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
Slide 1: 2019 Annual Results Presentation
2019 Annual Results Presentation 23 April 2020
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
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
Slide 4: Introduction and Key Highlights
Introduction and Key Highlights Andrew Denton, CEO 4
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
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
Slide 7: Financial Review
Financial Review John Miller, Interim CFO 7
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
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
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
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
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
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
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
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
Slide 16: Business and Sales Update
Business and Sales Update Andrew Denton, CEO 16
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
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
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
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
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
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
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
Slide 24: Summary
Summary Andrew Denton, CEO 24
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
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
Slide 27: Q&A
Alfa’ Q&A
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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