REG - Amicorp FS (UK) PLC - Final Results
30/04/2024 10:45
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RNS Number : 6028M Amicorp FS (UK) PLC 30 April 2024
The information contained within this announcement is deemed by the Company
(LEI: 21380028AUYWGMYXQA57) to constitute inside information for the
purposes of Article 7 of the Market Abuse Regulation (EU) No 596/2014 as it
forms part of UK domestic law by virtue of the European Union (Withdrawal) Act
2018 as amended ('UK MAR'), and Article 7 of the Market Abuse Regulation (EU)
No. 596/2014 ('EU MAR'). The person responsible for arranging and
authorising the release of this announcement on behalf of the Company is
Stephen Wong, Chief Financial Officer.
30 April 2024
Amicorp FS (UK) Plc
('AMIF', the 'Company' or the 'Group')
Final Results
Maiden Final Results - FY23 delivers positive revenue development and
strategic progress
Amicorp FS (UK) Plc, the international specialist fund services group, is
pleased to report its audited final results for the year ended 31 December
2023 ('FY23' or the 'year').
FY23 Financial Highlights
· Total revenue increased by 7.6% to US$12.8 million (FY22: US$11.9 million),
largely driven by a 60.3% increase in revenues by the Governance and
Compliance Services division to US$1.3 million (FY22: US$0.8 million)
· Gross profit of US$8.8 million, equivalent to a 68.8% margin
· Adjusted EBITDA(1) of US$1.9 million, representing a 14.7% margin
· EBITDA of US$0.9 million, after offsetting the one-time exceptional IPO
expenses of US$1.0 million
FY23 Strategic Highlights
· Successful IPO on the Main Market of the London Stock Exchange on 8 June 2023,
alongside a placing of new Ordinary Shares raising US$6.5 million before
expenses and a placing of existing Ordinary Shares of US$9.7 million
· Successful completion of the demerger of Amicorp Luxembourg S.A., leading to
the formation of Amicorp Fund Services Luxembourg S.A. and allowing for an
operational expansion in this strategically important fund services market
· Completion of share transfer of Amicorp Fund Services (Mumbai) Private Limited
which became a wholly owned subsidiary of the Group.
Investment of US$222k in future growth, through expanding its sales force by
c.50% and undertaking automation projects to accelerate growth in 2024 and
beyond
FY23 Operational Highlights
· The number of funds grew by 13% with AMIF's client base reaching 501(2) funds
(FY22: 444(2) funds), laying a solid foundation for the future growth of Fund
Administration
· Opening of Brazil office at the start of 2023 following receipt of regulatory
approval
· Undergoing application process for fund administration licenses in the Dubai
International Financial Centre ('DIFC') and Astana International Financial
Centre ('AIFC')
· Development of Governance and Compliance Services to expand the Group's
offerings including ESG and corporate governance support
· Expansion of Business Process Outsourcing ('BPO') Services to include VC back
office offering
(1) Adjusted EBITDA is calculated by removing exceptional IPO related costs
from the Group's EBITDA.
(2) FY23: 501 funds of which 297 are active. FY22: 444 funds of which 274
are active.
Commenting on the FY23 Results, Toine Knipping, Non-Executive Chairman of
AMIF, said:
"Following our successful move to the London Stock Exchange in June 2023, I am
pleased to report on progress across the business for our maiden set of full
year results. During the past twelve months, AMIF achieved a number of
important strategic milestones, including continued geographic expansion with
new office opened in Brazil, completion of demerger in Luxembourg and
application for licences to operate in Dubai and Astana.
"A 13% increase in the number of funds under administration led to continued
revenue growth and laid a solid foundation for future advancement, as the
outsourcing of fund management services by asset managers continues to gather
pace as a result of increasing regulatory requirements.
"The use of funds for investment purposes is another important positive trend
for our business and AMIF is ideally placed to benefit with our ability to
provide a full suite of administration services across multiple jurisdictions.
"In addition to supportive regulatory tailwinds and the expansion of the asset
management industry, AMIF offers prospective clients a scalable operating
platform, benefitting from significant recent investment and an established
brand with a track record of managing risk."
For further information please contact:
Amicorp FS (UK) Plc Via Buchanan Communications
Toine Knipping, Non-Executive Chairman
Chi Kin Lai, Chief Executive Officer
Tat Cheung (Stephen) Wong, Chief Financial Officer
Zeus (Broker) Tel: +44 (0) 20 3829 5000
Martin Green / Louisa Waddell (Investment Banking) www.zeuscapital.co.uk (http://www.zeuscapital.co.uk)
Benjamin Robertson (Corporate Broking)
Bowsprit Partners Limited (Financial Adviser) Tel: +44 (0) 20 3883 4430
John Treacy www.bowspritpartners.com (http://www.bowspritpartners.com)
Luis Brime
Media enquiries: Tel: + 44 (0) 20 7466 5000
Buchanan (Financial Communications) AmicorpFS@buchanan.uk.com (mailto:AmicorpFS@buchanan.uk.com)
Simon Compton
Verity Parker
Notes to Editors
AMIF is an international specialist fund services group that works with a
broad mix of clients including institutional investors, fund managers (private
equity, venture capital and hedge funds) as well as family offices to provide
a suite of specialist services across global markets. AMIF provides local and
global expertise to over 500 funds.
AMIF provides a comprehensive and tailored range of services which are all
underpinned by market-recognised technology solutions that support clients
from a single point of contact.
These include:
· Fund Administration and Investor Services: Fund accounting, fund
administration, in-house NAV calculation, investor services including Register
& Transfer Agency services, booking of subscriptions & redemptions,
audit liaison/support, real time oversight over investment performance.
· Governance and Compliance Services: FATCA and CRS reporting services,
Fiduciary, Anti-Money Laundering (AML) officer services in compliance with
international rules and regulations including administrative support to the
Board and Committees of the Board.
· BPO Services: Simplifying accounting and administration services
through automated accounting processes and providing management insight into
business operations through regular and consistent management reporting.
For further information please visit www.amicorp-funds.com/chairmans-welcome/
(http://www.amicorp-funds.com/chairmans-welcome/)
Chairman's Statement
Overview
I am pleased to introduce AMIF's maiden final results to stakeholders
following the Company's listing on the London Stock Exchange in June 2023.
During the past 15 years, our management team have built a specialist fund
services provider to the asset management industry. AMIF is well positioned
in its markets with a strongly diversified mix of customers, services and
geographies, to provide a 'one-stop-shop' for clients, who typically require
reoccurring services over a period of years.
AMIF has a clear strategy for growth specifically in emerging markets with
significant expansion opportunities amongst its current client base and an
opportunity to tap into larger funds via its existing network. The growth
prospects are underpinned by a scalable operating platform that has seen
significant recent investment.
Results overview
Following its IPO, AMIF has continued its operational and revenue development,
driven by consistent organic growth and increased diversification. The Group's
Governance and Compliance Services division has shown improvement in FY23
revenue to US$1.3 million in FY23 (FY22: US$0.8 million), which represents
growth of 60.3%.
The trend of asset managers and fund providers outsourcing back-office
functions has continued as a result of escalating compliance requirements and
rising staff costs. With AMIF's proven track record, comprehensive fund
administration services, and extensive knowledge of regulatory landscapes
across various regions, particularly in emerging markets, the Group is
well-positioned to capture market share in this environment.
Moreover, an increasing number of family offices, multinational companies and
investors are looking to structure their cross-border investments through fund
structures, therefore leading to more diversified opportunities for the Group,
AMIF remains committed to innovation and substantial investment in its
business, ensuring the Group's operational platform can support AMIF's
expansion goals. This strategic approach will facilitate the rollout of our
systems and processes to a broader client base, driving higher operating
margins and reinforcing our capital-light business model.
Stakeholder engagement
AMIF is committed to keeping its shareholders and potential investors informed
through timely updates. To ensure that all existing and future stakeholders
are able to track the Group's progress and obtain updates as soon as
available, we encourage registration to AMIF's alert service via the Group's
investor relations website.
Board composition and governance
There are no changes to the Board since the Group's listing in 2023,
comprising a balance of three Executive and three Non-Executive Directors who
bring the required range of skills and experience to support AMIF's strategic
objectives. AMIF has adopted the principles of the Quoted Companies Alliance
Code for corporate governance and established both Audit and Remunerations
committees.
Dividend policy
AMIF intends to adopt a stable dividend policy that will seek to maximise
shareholder value and reflect its strong earnings potential and cash flow
characteristics, while allowing it to retain sufficient capital to fund
ongoing operating requirements and to invest in the Group's long-term growth.
There is currently no fixed ratio on dividend pay-out but this is something
the Board will consider as AMIF grows.
Outlook for the Group
The outlook for the markets in which we operate remains positive. Asset
managers are experiencing an environment with multiple challenges, including
increasing volatility, fee compression, rising costs and technological change.
In the face of these challenges, an increasing number of managers and family
offices are looking to outsource their fund administration services to a
specialist provider with the ability to roll out a suite of services to
multiple funds with minimal incremental cost drag.
As fund managers outsource middle and back office functions due to
increasingly complex compliance requirements and inflationary staff costs, it
is logical to find fund administration providers that have already invested in
their technology and risk platforms, who can provide services that can
accommodate the latest changes in their jurisdiction.
AMIF provides a wide suite of services across LatAm, Europe and MEAI, meaning
our business can act as one-stop shop for fund managers that need services
across fund administration, governance and compliance and business process
outsourcing.
AMIF is well-positioned to act as an acquirer of choice in the fragmented fund
services market, given its size, comprehensive range of services, and
established track record. The Board is optimistic about the outlook for the
Group.
Toine Knipping
Chairman
30 April 2024
Chief Executive Officer's Report
Introduction
2023 was a transformative year for AMIF highlighted by the Group's progress in
generating continued organic revenue growth as well as its successful IPO on
the London Stock Exchange, which marked a new chapter in the Group's corporate
development and established a strong platform for the future growth of AMIF.
Overview
In FY23, AMIF has successfully driven its operational performance agenda which
has seen the Group expanding its sales team to boost organic growth and
extending its services into ESG and ERM, which supports the accelerated growth
from the Governance and Compliance Services division.
AMIF has also expanded its BPO Services division into portfolio administration
and other back-office services to become a one-stop solution provider for all
reporting needs to investment managers globally.
Listing rationale
London retains its status as the world's leading market for financial services
and the Board believes that the Group's listing on the London Stock Exchange
in 2023 provided AMIF with the platform and direct access to capital markets
and wider investor communities to enable the Group to expand its business
globally. This was a significant milestone for AMIF which will aid the
Group's expansion plans and provide new investors with the opportunity to
participate in AMIF's growth story.
It will also enable the Group to take full advantage of the continued growth
in the outsourcing of fund administration services due to diversification
within the asset management industry and increasing regulatory and compliance
requirements.
Fundraising and use of IPO proceeds
The placing that accompanied AMIF's IPO raised US$16.2 million before
expenses, of which US$6.5 million was raised to enable the Group to take
advantage of continued growth in the outsourcing of fund administration
services, which has arisen as a result of diversification in the asset
management industry and increasing regulatory and compliance requirements.
The Board is pleased with the decision to list, which has already led to an
increase in the number of inbound enquiries due to AMIF's enhanced profile and
status as a publicly listed company.
The table below shows an update on use of net IPO proceeds, after deducting
placing and admission expenses of US$800k:
Anticipated use of proceeds Current update
IT expenses related to automation process, including licensing fee and US$90k deployed towards development of digital onboarding portal and NAV
consultancy fee (US$1 million) automation (refer to Investment in IT section)
Depositary lite licence in Luxembourg; Demerger completed, creating the condition to start the licensing application
of depositary lite license (refer to Licence Development section)
(US$1 million)
Expansion of Governance and Compliance services (US$1 million) US$114k deployed towards expansion of team and development of ESG services
(refer to Growth Plans section)
Setting up licensed fund administration in strategic markets (US$1 million) The Republic of Ireland was researched as a possible new jurisdiction but
after careful appraisals the board decided to redirect focus to emerging
markets including UAE and Kazakhstan (refer to Licence Development section)
Expansion of sales team in strategic locations US$222k deployed towards increase in salesforce (refer to Maintaining Global
Footprint section)
(US$1.7 million)
Market expansion
Maintaining global footprint
AMIF stated at the time of its IPO that an important aspect of the Group's
organic growth strategy was to expand its service offering amongst current
clients and maximise market outreach. The business has spent over 15 years
establishing itself as the provider of a full suite of fund services across
multiple jurisdictions and has built strong foundations for further growth.
AMIF has a diverse client base spanning international jurisdictions that are
either traditional fund domiciles or areas where frequent investment and
investment management activities are observed. To effectively cater to its
clientele, AMIF currently operates in 14 strategic locations worldwide,
covering all major time zones across MEAI, Europe and LATAM.
The expansion within existing offices is vital to building a robust pipeline
for future organic growth. As committed during the IPO, part of the proceeds
have been deployed towards the expansion of salesforce in Singapore, Hong
Kong, Dubai and Brazil, resulting in a circa 50% increase in sales team from
12 individuals in 2022 to 18 as at 31 December 2023. While such investment
in human capital has put temporary pressure on short-term profitability, the
Group regularly reviews its investment strategies and closely monitors its
results, in order to achieve long-term sustainable growth and future
competitiveness.
The success of AMIF's global footprint is also attributable to its centralised
operation office setup. Through its operation offices in Mauritius and
India, the Group has access to a diverse talent pool, multicultural teams and
multilingual support to provide round-the-clock services. The Group secures
its core competitive advantage in terms of scalability and flexibility to
adjust operations based on business needs, seasonal demands, and growth
opportunities.
In December 2023, the shares of Amicorp Fund Services (Mumbai) Private
Limited, which were held on trust by Amicorp Group for AMIF, were successfully
transferred to the Group pursuant to the approval granted by the relevant
authority of India. This allows AMIF to exercise contractual control over
the independent operation of one of its key operation offices.
Licence development
Brazil
In early 2023, AFS Brazil LTDA became operational after receiving approval
from the CVM to provide fiduciary investment fund administration services.
This license enables AFS Brazil LTDA to manage private equity funds (FIP), a
rapidly growing segment in the local investment fund sector over the past
decade. The first half of 2023 saw significant efforts to establish Amicorp
Fund Services as a FIP administrator in Brazil, marked by a major event
attended by CVM officials, investment managers, law firms, and strategic
partners. Such efforts continued throughout the rest of 2023 to attract
business and opportunities.
Luxembourg
In November 2023, AMIF announced the successful formation of Amicorp Fund
Services Luxembourg S.A. pursuant to CSSF approval on the demerger of Amicorp
Luxembourg S.A., which will allow for an expansion of the Group's operations
in the largest investment funds centre in Europe and the second largest in the
world after the United States. Luxembourg is a worldwide leader in
cross-border fund distribution and has continued to develop its reputation as
a centre for a large variety of investment structures and funds.
The de-merger involved the separation of the fund administration element of
AMIF's existing jurisdictional licence, held within the Amicorp Group, thereby
creating the conditions for AMIF to apply for an additional depositary lite
licence that will complement the Group's administration business with enhanced
services and revenue opportunities.
A depositary lite licence allows for the provision of a number of services
including cash flow monitoring, safekeeping of assets and ongoing oversight,
and will enable the Group to further strengthen its presence, collaborating
with complementary service providers such as AIFMs and legal firms, to expand
the Group's reach to new prospects, allowing to drive a significant increase
in revenue generating opportunities.
UAE
The asset management industry in GCC and UAE are both growing at a tremendous
speed. In particular, the DIFC has become one of the major financial centres
in the region where global family offices, asset managers and institutional
investors from Europe and Asia have a significant presence. The Group has
been administrating funds managed by asset managers and family offices based
there since 2021. As AMIF's client base continues to grow in UAE, it has
become strategically important to have a local presence. In March 2023, the
Group started the application process for a Category 4 license in DIFC which
would allow for provision of fund administration services to DIFC established
funds. The application process is on track, and AMIF expects to update the
market in H1 2024 on its progress.
Other strategic markets
AMIF continually assesses and pursues a range of expansion opportunities.
These plans had included a fund administration licence application in the
Republic of Ireland, but due to a change in market dynamics the Group has
decided to look at other opportunities that will represent a better return for
shareholders. AMIF's appraisals of the viability of other jurisdictions have
identified opportunities in fast-growing emerging markets including AIFC in
Kazakhstan and also in Saudi Arabia. The application in AIFC commenced in
late 2023 and is now at an advanced stage and the Group expects to update the
market in H1 2024 on its progress.
Growth plans
AMIF is expanding across all its key markets as part of a plan to accelerate
its growth ambitions, both organically and through mergers and acquisitions.
Organically, the Group will continue to provide a comprehensive and tailored
range of services - including fund set up and structuring, fund
administration, investor services, assurance and governance services all of
which are underpinned by market-leading technology solutions that support our
clients across the value chain, from a single point of contact.
The growing complexity in regulatory and reporting demands presents
opportunities for its Governance and Compliance business, prompting plans to
expand services into areas such as ESG and ERM, aiming to become a leading
provider in these fields. A major portion of IPO proceeds were set aside for
this purpose, to develop new product and service offering, increase
marketability and build up a team of experienced and qualified officers.
In 2023, the Group invested into the development of an online AML/CFT
e-learning tool, targeting all the directors, officers and employees who are
associated with a Cayman Islands fund or investment management company. The
tool was launched in March 2024 and can be subscribed to as an additional
revenue stream under the Group's G&C business.
Investment in IT
The Group has always been committed to rolling out automated and innovative
digital solutions that deliver greater operational and cost-saving
efficiencies for fund managers, and equip them with the data and insights they
need to be compliant and make better informed decisions on their investments.
Following the Group's listing, AMIF used certain of the IPO proceeds to start
the development of a cloud-based onboarding platform which streamlines the
onboarding of investors for fund managers, ensures key information is more
accessible, accurate and secure, and better connects the people that matter
when it comes to administrating their fund.
AMI-GO was launched in March 2024, as the new platform developed in-house that
provides fund managers with a centralised source of information about their
funds and their investors, allowing them to retrieve and upload financial,
corporate and legal documents - such as Subscription forms, Source of Fund
declarations and KYC and/or AML records. This tool opens up direct lines of
communication between fund managers, investors and their Amicorp Fund Services
team.
In parallel, the Group continued its NAV automation process within its
existing IT system, as the enhancement of system capability and use of
advanced technology play a crucial role to the operational and financial
success of the Group.
In FY23, each operational staff member managed an average of seven and a half
funds, but with improved IT systems, this is expected to rise to eleven funds
per person by FY25E. This efficiency enhancement could lead to significant
cost savings and drive the growth of gross profit margins, as staff costs are
a major expense for AMIF, accounting for 56.0% of total revenue in FY23.
Inorganic growth
AMIF's business development is primarily driven by organic growth, with its
sales teams in MEAI, Europe, and LATAM playing a crucial role. Moving
forward, the Group is expected to continue this trajectory, simultaneously
seeking suitable targets for M&A to bolster its growth.
The Group's strategy for inorganic growth through acquisitions is centred on
several key objectives:
1. Enhancing Incremental EBITDA: Targeting acquisitions that will
contribute positively to the Group's EBITDA.
2. Expanding Sales and License Networks: Acquiring entities that will
expand AMIF's sales and license networks, thereby increasing its market reach
and capabilities.
3. Acquiring Skilled Personnel: Focusing on targets that can bring in
skilled workers, particularly in sales and operations, to strengthen AMIF's
workforce.
4. Adding Economies of Scale: Integrating acquisitions that can bring
economies of scale to AMIF's current operational model, improving
cost-efficiency.
5. Strengthening Service Delivery Platform: Enhancing AMIF's existing
service delivery platform, both in terms of efficiency and in the scope and
quality of services offered.
6. Extending Client Base: Seeking acquisitions that will allow AMIF to
expand its client base, contributing to long-term growth and market
diversification.
For future acquisitions, AMIF will strategically select targets that align
with these objectives, ensuring that each acquisition is a step towards
enhancing its market position, operational efficiency, and overall
profitability. Its immediate focus is to identify opportunities that can
expand its client base, strengthen its sales and license networks, and
facilitate entry into new markets.
Financial Performance Overview
The Group benefits from stable and non-cyclical revenue streams, largely
attributed to ongoing contracts with both open-ended and closed-ended fund
clients. Open-ended fund clients offer perpetual contractual relationships,
with their longevity contingent on avoiding substantial redemptions. In
contrast, closed-ended fund clients typically engage in fixed-term investments
with possible extensions (e.g., an initial three-year term with options for a
three-year and a further one-year extension, or other durations as outlined in
the fund's PPM). The usual duration of these closed-ended fund contracts
ranges from five to seven years.
Revenue for the Group is primarily derived from fees based on a percentage of
AUM, subject to a minimum fee threshold. Alternatively, it can be a
combination of a fixed minimum fee plus a variable component also based on
AUM.
Consistent Recurring Revenues
AMIF's revenue is characterised by its predictability and regularity,
underpinned by strong client retention. The Group's role as a fund
administrator affords it up-to-date financial insights on its clients, which
aids in reducing the risk of unpaid fees.
Cashflow visibility
To comply with AML and KYC regulations in various jurisdictions, the Group, in
its role as fund administrator, holds significant control over clients' bank
accounts, either as the sole or joint signatory. This control extends to
treasury management, where the Group manages and approves payments to entities
like asset managers, legal advisors, auditors, custodians, and other service
providers. This management of fund accounts not only limits bad debt but
also enhances AMIF's cash flow visibility and management, crucial for meeting
financial obligations. The Group's approach to client service is marked by
transparency, especially regarding fees, which minimises disputes over
charges.
Automation and improvement of profit margin
Since establishing a fund administration team in Bangalore in 2007, AMIF has
focused on automating operations and improving efficiency. This has allowed
the Group to manage an increasing number of funds without a significant rise
in costs, thus maintaining or improving profit margins. Despite almost
doubling the number of fund clients from 284 in 2020 to 501 in 2023, the
Group's direct costs have only increased by around 23.8%. This economy is
attributed to continuous technological advancements and partnerships,
essential for our scalability and further operational efficiency.
Client development
Client retention
AMIF's fund clients and client structures typically have a lifespan of between
five to ten years. Due to the nature of the Group's business, it is
difficult for its clients to replace service providers such as the Group once
they have been engaged for fund administration services. Transferring
services to another provider involves time-consuming legal and administrative
processes and additional costs for funds.
Diversification of client base
The Group has significant diversification of revenue from over 500 fund
clients and client structures. Except for the Group's arrangement with
Amicorp Group pursuant to the Intragroup Outsourcing Agreement, there is no
concentration on revenue and the Group's top ten fund clients and structures
have remained below 10% of revenue for each of the last four years.
Cash position
As at the end of 2023, AMIF had circa US$3 million cash in hand whilst
remaining debt free. The successful IPO on the London Stock Exchange in June
2023 raised over US$6.4 million of fresh capital for AMIF. The Group has
already started to allocate the proceeds from listing towards IT investments
and business developments. This includes expanding the sales team, obtaining
new licences and expanding the Group's Governance and Compliance services
division.
People/workforce/employees
Senior management change
In December 2023, the Group appointed Robin Hoekjan, a Dutch national with
more than a decade of fund industry expertise, as Chief Operating Officer, a
non-Board position.
Having started his career as a Derivatives Trader in a proprietary trading
firm at the Amsterdam Stock Exchange, Robin subsequently ascended through
various roles in fund management firms, encompassing portfolio management and
deal making in listed securities, private equity, and venture capital.
Transitioning to the fund service sector, he has worked in Amsterdam,
Luxembourg, London, and Dubai, as well as occupying several management
positions within Intertrust Group and TMF Group, including Head of Depositary,
Head of Fund Services, and Global Head of Onboarding and Investor AML/KYC.
Robin is expected to contribute to the continuous enhancement of efficiency
across the global offices of the Group. His experience and expertise will
drive operation efficiency and IT advancement, aiming to equip the Group and
its operational team to handle larger mandates. Pursuant to Robin's
appointment, Kiran Kumar will remain in his position as Executive Director of
AMIF, but has shifted his focus towards the development and promotion of the
Group's key new business initiatives, particularly the accounting and
back-office support services given his significant background in accounting
and finance.
Outlook
Subsequent to the year end of FY23, the Group has continued to grow the number
of funds under administration with a total of 30 new wins as of the date of
this report.
The Group is poised to benefit from converting its pipeline of funds into
active funds, with an emphasis on appreciating the potential launch rate and
acknowledging the lag in revenue conversion. This transformation will be
bolstered by AMIF's ongoing expansion into new geographies, particularly with
revenues starting to flow from previous investments in regions like Mexico,
UAE, Luxembourg, Hong Kong and Singapore.
Although it has put temporary pressure on short-term profitability, the Group
regularly reviews its strategies and closely monitors its results, in order to
achieve long-term sustainable growth and future competitiveness.
In addition, there is an expectation of growth in revenues from ancillary
services driven by global regulatory updates. The aim is to establish the
Group as a leading provider of these services and a comprehensive solution for
AMIF's clients, which will be further enhanced by any additional acquisitions.
These strategic moves and growth areas give the Board confidence in the
recovery of margins.
Over the next twelve months, the Group also intends to expand its portfolio of
value-added services. A key aspect of this plan is to offer CFO and CFO
assist services to clients within the current BPO framework. The goal is to
elevate existing service contracts from basic bookkeeping and accounting to
more comprehensive management reporting and CFO assist services, and to extend
these enhanced services to new external clients including but not limited to
asset or fund managers, family offices and investment entities.
Operationally, the Group is transitioning towards automating its fund
administration processes. Utilising some of the IPO proceeds, the Group
invested into the development of AMI-GO, an automated self-onboarding tool for
fund manager and investor. Followed by its successful launch in March 2024,
AMI-GO is expected to streamline operations, improve compliance, enhance
communication, and contribute to a positive user experience, ultimately
benefiting both the Group and its clients. Alongside this, the Group is
continually evaluating its IT infrastructure to identify further opportunities
for technology integration to enhance operational efficiency.
Chi Kin Lai
Chief Executive Officer
30 April 2024
Financial Review
Key Performance Indicators (KPIs)
The Group uses a number of both IFRS and non-IFRS KPIs to measure its
performance. The Group operates a framework whereby the same KPIs are
monitored throughout the business - be that at divisional or jurisdictional
level. These KPIs used may not be directly comparable with similarly titled
measures used by other companies.
The Group constantly reviews its management information and KPIs to ensure
that the Board has adequate and appropriate oversights of the business. The
Group also plans to introduce necessary non-financial KPIs in FY24.
IFRS KPIs
Revenue and segment results are reviewed by the Group on a regular basis to
assess performance. These are assessed at a Group, divisional and
jurisdictional level. These KPIs are monitored against budgets and targets.
For details of IFRS KPIs, please refer to the Financial Overview section.
Non-IFRS KPIs
The principal non-IFRS KPIs that the Directors believe have had, and will
continue to have, a material effect on its operations, results and financial
condition include:
· Client base;
· Payroll and remuneration costs as a percentage of revenue; and
· Operational efficiency.
Client Base
FY23 FY22
Number of funds at start of year 444 393
New funds 104 105
Funds terminated (47) (54)
Number of funds at year end 501 444
The number of funds administered is impacted by the ability of the Group and
its sales officers to obtain new fund clients. The Group has been partially
reliant on receiving new client introduction and work referrals from Amicorp
Group and its affiliated businesses, and from the Group's established referral
relationships with on-shore and off-shore legal advisers, asset management
businesses, independent advisors and consultants, accounting firms and other
professional intermediaries.
Over the course of 2023, the total number of funds has grown organically at an
annualised rate of 12.8% from 444 on 1 January 2023 to 501 on 31 December
2023, laying a solid foundation for the future growth of Fund Administration.
While the number of new wins was comparable to 2022, the Group has experienced
similar level of terminations in 2023 arising from the continuous effects of
the following factors:
· Withdrawal of investors' commitment or investment owing to unfavourable market
conditions;
· Voluntary closure of funds due to restructuring or changes in investment
strategy; and
· Cancellation because of difference in risk appetite.
It is also important to note that a major portion of recurring income from
fund administration services is only realised upon successful fund launch.
The timing of fund launch is influenced by external factors like fund raising
capability of fund managers, approval process of relevant authorities,
economic conditions and market sentiment. 297 out of 501 funds were active as
at 31 December 2023, representing an 8.4% increase as compared to 274 active
funds as at 31 December 2022.
Payroll and remuneration costs as a percentage of revenue
The largest expense incurred by the Group relates to payroll and remuneration
costs, which comprise of salaries and wages and discretionary bonuses that are
paid to staff that meet their respective targets.
The Group monitors payroll and remuneration costs as a percentage of revenue,
with the historical trend as follows:
FY23 FY22
US$'000 US$'000
Payroll and remuneration costs 7,178 5,397
Revenue 12,814 11,909
Payroll and remuneration costs as a percentage of revenue 56.0% 45.3%
Payroll and remuneration costs increased by US$1.8 million, or 33.0%, to
US$7.2 million in FY23, compared to US$5.4 million in FY22.
The major incremental payroll and renumeration costs represents the Group's
increased investment in sales employees to enhance its outreach to potential
customers in strategic locations including Hong Kong, Curacao, Chile, Mexico
and Brazil. The Group's operation team was also strengthened to provide
adequate workforce, capability, and expertise to cope with new business
opportunities arising from the continuous sales and marketing efforts,
together with local fiscal, tax, and economic reforms.
The expansion in these offices is vital to building a pipeline for future
organic growth. As committed during the IPO and in line with the adopted
business strategies, such investment in human capital is expected to continue
in 2024. Although it has put temporary pressure on short-term probability,
the Group regularly reviews its strategies and closely monitors its results,
in order to achieve long-term sustainable growth and future competitiveness.
Operational efficiency
Operational efficiency is another key metric the Group regularly reviews in
order to maximise resource utilisation and drive down costs. The Group has
policies in place where it is mandatory for client facing and back office
employees (together, 'Operational Employees') to submit timesheets on a weekly
basis so that the Group can better monitor employees' time spent on standard
tasks.
The Group measures operational efficiency of its Fund Administration division
by computing the number of funds handled by each Operational Employee under
that division ('Fund Operational Employee'):
FY23 FY22
Number of funds 501 444
Number of Fund Operational Employees 67 61
Number of funds per Operational Employee 7.5 7.3
The number of funds handled by each Operational Employee has increased
slightly from 7.3 in 2022 to 7.5 in 2023. Such improvement represents the
result of the Group's efforts in standardisation of workflow, system
automation and enhancement of operation process.
The Group believes that the successful maintenance of such level of
operational efficiency is essential to display the scalable characteristic of
its business model. It also lays the foundation for AMIF to execute its
organic and inorganic growth strategies.
Group Income Statement for the Year Ended 31 December
2023 2022(1)
US$'000 US$'000
Revenue 12,814 11,909
Payroll and remuneration costs (7,178) (5,397)
Rent and occupancy (430) (783)
Professional fees (1,068) (356)
IT expenses (657) (547)
IPO expenses (952) (906)
Foreign currency gain 5 28
Other operating expenses (1,607) (692)
EBITDA 927 3,256
Other gains - 38
Interest income 99 -
Finance costs (89) (39)
Depreciation on tangible assets (284) (128)
Profit before income tax 653 3,127
Income tax expense (667) (829)
Net (loss) / profit for the year (14) 2,298
(1) These comparative figures were extracted from the historical financial
information published in the Group's prospectus dated 5 June 2023.
Reconciliations from these historical financial information to the IFRS
comparatives are presented in Reconciliations of Comparatives after the
primary financial statements.
Adjusted EBITDA
The EBITDA figures shown above includes IPO costs which are deemed to be
extraordinary. By excluding these, the management believes that the adjusted
EBITDA could precisely reflect the performance of the Group's ordinary
business operation, as shown below:
Year ended 31 December
2023 2022
US$'000 US$'000
Reported EBITDA 927 3,256
IPO costs 952 906
Adjusted EBITDA 1,879 4,162
Adjusted EBITDA margins 14.7% 34.9%
The Group experienced a decline in adjusted EBITDA margins in FY23 reflecting
the significant investment being made in both the sales and operation teams.
This continuous process is fundamental to driving sustained long-term growth
and creating future opportunities for the Group.
Post-listing expenses
Included in EBITDA and adjusted EBITDA, the Group incurred post-listing
expenses amount to US$943k which represent one-time or recurring expenses
arising from listing obligations which was dependent on successful
admission. Examples of post-listing expenses include the carved-out
subscription to certain IT systems such as finance and accounting systems,
Microsoft licenses and hosting services.
Effective from Admission, the Group also incurred additional expenses such as
statutory listing fee, professional indemnity insurance which were previously
covered by Amicorp Group, as well as the engagements of ongoing professional
advisers for listing rule compliance.
These expenses are expected to continue in medium to long term. Their impact
on profitability are believed to be compensated by the long-term benefits
arising from the IPO, as described in the Chief Executive's Statement above.
Revenue
Revenue by operating segments
Year ended 31 December
2023 2022
US$'000 US$'000
Fund administration 7,927 7,823
Governance and compliance 1,305 814
Business process outsourcing 3,582 3,272
Total 12,814 11,909
Revenue in FY23 increased by 7.6% to US$12.8 million (FY22: US$11.9 million),
which was contributed by:
· Fund Administration revenue increased by 1.3% to reach
US$7.9 million in FY23 (FY22: US$7.8 million). Despite the increase in the
net number of funds as compared to 2022, the Group was partly affected by
investors redeeming or withdrawing interest in operating funds, reduced
investor transaction activities and closed funds vulnerable to uncertain
market conditions. Fund launches also slowed down due to challenges in fund
raising amid global inflation and interest rate staying at an uncomfortably
high level. However, the Group continued to prove its strength in client
retention and stability of recurring revenue from its diversified client base.
· Governance and Compliance Services revenue increased by
60.3% to US$1.3 million in FY23 (FY22: US$0.8 million), which is in line with
the increase in AML officer and directorship mandates to 400+ in FY23 from
300+ mandates in FY22, predominantly associated with the Group's fund clients
domiciled in the Cayman Islands and Luxembourg. The growth in FY23 was a
result of multi-directional efforts in securing the mandates from existing
customers under the enhanced regulatory environment and a well-defined revenue
model, which relies on a packaged service fee that covers the defined minimum
statutory requirements for each mandate, plus a variable time-spent fee for
value-added services to fulfil the relevant fiduciary responsibilities. The
Group has been engaging in proactive marketing of this business line,
intending to widen the service offerings and create value for its clients.
· Business Process Outsourcing Services revenue experienced
an increase of 9.5% to US$3.6 million in FY23 (FY22: US$3.3 million). In
Luxembourg, the Group boasts a well-equipped corporate services
infrastructure, positioning itself as a reliable one-stop solution for
comprehensive fund structure formation and ongoing administrative support. The
sales team is specifically directed to capitalise on opportunities in
Luxembourg that combine both fund administration and corporate services.
Alongside with the growing revenue from corporate services from external
client entities, the revenue from the Intragroup Outsourcing Agreement with
Amicorp Group picked up in the second half of 2023, benefitting from the
increased client base followed by the efficiency transformation campaign to
enhance operational synergy between its Business Process Outsourcing and Fund
Administration teams.
Revenue by geography
The following table summarises the revenue by geography for the year ended 31
December 2022 and 2023:
FY23 FY22
US$'000 US$'000
LATAM 2,446 2,027
Europe 3,211 2,920
MEAI(1) 7,157 6,962
12,814 11,909
(1) MEAI refers to geographical region of Middle East, Asia and India.
The Group has experienced a welcome diversification of its revenues, from MEAI
to Europe. Such movement is in line with the Group's expectation and helps
supports the long-term business goal by reducing the impact of short-term
market volatility, allowing the Group's portfolio to benefit from the growth
potential of different geographic regions over time and reducing country
specific risks, individual sector challenges and everyday competitive
pressures.
Divisional Performance Review
For the year ended 31 December 2023 ('FY23')
Fund Administration Business Process Outsourcing Governance and Compliance Total
US$'000 US$'000 US$'000 US$'000
Revenue 7,927 3,582 1,305 12,814
Direct staff costs (2,710) (254) (478) (3,442)
Other direct costs (553) - - (553)
Gross profit 4,664 3,328 827 8,819
Gross profit margins 58.8% 92.9% 63.4% 68.8%
For the year ended 31 December 2022 ('FY22')
Fund Administration Business Process Outsourcing Governance and Compliance Total
US$'000 US$'000 US$'000 US$'000
Revenue 7,823 3,272 814 11,909
Direct staff costs (2,581) (293) (273) (3,147)
Other direct costs (514) - - (514)
Gross profit 4,728 2,979 541 8,248
Gross profit margins 60.4% 91.0% 66.5% 69.3%
Fund Administration segment delivers gross profit margin of 58.8% in FY2023,
and 60.4% in FY2022. These result from the Group's additional investment in
the form of additional experienced Production Employees, as well as extra
modules to existing fund administration systems. These increased investments
aim to drive additional business wins and revenue growth in the segment from
2024 and onwards.
Business Process Outsourcing segment consistently delivers gross profit margin
of more than 90% during the years ended 31 December 2022 and 2023. The Group
intends to maintain similar results from this segment mainly through its
continuous collaboration with Amicorp Group.
The Governance and Compliance segment delivers gross profit margins of 63.4%
and 66.5% in FY2023 and FY2022 respectively. It could be attributable to the
increase in direct staff costs arising from employment of additional senior
compliance experts in Luxembourg, Curacao, India, and Mauritius as part of the
Group's increased focus in the promotion and broadening of its governance and
compliance services. This foundation of a senior compliance team was
considered as a building block to the upcoming growth of the segment.
Payroll and renumeration costs
Payroll and remuneration costs increased by US$1.8 million, or 33.0%, to
US$7.2 million in FY23, compared to US$5.4 million in FY22.
Please refer to non-IFRS KPIs section above for details of movement of payroll
and remuneration costs.
Rent and occupancy
Rent and occupancy includes cost recharged by Amicorp Group for their
subletting and property service rendered to the Group based on various
intercompany service agreements. At the same time, the Group charged to
depreciation expenses in accordance with the adoption of IFRS16 for its four
leases with third party landlords.
The decrease of rent and occupancy by US$353k, or 45.1% to US$430k in FY23
compared to US$783k in FY22 was partially compensated by the increase in
depreciation expenses because of the newly acquired third party lease in Hong
Kong and Chile.
Professional fees
Professional fees represent accounting, audit and tax compliance service fees
for certain subsidiaries of the Group, legal fees for licensing application
and legalisation of documents, as well as professional outsourcing relating to
ordinary business.
The increase of professional fees by US$712k, or 200% to US$1.1 million in
FY23 compared to US$356k in FY22 was attributed to the provision of Group
audit fee, additional statutory audit and tax reporting obligations of newly
incorporated subsidiaries and the application of fund administration license
in DIFC of Dubai. In addition, the Group also undertook temporary
engagements with external compliance services providers in Malta in H1-22 to
support local statutory compliance matters, which were duly completed pursuant
to the relevant regulatory approval granted by MFSA.
IT expenses
IT expenses comprise of the fees incurred for the use of the fund
administration systems, Bloomberg terminal and other business-related systems.
IT expenses increased from US$547k in FY22 to US$657k in FY23 because of the
newly incurred cloud hosting service for the fund administration system, and
fee increment for the use of other systems.
Other operating expenses
Other operating expenses consists of sales and marketing expenses, travelling
expenses, statutory fees, office expenses, and other administrative expenses.
The increase in other operating expenses to US$1.6 million in FY23 from
US$692k in FY22 was due to increased travelling expenses arising from
extensive overseas sales meetings and inter-office visits. Furthermore, the
Group also actively pursued business development activities including
subscription to a financial database, participation in professional
associations, and the organisation and sponsorship of business development
events.
The Group also observed a modest increase in bad debt provision and write-off.
This adjustment reflects our commitment to conservative accounting practices
and our proactive approach to addressing potential credit risks within the
receivables.
As is customary for professional services firms, the Group obtained its own
requisite professional indemnity insurance post admission to protect its
business in the event of claims.
Income tax expense
The estimated income tax expense decreased in FY23 to US$667k (FY22: $829k),
along with the movement in the profit before income tax.
Included in the income tax expense for FY23, the Group recognised a US$139k
portion that is notional and presentational, under the merger accounting
principles to treat its newly incorporated Luxembourg subsidiary as if it had
always been with the Group ('notional tax expense').
Excluding such notional tax expense, the Group's effective tax rate as a
percentage of profit before income tax in FY23 was 80.1% (FY22: 26.5%). Such
increase is due to the non-deductible nature of the increased IPO costs in
FY23, as well as the operating results of the developing offices in Mexico and
Brazil. The Group has accumulated unused tax losses of US$4.8 million for
which no deferred tax assets have been recognised (FY22: US$3.2 million).
Such tax losses, if utilised, could benefit the tax position of the Group in
the future.
Earnings per share ('EPS')
Basic and diluted EPS decreased to (US$0.01) cents in FY23 from US$1.9 cents
in FY22.
Stephen Wong
Chief Financial Officer
30 April 2024
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
Year ended 31 December
Notes 2023 2022
Audited Unaudited
US$'000 US$'000
Revenue 5 12,814 9,892
Payroll and remuneration costs 7 (7,178) (4,504)
Rent and occupancy (430) (555)
Professional fees 8 (1,068) (356)
IT expenses (657) (547)
Depreciation expenses (284) (128)
IPO expenses (952) (906)
Foreign exchange gain 5 28
Other operating expenses 6 (1,607) (684)
Operating profit 643 2,240
Other gains - 38
Interest income 99 -
Interest costs (89) (39)
Profit before income tax 653 2,239
Income tax expense 9 (667) (601)
Net (loss) / profit after tax (14) 1,638
Earnings per ordinary shares (Note 26) US$ US$
Cent Cent
Basic EPS (0.01) 1.44
Diluted EPS (0.01) 1.44
CONSOLIDATED STATEMENT OF TOTAL COMPREHENSIVE INCOME
Year ended 31 December
Notes 2023 2022
Audited Unaudited
US$'000 US$'000
Net (loss) / profit after tax (14) 1,638
Other comprehensive gain
Foreign currency translation (175) 38
Total comprehensive income (189) 1,676
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December
Notes 2023 2022
Audited Unaudited
US$'000 US$'000
Non-current assets
Property, plant and equipment 10 106 76
Intangible assets 11 83 -
Right of use assets 17 440 364
Investments 58 61
Deferred tax assets 9 232 263
919 764
Current assets
Trade receivables 12 2,860 1,521
Other receivables, deposits and prepayments 13 637
561
Amounts due from related companies 22 3,711 4,374
Cash and cash equivalents 14 2,973 875
10,105 7,407
Total assets 11,024 8,171
Current liabilities
Trade payables 15 151 201
Accrued payroll and employee benefits 18 459 288
Other payables and accruals 16 840 143
Lease liabilities 17 183 146
Deferred consideration payable 16 - 213
Income tax payable 9 472 1,117
2,105 2,108
Net current assets 8,000 5,299
Total assets less current liabilities 8,919 6,063
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CONTINUED)
As at 31 December
Notes 2023 2022
Audited Unaudited
US$'000 US$'000
Non-current liabilities
Lease liabilities 17 304 237
304 237
Total liabilities 2,409 2,345
NET ASSETS 8,615 5,826
Equity
Share capital 20 120 114
Share premium 5,989 -
Foreign exchange reserves (375) (200)
Merger reserves 3,164 2,410
Distributable reserves - 2,569
Retained earnings (283) 933
Total equity 8,615 5,826
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share capital Share premium Forex translation Merger reserves Retained earnings Distributable reserves Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Audited
As at 1 January 2023 114(1) - (200) 2,410 933 2,569(4) 5,826
Share additions 6 6,462(2) - - - - 6,468
Directly attributable costs - (473)(3) - - 53(3) - (420)
Pre-listing Dividends (Note 21) - - - - (837)(5) (2,569)(5) (3,406)
Merger reserve additions & elimination - - - 329 (6) (418) - (89)
Profit for the period - - - 425(6) (14) - 411
Foreign currency translation - - (175) - - - (175)
As at 31 December 2023 120 5,989 (375) 3,164 (283) - 8,615
Share capital Share premium Forex translation Merger reserves Retained earnings Distributable reserves Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Unaudited
As at 1 January 2022 114(1) - (238) 2,244 874 1,202 4,196
Merger reserve additions and eliminations(5) - - - 166(6) (211) - (45)
Profit for the period - - - - 1,637 - 1,637
Transferred to distributable reserve - - - - (1,367) 1,367 -
Foreign currency translation - - 38 - - - 38
As at 31 December 2022 114 - (200) 2,410 933 2,569 5,826
( )
(1)This represents the share capital of the Company, immediately prior to
being inserted as a holding company of the Group described in Note 2(a). The
share capital amounted to US$62k on its incorporation date being 3 March 2023,
and increased to US$114k on 23 May 2023 due to additional share issuance.
According to the merger accounting principles outlined in Note 3(c), the Group
is treated as if the Company, together with its subsidiaries, had collectively
existed and been merged throughout the current and comparative accounting
periods, and hence this share capital of US$114k is presented as the opening
balance on consolidation.
(2) On 8 June 2023, the Company successfully raised gross proceeds of US$6.47
million through a placing of 6,468,000 ordinary shares, at the par value of
US$0.001 each share. The difference between the placing price and the nominal
value of the shares constitutes the share premium.
(3) The total amount of US$473k, which represents incremental costs directly
associated with the issuance of new shares, is deducted from equity, in line
with IAS 32. Out of this total, US$53k had already been expensed in prior
years, contributing to the success of share issuances in 2023, and therefore
is reclassified from retained earnings to share equity, as a result. See
accounting policies in Note 3(n).
(4) The opening balance represents certain net earnings of prior years
according to the carve-out principles of the HFI included in the listing
prospectus dated 5 June 2023, at the time when the Group was previously not
yet formed as a separate standalone legal entity or group of entities.
(5) Pre-listing dividends of US$3.4m had been declared by Amicorp Fund
Services Asia Limited, before the Company, Amicorp FS (UK) Plc, was inserted
on 26 May 2023 as the holding company of the Group, in line with the listing
prospectus dated 5 June 2023.
(6) Merger accounting is used for the Company inserted as the holding company
of the Group, by way of receiving transferred shares of certain entities under
common control as part of the carve-out reconstruction, given the ultimate
controlling parent has remained the same. This merger reserve represents the
excess of received entities' net assets over the transfer consideration, under
the predecessor method. The details regarding the accounting policy for the
merger reserve are described in Note 3(c).
CONSOLIDATED STATEMENT OF CASH FLOWS
As at 31 December
2023 2022
Audited Unaudited
US$'000 US$'000
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax 653 2,239
Adjustments for:
Depreciation of tangible assets 44 17
Amortisation of intangible assets 11 -
Depreciation of right of use assets 228 111
Recognition / (reversal) of doubtful debt provision 153 (3)
Bad debt recognised 193 -
Provision for group audit fees 500 -
Finance costs 89 39
Foreign exchange gain (5) (28)
Fair value gain from an investment measured at FVTP&L - (38)
1,866 2,337
Increase in trade receivables (1,680) (275)
Decrease in other receivables, deposits and prepayments 231 328
Decrease / (increase) in amounts due from related companies 698 (1,651)
Increase in accrued payroll and employee benefits 171 46
(Decrease) / increase in trade payables (45) 125
Increase / (decrease) in other provisions and payables 197 (12)
Cash generated from operations 1,438 898
Income tax paid to tax authorities (1,015) (477)
Income tax settled through amounts due from related companies(1) (141) (301)
Net cash flows generated from operating activities 282 120
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of tangible and intangible assets (167) (71)
Settlement of deferred considerations (including unwinding interests) (261) -
Net cash flows used in investing activities (428) (71)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from a placing of additional ordinary shares, net of costs 5,898 -
Repayment of unwinding interest portion of lease liabilities (40) (30)
Repayment of principal portion of lease liabilities (200) (87)
Net cash flows generated from / (used in) financing activities 5,658 (117)
Non-cash transaction:
Pre-IPO dividends in specie (3,406) -
NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS 2,106 (68)
Cash and cash equivalents at beginning 875 937
Foreign exchange difference (8) 6
CASH AND CASH EQUIVALENTS AT END OF YEAR 2,973 875
( )
(1) (These tax settlements were dealt via the Amicorp Group before the IPO
carve-out completion in May 2023. See Note 9(b) for the tax details.)
Reconciliation tables below of financial information for the year ended 31
December 2022 are included to demonstrate the consolidated comparatives in
conjunction with the Group's Historical Financial Information ('HFI') included
in the listing prospectus dated 5 June 2023, for the same financial year and
as at the same financial year end.
RECONCILIATION OF COMPARATIVES
Consolidated Unaudited Statement of Total Comprehensive Income
for the year ended 31 December 2022
Adjustment
As per Historical Financial Information published in prospectus Exclusion of AFS Luxembourg based on IFRS(1) As per consolidated statement of total comprehensive income in this Report
US$'000 US$'000 US$'000
Revenue 11,909 (2,017) 9,892
Payroll and remuneration costs (5,397) 893 (4,504)
Rent and occupancy (783) 228 (555)
Professional fees (356) - (356)
IT expenses (547) - (547)
Depreciation expenses (128) - (128)
IPO expenses (906) - (906)
Foreign exchange gain 28 - 28
Other operating expenses (692) 8 (684)
Operating profit 3,128 (888) 2,240
Other gains 38 - 38
Interest costs (39) - (39)
Profit before income tax 3,127 (888) 2,239
Income tax expense (829) 228 (601)
Net profit after tax 2,298 (660) 1,638
(1) This represents a portion of a subsidiary in Amicorp Group brought into
AFS Group under the carve-out principles presented in the historical financial
information ("HFI"), and it is excluded from the IFRS based comparatives in
the consolidated financial statements of this annual report given that AFS
Luxembourg is accounted for under the prospective approach described in Note
3(c).
RECONCILIATION OF COMPARATIVES (CONTINUED)
Consolidated Unaudited Statement of Financial Position as at 31 December 2022
Adjustments
As per Historical Financial Information published in prospectus Exclusion of AFS Luxembourg based on IFRS Consolidation adjustments(1) As per consolidated statement of financial position in this Report
US$'000 US$'000 US$'000 US$'000
Assets
Non-current assets
Property, plant and equipment 76 - - 76
Right of use assets 364 - - 364
Investment measured at FVTP&L 62 - (1) 61
Deferred tax assets 263 - - 263
765 - (1) 764
Current assets
Trade receivables 1,521 - - 1,521
Other receivables, deposits and prepayments 637 - - 637
Amounts due from related companies 7,781 (2,095) (1,312) 4,374
Cash and cash equivalents 875 - - 875
10,814 (2,095) (1,312) 7,407
Total assets 11,579 (2,095) (1,313) 8,171
Liabilities
Non-current liabilities
Lease liabilities 237 - - 237
Current liabilities
Trade payables 201 - - 201
Accrued payroll and employee benefits 288 - - 288
Other payables and accruals 129 - 14 143
Lease liabilities 146 - - 146
Deferred consideration payable 213 - - 213
Income tax payable 1,117 - - 1,117
2,094 - 14 2,108
Total liabilities 2,331 - 14 2,345
Net assets 9,248 (2,095) (1,327) 5,826
Equity
Share capital 946 - (832) 114
Foreign exchange reserves (142) - (58) (200)
Merger reserves - - 2,410 2,410
Distributable reserves - (2,095) 4,664 2,569
Retained earnings 8,444 - (7,511) 933
Total equity 9,248 (2,095) (1,327) 5,826
( )
(1) the historical financial information for the financial year ended 31
December 2022 included in the prospectus was prepared under the combination
method since the legal structure of the Group was not yet formed. For the
consolidated financial statements of this annual report, such historical
information as comparatives is adjusted with consolidation eliminations where
appropriate. For details, please see Note 2(a) and Note 3(c).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL
These annual financial statements for the year ended 31 December 2023 are the
audited consolidated financial statements for Amicorp FS (UK) Plc and its
subsidiaries; the comparatives within these consolidated financial statements
including the disclosure notes (i.e. for the financial year ended 31 December
2022) are unaudited. Amicorp FS (UK) Plc (the 'Company'), a public limited
company incorporated and domiciled in the United Kingdom with its company
number being 14704124 under the Companies Act 2006, together with its
subsidiaries (collectively, the 'Group'), is a provider of fund administration
services, regulatory reporting, fiduciary services and multi-faceted business
support alternatives for hedge funds, private equity funds and family offices
investing in listed or unlisted equities, financial instruments, projects,
real estate and various asset classes locally or globally.
The Group also offers administration and fiduciary services to special purpose
vehicles associated with fund structures or entities with passive investment
on financial instruments.
The address of the Company's registered office is 5 Lloyd's Avenue, London,
United Kingdom, EC3N 3AE.
The financial information included in this preliminary statement of results
does not constitute statutory accounts within the meaning of Section 435 of
the Companies Act 2006 (the "Act"). The financial information for the year
ended 31 December 2023 has been extracted from the statutory accounts on which
an unqualified audit opinion has been issued. Statutory accounts for the year
ended 31 December 2023 will be delivered to the Registrar of Companies in
advance of the Group's annual general meeting.
2. BACKGROUND AND BASIS OF PREPARATION
(a) Background and purposes of the consolidated financial
information
The Group is a business division of Amicorp Group, which is a multinational
organisation providing, in addition to fund administration services, a broad
range of corporate management, capital market and financial services to
clients globally with a dedicated network of international experts and
specialists.
Since year 2018, newly incorporated subsidiaries of the Group and former
subsidiaries of Amicorp Group entered into multiple conditional agreements for
the sale and purchase of the respective equity share capital of such former
subsidiaries, being a set of fund administration services within Amicorp
Group.
The Group was not formed of a separate standalone legal group of entities, and
the Company was incorporated on 3 March 2023 and inserted as the holding
company of the Group on 26 May 2023.
As announced on 5 June 2023, the Company successfully raised gross proceeds of
US$6.47 million through a placing of 6,468,000 new ordinary shares, with a
further placing of 9,702,000 existing ordinary shares that raised US$9.70
million. On 8 June 2023, the Company was successfully admitted to the Main
Market of the London Stock Exchange, as a holding company of the Group.
The insertion of the Company as the holding company of the Group constitutes a
carve-out reconstruction involving transfer of shares in the Group's entities,
in which merger accounting is applied. Accordingly, the consolidated
financial statements of the Group are prepared as if the Company, together
with its subsidiaries, collectively had already existed before the start of
the earliest period presented. The comparative information is, therefore,
presented as if the carve-out reconstruction had already occurred, and it has
been derived from the HFI included in the listing prospectus, primarily
adjusted for the demerger equity, reserve and consolidation adjustments,
except for Amicorp Fund Services Luxembourg S.A ("AFS Luxembourg"); AFS
Luxembourg was incorporated as a new legal entity in the Luxembourg
jurisdiction during the current financial year and transferred to the Group as
a subsidiary, and the carved-out portion related to AFS business in Luxembourg
included in the HFI are now excluded from the comparatives, in order to be in
compliance with the IFRS reporting framework (See Note 3c). Reconciliations
from the historical financial information to the IFRS comparatives are
presented in Reconciliations of Comparatives after the primary statements.
This first-time consolidated financial statements ("annual financial
statements") of Amicorp FS (UK) Plc, for the year ended 31 December 2023, have
been prepared in accordance with International Accounting Standards ("IAS"),
the requirements of the Companies Act 2006 and UK-adopted International
Financial Reporting Standards ("IFRS"), including the interpretations issued
by the IFRS Interpretations Committee ("IFRIC"). These consolidated
financial statements, which are audited, should be read in conjunction with
the Group's Historical Financial Information ('HFI') as at and for the year
ended 31 December 2022 included in the listing prospectus dated 5 June 2023,
which is available on the Group's website.
The accounting policies adopted are consistent with those adopted by the Group
in the HFI included in the listing prospectus. The consolidated financial
statements are presented in thousands of US Dollars ('US$'000') unless
otherwise indicated and prepared under the historical cost convention and
based upon the accounting policies disclosed below.
Under the merger accounting principles, these consolidated financial
statements of the Group are presented as if the Company, with its
subsidiaries, had always existed at its earliest period even though the
Company was incorporated in 2023.
The comparatives within these consolidated financial statements including
disclosure notes (i.e. for the financial year ended 31 December 2022) are
unaudited, with consistency in the accounting policies with those applied to
the audited financial information for the year ended 31 December 2023.
Where applicable, the Group has taken into account and implemented IFRS
standards, along with any related interpretations and amendments, which were
issued and effective as of 1 January 2023. The Group has not chosen to adopt
any standards, interpretations, or amendments before their effective date.
While there have been some new amendments effective in 2023, they are not
considered to impact the consolidated financial statements.
(b) Entities included within the Group
The financial position and financial performance of the following entities are
included as part of the consolidated financial statements:
Amicorp Fund Services Asia Limited(1)
Amicorp Fund Services (Asia) Pte. Ltd.
Amicorp (Shanghai) Consultants Ltd.
Amicorp Fund Services N.V.
Amicorp Fund Services N.V. (Barbados Branch)
Amicorp Fund Services N.V. (Bahamas Branch)
Administradora de Fondos de Inversión Amicorp S.A.
Amicorp Administradora General de Fondos SA (formerly known as ECUS
Administradora General de Fondos SA)
AFS BRASIL LTDA.
Soluciones y Servicios AFS México, S.A. de C.V.
Amicorp Fund Services Malta Limited
Amicorp Support Services Ltd
Amicorp Fund Services (Mumbai) Private Limited(1)
Amicorp Fund Services (Mumbai) Private Limited (Bangalore Branch)
Amicorp Fund Services (Cyprus) Ltd
Amicorp Fund Services Luxembourg S.A(1)
(1) Shares of these entities were transferred to the Company during the
financial year ended 31 December 2023, as part of the reconstruction process
for the Company inserted as the holding company of the Group described in Note
2a. These entities are accounted for under the merger accounting approach
described in Note 3c, and included in the consolidated financial statements.
(c) Basis of measurement and going concern assumption
The consolidated financial statements have been prepared under the historical
cost basis except for certain financial assets and liabilities which are
measured at fair value in accordance with UK-adopted IFRS and IAS. The
measurement bases are fully described in the accounting policies below.
The material accounting policies that have been used in the preparation of the
consolidated financial statements are summarised below. These policies have
been consistently applied to years and periods presented unless otherwise
stated.
It should be noted that accounting estimates and assumptions are used in
preparation of the consolidated financial statements. Although these estimates
are based on management's best knowledge and judgment of current events and
actions, actual results may ultimately differ from those estimates. The area
involving a higher degree of judgment or complexity, or areas where
assumptions and estimates are significant to the consolidated financial
statements, are disclosed in note 4.
Going concern
The Group raised US$6.5 million in the current financial year, which enriches
its working capital. The Directors are satisfied that the Group has sufficient
resources to continue in operation for the foreseeable future, a period of not
less than 12 months from the date these financial statements are issued.
Accordingly, they continue to adopt the going concern basis in preparing the
consolidated financial statements.
In assessing going concern, the Directors considered the Group's cash flows,
solvency and liquidity positions, and have considered a range of scenarios as
part of the assessment; Directors considered the reasonably worst case
scenario by applying adverse assumptions on key business metrics which
presumes fund launch rate and attrition rate of new funds and existing
launching funds respectively being 50% worse than those in the normal
scenarios, as a reverse stress test. In this reasonably worst scenario, the
net current assets and cash and bank equivalence are projected to remain
positive throughout the going concern period.
As at the year ended 31 December 2023, the Group had cash and cash equivalents
of US$3.0 million (31 December 2022: US$0.9 million) and net current assets of
US$8.0 million (31 December 2022: US$5.3 million), and the IPO expenses of
$952k in the current financial year are not anticipated since the listing has
been completed, which the Directors believe will be sufficient to maintain the
Group's liquidity over the going concern period (i.e. at least 12 months from
the date of issue of these financial statements), including continued
investments to meet existing financial commitments and to deliver future
growth.
(d) Functional and presentation currency
Items included in the financial information of each of the Group's entities
are measured using the currency of the primary economic environment in which
the entity operates (the 'functional currency'). The presentational currency
of the Group is United States Dollars ('US$'), and hence the financial
information is presented in US$, unless specified otherwise.
In the individual financial statements of the Group's entities, foreign
currency transactions are translated into the functional currency of the
individual entity using the exchange rates prevailing at the dates of the
transactions. At the reporting date, monetary assets and liabilities
denominated in foreign currencies are translated at the foreign exchange rates
ruling at the reporting date. Foreign exchange gains and losses resulting
from the settlement of such transactions and from the reporting date
retranslation of monetary assets and liabilities are recognised in profit or
loss.
Non-monetary items carried at fair value that are denominated in foreign
currencies are retranslated at the rates prevailing on the date when the fair
value was determined and are reported as part of the exchange revaluation gain
or loss. Non-monetary items that are measured in terms of historical cost in
a foreign currency are not retranslated.
In the consolidated financial information, all individual financial statements
of foreign operations, originally presented in a currency different from the
Group's presentation currency, have been converted into US$. Assets and
liabilities have been translated into US$ at the closing rates at the
reporting dates. Income and expenses have been converted into US$ at the
exchange rates ruling at the transaction dates, or at the average rates over
the reporting year provided that the exchange rates do not fluctuate
significantly. Any differences arising from this procedure have been dealt
with separately in other comprehensive income and the translation reserves in
equity.
3. ACCOUNTING POLICIES
(a) Basis of consolidation
On consolidation, the results and financial position of foreign operations are
translated into the presentation currency of the Group, as follows:
· Assets and liabilities for the consolidated statement of financial position
presented are translated at the closing rate at the reporting date;
· income and expense items are translated at exchange rates ruling at the date
of the transactions;
· all resulting exchange differences are recognised in other comprehensive
income (foreign exchange reserves); and
· cash flow items are translated at the exchange rates ruling at the date of the
transaction
Inter-company transactions and balances between group companies together with
unrealised profits are eliminated in full in preparing the consolidated
financial statements. Unrealised losses are also eliminated unless the
transaction provides evidence of impairment on the asset transferred, in which
case the loss is recognised in profit or loss.
The results of subsidiaries acquired or disposed of, if any, during the year
are included in the consolidated statement of comprehensive income from the
dates of acquisition or up to the dates of disposal, as appropriate. Where
necessary, adjustments are made to the financial statements of subsidiaries to
bring their accounting policies into line with those used by other members of
the Group.
Acquisition of subsidiaries or businesses is accounted for using the
acquisition method. The cost of an acquisition is measured at the aggregate
of the acquisition-date fair value of assets transferred, liabilities
incurred, and equity interests issued by the Group, as the acquirer. The
identifiable assets acquired, and liabilities assumed are principally measured
at acquisition-date fair value. The Group's previously held equity interest
in the acquiree is re-measured at acquisition-date fair value and the
resulting gains or losses are recognised in profit or loss. The Group may
elect, on a transaction-by-transaction basis, to measure the non-controlling
interests that represent present ownership interests in the subsidiary either
at fair value or at the proportionate share of the acquiree's identifiable net
assets. All other non-controlling interests are measured at fair value
unless another measurement basis is required by IFRSs. Acquisition-related
costs incurred are expensed unless they are incurred in issuing equity
instruments in which case the costs are deducted from equity.
Any contingent consideration to be transferred by the acquirer is recognised
at acquisition-date fair value. Subsequent adjustments to consideration are
recognised against goodwill only to the extent that they arise from new
information obtained within the measurement period (a maximum of 12 months
from the acquisition date) about the fair value at the acquisition date. All
other subsequent adjustments to contingent consideration classified as an
asset or a liability are recognised in profit or loss.
Changes in the Group's interests in subsidiaries that do not result in a loss
of control are accounted for as equity transactions. The carrying amounts of
the Group's interest and the non-controlling interest are adjusted to reflect
the changes in their relative interests in the subsidiaries. Any difference
between the amount by which the non-controlling interest is adjusted and the
fair value of the consideration paid or received is recognised directly in
equity and attributed to owners of the Group.
When the Group loses control of a subsidiary, the profit or loss on disposal
is calculated as the difference between (i) the aggregate of the fair value of
the consideration received and the fair value of any retained interest and
(ii) the previous carrying amount of the assets (including goodwill), and
liabilities of the subsidiary and any non-controlling interest. Amounts
previously recognised in other comprehensive income in relation to the
subsidiary are accounted for in the same manner as would be required if the
relevant assets or liabilities were disposed of.
(b) Subsidiaries
A subsidiary is an investee over which the Group is able to exercise control.
The Group controls an investee if all three of the following elements are
present: power over the investee, exposure, or rights, to variable returns
from the investee, and the ability to use its power to affect those variable
returns. Control is reassessed whenever facts and circumstances indicate
that there may be a change in any of these elements of control.
(c) Merger accounting
Merger accounting is used for the Company inserted as the holding company of
the Group, by way of receiving transferred shares of certain entities under
common control as part of the carve-out reconstruction described in Note 2(a),
given the ultimate controlling parent has remained the same. This method
treats the Company, together with its subsidiaries, as if they had been merged
throughout the current and comparative accounting periods.
The net assets of the consolidated entities or businesses use the existing
book values from the controlling parties' perspective. No amount is
recognised in consideration for goodwill or excess of acquirers' interest in
the net fair value of acquiree's identifiable assets, liabilities and
contingent liabilities over cost at the time of the carve-out reconstruction,
to the extent of the continuation of the controlling parties' interest.
When the Company was inserted as the holding company of the Group, the excess
of the carrying amount of integrated net assets over the consideration to
Amicorp Group is represented as a merger reserve in equity in the consolidated
statement of financial position, under the predecessor method.
AFS Luxembourg was incorporated as a new legal entity in the Luxembourg
jurisdiction during the current financial year and transferred to the Group as
a subsidiary. As the transaction is considered as an acquisition of trade and
assets, merger accounting principles have been applied prospectively, i.e.
without the necessity for restating pre-combination figures and from the date
of the common control transfer of the trade and assets into the AFS Luxembourg
business without restating the comparatives for that business to before that
date. AFS Luxembourg is entitled for all the economic benefits and costs of
its AFS business in Luxembourg effective from 1 January 2023. The consolidated
statement of financial statements are prepared under merger accounting
principles to include such transactions from 1 January 2023, accounting for
this AFS Luxembourg business as if it had always been with the Group.
Transaction costs, including professional fees, registration fees, costs of
furnishing information to shareholders, costs or losses incurred in operations
of the previously separate businesses, etc., incurred in relation to the
carve-out reconstruction that are to be accounted for by using merger
accounting are recognised as an expense in the financial year in which they
are incurred.
(d) Tangible assets
Tangible assets are stated at cost less accumulated depreciation and
accumulated impairment losses.
The cost of tangible asset includes its purchase price and the costs directly
attributable to the acquisition of the items.
Subsequent costs are included in the asset's carrying amount or recognised as
a separate asset, as appropriate, only when it is probable that future
economic benefits associated with the item will flow to the Group and the cost
of the item can be measured reliably. The carrying amount of the replaced
part is derecognised. All other repairs and maintenance are recognised as an
expense in profit or loss during the financial period in which they are
incurred.
Tangible assets are depreciated so as to write off their cost or valuation net
of expected residual value over their estimated useful lives on a
straight-line basis. The useful lives, residual value and depreciation
method are reviewed, and adjusted if appropriate, at the end of each reporting
period. The useful lives are as follows:
Machinery and
equipment 3 - 10 years
Furniture and
fixtures 3 - 10 years
Motor
vehicles
3 - 5 years
Leasehold
improvements in line with lease terms
An asset is written down immediately to its recoverable amount if its carrying
amount is higher than the asset's estimated recoverable amount.
The gain or loss on disposal of an item of tangible assets is the difference
between the net sale proceeds and its carrying amount, and is recognised in
profit or loss on disposal.
(e) Intangible assets
Costs associated with maintaining software programmes are recognised as an
expense as incurred. Costs that are directly attributable to the identifiable
software are recognised as intangible assets.
The Group amortises intangible assets with a limited useful life, using the
straight-line method over the following periods:
IT
software
3 - 5 years
The useful life is assessed by considering technological advancements,
industry trends, evolving needs, and the overall pace of innovation in the
relevant market.
(f) Financial instruments
(i) Financial assets
A financial asset (unless it is a trade receivable without a significant
financing component) is initially measured at fair value plus, for an item not
at fair value through profit or loss ("FVTPL"), transaction costs that are
directly attributable to its acquisition or issue. A trade receivable
without a significant financing component is initially measured at the
transaction price.
All regular way purchases and sales of financial assets are recognised on the
trade date, that is, the date that the Group commits to purchase or sell the
asset. Regular way purchases or sales are purchases or sales of financial
assets that require delivery of assets within the period generally established
by regulation or convention in the market place.
Financial assets with embedded derivatives are considered in their entirely
when determining whether their cash flows are solely payment of principal and
interest.
Investments
It represents an investment in an equity fund classified as a financial asset
measured at fair value through profit or loss, given that it was not elected
by management at inception to recognise fair value gains and losses through
OCI; the Group held 2,386 units of Series B in Fondo De Inversion Ecus
Agri-food, which is a Chilean public fund regulated by the Chilean Financial
Market Commission ("CMF"), with aims to generate long-term capital
appreciation from its investment portfolio for food and agricultural products,
and the units of Series B held by the Group represent 1.69 per cent of the
total units issued by the fund.
The Group's valuation technique used for this investment is the net asset
value, based on the ratio of the units held over the total unit issued by the
fund.
The fair value hierarchy of this investment is considered as level 1, given
that the fund is required to report its net asset value to the CMF on a
quarterly basis, following the guidelines provided by the CMF for the fair
value inputs. The fair value of the investment recognised by the Group is
measured as at reporting dates.
Debt instruments
Subsequent measurement of debt instruments depends on the Group's business
model for managing the asset and the cash flow characteristics of the asset.
The Group only has the following type of debt instruments:
Amortised cost: Assets that are held for collection of contractual cash
flows and the cash flows represent solely payments of principal and interest
are measured at amortised cost. Financial assets at amortised cost are
subsequently measured using the effective interest rate method. Interest
income, foreign exchange gains and losses and impairment are recognised in
profit or loss. Any gain on derecognition is recognised in profit or loss.
(ii) Impairment loss on financial assets
The Group recognises loss allowances for expected credit loss ('ECL') on trade
receivables and other receivables that are financial assets measured at
amortised cost. The ECLs are measured on either of the following bases: (1)
12 months ECLs: these are the ECLs that result from possible default events
within the 12 months after the reporting date: and (2) lifetime ECLs: these
are ECLs that result from all possible default events over the expected life
of a financial instrument. The maximum period considered when estimating
ECLs is the maximum contractual period over which the Group is exposed to
credit risk.
ECLs are a probability-weighted estimate of credit losses. Credit losses are
measured as the difference between all contractual cash flows that are due to
the Group in accordance with the contract and all the cash flows that the
Group expects to receive. The shortfall is then discounted at an
approximation to the assets' original effective interest rate.
The Group has elected to measure loss allowances for trade and other
receivables using IFRS 9 simplified approach and has calculated ECLs based on
lifetime ECLs. The Group has established a provision matrix that is based on
the Group's historical credit loss experience, adjusted for forward-looking
factors specific to the debtors and the economic environment.
For other financial assets, such as amount due from related companies,
deposits and other current assets, the ECLs are based on the 12-months ECLs.
However, when there has been a significant increase in credit risk since
origination, the allowance will be based on the lifetime ECLs.
When determining whether the credit risk of a financial asset has increased
significantly since initial recognition and when estimating ECL, the Group
considers reasonable and supportable information that is relevant and
available without undue cost or effort. This includes both quantitative and
qualitative information analysis, based on the Group's historical experience
and informed credit assessment and including forward-looking information.
The Group assumes that the credit risk on a financial asset has increased
significantly if it is more than 30 days past due.
The Group considers a financial asset to be credit-impaired when: (1) the
counterparty is unlikely to pay its credit obligations to the Group in full,
without recourse by the Group to actions such as realising security (if any is
held); or (2) the financial asset is more than 30 days past due.
Interest income on credit-impaired financial assets is calculated based on the
amortised cost (i.e., the gross carrying amount less loss allowance) of the
financial asset. For non-credit impaired financial assets interest income is
calculated based on the gross carrying amount.
(iii) Financial liabilities
The Group classifies its financial liabilities, depending on the purpose for
which the liabilities were incurred. Financial liabilities at fair value
through profit or loss are initially measured at fair value and financial
liabilities at amortised costs are initially measured at fair value, net of
directly attributable costs incurred.
Financial liabilities at amortised cost
Financial liabilities at amortised cost including trade and other payables are
subsequently measured at amortised cost.
Gains or losses are recognised in profit or loss when the liabilities are
derecognised as well as through the amortisation process.
Financial liabilities at fair value through P&L
Any deferred consideration, arising from business acquisitions, is measured at
fair value at the date of acquisition. If an obligation to pay deferred
consideration that does not meet the definition of an equity instrument is
remeasured at fair value at each reporting date and subsequent changes in the
fair value of the deferred consideration are recognised in profit or loss.
(iv) Effective interest method
The effective interest method is a method of calculating the amortised cost of
a financial asset or financial liability and of allocating interest income or
interest expense over the relevant period. The effective interest rate is
the rate that exactly discounts estimated future cash receipts or payments
through the expected life of the financial asset or liability, or where
appropriate, a shorter period.
(v) Equity instruments
Equity instruments issued by the Group are recorded at the proceeds received,
net of direct issue costs.
(vi) Derecognition
The Group derecognises a financial asset when the contractual rights to the
future cash flows in relation to the financial asset expire or when the
financial asset has been transferred and the transfer meets the criteria for
derecognition in accordance with IFRS 9.
Financial liabilities are derecognised when the obligation specified in the
relevant contract is discharged, cancelled or expires.
(g) Revenue recognition
Revenue from contracts with customers is recognised when control of goods or
services is transferred to the customers at an amount that reflects the
consideration to which the Group expects to be entitled in exchange for those
goods or services, excluding those amounts collected on behalf of third
parties. Revenue excludes value added tax or other sales taxes and is after
deduction of any trade discounts.
Depending on the terms of the contract and the laws that apply to the
contract, control of the goods or service may be transferred over time or at a
point in time. Control of the goods or service is transferred over time if
the Group's performance:
• provides all of the benefits received and consumed simultaneously by the
customer;
• creates or enhances an asset that the customer controls as the Group
performs; or
• does not create an asset with an alternative use to the Group, and the
Group has an enforceable right to payment for performance completed to date.
If control of the goods or services transfers over time, revenue is recognised
over the period of the contract by reference to the progress towards complete
satisfaction of that performance obligation; for instance, certain services
are activities performed to fulfil AFS's continuous integrated fund
administrative service and the benefits consumed by the client are
substantially the same for each monthly service (i.e. 12 distinct instances of
admin service provision) and the corresponding revenue is being recognised
every month. Otherwise, revenue is recognised at a point in time when the
customer obtains control of the goods or service.
Where the contract contains a financing component which provides a significant
financing benefit to the Group, revenue recognised under that contract
includes the interest expense accreted on the contract liability under the
effective interest method. For contracts where the period between the
payment and the transfer of the promised goods or services is one year or
less, the transaction price is not adjusted for the effects of a significant
financing component, using the practical expedient in IFRS 15.
Revenue comprises the provision of fund administration services, regulatory
and compliance services and also business process outsourcing services. Fund
administration services represent fund onboarding, registrar and transfer
agency and NAV calculation, and preparation of financial statements;
regulatory and compliance and business process outsourcing include services of
AML, directorship, board support, FATCA, CRS and other tax reporting. These
fund services revenues are recognised when the relevant services are rendered
and the customer simultaneously receives and consumes the benefits provided.
(h) Income taxes
Income taxes for the year comprise current tax and deferred tax.
Current tax is based on the profit or loss from ordinary activities adjusted
for items that are non-assessable or disallowable for income tax purposes and
is calculated using tax rates that have been enacted or substantively enacted
at the end of the reporting year.
Deferred tax is recognised in respect of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes
and the corresponding amounts used for tax purposes. Except for recognised
assets and liabilities that affect neither accounting nor taxable profits,
deferred tax liabilities are recognised for all taxable temporary
differences. Deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which deductible
temporary differences can be utilised. Deferred tax is measured at the tax
rates appropriate to the expected manner in which the carrying amount of the
asset or liability is realised or settled and that have been enacted or
substantively enacted at the end of reporting period.
Deferred tax liabilities are recognised for taxable temporary differences
arising on investments in subsidiaries, except where the Group is able to
control the reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future.
Income taxes are recognised in profit or loss except when they relate to items
recognised in other comprehensive income in which case the taxes are also
recognised in other comprehensive income or when they relate to items
recognised directly in equity in which case the taxes are also recognised
directly in equity.
The Group has assessed Deferred Tax related to Assets and Liabilities arising
from a Single Transaction (Amendments to IAS 12) effective from 1 January
2023, where applicable, which narrows the scope of the initial recognition
exemption to exclude transactions that give rise to equal and offsetting
temporary differences. There was no impact on the statement of financial
position because the balances qualify for offset under paragraph 74 of IAS 12.
(i) Foreign currency
Transactions entered into by group entities in currencies other than the
currency of the primary economic environment in which it/they operate(s) (the
"functional currency") are recorded at the rates ruling when the transactions
occur. Foreign currency monetary assets and liabilities are translated at
the rates ruling at the end of the reporting year. Non-monetary items
carried at fair value that are denominated in foreign currencies are
retranslated at the rates prevailing on the date when the fair value was
determined. Non-monetary items that are measured in terms of historical cost
in a foreign currency are not retranslated.
Exchange differences arising on the settlement of monetary items, and on the
translation of monetary items, are recognised in profit or loss in the year in
which they arise. Exchange differences arising on the retranslation of
non-monetary items carried at fair value are included in profit or loss for
the period except for differences arising on the retranslation of non-monetary
items in respect of which gains and losses are recognised in other
comprehensive income, in which case, the exchange differences are also
recognised in other comprehensive income.
On consolidation, income and expense items of foreign operations are
translated into the presentation currency of the Group (i.e. United States
dollars) at the average exchange rates for the year, unless exchange rates
fluctuate significantly during the period, in which case, the rates
approximating to those ruling when the transactions took place are used. All
assets and liabilities of foreign operations are translated at the rate ruling
at the end of the reporting year. Exchange differences arising, if any, are
recognised in other comprehensive income and accumulated in equity as foreign
exchange reserve (attributed to non-controlling interests as appropriate).
Exchange differences recognised in profit or loss of group entities' separate
financial statements on the translation of long-term monetary items forming
part of the Group's net investment in the foreign operation concerned are
reclassified to other comprehensive income and accumulated in equity as
foreign exchange reserve.
On disposal of a foreign operation, the cumulative exchange differences
recognised in the foreign exchange reserve relating to that operation up to
the date of disposal are reclassified to profit or loss as part of the profit
or loss on disposal.
(j) Employee benefits
(i) Defined contribution retirement Contributions to defined
contribution retirement plans are recognised as an expense in profit or loss
when the services are rendered by the employees.
(ii) Termination benefits
Termination benefits are recognised on the earlier of when the Group can no
longer withdraw the offer of those benefits and when the Group recognises
restructuring costs involving the payment of termination benefits.
(k) Provisions and contingent liabilities
Provisions are recognised for liabilities of uncertain timing or amount when
the Group has a legal or constructive obligation arising as a result of a past
event, which it is probable will result in an outflow of economic benefits
that can be reliably estimated.
Where it is not probable that an outflow of economic benefits will be
required, or the amount cannot be estimated reliably, the obligation is
disclosed as a contingent liability, unless the probability of outflow of
economic benefits is remote. Possible obligations, the existence of which
will only be confirmed by the occurrence or non-occurrence of one or more
future events, are also disclosed as contingent liabilities unless the
probability of outflow of economic benefits is remote.
(l) Impairment of other assets
At the end of each reporting year, the Group reviews the carrying amounts of
the following assets to determine whether there is any indication that those
assets have suffered an impairment loss or an impairment loss previously
recognised no longer exists or may have decreased:
· tangible assets and intangible assets;
If the recoverable amount (i.e. the greater of the fair value less costs to
sell and value in use) of an asset is estimated to be less than its carrying
amount, the carrying amount of the asset is reduced to its recoverable amount.
An impairment loss is recognised as an expense immediately.
Where an impairment loss subsequently reverses, the carrying amount of the
asset is increased to the revised estimate of its recoverable amount, to the
extent that the increased carrying amount does not exceed the carrying amount
that would have been determined had no impairment loss been recognised for the
asset previously. A reversal of an impairment loss is recognised as income
immediately.
(m) Related parties
(a) A person or a close member of that person's family is
related to the Group if that person:
(i) has control or joint control over the Group;
(ii) has significant influence over the Group; or
(iii) is a member of key management personnel of the Group or
the Group's parent.
(b) An entity is related to the Group if any of the following
conditions apply:
(i) The entity and the Group are members of the same group
(which means that each parent, subsidiary and fellow subsidiary is related to
the others).
(ii) One entity is an associate or joint venture of the other
entity (or an associate or joint venture of a member of a group of which the
other entity is a member).
(iii) Both entities are joint ventures of the same third party.
(iv) One entity is a joint venture of a third entity and the other
entity is an associate of the third entity.
(v) The entity is a post-employment benefit plan for the benefit
of the employees of the group or an entity related to the Group.
(vi) The entity is controlled or jointly controlled by a person
identified in (a); or
(vii) A person identified in (a)(i) has significant influence over
the entity or is a member of key management personnel of the entity (or of a
parent of the entity).
(viii) The entity, or any member of a group of which it is a part,
provides key management personnel services to the Group or to the Group's
parent.
Close members of the family of a person are those family members who may be
expected to influence, or be influenced by, that person in their dealings with
the entity and include:
(i) that person's children and spouse or domestic partner;
(ii) children of that person's spouse or domestic partner; and
(iii) dependents of that person or that person's spouse or
domestic partner.
(n) Share capital
In accordance with IAS 32, expenses incurred specifically for issuing shares,
such as underwriting fees, are deducted from equity. Conversely, expenses
associated with listing on the stock market, such as listing fees, or those
not directly linked to issuing new shares, are recognised as expenses in the
income statement.
For costs that pertain to both share issuance and listing, such as legal fees,
they are allocated between these two functions in a reasonable and consistent
manner.
(o) Distributable reserve
It represents certain net earnings of prior years recognised according to the
carve-out principles of the HFI included in the listing prospectus, at the
time when the Group was previously not yet formed as a separate standalone
legal entity or group of entities.
4. KEY ACCOUNTING ESTIMATES
In the application of the Group's accounting policies, the directors are
required to make judgements, estimates and assumptions about the carrying
amounts of assets and liabilities that are not readily apparent from other
sources. The estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant. Actual
results differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period or in the period
of the revision and future periods if the revision affects both current and
future periods.
Key sources of estimation uncertainty
In addition to information disclosed elsewhere in this financial information,
other key sources of estimation uncertainty that have a significant risk of
resulting a material adjustment to the carrying amounts of assets and
liabilities within next financial year are as follows:
(i) Impairment of financial assets measured at amortised cost
Management estimates the amount of loss allowance for ECL on financial assets
that are measured at amortised cost based on the credit risk of the respective
financial asset. The loss allowance amount is measured as the difference
between the asset's carrying amount and the present value of estimated future
cash flows after taking into consideration of expected future credit loss of
the respective financial asset. The assessment of the credit risk of the
respective financial asset involves high degree of estimation and
uncertainty. When the actual future cash flows are different from expected,
a material impairment loss or a material reversal of impairment loss may
arise, accordingly.
(ii) Direct costs attributable to share issuance
The Group incurred various costs in issuing its own equity instruments, with
some portions identified as transaction costs. Transaction costs are
incremental expenses directly related to the equity transaction that would
have been avoided if the equity instruments had not been issued. These costs
associated with the equity transaction are accounted for as deductions from
equity.
There is a degree of judgement involved in determining which costs are
directly attributable to the equity transaction and in considering whether
these costs relate to the listing of new shares and existing shares, or the
issuances of new shares, and only the latter can be treated as a deduction
from equity. Common costs for both listing and share issuance have been
apportioned to equity by considering the percentage of shares newly issued at
the IPO (5%) in relation to the existing shares admitted for listing, as
applicable.
Overall, US$473k has been deducted from the share premium, US$420k of which is
transaction costs incurred during the current financial year ended 31 December
while the remaining amount of US$53k was the transaction costs incurred in
prior financial years.
(iii) Merger reserve
These consolidated financial statements involve the recognition and
measurement of merger reserves arising from business combinations under common
control when the Company was inserted in May 2023 into the Group as the
listing company for the AFS business. The measurement of merger reserves is
subject to estimations due to the complexity and judgment involved in
determining the value of net assets received via the receipt of shares in
certain subsidiaries transferred to the Company. Management exercises
professional judgment and utilises appropriate valuation methodologies to
determine the initial recognition and measurement of merger reserves. For
details, please see the accounting policy described in Note 3c.
(iv) Comparatives
The portion of the AFS business in Luxembourg included in the HFI prepared
under the carve-out principles has been excluded from the comparatives of
these consolidated financial statements to align with the IFRS reporting
framework, as outlined in Note 3c. Reconciliations from the historical
financial information to the IFRS comparatives are provided in Reconciliations
of Comparatives after the primary statements.
AFS Luxembourg was established as a new legal entity and transferred to the
Group as a subsidiary during the current financial year ended 31 December
2023, constituting an acquisition of trade and assets. In accordance with
merger accounting principles, this transaction is treated prospectively,
without restating pre-combination figures. Management has exercised judgment
in applying accounting standards and assessing the impact of opening balance
and comparative adjustments.
5. SEGMENTAL REPORTING
The Group's decision makers, consisting of the chief executive officer, chief
operating officer, the chief financial officer and managers for corporate
planning, examine the Group's performance from a fund service provider's
perspective and have identified three reportable segments of its business
under IFRS 8.
The reportable segments are identified as fund administration, business
process outsourcing and regulatory and compliance. Management primarily uses
a measure of net earnings by services to assess the performance of the
reportable segments.
The customer base is primarily institutional clients, including private equity
funds, family offices and hedge funds. No individual client in Fund
Administration and Governance and Compliance represents more than 2% of
revenue in the year ended 31 December 2023 (31 December 2022: same).
Year ended 31 December 2023 Revenue Direct Other Gross
staff cost direct costs profit
US$'000 US$'000 US$'000 US$'000
Fund Administration 7,927 (2,710) (553) 4,664
Business Process Outsourcing 3,582 (254) - 3,328
Governance and Compliance(1) 1,305 (478) - 827
Total 12,814 (3,442) (553) 8,819
Indirect staff costs (3,736)
Other operating expenses (3,488)
IPO expense (952)
Net finance income 10
Profit before income tax 653
Year ended 31 December 2022 Revenue Direct Other direct costs Gross
staff cost profit
US$'000 US$'000 US$'000 US$'000
Fund Administration 6,217 (2,038) (514) 3,665
Business Process Outsourcing 3,272 (293) - 2,979
Governance and Compliance(1) 403 (187) - 216
Total 9,892 (2,518) (514) 6,860
Indirect staff costs (1,986)
Other operating expenses (1,728)
IPO expense (906)
Other gains 38
Finance costs (39)
Profit before income tax 2,239
(1) Governance and Compliance services is formerly known as Regulatory and
Compliance services.
5. SEGMENTAL REPORTING (CONTINUED)
Geographical information
The amount of its revenue from external customers broken down by geographical
region of contracting entities in the Group is shown in the table below.
Geographical revenue
Year ended 31 December
2023 2022
US$'000
US$'000
LATAM 2,446 2,027
Europe 3,211 903
MEAI(1) 7,157 6,962
12,814 9,892
Geographical assets and liabilities
The total assets and liabilities by geographical region are shown as below:
Year ended 31 December 2023 Year ended 31 December
LATAM Europe MEAI(1) Consolidation elimination Total
US$'000 US$'000 US$'000 US$'000 US$'000
Total assets 2,894 4,281 11,318 (7,469) 11,024
Total liabilities 574 771 948 116 2,409
Year ended 31 December 2022 Year ended 31 December
LATAM Europe MEAI(1) Carve-out basis(2) Total
US$'000 US$'000 US$'000 US$'000 US$'000
Total assets 3,594 855 2,952 770 8,171
Total liabilities 612 311 1,422 - 2,345
(1) MEAI means the Group's operations in the geographical region of Middle
East, Asia and India.
(2) These represents carve-out adjustments for the HFI under the carve-out
principles described in Note 2a, and these balances are included in amounts
due from related companies in relevant historical financial years; the
counterparty is the parent of the wider group incorporated in Cyprus, and
these balances, post HFI, are expected to be reflected in corresponding
balance sheet accounts by geographical regions, near or upon the Group's
carve-out completion.
6. OTHER OPERATING EXPENSES
Year ended 31 December
2023 2022
US$'000 US$'000
Business development expenses (including travelling expenses) 595 373
Statutory fee expenses 78 48
Recognition/ (reversal) of doubtful debt provision(2) 153 (3)
Bad debt recognised(2) 193 -
Other overhead expenses 588(1) 266
1,607 684
(1) the increment mainly represents additional directors and officers
insurance costs of US$198k as part of the ordinary business activities.
(2) Recognition/(reversal) of doubtful debt provision represents the
estimation and adjustment of a provision for potential uncollectible debts,
and bad debt recognised is the specific amount of accounts receivable deemed
uncollectible and is hence written off as an expense.
7. PAYROLL AND REMUNERATION COSTS
Year ended 31 December
2023 2022
US$'000 US$'000
Employee costs (including directors) comprise:
Wages and salaries 6,985 4,375
Contributions on defined contribution retirement plans 19 33
Other employment benefits 174 96
7,178 4,504
Year ended 31 December
2023 2022
Average monthly number of employees 95 72
8. PROFESSIONAL FEES
The net increment includes an audit fee provision of US$500k, and such audit
services align with the statutory and listing requirements in the UK and other
relevant jurisdictions where the Group operates. The remaining increment of
US$212k is contributed mainly by financial analysis and reporting services and
also equity research services, along with recurring professional services for
SOC reports and statutory tax filings etc.
9. TAX
This note provides an analysis of the Group's current income tax and deferred
tax.
(a) Income tax expense
Year ended 31 December
2023 2022
US$'000 US$'000
Current income tax
Current tax on profits for the year 647 587
Deferred income tax
Deferred tax expense for the year (Note 9c) 20 14
Total income tax expenses 667 601
(b) Income tax payables
Year ended 31 December
2023 2022
US$'000 US$'000
Current income tax payable 472 1,117
In the respective financial years, tax expense or income recognised in other
comprehensive income amounted to nil, in addition to the income tax expenses
above charged to profit or loss. Also, there was no significant uncertain
tax position or tax-related contingency identified in the Group.
Reconciliation of income tax expense to prima facie tax payable
Year ended 31 December
2023 2022
US$'000 US$'000
Profit before income tax expense 653 2,239
Current tax charge at the UK average rate of 24.43% (2022: 19%) 160 425
Effects of material amounts that are not taxable/deductible in calculating
income tax: (2)
Use of brought forward losses unrecognised
Use of brought forward losses unrecognised (69) (47)
Non-deductible expenses 282 172
Losses not recognised 693 -
Fair value gain on an investment measured at FVTP&L - (7)
Difference in overseas tax rates(3) (399) 49
Others - 9
Income tax expenses 667 601
(2) The financial impact of standard non-deductible items, such as
depreciation and interest expenses, is considered insignificant in the Group,
and hence are excluded from the reconciliation.
(3) Income tax on overseas profits has been calculated on the estimated
assessable profit for the years at the respective tax rates prevailing in the
countries in which the Group operates.
9. TAX (CONTINUED)
Cyprus corporate tax has been provided at the rate of 12.5% (2022: 12.5%) on
the estimated assessable profits of the Group's operations in Cyprus.
Malta corporate tax has been provided at the rate of 35% (2022: 35%) on the
estimated assessable profits of the Group's operations in Malta.
Luxembourg corporate tax has been provided at the rate of 17% (2022: 17%) on
the estimated assessable profits of the Group's operations in Luxembourg.
India corporate tax has been provided at the rate of 25% (2022: 25%) on the
estimated assessable profits of the Group's operations in India. 25% is the
statutory rate of corporate income tax in India in this period although a
higher effective tax rate can apply to profit in this jurisdiction owing to
the application of surtaxes.
Hong Kong corporate tax has been provided at the rate of 16.5% (2022: 16.5%)
on the estimated assessable profits of the Group's operations in Hong Kong.
Singapore corporate tax has been provided at the rate of 17% (2022: 17%) on
the estimated assessable profits of the Group's operations in Singapore.
Chile corporate tax has been provided at the rate of 27% (2022: 27%) on the
estimated assessable profits of the Group's operations in Chile.
Curacao corporate tax has been provided at the rate of 3% (2022: 3%) on the
estimated assessable profits of the Group's operations in Curacao.
In the financial year ending on 31st December 2022, the Group's operations in
the United Kingdom made provisions for UK corporate tax at a rate of 19% on
the estimated assessable profits. Subsequently, in the financial year ending
on 31st December 2023, the corporate tax rate increased to 24.43%. This
increase is in line with the change in the UK corporation tax year, which
began on 1st April 2023 and introduced a higher corporate tax rate of 25%.
(c) Deferred tax assets
2023 2022
US$'000 US$'000
Balances as at 1 January 263 276
Deferred tax expense recognised (Note 9a) (20) (14)
Foreign exchange difference (11) 1
Balances as at 31 December 232 263
The deferred tax assets are recognised for the carry forward of unused tax
losses and unused tax credits to the extent that it is probable that future
taxable profit will be available against which the unused tax losses and
unused tax credits can be utilised.
The deferred tax assets provided relate to trading losses.
(d) Unused tax losses
2023 2022
US$'000 US$'000
Accumulated unused tax losses for which no deferred tax asset has been 4,792 3,191
recognised
Potential tax benefits at effective tax rates in respective years 1,358 922
The unused tax losses are seen in some entities within the Group, for which no
deferred tax asset has been recognised on the prudency basis, given the
unpredictability of profit streams and future economic benefits; unrecognised
tax losses of US$161k were utilised in 2023 (2022: $248k), and remaining
unrecognised tax losses can be carried forward indefinitely for future use.
(e) OECD reforms and developments
On 8 October 2021, 136 countries reached an agreement for a two-pillar
approach to international tax reform ('the OECD agreement'). Amongst other
things, Pillar One proposes a reallocation of a proportion of tax to market
jurisdictions, while Pillar Two seeks to apply a global minimum effective tax
rate of 15%.
Whilst the Group is below the size thresholds for these proposals to apply,
the OECD agreement is likely to see changes in corporate tax rates in a number
of countries in the next few years. The impact of changes in corporate tax
rates on the measurement of tax assets and liabilities depends on the nature
and timing of the legislative changes in each country, which will become known
and certain in the near future.
10. PROPERTY, PLANT AND EQUIPMENT
Machinery and equipment Furniture and fixtures Leasehold improvement Motor vehicles Total
US$'000 US$'000 US$'000 US$'000 US$'000
Cost
At 1 January 2023 51 38 51 44 184
Additions 24 - 53 - 77
Written off/disposals - - - - -
Exchange differences (1) - - - (1)
At 31 December 2023 74 38 104 44 260
At 1 January 2022 31 37 - 44 112
Additions 20 - 51 - 71
Written off/disposals - - - - -
Exchange differences - 1 - - 1
At 31 December 2022 51 38 51 44 184
Accumulated depreciation
At 1 January 2023 28 37 - 43 108
Charge for the year 10 1 32 1 44
Written off/disposals - - - - -
Exchange differences 2 - - - 2
At 31 December 2023 40 38 32 44 154
At 1 January 2022 25 37 - 29 91
Charge for the year 3 - - 14 17
Written off/disposals - - - - -
Exchange differences - - - - -
At 31 December 2022 28 37 - 43 108
Net book value
At 31 December 2023 34 - 72 - 106
At 31 December 2022 23 1 51 1 76
There were no tangible assets pledged as security by the Group in the years
ended 31 December 2023 and 2022.
11. INTANGIBLE ASSETS
During the financial year ended 31 December 2023, there were additions of IT
software for US$90k.
12. TRADE RECEIVABLES
As at 31 December
2023 2022
US$'000 US$'000
Trade receivables 3,079 1,599
Less: allowance for doubtful debts (219) (78)
2,860 1,521
The Group allows a credit period of 30 days upon the services rendered to
customers. Due to the short-term nature of the current trade receivables,
their carrying amounts are considered to be the same as their fair value.
Information about the Group's exposure to credit risk and foreign currency
risk can be found in note 24.
At 31 December, the ageing analysis of the trade receivables based on invoice
date is as follows:
As at 31 December
2023 2022
US$'000 US$'000
Up to 3 months 2,767 1,371
3 to 6 months 146 171
6 to 12 months 85 42
Over 1 year 81 15
3,079 1,599
Also, the following is an ageing analysis of trade receivables past due but
not impaired at 31 December:
As at 31 December
2023 2022
US$'000 US$'000
Up to 3 months 870 517
3 to 6 months 42 21
6 to 12 months 55 23
Over 1 year 68 13
1,035 574
12. TRADE RECEIVABLES (CONTINUED)
The Group applies the IFRS 9 simplified approach to measuring expected credit
losses which uses a lifetime expected loss allowance for all trade
receivables. In measuring the expected credit losses, receivables are
grouped based on their shared credit risk characteristics and numbers of days
past due. The expected credit losses on these trade receivables are
estimated using a provision rate based on the Group's historical credit loss
experience, adjusted for factors that are specific to the debtors, general
economic conditions and an assessment of both the current and the forecast
direction of conditions as at the reporting dates, including time value of
money where appropriate.
Up to 3 months 3 to 6 months 6 to 12 months Over 1 year Total
31 December 2023 US$'000 US$'000 US$'000 US$'000 US$'000
Expected credit loss rate 2.7% 13.7% 50.6% 98.8% 7.1%
Gross trade receivables 2,767 146 85 81 3,079
Loss allowance 76 20 43 80 219
Up to 3 months 3 to 6 months 6 to 12 months Over 1 year Total
31 December 2022 US$'000 US$'000 US$'000 US$'000 US$'000
Expected credit loss rate 4.2% 10.5% 9.5% 0% 4.9%
Gross trade receivables 1,371 171 42 15 1,599
Loss allowance 56 18 4 - 78
13. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS
As at 31 December
2023 2022
US$'000 US$'000
Accrued income 58 425
Deposits 47 35
Prepayments and other receivables 187 118
Receivables from IPO proceeds 150 -
VAT receivables 119 59
561 637
14. CASH AND CASH EQUIVALENTS
As at 31 December
2023 2022
US$'000 US$'000
Cash at bank and in hand 2,973 875
Cash and cash equivalents are denominated in the following currencies:
As at 31 December
2023 2022
US$'000 US$'000
United States dollar 2,255 111
Hong Kong dollar 3 123
Chilean Peso 515 480
Euro 162 124
Others 38 37
2,973 875
15. TRADE PAYABLES
As at 31 December
2023 2022
US$'000 US$'000
Trade payables 151 201
Trade payables represent payables to service providers. The credit period
granted by service providers is normally 30 days. The Group has financial
risk management policies in place to ensure that all payables are settled
within the credit time frame. Details are set out in note 24.
16. OTHER PAYABLES
As at 31 December
2023 2022
US$'000 US$'000
Current
Other payables and accruals 257 130
VAT payables 29 5
Group audit fee accruals 500 -
Payment in advance from customers 54 8
840 143
Deferred consideration - financial liabilities measured at FVTP&L
Current - 213
Non-current - -
- 213
(a) Deferred consideration
In October 2021, the Group acquired 100% of equity interests of Amicorp
Administradora General de Fondos SA (formerly known as ECUS Administradora
General de Fondos SA) for a total discounted consideration of CLP588 million
(US$706k), comprised of: (i) initial cash consideration of CLP417 million
(US$501k); (ii) discounted deferred cash consideration of CLP171 million
(US$205k) payable by no later than October 2023. The acquiree has been
accounted for as subsidiaries of the Group since the acquisition date.
In the financial year ended 31 December 2022, the deferred consideration due
to the seller was payable by October 2023, and the undiscounted payable amount
was the undiscounted deferred base payment of CLP 188m plus/minus CLP 60m
depending on the outcome of certain pre-acquisition tax credit claims
submitted by the seller to the local authorities in Chile, in accordance with
the acquisition agreement.
The deferred consideration was measured at FVTP&L, and the fair value was
remeasured at every reporting date. Also, the group's policy was to recognise
transfers into and out of fair value hierarchy levels as at the end of the
reporting period, and management decided that the deferred consideration was
classified as level 3, given the significant inputs were not based on
observable market data.
The valuation technique used was discounted cash analysis, with the following
table summarising the details:
Description Valuation techniques Significant inputs Sensitivity of the fair value measurement to input
Contingent consideration Discounted cash flow. Discount rate of 5.00% An increase in the discount rate of 100 basis points would decrease the fair
value by US$ 1.7k as at 31 December 2022.
Expected net cash outflows are estimated based on the terms of the share Expected undiscounted cash outflows of CLP 188.8m (US$ 221.8k)
purchase agreements and the group's expectations of outcomes of tax credit Management did not consider the value of expected future cash outflows would
claims. change materially during the next 12 months from 31 December 2022.
17. LEASES
This note provides information for leases where Group is a lessee within the
scope of IFRS 16.
In the prior year ended 31 December 2022, the Group entered into two more
office leases in January and June 2022 respectively, each with lease terms of
2 years and 3.5 years respectively. During the current financial year to 31
December 2023, an additional office lease was ascertained and commenced in
February for a lease term of 3 years.
The Group does not have options to purchase certain offices for a nominal
amount at the end of the lease term. Also, these leases do not contain
variable lease payments throughout the lease terms.
The total cash outflow for leases amount to US$240k in financial year ended 31
December 2023 (US$117k in 2022).
(i) Right of use assets
Office premise Office premise
2023 2022
US$'000 US$'000
Cost
At 1 January 475 262
Additions 304 239
Exchange differences - (26)
At 31 December 779 475
Accumulated depreciation
At 1 January 111 4
Depreciation for the year 228 111
Exchange differences - (4)
At 31 December 339 111
Net carrying balance as at 31 December 440 364
(ii) Lease liabilities
Office premises Office premises
2023 2022
US$'000 US$'000
At 1 January 383 260
Additions 304 234
Interest expense 40 30
Lease payments (240) (117)
Exchange differences - (24)
At 31 December 487 383
Discounted lease payments are due as follows:
2023 2022
US$'000 US$'000
Within one year 183 146
In between one and two years 197 118
In between two and five years 107 119
487 383
17. LEASES (CONTINUED)
Undiscounted lease payments are due as follows:
As at 31 December
2023 2022
US$'000 US$'000
Within one year 213 150
In between one and two years 214 132
In between two and five years 111 155
538 437
Less: Future finance charges (51) (54)
Lease liabilities 487 383
Disclosed as:
Current 183 146
Non-current 304 237
487 383
(iii) Short term leases
Short-term leases are leases with a lease term of 12 months or less without a
purchase option. Under IFRS 16, these leases are not included in right of
use assets or lease liabilities, and such lease expenses are recognised in
profit and loss when incurred; these short term leases are immaterial to the
Group in the financial year ended 31 December 2023 (2022: same).
18. ACCRUED PAYROLL AND EMPLOYEE BENEFITS
As at the year ended
Dec-2023 Dec-2022
US$'000 US$'000
Accruals for wages and social securities 265 53
Wage tax accruals 75 20
Long term services accruals 27 172
Leave accruals 92 43
459 288
19. FEES FOR COMPANY'S AUDITORS AND ITS ASSOCIATES
Year ended 31 December
2023 2022
US$'000 US$'000
Fees payable to the Company's auditor and its associates:
Audit of the company and consolidated financial statements 500 -
Audit of the company's subsidiaries 105 15
Total audit services 605 15
Non-audit services(1) 196 364
Other assurance services(1) 109 202
Total audit services, audit-related and other assurance services 910 581
(1)The non-audit services and other assurance services provided by the
Company's auditor and its associates are related to the other assurance
engagements for the Company's IPO, outside of statutory audit requirements.
20. SHARE CAPITAL
On 3 March 2023, the Company was established with an initial capital of GBP
50,000, which was divided into 5,000,000 ordinary shares valued at GBP 0.01
per share. Subsequently, on 4 April 2023, the share capital was converted to
US dollars at a rate of US$0.0124 per share, resulting in a total of
US$62,000. On 23 May 2023, this existing share capital was further divided
into 62,000,000 ordinary shares, each valued at US$0.001, while maintaining
the total share capital at US$62,000.
Moreover, additional allotments of 51,500,000 and 6,468,000 shares at US$0.001
each were made on 23 May 2023, and 8 June 2023, respectively, bringing the
total number of shares to 119,968,000, with a total value of US$119,968.
21. DIVIDENDS
Pre-listing dividends of US$3.4m had been declared by Amicorp Fund Services
Asia Limited, before the Company, Amicorp FS (UK) Plc, was inserted on 26 May
2023 as the holding company of the Group, in line with the listing prospectus
dated 5 June 2023.
22. RELATED PARTIES TRANSACTIONS
(a) Transactions with Amicorp Group
The following transactions were carried out with related parties who are
members of Amicorp Group.
Year ended 31 December
2023(1)
US$'000
Revenue 3,231
Rental and remuneration expenses 1,031
Interest income derived from term deposits 35
(1)Comparatives are excluded, given the Group had not been legally
incorporated during the financial year ended 31 December 2022. Transactions
with Amicorp Group under the carve-out principles in the historical financial
years are included in the HFI of the listing prospectus dated 5 June 2023.
As at 31 December
2023 2022
US$'000 US$'000
Amounts due from related parties 3,711 4,374
Bank balances with Amicorp Bank Trusts 76 38
Term deposits with Amicorp Bank Trusts 505 -
The expected credit loss assessment does not have a material impact on the
carrying amount of the amounts due from related companies, and no bad debt
allowance associated with these balances was recognised.
(b) Transactions with related parties other than Amicorp Group
There has been no related party other than Amicorp Group that the Group enters
into transactions with, related to fund administrative business, throughout
the current financial year (prior year: same). The Group's transactions are
conducted on an arm's length basis.
(c) Transactions with key management personnel, remuneration and other
compensation
Executive members of the board (Executive Directors) are recognised as being
key management personnel who are those persons having authority and
responsibility for planning, directing and controlling the activities of the
Group, directly or indirectly.
The summary of compensation of key management personnel is as follows:
For the year ended 31 December
2023 2022
US$'000 US$'000
Salaries and short-term benefits 823 648
Information on the remuneration of both the Executive Directors and
Non-Executive Directors (including their respective interests in shares of the
Company) is given in the remuneration report of this annual report.
23. CAPITAL RISK MANAGEMENT
The Group's objectives on managing capital are to finance its operations with
its owned capital and to safeguard the Group's ability to continue as a going
concern in order to provide returns for major stakeholders. The Group monitors
the sufficiency of capital based on the positions of cash, net current assets
and also total net assets.
Lease liabilities are not considered as debts for capital risk management
given that corresponding right of use assets are recognised at inception for
the equivalent amounts. There have been no external debts in both financial
years ended 31 December 2022 and 31 December 2023, and the mentioned financial
positions remain positive at a healthy level.
24. FINANCIAL RISK MANAGEMENT
The Group's major financial instruments include trade receivables, other
receivables, deposit and prepayments, amounts due from related companies, cash
and cash equivalent, and trade payables which are disclosed in respective
notes. The risks associated with these financial instruments include
liquidity risk, foreign currency risk, credit risk and interest rate risk.
The policies on how to mitigate these risks are set out below. The
management team manages and monitors these exposures to ensure appropriate
measures are implemented on a timely and effective manner.
(a) Liquidity risk
Individual operating entities within the Group are responsible for their own
cash management, including the uses of cash surpluses, to cover expected cash
demands, subject to approval by management when involved amounts exceeds
certain predetermined levels of authority. The Group's policy is to
regularly monitor its liquidity requirements and its compliance with lending
covenants, to ensure that it maintains sufficient reserves of cash to meet its
liquidity requirements in the short and longer term.
The following tables show the remaining contractual maturities at the end of
the reporting period of the Group's non-derivative financial liabilities,
based on undiscounted cash flows (including interest payments computed using
contractual rates or, if floating, based on rates current at the reporting
date) and the earliest date the Group can be required to pay.
Within 2-5 years Total undiscounted cash flows Carrying amount
1 year or on demand
US$ US$ US$ US$
As 31 December 2023
Trade payables 151 - 151 151
Accrued payroll and employee benefits 459 - 459 459
Other provisions and payables 757 - 757 757
Lease liabilities 213 325 538 487
1,580 325 1,905 1,854
At 31 December 2022
Trade payables 201 - 201 201
Accrued payroll and employee benefits 288 - 288 288
Other provisions and payables 130 - 130 130
Deferred consideration 222 - 222 213
Lease liabilities 150 287 437 383
991 287 1,278 1,215
(b) Market risk
Foreign currency risk
The Group operates internationally and is exposed to foreign exchange risk
arising from its ongoing transactions and the financial assets and liabilities
denominated in foreign currencies. Foreign exchange risk also arises from
financial assets and liabilities denominated in the functional currencies in
which they are measured. Translation exposures with a functional currency
different from Group's presentation currency are not included in the
assessment of Group's exposure to foreign currency risks in accordance with
IFRS 7 - Financial Instruments: Disclosures.
In countries where the Group operates, except for Hong Kong, income and
expenditure are predominantly derived in respective functional currencies and
management therefore considers the transactional related foreign exchange risk
is insignificant. In Hong Kong, income is predominantly derived in US$
whilst the expenditure is in HK$. Because of HK$ having been pegged to US$ at
a fixed rate of 7.8 by Hong Kong government since 1983, it is concluded that
its foreign currency risk against US$ is minimal in the jurisdiction. Overall,
the Group is not subject to significant foreign currency risks.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a
financial instrument will fluctuate because of changes in market interest
rates. Management considers the interest rate risk as insignificant to the
Group since there has been no interest bearing borrowings, significant
interest income or tangible assets with fair values substantially subject to
interest rates.
(c) Credit risk
The Group's credit risk is primarily attributable to its trade and other
receivables, contract assets and amounts due from related parties.
Management has a credit policy in place and the exposures to these credit
risks are monitored on an ongoing basis. Management of credit risk involves
a number of considerations, such as the financial profile of the counterparty,
and specific terms and duration of the contractual agreement.
Customer credit risk is managed subject to the Group's established policy,
procedures and control relating to customer credit risk management. The
requirement for impairment is analysed at each reporting date on an individual
basis for customers. The Group evaluates the concentration of risk with
respect to trade and other receivables and contract assets as low, as its
customer base consists of a large number of individual customers who operate
in several jurisdictions, industries and largely independent markets.
The Group measures loss allowances for trade and other receivables at an
amount equal to lifetime ECLs, which is calculated using a provision matrix.
As the Group's historical credit loss experience does not indicate
significantly different loss patterns for different customer segments, the
loss allowance based on past due status is not further distinguished between
the Group's different customer bases.
The Group does not have any significant credit risk exposure to any individual
client or counterparty.
In respect of financial assets at amortised cost composed of trade and other
receivables and amounts due from related companies, the directors are of the
opinion that the credit risk is low because these companies have high credit
quality and no recent history of default payment, and the loss allowance
recognised during the year was therefore limited to 12 months ECLs.
The maximum exposure to credit risk is represented by the carrying amount of
each financial asset at the end of reporting period.
For transactions with open accounts, funds which equal to a certain percentage
of the gross purchase amounts are deposited with the Group by debtors in
advance before the execution of those transactions.
For transactions with letters of credit, transferrable letters of credit will
be arranged to creditors to remove counterparty default risk.
(d) Financial instruments
IFRS 13 requires that the classification of financial instruments measured at
fair value to be determined by reference to the source of inputs used to
derive fair value, and that the fair values of all financial instruments held
at amortised cost are approximately equal to their carrying values.
Financial assets include an investment, trade receivables, other receivables
and deposits (excluding VAT receivables and prepayments), amounts due from
related companies and cash and cash equivalents; financial liabilities are
trade payables, accrued payroll and employee benefits, other provisions and
payables, lease liabilities and also deferred consideration payable.
These financial assets and financial liabilities, except for an investment and
deferred consideration payable, are all measured at amortised costs,
approximate to their carrying values, while the investment and deferred
consideration payable are measured at FVTP&L. See Note 16 for details of
the deferred consideration payable on its valuation, inputs and fair value
hierarchy.
25. COMMITMENTS
The Group rents various offices to conduct its business, which the Group has
no control over, and hence these leases are not within the scope of IFRS 16
Leases. Such rental expenses incurred were charged to the income statement
on a straight-line basis over the relevant lease periods.
For leases within scope of IFRS 16, lease liabilities are recognised (Note 17)
to reflect the discounted committed future rental payments. Also, the
portfolio of short-term leases to which the Group is committed at the end of
the reporting periods are not dissimilar to that which the details of
short-term lease expense disclosed on Note 17 relate to. Therefore, these two
types of leases are excluded from this commitments disclosure.
The table below presents a maturity analysis of lease payments showing the
undiscounted lease payments to be made on an annual basis:
As at 31 December
2023 2022
US$'000 US$'000
Minimum lease payments for non-cancellable leases:
Within one year 468 709
Later than one year but not later than five years - -
468 709
26. EARNINGS PER SHARE
Basic earnings per share (EPS) is calculated based on the profit or loss for
the financial year divided by the weighted average number of ordinary shares
during the same financial year. Diluted EPS is calculated by adjusting the
weighted average number of common shares to include the potentially dilutive
effect of additional ordinary shares.
There have been no dilutive shares during the financial year ended 31 December
2023, and therefore the weighted average number of ordinary shares are the
same for the calculations of both Basic EPS and Diluted EPS.
Year ended 31 December
2023 2022
Net (loss) / profit in US$'000 (14,000) 1,638,000
Weighted average number of ordinary shares (basic & diluted) 117,147,233 113,500,000
Basic EPS in USD cent (0.01) 1.44
Diluted EPS in USD cent (0.01) 1.44
27. EVENTS OCCURRING AFTER THE REPORTING PERIOD
There have been no material subsequent events as of the report date.
- ENDS -
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