Alpha Financial Markets Consulting plc

Summary

Quoted on the London Stock Exchange, Alpha Financial Markets Consulting (FMC) is a company that's on a mission to help (financial markets/services?) businesses maximise/improve their profits. The company's flagship offering is the provision of consultancy/advisory services. What makes the consultancy offering unique is that it's provided by the largest team of financial market industry experts. Evidence suggests that the provision of consultancy services by the largest financial market industry experts team enables financial markets companies to make better business decisions, ultimately leading the companies to maximise/improve their profits. The expected return of an investment in Alpha FMC over the next five years is ccc%, according to the estimates of Proactive Investors, which equates to an annual return of ccc%. In other words, an £100,000 investment in the company is expected to return £cc in five years time. The degree of risk associated with an investment in Alpha FMC is 'medium', with the shares having an adjusted beta that is 14% above the market (1.14 vs. 1). Assuming that a suitable return level over five years is 10% per year, then an investment in the company is considered to be a 'suitable' one.

Operations

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Financials

Strong financial performance and robust financial position.

Risks

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Valuation

Research suggests that in terms of estimating the expected return of an investment over a period of 12-months or more, the approach that is more/most accurate is the discounted cash flow approach, so that's the approach that we suggest to use here. While Alpha has paid a dividend every year since its public listing (in 2017), at the moment, the growth rate of the dividend varies materially; accordingly, we suggest valuing the business using the free cash flow valuation method (rather than the dividend discount model). Key things that influenced the assumptions of our model include 1) the company operates in a total addressable market that is materially large; 2) Alpha's value proposition is industry-focused, delivering true expertise; 3) the management team is high-calibre and has a proven track record of organic growth; 4) the business has a strong reputation and deep relationships with global clients; and 5) the client base of Alpha is broad, diversified and expanding.

Operations

How did the idea of the company come about?

In 2003, the idea of Alpha FMC came to Nicholas Kent and Margaret Kent, the now founders of the company, when they developed a strong desire to maximise/improve the profits of the businesses in which they were involved (i.e. financial markets businesses). Researching into how to do that, they realised that one of the best ways is via the provision of consultancy services, in particular financial markets consultancy services. They also realised that there are many company owners and agents that feel the same way as them, with profit maximisation one of the fundamental assumptions of economic (and business) theory. In their quest to maximise the profits of their businesses and the businesses of others, Alpha FMC was born.

What's the mission of the company?

Listed on the Alternative Investment Market (AIM) of the London Stock Exchange and headquartered in the United Kingdom, the mission of the company is to help businesses maximise their profits, in particular to provide the best (financial markets?) consultancy services.

What's the company's main offering(s)?

Who’s the target audience of the company’s flagship/first product?

The audience is companies that operate in the asset management, wealth management and insurance industries.

What's a major problem that the target audience experience?

A lack of profits/growth.

What's a key solution to the problem?

The solution is the provision of consultancy/advisory services. What makes the consultancy offering unique is that it's provided by the largest and most diverse team of financial markets industry experts, with 760 consultants operating from 16 offices across the United Kingdom, Europe, North America and Asia. Evidence suggests that the provision of consultancy services by the largest and most diverse financial markets industry experts team enables financial market companies to make better business decisions, ultimately leading the companies to maximise/improve their profits.

Client service proposition

The group’s client proposition can be broadly categorised into three areas: Alpha Financial Markets Consulting, Alpha Technology Services and Alpha Data Solutions.

Alpha Financial Markets Consulting

The group provides advice to its clients in the asset, wealth management and insurance industry based on its sector experience and deep knowledge of the needs of specific industry participants. The group’s financial markets consulting proposition extends to working with clients across the four primary areas of:

1. Strategy and advisory
2. Evaluation and selection
3. Implementation and execution
4. Benchmarking

In each case, these services are delivered across the value chain, which comprises:

1. Portfolio optimisation
2. Order management
3. Pre-trade and post-trade compliance
4. Sales, marketing and distribution operating model design
5. Client relationship management and engagement
6. Regulatory and investment guidance change and other risk management
7. Middle and back office outsourcing selection
8. Client reporting
9. Trade and corporate action processing
10. Fund and portfolio accounting
11. Custody services

Strategy and Advisory

The group provides its clients with insight into market trends, new products, the regulatory agenda and competitive threats and opportunities. The advice that the group provides allows its clients to make decisions on managing their business and connecting with the market. The group’s consultants are industry specialists, and as part of a global team, are able to provide an international perspective for their clients, giving insight across the value chain.

Evaluation and Selection

The group provides independent and impartial advice to its clients on the choice of technology solutions, outsourcing providers and other partners for their businesses. Using its current knowledge of the market and proprietary benchmarking data, the group is able to provide an up-to-date view of provider capabilities and the best solutions for the specific needs of its clients. The group’s impartial position also enables it to conduct commercial negotiations on behalf of clients and build relationships between these clients and their providers.

Implementation and Execution

For the implementation and execution of complex projects, the group provides clients with professional teams who have specialist hands-on expertise in delivering complex and time critical projects. These projects span the spectrum of front, middle and back office functions.

Benchmarking

The group has developed an extensive library of data and analysis on the asset and wealth management industry, providing benchmarking analysis on comparable costs, operational performance, key performance Indicators and other metrics. This library of benchmarking data is proprietary to the group. Clients are able to benchmark their operational capability and cost profile against other asset managers; if the operational activity is outsourced, they can compare capability and cost profiles against the services provided by third party administrators to other outsourced asset managers.

The studies benchmark core comparison metrics and include:

• Tariff and rate cards;
• Key performance indicators and service performance;
• Service level agreements; and
• Commercial contract items.

Alpha Technology Services

Through Alpha Technology Services, the group delivers specialist technical expertise to clients in two key areas:

Project Delivery

The group’s specialists include developers or configurators with deep expertise in a particular software platform or range of platforms.

Ongoing Support

Following the implementation of a software platform (for example, the Salesforce.com Client Relationship Management tool), Alpha Technology Services supports clients with the ongoing maintenance, improvement and configuration of the platform. This is typically contracted on an annual basis, providing clients with access to a set number of days of support per week or month, and Alpha with an annuity revenue stream.

Currently, Alpha Technology Services is predominantly focused on servicing the distribution part of the asset and wealth management value chain, but demand is already emerging in other areas, and the group’s strategy is to address the growing area of demand by broadening its technical capabilities accordingly.

Alpha Data Solutions

Following the acquisition of TrackTwo GmbH in July 2017, the company’s new division, Alpha Data Solutions, provides a specialist data offering to asset managers. This data offering, 360 SalesVista, enables asset managers to match client transactions and AUM to create a golden source for client data. This improved visibility and accuracy of customer flows can be used by asset managers to deliver improved business outcomes across distribution, finance and compliance.

Project portfolio overview

Projects classification

Projects typically span multiple service lines and vary in size, duration and nature. The group principally prices its consulting services on a time and materials basis using daily charge out rates, but also uses fixed price contracts on occasions (typically in continental Europe and North America). The group undertakes projects across most of the asset and wealth management value chain and these fall into three categories:

• Major programmes: these typically span more than one financial year, are multi-geography and would be valued in excess of £2 million. There are usually 2 to 5 major programmes running in any year.
• Large programmes: these are typically up to a year in duration, single or multi regions and valued between £1 million and £2 million. There are circa 10 large programmes undertaken in a year.
• Small programmes: these are typically single region, focused programmes valued at less than £1 million. There are usually more than 100 small programmes undertaken in a year.

Client segments

The group identifies challenges to and provides offerings for a range of clients, including:

Asset Managers

The group has provided services to over 200 clients across the globe, including all of the world's top 20 largest global asset managers by AUM and 80% of the top 50 as at 31 March 2022. In addition to traditional asset managers, Alpha also advises insurance-backed and pension-based businesses. The group’s clients cover the whole spectrum of institutional, intermediary and retail asset managers.

Wealth Managers

Alpha works with wealth managers delivering private banking and wealth solutions, discretionary fund management and family office services to end clients. The services provided to these organisations mirror those delivered to traditional asset managers.

Third Party Administrators

The group works with the majority of the largest third party administrators, organisations that provide outsourced middle and back office services to the asset and wealth management industry. Alpha supports these organisations with a wide range of services, including sales effectiveness consulting, deal management and target operating model design and implementation.

Alternative Investment Managers

Alpha supports a range of clients in the alternative investment space, including private equity houses, alternative fund managers, and traditional asset managers with alternative investment strategies (such as real estate, private equity or other illiquid investments). The services provided to these organisations mirror those delivered to the traditional asset managers.

Other Providers

Finally, Alpha supports a range of other providers to the asset and wealth management industry, including software vendors and data providers. Engagements with these clients include new product development, market reviews and support responding to market requests for proposal.

The people

Alpha is a people business and the key to the group's success is its highly talented people with deep specialist knowledge. This very deep expertise enables Alpha to help its clients deal with complex operational and organisational challenges, and clients often struggle to find these strengths in the larger more generalist consulting businesses. Alpha is keen to attract the highest quality people in its fields of operation and the company's goal is to recruit the top 5% in the field.

The group employs around 760 revenue-generating consultants (full-time equivalent basis), of which around 10% are contractors with the rest being fulltime staff. Full-time consultants receive a profit share in the form of a cash bonus. For a manager, this can reach 30% of the annual salary. In the case of the senior executive team, the cash payment is smaller, while equity options are awarded on annual basis, under the management incentive plan (MIP). The company anticipates an approximate 3% equity dilution over time (strictly a maximum of 10% over three years). Unvested awards granted under the MIP are limited to a maximum of 10% in aggregate of the company’s issued share capital. Vesting of the awards is linked to several factors, depending on the individual, including earnings per share growth, total shareholder return or specific business unit EBITDA.

Key strengths of the group

As a leading global consultancy provider to the asset and wealth management industry, the directors believe that Alpha is well-positioned for continued growth in a marketplace shaped by the primary market drivers of an underlying growth in AUM, rising cost pressures, regulatory change and continuing consolidation, all of which are underpinned by technological change in the asset and wealth management industry. The group’s approach is to create value for clients by leveraging its extensive industry knowledge, proprietary database, product expertise and application of technology and digital innovation to deliver a targeted service offering across most of the asset and wealth management value chain from portfolio management through sales, distribution and the middle and back office. This approach allows the group to help its clients improve key aspects of their business.

The directors believe that Alpha’s strategy, together with the following competitive strengths, distinguish it from its competitors in this marketplace.

Focused industry proposition delivering true expertise – Alpha has developed specialised expertise and experience in the asset and wealth management industry. This industry focus enables the group’s professionals to provide offerings on a global basis with a comprehensive understanding of the market, business issues and relevant technologies, and ultimately deliver tailored solutions for each client.

Strong reputation and deep relationships with global clients – Alpha has served a large proportion of the world’s largest and most successful asset managers and wealth management companies, including all of the world's top 20 largest global asset managers by AUM and 80% of the top 50 as at 31 March 2022.

Broad, diversified and expanding base of clients – The group’s business extends to delivering a range of product offerings to global asset managers, wealth managers, asset owners and third party administrators. Revenue is diversified across a growing client base with no single client accounting for more than 10% in the year ended 31 March 2022.

Intellectual property – The group combines industry leading consulting expertise with detailed proprietary benchmarking data developed since the creation of the group, which has enabled it to develop trusted, long term relationships with clients. This information is held by the company, preventing the company from becoming dependent on one particular individual or group of individuals.

Alpha’s people and culture – The group competes with the largest consultancy companies globally for talent, operating a business in which people are central to the delivery of its growth strategy. Alpha targets both graduates and experienced professionals and has developed a strong culture which attracts high calibre consultants and places people at the heart of the business. Further, Alpha has created an environment in which people are rewarded for both their own contribution and for the success of the business as a whole. The directors believe that Alpha’s reputation is key to attracting those talents. To develop and support high performance, the directors believe that the group has developed a rigorous recruitment process and comprehensive training and development plan, offers a market leading compensation package including profit share arrangements, and has a strong focus on employee wellbeing. This results in Alpha having attained what the directors believe to be an industry leading unmanaged consultant attrition rate of less than 5% in the year ended 31 March 2022.

Strong track record of organic growth – Alpha has delivered a consistent record of growth with a revenue CAGR of 33% from £6.71 million for the year ended 31 March 2011 to £158.0 million for the year ended 31 March 2022. This significant revenue growth has been accompanied by a CAGR in adjusted EBITDA of 40% over the same period, reaching £33,87 million for the year ended 31 March 2022.

Proven, experienced high-calibre management team – The group benefits from a high-calibre senior management team with substantial and diverse experience, led by Euan Fraser, the group’s Chief Executive Officer. Together, the senior management team has driven the growth and strong financial performance of the business over the past several years and has a proven track record of delivering results.

Building on the significant growth already achieved in recent years, the directors believe that the group has the potential to capture a significantly larger market share of its chosen markets. The directors believe that the competitive advantages as described above position the group to deliver profitable growth.

Strong balance sheet?

Which are the main competitors of the product?

A key way to determine an offering’s closest competitors is by looking at other offerings that are targeting the same or similar target audience (i.e. financial markets/services companies) and providing or aiming to provide the same core benefit (i.e. more/maximum business profits, in particular financial markets/services consultancy), and then ranking the offerings in terms of the total amount of time spent using and/or money spent purchasing the offerings. With that said, we view that the closest competitor of the Alpha FMC offering(s) is Accenture. A detailed comparison between Alpha FMC and its main competitors are shown in the table below.

Alpha operates in a competitive global market and competes with several organisations that offer services similar to those offered by the group. Competitors include the advisory practices of major accounting firms, global consulting firms and boutique consulting businesses.

The group has been able to successfully compete against these firms by providing specialist expertise to the asset and wealth management industry, and by consistently delivering a high quality service which attracts repeat business and fosters long term relationships. Against the boutique consulting businesses, Alpha is able to differentiate itself through its global offering, relationships with the largest fund managers and reputation for high quality and efficient service. Against the global consulting firms, the group differentiates itself with a specialised industry offering and tailored client solutions. Alpha is able to set itself apart from the advisory practices of major accounting firms through its specialist sector focus and by deploying highly experienced industry consultants to client engagements, who have demonstrable track records of delivering complex projects. This is made possible through the group’s ability to attract and retain high calibre consultants.

Total Addressable Market

Here, the total addressable market (TAM) is defined as the global financial services consultancy market, and based on a number of assumptions, it is estimated that the size of the market as of today (23rd January 2023), in terms of revenue, is $46 billion.

Serviceable Available Market

The serviceable available market (SAM) is defined as the global asset management, wealth management and insurance consultancy market, and based on a number of assumptions, it is estimated that the size of the market as of today (23rd January 2023), in terms of revenue, is $23 billion.

Serviceable Obtainable Market

Here, the serviceable obtainable market (SOM) is defined as the United Kingdom asset management, wealth management and insurance consultancy market, and based on a number of assumptions, it is estimated that the size of the market as of today (23rd January 2023), in terms of revenue, is $2.17 billion.

The key structural drivers in the industry are as follows:

Cost pressures. As the pressures on the asset management sector continue to increase, Alpha offers asset managers offerings to improving efficiency, reducing costs and upgrading legacy systems. That's probably the most important structural driver for Alpha, since ongoing cost pressures force businesses to seek major operational improvements, including upgrading their systems, which plays directly into Alpha's strengths.

Regulatory demand. Regulations are continually changing and evolving and new ones introduced and this is extremely challenging for businesses to cope with on their own. One recent regulatory development is the US SEC's plan to revamp the rules around fund names, which would require funds to prove that 80 per cent of their holdings match their names. The proposal would apply to everything from 'core' and 'growth' funds to funds that invest in 'sin stocks' or investments that meet 'ESG' criteria. According to a media report, the SEC has estimated the cost to the fund industry at up to US$5bn.

Growth in assets under management. Global assets under management run by money and wealth managers grew by 12% to US$112trn over 2021, according to BCG. This growth rate was well above the 7% average for the previous twenty year period and was supported by higher than normal net flow rates at US$4.4trn or 4.4%.

Client and societal expectations. This factor has been made apparent through the ascent of ESG (environmental, social and corporate governance) in recent years, which resulted in the establishment of a new business practice for Alpha.

2. Growth in assets under management. The asset and wealth management industry has grown significantly since 2008, with global aggregate assets under management standing at approximately $112 trillion at the end of 2021, compared to $38.5 trillion at the end of 2008.
3. Regulatory changes and cost pressures. Whilst overall AUM is growing, the asset and wealth management industry is experiencing challenges stemming from regulatory changes and cost pressures from the regulators and end clients. These factors are driving an increased focus by asset and wealth managers on improving systems, data quality and operational processes, in order to gain a competitive advantage, generate above average returns and reduce costs. This in turn has helped drive demand for the management consulting services provided to the asset and wealth management industry, across the spectrum of front, middle and back office functions.
4. The industry is subject to a wide range of regulatory and risk management considerations, which the directors believe will continue to drive growth in consulting services. In addition to the ever more demanding regulatory environment, the industry is having to react to requests from institutional and retail customers for greater transparency in reporting, engagement and accountability, which in turn is driving a growth in demand for more effective data systems and processes.
5. Consolidation. The pressure on margins within the asset and wealth management industry has also resulted in significant consolidation in recent years, as fund managers seek to increase assets under management, drive synergies and ultimately generate better returns through mergers and acquisitions. The value of global M&A deals completed in the sector totalled approximately $34.9 billion in 2015 and $71.3 billion in 2016, with many market commentators expecting continued consolidation through M&A in the asset and wealth management industry in the near future. This has created substantial opportunities and areas of growth for Alpha as it continues to provide M&A integration, operational and outsourcing consultancy services to increasingly larger and more complex fund managers.

What are the main achievements of the company?

• Worked with all of the world's top 20 and 80% of the world's top 50 asset managers (in terms of asset under management), along with a wide range of other buy-side companies.
• The company has the largest dedicated team in the industry, with in excess of 900 consultants, globally.
• It operates from 16 client-facing offices, across the United Kingdom, North America, Europe and APAC.
• When the company IPO'd (in 2017), the company set as its next milestone to the double the size of the business (in terms of revenue?) within four years time, and the company achieved the milestone (a year earlier than the target date?). The company has since set a new milestone to double the business again within the same duration (i.e. four years), and it looks very likely that the goal will be achieved (expected FY23 revenue of £196.8 million vs. target revenue of £174.4 million).

What's the business strategy of the company?

The group’s strategy is to continue to grow in both existing and new jurisdictions, both organically and through selective acquisitions, with a particular focus on North America. It also involves extending the depth and range of client segment and service line offerings. The group has a strong track record of EBITDA growth and intends to further grow its business in the following ways:

Expand existing services in existing markets – The group currently serves clients in multiple countries and the directors consider that there is substantial scope to grow within these markets. In addition to winning new clients, the group also aims to grow by extending the services delivered to existing clients, or by serving other client group entities.

Expand existing services into new jurisdictions – The group currently serves clients from its offices in the UK, France, the US, Luxembourg, Switzerland, the Netherlands and Singapore. The group will seek to extend its international reach to cover new jurisdictions and is considering new offices in Germany, Switzerland and Hong Kong over the coming years.

Adding new services to deliver to existing and new clients – The group will continue to evaluate market demand for new services, products and propositions to deliver to both existing and new clients in both existing and new jurisdictions. This assessment will take place at a local level and any new opportunities for such services shared globally across the group.

Make selective acquisitions – In addition to organic growth, the group will consider small scale acquisitions of consulting businesses, technology and intellectual property, to deepen, enhance or extend the group’s existing capabilities and the range of products and services offered to its clients.

Extend into new sectors within the financial services industry – The directors believe that the business model that has been successfully deployed in the asset and wealth management industry can be applied to new sectors within the financial services industry which exhibit similar industry characteristics such as (i) high regulatory oversight, (ii) a focus on operating model and technology change, (iii) changing end-client dynamics, and (iv) a familiar competitive landscape. In the medium term, Alpha will seek to develop a market leading proposition in industries which meet the above criteria. Of these, the directors currently believe the insurance industry is the most attractive area in which the company may look to expand, having already delivered some services in the space at the request of its clients (many of whom have insurance parents) and is exploring making relevant specialist hires into a separate pool of resource to support growth in this area.

Who are the key members of the team?

The management team has a wealth of experience in the financial services/markets industry.

Executive

Global Chief Executive Officer: Euan Fraser

Euan has served as Global Chief Executive Officer of Alpha since 2013. During this period, the business has increased EBITDA almost seven-fold, and he has led the Group through two private equity transitions and a public listing on the London Stock Exchange’s AIM in 2017. Euan was previously Chief Executive Officer of Alpha UK, starting in April 2011, where he established both Alpha’s M&A Integration and Operations & Outsourcing practices. He joined Alpha in 2004 and has over 20 years’ financial services experience, having worked at Merrill Lynch and KPMG, where he qualified as a chartered accountant.

Euan keeps the skills to support and deliver the Group’s strategy up to date through his role as Chief Executive Officer of a global consulting firm operating within the financial services sector. In this role, Euan has to understand and manage the interests of a range of stakeholders, including employees, clients, competitors and investors. Euan maintains a number of strong industry relationships that involve sharing of knowledge and perspectives.

On 1st April 2023, Euan will be succeeded as CEO and as a board member by Luc Baqué, who is currently the Global Head of Asset & Wealth Management Consulting at Alpha. Luc, aged 46, joined Alpha in 2010 to create the Paris Office. He became Head of Europe in 2016 and Global Head of Asset & Wealth Management Consulting in 2020. Luc has more than 20 years of industry experience. Prior to joining Alpha, he spent five years with UBS in Paris as head of change management and six years with Solving International, a strategy management consultancy, specialising in Financial Services. Euan has agreed to remain with the Group as a Strategic Adviser.

Global Chief Financial Officer: John Paton

John is a chartered accountant with 23 years of corporate finance, banking and audit experience. He joined from HSBC where he was a Director in the UK Mid-Market Advisory team (2007-12), the Corporate Origination team (2012-16) and latterly, the UK Banking team (2016-2018). Over his 11 year tenure he advised on a variety of M&A transactions and led loan financings for UK corporates. Prior to this he spent more than five years at MacArthur & Co. focusing on capital raisings including AIM IPOs. John started his career at KPMG, where he spent nearly seven years, working across financial services audit and risk management with exposure to financial reporting requirements, governance, risk & internal controls and systems’ implementation. He is a member of the Institute of Chartered Accountants of Scotland, graduated LLB (Hons) from the University of Aberdeen and holds an Executive MBA from the University of Bristol & École Nationale des Ponts & Chaussées, France. John joined Alpha in February 2018.

Global Chief Commercial Officer: Nick Fienberg

Nick has 15 years of experience consulting in the financial services, and in particular the capital markets sector. Specialising in asset management outsourcing, he has worked with a wide range of clients on advisory and implementation roles covering large scale outsourcing and organisational change initiatives, strategic business studies and market trend analysis.

Global Chief Operating Officer: Sarah Peacock

Sarah is Alpha’s Global Chief Operating Officer. She joined Alpha in 2008. Before moving into business operations, she spent over 10 years in asset and wealth management consulting with experience performing both project management and functional roles, and working extensively on implementation and business transformation projects. As COO, Sarah is responsible for overseeing operations functions globally including IT & infrastructure, data privacy, people and talent management, service delivery and knowledge management.

Global Head - Aiviq: Lee Griggs

Lee is the Global Head of Aiviq. Lee has a record of international business building with over 20 years experience, providing market leading enterprise and SaaS solutions to leading financial institutions. Lee has extensive knowledge of strategy creation, execution and expansion and has a proven track record in business development, process management and organisational optimisation.

Global Chief Client Officer and Head of UK - Asset & Wealth Management Consulting: Stuart McNulty

Stuart is the Global Chief Client Officer & Head of UK for Asset & Wealth Management Consulting at Alpha. Stuart began his career at Accenture, where he specialised in the capital markets sector, leading projects ranging from system implementations to process change initiatives. Stuart then moved to J.P. Morgan, where he ran strategic projects within the credit exotics and hybrids middle office team, before joining Alpha in 2007. Since then, Stuart has worked on a wide variety of asset management projects, including new product development, competitive analysis, rate card reviews and large-scale onboarding programmes.

Stuart holds a First Class honours degree in Computer Science from the University of Sheffield.

Head of North America - Asset & Wealth Management Consulting: Joe Morant

Joe is Head of North America for Asset & Wealth Management Consulting at Alpha. Prior to joining Alpha Joe held operations and technology leadership roles at Nuveen Investments and BNY Mellon Asset Management. Joe has also held executive management positions at several service provider and consulting firms. Joe has worked extensively across the US and Europe, consulting to a range of leading asset managers. He has a breadth of experience across all aspects of the asset management business ranging from major change programs to corporate strategy and operating model definition.

Global Head of Innovation - Asset & Wealth Management Consulting: Neil Curham

Neil joined Alpha in April 2011 as a result of the acquisition of Tomtom Consultants. Neil established Tomtom Consultants in 2005 to become the leading consultant to distribution in investment management.

Neil has fifteen years experience working within investment management distribution and has more than eight years consultancy experience. During this time, Neil has assisted with business, operational and technical strategy addressing areas such as service proposition, client relationship management, client communications, marketing automation and web delivery.

Executive Director and Global Head of Distribution - Asset & Wealth Management Consulting: Mike Smith

Mike has over 20 years’ consulting experience and is an Executive Director and the Global Head of Alpha’s Distribution Practice, advising Asset Managers globally across their Sales, Marketing, Client Service and Product functions. Mike specialises in Distribution Transformation, including Strategy, Operating Models, Process Optimisation, Distribution Technology, Client Experience, Distribution Data & Analytics.  

Board

Independent Non-Executive Chairman: Ken Fry N (Chair), A, R

Ken joined the Alpha Board in 2016, following almost 10 years as the Global Chief Operating Officer at Aberdeen Asset Management. He was appointed the Board’s Non-Executive Chairman in February 2018. Ken has over 27 years’ experience in financial services, and has considerable experience integrating acquisitions within the investment management industry. Ken has a strong technology and operations background, and has undertaken a number of transformational projects during his career. He directed the integration of many major acquisitions while at Aberdeen Asset Management, including assets acquired from Deutsche Asset Management, Credit Suisse Asset Management and Scottish Widows Investment Partners.

Ken keeps the skills to support and deliver the Group’s strategy up to date by maintaining a wide network of contacts within investment management globally. He regularly attends conferences and discussion forums to keep abreast of industry issues and meets with both clients and investors. He also advises on M&A strategy within the investment management industry.

Global Chief Executive Officer: Euan Fraser

For the profile, see the 'executive' team section of this report, above.

Global Chief Financial Officer: John Paton

For the profile, see the 'executive' team section of this report, above.

Non-Executive Director: Penny Judd R (Chair), A, N

Penny joined the Alpha Board as a Non-Executive Director in February 2018, having previously held the roles of Managing Director and EMEA Head of Compliance at both Nomura International plc and UBS AG. Penny has a strong public markets and financial services background, with over 30 years’ experience in compliance, regulation, corporate finance and audit. She is also a chartered accountant and is currently Non-Executive Director and Chair of Audit Committee for both Trufin plc and Team17 Group plc.

Penny keeps the skills to support and deliver the Group’s strategy up to date through her experience gained on other listed company boards, while also maintaining a wide network of contacts in financial services and regulation. She attends various conferences and events covering relevant industry and governance matters, and meets with a range of advisers and institutional investors in AIM and main market companies.

Independent Non-Executive Director: Jill May A, N, R

Jill joined the Alpha Board as a Non-Executive Director in July 2020. She has over 20 years’ experience in investment banking, with her executive career spent working in corporate finance for SG Warburg & Co. Ltd from 1985 to 1995, and senior positions in Group Strategy at UBS where she was a Managing Director from 2001 to 2012.

She was a Panel Member from 2013 to 2018 and a Non-Executive Director from 2013 to 2016 of the Competition and Markets Authority (CMA), and a Non-Executive Director of the Institute of Chartered Accountants in England and Wales (ICAEW) from 2015 to 2019.

Jill is currently an External Member of the Prudential Regulation Committee at the Bank of England. Her current listed company experience includes her roles as Non-Executive Director of Standard Life Investments Property Income Trust Limited, JP Morgan Claverhouse Investment Trust plc and Ruffer Investment Company Limited.

Non-Executive Director: Maeve Byrne A (Chair), N, R

Maeve is a Fellow of the Institute of Chartered Accountants in Ireland and has over 30 years’ experience in Financial Services.

She started her career as an auditor with KPMG Ireland and worked in several other KPMG international offices in Europe and North America. Within KPMG, Maeve moved from Audit to Transaction Services where she was a Financial Services Partner from 2002 to 2014. From 2010 to 2013, Maeve was seconded to Royal Bank of Scotland and the Non-Core Division where she was CFO and a member of the Group Finance Board & Risk and Control Committee. From 2014 to 2017, she held senior executive roles at the Royal Bank of Scotland in Capital Resolutions Group and Williams & Glyn.

Since 2017, Maeve has focused on transformation services, offering Board advisory services as an independent consultant. She has worked with Financial Services companies including Santander and clients in the Fintech/Neo bank space.

How much does the company expect to make over the next five years?

Most recent full-year results

In the 12-months period ended 31st March 2022, revenue increased by 61.1% to £158.0 million (FY21: £98.1 million), driven almost entirely by net fee income (99.9%), across all three of the company's main geographical markets (i.e. North America, United Kingdom and Europe & APAC). The North America region saw the largest growth of all of the regions (184% vs. 38.6% for Europe & APAC and 34.9% for the United Kingdom), while the United Kingdom region represents the largest share of the total (46% vs. 30% for North America and 25% for Europe & APAC). Gross profit increased by 70.4% to 59.4 million (FY21: 34.8 million), equating to a two percentage point improvement in the profit margin, to 37.59% (FY21: 35.47%). The improved margin is mainly due higher consultancy utilisation levels and improved consulting rates. Mainly reflecting increased acquisition costs, higher acquired intangible asset amortisation and share-based payments costs, profit before tax increased by 65.9% to £14.9 million (FY21: £9.0 million), equating to a 26 basis point improvement in the profit margin, to 9.43% (FY21: 9.17%). Basic earnings per share increased by 33.7% to 7.69p (FY21: 5.75p).

On a like-for-like basis (i.e. excluding the acquisition of Lionpoint), revenue increased by 31.3% to £128.6 million. Adjusted EBITDA increased by 56.0% to £33.9 million (FY21: £21.7 million), adjusted profit before tax increased by 62.2% to £31.8 million (FY21: £19.6 million), and adjusted earnings per share increased by 43.9% to 21.46p (FY21: 14.91p).

In relation to the financial position of the company, net current assets increased by 21.5% to £27.2 million (FY21: £22.4 million), and cash increased by 86.7% to £63.5 million (FY21: £34.0 million). Net assets increased by 40.7% to £132.7 million (FY21: £94.4 million). With no debt, net cash increased by 86.7% to £63.5 million (FY21: £34.0 million).

After adjusting for higher share-based payments (£4.08m for FY22 vs. £1.69m for FY21), taxation (£6.37 for FY22 and £3.14m for FY21) and other items, net cash generated from operating activities increased by 59.3% to £33.5 million (FY21: £21.0 million). Mainly due to the Lionpoint acquisition (in May 2021), net cash used from investing activities increased by 8x to £24.5 million (FY21: £2.9 million). Net cash from financing activities swung to using £20.0 million (FY21: £8.5 million), mainly due to the issuance of new shares (to fund the Lionpoint acquisition). Final dividend increased by 55% to 7.50p per share (FY21: 4.85p), resulting in a 49.6% jump in the total dividend for the year, to 10.40p (FY21: 6.95p).

On a like-for-like basis (i.e. excluding the acquisition of Lionpoint), adjusted cash generated from operating activities increased by 61% to £36.0 million (FY21: £22.3 million), equating to an adjusted cash conversion of 112% (FY 21: 111%).

Most recent interims

In the six month period ended 30th September 2022, revenue increased by 57.3% to £107.6 million (H1 FY22: £68.4 million), driven almost entirely by higher net fee income (net fee income accounts for 99.4% of revenue), from all of the company's main geographical markets (i.e. North America, United Kingdom and Europe & APAC). The North America region experienced the highest level of growth of all of the company's key regions (at 135%) and now accounts for the largest amount of the group's total net fee income (41.4% of the group's total net fee income). Total net fee income jumped by 56.5% to £107.0 million (H1 FY22: £68.4 million).

The number of client relationships increased by 19% to 787 clients (H1 22: 662), boosted by both new clients wins and client retention. Gross profit increased by 45.3% to £38.4 million (H1 FY22: £26.5 million), equating to a three percentage point decrease in the gross profit margin, to 35.7% (H1 FY22: 38.7%). The decrease in the margin is mainly due to higher consultant day rates. The number of consultants increased by 40.4% to 921 consultants (H1 FY22: 656 consultants), driven by client demand. The director headcount increased by 11% to 97 directors (H1 FY22: 88 directors). Profit before tax increased by 235.6% to £14.2 million (H1 22: £4.2 million), equating to a seven percentage point improvement in the profit margin, to 13.20% (H1 FY22: 6.14%). Basic earnings per share increased by 10x to 9.10p (H1 22: 0.87p).

On a like-for-like basis (i.e. excluding the acquisition of Lionpoint), net fee income increased by 45.3% (H1 FY22: 21.7%). Adjusted EBITDA increased by 45.6% to £22.5 million (H1 FY22: £15.4 million), equating to a 1 percentage point decease in the margin, to 21.5% (H1 FY22: 22.6%). Adjusted profit before tax increased by 47.2% to £21.3 million (H1 22: £14.4 million). Adjusted earnings per share increased by 43.0% to 14.09p (H1 22: 9.85p).

Net current assets decreased by 32.0% to £18.5 million (H2 22: £27.2 million), and cash decreased by 24.7% to £47.8 million (H2 22: £63.5 million) as funds were used towards the (Lionpoint) acquisition. Net assets increased by 11.4% to £147.9 million (H2 22: £132.7 million), and debt increased to £7.5 million (H2 22: nil). The company has access to a £20.0m revolving credit facility, enabling the company to further improve its liquidity if required. Overall, net cash decreased by 36.5% to £40.3 million (H2 22: £63.5 million).

Net cash generated from operating activities decreased by 63.3% to £2.2 million (H1 FY22: £6.0 million) as the improved profits were outweighed by higher working capital requirements and tax payments. Adjusted cash generated from operating activities decreased by 50.6% to £4.2 million (H1 FY22: £8.5 million). Net cash used from investing activities decreased by 10.4% to £21.5 million (H1 FY22: £24.0 million). A significant portion of the cash (96%) was used to pay for the (Lionpoint) acquisition. Net cash from financing activities switched to using £3.3 million (H1 FY22: £23.8 million), mainly because no new shares were issued during the period. Interim dividend increased by 27.6% to 3.70p per share (H1 FY22: 2.90p).

Since interims

The company added that it is well on the way to achieving its medium-term goal of doubling the size of the Alpha Group over the four-year period to November 2024 (from November 2000).

The company sees significant market potential in the insurance industry and, ultimately, believe that its insurance offerings could grow to a similar size as Alpha's asset and wealth management consulting ("AWM") business in the medium to long term.

What are the financials?

Financial performance

Year end 31 March (£000's)	2019	2020	2021	2022	2023e	2024e
Revenue	77,661	90,901	98,066	158,005
Rechargeable expenses	(1,701)	(1,977)	(112)	(196)
Net fee income	75,960	88,924	97,954	157,809	196,846	209,496
Cost of sales	(46,878)	(54,521)	(63,130)	(98,452)	(125,390)	(133,372)
Gross profit	29,082	34,403	34,824	59,357	71,456	76,124
Gross margin (%)	38.3	38.7	35.6	37.6	36.3	36.3
Administration expenses (underlying)	(12,867)	(15,605)	(14,815)	(27,200)	(34,000)	(36,380)
Adjusted operating profit	16,215	18,798	20,009	32,157	37,456	39,744
Adjusted operating margin (%)	21.3	21.1	20.4	20.4	19.0	19.0
Amortisation of acquired intangible assets	(2,586)	(3,376)	(3,517)	(4,716)	(4,500)	(4,500)
Loss on disposal of fixed assets	(6)	(11)	(13)	(32)	0	0
Share-based payments charge	(872)	(1,307)	(2,496)	(6,218)	(8,000)	(6,000)
Earn-out and deferred consideration	(295)	(2,761)	(3,606)	(1,423)	(3,862)	(6,158)
Acquisition costs	0	(488)	0	(683)	0	0
Integration costs	0	(509)	(107)	0	0	0
Foreign exchange losses/(gains)	116	80	(94)	(1,310)	0	0
Adjusting items	(3,643)	(8,372)	(9,833)	(14,382)	(16,362)	(15,668)
Operating profit	12,572	10,426	10,176	17,775	21,094	24,076
Depreciation	263	1,022	1,085	1,155	1,800	1,890
Amortisation of capitalised development costs	0	428	613	556	300	300
Adjusting items	3,643	8,372	9,833	14,382	16,362	15,668
Adjusted EBITDA	16,478	20,248	21,707	33,868	39,556	41,934
Adjusted EBITDA margin (%)	21.7	22.8	22.2	21.5	20.1	20.0
Finance income	0	1	0	1	150	200
Finance expense	(52)	(182)	(404)	(406)	(400)	(400)
Adjusted profit before tax	16,163	18,617	19,605	31,752	37,206	39,544
Normalised taxation	(3,923)	(4,269)	(4,500)	(7,994)	(9,673)	(10,875)
Adjusted profit after tax	12,240	14,348	15,105	23,758	27,532	28,670
Adjusting items	(3,643)	(8,372)	(9,833)	(14,382)	(16,362)	(15,668)
Non-underlying finance expenses	0	(951)	(803)	(2,488)	0	0
Tax impact of adjusting items	602	1,142	1,358	1,624	0	0
Profit for the year	9,199	6,167	5,827	8,512	11,170	13,002
Exch differences on translation of foreign operations	2,505	1,311	(3,104)	3,180	0	0
Total comprehensive income/(expense) for the year	11,704	7,478	2,723	11,692	11,170	13,002
Adjusted profit after tax	12,240	14,348	15,105	23,758	27,532	28,670
Weighted average number of shares	101.6	101.0	101.3	110.7	115.7	118.6
Wtd ave number of shares incl potentially dilutive	104.0	105.3	105.9	117.4	123.0	125.9
Basic earnings per ordinary share (p)	9.05	6.11	5.75	7.69
Diluted earnings per ordinary share (p)	8.84	5.85	5.50	7.25
Adjusted earnings per ordinary share (p)	12.05	14.21	14.91	21.46	23.80	24.18
Adjusted diluted earnings per ordinary share (p)	11.77	13.62	14.26	20.23	22.39	22.78

	31st March 2019	31st March 2020	31st March 2021	31st March 2022
Cash	(18,581)	(25,996)	(34,012)	(63,516)
Short-term debt	0	5,000	0	0
Long-term debt	0	0	0	0
Net bank debt	(18,581)	(20,996)	(34,012)	(63,516)
Short-term leases	0	791	514	1,134
Long-term leases	0	1,878	1,379	1,275
Earnouts & deferred cons ST	0	3,699	1,992	20,500
Earnouts & deferred cons LT	486	6,864	9,071	20,146
Total net debt/(cash)	(18,095)	(7,764)	(21,056)	(20,461)
Net assets	89,140	91,386	94,356	124,537
Capital employed	71,045	83,622	73,300	104,076
Net debt/equity (%)	(20)	(8)	(22)	1

Year end 31 March (£000's)	2021	2022	2023e	2024e
Cash flows from operating activities:
Operating profit for the period	10,176	17,775	21,094	24,076
Depreciation of property, plant and equipment	1,085	1,155	1,800	1,890
Loss on disposal of fixed assets	13	32	0	0
Amortisation of intangible fixed assets	4,130	5,272	4,800	4,800
Acquisition related costs	0	0	0	0
Share-based payment charge	1,693	4,075	8,000	6,000
Increase in provisions	0	1,302	0	0
Foreign exchange gain on cash and cash equivalents	0	0	0	0
Operating cash flows before movements in working capital	17,097	29,611	35,694	36,766
Working capital adjustments:
(Increase)/decrease in trade and other receivables	3,221	(7,066)	(6,500)	(5,918)
Increase/(decrease) in trade and other payables	6,424	15,729	4,000	5,507
Tax paid	(5,707)	(4,767)	(8,834)	(10,274)
Net cash generated from operating activities	21,035	33,507	24,360	26,082
Cash flows from investing activities:
Interest received	0	1	65	200
Acquisition of subsidiary, net of acquired cash	(2,752)	(23,796)	(20,716)	(20,000)
Capitalised development costs	0	0	0	0
Additions to property, plant and equipment	(151)	(684)	(700)	(500)
Purchase of intangible assets	0	0	(319)	0
Net cash used in investing activities	(2,903)	(24,479)	(21,670)	(20,300)
Cash flows from financing activities:
Issue of ordinary share capital	0	31,102	0	0
Share issuance costs	0	(1,053)	0	0
Net settlement of vested share options	0	0	(322)	0
Purchase of own shares by the employee benefit trust	0	(205)	(1,129)	0
Repayment of borrowings	(5,000)	0	0	0
Drawdown of bank borrowings	0	0	0	0
Interest and bank loan fees	(486)	(285)	(300)	(300)
Principal lease liability payments	(809)	(814)	(1,300)	(1,430)
Interest on lease liabilities	(102)	(111)	(113)	(119)
Dividends paid	(2,136)	(8,678)	(12,747)	(14,021)
Net cash used in financing activities	(8,533)	19,956	(15,911)	(15,870)
Net increase/(decrease) in cash and cash equivalents	9,599	28,984	(13,221)	(10,088)
Cash and cash equivalents at beginning of the period	25,996	34,012	63,516	50,295
Effect of exchange rate fluctuations on cash held	(1,583)	520	0	0
Cash and cash equivalents at end of the period	34,012	63,516	50,295	40,207

Financials

Year	1	2	3	4	5	6	7	8	9	10	11	12	13	14	15	16	17	18	19	20	21	22	23	24	25	26	27	28	29	30	31	32	33	34	35	36	37	38	39	40	41	42	43	44	45	46	47	48	49	50
Year end date	31/12/2018	31/12/2019	31/12/2020	31/12/2021	31/12/2022	31/12/2023	31/12/2024	31/12/2025	31/12/2026	31/12/2027	31/12/2028	31/12/2029	31/12/2030	31/12/2031	31/12/2032	31/12/2033	31/12/2034	31/12/2035	31/12/2036	31/12/2037	31/12/2038	31/12/2039	31/12/2040	31/12/2041	31/12/2042	31/12/2043	31/12/2044	31/12/2045	31/12/2046	31/12/2047	31/12/2048	31/12/2049	31/12/2050	31/12/2051	31/12/2052	31/12/2053	31/12/2054	31/12/2055	31/12/2056	31/12/2057	31/12/2058	31/12/2059	31/12/2060	31/12/2061	31/12/2062	31/12/2063	31/12/2064	31/12/2065	31/12/2066	31/12/2067
Type	Historic	Historic	Historic	Historic	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast	Forecast
Income statement
Revenues (£'000)	NA	4	1,147	538	1,801	3,534	6,711	12,327	21,906	37,665	62,654	100,833	157,000	236,506	344,688	486,019	663,015	875,059	1,117,362	1,380,364	1,649,821	1,907,756	2,134,284	2,310,068	2,419,025	2,450,751	2,402,156	2,277,961	2,089,943	1,855,094	1,593,091	1,323,605	1,063,945	827,415	622,545	453,170	319,150	217,456	143,348	91,423	56,411	33,675	19,449	10,868	5,875	3,073	1,555	761	361	165
Gross profits (£'000)	NA	(763)	408	(266)	1,351	2,651	5,033	9,245	16,430	28,249	46,990	75,625	117,750	177,379	224,047	364,514	497,262	656,294	726,285	897,237	907,401	1,049,266	1,173,856	1,270,537	1,330,464	1,347,913	1,321,186	1,252,878	1,149,469	1,020,302	716,891	595,622	478,775	372,337	280,145	203,926	143,617	97,855	64,506	41,140	25,385	15,154	8,752	4,890	2,644	1,383	700	343	162	74
Operating profits (£'000)	NA	(687)	(2,819)	(10,814)	1,081	2,121	4,026	7,396	13,144	22,599	37,592	60,500	94,200	141,904	172,344	291,611	397,809	525,035	558,681	690,182	659,928	763,103	853,714	924,027	967,610	980,300	960,862	911,184	835,977	742,038	477,927	397,081	319,184	248,224	186,763	135,951	95,745	65,237	43,004	27,427	16,923	10,103	5,835	3,260	1,763	922	466	228	108	50
Net profits (£'000)	NA	(551)	(2,964)	(12,487)	1,081	2,121	4,026	7,396	13,144	22,599	37,592	60,500	94,200	141,904	151,663	256,618	350,072	462,031	491,639	607,360	580,737	671,530	751,268	813,144	851,497	862,664	845,559	801,842	735,660	652,993	420,576	349,432	280,881	218,437	164,352	119,637	84,256	57,408	37,844	24,136	14,892	8,890	5,135	2,869	1,551	811	410	201	95	44

What are the assumptions used to estimate the financial forecasts?

Key inputs

Description	Value	Commentary
Revenue
What's the estimated current size of the total addressable market?	$590,000,000,000	Here, the total addressable market (TAM) is defined as the global consultancy market, and based on a number of assumptions, it is estimated that the size of the market as of today (27th January 2023), in terms of revenue, is $590 billion.
What is the estimated company lifespan?	50 years	Research shows that the average lifespan of a large corporation is around 50 years.
What's the estimated annual growth rate of the total addressable market over the lifecycle of the company?	3%	Research shows that the growth rate of the global consultancy market (i.e. the total addressable market) is similar to the growth rate of global gross domestic product, which has averaged (medium) around 3% per year in the last 20 years (2001 to 2022).
What's the estimated company peak market share?	1%	We estimate that especially given the experienced team of the company, the peak market share of Alpha FMC is around 1%, and, therefore, suggests using the share amount here. As of 30th September 2022, Alpha FMC's current share of the market is 0.033%.
Which distribution function do you want to use to estimate company revenue?	Gaussian	Research suggests that the revenue pattern of companies is similar to the pattern produced by the Gaussian distribution function (i.e. the revenue distribution is bell shaped), so we suggest using that function here.
What's the estimated standard deviation of company revenue?	5.5 years	Another way of asking this question is this way: within how many years either side of the mean does 68% of revenue occur? Based on Alpha FMC's current revenue amount (i.e. $250 million) and Alpha FMC's estimated lifespan (i.e. 50 years) and Alpha FMC's estimated current stage of its lifecycle (i.e. growth stage), the we suggest using five and a half years (i.e. 68% of all sales happen within five and a half years either side of the mean year), so that's what's used here.
Growth stages
How many main stages of growth is the company expected to go through?	4 stages	Research suggests that a company typically goes through four distinct stages of cash flow growth. Research also shows that incorporating those stages into the discounted cash flow model improves the quality of the model and, ultimately, the quality of the value estimation. In addition, research shows that a key way to determine the stage which a company is in is by examining the cash flow patterns of the company. A summary of the economic links to cash flow patterns can be found in the appendix of this report. We estimate that with Alpha FMC's operating cash flows positive (+), investing cash flows negative (-) and its financing cash flows positive (+), the company is in the second stage of growth (i.e. the 'growth' stage), and, therefore, it has a total of three main stages of growth remaining.
What proportion of the company lifecycle is represented by growth stage 1?	30%	Research suggests 30%.
What proportion of the company lifecycle is represented by growth stage 2?	10%	Research suggests 10%.
What proportion of the company lifecycle is represented by growth stage 3?	20%	Research suggests 20%.
What proportion of the company lifecycle is represented by growth stage 4?	40%	Research suggests 40%.
Growth stage 2
Cost of goods sold as a proportion of revenue (%)	35%	Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 2), and the margin for its peers is 35%.
Operating expenses as a proportion of revenue (%)	15%	Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 2), and the margin for its peers is 15%.
Tax rate (%)	12%	Research suggests that it's best to use a similar rate as the one used by peers that are in the same growth stage (i.e. growth stage 2), and the rate for its peers is 12%.
Depreciation and amortisation as a proportion of fixed capital (%)	10%	Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 2), and the margin for its peers is 10%.
Fixed capital as a proportion of revenue (%)	10%	Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 2), and the amount for its peers is 10%.
Working capital as a proportion of revenue (%)	15%	Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 2), and the amount for its peers is 15%.
Net borrowing ($000)	Zero	We suggest that for simplicity, the net borrowing figure is zero.
Interest amount ($000)	Zero	We suggest that for simplicity, the interest amount figure is zero.
Growth stage 3
Cost of goods sold as a proportion of revenue (%)	45%	Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 3), and the margin for its peers is 45%.
Operating expenses as a proportion of revenue (%)	15%	Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 3), and the margin for its peers is 15%.
Tax rate (%)	12%	Research suggests that it's best to use a similar rate as the one used by peers that are in the same growth stage (i.e. growth stage 3), and the rate for its peers is 12%.
Depreciation and amortisation as a proportion of fixed capital (%)	10%	Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 3), and the amount for its peers is 10%.
Fixed capital as a proportion of revenue (%)	10%	Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 3), and the amount for its peers is 10%.
Working capital as a proportion of revenue (%)	15%	Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 4), and the amount for its peers is 15%.
Net borrowing ($000)	Zero	We suggest that for simplicity, the net borrowing figure is zero.
Interest amount ($000)	Zero	We suggest that for simplicity, the interest amount figure is zero.
Growth stage 4
Cost of goods sold as a proportion of revenue (%)	55%	Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 4), and the margin for its peers is 55%.
Operating expenses as a proportion of revenue (%)	15%	Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 4), and the margin for its peers is 15%.
Tax rate (%)	12%	Research suggests that it's best to use a similar rate as the one used by peers that are in the same growth stage (i.e. growth stage 4), and the rate for its peers is 12%.
Depreciation and amortisation as a proportion of fixed capital (%)	10%	Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 4), and the amount for its peers is 10%.
Fixed capital as a proportion of revenue (%)	10%	Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 4), and the amount for its peers is 10%.
Working capital as a proportion of revenue (%)	15%	Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 4), and the amount for its peers is 15%.
Net borrowing ($000)	Zero	We suggest that for simplicity, the net borrowing figure is zero.
Interest amount ($000)	Zero	We suggest that for simplicity, the interest amount figure is zero.

What are the key risks of investing in the company?

As with any investment, investing in Alpha FMC carries a level of risk. Overall, based on the Alpha FMC's adjusted beta (i.e. 1.139), the degree of risk associated with an investment in Alpha FMC is 'medium'.

Here, to estimate the adjusted beta, we used the iShares MSCI World ETF to represent the market portfolio; and in terms of the time period and frequency of observations, we used five years of monthly data (i.e. 60 observations in total), which is supported by a study and is the most common choice. The beta value in a future period has been found to be on average closer to the mean value of 1.0, and because valuation is forward-looking, it is logical to adjust the raw beta so it more/most accurately predicts a future beta. In addition, here, we have assumed that for an investment to be considered 'medium' risk, it must have a beta value of between 0.5 and 1.5. Further information about the beta ratings can be found in the appendix section of this report.

The key risks can be found below. For us, currently, the biggest risk to the valuation of the company relates to the company's ability (and willingness) to take the appropriate risk to maintain the growth of the business.

Risks relating to the group's business and the industry in which it operates

• Ability to retain key personnel and senior management
• Low barriers to entry
• Concentration of key customers
• Revenue growth is partly reliant on attracting new personnel to expand existing services and lead new service offerings
• Revenue growth is also reliant on ability to cross sell and up sell new services to existing clients and to win new clients
• Revenue growth is sensitive to selling major and large scale projects
• Ability to maintain quality of service and fulfil obligations on client contracts
• Technological change and reliability
• Geography
• Currency and exchange rates
• Regulatory environment
• Training and risk management
• Cash collection and bad debt
• Funding and use of proceeds of the Placing
• Macroeconomic conditions
• Tax risks
• Use of contractors
• Utilisation rates of consultants
• Relationships with technology platforms and service providers

Risks relating to the shares

• Share price volatility and liquidity
• Investment risk
• Dilution
• Dividends may not be paid

How much can I expect to make from an investment in the company?

What's the expected return of an investment in the company?

ccc

What are the assumptions used to estimate the return figure?

Key inputs

Description	Value	Commentary
Which valuation model do you want to use?	Discounted cash flow	Research suggests that in terms of estimating the expected return of an investment over a period of 12-months or more, the approach that is more accurate is the discounted cash flow approach, so that's the approach that we suggest to use here; nevertheless, for completeness purposes, separately, the valuation of the company is also estimated using the using the relative valuation approach (the valuation based on the relative approach can be found in the appendix of this report).
Which type of DCF model do you want to use?	Free cash flow	While Alpha has paid a dividend every year since its public listing (in 2017), at the moment, the growth rate of the dividend varies materially; accordingly, we suggest valuing the business using the free cash flow valuation method (rather than the dividend discount model). Nevertheless, for completeness purposes, separately, the valuation of the company is also estimated using the dividend discount model (the valuation based on the dividend discount model can be found in the appendix of this report).
Which financial forecasts to use?	Proactive Investors	The only available long-term forecasts (i.e. >15 years) are the ones that are supplied by us (the forecasts can be found in the financials section of this report), so we suggests using those.
Growth stage 2
Discount rate (%)	15%	There are two key risk parameters for a firm that need to be estimated: its cost of equity and its cost of debt. A key way to estimate the cost of equity is by looking at the beta (or betas) of the company in question, the cost of debt from a measure of default risk (an actual or synthetic rating) and apply the market value weights for debt and equity to come up with the cost of capital.
Probability of success (%)	90%	Research suggests that a suitable rate for a company in this growth stage (i.e. stage 2) is 90%.
Growth stage 3
Discount rate (%)	10%	There are two key risk parameters for a firm that need to be estimated: its cost of equity and its cost of debt. A key way to estimate the cost of equity is by looking at the beta (or betas) of the company in question, the cost of debt from a measure of default risk (an actual or synthetic rating) and apply the market value weights for debt and equity to come up with the cost of capital.
Probability of success (%)	100%	Research suggests that a suitable rate for a company in this growth stage (i.e. stage 3) is 100%.
Growth stage 4
Discount rate (%)	10%	There are two key risk parameters for a firm that need to be estimated: its cost of equity and its cost of debt. A key way to estimate the cost of equity is by looking at the beta (or betas) of the company in question, the cost of debt from a measure of default risk (an actual or synthetic rating) and apply the market value weights for debt and equity to come up with the cost of capital.
Probability of success (%)	100%	Research suggests that a suitable rate for a company in this growth stage (i.e. stage 4) is 100%.
Other key inputs
What's the current value of the company?	$659 million	As at 26th January 2023, the current value of the Alpha FMC company is $659 million (or £554 million).
Which time period do you want to use to estimate the expected return?	Between now and five years time	Research suggests that following a market crash, the average amount of time it takes for the price of a stock market to return to its pre-crash level (i.e. the recovery period) is at least three years. Accordingly, we suggest that to account for general market cyclicity, it's best to estimate the expected return of the company between now and five years time.

Sensitive analysis

The three main inputs that result in the greatest change in the expected return of the Alpha investment are, in order of importance (from highest to lowest):

1. The size of the total addressable market (the default size is $ccc billion);
2. Alpha FMC peak market share (the default share is ccc%); and
3. The discount rate (the default time-weighted average rate is 10%).

The impact of a 10% change in those main inputs to the expected return of the Alpha investment is shown in the table below.

Alpha FMC investment expected return sensitive analysis

Main input	10% worse	Unchanged	10% better
The size of the total addressable market	To be added	To be added	To be added
Alpha FMC peak market share	To be added	To be added	To be added
The discount rate	To be added	To be added	To be added

Key inputs

Description	Value	Commentary
Which valuation model do you want to use?	Discounted cash flow	Research suggests that in terms of estimating the expected return of an investment over a period of 12-months or more, the approach that is more/most accurate is the absolute valuation approach, so that's the approach that we suggest using to determine the estimated value of the company.
Which type of discounted cash flow model do you want to use?	Dividend discount model	The policy of Alpha FMC is to pay out approximately half of adjusted profit after tax. Accordingly, we suggest using the dividend discount model (DDM), which is one of the most common discounted cash flow models.
How many distinct stage of growth do you want to use?	Two stages	For simplicity, we have used two stages here.
What is the transition between the two growth stages?	Smooth	We suggest a smooth transition, and, therefore, we suggest using the H-Model.
What is the expected lifespan of the business?	Perpetual	Again, for simplicity, we have assumed that the business continues forever.
What is the expected initial growth rate of dividends?	32.5%
What is the expected constant growth rate in dividends?	3%	We note that the gross domestic product (GDP) growth rate in the last 20 years (2001 to 2022) is around 3% per year for the global economy, and around 2.25% for the United Kingdom. Since the company's inception (i.e. eight years ago), the median dividend of the company is 1.57%. Further information about the company's dividend pay-outs can be found in the appendix section of this report.
What is the half life of the initial dividend growth rate?	7.5 years	We suggest using 7.5 years.
Which financial forecasts to use?	Proactive Investors	Here, we have used the forecasts of Proactive Investors.
What is the required return on equity?	9.479%	For estimating the required return on equity, we used the Capital Asset Pricing Model (CAPM), which provides an economically grounded and relatively objective procedure for required return estimation, and, therefore, it has been widely used in valuation. The calculation of the required return on equity (and the reasons behind the calculation) can be found in the table below.
What's the current value of the company?	454.88 pence per share	As at 18th January 2023, the current value of Alpha FMC is 454.88p per share.
Which time period do you want to use to estimate the expected return?	Between now and five years time	Research suggests that following a market crash, the average amount of time it takes for the price of a stock market to return to its pre-crash level (i.e. the recovery period) is at least three years. Accordingly, we suggest that to account for general market cyclicity, it's best to estimate the expected return of the company between now and five years time.

Sensitive analysis

The three main inputs that result in the greatest change in the expected return of the Alpha investment are, in order of importance (from highest to lowest):

1. The initial growth rate (the default rate is cccx);
2. The terminal growth rate (the default rate is $ccc million); and
3. The discount rate (the default time-weighted average rate is 10%).

The impact of a 10% change in those main inputs to the expected return of the Alpha investment is shown in the table below.

Sirius investment expected return sensitive analysis

Main input	10% worse	Unchanged	10% better
The initial growth rate	To be added	To be added	To be added
The terminal growth rate	To be added	To be added	To be added
The default rate	To be added	To be added	To be added

Cost of equity (%)

Input	Input value	Additional information
Risk-free rate (%)	3.591%	Here, the risk free rate is the US 30 year treasury bond, and is calculated as at 1st February 2023. Research suggests that for the risk-free rate, it's best to use one that has the same or similar maturity to the estimated remaining lifespan of the company. Here, we have assumed that the estimated lifespan of the company is 50 years, so we have used the longest maturity, which is 30 years.
Beta	1.139	Here, to estimate the adjusted beta, we used the iShares MSCI World ETF to represent the market portfolio; and in terms of the time period and frequency of observations, we used five years of monthly data (i.e. 60 observations in total), which is supported by a study and is the most common choice. The beta value in a future period has been found to be on average closer to the mean value of 1.0, and because valuation is forward-looking, it is logical to adjust the raw beta so it more/most accurately predicts a future beta.
Equity risk premium (%)	7.98%	Research suggests that for the region of equity risk premium, it's best to use one that is the same or similar to the region of the beta market portfolio. Here, the region of the beta market portfolio is the world/global, so we have used the world/global region for the equity risk premium, and is calculated as at 5th January 2023.
Cost of equity (%)	12.68%	Cost of equity = Risk-free rate + Beta x Equity risk premium.

Appendix

Relative valuation approach

What are the assumptions used to estimate the return figure?

Key inputs

Description	Value	Commentary
Which type of multiple do you want to use?	Price/earnings to growth	Mainly given the relatively low amount of fixed capital expenditure (as a proportion of revenue) of companies within the consultancy industry (for example, currently, Alpha's fixed capital expenditure as a proportion of revenue is around 0.5%), we suggest valuing the company using the price/earnings ratio. However, we feel that to take into account the different business lifecycle stages of its peers (and, therefore, the different growth stages of its peers), the most suitable valuation multiple to use is the price/earnings to (earnings) growth multiple (or the PEG multiple, for short), rather than the price/earnings multiple. Another multiple which we think it's worth looking at is the (sales) growth-adjusted EV/sales, mainly because the multiple takes into account the different leverage levels of the peers (whereas the PEG does not, at least not directly; one is able to argue that the leverage levels are reflected indirectly in the earnings growth rates).
In regards to the PEG multiple, for the earnings figure, which year to you want to use?	Year 1	Research suggests that when using the relative valuation approach, it's best to use a time period of 12 months or less. Accordingly, for the earnings figure, we suggest using Year 1, which is 22 pence per share.
In regards to the PEG multiple, for the earnings growth figure, which year(s) do you want to use?	Year 2 to 4, from now	We suggest that for the earnings growth figure, it's best to use Year 2 to 4, which equates to a compound annual growth rate (CAGR) of 30%.
In regards to the PEG multiple, what multiple figure do you want to use?	1.04x	Here, we suggest using a multiple of 1.04x, which we believe is in-line with the multiples of Alpha's peers.
Which financial forecasts to use?	Proactive Investors	The only available forecasts are the ones that are supplied by us (the forecasts can be found in the financials section of this report), so we suggest using those.
What's the current value of the company?	$659 million	As at 26th January 2023, the current value of the Alpha FMC company is $659 million (or £554 million).
Which time period do you want to use to estimate the expected return?	Between now and one year time	Research suggests that when using the relative valuation approach, it's best to estimate the expected return of the company between now and one year time.

Key inputs

Description	Value	Commentary
Which type of multiple do you want to use?	Growth-adjusted EV/sales	For the numerator, we believe that to account for the different financial leverage levels of its peers, it's best to use enterprise value (EV), rather than price. For the denominator, we believe that because we expect Alpha FMC to reinvest almost all of its revenue back into the business over the five year forecast period and, therefore, its earnings are expected to be abnormally low over the period, it's best to use sales. Accordingly, we suggest valuing the company using the EV/sales ratio. However, we feel that to take into account the different business lifecycle stages of its peers, the most suitable valuation multiple to use is the (sales) growth-adjusted EV/sales multiple, rather than the EV/sales multiple.
In regards to the growth-adjusted EV/sales multiple, for the sales figure, which year to you want to use?	Year 1	Research suggests that when using the relative valuation approach, it's best to use a time period of 12 months or less. Accordingly, for the sales figure, we suggest using Year 1, which is ccc pence per share.
In regards to the PEG multiple, for the earnings growth figure, which year(s) do you want to use?	Year 2 to 4, from now	We suggest that for the sales growth figure, it's best to use Year 2 to 4, which equates to a compound annual growth rate (CAGR) of 30%.
In regards to the PEG multiple, what multiple figure do you want to use?	0.43x	Here, we suggest using a multiple of 0.43x, which we believe is in-line with the multiples of Alpha's peers.
Which financial forecasts to use?	Proactive Investors	The only available forecasts are the ones that are supplied by us (the forecasts can be found in the financials section of this report), so we suggest using those.
What's the current value of the company?	$659 million	As at 26th January 2023, the current value of the Alpha FMC company is $659 million (or £554 million).
Which time period do you want to use to estimate the expected return?	Between now and one year time	Research suggests that when using the relative valuation approach, it's best to estimate the expected return of the company between now and one year time.

Name	Bloomberg ticker	Market capitalisation (USD,billion)	Primary exchange	Adjusted EV/sales	PEG	P/E	Earnings growth rate (%)	Sales growth rate	Adjusted beta
Alpha Financial Markets Consulting	AFM LN	659	London	7.49				29%	1.07
UK professional services
JTC	JTC LN	1,346	London	23.19				24%	1.11
XPS Pensions	XPS LN	425	London	30.16				8%	0.73
Gateley	GTLY LN	293	London	15.73				10%	0.61
Keystone Law	KEYS LN	166	London	9.01				18%	0.63
Elixirr International	ELIX LN	294	London	6.54				45%	1.07
Kin and Carta	KCT LN	493	London	10.47				14%	0.90
MJ Hudson	MJH LN	N/A	London					26%
Median		424.53	London	10.47				21%	0.90
Global consultancies
Accenture	ACN US	181,070	New York	19.99				13%	1.19
Cognizant Technology Solutions	CTSH US	33,091	NASDAQ GS	32.76				5%	0.99
CGI Inc.	GIB US	20,307	New York	102.10				2%	0.80
Genpact	G US	8,857	New York	20.74				10%	0.86
Capgemini	CAP FP	32,648	EN Paris					11%	1.17
Reply SpA	REY IM	4,941	BrsaItaliana	16.54				12%	0.91
DXC Technology	DXC US	6,520	New York	(8.99)				-8%	1.12
GFT Technologies	GFT GY	1,147	Xetra	10.94				12%	1.26
Atos SE	ATO FP	1,436	EN Paris	51.54				1%	1.59
Tata Consultancy Services	TCS IN	153,821	Natl India	51.05				10%	0.89
Infosys	INFO IN	78,994	Natl India	27.75				14%	0.91
Wipro	WPRO IN	27,006	Natl India	18.26				11%	0.94
HCL Technologies	HCLT IN	37,344	Natl India	25.42				10%	0.92
Median		27,006		23.08				10%	0.94

Discount/premium to peers

Name	Market capitalisation (USD,billion)	Adjusted EV/sales	Adjusted EV/EBITDA	Adjusted EV/EBIT	Adjusted P/E	Sales growth rate	Adjusted beta
UK professional services	55%	(28%)	(61%)	(68%)	(34%)	40%	19%
Global consultancies	(98%)	(68%)	(76%)	(76%)	(65%)	184%	14%

Name	2Y Corr	Mkt Cap (USD)	BF P/E	BF EV/EBITDA	BF EV/EBIT	BF EV/Rev	LF P/BV
Alpha Financial Markets Consul		658.12M	21.0x	11.3x	13.0x	2.2x	3.6x
Current Premium to Comps Mean			19%	3%	-5%	4%	-15%
Mean (Including AFM LN)		41.96B	17.6x	11.0x	13.7x	2.2x	4.2x
Capgemini SE	0.3	32.63B	14.8x	9.6x	12.1x	1.5x	3.3x
GFT Technologies SE	0.24	1.11B	18.7x	10.9x	13.8x	1.2x	5.3x
Tata Consultancy Services Ltd	0.24	153.05B	26.4x	18.2x	19.8x	4.9x	11.5x
Atos SE	0.23	1.45B	11.0x	4.9x	44.1x	0.4x	0.3x
Infosys Ltd	0.21	77.81B	22.8x	15.6x	17.6x	3.9x	8.5x
CGI Inc	0.21	20.23B	16.4x	10.9x	13.2x	2.2x	3.7x
Reply SpA	0.2	4.93B	21.9x	12.7x	15.2x	2.0x	5.3x
Cognizant Technology Solutions	0.18	33.77B	14.0x	8.5x	10.1x	1.6x	2.8x
Wipro Ltd	0.18	26.78B	16.9x	10.6x	12.9x	2.0x	2.9x
Accenture PLC	0.17	182.82B	23.3x	14.5x	17.4x	2.7x	7.6x
HCL Technologies Ltd	0.17	37.12B	18.6x	11.4x	14.0x	2.6x	4.7x
DXC Technology Co	0.14	6.50B	6.4x	3.7x	7.0x	0.7x	1.4x
Genpact Ltd	0.13	8.59B	15.5x	11.6x	12.6x	2.1x	5.0x

Name	Rev - 1	EPS - 1	P/E	ROE	Dvd 12M
Alpha Financial Markets Consul	61.11%	5.96%	29.38	9.44%	2.41%
Accenture PLC	21.89%	22.99%	24.91	32.90%	1.51%
Cognizant Technology Solutions	11.14%	38.06%	14.6	19.95%	1.64%
CGI Inc	6.11%	12.82%	18.43	20.87%	--
Genpact Ltd	8.43%	7.41%	25.19	19.11%	1.07%
Capgemini SE	14.59%	24.89%	21.25	19.60%	1.39%
Reply SpA	16.87%	19.16%	29.18	18.12%	0.66%
DXC Technology Co	-8.26%	155.46%	14.27	10.30%	--
GFT Technologies SE	27.28%	82.77%	23.97	--	0.90%
Atos SE	-3.06%	--	--	-14.49%	--
Tata Consultancy Services Ltd	16.80%	16.23%	30.76	37.83%	3.31%
Infosys Ltd	21.07%	14.98%	26.93	32.98%	2.14%
Wipro Ltd	27.69%	16.49%	19.17	16.02%	1.51%
HCL Technologies Ltd	12.84%	2.13%	21.35	22.27%	4.30%
Medium	15.69%	16.49%	23.97	19.60%	1.51%

Name	Net debt/EBIT	Total debt/EBIT	Net debt/Equity	Total debt/Total assets	EBITDA/Interest expense
	(x)	(x)	(%)	(%)	(x)
Median	-0.27	0.77	-10.13	12.79%	44.42
Alpha Financial Markets Consul	--	--	--	1.05%	64.72
Accenture PLC	-0.21	0.27	-11	7.04%	258
Cognizant Technology Solutions	-0.34	0.42	-10.13	9.27%	411.44
CGI Inc	1.17	1.55	41.38	26.20%	44.42
Genpact Ltd	1.86	2.65	70.93	40.20%	13.04
Capgemini SE	--	--	--	31.80%	24.65
Reply SpA	--	--	--	9.08%	51.59
DXC Technology Co	1.58	2.68	65.92	30.63%	10.07
GFT Technologies SE	--	--	20.93	25.15%	42.01
Atos SE	--	--	--	34.80%	26.25
Tata Consultancy Services Ltd	-0.86	0.13	-45.4	5.52%	200.19
Infosys Ltd	-0.33	0.26	-15.34	4.64%	--
Wipro Ltd	-1.19	1.11	-25.95	16.30%	30.86
HCL Technologies Ltd	--	--	--	7.12%	83.33

Name	Sales growth	EBITDA growth	EBITDA margin	Operating income margin	Net income growth	Net profit margin	Capex/Sales (%)	Return on invested capital	Return on assets	Return on equity
Median	16.08%	10.10%	18.70%	15.27%	8.06%	10.02%	1.49%	12.95%	9.85%	19.60%
Alpha Financial Markets Consul	65.31%	105.08%	18.82%	15.37%	28.07%	6.55%	0.43%	12.24%	5.90%	9.44%
Accenture PLC	16.08%	16.58%	19.56%	15.27%	17.52%	11.43%	1.17%	32.40%	15.70%	32.90%
Cognizant Technology Solutions	8.11%	12.48%	18.52%	15.56%	22.45%	12.11%	1.51%	17.51%	13.56%	19.95%
CGI Inc	6.11%	4.31%	19.94%	16.25%	8.22%	11.56%	1.21%	13.65%	9.85%	20.87%
Genpact Ltd	11.29%	-4.50%	15.18%	11.92%	2.10%	8.11%	1.33%	10.22%	7.34%	19.11%
Capgemini SE	18.61%	16.26%	14.84%	11.37%	25.84%	7.60%	1.46%	10.51%	6.52%	19.60%
Reply SpA	21.46%	13.39%	16.22%	13.23%	1.59%	8.61%	2.50%	14.33%	8.70%	18.12%
DXC Technology Co	-8.73%	-36.05%	13.41%	-1.59%	-38.91%	3.14%	1.56%	-10.30%	2.55%	10.30%
GFT Technologies SE	--	--	--	--	--	6.09%	1.22%	--	--	--
Atos SE	0.00%	-30.86%	7.47%	-0.04%	--	-7.52%	2.51%	-17.95%	-4.74%	-14.49%
Tata Consultancy Services Ltd	17.32%	10.44%	26.43%	24.15%	7.90%	18.68%	1.30%	32.05%	25.89%	37.83%
Infosys Ltd	22.41%	10.10%	24.16%	21.34%	10.09%	16.74%	1.78%	26.95%	20.16%	32.98%
Wipro Ltd	18.37%	-0.27%	18.70%	15.04%	-5.44%	12.80%	2.55%	11.40%	10.34%	16.02%
HCL Technologies Ltd	7.99%	-1.77%	22.30%	17.99%	2.90%	14.84%	1.92%	--	15.57%	22.27%

Name	Raw Beta	Adj Beta (2/3*Raw Beta+1/3*1)	Alpha	R Squared	Standard deviation of error	Relative Index
Median	0.95	0.96	0.04	0.3	3.02
Alpha Financial Markets Consul	1.11	1.07	0.47	0.15	4.43	UKX Index
Accenture PLC	1.27	1.18	0.05	0.69	2.19	SPX Index
Cognizant Technology Solutions	0.99	0.99	-0.21	0.45	2.81	SPX Index
CGI Inc	0.53	0.68	0.03	0.16	2.28	SPTSX Index
Genpact Ltd	0.77	0.85	0.15	0.43	2.28	SPX Index
Capgemini SE	1.25	1.17	0.08	0.53	2.87	CAC Index
Reply SpA	0.87	0.91	0.1	0.2	4.6	FTSEMIB Index
DXC Technology Co	1.16	1.11	0.05	0.23	5.43	SPX Index
GFT Technologies SE	1.31	1.21	1.17	0.2	6.12	DAX Index
Atos SE	1.88	1.59	-1.78	0.3	6.93	CAC Index
Tata Consultancy Services Ltd	0.83	0.89	-0.09	0.33	2.64	SENSEX Index
Infosys Ltd	0.87	0.91	0.01	0.33	2.78	SENSEX Index
Wipro Ltd	0.91	0.94	-0.22	0.3	3.17	SENSEX Index
HCL Technologies Ltd	0.88	0.92	0.02	0.27	3.23	SENSEX Index

Name	2Y Corr	Mkt Cap (USD)	BF P/E	BF EV/EBITDA	BF EV/EBIT	BF EV/Rev	LF P/BV
Alpha Financial Markets Consulting		646.52M	20.6x	11.1x	12.8x	2.2x	3.5x
Randstad NV	0.27	11.84B	14.0x	8.3x	10.8x	0.4x	2.3x
Coor Service Management Holdin	0.25	635.89M	13.3x	9.1x	15.6x	0.7x	3.1x
Bure Equity AB	0.25	1.82B	--	--	--	--	1.5x
GFT Technologies SE	0.24	1.10B	18.7x	10.9x	13.8x	1.2x	5.3x
Rejlers AB	0.21	287.34M	14.8x	8.4x	13.9x	0.9x	2.1x
XPS Pensions Group PLC	0.17	414.52M	14.2x	9.7x	11.4x	2.4x	2.3x
Science Group PLC	0.16	219.09M	--	--	--	--	2.5x
Fintel Plc	0.13	266.34M	16.9x	10.7x	12.7x	3.2x	2.3x
RPS Group PLC	0.12	762.27M	24.9x	11.8x	17.5x	1.2x	1.7x
Alan Allman Associates	0.04	442.12M	19.5x	13.2x	15.6x	1.4x	2.9x
Current Premium to Comps Mean			21%	11%	-6%	43%	32%
Mean   (Including AFM LN)		1.68B	17.0x	10.0x	13.5x	1.5x	2.7x

Sensitive analysis

The three main inputs that result in the greatest change in the expected return of the Alpha investment are, in order of importance (from highest to lowest):

1. The PEG multiple (the default multiple is 1.04x);
2. The Year-one earnings forecast (the default forecast is $ccc million); and
3. The Year 2 to 4 earnings growth forecast (the default forecast isccc%)

The impact of a 10% change in those main inputs to the expected return of the Alpha investment is shown in the table below.

Sirius investment expected return sensitive analysis

Main input	10% worse	Unchanged	10% better
The growth-adjusted EV/sales multiple	To be added	To be added	To be added
The Year-one sales forecast	To be added	To be added	To be added
The Year 2 to Year 4 sales growth forecast	To be added	To be added	To be added

Dividend

Since the company's listing (i.e. around five years ago), the median dividend growth rate is 16%, and the mean is 48%. The constant/fixed rate dividend rate is 11.97%; in other words, if the company had grown its dividend during that period at a rate that is constant (rather than variable), then the rate would be 11.97%.

Dividend

Financial year	Interim	Full-year	Total	Growth
2023	3.70	7.60	11.30	9%
2022	2.90	7.50	10.40	50%
2021	2.10	4.85	6.95	231%
2020	2.10	0.00	2.10	-65%
2019	1.91	4.09	6.00	16%
2018	1.48	3.69	5.17	N/A

Significant Shareholders

Shareholders	% of issued share capital with voting rights
Abrdn	10.69
Invesco	9.06
Janus Henderson Investors	7.51
BlackRock	5.45
Investec Wealth & Investment	4.65
NFU Mutual	3.98
M&G Investment Management	3.84

Last updated 17th January 2023. The percentage of the company’s issued share capital not in public hands is 6.4%.

• The company's medium term goal is to double it size over the four years to November 2024 (from November 2020).
• The asset management, wealth management and insurance markets are influenced by powerful long-term trends, notably the drive for efficiency, fee compression, regulatory change and the growing focus on ESG and responsible investment.
• These trends represent a strong tailwind for the Group and are steadily increasing the relevance and value of its proposition: to provide the best specialist consultancy services for clients wherever in the world they need us.
• The group’s strategic aim to be recognised as the leading global consultancy to the asset management, wealth management and insurance industries.
• The three most significant growth opportunities that would enable Alpha to achieve our growth target of doubling the business - rapid expansion in insurance consulting, continued strong growth in North America and acquisitions.
• One of the company's beliefs that the insurance industry offers an opportunity for Alpha of comparable scale to its core asset and wealth management market is being rapidly vindicated.
• Our technology services business has also been significantly strengthened over the past year thanks to major investments in Axxsys, the software implementation specialist that we acquired in FY 20. Over the past 12 months, Axxsys has broadened its proposition with the launch of technology consulting practices focussed on data and cloud services, front office projects and wealth management.
• Our current trading and project pipeline to date is very strong, and our revenue visibility is better than ever as our clients commit to longer and more complex business change projects. These factors, coupled with Alpha's robust balance sheet, give us considerable confidence that even if we are heading into more difficult markets, we are doing so from a position of real strength.

Consolidated statement of comprehensive income

	Year ended 31st March 2017 (£'000)	Year ended 31st March 2018 (£'000)	Year ended 31st March 2019 (£'000)	Year ended 31st March 2020 (£'000)	Year ended 31st March 2021 (£'000)	Year ended 31st March 2022 (£'000)
Continuing operations
Revenue	49,240	66,009	77,661	90,901	98,066	158,005
Rechargeable expenses	-	-	(1,701)	(1,977)	(112)	(196)
Net fee income	-	-	75,960	88,924	97,954	157,809
Cost of sales	(32,515)	(40,748)	(46,878)	(54,521)	(63,130)	(98,452)
Gross profit	16,725	25,261	29,082	34,403	34,824	59,357
Administration expenses	(12,721)	(16,703)	(16,510)	(23,977)	(24,648)	(41,582)
Operating profit	4,004	8,558	12,572	10,426	10,176	17,775
Depreciation	289	297	263	1,022	1,085	1,155
Amortisation of capitalised development costs	-	-	-	428	613	556
Adjusting items	3,951	5,114	3,643	8,372	9,833	14,382
Adjusted EBITDA	8,244	13,969	16,478	20,248	21,707	33,868
Finance income	5	-	-	1	-	1
Finance expense	(7,880)	(7,059)	(52)	(1,133)	(1,207)	(2,894)
Profit before tax	(3,871)	1,499	12,520	9,294	8,969	14,882
Taxation	(537)	(1,941)	(3,321)	(3,127)	(3,142)	(6,370)
Profit for the year	(4,408)	(442)	9,199	6,167	5,827	8,512
Exchange differences on translation of foreign operations	(224)	(186)	2,505	1,311	(3,104)	3,180
Total comprehensive income for the year	(4,632)	(628)	11,704	7,478	2,723	11,692
Basic earnings per ordinary share (p)	(5.52)	(0.49)	9.05	6.11	5.75	7.69
Diluted earnings per ordinary share (p)	(5.52)	(0.49)	8.84	5.85	5.50	7.25

Consolidated statement of financial position

	As at 31st March 2017 (£'000)	As at 31st March 2018 (£'000)	As at 31st March 2019 (£'000)	As at 31st March 2020 (£'000)	As at 31st March 2021 (£'000)	As at 31st March 2022 (£'000)
Assets
Non-current assets
Goodwill	51,529	52,626	55,162	64,642	63,067	100,991
Intangible fixed assets	23,213	22,913	20,768	25,774	21,648	31,333
Property, plant and equipment	451	397	414	530	415	806
Right-of-use asset	-	-	-	2,611	1,816	2,304
Deferred tax asset	-	-	-	-	-	671
Capitalised contract fulfilment costs	-	-	-	-	154	131
Total non-current assets	75,193	75,936	76,344	93,557	87,100	136,236
Current assets
Trade and other receivables	12,087	21,242	19,680	21,212	17,938	29,569
Cash and cash equivalents	8,023	9,774	18,581	25,996	34,012	63,516
Total current assets	20,110	31,016	38,261	47,208	51,950	93,085
Current liabilities
Trade and other payables	(10,024)	(20,621)	(18,427)	(26,018)	(27,241)	(56,671)
Provisions	-	-	(3,359)	(4,150)	-	(3,277)
Corporation tax	-	-	-	(791)	(1,792)	(4,788)
Lease liabilities	-	-	-	(5,000)	(514)	(1,134)
Total current liabilities	(10,024)	(20,621)	(21,786)	(35,959)	(29,547)	(65,870)
Net current assets	10,086	10,395	16,475	11,249	22,403	27,215
Non-current liabilities
Borrowings	(85,879)	-	-	-		-
Deferred tax provision	(3,946)	(3,401)	(3,193)	(4,438)	(3,022)	(4,331)
Other non-current liabilities	-	(277)	(486)	(7,104)	(10,737)	(25,100)
Lease liabilities	-	-	-	(1,878)	(1,379)	(1,275)
Total non-current liabilities	(89,825)	(3,678)	(3,679)	(13,420)	(15,138)	(30,706)
Net assets	(4,546)	82,653	89,140	91,386	94,365	132,745
Equity
Issued share capital	-	77	76	78	80	89
Share premium	86	89,396	89,396	89,396	89,396	119,438
Capital redemption reserve	-	-	1	-	-	-
Foreign exchange reserve	(224)	(410)	2,095	3,406	302	3,482
Other reserves	-	267	737	1,652	4,044	9,361
Retained earnings	(4,408)	(6,677)	(3,165)	(3,146)	543	375
Total shareholders' equity	(4,546)	82,653	89,140	91,386	94,365	132,745

Consolidated statement of cash flows

	Year ended 31st March 2017 (£'000)	Year ended 31st March 2018 (£'000)	Year ended 31st March 2019 (£'000)	Year ended 31st March 2020 (£'000)	Restated year ended 31 March 2021 (£'000)	Year ended 31 March 2022 (£'000)
Cash flows from operating activities:
Profit for the year					5,827	8,512
Taxation					3,142	6,370
Finance income					-	(1)
Finance expense					1,207	2,894
Depreciation of property, plant and equipment	289	297	263	1,022	1,085	1,155
Loss on disposal of fixed assets	2,488	-	6	11	13	32
Amortisation of intangible fixed assets	2,488	2,383	2,586	3,804	4,130	5,272
Share-based payment charge	-	191	436	917	1,693	4,075
Acquisition related costs	1,463	241	61	-	-	-
Costs relating to AIM admission	-	1,621	-	-	-	-
Increase in provisions	-	-	-	-	-	1,302
Operating cash flows before movements in working capital	8,244	13,291	15,924	16,180	17,097	29,611
Working capital adjustments:
(Increase)/decrease in trade and other receivables	(1,644)	(8,839)	1,562	30	3,221	(7,066)
Increase in trade and other payables	970	8,107	878	4,444	6,424	15,729
Tax paid	(1,707)	(1,222)	(1,996)	(2,446)	(5,707)	(4,767)
Net cash generated from operating activities	5,863	11,337	16,368	18,208	21,035	33,507
Cash flows from investing activities:
Interest received	5	-	-	1	-	1
Acquisition of subsidiaries, net of acquired cash	(77,790)	(1,941)	(1,113)	(7,339)	(2,752)	(23,796)
Costs relating to AIM admission	-	(892)	-	-	-	-
Costs relating to acquisitions	(1,463)	(242)	-	-	-	-
Capitalised development costs	-	-	-	(1,387)	-	-
Purchase of property, plant and equipment, net of disposals	(199)	(243)	(728)	(349)	(151)	(684)
Net cash used in investing activities	(79,447)	(3,318)	(1,841)	(9,074)	(2,903)	(24,479)
Cash flows from financing activities:
Issue of ordinary share capital	86	34,348	-	(1)	-	31,102
Share issuance costs	-	-	-	-	-	(1,053)
EBT purchase of Company's own shares	-	-	-	-	-	(205)
Repayment of bank borrowings	(1,540)	(33,602)	-	5,000	(5,000)	-
New borrowings	83,829	-	-	-	-	-
Interest and bank loan fees	-	-	-	-	(486)	(285)
Principal lease liability payments	(1,431)	(5,469)	(45)	(706)	(809)	(814)
Interest on lease liabilities	-	-	-	(129)	(102)	(111)
Repayment of preference shares	(95)	-	-	-	-	-
Dividends paid		(1,508)	(5,687)	(6,256)	(2,136)	(8,678)
Net cash generated from/(used in) financing activities	80,849	(6,231)	(5,732)	(2,139)	(8,533)	19,956
Net increase in cash and cash equivalents	7,265	1,788	8,795	6,995	9,599	28,984
Cash and cash equivalents at beginning of the year	-	8,023	9,774	18,581	25,996	34,012
Effect of exchange rate fluctuations on cash held	758	(37)	12	420	(1,583)	520
Cash and cash equivalents at end of the year	8,023	9,774	18,581	25,996	34,012	63,516

	2017	2018	2019	2020	2021	2022
Cash Flow from Operations	+	+	+	+	+	+
Cash Flow from Investing	-	-	-	-	-	-
Cash Flow from Financing	+	-	-	-	-	+

Interim condensed consolidated statement of comprehensive income

	Unaudited six months ended 30 Sep 2022	Unaudited six months ended 30 Sep 2021
	£'000	£'000
Continuing operations
Revenue	107,599	68,421
Rechargeable expenses	(583)	(31)
Net fee income	107,016	68,390
Cost of sales	(68,573)	(41,930)
Gross profit	38,443	26,460
Administration expenses	(22,679)	(20,992)
Operating profit	15,764	5,468
Depreciation	898	497
Amortisation of capitalised development costs	151	301
Adjusting items	5,668	9,171
Adjusted EBITDA	22,481	15,437
Finance income	65	1
Finance expense	(1,630)	(1,238)
Profit before tax	14,199	4,231
Taxation	(3,922)	(3,278)
Profit for the period	10,277	953
Exchange differences on translation of foreign operations	9,963	2,100
Total comprehensive income for the period	20,240	3,053
Basic earnings per ordinary share (p)	9.10	0.87
Diluted earnings per ordinary share (p)	8.55	0.83

Interim condensed consolidated statement of financial position

	Unaudited as at 30th September 2022	Unaudited as at 30th September 2021	Audited as at 31st March 2022
	£'000	£'000	'000
Non-current assets
Goodwill	107,310	100,307	100,991
Intangible fixed assets	30,936	33,661	31,333
Property, plant and equipment	1,109	576	806
Right-of-use asset	1,904	2,032	2,304
Deferred tax asset	1,088	-	671
Capitalised contract fulfilment costs	119	168	131
Total non-current assets	142,466	136,744	136,236
Current assets
Trade and other receivables	41,695	27,644	29,569
Cash and cash equivalents	47,764	40,032	63,516
Total current assets	89,459	67,676	93,085
Current liabilities
Trade and other payables	(55,709)	(47,579)	(56,671)
Provisions	(3,433)	-	(3,277)
Corporation tax	(3,226)	(2,307)	(4,788)
Lease liabilities	(1,072)	(745)	(1,134)
Interest bearing loans and borrowings	(7,477)	-	-
Total current liabilities	(70,917)	(50,631)	(65,870)
Net current assets	18,542	17,045	27,215
Non-current liabilities
Deferred tax liability	(3,765)	(5,598)	(4,331)
Other non-current liabilities	(8,357)	(22,279)	(25,100)
Lease liabilities	(941)	(1,375)	(1,275)
Total non-current liabilities	(13,063)	(29,252)	(30,706)
Net assets	147,945	124,537	132,745
Equity
Issued share capital	90	89	89
Share premium	119,438	119,438	119,438
Foreign exchange reserve	13,445	2,402	3,482
Other reserves	12,867	6,545	9,361
Retained earnings	2,105	(3,937)	375
Total shareholders' equity	147,945	124,537	132,745

Interim condensed consolidated statement of cash flows

	Unaudited six months ended 30 Sep 2022	Restated10 unaudited six months ended 30 Sep 2021	Audited year ended 31 Mar 2022
	£'000	£'000	£'000
Cash flows from operating activities:
Profit for the period	10,277	953	8,512
Taxation	3,922	3,278	6,370
Finance income	(65)	(1)	(1)
Finance expenses	1,630	1,238	2,894
Depreciation of property, plant and equipment	898	497	1,155
Loss on disposal of fixed assets	-	21	32
Amortisation of intangible fixed assets	2,507	2,559	5,272
Share-based payment charge	3,588	1,672	4,075
Increase in provisions	-	-	1,302
Foreign exchange gain on cash and cash equivalents	(4,764)	-	-
Operating cash flows before movements in working capital	17,993	10,217	29,611
Working capital adjustments:
Increase in trade and other receivables	(9,065)	(5,160)	(7,066)
(Decrease)/increase in trade and other payables	(676)	3,573	15,729
Tax paid	(6,062)	(2,660)	(4,767)
Net cash generated from operating activities	2,190	5,970	33,507
Cash flows from investing activities:
Interest received	65	1	1
Consideration paid on acquisitions, net of cash acquired	(20,716)	(23,796)	(23,796)
Purchase of intangible assets	(319)	-	-
Purchase of property, plant and equipment, net of disposals	(564)	(204)	(684)
Net cash used in investing activities	(21,534)	(23,999)	(24,479)
Cash flows from financing activities:
Issue of ordinary share capital	-	31,102	31,102
Share issuance costs	-	(1,053)	(1,053)
Net settlement of vested share options	(322)	-	-
EBT purchase of Company's own shares	(1,129)	(187)	(205)
Drawdown of bank borrowings	7,477	-	-
Interest and bank loan fees	(110)	(199)	(285)
Principal lease liability payments	(650)	(348)	(814)
Interest on lease liabilities	(53)	(52)	(111)
Dividends paid	(8,547)	(5,431)	(8,678)
Net cash (used in)/generated from financing activities	(3,334)	23,832	19,956
Net (decrease)/increase in cash and cash equivalents	(22,678)	5,803	28,984
Cash and cash equivalents at beginning of the period	63,516	34,012	34,012
Effect of exchange rate fluctuations on cash held	6,926	217	520
Cash and cash equivalents at end of the period	47,764	40,032	63,516

0.61% of GDP is spent on management consultancy services.

GDP-weighted spending on consultancy in 2005

Country	Consulting revenue (billion)	GDP (billion)	Consulting spend/GDP (%)
USA	112.50	13,094.79	0.86%
United Kingdom	19.40	2,321.84	0.84%
Germany	18.50	2,767.30	0.67%
Japan	20.40	4,572.81	0.45%
France	8.40	2,137.36	0.39%
Italy	2.60	1,786.07	0.15%
China	2.34	2,256.70	0.10%
India	1.49	834.05	0.18%
South Korea	1.64	844.20	0.19%

Economic links to cash flow patterns

Economic links to cash flow patterns

Cash flow type	Introduction	Growth	Shake out	Mature	Decline
Operating	-	+	+/-	+	-
Investing	-	-	+/-	-	+
Financing	+	+	+/-	-	+/-