Alfa Financial Software : Financial Reporting Document

1 September 2022

Alfa Financial Software Holdings PLC

2022 Half Year Report

Growth in resilient market underpins expectations

Alfa Financial Software Holdings PLC ("Alfa" or the "Company"), a leading developer of software for the asset finance industry, today publishes its unaudited results for the six months ended 30 June 2022 ("the period").

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

Financial highlights

• Operating profit strongly up 25% on H1 2021
• Subscription revenues up 18% on H1 2021
• Continued strong cash generation
• Revenue up 7% versus H1 2021, 5% at constant currency

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• Robust balance sheet position with £21m of cash and no bank debt
• Special dividend of 3.5 pence per share (£10.5m) declared taking total dividends over two years to 33.6 pence and £100m

Strategic highlights

• Increasing diversification of our customer base; Top five customers make up 35% of revenues in H1 2022 (H1 2021: 43%, H1 2020: 55%)
• TCV up by 10% since H1 2021 to £138m driven by 16% growth in Subscription TCV
• Strong software delivery and Cloud Hosting performance
• Continued investment in people and product for future growth
• Record level of employee engagement, retention at 85%
• Investors in People Gold status achieved
• Alfa Systems version 5.7 release planned
• Partner usage up by 51% since H1 2021

Andrew Denton, Chief Executive Officer

"I am very pleased with the way we have performed in the first half of 2022, and the fact that we continue to make strong progress across all aspects of the business. As well as our strong financial performance, we continue to hire and retain the best people and grow our partnership programme. Our Cloud Hosting business is growing quickly as we develop and implement the best software in our industry. Our strong sales pipeline provides a platform for continued growth. We have also continued our progress in building resilience into the business through further reducing customer concentration, growing subscription revenues, increasing geographic spread and diversifying target markets. This alongside the inherent robustness of the asset finance software market underpins our confidence in the outlook for the business, despite a tough economic environment, and allows us to announce another special dividend whilst maintaining a strong balance sheet."

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Investor and analyst webcast

The Company will host a conference call today at 09:30am. To obtain details for the conference call, please email alfa@tulchangroup.com. 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://investors.alfasystems.com/.

Notes to editors

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

Alfa Systems, our class-leading technology platform, is at the heart of some of the world's largest asset finance companies. Key to the business case for each implementation is Alfa Systems' ability to replace multiple customer systems with our single platform. Alfa Systems supports both retail and corporate business for auto, equipment, wholesale and dealer

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finance on a multijurisdictional basis, including leases/loans, originations and servicing. An end-to-end solution with integrated workflow and automated processing using business rules, Alfa Systems provides compelling solutions to asset finance companies.

Alfa Systems is currently live in 37 countries. Alfa has offices in Europe, Australasia and North America. For more information, visit www.alfasystems.com.

Forward-looking statements

This Half Year Report (HYR) 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 HYR 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 HYR. Accordingly, reliance should not be placed on any forward-looking statements.

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BUSINESS REVIEW

Good first half performance

The first half of 2022 has seen good progress across all areas of our business. We have continued to deliver successful implementations, supported by our scalable and reliable cloud-native hosting solution, at the same time as releasing significant enhancements to our software.

We have seen good growth in our contracted orders with Total Contract Value ("TCV") up 10% since 30 June 2021 and we have replenished and grown our pipeline which gives us good visibility for 2023.

Financial performance in the first half was strong, with revenue up 7% to £43.9m (2021 H1: £41.1m) and with good control of costs which remained unchanged. Revenue benefited from favourable currency movements but total chargeable days were impacted by increased holidays taken and sickness compared with the same period last year as the impacts from Covid-19 unwind. Operating profit performance was even stronger, up 25% to £14.2m (H1 2021: £11.4m). Cash conversion was robust at 112% and we finished the period with net cash of £20.8m (31 Dec 2021: £23.1m).

We have continued to reduce our dependency on key customers, with our top 5 customers representing 35% of our revenues in H1 2022, compared with 43% in H1 2021, 55% in H1 2020 and 64% in H1 2019. We had fifteen customers contributing revenues of more than £1m in the period, up from thirteen in H1 2021, ten in H1 2020 and seven in H1 2019.

Recruitment picked up towards the end of the period, after a slower than planned hiring start to the year in a tight labour market. At 30 June 2022 we had a headcount of 417 (H1 2021: 389). Average headcount in the period of 399 (2021 H1: 375) was a 6% increase on last year. Our strong pipeline has enabled us to remain fully utilised. Our team retention rate, which had reduced in the second half of 2021, started to improve again during the second quarter of this year and our employee engagement is now at 83%, a record level for the last five years.

Strategic progress

Alfa is a leading asset finance software company with global scale. Our platform, Alfa Systems, is the world's leading asset finance software, and has been supporting some of the world's largest and most innovative companies for more than 30 years.

Our vision is to grow our company size naturally, but grow our impact rapidly - always retaining our underlying culture. Key to this is delivering more concurrent implementations of our

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