Financial Review

The forward order book of contracted revenue increased by 7% at constant currency (5% at actual rates) to £38.74 million at 31 December 2014.

Group revenue increased by 6% at constant currency but fell by 1% at actual rates to £32.02 million (2013: £32.49 million).

Contracted revenue
The forward order book of contracted revenue increased by 7% at constant currency (5% at actual rates) to £38.74 million at 31 December 2014 (2013 at constant currency £36.36 million). The proportion by value of recurring software licences and data clients at the end of 2014 secured to the end of 2015 or beyond amounted to 77% (2013: 78%); the weighted average length of contracts
committed remained unchanged at 16 months.

New contracted revenue
New sales of recurring software and data contracts were up 19% to £3.87 million (2013: £3.24 million). Professional services revenue increased by 33% to £2.76 million (2013: £2.07 million). Approximately 78% of new recurring contracted revenue came from existing clients (2013: 77%).

Recurring revenue
The Group’s business model of Software as a Service (‘SaaS’) and recurring revenue contracts continues to provide excellent visibility of revenue. The annualised recurring revenue from software licences and data fees at the end of December 2014 increased by 4% at constant currency to £29.39 million (2013: £28.30 million). The net growth rate for StatPro Revolution was 68% (2013: 114%).

StatPro Seven annualised recurring revenue was resilient at £20.28 million (2013: £21.20 million) with net cancellation rate of 4% (2013: 5%). Excluding the impact of conversions to StatPro Revolution, the recurring revenue for StatPro Seven (at £21.21 million) was flat year on year (2013: 2% reduction).

Andrew Fabian

The increase in expenditure related to several areas of the business as part of the investment in cloud technology.

Andrew Fabian




Annualised recurring contract revenue 2014 Annualised recurring contract revenue 2013
Software licences and data fees £ million £ million
As at 31 December 2013 28.72 29.52
Net impact of exchange rates (0.42) (1.05)
At 1 January 2014 (at December 2014 rates) 28.30 28.47
New contracted revenue 3.87 3.24
Cancellations/reductions (2.78) (2.99)
Net increase 1.09 0.25
Recurring licence fees as at 31 December 29.39 28.72



Revenue by segment 2014
£ million
£ million
EMEAA 20.82 19.36 8%
North America 11.20 10.94 2%
32.02 30.30 6%
FX 2.19
Group revenue 32.02 32.49 (1%)

* At constant currency



Revenue by segment
Revenue increased in the EMEAA region by 8% at constant currency to £20.82 million (2013 at constant currency: £19.36 million). In the North American region, revenue increased by 2% at constant currency to £11.20 million (2013 at constant currency: £10.94 million), as shown in table 2.

Revenue by service
Cloud revenues (incorporating StatPro Revolution, Risk and Data) grew by 28% as shown in table 3.

StatPro Revolution revenue profile
StatPro Revolution recurring revenue is now 18% of the Group total (2013: 11%) and has grown at a higher rate than other revenues as the service is developed on a highly scalable technology platform.

The total recurring revenue from clients whose subscription includes StatPro Revolution was £11.95 million (2013: £9.12 million) representing 46% (2013: 37%) of total software recurring

Following the decision in 2014 to raise the minimum client fee, the average revenue per StatPro Revolution client has increased by 37% and the revenue distribution profile for StatPro Revolution is shown in table 4.

Operating expenses
Operating expenses (before amortisation of intangible assets and exceptional items) as expected increased by 3% (10% at constant currency) to £25.53 million (2013: £24.71 million). The increase in expenditure related to several areas of the business as part of the investment in cloud technology. This included additional employee costs in client services, sales and development, data costs and cloud infrastructure. The average number of employees was 251 (2013: 249).

Exceptional items
There were no exceptional items in 2014. Following a project to streamline core internal services (IT, finance and HR), the Group decided to relocate the Toronto team to a smaller office. Whilst not treated as an exceptional item, there was a one-off charge relating to the office lease of around £0.35 million. The exceptional charge of £0.35 million in 2013 related to additional contingent consideration for the SiSoft acquisition (see notes 3, 8 and 26).


Revenue by service 2014
£ million
£ million
StatPro Revolution and cloud-related 11.16 8.72 28%
StatPro Seven and non-cloud-related 20.86 21.58 (3%)
32.02 30.30 6%
FX 2.19 6%
Group revenue 32.02 32.02 32.49 (1%)

* At constant currency



StatPro RevolutionAnnualised revenue bands Annualised
Number of
Average revenue
per client
Number of
per client
<£2K 139 127 1.1 143 136 1.1
£2K-<£10K 414 97 4.3 277 68 4.1
£10K-<£50K 1,419 62 22.9 884 34 26.0
£50K-<£100K 1,328 19 69.9 952 13 73.2
>£100K 2,122 10 212.2 967 6 161.2
Total 5,422 315 17.2 3,228 257 12.5

* At constant currency



As a result of the planned increase in investment in cloud technology, the adjusted EBITDA was £4.36 million (2013: £5.46 million).

Finance income and expense
Net finance expense was £0.29 million (2013: £0.27 million), and is mainly the finance costs of the Group’s currently unutilised credit facility.

Profit before tax
The impact of currency movements was to decrease adjusted profit before taxation by £0.54 million. Profit before taxation was £2.37 million (2013: £3.11 million). Adjusting for amortisation of acquired intangible assets, share based payments and exceptional items, the adjusted profit before taxation was £2.58 million (2013: £4.05 million).

The tax charge is £0.77 million (2013: £1.03 million). The overall effective tax rate is 33% (2013: 33%). This is higher than the prevailing UK rate, mainly due to the impact of operations in countries with higher tax rates than the UK.


Adjusted EBITDA 2014
£ million
£ million
StatPro Revolution and cloud-related (6.24) (6.91) 10%
StatPro Seven and non-cloud-related 10.60 11.78 (10%)
4.36 4.87 (10%)
FX 0.59
Adjusted EBITDA 4.36 5.46 (20%)
Adjusted EBITDA margin
StatPro Revolution and cloud-related (55.9%) (79.2%)
StatPro Seven and non-cloud-related 50.8% 54.6%
Adjusted EBITDA margin – total 13.6% 16.1%

* At constant currency


Earnings per share
Adjusted earnings per share was 2.7p (2013: 4.5p). Actual and diluted earnings per share was 2.4p (2013: 3.1p).

The Directors are recommending an increased final dividend of 2.05p per share (2013: 1.95p) making a total dividend for 2014 of 2.9p per share (2013: 2.8p), up 4%. The final dividend will be paid on 27 May 2015 to all shareholders on the register at the close of business on 1 May 2015.

Total dividends paid in 2014 amounted to £1.89 million (2013: £1.86 million). The dividend cover (calculated as adjusted eps: dividends per share) was 0.93 times (2013: 1.61).

Balance sheet
The Group’s net assets at the year end were £45.69 million (2013: £46.91 million).

Cash flow and financing
2014 was another year of positive cash generation with cash inflow from operating activities of £7.71 million (2013: £9.40 million), although lower than the prior year, mainly due to lower operating profits and working capital movements. The Group ended the year with net cash of £2.68 million (2013: £4.00 million). The Group retains its long-term financing facility, amounting to £7.5 million, which was undrawn at 31 December 2014.

Research and development and capex
The research and development team is now focused solely on the Group’s cloud-based solutions, the StatPro Revolution platform. R&D expenditure increased overall by 12% to £4.99 million as planned (2013: £4.44 million), equating to 16% of Group revenue (2013: 14%). The total expenditure on StatPro Revolution including marketing and other costs was £5.52 million (2013: £4.92 million).

Development costs of £3.62 million were capitalised in the year (2013: £3.40 million) and amortisation on internal development was £3.35 million (2013: £3.40 million). Expenditure on other intangible assets was £0.44 million (2013: £0.08 million) and total capital expenditure on property, plant and equipment was £1.86 million (2013: £0.93 million).

Principal financial risks
The principal business risks and uncertainties affecting the Group are described on pages 25 to 27. For each category of risk, the directors have identified means by which the risk can be managed or reduced in a cost effective way, whilst accepting that some risks cannot be completely eliminated. Details of key financial risks are considered below.

Financial risk management
The current and projected financial risks of the Group are managed by the Group finance team. The primary risk relates to financing facilities and this is mitigated by ensuring very tight control of cash and detailed forecasting of business cash flows.

Liquidity risk
The Group’s cash position is closely monitored with weekly updates from all overseas operations and daily updates of cash collected from customers. Any aged debtor balance that is overdue is investigated to ascertain the reason and to resolve the situation promptly. Monitoring procedures for short term cash projections allow the Group finance team to closely monitor the key liquidity and other financial ratios to ensure that there is sufficient liquidity in the business at all times and sufficient headroom in relation to the banking covenants.

Financing facilities
The Company retains its senior debt facility with The Royal Bank of Scotland plc (RBS), which is committed to May 2017, subject to compliance with agreed covenants. At 31 December 2014, the Group
had both net cash of £2.68 million and undrawn credit facilities of £7.50 million available to support its business operations and therefore the Board believes that the Group is well positioned to manage the business risks.

Foreign exchange risk management
The Group is exposed to exchange rate fluctuations given that the majority of its revenue is non-sterling based. The Group also has a significant proportion of its costs in the same currencies as its revenues and therefore there is a reasonable degree of natural reduction in overall currency risk.

All material foreign currency transaction exposures (i.e. sales and purchase contracts denominated in a different currency to the local reporting currency) are hedged through use of foreign exchange
contracts as soon as the amount and timing of the exposure is identified with reasonable certainty. The Group’s policy is not to hedge profit and loss translation exposures.

As part of our liability management, we have made use of currency swaps with a total principal value of approximately £5.11 million denominated in USD, CAD, and EUR, to create synthetic currency hedges in order to provide a partial hedge against movements in the fair value of investments in overseas subsidiaries. As the Group continues to grow and generates increased profits overseas
in foreign currencies, this exchange rate exposure is expected to increase.

Interest rate risk management
The Group is exposed to interest rate risk and an increase in interest rates would increase the interest payable on the Group’s banking facility. Given the Group’s current net cash position and the benign outlook for interest rates, the Board has decided not to undertake any interest rate hedging but will review the position from time to time.

The risk to rising interest rates (should the Group return to a net debt position) would be partly mitigated by an increase in interest income from surplus cash and deposits, where the policy is to seek to maximise interest return without exposure to inappropriate liquidity or counterparty risk.

Andrew Fabian
Group Finance Director
12 March 2015