Alpha Strategic PLC

Audited Preliminary Results for year

ended 31st March 2009

Financial Highlights

-   Second acquisition completed post year end with guaranteed income in the first year

-   IKOS Asset Management join Winton Capital as Alpha Shareholders

-   Income eases on redemptions in line with the industry and low interest rates, despite good 
     performance from Winton

-   Overheads fall significantly with core administration costs held static

-   Healthy cash and debtor balance at £2.2 million (2008 - £2.4 million)

Chairman's Statement

As I write, your company has successfully completed its second transaction and acquired a new source of revenue from the G10 currency fund managed by IKOS Asset Management. It is said that patience is a virtue, and in our case three years of discussions with this highly reputable money manager have paid off. This transaction is seminal for Alpha Strategic, and firmly establishes a bright future for the company. We welcome IKOS to the shareholder roster, and look forward to working with them over the years to come. 

This most recent transaction includes an income guarantee in the first year of USD 800,000, which, combined with our income from Winton, and with overheads held at their historically low levels, should firmly move the company into profitability. 

These accounts are of course backward rather than forward-looking and as such they include a turbulent period in the global economy. Over the 12 months to March 2009, the world was rocked by a financial firestorm that saw many hedge fund managers pack up their tents. Gratifyingly we had declined to deal with a number of those who folded, believing there to be a large number of firms in the industry who relied for their profits on a bull market rather than skill or research. By contrast both Winton and IKOS showed strong performance through the recent difficult period. 

Nonetheless, we were not immune from the effects of what the BBC branded, complete with a specially-designed logo, "The Downturn". Shareholders will know that one of the attractive features of the Global Futures Fund is its weekly liquidity. Unfortunately for Alpha, such were losses in investors' other portfolios that they used the GFF's liquidity as a source of cash, and significant redemptions were experienced during the year in line with the industry, despite positive performance. This had a knock-on effect on Alpha's earnings, which fell accordingly. I am pleased to report however that marketing for the GFF has recently transferred to a new sales organisation in Switzerland and there has been increased interest in the fund from investors.

Now that the worst of the global economic earthquake seems to be over, we see evidence that investors, have a renewed appetite for hedge funds, but are choosing to go with managers who show size and quality balanced with return. In this atmosphere, both Winton and IKOS should prosper, and hence so should Alpha, as this is our strategy too.  

One of the objectives of your company is to build a diversified income stream. The issues we experienced last year show the merit of doing so. Now that we have moved from one to two partner managers, whose income is not highly correlated, we begin to strengthen the source of our income to the benefit of all. 

During the year, as previously announced, we saw a change in management structure. After three years of solid relationship building, the fruits of which we have recently seen, Kit Malthouse moved aside from being chief executive following his election to the London Assembly and appointment as Deputy Mayor of London. Dr Nicola Meaden moved across from her non executive role to became our new Chief Executive, bringing a wealth of experience and contacts, with Kit fulfilling a part time role as finance director. Our transaction with IKOS is largely down to their excellent teamwork and we are lucky to have such a productive management partnership. 

I am pleased to report that our conversations with managers continue, with a number showing strong interest in our approach. Undoubtedly the IKOS transaction and its associated income stream, will make our offer more attractive to potential third and fourth partners and I hope to have further positive news in the near future. 

Colin Barrow, 

Chairman.

Financial review

The Company is designed to have a low overhead, flat management structure and hence its financial performance is relatively transparent.

During the year revenue fell despite a period of outstanding investment performance by the managers of the Global Futures Fund, Winton Capital Management Limited. Investors' in the fund who had experienced losses elsewhere took advantage of the weekly liquidity provided by the GFF and a number of redemptions took place. In addition the sudden drop in interest rates resulted in a significant fall in our interest earnings from our cash pile. Overall revenue therefore fell to £379,000 (2008 - £669,000).

Ongoing administration costs of the Company rose marginally, but were still held at low levels. 

However, despite these issues the Company has maintained a very healthy cash balance, although since the balance sheet date some of this cash has been utilized in our latest acquisition with IKOS Asset Management. 

The Company is very cautious about deployment and investment of its cash balance, and during the year the company withdrew its holdings in the Sterling money market account operated by HSBC due to credit risk concerns over this type of product. 

The Company's performance was of course entirely dependent upon the fees generated by the investment results of the Global Futures Fund. As mentioned this has been excellent over the period in question. However Alpha has always been vulnerable while it only had an interest in one partner manager. Pleasingly this is no longer the case, and the latest transaction with IKOS should see a good financial performance for the company in the coming year. 

Consolidated Income Statement

For the year ended 31st March 2009

Consolidated Balance Sheet

As at 31st March 2009

Consolidated Cash Flow Statement 

for the year to 31st March 2009

Cash and cash equivalents (which are represented as a single class of assets on the face of the balance sheet) comprise cash at bank and money market deposit investments with a maturity of up of three months. There is no material foreign exchange movement in respect of cash and cash equivalents.

Consolidated statement of changes in equity

for the year to 31st March 2009

Share Capital is the amount subscribed for ordinary shares at nominal value. Share Capital 'A' shares is the amount subscribed for A ordinary shares at nominal value.

Share premium represents the excess of the amount subscribed for share capital over the nominal value of these shares net of share issue expenses.

The merger reserve comprises the excess the amount subscribed for share capital over the nominal value of ordinary shares issued in respect of the acquisition of Winton Advisors Limited in accordance with the Companies Act 1985.

Accumulated deficit represent cumulative losses of the Group attributable to equity holders. There were no changes in equity in the prior year other than the profit for the period.

1    Basis of Preparation

The financial information set out in the announcement does not constitute the company's statutory accounts for the years ended 31 March 2009 or 2008. The financial information for the year ended 31 March 2008 is derived from the statutory accounts for that year which have been delivered to the Registrar of Companies. The auditors reported on those accounts; their report was unqualified, did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their report and did and did not contain a statement under s237(2) or (3) Companies Act 1985. 

The audit of the statutory accounts for the year ended 31 March 2009 is completed. The auditors reported on those accounts; their report was unqualified, did not contain an emphasis of matter and did not contain a statement under s237(2) or (3) Companies Act 1985. These accounts will be delivered to the Registrar of Companies following the company's annual general meeting. 

While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRSs), this announcement does not itself contain sufficient information to comply with IFRSs.

2     Aborted acquisition costs

There were no exceptional costs during the year ended 31st March 2009. Costs of £239,000 were incurred in the year ended 31st March 2008 in respect of the proposed acquisition of a minority equity stake a northern European hedge fund management company. The Company negotiated terms to acquire this stake and, following board approval by both Alpha and the target, initiated formal due diligence and the legal work required to effect an acquisition. As the transaction neared completion we were notified that the target management wished us not to proceed with the transaction and, in return for our withdrawal, undertook to cover our significant professional costs. In January of 2008 the management of the target company withdrew from this undertaking and, following legal advice, the Company is seeking to recover its costs through the courts. The litigation is ongoing and no amounts have been included within these financial statements in respect of any potential recovery of costs.

3     (Loss)/earnings per share

Basic

The calculation of the basic (loss)/earnings per share is based upon the net loss after tax attributable to ordinary shareholders of £160,000 (2008: profit £28,000) and a weighted average number of shares in issue for the year of 3,308,500 (2008: 3,308,500).

Diluted 

The diluted loss per share in 2009 is the same as the basic loss per share as the loss for the year has an anti-dilutive effect. The diluted earnings per share for 2008 was based upon the net profit after tax attributable to ordinary shareholders of £28,000 and a weighted average number of shares in issue for the year, as adjusted for the maximum shares that could be in issue following conversion of the 'A' ordinary shares and allotments under warrants, of 3,692,408.

4     Share Capital

Capital structure

Details of the authorised and issued share capital, together with details of the movements in the Company's issued share capital and details of employee share schemes are shown above. There are no specific restrictions on the size of a holding nor on the transfer of shares, which are both governed by the general provisions of the Company's Articles of Association, the Combined Code, the Companies Acts and related legislation. The directors are not aware of any agreements between holders of the Company's shares that may result in restrictions on the transfer of securities or on voting rights. No person has any special rights of control over the Company's share capital and all issued shares are fully paid. The Company's share capital comprises 'A' ordinary shares and 'Ordinary shares' as disclosed below. See also note 20 below.

A ordinary shares

The holders of A ordinary shares do not have the right to vote at general meetings and do not have the right to be paid any dividend. Conditional on the market price of each ordinary share being double the placing price for 30 consecutive business days within the period between the first and fifth anniversary of admission to AIM and thereafter the market price of each ordinary share being three times the placing price for 30 consecutive business days, a holder of A ordinary shares may exercise in whole or in part the conversion rights attaching to the A ordinary shares held. On conversion of all or part of the A ordinary shares, each share shall convert into ordinary shares as equals 0.005% of the fully diluted equity. All A ordinary shares which are in issue and remain unconverted after the tenth anniversary of the date of admission to AIM shall be converted into deferred shares. 

On 1st August 2005, the Company granted a warrant to subscribe for ordinary shares in the Company. The principal terms of the warrant are as follows:

-  The holders will be entitled to subscribe at the placing price of £1 for such number of ordinary shares which are equivalent to one per cent. of the issued ordinary share capital of the Company at the time of exercise, excluding any ordinary shares created as a result of conversion of the A ordinary shares and excluding ordinary shares issued as a result of prior exercise of the warrant;

-  The warrant may be exercised at any time during the period of five years from the date of Admission of 11th August 2005;

-  Ordinary shares issued on the exercise of the warrant will rank for dividends or other distributions declared, made or paid by the Company after the date of exercise, but not before such date, and otherwise equally in all respects with the ordinary shares in issue on the date of such exercise;

-  The number of ordinary shares issued on exercise of the warrant and the subscription price will be adjusted upon a capitalisation of reserves, a rights issue or on a sub-division or consolidation of share capital; and

-  If a takeover offer is made to all holders of ordinary shares, the Company will use reasonable endeavours to procure a comparable offer to the holder of the option.

On 1st August 2005, the Company granted a warrant to subscribe for ordinary shares. The principal terms of the warrant are as follows:

-  The holder will be entitled to subscribe at the placing price of £1 for 15,000 ordinary shares;

-  The warrant may be exercised at any time during the period of five years from the date of Admission on 11th August 2005;

-  Ordinary shares issued on the exercise of the holder of the warrant will rank for dividends or other distributions declared, made or paid by the Company after the date of exercise, but not before such date, and otherwise equally in all respects with the ordinary shares in issue on the date of such exercise;

-  The number of ordinary shares issued on exercise of the warrant and the subscription price will be adjusted upon a capitalisation of reserves, a rights issue or on a sub-division or consolidation of share capital; and

-  If a takeover offer is made to all holders of ordinary shares, the Company will use reasonable endeavours to procure a comparable offer to the holder of the option.

5     Related party transactions

During the year the Company had income of £nil (2008 - £36,000) arising from management services rendered to its subsidiary. Details of amounts owing to and from the subsidiary are disclosed in notes 15 and 17.

During the year, the Company has incurred costs of £nil (2008 - £10,000) for use of services and occupation of premises owned by Colin Barrow, a director of the Company. There were no amounts outstanding due to Colin Barrow at 31st March 2009 and 31st March 2008.

6     Contingent assets and liabilities

The directors remain confident that the professional fees under recovery in the litigation mentioned in note 5 will eventually accrue to the Company however no amounts have been included in these accounts with reference to those fees and there were no other contingent assets or liabilities.

7     Post-balance sheet events

On 10th July 2009 announced that it had entered into an agreement with IKOS Asset Management Limited ('IAML') to receive 7.2% of the aggregate fees received by IAML relating to the IKOS G10 Currency Fund (the 'Fund'). Alpha Strategic will receive at least USD 800,000 during the first year of this revenue sharing agreement. 

The Company has acquired Acme Advisors Limited ('Acme'), a wholly owned subsidiary of IAML. Acme has been incorporated to provide sales and distribution advisory services to IAML in respect of the Fund and, for the provision of these services, has an agreement to receive 7.2% of IAML's aggregate management and performance fees from the Fund. 

Consideration for the purchase of Acme was USD 2,800,000, to be satisfied by the issue of 1,212,121 ordinary shares of 1 pence each in Alpha Strategic ('Ordinary Shares') at a price of 85p per Ordinary Share and the payment of USD 1,127,818 in cash. 

It is not practicable to disclose the carrying value of Acme as there are number of matters which have yet to be resolved due to the proximity of the acquisition to the reporting date.

8     Copies of the financial statements

Copies of the financial statements will be sent to shareholders in due course and can be obtained by contacting the Company secretary at 66 Buckingham Gate, London SW1E 6AU or by visiting the Company website, www.alphastrategic.co.uk where they are available for download.

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