REG - Amicorp FS (UK) PLC - Interim Results
12/09/2024 07:00
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RNS Number : 8502D Amicorp FS (UK) PLC 12 September 2024
12 September 2024
Amicorp FS (UK) Plc
('AMIF', the 'Company' or the 'Group')
Interim Results
Strategic focus on organic growth investments beginning to yield positive
momentum
Amicorp FS (UK) Plc, the international specialist fund services group, is
pleased to report its interim results for the six months ended 30 June 2024
('H1-2024' or the 'Period'). The Board remains optimistic about the Group's
ability to sustain this performance level into H2-2024.
H1-2024 Financial Highlights
· Total revenue increased by 2.3% to US$7.2 million (H1-2023: US$7.1 million).
This growth was largely driven by the US$234k (11%) increase in revenue
within the Business Process Outsourcing ('BPO') division and the US$291k (43%)
growth in revenue in the Governance and Compliance ('G&C') services
division
· Gross profit of US$4.8 million (H1-2023: US$4.8 million) is equivalent to a
66.1% margin (H1-2023: 68.1%)
· Adjusted EBITDA of US$1.0 million (H1-2023: US$2.4 million, before offsetting
the one-time IPO expenses of US$1.2 million)
· EBITDA of US$1.0 million (H1-2023: US$1.2 million) represents a 14.0% margin
(H1-2023: 17.2%)
H1-2024 Operational Highlights
· The number of funds increased to 508 (H1-2023: 463), driven by 46% growth in
new wins to 57 (H1-2023: 39)
· Opening of Kazakhstan office in mid-2024 following receipt of regulatory
approval
· Ongoing application process for a fund administration license in the Dubai
International Financial Centre ('DIFC')
· Successful launch of AMI-GO in March 2024, as the new platform developed
in-house that provides fund managers with a centralised source of information
about their funds and investors
· Launch of an online Anti-Money Laundering / Countering the Financing of
Terrorism ('AML/CFT') e-learning tool and an AML/CFT framework documentation
service, as the new service offering under the G&C services division
Commenting on the Interim Results, Toine Knipping, Non-Executive Chairman of
AMIF, said:
"As we continue to navigate the post-IPO landscape, I am pleased to report
that AMIF's strategic focus on investment in organic growth is yielding early
positive returns evidenced by growth in both new wins and revenue in H1-2024,
further bolstered by 34 additional new wins in early H2. These are a
testament to the strength of our business model and the effectiveness of our
strategy, which is centred on delivering sustainable value to our
stakeholders.
"The diversification of our client base and services, coupled with our
extensive knowledge of the regulatory landscapes across various regions, has
been instrumental in driving this growth. Our Governance and Compliance
services division, in particular, has shown consistent revenue growth
year-on-year, underscoring our ability to capture market share amidst
increasing demand for outsourced services.
"Looking ahead, we remain committed to furthering our investment in
operational excellence and sales network in strategic locations, ensuring that
we can continue to meet the evolving needs of our clients while driving higher
operating margins. Our strategic approach, supported by a capital-light
business model, positions AMIF as a key player in the fragmented fund services
market, and we are confident in our ability to maintain this momentum as we
capitalise on the significant growth opportunities that lie ahead."
For further information please contact:
Amicorp FS (UK) Plc Via Burson Buchanan
Toine Knipping, Non-Executive Chairman
Chi Kin Lai, Chief Executive Officer
Tat Cheung (Stephen) Wong, Chief Financial Officer
Zeus (Broker) Tel: +44 (0) 20 3829 5000
Martin Green / Louisa Waddell (Investment Banking) www.zeuscapital.co.uk (http://www.zeuscapital.co.uk/)
Benjamin Robertson (Corporate Broking)
Bowsprit Partners Limited (Financial Adviser) Tel: +44 (0) 20 3883 4430
John Treacy www.bowspritpartners.com (http://www.bowspritpartners.com/)
Luis Brime
Media enquiries: Tel: + 44 (0) 20 7466 5000
Burson Buchanan (Financial Communications) AmicorpFS@buchanan.uk.com (mailto:AmicorpFS@buchanan.uk.com)
Simon Compton www.bursonbuchanan.com
Verity Parker
Notes to Editors
AMIF is an international specialist fund services group that works with a
broad mix of clients including institutional investors, fund managers (private
equity, venture capital and hedge funds) as well as family offices to provide
a suite of specialist services across global markets. AMIF provides local and
global expertise to over 500 funds.
AMIF provides a comprehensive and tailored range of services which are all
underpinned by market-recognised technology solutions that support clients
from a single point of contact.
These include:
· Fund Administration and Investor Services: Fund accounting, fund
administration, in-house NAV calculation, investor services including Register
& Transfer Agency services, booking of subscriptions & redemptions,
audit liaison/support, real time oversight over investment performance.
· Governance and Compliance Services: FATCA and CRS reporting services,
Fiduciary, Anti-Money Laundering (AML) officer services in compliance with
international rules and regulations including administrative support to the
Board and Committees of the Board.
· BPO Services: Simplifying accounting and administration services
through automated accounting processes and providing management insight into
business operations through regular and consistent management reporting.
For further information please visit www.amicorp-funds.com/chairmans-welcome/
(http://www.amicorp-funds.com/chairmans-welcome/)
Chief Executive Officer's Report
Operational and Strategic Review
Fund Administration
Client Base
H1-2024 H1-2023 FY-2023
Number of funds at start of Period/year 501 444 444
New funds 57 39 104
Funds terminated(*) (50) (20) (47)
Number of funds at Period/year end 508 463 501
(*)Approximately half of the funds terminated in H1-2024 are a result of the
Group's initiative to clean-up non-revenue generating launching funds, in an
attempt to refocus its pipeline.
In the last six months the number of funds has grown organically at an
annualised rate of 2.8% from 501 on 1 January 2024 to 508 on 30 June 2024.
While the 46% growth in number of new wins is in line with management's
expectation arising from the investment in the Group's salesforce, the Group
experienced an increased level of terminations in H1-2024 arising from the
following:
· Withdrawal of investors' commitment or investment owing to unfavourable market
conditions;
· Voluntary closure of funds due to restructuring or changes in investment
strategy; and
· Clean-up of non-revenue generating launching funds which no longer seek to
fund-raise.
It is also important to note that a major portion of recurring income from
fund administration services is only realised upon successful fund launch.
The timing of fund launch is influenced by external factors like fund
raising capability of fund managers, approval process of relevant authorities,
economic conditions and market sentiment. As a result, the number of active
funds as of 30 June 2024 remained flat as compared to prior period, reaching
299 out of 508 (H1-2023: 297).
The Group continues its focus on expanding service offerings to assist with
additional demands within its client base and to capture potential revenue
increases.
Market Expansion
In view of maximising the Group's organic growth, AMIF has also actively
expanded its geographic presence in both developed and emerging markets, as
follows:
Kazakhstan
In mid-2024, Amicorp Fund Services (AIFC) Limited has had its fund
administration license approved by the Astana International Financial Centre
('AIFC'), Kazakhstan's leading financial hub, making it the first provider to
be awarded a license in this important jurisdiction. Kazakhstan is
strategically positioned at the centre of the New Silk Road investment
corridor that links Asia and Europe and one that has seen a significant rise
in foreign direct investments. The majority of goods currently exported from
China and Central Asia to Europe go through Kazakhstan.
The strong investment flows make the AIFC an increasingly important hub for
financial markets across Central Asia. It also offers attractive investment
incentives and has a strong regulatory framework that aligns with
international standards, making it a highly effective and secure platform to
create and build fund structures for a wide range of investment needs. Those
are expected to include real estate and private equity investment funds that
focus on the infrastructure opportunities being established across Kazakhstan
and the wider Central Asia region; funds that invest in venture capital that
are benefitting from an uplift in technological innovation and are being
supported by various government initiatives in the local market at the moment;
funds that invest in alternative asset classes such as equities, fixed income
instruments, commodities or other liquid assets, and funds that provide
efficient and flexible vehicles to support specific wealth management plans.
UAE
Among the Gulf Cooperation Council ('GCC') and UAE, the Dubai International
Financial Centre ('DIFC') has become one of the major financial centres in the
region where global family offices, asset managers and institutional investors
from Europe and Asia have a significant presence. The Group's application
process for the fund administration license in DIFC has been ongoing. A
Category 4 license, when granted, would allow for the offering of fund
administration services to DIFC established funds. The Group has been
actively working with local advisors to adhere to the process of the
authority, expecting to obtain the regulatory approval in the next six to nine
months.
Investment in IT
The Group has always been committed to rolling out automated and innovative
digital solutions that deliver greater operational and cost-saving
efficiencies for fund managers, and equip them with the data and insights they
need to be compliant and make better informed decisions on their investments.
AMI-GO
AMI-GO was launched in March 2024, as a cloud-based onboarding platform
developed in-house which streamlines the onboarding of investors for fund
managers, ensures key information is more accessible, accurate and secure, and
better connects the people that matter when it comes to administrating their
fund. This new platform also provides fund managers with a centralised
source of information about their funds and their investors, allowing them to
retrieve and upload financial, corporate and legal documents, such as
subscription forms, source of fund declarations and KYC and/or AML records.
NAV Automation Process
The Group continued its NAV automation process within existing IT systems, as
the enhancement of system capability and use of advanced technology play a
crucial role to the operational and financial success of the Group. During
H1-2024, AMIF completed projects such as automated trade upload with key
brokers, automatic generation of investor deliverables and the migration of
hosting server of its fund administration system. Although these
achievements might not create a visible functionality for the clients, they
are seen as important stepping stones in driving efficiency and reducing the
risk of human errors.
Outlook for Fund Administration - H2-2024
In the period from 1 July 2024 to 31 August 2024, the Group has continued to
grow the number of funds under administration with a total of 34 new wins at
the start of H2-2024, and the number of new wins in H2 is expected to outweigh
the number achieved in H1, based on historical trends.
Alongside its continuous expansion of its salesforce in strategic locations,
AMIF has been taking a proactive marketing approach by investing in
self-organised networking events and participating in third-party conferences
to strengthen its market presence, expand the Group's reach to new prospects
and collaborate with complementary service providers such as legal firms,
professional accountants and tax advisors. Such initiatives are expected to
continue in H2-2024.
The Group implements a rigorous process for the regular monitoring and
assessment of its sales team to ensure that salespersons consistently achieve
their targets and maintain successful performance. This process includes
ongoing evaluations of sales activities, deal flows, and overall
effectiveness. The sales team receives continuous feedback and guidance from
management to help them meet their goals and enhance their success.
Following the successful launch of AMI-GO, the Group has already put in place
a plan for the second and third phase of development which aims to enhance its
features towards support of subsequent investor transactions (such as
switching, transfer and redemption), ongoing review and monitoring, as well as
extension of dashboards and reporting capabilities. The ultimate goal is to
consolidate all these desired functionalities into AMI-GO as the centralised
platform, in order to maximise user experience.
With objectives to further automate mundane tasks, eliminate likelihood of
human error, increase operational efficiency and achieve cost-saving, the
Group has lined up multiple IT projects on existing IT infrastructure and
continued to prioritise those around financial statement preparation,
automated data feed, system integration and streamlining of workflows which
are expected to improve operational efficiency.
Governance and Compliance services
The Group actively pursued the expansion of the G&C services segment to
reach 455 mandates in H1-2024 (H1-2023: 391), which primarily include the
engagements for Anti-Money Laundering Compliance Officer ('AMLCO'), Money
Laundering Reporting Officer ('MLRO'), Deputy Money Laundering Reporting
Officer ('DMLRO') and Directorship services. These new mandates were secured
with a combined effort in cross-selling from existing customers and securing
new mandates from new clients.
A portion of IPO proceeds were anticipated for the development of new product
and service offering under the G&C services, as follows:
In March 2024, the Group successfully launched an online AML/CFT e-learning
tool, targeting all the directors, officers and employees who are associated
with a Cayman Islands fund or investment management company, pursuant to a
recent guidance note published by the Cayman Islands Monetary Authority
('CIMA'). The tool could be subscribed to as an additional offering under
the Group's G&C business.
In parallel, the Group also invested in the required infrastructure to offer a
brand-new AML/CFT framework documentation service, which was rolled out in
April 2024. With this offering, the Group assists its Cayman Islands
domiciled fund and fund management company clients to prepare an AML/CFT
policy manual which is fully compliant with the latest CIMA regulation.
Outlook for Governance and Compliance services - H2-2024
As the Group moves into the second half of 2024, there is a strategic emphasis
on expanding the market presence of its newly launched online AML/CFT
e-learning tool and the AML/CFT framework documentation service. With these
offerings being closely aligned with the recent mandates issued by CIMA, the
Group recognises the importance of heightened marketing outreach. Efforts
will focus on educating clients and prospects about the necessity of these
tools for compliance, and emphasising their seamless integration into existing
AML processes.
In addition, the Group intends to capitalise on its established expertise in
G&C services by expanding its footprint in the UAE, particularly in Dubai
and Abu Dhabi. Recognising the region's growing prominence as a financial
hub, the Group sees significant potential in offering tailored compliance and
risk officer services to local funds and fund managers. These services will
be positioned as critical enablers for maintaining compliance with both local
and international regulations, offering UAE-based clients the assurance that
their operations meet the highest standards of regulatory oversight.
The Group is targeting enhancing its client engagement through regular board
and AML officer meetings. These sessions will serve not only as platforms for
compliance updates but also as opportunities to introduce the latest
regulatory developments and discuss their implications for fund operations.
During these interactions, the designated team will actively listen to
client feedback to identify emerging needs and explore how its service
offerings can be further tailored to meet those demands. This proactive
approach aims to deepen client relationships and ensure that the Group remains
a trusted partner in navigating the increasingly complex regulatory landscape.
Business Process Outsourcing services
Alongside its intragroup outsourcing agreement to provide accounting and
administration services to the clients of Amicorp Group, the Company boasts a
well-equipped corporate services infrastructure in Luxembourg, positioning
itself as a reliable one-stop solution for comprehensive fund structure
formation and ongoing administrative support. The sales team is specifically
directed to capitalise on opportunities in Luxembourg that combine both fund
administration and corporate services.
In addition, the Group positions itself as a trusted strategic partner in the
global investment eco-system, which does not only include investment funds,
but also investors, fund and asset managers and investee companies. These
customer groups, which rely on outsourcing as a strategic approach to enhance
their own competitive advantage and achieve long-term growth objectives, drive
the demands for customised back-office support services such as chief
financial officer ('CFO') and CFO-assist services, investor reporting,
portfolio consolidation and data analysis.
In H1-2024, the Group's effort in the promotion of these back-office support
services began to materialise, by securing new mandates on appointment as CFO
and finance officer for fund managers based in Dubai and Abu Dhabi. The
Group seeks to achieve growth with these clients, by assigning named
professionals who assist them with strategic planning and operational
oversight, including financial planning, analysis, reporting, budgeting, cash
management, and treasury planning.
Outlook for Business Process Outsourcing services - H2-2024
As the Group enters the second half of 2024, the Business Process Outsourcing
division is poised for growth, driven by the successful acquisition of new
contracts on the CFO and CFO-assist services from key venture capital focused
managers across the middle east region. These contracts, secured through our
newly developed service offerings focusing on services to the fund manager
universe, cover finance function outsourcing, investor reporting, finance
officer offerings, portfolio administration, back-office administration and
pre and post due diligence support. These services were developed to meet
the evolving needs of businesses in an increasingly digitalised environment.
With these new contracts, AMIF anticipates a marked increase in new wins and
market share, reinforcing the Group's position as a leader in the BPO sector.
Use of IPO proceeds
The table below shows an update of use of IPO proceeds:
Anticipated use of proceeds Update - FY23 Current update - H1-2024
IT expenses related to automation process, including licensing fee and US$90k deployed towards development of digital onboarding portal and NAV US$139k further deployed towards development of digital onboarding portal and
consultancy fee (US$1 million) automation NAV automation
Depositary lite license in Luxembourg (US$1 million) Demerger completed, creating the condition to start the licensing application No change
of depositary lite license
Expansion of Governance and Compliance services (US$1 million) US$114k deployed towards expansion of team and development of ESG services US$227k deployed towards expansion of team, development of an online AML/CFT
e-learning tool and an AML/CFT framework documentation service
Setting up licensed fund administration in strategic markets (US$1 million) The Republic of Ireland was researched as a possible new jurisdiction but US$80k deployed towards opening of Kazakhstan office; License application
after careful appraisals the Board decided to redirect focus to emerging process in UAE is ongoing (refer to Market Expansion section)
markets including UAE and Kazakhstan
Expansion of sales team in strategic locations (US$1.7 million) US$222k deployed towards increase in salesforce US$354k further deployed towards increase in salesforce
Due to the dynamic nature of these projects, completion progress and resource
deployment are regularly reviewed by management to ensure alignment with
objectives and effective resource utilisation.
Outlook for the Group
The Board is pleased to report the progress made in the first half of the
year, particularly with the early signs of gradual return on the Group's
investments. The consistent positive trend in new funds onboarded at the
start of the second half further bolsters our optimism that this momentum will
continue throughout the year. AMIF is well placed to capitalise as its
pipeline of funds converts into active mandates, with an understanding of the
potential launch rate and an appreciation for the inherent lag in revenue
conversion.
Chi Kin Lai
Chief Executive Officer
12 September 2024
Group H1-2024 Income Statement
H1-2024 H1-2023(1) Change FY-2023
US$'000 US$'000 % US$'000
Revenue
Fund Administration 3,982 4,347 (8.4)% 7,927
Business Process Outsourcing services 2,299 2,065 11.3% 3,582
Governance and Compliance services 966 675 43.1% 1,305
Total Revenue 7,247 7,087 2.3% 12,814
Payroll and remuneration costs (4,183) (3,493) 19.8% (7,178)
Rent and occupancy (193) (262) (26.3)% (430)
Professional fees (855) (227) 276.7% (1,068)
IT expenses (237) (314) (24.5)% (657)
Foreign currency (loss) / gain (109) 33 (430.3)% 5
Other operating expenses (643) (403) 59.6% (1,607)
Adjusted EBITDA(2) 1,027 2,421 (57.6)% 1,879
IPO expenses - (1,201) (100.0)% (952)
EBITDA 1,027 1,220 (15.8)% 927
Other gains / (losses) 17 (37) 145.9% -
Interest income 27 - N/A 99
Interest costs (20) (23) (13.0)% (89)
Depreciation expenses (157) (132) 18.9% (284)
Profit before income tax 894 1,028 (13.0)% 653
Income tax expense (264) (298) (11.4)% (667)
Profit / (loss) for the Period / year 630 730 (13.7)% (14)
(1) These comparative figures were extracted from the interim results for the
six months ended 30 June 2023 published on 27 September 2023, prepared under
the consistent basis as that for the Historical Financial Information ('HFI')
included in the listing prospectus dated 5 June 2023. See Reconciliations of
Comparatives section under the unaudited financial statements of this report
for details.
(2) Included in adjusted EBITDA, the Group incurred post-listing expenses of
US$813k (H1-2023: $49k) which represent one-time or recurring expenses arising
from listing obligations which were dependent on successful admission.
Examples of post-listing expenses include the carved-out subscription to
certain IT systems such as finance and accounting systems, Microsoft licenses
and hosting services. Effective on Admission, the Group also incurred
additional expenses such as statutory listing fee, professional indemnity
insurance, as well as the engagements of ongoing professional advisers for
listing rule compliance.
Financial Review
Revenue
Revenue increased by 2.3% to US$7.2 million (H1-2023: US$7.1 million), which
was contributed by:
· Fund Administration revenue dropped to US$4.0 million in H1-2024 (H1-2023:
US$4.3 million). The Group witnessed an increase in the net number of funds
as compared to H1-2023. However, Fund Administration revenue took a hit as a
result of the increased closure and termination of funds at the beginning of
the year, as investors redeemed from or withdrew interest in operating funds
due to uncertain market conditions. Fund launches remained slow due to the
continuous effects of global inflation staying at an uncomfortably high level,
leading to depressed market sentiment and challenges in fund raising.
· Governance and Compliance services revenue increased by 43.1% to US$1 million
in H1-2024 (H1-2023: US$0.7 million), which is in line with the increase in
AML officer and directorship mandates to 455 in June 2024 from 391 mandates in
June 2023, predominantly associated with the Group's fund clients domiciled in
the Cayman Islands and Luxembourg. The Group has endorsed strategic
initiatives to concentrate resources on targeted market, aiming to benefit
from the growing demands arising from the fast-changing regulatory
requirements, through its expanded services and offerings.
· Business Process Outsourcing services revenue experienced an increase of 11.3%
to US$2.3 million in H1-2024 (H1-2023: US$2.1 million). The growing revenue
is largely driven by the growth of revenue from the Intragroup Outsourcing
Agreement with Amicorp Group, arising from an inflationary adjustment on
charge-out rates applied on a consistent scope of work performed.
The seasonal element of Fund Administration and Business Process Outsourcing
revenue remains applicable, specifically arising from revenue recognition of
financial statement preparation work which falls on the first half of the
year.
Divisional Performance Overview
H1-2024
Fund Administration Business Process Outsourcing Governance and Compliance Total
US$'000 US$'000 US$'000 US$'000
Revenue 3,982 2,299 966 7,247
Direct staff costs (1,622) (272) (355) (2,249)
Other direct costs (210) - - (210)
Gross profit 2,150 2,027 611 4,788
Gross profit margins 54.0% 88.2% 63.3% 66.1%
H1-2023
Fund Administration Business Process Outsourcing Governance and Compliance Total
US$'000 US$'000 US$'000 US$'000
Revenue 4,347 2,065 675 7,087
Direct staff costs (1,557) (179) (238) (1,974)
Other direct costs (284) - - (284)
Gross profit 2,506 1,886 437 4,829
Gross profit margins 57.6% 91.3% 64.7% 68.1%
FY-2023
Fund Administration Business Process Outsourcing Governance and Compliance Total
US$'000 US$'000 US$'000 US$'000
Revenue 7,927 3,582 1,305 12,814
Direct staff costs (2,710) (254) (478) (3,442)
Other direct costs (553) - - (553)
Gross profit 4,664 3,328 827 8,819
Gross profit margins 58.8% 92.9% 63.4% 68.8%
Fund Administration, Business Process Outsourcing and G&C segments
delivered gross profit margin of 54%, 88% and 63% respectively in H1-2024.
These result from the Group's additional investment in the form of
additional experienced production employees, especially in the Business
Process Outsourcing and G&C services divisions which are in line with the
growth strategies set out in the Chief Executive Officer's Report.
All in all, these three segments contribute to 66% of overall gross profit
margin for H1-2024, compared to 68% for H1-2023. It continues to demonstrate
the Group's capability to consistently maintain a high gross profit margin
above 65%.
Payroll and renumeration costs
The Group reported an increase of US$0.7 million, or 19.8%, in payroll and
renumeration costs in H1-2024 (H1-2023: US$3.5 million). The major
incremental payroll and renumeration costs represents the Group's increased
investment in senior sales employees to enhance its outreach to potential
customers in strategic locations including Hong Kong, Singapore, Luxembourg
and Brazil. The Group's operation and compliance team were also strengthened
to provide adequate workforce, capability, and expertise to cope with new
business opportunities arising from the continuous sales and marketing
efforts, together with local fiscal, tax, and economic reforms.
The table below summarises the Group's headcount by geographical locations as
at the Period/year end:
H1-2024 H1-2023 FY-2023
Chile 13 13 13
Hong Kong 8 7 9
India 38 45 37
Mauritius 12 10 11
Luxembourg 9 8 9
Others 28 25 29
Total Group Headcount 108 108 108
Although the total headcount has remained stable, the Group had intentionally
shifted its hiring strategy to focus on jurisdictions that offer the
specialised expertise needed to meet the growing operational complexity and
dynamic demands of the business. The expansion in these higher-cost offices
is vital to building a pipeline for future organic growth. As anticipated
during the IPO and in line with the adopted business strategies, such
investment in human capital is expected to continue in H2-2024. Although it
has put temporary pressure on short-term probability, the Group regularly
reviews its strategies and closely monitors its results, in order to achieve
long-term sustainable growth and future competitiveness.
Rent and occupancy
Rent and occupancy represents cost recharged by Amicorp Group for their
subletting and property service rendered to the Group based on various
intercompany service agreements. At the same time, the Group charged to
depreciation expenses in accordance with the adoption of IFRS16 for its five
leases with third party landlords.
The decrease of rent and occupancy by US$69k, or 26.3% to US$193k in H1-2024
compared to US$262k in H1-2023 was partially compensated by depreciation
expenses because of the newly acquired third party lease in Hong Kong at lower
rate.
Professional fees
Professional fees represent accounting, statutory audit and tax compliance
service fees for the Group and its subsidiaries, legal fees for licensing
application and legalisation of documents, as well as professional outsourcing
relating to ordinary business.
The increase of professional fees by US$628k, or 276.6% to US$855k in H1-2024
compared to US$227k in H1-2023 was largely attributable to post-listing
related compliance and advisory expenses. In addition, the Group also
incurred additional spending towards statutory and tax reporting obligations
for its newly demerged subsidiary in Luxembourg.
IT expenses
IT expenses comprise of the fees incurred for the use of the fund
administration system, Bloomberg terminal and other business-related systems.
IT expenses decreased from US$314k in H1-2023 to US$237k in H1-2024 because of
the reduced subscription fee incurred from the fund administration system in
Chile due to an operation initiative to centralise the usage of the same
system with other subsidiaries of the Group.
Other operating expenses
Other operating expenses consists of sales and marketing expenses, travelling
expenses, statutory fees, office expenses, and other administrative expenses.
The increase in other operating expenses to US$643k in H1-2024 from US$403k in
H1-2023 was due to increased travelling expenses arising from extensive
overseas sales meetings and inter-office visits. Furthermore, the Group also
actively pursued business development activities including subscription of
membership in professional and industry associations, organisation of its own
marketing events, as well as sponsorship of selected external forums.
Income tax expense
The estimated income tax expense decreased to US$264k in H1-2024 (H1-2023:
$298k), in line with the movement in the profit before income tax. The
Group's effective tax rate as a percentage of profit before income tax in
H1-2024 remained at a similar level of 29.5% (H1-2023: 29.0%).
Unaudited Condensed Consolidated Financial Statement
For the six months ended 30 June 2024
Notes Six months ended 30 June 2024 Six months ended 30 June 2023
Unaudited Unaudited
US$'000 US$'000(1)
Revenue 5 7,247 5,587
Payroll and remuneration costs 7 (4,183) (2,988)
Rent and occupancy (193) (140)
Professional fees (855) (227)
IT expenses (237) (314)
Depreciation expenses (157) (132)
IPO expenses - (1,201)
Foreign exchange (loss) / gain (109) 33
Other operating expenses 6 (643) (403)
Operating profit 870 215
Other gains / (losses) 17 (37)
Finance income/ (costs), net 7 (23)
Profit before income tax 5 894 155
Income tax expense 8 (264) (112)
Net profit after tax 630 43
Other comprehensive income
Foreign currency translation 171 20
Total comprehensive income 801 63
Earnings per ordinary shares US$ US$
Cent Cent(1)
Basic EPS 0.53 0.04
Diluted EPS 0.53 0.04
(1) These comparatives for the six months ended 30 June 2023 are exclusive of
Amicorp Fund Services Luxembourg S.A ('AFS Luxembourg') for IFRS presentation.
AFS Luxembourg was successfully merged into the Group in the second half of
2023 via common control transactions and its full-year financial results were
included under merger accounting treatments (i.e., the prospective approach)
in the Group's audited consolidated financial statements for the year ended 31
December 2023. Please refer to the Reconciliation of Comparatives section in
this report after the primary statements for details, in conjunction with the
Group's June 2023 interim results published on 27 September 2023, which were
however prepared on the consistent basis as that for the HFI included in the
listing prospectus dated 5 June 2023, along with the Group's 2023 audited
annual report published on 30 April 2024.
Unaudited Condensed Consolidated Statement of Financial Position
As at 30 June 2024
Notes 30 June 31 December
2024 2023
US$'000 US$'000
Non-current assets
Property, plant and equipment 87 106
Intangible assets 191 83
Right of use assets 11 403 440
Investments 72 58
Deferred tax assets 212 232
965 919
Current assets
Trade receivables 9 2,763 2,860
Other receivables, deposits and prepayments 957 561
Amounts due from related companies 13 4,636 3,711
Cash and cash equivalents 2,980 2,973
11,336 10,105
Total assets 12,301 11,024
Current liabilities
Trade payables 184 151
Accrued payroll and employee benefits 757 459
Other payables and accruals 10 921 840
Lease liabilities 11 211 183
Income tax payable 567 472
2,640 2,105
Net current assets 8,696 8,000
Total assets less current liabilities 9,661 8,919
Non-current liabilities
Lease liabilities 11 245 304
245 304
Total liabilities 2,885 2,409
NET ASSETS 9,416 8,615
Equity
Share capital 120 120
Share premium 5,989 5,989
Foreign exchange reserves (204) (375)
Merger reserves 3,164 3,164
Retained earnings 347 (283)
Total equity 9,416 8,615
Unaudited Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 June 2024
Share capital Share premium Forex Merger Retained earnings Distributable reserves Total
translation reserves
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
As at 1 January 2024 120 5,989 (375) 3,164 (283) - 8,615
Profit for the period - - - - 630 - 630
Foreign currency translation - - 171 - - - 171
As at 30 June 2024 120 5,989 (204) 3,164 347 - 9,416
Share capital Share premium Forex Merger Retained earnings Distributable reserves Total
translation reserves
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
As at 1 January 2023 114 (1) - (200) 2,244(3) 1,157 4,666(4) 7,981
AFS Luxembourg exclusion(6) - - - - - (2,097) (2,097)
Adjusted opening balance for IFRS presentation(6) 114 - (200) 2,244 1,157 2,569 5,884
Share additions 6 6,462(2) - - - - 6,468
Profit for the period - - - - 730 - 730
Pre-listing Dividends - - - - (837) (2,569) (3,406)(5)
Foreign currency translation - - 20 - - 20
Adjusted closing balance for 30 June 2023(5&6) 120 6,462 (180) 2,244 1,050 - 9,696
(1) This represents the share capital of the Company, immediately prior to
being inserted as a holding company of the Group described in Note 2(a). The
share capital amounted to US$62k on its incorporation date being 3 March 2023,
and increased to US$114k on 23 May 2023 due to additional share issuance.
According to the merger accounting principles outlined in Note 3(c), the Group
is treated as if the Company, together with its subsidiaries, had collectively
existed and been merged throughout the comparative accounting periods, and
hence this share capital of US$114k is presented as the opening balance as at
1 January 2023.
(2) On 8 June 2023, the Company successfully raised gross proceeds of US$6.47
million through a placing of 6,468,000 ordinary shares, at the par value of
US$0.001 each share. The difference between the placing price and the nominal
value of the shares constitutes the share premium.
(3) The details regarding the accounting policy for the merger reserve are
described in Note 3(c).
(4) The opening balance represents certain net earnings of prior years
according to the carve-out principles of the HFI included in the listing
prospectus dated 5 June 2023, at the time when the Group was previously not
yet formed as a separate standalone legal entity or group of entities.
(5) Pre-listing dividends of US$5.8m had been preliminarily declared by
Amicorp Fund Services Asia Limited, before the Company, Amicorp FS (UK) Plc,
was inserted on 26 May 2023 as the holding company of the Group, in line with
the listing prospectus dated 5 June 2023. The amount was finalised at $3.4m,
following changes for IFRS presentation, included in the annual report ended
31 December 2023 and this final dividend (previously US$5.8m) is updated and
reflected here.
(6) As described in Note 4(ii), these adjustments for IFRS presentation were
to reflect the exclusion of the AFS Luxembourg portion that was however
included in the prior interim results for June 2023 prepared under the
consistent basis as that for the HFI in the listing prospectus. AFS Luxembourg
was then merged into the Group successfully in October 2023 and its full-year
financials were included, under the merger accounting approach under common
control as if the subsidiary had always been part of the Group, in the audited
consolidated financial statements for the year ended 31 December 2023. Also
see Section Reconciliation of Comparatives for details.
Unaudited Condensed Consolidated Statement of Cash Flows
For the six months ended 30 June 2024
Period ended 30 June
2024 2023
US$'000 US$'000
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax 894 155(1)
Adjustments for:
Depreciation of tangible asset 25 16
Depreciation of intangible asset 30 -
Depreciation of right of use assets 102 116
Realised and unrealised foreign exchange gain 109 (33)
Recognition of doubtful debt provision 266 -
Provision for group audit fees 250 -
Fair value (gain)/ loss from an investment measured at FVTP&L (17) 37
Finance costs 20 23
1,679 314(1)
(Increase)/ decrease in trade receivables (164) 335
Increase in other receivables, deposits and prepayments (391) (861)
Increase in amounts due from related companies (813) (853)(1)
Increase in accrued payroll and employee benefits 298 104
Increase/ (decrease) in trade payables 33 (91)
(Decrease)/ increase in other provisions and payables (169) 91
Cash generated from/ (used in) operations 473 (961)
Income tax paid to tax authorities (161) (752)
Income tax settled through amounts due from related companies - (265)
Net cash flows generated from/ (used in) operating activities 312 (1,978)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of tangible assets (144) (51)
Proceeds from a placing of additional ordinary shares - 6,324
Net cash flows (used in)/ generated from investing activities (144) 6,273
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of unwinding interest portion of lease liabilities (20) (19)
Repayment of principal portion of lease liabilities (99) (91)
Net cash flows used in financing activities (119) (110)
NET INCREASE IN CASH AND CASH EQUIVALENTS 49 4,185
Cash and cash equivalents at beginning of period 2,973 875
Exchange difference (42) 32
CASH AND CASH EQUIVALENTS AT END OF PERIOD 2,980 5,092
( )
(1) Changes for IFRS presentation (i.e., AFS Luxembourg exclusion) are
reflected in the comparatives for the six months ended 30 June 2023. See
Section Reconciliation of Comparatives and Note 4(ii) for details.
Reconciliation tables below of financial information for the six months ended
30 June 2023 are to demonstrate the consolidated half-year comparatives
exclusive of AFS Luxembourg (which was then successfully merged into the Group
in the second half of 2023) for IFRS presentation, in conjunction with and as
opposed to the Group's June 2023 interim results published on 27 September
2023, which were prepared on the consistent basis as that for the HFI included
in the listing prospectus dated 5 June 2023.
RECONCILIATION OF COMPARATIVES
Unaudited Consolidated Condensed Statement of Total Comprehensive Income
for the six months ended 30 June 2023
Adjustment
As per 2023 interim results Exclusion of Adjusted
AFS Luxembourg based on IFRS(1) comparatives in this report
US$'000 US$'000 US$'000
Revenue 7,087 (1,500) 5,587
Payroll and remuneration costs (3,493) 505 (2,988)
Rent and occupancy (262) 122 (140)
Professional fees (227) - (227)
IT expenses (314) - (314)
Depreciation expenses (132) - (132)
IPO expenses (1,201) - (1,201)
Foreign exchange gain 33 - 33
Other operating expenses (403) - (403)
Operating profit 1,088 (873) 215
Other losses (37) - (37)
Interest costs (23) - (23)
Profit before income tax 1,028 (873) 155
Income tax expense (298) 186 (112)
Net profit after tax 730 (687) 43
( )
( )
(1) This represents a portion of a subsidiary (related to AMIF business in
Luxembourg) in Amicorp Group brought into AMIF Group, included in the prior
interim results for 30 June 2023 published on 27 September 2023, which was
prepared under the consistent basis as that for the HFI in the listing
prospectus dated 5 June 2023, and it has subsequently been decided to be
excluded from the comparatives in this June 2024 interim results for IFRS
presentation given that AFS Luxembourg has then been accounted for under the
prospective approach described in Note 3(c) since it was successfully merged
under common control into the Group from October 2023.
RECONCILIATION OF COMPARATIVES (CONTINUED)
Unaudited Condensed Consolidated Statement of Cash Flows
for the six months ended 30 June 2023
As per 2023 interim results Exclusion of AFS Luxembourg based on IFRS Adjusted
comparatives in this report
US$'000 US$'000 US$'000
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax 1,028 (873) 155
Adjustments for:
Depreciation of tangible asset 16 16
Depreciation of right of use assets 116 116
Realised and unrealised foreign exchange gain (33) (33)
Fair value (gain)/ loss from an investment measured at FVTP&L 37 37
Finance costs 23 23
1,187 (873) 314
Decrease in trade receivables 335 335
Increase in other receivables, deposits and prepayments (861) (861)
Increase in amounts due from related companies (1,726) 873 (853)
Increase in accrued payroll and employee benefits 104 104
Decrease in trade payables (91) (91)
Increase in other provisions and payables 91 91
Cash used in from operations (961) (961)
Income tax paid to tax authorities (752) (752)
Income tax settled through amounts due from related companies (265) (265)
Net cash flows used in operating activities (1,978) (1,978)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of tangible assets (51) (51)
Proceeds from a placing of additional ordinary shares 6,324 6,324
Net cash flows generated from investing activities 6,273 6,273
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of unwinding interest portion of lease liabilities (19) (19)
Repayment of principal portion of lease liabilities (91) (91)
Net cash flows used in financing activities (110) (110)
NET INCREASE IN CASH AND CASH EQUIVALENTS 4,185 4,185
Cash and cash equivalents at beginning of period 875 875
Exchange difference 32 32
CASH AND CASH EQUIVALENTS AT END OF PERIOD 5,092 5,092
Notes to the Unaudited Condensed Consolidated Financial Statements
1. GENERAL
These interim financial statements are unaudited condensed consolidated
financial statements for Amicorp FS (UK) Plc and its subsidiaries. Amicorp
FS (UK) Plc (the 'Company'), a public limited company incorporated and
domiciled in the United Kingdom with its company number being 14704124 under
the Companies Act 2006, together with its subsidiaries (collectively, the
'Group'), is a provider of fund administration services, regulatory reporting,
fiduciary services and multi-faceted business support alternatives for hedge
funds, private equity funds and family offices investing in listed or unlisted
equities, financial instruments, projects, real estate and various asset
classes locally or globally.
The Group also offers administration and fiduciary services to special purpose
vehicles associated with fund structures or entities with passive investment
on financial instruments.
The address of the Company's registered office is 5 Lloyd's Avenue, London,
United Kingdom, EC3N 3AE.
2. BACKGROUND AND BASIS OF PREPARATION
(a) Background and basis of the condensed consolidated financial information
The Group is a business division of Amicorp Group, which is a multinational
organisation providing, in addition to fund administration services, a broad
range of corporate management, capital market and financial services to
clients globally with a dedicated network of international experts and
specialists.
Since year 2018, newly incorporated subsidiaries of the Group and former
subsidiaries of the Amicorp Group entered into multiple conditional agreements
for the sale and purchase of the respective equity share capital of such
former subsidiaries, being a set of fund administration services within
Amicorp Group.
The Group was not formed of a separate standalone legal group of entities, and
the Company was incorporated on 3 March 2023 and inserted as the holding
company of the Group on 26 May 2023.
As announced on 5 June 2023, the Company successfully raised gross proceeds of
US$6.47 million through a placing of 6,468,000 new ordinary shares, with a
further placing of 9,702,000 existing ordinary shares that raised US$9.70
million. On 8 June 2023, the Company was successfully admitted to the Main
Market of the London Stock Exchange, as a holding company of the Group.
The insertion of the Company as the holding company of the Group constitutes a
carve-out reconstruction involving transfer of shares in the Group's entities,
in which merger accounting was applied to the preparation of the 2023
consolidated annual financial statements; the annual consolidated financial
statements of the Group were prepared as if the Company, together with its
subsidiaries, collectively had already existed before the start of the
earliest period presented. The comparative information was, therefore,
presented as if the carve-out reconstruction had already occurred, and it was
derived from the HFI included in the listing prospectus, primarily adjusted
for the demerger equity, reserve and consolidation adjustments, except for AFS
Luxembourg; AFS Luxembourg was incorporated as a new legal entity in the
Luxembourg jurisdiction during the second half of the 2023 annual financial
year and transferred to the Group as a subsidiary, and the carved-out portion
related to AFS business in Luxembourg included in the HFI was excluded from
the comparatives in the 2023 annual consolidated financial statements, in
order to be in compliance with the IFRS reporting framework (See Note 3c). In
the June 2024 interim consolidated financial statements of this report, such
exclusion is also applied to the comparatives for the six months ended 30 June
2023, and reconciliations to the prior year interim results are presented in
Section Reconciliations of Comparatives after the primary statements of this
June 2024 interim results.
The condensed consolidated financial statements ('Interim Financial
Statements') of Amicorp FS (UK) Plc for the six months ended 30 June 2024 have
been prepared in accordance with IAS 34 Interim Financial Reporting issued by
the International Accounting Standards Board, as adopted by the United Kingdom
('UK IAS'), and UK-adopted International Financial Reporting Standards
('IFRS'), including the interpretations issued by the IFRS Interpretations
Committee ('IFRIC'). These Interim Financial Statements, which are
unaudited, does not amount to full statutory accounts within the meaning of
Section 434 of the Companies Act 2006 and does not include all of the
information and disclosures required for full annual financial statements, and
should be read in conjunction with the Group's annual report for the financial
year ended 31 December 2023, which is available on the Group's website; the
Independent Auditor's Report in the annual report for the financial year ended
31 December 2023 was unqualified, did not contain an emphasis of matter
paragraph and did not contain any statement under Section 498 of the Companies
Act 2006.
The condensed consolidated financial statements are presented in thousands of
US Dollars ('US$'000') unless otherwise indicated, and prepared under the
historical cost convention and based upon the accounting policies disclosed
below. Under the merger accounting principles, these Interim Financial
Statements of the Group are presented as if the Company, with its
subsidiaries, had always existed at its earliest period even though the
Company was incorporated in 2023.
While the comparatives pertaining to the financial year ended 31 December 2023
are audited, the interim consolidated financial statements for 30 June 2024,
including comparatives for the six months ended 30 June 2023, are unaudited,
with consistency in the accounting policies with those applied to the audited
annual financial information for the year ended 31 December 2023.
Where applicable, the Group has taken into account and implemented IFRS
standards, along with any related interpretations and amendments, which were
issued and effective as of 1 January 2024. The Group has not chosen to adopt
any standards, interpretations, or amendments before their effective date.
While there have been some new amendments effective in 2024, they are not
considered to impact the condensed consolidated interim financial statements.
(b) Entities included within the Group
The financial position and financial performance of the following entities are
included as part of the condensed consolidated financial statements:
Amicorp Fund Services Asia Limited(1)
Amicorp Fund Services (Asia) Pte. Ltd.
Amicorp (Shanghai) Consultants Ltd.
Amicorp Fund Services N.V.
Amicorp Fund Services N.V. (Barbados Branch)
Amicorp Fund Services N.V. (Bahamas Branch)
Administradora de Fondos de Inversión Amicorp S.A.
Amicorp Administradora General de Fondos SA
AFS BRASIL LTDA.
Soluciones y Servicios AFS México, S.A. de C.V.
Amicorp Fund Services Malta Limited
Amicorp Support Services Ltd
Amicorp Fund Services (Mumbai) Private Limited(1)
Amicorp Fund Services (Mumbai) Private Limited (Bangalore Branch)
Amicorp Fund Services (Cyprus) Ltd
Amicorp Fund Services Luxembourg S.A(1)
Administradora Amicorp Peru SAC
Amicorp Fund Services (AIFC) Limited
(1) Shares of these entities were transferred to the Company during the
financial year ended 31 December 2023, as part of the reconstruction process
for the Company inserted as the holding company of the Group described in Note
2a. These entities are accounted for under the merger accounting approach
described in Note 3c, and included in the consolidated financial statements.
(c) Basis of measurement and going concern assumption
The condensed consolidated financial statements have been prepared under the
historical cost basis except for certain financial assets and liabilities
which are measured at fair value in accordance with UK-adopted IFRS and IAS.
The measurement bases are fully described in the accounting policies below.
The material accounting policies that have been used in the preparation of the
condensed consolidated financial statements are summarised below. These
policies have been consistently applied to years and periods presented unless
otherwise stated.
It should be noted that accounting estimates and assumptions are used in
preparation of the condensed consolidated financial statements. Although these
estimates are based on management's best knowledge and judgment of current
events and actions, actual results may ultimately differ from those
estimates. The area involving a higher degree of judgment or complexity, or
areas where assumptions and estimates are significant to the condensed
consolidated financial statements, are disclosed in note 4.
Going concern
The Group raised US$6.5 million in the financial year ended 31 December 2023,
which has enriched its working capital. The Directors are satisfied that the
Group has sufficient resources to continue in operation for the foreseeable
future, a period of not less than 12 months from the date this report is
issued. Accordingly, they continue to adopt the going concern basis in
preparing the condensed consolidated financial statements.
In assessing going concern, the Directors considered the Group's cash flows,
solvency and liquidity positions, and have considered a range of scenarios as
part of the assessment; Directors considered the reasonably worst case
scenario by applying adverse assumptions on key business metrics which
presumes fund launch rate and attrition rate of new funds and existing
launching funds respectively being 50% worse than those in the normal
scenarios, as a reverse stress test. In this reasonably worst scenario, the
net current assets and cash and bank equivalence are projected to remain
positive throughout the going concern period.
As at 30 June 2024, the Group had cash and cash equivalents of US$3.0 million
(31 December 2023: US$3.0 million) and net current assets of US$8.7 million
(31 December 2023: US$8.0 million), which the Directors believe will be
sufficient to maintain the Group's liquidity over the going concern period
(i.e. at least 12 months from the date of issue of these Interim Financial
Statements), including continued investments to meet existing financial
commitments and to deliver future growth.
(d) Functional and presentation currency
Items included in the interim financial information of each of the Group's
entities are measured using the currency of the primary economic environment
in which the entity operates (the 'functional currency'). The presentational
currency of the Group is United States Dollars ('US$'), and hence the
financial information is presented in US$, unless specified otherwise.
In the individual financial statements of the Group's entities, foreign
currency transactions are translated into the functional currency of the
individual entity using the exchange rates prevailing at the dates of the
transactions. At the reporting date, monetary assets and liabilities
denominated in foreign currencies are translated at the foreign exchange rates
ruling at the reporting date. Foreign exchange gains and losses resulting
from the settlement of such transactions and from the reporting date
retranslation of monetary assets and liabilities are recognised in profit or
loss.
Non-monetary items carried at fair value that are denominated in foreign
currencies are retranslated at the rates prevailing on the date when the fair
value was determined and are reported as part of the exchange revaluation gain
or loss. Non-monetary items that are measured in terms of historical cost in
a foreign currency are not retranslated.
In the condensed consolidated financial information, all individual financial
statements of foreign operations, originally presented in a currency different
from the Group's presentation currency, have been converted into US$. Assets
and liabilities have been translated into US$ at the closing rates at the
reporting dates. Income and expenses have been converted into US$ at the
exchange rates ruling at the transaction dates, or at the average rates over
the reporting period provided that the exchange rates do not fluctuate
significantly. Any differences arising from this procedure have been dealt
with separately in other comprehensive income and the translation reserves in
equity.
3. ACCOUNTING POLICIES
(a) Basis of consolidation
On consolidation, the results and financial position of foreign operations are
translated into the presentation currency of the Group, as follows:
· Assets and liabilities for the condensed consolidated statement of financial
position presented are translated at the closing rate at the reporting date;
· income and expense items are translated at exchange rates ruling at the date
of the transactions;
· all resulting exchange differences are recognised in other comprehensive
income (foreign exchange reserves); and
· cash flow items are translated at the exchange rates ruling at the date of the
transaction
Inter-company transactions and balances between group companies together with
unrealised profits are eliminated in full in preparing the condensed
consolidated financial statements. Unrealised losses are also eliminated
unless the transaction provides evidence of impairment on the asset
transferred, in which case the loss is recognised in profit or loss.
The results of subsidiaries acquired or disposed of, if any, during the year
are included in the condensed consolidated statement of comprehensive income
from the dates of acquisition or up to the dates of disposal, as
appropriate. Where necessary, adjustments are made to the financial
statements of subsidiaries to bring their accounting policies into line with
those used by other members of the Group.
Acquisition of subsidiaries or businesses is accounted for using the
acquisition method. The cost of an acquisition is measured at the aggregate
of the acquisition-date fair value of assets transferred, liabilities incurred
and equity interests issued by the Group, as the acquirer. The identifiable
assets acquired and liabilities assumed are principally measured at
acquisition-date fair value. The Group's previously held equity interest in
the acquiree is re-measured at acquisition-date fair value and the resulting
gains or losses are recognised in profit or loss. The Group may elect, on a
transaction-by-transaction basis, to measure the non-controlling interests
that represent present ownership interests in the subsidiary either at fair
value or at the proportionate share of the acquiree's identifiable net
assets. All other non-controlling interests are measured at fair value
unless another measurement basis is required by IFRSs. Acquisition-related
costs incurred are expensed unless they are incurred in issuing equity
instruments in which case the costs are deducted from equity.
Any contingent consideration to be transferred by the acquirer is recognised
at acquisition-date fair value. Subsequent adjustments to consideration are
recognised against goodwill only to the extent that they arise from new
information obtained within the measurement period (a maximum of 12 months
from the acquisition date) about the fair value at the acquisition date. All
other subsequent adjustments to contingent consideration classified as an
asset or a liability are recognised in profit or loss.
Changes in the Group's interests in subsidiaries that do not result in a loss
of control are accounted for as equity transactions. The carrying amounts of
the Group's interest and the non-controlling interest are adjusted to reflect
the changes in their relative interests in the subsidiaries. Any difference
between the amount by which the non-controlling interest is adjusted and the
fair value of the consideration paid or received is recognised directly in
equity and attributed to owners of the Group.
When the Group loses control of a subsidiary, the profit or loss on disposal
is calculated as the difference between (i) the aggregate of the fair value of
the consideration received and the fair value of any retained interest and
(ii) the previous carrying amount of the assets (including goodwill), and
liabilities of the subsidiary and any non-controlling interest. Amounts
previously recognised in other comprehensive income in relation to the
subsidiary are accounted for in the same manner as would be required if the
relevant assets or liabilities were disposed of.
(b) Subsidiaries
A subsidiary is an investee over which the Group is able to exercise
control. The Group controls an investee if all three of the following
elements are present: power over the investee, exposure, or rights, to
variable returns from the investee, and the ability 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 of these elements of
control.
(c) Merger accounting
Merger accounting was applied to the financial year ended 31 December 2023
since the Company was inserted in May 2023 as the holding company of the
Group, by way of receiving transferred shares of certain entities under common
control as part of the carve-out reconstruction described in Note 2(a), given
the ultimate controlling parent has remained the same. This method treated
the Company, together with its subsidiaries, as if they had been merged
throughout the prior financial year and its comparative accounting periods in
the 2023 annual report published on 30 April 2024.
The net assets of the combining entities or businesses used the existing book
values from the controlling parties' perspective. No amount was recognised
in consideration for goodwill or excess of acquirers' interest in the net fair
value of acquiree's identifiable assets, liabilities and contingent
liabilities over cost at the time of the carve-out reconstruction, to the
extent of the continuation of the controlling parties' interest.
When the Company was inserted as the holding company of the Group, the excess
of the carrying amount of integrated net assets over the consideration to
Amicorp Group was represented as a merger reserve in equity in the condensed
consolidated statement of financial position, under the predecessor method.
AFS Luxembourg was incorporated as a new legal entity in the Luxembourg
jurisdiction in October 2023 and transferred to the Group as a subsidiary in
the second half of the prior financial year. As the transaction was considered
as an acquisition of trade and assets, merger accounting principles were
applied prospectively, i.e. without the necessity for restating
pre-combination figures and from the date of the common control transfer of
the trade and assets into the AFS Luxembourg business without restating the
comparatives for that business to before that date. AFS Luxembourg was
entitled for all the economic benefits and costs of its AMIF business in
Luxembourg effective from 1 January 2023 to its incorporation in October 2023,
and therefore the consolidated statement of financial statements for the year
ended 31 December 2023 were prepared under merger accounting principles to
include such transactions from 1 January 2023, accounting for this AFS
Luxembourg business as if it had always been with the Group.
Transaction costs, including professional fees, registration fees, costs of
furnishing information to shareholders, costs or losses incurred in operations
of the previously separate businesses, etc., incurred in relation to the
carve-out reconstruction that were to be accounted for by using merger
accounting were recognised as an expense in the period in which they were
incurred.
(d) Tangible assets
Tangible assets are stated at cost less accumulated depreciation and
accumulated impairment losses.
The cost of tangible asset includes its purchase price and the costs directly
attributable to the acquisition of the items.
Subsequent costs are included in the asset's carrying amount or recognised as
a separate asset, as appropriate, only when it is probable that future
economic benefits associated with the item will flow to the Group and the cost
of the item can be measured reliably. The carrying amount of the replaced
part is derecognised. All other repairs and maintenance are recognised as an
expense in profit or loss during the financial period in which they are
incurred.
Tangible assets are depreciated so as to write off their cost or valuation net
of expected residual value over their estimated useful lives on a
straight-line basis. The useful lives, residual value and depreciation
method are reviewed, and adjusted if appropriate, at the end of each reporting
period. The useful lives are as follows:
Machinery and equipment 3 - 10 years
Furniture and fixtures 3 - 10 years
Motor vehicles 3 - 5 years
Leasehold improvements in line with lease terms
An asset is written down immediately to its recoverable amount if its carrying
amount is higher than the asset's estimated recoverable amount.
The gain or loss on disposal of an item of tangible assets is the difference
between the net sale proceeds and its carrying amount, and is recognised in
profit or loss on disposal.
(e) Intangible assets
Costs associated with maintaining software programmes are recognised as an
expense as incurred. Costs that are directly attributable to the identifiable
software are recognised as intangible assets.
The Group amortises intangible assets with a limited useful life, using the
straight-line method over the following periods:
IT
software
3 - 5 years
The useful life is assessed by considering technological advancements,
industry trends, evolving needs, and the overall pace of innovation in the
relevant market.
(f) Financial instruments
(i) Financial assets
A financial asset (unless it is a trade receivable without a significant
financing component) is initially measured at fair value plus, for an item not
at fair value through profit or loss ('FVTPL'), transaction costs that are
directly attributable to its acquisition or issue. A trade receivable
without a significant financing component is initially measured at the
transaction price.
All regular way purchases and sales of financial assets are recognised on the
trade date, that is, the date that the Group commits to purchase or sell the
asset. Regular way purchases or sales are purchases or sales of financial
assets that require delivery of assets within the period generally established
by regulation or convention in the market place.
Financial assets with embedded derivatives are considered in their entirely
when determining whether their cash flows are solely payment of principal and
interest.
Investments
It represents an investment in an equity fund classified as a financial asset
measured at fair value through profit or loss, given that it was not elected
by management at inception to recognise fair value gains and losses through
OCI; the Group held 2,386 units of Series B in Fondo De Inversion Ecus
Agri-food, which is a Chilean public fund regulated by the Chilean Financial
Market Commission ('CMF'), with aims to generate long-term capital
appreciation from its investment portfolio for food and agricultural products,
and the units of Series B held by the Group represent 1.69 per cent of the
total units issued by the fund.
The Group's valuation technique used for this investment is the net asset
value, based on the ratio of the units held over the total unit issued by the
fund.
The fair value hierarchy of this investment is considered as level 1, given
that the fund is required to report its net asset value to the CMF on a
quarterly basis, following the guidelines provided by the CMF for the fair
value inputs. The fair value of the investment recognised by the Group is
measured as at reporting dates.
Debt instruments
Subsequent measurement of debt instruments depends on the Group's business
model for managing the asset and the cash flow characteristics of the asset.
The Group only has the following type of debt instruments:
Amortised cost: Assets that are held for collection of contractual cash flows
and the cash flows represent solely payments of principal and interest are
measured at amortised cost. Financial assets at amortised cost are
subsequently measured using the effective interest rate method. Interest
income, foreign exchange gains and losses and impairment are recognised in
profit or loss. Any gain on derecognition is recognised in profit or loss.
(ii) Impairment loss on financial assets
The Group recognises loss allowances for expected credit loss ('ECL') on trade
receivables and other receivables that are financial assets measured at
amortised cost. The ECLs are measured on either of the following bases: (1)
12 months ECLs: these are the ECLs that result from possible default events
within the 12 months after the reporting date: and (2) lifetime ECLs: these
are ECLs that result from all possible default events over the expected life
of a financial instrument. The maximum period considered when estimating
ECLs is the maximum contractual period over which the Group is exposed to
credit risk.
ECLs are a probability-weighted estimate of credit losses. Credit losses are
measured as the difference between all contractual cash flows that are due to
the Group in accordance with the contract and all the cash flows that the
Group expects to receive. The shortfall is then discounted at an
approximation to the assets' original effective interest rate.
The Group has elected to measure loss allowances for trade and other
receivables using IFRS 9 simplified approach and has calculated ECLs based on
lifetime ECLs. The Group has established a provision matrix that is based on
the Group's historical credit loss experience, adjusted for forward-looking
factors specific to the debtors and the economic environment.
For other financial assets, such as amount due from related companies,
deposits, prepayments and other current assets, the ECLs are based on the
12-months ECLs. However, when there has been a significant increase in
credit risk since origination, the allowance will be based on the lifetime
ECLs.
When determining whether the credit risk of a financial asset has increased
significantly since initial recognition and when estimating ECL, the Group
considers reasonable and supportable information that is relevant and
available without undue cost or effort. This includes both quantitative and
qualitative information analysis, based on the Group's historical experience
and informed credit assessment and including forward-looking information.
The Group assumes that the credit risk on a financial asset has increased
significantly if it is more than 30 days past due.
The Group considers a financial asset to be credit-impaired when: (1) the
counterparty is unlikely to pay its credit obligations to the Group in full,
without recourse by the Group to actions such as realising security (if any is
held); or (2) the financial asset is more than 30 days past due.
Interest income on credit-impaired financial assets is calculated based on the
amortised cost (i.e., the gross carrying amount less loss allowance) of the
financial asset. For non credit-impaired financial assets interest income is
calculated based on the gross carrying amount.
(iii) Financial liabilities
The Group classifies its financial liabilities, depending on the purpose for
which the liabilities were incurred. Financial liabilities at fair value
through profit or loss are initially measured at fair value and financial
liabilities at amortised costs are initially measured at fair value, net of
directly attributable costs incurred.
Financial liabilities at amortised cost
Financial liabilities at amortised cost including trade and other payables are
subsequently measured at amortised cost.
Gains or losses are recognised in profit or loss when the liabilities are
derecognised as well as through the amortisation process.
Financial liabilities at fair value through P&L
Any deferred consideration, arising from business acquisitions, is measured at
fair value at the date of acquisition. If an obligation to pay deferred
consideration that does not meet the definition of an equity instrument is
remeasured at fair value at each reporting date and subsequent changes in the
fair value of the deferred consideration are recognised in profit or loss.
(iv) Effective interest method
The effective interest method is a method of calculating the amortised cost of
a financial asset or financial liability and of allocating interest income or
interest expense over the relevant period. The effective interest rate is
the rate that exactly discounts estimated future cash receipts or payments
through the expected life of the financial asset or liability, or where
appropriate, a shorter period.
(v) Equity instruments
Equity instruments issued by the Group are recorded at the proceeds received,
net of direct issue costs.
(vi) Derecognition
The Group derecognises a financial asset when the contractual rights to the
future cash flows in relation to the financial asset expire or when the
financial asset has been transferred and the transfer meets the criteria for
derecognition in accordance with IFRS 9.
Financial liabilities are derecognised when the obligation specified in the
relevant contract is discharged, cancelled or expires.
(g) Revenue recognition
Revenue from contracts with customers is recognised when control of goods or
services is transferred to the customers at an amount that reflects the
consideration to which the Group expects to be entitled in exchange for those
goods or services, excluding those amounts collected on behalf of third
parties. Revenue excludes value added tax or other sales taxes and is after
deduction of any trade discounts.
Depending on the terms of the contract and the laws that apply to the
contract, control of the goods or service may be transferred over time or at a
point in time. Control of the goods or service is transferred over time if
the Group's performance:
· provides all of the benefits received and consumed simultaneously by the
customer;
· creates or enhances an asset that the customer controls as the Group performs;
or
· does not create an asset with an alternative use to the Group and the Group
has an enforceable right to payment for performance completed to date.
If control of the goods or services transfers over time, revenue is recognised
over the period of the contract by reference to the progress towards complete
satisfaction of that performance obligation; for instance, certain services
are activities performed to fulfil AMIF's continuous integrated fund
administrative service and the benefits consumed by the client are
substantially the same for each monthly service (i.e. 12 distinct instances of
admin service provision) and the corresponding revenue is being recognised
every month. Otherwise, revenue is recognised at a point in time when the
customer obtains control of the goods or service.
Where the contract contains a financing component which provides a significant
financing benefit to the Group, revenue recognised under that contract
includes the interest expense accreted on the contract liability under the
effective interest method. For contracts where the period between the
payment and the transfer of the promised goods or services is one year or
less, the transaction price is not adjusted for the effects of a significant
financing component, using the practical expedient in IFRS 15.
Revenue comprises the provision of fund administration services, regulatory
and compliance services and also business process outsourcing services. Fund
administration services represent fund onboarding, registrar and transfer
agency and NAV calculation, and preparation of financial statements;
regulatory and compliance and business process outsourcing include services of
AML, directorship, board support, FATCA, CRS and other tax reporting. These
fund services revenues are recognised when the relevant services are rendered
and the customer simultaneously receives and consumes the benefits provided.
(h) Income taxes
Income taxes for the reporting period comprise current tax and deferred tax.
Current tax is based on the profit or loss from ordinary activities adjusted
for items that are non-assessable or disallowable for income tax purposes and
is calculated using tax rates that have been enacted or substantively enacted
at the end of the reporting period.
Deferred tax is recognised in respect of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes
and the corresponding amounts used for tax purposes. Except for recognised
assets and liabilities that affect neither accounting nor taxable profits,
deferred tax liabilities are recognised for all taxable temporary differences.
Deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary
differences can be utilised. Deferred tax is measured at the tax rates
appropriate to the expected manner in which the carrying amount of the asset
or liability is realised or settled and that have been enacted or
substantively enacted at the end of reporting period.
Deferred tax liabilities are recognised for taxable temporary differences
arising on investments in subsidiaries, except where the Group is able to
control the reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future.
Income taxes are recognised in profit or loss except when they relate to items
recognised in other comprehensive income in which case the taxes are also
recognised in other comprehensive income or when they relate to items
recognised directly in equity in which case the taxes are also recognised
directly in equity.
The Group has assessed Deferred Tax related to Assets and Liabilities arising
from a Single Transaction (Amendments to IAS 12) effective from 1 January
2023, where applicable, which narrows the scope of the initial recognition
exemption to exclude transactions that give rise to equal and offsetting
temporary differences. There was no impact on the statement of financial
position because the balances qualify for offset under paragraph 74 of IAS 12.
(i) Foreign currency
Transactions entered into by group entities in currencies other than the
currency of the primary economic environment in which it/they operate(s) (the
'functional currency') are recorded at the rates ruling when the transactions
occur. Foreign currency monetary assets and liabilities are translated at
the rates ruling at the end of the reporting period. Non-monetary items
carried at fair value that are denominated in foreign currencies are
retranslated at the rates prevailing on the date when the fair value was
determined. Non-monetary items that are measured in terms of historical cost
in a foreign currency are not retranslated.
Exchange differences arising on the settlement of monetary items, and on the
translation of monetary items, are recognised in profit or loss in the period
in which they arise. Exchange differences arising on the retranslation of
non-monetary items carried at fair value are included in profit or loss for
the period except for differences arising on the retranslation of non-monetary
items in respect of which gains and losses are recognised in other
comprehensive income, in which case, the exchange differences are also
recognised in other comprehensive income.
On consolidation, income and expense items of foreign operations are
translated into the presentation currency of the Group (i.e. United States
dollars) at the average exchange rates for the year, unless exchange rates
fluctuate significantly during the period, in which case, the rates
approximating to those ruling when the transactions took place are used. All
assets and liabilities of foreign operations are translated at the rate ruling
at the end of the reporting period. Exchange differences arising, if any, are
recognised in other comprehensive income and accumulated in equity as foreign
exchange reserve (attributed to non-controlling interests as appropriate).
Exchange differences recognised in profit or loss of group entities' separate
financial statements on the translation of long-term monetary items forming
part of the Group's net investment in the foreign operation concerned are
reclassified to other comprehensive income and accumulated in equity as
foreign exchange reserve.
On disposal of a foreign operation, the cumulative exchange differences
recognised in the foreign exchange reserve relating to that operation up to
the date of disposal are reclassified to profit or loss as part of the profit
or loss on disposal.
(j) Employee benefits
(i) Defined contribution retirement plan
Contributions to defined contribution retirement plans are recognised as an
expense in profit or loss when the services are rendered by the employees.
(ii) Termination benefits
Termination benefits are recognised on the earlier of when the Group can no
longer withdraw the offer of those benefits and when the Group recognises
restructuring costs involving the payment of termination benefits.
(k) Provisions and contingent liabilities
Provisions are recognised for liabilities of uncertain timing or amount when
the Group has a legal or constructive obligation arising as a result of a past
event, which it is probable will result in an outflow of economic benefits
that can be reliably estimated.
Where it is not probable that an outflow of economic benefits will be
required, or the amount cannot be estimated reliably, the obligation is
disclosed as a contingent liability, unless the probability of outflow of
economic benefits is remote. Possible obligations, the existence of which
will only be confirmed by the occurrence or non-occurrence of one or more
future events, are also disclosed as contingent liabilities unless the
probability of outflow of economic benefits is remote.
(l) Impairment of other assets
At the end of each reporting period, the Group reviews the carrying amounts of
the following assets to determine whether there is any indication that those
assets have suffered an impairment loss or an impairment loss previously
recognised no longer exists or may have decreased:
· tangible assets and intangible assets
If the recoverable amount (i.e., the greater of the fair value less costs to
sell and value in use) of an asset is estimated to be less than its carrying
amount, the carrying amount of the asset is reduced to its recoverable
amount. An impairment loss is recognised as an expense immediately.
Where an impairment loss subsequently reverses, the carrying amount of the
asset is increased to the revised estimate of its recoverable amount, to the
extent that the increased carrying amount does not exceed the carrying amount
that would have been determined had no impairment loss been recognised for the
asset previously. A reversal of an impairment loss is recognised as income
immediately.
(m) Related parties
(a) A person or a close member of that person's family is related to the
Group if that person:
(i) has control or joint control over the Group;
(ii) has significant influence over the Group; or
(iii) is a member of key management personnel of the Group or the Group's parent.
(b) An entity is related to the Group if any of the following conditions
apply:
(i) The entity and the Group are members of the same group (which means that each
parent, subsidiary and fellow subsidiary is related to the others).
(ii) One entity is an associate or joint venture of the other entity (or an
associate or joint venture of a member of a group of which the other entity is
a member).
(iii) Both entities are joint ventures of the same third party.
(iv) One entity is a joint venture of a third entity and the other entity is an
associate of the third entity.
(v) The entity is a post-employment benefit plan for the benefit of the employees
of the group or an entity related to the Group.
(vi) The entity is controlled or jointly controlled by a person identified in (a);
or
(vii) A person identified in (a)(i) has significant influence over the entity or is
a member of key management personnel of the entity (or of a parent of the
entity).
(viii) The entity, or any member of a group of which it is a part, provides key
management personnel services to the Group or to the Group's parent.
Close members of the family of a person are those family members who may be
expected to influence, or be influenced by, that person in their dealings with
the entity and include:
(i) that person's children and spouse or domestic partner;
(ii) children of that person's spouse or domestic partner; and
(iii) dependents of that person or that person's spouse or domestic partner.
(n) Share capital
In accordance with IAS 32, expenses incurred specifically for issuing shares,
such as underwriting fees, are deducted from equity. Conversely, expenses
associated with listing on the stock market, such as listing fees, or those
not directly linked to issuing new shares, are recognised as expenses in the
income statement.
For Costs that pertain to both share issuance and listing, such as legal fees,
they are allocated between these two functions in a reasonable and consistent
manner.
(o) Distributable reserve
It represents certain net earnings of prior years recognised according to the
carve-out principles of the HFI included in the listing prospectus, at the
time when the Group was previously not yet formed as a separate standalone
legal entity or group of entities.
4. KEY ACCOUNTING ESTIMATES
In the application of the Group's accounting policies, the directors are
required to make judgements, estimates and assumptions about the carrying
amounts of assets and liabilities that are not readily apparent from other
sources. The estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant. Actual
results differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period or in the period
of the revision and future periods if the revision affects both current and
future periods.
Key sources of estimation uncertainty
In addition to information disclosed elsewhere in this financial information,
other key sources of estimation uncertainty that have a significant risk of
resulting a material adjustment to the carrying amounts of assets and
liabilities within next financial year are as follows:
(i) Impairment of financial assets measured at amortised cost
Management estimates the amount of loss allowance for ECL on financial assets
that are measured at amortised cost based on the credit risk of the respective
financial asset. The loss allowance amount is measured as the difference
between the asset's carrying amount and the present value of estimated future
cash flows after taking into consideration of expected future credit loss of
the respective financial asset. The assessment of the credit risk of the
respective financial asset involves high degree of estimation and
uncertainty. When the actual future cash flows are different from expected,
a material impairment loss or a material reversal of impairment loss may
arise, accordingly.
(ii) Comparatives
The Group's June 2023 interim results was published on 27 September 2023, and
it had been prepared on the consistent basis as that for the HFI included in
the listing prospectus dated 5 June 2023.
Subsequent to the prior year reporting for the six months ended 30 June 2023,
AFS Luxembourg was established as a new legal entity in October 2023 and
transferred to the Group as a subsidiary in the latter half of the financial
year 2023, constituting an acquisition of trade and assets. In accordance with
merger accounting principles, this transaction was treated prospectively in
the annual report for the financial year ended 31 December 2023, without
restating pre-combination figures. As part of that annual report, management
exercised judgment in applying accounting standards and assessing the impact
of opening balance and comparative adjustments in this context.
Included in this June 2024 interim results, the half-year comparatives for 30
June 2023 are accordingly adjusted to be exclusive of AFS Luxembourg for IFRS
presentation. Please refer to the Reconciliation of Comparatives section in
this report after the primary statements for further details, in conjunction
with to the Group's June 2023 interim results mentioned above, along with the
Group's 2023 audited annual report published on 30 April 2024.
5. SEGMENTAL REPORTING
The Group's decision makers, consisting of the chief executive officer, chief
operating officer, the chief financial officer and the manager for corporate
planning, examines the Group's performance from a fund service provider's
perspective and has identified three reportable segments of its business under
IFRS 8.
The reportable segments are identified as fund administration, business
process outsourcing and regulatory and compliance. Management primarily uses
a measure of net earnings by services to assess the performance of the
reportable segments.
The customer base is primarily institutional clients, including private equity
funds, family offices and hedge funds. No individual client represents more
than 5% of revenue in the six months ended 30 June 2024 (30 June 2023: same).
Period ended 30 June 2024 Revenue Direct staff cost Other direct costs Gross profit
US$'000 US$'000 US$'000 US$'000
Fund Administration 3,982 (1,622) (210) 2,150
Business Process Outsourcing 2,299 (272) - 2,027
Governance and Compliance 966 (355) - 611
Total 7,247 (2,249) (210) 4,788
Indirect staff costs (1,934)
Other operating expenses (1,967)
Finance income, net 7
Profit before income tax 894
Period ended 30 June 2023(2) Revenue Direct staff cost Other direct costs Gross profit
US$'000 US$'000 US$'000 US$'000
Fund Administration 2,847 (1,250) (284) 1,313
Business Process Outsourcing 2,065 (179) - 1,886
Governance and Compliance 675 (238) - 437
Total 5,587 (1,667) (284) 3,636
Indirect staff costs (1,321)
Other operating expenses (936)
IPO expense (1,201)
Finance costs (23)
Profit before income tax 155
The amount of its revenue from external customers broken down by geographical
region of contracting Group entities is shown in the table below.
Geographical revenue
Period ended 30 June
2024 2023(2)
US$'000 US$'000
LATAM 1,202 1,468
Europe 1,785 474
MEAI(1) 4,260 3,645
7,247 5,587
( )
(1) MEAI means Group's operations in the geographical region of Middle East,
Asia and India
(2) Changes for IFRS presentation (i.e., AFS Luxembourg exclusion) are
reflected in the comparatives for the six months ended 30 June 2023 in line
with Section Reconciliation of Comparatives and Note 4(ii).
6. OTHER OPERATING EXPENSES
Period ended 30 June
2024 2023
US$'000 US$'000
Business development expense 55 71
Statutory fee expenses 36 17
Travelling expenses 279 177
Other overhead expenses 273 138
643 403
7. PAYROLL AND REMUNERATION COSTS
Period ended 30 June
2024 2023(1)
US$'000 US$'000
Employee costs (including directors) comprise:
Wages and salaries 4,050 2,923
Contributions on defined contribution retirement plans 12 8
Other employment benefits 121 57
4,183 2,988
(1) Changes for IFRS presentation (i.e., AFS Luxembourg exclusion) are
reflected in the comparatives for the six months ended 30 June 2023 in line
with Section Reconciliation of Comparatives and Note 4(ii).
8. INCOME TAX
Period ended 30 June
2024 2023(1)
US$'000 US$'000
Current income tax 257 105
Deferred income tax 7 7
Total tax charge for the Period 264 112
(1) Changes for IFRS presentation (i.e., AFS Luxembourg exclusion) are
reflected in the comparatives for the six months ended 30 June 2023 in line
with Section Reconciliation of Comparatives and Note 4(ii).
9. TRADE RECEIVABLES
As at the Period / year ended
Jun-2024 Dec-2023
US$'000 US$'000
Trade receivables 3,248 3,079
Less: loss allowance (485) (219)
2,763 2,860
10. OTHER PROVISIONS AND PAYABLES
As at the Period / year ended
Jun-2024 Dec-2023
US$'000 US$'000
Current
Other payables and accruals 419 257
VAT payables 7 29
Group audit fee accruals 443 500
Payment in advance from customers 52 54
921 840
11. LEASES
This note provides information for leases where Group is a lessee within the
scope of IFRS 16.
The Group does not have options to purchase certain offices for a nominal
amount at the end of the lease term. Also, these leases do not contain
variable lease payments throughout the lease terms.
The total cash outflow for leases amount to US$119k in the six months ended 30
June 2024 (in the half year ended 30 June 2023: $110k).
(i) Right of use assets
Office premise
US$'000
Cost
At 1 January 2023 475
Additions for the year 304
Exchange differences -
At 31 December 2023 779
Additions for the period 72
Disposal during the period (50)
Exchange differences (5)
At 30 June 2024 796
Accumulated depreciation
At 1 January 2023 111
Depreciation for the year 228
Exchange differences -
At 31 December 2023 339
Depreciation for the period 102
Disposal during the period (47)
Exchange differences (1)
At 30 June 2024 393
Net carrying balance as at 30 June 2024 403
Net carrying balance as at 31 December 2023 440
(ii) Lease liabilities
Office premises
US$'000
At 1 January 2023 383
Additions 304
Interest expense 40
Lease payments (240)
Exchange differences -
At 31 December 2023 487
Additions 70
Interest expense 20
Lease payments (119)
Exchange differences (2)
At 30 June 2024 456
Discounted lease payments are due as follows:
As at the period / year ended
Jun-2024 Dec-2023
US$'000 US$'000
Within one year 211 183
In between one and two years 190 197
In between two and five years 55 107
456 487
Undiscounted lease payments are due as follows:
As at the Period / year ended
Jun-2024 Dec-2023
US$'000 US$'000
Within one year 236 213
In between one and two years 201 214
In between two and five years 55 111
492 538
Less: Future finance charges (36) (51)
Lease liabilities 456 487
Disclosed as:
Current 211 183
Non-current 245 304
456 487
(iii) Short term leases
Short-term leases are leases with a lease term of 12 months or less without a
purchase option. Under IFRS 16, these leases are not included in right of
use assets or lease liabilities, and such lease expenses are recognised in
profit and loss when incurred; these short term leases are immaterial to Group
in the six months ended 30 June 2024 (in the year ended 31 December 2023:
same).
12. DIVIDENDS
During the interim period ended 30 June 2024, the Company did not declare
dividends.
In the prior half year ended 30 June 2023, pre-listing dividends of $5.8m had
been preliminarily declared and then determined and finalised at $3.4m by
Amicorp Fund Services Asia Limited, in line with the listing prospectus dated
5 June 2023.
13. RELATED PARTIES TRANSACTIONS
(a) Transactions with Amicorp Group
The following transactions were carried out with related parties who are
members of Amicorp Group.
Period ended 30 June
2024 2023
US$'000 US$'000
2,158 1,766
Rental and remuneration expenses (542) (1,155)
As at the Period / year ended
June-2024 Dec-2023
US$'000 US$'000
Amounts due from related parties 4,636 3,711
The expected credit loss assessment does not have a material impact on the
carrying amount of the amounts due from related companies, and no bad debt
allowance associated with these balances was recognised.
(b) Transactions with related parties other than Amicorp Group
There has been no related party other than Amicorp Group that the Group enters
into transactions with, related to fund administrative business, throughout
the interim period. The Group's transactions are conducted on an arm's length
basis.
(c) Transactions with key management personnel, remuneration and other
compensation
Key management personnel are those persons having authority and responsibility
for planning, directing and controlling the activities of Group, directly or
indirectly.
The summary of compensation of key management personnel is as follows:
Period ended 30 June
2024 2023
US$'000 US$'000
Salaries and short-term benefits 517 372
14. FINANCIAL RISK AND CAPITAL MANAGEMENT
The Group's major financial instruments include trade receivables, other
receivables and deposit, amounts due from related companies, cash and cash
equivalent and trade payables which are disclosed in respective notes. The
risks associated with these financial instruments include liquidity risk,
foreign currency risk, credit risk and interest rate risk. The management
manages and monitors these exposures to ensure appropriate measures are
implemented in a timely and effective manner.
(a) Liquidity risk and Capital management risk
Our assessment of liquidity risk and capital management risk remain consistent
with what was disclosed in the annual report for the year ended 31 December
2023, indicating no alterations. There has not been any bank facility or
financial covenants in the six months ended 30 June 2024 (in the six months
ended 30 June 2023: same).
(b) Foreign currency risk
The Group operates internationally and is exposed to foreign exchange risk
arising from its ongoing transactions and the financial assets and liabilities
denominated in foreign currencies. Foreign exchange risk also arises from
financial assets and liabilities denominated in the functional currencies in
which they are measured. Translation exposures with a functional currency
different from Group's presentation currency are not included in the
assessment of Group's exposure to foreign currency risks in accordance with
IFRS 7 - Financial Instruments: Disclosures.
In countries where the Group operates, except for Hong Kong, income and
expenditure are predominantly derived in respective functional currencies and
management therefore considers the transactional related foreign exchange risk
is insignificant. In Hong Kong, income is predominantly derived in US$ whilst
the expenditure is in HK$. Because of HK$ having been pegged to US$ at a
fixed rate of 7.8 by Hong Kong government since 1983, it is concluded that its
foreign currency risk against US$ is minimal in the jurisdiction. Overall, the
Group is not subject to significant foreign currency risks.
(c) Credit risk
The Group's credit risk is primarily attributable to its trade and other
receivables, contract assets and amounts due from related parties.
Management has a credit policy in place and the exposures to these credit
risks are monitored on an ongoing basis. Management of credit risk involves
a number of considerations, such as the financial profile of the counterparty,
and specific terms and duration of the contractual agreement.
The Group measures loss allowances for trade and other receivables at an
amount equal to lifetime ECLs, which is calculated using a provision matrix.
As the Group's historical credit loss experience does not indicate
significantly different loss patterns for different customer segments, the
loss allowance based on past due status is not further distinguished between
the Group's different customer bases. The Group does not have any
significant credit risk exposure to any individual client or counterparty.
(d) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a
financial instrument will fluctuate because of changes in market interest
rates. Management considers the interest rate risk as insignificant to the
Group since there has been no interest bearing borrowings, significant
interest income or tangible assets with fair values substantially subject to
interest rates.
(e) Fair value of financial instruments carried at other than fair value
The fair value of financial instruments represents the amount at which the
instrument could be exchanged in a current transaction between willing
parties, other than a forced sale or liquidation. The carrying amounts of
the Group's financial instruments carried at amortised cost approximate their
fair values as at 30 June 2024 (31 December 2023: same).
15. EVENTS OCCURRING AFTER THE REPORTING PERIOD
There has been no subsequent event as of the report date.
16. CONTINGENT LIABILITIES
The Group has no contingent liabilities arising in the ordinary course of
business, which would be material in the context of the Group's condensed
consolidated financial position.
Principal Risks and Uncertainties
The Group faces a number of risks and uncertainties that may have an adverse
impact on the Group's operation, performance or future prospects.
The Board regularly assesses and monitors the principal risks and
uncertainties of the business, and considers that they have not changed and
remain relevant for the remaining six months of the 2024 financial year.
Such principal risks and uncertainties are summarised as follows:
Fiduciary risk
The Group acts in a fiduciary capacity as directors and AML officers to its
clients which carries specific legal obligations, including certain fiduciary
duties as well as responsibility for decision making. Breaches of such
specific legal duties and obligations could give rise to a claim against the
Group and its employees, and/or sanctions from the Group's regulators.
Risk-based approach to AML and KYC for the Group's business
The Group applies a risk-based approach to AML and KYC in conducting its
business in jurisdictions in which the Group may or may not be required to be
licensed. Whilst regulatory authorities commonly mandate a risk-based
approach to AML and KYC and publish regulatory guidelines and regulatory
expectation as to the standards that should be applied in a risk-based
approach, there is no assurance that the Group's procedures will in all cases
meet all the guidelines and/or regulatory expectation where such guidelines or
published regulatory expectations may be open to differing interpretations or
lacking legal clarity.
Dependency on key personnel
The Group is dependent upon key senior management personnel who direct the
implementation of the Group's strategy and business growth. If the Group's
senior management were to depart, or otherwise cease to be able to perform
their duties for the Group, the Group may not be able to identify and recruit
adequate replacements in a timely manner, or at all, and the Group's business
may suffer disruption or other damage.
Risks relating to performance
The Group's clients are engaged in complex activities involving investments in
financial instruments and multi-jurisdictional structures. Whilst the
Group's staff are trained and experienced in providing services relating to
such activities and deliver services within an operating environment that has
been developed and tested to prevent errors, the complexity of the activities
can mean that it is difficult to fully eliminate the possibility of staff
making errors.
Importance of ability to maintain and develop existing client relationships
A large proportion of the Group's revenues are derived from servicing existing
fund clients and client structures. There can be no assurance that existing
client relationships will continue to grow or that key clients will not choose
to move the servicing of their funds and structures to the Group's
competitors.
Ability to maintain current referral relationship to gain new clients
The Group has been partially reliant on receiving new client and work
referrals from established referral relationships with on-shore and off-shore
legal advisers, asset management businesses, independent advisors and
consultants, accounting firms and other professional intermediaries, as well
as the Amicorp Group and its affiliated business. If the Group is unable to
retain and sustain these relationships, this could have a material adverse
effect on the Group's business, results of operations or financial condition.
Risks associated with growth and acquisitions
Continued growth in the Group's overall client base would require further
investment by the Group in personnel, facilities, information technology,
financial management and controls. There is no assurance that the Group
would be successful in deploying investment to augment its service offering
and overall business scale.
Relationship with the Amicorp Group
Whilst the Pre-IPO reorganisation has been effected at arm's length and such
that all of the operations of the fund services business were carved-out from
Amicorp Group, the Group is still reliant on the certain contractual
undertakings with the Amicorp Group with respect to its Luxembourg and India
operations. In the event that the Amicorp Group does not comply with such
undertakings in full or in part, the ability of the Group to continue to
operate and generate revenue from the fund services business in such
jurisdictions could be impaired.
Variable fee risk
The Group's fees are based on a mix of fixed and variable fees. The precise
proportion of the Group's variable fees may differ depending on asset size of
funds, client preference, activity levels and sector norms. Besides,
individual asset classes are susceptible to fluctuations in performance driven
by, among other things, macroeconomic factors, changing regulatory
obligations, changing taxation legislation, and shifts in client preferences
and demands.
Reliance on third party fund administration systems
The services provided by the Group rely considerably on third party fund
administration systems. Whilst the Group has contracts in place with each
these systems, were a disruption to occur to the support provided by them,
this might adversely affect the Group's ability to service its clients in
keeping with contracted and expected service levels.
Business continuity risk and IT security
The Group's business is dependent on the capacity and reliability of the IT
and communication systems that support its operations. A large part of
services are delivered through electronic means, including via public and
private communications networks. These IT and communications systems and
networks can be subject to performance degradation or failure for reasons
within or outside the control of direct suppliers.
Disputes and litigation risk
The Group's activities as a professional service provider across multiple
jurisdictions with separate legal and regulatory requirements give rise to
the risk of potential disputes, legal proceedings or claims both from
clients directly or indirectly or from other parties who may be counterparties
to transactions which, whilst the Group is not a party to them as a
principal, it may be acting as an agent on behalf of clients involved in
them.
Pricing risk
The fund, corporate and private client services industry is well developed and
is a highly competitive environment and the Group may face increased
competition and price pressure in the markets and jurisdictions in which it
operates.
Currency fluctuation risks
As the Group conducts business across multiple jurisdictions, the Group may be
exposed to financial risks associated with fluctuations in currency exchange
rates, primarily, at present, between, Euros, US dollars, Hong Kong dollars,
Singapore dollars and Chilean Pesos.
Statement of Directors' Responsibilities
Each of the Directors whose names appear below confirms that, to the best of
his or her knowledge:
· the condensed set of financial statements gives a true and fair view of the
assets, liabilities, financial position, and profit or loss of the issuer, or
undertakings included in the consolidation, as required by DTR 4.2.4R and
prepared in accordance with UK adopted IAS 34 'Interim Financial Reporting';
· the interim management report includes a fair review of the information
required by DTR 4.2.7R, namely:
- an indication of important events that have occurred during the first six
months and their impact on the condensed set of financial statements; and
- a description of the principal risks and uncertainties for the remaining six
months of the financial year; and
· the interim management report includes a fair review of the information
required by DTR 4.2.8 R, namely:
- related party transactions that have taken place in the first six months of
the current financial year and that have materially affected the financial
position or the performance of the enterprise during that period; and
- any changes in the related party transactions described in the last annual
report that could have a material effect on the financial position or
performance of the enterprise in the first six months of the current financial
year.
The Directors of Amicorp FS (UK) Plc as at the date of this announcement are
as follows:
Executive Directors
Chi Kin Lai, Chief Executive Officer
Tat Cheung (Stephen) Wong, Chief Financial Officer
Robin Hoekjan, Chief Operating Officer
Non-Executive Directors
Antonius Knipping, Chairman
Kathy Byrne
Patrick Byron
Approved by the Board and signed on its behalf by:
Chi Kin Lai Tat Cheung (Stephen) Wong
Chief Executive Officer Chief Financial Officer
12 September 2024 12 September 2024
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