Alfa Financial Software Holdings Plc · LSE:ALFA

Alfa Financial Software — FY2019 Earnings Presentation

28 slides from Alfa Financial Software's earnings presentation, Apr 23, 2020

  1. Slide 1: 2019 Annual Results Presentation

    2019 Annual Results Presentation 23 April 2020

  2. 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

  3. 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 3

  4. Slide 4: Introduction and Key Highlights

    Introduction and Key Highlights Andrew Denton, CEO 4

  5. Slide 5: Overview

    Overview FY 2019 outturn • Revenue in line with guidance, H2 boosted by contractual non-recurring revenue • Y-o-y revenue decline, due to delays in implementation projects and reduced discretionary spend by customers • Strong implementation delivery across seven customer implementations • Robust bal

  6. Slide 6: FY 2019 – at a glance

    FY 2019 – at a glance Financial and operational highlights £64.5m £12.7m £58.8m 142 % Operating free cash flow Revenue Adjusted EBIT(1) Cash conversion(1) 2018: £71.0m 2018: £22.0m 2018: £44.9m 2018: 87% 7 13 316 83% Implementation projects(3) ODS customers(2) Headcount at year end Staff retention r

  7. Slide 7: Financial Review

    Financial Review John Miller, Interim CFO 7

  8. Slide 8: 2019 Income Statement analysis

    2019 Income Statement analysis An overview of key metrics FY FY Overview 2018 2019 % Key Financial Metrics £m £m Change Change • 2019 revenue primarily impacted by: Revenue 71.0 64.5 (6.5) (9%) − Three new implementation customers in 2019 − New customer in pre-contract implementation services (inclu

  9. Slide 9: 2019 Income Statement analysis: Software implementation revenues

    2019 Income Statement analysis Software implementation revenues £m Software implementation revenues 2018 2019 Change • Seven implementation projects in 2019 (2018: New five, including one paused) - 8.8 8.8 • One go-live late 2019 Continuing 26.0 16.3 (9.7) • Three new implementation customers in 201

  10. Slide 10: 2019 Income Statement analysis: ODS revenues

    2019 Income Statement analysis ODS revenues £m ODS revenues 2018 2019 Change New • £2.3 million from two implementation customers - 2.3 2.3 Pre-implementation 1.0 2.5 1.5 • £2.5 million from two pre-implementation projects Continuing 19.9 13.1 (6.8) • Both now in implementation Completed or non-recu

  11. Slide 11: 2019 Income Statement analysis: Maintenance revenues

    2019 Income Statement analysis Maintenance revenues £m Maintenance revenues 2018 2019 Change • Continuing maintenance increased 4% y-o-y: New - 0.3 0.3 - Underlying annual increases; and Continuing 13.3 13.8 0.5 - Increased portfolio sizes. Hosting 0.3 0.6 0.3 • New maintenance relates to implementa

  12. Slide 12: 2019 Income Statement analysis: Expense analysis

    2019 Income Statement analysis Expense analysis £m Expenses 2018 2019 Personnel related expenses • Personnel expenses account for 72% of operating expenses 37.9 36.8 (2018: 78%) Advertising, sponsorship and marketing costs 0.8 0.6 • Higher cost base in FY20 Depreciation and amortisation 0.9 2.8 − Fu

  13. Slide 13: 2019 Cash flow statement

    2019 Cash flow statement £m Cash and cash equivalents 2018 2019 Operating profit 22.4 13.7 • Cash increase of £13.9 million Depreciation and amortisation 0.9 2.8 • 2019 Free cash flow conversion 142% (2018: 87% in Share based payments 0.3 0.7 2018: Unrealised loss on derivative financial instruments

  14. Slide 14: 2019 Balance Sheet: Assets

    2019 Balance Sheet Assets £m Balance sheet Dec 2018 Dec 2019 Total non-current assets • IFRS 16 adoption: 27.4 45.2 Current assets − Non-current assets increased by £18.0 million Trade receivables and accrued income 13.8 11.3 − Current liabilities increased by £1.5 million and Prepayments and other

  15. Slide 15: 2019 Balance Sheet: Liabilities

    2019 Balance Sheet Liabilities £m Balance sheet (continued) Dec 2018 Dec 2019 Total non-current assets 27.4 45.2 • Trade and other payables decreased due to bonus Current assets payment in April 2019 Trade receivables and accrued income • Deferred software revenue increased due to: 13.8 11.3 Prepaym

  16. Slide 16: Business and Sales Update

    Business and Sales Update Andrew Denton, CEO 16

  17. Slide 17: Business and sales update - Agenda

    Business and sales update - Agenda  Organisational changes Focused business development and enhanced leadership  Implementation update 4 go-lives, 5 agreements, 1 cancellation signed since H1 results  Late stage pipeline Less dependence on key customers  Product development and innovation Extend

  18. Slide 18: Organisational changes

    Organisational changes Refreshed business development function − Chief Revenue Officer oversees commercial, sales and marketing − Tighter coupling of sales, commercial and finance functions − Business development directors for Americas, EMEA and Australasia Improved organisational structures and str

  19. Slide 19: Implementation update

    Implementation update Four go-lives, five new agreements, one cancellation Client descriptor Status Location OEM A Front end went live in Spain, Germany and UK. Implementation phase Europe complete. Now an ODS customer. Auto Finance A Successful and high-profile go-live for high-volume portfolio in

  20. Slide 20: H1 2019 late stage pipeline update

    H1 2019 late stage pipeline update Two won, two in design, one lost Potential client Size Partnership Location Status descriptor UK, Europe & North Won, but subsequently Auto OEM B Alfa Start N America cancelled Retail Bank D Alfa Start N UK Won Pipeline. Design work Auto Finance D Large Y US being

  21. Slide 21: Late stage pipeline – additions since H1 2019

    Late stage pipeline – additions since H1 2019 Five new opportunities, one converted in Q1 2020 Potential client Size Partnership Territory Status descriptor Auto OEM C Medium N US Won Q1 2020 Pipeline. Initial work Retail Bank E Medium N US being carried out under SOW Auto Finance E Alfa Start N Eur

  22. Slide 22: Product development and innovation

    Product development and innovation Enhancing Alfa Systems’ competitive advantage Ongoing investment in R&D remains key to maintaining leadership of Alfa Systems Alfa Start (“Business in a Box”) development started, July 2019, with product launch, March 2020 following successful go-live with Hampshir

  23. Slide 23: Partnerships

    Partnerships Operational gearing Additional element to Alfa’s growth strategy Two types of implementation partners: − Staff augmentation partners − System integrators Delivered product and implementation induction training to over 30 staff augmentation partner team members in 2019 − As at 31 Decembe

  24. Slide 24: Summary

    Summary Andrew Denton, CEO 24

  25. Slide 25: Summary: 2019 performance and 2020 outlook

    Summary 2019 performance and 2020 outlook • Current trading in line with expectations • Revenues in line with Trading Update • Contractual non-recurring revenues boosted profitability • FY19 - three new implementation customers - Europe, South Africa, and UK • FY20 - announced contract wins in US Au

  26. Slide 26: Summary: Long-term value creation

    Summary Long-term value creation • Market fundamentals for Alfa Systems compelling in medium to long term • Customer decisions prompted by • Digital Darwinism • Auto • demand for electric and autonomous vehicles • adoption of e-commerce business platforms • Equipment will vary by sector • mining and

  27. Slide 27: Q&A

    Alfa’ Q&A

  28. Slide 28: Definitions

    Definitions Measures not specifically defined by IFRS Adjusted margin Operating free cash flow conversion Adjusted EBIT in 2019 is defined as profit from continuing operations before • Operating Free Cash Flow is calculated as cash from operations, less gains interest and income taxes, adjusted for

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