Alfa Financial Software Holdings PLC · LSE:ALFA
Alfa Financial Software — H1 2020 Earnings Presentation
29 slides from Alfa Financial Software's earnings presentation, Sep 29, 2020
Slide 1: H1 2020 Interim Results Presentation
H1 2020 Interim Results Presentation Challenging conditions highlighting our qualities 29 September 2020
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 Duncan Magrath, 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
Overview Review of H1 Looking forward • Revenue and profit significantly ahead of original • Tech leadership reinforced by Alfa iQ launch expectations and last year • Special dividend of £44m (15p per share) declared • Covid-19 disruption minimised at this stage: • High performance delivery continue
Slide 6: H1 2020 – at a glance
H1 2020 – at a glance Financial and operational highlights £38.2m +22% £10.4m 27% Revenue Revenue movement (1) Operating profit Operating profit margin H1 2019: £30.9m At constant currency H1 2019: £5.4m H1 2019: 17% 6 16 340 85% Implementation projects (2) ODS customers (3) Headcount Staff retentio
Slide 7: Financial Review
Financial Review Duncan Magrath, CFO
Slide 8: H1 2020 Income Statement analysis
H1 2020 Income Statement analysis Strong increase in revenue and profits 45 12 40 38.2 10.4 33.6 10 • 24% increase in revenue with increases 35 30.9 8.3 across all three segments 30 8 25 6 5.4 £m £m 20 • £2.7m overall revenue benefit from reduced 15 4 holidays taken, across both ODS and 10 2 impleme
Slide 9: H1 2020 - Software implementation revenues
H1 2020 - Software implementation revenues Increased billable days along with higher licence fee income No. of ongoing implementation customers during the period > £100k 5 7 8 • Strong licence fee income in the Total Revenue £38.2m period due to good progress on 20 implementations 16.2 14.4 8.2 15 1
Slide 10: H1 2020 – ODS revenues
H1 2020 – ODS revenues Strong growth in underlying revenues, from pre-implementation and follow on work from a completed implementation No. of customers during the period > £100k 12 13 16 • Two large pre-implementation Total Revenue £38.2m 16 customers with work continuing 14 from H2 2019 13.8 8.2 1
Slide 11: H1 2020 Maintenance revenues
H1 2020 Maintenance revenues Return to growth in maintenance revenues and growing cloud hosting fees No. of customers during the period 22 25 25 • New Customers - three additional Total Revenue £38.2m 8.4 customers compared with H1 8.2 8.2 2019 8.0 8.2 16.2 7.8 7.6 • Ongoing revenues up with Annual
Slide 12: H1 2020 Expenses
H1 2020 Expenses Continued investment in people but reduction in travel costs due to Covid-19 29 28.0 • Continuing to invest in people, with average 28 headcount up to 322 (H1 2019: 310), with lower 27 25.7 attrition rates 26 25.6 25 £m 24 • Personnel costs in H1 2020 include full half 23 year impac
Slide 13: H1 2020 Cash flow data
H1 2020 Cash flow data Cash conversion remains above 100% H1 H1 £m 2019 2020 Operating profit 5.4 10.4 • Cash increased to £68.6m Depreciation and amortisation 1.4 1.5 Share based payments 0.5 0.5 • H1 2020 Free Cash Flow Conversion of 108% Movement in provisions (0.4) (0.3) Movement in contract lia
Slide 14: H1 2020 Balance Sheet
H1 2020 Balance Sheet Robust balance sheet with net cash of £69m £m Dec 2019 Jun 2020 Total non-current assets 45.2 44.8 • Increase in receivables from year end due to higher Current assets billing and also some delayed billing for overseas Trade receivables and accrued income 11.3 17.4 customers Pr
Slide 15: Capital allocation and Special Dividend
Capital allocation and Special Dividend • Business continues to be cash generative • Net cash of £69m at 30 June 2020, and has continued to increase since then • We can grow the business naturally, with no need for significant M&A • We have looked at a range of downsides, and even in severe downside
Slide 16: Business and Sales Update
Business and Sales Update Andrew Denton, CEO
Slide 17: Market overview
Market overview Short term weakness, but medium term resilience Short-term Medium to Long term • Asset finance market more resilient in US, weaker • Asset finance markets do well during downturns, in UK /Europe with greater share of finance • US - ELFA(1) MLFI-25(2) July ytd new business • Secular d
Slide 18: Total Contract Value (“TCV”)
Total Contract Value (“TCV”*) Growth in TCV largely due to growing subscription revenues, but cautious due to economic uncertainty 100 96.4 • Implementation TCV has increased due to good development of 90 pipeline, including licence and additional phases of current 80.5 80 projects 70.1 70 • Custome
Slide 19: Pre-Implementation and Implementation update
Pre-Implementation and Implementation update Strong development on delivery implementation Client descriptor Size Partnership Territory Comment Retail Bank B L Y E Did not progress to implementation Pre Auto Fin. D L N US Implementation contract under negotiation Auto Fin. A L N US Phase 1 successfu
Slide 20: Late stage pipeline – update from Dec 2019
Late stage pipeline – update from 31 Dec 2019 Strong development of prospects in the period Potential Client descriptor Size Partnership Territory Comment Auto Fin. D L Y US Moved to Pre-implementation, design work being carried out under Letter of Engagement Auto Fin. E S N E Cancelled Auto Fin. F
Slide 21: Late stage pipeline – new additions
Late stage pipeline – new additions Encouraging additions to the pipeline Potential client descriptor Size Territory Comment Retail Bank F S UK/US Definition for new work plus v5 upgrade Retail Bank G S UK Shortlist of 2 Retail Bank H M UK Awarded – v5 upgrade OEM A L US Potential expansion into new
Slide 22: Growth accelerators
Growth accelerators Gaining traction Opportunity Progress in 2020 • Additional sales channel • Accenture engaged Partnerships • Access new opportunities and markets • Across our five partners we are • Provide flexible resource working with four different clients in four different geographies • Addre
Slide 23: Technology Leadership
Technology Leadership Alfa iQ: The intelligence platform for asset finance • Alfa iQ is a joint venture between Alfa and Blaise Thomson’s Bitfount to leverage artificial intelligence and machine learning in asset and auto finance • Blaise was a founder and CEO at VocalIQ, which was sold to Apple in
Slide 24: Summary
Alfa: Summary Andrew Denton, CEO
Slide 25: Summary and outlook
Summary and outlook • Pleased with H1 performance • We have coped well with the challenges we have faced – due to great people and technology • We have continued: • to win new work and develop late stage pipeline • our strong delivery record • to be a technology leader • We expect 2020 revenue to be
Slide 26: Q&A
Q&A
Slide 27: Customer Overview – at June 2020
Customer Overview – at 30 June 2020 Growth in ODS customers, underpinned by Maintenance and increasingly Cloud Hosting Service Custo mer number 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Pre-implementation 2 Implementation 6 Completed Imp. - moved to ODS 1 ODS 21 Main
Slide 28: Modelling considerations
Modelling considerations • Adjusted EBIT was calculated in 2019 by writing off capitalised development costs and then adding back the related amortisation • This adjustment should trend to zero over time, and as the net impact in 2020 H1 would have been only £0.2m – we have dropped this as an Altern
Slide 29: Definitions
Definitions Measures not specifically defined by IFRS Total Contracted Value Operating free cash flow conversion • TCV is calculated by analysing future contracted revenue based on the following components: • Operating free cash flow conversion is calculated as cash from operations, less capital exp
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