TIDMALPH
RNS Number : 6978L
Alpha Group International PLC
05 January 2023
5 January 2023
Alpha Group International plc
("Alpha" or the "Group")
Launch of Bristol Office and Share Scheme
New Share Scheme
Overview
Alpha Group International plc (AIM: ALPH), a leading provider of
financial solutions dedicated to global corporates and
institutions, is pleased to announce the formal launch of a new
sales office in Bristol along with a related share scheme.
The Bristol office (the "Bristol Operation") was initially
established in January 2022, to focus on providing Alpha's existing
offering to smaller corporates (UK companies with turnovers of
GBP5m - GBP30m) compared to those the Group has historically
served. The Bristol Operation has a sales team that leverages the
existing operations and infrastructure of the Group's FX Risk
Management ("FXRM") division in the same manner as its FXRM offices
in Amsterdam, Milan and Toronto.
Why this market?
Having only captured a fraction of the UK corporate market, the
Board believes that the Group already has a substantial runway for
growth. However, the UK SME market represents an additional and
attractive market opportunity that can be captured efficiently,
cost-effectively and without distracting from our wider focus on
larger corporates and institutions. The Bristol Operation is
already off to a strong start and has generated revenues in excess
of GBP2m in 2022.
UK companies in this turnover range are often even more
underserved by traditional providers than their larger peers. By
providing these clients with Alpha's distinctive approach to FX
risk management and access to established capabilities, the Group
can provide them with a much-needed level of service and enter this
market with a significant competitive advantage. Although clients
will be smaller, our focus will remain on servicing high-quality
companies, thereby providing a valuable opportunity to partner with
high-growth companies and secure a significant share of wallet at
an early stage.
After almost fifteen years of investment in our operations,
underpinned by a strong focus on scalability and agility, the Group
is now able to enjoy strong economies of scale across the business
and service this marketplace whilst leveraging the capacity within
its existing operations.
Why Bristol?
Smaller businesses naturally provide smaller revenue
opportunities. In order to take Alpha's high-quality offering to
this marketplace whilst maintaining attractive profit margins, we
needed to ensure that our cost to service would be lower, whilst
also ensuring we could continue to access high-quality talent. An
office in Bristol made this possible for three main reasons:
firstly, Bristol provides a high standard, but lower cost of
living; secondly, the city has one of the highest productivity
levels per capita, employment and qualification rates of all major
UK cities(1) , which underlines the quality of available local
talent; and thirdly commercial rents are significantly lower.
One of the core considerations when deciding to launch a SME
division was ensuring we could build and sustain a high-quality
team with a resolute focus on becoming a leader within the SME
market. Achieving this meant that we needed to avoid becoming an
incubator for front office employees wishing to eventually work
with larger businesses - something that would have naturally
occurred if the SME division was based within or near the London
office. Having a separate office in Bristol, where the cost of
living is lower, but the quality of life is high, ensures that the
financial and lifestyle dynamics available to the team are equally
as attractive as they are in our other offices.
(1) Bristol Key Facts 2022 | www.bristol.gov.uk
Bristol Share Scheme
In order to incentivise the key personnel within the Bristol
Operation, the Group is putting in place an employee share
ownership scheme for certain individuals (the "Bristol
Participants").
A new class of shares ("I Shares") in Alpha FX Limited is being
created, with 79% owned by the Group and 21% owned by the remaining
Bristol Participants. The value of the I Shares will be linked to
the performance of the Bristol Operation. The Bristol share
ownership scheme is structured in a similar way to the share
schemes implemented for other FX risk management divisions in
Canada and The Netherlands. From March 2025, the Bristol
Participants will have the option to convert 25% of their holding
of I Shares into ordinary shares of GBP0.002p each in the Company
("Ordinary Shares") each year for four years (with the final option
being exercisable in March 2028). The value of the shares upon
conversion is based on an 8x multiple of the operation's annual
profit after tax, and therefore is designed to be accretive on an
EPS basis for our Group shareholders as long as Alpha's valuation
stays in excess of an 8x multiple of earnings and Group earnings
continue to grow sufficiently.
Speaking on the launch of the Bristol office, Morgan Tillbrook,
CEO of Alpha said:
"The opportunity to apply Alpha's principles of currency risk
management and powerful capabilities to UK SMEs is an attractive
one. Whether you're a GBP5m company or a GBP500m company, the
impact of currency volatility is felt in the same way, but
unfortunately smaller businesses often remain the most overlooked
when it comes to strategic support. It's also a pleasure to see
another long-standing member of the team, Luc Barford, leading this
division. Luc first joined Alpha in 2015 and is someone who lives
and breathes the Alpha ethos. I am looking forward to seeing him
and the team go from strength to strength as they embark on this
next stage in their journey."
Alpha's approach to share schemes
Share schemes are intrinsically linked to both dilution and
long-term value creation for shareholders. We therefore believe it
is important to clearly explain our approach to new share schemes
in any related announcements.
Providing employees with the opportunity to earn a stake in the
business via share ownership schemes is an intrinsic part of
Alpha's entrepreneurial culture and client-first philosophy.
Employees that think and act like owners are naturally deeply
invested in building sustainable businesses. Likewise, they
recognise that the future of their business is determined by the
long-term value they can provide their clients.
Naturally however, issuing new shares schemes dilutes existing
holders. It is therefore essential that the growth they are
designed to create is of a long-term nature and materially
outweighs the impact of any dilution. To achieve this, our focus is
on creating separate schemes that ensure participants' rewards are
contingent on the growth of the divisions they directly influence.
For example, if one division underperformed, but the rest of the
group overperformed, shareholders would not be expected to dilute
for the underperforming division.
With over 110 employee shareholders and multiple business units,
achieving this level of alignment naturally introduces complexity.
However, we strongly believe that a simple, one-size-fits-all
scheme, whilst easier to understand and administer, would not
create the individual accountability that is so important to
ensuring rewards are always and clearly linked to results. People
must be rewarded for their ability to contribute to growth, not
simply for being part of a journey. With this in mind, the Group
has two main types of share schemes:
1. Group & Established Division Share Schemes
The above schemes are typically used to incentivise either
Central Services employees who support divisions across the Group,
or divisional employees who are targeted on growing revenues within
the Group's more established business divisions, currently just UK
Corporate.
These schemes vest annually in equal tranches over a period of
no less than four years, based on the achievement of organic
revenue growth targets. For Group schemes, these targets are based
on Group revenue. For established division schemes, they are based
on the organic revenue growth of the division they are a part of.
All revenue targets are ambitious and compounding, and rewards are
now also capped against a maximum market capitalisation, and thus
designed to make each growth scheme earnings per share accretive,
as long as overall Group earnings continue to grow
sufficiently.
2. New Venture Share Schemes
Share schemes for new ventures are typically used to incentivise
employees who are working within newer divisions, e.g. Bristol,
Toronto, Amsterdam, Institutional, Alpha Platform Solutions, and in
due course, Milan and Sydney.
With this type of scheme, employees own an equity stake in their
individual business unit, with an option to convert their stake
into Group shares in equal annual tranches over a period of four
years, with the first vesting typically beginning in their third or
fourth year of operation. The value of shares at the time of
conversion is based on an 8x multiple of the operation's profits
after tax and is therefore designed to make each growth scheme
earnings accretive to the Group, as long as Group earnings continue
to grow sufficiently and Alpha's valuation stays in excess of an 8x
multiple of earnings. At conversion, and in exchange for converting
their shares into Group shares, participants' holdings in their
business units commensurately decrease and the Group's holding
commensurately increases.
Equity stakes within these new ventures are typically larger
than in our Group & Established Division share schemes. This
reflects the fact that these ventures are new, unproven, and being
led by individuals from experienced and established backgrounds,
who are taking on significant levels of accountability - often
requiring long-term relocations to new countries or even
continents. Aligning the schemes to profitability ensures that
these rewards are intrinsically linked to their ability to execute
and create sustainable and profitable revenue growth.
Speaking on Alpha's share schemes, Morgan Tillbrook, CEO of
Alpha said:
"Alpha has a strong track record of generating organic growth
and successfully breaking into new products and markets. It is
important to remember however that behind each strong set of
results are people who have committed deeply to building valuable,
long-term businesses with market-leading offerings. Whilst it may
be rare for a company to invest so much effort into creating
bespoke share schemes, it is also rare for a company within our
industry to deliver such consistently high levels of growth. We
believe this correlation is not by chance and that, as our track
record has shown, empowering our people in this way is ultimately
the most rewarding path for everyone involved."
Enquiries:
Alpha Group International plc via Alma PR
Morgan Tillbrook, Founder and CEO
Tim Powell, CFO
Liberum Capital Limited Tel: +44 (0) 20
(Nominated Adviser and Sole Broker) 3100 2000
Neil Patel
Cameron Duncan
Kate Bannatyne
Kane Collings
Alma PR (Financial Public Relations) Tel: +44 (0) 20
3405 0205
Josh Royston
Andy Bryant
Kieran Breheny
Notes to Editors
Alpha is a high-tech, high-touch provider of enhanced financial
solutions dedicated to corporates and institutions operating
internationally. Working with clients across 50+ countries, we
blend intelligent human capabilities with new technologies to solve
complex problems across three key areas: FX risk management, global
accounts and mass payments.
Key to our success is our team - nearly 300 people based across
seven global offices, brought together by a high-performance
culture and a partnership structure that empowers them to act as
owners of our business.
Despite being an established business listed on the London Stock
Exchange, we remain relentlessly focused on maintaining the same
level of operational agility and client focus we had when we first
started in 2009. This dynamic, combined with the passion of our
people, have enabled us to make a substantial and enduring
difference to our clients, and deliver a growth story to match.
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END
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