Alpha FX publishes a full year trading update

Darren Sinden

The business was also able to expand its operations in 2020 establishing a presence in Amsterdam and bolstering headcount in both front and back-office operations

FX risk management business Alpha FX published a trading update this morning for the full year 2020, and it showed a strong finish to the second half of the year for the group.

Alpha confirmed that the company had seen a slowdown in business in the early part of the year, as its corporate customers trimmed or put their activities on hold. Thanks to the downturn in global trade bought about by the pandemic and associated lockdowns.

However, in the second half of 2020 business rebounded within its FX risk management and alternative banking divisions. To the extent that the company was able to grow its base of corporate customers by 16% over the year, adding just over 100 new customers.

The business was also able to expand its operations in 2020 establishing a presence in Amsterdam and bolstering headcount in both front and back-office operations. It created 16 new jobs in the back office and four in the front, and Alpha FX intends to grow staff numbers further as the business continues to gain traction.

In terms of revenues, management expects full-year 2020 to generate around £46.0 million and forecasts that operating profits will be slightly ahead of expectations. However, the company also warned that with the UK and parts of Europe back in lockdown, a slower start to business in 2021 is expected.

Alpha FX is setting up an operation in Malta, through which it will service its European derivatives clients post Brexit. This new operation is expected to be up and running by the end of Q1 2021.

However, until then the group will have to forgo some business from clients in EU states, where reverse solicitation is not permitted. Alpha FX estimates this to be less than 1% of its overall business.

The company also intends to reinstate its dividend and will announce further details when it publishes full-year results in March. The company remains debt-free and has £48.0 million of free cash on its balance sheet.

Commenting on the update Alpha FX founder and CEO Morgan Tillbrook said that: “Despite the challenges faced, the team ensured 2020 was another consecutive year of strong growth across all divisions of the business.”

Mr Tillbrook added “The lifeblood of Alpha’s success is our people and I am extremely proud of our team for rising to the challenge to deliver in the way they have. It is a real privilege to lead the group and I believe the progress made this year will set us in very good stead long into the future.”

Shares in Alpha FX, which are listed on the London Stock Exchange have traded lower this morning, down by some 4.90% at £13.50. However, the stock had previously enjoyed a sustained rally, rising from a Covid crash low of £5.15 to trade at £14.50 ahead of today’s news.

So whilst it may have been better to travel than arrive, shareholders will no doubt be pleased with the company’s overall performance.

The stock has been upgraded this morning by their brokers Liberum, who have raised their Alpha FX target price to £15.00 from £13.50, raising their profit forecasts by 6.0% in 2020 and 2.0% in 2021. Liberum believes that further upgrades could be justified once the current lockdown comes to an end.

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