Alpha Group International plc
Annual Report 2022
Company Overview
2022 Highlights 1
Introduction to Alpha Group 3
Strategic Report
Chairman’s Statement 6
Chief Executive’s Statement 8
Chief Financial Officer’s Statement 24
Introduction to FX Risk Management 30
Introduction to Alternative Banking Solutions 38
Principal Risks & Uncertainties 44
Engaging our Stakeholders 55
Principal Board Decisions 58
Corporate Social Responsibility 60
Business Model 65
Corporate Governance Report
Board of Directors 66
Corporate Governance Statement 68
Audit Committee Report 76
Remuneration Committee Report 80
Directors’ Report 84
Independent Auditor’s Report 88
Financial Statements
Consolidated Statement of Comprehensive Income 98
Consolidated Statement of Financial Position 99
Consolidated Statement of Cash Flows 100
Consolidated Statement of Changes in Equity 101
Notes to the Consolidated Financial Statements 102
Shareholder Information 148
C5
Highlights
FY2022
FINANCIAL HIGHLIGHTS
− Strong financial performance delivered alongside a significant
year of investment
− Group revenue up 27% to £98.3m (2021 £77.5m)
− FX Risk Management revenue up 22% to £69.5m (2021 £57.1m)
− Alternative Banking Solutions revenue up 41% to £28.8m (2021
£20.4m)
− Profit before tax including other operating income up 42% to
£47.2m (2021 £33.2m)
− Underlying1 profit before tax up 16% to £38.6m (2021 £33.4m)
− FX Risk Management underlying operating margin of c. 39%
− Alternative Banking Solutions underlying operating margin of
c. 39%
− Basic earnings per share, including interest income, up 50% to
86.8p (2021 57.7p) and on an underlying1 basis up 20% to 70.1p
(2021: 58.3p)
− Final dividend of 11 pence per share, payable on 12 May 2023 to
shareholders on the register as at 14 April 2023, making a total
dividend for 2022 of 14.4p (2021 11.0p)
− Strong cash generation and debt free with £144m net assets,
and £114m in adjusted net cash2
− Deferred revenue from account fees, which will be recognised
over the next 12 months, increased to £4.9m (2021: £2.2m)
OPERATIONAL HIGHLIGHTS
− 19% increase in FX Risk Management client numbers, to 1,047
(2021: 881)3
REVENUE FY2022 (£)
£98.3M
2022
2021
2020
£46.2m
2019
£35.4m
£98.3m
£77.5m
UNDERLYING PROFIT BEFORE TAX (£) 1
£38.6M
2022
2021
2020
2019
£17.5m
£14.6m
£38.6m
£33.4m
REPORTED PROFIT BEFORE TAXATION (£)
£47.2M
£47.2m
£33.2m
2022
2021
2020
£17.1m
2019 £
13.5
− Average revenue per FX Risk Management client continued to
BASIC EARNINGS PER SHARE (PENCE)
increase
− 141% increase in accounts invoiced4 within Alternative Banking
Solutions, to 4,200 (2021: 1,746)
− Employee headcount increased from 214 to 357 at the year end
− 52% increase in FX Risk Management Front Office headcount
to 102 (2021: 67)
− Three new international offices launched in Luxembourg,
Sydney and Milan, with a further office launching in Madrid in
Q2 2023
− Launch of new employee growth share schemes, taking the
total number of colleagues with a long-term equity interest in
the Group to 1105
− Name changed to Alpha Group International plc (previously
Alpha FX Group plc)
− Listing on the Premium Segment of the Main Market intended
for 2024
1 Underlying excludes the impact of other operating income and non-cash share-based payments.
2 Please refer to table calculating Adjusted Net Cash within Cash Flow & Balance Sheet section.
3 The Group exclude Training Accounts (those that have generated less than £10,000 in revenue since being
onboarded) in order to provide a clearer picture of client growth and retention.
4 ‘Account’ refers to an account opened by clients to manage their funds, and that are live at the period end.
5 The Group defines a ‘long-term equity interest’ as an equity stake that is: held prior to the Company’s IPO; or
held in the Group’s growth share schemes; or shares owned directly in one of the Group’s trading subsidiaries.
86.8P
2022
2021
2020
57.7p
31.7p
2019
27.7p
86.8p
UNDERLYING BASIC EARNINGS PER SHARE (PENCE)
70.1P
2022
2021
2020
2019
32.8p
30.1p
70.1p
58.3p
1
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022
COMPANY OVERVIEW ABOUT ALPHA
Alpha Group
Half fintech, half consultancy,
wholly different.
Alpha is a leading non-bank provider of financial
Despite being an established company listed on
solutions dedicated to corporates and institutions
the London Stock Exchange, we remain relentlessly
operating internationally. Providing services to clients
focused on maintaining the same level of agility and
situated across three continents, we blend deep
client focus we had when we first began in 2009.
expertise with cutting-edge technologies to provide
These dynamics, combined with the passion of our
an enhanced alternative to their traditional bank.
people, have enabled us to make a substantial and
enduring difference to our clients, and deliver a
The key to our success is our team, over 350 people
growth story to match.
based across eight international offices, brought
together by a high-performance culture and a
partnership structure that empowers them to act
as owners of our business.
OUR DIVISIONS AND MARKETS
DIVISION
PRODUCTS
FX Risk Management (“FXRM”)
Alternative Banking Solutions (“ABS”)
(est. 2009)
(est. 2020)
Risk Management
Mass Payments
Global Accounts
Mass Payments
MONETISATION
Margins on Spot, Forward
& Option Contracts
Payment Fees
Account Fees
Payment Fees
Margins on Spot Contracts
CLIENTS
Corporates & Institutions
Institutions
OFFICES
London, Toronto, Amsterdam,
Milan, Bristol, Sydney, Madrid1
London, Luxembourg,
Malta
150
FX Risk Management
171
Alternative Banking Solutions
36
Central Services
HEADCOUNT
1 Madrid expected to launch Q2 2023
2
3
Our History
Our past performance is the result
of being relentlessly focused on
the future.
COMPANY OVERVIEW OUR HISTORY
2023
2022
2021
Q2, 2023: Expected launch of
FXRM sales office in Madrid.
December 2022: Rebrands as Alpha
Group International plc.
October 2022: Launch of FXRM
office in Sydney.
March 2022: Launch of FXRM sales
office in Milan.
January 2022: Launch of ABS office
in Luxembourg and FXRM sales
office in Bristol.
December 2021: Employee shareholder
milestone, with over 100 employee
shareholders.
September 2021: Company formally
launches global accounts solution for
alternative investments (institutions).
April 2021: Group completes
decentralisation into FX Risk
Management and Alternative
Banking Solutions.
March 2021: Launch of office in
Malta, focused on alternative
investment market.
placing for investment, raising £20m.
2020 April 2020: Capital raise and share
2019
2018 October 2018: Capital raise and share
January 2019: Company joins AIM-
100 listed on the London Stock
Exchange.
December 2018: Launch of mass
payments platform.
placing for investment, raising £20m.
August 2017: Obtain FCA licence to
provide derivatives.
2017
2009 February 2009: Alpha launches as
FX Risk Management specialist to
UK corporates.
March 2020: Launch of FXRM
sales office in Amsterdam.
October 2018: Launch of FXRM
sales office in Toronto.
March 2018: Launch of
Institutional division.
April 2017: IPO on AIM with a
market cap of c. £65m.
4
5
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022 Chairman’s Statement
Clive Kahn
I’m delighted to have overseen another year of excellent
financial and strategic progress for the Group, characterised by
continued expansion across our teams, clients and geographies.
Through measured investment and the hard work of our people,
we have fortified our position within our markets and continued
to grow our two distinct divisions towards the massive potential
we see ahead, whilst reinforcing our competitive advantages.
Whilst double-digit growth in both revenue and
I am delighted to have someone of Tim Powell’s
operating profit are notable highlights, I have also
calibre join the Board, and I look forward to working
been deeply impressed by the level of discipline
with him closely. At the same time, I would like
and energy behind the scenes that has gone into
to reiterate my wholehearted thanks to Tim Kidd
setting and execution of strategy, and enhancing
for the vital role he has played in the growth of
our risk management and controls. Having joined
the Company and wish him the very best in his
Alpha as Chairman in 2016, just before its IPO, it is a
retirement.
pleasure to see the business evolving and maturing,
whilst still retaining the same entrepreneurial flare
and ambition that has made it such an exciting
NAME CHANGE
growth story. This unique dynamic, combined with
In November 2022, we announced our decision to
the strength of the leadership team, is creating an
formally change the Group’s name from Alpha FX
increasing sense of predictability when it comes to
Group plc to Alpha Group International plc, with the
our growth, and gives me great confidence in our
London Stock Exchange TIDM for the Company also
ability to execute on our future ambitions.
changed to LON:ALPH from LON:AFX.
BOARD OF DIRECTOR CHANGES
From its establishment in 2009 the Group has
specialised in providing FX solutions. However,
The Group continues to benefit from a strong,
we have now evolved to become a company that
founder-led management team. In December 2022
delivers an increasing range of financial solutions
we appointed Tim Powell to the Board as Chief
to corporates and institutions. Our new name
Financial Officer. With over 25 years’ experience
therefore better reflects where we are today, as
working in high-quality, fast growing public
well as our increasingly global presence across the
companies, 17 of which were at the London Stock
markets in which we operate. It’s a small change, but
Exchange, Tim brings a wealth of experience and
one that reflects our achievements to date and the
insight which will undoubtedly prove beneficial
scale of our future ambitions.
to Alpha in the next stage of its growth. Tim’s
appointment followed the retirement of Tim Kidd
as Chief Financial Officer in December 2022.
STRATEGIC REPORT CHAIRMAN’S STATEMENT
Clive Kahn
Non-Executive Chairman
DIVIDEND
Following the strong full year results, the Board is
pleased to declare a final dividend of 11.0p per share
(2021: 8.0p). Subject to shareholder approval, the
final dividend will be payable to Shareholders on the
register at 14 April 2023 and will be paid on 12 May
2023. This represents a total dividend for the year of
14.4p per share (2021: 11.0p).
LOOKING AHEAD
“Since inception,
Alpha has grown from
strength to strength,
and we are in an
excellent position
going into 2023.”
Since inception, Alpha has grown from strength
Lastly, I would like to thank all our people for their
to strength, and we are in an excellent position
contribution to our success and continued growth, as
going into 2023. Whilst the macro challenges which
well as our shareholders for their continued support
characterised 2022 are likely to continue throughout
throughout the year. I look forward to another year of
much of this year, the Group has proven consistently
growth for all involved in the Alpha journey.
that, through hard work and prudent management
of its resources, it can grow through even the most
Clive Kahn
testing conditions. We are still barely scratching
Non-Executive Chairman
the surface of our target market, and the size of our
opportunity continues to grow as we expand into new
products and geographies. We are already underway
with our plans to accelerate our growth through
further investment, and it is our firm belief this
will prove transformational for the Group’s growth
prospects.
6
7
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022 Chief Executive’s Statement
Morgan Tillbrook
I am pleased to report another strong year of growth, with Group
revenue increasing 27% to £98.3m (2021: £77.5m), underlying profit
before tax increasing 16% to £38.6m (2021: £33.4m) and reported
profit before tax increasing 42% to £47.2m (2021: £33.2m).
We achieved these results alongside a significant year of
investment in our people, processes, and technologies, with a
67% increase in employee headcount, taking our team to over 350
people across eight global offices, strengthening the foundations
for future growth.
Importantly, these results were delivered during a
Over the past few years, I have been pleased to
year in which we took the time to further enhance
receive feedback from investors who value the
our standards and scalability, at times even throttling
level of detail and context we provide in our trading
back on short-term growth to achieve this. These
updates. However, as time goes on, our story grows
long-term decisions highlight the maturity and
longer, and I therefore increasingly find myself torn
commitment of the senior leadership team and will
between the need to provide enough context for new
enable us to accelerate our growth sustainably as we
investors, without creating too much repetition for
move into 2023 and beyond.
existing ones.
It remains a pleasure to work with a team that care
To solve this dilemma, moving forward I will reference
so passionately about their clients, colleagues, and
relevant context via hyperlinks throughout our
the long-term future of the business. The difference
statements. This will give investors the flexibility to
our people make in shaping Alpha’s growth story
opt-in or out of additional detail, depending on their
cannot be overestimated, and whilst this report
level of familiarity (or interest!) in the subject.
will go into great detail about all the various drivers
of growth, ultimately what it all boils back down
to is them. I would therefore like to thank all my
colleagues for another exceptional year working
GROUP ENVIRONMENT
Over the last thirteen years, we have consistently
together and I look forward to seeing what we can
delivered organic revenue growth, alongside a
achieve in 2023 and beyond.
A NOTE ON DETAIL
balanced programme of strategic investments that
have expanded our market opportunity, deepened
our differentiation, and made us increasingly
attractive to work with.
The focus of our investor relations program is to
attract and retain shareholders who share our
Importantly, market conditions have not always
long-term vision, and I believe providing more
been straightforward during this time. Indeed, our
comprehensive and up to date disclosures is key
introduction to public life in 2017 was swiftly followed
to that.
8
by some of the greatest macro-economic events
STRATEGIC REPORT CHIEF EXECUTIVE’S STATEMENT
Morgan Tillbrook
Chief Executive Officer
seen in a generation, with Brexit, COVID-19, the supply
be unrealistic to think we have been immune to
chain crisis, the Russia/Ukraine conflict, and (most
this. With this in mind, we will be using the current
recently) rising inflation, all testing our resilience.
environment as a timely reminder to maintain a
Despite this, we have continued to manage and grow
strong cost discipline as we scale, especially as we
through these challenges, and each time emerged a
accelerate our investment.
stronger and wiser business.
At our IPO we had one office and one offering focused
individual business environments of our FXRM and
exclusively on UK corporates, and we were still barely
ABS divisions in their respective sections later in
scratching the surface of our addressable market.
this statement.
You will find more detailed explanations on the
Today, however, we have two leading offerings that
are decentralised and delivered through eight global
offices, with a high-quality client base of corporates
and institutions across three continents. Our market
INFLATIONARY ENVIRONMENT & INTEREST
RATES
opportunity is therefore larger and more diversified
In my discussions with investors throughout
than it has ever been, and with our offerings continuing
the year, inflation and rising interest rates were
to evolve and pegged to business activities that
understandably an area of interest. On balance, this
are largely non-discretionary in nature, we are
has been (and continues to be) a positive tailwind
well-positioned to continue delivering predictable,
for Alpha. In an economy where prices rise, the
defensible long-term growth, even in challenging
volume of currency our clients need to trade will
macro-economic climates.
also typically rise, putting us in a fortunate position
where increasing commissions for our clients is
Whilst the current inflationary environment will not
not required. Rising interest rates meanwhile have
alter our investment strategy, we are conscious
enabled us to benefit from additional interest
that as businesses grow larger, there is a propensity
income of c. £9m, as reported in our January 2023
for unnecessary costs to creep in. Whilst we have
trading update.
maintained very strong margins over the years, it would
9
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022 Chief Executive’s Statement
Continued
This interest is being generated from our own
are today, and their perspectives will make for an
balances and sterling, euro and dollar denominated
incredibly valuable read, even amongst our longest
client funds that are aggregated and held overnight,
standing investors.
off balance sheet, as part of Alpha’s safeguarding
arrangements for its alternative banking solution. We
FX RISK MANAGEMENT (“FXRM”)
anticipate this additional interest income will become
even more material in the year ahead, but we are also
Read the introduction on page 30
mindful that this is an unpredictable income stream
HIGHLIGHTS
and, if we return to a low interest rate environment, a
potentially transitory one. With this in mind, we have
chosen to recognise this as ‘other operating income’,
not underlying revenue. Indeed, as one investor
recently said to me: “the interest income is the cherry
on the sundae… but nobody buys a sundae because of
the cherry!”
OUR OFFERINGS EXPLAINED
Historically, I have provided brief overviews of our FX
Risk Management (“FXRM”) and Alternative Banking
Solutions (“ABS”) offerings within my own statement.
In doing so however, I have often felt that brevity
comes at the expense of clarity, and that we are in
some respects oversimplifying what we do and, more
−
22% revenue growth to £69.5m (2021: £57.1m)
− Underlying profit before tax margin of c. 39%
−
19% increase in FXRM client numbers to 1,047
(2021: 881)
−
52% increase in FXRM Front Office headcount
to 102 (2021: 67)
− Average annual revenue per FXRM client
continued to increase
−
Two new international offices launched in
Sydney and Milan, with a third launching in
Madrid in Q2 2023
−
Launch of new online platform
importantly, what differentiates us. Whilst some
In its fourteenth year of trading, our FXRM division
oversimplification will remain necessary in order to
continued to deliver strong growth, with revenue
protect commercially sensitive information, as our
increasing to £69.5m (2021: £57.1m), and client
competitive moat has widened, there are now areas
numbers increasing to 1,047 (2021: 881). Behind these
which we feel more comfortable sharing publicly.
With this in mind, for the first time this year the
numbers were some encouraging trends: our overall
client concentration fell whilst average revenue per
client continued to increase, reflecting our ability
leaders of each of our divisions have prepared their
to grow wallet share with existing clients whilst also
own detailed explanations of our offerings, which can
winning increasingly larger ones, as our reputation
be read in:
and balance sheet grow.
−
−
Introduction to FX Risk Management pg 30
Introduction to Alternative Banking Solutions pg 38
Together, these overviews provide the most
comprehensive explanations of our offerings to
date, and I believe they are a must-read for anyone
who wishes to properly understand what we do and
what makes us distinctive. Alex Howorth (Group MD
Additionally, we have continued to see increases in
the average revenue generated by our Front Office
Portfolio Manager’s (“PMs”) in their first, second and
third years – something we call the “learning curve”.
This reflects compounding improvements in our
training, capabilities and reputation, along with the
consistently high calibre of people that are being
FXRM) and Adam Dowling (Group MD ABS) have been
hired.
instrumental in shaping their divisions into what they
STRATEGIC REPORT CHIEF EXECUTIVE’S STATEMENT
881
1,047
754
648
FXRM CLIENT NUMBERS
1,200
1,000
800
600
400
200
–
482
310
2017
2018
2019
2020
2021
2022
Notably, much of our existing team are still in the very
number of new starters in 2022, who will naturally have
early stages of their learning curves, meaning that
a minimal contribution in their first year. Headcount
our current headcount alone provides significant
growth was also flat during 2020 as a result of
capacity to support materially higher revenues. The
COVID-19, resulting in an uplift in overall productivity. By
hires from our recruitment team today are therefore
contrast we only added eleven Back Office employees
cementing our future growth prospects and giving
in FXRM during the year compared to 35 in Front
us far greater visibility over our growth trajectory.
Office, improving our operational gearing.
Additionally, the depth of senior talent within our
teams continues to grow, providing us with strong
FXRM GLOBAL RECRUITMENT
foundations to develop emerging talent and support
the scaling of the business.
Our success in hiring is in no small part down to the
efforts of our Front Office recruitment team. We set
As we grow our headcount, Front Office productivity
up this team in 2020, and during the first couple of
is a key metric for us. We track this by looking at the
years spent a lot of time learning how to build a high-
total cumulative tenure of our Front Office, compared
performing recruitment function and establishing a
to our revenue growth. The graph below shows that
core team. Equally important was making sure this
we have been able to maintain productivity, despite
team were deeply ingrained in the Alpha culture and
international expansion into new markets, often
intimately understood the role, our principles and
seeded by our top performers, as well as a significant
standards.
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£60m
£50m
£40m
£30m
£20m
£10m
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10
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FY 2014
FY 2015
FY 2016
FY 2017
FY 2018
FY 2019
FY 2020
FY 2021
FY 2022
Revenue
Cumulative Years
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022
Chief Executive’s Statement
Continued
Three years on, and I can now say with confidence
Our decision to ‘sunset’ these legacy systems in
This was indeed the case, with revenues falling by
We are also pleased to be finalising preparations
that we have a team which not only knows what a
2021 in order to build upon a new greenfield stack
15% in the year. The office has however continued
to launch a Spanish office at the end of Q2 2023 in
strong Alpha candidate looks like, but can represent
created a powerful step-change in the scope and
to remain profitable, despite increasing investment
Madrid. The Madrid team will be led by three highly
our career opportunities in a compelling and
pace of new product development. This is serving
into a Back Office team to support our 24/7 service
experienced, long-term Alpha employees who have
authentic way. In 2022, the team really hit its stride,
to add significant and growing value to our online
capabilities, as well as a move to a new purpose-built
been successfully penetrating these markets from
with global Front Office headcount at the year-end
capabilities, and with an exciting roadmap in place
office space. We have learned from our experience in
our London HQ since 2018, and have already built
increasing to 102 (2021: 67), and a strong pipeline of
for 2023, underpinned by a talented technology and
Toronto, and expect the team to return to growth in
a significant Spanish-speaking client base. Our
STRATEGIC REPORT CHIEF EXECUTIVE’S STATEMENT
candidates going into 2023.
product team, I am looking forward to sharing new
2023.
As someone who was closely involved in Front
Office recruitment for a long time, I know first-hand
how difficult it can be to find the right candidates
FXRM OFFICES
developments in the months ahead.
Our Amsterdam, Milan and Bristol offices all continue
us with greater access to Spanish-speaking talent, as
to make excellent progress. All three offices were
well as increasing our attractiveness to clients who
launched by employees with many years’ experience
prefer to do business with suppliers that have a local
presence in Spain is designed to enhance our growth
prospects in Spanish-speaking markets by providing
– both in terms of ability and culture. Not only is
By way of a recap, at our IPO in 2017 we were a small
working with the business, and are growing quickly
presence.
the recruitment market incredibly competitive, but
team based in Reading, Berkshire. From there we
under their stewardship:
often the best hires are people who come from
moved to London, before going on to launch FXRM
FXRM CURRENT ENVIRONMENT
unconventional backgrounds and are not actively
sales offices in Toronto, Amsterdam, Milan, Bristol
− Amsterdam (trading since April 2020) delivered
looking for a new role. I am therefore very pleased
and Sydney, with an office in Madrid expected to
strong profit, with revenues up 69% on 2021 to
2022 was a year of extreme volatility within the
with the progress the team has made, and believe
launch in Q2 2023.
this function provides a significant and global
competitive advantage for the business moving
Our London team continued to deliver strong revenue
forward. To reflect this, I am also delighted to have
growth of 13% in 2022, whilst remaining the incubator
been able to include the recruitment team in our
for talent that will go on to build Alpha’s presence in
long-term equity schemes.
FXRM TECHNOLOGY
overseas markets. Our global expansion strategy in
FXRM is focused on the identification and analysis of
key overseas markets which not only fit in terms of
market size, structure and culture, but where a local
In May 2022, we were also proud to launch our
presence is deemed highly accretive to growth.
brand-new client platform for FX Risk Management,
representing the culmination of many months of
Where regulatory permissions allow, we prefer to
hard work and dedication from our technology and
initially test international markets by servicing them
product teams. The new platform benefits from
from our existing office. Once proven, we then go
significantly enhanced functionality and a modern
on to establish offices overseas, made up of people
and intuitive user interface, designed to provide
who have been through the ‘Alpha Academy’ and can
clients with even greater visibility and efficiency
therefore be relied upon to successfully export our
when managing and reporting on FX. As a business
selling standards and culture.
that is both high-tech and high-touch, this platform
is serving to further deepen our differentiation in this
We do not underestimate that, for any company,
space, and feedback has been very encouraging.
launching new offices overseas is not without its
challenges. In our H1 2022 results statement we
Even after the upgrades made to date, the team’s
notified the market that we could see challenges
ambitions to build meaningful innovations is
arising in our Toronto office and expected this to
incredibly exciting. FXRM was where our business
cause a reduction in their revenues for the year (H1
was born, and there was a considerable amount
2022 results statement).
of legacy that had built up over the past decade.
£6.4m;
− Bristol1 (trading since January 2022) delivered
revenues in excess of £2m; and
− Milan (trading since March 2022) delivered
revenues of £2m.
1 For any investors who are unfamiliar with why we chose to have
a separate UK office in Bristol, I cover this in more detail in our
our January 2023 RNS.
foreign exchange markets, and against backdrops
like this we are sometimes asked by stakeholders
whether our FXRM division has benefited. The
rationale behind this question is the belief that
increased volatility leads to increased hedging – a
view endorsed by many FX providers. However, this
is where the fundamental difference between Alpha
and its competitors is most pronounced.
Alpha’s clients buy and sell currency for commercial
Our most recent office launch in Sydney secured
purposes, therefore volatility does not materially
its regulatory licence in October and delivered
change the overall amount they will need to transact.
encouraging initial revenues in the last couple of
For example, a client that needs to purchase $10
months of the financial year, with this momentum
million over the next 12 months does not then need
continuing so far into 2023. Investing in an office
to purchase $15 million because the exchange
in Sydney not only gives us access to some major
rate has changed. In addition, the majority of
regional Australian and Asian target markets but,
Alpha’s clients hedge forecasted cash flows (as
alongside our offices in Toronto and London, gives
opposed to firm commitments). When hedging
us the 24/7 capability to support our clients globally.
firm commitments, it can make sense to increase
This will allow us to service many more countries than
the proportion hedged in times of volatility to gain
we do today and supports our longer-term plans to
certainty. However, when hedging cashflow forecasts,
expand our regional teams. We are confident in our
if we were to encourage clients to deviate away from
ability to effectively export Alpha’s strong culture
a predefined strategy and disproportionately hedge
and have already had four established UK colleagues
more, simply in response to increased volatility,
emigrate to Australia to support this, alongside local
we would be doing two things: 1) increasing their
hires who are already experienced in the market.
concentration to a particular exchange rate; and
12
13
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022
Chief Executive’s Statement
Continued
ABS OPERATIONAL SCALABILITY
2) increasing the amount of currency being hedged
proper currency risk management strategy in place.
further into the future. Whilst this would immediately
Indeed, this will often be felt most by companies that
boost our own revenues, the problem with this is
have fallen victim to over-hedging or under-hedging
two-fold. Firstly, if this exchange rate moves against
as a result of poor advice.
our clients, having an overconcentration to it will
negatively impact their pricing and purchasing power,
In Q4 2022, we started to see the headwinds from
and potentially leave them exposed to large margin
the global economic slowdown across the wider
calls. And secondly, when that happens, we will
marketplace and were aware that some businesses
understandably lose the trust and business of our
were overstocking in anticipation of supply chain
clients, not to mention having compromised our own
shortages. At the same time, we also saw less fund
risk management principles in the process. As a risk
and institutional flow due to reduced deal activity.
management specialist, both outcomes would be
Nonetheless, with a diversified client base, fantastic
wholly inappropriate.
team, and leading capabilities, we remain confident
Ultimately, the only way such an approach to
managing currency works is if a company can reliably
and consistently predict the currency market.
about our growth prospects.
FXRM CREDIT ENVIRONMENT
Unfortunately, however, despite all of the noise and
Alpha provides tailored credit facilities against
forecasts that are out there, such a firm doesn’t exist.
the hedging instruments we offer to clients. Credit
If it did, they wouldn’t need to make their money
risk is mitigated by the quality and diversity of our
exchanging other people’s currency! It is for these
client base, alongside the robustness of our credit
reasons that we do not see times of heightened
controls and systems. Further mitigation comes
uncertainty as an opportunity to increase revenues.
from the fact that our terms and conditions ensure
Instead, our approach is to help our clients maintain
all future client trades are at our discretion. We can
a balanced hedging profile by tailoring tried and
therefore react quickly to changes in the macro
tested risk management principles to the underlying
environment or individual client profiles by refusing
dynamics of their business. Our clients hedge in line
future trades, thereby capping our exposure to past
with a long-term, pre-agreed strategy – not off the
trades only. This reduces our risk exposure and poses
back of FX market volatility, or the accompanying
significantly less risk than traditional credit facilities.
commentary and fanfare that are prevalent in our
In addition, unlike a typical lending/borrowing facility
industry.
we are only exposed to the deviation in MTM value
of the FX contract (which could be in or out of the
Our approach of helping clients hedge strategically
money and on average has a length of six months)
in line with a predefined programme driven by
and not the notional value of the trade.
commercial purposes means we do not experience
the same revenue spikes that other providers might
In a recessionary environment, the risk of any form
off the back of volatility, but it does mean we can
of credit default is naturally heightened, and Alpha
be confident that we have provided our clients
is not immune to this. Likewise, as our business
with advice that is in their best long-term interests.
grows and we underwrite more credit facilities, we
This naturally then results in more consistent and
are naturally exposed to more potential defaults.
predictable performances for their businesses, as
Importantly however, the risk of potential losses
well as our own. Where volatility can help however,
is factored into our expectations each year and is
is in serving to highlight why it is important to have a
inherent in any business that extends credit.
STRATEGIC REPORT CHIEF EXECUTIVE’S STATEMENT
FY2023
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
s
t
n
u
o
c
c
A
e
v
i
L
f
o
r
e
b
m
u
N
S
B
A
1,000
FY2020
0
0
FY2022
FY2021
20
40
60
80
100
120
140
Full time equivalent – Client Services and Compliance
We are also sector agonistic and therefore highly
Significant progress has also been made in
diversified across our marketplaces and continue to
frontloading our hiring in order that we have the
publish our sector concentration and top 20 client
ability and maturity to scale significantly: headcount
exposures on our website biannually.
increased by 114% to 171 (2021: 80), with roles
ALTERNATIVE BANKING (“ABS”)
Read introduction on page 38
HIGHLIGHTS
primarily in Compliance, Technology and Client
Services.
Whilst this is a solid financial performance in this
division, the number of accounts onboarded was,
in truth, lower than we originally planned for. This
reflects the team’s strategic decision to throttle back
41% revenue growth to £28.8m (2021: £20.4m)
on the number of accounts being onboarded in order
−
−
141% increase in live accounts invoiced to 4,200
(2021: 1,746)
− Deferred revenue from account fees, which
will be recognised over the next 12 months,
increased to £4.9m (2021: £2.2m)
to prepare for our global expansion and shift focus
towards larger-scale strategic partnerships with
corporate service providers and fund administrators.
Such providers typically open and manage many
thousands of accounts on behalf of alternative
investment funds and, in a number of instances, are
− Underlying Profit before tax margin of c. 39%
not only opening individual accounts with us, but
−
114% growth in headcount to 171 (2021: 80)
Our Alternative Banking Solutions division was
discreetly launched in 2020 with the vision to
become the world’s first purpose-built provider of
account solutions for the alternative investment
industry. Just over three years later, the division has
grown revenue by 41% in the year to £28.8m (2021:
£20.4m) and increased its number of live accounts
invoiced, to 4,200 (2021: 1,746).
are now looking to conduct sizeable migrations of
existing accounts currently held with their traditional
banking providers, in order to benefit from our
purpose-built solution.
These partnerships represent an exciting step
change in our growth opportunities in this division
and provide us with the opportunity to significantly
accelerate our current run rate. However, integrating
with these partners not only takes time, but requires
us to have the right foundations and teams in place
14
Room for a quote here somewhere?
The one i picked might not be right
15
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022
Chief Executive’s Statement
Continued
to handle a step change in scalability. This has
industry. This end-to-end software stack is only one
ABS ENVIRONMENT
meant carefully managing our rate of growth during
half of the equation however, and is underpinned
the year, in order to create bandwidth to accelerate
by dedicated infrastructure, processes, blue-chip
our investment in scalability, which will support
banking relationships, and a team of over 170 people,
faster growth globally in the future and ensure we
solely focused on the alternative investment market.
maintain excellent service levels. These investments
Additionally, investment managers and their service
have primarily been focused on: developing
providers expect to see a strong level of governance,
system integrations, increasing automation, and
track record, balance sheet and experience when
frontloading recruitment in Compliance, Client
working with a non-bank – something that most
Services & Technology, in anticipation of our growth
non-bank entrants simply do not have. Incumbent
trajectory.
banks meanwhile continue to retrench – a trend
that speaks to the deep levels of specialisation
In light of these investments, we think it is important
required to service this marketplace effectively and
to provide some clarity around the operational
profitably.
scalability of ABS and how our headcount is evolving
in both Malta and London. The chart on page 15
It has taken time and investment to build a solution
represents the core headcount that is intrinsically
that can effectively and sustainably service this
linked to our cost to serve. We expect to see
marketplace. Far from slowing down, we are now
enhanced scalability through 2023 and beyond,
about to embark on our most significant programme
which is a by-product of the maturity of the team
of investment to date in order to increase our first-
coming through, our investment in processes and
mover advantage and deepen our differentiation
automation, and our partnership agreements.
even further. Our ABS team in the UK is now
Many of the partners we are working with
(adjacent to our London HQ) which, when combined
individually manage far in excess of the 4,200
with our ABS offices in Malta and Luxembourg, will
accounts that have been opened by Alpha to date,
provide space for over 400 people dedicated to the
and fully support our decision to take a measured
alternative investment industry over the next few
preparing to move to their own dedicated office
and controlled approach to this exciting next
years.
stage in our journey. We ended last year with 4,200
accounts, and we intend to have at least doubled
Whilst we are only scratching the surface of the
this to 8,400 by the end of 2023, and will continue
European market, the service providers we are
to keep the market updated on our progress.
partnering with are global, and have already
Importantly, the business we receive through
expressed a strong desire for us to expand our
our partnerships is also well-diversified across
offering to North America and Asia. These regions
a number of different service providers, with no
are currently outside of our regulatory scope,
concentrated exposure to any one service provider.
but with the benefit of the interest tailwind, we
have taken the opportunity to begin regulatory
Whilst we remain vigilant to the potential for new
applications in the US and Singapore. These
entrants in this marketplace, we also know that
applications are just one such example of our
there are significant barriers to entry, and we have
accelerated investment in scalability that is being
a strong competitive advantage. After three years
carried out to secure our global expansion. Providing
of technical development, market testing, product
these applications are accepted, this will open up
optimisation and diagnosing the challenges that
new revenue opportunities for the business, from
alternative investment institutions face, we now
existing partners who have already shown a strong
provide a truly purpose-built platform for the
appetite to work with us in these jurisdictions.
STRATEGIC REPORT CHIEF EXECUTIVE’S STATEMENT
“The stronger a
company’s pool of
talent and culture, the
better its ability to
perform, evolve and
adapt to the inevitable
challenges that come
with growth.”
The alternative investment industry (within which our
ABS division operates) saw a decline in deal activity
in 2022 and investment managers naturally found
fundraising more challenging as a result. Despite
this, we continued to see high demand for account
openings, and the team delivered strong growth. We
believe there are three main reasons for this. Firstly,
the c. 4,200 accounts that Alpha has onboarded to
date, pales in comparison to the size of the overall
market; Preqin tracks 160,000 funds globally and
we estimate that each fund will have on average
ten assets, each requiring accounts.1 Secondly,
Alpha’s innovative offering has proved highly
attractive and therefore remains in high demand.
And thirdly, the alternative investment industry is
With such a large market to go after, combined
highly diversified across a variety of asset types,
with the strength of Alpha’s unique offering, this
investment timeframes and geographies, all of which
opportunity is once again very much about Alpha
provide a counterbalancing effect. For example,
deploying our proven entrepreneurial skills to
whilst investors reduced their appetite for some
continue building a high-growth, high-value business.
asset classes (e.g. private equity) this was offset
1 Preqin Global Report 2023: Alternative Assets
by increased demand for (comparatively) lower risk
assets such as private debt.
OUR PEOPLE
The combination of these three factors means that,
In previous reports I have sometimes talked about
even if the market was to slow down further, our
the importance of talent and cultural ‘density’. The
business would still be in a strong position to grow.
principle is a simple one – the stronger a company’s
Indeed, we did monitor a slowdown in trading going
through existing accounts in the fourth quarter of
pool of talent and culture, the better its ability
to perform, evolve and adapt to the inevitable
2022, which temporarily reduced demand for FX
challenges that come with growth.
transactions. We believe this reflects the fact that
some investors are holding onto their allocations in
As a business scales, there is always a risk that
the current environment – a view echoed by EY in
their recent 2022 Global Alternative Fund Survey.
Furthermore, the industry is still expected to grow
over the medium term, with Preqin estimating an
annualised rate of growth of 10.8% over the next
five years to 2027.1 Finally, whilst many investment
its density in these two areas will become diluted.
Amongst other things, the pressure of resource
gaps, managing budgets, and growth targets can
lead people to compromise on their standards.
It is for this reason that we remain relentlessly
focused on ensuring we maintain high levels of
managers are expected to hold their allocations for
talent and cultural density as we scale, by ensuring
the time being, the 2022 Global Alternative Fund
survey indicated that those expecting to change
will be increasing their allocations to alternative
investments over the next three years.
our investments in our people and culture are
commensurate to the Company’s growth, and that we
don’t compromise our standards and principles.
16
17
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022 Chief Executive’s Statement
Continued
BUILDING OUR TEAM
As I have already mentioned, we made excellent
progress in hiring throughout the year, with Group
headcount at year end increasing by 67% to 357
(2021: 214).
With a 67% increase in headcount, some investors
may be concerned that we have compromised on
our standards to deliver these numbers. In reality
however, there are two important factors to take
into consideration here. Firstly, with our hiring split
across two fully decentralised divisions, the step
change in headcount is divided up and therefore
more manageable: 91 heads were added in ABS, 44 in
FXRM, and 8 in Central Services. Secondly, whilst the
percentage of employees that part ways with Alpha
during their first six months has marginally reduced
(a reflection of our improved hiring ability), it has not
dropped dramatically because the principle of setting
a high standard internally, from a competence and
cultural perspective, remains intact.
Ultimately, employee churn in the early months is
a by-product of our best-in-class ambition. Whilst
we will continue to focus on improving our ability to
filter the right candidates, and develop and retain the
best people, we are realistic that a certain level of
employee turnover is a by-product of upholding the
highest standards.
EMPOWERING OUR TEAM
At Alpha, our definition of a high-performance
environment is “a place where everyone’s getting
better”. From our work with Dr Ceri Evans, we’ve
identified that the most important ingredient for
everyone to be getting better is to have a speak-
up culture. As our team grows and becomes more
globally spread, it becomes increasingly important
that we strive for a culture where employees feel
empowered to “speak up” about where we can
improve at every level, and in every aspect of our
business. Doing so will enable us to better identify
what holds us back, our blind spots, call out
inconvenient facts and uncomfortable truths that
need to be addressed, and moreover, keep learning
and improving.
We’ve learned from our work with Dr Evans that
speaking up is not always easy for people to do. In
fact, if left unchecked, many people’s natural bias
is to do the exact opposite – whether that’s through
fear of being wrong, exposing their own knowledge
gaps, or coming across as defensive. Nonetheless,
the evidence from decades of investigation
and intervention in high-stake, high-pressure
environments is that the foundation for reliability
and excellence under pressure, is leadership that
encourages and values honest communication and
teamwork.
Consequently, as a leadership team we are doubling
down on this aspect of Alpha’s culture and are
striving to be one of the best organisations in the
world in this respect. Whilst we know this is a high
bar, we see it as central to both our team’s individual
growth, as well as the growth of the business as a
whole. It is a privilege and a pleasure to have a close
long-term working relationship with someone of
Ceri’s calibre and the principle of a speak up culture
is something that has been adopted by a number of
ambitious organisations with great success. Indeed,
Toto Wolff of Mercedes Formula 1 has on a number
of occasions gone on record to credit Ceri’s impact
himself.
The idea of a ’speak up’ culture was first coined
by Amy Edmondson (Professor of Leadership
and Management at Harvard Business School) to
describe companies that create ‘psychological safety’
in the workplace so that colleagues feel both safe
and valued to ’speak up’. When people don’t feel they
can speak up, their company’s ability to innovate,
learn and grow is compromised. By contrast, an open
and candid culture empowers people and unlocks
enormous benefits for innovation, learning and risk
management.
STRATEGIC REPORT CHIEF EXECUTIVE’S STATEMENT
REWARDING OUR TEAM
If you have the right people and right culture, you
also need to make sure you have the right incentives.
I’m passionate about ensuring every member of
our team has an opportunity in front of them to
learn more, earn more and ultimately progress their
careers. For many this will include working towards
becoming an equity partner in the business.
When I launched our employee share ownership
schemes, it was with two overarching thoughts.
Firstly, I wanted a way for more people to share in
the growth they created and be rewarded for the
“An ownership mentality
is incredibly powerful –
it unlocks discretionary
energy, new ideas and
gets people to think
long-term. ”
were first launched in 2017, our share price has
increased c. 700% and created c. £700m in additional
hard work they put in. And secondly, I passionately
value for shareholders. This, off the back of five
believed that if we gave more people the opportunity
to own a stake in the business, together we would go
consecutive years of strong, organic growth, without
any acquisitions, and often delivered against some
on to deliver stronger and more sustainable growth.
very challenging backdrops.
An ownership mentality is incredibly powerful – it
unlocks discretionary energy, new ideas and gets
people to think long-term.
Based on Alpha’s track record to date, shared
With this in mind I am delighted that 48 employees
will be rewarded with equity vesting in Q1 2023, in
recognition of all their hard work and commitment.
Additionally, it was also a pleasure to be able to
ownership seems to be working. Since the schemes
welcome 42 new colleagues onto our share schemes,
taking our total number of Partners to 110 – a
reflection of not only the part they’ve played in our
growth story to date, but also the impact they will
have on its long-term future.
Moving forward, we remain committed to creating
more employee shareholders as our company
grows in order to reward high performance and
loyalty, amplify our long-term culture, and ensure
everyone has the opportunity to work towards
becoming a shareholder. As founder-CEO, seeing
the impact these schemes can have on people’s
lives is undoubtedly the most rewarding part of my
job. Importantly, these awards are also contingent
on delivering a level of financial performance that
ensures any dilution to existing holders is materially
outweighed by the growth they created. For investors
who are interested in reading more about how we
achieve this, a detailed explanation can be found
towards the end of our January RNS.
18
19
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022 Chief Executive’s Statement
Continued
LEADING OUR TEAM
working at fast-growing public companies, 17 years
of which were at the London Stock Exchange Group.
With Adam Dowling and Alex Howorth leading the
The team and I have had the pleasure of working with
mind, we remain committed to providing inspiring
office environments that reward our team for their
hard work and enhance their performance and
growth of our ABS and FXRM divisions, and excellent
him for just over three months now, and his ability to
well-being.
bench strength across the wider Group, the business
fit right in and hit the ground running, is testament to
is on an exciting and stable trajectory. As CEO, I take
his skill set and character.
great pleasure in seeing the teams honing their
strategy-setting and execution capabilities, and it is
NEW OFFICES
a privilege to be in a position where both divisions
are executing so well. This is now providing me with
2022 and the start of 2023 have been characterised
more bandwidth to focus on our longer-term Group
by increasing investments in office space, with our
strategy, and explore new opportunities that will
teams in Amsterdam, Bristol, Malta and Toronto all
enhance our growth, whilst creating some healthy
moving to new purpose-built offices for the first
distance from which I can challenge and evaluate
time since their inception. Additionally, we have
the FXRM and ABS strategies. From my time in
signed heads of terms to split our London HQ into
these strategy sessions, I can say with confidence
two neighbouring offices to create dedicated HQs
the business is maturing in all the right ways,
for each of our divisions. Our existing office will
whilst crucially retaining the start-up foundations
now become home to our FXRM team, whilst our
INVESTING FOR GROWTH IN 2023
As outlined in our January trading update, we
find ourselves in a fortunate position where we
are anticipating exceptional performance in
2023, driven by a combination of expected strong
revenue growth and other operating income.
Consequently, we have made the strategic decision
to bring forward investment in our operational
infrastructure, originally planned for 2024/2025,
particularly within ABS. This investment is already
underway and focused on accelerating future
revenue growth and strengthening the long-term
STRATEGIC REPORT CHIEF EXECUTIVE’S STATEMENT
“We run this business
with a view of years and
decades, as opposed
to quarters and annual
comparisons, and think
this is a key advantage
in creating strong,
sustainable shareholder
value over time.”
of cultural density, operational agility and client
new office will become home to our ABS team. Our
scalability of this division.
centricity that have underpinned our high-growth
Central Services team meanwhile will have the luxury
story. The combination of big business maturity
of rotating between the two!
and start-up flair (something I’ve often described
Additionally, in the event that our Underlying
earnings per share. How we set about achieving this
Operating Profit (which excludes other operating
is then determined by three strategies: (i) our FX Risk
value for our shareholders and steadily enhance our
as being “David and Goliath”) bodes extremely well
Whilst FXRM and ABS are now very much two
income) exceeds our expectations throughout the
Management strategy; (ii) our Alternative Banking
for both the trajectory and predictability of our
separate business units, the offices are still only a
year, we will look to make additional investments in
Solutions strategy, and (iii) our Group Strategy.
growth in the future. To have a leadership team
60 second walk away from one another, and we are
discretionary initiatives (e.g. marketing campaigns
that can operate so effectively at both ends of the
keen to maintain interaction between each division.
and regulatory applications) designed to further
Our FXRM and ABS strategies are led by Alex
spectrum is rare, and gives me great confidence and
To this end, we will intentionally be ensuring there
accelerate growth, without the initiatives becoming
Howorth and Adam Dowling respectively, and are
excitement for the future.
are a number of “shared amenities” between the two
embedded in our cost base.
offices.
focused on moat-widening activities that separate
their businesses from their competitors. This is
I also wish to extend one final farewell to our former
Any accelerated investment will naturally be
covered extensively in their business introductions
CFO, Tim Kidd, who has now officially left the Group
Our investment in office space is being driven by
reflected in our operating margin in the short-
(pg 30) and (pg 38). Our Group Strategy meanwhile
after providing us with an extended notice period
the growth within our teams, but most importantly,
term, but Group profit before tax margins and the
is concerned with smart capital allocation and
following his January 2022 announcement of his
our team’s desire to be in the office. Indeed, prior to
absolute level of EPS will be enhanced by the other
upholding the long-standing principles that will
planned retirement. Tim has made an incredible,
opening our second London HQ, demand had already
operating income. The Board and I firmly believe
support these moat-widening activities. These
positive impact since joining us in 2016 ahead of
exceeded capacity, to the extent our operational
this accelerated investment program will further
principles are: (i) Client Centricity; (ii) Operational
our IPO – not just on the business, but on myself
teams were having to work from the office (as
enhance our long-term growth prospects and
Agility; and (iii) Cultural & Talent Density.
personally too. Whilst he will undoubtedly be missed,
opposed to home) on rotation. In a climate where
scalability in the medium to long-term.
we look forward to keeping in touch with him as an
many employers are struggling to encourage their
honorary member of the team and we wish him all
teams to return to the office, I consider this a great
the best for the future.
problem to have! Whilst I know having the flexibility
to work from home can be valuable, I fully support
GROUP STRATEGY
Moving forward we will continue to invest our
capital and deliver initiatives that support all three
of our strategies, align to the principles above, and
When it comes to business, strategy can often be
embrace a long-term horizon. We run this business
With Tim Kidd retiring, I was delighted to officially
our team’s desire to regularly come together under
overly complicated. At its most basic level, Alpha’s
with a view of years and decades, as opposed to
welcome our new CFO, Tim Powell, to the Board in
one roof and believe it has significant benefits for
objectives are relatively simple. We want to: (i) win
quarters and annual comparisons, and think this
December. Tim Powell brings a wealth of experience
performance, collaboration, and culture. With that in
new clients; (ii) retain existing ones; and (iii) grow
is a key advantage in creating strong, sustainable
our share of their wallet, to build long-term intrinsic
shareholder value over time.
20
21
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022 Chief Executive’s Statement
Continued
CAPITAL ALLOCATION
PREMIUM LISTING
OUTLOOK
As our offerings have become more diversified,
We have hugely enjoyed our journey on AIM since our
our cash conversion has continued to grow and,
IPO in 2017 and have seen the sizeable benefits that
combined with the interest rate tailwinds, we are
the public markets can offer.
now in a position where as at 31 December 2022
we have net assets of £144.5m (2021: £109.8m),
Being a public company has not only enabled
including £114.4m of adjusted net cash (2021:
us to raise capital to grow and create employee
£88.2m).
shareholders, but it has also greatly enhanced our
reputation amongst the global corporates and
Our overarching preference is to allocate capital
institutions that we work with, who take confidence
into high-confidence organic growth initiatives,
from our public market status, as well as the
within both existing and potential new business
increased transparency and governance that comes
units. Such initiatives include: expanding our
with this.
territories, extending and improving product lines,
or any other moat-widening opportunities that
As a business that is growing in size, becoming more
separate us from competitors.
global, and gaining interest from increasingly larger
clients, particularly within the institutional space,
In view of the Group’s confidence in the sizable and
we believe a Main Market Premium listing will serve
exciting market opportunities that are presented
to further enhance our reputation and support our
to us, it is the Board’s belief that, after maintaining
market penetration as we move into new countries
our progressive dividend policy, retaining and
and engage larger clients. At the same time, Premium
deploying this cash within the business will deliver
Listing reporting standards will naturally lead to
Through our successful track record of investment,
innovation and expansion, our foundations for
growth have never been stronger and our market
opportunity has never been larger. These dynamics,
combined with our team’s hard work and dedication,
are generating high levels of demand for our
services.
The current macro environment requires
appropriate levels of caution and prudence.
However, we have proven over the last fourteen
years that we can navigate and grow through many
testing conditions and have become stronger and
more resilient with every new challenge.
Trading since 31 December 2022 has been positive
and in line with our expectations. Looking ahead to
the rest of the year, we are confident in delivering
strong revenue and profit growth, whilst also
delivering on our recently announced intention to
bring forward investment in our operations, thereby
STRATEGIC REPORT CHIEF EXECUTIVE’S STATEMENT
The quantum and variability of the interest on
client balances will create some volatility in Other
Operating Income based on variables that are
largely outside of our control and that have limited
correlation to the underlying performance of the
business. As a reminder, the interest income is
dependent on the amount of client cash we hold, its
currency, and the interest rates we are able to obtain.
With this in mind, we will continue to focus our
trading updates and performance reviews on
underlying metrics, while we will share the blended
average client balances and interest rates through
our website on a quarterly basis, in order to provide
a mechanism for stakeholders to model this interest
income themselves.
So far this year, the blended average balances has
been £1.6bn and the blended average interest rate
has been 2.8%. As disclosed in the accounts, we have
also hedged some of this interest income through
interest rate swaps (see notes 10 & 15).
significant levels of growth and deliver the best
higher levels of governance and disclosure, both of
accelerating our growth plans.
THANK YOU
value for shareholders long-term. As a company
which we know will be well-received by our clients,
where top management has a significant proportion
banking partners and investors alike.
of their worth concentrated in company stock,
we are investing alongside you with each of these
decisions.
As well as providing cash for investment, a
strong balance sheet is also important to our
counterparties, as a healthy cash profile is required
as collateral for hedging facilities, regulatory capital,
and also provides our clients with confidence.
We will of course review our cash position on a
regular basis, and if we feel our cash position
becomes greater than we require, will look to
reassess. We are however earning strong returns on
deploying our capital and are confident in our ability
to do so in the future.
“We believe a Main
Market Premium listing
will serve to further
enhance our reputation
and support our market
penetration as we move
into new countries and
engage larger clients.”
Throughout the current uncertainty within the
banking sector, our operations have remained
unaffected and our balances have remained stable.
As a reminder, Alpha safeguards 100% of its clients’
cash in segregated safeguarding accounts with Tier
1 counterparties consisting of Barclays Bank, Citi
Bank, Goldman Sachs and Lloyds Bank. In addition,
unlike a bank, Alpha does not use client cash to
issue loans and therefore 100% of client held funds
remain in cash at all times.
I would like to end by thanking all of our team for their
hard work throughout 2022 to deliver another record
performance. When I look at the numbers delivered,
it is humbling to think that behind this incredible
growth story is still a relatively small team of just over
350 people, and that shortly we hope to be taking
our business to the Main Market of the London Stock
Exchange. It is a privilege to work amongst people
with the energy, passion and commitment that they
all bring to work each day, and I look forward to
seeing what we can achieve together in the rest of
TREATMENT OF OTHER OPERATING INCOME
2023.
Whilst the Group is likely to continue benefitting
from material levels of interest rate income on our
client balances, it is important we do not let this
distract from the underlying performance of the
business, which is the Board’s main measure to
judge success against our expectations.
Morgan Tillbrook
Chief Executive Officer
22
23
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022 Financial Review
Tim Powell, CFO
2022 has seen strong growth across both divisions with total
revenues increasing 27% to £98.3m (2021: £77.5m). FX Risk
Management revenue grew 22% to £69.5m, whilst Alternative
Banking Solutions grew 41% to £28.8m.
FX RISK MANAGEMENT
The FX Risk Management division focuses on
supporting corporates and institutions that trade
currency for commercial purposes through the
Group’s sales teams located in London, Toronto,
Amsterdam, Milan, Bristol and Sydney. Revenue grew
by 22% over the prior year to £69.5m (2021: £57.1m)
with strong growth across all regions except Canada.
Revenue growth remained strong in the London
FX Risk Management business, up £6m (13%) with
a further £6m (70%) of growth coming from our
overseas offices and Bristol.
Total revenue from hedging products (forwards and
options) has increased by 23% against the prior year
from £40.7m to £50.1m.
The revenue from forward transactions represents
the difference between the rate charged to clients
and the rate paid to banking counterparties.
The underlying operating profit margin of the division
was c. 39%, (2021: c. 44%) with the decrease primarily
being driven by the first-year costs of our new offices
in Bristol, Milan and Sydney. Excluding these new
offices the Corporate margin would have been c. 47%.
ALTERNATIVE BANKING SOLUTIONS
Alternative Banking Solutions revenue grew
substantially from £20.4m in the prior year to £28.8m
in 2022 driven by an increased number of accounts
and greater ancillary payment and spot fees.
FXRM Growth 22%
£6m
£6m
£6m
£3m
£98m
£9m
£108m
£78m
£20.4m
£57.1 m
ABS Growth 41%
£29m
£69m
2021
Revenue
FXRM London
Office
FXRM Overseas
Offices
ABS Account
Revenue
ABS Payment &
Spot Revenue
2022
Revenue
Other operating
income
2022
Income
FXRM
ABS
STRATEGIC REPORT FINANCIAL REVIEW
Tim Powell
Chief Financial Officer
Account fee revenue increased by £6m (260%) to
underlying profit before tax in the year increased by
£8m, as the number of accounts being managed
16% to £38.6m. Statutory profit before tax increased
increased by 141% from 1,746 to 4,200 and we
by 42% to £47.2m (2021: £33.2m).
generated a full year of income from accounts
opened in the prior year. Revenue from annual
The year ended 31 December 2022 was another
account fees is recognised on a straight-line basis
year of significant investment. Overall headcount
over the 12 months from the date the account
increased in the year from 214 to over 350 at 31
was opened or renewed. At 31 December 2022
December 2022 to support future long-term growth.
deferred revenue was £5m (2021: £2m), that will be
The underlying profit before tax margin decreased
recognised as revenue in 2023.
slightly to 39% (2021: 43%) reflecting the increased
levels of investment and increase deferred account
The underlying operating profit margin of the
revenue. However, the statutory profit before tax
ABS division was c. 39%, (2021: c. 42%). This small
margin significantly increased to 48% (2021: 43%)
reduction on 2021 was predominately due to
reflecting the other operating income.
the timing mismatch of in-year investment and
increased account fees deferred.
GROUP PROFITABILITY
OTHER OPERATING INCOME
As outlined in our October 2022 and January
2023 trading updates, the current interest rate
Underlying profit is presented in the income
environment has allowed the Group to benefit from
statement to allow a better understanding of the
additional interest income predominantly generated
Group’s financial performance on a comparable
from its client balances, as well as a small proportion
basis from year to year. The underlying profit
from its own. With the number and size of client
excludes the impact of the other operating income
balances growing, this has contributed £9.3m of
and the share-based payments. On this basis, the
interest income in the last four months of 2022
(2021: £nil).
24
25
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022 Financial Review
Continued
41%
£44m
FXRM Margin
2022: c.39%
ABS Margin
2022: c.39%
£18m
2022
Corporate*
9%
£5m
2022
Toronto
38%
£15m
£6m
47%
£6m
£3m
38%
£5m
£2m
40%
£24m
£9m
2022
Amsterdam
2022
Institutional FXRM**
2022
Institutional ABS**
2022
Alpha Pay
Operating Profit
Revenue
* Corporate division is primarily London but also includes other offices not disclosed elsewhere (Bristol, Milan, and Sydney)
**For the purpose of deriving margins for ABS and FX Risk Management, the cost base of the Institutional division have been allocated
based on revenue.
It is worth noting that the Group is only able to obtain
underlying rates. The effective tax rate in 2021 reflected
attractive interest rates on these overnight client cash
a one-off charge for the internal transfer of clients
balances because of our ability to aggregate numerous
between our UK and Malta operations, excluding this
individual client balances, many of which are transitory
the effective tax rate in 2021 would have been 19%. We
in nature and typically only held for 24 hours.
expect this effective tax rate to increase in 2023 driven
by the UK’s increase in corporation tax rates to 25%.
Whilst the increased interest stream from client
balances is a positive boost for the Group and a natural
by-product of our increasingly diversified product
EARNINGS PER SHARE
offering, we are mindful that aspects of its dynamics
Underlying basic earnings per share increased 20% in
are driven by macroeconomics beyond our control.
the year to 70.1p (2021: 58.3p), whilst basic earnings per
As outlined in October, we have therefore chosen
share were 50% higher at 86.8p (2021: 57.7p), driven by
to recognise interest income on client balances as
the interest income.
‘other operating income’, not revenue from operating
activities. The interest income generated on our own
cash is shown as underlying finance income.
TAXATION
KEY PERFORMANCE INDICATORS
The Group monitors its performance using several
key performance indicators which are reviewed
at operational and Board level. The key financial
The effective tax rate for the period was 17% (2021:
performance indicators are revenue, underlying
22%). The decrease in effective rate is primarily due
profit before tax, profit before tax, margin, number of
to SME R&D tax credits and the impact of the SAYE
FXRM clients, number of ABS client accounts, and the
scheme. This also reflects the mix of profits across our
number of FXRM Front Office staff.
global subsidiaries without any material changes in
STRATEGIC REPORT FINANCIAL REVIEW
CASH FLOW AND BALANCE SHEET
The overall net assets of the Group increased in the
In the year ended 31 December 2022, 60% of the
revenue in the year was derived from products where
the revenue is converted into cash within a few
days of the trade date (2021: 60%). Including other
operating income, cash conversion increased to 63%
in 2022. This has continued to have a positive impact
on the Group’s cash flow. On a statutory basis, net
cash and cash equivalents increased in the year by
£29m to £137m.
The Group’s statutory cash position can fluctuate
significantly from day to day due to the impact of
changes in, collateral paid to banking partners,
margin received from clients, early settlement of
trades, or the unrealised mark to market profit or
loss from client swaps. These movements result in
an increase or decrease in cash with a corresponding
change in other payables and trade receivables.
Therefore, in addition to the statutory cash flow,
the Group presents an adjusted net cash summary
excluding these items, shown below. On this basis,
adjusted net cash increased in the year by £26m to
£114m.
year by £35m to £144m.
Looking ahead, and as stated in our January Trading
update, investment in 2023 is expected to increase
as we bring forward investment in our operations
(in particular in our Alternative Banking Solutions
division), originally planned for 2024/25 and
beyond. This investment is already underway and
is focused on accelerating future revenue growth
and strengthening the long-term scalability and
sustainability of our business.
DIVIDEND
Following the strong full year results, the Board is
pleased to declare a final dividend of 11.0p per share
(2021 – 8.0p). Subject to shareholder approval, the
final dividend will be payable to shareholders on the
register at 14 April 2023 and will be paid on 12 May
2023. This represents a total dividend for the year of
14.4p per share (2021: 11.0p).
Tim Powell
Chief Financial Officer
Net cash and cash equivalents
Variation margin paid to banking counterparties
Margin received from clients*
Net MTM timing loss from client drawdowns and
extensions within trade receivables
Adjusted net cash**
31 December 2022
£’000
31 December 2021
£’000
136,799
44,876
181,675
(70,204)
2,912
114,383
108,044
8,380
116,424
(34,363)
6,129
88,190
* Included in ‘other payables’ within ‘trade and other payables’.
** Excluding collateral received from clients, collateral paid to banking counterparties, early settlement of trades and the unrealised
mark to market profit or loss from client swaps.
26
27
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022
STRATEGIC REPORT KEY PERFORMANCE INDICATORS
Key Performance Indicators
The following KPIs are used to track the performance of the business against the Group’s strategy on page 21.
REVENUE
FXRM CLIENT NUMBERS 1
The income from services and products provided to
The number of clients that have generated revenues
clients during the year.
in excess of £10,000 over the previous 12 months.
£98.3M
1,047
£98.3m
£77.5m
2022
2021
2020
2019
2018
£46.2m
£35.4m
£23.5m
2017 £13.5m
2022
2021
2020
2019
2018
2017
482
310
1,047
881
754
648
UNDERLYING PROFIT BEFORE TAX 2
FXRM FRONT OFFICE HEADCOUNT
Profit before interest, tax, exceptional items and
The number of employees in Front Office employed
share-based payments.
by the Group as at 31 December of each year.
£38.6M
102
2022
2021
2020
2019
2018
2017
£17.5m
£14.6m
£10.0m
£6.8m
£38.6m
£33.4m
102
2022
2021
2020
2019
2018
2017
67
66
64
51
32
PROFIT BEFORE TAX
ABS LIVE ACCOUNTS INVOICED
£47.2M
£47.2m
£33.2m
2022
2021
2020
£17.1m
2019 £13.5m
2018
£9.7m
2017 £5.6m
The number of accounts opened by clients that were
live at the period end.
4,200
2022
2021
1,746
4,200
1 The Group excludes Training Accounts (those that have generated less
than £10,000 in revenue since being onboarded) in order to provide a clearer
picture of client retention for the purposes of these figures.
2 Underlying excludes the impact of non-cash share-based payments, Other
operating income, and in the prior years, exceptional property-related costs.
29
2828
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022
Our Businesses
FX Risk Management
WHAT WE DO AND WHO WE DO IT FOR
REVENUE FY2022 (£)
Our FX Risk Management division focuses on
supporting corporate and institutional clients
that need to buy or sell currency for commercial
purposes, either from buying and selling goods and
services overseas, or from the underlying value of an
asset or liability.
The clients that we support are regularly impacted by
movements in exchange rates, creating material risk
that can significantly impact their performance and
profitability. We support them by providing strategies
and technologies that enable them to mitigate risk
by managing currency volatility more easily and
effectively.
We service a highly diversified client base through
our Corporate and Institutional teams in London,
Toronto, Amsterdam, Milan, Bristol, Sydney and
(imminently) Madrid, and our revenues are derived
from executing forward, option and spot contracts
on a matched principal basis. We are sector
agnostic, in a non-cyclical market, working across a
multitude of currencies and continents, and are thus
highly diversified. We estimate the global market
opportunity for our FXRM division to be worth c.
$170bn in revenue terms, meaning we are barely
scratching the surface.
£69.5M
(2021: £57.1M)
CLIENT NUMBERS
1,047
(2021: 881)
% GROUP REVENUE
71%
WHAT PROBLEM ARE WE SOLVING?
To understand the distinctiveness of our model,
one must first understand the following three
considerations: (i) the ongoing challenge that
businesses with a recurring exposure to currency
volatility are faced with, (ii) what a well-balanced
hedging solution looks like, and (iii) the set of FX-
related conditions that create a web of complexity, and
often suboptimal decision making, for businesses to
MARKET AT A GLANCE
navigate through.
STRATEGIC REPORT OUR BUSINESSES
The possible solutions will consider the commercial
risk posed to the business because of volatility
itself (indicating what an organisation needs to do
to protect themselves), the cash position and credit
worthiness of the business (indicating what they can
afford to do), and the risk appetite and commercial
objectives of the decision makers (indicating what
they would like to do).
When considering the answers to the above, it’s
important to first consider what “bad” looks like.
Essentially this falls into one of the two camps
mentioned above: under-hedging (hedging too little,
including nothing) or over-hedging (hedging too
much). For organisations that are hedging cash-flow
forecasts, the implications of under or over-hedging
can be significant. For corporates it can materially
impact their purchasing and pricing power; and for
funds it can impact their investment performance. In
Alex Howorth
Group MD, FX Risk Management
Some examples of the questions that decision
both cases, this results in reduced competitiveness
makers continuously need to consider when hedging
and profits. Additionally, over-hedging can also lead
include: how to fix the rate and how not to, when to
to margin calls that result in cash-outflows that can
fix the rate and when not to, how much is too much,
negatively affect the business.
and how much is not enough. Only by answering
these questions correctly can decision makers
The aim is to ultimately get the balance right and
ultimately avoid the problem of under or over-
ensure that profits aren’t unnecessarily eroded,
hedging.
commercial objectives aren’t unnecessarily
obstructed, and the day to day running of the
ii. What ‘good’ risk management looks like
business is not negatively impacted. Understandably
To develop a well-balanced hedging solution, the
this is easier said than done. Part of the difficulty
first step is to start with the business itself. We
in answering these questions and striking the right
cannot, with any integrity, propose a solution to a
balance stems from the fact that decision makers
business without understanding how their business
are faced with a web of complexity and distraction
works. Thus, our primary focus is to obtain a deep
from the FX market itself.
understanding of an organisation’s operating
model, any supply chain considerations, their target
iii. Fear, Greed, & Sub-Optimal Decision Making
market, competitive landscape, profit margins, cash
FX is unpredictable and volatility is not linear. As a
constraints (cyclical or not), pain points that make
result, whilst there is risk from unfavourable volatility,
the day-to-day operations harder to navigate, and,
there is also “opportunity” from favourable currency
importantly, the core commercial short, medium, and
swings. It is not uncommon therefore for businesses
long-term objectives of the key decision makers and
to be driven by a desire on the one hand to protect
$170bn global revenue opportunity 1
i. The challenge our clients face
owners.
Non-banks hold a fraction of the market
<0.05% market share globally
Any organisation with an ongoing exposure to currency
volatility must continuously and appropriately
determine how to protect their business against
the risk that currency volatility creates. This can
range from hedging firm commitments, through to
their margins, and on the other, to increase their
profitability. The combination of both introduces
This understanding gives us a base foundation from
two quite strong emotional drivers into the decision-
which a strategic hedging programme can then be
making equation – fear and greed – an age-old
built. The next step is to determine how to protect
human problem which negatively influences the
the business against currency volatility itself. At this
performance of a hedging strategy.
1 Estimate based on Mckinsey Global Payments Report 2022.
hedging cashflow forecasts. The latter of these is
point we want to explore the following questions: (i)
more complex, and where clients naturally face the
biggest challenge – and this is where Alpha focuses its
proposition and differentiates itself the most.
how much to hedge, (ii) which instrument to use, (iii)
When faced with such unpredictability, the one thing
when to hedge, and (iv) how often to revisit these
that people will often seek the most is reassurance.
questions.
Often however they find this in the wrong places.
30
31
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022 FX Risk Management
Continued
As such it’s quite normal for decision makers to seek
undesirable exchange rate in the future – hence the
If this approach is fundamentally flawed though, why
And in terms of sustainability – we believe it is easier
counsel from those “in the know” about which way
gamble. Despite the odds being firmly against the
don’t more providers choose to challenge the short-
to keep the clients you have, by providing sound risk
the market is likely to move. This usually comes in
client, these instruments remain highly alluring to
term cycle? The answer to this is simple – people are
management advice that delivers consistent results
the form of market commentaries or forecasts, and
many.
despite this approach producing suboptimal results
human with emotional drivers that are unfortunately
over the long-term.
easy to sell to, and the commercial opportunity to
when measured over the medium to long-term, to
The final challenge relates to the ongoing conflict of
monetise this with short-term market opinions and/
Ultimately, by avoiding the path of least resistance,
this day it remains the default service offering by
interest created by the traditional commission model
or speculative products, is inherently easier and
we set out to remain a business that is long-term,
STRATEGIC REPORT OUR BUSINESSES
both banks and non-banks alike.
within non-banks. Notably, the immediate short-term
lucrative in the short-term.
“When faced with such
unpredictability, the
one thing that people
will often seek the
most is reassurance.
Often however they
find this in the wrong
places.”
earning potential for the individuals involved in the
sale and dealing of FX, often stands to compromise
the integrity of their hedging advice in terms of
timing, quantum, and product.
The conditions that our clients face can therefore be
summarised as follows: significant sums of risk linked
to a recurring business decision, overseen by human
beings who are prone to making imperfect decisions,
linked to a variable that is hard to predict and can
both boost or cripple performance, with instruments
that vary wildly and can be difficult to understand,
and influenced by advice that often has a short-term
focus and can be self-serving in nature. If it sounds
like a lot, it’s because it is!
The Short-term Trap
In our experience, most banks are more passive and
Collectively the problems outlined above serve to
risk averse, sending generic in-house forecasts and
fuel fear and greed tendencies, and subsequently
analysis en-masse to their customer base, usually via
suboptimal decision making, at a time when a
email. Our non-bank competitors on the other hand
balanced and strategic approach to managing
typically actively engage in providing businesses
currency is often needed the most. We refer to this
with personal predictions and opinions, as well
as the Short-term Trap.
as producing generic commentary and in-house
forecasts.
The obvious question to ask is, if the Short-term
Trap leads to such suboptimal outcomes, why then
Adding to the complexity is the plethora of financial
does it persist? Ultimately, the answer to this lies in
instruments available to businesses, which can
the fact that international businesses will always be
also be placed into one of two camps; (i) genuine
faced with a recurring decision to buy or sell currency
risk management products with a commercial
(this will never go away), and as long as that decision
purpose, and (ii) speculative products that are akin
remains intrinsically linked to a live moving variable
to gambling. Regarding the speculative products,
(FX rates), it will continue to create the conditions
these instruments serve no logical purpose in a
for success or failure. Furthermore, in an industry
genuine risk management strategy, and tend to offer
where FX providers and the global media continue
immediate short-term benefits by providing a more
to indulge and promote FX market forecasts and
favourable exchange rate today, at the expense
commentary, a convention is established that lures
of committing the client to a potentially more
business into believing there is genuine value and
credibility in relying on them.
high-growth, and a global leader in its space.
However, by leaning into a more difficult path
our challenge becomes, how can we navigate
it successfully? This comes down to three core
HOW WE DIFFERENTIATE – “THE ALPHA WAY”
If the traditional way of doing things is easier, why
components: our Business Philosophy, our
have we chosen a more difficult path? Ultimately
Performance Culture, and our Remuneration System.
this comes down to three things – integrity, purpose,
and sustainability. In terms of integrity – we know the
short-term model is not in the long-term interest of
PILLAR 1. OUR BUSINESS PHILOSOPHY
our clients. In terms of purpose – we are genuinely
Over the past fourteen years we have made it our
passionate about solving the problem of currency
mission to distinguish ourselves away from the short-
risk for our clients; in an industry fixated on the
term, FX-focused, and sales-led services that have
direction of FX markets and being part of the fanfare
always been abundant in the market. We have sought
that surrounds them, we are proud to be different
to challenge preconceived ideas of what “good” looks
and have a clear vision to become the global leader
like by prioritising the commercial development and
in FX risk management.
acumen of our people, and engaging in conversations
that seek to genuinely understand our clients’
businesses and what they truly need, rather than
what they might want, or have become accustomed to.
Risk management led
Our approach to managing currency volatility is risk
management led, not FX market led. We know that
nobody can reliably predict the currency market,
and to pretend otherwise would compromise our
clients’ commercial objectives. Our belief is that any
conversations around currency markets and “when”
to buy should only take place after a clearly defined
risk management strategy is in place. It is for this
reason, that we don’t consider ourselves, nor position
ourselves, as FX market experts, and therefore unlike
our peers, since inception we have never published
FX market commentary, analysis or forecasts. In fact,
we don’t believe the notion of an FX market expert
even exists or carries any legitimacy at all.
32
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ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022 FX Risk Management
Continued
A risk management culture, like Alpha’s, versus one
is a business conversation – one that evaluates the
A winning mindset
Ultimately our people are our most treasured asset,
that indulges market commentary and forecasts, are
client’s business dynamics, competitive environment,
Across all divisions and departments, we want
and we demand a lot from them. For our people-led
mutually exclusive and deliver distinctly different
and commercial objectives, in order that we can
to be considered exceptional at what we do and
model to remain sustainable it’s imperative we invest
STRATEGIC REPORT OUR BUSINESSES
outcomes.
Keeping it simple
In terms of the hedging products we recommend
to our clients, we know that, used in the right way,
simple products are, in the vast majority of cases,
far more effective than complex or speculative
ones at managing currency risk. To support this
ethos, we incentivise our people by deliberately
paying significantly lower rates of remuneration
on more complex products, whilst celebrating and
over-rewarding scenarios where we successfully
talk clients down from more complex ones, to using
simple ones. Our philosophy has always been to avoid
the path of least resistance and challenge clients on
what they need versus what they want.
Business conversations not sales conversations
Effective strategy requires a deep understanding
of how a client’s organisation works, in order to
diagnose their challenges and build an appropriate
solution. This cannot be achieved by talking to a
client about their generic “FX requirements” only
to put forward a pre-conceived FX solution. This is
just a sales conversation. What is needed instead
“A risk management
culture, like Alpha’s,
versus one that
indulges market
commentary and
forecasts, are mutually
exclusive and deliver
distinctly different
outcomes.”
then tailor appropriate risk management principles
to their unique circumstances. Only by adopting this
approach can a well-balanced hedging strategy be
achieved.
Summary
Our business philosophy intrinsically takes us down
a more challenging path, but we believe this leads to
more meaningful and sustainable results. By forging
long-term relationships with our clients based on
value, credibility, and trust, the rewards that follow
(which are proven to compound overtime) create
strong earning potential for our people, and strong
sustainable value for our investors. Everyone wins.
PILLAR 2. OUR PERFORMANCE CULTURE
Our second core component is our performance
culture. We are relentlessly committed to cultivating
a team-oriented performance environment that runs
through the entire organisation. We believe highly
effective, team-led systems drive higher levels of
performance, versus a cluster of highly talented
individuals working independently and focused on
self-interest. But team-led systems need organising,
they need direction, and they need purpose – our
performance culture is our second core component
and acts as a central pillar in helping us achieve this.
It has several sub-components, the first of which is
development.
Everyone’s getting better
In many organisations, development is something
which is reserved for more junior people, and the
more senior you become the less you are expected
to develop. We do not subscribe to this notion, and
instead our focus on development is both top down
and bottom up, from our most entry level people, to
our most senior. By creating an environment where
everyone is getting better, seeking out their next level
of performance, and addressing inconvenient facts
or uncovering uncomfortable truths, we continuously
elevate our collective potential.
pursue excellence in every field. Throughout the
in them appropriately.
organisation, we emphasise that, whoever you are
and whatever role you play, we all have an obligation
Summary
to achieve and uphold a reputation of excellence. Our
In any high-performing sports team, what separates
people knowingly sign up to this when they join, it is
those who finish first, from those who don’t, is
one of our most important guiding principles and,
their intent. Individually and collectively, they train
unsurprisingly, it is not for everyone.
that extra bit harder, they create a culture where
Enjoying the journey
1% improvements are both valued and sought out,
they empower and elevate one another, and they
Performance environments can be mentally and
constantly look to invest in areas that will make the
physically taxing, and we don’t want our people to
boat go that little bit faster. We subscribe to the
become slaves to performance or burn out. Thus,
belief that business is no different. It’s one of the
we place a huge amount of importance on the
main reasons we have established an exciting and
third sub-component of our performance culture,
long-standing relationship with a world-renowned
which is ensuring this journey remains enjoyable for
performance coach, Dr Ceri Evans, who, in addition
everyone. Yes, we want to get better, and yes we want
to Alpha, works with some of the world’s most
to operate at an elite level, but we also want this to
respected and successful sports teams.
be fun – not least because we believe enjoyment is
an integral ingredient to performing at a higher level.
DIFFERENTIATION AT A GLANCE
THE TRADITIONAL WAY
THE ALPHA WAY
FX Market “Experts”
Risk Management Experts
Sales & FX market conversations
Business & risk management conversations
Publish market predictions & commentary
Avoid the noise and distraction of the markets
Recurring revenue targets
No recurring revenue targets since inception
Promote complex products
Promote simple products
Sell clients what they want
Sell clients what they need
High volumes of low-value clients
Low volumes of high-value clients
34
35
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022
STRATEGIC REPORT OUR BUSINESSES
FX Risk Management
Continued
PILLAR 3. OUR REMUNERATION SYSTEM
OUR STRATEGY
Our remuneration system is the third component of
Our (i) Business Philosophy, (ii) Performance Culture
our model and is designed to both complement our
and (iii) Remuneration System ultimately serve to
business philosophy and regulate our performance
create what we call our “economic moat” – a term
culture.
originally coined by Warren Buffett to describe a
business’ ability to maintain a competitive edge over
As a fast-growing business with growth expectations
its competitors.
from investors, one could envisage a conflict
between our long-term principles and results-
i. Our Business Philosophy
oriented environment. We however feel the two are
Helping our clients ignore the “noise” of the FX
aligned and show this through strong leadership
markets and providing them with effective, long-
and a clear cultural direction. We then reinforce our
term, commercially focused FX risk management
approach with very deliberate and well-designed
strategies.
remuneration structures.
Despite our strong track record of growth, since
inception, our Front Office employees have never
had a recurring revenue target for existing clients –
not at the individual client level or across their wider
portfolio. We believe this is not only unique in our
industry, but also in sales environments. Instead,
we opt solely for monthly new business targets that
are deliberately modest and static. We believe this
approach is critical in driving the right behaviour
at the outset of a new client relationship and in
delivering consistent positive client outcomes over
the long-term – which then leads to high levels of
retention. Ultimately, we want our people to prioritise
client retention and acting in the long-term interests
of their clients, rather than be influenced by the need
to hit a short-term recurring revenue target.
We also use remuneration to both incentivise and
disincentivise our people relative to the complexity
of the products they sell (i.e. the more complex
the product, the lower the remuneration). We
believe in most instances the simplest solution or
product should always be prioritised, which often
means less revenue today, but more over time. In
an industry where the sale of complex products is
often overly rewarded, and the people that sell them
are pedestalled as experts, this is a key cultural
difference.
ii. Our Performance Culture
Fostering a high-performance environment where
everyone is getting better, delivering to a high
standard, and having fun along the way.
iii. Our Remuneration System
Remuneration that is aligned to the long-term
interests of our clients, with no recurring revenue
targets at a portfolio or client level since inception.
Given the size of our market opportunity, our strategy
is therefore largely focused on the following three
areas:
1. Exporting our Business Philosophy and
Performance Culture overseas – we will continue to
ensure the Alpha ‘watermark’ is exported into new
overseas markets.
2. Attracting, developing and retaining exceptional
people – we will continue to build a highly talented
team where everyone is getting better.
3. Innovation focused on enhancing our service
offering and operations – we will continue to improve
the effectiveness and efficiency of both our client
offering as well as our own internal operations.
Alex Howorth
Group MD, FX Risk Management
36
37
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022 Our Businesses
Alternative Banking Solutions
WHO ARE WE HELPING?
REVENUE FY2022 (£)
Our global accounts solution has been purpose-
built for alternative investment managers and, just
as importantly, the corporate service providers and
fund administrators that support them (“Service
Providers”). These clients typically require local
accounts in key investment jurisdictions for their
£28.8M
(2021: £20.4M)
investment vehicles. Such investment vehicles
LIVE ACCOUNTS INVOICED
typically belong to the following fund types: private
equity, private debt, venture capital, real estate,
infrastructure and fund of funds, and will be used
for purposes such as asset sales, purchases, or
distributions.
As our reputation and capabilities have grown,
we are seeing increasing levels of interest from
service providers that wish to partner with us. These
organisations are responsible for managing a number
of back-office activities on behalf of funds and their
underlying investment entities, including: opening
and managing of accounts, sending of payments,
and FX execution. Such service providers can range
significantly in size, with our existing partners
estimated to be managing anywhere between 2,000
and 30,000 investment entities each. Each of these
4,200
(2021: 1,746)
% GROUP REVENUE
29%
THE PROBLEM
investment entities will typically require their own
Whether you are an investment manager or one of
local account, therefore representing a significant
their service providers, opening and managing bank
undertaking for these service providers.
Data company Preqin tracks 160,000 alternative fund
profiles globally, and we estimate that each fund will
have on average ten assets, each requiring accounts.
Based on these calculations, we are barely scratching
the surface of the market. Our competition is almost
exclusively banks.
accounts in key investment jurisdictions is often a time-
consuming, resource-intensive and unreliable process.
GLOBAL MARKET OPPORTUNITY
AT A GLANCE
160,000 alternative investment funds 1
Our clients operate globally, with their funds
> 1.6 million entities
domiciled in key investment jurisdictions, in particular
Europe, Singapore (Asia) and the USA (Americas). Our
existing regulatory scope means we can currently
service each fund’s European business, however we
are in the process of expanding our global reach with
50 key corporate service providers
<1 % market share
applications in the US and Singapore underway.
1 Preqin Global Report 2023: Alternative Assets
STRATEGIC REPORT OUR BUSINESSES
The difficulty these traditional providers face when
servicing this marketplace, naturally invites the
question, “Why have no new providers entered this
space?”. Here, the reality is simple – you need three
key things: segment focus and expertise, dedicated
processes and systems, and importantly, a balance
sheet and track record that can be trusted.
As a publicly listed company with a strong balance
sheet and a track record of processing tens of
billions in transactions, even Alpha still comes under
significant amounts of due diligence and scrutiny
before service providers and investment managers
open an account with us. Any fintech seeking to
service this calibre of client however would rarely
have the expertise, track record, balance sheet, or
blue-chip local banking relationships, to get a robust
solution up and running. Ultimately, our own success
in this space was only possible because of the
Adam Dowling
Group MD, Alternative Banking Solutions
Whilst this can be a significant headache for
maturity of our core business and ability to become
individual investment managers, these problems
a specialist “start-up” through our decentralisation
are amplified considerably for the service providers
strategy. Our clients now benefit from dedicated
tasked with managing many thousands of accounts
people, processes and technologies, alongside the
on their behalf, day-in, day-out. For these service
capabilities of an established PLC business, a strong
providers, the sheer number of interactions across
Group Balance Sheet, and a track record they can
all their bank accounts for workstreams such
trust. It’s a rare combination and one that provides us
as onboarding, ongoing KYC, payments, FX, and
with a significant competitive advantage.
reporting, is staggering. Furthermore, if the quality
of these interactions is poor or inefficient, it leads to
significant pain and cost for the service provider. We
WHAT WE DO
are on a mission to bring down the number of these
At Alpha we have built the world’s first accounts
interactions, whilst simultaneously raising their quality.
solution dedicated to the alternative investment
industry. Our clients benefit from people, processes
To understand the scale of this problem and why
and technology that have been purpose-built for
it exists, it is helpful to explain the availability of
their industry, and this makes a significant difference
options in the marketplace today. Traditional banks
to both the efficiency and service levels they receive
have generalised, low-touch offerings built on legacy
– whether they are an investment manager managing
systems that are designed to handle standard
multiple accounts, or a service provider, managing
corporate and retail clients at scale. They are not
thousands.
built to handle the specialised and often complex
nature of alternative investment structures, or meet
Our aim is for every interaction with clients to be
the needs of service providers managing thousands
as efficient and streamlined as possible, whilst
of accounts. This (as I will outline later) requires
also remaining highly controlled and compliant.
a high-tech, high-quality service, underpinned by
Once again, whilst this makes a big difference to
specialised teams, processes and technologies. As a
investment managers, for service providers that are
result, for traditional providers, servicing these entities
managing thousands of accounts for hundreds of
to a high standard and efficiently is simply not viable.
different investment managers, the benefits of these
Consequently, traditional banks’ appetites to service
efficiencies are compounded significantly, and make
this marketplace has been gradually decreasing, and
a sizeable difference to their day-to-day operations
with it, any investment in improving the quality of their
and thus the quality and profitability of their own
offerings.
service offerings.
38
39
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022
Alternative Banking Solutions
Continued
Consequently, many of the upgrades we are making
payments and FX transactions at key stages
HOW WE’RE DOING
today, are now focused on enhancing the needs and
throughout their lifecycle, which provide additional
experience of the service providers by streamlining
revenue opportunities. Importantly, providing clients
processes and unlocking new efficiencies.
with an account also gives us the opportunity to
Monetisation
build enduring relationships with the investment
managers. This means that, even when the existing
In terms of monetisation, we typically generate
assets or funds come to the end of their lifecycles
revenues through annually recurring subscription
(typically 5-7 years), we will have the opportunity to
fees against each account that is opened. A number
work with the investment manager on their other
of these accounts will often then go on to process
investments and funds in the future.
DIFFERENTIATION AT A GLANCE
THE TRADITIONAL WAY
THE ALPHA WAY
One-size-fits all approach, servicing mass volumes
People, processes and technology dedicated to the
of corporate and retail clients
alternative investment industry
Low-touch reactive service delivered by generalist
High-quality proactive service delivered by
teams
specialist teams
Generic compliance processes and manual,
Bespoke compliance processes and streamlined
resource-intensive onboarding
onboarding
Slow and unreliable account opening times
Fast and reliable account opening times
Inability to access local accounts in key investment
Local accounts available across key investment
jurisdictions
jurisdictions
Ancillary revenue obligations and minimum spends
Fixed and transparent annual fee, with no ancillary
required to keep accounts opened
obligations or minimum spends
STRATEGIC REPORT OUR BUSINESSES
“When combined,
our new offices will
provide space for 400+
people in ABS, evenly
distributed across
Malta and London,
with a small team in
Luxembourg.”
OUR PERFORMANCE CULTURE
Our Global Accounts Solution was publicly launched in
September 2021 and has already grown to service over
4,200 investment entities, underpinned by a dedicated
team of 171 people. This led to annual revenues
growing 41% last year to £28.8m (2021: £20.4m). During
this time, we have also solidified our relationship with
key service providers and, having demonstrated the
quality of our offering over the past three years, are
now entering into formal strategic partnerships. Such
partnerships represent an exciting step-change in our
growth prospects within this division, and have the
potential to not only increase the incremental volume
of our pipeline, but also present exciting opportunities
for mass migrations of accounts currently held with
traditional providers. With this in mind, much of our
attention is now turning to ensuring we continue to
scale our processes, people and technology to secure
Whilst the FXRM division is predominantly made
this next stage in our growth.
up of Front Office teams, our own division is largely
made up of Back Office teams. Like FXRM however,
In the last year, we have increased our headcount by
we share ambitious targets and objectives, and
over 90 people to 171, and are now preparing to move
fostering a high-performance culture of our own has
into our own dedicated HQ in London, along with a
therefore been key.
new office in Malta. When combined, these offices will
provide the space for over 400 people in ABS, evenly
Having settled on our definition of a high-
distributed across Malta and London, with a small
performance culture – “a place where everyone’s
team in Luxembourg.
getting better” – our focus has turned to creating
a practical, enjoyable and scalable development
Alongside these exciting ambitions, I also feel there
framework which can ensure this remains a reality
are a number of areas where we can develop and
as we grow. To help us develop and roll out this
improve as a team. Whilst our revenue numbers are
framework, we have partnered with world-renowned
strong, I still believe we can get better at identifying
performance coach and consultant psychologist, Dr
and capturing the FX and payments opportunities that
Ceri Evans. The framework we have built with Ceri is
can be linked to the accounts we are opening, albeit
unique to Alpha and designed to enable people to
not all accounts will have an FX element as some of
achieve their “Next Level of Performance” or “NLP”.
our alternative investment clients will raise funds in
In simple terms an NLP is about creating clarity
the same currency they invest. Whilst it’s frustrating to
in an individual’s mind about what their next level
Accounts managed via multiple banks, platforms
All accounts managed through a single platform,
think we are missing these, it’s also exciting to realise
of performance looks like, as well as a personal
and logins
built for service providers
Legacy technology, built for the mass market
Cutting-edge technology purpose-built for
alternative investments
that even small improvements here could make a
roadmap to bridge the gap between their current
big difference to our revenue and profit generation.
reality and their desired future state. Ultimately,
The next stage of our CRM development will link our
the compounded effect of having each and every
Institutional FX Risk Management and our Alternative
person in the team focused on achieving their NLP, is
Banking Solutions together, and I believe this will
fostering an environment in which everyone is getting
create notable improvements in our ability to secure
better, and thereby creating a powerful momentum
more FX and payments opportunities moving forward.
in the business.
40
41
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022 STRATEGIC REPORT OUR BUSINESSES
Alternative Banking Solutions
Continued
OUR STRATEGY
Our vision over the next few years is to be recognised
as the global leader in financial services, that is built
to empower the alternative investment industry. The
market opportunity in front of us is huge, and we are
looking to scale at pace. Last year we ended with
4,200 accounts, and we intend to finish 2023 having
at least doubled this to 8,400.
Like our FXRM division, we use Warren Buffett’s
concept of an “economic moat” when thinking about
strategy. For Alternative Banking Solutions, our
economic moat can be summarised as follows:
− Purpose-built processes and technologies
− Highly specialised teams with deep domain
knowledge
− A trusted provider and partner, with a strong
track record and reputation
“The market opportunity
in front of us is huge,
and we are looking to
scale at pace. Last
year we ended with
4,200 accounts, and we
intend to finish 2023
having at least doubled
this to 8,400.”
iii) Increasing our presence and brand awareness
in key investment jurisdictions –
We will expand our global presence in key
Our long-term strategy moving forward is focused on
investment jurisdictions through new offices,
widening our economic moat in each of these areas
marketing, global banking relationships and new
as we scale. This will be achieved by:
regulatory licenses, with Singapore and the USA
both key areas of interest for us.
i) Increasing operational scalability, whilst
remaining highly specialised –
Moving forward we will continue to upgrade and
evolve our accounts solution to ensure we remain the
Our deep levels of specialisation and high levels of
leading provider in this space. Equally, we are already
service have enabled us to grow quickly; it is now
looking at ways to provide solutions beyond this. Our
key that we ensure the foundations are in place to
ambition is to become the leading bank alternative
scale this sustainably.
ii) Deepening our relationships and technical
integrations with key service providers –
to the alternative investment space; our focus is
the market, not the product, and we aim to solve
a broader range of client challenges, by stripping
out complexity and bureaucracy and leveraging our
bespoke Alternatives infrastructure and expertise.
Through our partnership teams, we will continue
Ultimately, we are deeply committed to this space,
to double down on our strategic relationships with
listening to our clients and developing high-value
key service providers, to drive greater advocacy
solutions that meet their needs.
with our existing partners, whilst also creating new
partnerships.
Adam Dowling
Group MD, Alternative Banking Solutions
42
43
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022
Principal Risks & Uncertainties
Tim Butters, Chief Risk Officer
We remain focused on identifying, understanding, and
managing our key risks, whilst embedding our risk management
framework across the group, to ensure strong oversight and
accountability. Headcount across the risk and control functions
continues to grow in line with the business to provide control,
oversight, and monitoring. 2022 has seen the further addition
of experienced hires to the team and the establishment of our
Internal Audit function.
OUR APPROACH TO RISK MANAGEMENT
Alpha has independent external audits across
We adopt a ‘three lines of defence’ model to manage
our principal business risks, in line with enterprise
risk management best practices.
FIRST LINE OF DEFENCE
Primary responsibility for managing risk through the
design and implementation of appropriate controls.
This sits with operational management who own and
manage their risks.
(i) Compliance & AML (including safeguarding)
(ii) Information Security, (iii) Finance (including
Settlements), and (iv) Technology. The Risk
Committee together with the Audit Committee
decides quarterly whether any additional external
audits should be scoped. Where appropriate,
insurance policies are used to further reduce the
impact of risks manifesting as losses.
ENTERPRISE RISK MANAGEMENT FRAMEWORK
Our Enterprise Risk Management (“ERM”) framework
SECOND LINE OF DEFENCE
provides assurance to the Board on the sound
Comprised of the Risk, second-line Compliance, and
Legal teams, who work with the first line to help build
and monitor the first line of defence controls. The
second line ensures that levels of risk against risk
appetite are reported to the Board and escalated
when exceeded.
THIRD LINE OF DEFENCE
Internal Audit, along with other third-party reviewers,
provide independent assurance to the Board on the
effectiveness of the risk management framework
and the operation of the first and second lines of
defence.
management of existing and emerging risks and the
effectiveness of our internal controls.
1. Group Strategy
Risk is a core consideration when setting strategy
and business plans. Risks that can impact the
delivery of the strategy are proactively identified to
ensure we can manage them accordingly.
2. Risk Appetite
Set by the Board, the risk appetite defines how much
risk we are willing to take in pursuit of our strategic
objectives. Our risk appetite ensures the ongoing
monitoring and management of prudent levels of
operational, compliance, financial, strategic, and
information risk, whilst enhancing shareholder value.
44
STRATEGIC REPORT PRINCIPAL RISKS & UNCERTAINTIES
Tim Butters
Chief Risk Officer
Our risk appetite is established by qualitative
The amber thresholds allow for early identification of
risk appetite statements and measured through
risks that are regularly occurring, picking up velocity
quantitative key risk indicators (“KRI”) metrics.
or approaching appetite limits. The red thresholds
To stay within our appetite, we always observe
are set to appetite; a level of risk more than the red
a compliant legal and regulatory regime whilst
limit is seen as ‘out of appetite’ and reportable to the
applying best practices, including:
Board.
− Creating a clear framework of accountability
3. Risk profile
and responsibility that is transparent and
This is the current measure of the level of risk the
allows for better decision-making;
business is exposed to. Key risk indicators and
− Recognising that our two divisions face
different and common risks, and will therefore
set policies, procedures, and the necessary
reporting mechanics to ensure and validate
that risks are understood, monitored,
managed, and controlled;
− Recruiting, retaining, and developing our
people to embed a culture that reflects the
risk appetite.
risk limits determine the Group’s risk profile and
indicate whether we are operating within appetite.
We continue to invest in risk infrastructure to provide
better insight into our risk profile.
4. Risk Culture and Governance
The executive team are full-standing members and
regular attendees of the monthly Risk Committee.
Oversight of the risk management framework is
governed by the Risk Committee under delegated
authority from the Board. This buy-in and tone from
The appetite statements provide clarity on the
the top ensure a strong risk culture is propagated
scale and type of activities we wish to undertake,
throughout the organisation.
and the Board has set a two-tiered limit approach
to the quantitative metrics (KRIs) of amber and red
5. Risk Policies
thresholds.
Policies are used to clearly define a consistent
approach to risk management across the group and
to assign accountability.
45
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022
Principal Risks & Uncertainties
Continued
Group Strategy
1
Risk Reporting and
Monitoring
8
Controls Testing
7
6
Identification
and Assessment
ENTERPRISE RISK
FRAMEWORK
5
Risk Policies
Risk Appetite
3
Risk Profile
2
4
Risk Culture
and Governance
6. Identification and Assessment – Principal Risks
In addition to internal controls testing, Alpha
To be managed, risks need to be identified and
undergoes several internal and external audits per
understood. Alpha utilises several approaches to
annum whereby our controls are independently
do so, from risk assessments and workshops, to
reviewed. Any findings are tracked by the Internal
STRATEGIC REPORT PRINCIPAL RISKS & UNCERTAINTIES
Principal Risks & Uncertainties
FY2022
We assess, manage and mitigate risks in order to deliver
on our purpose and strategy.
Risk Type: Cyber And Data Security
Security is a vital part of Alpha’s fabric and is integral to ensuring the sensitive data we process on behalf
of our clients maintains confidentiality, integrity, and availability. The Group faces the risk of its operating
systems failing and the failure to safeguard business-critical data and systems.
MOVEMENT
Unchanged
RISK MITIGATIONS AND UPDATE
− Security awareness training and workshops were a key focus for the
group in 2022 and will remain so in 2023 and beyond. We continue
to provide all new staff with security awareness training workshops
and refresher training. We continue to subject our staff to complex
phishing simulations ensuring heightened vigilance around emails.
− Our software development teams attend specialist training to
increase security awareness, as well as secure coding best practices.
− We have increased technical expertise in the security team, to
mature the level of internal testing as well as the incident response
ensuring risk has a ‘seat at the table’ in operational
Audit function through to closure and via the Group
capabilities.
and strategic decisions. In total, we have over a
Risk Committee.
hundred risks in our risk register which we monitor
closely.
7. Controls testing
8. Risk Reporting and Monitoring
Reporting provides oversight of the firm’s risk
profile against appetite and identifies new risks
We continuously work towards strengthening
or increasing exposures that may become out of
our controls testing framework, with key controls
appetite. Daily scenario testing ensures appropriate
frequently tested to assess their design and
management of liquidity and credit risk.
operational effectiveness. This gives us a more
proactive approach to risk management, with the
results of the assessments reported to the Risk
Tim Butters
Committee ensuring clear accountability for the
Chief Risk Officer
firm’s key controls. This is complemented by ad-hoc
‘deep-dives’ where, in response to internal or external
developments, specific areas of the business may be
targeted for a more in-depth review.
− We have an ongoing programme to review all security controls in
support of our journey towards industry-leading certifications and
attestations.
− A purple team testing exercise was carried out on both our internal
and external infrastructure evaluating the effectiveness of our
security controls.
− We leverage top-tier cloud service providers. In line with the shared
responsibility model, we ensure our responsibility regarding data
security is fulfilled in line with best practices, a defence-in-depth
approach, control testing, and training.
− We have renewed and increased the coverage of our comprehensive
cyber insurance policy.
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47
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022
Principal Risks & Uncertainties
Continued
Risk Type: Regulatory Risk
Risk Type: Operational Risk
The Group faces the risk of failing to adhere to its regulatory and legal requirements. Failure could see the Group
The Group is subject to the risk of loss resulting from inadequate or failed internal processes, people, systems,
exposed to significant regulatory penalties and reputational damage. Additionally, any new regulation or changes
or external events. This can include incorrect inputting or execution of a trade or settlement, internal fraud,
to existing regulations may require the Group to increase its spending on regulatory compliance and/or change
and financial reporting delays or errors.
business practices.
RISK MITIGATIONS AND UPDATE
MOVEMENT
RISK MITIGATIONS AND UPDATE
MOVEMENT
− We maintain robust policies, procedures, systems and controls,
Increased
− The Risk team oversees our operational risk framework working
Unchanged
STRATEGIC REPORT PRINCIPAL RISKS & UNCERTAINTIES
Reason for movement:
We have a scalable regulatory
framework and work with
industry bodies and local
advisers to ensure we adhere
to regulation; however as we
continue our geographical
expansion the regulatory risk
increases due to local nuances.
and monitoring and assurance programs. These ensure continued
compliance with our regulatory obligations.
− We have strong relationships with best-in-class financial crime
consultancies which we utilise to provide independent advice and
assurance on our compliance processes.
− Independent external audits are conducted on our AML and
safeguarding processes and controls.
− We have integrated with several RegTech providers to ensure we
have the best and most innovative tools at our disposal. Our new
transaction monitoring provider will go live in 2023 enabling us to
enhance and fine-tune the ongoing monitoring of our client base.
− The Compliance team continues to appropriately increase its
headcount to accommodate regulatory and business needs,
including hiring resource to ensure local expertise and compliance
in newly licensed jurisdictions.
− The governance of compliance risk via Risk Committee forums
reflects the prioritisation of compliance within Alpha’s long-term
objectives and goals.
− Our dedicated quality assurance and compliance monitoring
functions have been enhanced further this year showing our
commitment to high levels of oversight and accountability.
closely with risk champions in each first-line team to ensure risks are
proactively identified.
− Firmwide risk and control self-assessments are conducted in each
department at least twice a year to identify risks and controls at an
inherent and residual level.
− We have a clear control framework in place and key controls
are regularly tested for effectiveness by the risk team. We have
significantly increased the number of controls we test.
− We maintain a strict division between Front and Back Office
functions to ensure Back Office remains independent and attentive
to any errors that Front Office may have caused. We have further
strengthened our lines of defence model this year.
− Internal fraud risk is minimised through investment in compliance
resources and functions, pre-employment screening of all
employees, maintaining strict delegated authority limits, segregation
of duties, and regular monitoring and oversight across different
management functions. The Group has comprehensive insurance
policies to partially indemnify against the risk of fraud from an
internal member of staff.
− We promote a positive speak-up culture so risk events are proactively
identified and escalated.
− We continue to invest and focus on retaining a scalable operating
model, with a particular ongoing focus on automation and straight-
through processing to reduce operational risk further.
− Business continuity run-books contain detailed continuity measures,
for different scenarios that can adversely impact key systems
supporting significant processes.
− Ongoing internal reviews and reconciliations are carried out by
qualified and experienced employees, with oversight from the Audit
Committee, Board and External audit.
48
49
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022
Principal Risks & Uncertainties
Continued
Risk Type: Credit Risk
Credit risk is inherent in Alpha’s business model. The Board accepts that credit losses are a function of our
trading, and we take a risk-based approach to balance revenue opportunities against the risk of default. We
are exposed to credit risk if a client fails to deliver currency at maturity of the contract and/or fails to deposit
margin when a margin call is made. Alpha’s credit risk is equal to the negative fair value of the contract minus
any deposit held at the time of cancellation.
RISK MITIGATIONS AND UPDATE
MOVEMENT
− We have a dedicated Credit team with significant experience who
Increased
Reason for movement:
Macroeconomic backdrop
of rising interest rates, high
inflation, and the potential
of recession.
review all credit requests and conduct ongoing reviews throughout the
duration of the contract. The frequency of these reviews is driven by
the risk level of each client as well as any material macro event that
may affect our client base.
− Although we provide our clients with credit facilities for hedging, our
terms and conditions enable all future customer trades to be at our
discretion, therefore we can react quickly to changes in the macro
environment or individual client profile, capping our exposure to past
trades only. This significantly reduces our risk exposure and poses
significantly less risk than providing traditional credit facilities.
− We conduct ongoing stress testing of our credit book to simulate
stressed market conditions. In 2022 particular emphasis has been put
on our exposure to Eastern European currencies and clients exposed
to high interest rates and energy costs.
− Second-line oversight of credit exposures and policy adherence is
performed by the Risk team.
− Top client concentrations are monitored closely and disclosed on our
website by currency pair.
STRATEGIC REPORT PRINCIPAL RISKS & UNCERTAINTIES
Risk Type: Strategic Risk
Risk is inherent in any strategy. To ensure we execute effectively we need to understand and actively manage our
MOVEMENT
Unchanged
strategic risks.
RISK MITIGATIONS AND UPDATE
− We have a clearly defined strategy, which we continue to successfully
execute, and key risks to delivery are identified and reviewed regularly.
− Regular and open dialogue between Execs and Non-execs at the Plc
Board level on execution risk and Group strategy occurs before moving
into new markets. Alpha’s Board has extensive experience in entering
new markets and scaling businesses, which it applies when considering
new opportunities.
− A succession plan is in place and approved by the Board for all key
roles. Key management have entered into contracts that provide notice
periods for the Group’s protection. The Group has a comprehensive key-
person insurance policy in place.
− We hold strong, transparent relationships with multiple banking partners
and remain aligned on risk appetite.
Risk Type: Technology Risk
Technology underpins most businesses and Alpha is no different. We rely on the uptime and availability of in-house
and third-party systems. A failure in this technology could disrupt both our own and our clients’ businesses.
RISK MITIGATIONS AND UPDATE
MOVEMENT
− Our critical platforms are hosted by tier-one providers in the cloud with
Decreased
resiliency built-in.
− Stringent release and change management processes are in place. We
have implemented code analysis tools to check for vulnerabilities as the
code is being written, as well as implementing more quality control gates.
− We use Amazon Web Services Security Hub for visibility across our entire
AWS estate.
− We have released a new client-facing portal and decommissioned the
legacy Risk Management/Alpha Pay platform.
− We have implemented a Software Developer Security Training program.
− We have tightened administrator permissions and built-in approval
processes around permission changes.
Reason for movement:
We continue to remove
legacy technology and our
platforms are fully cloud-
based.
50
51
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022
Principal Risks & Uncertainties
Continued
Risk Type: Liquidity Risk
Alpha operates a matched principal brokerage model, meaning that it immediately executes a matching trade
with its banking counterparties on receipt of client orders. Liquidity risk arises if Alpha is unable to meet its
financial obligations when they fall due. This could result from an overextension of credit facilities or a large
move in a currency pair that Alpha has a large exposure to. If Alpha were unable or restricted to meet its trading
capital requirements this could result in its banking counterparties closing out positions or even terminating the
financing facilities currently provided.
MOVEMENT
Decreased
Reason for movement:
Our cash position has further
increased, driven by cash
conversion, profitable trading
and interest earned.
RISK MITIGATIONS AND UPDATE
− Our terms of business enable us to collect margin from clients in
response to adverse market moves (margin calls). Alpha benefits
from netting where we are called to place margin from our banking
counterparties on a netted currency pair basis, whereas we can call
our clients for margin on a gross basis.
− Key risk indicators act as an early warning system to alert the Board
to conditions that could potentially lead to a period of stretched
liquidity.
− Our cash position has increased significantly due to profitable trading
and interest accrued on balances.
− The Senior Management team reviews forecasts and cash flows
regularly to determine whether the Group has sufficient cash
reserves to meet future working capital requirements and to take
advantage of business opportunities.
− We perform liquidity analysis at a net currency and FX cross basis,
including client margin call versus bank margin call to identify any
funding shortfall.
− We conduct client and overall book stress testing with circuit
breakers in place.
− Further improvements have been made to our daily cash calculation
which allows greater visibility on the components of our cash position
and the ability to track cash flows.
− Top client concentrations are closely monitored and are disclosed on
our website by currency pair.
− Additional liquidity providers have been approved, reducing the
concentration risk to our banking counterparties.
STRATEGIC REPORT PRINCIPAL RISKS & UNCERTAINTIES
Risk Type: Dispute Risk
Whilst a client may not default on a contract, they may dispute its validity. With the challenging macro
backdrop, there is a risk clients may try to renege on trades that have gone against them.
RISK MITIGATIONS AND UPDATE
MOVEMENT
− Thematic deep dive on dispute risk has been conducted to ensure
Increased
this risk is kept to a minimum.
Reason for movement:
The macroeconomic backdrop
of rising rates, high inflation,
and the potential of a recession
may lead to clients being
opportunistic.
− All trades have evidence attached to them of the trade instruction.
− All derivative trades are reviewed by the compliance team, ensuring
trades are booked in line with regulation and policy.
− All credit facilities are reviewed by the credit team, ensuring credit
agreements are executed correctly.
− Our Compliance Monitoring team samples a percentage of all trades
to ensure all documents are correct and present and evidence is
attached to trades.
− Controls regarding the disclosure of complex derivative products
to our clients are in place, including compulsory monthly valuation
reports sent to all authorised signatories, and trade confirmations
sent to the director(s) in addition to authorised contacts.
− We have proactively engaged a dispute risk lawyer to review our
processes.
− The Risk team control tests the above processes to ensure they are
operating effectively.
Risk Type: Reputational Risk
Alpha is highly regarded in our industry. Maintaining this reputation is important to retain our existing clients,
expand our client base, and preserve our strong relationships with our banking partners. There is a risk that an
unforeseen event may adversely affect Alpha’s reputation, impacting future profitability.
KEY TOPICS
MOVEMENT
− We have a marketing and communication strategy that includes
Unchanged
detailed and open public reporting.
− We pride ourselves on strong cultural values and a positive risk and
compliance culture.
− We maintain an open and proactive dialogue with our banks and the
regulators to provide high levels of transparency and comfort.
− We have a contract with a cyber security and reputation management
company, which provide an online impersonation takedown service to
minimise, where possible, brand impersonation.
52
53
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022
STRATEGIC REPORT ENGAGING WITH OUR STAKEHOLDERS
Engaging with our Stakeholders
Section 172(1) of the Companies Act 2006 requires the Directors to act in a way they consider would be
most likely to promote the success of the Company for the benefit of its members as a whole, taking into
account the matters set out below. The Board believes that engaging with stakeholders leads to better
decision making and is therefore critical to our long-term success.
SECTION 172 MATTER
RELEVANT SECTIONS OF ANNUAL REPORT
The likely consequences of any decision in the
− Business Model (pg 65)
long term
− Strategies (pg 21,36,42)
− Stakeholder engagement (pg 55)
The interests of the company’s employees
− Stakeholder engagement (pg 56)
− Corporate Social Responsibility (pg 60)
The need to foster the company’s business
− Stakeholder engagement (pg 56)
relationships with suppliers, customers and others
− Corporate Social Responsibility (pg 60)
The impact of the company’s operations on the
− Corporate Social Responsibility (pg 60)
community and the environment
The desirability of the company in maintaining a
− Corporate Governance Statement (pg 74)
reputation for high standards of business conduct
The need to act fairly between stakeholders of
− Stakeholder engagement (pg 55)
the company
Communities & Environment
We value the opportunity to support organisations and causes that are important to our stakeholders and us.
HOW WE ENGAGED
KEY TOPICS
KEY OUTCOMES
− Fundraising activities for three
− Which charities our
− Facilitated funding for our
charities: Motor Neurone Disease
employees wish to
chosen charities
Association, Lymphoma Action,
support
− Awareness for charitable and
and Mind.
− Direct engagement with Climate
Impact Partners as part of the
Carbon Neutral Protocol
− How we can raise
environmental causes boosted
money and awareness
across the business and to our
for each cause
wider stakeholders
− Environmental
− Became a certified
sustainability and
supporting our
Carbon Neutral company
by supporting the Acre
Amazonian Rainforest
Amazonian Rainforest REDD+
REDD+ project in Brazil
project in Brazil
54
55
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022 Employees
Clients
Our people are what set us apart from our competition, providing a leading level of service that enables us to
Understanding the needs and challenges facing our clients is central to our growth strategy.
grow our business.
HOW WE ENGAGED
KEY TOPICS
KEY OUTCOMES
HOW WE ENGAGED
KEY TOPICS
KEY OUTCOMES
STRATEGIC REPORT ENGAGING WITH OUR STAKEHOLDERS
− Company-wide employee
− Current performance and
strategy
− Future objectives and
strategy
− Resource planning
−
Learning, development and
career progression
− Recognising exceptional
achievements
− Charity and fundraising
initiatives
engagement surveys, with results
and actions presented back to teams
and Board
− 360 feedback surveys carried out on
Senior Management
− Quarterly wrap-ups to celebrate
wins and recognise exceptional
performances
− Quarterly townhalls held within each
division to present progress against
strategy, future focus, and recognise
key achievements
− Following investor roadshows, CEO &
CFO host employee roadshows with
each division
− Regular team-building exercises,
including an annual company-wide
trip abroad
− Fortnightly strategy meetings
attended by all department heads,
chaired by divisional MDs
−
−
−
Introduced flexible and
reduced working hours
Increased communication
between Central Services
teams and FXRM and ABS
Increased involvement
amongst a wider group
of colleagues with world-
renowned performance
coach, Dr Ceri Evans
− Process for salary reviews
has been standardised
across the business
to ensure fairness and
transparency
− Working from home policy
created
Business Partners & Suppliers
Our partners and suppliers enable us to enhance our offering and provide better solutions to clients and employees.
HOW WE ENGAGED
KEY TOPICS
KEY OUTCOMES
− Sharing of key regulatory
− Company performance
announcements
− Direct engagement between
Executive Directors and key
suppliers and partners
− Senior Management engage with key
suppliers and provide key updates to
Executive Directors
− Customer service delivery
− Company strategy
− Audit and risk committee
information
− Risk, governance and
compliance
− Diversity and inclusion
− Enhanced products and
service by leveraging
suppliers’ capabilities
− We continue to partner with
a number of high-quality
partners that understand our
business and the vital part
they play in our long-term
ambitions
−
Increasing focus on diversity
with our recruitment partners
−
The customer experience
− Regulations and
compliance
− New products and features
− Reasons for choosing Alpha
− Enhanced product offerings,
both online and offline, to
provide a better customer
experience
− Client feedback implemented
into our product development
roadmap
− Subsequently grew product
and technology teams in
order to continue supporting
client-led new product
development
− Client surveys are sent out to all new
customers with results shared with
CEO and MDs
− Attendance at over 40 industry
events throughout the year
− Active memberships with seven key
industry associations
− Direct engagement between
Directors and key clients
− Client-facing employees share
feedback with senior management,
which is put forward to the Board for
consideration where appropriate
− Email updates on upcoming
developments and releases, with
feedback requested
Our Shareholders
We value the views of our shareholders and the financial commitment they’ve made to support our growth.
HOW WE ENGAGED
KEY TOPICS
KEY OUTCOMES
− Our CEO and CFO hold meetings with
major shareholders following interim
and full year results to discuss the
Group’s performance
− Shareholder analysis is presented
once a quarter to inform Directors of
key changes
− Shareholder feedback report
is obtained independently and
anonymously after half and full year
roadshows and shared with the Board
− All shareholders were invited to
submit questions to the Board at the
Annual General Meeting
− Company performance
− Company strategy and
long-term vision
− Key risks and governance
− Alpha’s business model
− Market opportunities
− Dividend strategy
−
Impact of macro-
environment
− ESG
− Provided greater clarity over
our strategy and market
opportunity in the Alternative
Banking Solutions space as
well as future growth plans
for FXRM
−
−
−
Launched a new investor
relations website with
greater breadth and depth of
information
Increased the number
of performance metrics
available to investors
Increased the level of detail
in our trading updates and
interim and full year reports
56
57
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022 Principal Board Decisions
Strategy & Business Performance
STRATEGIC REPORT PRINCIPAL BOARD DECISIONS
In accordance with section 172 of the Companies Act 2006, the
Board regularly considers the likely consequences of our strategy
and long-term decisions, taking into account the interests of all
our stakeholders.
The table below highlights some of the key decisions taken throughout the year by the Board, and, along with the
stakeholder engagement on page 55, the key considerations and stakeholder groups that were taken into account
when making those decisions.
Succession Planning & Retention
KEY BOARD DECISION
KEY CONSIDERATIONS
STAKEHOLDERS CONSIDERED
Approved the
Ensuring the new CFO had the skills,
− Shareholders
appointment of Chief
experience and knowledge to fulfil the
Financial Officer, Tim
role and enable the Group to deliver on
Powell, to the Board.
its growth ambitions, whilst also being a
− Employees
− Customers
strong cultural addition to the team.
Approved the adoption
Ensuring we can continue to attract and
− Shareholders
of the F, G and H Growth
retain employees that are capable of
Share Schemes.
creating exceptional levels of growth and
customer service, whilst also ensuring the
benefits of that extra-level of growth far
outweighs the impact of dilution
− Employees
− Customers
Risk Management
KEY BOARD DECISION
KEY CONSIDERATIONS
STAKEHOLDERS CONSIDERED
Reviewed and approved
Considered the level of risk Alpha was
− Shareholders
the Group’s Risk Appetite.
willing to accept based on its strategic
objectives of: maintaining capital
adequacy, delivering stable earnings
growth, ensuring stable and efficient
access to funding and liquidity, and
maintaining stakeholder confidence.
− Employees
− Customers
− Suppliers
KEY BOARD DECISION
KEY CONSIDERATIONS
STAKEHOLDERS CONSIDERED
Approved regulatory
Providing accurate, clear and detailed
− Shareholders
communications,
communications to give our stakeholders
including all reports and
the best possible understanding of how
accounts.
our business is performing and where we
− Customers
− Partners & Suppliers
are going.
Approved the Group’s
Evaluating the appropriateness of the
− Shareholders
three-year strategy as
growth targets, and the strategies set out
part of an away-day
to achieve them over the next 12 months.
strategy workshop.
Diagnosing key challenges and what will
− Customers
− Employees
be needed to overcome them.
Approved the launch of
Evaluating the market opportunity,
− Shareholders
the Australian office.
growth strategy, key challenges, and likely
return on investment.
− Customers
− Employees
Treatment of client
Approved the treatment of client interest
− Shareholders
interest.
as “Other operating income” and to
exclude it from underlying non-GAAP
measures.
Operational & Financial Planning
KEY BOARD DECISION
KEY CONSIDERATIONS
STAKEHOLDERS CONSIDERED
Approved the H1 2022
Ensuring we continue to invest in the
− Shareholders
reforecast and FY 2023
resources and capabilities needed to
budget.
deliver on our growth plans and provide
a market-leading customer experience,
whilst also maintaining attractive profit
margins.
− Customers
− Employees
Approved dividend policy
Providing attractive returns to
− Shareholders
and payment of interim
shareholders, whilst ensuring that
and final dividend.
dividend payments do not compromise
long-term strategic growth investments.
Approved the Group’s
Ensuring the name positioned the
− Customers
name change to Alpha
company appropriately in its marketplace,
Group International plc.
in light of its growing product range and
future ambitions.
58
59
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022 Corporate Social
Responsibility
At Alpha, sustainable business practices aren’t just about
doing the right thing. We believe that when embraced in the
right way, they can become a long-term driver of superior
financial performance and make for a better-quality company
and investment.
ENVIRONMENTAL
Nevertheless, the Group does believe in further
STREAMLINED ENERGY AND CARBON
minimising its impact where possible. Our London-
REPORTING (SECR)
The Group is required to report under the
Streamlined Energy & Carbon Reporting (SECR)
framework. The Group’s operations have inherently
low emissions, and we attained our carbon neutral
certification in January 2022 by partnering with
Natural Capital Partners and offsetting our carbon
emissions from January 2021.
Our SECR reporting covers the energy consumption
and Greenhouse Gas (GHG) emissions for the year
ended 31 December 2022 including scope 1, 2 and
3 emissions. The table below shows the energy and
GHG emissions from business activities involving
the combustion of gas and fuels, the purchase of
electricity, and business travel in both kWh and
tCO2e.
We have selected an intensity metric based on the
energy consumption per employee of Alpha Group;
this is 263kg CO2e / employee. The key driver for the
decrease in the intensity ratio between 2021 and
2022 is due to the increase of headcount within the
same office footprint in London. Over this time, the
emissions generated from the office space did not
materially change. We will use this intensity ratio to
monitor our energy efficiency performance over time.
The Group’s operations are largely limited to its
offices and have an inherently low environmental
impact.
based HQ was built in 2019 with sustainability at the
forefront of its design, with water recycling and a 71%
improvement in operational energy consumption
over a standard office fit-out.
We have a mostly paperless marketing model, and
our team endeavour to separate waste and recycle
all office supplies where possible. Other steps we
have taken include: automating office lights to
turn off when not being used, zero use of plastic
cups, and the Cycle to Work scheme to encourage
environmental travel. We will be targeting a reduction
in the average emission generated through the
use of business travel per employee. We also
carefully consider suppliers and their values before
onboarding them.
SECR Methodology
The figures quoted within this report include
electricity invoices and expense reimbursement
claims for business travel. Conversion factors used to
calculate are taken from the ‘Government conversion
factors for company reporting of greenhouse gas
emissions’.
CARBON NEUTRAL
We are proud to be a Carbon Neutral company and
have been offsetting all of our carbon emissions
since 2021, through our partnership with Natural
Capital Partners (“NCP”).
STRATEGIC REPORT CORPORATE SOCIAL RESPONSIBILITY
Unit
31 December
2022
31 December
2021
kWh
348,709
254,576
TOTAL ENERGY USE COVERING ELECTRICITY, GAS,
OTHER FUELS AND TRANSPORT
Total emissions generated through combustion of gas
Total emissions generated through use of purchased
electricity
tCO2e
tCO2e
Total emissions generated through use of other fuels
tCO2e
Total emissions generated through use of business travel
tCO2e
Total emissions generated through use of water and waste
tCO2e
Total gross emissions
INTENSITY RATIO (TOTAL GROSS EMISSIONS PER
HEADCOUNT)
tCO2e
kgCO2e PER
AVERAGE
EMPLOYEE
0
72
0
8
0.7
81
0
52
0
6
0.5
59
263
320
Working with Natural Capital Partners we support
We chose this project in recognition of the
the Acre Amazonian Rainforest REDD+ project
enormous role that The Amazon rainforest plays
in Brazil. This project delivers approximately
in reducing carbon in the atmosphere, and the
360,000 tonnes of emission reductions each year,
staggering amount of biodiversity that stands to be
alongside initiatives focused on achieving, zero
lost as a result of environmental degradation and
hunger, no poverty and protecting endangered
deforestation. 90% of Brazil’s Acre state is forested,
and vulnerable species. Carbon revenues
but the current rate of destruction means that by
generated through our partnership with Natural
2030 this could decline to 65% - a trend we hope to
Capital Partners are used to finance:
play our part in reversing.
− Forest protection: using physical boundaries
to restrict access to forested areas, and
patrols to deter destruction and monitor
conservation efforts.
− Sustainable development activities:
engaging and supporting local communities
to address the reasons for deforestation,
and restructure local economies
towards sustainable land use and forest
conservation, ultimately with the intention of
improving food security, income, healthcare
and education.
SOCIAL
DIVERSITY & INCLUSION
We are committed to ensuring Alpha is a diverse
and inclusive place to work. We operate a true
meritocracy, recruiting and promoting people based
on their attitude, skills, and experience. We do not
discriminate between employees or prospective
employees on the grounds of age, race, disability,
religion, gender, education, or any other criteria.
Fundamentally, we believe that the more diverse a
business is, the greater its potential performance.
60
61
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022
STRATEGIC REPORT CORPORATE SOCIAL RESPONSIBILITY
STRATEGIC REPORT CHAIRMAN’S STATEMENT
Corporate Social Responsibility
Continued
Our stance on diversity not only forms expectations
quizzes, and several sponsored half marathons.
we have for ourselves, but also the recruitment
We have also been fortunate to have representatives
partners we work with too. To this end, we review
of MNDA present to our team to increase awareness
every partner to ensure that their policies and
and advocacy for the work they do.
standards around diversity align with our own.
Upon the completion of our diversity and inclusion
chosen to raise money for Lymphoma Action this
survey in Q2 2023, we are also preparing to launch
year, after one of our colleagues received a diagnosis
our first D&I working Group. This working group
of Hodgkins Lymphoma last year.
Alongside our support for MNDA, our team have also
is designed to create an environment where the
perspectives of people from different backgrounds
Lymphoma Action has played a key role in supporting
can be understood, to enable people from all
our colleague and their family throughout their
backgrounds to pursue successful careers at Alpha,
recovery journey, and is now a charity that will always
and for Alpha to benefit from wider cultural diversity.
be close to our hearts. Fundraising events during
Our role as an employer is then to provide the
the year included a sponsored football match and
support and tools to enact the changes that matter.
a charity auction, and the team are committed to
Progress was also made during 2022 on achieving
continue supporting this importance cause in the
greater gender balance in senior management
future. We also wish our colleague all the best in their
positions:
% Female
Board
Group Colleagues
As at 31
Dec 2022
As at 31
Dec 2021
17%
32%
17%
33%
Senior Management
35%
27%
CHARITABLE SUPPORT
At the start of 2022 the Alpha team chose the
Motor Neurone Disease Association (“MNDA”) as
their charity partner for the year. MNDA focuses on
improving access to care and research for people
living with motor neurone disease, and a number
ongoing recovery, and are committed to continuing
to support them personally during their treatment
period.
PERSONAL DEVELOPMENT
Personal development is an intrinsic part of Alpha’s
high-performance culture and our vision to create
“a place where everyone gets better”. Our initiatives
have been covered extensively in the statements of
our CEO and Group MDs, but are also summarised
again below:
− Access to world-class performance coaching
and workshops with Dr Ceri Evans
−
Investment in external training and
qualifications
− Accelerated career progression within a fast-
growing business
of colleagues had personal connections to this
− Surrounding great people with great people
organisation.
To support the incredible work of this organisation
our team hosted a number of internal fundraising
events, including: sport screenings, cake sales,
− Regular opportunities to move roles and
departments through our “cross-fit” initiative
62
63
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022
STRATEGIC REPORT OUR BUSINESS MODEL
Our Business Model
Business can be complicated.
We strive to make it less so.
OUR RESOURCES
PEOPLE
PROCESSES
TECHNOLOGY
PARTNERS
CAPABILITIES
350+ people speaking
20+ languages, brought
together by a high-
performance culture,
led by an experienced
leadership team with a
founder-CEO.
Streamlined but
robust systems and
processes, enabling
quick and controlled
decision making, with
increasingly high levels
of automation.
Low-legacy, modular
technologies, that are
always evolving, in order
to more effectively and
efficiently meet the
needs of our team and
clients.
Working in partnership
with leading suppliers
and channel partners
enhances our business
model and enables
us to reach a wider
audience.
Well-capitalised, debt
free and profitable,
with a high-quality
and diverse product
offering, and a strong
reputation.
▼
OUR STRATEGY
Our overarching objective is to grow our business by delivering on our KPIs (see pg 29). This is achieved by delivering on our FX Risk
Management Strategy (pg 36), our Alternative Banking Solutions Strategy (pg 42) and our Group Strategy (pg 21).
▼
GUIDED BY OUR BEHAVIOURS
Act as One
Be Humble
Seek Reality
Expect More
Make Moves
▼
THE VALUE WE CREATE
EMPLOYEES
CLIENTS
SHAREHOLDERS
PARTNERS
COMMUNITIES
Providing outstanding
earning and learning
potential for everyone
who works with us and
the opportunity to own
a stake in the business
through share option
incentive schemes.
Solutions that make
a substantial and
enduring difference to
our clients.
Delivering sustainable
long-term returns to
our shareholders.
As our business
continues to grow, so
do the opportunities
for our business
partners who work
with us.
Fundraising and
volunteering for our
chosen charities and
environmental causes.
100+
Continued growth
700%+
9
3
Employee
Shareholders.
in Avg. revenue per
client 2021-22.
Share price growth
IPO 2017-FY2022.
Banking
counterparties.
Charities supported
in 2022.
▼
OUR PURPOSE
To create an exceptional community full of opportunity that works hard but lives well.
COMMUNITY
OPPORTUNITY
All of the above stakeholders we work with: Employees,
Clients, Shareholders, Partners and Communities.
The growth and rewards that come from playing a part in
our community’s success.
64
65
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022 The Board
CORPORATE GOVERNANCE BOARD OF DIRECTORS
Morgan Tillbrook
Chief Executive Officer
Tim Powell
Chief Financial Officer
Tim Butters
Chief Risk Officer
Clive Kahn
Non-Executive Chairman
Lisa Gordon
Non-Executive Director
Vijay Thakrar
Non-Executive Director
Skills & Experience
Skills & Experience
Skills & Experience
Skills & Experience
Skills & Experience
Skills & Experience
Tim Powell brings over 20 years of
experience working in high-quality
fast-growing public companies. 17
of these years were at the FTSE 100
listed, London Stock Exchange Group
(“LSEG”). He was CFO of the LSEG’s
largest subsidiary, London Stock
Exchange, and was finance lead for
the $27bn acquisition and integration
of Refinitiv. Tim is a Chartered
Accountant and graduated with an
engineering degree from Birmingham
University.
Tim joined Alpha in 2019 with over 15
years’ experience in risk management,
including as Head of Risk at World
First, the global payments provider,
and Mako Trading, a leading derivatives
market maker. Beginning his career
at Mitsubishi UFJ Securities, Tim has
experience across both financial and
non-financial risk and is Certified by the
Global Association of Risk Professionals
having achieved their FRM designation.
Morgan founded Alpha in 2009 and
has over 20 years’ experience building
and leading fast-growing companies
across technology and financial services.
Self-funded and debt free up until its
IPO in 2017, the company has delivered
fourteen years of profitable and organic
growth, alongside a consistent track
record of strategic investments which
have expanded the company from a
sole provider of FX Risk Management
solutions in the UK, to a global leader of
a diverse (and growing) range of financial
solutions.
Outside of Alpha, Morgan successfully
competes in the British GT racing
championship. He is also a passionate
angel investor to several exciting early-
stage companies.
Clive has over 35 years of experience in
financial services, particularly in FX and
payments. He previously served as Chief
Financial Officer and Chief Executive
Officer of Travelex, the global foreign
exchange business, as well as CEO of
Cardsave, a credit card acceptance and
payments solutions business. In addition
to his role as Non-Executive Chairman of
Alpha, Clive is CEO of takepayments LTD,
a payment solutions business. Clive is
also a Chartered Accountant.
Lisa has over 25 years’ Board experience
in Executive and Non-Executive roles
at both listed and private companies.
She began her career as an equities
investment analyst and subsequently
spent many years in strategy and
business development roles in the
media and technology sectors.
Lisa currently holds a number of Non-
Executive positions which include
Chairman, Cenkos Securities Plc; Senior
Independent Director, M&C Saatchi Plc;
Non-Executive Director, JP Morgan Mid
Cap Investments Trust Plc and Non-
Executive Director, Magic Light Pictures.
Vijay is a Chartered Accountant with
extensive strategic, commercial and
governance experience with fast growth
listed companies, and was previously
a Partner at EY and Deloitte, chairing
Deloitte’s mid cap listed companies’
practice. He has served on various
Boards as a Non-Executive, including
The Quoted Companies Alliance and
Quorn Foods. Vijay is currently Chairman
of The Alumasc Group plc, Treatt plc,
and at RSM Group (Remuneration
Committee Chair).
Maintaining Skill Set
Maintaining Skill Set
Maintaining Skill Set
Maintaining Skill Set
Maintaining Skill Set
Maintaining Skill Set
As CEO of a regulated and high-growth
FX solutions business, Morgan’s
experience is kept up to date by nature
of his day-to-day role. He also attends
a variety of meetings and events to
support his personal development and
is an avid reader of self-development
literature.
As CFO of Alpha, Tim keeps his skills
and experience up to date by nature of
his day-to-day role. Furthermore, as a
Chartered Accountant he undertakes
Continuous Professional Development
(CPD) training, alongside a variety of
technical courses and subscriptions to
professional publications.
Tim’s experience is kept up to date by
the nature of his day-to-day role. He
is a member of the Global Association
of Risk Professionals and undertakes
regular CPD training.
Nomination Committee Member
None
None
As Chief Executive Officer of a regulated
and high-growth payments business,
Clive’s skills and experience are kept up
to date by nature of his current role. He
also attends a variety of skill-focused
conferences.
Lisa’s skills and experience are kept
up to date by nature of her current
roles. She also attends numerous NED
CPD training events and professional
seminars.
Vijay stays up to date by virtue of his
roles and CPD that he continues to
undertake, including attendance on
various update webinars and training
events.
Audit Committee Member
Nomination Committee Chair
Remuneration Committee Member
Audit Committee Member
Nomination Committee Member
Remuneration Committee Chair
Audit Committee Chair
Nomination Committee Member
Remuneration Committee Member
Appointed: 2009
Appointed: 2022
Appointed: 2021
Appointed: 2016
Appointed: 2017
Appointed: 2021
66
67
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022 Corporate Governance
Statement
“The Board recognises the value
and importance of high standards of
corporate governance and ensuring
that all of its practices are conducted
transparently, ethically and effectively.”
This section sets out our approach to governance and provides further information on how the Board
and its committees operate.
In compliance with the AIM rules for Companies, the Group has chosen to formalise its governance
policies by complying with the QCA Corporate Governance Code for Small and Mid-Sized Quoted
Companies (the “QCA Code”).
Clive Kahn
Non-Executive Chairman
CORPORATE GOVERNANCE REPORT
QCA CODE PRINCIPLE
RELEVANT SECTION(S) OF THE ANNUAL REPORT
1.
Establish a strategy and business model which
Business Model pg 65
promote long-term value for shareholders.
Strategies pgs 21, 36, 42
2. Seek to understand and meet shareholder needs
Engaging with Stakeholders (s172) pg 57
and expectations.
Corporate Governance Statement pg 74
3. Take into account wider stakeholder and social
Engaging with Stakeholders (s172) pg 55
responsibilities and their implications for long-term
Corporate Social Responsibility pg 60
success.
4. Embed effective risk management, considering
Principal Risks pg 44
both opportunities and threats throughout the
organisation.
Corporate Governance Statement ► Internal
Controls & Risk Management pg 74
5. Maintain the Board as a well-functioning, balanced
Board of Directors pg 66
team led by the Chair.
Corporate Governance Statement ► Board
Composition pg 71
6. Ensure that, between them, the Directors have
Board of Directors pg 66
the necessary up-to-date experience, skills and
Corporate Governance Statement ► Board
capabilities.
Effectiveness pg 72
7.
Evaluate Board performance based on clear
Corporate Governance Statement ► Board
and relevant objectives, seeking continuous
Effectiveness pg 72
improvement.
Remuneration Committee Report ► Remuneration
Policy pg 80
8. Promote a corporate culture that is based on ethical
Corporate Governance Statement ► Business
values and behaviours.
Culture, Behaviour & Ethics pg 73
Business Model pg 65
9. Maintain governance structures and processes
Corporate Governance Statement pg 69
that are fit for purpose and support good decision-
Remuneration Committee Report pg 80
making by the Board.
Audit Committee Report pg 76
10. Communicate how the Company is governed
Corporate Governance Statement pg 72
and is performing by maintaining a dialogue with
shareholders and other relevant stakeholders.
Engaging with Stakeholders (s172) pg 55
Further information is also published on our website:
alphagroup.com/investors/corporate-governance
68
69
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022
Corporate Governance
The Board
The Board is responsible for the proper management of the Group by formulating, reviewing, approving and
BOARD COMPOSITION
HOW THE BOARD OPERATES
monitoring the Group’s strategy, budgets, corporate actions and risk appetite.
CORPORATE GOVERNANCE REPORT
AUDIT COMMITTEE
NOMINATION COMMITTEE
REMUNERATION COMMITTEE
The Audit Committee determines
and examines any matters
relating to the financial affairs of
the Group, including the terms
of engagement of the Group’s
auditors and, in consultation with
the auditors, the scope of the
audit. In addition, it considers the
financial performance, position and
prospects of the Group and ensures
they are properly monitored and
reported on, alongside reviewing
regulatory announcements. The
Audit Committee meets not less
than three times in each financial
year and has unrestricted access to
the Group’s auditors.
The Audit Committee is chaired by
Vijay Thakrar and its other members
are Lisa Gordon and Clive Kahn,
both of whom are independent Non-
Executive Directors and have recent
and relevant financial experience.
The Nomination Committee
reviews and recommends
nominees as new Directors
to the Board. The Nomination
Committee meets as the
Chairman of the committee
requires.
The Remuneration Committee
reviews the performance of the
Executive Directors and sets
their remuneration, determines
the payment of bonuses to the
Executive Directors and considers
the Group’s long-term incentive
arrangements for employees. In
exercising this role, members of
this committee have regard to the
recommendations put forward in
the QCA Corporate Governance
Code and to industry benchmarks.
The Nomination Committee is
chaired by Clive Kahn; its other
members are Lisa Gordon, Vijay
Thakrar and Morgan Tillbrook.
The Remuneration Committee
is chaired by Lisa Gordon and its
other members are Clive Kahn
and Vijay Thakrar, both of whom
are independent, Non-Executive
Directors.
KEY AREAS OF ACTIVITY
KEY AREAS OF ACTIVITY
KEY AREAS OF ACTIVITY
− Financial reporting and market
updates
−
Internal control and risk
management reviews
− External audit
− Review of the Risk Register
− Engage with Chief Risk Officer
and Risk Committee
− Review of complaints register
− Review strategy and
performance with Executive
Directors & Senior Management
− Assesses the adequacy of
the knowledge pool of Non-
Executive Directors
− Assesses the adequacy of
representativeness of Non-
Executive Directors
− Approve the appointment
of any new Non-Executive
Directors
− Succession planning for
Executive Directors and
Senior Management
− Oversight of Executive
Remuneration policy
− Review of Director’s
remuneration against
benchmark data
− Setting and appraisal of
performance targets
− Reviewing equity incentive
schemes
The Board is responsible to shareholders for the
The Board maintains a flexible, efficient and effective
successful stewardship of the Group and sets the
management framework within an entrepreneurial
strategy for its long-term success. It is important that
environment, aiming to deliver long-term growth for
the Board contains the right mix of skills, experience
shareholders. Matters reserved for the attention of
and knowledge in order to deliver the strategy of
the Board which are reviewed annually include the
the Group. As such, the Board comprises three
Group’s:
Executive Directors and, including the Chairman,
three independent Non-Executive Directors. The
− Objectives and strategy
Board considers all three Non-Executive Directors
− Structure and capital
to be fully independent within the meaning of
the UK Corporate Governance Code. Tim Powell
(Chief Financial Officer) joined the Board as a new
Executive Director on 5 December 2022.
The Chairman and Chief Executive have distinct
roles. The Chairman’s primary responsibility is the
− Financial reporting, controls and dividend policy
− Regulatory reporting and controls
− Risk management, internal controls and
governance
− Significant contracts or investments
− Shareholder communications
delivery of the Group’s corporate governance and the
− Board membership, succession planning and
effective operation of the Board of Directors, whilst
other appointments
the Chief Executive is responsible for the operation
− Remuneration of Senior Management
of the Group in order to deliver on its strategic
objectives. The Chairman has a clear separation from
the day-to-day business of the Group which allows
− Delegation of authority
him to make independent decisions.
BOARD COMMITTEES
The Board has established an Audit Committee,
Remuneration Committee and Nominations
Committee, each with formally delegated duties and
responsibilities and with written terms of reference.
Each Committee comprises Non-Executive Directors
of the Group. No new independent external advice
was sought by the Board or its Committees during
the period. Full details on each committee can be
seen on page 70.
The Board believes that the size and composition of
the Board is appropriate given the size and stage of
development of the Group and, as per the individual
biographies, that the Directors bring a desirable
range of skills, experience, personal qualities and
capabilities in light of the Group’s challenges and
opportunities, whilst at the same time ensuring that
no individual(s) can dominate the Board’s decision
making.
All Board Directors are subject to election at their
first Annual General Meeting and to re-election
annually thereafter. Given the Group intention to
move to the Main Market, we will look to add another
Non-Executive Director to the Board in 2023.
70
71
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022 Corporate Governance
Continued
BOARD MEETINGS FY2022
Board
Remuneration
Committee
Nomination
Committee
Audit
Committee
SCHEDULED MEETINGS
Clive Kahn
Lisa Gordon
Vijay Thakrar
Morgan Tillbrook
Tim Kidd1
Tim Powell2
Tim Butters
6
6
6
6
6
6
1
6
2
2
2
2
2
2
0
0
1
1
1
1
1
1
0
0
3
3
3
3
3
3
1
3
1 Tim Kidd resigned from the PLC board on 5 December 2022
2 Tim Powell joined the Board on 5 December 2022
BOARD MEETINGS
BOARD EFFECTIVENESS
The Board held 12 scheduled Board meetings during
An assessment of the Board’s effectiveness was
the year. Non-Executive Directors also communicate
undertaken by the Board in October 2021, led by the
directly with Executive Directors and Senior
Management between formal Board meetings.
Group’s Chairman. Key areas of focus included:
The Chairman and the CFO plan the agenda for
each Board meeting in consultation with all other
Directors. The agenda is issued with supporting
papers ahead of the Board meetings, along with
−
The effectiveness of the Board in setting strategy
− Appropriateness of KPIs and management
information
− Risk management
appropriate information required to enable the Board
− Shareholder engagement
to discharge its duties.
Directors are expected to attend all Board meetings
− Corporate governance
− Effectiveness of the committees
and the Committee meetings for which they
− Appropriateness of the Board’s composition and
are members. The table below shows Director’s
skills in order to discharge its duties
attendance at scheduled Board and Committee
meetings during the year.
The review highlighted the Board’s strengths across these
areas and recommended some minor actions that could
be taken in 2022 to enhance its effectiveness. In addition,
the Board intends to instruct an independent company to
conduct a Board effectiveness review in 2023.
CORPORATE GOVERNANCE REPORT
The skills and experience of the Board are outlined in
Anonymous employee engagement surveys are
their biographical details on page 66. Their experience
conducted annually and the company’s “Speak
and characteristics give them the ability to deliver and
Up Culture” also ensures that all employees are
challenge the Group’s strategy for the benefit of all its
empowered to feedback on culture and behaviours,
stakeholders. The Board keeps succession planning
regardless of tenure or seniority.
under review and monitors the progress and success
of the development plans which have been established
Integrity is everything at Alpha and underpinned by
for relevant employees, with a particular focus on
our principle of not only “Knowing what’s right” but
ensuring over time all senior management positions
most importantly “Doing what’s right”. The Directors
have at least one internal successor. The Nomination
believe that the main determinant of whether a
Committee also monitors the length of tenure of the
business behaves ethically and does the right thing is
Chairman and Non-Executive Directors and the mix and
the quality of its people.
skills of the Directors.
BUSINESS CULTURE, BEHAVIOURS AND ETHICS
The Directors have responsibility for ensuring that
individuals employed by the Group demonstrate the
highest levels of integrity and undertakes reviews of
The Group has a clearly defined vision and purpose
its employees regularly. In addition, the Group has
along with key behaviours and principles. ‘Cultural
a formal Bribery and Anti-Corruption Policy and a
Density’ is a core strategic pillar for the business,
Share Dealing Code.
and as the company continues to scale, we believe
retaining our culture and high ethical standards will
be key to maintaining our high performance and
TIME COMMITMENTS
delivering on our objectives, strategy and business
The Directors recognise the need to commit the
model.
necessary amount of time to fulfil their roles, as
outlined in their letters of appointment. The Board
is satisfied that the Chairman and Non-Executive
Directors are able to commit the sufficient time to
the Group’s business. There has been no significant
change in the Chairman’s time commitments since
his appointment.
DEVELOPMENT
The Company Secretary ensures that all Directors
are kept up to date on any relevant changes in
legislation and regulations, with the assistance of
the Group’s advisers where appropriate. Executive
Directors are subject to the Group’s performance
development review process, through which their
performance against predetermined objectives and
their personal and professional developments needs
are considered.
72
73
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022
CORPORATE GOVERNANCE REPORT
Corporate Governance
Continued
INTERNAL CONTROLS & RISK MANAGEMENT
Anonymous feedback from institutional investors
The Board has ultimate responsibility for the Group’s
control and risk management environment, all of
which are designed to manage and mitigate risks
that may undermine its strategic objectives. Such
systems can only provide a reasonable but not
absolute level of assurance against material loss or
misstatement. The Audit Committee monitors and
reviews the Group’s internal control procedures and
reports its conclusions and recommendations to the
Board.
As further described on page 78 of the Audit
Committee report, the Group has an established
framework of risk management and internal control
systems, policies and procedures in place, including
an internal audit function.
is obtained and shared with the Board following its
interim and final results roadshows, and a quarterly
breakdown of the share register are provided to the
Board for consideration.
During the year, shareholders requested that
greater breadth and depth of information would be
beneficial in respect of Alpha’s Alternative Banking
Solutions division. Greater levels of disclosure have
subsequently been provided in the Group’s recent
trading updates and this annual report.
ANNUAL GENERAL MEETING (“AGM”)
The Group’s AGM will take place at 9:00am on 17 May
2023. The Notice of AGM and explanatory notes on all
resolutions are provided alongside all copies of the
annual report mailed to shareholders. Digital copies
RELATIONS WITH STAKEHOLDERS
are also available via the Group’s website.
The Group is committed to ensuring it engages with
all of its stakeholders to ensure their needs and
considerations are taken into account in its decision
making. Further details can be found on page 55.
SHAREHOLDER COMMUNICATIONS
The Group maintains communication with both
current and potential institutional shareholders
through one-to-one meetings with the Chief
Executive Officer and Chief Financial Officer,
particularly following the publication of its interim
and full year results, as well as ad-hoc meetings
and conference calls. Private shareholders are
encouraged to attend the Annual General Meeting
at which the Group’s activities are considered and
questions answered.
The Group’s website has a dedicated investor
relations page which contains the latest information,
including its most recent results. New and potential
investors will soon also have the opportunity to
submit questions at any time throughout the year via
the investor relations website, and all responses will
be published for everyone to see.
74
75
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022 CORPORATE GOVERNANCE AUDIT COMMITTEE REPORT
Audit Committee Report
Vijay Thakrar
Non-Executive Director
On behalf of the Board, I am pleased to present the Audit
Committee report for the year ended 31 December 2022. The
Audit Committee is responsible for ensuring that the financial
performance of the Group is properly reported and reviewed.
Its role includes: monitoring the integrity of the financial statements (including annual and interim accounts
and results announcements), monitoring the work of the internal audit function, reviewing internal control
and risk management systems, reviewing any changes to accounting policies, reviewing and monitoring the
extent of the non-audit services undertaken by external auditors, and advising on the appointment of external
auditors. The Audit Committee met at three scheduled meetings during the year and also held meetings,
independent of management, with BDO LLP, the Company’s external auditors.
Vijay Thakrar
Non-Executive Director, Audit Committee Chair
DUTIES
REVENUE RECOGNITION
The Committee discussed the treatment of
ROLE OF THE EXTERNAL AUDITOR
The main items of business considered by the Audit
Given the different nature of the Company’s income
Committee during the year included:
streams from FX Risk Management and Alternative
− Review of the 2022 external audit plan and audit
revenue recognition treatment adopted for the
Banking Solutions, the Committee discussed the
engagement letter
− Review of the 2022 internal audit plan and
outputs from its work
− Consideration of key audit matters and how they
are addressed
− Review of the effectiveness of the external
audit process
− Monitoring the integrity of the financial
statements and Annual Report, and of any
trading updates provided externally
− Going concern review
different streams with management and with the
auditors, who have confirmed that the Company’s
treatments accord with relevant accounting
standards.
CREDIT RISK
In light of the changes within the macro-economic
environment in 2022, the Committee discussed the
likelihood of customer defaults and their impact on
the Group’s financial performance. The Committee
discussed with management the processes for
mitigating credit risk and management confirmed that
− Consideration of regulatory developments and
adequate safeguards are in place to reduce the risk of
their impact
customer defaults from arising.
As a result of considering the above matters, the
COMMISSIONS
Committee focused on the following matters
considered to potentially have a material impact on
its financial results.
Commissions are paid to key employees based on a
percentage of revenues. Starting from 1 March 2022, a
new procedure was set up such that the commissions
are adjusted based on the risk profile of the product.
commissions with management who consider
the nature to be in line with industry standards.
The auditors have also reviewed the same and
concluded that the accounting treatment of
commissions is appropriate.
FAIR VALUE OF OPEN TRADES
Accounts receivable include unrealised profits on
open trades as at the year end. The Committee
discussed with management the accounting
treatment applied to determine the fair value
of open positions, who confirmed that the
methodology is consistent with previous years,
and the auditors have also reviewed the same and
concluded that it is appropriate.
CREDIT VALUATION ADJUSTMENT (CVA)
The Committee has discussed with management
the CVA methodology adopted. Management have
confirmed that the CVA methodology is broadly
consistent with previous years, with the addition
of some developments. The auditors have also
reviewed the Company’s CVA and concluded that it
is appropriate.
The external auditor, BDO LLP, was initially appointed
in the financial year to 31 December 2016, following
a formal tender process, and was reappointed at the
Company’s 2020 AGM. As a result of the five-year
rotation policy to enhance auditor independence,
the incumbent audit partner was appointed for the
2021 audit. No changes were made for the 2022
audit to ensure continuity of service. The Audit
Committee monitors the relationship to ensure
that auditor independence and objectivity are
maintained. The Committee is satisfied with BDO’s
independence but will keep under review the need
for an external tender. The breakdown of fees
between audit and non-audit services is provided in
Note 5 of the Group’s financial statements.
The Committee monitors the non-audit fees.
Having reviewed the auditor’s independence and
performance, the Audit Committee recommends
that BDO LLP be reappointed as the Group’s auditor
at the next AGM.
76
77
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022
CORPORATE GOVERNANCE AUDIT COMMITTEE REPORT
Audit Committee Report
Continued
AUDIT PROCESS
The auditor prepares a plan for the audit of the full
period financial statements. The audit plan sets out
the scope of the audit, areas to be targeted, and
audit timetable. This plan is reviewed and agreed
in advance by the Audit Committee. Following the
audit, the auditor presents its findings to the Audit
Committee for discussion, including management
letter points detailing areas for improvement. The
Audit Committee monitors management’s actions in
respect of such recommendations.
INTERNAL AUDIT
In the year ended 31 December 2022 the Group
created an internal audit function, due to the
increasing complexity of the business and
geographical spread. The Committee sanctioned the
appointment of an experienced internal auditor with
relevant industry experience to lead the function,
who commenced employment in February 2022. The
Committee has approved the Internal Audit Charter,
effectively. In particular, the Committee ensures that
the Company’s Chief Risk Officer, who chairs the
Company’s Risk Committee, which meets monthly
to consider the principal risks facing the Company,
presents a regular update of the Risk Committee’s
work to the Board.
WHISTLEBLOWING
The Group has a whistleblowing policy which enables
employees of the Group to confidentially report
matters of concern.
OUR PRIORITIES FOR THE YEAR AHEAD
During 2023, the Committee will focus on:
− Assessing the workstream, effectiveness and
composition of the new internal audit function.
− Continuing to assess any ongoing changes to
the regulatory environment, business practices
and risk profile of the Group.
Internal Audit Policy, and established a direct and
− Considering the reporting of the Group’s
open line of communication between the Audit Chair
performance to ensure it continues to align with
and the Head of Audit. The Committee also approved
the way the business is run.
and oversaw an Internal Audit plan for 2022. This
plan was executed independently from the Alpha
management team, with any findings arising from
audit activity reported to the Audit Committee.
− Continuing to monitor with the Board, as
a whole, the risks facing the Company and
ensuring that appropriate resources and
experience are provided to help mitigate these.
Vijay Thakar
Non-Executive Director
Audit Committee Chair
RISK MANAGEMENT AND INTERNAL CONTROLS
As described on page 74 of the corporate governance
report, the Group has established a framework of
risk management and internal control systems,
policies and procedures. The Board as a whole is
responsible for reviewing the risk management and
internal control framework and ensuring that it
operates effectively. During the year, on behalf of the
Board, the Committee has reviewed the framework,
and the Committee is satisfied that the internal
control systems in place are currently operating
78
79
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022
Remuneration Committee Report
Lisa Gordon
Non-Executive Director
I am pleased to present the 2022 remuneration report, which
sets out the remuneration policy and the remuneration paid
to the Directors for the year. Alpha Group International plc is
listed on the Alternative Investment Market (AIM) and, as such,
in the interests of transparency, the following disclosures are
prepared on a voluntary basis for the Group.
MEMBERS OF THE REMUNERATION COMMITTEE
EXECUTIVE DIRECTORS’ SERVICE CONTRACTS
Details of the Remuneration Committee are provided
in the Corporate Governance Statement.
Executive
Director
Required written notice
by both the Company
and individuals
REMUNERATION POLICY
Morgan Tillbrook
12 months
The Group’s policy is that the Executive Directors’
remuneration package should be sufficiently
competitive to attract, retain and motivate those
Directors to achieve the Group’s objectives without
making excessive payments. Remuneration is
reviewed each year in light of the Group’s business
objectives. The Remuneration Committee’s intention
is that remuneration should reward achievement of
objectives and that these align with shareholder’s
Tim Powell
6 months
Tim Butters
6 months
NON-EXECUTIVE DIRECTORS SERVICE
CONTRACTS
interests over the medium-term. Remuneration
The Non-Executive Directors do not have service
consists of a basic salary, performance-related
contracts but are appointed under letters of
bonus, long-term incentive plan and pension
appointment. Appointment letters are intended to
contributions.
be for a two-year term. No compensation is payable
in the event of a Non-Executive not being re-elected.
Performance-related bonuses are based on
The Board determines the terms and conditions of
achievement of the Group’s budget for both revenue
the Non-Executive Directors.
and profit, both of which are key KPIs for the Group.
The Committee ensures that the balance between
fixed and variable remuneration helps to ensure
DIRECTORS’ REMUNERATION
objectives are aligned. The Committee believes that
The table on the following page summarises the total
the dual focus on revenue and profit performance is
gross remuneration of the Directors who served in
integral to ensuring delivery of shareholder value.
the year ended 31 December 2022.
80
CORPORATE GOVERNANCE REMUNERATION COMMITTEE REPORT
Lisa Gordon
Non-Executive Director, Remuneration Committee Chair
BASE SALARY INCREASE
believes that the best outcome for all stakeholders
The only changes made to Director’s Remuneration in
2022 was to increase the salary of the CFO, Tim Kidd,
from £225,000 to £250,000 and the CRO, Tim Butters,
from £160,000 to £200,000. The Committee carried
out a review where Directors’ Remuneration was
benchmarked against businesses in a similar sector
and/or delivering similar growth and returns for
shareholders. In light of this review, it was concluded
that the salaries of Tim Butters and Tim Kidd were
not aligned to these benchmarks. The Committee
was to increase base salary to a level where it is
aligned to the wider market. The Committee will
continue to undertake an annual benchmark review.
Tim Powell was appointed to the Board on 5
December 2022. His salary for the year ended 31
December 2022 was £225,000. This has been
apportioned in the following table from the date of
his appointment.
YEAR ENDED 31 DECEMBER 2022
Basic
salary /fee
Bonus*
Pension
Share-based
payment
EXECUTIVE
£
£
Morgan Tillbrook
500,000
500,000
Tim Kidd
(resigned 5
December 2022)
Tim Butters
Tim Powell
(appointed 5
December 2022)
NON-EXECUTIVE
Clive Kahn
Lisa Gordon
Vijay Thakrar
232,192
174,144
200,000
16,331
52,500
52,500
52,500
–
–
–
–
–
£
3,557
–
3,750
–
–
–
–
£
–
–
Other
£
Total
£
5,130
1,008,687
1,318
407,654
23,894
15,928
819
–
228,463
32,259
–
–
–
–
–
–
52,500
52,500
52,500
81
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022
Remuneration Committee Report
Continued
YEAR ENDED 31 DECEMBER 2021
DIRECTORS’ SHAREHOLDING AND SHARE INTERESTS
CORPORATE GOVERNANCE REMUNERATION COMMITTEE REPORT
Basic
salary /fee
Bonus*
Pension
Share-based
payment
EXECUTIVE
£
£
Morgan Tillbrook
500,000
187,500
Tim Kidd
225,000
84,375
Tim Butters
(appointed 7 October
2021)
NON-EXECUTIVE
Clive Kahn
Lisa Gordon
Vijay Thakrar
(appointed 19 May
2021)
37,699
7,068
45,000
45,000
27,808
–
–
–
£
2,813
–
663
–
–
–
£
–
–
Other
£
3,871
3,288
Total
£
694,184
312,663
2,168
177
47,775
–
–
–
–
45,000
1,258
–
46,258
27,808
*The bonus arrangement for Morgan Tillbrook and Tim Kidd for the year ended 31 December 2022 was a maximum bonus of 200% of basic
salary for Morgan Tillbrook and 150% for Tim Kidd, based on the Group’s achievement against key performance indicators (year ended 31
December 2021: bonus awarded was 50% of basic salary).
For the Executives, the Annual Bonus Plan is based
The highest paid Director was paid £1,008,687 during
on the Groups achievement against key performance
the year (2021: £694,184). The average earnings within
indicators. The calculation is aligned to revenue and
the Group for the year ending 31 December 2022
profit growth, with a maximum bonus requiring the
excluding Directors was £72,707 (2021: £78,259).
Group to achieve a minimum outperformance of 25%
above its internal budget.
The Executive remuneration policy for the year ended
December 2023 is set out in the table below:
EXECUTIVE
Morgan Tillbrook
Tim Powell
Tim Butters
Base salary
£
Maximum bonus
%
500,000
225,000
250,000
200%
125%
Nil
Pension
£
3,750
3,750
3,750
The following table summarises the shareholding and share interests of the Directors at 31 December 2022.
AS AT 31 DECEMBER 2022
BENEFICIALLY OWNED
EXECUTIVE
Morgan Tillbrook
Tim Butters
Tim Powell
NON-EXECUTIVE
Clive Kahn
Lisa Gordon
Vijay Thakrar
6,823,644
22,998
–
355,000
25,665
2,400
Tim Butters is a participant in the E and F Growth
A resolution to accept the Remuneration Committee
Share Schemes. Full details of the scheme are
Report will be put to shareholders at the Annual
provided in Note 24 of the Consolidated Financial
General Meeting, and the Committee will conduct a
Statements. Following the revenue growth target
full annual review of the policy.
of 25% being met for the year ended 31 December
2021, he was awarded 23,010 shares in March 2022.
Following the revenue growth target of 20% being
met for the year ended 31 December 2022, it is
estimated that upon exercise of the put options, he
Lisa Gordon
will receive 22,641 shares in March 2023.
Non -Executive Director
Remuneration Committee Chair
At 31 December 2022 Tim Powell had no beneficial
interest in the shares of the Company. He is a
participant in the F Growth Share Scheme which was
established prior to his appointment as a Director.
Full details of the scheme are provided in Note 24 of
the Consolidated Financial Statements.
82
83
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022
Directors’ Report
The Directors present their Annual Report and the audited
financial statements for the year ended 31 December 2022.
The corporate governance statement on page 68 also forms
part of this Director’s Report.
BUSINESS REVIEW
An analysis of the Group’s development (including
likely future developments) and performance is
contained in the Chairman’s Statement, CEO’s
Statement and Our Strategy. Information on
the financial risk management strategy of the
Group and its exposure to its principal risks &
uncertainties section of the report on page 44.
PRINCIPAL ACTIVITY
Alpha Group International plc (the “Company”) is a
public limited company incorporated and domiciled
in England and Wales. The registered office of the
Company is Brunel Building, 2 Canalside Walk,
London W2 1DG. The registered company number
is 07262416. The Company presents a list of its
subsidiaries in note 14.
The Company’s principal activity is the
development of financial strategies and
technologies for global corporates and institutions
covering: FX risk management, mass payments and
account openings.
RESULTS AND DIVIDEND
Non-Executive
Clive Kahn
Lisa Gordon
Vijay Thakrar
Biographical details, along with committee
responsibilities, are provided on page 66.
DIRECTORS’ INTERESTS
The Directors’ interests in the Group’s shares and
options over ordinary shares are shown in the
remuneration report on page 83.
CHARITABLE DONATIONS
The Group put on a number of charitable events
throughout the year with employees, which resulted
in c. £4,500 of employee donations to the company’s
fundraising account, alongside a Group donation of
£1,972. Most funds however are raised directly via
employees’ individual fundraising pages.
POLITICAL DONATIONS
The Group has not made any political donations in the
past, nor does it intend to make them in the future.
The Group shows its results for the year in the
statement of comprehensive income on page 98.
ENVIRONMENT
Details of the proposed final dividend for the year
The Group believes in minimising its impact to the
are included on page 120.
DIRECTORS
The Directors of the Company during the year were:
Executive
Morgan Tillbrook
Tim Kidd (resigned 5 December 2022)
Tim Butters
Tim Powell (appointed 5 December 2022)
84
environment where possible and is a certified carbon
neutral company. More details on the measures it has
taken are set out on page 60.
EQUAL OPPORTUNITIES
We are committed to ensuring our workplace is equal,
diverse and inclusive. We operate a true meritocracy,
recruiting and promoting staff based on their attitude,
CORPORATE GOVERNANCE DIRECTORS REPORT
skills and experience. We do not discriminate
FINANCIAL INSTRUMENTS
between employees or prospective employees
on the grounds of age, race, disability, religion,
gender, education, or any other criteria. We are also
committed to ensuring all employees feel respected
and are able to perform to the best of their ability.
The financial risk management objectives and
policies of the Group, including credit risk, market
risk, liquidity risk, interest rate risk and currency risk,
are provided in note 17 to the Consolidated Financial
Statements.
EVENTS AFTER THE REPORTING PERIOD
SHARE CAPITAL STRUCTURE
On 17 February 2023, the Group entered into an
interest rate swap for a notional amount of up to
$400m to fix the rate of interest receivable on US
Dollar cash balances held in respect of the Group’s
client cash balances. With the interest rate swap,
the Group receives a fixed rate of interest and pays a
Details of changes in the Group’s share capital are
disclosed in note 20 of the Consolidated Financial
Statements.
SHARE OPTIONS SCHEMES
floating interest rate based on SOFR, the difference
Details of employee share schemes are set out in
between the rates results in the Group receiving a
note 24 to the Consolidated Financial Statements.
fixed rate of interest. The contract commences in
August 2023 and expires in August 2025 with a net
interest rate receivable of 4.14%. Hedge accounting is
applied in accordance with IFRS 9.
PURCHASE OF OWN SHARES
There was no purchase of own shares in the period.
Following the vesting of the B Growth Share Scheme
GOING CONCERN
for the year ended 31 December 2021, the Company
will be issuing 549,137 shares in March 2023 and
88,015 shares in March 2025 to an ex-employee as
part of a settlement agreement.
Following the vesting of the C Growth Share Scheme
for the year ended 31 December 2022, the Company
will be issuing 171,810 shares in March 2023.
Following the vesting of the E Growth Share Scheme
for the year ended 31 December 2022, the Company
will be issuing 161,064 shares in March 2023.
Following the second year of vesting of the Alpha
FX Institutional Limited share scheme for the year
ended 31 December 2022, the Company will be
issuing 123,768 shares in March 2023.
Following the first year of vesting of the Alpha
Foreign Exchange (Canada) Limited share scheme for
the year ended 31 December 2022, the Company will
be issuing 8,395 shares in March 2023.
As described in note 2 of the financial statements,
the Group has carried out a Going Concern
assessment. The Directors believe the Group is
in a strong financial position due to its profitable
operations and strong cash generation, and therefore
that the Group has adequate resources to continue
its operations for the foreseeable future. For this
reason, they continue to adopt the going concern
basis in preparing the financial statements.
RESEARCH & DEVELOPMENT
The Company has a continuous programme of
development expenditure as part of its focus on
evolving its service offering through technological
innovation. Capitalised internal development
expenditure is disclosed in note 11 of the accounts.
All other development expenditure is recognised in
the Statement of Comprehensive income.
BRANCHES
The Group has three branches outside of the United
Following the first year of the vesting for the D Share
Kingdom located in The Netherlands, Italy and
scheme for the year ended 31 December 2022, the
Australia.
Company will be issuing 111,085 shares in March 2023.
85
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022 CORPORATE GOVERNANCE DIRECTORS REPORT
the Company’s website is the responsibility of the
Directors. The Directors’ responsibility also extends
to the ongoing integrity of the financial statements
contained therein.
By order of the board
Simon Kang
Company Secretary
21 March 2023
Directors Report
Continued
FUTURE DEVELOPMENTS
Company law requires the Directors to prepare financial
WEBSITE PUBLICATION
The Directors are responsible for ensuring the
annual report and the financial statements are made
available on a website. Financial statements are
published on the Company’s website in accordance
with legislation in the United Kingdom governing
the preparation and dissemination of financial
statements, which may vary from legislation in other
jurisdictions. The maintenance and integrity of
The board intends to continue to pursue the
business strategy as outlined in the strategic report
on page 21.
STAKEHOLDER INVOLVEMENT POLICIES
The Directors believe that the involvement of
employees, clients and suppliers is an integral
part of the Group’s culture and plays a key part in
its decision making and growth to date. For more
information, view pages 55-59.
AUDITOR AND DISCLOSURE OF INFORMATION
TO AUDITOR
statements for each financial year. Under that law the
Directors have elected to prepare the Consolidated
Financial Statements in accordance with UK adopted
International Accounting Standards in conformity with
the requirements of the Companies Act 2006. 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 and profit
or loss of the Group and the Company for the period.
The Directors are also required to prepare financial
statements in accordance with the rules of the London
Stock Exchange for companies trading securities on the
Alternative Investment Market.
In preparing these financial statements, the Directors
BDO LLP were appointed as auditors on 7 December
are required to:
2016 and are continuing in office. In accordance
with s489(4) of the Companies Act 2006 a resolution
−
select suitable accounting policies and then apply
for their reappointment will be proposed at the
them consistently;
forthcoming Annual General Meeting.
As far as the Directors are aware, there is no
relevant audit information of which the Company’s
auditor is unaware, and each Director has taken all
reasonable steps that he or she ought to have taken
to make himself or herself aware of any relevant
audit information and to establish that the Group’s
− make judgements and accounting estimates that
are reasonable and prudent;
−
state whether they have been prepared in
accordance with UK adopted international
accounting standards subject to any material
departures disclosed and explained in the financial
statements; and
auditors are aware of this information.
− prepare the financial statements on the going
ANNUAL GENERAL MEETING
The Annual General Meeting will be held at 9.00am
on 17 May 2023 at the offices of Bird & Bird LLP,
12 New Fetter Lane, London EC4A 1JP. The Notice of
Annual General Meeting and the ordinary and special
resolutions to be put to the meeting are mailed with
hard copies of this report, or are available to view on
our website.
STATEMENT OF DIRECTORS RESPONSIBILITIES
The Directors are responsible for preparing the
Annual Report and the financial statements in
accordance with applicable law and regulations.
concern basis unless it is appropriate to presume
that the Company will continue in business.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the company’s transactions and disclose
with reasonable accuracy at any time the company’s
financial position and enable them to ensure that the
financial statements comply with the requirements of
the Companies Act 2006. They are also responsible
for safeguarding the assets of the Company and hence
for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
86
87
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022 Independent auditor’s report
To the members of Alpha Group
International Plc
Opinion on the financial statements
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 December 2022 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
Kingdom Accounting Standards, including Financial
Reporting Standard 101 Reduced Disclosure
Framework (United Kingdom Generally Accepted
Accounting Practice).
BASIS FOR OPINION
We conducted our audit in accordance with
International Standards on Auditing (UK) (ISAs (UK))
and applicable law. Our responsibilities under those
standards are further described in the Auditor’s
United Kingdom Generally Accepted Accounting
responsibilities for the audit of the financial
Practice; and
− the financial statements have been prepared
in accordance with the requirements of the
Companies Act 2006.
We have audited the financial statements of Alpha
Group International Plc (the ‘Parent Company’)
and its subsidiaries (the ‘Group’) for the year
ended 31 December 2022 which comprise the
Consolidated Statement of Comprehensive Income,
the Consolidated Statement of Financial Position,
the Consolidated Statement of Cash Flows, the
Consolidated Statement of Changes in Equity,
statements section of our report. We believe that
the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.
Independence
We remain independent of the Group and the
Parent Company in accordance with the ethical
requirements that are relevant to our audit of the
financial statements in the UK, including the FRC’s
Ethical Standard as applied to listed entities, and
we have fulfilled our other ethical responsibilities in
accordance with these requirements.
CORPORATE GOVERNANCE INDEPENDENT AUDITOR’S REPORT
− We considered the risks identified and
independent sources. We also performed
judgements made by the Directors as most
retrospective testing to compare prior year’s
likely to adversely affect the Group’s and
forecasts to current year actual results to
Parent Company’s available financial resources
evaluate the reliability and reasonableness of
and challenged the Directors on their
historic forecasts.
appropriateness based on our understanding of
the business, results of our audit work and the
relevant macro economic factors.
−
The risks and judgement the Directors
considered as most likely to impact the
business and where we challenged were:
− A major client default or loss of a major client:
In doing so we considered the reduced client
concentration risk in the forward and options
business based on revenue.
− Free cash position: We reviewed the Directors
cash flow forecast for a period of at least 12
months from the date of signing these financial
statements. We reviewed the Directors
downside scenario considering the impact of
rising interest rates, inflation and contraction in
the UK economy on the operations and Group’s
internal forecast including related assumptions.
−
Impact of climate risks on long-term strategy,
financial projections, and viability of the
business.
− Reasonableness of bad debt provisions and
valuation adjustments including credit value
adjustments (CVA).
− We also considered the adequacy of the Group’s
capital regulatory requirements.
Based on the work we have performed, we have
not identified any material uncertainties relating to
events or conditions that, individually or collectively,
may cast significant doubt on the Group and the
Parent Company’s ability to continue as a going
concern for a period of at least twelve months from
when the financial statements are authorised for
issue.
− Reliability of the forecasts prepared by the
Directors were compared to relevant published
data and to data obtained from reputable
Our responsibilities and the responsibilities of
the Directors with respect to going concern are
described in the relevant sections of this report.
COVERAGE
96% (2021: 97%) of Group profit before tax
100% (2021: 99%) of Group revenue
100% (2021: 100%) of Group total assets
the Company Statement of Financial Position, the
CONCLUSIONS RELATING TO GOING CONCERN
KEY AUDIT MATTERS
2022
2021
Company Statement of Changes in Equity and notes
to the financial statements, including a summary of
significant accounting policies. The financial reporting
framework that has been applied in the preparation
of the Group financial statements is applicable law
and UK adopted international accounting standards.
The financial reporting framework that has been
applied in the preparation of the Parent Company
financial statements is applicable law and United
In auditing the financial statements, we have
concluded that the Directors’ use of the going
concern basis of accounting in the preparation
of the financial statements is appropriate. Our
evaluation of the Directors’ assessment of the
Group and the Parent Company’s ability to continue
to adopt the going concern basis of accounting
included:
Existence and accuracy of revenue
Appropriateness of Credit Value Adjustments (CVA)
Fair value of growth shares
MATERIALITY
Group financial statements as a whole
£1.9 million (2021: £1.7 million) based on 5% of profit before tax less other
operating income (2021: 5% of profit before tax).
88
89
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022 Independent auditor’s report
Independent auditor’s report
Continued
Continued
AN OVERVIEW OF THE SCOPE OF OUR AUDIT
Our involvement with component auditors
KEY AUDIT MATTER
HOW THE SCOPE OF OUR AUDIT ADDRESSED
THE KEY AUDIT MATTER
CORPORATE GOVERNANCE INDEPENDENT AUDITOR’S REPORT
Our Group audit was scoped by obtaining an
For the work performed by component auditors,
understanding of the Group and its environment,
we determined the level of involvement needed
including the Group’s system of internal control, and
in order to be able to conclude whether sufficient
assessing the risks of material misstatement in the
appropriate audit evidence has been obtained
financial statements. We also addressed the risk of
as a basis for our opinion on the Group financial
management override of internal controls, including
statements as a whole. Our involvement with
assessing whether there was evidence of bias by
component auditors included the following:
the Directors that may have represented a risk of
material misstatement.
The Group comprises the Parent Company and 14
subsidiaries (2021: 10). Alpha Group International Plc,
−
Instructions were issued to the component
auditors detailing the scope, the risk
assessment, timing of their work and the
allocated component materiality thresholds;
Alpha FX Limited. Alpha FX Institutional Limited and
− We conducted numerous virtual meetings
Alpha FX Europe Limited have been determined to
be significant components. With the exception of
Alpha FX Europe Limited, the audits of all significant
components were performed by the Group
engagement team. The audit of Alpha FX Europe
Limited was performed by our network firm in
Malta with the Group engagement team performing
additional specific audit procedures on material
through the planning, execution and completion
stages of the audit;
− We performed a detailed review of the submitted
reporting deliverables and reviewed the work
undertaken by our component auditor by
reviewing their working papers, and findings
where necessary.
financial statements areas.
Key audit matters
We determined that the Alpha Foreign Exchange
(Canada) Limited and Alpha FX Italy Limited were
not significant component for the purposes of
the Group audit. For these entities, specific audit
procedures on material financial statements areas
were performed by the Group engagement team.
The financial information of Alpha FX Netherlands,
a non-significant component, was subject to review
procedures performed by the Group engagement
Key audit matters are those matters that, in our
professional judgement, were of most significance in
our audit of the financial statements of the current
period and include the most significant assessed
risks of material misstatement (whether or not due to
fraud) that we identified, 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
team. All other entities are not trading currently or
statements as a whole, and in forming our opinion
are dormant and have no impact on the Group audit.
thereon, and we do not provide a separate opinion on
these matters.
Existence and
The risk relating to the FX Hedging
Our procedures included the following:
accuracy of revenue
revenue stream revolves around the
existence and accuracy of revenue
The Group’s revenue
recorded in the year. Existence refers
recognition policy
to the risk that trades did not occur
is included with the
or were overstated, accuracy refers to
accounting policies in
the risk that calculations identifying
note 2 and segment
the revenue amounts to be recorded
reporting on revenue
contain errors.
is included in note 4
The Group’s reported FX Hedging
revenue drives the level of sales
commissions payable to front office
staff and is a key metric in the Group’s
Growth Share Scheme used to
incentivise directors, key Management
and certain staff, which further
increases the risk over the existence of
revenue recognised.
For Alternative Banking Solutions, the
risk lies in the payments revenue which
is recognised on a monthly basis in line
with the minimum monthly fee agreed
with customers subject to adjustments
for other fees e.g. monthly bank
charges based on volume collections
or payments transactions are added.
There is a risk that the calculations
identifying the revenue amounts to be
recorded contains errors.
For these reasons we considered the
existence and accuracy of revenue to
be a key audit matter.
We reviewed the revenue recognition policy
applied by management to each of the
Group’s revenue streams and considered
its compliance with IFRS15 ‘Revenue from
Contracts with Customers’ with a specific
focus on existence and accuracy of revenue.
For FX Hedging revenue, we tested a sample
of matched principal spot, forward and option
contracts to verify the existence and accuracy
of revenue, with reference to underlying
supporting trade tickets and third party
information recorded with the relevant banking
counterparty. We recalculated the profits
arising from the trades and tested key inputs
into the calculation to the relevant underlying
supporting documents outlined above.
We agreed a sample of the Alternative Banking
Solutions revenue (payments revenue) to
supporting documentation. This included
obtaining revenue confirmations from a
sample of customers on the payments
revenue generated via the Alternative Banking
Solutions Platform to assess the existence and
accuracy of revenue recognised.
Key observations:
Based on the procedures performed we
consider the recognition of revenue to be
appropriate and in line with the requirements
of the reporting framework.
90
91
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022
Independent auditor’s report
Continued
KEY AUDIT MATTER
HOW THE SCOPE OF OUR AUDIT ADDRESSED
THE KEY AUDIT MATTER
Appropriateness
Alpha Group International plc holds
Our procedures included the following:
of Credit Value
a large open forward book of trades
adjustment- CVA
not yet settled at year end. Under
We performed credit reviews on a sample basis
accounting standards any open
to confirm that the credit ratings which are a
The Group’s
derivative positions at year end are
key input into the CVA calculation are accurate
accounting policy
required to be held at fair value.
and in compliance with the credit risk rating
is included with the
methodology. This included reviewing external
accounting policies
At each reporting date management
information supporting the ratings. Our sample
note 2 and the
reassess the fair value of open
covered all risk bands allotted by management.
significant judgments
trades, which includes adjusting
in relation to Credit
the carrying value of the forward
With the assistance of our internal valuations
valuation adjustment
book with reference to their mark to
experts we assessed the appropriateness of
is set out in note 3
market forward rates as well as an
the CVA methodology and related assumptions.
assessment of the credit worthiness of
We performed a recalculation of the credit
their counterparties along with other
valuation adjustment and compared against
inputs. The amount of the adjustment
Management’s own assessment. We also
represents the difference between
checked that the calculations are in line with
the net carrying amount and the value
the CVA methodology.
of the future expected cash flows
associated with the receivables.
With the assistance of our internal valuations
experts we also assessed whether the input
Management is required to exercise
data from external parties is appropriate and is
a significant level of judgement in
reflective of the risk faced by the Group.
their assessment of the credit value
adjustment which involves key inputs
We considered the alternative scenarios and
with high estimation uncertainty. This
sensitivities provided by management which
presents a significant risk of material
included adjusting key inputs of CVA with
misstatement in the appropriateness
reasonable alternative changes to ascertain
of the credit value adjustment and
reasonableness of CVA inputs and their impact
completeness and accuracy of data in
on CVA as a whole.
the CVA model.
We assessed the completeness and accuracy of
input data in the model to underlying supporting
documentation on a sample basis with specific
focus of two way testing (tracing data and inputs
from source to model and model to source) on
credit risk rating, mark to market (MTM) rates
and other trade specific data.
Key observations:
Based on the procedures performed we
consider the CVA Methodology (including
related assumptions) to be reasonable.
92
CORPORATE GOVERNANCE INDEPENDENT AUDITOR’S REPORT
KEY AUDIT MATTER
HOW THE SCOPE OF OUR AUDIT ADDRESSED
THE KEY AUDIT MATTER
Fair value of growth
During the year, the Group issued five
With the assistance of our internal valuations
shares
new share schemes.
experts we assessed the fair value valuation of “F,
G, H, Alpha FX Institutional Limited, Alpha Foreign
See Note 2 on
The key input is the fair value applied
Exchange (Canada) Limited share schemes” by
accounting policy
to the new growth shares schemes
on Share based
which is highly subjective and requires
performing the following procedures:
− Assessing the appropriateness of the
payments and note
use of Management judgment and
methodology and model used;
24 for additional
estimates which inherently creates
disclosures
the risk of material misstatement
in respect of valuations applied to
the schemes. For certain schemes,
Management uses their own expert for
assessing the fair value of these share
schemes.
− Comparing market inputs used to information
independently sourced from Bloomberg and
S&P Capital IQ; and
− Calculating the fair value of the options at
each grant date using appropriate inputs and
a recognised model in order to provide a fair
value crosscheck of the options.
Accounting for growth shares under
With the assistance of our internal valuations
IFRS2 Share based payments is
complex of which the risk of error
is further heightened by added
complexity due to the modifications
to the existing share schemes.
Other assumptions include volatility
assumption, risk free rate, expected
life among others.
The disclosures needed in respect
of these schemes are also complex,
creating a presentation risk in the
financial statements. In addition
certain disclosures are required by
the Companies Act 2006 and IAS24
for transactions with Directors and
Related Parties.
We have therefore identified the fair
value of growth shares as a key audit
matter
experts we have reviewed managements
experts work on share schemes including
challenging management on the appropriate
accounting treatment of these shares and related
modifications. In addition we determined whether
the vesting criteria are met as per terms and
conditions of the share scheme agreement.
We performed a review of the share issue
documents such as agreements and related
accounting entries in respect of new and existing
share schemes, including the share option charges
relating to the current year.
We corroborated management forecasts with our
work in going concern and other areas to ascertain
whether managements forecast used for the
fair value of growth shares is consistent across
different financial statement areas.
We reviewed the disclosures made by
Management to confirm if they were consistent
with our audit work performed and in line with the
requirements of the relevant accounting standard.
Key observations:
Based on our audit work performed, we consider
the judgements and estimates made by
management in the valuation of growth shares to
be reasonable and the related disclosures to be
appropriate.
93
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022 Independent auditor’s report
Continued
OUR APPLICATION OF MATERIALITY
immaterial as we also take account of the nature
We apply the concept of materiality both in planning
and performing our audit, and in evaluating the
effect of misstatements. We consider materiality to
be the magnitude by which misstatements, including
omissions, could influence the economic decisions of
reasonable users that are taken on the basis of the
financial statements.
In order to reduce to an appropriately low level
the probability that any misstatements exceed
materiality, we use a lower materiality level,
performance materiality, to determine the extent of
testing needed. Importantly, misstatements below
these levels will not necessarily be evaluated as
of identified misstatements, and the particular
circumstances of their occurrence, when evaluating
their effect on the financial statements as a whole.
Based on our professional judgement, we determined
materiality for the financial statements as a whole
and performance materiality as shown below:
Component materiality
We set materiality for each significant component
of the Group based on a percentage of between 7%
and 95% (2021: 8% and 95%) of Group materiality
dependent on the size and our assessment of the
risk of material misstatement of that component.
CORPORATE GOVERNANCE INDEPENDENT AUDITOR’S REPORT
Component materiality ranged from £0.132 million
the extent otherwise explicitly stated in our report,
to £1.8 million (2021: £0.14 million to £1.6 million). In
we do not express any form of assurance conclusion
the audit of each component, we further applied
thereon. Our responsibility is to read the other
performance materiality levels of 65% (2021: 65%)
information and, in doing so, consider whether the
of the component materiality to our testing to
other information is materially inconsistent with the
ensure that the risk of errors exceeding component
financial statements, or our knowledge obtained in
materiality was appropriately mitigated.
the course of the audit, or otherwise appears to be
Reporting threshold
materially misstated. If we identify such material
inconsistencies or apparent material misstatements,
we are required to determine whether this gives
We agreed with the Audit Committee that we would
rise to a material misstatement in the financial
report to them all individual audit differences in
statements themselves. If, based on the work we
excess of £38.6K (2021: £33.6K). We also agreed to
have performed, we conclude that there is a material
report differences below this threshold that, in our
misstatement of this other information, we are
view, warranted reporting on qualitative grounds.
required to report that fact.
OTHER INFORMATION
We have nothing to report in this regard.
The directors are responsible for the other
OTHER COMPANIES ACT 2006 REPORTING
information. The other information comprises the
information included in the annual report other than
Based on the responsibilities described below and
Group financial statements
Parent company financial statements
the financial statements and our auditor’s report
our work performed during the course of the audit,
2022
£ million
2021
£ million
2022
£ million
2021
£ million
Materiality
1.9
1.7
0.7
1.6
Basis for determining
materiality
5% of Profit before tax
less other operating
income
5% of Profit before
tax
1% of total assets
95% of Group
Materiality
Rationale for the
benchmark applied
Performance
materiality
Basis for determining
performance
materiality
Investors are
the principal
stakeholders and are
primarily interested
in profitability.
The entity is an asset
based entity and
serves as a holding
company for Group
therefore total assets
was considered to
be an appropriate
benchmark.
Limited to a
percentage of Group
materiality based
on our assessment
of component
aggregation risk.
Investors are the
principal stakeholders
and are primarily
interested in profitability.
Due to rising interest
rates, the Group has
earned a significant
amount of interest
income which has been
eliminated to arrive at a
profit more reflective of
investors interest.
1.24
1.1
0.4
1.04
65% of Materiality
65% of Materiality
65% of Materiality
65% of Materiality
This is based on our expected value of known
and likely misstatements in the current year,
and Management’s attitude to proposed
adjustments. The Group has extended its
geographical range and has some complex
estimates involved in the financial statements.
This is based on our expected value of known
and likely misstatements in the current year,
and Management’s attitude to proposed
adjustments.
thereon. Our opinion on the financial statements
we are required by the Companies Act 2006 and ISAs
does not cover the other information and, except to
(UK) to report on certain opinions and matters as
described below.
Strategic report and
Directors’ report
In our opinion, based on the work undertaken in the course of the audit:
− the information given in the Strategic report and the Directors’ report for the
financial year for which the financial statements are prepared is consistent with
the financial statements; and
− the Strategic report and the Directors’ report have been prepared in accordance
with applicable legal requirements.
In the light of the knowledge and understanding of the Group and Parent Company and
its environment obtained in the course of the audit, we have not identified material
misstatements in the strategic report or the Directors’ report.
Matters on which we
We have nothing to report in respect of the following matters in relation to which the
are required to report
by exception
Companies Act 2006 requires us 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.
94
95
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022 Independent auditor’s report
Continued
RESPONSIBILITIES OF DIRECTORS
respect of irregularities, including fraud. The extent
As explained more fully in the Statement of Directors’
Responsibilities, the Directors are responsible for
the preparation of the financial statements and
for being satisfied that they give a true and fair
view, and for such internal control as the Directors
determine is necessary to enable the preparation
of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors
are responsible for assessing the Group’s and the
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 the Directors either intend to
liquidate the Group or the Parent Company or to
cease operations, or have no realistic alternative but
to do so.
to which our procedures are capable of detecting
irregularities, including fraud is detailed below:
We gained an understanding of the legal and
regulatory framework applicable to the Group
and Parent Company, and the industry in which it
operates and considered the risk of acts by the
Group and Parent Company which would be contrary
to applicable laws and regulations, including fraud.
These included but were not limited to compliance
with the Companies Act 2006, the applicable
accounting standards, AIM Rules, Corporation Tax
Act 2010 and the Financial Conduct Authority (FCA)
regulations.
We assessed compliance with applicable laws and
regulations and performed audit procedures on
these areas as considered necessary.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF
Our procedures included:
THE FINANCIAL STATEMENTS
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 an auditor’s report
that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a 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
− enquiry with the management and those charged
with governance regarding how the Group and
Parent Company is complying with those legal and
regulatory frameworks and whether there were any
known instances of non-compliance, or any actual,
suspected or alleged fraud;
− assessment of the Group’s compliance with
applicable taxation regulations with the assistance
of tax specialists;
and are considered material if, individually or in the
− review of board and audit committee meeting
aggregate, they could reasonably be expected to
minutes for any known instances of non-compliance,
influence the economic decisions of users taken on
or any actual, suspected or alleged fraud; and
the basis of these financial statements.
− review of legal correspondence and those from the
regulator for any instances of non-compliance with
Extent to which the audit was capable of detecting
laws and regulations.
irregularities, including fraud
Irregularities, including fraud, are instances of
non-compliance with laws and regulations. We
design procedures in line with our responsibilities,
outlined above, to detect material misstatements in
We performed risk assessment procedures to
identify the risk of material misstatement due
to irregularities including fraud (fraud risks) and
identified events or conditions that could indicate
an incentive or pressure to commit fraud or provide
CORPORATE GOVERNANCE INDEPENDENT AUDITOR’S REPORT
an opportunity to commit fraud. We identified the
A further description of our responsibilities is
areas most susceptible to fraud to be management
available on the Financial Reporting Council’s
override of controls, revenue recognition (existence
website at: www.frc.org.uk/auditorsresponsibilities.
and accuracy) including the related traders
This description forms part of our auditor’s report.
commission earned on the FX Hedging revenue.
Our procedures in response to the above included:
USE OF OUR REPORT
This report is made solely to the Parent 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
Parent 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 Parent Company and the
Parent Company’s members as a body, for our audit
work, for this report, or for the opinions we have
formed.
Justin Chait (Senior Statutory Auditor)
For and on behalf of BDO LLP,
Statutory Auditor
London, UK
21 March 2023
BDO LLP is a limited liability partnership registered
in England and Wales (with registered number
OC305127).
− The procedures set out in the key audit matters
section of our report;
− In addressing the risk of fraud through management
override of controls, we tested the appropriateness
of a sample of journal entries and other adjustments
in the general ledger by agreeing to supporting
documentation and evaluated the business rationale
of any significant transactions that were unusual or
outside the normal course of business and testing
of accounting estimates due to risk of management
bias; and
− Incorporating unpredictability procedures into our
audit approach.
We communicated relevant identified laws
and regulations and potential fraud risks to all
engagement team members including component
engagement teams and remained alert to any
indications of fraud or non-compliance with laws and
regulations throughout the audit. We also reviewed
the result of component audit teams procedures
performed in this regard.
Our audit procedures were designed to respond
to risks of material misstatement in the financial
statements, recognising that the risk of not detecting
a material misstatement due to fraud is higher than
the risk of not detecting one resulting from error,
as fraud may involve deliberate concealment by,
for example, forgery, misrepresentations or through
collusion. There are inherent limitations in the audit
procedures performed and the further removed
non-compliance with laws and regulations is from
the events and transactions reflected in the financial
statements, the less likely we are to become aware
of it.
96
97
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2022
Consolidated Statement of Financial Position
As at 31 December 2022
Company number: 07262416
Year ended
31 December 2022
Year ended
31 December 2021
As at
31 December 2022
As at
31 December 2021
FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF FINANCIAL POSITION
REVENUE
Other operating income
Operating expenses
OPERATING PROFIT
Underlying operating profit
Other operating income
Share-based payments expense
Finance income
Finance expenses
PROFIT BEFORE TAXATION
Underlying profit before taxation
Other operating income
Share-based payments expense
Taxation
PROFIT FOR THE YEAR
Attributable to:
Equity holders of the parent
Non-controlling interests
PROFIT FOR THE YEAR
OTHER COMPREHENSIVE INCOME:
Items that may be reclassified to the profit or loss:
Exchange gain/(loss) on translation of foreign operations
Loss recognised on hedging instruments
Tax relating to items that may be reclassified
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
Attributable to:
Equity holders of the parent
Non-controlling interests
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
Earnings per share attributable to equity owners of the parent
(pence per share)
− basic
− diluted
− underlying basic
− underlying diluted
98
Note
4
4
5
6
6
8
9
9
9
9
£’000
98,332
9,278
(60,722)
46,888
38,274
9,278
(664)
784
(458)
47,214
38,600
9,278
(664)
(8,164)
39,050
36,372
2,678
39,050
1,382
(639)
160
39,953
37,275
2,678
39,953
86.8p
83.8p
70.1p
67.7p
£’000
77,471
-
(44,143)
33,328
33,588
-
(260)
536
(681)
33,183
33,443
-
(260)
(7,140)
26,043
23,531
2,512
26,043
(148)
-
-
25,895
23,383
2,512
25,895
57.7p
55.1p
58.3p
55.7p
NON-CURRENT ASSETS
Intangible assets
Property, plant and equipment
Right-of-use assets
Derivative financial assets
TOTAL NON-CURRENT ASSETS
CURRENT ASSETS
Cash and cash equivalents
Derivative financial assets
Other receivables
Fixed collateral
TOTAL CURRENT ASSETS
TOTAL ASSETS
EQUITY
Share capital
Share premium account
Capital redemption reserve
Merger reserve
Retained earnings
Translation reserve
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
Non-controlling interests
TOTAL EQUITY
CURRENT LIABILITIES
Derivative financial liabilities
Other payables
Deferred income
Lease liability
Current tax liability
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Derivative financial liabilities
Other payables
Deferred tax liability
Lease liability
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
TOTAL EQUITY AND LIABILITIES
Note
11
12
13
15
19
15
18
19
20
20
20
20
20
20
15
22
13
15
22
8
13
£’000
4,814
3,248
11,848
27,819
47,729
136,799
99,119
6,821
4,726
247,465
295,194
84
53,513
4
667
84,220
1,258
139,746
4,707
144,453
42,764
77,272
4,924
1,407
3,781
130,148
7,317
222
1,387
11,667
20,593
150,741
295,194
£’000
2,995
2,323
6,136
17,335
28,789
108,044
58,551
9,807
3,506
179,908
208,697
82
50,783
4
667
54,189
(124)
105,601
4,193
109,794
36,697
39,998
2,193
450
3,847
83,185
7,745
-
1,061
6,912
15,718
98,903
208,697
The Consolidated Financial Statements of Alpha Group International plc were approved by the Board of Directors on
21 March 2023 and signed on its behalf by:
M J Tillbrook
Director
T Powell
Director
99
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022 Consolidated Statement of Cash Flows
For the year ended 31 December 2022
Consolidated Statement of Changes in Equity
For the year ended 31 December 2022
FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Year ended
31 December 2022
Year ended
31 December 2021
Note
£’000
£’000
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before taxation
Other operating income
Finance income
Finance expense
Amortisation of intangible assets
Intangible assets written off
Depreciation of property, plant and equipment
Depreciation of right-of-use assets
Property, plant and equipment written off
Share-based payment expense
(Increase)/decrease in other receivables
Increase/(decrease) in other payables
(Increase) in derivative financial assets
Decrease in financial assets at amortised cost
Increase in derivative financial liabilities
(Increase)/decrease in fixed collateral
CASH INFLOWS FROM OPERATING ACTIVITIES
Other operating income received
Tax paid
NET CASH INFLOWS FROM OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
Payments to acquire property, plant and equipment
Payments to acquire right-of-use assets
Expenditure on intangible assets
NET CASH OUTFLOWS FROM INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Issue of ordinary shares by Parent Company
Issue of shares to non-controlling interests in subsidiary undertakings
Dividends paid to equity owners of the Parent Company
Dividends paid to non-controlling interests
Payment of lease liabilities – principal
Payment of lease liabilities - interest
Net interest received/(paid)
NET CASH (OUTFLOWS) FROM FINANCING ACTIVITIES
INCREASE IN NET CASH AND CASH EQUIVALENTS IN THE YEAR
Net cash and cash equivalents at beginning of year
Net exchange gains/(loss)
NET CASH AND CASH EQUIVALENTS AT END OF YEAR
6
6
11
11
12
13
12
12
11
21
13
13
19
47,214
(9,278)
(784)
458
1,573
43
764
1,154
50
664
(1,547)
40,006
(51,052)
5,803
5,000
(1,220)
38,848
7,490
(7,486)
38,852
(1,739)
(46)
(3,435)
(5,220)
996
46
(4,810)
(1,877)
(891)
(452)
729
(6,259)
27,373
108,044
1,382
136,799
33,183
-
(536)
681
950
121
589
809
-
260
127
(14,235)
(21,894)
11,778
26,851
519
39,203
-
(4,666)
34,537
(661)
-
(1,992)
(2,653)
26
327
(4,505)
(1,739)
(121)
(344)
(308)
(6,664)
25,220
82,972
(148)
108,044
BALANCE AT
1 JANUARY 2021
Profit for the year
Other comprehensive
income
Transactions with owners
Shares issued on vesting
of share option scheme
Issue of shares to non-
controlling interests in
subsidiary undertakings
Shares repurchased from
non-controlling interests
Shares issued in relation to
SAYE share scheme
Forfeiture of shares in
subsidiary
Share-based payments
Dividends paid
BALANCE AT
31 DECEMBER 2021
Profit for the year
Other comprehensive
income
Transactions with owners
Shares issued on vesting
of share option scheme
Issue of shares to non-
controlling interests in
subsidiary undertakings
Issue of shares in relation
to subsidiary earnout
Forfeiture of shares in
subsidiary
Shares issued in relation to
SAYE share scheme
Share-based payments
Dividends paid
BALANCE AT
31 DECEMBER 2022
Share
capital
Share
premium
account
Capital
redemption
reserve
Merger
reserve
Retained
earnings
Translation
reserve
Total
Total
Non-
controlling
interests
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
Attributable to the owners of the Parent
80
50,582
4
667
35,631
24
86,988
3,653
90,641
-
-
2
-
-
-
-
-
-
-
-
175
-
-
26
-
-
-
82
50,783
-
-
2
-
-
-
-
-
-
-
-
-
-
1,906
-
824
-
-
-
-
-
-
-
-
-
-
-
4
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
23,531
-
23,531
2,512
26,043
-
(148)
(148)
-
(148)
(164)
-
56
-
(620)
260
(4,505)
-
-
-
-
-
-
-
13
-
56
26
(13)
-
107
107
(162)
(106)
-
26
(620)
(165)
(785)
260
-
260
(4,505)
(1,739)
(6,244)
667
54,189
(124)
105,601
4,193
109,794
-
36,372
2,678
39,050
1,382
903
-
-
-
-
-
-
-
-
-
36,372
(479)
(2)
-
(1,801)
87
-
664
(4,810)
-
-
903
-
46
46
(105)
-
(228)
(141)
-
-
824
664
-
-
105
87
824
664
-
-
-
-
-
-
-
84
53,513
4
667
84,220
1,258 139,746
4,707
144,453
(4,810)
(1,877)
(6,687)
100
101
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022
1. GENERAL INFORMATION
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Basis of consolidation
The Consolidated Financial Statements consist of the financial statements of the ultimate Parent Company (Alpha Group
International plc) and all entities controlled by the Company (its subsidiaries).
i. Subsidiaries
Where the Company has control over an investee, it is classified as a subsidiary. The Company controls an investee if
all three of the following elements are present: power over the investee, exposure to variable returns from the investee,
and the ability of the investor to use its power to affect those variable returns. Control is reassessed whenever facts and
Alpha Group International plc, formerly Alpha FX Group plc (up until 19 December 2022), (the “Company”) is a public limited
circumstances indicate that there may be a change in any elements of control.
company having listed its shares on AIM, a market operated by The London Stock Exchange, on 7 April 2017. The Company is
incorporated and domiciled in the UK (registered number 07262416) and its registered office is Brunel Building, 2 Canalside
ii. Transactions eliminated on consolidation
Walk, London, England, W2 1DG.
The Consolidated Financial Statements incorporate the results of the Company and its subsidiary undertakings.
The Group’s principal activity is the development of financial strategies and technologies to assist corporates and
institutions in their FX risk management, mass payments and account opening requirements.
The principal accounting policies adopted in the preparation of the Consolidated Financial Statements are set out in note 2.
2. ACCOUNTING POLICIES
Basis of preparation
The Consolidated Financial Statements have been prepared in accordance with UK international accounting standards
using the measurement bases specified by UK IFRS for each type of asset, liability, revenue or expense.
The Consolidated Financial Statements are presented in Pounds Sterling (“£”), and all values are rounded to the nearest
thousand (“£’000”) except where otherwise indicated. The principal accounting policies adopted in the preparation of the
Consolidated Financial Statements are set out below and have been applied consistently throughout all periods presented,
unless otherwise stated.
The preparation of Consolidated Financial Statements in conformity with adopted UK IFRS requires the use of certain
critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s
accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and
estimates are significant to the Consolidated Financial Statements are disclosed in note 3.
The Consolidated Financial Statements are prepared on the historical cost basis except for those detailed within ‘Financial
Instruments’ below.
a)
b)
New standards, interpretations and amendments effective from 1 January 2022:
− There are no new standards, interpretations and amendments which became mandatorily effective for the
current reporting period which have had any material effect on the financial statements of the Group.
New standards, interpretations and amendments not yet effective:
− There are no IFRS interpretations that are not yet effective that would be expected to have a material impact on
the Group.
Intragroup balances, and any gains and losses or income and expenses arising from intragroup transactions, are
eliminated in preparing the consolidated financial information.
iii. Non-controlling interests
Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the Group’s
equity therein. Non-controlling interests consist of the amount of those interests at the date of the original business
combination and the minority’s share of changes in equity since the date of the combination.
In accordance with IFRS 10, the Group recognises any non-controlling interest at the non-controlling interest’s
proportionate share of the acquiree’s net assets on a transaction-by-transaction basis.
The Group treats transactions with the non-controlling interest as transactions with equity owners of the Group. For
purchases from non-controlling interests the difference between the fair value of consideration paid and the relevant
share of net assets acquired is recorded in equity.
Segmental reporting
In accordance with IFRS 8 ‘Operating Segments’, an operating segment is defined as a business activity whose operating
results are reviewed by the chief operating decision makers and for which discrete information is available.
Operating segments are reported in a manner consistent with the internal management reporting provided to the chief
operating decision-makers. The chief operating decision-makers responsible for allocating resources and assessing
performance of the operating segments are identified as the Group’s Chief Executive Officer and Chief Financial Officer.
Going concern
The Board has concluded that it is appropriate to adopt the going concern basis, having undertaken a review of financial
forecasts and available resources. The Group meets its day-to-day working capital requirements through its strong cash
reserves. As at 31 December 2022, the Group had a healthy liquidity position with £136.8m of cash and cash equivalents
(see note 19) of which the Group’s adjusted net cash excluding client funds was £114.4m (see the Financial Review), with
no debt financing commitments. The Group has net current assets of £117.3m at 31 December 2022 and net assets of
£144.5m.
In assessing going concern, management have considered any potential effects of Russia’s ongoing invasion of Ukraine,
the current cost of living crisis and rising interest rate environment on the Group and its customers. Alpha’s products and
services are largely non-discretionary in nature and Alpha has limited direct or indirect exposure to Russia and therefore
Any new or amended accounting standards or interpretations that are not yet mandatory have not been early adopted.
we do not anticipate any significant impact to the business from these events.
102
103
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022 2. ACCOUNTING POLICIES [CONT.]
Going concern [cont.]
This assessment has considered the impact on the Group’s operations, its 2023 budget and 2024 internal forecast.
Given the nature of the above events, severe downside scenarios have been modelled where revenue targets are missed
by up to 40% together with the assumption that a number of clients are unable to meet their mark-to-market obligations,
resulting in bad debts. Even in these scenarios, the Group has strong liquidity, no external debt and the availability of
mitigating actions that would allow it to meet its financial liabilities as they fall due. These mitigating actions, should they
be required, are all within management’s control and could include reducing new recruitment, lowering commission or
bonus payments, and reducing capital expenditure.
The Directors therefore have a reasonable expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future. The Group therefore continues to adopt the going concern basis in
preparing its Consolidated Financial Statements.
Revenue
FX Hedging
When the Group enters into a foreign exchange contract with a client, it immediately enters into a separate matched
contract with its banking counterparty.
Spot and forward revenue is recognised when a binding contract is entered into by a client and the rate is fixed and
determined. In accordance with IFRS 15, revenue is recognised at this point in time as the performance obligation is
satisfied by transferring control of the contract to the client. Revenue represents the difference between the rate
offered to clients and the rate the Group pays its banking counterparties.
Options revenue is recognised when a binding contract is entered into by a client and the revenue is fixed and
determined. In accordance with IFRS 15, revenue is recognised at this point in time as the performance obligation is
satisfied by transferring control of the contract to the client. Revenue represents the difference between the premiums
paid by clients and the premium the Group pays to its banking counterparties.
Payments and collections
Alternative Banking Solutions provides payment and collection services and receives revenue from both banking fees
and spot transactions. Banking fees are charged for (but are not limited to) electronic payments in and out of accounts
(e.g. Faster Payments, CHAPS, International payments and collections) and implementation fees. Revenue is respect of
banking fees is recognised when a payment is executed. Revenue is recognised at this point in time as the performance
obligation is satisfied by transferring control of the contract to the client.
Annual account fees
Revenue from annual account fees is recognised on a straight-line basis over the 12 months from the date the account
is opened, resulting in deferred income on the face of the Consolidated Statement of Financial Position. The initial
set-up of the account may only happen upfront at a single point in time (with the associated fee being charged at this
point), but the ongoing access to the account (particularly through access to the portal) and other ancillary services are
provided to the customer throughout the period the account is open. On an annual basis, each account is reviewed from
a compliance perspective and subsequently charged a renewal fee for the following 12 months.
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Other operating income
Other operating income is made up of interest generated from client cash balances, as a result of the increased interest
rate environment (further detail within note 4). Whilst the increased interest stream is a positive boost for the Group and a
natural by-product of our increasingly diversified product offering, we are mindful that aspects of its dynamics are driven
by macroeconomics beyond our control. We have therefore chosen to recognise interest income on client balances as
‘other operating income’, not revenue on the face of the Consolidated Statement of Comprehensive Income.
The recent changes to the interest rate environment has meant that these accounts can be interest bearing, whilst
maintaining the safeguarding requirements. The Group is able to obtain attractive interest rates on these overnight client
cash balances only because of its ability to aggregate numerous individual client balances, many of which are transitory
and typically only held for 24 hours. Under the terms of the Electronic Money Licence (EMI) the Group is not able to pass
any of the interest earned back to the clients.
Interest earned on Alpha’s own cash is recognised within finance income in the Consolidated Statement of
Comprehensive Income.
Underlying measures
The Group reports underlying operating profit, underlying EPS and underlying Profit before taxation. These measures
are not measures of performance under IFRS and should be considered in addition to, and not as a substitute for, IFRS
measures of financial performance and liquidity. The Group uses non-GAAP performance measures as key financial
indicators as the Board believe these better reflect the underlying performance of the business.
Underlying items exclude other operating income from client balances and share award costs.
Foreign currency translation
The Group’s consolidated historical financial statements are presented in pounds sterling, which is the functional currency
of the Parent.
Transactions and balances
Transactions in foreign currencies are initially recorded by the Group entities at the functional currency rates prevailing
at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at
the functional currency spot rate of exchange ruling at the reporting date. All differences are taken to the Consolidated
Statement of Comprehensive Income.
Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rates
at the date of the initial transaction. The gain or loss arising on translation of non-monetary items is recognised in other
comprehensive income and accumulated in the translation reserve as a separate component of equity.
Group companies
The results and financial position of Group entities that have a functional currency different from the presentation
currency are translated into the presentation currency as follows:
− assets and liabilities at each period end are translated at the prevailing closing rate at the date of the consolidated
statement of financial position;
− income and expenses for each period within the Consolidated Statement of Comprehensive Income are translated at
the average rate for the period; and
− on consolidation, exchange differences arising from the translation of overseas operations are recognised in other
comprehensive income and accumulated in the translation reserve as a separate component of equity. On disposal
of a foreign operation, the cumulative translation differences are transferred to the Consolidated Statement of
Comprehensive Income as part of the gain or loss on disposal.
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ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022 2. ACCOUNTING POLICIES [CONT.]
Impairment
Financial instruments
Financial Assets
Initial measurement
Impairment provisions are recognised under the general approach according to a three-stage expected credit loss
impairment model. Impairment provisions represent the difference between the present value of all contractual
cashflows and the present value of expected future cashflows. Impairment losses are recognised in the Consolidated
Statement of Comprehensive Income. The Group performs an assessment of a significant increase in credit risk on
an annual basis. In accordance with IFRS 9, the Group can apply the policy election for trade receivables. The Group
All financial assets are measured initially at fair value less transaction costs. The Group’s financial assets include derivatives
recognises lifetime expected credit losses under the simplified approach. The Group has performed a re-assessment
not designated as hedging instruments (foreign exchange forward and option contracts with customers and banking
of lifetime expected credit losses at 31 December 2022.
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
counterparties), derivatives designated as hedging instruments (foreign exchange forward and interest rate swap contracts
with customers and banking counterparties) and amortised cost assets (financial assets at amortised cost, other receivables,
cash and cash equivalents and fixed collateral).
Subsequent measurement
IFRS 9 divides all financial assets into two classifications - those measured at amortised cost and those measured at
fair value. Where assets are measured at fair value, gains and losses are recognised in the Consolidated Statement of
Comprehensive Income.
The classification of a financial asset is made at the time it is initially recognised, namely when the Group becomes a party to
the contractual provisions of the instrument. If certain conditions are met, the classification of an asset may subsequently
need to be reclassified.
Following initial measurement, the Group measures its financial assets at fair value through profit or loss or amortised cost,
based on the business model for managing the financial instruments and the contractual cash flow characteristics of the
instrument.
Fair value through profit or loss
This category comprises in-the-money derivatives and out-of-money derivatives where the time value offsets the negative
intrinsic value (see “Financial liabilities” section for out-of-money derivatives classified as liabilities). Other than derivative
financial instruments which are not designated as hedging instruments, the Group does not have any financial assets at fair
value through profit or loss.
Amortised cost
The Group’s financial assets measured at amortised cost comprise other receivables and cash and cash equivalents in the
consolidated statement of financial position.
These assets arise principally from financial assets where the objective is to hold these assets in order to collect contractual
cash flows and the contractual cash flows are solely payments of principal and interest. They are initially recognised at
fair value plus transaction costs that are directly attributable to their acquisition or issue and are subsequently carried at
amortised cost using the effective interest rate method, and where applicable, less provision for impairment.
De-recognition of financial assets
Financial assets will be de-recognised when the contractual rights to the cash flows from the assets have expired, or when the
Group transfers its contractual rights to receive the cash flows and substantially all of the risk and rewards of the assets have
been transferred.
Management’s judgement is applied in determining whether the contractual rights to the cash flows from the transferred
assets have expired or whether the Group retains the rights to receive cash flows on the assets but assume an obligation to
pay for those cash flows.
Financial liabilities
Classification
The Group determines the classification of its financial liabilities at initial recognition. All financial liabilities are
recognised initially at fair value and, in the case of loans and borrowings, subsequently carried at amortised cost
including directly attributable transaction costs. The Group has not applied the option to designate any financial
liabilities as measured at fair value through profit or loss that were previously measured at amortised cost. The Group’s
financial liabilities include derivative financial liabilities and trade and other payables.
De-recognition of liabilities
A financial liability is de-recognised when the obligation under the liability is discharged, substantially modified,
cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially
different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is
treated as a de-recognition of the original liability and the recognition of a new liability, and the difference in the
respective carrying amounts is recognised in the Consolidated Statement of Comprehensive Income.
Offsetting financial instruments
When there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net
basis or realise the asset and settle the liability immediately, financial assets and liabilities are offset, and the net
amount reported in the consolidated statement of financial position.
Derivative financial instruments
Derivative financial assets are carried as assets when their fair value is positive and liabilities when their fair value is
negative. Changes in the fair value of derivatives are included in the Consolidated Statement of Comprehensive Income.
The Group’s derivative financial assets and liabilities comprise of forward and option foreign exchange contracts, and
interest rate swap contracts.
The Group undertakes matched principal broking involving undertaking immediate back-to-back derivative
transactions with counterparties. These transactions are classified as financial instruments at fair value through profit
or loss and are shown gross, except where a netting agreement, which is legally enforceable, exists and the intention is
for the asset and liability to be settled net.
The credit valuation adjustment (“CVA”) reflects the credit risk of the counterparties inherent in the valuation of
the derivative financial instruments. The adjustment represents the estimated fair value of protection required to
hedge the counterparty credit risk. The adjustment takes into account counterparty exposure, applicable collateral
arrangement and default probability rates.
Derivative financial instruments and hedge accounting
The Group uses derivative financial instruments to hedge part of its exposure to foreign exchange and interest rate
risks. All derivative financial instruments are initially measured at fair value on the contract date and are also measured
at fair value at subsequent reporting dates.
106
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ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022 2. ACCOUNTING POLICIES [CONT
Derivative financial instruments and hedge accounting [cont.]
Hedge accounting is applied to financial assets and financial liabilities only where all of the following criteria are met:
− The hedging relationship consists only of eligible hedging instruments and eligible hedged items.
− At the inception of hedge there is formal designation and documentation of the hedging relationship, the Group’s
risk management objective and strategy for undertaking the hedge, the hedged item and hedging instrument, and
how the hedge effectiveness will be assessed;
− An economic relationship exists between the hedged item and the hedging instrument;
− Credit risk does not dominate changes in value; and
− The hedge ratio is the same for both the hedging relationship and the quantity of the hedged item actually hedged
and the quantity of the hedging instrument used to hedge it.
If derivatives do not qualify for hedge accounting, any changes in the fair value of the derivative financial instrument are
recognised in the income statement as they arise.
Hedge relationships are classified as cash flow hedges where the derivative financial instruments hedge the Group’s
exposure to variability in cash flows resulting from a highly probable forecasted transaction. These include the
exchange rate risk of interest receivable denominated in foreign currency and interest rate risk. Changes in the
fair value of derivative financial instruments that are designated and effective as hedges of future cash flows are
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
− Level 1 quoted (unadjusted) market prices in active markets for identical assets or liabilities.
− Level 2 valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or
indirectly observable.
− Level 3 valuation techniques for which the lowest level input that is significant to the fair value measurement is
unobservable.
For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities based on the nature,
characteristics and risks of the inputs into the valuations and the level of the fair value hierarchy as explained above.
Taxes
Current income tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation
authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at
the reporting date.
Deferred income tax
Deferred income tax is provided on all temporary differences at the reporting date arising between the tax bases of assets
and liabilities and their carrying amounts for financial reporting purposes. Deferred tax is calculated at the tax rates that
are expected to apply in the period when the liability is settled or the asset realised, based on the tax rates that have been
recognised directly in other comprehensive income and the ineffective portion is recognised immediately in the income
enacted or substantively enacted by the balance sheet date.
statement. If the hedging derivative expires or is sold, terminated, or exercised, or the hedge no longer meets the
criteria for hedge accounting, or the hedge designation is revoked, hedge accounting is discontinued prospectively.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and deposits held at call with banks. For the purposes of the
consolidated cash flow statement, cash and cash equivalents consist of cash and cash equivalents as defined above.
Cash held as collateral with banking counterparties for which the Group does not have immediate access, is shown as
fixed collateral on the face of the Consolidated Statement of Financial Position.
Other payables
Other payables are initially stated at fair value and subsequently measured at amortised cost using the effective
interest method. Other payables are obligations to pay for goods or services that have been acquired in the ordinary
course of business. They are classified as current liabilities if payment is due in one year or less. If payment is due at a
later date, they are presented as non-current liabilities.
Fair value
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date.
The Group uses valuation techniques that are appropriate to the circumstances and for which sufficient data
is available to measure fair value, maximising the use of relevant observable inputs and minimising the use of
unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised
within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value
measurement as a whole:
Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available
against which the difference can be utilised.
Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets and
liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
Employee benefits
Pension obligations
The Group operates a defined contribution pension scheme for employees. The assets of the scheme are held separately
from those of the Group. Contributions made by the company are charged to the Consolidated Statement of Comprehensive
Income.
Share-based payments
The Group issues equity-settled share-based payments to Directors and employees of the Group through the Growth Share
Schemes, Approved and Unapproved Options Schemes.
Equity-settled share-based schemes are measured at fair value, excluding the effect of non-market-based vesting
conditions, at the date of grant using an appropriate option pricing model. The Growth Shares Schemes have been valued
using a Monte Carlo Simulation Approach due to the existence of market-based conditions. Non-market-based conditions
exist over revenue-based targets which require management to estimate the probability of meeting these conditions. The
Approved and Unapproved Options Schemes have been valued using a Black Scholes option pricing model as only a service-
based condition exists. Both schemes require the estimation of appropriate attrition rates to estimate the number of share
options which are likely to vest.
The fair value of the shares or share options is recognised over the vesting period to reflect the value of the employee
services received. The charge relating to grants to employees of the Company is recognised as an expense in the
Consolidated Statement of Comprehensive Income.
108
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ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022 2. ACCOUNTING POLICIES [CONT.]
Depreciation [cont]
Property, plant and equipment
Owned assets
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Short-term/low value exemptions
Payments associated with leases with a lease term of twelve months or less and leases of low-value assets are recognised
as an expense in the Consolidated Statement of Comprehensive Income on a straight-line basis.
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in
Property, plant and equipment is stated at cost less accumulated depreciation and where applicable, impairment losses.
share premium as a deduction from the proceeds of the new shares to which they relate.
Depreciation
Depreciation is charged to the Consolidated Statement of Comprehensive Income on a straight-line basis over the estimated
useful lives of each item of property, plant and equipment. Estimated residual values are included in the calculation of
depreciation.
The estimated useful lives of property, plant and equipment are as follows:
Improvements to property
Fixtures and fittings
Computer equipment
-
-
-
Period of lease
4 to 5 years straight line
3 years straight line
Intangible assets
Intangible assets consist of internally developed software and domain names.
Expenditure on internally developed software is capitalised if the costs can be reliably measured, the product or process
is technically and commercially feasible, future economic benefits are probable, and the Group has sufficient resources to
complete the development and to use or sell the asset. The assets are initially recorded at cost including labour, directly
attributable costs and any third-party expenses, and amortised over their useful economic lives of 3 years from the date of first
use.
Impairment of property, plant and equipment and intangible assets
Tangible and Intangible assets are assessed for any indicators of impairment at each balance sheet date or if there are
any indicators of impairment. If any indication exists, or when annual impairment testing for an asset is required, the Group
estimates the asset’s recoverable amount. The recoverable amount is determined on an individual asset by asset basis.
When the recoverable amount is less than its carrying amount, the asset is considered impaired and is written down to its
recoverable amount.
Leases
In accordance with IFRS 16, the Group recognises a right-of-use asset and corresponding liability at the date at which the
leased asset is available for use.
Right-of-use assets are recorded initially at cost and amortised on a straight-line basis over the lease term. Cost is defined as
the net present value of the lease liabilities plus any initial costs and dilapidation provisions less any lease incentives received.
The right-of-use asset is tested for impairment if there are any indicators of impairment.
The lease liability is measured at the present value of the lease payments, discounted at the rate implicit in the lease, or if that
cannot be readily determined, at the lessee’s incremental borrowing rate specific to the term, country, currency and start date
of the lease.
The finance cost is charged to the Consolidated Statement of Comprehensive Income over the lease period so as to produce a
constant periodic rate of interest on the remaining balance of the liability for each period.
Provisions
Provisions are recognised when the Group has a present obligation as a result of a past event and it is probable that the
Group will be required to settle the obligation. Provisions are only recognised if the amount can be estimated reliably.
Provisions are measured based on the best estimates of the expenditure required to settle the obligation at the reporting
date and are discounted to present value where the effect is material.
3. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of the Group’s financial statements requires management to make estimates, judgements and
assumptions about the carrying amounts of assets and liabilities. Uncertainty about these assumptions and estimates
could result in outcomes that could require a material adjustment to the carrying amount of the assets or liability affected
in the future.
The estimates and underlying assumptions are reviewed on an ongoing basis. In the process of applying the Group’s
accounting policies, management has made the following judgements and estimates which have the most significant
effect on the amounts recognised in the Consolidated Financial Statements.
Significant estimates
Impairment of financial assets
The Group recognises impairment provisions under the general approach according to a three-stage expected credit loss
impairment model.
Impairment provisions represent the difference between the present value of all contractual cash flows and the present
value of expected future cashflows. To calculate the present value of the future expected cash flows, management must
make an estimate of expected future cash flows and apply an appropriate discount factor, estimated using the latest
market information. When assessing future cash flows and discount factors the Group takes the following into account:
− Changes in the credit quality of the borrower or instrument
− The Groups liquidity and free cash position
− Forward-looking macroeconomic factors (upside and downside).
An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount.
Impairment losses are recognised in the Consolidated Statement of Comprehensive Income. The Group performs an
assessment of significant increase in credit risk on an annual basis.
Credit value adjustment
The credit value adjustment of £3.4m (2021: £5.2m) has been calculated by management based on the assumption that
the Group will be unable to collect all the receivable amounts due under the contract terms, and therefore, is a method of
counterparty credit risk management. In order to calculate expected future cash flows, management make an estimate
using the latest real-time market information, risk ratings of the clients and experience.
110
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ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022
3. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS [CONT.]
Significant judgements
Development costs
Development costs that are directly attributable to the development of a project are capitalised based on management’s
Revenue in the table below is in accordance with the methodology used for preparing the financial information for
management, for each operating segment. Although a proportion of the revenue from EU clients is initially booked through
Alpha FX Europe Limited in Malta, revenue in the table below has been reallocated to the relevant entity where the sales team
is located.
Within 2022, the Group opened offices in Milan Italy, Sydney Australia and Bristol. All of these offices service Corporate clients
assessment of the likelihood of a successful outcome for each project. This is based on the management’s judgement that the
from their local offices. The results of these new offices are included within the Corporate London Segment. Additionally, there
project is technologically, commercially and economically feasible in accordance with IAS 38 Intangible Assets. In determining
were costs associated with Alpha Europe (based in Luxembourg) which have been shown 50/50 within Institutional and Alpha
the amount to be capitalised, management makes assumptions regarding the expected future cash generation of the project, i.e.
Pay. Under IFRS 8 these segments do not meet the quantitative reporting thresholds in 2022. The revenue of these offices in
Group revenue, and the expected period of benefits. Details of capitalised development costs are shown in note 11.
aggregate was £4.5m and underlying loss before taxation in aggregate was £1.6m.
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Share-based payments
As described in note 2, equity settled share awards are recognised as an expense based on their fair value at date of grant. The fair
value of equity settled growth shares scheme and unapproved share options are estimated through the use of option valuation
models which require an element of judgement in assessing the inputs. Judgement is also exercised in assessing the number of
options subject to non-market vesting conditions that will vest.
Client balances
Where client balances are held by the Group, as part of its EMI obligations those funds must be held in segregated accounts, not
available for use by the Group, and must comply with regulatory safeguarding compliance requirements. The Group is not a party
to the contractual provisions nor a beneficial owner of the funds. As a result, the Group has determined that it does not have
sufficient ownership or control over these balances to include them and their corresponding liability on the Groups Statement of
Financial Position.
4. SEGMENTAL REPORTING
During the year, the Group generated revenue from the sale of forward currency contracts, option contracts, foreign exchange spot
transactions and fees received from payments collections and cash accounts.
The Group has five reportable operating segments under the provisions of IFRS 8, based on the individually reportable subsidiaries
and divisions. These five segments are:
− Corporate London represents revenue generated by Alpha FX Limited’s Corporate clients serviced from the London head office.
− Institutional represents revenue from Alpha FX Institutional Limited, which primarily services funds.
− Corporate Toronto represents revenue generated by Alpha Foreign Exchange (Canada) Limited, serviced from Toronto, Canada.
− Corporate Amsterdam represents revenue generated by Alpha FX Netherlands Limited, which services corporate clients from
Amsterdam, The Netherlands.
− Alpha Pay, a division of Alpha FX Limited which services clients who require international payments and accounts. The offering
is distributed via our European Corporate offices and Alpha FX Institutional Limited as well as Alpha Pay’s own sales team.
The chief operating decision makers, being the Group’s Chief Executive Officer and the Chief Financial Officer, monitor the results
of the operating segments separately each month. Key measures used to evaluate performance are revenue and profit before
taxation. Management believe that these measures are the most relevant in evaluating the performance of the segment and for
making resource allocation decisions.
In April 2021, the Group decentralised into two divisions; Alternative Banking Solutions and FX Risk Management.
These two divisions are now the key drivers to the Group strategy and growth of each operating segment. Revenue for each
operating segment has been split by the two divisions, as this reflects how the chief operating decision-makers manage the
business.
112
2022
Corporate
London
Institutional
Corporate
Toronto
Corporate
Amsterdam
FX Risk Management*
Alternative Banking Solutions**
TOTAL REVENUE
Underlying operating profit
Finance income
Finance costs
Underlying profit before
taxation
Other operating income
Share-based payments
PROFIT BEFORE TAXATION
£’000
43,332
581
43,913
18,457
779
(146)
19,090
468
(632)
18,926
£’000
15,133
4,703
19,836
7,325
-
(83)
7,242
4,412
(32)
11,622
£’000
4,698
-
4,698
536
-
(31)
505
-
-
2021
Corporate
London
Institutional
Corporate
Toronto
Corporate
Amsterdam
FX Risk Management*
Alternative Banking Solutions**
TOTAL REVENUE
Underlying operating profit
Finance income
Finance costs
Underlying profit before
taxation
Share-based payments
PROFIT BEFORE TAXATION
£’000
34,166
61
34,227
15,955
536
(526)
15,965
(228)
15,737
£’000
11,069
4,565
15,634
6,485
-
(57)
6,428
(32)
6,396
£’000
5,497
-
5,497
1,745
-
-
1,745
-
1,745
Alpha
Pay
£’000
846
£’000
5,500
Total
£’000
69,509
28,823
888
22,651
6,388
3,095
-
(68)
23,497
98,332
8,861
38,274
5
(130)
784
(458)
3,027
8,736
38,600
-
-
4,398
-
9,278
(664)
Alpha
Pay
£’000
3,369
14,961
18,330
Total
£’000
57,036
20,435
77,471
7,776
33,588
-
(98)
536
(681)
£’000
2,935
848
3,783
1,627
-
-
1,627
7,678
33,443
-
-
(260)
1,627
7,678
33,183
505
3,027
13,134
47,214
*
FX Risk Management represents revenue derived from foreign exchange forward, spot, and option contracts provided
to corporate and institutional clients, primarily for the purpose of hedging commercial foreign exchange exposures.
** Alternative Banking Solutions represents revenues derived from fees and foreign exchange spot contracts generated from
the provision of cross border payments, collections and annual account fees to corporates and institutions.
113
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022
4. SEGMENTAL REPORTING [CONT.]
Revenue by product
Foreign exchange forward transactions
Foreign exchange spot transactions
Option contracts
Payments, collections and account fees
TOTAL
Non-current assets for each country is as follows:
Non-current assets
United Kingdom
Malta
The Netherlands
Canada
Other
TOTAL NON-CURRENT ASSETS
Revenue by region of customer
United Kingdom
Europe
Canada
Rest of world
TOTAL
31 December 2022
£’000
31 December 2021
£’000
41,073
29,027
9,046
19,186
98,332
31,945
26,053
8,779
10,694
77,471
31 December 2022
£’000
31 December 2021
£’000
29,811
14,400
2,434
1,063
21
47,729
23,435
5,155
183
16
-
28,789
31 December 2022
£’000
31 December 2021
£’000
39,414
47,542
4,962
6,414
98,332
23,024
36,678
5,601
12,168
77,471
All revenue is from external customers and is based on the location of those customers.
Other operating income
Interest is earned on overnight deposits with several credit institutions all ‘A’ rated with the leading rating agencies. The
amount of interest earned is dependent on several variables:
− The absolute balance we hold, which can move significantly from day-to-day
− The mix of currency balances we hold, and;
− The interest rate environment and rates that can be obtained from credit worthy institutions.
Interest income is a natural by-product of our accounts solution, and as such is an uncontrollable income stream for the Group,
which would be transitory if we return to a low interest rate environment. We have therefore chosen to recognise interest
income on client cash balances as ‘other operating income’, not revenue.
In 2022 material interest income was only earned over the last four months of the year. During this time the blended average
client balances and interest rates were £1.6bn and 1.5% respectively (£0.8bn and 0% respectively in the prior year).
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
5. OPERATING PROFIT
Operating profit is stated after charging/(crediting):
Depreciation of owned property, plant and equipment
Amortisation of internally generated intangible assets
Depreciation of right-of-use assets
Rental costs for short-term leases
Property, plant and equipment written off
Impairment of intangible assets
Staff costs (note 7)
Estimated probability of default in relation to Norwegian client
Bad debt expense
Net foreign exchange (gains)/losses
Audit fees
Audit fees in respect of the Group, Company and subsidiary financial statements
Non Audit fees
Fees in respect of CASS Limited Assurance
6. FINANCE INCOME AND EXPENSES
FINANCE INCOME
Interest on bank deposits
Finance income to reverse the discount relating to the Norwegian client*
Other interest receivable
TOTAL
FINANCE COST
Interest on bank deposits
Finance cost on dilapidation provision
Finance cost on lease liabilities (note 13)
TOTAL
31 December 2022
£’000
31 December 2021
£’000
764
1,573
1,154
787
50
43
31,713
(27)
235
(274)
550
7
589
950
809
179
-
121
21,680
(243)
2,869
118
335
7
31 December 2022
£’000
31 December 2021
£’000
622
55
107
784
-
507
29
536
31 December 2022
£’000
31 December 2021
£’000
-
(6)
(452)
(458)
(337)
-
(344)
(681)
* During 2022 the remaining provision balance of £55,533 relating to the Norwegian client was reversed in finance income.
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ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022
7. EMPLOYEE COSTS
Staff costs, including directors’ remuneration, were as follows:
Wages and salaries
Social security costs
Share-based payment charge
Other pension costs
EMPLOYEE BENEFIT EXPENSE INCLUDED IN OPERATING PROFIT
31 December 2022
£’000
31 December 2021
£’000
27,312
3,062
664
675
31,713
18,936
2,075
260
409
21,680
The average number of employees, including the Executive Directors, was as follows:
Executive Directors
Sales, administration and support staff
TOTAL
Remuneration of key management personnel
31 December 2022
No.
31 December 2021
No.
3
305
308
2
182
184
8. TAXATION
Tax charge
CURRENT TAX:
UK Corporation tax on the profit for the year
UK Corporation tax on the internal transfer of clients*
Adjustments relating to prior years
Overseas Corporation tax on the profit for the year
TOTAL CURRENT TAX
DEFERRED TAX
Origination and reversal of temporary differences
Adjustments relating to change in rate
TOTAL DEFERRED TAX
TOTAL TAX EXPENSE
Factors affecting tax charge for the year
Key management personnel represent those personnel who have authority and responsibility for planning, directing and
Profit on ordinary activities before tax
controlling the activities of the Group, including the Non-Executive Directors.
Key management remuneration and benefits include:
Wages and salaries
Social security costs
Share-based payments
Defined contribution scheme
TOTAL
31 December 2022
£’000
31 December 2021
£’000
3,234
335
58
26
3,653
2,233
225
8
16
2,482
During 2022, retirement benefits accrued to 7 Directors (2021: 5) who are regarded as key management personnel within the
Group in respect of defined contribution pension schemes.
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31 December 2022
£’000
31 December 2021
£’000
8,056
-
(591)
216
7,681
483
-
483
8,164
5,816
892
(282)
279
6,705
237
198
435
7,140
31 December 2022
£’000
31 December 2021
£’000
47,214
8,971
499
(837)
(591)
-
292
(170)
-
8,164
33,183
6,305
392
-
(282)
198
(365)
-
892
7,140
Profit on ordinary activities multiplied by the effective standard rate of UK
corporation tax of 19%
Effects of:
Expenses not deductible for tax purposes
Additional R&D deduction
Adjustments relating to prior years
Adjust closing deferred tax in respect of change in future rate of taxation
Different tax rates applied in overseas jurisdictions
Trading losses brought forward
UK corporation tax on internal transfer of clients*
TOTAL TAX CHARGE FOR THE YEAR
* When planning for the possibility of a no-deal Brexit and in response to the limited scope covering financial services within
the Free Trade Agreement, a wholly-owned subsidiary was established in Malta in March 2021. This enabled the Group to
continue to service all clients without disruption both now and in the future. As a result, a number of clients were transferred
from Alpha FX Limited in the UK to Alpha Europe Limited in Malta which crystallised a one-off UK tax charge of £892,095 in
2021 for the transfer of business.
At the year ended 31 December 2022 the Group had unused oversea tax losses amounting to £182,079 (2021: £169,539) for
which no deferred tax asset has been recognised. Alpha FX Europe Limited’s carried forward tax losses of £169,539 were
utilised in the year ended 31 December 2022.
116
117
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022 FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
9. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the profit for the year attributable to equity holders of the Parent, by
the weighted average number of ordinary shares in issue during the financial year. Diluted earnings per share additionally
includes in the calculation, the weighted average number of ordinary shares that would be issued on conversion of any
dilutive potential ordinary shares. The dilutive effect is calculated on the full exercise of all potentially dilutive ordinary share
options granted by the Group.
8. TAXATION [CONT.]
Deferred tax
The deferred taxation liability is based on the expected future rate of corporation tax of 25% (2021: 25%) and comprises the
following:
LIABILITIES
At 1 January
UK tax charge relating to current year
UK tax charge relating to change in future tax rates
Tax charge relating to foreign exchange rate movements
Tax charge on other comprehensive income
TOTAL DEFERRED TAX LIABILITY
31 December 2022
£’000
31 December 2021
£’000
The Group additionally discloses an underlying earnings-per-share calculation that excludes the impact of share-based
payments, other operating income and their tax effect, which better enables comparison of financial performance in the
current year with comparative years.
1,061
483
-
3
(160)
1,387
626
237
198
-
-
1,061
Basic earnings per share
Diluted earnings per share
Underlying – basic
Underlying – diluted
31 December 2022
pence
31 December 2021
pence
86.8p
83.8p
70.1p
67.7p
57.7p
55.1p
58.3p
55.7p
The UK deferred tax liability as at 31 December 2022 and as at 31 December 2021 relates to the tax effect of timing
differences in respect of fixed assets. The deferred tax also includes charges through other comprehensive income.
Deferred tax on each component of other comprehensive income is as follows:
CASH FLOW HEDGES
Losses recognised on hedging
instruments
Exchange differences arising on
translation of foreign operations
TOTAL TAX CHARGE ON OTHER
COMPREHENSIVE INCOME
31 December 2022
31 December 2021
Before tax
£’000
Tax
£’000
After tax
£’000
Before tax
£’000
Tax
£’000
After tax
£’000
(639)
160
(479)
-
-
-
1,382
-
1,382
(148)
-
(148)
743
160
903
(148)
-
(148)
The calculation of basic and diluted earnings per share is based on the following number of shares:
Basic weighted average shares
Contingently issuable shares
Diluted weighted average shares
31 December 2022
No.
31 December 2021
No.
41,923,407
1,482,706
43,406,113
40,773,748
1,925,202
42,698,950
The earnings used in the calculation of basic, diluted and underlying earnings per share are set out below:
Profit after tax for the year
Non-controlling interests
Earnings – basic and diluted
Other operating income
Share-based payments
Taxation impact of the above
Earnings – underlying
31 December 2022
£’000
31 December 2021
£’000
39,050
(2,678)
36,372
(9,278)
664
1,637
29,395
26,043
(2,512)
23,531
-
260
-
23,791
118
119
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022
10. DIVIDENDS
12. PROPERTY, PLANT AND EQUIPMENT
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Final dividend for the year ended 31 December 2020 of 8.0p per share
Interim dividend for the year ended 31 December 2021 of 3.0p per share
Final dividend for the year ended 31 December 2021 of 8.0p per share
Interim dividend for the year ended 31 December 2022 of 3.4p per share
31 December 2022
£’000
31 December 2021
£’000
-
-
3,375
1,435
4,810
3,276
1,229
-
-
4,505
All dividends paid are in respect of the ordinary shares of £0.002 each.
The Directors propose that a final dividend in respect of the year ended 31 December 2022 of 11.0p per share amounting to
£4,641,621 will be paid on 12 May 2023 to all shareholders on the register of members on 14 April 2023. This dividend is subject
to approval by shareholders at the AGM and has not been accrued as a liability in these Financial Statements in accordance
with IAS 10 ‘Events after the reporting period’.
11. INTANGIBLE ASSETS
COST
At 1 January 2021
Additions
Impairment
AT 31 DECEMBER 2021
Additions
Impairment
AT 31 DECEMBER 2022
AMORTISATION
At 1 January 2021
Charge for the year
AT 31 DECEMBER 2021
Charge for year
Impairment
AT 31 DECEMBER 2022
NET BOOK VALUE
At 1 January 2021
At 31 December 2021
AT 31 DECEMBER 2022
Internally generated
software
£’000
Domain
names
£’000
2,672
1,955
(121)
4,506
3,410
(621)
7,295
598
940
1,538
1,557
(578)
2,517
2,074
2,968
4,778
-
37
-
37
25
-
62
-
10
10
16
-
26
-
27
36
Total
£’000
2,672
1,992
(121)
4,543
3,435
(621)
7,357
598
950
1,548
1,573
(578)
2,543
2,074
2,995
4,814
COST
At 1 January 2021
Additions
Write offs
AT 31 DECEMBER 2021
Additions
Write offs
Reclassification*
AT 31 DECEMBER 2022
DEPRECIATION
At 1 January 2021
Charge for the year
Write offs
AT 31 DECEMBER 2021
Charge for the year
Write offs
AT 31 DECEMBER 2022
NET BOOK VALUE
At 1 January 2021
At 31 December 2021
AT 31 DECEMBER 2022
Leasehold
improvements
£’000
Fixtures &
fittings
£’000
Computer
equipment
£’000
1,453
-
-
1,453
1,167
-
147
2,767
199
149
-
348
206
-
554
1,254
1,105
2,213
790
220
-
1,010
239
(116)
(147)
986
237
159
-
396
189
(84)
501
553
614
485
756
441
(1)
1,196
333
(377)
-
1,152
312
281
(1)
592
369
(359)
602
444
604
550
Total
£’000
2,999
661
(1)
3,659
1,739
(493)
-
4,905
748
589
(1)
1,336
764
(443)
1,657
2,251
2,323
3,248
* £146,866 of tangible assets were incorrectly classified as Fixtures and fittings in the prior year and have since been reclassified
to Leasehold improvements in the current year.
During the year, assets with a cost of £493,030 were written off. The resulting loss was £50,337.
120
121
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022
13. RIGHT-OF-USE ASSETS AND LEASE LIABILITIES
Amounts recognised in the Consolidated Statement of Comprehensive Income
Leases where the Group is a lessee are accounted for by recognising a right-of-use asset and a lease liability except for
leases of low value assets and leases with a term of 12 months or less.
In October 2022, a lease was signed for new premises in Malta. The lease has a contractual start date of 30 November 2022
and is a ten-year lease with a break option at 5 years. After the end of the rent-free period of six months, rent of €461,700
Depreciation charge on right-of-use assets (note 5)
Interest on lease liabilities (note 6)
Rental costs for short-term leases (note 5)
(£409,715) is payable per annum, subject to a 3% increase after one year, and a subsequent rent review of no more than
TOTAL
31 December 2022
£’000
31 December 2021
£’000
1,154
452
787
2,393
809
344
179
1,332
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
3% per annum. The incremental borrowing rate used to discount lease liabilities at initial inception is 4.7%, based on
management’s assessment. On initial recognition of the lease, a right-of-use asset of £3,557,614 was recognised.
In October 2021, a lease was signed for new premises in Amsterdam. The lease has a contractual start date of 1 January 2022
and has been accounted for as a right-of-use asset and a lease liability from that date. It is a ten-year lease with a break
option at 6.5 years. The incremental borrowing rate used to discount lease liabilities at initial inception is 1.6%, based on
management’s assessment. On initial recognition of the lease, a right-of-use asset of £2,173,543 was recognised.
The Group signed two further leases for new premises which commenced in the year, one in Bristol for five years and one
in Toronto, Canada for seven years. On initial recognition of these leases, a right-of-use asset of £297,999 was recognised in
respect of the Bristol lease and a right-of-use asset of £836,785 was recognised in respect of the Toronto lease.
In May 2019, the Group signed a ten-year lease for the Head Office Premises in London expiring in May 2029. The rent is
subject to a rent review after five years and the lease does not contain any break clause. The incremental borrowing rate
used to discount lease liabilities at initial inception is 4.5%, based on management’s assessment (2021: 4.5%).
Right-of-use assets
At 1 January
Additions
Depreciation charge for the year
AT 31 DECEMBER
Lease liabilities
At 1 January
Additions
Finance cost (note 6)
Payments in the year
AT 31 DECEMBER
Analysis:
Current
Non-current
TOTAL LEASE LIABILITIES
31 December 2022
£’000
31 December 2021
£’000
6,136
6,866
(1,154)
11,848
6,945
-
(809)
6,136
31 December 2022
£’000
31 December 2021
£’000
7,362
6,603
452
(1,343)
13,074
1,407
11,667
13,074
7,483
-
344
(465)
7,362
450
6,912
7,362
The rental costs for short-term leases amounting to £786,931 (2021: £178,919) relate to leases of less than one year for premises
at our other overseas operations.
14. SUBSIDIARIES
The Group’s subsidiaries as at 31 December 2022 are as follows:
Name
DIRECT HOLDING
Alpha FX Limited
Alpha Agency Solutions Ltd
INDIRECT HOLDING
Alpha FX Institutional Limited
Alpha Foreign Exchange (Canada) Limited
Alpha FX Netherlands Limited
Alpha FX Europe Limited
Alpha FX Italy Limited
Alpha Europe
Alpha FX Australia Pty Ltd
AGI Financial Pte. Ltd.
Alpha Financial Solutions Ltd
Alpha FS Ltd
Alpha FX Group Limited
Alpha FS Group Ltd
Country
of
incorporation
Proportion of
ordinary
shares held
England1
England1
England1
Canada2
England1
Malta3
England1
Luxembourg4
Australia5
Singapore6
England7
England7
England7
England7
100%
100%
78.5%
74.7%
93.5%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Active
Non-trading
Active
Active
Active
Active
Active
Active
Active
Non-trading
Dormant
Dormant
Dormant
Dormant
Registered addresses:
1. Brunel Building, 2 Canalside Walk, London, UK, W2 1DG
2. Suite 2400, 745 Thurlow Street, Vancouver BC, Canada, V6E 0C5
3.
4.
171, Old Bakery Street, Valletta VLT1455, Malta
17 Boulevard F.W. Raiffeisen, L-2411 Luxembourg, Grand Duchy of Luxembourg
5. c/o Intertrust Australia Pty Ltd, Suite 2, Level 25, 100 Miller Street, North Sydney, NSW 2060
6.
7.
14 Robinson Road #12-01/02, Far East Finance Building, Singapore (048545)
128 City Road, London, United Kingdom, EC1V 2NX
The principal activity of the Group and its subsidiary undertakings is the development of financial strategies and technologies to
122
123
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022
14. SUBSIDIARIES [CONT.]
assist corporates and institutions in their FX risk management, mass payments and account opening requirements. More
detail on each subsidiary undertaking is provided in note 4. Shares in all indirect subsidiary holdings are held by Alpha FX
Limited. The accounting year-ends of all subsidiaries is 31 December 2022.
During the year, there were amendments to share schemes in three subsidiaries.
In March 2022, Alpha FX Limited’s shareholding in Alpha FX Institutional Limited decreased from 79.4% to 78.5% following
an adjustment to the employee share ownership incentive scheme to include additional key employees and following
the first vesting of the share scheme. In June 2022 Alpha FX Limited reduced its shareholding in Alpha Foreign Exchange
(Canada) Limited from 75.0% to 74.7%, after an allotment of shares to key employees. In November 2022, Alpha FX Limited
increased its shareholding in Alpha FX Netherlands Limited from 83.5% to 93.5% as part of a share buy-back due to a
termination of an employment contract.
More information regarding the share schemes is included in note 24.
15. DERIVATIVE FINANCIAL ASSETS AND FINANCIAL LIABILITIES
Derivative financial assets not designated as hedging instruments
Foreign currency forward and option contracts
with customers
Foreign currency forward and option contracts
with banking counterparties
31 December 2022
31 December 2021
Fair value
£’000
Notional principal
£’000
Fair value
£’000
Notional principal
£’000
116,515
16,521,973
69,634
10,625,685
10,194
4,787,695
5,738
5,892,363
Other foreign exchange forward contracts
229
16,592
514
17,570
126,938
21,326,260
75,886
16,535,618
Analysis:
Current
Non-current
TOTAL DERIVATIVE FINANCIAL ASSETS
31 December 2022
£’000
31 December 2021
£’000
99,119
27,819
126,938
58,551
17,335
75,886
Derivative financial liabilities not designated as hedging instruments
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Foreign currency forward and option contracts
with customers
Foreign currency forward and option contracts
with banking counterparties
31 December 2022
31 December 2021
Fair value
£’000
Notional principal
£’000
Fair value
£’000
Notional principal
£’000
47,706
6,164,718
42,720
8,467,787
1,736
5,711,465
1,722
7,950,554
49,442
11,876,183
44,442
16,418,341
Derivative financial liabilities designated as hedging instruments
Foreign currency forward contracts
Interest rate swap contracts
Total Derivative financial liabilities
31 December 2022
31 December 2021
Fair value
£’000
Notional principal
£’000
Fair value
£’000
Notional principal
£’000
286
353
639
21,648
205,000
226,648
-
-
-
-
-
-
31 December 2022
31 December 2021
Fair value
£’000
Notional principal
£’000
Fair value
£’000
Notional principal
£’000
50,081
12,102,831
44,442
16,418,341
Analysis:
Current
Non-current
TOTAL DERIVATIVE FINANCIAL LIABILITIES
31 December 2022
£’000
31 December 2021
£’000
42,764
7,317
50,081
36,697
7,745
44,442
124
125
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
15. DERIVATIVE FINANCIAL ASSETS AND FINANCIAL LIABILITIES [CONT.]
16. FINANCIAL INSTRUMENTS
Items that will be reclassified to the Consolidated Statement of Comprehensive Income:
Movement in year
Cash flow hedges
Losses recognised on hedging instruments
Exchange differences arising on translation of foreign
operations
Tax relating to items that may be reclassified
31 December 2022
£’000
31 December 2021
£’000
(639)
1,382
160
903
-
(148)
-
(148)
Since the Group’s inception, it has historically operated in a low interest rate environment. However, since Q3, 2022, when
interest rates started to rise, the Group started to receive a large amount of interest on its own free cash balances as well
as client cash balances. In line with the Group’s treasury policy, we have entered into interest rate swap contracts to manage
interest rate risk, see further details below.
Interest rate swap contracts
Forward foreign exchange contracts and options fall into level 2 of the fair value hierarchy as set out in note 2. Level 2
comprises those financial instruments which can be valued using inputs other than quoted prices that are observable
for the asset or liability either directly (i.e., prices) or indirectly (i.e., derived from prices). The fair value of forward foreign
exchange contracts is measured using observable forward exchange rates for contracts with a similar maturity at the
reporting date. The fair value of option foreign exchange contracts is measured using an industry standard external model
that best presents the unpublished interbank valuations.
There were no transfers between level 1 and 2 during the current or prior year. The fair value of all other financial assets
and financial liabilities is approximate to their carrying value.
The principal financial instruments of the Group, from which financial instrument risk arises, are as follows:
a) Financial assets per statement of financial position
FAIR VALUE ASSETS
31 December 2022
£’000
31 December 2021
£’000
The interest rate swap contracts designated as hedging instruments relate to transactions entered into in December 2022 to
Derivatives not designated as hedging instruments (note 15)
fix the rate of interest receivable on cash balances held by the Group in respect of its own free cash balances as well as client
cash balances. With the interest rate swap, the Group receives a fixed rate of interest and pays a floating interest rate based
on SONIA, the difference between the rates results in the Group receiving a fixed rate of interest.
The contracts commence in June 2023 with expiries in June 2025 and June 2026, with an average net interest rate
receivable of 4.1%. Upon expiry of the contracts or if they no longer qualify for hedge accounting, the deferred gains/losses in
comprehensive income relating to the Group’s own free cash balances will be reclassified within finance income and those
relating to client cash balances will be reclassified within other operating income. The hedging ratio at year end was 1:1. The
hedge effectiveness will be reassessed at each reporting date.
Foreign currency forward contracts
The forward contracts designated as hedging instruments relate to hedges entered into in December 2022 to fix the
exchange rate of interest receivable denominated in dollars and euros. The contracts have monthly expiries up to December
2023. The deferred gains/losses in comprehensive income will be reclassified within other operating income upon expiry of
the contracts or if they no longer qualify for hedge accounting. The hedging ratio at year end was 1:1. The hedge effectiveness
will be reassessed at each reporting date.
Net gains/(losses) on financial assets at fair value through profit or loss
Foreign exchange derivatives
31 December 2022
£’000
31 December 2021
£’000
274
274
(118)
(118)
Derivatives not designated as hedging instruments are intended to reduce the level of foreign currency risk for expected
future cash flows. The tables above show the fair value of those foreign exchange forward contracts as at each year-end.
TOTAL FAIR VALUE ASSETS
AMORTISED COST ASSETS
Financial assets at amortised cost
Other receivables excluding prepayments
Cash and cash equivalents
Fixed collateral
TOTAL AMORTISED COST ASSETS
TOTAL FINANCIAL ASSETS
126,938
126,938
-
4,384
136,799
4,726
145,909
272,847
75,886
75,886
5,803
2,542
108,044
3,506
119,895
195,781
b) Financial liabilities per statement of financial position
FAIR VALUE LIABILITIES
Derivatives not designated as hedging instruments (note 15)
Derivatives designated as hedging instruments (note 15)
TOTAL FAIR VALUE LIABILITIES
OTHER PAYABLES MEASURED AT AMORTISED COST
Other payables and accruals
TOTAL OTHER PAYABLES
TOTAL FINANCIAL LIABILITIES
31 December 2022
£’000
31 December 2021
£’000
49,442
639
50,081
75,903
75,903
125,984
44,442
-
44,442
41,173
41,173
85,615
126
127
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022 16. FINANCIAL INSTRUMENTS [CONT.]
c) Offsetting financial assets and financial liabilities
Financial instruments at fair value through profit or loss represent immediate back-to-back derivative transactions with banking
counterparties and are reported as financial assets and financial liabilities in the consolidated statement of financial position.
The transactions are subject to ISDA (“International Swaps and Derivatives Association”) Master Agreements and similar master
agreements which provide a legally enforceable right of offset in the normal course of business, the event of a default and
the event of insolvency or bankruptcy. In accordance with the master agreements, contracts with banking counterparties are
assessed daily on a net basis.
However, contracts with clients are assessed daily on a gross basis, and therefore shown as separate financial assets and
financial liabilities in the consolidated statement of financial position.
2022
Derivative financial assets
Derivative financial liabilities
2021
Derivative financial assets
Derivative financial liabilities
Gross
fair
value
£’000
186,868
(154,248)
Gross
fair
value
£’000
122,508
(99,444)
Amounts subject to enforceable netting arrangements
Fair
value
offset
£’000
(59,930)
59,930
Net derivative
financial
asset/(liability)
(Note 15)
£’000
126,938
(49,442)
Fixed
collateral
£’000
4,726
-
Amounts subject to enforceable netting arrangements
Fair
value
offset
£’000
(46,622)
46,622
Net derivative
financial
asset/(liability)
(Note 15)
£’000
75,886
(44,442)
Fixed
collateral
£’000
3,506
-
Variation
margin
offset
£’000
-
44,876
Variation
margin
offset
£’000
-
8,380
17. FINANCIAL RISK MANAGEMENT
Objectives, policies and processes for managing and the methods used to measure risk
There have been no substantive changes in the Group’s exposure to financial instrument risks, its objectives, policies and
processes for managing those risks or the methods used to measure them from previous periods, unless otherwise stated in this
note.
Financial assets principally comprise trade and other receivables, cash and cash equivalents, fixed collateral and derivative
financial assets. Financial liabilities comprise trade and other payables, shareholder loans and derivative financial liabilities. The
main risks arising from financial instruments are credit risk, liquidity risk, market risk, foreign currency risk, and interest rate risk,
each of which are discussed in further detail below.
The Group monitors and mitigates financial risk on a consolidated basis. The Group has implemented a framework to ensure that
risk management practices appropriate to a listed company are in place.
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
The Group operates under the Three Lines of Defence approach to risk management. This framework is overseen and
enforced by the Risk Committee and Board.
1.
First Line is risk management: Primary responsibility for strategy, performance and risk management lies with the
Executive Team and the Heads of each department.
2. Second Line is risk oversight: The Risk, Compliance, Finance and Legal Teams provide risk oversight.
3. Third Line is independent assurance: Independent assurance on the effectiveness of the risk management systems.
Specialist external reviews provide an additional line of defence.
Credit risk
Credit risk is inherent in Alpha’s business model. The Board accepts that credit losses are a function of our trading
model, and the Group takes a risk-based approach to balance revenue opportunities against the risk of default. Credit
risk is the risk that a client fails to deliver currency at maturity of a contract and/or fails to deposit margin when a margin
call is made which could ultimately lead to a financial loss.
Where the Group provides credit to customers, this is subject to credit verification checks and an in-depth underwriting
process by our Credit Team based on both quantitative and qualitative factors. Credit policies are aimed at reducing
the impact of losses, credit terms will only be granted to customers who satisfy a creditworthiness assessment and
demonstrate an appropriate payment history. The client terms and conditions and the credit facility confirmation letter
highlight the client’s margin terms and requirement to provide collateral. This provides further mitigation to the credit
exposure and reduces the risk of potential disputes. The Group evaluated the concentration of risk as low with respect
to derivative financial assets arising from contracts with counterparties. This is due to the fact that no single customer
represents a significant proportion of the total value of customer contracts and the business has historically low levels
of counterparty default.
Client credit exposures are monitored daily. Stress tests are carried out to assess and minimise client credit risk
exposures under various market volatility scenarios.
Counterparty risk
The Group relies on third party institutions in order to trade with clients. To reduce counterparty credit risk, the Group
only trades with institutional counterparties with robust balance sheets, high credit ratings and strong capital resources.
The Group monitors the creditworthiness of institutional counterparties on an ongoing basis. As part of the Group’s
business continuity procedures settlement lines have been established with several institutional counterparties in order
to reduce the impact of business disruption as a result of counterparty risk.
Liquidity risk
Liquidity risk is the risk that the Group may encounter difficulty in meeting its financial obligations as they are due.
Extensive controls are in place to ensure that liquidity risk is mitigated. The Group’s liquidity requirements are reviewed
daily, and the Group employs stress testing to model the sufficiency of its liquidity in stressed market scenarios. The
ability of clients to pay margin and settle contracts is monitored with automated triggers and alerts configured into the
Group’s systems. The Group maintains cash reserves and continues to increase these reserves relative to its trading
activity on an ongoing basis.
The Group attempts to ensure it maintains (as closely as possible) a balanced position in each currency, with regular
stress testing of its net long/short position in a particular currency against sudden and unforeseen market movements
(“Black Swan Events”).
The Group has sufficient cash resources to pay its debts and contractual liabilities as they fall due. Consequently,
management does not believe that the Group has a material exposure to liquidity risk.
128
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ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022
17. FINANCIAL RISK MANAGEMENT [CONT.]
Market risk
Market risk is minimised by the operation of matched derivative transactions, whereby all derivatives sold to customers
are matched on a back-to-back basis with an offsetting derivative from a banking counterparty. The Group is only
exposed to the net position of its derivative assets and liabilities and this position is collateralised on a daily basis.
The Group may from time to time buy treasury hedges from its banking counterparties, that are not matched with the
client, to limit the tail risk of individual trades. The treasury hedges involve buying an option and therefore the Group
has the right to trade rather than an obligation so there is no downside risk on these transactions.
Interest rate risk
Interest rate risk is the risk that the value of a financial instrument or cash flows associated with the instrument will
fluctuate due to changes in market interest rates. Interest rate risk arises from interest bearing financial assets and
liabilities used by the Group. Interest bearing assets comprise cash and cash equivalents which are considered short-
term liquid assets. It is the Group’s policy to settle derivative financial liabilities arising from contracts with customers
(included within trade payables) and other payables within the credit terms allowed. Therefore, the Group generally
does not incur interest on overdue balances.
In 2022 the interest receivable on cash and cash equivalents was managed using derivative instruments to hedge
interest rate risk (note 15).
Foreign currency risk
Foreign currency risk refers to the risk that non-sterling revenue earned on a transaction may fluctuate due to changes
in foreign currency rates. The Group is exposed to foreign currency risk on revenue, expenses and net assets that are
denominated in a currency other than sterling. The principal currencies giving rise to this risk vary from period to period
depending on the currency of transactions undertaken by the Group. Details of the foreign currency cash balances can
be found in note 19.
The Group manages its exposure to currency movements in line with its Treasury Policy. Client money received in a
foreign currency is deposited in a bank account of the same currency, netting off to provide a natural hedge. The Group
reduces its exposure to foreign exchange by retranslating excess cash in foreign currencies into sterling on a regular
basis. The Group hedges a proportion of its unrealised profits through foreign exchange contracts designated as fair
value through profit or loss.
The Group’s policy is to reduce the risk associated with the revenue denominated in foreign currencies by using forward
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Year ended 31 December
EURO:
10% weakening in the £/€ exchange rate
10% strengthening in the £/€ exchange rate
US DOLLAR:
10% weakening in the £/$ exchange rate
10% strengthening in the £/$ exchange rate
CANADIAN DOLLAR:
10% weakening in the £/$ exchange rate
10% strengthening in the £/$ exchange rate
Impact on profit after tax
Impact on equity
2022
£’000
4,624
(3,784)
2,546
(2,083)
384
(314)
2021
£’000
4,613
(3,774)
1,269
(1,039)
408
(334)
2022
£’000
3,540
(2,897)
1,187
(971)
410
(335)
2021
£’000
573
(469)
386
(316)
305
(250)
The sensitivities in the table above do not include the impact of foreign exchange hedges in place to optimise cash
management across the Group. By including the impact of hedges in place throughout 2022, the impact of a 10% weakening of
the pound on profit after tax would have been £804k and £1,733k (2021: £2,081k and £779k) for Euro and US dollar respectively.
Similarly, the impact of a 10% strengthening of the pound on profit after tax would have been -£658k and -£1,418k (2021:
-£1,703k and -£638k) for Euro and US dollar respectively.
Exchange rates for financial year
2022
2021
EURO:
Average rate
Closing rate
US DOLLAR:
Average rate
Closing rate
CANADIAN DOLLAR:
Average rate
Closing rate
1.1730
1.1269
1.2369
1.2027
1.6080
1.6295
1.1630
1.1909
1.3751
1.3543
1.7244
1.7112
fixed rate currency hedges. The settlement of these forward foreign exchange contracts is expected to occur within the
The impact of a change of 10% has been selected as this is considered reasonable given the current level of exchange rates
following twelve months. Changes in the fair values of forward foreign exchange contracts are recognised directly in the
and the volatility observed both on a historical basis and market expectations for future movement.
consolidated statement of comprehensive income.
Foreign currency risk – sensitivity analysis
Management of capital
The Group’s objectives when managing capital are to maximise shareholder value whilst safeguarding the Group’s ability
The Group’s principal recurring foreign currency transactions are in Euros, US Dollar and Canadian Dollar. The table
to continue as a going concern. The Group’s policy is to maintain a capital base and funding structure that retains creditor
opposite shows the impact on the Group’s operating profit and equity, of a 10% change in the exchange rate of the
and market confidence, provides flexibility for business development, ensures adherence to regulatory requirements, whilst
principal currencies, euro, US dollar and Canadian dollar.
optimising returns to shareholders.
The Group monitors its total equity as shown in the consolidated statement of financial position. In order to maintain or adjust
the capital structure, the Company may issue new shares, adjust the dividends paid to shareholders or buy back shares.
130
131
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022 18. OTHER RECEIVABLES
Financial assets at amortised cost
Other receivables
Prepayments
19. CASH
31 December 2022
£’000
31 December 2021
£’000
-
4,384
2,437
6,821
5,803
2,542
1,462
9,807
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
The Directors consider that the carrying amount of cash and cash equivalents approximates to their fair value. All changes in
financial liabilities arising from financing activities, other than the lease liabilities taken out in 2019 and 2022, are due to cash
flow movements and are shown in the consolidated statement of cash flows within cash flow from financing activities.
20.
CAPITAL AND RESERVES
Share capital
AUTHORISED, ISSUED AND FULLY PAID
At 31 December 2022
At 31 December 2021
No.
£’000
No.
£’000
Ordinary shares of £0.002 each
42,196,554
84
40,964,225
82
Cash and cash equivalents comprise cash balances and deposits held at call with banks.
Fixed collateral comprise cash held as collateral with banking counterparties for which the Group does not have immediate
access.
Number of shares
Cash balances included within derivative financial assets (see note 15) relate to the variation margin called by banking
counterparties regarding out of the money trades.
Cash and cash equivalents
Variation margin called by counterparties (note 16)
Fixed collateral
TOTAL CASH
Cash at bank is made up of the following currency balances:
British pound
Euro
US Dollar
Canadian Dollar
Norwegian Krone
Chinese Renminbi
Other currencies
31 December 2022
£’000
31 December 2021
£’000
136,799
44,876
4,726
186,401
108,044
8,380
3,506
119,930
31 December 2022
£’000
31 December 2021
£’000
86,421
61,325
20,565
4,070
7,622
3,307
3,091
186,401
90,072
(22,705)
50,046
1,376
25
395
721
119,930
The Norwegian Krone and Chinese Renminbi balances of £7,621,894 and £3,307,134 at 31 December 2022 represent short-
term timing differences over the year end. The Norwegian Krone balance represents cash in transit over the year end.
The Chinese Renminbi balance was received from a client on 30th December and subsequently paid out to a banking
counterparty on the first working day of 2023.
AT 1 JANUARY 2021
Shares issued on vesting of share option schemes
AT 31 DECEMBER 2021
Shares issued on vesting of share option schemes
AT 31 DECEMBER 2022
Ordinary shares
40,123,568
840,657
40,964,225
1,232,329
42,196,554
The following movements of share capital occurred during the year ended 31 December 2022:
On 21 March 2022, the Company issued 1,123,946 new shares following the vesting of shares under the B, C and E Growth
Share Schemes and the Institutional Share Scheme.
On 25 March 2022, the Company issued 99,386 new shares in respect of shares issued following the vesting of the SAYE
share scheme.
The Company issued a further 8,997 new shares in respect of shares issued following the vesting of the SAYE share scheme,
between April 2022 and June 2022.
The following movements of share capital occurred during the year ended 31 December 2021:
On 23 March 2021, the Company issued 822,873 new shares following the vesting of shares under the B and C Growth Share
Schemes.
On 23 March 2021, the Company issued 2,403 new shares in respect of shares issued following the early exercise by an
employee of the SAYE share scheme.
On 19 April 2021, the Company issued 2,596 new shares in respect of shares issued following the early exercise by an
employee of the SAYE share scheme.
On 10 September 2021, the Company issued 12,785 new shares in respect of shares issued to a former employee of Alpha FX
Institutional Limited as part of a settlement agreement.
132
133
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022
20. CAPITAL AND RESERVES [CONT.]
Below shows summarised financial information for each subsidiary and division that has non-controlling interests that are
material to the Group. The amount disclosed are before intra-group eliminations.
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Share premium account
In the year ended 31 December 2022 the share premium account increased by £1,905,507 following the vesting of shares
under the Institutional Share Scheme. The share premium account increased by a further £823,771 following the vesting of
the SAYE share scheme.
In the year ended 31 December 2021 the share premium account increased by £175,341 due to shares vesting as a result of a
settlement agreement. The share premium account increased by a further £25,986 as a result of shares vesting due to two
early exercises of the SAYE scheme.
Capital redemption reserve
The capital redemption reserve of £3,701 arose following the buy-back of shares in prior years.
Merger reserve
The merger reserve of £666,529 was created in October 2016 as a result of the share for share exchange with non-
controlling interests. The merger relief reserve represents the difference between the fair value and nominal value of shares
issued on the acquisition of non-controlling interests, where the Company has taken advantage of merger relief.
Retained earnings
Represents accumulated profits attributable to equity owners of the parent less accumulated dividends.
Translation reserve
The translation reserve of £1,257,974 (2021: (£123,429)) represents the foreign exchange differences arising from the
translation of the net investment in foreign entities.
21. NON-CONTROLLING INTERESTS
Non-controlling interests (“NCI’s”) include the following:
− Alpha Foreign Exchange (Canada) Limited (“Canada”) in which the NCI’s shareholding increased from 25% to 25.3% in
April 2022 following the launch of the Canada share scheme, and reduced to 18% in September 2022. A further 4.3%
of the shares are held by employees, but these shares are not included in the NCI as the shares confer no upfront
economic rights to their holders and as such, are not entitled to receive dividends, receive notice of, attend, speak or
vote at general meetings of the Company and are not entitled rights to participate in any distributions upon a liquidation
or capital reduction of the Company.
− Alpha FX Institutional Limited (“Institutional”) in which the NCI’s shareholding reduced from 20.0% to 15.4% in March
2022. A further 6.1% of the shares are held by employees, but these shares not included in the NCI, in line with the
reasoning above for Canada.
− Alpha Pay, a division of Alpha FX Limited in which voting shares held by the NCIs decreased from 8.21% at the start of the
year to 7.53% in January 2022. A further 11.23% of the shares are held by employees, but these shares are not included in
the NCI, in line with the above.
− Alpha FX Netherlands Limited (“Netherlands”) in which the NCI’s shareholding decreased from 16.5% to 6.5% in
November 2022.
Institutional
Canada
Alpha Pay
Netherlands
31 Dec
2022
£’000
31 Dec
2021
£’000
31 Dec
2022
£’000
31 Dec
2021
£’000
31 Dec
2022
£’000
31 Dec
2021
£’000
31 Dec
2022
£’000
31 Dec
2021
£’000
Revenue
19,836
15,634
4,698
5,497
23,496
18,330
6,388
3,783
4,412
9,342
1,511
-
5,175
1,070
-
371
66
-
4,398
1,473
368
10,495
790
-
6,219
804
-
1,960
311
-
1,627
269
(1,023)
(910)
(182)
-
(408)
(829)
(264)
-
3
13,612
5
7,292
(2,729)
10,886
(3,531)
3,766
1,064
1,191
(960)
1,295
16
1,184
(228)
972
-
1,595
-
804
2,434
3,126
-
-
(2,553)
1,595
804
3,007
183
1,905
(199)
1,889
Other operating income
Profit after taxation
Profit allocated to non-
controlling interests
Dividends declared to
non-controlling interests
AT 31 DECEMBER
Assets
Non-current assets
Current assets
Liabilities
Current liabilities
NET ASSETS
22. OTHER PAYABLES
CURRENT:
Other payables
Other taxation and social security
Accruals
NON-CURRENT:
Dilapidation provision
TOTAL OTHER PAYABLES
31 December 2022
£’000
31 December 2021
£’000
70,204
1,369
5,699
77,272
222
222
77,494
34,363
1,018
4,617
39,998
-
-
39,998
Other payables consist of margin received from clients and client-held funds. The carrying value of other payables classified as
financial liabilities measured at amortised cost, approximates fair value.
134
135
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
23. RELATED PARTY TRANSACTIONS AND BALANCES
Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over
the other party in making financial or operational decisions, or one other party controls both.
The Group operates several growth share schemes where shares in subsidiary entities are awarded to employees and are converted
into shares in the Company at a future date based on pre-determined vesting criteria. External tax valuations for share schemes are
obtained from an independent third party prior to issue. Indemnities are also obtained from all employees for any future tax liabilities
that may arise.
Subsidiaries
The Parent Company of the Group is Alpha Group International plc. Note 14 provides information about the subsidiaries and
the holding company. Details of the ultimate controlling party can be found in note 25.
Should any additional payroll tax liabilities arise, in the first instance, they would be paid by the subsidiary company and the tax
indemnities would ensure recovery of any additional tax liabilities from the growth shareholders. The Board has assessed that should
such an event occur, there would not be a material impact on the Group’s net assets or the result for the year.
Transactions between the Group and its subsidiaries have been eliminated on consolidation and are not disclosed in this
B Growth Share Scheme
note.
Key management personnel
The Group considers its key management personnel to be the Directors of Companies within the Group.
Under the B Growth Share Scheme, selected employees of the Group who were employed prior to the Company’s IPO in 2017, were
issued with B shares in Alpha FX Limited. The rights attaching to the B shares include a put option which, when exercised, enable the
shareholder to convert the B shares into ordinary shares of the Company.
Following the exercise of 341 B Growth Shares in respect of the year ended 31 December 2020, 630,279 shares in Alpha Group
International plc were issued as consideration in March 2022. Due to the impact of COVID-19, the issuance of these shares had been
The compensation of the Directors of the Company, together with their shareholding, is included in the Remuneration
deferred from March 2021 with all future issuances similarly deferred by a year.
Committee report on page 80.
Loans with key management personnel
In March 2022, following the revenue growth target for the year being met in respect of the year ended 31 December 2021, 333
B Growth Shares were exercised when the share price of the Company was 1909p. As a result, 549,137 shares in Alpha Group
As at 31 December 2022 there was a loan balance outstanding with A J Hall, a Director of Alpha FX Institutional Limited,
International plc were due to be issued as consideration in March 2023 and 88,015 shares to an ex-employee in March 2025 as part of
amounting to £97,791 (2021: £63,650) and a loan balance outstanding with S J Marsh, a Director of Alpha FX Institutional
a settlement agreement. This represents the final vesting of the B Growth Share Scheme.
Limited, amounting to £130,185 (2021: £173,850). Both loans were in respect of shares that were issued partly paid. These
balances will be repaid in part on the second vesting of the Institutional shares in March 2023 (see note 26). The intention is
The share-based payment charge of the B Growth Shares in the year ended 31 December 2022 was £nil (2021: £nil).
for the remainder of the loan balances to be repaid via a deduction from dividend payments throughout 2023.
Transactions with key management personnel
C Growth Share Scheme
During the year, Alpha FX Limited traded gross foreign currency contracts with; M J Tillbrook £2,291,400 (2021: £nil) and M E
In October 2018, the Group adopted a C Growth Share Scheme, under which 863 C ordinary shares (“C Shares”) in Alpha FX Limited
Stuart £30,853 (2021: £49,768), on an arms length basis.
(the “Company”) were issued to full-time employees of the Group (“C Share Growth Scheme”).
During the year, Alpha FX Limited purchased services totalling £1,900 (2021: £nil) from C I Kahn, on an arms-length basis, in
The C Shares confer no upfront economic rights to their holders and in particular holders of the C Shares are not entitled to receive
relation to tickets for a sporting event.
dividends, receive notice of, attend, speak or vote at general meetings of the Company and are not entitled rights to participate in any
distributions upon a liquidation or capital reduction of the Company.
In December 2022, the Group booked and paid for 2023 business travel to Australia for a Director, that included personal
expenses due to his family being in attendance, this amounted to £26,000. As intended when the prepayment was made, this
The C Shares contain a put option, such that, when and to the extent vested, they can be converted into ordinary shares in the
amount was subsequently fully reimbursed in early 2023.
Other entities
During the year, the Group purchased goods and services totalling £391,128 (2021: £511,516) on an arms-length basis from
Klarify Group Limited, a multi-cloud and cyber security specialist in which M J Tillbrook has a 42% (2021: 42%) beneficial
ownership.
24. SHARE-BASED PAYMENTS
Group. The rate of conversion is that the C Shares will be regarded as worth a pro rata share of the share price gain of Alpha Group
International plc above a hurdle price of 550p based upon the market price of Alpha Group International plc at the time of allotment.
Upon conversion, the number of ordinary shares in Alpha Group International plc that a C Shareholder will receive is such number of
ordinary shares whose value is equivalent to the Group’s closing share price at the conversion date. Conversion is only permitted to
the extent that the C Shares have vested.
The C Share Growth Scheme includes a requirement for Group revenue to grow 20% in 2022 and 20% in 2023 in order for vesting to
occur. The gain that a C Shareholder can receive is capped at a ceiling on the maximum market capitalisation of Alpha of £650m. As
a result, the C Shareholders will be entitled to a pro rata share of the gain in market capitalisation of Alpha between the hurdle price
at the time of allotment and the market capitalisation ceiling of £650m. If a participating employee either leaves employment with
Employees (including senior executives) of the Group receive remuneration in the form of share-based payments, whereby
the Group or commits a performance breach (broadly conduct detrimental to the business and reputation of the Group), the Group is
employees render services as consideration for equity instruments (equity-settled transactions).
entitled to buy back the relevant C Shares at cost.
The Group recognised a total expense related to all the above equity-settled share-based payment transactions in the year
In March 2022, 186 C Growth Shares were exercised in respect of the year ended 31 December 2021. As a result, 219,494 shares in
ended 31 December 2022 of £663,624 (2021: £259,782).
Alpha Group International plc were issued as consideration in March 2022.
136
137
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022 24. SHARE-BASED PAYMENTS [CONT.]
C Growth Scheme [cont]
Based on share price of the Company of 1850p as at 31 December 2022 and following the revenue growth target for the year
being met for the C Growth Shares, it is estimated that upon exercise of the put options in respect of the year ended 31
December 2022, the Company will issue 171,853 shares in March 2023.
The share-based payment charge of the C Growth Shares in the year ended 31 December 2022 was a credit of £17,918 (2021:
charge of £123,024).
E share growth scheme
In 2020 the Group adopted an E Share Growth Scheme under which 882 E ordinary shares (“E Shares”) in Alpha FX Limited
were issued to full time employees of the Group (“E Share Growth Scheme”). The E Shares contain a put option, such that,
when and to the extent vested, they can be converted into ordinary shares in the Group. The E Shares will vest in four equal
tranches, occurring annually, starting on 31 December 2021 until 31 December 2024. Vesting will require Group revenue
growth of 25% in 2021, 20% in 2022, 20% in 2023 and 20% in 2024.
The rate of conversion of the E Shares, is a pro rata share of the market capitalisation gain of Alpha above a hurdle price
of £300m. The gain that an E Shareholder could receive is capped through placing a ceiling on the maximum market
capitalisation of Alpha of £650m. The result of doing so is that the E Shareholders will be entitled to a pro rata share of the
gain in market capitalisation of Alpha between £300m and the market capitalisation ceiling of £650m.
Upon conversion, the number of ordinary shares in the Group an E Shareholder will receive is such number of ordinary
shares whose value is equivalent to the Group’s closing share price at the conversion date. Conversion is only permitted to
the extent that the E Shares have vested.
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
G and H Share Growth Scheme
In June 2022 the Group awarded 360 shares under the G Share Growth Scheme and 265 shares under the H share scheme.
The G and H Shares contain a put option, such that, when and to the extent vested, they can be converted into ordinary shares
in the Group. The shares will vest in five tranches, occurring annually, in respect of the Financial Years for 2022, 2023, 2024,
2025 and 2026. The shareholders will be able to vest 12.5% of their holding for Financial Year 2022, 12.5% for Financial Year
2023, 25% for Financial Year 2024, 25% for Financial Year 2025 and 25% for Financial Year 2026.
Vesting for each Financial Year for the G shareholders will require revenue from the London Corporate division (and any future
corporate division in Spain) to grow by 5.5% in Financial Year 2022, 15% in Financial Year 2023, 15% in Financial Year 2024, 15% in
Financial Year 2025 and 15% in Financial Year 2026.
Vesting for each Financial Year for the H shareholders is subject to 2 revenue targets being met, with shareholders being
entitled to vest 50% of their holding for each Financial Year in respect of each target being met. The first revenue target is
for the London Corporate division (and any future corporate division in Spain) to grow by 5.5% in Financial Year 2022, 15% in
Financial Year 2023, 15% in Financial Year 2024, 15% in Financial Year 2025 and 15% in Financial Year 2026. The second target is
for the revenue from all the global corporate divisions to grow by 18.6% in Financial Year 2022, 20% in Financial Year 2023, 20%
in Financial Year 2024, 20% in Financial Year 2025 and 20% in Financial Year 2026.
The rate of conversion that the G and H Shares will be regarded as worth, is a pro rata share of the market capitalisation gain
of Alpha above a hurdle price of £740m. The gain that a shareholder could receive is capped through placing a ceiling on the
maximum market capitalisation of Alpha of £1,867m. The result of doing so is that the G and H Shares will be entitled to a pro
rata share of the gain in market capitalisation of Alpha between £740m and the market capitalisation ceiling of £1,867m.
Upon conversion, the number of ordinary shares in Alpha that a shareholder will receive is such number of ordinary shares
whose value is equivalent to Alpha’s closing share price at the conversion date. Conversion is only permitted to the extent that
In March 2022, 197 E Growth Shares were exercised in respect of the year ended 31 December 2021. As a result, 174,345
the G and H Shares have vested.
shares in Alpha Group International plc were issued as consideration in March 2022.
Based on share price of the Company of 1850p as at 31 December 2022 and following the revenue growth target for the year
being met for the E Growth Shares, it is estimated that upon exercise of the put options in respect of the year ended 31
December 2022, the Company will issue 161,097 shares in March 2023.
The share-based payment charge of the G and H Growth Shares in the year ended 31 December 2022 was £328,772 (2021: £nil).
Details of the outstanding shares in Alpha FX Limited in respect of the above schemes are as follows:
The share-based payment charge of the E Growth Shares in the year ended 31 December 2022 was £148,660 (2021: £69,713).
31 December 2022
F Share Growth Scheme
In June 2022 the Group issued an initial 285 shares under the F Share Growth Scheme with a further 99 shares issued in
November 2022. The F Shares contain a put option, such that, when and to the extent vested, they can be converted into
ordinary shares of the Group. The F Shares will vest in four equal tranches, occurring annually, in respect of the Financial
Years for 2023, 2024, 2025 and 2026. Vesting for each Financial Year will require Group revenue growth of 20% in Financial
Year 2023, 20% in Financial Year 2024, 20% in Financial Year 2025 and 20% in Financial Year 2026. The rate of conversion
that the F Shares will be regarded as worth, is a pro rata share of the market capitalisation gain of Alpha above a hurdle
price of £740m. The gain that an F shareholder could receive is capped through placing a ceiling on the maximum market
capitalisation of Alpha of £1,867m. The result of doing so is that the F Shares will be entitled to a pro rata share of the gain
in market capitalisation of Alpha between £740m and the market capitalisation ceiling of £1,867m.
Upon conversion, the number of ordinary shares in Alpha that an F Shareholder will receive is such number of ordinary
shares whose value is equivalent to Alpha’s closing share price at the conversion date. Conversion is only permitted to the
extent that the F Shares have vested.
The share-based payment charge of the F Growth Shares in the year ended 31 December 2022 was £172,204 (2021: £nil).
B Growth
Share Scheme
no.
C Growth
Share Scheme
no.
E Growth
Share Scheme
no.
F Growth
Share Scheme
no.
G Growth
Share Scheme
no
H Growth
Share Scheme
no.
Outstanding at beginning of year
Granted in the year
Exercised in the year*
Forfeited in the year
OUTSTANDING AT END OF YEAR
358
-
(333)
(25)
-
568
-
(186)
(81)
301
882
-
(197)
(83)
602
-
384
-
(23)
361
-
360
-
-
-
265
-
-
360
265
* The 328 B shares that were exercised in March 2022 in respect of the year ended 31 December 2021 and the shares in the
Company will not be issued until March 2023 and March 2025.
138
139
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022
24. SHARE-BASED PAYMENTS [CONT.]
G and H Share Growth Scheme [cont]
Outstanding at beginning of year
Granted in the year
Exercised in the year*
Forfeited in the year
OUTSTANDING AT END OF YEAR
31 December 2021
B Growth
Share Scheme
no.
C Growth
Share Scheme
no.
E Growth
Share Scheme
no.
709
-
(351)
-
358
568
-
-
-
568
882
-
-
-
882
*The 351 B shares that were exercised in the year were in respect of the year ended 31 December 2020 and the shares in the
Company were issued in March 2022.
The fair value of the Growth Share Schemes was calculated using a Monte Carlo simulation model. The model considers historical
and expected dividends, and the share price volatility of the Group relative to that of its competitors, to predict the share
performance. When determining the grant date fair value of awards, service and non-market performance conditions are not
considered. However, the likelihood of the conditions being met is assessed as part of the Group’s best estimate of the number of
equity instruments that will ultimately vest. Market performance conditions are reflected within the grant date fair value.
The inputs used for fair valuing the awards at the date of grant were as follows:
B Growth
Share Scheme
C Growth
Share Scheme
E Growth
Share Scheme
F, G & H Growth
Share Schemes
Expected volatility %
Risk free interest rate %
Option life (years)
Starting equity value (£m)
SAYE scheme
25.0%
0.09%
3
£33.6m
25.0%
0.75%
5
45% - 55%
0.10%
5
40%
2.3%
5
Following the vesting of the SAYE scheme, the Company issued 108,383 shares in 2022.
Alpha FX Institutional Limited
Alpha FX Institutional Limited was incorporated in 2018, and at 31 December 2022 is owned 15.4% by the management team.
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
In March 2022, employees exercised their option to convert 4.62% of their holding in respect of the year ended 31 December 2021.
As a result, 99,828 shares in the Company were issued as consideration.
Based on share price of the Company of 1850p as at 31 December 2022, it is estimated that the Company will issue 123,792 shares
as consideration for employees converting 4.99% of the equity in respect of the year ended 31 December 2022.
The share-based payment charge in the year ended 31 December 2022 was £31,906 (2021: £31,906).
Alpha Foreign Exchange (Canada) Limited
In 2019 the Group announced the share ownership plan for Alpha Foreign Exchange (Canada) Limited which is 25% owned by
management. Under the agreement, management can exchange 25% of the shares they hold in the subsidiary for new ordinary
shares in the Company in each of the financial years ended 31 December 2022, 31 December 2023, 31 December 2024 and 31
December 2025. As the shares held by the management in the subsidiary is reduced over time, Alpha FX Limited’s shareholding
over the subsidiary will commensurately increase.
In April 2022 the Group adjusted the employee share ownership incentive scheme for Alpha Canada to include additional key
employees. The new shares are structured in a similar way to the shares issued to existing employee shareholders of Alpha Canada
and will vest in four equal tranches, for each of the financial years ending 31 December 2024, 31 December 2025, 31 December 2026
and 31 December 2027.
Based on share price of the Company of 1850p as at 31 December 2022, it is estimated that the Company will issue 8,397 shares as
consideration for an employee converting 4.5% of their equity in respect of the year ended 31 December 2022.
Alpha Pay
In 2019 the Group announced that it had put in place an employee share ownership incentive scheme for certain individuals
employed in the Group’s newly formed business division, Alpha Pay). A new class of shares (“D Shares”) in Alpha FX Limited
was created.
The value of the D Shares will be linked to the performance of the Alpha Pay business. Under the initial share award, from March
four years (with the final option being exercisable in March 2026). At conversion, and in exchange for converting their D shares into
shares in the Group, the APS Participants’ holding of D Shares in Alpha FX Limited will commensurately decrease and the Group’s
holding will commensurately increase.
Following the continued success of Alpha Pay, in December 2021 the Group adjusted the employee share ownership scheme to
include additional new employees to support the ongoing growth of the division. As a result, a new class of non-dividend bearing
and non-voting D3 shares and D4 shares were issued. The value of the D3 Shares and D4 Shares will be linked to the performance
of the Alpha Pay business and are structured in a similar way to the existing D shares issued in 2019. The D3 Shareholders will have
£186.6m
£300.0m
£740.0m
2023, the Alpha Pay Participants will have the option to convert 25% of their holding of D Shares into Group shares each year for
With the initial share award, the individuals have the option to convert a percentage of their holding into Group shares over a
the option to convert 25% of their holding of D3 Shares into ordinary shares of the Group each year for four years commencing
four-year period, based upon strict performance criteria, with the first year of conversion being the year ended 31 December
from March 2024 (with the final option being exercisable in March 2027). The D4 Shareholders will have the option to convert 25%
2021. At conversion, and in exchange for converting their shares into the Group, Alpha FX Limited’s shareholding over Alpha FX
of their holding of D4 Shares into Group Shares each year for four years commencing from March 2025 (with the final option being
Institutional Limited will commensurately increase.
exercisable in March 2028). At conversion, and in exchange for converting their D3 shares and D4 Shares into Group Shares, the
D3 shares held by the D3 Shareholders and the D4 Shares held by the D4 Shareholders in Alpha FX Limited will commensurately
In 2019 the Group adjusted the employee share ownership incentive scheme to include additional key employees. These
decrease and the Group’s holding will commensurately increase.
individuals have the option to convert a percentage of their holding into Group shares over a four-year period, based upon strict
performance criteria, with the first year of conversion being the year ended 31 December 2022.
Following the continued success of the Institutional Division, the Group further adjusted the employee share ownership incentive
At 31 December 2022 the Group owned 81.2% of the issued shares of the division (31 December 2021: 81.6%). However, for
accounting purposes, the Group’s share of the profits and voting rights at 31 December 2022 was 92.5% (31 December 2021: 91.8%).
scheme in March 2022 to include additional key employees. The new shares are structured in a similar way to the shares issued
Based on share price of the Company of 1850p as at 31 December 2022, it is estimated that the Company will issue 111,028 shares
to previous employee shareholders of Alpha Institutional, and will vest in four equal tranches, for each of the financial years
as consideration for an employee converting 3.7% of their equity in respect of the year ended 31 December 2022.
ending 31 December 2024, 31 December 2025, 31 December 2026 and 31 December 2027.
140
141
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022 24. SHARE-BASED PAYMENTS [CONT.]
Alpha FX Netherlands Limited
Following the establishment of our Netherlands business in 2020, in May 2021 the Group announced a new share scheme
to incentivise key personnel within Alpha FX Netherlands Limited.
These individuals have the option to exchange 25% of the shares they hold in Alpha FX Netherlands Limited for new
ordinary shares in the Company for each of the financial years ended 31 December 2023, 31 December 2024, 31 December
2025 and 31 December 2026. The shares exchanged will be valued with reference to an 8x multiple of underlying profit
after tax achieved by Alpha FX Netherlands Limited. As the shares held by the management in the subsidiary is reduced
over time, Alpha FX Limited’s shareholding over the subsidiary will commensurately increase.
At 31 December 2022 the Group owned 93.5% of the issued shares of Alpha FX Netherlands Limited (31 December 2021:
83.5%).
25. ULTIMATE CONTROLLING PARTY
The Directors believe that there is no ultimate controlling party of the Group.
26. EVENTS AFTER THE REPORTING PERIOD
On 17 February 2023, the Group entered into an interest rate swap for a notional amount of up to $400m to fix the rate of
interest receivable on US Dollar cash balances held in respect of the Group’s client cash balances. With the interest rate
swap, the Group receives a fixed rate of interest and pays a floating interest rate based on SOFR, the difference between
the rates results in the Group receiving a fixed rate of interest. The contract commences in August 2023 and expires in
August 2025 with a net interest rate receivable of 4.14%. Hedge accounting is applied in accordance with IFRS 9.
Following the vesting of the B Growth Share Scheme for the year ended 31 December 2021, the Company will be issuing
549,137 shares in March 2023 and 88,015 shares in March 2025 to an ex-employee as part of a settlement agreement.
Following the vesting of the C Growth Share Scheme for the year ended 31 December 2022, the Company will be issuing
171,810 shares in March 2023.
FINANCIAL STATEMENTS COMPANY STATEMENT OF FINANCIAL POSITION
Company Statement of Financial Position
As at 31 December 2022
Company number: 07262416
NON-CURRENT ASSETS
Investments
TOTAL NON-CURRENT ASSETS
CURRENT ASSETS
Trade and other receivables
Current tax asset
TOTAL CURRENT ASSETS
TOTAL ASSETS
EQUITY
Share capital
Share premium account
Capital redemption reserve
Merger reserve
Retained earnings
TOTAL EQUITY
CURRENT LIABILITIES
Trade and other payables
TOTAL CURRENT LIABILITIES
TOTAL EQUITY AND LIABILITIES
Year ended
31 December 2022
Year ended
31 December 2021
Note
£’000
£’000
4
5
8
6
53,076
53,076
11,927
51
11,978
65,054
84
53,513
4
667
10,779
65,047
7
7
65,054
52,398
52,398
10,518
249
10,767
63,165
82
50,783
4
667
11,609
63,145
20
20
63,165
Following the vesting of the E Growth Share Scheme for the year ended 31 December 2022, the Company will be issuing
The Company reported a profit for the year ended 31 December 2022 of £3,351,205 (2021: £10,199,472).
161,064 shares in March 2023.
The financial statements of Alpha Group International plc were approved by the Board of Directors on
Following the second year of vesting of the Alpha FX Institutional Limited share scheme for the year ended 31 December
21 March 2023 and signed on its behalf by:
2022, the Company will be issuing 123,768 shares in March 2023.
Following the first year of vesting of the Alpha Foreign Exchange (Canada) Limited share scheme for the year ended 31
December 2022, the Company will be issuing 8,395 shares in March 2023.
M J Tillbrook
Director
T Powell
Director
Following the first year of the vesting for D Share scheme for the year ended 31 December 2022, the Company will be
issuing 111,085 shares in March 2023.
142
143
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022 Company Statement of Changes in Equity
For the year ended 31 December 2022
Notes to the Company Financial Statements
For the year ended 31 December 2022
FINANCIAL STATEMENTS NOTES TO THE COMPANY FINANCIAL STATEMENTS
Called up
share
capital
Share
premium
account
Capital
redemption
reserve
Merger
reserve
Retained
earnings
Total
equity
1. BASIS OF PREPARATION
The financial statements have been prepared under the historical cost convention and with Financial Reporting Standard
100 Application of Financial Reporting Requirements (“FRS 100”) and Financial Reporting Standard 101 Reduced
£’000
£’000
£’000
£’000
£’000
£’000
Disclosure Framework (“FRS 101”).
BALANCE AT 1 JANUARY 2021
80
50,582
Profit for the year
Transactions with owners
Shares issued on vesting of share option scheme
Shares issued in relation to SAYE share scheme
Share-based payments
Dividends paid
-
2
-
-
-
-
175
26
-
-
BALANCE AT 31 DECEMBER 2021
82
50,783
Profit for the year
Transactions with owners
Shares issued on vesting of share option scheme
Issue of shares in relation to subsidiary earnout
Shares issued in relation to SAYE share scheme
Share-based payments
Dividends paid
-
2
-
-
-
-
-
-
1,906
824
-
-
4
-
-
-
-
-
4
-
-
-
-
-
-
667
5,688
57,021
-
-
-
-
-
10,200
10,200
(2)
-
228
175
26
228
(4,505)
(4,505)
667
11,609
63,145
-
-
-
-
-
-
3,351
3,351
(2)
-
-
631
-
1,906
824
631
(4,810)
(4,810)
BALANCE AT 31 DECEMBER 2022
84
53,513
4
667
10,779
65,047
In preparing these financial statements the Company has taken advantage of all disclosure exemptions conferred by FRS
101. Therefore, these financial statements do not include:
− certain comparative information as otherwise required by IFRS;
− certain disclosures regarding the Company’s capital;
− a statement of cash flows;
− the effect of future accounting standards not yet adopted;
− the disclosure of the remuneration of key management personnel; and
− disclosures of related party transactions with other wholly owned members of Alpha Group International plc group of
companies.
In addition, and in accordance with FRS 101 financial instrument disclosure exemptions have been adopted because
equivalent disclosures are included in the Company’s Consolidated Financial Statements. These financial statements do
not include certain disclosures in respect of:
− share-based payments; or
− financial instruments (other than certain disclosures required as a result of recording financial instruments at fair
value); or
− fair value measurement other than certain disclosures required as a result of recording financial instruments at fair
value.
The financial statements are prepared in pounds sterling (“£”), and all values are rounded to the nearest thousand
(“£’000”) except where otherwise indicated.
2. SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted are the same as those set out in note 2 to the Consolidated Financial
Statements except as noted below.
Investments in subsidiaries and associates are stated at cost less, where appropriate, provisions for impairment.
3. PROFIT FOR THE YEAR
As permitted in section 408 of the Companies Act 2006, the Company has elected not to present its own statement of
comprehensive income for the year. The Company reported a profit for the financial year ended 31 December 2022 of
£3,351,205 (2021: £10,199,472).
The auditor’s remuneration for audit and other services is disclosed in note 5 to the Consolidated Financial Statements.
144
145
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022 4. INVESTMENTS IN SUBSIDIARY UNDERTAKINGS
The Company’s investment in the share capital of Alpha FX Limited and details of the subsidiary companies are disclosed in
note 14 to the Consolidated Financial Statements.
Balance at 1 January
Share for share exchange
Issue of share capital in subsidiary
BALANCE AT 31 DECEMBER
31 December 2022
£’000
31 December 2021
£’000
52,398
678
-
53,076
2,065
333
50,000
52,398
The additional investments in the year represent share-based payments for employee share schemes in the subsidiary
company and a buyback of shares from employees that left the business in the year.
5. TRADE AND OTHER RECEIVABLES
Amount owed by Group undertaking
31 December 2022
£’000
31 December 2021
£’000
11,927
11,927
10,518
10,518
During the year, no impairment provisions have been made against any class of debtor.
6. TRADE AND OTHER PAYABLES
Accruals
7. EMPLOYEE COSTS
31 December 2022
£’000
31 December 2021
£’000
7
7
20
20
The Company did not have any employees during the year (2021: nil). All staff are employees of the subsidiary undertaking.
8. SHARE CAPITAL
Details of the share capital of the Company are included in note 20 to the consolidated accounts.
146
147
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022
Shareholder Information
REGISTERED OFFICE
Brunel Building
2 Canalside Walk
London W2 1DG
COMPANY ADVISERS & CORPORATE BROKER
Liberum Capital Limited
Ropemaker Place, Level 12
25 Ropemaker Street
London EC2Y 9LY
SHARE REGISTRARS
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA
FINANCIAL PR & ADVISORS
Alma PR Limited
71 - 73 Carter Lane
London EC4V 5EQ
AUDITORS
BDO LLP
55 Baker St
Marylebone
London W1U 7EU
LEGAL ADVISERS
Bird & Bird LLP
12 New Fetter Lane
London EC4A 1JP
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CBP00019082504183028ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2022 ALPHA GROUP INTERNATIONAL PLC
Brunel Building
2 Canalside Walk
London W2 1DG
www.alphagroup.com