Contract wins and trading update

 29 October 2020

Alfa Financial Software Holdings PLC

Contract wins and trading update

Alfa Financial Software Holdings PLC ("Alfa" or the "Company"), a leading developer of mission-critical software for the asset finance industry, today announces new contract wins as well as an update on trading.

At the time of our half-year results announcement on 29 September 2020 we had two prospects in our late stage pipeline where work had started and was ongoing but full contracts were yet to be signed.  We are pleased to announce that the two contracts, one for a leading US auto finance customer, and one for a leading US retail bank providing equipment finance in its home market, have now been signed.  The first contract win ranks in the top tier by contract value and the second ranks in the middle tier by contract value relative to other Alfa contracts.

In addition, we have won a five year extension to a maintenance and licence subscription for an existing client, which was not in the pipeline.  This contract win ranks in the top tier by contract value relative to other Alfa contracts and highlights the strength of Alfa's intellectual property to generate revenue.  Due to the licence component, this contract extension will impact our 2020 revenues as well as giving an additional underpin to our maintenance revenues through to 2025.

In addition to this strong momentum in converting our late stage sales pipeline and securing new contracts, trading was good through Q3 with revenues of £16m in the quarter.  This was in line with last year but down, as expected, on the run-rate for the first half due to the relative increase in holidays taken by our people during the period.  Cash generation during the period has continued to be strong.

As a consequence of the continuing strong trading performance, the greater revenue visibility as a result of strong contract win momentum, and the five year subscription extension referred to above, the Board now expects EBIT for the year ending 31 December 2020 to comfortably exceed FY19 actuals.  Given the macro-economic uncertainties, we still remain cautious for 2021, but the additional contracts recently secured will nonetheless benefit our financial performance next year.

Andrew Denton, Chief Executive Officer of Alfa said:

"We are delighted to see the improved contract momentum has continued with very strong recent pipeline conversion.  It is particularly encouraging to see the progress we have made in the US.  Our contract win with a US auto finance customer builds on our already strong presence in the US automotive market where we also recently announced Alfa Start for US Auto as well as our first go-live with that product.  Our win in US equipment finance is with one of the most prestigious names in another highly strategic market for Alfa and positions us well to increase our share in that market.  

The subscription extension strongly highlights the value of Alfa's intellectual property.  We will continue to use our software to create new revenue streams such as Cloud Hosting, which was one of the highlights of the half-year results.

We are pleased that our investment in developing products such as Alfa Start and our recent release of new functionality in Alfa Systems version 5.6, particularly its digital capabilities, is reinforcing our intellectual property and resonating well with customers.  We are also seeing this through the continued development and conversion of the late stage pipeline, as well as increased early stage activity which is spread across the whole of our business.   This has the potential to replenish our pipeline, although this continues to be subject to macro-economic uncertainty.

Overall it is really pleasing to see that the momentum in the business is coming through into our increased financial expectations for the full year".

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Notes to Editors

Alfa has been delivering software systems and consultancy services to the global asset and automotive finance industry since 1990. Our best practice methodologies and specialised knowledge of asset finance facilitates delivery of large software implementations and highly complex business change projects. With an excellent delivery track record spanning three decades, Alfa's experience and performance is unrivalled in the industry.

Alfa Systems, our class-leading technology platform, is at the heart of some of the world's largest asset finance companies. Key to the business case for each implementation is Alfa Systems' ability to replace multiple customer systems with our single platform. Alfa Systems supports both retail and corporate business for auto, equipment, wholesale and dealer finance on a multijurisdictional basis, including leases/loans, originations and servicing. An end-to-end solution with integrated workflow and automated processing using business rules, Alfa Systems provides compelling solutions to asset finance companies.

Alfa Systems is currently used by customers or has live implementations in 26 countries and Alfa has offices in Europe, Australasia and North America. For more information, visit www.alfasystems.com.