LONDON (ShareCast) - (Sharecast News) - Financial management software provider Aptitude Software updated the market on the year ended 31 December on Monday, reporting that it made "good progress" in 2019, and expected to report results in line with the board's expectations.
The London-listed company said it complemented a good new business performance in the year, weighted towards the first half, with several new contracts from existing clients as they expanded the scope of their use of its products.

It said a current focus was the opportunity with the 'Aptitude Insurance Calculation Engine' (AICE), with several contract wins achieved in 2019.

The firm explained that AICE allowed an insurer to perform the calculations and detailed accounting movements they required to be compliant with the new insurance accounting standard IFRS 17.

Recent speculation that the deadline for the implementation of IFRS 17 could be deferred by 12 months, with it currently becoming effective for periods beginning on 1 January 2022, had caused delays with "a small number" of sales opportunities for AICE.

Those delays had minimal impact on 2019 recognised revenue, but had suppressed annual recurring revenue growth as at 31 December from what would otherwise have been achieved.

"New business success has also been achieved with the 'Aptitude Accounting Hub' (AAH) and 'Aptitude Revenue Management'," the board said in its statement, adding that "particularly pleasing" was the number of finance transformation-led sales for AAH.

"A highlight in the year was the entry into an enterprise licence agreement with an existing client [which] is one of the UK's leading clearing banks.

"This client's use of AAH in a growing number of its operations led to incremental licencing requirements and further demonstrates the material value the group's applications can bring to organisations looking to undertake finance transformation."

Despite the strengthening of sterling versus the dollar in the final quarter of 2019, which reduced the group's annualised recurring revenue at year-end by £0.9m, it said annualised recurring revenue increased to £28.6m over the year, representing growth of 22% on a constant currency basis.

"A further highlight in the year was the group's successful inaugural user and partner conference in North America, AptConnect.

"The conference was held in Boston in November with over 60 delegates and demonstrates a further step in moving the group to an increasingly client-centric business."

Looking ahead, Aptitude said that, following both the re-organisation of the group and change in leadership in 2019, opportunities in the market, client base and the business had been identified for additional investment.

It explained that 'finance transformation', also known as digital finance, was still a significant opportunity with the benefits of an accounting hub - its key offering - being increasingly recognised by the market.

"To fully realise the opportunity, development is being increased in both functionality and technology, activity that is being performed at our integrated centre of excellence in Poland, the Aptitude Innovation Centre, which continues to be a material differentiator for the group and where a growing number of activities are performed.

"One of the other key areas of investment this year will be in the enablement and training of our clients and partners as well as our own people; an initiative which will accelerate the use of our products within the existing base, ensure highly successful implementations and, as a result, encourage wider adoption within the market.

"This investment will be in both people and technology and will also underpin our partner programme where such enablement is a differentiating capability."

Several operational areas of the business would also be strengthened in 2020, the directors explained, allowing it to further enhance the services it provided to its clients.

Those would include support, solution management services, its software-as-a-service (SaaS) offering, and consultant and partner enablement.

The group's SaaS or cloud-based offerings continued to grow, and scaling that service further was a key growth driver for the business, it said.

Aptitude said investment would also continue in the professional services organisations responsible for the implementation of its applications, in conjunction with its clients and partners.

"The acceleration in investment is to build the necessary foundations to fully realise the opportunities that have been identified.

"With the board's overall revenue growth expectations for 2020 unchanged, the above investments - together with the aforementioned foreign exchange impact on annualised recurring revenue - are likely to result in 2020 adjusted operating profits being marginally ahead of those expected for 2019.

"With a strong portfolio of product and service offerings, increasing worldwide presence, a well-established partner network and a growing proportion of higher margin recurring revenues, the group is well placed and is confident that growth in profits will return to longer term trends in 2021 and following years."

The board also confirmed the appointment of Jeremy Suddards as its chief executive officer on Monday, with immediate effect, following a successful transition to the role since the announcement in July.

Tom Crawford was retiring from the board, but would continue to work with the group on a part-time basis.

"The board welcomes Jeremy to his new role and thanks Tom for his exceptional contribution to the group in recent years."

Aptitude said it expected to issue its results for the year ended 31 December on 11 March.

At 1306 GMT, shares in Aptitude Software were down 12.23% at 560p.

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