Alpha Group reports strong trading at end of 2022

Corporate and institutional financial solutions provider Alpha Group International said in an update on Wednesday that trading in late 2022 remained “strong”.

The AIM-traded firm said it expected revenue for the full year to increase 27% to around £98m, with operating profit in-line with expectations and profit before tax, including interest, to be ahead of forecasts.

It said those results were achieved alongside increased investment in people, infrastructure, and technology, in particular within its alternative banking solutions division, where client demand continued to exceed expectations.

“Since our inception, Alpha has carefully balanced its investment programme, delivering thirteen consecutive years of strong revenue growth and attractive profit margins,” the board said in its statement.

“Moving into 2023, we find ourselves in the fortunate position of expecting exceptional growth in absolute earnings and cash generation, driven by a combination of expected strong revenue growth and interest income.

“In light of this, we believe it would be a missed opportunity to not bring forward investment in our operations - in particular in our alternative banking solutions division - originally planned for 2024-2025 and beyond.”

Alpha said the investment was already underway, and was focussed on accelerating future revenue growth and strengthening the long-term scalability and sustainability of the business.

Additionally, it said that in the event its operating profit excluding interest exceeded current market expectations for 2023, it said it would look to make additional investments in discretionary initiatives such as marketing campaigns, designed to further accelerate growth, without becoming embedded into the cost base.

“From a presentational point of view, because of our decision in October not to classify interest income as revenue, any accelerated investment - whether ongoing or discretionary - which is charged to profit will be reflected in the operating margin in the short-term, but group profit before tax margins and the absolute level of earnings per share will be significantly enhanced by the expected increase in interest income received.”

Alpha said it had adopted the strategy in the belief that it would lead to an “exciting step change” in its long-term growth prospects.

“2022 continued Alpha's 13 consecutive years of strong organic and profitable revenue growth,” said founder and chief executive officer Morgan Tillbrook.

“Whilst there is no doubt the world has moved into a more challenging macro-environment, we have proven our resilience, even when faced with unprecedented challenges.

“Importantly, whether it's exchanging currency, holding accounts, or making payments, businesses will always need to carry out these activities. Indeed, managing them efficiently and effectively often becomes even more important in a challenging environment.”

Tillbrook said that, as well as the firm’s business model benefitting from being “largely non-discretionary”, it also benefited from being “highly diversified” across two decentralised divisions, each with its own product lines and client bases that were sector agnostic and spanned more than 50 countries.

“Meanwhile our service offering continues to grow from strength to strength in response to our continued and prudent investment, and is led by a team who, through carefully structured growth equity schemes and a client-centric culture, are deeply invested in delivering sustainable returns.

“As a business, we are in the strongest position we have ever been in, and with our growing number of products and geographies still barely scratching the surface of our addressable market.

“Moving into 2023 and beyond, we have all the foundations in place to deliver predictable, defensible, long-term growth and I am therefore looking forward to the year ahead with confidence.”

At 1329 GMT, shares in Alpha Group International were up 0.33% at 1,826p.

Reporting by Josh White for Sharecast.com.