Full Year results

RNS Number : 3633I

Alpha FX Group PLC

21 March 2018

 

21 March 2018

Alpha FX Group plc

("Alpha FX" or the "Group")

Full Year results

for the year ended 31 December 2017

Alpha FX Group plc (AIM: AFX), a founder led, UK-based foreign exchange service provider, is pleased to announce its audited Full Year Results for the year ended 31 December 2017.

Financial Highlights

·     Revenue up 60% to £13.5m (2016: £8.5m)

·     Underlying* operating profit up 55% to £6.8m (2016: £4.4m)

·     Reported operating profit up 29% to £5.6m (2016: £4.4m)

·   Underlying operating profit margin for the year of 50% (2016: 51%) and on a reported basis 42% (2016: 51%)

·     Underlying basic earnings per share up 31% to 17.5p (2016: 13.4p) and up 6% on a reported basis to 14.2p (2016: 13.4p)

·     Final dividend of 3.4 pence per share, payable on 16 May 2018

Operational highlights

·     Successful AIM listing on 7 April 2017, raising £13m of primary proceeds

·     Front office staff numbers increased from 21 to 32 in the year

·   Increasing focus on technology platform as a differentiator, increasing the technology team to 9 people by year end

·     Headquarters relocated with all staff consolidated in Paddington, London

·     Created team for overseas markets, already delivering revenues

·     Achievement of Growth Share Scheme performance target

·     Total number of clients increased by 39% taking total to 310**

Post Year End

·     Strengthening of the Board with Henry Lisney appointed as Chief Operating Officer

·     Launch of institutional offering, further expanding the Group's total addressable market

* Underlying excludes the impact of the one-off costs relating to the IPO and non-cash share based payments.

** The Group exclude Training Accounts (those that have generated less than £10,000 in revenue since being onboarded) in order to provide a clearer picture of client retention for the purposes of these figures.

Outlook

2018 will be our first full year as a publicly listed business. Even with the strong performance to date, Alpha has only penetrated a small proportion of its addressable market, one that will over time become even larger with our recent entry into overseas markets and expansion into new sectors such as the institutional market which was announced today.

Having invested in technology, new product development and infrastructure in 2017, along with the growth of our team, the Group is well positioned for further growth.

Q1 has already started positively in all areas, and with a clear strategy and highly motivated team in place the outlook for the year is positive.

Morgan Tillbrook, Chief Executive Officer of Alpha FX, commented:

"I'm delighted with the progress that Alpha has made during the year. As well as delivering strong revenue and profit growth we have invested strategically across all aspects of our business to enable sustainable future growth, whist maintaining margins. The benefits of our IPO in April 2017 continue to exceed our expectations."

Clive Kahn, Non-Executive Chairman of Alpha FX, added:

"FY17 was a landmark year in Alpha's history. The IPO in April marked the start of a new chapter for the Group, providing the capital to make significant investments across all areas of the business, whilst also raising our public profile.

Although we listed less than 12 months ago, the benefits are already evident in the full year performance of the Group, and as such I'm pleased to report a strong set of financial results." 

Dividend

The Board has a stated policy to target a dividend of approximately 30 per cent. of the Group's underlying profit after tax in each financial year.

In line with our stated dividend policy, we paid our maiden interim dividend of 1.5 pence per share in October 2017.

The Board has recommended a final dividend of 3.4 pence per share giving a total dividend for the financial year of 4.9 pence per share.  Subject to approval by shareholders at the Annual General Meeting on 11 May 2018, the final dividend will be paid on 16 May 2018 to shareholders on the register at 13 April 2018. The ex-dividend date will be 12 April 2018.

Enquiries:

Alpha FX Group plc                                         Morgan Tillbrook, Founder and CEO Tim Kidd, CFO	via Alma PR
Liberum Capital Limited (Nominated Adviser and Sole Broker)                             Neil Patel Richard Bootle Kane Collings	Tel: [phone]
Alma PR (Financial Public Relations)      Josh Royston Helena Bogle Rebecca Sanders-Hewett	Tel: [phone]

Market Abuse Regulation

This announcement is released by Alpha FX Group plc and contains inside information for the purposes of the Market Abuse Regulation (EU) 596/2014 ("MAR") and is disclosed in accordance with the Company's obligations under Article 17 of MAR. The person who arranged for the release of this announcement on behalf of Alpha FX Group plc was Tim Kidd, Chief Financial Officer.

About Alpha

Alpha is a founder led, UK-based foreign exchange service provider focused on managing exchange rate risk for UK corporates and institutions that trade internationally. The Company's primary client base consists of businesses and institutions across the UK and Europe that have a requirement to convert currency for a commercial purpose, such as buying or selling goods and services overseas, repatriating profits, or expatriating payroll. Since it was incorporated in 2010, Alpha has been able to build and retain a high-quality client base.

 

Operational Review

2017 marked a strong year of growth for Alpha, both in revenue and profits as well as in our investment in staff and infrastructure.

During the year, we increased our client numbers by 39%, bringing our total number of clients to 310. Pleasingly, our revenue grew at a higher rate which is a reflection of both winning bigger clients and entering into larger trades.

We will continue to focus on growing our client base by penetrating our existing corporate market place in the UK, alongside continued expansion into the institutional market and overseas sectors.

Europe in particular presents a very exciting area of expansion for us. During the financial year we have recruited staff for our London office who are fluent in foreign languages which has enabled us to steadily expand into select European territories.  As a result, we successfully onboarded our first European clients in the second half of the financial year.

While we are constantly looking for ways to acquire new clients, we remain dedicated to providing the very best levels of service to our existing client base.  To ensure this, Alpha's co-founder, Jon Currie, has continued in his role focused on enhancing our service delivery and is working collaboratively with our clients to improve customer insights and understanding to ensure we provide maximum value to them. Further operational progress was made with the expansion of our market analysis team and through obtaining regulatory approval to offer currency swaps and options to clients (in addition to existing products and services).  As well as providing additional benefits to our existing clients, both developments will undoubtedly increase our appeal to prospective clients.

Aside from penetrating our traditional corporate marketplace, we have today launched our institutional business which the Board believes presents a valuable growth opportunity for Alpha. The Group has recruited five key individuals with significant experience in institutional FX, who will be able to tailor our existing technology and service solutions to meet investment managers' specific and increasingly complex needs.

Throughout the course of this year we have also continued to invest in the ongoing development of our technology platform which has proved to be an important element of our advisory service offering, has enabled us to win larger client accounts (including a number of FTSE 250 clients) and as such will continue to be a focus going forward. Our online currency management platform has been developed in-house and, we believe, affords us a strong competitive advantage. It provides our clients with a tailored and comprehensive overview of their currency exposures, allowing them to manage and report on these exposures more effectively, whilst reducing the time and costs involved in doing so. We believe that our bespoke platform offers clients a greater insight into their hedging activities than our competitors' offerings and has become a key differentiator in a short space of time, helping us with both customer acquisition and retention, as well as margin protection. In February 2018 we migrated to a new Cloud Application Platform which offers richer functionality, greater customisation and increased scalability.

Technology is an important cornerstone of our business, we have a strong technology development roadmap in place and further functionality will be introduced during 2018 to enhance the platform.

In December, we relocated our head office to London to bring all our staff under one roof in order to support the unique culture which ultimately underpins our success.  We have already seen the benefits of a single, larger office with wider skill sharing, stronger relationships being forged and a positive atmosphere of camaraderie and collaboration. 

Our PLC status, which reflects Alpha's success and future ambitions, has enabled us to attract high calibre individuals in a relatively short space of time, with a noticeable shift in the volume and quality of inbound applications. Total headcount increased from 30 to 51 during the course of the year.

Of the new recruits, 11 joined the front office team to continue the rate of client acquisition in the UK corporate market, as well as penetrating overseas territories from our London Head Office. As always, we expect staff contributions to increase incrementally as individuals develop along the learning curve and we are pleased that yet again new starters in FY17 outperformed those in FY16, a trend we expect will continue in 2018.

The majority of remaining new team members joined our Technology team, spearheading new product development and technological innovation, with a particular focus on evolving Alpha's online currency management platform and payment functionality, as well as developing customised platform solutions for our clients.

Today we are also delighted to announce the appointment of Henry Lisney to the Board in his role of Chief Operating Officer. Henry joined Alpha in 2013 as a Portfolio Manager before quickly rising to the role of Operations Director prior to his appointment in March 2018 as Chief Operating Officer. He has been hugely influential in developing all areas of the business, spearheading the Company's IPO last year, as well as leading the expansion of our product and technology offering.  Henry's rapid progression is testament to Alpha's culture of meritocracy.

Lastly, we are pleased to note that 15 employees saw their first tranche of share options vest due to the overall strong revenue performance of the Company and we believe this increased level of ownership bodes well for a company that has always thrived off its entrepreneurial mind-set.

Financial Review

Revenue in the year ended 31 December 2017 grew by 60% to £13.5m (2016: £8.5m). Revenue continues to be driven by increasing revenue from new clients and strong client retention, as well as new starters in 2017 continuing to outperform those from the previous year.

The average commission (revenue as a % of gross value of currency transactions sold) increased in the year to 31 December 2017, due primarily due to a higher proportion of forward trades (which attract a higher commission rate) as well as the larger trades and a change in the mix of currencies. There were no structural changes in forward commission rates in the year to 31 December 2017 compared to the prior year.

Underlying operating profit increased by 55% to £6.8m (2016: £4.4m) whilst on a reported basis, operating profit was up 29% to £5.6m (2016: £4.4m). In 2017 there was continued investment in headcount in both the front and back office with total headcount increasing from 30 to 51. Despite this continued investment, the Group delivered an underlying operating profit margin of 50% (2016: 51%).

The effective rate of taxation for 2017 was 22%. This is higher than the standard rate primarily as a result of costs of the IPO which are not allowable for tax purposes.

Underlying basic earnings per share that exclude the impact of the one-off costs relating to the IPO and their tax effect and share-based payments, increased from 13.4p in 2016 to 17.5p in 2017. Basic earnings per share increased from 13.4p in 2016 to 14.2p in 2017.

On 7 April 2017, the Company issued 6,632,653 new shares upon admission to the London Stock Exchange, raising £12.3m after expenses. Part of the net proceeds were used to repay shareholder loans in existence as at 31 December 2016 of £1.4m.

Cash flow

On a statutory basis, net cash and cash equivalents increased by £5.5m to £13.1m. However, the Group's cash position can fluctuate significantly from year to year due to the impact of changes in the collateral received from clients, early settlement of trades, or the unrealised mark to market profit or loss from client swaps, resulting in an increase or decrease in cash with a corresponding change in other payables and trade receivables. Therefore, in addition to the statutory cash flow, the Group presents an adjusted net cash summary below which excludes the above items. In the year ended 31 December 2017 net cash on the non-statutory basis increased by £11.9m to £13.7m, largely due to the net proceeds of the IPO and the profitable trading in the year.

	31 December 2017	31 December 2016
	£'000	£'000
Net cash and cash equivalents	13,073	7,581
Variation margin paid to banking counterparties	3,517	4,342
	16,590	11,923
Margin received from clients & client held funds*	(4,036)	(9,772)
Net MTM timing loss/(profit) from client drawdowns and extensions within trade receivables	1,102	(350)
Adjusted net cash**	13,656	1,801

* Represents 'other payables' within 'trade and other payables'

** Excluding collateral received from clients, early settlements and the unrealised mark to market profit or loss from client swaps

The table below presents the operating cash conversion on a similar basis, which excludes collateral received from clients, early settlements and the unrealised mark to market profit or loss from client swaps. Cash conversion for the year ended 31 December 2017 reduced to 47% from 60% on the prior year. The reduction is due to an increase in the proportion of forward trades which represented 89% of the revenue in 2017 compared to 85% in 2016 as well an increase in the average tenure of forward transactions.

	Year ended	Year ended
	31 December 2017	31 December 2016
	£'000	£'000
Underlying operating profit	6,754	4,358
Depreciation & amortisation	101	57
Loss on sale of fixed assets	26	-
Increase in debtors**	(3,702)	(2,145)
Increase in creditors**	226	427
Less capital expenditure	(233)	(90)
Cash from operations before tax, and after capex**	3,172	2,607
Conversion	47%	60%

** Excluding collateral received from clients, early settlements and the unrealised mark to market profit or loss from client swaps

Growth Share Scheme Awards

As set out above, the Group has achieved annual revenue growth of 60 per cent. for the year ended 31 December 2017, and as such the first tranche of B shares in the Company's subsidiary, Alpha FX Limited ("B Shares"), have vested.

At IPO the Company implemented a Growth Share Scheme pursuant to which B Shares were issued to certain full-time employees of the Group. The Growth Share Scheme is administered and managed by the Board.

The B Shares contain a put option, such that, when and to the extent vested, they can be converted into ordinary shares in the Company. Under the original terms of the Growth Share Scheme, the B Shares allotted to participants would vest in three equal tranches, occurring annually, starting on 31 December 2017 until 31 December 2019. Vesting would require 30 per cent. revenue growth per year, meaning that full vesting would require three year compound growth of 120 per cent.

On 5 September 2017, the Company announced that the length of the Growth Share Scheme had been extended, with the B Shares now vesting in five equal tranches, occurring annually, starting on 31 December 2017 until 31 December 2021. The requirement for revenue growth in the first three years would remain the same, namely 30 per cent. per year, whilst vesting in years four and five require 20 per cent. revenue growth per year. All other details of the Growth Share Scheme remain as set out in the Company's admission document.

The Company will issue 565,387 ordinary shares to employees under the Growth Share Scheme. Application has been made for the new ordinary shares to be admitted to trading on the AIM market of the London Stock Exchange and admission is expected to occur on or about 27 March 2018.  Following the issue of the new ordinary shares, the issued share capital of the Company will comprise 33,327,366  ordinary shares, each with one voting right. This figure will represent the total voting rights in the Company and may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or change to their interest in, or a change to their interest in the Company under the Financial Conduct Authority's Disclosure and Transparency Rules.

 

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2017

		Year ended  31 December 2017	Year ended  31 December 2016
	Note	£	£
Revenue		13,543,132	8,475,424
Operating expenses		(7,913,448)	(4,117,175)
Underlying operating profit		6,753,889	4,358,249
Cost associated with the IPO		(612,873)	-
Share-based payments		(511,332)	-
Operating profit		5,629,684	4,358,249
Finance income		25,110	-
Finance expenses		(32,626)	(45,164)
Profit before taxation		5,622,168	4,313,085
Taxation		(1,225,932)	(863,992)
Profit and total comprehensive income for the year
		4,396,236	3,449,093
Profit for the year attributable to:
Equity owners of the parent		4,396,236	2,940,086
Non-controlling interests		-	509,007
		4,396,236	3,449,093
Earnings per share attributable to equity owners of the parent (pence per share)
-     basic	4	14.2p	13.4p
-     diluted	4	13.9p	13.4p
-     underlying basic	4	17.5p	13.4p
-     underlying diluted	4	17.2p	13.4p

 

Consolidated Statement of Financial Position

As at 31 December 2017

		As at	As at
		31 December 2017	31 December 2016
	Note	£	£
Non-current assets
Intangible assets		124,720	45,521
Property, plant and equipment		197,025	169,291
Total non-current assets		321,745	214,812
Current assets
Trade and other receivables	6	16,824,511	15,792,474
Cash and cash equivalents	7	13,073,132	7,963,625
Other cash balances		1,571,475	1,921,264
Total current assets		31,469,118	25,677,363
Total assets		31,790,863	25,892,175
Equity
Share capital	10	65,524	1,118
Share premium account	10	12,237,951	-
Capital redemption reserve	10	3,701	60
Merger reserve	10	666,529	666,529
Retained earnings		9,081,374	4,748,978
Total equity		22,055,079	5,416,685
Current liabilities
Loans and borrowings		-	1,381,282
Trade and other payables	8	8,830,511	17,826,893
Current tax liability		694,692	865,327
Provisions	9	110,000	-
Total current liabilities		9,635,203	20,073,502
Non-current liabilities
Loans and borrowings		-	370,500
Deferred tax liability		20,581	31,488
Provisions	9	80,000	-
Total non-current liabilities		100,581	401,988
Total equity and liabilities		31,790,863	25,892,175

 

Consolidated Cash Flow Statement

For the year ended 31 December 2017

		Year ended 31 Dec 2017	Year ended 31 Dec 2016
	Note	£	£
Cash flows from operating activities
Profit before taxation		5,622,168	4,313,085
Net finance expenses		7,516	45,164
Amortisation of intangible assets		26,316	1,979
Depreciation of property, plant and equipment		74,590	54,724
Loss on disposal of fixed assets		25,507	-
Share-based payment expense		482,372	-
Provision charged in year		190,000	-
(Increase)/decrease in other receivables		(155,158)	484,105
(Decrease)/increase in other payables		(5,676,021)	6,053,170
(Increase) in derivative financial assets		(876,879)	(8,510,926)
(Decrease)/increase in derivative financial liabilities		(3,320,361)	3,649,156
Decrease/(increase) in other cash balances		349,789	(1,302,835)
Cash (outflows)/ inflows from operating activities		(3,250,161)	4,787,622
Tax paid		(1,409,547)	(908,868)
Net cash (outflows)/inflows from operating activities		(4,659,708)	3,878,754
Cash flows from investing activities
Expenditure on internally developed intangible assets		(105,515)	(47,500)
Payments to acquire property, plant and equipment		(127,831)	(42,961)
Net cash outflows from investing activities		(233,346)	(90,461)
Cash flows from financing activities
Proceeds from borrowings		400,000	475,925
Repayment of borrowings		(1,769,425)	(100,000)
Dividends paid to equity owners of the Parent Company		(491,430)	(510,000)
Amounts repaid by Directors		-	242,642
Amounts lent to Directors		-	(40,173)
Issue of ordinary shares by Parent Company		13,000,000	900
Share issue costs		(748,784)	-
Issue of ordinary shares by subsidiary		2,073	-
Repurchase of preference shares in subsidiary		-	(477,000)
Purchase of non-controlling interest for cash*		-	(1,000,000)
Net interest paid		(7,516)	(45,164)
Net cash outflows from financing activities		10,384,918	(1,452,870)
Increase in net cash and cash equivalents in the year		5,491,864	2,335,423
Net cash and cash equivalents at beginning of year		7,581,268	5,245,845
Net cash and cash equivalents at end of year	7	13,073,132	7,581,268

*reclassification of purchase of non-controlling interest for cash from investing activities in the prior year to financing activities in the current year

Consolidated Statement of Changes in Equity

For the year ended 31 December 2017

	Attributable to the owners of the parent
	Share capital	Share premium account	Capital redemption reserve	Merger reserve	Retained Earnings	Total	Non-controlling interests	Total
	£		£	£	£	£	£	£
Balance at 1 January 2016	140	-	-	-	1,916,753	1,916,893	991,438	2,908,331
Profit and total comprehensive income for the financial year	-	-	-	-	2,940,086	2,940,086	509,007	3,449,093
Transactions with owners
Shares issued	900	-	-	-	-	900	-	900
Shares repurchased from non-controlling interest	-				260,759	260,759	(1,260,759)	(1,000,000)
Cancellation of shares in Parent Company	(60)	-	60	-	-	-	-	-
Cancellation of shares in subsidiary	-	-	-	-	(31,701)	(31,701)	31,701	-
Settlement of non-controlling interest via share for share exchange	138	-	-	666,529	173,081	839,748	(839,610)	138
Dividends paid	-	-	-	-	(510,000)	(510,000)	-	(510,000)
Waiver by non-controlling interests of dividend liabilities	-	-	-	-	-	-	568,223	568,223
Balance at 31 December 2016	1,118	-	60	666,529	4,748,978	5,416,685	-	5,416,685
Profit and total comprehensive income for the financial year	-	-	-	-	4,396,236	4,396,236	-	4,396,236
Transactions with owners
Bonus shares issued	54,782	-	-	-	(54,782)	-	-	-
Cancellation of shares in Parent Company	(3,641)	-	3,641	-	-	-	-	-
Shares issued on listing	13,265	12,986,735	-	-	-	13,000,000	-	13,000,000
Costs of issue of equity shares	-	(748,784)	-	-	-	(748,784)	-	(748,784)
Dividends paid	-	-	-	-	(491,430)	(491,430)	-	(491,430)
Share-based payments	-	-	-	-	482,372	482,372	-	482,372
Balance at 31 December 2017	65,524	12,237,951	3,701	666,529	9,081,374	22,055,079	-	22,055,079

1. Corporate information

Alpha FX Group plc, (the 'Company') is a public limited company having listed its shares on AIM, a market operated by The London Stock Exchange, on 7 April 2017. The Company is incorporated and domiciled in the UK (registered number 07262416) and its registered office is 2 Eastbourne Terrace, London, W2 6LG. The consolidated financial statements incorporate the results of the Company and its subsidiary undertaking Alpha FX Limited.

Statutory accounts for the year ended 31 December 2016 have been delivered to the Registrar of Companies. The statutory accounts for the year ended 31 December 2017 will be delivered to the Registrar of Companies following the Group's Annual General Meeting.

The auditors' reports on the financial statements for 31 December 2017 and 31 December 2016 were unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

2. Accounting policies

Basis of preparation

The consolidated financial statements have prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board and adopted by the European Union ("IFRS").

The financial information set out above does not constitute statutory accounts for the years ended 31 December 2017 and 31 December 2016 but is derived from those accounts.

The Directors have assessed the Group's projected business activities and available financial resources together with detailed forecasts for cash flow and relevant sensitivity analysis. The directors believe that the Group remains well placed to manage its business risks successfully. After making appropriate enquiries the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future.  Accordingly, the directors continue to adopt the going concern basis in preparing the statutory accounts for the year ended 31 December 2017.

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

Accounting policies

The accounting policies adopted in this financial summary are identical to the those adopted in the Group's most recent annual financial statements for the year ended 31 December 2017.

Segment reporting

The revenue for the Group is generated through the provision of commercial and wholesale foreign exchange services and this is the sole operating segment of the Group, with 94% of the revenue being derived from within the UK in 2017.

4. Earnings per share

Basic earnings per share is calculated by dividing the profit for the year attributable to equity holders of the parent, by the weighted average number of ordinary shares during the year. Diluted earnings per share additionally includes in the calculation, the weighted average number of ordinary shares that would be issued on conversion of any dilutive potential ordinary shares.

The Group additionally discloses an underlying earnings per share calculation that excludes the impact of the one-off costs relating to the IPO and their tax effect and share-based payments, which better enables comparison of financial performance in the current year with comparative years.

	31 December 2017	31 December 2016
	pence	pence
Underlying - basic	17.5p	13.4p
Underlying - diluted	17.2p	13.4p
Basic earnings per share	14.2p	13.4p
Diluted earnings per share	13.9p	13.4p

The calculation of basic and diluted earnings per share is based on the following number of shares:

	31 December 2017	31 December 2016
	No.	No.
Basic weighted average shares	31,017,500	21,983,764
Contingently issuable shares	566,714	-
Diluted weighted average shares	31,584,214	21,983,764

As disclosed in note 9, in 2017 there was a bonus issue of shares which were converted from £1 shares into shares of 0.002p each, prior to the IPO. The effect of this has been backdated to 1 January 2016, impacting the basic weighted average shares for 31 December 2016.

The earnings used in the calculation of basic, diluted and underlying earnings per share are set out below:

	31 December 2017	31 December 2016
	£	£
Profit after tax for the year	4,396,236	3,449,093
Non-controlling interests	-	(509,007)
Earnings - basic and diluted	4,396,236	2,940,086
Costs associated with the IPO	612,873	-
Tax effect	(39,944)	-
Share-based payments	511,332	-
Deferred tax asset impact on share-based payments	(39,873)	-
Earnings - underlying	5,440,624	2,940,086

5. Dividends

	31 December 2017	31 December 2016
	£	£
Interim dividend for the year ended 31 December 2017 of 1.5p per Ordinary Share of £0.002 each	491,430	-
Interim dividend for the year ended 31 December 2016 of £593 per A Ordinary Share of £1 each	-	510,000
	491,430	510,000

The Directors propose that a final dividend in respect of the year ended 31 December 2017 of 3.4p per share amounting to £1,133,130 will be paid on 16 May 2018 to all shareholders on the register of members on 13 April 2018. This dividend is subject to approval by shareholders at the AGM and has not been included as a liability in these Financial Statements.

6. Trade and other receivables

Trade receivables represent the fair value of derivative financial assets arising as a result of matched principal transactions.

	31 December 2017	31 December 2016
	£	£
Trade receivables (derivative financial asset)	16,550,496	15,673,617
Other receivables	168,224	1,533
Prepayments	105,791	117,324
	16,824,511	15,792,474

At 31 December 2017 and 31 December 2016 none of the receivables shown above were past due or impaired.

7. Cash

Cash and cash equivalents comprise cash balances and deposits held at call with banks.

Other cash balances comprise cash held as collateral with banking counterparties for which the Group does not have immediate access.

Cash balances included within derivative financial assets relate to the variation margin called against out of the money trades with banking counterparties.

	31 December 2017	31 December 2016
	£	£
Cash and cash equivalents	13,073,132	7,963,625
Bank overdraft	-	(382,357)
Net cash and cash equivalents	13,073,132	7,581,268
Variation margin called by counterparties*	3,516,811	4,341,820
Other cash balances	1,571,475	1,921,264
Total cash	18,161,418	13,844,352

*Included within trade receivables and trade payables

8. Trade and other payables

Trade payables represent the fair value of derivative financial liabilities arising as a result of matched principal transactions.

	31 December 2017	31 December 2016
	£	£
Trade payables (derivative financial liability)	4,164,936	7,485,297
Other payables	4,036,101	9,771,807
Other taxation and social security	258,830	216,306
Accruals and deferred income	370,644	353,483
	8,830,511	17,826,893

Other payables consist of margin received from clients and client held funds. The carrying value of trade and other payables classified as financial liabilities measured at amortised cost, approximates fair value.

9. Provisions

The provision represents an onerous lease provision being the present value of the estimated obligations under a lease where the unavoidable costs of the lease exceed the economic benefit expected to be received from it.

10. Share capital

The following movements of share capital occurred in the 12 months to December 2017.

Number of shares	A shares	B  shares	C  shares	D shares	Ordinary shares	Deferred shares	Total
At 1 January 2017 - shares of £1 each	75	65	-	-	-	-	140
Issue of shares	760	138	31	109	-	-	1,038
Reclassification	65	(65)	-	-	-	-	-
Repurchase and cancellation	(40)	(20)	-	-	-	-	(60)
At 31 Dec 2016	860	118	31	109	-	-	1,118
Bonus issue	42,140	5,782	1,519	5,341	-	-	54,782
	43,000	5,900	1,550	5,450	-	-	55,900
Conversion to £0.002 each	21,500,000	2,950,000	775,000	2,725,000	-	-	27,950,000
Re-designation	(21,500,000)	(2,950,000)	(775,000)	(2,725,000)	26,129,326	1,820,674	-
Cancellation of shares	-	-	-	-	-	(1,820,674)	(1,820,674)
Issue of new shares on IPO	-	-	-	-	6,632,653	-	6,632,653
At 31 Dec 2017	-	-	-	-	32,761,979	-	32,761,979

On 24 March 2017, a bonus issues of shares was made for all A, B, C and D shares of 49 additional shares for each share held. On the same date, all shares were converted from ordinary shares of £1 each to ordinary shares of £0.002 each.

On 31 March 2017, all the A and B shares were converted into ordinary shares, the C shares were converted into 371,851 ordinary shares and 403,149 deferred shares and the D shares were converted into 1,307,475 ordinary shares and 1,417,525 deferred shares. On the same date, the 1,820,674 deferred shares were cancelled.

On 7 April 2017, the Company issued 6,632,653 new shares upon admission to the London Stock Exchange.

11. Subsequent events

On 20 March 2018 the Group launched a new business division, 'Alpha Institutional', whose focus is on expanding Alpha's service offering to fund and institutional clients.

In order to incentivise key personnel a newly formed subsidiary has been incorporated under Alpha FX Limited, the Group's existing subsidiary and main trading entity. The share capital of the new subsidiary is 60% owned by Alpha FX Limited, with the balance split between five key individuals. Commencing three full years following incorporation, the individuals will have the option to convert a percentage of their shareholding into Group shares each year, based upon strict performance criteria. At conversion, and in exchange for converting their shares into the Group, Alpha FX Limited's shareholding over Alpha FX Institutional Limited will commensurately increase.

On 20 March 2018 the Company determined that following the vesting of shares under the Growth Share Scheme for the year ended 31 December 2017, it would be issuing 565,387 shares on 26 March 2018. The number of shares to be issued is based on the average share price in the 60 days prior to vesting of 508.1p.

12. Availability of Annual Financial Report

The Group notes that the Annual Report & Accounts for the year ended 31 December 2017 will be posted to Alpha FX shareholders shortly. The document will also be available on the Group's website at www.alphafx.co.uk and in hard copy at 2 Eastbourne Terrace, Paddington London W2 6LG.

 

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