213800C5UOZHUTNUGA28 2021-01-01 2021-12-31 213800C5UOZHUTNUGA28 2020-01-01 2020-12-31 213800C5UOZHUTNUGA28 2020-12-31 213800C5UOZHUTNUGA28 2021-12-31 213800C5UOZHUTNUGA28 2019-12-31 213800C5UOZHUTNUGA28 2020-01-01 2020-12-31 ifrs-full:IssuedCapitalMember 213800C5UOZHUTNUGA28 2020-01-01 2020-12-31 alfa:OwnSharesMember 213800C5UOZHUTNUGA28 2020-01-01 2020-12-31 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 213800C5UOZHUTNUGA28 2020-01-01 2020-12-31 ifrs-full:RetainedEarningsMember 213800C5UOZHUTNUGA28 2020-01-01 2020-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 213800C5UOZHUTNUGA28 2020-01-01 2020-12-31 alfa:CostOfSalesMember 213800C5UOZHUTNUGA28 2020-01-01 2020-12-31 alfa:SalesGeneralAndAdministrativeExpensesMemberMember 213800C5UOZHUTNUGA28 2021-01-01 2021-12-31 ifrs-full:IssuedCapitalMember 213800C5UOZHUTNUGA28 2021-01-01 2021-12-31 alfa:OwnSharesMember 213800C5UOZHUTNUGA28 2021-01-01 2021-12-31 ifrs-full:RetainedEarningsMember 213800C5UOZHUTNUGA28 2021-01-01 2021-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 213800C5UOZHUTNUGA28 2021-01-01 2021-12-31 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 213800C5UOZHUTNUGA28 2019-12-31 ifrs-full:IssuedCapitalMember 213800C5UOZHUTNUGA28 2019-12-31 alfa:OwnSharesMember 213800C5UOZHUTNUGA28 2019-12-31 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 213800C5UOZHUTNUGA28 2019-12-31 ifrs-full:RetainedEarningsMember 213800C5UOZHUTNUGA28 2019-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 213800C5UOZHUTNUGA28 2020-12-31 ifrs-full:IssuedCapitalMember 213800C5UOZHUTNUGA28 2020-12-31 alfa:OwnSharesMember 213800C5UOZHUTNUGA28 2020-12-31 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 213800C5UOZHUTNUGA28 2020-12-31 ifrs-full:RetainedEarningsMember 213800C5UOZHUTNUGA28 2020-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 213800C5UOZHUTNUGA28 2021-12-31 ifrs-full:IssuedCapitalMember 213800C5UOZHUTNUGA28 2021-12-31 alfa:OwnSharesMember 213800C5UOZHUTNUGA28 2021-12-31 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 213800C5UOZHUTNUGA28 2021-12-31 ifrs-full:RetainedEarningsMember 213800C5UOZHUTNUGA28 2021-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember iso4217:GBP xbrli:shares iso4217:GBP xbrli:shares
Stepping into
our opportunity
Alfa Financial Software Holdings PLC
Annual Report and Accounts 2021
Find out mor
e online at
alfasystems.
com
We are all
about software
& delivery
Alfa is a leading provider of software and
services to the global auto and equipment
finance industries. We deliver our leading-
edge technology with smart, diverse people,
makingourcustomers
future-ready.
Strategic repor
t
1
Financial highlights
4 Softwar
e
6 Subscription
8 Services
10
A
t a glance
12
Chief Executive
’
s r
eview
16
Market o
verview
18
Business model
20
Investment case
22
Company strategy
24
Strategy in action
25 People
26 Partnering
28
Strategic Inv
estment
30
Alfa iQ
32
Cloud Hosting
34
Alfa Start
36
Ke
y performance indicators
38
Financial r
eview
44
Risk management
46
Principal risks and uncertainties
52
Viability statement
54
Section 172 statement
58
Environmental, S
ocial & Governance
Governance
71
Chairman’
sintroductiontogo
vernance
74
Board of Dir
ectors
76
Company Leadership T
eam
77
Board leadership & company purpose
81
Division of responsibilities
86
Composition, succession & evaluation
90
NominationCommitteeReport
94
Audit&RiskCommitteeReport
100
Directors’ Remuneration R
eport
103
Directors’RemunerationP
olic
y
112
Annual Report on Remuneration
122
Directors’
r
eport
127
Statement of Dir
ectors’ responsibilities
Financial stat
ements
129
Independent auditor’
s report
137

Consolidateds
tatementofpr
otorlossand
comprehensiv
e income
138

Consolidateds
tatementofnancialposition
139


Consolidatedstatementofchangesinequity
140

Consolidateds
tatementofcasho
ws
141
Notes to the consolidated
nancialstatements
173


Companystatementofnancialposition
174

Companystatementofchangesinequity
175
Notestothecompanynancialstatements
Other information
179
Glossary of terms
180
Shareholder inf
ormation
Group revenue (£m)
2021
£83.2m
£78.9m
£64.5m
£71.0m
20
20
20
19
20
18
Operating profit (£m)
2021
£24.7m
£
23.9m
£
13.7m
£
22.4m
20
20
20
19
20
18
Cash (£m)
2021
£23.1m
£
37.0m
£
58.8m
£
44.9m
20
20
20
19
20
18
Operating profit margin
2021
29.7%
30.3
%
21.3
%
31.5
%
20
20
20
19
20
18
Dividends paid (£m)
2021
£32.7m
£
44.2m
20
20
Number of subscription
customers
2021
31
28
25
28
20
20
20
19
20
18
Employee retention
2021
87%
93
%
83
%
88
%
20
20
20
19
20
18
Employee engagement*
2021
78%
74%
55%
68%
20
20
20
19
20
18
Customer concentration (top 5)
2021
38%
48
%
61%
59
%
20
20
20
19
20
18
*
Calculation revised, 2020, 2019 and 2018
restated, see KPI page 37.
Contents
Financial highlights
Non-financial highlights
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
1
STRA
TE
GIC REPORT
Alfa is an
2
Alfa Financial So
ftware Holdings PLC
Annual R
eport and Account
s 2021
IP company
The IP that
exists in AlfaSystems
has been built
up over 30
years
of working and specialising in
the auto and
equipment finance
industry. It is
the core of
our
business and the heart and lungs
of our customers’
operations.
Key to the success of Alfa today is the
launch, in 2010, of Alfa Systems v5. This
was built with the future in mind: 100%
web-based and 100% Java – making it
fully digitally enabled and cloud native.
Itis constantly evolving to meet the needs
oftoday’s customers.

Readmoreaboutourin
vestmentinIP
onpages28-29
Big company impact.

Vision
T
o gr
ow our company siz
e naturally
,
but gro
w our impact rapidly – always
retaining our underlying cultur
e. Key to
this is delivering mor
e concurrent Alfa
implementations, more efficiently
, with
a world-class product. W
e will have a big
company impact, but a small company f
eel.
 
Forourpurposeandidentity
,turnto
page 10
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
3
STRA
TE
GIC REPORT
Market-leading
software
Dec 2020

Dec 2021


SOFTWARE
Our Alfa Systems software is at the
heartofsome
of
the
world’s
largest
andmostinnovative
auto
and
equipment
finance companies.
4
Alfa Financial So
ftware Holdings PLC
Annual R
eport and Account
s 2021
REVENUESTREAMS





















What is included in the software revenue stream?
Software r
evenues include rev
enues fromrecognition of customised licence
rev
enue, one-off licence f
ee
s and any dev
elopment fees charged to customers
on a day rate basis.
What happened in 2021?
Ev
er
y f
our weeks
we r
elease a
new v
ersion ofthe
software, and
so ther
e w
ere
13newreleases in
2021. W
e also
rolled out
Mercury
, our new
User Interface, to
11customers, whose users
are
now
benefiting from
it
s built-in
accessibility and
cleanand modern en
vironment. W
e had
27 go-liv
es during the
year including
5 ne
w
implementations of v5. Of the new v5 implementations, 2 wer
e upgrades from v4, as
a consequence new licence rev
enues were r
elatively low in the y
ear
. Offsetting this
was an increase in the number of dev
elopment days charged to clients.
Software revenue (£m)
2021
13.6
20.0
20
20
Software revenue (%)

56%
28%
16%
Front office
is used to refer
totheauto and
equipment finance
point of sale.
Middle office
repr
esent
s every
thing
that happens
between the creation
of a quote and having
a live finance schedule
for a deliv
ered asset.
Back office
includes all in-life
contract-management
transactions such as
billing and collection,
and all customer
service
s transactions
such as address
changes and payment
reschedules and
wherethe
complex
accounting takes place.
“
A
f
ter ver
y c
are
fu
l ev
a
luation
and con
sideration, we selec
ted
A
l
fa
be
cause we
felt
it’
s
a
gr
eat
in
nov
ative plat
form for us, and
so fa
r we have be
en please
d w
ith
t
heir produc
t capabil
it
y
. I fee
l li
ke
t
he overa
ll m
atch be
t
we
en our t
w
o
compan
ies and c
ult
ure, par
t
icu
larly
arou
nd in
nov
ation a
nd ESG
, real
ly
helped u
s ma
ke t
h
is de
cision.
”
Shamim Mohammad
EVP, Chief Information & Technology
Officer, CarMax
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
5
STRA
TE
GIC REPORT
Reliable cloud
hosting
Dec 2020

Dec 2021


SUBSCRIPTION
Our cloud hosting services have grown rapidly
and the robustness of the built in services
and the ability to simplify and accelerate
implementations make them an attractive
choice for customers.
6
Alfa Financial So
ftware Holdings PLC
Annual R
eport and Account
s 2021
REVENUESTREAMS
Subscription revenue (£m)
2021
23.5
18.1
20
20
Subscription revenue (%)

56%
28%
16%
Alfa cloud hosting services
•
Customised automated task scheduling with monitoring and aler
ting
•
Automated patching and deplo
yment
s of Alfa Systems
•
Agility to create, destroy and r
esize environments
•
Disaster recovery leveraging manag
ed ser
vices with annual te
st
•
Automated database backup and on-r
eque
st copying of data
betweenenvironments
•
24/7 threat monitoring and annual penetration testing
•
ISO 27001 and SOC2 audited processes
•
Envir
onment and per
formance monitoring with automat
ed aler
ting

















What is included in the subscription revenue stream?
Subscription r
evenues include recurring rev
enues paid on a monthly or annual
basis, including subscription licence rev
enues, maintenance and cloud hosting
.
What happened in 2021?
2021 built on the significant progress we made in 2020 in dev
eloping our cloud
hosting ser
vices. There wer
e nine go-live ev
ents for the hosting team in 2021, three
of these were f
or new implementations, with the remainder being upgrade ev
ents.
We
continue to focus on increasing subscription licence sales both when
customers are looking to take our hosting service
s, but even wher
e they
wishtodeploy in their o
wn cloud.
“
W
e neede
d a sy
stem t
hat w
as f
it
for p
ur
p
ose a
nd fit for the fut
ure:
A
l
fa v5 met t
hose cr
iteria. A
lf
a
v5 w
il
l g
ive Close Brother
s A
sset
Fin
ance s
ca
labil
it
y
, but als
o
ni
mbleness that’
s
a
prerequi
site
in a c
ha
ngi
ng env
i
ronment. W
e
operate i
n a numbe
r of juris
dic
tion
s
and c
ha
nges are con
sta
nt, whether
t
hat
’
s regu
lator
y
,
accou
nti
ng
,
or
justinter
na
l report
i
ng
,
we’
re go
ing
to be i
n a much st
ronger position
todeal w
ith change quick
ly
and
more econom
ic
al
ly
.
”
Neil Davies
CEO, Commercial, Close Brothers
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
7
STRA
TE
GIC REPORT
Quality delivery
with quality
people
Dec 2020

Dec 2021


SERVICES
The quality of our people, the knowledge
sharing embedded in the organisation and
the inherent IP within our software, means
that our delivery record is second to none.
8
Alfa Financial So
ftware Holdings PLC
Annual R
eport and Account
s 2021
REVENUESTREAMS
Services revenue (£m)
2021
46.1
40.8
20
20
Services revenue (%)

56%
28%
16%













What is included in the services revenue stream?
Services revenues are r
evenues from any w
ork done for customers including
pre-implementation, implementation w
ork, and ongoing service
s, but
excludesany r
evenue fr
om development work.
What happened in 2021?
2021 saw a continuation of our strong deliv
er
y record underpinned b
y the
gro
wth in our p
ool of client-facing people and placement of par
tner resources on
customer project
s. W
orking 100% remotely we successfully completed five new
implementations of Alfa v5, continued ongoing implementation and v5 upgrade
projects, and provided ongoing service
s across the majority of our existing
customer base.
W
e continue to invest in the development of our people and in the quality and
efficiency of our delivery mo
del, as well as building and lev
eraging our partner
ecosystem to enable more concurrent implementation pr
oject
s.
Implementation milestones
1995
Alfa v3
launched
2003
Alfa v4
launched
2021
35% of
customers
using hosting
2017
Alfa hosting
launched
2010
Alfa v5
launched
2020
Alfa Start
launched
“
W
e’
re ver
y pleased w
ith the product,
we’
ve
got
a
ver
y strong t
ea
m
at
A
l
fa
support
i
ng
us. W
e’
ve go
t
multiple supp
l
iers, but Al
fa a
re by
far a
nd aw
ay t
he be
st per
form
i
ng
par
t
ner t
hat we ha
ve
, in ter
m
s
of the b
ehav
iour
s t
hey op
erate
w
ith asa
norga
ni
sat
ion
–
t
hey’
re
extre
me
ly
p
ro
fe
ss
i
on
al.
”
Russ Fitzgerald
Chief Information Officer,
Hampshire Trust Bank
2019
4.6m contract
por
tfolio
go-live
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
9
STRA
TE
GIC REPORT
Our purpose and identity
T
o deliv
er our leading-e
dge t
echnolog
y with smar
t
, diverse people, making our
customers future-r
e
ady
. W
e are a softwar
e and deliv
er
y company
.
10
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
A
TAGL
AN
CE
7%
58%
35%
56%
28%
16%
24%
17%
59%
What we do
Where we do it
Who we do it for
Services
W
e p
erformed implementation or ongoing
service
s for 28 customers during the year
.
All of our rev
enues are for the sale of softwar
e
and related service
s. This split is to help
understanding of changes in busines
s activity
.
EMEA
W
e had 21 cus
tomers based in Europe
andAfrica, as at 31 December 2021.
Alfa Systems has been implemented
andislivein 16 EMEA countries, with a
furtherexpansion under
way into additional
countries over the next f
ew years.
Original equipment manufacturers
OEMs include both equipment and automotive
manufacturers, whose main purpose is the sale of
theasset rather than the
provision
of financing.
Software
W
e had 21 cus
tomers during the year
wherew
e pro
vided development services.
In addition, we had 7 customers where w
e
recognised a por
tion of the customised
licence in the period, and 6 customers where
there was point-in-time licence r
ecognition
inthe year
.
America
W
e primarily ser
ved cus
tomers across the
US out of offices in Michigan and T
exas,
although US customers are also supporte
d
from the UK. W
e have deep experience of
the USA automotiv
e finance sector and a
gro
wing presence in equipment finance.
Banks
Customers classified as banking institutions
are financeentities associated with
regulated banking groups.
Subscriptions
A
t 31 Decemb
er 2021, we had 31
subscription customers, up from 28 last
year
. Of these, 12 were taking hosting
service
s at the end of the year
.
Rest of the World
W
e have operations inAustralia and New
Zealand specialising in both automotive and
equipment finance. As at 31 De
cember 2021
we had 26 team members in this region.
Independents
Independent customers are customers who are
neither part of a regulated banking group nor
manufacturers of the asset being financed.
Independent customers tend to be smaller
,
both in por
tfolio volumes and personnel using
Alfa Systems.
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
11
STRA
TEGIC REPOR
T
Strong performance
W
e s
aw a strong performance throughout
2021 with good progr
ess across all par
t
s
ofour business. W
e have c
ontinued to deliver
successful implementations with increased
usage of our scalable and reliable cloud
hosting solution, at the same time as
releasing significant enhancements to
oursoftware.
W
e have seen excellent sales growth
reflected in our contracted orders with
T
otalContract V
alue (
T
CV) of £133m up
4%since 30 September 2021 and 18% in
the twelve months since 31
De
cember 2020.
The pipeline has continued to streng
then
underpinning our confidence in the future
gro
wth of the busine
ss.
In another difficult year f
or our people, with
the disruption and uncertaint
y from the
ongoing impact
from CO
VID-19, we
have
continued to focus on our culture and w
e are
pleased to see that translate into high
employ
ee eng
agement scor
es. The resulting
high retention rates and our ability to
continue to attract high-calibre people
intoAlfa, support
s our ability to gr
ow our
headcount in a tight labour market. The
strong conv
ersion of our pipeline and
continued investment in our product and
processes have enabled our growing
workf
orce to r
emain fully utilised.
F
inancial per
formance has also been strong.
Rev
enue of £83.2m (2020: £78.9m) was up
5% on last year
, or 14% compared with
2020rev
enues of £73.3m, after excluding
one-off licence r
evenue fr
om a five year
contract extension.
T
o suppor
t the growth in the business
av
erage headcount in the period was 383
(2020: 341)
, a 12% increase which increased
salar
y cost
s. Hosting cos
ts also increased as
that business grew ov
er last year
. Both of
these were partially offset by a full twelv
e
months of reduced trav
el and office cost
s
compared with 2020.
Overall operating pro
fit up £0.8m to £24.7m
(2020: £23.9m) with the rev
enue increase of
£4.3m partially offset by increased cost
s of
£3.5m, whilst maintaining operating profit
margin at 30% (2020: 30%)
.
Cash conversion was strong at 114%
(2020: 114%) and we finished the period
with net cash of £23.1m (31 Dec
2020: £37.0m) after payment of £32.7m
ofdividends in the calendar year
.
W
e have continued to diversify our rev
enue
base with our top five customers now
repr
esenting 37% of our revenues in 2021
compared to 48% in 2020 and 61% in
2019.W
e have continued to deepen our
relationships acr
oss our customer base,
leading to more customers making a
material rev
enue contribution to our
business. W
e had 14 customers contributing
rev
enues of more than £2m in the year
, up
from 10 in 2020 and 7 in 2019.
“
We started 2021 with a strong fi
nan
ci
al
an
d d
el
ive
ry
performance and maintained this through the whole of the
year. With the improving quality of our revenue mix, the
strategic improvements made across the business, the quality
of our people and strength of the intellectual property in our
software, we have great confidence in Alfa’s prospects.”
Andrew Denton
Chief Executive Officer
12
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
CEO’
SREVIEW
Alfa’
s culture has meant that from the early
days of f
orming the business we have
focused on creating a positive, sustainable
impact on society
. It is ple
asing that our
underlying strength in ESG is now being
reflected in improv
ed ESG scores, including
the Carbon Disclosure Project and b
y
achieving an ISS ESG ‘P
rime’ rating. ISS ES
G
takes an absolute bes
t-in-class approach
byindustry
, so companies are categorised
as‘Prime
’ if they achieve/ ex
ceed the
sustainability per
formance requirements
(the ‘Prime threshold’) defined by ISS ESG
for each specific industr
y in the ESG
Corporate Rating.
Subscription
Subscription r
evenues have gr
own rapidly
ov
er the last couple of years and comprise
any r
evenues that are r
ecurring including
monthly or annual maintenance billing, cloud
hosting ser
vices and bundle
d licence,
maintenance and hosting contract
s.
W
e have transitioned to a ‘
cloud firs
t’
approach to sales bec
ause we see real
benefit
s in the spe
ed of implementation
forcustomers and they see benefit
s in the
reliability of the service and built-in tools,
including automated monitoring, patching
and scheduling. We anticipate that the
majority of new customers will take a hosted
service and all of the current v4 to v5
upgrades are moving into a hosted v5
envir
onment. In addition we expe
ct that
new customers will increasingly take
bundled licence, hosting and maintenance
contracts, fur
ther improving the stickiness
of the customer base. W
e now ha
ve sev
en
customers taking cloud hosting ser
vices for
live pr
oduction environments and have fiv
e
customers taking hosting ser
vices during
design and implementation, most of which
will become live production customers, to
give a total of tw
elve customers taking
hosting ser
vices, up from ten at the end
of2020.
The number of customers with ongoing
maintenance contracts has increased to
29from 27 at the end of 2020.
Software
Our strategy is to continue to develop
oursoftware, to ensur
e that we meet
industr
y and customer nee
ds as they evolv
e
and asthe regulatory environment chang
es.
W
e release a new update of Alfa every
fourw
eeks, each one of which makes
enhancements available to customers that
add to their ability to ser
ve their o
wn
customers. This maintains our edge as a
leading pro
vider of auto and equipment
finance software.
During 2021 we inv
este
d in impro
ving the
efficiency of our software development; all
part of our continuing drive for simplification.
W
e se
e the focus of dev
elopment in
2022 mov
e towards customer facing
functionality improv
ements, as cus
tomers
continue to innovate and r
eact to the
changing demands of the market. W
e are also
looking to expand our
capacity to deliver ne
w
developments, and consequently we are in
detailed planning for creating a new virtual
development hub in P
ortugal to augment our
London development teams.
Our differentiators





Delivery track record
Our bes
t practice methodologies and
specialise
d knowledge of auto and
equipment finance enable us to deliver
large system implementations and highly
complex
business change
projects.
With an
excellent deliv
ery record
over
three
dec
ades in
the
industr
y
, Alfa’
s track
record is unrivalled.
Unify systems
Alfa Systems helps customers reduce
complexity by consolidating disparate
legacy sys
tems, integrations and
workar
ounds. Alfa Systems remo
ves
these inefficiencie
s byusing a single
platform with a single database.
Innovate and challenge

Multi-entity
, multi-regulatory
,
mu
lt
i-
currency and multilingual.
W
e react
quickly
in a
complex
and
changing market and adapt to match
business requir
ement
s and
c
us
t
om
er
needs as they evolve.
Create an omnichannel
experience
W
e emp
ower customers, dealers
andvendors thr
ough enhanced
self-service and omnichannel
technology
.
Perform through

Alfa Systems is designed ground-up
with the latest te
chnology to allow
easy
integration into
other systems and
to work in a web en
vironment with
scalable per
formance, pr
oven f
or a
10 million contract por
tfolio
.
Achieve operational agility
Streamline operations thr
ough process
automation, acr
oss diff
erentfunctions
andgeographies. Achieve
greater
control, connected processes and
aseamless flow o
finformation
.
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
13
STRA
TEGIC REPOR
T
Despite more of an internal focus on
development in 2021 w
e did significantly
advance our ability to ser
vice Wholesale
customers which is a new and significant
vertical market for Alfa. These enhancement
s
allow support for all asset type
s, spee
dier
access to funds for Wholesale cus
tomers
while tracking and managing contracts
through the early stages and allowing f
or bulk
changes to Wholesale contract cur
tailment
schedules. We no
w have tw
o customers using
our Wholesale functionalit
y and one of our
major contract wins in the first half was for a
Wholesale-only cus
tomer
.
W
e have also deliver
ed improv
ement
s in the
areas of configuration manag
ement, credit
decisioning, busine
ss rule creation and
regulatory suppor
t for Eur
opean market
s.
The new user interface (UI) that we
launched last year is now in production
witheight customers and these new UI
approaches hav
e been use
d to develop
collections and cur
tailment
s functionality
.
As expected overall so
ftware rev
enue
reduced compared with last year due to the
reduction in brand new Alfa implementations
and consequently there was a reduction in
licence income, although this was partially
offset by incr
eased development days f
or
existing customers, including
those upgrading
from Alfa S
ystems v4 to v5.
Services
Services revenues are derived fr
om all of the
work on implementations and other services
but exclude dev
elopment days on new and
existing customers (which is shown in
software)
. W
e hav
e continued to deliver
avery high level of service to customers,
whilst operating remotely during the period.
In 2021 in the UK we saw g
o-lives on an
AlfaStart project
, implementing for new
business following the acquisition by another
customer and, two v4 to v5 upgrades.
In Eur
ope we saw the continuation of a
multi-country implementation across a
further four European countries, and in the
US a brand new implementation for an
automotive client and the launch of thr
ee
new modules for an existing customer
.
W
e have gro
wn our customer-serving team,
howe
ver a greater pr
opor
tion of their time
was spent on software development which
shows in software. Within services there was a
reduction in new implementation work, of
fset
by the implementation of v4 to v5 upgrades.
W
e have also gro
wn our access to par
tner
resources and during the year w
e had
partners op
erating with us for sev
en
customers, which is up from four customers
for the last year
. In 2020 there was some
large systems integration w
ork done by a
partner which normally would not be within
the scope of our work, and if this was
excluded total partner days were up 54%.
Our partner programme is a key enabler of
our gro
wth and we will expand this fur
ther
.
W
e will create plans to develop partner-led
delivery which would be a significant step
forward from partners simply augmenting
our existing resources.
Alfa iQ – putting theory

Alfa iQ spent 2021 engaged in prototyping
work with Alfa customers which successfully
validated the busines
s benefit of ar
tificial
intelligence and machine learning
applications within the asset finance industr
y
.
Alfa iQ has now been engaged by two leading
organisations, one providing automotiv
e
finance and the other business finance, to
implement artificial intelligence and machine
learning solutions within their businesse
s,
which will generate r
evenue in 2022.
The projects build on two different
applications of ar
tificial intelligence and
machine learning in asset finance:
impro
vements to originations and
workflowoptimisation.
Up until no
w Alfa iQ has r
elied on using
resources from Alfa and Bitf
ount, the joint
ventur
e par
tners, howe
ver we ar
e now
actively r
ecruiting into the joint venture.
In the period Alfa iQ achieved ISO
27001certific
ation.
Strong engagement with

W
e have balanced the issues of s
afety along
with recognising the mental health impacts of
lockdowns. W
e have not r
equired anyone to
come to the offices during the pandemic who
did not want to, but when allo
wed, we hav
e
opened up the office for those who want to
be there. Each department or team has
created its own char
ter for the wa
y it wishes
to work and we ar
e implementing these now
.
W
e have continued to arrange remote e
vents
to keep engagement high, ranging from short
presentations on work and lif
e topics through
to Company-wide hackathons, inno
vation
days and conf
erences.
Engagement and retention ha
ve r
emained
high, and we continue to be able to attract
high-quality diverse people to Alfa, howev
er
we r
ecognise that the market remains tight
for quality software engineers and so we
work har
d to ensure that we ar
e the
employ
er of choice. With this in mind, we
hav
e a very full agenda in our global HR
function, where activity has included
updating our approach to on-boarding and
to learning and development as w
ell as an
ongoing re
view of rewar
ds and benefit
s.
Employ
ee share ownership has always been
impor
tant to Alfa and we intr
oduced a Save
as Y
ou Earn (SA
YE) share scheme in the UK
and an Employ
ee Stock Purchase Plan
(ESPP) shar
e scheme in the USA.
Capital return
W
e remain a strongly cash generative
business. W
e continuously review our
strategy and as
sess the funds ne
eded
topursue that strategy and then review
theoptions for an
y excess funds. When
presenting our 2020 results we committed
to star
ting a programme of r
egular
dividends, and we r
emain committed to
doing this through the declaration of a single
ordinary dividend each year alongside our
“
Engagement and retention has remained high,
and we continue to be able to attract high-quality
diverse people to Alfa, however we recognise that
the market remains tight for quality software
engineers and so we work hard to ensure that
weare the employer of choice.”
14
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
CEO’
SREVIEWCONTINUED
full-year r
esult
s. De
spite the payment of a
regular dividend, w
e expect to continue to
generate ex
cess c
ash and so from time to
time we will also look whether to return it.
Having made an assessment of our potential
inv
es
tment needs and reviewing our internal
for
ecas
t
s for the next 12-18 months we
declared a special dividend of 10 p
ence per
share, f
or a total payment of £30m, which
means that we will hav
e generated total
dividends for shar
eholders over the last
12 months of 26 pence per share or £77m.
Looking forwards it remains our intention to
continue to pay a r
egular dividend, and to
gro
w this progressively
, but in addition we
announced a share buyback programme in
January 2022 to sp
end up to £18m ov
er the
next 18 months to buy back our shares,
partly to s
atisfy share option vestings, but
with the majority to be held in T
reasury and/
or cancelled.
Robust market conditions
While the underlying auto and equipment
finance market did initially see a dip in
activity following widespread CO
VID-19
lockdowns, it has broadly been reco
vering
since H2 2020. This continued through 2021
and we now see generally fa
vourable market
conditions, recognising that whilst we hav
e
no direct exposure to ev
ents in Ukraine and
Russia, it is too early to say what the medium
term impacts on the macroe
conomic
outlook may be.
Regarding the asset finance softwar
e
market, since the initial disruption of the
uncertaint
y caused by COVID-19 in H1
2020, we hav
e seen no adverse impact on
our market. Indee
d, the remote w
orking
practices that companies have been forced
to adopt, and are increasingly looking to be
standard practice going f
orwards, has
accelerated moves towar
ds a digital
strategy
, alongside increased focus on
system flexibility and reliability
, and
increasing r
egulator
y and legacy push
factors, both of which Alfa is well positioned
to benefit from.
Good conversion of late

When we announced our 2020 results
wehad a strong late-stage pipeline, but
highlighted the impor
tance of converting
this into signed contract
s and that
conv
er
ting prospect
s into signed contract
s
was taking longer than normal. During the
year we ha
ve con
verted seven prospect
s
into wins and added an additional five
prospect
s, without losing any
, so finishing
the year with eight pr
ospe
cts. This succe
ss
in conv
er
ting the late-stage pipeline
demonstrates that we have a compelling
proposition. Since the end of 2021 w
e have
added one additional prospect and
conv
er
ted one into a win so that we
currently ha
ve eight prospects in our
late-stage pipeline.
It is not only the quality of our software that
gives us such a strong conv
ersion of
prospect
s, but our strong delivery record.
An increasing tr
end has been the move
towar
ds customers looking to implement
Minimum Viable P
roduct (MVP
) solutions
suppor
ted by Alfa Start
. This has the
advantage of getting us on the gr
ound
faster
, demons
trating the quality of our
software and people.
Outlook
The market opportunit
y for Alfa is v
er
y
exciting and w
e have g
ood visibility of work
for 2022. W
e know there is a tight talent
market at the moment, but assuming we
continue our excellent r
ecent record of
attracting and retaining talent, we will see
good rev
enue growth in 2022, albeit with
some additional margin pressure due to
salar
y inflation and return to normal costs.
With the strategic improv
ements made
across the business, the quality of our
people and s
trength of the intellectual
property in our soft
ware, w
e have gr
eat
confidence in Alfa’
s prospect
s.
Andrew Denton
Chief Executive Officer
8 March 2022
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
15
STRA
TEGIC REPOR
T







MARKETOVER
VIE
W
Global trends
Global economic recovery continues, with
the focus shifting to the after-effects of a
relativ
ely shor
t-lived recession. Supply chain
disruption and surging demand hav
e
contributed to global inflation; and used
asset
s hav
e soared in value whilst new
inv
entor
y remains low
.
The climate emergency is for
cing consumers
and businesse
s to look at ways to impro
ve
their carbon footprint. Auto and equipment
finance companies play a critical role in this
change, pro
viding the world with ev
er
impro
ving green technologies.
What this means for Alfa today
The ability to refinance assets or onb
oard
used asset
s provides our customers with
theability to
thrive in
times of
low inv
entory
,
but also pro
vide tools for supporting the
circular
economy
. Usage-based
billing is
fullyconfigurable,
allowing
client
s to
build
flexible
financing solutions.
Our
customers
are also configuring gr
een financing
products, including loc
al gov
ernment
subsidies and recording key emissions
dataagainst their
asset
s.
Alfa Systems is a highly configurable
platform which often r
esult
s in our
customers being well positioned to
facesuch
challenges. Demand
is str
ong
worldwide as finance companies continue
to
look to
implement r
esilient, flexible
and
modern technolog
y landscape
s.
What this means for Alfa tomorrow
Alfa continues to keep a close eye on trends
and shift
s within the geographies and
industries in which we operate. Recent years
hav
e highlighted that
, often, these shif
ts are
unfor
ese
en. This highlights the imp
ortance
of
flexibility and
configurability
within our
solution, pro
viding customers with features
that not only satisfy the requirements of
today but that can be applied to the
challenges of tomorro
w
.
USA
It was
expe
cted that
delinquencies in
the
USA
automotive
finance market
would
spike as forbearance pr
ogrammes came to
an end, but this has yet to materialise to the
anticipated extent.
Supply chain issues and inflation continue
todisrupt
originations, but
low
rates and
atrend
towar
ds long
er terms
are k
eeping
payments affordable and demand high.
Equipment demand r
emains high
withfuture pr
ospect
s looking strong
dueto continued industr
y confidence
andincreased go
vernment
infrastructurespending.
What this means for Alfa today
Alfa support
s the largest pro
viders inboth
the equipment and automotiv
eindustrie
s,
suppor
ting their businessthrough periods
of challenge
andoppor
tunity
.
The ability for clients to repor
t in real time
on their por
tfolio allo
ws them to track
industr
y trends as well as portfolio and
process per
formance. This allows our
clientsto identify ar
eas of
concern and
oppor
tunity
, such as the ability to introduce
new
products or
streamline k
eyprocesses
ahead o
f a
for
ecas
ted spikein
volume.
What this means for Alfa tomorrow
Alfa’
s continued
focus
on automation,
configurability and connectivity keeps our
customers prepared f
or any future
after-effects of the pandemic. Our internal
inv
es
tment process continues to introduce
key pr
oduct features required by a number
of
our clients, such
as
expanding our
collections and credit offerings.
Europe
More
aggressive
sustainability targets
amongst European captives have pr
esented
a challenge to pr
ovide green assets to the
mass market.
Usage-based products continue to be an
area of dev
elopment as pro
viders react to
higher demand f
or more
flexible, cost-
efficient and sustainable ways of utilising
asset
s while retaining pr
ofitability and
managing residual risk.
Large multinational pro
viders are looking to
reduce technology overheads by selecting a
single pro
vider that can suppor
t multiple
countries and an evolving product landscape.
What this means for Alfa today
Alfa Systems pro
vides configurable suppor
t
for usage-based products, allowing client
s
to configure bespoke off
erings.
Reporting and configuration management
capabilities allow client
s to accurately
monitor the per
formance o
f their new
products and iteratively impro
ve upon
them. Configurable subsidy management
allows customers to manage an ev
er-
changing landscape of green incentives
across multiple jurisdictions.
Alfa’
s pr
oduct flexibility
and deliv
ery
experience acr
oss E
urope
means it
is well
placed to implement multi-countr
y projects
successfully
. Furthermore, a wealth of
experience in
our home
market along
with
our UK
Alfa Start off
ering
allows
us to
deliver high-quality solutions at a low
er cost
.
What this means for Alfa tomorrow
Alfa’
s pr
oduct inv
estment allows
our
customers to stay up to date with product
and regulatory developments. Furthermore,
Alfa continues to invest in and innovate its
delivery methodolog
y
, building on an
already pr
oven deliv
er
y track recor
d.
This places us in the be
st position to meet
the needs of our cus
tomers as they juggle
large-scale change in a number of ar
eas,
such as meeting their sustainabilit
y targets.
16
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
Australia and New Zealand
Covid-19 has continued to dominate the
agenda for man
y organisations, with the
auto and equipment finance sector being
noexception.
It’
s incr
easingly
clear that
organisations with modern technolog
y and
processes have been better able to adapt to
new ways of w
orking. Throughout 2021 Alfa
has worked with our clients in Australia and
New
Zealand
to
suppor
t both
them
and
their end customers.
While smaller
, the market in Australia and
New
Zealand
is
remarkably
diverse.
Australia in particular has a large equipment
finance market led by the mining and ra
w
materials sector
, and automotive finance
leasing has continued to show strength in
both countries.
What this means for Alfa today
Strong and long-lasting r
elationships remain
key to our success, with our ability to
suppor
t the gro
wing operations of our
existing clients being
a k
ey measur
e
of that
success. Alfa’
s ability
to
suppor
t a
broad
range of agr
eement typ
es on a single
platform is an advantage in smaller mark
et
s
with a high level of pr
oduct diversification,
and we continue to see strong demand.
What this means for Alfa tomorrow
F
irst and foremost our key objective f
or
2022 is
the execution
of
our existing
projects, along
side the suppor
t of our
existing customers.
W
e expect to
see
business practice
s driving towar
ds more and
more automation and pr
ocess supp
ort
,
both areas in which Alfa is very well placed.
Technology trends
Artificial intelligence and machine learning
remain points of interest
, with more possible
applications being uncover
ed as new market
trends
and
challenges emerg
e. One
example
is residual value modelling, both as supply
chain issues continue and customers lo
ok for
more
flexible
usage models.
Delivery requirements often drive
technology requirement
s too, with agile
delivery models demanding sc
alable cloud
solutions. Our customers are looking to
decrease the technology footprint
managedby
their internal
teams, reducing
the ongoing ov
erheads that come with
on-premise deplo
yment.
The emphasis on data only gro
ws stronger
with more customers realising the value that
big data pro
vides. Robust API connectivit
y
isof paramount
importance as auto
and
equipment finance providers look to
coalesce asset
, contract, telematics and
other data to pro
vide clearer views of
profitability and efficiency
.
What this means for Alfa today
Alfa has been at the forefront o
f the digital
rev
olution in auto and equipment finance,
and Alfa Systems has a rich application
programming
inter
face (API)
allowing
seamless connectivity
. W
e’ve
continue
d
to
increase the br
eadth of ser
vices available
and also
expande
d
the integration
patterns
suppor
ted by Alfa Systems, such as Amazon
SQS and HTTP transpor
t typ
es for
outbound mess
aging.
Inv
es
tment into our cloud hosted offering
continues. W
e recognise the importance of
secure and resilient cloud architectur
es and
these are key considerations in the design of
our service, which we continually monitor
through client engagement and internal
procedures, such as disaster recovery tes
ts.
Alfa’
s joint
ventur
e, Alfa
iQ,
continues to
explore
the use o
f machine
le
arning
in auto
and equipment finance. The industr
y
presence of Alfa iQ has increased thr
ough
thought leadership and confer
ence activity
,
driving the adoption of AI in the auto and
equipment finance market.
What this means for Alfa tomorrow
The industr
y continues to focus on utilising
new technologies in innovative ways and
Alfa’
s inv
estment mirrors
this appetite,
ensuring we ar
e designing solutions that c
an
place our customers at the forefr
ont of
technology trends.
 
Mo
rein
for
ma
ti
ono
nAl
faiQc
anb
e

found on
page 30.
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
17
STRA
TEGIC REPOR
T
BUSINESSMO
DEL
Markets
See market o
verview
page 16
Culture and values
Seemoreaboutour
culture and values
page62
Inputs
Value creation
Leadingcompaniesrequire
innovation and customer
-specific
enhancements to stay ahead
Autoandequipmentfinance
isheavilyregulat
ed–

regulatorychangerequir
es

software chang
es
New mark
et
s and geographies
requireso
ftwaredev
elopment
Gro
wing Company pro
vides
career dev
elopment and
re
wards for our people
So
ftware
Leading-edge
technologyand
innovation
attractssmart,
diverse
people
Pe
ople
Sma
r
t
,di
ve
rsep
e
op
le

improv
e our
software
18
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
R
ev
enue
Subscriptions
Ser
vices
So
ftware
Financial returns
for shareholders
See Financial r
evie
w
page38
Positive impact

SeeESGsection
page58
Outputs
Delivery
Retain for potential
future needs
Cash
Solutions for leading auto
andequipmentfinance
companies

Newmark
etentry
Expanding our
addressable market
Our delivery
track recor
d and
market-leading
software driv
e
recommendations
and additional sales
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
19
STRA
TEGIC REPOR
T
1

3
INVESTMENTC
A
SE
Purpose-built for auto and equipment enterprises
globally, developed to meet the current and future
needs of the industry.
Alfa Systems is a leading auto and
equipment financesoftware platform
Strongly positioned
ina large resilient
addressable market
with clear structural
growth drivers
W
e have an establishe
d position of
leadership in the auto and equipment
finance software market, underpinned
byour experience, ourtrack r
ecord of
delivery
, and our in-depth unders
tanding
of the industr
y
.
Changing regulations (f
or instance
risk
-freerates)
, the ne
ed for digital
capabilities (accelerating as a result
ofchanges in customer processes due
tothe globalpandemic) and theneed to
replace ag
eing infrastructure andoutdated
systems are driving underlying demand for
Alfa Systems.
W
e are committed to growing our market
share b
y recruiting the smarte
st pe
ople,
maintaining and developing our leading-
edgetechnolog
y
, and surpassing customer
expectations through delivery excellence.
20
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021


3
Constant innovation
delivers leading-edge
technology embedding
strong long-term
customer relationships
Alfa has inv
es
ted significantly in the
development of its technolog
y platform to
ensure it is secure, r
eliable, resilient andscalable
to gro
w with our customers’ busine
ss ambitions.
Our suite of integrated modules
canbedeployed and configured as afullend-
to-end solution cov
ering theentireauto and
equipment finance lifecycle or alternatively to
pro
vide stand-alone suppor
t for functional or
product areas.
Our hosted
solution adds
fur
ther value
byreducing
implementation timescales andpr
ovides a
single,
resilient, actively
monitoredinfrastructure.
Our strong, long-term customer relationships
drive r
ecurring revenues aswell as pr
oviding
refer
ences for newpr
ospect
s.
Strong cash generation
delivering a strong
balancesheet supporting
growth plans
We have a clear
strategy anda cash
generative modelthat
enables us to fund our
growth internally
A robust


of cash (2020: £37m)
andno bank debt
(2020: £nil)
An impressive cash
conversion rate

(2020: 114%)
W
e have multi-year
relationships with our
customers, built on
our consistent delivery
.
Our dierentiated
businessmodel is
dicultto replicate
30 years and growing
With an excellent deliv
er
y histor
y over
three decade
s in the industr
y
, Alfa’
s
track record is unrivalled.
Our business model t
ypically involv
es the
sale and deployment of our auto and
equipment finance software platform
into large enterprises, that hav
e highly
complex andvarying requirements.
W
e are able to leverage
our understanding of
these complexities to
enhance Alfa Systems –
asignificant selling point
for new pr
ospect
s.
Our Alfa Start
methodology
enablesusto deliver
asubscription-based
service rapidly to smaller
,
less complex customers.
W
e have establishe
d a partner net
work that
extendsour sales channel and enable
s us to
increaseour capacity to implement more Alfa
Systems, hence lev
eraging our IP
.
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
21
STRA
TEGIC REPOR
T
Our strategy for creating long-term sustainable
business value
A
Group
r
evenue
B
Operating
profit
C
Operating profit margin
D
Cash
E
Operating free cash
flowconv
ersion
F
T
otal contract
value
(TCV)
G
Headcount
H
Retention rate
I
Employ
ee eng
agement
J
Greenhouse gas
emissions (tCO
2
e)
Key
COMP
A
NYSTR
A
TEGY
Strategic priorities
Description
Our objectives
Link to KPIs
1
Strengthen
Grow our differentiation of market-

W
e will continue to offer a supportive,
diverse and collaborative w
orking
envir
onment and be considered to
bean employer of choic
e.
W
e will maintain our le
ading-edge
technology and ensure it
s secure,
effective deliv
er
y to make our people,
and customers, future-ready
. Our
target mark
et
s inform and dir
ect our
product dev
elopment.
W
e will maintain our unriv
alled track
record f
or delivering larg
e system
implementations and highly complex
business change project
s.
•
Retain and attract the best people
•
Support our pe
ople through flexible w
orking
•
Encourage inclusivity and div
ersity
•
Pr
ovide career development and learning opportunities
•
Make a positive impact t
o contribute to a more sustainable future
•
F
oster innovation throughout the compan
y
•
Rein
vest in the product to increase value f
or customers and prospect
s
•
Seiz
e market oppor
tunities for new pr
oduct
s
•
Continue to dir
ect product roadmap by tar
get markets
•
Integrate Alfa S
ystems with be
st-of-breed solutions
•
Successful deliv
er
y of all Alfa implementation projects
andongoingservice
s
•
Maintain strong customer engagement and loyalty
A
B
C
D
E
F
G
H
I
J
2
Sell
Focus on cloud-hosted, subscription

W
e will retain our market-leading
position and grow our shar
e of the
enterprise auto and equipment finance
sector
. Our target markets inform and
direct our sales and marketing effort
.
•
Gro
w target mark
et share
•
Gro
w cloud-hosted, subscription s
ales
•
Gro
w incremental sales to existing customers
•
Impro
ve pr
ospect eng
agement and sales process
A
B
C
D
E
F
G
H
I
J
3
Scale
Increase our capacity for developing

W
e will increase product engineering
and delivery capacit
y
, enabling
rev
enuegrowth.
•
Impro
ve pr
oduct engineering sc
alability
•
Increase de
velopment capacity
•
Increase deliv
ery c
apacity
A
B
C
D
E
F
G
H
I
J
4
Simplify
Simplifying our product,
implementations and processes


W
e will continue to invest in
simplification to achieve our vision
ofdelivering mor
e concurrent Alfa
implementations, more efficiently
witha world-class product.
•
Simplify our suppor
ted code
sets and platforms
•
Simplify our product development
•
Simplify our implementation and upgrade delivery approach
•
Impro
ve operational efficiency
•
Impro
ve manag
ement information and control
A
B
C
D
E
F
5
Synergise
Develop our partner ecosystem,



W
e will work with a select group of
partners to create additional sale
s
channel oppor
tunities and increase
ourdelivery capabilitie
s whilst
maintaining quality
.
•
Leverag
e our par
tner ecosystem for sales
•
Scale and lev
erage our partner e
cosystem for deliv
er
y
•
Add to our partner ecosys
tem
•
Continuous impro
vement of Alfa P
artner programme
A
B
C
D
E
F
6
Start
Improve our offering for smaller auto
and equipment finance providers as


W
e will b
ecome a market leader
inthevolume market o
f the auto and
equipment financeindustr
y
.
•
Continuous impro
vement of Alfa S
tar
t delivery
•
Continuous impro
vement of Alfa S
tar
t product
•
Win customers in the volume market, based on Alfa Start proposition
•
Continue inv
estment mo
del for v
olume market
A
B
C
D
E
F
22
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
Strategic priorities
Description
Our objectives
Link to KPIs
1
Strengthen
Grow our differentiation of market-

W
e will continue to offer a supportive,
diverse and collaborative w
orking
envir
onment and be considered to
bean employer of choic
e.
W
e will maintain our le
ading-edge
technology and ensure it
s secure,
effective deliv
er
y to make our people,
and customers, future-ready
. Our
target mark
et
s inform and dir
ect our
product dev
elopment.
W
e will maintain our unriv
alled track
record f
or delivering larg
e system
implementations and highly complex
business change project
s.
•
Retain and attract the best people
•
Support our pe
ople through flexible w
orking
•
Encourage inclusivity and div
ersity
•
Pr
ovide career development and learning opportunities
•
Make a positive impact t
o contribute to a more sustainable future
•
F
oster innovation throughout the compan
y
•
Rein
vest in the product to increase value f
or customers and prospect
s
•
Seiz
e market oppor
tunities for new pr
oduct
s
•
Continue to dir
ect product roadmap by tar
get markets
•
Integrate Alfa S
ystems with be
st-of-breed solutions
•
Successful deliv
er
y of all Alfa implementation projects
andongoingservice
s
•
Maintain strong customer engagement and loyalty
A
B
C
D
E
F
G
H
I
J
2
Sell
Focus on cloud-hosted, subscription

W
e will retain our market-leading
position and grow our shar
e of the
enterprise auto and equipment finance
sector
. Our target markets inform and
direct our sales and marketing effort
.
•
Gro
w target mark
et share
•
Gro
w cloud-hosted, subscription s
ales
•
Gro
w incremental sales to existing customers
•
Impro
ve pr
ospect eng
agement and sales process
A
B
C
D
E
F
G
H
I
J
3
Scale
Increase our capacity for developing

W
e will increase product engineering
and delivery capacit
y
, enabling
rev
enuegrowth.
•
Impro
ve pr
oduct engineering sc
alability
•
Increase de
velopment capacity
•
Increase deliv
ery c
apacity
A
B
C
D
E
F
G
H
I
J
4
Simplify
Simplifying our product,
implementations and processes


W
e will continue to invest in
simplification to achieve our vision
ofdelivering mor
e concurrent Alfa
implementations, more efficiently
witha world-class product.
•
Simplify our suppor
ted code
sets and platforms
•
Simplify our product development
•
Simplify our implementation and upgrade delivery approach
•
Impro
ve operational efficiency
•
Impro
ve manag
ement information and control
A
B
C
D
E
F
5
Synergise
Develop our partner ecosystem,



W
e will work with a select group of
partners to create additional sale
s
channel oppor
tunities and increase
ourdelivery capabilitie
s whilst
maintaining quality
.
•
Leverag
e our par
tner ecosystem for sales
•
Scale and lev
erage our partner e
cosystem for deliv
er
y
•
Add to our partner ecosys
tem
•
Continuous impro
vement of Alfa P
artner programme
A
B
C
D
E
F
6
Start
Improve our offering for smaller auto
and equipment finance providers as


W
e will b
ecome a market leader
inthevolume market o
f the auto and
equipment financeindustr
y
.
•
Continuous impro
vement of Alfa S
tar
t delivery
•
Continuous impro
vement of Alfa S
tar
t product
•
Win customers in the volume market, based on Alfa Start proposition
•
Continue inv
estment mo
del for v
olume market
A
B
C
D
E
F
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
23
STRA
TEGIC REPOR
T
Initiatives
SERVICES
SOFTWARE
SUBSCRIPTION
Strategic priorities
People
Partnering
Strategic
Investment
Alfa iQ
Cloud
Hosting
Alfa Start
1
Strengthen
2
Sell
3
Scale
4
Simplify
5
Synergise
6
Start
Find out
more on
page25
Find out
more on
page26
Find out
more on
page28
Find out
more on
page 30
Find out
more on
page32
Find out
more on
page 34
STRA
TEGYINACTION
Initiatives underpinning
our strategy
24
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
We are Alfa
Our talent is our bes
t asset – successful
project delivery depends on passionate
people who are engaged and care about
what they do. W
e take great pride in the
strong culture at Alfa, and w
e work hard t
o
look after our colleague
s, retaining and
attracting the bes
t in the business.
Inclusion & Diversity:
A key strategic priority is to attract, develop
and retain a truly div
erse team. Our strong
Inclusion & Diversity policy helps us recruit
the bes
t and smarte
st pe
ople.
Diverse cultural perspectives really do
inspire inno
vation and creativity at Alfa.
W
e make thing
s better and solve pr
oblems
together
, so we
’
re alwa
ys striving towards
being as inclusive as we can.
•
Our new T
ransitioning at W
ork policy
,
launch of Cultural Days and the ev
ents
and initiatives run by our Communities are
2021 successe
s we ar
e really proud o
f
.
Delivering the best

Our smart p
eople deliver great
implementations to our customers and
develop class-leading software. W
e suppor
t
teams with
flexibility
, in
vest in
wellbeing
and
make sure e
veryone feels connected. There are
always Learning & Development opportunitie
s
for gr
owth and career progression available.
•
This year
we
’ve been pr
eparing for
the
launch of our
new Learning Management
System as well as sharing a suite o
f tools,
resources and workshops to support new
ways of w
orking and to help reach our full
potential. W
ellbeing has been a core focus,
rolling out new r
ewards and benefits,
training up Mental
Health F
irst Aiders and
enhancing paid carer leav
e allowance.
Culture:
Recruiting and retaining the best pe
ople is
fundamental to our gro
wth. We attract and
hold on to talent by r
einfor
cing the Alfa
Culture and ensuring a positiv
e learning
envir
onment. Underpinned by
our V
alue
s, the
Alfa Culture is something o
ften describ
ed as
‘
special
’
. W
e f
oster a setting
in which
everyone
feels listened to and value
d. W
e also enjoy
each other’
s company and
make
effort
s to
hav
e fun alongside working hard.
•
2021 saw us maintain connections and
team rappor
t with a variety of vir
tual
andreal-w
orld events. W
e seek regular
feedback from all areas o
f the busines
s
and hav
e kicked off projects which focus
on our Employ
er Brand, sharing more on
life at Alfa and getting t
o know each
other better
.
Findoutmor
eonpage62
Communities –
inside & outside Alfa:
Our internal Communities are employ
ee-le
d
groups – safe spaces f
or those involv
ed to
discuss and promote issues, suppor
t each
other and work towar
ds impro
ving policies.
They focus on: Racial E
quity
, Inclusion &
Diversity
, LGBT
Q+, Parents and W
omen.
Our Envir
onmental Impact, Social Impact
and Alfa Communities look af
ter the wider
communities in which we work (as well as
internal operations)
, raising money for
charities, focusing on sustainability and
giving back in the form of v
olunteering, work
experience schemes and sharing exper
tise.
•
Our Communities continue to do fantastic
work in all their r
esp
ective areas. W
e have
enjoy
ed a huge variety of events and
learned from each group this y
ear
. We
’ve
raised great sums for charity partners and
are pr
oud to confirm we r
eached c
arbon
positivity in 2021.
Find out mor
e on page 65
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
25
STRA
TEGIC REPOR
T
SERVICES
People
Partnering
SERVICES
STRA
TEGYINACTION

Partner relationships

Partner-assisted project
go-lives in2021

Ongoing partner-
assistedprojects
Approach
Partnerships are an important growth
accelerator
, bringing a number of benefit
s
toAlfa and our customers. These include:
•
Increased operational capacity through
partner s
taff augmentation of our teams,
allowing us to deliv
er more Alfa S
ystems
implementations concurrently;
•
Greater fle
xibility to change resourcing
rapidly by lev
eraging our partners’ size and
bench strength;
•
Increased sales oppor
tunities through
joint business development and access to
a wider range of customers through our
partner net
work;
•
F
aster
/less risky implementation project
s
through smoother systems integration by
skilled Systems Integrator (SI) partner
resources with Alfa S
ystems experience;
•
Extended local market exper
tise,
language skills and presence enabling
more eff
ective sales and implementation;
•
Client-side resourcing capability through
our partner net
work, allo
wing us to provide
an additional service to cus
tomers; and
•
Extended product off
ering and simplified
implementations through integrating Alfa
with complementary solutions from
technology par
tners.
“
W
e’
ve been collaborat
i
ng
w
it
h
A
l
fafor
more th
an 20
years now
.
The Accentu
re and A
lfa leade
rship
,
consu
lti
ng a
nd tec
h
nolog
y tea
ms
have a
n exce
llent t
rac
k re
cord of
work
ing we
ll a
nd del
iver
ing busi
ness
be
nefit toge
t
her.
”
Cameron Krueger
Managing Director, Accenture
“
Deloitte a
nd A
l
fa have b
een work
i
ng toget
her
to moder
ni
se s
ystem
s and pro
cesse
s and
del
iver compel
li
ng dig
ita
l e
x
per
iences for
ourcl
ients. T
oget
her
,
our o
rga
n
isat
ions
compl
ement one anot
her e
x
tr
emely wel
l
tobri
ng
t
he
be
st
sol
ution
s
a
nd
del
iver
g
reat
busine
ss outcomes fo
r our c
lient
s.
”
Andrew Denton
CEO, Alfa Financial Software
26
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
Partnering
Our partner programme is a key part
of
Alfa’s
long-term
growth
strategy
Highlights
This year we ha
ve successfully scaled our
partner relationships, remotely onboarding
three partner intakes and emb
edding more
partners in our project teams, s
ales activities
as well as in client-side/SI r
oles. On the
delivery side, par
tner resources hav
e been
utilised across 7 customer project
s in three
differ
ent geographies and we hav
e seen two
partner-assiste
d projects go live. This year we
hav
e benefite
d from incr
eased s
ales channel
oppor
tunities via our par
tner relationships
and the
extended global r
each and
credibility
they pro
vide. W
e hav
e also continued to
explore
new partnerships invarious
geographies that can help us in
salesopp
ortunitie
s.
W
e have gro
wn our par
tner ecosystem,
agreeing engagement terms with a notable
global prof
essional ser
vices organis
ation for
the combined marketing and delivery of the
Alfa Systems platform.
W
e have continued to invest in partner
training, fur
ther developing our training
programme including course material
impro
vements and new Alfa Systems training
envir
onment
s automatically synchronised
with the latest versions of Alfa Start
.
Updates to our partner por
tal and access to
additional resources mean that our partners
hav
e better acces
s to supporting information
and tooling, bringing increased efficiencie
s.
W
e work with a small, carefully selecte
d
partner e
cosystem of like-minded
organisations with geographical spread
andcomplementary deliver
y capabilities.
W
e utilise three t
ypes of par
tnering – the
first is staff augmentation, where industr
y
exper
t partner s
taff augment our teams and
assist with our standard implementation
consultancy work with Alfa, priming the
delivery
. T
ypical roles include configuration,
training and testing suppor
t
.
The second type is working with SI par
tners to
per
form activities outside of Alfa’
s standard
implementation scope and which are key to the
successful delivery of the project
. T
ypic
al roles
include programme manag
ement, integration
development, test management
, document
production and report creation.
The third type is working with technology
partners for out-of-the-box integrations
with bes
t-of-breed solutions.
Plans – for 2022
In 2022, we will continue to scale our
existing partnerships and evaluate
other potential par
tners to strengthen
further our par
tner e
cosystem and
core market c
overag
e. This will include
exp
an
din
g ou
r par
tner-assisted delivery
capability in
Nor
th Amer
ic
a to
inc
reas
e
operational capacity
.
As staff augmentation par
tnerships
mature and partner resources gain
exper
t Alfa
Systems
implementation
knowledge
and experience, w
e plan
toadvance themto
wards
a joint
delivery model, s
tarting with T
eamwill.
In preparation f
or this, in 2022 we will
continue to make significant inv
es
tment
in our partner programme including:
•
Extending our partner suppor
t team;
•
Impro
ving partner onb
oarding,
including introducing certification /
accreditation;
•
Impro
ving par
tner collaboration
tooling; and
•
Opening up more r
oles for partners
W
e will continue s
ales collaboration
activities with our par
tners. This is an
impor
tant aspect of our par
tnerships,
with new sales acting as a growth
accelerator
, both for Alfa and for scaling
our partner relationships fur
ther
.
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
27
STRA
TEGIC REPOR
T
Continued investment in our
leading-edge software to make

As customers drive their businesse
s harder
and expect more access to information, Alfa
Systems’ performance has been improved,
continuing our journey to an always-
available system. Simple deployment
models, such as cloud hosting and Do
cker
containers, enable us to deliver Alfa S
ystems
more efficiently and earlier
, allowing our
customers to focus on their business
differ
entiators rather than infrastructure.
Inv
es
ting in our whole engineering process,
including our people, ensures that our
onboarding, tools and infrastructure enable
us to scale teams efficiently
, whils
t
benefiting more from external expertise and
leading-edge technolog
y
.
Continued system modularis
ation effort has
separated fur
ther component
s allowing us
to use them more easily in mor
e context
s.
W
e are also es
tablishing architectural
guidelines and automated tooling to as
sist
Product Engineering teams adopt these
principles as par
t of business as usual
development in their ar
eas.
Product Engineering now benefits from a
completely new build process and system,
deliver
ed by the Software Dev
elopment
Lifecycle (SDLC) initiativ
e, which keeps an
always green mainline f
or Alfa Systems,
using scalable computing resources.
This remo
ves significant friction from the
development experience, pr
oviding better
isolation between parallel enhancement
s
and impro
ving the oppor
tunity for
collaboration. This now opens the
oppor
tunity to efficiently fur
ther scale our
STRA
TEGYINACTION
Mercury is a modern UI (User Inter
face) which is accessible to all, which helps users of Alfa Systems
complete their daily tasks with ease in a modern, clean and uncluttered environment.

Clients live with Mercury UI
Strategic
Investment
SOFTWARE
28
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
engineering team and improv
e release
flexibility
, which should bene
fit our
customers. W
e are alr
eady finding
impro
vements from the new approach as
engineers experiment and leverage this to
automate other processes.
Business rules, now even better
Po
werful Busines
s Rules functionality has
long been a key differ
entiator for the Alfa
Systems product, allowing our clients to
configure their o
wn business de
cision logic
within the system. This can include, for
example, data validation, company policy
rules and automation of workflow
progr
essions and actions. Be
cause this is
configuration-based, it allows for rules to be
added or update
d without requiring Alfa
Systems development eff
ort and a new
release of the softwar
e.
This year as part of our ongoing product
inv
es
tment, we have used functional groups
tomake significant
impro
vements to the
business rule e
ditor to guide authors when
creating rules, and to prev
ent creation of rules
which would hav
e no effect. These useabilit
y
changes will enable our customers to define
more rules, more efficiently
, shor
tening the
time to business bene
fit realisation.
Improved credit decisioning
In 2021
we extended
our cr
edit and
middle
office functionality in Alfa Systems, f
ocusing
initially on
the UK
equipment market. This
inv
es
tment included: consolidated supp
ort for
credit
applications; integration
with
Experian
for consumer and commer
cial searches; more
efficient decision making by gathering credit
data only when required; and alignment
between external
and Alfa
de
cision engines.
This ex
citing impr
ovement
to the
product
willbenefit both existing and
prospective
customers and is very timely given the current
economic outlook with Credit De
cisioning
being a primar
y focus for the industry in 2022.
Class-leading user interface
Las
t year we intr
oduced a new user inter
face
to Alfa Systems, code-named Mercury
, the
first to be entirely driven b
y direct end-user
feedback. This year has seen Mercury rolled
out to many of our v5 clients and feedback
has been hugely positive.
Mercury and our
future
UIs continue
to ev
olve
via our engagement in regular end-user
research sessions, watching people use Alfa
Systems in their day jobs. This y
ear our
approach to user r
esearch has also developed
significantly
. For
example, w
e no
w hav
e a
demo application where we can make
prototype screens available to clients allowing
them to trial new lay
out
s and component
s
before actual dev
elopment star
t
s.
W
e have also been working on a new
framework f
or user interface development
at Alfa (code-named Render
)
, building on
the success of Mercury
. Render will both
rev
olutionise and simplify UI development
at Alfa, as well as pr
oviding a host of other
benefit
s to areas such as testing and
application per
formance. W
e genuinely
believe this will be a game-changer for the
Alfa product and for our users.
Plans – for 2022
Our future in
vestment
s will continue
to focus on shortening the cycle from
requirements to delivery ensuring that
our customers receive the best ser
vice
and are kept futur
e-ready
. We will
progr
ess our modularis
ation initiative,
further focusing on simplification and
bottlenecks. In parallel, we will
continue to revie
w and update our
structure and processes to improv
e
team autonomy and individual
master
y within our engineering teams
as well as to balance the diff
erent
types of work we do.
2022 will also see an increased
focuson inv
estment in functional
impro
vements to Alfa Systems,
delivering mor
e strategic roadmap
items to continue to strengthen our
market-leading product.
Alfa’s dedicated UI/UX Design team have accessibility
aspart of their core remit. This team recently carried
out an accessibility audit of our Alfa Systems software,
part ofamajor internal investment initiative which
fundamentallyimproves the overall UI and UX of Alfa
Systems. A strand of this work (codenamed Mercury)
wasinformed by the Web Content Accessibility
Guidelines(WCAG)and has gone live at many of
ourclients,with hugelypositive feedback from users.
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
29
STRA
TEGIC REPOR
T
STRA
TEGYINACTION
Alfa iQ
SOFTWARE
30
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
Alfa iQ was established to deliver
intelligence
to
the
world’s
auto
and
equipment finance providers.
Artificial intelligence
and machine learning
2020 saw the formation o
f our joint venture
with Bitfount. Alfa iQ was establishe
d with a
mission to employ artificial intelligence (AI)
and machine learning (ML) techniques to
deliver the highest quality insight
s to the
world’
s asset finance providers. AI and ML
do howe
ver require car
eful implementation
to yield valuable results. This is why we
partnered with Bitfount, a team of carefully
selected exper
t
s in AI and ML who are
pushing the capabilities of such technolog
y
,
not just in terms of the quality of the insight
s
gained from their algorithms, but also in the
way these are designed with data privacy at
the for
efront.
One challenge of these technologies is
getting enough quality
, well-structured data,
to create r
obust algorithms, and so this
collaboration, pairing Alfa’
s expert
s in asset
finance and data
structures, with Bitfount’
s
deep understanding of this emerging
technology
, is uniquely well placed to pro
vide
consistent and unparalleled bene
fits to our
customers. The advantages for our
customers are as varied as improv
ed
auto-decisioning with a reduced ne
ed for
manual intervention, improv
ed delinquenc
y
prediction, exposure
and concentration risk
identification and ultimately more accurate
lending, leading to a greater return on capital.
Highlights
W
e have been steadily introducing Alfa iQ to
selected, leading indus
tr
y play
ers, including
but not limited to existing Alfa customers.
So far testing of our machine learning
methods is continuing with two customers,
and we hav
e signed a paid contract with our
first customer
.
In 2021 Alfa iQ achieved ISO 27001
andCyber essentials certific
ations for
information security
, demonstrating our
ability to leverage contacts and experience
to setup strong infrastructure ar
ound this
new ventur
e.
Alfa iQ also welcomed its firs
t full-time staff
member this year to augment the existing
members from Bitfount and Alfa and this
expansion of the team will continue in 2022.
Hiring is being managed meticulously to
recruit only individuals with the expertise
and high standards we r
equire.
Plans – for 2022
2022 will see iQ grow its customer base
with both
increases in w
ork f
or existing
customers, and the onboarding of new
ones. After finishing tes
ting and
development with the initial onboar
ding
customers, iQ int
ends to e
xpand their
products with both ‘software as a
service’ options
and bespoke analysis.
In order to achiev
e these goals, we will
carefully manag
e the t
eams expansion,
utilising the
existing wealth
of
experience fr
om the
two par
ent
companies, as well as new employ
ee
s.
Whilst this is ongoing, we anticipate that
demonstrating the advantag
es of iQ’
s
products will be
increasingly easy
as iQ’
s
reputation and portfolio of work gr
ows.
iQ’
s core
strateg
y group
consisting
ofsenior leadership fr
om Alfa and
Bitfount w
orked hard throughout
thisyear to
get the structur
es and
processes in place to begin work for
their first customers and now the focus
will mov
e towar
d expanding capacity
,
to facilitate new workloads whilst
retaining the highest quality
.
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
31
STRA
TEGIC REPOR
T
STRA
TEGYINACTION
Delivery
•
W
e are now liv
e for eight customers across
EMEA, Americ
as and now Asia Pacific
.
•
Managed infrastructure f
or six customers
currently in the pr
oject implementation
phase and as project accelerators f
or
future on-pr
emises cus
tomers.
•
Seamlessly deploy
ed signific
ant Alfa
Systems upgrades to our live customers
allowing our customers to benefit from
the latest versions of Alfa Systems.
•
Pr
ovided our customers with timely
information after the recent Log4Shell
vulnerability was reporte
d. Our lay
ered
architecture and so
ftware vulnerability
monitoring process ensured that our
customers were not impacted. W
e then
rolled out the latest patche
s from A
WS
and our other vendors as soon as they
wer
e available.
Comparing these numbers to the 2020
report
, many of those customers are no
w
live, illustrating how Alfa Hosting can spee
d
up implementation projects e
specially when
used in tandem with Alfa Star
t.
Cloud Hosting
SUBSCRIPTION
Up to


faster for initial deployments
32
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
Scalability
•
Increased the size and geographical
distribution of the team by onboarding
additional capacity based in the US
A.
This allowed us to co
ver more out-o
f-hours
request
s for our
EMEA customers and to
pro
vide more in-working hours support for
our US and Asia
Pacific customers.
•
T
owards the end o
f the year we launched
a closed-beta for our customer por
tal.
Customers will be able to self-ser
ve
impor
tant audit document
s and view
up-to-date status information for their
envir
onment
s. W
e will inv
est in additional
por
tal functionality in 2022 with the aim
of allowing our customers to manage
featur
es of their deployment
s whilst
reducing the load on our team for simple
and frequently executed tasks. In Q1
2022 we expect to open the por
tal as
generally available to all customers.
•
2022 will see oppor
tunities to automate
more of our pr
ocesse
s and to continue to
impro
ve the customer experience
wherev
er we can.
Technology
•
Deliver
ed comprehensive support for
running Alfa Systems in Docker containers
from within the Alfa Hosting service to
leverag
e alignment between all Alfa
Systems. This included suppor
t for
deploying upgrades of the Alfa Digital
Gateway micro-service with zero
downtime or service interruption.
•
Migrated, with zer
o downtime,
to the
nextgeneration of
our security par
tner’
s
machine-learning based threat monitoring.
Alert Logic Managed Detection and
Response provides best-of-breed
AI-based intrusion detection, backed by
a24x7 team of security exper
t
s. This has
significantly cut the time to deliver new
infrastructure for our customers whilst
ensuring that every ser
ver is monitor
ed
24/7 for potential thr
eat
s.
•
Delivered a secure and scalable solution
formo
ving obfuscated
data between
customer environments as required for issue
repr
oduction or busines
s verification testing.
No more infrastructure delays with
fully-managed environments from
AlfaHosting.
Open
to
users
from
thefirst
day
of
a
project.
Plans – for 2022
W
e will continue to onb
oard new clients
and to pro
vide secure and per
formant
infrastructure to
our e
xisting client
s
allowing them to f
ocus on delivering
value to their business throughout every
stage of a project.
W
e also plan to fur
ther increase
thesize of our team with additional
members in both the EMEA and USA
regions to pr
ovide expert round-the-
clock suppor
t wherev
er our customers
are located.
2022 will see increased investment in
our deployment, monitoring and
por
tal platforms to ensur
e that we
continue to off
er market-leading
tooling to both our internal teams
andcustomers.
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
33
STRA
TEGIC REPOR
T
Alfa Start
SUBSCRIPTION
STRA
TEGYINACTION


Alfa Start implementations can
reachlive production inaslittle
as20weeks.
34
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
Approach
Alfa Start offers a pr
econfigured, hoste
d
software solution for the quick and c
ost-
effective
delivery of
Alfa Systems.
Using
a
predefined, be
st-practice configuration and
process catalogue, Alfa Star
t allows operations
of all sizes to take full advantage of the
multi-featur
ed, market-leading Alfa Systems
platform. The Alfa Start approach is designed
to accelerate systems change pr
ogrammes,
maximising value
and minimising
risk.
Lean operations
taking on
Alfa Start
’
s best-
practice parameters and processes can
quickly leverag
e the prov
en functionality
and per
formance f
or which Alfa Systems has
become renowned. For those or
ganisations
requiring more customisation, Alfa Start
canact as
a
project acc
elerator
, enabling
fasterimplementations.
Alfa S
tart
’
s rapid
implementation model
benefit
s both Alfa and our customers.
Alfa Start is a key enabler of agile delivery
,
allowing clients to confidently and quickly
establish a firs
t phase go-live, r
ecognising the
benefit
s of Alfa Systems earlier and pro
viding
production
experience f
or
future
phases.
Implementations of this nature enable Alfa to
scale effectively
, delivering mor
e concurrent
projects, providing the same high-quality
service, but without a corresponding increase
in the number of implementation consultants.
Through Alfa Start we ar
e increasing the
number of available customers in key targ
et
markets, presenting Alfa as a more competitive
package, especially among
st smaller auto and
equipment finance providers. This not only
protects our p
osition as a market leader
, but
also allows us to support growth and
disruption. Alfa Start is complemented by
AlfaHosting, which
allows clients to
use Alfa
without having to establish and maintain
envir
onment
s. T
ogether
, both allow the client
to go live quick
er with an Alfa platform that
meet
s both the functional and technic
al
requirements, whilst
increasing
Alfa’
s
subscription rev
enue stream.
Highlights
2021 has seen successful go-lives for both
Alfa Start out-of-the-box and accelerator
projects, plus the kick-off o
f numerous other
projects utilising Alfa Star
t as an accelerator
.
Alfa Start has be
en fully operationalised
andembedde
d in two
key tar
get markets.
All implementations acr
oss UK Equipment
and US A
utomotive markets now
utilise Alfa
Start either as an accelerator or through the
out-of-the-box appr
oach. As the number
ofprojects has increased, we
are r
ealising
compounding benefit
s as we gather more
feedback, build more
exper
tise and incr
ease
our Alfa Start user group.
In parallel to project feedback, the ongoing
internal inv
es
tment initiatives throughout 2021
hav
e ensured the continuous development of
Alfa Start
. This includes incorporating new
product
featur
es, expanding
functional and
integration capabilities, e
stablishing more
client-facing documentation and improving
internal testing
. This has ensured that Alfa
Start remains the class-leading product and
implementation approach.
Plans – for 2022
In 2020 we launched Alfa Start
products cov
ering both the
US
Automotiv
e and UK
Equipment
markets. Alfa Star
t has pro
ved very
successful in both market
s, and 2022
will also
see a number
of existing
implementations progr
ess and new
projects b
egin, ensuring the momentum
created by Alfa Start continues to build.
Alfa Start has also prov
en to be
successful in adjacent markets, with
clients using parts of
our existing
offerings. As such, we ar
e looking
towar
ds implementing new Alfa Start
offerings f
or other target markets, in
particular US
Equipment.
Through br
oadening the market
cov
erage of Alfa Start we will further
compound the benefit
s this model offers
through mor
e rapid implementations.
A number of key initiatives during 2022
will ensure that Alfa Start remains
leading edge. A programme to simplify
migration will look to enable rapid
migration of portfolios and facilitate
low-friction
por
tfolio ac
quisition,
suppor
ting our
customers’ gro
wth.
In addition, we ar
e building software
partnerships to expedite the
implementation of key integrations
withcommon v
endors, enabling
our
customers to rapidly incorporate Alfa
into wider system landscape
s. F
inally
,
we ar
e broadening the functional
cov
erage o
f existing AlfaStart of
ferings,
incorporating key diff
erentiators such as
automated creditdecisioning.
“
Alfa Start makes a world-leading product –
AlfaSystems – available to more companies.
Ourcustomers can use Alfa Start to simplify and
expedite complex change programmes, reducing
riskand enabling them to see benefits earlier. We can
deliver more projects, in fewer days, but crucially
without impacting any of the quality forwhich
we’reknown.”
Sarah Taylor
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
35
STRA
TEGIC REPOR
T
KEYPERFORMAN
CEINDI
CA
TORS
Measuring our performance





Our strategic priorities
1



3





6

Financial
Group revenue

2021
£83.2m
£
78.9m
£
64.5m
20
20
20
19
2021 performance
Group re
venue grew b
y 5% from last
yearwith strong gro
wth in Service
s and
Subscription streams, and a decline in
Software stream driv
en primarily by a
largeone-o licence f
ee in 2020 which
didnot recur
.
Why do we measurethis?
Growing r
evenue is a measure of customer
and business success. It is central to our
objective of gro
wing by maintaining our
leading competitive position through
dierentiation of market-leading P
eople,
Product and Delivery
.
Linked to
remuneration:
Ye
s
Links to strategic
priorities:
1

3


6
Operating profit

2021
£24.7m
£
23.9m
£
13.7m
20
20
20
19
2021 performance
Operating prot increased from last
yearas a result of gr
owth in revenues,
partially oset by increased salar
y cost
s,
aswell as higher hosting and internal
computer costs.
Why do we measurethis?
Operating prot
is an indicator
of the
Group
’
s pr
otability
. It can
be used to
analyse the Gr
oup
’
s core
operational
performance without the cost
s of capital
structure and
tax expenses impacting pr
ot.
Linked to
remuneration:
Ye
s
Links to strategic
priorities:
1

3


6
Operating profit margin

2021
30%
30%
21%
20
20
20
19
2021 performance
Operating prot
margin has
remained in line
with last year with rev
enue growth partially
oset by
increased costs of our
growing
workfor
ce (see comments under Gr
oup
revenue
and operating pr
ot abov
e)
.
Why do we measurethis?
Operating prot margin is a measure o
f
how eectively we sell Alfa S
ystems and
manage our cost base. It also allows
comparison across dierent companies
and sectors.
Linked to
remuneration:
Ye
s
Links to strategic
priorities:
1

3


6
Cash

2021
£23.1m
£
37.0m
£
58.8m
20
20
20
19
2021 performance
During 2021 a second special dividend of
£29.7m was paid, reducing the Group
’s
cash balance. Excluding the impact of the
dividend payment, cash has fur
ther
improv
ed due to a favourable operating
free cash ow performance.
Why do we measurethis?
Cash is critical to allow the Group to cov
er
its expense
s, provide funds f
or investment,
growth and to meet its long-term ne
eds.
Cash generation is a good indicator of the
underlying health of the business.
Linked to
remuneration:
Ye
s
Links to strategic
priorities:
1

3


6
Operating free cash flow conversion 114

2021
114%
114%
138%
20
20
20
19
2021 performance
Operating free cash ow conversion
performed in line with last year with
continued focus on cash management.
Why do we measurethis?
A strong unencumbered balance sheet
position is key to growing the business in
the future. Our business has always been
cash generative and this KPI allows us to
monitor cash ows before inv
estment in
capital projects.
Linked to
remuneration:
Ye
s
Links to strategic
priorities:
1

3


6
Total contract value (TCV)

2021
£133.1m
£
112.9m
£
80.5m
20
20
20
19
2021 performance
Y
ear-on-year total T
CV has seen signicant
growth from 31 December 2020 with
improv
ements across all revenue streams
particularly subscription and software.
See p39 for further detail.
Why do we measurethis?
Helps to predict rev
enue and the value
ofacontract ov
er it
s lifetime, which will
generally extend beyond the curr
ent
nancial year
. See p37 for a detailed
explanation of the calculation.
Linked to
remuneration:
No
Links to strategic
priorities:
1

3


6
36
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
Operational
Headcount

2021
382
360
316
20
20
20
19
2021 performance
Headcount has increased due to planned
recruitment and investment continuing
across the business together with an
improv
ed employee retention rate.
Why do we measurethis?
Our revenue gr
owth and ability to win
newbusiness is heavily dependent on the
number and deep exper
tise of our people
and therefor
e growing our team f
or the
future is key to this g
oal.
Linked to
remuneration:
No
Links to strategic
priorities:
1
3
Retention rate

2021
87%
93%
83%
20
20
20
19
2021 performance
The retention rate has declined during
theyear largely due to the impact that
thepandemic has had on the recruitment
market and people’
s evaluation of
futureaspirations.
Why do we measurethis?
Our deep expertise in the
industr
y and
our
ability to service our cus
tomer relationships
is driven by the quality of our people.
A higher retention rate demonstrates
sustained engagement and maintenance
ofkey skills
and knowledge.
Linked to
remuneration:
No
Links to strategic
priorities:
1
3
Employee engagement*

2021
78%
74%
55%
20
20
20
19
2021 performance
Employee engagement has impr
oved
during the year
, due to the an increased
focus on this area b
y senior management,
as well as the deliberate actions that wer
e
taken in response to the pandemic.
Why do we measurethis?
Measures levels of emplo
yee satisfaction
and connection to the business. There is a
positive correlation between employ
ee
engagement and business per
formance
and the metric should be a lead indicator
for retention r
ate per
formance.
Linked to
remuneration:
No
Links to strategic
priorities:
1
3

Greenhouse gas emissions (tCO
2
e)
142
2021
142
212
821
20
20
2021 performance
Our emissions have fallen signicantly due
to much reduced travel driv
en primarily as
a result of the pandemic combined with a
review of tra
vel needs generally
.
Why do we measurethis?
Responsible operations and a commitment
to a positive Envir
onmental, Social &
Governance (ESG) ag
enda. We ar
e
committed to a position of carbon
positivity through assessing our carb
on
footprint and emissions.
Linked to
remuneration:
No
Links to strategic
priorities:
1
3
Definition and KPI

In considering the nancial performance of the
business, the Directors and management use key
performance indicators (KPIs)
, some of which are
dened by IFRS and some of which are not specically
dened by IFRS.
W
e believe that operating free cash ow conv
ersion
isa key measure r
equired to asses
s our nancial
performance. It is used by management to measure
liquidity
. This measure is not dened by IFRS
.
The most directly comparable IFRS measure f
or
operating free cash ow conversion is cash o
ws from
operations. The measure is not necessarily comparable
to similarly refer
enced measures used by other
companies. As a result, investors should not consider
this performance measure in isolation from, or as a
substitute analysis for
, our results of operations as
determined in accordance with IFRS
.
The calculation method for each metric is as follows:

Represents the number of Alfa employees under
contracts of employment as at 31 December of
eachyear
.

Represents the retention of Alfa employ
ees over the
previous 12-month period, excluding an
y managed
sta attrition.

TCV is calculated by analysing futur
e contract revenue
based on the following components:
(i)
an assumption of thr
ee years of subscription
payments (including maintenance, cloud hosting
and subscription licence) assuming these ser
vices
continued as planned (actual contract leng
th
varies by customer);
(ii)
the estimated remaining time to complete
service
s and software deliverables within
contracted software implementations, and
recognise deferr
ed licence amount
s (which may
not all be under a signed statement of work); and
(iii)
Pre-implementation and ong
oing ser
vices and
software work which is contracted under a
statement of work.
The denition of T
CV has been aligne
d with the new
rev
enue streams reported, however the underlying
calculations are consistent with previous periods, and
accordingly no r
estatement is required.
Given this KPI is forward looking, in calculating the
TCV w
e have used the budget 2022 ex
change rates.
These budget rates are; USD: 1.38, EUR: 1.17, A
UD:
1.88, and NZD: 1.95.

The overall Emplo
yee engagement score is deriv
ed
from bi-monthly employ
ee Pulse survey ratings based
on the questions “I am happy in my role
” and “I would
recommend Alfa to a friend as an employ
er”
.
The calculation of this score has been revised during
the year to include only these two broad questions,
which provides a clearer r
esult than the previous
method which included additional ques
tions relating
to specic aspe
cts of working at Alfa which meant the
impact of any specic issues could be duplicate
d
within the overall scor
e. Comparative period scores
have been restated accordingly
.



Operating free cash ow is calculated as cash
generated from operations, less capital expenditures,
less the principal element of lease payments in respe
ct
of IFRS16. Operating free cash ow conv
ersion
represents operating free cash ow generated as a
proportion of operating prot.
STRA
TEGIC REPOR
T
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
37
FINANCIALREVIEW
“
2021 saw us make further financial progress,
paying our second special dividend, along with
our first ordinary dividend, and the launch of a
share buyback programme in early 2022.”
Duncan Magrath
Chief Financial Officer
Financial results
£m
2021
2020
Movement
%
Rev
enue
83.2
78.9
5%
Operating
profit
24.7
23.9
3%
Pro
fit before
tax
23.8
23.2
3%
T
axation
(4.6)
(2.9)
159%
Pro
fit for the
period
19.2
20.3
(5)%
Basic earnings
per share
6.5p
6.9p
(6)%
Rev
enues increased by 5% or £4.3m to
£83.2m in the tw
elve months
ended
31 December 2021 (2020: £78.9m)
.
Gro
wth at cons
tant currency was 9%.
Operating profit
increased by
£0.8m to
£24.7m (2020: £23.9m)
, due to the £4.3m
increase in
rev
enues, par
tially offset b
y £3.5m
increase in
expenses, principally due to a
£1.8m increase
in salar
y cost
s fr
om pay rises
and increased headcount, as well as higher
hosting cost
s up by
£0.8m and other
computer costs up by £0.8m.
Net finance costs which relate
to lease
expenses of £0.8m (2020: £0.7m)
resulted in
profit
before tax
of £23.8m (2020: £23.2m)
.
The Eff
ective T
ax Rate (ETR) f
or 2021 is
19.3% ( 2020: 12.5%)
, the increase r
eflect
s
that the prior y
ear benefited from R
&D tax
relief for the tw
o years 2018 and 2019,
whereas the curr
ent year reflects the R&D
tax relief f
or 2020 only
. The resulting pro
fit
for the
period was £19.2m (2020: £20.3m)
.
Revenue
Rev
enue –
by type
£m
2021
2020
(*restated)
Movement
%
Subscription
*
23.5
18.1
30%
Softwar
e*
13.6
20.0
(32%)
Services*
46.1
40.8
13%
T
otalrevenue
83.2
78.9
5%
*
T
o b
etter reflect the nature and type of
rev
enue, changes have been made to the
classification and allocation of revenue line
items. The comparative disclosur
es for the
2020 reporting period have also been amended
to reflect a fair base for comparability
. These
changes have had no impact on the total
rev
enue or the profit befor
e tax that were
disclosed for 2020. Software r
evenues include
rev
enues from recognition of customised
licence rev
enue, one-off licence fees and any
development r
evenues. Subscription rev
enues
include recurring rev
enues paid on a monthly
orannual basis, including subscription licence
rev
enues, maintenance and cloud hosting
.
Services revenues are re
venues from any w
ork
done for customers including pre-implementation
work, implementation work, and
o
ng
oi
n
g
service
s, but excludes any r
evenue from
development work.
38
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
Subscription revenues
Overall subscription re
venues increased 30%
to £23.5m (2020:
£18.1m)
. The incr
ease was
driven b
y a 24% increase in maintenance
rev
enues with customers increasing to 29 at
the end of the year
, up from 27 at the start of
the year
. Hosting customers increased from
10 at the end of last year to 12 at the end of
2021. Rev
enues from pure hosting alone
grew str
ongly
, along
side good growth from
rev
enues from bundled subscriptions, which
included not just hos
ting but also
maintenance and licence payments.
Software revenues
Software
rev
enues of £13.6m wer
e down
£6.4m or 32% on last year (2020: £20.0m)
.
Of this reduction, £5.6m
was due to a
five-y
ear contract extension agr
ee
d and
recognised in 2020 with a customer who had
previously terminated its licence. In 2021 we
did recognise £2.1m
of r
evenue acr
oss six
existing customers for additional
licence
payments as a result of going through a
contractual band or for new modules.
As previously discussed more of our
implementation work this year has been for
v4 to v5 upgrades, which generally do not
attract additional licence payments, except
where customers take on additional
modules and so the income from
customised licence
s was down on last year
.
This was partially offset by income from
increased development w
ork for existing
customers, including those going through v4
to v5 upgrades.
Services revenues
T
otal ser
vices revenue incr
eased by 13% to
£46.1m (2020: £40.8m) at actual exchang
e
rates, driven by higher char
geable days from
our increased headcount. There was a
reduction in pre-implementation r
evenues,
where last year w
e had two large customers
requiring detailed pre-implementation
work. Re
venues from new implementations
wer
e up, although stronger gr
owth was seen
with ongoing service
s work, larg
ely on the
back of v4 to v5 upgrades.
Total contract value (TCV)
TCV – b
y stream
£m
2021
2020
Movement
%
Subscription
85.8
69.1
24%
Softwar
e
14.9
12.8
16%
Services
32.4
31.0
5%
T
otalTCV
133.1
112.9
18%
T
otal contract value (
T
CV) – as define
d
inthe definition section on page 37 –
increased ov
er last year by 18% to £133.1m.
As expecte
d the subscription T
CV has
increased 24% driven b
y an increase in the
number of customers and the significant
gro
wth in our hos
ting business. There was
also a 16% increase in software, fr
om
secured development work and licences
from the contracts, and from the strong
conv
ersion of the last-stage pipeline in the
year
. Growth in service
s T
CV
, at 5%, was
somewhat low
er with a number of v4 to v5
implementations coming to an end.
TCV – b
y stream
for next 12
months
£m
2021
2020
Movement
%
Subscription
26.9
22.4
20%
Softwar
e
6.7
6.1
10%
Services
26.2
23.8
10%
T
otalTCV
59.8
52.3
14%
Of the TCV at 31 December 2021, £59.8m
(31 Dec 2020: £52.3m) is anticipate
d to
conv
er
t into rev
enue within the next
12 months, assuming contract
s continue as
expected and are not cancelle
d or delay
ed.
This includes £6.7m (2020: £6.1m) of
software re
venues, £26.9m (2020: £22.4m)
of subscription rev
enues and £26.2m
(2020: £23.8m) of service
s rev
enues.
Operating profit
The Group
’
s operating pr
ofit increased
by£0.8m, or 3%, to £24.7m in 2021
(2020: £23.9m)
. This reflecte
d the £4.3m
increase in r
evenues, partially offset by an
increase in
the Group
’
s cost base as w
e
continued to invest in the business.
Increased headcount dro
ve higher costs
although this was partially offset by reduced
partner cos
t
s, which wer
e high in 2020 due
toone larg
e pre-implementation pr
oject.
The Group
’
s operating pr
ofit on a
constant
currency basis increased by 10% as sterling
was stronger
against the USD than last year
.
Headcount numbers were up 6% at
31 December 2021 at 382 (31 D
ecember
2020: 360)
, with average headcount
increasing mor
e significantly to 383
(2020: 341) up 12%. Our staff retention rate
has been s
trong at 87% o
ver the 12 months
up to that date, as expected down from the
unusually high 93% experienced in 2020.
Expenses – net
£m
2021
2020
(restated)
Movement
%
Costofsales*
29.0
27.0
7%
Sales,generaland
administrative
expenses*
30.0
28.5
5%
Other income
(0.5)
(0.5)
–
T
otalexpenses

–net
58.5
55.0
6%
*
T
o b
etter reflect the nature and function of
certain expense
s, changes have been made to
the classification and allocation of expense line
items. The comparative disclosur
es for the
December 2020 repor
ting period have also
been amende
d to reflect a fair base for
comparability
. Cos
ts previously classified as
implementation and suppor
t expenses and
research and pr
oduct development expenses
of £11.9m and £15.1m, respectively
, have been
presented as cost of sale
s. In addition, £3.4m
of implementation and support expense
s and
£3.8m of research and pr
oduct development
expenses have been reclassified to sale
s,
general and admin expenses. The main items
affected are administrative salary cost
s,
computer costs and proper
ty related expenses.
These changes have had no impact on the total
expenses or the profit before tax that w
ere
disclosed at the end of December 2020.
STRA
TEGIC REPOR
T
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
39
FINANCIALREVIEWCONTINUED
Cos
tofs
al
e
s
increased by £2.0m to £29.0m
(2020: £27.0m) due to higher salar
y cost
s
from the incr
ease in customer-facing
headcount along with increased hosting
cost
s, par
tially offset b
y a reduction in
partner cos
t
s.
Sal
e
s,g
en
era
lan
dad
mi
ni
s
tra
ti
ve(SG&
A)
expenses increased by £1.5m to £30.0m in
the year (2020: £28.5m)
. This included
increased salar
y cost
s through higher
headcount although this was somewhat
offset by the r
eduction in contractor cost
s.
In addition Pro
fit Share Pa
y increased to
£3.1m (2020: £2.7m)
. There has also been
an unfav
ourable increase in for
eign currency
differ
ences of £0.7m, which moved fr
om a
gain of £0.5m in 2020 to a loss of £(0.2)m in
2021. The above factors w
ere offset b
y a
further reduction in travel and conf
erence
cost
s, as there was almost no trav
el for the
whole of the twelv
e month period.
Finance costs
Net finance cost
s which relate to leases of
£0.8m (2020: £0.7m) remained relativ
ely
unchanged with a small reduction in finance
income from r
educed c
ash balances and
interest rates.
Profit for the period
Pro
fit after taxation decreased by
£1.1m,
or5%, to £19.2m
in 2021 (2020: £20.3m)
.
The Eff
ective T
ax Rate (ETR) f
or 2021 is
19.3% (2020: 12.5%) with
this increase
reflecting, in par
t, that the prior year
benefited from R&D
tax relief f
or the tw
o
years 2018 and 2019, wher
eas the current
year will
reflect the R&D
tax relief f
or
2020only
.
Earnings per share
Basic earnings per share decreased by 6%
to6.49 pence in 2021 (2020: 6.93 pence)
.
Diluted earnings p
er share decreased by 6%
to 6.39 pence (2020: 6.79 pence)
.
Cash flow
Net cash (including the effect of exchang
e
rate changes) decreased by £13.9m to
£23.1m at 31 December 2021, from £37.0m
at 31 December 2020. This de
crease has
been driven by strong cash generated from
operations, offset by the pa
yment of special
and regular dividends of £32.7m.
Operating free
cash flow
conversion
£m
2021
2020
Mov
ement
%
Cashgenerated
from operations
31.3
30.1
4%
Adjustedfor:
Capitalexpenditure
(1.3)
(1.0)
30%
Principalelement
of the lease
payments in
respectofIFRS16
(1.9)
(1.7)
12%
Operating free
cash flow
28.1
27.4
3%
Operating pro
fit
24.7
23.9
3%
Operating free cash
flow con
version
114%
114%
–
40
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
Cash generated from operations benefited
from a continuing strong f
ocus on cash
per
formance. The Gr
oup
’
s op
erating free
cash flow conv
ersion (FCF) of 114%
(2020: 114%) was in line with last year due
to continued focus on cash management.
This is a very strong result and higher than
our ongoing trend which will be closer to
100% conv
ersion.
In addition to the cash generated from
operations of
£31.3m, the
Group
incurred
£1.3m on
capital expenditure
(2020: £1.0m)
and made
net tax
payments of £3.8m
(2020: £3.8m)
. This
included the r
esearch and
development
tax cr
edit claim r
eceived during
the period of
£1.6m, which
was claimed and
recognised in 2020, resulting in the unusually
low
effective tax
rate
for FY
2020. The
Group
has no
external bank
borrowings.
In the y
ear
, net cash outflows of £39.2m
(2020: £45.9m) from financing activities wer
e
largely driv
en by £32.7m (2020: £44.2m) of
dividends paid, with ordinary dividends of
£3.0m (2020: nil) along
with Special
Dividends of £29.7m (2020: £44.2m)
.
In addition there w
ere principal element
oflease payments of £1.9m
(2020: £1.7m)
and £4.6m (2020: nil) for funding the
Employment Benefit T
rust for the purchase
of shares to satisfy current and future L
TIPs
thereb
y avoiding potential dilution fr
om the
issue of shares to satisfy vesting
s.
Balance sheet
The most significant movement in the
balance sheet was the change in cash noted
above. Other balance sheet movements wer
e
as follo
ws:
Non-current assets of £44.4m were lar
gely
unchanged from last year (2020: £44.8m)
.
Current assets, excluding cash, increased
by£2.8m to £16.5m (2020: £13.7m)
. T
rade
receivables remain well contr
olled with
debtor days at 26 days (2020: 27 da
ys) with
only £0.1m (2020: £0.1m) more than 90
days ov
erdue. Pr
ovision f
or impairment
remains £nil (2020: £nil)
. Accrued income
increased in the year b
y £1.3m to £6.3m due
to increased rev
enue, partially offset by the
unwinding of the accrued income r
elated to
the one-off licence
f
ee bo
ok
ed i
n 2
02
0.
Prepa
yments increased by
£1.1m to
£3.2m
(2020: £2.1m)
due to
the inclusion
of deferr
ed
cost
s (
offset b
y a
related incr
ease in
deferred
licence contract
liabilities)
.
Current liabilities of £24.0m (2020: £18.1m)
wer
e up £5.9m. Ther
e was a £1.1m
increase
in trade payables and other payables to
£9.3m (2020: £8.1m) principally
due to
higher bonus and profit shar
e payments.
Lease liabilities increased from
£1.7m to
£1.9m due to
new leases for the
Michigan
and Sy
dney offices. Contract liabilities
increased by £4.0m to £11.0m (2020: £7.0m)
with deferred licence liabilities increasing
£3.4m to £5.3m (2020: £1.9m) due to an
increase in the material right r
elated to
customised licence implementations, along
with an increase in deferr
ed maintenance
liabilities up £0.6m to £5.7m
(2020: £5.1m)
due to gro
wth in the busine
ss.
Non-current
liabilities reduced slightly
, do
wn
£0.6m to
£16.6m (2020:
£17.2m) due
to a
reduction in
lease liabilities to
£15.2m
(2020: £15.8m)
with pr
ovisions r
emaining
unchanged at £1.4m (2020:£1.4m)
.
STRA
TEGIC REPOR
T
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
41
FINANCIALREVIEWCONTINUED
Key financial metrics
The Group uses Operating cash flow
conv
ersion as a financial metric which
isnot specifically define
d by
IFRS but
which management uses as a key
measure to assess financial per
formance.
Operating cash flow conv
ersion is
calculated as c
ash generated from
operations as a percentage of
operatingprofit.
This measure is not dir
ectly comparable
to similarly ref
erenced measures used
by other companies and, as a result,
inv
es
tors should not consider this
per
formance measur
e in isolation from,
or as a substitute analysis for
, our result
s
of operations as determined in
accordance with IFR
S.
Constant currency
W
e provide percentag
e increases or
decreases in revenue and operating
profit to eliminate the eff
ect of changes
in currency values as we believe it is
helpful to the understanding of
underlying trends in the business.
When trend
information is
expressed
herein ‘in
constant currencies’
, the
comparative r
esult
s are derived by
re-calculating non-pound sterling-
denominated rev
enue and/
or expense
s
using the a
verage
monthly exchang
e
rates of this year and applying them
tothe comparativ
e year’
s r
esult
s,
excluding gains
or losses on derivative
financial instrument
s. The averag
e
ratesare as shown in note 1.4 to the
financial statement
s.
Capital allocation and
distributions
The Group
’
s capital alloc
ation policy takes
into consideration the need to continue to
inv
es
t in our people and te
chnology whilst
maintaining strong liquidity and is shown in
more detail on the opposite page.
Since Nov
ember 2020 we have paid £74m
of special dividends and paid the first regular
dividend of 1.0 pence per share in July 2021,
amounting to £3m.
In January 2022 we announced a share
buyback programme of up t
o £18m over the
next 18 months.
The Board intends to pr
ogressively incr
ease
the dividend as the Group gr
ows, whilst
ensuring that we r
etain a strong balance sheet
.
F
or 2021 we are pr
oposing a dividend of
1.1pence per share, amounting to £3.3m.
If appro
ved by shareholders in the Annual
General Meeting
, this will be paid on
24 June 2022 to shareholders on the r
egister
as at 27 May 2022. The ex
-dividend date
willbe 24 May 2022.
Related parties
Details about related par
ty transactions are
disclosed in note 32.
Going concern
The financial statement
s are pr
epared
onthe going concern basis. The Gr
oup
continues to be cash generative and the
Directors believe that the Gr
oup has a
resilient business model. The Group meet
s
its day-to-day working capital requir
ement
s
through its cash reser
ves generated from
operating activities. The Group
’
s forecast
s
and projections, taking account of
reasonably possible changes in trading
per
formance, sho
w that the Group has
sufficient cash reserves to continue to
operate for a period of not less than
12 months from the date of appr
oval of
these financial statement
s. The going
concern assessment also include
s downside
stress tes
ting in line with FRC guidance
which demonstrates that even in the most
extreme downside conditions consider
ed
reasonably possible, given the existing lev
el
of cash held, the Group would continue t
o
be able to meet it
s obligations as they fall
due, without the need for substantive
mitigating actions. On this basis, whilst it
isacknowledged that there is continued
uncertaint
y ov
er future economic
conditions, the Directors consider it
appropriate to continue to adopt the g
oing
concern basis of accounting in pr
eparing the
financial statement
s.
Viability statement
The Viability statement containing a br
oader
assessment by the Board of the Company’
s
ongoing viability is set out in the Strategic
report on pages 52 to 53.
Subsequent events
On 18 January 2022 the Group announced
the launch of a share buyback pr
ogramme.
Refer to the Compan
y website f
or more
details. There ha
ve been no other reportable
subsequent events.
Duncan Magrath
Chief Financial Officer
8 March 2022
42
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
Cash
generated
Use of Cash
Reason
Impacts
Stakeholder
2021
Programme
CAPIT
ALALLOCA
TIONFR
AM
EWORK
Strategic
Investment
Expands
functionality of
product and
increases
oppor
tunities for
sales
Pro
fit
Company
Employ
ee
s
Customers
Partners
F
or fur
ther details
of Strategic
Inv
es
tment made
in the year
, see
pages 28-29
Product
Maintenance
Ensures product
remains up to
date with latest
technology
Pro
fit
Company
Employ
ee
s
Customers
Significant
inv
es
tment in
2021 in pro
viding
a faster and more
reliable wa
y of
releasing new
product updates
CSR Days
Each employ
ee is
allowed to spend
three days on CSR
activities
Profit
Company
Employ
ee
s
On av
erage one
CSR day taken
per employee
– we will
encourage
greater take-up
in2022
Climate
Positive
Pa
yment
s to
offset remaining
emissions to
ensure w
e are
climate positive
Pro
fit
Envir
onment
W
e signed up
with Ecologi in
2021 to make
monthly
payments to be
climate positive
Profit Share
10% of profits
generated paid
out to employ
ee
s
Pro
fit
Employ
ee
s
T
otal cost in 2021
of £3.1m.
Regular
Dividend
Gives a steady
cash return to
shareholders;
allows income
funds to inv
es
t
–
Shareholders
1.1 pence per
share pr
oposed
amounting
to£3.3m
(2020:£3.0m)
Additional
Capital
Return
Returns ex
cess
cash to
shareholders if
not neede
d for
company gr
owth
EPS
Shareholders
Pa
yment of
second spe
cial
dividend of £30m
and launch of
£18m buyback
programme
STRA
TEGIC REPOR
T
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
43
RISKM
ANAGEMENT
How we monitor risk
Introduction
A theme of 2021, like 2020, has been the continuing
COVID-19
pandemic, with
it
’
s
wide-reaching
so
cial
and macroeconomic impact
s across all Alfa r
egions.
W
e hav
e
built
upon our
experience of
2020, and
hav
e continued to adapt well to the situation,
shielding our delivery and per
formance from the
uncertaint
y
. Our risk management framework has
play
ed an imp
ortant role in this, providing us with a
solid basis for assessing, preparing for and r
eacting
to these type
s of challenges.
As the
C
OVID-19
situation developed
in 2021,
ourCOVID-19
Incident Response T
eam
workedclosely
with the
Company Leadership
T
eam (
CL
T
)to identify
, c
ontrol
and mitigate
risks
astheydeveloped.
This allo
wed us
to
take
proactiv
e action throughout the year
, doing our
part to ensure the safety and wellbeing of our
employ
ee
s and customers, and to minimise the
riskto
our operations.
Risk management is integral

The events of 2021 have again demonstrated
theinterconnectedness of
many
of
the risks
and
oppor
tunities that our busines
s faces. In order
todeliver
our
strateg
y and
achieve e
xcellence
through our business model, both operationally
and financially
, we must make sure that w
e maintain
theright balanc
e between
safeguarding
against
potential risks, and taking advantage of potential
oppor
tunities as they arise. Our aim is to foster a
culture of eff
ective risk management by
encouraging appropriate and monitor
ed risk-taking
and inno
vation, in
order to
achieve the
Group
’
s
strategic priorities.
Ou
r st
ra
te
gi
c pr
io
ri
ti
e
s as s
et o
ut o
n p
ag
es
22an
d23,a
ret
o:
•
Strengthen – Grow our diff
erentiation of
market-leading P
eople, Product and Delivery
.
•
Sell – Focus on cloud-hosted, subscription sale
s
to our target mark
et
s.
•
Scale – Increase our capacity for developing and
delivering Alfa S
ystems.
•
Simplif
y – Simplifying our product,
implementations and processes to enable more
concurrent Alfa S
ystems implementations.
•
Synergise – Develop our partner ecosystem, to
impro
ve our sales oppor
tunitie
s and to enable
more concurr
ent Alfa Systems implementations.
•
Star
t – Improv
e our off
ering for smaller auto and
equipment finance providers as a platf
orm for
innovation and to incr
ease our reach.
Whilst overall r
esponsibilit
y for risk lies at the Board lev
el,
the Directors hav
e delegated authorit
y for risk
identification to the CL
T
.
A bottom-up approach has primarily been under
taken to
provide a detailed r
eview of risks by r
elevant business
owners and this is led by the Risk Officer
, twice a year
.
The output is then reassessed by the CL
T to provide
assurance over completeness of the risk r
egister
.
Our systems and processes are designe
d to manage our
exposure
to risk
rather
than eliminate
the risk
completely
.
Therefor
e the Audit & Risk Committee, with the CL
T
, will
reassess the
Group
’s
risk
appetite each
year with
this in
mind. The Audit and Risk Committee will consider the risks
associated with the conduct of our busines
s and the
delivery of
our strategy
, assessing the
risks we
are exposed
to and
evaluating whether this
exposure
is acc
eptable
given the likelihood and severity of the risk.
Risks are assessed to understand the likelihoo
d and
theimpact of
the risk
cr
ystallising. W
e assess risk acr
oss
our business areas, and we analyse their impact across
these categories:
•
Financial
•
Operational
•
Reputational
•
Legal and regulator
y
•
Climate
Each risk is review
ed, twice a year
. At each r
eview date,
theexisting contr
ols ar
e r
eviewed f
or adequacy and
effectiveness. Due to the ever
-changing business
landscape and the industr
y we work in, it is quite possible
for the contr
ol requirements to change and for pr
oces
ses
and policies to require updating. If this is the case, then a
business owner is identified and they are responsible for
implementing changes.
Management
monitors pr
ogress against the
principal risks.
This is shared with our internal auditor
, BD
O
, to assist
withforming
the internal
audit plan f
or 2022.
The
Board
reviews the summary risk register and assesse
s the
adequacy of the principal risks identifie
d, as well as the
mitigating controls and procedures which are in plac
e
andare
operational.
1
Identify risks
2
Define risk
appetite
3
Assess and
quantify
4
Respond, manage
and mitigate
5
Monitor
and review
Our aim is to foster a culture of effective risk
management by encouraging appropriate and

44
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
Responsibilities
•
Define
s the risk gov
ernance
framework, risk cultur
e
andprinciples
•
Sets the tone for risk
management including
riskappetite
•
Responsible for an effective
system of internal controls
•
Approv
es risk de
cisions that
are beyond delegated
authorities

•
Be aler
t to risks associated with the activitie
s that they perform
•
Repor
t inefficient, unnece
ssar
y or unworkable contr
ols

•
Reviews the risk
management framework
and the effectiveness of
internal controls, risk
management systems
and major risk initiatives
•
Reviews and challenges
the principal risks in the
risk register
, and risk
scores
•
Reviews the internal
audit programme and
report
s



•
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 Board in r
elation to
risk profile, strategy and
key controls
•
Review and challenge
therisk
register
, and
riskscores
•
Review the sustainability
of risk methodologies,
metrics and policie
s
•
As
sess major risk-r
elated
projects
•
As
sess new commercial
arrangements through
participation in the De
al
Committee

CLT
•
Asse
sses for new risks, updates on current risks
assessment and implement
s mitigation s
trategies
and actions




•
Responsible for collating
updates, managing the
risk register and
presenting principal risks
and uncertaintie
s to the
Company Leadership
Meeting and
Audit
and
Risk Committee
•
The Risk Officer act
s as
an advocate for risk
management across all
levels of the business
•
The Risk Officer report
s
to the CFO in relation to
risk management
matters
•
The CFO has
responsibility for
gov
ernance and risk
management revie
w
Our risk management
framework
Our risk management framew
ork is
designed to be flexible and pr
oactive,
andlinks tightly into
our operations and
decision making, allowing us to react with
spee
d and agility to new and evolving risks
as they arise across all of our business
areas. This has helped us in 2021 to
continue to progr
ess our strategic
objectives, and to identify and pursue
oppor
tunities as they arose.
W
e recognise that managing risk effectively
is integral
to ex
ecuting our strategy
.
W
e have theref
ore implemented a
five-step process for monitoring and
managing risk throughout our business,
allowing the Dir
ectors to conduct a robust
assessment of the principal risks facing the
Group
. Risk is not something that should be
eliminated but
, instead, identified,
assesse
d and managed in a timely manner
.
Creating the right corporate culture
for effective risk management
Our organisation has an open and accountable
culture,
led b
y our
exp
erienced CL
T
,
whose
members ha
ve
many
years
of
experience in
their areas. The Boar
d and the CL
T set the tone
for our risk management activities, embedding
risk consideration and assessment into the
culture within the organisation. Ownership and
accountability for risks is an integral part of our
risk management framew
ork.
The Board has o
verall responsibility for
thegov
ernance of
risks, ensuring
we
have
adequate and effective systems in place and
setting the tone for our risk cultur
e. It does
this in various ways:
•
Risks are considered by the Boar
d as an
intrinsic part of our s
trategic planning, and in
the consideration of new opportunitie
s, risk
is recognised as an inherent part of each
oppor
tunity
, and is asse
ssed together with
the oppor
tunity
.
•
There is a twice-yearly r
eview by the Audit &
Risk Committee of principal risks,
theirevolution,
and
consideration o
f
emerging risks.
•
The CL
T members are the owners f
or each
risk in the Corporate risk register
, and they
,
and their teams, are r
esponsible for the
identification, asses
sment and treatment of
the risks in their own ar
eas. Risk management
is thus embedde
d into each area of the
business, which is be
st placed to progress
the actions and mitigations.
•
The Risk Officer coordinates risk
management activities and collates the risks
into the Corporate Risk Register
. The Risk
Officer is an advocate for best practice
across the organisation.
•
Risk assurance is achieved through our
external and
internal audits as
well
as
through our attainment of IS
O27001 and
ISO27018 certifications, and through our
SOC2 T
ype 2 audit.
STRA
TEGIC REPOR
T
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
45
Risks
Socio-economic and
geo-political risk
IT security and
cyberrisks
Pandemic outbr
eak in
Alfaand/
or customer
geographies
Business interruption
orcontinuity
Acceptable risk appetite
Risk to people, skills,
location and working
envir
onment
High customer
concentrationrisk
A
B
C
D
E
F
Impact
Probability
B
C
F
E
D
A
PRINCIP
ALRI
SKSANDUN
CER
T
AINTIES
Our risk appetite
Our risk appetite provides us with guidance
on the levels of risk w
e are pr
epared to take
inpursuit of our
objectives, and is consider
ed
a fundamental part of the planning and
execution of
our strategy
. In Mar
ch 2021,
theBoard, assisted by
the Audit &
Risk
Committee and the CL
T
, asse
ssed and
updated our risk appetite in light of the
developing in-y
ear and emerging risks.
W
e take a cautious approach to risk, aiming
to operate in a manner that would not put
the business at risk of significant financial,
operational or reputational damage.
This risk appetite has shaped our resp
onse
to the COVID-19 pandemic as it has
continued to evolve thr
ough 2021, forming
the basis of our approach to pr
otecting our
employ
ee
s, our customers and our
deliverables to ourcustomers.
Focus for 2022
Continuous impro
vement of risk
management procedures, including
training and awar
eness within the
Company of our risk manag
ement
bes
tpractices.
Risk identification and asses
sment –
bi-annual risk reviews including assessing
actions and control r
eviews.
Cyber security and data protection –
maintain SOC2 T
ype 2 and ISO
programme compliance, and continue
toassess and s
trengthen our cyb
er
security defences.
Business continuity and dis
aster recovery
– scenario testing exercises.
Internal audits – reviews of the strength
and effectiveness of our financial and
ITcontrols.
Continuing focus and dev
elopment of
understanding of climate-related risks.
Principal risks and uncertainties

The Group faces a number of risks that may
adversely aff
ect our strategic and busine
ss
objectives, operations, liquidity
, financial
position, reputation or future performance,
notall o
f which
are wholly
within
our contr
ol or
known to us. Some such risks ma
y currently be
regarded as immaterial and could turn out to
be material. W
e accept that risk is an inherent
part of doing busine
ss.
The Board considers the f
ollowing matters
tobe the
principal risks and
uncer
tainties
(innospecific order
) affecting
our
busines
s
atthis time.
Principal risk analysis (including mitigating activities)
46
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
Our strategic priorities
Risk A – Socio-economic and geo-political risk
Links to strategic priorities:
1

3
6
Movement:
Same level of risk
Impact:
Major
Probability:
Likely
How does it impact us?
W
e continue to face uncer
tainty in the global
economic outlook, which may impact demand
forour services, or our cus
tomer’
s rev
enues, and
therefor
e their budgets to pay for our services.
Thecurrent major
component
s of this
risk are:
•
A
t the time of writing, Russian for
ces are invading
Ukraine. Alfa does not have customers nor staff
in Ukraine or Russia, and so our business is not
directly impacted. Howev
er
, there will be
knock
-on social and economic impact
s of this
concerning crisis throughout 2022, which ma
y
impact us. As the situation develops, we will
assess risks to our busine
ss, and determine
appropriate mitigation.
•
The CO
VID-19 pandemic may hav
e short or
long-term economic impact
s on our customers,
potentially leading to a reduction in our
addressable market. The
se economic impact
s
are included under this principal risk, whereas
the health and wellbeing, and busines
s continuity
aspect
s are included in Risk B – Pandemic
outbreak in Alfa and/
or customer geographie
s.
•
Inflation has increased in each of our r
egions,
leading to increased cost
s to our business.
These increases may outpace our rev
enue
increases, if we ar
e unable to increase our
feesinline with cost
s.
•
Changes to the trading r
elationships between
the EU and the UK follo
wing Brexit may impact
our ability to ser
vice customers in the EU,
although we hav
e not experienced significant
impacts to date.
The uncertaint
y in global economic outlook
introduced b
y
the Ukrainian
war
leads us
to
retain
this
risk at the same level as before. The f
ollowing elements
of this risk hav
e receded, however:
•
The CO
VID-19 pandemic’
s economic impact
s
onour industr
y has not been damaging to Alfa to
date, as we and our clients have adapted well as
the situation has developed.
•
Uncertainty around US economic, immigration
and trade policy has recede
d in 2021.

This risk goes hand-in-hand with oppor
tunity
,
asour customers
may
se
ek to
adapt to
the
changing economic environment, seeking
operational efficiency
, introducing new pr
oduct
s
or reacting to r
egulator
y changes. Alfa is well
placed to help with the system and process
changes neede
d for such adaptation, either
where Alfa S
ystems is the incumbent sys
tem or
where a new system is needed.
W
e hav
e f
ormed a
Markets and
Products team,
to further focus our attention on alignment of
our product roadmap with the needs of our
target mark
et
s. This helps us to be in the be
st
position to take on oppor
tunities as they arise.
Despite the uncer
tain outlook, we have
attracted continued interest for new work
from sales prospects and existing customers
throughout 2021, fr
om diverse geographies
and sectors within the auto and equipment
finance industr
y
.
Our strategy include
s continuing to build a
diverse customer base, both geographically and
by
asset type
(i.e.
automotive,
e
quipment) but
also b
y
type of
customer (i.
e. banking,
OEM or
independent) which
theref
ore
hav
e diff
erent
andoften contr
asting risk
characteristics.
This mitigates some of this risk as there is often
adegree
of cyclicality
in tr
ends
affecting
the
autoand
equipment finance
industr
y
.
W
e ensure that the Group is financially robust
and resilient to economic downturns, or project
pauses, by retaining cash reserves and collecting
maintenance and licence rev
enues in advance.
Our fees for service
s are g
enerally increased
annually
, taking consideration of the increases
experienced in
our c
ost base.
W
e have an establishe
d presence and customer
base in
the EU
,
and ar
e committed
to
this as
a
target mark
et.
Strengthen
– Grow our dier
entiation of
market-leading People, Pr
oduct and Delivery
.
1
Simplify
– Simplifying our product
,
implementations and processes
toenablemore concurr
ent Alfa
Systemsimplementations.

Start
– Impro
ve our oering f
or smaller auto
and equipment nance nance pr
oviders as
a platform for inno
vation and to increase our
reach.
6
Sell
– F
ocus on cloud-hosted, subscription
sales to our target markets.
Synergise
– Dev
elop our partner
ecosystem, to improve our sales
opportunitie
s and to enable more
concurrent Alfa S
ystems implementations.

Scale
– Increase our capacity for dev
eloping
and delivering Alfa S
ystems.
3

STRA
TEGIC REPOR
T
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
47
PRINCIP
ALRISKS
ANDUNCE
RT
AINTIESC
ONTINUED
Risk B – Pandemic outbreak in Alfa and/or customer geographies
Links to strategic priorities:
1

3
6
Movement:
Decreased level of risk
Impact:
Moderate
Probability:
Possible
How does it impact us?
The CO
VID-19 pandemic has
continue
d t
o
develop thr
oughout 2021, with new variant
s
emerging, and Government r
esponse
s to control
the spread varying from region to r
egion.
Whilst the pandemic appears to be ne
aring its
end, there is continuing uncertainty around how
itwill de
velop
in 2022.
The risks
relating
to the
current pandemic ar
e intert
wined with other
principal risks, notably Risk A – Socio economic
and geo-political risk, and Risk C – Risk to pe
ople,
skills, location and working environment.
W
e have actively monitor
ed and reacted to this
situation throughout 2021 and early 2022, and we
hav
e concluded that the level of this risk to our
business is reduced from it
s 2020 position.
Whilst this pandemic continues to develop, w
e
face a number of possible impact
s:
•
The health and wellbeing of our employ
ee
s,
their families and other stakeholders may be
impacted. Mitigating this
is of
critical
impor
tance in shaping our response to this risk.
•
W
e may experience significant infection
levels, f
or example as new variants emerge
and become dominant
. This could
temporarily reduce the resource capacity of
our business and our professional service
s
fee earning capacity
, p
otentially resulting in
deferred or lost rev
enue.
•
Similarly
, customers and potential customers
may become temporarily resource-
constrained, limiting their c
apacity to
manage larg
e-scale IT project
s and run sale
s
processes, respe
ctively
.
•
T
ravel r
estrictions may be reintroduced,
through our o
wn polic
y
, customer polic
y and
gov
ernment policy
, and this may temporarily
reduce, or be perceived to r
educe, our ability
to operate for some of our g
eographically
diverse customer sites.
•
Remote w
orking relies on third party
cloud-based ser
vices such as vide
o calling
and chat software. Such services may
experience problems during peak remote
working times, impacting the efficiency of
our employ
ee
s.
•
W
e may experience a slowdo
wn in supply for
our IT equipment nee
ds.
•
The pandemic may ha
ve short or long- term
economic impact
s on our customers,
potentially leading to a reduction in our
addressable market. This is discusse
d in
moredetail in Risk A – S
ocio-e
conomic
andgeo-political risk.

W
e have continued to adapt our pandemic
response throughout 2021, and our business
hasbecome very accustomed
to operating
in
thisenvir
onment.
Our Incident
Response T
eam (IR
T
) manag
es and
coordinates our actions relating to the pandemic.
This team is chaired by our Chief P
eople Officer
,
and contains repr
esentatives from across our
business unit
s and geographies.
The IR
T monitors
exp
ert and
Government
advice
in each of our operating regions, and takes timely
action on that advice.
W
e made an e
arly mov
e to remote w
orking,
during Mar
ch
2020, as
par
t of
the activation
of
our pandemic plan, and remote w
orking has
remained in place ever since. W
e hav
e re-opened
offices when possible for those who are better
able to work in an office en
vironment, and hav
e
plans in place for transitioning to a Smart W
orking
policy once the pandemic die
s down. All of our
consultants and engine
ers use laptops, remote
connections and remote working tools. Our
systems which suppor
t remote working ha
ve
functioned well throughout the pandemic.
The IR
T and other internal teams communicate
regular guidance and advice to our emplo
yees,
including on their working location, working
envir
onment and wellbeing. W
e have an activ
e
programme of emplo
yee wellbeing ev
ent
s, and
we r
ecognise the impor
tance of suppor
ting and
engaging with our employees whilst they are
working r
emotely
.
W
e regularly liaise with our customer
organisations to ensure that we abide b
y their
policies –
for
example,
with r
espe
ct to
busine
ss
trav
el, and to ensure that they ar
e satisfied
withthe service the
y ar
e r
eceiving fr
om our
remote teams.
Our essential cus
tomer service
s – Alfa suppor
t,
Alfa Hosting and T
e
chnical Operations – are run
by globally-distributed teams, using cloud
infrastructure, pro
viding resilience against
business continuity risks.
The pro
viders of our key remot
e working tools
hav
e confirmed and demons
trated that they have
suitable business continuity and c
apacity planning
in place.
W
e ensure that our sourcing activities for essential
IT equipment remain ahead of supply chain
delays,
for
example
by
carefully managing
the
stock levels held with our IT supplier
, and actively
monitoring lead times.
48
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
Risk C – Risk to people, skills, location and working environment
Links to strategic priorities:
1
3

Movement:
Same level of risk
Impact:
Moderate
Probability:
Likely
How does it impact us?
Our business is heavily dependent on our pe
ople
bec
ause they are integr
al to the development and
delivery of Alfa Systems.
A failure to attract, train and retain high quality
individuals in our key operating regions ma
y limit
our ability to deliver implementations, maintain
product quality and leading-edge functionality
,
manage customer relations and deliv
er on our
strategic plan. This element of the risk has
increased in
2021 and
early 2022
(although this
has not
changed the
overall
Principal
Risk lev
el)
,
as we ar
e seeing higher competition in
recruitment markets.
As our
global reach
expands
and opportunities
arise in new regions, w
e may find it difficult to
pro
vide employees across geographically diverse
customer sites. This has the potential to have an
impact on our ability to deliver implementation
service
s to our customers.
The health, wellbeing and security of our
employ
ee
s is of utmost impor
tance to our
organisation. W
e work in geographically diverse
locations, and our employees may be at risk
fromexternal
factors,
such as
the
impact
s o
f the
COVID-19
pandemic, and
the safety
and
security
in each region. This impact is intertwined with
RiskB –
Pandemic outbr
eak in
Alfa and/
or
customer geographies.

W
e have implemented a Smar
t W
orking
approach
in or
der to
adapt to
the ‘new
normal’
which will
follow
the CO
VID-19 r
emote w
orking
model. T
eams de
cide their most effective
working model, and capture this in a team
charter
. Central to this approach is continuing
tobuild our
culture,
whilst retaining
our ex
cellent
delivery
, and enabling
employee fle
xibility
.
Our HR team are v
er
y proactiv
e in the area of
employ
ee wellbeing
, with an active pr
ogramme of
wellbeing events to suppor
t and engage with our
employ
ee
s while they are r
emote working.
Employ
ee eng
agement surveys are carried
outevery two
months, and
allow
areas
for
impro
vement to be identified and acted upon.
Our employ
ee sur
veys indicate that our proactive
response fr
om
leadership to
the
COVID-19
epidemic has been a signific
ant contributing
factor in employ
ee s
atisfaction.
W
e have continued to have high emplo
yee
retention figur
es in 2021.
W
e b
enchmark our remuneration lev
els
againstrelevant r
oles in
the
industr
y and
aim
tobe competitiv
e.
Recruitment of graduates and experienced
hires is continuing, using a diverse number of
sources, searching f
or candidates from varied
backgrounds and ethnicity and with varied
core skills.
Alfa Partnering provides a strong and gr
owing
network of pr
ofessional ser
vices par
tner
organisations, with
extensive
establishe
d
geographical presence. This pro
vides us with
resourcing
flexibilit
y
, and
wider
geographical
cov
erage, and is key to our strategy to decouple
our gro
wth from our own headcount.
Many
of
our teams
are globally-distributed,
allowing us to co
ver more r
egions and time zones
effectively
, and remote working is now common
and efficient practice. This is an effective
mitigation against the risk of not being able to
pro
vide employees in geographically diverse
customer sites.
W
e have an establishe
d presence in our key
strategic markets in
Europe
and the
USA.
W
e have actively r
ecruited on b
oth continents
in2021, and
this continues in
2022.
STRA
TEGIC REPOR
T
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
49
PRINCIP
ALRISKS
ANDUNCE
RT
AINTIESC
ONTINUED
Risk D – High customer concentration risk
Links to strategic priorities:

3


6
Movement:
Same level of risk
Impact:
Major
Probability:
Possible
How does it impact us?
•
Alfa specialise
s in pro
viding software and
service
s to the auto and equipment finance
sector
. At the core o
f our customer base are
large corporate pla
yers in this industr
y
.
•
W
e have significant customer concentration
risk due to the size and duration of the
software implementation projects for these
large corporates. If one, or more, of our k
ey
customers pauses, or terminate
s their
implementation activities, there is a risk of a
material impact on rev
enue targets.
•
Such a pause or termination is a possible
impact of other principal risks, such as Risk A
– Socio-economic and geo-political risk, or
Risk B – Pandemic outbr
eak in Alfa and/
or
customer geographies.


Reliance on our biggest customers has
considerably decreased in 2021, with our T
op 5
customers representing 37% of our r
evenues
in2021, compared with 48% in 2020 and 61%
in2019. W
e
had twenty
five
cus
tomers
contributing
revenues
of
more
than £1m
in
2021,up fr
om
twenty one
in 2020
and sixteen
in2019. This
reduce
s
this risk,
but not suf
ficiently
to mov
e it down a rating.
W
e have continued to progr
ess our s
trategy
forbuilding
a
diverse
customer base,
both
geographically and
by asset
type (i.e.
automotive,
equipment) but
also
by
type of
customer (i.
e. banking,
OEM or
indep
endent)
.
This has reduced our reliance on any one o
f these
areas, which ha
ve contrasting risk characteristics.
Initiatives such as Alfa Partnering, and Alfa
Startfor smaller
organis
ations
allow
us to
take
onmoreconcurr
ent implementations,
thus
reducing this risk.
Nevertheless, we
accept
that a
signific
ant f
ocus
on large corporates in our industr
y is inherent in
our strategy
, and so there is an element of this
risk which is accepted.
Risk E – IT security and cyber risks
Links to strategic priorities:
1

3
Movement:
Same level of risk
Impact:
Major
Probability:
Possible
How does it impact us?
•
Our systems, networks and pr
oduct
s may be
subject to cyb
er attacks, specifically
designed to disrupt our busine
ss, obtain our
intellectual propert
y or data, or harm our
reputation. S
uch a securit
y breach could
impinge upon our ability to operate our
business, including our ability to continue
pro
viding suppor
t to our customers.
•
Our Alfa
Hosting off
ering stores
our customers’
data on third party cloud hosting platforms.
A security breach in our Alfa Hosting offering
could result in compliance violations, identify
theft
, malware inf
ections, diminishe
d customer
trust and loss of revenue.
•
The global trend w
e saw in 2020 of high
number of incident
s of cyber attacks agains
t
IT companies has continued in 2021.


Our internal IT and cyber se
curity team monitors
key security and cyb
er risks, assesse
s and
monitors the control framew
ork of our key
technology suppliers and under
takes day-to-day
monitoring of IT security incident
s.
W
e implement continual improvements in our IT
security environment and maintain an annual
education and training programme for all staff
.
W
e have maintained our SOC2 T
ype 2, ISO27001
and ISO27018 compliance in 2021.
W
e have continuity plans for our Alfa Hosting
service
s, where we use thir
d part
y cloud hosting
suppliers,
including
transferring
our customers’
data to a similar suppor
ted environment should
the service
s be unavailable.
Our customers per
form thorough assessments
ofthe
security of
the Alfa
Hos
ting
platform
duringtheir
system selection
and implementation
process, measuring our IT securit
y and data
protection processes and controls against
theirown,
t
ypically stringent,
internal
policies.
These compliance checks sit along
side our
ownpolicies and
procedures, and
provide
independent assurance for our customers that
appropriate security controls ar
e in place.
50
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
Risk F – Business interruption or continuity
Links to strategic priorities:
1

3
Movement:
Same level of risk
Impact:
Major
Probability:
Unlikely
How does it impact us?
W
e are at risk of disruption to our day-to-da
y
operations if there is a disaster incident which
causes our internal IT sys
tems to fail or we do not
hav
e access to our office space.
A failure to be able to use key IT s
ystems or acce
ss
our infrastructure could lead to a failure to deliv
er
maintenance service
s to our customers and
therefor
e hav
e a negative reputational impact.
Note that the
risk that CO
VID-19 poses to us,
and our readiness for this, is given specific focus
as Risk B – Pandemic outbr
eak in Alfa and/
or
customer geographies.

W
e have an establishe
d, detailed and tes
ted
incident management procedure and
escalationproces
s.
W
e have a disaster recovery and business
continuity plan which is review
ed and
teste
dannually
.
Our SOC2 T
ype 2 reporting and complete failover
testing has identifie
d no significant required
remedial actions.
Where w
e provide Alfa Hosting services, using third
part
y cloud hosting suppliers, we hav
e a continuity
plan in
place to
transfer
our customers’ data
to
a
similar suppor
ted environment should the services
not be available
STRA
TEGIC REPOR
T
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
51
VIAB
ILIT
YST
A
TEMENT
Assessment of prospects
Alfa is one of the leading pro
viders of
software to the auto and equipment finance
industr
y and it is the Group
’
s clear focus to
increase its relatively small market shar
e in
this space by:
•
Gro
w differ
entiation of market leading
People, Pr
oduct, D
elivery;
•
F
ocus on cloud-hoste
d subscription sales
to our target mark
et
s;
•
Increase our capacity for de
veloping and
delivering Alfa S
ystems;
•
Simplifying our product, implementations
and processes to enable more concurrent
Alfa implementations, more efficiently
,
with a higher margin;
•
Develop partner ecosystem, to improv
e
sales opp
ortunitie
s and enable more
concurrent Alfa implementations; and
•
Impro
ve our of
fering for smaller auto and
equipment finance providers as a platf
orm
for inno
vation and to increase reach.
During the year ended 31 December 2021,
the Group gener
ated profit before tax of
£23.8 million and, excluding the pa
yment of
a £29.7m Special Dividend in the year
, was
cash-generative with net cash generated
from operating activities amounting to
£26.7 million.
T
aking into account the Group
’
s current
position and it
s principal risks and
uncertaintie
s as describe
d on pages 46 to 51
of this Annual Report
, the Directors hav
e
assesse
d the Group
’
s prospect
s and viability
.
Assessment period and process
The strategy and busine
ss model as set out on
pages 22
to 35
and 18
to 19
are centr
al toan
understanding of it
s prospect
s. These input
s
pro
vide a
framework f
or assessing the
Group
’
s
prospect
s and viability
.
The three-year timeframe f
or asses
sing both
prospect
s and viability is considered to be
appropriate because:
•
It reflects reasonable expectations in
terms of the reliability and accuracy of
operational for
ec
asting models; and
•
Projections looking out beyond thr
ee years
become significantly le
ss meaningful in the
context of the
fast-moving nature
of the
auto and equipment finance industr
y and
the software and technology landscap
e.
The Group
’
s prospect
s are assessed
primarily through its annual planning
process, led by the CEO with the CL
T
.
All relevant functions ar
e involv
ed, including
finance, sales, recruitment and resourcing,
and commercial.
The Board participates fully in the annual
process and has the task of considering
whether the plan appropriately takes into
account the external envir
onment, including
technological, social and macroeconomic
changes, as well as the risks and
uncertaintie
s of the business.
The output of the annual revie
w process
includes the annual financial budget and an
analysis of the risks which could prev
ent the
plan being delivered.
Detailed financial forecast
s which include
profit, cash flow and key financial ratios ha
ve
been prepared for the thr
ee-year period to
December 2024.
The first year of the financial for
ecas
ts forms
the Group
’
s 2022 budget and is subject to a
refor
ecast proce
ss each quar
ter
. The second
and third y
ears are prepar
ed in detail based
on the Group
’
s three year strategic planning
process and are flexed based on the actual
results in the firs
t year
.
Assessment of viability
The Board’
s asse
ssment of the Group
’
s
prospect
s, as describe
d on this page, has
been made with reference to curr
ent market
conditions and known risk factors, as
describe
d in principal risks and uncertaintie
s
on page 46.
The Board has consider
ed the Group
’
s
financial per
formance in 2021, particularly
inthe context of the COVID-19 pandemic,
and the risk factors noted above and
consider that the key risks which could ha
ve
a major impact the delivery of the Group
’s
financial objectives are as follo
ws:
In accordance with the UK
Corporate Governance Code, the
Board has assessed the prospects
and viability of Alfa.
52
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
•
Socio-economic or geopolitical risks
impacting conv
ersion of the sales pip
eline
and/
or spending by existing customers;
•
Loss of significant customers.
Conclusion
It was determined that none of the
individual risks would, in isolation,
compromise the Gr
oup
’
s viabilit
y
.
The Directors theref
ore r
eviewed the
outputs of the alternative for
ec
ast
s which
wer
e produced to model the effect on the
Group
’
s liquidity and solvency of sever
e but
plausible combinations of the principal risks
and uncertaintie
s affecting the business.
Scenario 2 r
eflect
s the combination of all
risk factors identified and is considered a
‘worst case scenario
’
. The Directors consider
that this scenario addresses the key risk
factors outlined above.
Based on the current commercial outlook,
Scenario 2 is consider
ed extremely sever
e
and has been prepared for the purpose of
creating outcomes that hav
e the ability to
threaten the viability of the Gr
oup.
In the case of such a scenario cr
ystallising
the Group w
ould be required to take some
mitigating actions largely r
elated to the level
of headcount in the business, the level of
partner us
age and discretionary spending.
In addition there ar
e many other diff
erent
levers that could be pulled to further
minimise the financial impact and maintain
liquidity to continue in operation.
Scenario 1:
This scenario assumes a 20% reduction
inongoing
ser
vices spend
by
existing
customers, no conversion of sales pipeline
and no gro
wth in par
tner utilis
ation during
the for
ecas
t period, resulting in a 40%
reduction from base case r
evenues by 2024.
Employ
ee retention rates reduced by 10%
resulting in a reduction in headcount of 26%
from base case by the end of 2024.
Direct cost
s relating to partner usage and
Cloud hosting ser
vices are significantly
reduced in line with customer activity
, and
the level of salary inflation, bonuse
s and
profit shar
e are also r
educed.
No other
mitig
ating
actions ar
e r
equired in
this scenario with other cost
s remaining in
line with the base case and continued
payment of dividends and shar
e-buy backs
as planned.
Scenario 2:
This scenario assumes a significant los
s of
customers in addition to no conversion o
f
the sales pip
eline. Includes two major
implementation projects pausing during
2022 and significant loss of customers
resulting
in termination
of existing
maintenance agreements and reduced
ongoing spending by r
emaining customers.
This scenario results in a 55% reduction
from base case re
venues by 2024. Employ
ee
retention declines by 20% in this scenario
but recruitment continues and no
redundancies would be required; this results
in a 46% reduction in headcount from base
cae by the end of 2024.
Direct cost
s are r
educed fur
ther than in
Scenario 1 and additional operating cost
reductions in line with reduced headcount.
Discretionary share buy-backs would be
paused in this scenario, how
ever no other
mitigating actions are requir
ed.
Rev
enue and profitability are clearly
affected in this alternative scenario
, howev
er
based on the Group
’s existing cash reserves,
combined with incremental cost reduction
measures, the business would retain
sufficient cash reserves to continue in
operation throughout the thr
ee-year
for
ecas
t period, with the lowest cash
balance modelled in this perio
d of £8.2m.
Whilst it is acknowledged that there is
continued uncer
tainty over futur
e economic
conditions, based on the asse
ssment of
prospect
s and viability
, the Directors
confirm that they hav
e a reasonable
expectation that the Group will be able to
continue in operation and meet it
s liabilities
as they fall due ov
er the three-year period
ending 31 December 2024.
STRA
TEGIC REPOR
T
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
53
S
1
72ST
A
TEMENT
Setting the right
tonefrom the top
The Board of
Directors of Alfa
hasalways taken decisions
for
thelong term, and
collectively
andindividually our aim
is always
to uphold the highest standards
ofconduct.
A broad rang
e of stakeholders are important
to the Group at local, regional and functional
levels. Day-t
o-day engagement with our key
stakeholders, and other local s
takeholder
groups, is conducted at the business level
and in a format best suited to the context
.
This may be locally
, regionally or functionally
,
by the Boar
d or senior management,
depending on the stakeholder
. Where the
Board does not engage directly with our
stakeholders, it is kept updated so Directors
maintain an effective understanding of what
matters to our stakeholders and can draw
on these perspe
ctives in Board decision-
making and strategy development. A
s the
Board r
eceives presentations and makes
decisions, we ensure that the long-term
impact on any of these groups is consider
ed.
W
e p
eriodically review which are our k
ey
stakeholder relationships and examine ho
w
we engage with them. W
e also consider ways
to ensure that w
e maintain open lines of
communication with those stakeholder
groups and whether ther
e are ways that the
Board’
s engagement can be improved to
help us operate more eff
ectively
.
Example of s172 considerations in a Board decision
During 2021 the Board was asked to consider and appr
ove taking out a ne
w lease for the
Michigan Office for
seven y
ears with a total
cost over
that time of
$2m. Through the
pandemic
we ha
ve demonstrated how
we can work
remotely and
so we needed to decidewhether we
neede
d an office at all, and if yes how man
y people should it b
e able to accommodate.
S172 consideration
Considerations for the Michigan Office
Like
lycon
se
qu
en
ceso
flon
g
term impact
Initially the office will be configured f
or 35 desks, but
this can be expanded to up to 50 de
sks, allowing f
or the
future gr
owth for the Company
.
Int
ere
s
t
s of t
he Com
pa
ny
’s
emp
loye
es
Benefit
s of an office included maintaining Alfa’
s culture,
facilitating training with a dedicate
d training space
andthe potential beneficial impact on employee
’
s
mental health.
Foster
business relationships
wi
th s
upp
li
er
s, cu
s
to
mer
and
others
Having a physical pr
esence makes it p
ossible to invite
customers and suppliers to get a feel for Alfa
’
s culture
and meet employees.
Imp
ac
t o
f the co
mp
any
’s
operations on the
community
and environment
W
e de
cided to stay within the Michigan area although
we did mov
e a short dis
tance awa
y from the existing
office to a slightly less expensive area. B
y having our own
office, we can chose our energy supplier and we ha
ve
selected a supplier that provides 100% renewable
energy and we hav
e set aside space in the kitchen
forr
ec
ycling.
Desirabilit
y of maintaining a
rep
ut
a
tio
n for h
ig
h s
ta
nd
ard
s
of business c
onduct
W
e b
elieve that a smart, well designe
d office will project
the standards that we as a compan
y wish to abide by
.
When the office opens we will sour
ce sustainable, ethical
local suppliers wherever w
e can.
Ne
ed to a
c
t fai
rl
y as b
et
we
en
me
mb
er
s of th
e com
pany
W
e b
elieve the cost of maintaining an offic
e in Michigan
is outweighed by the benefit
s of impro
ved retention and
impro
ved employee welfar
e.
54
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
Maintaining
high standards
of business
conduct
Likely
consequences
of long term
decisions
Interests
of Alfa
employees
Board information &
Stakeholder engagement
Board decision
Board strategic
discussion & Review
Review & Monitor
The need to
foster business
relationships with
suppliers,
customers and
others
Impact of Alfa
operations on the
community and
environment
The need to act
fairly as between
members of Alfa
Identify priorities
Establishing goals
and objectives
Finding r
esources
Allocating funds to
support the de
cision
to be made
Updates and
information on
outcomes of decisions
STRA
TEGIC REPOR
T
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
55
S
1
72ST
A
TEMENTCONTI
NUED
The Board is responsible for
leading stakeholder engagement,
ensuring that we fulfil our
obligations to those impacted
bythe business.
Engagement
with our
shareholders
and wider stakeholder groups
plays a
vital
role in
Alfa’s business.
Alfa’s key stakeholders are set
out below:
W
e b
elieve that considering our stakeholders in
key business decisions is not only the right thing
to do, but is fundamental to our ability to driv
e
value creation ov
er the longer term.
In this section we identify our five key
stakeholder groups and ha
ve pro
vided an
ov
er
view of their interests, their concerns and
the ways in which the Board act
ed with regard
to these groups when taking its key strategic
decisions throughout the year
, and what the
Board has learned from these interactions,
having
regar
d (among
other
matters) to
the
factors
set out
in
section 172(1)(a)
to (f)
oftheCompanies Act
2006.
The Boar
d
willsometimes engage
directly
with certain
stakeholders on particular is
sues, but the size
and distribution of our stakeholders and of Alfa
means that stakeholder engagement often
takes place at an operational level, within the
context o
f the
Board’
s agr
eed strategy
.
In this
section we show how the Boar
d engaged with
each of our key stakeholder gr
oups, summarise
the specific actions we took for stakeholder
groups
in
response to
the
COVID-19
pandemic
and set out some case studie
s which give mor
e
detail of how our stakeholders ar
e considered
when making specific de
cisions.
Customers
Our customers
are c
entral to
our
bu
si
ne
ssa
n
dwit
ho
utt
he
mwewo
ul
dno
t
exi
s
t
.Weaimtod
el
ive
rou
rle
ad
in
g-
ed
ge

technology making our
customers
future-
ready
.
How the Board engaged
The
Board
receives an
update on
existing and
potential customers throughout the year
.
As par
t of the two Boar
d strateg
y sessions
that wer
e held in the year
, the Board looked
at customer
needs and
the extension
of
Alfa
Systems into adjacent markets that could
pro
vide a
broader
offering
to our
exis
ting
and future customers.
Identifying our
customers’ needs, alongside
changing market dynamics and regulations,
allows us to identify oppor
tunities for
Company gr
owth and to focus our product
research and dev
elopment such that it
willproduce
innovative
and functional
solutions for the auto and equipment
finance industr
y
.
Outcome of engagement
Our customers have dir
ect channels to
engage with all levels of the or
ganisation,
including pro
viding feedback via user groups
in both
EMEA
and the
USA, chaired
by
a
customer representative. During the
pandemic, customers have r
ealized the
impor
tance of a truly digital envir
onment
and the
flexibility that
this pr
ovides f
or
remote w
orking. This has driven increased
enquiries for new Alfa S
ystems and also for
further development and hosting ser
vices
from
existing customers.
This
has led
to
discussions in the Board as to how use o
f
partners can help
pro
vide a
more flexible
quicker response to customer needs.
W
e continue
d to build on our long-term
relationships with our customers. This
is key to dev
eloping our leading-edge
technology and hos
ting ser
vices, increasing
customer loyalty
, which in turn enable
s us
to win new business.
Engagement in 2022
Looking ahead, the Board is keen to get
back to in-person engagement with
customers as pandemic considerations
allow
, including attendance at trade shows.
W
e will continue
to explor
e new
business
methods and how we can innovate new
technologies to improve the customer
journey and develop our ong
oing
relationships with customers.
Employees
Li
ste
ni
ngt
oou
rta
le
nt
ede
mp
loyee
s
,
being
flexible,supportive
andinclusiv
e,
ar
e our r
ou
te
s to gr
owi
ng a
nd re
t
ain
in
g
Al
fa’st
al
en
tpo
ol
,en
ab
li
ngu
stode
li
ve
r
against our strategic
priorities and
dev
elop our people.
How the Board engaged
Employ
ee eng
agement r
emains a key
priority f
or the
Board. V
icky
Edwards,
the
Chief People Officer
, attended Board
meetings twice in 2021 to provide an
update on
all HR
initiatives. Matthew
White,
the COO, updates the Board with a HR
dashboard, highlighting key statistics and
reviewing emplo
yee survey result
s at each
Board meeting.
In 2021 we continued to hold online events
for emplo
yees to provide f
ee
dback, hear
plans and make suggestions to the
Company
Leadership T
eam
(CL
T)
and
theBoard,
as
well
as an
in-depth ‘In
Conv
ersation With…
’ with
two members
ofthe
CL
T
. Some
in-person events w
ere
possible in loc
ations where r
estrictions
allowed. Outside the
se forums, f
eedback is
always encouraged and communication is
welcomed by all.
Outcome of engagement
W
e have a strong culture at Alfa and w
e are
proud that our people are highly engaged,
suppor
tive of each other and of the
organisation’
s aims.
W
e ha
ve
focused on
keeping colleagues conne
cted with events
and communications, enhanced some of
our family-friendly policies and rolled out
various wellbeing and career development
initiatives in response to need and the
world ar
ound us, balancing changing rules
and periods of working from home with
offices re-opening. W
e continued to
suppor
t all employ
ee
s through 2021, again
without furlough, and hav
e be
en able to
successfully on-board new employ
ee
s
remotely
, supp
orting them with funds for
their home set-up.
Engagement in 2022
W
e will maintain our commitment to
diversity and inclusion, keeping this front
ofmind when
making decisions. Internal
communications will be enhanced to
consistently align
with Alfa’
s strategy and
core themes, pro
viding clarity and focus.
W
e will continue to lis
ten, learn and
respond as we mov
e to Smart Working.
56
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
Communities
Wehaveares
po
n
si
bi
li
tyt
ous
eou
r
exp
e
r
ti
se a
nd r
es
ou
rce
s to a
dd va
l
ue to
the communities
in which
we oper
ate.
Our intention
is to
reduce our
impact
ont
hee
nvi
ron
me
n
twhe
reve
rpo
ss
ib
le
.

Weals
ohavea
ct
ivei
nt
er
na
lcom
mu
ni
ti
es

–em
pl
oyee
-l
e
dgro
up
sth
ata
res
afe

sp
ac
esfo
rco
ll
eag
ue
stop
ro
mo
tei
ss
ue
s,

su
pp
or
te
ac
hot
he
ran
dco
nt
rib
ut
eto

organisational chang
e.
How the Board engaged
The Board support
s employees and
endorses contributions to wider
communities with
time and
exper
tise.
F
undraising is matched by the company
,
paidvolunteering
days
are enc
ouraged and
internal communities are supporte
d and
given platf
orms and resources. Ev
ent
s and
initiatives run by our communities are
promoted company-wide and attended b
y
senior individuals.
Outcome of engagement
Envir
onmental, S
ocial &
Governance
(ESG)
is becoming a greater focus with the
establishment of a Steering Group in 2021.
Both the CFO and CPO sit on the Steering
Group and brief the CEO and wider CL
T
onthe status
and
progr
es
s
of pr
oject
s.
The CEO has ultimate r
esp
onsibility to the
Board f
or all ESG matters. Support has
been given to carbon-offsetting project
s
and inv
es
tment has been made into
external consultancy
for
ESG
measurement
and guidance. W
e continue to fundraise for
charities and suppor
t cause
s close to our
colleagues’ heart
s.
Engagement in 2022
Looking ahead, the Board is committed
to driving ESG initiatives further forward.
W
e will review goals and a f
ormal strateg
y
will be developed in 2022. Roles and
responsibilities for the ESG Steering
Group and ESG w
ork will be define
d
andcommunicated. Action will be taken
to accurately measure Alfa
’
s carbon
footprint and strengthen reporting in this
area. W
e will continue to suppor
t our
internal and external communities and
use our corporate voice r
esponsibly
wherev
er we can.
Partners
Building trusted partnerships through
on
goi
ngd
ia
lo
gu
ehe
lp
sust
obe
t
ter

understand the
needs of our
partners
an
d to deve
l
op a
nd i
mp
rove ou
r of
fe
ri
ng.
How the Board engaged
The Board r
eceives repor
ts on how we hav
e
worked with our partners throughout the
year
, with a focus on key commer
cial events,
which hav
e be
en mainly virtual event
s
dueto
strict worldwide
restrictions on
largegatherings.
The Board consider
ed how we can build
andimpro
ve
on our
exis
ting c
ommercial
partnerships when discus
sing strategic
oppor
tunities during the Board Strategy
sessions in June and Octob
er 2021.
Outcome of engagement
Executive
Directors ar
e in
volved
directly
with partner senior management and
pro
vide regular updates to the Board
onkey
par
tner dev
elopment
s and
issues.
The Board support
s the continuing
development of our partner training and
learning programme, which aims to deliv
er
a comprehensiv
e training schedule
including Alfa Systems training, our
delivery methodolog
y and simulation
based implementation workshops.
The Board support
s continued sc
aling
ofour existing
par
tnerships as
well
as
extending our
par
tner ecosystem to
strengthen our coverage in cor
e markets.
Engagement in 2022
W
e will continue our eng
agement with
ourcommercial
partners, ensuring
we
areadapting
to
their needs in
this
changingenvir
onment.
Our partnership programme is an impor
tant
part of
Alfa’
s long-term
gro
wth strategy
.
W
e aim to develop our par
tner ecosystem
to
increase
Alfa’
s operational
capacity and
sales opp
ortunitie
s.
Investors
TheB
oa
rdp
la
ce
sgr
eati
mp
or
ta
nceo
n

having
positive
relationships with
all
shareholders and
seeks to
ensure there
is
an appropria
te and
constructive dialo
gue
with in
vestors.
How the Board engaged
W
e conduct extensive engagement with
ourinstitutional investors thr
oughout
theyear
. Due to on-g
oing CO
VID-19
restrictions, the A
GM was held as
a hybrid
meeting in 2021 with shareholders invited
to attend remotely
. An invitation was
included in the Notice o
f Meeting for
shareholders to ask questions in advance
of the meeting.
On 14 October 2021, shareholders
wer
einvited to view an online inv
es
tor
presentation on Alfa’
s technolog
y
, hoste
d
bythe CEO and members of the senior
management team. The ev
ent gave an
in-depth view of the product, the
technology that underpins it and how
itisdeveloped to ensure it r
emains
theleading software for auto and
equipment finance.
The Board r
eceives regular updates on
inv
es
tor communication activity
, change
s
tothe
shareholder
register
, analysis
of
shareprice
performance and
par
ticular
inv
es
tment themes such as environmental,
social and corporate gov
ernance.
In addition, the feedback from shareholder
/
analyst interactions is shared with the Board
on a regular basis, via our corporate br
okers.
Outcome of engagement
The Board considers inf
ormation from
across the Company to help it understand
the impact of its de
cisions, and to consider
the interest
s and views of our key in
vestors.
Our Inv
es
tors understand the strateg
y that
underpins our future gr
owth plans and are
keen to engage with regard t
o financial and
operating per
formance of the business.
Engagement in 2022
W
e will continue to eng
age with our
shareholders thr
oughout 2022. W
e are
pro
visionally planning to hold another
inv
es
tor day in 2022. Due to the ongoing
uncertaint
y ar
ound CO
VID-19 r
es
trictions,
the Boar
d will
keep the 2022
A
GM
arrangements under review until there is
more clarity around the futur
e guidance to
the ongoing pandemic
STRA
TEGIC REPOR
T
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
57
ENVIRONMENT
AL
,SOCIALANDG
O
VERNANCE
United Nations Sustainable
Development Goals
The United Nations Sustainable
Development Goals are the blueprint to
achieve a better and mor
e sustainable future
for all. They addr
ess the global challenges
we face, including those r
elated to
inequality
, climate change, en
vironmental
degradation and poverty
.
W
e continue to align with the
UN Sustainable
Development Goals and focus particularly on
four which fit w
ell with ongoing projects and
plans for futur
e initiatives. These also tie in
nicely with the
Alfa V
alues.
From CSR to ESG:
CSR (
Corporate S
ocial Responsibility)
was the precursor to ESG
(Envir
onmental, Social
and Gov
ernance)
,
ensuring a
company’s
actions ha
ve a
positive impact on the envir
onment,
consumers, employ
ee
s, communities,
and the public sphere.
ESG builds on CSR, measuring
per
formance with metrics which can
beused by inv
estors, customers and
employ
ee
s to hav
e an understanding
ofthe compan
y
’
s ESG performance.
A
t Alfa we hav
e adopted the current
terminology of ESG, which is now in
common use by organisations. This year
we f
ormed an ESG Steering Group.
4.Q
ua
li
t
yEdu
ca
ti
on
5.G
en
de
rEqu
al
it
y
1
3.Cl
im
ateAc
t
io
n
1
7
.Pa
r
tn
er
sh
ip
sfort
heG
o
al
s
W
e’ve been doing a lot of good things in this
space for man
y years – it’
s a key reason one
of our formal Compan
y values is ‘Create a
Positiv
e Impact’
.
W
e know there are man
y business b
enefit
s to
driving ESG initiatives, but we do this because
it’
s important to us
and always
has been.
ESG is a core part of the Alfa culture.
We are Alfa










58
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
•
Our Communities
•
F
ocus on Learning
& Development
•
Cultur
e &
Engagement
•
Inclusion &
Diversity
•
Onboarding &
Induction
processes
•
L
aunch Learning
Management
System
•
T
alent Development
programme
•
Mentoring, Coaching
&Buddies programmes
•
Envir
onmental
Policy
•
Commitment
toeducate
stakeholders
•
Supplier appro
val
pro
ce
s
s
•
Partner with more
clients& suppliers
•
V
olunte
ering
scheme
•
Dedicated
volunteering
month
•
Charity partners
in each region
•
V
olunteering
uptake
•
Formal partnership with
Code Y
our Futur
e
•
Envir
onmental
Policy
•
Reaching carbon
positivity
•
W
orking with The
Climate Coalition
•
Partnership with
K
O Cy
cle,
recycling IT
hardwar
e
•
Measurement
•
Partnership with The
Climate Coalition
•
Calculate detailed
carbon footprint data
•
Formalise ESG S
trategy
…people
…community
…environment
…customers
and suppliers
Link to SDG
Strong
Improve
Next year
IMA
GE
S

T
O
COME
STRA
TEGIC REPOR
T
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
59
ENVIRONMENT
ALSOCIALANDGOVERNANCECONTINUED
Our people
Our focus on people throughout 2021
remained a high priority and will always
be
key
to
Alfa’s
commitment
to
provide
the best possible service to our clients.












Our Communities are:
•
Alfa for R
acial Equity
•
Envir
onmental Impact
•
Inclusion & Diversity
•
LGB
T
Q+
•
Par
ents’
•
Social Impact
•
W
omen’
s
All of these employee-led groups ar
e
safe spaces for those inv
olved to discuss
and promote issues, suppor
t each other
and work towar
ds impro
ving policies.
Their wonderful work includes cooker
y
classes, showcasing an array of cultural
delicacies, running work experience
programmes aimed at school leavers
from disadvantaged backgrounds,
promoting causes with blog post
s and
networks of Champions, inv
olvement in
external round tables and events, and a
huge variety of other activities.
60
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
Gender equality
We were pro
ud to h
ave b
een i
n a po
si
ti
on to
wel
com
e 69 new joi
ne
rs a
cros
s ou
r of
f
i
ces i
n
202
1
, of wh
ich 25 (36
%
) were w
ome
n.
In th
e UK al
on
e, we we
lco
me
d 5
1 new j
oin
er
s
in th
e yea
r
, o
f whi
ch 1
9 (3
7%
) wer
e wom
en,
whi
ch re
pre
se
nt
s a s
imi
lar l
eve
l to fem
al
e
hir
es in t
he U
K in 2020.
Looking at
graduate r
ecruitment, w
e hir
ed
20newhi
re
sint
otheU
Kgr
adu
at
esch
em
e,

ofwh
ich45%ofpo
si
ti
on
sweref
ill
edby

female candidates.
Throughout the
year
, we
sponsored
recru
itment eve
nt
s suc
h as Br
ight Network
’s
Women i
n T
ech a
nd Wom
en in STEM eve
nt
s
.
Through
our rec
ruitment partners we
proactively target
diverse grou
ps through
email mark
eting and campaigning. Of our
gr
adu
at
e app
li
ca
tio
ns i
n th
e UK
, arou
nd 30
%
of th
e ap
pl
ica
ti
on
s we rece
ive
d wer
e fro
m
fem
al
e can
di
da
tes
. Th
is r
ati
o is a g
en
era
l
representation o
f the g
ender mak
e-up in
the
ear
ly c
are
er
s STEM and t
ech
no
lo
g
y se
c
to
rs
as a w
hol
e.
We conti
nue t
o mai
nt
ai
n a s
tro
ng l
evel o
f
retention
* ac
ross the business.
As of
De
cemb
er 2021
, re
te
nti
on a
cros
s t
he
bu
sin
es
s w
as 87%.
Bre
ak
ing t
hi
s dow
n by ge
nd
er
, r
ete
nt
io
n of
fem
al
es s
to
od a
t 86% and re
ten
ti
on of m
al
es
s
too
d at 8
8%
. O
f leav
er
s acro
ss t
he b
us
in
es
s
in 202
1
, 34% were wo
me
n.
*
Ret
en
ti
on c
al
cul
at
io
n is a
s fo
ll
ows
: Sta
r
t
in
g
He
ad
cou
nt (fro
m 1
2 m
on
th
s ag
o) minu
s
Leav
er
s ove
r th
e 1
2-mo
nt
h pe
ri
od d
iv
i
de
d by
Starting Headc
ount (
from 1
2 months ago
).
“
Alfa is hiring people that are
really clever, deep thinkers and
problem-solvers. They’re looking
for what you’re going to bring
to the organisation and how
you’re going to help it grow and
get to the next level. Every single
person is an important part of
the process. Alfa is big enough to
have great software and clients,
but not so big that you’re lost.
People get heard.”
Caroline Chopra
“
What I love is the ability to
work on different things with
different people, and the
diversity and variety of people
is also very good. You get a lot
of varied perspectives, from a
lot of different people all around
the world, and from diverse
backgrounds. That never really
gets dry.”
Ricky Christian
“
At Alfa you get listened to. You
get nurtured. People here care
about you. Every company will
say the same stuff but at Alfa the
employees say it themselves –
and it’s real, you can feel it. It is
great to work here. The people,
the culture, how receptive we are
to change… Alfa is special.”
Jack Matthewson
STRA
TEGIC REPOR
T
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
61
ENVIRONMENT
ALSOCIALGOVERNANCEC
ONTINUED
OUR PE
OPLE C
O
NTINUE
D
Inclusion & diversity
Diverse cultural perspectives really do inspire
innovation and creativity at Alfa. W
e make
things better and solve problems tog
ether
, so
we
’
re
always
striving to
wards
being as
inclusive
as we can.
In addition to our vibrant Communities, we
adopt measures to impro
ve things for people
across the board. W
e were pr
oud to launch our
Inclusion & Diversity charter and our
T
ransitioning at W
ork polic
y this year
.
W
e developed and ran Inclusive Recruitment
training for ev
er
yone in
volved in our
recruitment process and there was a div
erse
series of talks, events and activitie
s run by our
Communities to promote and increase
awar
eness on key issue
s.
In c
elebration of
diversity
, we
’
re
launching
Cultural
Days
in 2022.
Flexible
Culture
Days will
allow our people to swap in and out of national
public holidays that might not match their
particular v
alues, beliefs or heritage.
Wellbeing
W
ellb
eing remains a r
eally impor
tant focus
forAlfa.
W
e hav
en
’t made
use of
the furlough
scheme throughout the pandemic, and this
year we continued to in
vest in wellbeing.
Along with enhanced paid carer leave
allowance, access to physical, mental and
financial advice and assistance via our
employ
ee b
enefit
s platform, and w
orking from
home contributions, we ha
ve gro
wn an internal
network
of
trained Mental
Health F
irs
t Aiders.
17 individuals in differ
ent regions ar
e now
available to colleagues for judgement-fr
ee
listening and suppor
t.
W
e launche
d Gympass and Pepp
y health
(inthe UK)
which pr
ovides support for
menopause, fertility and new parents.
2022 will
see us launching
Pepp
y
’
s new
Pepp
yMen service.
W
e will continue to actively suppor
t our
Communities internally
and
externally
,
challenge ourselves continually to be more
inclusive and use our corporate v
oice for good,
wherev
er we can.
“
2021
has been
another challenging
year for everyone, in many ways,
but we have managed to maintain
our inimitable
positivity and
Alfa’s
special culture remains strong.
Wehave lots
of ‘People
Projects’ on
the go, but I am particularly focused
on Culture
and Inclusion
– making
Alfa a place where people have a
voice, where
we are
all safeto
be
ourselves –
being an
employer that
attracts and retains great people.”
Vicky Edwards
Chief People Officer, Alfa Financial Software
Culture
The Culture at Alfa is something w
e
’
re
extremely pr
oud of
. It is one of our greatest
strengths and remains highly valued by
ourpeople.
This year we
’ve continued to keep our
culture aliv
e, despite the ongoing challenges
of working r
emotely much of the time.
Our Ev
ent
s team has maintained a
programme of liv
ely and well-attended
events, ranging from virtual Company
confer
ences through to real-w
orld social
events such as ice skating and boat trips.
Givea
ways across the y
ear helpe
d to spread
smiles and cement our culture, and included
branded beanie
s, hampers, and terrariums
for home w
orkspaces.
Adapting to restrictions, one of the UK
Company meetings included sending out
bamboo picnic utensils to everyone and
using the intranet to drop pins on maps so
that colleagues could meet up af
terwards in
smaller
, safer groups for the social element
of the day
.
Our US
colleague
s held
their confer
ence
in
person in
Miami
in No
vember
, and
Australia
and Ne
w Z
ealand
teams met
in
December
,
which wer
e impor
tant reminders of the
benefit
s of face-to-face meetings, alb
eit
follo
wing rules and s
afety prot
ocols as required.
W
e take feedback seriously at Alfa.
Our culture encourag
es positive
conv
ersation and transparency
. There’
s
always an opportunit
y to pro
vide ideas and
ask questions at all levels. W
e also seek
anonymous f
ee
dback with regular emplo
yee
surveys – and £5 for each completed sur
vey
also goes to charity
. This year we launched a
new platform to better measur
e employee
engagement, providing mor
e in-depth
insight to drive action.
In addition to our Pulse surveys, we ensur
e
we pr
ovide opportunitie
s for two-wa
y
communication with regular townhall Q
&As,
and this year launched a series of ‘In
Conv
ersation With...
’ where we deep dive
into a host of subject
s.
Alfa’
s frequent innovation days and annual
Hackathon events are a highlight for
colleagues to get creative, inspir
e change
and get to know each other better
.
T
eamwork and pr
oblem-solving are the
focus, and the 2021 Hackathon winning
team featur
ed new joiners from the latest
graduate scheme intake.
Next year we look f
or
ward to mor
e
oppor
tunities to get together r
egularly and
continue to develop eff
ective two-way
communication channels where ev
er
yone
feels inv
olved, informed and heard.
62
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
Statutory gender pay gap (GPG) reporting
Data from April 2021
Gender pay gap
Salary (£k)
2021
2020
Overall mean
38.2
39.1
Overall median
35.9
37.0
Mean – female
33.9
34.5
Mean – male
40.0
40.7
Gender pay gap
15.1%
15.3%
Median – female
32.5
32.7
Median – male
38.4
38.3
Gender pay gap
15.3%
14.7%
W
e have seen a slight improv
ement in the year f
or the mean gender pay gap, ho
wev
er a slight
deterioration in the median gender pay gap. Lik
e many in the industr
y our balance towar
ds men
ov
er women at all levels is r
eflective of the ov
erall industr
y
. Our female talent pipeline continues
to impro
ve with 36% of 2021 joiners being female, and 45% o
f UK graduates, however as these
are gener
ally into more junior roles in the organisation, it will take some time f
or this to be
reflected in
impro
ved g
ender pa
y gap
figures
(see page
61 for
further details)
.
Learning & development
This year we in
vested in a new Learning
Management
System
which has
b
een built
ov
er
many months and launches in 2022. This will
suppor
t individual learning and development in
a way nev
er seen be
for
e at Alfa.
A whole new suite of tools and resourc
es
suppor
ting all facets of life at Alfa has been
created as part of our new learning and
development of
fering.
New Company policies (such as Smart
W
orking) have been suppor
ted with a
programme of w
orkshops and training, for
managers of virtual teams, in a way that has
really helped smooth transitions.
Our key priorities for 2022 include:
•
Launch new Learning Management
Sys
t
e
m
•
F
ocus on our Management Development
resources and approaches
•
Mentoring, Coaching & Buddies – we
’ll
define and train people to develop this
valuable suppor
t tool
•
F
ollowing extensive e
valuation in 2021,
we
’ll be revamping our Onboarding &
Induction processes, making us more agile
and responsive
•
New T
alent Development programme
across the business will provide mor
e
oppor
tunities for progr
ession and
personal ownership of careers
Recruitment & retention
The pandemic fast-tracked Flexible W
orking
at Alfa. W
e to
ok this one step fur
ther in
2021 and introduced Smart Working acr
oss
the organisation. W
e know emplo
yees have
commitments and lives out
side work, which
is why ev
er
yone can now choose, as part of
their team, where they’r
e based on work
days. Be it in the office or at home, w
e keep
everyone connected and make sure we
’r
e all
pulling together
. This suppor
ts retention
and also widens the pool of talent we can
attract. Smar
t W
orking will come into full
operation in 2022, as local C
O
VID-19
restrictions allow in all our locations.
W
e have continued to benchmark our total
packages with strong pay and pr
omotions
activity and added new bene
fits, par
ticularly
in the W
ellb
eing space. The launch of our
new employ
ee ShareSav
e scheme enables
employ
ee
s to inv
es
t in Alfa and share in
oursuccess.
This year we ha
ve laid the f
oundations for a
variety of Employer Brand pr
oject
s which
kick off in 2022. W
e are using employ
ee
stories in various me
diums to give insight
into life at Alfa both internally and externally
– we hav
e fascinating, diverse and hugely
talented pe
ople at Alfa and we
’ll be shining a
spotlight on them in order to attract and
retain the best in the busines
s.
In 2022 we ar
e looking at creating remote
hubs to further widen our talent p
ool, we
will continue to enhance and promote our
packages to remain competitive and will
continue to inv
es
t in our social and wellbeing
calendar to suppor
t our culture.
STRA
TEGIC REPOR
T
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
63
ENVIRONMENT
ALSOCIALGOVERNANCEC
ONTINUED
OUR CU
ST
OMERS & S
UPPLIE
RS
Alfa’s
Environmental
Policy
includes
a commitment to engage and educate
employees and other stakeholders on
theimportance
of
sustainability.
Our customers
& suppliers
User groups
W
e are committed to adopting and applying
the latest te
chnology
, including server
virtualis
ation technolog
y
, to ensure that our
customers’ energy consumption
is kept
to
aminimum.
Our product, Alfa Systems, pro
vides
functionality to enable our customers to charge
their customers on a usage basis, therefor
e
making utilisation of asset
s more efficient.
In owned data centres, our pro
vider has
noted that 94% of our energy utilisation
wasfrom r
enewable energy sources.
Alfa also uses data centres operated by a
third party
, A
WS Cloud Computing.
A
WS iscommitted to powering operations
with 100% renewable ener
gy by 2025.
Partnering in ESG
Next year w
e intend to
par
tner withmore
clients and suppliers on E
SG initiatives.
W
e will also review our supplier appro
val
process and see how we can embed
more ESG factors into selection.
64
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
Our
community
We have a passion for using our expertise and
resources to add value to the communities in
which we work.
Volunteering
Alfa offers thr
ee days’ paid volunteering
per year and we ha
ve a framew
ork in
place to help employ
ee
s choose a
suitable volunteering opportunit
y
.
This isa really popular scheme at Alfa
and one our people are rightly proud of
.
Ev
er
yone is encourag
ed to take an
activepart in the schemes offered and
volunteers range in seniority from junior
consultant all the way to CEO
. It
’
s
mutually beneficial and we have
developed strong partnerships over
theyears.
In June 2021 we had our first dedicate
d
V
olunteering Month.
Fundraising
W
e have charity par
tners in each of
ourregions. In 2021 they w
ere:
The
Climate
Coalition
in EMEA,
Feeding
America
in the US
A and
Sh
are t
he
Dignity
andKidsCan
in Asia Pacific.
These charities are nominated and
voted for b
y employees. The company
also matches any funds raised for
these brilliant cause
s.
Werais
edove
r£26
,0
0
0foro
ur
charity partners and
others
du
rin
g20
21
.
Employ
ee
s as individuals also hold
events and raise funds for many other
local and national charitie
s throughout
the year
.
A number of Alfa employees hav
e
volunteered with Code Y
our Futur
e – which
utilises our spe
cific technical skills and
abilities as an organisation.
Code Y
our Futur
e is a charity which teache
s
code to refugees, asylum seekers and
otherwise dis
advantaged people. This helps
increase div
ersity in software development
as well as impr
oving confidence and
employment pr
ospect
s. We
’r
e exploring a
formal partnership with Code Y
our Future
in2022.
Something else we support each year is ‘The
W
onder
ful Xmas Post’
, a campaign to send
crafty and uplifting Chris
tmas cards to
isolated older pe
ople in care homes across
the world. Matched recipients are always
delighted to receive cards fr
om us and we
lov
e to send them!
Our plans for next year include w
orking
toincrease the uptake o
f volunteering
allowances across Alfa.
STRA
TEGIC REPOR
T
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
65
ENVIRONMENT
ALSOCIALGOVERNANCEC
ONTINUED
ENV
I
RO
N
MEN
T
Environmental impact
Our Envir
onmental Impact teams in all regions
help us to drive change and r
educe our impact
on the planet in lots of ways.
Our Cy
cle to W
ork scheme introduced in
2020 has seen good uptake and this will
undoubtedly increase as trav
el and office
timeresumes.
In our energy-efficient offices we ensure
sustainable, ethical and environmentally
conscious purchasing f
or café products, event
givea
ways and other items.
W
e also rec
ycle waste and coff
ee grounds,
compost food waste, have eliminated
single-use plastics and use e
co-friendly
cleaning products.
Alfa sour
ces electricity in the
UK fr
om
renewable ener
gy provider
, Opus.
Alfa’
s Data and Equipment Disposal Policy
cov
ers off securely and sustainably
disposing of IT equipment
, including
laptops. W
e also rec
ycle technical hardwar
e
and donate to schools.
The Climate
Coalition is
the UK’
s larg
es
t
group of people dedicate
d to action against
climate change; a gr
oup of over 120
organisations – including
the National
T
rus
t,
W
omen’
s Institute, Oxfam, and
RSPB
– that
is
22 million voices strong. The Climate
Coalition
’
s aim
is to
bring people fr
om all
walks
of life and or
ganisations with different goals
together to collectively call f
or climate action
and w
e’v
e partnered with
them.
W
e have been raising money for The Climate
Coalition and,
in r
eturn, they’ve joined us
to
deliver a variety of social talks on the theme of
Climate Action.
In No
vember they
deliver
ed a
talk on
‘
What Happens
After COP26?’
.
One of the main aims of our Environmental
Policy is to carry out our business in a
manner that minimises our impact on
theenvironment.
Our
environment
66
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
Carbon emissions and energy consumption reporting
2021
2020***
Global
(inc.UK)
UK
Global
(inc. UK)
UK
T
otal electricit
y use (kWh)
112,333
93,954
114,639
102,748
T
otal gas use (kWh)
97
–
–
–
T
otal transpor
t fuel (kWh)
131,651
130,993
111,600
109,370
T
otal energy from other sources (heating & cooling) (kWh)
53,079
53,079
41,166
41,166
T
otalenergyuse(allsources)(kWh)
297,160
278,026
267,405
253,284
T
otal carb
on emissions (electricity) (tCO
2
e)
33
28
33
30
T
otal carb
on emissions (gas) (tCO
2
e)
0
0
0
0
T
otal carb
on emissions (transpor
t fuel) (tCO
2
e)
49
49
39
38
T
otal carbon emissions (
other sour
ces – heating
& cooling, flights and taxis)
(tCO
2
e)
60
14
140
46
T
otalcarbonemissions(tCO
2
e)
142
91
212
114
Scope 1 (tCO
2
e) – gas, heating and company cars
49
*
43
*
Scope 2 (tCO
2
e) – electricity and ele
ctric cars
44
*
38
*
Scope 3 (tCO
2
e) – flights, taxis, water taxis
49
*
131
*
T
otalcarbonemissions(tCO
2
e)
142
*
212
*
T
otal revenue (£m)
83.2
–
78.9
–
Carbonintensityratio(tCO
2
e per £million)
1.7
*
2.7
*
T
otalcarbonoffsetspurchasedfromEc
ologi(tCO
2
e)**
1,231
–
–
–
*
This information has been calculated at a global level only
.
**
W
e compensate for unavoidable emissions b
y purchasing certified carb
on emissions from Ecolo
gi.
***
2020 data has be
en updated as par
t of improv
ements to c
alculation methodology
.
Carbon emissions
One of our Company objectives for 2021 was
to
be
come
a ‘
climate positive
’
workfor
ce.
This year we ha
ve been looking at options for
our interim carbon offsetting solution in order
to reach this targ
et and have w
orked with
Ecologi f
or credible and impactful offsetting
projects to supp
ort
. Carbon offsetting is only
acredible
tool when
used alongside
emissions
reduction strategies, which we are beginning
toimplement
where
possible.
The ne
xt goal
is to
work
with a
sustainability
consultancy to help us calculate more detailed
carbon footprint data and develop strategies
to reduce it, before ultimately offsetting what
cannot be avoided.
Alfa’
s London
office
has achiev
ed an
‘
excellent’
rating
under the
BREEAM
In-Use certification
for 2021/22.
“
Our global Environmental
Impact team is really looking
forward to 2022; we have
lots of ideas and motivation
to improve Alfa’s carbon
impact and help to develop a
formal emissions reduction
strategy. We’ve had so
much internal support
from colleagues andsenior
management and feel we can
break new ground for Alfa’s
ESGgoals.”
Hannah Coral
STRA
TEGIC REPOR
T
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
67
ENVIRONMENT
ALSOCIALGOVERNANCEC
ONTINUED
ENV
I
RO
N
MEN
T
Carbon & energy efficiency actions
W
e are committed to responsible c
arbon
management and will practise energy
efficiency throughout our organisation,
wherev
er it’s c
ost effective. W
e recognise
that climate change is one of the most
serious envir
onmental challenges currently
threatening the global community and we
understand we hav
e a role to play in
reducing greenhouse gas emissions. W
e hav
e
implemented the policie
s below for the
purpose of increasing the business’
s energy
efficiency in the relevant financial year:
•
Mov
ed to remote home working
duetoCOVID-19. Will r
eview when
situation permit
s.
•
Implemented and encouraged use of
video conferencing.
•
T
ravel r
educed due to C
O
VID-19.
In 2021, we became carb
on positive as our
offsets purchased from Ecologi e
xceed our
emissions (i.e. Scope 1 and S
cope 2
emissions, as well as those Scope 3
emissions that have been disclosed)
.
Methodology used in the calculation
of disclosures
ESOS methodology (as specified in
Complying with the Energy Savings
Oppor
tunity Scheme version 6, published
bythe En
vironment Agency
, 21.01.21)
usedin conjunction with Gov
ernment GHG
reporting conversion factors. The calculations
hav
e be
en appro
ved by a P
AS51215
compliant body
.
F
or carbon only related matters, the SECR
methodology as sp
ecified in ‘Environmental
reporting guideline
s: including Str
eamlined
Energy and Carbon Repor
ting and
greenhouse gas reporting
’ was used in
conjunction with Government GHG
reporting conversion factors.
Estimates made with respe
ct to the
dateinclude:
•
Company car annual mileage pr
ovided
and appor
tioned into months;
•
Emissions in line with a medium-sized
engine assumed for one car; and
•
Assumed all taxi rides are 5 miles.
Note: Emissions data includes W
T
T
(w
ell-to-tank) and T
&D (transmission and
distribution)
. kWh data excludes flights,
taxis and water taxis.
68
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
Taskforce on Climate-Related Financial Disclosures:
Are
a
Recommended disclosure
Alfa Disclosure
Governanc
e
Describe the Board’
s o
versight o
fclimate-
related risks and opportunitie
s
Overall responsibility for all ESG matters sits with the Group CEO and
progr
ess is repor
ted to the Board. Reporting and risk management issues
are discussed and debated as par
t of the Audit & Risk Committee.
Describe management’
s r
ole in assessing
and managing climate-related risks and
oppor
tunities.
As par
t of the twice a year detailed risk management pr
oces
s the Company
Leadership T
eam reviews and discusses the late
st view of all oppor
tunities
and risks including climate-related and in particular corporate level risks are
discussed by
the Executive
Board members.
Strategy
Describe the climate-related risks and
oppor
tunities the organization has
identified over the short, me
dium,
andlong
term.
In the short-term we see little impact of climate-related risks and
oppor
tunities on our busines
s, howe
ver we ar
e acutely awar
e of our
responsibility to contribute towards the global eff
ort
s to mitigate agains
t
climate change, and ther
efore w
e are actively looking to r
educe our carb
on
footprint, including reducing travel t
o client sites, asse
ssing renewable
energy options for new offices, and considering tra
vel distances for the
location of conferences. In the medium to longer
-term we see more
positives for Alfa than negatives. A mov
e towar
ds lower carbon new
technologies is likely to result in increasing requirements for asset backed
finance solutions, which will drive gr
owth in our underlying market
s. In
addition increasing r
epor
ting requirements through the supply chain will
require agile systems that can respond to the new reporting requirements
which will
increasingly demonstrate
the
greater
flexibility of
Alfa Systems
ov
er competitor product
s.
Describe the impact of climate-related
risks and oppor
tunities on the
organization
’
s
businesse
s, strategy
,
andfinancial planning.
T
o enable our systems to respond to increasing demands for mobile
solutions and emissions reporting
, it may r
equire more inv
estment in
theproduct
to mak
e the
mos
t o
f these
oppor
tunities. The
increased
functionality howev
er is likely to lead to increased licence r
evenues as
customers want to access the new module
s providing this.
Describe the r
esilience of
the organization
’
s
strategy
, taking into consideration differ
ent
climate-related scenarios, including a 2°C
orlower
scenario.
As we do not believe ther
e are significant risks to our organisation, other
than the
overall
risk to
the world
economy
, w
e believ
e our
exis
ting
strateg
y
has a high degree of resilience to diff
erent climate-r
elated scenarios.
Risk
management
Describe the organization
’
s processes
foridentifying and
assessing climate-
related risks.
W
e have a comprehensiv
e process of risk management which includes a
detailed asse
ssment of risks twice a year
. Included within this process is
explicit
consideration of
climate-related risks.
Describe the organisation
’
s pr
ocesse
s
formanaging
climate-related risks.
In the short-term we do not see signific
ant climate-related risks for the
organisation and as a consequence we keep the risks under review
, but are
not actively managing an
y at this point in time.
Describe how processe
s for identifying,
assessing
, and managing climate-related
risks ar
e integrated into
the or
ganization’
s
ov
erall risk management.
It is an integral part of our overall risk management, and in particular it is
discussed when considering the corporate level risks.
Metrics
andtargets
Disclose the metrics used by the
organization to assess climate-related
risks and oppor
tunities in line with it
s
strategy and risk management process.
W
e do not currently use any metrics for assessing climate-related risks
other than being awar
e of the growth projections in the underlying auto
and equipment finance market. W
e are how
ever intending during 2022 to
set targets for reduction in emissions to ensure that w
e play our part in the
ov
erall journey to a net zero econom
y
. See page 67 for further details.
Disclose Scope 1, Scope 2, and, if
appropriate, S
cope 3 greenhouse gas
(GHG)
emissions, and
the r
elated risks.
See page 67.
Describe the target
s used by the
organisation to manage climate-related
risks and oppor
tunities and per
formance
against targets.
W
e have no specific targets for the management of the risks and
oppor
tunities be
cause as noted above we do not see any short-term risks
or oppor
tunities. If and when any risks and oppor
tunities be
come more
apparent w
e will seek to se
e what targets we could set.
The Strategic Report and the F
inancial Review ar
e approv
ed by the Board of Dir
ectors and signed on it
s behalf by:
Andrew Denton
Chief Executive Officer
STRA
TEGIC REPOR
T
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
69
Corporate
governance
Section 5:
Remuneration
See
page
P
Linking remuneration with
purpose and strateg
y
101 to
102
Q
Remuneration P
olicyreview
104
R
Performance
outcomes
in2021 S
trategic tar
gets
114

ReadmoreintheR
emuneration
CommitteeReportonpages
100to121
Section 4:
Audit, risk and
internal controls
See
page
M

Financial
repor
ting,external
auditor & internal audit
98to99
N
Review o
f 2021
AnnualReport
96
O
Internal financial controls
Risk management
98

ReadmoreintheA
udit&Risk
CommitteeReportonpages94to99
Section 1:


purpose
See
page
A
Effective Board
77
B
Purpose,
s
trategy
,
valuesand culture
77
C
Governance framew
ork
77
D
Stak
eholder engagement
77
E
W
orkforce
policies
andpractices
79
Section 2:
Division of
responsibilities
See
page
F
Board r
oles
83
G
Independence
89
H
External commitments
andconflicts of
interest
84
I
Board efficiency: key
activities of the Board
85
Section 3:
Composition,
succession and
evaluation
See
page
J
Appointments totheBoard
86
K
Board composition
86
L
Board evaluation
86

ReadmoreintheNomination
CommitteeReportonpages90to93
70
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
Dear shareholders,
On behalf of the Board, I am pleased to present
the Gr
oup
’s
corp
orate
gov
ernance r
epor
t
for
the financial year ended 31 December 2021.
This report outline
s how the Boar
d continues
to make sure that r
obust and appropriate
gov
ernance procedures are in place to ensur
e
effective and prudent manag
ement of the
Company that will deliv
er long-term
sustainable success for the benefit of our
shareholders and br
oader stakeholders.
In this report
, we set out our appr
oach to
corporate gov
ernance and pro
vide detail on
the role of the Boar
d of Directors, f
ollowed by
more detailed sections on the work of each of
the three key Boar
d Committee
s: Audit & Risk
Committee, Nomination
Committee and
Remuneration Committee. T
ogether
, these
give a clear insight into how w
e manage
corporate gov
ernance principles and processe
s
within the Group
.
Board focus areas in 2021
•
Special dividend of 10 pence per
ordinary share.
•
P
erformance of the business,
financially and operationally
.
•
2022 budget and long-term
strategicplan.
•
Sales pipeline and busines
s
development.
The UK Corporate
Governance Code 2018: Our
compliance
Effective corporate g
overnance pr
ovides
an essential foundation for the long-term
sustainable success of the Company
.
This report set
s out the key elements of
Alfa’
s corporate g
overnance
arrangements,
including how we ha
ve sought to apply the
principles and pr
ovisions
of the
2018 UK
Corporate Gov
ernance Code (the
‘2018
Code’)
during the
year
.
A copy of the 2018 Code, issued by the
F
inancial Reporting Council c
an be found
at www
.frc.org.uk. This g
overnance
statement, including the Nomination
Committee, Audit & Risk Committee,
and Remuneration Committee Report
s,
explains how w
e have applied the
principles and complied with the
pro
visions of the 2018 Code.
Non-compliance with

The Group has complied with the Code
pro
visions during the financial year with
the exception of Code pr
ovision 9:
TheChairman of the Board was not
independent on appointment as he
previously held the position of Chief
Executive Officer and is the contr
olling
shareholder of the Compan
y
. On listing
,
the Board unanimously supported, and
continues to suppor
t, the app
ointment
of the Chairman to retain his skills and
experience, and ensure continuity of
service for Alfa’
s cus
tomers and
commercial partners.
“
Following the Director appointments made in
2020, this has been the first full year with the
new Board and I can say it has been a pleasure
to be the Chairman of such a progressive and
knowledgeable team that continues to make
excellent progress in developing the business.”
Andrew Page
Executive Chairman
CHAIR
MAN
’
S

INTRODU
CTIO
N
CORPORA
TE GOVERNANCE
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
71
Continued strong performance
during 2021
The uphea
val o
f the
global
COVID-19
pandemic continued to provide an
unprecedented challenge to all companies.
The gov
ernance envir
onment that Alfa had in
place
when the
COVID-19
crisis unfolded
in
early 2020, suppor
ted high-quality de
cision
making which ensured that we maintained the
strong business momentum we had prior to the
pandemic, whilst at the same time, looking
after the interest
s of all our stakeholders,
particularly our employees. Further detail of
how the Company continues to r
espond to
these unprecedente
d times is set out
throughout this r
epor
t.
During 2021, the Company kept in line with
for
ecas
t, as highlighte
d in the scheduled
market announcements, throughout the
year
.As a
result
of
Alfa’
s continued str
ong
per
formance despite the pandemic, we w
ere
delighted to announce a special dividend in the
amount of 10 pence per share, which was paid
to
shareholders
on 5
November 2021.
Additionally and as a result of the continued
strong performance, CEO Andrew Denton
andI ha
ve
elected to
for
ego
any
future
remuneration, subject to minimum statutor
y
requirements. W
e feel that as significant
shareholders of the Compan
y
, we wanted to
fully align our future r
emuneration with those
of other shareholders thr
ough future dividend
payments and the growth in the share price.
Since IPO in 2017 Andrew Denton has elected
each year to f
orego participating in Company
L
TIP and bonus scheme
s for which he would be
ordinarily be included in, for the same reason.
Environment, Social & Governance
I’
m pleased
to r
eport that during
the year
we
hav
e focused on enhancing the ESG actions
that we ar
e taking to enable improv
ement in
our ESG reporting and ratings with a number
ofagencies.
Details of our ESG commitments and work
during 2021 can be found on pages 58 to 69.
Our approach to corporate
governance
Corporate gov
ernance at Alfa takes a
thoughtful and considered approach in
volving
the Board as w
ell as other key personnel to
identify and apply the principles of good
corporate gov
ernance.
This means balancing the interest
s of the
Company’s
many stakeholders, such
as
shareholders, emplo
yees, cus
tomers,
suppliers, partners and the communitie
s
wework
in. Str
ong gov
ernance helps to
cultivate a company cultur
e of integrity and
stakeholder alignment, along
side corporate
structures that improv
e leadership,
accountability and effectiveness.
This brings a sharper focus to strategic
objectives and translates into better de
cision
making which, in turn, drives competitive
advantage and gro
wth and result
s in stronger
corporate per
formance and a sustainable
business model. The Board has maintained a
strong
focus
during the
year
on the Compan
y
’
s
strategic goals whilst ensuring that the
Company has the right people in place to
deliver on its strateg
y
. During this perio
d of
continued growth, it is vital to ensure that the
Company’s
governance
processes are
robust in
order to ensur
e that the business is protected
and that
all stakeholders’
interest
s ar
e tak
en
into account.
Culture, values and people
Alfa has fostered a strong Compan
y culture
which is underpinned by a set of values
whichensure that
everyone stays f
ocused
ondelivering our
strateg
y whilst staying true
towho we
are. The
Board r
ecognises the
impor
tance of setting this culture and
ensuring that the neces
sar
y resources are
inplace to allo
w our people to deliv
er the
Company’s
strateg
y
.
The Board is kept up to dat
e on employee
engagement through the inclusion and
discussion of the Pulse survey results which are
collected on a bi-monthly basis and presente
d
to the Board b
y the Chief Operating Officer
.
A focus of the Compan
y Leadership T
eam
during the year has been to continue to
ensurethe
ov
erall w
elfare
of
our emplo
yees
throughout
the
COVID-19
pandemic.
The Board is satisfied that the approach
towar
ds engagement with colleagues
describe
d on pages 77 to 79 is robust.
72
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
CHAIR
MAN
’
S
INTRODU
CTIO
NCONTIN
UED
External Board evaluation
F
ollowing the Director appointments made in
2020, this has been the firs
t full year with the
new Board and I can say that it has been a
pleasure to be the Chairman of such a
progr
essive and knowledgeable team that
continues to
make
excellent
progress in
developing the business.
An e
xternal Boar
d evaluation
process was
conducted by Board Eff
ectiveness and
Governance
Ser
vices (BE-GS)
during the
summer
/
autumn f
ollowing
the 2021
AGM.
The evaluation acknowledged the great
progr
ess that has be
en made since the
appointment
s in early 2020 with
recommendations made by BE-GS made upon
solid bes
t practice. Details of the evaluation
can be found on pages 86 to 88.
F
inally
, I would like to take this opportunity
tothank all
of our
stakeholders f
or
theircontinuing support in these
unprecedented time
s.
Andrew Page
Chairman of the Board and Founder
CORPORA
TE GOVERNANCE
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
73
CHAIR
MAN
’
S
INTRODU
CTIO
NCONTIN
UED
Andrew Page
Executive Chairman


Andrew is one of the f
ounding
Directors of Alfa. Andre
w bec
ame
the Chief
Executive
Officer in
2010
and the
Executive Chairman
in
September 2016. Andrew pr
ovides
commercial o
versight and with the
Board sets the strategic direction
and goals of the Company
.
Key strengths
Andrew has considerable senior
management
experience and
a
deep understanding of the auto
and equipment finance industr
y
.
Other appointments
Director of CHP Softwar
e and
Consulting Ltd
Andrew Denton
Chief Executive Officer


Andrew joined Alfa in 1995 and
became a memb
er of the Board of
Directors in 2003 as Sales and
Marketing
Director
. He
was made
Chief Operating Officer in 2010
and became CEO in September
2016. Andrew is also Dir
ector
andjoint f
ounder o
f the
Leasing
Foundation, an or
ganisation that
suppor
ts the leasing and auto and
equipment finance industr
y
through charitable activities,
research and dev
elopment.
Key strengths
Computer scientist by training,
considerable senior management
experience and
significant
experience in
the
auto and
equipment finance industr
y
.
Other appointments
Director of CHP Softwar
e and
Consulting Ltd
Duncan Magrath
Chief Financial Officer


Duncan star
ted his career at Price
W
aterhouse, and qualified as a
Chartered Accountant in 1989.
He joined Ocean Group in 1992,
and spent
13 y
ears in
the
UK and
USA
in various
finance
roles as
the
group
transformed
into Ex
el
Logistics. He joine
d Balfour Beatty
,
the infrastructure company
, in 2006
and was Group CFO fr
om 2008 to
2015. In
2016 he joined
Rubix,
an
Industrial Part
s Distributor
, as
Group CFO and was in that r
ole
through to 2019.
Key strengths
Extensive
experience in
senior
financial positions
both in
the UK
and internationally
, including a de
ep
understanding of investor relations
and financial strategy
Other appointments
n
/a
Matthew White
Chief Operating Officer


Matthew joined Alfa as a
graduate
in 1999, star
ting in a software
development r
ole. In his 20-year
career delivering software f
or the
auto and equipment finance
industr
y
, Matthew hasdirect
experience of ev
ery
thing inv
olved
in systems implementation, from
configuration and testing suppor
t
to project manag
ement fora
number of UK and
European
projects. From 2010 to 2016,
Matthew’s r
ole grew
to include
responsibility for most of the
operations of the Company
,
before he
led Alfa’
s IPO in 2017.
As Chief Operating Officer
, a role
which he assumed in February
2019, Matthew is
accountable
forthe international
operations
ofthe business, including Alfa’
s
technology platform and
projectdelivery
.
Key strengths
Considerable senior management
experience in
software
development and all aspects
ofsystems implementation
anddelivery
Other appointments
n
/a
N
74
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
BO
ARDOFDI
RECT
ORS
Steve Breach
Independent
Non-Executive Director


Steve is a member of the Institute
of Chartered Accountant
s in
England and W
ales, having qualified
with EY in 1993 where he f
ocused
on providing c
orporate finance
advice to technology busine
sses
inthe UK
and internationally
.
Steve
has 17 y
ears’ experience
as
Chief Financial Officer of a number
of businesses. Between 2010 and
2016, Steve was CF
O of T
ribal
Group PLC, a leading international
provider o
f student management
software to the education market.
Steve has subsequently pursued a
por
tfolio career
, acting as adviser to
a number of privately owned
companies.
Key strengths
Steve has held a number of CF
O
roles and
has extensive
experience
in corporate finance.
Other appointments
Advisor to a number of private
companies
Adrian Chamberlain
Independent
Non-Executive Director


Adrian is
a
Non-Executive
Director
of
Cambridge Univ
ersity Health
T
rust, one of
the country
’s
largest
NHS T
rust
s, where
he chairs the
Performance Committee.
During 2021, Adrian was appointed
as the Senior Independent Director
of
the T
rus
t. He
is also
Executive
Chairman of eConsult L
td, a leading
cloud-based medic
al triage
company
. He previously has held
senior ex
ecutive positions
in
a
number of private and public
hi-tech and telecommunications
companies including Chief
Executive
Officer o
f Messagelabs
and Achilles Ltd, a member of the
Board of Cable & Wireless and
Bovis Lend Lease, and a member
ofthe
Operations Board
at
Symantec.
He holds
an
MA in
Histor
y from T
rinity College,
Cambridge and
an MBA
from
the
London Business School.
Key strengths
Extensive
experience
internationally in both the private
and public sectors, par
ticularly in
strategy formulation
and ex
ecution,
technology and Software as
aService.
Other appointments
Chairman of eConsult Health Ltd
Senior Independent Director of
Cambridge Univ
ersity Health
T
rust
and Chair of the Performance
Committee
Charlotte de Metz
Independent
Non-Executive Director


Currently Chief P
eople Officer at
Keyloop which f
ocuse
s on software
for the automotiv
e industr
y where
she joined in early 2021, after
serving as Chie
f People Officer
atSynamedia
where
she led
a
large-scale global transf
ormation.
Prior to that, Charlotte was Global
Head of Human Resources and
more
recently
as Executiv
e V
ice
President at F
inastra, a global
fintech where she was responsible
for
Executive
T
alent, corporate
social responsibility
, culture and
values, and inclusion and diversity
.
Prior to joining F
inastra in 2012 as
Global Head of Human Resources,
Charlotte spent over 11 y
ears at
V
entyx, a global
provider o
f
software solutions for the ener
gy
,
utility and other asset-intensive
businesse
s. During her tenure at
V
entyx she held
v
arious
HR r
oles,
latterly as Human Resource
Manager
for
Rest of
W
orld.
Key strengths
Strong track r
ecord in delivering
innovative emplo
yee development,
engagement, and retention
practices. Charlotte
has e
xtensive
experience in
managing
high-
impact, enterprise-wide
transformations in challenging,
fast-paced environments.
Other appointments
CPO, K
eyloop Limited
Chris Sullivan
Senior Independent
Non-Executive Director


Chris was
Chie
f Ex
ecutive o
f the
Corporate & Investment Bank at
Santander UK
during the y
ears
2015-2018, and prior to this held
various CEO roles during a 40-year
career at The Royal Bank of
Scotland
and NatW
es
t. His
11
years
on the
Group
Executive
Committee included leading
Corporate Banking, Retail Banking,
Direct Line and Retail Dir
ect and
culminated in appointment to the
post of Deputy Group Chief
Executive in Mar
ch 2014.
A recipient of the Leasing Life
European Lif
etime Achievement
A
ward,
Chris brings
expertise in the
auto and equipment finance
industr
y
, having spent nearly 30
years with the Lombard Gr
oup
inanumber of
directorate
roles
including as CEO
.
Key strengths
Extensive
experience of
corporate,
investment and retail banking and
asset financing together with
general management and listed
company
experience.
Other appointments
Chairman of the W
e
stminster
Abbey Investment Committee,
Non-Executive
Director
of Guild
Espor
ts PLC, Senior Independent
Director for D
WF Group PLC,
Non-Executive
Director
of
Cannaray L
td
A
N
R
A
N
R
A
N
R
A
N
R
Committee membership
A
Audit
Committee chair
Nomination
N
Remuneration
R
CORPORA
TE GOVERNANCE
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
75
Richard Raistrick
Chief International
Officer


Relevant experience/
previous roles
Richard is r
esponsible for project
delivery for
some of Alfa
’
s
largest
customers. He has carried out
consultancy and project
management engagements around
the globe, and has worked in the
auto and equipment finance sector
since 1995.
James Paul
Chief Delivery Officer


Relevant experience/
previous roles
James is
accountable f
or all
EMEA
implementations and takes global
responsibility for support
,
resourcing and partnering.
James has
over
20 years’
experience
implementing in auto and
equipment finance for
organisations of all sizes.
Vicky Edwards
Chief People Officer


Relevant experience/
previous roles
Vicky
joined Alfa
in Mar
ch 2020,
bringing 26
years of
experience
inconsultancy businesses. A
commercially f
ocused HR leader
,
Vicky
has held
leadership roles
across HR, commercial and
operations functions, as well as
C-suite level positions in the
prof
essional ser
vices, te
chnology
and energy sectors.
Richard Dewire
Chief Revenue Officer


Relevant experience/
previous roles
Richard has ov
er 20 years in the
auto and equipment finance
industr
y and an in-depth
knowledge of Alfa S
ystems through
many years of implementation, with
extensive
knowledge
of Alfa
’
s sales
and commercial pr
oces
s. He was
previously Dir
ector of Strategy and
Investment.
Andrew Flegg
Chief Technology
Officer


Relevant experience/
previous roles
Andrew brings ov
er 35 years of
programming
experience, o
ver
25 years in commercial so
ftware
development and o
ver 15 years in
the auto and equipment finance
industr
y
. He was
previously Alfa
’
s
Global Director of Platforms,
covering int
ernal IT systems, cloud,
information security and solution
architecture.
Andrew Denton
Chief Executive Officer


Duncan Magrath
Chief Financial Officer


Matthew White
Chief Operating Officer


76
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
COMP
ANYLEAD
ERSHIPTEA
M
BO
ARDLEADERSH
IPANDCOMP
ANYPURP
OSE
Maintaining g
ood gov
ernance is
essential
tosuppor
t the
delivery of
Alfa’
s strategic
objectives, and to ensure that the business is
run well f
or the benefit of all s
takeholders and
for sustainable long-term value. The Board
continues to monitor the framework so it
remains appr
opriate to the business.
The gov
ernance framework embeds our
values into the policie
s and processes of
Alfaand therefor
e helps to strengthen the
corporate culture.

ReadmoreaboutourCompan
y
LeadershipT
e
amonpage76.
During this year and as part of the annual
review cycle, the Boar
d revie
wed, updated
and appr
oved
the Schedule
of Matters
Reserved for the Board and the T
erms
ofRef
erence
for each
Board
Committee.
The Audit & Risk Committee also review
ed,
updated and approv
ed other relevant
Company policies. There is an internal contr
ols
system in place which allows the Board to
assess and manage risks to the busines
s.

ReadmoreaboutourRiskManag
ement
onpages44to51andtheAudit&Risk
CommitteeReportonpages94to99.
The Board pr
ovides suppor
t in
implementing strategic priorities as well as
ov
ersight and constructive challenge on the
running of the business. Through reporting,
including the use of both financial and
non-financial metrics, the Board is able
toevaluate and guide the progr
ess and
per
formance of the Compan
y
. Report
s from
across the business are pro
vided at Board
meetings to up
date the Board and enable
effective discussion.
Defining purpose

During the year
, the Company has continued
to embed across the business the purp
ose
and values as set out in the Strategic report
on pages 1 to 69 of this report
.
The Board continues to monitor the
strategic direction of the Company and the
key inv
estment
s we nee
d to make to r
emain
in a leading position in an ever-changing
market, and ensures we hav
e the resources
and the right people, in the right place
operationally
, to ensure we r
emain relevant
to the markets in which we operate.
The Board and Compan
y Leadership T
eam
(CL
T) embed the Company
’
s values across
the business. In order to monitor whether
our culture is and r
emains aligned with our
values, the Company seeks feedback from
customers and potential customers on how
the values have been received. Additionally
,
to understand what they experienced during
the sales proces
s and through the various
stages of software implementations and
pro
vision of ser
vices.
Governance framework
The Board is made up of a majority of
independent Directors whose diverse
experience enables appropriate debate
andchallenge at Board and Committ
ee
discussions. The Board has an appr
oved
gov
ernance framework o
f systems and
controls which enables the effective
discharge of the Boar
d’
s responsibilitie
s.
Directors hav
e a duty to promote the
success of the Company under section 172
of the Companies Act 2006. The Company
’
s
section 172 statement c
an be found on
pages 54 to 55 and this framework support
s
our Directors’ compliance with their duties.
Board engagement
The Board r
ecognises it
s responsibilitie
s to
engage with and incorporate the views of
key stakeholders in strategic planning and
decision making, and the imp
ortance of
stakeholder trust in building resilience and
long-term sustainability
. Although the Board
retains o
verall responsibility for stakeholder
engagement there is interaction at various
levels of the business so that it is carried out
by those most relevant to a particular
stakeholder group or particular issue.
Our section 172 statement and ‘How we
engage with our stakeholders’ section on
pages 54 to 57 set
s out the main interest
s
ofkey stakeholders and the wa
ys in which
Alfa engages with them.
The Board r
ecognises the imp
ortance of
considering all stakeholders in it
s decision-
making, although the weight given to each
stakeholder group ma
y var
y depending on
the subject in ques
tion.
Through engagement and gr
eater
understanding of the interest
s of
stakeholders, the Board is able to assess
thelong-term consequences of decisions on
stakeholders and the business. We c
ontinue
to work on embedding practices across
Alfaso that consideration of stakeholder
interest
s in decisions is second nature at
alllevels of the business.
Workforce engagement
The Board monitors and assesses engagement
with all
stakeholders, withparticular attention
on workf
orce engagement.
Employ
ee Pulse sur
veys pr
ovide regular
understanding of wider views and an
‘
opendo
or’ approach to feedback and
communication also allows for fr
equent
two-way con
versation and insight.
The challenges presented by the COVID-19
pandemic remained throughout 2021, but
effort was made to maintain culture and
connections with online events as well as
in-person social element
s to these event
s
wherev
er restrictions allowed.
CORPORA
TE GOVERNANCE
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
77
All Board meetings feature updates on
People matters and engagement lev
els.
The Chief People Officer presented at two
Board meetings in 2021, demonstrating the
increased impor
tance placed on our people.
A
ttendance of Company meetings, social
and online T
own Hall events (including Q&A)
with the Board as w
ell as Company updates
and frequent co-ordinated internal
communications all suppor
t engagement
across the organisation.
Given the Boar
d’
s visibility of the
engagement channels and effort
s, as well as
its acce
ssibility to the workfor
ce through the
initiatives and events as mentioned, it is
confident at this time that appropriate
measures are in place as an alternativ
e to
Pro
vision 5 of the 2018 UK Corporate
Governance Code.
The Company activ
ely encourages the
inv
olvement of employ
ees in the Company
’
s
per
formance and the principal decision in
2021 with regard t
o employee interests was
to launch UK/USA all-emplo
yee share plans.
The Sav
e As Y
ou Earn (SA
YE) scheme known
as the ‘Sharesave
’ plan in the UK and
Employ
ee Stock Purchase Plan (ESPP
) in the
USA w
ere launched in November 2021
allowing employ
ees to be
come greater
stakeholders in the business.
Engagement with shareholders
Alfa is committed to engaging with
shareholders and pr
ospective investors to
inform and aid understanding of its strateg
y
and progr
ess. The focus of all communications
is ensuring transparent, and detailed and
meaningful information.
The Chairman has ov
erall responsibility for
ensuring that the Company has appr
opriate
channels of communication with it
s
shareholders and is supported in this by
theSenior Independent Director and the
Executive Dir
ectors.
Shareholders ar
e consulted on a variety of
issues, as appropriate, such as the medium-
to long-term strategy of the Company
,
current trading and market c
onditions and
Directors’ r
emuneration. The Boar
d regularly
receives f
ee
dback fr
om the Group
’
s br
okers,
advisors and the E
xecutive Dir
ectors on the
views of major shareholders and the in
vestor
relations pr
ogramme, and also receives
report
s on significant changes to the
composition of the Gr
oup
’s
share r
egister
.
Due to the ongoing pandemic the usual
direct engagement mechanisms with
shareholders ha
ve been cur
tailed but the
Directors hav
e continued communications
virtually through one-to-one meeting
s and
responding to specific shareholder queries
and pro
vided digital presentations, including
for the half-y
ear result
s announcement.
Given the r
es
trictions on trav
el and large
gatherings, and the guidance available to us
at the time, we took the decision to hold the
2021 A
GM behind closed doors again. As we
approach our
2022 A
GM, we will c
ontinue to
monitor the situation, and will prioritise the
health and safety of the Board, our
colleagues and of course our shareholders.
F
ur
ther details will be provided when our
Notice of A
G
M is published on
11 April 2022.
The Group
’
s investor relations micr
osite
www
.investors.alfasys
tems.com is updated
throughout the y
ear
, providing the annual
and interim report
s, presentations given to
analyst
s and investors, trading updates and
other regulatory announcement
s, and
up-to-date information on the Gr
oup
’
s
activities. Shareholders are able to contact
the Company thr
ough the Company
Secretary
, at the Company
’
s registered
office, which is shown on the Dir
ectors’
report on page 122.
Shareholder agreement
The relationship between the Board and the
controlling shar
eholder of the Company (the
‘Contr
olling Shareholder’)
, CHP Softwar
e
and Consulting Limited, is gov
erned by the
Relationship Agreement (
which was
executed on 26 May 2017)
. This agreement
is a framework under which the Contr
olling
Shareholder
, and the shareholders of the
Controlling Shar
eholder will operate to
protect the rights of the non-controlling
shareholders. Ther
e have been no changes
to the Relationship Agreement during 2021,
or up to the date of this report. Under the
Relationship Agreement, two Non-
Executive Dir
ectors can b
e appointed to the
Board f
or as long as the Controlling
Shareholder holds 20% or mor
e of the
voting rights over the Compan
y
’
s shares:
•
One Non-Executiv
e Director can be
appointed to the Board for so long as the
Controlling Shar
eholder holds 10% or
more but less than 20% of the voting
rights in resp
ect of the Company
’
s shares;
and
•
If none of the Contr
olling Shareholders
are members of the Nomination
Committee, the Controlling Shareholder
can appoint an obser
ver to the
Nomination Committee.
Andrew P
age is designated as the first
appointed Director of the Controlling
Shareholder
. Andrew Denton has not been
appointed as a de
signated Director by the
Controlling Shar
eholder
. It has be
en agreed
that for as long as the Contr
olling
Shareholder has the right to appoint two
Directors to the Board, and whilst Andr
ew
Denton is a Director of the Company
, the
Controlling Shar
eholder will not exer
cise it
s
right to appoint a second Director to the
Board. Ther
e have been no Board observers
appointed either under the Relationship
Agreement, or other
wise.
F
or fur
ther details of the Relationship
Agreement, se
e page 124 of the
Directors’Report
.
78
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
BO
ARDLEADERSH
IPANDCOMP
ANYPURP
OSECONTINUED
Workforce policies

Our people bring a diverse range of
experience, expertise and perspe
ctives that
contribute to the values and culture of Alfa
and are essential for the deliv
er
y of our
strategic objectives. A positive environment
where our people feel valued, motivate
d and
able to thriv
e is essential to Alfa
’
s continued
success. The Board recognises the value of
,
and suppor
ts, signific
ant investment of time
and resources in our colleagues to allow Alfa
to attract and retain talent and dev
elop the
skills of our employ
ee
s.
One central policy in creating this
envir
onment and culture is Alfa’
s Ethics and
Code of Conduct (the ‘Code of Conduct’)
which clearly set
s out a zer
o-tolerance
policy for dishones
t and corrupt behaviour
among our employ
ee
s and seeks to educ
ate
team members on unlawful and unethical
conduct. Compliance with the polic
y
maintains Alfa’
s reputation in the
marketplace as well as our r
elationship with
our colleagues, investors, customers and
other stakeholders.
The Code of Conduct pro
vides clear
guidance to employ
ee
s in respect of legal
and ethical issues which they may come
across while conducting Alfa business,
andwhat Alfa expect
s in respect of our
employ
ee
s’ behaviour
, and provides
impor
tant information on w
orking at Alfa
tohelp embed the behaviours and values
alongside more practical information to
enable our employ
ee
s to work effectiv
ely
and efficiently
.
The Board is r
esponsible for overseeing the
Company’s
arrangements for the w
orkfor
ce
to be able to raise matters of concern and
seeks to foster an environment wher
e
individuals can be confident about sp
eaking
up about concerns without fear of r
etaliation.
The Board monitors this ar
ea through r
epor
t
s
on the number and type
s of concerns raised
through the whistleblowing pr
ocess and the
outcomes of the concerns raised.
Employee engagement
The Board monitors and assesses engagement with all stakeholders, with par
ticular
attention on employ
ee engagement
. Employ
ee Pulse sur
veys pr
ovide regular
understanding of wider views and an ‘
open do
or’ approach to feedback and
communication also allows for fr
equent two-way conv
ersation and insight. The challenge
s
presented by the COVID-19 pandemic r
emained throughout 2021, but effort was made
to maintain culture and connections with online events as well as in-person social element
s
to these events wherever r
es
trictions allowed.
All Board meetings feature updates on P
eople matters and engagement levels. The Chief
People Officer pr
esente
d at two Board meetings in 2021, demonstrating the increased
impor
tance placed on our people. Online T
own Hall events with senior team members as
well as Company updates and frequent co-or
dinated internal communications all supp
ort
engagement across the organisation.
CORPORA
TE GOVERNANCE
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
79
BO
ARDLEADERSH
IPANDCOMP
ANYPURP
OSECONTINUED
Throughout the y
ear
, regular town halls
andelectronic updates to all employees
from CEO Andr
ew Denton hav
e pro
ven
tobe a very succes
sful engagement
mechanism. Andrew Denton and the CL
T
update the workfor
ce on all aspect
s of the
business and take direct ques
tions in real
time from emplo
yees.
Alfa is focused on the impor
tance of the
wellbeing of our workf
orce and this
remained heightened during the pandemic
with additional challenges for our r
emote
working employ
ees. We c
ontinue to invest in
wellbeing. In addition to enhanced paid
carer leav
e allowance, access to physical,
mental and financial advice/
assis
tance and
working fr
om home contributions, we hav
e
gro
wn an internal network of trained Mental
Health F
irst Aiders, available to employees
for judgement-fr
ee listening and suppor
t
.
In 2021, we hav
e deliver
ed diversity training
across a number of key gr
oups – Inclusive
Leadership, Inclusive R
ecruitment and
Unconscious Bias training. W
e continue
tosuppor
t our communities to raise
awar
eness across the company on issues
around div
ersity and expanded our network
of external bodies and par
tners that we
work with and support
. As a result of this
work, 47% of new grads w
ere f
emale and
47% from a div
erse background.
Alfa is fully committed to maintaining
highstandards of ethical and prof
essional
conduct for the Compan
y and it
s
employ
ee
s. W
e have a number of policies
ineffect which are designed to create an
envir
onment and culture where:
•
Employ
ees’ health, s
afety
, right
s and
wellbeing are placed at the heart of
theway the Gr
oup does busine
ss;
•
Employ
ee diversity and inclusion
iscelebrated;
•
Employ
ees mus
t act ethically
, hone
stly
and stand up for what is right; and
•
Communication across the business
should be open, hones
t and responsible.
T
o suppor
t the Code of Conduct and our
values, Alfa has a number of other workfor
ce
policies and practice
s cov
ering:
•
Business expenses;
•
Confidentiality;
•
Health and safety;
•
Diversity and inclusion;
•
Harassment;
•
Share dealing; and
•
Whistleblowing.
W
e se
ek to embed our Co
de of Conduct
through continuing communications,
training and appropriate contr
ols.
The Code of Conduct and all other
workf
orce policies and procedures can be
found and easily accessed by our employ
ee
s
through our intranet site.
An Equality
, Diversity and Inclusion P
olicy
was published in February 2022 which aims
for our colleagues to be truly repr
esentative
of all sections of society and our customers,
and for ev
er
yone to f
eel respe
cted and able
to give their best
.
Whistleblowing
W
e recognise that our pe
ople are our
strongest asset
s for detecting and av
oiding
legal and ethical failure within our business.
Our whistleblowing policy and team
pro
vides a s
afe en
vironment to r
epor
t
concerns regar
ding illegal, unethical or
improper behaviour
.
The Group
’
s Whistleblowing Policy clearly
explains to employ
ee
s how they can raise
concerns directly to the Group
’
s
Whistleblowing Officer
.
All whistleblowing cases are formally
inv
es
tigated by the Whistleblowing Officer
and reported regularly to the Audit & Risk
Committee and the Board, and the Board is
responsible for r
eviewing the effectiveness of
actions taken in response to concerns raised.
Where
neces
sar
y
, external specialist third
partie
s, or other members of staff
, with
appropriate
experience, ma
y be appointed to
help inv
es
tigate issues that have been raised.
Share dealing code
Alfa has revised and reissued a share dealing
code during the year
. This applies to all
employ
ee
s and Directors. It restrict
s
dealings by all employ
ee
s during closed
periods, dealings by a par
ticular sub-set of
employ
ee
s out
side of closed periods, and
pro
vides additional restrictions on the
Company’s Dir
ectors, it
s other PDMRs and
certain p
ersons deemed insiders.
In accordance with the Mark
et Abuse
Regulation, the Dir
ectors and PDMRs have
confirmed to the Company they are
responsible for pr
ocuring the compliance of
their respective connected p
ersons with the
Alfa share dealing code. The share dealing
code has been publishe
d on the Alfa
intranet and guidance and communication is
pro
vided to all new star
ters and the Alfa
team on an ad hoc basis.
Suppliers and modern slavery
W
e do not supp
ort any form of slav
ery
,
human trafficking or child labour and we only
work with suppliers that hav
e been asse
ssed
through our internal pr
ocesse
s to be ethical
pro
viders. W
e hav
e an ethical procurement
policy and our key procurement personnel
hav
e be
en trained in relation to the r
elevant
requirements and regulations.
80
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
BO
ARDLEADERSH
IPANDCOMP
ANYPURP
OSECONTINUED
Division of responsibilities
Alfa is led and controlled by the Board which is
collectively responsible for the long-term and
sustainable success of the Group. The structure
of the Board, and manag
ement, roles and
Committees ensures controls and oversight
with a balanced approach to risk aligned with
Alfa’
s cultur
e. The
structure
assist
s the
Board
with carr
ying out it
s responsibilities and is
designed to ensure that the Board focuses on
strategy
, monitoring the per
formance of the
Group and go
vernance, risk and contr
ol issues.
Responsibility of the Board
The Board is collectively r
esponsible for the
long-term success of the Group and for ensuring
leadership within a framework of eff
ective
controls. The ke
y roles of the Board ar
e:
•
Setting the strategic dir
ection of the
Group;
•
Overseeing implementation of the s
trategy
by ensuring that the Gr
oup is suitably
resourced to achiev
e it
s strategic aspirations;
•
Providing entr
epreneurial leadership within
aframework
of
prudent
and eff
ective
controls which enables risk to be assesse
d
and managed;
•
Ensuring that the necess
ary financial
andhuman resources are in place f
or the
Group to meet its obje
ctives; and
•
Re
viewing the Group
’
s culture supporte
d
by its value
s.
Board and Committee

Board
Audit&Risk
Committee
Nomination
Committee
Remuneration
Committee
Andrew P
age
6/6
2/2
Andrew Denton
6/6
Duncan Magrath
6/6
Matthew White
6/6
Stev
e Breach
6/6
4/4
2/2
4/4
Adrian Chamberlain
6/6
4/4
2/2
4/4
Charlotte de Metz
6/6
4/4
2/2
4/4
Chris Sullivan
6/6
4/4
2/2
4/4
How the Board operates
During the year
, the Board considers a
comprehensiv
e programme of r
egular matters
cov
ering operational and financial per
formance
reporting
, strategic reviews and updates, and
various gov
ernance report
s and approvals.
Board meetings
The Boar
d
held six
sche
duled meetings in
2021
and two ad hoc meetings, for specific approvals
and discussions. If Directors are unable to
attend a meeting, they have the opportunit
y
beforehand to discuss an
y agenda items with
the Chairman.
During the year
, the Board and its Committee
s
conducted most me
etings in person but also
remotely thr
ough video calls when ne
cess
ary
,
enabling the Board to continue to function and
maintain the integrity of our gov
ernance
structure despite the ongoing pandemic.
Although not neces
sar
y in 2021, if in the event
that a Director is unable to attend a meeting
they would r
eceive all the papers for the
meeting andbe
updated on
matters discussed
at thene
xt meeting. Non-Executiv
es meet
without the Chairman at least annually to
appraise
the Chairman
’s
p
erformance and
Chairman also holds meetings with the
Non-Executive
Directors
without
the
ExecutiveDir
ectors being
present.
The table below recor
ds the number of
meetings held by the Board and each
Committee during 2021 and the number
ofmeetings attended b
y each
memb
er
.
There was 100% attendance at each meeting.
CORPORA
TE GOVERNANCE
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
81
DIVISIO
NOFRESPON
SIBILITIES
The follo
wing diagram shows the role of the Boar
d and its Committe
es and Company Leadership T
e
am:
Board of Directors
The Board is collectively r
esponsible for the long-term success of the Company
. The busines
s of the Company is manag
ed by the Board who ma
y
exer
cise all
of the
powers
of
the Compan
y
. The
Board
has
a f
ormal S
chedule of
Matters
Reserved for
the
Board
which is
available on
the
Company
website. Although the Boar
d retains ov
erall responsibility
, it delegate
s cer
tain matters to the Board Committees, and the detailed implementation
of matters appro
ved by the Boar
d and the day-to-day operational aspects of the busine
ss to the Company Leadership T
eam.
Audit & Risk Committee
Nomination Committee
Remuneration Committee
Reviews and r
epor
ts to the Board on the
Group
’
s financial
repor
ting, internal
control
and risk
management systems.
Monitors the
independence and effectiveness of the
external auditor
and the
effectiveness of
the
internal audit function.
Pro
vides succession planning for the Board and
leads the process for all Board appointments.
Keeps under revie
w the membership and
composition of the Board, including the
combination
of skills,
exp
erience
and div
ersity
,
and ensures it remains appr
opriate.
Determines the remuneration, bonuses,
long-term incentive arrang
ement
s, contract
terms and other benefit
s in respect of the
Executive
Directors,
the
Chairman, the
Company Secr
etar
y and senior management.
Oversees the remuneration and workf
orce
policies and takes the
se into account when
setting the
p
olicy f
or Dir
ectors’ r
emuneration.
Company Leadership Team
The Company Leadership T
eam is responsible for the day-to-da
y running of the business, carr
ying out and overseeing operational management,
and implementing the strategies the Board has set.
Executive Committees
These go
vernance committ
ee
s ar
e chair
ed by
an Executive
Director
and report to
the Executiv
e Group
, and
the Boar
d or
Board
Committee
s
asappropriate.
Investment Committee
Disclosure Committee
Deal Committee
The Inv
es
tment Committee determines the
Strategic Inv
estment initiatives that should
be under
taken. The Committee pro
vides a
structure through which eff
ective decisions
can be made on the priority and sche
duling
of Strategic In
vestment initiatives.
The Committee ensures that Strategic
Inv
es
tment initiatives align with
Alfa’
s
business s
trategy
.
The Disclosure Committee determines
whether information that is submitted to it
requires disclosure and determines any other
issue relating to the application of the
Disclosure Pr
ocedures that are requir
ed.
The Deal Committee determine
s standard
guidelines for an acceptable deal in terms of
financial position and key contractual terms.
The Board responsibilities
W
e have clear and documented roles and separation of duties bet
ween the Chairman and the CEO
. The Alfa CEO, Andr
ew Denton, is responsible for
determining the Alfa strategy and day-to-day operations, and leading the CL
T
, which assist
s in the day-to-day deliv
er
y of this strategy and general
operations. Andrew P
age, as Chairman, pro
vides oversight and guidance to Andr
ew Denton on the strategic direction, key commercial and contracting
decisions in addition to his responsibilities for running an effective Board. All Dir
ectors have access to the advice of the Compan
y Secretary
.
82
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
The division of responsibilities between our b
oard members is set out below:
Role
Principal responsibilities
Ex
ecutiveChairman
Andrew P
age
Manages and
provides leadership
totheBoard.
Act
s
as a
direct
liaison betw
een the
Boardand
management, w
orking with
theCEO
to
assist the
flowof
information.
Ensures that the Directors hav
e sufficient information to enable them to f
orm appropriate judg
ement
s.
Develops and sets the agendas for Boar
d meeting
s, working with the CEO and Compan
y Secretary
.
Recommends an annual schedule of Board and Committee meetings.
Ensures effective communications with shar
eholders and other stakeholders.
ChiefEx
ecutive
Officer
Andrew Denton
Responsible for the day-t
o-day management of Alfa.
Responsible f
or defining
the
strateg
y
and guiding
theCL
T on
its strategy execution,
once this
has beenagreed by
theBoard.
Creates
a framew
ork that
optimise
s r
esource
allocation to
deliver
strategic objectives
over
var
yingtimeframe
s.
Ensures the successful delivery agains
t the strategic plan and other key business obje
ctives, allocating decision making
and responsibilities accordingly
.
Identifies and
executes new
busine
ss opportunities and
asse
sses potential
acquisitions and
disp
osals.
Manages the
Group with
reference
to
it
s
risk pr
ofile in
the context
of the
Board’
s
risk appetite.
Responsible f
or En
vironmental,
Social
and Go
vernance
(ESG)
.
ChiefFinancial
Officer
Duncan Magrath
Overall management of the financial risks o
f the Group.
Responsible for financial planning and r
ecord-keeping, as well as financial reporting to the Board and shareholders.
Ensures effective financial compliance and contr
ol, while responding to regulatory developments, including financial
reporting
, effective allocation of capital, management of liquid r
esources, investor relations and corporate responsibility
.
Responsible for the r
epor
ting of ESG.
ChiefOperating
Officer
Matthew White
Responsible f
or da
y-to-day
op
erationalactivities.
Responsible for software dev
elopment.
Responsible f
or s
ystems implementationdelivery
.
Responsible for
delivery of HR resour
cingand planning.
Develops key business operational models, monitoring per
formance against KPIs and ensuring adequate staffing
recruitment to deliver dev
elopment and systems implementation.
SeniorIndependent
Director
Chris Sullivan
An Independent
Non-Executive
Director
.
Pro
vides a sounding board for the Chairman and CEO
.
Serves as
an
intermediar
y f
or the
otherDirectors
and shar
eholders
whennece
ssar
y
.
Is a
vailable to
shareholders if
they hav
econcerns.
Non-Ex
ecutive
Directors
Stev
e Breach
Adrian Chamberlain
Charlotte de Metz
Pro
vide
constructive challeng
e to
the Executive
Directors. Help
develop
proposals
on strategy
.
Scrutinise
management’
s
per
formance
in meeting
agreed g
oals and
obje
ctives.
Monitor
per
formance
report
s.
Satisfy themselves regarding the integrity of financial inf
ormation, and that controls and risk management s
ystems are
robust and defensible.
Determine appr
opriate
levels
of
remuneration
for
Executive
Directors.
Appoint and
remo
ve
Executive
Directors as
required
and r
eview
succession planning.
CORPORA
TE GOVERNANCE
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
83
Matters Reserved for the Board
The Boar
d
has a
formal S
chedule of
Matters
specific
ally reserved for its de
cision making
and appro
val. The matters that the Board
considers suitable for delegation ar
e
contained in the T
erms of Reference o
f
eachBoard
Committee.
There ar
e certain key responsibilitie
s that the
Board does not delegate and which are
reserved for it
s consideration. The full
Schedule o
f Matters
Reser
ved f
or the
Board
is available under the Corporate Governanc
e
section on our
website.

of interest
The Company is mindful of the time
commitment
required fr
om
Non-Executive
Directors in order to eff
ectively fulfil their
responsibilities on the Board, particularly
pro
viding constructive challenge and holding
management to account and utilising their
diverse
skills
and experience
to
benefit the
Company and pr
ovide strategic guidance.
Board
Risk management
and internal
controls
Major capital
commitments
Approval o
f
Annual Report and
Accounts
Company’s
purpose, values,
vision and culture
Corporate
gov
ernance
including Board
and Committee
evaluation
Material
acquisitions
and disposals
Engagement with
key stakeholders
Business
strategy and
approval o
f
long-term
aims and
objectives
Group
financial
reporting
and results
announcements
Prior to their appointment, prospective
Directors are ask
ed to provide details of an
y
other roles or significant obligations that may
affect the time available f
or them to commit
to the Company
. The Chairman and the Board
are then kept inf
ormed by each Director of
any
proposed external appointments or other
significant commitment
s as they arise.
These are monitored to ensur
e that each
Director has sufficient time to fulfil their
obligations and Chairman approval is r
equired
prior to a Director taking on any additional
external appointment.
Each
Director
’
s biographical details
and
significant time commitment
s out
side of the
Company ar
e set out in the Board biographies
on pages 74 to 75.
Whenever a Dir
ector takes on additional
external r
esponsibilitie
s, the
Director will
discuss the potential position with the
Chairman and confirm that, as far as they
area
ware,
there
are
no conflicts of
interest.
Each Director is required to disclose conflicts
and potential conflict
s to the Chairman and the
Company
Secretar
y
asand
when the
y
arise.
As par
t of the induction process, a newly
appointed Director is asked to disclose any
conflicts ofinter
es
t
to
the
Company
.
Thereafter
,
each Director has an oppor
tunity to disclose
conflicts at the b
eginning of each Board and
Committee meeting and as par
t of an annual
review
. None
of the
Directors declared
to the
Company any actual or potential conflicts of
interest
between an
yof
their
duties to
the
Company and their private inter
es
ts and/
or
other duties.
The Companies Act 2006 provides that
Directors must avoid a situation wher
e they
hav
e, or can have, a dir
ect or indirect interest
that conflicts, or p
ossibly may conflict, with the
Company’s
interes
ts.
Boards of public companies may authorise
conflicts and p
otential conflicts, where
appropriate,
if
their compan
y
’
s
ar
ticles of
association permit
.
84
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
DIVISIO
NOFRESPON
SIBILITIESCONTINUED
Key activities of the Board in 2021
Focus area
Key stakeholders
Activities
Link to
strategic
priorities
Strategy and
operations
see pages
1to69
Customers
Employ
ee
s
Partners
Inv
es
tors
•
Applying the
Board’
s strategic
understanding of
principal risks to key challenges and opportunitie
s.
•
Monitoring the
per
formance
of theCompany
againstagreed strategic objectives,
including k
ey
financialtargets.
1

3


6
Leadership,people
andculture
see pages
12to15
and
25
Employ
ee
s
Inv
es
tors
•
Receiving update
s on employ
ee views and
engagement levels.
•
Maintaining and
enhancing Alfa
’
s culture
and
values.
•
Continuing to
monitor
senior ex
ecutive talent
management
anddevelopment
plans
to pr
ovide
succession for all key positions.
1

3
6
Financ
e
see pages
36 to 43
Customers
Employ
ee
s
Community and
Envir
onment
Partners
Inv
es
tors
•
Reviewing
and appr
oving
thebudget.
•
Reviewing
financial k
ey performance
indicators (KPIs)
.
•
Approving full-y
ear result
s, half-year r
esult
s, trading
updates and the Annual Repor
t.
•
Approving a special dividend.
•
Reviewing the key risks to Alfa and the contr
ols in
place for mitigation.
•
Considering and
monitoring the
Group
’
s risk
appetite
and principal risks and uncertaintie
s.
•
Approving the viability and going concern statements.
•
Developing and monitoring ESG reporting framework.
1

3


6
Governanc
e
see pages
70to127
Employ
ee
s
Customers
Inv
es
tors
•
Monitoring and
reviewing
theCompany
’
s appr
oach t
o
corporate g
overnanc
e, its keypr
actices and
it
s
ongoing compliance with the 2018 Code.
•
Reviewing
the r
esult
s fr
omtheexternal Boar
d
effectivenessevaluation and
setting actions.
•
Approving
updated Committees’ T
erms
of R
eference.
•
Receiving and considering feedback from
shareholderengagement.
•
Reviewing and appro
ving the modern
slav
er
ystatement
.
1

6
Our strategic priorities
Strengthen
– Grow our dier
entiation of
market leading People, Pr
oduct and Delivery
.
1
Simplify
– Simplifying our product
,
implementations and processes
toenablemore concurr
ent Alfa
Systemsimplementations.

Start
– Impro
ve our oering f
or smaller
autoand equipment nance pr
oviders as
aplatform f
or innovation and t
o increase
ourreach.
6
Sell
– F
ocus on cloud-hosted, subscription
sales to our target markets.

Synergise
– Dev
elop our partner
ecosystem, to improve our sales
opportunitie
s and to enable more
concurrent Alfa S
ystems implementations.

Scale
– Increase our capacity for dev
eloping
and delivering Alfa S
ystems.
3
CORPORA
TE GOVERNANCE
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
85
Appointments to the Board
The Nomination
Committee leads the
processfor Boar
d appointments and mak
es
recommendations to the Board and also
ensures that succession plans are in place
forthe
Board
and senior
management.
The formal pr
ocedure for Boar
d
appointment
s and succession planning is
detailed in the
Nomination Committee
Report on pages 90 to 93.
Director re-election
Each Director is required under the Articles of
Association to retire at ev
er
y Annual General
Meeting and
submit
themselves f
or r
e-election
by shar
eholders.
A
t the
2021
Annual General
Meeting (A
G
M) o
f
the Company
, all of the current Dir
ectors stoo
d
for r
eappointment
, and wer
e duly electe
d with
majorities ranging from 99.15% to 100% of the
votes cast
.
All the Directors will retir
e and seek re-election
at the
2022 A
GM of
the Company
.
This r
epor
t
and in particular the Board biographies on
pages 74 to 75 set
s forth the contribution of
each Director on the Board to the Compan
y
and on this basis the Board, and specifically the
Chairman, believes each Director proposed for
re-election
at the
A
GM should
be r
eappointed.
The Board has based its recommendations for
re-election, in part
, on it
s review o
f the result
s
from the Boar
d evaluation process outlined
from
this
page,
and the
Chairman
’
s revie
w of
individual evaluations, and whether a Director
has demonstrated subs
tantial commitment to
the r
ole
(including time
for Boar
d and
Committee meetings noted
in this
repor
t) and
other responsibilities, taking into account a
number of considerations including outside
commitments and any changes thereof during
the period.
Board composition
The composition of the Board and Boar
d
Committees is continually asse
ssed to ensure
an appr
opriate
balance o
f skills
and
experience
is maintained. The Board takes into account
various considerations in assessing the
composition of the Board including length of
Director tenure, Boar
d diversity
, independence
and the
combination of
skills
and experience
of
the Directors.
Board evaluation
The Board r
ecognises the b
enefit of a thorough
evaluation process to reflect on it
s strengths
and the challenges it faces, and to identify
oppor
tunities to continuously improv
e it
s
effectiveness.
Our Board evaluation pr
oces
s was conducted
during the summer of 2021:
1.
The Boar
d agreed that an externally
facilitated Board effectiveness revie
w
should be conducted in 2021.
2.
Discussions wer
e initiated with three
reputed external agencies shortlis
ted for
conducting the Board eff
ectiveness
evaluation, and Derek W
oo
dward and
Mark Peters o
f Board Eff
ectiveness and
Governance S
er
vices (BE-GS) were
selected on the basis of their proposed
approach and Boar
d experience. BE-GS
does not have any other connections with
the Company or with individual Dir
ectors.
3.
The CFO and Compan
y Secretary
, having
liaised with the Chairman, discusse
d and
agreed the scope of the evaluation with
BE-GS.
4.
BE-GS conducted individual private
interviews with each of the Directors,
some members of the Company
Leadership T
eam (CL
T
) and the
Company’s Br
okers to gain insights as
tohow the Boar
d see
s itself and how it
isperceived b
y others. The inter
views
with the Directors cov
ered composition
and the diversity of the Boar
d; the
breadth and depth of w
ork programmes
for the Boar
d and Committee
s; and
Boardr
oom culture. BE-GS also
conducted a thorough desk
- top review
of Board and Committee agendas,
papers, and minutes.
5.
BE-GS also conducted a separate
evaluation of the Chairman against the
measures identified by the F
inancial
Reporting Council (FRC)
. This include
d
interviews with each of the Directors and
a detailed review with the SID
.
6.
BE-GS prepar
ed a repor
t of its finding
s
from the r
eview and identified
constructive forward-looking
recommendations to enhance the
effectiveness of the Board and
itsCommitte
es.
7.
The BE-GS report was first shared with
the Chairman and the SID and was then
presented to, and discussed by
, the
Board which agr
ee
d an action plan for
theyear ahead.
8.
Pr
ogress against the Board’
s action plan
will be monitored by the Chairman with
the suppor
t of the Company S
ecretar
y
and periodic repor
ts will b
e shared with
the Board.
9.
The Boar
d evaluation to be conducted in
2022 will be conducted internally but will
reflect on the actions from the 2021
external review
.
Recognising the positive

The Board has made huge pr
ogress since
itwas refr
eshe
d and str
eng
thened in
2019/20, despite the challenges of the
pandemic restrictions.
The Board and Committees have established
a good rhy
thm of work, with the new Dir
ectors
bringing a
diverse
blend of
solid experience
and skills.
The regular inf
ormation flows to the Board
from the CEO
, the CFO and the CO
O are high
quality
, comprehensive and consistent and are
supplemented with quality communication
between the
Chairman
and the
NEDs.
Meetings are
well pr
epared and
the cycle
of
CL
T update
s and separate strategy se
ssions
are
valued b
y the
NEDs
and pr
ovide
an
ongoing
oppor
tunity f
or e
xperienced-base
d debate.
There is mutual r
espe
ct and trust amongs
t the
Board
members, with
the Executive
Directors
welcoming the rigour and contributions made
by
each o
f the
NEDs. Each
Director continued
to contribute positively and eff
ectively both
within and outside of Board meeting
s.
86
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
COMPOSITION,SUCCESSIONANDEV
ALU
A
TION
There is a positive cultur
e amongst all the
Directors and the Board is visible to the wider
organisation and
leads
by
example. Ther
e
is
clarity in the communication casc
ade, which
suppor
ts unders
tanding by staff of the strategy
and performance,
and
set
s expectations.
Despite being a ver
y new Board, it w
orked well
throughout the r
es
trictions of the pandemic.
There is a high degr
ee of confidence in the
Chairman and the Committee Chairs.
The review did not identify any conc
erns and
allrecommendations made in
the BE-GS
report build upon a solid base of be
st
practice. Based on BE-GS extensive
“in the
Boardr
oom”
experience, all indicators
suggest that the Board and it
s Committees
are operating effectiv
ely
.
On the
Chairman’
s evaluation
against the
FRC
measures, the conclusion reached was that he
was effective. The Dir
ectors and investors
agree
that the
Chairman
is seen
by
all
(including
himself
) as
being in
a stewardship
role,
not
exer
cising an
y undue
control, and
allowing the
Board
as
a whole
and the E
xecutive
to run
thebusiness.
A summary of the key asse
ssment highlight
s contained in the BE-GS 2021 Board effectiveness review is set out below
.
Key assessment highlights
Commentary
Board composition and attributes
Unanimous vie
w that
this is a
high-qualit
y
Board;
the siz
e, composition
and
Executive/NED
mix o
f the
Board is
optimum
and comprises
a solid
and diverse
range
of
skills, e
xperience and
knowledge.
The NEDs
bring a
tremendous
range
of
experience. Good Chair
skills on
the
Board and Committees – high standard of technical ability
.
Culture-Board and organisation
The Boar
droom
culture
is exemplary –
the
Directors lead
by example.
There is
a
very open
and equal
approach,
with
everyone
sufficiently kno
wledgeable, experienced
and confident
to
challenge; and having the maturity to be challenged and learn.
The positive culture o
f the organisation shine
s through ev
ery
thing. There is clarity in the
communication cascade, which supp
ort
s unders
tanding by staff of the strategy and
per
formance,
and sets expectations. The
employ
ee communication is
two-way and
encourages open engagement on per
formance and major decisions. The regular P
ulse sur
vey
is one of many wa
ys the Board keeps in touch with the culture as per
ceived by employ
ees.
Stakeholder perceptions
CL
T members se
e the Board as value-adding and welcome the challeng
e and suppor
t
pro
vided by
the external dimensions
that the
NEDs bring.
Investors appr
eciate the
solid
Executive
team
under the
s
tewardship
of the
Executive
Chairman.
Board meetings
The Directors felt ther
e to be a good rhy
thm and cycle of Board meetings with well-
structured agendas and papers. There was a general f
eeling that the meeting
s wer
e run
efficiently due to comprehensiv
e papers, Chair briefing
s and good pre-meeting preparations.
Board information
Information flo
ws to the Board, including a good range of metrics, are o
f high quality and
consistent. Stakeholder KPIs are good, but feedback and oversight o
f feedback mechanisms
could be improv
ed.
People strategy
Pro
gress has
been made
in the
Board’
s
oversight
of the
Group
’
s people strategy and
succession. These ar
e
recognised as
essential elements of
the
Board’
s responsibility and
should be kept under regular r
eview
, along with diversity and the pipeline of talent below
Board and CL
T level.
Individual Directors
Each Director spoke highly of their colleagues, confirming that they brought diff
erent
attributes to
the
Board’
s deliberations.
Committees
The Committees p
erform well and, follo
wing a detailed review of their activities compared
with their duties within their terms of refer
ence, cov
er most of what are required of them.
CORPORA
TE GOVERNANCE
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
87
Summary of outputs and Board agreed actions
The follo
wing table present
s a high-level summary of the output
s from the 2021 Boar
d effectiveness review and the actions agr
eed by the Board.
A summary of the key asse
ssment highlight
s contained in the BE-GS 2021 Board effectiveness review is set out below
.
Outputs from the 2021 Board Effectiveness review
Board agreed actions
Increase the f
ocus on below Board level people strategy
, talent pipeline, diversity
, succession,
and r
emuneration
to k
eep pace
with the
execution of
the
strateg
y and
organis
ational
evolution.
Deeper dives into our p
eople strateg
y will
featur
e on the 2022 Board agendas.
Continue with
and increase
the NEDs e
xposure
to the
CL
T and
the
wider or
ganisation to
exchang
e ideas
and
reinfor
ce
the Boar
d’
s presence,
explain the
matters reserved for
de
cision
bythe
Board
and
the value
that
it brings;
such int
eraction will
support the
Board’
s role
in talent
management and succession planning.
Increased engagement as opportunitie
s
tomeet up
physically
open up
will
beschedule
d.
The pairing
b
etween
NEDs and
senior
managers
to be
further developed.
More
informal interaction
b
etween NEDs
and senior management to be arranged.
Oversight and reporting mechanisms for stakeholder feedback to the Board to be formalised.
This will be addressed as par
t of a more
structured ESG reporting framework.
The Board and the Committees should develop a f
or
ward pr
ogramme of work to ensur
e broad
cov
erage, support planning and to make effective use of precious Board/
Committe
e time.
A forward pro
gramme of work to be
developed and agreed.
An annual
review
of the
Committe
es’ activities gaug
ed against their
terms
of r
efer
ence to
b
e
conducted to ensure they hav
e fully discharged their r
esp
onsibilities.
Board’
s f
orward pr
ogramme t
o r
eflect this
recommendation.
The cycle of CL
T presentations at Board meetings and the separate programme of strategy
development meetings to be maintained.
Board’
s f
orward pr
ogramme t
o r
eflect this
recommendation.
Board
papers (
where
appropriate) to
build on the
organis
ation
’
s culture
by
more
clearly
refer
encing the stakeholder factors which had been taken into consideration.
Where a decision is being taken the papers
will reflect s172 factors.
The Group
’
s per
formance manag
ement system applie
s to management at all lev
els. The individual per
formance of the Ex
ecutive Directors is
review
ed separately by the Remuneration Committee. F
urther details of the Executive Directors’ performance measures and objectives and
their achievement against them are disclosed in the Remuneration R
epor
t on pages 100 to 121. As a result of the Board Eff
ectiveness review
,
we do not believe ther
e is a need to change the composition of the Board at this time.
BE-GS reviewed the accuracy of the content of this disclosur
e in relation to their work.
88
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
COMPOSITION,SUCCESSIONANDEV
ALU
A
TIONCONTINUED
Board composition

As required by the Code, at least 50% of
theBoard, ex
cluding the Chairman, are
Independent Non-Executive Dir
ectors.
As at 31 Decemb
er 2021, the Board
comprised the Executive Chairman, three
Executive Dir
ectors and four Independent
Non-Executive Dir
ectors. The Board
considers that all the Non-Executive
Directors, on appointment,
areindependent.
It is the Board’
s polic
y that appointment
s
tothe Board will alwa
ys be base
d solely
onmerit without any discrimination r
elating
to age, gender or an
y other matter that has
no bearing on an individual’s ability to fulfil
the role of Dir
ector
.
The Board is mindful of the aims of
theHampton-Alexander Revie
w
, an
independent review body which aims to
impro
ve women
’
s representation at Board
level and in leadership r
oles. This principle
ofBoard div
ersity is strongly suppor
ted by
the Board, r
ecognising that diversity of
thought, approach and experience is an
impor
tant consideration as part of the
selection criteria used to asse
ss candidate
s
to achieve a balanced Board.
The Board is also mindful of the aims of the
Parker R
eview
, an independent review body
dedicate
d to impro
ving the ethnic and
cultural diversity of UK boards to better
reflect their employee base and the
communities they ser
ve. The business
currently has no Dir
ector from an ethnic
minority background either on the Boar
d
orthe Executive Committee.
The Board considers that each Dir
ector is able
to allocate sufficient time to the Company to
discharge their r
esponsibilitie
s effectively
.
Diversity overview
Gender diversity Board
Board composition
Gender diversity
Companywide
Board tenure
Gender diversity
Senior manager
Average age of the Board
Male
70%
Female
30%
0-1 year
0%
1-2 years
38%
2-3 years
38%
3-4 years
0%
4-5 years
24%
Male
87%
Female
13%
40-49
38%
50-59
38%
60-69
24%
Executive Chair
13%
Executive
37%
Independent
50%
Male
83%
Female
17%
CORPORA
TE GOVERNANCE
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
89
COMPOSITION,SUCCESSIONANDEV
ALU
A
TIONCONTINUED
“
During 2021, the Committee continued to
focus on the depth and breadth of the Board,
the Company Leadership Team and senior
management succession as a key priority.”
Chris Sullivan
Chair of the Nomination
Committee
Attendance at meetings
Name
Meetings
attended
2021
ChrisSullivan(
Chair)
2/2
Stev
e Breach
2/2
AdrianChamberlain
2/2
CharlottedeMetz
2/2
Andre
wPage
2/2
Principal activities in 2021
•
Considered the r
esult
s of the 2020
Nomination Committee evaluation.
•
Re
viewed the structure, size and
composition of the Board and
itsCommitte
es.
•
Considered wider elements of
succession planning for the Board and
the levels below
, including how to
increase div
ersity
.
•
E
valuation of Directors (all of whom are
proposed for r
e-election at the AGM)
.
Areas of focus for 2022
•
Monitor Boar
d composition for
alignment of relevant skills, experience
and diversity to Company strategy
.
•
Oversight of the CL
T’
s development and
succession planning
.
Dear shareholders,
I am pleased to intr
oduce the Nomination
Committee (the ‘Committee
’) Report for
2021 which summarises our key activities
during the year
.
During 2021, the Committee continued to
focus on the depth and breadth o
f the Board,
the Company Leadership T
eam and senior
management succession as a key priority
.
The Committee maintains a well-defined
specific
ation for each appointment, with a
clear understanding of the values required to
help the effective functioning of the whole
Board. When considering the composition of
the Board, w
e keep under review the skills and
experience r
equired to
fulfil the
Board’
s
strategy
, to make suitable recommendations
based on those key attributes.
The Nomination
Committe
e
monitored the
membership of
all of
the Boar
d’
s Committees
follo
wing the appointment
s in 2020 of Adrian
Chamberlain and
Charlotte
de Metz
and
remain satisfied with their composition.
Succession planning
Succession planning
for
the Executive
Directors and Company Leadership T
eam
(CL
T) r
emains a particular f
ocus of
the
Committee. In addition, the Committee has
continued to monitor the CL
T and senior
management talent pool to ensure that
succession planning for business-critical
rolesis pr
oactively
review
ed.
The Board consider
ed the implications of the
requirements relating to the dev
elopment of a
diverse pipeline for succ
es
sion for the Boar
d
and the CL
T contained within the 2018 Co
de.
Discussions were held about initiativ
es taken to
increase the div
ersity in the hiring process,
including dr
awing
on NEDs
experience in
other
organisations of attracting diverse talent
.
Chris Sullivan
Chair of the Nomination Committee
90
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
NOM
INA
TION
COMMIT
TEEREP
ORT
Role of the Committee
The Nomination
Committe
e
is r
esponsible for
ensuring that the Board and its Committee
s
hav
e the appropriate balance of skills,
knowledge
and e
xperience to
effectively
le
ad
the Company both now and in the futur
e.
This is achieved through eff
ective succession
planning, the identification and development
of internal talent and a clear understanding of
the competencies and capabilitie
s required to
suppor
t the
deliver
y o
f Alfa
’
s
strateg
y
.
The Committee under
takes comprehensive
reviews of the leadership needs of the
Company
, fr
om both E
xecutives and
Non-
Executives, to
ensure
the continued ability
of
the organisation to compete effectively in the
marketplace, and keeps informed of the
strategic issues and commercial challenges
affecting the Company and the mark
et in
which it operates.
The Committee regularly undertakes a review
of its T
erms of Refer
ence to ensure that it
reflect
s the actual role carried out by the
Committee and that it is operating effectively
.
The Board r
eviewed and appro
ved minor
revisions to the T
erms of R
eference in
December 2021.
Appointment of Directors
There is a f
ormal, rigorous and transpar
ent
procedure f
or the appointment of new
Directors under which the Committee is
responsible for leading this process and making
recommendations to the Board. The sear
ch
process f
or ne
w Non-Ex
ecutive Dir
ectors is
to
appoint an
external
search
firm to
se
cure
a
strong and diverse list of candidates. A shor
tlist
of candidates is shared with the Committee,
meetings are schedule
d and then, once the
candidates have been identified, confirmation
is pro
vided of the time commitment required
and disclosure of an
y other business interest
s.
If discussions relate to the appointment of a
Chairman then Chris Sullivan, as Senior
Independent Director
, will lead the recruitment
process. When the Committee has found a
suitable candidate, the Chair of the Committee
makes a proposal to the whole Board, which
retains r
esponsibilit
y for all such appointments.
The Committee, on behalf of the Board,
regularly
assesse
s the
balance of
Executive
and
Non-Executive
Directors,
and
the composition
of
the Boar
d in
terms of
skills, e
xperience,
diversity and capacity
.
Diversity
Alfa seeks to have a w
orkforc
e which reflect
s
the world we and our customers liv
e in, whilst
facilitating the delivery of our strategic goals.
The Board and the Committee believe that
diversity is a wider topic than simply gender
and, in
order to
achieve the
Group
’
s
future
gro
wth aspirations, Alfa should remain
committed to building a pipeline of diverse
talent and regularly r
eviewing HR processes,
including recruitment and performance
management framew
orks.
The Committee will take into account a variety
of factors before r
ecommending any new
appointment
s to the Board, including r
elevant
skills t
o perform
the r
ole, experience,
knowledge and diversity
. Alfa ende
av
ours to
achieve appr
opriate diversity
, including gender
diversity
, throughout the Company
.
The Committee embraces the impor
tance
ofinclusion
and div
ersity and
support
s the
recommendations
of the
Hampton-Alexander
Review on g
ender and the Parker R
eview on
ethnic diversity
. Howev
er
, we acknowledge that
currently our Boar
d does not comply with the
recommendations and recognise that ther
e is
always more w
e can do, and will continue to
work to build a mor
e inclusive workplace at
alllevels
of
the Compan
y
. It
is
par
t
of the
Committee’
s r
emit when
making new
Board
appointment
s to consider the impor
tance of
diversity on the Board, including g
ender and
ethnicity
. This is considered in conjunction with
experience and
qualific
ations
in r
elation to
the
balance of the Board and its Committees.
CORPORA
TE GOVERNANCE
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
91
Board succession
The Committee keeps under review the
leadership needs of the organis
ation, both the
Executive
and
Non-Executive
Directors,
with a
view to ensuring the continued ability of the
organisation to compete effectively in the
marketplace. In addition, the Committee
reviews the succession plans for the Compan
y
Leadership T
eam and the senior management
structure, and employ
ee
s identified by
management as having the potential to dev
elop
in the longer term into futur
e leaders of the
business, taking into account future challenges
and oppor
tunities.
Independence
During 2021, the Committee reviewed the
balance
of skills,
exp
erience
and independence
of
the Boar
d. F
or Non-Executive
Directors
independence in thought and judgement is vital
to facilitating constructive and challenging
debate in the boardr
oom and is e
ssential to the
operational effectiveness of the Alfa Board and
its Committe
es.
The Committ
ee is
satisfied that
the external
commitments of
the Boar
d’
s Chairman and
members do not conflict with their duties as
Directors of the Company
. After the year end,
the Committee also considered the Directors
proposed for r
e-election by shareholders at the
A
GM. F
ollowing
discussion of
the skills
and
contribution of each Director
, and in
conjunction with the Board performance
evaluation, the Committee suppor
t
s the
proposed re-election of all Directors standing
for
re-election
at the
AGM in
2022.
Induction and ongoing
professional development
T
o ensure that each Director receiv
es
appropriate support on joining the Board,
there is a compr
ehensive and tailor
ed induction
programme, including the pr
ovision of
background material on the Compan
y and
briefings with relevant CL
T members. The
induction programme will continue to be
review
ed and update
d on a regular basis.
F
or prof
essional ongoing development, the
Board r
eceives presentations relevant to the
Company’s
busine
ss and
updates on
any
changes to markets, or regulations, which may
affect
the Compan
y
’
s
operations.
The Company Secr
etar
y supplies all Directors
with information on r
elevant corporate
gov
ernance and best practice. A
s part of their
annual per
formance evaluation, Dir
ectors are
given the opportunity to discuss training and
development needs. The Committee is
confident that Board members hav
e the
knowledge,
ability and
experience
to perform
the functions required of a Dir
ector of a
listedcompany
.
External directorships
The Board believ
es, in principle, in the b
enefit
of
Executive
Directors
accepting non-e
xecutive
directorships of other companies in order to
widen their skills and knowledge for the benefit
of the Company
. All such app
ointments require
the prior appro
val of the Board and the number
of public company appointments is limited to
one. Ther
e
were
no external appointments in
relation
to
the Ex
ecutive
Directors
during 2021.
Conflicts of interest
The Board operates a policy to identif
y and,
where appr
opriate, manage any potential
conflicts of interest that Directors may have.
It is the role of the Committee to monitor and
determine actions to address any potential, or
actual, conflicts that may arise. The Committee
reviews all potential conflicts of interest on an
annual basis and when new Directors ar
e
formally
appointed. No
conflicts of
interest
wer
e noted in the year and to the date of this
Annual Report
.
Reappointment of Directors
The reappointment of Dir
ectors is subje
ct to
their continuing commitment to Board
activities and satisfactor
y per
formance.
All Directors will stand for r
e-election annually
in accordance with the pr
ovision of the 2018
Code. The Committee has confirme
d to the
Board that the contributions made b
y the
Directors off
ering themselves for r
e-election
atthe 2022
AGM c
ontinue to
benefit the
Board and the members are in
vited to suppor
t
their re-election.
Non-Executive
Directors
are
appointed initially
for
three
years
and Non-Ex
ecutive
Directors
may
, subject to Board appro
val, remain in office
for
a
period of
up t
o six
years,
or
two
terms in
office,
with discr
etion
for
the Boar
d
to extend
the term for one further three-year term, to a
maximum o
f nine
years.
92
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
NOM
INA
TION
COMMIT
TEEREP
ORTCONTINU
ED
Annual evaluation
The per
formance of the Committ
ee has
beenasse
ssed as
par
t o
f the
ex
ternal
Board
evaluation conducted during summer
/
autumn
2021 by Boar
d Effectiveness and Governance
Services (BE-GS)
. The r
esult
s o
f the
evaluation
of the Board and its Committee
s wer
e
subsequently discusse
d in entirety and ar
eas
identified to develop the effectiveness of the
Committee fur
ther
. Information on the process
can be found on pages 86 to 88.
Focus for 2022
Board membership and succession will
continue to be high on the agenda moving into
2022. The Committee will continue to take an
active inter
es
t in the succession planning and
future leader identification processes for those
immediately below Board lev
el sitting on the
CL
T
, as well as monitoring pro
gress on diversity
to ensure that an
y succession plans incorporate
an appropriate balance of div
ersity
, skills
andexperience.
Chris Sullivan
Chair, Nomination Committee
8 Mar
ch
2022
CORPORA
TE GOVERNANCE
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
93
“
Alfa’s financial control environment and
governance framework has seen progressive
enhancements during the year, in particular
around the timeliness and accuracy of reporting
and forecasts.”
Steve Breach
Chair of the Audit and
RiskCommittee
Attendance at meetings
Name
Meetings
attended
2021
Stev
eBreach(
Chair)
4/4
AdrianChamberlain
4/4
CharlottedeMetz
4/4
ChrisSullivan
4/4
The Committee’
s members are all Independent
Non-Executive Dir
ectors.
Principal activities in 2021
•
Re
viewed the 2020 year-end financial
statement
s and Annual Report
.
•
Re
viewed the half-year financial results
and trading updates.
•
Appro
ved the Company’s risk
management framew
ork, risk appetite
and risk register
.
•
Re
viewed key findings from 2021
internal audits and approval of the 2022
internal audit plan.
•
Re
view of Information and C
yber
Security gov
ernance and organisation.
•
T
ax compliance status review
.
•
Re
viewed Internal & External
Auditeffectiv
eness.
•
Considered key ac
counting matters.
Areas of focus for 2022
•
Continued to monitor legislative and
regulatory changes that may impact the
work of the Committee.
•
Considered the impact of pr
oposed
audit industr
y changes.
•
Continued with oversight o
f internal
audit activities and findings.
•
Monitor
ed the continue
d progr
essive
enhancements to Alfa’
s systems and
internal controls.
Dear shareholders,
I am pleased to present our Audit and Risk
Committee Report for the year ended
31 December
2021. The
Report explains
the
work of the Committee during the year
, as well
as setting
out expected key
areas
of focus
for2022.
The Committee has an annual work plan linked
to
the Compan
y
’
s financial
repor
ting cycle,
which ensures that it considers all matters
delegated to it by the Board.
W
e have continued to review and challeng
e the
assumptions and judgements made by
management in the prepar
ation of published
financial information and to o
versee the
internal control en
vironment, including
ov
ersight of
the external and
internal audit
processes. Throughout the year
, the
Committee’
s primary f
ocus has
been to
maintain the integrity and transparency of the
Company’s
internal and
external financial
reporting
. W
e have continued to spend time
assessing the applic
ation of IFRS 15 ‘R
evenue
from
Contracts with
Customers’
, alongside
careful c
onsideration of
the Company’s
risk
management framew
ork, internal controls and
management information s
ystems.
It has been pleasing to se
e that the Company
has continued to make progr
ess during the year
impro
ving the timeliness and accurac
y of
reporting and forecast
s. Impor
tantly
, the
se
impro
vements have continued during an
extended period o
f r
emote w
orking which
has
existed since
the date
of the
last r
epor
t.
Committee members’
skills and
experience
areset out on pages 74 to 75 . The Boar
d is
satisfied that the Committe
e meet
s the
requirement to ha
ve r
ecent and relevant
financial e
xperience and
that, as
a whole,
it
s
members ha
ve
experience o
f the
auto
and
equipment finance and enterprise software
sector and corporate governanc
e.
This y
ear the
Board undertook an
ex
ternal
evaluation of the effectiveness of the Board
and Board Committees, including this
Committee, in accordance with the
requirements under the 2018 Code and you
can read more about this on pages 86 to 88.
As a result of its work during the year
, the
Committee has concluded that it has acted i
n
accordance with its T
erms of Refer
ence.
Steve Breach
Chair of the Audit and
RiskCommittee
94
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
A
UDITANDRI
SKCOMMITTEEREPORT
Key responsibilities

The Board has delegated to the Committee
responsibility for ov
erseeing financial repor
ting,
the review and assessment of the effectiveness
of the internal control and risk manag
ement
systems and maintaining an appropriate
relationship
with
the external
auditor
.
The Committee has adopted T
erms of
Refer
ence, which are a
vailable to view at
inv
es
tors.alfasystems.com. The T
erms of
Refer
ence pro
vided the framework for the
Committee’
s w
ork in
the year
and
key
responsibilities of the Committee are
summarised as follows:
•
Overseeing the relationship with the
Company’s external auditor
, monitoring
its e
ffectiveness and independence and
making recommendations to the Board in
respect of it
s remuneration, appointment
and remo
val. The Committee also reviews
the findings from the external auditor
,
including discussion of significant
accounting and audit judgements,
levelsof err
ors identified and overall
effectiveness of the audit process.
•
Re
viewing the financial statement
s of
theCompany
, including its annual and
half-yearly r
epor
t
s and, if applicable, any
other formal announcements relating to
its financial p
erformance. The Committee
will also consider significant financial
reporting issue
s, accounting policies and
key ar
eas of judgement or estimation.
This review also includes consideration
ofthe clarity and completeness of
disclosures on the information pr
esented
in the financial statement
s.
•
Overseeing the accounting principles,
policies and practice
s adopted by
theCompany
.
•
Monitoring and r
eviewing internal audit
activities, repor
ts and finding
s.
•
Re
viewing the effectiveness of the
Company’s system of internal financial
controls and internal contr
ol systems.
•
Advising the Board on the Compan
y
’
s risk
strategy
, risk policies and current and
emerging risk exposures, including the
ov
ersight of the overall risk manag
ement
framework and systems.
•
Assessing the ade
quacy and securit
y
ofthe Company’s arr
angements for it
s
employ
ee
s and contractors to raise
concerns, in confidence, about possible
wrongdoing in financial r
eporting or other
matters and to ensure pr
opor
tionate and
independent investigation of such matters.
•
Making recommendations to the Boar
d
asit deems appropriate on any ar
ea within
its remit where action or impro
vement
isrequired.
Meetings
During the year
, the Committee met four times
and met
privately with
the external
auditor
once. The Committee operates to a for
ward
agenda linked to the financial calendar which
ensures that the responsibilities and duties of
the Committee are discharged in accor
dance
with the T
erms of Refer
ence and the
requirements of
the UK
Corporate
Governance Code.
In addition to the Committee members, by
invitation, the meetings of the Committee may
be attended by the CFO
. The Chairman of the
Board, CEO and COO may also attend
meetings. The
Company
’
s
external auditor
and
the internal audit service
s provider ar
e also
present at all Committee meeting
s, to ensure
full communication of matters as they relate to
their respective responsibilities. At the end of
each Committee meeting
, Committee
members have the opportunity to meet with
the e
xternal auditor
(and,
where
appropriate,
the int
ernal auditor
)
for
a private
discussion
regarding the audit pr
ocess and relationship
with management.
The Chair of the Committee holds regular
meetings with
the external
auditor
, which
has
an oppor
tunity to discuss matters with the
Committee without management being
present
and also
with
the CFO
(who has
responsibility and custody of the internal
auditfunction)
.
Meetings of
the Committee
are
scheduled
close to the end of the half and full year
, as well
as before the publication of the associated
half-year and full-y
ear financial report
s, so as to
ensure the Committee is informed fully
, on a
timely basis, on areas of significant risks and
judgement. The Board has confirmed that it is
satisfied that Committe
e members posse
ss an
appropriate lev
el of independence and depth
of
financial and
commercial expertise. F
or
the
year ended 31 December 2021, Steve Breach,
the Chair of the Committee, was determined
by the Boar
d as having recent and r
elevant
financial e
xperience.
The Committee is satisfie
d that it receives
sufficient information and has access to
relevant and timely management personnel to
allow the Committee members to engage in an
informed debate during Committee meetings
and to fulfil its resp
onsibilities.
CORPORA
TE GOVERNANCE
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
95
Significant financial

As par
t of its monitoring of the
integrity of the financial
statement
s, the Committee
reviews whether suitable
accounting policies have been
adopted and whether
management has made
appropriate estimates and
judgements and se
eks suppor
t
from
the
external auditor
to
assess them. The Committe
e
considered the follo
wing
significant judgements and
other areas of audit f
ocus in
respect of the financial
statement
s f
or
the six
months
ended 30 June 2021 and year
ended 31 De
cember 2021.
These areas hav
e been
identified as being signific
ant
by virtue of their materiality or
being accounting items which
are new f
or the current
financial year or the lev
el of
judgement and/
or e
stimation
inv
olved. In order to ensur
e the
approaches taken wer
e
appropriate, the Committee
considered report
s from both
management
and the
external
auditor
. The Committee
challenged judgements and
sought clarification where
neces
sar
y
. The Committee
received a report from the
external auditor
on the
work
it
had per
formed to arrive at its
conclusions and discussed in
detail all material findings
contained within the report
.
Area of focus
Assessment
Review of the Committee
Conclusion/Action taken
Re
venuer
ecognition
The Gr
oup
’s
op
erations
include complex
sof
tware
implementation
programmes and service activitie
s.
The deliv
ery of
these contracts typically extends
ov
er mor
e
than one
reporting perio
d, and often the original project plans are amended as the
implementation programme pr
ogresses. In addition, from time to time,
the Compan
y
isentitled to
one-off
licence income
uplif
ts or chang
es to
maintenance income entitlements. Contract modific
ations also occur
from time to time.
In recognising re
venue, management must apply a number of
judgements to alloc
ate the ov
erall transaction price across the multiple
per
formance obligations that ha
ve been identified within the
se project
s.
Estimates are
applie
d in
this assessment for
example
when assessing
the
stand alone selling price.
In advance of the half year and full y
ear the Committee received report
s
from management that outlined the key judg
ement
s that wer
e likely to
be required to be included in the result
s. These repor
t
s wer
e review
ed
and the key points within them, including key sources of estimation
uncertaint
y
, w
ere
discussed, with
the external
auditor
commenting
where r
elevant.
As par
t of the process of appro
ving the issuing of the half-year and
full-year r
esult
s the
se report
s were updated and issued by management
to
the Committee
with manag
ement’s
final positions documented.
These were consider
ed carefully by the Committee in conjunction with
input fr
om
the external
auditor
.
The Committee agreed with the revenue judgements adopted by
management in preparing the r
esult
s.
Dev
elopmentcosts
The Group continues to invest in the development of the Alfa S
y
stems
product. The
majority o
f dev
elopment eff
ort isundertaken in
partnership with
customers and
therefor
e
isspe
cific
to that
implementation or
cus
tomer’
s pr
ocess.
Judgement is requir
ed to asse
ss whether any development is
substantially new in either design or functionality
, and whether it would
be commer
cially viable
in the
open market.Theref
ore,
management
assesse
s the
likelihoo
d
ofcapitalisation of
such costs prior
to
initiation of
the inv
es
tment project and also performs bi-annual asse
ssment
s of the
development w
ork that has been under
taken to determine if it meet
s the
criteria
set out
inIAS
38 f
or capitalisation.
The Committee reviewed r
epor
t
s from management detailing the c
ost
s
that had been identifie
d as appropriate f
or capitalisation.
The Committee noted that the amount
s being c
apitalised remained
relativ
ely modest compar
ed with
the total
expenditure on
the
product
during the
p
eriod. The
Committe
e concurr
ed with
management
’
s
approach on the amounts to be capitalise
d.
Goodwill and carr
ying value
ofin
vestments
The Group has goodwill on its balance sheet and the Company holds
inv
es
tment in subsidiaries. These ne
ed to be reviewed annually to
ensure
that the
recov
erable amount
exceeds the book value
, and
in the
case of investment in subsidiaries also to see if a previous impairment
should be rev
ersed.
The Committ
ee revie
wed and
challenged
management’
s
impairmentassessment
.
The Committee agreed that no impairment was required in the current
year f
or both goodwill and the c
arrying value of the investment in
subsidiaries. In
light
of the
investment
’
s
good performance
in the
year
,
the Committee agreed that the impairment recognised in 2018 should
be rev
ersed in the company only financial statement
s of Alfa Financial
Software Holdings PLC.
Going concern and
viabilitystatement
The Directors must satisfy themselves r
egarding the
Group
’s
long-
term viability and confirm
that they ha
ve ar
easonable expectation
that the Gr
oup will continue tooperate
and meet it
s liabilities as they
fall due for the f
oreseeable future.
The Committ
ee revie
wed manag
ement’s
budget and
for
ecas
t
s, including
an ov
er
view of the assumptions made in the preparation of the base case
suppor
ting the going concern and viability statement. This include
d the
Group
’
s 2022 budget and also plans for 2023 and 2024.
The Committee discusse
d and challenged the budget and f
orecast
s
before agr
eeing with the reasonableness of the three-year period.
The Committee asse
ssed this in light of the principal risks and
uncertaintie
s, including
the impact
of CO
VID-19,
as disclosed
on pag
es
46 to 51 in the Strategic r
epor
t.
The Committee discusse
d and challenged the downside scenarios
modelled as
par
t
ofthe V
iability statement
as
disclosed on
pages 52
to
53 in the Strategic r
epor
t, the funding he
adroom a
vailable, the feasibility
of mitigating actions, the dividend policy and share-buy back
programme, and the speed of implementation of any cost-saving
measures follo
wing future management decision-making.
The Committee noted the 2018 Co
de requirement f
or the Directors to
state whether they consider it appropriate to adopt the going c
oncern
basis
of
accounting f
or
aperiod of
at least 12
months fr
om the
date of
appro
val of the 2021 financial statement
s.
F
ollowing this evaluation and analysis, the Committee was satisfie
d
withthe judg
ement
s
made and
that
the continued
use o
f the
going
concern basis was appropriate, and the viability statement was
prepar
ed appropriately
.
96
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
A
UDITANDRI
SKCOMMITTEEREPORTC
ONTINUED
Area of focus
Assessment
Review of the Committee
Conclusion/Action taken
Re
venuer
ecognition
The Gr
oup
’s
op
erations
include complex
sof
tware
implementation
programmes and service activitie
s.
The deliv
ery of
these contracts typically extends
ov
er mor
e
than one
reporting perio
d, and often the original project plans are amended as the
implementation programme pr
ogresses. In addition, from time to time,
the Compan
y
isentitled to
one-off
licence income
uplif
ts or chang
es to
maintenance income entitlements. Contract modific
ations also occur
from time to time.
In recognising re
venue, management must apply a number of
judgements to alloc
ate the ov
erall transaction price across the multiple
per
formance obligations that ha
ve been identified within the
se project
s.
Estimates are
applie
d in
this assessment for
example
when assessing
the
stand alone selling price.
In advance of the half year and full y
ear the Committee received report
s
from management that outlined the key judg
ement
s that wer
e likely to
be required to be included in the result
s. These repor
t
s wer
e review
ed
and the key points within them, including key sources of estimation
uncertaint
y
, w
ere
discussed, with
the external
auditor
commenting
where r
elevant.
As par
t of the process of appro
ving the issuing of the half-year and
full-year r
esult
s the
se report
s were updated and issued by management
to
the Committee
with manag
ement’s
final positions documented.
These were consider
ed carefully by the Committee in conjunction with
input fr
om
the external
auditor
.
The Committee agreed with the revenue judgements adopted by
management in preparing the r
esult
s.
Dev
elopmentcosts
The Group continues to invest in the development of the Alfa S
y
stems
product. The
majority o
f dev
elopment eff
ort isundertaken in
partnership with
customers and
therefor
e
isspe
cific
to that
implementation or
cus
tomer’
s pr
ocess.
Judgement is requir
ed to asse
ss whether any development is
substantially new in either design or functionality
, and whether it would
be commer
cially viable
in the
open market.Theref
ore,
management
assesse
s the
likelihoo
d
ofcapitalisation of
such costs prior
to
initiation of
the inv
es
tment project and also performs bi-annual asse
ssment
s of the
development w
ork that has been under
taken to determine if it meet
s the
criteria
set out
inIAS
38 f
or capitalisation.
The Committee reviewed r
epor
t
s from management detailing the c
ost
s
that had been identifie
d as appropriate f
or capitalisation.
The Committee noted that the amount
s being c
apitalised remained
relativ
ely modest compar
ed with
the total
expenditure on
the
product
during the
p
eriod. The
Committe
e concurr
ed with
management
’
s
approach on the amounts to be capitalise
d.
Goodwill and carr
ying value
ofin
vestments
The Group has goodwill on its balance sheet and the Company holds
inv
es
tment in subsidiaries. These ne
ed to be reviewed annually to
ensure
that the
recov
erable amount
exceeds the book value
, and
in the
case of investment in subsidiaries also to see if a previous impairment
should be rev
ersed.
The Committ
ee revie
wed and
challenged
management’
s
impairmentassessment
.
The Committee agreed that no impairment was required in the current
year f
or both goodwill and the c
arrying value of the investment in
subsidiaries. In
light
of the
investment
’
s
good performance
in the
year
,
the Committee agreed that the impairment recognised in 2018 should
be rev
ersed in the company only financial statement
s of Alfa Financial
Software Holdings PLC.
Going concern and
viabilitystatement
The Directors must satisfy themselves r
egarding the
Group
’s
long-
term viability and confirm
that they ha
ve ar
easonable expectation
that the Gr
oup will continue tooperate
and meet it
s liabilities as they
fall due for the f
oreseeable future.
The Committ
ee revie
wed manag
ement’s
budget and
for
ecas
t
s, including
an ov
er
view of the assumptions made in the preparation of the base case
suppor
ting the going concern and viability statement. This include
d the
Group
’
s 2022 budget and also plans for 2023 and 2024.
The Committee discusse
d and challenged the budget and f
orecast
s
before agr
eeing with the reasonableness of the three-year period.
The Committee asse
ssed this in light of the principal risks and
uncertaintie
s, including
the impact
of CO
VID-19,
as disclosed
on pag
es
46 to 51 in the Strategic r
epor
t.
The Committee discusse
d and challenged the downside scenarios
modelled as
par
t
ofthe V
iability statement
as
disclosed on
pages 52
to
53 in the Strategic r
epor
t, the funding he
adroom a
vailable, the feasibility
of mitigating actions, the dividend policy and share-buy back
programme, and the speed of implementation of any cost-saving
measures follo
wing future management decision-making.
The Committee noted the 2018 Co
de requirement f
or the Directors to
state whether they consider it appropriate to adopt the going c
oncern
basis
of
accounting f
or
aperiod of
at least 12
months fr
om the
date of
appro
val of the 2021 financial statement
s.
F
ollowing this evaluation and analysis, the Committee was satisfie
d
withthe judg
ement
s
made and
that
the continued
use o
f the
going
concern basis was appropriate, and the viability statement was
prepar
ed appropriately
.
CORPORA
TE GOVERNANCE
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
97
Fair, balanced and
understandable
The Committee has under
taken a careful
review to ensur
e that the Annual Report is
‘fair
, balance
d and understandable’ and
pro
vides the ne
cessar
y information for
shareholders to assess the Company
’
s
consolidated position, per
formance,
business model and s
trategy
, in line with
therequirements of the 2018 Code.
The Committee members were consulted
atvarious stages during the drafting proces
s
and pro
vided input at the planning s
tage, as
well as having the opportunity to review the
Annual Report as a whole and discuss, prior
to the March 2022 Committee meeting, any
areas r
equiring additional clarity or b
etter
balance in the messaging
. In forming its
opinion and recommendation to the Board
in respect of the above matters, the
Committee asse
ssed the following:
•
A qualitative r
eview of disclosur
es and
areview
of internal consistency throughout
the Annual Report and Account
s;
•
A re
view by the Committee of all material
matters, as reported elsewhere in this
Annual Report and Account
s;
•
A risk
-comparison review
, which asse
sses
the consistency of the presentation
ofrisks, and significant judgements
throughout the main ar
eas of risk
disclosure in this Annual R
epor
t
andAccounts;
•
A re
view of the balance of good and bad
news; and
•
Ensuring it corr
ectly reflect
s:
•
the Company’
s position and
per
formance as described on pages 137
to 172;
•
the Company’
s business mo
del, as
describe
d on pages 18 to 19; and
•
the Company’
s strateg
y
, as describ
ed
on pages 22 to 35.
On the basis of this work, tog
ether with the
views expressed by the external auditor
, the
Committee recommended, and in turn the
Board confirmed, that it could make the
required statement that the Annual Report
is ‘fair
, balance
d and understandable’
.
Risk management
The Board has o
verall responsibility for
determining
the natur
e and
ex
tent
of its
principal and
emerging risks
and
the extent
ofAlfa’
s risk
appetite,
and f
or monitoring
andreviewing
the effectiveness
of the
Company’s
sys
tems o
f risk
management and
internal control. F
ur
ther details of the risk
management objectives and process are
onpages 44 to 45. The principal risks and
uncertaintie
s facing the Company are
addressed in the Strategic report in the table
on pages 46 to 51. The Board has delegated
tothe
Committee the
responsibility for
monitoring the effectiveness of the systems
ofrisk
management.
Internal control
The Board determines the objectives and
broad policies of the Company and meets
regularly
, when a set sche
dule of matters which
are r
equired to be brought to it for decision is
discussed. Overall
management
ofthe
Company’s
risk appetite, its tolerance
to risk
and discussion
of key
aspect
s of
execution of
the Compan
y
’
s
strateg
y r
emain
the
responsibility of the Board. The Boar
d has
delegated to the Audit and Risk Committee
the responsibility for ov
erseeing the system
ofinternal
controls
to
ensure
these ar
e
appropriate to the business envir
onment
s
inwhich the
Company operates.
Key elements of this system include
thefollo
wing:
•
A clearly define
d organisation structure for
monitoring the conduct and operations of
the business.
•
Clear delegation of authorit
y throughout the
Company
, star
ting with the matters reserved
for the Boar
d.
•
A formal process for ensuring that key risks
affecting operations across the Compan
y are
identified and
asse
ssed on
aregular
basis,
together with the contr
ols in place to mitigate
those risks. Risk consideration is embedde
d in
decision-making processe
s at all levels and the
most significant risks are periodically reviewed
by the Boar
d. The risk process is reviewed by
the Audit and Risk Committee.
•
The prepar
ation and review of the
annualbudget.
•
The monthly reporting of actual results
and their review against the budget,
for
ecas
t
s and the previous y
ear
, with
explanations obtained for all
significantvariances.
•
Controls in r
espect of financial repor
ting
and the production of the consolidated
financial statement
s are well established.
Group accounting policies are consistently
applied and review and r
econciliation
controls operate eff
ectively
.
•
The F
inance
Manual which
outline
s ke
y
control pr
ocedures and policie
s to apply
throughout the Compan
y
. This include
s
clearly defined p
olicies and esc
alating
authorisation levels for all pr
ocurement
activity including
capital e
xpenditure
andinv
es
tment.
During 2021 the Board, thr
ough the
Committee, has continued to monitor the
company’s
risk management
and
internal
control and it has also r
eviewed their
effectiveness. Thr
oughout
2021 Alfa
’
s
financial,
operational and compliance controls continued
to operate as intended.
Internal audit
The Audit and Risk Committee suppor
ts the
Board in fulfilling its responsibilities to review
the activities, resources, organisational
structure and operational effectiveness of the
internal audit activities. Follo
wing discussion
with the Committee Chair and the CFO
, BDO
LLP presents it
s internal audit plan for appro
val
to the Committee before the start of each new
financial year and will pr
ovide an update and
further plans at the mid-year stage.
The Committee monitored and review
ed the
scope, extent
and
effectiveness of
the internal
audit plan
in line
with the
Company
’s
key risks
and strategy
. Internal audit is a standing agenda
item at each Committee meeting and BD
O
LLP presents an up
date on audit activities, the
progr
ess of the audit plans and the outcomes
of all audits with action plans to address any
issues. Activitie
s of internal audit during 2021
included the following ar
eas of focus:
•
Post implementation
review
for
US financials
system change
•
IT Procurement r
eview
•
Payr
oll review
•
ESG review
•
Follow up on prior r
ecommendations.
98
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
A
UDITANDRI
SKCOMMITTEEREPORTC
ONTINUED
The Committee per
formed an effectiveness
review o
f internal audit during the year
.
As partof
this r
eview
refer
enced abov
e, and
considering
management’
s opinion,
the
Committee was satisfie
d that the internal audit
function remains eff
ective and fit for purpose.
External Audit
The Committee ov
ersees the Company
’
s
relationship with, and the performance
of
,the external auditor
. This includes
responsibility for monitoring its
independence, objectivity and compliance
with ethical and regulatory requirements.
The Committee is the primar
y contact with
the external auditor
. The Committee also has
responsibility for appro
ving the nature of
non-audit service
s which the
external auditor
may or ma
y not be allowed to pro
vide to the
Company and the f
ee
s paid for these service
s
(subject to de minimis le
vels)
.
Independence and performance
of the external auditor
The Committee is responsible for revie
wing
theindependence of the Compan
y
’
s external
auditor
, RSM, agr
eeing the terms of
engagement and the scope of its audit
.
RSM has
a policy of partner rotation,
whichcomplies with regulatory standards,
and RSM
operates a peer review pr
ocess
forits engagements, to ensure that
it
s
independence is maintained. The Committe
e
review
ed a report from the
external auditor
describing it
s arrangements to identif
y
,
report and manage any conflicts of interest
.
Maintaining an independent r
elationship with
the Company’
s external auditor is acritical
part of asse
ssing the effectiveness of the
audit process. The Board has appro
ved a
policy which is intende
d to maintain the
independence and objectivity of the e
xternal
auditor
. The polic
y
, which was update
d in the
year
, gov
erns the pro
vision of audit, audit-
related service
s and non-audit service
s
pro
vided by the auditor
. Committe
e appro
val
is requir
ed for any
ser
vice with an
expecte
d
cost in exc
es
s of £10,000.
During 2021, the
external auditor
confirmed to the
Committee
that it did not pro
vide any non-audit or
additional service
s other than for the
half-year r
eview that could lead to its
objectivity and independence b
eing
compromised on behalf of the Company
.
Details of audit, audit-related fees and
non-audit fees are included in note 9 to
theconsolidated financial statements.
The Committee notes that audit par
tner
rotation ev
er
y five y
ears facilitates
independence and objectivity within the
external audit team. The
current External
Audit Engagement P
ar
tner is Graham
Ricketts, who was appointe
d to lead the
audit in July 2020. The Committee is satisfie
d
with the per
formance and eff
ectiveness of
RSM as
external auditor
, taking into account
the Committee
’
s own
asses
sment and
feedback. The Committee has conclude
d
that RSM
displays the necessar
y attributes
ofindependence andobjectivity
.
Assessment of the audit
process
The sc
ope of
the
external audit
is
formally
documented by the auditor
. It discusse
s the
draft plan with management before it is
referr
ed to the Committee, which reviews its
suitability and holds fur
ther discussions with
management and the auditor befor
e final
appro
val. The Committee has reviewed the
quality of the audit plan and related report
s for
the 2021 audit and is satisfied with the quality
of these document
s.
The Committee discusse
d the quality of the
half-year
revie
w and
audit
work
since R
SM’
s
appointment and considered the per
formance
of
the external
auditor
, taking
into
account
feedback from various stakeholders across the
business and
the
Committee’
s o
wn assessment.
The evaluation focused on: robustness of the
audit process; quality of delivery; repor
ting;
and people and ser
vices. The Committe
e
review
ed the
independence o
f the
external
auditor
and concluded
that it
complie
s with
UK
regulatory and prof
essional requirement
s and
that its obje
ctivity is not compromised.
The Committee doe
s not intend to put
theexternal audit
out to
tender in
the coming
financial year as the appointment
ofRSMoccurr
ed in
2020 and
therefore
theCompany
has
complied with
the
Competitions and
Markets Authority
requirement in r
elation to audit tenders every
10 years. The Committee will continue to keep
this under
review
as part of
it
sreview
of
effectiveness o
f the
externalauditor
.
Going concern and

The Committee reviewed the updated
wor
ding of the Company
’
s longer-term
viability statement
, set out on pages 52
to53. T
o do this, the Committee ensured
that the financial model used was consis
tent
with the appro
ved three-year plan and that
scenario and sensitivity testing aligne
d
clearly with the principal risks of the
Company
. Committee members challenged
the underlying assumptions used and
review
ed the result
s of the detailed work
per
formed. The Committee was satisfied
that the analysis suppor
ting the viability
statement had be
en prepar
ed on an
appropriate basis. The Committee also
review
ed the going concern statement,
setout on page 126 and confirmed its
satisfaction with the testing metho
dology
.
Assessment of the
effectiveness of the
Committee
The Committee’
s effectiveness in respect
of2021 was evaluated as par
t of the
external review described on pages 86 to 88.
The key issues that were identified in the
Committee evaluation were discussed by
the Committee to ensure these were
adequately addressed and the Chair
pro
vided an update where appropriate.
Focus for 2022
In 2022, as well as the r
egular cycle of
matters that the Committee schedule
s for
consideration each year
, the Committee
willcontinue to monitor legislation and
regulatory changes, including those that
affect the audit market that ma
y impact the
work of the Committee. The Committee will
also continue with ov
ersight of internal audit
activities and findings as well as monitoring
the continued progressive enhancements to
Alfa’
s systems and internal controls.
Steve Breach
Chair, Audit and Risk Committee
8 March 2022
CORPORA
TE GOVERNANCE
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
99
“We want to ensure the overall remuneration
structure remains fit for purpose in light of
evolving circumstances, but also aligned with
theinterests of other stakeholder groups, notably
ouremployees.”
Adrian Chamberlain
Chair of the Remuneration
Committee
Attendance at meetings
Name
Meetings
attended
2021
AdrianChamberlain(
Chair)
4/4
ChrisSullivan
4/4
Stev
e Breach
4/4
CharlottedeMetz
4/4
The Committee’
s members are all Independent
Non-Executive Dir
ectors.
Principal activities in 2021
•
Working with COO and CPO on developing
a
new
structure
for
Executive
Director
and
Leadership personal obje
ctives.
•
Setting the annual bonus targets for the
Executive
Directors
for
the
financial y
ear
2021 and measuring per
formance against
them (f
ollowing
the
year
end)
.
•
Approving L
TIP awar
ds to employees, and
the targets attached to the
se.
•
Re
viewing and recommending for
appro
val the revised T
erms of Refer
ence
of the Committee.
•
Launch of all-employee shar
e plans in
the UK (SA
YE) and USA (ESPP
)
.
Areas of focus for 2022
•
Approval of bonus performance measures
and targets for 2022.
•
Approval of performance conditions and
awar
ds
under the
Company
’
s L
TIP
for
2022.
•
Review of any issues raised by shar
eholders
in relation to r
emuneration and the
Remuneration P
olicy
.
•
Asse
ssment of the ongoing
appropriateness of the remuneration
arrangements in light of remuneration
trends and market best practice.
Dear shareholders,
I am pleased to present our Directors’
Remuneration R
epor
t for the year ended
31 December 2021. I would like to thank
Chris Sullivan, Stev
e Breach and Charlotte
de Metz for their contribution to the
Committee’
s work during 2021.
During 2021 COVID-19 continued to hav
e
an impact on the operating environment.
The Remuneration Committee took a
decision to ignore its p
otential effects in
2020 when setting short and long-term
targets; reflecting our belief in the busine
ss’
s
robustness and prospect
s.
In 2021 we continued to believe this appr
oach
was appropriate. The 2021 bonus and 2021
L
TIP targets were set against this background.
During the course of 2021 the Committee
decided not to sc
ale back rewar
ds or adjust
targets as a result of the pandemic.
Like many R
emuneration Committees we
relied on internal
and external guidance in
light of the effects the pandemic had in ever
y
area of our liv
es. As is our dut
y to all Alfa
stakeholders, we want to ensur
e that the
ov
erall remuneration structure r
emains fit for
purpose in light of evolving cir
cumstances,
but also aligned with the interest
s of other
key stakeholder groups, notably our
employ
ee
s. This included the launch of new
all-employ
ee share plans in
the UK (S
A
YE)
and USA
(ESPP)
, designed to encourage and
widen employ
ee share ownership.
The Committee has spent time ensuring
that our approach to r
emuneration
continues to remain in line with market
changes and corporate gov
ernance
developments. The Committee continue
d
to carr
y out it
s usual role in ensuring
remuneration outcomes and decisions are
appropriate in the wider business context.
100
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
DIRECTORS’REMUNER
A
TIONREPO
RT
Company performance in 2021
The Company saw a strong financial and
operational per
formance in 2021.
Rev
enues were up 5% on the prior year at
£83.2m (2020: £78.9m) and operating
profitincr
eased by £0.8m to £24.7m
(2020: £23.9m)
. At constant currency
rev
enue grew 9% with operating pr
ofit up
10%. F
or a comprehensive o
verview
, I would
direct readers to the S
trategic report on
pages 1 to69.
During 2021 the Company did not furlough any
employ
ee
s or access any Government support
.
W
e also redirected time and resources to
develop a pr
ogramme of wellbeing r
esources,
activities and events to suppor
t our employees
through a difficult period.
In Nov
ember 2021, following Boar
d
appro
val, we wer
e once again delighted
toannounce the declaration of a special
dividend. This returned £29.7m to
shareholders and was positively r
eceived.
Performance outturns for 2021
The Committee approv
ed the 2021 bonus
outcomes for the
Executive Dir
ectors,
reflecting the compan
y
’
s strong operational
and financial per
formance. Operating pr
ofit
and rev
enue per
formance both significantly
exceeded the ranges set, and the fr
ee cash
flow modifier was achieved, warranting 100%
pay-out o
f the bonus’
s financial element
s.
The Committee also asse
ssed the
per
formance of each o
f the Executive
Directors against their personal obje
ctives,
It concluded that pay-outs of between
target and maximum w
ere warranted for
theCFO and COO.
The CFO was awar
ded 70% of maximum,
the COO 73% of maximum. More
information on ho
w the annual bonus
for2021 was determined is pro
vided
onpage 113.
The Executive Chairman and the CE
O have
separately advised the Committee that
, due
to their significant shareholding in the
Company
, they wish to waive their eligibility
for a bonus in respect of the per
formance
year 2021 and f
or any Long T
erm Incentive
Plan (L
TIP) awar
d for the performance
period beginning Januar
y 2022.
Shareholders will be a
ware that the
Executive Chairman and CE
O also waived
any entitlement f
or all per
formance y
ears
since the IPO in 2017. The Committee
places on record its thanks to the Executive
Chairman and the CEO for waiving their
bonus and L
TIP entitlement
s, which helps
the Committee broaden share o
wnership
toselected Company employees.
More br
oadly
, the Committee is s
atisfied
with Alfa’
s response to the COVID-19
pandemic and the impact this had on the
experience of all key Alfa stakeholders
during the year – including shar
eholders,
employ
ee
s and customers. The Committee
has therefor
e not exer
cised any discretion in
relation to the outcome of the variable pa
y
schemes, or to overall r
emuneration levels.
The second L
TIP awards for E
xecutive
Directors and members of the Company
Leadership T
eam were awar
ded in April
2021 and the per
formance against the
targets for both relativ
e total shareholder
return (TSR) and earnings per share (EPS)
gro
wth over the three years to December
2023 will be review
ed regularly
.
2021 Policy and
implementation
As required by the r
epor
ting regulations,
theRemuneration P
olicy was submitted to
abinding vote at the 2021 A
G
M, this being
the third anniv
ersar
y of it
s adoption.
During 2021, the Committee debated
theexisting remuneration arrangements.
On balance we decided that the current
approach r
emained well suited to Alfa’
s
strategic intentions. The Policy that was put
to shareholders at the 2021 A
G
M remained
largely unchang
ed.
F
ur
ther details on our Remuneration P
olicy
are described on pages 103 to 111.
A
t the end of 2021, the Chairman and CEO
requeste
d that the Committee approv
e
their proposal to reduce their salaries, bonus
and shares to the legal minimum level.
Both the Chairman and CEO are significant
shareholders in the Compan
y and expressed
a desire to align their future r
emuneration
with those of the other shareholders.
The Committee members were supportive
of the proposal and appro
ved it effective
1December 2021.
Therefor
e, for the upcoming y
ear
, s
alaries
for the Chairman and CEO will r
eflect the
National Living W
age. Salaries for the CFO
and COO will remain unchanged.
CORPORA
TE GOVERNANCE
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
101
The oppor
tunities available under the
annual bonus will be 0% of salar
y for the
CEO and remain at 125% o
f salar
y for the
CFO and 100% of salary for the CO
O
.
The Committee has taken the oppor
tunity
to review the performance measur
es for the
2022 annual bonus and is of the view that
our existing measures of rev
enue, operating
profit and personal objectives, with cash as a
modifier
, continue to be appropriate for
2022. F
ur
ther information is pr
ovided on
pages 120 and 121.
W
e unders
tand from our engagement with
shareholders that quantifiable non-financial
objectives are of r
eal impor
tance and, as
such, the Committee will continue to strive
to meet these expe
ctations. As in previous
years, pr
ecise financial and non-financial
targets are commer
cially sensitive and will
be disclosed at the end of the per
formance
year
, per our current practice.
The oppor
tunities available under the L
TIP
hav
e be
en set at 150% for the CFO and
100% of salar
y for the COO
. Over the year
the Committee gave careful thought to the
measures in the L
TIP
. W
e believe that, for
now
, EPS and TSR continue to provide the
most appropriate means of testing long-
term per
formance and ther
efor
e no changes
hav
e be
en made for the 2022 a
wards,
though we will continue to r
eview the
suitability of the measures prior to making
new awar
ds, as we do curr
ently
.
UK Corporate

T
o ensure the Committee continues to
bemindful of wider workfor
ce conditions,
we hav
e worked to impr
ove the flo
w of
feedback and workfor
ce information which
is pro
vided to the Committe
e and the Board
on a regular basis.
Committee evaluation
The Committee’
s per
formance was
evaluated externally by Board Eff
ectiveness
and Governance S
er
vices (BE-GS)
.
F
ur
ther information on the pr
oces
s
issummarised on pages 86 to 88.
The evaluation concluded that the
Committee was operating effectively
.
All Committee members were f
ound to
robustly challenge data, pr
oposals, and
remuneration and variable incentiv
es. It was
agreed that, given the evolving regulatory
framework, ther
e would be additional focus
on training for the Committee in 2022.
Adrian Chamberlain
Chair of the Remuneration
Committee
102
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
DIR
ECTORS’REMU
NER
A
TI
ONREP
ORTCONTIN
UED
Post
employment Y1
Post
employment Y2
Y1
Y2
Y3
Y4
Y5
Policy change




CEO sa
la
r
y wa
ive
d fr
om 1
December 20
21 (
Minimum
sta
tutory salar
y only
)

Unchanged


Unchanged
LTIP

Unchanged


Unchanged




Unchanged



Unchanged
Directors’ Remuneration Policy and implementation for 2021
CEO
CFO
COO
£310
£288
£230
CEO
CFO
COO
W
aived
6%
6%
CEO
CFO
COO
W
aived
125%
100%
CEO
CFO
COO
2021grant150%
2021grant100%
CEO
CFO
COO
CEO
CFO
COO
2-year
holding period
50% deferred in shar
es
forthreey
ears
CEO
CFO
COO
100%
100%
100%
200%
200%
200%
200%
200%
200%
W
aived
CORPORA
TE GOVERNANCE
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
103
EXECUTIVEREMUNERA
TI
ONPOLI
CYOVER
VIEW
Fixed elements of remuneration for Executive Directors
Element of
remuneration
Purpose and
link to strategy
Operation
Maximum opportunity
Performance
Salary
T
o attract
, retain and
motivate Ex
ecutive
Directors of the
calibre required to
deliver
the Compan
y
’
s
strategy and drive
business
performance.
Base salaries will be reviewed at least
annually
, and asse
ssed, taking into account
the scope and requirements of the role,
experience of
the incumbent and
the total
remuneration package. An
y increases will
typically be effective from 1 January
.
Account will also be taken of the
performance of the business, the s
alary
increases awar
ded to the wider employee
population, and remuneration arrangements
in other listed companie
s of comparable
scale and sector
.
There
is no
overall maximum
for
, or
increase to
, salar
y levels. In awar
ding
any increase, the Committee will be
mindful of the general incr
ease for
the broader employ
ee population.
In appropriate cir
cumstances the
Committee may awar
d increases
outside this range.
These may include:
•
A change in role and/
or
responsibilities;
•
Performance and/
or development
in the
role of
the Ex
ecutive
Director; and
•
A signific
ant change in the
Company’s
size, composition
and/
or comple
xity
.
In addition,
where an
Executive
Director has been appointed to the
Board at a starting salar
y which is
lower than typical market rate,
larger incr
eases may be awarded as
their experience
develops,
if the
Committee considers such
increases to be appropriate.
Personal performance
will be taken into
consideration when
determining any
salar
yincreases.
Benefits
T
o provide mark
et-
competitive benefit
s
which driv
e Ex
ecutive
Directors to deliver
the Compan
y
’
s
strategy
.
The Committee
’
s
policy is to
pro
vide
Executive
Directors
with competitive
levels
of benefit
s, taking into consideration the
benefit
s pr
ovided to
Alfa’
s employ
ees and
those offer
ed by its p
eers. Benefit
s are in
linewith those
for the
broader
workfor
ce
andcurrently
include (but
are not
limited to)
a car or cash allowance; private medical
insurance (individual
and family
, if
applicable); and
death-in-service life
assurance. The Company may a
ward
additional benefit
s where the Committee
considers it
appropriate (
e.g. trav
el,
accommodation and subsistence
allowances)
. These may
include
national
andinternational r
elocation benefits such
as(but not
limite
d to
) accommodation,
family relocation support and travel in line
with our policy for other employees in
similarsituations.
Given that the cost of benefits
depends on
the
Executive
Director’
s
individual circumstances, there
isnoprescribed maximum
monetary value.
The cost of the benefit
s provision
will be reviewed b
y the Committee
on a periodic basis to ensure it
remains appr
opriate.
Other payments such as leg
al fees
or outplacement cost
s may be paid
if it is considered appropriate.
There ar
e no
performance
conditions.
Pension
T
o encourage
andassist with
responsible, secure
retir
ement provisions,
thereby facilitating
the recruitment of
high-calibre E
xecutive
Directors to deliver
the Company’
s
strategy
.
May
be pr
ovided b
y way
of contribution
into
a Company pension scheme or receive a cash
supplement in lieu of pension contributions
into this
scheme (or
such other
arrangement
the Committee determines has the s
ame
economic effect)
.
The maximum
Company
contribution f
or Executive
Directors will
not ex
cee
d the
contribution (as
a percentag
e of
salar
y)
available to
the broader
employee population. The current
contribution lev
el for
Executive
Directors is 6% of salary
, which is
aligned to the contribution for the
broader employ
ee population.
There ar
e no
performance
conditions.
Shareholders appr
oved the new
Remuneration
P
olicy at
the A
G
M on
10 May
2021 and it will apply for a period of up to
three years. The Committee revie
wed the
remuneration framew
ork during the year to
ensure that it r
emains fit for purpose and
isdesigned to
suppor
t and
drive
the
businesss
trategy
.
The Policy is designed to attract
, retain and
motivate our leadership within a framework
designed to promote the long-term success
ofAlfa
and align
with our shar
eholders‘
interest
s. The Policy r
emained largely
unchanged from the R
emuneration Policy
appro
ved by shareholders in 2018.
104
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
ALF
AFINANCIALSOF
T
W
AREHO
LDING
SPLC
2021DIRE
CTORS’REMUNER
A
TIO
NPOLIC
Y

Variable elements of remuneration for Executive Directors
Element of
remuneration
Purpose and
link to strategy
Operation
Maximum opportunity
Performance
An
nu
alb
o
nu
san
d

Deferred
Bonus
Sh
ar
ePl
an(DB
SP)
Incentivises and
rewar
ds the
achievement of annual
financial and
non-financial
objectives integral
tothe Compan
y
’
s
strategy
.
The part-de
ferral of
earned bonus into
shares pro
vides
alignment with
shareholders’
long-term interests.
The Committee will set the per
formance
measures and their weighting, and targets
annually to reflect the key financial, strategic
and personal priorities for the business in the
relevant y
ear
.
Annual bonus outcomes will be determine
d by
the Committee, and the Committee may use
its discretion at the end of the per
formance
period to adjust the final bonus outcome if it
considers that the outcome does not reflect
the underlying performance of the business
during the year
, or if it considers the payment is
not
appropriate
in the
context of
unforeseen,
unexpected or
exceptional
circumstances.
Where
exercised,
the
rationale
for
this
discretion will be fully disclosed to shareholders
in the relevant Annual R
epor
t.
Not
less than
50% o
f
any
bonus
will
normally
be deferred into an awar
d of shares under the
DBSP
. Deferred shares will be subject to a
three-year holding period from the date of the
awar
d, but no fur
ther performance conditions
will apply
. Directors may sell sufficient shares to
satisfy the
respective tax
liability but
must
retain the net number of shar
es until the end of
this three-year period.
Malus
and
clawback
provisions
will apply
(se
e
explanatory notes)
.
The maximum
b
onus opportunity
may be up to 150% of salary for the
Executive
Directors
for
each
financial year
.
Annual awar
ds made each year
toExecutive
Directors
will be
set
out in the Annual Report on
Remuneration in r
espe
ct of the
relevant y
ear
.
Performance measur
es
will comprise a
combination of financial
and non-financial
objectives and the
measures may vary
from y
ear to year
.
At least half of the
annual bonus will be
based on financial
measures. The
non-financial
performance measures
may include a
combination of
strategic and/
or
personal objectives.
Further details on, and
the rationale for
, the
measures used in the
annual bonus will be
disclosed in the relevant
Annual
Report (and
the
targets set will normally
be disclosed
retr
ospectively
, subject
to these being
considered not to be
commercially
sensitive)
.
Lo
ngT
er
m
Incentive
Plan
(
LT
I
P
)
Incentivises and
rewar
ds the
achievement of the
Company’s
long-term
strategic objectives
for the business,
through the use of
share-based awar
ds.
T
o encourage
long-term
shareholding to r
etain
Executive
Directors
and provide gr
eater
alignment with
shareholders’
interest
s.
A
wards granted under the L
TIP ves
t subject to
the achievement of applicable performance
conditions measured ov
er at least a three-year
period. L
TIPs may be made as conditional shar
e
awar
ds
or
in
other
forms
(e.g. nil
cost options)
if
it is considered appropriate.
The Committee may use its discretion at the
end of the performance period to adjust the
final vesting outcomes if it considers that the
outcome does not reflect the underlying
performance of the business or par
ticipant
s
during the performance period, or if it
considers the payment is not appr
opriate in
thecontext
of
unfor
eseen, unexpected or
exceptional
circumstances. Wher
e
exercised,
the rationale for this discr
etion will be fully
disclosed to shareholders in the relevant
Annual Report
.
A
wards that vest are subject to a further
two-year holding period after the vesting date.
Directors may sell sufficient shar
es to satisf
y
the
respective
tax
liability
but
must r
etain
the
net number of shares until the end of this
two-year period.
The Committee retains the discretion to allo
w
dividends to accrue ov
er the vesting perio
d in
respect o
f
the
awards
that v
est (see
explanatory notes)
.
The maximum
value of shar
es (at
grant) which
can be made under
an
awar
d to an individual in respect of
a financial year is 150% of salary
.
Any a
wards made in the same year
under the Company Share Option
Plan will be taken into account
when applying these limit
s.
In ex
ceptional circumstances
awar
ds totalling 200% of salar
y
may be made in a year
.
Performance measur
es
will be determined by
the Committee at the
time of making each
awar
d to ensure
alignment with the
long-term success
ofthe
business.
The performance
conditions may
include, but are not
limited to, market
measures, financial
measures, and
strategic long-term
objectives.
For performance
between threshold and
maximum, a
wards
vest
on a straight-line basis.
CORPORA
TE GOVERNANCE
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
105
Element of
remuneration
Purpose and
link to strategy
Operation
Maximum opportunity
Performance
Company
S
hare
Op
ti
o
nPla
n

(C
S
O
P)
Incentivises and
rewar
ds the
achievement of
long-term targets
aligned to encourage
long-term
shareholding to r
etain
Directors, and pro
vide
greater alignment
with shar
eholders’
interest
s. The CSOP
also pr
ovides flexibility
in the retention and
recruitment of
Executive
Directors.
A
wards granted under the CSOP become
exer
cisable subject
to
such timings
and
performance conditions as may be set by
theCommittee.
Options are granted at market value or the
nominal share price if higher
.
The Committee may use its discretion at
theend o
f the
per
formance
period to
adjust
the final vesting outcomes if it considers that
the outcome does not reflect the underlying
performance of the business or par
ticipant
s
during the relevant period, or if it considers
the payment is not appropriat
e in the
context of
unforeseen, unexpected or
exceptional
circumstances. Wher
e ex
ercised,
the rationale for this discr
etion will be fully
disclosed to shareholders in the subsequent
Annual Report
.
Maximum value
of
£30,000 at
the
time o
f grant, including
any
existing
awar
ds under the CSOP
.
A
wards vest subject
topredetermined
performance
conditions assesse
d
over a minimum period
of three years.
All-employ
ee
share
plans
All-employee plans
are designed to
encourage share
ownership within the
wider workfor
ce.
Executive
Directors
are
eligible to
participate
in any all-employ
ee share plan in place, on
identical terms to other participant
s. In the
case of
UK
tax qualifying plans,
the
se will
be
operated in
line with
HMRC
guidance.
Participation in any appro
ved
all-employee shar
e plans will be
subject to the same limit
s as for
other eligible employees and, in the
case of
any
UK tax
qualif
ying plan,
will be
subject to
the maximum
limits p
ermitted by the relevant
taxlegislation.
The Committee may
apply conditions to
participation in
all-employee shar
e
schemes, which will
apply to all employees.
Shareholding
requirement
T
o drive long-term,
sustainable decision
making for the benefit
of the Company and
our shareholders.
The Ex
ecutive Dir
ectors ar
e r
equired to
build
up a shareholding equivalent to align with the
long-term inter
est
s of
shareholders.
Until the
requirement is met, 50% of any shar
e awards
vesting (after
any
sale
s to
cover tax
liabilitie
s)
should be retained.
Executive
Directors
are
required to
hold shares equivalent to 200% of
their salar
y in value. Directors are
required to continue to hold their
shareholding r
equirement, or
, if
their level of shar
eholding is below
the requirement, their actual
holdings, for a period of two years
after leaving the Company
.
There ar
e no
performance
conditions.
Non-Executive Director Remuneration
Element of
remuneration
Purpose and
link to strategy
Operation
Maximum opportunity
Performance
Fee
s pa
i
d to th
e
Non-Executive
Directors
Fees are set at a lev
el
to reflect the amount
of time and level of
involv
ement required
in order to carry out
their duties as
members of the
Board and its
committees, and to
attract and retain
Non-Executive
Directors of the
highest c
alibre with
relevant commer
cial
and other
exp
erience.
Fees f
or Non-Ex
ecutive Dir
ectors will
be
determined by the Chairman and the
Executive
Directors.
Additional fees are payable f
or acting as
Senior Independent Director
, Committee
Chairs, or for undertaking other duties.
Fee
levels will
be revie
wed (though not
necess
arily incr
eased) annually and set
with
refer
ence to the time commitment and
responsibility of the position as well as
taking into consideration market data for
roles in other companies of a similar size
andcomplexity
.
Details of the current f
ee levels for
the Non-Ex
ecutive Dir
ectors ar
e set
out in the Annual Report on
Remuneration.
There
is no
prescrib
ed maximum
annual increase. T
otal fees will not
exceed the
maximum amount
provided
in the
Company
’s
Ar
ticles
of Association.
Benefit
s appropriate
to the role ma
y be
provided. The
Non-Executive
Directors will hav
e the
benefit of a qualifying
third party indemnity
from the Company and
appropriate
Directors’
and Officers’
liability
insurance. T
rav
el and
reasonable
expenses
incurred (including
any
tax gr
oss-up)
in the
course of performing
their duties may be
paid by the Company
or reimbursed.
106
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
ALF
AFINANCIALSOF
T
W
AREHO
LDING
SPLC
2021DIRE
CTORS’REMUNER
A
TIO
NPOLIC
YCONTINUED
Prior arrangements
The Committee reser
ves the right to
makeany r
emuneration payments and/
or
payments for loss of office (including
exer
cising any discretions a
vailable to
itinconnection with such payments)
notwithstanding that they are not in line
with the Policy set out abov
e where the
terms of the payment w
ere agr
ee
d:
i.
Before the P
olic
y set out above came into
effect (pr
ovided, in the case of
any
payment agr
ee
d on or after 24 April 2018,
it is in line with the Policy appr
oved by
shareholders on that date); or
ii.
A
t a time when the relevant individual (or
other person to whom this Policy applies)
was not a Director of the Company and,
in the opinion of the Committee, the
payment was not in consideration f
or the
individual becoming a Director of the
Company
. F
or these purp
oses ‘payments’
includes the Committee s
atisfying awards
of variable remuneration and, in r
elation
to an awar
d ov
er shares, the terms of the
payment ar
e ‘agreed’ at the time the
awar
d is granted.
Selection of performance
conditions
F
or the annual bonus, the Committee b
elieves
that a
mix of
financial and
non-financial
targets is most appropriate for the Compan
y
.
Strategic and personal objectives may be
included where appropriate to ensur
e delivery
of key business milestone
s. The Committee
will determine the measures and weightings
each year
, based on the key financial and
strategic priorities for the Company
.
Performance under the L
TIP will typically
bebased on a
combination of
market and
non-market measures. This is so that the
Committee can assess the Compan
y
’
s
per
formance
with r
eference
to a
mix of
underlying financial and stock market
per
formance and encourag
es a focus on
long-term financial gro
wth as well as returns
toshareholders.
The Committee will
keep the
measures and weightings under revie
w prior
tothe start of each
cycle to
ensure
that these
remain
effective
in driving
the Executive
Directors to deliver long-term succ
es
s.
Explanatory notes
A
wards under an
y of the Company’s shar
e
plans referr
ed to in this report may:
a.
Be granted as conditional share a
wards or
nil cost options or in such other form that
the Committee determines has the s
ame
economic effect;
b.
Hav
e any performance conditions
applicable to them amended or
substituted by the Committee if an event
occurs which causes the Committe
e to
determine an amended or substitute
d
per
formance condition w
ould be more
appropriate and not materially less
difficult to satisfy;
c.
Incorporate the right to r
eceive an amount
(in cash or additional shar
es) equal to the
value of dividends which would ha
ve been
paid on the shares under an awar
d that
vest
s up to the
time of v
es
ting (
or where
the awar
d is subject to a holding period,
time of r
elease)
. This amount may
be
calculated assuming that the dividends
hav
e been reinv
este
d in the Compan
y
’
s
shares on a cumulative basis;
d.
Be settle
d in cash at the Committee’
s
discretion – although the Committee has
no intention to cash settle any Executive
Directors’ awar
ds and would do so only in
exceptional cir
cumstances (such as where
there was a r
egulator
y restriction on the
delivery of shares) or to settle tax
liabilities arising in connection with the
acquisition of shares; and
e.
Be adjus
ted in the event of an
y variation
of the Company’s shar
e capital or any
demerger
, delisting, spe
cial dividend
or
other e
vent
that ma
y af
fect the
Company
’
s
share price.
Discretion, malus and clawback
V
ariable pa
y a
wards ma
y be
made subject to
adjustment events. At the discretion o
f the
Committee, an award ma
y be adjusted b
efore
delivery (malus) or
reclaimed after deliv
ery
(cla
wback) if
an adjustment ev
ent occurs.
Our long-term incentive plans pr
ovide the
Committee with discretion in respect of
vesting outcomes that affect the actual level
of rewar
d payable to individuals.
Such discr
etion would only be used in
exceptional cir
cumstances and, if exercised,
the rationale for this discr
etion will be fully
disclosed to shareholders in the relevant
Annual Report
.
Malus will apply to awar
ds under the DBSP
and L
TIP
. Clawback will apply to all vested
awar
ds under the DBSP and L
TIP and the
part of the annual bonus which is paid in
cash. These provisions may be in
voked at
the Committee’
s discretion at any time
within three years of the pa
yment of cash
bonuses and six years of the grant of DBSP
and L
TIP awards.
The Committee has the discretion to inv
oke
these provisions in the f
ollowing circumstances:
•
Where ther
e is a material misstatement
ofany Compan
y financial result
s;
•
Where an err
or in assessing per
formance
conditions is discov
ered;
•
Where ther
e is misconduct on the part
ofthe individual; and
•
Where a mat
erial failure of risk
management by the Compan
y is
identified, or in the event of serious
reputational damage t
o the Company
.
Shareholding requirement
The Executive Dir
ectors are required to
build up a shareholding equal to at least
200% of salar
y
, to align with the long-term
interest
s of shareholders. Until the
requirement is met, 50% of any shar
e awar
ds
vesting (after any sales to cover tax
liabilities) should be retained. In order to
generate alignment with shar
eholders
beyond departure and to drive risk
-
conscious stewardship
, a post-ce
ssation
shareholding r
equirement will be placed on
Executive Dir
ectors. The pos
t-cessation
requirement r
elates to those awards
awar
ded through incentive schemes by the
Company
. Executive Dir
ectors will typic
ally
be required to maintain a shareholding equal
to the lower o
f their in-post guideline and
their actual holding, for one year
, and 50%
ofthat level f
or the second year
.
CORPORA
TE GOVERNANCE
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
107
NOTEST
OTH
EPOLIC
YT
ABLE

Illustrations of potential remuneration outcomes
The follo
wing char
t
s illustrate the remuneration that could be receiv
ed by each of the
Executive Dir
ectors for varying levels of per
formance in 2022. The chart
s are based on the
follo
wing assumptions:
Approach to recruitment
remuneration
The Committee will seek to align a new
Executive Dir
ector’s r
emuneration package
with the Policy as set out in the P
olicy T
able.
When determining a remuneration packag
e
for a new appointment, the Committee will
take into consideration the size and scope of
the role,
the skills and expertise of the
candidate, the external market
rate for
a
candidate of that e
xperience, as well as
the
impor
tance of securing the preferr
ed
candidate. Benefit
s will be limited to those
outlined in the Policy
, with relocation
assistance provided where appr
opriate.
A
wards under the L
TIP and/
or CSOP that
may be a
warded to
a new Ex
ecutive Director
will not ex
ceed 200% of salar
y and the bonus
oppor
tunity will not ex
ceed 150% of salar
y
.
Special consideration may be given in the
event that incentiv
es accrued at a previous
employ
er are due to be forfeited on the
candidate’
s leaving that
company
, in which
case the Committee retains the discretion to
grant awar
ds with vesting on a comparable
basis to the likely vesting of the previous
employ
er’s
awar
d; any such
awar
d is excluded
from the
maximum value of incentiv
es
referr
ed to above. F
or internal candidates,
long-term incentive a
wards granted in
respect of the prior role would be allow
ed to
vest according to their original terms.
F
or the appointment of a new Chairman or
Non-Executive Dir
ector
, the fee would be
set in accordance with the appr
ov
ed Policy
in for
ce at that time. The leng
th of service
and notice periods would be set at the
discretion of the Boar
d, taking into account
market practice, corporate go
vernance
considerations and the skills and experience
of the particular c
andidate at that time.
Service contracts and
appointment letters
The service contract
s of the Chairman and
the Executive Dir
ectors do not have a
specific duration but can b
e terminated by
not less than six months’ notice in the case
of the Chairman and the COO and by not
less than 12 months’ notice for the CEO and
CFO by either party
.
Pay
scenario
Purpose and link to strategy
Ma
xi
mu
m+
50
%

share
price
grow
t
h
Assumes 100% payout under the annual bonus
Assumes 100% payout under the L
TIP plus 50% share price growth
Maximum
Assumes 100% payout under the annual bonus
Assumes 100% payout under the L
TIP
On-target
Assumes 50% payout under the annual bonus
Assumes 25% pa
yout
under the
L
TIP (aligned with
threshold performance)
Minimum
Fixed elements o
f r
emuneration only
– base
s
alary,
b
enefits and pension
Andrew Denton, CEO (£000)
Maximum +
50% share
price growth
100%
100%
100%
100%
Maximum
On-target
Minimum
£23
£23
£23
£23
Duncan Magrath, CFO (
£
0
0
0
)
100%
32%
27%
49%
39%
52%
29%
24%
30%
18%
£1,267
£1,061
£580
£305
Maximum +
50% share
price growth
Maximum
On-target
Minimum
Matthew White, COO (£000)
100%
31%
28%
41%
32%
36%
32%
60%
27%
13%
£797
£687
£412
£247
Maximum +
50% share
price growth
Maximum
On-target
Minimum
Fi
xe
d
Bonus
L
TIP
108
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
NOTEST
OTH
EPOLIC
YT
ABLECONTINUED
Category A
Voluntary resignation
and termination
forcause
Category B
Agreed terms
Category C
Death or cessation by reason of
ill-health,disability, injury, redundancy
orchange of control
Fi
xed p
ay
Paid only until employment
ceases.
Paid for the notic
e period.
Paid only until employment ceases or for notice period
depending on the reason for cessation.
Annual
bonus
There is no contractual
entitlement to payments under
the annual bonus.
Bonuses delivered in shares
repr
esent the bonus the
Executive
Director has
already
earned and carr
y no fur
ther
performance conditions.
A
wards will normally be released
in accordance to the usual
schedule, unless the Committe
e
determines that awards should
be released at the time the
individual ceases employment.
A
wards will normally be released
in full unless the Committee
determines other
wise.
T
reatment will normally fall
between A and C, subject to
thediscretion o
f the Committee,
the terms of any termination
agreement and the reasons f
or
the Executive
Director’
s
departure.
Cessation during the financial year or after the financial year
end, but before pa
yment date, may result in bonus being
payable
(pro-rated f
or the
propor
tion of
the
financial y
ear
worked
unless the Committee
determines otherwise)
.
Such bonuses may be settled wholly in cash.
Bonuses deliver
ed in
shares r
epresent
the bonus
the Ex
ecutive
Director has already earned and carry no fur
ther per
formance
conditions. A
wards will normally be released in accor
dance to
the usual schedule, unless the Committe
e determines that
awar
ds should be released at the time the individual ceases
employment. A
wards will normally be released in full unless
the Committee determines other
wise. If the par
ticipant dies,
awar
ds will normally be released at the time of their death on
the same basis as for other good leavers.
L
TI
Pawa
rd
s
Unv
este
d a
wards
will lapse
on
cessation of employment.
V
es
ted a
wards
subject to
a
holding period will also lapse if the
Executive
Director’
s emplo
yment
is terminated for cause.
T
reatment will normally fall
between A and C, subject to the
discretion of the Committee,
theterms o
f any
termination
agreement and the reasons f
or
the Ex
ecutive Dir
ector’s
departure.
A
wards will normally vest and be released at the usual time.
Howev
er
, the Committe
e may determine that awar
ds should
vest at the time the individual ceases employment and be
released at that time or should be released at some other time
after cess
ation and before the or
dinar
y release date – such as
following the end o
f the per
formance period in the case of an
awar
d to which a holding period would otherwise apply.
The extent
of
vesting will
take into
account the e
xtent to
which the relevant performance conditions hav
e been met
.
A
wards ar
e usually scale
d back pro-rata to tak
e account of the
proportion of the original per
formance period that has
elapsed when
the individual
leav
es (but with
the Committee
having
discretion
not to
scale back
or
to r
educe the
scaleback)
.
If the participant die
s, awar
ds will normally vest at the time of
their death on the same basis as for other good leavers.
V
es
ted a
wards
subject to
a holding
period will
be r
eleased
from that holding period at the usual time, unless the
Committee determines the holding perio
d should end when
the individual leaves employment.
Under the service contract
s the Executive
Directors are entitled to a salary (reviewed
annually)
, pension contribution and benefits,
in addition to reimbursement of r
easonable
expenses incurred by them in the
per
formance of their duties.
The service contract
s for
Executive Dir
ectors
make no pro
vision for termination pa
yment
s,
other than for pa
yment in lieu of salar
y
.
The Non-Executive Dir
ectors’ appointment
s
are f
or a fixed term of three years and
aresubject to annual re-election by
shareholders. Under their letters of
appointment, their app
ointment is
terminable by either party on three months’
written notice except wher
e the Non-
Executive Dir
ector is not reappointed by
shareholders, in which case termination is
with immediate effect. The Non-Executive
Directors are entitled to the r
eimbursement
of reasonable business expenses.
Termination of office
If the
employment of
an Executive
Director
isterminated, an
y compensation
payable
willbe determined
by
refer
ence
to the
terms
ofthe
ser
vice c
ontract in
for
ce
at the
time.
As variable pay awar
ds are not contractual,
treatment of these awar
ds are determined
bythe
relevant
rules. The
Committe
e ma
y
structure any compensation payments beyond
the c
ontractual notice
provisions
inthe
contract in such a way as it deems appropriate.
The Company may at its discretion make
termination payments in lieu of notice and
contractual benefit
s. The ser
vice agreements
for the CEO
, CFO and CO
O allow f
or garden
leave during their notic
e period.
The appointment letters for the Non-
Executive Dir
ectors provide that no
compensation is payable on termination.
The Committee has a polic
y framework f
or
payments for loss of office b
y an Executive
Director
, both in relation to the service
contract and incentive pa
y
, which is
summarised below
.
CORPORA
TE GOVERNANCE
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
109
Change of control policy
In the event of a chang
e of control of the
Company
, L
TIP and CSOP awards will v
est to
the e
xtent determined b
y
the Committee
taking int
o account
the extent that
the
Committee determines that the p
erformance
conditions hav
e been s
atisfied, and, unles
s the
Committee determines other
wise, the
proportion of the per
formance period that has
elapsed. DBSP awards will normally be r
eleased
in full, unless the Committe
e determines
otherwise. Alternatively
, the Committe
e may
permit an
Executive
Director to
exchang
e their
awar
ds for equivalent awar
ds over shar
es in a
differ
ent Company
. If the change of contr
ol is
an internal reorganisation of the Company
,
Executive
Directors
will
ordinarily
be r
equired
to
exchange
their
awar
ds (rather
than awar
ds
vesting)
,
and the
Committe
e ma
y also
require
the e
xchange
of
awar
ds in
other circumstances,
as it considers appropriate. If other corporate
events occur such as a winding-up of the
Company
, demerger
, delisting, spe
cial dividend
or other event which, in the opinion of the
Committee, may materially affect the curr
ent
or futur
e
value of
the Company’s
shares, the
Committee may determine that awar
ds will
vest on the same basis as set out above for a
change of contr
ol.
Consideration of

The Committee consulted and met with the
Company’s
larges
t
shareholders
prior to
finalising this proposed Policy
. The Committee
will continue to monitor shareholder views
when setting
future ex
ecutive
remuneration
strategy and will consult with shareholders prior
to any significant changes to the P
olicy
.
The Committee takes full account of
theguidelines of investor bodie
s and
shareholder views in determining the
remuneration arrang
ement
s in operation
within the Company
.
Consideration of employment
conditions elsewhere in

The Committee takes into account the pay and
employment conditions of the wider emplo
yee
population across the Company when setting
Executive
Director
remuneration,
and
considered
this as
contex
t
when r
eviewing
the
Policy
. While the Committee has not consulted
employ
ee
s directly on the Remuneration P
olicy
for
Executive
Directors, the
Committee is
made awar
e of information such as w
orkforc
e
demographics, diversity initiatives, training
programmes, engagement lev
els and cultural
initiatives, as well as the r
emuneration
principles and policie
s that apply to the wider
workf
orce.
It is
expe
cted that
future
salar
y
increases f
or
Executive
Directors
will be
in
line
with the
general emplo
yee population,
except
in e
xceptional
circumstances.
Members of
the Company
Leadership T
eam
are in
vited to par
ticipate in the L
TIP
, in order for
there to be alignment between the objectives
of
the Ex
ecutive Dir
ectors and
senior
management. W
e also continue to encourage
employ
ee
s to become investors in the
Company by r
etaining legacy share awar
ds and
through its all-employee share schemes.
External appointments
Executive
Directors
may
hold
external
directorships if the Board determines that such
appointment
s do not cause any conflict of
interest. Where such appointment
s are
appro
ved and held, it is a matter for the Boar
d
to agree whether fees paid in respect of the
appointment are retained b
y the individual or
paid to the Company
.
Category A
Voluntary resignation
and termination
forcause
Category B
Agreed terms
Category C
Death or cessation by reason of ill-health,
disability, injury, redundancy or change
ofcontrol
Sh
ar
es
ave(SA
Y
E)
Scheme
Unvested options
will lapse
and
savings will be returned on
cessation of employment.
V
es
ted options
not e
xercised
will
also lapse
if the Ex
ecutive
Director’
s emplo
yment is
terminated for cause.
T
reatment will normally fall
between A and C, subject to the
discretion of the Committee,
theterms o
f any
termination
agreement and the reasons f
or
the Ex
ecutive Dir
ector’s
departure.
Options can
be ex
ercised immediately
, or
up to
six months
ofsavings can
be made
before
exer
cising options.
The Committee may determine that the options should be
exer
cised at
the time
the individual
ceases emplo
yment and
be released at that time or should be released at some other
time after cess
ation and before the original r
elease date. If the
participant die
s, options will normally vest at the time of their
death on the same basis as for other good leavers.
V
es
ted options
may
be ex
ercised at
any
time in
the six months
after the date of cessation, af
ter which they will lapse.
Other pa
yment
None.
Possible disbursements
suchaslegal costs and
outplacement service
s.
Possible disbursements such as legal cost
s and
outplacementservice
s.
110
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
NOTEST
OTH
EPOLIC
YT
ABLECONTINUED
Alignment of Remuneration Policy with the 2018 UK Corporate Governance Code
Governance in practice
The R
emuneration Committee
is committed
to g
ood corporate
governance
and as such
takes into
account a br
oad rang
e of
factors when determining
it
s Directors’
Remuneration P
olicy
. The Committee considered both legal and regulatory requirements, as
sociated guidance and the views of shareholders and their repr
esentative
bodies. Below is an outline of how the Committee works to ensure the principles of Pr
ovision 40 of the 2018 UK Corporate Gov
ernance Code are met.
Clarity
Remuneration arrangements should be
transparent and pr
omote effective engagement
with shareholders and the workf
orce.
Alfa is committed to clear and transparent reporting and communication with it
s stakeholders. The Committee
actively engages with our shareholders on ke
y decisions and Policy matters, when required.
The Alfa Remuneration P
olicy is aligned with longer-term shareholder inter
est
s and s
tructured to promote the
Group
’s
financial
and strategic
priorities.
Simplicity
Remuneration
structures should
avoid
complexity
and their rationale and operation should be easy
to understand.
Alfa’
s approach
to its r
emuneration
framework
focuses on
simplicity
.
The framew
ork comprises
three cor
e
elements to remuneration:
Fi
xed p
ay
. This
element c
omprises base pa
y
, taxable benefits and
pension.
Short-ter
m
incentives
. This element relates to an annual performance-related bonus which incentivises
delivery against b
oth financial and non-financial measures. In total, 50% of any bonus earned is paid in cash with
50% deferred into shar
es.
Long-
term
incentives
. This element r
elates to longer-term value creation thr
ough the L
TIP
.
Risk
Remuneration arrangements should ensure
thatreputational
and other
risks from
excessive
rewar
ds, and behavioural risks that can arise
fromtarg
et-based incentives
plans ar
e identified
and mitigated.
The remuneration arrangements are split between short-term and long-term rewards coupled with holding
periods, deferred elements and malus and clawback provisions to driv
e the right behaviours to incentivise the
Executive
Directors
to deliv
er long-term
sustainability of
the business
and shar
eholder r
eturns.
As a wider control, malus and cla
wback provisions apply to all participants of our long-term incentive plans.
The Remuneration Committee retains discr
etion to override f
ormulaic outcomes where these are not
considered reflective of underlying performance.
Predictability
The range of possible values of rewar
ds to
individual Directors and any other limits or
discretions
should be
identified and
explained
atthe time
of approving
the Policy
.
The Remuneration P
olicy set
s out scenario chart
s illustrating base pay
, short-term incentives and longer-term
incentive
outcomes under
threshold, tar
get
and maximum
performance scenarios.
Proportionality
The link between individual awards, the deliv
ery
ofstrategy and
the long-term
performance of
the
Company should be clear
. Outcome
s should not
rewar
d poor per
formance.
The Committee asses
ses per
formance against a range of financial and non-financial measures linked to our
business strateg
y
.
The Committee has the ability to override formulaic calculations and apply discr
etion.
The Committee regularly revie
ws pay policies for the wider workfor
ce and is mindful of this when setting
remuneration
for
Executive
Directors.
Alignment to culture
Incentive schemes should drive behaviours
consistent with Company purpose, values
andstrategy
.
These should include consideration of per
formance metrics, go
vernance requirements and engagement
withstakeholders.
CORPORA
TE GOVERNANCE
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
111
This section o
f the Dir
ectors’ Remuner
ation Report sets out the
remuneration
paid in
2021 and the
proposed r
emuneration f
or 2022.
During they
ear
, the Remuner
ation P
olicy operated as intended. The
follo
wing sections on
pages 112
to 115
have
been audited by
RSM:
Singlefigure
remuneration,
Long-
T
erm Incentive
Plan –
awards
vesting in
the year
, P
ension entitlement
s, External
Appointment
s, Pa
yment
s
forlossof
Office, Pa
yments to past Dir
ectors.
Context to remuneration decisions
The Committ
ee’
s decision making
this year
has
taken int
o account
a range
of
internal and
ex
ternal
factors including
Alfa’
s ong
oing r
esponse to
COVID-19
and the e
xternal market
performance. The
busine
ss acted
in line
with the s172
governance
guideline
s while
continuing
to deliv
er
exceptional
results for
shareholders. In
par
ticular
,
the Committee
was mindful
that:
•
Alfa requested no G
ov
ernment suppor
t from the Job R
etention Scheme and no emplo
yee received a pay cut and bonus payments
wer
emaintained
•
Shareholder guidanc
e was maintained throughout the period and a spe
cial dividend in the amount of £29.7m was paid to shareholders
Single total figure of remuneration
The f
ollowing
tables set
out
the total
remuneration r
eceived b
y Ex
ecutive
Directors and
Non-Executive Dir
ectors who
served during
2021 and
2020.
£’000s
Salary
andfees
Bene
fits
1
Pension
2
T
otal fixed
remuneration
Annual
bonus
3
Long-term
incentives
4
T
otal v
ariable
pay
T
otal figure
remuneration
Ex
ecutiveDirectors
Andrew P
age
2021
345
12
–
357
–
–
–
357
2020
374
13
–
387
–
–
–
387
Andrew Denton
2021
297
13
–
310
–
–
–
310
2020
322
15
–
337
–
–
–
337
Duncan Magrath
5
2021
275
13
16
304
316
–
316
620
(appointed 24 April 2020)
2020
214
7
12
233
217
–
217
450
Matthew White
2021
220
14
13
247
205
–
205
452
2020
220
10
13
243
176
–
176
419
Non-Ex
ecutiveDirectors
Chris Sullivan
2021
65
–
–
65
–
–
–
65
2020
65
–
–
65
–
–
–
65
Stev
e Breach
6
2021
65
–
–
65
–
–
–
65
2020
70
–
–
70
–
–
–
70
Adrian Chamberlain
2021
65
–
–
65
–
–
–
65
(appointed 24 April 2020)
2020
45
–
–
45
–
–
–
45
Charlotte de Metz
2021
55
–
–
55
–
–
–
55
(appointed 24 April 2020)
2020
38
–
–
38
–
–
–
38
1.
Benefit
s – corresponds to the taxable value of benefit
s receivable during the relevant financial y
ear and principally include company car (or cash equivalent)
,
life assurance, trav
el insurance and private medical insurance.
2.
Pension – Andr
ew Pag
e and Andrew Denton hav
e opted out of the pension scheme. Duncan Magrath and Matthew White receive a cash payment in lieu of a
pension contribution.
3.
Annual bonus – corresponds to the amount earned in respe
ct of the relevant financial y
ear
. Details of 2021 targets are set out on page 113. The Ex
ecutive
Chairman and the CEO waived any eligibility f
or a bonus in 2020 and 2021.
4.
Long-term incentives – corresponds to the amount vesting to the Executive Directors in r
espe
ct of a performance period ending at the conclusion of the
relevant financial y
ear
. The first awards under the L
TIP were granted in 2020, and vest subject to per
formance to 31 December 2022 (and will accordingly be
captured, to the extent these vest
, in the 2022 Annual Report).
5.
2020 remuneration f
or Duncan Magrath was pro-rated from the commencement of his emplo
yment.
6.
A payment of £5,085 was paid in January 2020 to cover w
ork completed on the finance remediation plan in 2019.
112
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
ANNUALREPOR
TONREMUNER
A
TIO
N2021
Base salary
Executive
Directors’
salaries wer
e r
eviewed
in 2021.
Andrew P
age
and Andr
ew
Denton pr
oposed to
the Boar
d
an adjustment
to their
base salar
y to
minimum legal requirements, effective 1 December 2021. The Board appro
ved this proposal.
The Boar
d
also determined
that ther
e
would
be no
increase
awar
ded to
Duncan Magrath
and Matthew
White f
or
the period
from
1 January 2022
to
31 December 2022.
2021 annual bonus
The 2021
annual bonus performance
measures
were
sele
cted to
reflect the
Company
’
s annual
and
long-term objectives
and
it
s financial
and strategic
priorities, as
appropriate.
Performance tar
gets are
set
to be
stretching, taking
into account
a r
ange o
f r
eferenc
e points, including
the Compan
y
’
s
budget
and thir
d
par
ty analyst
for
ec
ast
s, as
well as
the
Group
’s
s
trategic
priorities.
In respect of the annual bonus, the following measures wer
e appro
ved by the Committee for 2021:
•
Re
venue for the y
ear;
•
Operating profit;
•
Operating free cash flow con
version being cash flow generated from operations after deducting the settlement of derivative financial
instrument
s and margin calls and capital expenditures as a percentage of EBIT
, as de
fined above; and
•
P
ersonal per
formance based on the qualitative assessment of the individual’
s per
formance. F
ur
ther details on per
formance outcomes for
the non-financial measures are sho
wn in the second table.
The E
xecutive
Chairman and
CEO hav
e
waived their
entitlement
to a
b
onus
for
the 2021
p
erformance y
ear
.
The table below shows the bonus outturn relating to each measur
e:
Measure
W
eighting
T
arget
Threshold
Maximum
Actual
2021 bonus
pay-out
Rev
enue
37.5%
£74.6m
95%
110%
£83.2m
100%
Operating profit
37.5%
£13.6m
75%
146%
£24.7m
100%
Cash flow conv
ersion
Modifier
Above 100%
114%
0%
Personal performance
25%
0%
25%
CFO:17.50%
COO:18.25%
CFO:70%
COO:73%
T
otal (as a percentage of opportunity)
CFO:92.50%
COO:93.25%
Straight-line
vesting occurs
between thr
eshold and
maximum.
CORPORA
TE GOVERNANCE
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
113
Further commentary on non-financial measures
The personal measures describe
d above ar
e asses
sed with refer
ence to the follo
wing objectives
Objective
Commentary on p
erformance achieved
Achievement
Duncan Magrath
Finance Structur
e
Created a high performing finance team, delivering timely
,
accurate key data to driv
e business p
erformance.
70%
ESG Reporting
Impro
ved reporting of ESG to key stakeholders.
Inv
es
tor Relations
Emphasised streng
th of IP in Alfa to inv
estors, including focused
technology day
.
Management Information
Impr
oved f
orecasting accurac
y and medium to long term
strategic modelling, including implementation of a new tool.
Matthew White
People
Built, developed and retained a smar
t, diverse team. Measured
by headcount, engagement scores and retention.
73%
T
echnolog
y
Delivered high quality software to our customers and secure
technical infras
tructure f
or Alfa. Measured through various
quality and delivery metric
s.
Implementation
Deliv
ered successful Alfa Systems implementation projects.
Measured by pr
oject deliver
y and profitability
.
Maintenance & Hosting
Delivered high quality and highly pro
fitable maintenance and
hosting ser
vices. Measured through issue count, availability and
profitability
.
Strategic Change
Delivery of initiatives to:
•
Increase s
ystems implementation c
apacity
.
•
Increase so
ftware development capacity
.
•
Simplify the implementation of our software.
•
Impro
ve our strategic pr
oce
ss.
Based on
the
achievements listed abov
e, the
Committe
e agr
eed that
the final
ves
ting under
the 2021
bonus would
b
e
92.50% of
the maximum
for
Duncan Magrath
and
93.25% o
f maximum
for
Matthew White.
In confirming
this outcome,
the Committee
took into
consideration the
broader
financial and
op
erational
per
formance
of
Alfa during
the year
,
and the
strong
and eff
ective
leadership demonstrated b
y
the Ex
ecutive Dir
ectors it
wasdetermined that
no
adjustment
s wer
e
required
to the
formulaic
outcome.
In ac
cordance
with the
Remuneration P
olic
y
, 50%
of these
bonus amounts will
b
e paid
in cash, with
the remaining
50%,
after deduction
of tax,
to be
deferred into an a
ward of Alfa shar
es with a minimum holding perio
d of three years.
Executive
Base salar
y
Maximum
oppor
tunity
(% salar
y)
Performance
outcome (% of
maximum
Bonus outcome
£
of which cash
£
of which
shares
£
Duncan Magrath
£275,000
125%
92.50%
317,969
158,984
158,984
Matthew White
£220,000
100%
93.25%
205,150
102,575
102,575
114
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
REMUNER
A
TIO
NCOMM
ITTEE
REPO
RTCONTINUED
Long Term Incentive Plan – awards granted in the year
Share a
wards wer
e made to the Executive Dir
ectors under the L
TIP on 30 April 2021 equiv
alent to 150% of salary for the CFO and 100% of salar
y for the COO
.
The Executive Chairman and CEO ha
ve waived their entitlement to participate in the 2021 L
TIP
.
Executive
Date of a
ward
Face value (%
of salar
y)
Number of
shares granted
A
verag
e share
price at grant
(£)
A
ward
value
(£)
Threshold
vesting (% of
face value)
Performance
period
Duncan Magrath
30 April 2021
150%
300,218
1.374
£412,500
25%
1 Januar
y
2021 to 31
December
2023
Matthew White
30 April 2021
100%
160,116
1.374
£220,000
25%
1 Januar
y
2021 to 31
December
2023
1.
The share price used to calculate the number of performance shares was £1.374, the averag
e 5-day share price pr
eceding the date of the award
(30 April2021)
. This represent
s the face value of the share a
wards.
The L
TIP awards ar
e subject to two equally weighted per
formance metrics: relative t
otal shareholder return and earnings per share:
Measure
Description
W
eighting
Threshold/
target
Maximum
target
2021
T
otal shareholder return (TSR)
Measur
ed with reference to the FTSE Small Cap
index excluding in
vestment trust
s and the Company
50%
Median
Upper
quartile
Earnings per share (EPS)
Measured with ref
erence to EPS performance in the
year ending 31 December 2023
50%
5.4p
7.6p
2020
T
otal shareholder return (TSR)
Measur
ed with reference to the FTSE Small Cap
index excluding in
vestment trust
s and the Company
50%
Median
Upper
quartile
Earnings per share (EPS)
Measured with ref
erence to EPS performance in the
year ending 31 December 2022
50%
2.3p
2.8p
Straight-line
vesting occurs
between thr
eshold and
maximum f
or
both TSR
and EPS
elements of
the a
ward.
The three-year period ov
er which per
formance will be measured begin on 1 January of the year the awar
ds are granted and will end on 31 December
of the third y
ear
. Any awar
ds vesting for per
formance will be subject to an additional two-y
ear holding period, during which malus and clawback
pro
visions will continue to apply
.
Long-Term Incentive Plan – awards vesting in the year
No L
TIP
awar
ds v
este
d in
2021.
Pension entitlements
The only element of remuneration that is pensionable is basic annual salary
. A cash payment in lieu of pension contributions are pa
yable to the CFO and
COO, at a rate of 6% o
f salar
y as aligned with the broader workfor
ce, and defined in the 2021 Remuneration Policy
.
External appointments
Executive
Directors
are
allow
ed to
accept
one appointment
out
side
the Compan
y
, with
the prior
approval
of the
Board. An
y f
ees may
be r
etained b
y
the Dir
ector
, although
this is
at the discr
etion
of the
Board. During
2021 and
up to
the
date o
f this
report, none o
f the
Executive
Directors who
held
office
during the
year under
re
view held
ex
ternal
appointment
s f
or which
they received
a
fee.
Payments for loss of office
There w
ere no payments for loss of office during the y
ear or prior year
.
Payments to past Directors
There w
ere no payments to past Directors for loss of office during the y
ear or prior year
.
CORPORA
TE GOVERNANCE
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
115
Statement of Directors’ shareholdings and scheme interests
Executive
Directors
are
expected to
build and
hold Alfa
shares of
at least 200%
of
their
annual salary to
align with
the long-term
interest
s of
shareholders,
with
a r
equirement
to r
etain 50%
of any
share a
wards
vesting until
the 200%
requirement
is met.
Under the
Policy
, a
post-employment
shareholding r
equirement will apply whereb
y 100% of the shareholding r
equirement must be held for the first year follo
wing depar
ture fr
om Alfa and
50% for the second year
. Shareholding r
equirements and the numb
er of shares held by Dir
ectors during the year and as at 31 December 2021 are set
out in the table below:
Measure
Shares owned
outright at 31
December 2021
SA
YE without
conditions
Interest
s in share
incentive
schemes without
performance
conditions
Interest
s in share
incentive
schemes with
performance
conditions
Shares owned
outright at 31
December 2020
Shareholding
requirement
(% of
requirement
achieved)
1
Andrew P
age
182,334,041
–
–
–
181,764,821
achieved
Andrew Denton
15,322,107
–
–
–
15,891,327
achieved
Matthew White
2
861,866
11,718
–
456,213
552,368
achieved
Duncan Magrath
2
182,165
11,718
–
1,040,460
100,000
63%
Chris Sullivan
–
–
–
–
–
n
/a
Stev
e Breach
43,983
–
–
–
43,983
n/
a
Adrian Chamberlain
14,380
–
–
–
–
n
/a
Charlotte de Metz
–
–
–
–
–
n
/a
1.
Calculated using the share price of £1.895 (as at 31 December 2021)
.
2.
Duncan Magrath and Matthew White elected to join the Company SA
YE share scheme for which an option to acquir
e 11,718 ordinary shares at an option
exer
cise price of £1.536 per ordinary share was granted on 30 November 2021. Subject to certain conditions being satisfie
d, the entitlement to exer
cise the
SA
YE option arises during the p
eriod 1 January 2025 to 30 June 2025.
No L
TIPs
were
exer
cised during
the y
ear and
there w
ere
no une
xercised
vested shares
held at
31 December 2021.
The Ex
ecutive
Chairman and
Chief
Executive
Officer
have
signific
ant dir
ect or
indirect
shareholdings
in the
Company
.
Dilution
A
wards under Alfa incentiv
e plans may be satisfied by treasury shares or the issue of new shares or the purchase of shar
es in the market.
Under Inv
estment Asso
ciation guidelines, the issue of
new shares or r
eissue of tr
easur
y shar
es under a plan, when aggr
egated with awards
under
all of a
company
’
s other schemes, must not exceed 10% of the
issued ordinary share capital (adjusted for shar
e issuance and cancellation) in
any
rolling 10-y
ear period. As at 31 D
ecember 2021 no new shares or reissue of treasury shares had been use
d to satisfy awards, and so this limit had
not been exceeded.
Fees for the Non-Executive Directors
The fees were agr
eed on app
ointment and hav
e remained unchanged since that time. A summar
y of current f
ees is shown below:
£’000s
Basic fees
Audit and
Risk Chair
Remuneration
Chair
Senior
Independent
Director
Chris Sullivan
–
–
–
65
Stev
e Breach
55
10
–
–
Adrian Chamberlain
55
–
10
–
Charlotte de Metz
55
–
–
–
There
is
no additional
fee payable
to
the Chair
of
the
Nomination Committee.
All the
Non-Executive Dir
ectors ha
ve
letters o
f appointment, with
the Company
,
for
an initial
three-year term,
subje
ct to
annual reappointment
at the
A
GM. The
appointment letters
for
the Non-Executive
Directors pro
vide that
no compensation is
payable
upon termination.
L
etters
of appointment
are
available
for
insp
ection at
the
Company
’
s
registered
office.
Details of
the appointment terms
of the
Non-Executive
Directors
are
as
follows:
Start of current term
Expir
y of initial term
Chris Sullivan
18 July 2019
17 July 2022
Stev
e Breach
9 August 2019
8 August 2022
Adrian Chamberlain
24 March 2020
23 March 2023
Charlotte de Metz
24 March 2020
23 March 2023
116
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
REMUNER
A
TIO
NCOMM
ITTEE
REPO
RTCONTINUED
Total shareholder return performance
The gr
aph below
shows Alfa’
s TSR
p
erformance fr
om Admission
in May
2017
to 31
December 2021
against the
TSR performance
of
the FTSE
smallcap index
(excluding
investment
trust
s)
. The
graph shows
the
total shar
eholder r
eturn
generated b
y both
the
movement
in share
v
alue
and the
rein
vestment ov
er the
s
ame
period of
dividend income.
A
s
Alfa is
a constituent member
of
the FTSE
Small Cap
index,
the Committee
considers that
itis the
appropriate inde
x f
or comparativ
e
purpose
s.
This graph
has
been calculated in
accordance
with the Dir
ectors’ R
emuneration R
epor
ting
Regulations and shows total shar
eholder return fr
om the date of listing to 31 December 2021.
Total shareholder return (for the period from 25 May 2017 to 31 December 2021)
Value (£) (rebased)
May-17
Alfa Financial Software Holdings PLC
Dec-17
Dec-18
Dec-19
Dec-20
Dec-21
FTSE Small Capitalisation Index Ex Investment Trusts
£0
£35
£70
£105
£140
£175
CEO single figure of remuneration and variable pay outcome
£’000s
CEO single
figure of
remuneration
Annual bonus
pay-out (as a %
of maximum
oppor
tunity
1
L
TIP ves
ting (as
a % of
maximum
oppor
tunity)
2
2021
£310,236
n
/a
n
/a
2020
£337,174
n
/a
n
/a
2019
£338,129
n
/a
n
/a
2018
£337,944
n
/a
n
/a
2017
£349,478
n
/a
n
/a
1.
The CEO waived any eligibility f
or a bonus in 2021, 2020, 2019, 2018 and 2017.
2.
The CEO waived any eligibility to participate in the long-term incentive a
wards in respect of the 2021, 2020, 2019, 2018 and 2017 performance years.
3.
The CEO agreed to a reduction in salary e
ffective 1 Dec 2021.
Percentage change in CEO remuneration compared with employees
The table below shows the a
verage incr
ease in each component between the CEO and average emplo
yee in the Company fr
om Admission to 2021:
% change in base salary
% change in bonus earned
% change in benefits
CEO
2021:(8)%
2021:0%
2021:(13)%
2020: 0%
2020: 0%
2020: (6%)
2019: 0%
2019: 0%
2019: 0%
2018: 0%
2018: 0%
2018: (42%)
2017: 0%
2017: 0%
2017: 87%
Alfa UK employ
ee
s
2021:5%
2021:39%
2021:7%
2020: 9%
2020: (1%)
2020: 13%
2019: (3%)
2019: (13%)
2019: (42%)
2018: 1%
2018: (37%)
2018: 22%
2017: 2%
2017: (33%)
2017: (11%)
CORPORA
TE GOVERNANCE
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
117
Percentage change in Executive and Non-Executive Director remuneration
The table
b
elow
shows
the
percentage
increase/
de
crease
in
each Dir
ector’s
s
alar
y
/fees, taxable
benefit
s and
annual incentiv
e
plan between
2019 &
2020 and
2020 &
2021 compar
ed with
the
averag
e per
centage
increase
in each
of those
component
s of
pay f
or the
UK
-base
d emplo
yees of
the
Group
as a whole.
Disclosure
for
all Directors
in addition
to the
CEO
has been added
in 2020
in line
with the
requirement
s under
the EU
Shareholder
Right
s
Directive
II
and o
ver
time
a fiv
e-year
comparison
will be
built up
.
Alfa F
inancial Software
Holding
s
PLC emplo
ys only
the Non-Executive
Directors and
therefor
e
a
subset o
f the
Group
’
s
employees has
b
een used.
% change for the end o
f the comparative period
to the end of the reporting period
2021
% change in
salar
y
/fees
2021
% change in
benefit
s
2021
% change in
annual bonus
2020
% change in
salar
y
/fees
2020
% change in
benefit
s
2020
% change in
annual bonus
Andrew P
age (
Chairman)
(8)%
(8)%
n
/a
0%
7%
n
/a
Andrew Denton (
CEO
)
(8)%
(12)%
n
/a
0%
(6)%
n
/a
Duncan Magrath (CFO
)
0%
46%
100%
n
/a
n
/a
n
/a
Matthew White (
COO)
0%
29%
100%
0%
n
/a
n
/a
Stev
e Breach (NED
)
0%
n
/a
n
/a
0%
n
/a
n
/a
Adrian Chamberlain (NED)
0%
n
/a
n
/a
n
/a
n
/a
n
/a
Charlotte de Metz (NED)
0%
n
/a
n
/a
n
/a
n
/a
n
/a
Chris Sullivan (NED
)
0%
n
/a
n
/a
0%
n
/a
n
/a
Employ
ee
s
5%
7%
n
/a
9%
13%
(1)%
1.
D Magrath did not receive a bonus in 2020. The first year he r
eceived a bonus was in April 2021, in relation to the 2020 financial year
.
2.
M White joined the Board in October 2019 and did not receive an
y bonus as a Director in 2020. The first year he received a bonus was in April 2021, in relation
to the 2020 financial year
.
3.
D Magrath, A Chamberlain and C de Metz joined Alfa par
t way through 2020. In calculating the increase in salaries, the figures for 2020 hav
e been adjuste
d as
though they star
ted on the 1 Januar
y of that year
.
CEO pay ratio
The table below sets out the pay ratios for the CEO in r
elation to the equivalent pay for the lo
wer quartile, me
dian and upper quar
tile employ
ee
s
(calculated on
a full-time
equivalent basis)
. The
ratios ha
ve
been calculated in
accor
dance with
the
Companies (Miscellaneous R
epor
ting)
Requirements 2018. The CEO pay ratio data will be built upon annually until a rolling 10-y
ear dataset is produced. Bonuses and the value of any L
TIPs
that ha
ve
been granted,
which ar
e both
zer
o in
the case of
the CEO
, hav
e been e
xcluded fr
om the
remuneration figur
es used.
The methodology
adopted for
c
alculating the
ratio was
‘Option
A
’ which
entailed calculating
the total
full-time equivalent (FTE)
pay
and benefits for
allUK emplo
yees on
the
2021 pa
yroll.
Employ
ee
s
were
then
ranked based
on their
F
TE r
emuneration
from
low
to high
in order
to identify those
whose
remuneration
placed them
at the
25th, 50th
(median) and
75th percentile
point
s. The
CEO’s
single total
figure
of r
emuneration
(STFR)
was
then
measured against the
se percentiles, to produce the thr
ee pay ratios.
Option A was chosen bec
ause it was deemed to be the mos
t statistic
ally accurate method for this r
epor
ting purpose. Having review
ed the analysis,
theCompany
believes the
me
dian pa
y
ratio to
b
e consistent
with
the Compan
y
’
s g
eneral emplo
yee
pay
, r
eward
and progr
ession policies. The
Company
carries out annual s
alary reviews and annual reviews of benefits packages. Salar
y awards ar
e made with refer
ence to the outputs of annual industr
y
benchmarking ex
ercises.
As per
guidance, data
relating to
employees who
left part way
through
the year
and/
or employ
ee
s on
se
condment w
ere
excluded
from
the data
set and
analysis. Inf
ormation calculated
as at
31
Decemb
er
2021.
Ye
a
r
Method
25th percentile
(lower quartile)
Pay ratio 50th
percentile
(median)
75th percentile
(upper quartile)
2021
A
6.1:1
4.0:1
3.2:1
2020
A
5.7:1
4.3:1
3.2:1
2019
A
5.7:1
4.4:1
3.2:1
118
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
REMUNER
A
TIO
NCOMM
ITTEE
REPO
RTCONTINUED
Ye
a
r
£’000s
25th percentile
50th percentile
75th percentile
2021
T
otal remuneration
50.9
77.1
96.7
Salary only
46.8
72.2
86.2
2020
T
otal remuneration
59.5
78.5
106.7
Salary only
55.1
73.2
98.1
2019
T
otal remuneration
59.0
76.2
106.3
Salary
57.1
71.2
95.7
This is the third financial y
ear in which the Company reported information on ratios between CEO and averag
e staff pay under the amendments to the
Companies (Miscellaneous
Reporting) Regulations
in
2018.
There
has
been a slight
increase to
the ratio
at the
25th
percentile
(lower
quar
tile)
. Mean
while, the
ratio at
the 50th
p
ercentile
(median) has
de
creased
slightly and
at the
75th per
centile (
upper quartile)has r
emained the
same. There
have
been decreases to
the median r
emuneration figur
es at
all
quartile
s, most notably at the 25th percentile. The movement observed in the ratios and total remuneration figur
es in 2021 compared to the previous
year(s)
can be
explained b
y a
numb
er o
f factors,
including:
1.
A number of new joiners to the compan
y in 2021 fell into the lo
wer quartile bracket, thus lowering the lower quartile median figure;
2.
A number of senior members of staff (who w
ould typically fall into the upper quar
tile bracket) left par
t way through the y
ear and were
therefor
e excluded from the data set and analysis. This is r
eflected in the de
crease to the upper quartile (me
dian) remuneration figur
e; and
3.
The CEO advised the Committee that due to his holding in CHP Softwar
e and Consulting Ltd, the main significant shareholder in the
Company
, he elected to reduce his salar
y to the minimum statutor
y level of remuneration with eff
ect from 1 December 2021.
Thisresulted in the CEO’
s SFTR being lower than in previous y
ears.
Rewarding our people and wider workforce engagement
Alfa’
s appr
oach to
all-employee r
eward
is
focused on
pro
viding a
competitive package
to attract, r
etain and
incentivise our
employees to
deliver f
or
ourcustomers, business and
shareholders. The
Committe
e r
egularly
reviews
details o
f the
arrangement
s f
or the
broader w
orkforc
e and
this
informs
decisions on
remuneration
for the
Executive
Directors and
senior manag
ement. Alfa
continues to
review
s
alaries gr
oup-wide to
ensure that
we
remain
a c
ompetitive emplo
yer
within
the local
market. Salaries f
or E
xecutive
Directors,
senior manag
ers and
the
rest of
the
workfor
ce
are
all determined
with
refer
ence
to the
s
ame factors
such as
technical expertise, experience and
p
erformance, and
increases across
these populations
are
revie
wed to
ensure
they are br
oadly aligned. The Committee also to
ok an active r
ole in determining rewar
ds for the Compan
y Leadership T
eam. F
ur
ther information on
key initiatives f
or our people and what make
s Alfa unique can be found on page 25. In addition to a competitive salary
, all employees receive the
oppor
tunity to earn a per
formance-r
elated bonus, priv
ate medical care, matched contribution pension and death-in-ser
vice life assurance.
The Company Leadership T
eam and cer
tain employees are eligible to participate in long-term incentive schemes.
During the
review
of the
Directors’ Remuneration
Policy
, the
Committee sought
input fr
om
the Ex
ecutive Dir
ectors, ensuring
that any
conflict
of
interest was
suitably mitigated. It
was concluded
that
the existing
model of
base salar
y; annual
b
onus;
and a
three-year
L
TIP with
a
two-year
holding
period was
well
understood by
the
business, suppor
ted Alfa
’
s
culture
and continued
to
be appr
opriate to
drive business performance
going
forward.
Relative importance of spend on pay
The f
ollowing
table
illustrates Alfa’
s r
evenue
and operating
profit in
relation to
sp
end on
pay f
or all
employees for
the period and
last financial
year
.
2021
2020
Change
T
otal personnel cos
ts (£m) (note 7 to the consolidate
d financial statement
s)
42.4
39.6
7%
A
verage number of employ
ee
s (note 7 to the consolidated financial statement
s)
383
341
12%
Rev
enue (£m) (consolidated income statement)
83.2
78.9
5%
Operating profit (£m) (see note 4.2 to the consolidated financial statement
s)
24.7
23.9
3%
During FY2021, the Company paid dividends to shar
eholders amounting to £32.7m (FY20: £44.2m)
. F
or more inf
ormation on dividends and
expenditure
on
remuneration
of
all emplo
yees, see pag
es 171
and 158
respe
ctively
.
CORPORA
TE GOVERNANCE
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
119
Implementation of the Remuneration Policy in 2022
2022 Executive Directors’ base salaries
A
t the end of 2021, the Chairman and CEO requested the Committe
e appro
ve their proposal to reduce their salaries, bonus and shares to the legal
minimum le
vel.
Both the
Chairman and
CEO ar
e
significant shareholders
in the
Company
and expr
essed a
desire to
align their futur
e
remuneration
with
those of the other shareholders. The Committee members wer
e suppor
tive of the pr
oposal and approved it effectiv
e 1 Decemb
er 2021.
The Committ
ee carried out
a r
eview
of
the CFO‘
s and
COO
’
s
remuneration
packages
in late
2021
and determined
that ther
e
would
be no
salar
y
increase and that the bonus and L
TIP oppor
tunities remained appropriate.
The table
b
elow
shows
the
salarie
s f
or
the Ex
ecutive Dir
ectors as
at 1
Januar
y 2022
in comparison
to base
salar
y
at 1
January 2021:
£’000s
1 January 2022
1 January 2021
% change
Andrew P
age
23
374
(94)%
Andrew Denton
23
322
(93)%
Duncan Magrath
275
275
0%
Matthew White
220
220
0%
Pension and benefits
F
or 2022 the CFO and COO, in lieu of a pension contribution, will receiv
e a cash allowance of 6% of salar
y in line with the pension contribution available
to
the wider
workf
orce.
No
changes ar
e pr
oposed to
the benefits pro
vided.
2022 annual bonus
The Chairman
and CEO
hav
e waiv
ed their
bonus opportunity going
forward.
The
COO will be
entitled to
a maximum
annual bonus
equal to
100%
of
salar
y f
or 2022
with the
CFO entitled
to
a maximum
annual
bonus of
125% of
salar
y
. The
following
me
asures
have
b
een selected f
or the
2022 annual
bonus per
formance y
ear:
Measure
W
eighting
Operating profit
37.5%
Rev
enue
37.5%
Operating free cash flow conv
ersion
Modifier
Personal performance
25%
The
Committee is
of the
view that
our existing
measures
of
rev
enue, operating
profit
and
personal objectives
continue
to
be appr
opriate
for
the business.
Each bonus measure has a target, failure t
o meet a minimum p
ercentag
e of the rev
enue and operating profit targ
et will result in no bonus being
awar
ded f
or that
element. Achieving
a
maximum per
centage
of operating
pro
fit and
rev
enue
target
will r
esult in
the
maximum bonus
being a
warded
under the
formula (subject
to the
minimum operating pr
ofit
target
b
eing achie
ved)
.
The operating
pro
fit and
rev
enue
bonus elements can be
increased
or decreased by the operating free cash flow conv
ersion modifier depending on cash p
erformance, although the modifier cannot increase them
beyond
their maximum
opp
ortunity
. As
described earlier
, the
final determination
is made
by
the Committee
taking all
available factors
into
account.
The detailed bonus targets for the coming year are consider
ed to be commercially sensitive. Ho
wever
, the Committee will pro
vide an appropriate
explanation
of the
b
onus
outcomes in
the 2022
Directors’ Remuneration
Repor
t.
In accordance with the P
olic
y
, 50% of any bonus earned will b
e deferr
ed into shares for a three-year holding period.
120
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
REMUNER
A
TIO
NCOMM
ITTEE
REPO
RTCONTINUED
2022 Long-Term Incentive Plan
The normal
maximum L
TIP opportunity under
the P
olicy is
150%
of
salar
y
. For
2022, the
CEO
has waiv
ed their
L
TIP opportunit
y
. The
awar
d
oppor
tunity will remain at 100% of salary for the COO, and 150% of salary for the CFO
. Follo
wing vesting, awards will be subject to a subsequent
holding period of two years, with the entir
ety of any awar
d vesting released after two years.
The Committee has agreed TSR and EP
S measures for the L
TIP
, with an equal weighting applied to each measure.
The c
omparator gr
oup f
or
the TSR
is
the constituents of
the
FTSE Small
Cap index,
excluding
investment trust
s.
Median performance o
ver
the
three-year performance period will result in 25% vesting, with 100% ves
ting if upper quar
tile per
formance is achiev
ed. The EPS per
formance
conditions
are
being finalised
and details
will
be included
in the
RNS
announcing the
awar
ds.
2022 Non-Executive Director remuneration
Non-Executive
Directors
do
not participate in
any of
the
Company
’
s share
incentive
arrangement
s, nor
do they
receive
any
benefit
s. F
e
es for
Non-
Executive
Directors
are
revie
wed annually
, and
are
set b
y the
Chairman and
the Ex
ecutive Dir
ectors. F
ollowing the
annual
review
of
Non-Executive
Director fees, no changes are pr
opose
d for the 2022 f
ees. It was determine
d that the fees will remain at the follo
wing level:
Base fee
£55,000
Additional fee for chairing A
udit & Risk Committee or Remuneration Committee (subject to maximum fee
s of £65,000)
£10,000
F
ee for the Senior Independent Director (including chairing Committees)
£65,000
Appointment of external advisors
During
the y
ear
, the
Remuneration
Committee and
the Company
retained independent
external advisors
to
assist on
various
aspe
cts of
the
Company
’
s
remuneration
and
share
schemes. The
Company
hav
e continued
to
retain
the services of
Ellason
LLP as
external
advisers to
the
Committee f
or the
Executive
remuneration
incentives and
pro
vided updates on
market
trends
and
also T
ape
str
y Global
Compliance LLP
(T
ap
estr
y) who
continue to
act
as e
xternal advisors
to
the Committee,
to pr
ovide
suppor
t
and inf
ormation on
our all-employ
ee share
scheme
s, both
selected on
their e
xper
tise and
quality of
their previous
advice and
originally appointed
by
the Committee.
None o
f the
advisers
has an
y other
conne
ction with
the Company
or
it
s
Executive Dir
ectors. Ellason LLP
’
s fees for 2021 amounted to £14,688; T
apes
tr
y fees were £37,906. The Committee is satisfied that Ellason LLP
(whois
a
member of
the
Remuneration
Consultants Group
and
abides by
it
s Code o
f Conduct)
and
T
apes
try continued to
maintain
independence
andobjectivity
.
Statement of shareholding voting
The Dir
ectors’ R
emuneration P
olic
y and
FY2020 Director’
s
Remuneration
Report wer
e appr
ov
ed by
shareholders at
the
2021 A
G
M which
was held
on
10 Ma
y
2021. The
votes
cast wer
e as
follows:
£’000s
For
Against
V
otes withheld
Directors’ Remuneration R
epor
t (FY2020)
99.97%
0.03%
0
Directors’ Remuneration P
olic
y
98.50%
1.50%
0
Director service contracts
Director
ser
vice
contract
s ar
e
avaialble
for
inspection at
the Compan
y
’
s r
egistered o
ffice.
Signed on
8
March
2022 on
b
ehalf o
f the
Board
Adrian Chamberlain
Chair, Remuneration Committee
8 Mar
ch
2022
CORPORA
TE GOVERNANCE
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
121
Statutory information
The Dir
ectors of
Alfa present
their r
epor
t
and the
audited financial
s
tatement
s
for
theyear
ended
31 December
2021. This
Report includes
information
required
by
theCompanies Act
2006 and
the Listing Rules 9.8.4R of the UK F
inancial Conduct Authority
’
s Listing Rules and forms part of the
management report as required by theDisclosur
e and T
ransparency (DTR) R
ule 4.
Additional inf
ormation
which is
incorporated b
y r
eferenc
e into
this
Directors’
Report
canbeloc
ated b
y r
eference
the tables below
.
As permitted
by
the Companies
Act 2006,
the Directors’
Report includes the
disclosures
inthe
Strategic Report on:
Location in annual
report (page)
Performance and futur
e development in the business
1 to 69
Impor
tant events affecting the Group since the financial y
ear
171
Climate change emission reporting
66 to 69
Key F
inancial Performance indicators
36 to 37
Principal risks and uncertainties
46 to 51
Long-term Viability statement
52 to 53
Employ
ee involvement
25
The Group is r
equired to disclose cer
tain information under Listing Rule 9.8.4R in the Dir
ectors’
Report or advise where such relevant inf
ormation is contained. This information can be found
in the follo
wing sections of the Annual Repor
t and Accounts:
Listing rule requirement
Location in annual repor
t (page)
Details of any long-term incentiv
e schemes
169 to 170
Details of waiver of Dir
ector emolument
s and
future emoluments
100 to 121
Shareholder waiv
er of dividends and future
dividends
125
Details of any contract of significance in which
aDirector is
or was
materially inter
este
d
See section below headed ‘Relationship
Agreement with Controlling Shar
eholder’
Board statement in respect of Relationship
Agreement with the controlling shar
eholder
See section below headed ‘Relationship
Agreement with Controlling Shar
eholder’
Principal activities
The principal activity of the Alfa Group is the
pro
vision of software and software-r
elated
service
s to the auto and equipment finance
industr
y
. Alfa is a public company limited by
shares and is incorporated and domiciled in
England. Its shares are liste
d on the London
Stock
Exchange.
The
registered
office
is Moor
Place, 1 F
ore Str
eet A
venue, London, EC2Y
9D
T
,
United Kingdom.
Alfa’
s r
egistration no
.
is 10713517. The principal activity of the
Company is that of a holding compan
y
.
The Compan
y
’
s
registrar is
Equiniti Limited
situated at Aspe
ct House, Spencer Road,
Lancing
, W
est Sussex,
BN99
6DA.
Financial risk management
The financial risk management objectives and
policies of
the c
ompany
and the
exposure
of
the company to price risk, cr
edit risk, liquidity
risk and cash flow risk are disclosed in note 3 to
the financial statement
s.
Subsidiaries and branches

The Gr
oup has
subsidiaries in the
United
States of America, Germany
, Australia and
New Z
e
aland and
a subsidiary of
the
Company is r
egistered as a branch of
anov
erseas company
in S
outh Africa.
F
ur
ther details of these can be found in
note32.2 to
the accounts on
page 171.
Contracts of significance
W
e have no contracts de
emed significant other
than the Relationship Agreement between the
Company and the Contr
olling Shareholder
, as
detailed on page 124.
In addition, amounts are capitalise
d as Other
intangible asset
s which are sho
wn in note 15 to
the consolidated financial statement
s.
122
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
DIRECTORS
’REPO
RT
Research and development
The Group continued to inv
est in product
research and dev
elopment throughout the
year
. The product is enhanced by both specific
customer driven requirements, some of which
are paid f
or by customers, but also by internal
development using the skills and kno
wledge
from the dev
elopment teams but also using
feedback from the implementation teams.
The amount
expense
d in
the profit
and loss
account for r
esearch and development is
shown in note 6 to the consolidated
financialstatement
s.
In addition, amounts are capitalise
d as Other
intangible asset
s which are sho
wn in note 15 to
the consolidated financial statement
s.
Employee involvement
W
e place considerable value on the involvement
of our employ
ee
s, viewing and treating them as
valued team members and an integral par
t of
our business and our succe
ss. W
e continue to
keep them informed on matters affecting them
through both formal and inf
ormal meetings and
the Group intranet, including CEO updates.
T
eams are consulted regularly on a wide range of
matters affecting their curr
ent and future
interest
s. W
e have establishe
d share o
wnership
schemes for use throughout the Compan
y and
intend to use them to broaden shar
e ownership
across the Company
. Information on employee
engagement is available on pages 79 and 80.
F
ur
ther information on team engagement, as
monitored by our internal emplo
yee surveys, is
included in the ESG report on pages 58 to 69.
Employee diversity

Our policy for the Alfa team and all
applicant
s for employment is t
o match the
capabilities and talent
s of each individual to
the appropriate job
. W
e are committed to
ensuring equality of oppor
tunity in all
employ
ee relations. W
e aim to ensure that no
employ
ee, p
otential employ
ee, customer
,
visitor or supplier will receive less fav
ourable
treatment on
the grounds
of sex, pr
egnancy
,
disability
, religious beliefs, marital status,
race, ethnic origin,
nationality
, age, sexual
orientation or colour
.
Disability
With r
egard
to
existing team
members and
those who
may become
disable
d, Alfa
’
s policy
is t
o examine
ways and
means to
provide
continuing
employment
under the
existing
terms and conditions and to pro
vide training
and career development, including promotion,
where appr
opriate.
W
e ende
av
our to meet our responsibilitie
s to
train and employ disabled people.
Employment applications by people with any
disability are given full and fair consideration f
or
all vacancies and are asses
sed in accordance
with their skills and abilities.
Directors
The names of the persons who, at any time
during the financial year and up to the date of
this report
, wer
e Directors of the Company ar
e:
Date of appointment
Stev
e Breach
9 August 2019
Adrian Chamberlain
24 April 2020
Charlotte de Metz
24 April 2020
Andrew Denton
6 April 2017
Duncan Magrath
24 April 2020
Andrew P
age
4 May 2017
Chris Sullivan
18 July 2019
Matthew White
9 October 2019
Appointment and removal

The rules governing the appointment and
remo
val of a Director are set out in the Articles
of Association of the Company
. The Ar
ticles of
Association may be amended by a spe
cial
resolution of the shareholders. Specific details
relating to the Principal Shar
eholder
, CHP
Software and Consulting Limited, and its right
to appoint Directors are set out in this r
epor
t
on page 124.
All Directors will stand for r
e-election at the
A
GM on
an annual
basis, in
line with
the
recommendations of the 2018 Code.
The Article
s of Association are available
onthecorporate go
vernance pag
e of our
inv
es
tor relations w
ebsite
www
.investors.alfasys
tems.com.
Powers of the Directors
Specific powers relating to the allotment and
issuance of ordinary shares and the ability of
the Company to pur
chase it
s own securities
arealso
included within
the
Ar
ticles and
such
authorities are submitted for appro
val by the
shareholders
at
the A
G
M each
year
.
Since listing and as at 31 Decemb
er 2021,
theDirectors
have
not exer
cised any
of their
powers to issue, or pur
chase, ordinary shares
inthe shar
e
capital of
the
Company
.
Howe
ver post year end, a share r
epurchase
program commenced on 18 January 2022.
F
ur
ther details can be found on p124.
Directors’ interests
The
Directors’
interest
s
in
and
options
over
ordinary shares in the Company are sho
wn in the
Directors’
Remuneration
Repor
t
on
page
116.
Since the end of the financial year and to the
date of this report, there have been no changes
to such interest
s.
In line with the requirements of the Companies
Act, each Director has notifie
d the Company of
any situation in which they ha
ve, or could hav
e,
a direct or indirect interest that conflicts, or
possibly may conflict, with the interest
s of the
Company
(a
situational conflict)
.
These were consider
ed and approv
ed by the
Board in accor
dance with the Article
s and each
Director informed of the authorisation and any
terms on which it was given. All Dir
ectors are
awar
e of the need to consult with the Company
Secretary should any possible situational
conflict arise, so that prior consideration can be
given b
y the Board as to whether or not such
conflict will be approv
ed.
Directors’ indemnities
Each Director of the Company has the benefit
of a qualifying indemnity
, as defined by section
236 of the Companies Act, and as p
ermitted
by
the
Ar
ticles, as
well
as
Directors’ and
Officers’ liability
insurance.
No amount
was paid
under an
y o
f these
indemnities or insurances during the year other
than the applicable insurance premiums.
CORPORA
TE GOVERNANCE
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
123
Share capital
The Compan
y
’
s
ordinary shares
are
listed on
the London
Stock
Exchange.
The authorised
share capital of the Company as at
31 December
2021 and
8
March
2022, being
the latest practic
able date prior to the date of
this Annual Report
, comprises 300,000,000
ordinary shares of 0.1 pence each. Further
information
regar
ding the
Company
’s
issue
d
share capital can be found in note 26 of the
Company financial statements.
There ha
ve been no movements in the
Company’s
is
sued shar
e capital
since
31 December 2021 through to the date of this
Report
. Howev
er
, on 18 Januar
y 2022, the
Company announced it had entered into a
share
repur
chase pr
ogramme.
More
detail
can
be found on this page under ‘
Authority to
purchase
own
shares’
.
Shareholders’ voting rights
All members who hold ordinary shares are
entitled to
attend
and v
ote at
the A
GM.
On asho
w o
f hands
at a g
eneral
meeting
, ev
ery
member present in person shall have one v
ote
and on a poll, every member present in person
or b
y
proxy
shall hav
e one
vote
for ev
ery
ordinary shar
e held.
No shareholder
holds
ordinary shares carr
ying spe
cial rights relating
to the control of the Compan
y and the
Directors are not a
ware of an
y agreements
between holders
of
the Compan
y
’
s
shares that
may r
esult in restrictions on voting right
s.
Restrictions on transfer

The Article
s do not contain any restrictions on
the transfer o
f ordinary shares in the Company
other than the usual restrictions applicable
where an
y amount is unpaid on a share. All
issued share capital of the Company at the
date of this Annual Report is fully paid.
Certain res
trictions are also imposed by la
ws
and r
egulations
(such as
insider trading
and
market abuse requir
ement
s relating to close
periods) and
requirements of
the Listing R
ules
whereb
y Directors and certain employees of
the Company r
equire Board appr
oval to deal in
the Compan
y
’
s
securitie
s.
Each o
f the
Executive Dir
ectors, and
the senior
executives
(each,
a ‘R
estricte
d Shar
eholder’) at
the time of listing agreed, for a period of one
year f
ollowing Admission on the terms and
subject to
the
conditions of
the Underwriting
Agreement, were not to dispose of any of the
ordinary shar
es they
held in
the Company
(the
‘Initial Lock
-Up P
eriod’)
. This
Initial Lock-Up
Period
expired
on
1 June
2018
and, f
or most
of
the Restricted Shareholders, was follow
ed by
three further lock-up periods of 365 days, 720
and 1,095 days. Each of these further lo
ck
-up
periods commenced on the termination of the
Initial Lock
-Up P
eriod and
cov
ered on
e
ach
occasion a fur
ther 25% of the relevant
Restricted Shareholder’
s holding
of
ordinary
shares.
The final
lock
-up period
expired
on
1 June 2021.
Authority to purchase

Subject to authorisation by shareholder
resolution, the Company ma
y purchase its own
shares in accordance with the Companies Act
2006. Any shar
es b
ought back may be held as
treasury shares or cancelle
d immediately on
completion of the purchase.
A
t the
2021
AGM,
the
Company
was g
enerally
and unconditionally authorised by its
shareholders to pur
chase in the market up to
10% of the ordinary shares of the Company
(30,000,000 or
dinary shares)
. As
at
31 December
2021 the
full
extent of
this
authority remained in for
ce and unused.
This authority is renewable annually
, and a
special resolution will be proposed at the 2022
A
GM to
request shareholders
to renew
it
.
The Dir
ectors will
only purchase
the
Company
’
s
shares in the market if they believe it is in the
bes
t interest
s of shareholders in g
eneral.
On 18 January 2022, the Company announced
that it had entered into an arrangement with
Barcla
ys Bank PLC, acting through its
inv
es
tment bank to purchase or
dinar
y shares
inthe Compan
y
up to
an
aggregate pur
chase
price
of £18m
over
an 18-month
period.
The purchase of the or
dinary shares is made
independently and uninfluenced by the
Company and held as tr
easur
y shares.
The purpose of the share pur
chases is to
reduce
the Compan
y
’
s shar
e
capital and
to
enable the Company to meet obligations
arising from shar
e option programmes and
notto
issue any
new shares
to
satisf
y
future
option e
xercises.
As at
7 March
2022,
being the
last practicable
date prior to the production of this Annual
Report
, the number of ordinary shares held in
treasury was 388,605. Accordingly
, total voting
rights amounte
d to 299,611,395 ordinary
shares as at the same date.
During
2021, the
Employee Benefit
T
rust (EBT)
purchased 3,415,650 ordinary shares with the
nominal value of £3,415.65 for a total
consideration of £4,607,677.18 and to be held
in the EBT f
or the purpose of providing shar
es
to cov
er future shar
e option awards.
Transactions with

The only subsisting material transactions which
the Company has enter
ed into with related
partie
s are:
Relationship agreement and the
controlling shareholder
The Relationship Agreement was enter
ed into
on 26
May 2017
and regulates
the r
elationship
between CHP Software and Consulting
Limited (the
‘Contr
olling Shar
eholder’) and
the
Company f
ollowing listing. Subject to a cer
tain
minimum shareholding, the Relationship
Agreement details the right
s the Controlling
Shareholder has to r
epresentation on the
Board
and
Nomination Committee
and to
appoint observers
to the
Nomination
Committee (if
not
represented
on the
Committee)
.
The Contr
olling Shar
eholder
also
undertake
s not to operate, establish, own or
acquire a competing business during the terms
of the agreement. Any transactions between
Alfa and the Controlling Shar
eholder will be at
arm
’
s
leng
th and
on normal
commercial
terms.
The Relationship Agreement complies with the
requirements of the LRs, including Listing Rule
9.2.2AR(2)(a)
, and Lis
ting Rules 6.1.4DR.
124
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
DIR
ECTORS’REP
ORTCONTINU
ED
In accordance with the r
equirements of Listing
Rules 9.8.4(14)
, the Board confirms that the
Company has complied with its oblig
ations
under the Relationship Agreement, including in
respect of the independence provisions and, so
far as the Company is a
ware, the Controlling
Shareholder has complied with the pro
visions
of
the R
elationship Agr
eement (including
the
independence and non-compete provisions set
out ther
ein)
, at
all times
since
the Agreement
was entered into.
Other related par
ty transactions are
detailedinnote 32
to
the consolidated
financialstatement
s.
Profits and dividends
The c
onsolidated pro
fit after
tax f
or
the y
ear
ended 31
December 2021
was £19.2m
(FY20: £20.3m)
.
The r
esult
s ar
e discussed
in
greater detail in the F
inancial review on pages
38 to 42. Information on dividends is sho
wn in
note 31 of the F
inancial Statements and is
incorporated into this report by refer
ence.
During the year
, the trustee of the employee
benefit trust which op
erates in connection with
the Compan
y
’
s
share
plans waiv
ed its rights to
receive dividends on an
y shares held by it.
Details of the trust can be found in note 12
ofthis
report
.
Subject to appro
val at the Annual General
Meeting on
12
May
2022, a
2021 final dividend
of 1.1 pence per share will be paid on 24 June
2022 t
o holders
on
the r
egister on
27
May
2022. The ordinary shares will be quoted
ex
-dividend on
26 May
2022.
Significant Shareholdings at 31 December 2021 and 25 February 2022 (being the latest
practicable date of this report)
A
t the relevant dates, the Company had been notified, in accordance with chapter 5 of the Disclosure Guidance and T
ransparency Rules, of the
follo
wing voting rights as a shareholder of the Company:
Name of shareholder
No. of or
dinary
shares at
31 December
2021
% of total voting
rights at 31
December 2021
No. of or
dinary
shares at 25
February 2022
% of total voting
rights at 25
February 2022
Nature of
holding
CHP Software and Consulting Limited
197,645,649
65.88
197,645,649
65.96
Direct
Aberdeen Investments (Standard Life)
11,642,054
3.88
11,377,726
3.80
Indirect
Blackrock Inv
estment Mg
t
9,110,936
3.04
11,423,020
3.81
Indirect
During the
p
eriod between
25
February 2022
and
8 Mar
ch 2022
the Company
did
not r
eceive
any
notifications under
chapter
5 of
the Disclosure
Guidance and T
ransparency Rules.
The trustees of
the Company’s
employee shar
e
scheme (EB
T) ha
ve
a r
olling
dividend waiv
er in
place in respect of shares held in trust
.
Amendment of the Articles
The Article
s may only be amended by a special
resolution
of the
Company
’
s shar
eholders in
a
general meeting, in accordance with the
Companies Act
.
Compensation for loss of
office and change of control
There ar
e no agreements b
etween the
Company and its Directors or Alfa team
members providing f
or additional compensation
for
loss o
f of
fice or
employment (
whether
through
resignation, r
edundanc
y
or
otherwise)
that occurs bec
ause of a takeov
er bid.
The only significant agreement, to which the
Company is a party to that takes e
ffect, alters
or terminates upon a change of control of the
Company f
ollowing a takeov
er bid, and the
effect thereof
, is the Relationship Agreement.
The Relationship Agreement with the
Controlling Shar
eholder contains a pro
vision
under which it will terminate upon the earlier
of:
(i) the
Controlling Shar
eholder and
it
s
associates ceasing to have the entitlement to
exer
cise or
control the
exercise
of
10% or
more
of
the v
oting rights in
the Company;
or
(ii) the
Company’s
ordinar
y shar
es ceasing
to
be
admitted to the listing on the Official Lis
t of
theFCA.
Political donations
The Group made no political donations and
incurred
no political
expenditure
during the
year
(FY20: £nil)
.
It r
emains the
Company
’
s
policy not to make political donations or to
incur political
expenditure.
A
t the
2021
AGM,
the
Directors w
ere
generally
and unconditionally authorised by the
Company’s
shareholders to
make
limited
political donations
of
up to
£50,000, in or
der
to
protect against any inadvertent breaches of the
relevant pr
ovisions of the Companies Act 2006
which are v
er
y broad in natur
e. The Board has
no intention of using this authority
.
Interest capitalised in

No int
erest has
been capitalised by
Alfa in
theyear
ended 31
December 2021
or at
31 December 2020.
Stakeholder engagement
Details of how the Gr
oup has engaged with it
s
employ
ee
s, suppliers, customers and other
principal stakeholders together with details of
the key decisions taken by the Gr
oup during
the year ar
e disclosed on pages 54 to 57.
CORPORA
TE GOVERNANCE
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
125
Going concern
The financial statement
s are pr
epared on the
going concern basis. The Gr
oup continues to
be cash-generative and the Dir
ectors believe
that the Group has a r
esilient busine
ss model.
The Group meets it
s day-to-day working
capital requirements through its c
ash reserves
generated from operating activities.
The Gr
oup
’
s forecast
s and
projections, taking
account of reasonably possible changes in
trading per
formance, sho
w that the Group
has sufficient cash reserves to continue to
operate for a period of not less than
12 months from the date of appr
oval of these
financial statement
s.
The going concern assessment also includes
downside stress testing in line with FRC
guidance which demonstrates that even in the
most extreme
downside conditions
considered
reasonably
possible, giv
en the
exis
ting le
vel
of
cash held, the Group would continue to be able
to meet it
s obligations as they fall due, without
the need for substantive mitigating actions.
On this basis, whilst it is acknowledged that
there is continued uncertainty over future
economic conditions, the Directors consider it
appropriate to continue to adopt the g
oing
concern basis of accounting in pr
eparing the
financial statement
s.
Viability statement
The V
iability statement
containing
a br
oader
assessment by
the
Board
of
the Compan
y
’
s
ongoing viability is set out in the Strategic
report on pages 52 to 53.
Corporate governance
statement
The Compan
y
’
s
statement on
corporate
gov
ernance can be found on page 71 of the
Corporate gov
ernance report
. The report
forms
part of
this Dir
ectors’ R
epor
t and
is
incorporated by cross r
eference.
Climate risk reporting
F
or the first time this year the Company
hasmade disclosur
es consistent
with the
recommendations from the T
ask For
ce on
Climate-related
F
inancial Disclosur
es (TCFD
).
These disclosures are shown on pag
e 69.
Annual General Meeting
The Compan
y
’
s
Annual General
Meeting
willbeheld at
3pm
on Thursda
y
, 12
May
2022
at Alfa
’
s head o
ffice at
Moor Place, 1
Fore
Street, London,
EC2Y
9D
T
.
The Notice
of
Meeting setting
out
the r
esolutions to
be
proposed atthe
2022 A
GM, tog
ether with
explanatory notes, will
be sent
to shareholders
as a
separatedocument and
made a
vailable
ont
heCompan
y
’
s w
ebsite
www
.investors.alfasys
tems.com.
Disclosure of information to
the auditor
Each of the Directors of the Compan
y at the
date
the Dir
ectors’ Report is
approved
confirms that:
•
So far as the Dir
ector is aware, ther
e is no
relevant audit inf
ormation of which the
Company’s auditor is una
ware; and
•
He or she has taken all the steps that he or
she ought to hav
e taken as a Director in
order to make himself or herself a
ware o
f
any r
elevant audit information and to
establish that the Group and Company
’
s
auditors are a
ware of that inf
ormation.
This confirmation is given and should be
interpreted in accor
dance with the provisions
of s.418 of the Companies Act 2006.
RSM
UK
Audit
LLP
, the
Group
’
s
auditor
, has
indicated it
s willingnes
s to continue in office
and, on the recommendation of the Audit &
Risk Committee and in accordance with section
489 of the Companies Act of 2006, a resolution
to
reappoint it
will be put
to the
2022 A
G
M.
Board approval of the
Directors’ Report
The Dir
ectors’ R
epor
t was
approved
by
the
Board
on
8 Mar
ch 2022
and signed on
its
behalf by:
Andrew Denton
Chief Executive Officer
8 Mar
ch
2022
126
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
DIR
ECTORS’REP
ORTCONTINU
ED
The Directors are r
esponsible for preparing the
Strategic
Report and
the Dir
ectors’ R
epor
t, the
Directors’
Remuneration
Report
, the
separate
Corporate Governance Stat
ement and the
financial statement
s in accordance with
applicable law and regulations.
Company la
w requires the Directors to
prepar
e Group and Company financial
statement
s for each financial year
.
The Directors hav
e elected under company
law to pr
epare gr
oup financial statement
s in
accordance
with UK
-adopte
d International
Accounting Standards. The Dir
ectors have
elected under company law to pr
epare the
company financial statements in accordance
with United King
dom Generally Accept
ed
Accounting P
ractice (United King
dom
Accounting S
tandards and
applicable la
w)
.
The group financial statements are required by
law
and
UK
-adopted International
Accounting
Standards to pr
esent fairly the financial
position and per
formance of the gr
oup; the
Companies Act 2006 provides in relation to
such financial statement
s that refer
ences in the
relevant part of that Act to financial
statement
s giving a true and fair view are
refer
ences to their achieving a fair presentation.
Under c
ompany
law
the Dir
ectors must
not
appro
ve the financial statement
s unless they
are satisfied that they give a true and fair view
of the state of affairs of the Gr
oup and the
Company and of the pr
ofit or loss of the Group
for that period.
In preparing each of the Gr
oup and Company
financial statement
s, the Directors are
requiredto:
a.
select suitable accounting policie
s and then
apply them consistently;
b.
make judg
ement
s and accounting estimate
s
that are r
easonable and prudent;
c.
for the Gr
oup financial statement
s, state
whether they hav
e been prepared in
accordance
with UK
-adopted International
Accounting Standards;
d.
f
or the Company financial statements, s
tate
whether applicable
UK
accounting
standards hav
e been followed, subject to
any material departures disclosed and
explained in
the
Company
financial
statement
s; and
e.
prepar
e the financial statement
s on the
going concern basis unless it is inappropriate
to presume that the Group and the
Company will continue in business.
The Directors are r
esponsible for keeping
adequate accounting records that ar
e sufficient
to
show
and explain
the Group
’
s and
the
Company’s
trans
actions and
disclose with
reasonable accuracy at any time the financial
position of the Group and the Compan
y and
enable them
to ensure
that thefinancial
statement
s and
the Directors’
Remuneration
Report comply with the Companie
s Act 2006.
They are also r
esponsible for safeguarding the
asset
s o
f theGr
oup and
the Company
and
hence for taking r
easonable steps for the
prev
ention and detection of fraud and
otherirregularities.
Directors’ statement pursuant
to the Disclosure and
Transparency Rules
Each of the Directors, whose names and
functions are listed on pages 74 to 75 confirm
that, to
the best of
each person
’
s
knowledge:
a.
the financial statement
s, prepared in
accordance with the applicable set of
accounting standards, give a true and fair
view of the assets, liabilitie
s, financial
position and profit of the Compan
y and the
undertaking
s included in the consolidation
taken as a whole; and
b.
the Str
ategic Report containe
d in the
Annual Report include
s a fair revie
w of the
development and performance of the
business and the position of the Company
and the undertaking
s included in the
consolidation taken as a whole, together
with a description of the principal risks and
uncertaintie
s that they face.
The Directors are r
esponsible for the
maintenance and integrity of the corporate and
financial information included on the Alfa
F
inancial Software Holdings PLC w
ebsite.
Legislation in
the
United Kingdom
governing
the preparation and dissemination of financial
statement
s may diff
er from legislation in
otherjurisdictions.
This responsibility statement was approved b
y
the Boar
d
of Dir
ectors on
8 March
2022
and is
signed on it
s behalf by:
Andrew Denton
Chief Executive Officer
8 Mar
ch
2022
CORPORA
TE GOVERNANCE
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
127
ST
A
TEMENT
OFD
IRECTORS’
RESPO
NSIB
ILITI
ES
128
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
Financial
statements
Financial stat
ements
129
Independent auditor’
s report
137

Consolidateds
tatementofpr
otorlossand
comprehensiv
eincome
138

Consolidateds
tatementofnancialposition
139


Consolidatedstatementofchangesinequity
140

Consolidateds
tatementofcasho
ws
141


Notestotheconsolidatednancialstatement
s
173


Companystatementofnancialposition
174

Companystatementofchangesinequity
175
Companynotestothenancialstatements

Other information
179
Glossary of terms
180
Shareholder inf
ormation

FINANCIAL ST
A
TEMENTS
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
129
Opinion
W
e have audited the financial statement
s of
Alfa F
inancial S
oftware Holdings PL
C (the
‘parent
company’) and its subsidiaries (the
‘
group
’) for
the year
ended 31 December
2021, which comprise the Consolidated
statement of profit or loss and compr
ehensive
income, Consolidated statement of financial
position, Consolidated s
tatement of changes
in equity
, Consolidated statement of cash
flows, Company statement of financial
position, Company statement of changes in
equity and note
s to the financial statement
s,
including significant accounting policies.
The financial reporting framework that has
been applie
d in the preparation of the gr
oup
financial statement
s is applicable law and
UK
-adopted International Accounting
Standards. The financial r
eporting framework
that has been applie
d in the preparation of
the parent compan
y financial statement
s is
applicable law
and United Kingdom
Accounting Standards including F
inancial
Reporting Standard 102 “The F
inancial
Reporting Standard
applicable in the
UK and
Republic
of Ireland”
(United Kingdom
Generally Accepted Accounting P
ractice)
.
In our opinion:
•
the financial statement
s give a true and
fair view of the state of the group
’
s and of
the parent compan
y
’
s affairs as at
31 December 2021 and of the group
’
s
profit f
or the year then ended;
•
the group financial statements have been
properly prepar
ed in accordance with
UK
-adopted International Accounting
Standards;
•
the parent compan
y financial statement
s
hav
e be
en properly pr
epared in
accordance with United Kingdom
Generally Accepted Accounting Practice;
and
•
the financial statement
s have been
prepar
ed in accordance with the
requirements of the Companies Act 2006.
Basis for opinion
W
e conducte
d our audit in accordance
withInternational Standar
ds on
Auditing
(UK) (IS
As (UK)) and
applicable law
. Our
responsibilities under those standards
arefurther described in the Auditor’
s
responsibilities for the audit of the financial
statement
s section of our report
. W
e are
independent of the group and par
ent
company in accor
dance with the ethical
requirements that are rele
vant to our audit
ofthe financial
statement
s in the
UK,
including the FR
C’
s Ethical Standar
d as
applied to liste
d public interest entities
andwe ha
ve
fulfilled our other ethical
responsibilities in accordance with these
requirements. W
e believe that the audit
evidence we ha
ve obtained is sufficient and
appropriate to pr
ovide a basis f
or our opinion.
INDEPENDENTAUDIT
OR
’SREPO
RTT
OTHEMEMBERS
OFALF
AFINANCIALSO
FT
W
AREHOLDIN
GSPLC
Summary of our

Commentary
Key audit matters
Group
•
Rev
enue recognition – software and services revenue from implementation pr
oject
s
Par
entCompany
•
None
Materiality
Group
•
Overall materiality: £1,140,000 (2020: £893,000)
•
Performance materiality: £859,000 (2020: £670,000)
Par
entCompany
•
Overall materiality: £1,120,000 (2020: £882,000)
•
Performance materiality: £846,000 (2020: £662,000)
Scope
Our
audit
procedures (
excluding
analy
tical pr
ocedures
at
group
level)
cov
ered
100% of
rev
enue,
98%
of
total
asset
s
and
99%
of
profit
b
efor
e
tax.
130
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
Key audit matters
Key audit matters ar
e those matters that, in our professional judgment, were of most significance in our audit of the gr
oup and parent
company financial statements of the current period and include the most signific
ant assesse
d risks of material misstatement (whether or not
due to fraud) we identified, including those which had the greatest effect on the ov
erall audit strateg
y
, the alloc
ation of resour
ces in the audit
and directing the effort
s of the engagement team. These matters were addr
essed in the contex
t of our audit of the gr
oup and parent
company financial statements as a whole, and in forming our opinion thereon, and we do not pr
ovide a separate opinion on these matters.
Revenue recognition – software and services revenue from implementation projects
Key audit
matter
description
The 2021 group financial statements disclose the following types of revenue:
•
Software £13.6m (2020: £20.0m)
•
Services £46.1m (2020: £40.8m)
•
Subscription
£23.5m (2020:
£18.1m)
The Gr
oup
’s
op
erations
include complex
sof
tware
implementation
programmes
and service activities.
The deliv
er
y
of these
contracts typically extends
over
more than
one reporting period, and
often the
original pr
oject plans
are
amended, as
the
implementation progr
esse
s. As such, in recognising rev
enue, management has to apply a number of judgements to allocate
the ov
erall transaction price across the multiple per
formance obligations that hav
e been identifie
d within these project
s.
In addition,
due to
the structur
e of
the Group
’
s licenc
e and
maintenance
contractual arr
angements, the Gr
oup
also r
eceives
one-off licence uplifts or maintenance and right to use termination payment
s which need to be accounte
d for in accor
dance
with IFRS 15 “Rev
enue from contracts with customers”
.
W
e consider revenue r
ecognition for software and service
s rev
enue for implementation pr
oject
s to be a key audit matter due to:
•
The level of judg
ement involv
ed in the identification of distinct p
erformance obligations and subsequent
measurement of r
evenue and timing of r
ecognition.
•
The degree of estimation involv
ed in determining some input
s for inclusion in software/
ser
vices implementation
rev
enue calculations.
•
The potential risk of fraud in rev
enue recognition.
•
The allocation of audit resources and effort
.
F
ur
ther details on rev
enue recognition are included in note 1.5 “
Accounting policie
s – Rev
enue recognition
”
, note 2 “Critical
accounting judgements, es
timates and assumptions” and note 5 “Revenue fr
om contract
s with customers”
.
INDEPENDENTAUDIT
OR
’SREPO
RTT
OTHEMEMBERS

OFALF
AFINANCIALSOF
T
W
AREHOLDIN
GSPLCC
ONTINUED
FINANCIAL ST
A
TEMENTS
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
131
How the matter
was addressed
inthe audit
In response to this key audit matter
, the audit procedures we performed included:
•
Obtaining an understanding of the processes and controls around re
venue recognition.
•
Reviewing the gr
oup
’
s revenue r
ecognition polic
y
, including suppor
ting accounting papers, to asse
ss whether
per
formance obligations ha
ve been appropriately identified and rev
enue recognised in line with IFRS 15.
•
F
or software implementation rev
enue (software and service
s) we:
•
Asses
sed management’
s analysis of the per
formance obligations within individual contracts and of how the 5
steps in IFRS 15 should be applied.
•
Audited the rev
enue recognition calculations for a sample of the most significant contract
s to assess whether the
methodology applie
d was consistent with the group
’s r
evenue r
ecognition polic
y and across pr
oject
s.
This included tes
ting input
s in the calculations to suppor
ting evidence.
•
V
erified the explanations and data provided by manag
ement by holding discussions with project managers
regarding the k
ey assumptions and judgements made, in par
ticular around the estimate
s of the projected cost
s
to complete and the completeness of any contract arrangements, including any unusual terms and contract
modifications.
•
T
es
ted the completenes
s and accuracy of timeshe
et data as some performance obligations are recognised
based on days worked.
•
Challenged management on the appropriat
enes
s of estimates made in the IFRS 15 calculations. This include
d
assessing the result
s of management’
s analysis of the sensitivity of the calculations to the
se estimate
s.
•
Asses
sed key judgements made on spe
cific contracts including management
’
s treatment of any contract
modifications and whether the
se wer
e recognised appropriately in line with IFRS 15.
•
Auditing the disclosur
es in the financial s
tatements and evaluate
d whether the policy for revenue r
ecognition is
appropriately
explained and critical
judgements and key
sources
of estimation uncertainty are
appropriately disclosed.
Key
observations
Disclosure of the impact of the k
ey judgements and e
stimates applie
d in respect of revenue r
ecognition are disclosed
innote2
to the
financial
statement
s. Based
on the
result
s of
the
audit pr
ocedures outlined abo
ve,
we
have
no
observ
ationsto
report
.
No key audit matters wer
e identified in respect of the Parent Company
.
132
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
Our application of materiality
When establishing our overall audit strategy
, we set certain thresholds which help us to determine the nature, timing and extent of our audit
procedures. When evaluating whether the effects of miss
tatements, b
oth individually and on the financial statement
s as a whole, could
reasonably influence the economic decisions of the users we take into account the qualitativ
e nature and the siz
e of the misstatement
s.
Based on our professional judgement, we determined materiality as follows:
Group
Parent c
ompany
Overall materiality
£1,140,000 (2020: £893,000)
£1,120,000
(2020: £882,000)
Basis for determining
overallmateriality
5% of profit bef
ore tax (2020: 5% of pr
ofit
before tax adjusted to exclude one of
f
licencerev
enue associated with a five-year
contract extension)
1% of net assets, c
apped at 99% of group
ov
erall materiality (2020: 1% of net asset
s,
cappe
d at 99% of group o
verall materiality
)
Rationale for
benchmark applied
As a
lis
ted entity
, pr
ofit
before
taxation is
considered the most appropriate benchmark
forusers
of
the financial
s
tatements.
Net assets is consider
ed to be
the most
appropriate benchmark f
or the parent
companyas
it is
primarily a holding
company
.
Performance materiality
£859,000 (2020:
£670,000)
£846,000 (2020: £662,000)
Basis for determining
performancemateriality
75% of ov
erall materiality
75% of o
verall materiality
Reporting of misstatements
totheAudit Committee
Misstatement
s in
excess
of £57,000
and
misstatement
s below that threshold that, in our
view
, warranted repor
ting on qualitative gr
ounds.
Misstatement
s in
excess
of £56,000
and
misstatement
s below that threshold that, in our
view
, warranted repor
ting on qualitative gr
ounds.
An overview of the scope of our audit
The group consists of 8 component
s, loc
ated in the following countries;
•
United Kingdom
•
United States of America
•
Germany
•
Australia
•
New Z
ealand
F
ull scope audit
s were performed for 4 components, targeted audit procedures for 2 components and analy
tical procedures at group lev
el
for the r
emaining 2 component
s. The cover
age achieved by our audit pr
ocedures was:
Number of
component
s
Rev
enue
T
otal asset
s
Profit befor
e tax
F
ull scope audit
4
74%
90%
93%
T
argeted audit pr
ocedures
2
26%
8%
6%
Analy
tical procedures at group level
2
0%
2%
1%
T
otal
8
100%
100%
100%
T
argeted audit pr
ocedures were performed on component
s which are not financially significant by size but include a significant risk.
The targeted audit procedures included testing of revenue and the associated balance sheet amount
s as describ
ed in the key audit matter
section above.
All audit work was completed by the gr
oup audit team and no component auditors were used in our audit.
INDEPENDENTAUDIT
OR
’SREPO
RTT
OTHEMEMBERS

OFALF
AFINANCIALSOF
T
W
AREHOLDIN
GSPLCC
ONTINUED
FINANCIAL ST
A
TEMENTS
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
133
Conclusions relating to going concern
In auditing the
financial statements, we ha
ve concluded that
the dir
ectors’ use of the
going conc
ern basis of
accounting in
the preparation
of the
financial statements is appropriate.
Our evaluation o
f the dir
ectors’ assessment of the gr
oup
’
s and parent
company
’
s ability to continue
to adopt
the going concern basis of accounting included:
•
Checking the arithmetic accuracy of the forecast
s that form the basis of the dir
ectors’ going concern asses
sment and Viability statement
•
Corroborating the cash balance that is used as the star
ting point for the for
ecas
t
s by confirming to bank confirmations
•
Challenging management’
s for
ecas
t
s and comparing the 2022 budget to YTD results and order book
•
Asses
sing the assumptions made in management’
s stress-tes
ting
•
Completing further sensitivit
y analysis and stress-tes
ting
•
Auditing the disclosur
es in the financial s
tatements in resp
ect of going concern and viability
Based on the work we hav
e performed, we have not identified any material uncertainties relating to events or conditions that, individually or
collectively
, may cast significant doubt on the group
’
s or the parent company
’
s abilit
y to continue as a going concern f
or a period of at least
twelve months fr
om when the financial statement
s are authorised for issue.
In relation to the entity r
epor
ting on how they hav
e applied the UK Corporate Governance Code, we hav
e nothing material to add or draw
attention to in relation to the dir
ectors’ statement in the financial s
tatements ab
out whether the directors consider
ed it appropriate to adopt
the going concern basis of accounting.
Our responsibilities and the responsibilitie
s of the directors with r
esp
ect to going concern are described in the relevant sections of this report
.
Other information
The other information comprises the information included in the annual report other than the financial statement
s and our auditor’s r
eport
thereon. The directors are r
esponsible for the other information contained within the annual report. Our opinion on the financial s
tatements
does not cover the other information and, e
xcept to the extent otherwise explicitly state
d in our report
, we do not expr
ess any form of
assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so
, consider whether the other information is materially inconsistent with the
financial statement
s or our knowledge obtained in the course of the audit or otherwise app
ears to be materially misstate
d. If we identify such
material inconsistencies or apparent material misstatement
s, we are r
equired to determine whether this gives rise to a material misstatement
in the financial statement
s themselves. If
, base
d on the work w
e have performed, we conclude that there is a material misstatement of this
other information, w
e are requir
ed to repor
t that fact.
W
e have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, the part of the directors’ remuneration report to be audited has b
een properly prepar
ed in accordance with the Companies
Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
•
the information giv
en in the Strategic Report and the Directors’ Report for the financial year for which the financial statements
arepr
epared is consistent with the financial statement
s and those report
s have been prepared in accor
dance with applicable
legalrequirements;
•
the information about internal contr
ol and risk management systems in relation to financial r
epor
ting processes and ab
out share capital
structures, given in compliance with rules 7.2.5 and 7.2.6 in the Disclosure R
ules and T
ransparency Rules sourcebook made by the F
inancial
Conduct Authority (the FCA Rules)
, is consistent with the financial s
tatements and has b
een prepared in accor
dance with applicable legal
requirements; and
•
information about the company’
s corporate gov
ernance code and practices and about it
s adminis
trative, manag
ement and super
visor
y
bodies and their committe
es complie
s with rules 7.2.2, 7.2.3 and 7.2.7 of the FCA Rules.
134
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the gr
oup and the parent company and their en
vironment obtained in the course of the
audit, we have not identified material misstatement
s in:
•
the Strategic Report or the Directors’ Report; or
•
the information about internal contr
ol and risk management systems in relation to financial r
epor
ting processes and ab
out share capital
structures, given in compliance with rules 7.2.5 and 7.2.6 of the FCA Rules.
W
e have nothing to report in respect of the following matters in r
elation to which the Companies Act 2006 requires us to repor
t to you if
, in
our opinion:
•
adequate accounting records ha
ve not been kept by the parent c
ompany
, or returns adequate for our audit ha
ve not been received from
branches not visited by us; or
•
the parent compan
y financial statement
s and the par
t of the directors’ remuner
ation report to b
e audited are not in agreement with the
accounting records and r
eturns; or
•
certain disclosures of directors’ remuneration specified by law ar
e not made; or
•
we hav
e not received all the inf
ormation and explanations we requir
e for our audit; or
•
a corporate gov
ernance statement has not been prepared by the parent c
ompany
.
Corporate governance statement
W
e have
review
ed the directors’ statement
in relation
to going
concern, longer
-term viability and
that part of the
Corporate Governance
Statement r
elating to
the parent
company’s
compliance with the
pro
visions of the
UK Corporate Go
vernance Code
spe
cified for
our re
view by
the
Listing Rules.
Based on the work undertaken as par
t of our audit, we have concluded that each of the f
ollowing elements of the Corporate G
ov
ernance
Statement is materially consistent with the financial statement
s and our knowledge obtained during the audit:
•
Directors’ statement with regards the appr
opriateness of adopting the going concern basis of accounting and an
y material uncer
tainties
identified set out on pages 52 to 53;
•
Directors’ explanation as to their assessment of the group
’s pr
ospect
s, the period this asse
ssment covers and wh
y the period is appropriate
set out on pages 52 to 53;
•
Director’
s statement on whether it has a reasonable expectation that the group will be able to continue in operation and meet
s it
s liabilities
set out on page 53;
•
Directors’ statement on fair
, balance
d and understandable set out on page 98;
•
Board’
s confirmation that it has carrie
d out a robust assessment of the emerging and principal risks set out on pages 46 to 51;
•
Section of the annual report that describ
es the review of eff
ectiveness of risk management and internal control systems set out on page 98;
and,
•
Section describing the work of the audit committee set out on pages 94 to 99.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 127, the directors are r
esponsible for the preparation of
the financial statement
s and for being satisfied that they give a true and fair view
, and for such internal contr
ol as the directors determine is
neces
sar
y to enable the preparation of financial statements that are free from mat
erial misstatement
, whether due to fraud or error
.
In preparing the financial statements, the directors are responsible for assessing the group
’s and the par
ent company’
s ability to continue as a
going concern, disclosing, as applicable, matters related to going concern and using the going c
oncern basis of accounting unless the directors
either intend to liquidate the group or the par
ent company or to cease operations, or hav
e no realistic alternative but to do so
.
INDEPENDENTAUDIT
OR
’SREPO
RTT
OTHEMEMBERS

OFALF
AFINANCIALSOF
T
W
AREHOLDIN
GSPLCC
ONTINUED
FINANCIAL ST
A
TEMENTS
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
135
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error
, and to issue an auditor’
s report that include
s our opinion. Reasonable assurance is a high lev
el of assurance,
butis not a guarantee that an audit conducted in accordance with ISAs (UK) will alwa
ys detect a material miss
tatement when it exist
s.
Misstatement
s can arise from fraud or error and ar
e considered material if
, individually or in the aggregate, they could reasonably be
expected to influence the e
conomic decisions of users taken on the basis of these financial statement
s.
The extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities are instances of non-compliance with laws and r
egulations. The objectives of our audit are to obtain sufficient appr
opriate audit
evidence regar
ding compliance with laws and r
egulations that have a dir
ect effect on the determination of material amount
s and disclosures
in the financial statement
s, to per
form audit pr
ocedures to help identif
y instances of non-compliance with other laws and regulations that
may ha
ve a material effect on the financial statements, and to resp
ond appropriately to identified or suspected non-compliance with laws
and regulations identified during the audit.
In relation to fraud, the objectives of our audit ar
e to identify and asse
ss the risk of material misstatement of the financial statement
s due to
fraud, to obtain sufficient appropriat
e audit evidence regarding the assessed risks of material misstatement due to fraud through designing
and implementing appropriate r
esponse
s and to respond appropriately to fraud or suspected fraud identified during the audit
.
Howe
ver
, it is the primar
y responsibility of management, with the oversight of those char
ged with gov
ernance, to ensure that the entity
’
s
operations are conducted in accordance with the pr
ovisions of la
ws and regulations and f
or the prev
ention and detection of fraud.
In identifying and asse
ssing risks of material misstatement in respe
ct of irregularities, including fraud, the gr
oup audit engagement team:
•
obtained an understanding of the nature of the industr
y and sector
, including the leg
al and regulatory frameworks that the group and
parent compan
y operate in and how the group and par
ent company ar
e complying with the legal and regulatory frameworks;
•
inquired of management, and those charged with go
vernance, about their own identification and assessment of the risks of irregularities,
including any known actual, suspected or alleged instance
s of fraud;
•
discussed matters about non-compliance with laws and regulations and how fraud might occur including assessment of how and wher
e the
financial statement
s may be susceptible to fraud.
The most significant laws and regulations wer
e determined as follows:
Legislation/Regulation
Additional audit procedures performed by the audit engagement team included:
UK
-adoptedIAS,FRS102and
CompaniesAct2006
•
Review o
f the financial statement disclosures and tes
ting to suppor
ting documentation;
•
Completion of disclosure checklist
s to identify areas of non-compliance.
T
axcomplianceregulations
•
Inspection of advice received from internal / external tax advisors;
•
Inv
olvement of a tax specialist in the audit of tax;
•
Consideration of whether any matter identified during the audit requir
ed repor
ting to an appropriate
authority out
side the entity
.
136
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
The areas that we identified as being susceptible to material misstatement due to fraud wer
e:
Risk
Audit procedures performed by the audit engagement team:
Re
venuer
ecognition
The audit procedures performed in relation to rev
enue recognition are documented in the key audit
matter section of our audit report
.
Capitalisationof
dev
elopmentcosts
•
Reviewing the In
vestment Committee me
eting minutes for any pr
oject
s which may indicate the
understatement of amount
s capitalised during the perio
d;
•
Interviewing relevant personnel to understand the project
s capitalise
d in the period and the nature of
projects not c
apitalised;
•
V
erifying the amount
s capitalise
d during the year b
y refer
ence to underlying payr
oll records and
timesheet data.
Managemento
verride
ofcontr
ols
•
T
es
ting the appropriateness of journal entries and other adjustment
s;
•
Asses
sing whether the judgements made in making accounting es
timates are indicative of a potential
bias;
•
Evaluating the business rationale of any significant transactions that are unusual or outside the normal
course of business.
A further de
scription of our responsibilities for the audit of the financial statement
s is located on the Financial Reporting Council’s w
ebsite at:
http://
www
.frc.
org.uk/
auditorsresponsibilitie
s. This description forms par
t of our auditor’
s report.
Other matters which we are required to address
F
ollowing the recommendation of the audit committee, we w
ere appointed by management in July 2020 to audit the financial statements for
the year ending 31 December 2020 and subsequent financial p
eriods.
The period of total uninterrupted consecutive appointment
s is 2 years, cov
ering the years ending 31 December 2020 and 31 De
cember 2021.
The non-audit service
s prohibited by the FR
C
’
s Ethical Standard wer
e not provided to the gr
oup or the parent company and w
e remain
independent of the group and the par
ent company in conducting our audit.
Our audit opinion is consistent with the additional report to the audit committe
e in accordance with IS
As (UK)
.
Use of our report
This report is made solely to the company
’
s members, as a body
, in accordanc
e with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been under
taken so that we might state to the compan
y
’
s members those matters we are r
equired to state to them in an
auditor’
s report and for no other purpose. T
o the fulle
st extent permitte
d by la
w
, we do not accept or assume responsibility to anyone other
than the company and the compan
y
’
s members as a body
, for our audit work, f
or this report, or for the opinions we hav
e formed.
Graham Ricketts
(Senior Statutory Auditor)
F
or and on behalf of RSM UK Audit LLP
, S
tatutor
y Auditor
Chartered Accountant
s
25 Farring
don Street London, United Kingdom, EC4A 4AB
8 March 2022
INDEPENDENTAUDIT
OR
’SREPO
RTT
OTHEMEMBERSOFALF
A

FINANCIALSOF
TW
AREHOLD
INGSPLCCONTINUED
FINANCIAL ST
A
TEMENTS
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
137
CONSOLID
A
TEDST
A
TEMENTOFPROF
ITORLOSS

ANDCOMPREHENSIVEINCOME
£m
Note
2021
2020
(restated)
Continuingoperations
Rev
enue
5
83.2
78.9
Cost of sale
s*
(29.0)
(27.0)
Gross pr
ofit
54.2
51.9
Sales, general and administrative expenses*
(30.0)
(28.5)
Other income
0.5
0.5
Operating pro
fit
6
24.7
23.9
Share of net loss of joint v
enture
19
(0.1)
–
Pro
fitbeforenetfinanc
ecostsandtax
24.6
23.9
F
inance income
10
–
0.1
F
inance expense
10
(0.8)
(0.8)
Pro
fitbeforetaxation
23.8
23.2
T
axation
11
(4.6)
(2.9)
Pro
fitforthefinancialy
ear
19.2
20.3
Other comprehensive income:
Exchange dif
ferenc
es on translation of foreign operations
27
(0.1)
0.1
Other comprehensive (los
s)/income net of tax
(0.1)
0.1
T
otalcomprehensiv
eincomeforthey
ear
19.1
20.4
Earningspershare(inpence)forpr
ofitattributable
totheordinaryequityholdersoftheCompany
Basic
12
6.49
6.93
Diluted
12
6.39
6.79
W
eighte
d aver
age no. of shar
es (m) – basic
12
296.7
293.8
W
eighte
d aver
age no. of shar
es (m) – diluted
12
301.5
300.1
*
T
o better reflect the nature and function of certain expenses, changes have been made to the classifica
tion and allocation of expense line it
ems. The comparative disclosures
for the December 2020 reporting period have also been amended to re
flect a fair base for comparability
. Costs previously classified as implementation and support expenses
and research and product de
velopment expenses of £11.9m and £15.1m, respectively
, have been presented as cost o
f sales. In addition, £3.4m of implementation and
support expenses and £3.8m of research and product developmen
t expenses have been reclassified to sales, general and administrative expenses. The main items affected
are administrative salary costs, computer costs and property related expenses. These changes hav
e had no impact on the total expenses or the profit befor
e tax that were
disclosed at the end of December 2020.
The abov
e consolidated statement of
profit
or loss and
comprehensive
income should
be read in
conjunction with
the accompanyingnotes.
138
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
CONSOLID
A
TEDST
A
TEMENTOFFINANCIALPOSITIO
N
£m
Note
2021
2020
Asset
s
Non-currentassets
Goodwill
14
24.7
24.7
Other intangible asset
s
15
2.4
2.2
Property
, plant and e
quipment
16
0.8
0.9
Right-of-use assets
17
14.4
14.8
Deferred tax assets
18
1.8
1.8
Interest
s in joint ventur
e
19
0.3
0.4
T
otalnon-currentassets
44.4
44.8
Currentassets
T
rade receivable
s
20
6.0
5.8
Accrued income
21
6.3
5.0
Prepa
yments
21
3.2
2.1
Other receivables
21
1.0
0.8
Cash and cash e
quivalent
s
22
23.1
37.0
T
otalcurrentassets
39.6
50.7
T
otalasset
s
84.0
95.5
Liabilitiesandequity
Currentliabilities
T
rade and other payables
23
9.3
8.1
Corporation tax
23
1.8
1.3
Lease liabilities
24
1.9
1.7
Contract liabilities
23
11.0
7.0
T
otalcurrentliabilities
24.0
18.1
Non-currentliabilities
Lease liabilities
24
15.2
15.8
Pro
visions for other liabilities
25
1.4
1.4
T
otalnon-currentliabilities
16.6
17.2
T
otalliabilities
40.6
35.3
Capitalandreserves
Share capital
26
0.3
0.3
T
ranslation reser
ve
27
–
0.1
Own shares
28
(3.4)
–
Retained earnings
46.5
59.8
T
otalequity
43.4
60.2
T
otalliabilitiesande
quity
84.0
95.5
The above consolidated statement of financial position should be read in conjunction with the accompan
ying notes.
The consolidated financial statements on pages 137 to 172
were
approv
ed and authorised for
issue by the
Board of
Directors on 8 Mar
ch 2022
and signed on it
s behalf
.
Andrew Denton
Chief Executive Officer
Duncan Magrath
Chief Financial Officer
Alfa F
inancial Software Holdings PLC – R
egistered number 10713517
FINANCIAL ST
A
TEMENTS
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
139
CONSOLID
A
TEDST
A
TEMENTOFCHANGESI
NEQUITY
£m
Note
Share capital
Own
shares
T
ranslation
reserve
Retained
earnings
Equity
attributable to
owners of the
parent
Balance as at 1 January 2020
0.3
–
–
82.0
82.3
Pro
fit for the financial year
–
–
–
20.3
20.3
Other comprehensive income
–
–
0.1
–
0.1
T
otal comprehensive income f
or the year
–
–
0.1
20.3
20.4
T
rans
actions with owners in their capacity as owners:
Equity-settled share-based payment schemes
29
–
–
–
1.3
1.3
Equity-settled share-based payment schemes –
deferred tax impact
18
–
–
–
0.4
0.4
Dividends
31
–
–
–
(44.2)
(44.2)
Balance as at 31 December 2020
0.3
–
0.1
59.8
60.2
Pro
fit for the financial year
–
–
19.2
19.2
Other comprehensive loss
–
–
(0.1)
–
(0.1)
T
otal comprehensive income f
or the year
–
–
(0.1)
19.2
19.1
T
rans
actions with owners in their capacity as owners:
Equity-settled share-based payment schemes
29
–
–
–
1.1
1.1
Equity-settled share-based payment schemes –
deferredtaximpact
18
–
–
–
0.3
0.3
Dividends
31
–
–
–
(32.7)
(32.7)
Own shares issued
28
–
1.2
–
(1.2)
–
Own shares acquired
28
–
(4.6)
–
–
(4.6)
Balanceasat31December2021
0.3
(3.4)
–
46.5
43.4
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
140
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
CONSOLID
A
TEDST
A
TEMENTOFCA
SHFL
O
WS
£m
Note
2021
2020
Cashflowsfr
omoperatingactivities
Pro
fit before tax
23.8
23.2
Net finance cost
s
0.8
0.7
Share of net loss fr
om joint venture
0.1
–
Operating pro
fit
24.7
23.9
Adjustment
s:
Depreciation
6/16/17
2.3
2.2
Amortis
ation
6/15
0.8
0.8
Share-based payment char
ge
29
1.5
1.5
Loss on dispos
al of assets
–
0.1
Mov
ement in provisions
25
–
0.5
Mov
ement in working capital:
Mov
ement in contract liabilities
23
4.1
(1.9)
Mov
ement in trade and other receivables
20/21
(2.8)
0.6
Mov
ement in trade and other payables (excluding contr
act liabilities)
23
0.7
2.4
Cashgeneratedfromoperations
31.3
30.1
Interest element on lease payments
10/24
(0.8)
(0.8)
Income taxes paid
11
(3.8)
(3.8)
Netcashgenerat
edfromoperatingactivities
26.7
25.5
Cashflowsfr
ominv
estingactivitie
s
Pur
chases of proper
ty
, plant and e
quipment
16
(0.3)
(0.2)
Pur
chases of computer software
15
(0.1)
(0.1)
Pa
yment
s for internally dev
eloped sof
tware
15
(0.9)
(0.7)
Inv
es
tment in joint ventur
e
19
–
(0.3)
Loan to joint venture
19
–
(0.1)
Interest received
10
–
0.1
Netcashusedininvestingactivities
(1.3)
(1.3)
Cashflowsfr
omfinancingactivities
Dividends paid to Company shar
eholders
(32.7)
(44.2)
Principal element on lease payments
24
(1.9)
(1.7)
Pur
chase of own shares
(4.6)
–
Cashusedinfinancingactivitie
s
(39.2)
(45.9)
Netdecreaseincash
(13.8)
(21.7)
Cash and cash e
quivalent
s at the beginning of the year
22
37.0
58.8
Effect of f
oreign ex
change rate changes on cash and cash e
quivalents
(0.1)
(0.1)
Cashandcashequivalent
sattheendofthey
ear
22
23.1
37.0
The above consolidated statement of cash flows should be read in conjunction with the accompan
ying notes.
FINANCIAL ST
A
TEMENTS
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
141
NOTEST
OTH
ECONSOLID
A
TEDFINANCIALST
A
TEMENTS

FORTHEYEAREND
ED 3
1 DECEMBER 202
1


This note pro
vides a lis
t of the significant accounting policies adopted in the preparation of these consolidated financial s
tatement
s.
These policie
s hav
e be
en consistently applied to all the years presented, unless other
wise s
tated. The financial statement
s are for theGr
oup,
consisting of Alfa F
inancial Software Holdings PLC (Alfa or the Company
)
, it
s subsidiaries and joint venture, and are pr
esented to the nearest
million unless other
wise state
d. The change in pr
esentation from thousands to millions has be
en done to make the financial statements
clearer f
or the users.
The principal activity of the Group is to pr
ovide software solutions and consultancy service
s to the auto and equipment finance industr
y in the
UnitedKingdom, United States of America, Europe and Australasia.


Compliance with IFRS
The consolidated financial statement
s of the Group hav
e been prepared in accordance with UK
-adopted international accounting standards
and Company Law
. The change in the basis of pr
eparation from 2020 is r
equired by UK Company Law as a result of the UK’
s exit from the EU
on 31 January 2020 and the ce
ssation of the transition perio
d on 31 December 2020. This change doe
s not constitute a change in accounting
policy
, rather a change in the framew
ork which is required to group the use o
f IFRS in company la
w
. There is no impact on the recognition,
measurement or disclosur
e between the two frameworks in the period reporte
d.
Historical cost convention
The consolidated financial statement
s have been prepar
ed under the his
torical cost convention, other than the r
evaluation of financial asset
s
and financial liabilities recorded at fair value through pr
ofit or loss.
Going concern
The financial statement
s are pr
epared on the going concern basis. The Gr
oup continues to be c
ash-generative and the Dir
ectors believe that
the Group has a r
esilient busine
ss model. The Group meet
s it
s day-to-da
y working capital requirements through its cash reser
ves generated
from operating activities. The Group
’
s for
ec
ast
s and projections, taking account of reasonably possible changes in trading performance,
showthat the Gr
oup has sufficient cash reser
ves to continue to operate for a period of not less than 12 months from the date of these
financial statement
s.
The going concern assessment also includes downside stress te
sting in line with FRC guidance which demonstrates that even in the most
extreme downside conditions consider
ed reasonably possible, given the existing level o
f cash held, the Group would continue to be able to
meet it
s obligations as they fall due, without the nee
d for substantive mitigating actions.
On this basis, whilst it is acknowledged that there is continued uncer
tainty over futur
e economic conditions, the Directors consider it
appropriate to continue to adopt the g
oing concern basis of accounting in preparing the financial statements.
New and amended standards adopted by the Group
The Group applies for the first time the follo
wing new standard:
•
Amendments to IFRS 16 Lease
s: COVID 19-R
elated Rent Concessions (issue
d on 28 May 2020)
.
By adopting the abov
e, there has been no material impact on the financial statement
s.
New standards, amendments and interpretations not yet adopted
A
t the date of authorisation of these financial s
tatements, the Group has not applied the following new and r
evised IFRS Standards that ha
ve
been issue
d but are not yet eff
ective:
•
Amendments to IFRS 3 Busine
ss Combinations; IAS 16 Property
, Plant and Equipment; IAS 37 Pro
visions, Contingent Liabilities and
Contingent Assets; and Annual Improvements 2018-2020 (All issued 14 May 2020, effective from 1 January 2022)
.
The directors do not expect that the adoption of the Standards listed above will ha
ve a material impact on the financial statements
oftheGroup
.
142
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021




Basis of consolidation
Subsidiaries are all entities ov
er which the Group has contr
ol. The Group controls an entity when the Gr
oup is exposed to, or has rights
to,variable r
eturns from its involvement with the entity and has the ability to aff
ect those returns through its power ov
er the entity
.
Subsidiaries are fully consolidated from the date on which c
ontrol is transf
erred to the Group
.
Unless other
wise stated, subsidiaries have
share capital consisting solely o
f ordinary shares, and the
proportion of ownership inter
est
s held
equals the voting
right
s held b
y the Group
. The country of incorporation or
registration is also
each subsidiar
y
’
s principal place
ofbusiness.
All intra-Gr
oup transactions, balances,
income and
expenses are eliminat
ed on consolidation.
All subsidiaries ha
ve a
31 December y
ear end.
In the
current period
it was
conclude
d that
the Group
exercises contr
ol
over
the
employee
benefit trust
be
cause it
is exposed to
, and
has a right
to,variable
returns
from this
trust and
is able t
o use
its power
over
the trust
to af
fect those
returns. Ther
efore
the trust has
b
een consolidated
by
theGroup
in
the curr
ent period.
The impact
of consolidation
of
the trust
in the
prior period was
immaterial.
Joint arrangements
A joint arrangement is a contractual arrang
ement whereby the Gr
oup and other partie
s under
take an economic activity that is subject to joint control;
that is,
when the
relevant
activities that
significantly aff
ect the
inv
es
tee’
s r
eturns
require
the
unanimous consent
of
the parties sharing
control.
Joint c
ontrol is
the contractually
agreed sharing
of contr
ol of
an arrang
ement, and exists only when
decisions about the activities
thatsignificantly
affect the
arrangement’
s returns r
equire
the unanimous consent
of
the partie
s sharing
control.
Judgement isr
equiredindetermining this
classification through an evaluation of the facts and circumstances arising from each individual arrangement. Joint arrangements are classified as
either joint
operations or joint
ventur
es based on
the rights and obligations o
fthepar
ties to the
arrangement. In
joint operations, the
partie
s ha
ve
rights to the assets and
obligations for
the liabilities r
elatingtothe arrang
ement, whereas injoint
ventur
es, the parties hav
e rights to the
net assets
of the arrangement.
Alfa only has one
joint ventur
e, namely Alfa iQ
, which was f
ormed in May 2020.
The inv
es
tment in the joint
ventur
e is accounted for
using the
equity method. The Gr
oup
’s
share
of the
joint v
enture
’
s net pr
ofit/ (loss) is based
on its most recent
financial statement dra
wn up
to the
Group’
s
balance sheet date. The total carr
ying value of investment in joint venture r
epresents the cost of the investment
, including loans which form part
of the
net inves
tm
ent in
the joi
nt vent
ure, pl
us the
shar
e of
post-acquisition retained earnings and
any
other mov
ements inreser
ves less an
y
impairment in the value of the inv
es
tment.
The carr
ying values of joint ventures are r
eviewed on a regular basis and if ther
e is objective evidence that an impairment in value has occurred
as a result of one or more e
vents during the p
eriod, the investment is impaired. The Group
’
s share of the joint v
enture
’s losses in excess of its
interest in that joint venture is not r
ecognised to the extent that the Group has incurred legal or constructive obligations or made payments
on behalf of the joint ventur
e. Unrealised gains arising from transactions with joint venturesar
e eliminated agains
t the investment to the
extent of the Group
’
s interest in the investee. Unrealised losse
s are eliminated inthe same way
, but only to the extent that there is no
evidence of impairment.
Loans to the joint venture ar
e measured at fair value on initial recognition, and subsequently carried at amor
tised cos
t. Any surplus between
the nominal and fair value of the loan is recognised as an investment in the joint ventur
e.


Operating and reporting segment
s are reported in a manner consis
tent with the internal reporting provided to the Chief Operating Decision
Maker (
CODM)
. The Group
’
s Chief Executive Officer (
CEO
)
, who is responsible for allocating resources and asse
ssing per
formance, has been
identified as the CODM.
The CODM regularly re
views the Group
’
s operating result
s in order to assess per
formance and to allocate resources. The CODM considers
the business from a product perspective and, therefor
e, recognises one operating and reporting segment
, being the sale ofsoftware and
related service
s. The Group splits revenue b
y type of project but report
s operating result
s on a consolidated basis, as presented to the
CODM, along with the required entity wide disclosure.
The Group discloses rev
enue split by type of project being Subscription, S
oftware and Services.
a.
Subscription r
evenues include recurring r
evenues paid on a monthly or annual basis, including subscription licence rev
enues, maintenance
and cloud hosting.
b. S
oftware rev
enues include revenues from r
ecognition of customised licence revenue, one-of
f licence fees and any development r
evenues.
c.
Service
s rev
enues are rev
enues from any work done f
or customers including pre-implementation, implementation work, and ong
oing
service
s, but excludes any r
evenue from de
velopment work which is disclosed in Softwar
e.
NOTEST
OTH
ECONSOLID
A
TEDFINANCIALST
A
TEMENTS

FORTHEYEAREND
ED3
1DECEMBER202
1CONTINUED
FINANCIAL ST
A
TEMENTS
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
143
T
o better reflect the nature and type of revenue, chang
es have been made in 2021 to the classification and alloc
ation of rev
enue line items.
The comparative disclosur
es for the December 2020 repor
ting period have also been amended to reflect a fair base for comparability
.
These changes have had no impact on the total r
evenue or the pr
ofit before tax that w
ere disclosed at the end of December 2020.
See note 1.5 for details of our r
evenue r
ecognition accounting policy and note 2 for the critical accounting judgement
s and estimate
s
inrelation to r
evenue r
ecognition.


Functional currency
Items included in the consolidated financial s
tatements of each of the Group
’
s subsidiarie
s are measur
ed using their functional currency
.
The functional currency of the parent and each subsidiary is the currency of the primary e
conomic envir
onment in which the entity operate
s.
See applicable exchange rates used in 2021 and 2020 below:
2021
2020
Closing
A
verag
e
Closing
Av
erage
USD
1.35
1.38
1.37
1.28
EUR
1.19
1.16
1.11
1.13
NZD
1.98
1.95
1.89
1.98
AU
D
1.86
1.83
1.77
1.86
Presentation currency
The consolidated financial statement
s are presented in pounds sterling
. Alfa’
s functional and presentation currency is pounds sterling
.
Group companies
The results and financial p
osition of for
eign operations (none of which has the currency of a hyperinflationary economy) that hav
e afunctional
currency differ
ent from the pr
esentation currency are translated into the presentation currency as follo
ws:
•
Asset
s and liabilities for each consolidated statement of financial position presente
d are translated at the closing rate at the date ofthat
consolidated statement of financial position;
•
Income and expenses f
or each statement of pr
ofit or loss and
statement of compr
ehensive income ar
e translated at a
verage
exchange
rates
(unless this is not a
reasonable appr
oximation of
the cumulative
effect of the r
ates prevailing on the
transaction dates, in which case income
and expenses are tr
anslated at the dates of the tr
ansactions); and
•
All resulting exchang
e differ
ences are recognised in other comprehensiv
e income.
On consolidation, exchang
e differ
ences arising from the translation of any net in
vestment in foreign entities are r
ecognised in other
comprehensiv
e income. When a for
eign operation is sold the associate
d exchange dif
ferenc
es are reclassified to profit or loss, as part ofthe
gain or loss on sale.
Foreign currency transactions
T
rans
actions in for
eign currencies are translated into the respective functional currencies using the ex
change rates prevailing at the dates of
the transactions. For
eign exchange dif
ferenc
es arising from the settlement of such transactions and from the translation at thereporting date
of monetary asset
s and liabilitie
s denominated in foreign curr
encies are recognised in profit or loss. S
ee applic
able exchang
e rates use
d by the
Group abov
e.


The Group deriv
es revenue b
y type of project being Subscription, Software and S
er
vices (as disclose
d in note 1.3)
.
i
Subscription
rev
enue which includes the
periodic right
s to use
Alfa S
ystems, periodic maintenance, subscription (including
cloud hosting) and
one-off re
venue relating to catch-up periodic maintenance;
ii
Softwar
e rev
enue which includes de
velopment r
evenue
(par
t of
the customised licence r
evenue)
, options o
ver the
right to use
Alfa S
ystems,
and one-off licence f
ee
s; and
iii
Service
s rev
enue which includes software implementation ser
vices.
The Group pr
ovides the right to use, software development services, core implementation service
s and ongoing support of it
s product,
AlfaSystems. The Group
’
s contractual arrangements contain multiple deliverables or ser
vices, such as the development orcustomisation
ofthe software to the customer’
s requirements, implementation ser
vices such as migration of data and testing andcer
tain project
management service
s.
NOTEST
OTH
ECONSOLID
A
TEDFINANCIALST
A
TEMENTS

FORTHEYEAREND
ED3
1DECEMBER202
1CONTINUED
144
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021


Alfa assesse
s whether there ar
e distinct per
formance obligations at the star
t of each contract and throughout the performance of
theimplementation, development and services project
s and maintenance period. The
se per
formance obligations ar
e laid out below
.
Any one contract ma
y include a single per
formance obligation or a combination of those listed below:
a.
Software implementation services
Where implementation services are considered to be distinct
, i.e. when r
elatively straightforward, do not r
equire additional development
service
s and could be performed by
an external third
par
ty
, the implementation service
s ar
e accounted for as
a separate performance obligation
from an
y development service
s.
When a customer is in the process of implementing the software, the transaction price is allocate
d to this based on the stand-alone selling price
s
(deriv
ed from
s
tandard
day
rate
s) and
is recognised o
ver
time
based on
the eff
ort incurred,
limited to
the amount
to which
Alfa has
a right t
o pa
yment.
F
or customers
under the
Group
’
s
subscription based
contracts that ar
e
undergoing
implementation,
revenue
for so
ftware implementation
ser
vice
s is
deemed to b
e distinct from any other performance obligation and is recognised based on a percentage of completion basis.
When the type of ser
vices provided are ong
oing ser
vices, the transaction price is de
emed to be the actual day rate, and rev
enue is recognised at
a point in time as the ser
vice is pro
vided.
b.
Development services and licence services (the customised licence)
The second per
formance obligation is the granting of a right to use Alfa S
ystems, which include
s the delivery of the related software licence
and any dev
elopment effort
s which change the underlying code.
During the initial phase of implementing the software, the total r
evenue attributable to this performance obligation is estimate
d at the
outsetof the relevant software implementation project and recognised as the effort is expended, on a percentage-of-completion basis,
limited to the amount of rev
enue to which Alfa has the right to payment. A percentage-of-completion basis has been used be
cause
customers obtain the ability to bene
fit from the pr
oduct from the start of the implementation project
, the development or customisation
ofthe asset is tailored to the customer’
s specific requirement
s; and the customer is entitled to the bene
fit
s of the efforts as at the date the
effort
s are deliver
ed, so recognition ov
er time is appropriate.
Rev
enue attributable to development services is value
d using the residual value method as there are no stand-alone selling prices which are
observ
able as each pr
oject is customise
d. F
or customers under the Group
’
s subscription based contracts that are undergoing implementation,
rev
enue for dev
elopment ser
vices is deeme
d to be distinct from any other performance obligation and is recognised based on a p
ercentag
e
of completion basis.
Once the customer is already using the software and the services provided are ongoing de
velopment, the transaction price is de
emed to be
the actual day rate and r
evenue is r
ecognised at a p
oint in time as the development service is provided.
c. Option over the right to use Alfa Systems
In the event that customers hav
e to pay periodic maintenance fees in order to keep using Alfa S
ystems, a component of the
se future
maintenance fees is attributable to the right to use the software. In these circumstances the licence granted by Alfa is considered to rene
w in
future periods. There ma
y be a material right in respect of discount
s in future periods. In order to ascribe a value to this option, management
annualise the value of the customised licence per
formance obligation and compare it to the annual right to use softwar
e per
formance
obligation post go live.
The value of this option is built up from the start of the implementation project in line with the percentage-of-completion o
f development
rev
enue describe
d in 1.5(b) abov
e. Follo
wing the completion of the implementation project, the value of this option isrecognised evenly ov
er
the expected remaining customer life.
d.
Periodic right to use Alfa Systems
When a customer pays its maintenance fee annually
, this performance obligation represents the propor
tion of this fee which relates to the periodic
option to renew the right to use Alfa S
y
stems. If there is the right of cla
wback of the annual right to use, such amounts are recognised throughout
the annual period. If there is no right of clawback, then the annual right t
o use amount is recognised in full when there is a right of collection.
When a customer pays for its maintenance fee as part of a subscription contract (se
e section 1.5f below)
, it will not be treated as a separate
per
formance obligation (and will instead be par
t of the subscription amount)
.
e. Periodic maintenance amounts
This repr
esent
s the stand-alone selling price of the ongoing suppor
t or maintenance of Alfa Systems which is r
ecognise
d throughout
theperiod over which the services are delivered.
FINANCIAL ST
A
TEMENTS
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
145
f.
Subscription amounts
Certain of the Group
’
s implementation and ser
vice contract
s include a subscription payment mechanism. This repr
esent
s a monthly
feecharged to the customer cov
ering one or more of the f
ollowing performance obligations; the provision o
f monthly hosting ser
vices; the
monthly periodic right to use Alfa Systems and the pro
vision of monthly maintenance ser
vices (when this becomes applic
able to the
customer)
. The monthly payments are recognised as rev
enue in the period to which they relate. This reflects the underlying p
erformance
obligations of the Group and termination rights of the customer
.
g.
One-off revenue amounts
F
rom time
to time, the Gr
oup is entitled to r
eceive one-off
licence re
venue fr
om its cus
tomers as the
y increase the
number of contracts ontheir
version o
f Alfa S
ystems. Additionally
, there are
times when catch-up periodic maintenance amounts are entitled to be r
eceived bythe
Group,
also as a result of the increased number of contracts. Generally this revenue is r
ecognise
d at the point in time it is invoic
ed, or b
ecomes
contractually payable, r
eflecting the fact that the Group has no remaining performance obligations to satisf
y
.
Capitalised sales incentive costs
The Group incentivises its s
ales force f
or securing sale
s. In line with IFRS 15, these cost
s are capitalised and are amortise
d in line with the
percentage of c
ompletion of the software implementation project.
Costs to fulfil contracts
The Group has r
ecognised an as
set of £1.1m in relation to emplo
yee cost
s to fulfil its long-term development contracts. The
se cost
s relate
directly to the contracts, generate or enhance resources to be used to satisf
y performance obligations in the future and are expected to be
recov
ered. This asset is presented within prepayments in the Statement of F
inancial P
osition. These cos
ts are amor
tised within cost of s
ales in
line with the percentage of c
ompletion of the development pr
oject
.


Operating expenses include items such as personnel cos
t
s (including training and recruitment)
, cost of software not capitalised, research and
development costs and other infrastructure expenses. The
se items have been grouped into the follo
wing categories fordisclosure purposes:
•
Cost of sale
s – This includes salarie
s and other direct cost
s associated with s
atisfying customer contract
s and for developing so
ftware.
•
Sales, general and administrative expenses – This includes all the residual operating cost
s.


T
axation expense for the y
ear comprises current and deferred tax recognised in the reporting period. T
ax is recognised in profit and loss,
except to the extent that it r
elates to items recognised in other comprehensive income or dir
ectly in equit
y
. Current or deferr
ed taxation
asset
s and liabilities are not discounted.
Current tax
The current income tax char
ge is calculated on the basis of the tax laws enacted or substantively enacted at the repor
ting date in the
countries where the Group and its subsidiaries operate and generate taxable income. Management periodically evaluate
s positions taken
intax returns with r
espe
ct to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where
appropriate on the basis of amounts expecte
d to be paid to the tax authorities.
Deferred tax
Deferred income tax is recognised, using the liability method, on temporar
y differ
ences arising between the tax base
s of asset
s andliabilities
and their carr
ying amount
s in the Group
’
s consolidated financial statement
s. Howev
er
, the de
ferr
ed income tax is not accounted for if it arises
from initial r
ecognition of an asset or liability in a trans
action other than a business combination that at the timeof the transaction affect
s
neither accounting nor taxable profit or loss. Deferr
ed income tax is determined using tax rates (and laws) that have been enacted or
substantively enacted by the reporting date and are expected to apply when the related deferred income tax asset is realised or the deferr
ed
income tax liability is settled.
Deferred income
tax asset
s are
recognised to the extent that
it is pr
obable that future
taxable pro
fit
s will be a
vailable against which the
temporar
y diff
erences can be utilised. Deferr
ed income tax assets and liabilities are offset
when there
is a legally enfor
ceable right to
offset
current tax
asset
s against current tax
liabilities and when the deferr
ed income taxes, assets and liabilities relate
to income taxes levied b
y the
same taxation authority on either the
taxable entity or diff
erent taxable
entities where ther
e is an intention
to settle the balances on
a net basis.
NOTEST
OTH
ECONSOLID
A
TEDFINANCIALST
A
TEMENTS

FORTHEYEAREND
ED3
1DECEMBER202
1CONTINUED
146
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021




Alfa enters into lease contracts in respe
ct of various propertie
s and motor vehicles. These rental contracts are typically made for fixed
periods of two to ten years, and sometimes hav
e extension options. Lease terms are negotiated on an individual basis and contain a wide
range of diff
erent terms and conditions. In accor
dance with IFRS 16, leases are r
ecognised as a right-of-use asset with a corresponding
liability
, at the date at which the lease
d asset is available for use b
y Alfa. These asset
s and liabilities are initially measured on a present value
basis (as set out in more detail below
)
, with each subse
quent lease payment allocated between the liabilit
y and finance cost. The finance cos
t
is charged to pro
fit or loss over the lease period to produce a constant periodic rate of interest on the remaining ba
lanc
e of
the
liab
ility
f
or
each period. The right-of-use asset is
depreciated ov
er the shorter of the asset’
s useful lif
e andthe lease term
ona straight-line basis.
Alfa assesse
s whether a contract is, or contains a lease, at inception of the contract. The Group recognises a right-of-use asset and
acorresponding lease liability
, withrespe
ct to all lease arrangements in which it is the le
ssee, except for short-term leases (defined aslease
s
with a lease term of 12 months, or few
er) and leases of lo
w-value asset
s. For these leases, the Group recognises the lease payments as an
expense on a straight-line basis over the term of the lease, unless another systematic basis is more r
epresentative ofthetime pattern in which
economic benefit
s from the leased asset
s are consumed.
Lease liabilities
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by
using the rate implicit in the lease. If this rate cannot be readily determined, the Group uses it
s incremental borro
wing rate.
Lease payments include
d in the measurement of the lease liability comprise:
•
F
ixed lease payments (including in subs
tance fixed payments)
, less any lease incentives;
•
V
ariable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date;
•
The amount expected to b
e payable by the lessee under residual value guarantees;
•
The exer
cise price of purchase options, if the lessee is reasonably certain to exercise the options; and
•
Penalties f
or terminating the lease, if the lease term reflect
s the exercise o
f an option to terminate the lease.
The lease liability is presented in separate lines, split b
etween current and non-curr
ent liabilities, in the consolidate
d statement of financial
position. It is subsequently measured by increasing the carrying amount to reflect interes
t on the lease liability (using the effective inter
est
method) and by reducing the carrying amount to reflect the le
ase payments made.
The Group r
e-measures the lease liability (and makes a corresponding adjus
tment to the related right-of-use asset) whenev
er:
•
The lease term has changed, or there is a change in the assessment of exer
cise of a purchase option, in which case the lease liability is
re-measur
ed by discounting the revised lease payments using a revised discount rate;
•
The lease payments change due to changes in an index, or rate, or a change in expected payment under a guaranteed residual value.
In these case
s, the lease liability is re-measured by discounting the r
evised lease payments, using the initial discount rate (unles
s the lease
payments change is due to a change in a floating inter
es
t rate, in which case a revised discount rate is used); and
•
A lease contract is modified and the lease mo
dification is not accounted for as a separate lease, in which case the lease liability is re-
measured by discounting the r
evised lease payment
s using a revised discount rate.
Right-of-use assets
The right-of-use assets comprise:
•
The initial measurement of the corr
esponding lease liabilit
y;
•
Lease payments made at
, or before, the commencement da
y;
•
Any initial dir
ect cos
ts; and
•
Restoration cost
.
FINANCIAL ST
A
TEMENTS
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
147
The right-of-use assets are presented as a separate line in the consolidated s
tatement of financial position.
The right-of-use assets are subsequently measured at cos
t less accumulated depreciation and impairment losse
s (if applicable)
. They are
depreciated from the commencement date of the lease and o
ver the shorter period of the lease term and use
ful life of the underlying asset.
If a lease transfers o
wnership of the underlying asset, or the cos
t of the right-of-use asset reflects an expe
ctation thatthe Group will ex
ercise
a purchase option, the r
elated right-of-use asset is depreciated over the useful life of the underlying asset. Currently
, the Group does not have
any leases that include a purchase option, or transf
er ownership of the underlying asset.
Whenever the Gr
oup incurs an obligation for cost
s to dismantle and remo
ve a leased asset, res
tore the site on which it is located, orrestore
the underlying asset to the condition required by the terms and conditions o
f the lease, a provision is r
ecognised and measured under IAS 37.
Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extende
d
(or not terminated)
. The asse
ssment is review
ed if a significant event or a significant change in circumstances occurs which affect
s this
assessment and that is within the control of the lesse
e. During the current financial period, there ha
ve been no changes insuch asse
ssment
s.
V
ariable rents that do not depend on an index, or rate, are not included in the measurement of the lease liability and the right-of-use asset.
The related payments are recognised as an expense in the period in which the event or condition that triggers those payments occurs and are
included as an expense in the consolidated s
tatement of profit or loss and compr
ehensive income.


Goodwill is te
sted annually for impairment. The c
arrying amount is allo
cated to the c
ash-generating unit (
CGU) that is expecte
d to benefit
from in
vestment and which represents the lowest level at which the goodwill is monitored for internal manag
ement purpose
s. The carr
ying
value of the CGU is then compared to the higher of its fair value le
ss cost
s of disposal and it
s value in use. Any impairment attributed to the
goodwill is recognised immediately as an expense and is not subse
quently rev
ersed.
Other asset
s are teste
d for impairment whenev
er events or changes in circumstances indicate that the c
arrying amount might
notberecov
erable. An impairment loss is recognised for the amount by which the asset’
s carr
ying amount exceeds it
s recov
erable
amount.The recoverable amount is the higher of an asset’
s fair v
alue less cost
s of dispos
al and value in use. For the purposes of assessing
impairment, asset
s are grouped at the lowest levels f
or which there ar
e separately identifiable cash inflows which are larg
elyindependent of
the cash inflows from other assets or groups of assets (cash-generating unit
s)
. Non-financial asset
s other thangoodwillthat suffered an
impairment are r
eviewed for possible re
versal of the impairment at the end of each reporting period.


Cash and cash equivalent
s include cash at bank
and in hand as
well as short-term deposits with original maturities of three months
orless.


Recognition and de-recognition
F
inancial asset
s are recognised in the statement of financial position when the Group becomes par
ty to the contractual provision of
theinstrument
.
F
inancial asset
s are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and
substantially all the risks and rewar
ds are transf
erred.
Classification and initial measurement of financial assets
Except f
or those trade receivables that do not contain a significant financing component and are measured at the transaction price
inaccordance with IFR
S 15, all financial asset
s are initially measured at fair value adjusted for transaction cost
s (where applicable)
.
F
inancial asset
s, other than those designate
d and effective as hedging instrument
s, are classified into the follo
wing categories:
•
Amortise
d cost;
•
Fair value thr
ough profit or loss (FV
TPL); and
•
Fair value thr
ough other comprehensiv
e income (FVOCI)
.
In the periods pr
esente
d, the Gr
oup does not hav
e any financial
asset
s categorised as FV
TPL or FV
OCI. The classification is determined by both:
•
The entity
’
s business mo
del for managing the financial asset; and
•
The contractual cash flow characteristics of the financial asset
.
All income and
expenses relating to financial assets that ar
e recognised in pr
ofit or loss ar
e presented within finance
cost
s, finance income or
other financial items,
except f
or impairment of
trade receivables which is pr
esented within sale
s, general
and administrative expenses.
NOTEST
OTH
ECONSOLID
A
TEDFINANCIALST
A
TEMENTS

FORTHEYEAREND
ED3
1DECEMBER202
1CONTINUED
148
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021


Subsequent measurement of financial assets
Financial assets at amortised cost
F
inancial asset
s are measured at amortised cos
t if the asset
s meet the following conditions (and ar
e not designated as F
V
TPL):
•
They are held within a business model whose objective is to hold the financial asset
s and collect their contractual cash flows; and
•
The contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the
principalamount outs
tanding.
After initial recognition, these are measur
ed at amor
tised cos
t using the effective inter
est metho
d. Discounting is omitted where the effect of
discounting is immaterial. The Group
’
s trade and most other receivables (note
s 20 and 21) and cash and cash e
quivalents (note22) fall into
this category of financial ins
truments.
Impairment of financial assets
Under IFRS
9 the
requirements ar
e to
use forward-looking
information
to recognise
expecte
d cr
edit losses – the
‘
expe
cted cr
edit loss (ECL)
model’
.
The Gr
oup considers
a br
oad range
of inf
ormation when
assessing credit risk
and measuring
expecte
d cr
edit losses, including past ev
ents, current
conditions, r
easonable and
suppor
table f
orecast
s that aff
ect the expected collectability of
the futur
e cash flo
ws of
the instrument.
In applying this forward-looking approach, a distinction is made between:
•
F
inancial instrument
s that ha
ve not det
eriorated significantly in credit quality since
initial recognition or
that hav
e low cr
edit risk (‘Stag
e 1’); and
•
F
inancial instruments that hav
e deteriorated
significantly in cr
edit quality since
initial recognition
and whose
credit risk
is not
low (‘S
tage 2’)
.
•
‘Stage 3’ w
ould cover financial assets that have objective e
vidence of impairment at the reporting date.
‘12-month expected credit losse
s’ are recognised for the first category while ‘lifetime expecte
d credit losses’ are recognised for the second
and third categories.


T
rade receivable
s are amounts due from customers for licences sold or service
s per
formed in the ordinary course of business. They are generally
due for settlement within 30 da
ys of the invoice date and ar
e theref
ore all classified as current. T
rade receivables are recognised init
iall
y at
fa
ir
value and subsequently measured at amor
tised cost using the e
ffective inter
est method, le
ss provision f
or impairment. An impairment loss is
recognised when there is objective evidence that the Gr
oup will not be able to collect all amount
s due according to the original terms of the
receivable. The Group considers inf
ormation developed internally or obtained from external sources that indicates that a debtor is unlikely to
pay its creditors, including the Group, in full (
without taking into account any c
ollateral held by the Group
) as an indication that a financial
asset is not recov
erable.
The Group has applied the simplified approach to measuring expected credit losse
s, which uses a lifetime expected los
s allowance.
T
o measure the expected credit losse
s, trade receivables have been grouped based on days over
due. The expecte
d impairment loss is
recognised in the consolidated statement of profit or loss and comprehensiv
e income within sales, general and administrative expenses, and
subsequent recoveries are cr
edited to the same account previously used to recognise the impairment charge. During the curr
ent and prior
period the result of the above was immaterial and no impairment loss has been recognised.
The maximum exposure to cr
edit risk at the repor
ting date is the carr
ying value of each class of receivable mentioned above. The credit
qualities of these receivable
s are periodically asses
sed by ref
erence to external credit ratings (if available) or to historical information about
their default rates. The Group does not hold any collateral as security
.
As the total carr
ying amount of the current portion of the trade and other receivables is due within the next 12 months af
ter the reporting
date, the impact of applying the effective inter
est method is not signific
ant and, therefor
e, the carr
ying amount equals thecontractual
amount or the fair value initially recognised.


Property
, plant and e
quipment is stated at his
torical cost le
ss accumulated depreciation. Historical cos
t includes expenditure that is directly
attributable to the acquisition of the item. Depreciation on assets is c
alculated using the straight-line method to allo
cate their cost over their
estimate
d useful lives, as follows:
F
ixtures and fittings: 3-10 years
IT equipment: 2-5 years
Motor vehicles: 10 years
FINANCIAL ST
A
TEMENTS
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
149
The asset
s’ residual values and useful lives are review
ed and adjuste
d if neces
sar
y at each reporting date. An asset
’
s carr
ying amount iswritten
down immediately to its recoverable amount if the asset’
s carr
ying amount is greater than its e
stimated recoverable amount. Repairs and
maintenance are char
ged to the consolidated statement of profit or loss and comprehensiv
e income as incurred. Any gains or losses on
disposals are recognised within sale
s, general and administrative expenses in the consolidated statement of profit or loss and compr
ehensive
income unless other
wise specifie
d.
Property
, plant and e
quipment are r
eviewed for impairment whenev
er events or changes in circumstances indic
ate that the carr
ying amount
may not be recov
erable. An impairment loss is recognised for the amount b
y which the asset
’
s c
arr
ying amount exceeds it
s recov
erable
amount, which is the higher of an asset
’
s fair value less cost
s to sell and value in use. For the purpose of assessing impairment
, asset
s are
grouped at the lowest levels f
or which there ar
e separately identifiable cash flows.


Goodwill
Goodwill arose on the
acquisition of subsidiaries in 2012
as part of a group
reorganisation and repr
esent
s the ex
cess of the consideration
transferr
ed and the amount of any non-controlling int
erest in the investment over the fair value of the identifiable assets acquired
andliabilities and contingent liabilities assume
d.
The Group assesses whether goodwill has suffered any impairment on an annual basis in accor
dance with the accounting policy s
tatedinnote
1.9 above. Ther
e is one CGU, being the Gr
oup, as its geographical operations do not have separate or distinct cash inflows. The recov
erable
amount of goodwill has been determine
d based on value-in-use calculations using c
ash flow pr
ojections fromfinancial budgets and forecast
s.
Budgeted cash flow
projections are
based on the expectation of signing ne
w customers in the Gr
oup
’
s sale
s pipeline as well
as ongoing projec
t
s
with existing customers. Budgeted gross margin is based on historical evidence and the expe
ctations of market dev
elopment and efficiency
leverag
e. Management believes that any r
easonable change in any of the k
ey assumptions on which
the
rec
ov
era
ble
amoun
t is
bas
ed w
ould
not
cause the reported carr
ying amount to ex
ceed the recover
able amountof the CGU
. Th
e di
scou
nt ra
te us
ed
refle
ct
s
the G
roup’
s p
re-tax
weighted av
erage cost of capital (W
ACC)
, as adjus
ted forregion-specific risks andother factors as required b
y IFRS.
Intangible assets
Internally generated product dev
elopment cost
s only qualify for capitalisation if the Group can demons
trate all of thef
ollowing:
•
The technical feasibility of completing the intangible asset so that it will be available for use or sale, it
s intention to complete the intangible
asset and use or sell it;
•
Its abilit
y to use or sell the intangible asset; including how the intangible asset will generate pr
obable future economic benefit
s;
•
The existence of a market or
, if it is to be used internally
, the usefulness of the intangible asset;
•
The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and
•
Its abilit
y to measure r
eliably the expenditure attributable to the intangible asset during development.
Generally
, commercial
viability of
new pr
oduct
s, modules or capabilities is
not pr
oven
until all
high-risk dev
elopment issues ha
ve beenresolved
through
testing of the
specific development. Development
expenditure
incurred on
minor or
major upgrades, or
other chang
es in software
functionality
, doe
s not satisfy the criteria, where it is considered that the product is not substantially new in its de
sign or functional characteristics.
Such
expenditure is
theref
ore r
ecognised as an
expense. See
note 15
for disclosur
e of
development
cost
s which
hav
e met the
criteria o
f IAS
38 for
recognition. The Group continues to assess the eligibility of development costs for capitalis
ation on a project-by-pr
oject basis.
Externally acquired intangible asset
s are initially r
ecorded at historical cos
t. His
torical cost include
s expenditure that is dir
ectly attributable
to the acquisition of the item.
The Group amortises intangible asset
s with a limite
d useful life, using the straight-line method over the f
ollowing periods:
Computer software: licence period or 10 years as applicable
Internally generated software: 3-5 y
ears
Amortis
ation is presented within sale
s, general and administrative expenses.
Research and dev
elopment which does not me
et the criteria set out above is r
ecognised as an expense as incurred. Development cost
s
previously r
ecognised as an expense are not recognised as an asset in subse
quent periods.
NOTEST
OTH
ECONSOLID
A
TEDFINANCIALST
A
TEMENTS

FORTHEYEAREND
ED3
1DECEMBER202
1CONTINUED
150
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021




T
rade payables are obligations to pay for g
oods or ser
vice
s which hav
e been acquired in the ordinar
y course of business from suppliers.
T
rade payables are recognised initially at fair value and subsequently me
asured at amortise
d cost
s using the effective inter
est rate metho
d.
As the total carrying amount is due within
the next 12 months fr
om the r
epor
ting date, the impact
of applying the
effective inter
est method is
not significant and, ther
efore,
the carr
ying amount equals the contractual
amount orthe fair value
initially recognised.
The Gr
oup
’
s financial liabilities include
trade and
other payables and
lease liabilities. F
inancial liabilities are
initially measur
ed at fair
value, and,wher
e
appl
icabl
e, adjusted for transaction cost
s unless the Group designate
d a financial liability at fair value through pro
fit or loss. Subsequently
,
financial liabilities are
measured at amortised cost using the effective int
erest method. All interest-related charg
es and, ifapplicable, changes in
aninstrument
’
s fair value that are
reporte
d in pr
ofit or loss ar
e included within finance
cost
s or finance income.
The Group der
ecognises financial
liabilities when, and only when,
the Group
’
s obligations are
discharged, cancelled or expir
ed.
T
rade and other payables and
le
as
e
li
ab
il
iti
es
are classified as current liabilities if payment is due within one y
ear or less. If not
, they are
presented as non-current liabilities.


Pro
visions are r
ecognised when the Group has a present legal or constructive obligation as a result of past events, it is more likely than not that an
outflow of r
esources will be required to settle the obligation and a reliable estimate of the amount can b
e made. When the effect of the discounting
is material,
pro
visions are
measured at
the pr
esent value of
the expenditur
es expected to be r
equired to
settle the
obligation.


The Group pr
ovides a range of benefits to employees, including paid holiday arrangements and de
fined contribution pension plans.
Short-term benefits
Short-term b
enefit
s, including health cov
er and other similar non-monetar
y benefit
s, are recognised as an expense in the period in which the
service is received.
Post-employment benefits
The Gr
oup operates various
define
d contribution
plans f
or its employ
ees. A defined contribution plan
is a
pension plan
where the
Group
pays
fixed
contributions into a separate independent entity
. The Group has no legal or constructive obligation to pay further contributions if the fund doe
s not
hold sufficient
asset
s to
pay
all employ
ees the benefit
s r
elating to
the emplo
yee’
s service in
the current
and prior
periods.
Employee share scheme expense
The Gr
oup
makes equity-settled shar
e-based payments to
certain employ
ees, which
are
measured at
fair value
at the
date
of gr
ant and
expensed on
astraight-line basis
ov
er the
ves
ting period,
based on
the
Group
’s
e
stimate of
shares that
will ev
entually v
est
. F
or those
share
schemes with
market-
related
vesting conditions,
the
fair value
is
determined using
the Monte
C
arlo model
at
the grant
date. F
or shar
e options
issue
d with
EP
S (non-mark
et)
per
formance
ves
ting conditions,
the fair
value of
the underlying
vehicle
is equal
to the
grant date
shareprice
discounted b
y the
exp
ected dividend
yield
to reflect the lack of dividend accrual ov
er the vesting period. For all other share a
wards, those with pur
e employment conditions attached, the fair
value is
determine
d b
y r
efer
ence to
the market
value o
f the
shares
atthegrant date
or (wher
e
they ha
ve
an e
xercise
price) by
using
the Black
Scholes
model. For all shar
e schemes with non-market vesting conditions, the likelihood of vesting has b
een taken into account when determining the relevant
charge.
V
e
sting assumptions
are
review
ed during
each r
epor
ting
period to
ensure
they
reflect curr
ent expectations.


Ordinary shares
Ordinary shares are classified as equity
. There ar
e no restrictions on the distribution of c
apital and the repa
yment of capital.
Cumulative translation reserve
Exchange
differ
ences arising on translation o
f the for
eign-controlled entities ar
e recognised in Other Compr
ehensive Income and
accumulated
ina separate r
eser
ve within equity
. The cumulative
amount would be
reclassified to profit
or loss if the entity was
disposed of
.
Own shares
Own shares repr
esent the shares of the parent company Alfa F
inancial Software Holdings PLC that are held b
y the employee benefit trust
.
Own shares are r
ecorded at cost and de
ducted from equity
.


Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to equity holders of Alfa by the w
eighted average number of or
dinar
y
shares outs
tanding during the year (
excluding own shar
es held)
.
FINANCIAL ST
A
TEMENTS
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
151
Diluted earnings per share
Diluted earnings per share is
calculated in line with the basic earnin
gs p
er s
hare calculation above ex
cept that the w
eighted av
erage number
ofshares includes all potentially dilutiv
e options granted b
y the r
epor
ting date as if
those options had been exer
cised on the first da
y of the
accounting period or the date
of the grant, if later
. The shar
es hav
e no right to
voting or to
dividends while held intrust.


The preparation of financial statements requires the use of accounting estimate
s which, by definition, will seldom equal the actual results.
Management also needs to exercise judg
ement in applying the Group
’
s accounting policies.
This note pro
vides an overview of the areas that inv
olved a higher degree of judgement or complexity
, and of items which are more likelyto be
materially adjusted in future periods due to e
stimates and assumptions turning out to b
e wrong. Detailed information abouteach of these
estimate
s and judgements is include
d in other notes, together with information about the basis of calculation f
oreach affected line item in
the financial statement
s.


Revenue recognition – Assessing performance obligations
The Group is r
equired to make an assessment as to whether the implementation proces
s, which includes customise
d licence, implementation
rev
enue streams as well as any maint
enance fees during this phase, forms one or a number of per
formance obligations. Since the r
esidual
value method is used for the customised licence revenue (as explained in note 1.5)
, the e
stimation of fair value of implementation rev
enue
willimpact the contract consideration assigned to the customise
d licence.
In addition, the Group is also r
equired to make an assessment as to whether each contract contains an expe
ctation to deliver multiple
separate instances of the customise
d licence which may f
orm separate groups of distinct performance obligations. In doing the above,
theGroup assesses each soft
ware implementation contract as to whether the underlying so
ftware requires significant modification
orcustomisation by the Group in or
der to meet the cus
tomer’
s requirements before Alfa S
ystems can b
e utilised by the customer
.
Therefor
e judgement is r
equired in determining which effort
s relate to the implementation process and which effort
s could be determined
tobe development services which change or enhance the underlying code. In making this judgement, the Group asses
ses the contractual
terms and the original project plan for the implementation but also uses historical evidence of what constitutes core implementation work.
Internally generated software development – Assessing whether a project meets criteria of IAS 38
The Gr
oup is
required to
make an
assessment of each
ongoing
project in
order t
o determine
at what stage
a pr
oject meet
s the
criteriaoutlined in
the Gr
oup
’
s accounting policies. Such
assessment may
, in
certain circumstances, require
significant judgement. In
making this
judgement, the
Group
evaluates, amongst other factors,
the stage
at which
technical feasibility has
been achieved, manag
ement’s
intention to
complete and
use or
sell the
product, the lik
elihood of success, the
availability o
f technical and
financial resour
ces to complete
the dev
elopment phase
and management’
s ability
to measur
e r
eliably the e
xpenditure attributable
to the
project. Research
and pr
oduct development
expenditure
incurred on
minor or
major
upgrades, or other changes in software functionality
, do
es not satisf
y the criteria where it is consider
ed that the product is not substantially new
inits design or functional
characteristic
s. S
uch expenditure
is ther
efor
e recognised as
an expense.


Revenue recognition – Estimates feeding through to the customised licence
The customised licence and it
s associate
d material right are both impacted by the f
ollowing estimate
s:
•
Assigning a stand-alone selling price for implementation ser
vices day rates: the Group assesses the v
alue of the implementation service
s
deliver
ed by asses
sing the effective da
y rate for an implementation contract, taking into account all re
venue streams fr
om implementation
contracts ag
ainst day rates of similar projects in the s
ame geographies;
•
Estimating the appropriate life o
f customer relationship: the Group calculates the material right deferral of the customised licence based
on the total customer relationship life. This is also the time o
ver which the material right will be spr
ead; and
•
Determining the split of maintenance amount between suppor
t effort
s and right to use: the Group must estimate what p
ercentag
e of the
total maintenance fee relat
es to the cus
tomised licence.
Management
reassesse
s estimates and applies them
to new
projects prospectively
. A
variation of
5% to
10%, or
an incr
ease in expected customer
life b
y a year
, in the above, r
esult
s in an impact on revenue f
or the year ranging between an increase / decrease of £0.4m.


Revenue recognition –Number of forecast implementation and development days
The Gr
oup
es
timates the
number o
f da
ys r
equired to
complete
the r
elevant
software
customis
ation
effort at
the outset of
each projectand
on an
ongoing
basis including
at each
consolidated statement o
f financial
position dat
e. Estimates of
total project
daysr
equired for
a relevant
project are
based on
historical evidence
of
past implementations,
knowledge
of
the customer’
s systemsbeing r
eplaced and
scope of
cus
tomisation being
requeste
d.
The Gr
oup applies
the per
centage-of-completion
method whencalculating
implementation
and dev
elopment services r
evenue
and
updates e
stimates at each quar
ter end accordingly
. Therefor
e, a significant movement in total planned days w
ould result in volatility in implementation
and customised licence revenue.
NOTEST
OTH
ECONSOLID
A
TEDFINANCIALST
A
TEMENTS

FORTHEYEAREND
ED3
1DECEMBER202
1CONTINUED
152
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021


In common with all other businesse
s, the Group is exposed to risks that arise from its use of financial instrument
s. This note describe
s the
Group
’
s objectives, policie
s and processes for managing those risks and the methods used to measure them. Further quantitative inf
ormation
in respect of these risks is presente
d throughout these financial statement
s.
Are
a
Exposure arising from
Measurement
Management
Market risk – for
eign exchang
e
Contracted revenue and costs
denominated in a currency
otherthan the entity
’
s
functionalcurrency; and
Monetary as
sets and
liabilitiesdenominated in
acurrency other than the
entity
’
s functional currency
.
Cash flow for
ecas
ting and
for
eign exchange sensitivity
Natural hedging from
localise
dcost base and
promptcon
version of
for
eigncurrency cash
balancesinto pound sterling
Credit risk – cash balances
Cash and cash equivalent
s
Credit ratings
Diversification of
bankdeposit
s
Credit risk – customer receivables
T
rade receivable
s and
accruedincome
Ageing analysis
Credit ratings
Credit checks and
contractualpayment terms
Liquidity
Cash and cash e
quivalent
s
Cash flow forecasting
Collection of upfront licence
fees, ageing analysis of
customer receivables
The Group
’
s overall risk manag
ement policy focuses on the unpredictabilit
y of financial markets and seeks to minimise potential adverse
effects on the Group
’
s financial performance. The Group has used financial instrument
s to hedge cer
tain risk exposures in the past.
Risk management is carried out by the finance function under policies approv
ed by the Chief Financial Officer
. The finance function identifies,
evaluates and mitigate
s financial risks when deemed ne
cess
ary
.
The Group
’
s objectives when managing capital are to safeguard the Gr
oup
’
s abilit
y to continue as a going concern, so that it can pr
ovide
returns f
or shareholders and benefit
s for other stakeholders and maintain an optimal capital structure.


The Group operates internationally and is exposed to foreign ex
change risks arising fr
om various currencies, primarily with respect tothose
describe
d below
. Revenue is pr
edominantly denominated in pounds s
terling and US dollars. Operating cost
s are influenced bythe curr
encies
of the countries where the Group
’
s subsidiaries are based and pounds sterling and the US dollars are the currencies inwhich most operating
cost
s are denominated.
The split by curr
ency in relation to trade receivables is set out in note 20.
The Group
’
s exposure to f
oreign currency risk in relation t
o revenue is set out in note 5.4.
The Group has not enter
ed into or utilised any form of hedging against foreign curr
ency exposure during the current or prior period, nordoes
the Group ha
ve any outstanding commercial for
eign exchange contr
act
s at 31 December 2021 or 31 D
ecember 2020.
A 10% increase in the USD:GBP ex
change rate in the year ended 31 December 2021 would have incr
eased revenue and pr
ofit by 4% and
8%respectively
.
FINANCIAL ST
A
TEMENTS
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
153


a.
Credit risk related to transactions with financial institutions
Credit risk with financial institutions is managed by the Group
’
s finance function in accordance with a Boar
d appro
ved policy
. Management is
not awar
e of any significant risks associated with financial institutions as a result of cash and c
ash equivalent
s deposit
s(including shor
t-term
inv
es
tment
s) and financial derivative transactions.
b.
Credit risks related to customer trade receivables
Significant financial difficulties of the debtor
, probability that the debtor will enter bankruptcy or financial reorganisation, change ofstrateg
y
and default or delinquency in payment
s are consider
ed indicators that a trade receivable could be impaired. Given the complexity
, the size
and the length of cer
tain software implementation of related projects, a delay in the settlement of an open tradereceivable does not
neces
sarily constitute objective evidence that the trade receivable is impaired.
The Group
’
s customer base predominantly consist
s of large financial institutions that are financially sound. The r
esponsibilit
y for customer
credit risk management r
es
ts with management of the Group. P
ayment terms ar
e set in accordance with practices in the diff
erent
geographies and end-market
s served, t
ypically being 30 days from the date of the in
voice. T
rade receivables are actively monitor
ed and
managed. Collection risk is mitigate
d through the use of up
front payments of licences and maintenance. Historically
, there has been a de
minimis level of customer default as a result of the long history of dealing with the Group
’
s cus
tomer base and anactive cr
edit monitoring
function. Where applicable, credit limits may be es
tablished based on internal or external rating criteria, whichtake into account such factors
as the financial condition of the customers, their credit histor
y and the risk associated with their indus
tr
y segment.
The Group applies the IFRS 9 simplified approach to measuring expected credit losses which use
s a lifetime expected loss allowance forall
trade receivables and accrued income. T
o measure the expected credit losses, trade receivable
s and accrued income have been grouped
based on shared credit risk characteristics and the days past due. The accrue
d income relates to unbilled work in progr
ess and has
substantially the same risk characteris
tics as the trade receivables for the same type
s of contracts, other than where the Group has collected
upfront pa
yment
s in the form of licenc
e fees at the s
tart of a software implementation contract. The Group has concluded that the expe
cted
loss rates for trade receivables are less than the loss rates for the accrued income.
The expected los
s rates of trade receivables are based on the payment pro
files of cus
tomer inv
oices over a period of 36 months before
31 December 2021 or 31 D
ecember 2020 respe
ctively and the corr
esponding his
torical credit losses experience
d within this period.
The historical loss rate
s would then be adjusted to reflect current or forward-looking information in r
elation to any macr
oeconomic factors
affecting the ability of the customers to settle the receivables.
The Group has not identified any curr
ent factors or forward-looking information which w
ould be relevant to the historical loss rate
s
asalltrade receivables have been collected in the pas
t 24 months. Theref
ore on this basis, the loss allowance as at 31 December 2021
and31 December 2020 was immaterial for both trade receivables and accrue
d income.
See note 20 – T
rade receivable
s for the ag
eing of trade receivables and significant cus
tomer credit risk exposure.
NOTEST
OTH
ECONSOLID
A
TEDFINANCIALST
A
TEMENTS

FORTHEYEAREND
ED3
1DECEMBER202
1CONTINUED
154
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021




The Group
’
s principal objective when managing capital is to safeguard the Gr
oup
’
s abilit
y to continue as a going concern, so that it can
continue to pro
vide returns f
or shareholders and benefit
s for other stakeholders.
The capital structure o
f the Group
consist
s of cash and cash equivalents (note 22) and equity attributable to equity holders o
f theparent.
Liquidity risk is the risk that the Group will not be able to meet it
s financial obligations as they fall due.
The Group manages its exposure to liquidity risk through short and long-term forecast
s and by seeking to align the maturity profiles ofits
financial asset
s with its financial liabilitie
s. The Group
’s policy is to maintain an adequate level of liquidity to meet its liabilitie
s expecte
d to be
settled in the shor
t or near term, under both normal and stresse
d conditions.
The follo
wing table details the remaining contractual maturity of the Group
’
s financial liabilities. The amount
s disclosed in the table are the
contractual undiscounted cash flows.
31December2021
£m
Carryingvalue
Lessthan6
months
Between 6 to
12months
Between1to2
years
Between2to5
years
Morethan5
years
T
rade and other payables
6.9
6.9
–
–
–
–
Lease liabilities – future lease payments
20.3
1.3
1.4
2.7
7.4
7.5
31 December 2020
£m
Carrying value
Less than 6
months
Between 6 to
12 months
Between 1 to 2
years
Between 2 to 5
years
More than 5
years
T
rade and other payables
5.6
5.6
–
–
–
–
Lease liabilities – future lease payments
21.1
1.2
1.2
2.4
6.9
9.4




The Group assesses revenue b
y type of activity
, being Subscription, Software and S
ervice
s, as summarised below:
£m
2021
2020
(restated*)
Software
13.6
20.0
Subscription
23.5
18.1
Services
46.1
40.8
T
otalrev
enue
83.2
78.9
*
T
o better reflect the nature and type of revenue, changes hav
e been made to the classific
ation and allocation of revenue line items. The comparativ
e disclosures for the
December 2020 repor
ting period have also been amended to reflect a fair base for comparability
. The
se changes have had no impact on the total r
evenue or the pro
fit
before tax that wer
e disclosed at the end of December 2020.


The follo
wing tables reconcile
s profit f
or the period attributable to equity holders to Op
erating Pr
ofit for the periods presented:
£m
2021
2020
Pro
fit for the year
19.2
20.3
Adjusted for:
Net income from joint v
enture
0.1
–
T
axation
4.6
2.9
F
inance income
–
(0.1)
F
inance expense
0.8
0.8
Operating pro
fit
24.7
23.9
FINANCIAL ST
A
TEMENTS
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
155


Non-current assets attributable to each geographical market:
£m
2021
2020
UK
42.6
44.0
USA
1.2
0.7
Rest of W
orld
0.6
0.1
T
otalnon-currentassets
44.4
44.8
Rev
enue by geographical market is contained within note 5.3.




Customers with rev
enue accounting for mor
e than 10% of total rev
enue in the current y
ear are as f
ollows:
£m
2021
2020
Customer A
10%
12%
See note 20 for outstanding trade receivable
s from those customers with r
evenue accounting f
or more than 10% of total r
evenue.


The Group deriv
es revenue fr
om the transfer of g
oods and ser
vices as follows ov
er time and at a point in time in the following r
evenue
segments:
2021
£m
Services
Softwar
e
Subscription
T
otal
rev
enue
A
t a point in time – time and materials
25.2
5.6
–
30.8
A
t a point in time – fixed price
–
2.1
–
2.1
Over time – time and materials
19.8
4.1
–
23.9
Over time – fixed price
1.1
1.8
23.5
26.4
T
otalrev
enue
46.1
13.6
23.5
83.2
2020
£m (restated)*
Services
Software
Subscription
T
otal
rev
enue
A
t a point in time – time and materials
19.4
5.1
–
24.5
A
t a point in time – fixed price
0.2
5.7
0.8
6.7
Over time – time and materials
18.8
8.0
–
26.8
Over time – fixed price
2.4
1.2
17.3
20.9
T
otal revenue
40.8
20.0
18.1
78.9
All goods and ser
vices are sold directly to customers.
*
T
o better reflect the nature and type of revenue, changes hav
e been made to the classific
ation and allocation of revenue line items. The comparativ
e disclosures for the
December 2020 repor
ting period have also been amended to reflect a fair base for comparability
. The
se changes have had no impact on the total r
evenue or the pro
fit
before tax that wer
e disclosed at the end of December 2020.
NOTEST
OTH
ECONSOLID
A
TEDFINANCIALST
A
TEMENTS

FORTHEYEAREND
ED3
1DECEMBER202
1CONTINUED
156
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021




Rev
enue attributable to each geographical market based on where the customer mainly utilises it
s instance of Alfa, or where the ser
vice is
render
ed, is as follows:
£m
2021
2020
UK
30.0
25.8
USA
28.9
29.2
Rest of EMEA (ex
cl UK)
18.7
21.3
Rest of W
orld
5.6
2.6
T
otalrev
enue
83.2
78.9


Rev
enue by contractual curr
ency is as follows:
£m
2021
2020
GBP
35.9
33.3
USD
30.0
30.4
Euro
11.6
12.6
Other
5.7
2.6
T
otalrev
enue
83.2
78.9


£m
2021
2020
Contract liabilities – deferred licence
5.3
1.9
Contract liabilities – deferred maintenance
5.7
5.1
T
otalcontractliabilities
11.0
7.0
Contract liabilities – deferred licence
Where a customer purchases a perpetual software licence this is generally in
voiced upfront at the commenc
ement of the implementation
proje
ct
. Customers g
enerally r
equire additional
development
effort
s ov
er the
life
of the
implementation projec
t ino
rder to
cust
omis
e the
underlying code within Alfa
Systems. T
ogether these two
element
s form
the Group
’
s customised licence performance obligation. The fair
valueof this performance obligation is det
ermined using the residual method as
set out in note1.5b andthis
fair value is r
ecognised as the
development eff
ort is expended, on a percentag
e of completion basis.
As such the deferred licence contract liability balance as at 31 December 2021 represents any amount
s received in advance for the
customised licence per
formance obligation being satisfie
d (including any unr
ecognised soft
ware licence amounts that were r
eceived upfront)
.
Additionally
, where an option ov
er the right to use Alfa Systems in the future exists, the value of this is also included within the de
ferr
ed
licence contract liability
. The contract liability relating to the material right value is increased ov
er the life of the implementation pr
oject
inlinewith the percentage of c
ompletion of the development eff
or
ts and then released on a s
traight-line basis ov
er the expecte
d remaining
customer life post completion of the implementation project.
The deferred licence contract liability balance will incr
ease during the year as a result of:
•
any new up
front software licence pa
yment
s;
•
any write back in pr
eviously recognised rev
enue as a result of project extensions or re-plans; and
•
any additional material right balances that are added during the y
ear
.
The deferred licence contract liability balance will decrease during the y
ear as a result of:
•
increasing per
centage of completion of dev
elopment effort
s; and
•
any r
elease of material right balances following the completion of the implementation pr
oject.
FINANCIAL ST
A
TEMENTS
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
157
Contract liabilities – deferred maintenance
The majority of the Group
’
s customers are inv
oiced annually in advance for the maintenance and suppor
t service provided by the Group
.
As such, the deferred maintenance contract liability balance will incr
ease during the year as a result of billing and inv
oices be
coming due,
andwill decrease as the Group satisfies its as
sociated per
formance obligations. The deferred maintenance contract liability balance as at
31 December 2021 therefore r
epresents the Group
’
s unsatisfied period maintenance p
erformance obligation forwhich the re
venue has
beeninvoiced in advance.


During 2020, the Group enter
ed into a new one-off five-y
ear contract with a customer to renew its software licence and maintenance
agreements. The total amount of the contract price from this non-cancellable contract that relates to the performance obligations that are
unsatisfied at 31 De
cember 2021 is £8.4m (2020: £10.6m)
. W
e expe
ct to recognise £2.2m in each of the next three financial years and then
the remaining £1.8m in the final financial y
ear of the contract, being 2025.
In addition, the Group has unsatisfied or partially s
atisfied per
formance obligations at 31 December 2021 that relate to the licence
customisation for those customers that have ong
oing implementation project
s, or implementation projects that commence
d in early2022
and for which contracts were agr
eed prior to 31 De
cember 2021. This per
formance obligation includes the delivery of therelated software
licence and any dev
elopment effort
s which will change the underlying code. Linked to certain of the
se ongoing andfuture pr
oject
s, and also
to certain implementation project
s completed during 2021, the Group also has unsatisfied or par
tially satisfie
d per
formance obligations at
31 December 2021 that relate to the option over the right t
o use Alfa Systems, and in particular any material right in respect of discount
s to
be received by customer in future periods.
The above includes certain amount
s recognised as contract liabilities. The trans
action price allocated to the
se unsatisfied or par
tially satisfie
d
per
formance
obligations as
at 31 December 2021
is £11.1m
(2020: £9.0m)
. This
amount is e
xpecte
d to
be recognised o
ver
the remaining
life
of the
implementation pr
oject
s, in r
espe
ct of
the licence
and de
velopment eff
ort
s, and o
ver the
expected customer life
(follo
wing the c
ompletion of
the
implementation pr
oject) in r
espe
ct of
the option
over
the right
to use
Alfa S
ystems.
These unsatisfie
d or partially s
atisfied per
formance obligations are based on management’
s b
est judgement and may be impacted
inthefuture b
y a number of factors including:
•
any possible contract modifications,
•
currency
fluctuations;
•
external market factors; and
•
changes to the ov
erall forecast project plan including the over
all life of the implementation pr
oject and any required development eff
or
ts.
The Group applies the practical expedient in paragraph 121 of IFRS 15 and does not disclose information about the unsatisfie
d performance
obligations that have original expected durations of one year or less. This includes those per
formance obligations linked toongoing service
s
for all pr
oject typ
es (i.e. subscription, software and services)
.
The Group also applies the practical expedient in paragraph B16 of IFRS 15 and does not disclose the amount of the transaction
priceallocated to the uns
atisfied contract per
formance obligations where c
onsideration will be received directly corresponding to thevalue
of the performance obligation in the future and this consideration aligns to the value received to date f
or the corresponding per
formance
obligation. This includes those per
formance obligations linked to our software implementation service
s.
The Group has variable consideration in the f
orm of contract banding for its licence and maintenance volumes. It is included it in the
transaction price only to the extent that it is highly probable that a significant rev
ersal of revenue will not occur when the uncertainty
associated with the variable consideration is subse
quently resolved.


The follo
wing items have been included in arriving at operating profit in the table below:
£m
2021
2020
(restated)
Research and dev
elopment cost
s*
1.6
1.5
Depreciation of property
, plant and equipment
0.4
0.5
Depreciation of right-of-use lease assets
1.9
1.7
Amortis
ation of intangible asset
s
0.8
0.8
Share-based payments (inc. social securit
y contributions)
1.5
1.5
*
T
o better reflect the nature of r
esearch and development expenditur
e and align with capitalised development costs, changes ha
ve been made to the classification of expense line
items. R
esearch and development costs are no
w primarily made up of costs incurr
ed as par
t of the Group
’s int
ernal research and development activities, where as pre
viously this
line item included broader costs. The comparative disclosur
es for the December 2020 repor
ting period hav
e also been amended to reflect a fair base for comparability
.
NOTEST
OTH
ECONSOLID
A
TEDFINANCIALST
A
TEMENTS

FORTHEYEAREND
ED3
1DECEMBER202
1CONTINUED
158
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021


£m
2021
2020
W
ages and salarie
s
31.8
30.0
Social security contributions (on wages and salaries)
3.9
3.4
Pension costs
2.1
2.0
Pro
fit share pay *
3.1
2.7
Share-based payments **
1.5
1.5
T
otalemploymentcosts
42.4
39.6
*
Profit share pa
y refers to a pool of mone
y (that equates to appr
oximately 10% o
f the Group
’
s pre-tax profits) which is shared amongst the employ
ees, excluding Directors and
some other senior managers, as a percentage o
f basic salary. The amoun
t disclosed includes the related social security contributions.
**
This includes the related social security contributions.
Average monthly number of people employed based on location of home office
(including Executive Directors)
2021
2020
UK
282
255
USA
71
66
Rest of W
orld
30
20
T
otalaver
agemonthlynumberofpeopleemploy
ed
383
341


Key manag
ement compensation (including Executive Directors):
£m
2021
2020
W
ages, salarie
s and short-term bene
fit
s
3.1
2.6
Social security contributions
0.4
0.3
Post-emplo
yment benefit
s
0.1
0.1
Share-based payments *
0.9
0.2
T
otalkeymanag
ementcompensation
4.5
3.2
*
This includes the related social security contributions.
Key manag
ement personnel consist
s of the Company Leadership T
eam and the Executive Directors. Directors’ remuneration is detailed in the
Remuneration R
epor
t.
FINANCIAL ST
A
TEMENTS
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
159


The Group obtained the follo
wing ser
vices from the Group
’
s auditor as detailed below:
£m
2021
2020
Auditfees
DeloitteLLP
Audit f
ee
s relating to prior y
ear
–
0.1
RSMUKAuditLLP
Audit of the consolidated financial statements
0.2
0.2
Audit of subsidiaries
0.2
0.2
T
otalauditfees
0.4
0.5
Audit-relat
edassurancefees
RSM UK A
udit LLP
0.1
0.1
T
otalaudit-relatedassurancef
ee
s
0.1
0.1
Non-auditservices
–
–
T
otalauditandnon-audit-relatedservice
s
0.5
0.6


£m
2021
2020
Financ
e income
Interestincomeoncashorshort-termbankdeposits
–
0.1
£m
Note
2021
2020
Financ
e expense
Interest on lease liability
24
(0.8)
(0.8)
T
otalfinanceexpense
(0.8)
(0.8)
NOTEST
OTH
ECONSOLID
A
TEDFINANCIALST
A
TEMENTS

FORTHEYEAREND
ED3
1DECEMBER202
1CONTINUED
160
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021


Analysis of charge for the year
£m
2021
2020
Current tax
Current tax on pr
ofit f
or the year
4.5
4.5
Adjustment in respe
ct of prior years
(0.5)
(1.4)
F
oreign tax on pro
fit of subsidiaries for the current y
ear
0.3
0.6
Currenttax
4.3
3.7
Deferred tax
Origination and rev
ersal of temporar
y differ
ences
(0.1)
(0.3)
Adjustment in respe
ct of prior years
0.6
(0.5)
Effect of changes in tax rates
(0.2)
–
Deferr
edtax
0.3
(0.8)
T
otaltaxchargeinthey
ear
4.6
2.9
The effective tax rate f
or the year is higher (2020: low
er) than the standar
d rate of corporation tax in the UK. The effective tax rate f
or the
year ended 31 December 2021 was 19.3% (2020: 12.5%)
. The effective tax rate f
or the year is impacted by adjustment
s in respect to prior
years totalling £0.1m (2020: fa
vourable adjustment of £1.9m)
, due to increased tax cost
s for the prior year of £0.2m, an adjustment in
respect to deferred tax on share a
wards of £0.5m, less the benefit of the UK R&D tax claim for 2020 o
f £0.6m (2020: predominately due to
the benefit of UK R&D tax claims for 2018 and 2019)
. Excluding the impact of adjustments in respe
ct to prior years, the eff
ective tax rate for
the year was 18.9% (2020: 20.7%)
. The overall tax char
ge for the y
ear is reconciled as follows:
Analysis of charge for the year
£m
2021
2020
Pro
fit on ordinary activitie
s before taxation
23.8
23.2
Pro
fit on ordinary activitie
s at the standard rate of corporation tax – 19%
4.5
4.4
T
ax effects of:
Effect of diff
erent tax rates of subsidiaries operating in other jurisdictions
0.1
0.2
Expenses not de
ductible for tax purposes
–
0.1
Adjustment in respe
ct of prior years
0.1
(1.9)
Impact of tax rate changes
(0.2)
–
Other
0.1
0.1
T
otaltaxchargef
ortheyear
4.6
2.9
FINANCIAL ST
A
TEMENTS
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
161


2021
2020
Pro
fit attributable to equity holders of Alfa (£m)
19.2
20.3
W
eighte
d aver
age number of shares outs
tanding during the year
296,709,610
293,824,145
Basic earnings per share (pence per share)
6.49
6.93
W
eighte
d aver
age number of shares outs
tanding including potentially dilutive shares
301,505,177
300,069,048
Diluted earnings p
er share (pence per share)
6.39
6.79
The weighted av
erage number of ordinary shares in issue excludes 3,290,390 (2020: 6,175,855) shares held by emplo
yee benefit trus
t.
The diluted number of ordinary shares out
standing
, including share a
wards, is calculated on the assumption of conversion of all 5,470,741
(2020: 6,139,161) potentially dilutive ordinary shares.


£m
Note
2021
2020
Financ
e assets
F
inancial asset
s at amor
tised cost:
T
rade receivable
s
20
6.0
5.8
Other financial asset
s at amor
tised cost
21
7.3
5.8
Cash and cash e
quivalent
s
22
23.1
37.0
T
otalfinancialasset
s
36.4
48.6
Financ
eliabilities
F
inancial liabilities at amor
tised cos
t:
T
rade and other payables
23
6.9
5.6
Lease liabilities
24
17.1
17.5
T
otalfinanceliabilities
24.0
23.1


£m
2021
2020
Cost
A
t 1 Januar
y
24.7
24.7
A
t31December
24.7
24.7
The recov
erable amount of goodwill has been determine
d based on value-in-use calculations using c
ash flow pr
ojections from financial
budgets and forecast
s for a five-y
ear period using a pre-tax discount rate of 11% (2020: 11%)
. Cash flows beyond these periods have been
extrapolated using a s
teady 2% (2020: 2%) av
erage gro
wth rate. This growth rate does not excee
d the long-term av
erage gro
wth rate for the
markets in which the Group operates. Management believes that any reasonable chang
e in any of the key assumptions on wh
ich
the
recov
erable amount is based w
ould not cause the r
epor
ted carr
ying amount to e
xceed the recov
erable amount of
the CGU
.
NOTEST
OTH
ECONSOLID
A
TEDFINANCIALST
A
TEMENTS

FORTHEYEAREND
ED3
1DECEMBER202
1CONTINUED
162
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021


£m
Computer
software
Internally
generated
software
T
otal
Cost
A
t 1 Januar
y 2020
1.4
1.5
2.9
Additions
0.1
0.7
0.8
A
t 31 Decemb
er 2020
1.5
2.2
3.7
Amortisation
A
t 1 Januar
y 2020
0.5
0.2
0.7
Charge f
or the year
0.3
0.5
0.8
A
t 31 Decemb
er 2020
0.8
0.7
1.5
Netbookvalue
A
t 31 Decemb
er 2020
0.7
1.5
2.2
Cost
A
t 1 Januar
y 2021
1.5
2.2
3.7
Additions
0.1
0.9
1.0
A
t31December2021
1.6
3.1
4.7
Amortisation
A
t 1 Januar
y 2021
0.8
0.7
1.5
Charge f
or the period
0.1
0.7
0.8
A
t31December2021
0.9
1.4
2.3
Netbookvalue
A
t31December2021
0.7
1.7
2.4
Significant movement in other intangible assets
During 2021, Alfa de
veloped new internally g
enerated software at a
cost of £0.9m (2020: £0.7m)
. This softwar
e will be amortised over thr
ee to
five y
ears.
The total research and pr
oduct development expense for the period was £1.6m (2020: £1.5m restated – see note 6)
.
FINANCIAL ST
A
TEMENTS
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
163


£m
F
ixtures and
fittings
IT e
quipment
T
otal
Cost
A
t 1 Januar
y 2020
1.2
3.2
4.4
Additions
0.1
0.2
0.3
Disposals
(0.1)
(0.1)
(0.2)
A
t 31 Decemb
er 2020
1.2
3.3
4.5
Depreciation
A
t 1 Januar
y 2020
0.7
2.6
3.3
Charge f
or the year
0.1
0.4
0.5
Disposals
(0.1)
(0.1)
(0.2)
A
t 31 Decemb
er 2020
0.7
2.9
3.6
Netbookvalue
A
t 31 Decemb
er 2020
0.5
0.4
0.9
Cost
A
t 1 Januar
y 2021
1.2
3.3
4.5
Additions
–
0.3
0.3
Disposals
–
(0.1)
(0.1)
A
t31December2021
1.2
3.5
4.7
Depreciation
A
t 1 Januar
y 2021
0.7
2.9
3.6
Charge f
or the year
0.1
0.3
0.4
Disposals
–
(0.1)
(0.1)
A
t31December2021
0.8
3.1
3.9
Netbookvalue
A
t31December2021
0.4
0.4
0.8
NOTEST
OTH
ECONSOLID
A
TEDFINANCIALST
A
TEMENTS

FORTHEYEAREND
ED3
1DECEMBER202
1CONTINUED
164
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021


£m
Motor vehicles
Property
T
otal
Cost
A
t 1 Januar
y 2020
0.2
17.9
18.1
Additions
0.1
0.1
0.2
Disposals
(0.1)
(0.1)
(0.2)
A
t 31 Decemb
er 2020
0.2
17.9
18.1
Depreciation
A
t 1 Januar
y 2020
0.1
1.6
1.7
Charge f
or the year
0.1
1.6
1.7
Disposals
(0.1)
–
(0.1)
A
t 31 Decemb
er 2020
0.1
3.2
3.3
Netbookvalue
A
t 31 Decemb
er 2020
0.1
14.7
14.8
Cost
A
t 1 Januar
y 2021
0.2
17.9
18.1
Additions
0.2
1.3
1.5
A
t31December2021
0.4
19.2
19.6
Depreciation
A
t 1 Januar
y 2021
0.1
3.2
3.3
Charge f
or the year
0.1
1.8
1.9
A
t31December2021
0.2
5.0
5.2
Netbookvalue
A
t31December2021
0.2
14.2
14.4
The Group r
ecognised the following amounts in the consolidate
d statement of profit or loss and compr
ehensive income in r
elation to leases
under IFRS 16:
£m
2021
2020
Depreciation
(1.9)
(1.7)
Interest expense
(0.8)
(0.8)
Short-term lease exp
ense
(0.2)
(0.2)
Sub-lease rentals
One of the leased propertie
s is sub-leased to tenant
s under operating lease
s, with rentals pa
yable quar
terly
. Minimum lease payment
s
receivable on these sub-leases of proper
ty are as follo
ws:
£m
2021
2020
Within one year
–
0.4
Later than one year but not later than 5 years
–
–
Later than 5 years
–
–
T
otalsub-leasepaymentsreceivable
–
0.4
Income from sub-lease in the y
ear
0.5
0.5
FINANCIAL ST
A
TEMENTS
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
165


The pro
vision for deferr
ed tax consist
s of the following deferr
ed tax asset
s/(liabilitie
s) relating to accelerated capital allowances and short-
term timing differ
ences in relation to accruals and shar
e-based payment
s.
£m
2021
2020
Balance as at 1 January
1.8
0.6
Effect of changes in tax rates
0.2
–
Adjustment
s in respect of prior perio
d
(0.6)
0.5
Deferred inc
ome taxes r
ecognised in the
consolidated statement of
profit
or loss
and compr
ehensive inc
ome
0.1
0.3
Deferred tax on share-based payments recognised in reserves
0.3
0.4
F
oreign exchang
e movements
–
–
Balanceasat31December
1.8
1.8
Consisting of:
Depreciation in excess of capital allowances
–
(0.1)
Other timing differences
1.8
1.9
Balanceasat31December
1.8
1.8
Deferred income tax liabilities have not been recognised for the withholding tax and other tax
es that would be payable on the unremitted
earnings of cer
tain subsidiaries as the Group is able to control the timing o
f these temporar
y differences and it is probable that the
y will not
rev
erse in the for
ese
eable future. Unr
emitted earning
s totalled £3.4m at 31 Decemb
er 2021 (2020: £3.1m)
.


A
t the beginning of May 2020, the Group f
ormed Alfa iQ, a joint v
enture established to greatly enhance Alfa’
s ability to develop artificial
intelligence solutions f
or the auto and equipment finance industr
y
. The joint ventur
e was set up 51:49 between Alfa and Bitfount, acompany fou
nd
e
d
by Blaise
Thomson. The financial and
operating activities of the Gr
oup
’
s joint v
enture ar
e jointly contr
olled by the
par
ticipating shareholders.
The participating shareholders have rights to the net asset
s of the joint ventur
e through their equity shareholdings.
The interest in the joint venture c
onsist
s of par
t investment and part loan to joint venture accounted for as set out in note 1.2.
Investment
£m
2021
2020
Carr
ying amount as at 1 Januar
y
0.3
–
Carr
ying amount as at 6 May 2020 (i.
e. on es
tablishment of the joint ventur
e)
–
0.3
Share of net loss fr
om the joint venture
(0.1)
–
Carryingamountasat31De
cember
0.2
0.3
Loan to joint venture
£m
2021
2020
Carr
ying amount as at 1 Januar
y
0.1
–
Carr
ying amount as at 6 May 2020 (i.
e. on es
tablishment of the joint ventur
e)
–
0.1
Interest
–
–
Carryingamountasat31De
cember
0.1
0.1
The total loss from inter
es
t in joint ventur
e is £0.1m (2020: £0.0m) and the total interest in the joint venture is £0.3m (2020: £ 0.4m)
.
NOTEST
OTH
ECONSOLID
A
TEDFINANCIALST
A
TEMENTS

FORTHEYEAREND
ED3
1DECEMBER202
1CONTINUED
166
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
 
£m
2021
2020
T
rade receivable
s
6.0
5.8
Pro
vision for impairment
–
–
T
radereceivables–net
6.0
5.8
Ageing of trade receivables
Ageing of net trade receivables £m
2021
2020
Within agreed terms
4.1
5.6
Past due 1-30 days
1.2
0.1
Past due 31-90 days
0.6
–
Past due 91+ days
0.1
0.1
T
radereceivables–net
6.0
5.8
The Group believ
es that the unimpaired amount
s that are past due are fully reco
verable as there ar
e no indicators of future delinquency or
potential litigation.
Currency of trade receivables
£m
2021
2020
GBP
4.9
1.8
USD
0.9
3.1
Other
0.2
0.9
T
radereceivables–net
6.0
5.8
T
radereceivablesduefromsignificantcustomers
Customers with rev
enue accounting for mor
e than 10% of total rev
enue in the current y
ear have outstanding trade receivables as follows:
£m
2021
2020
Customer A
0.8
0.6
As at issuance of these financial statement
s, all amount
s relating to customers accounting for mor
e than 10% of total rev
enue had
beencolle
cted.
Impairmentandriskexposure
Information about the impairment of trade r
eceivable
s and the Group
’
s exposure to market risk (specifically foreign curr
ency risk) andcredit
risk can be found in note 3.


£m
2021
2020
Accrued income
6.3
5.0
Prepa
yments
3.2
2.1
Other receivables
1.0
0.8
T
otalotherreceivablesheldatamor
tisedcost
10.5
7.9
Accrued income represents fees e
arned but not yet inv
oiced at the repor
ting date which has no right of offset with contract liabilities –
deferred licence amounts.
Accrued income increased by £1.3m. The current y
ear balance repr
esent
s unbilled professional fees work in progr
ess, as well as £0.5m in
relation to subscription and £0.5m of one-o
ff licence rev
enue items where ther
e is contractual agreement to inv
oice in subsequent perio
ds.
Prepa
yments include £1.1m of deferred cost
s in relation to costs to fulfil contract
s – se
e note 1.5.
FINANCIAL ST
A
TEMENTS
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
167


£m
2021
2020
Cash at bank and in hand
23.1
37.0
Cashandcashequivalent
s
23.1
37.0
Currency of cash and cash equivalents
£m
2021
2020
GBP
14.9
28.5
USD
4.4
4.8
AU
D
1.3
1.1
Euro
2.0
2.1
Other
0.5
0.5
Cashandcashequivalent
s
23.1
37.0


£m
2021
2020
T
rade payables
0.8
0.9
Other payables
8.5
7.2
Corporation tax
1.8
1.3
Contract liabilities – deferred licence
5.3
1.9
Contract liabilities – deferred maintenance
5.7
5.1
Lease liabilities (note 24)
17.1
17.5
Pro
visions for other liabilities
1.4
1.4
T
otalcurrentandnon-currentliabilities
40.6
35.3
Less non-current por
tion
(16.6)
(17.2)
T
otalcurrentliabilities
24.0
18.1
Other payables include
s amounts relating to other tax and social securit
y of £2.4m (2020: £2.5m)
.
 
The follo
wing table set
s out the reconciliation of the lease liabilities from 1 January to the amount disclose
d at 31 December:
£m
2021
2020
Lease liabilities recognised at 1 Januar
y
17.5
19.0
Additions
1.5
0.2
Interest charge
0.8
0.8
Pa
yment
s made on lease liabilities
(2.7)
(2.5)
A
t31December
17.1
17.5
Additions to lease liabilities include extensions to existing lease agreement
s.
NOTEST
OTH
ECONSOLID
A
TEDFINANCIALST
A
TEMENTS

FORTHEYEAREND
ED3
1DECEMBER202
1CONTINUED
168
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
 
Below is the maturity analysis of the lease liabilities:
£m
2021
2020
Non-current
15.2
15.8
Current
1.9
1.7
T
otalleaseliabilitie
s
17.1
17.5
No later than one year
2.7
2.4
Between one year and 5 years
10.1
9.3
Later than 5 years
7.5
9.4
T
otal future lease payments
20.3
21.1
T
otal future interest payments
(3.2)
(3.6)
T
otalleaseliabilitie
s
17.1
17.5
The group
’
s net debt is made up of cash and cash e
quivalents and le
ase liabilities. The movement during the y
ear in lease liabilities is set out
above. Mo
vements in cash and c
ash equivalent
s are set out in the Cash flow statement. The
se are the only chang
es in liabilitie
s arising from
financing activities in the year
.


£m
A
t 1 Januar
y 2020
0.7
Pro
vided in the period
0.7
A
t 31 Decemb
er 2020
1.4
Pro
vided in the period
0.7
Utilised in the period
(0.1)
Released in the period
(0.6)
A
t31December2021
1.4
Pro
visions for other liabilities comprise amounts for office dilapidations, employ
er taxes on share-based payments and legal matters. It is
expected that the
se will be utilised by as follows: £0.5m in 2022, £0.2m in 2030 and £0.7m o
ver various years.
 
2021
2020
Issued and fully paid
Shares
£m
Shar
es
£m
Ordinary shares – 0.1 pence
300,000,000
0.3
300,000,000
0.3
Balance as at 31 December
300,000,000
0.3
300,000,000
0.3
No additional shares hav
e been is
sued or cancelle
d in the year ended 31 December 2021.


£m
2021
2020
A
t 1 Januar
y
0.1
–
Currency translation of subsidiaries
(0.1)
0.1
A
t31December
–
0.1
 
£m
2021
2020
Balance at 1 January
–
–
Acquired in the year
4.6
–
Issued on exercise of options
(1.2)
–
Balanceat31December
3.4
–
FINANCIAL ST
A
TEMENTS
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
169
The own shar
es reser
ve repr
esent
s the cost of shares in Alfa Financial S
oftware Holdings PLC purchased in the market and held b
y the Group
’
s
employ
ee b
enefit trust to satisf
y options under the Group
’
s share options plans (see Note 1.2)
. The number of ordinar
y shares held by the
employ
ee bene
fit trust at 31 Decemb
er 2021 was 2,590,260 (2020: 552,783)
. As at 31 De
cember 2021, the Group held 0.86% (2020: 0.18%)
of its own calle
d up share capital.
 
The Group r
ecognised total expense
s relating to shar
e-based payment of £1.5m (2020: £1.5m) in the current y
ear
. O
f this, £1.5m
(2020: £1.5m) relates to equity-settled L
TIP schemes and £0.0m (2020: £nil) relates to Employee Share Sa
ve schemes. See further detail
below
.
The outs
tanding share schemes are made up of the f
ollowing:
Grant date
Plan
Expiry date
Exer
cise
price
Share options
31December
2021
Share options
31 December
2020
June 2014/2015
L
TIP
4 annual tranches from 1 June 2018
0p
–
1,197,503
June 2018
L
TIP
June 2021
0p
–
1,378,178
Nov
ember 2019
L
TIP
November 2022
0p
1,113,909
1,205,036
June 2020
L
TIP
June 2023
0p
2,322,473
2,358,444
April 2021
L
TIP
April 2024
0p
1,121,104
–
Nov
ember 2021
L
TIP
October 2024
0p
60,872
–
Nov
ember 2021
UK Employee Shar
eSave
January 2025
1.536p
774,659
–
Nov
ember 2021
US Employee Shar
eSave
Januar
y 2024
1.670p
77,724
–
The weighted av
erage share price at the date o
f exercise f
or share options ex
ercised during the period was 130.4p (2020: 74.3p)
. The options
outs
tanding at 31 Decemb
er 2021 had a weighted av
erage exer
cise price of 24.1p (at 31 December 2020: nil)
, and a weighted av
erage
remaining contractual lif
e of 1.7 years (2020: 2.3 y
ears)
. The opening weighted av
erage exer
cise price at 1 January 2021 was nil (1 Januar
y
2020: nil)
. The weighted average ex
ercise price of options f
orfeited and exercised during the year was nil (31 December 2020: nil)
.

The 2019 L
TIP awards granted ar
e conditional on employment only; the fair value of these awar
ds has been c
alculated using the grant date
share price as a pr
oxy f
or fair value of the option adjuste
d for an
y dividends over the period. Ther
e are no market or non-market performance
conditions attached to the option scheme and, as such, no per
formance conditions ar
e included in the fair value c
alculation.
The 2020 L
TIP awards granted ar
e conditional on per
formance conditions, 50% based on EPS per
formance (non-market condition) and 50%
on TSR (market condition) as well as a thr
ee-year employment fulfilment. The fair value of these awards has been determined using the
Monte Carlo model at the grant date.
On 30 April 2021 the Group a
warded an L
TIP conditional on per
formance conditions, 50% based on EPS per
formance (non-market
condition) and 50% on TSR (market condition) as well as a thr
ee-year employment fulfilment. For those shar
e schemes with market-related
vesting conditions, the fair value is determined using the Monte C
arlo model at the grant date. F
or share options issued with EPS (non-
market) performance vesting conditions, the fair value of the underlying option is equal to the grant date share price. The follo
wing table list
s
the inputs to the mo
del used for the awar
ds granted in the year ended 31 Decemb
er 2021 based on information at the date of grant:
L
TIP awards (granted in April)
TSRelement
EP
Selement
Share price at date of grant
136p
136p
A
ward price
0p
0p
V
olatility
60.3%
–
Embedde
d TSR
6.9%
–
A
verage correlation
41.1%
–
Life of a
ward
3 years
3 years
Risk
-free rate
0.12%
–
Fair value per awar
d
73.6p
136.0p
NOTEST
OTH
ECONSOLID
A
TEDFINANCIALST
A
TEMENTS

FORTHEYEAREND
ED3
1DECEMBER202
1CONTINUED
170
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
 
On 30 Nov
ember 2021, the Group awar
ded to cer
tain employees an L
TIP conditional on employment only
. The fair value of these awards is
equal to the closing share price on the date of grant (192 pence)
, discounted by the expecte
d 12-month dividend yield to reflect the lack of
dividend accrual ov
er the vesting perio
d (three years)
. The expected price volatility is base
d on the historic volatility (based on the remaining
life of the scheme)
, adjusted for any expected changes to future volatility due to publicly available inf
ormation.
All of these Company schemes, as well as any non-cyclical a
wards, are equity-settled by awar
d of or
dinar
y shares.
The total share-based payment char
ge relating to Alfa F
inancial Software Holdings PLC shares for the y
ear is split as follows:
£m
2021
2020
Employ
ee share schemes – value of ser
vices
1.1
1.3
Expense in relation to fair value of social security liability on employee share schemes
0.4
0.2
T
otalcostofemploy
eeshareschemes
1.5
1.5
Details of the share options outstanding during the year are as follo
ws:
2021
2020
Outs
tanding at 1 Januar
y
6,139,161
6,482,950
Conditionally awar
ded in year
2,034,359
2,358,444
Exer
cised
(2,575,681)
(2,592,919)
F
or
feited or expired in y
ear
(127,098)
(109,314)
Outstandingat31De
cember
5,470,741
6,139,161
Ex
ercisableattheendofthey
ear
–
–

On 30 Nov
ember 2021, the Group launched an Employee ShareSa
ve Scheme – the Sa
ve As Y
ou Earn (SA
YE) scheme in the UK and Employ
ee
Stock Pur
chase Plan (ESPP) scheme in the US
. Under these scheme
s, eligible employ
ee
s can save up to a set limit each month. A
t the end of
the savings period (three years for S
A
YE and two years for ESPP
)
, employees c
an choose whether or not they wish to buy the shares at the
option price or take back their savings as cash. The option price is the share price at the start of the plan with a 20% discount for the UK
scheme and 15% discount for the US scheme. The fair value of these awar
ds hav
e been determine
d using the Monte Carlo model at the grant
date. The expected price volatility is based on the his
toric volatility (based on the remaining life o
f the scheme)
, adjus
ted for any expected
changes to future v
olatility due to publicly available information.
31December2021
S
AY
E
ESPP
Numberof
share options
Ex
ercise
price
Numberof
share options
Ex
ercise
price
Outs
tanding at beginning of year
–
–
–
–
Granted during the year
774,659
153.6p
77,724
167.0p
Outstanding at the end of the year
774,659
153.6p
77,724
167.0p
Exer
cisable at the end of the year
–
–
–
–
S
AY
E
31December
2021
ESPP
31December
2021
Share price
205.0p
205.0p
Exer
cise price
153.6p
167.0p
Expecte
d volatility
57.5%
57.2%
Expecte
d life
36 months
24 months
Risk
-free rate
0.51%
0.45%
Expecte
d dividend yields
2.45%
2.33%
FINANCIAL ST
A
TEMENTS
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
171




The Group has no capital commitments, no material contingent liabilities and no contingent asset
s.


On 18 January 2022 the Group announced the launch of a share buyback programme. R
efer to the Company w
ebsite for mor
e details.
There ha
ve been no other reportable subse
quent events.


A 2020 ordinary dividend of 1 pence per share was paid on 2 July 2021 amounting to £3.0m (2020: £nil)
.
A special dividend of 10 pence per share was paid on 5 November 2021 amounting to £29.7m (2020: £44.2m)
.
Subject to appro
val at the Annual General Me
eting on 12 May 2022, a 2021 dividend of 1.1 pence per shar
e will be paid on 24 June 2022 to
holders on the register on 27 May 2022. The or
dinary shares will b
e quoted ex-dividend on 26 Ma
y 2022.




The ultimate parent undertaking is CHP Software and Consulting Limited (the ‘Par
ent’)
, which is the parent undertaking of the smalles
tand
largest group in r
elation to these consolidate
d financial statement
s. The ultimate controlling party is Andrew Pag
e.


The principal subsidiaries and joint ventures of the Gr
oup and the Group percentag
e of equity c
apital are set out below
. All the
se are
consolidated within the Group
’s financial statements.
Registered address and country of
incorporation
Principal
activity
Held by
Company
2021
Held by
Group
2021
Held by
Company
2020
Held by
Group
2020
Alfa F
inancial Software
GroupLimited
Moor Place, 1 F
ore S
treet A
venue,
London, EC2Y 9D
T
, UK
Holding
company
100%
100%
100%
100%
Alfa F
inancial
Software Limited
Moor Place, 1 F
ore S
treet A
venue,
London, EC2Y 9D
T
, UK
Software
and service
s
–
100%
–
100%
Alfa F
inancial Software Inc
350N Old W
o
odward A
venue,
Birmingham, MI 48009, USA
Software
and service
s
–
100%
–
100%
Alfa F
inancial Software
AustraliaPty Limite
d
Lisgar House, Level 3, 32
Carring
ton Street,
Sy
dney
, NSW
, 2000, Australia
Services
–
100%
–
100%
Alfa F
inancial Software
NZLimited
Level 1 Building B, 600 Gr
eat
South Road, Gr
eenlane, Auckland
1051, New Z
ealand
Services
–
100%
–
100%
Alfa F
inancial Software GmbH
Bockenheimer Landstraße 20,
60323 F
rankfur
t am Main,
Germany
Software
and service
s
–
100%
–
100%
Alfa iQ
Moor Place, 1 F
ore S
treet A
venue,
London, EC2Y 9D
T
, UK
Software
and service
s
–
51%
–
51%
Alfa iQ was establishe
d in May 2020 – see note 19 for mor
e detail.
NOTEST
OTH
ECONSOLID
A
TEDFINANCIALST
A
TEMENTS

FORTHEYEAREND
ED3
1DECEMBER202
1CONTINUED
172
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021


32.3
Transactions with related parties
F
ull details of the Directors’ compensation and interest
s are set out in the Directors’ Remuner
ation Report on page
s 100 to 121.
See note 8 for further detail on monies paid to key management (including Directors)
.
Dividends to the amount of £21.7m wer
e paid to the Par
ent (2020: £29.6m)
.
Dividends of 1 pence and 10 pence per share wer
e paid to all shareholders in 2021 (2020: 15 pence per share)
. Directors and other key
management receiv
ed dividends base
d on their beneficial interest in the shares of the Company
. Directors’ beneficial interest
s in the shares
of the Company ar
e disclosed in the Remuneration Report on page 116.
The balances out
standing from the Par
ent at 31 Decemb
er 2021 and 2020 wer
e £nil and £nil respectively
.
In the prior period the Group inv
es
ted £0.4m in Alfa iQ consisting of: a capital contribution of £0.3m; and an interest-free loan fair value
d at
£0.1m. A
t 31 Decemb
er 2021 the value of the inv
es
tment is carried at £0.2m (2020: £0.3m) and the loan fair value
d at £0.1m (2020: £0.1m)
.
In the current period, the Group enter
ed into a rental agreement with CHP So
ftware and Consulting Limited for rental of a meeting r
oom on
the 9th floor of Moor Place for £0.03m per annum (2020: £nil) and at 31 December 2021 there was £nil balance out
standing from, or to
, the
Par
ent (2020: £nil)
.
There w
ere no other outs
tanding receivable balances from relat
ed par
ties at the end of the repor
ting period.


Asset
s and liabilities are offset and the net amount is reported in the consolidated s
tatement of financial position where Alfa curr
entlyhas a
legally enforc
eable right to offset the recognised amount
s, and there is an intention to r
ealise the asset and settle theliability simultaneously
.
The follo
wing table present
s the recognised asset
s and liabilities that are offset as at 31 December 2021 and 31 De
cember 2020
intheconsolidated statement of financial position.
31 December 2021
£m
Gross
amounts
Amounts
offset
Netamounts
presented
Accrued income
14.0
(7.7)
6.3
Contract liabilities – deferred licence
(13.0)
7.7
(5.3)
31 December 2020
£m
Gross
amounts
Amounts
offset
Net amounts
presented
Accrued income
12.6
(7.6)
5.0
Contract liabilities – deferred licence
(9.5)
7.6
(1.9)
COMP
ANYST
A
TEMENTOFFINANCIALP
OSITION
FINANCIAL ST
A
TEMENTS
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
173
£m
Note
2021
2020
Asset
s
Non-currentassets
Inv
es
tment in subsidiar
y companies
4
427.6
348.7
T
otalnon-currentassets
427.6
348.7
Currentassets
Other receivables
5
0.1
0.2
Cash and cash e
quivalent
s
6
0.1
0.1
T
otalcurrentassets
0.2
0.3
T
otalasset
s
427.8
349.0
Liabilitiesandequity
Currentliabilities
Amounts owed to subsidiaries
7
39.9
0.2
Other payables
8
0.7
0.4
Accruals
0.4
0.4
T
otalcurrentliabilities
41.0
1.0
Non-currentliabilities
Amounts owed to subsidiaries
7
–
–
Pro
vision
8
0.2
–
T
otalnon-currentliabilities
0.2
–
T
otalliabilities
41.2
1.0
Capitalandreserves
Ordinary shares
9
0.3
0.3
Own shares
10
(3.4)
–
Retained earnings
389.7
347.7
T
otalequity
386.6
348.0
T
otalliabilitiesande
quity
427.8
349.0
Retained earnings includes a profit of £74.8m for the 2021 financial y
ear (31 Decemb
er 2020: £79.8m)
. See the statement ofchanges
inequity on the next page for further detail.
The Company has taken advantag
e of the exemption under Section 408 of the Companies Act 2006 from pr
esenting it
s own profitandloss account.
The above Compan
y statement of financial position should be read in conjunction with the accompanying notes.
The Company financial statements on pages 173 to 178 were appro
ved and authorised for issue by the Boar
d of Directors on 8 March2022
and signed on it
s behalf
.
Andrew Denton
Duncan Magrath
Chief Executive Officer
Chief Financial Officer
Alfa F
inancial Software Holdings PLC
Registered number 10713517
COMP
ANYST
A
TEMENTOFCHANG
ESINEQUITY
174
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
£m
Note
Called-up share
capital
Own
shares
Retained
earnings
T
otal e
quity
Balance as at 1 January 2020
0.3
–
310.7
311.0
T
otal comprehensive pr
ofit for the period
–
–
79.8
79.8
Employ
ee share schemes – value of employee service
s
11
–
–
1.4
1.4
Dividends
12
–
–
(44.2)
(44.2)
Balance as at 31 December 2020
0.3
–
347.7
348.0
T
otal comprehensive pr
ofit for the period
–
–
74.8
74.8
Employ
ee share schemes – value of employee service
s
11
–
–
1.1
1.1
Dividends
12
–
–
(32.7)
(32.7)
Own shares acquired
10
–
(4.6)
–
(4.6)
Own shares issued
10
–
1.2
(1.2)
–
Balanceasat31December2021
0.3
(3.4)
389.7
386.6
As at 31 Decemb
er 2021 £3.4m (2020: £2.3m) of the retained earnings balance relates to reserves held to settle the Alfa employee share
schemes, and doe
s not qualify as distributable reser
ves.
The above Compan
y statement of changes in equit
y should be read in conjunction with the accompan
ying notes.
FINANCIAL ST
A
TEMENTS
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
175
NOTEST
OTH
ECOMP
ANYFINANCIALST
A
TEMENTS

FORTHEYEAREND
ED3
1DECEMBER202
1


Alfa F
inancial Software Holdings PLC is a public compan
y limited by shares and is incorporated and domiciled in England. The
se financial
statement
s are the separate financial statements for the Company
.
The registered office is Moor Place, 1 F
ore Street A
venue, London, EC2Y 9D
T
, United Kingdom. The registered no
. of Alfa is10713517.
The principal activity of the Company is as a holding company
.


The financial statement
s of Alfa F
inancial Software Holdings PLC ha
ve been prepared in compliance with F
inancial Reporting Standard 102, the
F
inancial Reporting Standar
d applicable in
the United
Kingdom and
the R
epublic of
Ireland
(‘FRS 102’)
and the
Companies Act 2006.
The principal accounting policies applie
d in the preparation of these financial statements are set out above. These policies have been consistently
applied to the years presented, unless other
wise state
d.
These financial statement
s have been prepared on a going conc
ern basis, under the historic
al cost convention. The Dir
ectors have used the going
concern principle on the basis that the current pr
ofitable financial projections of the Company and its subsidiaries indicate they will continue in
operation for the f
oreseeable future. As describ
ed in note 1.1 to the Consolidated financial statement
s, this asse
ssment includes downside stress
testing in line with FRC guidance.
The Company financial statements have been prepared in pounds sterling which is the functional and presentational currency of the Company and
hav
e been presented in
£m.
As permitted by
FRS
102 the
Company has
taken
advantage of
the disclosur
e ex
emptions available
under that
standard in
relation
to financial
instrument
s, presentation of a Cash Flow Statement, share-based payments, the aggregate remuneration of key manag
ement personnel and
related party trans
actions with other wholly-owned members of the Group
.
The parent compan
y meet
s the definition of a qualif
ying entity under FRS 102. Where r
equired, equivalent disclosures are given in the Gr
oup
accounts of Alfa Financial So
ftware Holdings PLC.
In the
current
period it was
concluded that the
Company
exercises
control
over
the emplo
yee benefit trust because it
is exposed to
, and
has a right
to, variable r
eturns from this trust and is able to use its p
ower o
ver the trust to aff
ect those returns. Therefor
e the trust has be
en consolidated by
the
Com
pany
. The impact of consolidation of the trust in the prior period was immaterial.


Subsidiaries are
all entities ov
er which the Compan
y has contr
ol. The Company
controls an
entity when the Company
is exposed to, or
has rights
to, variable r
eturns from its involvement with the entity and has the ability to aff
ect those returns through its power ov
er the entity
.
Unless other
wise state
d, subsidiaries have shar
e capital consisting solely of ordinary shares, and the propor
tion of ownership inter
es
ts held
equals the voting rights held by the Company
. The countr
y of incorporation or registration is also each subsidiary
’
s principal place of busine
ss.
Inv
es
tment
s in subsidiary under
takings are state
d at cost, including those cos
ts as
sociated with the acquisitions, le
ss pro
vision for
anyimpairment in value. Where e
vents or changes in circumstance
s, including an adverse mo
vement in the shar
e price, indicate that
thecarr
ying amount of an inv
es
tment may not be reco
verable, an impairment revie
w is per
formed. An impairment write-down is r
ecognised
to the extent that the carr
ying amount of the asset exceeds the higher of the fair value less cos
t to sell and value in use.
Any subsidiary under
takings sold or acquired during the year are included up to, or fr
om, the dates of change of contr
ol. Where contr
ol of a
subsidiary is los
t it is recognised in the profit or loss.
Amounts subsidiarie
s are unsecured, interest-free and repa
yable on demand. The carr
ying amount
s of such payables are consider
ed tobe
the same as their fair values due to their shor
t-term nature.


Basic financial asset
s, including trade and other receivables, cash and bank balance
s and other receivables, are initially recognised
attransaction price, unless the arrangement constitute
s a financing transaction.
A
t the end of each reporting p
eriod financial asset
s measured at amortise
d cost are assesse
d for objective evidence o
f impairment. If an as
set
is impaired the impairment loss is the differ
ence between the carr
ying amount and the present value of the es
timated cashflows discounted
at the asset’s original eff
ective interest rate. The impairment loss is recognised in profit or loss.
176
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
NOTEST
OTH
ECOMP
ANYFINANCIALST
A
TEMENTS

FORTHEYEAREND
ED3
1DECEMBER202
1CONTINUED


Basic financial liabilities, including trade and other payables and trading balances and loans from subsidiaries are initially recognised
attransaction price, unless the arrangement constitute
s a financing transaction, where the debt instrument is measured at the present value
of the future r
eceipt
s discounted at a market rate of interest. The Company derecognises financial liabilities when, and only when, the
Company’s obligations ar
e discharged, cancelled or expired.
Other payables are initially recorded at fair value and subsequently measured at amortise
d cost
. As the total carr
ying amount is due within
the next 12 months from the balance sheet date, the impact of applying the effective int
erest method is not signific
ant and therefor
e the
carr
ying amount equals to the contractual amount or the fair value initially recognised.
Pa
yables are classified as current liabilities if receipt or payment is due within one year or less.


Ordinary shares
Ordinary shares are classified as equity
. There ar
e no restrictions on the distribution of c
apital and the repa
yment of capital.
Own shares
Own shares repr
esent the shares of Alfa Financial S
oftware Holdings PLC that are held b
y the employ
ee b
enefit trust
. Own shares are
recorded at cost and deducted from equity
.


Grants made to subsidiar
y employees will not result in a charge recognised in the income statement, any charges for shar
e-based payment
s
are r
ecognised as an increase in the cost of investment in subsidiaries (as a c
apital contribution)
. For full details of the Gr
oup
’
s share-based
payments, refer to note 29 to the consolidated financial statements.


Dividends are r
ecognised through equity when approved by Alfa
’
s shareholders or on pa
yment, whichever is earlier
.


Estimates and judgement
s are continually evaluated and are based on historical experience and other factors, including expectations
offuture ev
ents that are believed to be reasonable under the circumstances. The resulting accounting estimate
s will, by definition, seldom
equal the related actual result
s. There w
ere no critical accounting judgements that would hav
e a significant effect on the amount
s recognised
in the parent compan
y financial statement
s or key sources of estimation uncer
tainty at the reporting date thatwould have a significant risk of
causing a material adjustment to the carr
ying amount
s of asset
s and liabilities within the next financial year
.


The Company’s exposur
e to financial risks is managed as par
t of the Group
’
s financial risk management. F
ull details about the
Group
’
sexposure to financial risks and how these risks could aff
ect the Group
’
s future financial per
formance ar
e given in note 3
totheconsolidated financial statement
s.


£’000s
2021
2020
Cost
As at 1 Januar
y
348.7
347.4
Capital contributions to subsidiaries
0.9
1.3
Rev
ersal of impairment
78.0
–
Asat31December
427.6
348.7
The carr
ying amount of the inv
es
tment is £427.6m at 31 December 2021 (2020: £348.7m)
. The recov
erable amount of the investment was
determined based on value-in-use c
alculations using cash flow projections of the Company and its subsidiaries from financial budgets and
for
ecas
t
s for a fiv
e-year period using a pre-tax discount rate of 11% (2020: 11%)
. Cash flows beyond these periods have been extrapolated
using a steady 2% (2020: 2%) averag
e growth rate. This gro
wth rate doe
s not exceed the long-term averag
e growth ratef
or the market
s in
which the Company and its subsidiaries op
erate. In addition, the market capitalisation of the Company as at31 December 2021 was
£569.0m. As the recov
erable amount, and the market capitalis
ation of the Company
, are in ex
cess of thecarr
ying amount of the investment,
no impairment charge has been recognised during the current financial y
ear
.
As the circumstances that resulted in an impairment charge in 2018 of £78.0m no longer apply
, it has b
een reversed in the curr
ent year
.
FINANCIAL ST
A
TEMENTS
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
177


A
t 31 Decemb
er 2021, other receivables relate to prepa
yments of £0.0m (2020: £0.2m) and V
A
T receivable
s of £0.1m (2020: £0.0m)
.


£m
2021
2020
Cash and cash e
quivalent
s
0.1
0.1


£m
2021
2020
Amounts owed to subsidiaries – current
39.9
0.2
Amounts owed to subsidiaries – non-current
–
–
T
otalamount
sow
edtosubsidiaries
39.9
0.2
Current amounts owed to subsidiaries of £39.9m relate primarily to cash advanced by Alfa F
inancial Software Limited to the Company for
dividend payments (2020: £0.2m)
.


Other payables relate to accruals of social security and other taxes of £0.0m (2020: £0.1m)
, trade creditors of £0.1m (2020: £0.1m)
andsalar
y cost
s of £0.6m (2020: £0.2m)
.
Long-term provision r
elates to the employer national insuranc
e contribution of £0.2m of the 2021 and 2020 share grant expense that r
elates
totheemploy
ee
s of the Company (2020: £0.0m)
.


Each ordinary share has a par value of 0.1 pence. All shares are fully paid and ha
ve equal voting rights.
Issuedandfullpaid
Shares –
ordinary
£m
A
t 31 Decemb
er 2021
300,000,000
0.3
A
t 31 Decemb
er 2020
300,000,000
0.3


2021
£m
2020
£m
Balance at 1 January
–
–
Acquired in the year
4.6
–
Issued on exercise of options
(1.2)
–
Balanceat31December
3.4
–
The own shar
es reser
ve repr
esent
s the cost of shares in Alfa Financial S
oftware Holdings PLC purchased in the market and held b
y the
Company’s
employee benefit trust to satisfy options under
the Group
’
s share
options plans (see Note 1.2 o
f the Group
accounts).
The number
ofordinary shares held b
y the emplo
yee benefit trust at 31 December 2021 was 2,590,260
(2020: 552,783)
. As at 31 December 2021, the
Company held
0.86% (2020: 0.18%) of
it
s own
calle
d up shar
e capital.


Under the rules of the Company
’
s L
TIP plans, on 1 June 2018, 1 November 2019, 2 June 2020, 30 April 2021 and 30 No
vember 2021
selected employees of theCompany
’
s subsidiary were granted awar
ds in the form of nil cost options ov
er ordinary shares in Alfa.
On 30
November
2021, emplo
yees of theCompan
y
’
s subsidiary that met
the set
criteria w
ere
invited to
join a
ShareSav
e S
cheme – the
SA
YE
scheme f
or the
UK employ
ees and the
ESPP scheme f
or the
US emplo
yees. Under these schemes,
eligible employ
ees can save
up to
a set
limit
eachmonth and
at the
end of
the vesting period can
use these savings
to buy or
dinary shares in
Alfa (at
a discount)
or take
these back as
cash.
Refer to not
e 29 of the consolidated account
s for mor
e detail on these scheme
s. The cost of the share-based remuneration is passed to the
relevant subsidiary
.
178
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021


A 2020 ordinary dividend of 1 pence per share was paid on 2 July 2021 amounting to £3.0m (2020: £nil)
.
A special dividend of 10 pence per share was paid on 5 November 2021 amounting to £29.7m (2020: £44.2m)
.
Subject to appro
val at the Annual General Me
eting on 12 May 2022, a 2021 dividend of 1.1 pence per shar
e will be paid on 24 June 2022 to
holders on the register on 27 May 2022. The or
dinary shares will b
e quoted ex-dividend on 26 Ma
y 2022.
Refer to not
e 31 of the consolidated account
s for mor
e detail.


The Company has no employ
ees other than the Directors. Full details of the Dir
ectors’ compensation and interes
ts are set out in the
Directors’ Remuneration R
epor
t on pages 100 to 121.


On 18 January 2022 the Group announced the launch of a share buyback programme. R
efer to the Company w
ebsite for mor
e details.
There ha
ve been no other reportable subse
quent events.


The Compan
y has
taken
advantage o
f the
exemption
under FR
S 102:33.1A
from
disclosing transactions
with other
members of
the
Group.
The immediate and ultimate parent undertaking is CHP Software and Consulting Limited, which is the parent undertaking of the smalles
t
andlargest group to consolidate these financial statement
s. The registered office o
f the immediate and ultimate parent undertaking is
MoorPlace, 1 For
e Street A
venue, London EC2Y 9D
T and copies of the financial statement
s of CHP Software and Consulting Limited can
beobtained from this address. The ultimate controlling party is Andrew Pag
e.
See a full listing of Company
’
s subsidiarie
s and joint venture in not
e 32.2 of the Group accounts.
NOTEST
OTH
ECOMP
ANYFINANCIALST
A
TEMENTS

FORTHEYEAREND
ED3
1DECEMBER202
1CONTINUED
OTHER INFORMA
TION
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
179
API:
Application Programming Interface.
A
GM:
Annual General Me
eting.
Alfa:
The Group or Alfa F
inancial
SoftwareHoldings PLC and its
subsidiaryunder
taking
s (as defined
bytheCompanies Act 2006)
.
APM:
Alternative P
er
formance Measure.
Article
s:
The Article
s of Association
oftheCompany
.
Banks:
Customers classified as banking
institutions are finance entities associate
d
with regulated banking groups.
Basicearningspershare:
Calculated by
dividing the profit attributable to equity
holders of Alfa by the w
eighted average
number of ordinary shares out
standing
during the year
.
Board:
The Boar
d of Directors of Alfa
F
inancial Software Holdings PLC.
CompaniesAct:
The Companies Act 2006
(as amended)
.
CEO:
Chief Executive Officer
.
CFO:
Chief Financial Officer
.
CGU:
Cash-generating unit.
Company:
Alfa F
inancial Softwar
e Holdings
PLC, a company incorporated in England and
W
ales with registered number 10713517
whose registered office is at Moor Place,
1F
ore Str
eet A
venue, London, EC2Y 9D
T
,
United Kingdom.
CL
T:
Compan
y Leadership T
eam.
CODM:
Chief Operating De
cision Maker
.
COO:
Chief Operating O
fficer
.
CSR:
Corporate Social Responsibility
.
Customerconcentration:
The pr
opor
tion
ofgroup r
evenues made up by the top 5 or
top 10 customers, in each relevant period
asstated
DBSP:
Deferred Bonus Share Plan.
Directors:
The Directors of the Compan
y
whose names are set out on pages 74 to 75.
DisclosureandT
ransparencyR
ules:
The
Disclosure and T
ransparency Rules made
under Part VI of the Financial S
ervice
s
andMarkets Act 2000 (as amende
d)
.
EMEA:
Eur
ope, the Middle East and A
frica.
ESG:
Environmental, S
ocial and Governance.
EPS:
Earnings per share.
EU:
Eur
opean Union.
EURIBOR:
the Euro Int
erbank Offer Rate.
FCA:
Financial Conduct A
uthority
FCF:
F
ree cash flow
.
FR
C:
The Financial R
epor
ting Council.
FTE:
Full time equivalent.
FVOCI:
F
air value through other
comprehensiv
e income.
FV
TPL:
Fair value through pr
ofit or loss.
GHG:
Greenhouse gases.
Group:
Alfa F
inancial Software Holdings PLC
and its subsidiarie
s.
HMR
C:
Her Majes
ty
’
s Rev
enue & Customs.
KPI:
Key performance indicator
.
IP:
Intellectual propert
y
.
IR
T:
Incident R
esp
onse T
eam.
I&S:
Implementation and Support
(“I&S”)expense.
LIBOR:
London Inter-bank Offer
ed Rate.
L
TIP:
Long-
T
erm Incentive Plan.
ML:
Machine Learning.
OEMs:
Original equipment and automotive
manufacturers.
Operatingfreecashflo
wconv
ersion:
Operating free cash flow is calculated ascash
from operations, less capital expenditures,
less the principal element oflease payment
s
in respect of IFRS 16. Operating free cash
flow conv
ersion repr
esent
s Operating free
cash flow generated as a proportion of
Operating profit.
PDMR:
Person Dischar
ging Managerial
Responsibilities.
PDP:
Performance Dev
elopment Plan.
RFI:
Request for information.
R&PD:
R
esearch and product development.
SG&A:
Sales, general and administrative
expenses.
SI:
Systems integrator
.
SONIA:
Sterling Overnight Index A
verage.
The effective o
vernight interest rate paid by
banks for unsecured transactions in the
British sterling market.
STFR:
Single total figur
e of remuneration.
TC
V:

T
otal contract value.
TheCode:
The UK Corporate Governance
Code published by the FRC in July 2018.
TSR:
T
otal shareholder return.
U
AT
:
User acceptance te
sting
UI
: Userinterface.
VAT
:
UK value adde
d taxation.
XaaS:
Ev
er
y
thing as a ser
vice.
GLOSS
AR
YOFTERMS
180
Alfa Financial S
oftware Holdings PLC
Annual R
eport and Account
s 2021
SHAREHO
LDERI
NFOR
MA
TI
ON
Alfa Financial Software Holdings PLC
Registered Office
Moor Place
1 F
ore Str
eet A
venue
London
EC2Y 9D
T
www
.alfasystems.c
om
T+44 (0)20 7588 1800
Registered Number: 10713517
Stock code: ALF
A
ISIN: GB00BDHXPG30
LEI: 213800C5UOZHUTNUGA28
Investor relations
ir@alfasystems.com
Media relations
T
ulchan Communic
ations LLP
Auditor
RSM UK A
udit LLP
Brokers
Barcla
ys Bank plc
Inv
es
tec Bank plc
Corporate lawyer
White & Case LLP
Remuneration advisors
Ellason LLP
T
apes
try Global Compliance LLP
Registrar/shareholder queries
Equiniti Limited
Aspect House,
Spencer Road,
Lancing
, W
e
st Sussex
BN99 6D
A
T
elephone 0371 384 2030 and out
side the UK +44 (0)121 415 7047
Online: help.share
view
.co.
uk (from here, y
ou will be able to securely
email Equiniti with y
our enquir
y
.)
Consultancy
, design and production
www.luminous.c
o.uk
Design and production
www.luminous.c
o.uk
Thi
s rep
or
t i
s pri
nte
d on 10
0% re
c
ycle
d
paper
, which is
cer
tified carbon balanced
by World L
an
d T
ru
s
t Ltd.
Bl
ackdo
g Di
gi
ta
l is a c
arb
on n
eu
tr
al
comp
any an
d is co
mmi
t
te
d to all ro
und
excel
le
nce an
d imp
roved e
nvi
ronm
ent
al
pe
r
for
man
ce is a
n imp
or
t
a
nt pa
r
t of o
ur
‘G
o G
reen
’ s
tr
ate
g
y
.
Lumi
nou
s are ce
r
ti
fi
ed in u
sin
g Ca
rbo
n
Ba
lan
ced p
ap
er fo
r the A
lf
a Fi
nan
cia
l
Sof
t
ware H
ol
din
gs PLC Ann
ual Re
po
r
t
.
Thi
s proj
ec
t h
as ba
la
nce
d thro
ugh Wor
ld
La
nd T
r
us
t th
e eq
uiv
al
ent o
f 21
0k
g of
Car
bo
n Di
oxid
e. Thi
s sup
po
r
t wi
ll en
abl
e
World L
an
d T
ru
s
t to prot
ec
t 4
0
m
2
of
critically threatened
tropical for
est
.
CBP011490
© Alfa Financial Software Holdings PLC, 2021
Moor Place
1 Fore Street Avenue
London EC2Y 9DT
UK
+44 (0)20 7588 1800