classified as employment linked and is included within net cash generated
from operating activities. The associated social security payments of £0.2m are also included within net cash generated from operating activities.
Wages, salaries and short-term benefits
Social security costs
Pension costs
Share-based payment charge
Total staff costs for the year
Staff costs in relation to key management personnel, as defined in note 25, were:
Wages, salaries and short-term benefits
Social security costs
Pension costs
Share-based payment charge
Total staff costs for key management personnel for the year
FY 23
Number
FY 22
Number
320
272
210
107
909
244
170
162
70
646
FY 23
£’000
FY 22
£’000
119,432
79,395
11,144
2,791
7,950
8,431
1,519
6,218
141,317
95,563
FY 23
£’000
3,468
504
105
2,991
7,068
FY 22
£’000
3,913
640
54
2,543
7,150
alphafmc.com
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Financial StatementsNotes to the consolidated financial statements continued 108
Annual Report & Accounts 2023
Annual Report & Accounts 2023
109
6. Finance income and expenses
Bank interest receivable
Total finance income
Interest and fees payable on bank loans
Interest on lease liabilities
Total underlying finance expenses
Non-underlying finance expenses
Total finance expenses
Net underlying finance expenses
Net finance expenses
Note
7
13
4
FY 23
£’000
364
364
(596)
(216)
(812)
FY 22
£’000
1
1
(296)
(111)
(407)
(2,417)
(2,487)
(3,229)
(2,894)
(448)
(406)
(2,865)
(2,893)
As at 31 March 2023, the Group held one principal bank facility comprising a £20.0m undrawn committed RCF with Lloyds Bank plc
with a tenor to June 2024. The Group has utilised up to £12.5m of the facility, drawn down occasionally through the year to meet
short-term liquidity requirements. The facility was undrawn as at 31 March 2023, and the Group remains in a strong cash position of
£59.2m. After the reporting period, the Group has extended the facility to June 2026 and increased the committed amount to £50.0m;
refer to note 27 for more information.
Amounts recognised in the Group’s consolidated statement of comprehensive income
Depreciation of right-of-use asset
Short-term lease expense
Low-value lease expense
Variable service charges
Included in administration expenses
Interest expense on lease liabilities
Included in finance expenses
FY 23
£’000
(1,389)
(1,096)
–
(54)
FY 22
£’000
(841)
(598)
(2)
(72)
(2,539)
(1,513)
(216)
(216)
(111)
(111)
Total cash rental payments made in the year on all lease tenors amounted to £2.6m (FY 22: £1.5m), of which £1.5m (FY 22: £0.9m)
related to lease liabilities and £1.1m (FY 22: £0.6m) related to short-term leases.
The Group has given consideration to any extension options and early termination options with reasonable certainty at the date of
signing these financial statements, and these have been reflected within the lease liability where appropriate.
The Group has no material income or expenses associated with sub-leasing arrangements, sale-and-leaseback transactions, or
variable lease payments.
7. Leases
Right-of-use assets
Net book value
As at 1 April 2022
Additions
Effect of modification to lease terms
Depreciation charge
Foreign exchange adjustments
As at 31 March 2023
Buildings
£’000
Equipment
under lease
£’000
2,301
2,671
209
(1,386)
213
4,008
3
–
–
(3)
–
–
Total
£’000
2,304
2,671
209
(1,389)
213
4,008
8. Taxation
Current tax
In respect of the current period – UK
Foreign taxation
Adjustment in respect of prior periods
Deferred tax
In respect of the current period – UK
Foreign taxation
Change in tax rate on opening balance
Adjustment in respect of prior periods
Total tax expense for the year
FY 23
£’000
FY 22
£’000
3,660
8,059
(442)
(1,995)
(1,380)
8
(100)
7,810
2,763
5,321
(168)
(2,241)
(671)
1,186
180
6,370
During the year the Group had £2.7m (FY 22: £1.3m) of additions to right-of-use assets, primarily in relation to two significant new office
leases in the UK and Luxembourg.
Lease liabilities
A summary of the Group’s undiscounted lease liabilities as at 31 March 2023 is presented below:
Due within one year
Due between one and five years
Due after five years
Total lease liabilities – undiscounted
Impact of discounting
Total lease liabilities – discounted
FY 23
£’000
2,158
2,391
60
4,609
FY 22
£’000
1,243
1,285
48
2,576
(448)
(167)
4,161
2,409
An increase in the UK corporation tax rate from 19% to 25% (effective 1 April 2023) was substantively enacted during the prior year on
24 May 2021. In FY 24, this change will increase the Group’s current tax charge accordingly. The UK deferred tax balances as disclosed
in note 9 reflect this substantively enacted rate.
In addition to the tax expense for the year ended 31 March 2023, the Group has also recognised a total of £2.4m (FY 22: £1.4m) of tax
through equity, of which £1.5m (FY 22: £0.2m) relates to current tax on the exercise of share options in the year and £0.9m (FY 22: £1.2m)
relates to deferred tax on share options outstanding. Additionally, a £0.4m credit (FY 22: £nil) was recognised through other
comprehensive income, relating to the deferred tax impact of foreign exchange fluctuations on acquired intangible assets.
alphafmc.com
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Financial StatementsNotes to the consolidated financial statements continued 110
Annual Report & Accounts 2023
Annual Report & Accounts 2023
111
8. Taxation continued
The difference between the total tax expense shown on p. 109 and the amount calculated by applying the standard rate of UK
corporation tax to the profit before tax is as follows:
Deferred tax assets and liabilities are offset where there is a legally enforceable right to do so and when the deferred taxes relate to the
same fiscal authority. The below table sets out the deferred tax asset and the net deferred tax liability, as presented in the consolidated
statement of financial position:
Profit before taxation
Tax on profit on ordinary activities at standard UK corporation tax rate of 19% (FY 22: 19%)
Effects of:
Fixed asset differences
Expenses not deductible for taxation
Differences due to overseas tax rates
Adjustments in respect of prior periods – current tax
Adjustments in respect of prior periods – deferred tax
Change in deferred tax rate
Deferred tax not recognised
Total tax expense for the year
FY 23
£’000
FY 22
£’000
25,771
14,882
4,896
2,828
(24)
1,252
2,202
(442)
(100)
26
–
(23)
1,078
1,651
(168)
180
831
(7)
7,810
6,370
Expenses not deductible for taxation relate mainly to employment-linked acquisition consideration, associated discount unwinding and
other acquisition-related costs, treated as capital for tax purposes.
9. Deferred tax
Movements in deferred tax
As at 31 March 2023
Accelerated capital allowances
Short-term timing differences
Share options
Arising on business combinations
Net deferred tax liability/(asset)
As at 31 March 2022
Accelerated capital allowances
Short-term timing differences
Share options
Arising on business combinations
Net deferred tax liability
Impact of
foreign
exchange
revaluation
£’000
–
53
–
374
427
1 April 2022
£’000
110
(690)
(3,213)
7,453
3,660
Recognised
in income
£’000
Recognised
in equity
£’000
31 March 2023
£’000
18
(1,381)
(1,215)
(889)
(3,467)
–
–
(870)
–
(870)
128
(2,018)
(5,298)
6,938
(250)
1 April 2021
£’000
Recognised
on business
combinations
£’000
Recognised
in income
£’000
Recognised
in equity
£’000
31 March 2022
£’000
22
(11)
(1,201)
4,212
3,022
–
–
–
3,423
3,423
88
(679)
(773)
(182)
–
–
(1,239)
–
110
(690)
(3,213)
7,453
(1,546)
(1,239)
3,660
Deferred tax assets recognised within these consolidated financial statements represent the future tax effect of share-based payment
charges in respect of awards that have yet to vest. Deductions in excess of the cumulative share-based payment charge recognised in
the consolidated statement of comprehensive income are recognised in equity. Other deferred tax assets recognised primarily relate to
timing differences on deductions for tax purposes and as such there is no restriction on recoverability.
Deferred tax liabilities represent the future tax impact arising from temporary timing differences between accounting and tax treatments
including from the initial recognition of acquired intangible assets and changes in tax rates as the liability is settled. The closing deferred
tax liability arising on business combinations reflects the tax effect of these temporary differences at 31 March 2023.
Deferred tax liabilities
Deferred tax assets
Net deferred tax (asset)/liability
10. Dividends
Amounts recognised as distributions to equity holders
Final dividend for the year ended 31 March 2022 of 7.50p (FY 21: 4.85p) per share
Interim dividend for the year ended 31 March 2023 of 3.70p (FY 22: 2.90p) per share
Total dividends paid in the year
FY 23
£’000
2,783
(3,033)
(250)
FY 23
£’000
8,547
4,227
12,774
FY 22
£’000
4,331
(671)
3,660
FY 22
£’000
5,431
3,247
8,678
After the balance sheet date, the Directors proposed a final dividend of 10.50p per ordinary share, totalling approximately £12.4m based
on the estimated eligible shares in issue at the payment date. The proposed final FY 23 dividend is subject to approval by shareholders
at the AGM and has, therefore, not been included as a liability in these consolidated financial statements. Subject to approval, the
dividend will be paid on 19 September 2023 to shareholders on the register at close of business on 8 September 2023.
11. 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. For further detail on the Group’s accounting policy see note 1.
In order to reconcile to the adjusted profit for the financial year, the same adjustments as set out in note 4 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:
Basic and diluted EPS
Profit for the financial year used in calculating basic and diluted EPS (£’000)
Weighted average number of ordinary shares in issue (’000)
Number of dilutive shares (’000)
Weighted average number of ordinary shares, including dilutive shares (’000)
Basic EPS (p)
Diluted EPS (p)
Adjusted EPS and adjusted diluted EPS
Note
FY 23
FY 22
17,961
8,512
113,531
110,689
7,883
6,748
121,414
117,437
15.82
14.79
7.69
7.25
Adjusted profit for the financial year used in calculating adjusted basic and diluted EPS (£’000)
4
33,229
23,757
Weighted average number of ordinary shares in issue (’000)
Number of dilutive shares (’000)
Weighted average number of ordinary shares, including dilutive shares (’000)
Adjusted EPS (p)
Adjusted diluted EPS (p)
113,531
110,689
7,883
6,748
121,414
117,437
29.27
27.37
21.46
20.23
alphafmc.com
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Financial StatementsNotes to the consolidated financial statements continued 112
Annual Report & Accounts 2023
Annual Report & Accounts 2023
113
12. Goodwill and intangible fixed assets
Goodwill
Movements in the year
Cost at beginning of the year
Additions
Gains from foreign exchange
Cost at end of the year
The table below summarises the assumptions used for each CGU:
Note
13
FY 23
£’000
100,991
–
2,685
FY 22
£’000
63,067
36,038
1,886
103,676
100,991
UK
North America
Europe & APAC
Sensitivity
Pre-tax discount rate
Medium-term growth rate
Long-term growth rate
FY 23
14.8%
15.3%
12.8%
FY 22
13.1%
13.4%
11.7%
FY 23
5.5%
11.5%
7.1%
FY 22
5.5%
11.5%
7.1%
FY 23
0.8%
1.6%
1.4%
FY 22
1.0%
1.6%
1.5%
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of
the acquired subsidiary at the date of acquisition. Goodwill is represented by assets that do not qualify for separate recognition and
includes the potential synergy benefits of combining the intellectual property and talents of the teams into the Group. In line with
IAS 21 para 47, goodwill arising on the acquisition of a foreign operation is held in local currency and is retranslated into the Group’s
presentational currency at each reporting date using the closing foreign exchange rate.
In prior years, goodwill was recognised upon the acquisitions of Alpha FMC Group Holdings Ltd in February 2016, TrackTwo GmbH
in July 2017, Obsidian Solutions Ltd in November 2019, Axxsys Ltd in June 2019 and Lionpoint Holdings, Inc. in May 2021.
In line with IAS 36 para 96, the carrying value of goodwill is not subject to systematic amortisation but is reviewed at least annually for
impairment. The review assesses each group of CGUs to which goodwill has been allocated for impairment by comparing the carrying
value of the units, including the goodwill, with the recoverable amount of the units. The carrying values of goodwill have been assessed
by reference to value in use. These have been estimated using cash flows from forecasts prepared by management around the balance
sheet date.
The CGUs have been grouped in line with the Group’s operating segments as this is the level at which goodwill is monitored by
management. Therefore, the groups of CGUs considered for impairment testing are UK, North America and Europe & APAC.
Allocation of goodwill
UK
North America
Europe & APAC
At end of the year
FY 23
£’000
52,082
32,626
18,968
FY 22
£’000
52,082
30,703
18,206
103,676
100,991
Key assumptions – impairment testing
The principal assumptions considered to be individually significant for the purposes of calculating the value in use for each CGU include
the assumed underlying trading used to estimate the future CGU cash flows, taking into account future CGU growth rates and margins,
and the pre-tax discount rate used to convert these estimated cash flows to present value.
In all cases, the budget for the following financial year forms the basis for the cash-flow projections for a CGU. These near-term FY 24
budget assumptions were sensitised to account for the inherent uncertainty associated with forward-looking cash-flow projections.
The cash-flow projections for the four years subsequent to the budget year reflect the Directors’ expectations of the medium-term
operating performance of the CGU and the growth prospects in the CGU’s market, reflecting a range of factors relevant to the specific
circumstances of each CGU. Underlying revenue growth assumptions for the period FY 25 to FY 28 range from an average annual
growth of 5.5% to 11.5% over the medium term and are assessed on a period-by-period basis reflecting market conditions. They
include the relative size of each CGU and the maturity level of operations in the territory in the determination of the future estimated cash
flows for value in use.
Thereafter, a perpetuity long-term growth rate is applied ranging between 0.8% and 1.6% depending on the CGU, based on longer-term
economic outlooks of those economies and the Directors’ longer-term assessment of the prospects of those businesses.
To discount these cash flows to present value, CGU-specific pre-tax discount rates have been applied to reflect the market assessment
of the time value of money and the specific risk profile of each CGU, including consideration of the relative size of each CGU, the
maturity level of operations in the territory and local market risk metrics. The Group bases its estimate for the pre-tax discount rate
on its weighted average cost of capital. The weighted average pre-tax discount rate for the Group was determined to be 14.7%
(FY 22: 12.8%). CGU-specific discount rates have been applied to reflect CGU-specific risks.
The Group has considered associated costs of climate change and decarbonisation when forecasting future cash flows.
The Group has considered a range of factors on the value in use estimate for each CGU.
In assessing goodwill impairment review, discount rates applied would have to increase to between 33.2% and 49.0% dependent on
the CGU to result in value in use headroom falling to nil for any CGU. The Directors consider that no reasonably possible change to
the long-term growth rates could result in impairment of goodwill for any CGU given the assumptions, summarised in the table above.
Management does not expect a material change to the discount rate in any of its CGUs as presented for the year ended 31 March 2023.
As such, in order to address inherent uncertainty surrounding forward-looking cash-flow assumptions, the Group has applied sensitivity
analysis to identify the point to which growth would have to fall in order to reduce headroom to nil. As such, the assumed medium-term
growth rate for the period from FY 25 to FY 28 would need to reduce to between (21.2%) and (31.3%), depending on the CGU, for the
value in use headroom to fall to nil.
The Directors have considered whether a reasonably possible change in the assumptions would erode the headroom or give rise to
a material adjustment to any carrying value in the next 12 months. The Directors do not consider that a reasonably possible change
in assumptions could result in a reduction in headroom to nil for any CGU.
Intangible fixed assets
As at 31 March 2023
Cost
At the start of the year
Additions
Exchange difference
Order
backlog
£’000
Customer
relationships
£’000
Intellectual
property
£’000
Trade
name
£’000
Capitalised
development
costs
£’000
Total
£’000
2,192
35,652
3,388
8,982
1,819
52,033
319
69
–
553
–
–
–
138
–
–
319
760
At the end of the year – total
2,580
36,205
3,388
9,120
1,819
53,112
Amortisation
At the start of the year
Charge for the year
Exchange difference
(2,072)
(12,083)
(468)
(40)
(3,044)
(18)
(2,141)
(461)
–
(2,771)
(603)
(4)
(1,633)
(20,700)
(186)
–
(4,762)
(62)
At the end of the year – total
(2,580)
(15,145)
(2,602)
(3,378)
(1,819)
(25,524)
Net book value
–
21,060
786
5,742
–
27,588
alphafmc.com
alphafmc.com
Financial StatementsNotes to the consolidated financial statements continued 114
Annual Report & Accounts 2023
Annual Report & Accounts 2023
115
12. Goodwill and intangible fixed assets continued
As at 31 March 2022
Order
backlog
£’000
Customer
relationships
£’000
Intellectual
property
£’000
Trade
name
£’000
Capitalised
development
costs
£’000
Cost
At the start of the year
Additions
Exchange difference
1,308
829
55
24,279
10,752
621
3,388
–
–
At the end of the year – total
2,192
35,652
3,388
6,232
2,602
148
8,982
Total
£’000
37,026
14,183
824
1,819
–
–
1,819
52,033
Amortisation
At the start of the year
Charge for the year
Exchange difference
(1,218)
(831)
(23)
(9,231)
(2,828)
(24)
At the end of the year – total
(2,072)
(12,083)
Net book value
120
23,569
(1,645)
(496)
–
(2,141)
1,247
(2,206)
(1,078)
(15,378)
(561)
(4)
(556)
(5,272)
1
(50)
(2,771)
(1,633)
(20,700)
6,211
186
31,333
Customer relationships
Customer relationships at the start of the year represent the total of the fair value at the acquisition dates of the customer relationships
that were owned by, but not previously recognised as assets of, Alpha FMC Group Holdings Ltd in FY 16, TrackTwo GmbH in FY 18,
Obsidian Solutions Ltd and Axxsys Ltd in FY 20, and Lionpoint Holdings, Inc. in FY 22.
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 and discount factors.
The value is given by the present value of the earnings the customer relationships generate, net of a reasonable return on other assets
also contributing to that stream of earnings (contributory asset charges).
A useful economic life of 11–17 years has been deemed appropriate based on the average realisation rate of cumulative cash flows and
benchmarked data for each respective acquisition. Projected cash flows have been discounted over this period. The amortisation
charge is recognised in administration expenses within the consolidated statement of comprehensive income.
Intellectual property
Intellectual property at the start of the year represents the fair value at the 3 February 2016 acquisition date of the intellectual property
which was owned by, but not previously recognised as assets of, Alpha FMC Group Holdings Ltd, intellectual property acquired as part
of the TrackTwo GmbH acquisition in FY 18, and those acquired on the acquisition of Axxsys Ltd and Obsidian Solutions Ltd in FY 20.
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 seven years has been deemed appropriate based on previous acquisitions and benchmarking data. Projected cash flows have been
discounted over this period. The amortisation charge is recognised in administration expenses within the consolidated statement of
comprehensive income.
Trade name
Trade name intangible assets at the start of the year represent the fair value at the 3 February 2016 acquisition date of the trade name,
which was owned by, but not previously recognised as assets of, Alpha FMC Group Holdings Ltd, and those acquired on the acquisition
of Axxsys Ltd and Obsidian Solutions Ltd in FY 20 and Lionpoint Holdings, Inc. in FY 22.
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
10–15 years has been deemed appropriate based on previous acquisitions and benchmarking data. Projected cash flows have been
discounted over this period. The amortisation charge is recognised in administration expenses within the consolidated statement of
comprehensive income.
Order backlog
The order backlog intangible at the start of the year relates to the fair value of the order backlog acquired with Axxsys Ltd in FY 20
and Lionpoint Holdings, Inc. in FY 22. These assets were fully amortised in the year with the amortisation charge being recognised
in administration expenses within the consolidated statement of comprehensive income.
Additions in the period of £0.3m relate to the purchase by the Group of several contracts from the management enterprise technology
solutions practice of CohnReznick LLP, a leading advisory, assurance and tax firm primarily based in the United States. These were also
fully amortised in the year.
The remaining useful economic lives of each of the respective asset classes acquired on acquisition above are summarised in the
table below.
Acquired entity
Alpha FMC Group Holdings
TrackTwo GmbH
Axxsys – UK
Axxsys – North America/Nordics
Obsidian Solutions
Lionpoint – UK
Lionpoint – North America
Lionpoint – Europe & APAC
Capitalised development costs
Customer
relationships
(years)
Intellectual
property
(years)
Trade name
(years)
4.8
5.3
7.2
8.2
13.6
10.2
10.2
10.2
–
1.3
–
–
3.6
–
–
–
7.8
–
11.2
11.2
6.6
13.2
13.2
13.2
Capitalised development costs represent the costs incurred in the development enhancements to the 360 SalesVista software product
within Aiviq. The asset was fully amortised in the year with the amortisation charge recognised in administration expenses within the
consolidated statement of comprehensive income.
alphafmc.com
alphafmc.com
Financial StatementsNotes to the consolidated financial statements continued 116
Annual Report & Accounts 2023
Annual Report & Accounts 2023
117
13. Acquisition of businesses
Acquisitions in previous years
As part of the acquisition of Lionpoint Holdings, Inc. in FY 22, as well as Axxsys Ltd and Obsidian Ltd in FY 20, the Group agreed
deferred consideration payments as well as contingent earn-out arrangements which were based on the financial performance of the
respective acquired entities over an agreed period of time. An update on the activity in the year and the outstanding balance in relation
to each of these acquisitions is provided below.
Lionpoint
In the prior year, the Group acquired 100% of the issued share capital of Lionpoint Holdings, Inc. (“Lionpoint”), a provider of specialist
consultancy services to the alternative investments industry, on a cash-free, debt-free basis.
A summary of the purchase consideration, net assets acquired, identifiable intangible assets and goodwill is set out below. These fair
values were determined by using established estimation techniques such as discounted cash flow and option valuation models.
Note
Book values
£’000
Fair value
adjustments
£’000
Values on
acquisition
£’000
Acquiree’s net assets at the acquisition date:
Trade name
Order backlog
Customer relationships
Tangible fixed assets
Right-of-use assets
Trade and other receivables
Cash
Trade and other payables
Provisions
Lease liabilities
Corporation tax liability
Deferred tax liability
–
–
–
53
478
4,588
2,148
(2,380)
(291)
(478)
(67)
–
2,602
829
2,602
829
10,752
10,752
–
–
–
–
–
–
–
–
53
478
4,588
2,148
(2,380)
(291)
(478)
(67)
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 British pound sterling. In the period, the Group recognised a foreign exchange loss of
£2.5m in the income statement arising from acquisition-related currency movements, arising from this retranslation. However, this loss
was mostly offset by a foreign exchange gain on US dollar cash held by the Group.
Following the strong performance of Lionpoint in FY 23 and reflective of a healthy pipeline of opportunities, the Group has reassessed
the fair value of the Lionpoint contingent consideration liability at the balance sheet date. The Group has updated its projections for the
remainder of the earn-out period and has therefore uplifted the total undiscounted expected earn-out payment from £17.7m to £20.0m,
assuming the maximum amount payable. These values are inclusive of employment-linked amounts. Additionally, at the reporting date,
the Group remeasured the discount rate applied to the expected future contingent consideration payments from 14.6% to 11.0%,
reflecting market conditions and the risk profile of the Lionpoint business. Accordingly, a fair value adjustment has been recognised
through the Group’s consolidated statement of comprehensive income, which has increased the liability by £2.3m.
As at 31 March 2023, the Group held a liability of £24.9m (FY 22: £33.7m) in relation to future deferred and contingent consideration
payable for this acquisition. Of this liability at the balance sheet date, £7.2m (FY 22: £14.0m) relates to deferred consideration and the
remaining £17.7m (FY 22: £19.7m) relates to contingent consideration. Within these deferred and contingent consideration liabilities,
£2.6m relates to employment-linked amounts.
Obsidian
As at 31 March 2022, the Obsidian earn-out liability of £1.9m reflected a balanced assessment of the Directors’ best estimate of
projected cash flows in relation to several plausible scenarios. During the year, a lower mutually agreed position was reached with
the original vendors. As a result, a fair value adjustment of £1.6m has been credited to the Group’s consolidated statement of
comprehensive income in the period. A final payment of £0.3m was made in the year, none of which was employment-linked.
Axxsys
The remaining £5.0m liability due on the acquisition of Axxsys as at 31 March 2022 was paid during the year, of which £0.3m was
employment-linked.
The below table summarises the movements in the deferred and contingent consideration liabilities held at 31 March 2023:
(3,423)
(3,423)
Additions
Balance as at 1 April 2022
Net identifiable assets acquired
4,051
10,760
14,811
Cash consideration relating to business combination
Goodwill on acquisition
12
50,849
36,038
The maximum payable for the acquisition (over four years) is $90.0m (£63.8m), to be settled in cash, with the option to settle a portion
of the deferred and contingent amounts in the Group’s ordinary shares. Of this maximum amount payable, $7.5m (£5.3m) is
employment linked. The fair value of consideration recognised on the date of acquisition amounted to $72.3m (£50.8m), of which
$33.5m (£23.5m) was paid on completion, alongside an additional net cash payment of $2.1m (£1.4m) in relation to completion working
capital. A balancing $0.5m (£0.3m) receivable was held at 31 March 2022.
Deferred consideration of $17.0m (£12.0m) was payable across the first and second anniversaries of the acquisition and contingent
earn-out consideration up to a maximum of $32.0m (£22.6m) was payable in three instalments across FY 23 to FY 25. The FY 23 to
FY 25 earn-out consideration payments are contingent on Lionpoint meeting certain profitability targets over the earn-out period.
The fair value of future consideration payable recognised on the date of acquisition was $37.3m (£26.2m), of which $20.6m (£14.5m)
related to contingent consideration and $16.7m (£11.7m) related to deferred consideration. In the opening consolidated statement of
financial position as at 31 March 2022, the Group held a liability of £33.7m in relation to future deferred and contingent consideration
payable for this acquisition.
Employment-linked acquisition payments are expensed through the consolidated income statement proportionately until FY 26.
During the year, the Group has expensed £1.7m (FY 22: £2.8m) 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, £2.4m (FY 22: £2.0m) of discount unwinding was expensed
as a non-underlying finance cost in relation to the Lionpoint acquisition consideration.
In FY 23, the Group made payments of £17.3m net of a £0.4m receivable that was due back from the sellers. Of these payments, £1.5m
relates to employment-linked consideration, and is presented within cash generated from operating activities, with the remaining £15.8m
presented within cash used in investing activities in the consolidated statement of cash flows.
Employment-linked consideration
Payments in the year33
Amounts receivable deducted from payments in the period
Unwinding of discounting
Fair value adjustment
Foreign exchange loss
Balance as at 31 March 2023
Represented by:
Current
Non-current
Balance as at 31 March 2023
Axxsys
£’000
5,000
–
–
Obsidian
£’000
Lionpoint
£’000
1,898
33,748
Total
£’000
40,646
–
–
–
–
1,658
1,658
(5,000)
(314)
(17,315)
(22,629)
–
–
–
–
–
–
–
–
–
–
(1,584)
–
–
–
–
–
(350)
2,417
2,251
2,540
(350)
2,417
667
2,540
24,949
24,949
16,027
8,922
16,027
8,922
24,949
24,949
alphafmc.com
alphafmc.com
33 Payments in the year of £22.6m comprise £1.8m of employment-linked payments included within cash generated from operating activities in the consolidated statement of cash flows and
£20.8m included within cash used in investing activities.
Financial StatementsNotes to the consolidated financial statements continued 118
Annual Report & Accounts 2023
Annual Report & Accounts 2023
119
14. Property, plant and equipment
Cost
As at 1 April 2021
Acquired through business combinations
Additions
Disposals
Exchange difference
As at 31 March 2022
Additions
Disposals
Exchange difference
As at 31 March 2023
Depreciation
As at 1 April 2021
Charge for the period
Disposals
Exchange difference
As at 31 March 2022
Charge for the period
Disposals
Exchange difference
As at 31 March 2023
Net book value as at 31 March 2023
Net book value as at 31 March 2022
15. Trade and other receivables
Amounts due within one year:
Trade receivables
Less: allowance for expected credit losses34
Trade receivables – net
Other debtors
Capitalised contract fulfilment costs
Prepayments
Accrued income
Total amounts due within one year
Leasehold
improvements
£’000
Fixtures
and fittings
£’000
Computer
equipment
£’000
Total
£’000
The Group has considered a number of factors in determining appropriate expected credit loss rates, including macro-economic factors
and asset-specific indicators such as customer correspondence, default or delinquency in payment and significant financial difficulties
of the customer.
Allowance for expected credit losses
236
31
–
(29)
3
241
–
(6)
3
235
1,712
2,183
1
–
(6)
2
232
87
(42)
6
21
684
(123)
17
53
684
(158)
22
2,311
2,784
773
(281)
38
860
(329)
47
238
283
2,841
3,362
(219)
(3)
13
(1)
(210)
(35)
6
1
(186)
(16)
6
(1)
(1,363)
(1,768)
(295)
104
(17)
(314)
123
(19)
(197)
(1,571)
(1,978)
(17)
42
(4)
(492)
256
(28)
(544)
304
(31)
(238)
(176)
(1,835)
(2,249)
–
31
107
35
1,006
740
1,113
806
FY 23
£’000
FY 22
£’000
26,781
24,182
(657)
(541)
26,124
23,641
1,194
1,101
1,999
3,710
539
1,548
1,113
2,728
34,128
29,569
Not overdue
Overdue 1–30 days
Overdue 31–60 days
Overdue 61–90 days
Overdue 90+ days
As at 31 March 2023
Not overdue
Overdue 1–30 days
Overdue 31–60 days
Overdue 61–90 days
Overdue 90+ days
As at 31 March 2022
Expected
loss rate
%
Gross carrying
amount
£’000
Loss
allowance
£’000
Net carrying
amount
£’000
1.98%
3.15%
5.01%
10.82%
17.60%
19,295
6,652
602
69
163
(382)
(209)
(30)
(7)
(29)
18,913
6,443
572
62
134
26,781
(657)
26,124
Expected
loss rate
%
Gross carrying
amount
£’000
Loss
allowance
£’000
Net carrying
amount
£’000
1.79%
2.50%
4.31%
8.06%
16.58%
17,865
5,007
773
303
234
(320)
(125)
(33)
(24)
(39)
17,545
4,882
740
279
195
24,182
(541)
23,641
Capitalised contract fulfilment costs comprise amounts incurred in relation to unsatisfied performance obligations on fixed-fee milestone
projects, and non-distinct software implementation costs incurred in advance of the commencement of the client’s licence period on
Aiviq contracts. As at 31 March 2023, total capitalised contract fulfilment costs were £1.2m (FY 22: £1.7m), of which £0.1m (FY 22: £0.1m)
was presented within non-current assets on the face of the consolidated statement of financial position. These costs are recognised in
the consolidated statement of comprehensive income at the point of revenue recognition for fixed-fee milestone projects or are amortised
to the consolidated income statement over the licence period for non-distinct software implementation costs. An expense of £1.5m has
been recognised in the consolidated statement of comprehensive income in relation to capitalised contract fulfilment costs. No significant
judgements have been made in determining the amount of costs to be capitalised, which primarily comprise costs within scope of
IAS 19 “Employee Benefits”.
Contract receivables are recognised in accrued income and relate to satisfied performance obligations recognised and not invoiced at
the year end. All such contract receivables are expected to be realised within one year and are classified within current assets. Contract
receivables are recorded on a time spent basis and as performance obligations are met on agreed fees and day rates, billed in arrears.
These are typically short-term timing differences that are administration in nature at each reporting date. Contract receivable payments
are due on standard terms once the invoices are raised. The contract receivables movement in the year represents these timing
differences across respective contract deliverables at each year end.
The expected credit loss calculated on accrued income was not material at the current or prior year ends. For analysis of the exposure
to credit risk at 31 March 2023, refer to note 23.
16. Cash and cash equivalents
Cash at bank
Cash and cash equivalents
FY 23
£’000
59,215
59,215
FY 22
£’000
63,516
63,516
All cash and cash equivalents held by the Group are available for use by the Group with no restrictions.
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 grown in the year reflecting the
overall growth of the Group, with debtor days reducing to 43 days (FY 22: 55 days).
An expected credit loss attributable to trade receivables is established after consideration of historical loss rates in preceding periods
and relevant current circumstances. The Group has determined historical loss rates for each ageing category of trade receivables by
performing an in-depth analysis of historical losses in conjunction with other factors in key Alpha territories.
34 The movement in the allowance for expected credit losses comprises a charge to the statement of comprehensive income of £109,000 and foreign exchange movements of £7,000.
alphafmc.com
alphafmc.com
Financial StatementsNotes to the consolidated financial statements continued 120
Annual Report & Accounts 2023
Annual Report & Accounts 2023
121
17. Trade and other payables
Trade payables
Accruals
Deferred income
Social security tax on share options
Taxation and social security
Other creditors
Earn-out and deferred consideration
Total amounts owed within one year
Note
22
13
FY 23
£’000
5,156
FY 22
£’000
5,114
29,880
23,898
796
1,669
4,734
2,277
16,027
60,539
1,865
1,050
2,964
1,280
20,500
56,671
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 majority of the accruals balance is the profit share bonus accrual, which has increased in the year, reflecting the enlarged team size,
the strong performance of the Group and the timing of some payments.
Earn-out and deferred consideration relates to the second deferred and contingent earn-out payments in relation to the acquisition
of Lionpoint. Refer to note 13 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. These contract liabilities typically arise on short-term timing differences between
performance obligations in some milestone or fixed-fee contracts and their respective contracted payment schedules. The contract
liability movement in the year represents these timing differences across contracts at each year end. The following table sets out the
revenue recognised in the current year that relates to carry-forward contract liabilities, and the current and non-current liabilities
recognised in the current year that have been deferred to future reporting periods. All current deferred income is expected to be
recognised through revenue within one year. Movements in the year predominantly relate to the underlying operations of the business,
and no material contract liabilities were recognised in relation to changes in estimates or contract modifications. There were no contract
modifications in the year that resulted in the recognition of revenue from performance obligations satisfied in previous periods.
Contract liabilities at the start of the year
Foreign exchange movements
Contract liabilities recognised in revenue during the year
Acquired through a business combination
Increase in contract liabilities during the year
Balance at the end of the year
Note
17,19
17,19
FY 23
£’000
2,098
104
Restated 35
FY 22
£’000
1,996
71
(1,969)
(1,692)
–
776
1,009
34
1,689
2,098
Unperformed balances shown in the table below represent the revenue that the Group will earn from customers when the Group
satisfies the remaining performance obligations in certain contracts. These mainly relate to Aiviq’s multi-year contracts that range
between one and ten years, in which software access revenue is recognised over the access period.
The following table sets out the aggregate amount of the contracted transaction price allocated to performance obligations that are
unsatisfied or partially satisfied at the year-end date. Unperformed balances relating to contracts with an expected original life of less
than one year are not disclosed. Similarly, the Group has adopted the practical expedient not to disclose amounts under longer-term
contracts in which the revenue is to be invoiced on agreed day rates. Revenue from unperformed performance obligations is expected
to be recognised in the following timeframes.
To be undertaken and recognised within one year
To be undertaken and recognised between one and three years
To be undertaken and recognised after three years
Total unperformed performance obligations
FY 23
£’000
1,373
2,257
1,614
FY 22
£’000
1,178
1,674
918
5,244
3,770
35 FY 22 reconciliation of deferred income has been restated to include the non-current portion of deferred income. This has resulted in £0.2m of additional deferred income being disclosed
for FY 22. This restatement is presentational and has no impact on the consolidated statement of financial position or consolidated statement of comprehensive income.
18. Provisions
Balance as at 1 April 2022
Utilised
Released
Additional provisions
Foreign exchange movements
Balance as at 31 March 2023
Social security
tax provisions
£’000
Legal and
other provisions
£’000
2,590
–
–
219
67
687
(138)
(100)
–
1
Total
£’000
3,277
(138)
(100)
219
68
2,876
450
3,326
Within social security tax provisions is a £1.4m (FY 22: £1.4m) provision relating to historical pre-AIM admission potential tax treatments.
An additional amount of £1.5m (FY 22: £1.2m) is included relating to further potential social security tax exposures and the balance
increased in the year following reviewing and updating the input assumptions. The amount and timing of these social security tax
provisions are subject to uncertainty. A final position agreed with a tax authority or through the expiry of a tax audit period could differ
from the estimated provision. Currently there are no ongoing tax audits.
Legal and other provisions comprise £0.3m (FY 22: £0.3m) of dilapidation provisions in respect of the Group’s leased offices and £0.2m
(FY 22: £0.4m) relating to ongoing legal claims. The movements in the year reflect satisfactory conclusions to certain matters. The balance
of legal and other provisions at 31 March 2023 represents the most probable outcome of these claims at the balance sheet date.
Given the uncertainty, a range of outcomes is possible in relation to these provisions. The Directors consider the cash outflows in
relation to recognised provisions could reasonably range between £1.2m and £5.4m. The carrying value of the provisions disclosed
above is a reasonable approximation of their fair value.
19. Other non-current liabilities
Earn-out and deferred consideration
Deferred income
Social security tax on share options
Other non-current liabilities
Total amounts owed after one year
Note
13
22
FY 23
£’000
8,922
213
1,640
625
FY 22
£’000
20,146
233
1,953
2,768
11,400
25,100
Earn-out and deferred consideration relates to future deferred and contingent earn-out payments to be made for the acquisition
of Lionpoint. Given the passage of time, the second deferred and contingent consideration payments now fall due within 12 months
from the balance sheet date. Refer to note 13 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.
For further details refer to note 17.
Other non-current liabilities decreased in the year as the remaining deferred element of FY 22 bonuses for certain directors and senior
management globally now falls due within 12 months from the reporting date, partially offset by FY 23 bonuses awarded in the year,
payable in summer 2024.
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Annual Report & Accounts 2023
Annual Report & Accounts 2023
123
20. Note to the cash flow statement
Alpha employee benefit trust
Cash and cash equivalents
Bank borrowings
Net cash
Less: cash and cash equivalents
Leases
Interest and bank loan fees
Liabilities arising from financing
Non-cash changes
1 April
2022
£’000
Cash flow
£’000
63,516
(7,323)
–
–
63,516
(7,323)
(63,516)
(2,409)
–
(2,409)
7,323
1,531
482
2,013
Lease
accounting
additions and
modifications
£’000
–
–
–
–
(2,854)
–
(2,854)
Other
changes
£’000
–
–
–
–
(216)
(482)
(698)
Foreign
exchange
£’000
3,022
31 March
2023
£’000
59,215
–
–
3,022
59,215
(3,022)
(59,215)
(213)
–
(4,161)
–
(213)
(4,161)
Cash and cash equivalents
34,012
26,836
1 April
2021
£’000
Cash flow
£’000
Acquisition
of subsidiary
£’000
Non-cash changes
Lease
accounting
additions and
modifications 36
£’000
Other
changes
£’000
Foreign
exchange
£’000
–
–
34,012
26,836
(34,012)
(26,836)
(1,893)
(52)
925
285
2,148
–
2,148
(2,148)
(478)
–
–
–
–
–
–
–
–
–
(827)
–
(111)
(233)
520
–
520
(520)
(25)
–
31 March
2022
£’000
63,516
–
63,516
(63,516)
(2,409)
–
(1,945)
1,210
(478)
(827)
(344)
(25)
(2,409)
Bank borrowings
Net cash
Less: cash and cash
equivalents
Leases
Interest and bank loan fees
Liabilities arising
from financing
21. Called up share capital
Allotted, called up and fully paid
Ordinary 0.075p shares (1 vote per share)
Allotted, called up and fully paid
Ordinary 0.075p shares (1 vote per share)
Movements in share capital during the year ended 31 March 2023:
Balance as at 1 April 2022
118,707,336 ordinary shares of 0.075p each
Issued shares
Balance as at 31 March 2023
120,509,736 ordinary shares of 0.075p each
FY 23
Number
FY 22
Number
120,509,736
118,707,336
FY 23
£
FY 22
£
90,382
89,031
£
89,031
(i)
1,351
90,382
(i)
During the year, a total of 1,800,000 ordinary shares were issued by the Group, all of which were issued to the employee benefit
trust (“EBT”) for future satisfaction of share incentive plans. A further 2,400 ordinary shares were issued by the Group, to satisfy
exercises under the employee incentive plan (“EIP”).
36 The FY 22 comparative has been re-presented to show the split between lease accounting additions and modifications from the discount unwinding associated with leases.
The Group held 6,274,380 (FY 22: 6,216,501) shares in the employee benefit trust (“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.
During the year, 1,800,000 ordinary shares were transferred by the Company to the EBT for potential future satisfaction of share
incentive plans, either through the issuance of new shares or the transfer of shares bought back from prior employees at nominal value.
Further, the EBT purchased 266,922 shares in the year at market value for £1.1m, which was funded by the Group and is accounted for
as a deduction from other reserves.
In the year, 2,009,043 shares held in the EBT were utilised for employee share option exercises.
Treasury shares
The Group held nil (FY 22: nil) shares in treasury.
22. 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 periods, 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
TSR over three years in excess of the mean total shareholder return (“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. In FY 21,
in response to COVID-19, options granted were subject to more flexible performance criteria, including local budget targets and a
variety of stretching personal sales or other targets. In FY 22, the performance conditions of options granted in that year returned to
the previous award criteria.
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.
Some of these share incentive awards 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 can be equity settled only.
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.
During the year ended 31 March 2023, a total of 3,153,014 share option and award grants were made to employees and senior
management (FY 22: 2,959,429). The weighted average of the estimated fair values of these options awarded in the year is £3.14
per share (FY 22: £2.68).
During the year 2,191,024 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. Of these vested
awards, 1,853,088 have been exercised, with a further 158,355 awards that vested in previous periods also exercised in the year. Of these
total 2,108,886 options exercised, the Group settled 2,011,443 either through the issuance of new shares, or shares transferred from the
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Financial StatementsNotes to the consolidated financial statements continued 124
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Annual Report & Accounts 2023
125
22. Share-based payments continued
Group’s EBT with a further 97,443 options retained for net tax settlement. The weighted average share price at the date of these
exercises was £4.27.
During the year, 552,467 share options were forfeited under performance conditions or as a result of leavers before vesting.
Of the 276,306 share options exercisable at the year end, 240,493 share options vested in the year. The remaining vested award holders
have a further six-year 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:
Outstanding at the beginning of the year
Granted during the year
Exercised during the year
Forfeited during the year
Expired during the year
Outstanding at the year end
Exercisable at the year end
FY 23
Number of
share options
9,504,379
3,153,014
(2,108,886)
(552,467)
–
9,996,040
276,306
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 2023 had a weighted average remaining contractual life of 1.7 years.
During the year ended 31 March 2023, options were granted in July 2022 and January 2023 to employees and certain 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:
Weighted average share price at grant date
Exercise price
Volatility
Weighted average share option life
Risk-free rate
Expected dividend yield
FY 23
£3.99
Nominal
20.10%
4 years
1.65%
3.00%
Expected volatility was determined by calculating the historical volatility of the market in which the Group operates. 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 £8.0m (FY 22: £6.2m) in the current year, comprising £7.0m (FY 22: £4.1m) in relation to
equity-settled share-based payments, and £1.0m (FY 22: £2.1m) relating to relevant social security taxes. As disclosed on p. 76
of the Remuneration Committee report, Euan Fraser stepped down from the role of Chief Executive Officer and from the Board
on 31 March 2023 and, as announced, remains with the Group as a strategic adviser on a part-time basis. This has resulted in an
acceleration of the share-based payment charge in relation to Euan’s share options, as all employment-linked conditions attached
to these share options have been removed.
Given the estimation, were the future conditions for all outstanding share options assumed to be met at the end of the reporting period,
the charge in the year would increase by £0.8m.
The combined carrying value of current and non-current liabilities relating to social security tax on share options as at 31 March 2023
is £3.3m (FY 22: £3.0m). A £1.0m charge was recognised in the consolidated statement of comprehensive income in the year, offset
by £0.7m 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 applicable analyst research and applicable future
tax rates. For these purposes, the share price is updated at each reporting period to reflect historical levels, and is assumed to grow in
line with the estimated future performance of the business. If the estimated future share price growth assumption were to double, the
social security costs in the period could increase by £0.3m. Were the share price to remain flat the charge would reduce by £0.3m.
23. Financial instruments
Carrying amount of financial instruments
The carrying amounts of the financial assets and liabilities include:
Financial assets measured at amortised cost
Cash and cash equivalents
Trade and other receivables
Total financial assets measured at amortised cost
Financial liabilities measured at amortised cost
Trade and other payables
Lease liabilities
Other non-current liabilities
Total financial liabilities measured at amortised cost
Financial liabilities measured at fair value
Earn-out and deferred consideration
Total financial liabilities measured at fair value
(i)
(ii)
(ii)
FY 23
£’000
Restated 37
FY 22
£’000
59,215
31,028
63,516
26,908
90,243
90,424
(37,313)
(30,292)
(4,161)
(625)
(2,409)
(2,768)
(42,099)
(35,469)
(24,949)
(40,646)
(24,949)
(40,646)
(i)
Trade and other receivables (note 15) as presented in the table above exclude capitalised contract fulfilment costs and prepayments
as these are non-financial assets.
(ii) Trade and other payables (note 17) and other non-current liabilities (note 19) in the table above exclude deferred income, social
security tax on share options, and taxation and other social security as these are non-financial liabilities. Earn-out and deferred
consideration liabilities are presented as a separate line item in the table above.
The book value of the financial instruments is deemed to be approximate to fair value. There has been no impairment loss recognised
in the current or prior years in respect of financial assets.
The Group’s financial instruments comprise cash and cash equivalents, items such as trade payables and trade receivables that arise
directly from its operations, and bank borrowings. These financial instruments arise in the ordinary course of business and their main
purpose is to provide finance for the Group’s operations.
The Group’s operations expose it to a variety of financial risks including market risk, credit risk, liquidity risk, interest rate risk and
foreign currency exchange rate risk. The Board has overall responsibility for internal control and risk management by the Group. In
this structure, the Audit and Risk Committee manages the processes of reviewing the quality of internal controls that are related to
the financial performance of the Group, as delegated by the Board. The policies set by the Board of Directors are implemented by
the Company’s finance team.
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37 The FY 22 comparative has been restated to disclose earn-out and deferred consideration liabilities of £40.6m as financial liabilities measured at fair value, previously disclosed as
financial liabilities measured at amortised cost. Additionally, the FY 22 comparative has been restated to include other debtors of £0.5m within financial assets measured at amortised
cost as these financial assets were previously excluded, and to exclude tax and social security liabilities of £6.0m from financial liabilities measured at amortised cost as these
non-financial liabilities were previously included. These restatements are presentational only and have had no impact on the consolidated statement of financial position or the
consolidated statement of comprehensive income.
Financial StatementsNotes to the consolidated financial statements continued 126
Annual Report & Accounts 2023
Annual Report & Accounts 2023
127
23. Financial instruments continued
Market risk
Market risk is the risk that changes in market prices, including foreign exchange and interest rates, will affect the Group’s income
or the value of financial instruments held at the year end. The Directors do not consider this to be a significant risk to the Group.
Inflation risk is the risk that the increased rate of inflation in the market will have a material impact on the Group’s forecasted cash flows.
The Group has therefore considered current and plausible inflation levels when forecasting future cash flows. The Group does not
believe that inflationary pressures represent a material risk to the Group’s financial position at the balance sheet date.
Credit risk
The Group’s credit risk is primarily attributable to potential default on its trade receivables. The Group considers a default to have
occurred when a balance is over 90 days overdue and there is no realistic prospect of payment. The Group has policies that require
appropriate credit checks on potential customers before sales are made.
The Group has provided for a lifetime expected credit loss against the trade receivables balance at the balance sheet date. The likelihood
of default is assessed by reference to the ageing category of the receivables. Refer to note 15 for further details. Were the expected
credit loss rates applied to receivables by the Group to increase by 1% for each ageing category, the resulting additional credit loss
to the Group would be £0.3m.
Interest rate risk
The Group has interest-bearing assets and liabilities. Interest-bearing assets comprise only cash and cash equivalents that earn interest
at a variable rate. The Group’s revolving credit facility attracts a variable rate of interest. Given the Group’s limited indebtedness, the
Directors do not currently engage in hedging transactions and will revisit the appropriateness of this policy should the Group’s operations
change in size or nature. The Group has no derivative transactions outstanding at 31 March 2023.
If the variable interest rate applicable to the Group’s revolving credit facility had been 500 bps higher in the year ended 31 March 2023,
finance expenses would have increased by £0.3m.
Liquidity risk
The Group maintains a committed RCF alongside its cash balances, designed to ensure that it has sufficient available funds for operations
and planned expansions. The Group monitors its levels of working capital to ensure that it can meet its liabilities as they fall due.
The concentration of liquidity risk is primarily around acquisition-related payments the Group is committed to make over the next several
years. The Group’s cash and RCF are expected to be more than sufficient to cover these liabilities as they fall due. Refer to note 13 for
further detail of these liabilities.
The Group’s current trade payables, accruals and other creditors totalling £37.3m are expected to be paid within six months of the
balance sheet date. Other non-current liabilities of £0.6m are expected to be settled between 12 and 18 months from the balance sheet
date. Of the gross undiscounted amounts payable in relation to earn-out and deferred consideration, £16.7m is expected to be paid
within six months of the balance sheet date, with the remaining £11.1m to be materially settled between 12 and 18 months of the
balance sheet date. A separate maturity analysis of the Group’s lease liabilities is disclosed in note 7.
Financial risk
The Group is liable for contingent earn-out payments on the acquisition of Lionpoint and, as at 31 March 2023, holds a liability that
represents the fair value of amounts that may become payable.
The fair value is determined by estimating the expected payment, discounted to present value, using a risk-adjusted discount rate.
The expected payment is determined separately in respect of each individual earn-out agreement, taking into consideration the expected
level of financial performance of each acquisition. The Group has assessed the estimation uncertainty of the liability held in relation to
contingent consideration, inclusive of employment-linked amounts. As a result, the Group has provided a single sensitivity for the Lionpoint
acquisition at the balance sheet date, as sensitivities applied to common underlying assumptions affect both elements of the liability.
If the discount rates used for the Lionpoint acquisition were to be 5% higher or lower than that assumed by management, the fair value
of the liability recognised within the Group would not change by a material amount.
Were the financial performance achieved by Lionpoint in FY 24 to decrease by 30% from the Board-approved budget, the undiscounted
amount to be paid for the third earn-out would remain unchanged at £10.0m. Were the financial performance achieved by Lionpoint in
FY 24 to decrease by 40% from the Board-approved budget, the undiscounted amount to be paid for the third earn-out would be
£2.8m lower at an amount of £7.2m and the discounted liability as at 31 March 2023 would decrease by £2.3m.
The Directors have also considered a reasonable range of circumstances to sensitise the forecast cash flows to calculate reasonable
estimated earn-out pay-out ranges for the Lionpoint acquisition. The Directors have determined that the reasonable range of
undiscounted contingent earn-out payments is between £17.7m and £20.0m.
Foreign currency exchange rate risk
The Group is exposed to foreign currency exchange rate risk mainly as a result of trade receivables and payables that will be settled
in euros and US dollars, as well as Lionpoint acquisition liabilities that are recorded in US dollars. The Group uses available currency
resources to help mitigate exposures. During the year, the Group did not enter into any arrangements to hedge this risk, as the
Directors did not consider the exposure to be significant given the short-term nature of the balances. The Group will review this policy
as appropriate in the future.
The impact on the Group’s net fee income arising from a 5% adverse movement in all foreign exchange rates relevant to the Group has
been calculated as being £7.2m (3.2%) in FY 23. The same sensitivity would also result in a decrease in the Group’s net assets of £1.5m.
Trade receivables
Cash
Trade payables
Total
GBP
’000
EUR
’000
USD
’000
CHF
’000
SGD
’000
NOK
’000
DKK
’000
AUD
’000
9,192
4,559
13,362
1,344
504
5
1,824
1,229
CAD
’000
316
RSD
’000
–
6,881
11,432
47,344
769
1,806
1,368
911
3,368
257
4,513
HKD
’000
–
14
(2,861)
(791)
(1,774)
(48)
(2)
–
(17)
(90)
(48)
(435)
(12)
13,212 15,200 58,932
2,065
2,308
1,373
2,718
4,507
525
4,078
2
24. Capital risk management
The Group’s objectives when managing capital are to safeguard its ability to continue as a going concern, provide returns for
shareholders and maintain an optimal capital structure to reduce the cost of capital.
The Group defines capital as being share capital plus all reserves, which amounted to £149.3m as at 31 March 2023 (FY 22: £132.7m).
The Board of Directors monitors the level of capital as compared to the Group’s long-term debt commitments and adjusts the ratio of
debt to capital as is determined to be necessary, by issuing new shares, reducing or increasing debt, paying dividends and returning
capital to shareholders. The Group is not subject to any externally imposed capital requirements.
25. Related party disclosures
Related parties, following the definitions within IAS 24, are the Group’s subsidiary companies, members of the Board, key management
personnel and their families, and shareholders who have control or significant influence over the Group.
The Group considers key management personnel, as defined under IAS 24 Related Party Disclosures, to be the Company’s Directors
and certain members of the Group’s senior management team that report into the Group Coordination Committee as detailed on p. 66.
Further disclosures relating to the remuneration of the Directors of the Company are set out in the Remuneration Committee report on
pp 73–77 and in note 5. There were no transactions within the year in which the Directors had any interest.
Transactions between the Company and its subsidiaries are on an arm’s length basis and have been eliminated on consolidation and
are not disclosed in this note. None of the Group’s shareholders are deemed to have control or significant influence and therefore are
not classified as related parties for the purposes of this note.
26. Ultimate controlling party
As at 31 March 2023 there is no ultimate controlling party of the Group. The largest shareholders in the Group are set out in the
Directors’ report and are also published at alphafmc.com/investors/aim-rule-26.
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Financial StatementsNotes to the consolidated financial statements continued Financial Statements
128
Annual Report & Accounts 2023
Annual Report & Accounts 2023
129
Company statement of financial position
As at 31 March 2023
27. Events after the reporting period
Acquisition of 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 (together, “Shoreline”), a boutique consultancy that provides services to the asset and wealth
management industry in APAC, on a cash and debt-free basis, for AUD 8.0m (£4.2m) initial cash consideration plus a performance-driven
earn-out of up to AUD 5.0m (£2.6m). The initial cash consideration is payable in instalments, with AUD 4.9m (£2.6m) paid on completion,
and AUD 1.7m (£0.9m) and AUD 1.4m (£0.7m) payable on the first and second anniversaries of completion respectively. Any contingent
earn-out tranches are payable by July 2025, 2026 and 2027 respectively. The maximum potential cash consideration payable by the
Group pursuant to the acquisition, assuming full payment of the earn-out, would be AUD 13.0m (£6.8m). The initial consideration was
funded from the Group’s cash resources.
As at the date of signing these financial statements, given the proximity of the acquisition to the announcement date, the accounting
is incomplete in respect of the valuation of the fair value of the acquiree’s assets and liabilities, and the associated goodwill for
this acquisition.
Renewal of the Group’s revolving credit facility
The Group has one principal bank facility which, as at 31 March 2023, comprised a £20.0m committed revolving credit facility (“RCF”)
with Lloyds Bank.
Subsequent to the year end, the Group has increased the amount of its committed RCF to £50.0m, with both Lloyds Bank and HSBC,
to provide funding flexibility in line with the Group’s growth. The facility tenor now runs until June 2026.
Assets
Non-current assets
Investments
Deferred tax asset
Amounts owed by Group undertakings
Total non-current assets
Current assets
Trade and other receivables
Corporation tax
Cash and cash equivalents
Total current assets
Current liabilities
Trade and other payables
Total current liabilities
Net current liabilities
Non-current liabilities
Other non-current liabilities
Total non-current liabilities
Net assets
Equity
Issued share capital
Share premium
Capital redemption reserve
Other reserves
Retained earnings
Total shareholders’ equity
As at
31 March 2023
£’000
As at
31 March 2022
£’000
Note
2
4
5
6
7
8
1,344
1,028
1,344
3,213
165,012
144,639
167,384
149,196
68
363
205
636
(14,407)
(14,407)
(13,771)
(57)
(57)
205
548
68
821
(3,635)
(3,635)
(2,814)
(211)
(211)
153,556
146,171
90
89
119,438
119,438
–
13,946
20,082
–
9,224
17,420
153,556
146,171
As permitted by Section 408 of the Companies Act 2006, a separate statement of comprehensive income of the Company has not
been presented. The Company’s profit for the year was £15.4m (FY 22: £8.6m).
The notes on pp 131–138 form part of these financial statements. These financial statements were approved and authorised for issue
by the Board of Directors on 22 June 2023. They were signed on its behalf by:
Luc MJ Baqué
Chief Executive Officer
John C Paton
Chief Financial Officer
Company registered number: 09965297
alphafmc.com
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Financial StatementsNotes to the consolidated financial statements continued
130
Annual Report & Accounts 2023
Company statement of changes in equity
For the year ended 31 March 2023
As at 1 April 2021
Comprehensive income
Profit for the year
Transactions with owners
Shares issued (equity)
Share-based payment charge
Net settlement of vested share options
Purchase of own shares by the employee benefit trust
Current tax recognised in equity
Deferred tax recognised in equity
Dividends
As at 31 March 2022
Comprehensive income
Profit for the year
Transactions with owners
Shares issued (equity)
Share-based payment charge
Net settlement of vested share options
Purchase of own shares by the employee benefit trust
Current tax recognised in equity
Deferred tax recognised in equity
Dividends
As at 31 March 2023
Share
capital
£’000
80
–
9
–
–
–
–
–
–
Share
premium
£’000
89,396
–
30,042
–
–
–
–
–
–
89
119,438
–
1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Other
reserves
£’000
3,907
Retained
earnings
£’000
17,474
Total
£’000
110,857
–
–
4,075
(12)
(205)
220
1,239
–
9,224
–
–
7,023
(343)
(1,139)
276
(1,095)
8,626
8,626
(2)
–
–
–
–
–
(8,678)
30,049
4,075
(12)
(205)
220
1,239
(8,678)
17,420
146,171
15,437
15,437
(1)
–
–
–
–
–
–
7,023
(343)
(1,139)
276
(1,095)
(12,774)
Notes to the Company financial statements
Annual Report & Accounts 2023
131
1. Summary of significant accounting policies
General information
Alpha Financial Markets Consulting plc (the “Company”) is a public company incorporated, domiciled and registered in England,
in the UK. The registered number is 09965297 and the registered address is 60 Gresham Street, London EC2V 7BB.
The parent company financial statements present information about the Company as a separate entity and not about the
consolidated Group.
Transition to FRS 101
During the year, the Company has revised the basis of preparation of these financial statements, transitioning from UK-adopted
International Financial Reporting Standards ("IFRS") to Financial Reporting Standard 101 Reduced Disclosure Framework ("FRS 101").
This transition has not resulted in any change to the Company’s financial position at the transition date.
Basis of preparation
These financial statements were prepared in accordance with FRS 101.
In preparing these financial statements, the Company applies the recognition, measurement and disclosure requirements of
International Financial Reporting Standards (“Adopted IFRS”), but makes amendments where necessary in order to comply with
the Companies Act 2006 and has set out below where advantage of the FRS 101 disclosure exemptions has been taken.
In these financial statements, the Company has applied the exemptions available under FRS 101 in respect of the following disclosures:
— a cash flow statement and related notes;
— comparative period reconciliations for share capital, tangible fixed assets, intangible assets and investment properties;
— disclosures in respect of transactions with wholly owned subsidiaries;
— disclosures in respect of capital management;
— the effects of new but not yet effective IFRS;
— disclosures in respect of the compensation of key management personnel;
— disclosures of transactions with a management entity that provides key management personnel services to the Company; and
90
119,438
13,946
20,082
153,556
— disclosures of related party transactions.
–
(12,774)
Share capital
Share capital represents the nominal value of share capital subscribed.
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 issuance costs.
Other reserves
The other reserves represent the cumulative fair value of the IFRS 2 share-based payment charge recognised each year, associated
current tax and deferred tax, 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 gains and losses recognised in the consolidated statement of
comprehensive income.
As the consolidated financial statements of the Group include the equivalent disclosures, the Company has also taken the exemptions
under FRS 101 available in respect of the following disclosures:
— IFRS 2 Share-based Payment in respect of Group-settled share-based payments; and
— certain disclosures required by IFRS 16 Leases in relation to disclosure of the Company’s leasing activities.
The Company financial statements are prepared on the historical cost basis. Non-current assets and disposal groups held for sale are
stated at the lower of the carrying amount and fair value less costs to sell.
The presentational currency of these financial statements and the functional currency of the Company is pounds sterling. All amounts in
these financial statements have been rounded to the nearest £1,000.
Going concern
The Directors have, at the time of approving the financial statements, a reasonable expectation that the Company and the Group have
adequate resources to continue in operation for the going concern period. For further details please refer to note 1 of the Group’s
consolidated financial statements.
Principal accounting policies
The accounting policies set out on pp 132–133 have, unless otherwise stated, been applied consistently to all periods presented in
these Company financial statements.
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Financial Statements 132
Annual Report & Accounts 2023
Annual Report & Accounts 2023
133
Notes to the Company financial statements continued
1. Summary of significant accounting policies continued
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 Directors have made no judgements, excluding those involving estimations, in the process of applying the Company’s accounting
policies that are considered to have a significant effect on the amounts recognised in the financial statements for the period ended
31 March 2023.
The Directors have identified the following areas as key estimates that are considered to have a significant risk of resulting in a material
adjustment to the carrying amounts of assets or liabilities within the next financial year.
Share-based payments
Management has estimated the share-based payment expense under IFRS 2. In determining the fair value of share-based payments,
management has considered several internal and external factors in judging the probability that management and employee share
incentives may vest and in assessing the fair value of share options at the date of grant. Such assumptions involve estimating a number
of future performance and other factors. The fair value calculations have been externally assessed for reasonableness in the current and
prior period.
Share-based payment charges recorded in the period are in respect of the share incentives awarded to the Directors of the Company,
as while they are employed by another Group entity, their services are considered to benefit the Group and the Company directly.
Refer to note 10 for further details.
Investments in subsidiaries
Investments in subsidiaries
Investments in subsidiaries are stated at cost less any provision for impairment. The Company monitors for indicators of impairment
at each reporting period, and a full impairment assessment is performed on an annual basis.
The Directors have deemed that no impairment was required in both the current and prior years.
Common control transactions
The Company applies a book-value method of transferring control of subsidiaries between the Company and its wholly owned
subsidiaries. All entities involved in the transfer are part of a wider economic group, are related parties within the Group, and are
transferred at a value equal to the book value of the investment held relating to the transferred company at the date of transfer.
Dividends
Group dividends proposed by the Board are recognised in the financial statements when they have been approved by shareholders
at the AGM. Interim dividends are recognised when they are paid.
Amounts owed by Group undertakings
Amounts owed by Group undertakings are recognised initially at fair value and subsequently measured at amortised cost, less provision
for impairment. A provision for impairment of intercompany receivables is established using an expected credit loss model. Amounts
owed by Group undertakings are presented within non-current receivables where they are not expected to be settled within the Group’s
normal operating cycle.
Employee benefits
Share-based payments
The cost of share-based employee compensation arrangements, whereby employees receive remuneration in the form of shares or
share options, is recognised as an employee benefit expense in the statement of profit or loss.
The total expense to be apportioned over the vesting period of the benefit is determined by reference to the fair value (excluding the
effect of non-market-based vesting conditions) at the date of grant.
In determining the fair value of share-based payments under IFRS 2, management has considered a number of internal and external
factors in order to judge the probability that management and employee share incentives may vest. Such judgements involve estimating
future performance and other non-market-based factors.
At the end of each reporting period the assumptions underlying the number of awards expected to vest are adjusted for the effects of
non-market-based vesting conditions to reflect the conditions prevailing at that date. The impact of any revisions to the original
estimates is recognised in the statement of profit or loss, with a corresponding adjustment to equity. Fair value is measured by the use
of a binomial model. The assumptions have been adjusted, based on management’s best estimate, for the effects of non-transferability,
lack of dividend until vesting and exercise restrictions.
The fair value calculations have been externally assessed as reasonable in the circumstances.
The Company applies an intra-group recharge arrangement to the share-based payment charge relating to employees of other entities
within the wider Group, to reflect the benefits received by the respective entity in relation to employees granted share options.
The Company is deemed to be the settling entity in the intra-group arrangement, as share options granted are in relation to ordinary
shares of the Company, and recognises the share-based payment charge for the full Group in other reserves. The Company’s
subsidiaries are considered to be the receiving entities in the arrangement, in line with the benefit received for services provided through
ongoing employment.
Amounts relating to employees who provide services directly to the Company are recorded as an equity-settled share-based payment
charge through the Company’s statement of comprehensive income and are not recharged.
The remaining charge in relation to employees who provide services to other Group entities is initially recognised as an investment in
subsidiaries and is simultaneously reversed upon the recharge of this cost to the receiving entity through amounts owed by Group
undertakings. This charge is recognised within the profit and loss of the relevant receiving entities. The Company presents these
movements in investments on a net basis within note 2.
For further details on the background to share-based payment plans and disclosures, please refer to note 22 of the Group’s
consolidated financial statements.
Shares held in treasury or by Alpha’s employee benefit trust
Shares held in treasury or by Alpha’s EBT represent the shares of Alpha Financial Markets Consulting plc. These shares are recorded at
cost and are deducted from equity.
Other significant accounting policies
Other significant accounting policies are consistent with those presented within the notes to the Group’s consolidated financial statements.
Changes in accounting policy
Several standards, interpretations and amendments to existing standards became effective for the year ended 31 March 2023, and
that will become effective in subsequent periods, as detailed on p. 101 of the Group accounts, none of which had a material impact
on the Company.
2. Fixed asset investment
Cost
As at 1 April 2021
Disposals
As at 31 March 2022
Disposals
As at 31 March 2023
£’000
1,344
–
1,344
–
1,344
The Company’s fixed asset investments are all in relation to investments in subsidiaries. The Company held no tangible fixed assets in
the current and prior year.
During the year, amounts recognised and subsequently reversed through intra-group recharge arrangements were £5.8m. These are
presented net in the table above in line with the Company’s accounting policies.
The undertakings in which the Group and Company had interest at the year end of more than 20% are as follows:
Subsidiary undertakings
Alpha FMC Trustee Limited
Alpha FMC Midco Limited
Alpha FMC Midco 2 Limited
Alpha FMC Bidco Limited
Country of
incorporation
Registered
address
UK
UK
UK
UK
1
1
1
1
Principal activity
Dormant
Class and
percentage of
shares held –
31 March 2023
Class and
percentage of
shares held –
31 March 2022
100% ordinary
100% ordinary
Intermediate holding company
100% ordinary
100% ordinary
Intermediate holding company
100% ordinary
100% ordinary
Intermediate holding company
100% ordinary
100% ordinary
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Financial Statements 134
Annual Report & Accounts 2023
Annual Report & Accounts 2023
135
2. Fixed asset investment continued
Subsidiary undertakings
Alpha FMC Group Holdings Limited
Alpha FMC Group Nominees Limited
Alpha FMC Group Limited
Alpha Financial Markets Consulting Group
Limited
UK
UK
UK
UK
Alpha Financial Markets Consulting UK Limited UK
Alpha Technology Services Consulting Limited UK
Aiviq Limited38
Alpha Financial Markets Consulting, Inc.
UK
USA
Alpha Financial Markets Consulting S.A.S.
France
Alpha Financial Markets Consulting
(Luxembourg) S.A.
Alpha Financial Markets Consulting
Netherlands B.V.
Alpha Financial Markets Consulting
Switzerland S.A.
Alpha Financial Markets Consulting
Germany GmbH39
Alpha Financial Markets Consulting
Singapore Pte. Ltd.
Alpha Financial Markets Consulting
Hong Kong Limited
Alpha Financial Markets Consulting
Australia PTY Limited
Axxsys Limited
Axxsys Financial Software Consulting
Canada Limited
Axxsys Consulting USA Inc.
Axxsys Danmark ApS
Obsidian Solutions Limited
Luxembourg
Netherlands
Switzerland
Germany
Singapore
Hong Kong
Australia
UK
Canada
USA
Denmark
UK
Alpha Technology Services Consulting S.A.S.
France
Obsidian Alpha Data Solutions LLC
Alpha FM Consulting Canada Inc.
Alpha Financial Markets Consulting
(Insurance) France S.A.S.
Lionpoint Holdings, Inc.
Lionpoint Group, LLC
Lionpoint Group (UK) Limited
Lionpoint Group SA
Lionpoint Group Pty Limited
Lionpoint GmbH
Alpha Data Solutions Limited
Serbia
Canada
France
USA
USA
UK
Switzerland
Australia
Germany
UK
Alpha Financial Markets Group Spain S.L.U.
Spain
Alpha FMC (Newco) Limited
UK
1
1
1
1
1
1
1
2
3
4
5
6
7
8
9
10
11
12
13
14
1
3
15
16
3
17
18
19
20
21
22
1
23
1
Country of
incorporation
Registered
address
Principal activity
Intermediate holding
company
Class and
percentage of
shares held –
31 March 2023
Class and
percentage of
shares held –
31 March 2022
100% ordinary
100% ordinary
Group services
100% ordinary
100% ordinary
Intermediate holding
company
Intermediate holding
company
100% ordinary
100% ordinary
100% ordinary
100% ordinary
Consultancy services
100% ordinary
100% ordinary
Dormant
100% ordinary
100% ordinary
Consultancy services
100% ordinary
100% ordinary
Consultancy services
100% ordinary
100% ordinary
Consultancy services
100% ordinary
100% ordinary
Registered addresses
1 60 Gresham Street, London EC2V 7BB, UK
2 12 East 49th Street, New York, NY 10017, USA
3 6 Square de L’Opéra Louis Jouvet, 75009 Paris, France
4 19/21 Route d’Arlon – bloc B, L-8009 Strassen, Luxembourg
5 Strozzilaan 101, Amsterdam, 1083 HN, The Netherlands
6 Stockerstrasse 55, 8002 Zürich, Switzerland
7 Kurt – Blaum – Platz 8, 63450 Hanau, Germany
8 6A Shenton Way #04-01 Downtown Gallery, Singapore 068815
9 22/F Neich Tower, 128 Gloucester Road, Wanchai, Hong Kong
10 Quay Quarter Tower, 50 Bridge Street, Sydney NSW 2000, Australia
11 New Broad Street House, 35 New Broad Street, London EC2M 1NH, UK
12 1800-13401 108th Avenue, Surrey, British Columbia V3T 5T3, Canada
Consultancy services
100% ordinary
100% ordinary
13 Incorp Services, Inc., One Commerce Center, 1201 Orange Street #600, Wilmington, Delaware 19899, USA
Consultancy services
100% ordinary
100% ordinary
14 Flaesketorvet 68, DK-1711 Copenhagen, Denmark
15 Dvadesetsedmog marta 6-6a, 11060 Palilula, Belgrade, Serbia
Consultancy services
100% ordinary
100% ordinary
16 Suite 1700, Park Place, 666 Burrard Street, Vancouver, BC V6C2X8, Canada
Consultancy services
100% ordinary
100% ordinary
17 251 Little Falls Drive, Wilmington, Delaware 19808-1674, USA
18 8 The Green, Suite A, Dover, Delaware 19901, USA
Consultancy services
100% ordinary
100% ordinary
19 5 Upper St. Martin’s Lane, London WC2H 9EA, UK
Consultancy services
100% ordinary
100% ordinary
20 Rue d’Italie 11, 1204, Geneva, Switzerland
21 Ground Floor, 123 Walker Street, North Sydney NSW, 2060, Australia
Consultancy services
100% ordinary
100% ordinary
22 c/o KUNZ Rechtsanwälte, Antoniterstraße 14-16, Köln, 50667, Germany
Consultancy services
100% ordinary
100% ordinary
23 PP/DE LA CASTELLANA número 18 7º, 28046, Madrid, Spain
Consultancy services
100% ordinary
100% ordinary
Consultancy services
100% ordinary
100% ordinary
Consultancy services
100% ordinary
100% ordinary
Consultancy services
100% ordinary
100% ordinary
Consultancy services
100% ordinary
100% ordinary
Consultancy services
100% ordinary
100% ordinary
Consultancy services
100% ordinary
100% ordinary
Consultancy services
100% ordinary
100% ordinary
Consultancy services
100% ordinary
100% ordinary
Consultancy services
100% ordinary
100% ordinary
Consultancy services
100% ordinary
100% ordinary
Consultancy services
100% ordinary
100% ordinary
Consultancy services
100% ordinary
100% ordinary
Consultancy services
100% ordinary
100% ordinary
Dormant
100% ordinary
Consultancy services
100% ordinary
Dormant
100% ordinary
N/A
N/A
N/A
38 Aiviq Limited (formerly Alpha Data Solutions Limited) changed its name in FY 23.
39 TrackTwo GmbH changed its name to Alpha Financial Markets Consulting Germany GmbH.
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Financial StatementsNotes to the Company financial statements continued 136
Annual Report & Accounts 2023
Annual Report & Accounts 2023
137
3. Taxation
Current tax
In respect of the current year
Adjustment in respect of prior periods
Deferred tax
In respect of the current year
Adjustments in respect of prior periods
Change in tax rate
Total tax charge/(credit) for the year
FY 23
£’000
(184)
476
(256)
1,345
–
1,381
FY 22
£’000
(328)
(93)
(813)
96
(56)
(1,194)
The decrease in the deferred tax asset during the year relates to a reallocation of the Group’s deferred tax asset, in relation to share
options, from the parent company to other Group entities. The portion of these assets that relate to employees of other Group entities
should previously have been recognised in those entities, given that they will benefit from a tax deduction available upon exercise, rather
than in the accounts of the Company. Therefore, in the Company accounts the Directors have determined that a reallocation of these
assets to the employing entities is required. The impact of this reallocation has resulted in a £1.3m deferred tax asset release in the
statement of comprehensive income, and a £1.4m release recognised through equity. The Directors do not consider this reallocation
to be material to the user’s understanding of the prior period financial statements and therefore have not restated the prior period.
There is no impact on the Group financial statements.
5. Trade and other receivables
Other debtors
Total amounts due within one year
FY 23
£’000
68
68
FY 22
£’000
205
205
An increase in the UK corporation rate from 19% to 25% (effective 1 April 2023) was substantively enacted on 24 May 2021. In FY 24,
this change will increase the Group’s current tax charge accordingly.
The difference between the total tax expense shown above and the amount calculated by applying the standard rate of UK corporation
tax to the profit before tax is as follows:
All amounts receivable from Group undertakings are included as non-current assets in the Company statement of financial position.
The Directors are satisfied that all outstanding amounts from subsidiary Group undertakings are recoverable. Expected credit loss in
relation to non-current and current amounts owed by Group undertakings was immaterial in both the current and prior year.
Profit before taxation
Tax on profit of ordinary activities at standard UK corporation tax rate of 19% (FY 22: 19%)
Effects of:
Income not subject to tax
Adjustments in respect of prior periods
Permanent differences
Remeasurement of deferred tax for changes in tax rates
Total tax credit/(charge) for the year
FY 23
£’000
16,818
3,195
(3,635)
1,821
–
–
FY 22
£’000
7,432
1,412
(2,271)
96
(375)
(56)
6. Cash and equivalents
Cash in bank and at hand
Cash and cash equivalents
7. Trade and other payables
Amounts owed to Group undertakings
1,381
(1,194)
Other creditors
Income not subject to tax relates to dividend income which was received from UK subsidiaries.
Adjustments in respect of prior periods comprise £0.4m in relation to current tax and £1.4m relating to deferred tax, which primarily
relates to tax on share options. Please refer to note 4 for further details on the deferred tax charge in the year.
4. Deferred tax
Movements in deferred tax
As at 31 March 2023
Share options
Deferred tax asset
As at 31 March 2022
Share options
Deferred tax asset
1 April 2022
£’000
3,213
3,213
Recognised
in income
£’000
Recognised
in equity
£’000
31 March 2023
£’000
(1,090)
(1,090)
(1,095)
(1,095)
1,028
1,028
1 April 2021
£’000
1,201
1,201
Recognised
in income
£’000
Recognised
in equity
£’000
31 March 2022
£’000
773
773
1,239
1,239
3,213
3,213
Social security tax on share options
Total amounts owed within one year
8. Other non-current liabilities
Social security tax on share options
Total amounts owed after one year
9. Financial instruments
Carrying amount of financial instruments
The carrying amounts of the Company’s financial assets and liabilities are as follows:
Financial assets measured at amortised cost
Financial assets measured at historical cost
Financial liabilities measured at amortised cost
Net financial assets
FY 23
£’000
205
205
FY 23
£’000
13,332
574
501
14,407
FY 23
£’000
57
57
FY 22
£’000
68
68
FY 22
£’000
2,809
560
266
3,635
FY 22
£’000
211
211
FY 23
£’000
FY 22
£’000
165,285
144,912
1,344
(14,464)
1,344
(3,846)
152,165
142,410
For the period ended 31 March 2023, the Company has recognised a total of £0.8m (FY 22: £1.4m) of tax through equity, of which a
£0.3m credit (FY 22: £0.2m) relates to current tax on the exercise of share options and an offsetting £1.1m (FY 22: £1.2m) debit relates
to deferred tax on share options outstanding.
The book value of the financial instruments is deemed to be approximate to fair value.
The Group’s financial instruments comprise intercompany receivables, investments in subsidiaries and trade and other payables.
These financial instruments arise in the ordinary course of business and their main purpose is to provide finance for the Group’s operations.
alphafmc.com
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Financial StatementsNotes to the Company financial statements continued 138
Annual Report & Accounts 2023
Annual Report & Accounts 2023
139
9. Financial instruments continued
The Group’s operations expose it to credit risk arising from intercompany receivables. Management has overall responsibility for internal
control and risk management by the Company. The policies set by management are implemented by the Company’s finance team.
Credit risk
The Company’s credit risk is primarily attributable to its intercompany receivables. The Company provides financing to other entities
within the Group on an unsecured and typically interest-free basis, repayable on demand. There is no collateral held on these receivable
balances. The expected credit loss on the Company’s financial assets is measured annually based on historical datapoints and an
assessment of the forward-looking probability of default. The expected credit loss on the Company’s intercompany receivables is
immaterial as at 31 March 2023.
The Directors consider the intercompany receivables to represent a low credit risk and credit risk is not considered to have increased
significantly since initial recognition. The wider Group has a strong liquidity position and there is no current expectation by the Directors
for repayment of the intercompany balances in the short term.
10. Share-based payments
Options under the Group’s “MIP” share option schemes have been granted to employees of the Company. For further information,
including the terms and conditions of these awards, please refer to note 22 of the Group’s consolidated financial statements.
The Company’s weighted average exercise price for all options outstanding in both the current and prior years was nominal. The options
outstanding as at 31 March 2023 had a weighted average contractual life of 1.1 years (FY 22: 1.3 years).
The Company’s weighted average share price at the date of exercised awards in the year was £4.40.
The Company recognised a total expense of £1.5m (FY 22: £0.7m) in the current year. As disclosed on p. 76 of the Remuneration
Committee report, Euan Fraser stepped down from the role of Chief Executive Officer and from the Board on 31 March 2023 and, as
announced, remains with the Group as a strategic adviser on a part-time basis. This has resulted in an acceleration of the share-based
payment charge in relation to Euan’s share options, as all employment-linked conditions attached to these options have been removed.
Given the estimation, were the future conditions for all outstanding share options assumed to be met at the end of the reporting period,
the charge in the year would increase by £0.1m.
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 applicable analyst research and applicable future tax rates. For these
purposes, share price is updated at each reporting period to reflect historical levels, and is assumed to grow in line with the estimated
future performance of the business. If the estimated future share price growth assumption were to double, the social security costs in
the year could increase by £0.1m. Were the share price to remain flat the charge would reduce by £0.1m.
11. Related parties
Identity of related parties with which the Company has transacted
The Company has not engaged in any transactions with any related parties other than with wholly owned subsidiaries, and
remuneration of the Company’s key management personnel. These transactions have not been disclosed as the Company has taken
advantage of exemptions under FRS 101.
12. Events after the reporting period
Renewal of the Group’s revolving credit facility
Subsequent to the year end, the Company has increased the amount of its committed RCF to £50.0m, with both Lloyds Bank and
HSBC, to provide funding flexibility in line with the Group’s growth. The facility tenor now runs until June 2026. Refer to note 27 of the
notes to the consolidated financial statements.
SASB Disclosure
The mission of the Sustainability Accounting Standards Board
(“SASB”) is to develop and disseminate sustainability accounting
standards that help public corporations disclose material,
decision-useful information to investors. The Group is supportive
of the SASB framework as it allows organisations to provide
comparable and consistent ESG-related data. As a “professional
and commercial services” organisation under SASB, the material
factors according to the SASB framework are as follows:
The below tables provide the numeric metrics relating to these
factors over the past 12 months where applicable, in addition to
the internal frameworks used to manage these risks on an
ongoing basis. Further qualitative data for each of the material
factors is provided throughout the Annual Report. The Group also
recognises the increasing importance of the environment to its
investors, employees and other stakeholders, which it describes
in addition to the required disclosure.
— data security;
— workforce diversity and engagement; and
— professional integrity.
Material factors
Data security
Principal locations in this Annual Report
Risk management pp 47–49
Workforce diversity and engagement
Looking after our people: emphasis on culture and inclusion pp 26–27
Social: diversity and inclusion pp 36–37
Sustainable business: governance p. 35; and community and social responsibility
pp 38–41
Professional integrity
ESG metrics:
Topic: Data security
Measurement
Number of data breaches
Description of approach to identifying and addressing data
security risks: SV-PS-230a.1
Alpha continues to invest in maintaining a robust security posture
across the organisation. Alpha seeks to continually improve
security controls and adapt to the ever-evolving cyber threat
landscape.
The Group’s IT and data security strategy ensures that the
confidentiality, integrity and availability of data are maintained and
is frequently assessed and updated to remain aligned with global
data protection frameworks and regulations.
Alpha has identified a number of key risk areas that are regularly
monitored and considered including: the misuse of data; accidental
or intentional dissemination of data; loss, theft or compromise of
data and/or information; incorrect data being used for internal or
external purposes; and unauthorised access of equipment and/or
physical resources.
Over the past 12 months, Alpha has continued to evolve its
internal governance and controls surrounding this topic. This activity
has included continuing to support Aiviq (formerly Alpha Data
Solutions) in maintaining ISO 27001:2013 certification.
Internal policies and governance
Alpha maintains a suite of information security policies, which
are reviewed, updated and approved by the Group Coordination
Committee on an annual basis.
FY 23
–
FY 22
–
SASB Code
SV-PS-230a.3
These policies are based upon best practice from the National
Institute of Standards and Technology (“NIST”) framework.
Policies include but are not limited to:
— acceptable use;
— access control;
— antivirus and threat management;
— asset management;
— data privacy;
— data encryption;
— information security training;
— password management;
— secure development;
— wireless network policy; and
— business continuity and disaster recovery.
The information security policies attest to the responsibility,
governance and business practices that Alpha applies to the
topics surrounding IT and data security, and enable the Group to
validate information security and risk posture on a constant basis.
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Notes to the Company financial statements continuedSASB Disclosure 140
Annual Report & Accounts 2023
SASB Disclosure continued
ESG metrics: continued
Senior oversight and executive sponsorship
The Global Head of IT Operations is responsible for the oversight
and management of incidents, risks and remedial activities
pertaining to Alpha’s IT, infrastructure and information security
function. Executive sponsorship of IT and data security in the
leadership team is provided by the Group Managing Director
and day-to-day oversight is the responsibility of the Information
Security Lead.
Alpha operates an internal Information Security Management
Forum (“ISMF”), chaired by the Information Security Lead. The ISMF
meets regularly to review incidents, risks and mitigation activities
across the Group. This includes managing activities pertaining to
Aiviq’s ISO 27001 certification.
Workforce training and awareness
All global Alpha employees are trained and empowered to take
responsibility for data security across the organisation. Mandatory
data handling and cybersecurity training is issued annually with a
positive pass required of each employee. This mandatory annual
training is supplemented throughout the year with security
awareness training modules, delivered electronically.
Social engineering assessments are additionally undertaken with
analysis and benchmarking against industry average statistics.
Further mandatory training is issued as a follow-up following
completion of these assessments. Technical safeguards such as
multifactor authentication (“MFA”), secure email gateway, secure
cloud access gateway, DMARC anti-spoofing controls and
phishing reporting are also implemented.
Cloud security and monitoring
Alpha continues to adopt market-leading cloud technologies to
ensure a multi-layered approach in defending its infrastructure,
people and data from emerging cyber threats. Using these
platforms, Alpha had deployed a broad range of technical
controls around encryption, intrusion detection and prevention,
data leak prevention, traffic inspection, and threat scanning.
Additionally, new technologies are regularly evaluated as Alpha
continues to assess the security landscape and identifies
potential changes in risk. Given the continuation of hybrid
working, further investment has also been made in the Group’s
Endpoint protection and detection suite, leveraging industry-best,
AI-driven local analysis.
Proactive monitoring across Alpha’s core infrastructure is
undertaken by the security operations centre (“SOC”), for which
Alpha leverages a qualified third party (BDO Digital). The SOC
enables the organisation to robustly assess alerts and events,
correlate with threat intelligence and take the appropriate course
of investigation.
Robust incident and breach response
The Global Head of Legal & Corporate Affairs oversees Alpha’s
protection and privacy framework, including compliance with all
relevant regulations. The Global Head of Operations oversees
operational procedures aligned to that framework with support
from the IT infrastructure, operations and client delivery teams.
Alpha operates a unified global incident response and breach
management process, which ensures we are able to appropriately
assess and triage all data security incidents, and ensure that the
most effective remediation is applied. The response function
ensures the timely containment of any incident(s) and impact
assessment, and handles both internal and external notifications
(if and when required).
During the previous 12 months, there were no reportable
data breaches.
Description of policies and practices relating to collection,
usage and retention of customer information: SV-PS-230a.2
Alpha fully understands its important custodial obligations around
protecting internal, employee and client information. In line with
this, Alpha has implemented and annually reviews a global data
protection policy and privacy statement, which comprises relevant
privacy notices relating to different areas of the business. Alpha’s
privacy statement explains the types of information collected and
processed, and governance of the usage attributed to this data
collection, and outlines the appropriate data retention schedules.
In accordance with the privacy statement, Alpha collects and
processes contact and organisational information for legitimate
business purposes, safeguarded by a suite of technical controls
to mitigate the risk of data breaches arising from external threats.
All systems and applications are configured on a least-privilege
basis, ensuring access to data is appropriate by job function.
All cloud platforms are assessed at the point of implementation
and annually thereafter to assess data residency and ongoing
compliance with the appropriate regional legislation.
To further mitigate risks associated with data handling, Alpha has
deployed several risk controls including:
— annual review and approval of global information security
policies by the Group Coordination Committee;
— clear oversight of and responsibility for the data protection and
privacy framework by the Global Head of Legal & Corporate Affairs;
— clear lines of operational responsibility and engagement across
the global data protection governance, overseen by the Global
Head of Operations;
— training and awareness to promote good cyber hygiene and
build a security aware culture;
— social engineering assessments across the global workforce,
robustly analysed to benchmark attack susceptibility against
industry averages;
— security operations centre performing real-time infrastructure
monitoring, correlating events and alerts with threat analytic
feeds and other sources of intelligence;
— adoption of a cloud-first IT architecture model, built upon
zero-trust security principles;
— due diligence, vetting and annual auditing of cloud providers
is undertaken to validate information security and risk posture
around these applications; and
— regular external collaboration with cybersecurity specialists.
Annual Report & Accounts 2023
141
Topic: Workforce diversity and engagement40
Measurement
Percentage of gender representation
SASB Code
SV-PS-330a.1
Level
Directors and equivalent
FY 23
85.8%
FY 22
84.4%
FY 23
13.3%
FY 22
11.5%
FY 23
0.0%
FY 22
0.0%
FY 23
0.9%
FY 22
4.2%
Managers, senior managers, associate
directors and equivalent
69.3%
71.1%
30.5%
26.4%
0.0%
0.0%
0.2%
2.4%
Male
Female
Other
N/A41
Analysts, consultants and equivalent
62.9%
63.5%
36.4%
34.8%
Overall split
Measurement
68.5%
69.7%
31.0%
28.0%
Percentage of racial/ethnic group representation (UK)
0.0%
0.0%
0.0%
0.0%
0.7%
0.5%
1.6%
2.3%
SASB Code
SV-PS-330a.1
Asian or
Asian British
Black or
Black British
Mixed
background
White or
White British
Other
N/A
Level
FY 23
FY 22
FY 23
FY 22
FY 23
FY 22
FY 23
FY 22
FY 23
FY 22
FY 23
FY 22
Directors and equivalent
1.8% 0.0% 1.8% 2.1% 1.8% 2.1% 89.5% 83.3% 0.0% 2.1% 5.3% 10.4%
Managers, senior managers,
associate directors
and equivalent
Analysts, consultants
and equivalent
15.6% 10.7%
3.1% 2.7%
3.1% 6.0% 67.6% 76.5% 1.3% 1.3% 9.3% 2.7%
17.5% 24.4% 5.3% 4.9% 3.5% 6.5% 62.6% 57.7% 3.5% 2.4%
7.6% 4.1%
Overall split
14.6% 14.4% 3.8% 3.4% 3.1% 5.6% 68.4% 70.3% 2.0% 1.9% 8.2% 4.4%
Measurement
Percentage of racial/ethnic group representation (North America)
SASB Code
SV-PS-330a.1
Asian
Black or
African American
Hispanic
or Latino
White
Other
N/A
Level
FY 23
FY 22
FY 23
FY 22
FY 23
FY 22
FY 23
FY 22
FY 23
FY 22
FY 23
FY 22
Directors and equivalent
11.1% 9.1% 0.0% 0.0% 0.0% 0.0% 77.8% 81.8% 3.7% 0.0%
7.4% 9.1%
All other employees
15.3% 15.6% 3.6% 4.3% 3.6% 5.4% 49.1% 60.8% 4.6% 4.8% 23.8% 9.1%
Overall split
14.9% 14.9% 3.2% 3.8% 3.2% 4.8% 51.6% 63.0% 4.5% 4.3% 22.4% 9.1%
Measurement
Voluntary turnover rate of employees42
Employee engagement as a percentage43
FY 23
12.2%
73.5%
FY 22
12.4%
69.3%
SASB Code
SV-PS-330a.2
SV-PS-330a.3
40 Given the nature of the metrics, the percentages used as part of the SASB disclosure refer to total global headcount, i.e. fee-generating consultants as well as business operations teams.
41 “N/A” refers to unknown, undisclosed or prefer not to say. An important part of the ongoing diversity and inclusion initiatives at Alpha is to endeavour to reduce the number of "N/A"
(where appropriate) and to expand the data groups on which it is reporting so as to provide a wider view of how it is performing against the topic. Please see the social section of the
sustainable business report for more information.
42 Voluntary turnover data for FY 21 and FY 22 was based on fee-generating consultants. As part of our ongoing developments of this reporting, figures for FY 23 include fee-generating
consultants as well as business operations teams. Voluntary turnover rate for fee-generating consultants only for FY 23 was 12.7%.
43 Employee engagement data for FY 23 was based on anonymous engagement surveys conducted during the year. FY 22 did not include Axxsys and Lionpoint.
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SASB Disclosure 142
Annual Report & Accounts 2023
SASB Disclosure continued
ESG metrics: continued
Topic: Professional integrity
Measurement
Total amount of monetary losses as a result of legal proceedings associated with
professional integrity44
FY 23
FY 22
SASB Code
–
–
SV-PS-510a.2
Description of approach to ensuring professional integrity:
SV-PS-330a.1
Acting with integrity is embedded into Alpha’s core values. To support
this, Alpha maintains clear policies for its employees on such
topics as anti-bribery, confidentiality, IT security and acceptable
use, whistleblowing and tax evasion. Annual performance reviews
include an assessment of professional integrity and compliance
with company policies. The Group will continue to review its
adherence to high professional standards and business ethics
and introduce new policies and training for its teams as
appropriate for the Group’s business model and range of services.
Operating according to strong standards of transparency,
honesty, business ethics and professional integrity means that
Alpha is able to identify, understand and meet consistently the
high expectations of its clients and wider stakeholders. Alpha is
also cognisant of its wider relationships and is developing its
approach to managing business and supplier relationships in
respect of human rights and ethical standards, such as through
its Living Wage application.
Alpha is committed to delivering the highest relationship and
delivery standards to all clients and prospective clients. As part of
this commitment, the professional conduct of the Group is at all
times fair and professional, premised upon:
— promoting Alpha’s services honestly and fairly;
— preserving the confidentiality and privacy of client businesses;
— acting lawfully and ethically at all times; and
— delivering projects in line with the terms of the engagement as
well as any wider services agreements.
It is the responsibility of the Alpha engagement lead, supported
by the client account owner, to ensure that client expectations
are met on each client project. The heads of each business then
oversee the engagement and satisfaction of clients with the
Group’s products and service offering, ensuring that they are
aligned to the Group’s high professional standards.
Directors and advisers
Directors
Ken Fry
Luc Baqué
John Paton
Penny Judd
Jill May
Maeve Byrne
Company number
09965297
Registered office
Alpha Financial Markets Consulting plc
60 Gresham Street
London EC2V 7BB
Auditor
KPMG LLP
EastWest
Tollhouse Hill
Nottingham NG1 5FS
Registrar
Computershare
The Pavilions
Bridgwater Road
Bristol BS99 6ZZ
Nominated adviser
Investec Bank plc
30 Gresham Street
London EC2V 7QP
Joint brokers
Joh. Berenberg, Gossler & Co.
60 Threadneedle Street
London EC2R 8HP
Investec Bank plc
30 Gresham Street
London EC2V 7QN
Company Secretary
Prism Cosec Limited
company.secretary@alphafmc.com
Corporate and investor website
alphafmc.com/investors
Client website
alphafmc.com
44 This covers losses arising out of legal proceedings against Alpha in connection with its relationship with clients and the delivery of professional services to its clients.
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Alpha Financial Markets Consulting plc’s commitment to environmental issues
is reflected in this Annual Report, which has been printed on Magno Satin, an
FSC® certified material. This document was printed by Park Communications
using its environmental print technology, which minimises the impact of
printing on the environment, with 99% of dry waste diverted from landfill.
Both the printer and the paper mill are registered to ISO 14001.
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Alpha FMC
60 Gresham Street
London
EC2V 7BB
+44 (0) 207 796 9300
enquiries@alphafmc.com
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