For immediate release
26 February 2001
STATPRO GROUP PLC
(“StatPro” or the “Group”)
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.
- 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|
|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.
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.
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.
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.
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.
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.
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. .
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.
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.
OPERATING AND FINANCIAL REVIEW
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.
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).
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).
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.
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.
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.
The Directors currently propose to continue to invest in growing the business and are not proposing to pay any dividend in the near future.
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.