Alfa Financial Software Holdings PLC · LSE:ALFA
Alfa Financial Software — H1 2019 Earnings Presentation
27 slides from Alfa Financial Software's earnings presentation, Sep 26, 2019
Slide 1: H1 2019 Interim Results Presentation
H1 2019 Interim Results Presentation 26 September 2019
Slide 2: Disclaimer
Disclaimer The following presentation is being made only to, and is only directed at, persons to whom such presentation may lawfully be communicated (“relevant persons”). Any person who is not a relevant person should not act or rely on this presentation or any of its contents. Information in the fo
Slide 3: Agenda
Agenda Introduction and key highlights Andrew Denton, CEO Financial review John Miller, Interim CFO Business and sales update Andrew Denton, CEO Summary Andrew Denton, CEO Q&A Definitions
Slide 4: Introduction and Key Highlights
Introduction and Key Highlights Andrew Denton, CEO
Slide 5: Overview: Revised guidance, September 2019
Overview Revised guidance, 16 September 2019 − Revenues declining due to delays in implementation projects and reduced discretionary spend by ODS customers − Cost pressures are increasing, particularly with respect to remunerating and retaining skilled staff − Conditions expected to continue into 20
Slide 6: H1 2019 – at a glance
H1 2019 – at a glance Financial and operational highlights £30.9m (9%) £5.4m 17 % Operating profit Revenue Revenue movement(1) Operating profit margin H1 2018: £32.9m At constant currency H1 2018: £8.6m H1 2018: 26% 5 12 304 82% Implementation projects (3) ODS customers(2) Headcount Staff retention
Slide 7: Financial Review
Financial Review John Miller, Interim CFO
Slide 8: Income Statement analysis: key metrics
H1 2019 Income Statement analysis An overview of key metrics HY HY 2018 2019 % Overview Key Financial Metrics £m £m Change Change Revenue • 2019 revenue primarily impacted by: 32.9 30.9 (2.0) (6%) − Delays in implementation of certain projects Revenue – constant currency 33.9 30.9 (3.0) (9%) − Broad
Slide 9: Income Statement analysis: Software implementation revenues
H1 2019 Income Statement analysis Software implementation revenues No. of ongoing implementation 4 4 5 customers Software implementation revenues 20 • 4 continuing software implementations 18 17.2 − 1 which pre-dates 1 Jan 17, 2 won in June 2017 and 16 1 won in March 2018 14.4 14 13.2 • 1 new implem
Slide 10: Income Statement analysis: ODS revenues
H1 2019 Income Statement analysis ODS revenues No. of customers > £100k 15 15 12 ODS revenues 14 • Customer numbers decreased from H1 2018 due 12 to a number of ODS customers who have 11.7 2.5 completed and fewer customers transitioning from 10 implementation to ODS than in the prior year 9.7 9.2 £m
Slide 11: Income Statement analysis: Maintenance revenues
H1 2019 Income Statement analysis Maintenance revenues No. of customers 28 28 22 Maintenance revenues • Ongoing maintenance increased by 12% in 10.0 comparison to H1 2018 due to 8.8 - Underlying annual increases generally agreed in May 9.0 8.0 of each year; and 8.0 7.2 - Benefits of increased portfo
Slide 12: Income Statement analysis: Expense analysis
H1 2019 Income Statement analysis Expense analysis £m H1 H2 H1 Expenses 2018 2018 2019 • Personnel expenses account for 73% of operating expenses Personnel related expenses 19.0 19.2 18.6 (H1 2018: 78%) Advertising, sponsorship and marketing costs 0.4 0.4 0.3 • Decreased headcount in period although
Slide 13: Cash flow data
H1 2019 Cash flow data H1 H1 Cash and cash equivalents £m 2018 2019 Operating profit 8.6 5.4 • Cash increase of £8.3 million Depreciation and amortisation 0.4 1.4 • H1 2019 Free Cash Flow Conversion of 205% compared Share based payments 0.1 0.5 to 109% in H1 2018 due to Interest element on lease pay
Slide 14: H1 2019 Balance Sheet: Assets
H1 2019 Balance Sheet Assets £m Dec 2018 Jun 2019 Balance sheet Total non-current assets 27.4 46.5 • The Group adopted IFRS 16 on 1 January 2019 as described above. This had a material impact on the Current assets balance sheet: Trade receivables and accrued income 13.8 14.5 − Non-current assets inc
Slide 15: H1 2019 Balance Sheet: Liabilities
H1 2019 Balance Sheet Liabilities £m Dec 2018 Jun 2019 Balance sheet (continued) Total non-current assets 27.4 46.5 • Trade and other payables decreased due to bonus payment in April 2019 Current assets • Deferred software revenue increased due to Trade receivables and accrued income 13.8 14.5 Prepa
Slide 16: Business and Sales Update
Business and Sales Update Andrew Denton, CEO
Slide 17: Organisational changes
Organisational changes Added deep knowledge of the asset finance industry to the Board while retaining strong financial and PLC operating knowledge: − Chris Sullivan (SID), David Stead, Steve Breach Improved organisational structures and strategic processes to support Alfa’s vision and long-term amb
Slide 18: Projects update
Projects update • Four ongoing and one new software implementation project during the first half of the year. • Work to date in respect of the new customer has been performed under specific fixed term engagement letters whilst the software licence and maintenance agreements are being finalised • Dur
Slide 19: Implementation update
Implementation update H1 19: four ongoing and one new implementation projects Client descriptor Status Territory Auto Finance A User testing completed; final preparations for initial go- US live in 2020. Run rate continues at the current level on second phase. Auto Finance B Development complete. Te
Slide 20: Market overview
Market overview Long-term market prospects are promising, market fundamentals remain attractive but current macro-economic and political uncertainty driving customer buying behaviour − Decisions driven by digital adoption and operating efficiencies − OEMs affected by uncertainty of trading relations
Slide 21: Late stage pipeline
Late stage pipeline Potential client Size Partnership Territory descriptor Auto OEM B Medium N Europe Wholesale Finance A Medium N US Retail Bank C Alfa Start N UK OEM C Medium N LATAM Auto Finance D Large Y US Retail Bank B Large Y Europe Auto OEM A Large Y UK
Slide 22: Product development and innovation
Product development and innovation Ongoing investment in R&D is key to maintaining leadership of the Alfa Platform Started development in July moving Alfa Start (“Business in a Box”) towards maturity for the UK equipment finance market Generating returns on 2018’s digital investment − Digital capabi
Slide 23: Partnerships
Partnerships Additional element to Alfa’s growth strategy Two types of implementation partners: − Staff augmentation partners − System Integrators Delivered product and implementation induction training to a group of 8 staff augmentation partner team members in H1 19 − Have given standard partner on
Slide 24: Summary
Alfa’ Summary Andrew Denton, CEO
Slide 25: Summary
Summary • Difficult trading conditions have affected financial performance in 2019 • Alfa continues to make steady progress against its objectives, benefitting from a strong installed customer base, solid recurring revenues and committed implementation • Implementation revenue was enhanced by the ad
Slide 26: Q&A
Q&A
Slide 27: Definitions
Definitions Measures not specifically defined by IFRS Total contracted value Operating free cash flow conversion • TCV is calculated by analysing future contracted revenue • Operating cash conversion is calculated as cash from operations less gains or based on the following components: losses on set
Alfa Financial Software Holdings — H1 2019 Earnings Presentation on 6ix