Revenue recognition for contract extension
26 February 2021
Alfa Financial Software Holdings PLC
Finalisation of revenue recognition for contract extension
Alfa Financial Software Holdings PLC ("Alfa" or the "Company"), a leading developer of mission-critical software for the asset finance industry provides this update on revenue recognition for a recently won contract.
We previously announced that we had won a five year extension to the maintenance and licence subscription for an existing client. The contract is different to our usual contracts in that there was no associated implementation project, therefore a number of judgements were needed which affected the period in which the revenues should be recognised. At the time of the announcement, we assumed that we would recognise at least c15% of the contract value in 2020, which was in line with the initial cash receipt.
We have now completed our analysis of the contract in accordance with accounting standards and have concluded that some of this revenue will need to be accelerated because there is no further work required to deliver the licence. That component (representing just under 40% of the total contract value) will therefore be recognised as a one-off amount on signing the contract in October 2020. The balance which represents the maintenance component will be recognised over the five year life of the contract.
As a consequence, our expectations for revenue recognition in 2020 from this contract will be £4m ahead of our previous expectations. There have been no changes to the contract itself. In addition to the positive changes set out in this update, trading has performed in line with our expectations.
Our audited results for the year to 31 December 2020 will be published on 23 March 2021.
Andrew Denton, Chief Executive Officer of Alfa, said:
"I am delighted to announce another increase in our expectations for 2020, and I continue to be excited about the prospects for our business."
Enquiries
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Alfa Financial Software Holdings PLC Andrew Denton, Chief Executive Officer Duncan Magrath, Chief Financial Officer
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+44 (0)20 7588 1800 |
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Tulchan Communications LLP James Macey White Matt Low |
+44 (0)20 7353 4200
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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 spanning three decades, 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 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 used by customers or has live implementations in 26 countries and Alfa has offices in Europe, Australasia and North America. For more information, visit www.alfasystems.com.
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