AFA Systems Plc, a London, UK-based provider of treasury and risk management software, is confident it can break into the black next year after winning 2.9m pounds ($4.6m) in orders so far this year in what chairman and chief executive Mike Hart describes as a buoyant market. In the six months through June 30, the company reported a loss of 716,000 pounds ($1.1m), down from a loss of 1m pounds ($1.6m) on revenue up 242% at 386,000 pounds ($621,460).
AFA reckons it has two advantages as it takes on companies like the UK’s largest software company Misys Plc in the viciously competitive market for financial software. Its Musketeer product, developed over four years in South Africa, covers a broader area of the market and offers seamless NT-based operation between order processing and settlement. South Africa has yet to win the same reputation as India as a rich source of offshore software expertise, but years of isolation during the anti-apartheid era has seen it develop a similar high-skill, low-cost workforce.
AFA chairman and managing director Mike Hart said 12,500 pounds ($20,125) is the going rate for a C++ programmer two years out of college in South Africa, compared with 60,000 pounds ($96,600) in London. Musketeer cost about 6.5m pounds ($10.4m) to develop while, if the work had been done in the UK, costs would have run in the 25m-pound to 30m-pound ($40.2m-$48.3m) range.
Hart is a veteran of the financial software market, having been managing director of ACT Group Plc when it was bought by Misys in 1995. Misys is the least of his problems since he argues that out of a world market estimated at around $5bn, Misys’ sales are only around $300m. They are bit players because 75% of it is still developed in-house, says Hart.
The big driver for growth is the growing tendency of banks and major corporates to look for outside software suppliers now that they are over the hump of Y2K spending. House broker Credit Lyonnais reckons that AFA is on course to make profit of 2.5m pounds ($4m) next year on revenue of 5.3m pounds ($8.5m).
