Alfa Financial Software Hldgs PLC Trading Update (0175X)
August 25 2020 - 1:00AM
UK Regulatory
TIDMALFA
RNS Number : 0175X
Alfa Financial Software Hldgs PLC
25 August 2020
25 August 2020
Alfa Financial Software Holdings PLC
Trading update
Alfa Financial Software Holdings PLC ("Alfa" or the "Company"),
a leading developer of mission-critical software for the asset
finance industry, is pleased to announce that, as a result of
strong year to date trading along with good progress on securing
revenue, that the Board's expectation of results for the year
ending 31 December 2020 are now ahead of current market
expectations. Alfa's Half Year results for the six months ended 30
June 2020 will be announced on 29 September 2020.
2020 Half Year results
On 13 July 2020 we announced that our trading in the first half
had been better than expected and that demand had been largely
resilient to the COVID-19 pandemic. Revenues in the first half
benefited from fewer holidays being taken by our people and
therefore a higher number of billable days were worked, although we
expect this to reverse in the second half.
Underlying revenue was also better than expected as we
successfully managed changing customer work schedules whilst
maintaining good utilisation. The Half Year results will also
benefit from the impact of remote working which has resulted in
reduced travel and marketing costs. This was partly offset by
higher overall staff costs driven by continued recruitment and
lower than normal attrition rates. At the time of the 13 July
trading update we remained cautious about the expected client
workload and prospects for the second half of the financial year
ending 31 December 2020. Whilst the Half Year results are yet to be
finalised, and are still subject to review by our new auditor, the
impact of the reduced holidays taken by our people has increased
billings by c.GBP3m. That, together with a stronger than forecast
first half performance, means that we now expect to report total
revenues of c.GBP38m with an EBIT of c.GBP10m and a net cash
balance of c.GBP68m.
Current trading and full year expectations
As a result of the ongoing impact of the pandemic, there remains
a higher degree of uncertainty than normal and this impacts our
ability to forecast accurately. Our forecasts can be impacted not
only by the likelihood of converting opportunities into secured
work, but also because changing customer plans means that
contracted revenue can slip into later periods with consequential
write-back in licence fee income due to revenue recognition
rules.
The strong performance from the first half has continued into
July. We have also made good progress in contract discussions, in
both extending existing work and securing late stage pipeline
opportunities. This, combined with the year-to-date performance,
means our expectations of revenue for the full year have now
increased.
At the time of our 2019 Full Year results we highlighted that
there would be short-term pressure on our margins, but that we
would continue to invest in our business and recruit new people due
to our strong balance sheet and confidence in the medium-term
outlook for the Company. We continue to believe that this is the
right approach and are therefore prepared that in the short-term we
may, at times, have a mismatch between secured revenue and our cost
base.
At the current time, whilst we are making good progress, we do
not have secured cover for all of our available billable time in
the remainder of the year. With the impact of additional holidays,
we are currently forecasting to make a loss in the second half.
However, despite this, and combined with our strong year-to-date
trading, we now expect our revenues and profits for the full year
to be ahead of current market expectations. Consensus market
expectations are currently for revenue of GBP60m and EBIT of GBP4m.
We now expect revenues to exceed this by about 5% with the vast
majority of this improvement also falling through to EBIT.
Outlook
The good progress in converting our late stage pipeline
reinforces our belief in our strategy, and if it continues we will
have a solid base for 2021. However, as previously mentioned, as a
result of the pandemic, the early stage pipeline remains weaker
than we would like and the medium-term economic outlook is
uncertain. This may impact our revenues in the second half of 2021
and into 2022. So whilst we have seen an encouraging performance so
far in 2020, until we have secured more future work, we remain
cautious for 2021.
Enquiries
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
Matt Low +44 (0)20 7353 4200
Notes to Editors
Alfa has been delivering 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 our delivery of large software implementations and
highly complex business change projects. With an excellent delivery
history over nearly three decades in the industry, Alfa's
experience and performance is unrivalled.
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 client systems on a 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
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