AFA losses widen as outlook remains unclear
12 March 2002 | 1109 views | 0
AFA Systems, the AIM-listed financial markets software vendor, is reporting losses of £14.6 million after acquisitions and goodwill charges for the year end December 2001, up from £2.7 million the previous year.
Mike Hart, chairman and chief executive, comments: "The outlook for 2002 continues to be unclear given the current uncertainty and volatility of global financial markets and economies."
Shares of AFA fell by 2.3%, to £0.85, compounding a 35% decline in the past year.
Group earnings for 2001 have been hit by an exceptional charge of £11 million against the all-share acquisition of Dart in April 2000, made when the AFA share price was £6.4. The company also acquired South African asset management vendor Smacsoft and CRM supplier Common Knowledge in February and August last year, for £7.2 million and £385,000 respectively.
Group revenues for the 12 months to 31 December 2001 increased approximately 90% to £8.14 million (2000: £4.3 million). This included a maiden ten-month contribution from Smacsoft totalling £2.15 million. Organic growth from the existing businesses caused turnover to rise 40% to £5.99 million.
Operating loss before recurring and exceptional goodwill amortisation for the 12 months stood at £536,000 (2000: £863,000). Within this amount Smacsoft contributed an operating profit of £420,000 for the 10 months since acquisition. While the turnover in the group's core Dart and Musketeer businesses increased by 40%, "difficult trading conditions" in the second half caused their losses to rise to £956,000 (2000: £863,000).
Looking ahead, the company has reported an order to provide Musketeer, its treasury and risk management software product, to Norinchukin International, the City subsidiary of Japan's Norinchukin Bank.
Under the terms of the contract, which has an approximate first stage value of £500,000, AFA Systems will receive a combination of an initial licence fee, implementation payments and recurring licence fees. Substantially all of this revenue is expected to fall into AFA's current financial year ended 31 December 2002.
The company has also confirmed a significant order for Smacsoft's Interlink software, with UK pensions operator Hermes Administration Services, with a contract value of approximately £150,000. The contract represents the group's first win for its investment management products outside the South African market.