Alfa Financial Software (ALFA) 2018年年度報告「LSE」.pdf

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1、Alfa Financial Software Holdings PLC Annual Report and Accounts 2018Focusing on future growthAnnual Report and Accounts 2018ContentsStrategic reportAlfa at a glance 1A focus on:Digital 2A focus on:Establishing our partner ecosystems 4A focus on:Accessing the volume market 6A focus on:Creating a high

2、 performance organisation 8Market overview 10Our business model 16Chief Executive Officers review of the year 18Our strategy 20Key performance indicators 26Risk management overview 30Principal risks and uncertainties 33Viability statement 36Financial review 38Corporate social responsibility 44Govern

3、anceCorporate Governance Introduction 50Corporate Governance Report 51Board of Directors 60Report of the Nomination Committee 63Report of the Audit and Risk Committee 67Report of the Remuneration Committee 74Annual Report on Remuneration 76Summary of the Directors Remuneration Policy 79Statement of

4、Directors responsibilities 83Directors Report 84Financial statementsIndependent auditors report to the members of Alfa Financial Software Holdings plc 88Consolidated statement of profit or loss and comprehensive income 94Consolidated statement of financial position 95Consolidated statement of change

5、s in equity 96Consolidated statement of cash flows 97Notes to the consolidated financial statements 98Company statement of financial position 128Company statement of changes in equity for the period from incorporation 129Notes to the Company financial statements 130Additional information Glossary of

6、 terms 1352018 HighlightsTotal revenue71m19%decrease on 2017Operating profit 22m34 million in 2017Adjusted EBIT margin(1)32%47%in 2017Alfa team at 31 December 2018312 employeesnet decrease of 17 in 2018(1)AdjustedEBITisdefinedasoperatingprofitexcludingpre-IPOsharebasedpaymentsandIPO-relatedcostsSoft

7、ware implementationODSMaintenance43%23%34%241(1)Alfa team members Europe 72(1)Alfa team members USA 15(1)Alfa team members RoW We analyse our 2018 business in a number of ways geographies,revenue types,customer types and industry verticalsAlfa at a glanceWhere we operateEuropeWe have 22 customers ba

8、sed in Europe,including two ongoing implementation customers as at 31 December 2018.Alfa Systems has been implemented and is live in eight European countries,with a further expansion underway into 10 countries over the next two years.We have expanded our European operations in 2019 by setting up a s

9、ubsidiary in Germany to serve as a base for our mainland European operations.USAWe primarily operate and serve customers in Texas,Michigan and Georgia,generating 33 million of revenue in 2018.We have deep experience of the US automotive sector and won our first US equipment customer in March 2018.Re

10、st of WorldWe have operations in both Australia and New Zealand,and have 15 team members in this region specialising in both automotive and equipment finance.Software implementationWe have four ongoing implementations at 31 December 2018.Software implementations vary in length and size depending on

11、the complexity of the lending portfolio,the number of systems being replaced and the level of change management required.During a software implementation,there may be a number of go-live events as different portfolios are migrated.Services include migration,development and configuration of customer-

12、specific automated processes or reporting and testing.MaintenanceWe have 30 customers paying annual maintenance fees,with 26 maintenance customers expected in 2019.Maintenance pricing is based on countries or geographical areas in which Alfa Systems is being used,number of finance contracts managed

13、on Alfa Systems and types of assets.ODSOngoing Development and Services ODS represents additional services or development provided to customers after the initial go-live of the software implementation.Our revenue streamsOur purpose:to deliver our leading-edge technology with smart,diverse people,mak

14、ing our customers future-ready.(1)Averageheadcountnumbers50%27%23%1231.BanksCustomers classified as banking institutions are finance entities associated with regulated banking groups.Such financing is often referred to as white label finance.2.OEMsOriginal Equipment Manufacturers OEMs include both e

15、quipment and automotive manufacturers,whose main purpose is the sale of the asset rather than the provision of financing.3.IndependentsIndependent customers are customers who are neither part of a regulated banking group nor manufacturers of the asset being financed.Independent customers tend to be

16、smaller,both in portfolio volumes and personnel using Alfa Systems.Our customers by typeOur verticalsAutomotive financeThe automotive finance industry provides a range of financial products to fund the acquisition of new and used vehicles.Our customers can be banking institutions providing finance t

17、o dealers,OEMs or independent sellers of automotive vehicles.Equipment financeEquipment finance covers a myriad of asset types from vending machines,which are high volume,low value,to power plants;low volume,high value.At Alfa we predominantly service the lending for agriculture,manufacturing,mining

18、,construction and transportation equipment.Historically,lending products on offer have been relatively vanilla,yet the equipment industry is seeing significant evolution towards consumption-based or subscription models.Generally lenders classified as equipment financers,have a variety of assets unde

19、r finance in their portfolios and may have some automotive finance as well,but this is not the predominant asset.62%of 2018 revenue38%of 2018 revenueThe video content included throughout the report does not form part of the Annual Report and Accounts 2018 of Alfa Financial Software Holdings PLC.Acce

20、ss enhanced video content on pages of this report with ReydarDownload Reydar app Aim and frame imageWatch it come to lifeFocus on Partners Page 4Accessing the volume market Page 6Using our leading-edge digital technologies and smart,diverse workforce,we are always looking to innovate and improve the

21、 solutions we provide.We believe everything can be improved through critical thinking.Whatever it is,we ask ourselves“how can it be better”.These areas of focus are:Focus on Digital Page 2Creating a high performance organisation Page 8Focusing on future growth Find out more about our focus on digita

22、l innovationArtificial intelligenceAgain we have seen significant steps forward as machine learning programmes have assisted in self-service customer helplines,with FAQs and with clever routing of questions or requests.This will continue to develop and learn as it is used more and more across many l

23、oans and customer relationships and will continue to revolutionise the way that our customers do business.Moving into 2019Our customers are looking for ease of use and efficiency of solutions whilst maintaining one brand and interface for their customers and our digital agenda has been tailored to t

24、ake our customers requirements and need for change into account.The basis for refining our digital agenda has been our highly successful European and US user groups which draws intelligence and feedback from a range of customers across a number of geographies and verticals.Self-serve applicationsWit

25、h digital solutions we have seen the ability to choose an asset from the comfort of your sofa become a reality.Integration of Alfa Systems with third party providers is now a must as customer identification and credit checking becomes something which can occur in a matter of minutes or indeed second

26、s as new technologies are used to read data and carry out statistical matching.Alfa Systems can now provide the technological solutions for our customers customers to select their leased asset,tailor the asset and the loan product to their needs and to complete credit checking processes to initiate

27、the loan.Moving into the life of the product,we have application-based products which provide the end-customers with immediate access to their loan data,customer support and ongoing service solutions.All of this is tailored to our customers branding and user interface to provide their customers with

28、 a cohesive solution which promotes efficiency and satisfaction.IoT and increased connectivity to the assetThe connectivity amongst everyday technologies continues to increase not only do we now see farm equipment measure weather or humidity in harvest,which then allows the manufacturers or lessors

29、of that equipment to forecast profitability or harvest success,we are also seeing data which allows lessors to assess maintenance requirements or residual values from how the asset is being used.Ultimately these are all data points which allow the lessor to structure loan products or services to bet

30、ter suit the lessee which becomes even more integral to the usership economy as end-customers move away from ownership and instead look for payments to be matched against usership and access.As the efficiency of IoT technologies and use of data increases,this will again contribute to increasing the

31、enjoyment of the overall customer experience,with the aim of promoting loyalty of the end customer.DigitalA focus on:For more information on the digital agenda see our two reports on digital discovery.Alfa in focusAlfa Financial Software Holdings PLCAnnual Report and Accounts 20182Deeper customer lo

32、yaltyReducing costsIncreasing revenueAugmented realityChange in usership and mobility modelsAPI strategyBlockchainKeep pace with technologyNeed for connectivity and control4312Incorporating digital needs into business strategyInnovation and exploration into new technologiesPull factors from the mark

33、etDigital providing added value across the businessIdentify need within businessRenew how digital enables3rd party systemsLegacy systems Alfa systems Digital gatewaygCarSubscriptionCar SharingCar PoolingOur customers move towards digitalWe are seeing significant innovation in financial technology as

34、 a result of changing end-customer needs.Digital agendas have been at the top of many CIOs and CEOs priorities for the last few years and in 2018 and into 2019 we have seen this move from being a talking point to becoming a reality.The driving force behind this has been customer buying power as inte

35、grated fintech solutions have become a must for ensuring ongoing customer loyalty.3Annual Report and Accounts 2018Alfa Financial Software Holdings PLCStrategic reportFinancial statementsAdditional informationGovernanceFind out more about our focus on partnershipsIntroductionSince inception,we have a

36、lways delivered Alfa Systems and supported our customers ourselves.While this model has served us well,allowing us to maintain control and ensure quality of the product and ensure delivery,it has necessarily coupled our ability to grow and develop the Alfa Team to top line growth.In order to move fo

37、rward,we believe that setting up a compact global ecosystem of partners will allow us to ultimately deliver more Alfa Systems implementations and grow our customer base but is expected to also provide sales leads.Additionally the partner ecosystem will give us more than that in the mid-term it will

38、be a key step to the move towards being a player in the volume market in both the US and Europe,and also due to the breadth and depth of these potential partner organisations,it will allow us to service geographies where we do not have a presence or local capabilities.Alfa in focusAlfa Financial Sof

39、tware Holdings PLCAnnual Report and Accounts 20184The success of our partner model lies in setting up partnerships with consultancy companies who share the same values as us and who we can work with in weaving the customers existing technology solutions and processes with Alfa Systems to create an i

40、ntegrated,elegant and efficient asset finance solution.and setting up teams is only efficient when there is a joint sales opportunity or live projects.In the short term,implementation team make-up is expected to be one third partner team members.Alfa Start methodology To create an efficient and low

41、friction implementation process,we have laid the groundwork with Alfa Start,which is our tried and tested,off-the-shelf,pre-configured solution and implementation process methodology.We have completed this for the US automotive sector and will continue to roll this out for all relevant software impl

42、ementations,both internally delivered and also partner assisted.Moving forward,we will adapt this for other sectors to allow us to have an Alfa Start methodology for all verticals and geographies.Developing Alfa Systems Any required development or customisation will remain with the Alfa team to ensu

43、re we retain control and security over the platform.How will we partnerCustomer focus will be critical We will retain the customer relationship,to ensure that our high standards of quality will be maintained whilst also meeting the customers needs.A small but carefully selected partner ecosystem We

44、are looking to partner with like-minded organisations,comprising both niche specialists and renowned management consultancies,with geographical spread but also bandwidth of deep asset finance expertise and strong delivery capabilities to complement our own.As with all relationships,it is important t

45、o us that we share the same values and are driving in the same direction therefore developing these partnerships will demand care and attention.Engaging,training and setting up the team We have advanced discussions with three potential partners and agreements with three existing partners.We have fou

46、nd that agreeing terms partner ecosystemsA focus on:Establishing ourMoving into 2019We will continue our successful partnership with Teamwill Consulting with whom we have been working with for more than two years,across Europe.Following the signing of engagement terms with Genpact in late 2017,we ha

47、ve a further three other partners where we are looking to agree terms in the event of a joint sales opportunity.We will continue to roll out and develop Alfa Start methodology to assist with training and facilitate partner assisted implementations.To support partners on implementations,we will set u

48、p a partner support line and also provide the latest information about Alfa Systems and our delivery methodology via a partner portal.We will continue to assess and evaluate other potential partners for our expanding ecosystem.5Annual Report and Accounts 2018Alfa Financial Software Holdings PLCStrat

49、egic reportFinancial statementsAdditional informationGovernanceThe volume marketCurrently our customer base is comprised primarily of enterprise customers who are often operating across multi jurisdictional areas and dealing with a web of legislation and regulation.We pride ourselves on the fact tha

50、t Alfa Systems can seamlessly deal with any regulation,any accounting and tax regime or any loan product and that the Alfa platform can operate globally.Our aspirations are to extend into the volume market,increasing our customer base and taking Alfa Systems to customers who are more medium-sized.In

51、 this market,simplification is key as often these customers are not looking for multi-jurisdictional implementation and do not have portfolios which comprise hundreds of thousands of lease contracts.Instead these players value a quality off-the-shelf solution,with simple,tried and tested automated p

52、rocedures relevant to companies of a smaller size,with the opportunity to add modules or processes as their business grows.Alfa in focusVolume marketA focus on:Accessing the Alfa Financial Software Holdings PLCAnnual Report and Accounts 20186 Find out more about our approach to our volume marketsAcc

53、essing this marketAlfa Systems is already cloud-ready,with 50%of our current Software Implementations being public cloud hosted and not on premises.This provides us with an excellent basis for accessing the volume market.Yet there remain a number of areas which require further preparation before we

54、can truly start the journey to gaining market share in this area:Simplification of implementation processes The Alfa Start methodology is the starting point of creating off-the-shelf processes and implementation procedures which would ultimately cover all relevant jurisdictions and geographies.The m

55、ethodology would allow partners or resellers to implement with limited to nil Alfa input.Simplification of our product To facilitate the simplified implementation,Alfa Systems needs to be flexible,nimble and efficient.Our modularisation project,which kicked off in 2018,is designed to refine the plat

56、form into smaller modules which will increase efficiencies on smaller implementations and also has the goal of decreasing complexity in the code base.12 Channel to market There are hundreds of players in the medium-sized market,very much dispersed geographically and vertically.Ways of accessing this

57、 market could be through partners,through resellers or through our own sales force.Pricing structures Many of the volume players will want to avoid long term financial commitments and the cash requirements of both large upfront license and extended implementation costs required by on-prem software.S

58、ubscription or SaaS style pricing will allow customers to scale their costs to the needs of the business quickly as business conditions change and such pricing will be dependent on the modularization of Alfa Systems and the modules chosen.Support and ongoing development Support efforts are being rev

59、iewed to assess the impact of increased requirements for a higher volume of customers but also the expected need for 24/7 helplines.While we provide some of our maintenance and support services while on site during the implementation,this would not be possible with a more typical reseller model and

60、therefore our support provision will have to evolve as we access new markets.345Moving forward2019 is a year of investment in simplification,both in product and processes,to lay the bedrock of the strategic aim of accessing these customers of the future.These simplification projects will not only se

61、rve the volume market but will also be fundamental to us in continuing to deliver the highest quality product and services to all our markets and in moving forward our partner agenda.7Annual Report and Accounts 2018Alfa Financial Software Holdings PLCStrategic reportFinancial statementsAdditional in

62、formationGovernanceInnovation at the core of how we developInnovation is key to how we develop at Alfa and one of the means by which we stay at the leading edge of the industry.The Alfa innovation team has developed a three stage process that allows for the systematic gathering,evaluation and adopti

63、on of new ideas,whether they are improvements to our existing products and processes or something completely new.Importantly,the process uses lean principles to allow people to take action while simultaneously applying only the minimum amount of investment to evaluate each idea.Innovation and engage

64、ment are encouraged across all levels of the organisation and this actively engages all our employees with the process.Alfa regularly holds events such as our Alfa Hackathons and Innovation Afternoons,which provide the Alfa team with the opportunity to experiment and try new ways of doing things.Oft

65、en,ideas that come up during these activities feed directly into the process itself.Typically,tens or even hundreds of ideas are generated from these innovation exercises which are the narrowed down as we go through the process.Currently,there are more than ten different ideas progressing through th

66、e different stages of the process,with a number of them adopted as part of the final stage of the process.Career paths and development opportunitiesIn 2018 we introduced a new career path and development framework to assist in how we structure performance management,development and training and succ

67、ession planning.Underlying this introduction was the separation of goals and objectives for developers in comparison to those proceeding along an implementation career path as we recognise that the skills required for each of these is very different.Moving into 2019 we are focused on defining the 20

68、19 objectives for relevant grades and career paths to establish a framework whereby our Alfa team can continue to contribute to the group strategy and be valued for that contribution.Our success as an organisation hinges on being able to recruit,retain and develop our Alfa team,allowing our people t

69、o innovate and grow throughout their career.In 2018 we introduced and focused on the following areas.A focus on:high performanceorganisationCreating aAlfa in focusAlfa Financial Software Holdings PLCAnnual Report and Accounts 20188 Find out more about our purpose and values.Our purpose To deliver ou

70、r leading-edge technology with smart,diverse people,making our customers future-ready.Our valuesMake it better togetherWe believe everything can be improved through critical questioning.Whatever it is,ask yourself“how can it be better”?Challenge without being challengingWe do the right thing in serv

71、ice of the bigger picture.Use your knowledge and expertise to benefit others.Let great ideas growWe believe that great ideas can come from anywhere.Have the confidence to share your ideas they will always be well received.Create a positive impactWe want to make a difference for each other,our custom

72、ers,and the communities we work within.Give something back.Our purpose and values project In January 2018,as a reaction to our Alfa team continuing to evolve and grow geographically,we initiated a project to define the Alfa purpose and values we hold in doing business.In particular,we wanted to resp

73、ect what had made Alfa so valued by our team members but also our customers and also to look to define a consistency of character across the entire business which would stand the test of time.We asked ourselves the questions of Why does Alfa exist?and how do we achieve this?We held 15 face to face i

74、nterviews with senior management,held five internal focus groups globally,arranged external interviews with our customers and advisors and reviewed trends and results from our employee survey results over the last three years.All this together made sure our purpose and values come from a place of au

75、thenticity,and truly reflect Alfa and its collective character.9Annual Report and Accounts 2018Alfa Financial Software Holdings PLCStrategic reportFinancial statementsAdditional informationGovernanceA complex and highly regulated market with many challenges and opportunitiesGlobal trendsOur differen

76、tiatorsThis is why our customers choose Alfa SystemsWe unify your systemsAvoid systems spaghetti consolidate disparate legacy systems,integrations and workarounds.Remove inefficiency and complexity by using a single platform with a single database.Create an omnichannel experienceEmpower customers,de

77、alers and vendors through enhanced self-service and omnichannel technology.Operate a clear and complete picture of the customer journey,from onboarding,throughout in-life management to end of term and retention.Innovate and challenge in multiple marketsMulti-entity,multi-regulatory,multi-currency an

78、d multilingual.React quickly in a complex and changing market.Adapt to match business requirements and customer needs as they evolve.Global asset finance marketWe believe the global asset finance market to be in good health,with continued demand in both the equipment and automotive verticals across

79、a number of asset finance suppliers.We have seen the US asset finance market remain buoyant,benefiting from fiscal support and attractive tax regimes,albeit the automotive market has continued being negatively impacted by new car sales and contagion from Chinese trade disputes.Europe continues its r

80、esurgence with new business volumes in the key European markets hitting double digits,albeit against a backdrop of emissions regulations and Brexit.Globally,the outlook for the equipment finance sector looks more stable than for the automotive finance sector,which is being buffeted by a number of he

81、adwinds.These include environmental trends,with emissions regulations becoming a stronger and stronger trend across many countries and regimes,declining new car sales,as well as the spectre of consumption-based financing,the increased transparency which e-commerce brings with it and the changing pri

82、orities of the millennial generation.We continue to see a focus on innovation of lending solutions,development of digital solutions with a focus on the customer and also a clearer drive from operational efficiencies and reporting powers.Alfas approachOur pipeline is diversified both geographically a

83、nd by vertical,although we have seen a clearer European presence in recent months.We are well placed to react to cyclical global market trends.Perform through leading-edge techCount on a comprehensive service-oriented architecture,and design your own API into the system.Exploit a 100%web and app UI

84、alongside reliable,scalable performance,proven for a 10 million-contract portfolio.Achieve operational agilityStreamline operations through process automation,across different functions and geographies.Achieve greater control,connected processes and a seamless flow of information.Market overview10Al

85、fa Financial Software Holdings PLCAnnual Report and Accounts 2018201820191.920201.31.6201820193.020202.32.0201820191.420201.41.7RegulationIn 2018 we saw European customers understand,react and comply with the increased regulation in the form of the General Data Protection Regulation(“GDPR”),effectiv

86、e May 2018,bringing enhanced consumer rights and tougher penalties.This follows on from the Open Banking legislation and the recent Payment Services Directive.Additionally,European OEMs in the automotive space had to evolve to meet the recent emissions targets,which slowed production and reduced mar

87、gins in the fourth quarter of 2018.In the US,there were a lower number of new regulations being introduced following the new administrations budgetary cuts in relation to the Consumer Financial Protection Bureau,and the tax incentives in relation to equipment started to bear fruit.As new regulation

88、is implemented,compliance and systems costs are expected to increase and therefore pressure is placed on profit margins at the lender level.This may put further focus on efficiency and operational gearing in the near term in order to maintain margins at an acceptable level.Alfas approachWe are ready

89、 to take advantage of an expected increase in systems expenditure.Security of data has always been at the forefront of our development and we are currently working with a number of customers to ensure they are GDPR ready and assisting with their change management programmes.Credit conditionsOverall

90、the global economy is in better shape than in recent years.The Euro area is gaining confidence and the further growth in the US economy has been supported by what is considered a business-friendly new administration after December 2017 tax reforms have been approved.With interest rate hikes and incr

91、eased inflation,there is a focus on operational efficiency to support ongoing economic growth.Alfas approachEnsuring our pipeline,and therefore future revenue generation,is diversified across geographical regions,industry verticals and types of customers.With a more competitive environment,we see le

92、nders continue to focus on reducing costs and digitalising operations,which are accelerating the adoption of new systems and increased IT investment.We are well-positioned to benefit from this trend.Talent poolIt has always been a challenge to hire graduate and experienced professionals at the rate

93、that we need,whilst maintaining the supervisory ratio needed to operate effectively.We continue to receive a high number of applicants for each post although competition for experienced candidates remains high,with relatively expensive recruitment costs.Our partner relationships will also supplement

94、 our talent pool.Alfas approachWe combine agency recruitment with a successful employee referral scheme,with many of our new Alfa team members applying through their connections to Alfa.GDP growth%Euro area(2)USA(3)UK(4)Focus on creating a high performance organisation Page 8(1)PwC Market Study on t

95、he Asset Finance Software Market,2017.(2)European Commission Winter 2019 Interim Economic Forecast.(3)Federal Open market Committee 19 December 2018.(4)HM Treasury forecast for UK Economy No.379.$5.4tnasset finance receivables,globally(1)200applications for each graduate positionStrategic reportFina

96、ncial statementsAdditional informationGovernance11Annual Report and Accounts 2018Alfa Financial Software Holdings PLCMarket overview continuedTechnology trendsCloudWe are continuing to see increased demand for cloud-based finance solutions with a lower level of customer investment in hardware requir

97、ed to support such solutions and decreasing internal personnel time required.Alfas approachAlfa Systems is cloud-ready and we are currently operating in the public cloud environment.Our experience is that significant operational gearing can be obtained by a cloud hosted solution which complements th

98、e efficiencies provided by Alfa Systems.Our sales approach has been Cloud First for more than a year.DigitalisationGenerally the asset finance industry has been slower than expected at implementing wholesale digital change,although it has been on the agenda of most lenders for a number of years.Digi

99、talisation is not just the embracing of app-based customer service solutions,but instead is the connectivity of the lenders systems with the asset,with other service providers systems,and with end-customers information leading to a myriad of data which will ultimately change the way that finance is

100、provided and end-customers are communicated with.On a legacy system or an internally developed solution,which accounts for c.60%of the asset finance market,this connectivity and transfer of data across technology solutions is difficult.Alfas approachAlfa Systems is developed using open API technolog

101、ies which supports our customers digitalisation.We continue to develop and partner with other technology providers to ensure that our systems remain relevant in an ever-changing world.Usership and autonomous vehiclesThe desire to own a car has declined globally as many consumers look towards other m

102、obility solutions such as ride hailing or ride sharing.This is a reaction in part to congestion or an emissions target but is also representative of changing consumer tastes and evolving technology.In recent times we have seen a number of OEM and hire car companies launch car share services or inves

103、t in ride hailing or sharing players all recognition that the world is adapting to the concept that car sharers may outweigh car owners in the near future.Ultimately OEM and other lending institutions have recognised that the landscape is changing and that the lending to end-customers may decline ov

104、er time,to be replaced by those providing the sharing or hailing solutions.This will disrupt not only the automotive industry but the entire transportation network and therefore may have a direct impact on rail,truck and other transportation.Focus on digital Page 2(1)PwC Report January 2018“Electric

105、 and self-driving cars will accelerate the change on our roads”.(2)PwC Report“The 2018 Strategy&Digital Auto Report”.The market for shared on-demand vehicles(Mobility as a Service/MaaS)in the US,the EU and China will be worth$1.4tn(2)by 2030(vs.$87bn in 2017)Ultimately autonomous vehicles are expect

106、ed to drive up operating margin as the salary costs are removed and technology increases fleet utilisation rates,although when this will become a realistic alternative is unknown.Alfas approachAs we see our customers prepare to adapt and evolve to this revolution,we believe that Alfas flexible confi

107、guration will support this fundamental change to the way products are financed.12Alfa Financial Software Holdings PLCAnnual Report and Accounts 2018Record levels reached in UK asset finance market with new business increasing 3%to almost33bnin 2018(1)Lease receivables for the bottom 25 AFE50 compani

108、es have increased more than 3bn(2)OverallOverall the European market has continued its recovery and there is a positive outlook as we move into 2019.In Europe the market players are relatively consolidated,with the top 25 asset finance companies accounting for around two thirds of funding provided.7

109、3%of funds are managed by bank owned lessors,with nearly 20%managed by OEMs.More than half of the investment in the EU is for replacement assets rather than growth investment which reflects the more modest economic growth in certain European countries.Alfas approachEurope remains an important market

110、 for us,with UK revenues of 22.8 million in 2018.Our pipeline remains diversified between Europe and the UK and our opportunities in Europe are all in the equipment vertical.EuropeBrexitLenders continue to monitor the progress of Brexit negotiations closely,especially in the UK.With 29 March 2019 lo

111、oming,the main impact on the asset finance industry is expected to be on volumes,as investment decisions on business expansion may be delayed as companies look for clarity on where negotiations will conclude.With the UK and Germany accounting for more than 50%of the European asset finance market,thi

112、s may lead to lower growth than expected as the March 2019 deadline approaches.Alfas approachWe have incorporated a German subsidiary in 2018 as part of our wider Brexit mitigation plan.This also demonstrates our commitment to the European marketplace.(1)FLA Industry Statistics February 2019 Finance

113、 and Leasing Association(2)Asset Finance Europe 50 2018 report Asset Financial International Find out more about our European market For more information on Brexit considerations see Risk management overview on page 32Strategic reportFinancial statementsAdditional informationGovernance13Annual Repor

114、t and Accounts 2018Alfa Financial Software Holdings PLCMarket overview continuedAutomotiveOver the first nine months of 2018,EU demand for passenger cars remained positive(+2.5%),in line with growth expectations for this year.Looking at the five biggest markets,demand went up in Spain(+11.7%),France

115、(+6.5%)and Germany(+2.4%),while car sales contracted in Italy(-2.8%)and in the United Kingdom(-7.5%).(1)UK car registrations fell almost 7%year-on-year to 2.37m units in 2018,with a near 30%drop in diesel registrations accounting for the most marked decline in the market.(2)Alfas approachAlfa System

116、s can comprehensively support the pay-per-mile model which is becoming prevalent.EquipmentThe European construction equipment sector delivered another positive surprise in the third quarter of 2018.Contrary to the expectations of a market that is edging closer to saturation,further growth was experi

117、enced.Equipment sales in Europe grew by 9.4%in the third quarter,and year-to-date growth is at 9.2%after nine months.In Western European markets,many of which are already at,or close to peak levels,sales expectations were surpassed,and they made a significant contribution to growth.In contrast,the T

118、urkish market fell by two thirds in Q3,and continues to be in freefall.Interestingly,both earthmoving and road equipment picked up in the third quarter,while recovery in the building construction equipment sector slowed down.As of today,total growth in sales at between 5%and 10%is the most realistic

119、 forecast for the European equipment sector in 2019.(3)Alfas approachOur digitalisation initiative makes us well placed to serve European OEMs and independents,serving customers through new lending products.Our market share of the European equipment market continues to increase as many of the top 50

120、 lenders use Alfa Systems.2.4%expected decline in UK new car registrations in 2019(4)Lease receivables for European auto captives have increased 30.5bn(+6%)271bnEuropean new leasing business in 2017(+4%)(6)(5)Europecontinued(1)UK new car and LCV registrations outlook to 2020 January 2019 SMMT(2)Sour

121、ce:https:/www.acea.be/press-releases/article/passenger-car-registrations-2.5-nine-months-into-2018-23.5-in-september(3)https:/www.autocar.co.uk/car-news/industry/uk-car-registrations-fall-68-2018-plus-2018s-best-sellers-revealed(4)Asset Finance Europe 50 2018 report Asset Financial International(5)h

122、ttps:/www.agoria.be/en/European-construction-machinery-markets-almost-double-digit-growth-in-2018-and-projections-for-2019(6)Asset Finance Europe 50 2018 report Asset Financial International14Alfa Financial Software Holdings PLCAnnual Report and Accounts 2018OverallA steadily growing economy and a b

123、usiness-friendly administration are paving the way for future growth.Although the US car market may have reached the peak of the current cycle,we are seeing an increase in demand in the equipment finance market.We have seen lending products evolve,moving away from the relatively simplistic loan prod

124、ucts of the past to more bundled contracts.Lenders are grappling with changes to lease,revenue and credit loss accounting as recent regulations are enforced which will lead to increased system reliance due to the complexity of the real time calculations required.Alfas approachThe US remains one of o

125、ur key markets.In 2018 we will focus on further expanding and diversifying our customer base,including expansion into US equipment finance providers.AutomotiveSales of new vehicles in the US rose slightly in 2018,defying predictions and highlighting a strong economy.Automakers reported an increase o

126、f 0.3 per cent over a year ago to 17.27 million vehicles.(3)There remains an oversupply of used vehicles which impacts the residual values of both new and used cars.This will challenge the profitability of live lease contracts in the short term.We have seen automotive lenders,both OEMs and banks,bei

127、ng more cautious around lending criteria amid sub-prime lending concerns.Having said that,the American Financial Services Association,after convening an expert panel to investigate sub-prime lending in the automotive market,has given the sector a clean bill of health.Although there had been some gro

128、wth in sub-prime loans in recent years,there had been growth over all risk tiers and it was not considered concentrated.Alfas approachAs new sales volumes decrease,Alfa has been assisting customers with change management processes in order to improve and protect margins.Although new car sales are fo

129、recast to generating demand for modern systems and we are well placed for personal contract hire or other consumer consumption focused lending products.Additionally we are also seeing lenders previously focused on automotive expand into equipment financing,therefore diversifying their asset portfoli

130、o,or start-ups entering the market both of which are key parts of our growing pipeline.USAFocus on partners Page 4(1)“2019 Equipment Leasing&Finance US Economic Outlook”December 2018 Equipment Leasing&Finance Foundation.(2)“U.S.Equipment&Software Investment Momentum Monitor”January 2019 Equipment Le

131、asing&Finance Foundation.(3)https:/ Vehicle Sales in 2019 December 2018 NADA(5)https:/www.elfaonline.org/docs/default-source/data/2018industrysizechart.pdf?sfvrsn=e999810d_2(6)https:/www.elfaonline.org/data/mlfi-25-monthly-leasing-and-finance-index/view-mlfi/monthly-leasing-finance-index-december-20

132、18EquipmentEquipment finance industry size grew from$1.012 trillion in 2017 to an estimated$1.033 trillion in 2018.(5)Business volume in the equipment finance sector picked up in the final month of 2018,and the year ended with cumulative new business volume 4 per cent higher than in 2017(6)Alfas app

133、roachWe are well placed to adapt to changes in financing structures,with consumption-based financing already a component of Alfa Systems.4.1%forecasted growth in 2019 equipment and software investment(1)9.1%Investment in Software increased at a 9.1%annual rate in Q3 2018 and is up 9.1%year-over-year

134、(2)16.8m new cars and light trucks projected to be sold in 2019(4)Strategic reportFinancial statementsAdditional informationGovernance15Annual Report and Accounts 2018Alfa Financial Software Holdings PLCInnovationR&PD and innovation A single end-to-end asset finance platform suitable for any vertica

135、l or geographyOur business modelWe create value by delivering and supporting Alfa Systems which provides an end-to-end,smart and sophisticated solution for players spanning the breadth of the asset finance industryOur resourcesHow we create value Technology Alfas continued product development and in

136、novation creates opportunity.We provide a unique software platform that combines modern,disruptive technology with industry-leading functionality and reliability.People Our team works collaboratively with our customers teams to meet their business needs and strategic aspirations.Expanding our partne

137、r network will accelerate the evolution of our implementation capabilities and complement our continued focus on delivery.Culture Our focus on excellence,agility and innovation ensures we are always at the forefront of the industry,providing solutions to regulatory and business challenges,digital ne

138、eds and hosting solutions.ExperienceOur software is built specifically for the asset finance industry and this,coupled with nearly 30 years of proven delivery capabilities,has given us deep experience and know-how.We work with a wide variety of customers,across geographies,cultures and verticals del

139、ivering excellence in everything we do.Financial stabilityWe aim to create stable commercial relationships which do not put our funding and liquidity at risk.Building long-term relationshipsThe life of an Alfa customer spans the initial needs assessment through to go-live,continued maintenance servi

140、ces and ongoing development and services work,across a myriad of asset types,geographies and lending products.But it does not stop there customers often return to a needs assessment as their portfolio increases,their asset types expand and geographical reach increases.From proposal to end of term,ac

141、ross many asset types and financing structures.Software implementationIncludes implementation and development work for new customers and upgrades and geographical or asset type roll-outs for existing customers.Implement,develop and trainAssessmentREVENUE STREAMSAll underpinned by strong governance a

142、nd robust risk managementOur valuesMake it better togetherChallenge without being challenging16Alfa Financial Software Holdings PLCAnnual Report and Accounts 2018ReinvestmentReinvestmentInternational Integrated Reporting Councils capitalsThis key provides a mapping to the“capitals”of the IIRCs Integ

143、rated Reporting(IR)Framework.You can find out more at:theiirc.org Financial Human Manufactured Intellectual Social NaturalShareholderEPS(basic)6.3p(2017:9.1p)CustomersCustomer loyalty:Average customer relationshipc.12 yearsDelivery over last 3 years6 software implementationsAlfa teamRetention 88%Rat

144、ing on Glass door3.8ProductInvestment in product16.3 million(2017:14.0 million)Brand coverageCountries 26Assets under finance 20+millionCommunities and societyMoney raised47,000Carbon emissions 890 tCO2eThe value we create for stakeholdersOngoing development and services(ODS)Includes further functio

145、nality,development or process changes in response to new regulation and further change management as businesses grow.MaintenanceOngoing support for existing customers portfolios,including upgrades available on a monthly,quarterly or biannual basis at the customers choosing,help desk support and othe

146、r maintenance services.MaintainContinued value creationUPGRADING AND INCREASING PORTFOLIOSLet great ideas growCreate a positive impactEmployee engagement 61.2%For more information see key performance indicators on pages 26-29Strategic reportFinancial statementsAdditional informationGovernance17Annua

147、l Report and Accounts 2018Alfa Financial Software Holdings PLC Andrewreflectson2018 and outlines the focuses for 2019We have re-organised and re-prioritised to create a better platform for growthChief Executive Officers review of the year phase of this customers implementation is going well,with com

148、pletion expected in the first half of 2019 and we are now engaged to design the second phase of the roll out which will start this year.We continue to assess whether our sales processes are relevant in the current market,whether our product offering is aligned with the needs of prospective customers

149、 and whether we have the right people in the right place to serve the business we have now and for the coming year.Moving into 2019,certain operational and management changes have been made which we believe will ensure that we are best placed to win new customers.Sales executionWe have combined the

150、sales and commercial teams to simplify reporting lines and to increase communication speed,with the objective of improving contract execution and increasing the pace and rate of our sales conversion.We have also assessed whether there were common themes or factors that were slowing the customer deci

151、sion-making process which we could impact by adapting our go-to-market strategy.Following this review,we found no reason to make significant changes to pricing and proposition,although we continue to see more focus on hosted solutions,a requirement for systems to be digital ready and customers looki

152、ng for global solutions.We have seen a number of single country implementations expand into potential multi-country implementations over the last 24 months.In the long-term,this expansion leads to operational benefits for the customer.For Alfa,while this multi-country expansion increases the value a

153、nd size of the opportunity,it often also impacts and complicates the decision making process.We believe these changes have contributed to positive momentum,evidenced by the start of delivering implementation services to a new European customer in the fourth quarter of 2018,whilst continuing to agree

154、 concurrently the license and maintenance agreements.This new project will represent a significant opportunity and strengthens our European footprint.There are always improvements which can be made in sales execution and this remains a key focus for myself,the rest of the executive and the Board goi

155、ng forward.Product offering and strategyDuring 2018,we progressed a number of key projects which will continue to position Alfa Systems as a platform solution.We are continuing to see demand for multi-country and highly integrated implementations and therefore we have further developed our Digital G

156、ateway technology and API strategy.We are encouraged by the early-stage,anecdotal customer feedback to date.This work will continue into 2019,when we will test the relevance and priorities of our product roadmap with our customers at the user group forums we run in Europe and North America.To comple

157、ment our sales efforts in relation to enterprise customers,Alfa has been developing its volume market 2018 has been a challenging year for Alfa following both the pause of one of our significant software implementations and the slower than expected conversion of the sales pipeline.In June 2018 we an

158、nounced that one of our major customers had taken the decision to delay their implementation project.This decision related to the customers existing internal systems and we are currently actively involved in discussions regarding the planning of the restart of this implementation,which is expected t

159、o be in the second half of 2019.This resulted in a decrease in 2018 revenue of 5.3 million in comparison to the prior year.We also saw a potential new customer significantly increase the geographical and functional scope of its proposed project.While this delayed the date at which the project may ha

160、ve started,it also materially increased the scale and size of the possible opportunity.We remain in positive discussions with this potential new customer,and it remains a prospect in our pipeline.We highlighted that one of our larger existing customers looked likely to extend its decision point rega

161、rding the expansion of its multi-country implementation.As of today,the first 18Alfa Financial Software Holdings PLCAnnual Report and Accounts 2018strategy(previously“Business-in-a-Box”).This part of our growth strategy is focused on winning business from companies in the asset finance market which

162、are smaller than our current enterprise customers.To be successful in this,we need to offer a product that is ready to go,pre-built and pre-configured with best practice processes.During 2018 and into 2019,we have introduced our Alfa Start methodology at one of our implementation projects with signi

163、ficant success to a leading US automotive retailer.This is an important first step in simplifying implementations which will extend our market opportunity,and results in a methodology which has been developed using our years of experience working with such companies.The second step is our Modularisa

164、tion project,the aim of which is to separate key components of Alfa Systems which will decrease the cost of future development and facilitate faster implementations.This remains a key priority on our product roadmap for 2019 and into 2020.A key trend in 2018 was an increase in our customers using di

165、gital initiatives and artificial intelligence methods to help them deliver efficiencies and improve their customers satisfaction levels.In 2018 we contributed to this by enabling a number of our customers digitalisation strategies,primarily through our Point of Sale and customer self-service offerin

166、g.Moving forward into 2019,the priority will be on building on this to demonstrate the business possibilities that Alfa Systems broad and flexible open API gives.We seek to leverage our API and establish technology partnerships and build a platform ecosystem around Alfa Systems which will be availab

167、le to all customers.Partners and peopleHistorically our people have delivered 100%of our software implementations and ongoing support efforts to our customer base.As of now,we have three agreed partnership framework agreements in place which provides us with the ability to decouple our future growth

168、 from headcount.It will also provide us with a more flexible cost base and extend our geographic reach in areas where we do not have a presence.We are negotiating framework agreements with two additional partners,have submitted two co-bids for prospective customers and hope to extend the partner net

169、work further during 2019.In addition to aligning our sales and commercial teams,we have set up an Investment Committee to review and monitor product strategy and investment going forward.We also welcome a new Global Director of People,Campbell Fitch,who brings with him a wealth of experience in rela

170、tion to talent and succession planning and remuneration.2018 resultsFollowing the announcement of a paused software implementation and slower than expected conversion of our sales pipeline,our revenue decreased by 19%to 71.0 million(2017:87.8 million),with operating profit margin decreasing to 32%(2

171、017:39%).The impact of our paused software implementation contract was sizeable and completing implementation work on five customers in 2017 led to a greater dependence on ODS revenue in the year.During 2018 we upgraded six of our customers around the world which contributed to growth in ODS revenue

172、 and we launched a new web point of sale system to support one of our Asia Pacific customers with their broker-introduced business.In the US,our Alfa Start implementation methodology is being successfully utilised on the implementation of one of the largest used car retailers,assisting with accelera

173、tion of implementation times.This provides solid evidence that our progress on our volume market strategy is producing benefits both for us and our customers.Revenue71mOperating profit margin32%Headcount312Looking forward Moving into 2019,our focus remains on converting sales opportunities to contra

174、cted customers.We are currently progressing contractual discussions with a new European customer and planning a second phase implementation for an existing multi-national customer.We have also seen an increase in the overall size of the pipeline across geographies and verticals since we last reporte

175、d at our half year results.Following an assessment of a number of different areas across the business including our sales and commercial processes we have made a number of organisational changes which we believe will strengthen the business going forward.We remain confident in the long-term opportun

176、ities for Alfa,and expect the company to perform in line with the Boards expectations in the year ahead.Andrew Denton CEO 7 March 2019 Strategic reportFinancial statementsAdditional informationGovernance19Annual Report and Accounts 2018Alfa Financial Software Holdings PLCRisksA Failure to increase m

177、arket share in relation to large multi-national customers or to retain our existing customer baseB High customer concentrationOur strategy for creating long-term sustainable business valueC Socio,geo-political riskD Risk to people,skills,location and working environmentOur strategic pillarsDelivery

178、Focusing on the customerProduct Leading with the best technology0110101100110100011010010101100101001101010011Our strategic prioritiesGrowing our market share by maintaining leading edge technology,increasing customer loyalty and winning new businessWe will retain our market-leading position and gro

179、w our share of the enterprise asset finance sectorEstablish our partner ecosystem to build operational capacity and sales channel opportunityWe will work with a select group of partners to increase our delivery capabilities whilst maintaining quality Establish our digital agenda as leading edge and

180、best in classWe will be a market leader for digital solutions in the asset finance sectorOur strategy20Alfa Financial Software Holdings PLCAnnual Report and Accounts 2018 See principal risks Pages 33-35 See key performance metrics Pages 26-29E Failure to deliver on our existing implementation or ODS

181、 businessF Failure to develop Alfa Systems to ensure it remains relevant in the market,to lower cost of development in the future and to allow competitive technological and product developmentG IT security and cyber risksH Business interruption or continuityPeople Delivering with smart diverse peopl

182、eInnovation and future proofing Planning for the futureReposition Alfa Systems and our delivery model for expansion into the volume marketWe will become a market leader in the volume market of the asset finance industryCreate a high performance organisationWe will continue to offer a supportive,dive

183、rse and collaborative working environmentPromote and grow valueWe will continue to have market-leading marginsStrategic reportFinancial statementsAdditional informationGovernance21Annual Report and Accounts 2018Alfa Financial Software Holdings PLC0110101100110100011010010101100101001101010011Our str

184、ategy Growing our market share by maintaining leading-edge technology,increasing customer loyalty and winning new businessObjectivesProgress in 2018 Key highlightsFocus for 2019Related KPIsRisks0110101100110100011010010101100101001101010011 Driving innovation in our existing solutions011010110011010

185、0011010010101100101001101010011 Lead with our Cloud First offering0110101100110100011010010101100101001101010011 Winning in our existing market by demonstrating capability of product and first in class delivery0110101100110100011010010101100101001101010011 Maintain our leading position as partner to

186、 the US automotive asset finance sector0110101100110100011010010101100101001101010011 Grow our European market share,across all verticals0110101100110100011010010101100101001101010011 Develop our US equipment asset finance expertise0110101100110100011010010101100101001101010011 Demonstrate value and

187、 innovation through thought leadership to support our customers and potential customers in responding to market change0110101100110100011010010101100101001101010011 Develop road map for new tools,services and modules,using new technologies such as AI and IoT,to anticipate and address shifting priori

188、ties and support change in our customers businessesCommitment to Europe through GmbH March 2018 win of a new customer allows us to access the US equipment market Upgrades for 6 existing customers Cloud first offering Creation of a product roadmap and Investment CommitteeUser groupsMaintain position

189、as key thought leader through planned pieces Continue on with research and development in relation to application of AI,machine learning and IoT Assessment of nearshoring opportunitiesContinuation of the roadmap Customer numbersRevenue growth existing customersRevenue growth new customersCountries w

190、e operate inMarket share Customer satisfactionA B C D E F G H Establish our partner ecosystem to build operational capacity and sales channel opportunityObjectivesProgress in 2018 Key highlightsFocus for 2019Related KPIsRisks0110101100110100011010010101100101001101010011 Select a small number of pre

191、ferred partners and establish engagement terms0110101100110100011010010101100101001101010011 Further develop training and learning programmes to promote delivery the“Alfa way”0110101100110100011010010101100101001101010011 Embed partners into our sales and customer relationship processesCurrently 3 p

192、artnership agreements in placeContinued strengthening of our European partner relationship 2 ongoing joint sales proposalsMaster service agreements with key 3-4 partnersSet up partner portal No.of partnersAvailable resourcesNo.of joint bidsCustomer satisfactionA B C D E F G H Establish our digital a

193、genda as leading edge and best in classObjectivesProgress in 2018 Key highlightsFocus for 2019Related KPIsRisks0110101100110100011010010101100101001101010011 Focus on Alfa as a Platform Solution0110101100110100011010010101100101001101010011 Develop compelling tools and value-adds to the platform0110

194、101100110100011010010101100101001101010011 Thought leadership to demonstrate leading partner to the asset finance industryDelivery Focusing on the customerProduct Leading with the best technologyPeople Delivering with smart,diverse peopleInnovation and future proofing Planning for the futureStrategi

195、c pillars22Alfa Financial Software Holdings PLCAnnual Report and Accounts 2018Progress in 2018 Key highlightsFocus for 2019Related KPIsRisksCommitment to Europe through GmbH March 2018 win of a new customer allows us to access the US equipment market Upgrades for 6 existing customers Cloud first off

196、ering Creation of a product roadmap and Investment CommitteeUser groupsMaintain position as key thought leader through planned pieces Continue on with research and development in relation to application of AI,machine learning and IoT Assessment of nearshoring opportunitiesContinuation of the roadmap

197、 Customer numbersRevenue growth existing customersRevenue growth new customersCountries we operate inMarket share Customer satisfactionA B C D E F G H Progress in 2018 Key highlightsFocus for 2019Related KPIsRisksCurrently 3 partnership agreements in placeContinued strengthening of our European part

198、ner relationship 2 ongoing joint sales proposalsMaster service agreements with key 3-4 partnersSet up partner portal No.of partnersAvailable resourcesNo.of joint bidsCustomer satisfactionA B C D E F G H Progress in 2018 Key highlightsFocus for 2019Related KPIsRisksEarly stage origination of a long t

199、erm product and digital roadmapSelf-serve appInnovation committee established to drive digitisation and platform strategy and reinvestment.Continue digital agendaRevenue growth new customersA B C D E F G H Risks A Failure to increase market share in relation to large multi-national customers or to r

200、etain our existing customer baseB High customer concentrationC Socio,geo-political riskD Risk to people,skills,location and working environment E Failure to deliver on our existing implementation or ODS businessF Failure to develop Alfa Systems to ensure it remains relevant in the market,to lower co

201、st of development in the future and to allow competitive technological and product developmentG IT security and cyber risksH Business interruption or continuityStrategic reportFinancial statementsAdditional informationGovernance23Annual Report and Accounts 2018Alfa Financial Software Holdings PLC011

202、0101100110100011010010101100101001101010011 Reposition Alfa Systems and our delivery model for expansion into the volume marketObjectivesProgress in 2018 Key highlightsFocus for 2019Related KPIsRisks0110101100110100011010010101100101001101010011 Promote simplification of delivery through our Alfa St

203、art methodology0110101100110100011010010101100101001101010011 Promote product simplification,initially by progressing modularisation programme0110101100110100011010010101100101001101010011 Pricing proposition to support winning in the volume market0110101100110100011010010101100101001101010011 Devel

204、op a sales channel for volume market0110101100110100011010010101100101001101010011 Develop a support and investment model for volume market0110101100110100011010010101100101001101010011 Demonstrate agility through thought leadership to support our customers and potential customers in responding to m

205、arket changeInitiate modularisation Roadmap for volume marketContinue modularisation programmeExtend Alfa Start methodology across verticals and geographiesDevelop detailed plan for pricing,sales and support and investment model for entering volume market and optimising value propositionReduce imple

206、mentation days A B C D E F G H Create a high performance organisationObjectivesProgress in 2018 Key highlightsFocus for 2019Related KPIsRisks0110101100110100011010010101100101001101010011 Embed purpose and values proposition throughout organisation,to be the foundation of everything we do01101011001

207、10100011010010101100101001101010011 Attract and retain the best people via a compelling value proposition0110101100110100011010010101100101001101010011 Align reward and recognition with high performance and contribution0110101100110100011010010101100101001101010011 Embed our career paths and learnin

208、g and development programmes0110101100110100011010010101100101001101010011 Succession planning to promote and develop key talent0110101100110100011010010101100101001101010011 Foster innovation throughout the companyPurpose and values project Updating policies to embed and also sales proposition Care

209、er pathsSuccession planning Talent developmentInnovation days CSR teams set up globallyReinvigorate reward and recognition Implement new learning and development frameworkContinue to plan for succession throughout the teamActively support innovation and collaborationRetentionGlassdoorPulse SurveyA B

210、 C D E F G H Promote and grow valueObjectivesProgress in 2018 Key highlightsFocus for 2019Related KPIsRisks0110101100110100011010010101100101001101010011 Deliver best in class delivery and support services0110101100110100011010010101100101001101010011 Align our global locations with our growth poten

211、tial0110101100110100011010010101100101001101010011 Enhance our consultancy capability0110101100110100011010010101100101001101010011 Reinvestment in the product to promote simplification,increase customer satisfaction and promote a modern,agile and collaborative working environmentDelivery Focusing o

212、n the customerProduct Leading with the best technologyPeople Delivering with smart,diverse peopleInnovation and future proofing Planning for the futureStrategic pillarsOur strategy continued24Alfa Financial Software Holdings PLCAnnual Report and Accounts 2018Progress in 2018 Key highlightsFocus for

213、2019Related KPIsRisksInitiate modularisation Roadmap for volume marketContinue modularisation programmeExtend Alfa Start methodology across verticals and geographiesDevelop detailed plan for pricing,sales and support and investment model for entering volume market and optimising value propositionRed

214、uce implementation days A B C D E F G H Progress in 2018 Key highlightsFocus for 2019Related KPIsRisksPurpose and values project Updating policies to embed and also sales proposition Career pathsSuccession planning Talent developmentInnovation days CSR teams set up globallyReinvigorate reward and re

215、cognition Implement new learning and development frameworkContinue to plan for succession throughout the teamActively support innovation and collaborationRetentionGlassdoorPulse SurveyA B C D E F G H Progress in 2018 Key highlightsFocus for 2019Related KPIsRisksAlfa StartGmbH set up Continued focus

216、on operating cost efficiencies to ensure that we have the capacity to invest in new skills to drive future growth Operating marginEPSFree Cash Flow ConversionA B C D E F G H Risks A Failure to increase market share in relation to large multi-national customers or to retain our existing customer base

217、B High customer concentrationC Socio,geo-political riskD Risk to people,skills,location and working environment E Failure to deliver on our existing implementation or ODS businessF Failure to develop Alfa Systems to ensure it remains relevant in the market,to lower cost of development in the future

218、and to allow competitive technological and product developmentG IT security and cyber risksH Business interruption or continuityStrategic reportFinancial statementsAdditional informationGovernance25Annual Report and Accounts 2018Alfa Financial Software Holdings PLC201871.0201787.7201673.320181201722

219、01612018(16%)20179%Key performance indicatorsMeasuring our performanceAlfa measures a range of financial and non-financial metrics to help manage the long-term performance of Alfa.Financial 2018 performance Rebasing of revenue as significant implementation customer paused and slower than anticipated

220、 sales pipeline conversion.Focus in 2019 Convert sales pipeline Upgrade opportunities at existing customers Hosting and cloud opportunitiesWhy do we measure this?Revenue and customer base growth Growing revenue is a measure of customer success and reflects the culture and success of Alfa.It is centr

221、al to our vision of being the number one supplier of the asset finance industry.Linked to remuneration:YesLinks to strategic priorities:Link to risk:A B C D E F G H 2018 performance One new implementation customer signed in 2018.Focus in 2019 Convert sales pipeline Why do we measure this?Revenue and

222、 customer base growth Growing revenue is a measure of customer success and new sales.Growing new revenue generally is an indication of new sales and future growth.New customers defined as license agreements signed in year.Linked to remuneration:NoLinks to strategic priorities:Link to risk:A B C D E

223、F G H 2018 performance Constant currency decline is marginally lower than actual following decreased implementation revenues being predominantly in USD.Focus in 2019 n/aWhy do we measure this?Revenue and customer base growth Demonstrates underlying organic growth or decline excluding the impacts of

224、currency.Linked to remuneration:NoLinks to strategic priorities:Link to risk:A B C D E F G H Grow new customer revenue1Grow group revenue71.0mGrow revenue on a constant currency basis(16%)For definitions and method of calculation on page 29Establish our partner ecosystem to build operational capacit

225、y and sales channel opportunityReposition Alfa Systems and our delivery model for expansion into the volume marketPromote and grow valueGrowing our market share by maintaining leading-edge technology,increasing customer loyalty and winning new businessEstablish our digital agenda as leading-edge and

226、 best in classCreate a high performance organisationOur strategic prioritiesRisks A Failure to increase market share in relation to large multi-national customers or to retain our existing customer baseB High customer concentrationC Socio,geo-political riskD Risk to people,skills,location and workin

227、g environment E Failure to deliver on our existing implementation or ODS businessF Failure to develop Alfa Systems to ensure it remains relevant in the market,to lower cost of development in the future and to allow competitive technological and product developmentG IT security and cyber risksH Busin

228、ess interruption or continuity26Alfa Financial Software Holdings PLCAnnual Report and Accounts 2018201832201739201623201832201747201645201866.5201776.8201674.02018862017692016113201816.3201714.0201613.62018 performance Operating profit margin impacted by revenue decreases and increased personnel cos

229、ts.Focus in 2019 Maintain market-leading marginsWhy do we measure this?Promote and grow value Operating profit is a measure of how effectively we do business and how we monitor our cost basis for the business now but also to facilitate our growth model.Linked to remuneration:NoLinks to strategic pri

230、orities:Link to risk:A B C D E F G H 2018 performance Operating profit margin impacted by revenue decreases and increased personnel costs.Focus in 2019 Maintain market-leading marginsWhy do we measure this?Promote and grow value Adjusted EBIT margin removes the impact of non-recurring income or expe

231、nses to assess how effectively we are delivering Alfa Systems and related services to customers.Linked to remuneration:YesLinks to strategic priorities:Link to risk:A B C D E F G H Adjusted EBIT margin32%Operating profit margin32%2018 performance Billings lower than revenue due to release of deferre

232、d license recognition and certain settlement amounts to be billed in 2019.Focus in 2019 Maintain billings of 95%of revenueWhy do we measure this?Strong balance sheet position demonstrates cash flow and growth in the underlying business.Linked to remuneration:NoLinks to strategic priorities:Link to r

233、isk:A B C D E F G H 2018 performance Sustained momentum in increasing the cash conversion ratio.Focus in 2019 Cash flow conversion of 95%Why do we measure this?Strong balance sheet position Our business has always been cash-generative and this KPI allows us to monitor cash flows throughout the year

234、before investment in capital projects.Linked to remuneration:YesLinks to strategic priorities:Link to risk:A B C D E F G H 2018 performance Alfa capitalised 0.4 million in 2018 in relation to digital innovationsFocus in 2019 Continue to deliver on modularisation and digital agenda Why do we measure

235、this?Product investment Quantification of the cost spent investing in research and development of Alfa Systems,demonstrating continued evolution and focus on change.Operating free cash flow conversion86%Billings66.5mR&D expense16.3mLinked to remuneration:NoLinks to strategic priorities:Link to risk:

236、A B C D E F G H Strategic reportFinancial statementsAdditional informationGovernance27Annual Report and Accounts 2018Alfa Financial Software Holdings PLC201827201732201631201831220173292016269201832017320161201888201795201695201861.220188902017690Key performance indicators continuedOperational2018 p

237、erformance One new customer signed in 2018,representing our expansion into the US equipment vertical.Number of customers at 2018 removes customers who have terminated in year or who have given notice to terminate in 2019.Focus in 2019 Grow customer numbers and maintain diversification across geograp

238、hies and verticalsWhy do we measure this?Revenue and customer base growth Our ultimate aim is to grow our share of the total addressable market and therefore increasing numbers of customers helps us achieve this but also it protects us against customer concentration risk in the medium term.2018 perf

239、ormance Headcount decreased due to natural attrition and lower recruitment,particularly in relation to experienced hires.Focus in 2019 Maintain headcount and leverage partner relationshipsWhy do we measure this?Revenue and customer base growth Our growth and ability to win new business is partially

240、dependent on the deep expertise of our people and therefore growing our team for the future is key to this.2018 performance Discussions with a further three ongoing,in anticipation of joint working relationships from sales pipeline.Focus in 2019 Grow and utilise partner ecosystemWhy do we measure th

241、is?New KPI for 2018 Revenue and customer base growth the growth of our business is also linked to our relationships with partner organisations who can facilitate introductions to potential customers and also provide resource augmentation capabilities.Number of customers27Headcount312Partner relation

242、ships32018 performance Retention rate fell due to natural attrition as market became more competitive and lower recruitment due to lower activity levels.Metric excludes any managed attrition.Focus in 2019 Retention of c.90%Why do we measure this?Engagement of people Our deep expertise in the industr

243、y and our ability to service our ongoing customer relationships is driven by the quality of our people;therefore a higher retention rate demonstrates sustained engagement and retention of key skills and knowledge.2018 performance New KPI in 2018 to recognise that increased employee engagement is a p

244、ositive indicator of culture and has a positive impact on business performance.Questions asked are“Would I recommend Alfa to a friend as an employer”,“I am happy with Alfas strategy and business goals”and“Alfa has an excellent atmosphere and culture.”Focus in 2019 Increased engagement from ongoing p

245、eople agendaWhy do we measure this?New KPI for 2018 It is important to measure levels of employee engagement as theses have been proven to have a positive impact on business performance.2018 performance New KPI in 2018 to set targets for decreasing impact on the environment in which we work.Focus in

246、 2019 Neutral environmental impact Why do we measure this?New KPI for 2018 Responsible operations we are committed to a position of carbon neutrality by reducing our travel emissions as much as possible.Employee engagement61.2Retention rate88%Linked to remuneration:NoLinks to strategic priorities:Li

247、nk to risk:A B C D E F G H Linked to remuneration:NoLinks to strategic priorities:Link to risk:A B C D E F G H Linked to remuneration:NoLinks to strategic priorities:Link to risk:A B C D E F G H Linked to remuneration:YesLinks to strategic priorities:Link to risk:A B C D E F G H Linked to remunerati

248、on:NoLinks to strategic priorities:Link to risk:A B C D E F G H Linked to remuneration:NoLinks to strategic priorities:Link to risk:A B C D E F G H Greenhouse gas emissions per 1,000 square feet(tCO2E)890 See our CSR section for more info on page 4428Alfa Financial Software Holdings PLCAnnual Report

249、 and Accounts 2018(1)HeadcountRepresents the number of Alfa team members under contracts of employment as at 31 December of each year.(2)Retention rateRepresents the retention of Alfa team members over the previous 12 month period.(3)BillingsThese are amounts invoiced in year.This differs from reven

250、ue as defined by IFRS due to the release of deferred income in relation to license payments and maintenance agreements and accrued income in relation to work in progress.(4)Adjusted EBIT marginAdjusted EBIT margin is defined as profit from continuing operations before income taxes,finance income,pre

251、-IPO share based compensation and IPO related expenses,as a proportion of revenue.Management utilises this measure to monitor performance as it illustrates the underlying performance of the business by excluding items considered by management not to be reflective of the underlying trading operations

252、 of Alfa.The following table reconciles Adjusted EBIT to profit for the year.000s20182017Profitfortheyear18,15025,866Adjusted for:Taxation4,3067,996Finance income(74)(33)Pre-IPO employee share schemes(1)4,400IPO-related expenses(2)3,000Adjusted EBIT22,38241,229(1)Relates to pre-IPO employee share sc

253、hemeexpense.(2)RelatestoIPO-relatedexpenseswhich are determined to be non-recurring.(5)Operating Free Cash Flow Conversion Operating Free Cash Flow represents net cash generated from operations less settlement of derivative instruments and margin calls,after the purchase of property,plant and equipm

254、ent and adding back IPO-related expenses.Operating Free Cash Flow Conversion represents Operating Free Cash Flow generated as a proportion of Adjusted EBIT.Management uses Operating Free Cash Flow Conversion for monitoring and managing cash flows.The table below presents a reconciliation of Operatin

255、g Free Cash Flow to cash generated by operations,which is the nearest measure prescribed by IFRS.000s20182017Cash generated by operations20,95428,853Adjusted for:Settlement of derivativefinancialinstruments and margin calls(108)(2,683)Capitalexpenditure(1,638)(663)IPO-related expensesexcludedfrom Ad

256、justed EBIT3,000Operating Free Cash Flow19,20828,507Adjusted EBIT22,38241,229Operating Free Cash Flow Conversion86%69%Definition and method of calculation of KPIsIn considering the financial performance of the business,the Directors and management use key performance indicators which are defined by

257、IFRS and those which are not specifically defined by IFRS.We believe that Billings,Adjusted EBIT margin and Operating Free Cash Flow Conversion are key measures to assess our financial performance.They are used by management to measure liquidity,in the case of Billings and Operating Free Cash Flow C

258、onversion,and profitability in relation to Adjusted EBIT margin as they provide a more meaningful comparison of operating fundamentals between companies within our industry.These measures are not defined by IFRS.The most directly comparable IFRS measure for Adjusted EBIT is our profit from continuin

259、g operations and for Operating Free Cash Flow Conversion it is cash flows from operations.These measures are not necessarily comparable to similarly referenced measures used by other companies.As a result,investors should not consider these performance measures in isolation from,or as a substitute a

260、nalysis for,our results of operations as determined in accordance with IFRS.The method of calculation for each metric is detailed to the right.Strategic reportFinancial statementsAdditional informationGovernance29Annual Report and Accounts 2018Alfa Financial Software Holdings PLCEnsuring effective r

261、isk identification and managementIntroductionWe recognise that effectively managing risk is integral to allowing us to achieve our strategy.Therefore we have implemented a five step process for monitoring and managing risk throughout our business and to allow the Directors to conduct a robust assess

262、ment of the principal risks facing our business.We believe that risk is not something that should be eliminated but instead identified,assessed and managed in a timely manner.Our aim is to foster a culture of effective risk management by encouraging appropriate and monitored risk-taking in order to

263、achieve the Groups strategic objectives.Risks and delivering on our strategic objectivesIn order to deliver our strategy and achieve excellence under our business model,both operationally and financially,we must ensure that we maintain the right balance between safeguarding against potential risks a

264、nd taking advantage of potential opportunities.Our key business objectives are:Focusing on the customerEnabling business agilityDelivering with the right peopleLeading with the best technologyWe operate within various different geographical markets which may have different and diverse risks attachin

265、g to them.Therefore it is important that we assess and manage our risk across each of these markets to ensure we have assessed all risks appropriately.Our customers are at the centre of everything we do and depending on the customer profile,they may be impacted by different regulatory,legislative an

266、d business requirements and challenges.Therefore we have also taken into account,where applicable,the relevant risks where they attach to our business.How we monitor1Identify risksWhile overall responsibility for risk lies at the Board level,the Directors have delegated authority for risk identifica

267、tion to the Executive Committee.A bottom-up approach has primarily been undertaken to provide a detailed review of risks by relevant business owners and this is led by the Risk Officer quarterly.The output is then reassessed by the Executive Committee to provide assurance over completeness of the ri

268、sk register.2Define risk appetiteOur systems and processes are designed to manage our exposure to risk rather than eliminate the risk completely.Therefore the Board,with the Executive Committee,will reassess the Groups risks appetite each year with this in mind.The Board will consider the risks asso

269、ciated with the conduct of our business and the delivery of our strategy,assessing the risks we are exposed to and evaluating whether this exposure is acceptable given the likelihood and severity of the risk.3Assess and quantifyRisks are assessed to understand the likelihood and the financial impact

270、 of the risk crystallising.We assess these looking at the following areas:Financial Operational Reputational Legal/compliance4Respond,manage and mitigateEach risk is reviewed quarterly.At each review date,the existing controls are reviewed for adequacy and effectiveness.Due to the ever-changing busi

271、ness landscape and the industry we work in,it is quite possible for the control requirements to change and for processes and policies to require updating.If this is the case,then a business owner is identified and they are responsible for implementing changes.5Monitor and reviewManagement monitors p

272、rogress against the principal risks.This has been shared with our internal auditors,KPMG LLP,to assist with forming the internal audit plan for 2019.The Board reviews the summary risk register and assesses the adequacy of the principal risks identified,as well as the mitigating controls and procedur

273、es which are in place and are operational.Risk management overview30Alfa Financial Software Holdings PLCAnnual Report and Accounts 2018ProbabilityImpact Responsibilities The processes and systems which support the risk management reviewQuarterly risk meetings allow us to discuss our detailed risk re

274、gister with each of the risk owners.Senior management within the business then assess where updates are required and track progress on mitigating actions.The Alfa risk register is documented in our project and issue-tracking software tool that is used for all of our development work.The senior manag

275、ement assess and monitor risks during these quarterly risk meetings using dashboards within the software which highlight key risks and relevant action points.The risk tool also provides a history of our decision making and discussion points.The principal risks and uncertainties and actions being tak

276、en to mitigate those risks are presented to the Board at least every six months,including as part of the financial year end process.As part of the long range business plan and risk management processes,the Board considers the level of risk carried and the extent of mitigation required to deliver an

277、acceptable level of risk.The complete risk register is reviewed at least quarterly as part of our Audit and Risk Committee meetings and ownership of the risk register sits with the Risk Officer.The impact of each risk is determined by assessing the financial,legal,regulatory and operational impact,i

278、n conjunction with the likelihood of the risk crystallising.Board Defines the risk governance framework,risk culture and principles Sets overall risk strategy and policy Approves risk levels Responsible for an effective system of internal controls Approves risk decisions that are beyond delegated au

279、thoritiesCEO and executive management Review the risk management framework and the effectiveness of internal controls,risk management systems and major risk initiatives across the Group Review the risk profile against risk appetite and make recommendations to management in relation to risk profile,s

280、trategy and key controls Review the sustainability of risk methodologies,metrics and policies Assess major risk-related projectsAudit and Risk Committee Reviews the risk management framework and the effectiveness of internal controls,risk management systems and major risk initiatives Reviews the int

281、ernal audit programme and reportsRisk Officer Responsible for collating updates,managing the risk register and presenting principal risks and uncertainties to the Executive Committee and Audit and Risk CommitteeOperational management Assess for new risks,update on current risks assessment and implem

282、ent mitigation strategiesPrincipal risk analysis1)Failure to increase market share in relation to large multi-national customers or to retain our existing customer base2)High customer concentration3)Socio,geo-political risk,4)Risk to people,skills,location and working environment5)Failure to deliver

283、 on our existing implementation or ODS business6)Failure to develop Alfa Systems to ensure it remains relevant in the market,to lower cost of development in the future and to allow competitive technological and product development7)IT security and cyber risks8)Business interruption or continuity Acc

284、eptable risk appetiteStrategic reportFinancial statementsAdditional informationGovernance31Annual Report and Accounts 2018Alfa Financial Software Holdings PLCFocus for 2019We have continued to focus on our risk management activities and have set a plan for the coming year as follows:Ad hoc audits an

285、d reviews we plan to assess our commercial contracting process during the year,with a focus on standardised contractual terms and delegation of authority.We will also update on our business and travel expenses audit,following the implementation of our new expenses policy in December 2018 and continu

286、e with our financial controls work in the UK and US following the implementation of our new HR and finance system.In order to deliver our strategy and achieve excellence under our business model,both operationally and financially,we must ensure that we maintain the right balance between safeguarding

287、 against potential risks and taking advantage of potential opportunities.We operate within various different geographical markets which may have diverse risks attaching to them.OperationalFinancialReputationalLegal/complianceRisks arising from people,processes,and systems impacting upon efficient an

288、d effective operations or our ability to deliver on strategic prioritiesRisks which might impact upon our ability to meet our financial expectations and obligations Risks which may impact how our Alfa team members or stakeholders perceive us or how they interact with usRisks related to non-complianc

289、e with government and regulatory requirements in the jurisdictions in which we operate Recruitment Training and development Service delivery Product development Contractual and commercial terms Information technology Information security Liquidity and funding Foreign exchange volatility Credit or cu

290、stomer concentration Tax Financial management and control Security Environment Ethics Ethics Corporate governance Laws and regulations Cyber security and data protection We have successfully achieved our SOC II certification in 2018 and will continue to ensure we continue to comply in 2019.Business

291、continuity and disaster recovery planning we have had a number of scenario-testing processes underway and will ask internal auditors to assess the strength of our procedures and responses.Brexit Our Board and Audit and Risk Committee continue to assess the potential impact of exiting the European Un

292、ion on our business.Although this is not seen as a stand-alone risk,it is one which we will continue to monitor in the coming months.Risk appetiteThe Board,assisted by the Audit and Risk Committee and senior leadership,assessed the Groups risks appetite in November 2018 for the categories above.This

293、 is then used to determine the appropriateness or effectiveness of the mitigating actions and controls in place or to be put in place.BrexitFollowing the recent decision by the UK population to exit,in due course,from the European Union(“Brexit”),the Directors have considered whether or not this wil

294、l manifest itself as an additional risk to the Group.While it is difficult to predict the impact of an exit,there may be an impact on the way Alfa does business.Therefore,while this does not constitute a principal risk to the business over and above the risks set out within the Principal risks and u

295、ncertainties section on pages 33-35,the Directors will continue to monitor and assess it.Therefore it is important that we assess and manage our risk across each of these markets to ensure we have assessed all risks appropriately.Risk management overview continued32Alfa Financial Software Holdings P

296、LCAnnual Report and Accounts 2018Risk A Failure to increase market share in relation to large multi-national customers or to retain our existing customer baseLink to strategic priorities Risk movement:NewImpact:SevereProbability:LikelyHow it impacts us We may fail to optimally assess our market,tech

297、nological changes,customer requirements,capacity needs and competitors strategies,including launching disruptive technologies,and therefore not target market opportunities or fail to win new contracts.We may fail to effectively address the significant changes going on in the industry,e.g.price,flexi

298、bility of product or meeting increased requirements in relation to digital enablement.Our product may not develop sufficiently to meet these market opportunities or may fail to meet customer requirements or needs,or these developments could have delays or cost overruns impacting on our market positi

299、on,revenue or returns on investment.What are we doing about it?We continue to expand our focused sales and marketing capability to effectively deliver new sales and expand our customer base.We have continued to focus on digital offerings as an additional value-add to both new and existing customers

300、to increase our sales potential.We seek to identify new customers and to upgrade existing customers who would benefit from our new services.We have professional,experienced project teams who focus on large-scale implementations and develop close relationships within the industries we serve.We are co

301、ntinuing to focus on expanding our partner network which will open up new sales channels and relationships.We critically review the commercial proposals made to new customers before we proceed and regularly assess our progress against the original sales proposal.We assess all product investment proj

302、ects through a thorough review of business cases before we approve major development programmes to ensure they meet our internal commercial targets and the requirements of the market.Risk B High customer concentrationLink to strategic priorities Risk movement:NewImpact:SevereProbability:LikelyHow it

303、 impacts us We have significant customer-concentration risk due to the size of our software implementation projects,the duration of them and the relatively low percentage of recurring revenues from maintenance contracts.Three customers each account for more than 10%of revenues,contributing 44%of our

304、 2018 revenue,and ten customers account for 77%of our revenues in 2018.What are we doing about it?We continue to aim for alignment of key contractual terms across all new contracts which are designed to provide protection where possible against paused or terminated contracts.We ensure that the Group

305、 is financially robust and resilient to economic downturns or project pauses by retaining cash reserves and collecting maintenance and license revenues in advance.Risk C Socio,geo-political riskLink to strategic priorities Risk movement:Slower sales conversion and lower revenues increases customer c

306、oncentrationImpact:SevereProbability:LikelyHow it impacts us Alfa derives all of its revenues from providers of asset finance.The finance industry is sensitive to changes in economic conditions and unforeseen external events,such as political instability,inflation and other unforeseen events which m

307、ay put pressure on profitability of the players in this market.This in turn may decrease the amount they have to spend on improving their internal systems and processes or may extend the decision-making when contemplating a new asset finance system.What are we doing about it?We continue to focus on

308、diversifying our customer base,both geographically and by asset type(i.e.automotive,equipment)but also by type of customer(i.e.banking,OEM or independent)which therefore have different and often contrasting risk characteristics.This mitigates some of this risk as there is often a degree of geographi

309、cal cyclicality in trends affecting the asset finance industry.We aim to maintain our pipeline with the same mix to allow for a diverse portfolio in future years.In times of uncertainty,regulation and focus on operational efficiency may increase and Alfa revisits the product roadmap and strategy to

310、ensure that such changes become business opportunities in times of economic,political and social uncertainty.We ensure that the Group is financially robust and resilient to economic downturns or project pauses by retaining cash reserves and collecting maintenance and license revenues in advance.Prin

311、cipal risks and uncertaintiesThe Group faces a number of risks that may adversely affect our strategic and business objectives,operations,liquidity,financial position,reputation or future performance,not all of which are wholly within our control or known to us.Some such risks may currently be regar

312、ded as immaterial and could turn out to be material.We accept risk is an inherent part of doing business.The Directors consider the following matters to be the principal risks and uncertainties(in no specific order)affecting our business at this time.Strategic reportFinancial statementsAdditional in

313、formationGovernance33Annual Report and Accounts 2018Alfa Financial Software Holdings PLCPrincipal risks and uncertaintiesRisk D Risk to people,skills,location and working environmentLink to strategic priorities Risk movement:The risk has decreased during 2018 due to the implementation of the People

314、strategy.Impact:HighProbability:UnlikelyHow it impacts us Our business is very much dependent on our people as they are integral to the development and delivery of Alfa Systems.There continues to be intense competition for engineers,both at the graduate level as well as highly experienced individual

315、s.Failure to attract,train and retain high quality individuals in our key operating regions may impact our ability to deliver implementations,maintain product quality and leading-edge functionality,manage customer relations and deliver on our strategic plan.What are we doing about it?We continue to

316、recruit graduates and experienced hires from a diverse number of sources,from varied backgrounds and ethnicity and with varied core skills.We benchmark our remuneration levels against the relevant roles in the industry and aim to be competitive,either through base pay and,going forward,through share

317、 ownership in our business.We have recently hired a Head of Human Resources,who will report to the COO and has responsibility for remuneration,development and succession planning with the Group.We are implementing performance-related bonus structures to ensure that contribution is adequately compens

318、ated and to align personal objectives with those of shareholders.Quarterly employee engagement surveys allow areas of improvement to be identified.Annual career and succession planning is carried out to provide for continuity of operations.We continue to focus on developing partnership programmes wi

319、th large international service organisations to decouple our future growth from employee numbers.Risk E Failure to deliver on our existing implementation or ODS businessLink to strategic priorities Risk movement:SameImpact:SevereProbability:UnlikelyHow it impacts us Our business is dependent on cont

320、inued delivery success our customers depend on Alfa Systems to be the heart and lungs of their business and therefore failure to deliver timely and effective implementations and maintain sufficient levels of post-implementation support could harm our reputation and cause loss of customers.Our implem

321、entations projects often involve a high degree of complexity and require a significant time investment from both Alfa and the client.Lack of appropriately skilled resource from the customer side can lead to failure to deliver timely and effective implementations.What are we doing about it?Our implem

322、entations and ongoing development and support services are delivered side by side with the customer,which allows continuous interaction and real-time feedback.We have implemented our faster implementation processes,focused on the automotive market,which is currently reaping significant rewards at on

323、e of our medium-sized implementations.We will develop similar processes to address the equipment market going forward.We have set up user groups in the US and Europe to allow knowledge sharing and a forum to gather customer feedback on existing projects as well as future requirements.Our development

324、 methodology is using 4-weekly time boxes which serves to minimise surprises,development is undertaken on a continuous basis of 4-week sprints and therefore increases the efficacy of quality reviews and testing cycles.We have project teams who are experienced in supporting our clients through last s

325、cale and complex implementations.We have developed flexibility within our workforce such that we are able to deploy team members to supplement the clients resources when required.We are also continuing to focus on expanding our partner network which will again provide opportunities to supplement the

326、 effort required by our clients during the implementation phase.34Alfa Financial Software Holdings PLCAnnual Report and Accounts 2018Risk F Failure to develop Alfa Systems to ensure it remains relevant in the market,to lower cost of development in the future and to allow competitive technological an

327、d product developmentLink to strategic priorities Risk movement:SameImpact:HighProbability:UnlikelyHow it impacts us As Alfa Systems is central to how an asset finance company operates,it is imperative that it continues to evolve to meet our customers,and prospective customers,ever-changing needs.Su

328、ch changes could come from increased regulation,adopting a new or more modern operating model or a desire for increased efficiency.Failure to manage our product road map in light of customer demand could result in an inappropriate investment focus which does not meet our customers business needs.Thi

329、s in turn could increase the risk that customers could look for alternative solutions,resulting in the loss of new or existing revenue streams,and could stall long-term growth prospects.What are we doing about it?We have historically developed Alfa Systems based on requirements from our customers,an

330、d this continues to be our focus.In 2018 our customer user-group forums have assisted in prioritising our product road map for the coming 12-24 months.We have recently updated our development and performance testing procedures with the aim of increasing customer satisfaction and we will continue to

331、innovate in this area in 2019.Our one-product approach,which provides a common upgrade path for all our customers,allows all customers to take advantage of new functionality.Risk G IT security and cyber risksLink to strategic priorities Risk movement:SameImpact:SevereProbability:UnlikelyHow it impac

332、ts us In recent times,IT security risk and cyber risk have increased and we are cognisant that no system,network or product is immune to the risk that outside elements may target Alfa with attacks,specifically designed to disrupt our business or harm our reputation.Although we do not store our custo

333、mers data,a targeted attack on Alfa could adversely affect our customers or future customers perception of Alfa Systems.In addition,a security breach could impact our ability to operate our business,including our ability to continue to provide support to our customers.What are we doing about it?Our internal IT and cyber security team continues to monitor key security and cyber risks,assess and mon