Alpha Group’s profit jumps 140% YoY to £115 million

Foreign exchange service provider Alpha Group International plc (AIM: ALPH) announced its results for the financial year ending December 31, 2023, which showed solid performance in terms of revenue and earnings growth.

According to the investor update published today, the company was able to amass a total revenue of £110 million. This figure was up 27% over the twelve months through December 2020, which was reported at £98.3 million the previous year.

Profit before tax saw a substantial increase of over 140%, reaching £115 million, up from £47.2 million in FY 2022. The underlying profit before tax also grew by 10% to about £42 million. Despite various market challenges, the company maintained a consistent underlying profit margin of 39%.

Another noteworthy aspect of Alpha Group’s financial performance was its other operating income from interest on client balances, which exceeded £73 million, well above the £9.3 million reported in FY 2022. Additionally, the company’s balance sheet and liquidity position remained very strong, with adjusted net cash increasing by over £60 million to more than £177 million.

In Q4 2023, client balances in the Alternative Banking division grew by 31% compared to the same quarter in the previous year, reaching £2.1 billion.

From a business development perspective, Alpha Group’s diversification strategy played a key role in achieving resilient revenue growth and strong profit margins. The company’s disciplined approach to credit and risk management resulted in the lowest level of client defaults in five years. Furthermore, Alpha Group made investments in operational scalability and efficiency, with a focus on expanding Front Office roles.

During the year, the company launched a new Fund Finance division and opened new Corporate FXRM offices in Madrid and Munich.

Morgan Tillbrook, CEO, commented: “Despite a challenging trading environment in 2023, our team have continued to work hard to deliver profitable revenue growth, whilst also making excellent progress on our long-term growth strategy. At the same time, our previous diversification into Alternative Banking has enabled us to benefit from exceptional levels of interest income. Whilst we have opted to exclude these numbers from our underlying profit for transparency, the fact remains that this is very much a by-product of our diversified business model and is providing us with transformative levels of capital from which we can significantly enhance our long-term growth prospects. We have already started to show this in 2023 with the acquisition of Cobase, the launch of our new Fund Finance division, and new offices in Spain and Germany.”

Earlier in December, Alpha Group finalized its acquisition of Financial Transaction Services, operating as Cobase. The acquisition, initially announced in September, involves Alpha purchasing an 85% stake in Cobase for €9.4 million in cash, a transaction that was subject to approval by De Nederlandsche Bank, the central bank of the Netherlands.

The deal also includes provisions for Alpha to acquire the remaining 15% stake through a performance-based earn-out scheduled between 2025 and 2028.