Trading Update
21/01/2025 07:00
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RNS Number : 0187U Alpha Group International PLC 21 January 2025
21 January 2025
Alpha Group International plc
("Alpha" or the "Group")
Trading Update
Alpha Group International plc, a global provider of high-tech, high-touch
financial solutions to corporates and institutions, today provides a trading
update for FY 2024.
Key Highlights (unaudited)
· Revenue from underlying activities up 23% to c. £135m (FY 2023: £110m)
· Total Income of c. £221m (2023: £186m), growth of c.18%, including income
from interest ("net treasury income") on client and own balances of c. £85m
(FY 2023: £76m)
· Underlying profit before tax and profit margin in line with expectations
following continued investment across the Group
· Strong cash and liquidity position with adjusted net cash increasing by nearly
£40m to c. £217m (FY 2023: £179m) after £30m of share buybacks
· Inclusion in the FTSE 250 in June, following a successful listing on the
Premium Segment of the Main Market in May 2024
· Board transition completed as planned, with Dame Jayne-Anne Gadhia assuming
role of Non-Executive Chair on 1 November 2024 and Clive Kahn as CEO on 1
January 2025. Further NED recruitment progressing well, to augment Board.
Overview
The Group performed strongly in 2024, with revenue growth of 23% despite a
continuing difficult economic backdrop. Pleasingly, the growth was delivered
across the business with both Corporate and Institutional divisions up by c.
20% year on year, driven by increasing contributions from overseas offices and
new product offerings. Cobase also contributed strongly in its first year with
the Group, following its acquisition in December 2023. H2's revenue
performance was aided by a gradual market recovery and a more normalised
seasonal pattern of activity in the Corporate market.
The interest rate environment throughout 2024 was similar to the previous
year, and client balances continued to grow, thereby delivering record levels
of net treasury income, profit, and cash. Underlying profit before tax is
expected to be in line with expectations, notwithstanding the cost of
investments in Cobase, increased operational headcount and further investment
in technology across the Group, all of which will support future growth.
Balance sheet strength increased throughout the year, with year-end net cash
increasing by nearly £40m to £217m. This increase in cash balance was
fuelled by strong operating profit and c. £85m net treasury income, primarily
from client balances. It was also achieved despite outflows from two separate
£20m buyback programmes, of which £30m was completed by year-end.
The Group benefited from its entrepreneurial, client-focused team culture, and
increasing diversity of products, client base and geographical reach, enabling
it to drive strong top-line growth despite a challenging macro-economic
environment, particularly within the Institutional division. That environment
is likely to remain challenging in 2025, although the divergence in monetary
policies globally should increase FX volatility and therefore increase demand
for effective FX risk management within Corporate and Institutional markets as
organisations look to plan ahead and review their approach to FX and treasury.
The Board remains confident in the outlook for the year ahead and in the
broader strategy to take advantage of the vast growth opportunity across the
Group. Each of Alpha's offices is still barely scratching the surface of its
addressable markets, and the Group has entered 2025 with more products and
stronger capabilities to support clients than ever before. The full-year
results statement for 2024 will be published week commencing 17 March 2025.
Reporting
As highlighted at the half-year, FY24 results will be reported for two key
markets: the Corporate market and the Institutional market. This move from a
product-centric reporting focus (FX risk management and alternative banking)
to a client-centric reporting focus (Corporates and Institutions) has been
undertaken to align with Alpha's revised organisational structure.
Corporate
Throughout 2024 the Corporate division continued to adapt to the more
challenging macroeconomic conditions by supporting clients with their FX
hedging strategies and decisions while maintaining a disciplined approach to
credit risk. Corporate revenues grew by 20% to c. £64m (£53m), with client
numbers increasing by 16% to 974 (2023: 838).
In 2023, investments were made in all seven corporate offices to ensure they
had the right structure and sufficient resources in place. It has been
pleasing to see the benefits of these investments bearing fruit in 2024. The
UK office returned to growth in 2024 following an investment in rebuilding the
talent and experience in the team, having been impacted by the necessary
exporting of talent to launch the overseas offices in the prior year. UK
revenue growth in 2024 was c. 7% year on year, with momentum building in the
second half.
All overseas offices showed excellent YoY growth except Canada, which was
flat. A new Canadian leadership team was installed in late 2023. Canada began
to reflect the benefits of this change in 2024, with revenues growing
sequentially in H2 over H1, giving confidence that the right structure is in
place to return to growth in 2025. The collective growth rate of Alpha's
remaining overseas offices meanwhile was nearly 60%, highlighting the merit of
the Group's global expansion strategy.
Institutional
Institutional 2024 revenues grew by c. 20% to c. £69m (2023: £57m). This
strong performance is even more pleasing in the context of the wider
institutional business environment, with deal activity in private capital
markets remaining significantly below historical norms, largely as a result of
relatively high interest rates. Equally, it is important to remember that this
same interest rate environment has also helped to generate over £85m in net
treasury income, providing somewhat of a natural hedge against the suppressed
underlying client activity.
Alpha's growing product portfolio, strong demand for these products, and the
team's cross-selling capabilities were key drivers in this outperformance.
· At a divisional level, the Institutional FXRM team delivered another strong
performance. Revenue increased 17% in the period, with client numbers
increasing 33% to 311 (December 2023: 233).
· Alternative Banking revenues increased by 20%, and account numbers increased
to over 7,100 (2023: 6,467) despite the subdued levels of deal activity within
the market and the knock-on effect this had on the need for accounts.
· The Fund Finance team continues to see strong interest in its service and is
winning increasingly larger value mandates, which has resulted in revenues
increasing by over 130%.
Cobase
Momentum continues to build in Cobase, acquired in December 2023. Cobase
operates a SaaS-based subscription fee model, and on a proforma basis, client
numbers and revenues increased by 59% and 70% respectively in the year to 214
and €3m (2023: €2m). This growth in its first full year of ownership
validates the acquisition rationale and supports confidence in Cobase's
ability to make an increasingly meaningful contribution over time as it
continues to integrate with the wider group.
Net Treasury Income from Client Balances
Average client balances grew to £2.3bn in Q4 (Q4 2023: £2.1bn). This
increase is linked to the growth in account numbers. Interest rates received
on these balances averaged 3.5% for the quarter. On an annualised basis,
client balances averaged £2.1bn (2023: £1.9bn) with an average interest rate
of 3.8% (2023: 3.6%), contributing to c. £85m in net treasury income in 2024
(2023: £76m). Included within this £85m figure is also circa £1m of net
interest income generated on client margins ('NTI - own').
Clive Kahn, CEO, commented:
"I am pleased to start my tenure as CEO by confirming strong growth and an
impressive result, particularly given the challenging macro-economic backdrop.
The fact that Alpha has produced such levels of growth in challenging economic
times is the greatest accolade to the strength of our model and team,
particularly with the strong cash generation aided by the continuing
high-interest rate environment. The Group's focus will be to build on the
strong foundations already established, by maintaining investment in
innovation to scale the business even further, whilst continuing to deliver
high returns for shareholders."
Enquiries:
Alpha Group International plc Via Alma Strategic Communications
Clive Kahn, CEO
Tim Powell, CFO
Alma Strategic Communications +44 (0) 20 3405 0205
(Financial Public Relations)
Josh Royston
Andy Bryant
Kieran Breheny
Louisa El-Ahwal
Notes to editors
Alpha is a global provider of high-tech, high-touch financial solutions to
corporates and institutions. Working with clients across 50+ countries,
we blend intelligent human capabilities with new technologies to provide an
enhanced alternative to traditional banking services, with solutions covering:
FX risk management, global accounts, mass payments, fund finance, and cash
management.
Key to our success is our team - close to 500 people based across eleven
global offices, brought together by a high-performance culture and a
partnership structure that empowers them to act as owners of our business.
Despite being an established business listed on the London Stock Exchange, we
remain relentlessly focused on maintaining the same level of operational
agility and client focus we had when we first started in 2009. This dynamic,
combined with the passion of our people, has enabled us to make a substantial
and enduring difference to our clients, and deliver a growth story to match.
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