In the words of management, “2018 was a challenging year” for Alfa Financial Software (ALFA). A fitting precis: the group’s market value crashed last June, after it warned on profits – citing customer project delays. However, the full-year results signalled improving prospects for the provider of software to the asset finance industry. Its shares were marked up by more than a fifth in response.
As was to be expected, the key performance metrics weren’t exactly encouraging. Software implementation revenues declined by 30 per cent to £30.4m, after the (pre-disclosed) pausing of an ongoing implementation by a major customer and the slower-than-expected conversion of the group’s sales pipeline. In turn, Alfa relied more heavily on its ongoing development and services (ODS) segment, which grew 15 per cent to £23.9m.
But the group is now progressing on new sales opportunities. It is in contractual discussions with a new European customer, and is working on an implementation for an existing multinational customer. It has also merged its sales and commercial teams, with a view to speeding up the pace at which sales are turned around.
House broker Numis expects adjusted pre-tax profit of £23.4m and EPS of 6.2p, against £22.5m and 6p in 2018.
| ALFA FINANCIAL SOFTWARE (ALFA) | ||||
| ORD PRICE: | 151p | MARKET VALUE: | £452m | |
| TOUCH: | 149-151p | 12-MONTH HIGH: | 483p | LOW: 101p |
| DIVIDEND YIELD: | nil | PE RATIO: | 24 | |
| NET ASSET VALUE: | 24p* | NET DEBT: | £44.9m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014** | 43.3 | 18.2 | na | na |
| 2015** | 54.0 | 22.9 | na | na |
| 2016** | 73.3 | 17.2 | 2.8 | nil |
| 2017 | 87.8 | 33.9 | 9.1 | nil |
| 2018 | 71.0 | 22.5 | 6.3 | nil |
| % change | -19 | -34 | -31 | - |
| Ex-div: | na | |||
| Payment: | na | |||
*Includes intangible assets of £25.9m, or 9p a share **Pre-IPO figures. Alfa floated in June 2017 | ||||
