Alfa Financial Software issues profit warning after client delays

Asset finance software developer Alfa Financial Software Holdings updated the market on Friday, warning shareholders that it was expecting a dip in both revenue and earnings as a result of client delays.

The FTSE 250 firm said it had been informed by one of its major customers that they had decided to delay their implementation project.

Alda said it was satisfied that the decision was related to the customer's internal systems, adding that it currently understood that the project was likely to be restarted in early 2019 when their underlying issues have been resolved.

In addition to that, Alfa said a potential new customer had “significantly increased” the geographical and functional scope of the project, and one of its larger existing customers “seemed likely” to extend its decision point regarding the expansion of another major contract.

As a result, the potential implementation start dates for each of those could be later in 2018, or into 2019.

Those delays would have “some impact” on the first half of 2018, the board said, and a “significant impact” on the second half.

It revised full-year revenue guidance to between £71m and £75m, at a USD-GBP budget rate of 1.35, assuming the delays persisted.

EBIT would also be “materially below” management's previous expectations as a result of its predominately fixed operating costs, notwithstanding a focus on cost efficiencies through the remainder of the year.

“We are disappointed by this unexpected delay in one of our major implementations, due to factors outside our control,” said chief executive Andrew Denton.

“Similarly, the expansion in scope of both a potential new implementation and another of our existing projects will have a negative impact on 2018 but in the medium term we anticipate a benefit as the projects are enlarged and implemented.

“We are absolutely focussed on the conversion of these specific projects and other opportunities to ensure our growth momentum is restored.”

The board said interim results for the six months ending 30 June would be announced on 4 September.