4 September 2025

Alfa Financial Software Holdings PLC

2025 Half Year Report

Strong H1 execution, Outlook remains positive

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 2025 ("the period").

Financial highlights:

·      Trading in line with expectations, on track to meet full year expectations

·      Revenue of £62.5m (H1 2024: £52.3m) up 20% or 22% at constant currency

·      ARR of £41.6m up 16% (H1 2024: £35.8m) with NRR of 112% (30 June 2024: 106%)

·      Very strong Software Engineering revenues in H1 (up 72%) drove high first half operating profit margin of 35% (H1 2024: 31%)

·      TCV of £211m up 9% (H1 2024: £193m) driven by ongoing growth in subscription revenue

·      Next 12 months TCV up 25% to £90m (H1 2024: £72m)

·      Robust balance sheet position with £23.9m (31 Dec 2024: £20.5m) of cash and no bank debt

·      Special dividend of 5.0 pence per share (£14.8m) declared reflecting sustained strong growth in cash generation and continued capital allocation discipline

Financial summary

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

Strategic highlights:

Growing SaaS subscription revenues

·      17% growth in subscription revenues versus H1 2024

·      ARR of £41.6m up 16% on last year

·      NRR of 112% boosted by new customers subscription revenues increasing through the implementation phase

·      12% growth in subscription TCV versus H1 2024

·      Alfa Cloud customers now total 23 (H1 2024: 20), 16 live with 7 in implementation

Strong sales and delivery momentum

·      Strong late-stage pipeline with 7 prospects

·      Six out of seven customers in late-stage pipeline working under letters of engagement

·      Nine customers upgraded to Alfa Systems 6

Sustained Investment in product, people, planet

·      Further development of our software with £19.4m investment in software (H1 2024: £18.8m) increasing our competitive lead

·      Particular focus on additional functionality in US Auto Originations, Fleet and Commercial Finance, which will increase our Serviceable and Target Addressable Markets

·      Average headcount of 508 up 7% versus H1 2024 with high staff retention (97%)

Outlook 

The exceptionally strong conversion of wins in 2024 resulted in a step up to a record level of TCV at the prior year end creating an excellent foundation for continued long term growth. We are working under letters of engagement with a number of customers in the late-stage pipeline and expect to continue this work in the second half ahead of signing full contract packs.  The very strong performance in the first half of the year was driven by an expected large increase in software engineering revenues. In the second half of the year, we expect a lower level of software engineering revenues and an impact from planned increases in headcount investment and salary costs. Ongoing work with customers, including those in the late-stage pipeline, means we remain confident in our full year expectations, despite currency headwinds and wider macro uncertainty. We continue to be well positioned for further progress and remain focused on delivering value in 2025 and beyond.

Andrew Denton, Chief Executive Officer

"We are delighted to have met our bold expectations for the first half of 2025. We have delivered strong growth and made strategic progress across the business. Alfa Systems 6 has been the frictionless upgrade for our customers that we planned and we now have nine of them live on this version. Continued investment in our software and our people is expanding our competitive advantage as well as our Serviceable and Target Addressable Markets, particularly in US Auto Originations, Commercial Finance and Fleet.

Our consistent track record of growth and delivery over the last five years shows that we have the right strategy and 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 alfa@teneo.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://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, 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 Systems 6, a breakthrough iteration of our software platform, was launched in 2024.

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 all over Europe, Australasia and the Americas. For more information, visit us at alfasystems.com or on LinkedIn.

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.

BUSINESS REVIEW

Strong strategic progress

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

·      Subscription growth - our strong sequential growth in subscription revenues has continued

·      Product development - continued progress particularly in the areas of US Auto Originations, Commercial Finance and Fleet, increasing the Serviceable and Target Addressable Markets

·      Delivering Alfa Systems 6 - we have shown the frictionless upgrade nature of AS6 for our customers, with 9 of them now live

·      Incremental sales - on the back of the strong positive customer reaction to Alfa Systems 6 we have sold incremental modules to a number of existing customers

Strong profitable growth

Financial performance in the first half was as expected, with revenue up 22% on a constant currency basis or up 20% at actual exchange rates to £62.5m (H1 2024: £52.3m). Subscription revenues continued to grow strongly up 17%. Delivery revenues were up 10% on H1 2024, as new projects ramped up during implementation phases. Software Engineering revenue in H1 2025 was strongly up 72% on H1 2024 as we focused our Software Engineering teams on chargeable development work for new customers.   

Annual Recurring Revenue (ARR) of £41.6m (H1 2024: £35.8m) was up 16%. Net Revenue Retention percentage (NRR) was high at 112% (H1 2024: 106%), benefiting from the increase in subscription revenues from new customers where revenue ramps up over time,  along with growth from existing customers. It also demonstrates the stickiness of our customer base.

Operating profit was up 33% to £21.6m (H1 2024 £16.2m) with the improvement in the margin a result of the strong increase in Software Engineering revenues driven by higher chargeability, with headcount and costs growth lower than revenue growth. Cash conversion in the period was 88% (H1 2024: 95%) in line with our guidance of 80% - 90% for 2025. Long term guidance is for average cash conversion to be between 90% - 100%. We finished the period with net cash of £23.9m (31 Dec 2024: £20.5m).

Pipeline conversions driving very strong TCV growth

We saw a significant growth in our TCV in 2024 on the back of eight customer wins to finish the year at a record level of £221m. This increased further in Q1 to £227m, and as expected we worked through some of this in Q2 to finish with TCV of £211m at 30 June 2025 up 9% versus this time last year, or 13% at constant currency. Whilst Delivery and Software Engineering TCV can be dependent on the timing of contract wins and implementation projects, Subscription TCV continues to grow.  

We had 23 customers each contributing revenues of more than £1m in the period (£2m on an annualised basis), an increase from last year (H1 2024: 19) and up from 7 in 2019. We have significantly reduced our customer concentration, with our top 5 customers representing 35% of our revenues in H1 2025, compared with 61% in 2019. At 30 June 2025, calculated on the last 12 months, our largest customer represented 8% of our revenues, although we expect this to move up and down slightly depending on the scale of individual implementations.

The stickiness of our customers on our modern software is demonstrated by NRR of 112% (H1 2024: 106%) 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 who was bought by another Alfa customer and the other who exited the asset finance software market.

Headcount growth, supported by strong retention

Following the record number of wins in 2024 we accelerated recruitment plans in the second half of 2024. In the first half of 2025 we have continued to focus our recruitment plans on experienced hires to support the delivery of these projects in addition to our regular plans for graduate intakes.

In H1 2025 the retention rate increased slightly to a very high level of 97%. Our engagement scores remained high at 78% (H1 2024: 81%). Headcount as at 30 June 2025 was up 6% at 512 (30 June 2024: 484) with average headcount in the period of 508 (H1 2024: 474) up 7% on last year.  We continue to recruit carefully to ensure we maintain the quality of our delivery and software development.

Investment in software

We continue to invest to maintain and grow our lead in the market. We invested £19.4m into the further development of our software in H1 (H1 2024: £18.8m). In H1 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 immediately to access an additional part of our existing target addressable market in asset finance, increasing the Serviceable Addressable Market (SAM).

The Commercial Finance market is something we've been working on 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.  In the longer term, this will open up a brand new addressable market of stand-alone commercial finance customers, increasing our Target Addressable Market (TAM).

We have developed Alfa Start for UK equipment finance and we are now seeking the right project to pilot our Partner-led Delivery (PLD) plans. We have also further progressed our US Auto Start product which will in conjunction with PLD give us access to the Tier 3 US Automotive market.

Strong delivery execution

We delivered 11 upgrades in the first half and as a result we now have nine customers on Alfa Systems 6, showing the frictionless nature of the upgrade to our customers. We are increasing our headcount and also expect to increase our use of partners in the second half to help satisfy the demand for delivery resources.

We continue to build our Cloud hosting operations on the back of the strong growth in this area of the business. We are looking to recruit additional people into this team to be based in Gdansk. Following the success of the Lisbon Smart Hub we are expanding our recruitment reach by setting up an operation in Gdansk that will include not only additional people into our hosting operations but also more software engineers.

Capital return

We remain a strongly cash-generative business, with cash conversion of 88% in H1 2025 in line with our guidance of 80% - 90% for 2025. Beyond this year we expect cash conversion to average between 90% to 100% in any year. We are committed to continuing to invest in our software and people to ensure that we continue to offer market leading solutions and excellent delivery and service to our customers. We continue to generate more cash than we need for our growth plans and will continue to return excess cash to shareholders.

Our main mechanism for returning capital is the payment of a regular, ordinary dividend and we have a policy to grow this progressively. To ensure that we retain the flexibility to invest in the business as required, our ordinary dividends are set at a sustainable level and we have historically made one-off returns of additional excess capital through the payment of special dividends.

Notwithstanding the payment of £11.2m of dividends during the first half we ended the period with net cash of £23.9m. As such, the Board has today declared a special dividend of 5.0 pence per share with an ex-dividend date of 25 September 2025, a record date of 26 September 2025 and a payment date of 7 November 2025. The special dividend would amount to a total payment of c.£14.8m and represents the tenth special dividend we have paid in the last 5 years.

Steady 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 and is in effect heart and lungs software and so cannot be easily replaced.

Strong pipeline

Following a record number of wins in 2024 our late-stage pipeline remains strong with seven prospects. We are the preferred supplier with six of these and have started working under letters of engagement with all six. One customer prospect has deferred their project and moved out of the late-stage pipeline as a result of their current supplier extending support for their legacy system. One customer moved back to the mid-stage pipeline as they are unlikely to make a commitment in the next 12 months. This has been balanced by a new addition into the pipeline for a Global OEM looking for a multi-country cross continent implementation.

H1 2025 continued the trend of macro uncertainty but our pipeline remains strong and we continued to see little impact on our pipeline from macro events with new prospects coming into the early-stage pipeline, showing that the buying dynamics of the market remain unchanged. 

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

ESG

We remain committed to our ESG 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. Activities in the first half of the year included providing 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.

Outlook 

The exceptionally strong conversion of wins in 2024 resulted in a step up to a record level of TCV at the prior year end creating an excellent foundation for continued long term growth. We are working under letters of engagement with a number of customers in the late-stage pipeline and expect to continue this work in the second half ahead of signing full contract packs.  The very strong performance in the first half of the year was driven by an expected large increase in software engineering revenues. In the second half of the year, we expect a lower level of software engineering revenues and an impact from planned increases in headcount investment and salary costs. Ongoing work with customers, including those in the late-stage pipeline, means we remain confident in our full year expectations, despite currency headwinds and wider macro uncertainty. We continue to be well positioned for further progress and remain focused on delivering value in 2025 and beyond.

FINANCIAL REVIEW

Financial results

Revenues increased by 20% or £10.2m to £62.5m in the six months ended 30 June 2025 (H1 2024: £52.3m).  On a constant currency basis, revenues were up 22% on last year. Revenues grew particularly strongly in the Americas, up 31%, which accounted for 44% of overall revenues (H1 2024: 40%).

Gross profit increased to £40.1m (H1 2024: £32.9m) up £7.2m, with gross margin improving to 64.2% (H1 2024: 62.9%) due to revenue growing faster than headcount principally due to planned better chargeability of our software engineering resources. Operating profit increased by £5.4m to £21.6m (H1 2024: £16.2m) with profit before tax of £21.5m (H1 2024: £16.1m). 

The Effective Tax Rate ("ETR") for the 2025 half year is 26.0% (H1 2024:  26.1%) in line with last year, with no significant changes since last year. For the full year 2025 we expect the ETR to be around 26.0% (2024 full year ETR: 24.9%). Profit for the period was £15.9m (H1 2024: £11.9m).

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 17% to £21.2m (H1 2024: £18.1m) with growth driven from both new and existing customers. Subscription customers now total 41 (H1 2024: 36), of which 23 are on Alfa Cloud, 16 are on their own private cloud and two are on v4 of Alfa. Of the 23 customers on Alfa Cloud, seven are not yet live as they are currently in implementation of which two are in the late-stage pipeline.

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 a timetable dictated to them. We mitigate the extra cost from this approach by encouraging customers to share branches and release dates.

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 to our customers, having such third-party verification of our compliance with these standards is a key selling point.

Software Engineering - Swing to chargeable development work in H1

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

As expected, Software Engineering revenue for the period increased significantly against the relatively low level of H1 2024, up to £10.3m (H1 2024: £6.0m).  In H1 2024 we focused our work on the launch of Alfa Systems 6 and performed fewer chargeable development days. In H1 2025 the biggest growth came from chargeable development revenue from new customers up £3.3m to £4.5m (H1 2024: £1.1m). There was also good growth in chargeable software development for existing customers up 41% to £4.5m (H1 2024: £3.2m).  Following the transition to SaaS only sales, perpetual customised licence recognition is now a small part of our business, with revenue of £1.1m in the period (H1 2024: £1.1m). There were one-off licence revenues of £0.2m (H1 2024: £0.5m). We expect in H2 2025 chargeable software development revenues to be at a more normal level compared with the very strong last two six month periods.

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 competitive advantage, through a balance of customer funded development and self-funded development.

Delivery - Continuing 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 good growth in Delivery revenues, versus both the first and second half last year. As customers progress from paid pipeline work through definition and into implementation delivery revenues increase. Of the 11 new customers, more were in implementation in 2025 compared with the 11 new customers in H1 last year and this drove increased delivery revenues, up 10% to £31.0m (H1 2024: £28.2m) at actual exchange rates. 

We delivered 11 customer upgrades, including those going onto AS6, in the first six months of the year and two more since then.  More frequent customer upgrades is a key part of our simplification agenda and ensuring quality delivery.  We already have 9 customers on Alfa Systems 6 which shows the progress we are making in this area.

We continue to look for opportunities to use partners to assist in delivering projects. The next stage in our progress towards partner-led delivery (PLD) is to deliver a PLD project for a UK Equipment Start customer. We are actively looking for the right project for this important step.  During H1 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)

Definition of TCV is included in the definitions section of this Half Year Report

Total contract value (TCV) at 30 June 2025 was £211m (31 December 2024: £221m, 30 June 2024: £193m).  The record level of TCV at 31 December 2024, was driven by significant growth in Delivery and Software Engineering TCV as a result of the record pipeline conversion which provided new customer implementation projects and a number of multi-year statements of work. We expected this to reduce in 2025 as we progressed these projects delivering both delivery and software engineering revenues, which we have seen in the first half. Subscription TCV continued to increase as we win new customers and grow the subscription base.

Of the TCV at 30 June 2025, £90m (H1 2024: £72m) is currently anticipated to convert into revenue within the next 12 months.  With the start of a number of new implementations the Delivery portion was up strongly at £34m (H1 2024: £22m) and we also had increases in Software Engineering revenues up 30% to £13m (H1 2024: £10m). Subscription portion also increased, up £3m to £43m (H1 2024: £40m).

Operating profit

The Group's operating profit increased by £5.4m to £21.6m in H1 2025 (H1 2024: £16.2m) due to the strong revenue growth and improved margins.

Headcount was up 6% at 30 June 2025 at 512 (H1 2024: 484), with average headcount of 508 up 7% on last year (H1 2024: 474). Staff retention remained high at 97% on a 12 month basis (30 June 2024:  96%).

Cost of sales increased more slowly than growth in revenue and was up by £3.0m to £22.4m (H1 2024: £19.4m). The 15% increase was due to higher headcount and salary costs along with increased hosting costs from the increasing scale of that business. These costs are net of capitalised intangible costs for internally generated software of £2.5m (H1 2024: £2.7m).

Sales, general and administrative expenses (SG&A) increased to £18.8m in the six-month period to 30 June 2025 (H1 2024: £17.0m).  Salary costs were up 10% in the period to £7.5m (2024 H1: £6.8m). Profit Share Pay, including employer's costs, in the period was £2.6m (2024 H1: £1.8m). Share-based payment charges have increased over last year by £0.4m to £0.9m (H1 2024: £0.5m), principally due to reassessment of performance outturn. Depreciation and amortisation increased to £1.5m (H1 2024: 1.2m) as a result of the increased capitalised development costs over the last 18 months. Realised and unrealised gains from FX hedges taken out to hedge USD flows were £1.7m (H1 2024: £0.0m). Other transaction FX losses were £0.6m (H1 2024: £0.0m).  Other costs totalling £7.4m increased £0.7m, or 10%, on last year (H1 2024: £6.7m). Other income of £0.3m was in line with last year (H1 2024: £0.3m).

Profit before Tax

Overall Profit before Tax of £21.5m was up 34% on last year (H1 2024: £16.1m). Net finance costs were £0.1m (H1 2024: £0.1m).

Profit for the period

Profit after taxation increased by £4.0m, or 34%, to £15.9m (H1 2024: £11.9m).  The Effective Tax Rate ("ETR") for the 2025 half year is 26.0% (H1 2024:  26.1%).  For the full year 2025 we expect the ETR to be around 26.0% (2024 full year ETR: 24.9%). The increase in the ETR is principally due to increased activities outside the UK taxed at higher rates.

Earnings per share

Basic earnings per share increased by 33% to 5.38 pence (H1 2024: 4.05 pence). Diluted earnings per share increased by 34% to 5.35 pence (H1 2024: 4.00 pence).

Cash flow

Cash generated from operations increased to £22.0m (H1 2024: £18.8m) largely as a result of the strong growth in the business. Net cash generated from operating activities was £17.6m (H1 2024: £13.9m) with a slight reduction in tax payments to £4.0m (H1 2024: £4.6m).

Net cash (including the effect of exchange rate changes) increased by £3.4m to £23.9m at 30 June 2025, from £20.5m at 31 December 2024.  We paid £11.2m of dividends in the period in respect of the FY 2024 Final Dividend and a 2025 Special Dividend (H1 2024: £9.7m). Purchases of own shares in the period were £0.9m (H1 2024: £0.8m).  Net capital expenditure of £2.8m was in line with last year (H1 2024: £2.8m) with capitalisation of software down slightly to £2.5m (H1 2024: £2.7m) and with other capex of £0.3m (H1 2024: £0.1m).

The Group's Operating Free Cash Flow Conversion (FCF) was 88% (H1 2024: 95%) in line with 2025 guidance of 80% - 90%.

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 30 June 2025 are detailed below.

Trade receivables of £8.7m were broadly in line with last year end (31 December 2024: £8.6m) although accrued income increased to £7.7m on very strong June revenues as compared to last year end (31 December 2024: £4.7m). Corporation tax recoverable of £1.8m (31 December 2024: £2.8m) reduced following a successful R&D claim.

Trade and other payables balance decreased by £0.8m to £10.9m at 30 June 2025 (31 December 2024: £11.7m) due to lower payroll related accruals.

Contract liabilities relating to software licences decreased by £0.1m to £8.0m at 30 June 2025 (31 December 2024: £8.1m). Contract liabilities from deferred maintenance increased to £10.4m (31 December 2023: £7.6m) reflecting the timing of billing of a number of annual maintenance contracts on 1 May. 

Subsequent events

There have been no subsequent events.

PRINCIPAL RISKS AND UNCERTAINTIES

Principal risks and uncertainties which could have a material impact on the long-term performance of Alfa Financial Software Holdings PLC and its subsidiaries were set out in the Alfa Financial Software Holdings PLC Annual Report for the year ended 31 December 2024, dated 12 March 2025, and remain valid at the date of this report.

Those risks and uncertainties at the date of this report where the impact continues to be assessed as "Major" and where the probability of the event is assessed as at least "Possible" were:

·      Socio-economic and geo-political risk: the risk of global and local economic downturn, having the potential to reduce our customers' and prospects' spending on our services, potentially impacted by recent events including the ongoing Ukraine war, conflict in the Middle East and the knock-on economic impacts of global trade wars.

·      Risk to people, teams and skills: talent recruitment, training and retention may not keep pace with our forecasts, preventing us fulfilling obligations to customers or taking on new business.

·      IT security and cyber risks: a targeted attack could adversely affect our customers' or potential customers' perception of Alfa Systems and could impact our ability to operate our business.

·      Competition risk: competitors may gain market share in target markets, impacting our growth potential.

Since the Annual Report, the following risk has been added to the principal risks, with the impact assessed as "Major" and the probability assessed as "Possible":

·      Exposure to potential new taxes imposed by the US on software or services being supplied from outside the US.

UNAUDITED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 30 JUNE 2025

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

UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2025

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

UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 30 JUNE 2025

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

UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED 30 JUNE 2025

The consolidated cash flow statement should be read in conjunction with the accompanying notes.

Notes to the Condensed Consolidated Half Year Financial Statements for the six months ended 30 June 2025

1.   General information

Alfa Financial Software Holdings PLC ("Alfa" or the "Company") is a public company limited by shares and is incorporated and domiciled in England. Its registered office is at Moor Place, 1 Fore Street Avenue, London, EC2Y 9DT, United Kingdom. Alfa's company registration number is 10713517.

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, North America, and Australasia.

These unaudited Half Year Financial Statements have been approved for issue by the Board of Directors on 3 September 2025.  These Half Year Financial Statements have been reviewed but not audited.

2. Accounting policies

2(a) Basis of preparation

The Half Year Financial Statements have been prepared in accordance with IAS 34 "Half Year Financial Reporting" as contained in UK-adopted International Accounting Standards and the Disclosure and Transparency Rules of the Financial Conduct Authority.

These Half Year Financial Statements do not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Accordingly, this report should be read in conjunction with the annual report for the year ended 31 December 2024 (the "Annual Financial Statements") which was prepared in accordance with UK-adopted International Accounting Standards and any public announcements made by Alfa during the Half Year reporting period. The Annual Financial Statements constitute statutory accounts as defined in section 434 of the Companies Act 2006 and a copy these statutory accounts has been delivered to the Registrar of Companies. The auditor's report on the Annual Financial Statements was not qualified, did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying the report and did not contain statements under section 498(2) or (3) of the Companies Act 2006.

The accounting policies adopted in the preparation of the Half Year Financial Statements are consistent with those used to prepare Alfa's consolidated financial statements for the year ended 31 December 2024 and the corresponding Half Year reporting period.

The preparation of the Half Year Financial Statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. In preparing these Half Year Financial Statements, the significant judgements made by management in applying the Group's accounting policies were the same as those that applied to the consolidated Annual Financial Statements described above. With respect to the key sources of estimation uncertainty disclosed in the consolidated Annual Financial Statements, it is noted that over the last few years we have increasingly moved to selling subscription licences in place of perpetual licences, and this has resulted in a decrease in the significance of the customised licence estimates and related judgements.

The Half Year Financial Statements have been prepared on a going concern basis, under the historical cost convention.

2(b) Going concern

The Half Year 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 reasonably possible changes in trading performance, show that the Group has sufficient cash reserves to operate for a period of not less than 12 months from the date of approval of these Half Year Financial Statements.

The going concern assessment performed 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 Half Year Financial Statements.

2(c) Changes in accounting policies

The Group has not adopted any new accounting standards in the period. Other changes to accounting standards in the period had no material impact.

2(d) Seasonality

The Group is not normally significantly influenced by seasonality or cyclical fluctuation because the Group's revenues are relatively consistent throughout the year. The Group's revenue is influenced by the number and maturity of software implementations during the period.  Separately, the Group's cash flows are subject to seasonal fluctuations because the Group invoices a proportion of its customers for maintenance annually in advance in the first six months of each year, resulting in a higher inflow of cash receipts in the first half of the Group's financial year in respect of maintenance revenues.

2(e) Foreign currency

The following exchange rates were used in the financial statements:

3.   Segment information and revenue from contracts with customers

3(a) Revenue by stream

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

* The names of two revenue streams were changed in H2 2024 - 'Software' is now 'Software Engineering' and 'Services' is now 'Delivery'. This was purely a renaming of the revenue streams which did not impact the revenue allocation between the streams, nor the total revenue or profit disclosed for H1 2024.

3(b) Revenue by geography

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:

Revenue attributable to the UK is £16.9m (H1 2024: £17.6m) and this is included within the EMEA revenue.

* The breakdown of revenue by geography has been changed to better reflect the operations of the Group. The change from 'US' to 'Americas' reflects new revenue from within the Americas but outside of the US.

3(c) Revenue by currency

Revenue by contractual currency is as follows:

3(d) Liabilities from contracts with customers

3(e) Timing of revenue

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:

4.   Operating profit

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

5.   Employee costs

* Profit share pay refers to a pool of money (that equates to approximately 10% of the Group's pre-tax profits before charging profit share) 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 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.

At 30 June 2025 the Group had 512 employees (30 June 2024: 484).

6.  Income tax expense

Income tax expense is calculated on management's best estimate of the full financial year expected rate, which is then adjusted for discrete items occurring in the reporting period.

The income tax expense for the six-month period ended 30 June 2025 was £5.6m (H1 2024: £4.2m).

The Effective Tax Rate ("ETR") for the 2025 half year is 26.0% (H1 2024: 26.1%). 

For the full year 2025 we expect the ETR to be around 26.0% (2024 full year ETR: 24.9%), so slightly above the UK statutory tax rate of 25.0% (2024: 25.0%), as a result of increased activities outside the UK subject to higher rates of tax.

7. 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.

We have assessed whether there are any indicators of impairment of goodwill.  Considering in particular the fact that we have experienced strong trading performance during the six-month period along with the carrying value of the assets for the Company remaining significantly below the market capitalisation of the Company, we found no indicators of impairment of goodwill.  As a consequence, no formal goodwill impairment test has been carried out.

8. Other intangible assets

Significant movement in other intangible assets

During H1 2025, Alfa developed new internally generated software at a cost of £2.5m (H1 2024: £2.7m). This software will be amortised over three to five years.

9.  Property, plant and equipment

10.  Right-of-use assets

11. Trade receivables

The Group holds the following trade receivables:

Trade receivables ageing

The Group believes that the unimpaired amounts that are past due are fully recoverable as there are no indicators of future delinquency or potential litigation.

12. Other receivables

Accrued income represents fees earned, but not invoiced, at the reporting date, which have no right of offset with contract liabilities - deferred licence amounts. Accrued income increased by £3.0m since last year-end driven by increased revenues and invoice timing.

Prepayments include £0.8m (FY 2024: £1.0m) of deferred costs in relation to costs to fulfil contracts.

The Group enters into derivative financial instruments (forward contracts) to hedge against foreign currency exposure. These instruments are initially recognised at fair value and are subsequently measured at fair value at each reporting date. The carrying value of the derivative financial instruments therefore equals their fair value. Fair values are determined with reference to observable market inputs, including spot and forward foreign exchange rates as at the reporting date. Accordingly, these instruments are classified as Level 2 in the fair value hierarchy under IFRS 13 Fair Value Measurement.

13. Current and non-current liabilities

14. Lease liabilities

The following table sets out the reconciliation of the lease liabilities from 1 January 2024 to the amount disclosed at 30 June 2025:

Additions to lease liabilities include extensions to existing lease agreements.

Below is the summary of timing of the lease payments:

Below is the maturity analysis of the lease liabilities:

The movement during the year in lease liabilities is set out above. Movements in cash and cash equivalents are set out in the cash flow statement. These are the only changes in liabilities arising from financing activities in the year.

15. Own shares

The own shares reserve represents the cost of shares in Alfa Financial Software Holdings PLC that have been:

-     Purchased in the market and held by the Group's employee benefit trust to satisfy options under the Group's share options plans. The number of shares held at 30 June 2025 was 539,667 (31 December 2024: 83,904); and

-     Purchased in the market and held by the Group as a result of the share buyback programme that was launched on 18 January 2022 and ended on 30 June 2023. The number of shares held at 30 June 2025 was 3,430,576 (31 December 2024: 4,775,119). The movement in the period relates to the satisfying of options under the Group's share options plans.

Own shares distributed relate to shares issued to employees on exercise of share options and for bonus awards deferred in shares.

16. Financial and liquidity risk management

The Group's activities expose it to a variety of financial risks: market risk (including currency risk), credit risk and liquidity risk.  The Half Year Financial Statements do not include all financial risk management information and disclosures required in the Annual Financial Statements; they should be read in conjunction with the Annual Financial Statements.  The responsibility for risk management has remained with the Board and there have been no changes to risk management policies since year-end.

17. Controlling party and related party transactions

The ultimate parent undertaking as at 30 June 2025 and 31 December 2024 was CHP Software and Consulting Holdings Limited (the 'ultimate parent'), being the parent undertaking of the smallest and largest group in relation to these consolidated financial statements.  The ultimate controlling party is Andrew Page. There was no trading between the Group and the Parent in H1 2025 or H1 2024.

In H1 2024, the Group paid property expenses of £0.005m on behalf of the ultimate parent and these were fully recharged back to the ultimate parent at no mark up. There were no such expenses in H1 2025.

Dividends to the amount of £6.1m were paid to the ultimate parent in H1 2025 (H1 2024: £5.6m).

At 30 June 2025 there was £nil balances outstanding from, or to, the ultimate parent (30 June 2024: £nil).

18. Dividends

The Board declared a 2.4 pence per share special dividend, amounting to £7.1m, paid on 30 May 2025 with a record date of 2 May 2025. An ordinary dividend of 1.4 pence per share for the year ended 31 December 2024 equating to £4.1m was paid on 27 June 2025, with a record date of 30 May 2025.

The Board declared on 3 September 2025 a special dividend of 5.0 pence per share, with an ex-dividend date of 25 September 2025, a record date of 26 September 2025 and a payment date of 7 November 2025. The special dividend would amount to a total payment of c.£14.8m.

19. Subsequent events

There have been no reportable subsequent events.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors confirm that these condensed consolidated Half Year financial statements (the 'Half Year Financial Statements') have been prepared in accordance with International Accounting Standard 34, 'Half Year Financial Reporting', as contained in UK-adopted international accounting standards and that the Half Year management report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:

•    an indication of important events that have occurred during the first six months and their impact on the condensed Half Year Financial Statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

•    material related-party transactions in the first six months and any material changes in the related-party transactions described in the last annual report.

The current directors are listed below all of whom were directors during the whole of the period:

Andrew Page

Andrew Denton

Duncan Magrath

Matthew White

Steve Breach

Adrian Chamberlain

Charlotte de Metz

Reena Raichura

Chris Sullivan

By order of the Board

Duncan Magrath

Chief Financial Officer

3 September 2025

INDEPENDENT REVIEW REPORT TO ALFA FINANCIAL SOFTWARE HOLDINGS PLC

Conclusion

We have been engaged by Alfa Financial Software Holdings PLC ('the Company') to review the condensed set of financial statements of the Company and its subsidiaries (the 'Group') in the half-yearly financial report for the six months ended 30 June 2025 which comprises the consolidated statement of profit or loss and comprehensive income, the consolidated statement of financial position, the consolidated statement of changes in equity, the consolidated statement of cash flows and related notes 1 to 19. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent material misstatements of fact or material inconsistencies with the information in the condensed set of financial statements.

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2025 is not prepared, in all material respects, in accordance with International Accounting Standard 34, "Interim Financial Reporting" as contained in UK-adopted International Accounting Standards, and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Basis for Conclusion

We conducted our review in accordance with International Standard on Review Engagements (UK) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" ('ISRE (UK) 2410') issued for use in the United Kingdom.  A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.  A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

As disclosed in note 2, the annual financial statements of the Group are prepared in accordance with UK-adopted International Accounting Standards.  The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting" as contained in UK-adopted International Accounting Standards.

Conclusions Relating to Going Concern

Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for Conclusion section of this report, nothing has come to our attention to suggest that management have inappropriately adopted the going concern basis of accounting or that management have identified material uncertainties relating to going concern that are not appropriately disclosed.

This conclusion is based on the review procedures performed in accordance with ISRE (UK) 2410, however future events or conditions may cause the Group and the Company to cease to continue as a going concern.

Responsibilities of Directors

The half-yearly financial report, is the responsibility of, and has been approved by, the directors.  The directors are responsible for preparing the half-yearly financial report in accordance with International Accounting Standard 34, "Interim Financial Reporting" as contained in UK-adopted International Accounting Standards and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

In preparing the half-yearly financial report, the directors are responsible for assessing the Group's and the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group and the Company or to cease operations, or have no realistic alternative but to do so.

Auditor's Responsibilities for the Review of the Financial Information

In reviewing the half-yearly financial report, we are responsible for expressing to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report.  Our conclusion, including our Conclusions Relating to Going Concern, are based on procedures that are less extensive than audit procedures, as described in the Basis for Conclusion paragraph of this report.

Use of our report

This report is made solely to the Company in accordance with International Standard on Review Engagements (UK) 2410 "Review of Interim Financial Information performed by the Independent Auditor of the Entity".  Our review work has been undertaken so that we might state to the Company those matters we are required to state to them in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this report, or for the conclusions we have formed.

RSM UK Audit LLP

Chartered Accountants

25 Farringdon Street

London

EC4A 4AB

3 September 2025

DEFINITIONS

Constant currency

When the Group believes it would be helpful for understanding trends in its business, the Group 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

Operating FCF conversion is calculated as cash from operations, less capital expenditures and the principal element of lease payments, as a percentage of operating profit.  Operating FCF is calculated as follows:

Total contract value (TCV)

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 (including maintenance, Cloud Hosting and subscription licence) 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 software

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. This is the same metric that was previously disclosed as 'Investment in product' and the name was changed to better reflect the nature of the cost.

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.