REG - Amicorp FS (UK) PLC - Maiden Interim Results
27/09/2023 07:00
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RNS Number : 7481N Amicorp FS (UK) PLC 27 September 2023
27 September 2023
Amicorp FS (UK) Plc
('AMIF', the 'Company' or the 'Group')
Interim Results
Trading in-line with management expectations
Well placed to take advantage of growth in outsourcing of fund administration
services
Amicorp FS (UK) Plc, the international specialist fund services group, is
pleased to report its maiden set of interim results for the six months ended
30 June 2023 ('H1-2023' or the 'period'). The Board is pleased to report a
successful period of trading in line with management expectations and is
confident in the Group's ability to maintain this level of performance into
H2-2023.
H1-2023 Financial Highlights
· Total revenue increased by 3.1% to US$7.1 million (H1 2022: US$6.9 million).
This growth was largely driven by a 65% increase in revenues by the Assurance
and Governance Services division when compared to H1-2022
· Gross profit of US$4.8 million is equivalent to a 68.1% margin to total
revenue
· Adjusted EBITDA of US$2.5 million represents a 34.9% margin to total revenue
· EBITDA of US$1.2 million, after offsetting the one-time IPO and post-IPO
expenses
H1-2023 Operational Highlights
· Successful IPO on the Main Market of the London Stock Exchange on 8 June 2023,
alongside a placing of new Ordinary Shares raising US$6.5 million before
expenses and a placing of existing Ordinary Shares of US$9.7 million
· Opening of Brazil office at the start of 2023 following receipt of regulatory
approval
· Undergoing application process for a fund administration license in the Dubai
International Financial Centre ('DIFC')
· Creation of Assurance and Governance Services to expand the Group's offerings
including ESG and corporate governance support
Commenting on the Interim Results, Toine Knipping, Non-Executive Chairman of
AMIF, said:
"Following our successful listing on the Main Market of the London Stock
Exchange in June this year, the business has continued to perform well both
operationally and financially, on the back of strong organic growth and
further diversification, evidenced by the improvement in the Assurance and
Governance Services part of the business.
"Asset managers and fund providers continue to outsource back office functions
due to increasingly complex compliance requirements and inflationary staff
costs. AMIF is ideally positioned to gain market share in this environment
with its strong track record, ability to offer a full suite of fund management
services and its in-depth understanding of the regulatory back drop across
multiple different geographies, especially in emerging markets.
"We will continue to innovate and invest heavily in the business, so that our
operating platform can support AMIF's ambitious expansion plans. This will
also enable our systems and processes to be rolled out more easily to a wider
range of future clients, thereby driving a higher operating margin and
supporting our capital light business model."
Market Abuse Regulation Disclosure
The information contained within this announcement is deemed by the Company
(LEI: 21380028AUYWGMYXQA57) to constitute inside information for the
purposes of Article 7 of the Market Abuse Regulation (EU) No 596/2014 as it
forms part of UK domestic law by virtue of the European Union (Withdrawal) Act
2018 as amended ('UK MAR'), and Article 7 of the Market Abuse Regulation (EU)
No. 596/2014 ('EU MAR'). The person responsible for arranging and
authorising the release of this announcement on behalf of the Company is
Stephen Wong, Chief Financial Officer.
For further information please contact:
Amicorp FS (UK) Plc Via Buchanan Communications
Toine Knipping, Non-Executive Chairman
Chi Kin Lai, Chief Executive Officer
Tat Cheung (Stephen) Wong, Chief Financial Officer
Bowsprit Partners Limited Tel: +44 (0) 20 3883 4430
John Treacy www.bowspritpartners.com (http://www.bowspritpartners.com/)
Luis Brime
Media Enquiries:
Buchanan Communications Tel: +44 (0) 20 7466 5000
Simon Compton AmicorpFS@buchanan.uk.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 operates at
significant scale, providing local and global expertise to over 460 active
funds.
AMIF provides a comprehensive and tailored range of services which are all
underpinned by market-recognised technology solutions that support clients
across the value chain, from a single point of contact.
These include:
· Fund Administration & 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.
· Assurance and Governance 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
Admission to Main Market
The placing that accompanied AMIF's Admission to the Main Market raised
US$16.2 million before expenses, of which US$6.5 million was raised to enable
the Group to take advantage of continued growth in the outsourcing of fund
administration services, which has arisen as a result of diversification in
the asset management industry and increasing regulatory and compliance
requirements. The Board is pleased with the decision to list on the Main
Market of the London Stock Exchange which has already led to an increase in
the number of inbound enquiries due to AMIF's enhanced profile and status as a
listed company.
Business Summary
AMIF's business is derived from regulatory requirements in jurisdictions where
funds have independent fund administration. Moreover, as levels of
regulation have increased over recent years, there has been an increasing
trend for asset managers, institutions and family offices to shift towards
outsourcing administrative and other services to specialist service providers,
in order to focus resources on their core businesses instead of increasing
administration, regulatory and reporting requirements.
AMIF currently provides the following services to its clients:
Fund Administration
Fund onboarding
Whilst the Group does not provide any legal, tax or fund structuring advisory
services, it does conduct internal reviews of fund documentation relevant to
its fund administration services in order to facilitate the successful launch
of a fund.
Registrar and transfer agency and NAV calculation
The Group, in its capacity as a fund administrator, implements and applies
Know-Your-Client ('KYC') and Anti-Money Laundering ('AML') policies and
procedures adopted by the relevant funds, meeting the applicable regulatory
requirements in order to collect relevant KYC documents from investors.
The Group's fund administration services also include:
· performing risk screening procedures
· due diligence processes on investors (for example to identify any politically
exposed persons ('PEPs')) or individuals involved in criminal activities or
corruption
· communicating with asset managers and local regulators to ensure regulatory
compliance
· processing subscription, transfer and redemption requests
· maintaining registers of investors; and
· treasury management.
Net Asset Value Calculation
The Group acts as an independent party to maintain funds' financial records,
carry out periodic reconciliations of transactions, fee computations, as well
as calculating the Net Asset Value ('NAV') of the funds in line with the
Private Placing Memorandum ('PPM') issued in respect of the relevant fund.
Preparation of financial statements
As fund administrators, the Group works closely with auditors, providing
relevant schedules and draft financial statements.
Assurance and Governance services (previously known as Regulatory and
Compliance services)
AML services
The Group designs and implements bespoke KYC and AML policies and procedures
for funds and client structures to assist them in maintaining a proper risk
framework as required in the relevant jurisdiction.
Most jurisdictions in which the Group provides funds services mandate the
appointment of qualified individuals to be designated as Anti-Money Laundering
Officers with responsibility for overseeing the AML policies and controls of
the fund, evaluating transactions and determining whether any identified
suspicious transactions should be reported to the relevant authorities.
Directorship services
The Group provides directorship services to a range of clients, including
asset managers, family offices and financial professionals to provide
independent oversight of the clients' business activities.
Acting as a director of the fund enables the Group to more closely monitor the
funds by accessing both financial and non-financial information and checking
that subscription proceeds are being deployed in accordance with the fund's
PPM. The appointed director may also participate in the decision-making
process on matters which may require independent judgment, such as dividend
distributions, late redemptions or subscription and appointment of third-party
service providers.
Board support services
The Group provides board support and related administrative services including
preparation of meeting agenda, preparation and presentation of relevant
reports (namely AML reports, NAV reports, suspicious transaction reports,
exceptional reports, regulatory updates and compliance reports), preparation
of meeting minutes and coordination of other corporate secretarial activities
for fund clients.
FATCA, CRS and other tax reporting services
The Group provides services to assist the proper classification, registration
and reporting of funds for FATCA, CRS and other tax compliance purposes.
Business Process Outsourcing services
Accounting and corporate services
The Group provides accounting and/or corporate services to general partners,
investment management companies and special purpose vehicles associated with
the Group's fund clients to meet their demand for streamlining their
resources.
The Group also offers accounting services to client companies investing in
financial instruments through the Group's automated fund accounting system.
Operational and Strategic Review
Fund Administration
Client Base
H1-2023 H1-2022 FY-2022
Number of funds at start of period/year 444 393 393
New funds 39 46 105
Funds terminated (20) (5) (54)
Number of funds at period/year end 463 434 444
The growth in number of funds has been robust and as expected. In the last
six months the number of funds has grown organically at an annualised rate of
8.6% from 444 on 1 January 2023 to 463 on 30 June 2023. While the number of
new funds was comparable to H1-2022, the Group has experienced more
terminations in H1-2023 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
· Cancellation because of difference in risk appetite.
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:
AFS Brazil LTDA became fully operational at the start of 2023 upon receiving
regulatory approval from the Comissão de Valores Mobiliários ('CVM') to
offer fiduciary investment fund administration services. The license is
specifically dedicated to overseeing private equity funds ('FIP'), which
experienced the fastest growth in the local investment fund sector over the
last ten years. Throughout H1-2023, substantial efforts were dedicated to
establishing Amicorp Fund Services as a FIP administrator in the Brazilian
market, including but not limited to a significant event featuring the
presence of the CVM with industry professionals from investment managers, law
firms, and strategic partners.
Dubai is one of the major financial centres in the Middle East where global
family offices, asset managers and institutional investors from Europe and
Asia have a significant presence. The Group has been administrating funds
managed by asset managers and family offices there since 2021. As AMIF's
client base continues to grow in Dubai, it has become strategically important
to have a local presence. The Group started the application process for the
fund administration license in Dubai International Financial Centre ('DIFC')
in March 2023. It is expected the license will be granted and a new office
will be opened in Q4-2023. The application process has commenced to obtain
the relevant license in Abu Dhabi and the Group is also assessing the
feasibility of applying for a fund administration license in Saudi Arabia.
Outlook for Fund Administration - H2-2023
In the period from 1 July 2023 to 31 August 2023, the Group has continued to
grow the number of funds under administration with a total of 17 new wins at
the start of H2-2023, and the number of new wins in H2 is expected to outweigh
the number achieved in H1, based on historical trends. 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.
In September 2023, the Group obtained approval from Commission de Surveillance
du Secteur Financier ('CSSF') of Luxembourg to separate the fund services
element of an existing license held within Amicorp Group. Following that,
the application for depositary lite license in Luxembourg is expected to
start, which would be complementary to the Group's fund administration
business with enhanced services and revenue base.
Continuous expansion of AMIF's sales network in strategic locations remains
important for organic growth of the Group's fund administration business.
The key strategic locations for sales expansion are in the UAE, Mexico,
Luxembourg and Singapore, where the Group is strengthening its presence,
collaborating with complementary services providers such as legal firms,
investment advisors and asset managers, to expand the Group's reach to new
prospects.
The application process has commenced for fund administration and specialised
depository licenses in Ireland to expand AMIF's business reach in Europe.
The application process should take between nine to twelve months. The
objective of obtaining fund administration and specialised depository licenses
in Ireland is to meet the demand of clients who prefer a common law fund
jurisdiction with European passport (i.e., the regulatory framework that
allows asset management firms based in one European Union ('EU') member state
to offer their investment services and manage assets for clients in other EU
member states without the need for additional regulatory approvals in each
country).
On the operation side, the Group has been moving towards automation of the
existing fund administration process. With the deployment of some of the IPO
proceeds, it is expected that an automated tool for fund manager and investor
onboarding will be completed and go live in H2-2023. The Group is
continuously assessing the effectiveness of its existing IT infrastructure and
finding opportunities for further technology integration to improve
operational efficiency.
Assurance and Governance services
The Group actively pursued the expansion of the Assurance and Governance
services segment to reach 391 mandates in H1-2023 (versus 240+ mandates in
H1-2022), which primarily include the extra engagements for AMLCO (Anti-Money
Laundering Compliance Officer), MLRO (Money Laundering Reporting Officer),
DMLRO (Deputy Money Laundering Reporting Officer) and Directorship services.
The growth in the current year was a result of multidirectional efforts in
securing the mandates in the last twelve months from existing customers and a
well-defined revenue model.
The revenue model includes packaged responsibility fees billed annually in
advance for the mandates and a time spent component billed at hourly
charge-out rates. Keeping accurate time records is not only mandatory for
such officers assuming fiduciary responsibility by defining minimum board,
MLRO and/or fiduciary meetings per year as per statutory requirements, but it
also helps keep track of the quality of services and compliance to the
commitment defined by the laws and regulations. Another source of revenue
that will be realised in H2-2023 is the fees billed towards conducting of
Annual Training Fees to the Investment or Asset Managers and responsible
officers as mandated by regulators.
Outlook for Assurance and Governance services - H2-2023
The twelve-month plan for building growth under Assurance and Governance
services is to expand the scope of services which can be summarised below.
While the regulations globally are being updated, with a focus on
Environmental and Social Governance ('ESG') and Enterprise Risk management
('ERM'), the Group is preparing itself to be one of the leading service
providers of these services and a one-stop service provider for AMIF's
clients.
In developing Assurance and Governance services, the Group continues to adhere
to its vision in organisational team structure, by the extensive deployment of
its centres of excellence in Bangalore and Mauritius, complemented by the
expertise in local offices. This delivery model, which is summarised below,
is believed to accommodate growth, build expertise and maintain high levels of
operating efficiency.
· Review and generation of reports happen in the existing fund administration
system as a central source, duly maintained by the teams in Bangalore and
Mauritius;
· The reports are then reviewed by the named officers who comment and approve,
and discuss exceptions with clients; and
· To ensure diversity of experiences to the staff, appointment of external
qualified officers with relevant experiences in the respective field is
expected.
While the major growth in mandates in H1-2023 was driven by new business from
existing clients, the plan for the coming months is to focus on new business
from new clients and third-party service providers. The additional efforts
will be invested in:
· Organisation of marketing events in the Cayman Islands, British Virgin Islands
and Dubai to target investment managers, asset managers and licenced funds;
· Seeking registration as preferred delivery partner with renowned
professionals;
· Offering AML setup and consultancy services;
· Investment in automation for statutory reports generation; and
· Provision of trainings to third parties as mandated by regulators.
Business Process Outsourcing services
The Group adjusted its targeted customer group of Business Process Outsourcing
services to include single or multiple family offices and discretionary
accounts managed by professional asset managers. The Group also provides
assistance towards the conversion from traditional holding structures to fund
structures as a more effective, secure and financially rewarding solution for
cross-border investment strategies. These changes which are seen to be
prompt reactions towards the evolving market trends will ensure the Group
continues meeting the needs of clients, by taking away the burden of managing
essential and often complex back-office tasks.
In Luxembourg, the Group is equipped with corporate services infrastructure to
act as a trusted one-stop shop for the comprehensive fund structure formation
and ongoing administrative support. The sales team has been tasked to
actively pursue combined fund administration and corporate services when they
come across Luxembourg opportunities.
In H1-2023, the Group carried out an efficiency transformation campaign to
maximise the operational synergy between its Business Process Outsourcing team
and Fund Administration team, by leveraging on their relevant and similar
expertise of financial statement delivery and audit liaison. Although the
campaign reduced slightly the external chargeable time of the Business
Processing Outsourcing team, it is considered to be an initial step towards
further automation and enhanced operational efficiency.
Outlook for Business Process Outsourcing services - H2-2023
The Group aims to continue with the initiatives taken, especially the
integration between the Business Process Outsourcing team and Fund
Administration team. The Group's vision is to consolidate the accounting
skillsets and level up the team to become a technical champion for accounting
related services and matters.
From a technology and innovation perspective, the Group is seeking system
efficiency by subscription of additional suitable tools or enhanced deployment
of its existing software for accounting and financial statement preparation
tasks.
Continuing the focus on value added services under each business line, the
plan for the coming twelve months is to provide CFO and CFO assist services to
clients under the current BPO portfolio. The plan is to upgrade the current
service contracts from bookkeeping and accounting services to value added
management reporting and CFO assist services and further provide the same
services to external clients.
Outlook for the Group
We are pleased to report a strong performance in the first half of the year.
There has also been a positive uptick in new funds onboarded at the start of
the second half and we remain comfortable that the business will trade in-line
with management expectations for the full year. AMIF is ideally positioned to
play a consolidator role in the fragmented fund services market due to its
scale, breadth of services and long-term track record. The Board looks to the
future with confidence.
Chi Kin Lai
Chief Executive Officer
27 September 2023
Group H1-2023 Income Statement
H1-2023 H1-2022 Change FY-2022
US$'000 US$'000 % US$'000
Revenue
Fund administration 4,347 4,297 1.2% 7,823
Business process outsourcing services 2,065 2,166 (4.7)% 3,272
Assurance and governance services 675 409 65.0% 814
Total Revenue 7,087 6,872 3.1% 11,909
Payroll and remuneration costs (3,461) (2,607) 32.8% (5,397)
Rent and occupancy (262) (428) (38.8)% (783)
Professional fees (227) (74) 206.8% (356)
IT expenses (297) (266) 11.7% (547)
Foreign currency gain 33 43 (23.3)% 28
Other operating expenses (403) (230) 75.2% (692)
Adjusted EBITDA(*) 2,470 3,310 (25.4)% 4,162
IPO expenses (1,201) (502) 139.2% (906)
Post-listing expenses(**) (49) - N/A -
EBITDA 1,220 2,808 (56.6)% 3,256
Other (losses) / gains (37) 22 (268.2)% 38
Finance costs (23) (18) 27.8% (39)
Depreciation expenses (132) (43) 207.0% (128)
Profit before income tax 1,028 2,769 (62.9)% 3,127
Income tax expense (298) (579) (48.5)% (829)
Profit for the period / year 730 2,190 (66.7)% 2,298
Employee costs as a percentage of revenue* 48.8% 37.9% 10.9% 45.3%
* These measures are Alternative Performance KPIs, which are not defined under
IFRS and are therefore termed "non-IFRS" KPIs. These KPIs supply additional
useful information on the underlying trends, performance and position of the
Group. These alternative performance KPIs used may not be directly
comparable with similarly titled measures used by other companies.
** Post-listing expenses are one-time or recurring expenses arising from
listing obligations which depends on successful admission. By excluding
these from adjusted EBITDA, the management believes that the Alternative
Performance KPI could precisely reflect the performance of the Group's
ordinary business operation. For details, please refer to Financial Review
session below.
Financial Review
Revenue
Revenue increased by 3.1% to US$7.1 million (H1-2022: US$6.9 million), which
was contributed by:
· Fund Administration revenue remained flat at US$4.3 million in H1-2023
(H1-2022: US$4.3 million). Despite the increase in the net number of funds
as compared to H1-2022, the Group was partly affected by the increased closure
and termination of funds as investors redeemed from or withdrew interest in
operating funds due to uncertain market conditions. Fund launches were also
slowed down due to challenges in fund raising amid global inflation staying at
an uncomfortably high level. Having said that, the Group continued to prove
its strength in client retention and stability of recurring revenue from its
diversified client base.
· Assurance and Governance services revenue increased by 65% to US$0.7 million
in H1-2023 (H1-2022: US$0.4 million), which is in line with the increase in
AML officer and directorship mandates to 391 in June 2023 from 240+ mandates
in June 2022, predominantly associated with the Group's fund clients domiciled
in the Cayman Islands and Luxembourg. The Group charges a packaged service
fee that covers the defined minimum statutory requirements for each mandate,
plus a variable time-spent fee for value-added services to fulfil the relevant
fiduciary responsibilities. The Group has been engaging in proactive
marketing of this business line, intending to widen the service offerings and
create value for its clients.
· Business Process Outsourcing services revenue experienced a slight decrease of
4.7% to US$2.1 million in H1-2023 (H1-2022: US$2.2 million). The growing
revenue from corporate services from external client entities was offset by
the drop of revenue from the Intragroup Outsourcing Agreement with Amicorp
Group, which is caused by the efficiency transformation campaign described in
the Operational and Strategic Review section above.
The seasonal element of Fund Administration and Business Process Outsourcing
services revenue remains applicable, specifically arising from revenue
recognition of financial statement preparation work which falls on the first
half of the year.
Payroll and renumeration costs
The Group reported an increase of US$0.8 million, or 32.8%, in payroll and
renumeration costs in H1-2023 (H1-2022: US$2.6 million). Such an increase,
arising from the addition of six sales employees and ten production employees
compared to H1-2022, represents the Group's continuous strategic investments
in human capital, with an aim to enhance their capabilities which contribute
to the Group's growth, innovation and overall success over the long term.
The table below summarises the Group's headcount by geographical locations as
at the period/year end:
H1-2023 H1-2022 FY-2022
Chile 13 11 12
Hong Kong 7 6 7
India 45 47 45
Luxembourg 8 10 8
Others 35 16 29
Total Group Headcount 108 90 101
The major incremental payroll and renumeration costs spread across the
following strategic locations:
· Brazil (H1-2023: US$201k; H1-2022: US$140k) being a newly licensed office
established the necessary organisational structure required by CVM, via the
addition of two production employees into the team. Such infrastructure
provides 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.
· Chile (H1-2023: US$375k; H1-2022: US$225k) being one of the fast-growing
emerging markets has a complex macroeconomy and inflation structure.
Inflationary adjustments have therefore accounted for most of the increase in
payroll and renumeration costs, as part of the Group's commitment to
demonstrate fair compensation, minimise turnover, and reduce the associated
costs of recruitment and training. Such stability in workforce and the
onboarding of an Operation Manager would also contribute to the success of the
Group's vision to expand the Chile office into the operation outsourcing
centre of LATAM.
· Curacao (H1-2023: US$243k; H1-2022: US$98k) has been known to have a
well-established and growing market for fund administration services. It
continues to contribute significant revenue into the Group's LATAM
operation. The increase in payroll and renumeration costs there arose solely
from the addition of two sales employees whose focus is on the expansion of
the Group's business in Curacao and LATAM via close collaboration with other
strategic offices in that geographical area.
· Dubai (H1-2023: US$107k; H1-2022: US$33k) has been actively working to
establish itself as a global financial hub, and its asset management sector
has been a key part of this strategy. In view of its rapidly growing and
transforming asset management industry, the Group recently enlarged its sales
coverage by adding two more senior sales employees to the team, aiming to
maximise its organic growth initiatives and capture a much wider spectrum
across the whole Middle East region.
· Hong Kong (H1-2023: US$610k; H1-2022: US$537k) remains as the largest revenue
generating office of the Group. The increase in payroll and renumeration
costs in Hong Kong was attributable to inflationary adjustments and addition
of one production employee. While the contribution from the pre-existing
team was recognised, the new employee brought in useful skill sets to the team
which speeded up the integration between Hong Kong and Singapore team based on
proximities of both areas.
· Mexico (H1-2023: US$216k; H1-2022: US$144k) being one of the largest economies
in Latin America has been benefiting from nearshoring opportunities because of
its geographic proximities to the US, and existence of trade agreements with
its regional neighbours. The Group has expanded its investment in Mexico
through the addition of a sales employee and a production employee in H1-2023,
who have collectively added to the strong pipeline and operation readiness to
this relatively new office.
Followed by the successful admission, the Group's investment in human capital
is expected to continue in the second half of 2023, in line with the adopted
business strategies.
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$166k, or 38.8% to US$262k in H1-2023
compared to US$428k in H1-2022 was partially compensated by the increase in
depreciation expenses because of the newly acquired third party lease in Hong
Kong at lower rate.
Professional fees
Professional fees represent accounting, audit and tax compliance service fees
for certain subsidiaries of the Group, 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$153k, or 207% to US$227k in H1-2023
compared to US$74k in H1-2022 was attributed to the additional statutory audit
and tax reporting obligations of newly incorporated subsidiaries and the
application of fund administration license in DIFC of Dubai. In addition,
the Group also undertook temporary engagements with external compliance
services providers in Malta in H1-2022 to support local statutory compliance
matters, which were duly completed pursuant to the relevant regulatory
approval granted by MFSA ('Malta Financial Services Authority').
IT expenses
IT expenses comprise of the fees incurred for the use of the fund
administration systems, Bloomberg terminal and other business-related systems.
IT expenses increased from US$266k in H1-2022 to US$297k in H1-2023 because of
the newly incurred cloud hosting service for the fund administration system,
and fee increment for the use of the Chilean operation system.
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$403k in H1-2023 from US$230k in
H1-2022 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 to a
financial database, participation in professional associations, and the
organisation and sponsorship of business development events.
Post-listing expenses
Post-listing expenses represent one-time or recurring expenses arising from
listing obligations which was dependent on successful admission. Examples of
post-listing expenses include the carved-out subscription to certain IT
systems such as finance and accounting systems and Microsoft licenses,
together with additional fees for the appointment of Executive and
Non-Executive Directors.
Effective on Admission, the Group also expects to incur additional expenses
such as statutory listing fee, professional indemnity insurance which were
previously covered by Amicorp Group, as well as the engagements of ongoing
professional advisers.
Income tax expense
The estimated income tax expense decreased to US$298k in H1-2023 (H1-2022:
$579k), in line with the movement in the profit before income tax.
H1-2023 Divisional Performance Overview
H1-2023
Fund administration Business process outsourcing Assurance and governance Total
US$'000 US$'000 US$'000 US$'000
Revenue 4,347 2,065 675 7,087
Direct staff costs (1,557) (179) (238) (1,974)
Other direct costs (284) - - (284)
Gross profit 2,506 1,886 437 4,829
Gross profit margins 57.6% 91.3% 64.7% 68.1%
H1-2022
Fund administration Business process outsourcing Assurance and governance Total
US$'000 US$'000 US$'000 US$'000
Revenue 4,297 2,166 409 6,872
Direct staff costs (1,254) (147) (120) (1,521)
Other direct costs (233) - - (233)
Gross profit 2,810 2,019 289 5,118
Gross profit margins 65.4% 93.2% 70.7% 74.5%
FY-2022
Fund administration Business process outsourcing Assurance and governance Total
US$'000 US$'000 US$'000 US$'000
Revenue 7,823 3,272 814 11,909
Direct staff costs (2,581) (293) (273) (3,147)
Other direct costs (514) - - (514)
Gross profit 4,728 2,979 541 8,248
Gross profit margins 60.4% 91.0% 66.5% 69.3%
Fund Administration, Business Process Outsourcing and Assurance and Governance
segments deliver gross profit margin of 58%, 91% and 65% respectively in
H1-2023. These result from the Group's additional investment in the form of
additional experienced production employees, as well as the newly subscribed
cloud hosting and fee increment of fund administration systems. All in all,
these three segments contribute to 68% of overall gross profit margin for
H1-2023, compared to 75% for H1-2022.
These continue demonstrating the consistently high gross profit margins of
around 70% for the Group.
Unaudited Condensed Consolidated Financial Statement
For the six months ended 30 June 2023
Notes 6 months to 30 June 2023 6 months to 30 June 2022
Unaudited Unaudited
US$'000 US$'000
Revenue 5 7,087 6,872
Payroll and remuneration costs 7 (3,493) (2,607)
Rent and occupancy (262) (428)
Professional fees (227) (74)
IT expenses (314) (266)
Depreciation expenses (132) (43)
IPO expenses (1,201) (502)
Foreign exchange gain 33 43
Other operating expenses 6 (403) (230)
Operating profit 1,088 2,765
Other (losses) / gains (37) 22
Finance costs (23) (18)
Profit before income tax 5 1,028 2,769
Income tax expense 8 (298) (579)
Net profit after tax 730 2,190
Other comprehensive income / (loss)
Foreign currency translation 20 (27)
Total comprehensive income 750 2,163
Earnings per ordinary shares US$ US$
Basic EPS 0.01 0.02
Diluted EPS 0.01 0.02
Unaudited Condensed Consolidated Statement of Financial Position
As at 30 June 2023
Notes 30 June 31 December
2023 2022
US$'000 US$'000
Non-current assets
Tangible assets 114 76
Right of use assets 11 601 364
Investment 28 61
Deferred tax assets 272 263
1,015 764
Current assets
Trade receivables 9 1,186 1,521
Other receivables, deposits and prepayments 1,616 637
Amounts due from related companies 13 2,454 6,515
Cash and cash equivalents 5,092 875
10,348 9,548
Total assets 11,363 10,312
Current liabilities
Trade payables 94 201
Accrued payroll and employee benefits 392 288
Other provisions and payables 10 203 129
Lease liabilities 11 227 146
Deferred consideration payable 10 231 213
Income tax payable 394 1,117
1,541 2,094
Net current assets 8,807 7,454
Total assets less current liabilities 9,822 8,218
Non-current liabilities
Lease liabilities 11 385 237
385 237
Total liabilities 1,926 2,331
NET ASSETS 9,437 7,981
Equity
Share capital 120 114
Share premium 6,462 -
Foreign exchange reserves (180) (200)
Merger reserves 2,244 2,244
Distributable reserves - 4,666
Retained earnings 791 1,157
Total equity 9,437 7,981
Unaudited Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 June 2023
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$'000
As at 1 January 2023 114 (1) - (200) 2,244(3) 1,157 4,666(4) 7,981
Share additions 6 6,462(2) - - - - 6,468
Profit for the period - - - - 730 - 730
Transferred to distributable reserve - - - - (259) 259 -
Pre-listing Dividends - - - - (837) (4,925) (5,762) (5)
Foreign currency translation - - 20 - - - 20
As at 30 June 2023 120 6,462 (180) - 791 - 9,437
Share capital Share premium Forex Merger Retained earnings Distributable reserves Total
translation reserves
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
As at 1 January 2023 114 (1) - (240) 2,244(3) 888 2,638(4) 5,644
Profit for the period - - - - 2,190 - 2,190
Transferred to distributable reserve - - - - (1,014) 1,014 -
Foreign currency translation - - (27) - - - (27)
As at 30 June 2023 114 - (267) 2,244 2,064 3,652 7,807
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) - (240) 2,244(3) 888 2,638(4) 5,644
Profit for the period - - - - 2,190 - 2,190
Transferred to distributable reserve - - - - (1,014) 1,014 -
Foreign currency translation - - (27) - - - (27)
As at 30 June 2023 114 - (267) 2,244 2,064 3,652 7,807
(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(d), the
Group is treated as if the Company, together with its subsidiaries, had
collectively existed and been merged throughout the current and comparative
accounting periods, and hence this share capital of US$114k is presented as
the opening balance on consolidation.
(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(d).
(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 $5.8m had been declared by Amicorp Fund Services
Asia Limited, before the Company, Amicorp FS (UK) Plc, was inserted on 26 May
2023 as the holding company of the Group, in line with the listing prospectus
dated 5 June 2023.
Unaudited Condensed Consolidated Statement of Cash Flows
For the six months ended 30 June 2023
Period ended 30 June
2023 2022
US$'000 US$'000
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax 1,028 2,769
Adjustments for:
Depreciation of tangible asset 16 1
Depreciation of right of use assets 116 42
Realised and unrealised foreign exchange gain (33) (43)
Fair value loss/ (gain) from an investment measured at FVTP&L 37 (22)
Finance costs 23 18
1,187 2,765
Decrease in trade receivables 335 467
Increase in other receivables, deposits and prepayments (861) (266)
Increase in amounts due from related companies (1,726)(1) (2,550)
Increase / (decrease) in accrued payroll and employee benefits 104 (69)
(Decrease) / increase in trade payables (91) 30
Increase / (decrease) in other provisions and payables 91 (22)
Cash (used in)/ generated from operations (961) 355
Income tax paid to tax authorities (752) (115)
Income tax settled through amounts due from related companies (265) (451)
Net cash flows used in operating activities (1,978) (211)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of tangible assets (51) (7)
Proceeds from a placing of additional ordinary shares 6,324 -
Net cash flows generated from/ (used in) investing activities 6,273 (7)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of principal portion of lease liabilities (110) (44)
Net cash flows used in financing activities (110) (44)
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 4,185 (262)
Cash and cash equivalents at beginning of period 875 937
Exchange difference 32 (46)
CASH AND CASH EQUIVALENTS AT END OF PERIOD 5,092 629
(1) Pre-listing dividends of $5.8m had been 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; these pre-listing dividends were non-cash payments settled
via amounts due from related companies, and hence were excluded from this cash
flow movement.
Notes to the Unaudited Condensed Consolidated Financial Statements
1. GENERAL
These interim financial statements are the 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, 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 the
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$9.70
million. On 8 June 2023, the Company was successfully admitted to the Main
Market of the London Stock Exchange, as a holding company of the Group.
The insertion of the Company as the holding company of the Group constitutes a
carve-out reconstruction involving transfer of shares in the Group's entities,
in which merger accounting is applied. Accordingly, the condensed
consolidated financial statements of the Group are prepared as if the Company,
together with its subsidiaries, collectively had already existed before the
start of the earliest period presented. The comparative information is,
therefore, presented as if the carve-out reconstruction had already occurred,
and it has been derived from the HFI included in the listing prospectus,
primarily adjusted for the demerger equity, reserve and consolidation
adjustments.
The condensed consolidated financial statements ("interim financial
statements") of Amicorp FS (UK) Plc for the six months ended 30 June 2023 have
been prepared in accordance with IAS 34 Interim Financial Reporting issued by
the International Accounting Standards Board, as adopted by the United Kingdom
("UK IAS"). These interim financial statements, which are unaudited, should
be read in conjunction with the Group's Historical Financial Information
('HFI') as at and for the year ended 31 December 2022 included in the listing
prospectus dated 5 June 2023, which is available on the Group's website.
The accounting policies adopted are consistent with those adopted by the Group
in the HFI included in the listing prospectus. The condensed consolidated
financial statements are presented in thousands of US Dollars ('US$'000')
unless otherwise indicated, and prepared under the historical cost convention
and based upon the accounting policies disclosed below.
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 2023. 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 2023, 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
Amicorp Fund Services Asia Limited (Singapore Branch)
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 (formerly known as ECUS
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
Amicorp Fund Services (Mumbai) Private Limited (Bangalore Branch)
Amicorp Fund Services (Cyprus) Ltd
(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 IFRSs. The measurement
bases are fully described in the accounting policies below.
The significant 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 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 of this report. Accordingly, they continue to adopt the
going concern basis in preparing the condensed consolidated financial
statements.
In assessing going concern, the Directors take into account the Group's cash
flows, solvency and liquidity positions, and have considered a range of
scenarios as part of their assessment. At the end of the period, the Group
had cash and cash equivalents of US$5.1 million (31 December 2022: US$0.9
million) and net current assets of US$8.8 million (31 December 2022: US$7.5
million), which the Directors believe will be sufficient to maintain the
Group's liquidity over the going concern period, including continued
investments to meet existing financial commitments and to deliver future
growth.
(d) Functional and presentation currency
Items included in the interim financial information of each of the Group's
entities are measured using the currency of the primary economic environment
in which the entity operates (the 'functional currency'). The functional
currency of the Group is United States Dollars ('US$'), and the financial
information is presented in US$ since most of the companies comprising the
Group are operating in US$ environment.
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 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) Goodwill
Goodwill represents the excess of the aggregate of the fair value of the
consideration transferred, the amount of any non-controlling interest in the
acquiree and the fair value of the Group's previously held equity interest in
the acquiree over the fair value of the identifiable assets and liabilities
measured as at the acquisition date.
Where the fair value of identifiable assets and liabilities exceed the
aggregate of the fair value of consideration paid, the amount of any
non-controlling interest in the acquiree and the acquisition date fair value
of the acquirer's previously held equity interest in the acquiree, the excess
is recognised in profit or loss on the acquisition date, after re-assessment.
(d) Merger accounting
Merger accounting is used for the Company inserted as the holding company of
the Group, as part of the carve-out reconstruction described in Note 2(a),
while the ultimate controlling parent has remained the same. This method
treats the Company, together with its subsidiaries, as if they had been merged
throughout the current and comparative accounting periods.
The net assets of the combining entities or businesses use the existing book
values from the controlling parties' perspective. No amount is 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 is represented as a merger reserve in equity in the condensed
consolidated statement of financial position.
Transaction costs, including professional fees, registration fees, costs of
furnishing information to shareholders, costs or losses incurred in combining
operations of the previously separate businesses, etc., incurred in relation
to the carve-out reconstruction that are to be accounted for by using merger
accounting are recognised as an expense in the period in which they are
incurred.
(e) 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
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.
(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.
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 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 contingent consideration, arising from business acquisitions, is measured
at fair value at the date of acquisition. If an obligation to pay contingent
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 contingent 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. Where the Group
issues its own equity instruments to a creditor to settle a financial
liability in whole or in part as a result of renegotiating the terms of that
liability, the equity instruments issued are the consideration paid and are
recognised initially and measured at their fair value on the date the
financial liability or part thereof is extinguished. If the fair value of the
equity instruments issued cannot be reliably measured, the equity instruments
are measured to reflect the fair value of the financial liability
extinguished. The difference between the carrying amount of the financial
liability or part thereof extinguished and the consideration paid is
recognised in profit or loss for the respective years.
(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. 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 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.
(i) Foreign currency
Transactions entered into by group entities in currencies other than the
currency of the primary economic environment in which they operate (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 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 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) Short term employee benefits
Short term employee benefits are employee benefits (other than termination
benefits) that are expected to be settled wholly before twelve months after
the end of the annual reporting period in which the employees render the
related service. Short term employee benefits are recognised in the year
when the employees render the related service.
(ii) 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.
(iii) 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;
· investments in subsidiaries
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 in prior years. 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.
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.
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 month period ended 30 June 2023 (30 June 2022:
same).
Period ended 30 June 2023 Revenue Direct staff cost Other direct costs Gross profit
US$'000 US$'000 US$'000 US$'000
Fund Administration 4,347 (1,557) (284) 2,506
Business Process Outsourcing 2,065 (179) - 1,886
Assurance and governance (1) 675 (238) - 437
Total 7,087 (1,974) (284) 4,829
Indirect staff costs (1,519)
Other operating expenses (1,058)
IPO expense (1,201)
Finance costs (23)
Profit before income tax 1,028
Period ended 30 June 2022 Revenue Direct staff cost Other direct costs Gross profit
US$'000 US$'000 US$'000 US$'000
Fund Administration 4,297 (1,254) (233) 2,810
Business Process Outsourcing 2,166 (147) - 2,019
Assurance and governance (1) 409 (120) - 289
Total 6,872 (1,521) (233) 5,118
Indirect staff costs (1,086)
Other operating expenses (743)
IPO expense (502)
Finance costs (18)
Profit before income tax 2,769
(1) Assurance and Governance services is formerly known as Regulatory and
Compliance services.
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
2023 2022
US$'000 US$'000
LATAM 1,468 1,043
Europe 1,974 1,655
MEAI(1) 3,645 4,174
7,087 6,872
( )
(1) MEAI means Group's operations in the geographical region of Middle East,
Asia and India.
6. OTHER OPERATING EXPENSES
Period ended 30 June
2023 2022
US$'000 US$'000
Business development expense 71 10
Statutory fee expenses 17 29
Travelling expenses 177 118
Other overhead expenses 138 73
403 230
7. PAYROLL AND REMUNERATION COSTS
Period ended 30 June
2023 2022
US$'000 US$'000
Employee costs (including directors) comprise:
Wages and salaries 3,428 2,544
Contributions on defined contribution retirement plans 8 14
Other employment benefits 57 49
3,493 2,607
8. INCOME TAX
Period ended 30 June
2023 2022
US$'000 US$'000
Current income tax 291 579
Deferred income tax 7 -
Total tax charge for the period 298 579
9. TRADE RECEIVABLES
As at the period / year ended
Jun-2023 Dec-2022
US$'000 US$'000
Trade receivables 1,263 1,599
Less: loss allowance (77) (78)
1,186 1,521
10. OTHER PROVISIONS AND PAYABLES
As at the period / year ended
Jun-2023 Dec-2022
US$'000 US$'000
Current
Other payables 18 4
Other provision 151 112
VAT payables 8 5
Payment in advance from customers 26 8
203 129
Deferred consideration - financial liabilities measured at FVTP&L(1)
As at the period / year ended
Jun-2023 Dec-2022
US$'000 US$'000
Current 231 213
Non-current - -
231 213
(1) In October 2021, the Group acquired 100% of equity interests of Amicorp
Administradora General de Fondos SA (formerly known as ECUS Administradora
General de Fondos SA) for a total discounted consideration of CLP588 million
(US$706k), comprised of: (i) initial cash consideration of CLP417 million
(US$501k); (ii) discounted deferred cash consideration of CLP171 million
(US$205k) payable by no later than October 2023. The acquiree has been
accounted for as subsidiaries of the Group since the acquisition date. The
acquisition was made as part of the Group's strategy to expand its business in
Chile.
The future consideration due to the seller will become payable by October
2023, and the undiscounted payable amount is the undiscounted deferred base
payment of CLP 188m plus/minus CLP 60m depending on the outcome of certain
pre-acquisition tax credit claims submitted by the seller to the local
authorities in Chile, in accordance with the acquisition agreement.
The deferred consideration is measured at FVTP&L, and the fair value is
remeasured at every reporting date. Also, the Group's policy is to recognise
transfers into and out of fair value hierarchy levels as at the end of the
reporting period, and management has decided that the deferred consideration
is classified as level 3, given the significant inputs are not based on
observable market data.
The valuation technique used is discounted cash analysis, with the following
table summarising the details:
Description Valuation techniques Significant inputs Sensitivity of the fair value measurement to input
Contingent consideration Discounted cash flow. Discount rate of 5.00% An increase in the discount rate of 100 basis points would decrease the fair
value by US$ 1k as at 30 Jun 2023 (31 Dec 2022: US$ 2k).
Expected net cash outflows are estimated based on the terms of the share Expected undiscounted cash outflows of CLP 188.8m
purchase agreements and the group's expectations of outcomes of tax credit
Management does not consider the value of expected future cash outflows will
claims. (US$ 235.1k) change materially during the upcoming period up to the maturity date.
11. LEASES
This note provides information for leases where Group is a lessee within the
scope of IFRS 16. In the financial year ended 31 December 2021, Group
initiated an IFRS 16 office lease spanning 5 years, and in the subsequent
year, Group entered into two more office leases in January and June 2022
respectively, each with lease terms of 2 years and 3.5 years respectively.
During the current interim financial period to 30 June 2023, an additional
office lease was ascertained and commenced in February for a lease term of 3
years.
AFSA 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$110k in the six month period to
30 June 2023 (in the year ended 31 December 2022: $117k).
(i) Right of use assets
Office premise
US$'000
Cost
At 1 January 2022 262
Additions for the year 239
Exchange differences (26)
At 31 December 2022 475
Additions for the period 351
Exchange differences 1
At 30 June 2023 827
Accumulated depreciation
At 1 January 2022 4
Depreciation for the year 110
Exchange differences (3)
At 31 December 2022 111
Depreciation for the period 116
Exchange differences (1)
At 30 June 2023 226
Net carrying balance as at 30 June 2023 601
Net carrying balance as at 31 December 2022 364
(ii) Lease liabilities
Office premises
US$'000
At 1 January 2022 260
Additions 234
Interest expense 30
Lease payments (117)
Exchange differences (24)
At 31 December 2022 383
Additions 319
Interest expense 19
Lease payments (110)
Exchange differences 1
At 30 June 2023 612
Discounted lease payments are due as follows:
As at the period / year ended
Jun-2023 Dec-2022
US$'000 US$'000
Within one year 227 146
In between one and two years 224 118
In between two and five years 161 119
612 383
Undiscounted lease payments are due as follows:
As at the period / year ended
Jun-2023 Dec-2022
US$'000 US$'000
Within one year 260 150
In between one and two years 243 132
In between two and five years 171 155
674 437
Less: Future finance charges (62) (54)
Lease liabilities 612 383
Disclosed as:
Current 227 146
Non-current 385 237
612 383
(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 month period to 30 June 2023 (in the year ended 31 December 2022:
same).
12. DIVIDENDS
Pre-listing dividends of $5.8m had been declared by Amicorp Fund Services Asia
Limited, before the Company, Amicorp FS (UK) Plc, was inserted on 26 May 2023
as the holding company of the Group, in line with the listing prospectus dated
5 June 2023.
During the interim period ended 30 June 2023, the Company did not declare
dividends.
13. RELATED PARTIES TRANSACTIONS
(a) Transactions with Amicorp Group
The following transactions were carried out with related parties who are
members of Amicorp Group.
Period ended 30 June
2023(1)
US$'000
Revenue 1,195
Rental and remuneration expenses (1,155)
(1)Comparatives for the same period of the prior year are excluded, given the
Group had not been legally incorporated during the six month period ended 30
June 2023. Transactions with Amicorp Group under the carve-out principles in
the historical financial years are included in the HFI of the listing
prospectus dated 5 June 2023.
As at the period / year ended
June-2023 Dec-2022
US$'000 US$'000
Amounts due from related parties 2,454 6,515
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
2023 2022
US$'000 US$'000
Salaries and short-term benefits 372 334
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 HFI included in the prospectus dated 5 June
2023, indicating no alterations. There has not been any bank facility or
financial covenants in the six month period to 30 June 2023 (2022: 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 AFSA 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 2023 (2022: 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.
Set out in the listing prospectus dated 5 June 2023 were details of the
principal risks and uncertainties for the Group and the key mitigating
measures applied, applicable at that time.
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 2023 financial year.
Such principal risks and uncertainties are summarized 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
Kiran Kumar Gundu Rao, Chief Operations 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
27 September 2023 27 September 2023
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