Full Year Results for year ended 31 December 2025

Alfa Financial Software Holdings PLC

Full Year Results for the year ended 31 December 2025

Excellent delivery and financial performance with fast growing subscription revenues

Alfa Financial Software Holdings PLC ("Alfa" or the "Company"), a leading developer of software for the asset finance industry, today publishes its audited results for the twelve months ended 31 December 2025 ("the period").

Financial highlights:

Financial summary

(1) See definitions section for further information regarding calculation of measures not defined by IFRS.

Strategic highlights:

Growing SaaS Subscription revenues

Strong sales and Delivery momentum

Sustained investment in product, people, planet

Outlook 

We continue to maintain a very healthy sales pipeline and are encouraged by the activity in the earlier stages of the pipeline. For 2026 we expect strong Subscription revenue growth and good Delivery revenue growth. Over recent years we have been very successful in growing our US business so that it now accounts for 45% of our revenues, which at current exchange rates creates a headwind for growth in our reported results. Overall, despite the impact of currency headwinds and wider macro uncertainty, we expect to see good revenue growth in 2026 and beyond.

Andrew Denton, Chief Executive Officer

"In 2025 we delivered exceptional operational performance along with a very strong financial performance generating 17% constant currency revenue growth and a 32% operating profit margin, meaning our target of "Rule of 40" was well and truly beaten. It also was a year of strong strategic progress with Subscription revenues up 16%.

Over the years we have made deliberate and considered technical architecture decisions so that we have a pure cloud-native product that is robust at volume, yet flexible enough to continue to benefit from integrating or interfacing with the latest technologies, including AI. This is not only driving improvements and innovation for our customers it is allowing us to increase our addressable markets and expand our competitive advantage.

We have continued to focus on maintaining the strength of the Alfa culture, evidenced by our very high employee retention and engagement scores. The strength of our culture along with the proven success of our strategy, the quality of our people and our product, and our very healthy pipeline mean we remain confident in the outlook for the business."

Enquiries :

Investor and analyst webcast

The Company will host a conference call today at 09:45am. To obtain details for the conference call, please email [email protected]. Please dial in at least 10 minutes prior to the start time.

An archived webcast of the call will be available on the Investors page of the Company's website https://www.alfasystems.com/en-eu/investors

Notes to editors

Alfa has been delivering leading-edge technology to the global asset finance and leasing industry since 1990. Our specialised expertise enables us to deliver the most challenging systems transformation projects successfully.

Alfa Systems, our class-leading SaaS platform, is at the heart of the world's largest and most progressive asset finance operations. Supporting all types of automotive, equipment and wholesale finance, Alfa Systems is proven at volume and across borders, and trusted by leading brands to manage complex portfolios, drive efficiency and sustainability, and enhance the customer experience.

With full functionality for Originations, Servicing and Collections, Alfa Systems is live in 37 countries, representing an integrated point solution, a rapid off-the-shelf implementation, or an end-to-end platform for the complex global enterprise.

Alfa maintains exceptional customer satisfaction through an impeccable track record, with our experience and performance unrivalled in the industry. Our customers stick with us for the long term because we deliver value that lasts for decades.

Alfa has offices in Europe, Australasia and the Americas. For more information, visit us at alfasystems.com or on LinkedIn.

Forward-looking statements

This Full Year Report ("FYR") has been prepared solely to provide additional information to shareholders to assess the Group's strategies and the potential for those strategies to succeed. The FYR should not be relied on by any other party or for any other purpose. This report contains certain forward-looking statements. All statements other than statements of historical fact are forward-looking statements. These include statements regarding Alfa's intentions, beliefs or current expectations, and those of our officers, directors and employees, concerning (without limitation), with respect to the financial condition, results of operations, liquidity, prospects, growth, strategies and businesses of Alfa. These statements and forecasts involve known and unknown risks, uncertainty and assumptions because they relate to events and depend upon circumstances that will or may occur in the future and should therefore be treated with caution. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements. These forward-looking statements are made only as at the date of this announcement. Nothing in this announcement should be construed as a profit forecast. Except as required by applicable law, Alfa disclaims any obligation or undertaking to update the forward-looking statements or to correct any inaccuracies therein, or to keep current any other information contained in the FYR. Accordingly, reliance should not be placed on any forward-looking statements.

BUSINESS REVIEW

Strong strategic progress

Alfa is an enterprise software and delivery company. Our strategy for creating long-term, sustainable business value is to:

In 2025 we continued to make significant strategic progress, at the same time as delivering strong results.

In 2025 we continued to increase our functional lead over our competition with further releases of Alfa Systems 6 and developing new modules to cover US Auto Originations, Fleet and Commercial Finance.

We have continued to grow the Company and have increased our access to talent pools by establishing a smart hub in Poland while maintaining the extremely strong Alfa culture.

Our diversification across end markets and customers means that our top five customers now account for a third of our revenues, five years ago they were nearly two-thirds of our business.

Our delivery excellence remains a key differentiator for us, and this has continued in 2025 with 35 delivery events in the year.

Our customer retention is extremely high. Since the cloud-native version of Alfa Systems was launched in 2010, no customer has ever moved off an implemented modern version of Alfa onto a rival system. 

AI and Alfa - Focused, Practical and Value creating

Alfa views AI as an enabler of greater efficiency and customer value rather than a disruptor of its business model. Our approach is deliberately pragmatic and grounded in real use‑cases that enhance productivity, delivery efficiency and product capability.

We focus our AI strategy on four areas:

1. AI literacy across the organisation, ensuring our people can responsibly and effectively leverage new tools.

2. Internal efficiencies, using AI to streamline processes, reduce manual effort and improve operational scalability, including in software development.

3. Delivery acceleration, applying AI to reduce implementation costs and timelines for customers.

4. Product enhancements, embedding AI where it solves specific customer challenges and improves automation, insight and decision‑support.

Alfa's business model and product architecture provide a strong foundation for long‑term AI resilience and Alfa is well placed to benefit from advances in AI technology:

​

Strong growth driven by fast growing Subscription revenues

Financial performance was strong with continued growth in revenue and profit. Revenue was up 15% to £126.7m (2024: £109.9m) at actual exchange rates or up 17% at constant currency rates.

Subscription revenues continued to grow strongly, up 16% year on year, driven by growth from existing customers along with new customers. In 2025 we started to see strong growth in Subscription revenues from customers won in 2024.

Delivery revenues were up 15% to £63.5m (2024: £55.0m), with growth in 2025 accelerating from 2024 as the implementation of new projects we won in Q4 2024 ramped up. 

Software Engineering revenue growth overall was up 13% versus 2024 finishing the year at £19.6m (2024: £17.4m), but with a very different phasing than last year. This year revenue was stronger in H1 than H2, due to stronger demand for customer-led development, which was the opposite of 2024. Software Engineering revenues are dependent on the stage of implementation work and the maturity of the product in the markets it is being implemented into.

We delivered strong growth in operating profit, increasing 17% to £40.1m (2024: £34.3m) on the back of the 15% growth in revenues at a gross margin of 63.7% (2024: 64.5%). Slower growth in SG&A resulted in an improved operating margin of 31.6% (2024: 31.2%). Cash conversion in the year was 97% (2024: 89%) at the upper end of our expected range of 90% - 100%. We finished the period with cash of £26.4m (31 Dec 2024: £20.5m) and no borrowings.

Excellent level of TCV supporting future growth

Our definition of a "win" and consequently the stage at which projects are included in TCV is only once full contract packs are signed. Sometimes contract packs are signed before we start work with a new customer, sometimes they are negotiated as implementation is underway and in extremis they may only be signed shortly before go-live. Customer preference can therefore impact the number of wins in any one year and therefore impact the level of TCV.

During 2025 we signed contract packs with one customer, but we were working with - and being paid by - five out of the ten customers in the late-stage pipeline. Overall TCV of £227.5m was up 3% versus last year (2024: £221.3m) with particularly strong growth in our Subscription TCV. Demand for chargeable Software Engineering development can vary depending on the mix of business we are implementing at any point in time. In FY26 we expect a greater proportion of implementations to follow a simpler deployment pattern with less bespoke requirements, which reduces chargeable development but typically accelerates time to full Subscription run rate.

Our top five customer concentration has significantly reduced to 33% of our revenues in 2025, compared with 61% in 2019. Our largest customer represented 9% of our revenues in 2025. The stickiness of our customers on our modern software is demonstrated by NRR of 109% (2024: 103%) and the fact that since we went live in 2010 with version 5 of our software we have only lost two customers after go-live, one was bought by another Alfa customer and the other exited asset finance.

Delivery and Software Engineering agility

2025 was a busy year for Delivery with 35 go-live events. At the end of 2025 we had 20 customers on Alfa Systems 6. We continue to focus on simplifying and increasing the speed of our implementations so that we can deliver more concurrent implementations and Alfa Cloud is a key factor in facilitating smooth go-lives. To service this growing customer base and to ensure that we have a model that can scale with this growth we have opened a smart hub in Poland. While the initial focus for recruitment here is to support the growth in Cloud operations, we may also use it to find additional talent for Software Engineering and Delivery.

The progress we have made with our simplification objective now enables us to have one team support multiple customers. We have established Central Delivery Teams in the UK and USA and these have grown in importance as part of our overall support to clients. For example, in EMEA we have nearly doubled the number of people in the team, they now support 13 clients and delivered eight of the upgrades in the year. This has halved the average age of client versions, providing a better service to the clients and at the same time making it easier for us to maintain. 

A key lever in simplifying our implementations is Alfa Start both as a complete package but also as an accelerator for more complex implementations. In 2025 we continued to invest across UK Equipment, US Auto, US Equipment and APAC Start. In 2026 we will also invest into Euro Start with an initial focus on Germany as we see this as a market of growing strategic importance for us.

Investment in software

We continue to invest to maintain and increase our technology leadership in the market. We invested £37.7m into the further development of our software in 2025 (2024: £37.1m). Our investment was focused on US Auto Originations, Fleet and Commercial Finance. These will increase both the proportion of our market that we can access as well as the size of our total addressable market. We made good progress and benefited from working closely with customers in all three areas, which is our preferred way of making investments, as it ensures that we create software that is a great fit for the market as a whole.

Fleet and US Auto Originations functionality allows us to immediately access an additional part of our existing Target Addressable Market in asset finance, increasing the Serviceable Addressable Market.

The Commercial Finance market is something we have been developing for a while and investment in this area will continue into next year and beyond. Our initial focus is to work with customers in the asset finance market who have Commercial Finance offerings and we have seen keen interest in exploring our new syndications functionality. In the longer term, this will open up a brand-new addressable market of stand-alone Commercial Finance customers, meaningfully increasing our Target Addressable Market.

We will continue to invest in all three areas in 2026 along with improving our Point of Sale and Portal capability along with investing in Architecture to simplify the process for expanding the use of AI by Alfa Systems customers to truly embed AI as part of our SaaS solution.

Headcount growth, supported by strong retention

To deliver the growth in the business we continued to recruit both graduates and experienced hires in 2025, with the biggest increase in the US, where average headcount was up 20% compared with 2024. Headcount in the UK has increased 38% over the last two years. The success in focusing on maintaining our culture across the business can be seen from continued high retention rates of 97% (2024: 96%). The combination of our recruitment and high retention has resulted in headcount at the end of the year being up 5% at 527 (2024: 502) with average headcount in the period of 516 (2024: 485) up 6% on last year.

Capital return

We remain a highly cash-generative business, with cash conversion of 97% in 2025 (2024: 89%). We expect cash conversion to average 90 - 100% over time. We are committed to investing in our product and people to ensure that we continue to offer market leading solutions and excellent delivery and service to our customers.

Our mechanism for returning capital is the payment of a regular, ordinary final dividend and we have a policy to grow this progressively. We will also consider special dividends when we have excess capital.

Notwithstanding the return of £26.0m excess cash to shareholders during the year through ordinary and special dividends, an increase of £3.9m on 2024, we ended the year with cash increasing by £5.9m to £26.4m. As such, the Board has today proposed an ordinary dividend of 1.5 pence per share, up 7%, with an ex-dividend date of 28 May 2026, a record date of 29 May 2026 and a payment date of 26 June 2026. The ordinary dividend would amount to a total payment of c.£4.4m. In addition, the Board has decided to declare a special dividend of 3.1 pence per share, up 29% on the special dividend declared this time last year, with an ex-dividend date of 30 April 2026, a record date of 1 May 2026 and a payment date of 29 May 2026. The special dividend would amount to a total payment of c.£9.2m.

Stable market conditions

We have seen over the last few years that despite a difficult and at times volatile macro-economic environment the asset finance market and demand for software within it has remained robust.

With regards to winning future customers, we benefit by not being dependent on any one particular market. Alfa Systems is operational in 37 countries; in automotive finance, equipment finance and wholesale and loan finance; for OEMs, banks and independents and across all asset classes. This breadth and diversity has helped insulate us from any underlying economic uncertainty in any individual market.

The market itself is relatively robust and our software once installed with customers is even more resilient to changes as it is mission critical for our customers' businesses - in effect being heart and lungs software which cannot be easily replaced.

Strong pipeline

At the end of the year our late-stage pipeline remains strong with 10 prospects, up from eight at the start of 2025. We are the preferred supplier with eight of these and have started working under letters of engagement with five. The pipeline includes a good balance across all regions with four in EMEA (including UK), with three each in the Americas and AsiaPac. There is also a good spread across Auto and Equipment and between OEM and banks.

2025 continued the trend of macro uncertainty but our pipeline remained strong and we continue to see good levels of activity in the early-stage pipeline, showing that the buying dynamics of the market remain largely unchanged. 

We remain confident in both the demand for our best-in-class software and our ability to win work in the market.

Sustainability

We remain committed to our sustainability activities and this was recognised by winning the Corporate Social Award at the Asset Finance Connect Summer Awards and our inclusion in the FTSE4Good Index. We have provided work experience for a social mobility charity, social talks and events, and fund-raising activities which were driven by the energy and enthusiasm of our Alfa Communities.

We also have invested in improving the accessibility of Alfa Systems, particularly for those using screen readers. This involved automated testing but also a lot of manual testing and judgement to gauge how understandable the screens are. Great progress has been made in 2025 but there is more work to be done to ensure all parts of the system are at the level we want.

Outlook 

We continue to maintain a very healthy sales pipeline and are encouraged by the activity in the earlier stages of the pipeline. For 2026 we expect strong Subscription revenue growth and good Delivery revenue growth. Over recent years we have been very successful in growing our US business so that it now accounts for 45% of our revenues, which at current exchange rates creates a headwind for growth in our reported results. Overall however, despite the impact of currency headwinds and wider macro uncertainty, we expect to see good revenue growth in 2026 and beyond.

FINANCIAL REVIEW

Financial results

Revenues increased by 15% or £16.8m to £126.7m in the 12 months ended 31 December 2025 (2024: £109.9m), with growth at constant currency stronger at 17%. Revenues grew very strongly in the Americas, up 23% on the back of some large customer wins over the last 18 months, and now account for 45% (2024: 42%) of revenues.

Gross profit increased to £80.7m (2024: £70.9m) up £9.8m, with gross margin at 63.7% (2024: 64.5%) with the decrease in gross margin due to software capitalisation of £5.0m (2024: £5.3m) remaining in line with last year and so dropping as a percentage of revenue.

Sales, General & Admin expenses increased to £41.0m (2024: £36.6m) largely due to increased headcount and salary increases along with increased profit share payout resulting from increased profits. Gains on foreign exchange forward contracts of £1.5m (2024: £0.3m gain) partially offset this.

Overall operating profit increased by 17% to £40.1m (2024: £34.3m) with profit before tax of £40.1m (2024: £34.1m). 

The Effective Tax Rate ("ETR") for 2025 was 24.9% (2024: 24.9%) in line with last year. Profit for the period was £30.1m (2024: £25.6m).

Revenue

Subscription - Continuing strong growth in Subscription revenues

Subscription revenues arise from revenues from SaaS and other recurring services

Overall Subscription revenues increased strongly by 16% to £43.6m (2024: £37.5m) with the strongest growth arising from new customers not yet live along with growth from existing customers. Subscription customers now total 42 (2024: 39) of which 22 are on Alfa Cloud, 15 are on their own private cloud, 2 are on v4 of Alfa and 3 are in the late-stage pipeline. Of the 22 customers on Alfa Cloud, 6 are not yet live as they are currently in implementation. Subscription revenues account for 34% of overall revenues (2024: 34%)

We have a single-tenant SaaS solution. We and our customers benefit from a single standard code-set and database, but with multi-layer data segregation as opposed to code-based segregation used in multi-tenant SaaS models. One of the big benefits of this approach is that customers can control their release cycles rather than having an upgrade timetable dictated to them.

Our SaaS services are ISO 27001 and ISO 27018 certified and SOC1 and SOC2 audited to confirm compliance with controls around data security and availability. Given the mission-critical nature of our systems for our customers, having such third-party verification of our compliance with these standards is a key selling point.

Software Engineering - as expected a reduction in chargeable work in H2 following very strong H1

Software Engineering revenues largely arise from chargeable development work for new and existing customers, along with some perpetual licence recognition.

Software Engineering revenues for the year increased by 13%. In 2025 the biggest growth came from chargeable development revenue from new customers up £2.8m to £8.7m (2024: £5.9m). Following the transition to SaaS only sales, perpetual customised licence recognition is now a relatively small part of our business, with revenue of £2.8m in the period (2024: £3.3m). There were one-off licence revenues of £0.9m (2024: £0.8m).

Our strategy is to continue to develop our software, to ensure that we meet and exceed customer and market needs as they evolve and as the regulatory and commercial environment continues to change. We have the industry leading software and we continue to invest to increase that lead, through a balance of customer funded development and self-funded development.

Delivery - Continuing strong delivery execution

Delivery revenues arise from work for existing customers delivering new modules, upgrades, migrations and other services, as well as work with new customers on project definition and implementation of Alfa Systems.

We entered the year with a record level of TCV, and with the new implementation projects getting underway we saw strong growth in Delivery revenues up 15% to £63.5m (2024: £55.0m). This growth was driven by the 11 new customers in implementation not yet live where revenues were up £11.5m to £27.8m (2024: 16.3m). These projects are multi-year projects with go-lives in subsequent years and as customers progress from paid pipeline work through definition and into implementation, Delivery revenues increase.

Total revenues from existing customers, including V4 to V5/AS6 upgrades was £35.7m (2024: £38.7m). Revenue from V4 to V5/AS6 upgrades was £9.6m (2024: £6.4m). As V4 to V5/AS6 projects are replaced by new projects this will further boost Subscription revenues due to the higher incremental Subscription revenues they will generate in the future. 

We had 35 delivery events in the year which was significantly up on the 26 delivered in 2024 and matched the record 35 delivered in 2023. Customers continued to upgrade onto AS6 and by the end of 2025 there were 20 customers on AS6. There were three go-lives during the year. In September there was an important v4 to AS6 go-live in the Nordics for a European Equipment OEM who we hope to further roll out Alfa into new territories in the coming years. In October an existing Australian client opened their doors to a brand new business in New Zealand in under 10 months from starting definition work. This rapid implementation was only possible by using our new APAC Start accelerator. In December we went live with a UK Bank, using UK Equipment Start as an accelerator, although there are further phases before it will have the full run rate of contracts loaded.

In 2025 staff augmentation partners accounted for 8% (2024: 8%) of the chargeable days delivered to clients. During 2025 we worked on our US Auto Start product using the knowledge gained from existing US auto projects, with an aim of targeting the Tier 3 US Auto Finance market with PLD.

Total Contract Value (TCV)

Total contract value (TCV) at 31 December 2025 was £227.5m (31 December 2024: £221.3m). There was strong growth in Subscription TCV which grew as Subscription revenues from customers in implementation started to increase. Software Engineering and Delivery TCV were down, as a lot of the new projects in implementation have worked through their backlog. As contracts get converted out of the late-stage pipeline we will see increases in Delivery TCV, although the nature of the projects mean that we are not expecting a significant increase in the Software Engineering TCV.

Of the TCV at 31 December 2025, £98.2m (2024: £95.7m) is currently anticipated to convert into revenue within the next 12 months. The Subscription portion increased 18% to £49.5m (2024: £41.9m). Software Engineering TCV, was down 35% to £8.8m (2024: £13.5m) and Delivery TCV slightly down 1% to £39.9m (2024: £40.3m). As noted above as new contracts convert from the late-stage pipeline we expect the Delivery TCV to increase.

Operating profit

The Group's operating profit increased by £5.8m to £40.1m in 2025 (2024: £34.3m) reflecting the £16.8m increase in revenue offset by cost increases of £11.0m.

Headcount numbers were up 5% at 31 December 2025 at 527 (2024: 502), with average headcount of 516 up 6% on last year (2024: 485). Staff retention remained very high at 97%.

Cost of sales increased by £7.0m to £46.0m (2024: £39.0m) to support the growth in the business. This was due to higher headcount and salary costs along with increased hosting costs from the increasing scale of that business. Capitalised investment into the product remained in line with last year.

Sales, general and administrative (SG&A) increased to £41.0m in the year (2024: £36.6m). Salary costs were up 9% in the period to £15.7m (2024: £14.4m). Profit Share Pay, including employer's costs, in the period was £5.0m (2024: £4.2m). Share-based payment charges increased from last year to £1.9m (2024: £1.4m). Depreciation and amortisation increased to £3.3m (2024: £2.7m) as a result of increased intangible asset amortisation. Gains on forward currency contracts increased to £1.5m (2024: £0.3m). Other foreign currency gains/losses were a loss of £0.7m (2024: £0.2m gain). Other costs totalling £15.9m increased 10% on last year (2024: £14.4m) with employee benefits, principally healthcare costs, up 25% along with smaller increases elsewhere as a result of the growth in the business.

Other income increased from £0.0m last year to £0.4m this year due to increases in UK R&D Expenditure credit (RDEC).

Profit before tax

Overall profit before tax of £40.1m was up 18% on last year (2024: £34.1m). Net finance costs were £nil (2024: £0.2m).

Profit for the period

Profit after taxation increased by £4.5m, or 18%, to £30.1m (2024: £25.6m). The Effective Tax Rate for 2025 remained at 24.9% (2024: 24.9%).

Earnings per share

Basic earnings per share increased by 17% to 10.19 pence (2024: 8.68 pence). Diluted earnings per share increased by 18% to 10.14 pence (2024: 8.56 pence).

Cash flow

Cash generated from operations was up to £44.5m (2024: £37.3m) with the key factor being a very strong receivables performance, which reduced slightly from last year end despite increased revenues. Net cash generated from operating activities was £37.2m (2024: £28.4m) with tax payments of £6.6m down on the £8.2m for 2024 largely due to the recovery of Corporate Tax receivable from last year.

Cash (including the effect of exchange rate changes) increased by £5.9m to £26.4m at 31 December 2025, from £20.5m at 31 December 2024. There was £37.2m of net cash generated from operating activities (2024: £28.4m). Total dividends paid in the year, being the ordinary and two special dividends, increased by 18% to £26.0m (2024: £22.1m). Purchases of own shares in the period were £0.9m (2024: £0.7m) purely for shares into the Employee Benefit Trust. Net capital expenditure of £5.4m was slightly down on last year (2024: £5.6m) with investment into the product slightly down on last year to £5.0m (2024: £5.3m) and with other capex of £0.4m (2024: £0.3m).

The Group's Operating Free Cash Flow Conversion (FCF) of 97% (2024: 89%) was up on last year and better than expected due to higher receipts at year end.

Balance sheet

The significant movements in the Group's balance sheet, aside from the cash balance which is described above, from 31 December 2024 to 31 December 2025 are detailed below.

Trade receivables decreased slightly from £8.6m at 31 December 2024 to £8.5m at 31 December 2025. They remain extremely tightly controlled with overdue debtors only £0.7m (2024: £0.5m) and these are all within 30 days overdue. All of the year end receivables have now been collected.

Accrued income was up on last year end at £5.5m (31 December 2024: £4.7m). Corporation tax recoverable of £0.7m was down on last year (31 December 2024: £2.8m) due to settlements received related to R&D claims.

Trade and other payables balance increased by £1.5m to £13.2m (31 December 2024: £11.7m) which was driven primarily increased amounts due relating to payroll, including profit share.

Contract liabilities relating to software licences increased slightly to £9.2m (31 December 2024: £8.1m). Contract liabilities from deferred maintenance decreased to £4.7m (31 December 2024: £7.6m) as more customers moved onto monthly Subscription payments.

Going concern

The financial statements are prepared on the going concern basis. This is considered appropriate due to the reasons stated in note 1.1.

Subsequent events and related parties

There have been no subsequent events that require disclosure. Details about related party transactions are disclosed in note 31.

DEFINITIONS

Constant currency

When the Company believes it would be helpful for understanding trends in its business, the Company provides percentage increases or decreases in its revenues to eliminate the effect of changes in currency values. When trend information is expressed herein "in constant currencies", the comparative results are derived by re-calculating comparative non-GBP denominated revenues using the average exchange rates of the comparable months in the current reporting period.

Operating Free Cash Flow (FCF) conversion

Calculated as cash generated from operations, less capital expenditures, less the principal element of lease payments in respect of IFRS16. Operating free cash flow conversion represents operating free cash flow generated as a proportion of operating profit.

Operating FCF is calculated as follows:

Total Contract Value (TCV)

TCV is calculated by analysing future contract revenue based on the following components:

(i) an assumption of three years of Subscription payments assuming these services continued as planned (actual contract length varies by customer);

(ii) the estimated remaining time to complete Delivery and Software Engineering deliverables within contracted software implementations, and recognise deferred licence amounts (which may not all be under a signed statement of work); and

(iii) Pre-implementation and ongoing Delivery and Software Engineering work which is contracted under a statement of work. 

As TCV is a reflection of future revenues, forward looking exchange rates are used for the conversion into GBP. The exchange rates used for the TCV calculation are as follows:

Investment in product

This represents the cost of time invested into developing and enhancing the software, including on specific customer developments that are largely chargeable. It is calculated by multiplying the time spent by a day rate which is based on salary costs (varying by seniority) plus a flat overhead allocation.

Annual Recurring Revenue (ARR)*

Represents the average value of customer Subscription contracts in the six months to the reporting date, annualised.

Excludes any revenues that are one-time or, at contract inception, not expected to be recurring for a period more than 12 months.

Net Revenue Retention % (NRR)*

Measures the percentage of recurring revenue retained from customers over the last 12 months, including upsells and expansions, and net of customer losses.

* These measures have been included to reflect the increased importance of Subscription revenues to the Group.

Consolidated statement of profit or loss and comprehensive income

The above consolidated statement of profit or loss and comprehensive income should be read in conjunction with the accompanying notes.

Consolidated statement of financial position

The above consolidated statement of financial position should be read in conjunction with the accompanying notes.

Consolidated statement of changes in equity

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

Consolidated statement of cash flows

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.

Notes to the consolidated financial statements for the year ended 31 December 2025

1. Summary of significant accounting policies

This note provides a list of the significant accounting policies adopted in the preparation of these consolidated financial statements. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial statements are for the Group, consisting of Alfa Financial Software Holdings PLC (Alfa or the Company) and its subsidiaries, and are presented to the nearest £0.1m unless otherwise stated.

The principal activity of the Group is to develop, implement and support software and SaaS solutions to the auto and equipment finance industry in the United Kingdom, Europe, Africa, Americas, and Australasia.

1.1 Basis of preparation

Statement of Compliance

The preliminary results for the year ended 31 December 2025 are prepared in accordance with UK adopted International Accounting Standards (IAS) and interpretations by the IFRS Interpretations Committee applicable to companies reporting under UK adopted IFRS. They do not include all the information required for full annual statements and should be read in conjunction with the 2025 Annual Report. The accounting policies adopted in this preliminary announcement are consistent with the Annual Report for the year ended 31 December 2025.

The financial information has been extracted from the financial statements for the year ended 31 December 2025, which have been approved by the Board of Directors on 11 March 2026. They have been reported on by the Group's auditors and will be delivered to the Registrar of Companies in due course. The report of the auditors was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498(2) or (3) of the Companies Act 2006. 

The comparative figures for the financial year 31 December 2024 have been extracted from the Group's statutory accounts for that financial year. The Board of Directors approved the 2024 Group financial statements on 12 March 2025, and they have been delivered to the Registrar of Companies. The report of the auditors was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

The financial information contained in this announcement does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006.

Compliance with IFRS

The consolidated financial statements of the Group have been prepared in accordance with the Companies Act 2006 and with United Kingdom adopted International Accounting Standards.

Historical cost convention

The consolidated financial statements have been prepared under the historical cost convention, other than the revaluation of financial assets and financial liabilities recorded at fair value through profit or loss.

Going concern

The financial statements are prepared on the going concern basis. The Group continues to be cash-generative and the Directors believe that the Group has a resilient business model. The Group meets its day-to-day working capital requirements through its cash reserves generated from operating activities. The Group's forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Group has sufficient cash reserves to continue to operate for a period of not less than 12 months from the date of these financial statements.

The going concern assessment also includes downside stress testing in line with FRC guidance which demonstrates that even in the most extreme downside conditions considered reasonably possible, given the existing level of cash held, the Group would continue to be able to meet its obligations as they fall due.

On this basis, the Directors consider it appropriate to continue to adopt the going concern basis of accounting in preparing the financial statements.

New and amended standards adopted by the Group

The Group has not adopted any new and amended standards in the current financial year that have had any material impact on the disclosures or on the amounts reported in these financial statements.

New standards, amendments and interpretations not yet adopted

At the date of authorisation of these financial statements, the Group has not applied the following new and revised IFRS Standards that have been issued but are not yet effective:

The Directors have not yet completed a detailed assessment of the impact of these new and revised standards. IFRS 18 is not expected to have a material impact on the recognition and measurement of the Group's assets and liabilities but is expected to affect the presentation and disclosures in future periods. UK SRS S1 and UK SRS S2 are expected to impact the nature and extent of the Group's sustainability‑related and climate‑related disclosures rather than the amounts recognised in the consolidated financial statements.

1.2 Group structure

Basis of consolidation

Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. Unless otherwise stated, subsidiaries have share capital consisting solely of ordinary shares, and the proportion of ownership interests held equals the voting rights held by the Group. The country of incorporation or registration is also each subsidiary's principal place of business.

All intra-group transactions, balances, income and expenses are eliminated on consolidation. All subsidiaries have a 31 December year end. The Group exercises control over the employee benefit trust (EBT) because it is exposed to, and has a right to, variable returns from this EBT and is able to use its power over the EBT to affect those returns. The EBT is therefore consolidated by the Group.

1.3 Segment reporting

Operating and reporting segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker (CODM). The Group's Chief Executive Officer (CEO), who is responsible for allocating resources and assessing performance, has been identified as the CODM.

The CODM regularly reviews the Group's operating results in order to assess performance and to allocate resources. The CODM considers the business from a product perspective and, therefore, recognises one operating and reporting segment, being the sale of software and related services. The Group splits revenue by type of activity but reports operating results on a consolidated basis, as presented to the CODM, along with the required entity-wide disclosures.

The Group discloses revenue split by type of activity, being Subscription, Software Engineering and Delivery.

a. Subscription revenues include recurring revenues paid on a monthly or annual basis, including subscription licence revenues, maintenance and cloud hosting.

b. Software Engineering revenues include revenues from development, the recognition of customised licence revenue, and any one-off licence fees.

c. Delivery revenues are revenues from any work done for customers including pre-implementation, implementation work and ongoing services.

See note 1.5 for details of our revenue recognition accounting policy and note 2 for the critical accounting judgements in relation to revenue recognition.

1.4 Foreign currency translation

Functional currency

Items included in the consolidated financial statements of each of the Group's subsidiaries are measured using their functional currency. The functional currency of the parent and each subsidiary is the currency of the primary economic environment in which the entity operates. See applicable exchange rates used in 2025 and 2024 below:

Presentation currency

The consolidated financial statements are presented in pounds sterling. The Company's functional and presentation currency is pounds sterling.

Group companies

The results and financial position of foreign operations (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

On consolidation, exchange differences arising from the translation of any net investment in foreign entities are recognised in other comprehensive income. When a foreign operation is sold, the associated exchange differences are reclassified to profit or loss, as part of the gain or loss on sale.

Foreign currency transactions

Transactions in foreign currencies are translated into the respective functional currencies using the exchange rates prevailing at the dates of the transactions. Foreign exchange differences arising from the settlement of such transactions and from the translation at the reporting date of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss. See applicable exchange rates used by the Group above.

1.5 Revenue recognition

The Group derives revenue by type of activity being Subscription, Software Engineering and Delivery (as disclosed in note 1.3).

i Subscription revenue includes the periodic rights to use Alfa Systems, periodic maintenance, and subscription (including cloud hosting).

ii Software Engineering revenue includes chargeable development revenue, customised licence revenue, options over the right to use Alfa Systems, and one-off licence fees.

iii Delivery revenue includes software implementation services.

The Group provides the right to use, software development services, core implementation services and ongoing support of its product, Alfa Systems. The Group's contractual arrangements contain multiple deliverables or services, such as the development or customisation of the software to the customer's requirements, implementation services such as migration of data and testing, and certain project management services.

Alfa assesses whether there are distinct performance obligations at the start of each contract and throughout the performance of the implementation, development and services projects and maintenance period. These performance obligations are laid out in this note.

Any one contract may include a single performance obligation or a combination of those listed below:

1.5.1 Software implementation services

Where implementation services are considered to be distinct, i.e. when relatively straightforward, do not require additional development services and could be performed by an external third party, the implementation services are accounted for as a separate performance obligation from any development services.

When a customer is in the process of implementing the software, the transaction price is allocated to this based on the stand-alone selling prices (derived from standard day rates) and is recognised over time based on the effort incurred, limited to the amount to which Alfa has a right to payment. For customers under the Group's subscription-based contracts that are undergoing implementation, revenue for software implementation services is deemed to be distinct from any other performance obligation. Recognition over time is appropriate because customers simultaneously receive and consume the benefits provided. A percentage-of-completion basis is used to estimate progress towards completion of the performance obligation over time. To calculate the percentage-of-completion, data is derived from timesheets for the days worked for the customer on implementation work and compared with the latest forecast of total implementation days to be completed on the project. When the type of services provided are ongoing services, the transaction price is deemed to be the actual day rate, and revenue is recognised at a point in time as the service is provided.

1.5.2 Development services and licence services (the customised licence)

Another performance obligation is the granting of a right to use Alfa Systems, which includes the delivery of the related software licence and any development efforts which change the underlying code. During the initial phase of implementing the software, the total revenue attributable to this performance obligation is estimated at the outset of the relevant software implementation project and recognised as the effort is expended, on a percentage-of-completion basis, limited to the amount of revenue to which Alfa has the right to payment. See note 5.6 for the accounting policy for variable consideration.

Recognition over time is appropriate because customers obtain the ability to benefit from the product from the start of the implementation project; the development or customisation of the asset is tailored to the customer's specific requirements; and the customer is entitled to the benefits of the efforts as at the date the efforts are delivered. A percentage-of-completion basis is used to estimate progress towards completion of the performance obligation over time. To calculate the percentage-of-completion, data is derived from timesheets for the days worked for the customer on development work and compared with the latest forecast of total development days to be completed on the project.

Revenue attributable to development services is valued using the residual value method as there are no stand-alone selling prices which are observable, as each project is customised. For customers under the Group's subscription-based contracts that are undergoing implementation, revenue for development services is deemed to be distinct from any other performance obligation and is recognised based on a percentage-of-completion basis.

Once the customer is already using the software, and the services provided are ongoing development, the transaction price is deemed to be the actual day rate and revenue is recognised at a point in time as the development service is provided.

1.5.3 Option over the right to use Alfa Systems

In the event that perpetual licence customers have to pay periodic maintenance fees in order to keep using Alfa Systems, a component of these future maintenance fees is attributable to the right to use the software. In these circumstances, the licence granted by Alfa is considered to renew in future periods. There may be a material right in respect of discounts in future periods. In order to ascribe a value to this option, management annualises the value of the customised licence performance obligation and compares it to the annual right to use software performance obligation post-go-live.

The value of this option is built up from the start of the implementation project in line with the percentage-of-completion of development revenue described in note 1.5.2 above. Following the completion of the implementation project, the value of this option is recognised evenly over the expected remaining customer life.

1.5.4 Periodic right to use Alfa Systems

When a customer pays its maintenance fee annually, this performance obligation represents the proportion of this fee which relates to the periodic option to renew the right to use Alfa Systems. If there is the right of clawback of the annual right to use, such amounts are recognised throughout the annual period. If there is no right of clawback, then the annual right to use amount is recognised in full when there is a right of collection.

When a customer pays for its maintenance fee as part of a subscription contract (see note 1.5.6 below), it will not be treated as a separate performance obligation (and will instead be part of the subscription amount).

1.5.5 Periodic maintenance amounts

This represents the stand-alone selling price of the ongoing support or maintenance of Alfa Systems which is recognised throughout the period over which the services are delivered.

1.5.6 Subscription amounts

Certain of the Group's implementation and service contracts include a subscription payment mechanism. This represents a monthly fee charged to the customer covering one or more of the following performance obligations: the provision of monthly hosting services; the monthly periodic right to use Alfa Systems; and the provision of monthly maintenance services (when this becomes applicable to the customer). The monthly payments are recognised as revenue in the period to which they relate. This reflects the underlying performance obligations of the Group and termination rights of the customer.

1.5.7 One-off revenue amounts

From time to time, the Group is entitled to receive one-off licence revenue from its customers as they increase the number of contracts on their version of Alfa Systems. Additionally, there are times when catch-up periodic maintenance amounts are entitled to be received by the Group, also as a result of the increased number of contracts. Generally, this revenue is recognised at the point in time it is invoiced, or becomes contractually payable, reflecting the fact that the Group has no remaining performance obligations to satisfy.

Costs to obtain contracts

The Group incentivises its sales force for securing sales. In line with IFRS 15, these costs are capitalised and are amortised in line with the percentage-of-completion of the software implementation project to which they relate.

Costs to fulfil contracts

The Group has recognised an asset in relation to employee costs to fulfil its long-term development contracts (as disclosed in note 20). These costs relate directly to the contracts, generate or enhance resources to be used to satisfy performance obligations in the future and are expected to be recovered. This asset is presented within prepayments in the statement of financial position. These costs are amortised within cost of sales in line with the percentage-of-completion of the development project to which they relate.

1.6 Operating expenses

Operating expenses include items such as personnel costs (including training and recruitment), cost of software not capitalised, research and development costs, and other infrastructure expenses. These items have been grouped into the following categories for disclosure purposes:

· Cost of sales - this includes salaries and other direct costs associated with satisfying customer contracts (including hosting costs) and for developing software.

· Sales, general and administrative expenses - this includes all the residual operating costs.

1.7 Income tax

Taxation expense for the year comprises current and deferred tax recognised in the reporting period. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. Current or deferred taxation assets and liabilities are not discounted.

Under the R&D Expenditure Credit (also referred to as the 'RDEC') scheme, the Group has received a tax credit based on qualifying R&D expenditure. This tax credit is recognised within pre-tax income, as 'Other Income'.

Current tax

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the reporting date in the countries where the Group and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred tax

Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the Group's consolidated financial statements. However, deferred income tax assets and liabilities are not recognised on the initial recognition of an asset or liability in a transaction other than a business combination which, at the time of the transaction, affects neither accounting nor taxable profit and does not give rise to equal taxable and deductible temporary differences.

Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the reporting date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred income tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes, assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

1.8 Leases

The Group enters into lease contracts in respect of various properties and motor vehicles. These rental contracts are typically made for fixed periods of two to ten years, and sometimes have extension options. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. In accordance with IFRS 16, leases are recognised as a right-of-use asset with a corresponding liability, at the date at which the leased asset is available for use by the Group. These assets and liabilities are initially measured on a present value basis (as set out in more detail below), with each subsequent lease payment allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease period to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset is depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis.

Alfa assesses whether a contract is, or contains, a lease at inception of the contract. The Group recognises a right‑of‑use asset and a corresponding lease liability, with respect to all lease arrangements in which it is the lessee, except for short‑term leases (defined as leases with a lease term of 12 months, or less) and leases of low-value assets. For these leases, the Group recognises the lease payments as an expense on a straight‑line basis over the term of the lease, unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed.

Lease liabilities

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the Group uses its incremental borrowing rate.

Lease payments included in the measurement of the lease liability comprise:

The lease liability is presented in separate lines, split between current and non-current liabilities, in the consolidated statement of financial position. It is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made.

The Group remeasures the lease liability (and makes a corresponding adjustment to the related right‑of‑use asset) whenever:

Right-of-use assets

The right‑of‑use assets comprise:

The right‑of‑use assets are presented as a separate line in the consolidated statement of financial position.

The right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses (if applicable). They are depreciated from the commencement date of the lease and over the shorter period of the lease term and useful life of the underlying asset. If a lease transfers ownership of the underlying asset, or the cost of the right‑of‑use asset reflects an expectation that the Group will exercise a purchase option, the related right‑of‑use asset is depreciated over the useful life of the underlying asset. Currently, the Group does not have any leases that include a purchase option, or transfer ownership of the underlying asset.

Whenever the Group incurs an obligation for costs to dismantle and remove a leased asset, restore the site on which it is located, or restore the underlying asset to the condition required by the terms and conditions of the lease, a provision is recognised and measured under IAS 37.

Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated). The assessment is reviewed if a significant event or a significant change in circumstances occurs which affects this assessment and that is within the control of the lessee. During the current financial period, there have been no changes in such assessments.

Variable rents that do not depend on an index, or rate, are not included in the measurement of the lease liability and the right‑of‑use asset. The related payments are recognised as an expense in the period in which the event or condition that triggers those payments occurs and are included as an expense in the consolidated statement of profit or loss and comprehensive income.

1.9 Impairment of non-financial assets

Goodwill is tested annually for impairment. The carrying amount is allocated to the cash-generating unit (CGU) that is expected to benefit from investment and which represents the lowest level at which the goodwill is monitored for internal management purposes. The carrying value of the CGU is then compared to the higher of its fair value less costs of disposal and its value in use. Any impairment attributed to the goodwill is recognised immediately as an expense and is not subsequently reversed.

Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount might not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (CGUs). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.

1.10 Cash and cash equivalents

Cash and cash equivalents include cash at bank and in hand as well as short-term deposits with original maturities of three months or less.

1.11 Financial assets

Recognition and derecognition

Financial assets are recognised in the statement of financial position when the Group becomes party to the contractual provision of the instrument.

Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and substantially all the risks and rewards are transferred.

Classification and initial measurement of financial assets

Except for those trade receivables that do not contain a significant financing component and are measured at the transaction price in accordance with IFRS 15, all financial assets are initially measured at fair value adjusted for transaction costs (where applicable). Financial assets, other than those designated and effective as hedging instruments, are classified into the following categories:

All income and expenses relating to financial assets that are recognised in profit or loss, where material, are presented within finance costs, finance income or other financial items, except for impairment of trade receivables which is presented within sales, general and administrative expenses.

Subsequent measurement of financial assets

Financial assets are measured at amortised cost if the assets meet the following conditions (and are not designated as FVTPL):

After initial recognition, these are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial. The Group's trade and most other receivables (notes 19 and 20) and cash and cash equivalents (note 21) fall into this category of financial instruments.

Impairment of financial assets

Under IFRS 9, the requirements are to use forward-looking information to recognise expected credit losses - the 'expected credit loss (ECL) model'. The Group considers a broad range of information when assessing credit risk and measuring expected credit losses, including past events, current conditions, and reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the instrument.

1.12 Trade receivables

Trade receivables are amounts due from customers for licences sold or services performed in the ordinary course of business. They are generally due for settlement within 30 days of the invoice date and are therefore all classified as current. Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment.

The Group has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue. The expected impairment loss is recognised in the consolidated statement of profit or loss and comprehensive income within sales, general and administrative expenses, and subsequent recoveries are credited to the same account previously used to recognise the impairment charge. During the current and prior period, the result of the above was immaterial and no impairment loss has been recognised.

The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above. The credit qualities of these receivables are periodically assessed by reference to external credit ratings (if available) or to historical information about their default rates. The Group does not hold any collateral as security.

As the total carrying amount of the current portion of the trade and other receivables is due within the next 12 months after the reporting date, the impact of applying the effective interest method is not significant and, therefore, the carrying amount equals the contractual amount or the fair value initially recognised.

1.13 Property, plant and equipment

Property, plant and equipment is stated at historical cost less accumulated depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the item. Depreciation on assets is calculated using the straight-line method to allocate their cost over their estimated useful lives, as follows:

The assets' residual values and useful lives are reviewed and adjusted if necessary at each reporting date. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount. Repairs and maintenance are charged to the consolidated statement of profit or loss and comprehensive income as incurred. Any gains or losses on disposals are recognised within sales, general and administrative expenses in the consolidated statement of profit or loss and comprehensive income unless otherwise specified.

Property, plant and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount, which is the higher of an asset's fair value less costs to sell and value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows.

1.14 Goodwill and other intangible assets

Goodwill

Goodwill arose on the acquisition of subsidiaries in 2012 and represents the excess of the consideration transferred over the fair value of the identifiable assets acquired and the liabilities and contingent liabilities assumed.

The Group assesses whether goodwill has suffered any impairment on an annual basis in accordance with the accounting policy stated in note 1.9 above. There is one CGU, being the Group, as its geographical operations do not have separate or distinct cash inflows. The recoverable amount of goodwill has been determined based on value-in-use calculations using cash flow projections from financial budgets and forecasts.

Budgeted cash flow projections are based on the expectation of signing new customers in the Group's sales pipeline as well as ongoing projects with existing customers. Budgeted gross margin is based on historical evidence and the expectations of market development and efficiency leverage. Management believes that any reasonable change in any of the key assumptions on which the recoverable amount is based would not cause the reported carrying amount to exceed the recoverable amount of the CGU. The discount rate used reflects the Group's pre-tax weighted average cost of capital (WACC), as adjusted for region-specific risks and other factors as required by IFRS.

Intangible assets

Internally generated intangible assets are initially measured at cost, and only qualify for capitalisation if the Group can demonstrate all of the following:

The cost for internally generated intangible assets is based on the time spent by staff on product development activities, to which a day rate based on salary cost is applied. Development expenditure incurred on minor or major upgrades, or other changes in software functionality, does not satisfy the criteria, where it is considered that the product is not substantially new in its design or functional characteristics. Such expenditure is therefore recognised as an expense. The Group continually assesses the eligibility of development costs for capitalisation on a project-by-project basis. See note 15 for disclosure of development costs which have met the criteria of IAS 38 for recognition.

Externally acquired intangible assets are initially recorded at historical cost. Historical cost includes expenditure that is directly attributable to the acquisition of the item.

The Group amortises intangible assets with a limited useful life, using the straight-line method over the following periods:

Amortisation is presented within sales, general and administrative expenses.

Research and development costs which do not meet the criteria set out above are recognised as an expense when incurred. Development costs previously recognised as an expense are not recognised as an asset in subsequent periods.

1.15 Trade and other payables

Trade payables are obligations to pay for goods or services which have been acquired in the ordinary course of business from suppliers. Trade payables are recognised initially at fair value and subsequently measured at amortised costs using the effective interest rate method. As the total carrying amount is due within the next 12 months from the reporting date, the impact of applying the effective interest method is not significant and, therefore, the carrying amount equals the contractual amount or the fair value initially recognised.

The Group's financial liabilities include trade and other payables and lease liabilities. Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs unless the Group designated a financial liability at fair value through profit or loss. Subsequently, financial liabilities are measured at amortised cost using the effective interest method. All interest-related charges and, if applicable, changes in an instrument's fair value that are reported in profit or loss are included within finance costs or finance income. The Group derecognises financial liabilities when, and only when, the Group's obligations are discharged, cancelled or expired.

Trade and other payables and lease liabilities are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities.

1.16 Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is more likely than not that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount can be made. When the effect of the discounting is material, provisions are measured at the present value of the expenditures expected to be required to settle the obligation.

1.17 Employee benefits

The Group provides a range of benefits to employees, including paid holiday arrangements and defined contribution pension plans.

Short-term benefits

Short-term benefits, including health cover and other similar non-monetary benefits, are recognised as an expense in the period in which the service is received.

Post-employment benefits

The Group operates various defined contribution plans for its employees. A defined contribution plan is a pension plan where the Group pays fixed contributions into a separate independent entity. The Group has no legal or constructive obligation to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to the employee's service in the current and prior periods.

Employee share scheme expense

The Group makes equity-settled share-based payments to certain employees, which are measured at fair value at the date of grant and expensed on a straight-line basis over the vesting period, based on the Group's estimate of shares that will eventually vest. For those share schemes with market-related vesting conditions, the fair value is determined using the Monte Carlo model at the grant date. For share options issued with non-market performance vesting conditions, the fair value of the underlying vehicle is equal to the grant date share price discounted by the expected dividend yield to reflect the lack of dividend accrual over the vesting period. For all other share awards, those with pure employment conditions attached, the fair value is determined by reference to the market value of the shares at the grant date or (where they have an exercise price) by using the Black Scholes model. For all share schemes with non-market vesting conditions, the likelihood of vesting has been taken into account when determining the relevant charge. Vesting assumptions are reviewed during each reporting period to ensure they reflect current expectations.

1.18 Equity

Ordinary shares

Ordinary shares are classified as equity. There are no restrictions on the distribution of capital and the repayment of capital.

Cumulative translation reserve

Exchange differences arising on translation of foreign subsidiaries are recognised in other comprehensive income and accumulated in a separate reserve within equity. The cumulative amount would be reclassified to profit or loss if the entity was disposed of.

Own shares

Own shares represent the shares of the parent company Alfa Financial Software Holdings PLC that are either held by the EBT, or acquired by the Group as part of its share buy-back programme (see note 27).

Own shares are recorded at cost and deducted from equity.

1.19 Earnings per share

Basic earnings per share

Basic earnings per share is calculated by dividing the profit attributable to equity holders of Alfa by the weighted average number of ordinary shares outstanding during the year (excluding own shares held).

Diluted earnings per share

Diluted earnings per share is calculated in line with the basic earnings per share calculation above except that the weighted average number of shares includes all potentially dilutive options granted by the reporting date as if those options had been exercised on the first day of the accounting period or the date of the grant, if later. The shares have no right to voting or to dividends while held in trust.

2. Critical accounting judgements, estimates and assumptions

The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual results. Management also needs to exercise judgement in applying the Group's accounting policies.

This note provides an overview of the areas that involved a higher degree of judgement or complexity, and of items which are more likely to be materially adjusted in future periods due to estimates and assumptions turning out to be wrong. Detailed information about each of these estimates and judgements is included in other notes, together with information about the basis of calculation for each affected line item in the financial statements.

2.1 Critical judgements in applying the Group's accounting policies

Revenue recognition

Critical judgements specific to customised licence revenue:

The Group is required to make an assessment as to whether the implementation process, which includes customised licence and implementation revenue streams as well as any maintenance fees during this phase, forms one or a number of performance obligations. Since the residual value method is used for the customised licence revenue (as explained in note 1.5), the estimation of fair value of implementation revenue will impact the contract consideration assigned to the customised licence.

In addition, the Group is also required to make an assessment as to whether each contract contains an expectation to deliver multiple separate instances of the customised licence which may form separate groups of distinct performance obligations. In doing the above, the Group assesses each software implementation contract as to whether the underlying software requires significant modification or customisation by the Group in order to meet the customer's requirements before Alfa Systems can be utilised by the customer. Therefore, judgement is required in determining which efforts relate to the implementation process and which efforts could be determined to be development services which change or enhance the underlying code. In making this judgement, the Group assesses the contractual terms and the original project plan for the implementation but also uses historical evidence of what constitutes core implementation work.

Critical judgements applicable to all revenue:

Judgements are made when the Group enters into new contracts with existing customers and also when there are changes to existing contracts with customers that include the addition of new customer-specific contractual terms. For these, the Group assesses the contractual terms both individually and in the context of the wider arrangement and applies the guidance in IFRS 15 to determine the appropriate accounting.

Internally generated software development - Assessing whether a project meets criteria of IAS 38

The Group is required to make an assessment of each ongoing project in order to determine at what stage (if at all) a project meets the criteria outlined in the Group's accounting policies. Such assessment may, in certain circumstances, require significant judgement. In making this judgement, the Group evaluates, amongst other factors, the stage at which technical feasibility has been achieved, management's intention to complete and use or sell the product, the likelihood of success, the availability of technical and financial resources to complete the development phase and management's ability to measure reliably the expenditure attributable to the project. Research and product development expenditure incurred on minor or major upgrades, or other changes in software functionality, does not satisfy the criteria where it is considered that the product is not substantially new in its design or functional characteristics. Such expenditure is therefore recognised as an expense. Judgement is also required with respect to when an asset is ready to be amortised - in making this judgement, the Group considers, amongst other factors, when the asset is available for use in the manner intended by management.

3. Financial risk management

In common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments. This note describes the Group's objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these financial statements.

The Group's overall risk management policy focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group's financial performance. The Group has used financial instruments to hedge certain risk exposures in the past. Risk management is carried out by the finance function under policies approved by the Board. The finance function identifies, evaluates and mitigates financial risks when deemed necessary.

The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern, so that it can provide returns for shareholders and benefits for other stakeholders, and maintain an optimal capital structure.

3.1 Foreign exchange risk

The Group operates internationally and is exposed to foreign exchange risks arising from various currencies, primarily with respect to those described below. Revenue is predominantly denominated in pounds sterling and US dollars. Operating costs are influenced by the currencies of the countries where the Group's subsidiaries are based, and pounds sterling and the US dollar are the currencies in which most operating costs are denominated.

The split by currency in relation to trade receivables is set out in note 19.

The Group's exposure to foreign currency risk in relation to revenue is set out in note 5.4.

The Group utilised forward contracts in both 2025 and 2024 to hedge against foreign currency exposure. The Group has no outstanding commercial foreign exchange contracts at 31 December 2025 (2024: three outstanding with £(0.1)m fair value). No hedge accounting has been applied in the current or prior year.

A 10% increase in the USD:GBP exchange rate in the year ended 31 December 2025 would have increased revenue and profit by 4% and 9% respectively (2024: 4% and 9% respectively). Management believes that 10% is a reasonable sensitivity given historical exchange rate movement.

3.2 Credit risk

a. Credit risk related to transactions with financial institutions

Credit risk with financial institutions is managed by the Group's finance function in accordance with a Board-approved treasury policy. Management is not aware of any significant risks associated with financial institutions as a result of cash and cash equivalents deposits (including short-term investments) and financial derivative transactions.

b. Credit risks related to customer trade receivables

Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, change of strategy and default or delinquency in payments are considered indicators that a trade receivable could be impaired. Given the complexity, the size and the length of certain software implementation of related projects, a delay in the settlement of an open trade receivable does not necessarily constitute objective evidence that the trade receivable is irrecoverable.

The Group's customer base predominantly consists of large financial institutions that are financially sound. The responsibility for customer credit risk management rests with management of the Group. Payment terms are set in accordance with practices in the different geographies and end markets served, typically being 30 days from the date of the invoice. Trade receivables are actively monitored and managed. Collection risk is mitigated through prompt submission of invoices. Historically, there has been a de minimis level of customer default as a result of the long history of dealing with the Group's customer base and an active credit monitoring function. Where applicable, credit limits may be established based on internal or external rating criteria, which take into account such factors as the financial condition of the customers, their credit history and the risk associated with their industry segment.

The Group applies the IFRS 9 simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance for all trade receivables and accrued income. To measure the expected credit losses, trade receivables and accrued income have been grouped based on shared credit risk characteristics and the days past due. The accrued income relates to unbilled work in progress and has substantially the same risk characteristics as the trade receivables for the same types of contracts, other than where the Group has collected upfront payments in the form of licence fees at the start of a software implementation contract.

The expected loss rates of trade receivables are based on the payment profiles of customer invoices over a period of 36 months before 31 December 2025 (2024: 31 December 2024), and the corresponding historical credit losses experienced within this period. The historical loss rates are then adjusted to reflect current or forward-looking information in relation to any macroeconomic factors affecting the ability of the customers to settle the receivables. The same approach is applied to both trade receivables and accrued income expected credit loss provisions.

The Group has not identified any current factors or forward-looking information which would be relevant to the historical loss rates. On this basis, the loss allowance as at 31 December 2025 and 31 December 2024 was nil for both trade receivables and accrued income.

See note 19 - Trade receivables for the ageing of trade receivables and significant customer credit risk exposure.

3.3 Liquidity risk

The Group's principal objectives when managing capital are to ensure that funds are available to support its growth strategy and to safeguard the Group's ability to continue as a going concern.

The capital structure of the Group consists of cash and cash equivalents (note 21) and equity attributable to equity holders of the parent.

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.

The Group manages its exposure to liquidity risk through short and long-term forecasts and by seeking to align the maturity profiles of its financial assets with its financial liabilities. The Group's policy is to maintain an adequate level of liquidity to meet its liabilities expected to be settled in the short or near term, under both normal and stressed conditions.

The following table details the remaining contractual maturity of the Group's financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows.

4. Segments and principal activities

4.1 Revenue by stream

The Group assesses revenue by type of activity, being Subscription, Software Engineering and Delivery, as summarised below:

4.2 Non-current assets geographical information

Non-current assets attributable to each geographical market:

\* The breakdown of non-current assets geographical information has been changed to better reflect the operations of the Group. The total remains unchanged.

Revenue by geographical market is contained within note 5.3. The table above excludes deferred tax assets for both 2025 and 2024.

5. Revenue from contracts with customers

5.1 Customer concentration

There were no customers with revenue accounting for more than 10% of total revenue in 2025 and 2024.

5.2 Timing of revenue

The Group derives revenue from the transfer of goods and services as follows over time and at a point in time in the following revenue streams:

2025

2024

All goods and services are sold directly to customers.

5.3 Revenue geographical information

Revenue attributable to each geographical market based on where the customer mainly utilises its instance of Alfa, or where the service is rendered, is as follows:

* The breakdown of revenue by geography has been changed to better reflect the operations of the Group. Previously named UK and rest of EMEA have been combined into EMEA. The other categories and total remains unchanged.

Revenue attributable to the UK is £34.9m (2024: £32.0m) and this is included within the EMEA revenue.

5.4 Revenue by currency

Revenue by contractual currency is as follows:

5.5 Liabilities from contracts with customers

Contract liabilities - deferred licence

Where a customer purchases a perpetual software licence, this is generally invoiced upfront at the commencement of the implementation project. Customers generally require additional development efforts over the life of the implementation project in order to customise the underlying code within Alfa Systems. Together, these two elements form the Group's customised licence performance obligation. The fair value of this performance obligation is determined using the residual method as set out in note 1.5.2 and this fair value is recognised as the development effort is expended, on a percentage-of-completion basis.

As such, the deferred licence contract liability balance as at 31 December 2025 and 31 December 2024 represents any amounts received in advance for the customised licence performance obligation being satisfied (including any unrecognised software licence amounts that were received upfront).

Additionally, where an option over the right to use Alfa Systems in the future exists, the value of this is also included within the deferred licence contract liability. The contract liability relating to the material right value is increased over the life of the implementation project in line with the percentage of completion of the development efforts and then released on a straight-line basis over the expected remaining customer life post-completion of the implementation project.

The deferred licence contract liability balance will increase during the year as a result of:

Contract liabilities - deferred maintenance

A number of the Group's customers are invoiced annually in advance for the maintenance and support service provided by the Group. As such, the deferred maintenance contract liability balance will increase as a result of billing and invoices becoming due, and will decrease as the Group satisfies its associated performance obligations. The deferred maintenance contract liability balance as at 31 December 2025 and 31 December 2024 therefore represents the Group's unsatisfied maintenance performance obligation for which the revenue has been invoiced in advance.

5.6 Unsatisfied performance obligations

The Group has unsatisfied or partially satisfied performance obligations at 31 December 2025 that relate to the licence customisation for some customers that have ongoing implementation projects. This performance obligation includes the delivery of the related software licence and any development efforts which will change the underlying code. Linked to certain of these ongoing and future projects, and also to certain implementation projects completed during 2025, the Group also has unsatisfied or partially satisfied performance obligations at 31 December 2025 that relate to the option over the right to use Alfa Systems, and in particular any material right in respect of discounts to be received by customers in future periods.

The above includes certain amounts recognised as contract liabilities. The transaction price allocated to these unsatisfied or partially satisfied performance obligations as at 31 December 2025 is £7.2m (2024: £9.9m). This amount is expected to be recognised over the remaining life of the implementation projects, in respect of the licence and development efforts, and over the expected customer life (following the completion of the implementation project) in respect of the option over the right to use Alfa Systems. Of the £7.2m, it is expected that £3.3m will be recognised in 2025, with the remainder being recognised in subsequent years.

These unsatisfied or partially satisfied performance obligations are based on management's best judgement and may be impacted in the future by a number of factors including:

The Group applies the practical expedient in paragraph 121 of IFRS 15 and does not disclose information about the unsatisfied performance obligations that have original expected durations of one year or less. This includes those performance obligations linked to ongoing services for all project types (i.e. subscription, software engineering and delivery).

The Group also applies the practical expedient in paragraph B16 of IFRS 15 and does not disclose the amount of the transaction price allocated to the unsatisfied contract performance obligations where consideration will be received directly corresponding to the value of the performance obligation in the future and this consideration aligns to the value received to date for the corresponding performance obligation. This includes those performance obligations linked to our software implementation services.

The disclosures above for unsatisfied or partially satisfied performance obligations are not relevant to our subscription performance obligations as these are typically satisfied on a monthly basis in line with the termination rights of the customers (see note 1.5.6).

The Group has variable consideration in the form of contract banding for its licence and maintenance volumes. It is included in the transaction price only to the extent that it is highly probable that a significant reversal of revenue will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Discounts or rebates are allocated proportionately to all performance obligations unless there is observable evidence that they relate entirely to one or more specific performance obligations, in which case they are allocated accordingly, in line with IFRS 15.

Contract modifications are accounted for as a separate contract when the scope of the contract increases due to the addition of distinct goods or services and the price reflects their stand-alone selling prices. In all other cases, modifications are accounted for as part of the existing contract, with revenue recognised on a cumulative catch-up basis or prospectively, as appropriate, in accordance with IFRS 15.

6. Operating profit

The following items have been included in arriving at operating profit:

* The Company has claimed credits under the UK RDEC regime in respect of 2023 and 2024 and intends to claim for 2025. The amount of the estimated RDEC credit is required to be recognised as both other income (which is taxable) and as a recoverable. In 2025, following the finalisation of the 2023 tax return, the RDEC benefit for 2023 was increased by £0.2m. In addition, an estimated £0.2m RDEC benefit was recognised for 2025, resulting in recognition of £0.4m in 2025.

7. Personnel-related costs

* Profit share pay refers to a pool of money (that equates to approximately 10% of the Group's pre-tax profits) which is shared amongst the employees, excluding Directors and some other senior managers, as a percentage of basic salary The amount disclosed includes the related social security contributions.

* The split of employees has been changed to better reflect the operations of the Group. The UK headcount, as disclosed previously, is included within the EMEA headcount. The total remains unchanged.

At 31 December 2025, the Group had 527 employees (2024: 502).

8. Key management

Key management compensation (including Directors):

Key management personnel consist of the Company Leadership Team and the Executive and Non-Executive Directors. Directors' remuneration is detailed in the Remuneration Report.

9. Auditor's remuneration

The Group obtained the following services from the Group's auditor as detailed below:

10. Finance income and expense

11. Income tax expense

Analysis of charge for the year

The effective tax rate for 2025 and 2024 is in line with the standard rate of corporation tax in the UK. The effective tax rate for the year ended 31 December 2025 was 24.9% (2024: 24.9%).

The overall tax charge for the year is reconciled as follows:

Analysis of charge for the year

12. Earnings per share

The weighted average number of ordinary shares in issue excludes 4,221,366 (2024: 5,074,188) shares held by the Group cumulatively under the EBT and as a result of the share buy-back programme.

The diluted number of ordinary shares outstanding, including share awards, is calculated on the assumption of conversion of 1,455,878 (2024: 4,037,158) potentially dilutive ordinary shares.

13. Financial assets and liabilities

14. Goodwill

The recoverable amount of goodwill has been determined based on value-in-use calculations using cash flow projections from financial budgets and forecasts for a five-year period using a pre-tax discount rate of 11.1% (2024: 10.4%) which is based on the CGU's weighted average cost of capital. Cash flows beyond these periods have been extrapolated using a steady 2.5% (2024: 2.5%) average growth rate which is reflective of management's best estimate at the time.

Management believes that any reasonable change in any of the key assumptions on which the recoverable amount is based would not cause the reported carrying amount to exceed the recoverable amount of the CGU.

15. Other intangible assets

Significant movement in other intangible assets

During 2025, Alfa developed new internally generated software at a cost of £5.0m (2024: £5.3m). This software will be amortised over three to five years.

The total research and product development expense for the period was £2.8m (2024: £2.3m).

16. Property, plant and equipment

17. Right-of-use assets