Alpha Financial Markets Consulting Regulatory News (AFM)

23 November 2023

Alpha Financial Markets Consulting plc

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

INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2023

Resilient performance in a more competitive market environment

Alpha Financial Markets Consulting plc (AIM:AFM), a leading global consultancy to the financial services industry, is pleased to report its unaudited results for the six months ended 30 September 2023 ("H1 24"). 

Financial highlights1

· Revenue increased by 7.5% to £115.6m (H1 23: £107.6m) and net fee income2 increased by 7.2% to £114.8m (H1 23: £107.0m), mostly on an organic3 basis. On a constant currency basis net fee income grew by 8.5%

· Gross profit was consistent at £38.4m (H1 23: £38.4m) with a 33.5% margin2 (H1 23: 35.9%), reflecting lower average consultant utilisation, particularly across the summer months, and selective investment in growing the consultant team, alongside consistent consultant day rates and management of variable costs

· Adjusted2 EBITDA was £20.1m (H1 23: £22.5m), with a 17.5% margin (H1 23: 21.0%) reflecting gross profit and continued cost control across a larger team

· Adjusted profit before tax was £18.4m (H1 23: £21.3m)

· Adjusted earnings per share was 11.81p (H1 23: 14.09p)

· On a statutory basis, profit before tax was £10.8m (H1 23: £14.2m) and basic earnings per share was 6.32p (H1 23: 9.10p) after deducting increased adjusting items, principally relating to acquisition-related costs

· Adjusted cash from operating activities was an outflow of £5.4m (H1 23: inflow of £4.2m), reflecting the normal H1 timing of payments, their relative size and weighting to first half profitability, and the associated performance-adjusted bonus accruals in the half. Adjusted cash conversion for the full year is estimated to be approximately 50%, given the expected H2 weighting of trading

· Robust balance sheet maintained with a net cash balance of £16.1m (31 March 2023: £59.2m) and a largely undrawn £50.0m revolving credit facility, with the net cash movement reflecting the usual H1 weighting of payments, including acquisition-related payments

· Maintained interim dividend declared of 3.70p per share (H1 23: 3.70p)

Operating highlights

· Continued progress in all Alpha's regions, with net fee income growth on a constant currency basis, despite a more competitive global consulting market and longer sales cycle

· Consultant4 headcount increased by 14.1% from the comparative half to 1,051 (H1 23: 921). This includes the addition of 38 consultants organically in the last six months (H1 23: 161), consistent with our selective hiring approach and committed graduate programme

· Continued strong growth of client relationships, with the number of clients5 that the Group has worked with increasing to 971 (H1 23: 787) and new client wins spanning the Group's global businesses

· Director6 headcount has increased by 15 in the period to 116, including promotions, three hires into Alpha's Insurance Consulting business and six additions from the Shoreline7 acquisition

· Further strategic progress in the Group's North America business, which continues to represent a key growth region, adding 23 consultants including 10 directors in the period

· The Shoreline acquisition consolidates Alpha's APAC presence, with the integration successfully completed in the first half

Outlook

· As previously noted, the global consulting market has experienced a more competitive environment with alonger sales cycle in the first half of the financial year

· Against this backdrop, Alpha's trading has been resilient, growing net fee income while maintaining consistent consultant day rates, albeit at lower average utilisation particularly in the summer months

· The current market remains competitive and continues to rebalance amidst an uncertain macro-economic environment

· Utilisation rates ticked up from summer lows in September and further in October, closer to target levels. The Group expects this improving trend to continue through the second half of the year

· The long-term market drivers that underpin demand for Alpha's services remain strong; the Group enters the second half with good near-term visibility and a strong and high quality pipeline of new business opportunities

· Accordingly, the Board continues to expect to deliver full year results in line with current market expectations

Commenting on the results, Luc Baqué, Chief Executive Officer, said:

"The Group's first half trading has been resilient. As communicated in June and outlined in our pre-close trading update, we have seen a lengthening sales cycle and increased competition as a result of overcapacity in the global consulting market. The current market remains challenging but is progressively rebalancing. With our unique value proposition and unrivalled consulting team, we continue to see robust client demand and enter the second half of the year with a strong pipeline. We remain well positioned for future growth in the medium to long term, in line with our ambition to double the business again by 2028."

Enquiries:

Analyst Presentation:

A presentation for analysts will be held today at 10:30 a.m. For further information, please contact Camarco at alphafmc@camarco.co.uk.

A copy of the presentation slides will be available on the company website (https://alphafmc.com/investors/reports-presentations/) following the meeting.

About Alpha FMC:

Headquartered in the UK and quoted on the Alternative Investment Market of the London Stock Exchange, Alpha is a leading global consultancy to the financial services industry.

Alpha combines highly specialist, sector-focussed management consulting and technology expertise to support the client transformation lifecycle. It has over 1,000 consultants globally, operating from 17 client-facing offices8 spanning the UK, North America, Europe and APAC.

1 All financial and operating highlights relate to the period ended 30 September 2023 ("H1 24") and the comparative period ended 30 September 2022 ("H1 23") unless otherwise specified

2 The Group uses alternative performance measures ("APMs") to provide stakeholders further metrics to aid understanding of the underlying trading performance of the Group. Margins are expressed as a percentage of net fee income. Refer to note 3 for further details

3 Organic net fee income growth excludes Shoreline, acquired during the period. Refer to note 3 for further information on the Group's APMs

4 "Consultants" and "headcount" refer to fee-earning consultants at the period end: employed consultants plus utilised contractors in client-facing roles. Total increase of 57, of which 19 was through acquisition; where "organically" refers to growth excluding consultants added through acquisition

5 Client numbers are cumulative and have been updated to include all client numbers from acquisition. Total increase of 184, of which 36 was through acquisition

6 "Directors" refers to fee-generating directors at the period end. All director increases are presented as net. Total increase of 15, of which six was through acquisition; where "organically" refers to growth excluding directors added through acquisition

7 "Shoreline" refers to Shoreline Consulting Pty Ltd, Shoreline Consolidated Pty Ltd and their subsidiaries acquired by Alpha on 1 May 2023

8 Group uses "office" to refer to office location; that is, if there are multiple offices in one location, they will be counted as one office

INTERIM REPORT

The start of 2023 marked both 20 years of Alpha and the beginning of a new chapter for the Group. Having doubled the size of the business ahead of its November 2024 target, Alpha set out a vision to double the Group's net fee income again over the next five years, through both organic growth and selective acquisitions.

As mentioned previously, the Group saw increased competition and a lengthening sales cycle in H1 as a result of overcapacity in the global consulting market. We still expect that this will be a short-term feature, while the consulting market balances supply with overall demand. Against this backdrop, trading in H1 has been resilient, with consistent sales wins monthly and 7.2% growth in net fee income compared to the first half of the prior year.

The Group has made good progress across key business areas and continues to see long-term structural drivers of demand for our services, which have created tailwinds for Alpha despite the more competitive market. We enter H2 with a strong pipeline of new business opportunities and see positive market sentiment returning. As outlined in our pre-close trading update in October, we expect to deliver full year results in line with current market consensus.

Half year review

Despite the more competitive environment, Alpha made headway in all three areas of its strategic growth agenda during the first half of the year: scaling up and broadening the client proposition, rolling out the client proposition globally, and making selective acquisitions.

The Group has continued to expand its client offering, strengthening its Insurance Consulting business by adding 12 clients and 38 consultants on the comparative half. Lionpoint is also performing well as we see ongoing demand for our consulting services in the alternative investments space. Alpha continues to broaden its geographic reach; in North America, a key strategic growth region for the Group, headcount has increased by 25 and there were 59 new client wins. Alpha's third growth pillar, selective acquisitions, made its latest advance with the acquisition of Shoreline, a boutique consultancy that provides services to the asset and wealth management sector in APAC. This acquisition cements Alpha's position as the leading consultancy for the asset and wealth management sector in the region.

Overall, H1 has been a period of selective investment in people, balancing the need to maintain control over costs while also positioning the Group for future growth opportunities.

Our financial performance has been resilient over the period, with the Group continuing to see solid client demand, repeat business and consistent consultant day rates. Amidst the more competitive backdrop, the Group has delivered a good increase in net fee income during the period, up 7.2% to £114.8m (H1 23: £107.0m) on a mostly organic basis, and on a constant currency basis net fee income has grown by 8.5%.

Adjusted EBITDA was £20.1m (H1 23: £22.5m) and adjusted profit before tax was £18.4m (H1 23: £21.3m). As outlined in our pre-close trading update, adjusted EBITDA margin was 17.5%; lower than prior years as a result of reduced consultant utilisation, which partly reflected quieter summer months, alongside continued selective investment in our consulting teams, maintenance of competitive remuneration packages and well controlled costs across our larger team.

Operational and geographical review 

? 

In announcing our ambition to double net fee income over the next five years we have set out a clear strategy for our growth, with the bulk of that growth expected to come from currently serviced sectors: asset and wealth management, alternatives and insurance. We aim to achieve this by continuing our disciplined expansion strategy, combining both organic growth and selective bolt-on acquisitions. We have established and are further developing a multi-boutique model with a strong cross-selling framework, which will enable us to deliver outstanding client service and maximise revenue opportunities on a global scale over the long term. 

As previously outlined, the global consulting market was more competitive over the half with a longer sales cycle, and continues to rebalance. Alpha has navigated through this market backdrop well, growing net fee income; and our strategy gives us a clear path through this environment. Utilisation rates ticked up in September from summer lows, and further in October, closer to target levels, and the Group expects this trend to continue through the second half of the year. Alpha enters H2 with a strong and high quality pipeline of new business opportunities.

Alongside our excellent reputation and highly relevant service offering, the long-term structural drivers that underpin demand for Alpha's services remain strong. We believe that the Group has potential and scope to continue to grow and gain market share in all our geographic regions.

Scaling up and rolling out our Insurance Consulting business globally continues to be one of our growth pillars as we aim to meet our 2028 strategic target. We are therefore pleased that the Group's offering for the insurance sector continued to build on its rapid expansion in the previous year. We see significant market potential in consulting to insurance clients and, ultimately, believe that our offering could grow to a similar size as Alpha's Asset & Wealth Management business in the medium to long term. 

An important part of growing the insurance offering is ensuring that we have the right skills and expertise to lead the proposition, hence we are delighted to have added three directors in the first half. Two of those new directors added were in the North America insurance market where the Group sees a strong growth opportunity. In May 2023, Alpha launched a dedicated insurance offering in the US with the aim of replicating the success of the Insurance Consulting teams in the UK and France. Reflecting the size of the 70 plus person Insurance Consulting team in the UK, and our ambition to grow and diversify further, we also appointed a new Head of Insurance Consulting for the UK from within the director team.

Our alternatives consulting business, Lionpoint, traded strongly and increased its footprint as our alternatives proposition resonates with clients globally. The Lionpoint team has added a?further 28 consultants globally, bringing the total consultant number in Lionpoint to over 290. Several key practices are being rolled out internationally in line with client demand, such as Fund Accounting & Operations. Looking forward, we see further scope for international roll-out and scale-up of the Lionpoint service offerings as the alternative investments market continues to attract growth in investments across the private equity, private credit, infrastructure, real estate and fund of funds segments.

During the?period, the Group has continued to win business with both new and existing clients across all locations. As a Group, we have now worked?with 971?clients (H1 23: 787).? 

? 

Geographic performance in the period can be summarised as follows: 

? 

? 

? 

?Consultant headcount grew in each geography as follows: 

All?our geographic regions delivered net fee income growth on a constant currency basis in the first half, mostly organically, driven by resilient client demand as a result of the ongoing structural drivers that we continue to experience in all our market segments.

The UK delivered the strongest growth in net fee income across the Group, producing organic growth rates of 14.1% overall, against the comparative period. We retain our market-leading reputation and are proud to be supporting some of the highest profile projects in the UK marketplace. We continue to see robust client demand in our established practices, with good progress in our newer Insurance Consulting offering. In line with the growth in net fee income in the region and selectively investing for future growth, Alpha UK added 26 consultants in the first half, mainly in the Insurance Consulting team, including a number of consultant hires committed in the prior half.

Also in the UK region, the Lionpoint alternatives investments team continued to grow strongly. Alpha's data and product solutions business, Aiviq, also grew revenue against the comparative period, while building a good pipeline and improving outlook. We are delighted that Aiviq's proposition has been recognised with a FinTech Global Wealth Tech "Top 100" award in the half.

In North America, following very strong net fee income growth in excess of 50% on average over the last three years, the quieter summer months were more pronounced. This reflects the more competitive environment and longer sales cycle that we previously indicated. While we saw a flatter half compared to the very high rates of growth in previous periods, the region continued to trade consistently, delivering net fee income growth of 2.1% on a constant currency basis.

The Group's alternative investments consulting business, Lionpoint, continues to trade strongly in North America. In line with the Group's selective approach to hiring, reflecting the near-term environment, headcount in North America increased by 23, including 10 directors to support further the Group's North America growth opportunity and ambitions. This included the addition of a new director in the Operations practice in North America, which continues to be an important client focus within the asset and wealth management sector.

Europe & APAC also delivered a robust performance in the period, with net fee income increasing?by 11.0% on a constant currency basis and 11.6% overall. Organic growth accounted for over half of this overall growth, with the acquisition of Shoreline delivering the remainder of the growth. Again, consistent with our strategy of selective investment and hiring, headcount in the region increased by 6.9% on an organic basis and by 15.2% overall, taking into account the 19 consultants joining the Group as part of the Shoreline acquisition.

? 

Our people

2023 marks 20 years since Alpha was established. Alpha started life as an asset management consultancy based out of London - it is now a Group of over 1,000 consultants as well as a strong business operations team, with offices globally and a diversified client base that we support across an array of specialist services and offerings. Thanks to the efforts of our outstanding staff, we have established a global reputation for delivering challenging and complex projects to the highest standards, with quality of work evidenced by significant repeat business. Our record of attracting and retaining high calibre employees can be attributed to our highly attractive offering, which we are constantly reevaluating, as well as our unique and inclusive culture that places people at the heart of the business.

In the context of a more competitive backdrop, we have been selective in our hiring this period, prioritising investment in accordance with demand and opportunity. While we remain cautious in our hiring approach, we are very excited about the talent we are able to attract and hire. As we continue to invest in our strategy, we have seen 20.0% headcount growth in the UK, 7.4% in North America and 15.2% in Europe & APAC on the comparative half, with much of this team growth added or committed in the second half of the prior year, and more selective additions this half.

We continue to develop and foster a multi-boutique organisation with an extremely solid cross-selling framework and culture of collaboration, consistent with our 2028 growth ambition. To reinforce this further, we have formalised roles to facilitate this, including four technology lead roles within our Asset & Wealth Management and Insurance Consulting businesses (based in the UK and North America) to capitalise on technology opportunities in the market.

?

Alpha is committed to developing and fostering early talent, offering a competitive graduate scheme and development programme for future leaders, and welcomed a further graduate intake in the period, across all our regions.

Alpha's directors play a vital role in developing this talent and in instilling our values, whilst ensuring delivery excellence across all client engagements. Maintaining and growing our director teams subsequently remains a key long-term priority for us as we look to successfully realise our ambitions. Over the period we have broadened our global director teams, adding 9 directors organically through a combination of promotions and selective experienced new hires.

Alpha has achieved so much since it began 20 years ago - and this is thanks to the incredible talent, unrivalled knowledge and unfailing commitment of our exceptional people. Our consultants are the best in the financial services sectors in which we operate and the key driving force behind the success of the business. The Board and the entire leadership team would like to thank everyone at Alpha for enabling us to progress this incredible growth story and we remain very excited to see what opportunities lie ahead.

Growth strategy

The Group kicked off the year with a refreshed ambition to double the size of Alpha again over the next five years. As outlined in the FY 23 results, the key pillars that will enable Alpha to achieve this are: further expansion in asset and wealth management consulting, particularly in North America; the global scale-up and roll-out of our Insurance Consulting and alternatives businesses; and making selective acquisitions.

We are pleased with the progress that the Group has made so far, especially in the more competitive market, and continue to expect that the majority of growth over the next five years will come from our consulting teams in the existing asset and wealth management, alternatives and insurance sectors. We are continuously monitoring for opportunities to diversify and scale up the consulting and technology practices, and for selective bolt-on acquisitions to supplement growth.

Although mindful of the current market environment, we continue to believe that that this market rebalancing will be short lived. The Group performed resiliently in H1 and enters the second half of the year with a strong pipeline. The long-term structural drivers that underpin client demand for Alpha's services remain strong and, therefore, we believe that Alpha's 2028 vision remains both appropriate and achievable.

Acquisitions

The Board recognises that adding further complementary expertise or adding geographic footprints in existing skill-sets through carefully selected acquisitions both enhances and strengthens the business proposition and increases the cross-sell opportunities across the Group. 

In May 2023, Alpha announced the acquisition of Shoreline, an APAC-based boutique consultancy that provides services to asset and wealth management clients. This acquisition adds a further 19 consultants with a client network that spans Australia and South-East Asia. The integration of this acquisition was successfully completed in the first half, making Alpha the leading consulting firm in the region for the asset and wealth management sector. 

We continue to review acquisition opportunities to complement and grow the Group's service offering to deliver client and shareholder value. 

 Governance and the Board

The members of Alpha's Board remain committed to the highest standards of corporate governance and regard business ethics, integrity, and strong governance as foundational elements in reducing risk and securing long-term value for shareholders.

The Board understands its crucial role in overseeing and advancing the Group's ESG efforts. The ESG Committee, which was established by the Board in recognition of this, held its inaugural meeting in the half, chaired by Jill May. The Committee's role is to maintain oversight of all facets of Alpha's corporate ESG agenda, ensuring the Group complies with regulatory requirements, meets the expectations of its stakeholders, and positions the Group for long-term, sustainable success.

The Group continues to focus on preparations to start reporting under the framework set out by the Task Force on Climate-Related Financial Disclosures ("TCFD"), as well as other regulatory requirements such as Gender Pay Gap Reporting, as the Group increases in scale. Alongside regulatory work, the Group is concluding its materiality assessment to further understand and assess stakeholder expectations, and is preparing for initiatives that will embed and demonstrate progress on this important agenda, including diversity targets and emissions reduction analysis. We look forward to launching our first dedicated sustainability report later in the financial year, to provide further details on these important parts of our strategy.

Having previously used the services of a third-party Company Secretarial provider, the Board appointed an internal Company Secretary with effect from 7 September 2023. The Board would like to thank Prism CoSec for their excellent service over the recent years and their role in transitioning responsibilities to the internal Alpha team.

Financial performance review

In a more competitive market environment, the Group performed resiliently in the first half with net fee income up by 7.2% compared to the first half of the last financial year, and 8.5% on a constant currency basis, mostly organically. Revenue also grew 7.5%, including increased rechargeable expenses, compared to the comparative period.

Overall, the Group's revenue and net fee income growth reflects strong ongoing client demand across a larger consulting team. We were pleased to maintain consistent consultant day rates overall and sales wins monthly through the first half, albeit at lower than target average consultant utilisation, particularly during the summer months. Net fee income grew in all geographic regions on a constant currency basis, with an inorganic contribution from the acquisition of Shoreline in the period. 

Group gross profit was £38.4m, consistent with the comparative period (H1 23: £38.4m). Gross profit margin was 33.5% (H1 23: 35.9%). This primarily reflects reduced average consultant utilisation in the current competitive market environment, alongside consistent day rates and selective investment in growing our team while maintaining a competitive remuneration package, partly offset by reduced variable costs given performance. The Group has added 57 consultants in the last six months (H1 23: 161), including 19 from the Shoreline acquisition and the majority of the remainder from our committed graduate intake in September.

The UK delivered the strongest regional growth in net fee income against the comparative period, growing 14.1% overall, entirely organically. This strong UK organic performance reflects solid client demand across the full range of Alpha practices, supported through a larger consulting team, the growth of which was mostly delivered in the second half of last year. This included substantial contributions from our established asset and wealth management capabilities in Investments, Operations and Client & Digital, and our newer Insurance Consulting and alternatives businesses also delivering strong growth against the comparative period. Within the UK results, Alpha's data and product solutions business, Aiviq also grew on the comparative period and maintains a good pipeline and outlook.

North America net fee income grew by 2.1% on a constant currency basis. Including the currency movement, North America performed largely consistently with the prior half, entirely on an organic basis. Alpha's alternatives business, Lionpoint, continued to perform well in the first half and contributed significantly to North America net fee income. The North America business overall continued to expand its domestic client base, as well as successfully capturing client demand through a number of cross-selling opportunities. The consultant team grew modestly in the first half, maintaining the Group's selective recruitment strategy. 

Europe & APAC also delivered another period of good growth. The region grew net fee income by 11.6% on the comparative period and, on an organic basis, the region reported 6.7% growth. This growth was delivered across the region, complemented by the acquisition of Shoreline. 

Currency translation had some effect on net fee income and profits during the first half of the financial year. In the period, the pound sterling averaged $1.26 (H1 23: $1.23) and ?1.16 (H1 23: ?1.18), which, with other similar currency movements, resulted in an unfavourable net currency effect on net fee income of £1.3m and on gross profit of £0.5m. On a constant currency basis, North America net fee income growth was 2.1% and Europe & APAC net fee income growth was 11.0%.

Alpha continues to support clients in some of the largest, most challenging and interesting projects across the industry. Alpha's revenue is driven by good client demand in its established practices, as well as progress in newer areas. Alpha's Insurance Consulting business and the Group's technology proposition continued to progress against the comparative half, winning a number of projects both with existing and new client relationships.

Overall, gross profit margin principally reflects reduced average consultant utilisation, selective investment in growing our team while maintaining a competitive remuneration package, partly offset by lower variable costs, alongside consistent consultant day rates overall. North America gross profit margin was 31.1%, primarily reflecting reduced average consultant utilisation. The UK gross margin of 35.6% similarly reflects reduced utilisation levels, particularly in the summer months, and consistent consultant day rates. Europe & APAC experienced good gross profit growth, with an improved 33.8% margin reflecting good rates growth relative to costs, partly offset by lower utilisation.

Adjusted administration expenses, as detailed in note 3, increased by £2.3m to £18.3m (H1 23: £16.0m) against the comparative period. This increase reflects investment in the Group's central team in the second half of the last year and some increases in overall spend to supporting the larger consultant headcount base, alongside ongoing cost control.

Including the adjusting items, which increased against the comparative half, administration expenses increased to £26.4m (H1 23: £22.7m) on a statutory basis. The adjusting items, set out in note 3, increased in the period to £6.6m (H1 23: £5.7m), reflecting increased acquisition and integration costs and earn-out and deferred consideration charges, partially offset by lower intangible asset amortisation and share-based payment charges.

Acquisition and integration costs were £0.2m (H1 23: £nil) as the Shoreline team was integrated into the Group in the first half of the year. The acquired intangibles amortisation charge decreased against the comparative period, reflecting some fully amortised intangibles, partly offset by the newly acquired Shoreline intangibles. In the first half, the Group recognised an earn-out and deferred consideration charge of £0.7m (H1 23: credit of £0.3m), reflecting a return of the charge after a fair value reduction in the liability held for Obsidian in the prior period. Further details on the earn-out and deferred consideration charges are set out in note 7. 

The share-based payment charge reduced to £3.7m (H1 23: £4.1m), having updated the input assumptions for current year performance, Alpha's share price and share option vests in the period. Further details of the share-based payment charge are set out in notes 3 and 12.  

Adjusted EBITDA was £20.1m (H1 23: £22.5m) and adjusted EBITDA margin was 17.5% (H1 23: 21.0%), reflecting consistent gross profit and higher adjusted administration expenses. Operating profit was £12.0m (H1 23: £15.8m) after charging increased depreciation and adjusting expenses. Further detail of these adjusting items is set out in note 3. If no adjustment was made for the share-based payment charge, adjusted EBITDA for the period would be £16.4m (H1 23: £18.4m) and adjusted EBITDA margin would be 14.3% (H1 23: 17.2%). 

Net finance expenses fell to £1.2m (H1 23: £1.6m), primarily comprising non-underlying finance expenses relating to acquisition consideration discount unwinding, which decreased given payments in the period, as set out in note 7. Adjusted profit before tax was £18.4m (H1 23: £21.3m) after charging increased depreciation and underlying finance costs, reflecting periodic revolving credit facility ("RCF") drawings and additional leases. Statutory pre-tax profit was £10.8m (H1 23: £14.2m) after also charging adjusting expenses and non-underlying finance expenses.

Taxation charges for the period were £3.6m (H1 23: £3.9m), reflecting reduced taxable profits, partially offset by the increase of the UK corporation tax rate from 19% to 25%.

Adjusted earnings per share ("EPS") was 11.81p per share (H1 23: 14.09p) and adjusted diluted EPS was 11.09p (H1 23: 13.23p), reflecting the adjusted profit after tax and the increased number of weighted average shares as a result of share option exercises in the current and prior periods, partly offset by the Group's purchase of shares into Alpha's employee benefit trust ("EBT"). After including the adjusting items, basic earnings per share was 6.32p (H1 23: 9.10p), while diluted EPS was 5.93p (H1 23: 8.55p), reflecting the increase in the share options awards outstanding. 

Net assets at 30 September 2023 totalled £143.1m (31 March 2023: £149.3m). This movement principally reflects profits in the period, offset by the Group's FY 23 final dividend payment and the purchase of the Company's own shares into the EBT. The Group continues to maintain a strong financial position. 

Net cash from operating activities was an outflow of £7.6m (H1 23: inflow of £2.2m) and adjusted cash from operating activities was an outflow of £5.4m (H1 23: inflow of £4.2m). Underlying working capital remains well managed, with consistent debtor days on the comparative half. The operating cash outflow in the period reflects the normal timing of profit share payments and their relative size compared to first half profitability. These profit share payments include both the payment of FY 23 profit share and the second tranche of deferred FY 22 payments. The size of these payments alongside the lower performance-adjusted bonus accruals in the half also results in an increased movement in working capital in the first half. Adjusted cash conversion is similarly affected in the half, and for the full year is estimated to be approximately 50% given the expected weighting of trading in the second half of the year.

The Group's net cash position was £16.1m as at 30 September 2023 (31 March 2023: £59.2m), reflecting the normal H1 timing of payments, a further £18.6m of acquisition consideration payments, including £1.7m of employment-linked amounts, and the payment of the £12.0m FY 23 final dividend in the half. During the period, the Group also provided £3.8m funding to Alpha's EBT to purchase 1,033,954 shares at the prevailing market share price. These shares will be held in the EBT, a discretionary trust, and are intended to be used to satisfy future exercises of share options by employees, including the Directors of the Company. Alpha was drawn £10.1m on its RCF at 30 September 2023, to assist with managing currency requirements in the period. 

The Board is pleased to declare a maintained interim dividend for FY 24 of 3.70p per share (H1 23: 3.70p), which will be paid on 21 December 2023 to shareholders on the register at the close of business on 8 December 2023.

Risk management

The Board is encouraged by the Group's resilient trading performance in the first half, while remaining cognisant of the potential risks and wider political and macro-economic uncertainties. While it is unclear how these potential risks will affect the current market conditions, including higher levels of competition and a longer sales cycle, we see a more positive market sentiment returning following the summer months. The Group continues to attract client demand for its services and has a strong pipeline of new business opportunities.

The Board does not consider that the principal risks and uncertainties differ from those at 31 March 2023 as detailed on pp 50-53 of the Annual Report & Accounts 2023. These risks relate to the following areas: people and resourcing; quality of service; data security; acquisition risk; market strategy; strategic objectives; macro-economic conditions; political/regulatory environment; competitors; client concentration; skills and subject matter expertise; utilisation rates; and cash collection.

The Directors and the senior management team are closely monitoring the situation in Israel and Gaza as it evolves. Alpha's operational footprint does not extend to that particular area, and we do not service clients based in those territories. Currently, the principal risk to Alpha is from a macro-economic perspective and the possible market impacts; however we continue to assess the risk of the conflict encompassing wider parts of the Middle East region.

Outlook

We are pleased by the resilient performance in H1 24 in a more competitive market environment with a longer sales cycle.

The Group has grown net fee income, while maintaining consistent consultant day rates and sales wins monthly. We have also continued to make good progress on a number of our growth pillars - in North America, including our alternative investments consulting business, Lionpoint, which has traded strongly; in expanding our Insurance Consulting business against the comparative half; and in selective acquisitions, with the acquisition of Shoreline.

While the global consulting market continues to rebalance, a more positive market sentiment is returning following the summer months. Utilisation rates ticked up from summer lows in September, and further in October, closer to target levels. The Group expects this improving trend to continue through the second half of the year. The structural drivers of growth in the core markets in which we operate, including increase in assets and insurance policies, cost pressure, regulation, technology breakthroughs, and changes in client and societal expectations, remain prevalent and will continue to drive ongoing demand for Alpha's services. We are very confident in the quality of our people, which we have continued to reinforce selectively in the period, our excellent market reputation, and business opportunities to extend the service offering for our clients further.

We enter the second half with a strong and high quality pipeline of new business opportunities, alongside improving current trading and utilisation levels. Accordingly, the Board continues to expect to deliver full year results in line with current market expectations.

Ken Fry Luc Baqué

Chairman Chief Executive Officer

23 November 2023

Responsibility statement

The Directors confirm that, to the best of their knowledge, these interim condensed consolidated financial statements have been prepared in accordance with UK-adopted International Accounting Standard (IAS) 34 Interim Financial Reporting. The Interim Report includes a fair review of the information required by:

· DTR 4.2.7R of the Disclosure Guidance and Transparency Rules (DTR), being an indication of important events that have occurred during the first six months of the financial year and their impact on the interim condensed consolidated financial statements; and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

· DTR 4.2.8R of the DTR, being 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 Group during that period; and any changes in the related party transactions described in the last Annual Report that could do so.

This Interim Report contains certain forward-looking statements with respect to the Group's current targets, expectations and projections about future performance, anticipated events or trends and other matters that are not historical facts. These forward-looking statements, which sometimes use words such as "aim", "anticipate", "believe", "intend", "plan", "estimate", "expect" and words of similar meaning, include all matters that are not historical facts and reflect the Directors' beliefs and expectations and involve a number of risks, uncertainties and assumptions that could cause actual results and performance to differ materially from any expected future results or performance expressed or implied by the forward-looking statement.

Ken Fry Luc Baqué

Chairman Chief Executive Officer

23 November 2023

Interim condensed consolidated statement of comprehensive income

For the six months ended 30 September 2023

9 Net fee income, adjusted EBITDA and other alternative performance measures are defined and reconciled in note 3

Interim condensed consolidated statement of financial position

As at 30 September 2023

The accompanying notes form part of these interim condensed consolidated financial statements.

Interim condensed consolidated statement of cash flows

For the six months ended 30 September 2023

Interim condensed consolidated statement of changes in equity

For the six months ended 30 September 2023

Issued share capital

Issued share capital represents the nominal value of share capital subscribed.

Share premium

The share premium account is used to record the aggregate amount or value of premiums paid when the Company's shares are issued at a premium, net of associated share issuance costs.

Foreign exchange reserve

The foreign exchange reserve represents exchange differences that arise on consolidation from the translation of the financial statements of foreign subsidiaries, including goodwill. 

Other reserves

The other reserves represent the cumulative fair value of the IFRS 2 share-based payment charge recognised each year, associated current tax, deferred tax and net settlement of vested share options, equity-settled acquisition consideration reserves, and purchases of the Company's own shares by the employee benefit trust ("EBT").

Retained earnings

The retained earnings reserve represents cumulative net gains and losses recognised in the consolidated statement of comprehensive income less dividends paid.

Notes to the interim condensed consolidated financial statements

1. Basis of preparation and significant accounting policies

1.1. General information

The principal activity of the Group is the provision of specialist consulting and related services to clients in the financial services industry, principally in the UK, North America, Europe and APAC.

Alpha Financial Markets Consulting plc is incorporated in England and Wales with registered number 09965297. The Company's registered office is 60 Gresham Street, London, EC2V 7BB. The Company is a public limited company and is admitted to trading on the AIM of the London Stock Exchange.

These interim condensed consolidated financial statements were authorised for issue on 23 November 2023 in accordance with a resolution of the Directors.

1.2. Basis of preparation

These interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting and should be read in conjunction with the Group's most recent annual consolidated financial statements, for the year ended 31 March 2023. They do not include all of the information required for a complete set of IFRS financial statements, however selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since Alpha's Annual Report & Accounts 2023. 

The financial information presented for the periods ended 30 September 2023 and 30 September 2022 is unaudited. The financial information for the 12 months to 31 March 2023 is audited.