Alpha Group International plc
Annual Report 2023
Company Overview
2023 Highlights 1
Introduction to Alpha Group 3
Strategic Report
Chairman’s Statement 6
Chief Executive’s Statement 8
Chief Financial Officer’s Statement 24
Key Performance Indicators 29
Introduction to FX Risk Management 30
Introduction to Alternative Banking 36
Introduction to Fund Finance 40
Introduction to Cobase 42
Principal Risks & Uncertainties 44
Sustainability 56
Engaging with our Stakeholders (s172) 66
Principal Board Decisions 69
Business Model 71
Corporate Governance Report
Board of Directors 72
Corporate Governance Statement 74
Remuneration Committee Report 82
Audit Committee Report 86
Directors’ Report 90
Independent Auditor’s Report 94
Financial Statements
Consolidated Statement of Comprehensive Income 104
Consolidated Statement of Financial Position 105
Consolidated Statement of Cash Flows 106
Consolidated Statement of Changes in Equity 107
Notes to the Consolidated Financial Statements 108
Shareholder Information 162
C5
Highlights
FY2023
FINANCIAL HIGHLIGHTS1
− Group revenue increased 12% to £110.4m (2022: £98.3m)
−
FX Risk Management revenue increased 10% to £76.3m (2022: £69.5m)
− Alternative Banking revenue1 increased 18% to £33.9m (2022: £28.8m)
− Underlying2 profit before tax grew 11% to £43.0m, excluding Cobase3 growth
was 12% to £43.2m (2022: £38.6m)
− Consistent underlying profit margins of 38% (2022: 39%)
− Alternative Banking client balances increased by 30% to £2.1bn in Q4
(2022 Q4: £1.6bn)
− Net treasury income4 from interest on client balances of over £73m
(2022: £9.3m)
−
Total Income increased 73% to £186.0m (2022: £107.6m)
− Profit before tax increased 148% to £115.9m (2022 restated5: £46.8m)
− Strong cash generation and debt free, with adjusted net cash6 increasing by
£64m to £178.8m (2022: £114.4m)
− Basic earnings per share up 124% to 206.2p (2022 restated: 92.1p), and
underlying basic earnings per share flat at 76.7p (2022 restated: 76.3p)
−
Final dividend of 12.3 pence per share, payable on 10 May 2024 to
shareholders on the register at 5 April 2024, making a total final dividend for
2023 of 16.0 pence per share (2022: 14.4p)
− Cobase (acquired 1 December 2023) contributed revenue of £186k in the
month post-acquisition
−
Initiated up-to £20m share buyback in January 2024
BUSINESS HIGHLIGHTS
− Against a difficult macro-environment, average revenue per FX Risk
Management client increased 7% (2022: 3%) and FX Risk Management client
numbers increased 2% to 1,071 (2022: 1,047)
− No. of accounts booking trades on our FXRM platform increased 19% in the year
− No. of accounts within Alternative Banking increased 54% to 6,467 (2022: 4,200)
− Group Front Office headcount increased 25% to 136 at the year-end (2022: 109)
− Benefits of diversification strategy clearly evidenced in resilient revenue and
profit growth
− Disciplined approach to credit and risk reflected in the lowest level of client
defaults in the past five years
− Business is well invested with scalable platform, creating operational gearing
opportunity moving forward
−
−
Launch of new Fund Finance business in May 2023
Launch of new Corporate FXRM offices in Madrid and Munich
− Completed our first acquisition (Cobase) in December 2023
− Working towards a listing on the Premium Segment of the Main Market in
May 2024
− Appointment of Dame Jayne-Anne Gadhia to the Board intended for 1 May
2024, as Chair Designate7
−
2024 has started well, in line with our expectations
REVENUE (+12%)
£110M
ADJUSTED NET CASH (+£64m)
£179M
PROFIT BEFORE TAX (+148%)
£116M
TOTAL INCOME (+73%)
£186M
UNDERLYING2 PBT (+11%)
£43M
FRONT OFFICE HEADS (+25%)
136
1 Alternative Banking revenue includes £0.7m of
revenue from Fund Finance solution, which was born
out of this division.
2 Underlying excludes the impact of non-cash share-
based payments expense, net treasury income on
client balances, one-off listing-related and M&A
costs and amortisation of purchased intangibles in
2023.
3 Cobase was acquired on 1 December 2023, and during
the month generated revenue of £0.2m, EBITDA of
£0.0m, and a PBT loss of £0.2m.
4 Previously “Other Operating Income”.
5 The prior period restatement is detailed further in
note 4 of the financial statements.
6 Excluding collateral received from clients, collateral
paid to banking counterparties, early settlement of
trades and the unrealised mark to market profit or loss
from client swaps and rolls.
7 Subject to the completion of normal regulatory due
diligence by the Company’s Nomad.
1
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023
COMPANY OVERVIEW ABOUT ALPHA
Alpha Group
Part fintech, part consultancy,
wholly different.
Alpha is a leading non-bank provider of financial
partnership structure that creates a powerful sense
solutions to corporates and institutions operating
of collective ownership across the business.
internationally. Blending deep expertise with cutting-
edge technologies, we provide a growing portfolio of
Whilst we are an established company listed on
financial solutions to clients across more than fifty
the London Stock Exchange, we remain relentlessly
countries, serving as an enhanced alternative to their
focused on maintaining the same level of agility and
traditional bank.
client focus we had when we commenced operations
in 2010. These dynamics, combined with the passion of
The key to our success is our team, over 480 people
our people, have enabled us to make a substantial and
based across ten international offices, brought
enduring difference to our clients, and deliver a growth
together by a high-performance culture and a
story to match.
OUR DIVISIONS AND MARKETS
DIVISION
FX Risk Management
Alternative Banking
(est. 2010)
(est. 2020)
Cobase
(acquired 2023)
PRODUCTS
Risk Management
Mass Payments
MONETISATION
Margins on Spot, Forward
& Option Contracts
Payment Fees
Bank Connectivity
Technology
Platform Fees
Global Accounts
Mass Payments
Fund Finance (‘FF’)
Account Fees
Payment Fees
Margins on Spot Contracts
Platform Fees (FF)
Advisory Fees (FF)
CLIENTS
Corporates & Institutions
Institutions
Corporates & Institutions
OFFICES
UK, Canada, Netherlands,
Italy, Australia, Spain,
Germany
UK, Luxembourg,
Malta
Netherlands
FY23 REVENUE
£76.3m
£33.9m
£0.2m
192
FX Risk Management
230
Alternative Banking
21
Cobase
HEADCOUNT
43
Central Services
2
3
Our History
Our past performance is the result
of being relentlessly focused on
the future.
COMPANY OVERVIEW OUR HISTORY
2023
2022
2021
December 2023: Acquisition of
Cobase completed.
September 2023: Launch of FXRM
sales offices in Madrid and Munich.
August 2023: Opened second HQ in
London, focused on the Institutional
market.
May 2023: Launch of Fund
Finance business.
December 2022: Company 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 Alternative
Banking office in Luxembourg.
December 2021: Employee shareholder
milestone, with over 100 employee
shareholders.
September 2021: Company formally
launches global accounts solution for
alternative investments.
April 2021: Group completes
decentralisation into FX Risk
Management and Alternative
Banking.
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 list of the London Stock
Exchange.
December 2018: Launch of mass
payments platform.
placing for investment, raising £20m.
March 2020: Launch of FXRM
sales office in Amsterdam.
October 2018: Launch of FXRM
sales office in Toronto.
March 2018: Launch of
Institutional business.
4
5
2017
2010
August 2017: Obtained FCA licence
to provide derivatives.
April 2017: IPO on AIM with a
market cap of c. £65m.
February 2010: Alpha launches as
FX Risk Management specialist to
UK corporates.
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023 Chairman’s Statement
Clive Kahn
I am pleased to report another year of strong financial and
operational progress for the Group, in which we delivered double-
digit growth alongside further geographic expansion
and the completion of our first acquisition.
Our ability to maintain our track record of top-
Jayne-Anne brings a wealth of experience setting
line growth during a period dominated by such
up and leading high-quality financial institutions,
challenging and turbulent macroeconomic
more details of which can be found in our regulatory
conditions underlines the resilience of our business.
announcement dated 20th March.
To have recorded such a performance despite
suppressed activity levels within both our corporate
In addition, Lisa Gordon will be stepping down from
and institutional markets validates both the strength
the Board on 1st May 2024 by not seeking re-election
of our proposition and the correctness of our
at the next AGM. On behalf of the Board and the
strategy to diversify our business streams and to
wider company, I would like to thank Lisa for all her
reinvest previous profits into our infrastructure and
contributions throughout Alpha’s growth journey
people.
over the past seven years – from our IPO on AIM, to a
company that is about to embark on its Main Market
A further result of the previous investment is that
listing. The Board and I look forward to working with
our best-in-class back office function has the
Jayne-Anne as Alpha embarks on the next chapter in
capacity for further growth. This enabled us to
its growth story.
focus our investment and capital allocation during
the year on our front office functions. We opened
two new overseas offices and launched a new fund
COBASE ACQUISITION
finance offering directed at the institutional market.
We were delighted, last December, to complete
We ended the year with record cash flows and a
our acquisition of Cobase, a leading multibank
strengthened balance sheet with £178.8m adjusted
connectivity platform. As a high-tech, disruptive force
net cash.
BOARD APPOINTMENTS
within the corporate and institutional space, Cobase
represents a natural fit for Alpha Group. There is
significant overlap between our client bases, with
considerable potential for mutual value adds, as well
The Group continues to benefit from an experienced
as the ability to provide a more integrated treasury
and founder-led leadership team. After eight years as
service for our clients.
Chair of the Company, I have agreed with the Board
that I will step down from this position at our 2025
The acquisition has brought a further 21 talented
AGM. Subsequently, on 20th March 2024, we were
colleagues into the Alpha Group, who will continue to
pleased to announce that Dame Jayne-Anne Gadhia
operate from the Cobase Amsterdam office.
will be joining the Board as Chair Designate, effective
upon the conclusion of the Company’s AGM on 1st
On behalf of Alpha, I would like to formally welcome
May 2024 (and subject to normal regulatory due
these new colleagues and, with the significant
diligence by the Group’s Nomad).
cross-selling prospects across our client bases in
mind, I am excited to see the opportunities our two
businesses can create in 2024 and beyond.
STRATEGIC REPORT CHAIRMAN’S STATEMENT
We were also pleased to be able to initiate a £20m
share buy-back programme at the end of January
of this year, full details of which can be found in our
regulatory announcement dated 29 January 2024.
LOOKING AHEAD
I believe the Group has never been better positioned
to deliver substantial growth and operational gearing
over the long term. Our industry-leading position,
achieved through investment and diversification
decisions taken in recent years, together with our
strong culture and leadership driving us forward,
means that, despite macro conditions that will
likely continue to challenge our clients and markets
CLIVE KAHN
Non-Executive Chairman
MAIN MARKET PREMIUM LISTING
Our plans remain on course for a Main Market
through 2024, our prospects are sound.
Premium listing later in May of this year. We view
this new listing as a key opportunity for Alpha to
There is a clear roadmap to grow our client base and
add to our solid reputation within our markets
wallet share across our seven FXRM offices, all of
and to allow us to target further clients across
which are still barely scratching the surface of their
new geographies. From a Board perspective,
addressable Corporate marketplaces. Equally, we
we also believe the higher levels of governance
have proven we can grow strongly in a suppressed
and disclosure required by the listing will also
Institutional market, and now that we are over the
strengthen our relationships with new and existing
hump of investing in our operational scalability and
stakeholders. Having joined Alpha in 2016, prior
infrastructure, there is an exciting opportunity to
to its IPO, it is incredible to reflect on how the
accelerate our growth by doubling down on our
business has grown and matured over the past
investments in our sales channels.
eight years. I look forward to seeing what the
company can achieve as it embarks on this next
THANK YOU
chapter.
FINAL DIVIDEND
I would like to thank all our long-standing and new
colleagues for their contributions to the success
and continued growth of our business, as well as our
Following the strong full-year results, and
shareholders for their continued support throughout
associated cash generation, the Board is pleased
the year. As we enter the next stage of Alpha’s
to declare a final dividend of 12.3p per share (2022:
evolution, with a clear roadmap ahead for disruption
11.0p). Subject to shareholder approval, the final
across our markets, I look forward to another year of
dividend will be payable to Shareholders on the
delivering significant growth.
register at 5 April 2024 and will be paid on 10 May
2024. This represents a total dividend for the year
Clive Kahn
of 16.0p per share (2022: 14.4p).
Non-Executive Chairman
6
7
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023
Chief Executive’s Statement
Morgan Tillbrook
This year’s statement has been an interesting one to write, as my
reflection on the year’s performance differs according to which
lens it is viewed through. As a shareholder, I am delighted with
the profitability and cash generation of the Group: profit before
tax grew 148% to £115.9m, underlying profit before tax grew 11%
to £43.0m, and interest on client balances of over £73m (FY 2022:
£9.3m) contributed to adjusted net cash increasing by £64m to
£178.8m.
STRATEGIC REPORT CHIEF EXECUTIVE’S STATEMENT
and back office to provide the infrastructure and
regulatory frameworks needed to build a business
of scale. Having made significant progress in this
area, our investment focus within our core FX Risk
Management and Alternative Banking divisions
will become more weighted towards the Front
Office – enhancing sales capability, refining our
technology to improve client interaction and user
experience, and bringing this all together to amplify
our sales engine. At the same time, we will continue
to invest in establishing strong foundations for our
newer ventures (Fund Finance & Cobase), as well
as leveraging our existing experience and client
relationships, so they can go on to forge exciting
long-term growth stories of their own.
A NOTE ON DETAIL
We are proud to provide existing and prospective
shareholders with a comprehensive level of detail
on the performance of the business within our
MORGAN TILLBROOK
Chief Executive Officer
At the same time, the interest rate tailwinds that
excluding net treasury income from client balances,
time constraints (and varying levels of interest!)
different stages along our maturity curve in terms of
generated such exceptional bottom line growth
despite the continuing benefits gained from our cash
among our audiences, I will continue to reference
how we build solutions to service them. Evaluating the
proved frustrating for our underlying business,
generation, as it is the benchmark by which we judge
relevant context via URL links throughout
Group through these two customer lenses (Corporate
stymying its pace of growth, albeit the growth of
ourselves, and therefore fitting that our shareholders
our statements in line with our recent results
and Institutional) is therefore helpful for understanding
our FXRM division reduced somewhat at our own
can too. The challenging conditions have given us the
announcements.
the opportunity in front of us.
regulatory disclosures. However, recognising the
have different needs and demands, and we are at
discretion, particularly where our considered credit
opportunity to re-analyse all aspects of our business,
appetite and high selling standards saw us walk
highlighting areas that we can improve upon, and we
away from a number of revenue opportunities. Our
have already made positive changes.
reputation has been built on high-quality, sustainable
CLIENT CENTRICITY IS KEY TO OUTPERFORMING
CORPORATES – DOUBLING DOWN ON OUR EXISTING
BUSINESS CYCLES
GLOBAL FOOTPRINT
growth, and we will not compromise that for short-
In a year in which Alpha expects to complete its
Alongside reviewing the performance of our income
Our Corporate clients are served through teams in the
term gains, even when the business environment is
milestone transition from AIM to a listing on the
streams, FX Risk Management and Alternative
UK and seven overseas offices across Europe, North
more challenging.
Premium segment of the Main Market, I would like
to thank all of our shareholders whose capital and
Banking, it is important to highlight how we
America and Australia. With native speakers in each
address our two client audiences, Corporate and
market, and our presence across multiple time zones,
As a founder, I am extremely proud that our team
support have helped us create such a dynamic
Institutional, as much of our strategic planning
we provide genuine 24/7 service capability across our
have built such a strong, diversified business,
enterprise. London’s capital markets have endured
centres around the solutions that each need.
client base. Significant developments during the year
that can thrive in different external environments.
a difficult period, with much conjecture surrounding
include the establishment of operations in Madrid
Should the relatively high interest rate environment
their competitiveness. Without them however, we
Both client types continue to be underserved by
and Munich, and the Group’s first acquisition, Cobase,
continue, our diversification of business will continue
would not have been able to achieve nearly as much
traditional banking and, whilst there is overlap in
which completed in December 2023.
to benefit the Group, and our balance sheet and cash
in such a short space of time, and certainly would not
the products sold, the sales channels, expertise
will strengthen further; whilst a return to lower rates
be the business we are today, now employing over
and technologies are distinct. This drives our entire
We have largely completed the current phase of our
should stimulate client activity and revenues.
480 people globally. It is gratifying that we have been
approach to growth: our strategy and planning; how
planned international roll-out of our Corporate FXRM
able to reward our shareholders handsomely and we
we think about future investment in headcount,
business, and our intention now is to double-down on
That said, we will not rest on our laurels. As a
will endeavour to continue doing so. The move from
technology, sales and marketing; how we drive
these offices to deliver on their substantial potential.
business that strives for high levels of performance,
AIM feels like a change of era, and this is apt for our
client acquisition, retention and expansion; and
Each office has been spearheaded by highly capable
we very much remain focused on delivering
business. As I will discuss through this report, recent
ultimately, how we set our expectations around the
leaders and each has the potential to replicate the
continued strong underlying growth. That is why
years have been dominated by our international roll-
scalability and pace of returns from our targeted
success of London, which is only 15 years old and still
we continue to present our underlying numbers
out, as well as investment in platform development
investments. In addition, these two client groups
remains in an early stage of its growth phase.
8
9
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023 Chief Executive’s Statement
Continued
Our investment into our back office functions to
date provides bandwidth to scale significantly. With
this in mind, although there is significant capacity
within our existing front office teams to support
materially higher revenues, our intention now is to
accelerate our prospects by focusing on front office
headcount growth and retention across our current
global offices. All the regions we operate in have
highly knowledgeable and incentivised management
teams operating in markets that can structurally
and competitively scale to be similar to the UK in
the long term. The acquisition of Cobase, acquired in
December 2023, has also added technology, talent
and clients, and expands our total addressable
market, providing a further growth engine.
INSTITUTIONAL - SCALING OUR SALES CHANNELS
ACROSS OUR MULTIPLE PRODUCT OFFERINGS
Alpha’s Institutional offering has continually
evolved in the six years since we first launched our
Institutional FXRM team and represents an exciting
growth opportunity in the short, medium and long
“Significant developments
during the year include
the establishment of
operations in Madrid and
Munich, and the Group’s
first acquisition, Cobase,
which completed in
December 2023.”
out new sales channels and expanding our sales
teams across our growing institutional offering, with
front office headcount expected to increase.
INCREASING CROSS-SELL OPPORTUNITIES
ACROSS THE GROUP HAS THE POTENTIAL TO
TRANSFORM OUR PROSPECTS
term. The alternative investment industry is currently
Leveraging the overlap between our solutions is at
in a cyclical downturn, but the success of our
the centre of our growth strategy and provides us
investment in the sector through this challenging
with the opportunity to increase our wallet share and
period is highlighted by the 6,467 accounts that
deepen our relationships with clients by becoming a
Alpha has onboarded to date, representing growth
larger part of their day-to-day financial operations, as
of 54% year-on-year, as well as the 55% growth
well as provide us with a wider net to win new clients.
in Institutional FXRM revenues, and the launch of
We have a strong track record of launching new
our Fund Finance offering in May, which generated
solutions and offices that go on to deliver attractive
over £700k in revenue in its first seven months of
levels of growth within highly specialised markets. We
operation. Our Institutional account solutions have
also continue to invest in enhancing our CRM system
also generated the vast majority of the £73m in net
across the group to improve the volume of data and
treasury income from interest on client balances.
quality of insights we have, enabling our sales teams
to more effectively cross-sell and deliver increasing
Similar to our Corporate marketplace, the market
value to our clients.
opportunity in Institutional is sizeable, as we continue
to take share from banks with our specialist, high-
A clear example of our early success here is our
tech, high-touch solutions. Our ongoing investment
Institutional FXRM office which (as previously
in our infrastructure and solutions continues to
mentioned) grew revenues by 55% against a
enhance our capabilities, with significant progress
challenging market backdrop, reflecting not only the
made in 2023. Heading into 2024, we are looking
team’s hard work but the initial wins from our cross-
forward to leveraging these upgrades, whilst building
selling initiatives into our Alternative Banking offering.
STRATEGIC REPORT CHIEF EXECUTIVE’S STATEMENT
In May, in a further step to diversify our offering, we
DEEP FOUNDATIONS LAID TO DELIVER
launched our Fund Finance proposition, which can
OPERATIONAL GEARING
benefit from cross-selling opportunities with clients that
come from Alpha’s Institutional FXRM and Alternative
Banking relationships. At the same time, the Fund
Finance team is already reciprocating by creating new
business opportunities of their own, which can then be
sold Alpha’s other services.
Likewise, our acquisition of Cobase brings a unique
technology platform, a SaaS revenue model and c. 130
clients, which opens up a number of opportunities to
offer solutions from our other divisions in the medium
term, albeit our initial focus will remain on accelerating
Cobase’s own client acquisition.
We not only plan to continue delivering future high
growth in revenues and client numbers but, over time,
we expect an increasingly higher proportion of that
growth to drop through into profitability and cash.
We have made significant investments in people,
processes and technology over the last five years
across our core divisions, and whilst we expect macro
conditions to continue to be a challenge through 2024,
this has put us in a strong position to benefit from
operational gearing as markets pick up.
STRONG CROSS-SELLING OPPORTUNITIES WITHIN BOTH OUR MARKETS
FX Risk
Management
FX Risk
Management
Bank
Connectivity
(Cobase)
Global
Accounts
CORPORATES
INSTITUTIONS
Bank
Connectivity
(Cobase)
Mass
Payments
Fund Finance
Mass
Payments
10
11
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023 Chief Executive’s Statement
Continued
Infrastructure & Technology
CASH PROVIDES THE SPRINGBOARD
DEAL FLOWS WITHIN THE ALTERNATIVE INVESTMENT MARKET
STRATEGIC REPORT CHIEF EXECUTIVE’S STATEMENT
The substantial investment we have made in our
technology and infrastructure over the last five
years spans two decentralised divisions, alongside
recently acquired Cobase, each with highly attractive
propositions and clear development roadmaps.
With Australia, alongside Europe and Canada,
Alpha is now able to operate 24/7 across time
zones, and our investments in infrastructure and
back office systems over the last few years have
provided significant capacity for us to scale our
global revenues. The objective now is to enhance
the experience for our clients and sales teams while
streamlining processes and building in additional
automation; the opportunity is to improve the
efficiency of our systems rather than simply grow
the size of our technology footprint or headcount, in
order that we can deliver more with less.
People
Owing to our investments in people, processes
and technology to date, we also believe we can
significantly grow the size of our business with far
more modest increases in back office headcount
going forward. The financial productivity of our front
office teams meanwhile will benefit from not only
our investment in internal technology but also the
growing range of solutions we can offer each client.
At the end of the year we had £178.8m of adjusted
net cash, and the strength of our balance sheet
now provides the opportunity to supercharge
our growth. As a Board, we continually discuss
our capital allocation policy and the balance
between dividends, share buybacks, acquisitions,
re-investing back into the business, as well as
ensuring we maintain a strong balance sheet for all
our stakeholders and counterparties. Following the
initiation of our £20m share buyback programme
in January 2024, the Board’s decision, for now, is
that, while we always look for a balanced approach,
our remaining cash gives us a major competitive
advantage as markets pick up and we identify
relevant opportunities across our matrix of offices,
services and clients. We also believe it is prudent
to have sufficient cash kept aside to capitalise not
only on the opportunities we have now, but also
to have the ability to accelerate investment in the
future, if faced with even greater upside. We will
naturally continue to keep this under review in the
normal course.
DEAL VOLUMES WITHIN THE ALTERNATIVE INVESTMENT MARKET
40000
30000
20000
10000
0
Private Equity
Venture Capital
Real Estate
Infrastructure
2021
2022
2023
Preqin Quarterly Updates (2021-2023)
n
b
$
1500
1000
500
0
Private Equity
Venture Capital
Real Estate
Infrastructure
2021
2022
2023
Preqin Quarterly Updates (2021-2023)
STRONG FINANCIAL KPIS DESPITE THE
in this market we are starting from a low base with a
CHALLENGING ECONOMIC BACKDROP
strong proposition, highlighted by a 54% increase in
accounts within Alternative Banking in the year.
Throughout the year we have seen the interest rate
environment suppress the activity levels of our FX
hedging and alternative investment clients. The
challenging macro conditions have resulted in our
clients being more conservative around forecasting
and, thus, FX hedging. At the same time, these macro
conditions meant we chose to reduce our own credit
appetite, resulting in a number of clients having
hedging facilities removed or reduced. This decision
ultimately ensured we had no meaningful defaults
during the year but also meant we walked away
from a number of revenue opportunities by taking a
balanced approach to growth.
Additionally, our institutional clients had the
challenge of higher financing costs in structuring new
deals and managing the mismatch between buyer
and seller expectations across all of the key asset
classes we serve: Private Equity, Venture Capital, Real
Estate, Infrastructure and Private Debt. Deal flow last
year was well below 2022 as funds faced increased
uncertainty about the economic outlook, and the
impact of higher interest rates and credit spreads.
As a result, the fundraising environment and private
equity M&A activity slowed considerably. However,
OUTLOOK – OUR NATURAL HEDGE
We currently expect markets to slowly pick up through
2024 and monetary policy to ease, providing greater
certainty over global trade, investment decisions and
demand visibility for our clients. While higher interest
rates will continue to provide a significant bottom-line
tailwind for the Group, driving exceptional levels of
net treasury income, we do not know to what extent
any easing of monetary policy will release the brakes
on currently suppressed activity levels of both our
corporate and institutional clients. The ability for
higher interest rates to amplify net treasury income
(from interest) on one hand, whilst simultaneously
suppressing underlying trading activity on the other
is referred to internally as our ‘natural interest rate
hedge’ and will likely remain a feature in 2024. Overall,
trading in 2024 to date has been encouraging and we
remain confident in the strength and scalability of our
business model, and our strategy to take advantage of
the vast growth opportunity available to the Group.
12
13
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023 Chief Executive’s Statement
Continued
DIVISIONAL ANALYSIS
FX RISK MANAGEMENT
Highlights
− Revenue growth of 10% to £76.3m (2022: £69.5m)
− Underlying profit before tax increased 18% to
£32.3m (2022: £27.3m)
− Client numbers increased 2% to 1,071 (2022: 1,047)
− Average revenue per client increased 7%
− Front Office headcount increased by 18% to 120
(2022: 102)
− Launch of two new offices, in Madrid & Munich
FXRM ENVIRONMENT
As previously outlined, the FXRM environment in
the short-term benefit of a more favourable initial
exchange rate, but commit the client to a potentially
more unfavourable exchange rate in the future.
We do not seek to advise on or promote complex
options products, and our selling standards
dictate that any we do facilitate should be on an
execution-only basis, driven by client demand. We are
unfortunately seeing these products being promoted
more and more within our industry, particularly in
this tougher economic climate. I believe this is largely
the symptom of two simple facts: i) complex options
provide high margins for the FX provider and ii) the
same less-scrupulous providers allure clients with the
prospect of outperforming the market.
2023 reflected challenging macro conditions, which
As a business, we feel this trend is an increasing
have suppressed our clients’ FX hedging activity. The
problem within our industry, however, I am pleased
first nine months of the year were characterised
to report that, in line with the intentions set out in
by high inflation rates globally and central banks
my last annual report statement, our teams have
responding by increasing interest rates, and during
continued to move in the opposite direction, with the
this period in particular, we made the decision to
percentage of FXRM revenues coming from complex
take a more conservative approach when it came to
options products reducing from 9% to 3% during
our own credit appetite. This resulted in us reducing
the year. Since 2022 we have purposely adjusted our
or removing hedging facilities for a number of clients,
commission structure to incentivise our sales teams
and also curtailed our appetite to work with some
to provide simple and appropriate solutions, while
new clients. Through this disciplined approach, we
paying lower rates of commission on more complex
are pleased to report we had no significant defaults
products. If we are serious about maintaining our
during the year; however, naturally, this also resulted
selling standards as we grow into a global business, it
in us walking away from some revenue opportunities.
is important that our incentives are aligned with our
The benefits of our diversification strategy across
culture.
FXRM were also clearly reflected during the period,
Whilst our avoidance of complex options products
with our Institutional FXRM business and our
has naturally cost us revenue in the short term, I
overseas corporate offices doing well to offset the
am incredibly proud that we have a team that is
impact of the economic headwinds experienced in
committed to acting in the best interest of their
the UK Corporate business.
FXRM SELLING STANDARDS
clients, delivering them what they need, even if it’s not
always what they initially request or might have been
sold by other FX companies. In a challenging sales
environment, it takes a certain type of salesperson
We set out to be the global leader in FX risk
to turn down the low-hanging fruit of a high-margin
management, and believe that integrity is as
options trade. Indeed, many of our competitors have
important as expertise if we want to deliver on this
seen their options revenue increase during this
vision. This is particularly pertinent when it comes
challenging period, as clients are encouraged to seek
to complex FX options products, which provide
outperformance in a tough environment.
STRATEGIC REPORT CHIEF EXECUTIVE’S STATEMENT
The moves our team are making around selling
their interests. Despite only a small increase in client
standards give me further confidence in the future
numbers, average revenue per client continued to
of this business and will unquestionably lead to more
increase, reflecting our continued ability to work with
sustainable revenue growth in the long-term, whilst
larger businesses as well as increase our wallet share
further differentiating us within an industry which,
with existing clients, as our reputation continues
unfortunately, is moving increasingly in the opposite
to grow. Front Office productivity also continued to
direction.
increase as the chart on the following page shows.
FXRM PERFORMANCE
UK Corporate
Overview
The UK Corporate FXRM office has grown its
revenues by around five times since our IPO in 2017,
Overall divisional revenues grew 10% to £76.3m for
but during the period experienced its first decline
the year (FY 2022: £69.5m), and client numbers grew
in revenue and has remained the most impacted by
by 2% to 1,071. This small gain in client numbers
the economic environment. This is primarily because
(actually a decrease since June 2023) largely reflects
it has the largest and longest-standing client base
the tightening of our credit appetite within the
and has therefore also been affected most by the
current interest rate environment, which has seen
adjustments to our credit appetite and the doubling
us stop working with certain existing clients, as well
down of our selling standards.
as reduce the pool of new clients we are prepared
to work with. Additionally, there have been a handful
Our UK Corporate office has long served as the talent
of clients who have become insolvent in the current
incubator for cultivating leaders to spearhead the
environment. Our push to reduce the number of
establishment of overseas offices. Over 125 years of
clients using complex option products has also
Alpha experience has been exported abroad over
weighed on our growth, with not every business ready
the past five years and, as a result, during this more
to be persuaded that complex options are not in
challenging period, the team have missed some
REVENUE DEVELOPMENT OF CORPORATE OFFICES (FY2023)
)
m
£
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£40
£35
£30
£25
£20
£15
£10
£5
£–
Full Years
Established
London
Toronto
Amsterdam
14
5
4
Milan
2
Sydney
Madrid
Munich
1
0
0
14
15
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023
Chief Executive’s Statement
Continued
FXRM FRONT OFFICE PRODUCTIVITY
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£80m
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Excluding hires <1yr
(revenue contribution
is minimal in first
year)
FY 2014
FY 2015
FY 2016
FY 2017
FY 2018
FY 2019
FY 2020
FY 2021
FY 2022
FY 2023
Revenue (LHS)
Cumulative Years (RHS)
What is Front Office Productivity?
Front Office productivity compares the total cumulative tenure of our Front Office, compared to our revenues. The graph shows that we have
been able to maintain productivity despite both the market headwinds, and experienced sales people moving into roles focused on leading
international expansion and/or the growth and development of our Front Office teams. When we take into account new joiners, whose
contribution in their first year is naturally lower than more experienced colleagues, this is even more pronounced.
of this talent. Our Madrid office, for example, was
Overseas Corporate Offices
our most recent export of talent from the UK, and
has taken with it over 15 years of combined Alpha
experience; this from a team of four who delivered
over £1.1m in Spanish client revenue from the UK
office over the past four years, and left the UK at a
more mature stage in their learning curve.
With our current overseas offices now established,
we feel there is no requirement to further export our
talent from the UK for the time being. This will ensure
that our existing talent can fully compound within the
UK, which remains an enormous growth opportunity
in its own right.
As highlighted, we believe we have (for now)
completed the “landing” phase of our “land and
expand” strategy (i.e. rolling out overseas Corporate
offices). In all cases, we believe the structural and
competitive dynamics, together with the size of
these local markets, means we have the potential
to replicate the financial size and success of the
UK office in the longer term. To underpin this, we
work very hard to ensure our selling standards and
culture are successfully exported overseas and led
by experienced individuals who are highly invested
in the future of each venture. Launching new offices
overseas is not without its challenges, but upholding
Having done so much to drive growth across the
our standards is key if we want to become the
wider business, I would like to personally thank our
undisputed global leader in FX risk management.
UK office for all they have done for the Group, and I
am looking forward to this team now being able to
Despite a year of challenging trading, our Corporate
once again double down on their own journey.
Toronto office remains profitable, albeit with
STRATEGIC REPORT CHIEF EXECUTIVE’S STATEMENT
revenues slightly down on 2022. As well as a difficult
to successfully export our culture and standards
macro backdrop, investors who have followed our
overseas. Whilst there is a lack of German-speaking
updates over the past 18 months will know we
candidates in London, in H1 last year we met with
temporarily found ourselves in a position where
an experienced individual working locally within the
we did not have enough senior talent to support
German FX market. Whilst this person has come from
the development of our junior talent. We therefore
outside our company, they quickly showed that their
had some rebuilding to do in Toronto to position it
standards and values aligned with our own, and to
for long-term growth. Throughout this rebuilding
reinforce this, they have also been joined by another
process, we have been focusing on developing
early Alpha hire from our Amsterdam office.
and upskilling the team and, having successfully
gone through this, towards the end of 2023 we
Toronto is our only office that started without any
subsequently promoted an existing team member
existing Alpha team members, and having learned a
to take over leadership of the office. This individual
lot from this experience, we have been keen to apply
is a highly respected, high-performing, long-term
these learnings to our selection and integration
member of the team, who has been instrumental in
process this time around. Consequently, we feel that,
the office’s growth to date.
in Munich, we have a leader and team who believe
in the Alpha way and are capable of delivering it
The early performance from the office since making
successfully. The early signs from Munich have been
these changes has been encouraging, and having
positive, and we are looking forward to seeing what
spent a week in Toronto with the team at the start of
they can deliver in their first full year of operation.
January, I feel confident the office is turning a corner
and has the right people and foundations in place to
Launched in 2022, our Sydney office has delivered
re-establish its growth journey.
good revenue growth in its first full year of trading.
This office is led by a core team possessing
In H1, we also established a Madrid office. This office,
over 30 years’ combined experience working
comprised of Spanish speakers, is led by a team of
at Alpha, ensuring that we have been able to
four with 15 years’ combined Alpha experience, and is
quickly communicate our proposition and export
the last and most recent export of UK talent for the
our culture. In addition to providing the basis for
time being. Our presence in Madrid has provided the
further expansion across the Australian territories,
foundations for further expansion into a wide range
our Sydney base will enable the Group to better
of Spanish-speaking markets, and we are pleased to
access a wide range of target Asian markets in the
report the office has seen strong trading to date with
future, contributing to our truly 24/7 client service
significant prospects ahead.
capabilities.
In Q4 2023, we also launched a new office in Munich.
Germany is a large and attractive market for us, and
historically we have had good success selling into the
market from our Amsterdam and UK offices.
Whilst we have wanted to launch in Germany for a
long time, finding the right person to lead a team
there has not been easy. Wherever possible, we like
our overseas offices to be established by existing
team members who have excelled through the UK
‘Alpha Academy’ and can therefore be relied upon
Institutional FXRM
As we have previously highlighted, our Institutional
FXRM office (based in the UK) continued to show
particularly strong growth in the period, with revenue
increasing 55% despite a significantly suppressed
market. Launching in 2018, the Institutional FXRM
team has a strong reputation within the Institutional
space. This business has solid foundations in place
in terms of talent, clients and solutions, to deliver
substantial organic growth going forward, but
16
17
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023
Chief Executive’s Statement
Continued
also to be at the centre of our efforts to amplify
our prospects within the Institutional market by
successfully cross-selling our growing range of
products. Having had an excellent year in a subdued
market, it will be exciting to see what the team can
achieve when activity levels start to pick up in the
alternative investment market, particularly when
considering the significant growth in our balance
sheet and presence over the past 18 months.
FXRM TECHNOLOGY
Our FXRM platform is designed to provide clients
with greater efficiency and visibility when managing
and reporting on FX. We continued to make
significant improvements to the platform throughout
the year, with modular credit facilities, derivatives
online, mark-to-market tooling, and accelerated
payment processing, all well-received upgrades
by our clients. Whilst it would be easy to get lost
in technical jargon, the principles behind any new
upgrades we make to the platform are simple – we
At the same time, average revenues per client continue
strive to create platform features for our clients that
to increase, alongside Front Office productivity. We
unlock new efficiencies and insights, so they can
are pleased to have not only continued to improve our
be more informed, more productive, and ultimately
existing foundations but have also opened two new
get more value from working with us. The success of
offices alongside this to facilitate further growth.
these developments can be seen in the increasing
levels of activity on the platform, with the number of
accounts booking trades on the platform increasing
19% in the year. Moving forward we will continue
to innovate and evolve our FXRM platform and are
also looking forward to exploring the longer-term
opportunity to integrate the capabilities of Cobase
following its acquisition in December 2023.
FXRM STRATEGY
While the macro backdrop to 2023 certainly provided
challenges to the growth of our FXRM revenues, the
growth prospects for FXRM heading into 2024 remain
exciting. Throughout 2023 we have continued to
make significant investments to further enhance the
FXRM division’s potential, including investment in our
online platform, and the exciting acquisition of the
treasury-focused fintech, Cobase, in December 2023.
The bigger picture is we have a clear strategy, a
tried and tested model and an identified runway
to continue delivering long-term growth with our
existing FXRM teams, markets and products. We
have seven international FXRM offices across three
continents and the strategy will now be doubling
down on our office investments and focusing on
“expanding” now that we have successfully “landed”.
This will also benefit our operational leverage going
forward, as a result of the investments made in
recent years. FXRM Front Office headcount increased
18% to 120 people in 2023 (FY 2022: 102), and our plan
is to focus in 2024 on growing and developing our
Front Office sales teams in our current offices. Having
successfully doubled down on our selling standards
in 2023, a big focus in 2024 will be on doing the same
with our nurturing and training standards; ultimately,
we believe that by getting both of these areas right,
STRATEGIC REPORT CHIEF EXECUTIVE’S STATEMENT
we will continue to put ourselves in an excellent
Alternative Banking highlights the sentiment I
position to deliver strong and sustainable revenue
outlined at the start of this statement; as Chief
growth moving forward.
ALTERNATIVE BANKING
Highlights
− Revenue increased 18% to £33.9m (2022: £28.8m)
− Number of accounts invoiced within Alternative
Banking increased 54% to 6,467 (2022: 4,200)
− Underlying profit before tax of £10.9m, a reduction
of 3.3% on the prior year (2022: £11.3m) as a
result of our accelerated investment programme
throughout the year, particularly in headcount
− Headcount increased 35% to 230 (2022: 171)
− Alternative Banking client balances increased by
30% to £2.1bn in Q4 (FY 2022 Q4: £1.6bn)
Alternative Banking Environment
Executive, the economic backdrop has proved
frustrating in growing the business, but as a
shareholder, the economic rewards have been
substantial in 2023. Not only has Alternative Banking
been key to our early success in cross-selling with
our FXRM and more recently Fund Finance teams,
but we have also earned interest on overnight
client balances throughout the year. As previously
outlined, our average client balances grew by c. 30%
between 2022 and 2023, as we continued to open
more accounts and grow wallet share with clients.
The interest rates generated by these balances
meanwhile averaged 3.6% for the year. Together
this contributed towards over £73m of net treasury
income on client funds, an increase of nearly eight
times against FY 2022.
Over the last three years we have built a business
Alternative Banking Technology
based around solving a service and technology
challenge in an institutional market inefficiently
served by banks. The growth in accounts we now
manage highlights the success of the team and our
product development roadmap. The 54% growth in
accounts was achieved despite a marked drop in
investment activity amongst our existing and target
clients. The decline in deal activity in the institutional
market in the first half of 2023 continued throughout
the rest of the year, with deal volumes and flows
significantly down on 2022 across all of the key asset
classes served by the division. This reduction in
activity led to a knock-on effect on the demand for
new accounts, payments and FX spot transactions.
Alternative Banking Performance
Our alternative banking technology has been
purpose-built for alternative investment clients,
and combined with our specialist teams, enables us
to provide our clients with a compelling alternative
to traditional banking providers, who are typically
characterised by legacy technologies and more
generalist offerings.
New product development is focused around three
key client-centric tenets of: Ease, Responsiveness,
and Reliability, with the ongoing goal of making
every interaction with our clients as efficient and
effective as possible, whilst also remaining highly
controlled and compliant. What we find particularly
exciting here is that much of the progress we make
increases both the attractiveness of our offering,
As a result, growth in account numbers was lower
whilst simultaneously reducing our own time
than we had anticipated at the start of the financial
and cost to serve. A great example of this is our
year, with just under 6,500 accounts, achieving
investment in automation to reduce the amount of
significant growth on the 4,200 accounts held at 31
manual involvement required between our teams
December 2022. Revenues meanwhile increased
and clients. This is improving the onboarding speeds
by 18% to £33.9m, with consecutive record revenue
and experience for clients, whilst also reducing the
quarters delivered in Q3 and Q4.
operational burden on our teams.
18
19
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023 Chief Executive’s Statement
Continued
Moving forward, we will continue to upgrade and
This will in turn increase the ease of use and
evolve our product offering, and with a growing
performance of our systems for our clients, improve
range of complimentary product offerings, each with
the responsiveness of our support, as well as reduce
innovative technologies of their own, we are moving
our time and cost to serve – enabling us to do more
ever closer towards our ambition of becoming the
with less.
leading non-bank provider of financial solutions to
the institutional space.
ALTERNATIVE BANKING STRATEGY
This step-change in scalability and efficiency is also
expected to reduce the level of growth in operational
headcount we need in Alternative Banking going
forward, whilst giving us the confidence to grow
Despite the temporary downturn in investment
our Front Office teams in 2024 within this division.
activity within our core markets, it is encouraging
As markets return to growth, we want to make it
that we have been able to continue to grow, and
as easy and attractive as possible for institutions
we are excited about the prospects for Alternative
and fund managers to deal with Alpha. The exciting
Banking as this slowdown unwinds and business
opportunity is to take the platform and brand we
activity increases. When the market picks up, our
have built and now layer on the sales-led culture
growing market presence, partnership relationships
that has been core to Alpha’s success over the last
and scale mean we are well-positioned to capitalise
15 years. We plan to open up a range of new sales
on the increased opportunity, with increasing levels
channels across the institutional marketplace,
of operational efficiency.
each focused on capitalising on different routes to
market, and as part of this will be increasing the size
We will continue to invest to scale the business, but
of our sales team. Suffice to say, the team and I are
feel we are over the hump of our major technology
very much looking forward to this next chapter in the
infrastructure spend. This year, the focus will be on
division’s growth journey.
automation and improving the client experience with
incremental enhancements to the functionality and
interfaces.
ALTERNATIVE BANKING OPERATIONAL SCALABILITY
FUND FINANCE
Highlights
− Launched in May 2023
− Revenue of over £700k for the seven months of
FY 2023 (currently recognised within Alternative
Banking)
− Digital platform launched
Born out of our Alternative Banking division,
our expansion into fund finance forms another
important step in our ambition to lead the way
in global financial solutions for the alternative
investment market – a bank alternative, dedicated
to Alternatives. This solution embodies our ‘high-
tech, high-touch’ approach to business, blending our
specialist expertise with smart technology to disrupt
industries that are both outdated and have high
barriers to entry.
We initially launched our solution in May 2023,
and in November followed up with the launch of
the industry’s first digital platform for connecting
borrowers with lenders. We are pleased to report
early successes in this division, with our solution
already proving popular among clients, contributing
over £700k towards Alternative Banking revenues
for the seven months of FY 2023 since its launch in
May. Looking ahead, we have further medium-term
ambitions to continuously improve the platform,
grow the client base, and focus on opportunities to
cross-sell, all of which provide an exciting roadmap
s
t
n
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o
#
g
n
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a
B
e
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i
t
a
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e
t
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A
i
7,000
6,000
5,000
4,000
3,000
2,000
1,000
FY 2020
0
-
20
FY 2023
for the future.
FY 2022
FY 2021
20
40
60
80
100
120
Client Services and Compliance (full-time equivalent)
When it comes to innovative new solutions, barriers
to entry are naturally a keen area of focus for both
Alpha and its investors. Here we believe we enter this
industry with a natural position of strength. This is
because, for a platform solution to be worthwhile for
borrowers and lenders, there needs to be speed and
scale on both sides of the equation: borrowers want
to know they can instantly screen across a large pool
of lenders, whilst lenders want to know they are going
to have easy access to a sizeable pool of borrowers.
Traditional fund finance intermediaries, however,
typically work with much smaller numbers of clients
STRATEGIC REPORT CHIEF EXECUTIVE’S STATEMENT
on an irregular basis and rely on manual processes
to deliver their service. This makes speed and scale
challenging.
Alpha’s ability to launch this solution has only been
possible because of our ability to combine deep
expertise within fund finance, with Alpha’s scale and
technological capabilities in the institutional market.
From launch, the fund finance team has been able to
instantly leverage 1,300+ relationships with potential
borrowers, whilst using technology to dramatically
streamline processes. Achieving this level of speed
and scale did not happen overnight though. It has
taken significant time, investment, and expertise,
built up over many years, with our institutional teams
now made up of over 250 people across three global
offices. The barriers to entry to launch a competing
platform from scratch are therefore significant and
give us a unique and sizeable first-mover advantage.
COBASE – EXPANDING OUR MARKET
Highlights
− Acquired December 2023
− Revenue growth of 67% to €2m (2022: €1.2m)1
− Client numbers increased 67% to 130 (2022: 78)
December saw us make our first-ever acquisition,
Amsterdam-based Cobase, a treasury-focused
fintech which supports corporates with seamless
connectivity between their ERP, payment and
banking systems (a more detailed overview of their
offering can be found in our RNS announcement
dated 12 October 2023).
In 2023, Cobase grew revenues by c. 67% to €2m1,
with all revenues derived through SaaS subscription
fees. Cobase’s client base has also increased by c.
67% during the year, to end 2023 with over 130 clients.
Alpha acquired circa 86% of the company for an initial
consideration of €9.6m (£8.3m) in cash, with the
remaining stake to be acquired via a performance-
based earn-out between 2025 and 2028.
1 Only revenue generated after Cobase’s acquisition in December is
included in the Group’s figures, which was £0.2m.
21
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023
Chief Executive’s Statement
Continued
Going forward, Cobase will retain its team and
Our overarching preference remains to allocate
continue to operate under its own brand, but the
capital into high-confidence organic growth
addition of the business expands our available
initiatives, within both existing and potential new
market. Their bank-connectivity technology added
business units. Such initiatives include: extending
to Alpha’s stable of products, means the Group
and improving product lines and tech solutions,
is now able to offer our corporate client base a
expanding our territories when appropriate, or any
comprehensive and flexible portfolio of treasury-
other moat-widening opportunities that differentiate
focused solutions covering FX, payments, accounts,
us from competitors.
bank connectivity, and treasury solutions.
In view of the Group’s confidence in the sizable and
We look at our capital allocation policy below, but
exciting market opportunities that are presented to
Cobase is a good example of how we plan to partly
us, it is the Board’s belief that, after maintaining our
use our cash to inorganically expand Alpha where
progressive dividend policy and initiating our £20m
appropriate. We are often shown opportunities
share buyback, retaining and deploying our remaining
to acquire businesses that compete in our FXRM
cash within the business will deliver significant levels
marketplace, but in reviewing their clients, service
of growth and deliver the best value for shareholders
and teams, typically they offer more risk than
long-term. Examples of this last year include the
reward and do not add to our ambition. We will look
opening of offices in Madrid and Munich, the launch
for companies that meet our stringent criteria of
of Fund Finance and the acquisition of Cobase.
adding technology, clients and products, together
with the opportunity to cross-sell, and most
As well as providing cash for investment, a strong
importantly complement the Alpha culture.
balance sheet is also important to our counterparties,
CAPITAL ALLOCATION AND SHARE BUY BACK
As highlighted throughout the report, the Group
generated significant levels of cash throughout
2023. As at 31 December 2023 we had net assets
of £223.5m (2022 restated: £142.9m), with adjusted
net cash increasing by £64m to over £178.8m (2022:
£114.4m).
As highlighted in last year’s statement, we do
review our cash position on a regular basis, and if
we feel our cash position becomes greater than
we require, will look to reassess. Given the current
cash balances and the likelihood of further cash
generation this year, the Board agreed to implement
a Share Buyback programme of £20m, full details
of which can be found in our RNS announcement
dated 29 January 2024. Purchased shares will be
held in treasury, enabling us to use the shares to
offset future dilution from our long-term growth
share schemes.
as a healthy cash profile is required as collateral
for hedging facilities, regulatory capital, and also
provides our clients with confidence.
“The team have made
significant strides
in delivering on our
accelerated investment
programme, which has
expanded and enhanced
our capabilities.”
STRATEGIC REPORT CHIEF EXECUTIVE’S STATEMENT
MAIN MARKET LISTING
As highlighted in last year’s statement and reiterated
to the market last September, Alpha intends to move
up to the Premium List of the Main Market. In line
with previous guidance, we are working to complete
this move in May 2024 with relevant workstreams
well progressed. The rationale for the intended move
is repeated below.
As a business that is growing in size, becoming more
global, and gaining interest from increasingly larger
clients, 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. At the same
time, Premium Listing standards will align to Alpha’s
commitment to providing higher levels of governance
and disclosure, both of which we know will continue
to be well-received by our clients, banking partners
and investors alike.
THANK YOU
2023 was a remarkable year for Alpha. We faced
To the team – I would like to thank you for your
different challenges in an interest rate environment
unwavering dedication throughout the year. Given
not experienced since we began trading in 2010.
that we delivered record profits, it is difficult to
Despite a natural inclination to do more, we have
reconcile that we didn’t achieve the underlying
maintained our discipline and been steadfast in our
growth we set out to, however, given the market we
approach to both credit management and our selling
found ourselves in, I am incredibly proud of what
standards – delivering our clients what they need
we achieved together. The mindset and ambition
(even if it’s not always what they initially request
heading into 2024 has been equally inspiring, and
or might have been sold by other FX companies).
this gives me confidence that together, we can meet
We are privileged to work with some truly great
future challenges and seize the opportunities that
clients, and our commitment to safeguarding their
lie ahead. 2024 has started well, and I am looking
interests during these challenging times has gone
forward to seeing what we can achieve together
a long way to maintaining their trust and enhancing
throughout the rest of the year.
our reputation further. At the same time, the team
have made significant strides in delivering on our
Morgan Tillbrook
accelerated investment programme, which has
Chief Executive Officer
expanded and enhanced our capabilities, and
created significant efficiencies and capacity from
which to scale whilst enjoying increasing levels of
operational leverage.
22
23
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023 Chief Financial Officer’s Statement
Tim Powell
2023 has seen good growth across both divisions despite a tough
macro-economic environment, with total revenues increasing 12%
to £110.4m (2022: £98.3m). FX Risk Management revenue grew 10%
to £76.3m (2022: £69.5m), whilst Alternative Banking grew 18%
to £33.9m (2022: £28.8m). Cobase, the Group’s first acquisition,
completed on 1st December 2023 and contributed £0.2m of
revenues in the one month of ownership in 2023.
REVENUE
ALTERNATIVE BANKING
FX RISK MANAGEMENT
Alternative Banking revenue grew 18% from £28.8m
in the prior year to £33.9m in 2023, driven by an
The FX Risk Management division focuses on
increased number of accounts, as well as revenue
supporting corporates and institutions that trade
from our new Fund Finance offering launched in May
currency for commercial purposes through the
2023.
Group’s sales teams located in London, Toronto,
Amsterdam, Milan, Madrid, Munich, and Sydney.
Account fee revenue increased by £5.8m (76%) to
Revenue grew by 10% over the prior year to £76.3m
£13.5m (2022: £7.7m), as the number of accounts
(2022: £69.5m), with a 3% increase in UK revenues
being managed increased by over 50% from 4,200
and a 42% increase in overseas offices’ revenues,
to just under 6,500, and we generated a full year
with growth across all regions except Canada.
of income from accounts opened in the prior year.
Revenue was up 3% in the London FX Risk
a straight-line basis over the 12 months from the date
Management business, driven by strong growth from
the account was opened or renewed. At 31 December
our institutional client base, up 55% to £23.5m (2022:
2023 deferred revenue was £7.1m (2022: £4.9m), and
£15.1m), partially offset by a weaker performance
this will be recognised as revenue in 2024.
Revenue from annual account fees is recognised on
within our corporate client base, which was down
14% to £35.2m (2022: £41.2m). This fall in revenue was
The underlying operating profit margin of the
primarily driven by the increased levels of uncertainty
Alternative Banking division was c. 33% (2022: c.
within the UK corporate market, resulting from the
39%). The reduction against 2022 was predominately
high inflation and interest rate environment.
due to the timing mismatch of in-year investment,
The underlying profit margin of the division increased
environment suppressing revenues.
to c. 42%, (2022: c. 39%) with the Corporate segment
delivering a margin of 50% (62% excluding the newer
Fund finance had a very encouraging start with
lower-margin overseas offices).
over £700k of revenue in its first seven months of
increased deferred account fees and the macro
operations.
STRATEGIC REPORT CHIEF FINANCIAL OFFICER’S STATEMENT
£2m
£74m
£186m
FXRM Growth 10%
Alternative Banking Growth 18%
£(6)m
£8m
£4m
£6m
£(1)m
£1m
£0m
£110m
£34m
£76m
£98m
£29m
£69m
2022
Revenue
UK
Corporate
UK
Institutional
FXRM
Overseas
Offices
AB
Account
Revenue
AB
Payment &
Spot
Revenue
Fund
Finance
Cobase
2023
Revenue
NTI - Client
NTI - Own
2023
Income
FX Risk Management
Alternative Banking
FX Risk Management Margin
2023: c.42%
Alternative Banking Margin
2023: c.33%
50%
£40m
£20m
2023
Corporate*
31%
£24m
£7m
51%
£9m
£4m
31%
£4m
£1m
33%
£30m
£10m
2023
Netherlands
2023
Institutional FXRM**
2023
Institutional AB**
2023
Alpha Pay
PBT
Revenue
8%
£4m
£0m
2023
Canada
* Corporate division is primarily UK but also includes other offices not disclosed elsewhere (Milan, Madrid, Munich, and Sydney)
**For the purpose of deriving margins for Alternative Banking and FX Risk Management, the cost base of the Institutional division has been
allocated based on revenue.
24
25
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023 Financial Review
Continued
GROUP PROFITABILITY
Underlying profit is presented in the income
statement to allow a better understanding of the
Group’s financial performance on a comparable basis
from year to year. The underlying profit excludes the
impact of the net treasury income on client balances
(see below) and non-underlying items. On this basis,
the underlying profit before tax, increased by 11%
to £43m (2022: £38.6m). Statutory profit before
tax increased by 148% to £115.9m (2022 restated:
£46.8m).
As previously highlighted, the Group continued to
invest in the year, some of which was accelerating
plans from 2024 & 2025. Investments included;
launching operations in Spain and Germany, a new
office in London focused on Institutional clients,
and further technology improvements to increase
scalability and digitisation. Overall headcount
increased in the year from 357 to over 480 at 31
December 2023 to support future long-term growth,
of which 21 were Cobase Employees. The underlying
profit before tax margin, excluding Cobase,
remained broadly flat at 38% (2022: 39%). However,
the statutory profit before tax margin increased
significantly to 62% (2022: 43%) reflecting the growth
in net treasury income from client balances.
NET TREASURY INCOME (NTI)
The current interest rate environment has continued
to allow the Group to benefit from interest income
generated from client balances. ‘Net treasury income
– client funds’ has contributed £73.7m of net treasury
income in the year (last four months of 2022: £9.3m),
with the number and size of client balances growing
to an average of £2.1bn in Q4 2023. The Group is
only able to obtain attractive interest rates on these
overnight client cash balances because of our ability
to aggregate numerous individual client balances,
many of which are transitory in nature and typically
only held for a short amount of time.
26
Whilst the increased interest income 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. As previously
outlined, we have therefore chosen to recognise this
income on client balances as ‘net treasury income – client
balances’ and exclude it from our underlying results.
This year the Group has also generated net treasury
income on the initial and variation margins it requires
for its FX Risk Management client relationships. These
balances contribute to the Group’s cash and cash
equivalent balances and directly relate to the operating
activities of the business. Therefore, we have decided to
separately disclose these amounts within total income
at the top of the Income Statement as opposed to within
finance income, totalling £1.8m (2022: £nil).
TAXATION
The effective tax rate for the period was 23% (2022: 17%).
The increase in effective rate is primarily due to the
change in UK corporation tax from 19% to 25% in April
2023. The rate was lower than the pro rata UK headline
rate of 23.5% due to the mix of profits across our global
subsidiaries. There were no other material changes in
underlying rates.
EARNINGS PER SHARE
Underlying basic earnings per share was flat at 76.7p
(2022: 76.3p), whilst total earnings per share were over
120% higher at 206.2p (2022: 92.1p). The impact of the
increased corporate rates of taxation was to suppress
underlying basic EPS by c. 6p and basic EPS by c. 14p.
206.2p
76.3p
76.7p
92.1p
Underlying EPS
EPS
2022
2023
STRATEGIC REPORT CHIEF FINANCIAL OFFICER’S STATEMENT
Net cash and cash equivalents
Variation margin paid to banking counterparties
Margin received from clients*
Net MTM timing of profit from client drawdowns and
extensions within trade receivables
ADJUSTED NET CASH**
31 DECEMBER 2023
£’000
31 DECEMBER 2022
£’000
197.9
11.1
209.0
(51.1)
20.9
178.8
136.8
44.9
181.7
(70.2)
2.9
114.4
* 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 and rolls.
KEY PERFORMANCE INDICATORS
corresponding change in other payables and trade
The Group monitors its performance using several
key performance indicators which are reviewed
at operational and Board level. The key financial
performance indicators are revenue, total income,
underlying profit before tax, profit before tax,
PBT margin, number of FXRM clients, number
of Alternative Banking client accounts, and the
number of FXRM Front Office staff.
CASH FLOW AND BALANCE SHEET
In the year ended 31 December 2023, 53% 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 (2022: 57%). Including
net treasury income, cash conversion increased
to 72% in 2023 (2022: 60%). 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 £61m to £198m.
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
receivables. Therefore, in addition to the statutory
cash flow, the Group presents an adjusted net
cash summary excluding these items, shown above.
On this basis, adjusted net cash increased in the
year by £64m to £179m. The overall net assets of
the Group increased in the year by £81m to £223m.
Tim Powell
Chief Financial Officer
27
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023
Financial Review
Continued
PRIOR PERIOD RESTATEMENT
BUYBACK
After reviewing the IFRS 2 Share-Based Payment
In January 2024 we announced a share buyback
standard and related guidance from the IFRIC,
programme of up to £20m; as at 18 March 2024
the Group has concluded that share ownership
we had purchased 332,429 shares at a total cost
schemes that grant employees shares or options in
of £5.7m.
DIVIDEND
Following the strong full year results, the Board
is pleased to declare a final dividend of 12.3p
per share (2022 – 11.0p). Subject to shareholder
approval, the final dividend will be payable to
shareholders on the register at 5 April 2024, and
will be paid on 10 May 2024. This represents a
total dividend for the year of 16.0p per share
(2022: 14.4p).
Tim Powell
Chief Financial Officer
subsidiaries, with conversion rights to the holding
company should be accounted for under IFRS 2
Share-Based Payment, rather than a non-controlling
interest in a subsidiary. As a result of this, the
previous years’ non-controlling interest recognised
over the annual profits of the subsidiaries were
overstated.
In addition, a number of other amounts relating
to these schemes have been restated in 2022,
namely the share-based payment charge to the
Consolidated Statement of Comprehensive Income,
the share premium recognised on vesting, and other
receivables relating to the purchase of the options.
Accordingly, the Group has restated its financial
statements in accordance with IAS 8 ‘Accounting
Policies, Changes in Accounting Estimates and Errors’.
The correction of these entries in 2022 results in a
slight decrease to profit after tax (£0.4m), an increase
to profits attributed to shareholders of the parent
(£2.7m), an increase to retained earnings (£4.6m), and
an increase to basic earnings per share (5.3p).
Full details of the restatement are shown in note 4 of
the accounts on page 119.
COBASE
On 1 December 2023 the group acquired a c. 86%
stake in Cobase – an innovative, cloud-based provider
of bank connectivity technology that enables
corporates to manage their banking relationships,
accounts, and transaction activity via one single
interface. The balance sheet has been incorporated
into the Group’s 31 December financial position. The
income statement impact in 2023 of one month of
trading was: revenue of £0.2m, EBITDA £nil, and a
loss before tax of £0.2m.
28
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 18-20.
REVENUE
FXRM CLIENT NUMBERS3
The income from services and products provided to
clients during the year.
The number of clients that have generated revenues
in excess of £10,000 over the previous 12 months.
£110.4M
1,071
2023
2022
2021
2020
£77.5m
£46.2m
£110.4m
£98.3m
2019
£35.4m
2018
£23.5m
2023
2022
2021
2020
2019
2018
1,071
1,047
881
754
648
482
UNDERLYING PROFIT BEFORE TAX 1
FXRM FRONT OFFICE HEADCOUNT
Profit before interest, tax, exceptional items and
share-based payments.
The number of employees in Front Office employed
by the Group as at 31 December of each year.
£43.0M
£43.0m
£38.6m
£33.4m
2023
2022
2021
2020
2019
2018
£17.5m
£14.6m
£10.0m
120
2023
2022
2021
2020
2019
2018
67
66
64
51
120
102
PROFIT BEFORE TAX
£115.9M
2023
20222
£46.8m
2021
£33.2m
2020
£17.1m
2019
£13.5m
2018
£9.7m
£115.9m
ALTERNATIVE BANKING ACCOUNTS INVOICED
The number of accounts opened by clients that were
live at the period end.
6,467
2023
2022
2021
1,746
6,467
4,200
58.3p
1 Underlying excludes the impact of non-cash share-based payments, net treasury income
on client balances, one-off listing-related and M&A costs and amortisation of purchased
intangibles in 2023, and in the prior years, exceptional property-related costs.
2 Full details of the restatement are shown in Note 4 of the Consolidated Financial Statements.
3 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 purpose of these figures.
29
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023
Our Businesses
FX Risk Management
WHO ARE WE HELPING?
REVENUE FY2023 (£)
Our FX Risk Management division focuses on
supporting corporate and institutional clients
that need to buy or sell currency for commercial
purposes, typically for buying and selling goods
and services overseas, or to fix the underlying
value of an asset or liability.
The clients that we support are regularly
impacted by movements in exchange rates,
and therefore exposed to material risk that
can significantly impact their performance
and profitability. We support them by providing
strategies and technologies that enable them to
£76.3M
(2022: £69.5M)
CLIENT NUMBERS
1,071
(2022: 1,047)
mitigate risk by managing the impact of currency
% GROUP REVENUE
volatility more easily and effectively. Similar to
a traditional currency broker, we then underpin
these solutions with a variety of ways to buy
and sell currency – from simple spot contracts
through to more sophisticated hedging products.
Despite our consultative approach, we charge no
69%
upfront costs or retainer fees, instead monetising
WHAT PROBLEM ARE WE SOLVING?
our services through commissions on forward,
option and spot contracts.
To understand the distinctiveness of our model,
one must first understand the following three
STRATEGIC REPORT OUR BUSINESSES
The latter of these is more complex, and where
When considering the answers to the above, it’s
clients naturally face the biggest challenge – and
important to first understand what “bad” looks
this is where Alpha focuses its proposition and
like. Essentially this falls into one of the two camps
differentiates itself the most.
mentioned above: under-hedging (hedging too little,
including nothing) or over-hedging (hedging too
Some examples of the questions that decision-
much). For organisations that are hedging cash-flow
makers continuously need to consider when hedging
forecasts, the implications of under or over-hedging
include: how to approach fixing the rate and how not
can be significant. For corporates, it can materially
to approach it, when to fix the rate and when not to,
impact their purchasing and pricing power, and for
how much is too much, and how much is not enough.
funds, it can impact their investment performance. In
Only by answering these questions correctly can
both cases, this results in reduced competitiveness
they ultimately avoid the problem of under or over-
and profits. Additionally, over-hedging can also lead
hedging.
to margin calls that result in cash outflows that
can negatively affect the business. The aim is to
ii. What ‘good’ risk management looks like
ultimately get the balance right and ensure that
To develop a well-balanced hedging solution, the
profits aren’t unnecessarily eroded, commercial
first step is to start with the business itself. We
objectives aren’t unnecessarily obstructed, and the
cannot, with any integrity, propose a solution to a
day-to-day running of the business is not negatively
client without understanding how their business
impacted. Understandably, this is easier said than
works. Thus, our primary focus is to obtain a deep
done. Part of the difficulty in answering these
understanding of an organisation’s operating
questions and striking the right balance stems from
model, any supply chain considerations, their target
the fact that decision-makers are faced with a web of
market, competitive landscape, profit margins, cash
complexity and distraction from the FX market itself.
constraints (cyclical or not), pain points that make
the day-to-day operations harder to navigate, and,
iii. Fear, Greed, & Sub-optimal Decision-making
importantly, the core commercial short, medium,
Whilst there is risk from unfavourable volatility,
and long-term objectives of the key decision-
there is also “opportunity” from favourable currency
makers and owners. This understanding gives us
swings. It is not uncommon therefore for businesses
a base foundation from which a strategic hedging
to be driven by a desire on the one hand to protect
programme can then be built.
their margins, and on the other, to increase their
profitability. The combination of both introduces
The annual global market opportunity for our
considerations: i) the ongoing challenge that
The next step is to determine how to protect the
two quite strong emotional drivers into the decision-
FXRM division is estimated to be worth over
businesses with a recurring exposure to currency
business against currency volatility itself. At this
making equation – fear and greed – an age-old
£200bn, meaning we have captured less than
volatility are faced with, ii) what a well-balanced
point we want to explore the following questions:
human problem which negatively influences the
1%. Our main competitors are banks, who hold
hedging solution looks like, and iii) the set of FX-
i) how much to hedge, ii) which instrument to use,
performance of a hedging strategy. When faced with
an estimated market share of over 80% through
related conditions that create a web of complexity,
iii) when to hedge, and iv) how often to revisit these
such unpredictability, the one thing that people will
pre-existing relationships, with the remaining
and often suboptimal decision making, for
20% held by non-bank foreign exchange
businesses to navigate through.
brokers. We service this marketplace through
our Corporate and Institutional teams in the UK,
i. The challenge our clients face
questions. The possible solutions will consider the
often seek the most is reassurance. Often however
commercial risk posed to the business because
they find this in the wrong places. Consequently, it’s
of volatility itself (indicating what an organisation
quite normal for decision makers to seek counsel
needs to do to protect itself), the cash position
from those “in the know” about which way the market
Canada, the Netherlands, Italy, Australia, Spain
Any organisation with ongoing exposure to currency
and creditworthiness of the business (indicating
is likely to move. This usually comes in the form of
and Germany. We are sector agnostic and our
volatility must continuously and appropriately
what they can afford to do), and the risk appetite
market commentaries or forecasts, and despite
revenues are highly diversified across a variety of
determine how to protect their business against the
and commercial objectives of the decision-makers
this approach producing suboptimal results when
sectors, currencies and continents, with clients
risk that currency volatility creates. This can range
(indicating what they would like to do).
measured over the medium to long-term, to this day
in over 50 countries.
from hedging firm commitments, through to hedging
cashflow forecasts.
it remains the default service offering by both banks
and non-banks alike.
30
31
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023 FX Risk Management
Continued
In our experience, most banks are passive and
THE SHORT-TERM TRAP
risk-averse, sending generic in-house forecasts and
analysis en-masse to their customer base, usually via
email. Our non-bank competitors on the other hand
typically actively engage in providing businesses with
personal predictions and opinions, as well as producing
generic commentary and in-house forecasts.
Adding to the complexity is the plethora of financial
instruments available to businesses, which can also
be placed into one of two camps: (i) genuine risk
management products with a commercial purpose,
and (ii) speculative products that are akin to gambling.
Regarding the speculative products, these instruments
serve no logical purpose in a genuine risk management
strategy and tend to offer immediate short-term
benefits by providing a more favourable exchange
rate today, at the expense of committing the client to
a potentially more undesirable exchange rate in the
future – hence the gamble. Despite the odds being
firmly against the client, these instruments remain
highly alluring to many.
The final challenge relates to the ongoing conflict of
interest created by the traditional commission model
within non-banks. Notably, the immediate short-term
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.
Collectively, the problems outlined above serve to
fuel fear and greed tendencies, and subsequently
suboptimal decision-making, at a time when a
balanced and strategic approach to managing currency
is often needed the most. We refer to this as the Short-
term Trap. The obvious question to ask is, if the Short-
term Trap leads to such suboptimal outcomes, why
then does it persist? Ultimately, the answer to this lies
in the fact that international businesses will always be
faced with a recurring decision to buy or sell currency
(this will never go away), and as long as that decision
remains intrinsically linked to a live moving variable
(FX rates), it will continue to create the conditions for
success or failure. Furthermore, in an industry where
FX providers and the global media continue to indulge
and promote FX market forecasts and commentary,
a convention is established that lures businesses
into believing there is genuine value and credibility in
relying on them.
If this approach is fundamentally flawed, why don’t
more providers choose to challenge the short-term
cycle? The answer to this is simple – people are
human with emotional drivers that are unfortunately
easy to sell to, and the commercial opportunity to
monetise this with short-term market opinions and/or
speculative products, is inherently easier and lucrative
in the short-term.
The conditions that our clients face can therefore be
HOW WE DIFFERENTIATE – “THE ALPHA WAY”
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!
If the traditional way of doing things is easier, why
have we chosen a more difficult path? Ultimately
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
our clients. In terms of purpose – we are genuinely
passionate about solving the problem of currency risk
for our clients; in an industry fixated on the direction
of FX markets and being part of the fanfare that
surrounds them, we are proud to be different and
have a clear vision to become the global leader in FX
risk management. And in terms of sustainability – we
STRATEGIC REPORT OUR BUSINESSES
believe it is easier to keep the clients you have,
Keeping it simple
by providing sound risk management advice that
In terms of the hedging products we recommend
delivers consistent results over the long-term.
to our clients, we know that, used in the right way,
simple products are, in the vast majority of cases,
Ultimately, by avoiding the path of least resistance,
far more effective than complex or speculative
we set out to remain a business that is long-term,
ones at managing currency risk. To support this
high-growth, and a global leader in its space.
ethos, we incentivise our people by deliberately
However, by leaning into a more difficult path
paying significantly lower rates of remuneration
our challenge becomes, how can we navigate
on more complex products, whilst celebrating and
it successfully? This comes down to three core
over-rewarding scenarios where we successfully
components: our Business Philosophy, our
talk clients down from more complex ones, to using
Performance Culture, and our Remuneration System.
simple ones. Our philosophy has always been to
PILLAR 1. OUR BUSINESS PHILOSOPHY
avoid the path of least resistance and challenge
clients on what they need versus what they want.
Over the past fourteen years we have made it our
Effective strategy requires a deep understanding
mission to distinguish ourselves away from the short-
of how a client’s organisation works, in order to
term, FX-focused, and sales-led services that have
diagnose their challenges and build an appropriate
always been abundant in the market. We have sought
solution. This cannot be achieved by talking to a
to challenge preconceived ideas of what “good” looks
client about their generic “FX requirements” only
like by prioritising the commercial development and
to put forward a pre-conceived FX solution. This is
acumen of our people, and engaging in conversations
just a sales conversation. What is needed instead
that seek to genuinely understand our clients’
is a business conversation – one that evaluates
businesses and what they truly need, rather than
the client’s business dynamics, competitive
what they might want, or have become accustomed
environment, and commercial objectives,
to.
in order that we can then tailor appropriate
risk management principles to their unique
Risk management led
circumstances. Only by adopting this approach can
Our approach to managing currency volatility is risk
a well-balanced hedging strategy be achieved.
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
SUMMARY
conversations around currency markets and “when”
Our business philosophy intrinsically takes us down
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.
A risk management culture, like Alpha’s, versus one
that indulges market commentary and forecasts, are
mutually exclusive and deliver distinctly different
outcomes.
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 over time) create
strong earning potential for our people, and strong
sustainable value for our investors. Everyone wins.
32
33
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023 FX Risk Management
Continued
PILLAR 2. OUR PERFORMANCE CULTURE
sub-component of our performance culture, which is
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
ensuring this journey remains enjoyable for everyone.
Yes, we want to get better, and yes we want to
operate at an elite level, but we also want this to be
fun – not least because we believe enjoyment is an
integral ingredient to performing at a higher level.
Ultimately our people are our most treasured asset,
and we demand a lot from them. For our people-led
model to remain sustainable it’s imperative we invest
in them appropriately.
SUMMARY
In any high-performing sports team, what separates
those who finish first, from those who don’t, is
their intent. Individually and collectively, they train
that extra bit harder, they create a culture where
1% improvements are both valued and sought out,
they empower and elevate one another, and they
constantly look to invest in areas that will make the
boat go that little bit faster. We subscribe to the
everyone is getting better, seeking out their next level
belief that business is no different. It’s one of the
of performance, and addressing inconvenient facts
main reasons we have established an exciting and
or uncovering uncomfortable truths, we continuously
long-standing relationship with a world-renowned
performance coach, Dr Ceri Evans, who, in addition
to Alpha, works with some of the world’s most
respected and successful sports teams.
elevate our collective potential.
A winning mindset
Across all divisions and departments, we want
to be considered exceptional at what we do and
pursue excellence in every field. Throughout the
organisation we emphasise that, whoever you are
and whatever role you play, we all have an obligation
STRATEGIC REPORT OUR BUSINESSES
and a clear cultural direction. We then reinforce our
Ultimately, we want our people to prioritise client
approach with very deliberate and well-designed
retention and acting in the long-term interests of
remuneration structures.
their clients, rather than be influenced by the need to
hit a short-term recurring revenue target.
Despite our strong track record of growth, since
inception, our Front Office employees have never
We also use remuneration to both incentivise and
had a recurring revenue target for existing clients –
disincentivise our people relative to the complexity
not at the individual client level or across their wider
of the products they sell (i.e. the more complex
portfolio. We believe this is not only unique in our
the product, the lower the remuneration). We
industry, but also in sales environments. Instead,
believe in most instances the simplest solution or
we opt solely for monthly new business targets that
product should always be prioritised, which often
are deliberately modest and static. We believe this
means less revenue today, but more over time. In
approach is critical in driving the right behaviour
an industry where the sale of complex products is
at the outset of a new client relationship and in
often overly rewarded, and the people that sell them
delivering consistent positive client outcomes over
are pedestalled as experts, this is a key cultural
the long-term, which then leads to high levels of
difference.
retention and allows us to organically increase our
wallet share over time.
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
PILLAR 3. OUR REMUNERATION SYSTEM
Promote complex products
Promote simple products
to achieve and uphold a reputation of excellence. Our
Our remuneration system is the third component of
people knowingly sign up to this when they join, it is
our model and is designed to both complement our
one of our most important guiding principles and,
business philosophy and regulate our performance
unsurprisingly, it is not for everyone.
culture.
Enjoying the journey
As a fast-growing business with growth expectations
Performance environments can be mentally and
from investors, one could envisage a conflict
physically taxing, and we don’t want our people to
between our long-term principles and results-
become slaves to performance or burn out. Thus,
oriented environment. We however feel the two are
we place a huge amount of importance on the third
aligned and show this through strong leadership
Sell clients what they want
Sell clients what they need
High volumes of low-value clients
Low volumes of high-value clients
Legacy technology, built for the mass market
Cutting-edge technology, purpose-built for currency
risk management
34
35
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023 Our Businesses
Alternative Banking
WHO ARE WE HELPING?
REVENUE FY2023 (£)
Our global accounts solution has been purpose-
built for alternative investment managers
and the corporate service providers and fund
administrators that support them (“Service
Providers”). These clients require local accounts in
key investment jurisdictions for their investment
vehicles, typically for the purpose of asset sales,
purchases, or distributions. Fund types typically
include: private equity, private debt, venture capital,
real estate, infrastructure and fund of funds.
As our reputation and capabilities have grown,
we are seeing increasing levels of interest from
service providers who 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 accounts,
sending 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
£33.9M
(2022: £28.8M)
LIVE ACCOUNTS
6,467
(2022: 4,200)
% GROUP REVENUE
31%
THE PROBLEM
entities each. Each of these investment entities will
Whether you are an investment manager or one of
typically require their own local account, therefore
their service providers, opening and managing bank
representing a significant undertaking for these
accounts in key investment jurisdictions is often a
service providers.
time-consuming, resource-intensive, and unreliable
Data company Preqin tracks 180,000+ alternative
process.
fund profiles globally, and we estimate that
Whilst this can be a significant headache for individual
each fund will have, on average, ten assets, each
investment managers, these problems are amplified
requiring accounts. Based on these calculations we
considerably for the service providers tasked with
are barely scratching the surface of the market. Our
managing many thousands of accounts on their behalf,
competition is almost exclusively banks.
day-in, day-out. For these service providers, the sheer
number of interactions across all their bank accounts
Our clients operate globally, with their funds
for workstreams such as onboarding KYC, payments,
domiciled in key investment jurisdictions, in
FX, and reporting, is staggering. Furthermore, if the
particular Europe, Singapore (Asia) and the USA
quality of these interactions is poor or inefficient,
(Americas). Our existing regulatory scope means
it leads to significant pain and cost for the service
we can currently service each fund’s European
provider. We are on a mission to bring down the
business, with an application in Singapore
number of these interactions, whilst simultaneously
underway to expand our global reach.
raising their quality.
STRATEGIC REPORT OUR BUSINESSES
To understand the scale of this problem and why
it exists, it is helpful to explain the availability of
options in the marketplace today. Traditional banks
have generalised, low-touch offerings built on legacy
systems that are designed to handle standard
corporate and retail clients at scale. They are not
however built to handle the specialised and often
complex nature of alternative investment structures.
This (as will be outlined later) requires a high-tech,
high-quality service, underpinned by specialised teams,
processes and technologies. As a result, for traditional
providers, servicing these entities to a high standard
and efficiently is simply not viable over the long term.
For most clients, the result is an unreliable and time-
intensive banking experience. Opening accounts can
take months, as clients manually navigate a back and
forth of onerous KYC and compliance processes, often
with customer representatives who do not specialise
in their industry. Furthermore, if an account is granted,
there is often considerable uncertainty over whether
it will remain open, with many of our clients reporting
that banks have closed their accounts at short notice.
In our experience, this is because the ongoing KYC
and compliance obligations outweigh the revenue the
bank is able to generate on the account. Often this also
“Our approach is
underpinned by three
service principles:
speed, responsiveness
and reliability, and
everything we do is
considered through
these lenses.”
Ultimately, our own success in this space was only
possible because of the maturity of our core business,
and ability to become a specialist “start-up” through
our decentralisation strategy. Our clients now benefit
from dedicated people, processes and technologies,
alongside the capabilities of an established PLC
business, a strong Group balance sheet, and a track
record they can trust. It’s a rare combination and
one that provides us with a significant competitive
advantage.
means that clients will only be granted accounts on
WHAT WE DO
the basis that they agree to take on ancillary services,
despite these services not always being commercially
preferable.
The difficulty traditional providers face when servicing
this marketplace naturally invites the question, “Why
have no new providers entered this space?” The reality
is, to do this successfully, 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, needed
to get a robust solution up and running.
At Alpha, we have built a leading accounts solutions
dedicated to the alternative investment industry – a
bank alternative, built for Alternatives. Our clients
benefit from people, processes and technology that
have been purpose-built for their industry, and this
makes a significant difference to both the efficiency
and service levels they receive – whether they are an
investment manager managing multiple accounts, or
a service provider managing thousands. Working with
Alpha, clients can be confident they will be able to have
an account when they need it, where they need it and
without any of the traditional hassle, uncertainty or
ancillary obligations typically associated with opening
and maintaining these accounts. Furthermore, once
accounts are open, we provide an intuitive online
platform for managing all accounts within one place,
enabling clients to gain a top-level view of accounts
across their entire structure, as well as segregated
views across individual SPVs – providing even more
improvements in efficiency and visibility.
36
37
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023 STRATEGIC REPORT OUR BUSINESSES
Alternative Banking Solutions
Continued
Ultimately our aim is for every interaction with clients
MONETISATION
to be as efficient and streamlined as possible, whilst
also remaining highly controlled and compliant. Our
approach is underpinned by three service principles:
speed, responsiveness and reliability, and everything
we do is considered through these lenses. Once again,
whilst this makes a big difference to investment
managers, for service providers that are managing
thousands of accounts for hundreds of different
investment managers, the benefits of these efficiencies
are compounded significantly, and make a sizeable
difference to their day-to-day operations, and thus, the
quality and profitability of their own service offerings.
We typically generate revenues through annually
recurring subscription fees against each account that
is opened. A number of these accounts will often then
go on to process payments and FX transactions at
key stages throughout their lifecycle, which provide
additional revenue opportunities. Importantly,
providing clients with an account also gives us the
opportunity to build enduring relationships with the
investment managers. This means that even when
the existing assets or funds come to the end of
their lifecycles (typically 5-7 years), we will have the
opportunity to work with the investment manager on
their other 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
digitalised 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
Accounts managed via multiple banks, platforms
All accounts managed through a single platform,
and logins
built for managing multiple investment entities
Legacy technology, built for the mass market
Cutting-edge technology, purpose-built for
alternative investments
38
39
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023 Our Businesses
Fund Finance1
WHO WE WORK WITH
REVENUE MAY 2023 - DEC 2023
Phase 1 – Digital Screening
BENEFITS TO LENDERS
STRATEGIC REPORT OUR BUSINESSES
Our fund finance offering is focused on providing
investment managers with a more efficient and
cost-effective way of obtaining borrowing facilities
for their funds. Such facilities typically consist of
short-term revolving credit facilities (Capital Call, NAV
Facilities, GP Facilities) designed to optimise liquidity
and returns throughout key stages in the fund’s
lifecycle.
Preqin reports that there are circa 50,000 fund
managers globally and conservatively, we believe that
there are c. 20,000 of these that have between 1-2
borrowing requirements per year. These clients are
primarily split out across North America, Europe, and
Asia, with the remaining distributed across the rest of
the world. As a result of Alpha’s existing client base,
our focus has initially been on European funds and
their managers, however, our ability to sell further
£700k+
MANDATES COMPLETED
28
HEADCOUNT
5
afield is not restricted, and we are already seeing
Unsurprisingly therefore, our research has shown
interest outside of Europe.
THE PROBLEM
that (depending on complexity) arranging a facility
can typically take anywhere between 3-9 months
when screening across a pool of lenders.
With over 200 lenders in the marketplace, each
with their own lending appetite, accessing fund
WHAT WE DO
finance has traditionally been a time-consuming and
At Alpha, we’re disrupting the traditional fund
resource-intensive process for investment managers.
finance intermediary model. By combining a highly
Furthermore, even once the right lender has been
experienced fund finance team with smart systems,
identified, the process of structuring a loan, agreeing
processes and technologies, we are making it easier
and underwriting terms, engaging legal teams, and
than ever before to secure the right facility on the
onboarding, creates large and complex manual
right terms. Our offering has been built in a modular
workstreams. This would be the case if a borrower
manner, broken down across two key phases, in
was only engaging with one lender; however, if a
order to provide our clients with the flexibility to
borrower wants to validate the competitiveness
pick and choose the services that best meet their
of the terms they receive, they will typically need
requirements.
to engage with multiple. Given the sheer size and
ever-changing nature of the market, screening
even just a handful of lenders (let alone 250) is
either, internally very time-intensive, or requires
expensive outsourcing to traditional debt advisers.
1 Fund finance was established within our Alternative Banking
division, and therefore headcount and revenue contributions are
currently recognised within Alternative Banking.
Our team begin by working in consultation with
clients to help them identify the right borrowing
facilities for them and create a borrowing profile.
With this profile in place, we will screen their
requirements across a large universe of lenders
using our digital fund finance platform. Our fund
finance platform is the first of its kind in the
marketplace and uses digital automation and our
proprietary lender database to take a process
As well as offering significant benefits to borrowers,
lenders also stand to benefit considerably from
featuring on Alpha’s fund finance platform, as
it provides them with fast access to a large and
growing pool of pre-qualified borrowers that match
their specific requirements, as well as streamlined
administration of their loans.
that would traditionally take months (or not be
A STRONG FIRST-MOVER ADVANTAGE
carried out at all) and condense it down to a
matter of minutes. At the same time, by screening
the borrower’s requirements across the whole
of the market, clients gain unprecedented levels
of market validation, and can therefore be more
confident than ever before in the competitiveness
of the terms they receive.
After using our screening tool, borrowers will
receive a custom-built report of relevant lenders.
From here, we offer a matching service, where we
will secure heads of terms for a facility from one or
more lenders.
Phase 2 – Structuring & Execution
The second phase of our offering is focused on
using the fund finance team’s knowledge and
expertise to negotiate, structure and execute the
client’s facility on their behalf. Here our focus is on
ensuring the process is as efficient as possible for
the borrowers and that they can feel confident they
are receiving the right facility on the right terms.
MONETISATION
There are two main ways we generate revenues
from our fund finance offering. For phase 1 of our
offering, we charge a platform screening fee, and
for phase 2, we charge advisory fees, which vary
depending on the depth of support the client would
like us to provide.
For a platform solution to be worthwhile for
borrowers and lenders, there needs to be speed
and scale on both sides of the equation: borrowers
want to know they can instantly screen across a
large pool of lenders, whilst lenders want to know
they are going to have easy access to a sizeable
pool of borrowers.
In our experience, however, traditional providers
are not set up to deliver this. Whilst they offer high
levels of expertise, their offerings rely solely on
human delivery. As a result, the speed and scale
of their operations are heavily limited, with most
fund finance intermediaries consisting of a cadre of
advisers, working with a small number of borrowers
each year.
This is where Alpha differs. In terms of scale –
through the success of our FX Risk Management
and Alternative Banking divisions, we have been
able to enter this market with an existing client base
of over 1,300 investment managers, all of whom are
potential borrowers. And in terms of speed – we are
able to use the Group’s strong capital position and
capabilities in technology to build a digital offering
that can process a workstream that would have
taken months, in a matter of minutes. As a result, we
believe we have a strong and sizeable first-mover
advantage in this market and an opportunity to
drive meaningful improvements within the industry.
40
41
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023 Our Businesses
Cobase
INTRODUCTION
REVENUE FY2023 (€)
STRATEGIC RATIONALE
Joining Alpha Group in December 2023, Cobase
is an innovative, cloud-based provider of bank
connectivity technology that enables corporates to
manage their banking relationships, accounts, and
transaction activity via one single interface. In doing
so, the company unlocks significant operational and
financial efficiencies, especially for international
businesses, with multiple banking relationships
across the world.
Without Cobase, companies have to manage multiple
€2m1
MANDATES COMPLETED
~ 130
platforms and integrations across an array of banks,
HEADCOUNT
significantly reducing the efficiency and visibility
with which they can manage their payments, cash
management and treasury functions. The more banks
and accounts a company has, the more challenging
this becomes.
21
Companies can utilise Cobase’s solution either
This makes Cobase a flexible and accessible option
directly through its platform or via its off-the-
for corporates that would benefit from many of
shelf ERP connections, with widely used solutions
the features of a TMS, but have been put off by the
providers such as Oracle, Netsuite, Microsoft
time, costs and expertise traditionally required to
Dynamics and SAP S4/HANA. The ease and simplicity
implement and maintain one.
with which this connectivity can be offered is a key
differentiator in a marketplace where it is typically
The company was founded in 2017 by Jorge
only achieved through enterprise-grade Treasury
Schafraad, and is made up of 21 people
Management Systems (“TMSs”). Such systems
headquartered in Amsterdam, The Netherlands. The
require expensive and resource-intensive manual
platform has already benefitted from significant
integrations with separate banking and payment
investment prior to Alpha’s acquisition, and a
providers, as well as separate memberships with
visionary management team, creating an innovative
networks such as SWIFT. As a result, research of
multibank platform that has over 500 bank
Alpha’s existing client base shows that less than 10%
connections across more than 80 countries.
are using a traditional TMS.
Cobase enables companies to leapfrog the
subscription fees, generating recurring revenues
aforementioned barriers through its unique approach
of circa €2m per annum. The company has a client
of being a software business, whilst also holding its
base of circa 130 corporate groups across the world,
own regulatory statuses and SWIFT membership.
reflecting 67% growth in the last 12 months (2022: 78).
Cobase current revenue is solely from SaaS
Alongside its bank connectivity, key features
include a Central Payments Hub as well as a Cash
Management and Treasury Management module.
1 Only revenue generated after Cobase’s acquisition in December
is included in the Group’s figures, which was £0.2m
STRATEGIC REPORT OUR BUSINESSES
providing a more holistic treasury service around
our core FX risk management proposition. This
will, in turn, enable Alpha to provide more value
to existing clients and increase wallet share and
retention. Additionally, it will naturally allow Alpha
to attract new clients for whom bank connectivity
is an initial purchasing driver, as is evidenced by
the 100 corporates who are already using Cobase.
At the same time, we see an exciting opportunity
for the Cobase team to leverage the scale and
experience of Alpha’s global sales team, as well as
the cross-selling opportunities with Alpha’s own
client base.
Alpha and Cobase’s offerings are highly
complementary, and provide exciting opportunities to
amplify one another’s growth by leveraging and sharing
each other’s unique capabilities and experience.
Indeed, 80% of Cobase’s existing client base falls
within Alpha’s own target market, highlighting the
strong potential for mutual value adds.
Cobase has retained its team and continues to
operate under its own brand and management whilst
its proprietary technology will help to accelerate
Alpha’s digital proposition and enable us to become
increasingly more integrated with our clients by
Portal
Mobile App
Host2Host
API
Payments
FX
Robo Assistant
Reporting
Netting
Alerts
Cash Pooling
In-House Banking
User Admin
Audit Trail
Forecasting
TX Screening
Bank Integration via SWIFT, H2H, EBICS, API,...
Bank A
Bank B
Bank C
Bank ...
Clients can either utilise Cobase through the company’s own portal or mobile app, or from within their
own ERP system by sending instructions via host2host or API connectivity.
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43
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023 Principal Risks & Uncertainties
Tim Butters, Chief Risk Officer
Against a backdrop of rising inflation and interest rates, we have
continued to grow, maintaining a disciplined approach to credit
and risk, whilst further enhancing our control environment.
We remain well capitalised, with increasing levels of liquidity,
driven by operating profit and net treasury income, whilst having
managed our risk appetite in key risk areas, to continue delivering
consistent returns.
OUR APPROACH TO RISK MANAGEMENT
SECOND LINE OF DEFENCE
In 2023 we hired an experienced cyber security
professional as Alpha’s first Chief Information
Security Officer, and built out a dedicated application
security function, further demonstrating our
commitment to cyber and data security, one of our
major risks. We continue to focus on key risk matters,
ensuring proportionate yet robust controls, and
have increased the size of the internal audit team to
provide further independent assurance.
Familiar readers may notice the addition of one new
risk this year, Financial Crime. Whilst in previous years
we have covered several financial crime controls
under regulatory risk, we have made considerable
investment in further enhancing our financial crime
team, systems, and controls in recent years, so we
feel it warrants its own entry.
We continue to 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.
Comprised of the Risk, Second-line Compliance,
Cyber Security, and Legal teams, who are
responsible for building and embedding the risk
framework. At Alpha, the second line works closely
with the first line to challenge, but also to advise on
and monitor our 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.
Alpha has independent external audits across
(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.
STRATEGIC REPORT PRINCIPAL RISKS & UNCERTAINTIES
RISK APPETITE
3
RISK PROFILE
2
4
GROUP
STRATEGY
1
RISK REPORTING
AND MONITORING
8
CONTROLS TESTING
7
6
IDENTIFICATION
AND ASSESSMENT
ENTERPRISE RISK
FRAMEWORK
5
RISK CULTURE
AND GOVERNANCE
RISK POLICIES
ENTERPRISE RISK MANAGEMENT FRAMEWORK
− Creating a clear framework of accountability and
Our Enterprise Risk Management (“ERM”) framework
provides assurance to the Board on the sound
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
responsibility that is transparent and allows for
better decision-making;
− 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;
delivery of the strategy are proactively identified to
− Recruiting, retaining, and developing our people
ensure we can manage them accordingly.
to embed a culture that reflects the risk appetite.
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
The appetite statements provide clarity on the scale
and type of activities we wish to undertake, and the
Board has set a two-tiered limit approach to the
quantitative metrics (KRIs) through amber and red
thresholds. The amber thresholds allow for early
levels of operational, compliance, financial, strategic,
identification of risks that are regularly occurring,
and information risk, whilst enhancing shareholder
value. Our risk appetite is established by qualitative
risk appetite statements and measured through
quantitative key risk indicators (“KRI”) metrics.
To stay within our appetite, we always observe a
compliant legal and regulatory regime whilst applying
best practices, including:
picking up velocity or approaching appetite limits.
The red thresholds are set to appetite; a level of risk
more than the red limit is seen as ‘out of appetite’ and
reportable to the Board.
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45
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023
Principal Risks & Uncertainties
Continued
3. RISK PROFILE
This is the current measure of the level of risk the
business is exposed to. Key risk indicators and
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 group prides itself on its strong and embedded
risk culture. 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.
5. RISK POLICIES
Policies are used to clearly define the approach to
risk management across the group and to assign
accountability.
6. IDENTIFICATION AND ASSESSMENT – PRINCIPAL
RISKS
To be managed, risks need to be identified and
understood. Alpha utilises several approaches to do
so, from risk assessments and workshops to ensuring
risk has a ‘seat at the table’ in operational and
strategic decisions. In total, we have over 100 risks
in our risk register which we monitor closely, with a
focus on our Principal Risks (see page 47).
7. CONTROLS TESTING
We continuously work towards strengthening our
control framework, with key controls frequently
tested to assess their design and operational
effectiveness. This gives us a more proactive
approach to risk management, with the results of
the assessments reported to the Risk Committee
ensuring clear accountability for the firm’s key
controls.
Tim Butters
Chief Risk Officer
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. In addition to internal controls
testing, Alpha undergoes several internal and
external audits per annum whereby our controls are
independently reviewed. Any findings are tracked by
the Internal Audit function through to closure via the
Group Risk Committee.
8. RISK REPORTING AND MONITORING
Reporting provides oversight of the firm’s risk
profile against appetite and identifies new risks
or increasing exposures that may become out of
appetite. We continue to enhance our risk reporting,
ensuring key risks are presented in a way that
enables decisions to be made. Daily scenario testing
ensures appropriate management of liquidity and
credit risk.
STRATEGIC REPORT PRINCIPAL RISKS & UNCERTAINTIES
Principal Risks
FY2023
We assess, manage, and mitigate risks in order to deliver on our
purpose and strategy. The risks below have been grouped as per
Alpha’s risk taxonomy.
Operational and Compliance Risk
Risk Type: Regulatory Risk
The Group faces the risk of failing to adhere to its regulatory and legal requirements. Failure could see the Group
exposed to significant regulatory penalties and reputational damage, as well as counterparties terminating our
relationship. Additionally, any new regulation or changes to existing regulations may require the Group to increase
its spending on regulatory compliance and/or change business practices.
RISK MITIGATIONS AND UPDATE
MOVEMENT
− We maintain robust policies, procedures, systems and controls,
UNCHANGED
monitoring, and assurance programs. These ensure continued
compliance with our regulatory obligations.
− We have strong relationships with best-in-class regulatory compliance
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 Reg-tech providers to ensure we have
the best and most innovative tools at our disposal.
− The Compliance team continues to appropriately increase its
headcount to accommodate regulatory and business needs, including
hiring resources 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.
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ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023
Principal Risks
Operational and Compliance Risk
Risk Type: Financial Crime Risk
Risk Type: Operational Risk
The Group faces the risk of being used as a conduit to commit financial crime, involving fraud or dishonesty;
The Group is subject to the risk of loss resulting from inadequate or failed internal processes, people, systems,
misconduct in, or misuse of information; or handling the proceeds of crime.
or external events. This can include incorrect inputting or execution of a trade or settlement, internal fraud, and
financial reporting delays or errors.
RISK MITIGATIONS AND UPDATE
MOVEMENT
RISK MITIGATIONS AND UPDATE
MOVEMENT
− We have partnered with two industry-leading providers to implement
NEW
− We continue to invest in, and focus on, retaining a scalable operating
DECREASED
STRATEGIC REPORT PRINCIPAL RISKS & UNCERTAINTIES
new transaction monitoring and screening systems, which has
enabled us to enhance our oversight of client trading activity and
payments. The oversight has allowed us to make more informed
changes to the financial crime framework of the business.
− The Compliance team continues to appropriately increase its
headcount to manage financial crime risk in line with transaction
flows. Notable hires include two Deputy Money Laundering Reporting
Officers and an additional Senior Sanctions specialist.
− We are implementing a new KYC application with system-based
controls and validation at its core. The tool will allow for an increase
in the quality of data reporting to help to highlight any emerging
financial crime risks.
− We have conducted annual reviews of our Financial Crime Risk
Assessment, and internal policies and procedures to ensure these
are up-to-date and appropriate to counter the financial crime threats
posed to Alpha.
− An annual independent external audit is conducted on our AML
procedures across the Group.
− We have invested in companywide sanctions training and are growing
our sanctions expertise internally.
− A standalone Financial Crime working group has been established to
deep dive into financial crime risk.
− As stated above, our dedicated quality assurance and compliance
monitoring functions have been enhanced further this year.
model, with a particular ongoing focus on automation and straight-
through processing.
REASON FOR MOVEMENT:
− We promote a positive speak-up culture, so risk events are proactively
Process optimisation
including an increase of
straight-through processing.
identified and escalated.
− The Risk team oversees the operational risk framework, working
closely with risk champions in each first-line team to ensure risks and
risk events are proactively identified and reported.
− 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, with key controls
regularly tested for effectiveness by the risk team.
− We maintain a strict division between Front and Back Office
functions to ensure Back Office remains independent and attentive
to any errors that the Front Office may have caused. We have further
strengthened our lines of defence model this year.
− Further enhancement of our operational resiliency framework, with
further BCP and incident response testing.
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ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023
Principal Risks
Operational and Compliance Risk
Risk Type: Dispute Risk
Risk Type: Technology Risk
Whilst a client may not default on a contract, they may dispute its validity. With the challenging macro backdrop,
Technology underpins most businesses and Alpha is no different. We rely on the uptime and availability of in-house
there is a risk clients may try to renege on trades that have gone against them.
and third-party systems. A failure in this technology could disrupt both our own and our clients’ businesses.
RISK MITIGATIONS AND UPDATE
MOVEMENT
RISK MITIGATIONS AND UPDATE
MOVEMENT
− Our thematic deep dive on dispute risk is frequently re-visited and
UNCHANGED
− We are cloud-first, giving us the ability to host our services with
DECREASED
STRATEGIC REPORT PRINCIPAL RISKS & UNCERTAINTIES
reviewed.
− All trades have evidence recorded against 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 reduced our offering of more complex products.
− The Risk team control tests the above processes to ensure they are
operating effectively.
resilience built in, and scale our platform according to our clients’
demands and needs.
REASON FOR MOVEMENT:
− The vendors we partner with are tier 1 providers, allowing Alpha to
We continue to remove
take advantage of out-of-the-box, turn-key security solutions and
legacy technology through
migrating our services to
cloud-based solutions.
industry-leading service level availability.
− Working with leading cloud providers such as Amazon and Azure gives
us the ability to utilise evolving technologies with minimal effort.
− We understand that our clients expect that their data is handled with
care and utmost confidentiality. Alpha’s alternative banking and all
central supporting services are certified to internationally recognised
security certification, namely ISO27001.
− Alpha continues to invest in world-leading security technologies,
adopting a defence-in-depth approach to provide both protection
and the ability to react to cyber incidents.
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ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023
Principal Risks
Financial Risk
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.
STRATEGIC REPORT PRINCIPAL RISKS & UNCERTAINTIES
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 was unable or restricted to meet its trading capital
requirements, this could result in its banking counterparties closing out positions or even terminating the trading
facilities currently provided.
RISK MITIGATIONS AND UPDATE
MOVEMENT
RISK MITIGATIONS AND UPDATE
− We have a dedicated Credit team with significant experience who
INCREASED
review all credit requests and conduct ongoing reviews throughout
the duration of the contract. The frequency of these reviews is driven
REASON FOR MOVEMENT:
by the risk level of each client as well as any material macro event
that may affect our client base.
Whilst our approach to credit
has remained disciplined in
− We have built and released a new internal credit platform for better
2023, the macroeconomic
backdrop of rising interest rates,
high inflation, and the potential
of recession have resulted in a
net increase in risk.
management and oversight of credit facilities, margin calls and
reporting.
− 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 2023, particular emphasis has been
put on clients’ exposures 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.
− Our terms of business enable us to collect margin from clients in
response to adverse market moves (margin calls). Alpha benefits
from netting: whilst we are called to place margin from our banking
counterparties on a netted currency pair basis, 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.
− Top client concentrations are closely monitored and are disclosed on
our website by currency pair.
− We have multiple liquidity providers, reducing the concentration risk
to our banking counterparties.
MOVEMENT
DECREASED
REASON FOR MOVEMENT:
Our cash position has further
increased, driven by cash
conversion, profitable trading
and interest earned.
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ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023
Principal Risks
Strategic Risk
Principal Risks
Information Risk
Risk Type: Strategic Risk
Risk Type: Cyber And Data Security
Risk is inherent in any strategy. To ensure we execute effectively we need to understand and actively manage
our strategic risks.
Security is a vital part of Alpha’s fabric and is integral to ensuring the sensitive data and money that 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.
STRATEGIC REPORT PRINCIPAL RISKS & UNCERTAINTIES
MOVEMENT
UNCHANGED
RISK MITIGATIONS AND UPDATE
MOVEMENT
− With the implementation of core protective controls in 2022, the
DECREASED
RISK MITIGATIONS AND UPDATE
− We have a clearly defined strategy, which we continue to successfully
execute, with key risks to delivery identified and reviewed regularly.
− The Board is presented to and signs off on the strategy of the Group and
receives updates from the Executive Directors throughout the year.
− 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 has 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: 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 detailed
UNCHANGED
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
regulators to provide high levels of transparency and comfort.
− We have a contract with a cyber security and reputation management
company, which provides an online impersonation takedown service to
minimise, where possible, brand impersonation.
REASON FOR MOVEMENT:
The enhancement of controls,
increased resource, and
the establishment of more
mature processes aligning to
ISO27001.
Group focused on enhancing these further and on detection controls
in 2023, i.e. the ability to be alerted on anomalous behaviour within
the Group’s network and critical systems.
− Hiring of a Chief Information Security Officer with over 15 years of
experience in the industry, to own and drive the information security
risk agenda.
− Creation and implementation of a comprehensive information
security management system, in compliance with and certified to
ISO27001, across central services and Alternative Banking.
− A Security, Information and Event Management (SIEM) system has
been implemented, enabling automated detection of attacks and
alerting to the Security and operational teams.
− Externally validated testing across all of the Group’s online domains
to identify weaknesses and confirm defensive cyber capabilities
through Purple team exercises.
− Hiring of an Application Security Specialist to work closely with
engineering functions, and enhance the security of our software
development, to reduce risk of release of our platform to clients with
potential vulnerabilities.
− We have renewed and increased the coverage of our comprehensive
cyber insurance policy.
− Continuation of security education across all staff to lower the risk of
common attack methodologies and safeguard data.
− Introduction of a data loss prevention tool to provide full visibility of
data movement outside of the Group network as well as the ability to
pre-emptively block the movement of sensitive data.
− We continue to 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 continue to invest in cloud technologies to leverage security
built by design, and provide the Group with scalable services in
preparation for expansion across existing regions and geographies.
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ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023
Sustainability
At Alpha, sustainable business practices aren’t just about doing
the right thing. We believe they can be a long-term driver of
superior financial performance and make for a better-quality
company and investment.
OUR PURPOSE – TO CREATE AN EXCEPTIONAL
SOCIAL
COMMUNITY FULL OF OPPORTUNITY.
DIVERSITY & INCLUSION
Our ability to attract, develop and retain the right
We are committed to ensuring Alpha is a diverse
people is fundamental to our long-term success.
and inclusive place to work – one where everyone
We strive to align all our team to our core purpose
is empowered to fulfil their potential. We operate a
of ‘creating an exceptional community full of
true meritocracy, recruiting and promoting people
opportunity that works hard but lives well’. By
based on their attitude, skills and experience. We do
providing our team with the best possible career
not discriminate between employees or prospective
opportunities and working environment, we place
employees on the grounds of age, race, disability,
their interests at the heart of our business. Our
religion, gender, education, or any other background.
people then capitalise on these opportunities and
introduce new skills and knowledge to the Alpha
Our stance on diversity forms not only the expectations
community, strengthening our business and driving
we have for ourselves but also for the recruitment
us forward, for the benefit of all our stakeholders.
partners we work with. We ask our recruitment partners
to diversify their candidate shortlists to ensure that our
hiring managers are seeing a true representation of the
best candidates in the market.
L i ves Well
OPPORTUNITY
The more opportunities we
capture, the more we can invest
back into our community
COMMUNITY
The stronger our community
becomes, the more opportunities
we can capture
Works Ha r d
STRATEGIC REPORT SUSTAINABILITY
During the year we were also pleased to launch our
CHARITABLE SUPPORT
DEI Working Group. The Group was set up to create
a forum where the perspectives and ideas of team
members from different backgrounds can be heard,
with the intention of informing and driving our DEI
strategy. Each meeting is focused on the priorities
raised by the members of the committee, with the
Head of HR acting as Chair and a Board member also
in attendance at every session. Alpha’s role as an
employer is to work with the DEI group to provide the
support and tools to enact the changes that matter.
Alpha also conducts an annual DEI survey to gather
anonymous feedback from our team members. In
2024, this survey will be used by the DEI working
group to set an agenda of deliverables, in order that
we can focus on the areas that matter the most.
The tables below show the gender and ethnic
breakdown of our team as of December 2023.
HEADCOUNT BY GENDER – DEC 20231
FEMALE
MALE
OTHER
Team member
128
253
Line manager
Direct reports to
Executives
Executive team
Non-executive
Directors
14
13
0
1
29
24
5
2
1
-
-
-
-
In 2023, Alpha dedicated several fundraising events
to the Movember cause: an organisation which
advocates for and supports men’s mental and
physical health and wellbeing. As part of this, the
team took part in a 60km movement challenge, bake
sale, football tournament and golfing competition,
raising a total of £6,795.
In 2024 we are partnering with the charity, Boxing
Futures, which was nominated and voted for by the
Alpha team. Boxing Future’s mission is to improve
the lives of economically and socially disadvantaged
young people, including those at risk of involvement
in crime, through non-contact boxing and other
physical exercise, by creating a community of
support which champions well-being.
We are also looking forward to rolling out corporate
social responsibility days in 2024, where our
team will be encouraged to take two days of paid
leave to volunteer their time to a local cause. This
initiative will initially be trialled with our London
Office, where we will be partnering with a charity
called “Paddington Partnerships” – an organisation
focused on providing support to local schools and
ecosystems in the Paddington area where our
London offices are based.
HEALTH & WELLBEING
‘Work hard, live well’ is an essential part of our
purpose statement. It emphasises that, in order to
sustain our high performance, we must look after
our employees’ well-being and help them find the
optimum work-life balance, whilst pursuing exciting
career opportunities.
HEADCOUNT BY ETHNICITY – DEC 20232
WHITE
ETHNIC
surveys annually, which enable the team to give
We carry out anonymous wellness and wellbeing
Team member
83%
17%
1 Numbers exclude Cobase, which was acquired in December 2023.
2 Alpha’s demographic data is collated via an annual confidential
survey. As such, a breakdown of the seniority bandings of team
members is not available.
feedback on the areas that are most important to
them when it comes to health and wellbeing, in order
that we can better focus on supporting them. As
a result of these surveys, in 2023 we launched an
international Employee Assistance Platform.
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ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023
Sustainability
Continued
The platform provides wide-ranging support
Our team also have access to world-class
across the wellbeing spectrum, including: mental
performance coaching and workshops with Dr Ceri
health, sleep guidance, physical exercise plans,
Evans – a high-performance coach and clinical
complimentary counselling sessions, discount
psychologist whose client base has included the
codes for healthy meal providers, and access to
likes of the New Zealand All Blacks. His knowledge
articles written by subject matter experts in the
and coaching have shaped how we discuss personal
field of wellbeing. Also in 2023, we hired a Head of
performance across the business and enhanced our
Wellness to join our business, who is responsible for
culture. The senior leadership team has participated
developing and implementing wellness initiatives and
in several high-performance workshops led by Ceri
strategies across the business.
Evans and is now translating these learnings into
PERSONAL DEVELOPMENT
their coaching style with their teams.
We’re proud to invest in external training and
“Everyone gets better”. This ethos is an intrinsic part
qualifications wherever it’s relevant to a person’s role,
of Alpha’s high-performance culture and drives our
with a number of our staff undertaking company-
focus on personal and professional development
sponsored qualifications each year. In 2024 we are
initiatives.
looking to formalise our professional development
policy in order to encourage more employees to
Internally, we ensure that new open positions are
pursue professional development opportunities as
advertised in an accessible way, to encourage
our business continues to grow. This will include a
upward progression and horizontal movements for
strategy to increase understanding and visibility of
team members seeking new challenges. Our focus
the professional development opportunities across
is always on trying to promote from within, and our
the business.
international expansion and ongoing growth also
provide employees with exciting opportunities to
work in new marketplaces and quickly increase their
responsibility and move up the learning curve.
STRATEGIC REPORT SUSTAINABILITY
ETHICAL STANDARDS
We believe that strong ethics are key to maintaining a positive and sustainable business. The principle of “Doing
what’s right” sits at the heart of our company charter and is intrinsic to Alpha’s culture. We then work hard to
monitor and improve our ethical standards through the following initiatives.
INITIATIVE
DESCRIPTION
Sales Commissions
Banks and brokers need clients to transact to make revenue and meet sales
targets; however, within the foreign exchange market, it may not always be in a
client’s best interest to transact. We’ve eliminated this conflict of interest through
a unique commission structure that removes recurring revenue targets and also
pays lower commissions on more complex products. Instead, we pay lifetime
commissions to all employees that incentivise them to retain clients for the long-
term by always acting in their best interests, even if it means foregoing shorter-
term opportunities for commissions. (Read more on pg 34)
Employee handbook
Our Employee Handbook (including a Code of Conduct) formally outlines the
standards we expect of our team and ensures they comply with relevant laws in an
ethical manner. Our handbook and policies are reviewed annually by our Head of
HR and updated as required in response to legislative updates or internal business
developments.
Shared Ownership
We believe that equity provides employees with an enhanced sense of ownership,
and that this comes with an enhanced sense of responsibility and long-term
thinking. Close to 100 employees have an equity stake in the business, and we are
committed to making new shareholders each year.
Modern Slavery
We are conscious that potential human rights risks exist within any business and
supply chain, and are committed to improving our business practices and methods
of conducting due diligence to combat modern slavery and human trafficking. We
therefore comply with the annual reporting requirements contained within Section
54 of the Modern Slavery Act 2015, being a relevant commercial organisation as
defined by Section 54.
Formal Policies
Alongside the initiatives described above, we also have a number of formal policies
designed to ensure our employees uphold our high ethical standards and comply
with applicable laws. These include: a formal policy on bribery and anti-corruption,
and a whistleblower policy that provides whistle-blowers with protection from
retaliation.
Annual Ethics Audit
Our Head of Internal Audit, in conjunction with HR, carries out annual audits of
our ethical standards to ensure we are upholding them, and also ideating ways for
improvement.
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59
Alpha’s official charity in
2024 is Boxing Futures
Employee Training on
All employees receive regular online training throughout the year on ethical
Ethical Standards
standards and are required to complete a series of modules and tests to ensure
these standards are properly understood.
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023 STRATEGIC REPORT SUSTAINABILITY
Sustainability
Continued
SOCIAL RESPONSIBILITY TARGETS
SUBJECT
FY 23 STATUS
GOALS FOR 2024
Diversity & Inclusion
− We have increased the percentage of women in the business from 17%
− Implement an anonymised CV policy to remove the potential for unconscious bias and ensure
to 26% in 2023.
objectivity in all of our interview processes.
− We engaged with our recruitment partners to ensure their policies and
− Expand our benefits offering to support parents returning to work, via childcare benefit support
standards around diversity align with our own.
programmes.
− We launched Alpha’s first diversity, equity and inclusion working Group,
− Continue to leverage the DEI working group to contribute to further positive actions across this space.
endorsed by Non-executive Director, Lisa Gordon.
Giving back
− £6,795 was donated to Movember by employees, an organisation
− Trialling of corporate social responsibility days in London, to give back to the local community.
dedicated to funding and supporting men’s mental and physical
wellbeing. Charitable initiatives included: a 60-kilometer movement
challenge, a bake sale, a football tournament and a golf competition.
− Raise in excess of £10,000 for Boxing Futures, Alpha’s nominated charitable partner for 2024.
Earning & Learning
− We pride ourselves on providing market-leading remuneration packages
− Organise sessions for the Alpha team, focused on financial wellbeing and planning for the future.
Providing sector-leading
and carried out a company-wide pay review in Q1 to benchmark
remuneration and training in
employees against industry standards.
order to attract and empower
high-performance people.
− Access to world-class performance coaching through Dr Ceri Evans,
alongside subsidised formal qualifications with educational institutions.
− New performance matrix introduced to help people measure their own
performance and identify development goals.
− Formalise our professional and personal development policy for 2024 to support team members
achieve their next level of performance.
Community
− All employees who have past 12 months of service were taken skiing as
− Improve employee engagement scores and voluntary retention.
Building a supportive and
part of an annual teambuilding and incentive trip.
engaged community that
people enjoy being a part of.
− Quarterly wrap-ups are hosted across all our offices, followed by an
evening event to celebrate.
− Carried out company-wide employee engagement survey, with a 70%+
participation rate.
− Introduced Electric Vehicle benefit scheme in the UK.
Living Well
− Complimentary mental health support for all employees introduced in
− Continue to improve engagement and understanding of our Employee Assistant Programme.
Supporting our team’s mental
2023. We also provide private healthcare for all employees (and their
and physical wellbeing.
families) from day one of joining.
− Head of Wellbeing hired in London, focused on helping the team improve
their physical and mental health.
− Outstanding office environments.
− Leverage our Head of Wellness role to create specific training plans and invite speakers and
educators to present to our team.
− Utilise wellness surveys to gather feedback from our team to understand what further support we
can offer.
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ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023 Sustainability
Continued
ENVIRONMENT
ENVIRONMENTAL STREAMLINED ENERGY AND
CARBON 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 2023 including scope 1, 2 and 3 emissions.
The table in the following section 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 297/kgCO2e employee. The key driver for the
Methodology
decrease in the intensity ratio between 2022 and 2023
is due to the increase in headcount.
The Group’s operations are largely limited to its offices
and have an inherently low environmental impact.
Nevertheless, the Group does believe in further
minimising its impact where possible. Our London-
based Corporate 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 endeavours 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, the Cycle to Work
scheme, and a new Electric Vehicle (EV) lease scheme
with Loveelectric. We will be targeting a reduction in the
average emission generated using business travel per
employee. We also carefully consider suppliers and their
values before onboarding them.
This year we partnered with 51-Carbon Zero to help
us calculate our carbon footprint in line with the
GHG Protocol Corporate Accounting and Reporting
standard. Part of the decision to work with an
external specialist was to ensure we are presenting
our environmental reporting in the most accurate
and independent way possible. 51-Carbon Zero have
specialised knowledge of GHG and SECR reporting
standards which have been able to improve the
accuracy of our carbon footprint calculation whilst
reducing the chance of bias.
The figures quoted in the table below have been
presented in accordance with the SECR standards
and reflect our carbon footprint for 2023 and 2022.
Conversion factors used to calculate the data are
BEIS, EPA, GHG Protocol, CE Delft, DCCEEW and
Climate Transparency.
STRATEGIC REPORT SUSTAINABILITY
Differences from prior year
Changes to the methodology for calculating our
carbon footprint have been implemented in 2023
with best practice guidance from 51-Carbon Zero.
Due to this change in methodology, we have restated
last year’s business travel figure from 8 tCO2e in
2022, to 720 tCO2e. This has then impacted i) our
total gross emissions in 2022, which has changed
from 81 tCO2e to 793 tCO2e and ii) the Intensity
Ratio, which we have restated from 263 KgCO2e
per average employee, to 2575 KgCO2e per average
employee.
With the help of 51-Carbon Zero, data now includes
spend on mileage, airfares, personal car mileage,
taxis, hotels, and public transport. Whereas, in 2022
before the restatement, this was limited to airfare,
taxis, and personal car mileage only.
In relation to energy, the kWh consumption figure
has decreased due to improved accuracy in data
collection at the offices. In 2022, there was limited
data available from the smaller and newer offices,
so Alpha was advised to use the same figures
produced from one office and extrapolate this out
to other offices of a comparable size. Whereas in
2023, 51-Carbon Zero supported us in gathering more
accurate information as well as the use of individual
country emission factors for electricity, rather than
just using the UK average factor applied in 2022.
As a result of increased accuracy, as referenced
above, increased headcount and lower business
travel in 2023 compared to 2022, Alpha’s overall
intensity ratio has also decreased.
UNIT 31 DECEMBER
2023
31 DECEMBER
2022
Restated
TOTAL ENERGY USE COVERING ELECTRICITY, GAS,
kWh
293,722
348,709
OTHER FUELS AND TRANSPORT
Scope 1:
Total emissions generated through combustion of gas
tCO2e
Scope 2:
Total emissions generated through purchased electricity
tCO2e
Scope 3:
Total emissions generated through business travel
Total emissions generated through use of water and waste
Total gross emissions
INTENSITY RATIO
(TOTAL GROSS EMISSIONS PER HEADCOUNT)
tCO2e
tCO2e
tCO2e
kgCO2e PER
AVERAGE
EMPLOYEE
2.7
94
439
24
560
0
72
720
0.7
793
1,297
2,575
62
63
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023 STRATEGIC REPORT SUSTAINABILITY
Sustainability
Continued
CARBON NEUTRAL
We are proud to be a Carbon Neutral company and
We take pride in being able to offset our emissions
have offset all our carbon emissions since 2021. This
in a way that produces not only environmental
year we partnered with Citibank to offset our carbon
benefits but also social and political benefits.
emissions. Citibank have provided a Verra standard
approved project in Vietnam, which finances the
Alpha is alert to the fast-developing discourse on
distribution of water purifiers to provide clean water
to households in Vietnam (Project 2577)1 .
how capital markets can have a positive impact
on improving the world’s environmental situation
through investing in carbon offsetting projects.
The project aims to distribute 300,000 safe drinking
However, there is always the risk of greenwashing
water purifiers across Vietnam, to rural, low-income
where projects are being produced without
households, whilst also mitigating greenhouse
having been through a rigorous assessment of
gas emissions. These devices will prevent CO2
their quality and integrity. To ensure Alpha does
emissions and deforestation by reducing the
not contribute to this we have invested in this
use of wood fuel that would have been used by
project. By being Verra standard approved we
households to boil and purify water. The water
are confident that our carbon credits will have a
purifiers also reduce and prevent the spread
genuine impact in reducing the world’s emissions.
of waterborne diseases by removing 99.99% of
bacteria and capturing contaminants. The project
has been through vigorous due diligence checks
and has been awarded Verra Standard.
Why we chose this project
We chose this project to recognise the role Alpha
can play in reducing the World’s carbon emissions,
whilst also improving the livelihood of others.
The project aligns to many of the United Nation’s
Sustainable Development Goals (SGDs), such as:
− No poverty (Goal 1);
− Good Health (Goal 2);
− Clean Water and Sanitation (Goal 6); and
− Climate action (Goal 13).
1 https://registry.verra.org/app/projectDetail/VCS/2557
64
65
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023
Engaging with our Stakeholders (s172)
Our Directors are aware of their responsibilities under Section 172(1) of the Companies Act 2006 and take
their responsibilities seriously. In making its decisions throughout the year, the Board considers it has
acted in a way that would promote the success of the Company for the benefit of its members as a whole,
whilst having regard to stakeholders and matters set out in Section 172(1) (a-f) of the Act.
In 2023, we identified six key stakeholder Groups, whose interests the Board considers and balances when
making their decisions. The table below outlines how we engaged with them throughout 2023, and how
their interests have influenced some of the decisions that have been made.
Employees
Our people are the lifeblood of our business. Their skills, values and commitment are what enable us to provide a
leading level of our service to our clients and grow our business.
HOW WE ENGAGED
KEY TOPICS
KEY OUTCOMES
− Company-wide employee
engagement surveys, with
results and actions presented
back to teams and Board.
− Operational and financial
− Group performance and
performance.
strategy shared across the
− Vision, mission and strategy
entire company.
for the Group and each
− FXRM and Alternative
− D&I working Group established
division.
(see pg 57)
− 360 feedback surveys carried
out on Senior Management.
− Bi-annual townhalls led by MDs
of each division to present
progress against strategy,
future plans, and recognise key
achievements.
− Following investor roadshows,
CEO & CFO hosted employee
roadshows.
− Regular team-building activities,
including an annual company-
wide trip abroad.
− Fortnightly strategy meetings
attended by all department
heads and chaired by divisional
MDs.
− Employee reviews on Glassdoor.
− Remuneration and
incentives.
− General wellbeing and
job satisfaction, including
recognition of achievements.
− Company culture.
− Diversity and inclusion.
Banking divisions shared
their strategy and
performance with the teams.
− Company-wide annual review
of salaries conducted in
January 2024.
− All employees provided with
office equipment allowance
to better support working
− Learning, development and
from home.
career progression.
− Recognising key
achievements.
− Launch of international
Employee Assistance
Platform.
− Charity and fundraising
− New performance matrix
initiatives.
introduced.
− Resource planning.
− Anti-money laundering
& Cyber Security
responsibilities.
STRATEGIC REPORT ENGAGING WITH OUR STAKEHOLDERS
Clients
Understanding the needs and challenges facing our clients is central to our growth strategy.
HOW WE ENGAGED
KEY TOPICS
KEY OUTCOMES
− Client surveys are sent out to new
customers with the results shared
with CEO & MDs.
− Attendance at over 20 industry
events in 2023.
− Active memberships with a number of
key industry associations.
− Direct engagement between Directors
and key clients.
− Frontline employees share feedback
with senior management, which is put
forward to the Board for consideration
where appropriate.
− The Board reviews key client data
and trends, such as growth in client
numbers, retention, and sector
concentration.
− Email updates on upcoming
developments and releases, with
feedback requested.
− Prior to our acquisition of Cobase, the
Directors garnered feedback from a
number of the business’ key clients.
− Customer experience and
− Enhanced product offerings,
key challenges they face.
both online and offline to
− Regulations and
compliance.
− New products and
features.
− Reasons for choosing
Alpha.
− Alpha’s sales model.
provide a better customer
experience.
− Client feedback
implemented into our
product development
roadmap.
− Acquisition of Cobase,
validated by existing and
− Technology propositions.
prospective client feedback.
− Instant insights reporting
introduced to measure
the quality of customer
experience.
− Approval of the annual
budget, which includes
investment to ensure we
continue to improve the
quality and efficiency of
interactions with clients.
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
− Which charities our team
− Raised £6,795 for our chosen
wish to support.
charities.
− Ways to raise money and
− Boosted awareness for
awareness for each cause.
− Environmental
sustainability.
charitable and environmental
causes across the business
and our wider stakeholders.
− Remained a certified Carbon
Neutral company.
− Fundraising activities for charities,
including: bake sales, sponsored
runs, football tournaments and golf
competitions.
− Partnered with Citibank as part of our
commitment to remaining a Carbon
Neutral company (see pg 64).
− Partnered with 51-Carbon Zero to help
us better calculate and understand
our carbon footprint (see pg 62).
− Introduction of employee electric
vehicle scheme to support carbon
emission reduction.
66
67
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023 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
− CEO and CFO hold meetings with
major shareholders following
interim and full year results to
present the Group’s performance.
Ad-hoc site visits and virtual
meetings are also held throughout
the year.
− Shareholder analysis is presented
once a quarter to inform Directors
of key changes.
− Anonymous shareholder feedback
is obtained via Nomads after half
year and full year roadshows.
− All shareholders were invited to
submit questions to the Board at
the Annual General Meeting.
− Operational and financial
performance.
− Sustainability initiatives
− We continue to increase the
level of detail in our trading
updates and full year reports.
and goals.
− Enhancements made to
− Company strategy and
vision.
− Capital allocation.
− Key risks and governance.
− Alpha’s business model.
− Market opportunities.
− Dividend strategy.
− Impact of macro-
environment.
− The Alpha culture.
annual report, in particular
detailed sections on FXRM and
Alternative Banking.
− Feedback from investors
presented back to the Board.
− Created a Diversity & Inclusion
working group, responsible
for driving new initiatives to
improve diversity & inclusion.
Our Business Partners & Suppliers
Our partners and suppliers (for example banking counterparties or third-party software vendors) play a key part
in enabling us to deliver a leading service to our clients by amplifying our capabilities and efficiencies.
HOW WE ENGAGED
KEY TOPICS
KEY OUTCOMES
− Sharing of key regulatory
− Financial and operational
announcements, face-to-face
meetings, site visits and telephone
contact.
− Senior Management engage with
key suppliers and provide key
updates to Executive Directors.
performance.
− Strategic direction.
− Key challenges we face.
− Business referrals and
promotional support.
− Our Alternative Banking
− Risk, governance and
Partnerships team develops
relationships with Service
Providers responsible for
recommending Alpha’s solutions.
compliance.
− Innovation and knowledge
sharing.
− Audit and risk committee
information.
− Diversity & inclusion.
− Employee wellbeing.
− Enhanced products and
services by leveraging
suppliers’ capabilities.
− We continue to partner with
a selection of high-quality
businesses that understand
our company and the part they
play in our long-term success.
− Increasing focus on diversity &
inclusion with our recruitment
partners.
− By maintaining high levels of
transparency with our key
counterparties in areas of risk,
compliance and strategy, we
deepen the trust and loyalty
we have with our suppliers as
we grow.
STRATEGIC REPORT ENGAGING WITH OUR STAKEHOLDERS
Key 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
employees, clients, shareholders, suppliers, communities and
the environment.
Throughout 2023, the Board made decisions to deliver against our strategy, whilst considering the different
interests of our stakeholder groups and the impact of key decisions upon them.
STRATEGY & BUSINESS PERFORMANCE
− Regularly considered the trading performance of the business and reviewed and contributed
to regulatory communications with the market.
− Reviewed the Group’s strategy, key challenges and proposed responses.
− Agreed investment priorities across the Group.
− Approved the acquisition of Cobase.
− Approved the opening of Munich and Madrid offices.
− Approved the launch of the Fund Finance division.
− Approved the move to the Premium List of the Main Market.
OPERATIONAL & FINANCIAL PLANNING
− Reviewed and approved the FY2024 budget and considered this against strategic
performance, objectives and market expectations.
− Approved dividend policy and payment of final dividend in respect of FY2022 and interim
dividend in respect of FY2023.
− Approved decision to acquire a long-term office lease for a second HQ in London for our
Institutional division.
− Approved initiation of £20m share buyback programme.
GOVERNANCE & LEGAL
− On the recommendation of the Audit Committee, reviewed and approved the Full Year
Announcement, Annual Report and Financial Statements for FY2022, and the Half Year
Announcement for FY2023 and other updates to the market.
− Reviewed and approved the Group’s risk appetite.
− Monitored regulatory and legislative developments and considered any potential impact on
the Group’s operations.
68
69
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023 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
480+ 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 (pg 29). This is achieved by delivering on our strategies
outlined in our CEO statement on pg 18 and 20.
▼
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.
Solutions that make
a substantial and
enduring difference to
our clients.
Delivering sustainable
long-term returns to
our shareholders.
As our business
grows, so do the
opportunities for our
partners that work
with us.
Fundraising and
volunteering for our
chosen charities and
environmental causes.
~ 100
Continued growth
~ 600%
10
100%
Employee
Shareholders.
In average revenue per
client 2021-23.
Share price growth
since IPO.
FX counterparties
Carbon Neutral
company.
▼
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.
70
71
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023 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 30 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, financial services and technology
sectors.
Lisa currently holds a number of Non-
Executive positions which include
Chairman, Cavendish Financial Plc;
Non-Executive Director, JP Morgan UK
Small Cap Growth & Income Plc, Non-
Executive Director, Magic Light Pictures
and Adviser to the Board at Fulcrum
Asset Management LLP.
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 a NED 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
72
(stepping down at 2024 AGM)
73
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023 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 (QCA 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 PURPOSE, STRATEGY AND BUSINESS
Sustainability | Our Purpose | pg 56
MODEL WHICH PROMOTE LONG-TERM VALUE FOR
SHAREHOLDERS.
Business Model | pg 71
CEO Statement | pg 8
2. PROMOTE A CORPORATE CULTURE THAT IS BASED
Ethical Standards | pg 59
ON ETHICAL VALUES AND BEHAVIOURS.
Business Culture, Behaviour & Ethics | pg 78
3. SEEK TO UNDERSTAND AND MEET SHAREHOLDER
Engaging with Stakeholders (s172) | pg 68
NEEDS AND EXPECTATIONS.
Relations with Stakeholders | pg 80
Shareholder Communications | pg 80
4. TAKE INTO ACCOUNT WIDER STAKEHOLDER
Engaging with Stakeholders (s172) | pg 67
INTERESTS, INCLUDING SOCIAL AND
ENVIRONMENT RESPONSIBILITIES AND THEIR
IMPLICATIONS FOR LONG-TERM SUCCESS.
Sustainability, Social | pg 56
Sustainability, Environmental | pg 62
5. EMBED EFFECTIVE RISK MANAGEMENT, INTERNAL
Principal Risks | pg 44
CONTROLS AND ASSURANCE ACTIVITIES,
CONSIDERING BOTH OPPORTUNITIES AND
THREATS, THROUGHOUT THE ORGANISATION.
Internal Controls & Risk Management | pg 79
6. ESTABLISH AND MAINTAIN THE BOARD AS A
Board of Directors | pg 72
WELL-FUNCTIONING, BALANCED TEAM LED BY THE
Board Composition | pg 77
CHAIR.
7. MAINTAIN APPROPRIATE GOVERNANCE
Board of Directors | pg 72
STRUCTURES AND ENSURE THAT INDIVIDUALLY
AND COLLECTIVELY THE DIRECTORS HAVE THE
NECESSARY UP-TO-DATE EXPERIENCE, SKILLS AND
Board Performance | pg 78
Board Experience | pg 79
CAPABILITIES.
8. EVALUATE BOARD PERFORMANCE BASED ON
Board Effectiveness | pg 78
CLEAR AND RELEVANT OBJECTIVES, SEEKING
Remuneration Policy | pg 82
CONTINUOUS IMPROVEMENT.
9. ESTABLISH A REMUNERATION POLICY WHICH IS
Remuneration Committee Report | pg 82
SUPPORTIVE OF LONG-TERM VALUE CREATION
AND THE COMPANY’S PURPOSE, STRATEGY, AND
CULTURE.
10. COMMUNICATE HOW THE COMPANY IS GOVERNED
Corporate Governance Statement | pg 74
AND IS PERFORMING BY MAINTAINING A DIALOGUE
WITH SHAREHOLDERS AND OTHER RELEVANT
STAKEHOLDERS.
Engaging with Stakeholders (s172) | pg 66
Further information is also published on our website:
alphagroup.com/investors/corporate-governance.
74
75
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023 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
CORPORATE GOVERNANCE REPORT
monitoring the Group’s strategy, budgets, corporate actions and risk appetite.
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
successful stewardship of the Group and sets the
strategy for its long-term success. It is important
that the Board contains the right mix of skills,
experience and knowledge in order to deliver
the strategy of the Group. As such, the Board
comprises three Executive Directors and, including
the Chairman, three independent Non-Executive
Directors. The Board considers all three Non-
Executive Directors to be fully independent within
the meaning of the UK Corporate Governance Code.
The Board maintains a flexible, efficient and effective
management framework within an entrepreneurial
environment, aiming to deliver long-term growth for
shareholders. Matters reserved for the attention of
the Board which are reviewed annually include the
Group’s:
− Objectives and strategy
− Structure and capital
− Financial reporting, controls and dividend policy
− Regulatory reporting and controls
− Risk management, internal controls and
The Chairman and Chief Executive have distinct
governance
roles. The Chairman’s primary responsibility is the
delivery of the Group’s corporate governance and
the effective operation of the Board of Directors,
whilst the Chief Executive is responsible for the
operation 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 them to make independent
decisions.
− Significant contracts or investments
− Shareholder communications
− Board membership, succession planning and
other appointments
− Remuneration of Senior Management
− Delegation of authority
BOARD MEETINGS
The Board believes that the size and composition of
The Board held 11 scheduled Board meetings during
the Board is appropriate given the size and stage of
the year. Non-Executive Directors also communicate
development of the Group and, as per the individual
directly with Executive Directors and Senior
biographies, that the Directors bring a desirable
and diverse range of skills, experience, personal
qualities and capabilities in light of the Group’s
Management between formal Board meetings.
The Chairman and the CFO plan the agenda for
challenges and opportunities, whilst at the same
each Board meeting in consultation with all other
time ensuring that no individual(s) can dominate
Directors. The agenda is issued with supporting
the Board’s decision making. All Board Directors
papers ahead of the Board meetings, along with
are subject to election at their first Annual General
appropriate information required to enable the Board
Meeting and to re-election annually thereafter.
to discharge its duties.
Given the Group’s intention to move to the Main
Market, we will look to add another Non-Executive
Directors are expected to attend all Board meetings
Director to the Board in 2024.
and the Committee meetings for which they are
members. The table below shows the Director’s
attendance at scheduled Board and Committee
meetings during the year.
76
77
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023 Corporate Governance
Continued
BOARD MEETINGS FY2023
BOARD EXPERIENCE
BOARD
REMUNERATION
COMMITTEE
AUDIT
COMMITTEE
MORGAN
TILLBROOK
TIM
TIM
CLIVE
LISA
POWELL
BUTTERS
KAHN
GORDON
VIJAY
THAKRAR
CORPORATE GOVERNANCE REPORT
SCHEDULED MEETINGS
CLIVE KAHN
LISA GORDON
VIJAY THAKRAR
MORGAN TILLBROOK
TIM POWELL
TIM BUTTERS
7
7
7
7
7
7
7
1
1
1
1
N/A
N/A
N/A
3
3
3
3
3
3
3
BOARD COMMITTEES
The skills and experience of the Board are outlined in
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 76.
BOARD PERFORMANCE
In February 2024, the Board instructed an independent
company (Independent Audit) to conduct a Board
performance review. Key areas of focus included:
− Strategy;
− Risk Management;
− Financial Oversight;
− Management Team;
− People & Culture; and
− Stakeholders.
The review is ongoing and is expected to be completed
by the end of April 2024.
their biographical details on page 72 and 79.
Their experience and characteristics give them the
ability to deliver and challenge the Group’s strategy
for the benefit of all its stakeholders. The Board keeps
succession planning under review and monitors the
progress and success of the development plans which
have been established for relevant employees, with
a particular focus on ensuring over time all senior
management positions have at least one internal
successor. The Nomination Committee also monitors
the length of tenure of the Chairman and Non-Executive
Directors and the mix and skills of the Directors.
BUSINESS CULTURE, BEHAVIOURS AND ETHICS
The Group has a clearly defined vision, mission and
purpose along with key behaviours and principles.
‘Cultural Density’ is a core strategic pillar for the
business, 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
delivering on our strategy. Anonymous employee
engagement surveys are conducted annually and the
company’s “Speak Up Culture” also ensures that all
employees are empowered to give feedback on culture
and behaviours, regardless of tenure or seniority.
FINANCIAL MANAGEMENT
SECTOR KNOWLEDGE
GLOBAL BUSINESS
LEADERSHIP & VALUES
SALES & MARKETING
✓
✓
✓
✓
✓
TECHNOLOGY & OPERATIONS ✓
SUSTAINABILITY
RISK MANAGEMENT
MERGERS & ACQUISITIONS
CAPITAL MARKETS
✓
✓
✓
REGULATORY ENVIRONMENT ✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
Integrity is everything at Alpha and is underpinned
DEVELOPMENT
by our principle of “Doing what’s right”. The
Directors believe that the main determinant of
whether a business behaves ethically and does the
right thing is the quality of its people. The Directors
are responsible for ensuring that individuals
employed by the Group demonstrate the highest
levels of integrity and undertake reviews of its
employees regularly. In addition, the Group has a
formal Bribery and Anti-Corruption Policy and a
Share Dealing Code.
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.
TIME COMMITMENTS
INTERNAL CONTROLS & RISK MANAGEMENT
The Directors recognise the need to commit the
The Board has ultimate responsibility for the Group’s
time necessary to fulfil their roles. This requirement
control and risk management environment, all of
is included in their letters of appointment. The
which are designed to manage and mitigate risks that
Board is satisfied that the Chairman and Non-
may undermine its strategic objectives. Such systems
Executive Directors are able to commit sufficient
can only provide a reasonable but not absolute level
time to the Group’s business. There has been
of assurance against material loss or misstatement.
no significant change in the Chairman’s time
The Audit Committee monitors and reviews the
commitments since his appointment.
Group’s internal control procedures and reports its
conclusions and recommendations to the Board.
78
79
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023
CORPORATE GOVERNANCE REPORT
Corporate Governance
Continued
As further described on page 86 to 88 of the Audit
Anonymous feedback from institutional investors
Committee report, the Group has an established
is obtained and shared with the Board following its
framework of risk management and internal control
interim and final results roadshows, and a quarterly
systems, policies and procedures in place, including
breakdown of the share register is provided to the
an internal audit function.
Board for consideration.
RELATIONS WITH STAKEHOLDERS
ANNUAL GENERAL MEETING (“AGM”)
The Group is committed to ensuring it engages with
The Group’s AGM will take place at 12:30pm on 1 May
all of its stakeholders to ensure their needs and
2024. The Notice of AGM and explanatory notes on all
considerations are taken into account in its decision
resolutions are provided alongside all copies of the
making. Further details can be found on page 68.
annual report mailed to shareholders. Digital copies
are also available via the Group’s website.
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 also have the opportunity to submit
questions at any time throughout the year via the
investor relations website, and all responses are
published for everyone to see.
80
81
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023 Remuneration Committee Report
Lisa Gordon
Non-Executive Director
I am pleased to present the 2023 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.
REMUNERATION POLICY
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
interests over the medium-term. Remuneration
EXECUTIVE
DIRECTOR
REQUIRED WRITTEN
NOTICE BY BOTH
THE COMPANY AND
INDIVIDUALS
Morgan Tillbrook
12 months
Tim Powell
6 months
Tim Butters
6 months
NON-EXECUTIVE DIRECTORS SERVICE
CONTRACTS
CORPORATE GOVERNANCE REMUNERATION COMMITTEE REPORT
BASE SALARY INCREASE
The only changes made to Director’s Remuneration
for shareholders. In light of this review, it was
in 2023 was to increase the salary of the CRO, Tim
concluded that the salary of Tim Butters was not
Butters from £200,000 to £250,000. The Committee
aligned to these benchmarks. The Committee
carried out a review where Directors’ Remuneration
believes that the best outcome for all stakeholders
was benchmarked against businesses in a similar
was to increase base salary to a level where it is
sector and/or delivering similar growth and returns
aligned to the wider market. The Committee will
continue to undertake an annual benchmark review.
YEAR ENDED 31 DECEMBER 2023
EXECUTIVE
Basic
Salary / Fee
£
Morgan Tillbrook
500,000
Tim Butters
Tim Powell
NON-EXECUTIVE
Clive Kahn
Lisa Gordon
Vijay Thakrar
250,000
225,000
52,500
52,500
52,500
Bonus*
Pension
Share-based
Payment
£
-
-
-
-
-
-
£
4,527
3,750
3,750
-
-
-
Other
£
-
Total
£
504,527
8,464
816
263,030
44,923
1,004
274,677
-
-
-
-
52,500
1,371
53,871
-
52,500
* The bonus arrangement for Morgan Tillbrook and Tim Powell for the year ended 31 December 2023 was a maximum bonus of 200% of
basic salary for Morgan Tillbrook and 125% for Tim Powell, on the Group’s achievement against key performance indicators (year ended 31
December 2022: 200% for Morgan Tillbrook and 150% for Tim Kidd). Due to tough market conditions and key performance indicators not
being met, the Directors did not receive a bonus for 2023.
YEAR ENDED 31 DECEMBER 2022
Basic
Salary / Fee
Bonus*
Pension
Share-based
Payment
EXECUTIVE
£
£
£
Other
£
Total
£
5,130
1,008,687
1,318
407,654
£
-
£
–
–
consists of a basic salary, performance-related
The Non-Executive Directors do not have service
Morgan Tillbrook
500,000
500,000
3,557
bonus, long-term incentive plan and pension
contracts but are appointed under letters of
contributions.
appointment. Appointment letters are intended to
be for a two-year term. No compensation is payable
Performance-related bonuses are based on
in the event of a Non-Executive not being re-elected.
achievement of the Group’s budget for both revenue
The Board determines the terms and conditions of
and underlying profit, both of which are key KPIs for
the Non-Executive Directors.
the Group. The Committee ensures that the balance
between fixed and variable remuneration helps
to ensure objectives are aligned. The Committee
DIRECTORS’ REMUNERATION
believes that the dual focus on revenue and profit
The following table summarises the total gross
performance is integral to ensuring delivery of
remuneration of the Directors who served in the year
shareholder value.
ended 31 December 2023.
Tim Kidd (resigned 5
December 2022)
Tim Butters
Tim Powell1
NON-EXECUTIVE
Clive Kahn
Lisa Gordon
Vijay Thakrar
232,192
174,144
–
200,000
16,331
52,500
52,500
52,500
–
–
–
–
–
3,750
23,894
819
228,463
–
–
–
–
15,928
–
–
–
–
–
–
–
32,259
52,500
52,500
52,500
82
83
1 Tim Powell was appointed to the Board on 5 December 2022. His salary for the year ended 31 December 2023 was £225,000. This has been
apportioned in the prior year 2022 table below from the date of his appointment.
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023
CORPORATE GOVERNANCE REMUNERATION COMMITTEE REPORT
Remuneration Committee Report
Continued
The Executive remuneration policy for the year ended December 2024 is set out in the table below:
EXECUTIVE
Morgan Tillbrook
Tim Powell
Tim Butters
Base Salary
£
£500,000
£325,000
£300,000
Bonus
%
150%
125%
Nil
Pension
£
£3,750
£3,750
£3,750
For the Executives, the Annual Bonus Plan is based
Tim Butters is a participant in the E and F Growth
on the Group’s achievement against key performance
Share Schemes. Full details of the scheme are
indicators. The calculation is aligned to revenue and
provided in Note 25 of the Consolidated Financial
profit growth, with a maximum bonus requiring the
Statements. Following the revenue growth target of
Group to achieve a minimum of 10% above its internal
20% being met for the year ended 31 December 2022,
budget. In order to avoid any perceived conflicts of
he was awarded 22,636 shares in March 2023.
interest, the Chief Risk Officer is not incentivised via a
performance-related bonus.
At 31 December 2023 Tim Powell had no beneficial
The highest paid Director was paid £504,527 during the
participant in the F Growth Share Scheme which was
year (2022: £1,008,687). The average earnings within
established prior to his appointment as a Director.
the Group for the year ending 31 December 2023,
Full details of the scheme are provided in Note 25 of
excluding Directors, was £74,818 (2022: £72,707).
the Consolidated Financial Statements.
interest in the shares of the Company. He is a
DIRECTORS’ SHAREHOLDING AND SHARE
INTERESTS
Following the revenue growth target for the year
ended 31 December 2023 not being met for the E
Growth Shares or the F Growth Shares, the shares
The following table summarises the shareholding and
lapsed. As a result, no shares in Alpha Group
share interests of the Directors at 31 December 2023.
International plc will be issued as consideration for
the lapsed E and F Growth Shares in March 2024.
A non-binding resolution to accept the Remuneration
Committee Report will be put to shareholders at
the Annual General Meeting and the Committee will
conduct a full annual review of the policy.
Lisa Gordon
Non-Executive Director
Remuneration Committee Chair
AS AT
31 DECEMBER 2023
BENEFICIALLY
OWNED
EXECUTIVE
Morgan Tillbrook
Tim Butters
Tim Powell
NON-EXECUTIVE
Clive Kahn
Lisa Gordon
Vijay Thakrar
5,934,168
34,229
-
355,000
25,665
2,400
84
85
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023 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 2023.
The Audit Committee is responsible for ensuring that the financial
performance of the Group is appropriately reported and reviewed.
Its role includes: monitoring the integrity of the financial statements (including annual and interim accounts and
results announcements), reviewing internal control and risk management systems by the whole Board, reviewing
any changes to accounting policies, reviewing and monitoring the extent of the non-audit services undertaken
by external auditors, overseeing the internal audit plan, 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.
DUTIES
REVENUE RECOGNITION
CORPORATE GOVERNANCE AUDIT COMMITTEE REPORT
FAIR VALUE OF OPEN TRADES
PRIOR PERIOD ADJUSTMENT FOR SHARE-BASED
Accounts receivable include unrealised profits on
PAYMENTS
open trades as at the year end. The committee
The Committee considered with management and
discussed with management the accounting
the auditors the background to the prior period
treatment applied to determining the fair value
adjustment and proposed adjustment. The reasons
of open positions, who confirmed that the
for the adjustment we discussed, and the Committee
methodology is consistent with previous years.
received assurances that the proposed treatment
The auditors have also reviewed the same and
was appropriate and had been scrutinised by
concluded that it is appropriate.
technical experts.
NET TREASURY INCOME
ROLE OF THE EXTERNAL AUDITOR
Given the increases in interest rates over H1 2023,
The external auditor, BDO LLP, was initially appointed
the Committee discussed with management the
in the financial year to 31 December 2016, following
reporting of net treasury income arising from client
a formal tender process. As a result of the five-year
balances and whether it should be included within
rotation policy to enhance auditor independence,
The main items of business considered by the Audit
Given the different nature of the Company’s
operating / underlying profits or not. The proposed
the current audit partner was appointed for the 2021
Committee during the year included:
income streams from FX Risk Management and
treatment, agreed with the auditors, seeks to
audit. No changes were made for the 2022 or 2023
− review of the 2023 BDO LLP audit plan and audit
engagement letter;
− consideration of key audit matters and how they
are addressed;
− review of the effectiveness of the external audit
process;
− monitoring of the integrity of the financial
statements and Annual Report, and of any trading
updates provided externally;
− review of the risk management and internal
control systems by the whole Board;
− review of the annual internal audit plan;
− consideration of regulatory developments and
their impact; and
− reviewed the accounting for share schemes and
the associated prior year restatement.
Alternative Banking, the Committee discussed the
revenue recognition treatment adopted for the
different streams with management and with the
auditors, who have confirmed that the Company’s
treatments accord with relevant accounting
standards. This included consideration of the
appropriateness of traders’ incentivisation plans
and the strength of anti-fraud controls.
CREDIT RISK
In light of the changes within the macro-economic
environment continuing into 2023, the committee
discussed with management the likelihood of
material customer defaults and their impact on
the Group’s financial performance. The Committee
concluded that adequate safeguards are in place
to reduce the risk of material customer defaults
As a result of considering the above matters, the
from arising.
Committee focused on the following matters
considered to potentially have a material impact on
the Group’s financial results.
achieve transparency.
CREDIT VALUATION ADJUSTMENT (CVA)
audits 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
The Committee has discussed with management
but will keep under review the need for an external
the CVA methodology adopted. Management have
tender. The breakdown of fees between audit
confirmed that the CVA methodology is consistent
and non-audit services is provided in Note 6 of
with previous years, and the auditors have also
the Group’s financial statements. The Committee
reviewed the Company’s CVA and concluded that it
monitors the non-audit fees. Having reviewed the
is appropriate.
NON-RECURRING COSTS
auditor’s independence and performance, the
Audit Committee recommends that BDO LLP be
reappointed as the Group’s auditor at the next AGM.
The Committee discussed with management the
treatment of costs that are not part of underlying
EXTERNAL AUDIT PROCESS
profits e.g. those associated with listing the group
BDO LLP prepares a plan for the audit of the full
on the Main Market. It was concluded that the
period financial statements. This audit plan sets out
proposed treatment of these costs appropriately
the scope of the audit, areas to be targeted and the
reflects the underlying profits, and has been
audit timetable. This plan is reviewed and agreed
agreed with the auditors. In the interests of
in advance by the Audit Committee. Following the
transparency, the disclosures make clear what
audit, the auditor presents its findings to the Audit
these non-underlying costs are.
Committee for discussion, including management
86
87
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023
CORPORATE GOVERNANCE AUDIT COMMITTEE REPORT
Audit Committee Report
Continued
letter points detailing areas for improvement within
WHISTLEBLOWING
the company’s internal controls framework. The Audit
Committee monitors management’s remediation
plans in respect of such recommendations, which are
formally tracked and reported by the Head of Internal
Audit.
INTERNAL AUDIT
An internal audit function was created in February
2022 with the appointment of an experienced
internal auditor with relevant industry experience
to lead the function, with a direct and open line
of communication between the Audit Committee
The Group has a whistleblowing policy which enables
employees of the Group to confidentially report
matters of concern. The Group is committed to
conducting business with honesty and integrity at all
times, and Alpha staff are encouraged to speak up
without fear of retribution if they have any concerns.
In the event that any such concerns are raised,
these would be escalated to the Chief Risk Officer
in accordance with the policy and reported to the
Board. No such instances were reported to the Board
during 2023.
Chair and the Head of Audit. In 2023 the Internal
OUR PRIORITIES FOR THE YEAR AHEAD
Audit function has continued to grow, recruiting
an additional headcount to the team and creating
new relationships with external consultancies to
deliver the annual internal audit plan. This plan was
proposed independently from the Alpha Executives/
Management Team and approved by the Audit
Committee. Any findings arising from internal audit
During 2024, the Committee will focus on:
− Reviewing the reporting of the Group’s results
/ performance externally for balance and
consistency with how performance is reviewed
and monitored internally;
activity are reported to the Audit Committee, which
− Monitoring with the Board as a whole the key
reviews the appropriateness of any follow-up actions.
risks facing the Group; the effectiveness of the
RISK MANAGEMENT AND INTERNAL CONTROLS
material controls over those risks; ensuring
that appropriate resources and experience are
provided to help mitigate the risks and enhance
As described on page 79 of the corporate
controls where necessary;
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. The Committee
ensures that the Company’s Chief Risk Officer, who
chairs the Company’s Risk Committees to consider
the principal risks facing the Company, presents a
− Assessing any ongoing changes to the
regulatory environment, business practices and
risk profile of the Group; and
− Considering changes needed to the Company’s
reporting and risk management processes as a
result of its planned move to be listed on the UK
Main Market Premium Segment.
regular update of the Risk Committees’ work to the
Vijay Thakar
Board, and internal control systems are routinely
Non-Executive Director
assessed via the performance of a controls testing
Audit Committee Chair
programme and the internal audit plan.
88
89
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023 Directors’ Report
The Directors present their Annual Report and the audited
financial statements for the year ended 31 December 2023.
The corporate governance statement on page 74 also forms part of this Director’s Report.
BUSINESS REVIEW
DIRECTORS’ INTERESTS
An analysis of the Group’s development (including likely
The Directors’ interests in the Group’s shares and
future developments) and performance is contained in
options over ordinary shares are shown in the
the Chairman’s Statement, CEO’s Statement and Our
remuneration report on page 84.
Strategy. Information on the financial risk management
strategy of the Group and its exposure to its principal
risks & uncertainties section of the report is on page 52.
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
CHARITABLE DONATIONS
During the year, the Group donated £1,419 to charity.
POLITICAL DONATIONS
The Group has not made any political donations in the
past, nor does it intend to make them in the future.
registered company number is 07262416. The Company
ENVIRONMENT
presents a list of its subsidiaries in note 15.
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 opening
requirements.
RESULTS AND DIVIDEND
The Group shows its results for the year in the
Consolidated Statement of Comprehensive Income on
page 104. Details of the proposed final dividend for the
year are included on page 7.
The Group believes in minimising its impact to the
environment where possible and is a certified carbon
neutral company. More details on the measures it has
taken are set out on 62-64.
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,
skills and experience. We do not discriminate between
employees or prospective employees on the grounds
of age, race, disability, religion, gender or any other
criteria. We are also committed to ensuring all
employees feel respected and are able to perform to
DIRECTORS
the best of their ability.
The Directors of the Company during the year were:
EXECUTIVE
NON-EXECUTIVE
EVENTS AFTER THE REPORTING PERIOD
Morgan Tillbrook
Clive Kahn
Following the third year of vesting of the Alpha FX
Tim Butters
Tim Powell
Lisa Gordon
Vijay Thakrar
Institutional Limited share scheme for the year ended
31 December 2023, the Company will be issuing 126,201
shares in March 2024.
Biographical details, along with committee
responsibilities, are provided on page 72.
CORPORATE GOVERNANCE DIRECTORS’ REPORT
Following the second year of vesting of the Alpha
Lisa Gordon, Non-Executive Director of the Company
Foreign Exchange (Canada) Limited share scheme for
will also step down from the Board by not putting
the year ended 31 December 2023, the Company will
herself up for re-election at the Company’s AGM on
be issuing 5,734 shares in March 2024.
the 01 May 2024. A process to recruit an additional
Non-Executive Director will be undertaken in the
Following the second year of the vesting for D1 and
coming months.
D2 Share scheme and the first year of vesting for the
D3 Share scheme for the year ended 31 December
2023, the Company will be issuing 80,544 shares in
March 2024.
Following the first year of vesting of the Alpha FX
Netherlands Limited share scheme for the year
ended 31 December 2023, the Company will be
issuing 22,148 shares in March 2024.
On 29 January 2024, the Group announced a share
repurchase programme up to a value of £20m to
purchase ordinary shares of 0.2 pence each. The
Ordinary Shares purchased will be held in treasury.
As at 19 March 2024, 339,929 ordinary shares of 0.2
pence each had been purchased for a consideration
FINANCIAL INSTRUMENTS
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 18 to the Consolidated Financial
Statements.
SHARE CAPITAL STRUCTURE
Details of changes in the Group’s share capital are
disclosed in note 21 of the Consolidated Financial
Statements.
SHARE OPTIONS SCHEMES
of £5.8m representing 0.8% per cent of the issued
Details of employee share schemes are set out in
share capital of the Group as at 19 March 2024. All
note 25 to the Consolidated Financial Statements.
shares purchased were held in Treasury.
On 29 February 2024, the Group entered into an
interest rate swap for a notional amount of up to
€100m to fix the rate of interest receivable on Euro
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 EuroSTR, the difference
between the rates results in the Group receiving a
fixed rate of interest. The contract commences in
March 2024 and expires in March 2026 with a net
interest rate receivable of 3%. Hedge accounting is
applied in accordance with IFRS 9.
On 20 March the group announced changes to the
Board of Directors with Dame Jayne-Anne Gadhia
appointed to the board as Chair Designate, effective
PURCHASE OF OWN SHARES
There was no purchase of own shares in the period.
GOING CONCERN
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
from the Company’s AGM on 01 May 2024, subject to
The Company has a continuous programme of
the completion of normal regulatory due diligence by
development expenditure as part of its focus on
the Company’s Nominated Adviser. In line with this,
evolving its service offering through technological
Clive Kahn, who has been Chair of the Company since
innovation. Capitalised internal development
2016, will therefore not be seeking re-election at the
expenditure is disclosed in note 12 of the accounts.
Company’s 2025 AGM, with Jayne-Anne remaining
All other development expenditure is recognised in
Chair Designate until the conclusion of Clive’s term
the Statement of Comprehensive Income.
as Chair.
90
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ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023
Directors’ Report
Continued
BRANCHES
STATEMENT OF DIRECTORS RESPONSIBILITIES
The Directors are responsible for keeping adequate
Financial statements are published on the
CORPORATE GOVERNANCE DIRECTORS’ REPORT
accounting records that are sufficient to show and
Company’s website in accordance with legislation
explain the company’s transactions and disclose
in the United Kingdom governing the preparation
with reasonable accuracy at any time the company’s
and dissemination of financial statements, which
financial position and enable them to ensure
may vary from legislation in other jurisdictions. The
that the financial statements comply with the
maintenance and integrity of the Company’s website
requirements of the Companies Act 2006. They are
is the responsibility of the Directors. The Directors’
also responsible for safeguarding the assets of the
responsibility also extends to the ongoing integrity of
Company and hence for taking reasonable steps
the financial statements contained therein.
for the prevention and detection of fraud and other
irregularities.
WEBSITE PUBLICATION
By order of the board
Simon Kang
Company Secretary
The Directors are responsible for ensuring the
19 March 2024
annual report and the financial statements are made
available on a website.
The Group has a number of branches outside of the
The Directors are responsible for preparing the Annual
United Kingdom located in The Netherlands, Italy,
Report and the financial statements in accordance with
Spain, Germany, and Australia.
applicable law and regulations.
FUTURE DEVELOPMENTS
The board intends to continue to pursue the
business strategy as outlined in the strategic report
on page 18 and 20.
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 66, 67 and 68.
AUDITOR AND DISCLOSURE OF INFORMATION
TO AUDITOR
Company law requires the Directors to prepare
financial 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
and the company financial statements in accordance
with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards and
applicable law). Under company law the Directors must
not approve the financial statements unless they are
satisfied that they give a true and fair view of the state
of affairs of the Group and company and of the profit
or loss of the Group and company for that 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
BDO LLP were appointed as auditors on 7 December
Alternative Investment Market.
2016 and are continuing in office. In accordance
with s489(4) of the Companies Act 2006 a resolution
In preparing these financial statements, the Directors
for their reappointment will be proposed at the
are required to:
forthcoming Annual General Meeting.
As far as the Directors are aware, there is no
them consistently;
− select suitable accounting policies and then apply
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
auditors are aware of this information.
ANNUAL GENERAL MEETING
The Annual General Meeting will be held at 12:30pm
on 01 May 2024 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 included
at the end of this Annual Report and financial
statements.
− 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
− prepare the financial statements on the going
concern basis, unless it is appropriate to presume
that the Company will continue in business.
92
93
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023
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 2023 and of
the Group’s profit for the year then ended;
Accounting Standards, including Financial Reporting
Standard 101 Reduced Disclosure Framework (United
Kingdom Generally Accepted Accounting Practice).
BASIS FOR OPINION
− the Group financial statements have been
We conducted our audit in accordance with
properly prepared in accordance with UK adopted
International Standards on Auditing (UK) (ISAs (UK))
international accounting standards;
and applicable law. Our responsibilities under those
− the Parent Company financial statements have
been properly prepared in accordance with
United Kingdom Generally Accepted Accounting
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 2023 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,
the Company Statement of Financial Position, the
Company Statement of Changes in Equity and notes
to the financial statements, including material
accounting policy information.
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 Kingdom
standards are further described in the Auditor’s
responsibilities for the audit of the financial
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.
CONCLUSIONS RELATING TO GOING CONCERN
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:
− We considered the risks identified and
judgements made by the Directors as most
likely to adversely affect the Group’s and Parent
CORPORATE GOVERNANCE INDEPENDENT AUDITOR’S REPORT
Company’s available financial resources and
independent sources. We also performed
challenged the Directors on their appropriateness
retrospective testing to compare prior year’s
based on our understanding of the business,
forecasts to current year actual results to
results of our audit work and the relevant macro-
evaluate the reliability and reasonableness of
economic factors.
historic forecasts.
− The risks and judgement the Directors considered
− Impact of climate risks on long-term strategy,
as most likely to impact the business and where
financial projections, and viability of the business.
we challenged were:
− Reasonableness of bad debt provisions and
− A major client default or loss of a major client:
valuation adjustments including credit value
In doing so we considered the reduced client
adjustments (CVA).
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.
− 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
Our responsibilities and the responsibilities of the
Directors were compared to relevant published
Directors with respect to going concern are described
data and to data obtained from reputable
in the relevant sections of this report.
OVERVIEW
COVERAGE
99% (2022: 96%) of Group profit before tax
100% (2022: 100%) of Group revenue
99% (2022: 100%) of Group total assets
KEY AUDIT MATTERS
2023
2022
Existence and accuracy of revenue
Accounting for growth share schemes
Appropriateness of Credit value adjustments (CVA)
Fair value of growth shares
*
**
***
MATERIALITY
Group financial statements as a whole £2.1 million (2022: £1.9 million) based on 5% of
adjusted profit before tax excluding the impact of one-off expenses incurred for business
combination and interest earned on the e-money balance (2022: 5% of Profit before tax less
other operating income).
*This pertains to the errors identified in the current year relating to the accounting treatment of growth share schemes in previous years.
**This is no longer considered to be a KAM because the model is now well established in addition to the rationale and justification of the various
associated inputs.
***This is no longer considered to be a KAM due to our enhanced understanding of the valuation methodology and consistency of its application,
assumptions and judgments around the valuation of growth share schemes as well as the limited impact in the current year where only one new
scheme was issued.
94
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ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023 Independent Auditor’s report
Continued
AN OVERVIEW OF THE SCOPE OF OUR AUDIT
OUR INVOLVEMENT WITH COMPONENT
KEY AUDIT MATTER
EXISTENCE AND
ACCURACY OF
REVENUE
The Group’s revenue
recognition policy
is included with the
accounting policies in
note 2 and segment
reporting on revenue
is included in note 5
Our Group audit was scoped by obtaining an
AUDITORS
understanding of the Group and its environment,
For the work performed by component auditors,
including the Group’s system of internal
we determined the level of involvement needed
control, and assessing the risks of material
in order to be able to conclude whether sufficient
misstatement in the financial statements. We
appropriate audit evidence has been obtained
also addressed the risk of management override
as a basis for our opinion on the Group financial
of internal controls, including assessing whether
statements as a whole. Our involvement with
there was evidence of bias by the Directors
component auditors included the following:
that may have represented a risk of material
misstatement.
The Group comprises the Parent Company
and 10 subsidiaries (2022: 14). Alpha Group
International Plc, Alpha FX Limited, Alpha FX
Institutional Limited and 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 financial statements areas. We
determined that the Alpha Foreign Exchange
(Canada) Limited, Financial transactional
services B.V and Alpha FX Italy Limited (active
until 30 Sept 2023, transferred to Alpha FX
Europe) were not significant components 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 team. All
other entities are not trading currently or are
dormant and have no impact on the Group audit.
− Instructions were issued to the component
auditor detailing the scope, the risk assessment,
timing of their work and the allocated
component materiality thresholds;
− We conducted numerous meetings 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
including their working papers, and findings
where necessary.
KEY AUDIT MATTERS
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 statements as
a whole, and in forming our opinion thereon, and
we do not provide a separate opinion on these
matters.
CORPORATE GOVERNANCE INDEPENDENT AUDITOR’S REPORT
The risk relating to the FX Hedging
revenue stream revolves around the
existence and accuracy of revenue
recorded in the year. Existence refers
to the risk that trades did not occur
or were overstated, accuracy refers to
the risk that calculations identifying
the revenue amounts to be recorded
contain errors.
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, 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.
HOW THE SCOPE OF OUR AUDIT ADDRESSED
THE 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 IFRS 9 ‘Financial Instruments’
(FX hedging revenue) and IFRS15 ‘Revenue
from Contracts with Customers’’ (Payments
transaction fee) with a specific focus on
existence and measurement 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 to the relevant underlying supporting
documents outlined above.
For Alternative Banking, payments revenue, we
agreed a sample of the Payments transaction
fee revenue to supporting documentation. We
obtained revenue confirmations from a sample
of customers on the payments transaction
fee revenue report to address existence and
accuracy.
Further, we have performed operating
effectiveness testing over the key revenue
controls in the process, as part of our testing
we have selected the appropriate sample
size as per our methodology and assessed
whether these controls have operated as
intended during the financial period under
consideration.
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.
96
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ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023
Independent Auditor’s report
Continued
KEY AUDIT MATTER
HOW THE SCOPE OF OUR AUDIT ADDRESSED
ACCOUNTING FOR
GROWTH SHARE
SCHEMES
See note 2 on
accounting policy
for Share-based
payments and note
4 for additional
disclosures
The group has several growth share
schemes in place to reward key
employees who work within the entities
in the Group. These schemes are
equity settled and are within the scope
of International Financial Reporting
Standards (IFRS) 2.
Accounting for growth share schemes is
an inherently complex area in relation to
the share option charge, vesting period
and fair valuation accounting treatment.
During the current year, we have
identified various errors in the
accounting treatment of the growth
share scheme in previous years.
Due to the material nature of these
errors, the previous years financial
statements have been restated in
accordance with the requirements of
International Accounting Standards
(IAS) 8 and a third statement of
financial position has been presented
in accordance with the requirements
of International Accounting Standards
(IAS) 1.
THE KEY AUDIT MATTER
We have obtained an understanding of the
accounting treatment and the related controls
around the growth share schemes (schemes).
We reviewed the schemes agreements to
understand the mechanics and various terms
and conditions.
With the assistance from our technical
accounting department, we assessed the
accounting treatment of the several growth
share schemes, including the impact of
the previous years’ errors on the financial
statements.
We evaluated the prior year restatement
disclosures and assessed if these are in line with
the requirements of IAS 8. Additionally, we tested
the completeness and accuracy of the prior
year restatement calculations by tracing back to
the prior year audited financial statements and
ensuring the correct journal have been posted
within the correct period.
KEY OBSERVATIONS:
Based on the above procedures, We have not
identified any indicator that would suggest that
the prior period errors have not been corrected
appropriately and that the current accounting
treatment for growth share schemes does not
comply with the requirements of IFRS 2
CORPORATE GOVERNANCE INDEPENDENT AUDITOR’S REPORT
Group financial statements
Parent company financial statements
2023
£ million
2022
£ million
2023
£ million
2022
£ million
Materiality
2.1
1.9
0.7
0.7
Basis for determining
materiality
Rationale for the
benchmark applied
Performance
materiality
Basis for determining
performance
materiality
Rationale for the
percentage applied
for performance
materiality
5% of Profit before tax
excluding the impact
of one-off expenses
incurred for business
combination and interest
earned on e-money
balance.
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
and core business
profitability.
5% of Profit before tax
less other operating
income.
1% of total assets
1% of total assets
The entity is an asset
based entity and
serves as a holding
company for group.
In the absence of any
revenue total assets is
used as a benchmark
to calculate materiality.
The entity is an asset
based entity and
serves as a holding
company for group.
In the absence of any
revenue total assets is
used as a benchmark
to calculate materiality.
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.
1.37
1.24
0.4
0.4
65% of Materiality
65% of Materiality
65% of Materiality
65% of Materiality
The Group has extended
its geographical range
and has some complex
estimates involved in the
financial statements. As
such, we have deemed
it appropriate to set our
threshold at 65%.
The Group has extended
its geographical range
and has some complex
estimates involved in the
financial statements. As
such, we have deemed
it appropriate to set our
threshold at 65%.
This is based on
our expected value
of known and likely
misstatements in
the current year,
and Management’s
attitude to proposed
adjustments.
This is based on
our expected value
of known and likely
misstatements in
the current year,
and Management’s
attitude to proposed
adjustments.
OUR APPLICATION OF MATERIALITY
In order to reduce to an appropriately low level the
Based on our professional judgement, we determined
dependent on the size and our assessment of the
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.
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 immaterial as we also take account of the
nature of identified misstatements, and the particular
circumstances of their occurrence, when evaluating their
effect on the financial statements as a whole.
materiality for the financial statements as a whole
risk of material misstatement of that component.
and performance materiality as shown above.
Component materiality ranged from £0.42m to
COMPONENT MATERIALITY
£2.1 million (2022: £0.132 million to £1.8 million). In
the audit of each component, we further applied
performance materiality levels of 65% (2022: 65%)
For the purposes of our Group audit opinion, we
of the component materiality to our testing to
set materiality for each significant component of
ensure that the risk of errors exceeding component
the Group based on a percentage of between 21%
materiality was appropriately mitigated.
and 90% (2022: 7% and 95%) of Group materiality
98
99
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023 Independent Auditor’s report
Continued
REPORTING THRESHOLD
We agreed with the Audit Committee that we would
report to them all individual audit differences in
excess of £42k (2022: £39.4k). We also agreed to
report differences below this threshold that, in our
view, warranted reporting on qualitative grounds.
OTHER INFORMATION
The directors are responsible for the other
information. The other information comprises the
information included in the annual report other than
the financial statements and our auditor’s report
thereon. Our opinion on the financial statements
does not cover the other information and, except to
the extent otherwise explicitly stated in our report,
we do not express any form of assurance conclusion
thereon. Our responsibility is to read the other
information and, in doing so, consider whether the
other information is materially inconsistent with
the financial statements or our knowledge obtained
in the course of the audit, or otherwise appears to
be materially misstated. If we identify such material
inconsistencies or apparent material misstatements,
we are required to determine whether this gives rise
to a material misstatement in the financial statements
themselves. If, based on the work we have performed,
we conclude that there is a material misstatement of
this other information, we are required to report that
fact.
We have nothing to report in this regard.
OTHER COMPANIES ACT 2006 REPORTING
Based on the responsibilities described below and our
work performed during the course of the audit, we are
required by the Companies Act 2006 and ISAs (UK) to
report on certain opinions and matters as described
below.
STRATEGIC REPORT
In our opinion, based on the work undertaken in the course of the audit:
AND DIRECTORS’
REPORT
− 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 have nothing to report in respect of the following matters in relation to which the
WE ARE REQUIRED
Companies Act 2006 requires us to report to you if, in our opinion:
TO REPORT BY
EXCEPTION
− 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
CORPORATE GOVERNANCE INDEPENDENT AUDITOR’S REPORT
RESPONSIBILITIES OF DIRECTORS
respect of irregularities, including fraud. The extent
As explained more fully in the Directors’
responsibilities statement, 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, 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.
OUR PROCEDURES INVOLVED:
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF
− enquiry with the management and those
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
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;
exists. Misstatements can arise from fraud or error
− review of board and audit committee meeting
and are considered material if, individually or in the
minutes for any known instances of non-
aggregate, they could reasonably be expected to
compliance, or any actual, suspected or alleged
influence the economic decisions of users taken on
fraud; and review of legal correspondence and
the basis of these financial statements.
those from the regulator; and
EXTENT TO WHICH THE AUDIT WAS CAPABLE OF
from the regulator for any instances of non-
DETECTING IRREGULARITIES, INCLUDING FRAUD
compliance with laws and regulations.
− review of legal correspondence and those
Irregularities, including fraud, are instances of
We assessed the susceptibility of the financial
non-compliance with laws and regulations. We
statements to material misstatement, including
design procedures in line with our responsibilities,
fraud. Our risk assessment procedures included but
outlined above, to detect material misstatements in
not limited to:
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ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023 CORPORATE GOVERNANCE INDEPENDENT AUDITOR’S REPORT
Independent Auditor’s report
Continued
− Enquiry with management and those charged
non-compliance with laws and regulations throughout
with governance regarding any known or
the audit. We also reviewed the result of component
suspected instances of fraud;
audit teams procedures performed in this regard.
− Review of minutes of meeting of those charged
with governance for any known or suspected
instances of fraud;
− Discussion amongst the engagement team
(including internal forensics experts) as to how
and where fraud might occur in the financial
statements;
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.
− Performing analytical procedures to identify any
There are inherent limitations in the audit procedures
unusual or unexpected relationships that may
performed and the further removed non-compliance
indicate risks of material misstatement due to
with laws and regulations is from the events and
fraud.
Based on the above, we identified the areas most
susceptible to fraud to be management override of
controls, revenue recognition (existence and accuracy)
including the related traders commission earned on
the FX Hedging revenue.
transactions reflected in the financial statements, the
less likely we are to become aware of it.
A further description of our responsibilities is available
on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor’s report.
OUR PROCEDURES IN RESPONSE TO THE ABOVE
USE OF OUR REPORT
INCLUDED:
− 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
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
19 March 2024
BDO LLP is a limited liability partnership registered in
England and Wales (with registered number OC305127).
102
103
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023 Consolidated Statement of Comprehensive Income
For the year ended 31 December 2023
Year ended
31 December 2023
Year ended
31 December 2022
Consolidated Statement of Financial Position
As at 31 December 2023
Company number: 07262416
As at
31 December 2023
REVENUE
Net treasury income – client funds
Net treasury income – own funds
TOTAL INCOME
Operating expenses
OPERATING PROFIT
Underlying operating profit
Net treasury income – client funds
Non-underlying items
Finance income
Finance expenses
PROFIT BEFORE TAXATION
Underlying profit before taxation
Net treasury income – client funds
Non-underlying items
Taxation
PROFIT FOR THE YEAR
Attributable to:
Equity holders of the parent
Non-controlling interests
PROFIT FOR THE YEAR
OTHER COMPREHENSIVE INCOME/(LOSS):
Items that may be reclassified to the profit or loss:
Exchange (loss)/gain on translation of foreign operations
Gain/(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
1The prior period restatement is detailed further in note 4.
104
Note
5
5
5
6
6
7
7
6
9
22
10
10
10
10
£’000
110,442
73,676
1,843
185,961
(73,809)
112,152
39,205
73,676
(729)
4,616
(834)
115,934
42,987
73,676
(729)
(27,142)
88,792
88,825
(33)
88,792
(679)
3,193
(798)
90,508
90,541
(33)
90,508
206.2p
203.4p
76.7p
75.6p
Restated1
£’000
98,332
9,278
-
107,610
(61,159)
46,451
38,274
9,278
(1,101)
784
(458)
46,777
38,600
9,278
(1,101)
(8,164)
38,613
38,613
-
38,613
1,382
(639)
160
39,516
39,516
-
39,516
92.1 p
89.0p
76.3p
7 3.7 p
FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at
31 December 2022
As at
1 January 2022
Restated1
£’000
Restated1
£’000
NON-CURRENT ASSETS
Goodwill
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
Current tax asset
TOTAL CURRENT ASSETS
TOTAL ASSETS
EQUITY
Share capital
Share premium account
Capital redemption reserve
Merger reserve
Redemption 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
Redemption liability
Deferred tax liability
LEASE LIABILITY
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
TOTAL EQUITY AND LIABILITIES
Note
12, 26
12, 26
13
14
16
20
16
19
20
21
21
21
21
21, 26
21
21
16
23
14
16
23
26
9
14
£’000
4,707
14,007
8,800
20,894
14,369
62,777
197,941
95,203
7,796
8,810
73
309,823
372,600
87
52,566
4
667
(1,884)
170,939
581
222,960
531
223,491
34,288
59,750
7,072
1,028
11,293
113,431
5,922
875
1,884
5,305
21,692
35,678
149,109
372,600
-
4,814
3,248
11,848
27,819
47,729
136,799
99,119
5,333
4,726
-
245,977
293,706
84
52,075
4
667
-
88,807
1,260
142,897
-
142,897
42,764
77,340
4,924
1,407
3,781
130,216
7,317
222
-
1,387
11,667
20,593
150,809
293,706
The Consolidated Financial Statements of Alpha Group International plc were approved by the Board of Directors on
19 March 2024 and signed on its behalf by:
1The prior period restatement is detailed further in note 4.
M J Tillbrook
Director
T Powell
Director
-
2,995
2,323
6,136
17,335
28,789
108,044
58,551
7,825
3,506
-
177,926
206,715
82
50,819
4
667
-
56,260
(122)
107,710
-
107,710
36,697
40,100
2,193
450
3,847
83,287
7,745
-
-
1,061
6,912
15,718
99,005
206,715
105
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023
Consolidated Statement of Cash Flows
For the year ended 31 December 2023
Consolidated Statement of Changes in Equity
For the year ended 31 December 2023
Year ended
31 December 2023
Year ended
31 December 2022
Note
£’000
Restated1
£’000
Share
capital
Share
premium
account
Capital
redemption
reserve
Merger
reserve
Redemption
Reserve
Retained
earnings
Translation
reserve
Total
Non-
controlling
interests
Total
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
Attributable to the owners of the Parent
FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before taxation
Net treasury income – client funds
Net treasury income – own funds
Finance income
Finance expense
Amortisation of intangible assets
Intangible assets written off
Depreciation of property, plant and equipment
Depreciation of right-of-use assets
Loss on disposal of property, plant and equipment
Share-based payment (credit)/expense
(Increase) in other receivables
(Decrease)/increase in other payables
Decrease/(increase) in derivative financial assets
Decrease in financial assets at amortised cost
(Decrease)/increase in derivative financial liabilities
Increase in fixed collateral
CASH INFLOWS FROM OPERATING ACTIVITIES
Net treasury income received
Tax paid
NET CASH INFLOWS FROM OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of subsidiary, net of cash acquired
Payments to acquire property, plant and equipment
Payments to acquire right-of-use assets
Proceeds from sale of property, plant and equipment
Expenditure on intangible assets
Interest received
NET CASH OUTFLOWS FROM INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Issue of ordinary shares by Parent Company
Issue of shares options
Forfeiture of share options
Dividends paid to equity holders of Parent Company
Dividends paid to subsidiary shareholders
Payment of lease liabilities – principal
Payment of lease liabilities – interest
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 (loss)/gains
NET CASH AND CASH EQUIVALENTS AT END OF YEAR
115,934
(73,676)
(1,843)
(4,616)
834
3,111
26
1,325
1,939
8
(58)
(1,343)
(15,550)
19,920
-
(9,232)
(4,084)
32,695
73,975
(15,881)
90,789
(8,227)
(6,927)
(235)
5
(8,025)
4,616
(18,793)
491
-
-
(6,368)
(2,762)
(779)
(793)
(10,211)
61,785
136,799
(643)
197,941
46,777
(9,278)
-
(784)
458
1,573
43
764
1,154
50
1,101
(1,476)
40,014
(51,052)
5,803
5,000
(1,220)
38,927
7,490
(7,486)
38,931
-
(1,739)
(46)
-
(3,435)
729
(4,491)
996
44
(77)
(4,810)
(1,877)
(891)
(452)
(7,067)
27,373
108,044
1,382
136,799
7
7
12
12
13
14
13
26
13
13
12
11
14
14
20
BALANCE AT 1 JANUARY 2022
(as previously reported)
82
50,783
Prior period restatement1
-
36
BALANCE AT 1 JANUARY 2022
(restated)
82
50,819
4
-
4
-
-
-
-
-
-
-
667
-
667
-
-
-
-
-
-
-
-
-
-
-
2
432
-
-
-
-
-
824
-
-
84
52,075
4
667
-
-
-
3
-
-
-
-
-
491
-
-
87
52,566
-
-
-
-
-
-
4
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,884)
-
-
-
54,189
(124)
105,601
4,193
109,794
2,071
2
2,109
(4,193)
(2,084)
56,260
(122)
107,710
38,613
(479)
-
38,613
1,382
903
(2)
1
-
1,101
(6,687)
-
-
-
-
-
432
1
824
1,101
(6,687)
88,807
1,260 142,897
-
-
-
-
-
-
-
-
-
107,710
38,613
903
432
1
824
1,101
(6,687)
142,897
88,825
2,395
103
(3)
(58)
(9,130)
-
88,825
(33)
88,792
(679)
1,716
-
1,716
-
-
-
-
(1,781)
491
(58)
(9,130)
564
(1,217)
-
-
-
491
(58)
(9,130)
667
(1,884)
170,939
581
222,960
531
223,491
Profit for the year (restated1)
Other comprehensive
income/(expense)
Transactions with owners
Shares issued on vesting
of share option schemes
(restated1)
Issue of share options in
subsidiary undertakings
(restated1)
Shares issued in relation to
SAYE share scheme
Share-based payments
(restated1)
Dividends paid(restated1)
BALANCE AT 31 DECEMBER
2022 (restated)
Profit/(loss) for the year
Other comprehensive
income/(expense)
Transactions with owners
Acquisition of subsidiary
Shares issued on vesting of
share option schemes
Share-based payments
Dividends paid
BALANCE AT 31 DECEMBER
2023
1The prior period restatement is detailed further in note 4.
1The prior period restatement is detailed further in note 4.
106
107
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
1. GENERAL INFORMATION
Alpha Group International plc (the “Company”) is a public limited 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 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 material accounting policies adopted in the preparation of the Consolidated Financial Statements are set out in note 2.
2. MATERIAL ACCOUNTING POLICIES
Basis of preparation
The Consolidated Financial Statements have been prepared in accordance with UK adopted 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 material 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 adopted 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)
New standards, interpretations and amendments effective from 1 January 2023:
− IAS 1 has replaced the requirement for the Group to disclose its significant accounting policies with the
requirement to disclose material accounting policy information.
− There are no other 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.
b)
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.
Any new or amended accounting standards or interpretations that are not yet mandatory have not been early adopted.
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 circumstances
indicate that there may be a change in any elements of control.
ii. Transactions eliminated on consolidation
Intragroup balances, and any gains and losses or income and expenses arising from intragroup transactions, are eliminated in
preparing the consolidated financial information.
iii. Acquisition accounting
Business combinations are accounted for using the acquisition method. The cost of the business combination is measured
as the aggregate of the consideration transferred and contingent consideration, measured at fair value on the date of the
business combination, and the value of any non-controlling interests in the acquiree. The business combination costs
incurred are expensed.
When the Group acquires a business it assesses the financial assets and liabilities assumed for appropriate classification
and designation in accordance with the contractual terms, economic circumstances and pertinent conditions at the
business combination date.
On an acquisition-by-acquisition basis, the Group elects whether to measure the non-controlling interests in the acquiree, if
any, at fair value or at the proportionate share of the acquiree’s identifiable net assets.
iv. 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.
Where there is an obligation to purchase the non-controlling interest at a future date, a financial liability will be recognised on
the business combination. The liability is initially recognised at fair value if it meets the definition of a derivative under IFRS 9
Financial instruments.
The financial liability for the non-controlling interest is subsequently accounted for under IFRS 9, with all changes in the
carrying amount, including the non-controlling interest share of profit, recognised as a re-measurement in the income
statement. When the obligation or “put liability” is exercised, the carrying amount of the financial liability at that date is
extinguished by the payment of the exercise price.
108
109
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023 FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
2. MATERIAL ACCOUNTING POLICIES [CONT.]
Annual account fees
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 2023, the Group had a healthy liquidity position with £197.9m of cash and cash equivalents (see note 20), with
no debt financing commitments. The Group has net current assets of £196.4m at 31 December 2023 and net assets of £223.5m.
In assessing going concern, management have considered the potential effects the current high interest rate environment
and the impact that these rates would have on our clients and the sectors in which they operate in. We do not anticipate any
significant impact, from a going concern perspective to the business from these events. This assessment has considered the
impact on the Group’s operations, its 2024 budget and 2025 internal forecast.
Given the nature of the above events, severe downside scenarios have been modelled where revenue targets are missed 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 have a reasonable expectation that the Group has adequate resources to continue in operational existence for the
foreseeable future. The Group 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.
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.
Fund Finance
Fund Finance provides advisory services to institutional clients who require intermediary advisory services to support their
funding requirements. The offering is distributed via a newly established sales team from the London head office. Revenue is
recognised in the period in which the advisory work is performed.
Cobase
Cobase charge recurring monthly subscription fees for use of their multibank connectivity platform. They also charge
implementation fees and user costs. Revenue from subscription fees and user costs are recognised on a straight-line basis
over the period in which the account is being used. Implementation fees and are recognised in the period in which the
implementation project has been finalised.
Net treasury income (previously called Other Operating Income)
‘Net treasury income- client funds’ is made up of interest generated from client cash balances, as a result of the increased
interest rate environment (further detail within note 5). 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
‘net treasury income-client funds’ (formerly Other operating income), not operating revenue, on the face of the Consolidated
Statement of Comprehensive Income.
The 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 short periods of time. 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.
‘Net treasury income – own funds’ relates to interest generated within the FX risk management division on initial and variation
margin held by the Group. The Group has title over these funds with the balances and therefore associated interest earned
being a direct consequence of the operational business and has therefore been included within Total Income and Operating
Profit in the Consolidated Statement of Comprehensive Income.
Spot and forward revenue is recognised when a binding contract is entered into by a client and the rate is fixed and determined.
Interest earned on Alpha’s own, free cash is recognised within finance income in the Consolidated Statement of
Revenue represents the difference between the rate offered to clients and the rate the Group pays its banking counterparties
aggregated with the volume of currency transacted.
Options revenue is recognised when a binding contract is entered into by a client and the revenue is fixed and determined.
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 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 in respect of transactional
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.
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 net treasury income from client funds, share award costs, M&A deal costs, amortization of
purchased intangibles and costs in relation to the anticipated move to premium listing on the London Stock Exchange.
110
111
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023 FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
2. MATERIAL ACCOUNTING POLICIES [CONT.]
Fair value through profit or loss
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.
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:
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.
− Assets and liabilities at each period end are translated at the prevailing closing rate at the date of the Consolidated
Statement of Financial Position;
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
− Income and expenses for each period within the Consolidated Statement of Comprehensive Income are translated at the
pay for those cash flows.
average rate for the period; and
− On consolidation, exchange differences arising from the translation of overseas operations are recognised in other
Impairment
comprehensive income and accumulated in the translation reserve as a separate component of equity. On disposal of a
Impairment provisions are recognised under the general approach according to a three-stage expected credit loss
foreign operation, the cumulative translation differences are transferred to the Consolidated Statement of Comprehensive
impairment model. Impairment provisions represent the difference between the present value of all contractual cashflows
Income as part of the gain or loss on disposal.
Financial instruments
Financial Assets
Initial measurement
All financial assets are measured initially at fair value less transaction costs. The Group’s financial assets include derivatives not
designated as hedging instruments (foreign exchange forward and option contracts with customers and banking 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
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 recognises lifetime
expected credit losses under the simplified approach. The Group has performed a re-assessment of lifetime expected
credit losses at 31 December 2023.
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
contractual provisions of the instrument. If certain conditions are met, the classification of an asset may subsequently need to
de-recognition of the original liability and the recognition of a new liability, and the difference in the respective carrying
be reclassified.
amounts is recognised in the Consolidated Statement of Comprehensive Income.
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.
112
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ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023 FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
2. MATERIAL ACCOUNTING POLICIES [CONT.]
Financial liabilities [cont.]
Offsetting financial instruments
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and deposits held at call with banks. For the purposes of the
Consolidated Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined above.
When there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or
Cash held as collateral with banking counterparties for which the Group does not have immediate access, is shown as fixed
realise the asset and settle the liability immediately, financial assets and liabilities are offset, and the net amount reported in
collateral on the face of the Consolidated Statement of Financial Position.
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.
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
Changes in the fair value of derivatives are included in the Consolidated Statement of Comprehensive Income. The Group’s
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
derivative financial assets and liabilities comprise of forward and option foreign exchange contracts, and interest rate swap
are presented as non-current liabilities.
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.
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 recognised directly in other
comprehensive income and the ineffective portion is recognised immediately in the income 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.
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:
− 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
enacted or substantively enacted by the balance sheet date.
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.
114
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ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
2. MATERIAL ACCOUNTING POLICIES [CONT.]
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.
Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less
accumulated amortisation and accumulated impairment losses. The amortisation and impairment losses of intangible
assets acquired in a business combination are classified as non-underlying in the income statement.
The estimated useful lives of intangible assets are as follows:
Internally generated software and Domain names
Software obtained through acquisition
Brand
Customer relationships
—
—
—
—
3 years straight line
3 years straight line
10 years straight line
14 years straight line
Impairment of property, plant and equipment and intangible assets
Equity-settled share-based schemes are measured at fair value, excluding the effect of non-market-based vesting conditions,
Tangible and intangible assets are assessed for any indicators of impairment at each balance sheet date or if there are
at the date of grant using an appropriate option pricing model. The Growth Shares Schemes have been valued using a
any indicators of impairment. If any indication exists, or when annual impairment testing for an asset is required, the Group
Monte Carlo Simulation Approach due to the existence of market-based conditions. Non-market-based conditions exist over
estimates the asset’s recoverable amount. The recoverable amount is determined on an individual asset-by-asset basis.
revenue-based targets which require management to estimate the probability of meeting these conditions. The Approved and
When the recoverable amount is less than its carrying amount, the asset is considered impaired and is written down to its
Unapproved Options Schemes have been valued using a Black Scholes option pricing model as only a service-based condition
recoverable amount.
exists. Both schemes require the estimation of appropriate attrition rates to estimate the number of share options which are
likely to vest.
Goodwill
The fair value of the shares or share options less the subscription price payable by the employees 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.
Property, plant and equipment
Owned assets
Property, plant and equipment is stated at cost less accumulated depreciation and where applicable, impairment losses.
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, straight line
4 to 5 years straight line
3 years straight line
Intangible assets
Goodwill arising on the acquisition of subsidiaries represents the excess of the cost over the fair value of the identifiable
net assets acquired at the date of the acquisition and is carried at cost less any accumulated impairment losses.
Impairment of goodwill
Goodwill is not subject to amortisation and is tested annually for impairment. Impairment is determined by assessing
the recoverable amount of the cash generating units that are expected to benefit from the synergies of the combination,
irrespective of whether other assets or liabilities of the Group are assigned to those units.
An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount,
where the recoverable amount is the higher of the asset’s fair value less costs of disposal and value in use. Impairment
losses relating to goodwill cannot be reversed in future periods.
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.
Intangible assets not acquired in a business combination consist of internally developed software and domain names.
The lease liability is measured at the present value of the lease payments, discounted at the rate implicit in the lease, or if
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
that cannot be readily determined, at the lessee’s incremental borrowing rate specific to the term, country, currency and
start date of the lease.
complete the development and to use or sell the asset. The assets are initially recorded at cost including labour, directly
The finance cost is charged to the Consolidated Statement of Comprehensive Income over the lease period so as to
attributable costs and any third-party expenses, and amortised over their useful economic lives of 3 years from the date of
produce a constant periodic rate of interest on the remaining balance of the liability for each period.
first use.
Intangible assets acquired in a business combination are identified and recognised separately from goodwill where they satisfy
Payments associated with leases with a lease term of twelve months or less and leases of low-value assets are recognised
the definition of an intangible asset and their fair values can be measured reliably. The cost of such intangible assets is their
as an expense in the Consolidated Statement of Comprehensive Income on a straight-line basis.
Short-term/low value exemptions
fair value at the acquisition date.
116
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ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023
2. MATERIAL ACCOUNTING POLICIES [CONT.]
Significant judgements
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in share
premium as a deduction from the proceeds of the new shares to which they relate.
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 Group’s 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 £3.0m (2022: £3.4m) 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.
Development costs
Development costs that are directly attributable to the development of a project are capitalised based on management’s
assessment of the likelihood of a successful outcome for each project. This is based on the management’s judgement
that the project is technologically, commercially and economically feasible in accordance with IAS 38 Intangible Assets.
In determining the amount to be capitalised, management makes assumptions regarding the expected future cash
generation of the project, i.e. Group revenue, and the expected period of benefits. Details are shown in note 12.
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.
Impairment of goodwill
The Group’s impairment test for goodwill is based on a value in use calculation using a discounted cash flow model. The
test aims to ensure that goodwill is not carried at a value greater than the recoverable amount, which is considered to be
the higher of fair value less costs of disposal and value in use. The identification of the Group’s cash generating units (CGUs)
used for impairment testing is considered a critical judgement within the scope of paragraph 122 of IAS1.
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.
Intangible assets acquired as part of a business combination
The fair value of acquired intangible assets, and therefore the resulting goodwill recognised on acquisition is significantly
affected by a number of factors. These include management’s best estimates of future performance including forecast
revenue, expected revenue attrition, forecast operating margin, any contributory assets changes, and estimates of the
return required to determine an appropriate discount rate (in order to calculate the net present value of the assets).
4. PRIOR PERIOD ADJUSTMENT
A number of Group employees receive remuneration in the form of share-based payments, whereby employees render
services as consideration for equity instruments (equity settled transactions). Typically, employees subscribe for shares
in a subsidiary. These shares are then exchangeable into shares of the parent if the vesting conditions are met. The Group
recorded the amounts receivable from the employees as a debtor and recorded non-controlling interests in respect of the
shares and options issued to employees. Some of these schemes also entitled the employees to dividends over the vesting
period. Where an employee leaves prior to vesting, (and are not considered to be a good leaver) the Group can require the
employee to return the shares in exchange for the lower of the subscription amounts paid and the fair market value of the
shares.
Historically, the Group has recognised a share-based payment charge in the Consolidated Statement of Comprehensive
Income equivalent to the difference between the subscription price payable by the employee and the fair market value of
that option over the life of the scheme.
On vesting of the share options, share premium was also recognised on issue of shares by the Parent Company.
118
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ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023 FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
4. PRIOR PERIOD ADJUSTMENT [CONT.]
After reviewing the IFRS 2 Share-Based Payment standard and related guidance from the IFRIC, the Group has concluded
EFFECT ON THE STATEMENT OF COMPREHENSIVE INCOME
that share ownership schemes that grant employees shares or options in subsidiaries, with conversion rights to the
holding company should be accounted for under IFRS 2 Share-Based Payment, rather than a non-controlling interest
in a subsidiary. As a result of this, the previous years’ non-controlling interest recognised over the annual profits of the
subsidiaries were overstated.
In addition, the previous years’ share-based payment charge to the Consolidated Statement of Comprehensive Income
was also found to be insufficient due to a miscalculation. On vesting of some share options, share premium was
incorrectly recognised.
Accordingly, the Group has restated its financial statements in accordance with IAS 8 ‘Accounting Policies, Changes
in Accounting Estimates and Errors’. Other receivables are to be reduced for the loan amounts recognised as a debtor
relating to the purchase of those shares and options, conversely a creditor is recognised for any subscription amounts
paid up in advance of vesting due to the non-recourse nature of the schemes. Any non-controlling interest recognised,
including profit attributed, in respect of these schemes has been reversed.
The correction of these entries results in an increase to profits attributed to shareholders of the parent, an increase to
retained earnings and an increase to earnings per share. Dividends paid to non-controlling interest in prior years have
been included within retained earnings. The effect of these adjustments is shown by restating each of the prior year
affected financial statement line items as follows:
As previously
Restatement
Restatement
Restatement
Restated
reported
As at
Year ended
Cumulative to
31 December 2022
1 January 2022
31 December 2022
31 December 2022
31 December 2022
Non-controlling interest
Retained earnings
Translation reserve
Share premium account
Other receivables
Other payables
£’000
(4,707)
(84,220)
(1,258)
(53,513)
6,821
(77,272)
£’000
4,193
(2,071)
(2)
(36)
(1,982)
(102)
£’000
514
(2,516)
-
1,474
494
34
£’000
4,707
(4,587)
(2)
1,438
(1,488)
(68)
£’000
-
(88,807)
(1,260)
(52,075)
5,333
(77,340)
Profit for the year (as previously reported)
Increase in share-based payment expense
PROFIT FOR THE YEAR (restated)
Attributable to Equity holders of the parent (as previously reported)
Decrease in non-controlling interest (as previously reported)
Increase in share-based payment expense
ATTRIBUTABLE TO EQUITY HOLDERS (restated)
EFFECT ON THE TOTAL COMPREHENSIVE INCOME
Total comprehensive income for the year (as previously reported)
Share-based payment expense increase
TOTAL COMPREHENSIVE INCOME FOR THE YEAR (restated)
Attributable to Equity holders of the parent (as previously reported)
Decrease in non-controlling interest (as previously reported)
Share-based payment expense increase
ATTRIBUTABLE TO EQUITY HOLDERS (restated)
EFFECT ON EARNINGS PER SHARE
Basic earnings per share (as previously reported)
Prior period adjustment
BASIC EARNINGS PER SHARE FOR THE YEAR (restated)
Diluted earnings per share (as previously reported)
Prior period adjustment
DILUTED EARNINGS PER SHARE FOR THE YEAR (restated)
Underlying Basic earnings per share (as previously reported)
Prior period adjustment
UNDERLYING BASIC EARNINGS PER SHARE FOR THE YEAR (restated)
Underlying diluted earnings per share (as previously reported)
Prior period adjustment
UNDERLYING DILUTED EARNINGS PER SHARE FOR THE YEAR (restated)
Year Ended
31 December 2022
£’000
39,050
(437)
38,613
36,372
2,678
(437)
38,613
Year Ended
31 December 2022
£’000
39,953
(437)
39,516
37,275
2,678
(437)
39,516
Year Ended
31 December 2022
£’000
86.8p
5.3p
92.1p
83.8p
5.2p
89.0p
70.1p
6.2p
76.3p
67.7p
6.0p
73.7p
120
121
These movements did not result in any specific impact on cash however the Consolidated Statement of Cash Flows has been
restated as a consequence of the adjustments detailed above.
In addition to the above, within the Consolidated Statement of Cash Flows, £729k in relation to interest received in the prior
year has been represented from financing to investing activities.
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023 5. SEGMENTAL REPORTING
During the year, the Group generated revenue from the sale of forward currency contracts, option contracts, foreign
exchange spot transactions, fees received from payments collections, cash accounts, and fund finance advisory fees.
The Group has six reportable operating segments under the provisions of IFRS 8, based on the individually reportable
subsidiaries and divisions. These six segments are:
− Corporate London represents revenue generated by Alpha FX Limited’s Corporate clients serviced from the UK.
− Institutional represents revenue from Alpha FX Institutional Limited, which primarily services funds.
− Corporate Toronto represents revenue generated by Alpha Foreign Exchange (Canada) Limited, serviced from Toronto,
Canada.
− Corporate Amsterdam represents revenue generated by Alpha FX Netherlands Limited, which services corporate
clients from Amsterdam, The Netherlands.
− Alpha Pay, a branch of Alpha FX Limited which services clients who require international payments and accounts.
The offering is distributed via our European Corporate offices and Alpha FX Institutional Limited, as well as Alpha
Pay’s own sales team.
− Cobase, a Dutch based company that was acquired by the Group in December 2023. They are a cloud-based
provider of bank connectivity technology that enables corporates to manage their banking relationships and
transactions.
The chief operating decision makers, being the Group’s Chief Executive Officer and the Chief Financial Officer, monitor the
results of the operating segments separately each month. Key measures used to evaluate performance are revenue, and
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.
The Group’s two divisions, FX Risk Management and Alternative Banking are 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.
Revenue in the following table is in accordance with the methodology used for preparing the financial information for
management, for each operating segment. Although a proportion of the revenue from EU clients is initially booked
through Alpha FX Europe Limited in Malta, revenue in the table below has been reallocated to the relevant entity where
the sales team is located.
The Group has overseas offices in Australia, Italy, Spain and Germany. All of these offices service Corporate clients
from their local offices. The results of these offices are included within the Corporate London Segment. The revenue of
these offices in aggregate was £5.8m and underlying loss before taxation in aggregate was £1.0m (£2.1m and £627k loss
respectively in prior year). There were costs associated with Alpha Europe (based in Luxembourg), before it was dissolved,
which have been shown 50/50 within Institutional and Alpha Pay. Fund Finance, which began trading in May 2023 has
been included within the Alpha Pay segment. Under IFRS 8 these segments do not meet the quantitative reporting
thresholds in 2023.
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
2023
Corporate
London
Institutional
Corporate
Toronto
Corporate
Amsterdam
FX Risk Management*
Alternative Banking**
Cobase
TOTAL REVENUE
Underlying operating profit
Finance income
Finance expenses
Underlying profit before taxation
Non-underlying Items
Net treasury income- client funds
£’000
39,884
-
-
39,884
15,621
4,612
(254)
19,979
(708)
5,534
£’000
23,518
3,701
-
27,219
8,506
-
(200)
8,306
(21)
34,071
£’000
4,228
-
-
4,228
408
(1)
(58)
349
-
-
£’000
8,699
-
-
8,699
4,566
-
(87)
4,479
-
-
PROFIT BEFORE TAXATION
24,805
42,356
349
4,479
Alpha
Pay
£’000
-
30,226
-
30,226
10,352
-
(235)
10,117
-
34,071
44,188
Cobase
Total
£’000
-
-
186
186
£’000
76,329
33,927
186
110,442
(248)
39,205
5
-
(243)
-
-
4,616
(834)
42,987
(729)
73,676
(243)
115,934
2022
FX Risk Management*
Alternative Banking**
TOTAL REVENUE
Underlying operating profit
Finance income
Finance expenses
Underlying profit before taxation
Non-underlying Items
Net treasury income- client funds
PROFIT BEFORE TAXATION
Corporate
London
Restated1
£’000
43,332
581
43,913
18,457
779
(146)
19,090
(1,069)
468
18,489
Institutional
Corporate
Toronto
Corporate
Amsterdam
Alpha
Pay
Cobase
Total
£’000
15,133
4,703
19,836
7,325
-
(83)
7,242
(32)
4,412
£’000
4,698
-
4,698
536
-
(31)
505
-
-
£’000
5,500
888
6,388
3,095
-
(68)
3,027
-
-
11,622
505
3,027
£’000
£’000
846
22,651
23,497
8,861
5
(130)
8,736
-
4,398
13,134
-
-
-
-
-
-
-
-
-
-
Restated1
£’000
69,509
28,823
98,332
38,274
784
(458)
38,600
(1,101)
9,278
46,777
* 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 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, as well as Fund Finance advisory fees.
122
123
1The prior period restatement is detailed further in note 4.
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023 FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
5. SEGMENTAL REPORTING [CONT.]
All revenue is from external customers and is based on the location of those customers.
6. OPERATING PROFIT
Operating profit is stated after charging/(crediting):
Revenue by region of customer
United Kingdom
Europe
Canada
Rest of world
TOTAL
Revenue by product
Foreign exchange forward transactions
Foreign exchange spot transactions
Option contracts
Payments, accounts and advisory fees
Platform 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
31 December 2023
£’000
31 December 2022
£’000
40,252
55,238
4,251
10,701
110,442
39,414
47,542
4,962
6,414
98,332
31 December 2023
£’000
31 December 2022
£’000
51,966
31,791
7,823
18,676
186
110,442
41,073
29,027
9,046
19,186
-
98,332
31 December 2023
£’000
31 December 2022
£’000
32,596
16,971
11,855
1,336
19
62,777
29,811
14,400
2,434
1,063
21
47,729
Staff costs (note 8)
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
Bad debt expense in the year
Bad debt expense fully provided for in previous years
Net foreign exchange losses/(gains)
Audit fees
Audit fees in respect of the Group, Company and subsidiary financial statements
Audit fees in respect of Cobase acquisition
Non Audit fees
Fees in respect of CASS Limited Assurance
31 December 2023
31 December 2022
£’000
37,665
1,325
3,121
1,939
897
8
26
135
858
372
680
56
10
Restated1
£’000
32,150
764
1,573
1,154
787
50
43
235
-
(274)
550
-
7
The Group separately identifies results before non-underlying items in the Consolidated Statement of Comprehensive
Income (we refer to these results as ‘adjusted’). This is consistent with the way that financial performance is measured
by management and reported to the Executive Committee and Board. These measures are not measures of performance
under IFRS and should be considered in addition to, and not as a substitute for, IFRS measures of financial performance and
liquidity.
*The Netherlands includes £9.1m of Intangibles relating to the Cobase acquisition.
Non-underlying items in the year are made up of the below charges/ (credits), most of which have arisen as a result of the
Net Treasury Income (NTI)
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.
Net treasury income is a natural by-product of our accounts solution, and is an uncontrollable income stream for the Group,
which would be at least partly transitory if we return to a low interest rate environment. We have therefore chosen to recognise
business combination (see note 26):
Acquisition costs in relation to business combinations
Other M&A related integration and transaction costs
Costs associated with the move from AIM to premium listing
Amortisation of purchased intangible assets
Share-based payments (credit)/charge
interest income on client cash balances as ‘Net treasury income- client funds ‘ (formerly ‘Other operating income’), not operating
TOTAL
revenue.
In 2023 material interest income was earned over the twelve months of the year. During this time the blended average ABS
client balances and interest rates were £1.9bn and 3.6% respectively (£1.6bn and 1.5% respectively in August to December in
the prior year).
‘Net treasury income- own funds’ relates to interest earned on client margin held by the FX risk management division, a direct
consequence of the operational business, shown in total income.
124
1The prior period restatement is detailed further in note 4.
31 December 2023
£’000
31 December 2022
£’000
487
62
248
(10)
(58)
729
-
-
-
-
1,101
1,101
125
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023
7. FINANCE INCOME AND EXPENSES
Remuneration of key management personnel
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
FINANCE INCOME
Interest on bank deposits
Finance income to reverse the discount relating to the Norwegian client
Other interest receivable
TOTAL
FINANCE EXPENSES
Finance expense on dilapidation provision
Finance expense on lease liabilities (note 14)
TOTAL
8. EMPLOYEE COSTS
Staff costs, including Directors’ remuneration, were as follows:
Wages and salaries
Social security costs
Share-based payment (credit)/expense
Other pension costs
EMPLOYEE BENEFIT EXPENSE INCLUDED IN OPERATING PROFIT
31 December 2023
£’000
31 December 2022
£’000
4,491
-
125
4,616
622
55
107
784
31 December 2023
£’000
31 December 2022
£’000
(41)
(793)
(834)
(6)
(452)
(458)
31 December 2023
31 December 2022
£’000
33,360
3,485
(58)
878
37,665
Restated1
£’000
27,312
3,062
1,101
675
32,150
During the year 2023, the research and development expenditure credit (RDEC) of £802,463 (2022: £nil) was offset against
employee costs.
Key management personnel represent those personnel who have authority and responsibility for planning, directing and
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 2023
31 December 2022
£’000
2,533
285
68
46
2,932
Restated1
£’000
3,234
335
97
26
3,692
During 2023, retirement benefits accrued to 10 (2022: 7) individuals who are regarded as key management personnel within
the Group in respect of defined contribution pension schemes.
9. TAXATION
Tax charge
CURRENT TAX:
UK Corporation tax on the profit for the year
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
TOTAL DEFERRED TAX
TOTAL TAX EXPENSE
31 December 2023
£’000
31 December 2022
£’000
24,536
(633)
219
24,122
3,020
3,020
27,142
8,056
(591)
216
7,681
483
483
8,164
The average number of employees, including the Executive Directors, was as follows:
Deferred tax has increased in the year due to the further investment into internally generated assets, new leases within the
Executive Directors
Sales, administration and support staff
TOTAL
31 December 2023
No.
31 December 2022
No.
3
431
434
3
305
308
Group, and the acquisition of Cobase.
1The prior period restatement is detailed further in note 4.
1The prior period restatement is detailed further in note 4.
126
127
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
9. TAXATION [CONT.]
Factors affecting tax charge for the year
Profit on ordinary activities before tax
Profit on ordinary activities multiplied by the effective standard rate of
UK corporation tax of 23.5% (2022: 19%)
Effects of:
Expenses not deductible for tax purposes
Additional R&D deduction*
Adjustments relating to prior years
Different tax rates applied in overseas jurisdictions
Unutilised trading losses
Trading losses brought forward
TOTAL TAX CHARGE FOR THE YEAR
31 December 2023
31 December 2022
Deferred tax on each component of other comprehensive income/(expense) is as follows:
The UK deferred tax liability as at 31 December 2023 and as at 31 December 2022 relates to the tax effect of timing
differences in respect of fixed assets. The deferred tax also includes charges through Other Comprehensive Income and from
acquired operations.
£’000
115,934
27,244
561
-
(633)
93
(102)
(21)
27,142
Restated1
£’000
46,777
8,888
764
(837)
(591)
292
(182)
(170)
8,164
CASH FLOW HEDGES
Gain/(losses) recognised on hedging
instruments
Exchange (loss)/ gain arising on
translation of foreign operations
TOTAL TAX (CHARGE)/CREDIT ON OTHER
COMPREHENSIVE INCOME/(EXPENSE)
31 December 2023
31 December 2022
Before tax
£’000
Tax
£’000
After tax
£’000
Before tax
£’000
Tax
£’000
After tax
£’000
3,193
(798)
2,395
(639)
160
(479)
(679)
-
(679)
1,382
-
1,382
2,514
(798)
1,716
743
160
903
* This is the first year that the company has qualified for RDEC instead of SME. Therefore, this income has been recognised in staff costs (note 8)
rather than a tax credit for the year ended 31 December 2023, amounting to £802,463.
10. EARNINGS PER SHARE
At the year ended 31 December 2023 the Group had unused overseas tax losses amounting to £102,304 (2022: £182,079).
Tax loss memo
LOSSES
At 1 January
Losses utilised in the year
Losses created in the year
TOTAL LOSSES
Deferred tax
31 December 2023
£’000
31 December 2022
£’000
(205)
166
(135)
(174)
-
-
(205)
(205)
The deferred taxation liability is based on the expected future rate of corporation tax of 25% (2022: 25%) and comprises the
following:
LIABILITIES
At 1 January
UK tax charge relating to current year from continuing operations
UK tax charge relating to current year from acquired operations
Tax charge relating to acquired operations
Tax (credit)/charge relating to foreign exchange rate movements
Tax charge/(credit) on other comprehensive income
TOTAL DEFERRED TAX LIABILITY
31 December 2023
£’000
31 December 2022
£’000
1,387
1,960
1,060
102
(2)
798
5,305
1,061
483
-
-
3
(160)
1,387
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.
The underlying calculation excludes the impact of share-based payments, net treasury income on client funds, non-
underlying items and their tax effect. This better enables comparison of financial performance in the current year with
comparative years.
Basic earnings per share
Diluted earnings per share
Underlying – basic
Underlying – diluted
31 December 2023
31 December 2022
Pence
206.2p
203.4p
76.7p
75.6p
Restated1
Pence
92. 1 p
89.0p
76.3p
73.7p
The prior year restatement has resulted in an increase in earnings per share in the various earnings per share calculations, as
stated within note 4, for the year ended 31 December 2022. This is driven from non-controlling interests being restated to £nil.
1The prior period restatement is detailed further in note 4.
1The prior period restatement is detailed further in note 4.
128
129
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023 10. EARNINGS PER SHARE [CONT.]
12. INTANGIBLE ASSETS
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
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 2023
No.
31 December 2022
No.
43,072,098
593,955
43,666,053
41,923,407
1,482,706
43,406,113
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
Non-underlying items
Net treasury income – client funds
Tax effect of above items
Earnings – underlying
11. DIVIDENDS
Final Plc dividend for the year ended 31 December 2021 of 8.0p per share
Interim Plc dividend for the year ended 31 December 2022 of 3.4p per share
Final Plc dividend for the year ended 31 December 2022 of 11.0p per share
Interim Plc dividend for the year ended 31 December 2023 of 3.7p per share
31 December 2023
31 December 2022
£’000
88,792
33
88,825
729
(73,676)
17,143
33,021
Restated1
£’000
38,613
-
38,613
1,101
(9,278)
1,554
31,990
31 December 2023
£’000
31 December 2022
£’000
-
-
4,765
1,603
6,368
3,375
1,435
-
-
4,810
All dividends paid by Alpha Group International plc 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 2023 of 12.3p per share amounting to
£5,328,583 will be paid on 10 May 2024 to all shareholders on the register of members on 5 April 2024. 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.
Goodwill*
Software
£’000
£’000
Domain
names
£’000
Brand
£’000
Customer
relationships
£’000
COST
At 1 January 2022
Additions
Impairment
AT 31 DECEMBER 2022
Additions
Impairment
On business combinations
Foreign exchange translation
-
-
-
-
-
-
4,707
-
4,506
3,410
(621)
7,295
8,025
(1,985)
3,292
33
AT 31 DECEMBER 2023
4,707
16,660
AMORTISATION
At 1 January 2022
Charge for the year
Impairment
AT 31 DECEMBER 2022
Charge for year
Impairment
AT 31 DECEMBER 2023
NET BOOK VALUE
At 1 January 2022
At 31 December 2022
-
-
-
-
-
-
-
-
-
AT 31 DECEMBER 2023
4,707
1,538
1,557
(578)
2,517
3,083
(1,959)
3,641
2,968
4,778
13,019
37
25
-
62
-
-
-
-
62
10
16
-
26
21
-
47
27
36
15
-
-
-
-
-
-
542
-
542
-
-
-
-
5
-
5
-
-
-
-
-
-
-
-
438
-
438
-
-
-
-
2
-
2
-
-
537
436
Total
£’000
4,543
3,435
(621)
7,357
8,025
(1,985)
8,979
33
22,409
1,548
1,573
(578)
2,543
3,111
(1,959)
3,695
2,995
4,814
18,714
* Goodwill of £4,706,860 was recognised during the year on a provisional basis as a result of the acquisition of Cobase (see note 26). The acquisition
of Cobase only occurred on 1 December 2023 and the associated determination of goodwill remains provisional. As part of the year end impairment
assessment, the recoverable amount was determined to be higher than the carrying value. In determining the recoverable amount, the assumptions
used included a long-term growth rate of 2% and a discount rate of 27.4%. The goodwill has been fully allocated to the Cobase CGU.
Intangible assets, excluding goodwill, had a net book value totalling £14,006,684 (2022: £4,813,898).
1The prior period restatement is detailed further in note 4.
130
131
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023
13. PROPERTY, PLANT AND EQUIPMENT
Leasehold
improvements
£’000
Fixtures &
fittings
£’000
Computer
equipment
£’000
COST
At 1 January 2022
Additions
Write offs
Reclassification*
AT 1 JANUARY 2023
Additions
On business combinations
Write offs
Foreign exchange translation
AT 31 DECEMBER 2023
DEPRECIATION
At 1 January 2022
Charge for the year
Write offs
AT 1 JANUARY 2023
Charge for the year
Write offs
Foreign exchange translation
AT 31 DECEMBER 2023
NET BOOK VALUE
At 1 January 2022
At 31 December 2022
AT 31 DECEMBER 2023
1,453
1,167
-
147
2,767
4,675
-
-
(41)
7,401
348
206
-
554
534
-
(2)
1,086
1,105
2,213
6,315
1,010
239
(116)
(147)
986
1,403
-
(6)
(7)
2,376
396
189
(84)
501
320
(1)
(1)
819
614
485
1,557
1,196
333
(377)
-
1,152
849
11
(12)
(5)
1,995
592
369
(359)
602
471
(4)
(2)
1,067
604
550
928
Total
£’000
3,659
1,739
(493)
-
4,905
6,927
11
(18)
(53)
11,772
1,336
764
(443)
1,657
1,325
(5)
(5)
2,972
2,323
3,248
8,800
* £146,866 of tangible assets were incorrectly classified as Fixtures and fittings in 2021 and were reclassified to Leasehold improvements in
the prior year.
During the year, assets with a cost of £18,458 (2022: £493,000) were written off. The resulting loss was £8,455 (2022: £50,000).
14. RIGHT-OF-USE ASSETS AND LEASE LIABILITIES
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 April 2023 a lease was signed for new premises in London for the Alternative Banking division. The lease has a contractual
start date of 1 September 2023 and is a ten-year lease. The rent is subject to a rent review after five years.
In December 2023 we took on an office lease as part of our acquisition of Cobase (see note 26).
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Right-of-use assets
At 1 January
Additions
Additions in relation to business combination
Depreciation charge for the year
Foreign exchange translation
AT 31 DECEMBER
Lease liabilities
At 1 January
Additions
Additions in relation to business combination
Finance cost (note 7)
Payments in the year
Foreign exchange translation
AT 31 DECEMBER
Analysis:
Current
Non-current
TOTAL LEASE LIABILITIES
31 December 2023
£’000
31 December 2022
£’000
11,848
10,954
182
(1,939)
(151)
20,894
6,136
6,866
-
(1,154)
-
11,848
31 December 2023
£’000
31 December 2022
£’000
13,074
10,405
182
793
(1,572)
(162)
22,720
1,028
21,692
22,720
7,362
6,603
-
452
(1,343)
-
13,074
1,407
11,667
13,074
The total undiscounted payments committed to over the remaining useful life of the respective leases as of the end of 31
December 2023 amounted to £28,613,000.
Amounts recognised in the Consolidated Statement of Comprehensive Income
Depreciation charge on right-of-use assets (note 6)
Interest on lease liabilities (note 7)
Rental costs for short-term leases (note 6)
TOTAL
31 December 2023
£’000
31 December 2022
£’000
1,939
793
897
3,629
1,154
452
787
2,393
The rental costs for short-term leases amounting to £897,069 (2022: £786,931) relate to leases of less than one year for
premises for a number of the Group’s overseas offices.
132
133
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023
15. SUBSIDIARIES
16. DERIVATIVE FINANCIAL ASSETS AND FINANCIAL LIABILITIES
The Group’s subsidiaries as at 31 December 2023 are as follows:
Derivative financial assets not designated as hedging instruments
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Name
DIRECT HOLDING
Alpha FX Limited
Alpha Agency Solutions Ltd
Financial Transaction Services B.V.
INDIRECT HOLDING
Alpha FX Institutional Limited
Alpha Foreign Exchange (Canada) Limited
Alpha FX Netherlands Limited
Alpha FX Europe Limited
Alpha FX Italy Limited
Alpha FX Australia Pty Ltd
AGI Financial Pte. Ltd.
Registered addresses:
Country
of
incorporation
England1
England1
Netherlands6
England1
Canada2
England1
Malta3
England1
Australia4
Singapore5
Proportion of
ordinary
shares held
100%
100%
86.36%
100%*
100%*
100%*
100%
100%
100%
100%
Active
Non-trading
Active
Active
Active
Active
Active
Active
Active
Non-trading
1. Brunel Building, 2 Canalside Walk, London, UK, W2 1DG
2.
3.
181 Bay Street, Suite 4210, Toronto, ON, M5J 2T3
171, Old Bakery Street, Valletta VLT1455, Malta
4. c/o Intertrust Australia Pty Ltd, Suite 2, Level 25, 100 Miller Street, North Sydney, NSW 2060
5.
14 Robinson Road #12-01/02, Far East Finance Building, Singapore (048545)
6. Haaksbergweg 75, 1101BR Amsterdam
* As detailed in note 4, historically some of the employee equity shareholding on a number of the share schemes had been recognised as non-
controlling interest, with the remainder of ordinary shares in the subsidiary being held by Group. However after reviewing the IFRS 2 Share-Based
Payment standard and related guidance from the IFRIC, the Group has concluded that they should not have been recognised as non-controlling
interest and therefore the proportion of ordinary shares held by the Group in respect of these subsidiaries has been revised to 100%.
The principal activity of the Group and its subsidiary undertakings is the development of financial strategies and technologies
to 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 5. Shares in all indirect subsidiary holdings are held by Alpha FX
Limited. The accounting year-ends of all subsidiaries is 31 December 2023.
In December 2023 Alpha Europe S.A. was dissolved and transferred to a branch of Alpha FX Europe Limited.
In December 2023 86.36% of Financial Transaction Services B.V. was acquired as part of a business combination (note 26).
The assets and operations of Alpha FX Italy Limited were transferred to its own branch of Alpha FX Europe Limited in the year.
The entity is in the process of being dissolved.
Foreign currency forward and option contracts with
customers
Foreign currency forward and option contracts with
banking counterparties
31 December 2023
31 December 2022
Fair value
£’000
Notional principal
£’000
Fair value
£’000
Notional principal
£’000
103,975
12,686,128
116,515
16,521,973
3,043
830,319
10,194
4,787,695
Other foreign exchange forward contracts
-
-
229
16,592
107,018
13,516,447
126,938
21,326,260
Derivative financial assets designated as hedging instruments
31 December 2023
31 December 2022
Fair value
£’000
Notional principal
£’000
Fair value
£’000
Notional principal
£’000
Foreign currency forward contracts
156
3,913
Interest rate swap contracts
2,398
825,546
2,554
829,459
-
-
-
-
-
-
Total Derivative financial assets
31 December 2023
31 December 2022
Fair value
£’000
Notional principal
£’000
Fair value
£’000
Notional principal
£’000
109,572
14,345,906
126,938
21,326,260
31 December 2023
Fair value
£’000
31 December 2022
Fair value
£’000
95,203
14,369
109,572
99,119
27,819
126,938
Analysis:
Current
Non-current
TOTAL DERIVATIVE FINANCIAL ASSETS
134
135
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
16. DERIVATIVE FINANCIAL ASSETS AND FINANCIAL LIABILITIES [CONT.]
Items that will be reclassified to the Consolidated Statement of Comprehensive Income:
Derivative financial liabilities not designated as hedging instruments
Foreign currency forward and option contracts with
customers
Foreign currency forward and option contracts with
banking counterparties
31 December 2023
31 December 2022
Fair value
£’000
Notional principal
£’000
Fair value
£’000
Notional principal
£’000
37,584
7,334,032
47,706
6,164,718
2,559
5,354,982
1,736
5,711,465
Other foreign exchange forward contracts
67
33,090
-
-
40,210
12,722,104
49,442
11,876,183
Derivative financial liabilities designated as hedging instruments
31 December 2023
31 December 2022
Fair value
£’000
Notional principal
£’000
Fair value
£’000
Notional principal
£’000
-
-
-
-
-
-
286
353
639
21,648
205,000
226,648
Foreign currency forward contracts
Interest rate swap contracts
Total Derivative financial liabilities
Movement in year
Cash flow hedges
Gains/(losses) recognised on hedging instruments
Exchange differences arising on translation of foreign operations
Tax relating to items that may be reclassified
31 December 2023
£’000
31 December 2022
£’000
3,193
(679)
(798)
1,716
(639)
1,382
160
903
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
The interest rate swap contracts designated as hedging instruments relate to transactions entered into in 2022 and 2023 to
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 contracts commence between June and December 2023 with expiries between June 2025 and June 2026. 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 net treasury income. The hedge effectiveness is reassessed at each reporting date and all hedges
remained effective throughout 2023.
Foreign currency forward contracts
31 December 2023
31 December 2022
Fair value
£’000
Notional principal
£’000
Fair value
£’000
Notional principal
£’000
The forward contracts designated as hedging instruments relate to hedges entered into in December 2022 and February
2023 to fix the exchange rate of interest receivable denominated in dollars and euros. The contracts have monthly expiries
up to January 2024. The deferred gains/losses in comprehensive income will be reclassified within net treasury income
40,210
12,722,104
50,081
12,102,831
upon expiry of the contracts or if they no longer qualify for hedge accounting. The hedge effectiveness is reassessed at each
Analysis:
Current
Non-current
TOTAL DERIVATIVE FINANCIAL LIABILITIES
31 December 2023
Fair value
£’000
31 December 2022
Fair value
£’000
34,288
5,922
40,210
42,764
7,317
50,081
reporting date and all hedges remained effective throughout 2023.
17. FINANCIAL INSTRUMENTS
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.
136
137
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023
17. FINANCIAL INSTRUMENTS [CONT.]
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
There were no transfers between level 1 and 2 during the current or prior year. The fair value of all other financial assets and
counterparties are assessed daily on a net basis.
financial liabilities is approximate to their carrying value.
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
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.
31 December 2023
31 December 2022
2023
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
Derivatives not designated as hedging instruments (note 16)
Derivatives designated as hedging instruments (note 16)
TOTAL FAIR VALUE ASSETS
AMORTISED COST ASSETS
Other receivables excluding prepayments
Cash and cash equivalents
Fixed collateral
TOTAL AMORTISED COST ASSETS
TOTAL FINANCIAL ASSETS
£’000
107,018
2,554
109,572
4,538
197,941
8,810
211,289
320,861
Restated1
£’000
126,938
-
126,938
2,896
136,799
4,726
144,421
271,359
b) Financial liabilities per statement of financial position
31 December 2023
31 December 2022
FAIR VALUE LIABILITIES
Derivatives not designated as hedging instruments (note 16)
Derivatives designated as hedging instruments (note 16)
TOTAL FAIR VALUE LIABILITIES
OTHER PAYABLES MEASURED AT AMORTISED COST
Other payables and accruals
TOTAL OTHER PAYABLES
TOTAL FINANCIAL LIABILITIES
£’000
40,210
-
40,210
58,295
58,295
98,505
Restated1
£’000
49,442
639
50,081
75,971
75,971
126,052
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.
Gross
fair
value
£’000
147,916
(92,233)
Gross
fair
value
£’000
186,868
(154,248)
Variation
margin
offset
£’000
-
11,125
Variation
margin
offset
£’000
-
44,876
Amounts subject to enforceable netting arrangements
Fair
value
offset
£’000
(40,898)
40,898
Net derivative
financial
asset/(liability)
(Note 16)
£’000
107,018
(40,210)
Fixed
collateral
£’000
8,810
-
Amounts subject to enforceable netting arrangements
Fair
value
offset
£’000
(59,930)
59,930
Net derivative
financial
asset/(liability)
(Note 16)
£’000
126,938
(49,442)
Fixed
collateral
£’000
4,726
-
Derivative financial assets
Derivative financial liabilities
2022
Derivative financial assets
Derivative financial liabilities
18. 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, 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.
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.
1The prior period restatement is detailed further in note 4.
138
139
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023 FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
18. FINANCIAL RISK MANAGEMENT [CONT.]
The Group has sufficient cash resources to pay its debts and contractual liabilities as they fall due. Consequently, management
Objectives, policies and processes for managing and the methods used to measure risk [cont]
does not believe that the Group has a material exposure to liquidity risk.
1.
First Line is risk management: Primary responsibility for strategy, performance and risk management lies with the
Market risk
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.
Market risk is also inherent in Alpha’s business model, however this 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.
Credit risk
Interest rate 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”).
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 2023 the interest receivable on cash and cash equivalents was managed using derivative instruments to hedge interest rate
risk (note 16).
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 20.
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 fixed
rate currency hedges. The settlement of these forward foreign exchange contracts is expected to occur within the following
twelve months. Changes in the fair values of forward foreign exchange contracts are recognised directly in the Consolidated
Statement of Comprehensive Income.
Foreign currency risk – sensitivity analysis
The Group’s principal recurring foreign currency transactions are in Euros, US Dollar and Canadian Dollar. The table below shows
the impact on the Group’s operating profit and equity, of a 10% change in the exchange rate of the principal currencies, euro, US
dollar and Canadian dollar.
140
141
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023
18. FINANCIAL RISK MANAGEMENT [CONT.]
Foreign currency risk – sensitivity analysis [cont]
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
2023
£’000
6,570
(5,375)
6,403
(5,239)
448
(366)
2022
£’000
4,624
(3,784)
2,546
(2,083)
384
(314)
2023
£’000
4,827
(3,949)
1,229
(1,005)
327
(267)
2022
£’000
3,540
(2,897)
1,187
(971)
410
(335)
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 2023, the impact of a 10% weakening
of the pound on profit after tax would have been £3,789k, £4,416k and £409k (2022: £804k, £1,733k and £nil) for Euro, US dollar
and Canadian dollar respectively. Similarly, the impact of a 10% strengthening of the pound on profit after tax would have been
-£3,100k, -£3,613k and -£335k (2022: -£658k, -£1,418k and £nil) for Euro, US dollar and Canadian dollar respectively.
Exchange rates for financial year
EURO:
Average rate
Closing rate
US DOLLAR:
Average rate
Closing rate
CANADIAN DOLLAR:
Average rate
Closing rate
2023
1.1499
1.1539
1.2436
1.2747
1.6780
1.6810
2022
1.1730
1.1269
1.2369
1.2027
1.6080
1.6295
The impact of a change of 10% has been selected as this is considered reasonable given the current level of exchange rates
and the volatility observed both on a historical basis and market expectations for future movement.
Management of capital
The Group’s objectives when managing capital are to maximise shareholder value whilst safeguarding the Group’s ability
to continue as a going concern. The Group’s policy is to maintain a capital base and funding structure that retains creditor
and market confidence, provides flexibility for business development, ensures adherence to regulatory requirements, whilst
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.
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
19. OTHER RECEIVABLES
Other receivables
Prepayments
TOTAL OTHER RECEIVABLES
20. CASH
31 December 2023
31 December 2022
£’000
4,538
3,258
7,796
Restated1
£’000
2,896
2,437
5,333
Cash and cash equivalents comprise cash balances and deposits held at call with banks for which the Group has
immediate access.
Fixed collateral comprises cash held as collateral with banking counterparties for which the Group does not have
immediate access.
Cash balances included within derivative financial assets (see note 16 and 17) relate to the variation margin called by
banking counterparties regarding out of the money trades counterparties for which the Group does not have immediate
access.
Cash and cash equivalents
Variation margin called by counterparties (note 17)
Fixed collateral
TOTAL CASH
Cash at bank is made up of the following currency balances:
British pound
Euro
US Dollar
Canadian Dollar
Australian Dollar
Chinese Renminbi
Norwegian Krone
Other currencies
31 December 2023
£’000
31 December 2022
£’000
197,941
11,125
8,810
217,876
136,799
44,876
4,726
186,401
31 December 2023
£’000
31 December 2022
£’000
135,584
53,153
17,858
4,754
2,224
1,090
542
2,671
217,876
86,421
61,325
20,565
4,070
1,007
3,307
7,622
2,084
186,401
143
142
1The prior period restatement is detailed further in note 4.
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023
20. CASH [CONT.]
Share premium account
In the year ended 31 December 2023 the share premium account increased by £491,227 following the vesting of share option
schemes.
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, 2022 and 2023, are due to
In the year ended 31 December 2022 the share premium account increased by £823,771 following the vesting of the SAYE
cash flow movements and are shown in the Consolidated Statement of Cash Flows within cash flow from financing activities.
share scheme and £431,756 (restated) following the vesting of share option schemes. Further details on the restatement can
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
21. CAPITAL AND RESERVES
Share capital
AUTHORISED, ISSUED AND FULLY PAID
At 31 December 2023
At 31 December 2022
No.
£’000
No.
£’000
Ordinary shares of £0.002 each
43,321,813
87
42,196,554
84
Number of shares
AT 1 JANUARY 2022
Shares issued on vesting of share option schemes
AT 31 DECEMBER 2022
Shares issued on vesting of share option schemes
AT 31 DECEMBER 2023
Ordinary shares
40,964,225
1,232,329
42,196,554
1,125,259
43,321,813
The following movements of share capital occurred during the year ended 31 December 2023:
On 27 March 2023, the Company issued 1,125,259 new shares following the vesting of shares under the B, C and E Growth Share
Schemes, and the Institutional, Canada and Alpha Pay share schemes.
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.
be found in note 4.
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.
Redemption reserve
The redemption reserve of £(1,884,165) comprises the fair value of the consideration payable to the non-controlling interest of
Financial Transaction Services B.V. (Cobase) on the date that the agreement was entered into. The reserve is expected to be
utilised over a four-year period between 31 December 2025 and 31 December 2028, with 25% of the non-controlling interest
acquired each period over the four years. More details on the acquisition can be found in note 26.
Retained earnings
Represents accumulated profits attributable to equity owners of the parent less accumulated dividends.
Translation reserve
The translation reserve of £580,515 (2022: £1,260,398 restated) represents the foreign exchange differences arising from the
translation of the net investment in foreign entities.
22. NON-CONTROLLING INTERESTS
As detailed in note 4, historically some of the employee equity shareholding on a number of the share schemes had been
recognised as non-controlling interest. However after reviewing the IFRS 2 Share-Based Payment standard and related
guidance from the IFRIC, the Group has concluded that they should not have been recognised as non- controlling interest
and therefore non-controlling interest has subsequently been restated to £nil as at 31 December 2022.
Non-controlling interest as at 31 December 2023 is made up of Financial Transaction Services B.V. (“Cobase”) which was
acquired in December 2023. The NCI’s shareholding is 13.64%. Further information on the acquisition of Cobase is provided in
note 26.
144
145
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023 FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
20. NON-CONTROLLING INTEREST [CONT.]
24. RELATED PARTY TRANSACTIONS AND BALANCES
Below shows summarised financial information for Cobase, before intra-group eliminations.
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.
31 December 2023
31 December 2022
Subsidiaries
Revenue
Loss after taxation
Loss allocated to non-controlling interests
£’000
186
(241)
(33)
Restated1
£’000
-
-
-
The Parent Company of the Group is Alpha Group International plc. Note 15 provides information about the subsidiaries and
the holding company. Details of the ultimate controlling party can be found in note 27.
Transactions between the Group and its subsidiaries have been eliminated on consolidation and are not disclosed in this
note.
Key management personnel
31 December 2023
31 December 2022
The Group considers its key management personnel to be the Directors of Companies within the Group.
Assets
Non-current assets
Current assets
Liabilities
Current liabilities
NET ASSETS
23. OTHER PAYABLES
CURRENT:
Other payables
Other taxation and social security
Accruals
NON-CURRENT:
Provisions
TOTAL OTHER PAYABLES
£’000
3,880
1,391
(340)
4,931
Restated1
£’000
-
-
-
-
31 December 2023
31 December 2022
£’000
51,243
1,455
7,052
59,750
875
875
60,625
Restated1
£’000
70,272
1,369
5,699
77,340
222
222
77,562
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.
The compensation of the Directors of the Company, together with their shareholding, is included in the Remuneration
Committee report on pages 84.
Transactions with key management personnel
During the year, Alpha FX Limited traded gross foreign currency contracts with; M J Tillbrook £1,424,473 (2022: £2,291,400) and
M E Stuart £47,690 (2022: £30,853), on an arm’s length basis.
Other entities
During the year, the Group purchased goods and services from entities classified as related parties as follows:
− Services totalling £121,793 (2022: £391,128) on an arms-length basis from Klarify Group Limited, a multi-cloud and
cyber security specialist in which M J Tillbrook owned a 42% (2022: 42%) beneficial ownership.
− Services totalling £214,698 (2022: nil) on an arms-length basis from Assured Cyber Limited, a cyber insurance broker
in which M J Tillbrook owns a 30% beneficial ownership.
During the year, the Group traded gross foreign currency contracts with entities classified as related parties as follows:
− Gross foreign currency contracts of £4,168 (2022: £1,670) on an arms-length basis with Zip Cap Limited, a financial
services company in which M J Tillbrook owns 100% of the share capital.
25. SHARE-BASED PAYMENTS
Employees (including senior executives) of the Group receive remuneration in the form of share-based payments, whereby
employees render services as consideration for equity instruments (equity-settled transactions).
The Group recognised a total credit related to all the above equity-settled share-based payment transactions in the year
ended 31 December 2023 of £57,946. The share-based payment charge for the year ended 31 December 2022 has been
restated to a charge of £1,101,095, further details can be found in note 4.
1The prior period restatement is detailed further in note 4.
146
147
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
25. SHARE-BASED PAYMENTS [CONT.]
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.
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
In March 2023, 148 C Growth Shares were exercised in respect of the year ended 31 December 2022. As a result, 171,810
shares in Alpha Group International plc were issued as consideration in March 2023.
Following the revenue growth target for the year not being met for the C Growth Shares, the remaining C Growth Shares
lapsed. As a result, no shares in Alpha Group International plc will be issued as consideration for the lapsed C Growth Shares
in March 2024. Further, the year ended 31 December 2023 was the final year of the C Growth Shares scheme.
The share-based payment charge of the C Growth Shares in the year ended 31 December 2023 was a credit of £243,084
(2022: credit of £17,918).
assessed that should such an event occur, there would not be a material impact on the Group’s net assets or the result for
E Share Growth Scheme
the year.
B Growth Share Scheme
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.
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. Due to the impact of COVID-19,
the issuance of these shares had been deferred from March 2021 with all future issuances similarly deferred by a year. As
a result, 549,137 shares in Alpha Group International plc were issued as consideration in March 2023 and with a further
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.
88,015 shares to be issued to an ex-employee in March 2025 as part of a settlement agreement. This represents the final
Upon conversion, the number of ordinary shares in the Group an E Shareholder will receive is such number of ordinary shares
vesting of the B Growth Share Scheme.
C Growth Share Scheme
In October 2018, the Group adopted a C Growth Share Scheme, under which 863 C ordinary shares (“C Shares”) in Alpha FX
Limited (the “Company”) were issued to full-time employees of the Group (“C Share Growth Scheme”).
The C Shares confer no upfront economic rights to their holders and in particular holders of the C Shares 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.
The C Shares contain a put option, such that, when and to the extent vested, they can be converted into ordinary shares in
the 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 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 the Group or commits a performance breach (broadly conduct detrimental to the business and
reputation of the Group), the Group is entitled to buy back the relevant C Shares at cost.
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.
In March 2023, 185 E Growth Shares were exercised in respect of the year ended 31 December 2022. As a result, 161,064
shares in Alpha Group International plc were issued as consideration in March 2023.
Following the revenue growth target for the year not being met for the E Growth Shares, 185 E Growth Shares lapsed. As a
result, no shares in Alpha Group International plc will be issued as consideration for the lapsed E Growth Shares in March
2024.
The share-based payment charge of the E Growth Shares in the year ended 31 December 2023 was a credit of £258,792
(2022: £322,304 restated).
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 requires 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.
148
149
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023 25. SHARE-BASED PAYMENTS [CONT.]
F Growth Share Scheme [cont]
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.
Following the revenue growth target for the year not being met for the F Growth Shares, 82 F Growth Shares lapsed. Alpha
Group International plc exercised the call options to buy the shares back from the employees at the original subscription
price. As a result, no shares in Alpha Group International plc will be issued as consideration for the lapsed F Growth Shares in
March 2024.
The share-based payment charge of the F Growth Shares in the year ended 31 December 2023 was £201,111 (2022: £213,314
restated).
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 the Spain
corporate division) 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 the Spain corporate division) 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 the G and H Shares have vested.
In respect of the year ending 31 December 2022, the revenue targets were met for the G and H Shares, however the market
capitalisation of Alpha did not exceed the hurdle price of £740m. With respect to the year ending 31 December 2023, the
revenue targets for the G and H Shares were not met. Accordingly, no shares in Alpha Group International plc will be issued as
consideration in March 2024 in respect of years ending 31 December 2022 and 31 December 2023.
The share-based payment charge of the G and H Growth Shares in the year ended 31 December 2023 was £221,967 (2022:
£551,489 restated).
150
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Details of the outstanding shares in Alpha FX Limited in respect of the above schemes are as follows:
31 December 2023
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
-
-
-
-
-
301
-
(148)
(11)
142
602
-
(185)
(16)
401
361
-
-
(5)
356
360
265
-
-
-
-
-
-
360
265
31 December 2022
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 333 B shares that were exercised in March 2022 in respect of the ended 31 December 2021 and the shares in the Company will not be issued until
March 2023 and March 2025.
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)
25.0%
0.09%
3
£33.6m
25.0%
0.75%
5
45%-55%
0.10%
5
40%
2.3%
5
£186.6m
£300.0m
£740.0m
151
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
25. SHARE-BASED PAYMENTS [CONT.]
Alpha Pay
Alpha FX Institutional Limited
Alpha FX Institutional Limited was incorporated in 2018, and at 31 December 2023 the management team had share options
equivalent to 10.4% of the business.
With the initial share award, the 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
2021. At conversion, and in exchange for converting their shares into the Group, Alpha FX Limited’s shareholding over Alpha FX
Institutional Limited will commensurately increase.
In 2019 the Group adjusted the employee share ownership incentive scheme to include additional key employees. These
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 Alpha FX Institutional Limited, the Group further adjusted the employee share ownership
incentive scheme in March 2022 to include additional key employees. The shares are structured in a similar way to the shares
issued to previous employee shareholders of Alpha Institutional, 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.
In March 2023, employees exercised their options equivalent to 4.99% of the business in respect of the year ended 31
December 2022. As a result, 123,768 shares in the Company were issued as consideration.
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 2023, the Alpha Pay Participants will have the option to convert 25% of their holding of D Shares into Group
shares each year for 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 the option to convert 25% of their holding of D3 Shares into ordinary shares of the
Group each year for four years commencing from March 2024 (with the final option being exercisable in March 2027). The
D4 Shareholders will have the option to convert 25% of their holding of D4 Shares into Group Shares each year for four
years commencing from March 2025 (with the final option being 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 decrease and
the Group’s holding will commensurately increase.
Based on the share price of the Company of 1750p as at 31 December 2023, it is estimated that the Company will issue
121,823 shares as consideration for employees converting options equivalent to 5.01% of the business in respect of the year
In March 2023, employees exercised their option to convert share options equivalent to 3.7% of their holding in respect of
the year ended 31 December 2022. As a result, 111,085 shares in the Company were issued as consideration.
ended 31 December 2023.
The share-based payment charge in the year ended 31 December 2023 was £20,852 (2022: £31,906).
Based on the share price of the Company of 1750p as at 31 December 2023, it is estimated that the Company will issue
106,928 shares as consideration for employees converting options in respect of the year ended 31 December 2023.
Alpha Foreign Exchange (Canada) Limited
Alpha FX Netherlands Limited
In 2019 the Group announced the share ownership plan for Alpha Foreign Exchange (Canada) Limited in which management
owned options equivalent to 25% of the business. 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.
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.
Based on the share price of the Company of 1750p as at 31 December 2023, it is estimated that the Company will issue
21,379 shares as consideration for an employee converting 1.6% of their equity in respect of the year ended 31 December
In March 2023, an employee exercised his option to convert options equivalent to 4.5% in the business in respect of the year
2023.
ended 31 December 2022. As a result, 8,395 shares in the Company were issued as consideration.
Based on the share price of the Company of 1750p as at 31 December 2023, it is estimated that the Company will issue 5,593
shares as consideration for an employee converting options equivalent to 4.5% in the business in respect of the year ended
31 December 2023.
152
153
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023
25. SHARE-BASED PAYMENTS [CONT.]
The fair value of the net assets acquired is set out below:
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Bristol
Following the establishment of a new sales office in Bristol in 2022, in January 2023 the Group announced a new share
scheme to incentivise key personnel within the Bristol office. A new class of shares (“I Shares”) in Alpha FX Limited was
created.
The value of the I Shares will be linked to the performance of the Bristol Operation. The Bristol share ownership scheme is
structured in a similar way to the share schemes implemented for other FX risk management divisions in Canada and The
Netherlands. From March 2025, the Bristol Participants will have the option to convert 25% of their holding of I Shares
into ordinary shares of £0.002p each in the Company (“Ordinary Shares”) each year for four years (with the final option
being exercisable in March 2028). The shares exchanged will be valued with reference to an 8x multiple of underlying
profit after tax achieved by the Bristol operation.
At conversion, and in exchange for converting their I shares into shares in the Group, the Bristol Participants’ holding of I
Shares in Alpha FX Limited will commensurately decrease and the Group’s holding will commensurately increase.
26. BUSINESS COMBINATIONS
On 1 December 2023, Alpha Group International plc acquired 86.36% of Financial Transaction Services B.V., trading as
“Cobase”, a leading multibank connectivity platform. Cobase is an innovative, cloud-based provider of bank connectivity
technology that enables corporates to manage their banking relationships, accounts, and transaction activity via
one single interface. In doing so, the company unlocks significant operational and financial efficiencies, especially for
international businesses with multiple banking counterparties across the world. Alpha believes there are opportunities to
amplify one another’s growth by leveraging and sharing each other’s unique capabilities and experience.
The purchase price allocation (shown in the following table) has been prepared on a provisional basis in accordance with
IFRS 3 Business Combinations because of the acquisition completing one month prior to the year end and information
regarding the intangible assets is still being sought. As a result, the intangible asset, deferred tax and goodwill amounts
in the table below are provisional. If new information is obtained within one year of the acquisition date, about facts and
circumstances that existed at the acquisition date, identifies adjustments to the amounts that existed at the date of
acquisition, then the accounting for the acquisition will be revised.
The initial consideration for the acquisition was €9.6m (£8.3m) in cash, with the remaining stake to be acquired via a
performance-based earn-out between 2025 and 2028.
Transaction costs relating to professional fees and integration costs associated with the business combination in the
year ended 31 December 2023 were £486,633 and have been expensed within non-underlying items (note 6).
Intangible assets
Property, plant and equipment
Right-of-use-asset
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Lease liabilities
Dilapidation provision
Deferred tax liabilities
TOTAL IDENTIFIABLE NET ASSETS
NON-CONTROLLING INTEREST
Goodwill on the business combination
DISCHARGED BY:
Cash consideration
Book value
£’000
Fair value adjustments
£’000
Fair value
£’000
3,292
9
182
1,322
53
(1,354)
(182)
(63)
143
3,402
980
-
-
-
-
-
-
-
(245)
735
4,272
9
182
1,322
53
(1,354)
(182)
(63)
(102)
4,137
(564)
4,707
8,280
Goodwill of £4,707k reflects certain intangible assets that cannot be individually separated and reliably measured due to their
nature. These items include the value of expected synergies arising from the business combination and the experience and skill
of the acquired workforce. The fair value of the acquired software, brand name and customer relationships was identified and
included in intangible assets.
Included in the Consolidated Statement of Financial Position is redemption liability of £1,884,165. This represents the fair value of
the consideration payable to the non-controlling interest of the subsidiary Cobase on the date that the agreement was entered
into. 25% of the non-controlling interest is to be acquired each period over a four-year period between 31 December 2025 and 31
December 2028. The opposite entry has been recognised within redemption reserve in equity.
Cobase generated revenue of £186k and loss after tax of £241k in the one month from the acquisition date to 31 December 2023,
this is included in the Consolidated Statement of Comprehensive Income for the reporting period.
27. ULTIMATE CONTROLLING PARTY
The Directors believe that there is no ultimate controlling party of the Group.
154
155
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023 28. EVENTS AFTER THE REPORTING PERIOD
Following the third year of vesting of the Alpha FX Institutional Limited share scheme for the year ended 31 December
2023, the Company will be issuing 126,201 shares in March 2024.
Following the second year of vesting of the Alpha Foreign Exchange (Canada) Limited share scheme for the year ended 31
December 2023, the Company will be issuing 5,734 shares in March 2024.
Following the second year of the vesting for D1 and D2 Share scheme and the first year of vesting for the D3 Share scheme
for the year ended 31 December 2023, the Company will be issuing 80,544 shares in March 2024.
Following the first year of vesting of the Alpha FX Netherlands Limited share scheme for the year ended 31 December
2023, the Company will be issuing 22,148 shares in March 2024.
On 29 January 2024, the Group announced a share repurchase programme up to a value of £20m to purchase ordinary
shares of 0.2 pence each. The Ordinary Shares purchased will be held in treasury. As at 19 March 2024, 339,929 ordinary
shares of 0.2 pence each had been purchased for a consideration of £5.8m representing 0.8% per cent of the issued share
capital of the Group as at 19 March 2024. All shares purchased were held in Treasury.
On 29 February 2024, the Group entered into an interest rate swap for a notional amount of up to €100m to fix the rate of
interest receivable on Euro 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 EuroSTR, the difference between the
rates results in the Group receiving a fixed rate of interest. The contract commences in March 2024 and expires in March
2026 with a net interest rate receivable of 3%. Hedge accounting is applied in accordance with IFRS 9.
On 20 March the Group will announce changes to the Board of Directors with Dame Jayne-Anne Gadhia appointed to
the board as Chair Designate, effective from the Company’s AGM on 01 May 2024, subject to the completion of normal
regulatory due diligence by the Company’s Nominated Adviser. In line with this, Clive Kahn, who has been Chair of the
Company since 2016, will therefore not be seeking re-election at the Company’s 2025 AGM, with Jayne-Anne remaining
Chair Designate until the conclusion of Clive’s term as Chair.
Lisa Gordon, Non-Executive Director of the Company will also step down from the Board by not putting herself up for
re-election at the Company’s AGM on 01 May 2024. A process to recruit an additional Non-Executive Director will be
undertaken in the coming months.
FINANCIAL STATEMENTS COMPANY STATEMENT OF FINANCIAL POSITION
Company Statement of Financial Position
As at 31 December 2023
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
As at
31 December 2023
As at
31 December 2022
Note
£’000
Restated1
£’000
As at
1 January 2022
Restated1
£’000
5
6
9
7
64,574
64,574
6,020
75
6,095
70,669
87
52,566
4
667
17,204
70,528
141
141
70,669
54,568
54,568
10,033
51
10,084
64,652
84
52,075
4
667
11,815
64,645
7
7
53,033
53,033
10,483
249
10,732
63,765
82
50,819
4
667
12,173
63,745
20
20
64,652
63,765
The Company reported a profit for the year ended 31 December 2023 of £11,814,708 (2022: £3,351,205).
The financial statements of Alpha Group International plc were approved by the Board of Directors on
19 March 2024 and signed on its behalf by:
M J Tillbrook
Director
T Powell
Director
156
157
1The prior period restatement is detailed further in note 4.
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023 Company Statement of Changes in Equity
For the year ended 31 December 2023
Notes to the Company Financial Statements
For the year ended 31 December 2023
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
£’000
£’000
£’000
£’000
£’000
£’000
Reduced Disclosure Framework (“FRS 101”).
FINANCIAL STATEMENTS NOTES TO THE COMPANY FINANCIAL STATEMENTS
BALANCE AT 1 JANUARY 2022
(as previously reported)
Prior period adjustment1
BALANCE AT 1 JANUARY 2022 (restated1)
Profit for the year
Transactions with owners
Shares issued on vesting of share option scheme
(restated )
Shares issued in relation to SAYE share scheme
Share-based payments (restated1)
Dividends paid
82
-
82
-
2
-
-
-
50,783
36
50,819
-
432
824
-
-
BALANCE AT 31 DECEMBER 2022 (restated1)
84
52,075
Profit for the year
Transactions with owners
Shares issued on vesting of share option scheme
Share-based payments
Dividends paid
-
3
-
-
-
491
-
-
BALANCE AT 31 DECEMBER 2023
87
52,566
4
-
4
-
-
-
-
-
4
-
-
-
-
4
667
11,609
63,145
-
667
564
600
12,173
63,745
-
-
-
-
-
667
-
-
-
-
667
3,351
3,351
-
-
1,101
434
824
1,101
(4,810)
(4,810)
11,815
11,815
-
(58)
(6,368)
17,204
64,645
11,815
494
(58)
(6,368)
70,528
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 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. MATERIAL ACCOUNTING POLICIES
The material 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 2023 of
£11,814,708 (2022: £3,351,205).
The auditor’s remuneration for audit and other services is disclosed in note 6 to the Consolidated Financial Statements.
1The prior period restatement is detailed further in note 4.
158
159
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023
4. PRIOR PERIOD ADJUSTMENT
As detailed in note 4 to the Consolidated Financial Statements, a number of Group employees receive remuneration in the
form of share-based payments, whereby employees render services as consideration for equity instruments (equity settled
transactions).
Historically, the Company has recognised an investment in subsidiary and a credit to retained earnings for the share-based
payment charge. On vesting of the share options, share premium and a corresponding intercompany receivable were also
recognised on issue of shares by the Company.
After reviewing IFRS 2, the Group concluded that on vesting of the share options, share premium had been incorrectly
recognised and other receivables were overstated as there was no arrangement for the subsidiary to reimburse the company.
In addition, the previous years’ share-based payment charge was also found to be insufficient due to a miscalculation.
Accordingly, the Company has restated its financial statements in accordance with IAS 8 ‘Accounting Policies, Changes in
Accounting Estimates and Errors’.
The correction of these entries results in an increase to investments, an increase to retained earnings and a decrease to
share premium. The effect of these adjustments is shown by restating each of the prior year affected financial statement line
items as follows:
As previously
reported
31 December 2022
Restatement
As at
1 January 2022
Restatement
Year ended
31 December 2022
Restatement
Cumulative to
31 December 2022
Restated
31 December 2022
Retained earnings
Share premium account
Investments
Other receivables
£’000
(10,779)
(53,513)
53,076
11,927
£’000
(564)
(36)
635
(35)
£’000
(472)
1,474
857
(1,859)
£’000
(1,036)
1,438
1,492
(1,894)
£’000
(11,815)
(52,075)
54,568
10,033
These movements did not result in any impact on cash.
5. INVESTMENTS IN SUBSIDIARY UNDERTAKINGS
FINANCIAL STATEMENTS NOTES TO THE COMPANY FINANCIAL STATEMENTS
The additional investments in the year represent the acquisition of Financial Transactions Services B.V. (Cobase) in the
year (see note 26 to the Consolidated Financial Statements), 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.
6. TRADE AND OTHER RECEIVABLES
Amount owed by Group undertaking
Prepayments
31 December 2023
31 December 2022
£’000
6,018
2
6,020
Restated1
£’000
10,033
-
10,033
During the year, no impairment provisions have been made against any class of debtor.
7. TRADE AND OTHER PAYABLES
Accruals
8. EMPLOYEE COSTS
31 December 2023
£’000
31 December 2022
£’000
141
141
7
7
Other than the Directors, the Company did not have any employees during the year (2022: nil). All staff are employees of the
subsidiary undertaking.
9. SHARE CAPITAL
The Company’s investment in the share capital of Alpha FX Limited and details of the subsidiary companies are disclosed in
note 15 to the Consolidated Financial Statements.
Details of the share capital of the Company are included in note 21 to the Consolidated Financial Statements.
Balance at 1 January
Share for share exchange
On business combinations
BALANCE AT 31 DECEMBER
31 December 2023
31 December 2022
£’000
54,568
437
9,569
64,574
Restated1
£’000
53,033
1,535
-
54,568
1The prior period restatement is detailed further in note 4.
1The prior period restatement is detailed further in note 4.
160
161
ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023
Shareholder Information
REGISTERED OFFICE
Brunel Building
2 Canalside Walk
London W2 1DG
COMPANY ADVISER & CORPORATE BROKER
Liberum Capital Limited
Ropemaker Place, Level 12
25 Ropemaker Street
London EC2Y 9LY
CORPORATE BROKER
Peel Hunt LLP
100 Liverpool Street
London EC2M 2AT
SHARE REGISTRARS
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA
FINANCIAL PR & ADVISORS
Alma Strategic Communications
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
Linklaters LLP
One Silk Street
London EC2Y 8HQ
This document has been printed on Splendorgel, a paper sourced from well man managed, responsible FSC® certified forests
and other controlled sources. The paper has been balanced with the World Land Trust, an international conservation charity,
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162
CBP024244ALPHA GROUP INTERNATIONAL PLC REPORT AND ACCOUNTS FY2023 ALPHA GROUP INTERNATIONAL PLC
Brunel Building
2 Canalside Walk
London W2 1DG
www.alphagroup.com