Shareholders were primed for disappointing half-year numbers from Alfa Financial Software (ALFA) after the asset finance software group issued a profit warning in June. However, judging by the 7 per cent fall in the shares on the day of the release of these results – admittedly exacerbated by a markedly small free-float – investors aren't ready to forgive the software group yet.
Two previously flagged contract delays contributed to the 48 per cent decline in revenue at the core software implementation division at £13.2m. However, the number of ongoing projects fell to four – excluding a fifth paused in the second quarter – from seven the prior year. Management said that while the group's pipeline of new work remained healthy, the pace of conversion had not materially increased. However, offering some encouragement, Alfa signed an upgrade and expansion agreement with a leading retail bank. Bosses note that this medium-sized project had already started contributing to performance.
Ongoing development and services business was another brighter spot, with underlying revenue up 40 per cent to £11.7m. Four new customers contributed almost £4.7m in sales, while the number of customers contributing more than £100,000 in revenue increased from 11 to 15.
Broker Numis forecasts adjusted pre-tax profits of £20.3m and EPS of 5.3p for 2018, against £41.3m and 11p in 2017.
| ALFA FINANCIAL SOFTWARE (ALFA) | ||||
| ORD PRICE: | 143.8p | MARKET VALUE: | £431m | |
| TOUCH: | 143.6-144p | 12-MONTH HIGH: | 548p | LOW: 131p |
| DIVIDEND YIELD: | nil | PE RATIO: | 18 | |
| NET ASSET VALUE: | 20p* | NET CASH: | £36.3m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 45.1 | 14.0 | 3.6 | nil |
| 2018 | 32.9 | 8.6 | 2.4 | nil |
| % change | -27 | -39 | -34 | nil |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes intangible assets of £25.6m, or 8.5p a share | ||||
