StatPro Group PLC – Final Results

For immediate release
26 February 2001

STATPRO GROUP PLC

(“StatPro” or the “Group”)

Preliminary Announcement

StatPro Group plc, a leading supplier of performance measurement software for the asset management industry worldwide, announces its preliminary results for the year ended 31 December 2000.

Highlights

  • Continuing turnover up 78% to £3.17 million – Sales invoiced on continuing business up 154% to £4.84 million.
  • Annual value of recurring revenues increased by 161% to £4.09 million
  • 74 contracts signed at the end of December 2000 up from 11 at the end of 1999
  • 10 new contracts signed to date in 2001, taking total number of contracts to 84
  • Operating costs (before goodwill amortisation) on target at £7.88 million
  • Operating loss (before goodwill amortisation) of £4.71 million in line with expectations
  • Strategic alliances signed with:
    – Reuters Lipper
    – Deloitte & Touche
  • Successful integration of AMS S.A. and Attribution contracts more than doubled to 28 to date
  • Recruitment of sales team and overseas expansion on track

Commenting on the results, Carl Bacon, Chairman of StatPro said: ‘We are delighted with the Group’s performance in 2000. Our investment in creating a global presence and a strong sales, marketing and support capability has already delivered results. We have grown from 11 contracts at the start of 2000 to 84 today, a testament not only to the quality of our products, but also to the excellent service and support provided by the first-class team at StatPro’

For further information, please contact:

StatPro Group plc

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

Buchanan Communications

Mark Edwards/Bobbie Swanson 020 7466 5000

CHIEF EXECUTIVE’S REVIEW

2000 – A Pivotal Year

StatPro started 2000 with some tough objectives. I am pleased to say we have met all of these, namely to acquire a quality attribution analysis system, to float the company and raise finance, and to broaden our distribution into Europe and the US.

Strong Revenue Growth

I am delighted to report that sales have grown exceptionally well with continuing turnover up by 78% to £3.17 million. Invoiced revenue in the continuing business grew significantly to £4.84 million, an increase of 154% over 1999.

Acquisition

We acquired Paris-based AMS S.A. in March 2000 for a consideration of £1.3 million (before expenses). One of the main reasons for the purchase was our belief that our sales and marketing expertise and global distribution would add value to their Performance Attribution product. By the end of December 2000, the annualised rental revenue has increased four-fold to over £600,000. The sales momentum has continued into 2001 and StatPro Attribution, as the product is now called, is expected to make a strong contribution to sales growth in 2001. This has been a very successful acquisition and we plan to model future acquisitions on this experience.

Flotation

In May 2000, StatPro floated on the official list of the London Stock Exchange raising £4.9 million (after expenses) by way of shares, convertible loan stock and warrants. This has helped to raise the profile of the company, which is a constituent of techMARK, the index of innovative technology companies, and allows us to create employee incentive schemes to recruit and retain high calibre people. The flotation provided us with financial resources to build StatPro into the leading supplier of performance measurement software for fund managers. We have allocated the bulk of these funds to building the sales team. At the end of December 2000 we had 10 full time sales professionals and a further 10 people in technical sales support. During the course of 2001 we plan to double the size of the team.

Sales

2000 was an excellent year for StatPro with the number of contracts rising from 11 to 74 by the end of the year. 2001 has started well with a further 10 contracts signed to date, taking the total to 84. We have an enviable list of clients, many of whom are already willing to act as reference sites for our products. This not only helps us sell further systems, but is also testimony to the quality of our products and support.

Product Development

We have continued to invest in our products and many new functions have been added in response to market demands.

During 2001 we will be looking at new opportunities to acquire further products to add to our range. There are many potential acquisition targets and we review these on a regular basis.

Client Services

2000 has tested our ability to handle large volumes of new clients and we feel we have passed this test successfully. Excellent services are critical for high client retention and to ensure that our clients gain the optimum benefit from our products. We start the year with 74 contracts and the majority of these are potential prospects for future sales of further products, modules and user licences. Each year will see a growing proportion of new business coming from existing clients.

Looking Ahead – A Solid Platform for Growth

StatPro’s main objective is to become cash flow positive by the end of 2001. Three key factors, which will enable us to meet this objective are, our robust business model, an excellent sales team and winning products.

Business Model

As we licence our software on an annual rental basis, our business is based on recurring revenue, making future cash flow easier to predict. Knowing our baseline revenues for the next 12 months allows us to plan with increasing accuracy. With a growing client base there is also less exposure to individual clients. At the start of 2001, we have approximately £4 million of annually recurring rental revenue to build on.

We believe that by having 6 distribution offices in key financial locations (UK, France, Germany, Switzerland, Luxembourg, and USA), we can ‘amortise’ the sunk cost of developing any product much faster. Our decision to open branch offices and the local knowledge we have thereby gained, has been invaluable to us in developing our product range and predicting future revenues.

By increasing the number of products we offer, we can spread the cost of building the client relationship. We believe that the benefits of this approach can already be seen and will deliver greater returns in 2001.

Professional Sales Team

The only way to sell our product range is with a sales force of the highest calibre. Our strategy for 2001 is to focus on salesforce productivity and to increase the team to 20. In addition to our current locations, we plan to open a new office in the Far East, and to extend our reach in the US and Europe. .

Winning Products

In focusing on client requirements, StatPro has secured an excellent customer base. Clients appreciate StatPro’s product offering and recognise how the product will save time and effort and improve communications with their own clients.

Outlook

2001 has started well with 10 new contracts signed to date and we believe that the combination of an experienced sales team and top quality products should lead to strong sales growth in 2001.

Justin Wheatley
Chief Executive

OPERATING AND FINANCIAL REVIEW

Turnover

Invoiced revenue on continuing operations increased by 154% to £4.84 million (1999 – £1.91 million) as the investment in recruiting and developing a strong, skilled sales and performance consulting team is delivering measurable results. The Group’s accounting policy for revenue recognition is to spread the licence revenue over the contract life, and as a result, £1.67 million of net revenue is deferred (1999 – £0.12 million). Turnover within the continuing business increased by 78% to £3.17 million (1999 – £1.78 million). We achieved strong sales growth in all regions and for all three of our core products and we have a solid base of subscription revenue with which to further grow the business in 2001.

The integration of the Attribution product following the acquisition of AMS S.A. in March 2000 has been successfully completed. We have more than doubled StatPro Attribution contracts to 28 to date, and the annual recurring contract value has increased four-fold. The contribution to turnover was £0.24 million and invoiced revenue was £0.61 million. The acquisition contributed a loss of £0.44 million.

Operating expenses and amortisation

Operating expenses in the continuing business before amortisation have increased to £7.88 million (1999 – £3.71 million), of which £7.42 million relates to the continuing operations and £0.46 million relates to the acquisition of AMS S.A. The operating loss before goodwill amortisation amounted to £4.71 million, of which £4.49 million (1999 – £1.93 million) relates to the continuing business before the acquisition of AMS S.A. The principal factors behind the significant increase in operating expenses were the investment in recruiting a larger sales and support team, opening offices in a number of overseas locations, and systems and infrastructure to support our growing client-base. Within the operating expenses of £7.88 million, £ 1.69 million (1999 – £0.96 million) was spent on research and development as a result of investment in our high calibre development team to continuously improve our products.

Employees

Approximately two-thirds of our costs relate to people and the growth in the number of employees has been a major factor behind the increased operating costs. We now have 110 people in six important financial centres (London, New York, Paris, Frankfurt, Lausanne and Luxembourg).

Interest

Net interest income of £50,000 (1999 – £43,000) was earned on our cash and bank deposits, after deducting the interest accrued primarily on the convertible debt and the interest element of finance leases. Loss before tax The loss before taxation amounted to £4.88 million (1999 – £0.18 million). In 1999 there was an exceptional gain of £1.47 million on the sale of Micropal France S.A. Taxation No current liability to corporation tax is expected, given the accumulated tax losses incurred by the Group.

Loss per share

Basic loss per share increased to 18.4p (1999 – 1.4p). The loss per share before amortisation and exceptional items increased to 17.6p (1999 – 8.6p).

Fixed assets

Goodwill arising on the acquisition of AMS S.A. has been capitalised and will be amortised over a five year period. The carrying value at the balance sheet date was £1.24 million (1999 – nil). We made significant investment in establishing a core network of offices in major financial markets and investing in state-of-the-art technology, including an integrated CRM system. As a result of this, capital expenditure increased to £0.69 million (1999 – £ 0.39 million). In addition, £0.19 million of computer software was acquired under finance lease arrangements.

Current assets

The level of debtors increased to £2.77 million (1999 – £0.68 million), the major component being trade debtors of £1.95 million (1999 – £0.29 million), reflecting the significant growth in the continuing business. The level of cash at bank and in hand amounted to £2.39 million (1999 – £2.61 million). Also included in debtors is £0.35 million (1999 – £0.04 million) relating to cash deposits on our leasehold properties held by landlords.

Creditors including convertible debt

The increase in short term creditors (excluding deferred revenue) to £1.37 million (1999 – £0.34 million) is mainly attributable to increases in trade and other creditors with the growth in the business. Deferred income increased from £0.31million to £2.01 million as a result of the significant growth in the annual recurring revenue base.

The long-term creditors arose following the issue of convertible debt and finance lease contracts. In accordance with FRS4: ‘Capital Instruments’, the proceeds of the convertible debt with warrants attached has been allocated between the debt and warrants and, as a result, an amount of £0.42 million has been credited to a warrant reserves. The nominal amount of convertible debt in issue at 31 December 2000 was £1.72 million with a carrying value of £1.43 million.

Share capital and reserves

The share capital has increased to £0.29 million representing 29,303,986 shares of 1p nominal value (1999 – £0.11 million), mainly as a result of the one-for-one bonus share issue, the issue of shares on flotation and the subsequent conversion of convertible debt issued at the same time. As a result, the share premium account has increased from £2.96 million to £6.83 million.

Cash flow

There was a net cash outflow from operating activities of £4.06 million (1999 – £1.44 million) as a result of continued investment made in growing the business. Net current assets (excluding deferred revenue) increased by 28% to £3.79 million (1999 – £2.95 million) and the directors are satisfied that the level of working capital in the business is sufficient to achieve our objective of becoming cash flow positive.

Acquisitions and disposals

£0.35 million was paid (before expenses) as the cash element of the acquisition of AMS S.A. In 1999 there were no acquisitions. The receipt of £ 1.66 million in 1999 related to the receipt of proceeds in connection with the disposal of Micropal France SA.

Dividend

The Directors currently propose to continue to invest in growing the business and are not proposing to pay any dividend in the near future.

Summary

The business will continue to invest its resources in strengthening the sales and performance consulting team, the acquisition of complementary products, and further expansion into overseas markets, in particular the US and Far East, and we look forward to another year of strong growth.

Consolidated profit and loss account for the year ended

Unaudited Unaudited
                                                      Notes      2000      1999
                                                                £'000     £'000
Turnover
     Continuing operations                                      2,930     1,784
     Acquisition                                                  242         -
                                                                3,172     1,784
     Discontinued operations                              3         -     1,360
Group Turnover                                            2     3,172     3,144

     Administrative expenses before goodwill                  (7,882)   (4,837)
     amortisation
     Amortisation of goodwill                             4     (219)         -
Administrative expenses                                       (8,101)   (4,837)

     Continuing operations                                    (4,488)   (1,927)
     Acquisition (after goodwill amortisation of £              (441)         -
     219,000)
     Discontinued operations                                       --       234
Operating loss                                                (4,929)   (1,693)

Exceptional item - surplus on disposal of                           -     1,467
discontinued operation
Net interest receivable                                            50        43
Loss on ordinary activities before taxation                   (4,879)     (183)
Tax                                                       5         -      (95)
Loss for the year                                             (4,879)     (278)

Loss per share - basic                                    6     18.4p      1.4p
Loss per share - before amortisation of goodwill and            17.6p      8.6p
exceptional items

Statement of group total recognised gains and losses

Unaudited    Unaudited
                                                             2000         1999
                                                            £'000        £'000
Loss for the financial year                               (4,879)        (278)
Exchange losses offset in reserves                           (45)         (17)
Total recognised gains and losses for the year            (4,924)        (295)

 

Consolidated Balance sheet at 31 December 2000

    Unaudited Unaudited
                                                      Notes      2000      1999
                                                                £'000     £'000

Fixed assets
Intangible assets                                               1,241         -
Tangible assets                                                   968       312
                                                                2,209       312
Current assets
Debtors                                                         2,768       684
Cash at bank and in hand                                        2,390     2,608
                                                                5,158     3,292
Creditors: amounts falling due within one year            7   (3,373)     (651)
Net current assets                                              1,785     2,641
Total assets less current liabilities                           3,994     2,953
Creditors - amounts falling due after more than one
year
Convertible loan                                              (1,425)         -
Finance lease obligations                                        (62)         -
Net assets                                                      2,507     2,953

Capital and reserves
Called up share capital                                           293       113
Share premium account                                           6,830     2,956
Warrant reserve                                           8       424         -
Profit and loss account                                       (5,040)     (116)

Equity shareholders' funds                                      2,507     2,953

 

Consolidated cash flow statement for the year ended 31 December 2000

Unaudited Unaudited
                                                                 2000      1999
                                                                £'000     £'000

Net cash outflow from operating activities                    (4,061)   (1,436)
Returns on investments and servicing of finance
Interest received                                                 191        44
Interest paid                                                   (120)         -
Issue costs in respect of convertible loan                      (200)         -
Net cash (outflow)/inflow from returns on investments and       (129)        44
servicing of finance

Taxation
Tax paid                                                          (6)      (58)
Capital expenditure and financial investment
Proceeds from sale of tangible fixed assets                        12         -
Purchase of tangible fixed assets                               (694)     (385)
Net cash outflow from capital expenditure and financial         (682)     (385)
investment
Acquisitions and disposals
Proceeds from disposal of subsidiary undertaking                    -     1,663
Costs incurred on sale of subsidiary undertaking                    -      (11)
Cash on disposal of subsidiary undertaking                          -     (115)
Consideration for acquisition of subsidiary undertaking         (350)         -
Costs incurred on acquisition of subsidiary undertaking          (79)         -
Cash acquired on acquisition of subsidiary undertaking             19         -
Net cash (outflow)/inflow from acquisitions and disposals       (410)     1,537

Equity dividends paid to shareholders                               -      (24)
Net cash outflow before management of liquid resources and    (5,288)     (322)
financing

Management of liquid resources
(Increases)/reductions in short term deposits                 (1,850)       225

Financing
Proceeds from issue of ordinary shares                          2,167     2,374
Issue costs in respect of shares issued                         (432)         -
Capital element of finance lease payments                        (65)         -

Proceeds from issue of convertible loan and warrants            3,400         -
Net cash inflow from financing                                  5,070     2,374
Decrease)/Increase in cash for the year                       (2,068)     2,277

 

Reconciliation of operating loss to net cash flow from operating activities

Unaudited    Unaudited
                                                              2000         1999
                                                             £'000        £'000
Operating loss                                             (4,929)      (1,693)
Depreciation of tangible fixed assets                          244          119
Amortisation of goodwill                                       219            -
Increase in debtors                                        (2,039)        (142)
Increase in work in progress                                     -           19
Increase in creditors (excluding deferred revenue)             832          149
Movement in deferred revenue                                 1,641          121
Loss on sale of tangible fixed assets                           31            8
Exchange differences                                          (60)         (17)
Net cash outflow from operating activities                 (4,061)      (1,436)

 

Reconciliation of net cashflow to movement in net funds

 Unaudited  Unaudited
                                                                2000       1999
                                                               £'000      £'000
(Decrease)/increase in cash in the period                    (2,068)      2,277
Movement in short term deposits                                1,850      (225)
Issue of convertible loan (net of £200,000 of issue          (2,776)          -
costs)
Principal outstanding on finance leases                        (121)          -
Decrease from financing - loan conversion                      1,371        200
Other non cash movements                                        (20)          -
Movement in net funds                                        (1,764)      2,252

Net funds at beginning of period                               2,608        356
Net funds at end of year                                         844      2,608

 

Analysis of net funds

 Unaudited  Unaudited
                                                                2000       1999
                                                               £'000      £'000

Cash at bank and in hand (excluding short term deposits)         540      2,608
Short term deposits                                            1,850          -
Convertible debt                                             (1,425)          -
Finance leases                                                 (121)          -
Net funds                                                        844      2,608

 

Notes to the preliminary financial statements

1. Acquisition. On 31 March 2000 the Group acquired AMS S.A. for an aggregate consideration of £1.298 million (before expenses), comprising £350,000 in cash and 790,000 shares (equivalent to 1.58 million shares after the bonus issue in April).

2. Segmental Analysis Turnover split geographically by destination is as follows:

 Unaudited   Unaudited
                                                              2000        1999

                                                             £'000       £'000
United Kingdom                                               1,563         704
USA                                                            188          45
Europe:                                                      1,347       1,035
Rest of world                                                   74           -
Total -  Continuing operations including acquisitions        3,172       1,784
         -  Discontinued operations (Europe)                     -       1,360
                                                             3,172       3,144

Reconciliation of sales invoiced to Group turnover is as follows:

Unaudited               Unaudited
                                                   2000                    1999
                                                  £'000                   £'000

Sales invoiced
Continuing                                        4,225                   1,905
Acquisition                                         615                       -
                                                  4,840                   1,905

Discontinued                                          -                   1,360
Group invoiced turnover                           4,840                   3,265

Deferred income                                 (1,668)                   (121)
Group turnover                                    3,172                   3,144

 

Reconciliation of recurring subscription revenue to Group invoiced turnover is as follows:

 Unaudited                  Unaudited
                                                2000                       1999
                                               £'000                      £'000

Recurring revenue
Software licences                              2,916                        427
Other recurring revenue                        1,169                      1,140
                                               4,085                      1,567
Other non-recurring revenue                      755                        338
Group invoiced turnover                        4,840                      1,905

Discontinued - non-recurring                       -                      1,360
Group invoiced turnover                        4,840                      3,265

3. Discontinued operations. This comprises the business of Micropal France SA which was sold in 1999 for an aggregate consideration of £ 1.66 million. A profit of £1.47 million was recognised on this disposal in 1999.

4. Amortisation of goodwill. Goodwill of £1.46 million arose on the acquisition of AMS. The goodwill is being amortised over a five year period as, in the opinion of the directors, this is the period over which the benefits resulting from the purchased goodwill are expected to arise.

5. Taxation. No current year corporation tax has been provided as the Group is not anticipating a corporation tax liability given the tax losses incurred by the operating companies within the Group.

6. Basic loss per share. Basic loss per share has been calculated based on the loss after taxation of £4.88 million (1999 – £278,000) and the weighted average number of shares of 26,514,951 (1999 – 19,280,842). The diluted loss per share is the same as the basic loss per share as, since the Group is making losses, there are no potentially dilutive shares outstanding.

7. Creditors. Included within creditors: amounts falling due within one year of £3.37 million (1999 – £0.65 million) is deferred revenue amounting to £2.01 million (1999 – £0.31 million).

8. Warrant reserve. In accordance with Financial Reporting Standard 4: ‘Capital Instruments’, the proceeds of the convertible debt with detachable warrants has been allocated between the debt and warrants. As a result £424,000 has been credited to warrant reserve.

9. The consolidated cash flow statement for 1999 has been reclassified with regard to short-term deposits to more fairly reflect their substance.

This document was approved by the directors on 26 February 2001. The preliminary results for the year ended 31 December 2000 are unaudited. The financial information set out in the announcement does not constitute the Company’s statutory accounts for the years ended 31 December 2000 or 31 December 1999. The financial information for the year ended 31 December 1999 is derived from the statutory accounts for that year which have been delivered to the Registrar of Companies. The auditors reported on those accounts and their report was unqualified.

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