TIDMAMIF
RNS Number : 7481N
Amicorp FS (UK) PLC
27 September 2023
27 September 2023
Amicorp FS (UK) Plc
('AMIF', the 'Company' or the 'Group')
Interim Results
Trading in-line with management expectations
Well placed to take advantage of growth in outsourcing of fund
administration services
Amicorp FS (UK) Plc, the international specialist fund services
group, is pleased to report its maiden set of interim results for
the six months ended 30 June 2023 ('H1-2023' or the 'period'). The
Board is pleased to report a successful period of trading in line
with management expectations and is confident in the Group's
ability to maintain this level of performance into H2-2023.
H1-2023 Financial Highlights
-- Total revenue increased by 3.1% to US$7.1 million (H1 2022:
US$6.9 million). This growth was largely driven by a 65%
increase in revenues by the Assurance and Governance Services
division when compared to H1-2022
-- Gross profit of US$4.8 million is equivalent to a 68.1% margin
to total revenue
-- Adjusted EBITDA of US$2.5 million represents a 34.9% margin
to total revenue
-- EBITDA of US$1.2 million, after offsetting the one-time IPO
and post-IPO expenses
H1-2023 Operational 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
-- Opening of Brazil office at the start of 2023 following receipt
of regulatory approval
-- Undergoing application process for a fund administration
license in the Dubai International Financial Centre ('DIFC')
-- Creation of Assurance and Governance Services to expand the
Group's offerings including ESG and corporate governance
support
Commenting on the Interim Results, Toine Knipping, Non-Executive
Chairman of AMIF, said:
"Following our successful listing on the Main Market of the
London Stock Exchange in June this year, the business has continued
to perform well both operationally and financially, on the back of
strong organic growth and further diversification, evidenced by the
improvement in the Assurance and Governance Services part of the
business.
"Asset managers and fund providers continue to outsource back
office functions due to increasingly complex compliance
requirements and inflationary staff costs. AMIF is ideally
positioned to gain market share in this environment with its strong
track record, ability to offer a full suite of fund management
services and its in-depth understanding of the regulatory back drop
across multiple different geographies, especially in emerging
markets.
"We will continue to innovate and invest heavily in the
business, so that our operating platform can support AMIF's
ambitious expansion plans. This will also enable our systems and
processes to be rolled out more easily to a wider range of future
clients, thereby driving a higher operating margin and supporting
our capital light business model."
Market Abuse Regulation Disclosure
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.
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
Bowsprit Partners Limited Tel: +44 (0) 20 3883 4430
John Treacy www.bowspritpartners.com
Luis Brime
Media Enquiries:
Buchanan Communications Tel: +44 (0) 20 7466 5000
Simon Compton AmicorpFS@buchanan.uk.com
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 operates at significant scale,
providing local and global expertise to over 460 active funds.
AMIF provides a comprehensive and tailored range of services
which are all underpinned by market-recognised technology solutions
that support clients across the value chain, from a single point of
contact.
These include:
-- Fund Administration & 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.
-- Assurance and Governance 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/
Chief Executive Officer's Report
Admission to Main Market
The placing that accompanied AMIF's Admission to the Main Market
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 on the Main Market of the London
Stock Exchange which has already led to an increase in the number
of inbound enquiries due to AMIF's enhanced profile and status as a
listed company.
Business Summary
AMIF's business is derived from regulatory requirements in
jurisdictions where funds have independent fund administration.
Moreover, as levels of regulation have increased over recent years,
there has been an increasing trend for asset managers, institutions
and family offices to shift towards outsourcing administrative and
other services to specialist service providers, in order to focus
resources on their core businesses instead of increasing
administration, regulatory and reporting requirements.
AMIF currently provides the following services to its
clients:
Fund Administration
Fund onboarding
Whilst the Group does not provide any legal, tax or fund
structuring advisory services, it does conduct internal reviews of
fund documentation relevant to its fund administration services in
order to facilitate the successful launch of a fund.
Registrar and transfer agency and NAV calculation
The Group, in its capacity as a fund administrator, implements
and applies Know-Your-Client ('KYC') and Anti-Money Laundering
('AML') policies and procedures adopted by the relevant funds,
meeting the applicable regulatory requirements in order to collect
relevant KYC documents from investors.
The Group's fund administration services also include:
-- performing risk screening procedures
-- due diligence processes on investors (for example to identify
any politically exposed persons ('PEPs')) or individuals
involved in criminal activities or corruption
-- communicating with asset managers and local regulators to
ensure regulatory compliance
-- processing subscription, transfer and redemption requests
-- maintaining registers of investors; and
-- treasury management.
Net Asset Value Calculation
The Group acts as an independent party to maintain funds'
financial records, carry out periodic reconciliations of
transactions, fee computations, as well as calculating the Net
Asset Value ('NAV') of the funds in line with the Private Placing
Memorandum ('PPM') issued in respect of the relevant fund.
Preparation of financial statements
As fund administrators, the Group works closely with auditors,
providing relevant schedules and draft financial statements.
Assurance and Governance services (previously known as
Regulatory and Compliance services)
AML services
The Group designs and implements bespoke KYC and AML policies
and procedures for funds and client structures to assist them in
maintaining a proper risk framework as required in the relevant
jurisdiction.
Most jurisdictions in which the Group provides funds services
mandate the appointment of qualified individuals to be designated
as Anti-Money Laundering Officers with responsibility for
overseeing the AML policies and controls of the fund, evaluating
transactions and determining whether any identified suspicious
transactions should be reported to the relevant authorities.
Directorship services
The Group provides directorship services to a range of clients,
including asset managers, family offices and financial
professionals to provide independent oversight of the clients'
business activities.
Acting as a director of the fund enables the Group to more
closely monitor the funds by accessing both financial and
non-financial information and checking that subscription proceeds
are being deployed in accordance with the fund's PPM. The appointed
director may also participate in the decision-making process on
matters which may require independent judgment, such as dividend
distributions, late redemptions or subscription and appointment of
third-party service providers.
Board support services
The Group provides board support and related administrative
services including preparation of meeting agenda, preparation and
presentation of relevant reports (namely AML reports, NAV reports,
suspicious transaction reports, exceptional reports, regulatory
updates and compliance reports), preparation of meeting minutes and
coordination of other corporate secretarial activities for fund
clients.
FATCA, CRS and other tax reporting services
The Group provides services to assist the proper classification,
registration and reporting of funds for FATCA, CRS and other tax
compliance purposes.
Business Process Outsourcing services
Accounting and corporate services
The Group provides accounting and/or corporate services to
general partners, investment management companies and special
purpose vehicles associated with the Group's fund clients to meet
their demand for streamlining their resources.
The Group also offers accounting services to client companies
investing in financial instruments through the Group's automated
fund accounting system.
Operational and Strategic Review
Fund Administration
Client Base
H1-2023 H1-2022 FY-2022
Number of funds at start of period/year 444 393 393
New funds 39 46 105
Funds terminated (20) (5) (54)
-------- -------- --------
Number of funds at period/year end 463 434 444
======== ======== ========
The growth in number of funds has been robust and as expected.
In the last six months the number of funds has grown organically at
an annualised rate of 8.6% from 444 on 1 January 2023 to 463 on 30
June 2023. While the number of new funds was comparable to H1-2022,
the Group has experienced more terminations in H1-2023 arising from
the following:
-- 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.
In view of maximising the Group's organic growth, AMIF has also
actively expanded its geographic presence in both developed and
emerging markets, as follows:
AFS Brazil LTDA became fully operational at the start of 2023
upon receiving regulatory approval from the Comissão de Valores
Mobiliários ('CVM') to offer fiduciary investment fund
administration services. The license is specifically dedicated to
overseeing private equity funds ('FIP'), which experienced the
fastest growth in the local investment fund sector over the last
ten years. Throughout H1-2023, substantial efforts were dedicated
to establishing Amicorp Fund Services as a FIP administrator in the
Brazilian market, including but not limited to a significant event
featuring the presence of the CVM with industry professionals from
investment managers, law firms, and strategic partners.
Dubai is one of the major financial centres in the Middle East
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 there since 2021. As AMIF's client base continues to
grow in Dubai, it has become strategically important to have a
local presence. The Group started the application process for the
fund administration license in Dubai International Financial Centre
('DIFC') in March 2023. It is expected the license will be granted
and a new office will be opened in Q4-2023. The application process
has commenced to obtain the relevant license in Abu Dhabi and the
Group is also assessing the feasibility of applying for a fund
administration license in Saudi Arabia.
Outlook for Fund Administration - H2-2023
In the period from 1 July 2023 to 31 August 2023, the Group has
continued to grow the number of funds under administration with a
total of 17 new wins at the start of H2-2023, and the number of new
wins in H2 is expected to outweigh the number achieved in H1, based
on historical trends. 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.
In September 2023, the Group obtained approval from Commission
de Surveillance du Secteur Financier ('CSSF') of Luxembourg to
separate the fund services element of an existing license held
within Amicorp Group. Following that, the application for
depositary lite license in Luxembourg is expected to start, which
would be complementary to the Group's fund administration business
with enhanced services and revenue base.
Continuous expansion of AMIF's sales network in strategic
locations remains important for organic growth of the Group's fund
administration business. The key strategic locations for sales
expansion are in the UAE, Mexico, Luxembourg and Singapore, where
the Group is strengthening its presence, collaborating with
complementary services providers such as legal firms, investment
advisors and asset managers, to expand the Group's reach to new
prospects.
The application process has commenced for fund administration
and specialised depository licenses in Ireland to expand AMIF's
business reach in Europe. The application process should take
between nine to twelve months. The objective of obtaining fund
administration and specialised depository licenses in Ireland is to
meet the demand of clients who prefer a common law fund
jurisdiction with European passport (i.e., the regulatory framework
that allows asset management firms based in one European Union
('EU') member state to offer their investment services and manage
assets for clients in other EU member states without the need for
additional regulatory approvals in each country).
On the operation side, the Group has been moving towards
automation of the existing fund administration process. With the
deployment of some of the IPO proceeds, it is expected that an
automated tool for fund manager and investor onboarding will be
completed and go live in H2-2023. The Group is continuously
assessing the effectiveness of its existing IT infrastructure and
finding opportunities for further technology integration to improve
operational efficiency.
Assurance and Governance services
The Group actively pursued the expansion of the Assurance and
Governance services segment to reach 391 mandates in H1-2023
(versus 240+ mandates in H1-2022), which primarily include the
extra engagements for AMLCO (Anti-Money Laundering Compliance
Officer), MLRO (Money Laundering Reporting Officer), DMLRO (Deputy
Money Laundering Reporting Officer) and Directorship services. The
growth in the current year was a result of multidirectional efforts
in securing the mandates in the last twelve months from existing
customers and a well-defined revenue model.
The revenue model includes packaged responsibility fees billed
annually in advance for the mandates and a time spent component
billed at hourly charge-out rates. Keeping accurate time records is
not only mandatory for such officers assuming fiduciary
responsibility by defining minimum board, MLRO and/or fiduciary
meetings per year as per statutory requirements, but it also helps
keep track of the quality of services and compliance to the
commitment defined by the laws and regulations. Another source of
revenue that will be realised in H2-2023 is the fees billed towards
conducting of Annual Training Fees to the Investment or Asset
Managers and responsible officers as mandated by regulators.
Outlook for Assurance and Governance services - H2-2023
The twelve-month plan for building growth under Assurance and
Governance services is to expand the scope of services which can be
summarised below. While the regulations globally are being updated,
with a focus on Environmental and Social Governance ('ESG') and
Enterprise Risk management ('ERM'), the Group is preparing itself
to be one of the leading service providers of these services and a
one-stop service provider for AMIF's clients.
In developing Assurance and Governance services, the Group
continues to adhere to its vision in organisational team structure,
by the extensive deployment of its centres of excellence in
Bangalore and Mauritius, complemented by the expertise in local
offices. This delivery model, which is summarised below, is
believed to accommodate growth, build expertise and maintain high
levels of operating efficiency.
-- Review and generation of reports happen in the existing fund
administration system as a central source, duly maintained
by the teams in Bangalore and Mauritius;
-- The reports are then reviewed by the named officers who comment
and approve, and discuss exceptions with clients; and
-- To ensure diversity of experiences to the staff, appointment
of external qualified officers with relevant experiences
in the respective field is expected.
While the major growth in mandates in H1-2023 was driven by new
business from existing clients, the plan for the coming months is
to focus on new business from new clients and thi rd-party service
providers. The additional efforts will be invested in:
-- Organisation of marketing events in the Cayman Islands, British
Virgin Islands and Dubai to target investment managers, asset
managers and licenced funds;
-- Seeking registration as preferred delivery partner with renowned
professionals;
-- Offering AML setup and consultancy services;
-- Investment in automation for statutory reports generation;
and
-- Provision of trainings to third parties as mandated by regulators.
Business Process Outsourcing services
The Group adjusted its targeted customer group of Business
Process Outsourcing services to include single or multiple family
offices and discretionary accounts managed by professional asset
managers. The Group also provides assistance towards the conversion
from traditional holding structures to fund structures as a more
effective, secure and financially rewarding solution for
cross-border investment strategies. These changes which are seen to
be prompt reactions towards the evolving market trends will ensure
the Group continues meeting the needs of clients, by taking away
the burden of managing essential and often complex back-office
tasks.
In Luxembourg, the Group is equipped with corporate services
infrastructure to act as a trusted one-stop shop for the
comprehensive fund structure formation and ongoing administrative
support. The sales team has been tasked to actively pursue combined
fund administration and corporate services when they come across
Luxembourg opportunities.
In H1-2023, the Group carried out an efficiency transformation
campaign to maximise the operational synergy between its Business
Process Outsourcing team and Fund Administration team, by
leveraging on their relevant and similar expertise of financial
statement delivery and audit liaison. Although the campaign reduced
slightly the external chargeable time of the Business Processing
Outsourcing team, it is considered to be an initial step towards
further automation and enhanced operational efficiency.
Outlook for Business Process Outsourcing services - H2-2023
The Group aims to continue with the initiatives taken,
especially the integration between the Business Process Outsourcing
team and Fund Administration team. The Group's vision is to
consolidate the accounting skillsets and level up the team to
become a technical champion for accounting related services and
matters.
From a technology and innovation perspective, the Group is
seeking system efficiency by subscription of additional suitable
tools or enhanced deployment of its existing software for
accounting and financial statement preparation tasks.
Continuing the focus on value added services under each business
line, the plan for the coming twelve months is to provide CFO and
CFO assist services to clients under the current BPO portfolio. The
plan is to upgrade the current service contracts from bookkeeping
and accounting services to value added management reporting and CFO
assist services and further provide the same services to external
clients.
Outlook for the Group
We are pleased to report a strong performance in the first half
of the year. There has also been a positive uptick in new funds
onboarded at the start of the second half and we remain comfortable
that the business will trade in-line with management expectations
for the full year. AMIF is ideally positioned to play a
consolidator role in the fragmented fund services market due to its
scale, breadth of services and long-term track record. The Board
looks to the future with confidence.
Chi Kin Lai
Chief Executive Officer
27 September 2023
Group H1-2023 Income Statement
H1-2023 H1-2022 Change FY-2022
US$'000 US$'000 % US$'000
Revenue
Fund administration 4,347 4,297 1.2% 7,823
Business process outsourcing
services 2,065 2,166 (4.7)% 3,272
Assurance and governance services 675 409 65.0% 814
Total Revenue 7,087 6,872 3.1% 11,909
Payroll and remuneration costs (3,461) (2,607) 32.8% (5,397)
Rent and occupancy (262) (428) (38.8)% (783)
Professional fees (227) (74) 206.8% (356)
IT expenses (297) (266) 11.7% (547)
Foreign currency gain 33 43 (23.3)% 28
Other operating expenses (403) (230) 75.2% (692)
-------- -------- --------- --------
Adjusted EBITDA(*) 2,470 3,310 (25.4)% 4,162
IPO expenses (1,201) (502) 139.2% (906)
Post-listing expenses(**) (49) - N/A -
EBITDA 1,220 2,808 (56.6)% 3,256
Other (losses) / gains (37) 22 (268.2)% 38
Finance costs (23) (18) 27.8% (39)
Depreciation expenses (132) (43) 207.0% (128)
-------- -------- --------- --------
Profit before income tax 1,028 2,769 (62.9)% 3,127
Income tax expense (298) (579) (48.5)% (829)
-------- -------- --------- --------
Profit for the period / year 730 2,190 (66.7)% 2,298
======== ======== ========= ========
Employee costs as a percentage
of revenue* 48.8% 37.9% 10.9% 45.3%
======== ======== ========= ========
* These measures are Alternative Performance KPIs, which are not
defined under IFRS and are therefore termed "non-IFRS" KPIs. These
KPIs supply additional useful information on the underlying trends,
performance and position of the Group. These alternative
performance KPIs used may not be directly comparable with similarly
titled measures used by other companies.
** Post-listing expenses are one-time or recurring expenses
arising from listing obligations which depends on successful
admission. By excluding these from adjusted EBITDA, the management
believes that the Alternative Performance KPI could precisely
reflect the performance of the Group's ordinary business operation.
For details, please refer to Financial Review session below.
Financial Review
Revenue
Revenue increased by 3.1% to US$7.1 million (H1-2022: US$6.9
million), which was contributed by:
-- Fund Administration revenue remained flat at US$4.3 million
in H1-2023 (H1-2022: US$4.3 million). Despite the increase
in the net number of funds as compared to H1-2022, the Group
was partly affected by the increased closure and termination
of funds as investors redeemed from or withdrew interest
in operating funds due to uncertain market conditions. Fund
launches were also slowed down due to challenges in fund
raising amid global inflation staying at an uncomfortably
high level. Having said that, the Group continued to prove
its strength in client retention and stability of recurring
revenue from its diversified client base.
-- Assurance and Governance services revenue increased by 65%
to US$0.7 million in H1-2023 (H1-2022: US$0.4 million), which
is in line with the increase in AML officer and directorship
mandates to 391 in June 2023 from 240+ mandates in June 2022,
predominantly associated with the Group's fund clients domiciled
in the Cayman Islands and Luxembourg. The Group charges 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
a slight decrease of 4.7% to US$2.1 million in H1-2023 (H1-2022:
US$2.2 million). The growing revenue from corporate services
from external client entities was offset by the drop of revenue
from the Intragroup Outsourcing Agreement with Amicorp Group,
which is caused by the efficiency transformation campaign
described in the Operational and Strategic Review section
above.
The seasonal element of Fund Administration and Business Process
Outsourcing services revenue remains applicable, specifically
arising from revenue recognition of financial statement preparation
work which falls on the first half of the year.
Payroll and renumeration costs
The Group reported an increase of US$0.8 million, or 32.8%, in
payroll and renumeration costs in H1-2023 (H1-2022: US$2.6
million). Such an increase, arising from the addition of six sales
employees and ten production employees compared to H1-2022,
represents the Group's continuous strategic investments in human
capital, with an aim to enhance their capabilities which contribute
to the Group's growth, innovation and overall success over the long
term.
The table below summarises the Group's headcount by geographical
locations as at the period/year end:
H1-2023 H1-2022 FY-2022
Chile 13 11 12
Hong Kong 7 6 7
India 45 47 45
Luxembourg 8 10 8
Others 35 16 29
-------- -------- --------
Total Group Headcount 108 90 101
======== ======== ========
The major incremental payroll and renumeration costs spread
across the following strategic locations:
-- Brazil (H1-2023: US$201k; H1-2022: US$140k) being a newly
licensed office established the necessary organisational
structure required by CVM, via the addition of two production
employees into the team. Such infrastructure provides 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.
-- Chile (H1-2023: US$375k; H1-2022: US$225k) being one of
the fast-growing emerging markets has a complex macroeconomy
and inflation structure. Inflationary adjustments have therefore
accounted for most of the increase in payroll and renumeration
costs, as part of the Group's commitment to demonstrate fair
compensation, minimise turnover, and reduce the associated
costs of recruitment and training. Such stability in workforce
and the onboarding of an Operation Manager would also contribute
to the success of the Group's vision to expand the Chile
office into the operation outsourcing centre of LATAM.
-- Curacao (H1-2023: US$243k; H1-2022: US$98k) has been known
to have a well-established and growing market for fund administration
services. It continues to contribute significant revenue
into the Group's LATAM operation. The increase in payroll
and renumeration costs there arose solely from the addition
of two sales employees whose focus is on the expansion of
the Group's business in Curacao and LATAM via close collaboration
with other strategic offices in that geographical area.
-- Dubai (H1-2023: US$107k; H1-2022: US$33k) has been actively
working to establish itself as a global financial hub, and
its asset management sector has been a key part of this strategy.
In view of its rapidly growing and transforming asset management
industry, the Group recently enlarged its sales coverage
by adding two more senior sales employees to the team, aiming
to maximise its organic growth initiatives and capture a
much wider spectrum across the whole Middle East region.
-- Hong Kong (H1-2023: US$610k; H1-2022: US$537k) remains as
the largest revenue generating office of the Group. The increase
in payroll and renumeration costs in Hong Kong was attributable
to inflationary adjustments and addition of one production
employee. While the contribution from the pre-existing team
was recognised, the new employee brought in useful skill
sets to the team which speeded up the integration between
Hong Kong and Singapore team based on proximities of both
areas.
-- Mexico (H1-2023: US$216k; H1-2022: US$144k) being one of
the largest economies in Latin America has been benefiting
from nearshoring opportunities because of its geographic
proximities to the US, and existence of trade agreements
with its regional neighbours. The Group has expanded its
investment in Mexico through the addition of a sales employee
and a production employee in H1-2023, who have collectively
added to the strong pipeline and operation readiness to this
relatively new office.
Followed by the successful admission, the Group's investment in
human capital is expected to continue in the second half of 2023,
in line with the adopted business strategies.
Rent and occupancy
Rent and occupancy represents 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 five leases with third party
landlords.
The decrease of rent and occupancy by US$166k, or 38.8% to
US$262k in H1-2023 compared to US$428k in H1-2022 was partially
compensated by the increase in depreciation expenses because of the
newly acquired third party lease in Hong Kong at lower rate.
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$153k, or 207% to US$227k
in H1-2023 compared to US$74k in H1-2022 was attributed to the
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 H1-2022 to support local statutory
compliance matters, which were duly completed pursuant to the
relevant regulatory approval granted by MFSA ('Malta Financial
Services Authority').
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$266k in H1-2022 to US$297k in
H1-2023 because of the newly incurred cloud hosting service for the
fund administration system, and fee increment for the use of the
Chilean operation system.
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$403k in H1-2023
from US$230k in H1-2022 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.
Post-listing expenses
Post-listing expenses 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 and Microsoft licenses, together with additional fees for
the appointment of Executive and Non-Executive Directors.
Effective on Admission, the Group also expects to incur
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.
Income tax expense
The estimated income tax expense decreased to US$298k in H1-2023
(H1-2022: $579k), in line with the movement in the profit before
income tax.
H1-2023 Divisional Performance Overview
H1-2023
Business Assurance
Fund administration process outsourcing and governance Total
US$'000 US$'000 US$'000 US$'000
Revenue 4,347 2,065 675 7,087
Direct staff costs (1,557) (179) (238) (1,974)
Other direct costs (284) - - (284)
Gross profit 2,506 1,886 437 4,829
Gross profit
margins 57.6% 91.3% 64.7% 68.1%
==================== ===================== ================ ========
H1-2022
Business Assurance
Fund administration process outsourcing and governance Total
US$'000 US$'000 US$'000 US$'000
Revenue 4,297 2,166 409 6,872
Direct staff
costs (1,254) (147) (120) (1,521)
Other direct
costs (233) - - (233)
Gross profit 2,810 2,019 289 5,118
Gross profit
margins 65.4% 93.2% 70.7% 74.5%
==================== ===================== ================ ========
FY-2022
Business Assurance
Fund administration process outsourcing and governance Total
US$'000 US$'000 US$'000 US$'000
Revenue 7,823 3,272 814 11,909
Direct staff costs (2,581) (293) (273) (3,147)
Other direct costs (514) - - (514)
Gross profit 4,728 2,979 541 8,248
Gross profit
margins 60.4% 91.0% 66.5% 69.3%
==================== ===================== ================ ========
Fund Administration, Business Process Outsourcing and Assurance
and Governance segments deliver gross profit margin of 58%, 91% and
65% respectively in H1-2023. These result from the Group's
additional investment in the form of additional experienced
production employees, as well as the newly subscribed cloud hosting
and fee increment of fund administration systems. All in all, these
three segments contribute to 68% of overall gross profit margin for
H1-2023, compared to 75% for H1-2022.
These continue demonstrating the consistently high gross profit
margins of around 70% for the Group.
Unaudited Condensed Consolidated Financial Statement
For the six months ended 30 June 2023
Notes 6 months 6 months to
to 30 June 30 June 2022
2023
Unaudited Unaudited
US$'000 US$'000
Revenue 5 7,087 6,872
Payroll and remuneration
costs 7 (3,493) (2,607)
Rent and occupancy (262) (428)
Professional fees (227) (74)
IT expenses (314) (266)
Depreciation expenses (132) (43)
IPO expenses (1,201) (502)
Foreign exchange gain 33 43
Other operating expenses 6 (403) (230)
------------ --------------
Operating profit 1,088 2,765
Other (losses) / gains (37) 22
Finance costs (23) (18)
------------ --------------
Profit before income tax 5 1,028 2,769
Income tax expense 8 (298) (579)
------------ --------------
Net profit after tax 730 2,190
Other comprehensive income
/ (loss)
Foreign currency translation 20 (27)
------------ --------------
Total comprehensive income 750 2,163
Earnings per ordinary shares US$ US$
Basic EPS 0.01 0.02
Diluted EPS 0.01 0.02
Unaudited Condensed Consolidated Statement of Financial
Position
As at 30 June 2023
Notes 30 June 31 December
2023 2022
US$'000 US$'000
Non-current assets
Tangible assets 114 76
Right of use assets 11 601 364
Investment 28 61
Deferred tax assets 272 263
-------- ------------
1,015 764
Current assets
Trade receivables 9 1,186 1,521
Other receivables, deposits
and prepayments 1,616 637
Amounts due from related companies 13 2,454 6,515
Cash and cash equivalents 5,092 875
-------- ------------
10,348 9,548
Total assets 11,363 10,312
-------- ------------
Current liabilities
Trade payables 94 201
Accrued payroll and employee
benefits 392 288
Other provisions and payables 10 203 129
Lease liabilities 11 227 146
Deferred consideration payable 10 231 213
Income tax payable 394 1,117
-------- ------------
1,541 2,094
Net current assets 8,807 7,454
-------- ------------
Total assets less current
liabilities 9,822 8,218
-------- ------------
Non-current liabilities
Lease liabilities 11 385 237
-------- ------------
385 237
Total liabilities 1,926 2,331
-------- ------------
NET ASSETS 9,437 7,981
======== ============
Equity
Share capital 120 114
Share premium 6,462 -
Foreign exchange reserves (180) (200)
Merger reserves 2,244 2,244
Distributable reserves - 4,666
Retained earnings 791 1,157
-------- ------------
Total equity 9,437 7,981
======== ============
Unaudited Condensed Consolidated Statement of Changes in
Equity
For the six months ended 30 June 2023
Share Share Forex Merger Retained Distributable Total
capital premium translation reserves earnings reserves
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
As at 1
January 2023 114 (1) - (200) 2,244(3) 1,157 4,666(4) 7,981
Share
additions 6 6,462(2) - - - - 6,468
Profit for the
period - - - - 730 - 730
Transferred to
distributable
reserve - - - - (259) 259 -
Pre-listing (5,762)
Dividends - - - - (837) (4,925) (5)
Foreign
currency
translation - - 20 - - - 20
As at 30 June
2023 120 6,462 (180) - 791 - 9,437
Share Share Forex Merger Retained Distributable Total
capital premium translation reserves earnings reserves
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
As at 1
January 2023 114 (1) - (240) 2,244(3) 888 2,638(4) 5,644
Profit for the
period - - - - 2,190 - 2,190
Transferred to
distributable
reserve - - - - (1,014) 1,014 -
Foreign
currency
translation - - (27) - - - (27)
-------- -------- ------------ --------- --------- -------------- --------
As at 30 June
2023 114 - (267) 2,244 2,064 3,652 7,807
(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(d), 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 details regarding the accounting policy for the merger
reserve are described in Note 3(d).
(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 $5.8m had been declared by Amicorp
Fund Services Asia Limited, before the Company, Amicorp FS (UK)
Plc, was inserted on 26 May 2023 as the holding company of the
Group, in line with the listing prospectus dated 5 June 2023.
Unaudited Condensed Consolidated Statement of Cash Flows
For the six months ended 30 June 2023
Period ended 30 June
2023 2022
US$'000 US$'000
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax 1,028 2,769
Adjustments for:
Depreciation of tangible asset 16 1
Depreciation of right of use assets 116 42
Realised and unrealised foreign
exchange gain (33) (43)
Fair value loss/ (gain) from an
investment measured at FVTP&L 37 (22)
Finance costs 23 18
------------- --------
1,187 2,765
Decrease in trade receivables 335 467
Increase in other receivables,
deposits and prepayments (861) (266)
Increase in amounts due from related
companies (1,726)(1) (2,550)
Increase / (decrease) in accrued
payroll and employee benefits 104 (69)
(Decrease) / increase in trade
payables (91) 30
Increase / (decrease) in other
provisions and payables 91 (22)
------------- --------
Cash (used in)/ generated from
operations (961) 355
Income tax paid to tax authorities (752) (115)
Income tax settled through amounts
due from related companies (265) (451)
------------- --------
Net cash flows used in operating
activities (1,978) (211)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of tangible assets (51) (7)
Proceeds from a placing of additional
ordinary shares 6,324 -
------------- --------
Net cash flows generated from/
(used in) investing activities 6,273 (7)
------------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of principal portion
of lease liabilities (110) (44)
------------- --------
Net cash flows used in financing
activities (110) (44)
------------- --------
NET INCREASE/(DECREASE) IN CASH
AND CASH EQUIVALENTS 4,185 (262)
Cash and cash equivalents at beginning
of period 875 937
Exchange difference 32 (46)
CASH AND CASH EQUIVALENTS AT
OF PERIOD 5,092 629
============= ========
(1) Pre-listing dividends of $5.8m 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; these
pre-listing dividends were non-cash payments settled via amounts
due from related companies, and hence were excluded from this cash
flow movement.
Notes to the Unaudited Condensed Consolidated Financial
Statements
1. GENERAL
These interim financial statements are the unaudited condensed
consolidated financial statements for Amicorp FS (UK) Plc and its
subsidiaries. Amicorp FS (UK) Plc (the 'Company'), a public limited
company incorporated and domiciled in the United Kingdom, 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.
2. BACKGROUND AND BASIS OF PREPARATION
(a) Background and basis of the condensed 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 the 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 the 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$9.70 million. On 8 June 2023, the
Company was successfully admitted to the Main Market of the London
Stock Exchange, as a holding company of the Group.
The insertion of the Company as the holding company of the Group
constitutes a carve-out reconstruction involving transfer of shares
in the Group's entities, in which merger accounting is applied.
Accordingly, the condensed consolidated financial statements of the
Group are prepared as if the Company, together with its
subsidiaries, collectively had already existed before the start of
the earliest period presented. The comparative information is,
therefore, presented as if the carve-out reconstruction had already
occurred, and it has been derived from the HFI included in the
listing prospectus, primarily adjusted for the demerger equity,
reserve and consolidation adjustments.
The condensed consolidated financial statements ("interim
financial statements") of Amicorp FS (UK) Plc for the six months
ended 30 June 2023 have been prepared in accordance with IAS 34
Interim Financial Reporting issued by the International Accounting
Standards Board, as adopted by the United Kingdom ("UK IAS"). These
interim financial statements, which are unaudited, should be read
in conjunction with the Group's Historical Financial Information
('HFI') as at and for the year ended 31 December 2022 included in
the listing prospectus dated 5 June 2023, which is available on the
Group's website.
The accounting policies adopted are consistent with those
adopted by the Group in the HFI included in the listing prospectus.
The condensed consolidated financial statements are presented in
thousands of US Dollars ('US$'000') unless otherwise indicated, and
prepared under the historical cost convention and based upon the
accounting policies disclosed below.
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 condensed consolidated interim financial
statements.
(b) Entities included within the Group
The financial position and financial performance of the
following entities are included as part of the condensed
consolidated financial statements:
Amicorp Fund Services Asia Limited
Amicorp Fund Services Asia Limited (Singapore Branch)
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
Amicorp Fund Services (Mumbai) Private Limited (Bangalore
Branch)
Amicorp Fund Services (Cyprus) Ltd
(c) Basis of measurement and going concern assumption
The condensed 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 IFRSs. The measurement bases are fully described
in the accounting policies below.
The significant accounting policies that have been used in the
preparation of the condensed 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 condensed 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 condensed
consolidated financial statements, are disclosed in note 4.
Going concern
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 of this report.
Accordingly, they continue to adopt the going concern basis in
preparing the condensed consolidated financial statements.
In assessing going concern, the Directors take into account the
Group's cash flows, solvency and liquidity positions, and have
considered a range of scenarios as part of their assessment. At the
end of the period, the Group had cash and cash equivalents of
US$5.1 million (31 December 2022: US$0.9 million) and net current
assets of US$ 8 .8 million (31 December 2022: US$7.5 million),
which the Directors believe will be sufficient to maintain the
Group's liquidity over the going concern period, including
continued investments to meet existing financial commitments and to
deliver future growth.
(d) Functional and presentation currency
Items included in the interim financial information of each of
the Group's entities are measured using the currency of the primary
economic environment in which the entity operates (the 'functional
currency'). The functional currency of the Group is United States
Dollars ('US$'), and the financial information is presented in US$
since most of the companies comprising the Group are operating in
US$ environment.
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 condensed 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 period 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 condensed 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 condensed 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 during the
year are included in the condensed 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) Goodwill
Goodwill represents the excess of the aggregate of the fair
value of the consideration transferred, the amount of any
non-controlling interest in the acquiree and the fair value of the
Group's previously held equity interest in the acquiree over the
fair value of the identifiable assets and liabilities measured as
at the acquisition date.
Where the fair value of identifiable assets and liabilities
exceed the aggregate of the fair value of consideration paid, the
amount of any non-controlling interest in the acquiree and the
acquisition date fair value of the acquirer's previously held
equity interest in the acquiree, the excess is recognised in profit
or loss on the acquisition date, after re-assessment.
(d) Merger accounting
Merger accounting is used for the Company inserted as the
holding company of the Group, as part of the carve-out
reconstruction described in Note 2(a), while 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 combining 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 condensed consolidated statement of financial
position.
Transaction costs, including professional fees, registration
fees, costs of furnishing information to shareholders, costs or
losses incurred in combining 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 period in which they
are incurred.
(e) 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
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.
(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.
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 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, prepayments 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 contingent consideration, arising from business
acquisitions, is measured at fair value at the date of acquisition.
If an obligation to pay contingent 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 contingent 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. Where the Group issues its own equity instruments to a
creditor to settle a financial liability in whole or in part as a
result of renegotiating the terms of that liability, the equity
instruments issued are the consideration paid and are recognised
initially and measured at their fair value on the date the
financial liability or part thereof is extinguished. If the fair
value of the equity instruments issued cannot be reliably measured,
the equity instruments are measured to reflect the fair value of
the financial liability extinguished. The difference between the
carrying amount of the financial liability or part thereof
extinguished and the consideration paid is recognised in profit or
loss for the respective years.
(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. 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 reporting period 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
reporting period.
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.
(i) Foreign currency
Transactions entered into by group entities in currencies other
than the currency of the primary economic environment in which they
operate (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 reporting period. 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 period 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
reporting period. 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) Short term employee benefits
Short term employee benefits are employee benefits (other
than termination benefits) that are expected to be settled
wholly before twelve months after the end of the annual reporting
period in which the employees render the related service.
Short term employee benefits are recognised in the year when
the employees render the related service.
(ii) Defined contribution retirement plan
Contributions to defined contribution retirement plans are
recognised as an expense in profit or loss when the services
are rendered by the employees.
(iii) 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 period, 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;
-- investments in subsidiaries
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 a mount 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 in
prior years. 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.
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.
5. SEGMENTAL REPORTING
The Group's decision makers, consisting of the chief executive
officer, chief operating officer, the chief financial officer and
the manager for corporate planning, examines the Group's
performance from a fund service provider's perspective and has
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 represents more than 5% of revenue in the six month period
ended 30 June 2023 (30 June 2022: same).
Period ended 30 June Revenue Direct staff Other direct Gross profit
2023 cost costs
US$'000 US$'000 US$'000 US$'000
Fund Administration 4,347 (1,557) (284) 2,506
Business Process
Outsourcing 2,065 (179) - 1,886
Assurance and governance
(1) 675 (238) - 437
------- ------------ ------------ ------------------------------
Total 7,087 (1,974) (284) 4,829
Indirect staff costs (1,519)
Other operating expenses (1,058)
IPO expense (1,201)
Finance costs (23)
Profit before income
tax 1,028
==============================
Period ended 30 Revenue Direct staff Other direct Gross profit
June 2022 cost costs
US$'000 US$'000 US$'000 US$'000
Fund Administration 4,297 (1,254) (233) 2,810
Business Process
Outsourcing 2,166 (147) - 2,019
Assurance and governance
(1) 409 (120) - 289
------- ------------ ------------ ------------
Total 6,872 (1,521) (233) 5,118
Indirect staff costs (1,086)
Other operating expenses (743)
IPO expense (502)
Finance costs (18)
Profit before income
tax 2,769
============
(1) Assurance and Governance services is formerly known as
Regulatory and Compliance services.
The amount of its revenue from external customers broken down by
geographical region of contracting Group entities is shown in the
table below.
Geographical revenue
Period ended 30 June
2023 2022
US$'000 US$'000
LATAM 1,468 1,043
Europe 1,974 1,655
MEAI(1) 3,645 4,174
-------------------- -------
7,087 6,872
==================== =======
(1) MEAI means Group's operations in the geographical region of
Middle East, Asia and India.
6 . OTHER OPERATING EXPENSES
Period ended
30 June
2023 2022
US$'000 US$'000
Business development
expense 71 10
Statutory fee expenses 17 29
Travelling expenses 177 118
Other overhead expenses 138 73
-------- --------
403 230
======== ========
7 . PAYROLL AND REMUNERATION COSTS
Period ended
30 June
2023 2022
US$'000 US$'000
Employee costs (including
directors) comprise:
Wages and salaries 3,428 2,544
Contributions on defined
contribution retirement
plans 8 14
Other employment benefits 57 49
-------- --------
3,493 2,607
======== ========
8 . INCOME TAX
Period ended
30 June
2023 2022
US$'000 US$'000
Current income tax 291 579
Deferred income tax 7 -
Total tax charge for
the period 298 579
======== ========
9. TRADE RECEIVABLES
As at the period
/ year ended
Jun-2023 Dec-2022
US$'000 US$'000
Trade receivables 1,263 1,599
Less: loss allowance (77) (78)
--------- ---------
1,186 1,521
========= =========
10. OTHER PROVISIONS AND PAYABLES
As at the period
/ year ended
Jun-2023 Dec-2022
US$'000 US$'000
Current
Other payables 18 4
Other provision 151 112
VAT payables 8 5
Payment in advance
from customers 26 8
--------- ---------
203 129
========= =========
Deferred consideration - financial liabilities measured at
FVTP&L(1)
As at the period
/ year ended
Jun-2023 Dec-2022
US$'000 US$'000
Current 231 213
Non-current - -
--------- ---------
231 213
========= =========
(1) 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$205k)
payable by no later than October 2023. The acquiree has been
accounted for as subsidiaries of the Group since the acquisition
date. The acquisition was made as part of the Group's strategy to
expand its business in Chile.
The future consideration due to the seller will become payable
by October 2023, and the undiscounted payable amount is the
undiscounted deferred base payment of CLP 188m plus/minus CLP 60m
depending on the outcome of certain pre-acquisition tax credit
claims submitted by the seller to the local authorities in Chile,
in accordance with the acquisition agreement.
The deferred consideration is measured at FVTP&L, and the
fair value is remeasured at every reporting date. Also, the Group's
policy is to recognise transfers into and out of fair value
hierarchy levels as at the end of the reporting period, and
management has decided that the deferred consideration is
classified as level 3, given the significant inputs are not based
on observable market data.
The valuation technique used is discounted cash analysis, with
the following table summarising the details:
Description Valuation techniques Significant inputs Sensitivity of
the fair value
measurement to
input
Contingent Discounted cash Discount rate An increase in
consideration flow. of 5.00% the discount
rate of 100 basis
Expected net cash Expected undiscounted points would
outflows are estimated cash outflows decrease the
based on the terms of CLP 188.8m fair value by
of the share purchase (US$ 235.1k) US$ 1k as at
agreements and the 30 Jun 2023 (31
group's expectations Dec 2022: US$
of outcomes of tax 2k).
credit claims.
Management does
not consider
the value of
expected future
cash outflows
will change materially
during the upcoming
period up to
the maturity
date.
------------------------ ----------------------- ------------------------
11. LEASES
This note provides information for leases where Group is a
lessee within the scope of IFRS 16. In the financial year ended 31
December 2021, Group initiated an IFRS 16 office lease spanning 5
years, and in the subsequent year, 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 interim financial period to 30 June 2023, an additional
office lease was ascertained and commenced in February for a lease
term of 3 years.
AFSA 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$110k in the six
month period to 30 June 2023 (in the year ended 31 December 2022:
$117k).
(i) Right of use assets
Office
premise
US$'000
Cost
At 1 January 2022 262
Additions for the year 239
Exchange differences (26)
---------
At 31 December 2022 475
Additions for the period 351
Exchange differences 1
---------
At 30 June 2023 827
Accumulated depreciation
At 1 January 2022 4
Depreciation for the year 110
Exchange differences (3)
---------
At 31 December 2022 111
Depreciation for the period 116
Exchange differences (1)
---------
At 30 June 2023 226
Net carrying balance as at
30 June 2023 601
=========
Net carrying balance as at
31 December 2022 364
=========
(ii) Lease liabilities
Office
premises
US$'000
At 1 January 2022 260
Additions 234
Interest expense 30
Lease payments (117)
Exchange differences (24)
----------
At 31 December 2022 383
Additions 319
Interest expense 19
Lease payments (110)
Exchange differences 1
----------
At 30 June 2023 612
Discounted lease payments are due as follows:
As at the period /
year ended
Jun-2023 Dec-2022
US$'000 US$'000
Within one year 227 146
In between one and two years 224 118
In between two and five years 161 119
---------- ---------
612 383
========== =========
Undiscounted lease payments are due as follows:
As at the period / year
ended
Jun-2023 Dec-2022
US$'000 US$'000
Within one year 260 150
In between one and two years 243 132
In between two and five years 171 155
------------ ------------
674 437
Less: Future finance charges (62) (54)
------------ ------------
Lease liabilities 612 383
Disclosed as:
Current 227 146
Non-current 385 237
------------ ------------
612 383
(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 Group in the six month
period to 30 June 2023 (in the year ended 31 December 2022:
same).
12 . DIVIDS
Pre-listing dividends of $5.8m had been declared by Amicorp Fund
Services Asia Limited, before the Company, Amicorp FS (UK) Plc, was
inserted on 26 May 2023 as the holding company of the Group, in
line with the listing prospectus dated 5 June 2023.
During the interim period ended 30 June 2023, the Company did
not declare dividends.
13. RELATED PARTIES TRANSACTIONS
(a) Transactions with Amicorp Group
The following transactions were carried out with related parties
who are members of Amicorp Group.
Period ended 30
June
2023(1)
US$'000
Revenue 1,195
Rental and remuneration expenses (1,155)
(1) Comparatives for the same period of the prior year are
excluded, given the Group had not been legally incorporated during
the six month period ended 30 June 2023. 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 the period
/ year ended
June-2023 Dec-2022
US$'000 US$'000
Amounts due from related
parties 2,454 6,515
========== =========
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 interim period. The Group's
transactions are conducted on an arm's length basis.
(c) Transactions with key management personnel, remuneration and
other compensation
Key management personnel are those persons having authority and
responsibility for planning, directing and controlling the
activities of Group, directly or indirectly.
The summary of compensation of key management personnel is as
follows:
Period ended 30 June
2023 2022
US$'000 US$'000
Salaries and
short-term benefits 372 334
=========== ==========
14. FINANCIAL RISK AND CAPITAL MANAGEMENT
The Group's major financial instruments include trade
receivables, other receivables and deposit, 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 management
manages and monitors these exposures to ensure appropriate measures
are implemented in a timely and effective manner.
(a) Liquidity risk and Capital management risk
Our assessment of liquidity risk and capital management risk
remain consistent with what was disclosed in the HFI included in
the prospectus dated 5 June 2023, indicating no alterations. There
has not been any bank facility or financial covenants in the six
month period to 30 June 2023 (2022: same).
(b) 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 AFSA 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.
(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.
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.
(d) 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.
(e) Fair value of financial instruments carried at other than
fair value
The fair value of financial instruments represents the amount at
which the instrument could be exchanged in a current transaction
between willing parties, other than a forced sale or liquidation.
The carrying amounts of the Group's financial instruments carried
at amortised cost approximate their fair values as at 30 June 2023
(2022: same).
15. EVENTS OCCURRING AFTER THE REPORTING PERIOD
There has been no subsequent event as of the report date.
16. CONTINGENT LIABILITIES
The Group has no contingent liabilities arising in the ordinary
course of business, which would be material in the context of the
Group's condensed consolidated financial position.
Principal Risks and Uncertainties
The Group faces a number of risks and uncertainties that may
have an adverse impact on the Group's operation, performance or
future prospects.
Set out in the listing prospectus dated 5 June 2023 were details
of the principal risks and uncertainties for the Group and the key
mitigating measures applied, applicable at that time.
The Board regularly assesses and monitors the principal risks
and uncertainties of the business, and considers that they have not
changed and remain relevant for the remaining six months of the
2023 financial year.
Such principal risks and uncertainties are summarized as
follows:
Fiduciary risk
The Group acts in a fiduciary capacity as directors and AML
officers to its clients which carries specific legal obligations,
including certain fiduciary duties as well as responsibility for
decision making. Breaches of such specific legal duties and
obligations could give rise to a claim against the Group and its
employees, and/or sanctions from the Group's regulators.
Risk-based approach to AML and KYC for the Group's business
The Group applies a risk-based approach to AML and KYC in
conducting its business in jurisdictions in which the Group may or
may not be required to be licensed. Whilst regulatory authorities
commonly mandate a risk-based approach to AML and KYC and publish
regulatory guidelines and regulatory expectation as to the
standards that should be applied in a risk-based approach, there is
no assurance that the Group's procedures will in all cases meet all
the guidelines and/or regulatory expectation where such guidelines
or published regulatory expectations may be open to differing
interpretations or lacking legal clarity.
Dependency on key personnel
The Group is dependent upon key senior management personnel who
direct the implementation of the Group's strategy and business
growth. If the Group's senior management were to depart, or
otherwise cease to be able to perform their duties for the Group,
the Group may not be able to identify and recruit adequate
replacements in a timely manner, or at all, and the Group's
business may suffer disruption or other damage.
Risks relating to performance
The Group's clients are engaged in complex activities involving
investments in financial instruments and multi-jurisdictional
structures. Whilst the Group's staff are trained and experienced in
providing services relating to such activities and deliver services
within an operating environment that has been developed and tested
to prevent errors, the complexity of the activities can mean that
it is difficult to fully eliminate the possibility of staff making
errors.
Importance of ability to maintain and develop existing client
relationships
A large proportion of the Group's revenues are derived from
servicing existing fund clients and client structures. There can be
no assurance that existing client relationships will continue to
grow or that key clients will not choose to move the servicing of
their funds and structures to the Group's competitors.
Ability to maintain current referral relationship to gain new
clients
The Group has been partially reliant on receiving new client and
work referrals from established referral relationships with
on-shore and off-shore legal advisers, asset management businesses,
independent advisors and consultants, accounting firms and other
professional intermediaries, as well as the Amicorp Group and its
affiliated business. If the Group is unable to retain and sustain
these relationships, this could have a material adverse effect on
the Group's business, results of operations or financial
condition.
Risks associated with growth and acquisitions
Continued growth in the Group's overall client base would
require further investment by the Group in personnel, facilities,
information technology, financial management and controls . There
is no assurance that the Group would be successful in deploying
investment to augment its service offering and overall business
scale.
Relationship with the Amicorp Group
Whilst the Pre-IPO reorganisation has been effected at arm's
length and such that all of the operations of the fund services
business were carved-out from Amicorp Group, the Group is still
reliant on the certain contractual undertakings with the Amicorp
Group with respect to its Luxembourg and India operations. In the
event that the Amicorp Group does not comply with such undertakings
in full or in part, the ability of the Group to continue to operate
and generate revenue from the fund services business in such
jurisdictions could be impaired.
Variable fee risk
The Group's fees are based on a mix of fixed and variable fees.
The precise proportion of the Group's variable fees may differ
depending on asset size of funds, client preference, activity
levels and sector norms. Besides, individual asset classes are
susceptible to fluctuations in performance driven by, among other
things, macroeconomic factors, changing regulatory obligations,
changing taxation legislation, and shifts in client preferences and
demands.
Reliance on third party fund administration systems
The services provided by the Group rely considerably on third
party fund administration systems. Whilst the Group has contracts
in place with each these systems, were a disruption to occur to the
support provided by them, this might adversely affect the Group's
ability to service its clients in keeping with contracted and
expected service levels.
Business continuity risk and IT security
The Group's business is dependent on the capacity and
reliability of the IT and communication systems that support its
operations. A large part of services are delivered through
electronic means, including via public and private communications
networks. These IT and communications systems and networks can be
subject to performance degradation or failure for reasons within or
outside the control of direct suppliers.
Disputes and litigation risk
The Group's activities as a professional service provider across
multiple jurisdictions with separate legal and regulatory
requirements give rise to the risk of potential disputes, legal
proceedings or claims both from clients directly or indirectly or
from other parties who may be counterparties to transactions which,
whilst the Group is not a party to them as a principal, it may be
acting as an agent on behalf of clients involved in them.
Pricing risk
The fund, corporate and private client services industry is well
developed and is a highly competitive environment and the Group may
face increased competition and price pressure in the markets and
jurisdictions in which it operates.
Currency fluctuation risks
As the Group conducts business across multiple jurisdictions,
the Group may be exposed to financial risks associated with
fluctuations in currency exchange rates, primarily, at present,
between, Euros, US dollars, Hong Kong dollars, Singapore dollars
and Chilean Pesos.
Statement of Directors' Responsibilities
Each of the Directors whose names appear below confirms that, to
the best of his or her knowledge:
-- the condensed set of financial statements gives a true and
fair view of the assets, liabilities, financial position,
and profit or loss of the issuer, or undertakings included
in the consolidation, as required by DTR 4.2.4R and prepared
in accordance with UK adopted IAS 34 'Interim Financial Reporting';
-- the interim management report includes a fair review of the
information required by DTR 4.2.7R, namely:
* an indication of important events that have occurred
during the first six months and their impact on the
condensed set of financial statements; and
* a description of the principal risks and
uncertainties for the remaining six months of the
financial year; and
-- the interim management report includes a fair review of the
information required by DTR 4.2.8 R, namely:
* related party transactions that have taken place in
the first six months of the current financial year
and that have materially affected the financial
position or the performance of the enterprise during
that period; and
* any changes in the related party transactions
described in the last annual report that could have a
material effect on the financial position or
performance of the enterprise in the first six months
of the current financial year.
The Directors of Amicorp FS (UK) Plc as at the date of this
announcement are as follows:
Executive Directors
Chi Kin Lai, Chief Executive Officer
Tat Cheung (Stephen) Wong, Chief Financial Officer
Kiran Kumar Gundu Rao, Chief Operations Officer
Non-Executive Directors
Antonius Knipping, Chairman
Kathy Byrne
Patrick Byron
Approved by the Board and signed on its behalf by:
Chi Kin Lai Tat Cheung (Stephen) Wong
Chief Executive Officer Chief Financial Officer
27 September 2023 27 September 2023
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END
IR NKABDFBKDACB
(END) Dow Jones Newswires
September 27, 2023 02:00 ET (06:00 GMT)
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Amicorp Fs (uk) (LSE:AMIF)
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