StatPro Group PLC – Acquisition & Placing

For immediate release
27 September 2006

STATPRO GROUP PLC

(“StatPro” or the “Group”)

Proposed acquisition of FRI Corporation
Placing of new Ordinary Shares to raise approximately £10.6 million
Trading Update

StatPro, the AIM listed provider of portfolio analytics solutions for the global asset management industry, today announces the proposed acquisition of FRI Corporation (‘FRI’).

Highlights:

  • acquisition of FRI for an aggregate consideration of CDN$53.0 million (£25.0 million) to be funded by a combination of a Placing, new banking facilities and existing cash resources
  • Placing of 12,000,000 new shares by Arbuthnot Securities Limited with institutional and other investors at 88 pence per share representing a discount of approximately 5 per cent. to the prevailing mid-market price, to raise approximately £10.6 million before expenses, representing approximately 23.4 per cent. of the enlarged issued share capital of the Company
  • The Board expects that the Acquisition will be earnings enhancing in the Group’s financial year to 31 December 2007
  • As part of the Placing, certain of the Directors and senior management have agreed to subscribe for an aggregate of 585,223 Placing Shares
  • Since its interim results, the Company has continued to perform well; prospects for the remainder of 2006 continue to be positive for all of the Company’s products across all of its territories. As expected, the Company is continuing to see strong demand in particular for its risk and fixed income products
  • The Placing and the Acquisition are conditional upon the approval of shareholders at an extraordinary general meeting of the Company to be held on 20 October 2006
  • Arbuthnot Securities Limited are acting as NOMAD and broker to the Company

Placing Statistics

Placing Price                                                                88p
Number of Existing Ordinary Shares                                    39,341,410
Number of Placing Shares being placed on behalf of the Company        12,000,000
Gross proceeds of the Placing receivable by the Company            £10.6 million
Number of Ordinary Shares in issue immediately following
Admission                                                             51,341,410
Percentage of the Enlarged Share Capital being placed pursuant
to the Placing                                                    23.4 per cent.

Commenting on the Acquisition and the Placing, Justin Wheatley, Chief Executive of StatPro said:

‘The Acquisition significantly strengthens the Company’s position in the North American market and creates a number of cross-selling opportunities to our clients. FRI is one of the leading sources of bond data and the Acquisition will enable the Company to provide a total solution for our clients. The Acquisition continues our stated strategy to grow by acquiring new products and investing in such products for growth, rather than developing products from inception. ‘Furthermore, we are delighted with the success of the Placing and we welcome our new institutional shareholders and thank our existing shareholders for their continued support.’

Commenting on the transaction Eligio M. Gaudio, President and Chief Executive Officer, FRI said:

‘This is a truly exciting, great step forward for both FRI and our clients. We believe that there are considerable product synergies to be realised in joining FRI and StatPro. Together, we will be able to bring to our clients a full range of integrated solutions to meet their needs.’

An analysts’ meeting will be held at 9.45 for 10.00am at the offices of Smithfield, 10 Aldersgate Street, London, EC1A 4HJ

For further information please contact:

StatPro Group plc

Justin Wheatley, Chief Executive 020 8410 9876
Andrew Fabian, Finance Director

Arbuthnot Securities Limited

Tom Griffiths/Neil Kirkton 020 7012 2000

Smithfield

Reg Hoare 020 7360 4900

Notes to Editors:

StatPro Group plc is a leading provider of portfolio analytics solutions for the global asset management industry. StatPro floated on the London Stock Exchange in May 2000 and transferred its listing in June 2003 to AIM. StatPro has grown its revenue from continuing operations from £1.8 million in 1999 to £10.8 million in 2005.

1. Introduction

The Company announces the proposed acquisition of FRI (the ‘Acquisition’) for an aggregate consideration of approximately CDN$53.0 million (£25.0 million) and to raise £10.6 million (before expenses) by way of a placing of 12,000,000 new Ordinary Shares at a price of 88 pence per share (the ‘Placing’). The net proceeds of the Placing will be used to fund part of the cash element of the consideration payable for FRI. The balance of the cash element of the consideration payable for FRI will be satisfied out of the Bank Facility and existing cash resources.

FRI is an investment management solutions company based in Canada. It is a leading provider of securities information services, asset, wealth and trading management software solutions to approximately 190 clients. The aggregate consideration payable for the entire issued share capital of FRI is CDN$53.0 million (£25.0 million), subject to certain adjustments, which is to be satisfied as to CDN$50.3 million (£23.7 million) in cash payable on Completion. The balance of the consideration payable for FRI is to be provided by way of a class of exchangeable shares in FRI to be retained by FRI’s senior management, which exchangeable shares will effectively be exchangeable for new Ordinary Shares in the Company.

The Acquisition is in line with StatPro’s stated strategy to grow by acquiring new products and investing in such products for growth, rather than developing products from inception. The Directors believe that investing in new products rather than developing from inception reduces risk, brings critical expertise in the domain of each product and helps build the strong client relationships and service culture that increase the number of products used by each client.

In the opinion of the Directors, the acquisition of FRI will thus complement the Group’s existing activities and strengthen the Group’s competitive and geographical positions. It will allow StatPro to extend its product reach, namely by the provision of software combined with market and other data, whilst also enhancing the Group’s ASP offering and providing a total solution that can be offered to smaller customers. In addition, the Acquisition will significantly increase the Group’s North American presence and provide opportunities to offer the Group’s existing products to FRI’s clients and vice-versa. It will also further boost the Group’s successful South African business, which was recently strengthened by the acquisition of Kizen in May 2006. In addition, the Directors expect that the Group will derive operational synergies as a result of combining FRI with StatPro.

The Board expects that the Acquisition will be earnings enhancing in the Group’s financial year to 31 December 2007.

The Placing Shares have been conditionally placed with institutional and other investors. Subject, inter alia, to the passing of the resolution numbered 1 in the EGM Notice at the EGM, Completion of the Acquisition and Admission and dealings in the Placing Shares are expected to commence on AIM on 24 October 2006.

2. Information on FRI

FRI, which is a Canadian corporation, is based in Toronto and Montreal. It was founded in 1968 and the current management team has managed the business since 1995. FRI has grown revenues from CDN$10.6 million (£5.0 million) in 2002 to CDN$19.6 million (£9.2 million) in 2005.

FRI’s business comprises valuation data, where it provides pricing on approximately 450,000 assets, and portfolio management systems. FRI is a leading source of Canadian bond data and also supplies pricing data on other international instruments. Furthermore, FRI is capable of handling complex assets such as credit derivatives and mortgage-backed securities. FRI has approximately 190 clients, comprising fund managers and custodians, primarily based in the US and Canada, and including many of the industry leaders. Outside North America, clients include the Johannesburg Stock Exchange. For the year ended 31 December 2005, FRI reported audited turnover of CDN$19.6 million (£9.2 million) and profit before tax of CDN$2.6 million, (£1.2 million). As at 31 December 2005, it had net assets of CDN$12.3 million (£5.8 million).

3. Background to and reasons for the Acquisition

StatPro has made seven acquisitions of either products or small businesses since 2000, the year its shares were first listed on the Official List of the London Stock Exchange (before subsequently transfering to AIM in 2003).

Each acquisition has added to, and complemented, the Company’s existing range of products and thereby created an opportunity to use the enhanced and enlarged product base to cross sell to both existing and new clients. This reduces the Company’s risk, and also brings critical expertise in the domain of each product by the addition of expert professionals to StatPro’s team from the acquired businesses.

The Company’s strategy, which the Board believes is beginning to come to fruition, is to provide a complete solution to its clients for all their portfolio analytics needs. However, the Directors have recognised for some time that the Group was under-represented in North America, which it believes comprises more than half of the global market opportunities for portfolio analytics products. The Directors also believe that the North American market is a growing one, benefiting from consolidation and fragmentation amongst the customer base, whilst increasing regulation, such as Sarbanes Oxley, continues to drive customer needs to invest in the type of products sold by the Group. Therefore, the acquisition of FRI is significant as it will enable the Company to address this under-representation and further develop its products globally, thereby increasing its growth prospects.

Following Completion, the Enlarged Group will have approximately 75 per cent. more clients, 440 client contracts in aggregate, of which nearly half by value will be with clients based in North America. In the short term, the Directors intend to focus on addressing the opportunities to sell FRI’s data products to the Group’s existing clients and offer the Group’s portfolio of analytics products to FRI’s customers. The Board believes that the addition of FRI’s data will strengthen the Group’s ability to offer a complete and enhanced service and thereby provide a realistic alternative to other systems/data solution providers, especially in the important North American market.

4. Terms of the Acquisition

The total consideration payable by the Company for FRI is approximately CDN$53.0 million (£25.0 million). The consideration is to be satisfied as to CDN$50.3 million (£23.7 million) in cash payable on Completion. The cash element of the consideration will be satisfied out of the net proceeds of the Placing, a term loan facility of up to £12 million, a revolving facility of up to £2.5 million (together the ‘Bank Facility’) and existing cash resources.

The balance of the consideration payable for FRI, being CDN$2.7 million (£1.3 million) is to be provided by way of a class of exchangeable shares in FRI to be retained by FRI’s senior management. The exchangeable shares in FRI will effectively be exchangeable for new Ordinary Shares in the Company for up to 5 years from Completion. The aggregate number of new Ordinary Shares to be issued by the Company in respect of the exchangeable shares in FRI is 1,446,573 Ordinary Shares.

5. Details of the Placing

The Company proposes to raise approximately £10.6 million (before expenses) through the issue of the Placing Shares at the Placing Price. The Placing Price represents a discount of approximately 5 per cent. to the closing mid-market price of 92.5 pence per Ordinary Share on 26 September 2006, being the last dealing day prior to the publication of this document. The Placing Shares will represent 23.4 per cent. of the Company’s Enlarged Share Capital.

Application has been made to the London Stock Exchange for the Placing Shares to be admitted to trading on AIM. It is expected that the Acquisition will be completed, Admission will become effective and that dealings in the Placing Shares on AIM will commence on 24 October 2006.

The Placing Shares will rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared following Admission. It is expected that CREST accounts will be credited on the day of Admission and that share certificates (where applicable) will be despatched by 31 October 2006.

As part of the Placing, certain of the Directors have agreed to subscribe in aggregate for 210,224 Placing Shares at the Placing Price, representing 1.8 per cent. of the Placing Shares. The Directors’ interests at the date of this announcement and on Admission are set out in the table below:

 As at the date of this document     Immediately following Admission

Directors       Number of      % of Existing         Number of     % of Enlarged
          Ordinary Shares    Ordinary Shares   Ordinary Shares     Share Capital

C.R.              295,000               0.75           317,727              0.62
Bacon

J.M.B.T         6,437,000              16.36         6,476,772             12.62
Wheatley

A.M.               10,000               0.03            21,363              0.04
Fabian

M.C.              265,500               0.67           299,590              0.58
Fairbairn

M.A.            1,454,000               3.70         1,533,545              2.99
Adorian

D.M.D.A.        1,804,760               4.59         1,827,487              3.56

In addition to the above holdings, J.M.B.T. Wheatley and D.M.D.A Wheatley hold 255,000 Ordinary Shares (representing 0.65 per cent. of the Ordinary Shares at the date of this announcement) in a family trust, each of them being a trustee and potential beneficiary of the trust.

6. Bank Facility

In order to finance part of the cash element of the consideration payable for the Acquisition, the Company has entered into the Bank Facility. The Board considers that it is in the best interests of the Company that the cash element of the consideration payable for the Acquisition be funded by a combination of debt and equity in order to maximise the return to Shareholders. As part of the banking arrangements, it has been agreed that the exercise period of the existing warrant held by Kaupthing Singer & Friedlander Limited to subscribe for up to 130,000 Ordinary Shares at a price of 62.5 pence per share will be extended by one year so as to be exercisable at any time up until 31 October 2007.

7. Current trading and prospects

The Company reported its interim results for the six months ended 30 June 2006 on 31 July 2006. The Group achieved a strong performance in the first half of 2006 reflecting a significant increase in new business, strong demand for its expanding range of portfolio analytics products and a positive market place. Revenue increased by 26 per cent. to £6.33 million from £5.02 million in the comparable period in 2005 and earnings per share rose by 43 per cent. to 2.0p from 1.4p in the comparable period in 2005.

The Company’s annualised value of recurring revenue grew to £12.0 million as at 30 June 2006 (June 2005: £9.0 million) up from £10.1 million as at 31 December 2005; of this £1.35 million resulted from net new contracts, £0.74 million was derived from acquisitions during the period, and there was an adverse impact of £0.19 million due to currency movements. The increase in organic revenue since 30 June 2005 was approximately 23 per cent.

The Company paid a maiden dividend of 0.5 pence per Ordinary Share for the financial year 2005 on 31 May 2006 and as announced in the interim results for 2006, proposes to pay a maiden interim dividend of 0.3 pence per share on 1 November 2006 to Shareholders on the register at the close of business on 6 October 2006. The Directors intend to maintain a progressive dividend policy, balancing the investment needs of the business and the growth in underlying cash and earnings per share.

The Board is pleased to report that since the interim results, the Group has continued to perform well and prospects for the remainder of 2006 continue to be positive for all of the Group’s products across all of its territories. As expected, the Company is continuing to see strong demand in particular for its risk and fixed income products.

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