26th Sep 2019 09:55
(Alliance News) - Alfa Financial Software Holdings PLC on Thursday said its first half revenue and profit declined due to delays in project implementations.
For the six months to June 30, the asset finance software firm posted a 6.2% year-on-year fall in revenue to GBP30.9 million from GBP32.9 million. Pretax profit shrunk by 40% to GBP5.1 million from GBP8.6 million.
Alfa said: "Key customer demand has been influenced by macro-economic and political uncertainties, which have depressed capital expenditure in our end markets. Revenue has decreased due to delays in the implementation of certain projects and a reduction in customer spend on optional upgrades and non-critical work."
Despite project delays, Alfa reported "strong delivery" across five customer implementations.
Software implementation revenue rose 9.4% year-on-year to GBP14.4 million from GBP13.2 million, but this was offset by declines elsewhere. Ongoing development & services revenue fell by 22% to GBP9.2 million from GBP11.7 million and Maintenance revenue fell 9.0% to GBP7.2 million from GBP8.0 million.
Turning to the full-year, Alfa reiterated a profit warning it issued earlier in September.
The company explained: "Competition for talent is high across our markets and consequently we expect to award remuneration increases for our delivery teams in excess of general inflation rates. Additionally, we expect to incur some one-off legal and professional costs in the second half of 2019. As a result, and as previously announced on September 16, the board now expects Alfa's full year proï¬t for 2019 to be significantly below its previous expectations."
The firm also anticipates baseline revenue between GBP63 million and GBP65 million though the estimate does not include a potential GBP4 million "revenue upside" it could achieve if it finalises new licence agreements. It reported revenue of GBP71.0 million in 2018.
Looking to 2020, Alfa said it expects political uncertainty and macro-economic conditions to continue to affect customer sentiment and buying behaviour.
Chief Executive Andrew Denton said: "Results for the period have fallen short of our plans. We have been disappointed that our revenues have fallen back due to delays in anticipated implementation projects, as well as reductions in discretionary spend by customers.
"The medium-term prospects for Alfa remain compelling with a number of pipeline opportunities across existing and new geographies. Those opportunities extend beyond our existing market segments and there is increasing interest in our pre-configured Alfa Start offering for the UK equipment finance market."
Shares in the company were 2.8% higher at 81.00 pence each in London on Thursday morning.
By Eric Cunha; [email protected]
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