Alpha Financial Markets Consulting Regulatory News (AFM)

6 June 2018

Alpha Financial Markets Consulting plc

("Alpha", the "Company" or the "Group")

Alpha Financial Markets Consulting plc (AIM:AFM), a leading global provider of specialist consultancy services to the asset and wealth management industry, is pleased to report its audited results for the 12 months ended 31 March 2018 (FY18). This constitutes the Group's first annual results as a public company, following admission of the Group to trading on AIM on 11 October 2017.

A YEAR OF STRONG PERFORMANCE AND A CONFIDENT OUTLOOK

Financial Highlights

· Group revenue increased by 51.5% to £66.0m (FY17: £43.6m)

· Group adjusted EBITDA increased by 62.9% to £13.9m (FY17: £8.6m)

· Group adjusted operating profit increased by 65.0% to £13.6m (FY17: £8.3m)

· Strong cash generation from operating activities of £11.3m (FY17: £4.3m)

· Recommending a final dividend per share of 3.69p, bringing total dividend for the year to 5.17p inclusive of the previously paid 1.48p interim dividend

· Exceptional non-recurring items in the period included costs of AIM admission, costs relating to the acquisition of TrackTwo GmbH and costs related to a successful secondment programme into the Group's US offices

Operating Highlights

· Establishment of first Alpha office in Asia, in Singapore

· Acquisition and successful integration of TrackTwo GmbH

· Launch of two new practice areas: Digital and Alpha Data Solutions

· Continued investment in the highest calibre of people; number of consultants grew by 27% compared to FY17

· Addition of five directors to reinforce the management team and further support future growth

Commenting on the results, Euan Fraser, Global Chief Executive Officer said:

"We are delighted to be reporting on the most successful year in Alpha's history. Alpha has continued to achieve growth in all its core markets of the UK, Europe & Asia, and the US, with revenue increasing by 51.5% to £66.0m and adjusted EBITDA by 62.9% to £13.9m, ahead of market expectations. These results reflect the exceptionally hard work of our talented team.

We were pleased with the success of our IPO and admission to AIM in October, and take great confidence from our first eight months of trading as a public company. We have continued to invest in geographic expansion and extending Alpha's service offering, responding to a strong pipeline and unwavering client demand.

Looking ahead, the structural industry drivers of cost pressure and regulatory change, along with increasing assets under management, create significant opportunities for future growth. The Group is well positioned to leverage its recent performance in the financial year ahead."

Enquiries:

Analyst Presentation:

A results presentation from Alpha will take place at 9.30 a.m. on the day at Berenberg's offices, 60 Threadneedle Street London EC2R 8HP. Those wishing to attend should email alpha@templebaradvisory.com or call 0207 001 1080. A copy of the presentation slides will be available on the company website at 9.30 a.m. for those unable to attend.

The full year results and presentation slides can be found on Alpha's website at http://investors.alphafmc.com/reports-and-presentations.

Chairman's Report

Introduction

In my first statement to you as Chairman of the Board, it gives me great pleasure to introduce Alpha's FY18 year-end results. FY18 was a definitive year for Alpha; in October 2017, the Company was successfully admitted to trading on the AIM of the London Stock Exchange and is now able to report Alpha's best financial results since it was founded in 2003. This compelling record of financial performance, together with investment in the business from our new shareholders, positions the Group extremely well for continued future growth.

Overview of the Financial Year

Alpha has continued to perform confidently across its business areas and has delivered its first full-year results as a public company ahead of market expectations. With continuing demand for Alpha's services from within the asset and wealth management industry and a strong pipeline of new business, the Group achieved annual revenues of £66.0m. Trading progressed well during the months following Alpha's admission to trading on AIM.

During the period, Alpha completed an important strategic acquisition in TrackTwo GmbH ("TrackTwo"), a specialist data solutions and consulting firm based in Frankfurt. This now forms the core of a new business practice, Alpha Data Solutions. Alpha also launched another practice, Alpha Digital, thus strengthening further its platforms to fulfil business opportunities on an increasingly global basis.

Dividend

The Alpha Board is recommending a final dividend of 3.69p per share, which, if approved at the Annual General Meeting, will be payable on 12 September 2018. Together with the previously paid 2018 interim dividend of 1.48p per share, this gives a total dividend for the year of 5.17p per share, in line with the policy of paying approximately 50% of post-tax profits to shareholders, this year adjusted to reflect normalised post-AIM admission earnings.

Governance

An important focus since Admission has been fulfilling the Group's corporate governance transition from a private to a public company. I am very pleased to be involved in Alpha's future growth journey, having worked with the Company as a client for over ten years. The Alpha Board meets regularly to oversee the Group's corporate activities and progress towards its strategic objectives.

Board Changes

Recently, we welcomed Penny Judd to the Alpha Board, as a new Non-Executive Director, and John Paton, who joined Alpha as Chief Financial Officer. Together, Penny and John bring a wealth of public markets and financial services expertise to the Alpha Board and I look forward to working with them.

I was delighted to be appointed as Chairman in February, following two years serving on the Alpha Board as a Non-Executive Director. This follows the decision by Timothy Trotter, Alpha's longest serving independent Non-Executive Director, to step down, as was disclosed in the AIM admission document. Tim has been an invaluable support to the Directors in the last four years; we and the entire management team would like to thank him and wish him well in the future.

Strategy

The Alpha Board works closely with the Alpha executive team to develop a successful and achievable strategy. Alpha's growth strategy remains focussed on continuing to grow in both existing and new jurisdictions. This strategy is being diligently executed through the continued strengthening of the global consulting teams, extension of Alpha's geographic footprint and investment in capabilities to expand further the service offering.

The Group is led by a strong executive team, with a rich range of skills and experience, and a deep understanding of the asset and wealth management industry. The Alpha Board is extremely confident that this team of people is well placed to deliver Alpha's strategic vision and objectives.

Outlook

The asset and wealth management industry is undergoing deep-rooted change, with increasing pressure on fees and regulatory focus driving the need for support with a range of complex change initiatives and projects. With its highly focussed market proposition, strong reputation in the industry and a robust platform for growth, Alpha is uniquely positioned to assist with its clients' needs. The Alpha Board is encouraged by the strong business pipeline and confident of further growth in the financial year ahead.

Finally, I would like to thank all Alpha's employees, clients and the wider stakeholders for their commitment, hard work and invaluable contributions.

Ken Fry

Chairman

Global Chief Executive Officer's Report

Introduction

I am delighted to present our full-year results, with FY18 having been a very successful year for Alpha. Following on from our AIM admission in October 2017, we have enjoyed another year of strong revenue, operating profit and adjusted EBITDA growth. This growth has been delivered across all of our core regions, through both the breadth of our service offering and a successful acquisition.

Summary of Financial Performance 1 2

The Group has demonstrated strong revenue growth, with a continued focus on operating margins resulting in revenue increasing by 51.5% to £66.0m (FY17: £43.6m), adjusted EBITDA 3 by 62.9% to £13.9m (FY17: £8.6m) and operating profit by 39.5% to £8.6m (FY17: £6.1m). Our transition from a private limited company to a public company strengthened our statement of financial position and we have also had another year of excellent cash generation from operations. The Board is pleased to propose a final dividend of 3.69p per share, bringing the total dividend to 5.17p per share for the year, ahead of expectations.

The Group has delivered very strong organic growth across its core business, driven by working on some of the largest and most challenging projects in the asset and wealth management industry, on an increasingly global scale. The Group also added an additional 25 new clients during the year.

Operational Review

Client demand for our consulting talent and expertise continues to be driven by the structural industry trends of increasing cost pressures and regulatory demand, alongside increasing assets under management. Consequently, FY18 saw strong results from across all our core geographies: the UK, the US, and Europe & Asia.

Alpha continued to expand its service offering with the creation of new practices, including Alpha Digital and Alpha Data Solutions, in response to demand from our clients. In addition, practices that the Group launched in FY17 such as Investment Guidelines and Regulatory Compliance performed well and made a contribution to this year's substantial growth. Well-established practices such as Front Office, Distribution, M&A Integration and Operations & Outsourcing continued to be very successful.

Geographical Overview

We are pleased to have enjoyed strong client-led demand across all of the markets in which we operate:

* 12 months results to 31 March 2017 per Admission Document dated 6 October 2017; hereafter referred to as "FY17"

** Audited results; hereafter referred to as "2017"

* Consultant Headcount refers to fee generating consultants: employed consultants plus utilised contractors

Each of our regional businesses grew substantially compared to the previous 12 months, both in terms of revenue and consultant headcount. Our newest offices in Singapore and Switzerland, which opened at the end of FY17, were launched in response to client requests for the Group to have a presence in these locations. I am pleased to report that both offices enjoyed profitable first years. We are very pleased with the success of our first office in Asia and have recently hired an Executive Director in Singapore to strengthen our offering and lead our expansion in that market.

The UK remains the largest geography within the Alpha Group and we are delighted with the continued growth that it has enjoyed this year.

In Europe, Alpha continues to deliver a robust performance growing revenue and profitability, with offices in France, Luxembourg, the Netherlands and Switzerland, along with our newly acquired business in Germany. We perceive a number of growth opportunities, both in terms of geographic expansion and in the development of our existing practices.

We believe that the US market represents the most significant geographic opportunity for future growth. We see no other consulting firm offering the same blend of expertise, market-leading consulting and project management skills, and our proposition is resonating with both national and global clients in that market. As a result of demand, and our existing projects in the US, we now have a presence in four financial centres (Chicago, Denver, Los Angeles, San Francisco), in addition to our core offices in Boston and New York. We are pleased to report that Alpha US delivered to our growth expectations in FY18.

Alpha's strong underlying adjusted EBITDA performance reflects our growing global reputation as the consulting partner of choice to support asset managers with their most critical projects, along with our strong utilisation and increased efficiency. We have continued to invest in central operational capability to support this continued global growth.

We were also delighted to win the Funds Europe Consultant of the Year award for the third consecutive year.

Our People

The people at Alpha are our greatest asset. We remain completely committed to hiring the very highest quality consultants at every level of the Group and increased our headcount of consultants, including contractors, by 27% to 305 globally (March 2017: 240). That relentless focus on quality ensures that we deliver exceptional results to our clients, which in turn drives client loyalty and repeat business, and helps us to retain our market-leading reputation.

We will continue to offer market-leading compensation to attract the very best consulting talent. Our focus on creating a unique culture that differentiates us from our competitors also helps us to retain the talent that we hire, with unmanaged attrition at 5% in the year. This, in turn, limits recruitment costs and ensures that our clients benefit from the expertise that an experienced team brings.

We now have two employee equity schemes in place. Offering all our people the opportunity to be shareholders in Alpha helps us not only retain staff and align interests, but also attracts a wide pool of fresh talent. All staff that were employed at the time of the AIM admission received a nominal number of shares.

To help achieve a consistent global culture, we have an important ongoing secondment programme, which has allowed us to second a significant number of our consultants to facilitate growth in our new offices, including Singapore and Switzerland most recently, and embed our culture globally. The globally consistent culture is very important to the Group as it plays an integral role in ensuring the same high calibre quality across our consultant team, driving a seamless client experience and market reputation.

We were delighted to have our culture recognised by winning a place, for the second consecutive year, in the Sunday Times' 100 Best Small Companies to Work For 2017 (2017: top 20; 2016: top 50). Culture and quality have, for many years, been the foundation of Alpha's success and will continue to shape and drive our business.

Growth Strategy

Alpha's objective is to be recognised as the leading asset management consultancy in all the geographies in which it operates, with an ongoing strategic focus to continue building scale in all markets, for which it is well positioned.

The Group's growth strategy is both organic and inorganic. The majority of Alpha's historic growth has been organic, with last year's acquisition of TrackTwo highlighting the role that inorganic growth can play in adding to the products and services that the Group can successfully bring to its client base.

The Group expects to achieve continued growth in all geographic markets, including both established and more recently opened offices. Alpha will continue to focus on building its client base of asset managers, asset owners, wealth managers and those who support the asset management industry, such as third-party administrators.

We will continue to invest in our service offering and will both deepen and broaden our practice structure. Through a combination of internal promotions and external hires, we will ensure that each practice has the appropriate leadership to meet client demand.

Alpha has built an exceptional service offering, which is heavily in demand across a wide range of asset management sponsors and geographies. That service offering is currently defined by 10 practices within Alpha. Our ongoing focus is to deepen our offering within those practices and to consistently develop that proposition across all regions. We will continue to broaden our service offering and extend the number of practices so as to meet client demand.

The structural drivers within the asset management industry of fee pressure, growth in assets under management and on-going regulatory change are creating significant change and opportunity within our clients, which are trends that we expect to continue.

Acquisitions

Acquisitions are an important part of the Group's growth strategy, alongside organic growth, with a focus on acquiring businesses that offer complementary services to clients in Alpha's existing and target markets. Our objective is to extend our consulting proposition and broaden our reach into other financial services industries beyond asset and wealth management.

In July 2017, we successfully completed our acquisition of TrackTwo, and the integration of the business and its core product, 360 SalesVista, has been very successful. Alpha's much broader footprint allows the Group to take the product, 360 SalesVista, to a much wider market than TrackTwo as a standalone entity, offering significant opportunity for future growth.

The Group remains acquisitive and will continue to add to its service offering through selectively investing in new products and services that provide diversified and established revenues and, where possible, are underpinned by strong data or technology components.

Current Trading and Outlook

The Group's trading performance in the second half of FY18 was excellent and we have started FY19 with confidence. The structural drivers in the asset management industry remain very strong and continue to drive a wide range of significant change projects within our client base. We remain focused on delivering another year of growth and continuing to broaden our geographic footprint and service offering.

The Group is well positioned to leverage its recent accomplishments and to continue to build on its progress in the year ahead.

Euan Fraser

Global Chief Executive Officer

1 Comparable period references ("FY17") are to the 12-month period ended 31 March 2017; see the Chief Financial Officer's Report for further disclosure

2 All rounding and percentage change calculations are from the basis of the financial statements, in £'000s

3 Adjusted EBITDA is operating profit before 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

Chief Financial Officer's Report

Group Results

I am delighted that Alpha has delivered strong inaugural full-year results following its admission to trading on AIM in October 2017, and to be reporting my first results as Alpha's Chief Financial Officer.

Alpha's accounting period represents the year to 31 March 2018 and the comparative period represents 60 weeks to 31 March 2017 from 3 February 2016, when Alpha Financial Markets Consulting plc, a new holding company, acquired the Alpha business. In order to allow better clarity to the underlying performance of the Group, constant period comparisons of selected profit and loss account and cashflow items have been included.

* 12 months results to 31 March 2017 per Admission Document dated 6 October 2017; hereafter referred to as "FY17"

** Audited results; hereafter referred to as "2017"

*** Adjusted operating profit is operating profit before interest, tax, amortisation and other adjusting non-operational costs including acquisition costs, AIM admission costs, restructuring costs, earn-out costs and share based payment charges

Revenue

The Group has delivered another impressive year of progress. Reflective of Alpha's successful growth strategy, Group revenue for FY18 increased to £66.0m, representing a 34.1% increase on the previous accounting period (2017: £49.2m), and a 51.5% increase against the prior 12 months.

Alpha grew in all three of its core geographic regions with revenues in the UK, the US, and Europe & Asia, increasing by 24.0%, 82.8% and 41.1% respectively (or 40.5%, 107.1% and 58.3% respectively in comparison to the prior 12 months). This growth has been driven by strong demand in our established practices, including Front Office, Distribution, M&A Integration and Operations & Outsourcing, supported by an increase in global consultant headcount to 305 consultants (including contractors) by the year end (March 2017: 240). Both of the newer offices in Switzerland and Singapore also traded well and made good progress. TrackTwo, acquired in July 2017, contributed £0.9m revenue whilst under Group ownership.

Group Profitability

The Group also substantially increased its profits. Gross profit rose to £25.3m (2017: £16.7m) and gross profit margin improved 430 basis points to 38.3% (2017: 34.0%), driven mainly through improved utilisation of our consultancy staff, both in the UK and globally, as both existing and new offices developed an expanded market presence.

Group overhead costs, before adjusting items as detailed in note 4 of the consolidated financial statements, increased 32% in the year to £11.3m (2017: £8.7m), reflecting increased recruitment spend required to deliver consultant headcount growth, strategic investment in the Group management team to manage the global operations and anticipate future growth, other staff related costs and costs associated with being a publicly quoted company.

The Group also reported an adjusted EBITDA of £13.9m, representing an increase of 62.9% on the prior 12 months. Adjusted EBITDA margin improved to 21.1% (2017: 16.7%; or FY17: 19.6%). Adjusted operating profit increased to £13.6m (FY17: £8.3m).

Total Group operating profit more than doubled to £8.6m (2017: £4.0m) after charging depreciation, intangible amortisation costs, one-off costs and other non-operational costs. Adjusted EBITDA excludes these expense items to give better clarity to the underlying performance of the Group. These adjustments total £5.4m of costs in FY18 (2017: £4.2m) and are detailed in note 4 of the consolidated financial statements.

Currency

Currency translation had a modest impact on both sales and profits in FY18, as a result of the weaker Sterling. In the year, Sterling averaged USD1.34 (2017: USD1.32) and €1.14 (2017: €1.19). Currency translation increased FY18 sales by £0.4m (0.6%).

Net Finance Expense

Net finance costs decreased in the year to £7.1m (2017: £7.9m). This decrease reflects Alpha's capital restructuring and reduced indebtedness since the October equity raise at the time of admission to AIM. The Group repaid or converted to equity all of its previous private equity-related debt. As a consequence, £1.7m of amortising loan issuance costs were written off and are included in the £7.1m net finance costs for the year. Since its admission to AIM, the Group has operated with a net cash position.

Taxation

The Group's tax charge was £1.9m (2017: £0.5m). The effective tax rate was inflated by adjusting items, including AIM admission costs, and limits on tax deductibility of interest costs under the previous capital structure. The Group's cash tax payment in the year was £1.2m (2017: £1.7m). Adjusted profit after tax is shown using a blended rate of the jurisdictions in which the Group operates to better indicate the Group's expected ongoing tax position.

For further taxation details, see notes 8 and 9 in the notes to the consolidated financial statements.

Acquisition Activity

Complementary, bolt-on acquisitions to enhance the product and service offering to Alpha's clients are integral to the Group's strategy. On 18 July 2017, the Group acquired 100% of the share capital of TrackTwo, a German based consulting and data solutions business. Since acquisition, TrackTwo continues to progress well.

Earnings per Share

Pro forma adjusted earnings per share4 improved to 9.77p per share (2017: 7.75p) and, after including the adjusting expense items, the basic loss per share is 0.49p per share (2017: 5.52p loss).

Cashflow, Statement of Financial Position and Net Funds

The Group has continued to see healthy cash generation with net cash generated from operating activities rising to £11.3m (2017: £5.9m). This represents an 83% adjusted cash conversion5 rate from adjusted operating profit this year, improving on the 74% adjusted cash conversion rate in 2017.

On admission to trading on AIM on 11 October 2017, the Company issued 22 million shares, which raised £35.2m for the Group. This equity raising, together with existing cash reserves, was used to meet the admission expenses, and also repay all of the Group's outstanding debt facilities.

Net cash interest paid increased to £5.5m (2017: £1.4m) reflecting the settlement of debt facilities at the time of AIM admission. Income tax paid totalled £1.2m (2017: £1.7m). The Group also paid the initial TrackTwo consideration payment in the year and its maiden interim dividend payment of £1.5m. In the prior period, cash outflows from investing activities included the private equity acquisition of the group and associated financing.

The Group maintains a £5m committed revolving debt facility expiring in October 2020, arranged at the time of admission and which has since remained undrawn. At the year end, the Group's cash position was £9.8m (2017: net debt £77.9m).

Dividends

The Board is recommending a final dividend of 3.69p per share (2017: nil). If approved at the Annual General Meeting, the final dividend will be paid on 12 September 2018 to shareholders on the register on 3 August 2018.

Together with the previously paid FY18 interim dividend of 1.48p per share, this gives a total dividend for the year of 5.17p per share. This is consistent with the Group's stated policy of paying dividends of approximately 50% of profits after tax, which, this year is calculated on an adjusted basis to represent normalised post-AIM admission earnings.

Total Shareholders' Funds

Total shareholders' funds increased to £83.0m (March 2017: £4.5m negative reserves). The changes in equity reserves reflect the Group's capital reorganisation on admission to AIM, the retained loss after tax for the year, currency movements on overseas asset values, equity settled consideration and the payment of the interim dividend.

Risk Management and the Year Ahead

Risk is managed actively and closely across our geographical business operations to individual materiality. Risk management is embedded within all aspects of the organisation and any principal Group risks will be identified to, discussed and monitored at Board level. Macro-economic and end-market conditions are subject to change and are reviewed regularly. Alpha has a set of core company values, adopted internationally, which reflects the Group's ethical and responsible approach to business. The Board has considered all of the above factors in its review of going concern and has been able to conclude the review satisfactorily.

The Group has delivered a strong financial performance and ends the year with a robust balance sheet which positions it well for the year ahead.

John Paton

Chief Financial Officer

4 Pro forma adjusted earnings per share is calculated by dividing the adjusted profit after tax by the weighted average number of ordinary shares in issue since admission to trading on AIM

5 Adjusted cash conversion is net cash from operating activities divided by adjusted operating profit

Consolidated statement of comprehensive income

For the year ended 31 March 2018

* Adjusted EBITDA is operating profit before 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.

** Pro forma adjusted earnings per share for FY18 is calculated by dividing the adjusted PAT by the weighted average number of ordinary shares in issue from AIM admission during the year.  

Consolidated statement of financial position

As at 31 March 2018

Consolidated statement of cash flows

For the year ended 31 March 2018

Consolidated statement of changes in equity

For the year ended 31 March 2018

Share capital

Share capital represents the nominal value of share capital subscribed.

Share premium

Share premium represents the aggregate amount or value of premiums paid when the company's shares are issued at a premium, net of associated share issue costs.

Foreign exchange reserve

The foreign exchange reserve represents exchange differences which arise on consolidation from the translation of the financial statements of foreign subsidiaries.

Retained earnings

The retained earnings reserve represents cumulative net gains and losses recognised in the consolidated statement of comprehensive income. This makes up our distributable reserves.

Other reserves

The other reserves represent the cumulative fair value of the IFRS 2 share based payment charge to be recognised each year and equity-settled consideration reserves.

Notes to the consolidated financial statements

1. Basis of Preparation and Significant Accounting Policies

The financial information set out in this financial results announcement does not constitute statutory

accounts as defined in section 435 of the Companies Act 2006. The consolidated statement of

comprehensive profit and loss and other comprehensive income, consolidated statement of financial

position, consolidated statement of change in equity, consolidated statement of cashflows and the

associated notes have been extracted from the group's financial statements for the year ended 31 March 2018, upon which the auditor's opinion is unqualified and does not include any statement under section

498 of the Companies Act 2006. The statutory accounts for the year ended 31 March 2018 will be

delivered to the Registrar of Companies following the Annual General Meeting.

These condensed preliminary financial statements for the year ended 31 March 2018 have been prepared

on the basis of the accounting policies adopted by the Group upon admission to AIM. These are in

accordance with the Group's accounting policies as set out in the historical financial information included

in the AIM Admission Document.

The recognition and measurement requirements of all International Financial Reporting Standards

('IFRSs'), International Accounting Standards ('IAS') and interpretations currently endorsed by the

International Accounting Standards Board ('IASB') and its committees as adopted by the EU and as

required to be adopted by AIM listed companies have been applied.

2. Segment information

Management has determined the operating segments by considering the segment information that is reported internally to the chief operating decision-maker, the Board of Directors. For management purposes, the Group is currently organised into three geographical operating divisions: UK, US and Europe & Asia. The Group's operations are all consist of one type of operations - consultancy services to the asset/wealth management industry.

During the year the Group had one customer which comprised 10.7% of the Group's revenues. This customer is reported within both the UK and US segments. No customer contributed more than 10% of Group revenues in 2017.

3. Operating profit

4. Reconciliation of adjusted operating profit and adjusted EBITDA

Alpha uses alternative performance measures, including Adjusted EBITDA, to allow a clearer understanding of the underlying performance of the Group. Adjusted EBITDA is a commonly-used measure in which earnings are stated before intangible asset amortisation and depreciation, used by the Board to assess performance; the Board considers that this alternative performance measure is the most appropriate measure by which users of the financial statements can assess the ongoing performance of the Group. Adjusted EBITDA also excludes the employee share-based payments charge to remove the inherent volatility in share-based payment expense calculations and more closely align to the operational activities. Note 21 sets out further details of the employee share-based payments expense calculation under IFRS2.

As per note 13, the acquisition of TrackTwo GmbH involved deferred consideration payments in the form of an earn-out which, in accordance with IFRS3, will be expensed annually to 2021 dependent on the ongoing employment of the vendor. This cost has been removed to calculate Adjusted EBITDA as, whilst it will recur in the short-term, it represents additional payments linked to the TrackTwo acquisition.

Other acquisition costs expensed in the current year, relating to the TrackTwo acquisition, and in the prior period, relating to the acquisition of Alpha FMC Group Holdings Limited, have also been excluded from Adjusted EBITDA as they are not directly attributable to the ongoing performance of the Group. Similarly, costs directly attributable to the AIM admission in October 2017 have also been excluded.

Restructuring costs relating to realigning the US operations have been excluded from Adjusted EBITDA as they relate to a specific restructuring programme.

5. Reconciliation to adjusted profit after tax

Adjusted profit after tax is also shown to allow a clearer understanding of the underlying performance of the Group. Adjusted profit after tax is stated before adjusting items and their associated tax effects.

6. Staff costs

The average number of employees employed by the group, including executive directors, was:

Staff costs for the above persons were:

7. Finance costs and finance income

As part of the loan repayments on at the time of admission to trading on AIM, loan note issue costs amortisation of £1.7m was accelerated and expensed. 

8. Taxation

Tax has been calculated using an estimated annual effective tax rate of 19% (2017: 20%) on profit before tax.

The difference between the total tax expense shown above and the amount calculated by applying the standard rate of UK corporation tax to the profit before tax is as follows:

9. Deferred tax

The UK Government has announced future tax changes to the corporation tax rate. These changes resulted in a decrease in the standard rate of corporation tax to 20% for the 2016/17 tax year, falling to a rate of 19% for the 2017/18, 2018/19 and 2019/20 tax years and eventually culminating in a rate of 17% by 2020/21.

As at 31 March 2018 all such changes have been substantively enacted and have therefore been reflected in the calculation of deferred tax for the year ended 31 March 2018.

10. Dividends

The proposed final dividend is subject to approval by the shareholders at the AGM and has not been included as a liability in these financial statements.

11. Earnings/(loss) per share

The Group presents basic and diluted earnings per share ('EPS') data, both adjusted and non-adjusted for its ordinary shares. Basic EPS is calculated by dividing the profit or loss for the period attributable to ordinary shareholders by the weighted normalised average number of ordinary shares outstanding during the period. Potential ordinary shares are only treated as dilutive when their conversion to ordinary shares would decrease EPS (or increase loss per share).

In order to reconcile to the adjusted profit for the financial period, the same adjustments as in notes 4 and 5 have been made to the Group's loss for the financial period. The profits/(losses) and weighted average number of shares used in the calculations are set out below:

Loss per share is calculated based on the share capital of Company and the earnings of the Group.

As explained, the Group's consolidated financial statements reflect the continuation of the pre-existing group previously headed by Alpha FMC Topco Limited. To aid comparability following the Group's reconstruction and share reorganisation, the 79,841,931 ordinary shares held by original Shareholders immediately before the AIM admission has been used to best indicate the share capital in existence before the AIM admission and provide earnings information on a consistent basis. Similarly, in the pro forma adjusted EPS and pro forma adjusted diluted EPS calculations, to allow comparability between periods, the weighted average number of shares in issue only considers the shares in issue at and since admission to trading on AIM and 2017 considers the shares in issue immediately prior to the AIM admission.

There were no potentially dilutive ordinary shares for the period ended 31 March 2017. No dilution has been applied in accordance with accounting standards in 2017.

12. Goodwill and Intangible fixed assets

Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group's share of the net identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill was recognised upon the acquisition of Alpha FMC Group Holdings Limited by Alpha Financial Markets Consulting plc on 3 February 2016 and is the difference between the consideration paid and the fair value of assets acquired and liabilities assumed. During the current year goodwill increased reflecting the acquired goodwill arising on the acquisition of TrackTwo. Goodwill acquired and liabilities assumed represent the potential synergy benefits of combining the Alpha and TrackTwo intellectual property and talents of the team into the Group. In line with IAS 36, the carrying value of goodwill is not subject to systematic amortisation but is reviewed at least annually for impairment. The review assesses each cash-generating unit ('CGU') to which goodwill has been allocated for impairment by comparing the carrying amount of the unit, including the goodwill, with the recoverable amount of the unit. The impairment reviews completed have calculated the recoverable amount of goodwill through a Value in Use calculation.

The cash generating units that have been considered are UK, US and Europe & Asia, in line with our operating segments and the goodwill allocated to the CGU's as follows:

In considering this position, the estimated adjusted weighted average cost of capital ('WACC') for the Group was determined to be 11.6% (2017: 12.5%). This discount rate has been applied to the Group's future cash flow forecasts in order to make this assessment at each balance sheet date.

Revenues and gross margins have continued at the rate projected, with limited customer attrition, no significant change in the competitor landscape, no negative events impacting on the Group's brand or reputation and no legal or regulatory changes impacting the Group's offering. There are no other aspects of the key business objectives that have not been met. The recoverable amounts of all CGUs are based on the same key assumptions.

The Directors do not therefore believe there to be any impairment indicators.

As in the prior period, the base actuals have been inflated by 10% up to year 3 and by 1% then onwards, for each cash generating unit, which management believe does not exceed the long-term average growth rate for the industry, with a terminal value calculated on a perpetuity basis.

These cash flows are discounted at a post-tax discount rate of 11.6% and adjusted for specific risk factors that take into account the sensitivities of the projection. The Group has conducted a sensitivity analysis on the impairment test for all cash generating units individually. If the assumed growth rate was reduced to 0%, the receivable amount for each cash generating unit would remain greater than their carrying values. Further

increasing the post-tax discount rate to 13.5% resulted in positive headroom remaining for all cash generating units compared to the carrying value of goodwill.

Intangible fixed assets

Customer relationships