Management consultants have a reputation for charging a song to provide unregulated advice awash with buzzword-laden obviousness, via over-stylised Powerpoint presentations. But in industries where best practice is opaque and the hunt for competitive edge intense, client demand tends to remain robust. Full-year numbers for Alpha Financial Markets (AFM) suggests the asset and wealth management sectors are happy to pay up.
The Aim-listed group saw its operating profit climb 47 per cent to £12.6m in the 12 months to March, buttressed by an expanding client base and geographic footprint. That helps to explain what for a services firm amounts to bullishness: a 19 per cent rise in consultant headcount to 362, which contributed to a 15 per cent uptick in sales costs.
There’s little sign of a slowdown. Management expects “sustained growth” across its current geographical footprint, and used these results to announce the £9m all-cash acquisition of Axxsys, a technology-focused peer firm that promises to boost cross-selling opportunities in the Nordics and Canada.
Of course, all is well so long as asset managers have the cash to spend on Alpha’s insights. Should a market rout lead to a hit to clients’ commissions and revenues, chief executive Euan Fraser says his firm is well-protected by a robust pipeline for “change projects”, which are unlikely to be canned.
Analysts at broker Berenberg forecast adjusted earnings of 14p per share for the 12 months to March 2020, and 15.6p in FY2021.
| ALPHA FINANCIAL MARKETS (AFM) | ||||
| ORD PRICE: | 230p | MARKET VALUE: | £233m | |
| TOUCH: | 228-236p | 12-MONTH HIGH: | 274p | LOW: 185p |
| DIVIDEND YIELD: | 2.6% | PE RATIO: | 25 | |
| NET ASSET VALUE: | 88.2p* | NET CASH: | £18.6m | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016^ | 30.4 | -0.8 | n/a | nil |
| 2017^ | 49.2 | -3.9 | -5.5 | nil |
| 2018 | 66.0 | 1.5 | -0.5 | 5.17 |
| 2019 | 76.0 | 12.5 | 9.1 | 6.00 |
| % change | +15 | +735 | - | +16 |
| Ex-div: | 29 Aug | |||
| Payment: | 11 Sep | |||
| *Includes intangible assets of £75.9m, or 75.1p a share ^Pre-IPO figures | ||||
