LONDON (ShareCast) - (Sharecast News) - Shares in Alfa Financial rose on Thursday after the asset finance software group announced a £5.9m special dividend and an 8% increase in its final dividend following a solid set of annual results and solid cash generation.

The company said it would be paying out 2p per share to shareholders as a special dividend, in addition to the 1.3p final dividend, with cash conversion surpassing 100% for the fourth year in a row - coming in at 115%, up from 102% previously.

Alfa paid out 5.5p or £16.2m in special dividends in the year, taking the total amount of special dividend payments over the past three years to 37p or £109m. Even after the special dividends, the company ended the year with £21.8m in cash, up 17% on 2022.

Revenues for 2023 were up 9% at £102m, driven by a 16% jump in subscription revenues. However, operating profits rose by just 2% to £30.1m, as growth was held back by £35m of investments in the platform in order to deliver its pipeline, the company said.

Total contract value reached a record £165.3m by the end of the year, up 16%. The company hailed its continued diversification of the customer base, with its top-five customers now generating just 35% of total revenues, compared with an over-exposed position in 2019 when they made up 61% of sales. As such, no customer now accounts for more than 10% of total revenues, while its largest customer four years prior made up 20% of sales.

Looking ahead, Alfa said revenue growth in 2024 will be in the mid-to-high single digits, though this will be weighted towards the second half as new sales come fully on stream.

"Our encouraging new business pipeline, confidence in the outlook and our strategy means that Alfa will continue to invest in our technology and people, whilst continuing to return cash to shareholders through our sustainable, progressive dividend," the company said.

The stock was up 1.5% at 171.98p by 1058 GMT.

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