17 December 2020
Alfa Financial Software Holdings PLC
Alfa Financial Software Holdings PLC ("Alfa" or the "Company"), a leading developer of mission-critical software for the asset finance industry, is pleased to provide an update on current trading.
The positive momentum from earlier in the year has continued and we have seen strong performances in both October and November, and anticipate that December will also be better than previously expected. The strong performance has been a combination of higher revenue along with lower costs.
The higher revenues are due to:
· continuation of contractual commitments for existing projects, with additional statements of work being secured
· pre-implementation work in advance of potential contracts for new implementations or upgrades; and
· a smaller than expected negative impact from holidays delayed from the first half.
We are also pleased to announce that an existing UK equipment finance customer, who we have been working with under letters of engagement, and who has been in our late stage pipeline for six months, has now signed contracts to upgrade from Alfa Version 4 to Alfa Version 5. The contract will rank as a middle tier contract by value, and will be implemented into an Alfa Cloud Hosting environment.
We noted at the half year that we had seen reduced travel, conference and marketing costs as a result of the pandemic. This reduced level of spend has continued through the second half. We were also expecting to complete some internal infrastructure upgrade projects, but with time being spent supporting revenue growth, these costs have been delayed into 2021.
Overall therefore we expect to exceed our current revenue expectations for the year ending 31 December 2020 by just under 5% with all of the benefit flowing into EBIT in addition to the continuing benefit of the reduced costs.
Looking to 2021, we expect a larger proportion of our work to be spent on upgrading existing customers to Version 5 and in the expansion of our global relationships under existing licences rather than new standalone projects. Retaining and expanding our footprint with existing customers is a real show of strength in the service that we deliver to them, albeit that these upgrades and expansions will generate a lower level of perpetual licence income next year. We do expect an increase in our costs as we return to a more normal level of working, along with the impact of the delayed internal projects noted above and with an increase in the levels of holiday being taken once the travel restrictions from the pandemic have eased. Whilst the late stage pipeline continues to develop well, we have a lower level of contractual visibility than we would like, particularly given the current macro-economic environment. We are building a business that has the capability to grow both revenue and profits, but until contractual cover is secured our expectations of 2021 financial performance remain unchanged.
Andrew Denton, Chief Executive Officer of Alfa, said:
"Given the uncertainties at the start of the year, I am delighted to be finishing with a strong performance not only financially but also by confirming the continuation of a longstanding customer relationship with a new contract to upgrade to Alfa Version 5.
I am particularly pleased that this important customer has recommitted to Alfa. Their commitment to this upgrade underlines the continued strength of the Alfa product and the high quality service that we have delivered over many years. The new version will give them access to the industry leading functionality and technology in the recently released Alfa 5.6 deployed using always-on Alfa Cloud Hosting with fully managed infrastructure and regular upgrades.
Overall, it is very encouraging to see a further increase in our expectations for 2020, and whilst our expectations for 2021 currently remain unchanged, if we continue to convert our late stage pipeline and secure work for 2021 we should see improvements in our revenue and profit expectations."
Alfa Financial Software Holdings PLC
Andrew Denton, Chief Executive Officer
Duncan Magrath, Chief Financial Officer
+44 (0)20 7588 1800
Tulchan Communications LLP
James Macey White
+44 (0)20 7353 4200
Notes to Editors
Alfa has been delivering software systems and consultancy services to the global asset and automotive finance industry since 1990. Our best practice methodologies and specialised knowledge of asset finance facilitates delivery of large software implementations and highly complex business change projects. With an excellent delivery track record spanning three decades, Alfa's experience and performance is unrivalled in the industry.
Alfa Systems, our class-leading technology platform, is at the heart of some of the world's largest asset finance companies. Key to the business case for each implementation is Alfa Systems' ability to replace multiple customer systems with our single platform. Alfa Systems supports both retail and corporate business for auto, equipment, wholesale and dealer finance on a multijurisdictional basis, including leases/loans, originations and servicing. An end-to-end solution with integrated workflow and automated processing using business rules, Alfa Systems provides compelling solutions to asset finance companies.
Alfa Systems is currently used by customers or has live implementations in 26 countries and Alfa has offices in Europe, Australasia and North America. For more information, visit www.alfasystems.com.