Alfa Financial Software’s (ALFA) pre-tax profits nearly doubled in the period under review, as demand held up during the coronavirus crisis. As such, sales leapt ahead of management’s original expectations for the six months to June.
Revenue growth was led by a particularly strong performance in the ongoing development and services division, where sales climbed by a half. Alfa attributed the growth to two pre-implementation customers – but since the period end, one project has been cancelled due to a dispute over contractual terms.
Its largest segment, software implementation, logged a 12 per cent growth in sales. But here, too, Alfa lost a customer – although the contract was cancelled because of coronavirus.
Looking ahead, the company cited strong progress in its late stage pipeline, but early-stage projects have halved compared with last year. Still, Alfa now expects that revenues through 2020 will come in ahead of current expectations. But uncertainty in the wider market prevails – management warned that it is still cautious about its prospects for 2021.
FactSet places consensus forecast EPS at 2.06p for the 2020 full year, rising to 1.87p in 2021.
| ALFA FINANCIAL SOFTWARE (ALFA) | ||||
| ORD PRICE: | 127p | MARKET VALUE: | £381m | |
| TOUCH: | 127-129p | 12-MONTH HIGH: | 120p | LOW: 53p |
| DIVIDEND YIELD: | nil | PE RATIO: | 27 | |
| NET ASSET VALUE: | 31p* | NET CASH: | £50.4m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2019 | 30.9 | 5.15 | 1.40 | nil |
| 2020 | 38.2 | 10.1 | 2.68 | nil** |
| % change | +24 | +95 | +91 | - |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes intangible assets of £27m, or 9p a share **Special dividend of 15p per share, payable on 6 Nov 2020 with an ex-dividend date on 15 Oct 200 | ||||
