Audited Preliminary Results for the 12 months ended 31 March 2019 5 June 2019 1
Presentation Team Euan Fraser John Paton Global Chief Executive Officer Chief Financial Officer • Has led Alpha as CEO since 2013 • Joined Alpha as CFO in February 2018 • During this period, the business has increased • Over 20 years’ experience across corporate EBITDA eight-fold finance, banking and audit • Led the business through two successful private • Qualified as a chartered accountant with KPMG equity transactions and a public listing • Holds an Executive MBA • Alpha UK CEO from 2011 to 2015 • Prior to Alpha, worked at HSBC in both Global • Over 20 years’ financial services experience in and Commercial Banking divisions both consulting and industry at Merrill Lynch • Latterly at HSBC, he was a director within • Qualified as a chartered accountant with KPMG UK Banking 2
Agenda Full year results presentation Key Highlights Euan Fraser Agenda 1. Key Financials John Paton 2. Market & Operating Review Euan Fraser 3. Outlook Euan Fraser 4. 3
Agenda Key Highlights
1 Key Financial Highlights We continue to grow successfully our global business 2 Revenue Adjusted EBITDA Operating Profit 15.1% 18.0% 46.9% FY 19: £76.0m FY 19: £16.5m FY 19: £12.6m FY 18: £8.6m FY 18: £66.0m FY 18: £14.0m 3 4 Adjusted Cash Conversion Adjusted Earnings per Share Total Dividend per Share 23.0% 16.1% FY 19: 101% FY 19: 12.05p FY 19: 6.00p FY 18: 83% FY 18: 9.80p FY 18: 5.17p 1 . “FY 19”. Comparative period references (“FY 18”) are to the 12 -month period ended 31 March 2018. All rounding and percentage c hange calculations are from the basis of the financial statements in £’000s . 2. Adjusted EBITDA 5 is operating profit before foreign exchange, interest, tax, depreciation, amortisation and other adjusting non-operational costs including acquisition costs, AIM admission costs, restructuring costs, earn-out costs and share-based payment charges. FY 18 has been recalculated to exclude foreign exchange gains or losses. 3. Adjusted cash conversion is net cash from operating activities divided by adjusted operating profit. Adjusted operating profit is adjusted EBITDA less depreciation. 4. Adjusted EPS is adjusted PAT over the weighted average number of shares in issue in the period. FY 18 recalculated to exclude FX.
1 Key Operational Highlights Delivering growth through global operations • Two new practices: FinTech & • Consulting to 38 new clients Innovation and ETF & Indexing Practices • 2 New clients in recently launched Clients • FY 18 practices, Digital and Alpha markets, Singapore and Switzerland a Data solutions, established within • Growing client base includes 80% the service proposition of world’s top 20 asset managers • Continued roll-out of Alpha FY 19 by AUM 3 FY 18 FY 19 FY 18 FY 19 practices globally 252 241 279 10 12 • • Opening of first office in a German- Acquisitions remain a key aspect Acquisitions speaking market, Zurich of the growth strategy Offices • • Appointment of new CEO in Ongoing review of acquisition a a the Netherlands opportunities during the year • • Newly opened (FY 18) Singapore Post balance sheet acquisition office well established in Asia of Axxsys FY 18 FY 19 FY 18 FY 19 9 10 1 − • Number of consultants increased 4 Headcount by 19% • Largest graduate intake since scheme launch in 2012 • Hiring of two directors globally and FY 18 FY 19 promotion of one UK director 305 362 1. All operational highlights figures are total numbers as at the end of the reporting period with the exception of Acquisitions, which reflects the number of acquisitions undertaken in the reported period. 2. Client numbers are 6 cumulative. 3. Investment & Pensions Europe 2018, “The Top 400 Asset Managers”. 4. Except where noted, “headcount” and “consu lta nts” refers to total fee generating consultants at the year end: employed consultants plus utilised contractors.
Our Regional Businesses at a Glance Consolidating our position as a leading global consultancy to the asset management industry UK EUROPE 170+ Consultants 120 Consultants London Paris Edinburgh Luxembourg Amsterdam US Geneva New 55 Consultants Zurich New York Boston ASIA 10+ Consultants Singapore 362 10 Global Headcount Global Offices 7
Strategic Highlights: acquisition of Axxsys Alpha has acquired 100% of Axxsys Limited and its subsidiaries Axxsys is a specialist SimCorp advisory and implementation consultancy , with expertise across a range of additional investment management solutions. 2003 established Overview: 28 people 3 global offices Over 15 years’ Employees at UK (headquarters), experience in consulting acquisition Denmark and Canada and technology £9 million £6.2 million Base cost of acquisition plus FY 18 annual revenues performance earn-out paid in installments The addition of Axxsys to the Alpha Group creates additive revenue as well as bringing a strong complementary, technology focussed service to the client proposition Strategic Extends the service offering Add-on consulting business Broadens geographic reach Develops Alpha’s footprint in drivers: SimCorp and investment Niche consulting within management platforms investment management the Nordics and Canada Positive pipeline of work Cross-selling opportunity Accretive Creates strong Brings new clients to the Positive impact on EPS due to revenue visibility distribution model cash purchase 8
Agenda Key Financials
Key Performance Indicators Historic track record Current full year £80.0 Previous full years 7-Year £76.0 £70.0 Revenue CAGR 33% £66.0 £60.0 £50.0 Revenue £40.0 £43.6 £36.4 £30.0 £30.4 £26.9 £20.0 £10.0 £14.2 £10.2 £0.0 FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 FY 18 FY 19 Adjusted EBITDA FY 19 £29.1 FY 19 FY 19 £16.5 362 Gross Profit Headcount FY 18 £25.3 FY 18 £13.9 FY 18 305 £8.6 £15.0 FY 17 FY 17 FY 17 240 £0.0 £5.0 £10.0 £15.0 £20.0 £0.0 £10.0 £20.0 £30.0 £40.0 10
Group Income Statement 12 months ended 31 March 2019 £’000 Key highlights: FY 19 FY 18 % change Revenue 75,960 66,009 15.1% • Strong 15.1% organic revenue growth; Gross profit 29,082 25,261 15.1% nil FX impact Gross profit margin % 38.3% 38.3% • Consistent 38.3% gross profit margins Administration expenses 1 (12,604) (11,292) 11.6% • Administration expenses increase Adjusted EBITDA 16,478 13,969 18.0% of 11.6% Adjusted EBITDA margin % 21.7% 21.2% • Adjusted EBITDA margin continued to Depreciation (263) (297) 11.5% improve to 21.7% Adjusted operating profit 16,215 13,672 18.6% • Adjusting expense items (3,643) (5,114) (28.8%) Reduction in interest costs reflects post AIM admission structure Operating profit 12,572 8,558 46.9% Interest (52) (7,059) • Adjusted EPS increased 23.0% as adjusted effective tax rate normalises Profit before tax 12,520 1,499 735.2% Adjusted profit after tax 12,240 9,984 22.6% • 4.09p per share dividend recommendation, in line with 50% pay- Adjusted earnings per share 12.05p 9.80p 23.0% out policy, on an adjusted PAT basis Dividend per share - Interim 1.91p 1.48p - Final (proposed) 4.09p 3.69p Total dividend per share 6.00p 5.17p 16.1% 1. Administration expenses stated before non-operating costs including foreign exchange movements, acquisition costs, AIM admission costs, restructuring costs, earn-out costs and share-based payment charges. 11
Regional Performance 12 months ended 31 March 2019 UK Revenue: £44.9m 12.3% Gross Profit: £20.1m 18.2% US EUROPE & ASIA Revenue: Revenue: £9.2m 1.5% £21.9m 28.9% Gross Profit: Gross Profit: £1.7m ( 38.2% ) £7.3m 31.4% Key highlights: • 12% Revenue growth across all regions as Alpha continues to internationalise • Europe & Asia delivered best regional performance; with Swiss and £76m Singapore revenues doubling, while maintaining gross profit margin • 29% UK grew revenue and improved gross profit margin, while utilisation Revenue UK 59% levels normalised through the year from FY 18 highs USA • US business grew, experiencing lower utilisation levels as it consolidated Europe & Asia progress, strengthening the team and adding new domestic clients 12
Adjusting Expense Items 12 months ended 31 March 2019 Non-recurring: Key highlights: £’000 FY 19 FY 18 • No non-recurring expenses in the current year − AIM admission costs 1,621 − US restructuring & secondment costs 251 • The comparative period includes one- off AIM admission costs, TrackTwo − Acquisition costs 241 acquisition expenses and costs − Total non-recurring costs 2,113 relating to a specific successful US restructuring Non-underlying: • Non-underlying expenses include: £’000 FY 19 FY 18 • Amortisation of acquired Amortisation 2,586 2,383 intangible assets Share-based payments charge 872 191 • Management and employee share- based incentive reward charges Earn-out consideration 295 391 under IFRS 2, including relevant − Loss on disposal of fixed assets 6 social security taxes (Gains)/losses on foreign exchange (116) 36 • TrackTwo earn-out payments expensed per IFRS 3 Total non-underlying operating costs 3,643 3,001 • FX (gains) / losses separated from Total adjusting non-operating costs 3,643 5,114 the underlying trading results 13
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