StatPro Group PLC – Final Results

For immediate release
10 March 2008

STATPRO GROUP PLC

(“StatPro” or the “Group”)

Preliminary Results for the Year ended 31 December 2007

StatPro Group plc, the AIM listed provider of portfolio analytics and data solutions for the global asset management industry, announces its unaudited preliminary results for the year ended 31 December 2007. Year ended Year ended Change 31 December 31 December 2007

  Year ended      Year ended      Change
                                       31 December     31 December
                                           2007            2006
                                        Unaudited        Audited

Turnover                              £24.07 million  £14.60 million      +65%
Profit before tax                      £4.57 million   £1.14 million     +302%
Adjusted profit before tax *           £5.03 million   £2.79 million      +80%
Basic earnings per share                         7.0p            3.3p    +112%
Adjusted earnings per share *                    7.9p            6.3p     +25%
Dividend per share - final proposed
for year                                        1.05p            0.7p     +50%
Dividend per share - total proposed
for year                                         1.5p            1.0p     +50%

Financial highlights

  • Recurring annualised revenue increased to £20.27 million (2006: £17.66 million)
  • Adjusted operating profit margin* increased to 25.0% (2006: 19.7%)
  • Strong free cash flow** of £4.39 million (2006: £1.95 million)
  • Total dividend increased by 50% to 1.5p (2006: 1.0p)

Operational highlights

  • Acquisition of Initram Data Inc. completed in July 2007
  • Integration of North American business completed
  • Average number of products for top 30 clients is now 4.5 products per client (2006: 3.7)
  • Acquisition of Performa completed in February 2008:
  1. provider of software to asset managers (product market drivers are GIPS(R) and MiFID)
  2. 25 client contracts with recurring annualised revenue of £2.1 million
  3. Strong cross-selling opportunities to largely UK blue-chip client base
  4. Value of recurring annualised contracts for Group now over £22 million

* Adjusted profit before tax, adjusted earnings per share and adjusted operating profit are profit before tax, earnings per share and operating profit after adjustment for amortisation of acquired intangibles and exceptional items (notes 3 and 10)

** Free cash flow is defined as cash generated from operations less investment in internally generated intangible assets (note 6)

Commenting on the results, Justin Wheatley, Chief Executive of StatPro said: ‘We started 2008 in a very strong position; we have a healthy new business pipeline and with the benefits of the recent acquisition of Performa to come, we now have over £22m of recurring annualised revenue.

‘To date there is little evidence that the problems of the credit markets are spilling over into our markets; if they do then we are confident that we are well placed to take appropriate action. In the event that conditions remain benign, then we expect to have another good year in 2008.

‘We aim to keep our adjusted operating profit margins at or above 25% and we will be alert for any opportunities to consolidate the market to improve these margins. We will provide a further update on trading at our AGM on 21 May 2008.’

– Ends –

For further information, please contact:

StatPro Group plc

Justin Wheatley, Chief Executive On 10 March: 020 7360 4900
Andrew Fabian, Finance Director  Thereafter: 020 8410 9876

Arbuthnot Securities Limited

Tom Griffiths/Alasdair Younie 020 7012 2000

Smithfield

Reg Hoare/ Tania Wild 020 7360 4900

A briefing for analysts will be held at 9.30am today at the offices of Smithfield, 10 Aldersgate Street, London, EC1A 4AH

Notes to Editors: StatPro Group plc is a leading provider of portfolio analytics and data 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 recurring revenue from less than £1 million in 1999 to over £22 million today.

CHIEF EXECUTIVE’S REVIEW

Highlights

2007 has been a very good year for StatPro. Our revenue grew 65% to £24.07 million (2006: £14.60 million); our profit before tax rose 302% to £4.57 million (2006: £1.14 million) and by 80% on an adjusted profit before tax basis to £5.03 million (2006: £2.79 million). Underlying organic revenue growth was 22% (2006: 18%) reflecting the benefits of our core strategy of cross-selling products to our existing clients.

Earnings per share rose 112% to 7.0p (2006: 3.3p); adjusted earnings per share rose 25% to 7.9p (2006: 6.3p). Free cash flow rose 125% to £4.39 million (2006: £1.95 million). In 2005 we set StatPro the goal to produce operating margins of above 20% within 3 years. In 2007 our adjusted operating margins increased to 25.0% (2006: 19.7%) and we aim to maintain or improve this margin for 2008.

Recurring Revenue Model

StatPro’s business model is based around selling software, data and services for annual rental fees on long term contracts. We have always followed this business model as we believe that it provides great stability not only to our business, but also for our clients. Often referred to as ‘Software as a Service (SaaS)’, the important point is that the model brings a business high visibility of revenues and this allows for better long term planning.

At the end of 2007 our recurring contracts for software and data had an annualised value of £20.27 million (2006: £17.66 million). Of these contracts 71% by value are contracted to the end of 2008 and beyond (2006: 57%) and the total value of contracted revenue amounts to £28.0 million (2006: £24.4 million).

We have not seen any immediate impact on business activity to date due to the global credit crisis, but were this to change, we feel very confident that our robust business model will stand us in good stead. In addition, it is the nature of our products that they are needed in good times as well as bad: for our clients, explaining portfolio losses is as important as explaining gains and demonstrating management of risks undertaken on behalf of investors is at a premium. Clients also seek value and excellent support from their suppliers. A good reputation for service and expertise is vital to win business during tough markets. StatPro has demonstrated that it has the people, the expertise and scale to offer market leading portfolio analytics and data services whatever the market conditions.

Acquisitions

FRI

The integration of FRI was completed during 2007 and we saw the benefits of this hard work with a substantial improvement in the performance of our North American operations in the second half of the year. Combining two businesses of roughly equal size located in different time zones is not easy, but our North American business is very much a StatPro business now and completely focused on sales and support of our analytics products and the production and sale of data services. The loss making real time data business was disposed of during 2007 and the Johannesburg Stock Exchange (‘JSE’) project was put onto a firmer commercial footing for the future by creating a dedicated development and support team in South Africa.

One of our aims was to launch new data services to our analytics clients and we started delivering index data to three clients by the end of 2007, having launched the service in late November. As we expand the range of indices we provide we expect to build on this promising start.

The credit crisis has highlighted the need for accurate and independent pricing of complex assets and our proposed new OTC Pricing service has progressed well during 2007. We now expect to launch this service during the first half of 2008 and early signs are that it will be very much in demand by custodian banks and asset managers.

Initram

In July 2007 we acquired Initram, a supplier of Canadian bond prices. Initram has been fully integrated into our operations in Montreal.

Performa

On 20th February 2008 we completed the acquisition of Performa Consultants UK Limited (‘Performa’), a specialist provider of GIPS (R) software. Performa brings an additional £2.1 million per annum in recurring software contracts with 25 clients mainly in the UK, but also in the US and Europe. In common with other acquisitions, we see the opportunity to cross-sell our products to our new clients, together with consolidation benefits as we integrate our UK operations in one site. Overall, the Board believes the acquisition will be earnings enhancing for 2008.

Performa is highly respected in the asset management community and we intend to build on this to develop new services based around our GIPS (R) software as these standards have seen a revival based on the MiFID regulations as it is easier for companies to comply with MiFID if they already comply with GIPS (R).

New Business

Overall sales of new software contracts have been in line with our expectations. New contracts, net of cancellations, were £2.04 million (2006: £2.10 million); the renewal rate was 94% (2006: 95%). We achieved higher than expected sales of professional services amounting to £4.79 million (2006: £2.12 million). Sales of software and data to existing clients comprised 63% of new business with 37% coming from new clients. New sales were split 41% in North America and 59% in UK , Europe and the rest of the world. However, North American sales were significantly stronger in the second half of 2007 as the fruits of integrating the North American business came to bear. We were also pleased with a number of significant sales to FRI clients of StatPro’s suite of analytics products.

Strategy

Since 2000 it has been StatPro’s stated aim to leverage the benefits of our acquisition strategy to cross-sell our products to all our clients. This strategy can be shown to have worked with the average number of products per client now 1.9 (2006: 1.6) whilst our top 30 clients, who represent approximately 50% of our recurring rental contracts, have an average of 4.5 contracts each (2006: 3.7).

We will continue to seek to build on this success with further acquisitions, like that of Performa, provided that such acquisitions are earnings enhancing.

People

The Board and I would like to thank all our colleagues at StatPro for yet another excellent year of hard work. The dedication and expertise of the people at StatPro sets our business apart and will make the difference in making 2008 an even better year for us.

Dividend

The Board is pleased to recommend that the final dividend for 2007 be 1.05p per share, which, together with the interim dividend of 0.45p, makes a total dividend of 1.5p for 2007, a 50% increase on the 2006 dividend of 1.0p per share. We intend to maintain a progressive dividend policy reflecting the balance between the investment needs of the business and growth in underlying cash and earnings per share.

Outlook

We started 2008 in a very strong position; we have a healthy new business pipeline and with the benefits of the recent acquisition of Performa to come, we now have over £22m of recurring annualised revenue. To date there is little evidence that the problems of the credit markets are spilling over into our markets; if they do then we are confident that we are well placed to take appropriate action. In the event that conditions remain benign, then we expect to have another good year in 2008.

We aim to keep our adjusted operating profit margins at or above 25% and we will be alert for any opportunities to consolidate the market to improve these margins. We will provide a further update on trading at our AGM on 21 May 2008.

Justin Wheatley
Chief Executive

FINANCIAL REVIEW

Overview

During 2007 we successfully completed the integration of the four businesses acquired in 2006 and 2007. There has been a substantial step change in the scale of the business operations resulting in a 65% increase in revenue in 2007 (of which approximately 43% relates to acquisitions and 22% is underlying growth), and an increase in adjusted operating profit by 109% to £6.03 million (2006: £2.88 million). We have achieved an adjusted operating profit margin of 25.0% (2006: 19.7%) exceeding our short term target of 20%. We continue to generate strong operating cash flow and repaid £2.01 million of our term loan in the year.

Key business integration projects included:

  • agreement signed for additional work on major systems development project for the Johannesburg Stock Exchange;
  • transfer of contracts in real-time data division to Tenfore Systems Limited; and,
  • recovery of cash on working capital balance relating to the FRI acquisition.

Acquisitions

StatPro Canada expanded its operations by acquiring Initram Data Inc. (‘Initram’), a Montreal based data provider in July 2007, for a total cash consideration (before expenses) of C$3.0 million (£1.41 million) with C$2.1 million (£0.99 million) paid on completion and the balance payable over two years. Through this acquisition we acquired further data clients (approximately £0.33 million annualised revenue at the acquisition date) and new prospects and an excellent team who will help us accelerate the growth of our global data business.

In line with its strategy of acquiring complementary businesses and consolidating the sector, on 20 February 2008, StatPro completed the acquisition of Performa Consultants UK Limited (‘Performa’), a supplier of software solutions to asset managers for complying with Global Investment Performance Standards (GIPS(R)). This acquisition brings with it new largely blue chip clients, a highly professional team and significant cross-selling opportunities. The recurring revenue on acquisition was approximately £2.1 million per annum.

StatPro acquired 100 per cent of Performa for a consideration (before expenses) of £7.0 million. The consideration will be increased by the value of Performa’s net current assets at completion, above an agreed minimum level, of approximately £0.8 million. The total consideration will be satisfied by a combination of £6.6 million in cash and the issue to the vendors of 1,372,020 ordinary shares of 1p each at an effective price of 86.6p, based on the average closing mid-price of StatPro’s ordinary shares for the ten day trading period prior to the date of completion. The cash element of the consideration is being financed by an increase to a total of £22.5 million in committed banking facilities from the Group’s existing bankers.

StatPro is now a transformed business with over £22 million of recurring revenue, a coherent product suite and a more balanced geographical footprint. With our business model of repeat revenue multi-year contracts and focus on increasing operating margin and cash generation, the business is now in a strong position to benefit from the investments made over the past few years.

Turnover

Group turnover increased by 65% (2006: 35%) to £24.07 million (2006: £14.60 million), of which £0.17 million (1%) related to the acquisition in the year. At constant exchange rates the revenue would have increased by 67% to £24.41 million. Adjusting for the revenue impact of acquisitions in 2006 and 2007 the underlying growth rate was approximately 22% as shown in the table below.

 

                                     Year to             Year to        Growth
                                 31 December         31 December       year on
                                        2007                2006          year
                                   £ million           £ million             %
Group revenue
Total revenue as reported              24.07               14.60            65
Acquisition in 2007                    (0.17)                  -
Acquisitions in 2006                   (8.34)              (1.86)
                                      --------             -------
Underlying revenue                     15.56               12.74            22
-----------------                     --------             -------     ---------

The split of revenue for the year by type was as follows:

    Year to            Year to       Growth
                                   31 December        31 December      year on
                                          2007               2006         year
                                     £ million          £ million            %
Group revenue
Software licences                        15.23              11.66           31
Data fees                                 4.05               0.82          394
                                        --------            -------
Total recurring revenue                  19.28              12.48           54

Professional services revenue             4.79               2.12          126
                                        --------            -------
                                         24.07              14.60           65
               -----------------        --------            -------    ---------

Software licence revenue grew by 31% to £15.23 million (2006: £11.66 million). Data revenue increased by 394% to £4.05 million reflecting the full year impact of the acquisition of the data division (2006: £0.82 million). The level of professional services revenues increased by 126% to £4.79 million (2006: £2.12 million) due to both the contribution from acquisitions and a stronger performance from existing operations. The Group continues to have excellent visibility of revenue with a high percentage of recurring revenue at 80% (2006: 85%) of total revenue. Whilst this percentage of recurring revenue is lower than in the prior year due to the higher professional services revenue fees, it is considered high by industry standards.

Recurring revenue

The annualised recurring revenue from software licences and data fees at the end of December 2007 was £20.27 million (2006: £17.66 million). New contracts, net of cancellations, amounted to £2.04 million (2006: £2.10 million). The net impact of the revaluation of contracts to the year end exchange rates amounted to an increase of £0.99 million. Therefore, before the impact of the acquisition and disposal, there was an increase in annualised recurring revenue of 17% year on year (12% at constant exchange rates). Contracts acquired amounted to £0.33 million and contracts terminated on disposal of the real-time data business amounted to £0.75 million.

Software licences and data fees           Annualised recurring    % of starting
                                                contract value       year value
                                                            £m

At 31 December 2006                                      17.66

New contracted revenue (net
of cancellations)                  2.04                                   11.6%
Net impact of exchange rates       0.99                                    5.6%
                                --------                                 -------
Net increase in year                                      3.03            17.2%

Net recurring value (before
impact of acquisition
and disposal)                                            20.69

Contracts acquired with
acquisition                        0.33                                    1.8%
Contracts transferred/
terminated on disposal            (0.75)                                  (4.2%)
                                --------                                 -------
Net impact of acquisition
and disposal                                             (0.42)           (2.4%)

Net increase in contracted
annualised revenue                 2.61                                   14.8%

At 31 December 2007                                      20.27
-------------------------       --------               --------          -------

Approximately 63% of new recurring contracted revenue arose from existing clients (2006: 40%).

Following the acquisition of Performa in February 2008, the current level of recurring revenue is in excess of £22 million.

The proportion by value of recurring software licences and data clients at the end of 2007 secured to the end of 2008 or beyond increased to 71% (2006: 57%). We now have 38 (2006: 29) client groups each subscribing more than £150,000 per annum and 13 (2006: 11) at over £300,000 per annum. StatPro’s top thirty client groups have on average 4.5 products per client (2006: 3.7) with an average recurring value of contracts of £341,000 per annum (2006: £297,000). The weighted average length of contracts committed is over 16 months, resulting in approximately £28.0 million of revenue being contracted as at 31 December 2007 (2006: £24.4 million), and our renewal rate remains high by industry standards at 94% (2006: 95%).

Operating expenses and exceptional items

Operating expenses (before amortisation of intangibles and exceptional items) increased by 57% to £16.19 million (2006: £10.29 million) principally as a result of a 70% increase in the average number of employees during the year from 141 to 239, predominantly through acquisitions. We ended 2007 with 253 employees (2006: 233). Following the acquisition of Performa in February 2008, which added 19 people to the business, the number of employees today is 272.

Following the FRI acquisition in late 2006 we conducted a review of our North American property requirements. We moved premises in Toronto as the existing office lease was due to terminate in 2007. We also moved offices in New York, closed a small satellite office in San Francisco and opened a small office in Seattle to service our growing US west coast clients. In early 2008 we moved our Montreal office, where the existing lease was in the final year. We also plan to open a small office in Boston in the first half of 2008. These moves have resulted in an increase in capital expenditure above our normal level but is expected to improve operational efficiencies.

Other costs for the business which have increased in the year relate to data acquired from third parties, exchange fees and other costs such as telecommunications required to deliver an integrated data and software service.

Adjusted operating profit margin

The Group increased its operating profit by 354% to £5.57 million (2006: £1.23 million). Adjusted operating profit increased by 109% to £6.03 million (2006: £2.88 million) as shown in note 3 and as a result, the adjusted operating profit margin increased to 25.0% (2006: 19.7%).

Investment in research and development

The Group continues to increase its investment in research and development. The carrying value of development costs, including acquired technology and customer contracts, amounted to £5.07 million (2006: £4.55 million). Development expenditure is amortised over a three year period as this is the period that the directors expect the benefits to arise from the expenditure incurred. Customer contracts are amortised over a period of between three and seven years as this is the period that the directors expect the benefits to arise from the contracts. The amortisation of intangibles amounted to £2.32 million in 2007 (2006: £1.67 million), of which £0.46 million related to acquired intangibles (2006: £0.23 million). The carrying values, which are analysed by product, are considered carefully by the Board and if there has been any impairment in any development costs then the carrying value is written down accordingly.

Interest

As a result of the interest arising on the loan drawn down in October 2006 to finance the acquisition of FRI there was a significant increase in the net interest expense in 2007 amounting to £1.00 million (2006: £0.09 million). Part of this interest charge relates to the unwinding of discount on deferred consideration amounting to £0.16 million (2006: nil).

Profit before tax

The profit before taxation increased by 302% to £4.57 million (2006: £1.14 million). At constant exchange rates the profit before taxation would have increased by 305% to £4.61 million. The adjusted profit before taxation grew by 80% to £5.03 million (2006: £2.79 million).

Taxation

The tax charge amounted to £0.82 million (2006: net credit £0.08 million) giving an effective tax rate of 18%. The Group level of deferred tax asset was £1.74 million (2006: £2.27 million) and amounts to 46% (2006: 57%) of the potential deferred tax asset for the Group. In the opinion of the directors there is a reasonable degree of probability that this deferred tax asset will be recoverable against tax on trading profits in future years.

Earnings per share

Basic earnings per share amounted to 7.0p (2006: 3.3p). Fully diluted earnings per share in 2007 were 6.8p (2006: 3.2p) based on potentially dilutive shares outstanding amounting to 1,757,282 (2006: 1,587,334). Adjusted earnings per share, which is earnings per share adjusted for amortisation of acquired intangibles and exceptional items was 7.9p (2006: 6.3p). Balance Sheet The Group’s net assets increased to £25.01 million at 31 December 2007 (2006: £17.97 million). This increase was mainly as a result of the net profits attributable to equity shareholders of £3.72 million, an increase in equity during the year of £0.69 million and exchange differences through reserves amounting to £3.02 million.

Non-current and current assets

Goodwill arising on acquisitions during the year amounted to £2.34 million of which the main movements were for Initram and for the remaining minority interest in StatPro Italia. Other net adjustments to goodwill relate to adjustments to the estimated deferred consideration and the adjustment for recovery of cash on the FRI acquisition. The carrying value for goodwill arising on all acquisitions has been reviewed and there have been no impairments to any goodwill. The revaluation of goodwill to year end exchange rates resulted in a net increase of £4.13 million.

Total capital expenditure amounted to £1.22 million in 2007 (2006: £0.30 million). The increase relates predominantly to office moves following the North American acquisitions. Included within non-current assets is deferred tax of £1.74 million (2006: £2.27 million). The level of current assets decreased to £8.16 million (2006: £8.68 million). Increased new business and acquisitions resulted in an increase in trade debtors, the largest component of debtors, amounting to £4.98 million at the end of 2007 (2006: £3.78 million). The level of cash and cash equivalents reduced to £0.95 million (2006: £3.33 million).

Current and non-current liabilities

The main movements in creditors were an increase in deferred income, a reduction in accruals and movements resulting from the repayment of £2.01 million of the term loan and deferred consideration. At 31 December 2007, there is an estimated £3.05 million deferred consideration remaining (2006: 4.07 million) arising on acquisitions, which is the directors’ current projection of the fair value that will ultimately be due under the various transactions. However, this amount is uncertain and the eventual payments may be higher or lower than this amount. The directors will review this estimate at each balance sheet date and adjustments, if any, will be made to the goodwill carrying value and the deferred consideration. The level of trade and other payables (excluding corporation tax and deferred income) reduced slightly to £4.70 million (2006: £4.77 million). Deferred income, which is a non-cash liability, amounted to £9.11 million (2006: £8.67 million).

Cash flow and financing

There was another year of solid cash generation; cash generated from operations before investment in internally generated intangible assets during 2007 amounted to £7.03 million (2006: £3.89 million). The free cash flow (cash generated from operations less investment in internally generated intangible assets) of £4.39 million (2006: £1.95 million), was 125% higher year on year (see note 6). The net cash investment in acquisitions amounted to £3.38 million during the year, including payments of deferred consideration on prior year acquisitions. The net proceeds of share issues during the year amounted to £0.69 million.

The acquisition and deferred consideration paid in 2007 on past acquisitions were financed through existing resources. Higher financing costs of interest and dividends and an adverse exchange movement on translation of the currency debt have resulted in an increase in the net debt at 31 December 2007 to £10.13 million (2006: £7.68 million). The directors believe that optimising the use of the balance sheet in this way is in the best interests of the shareholders.

Share capital and reserves

The issued share capital amounted to £0.53 million (2006: £0.52 million) representing 53,114,334 shares of 1p nominal value (2006: 52,168,820) and the share premium account has increased to £14.27 million (2006: £13.57 million) as a result of the issue of 945,514 shares during the year.

The equity minority interests amounting to a net profit of £0.03 million (2006: net loss of £0.11 million) relate to the minorities’ share of profits less losses for the year. The equity minority interests of £0.04 million (2006: £0.14 million) have been deducted in computing the total capital employed.

Post balance sheet events

On 20 February 2008, we completed the acquisition of Performa Consultants UK Limited a supplier of software solutions to asset managers for complying with Global Investment Performance Standards (GIPS(R)). The cash element of the consideration is being financed by an increase to a total of £22.5 million in committed banking facilities from the Group’s existing bankers as outlined below. As part of the acquisition of Performa, 1,372,020 ordinary shares of 1p each were issued to the vendors, and as a result, StatPro currently has 54,486,354 ordinary shares in issue.

Dividend

The directors are recommending a final dividend for 2007 of 1.05p per share (2006: 0.7p) making a total dividend for 2007 of 1.5p per share (2006: 1.0p). It is intended to pay the dividend on 28 May 2008 to all shareholders on the register at the close of business on 25 April 2008. In accordance with IFRS, this dividend is not accrued in these financial statements. Dividends paid in 2007 amounted to £0.62 million (2006: £0.30 million). The Board intends to maintain a progressive dividend policy reflecting the balance between the investment needs of the business and the growth in underlying cash and earnings per share.

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 the business cash flows.

The Company has arranged a committed bank facility amounting to a total of £22.5 million on competitive terms. £12 million of the facility is a term loan which was drawn down in October 2006 to part finance the FRI acquisition. £2.01 million of the loan was repaid in 2007 and is not available to be re-drawn. £7 million of the facility is a term loan which was drawn down in February 2008 to part finance the Performa acquisition. The remaining £3.5 million facility is primarily available for working capital purposes, of which £0.59 million was drawn at 31 December 2007. As at 29 February 2008, the Group had net debt of approximately £17 million.

The financial risk profile has further increased as the balance sheet is geared but the directors believe that this financial structure is in the best interests of the shareholders given the strong recurring revenue and the projected operating cash inflow.

Andrew Fabian
Finance Director

Group income statement for the year ended 31 December 2007

      Notes      Year to        Year to     Year to    Year to
                                      31             31          31         31
                                December       December    December   December
                                    2007           2007        2007       2006
                               Unaudited      Unaudited   Unaudited    Audited
                                   £'000          £'000       £'000      £'000
                              Continuing   Acquisitions       Total
                              operations

Group Revenue             2       23,903            171      24,074     14,604
---------------------  ------     --------       --------    --------    -------
Operating expenses
before amortisation
of intangibles and
exceptional items                (16,051)          (139)    (16,190)   (10,288)
Amortisation of
internally generated
intangibles                       (1,857)             -      (1,857)    (1,435)
Amortisation of
acquired intangibles      3         (451)            (8)       (459)      (234)
Exceptional items         4            -              -           -     (1,421)
---------------------  ------     --------       --------    --------    -------

Operating expenses               (18,359)          (147)    (18,506)   (13,378)
                                  --------       --------    --------    -------

Operating profit          3        5,544             24       5,568      1,226
                                  --------       --------

Interest receivable                                              66        106
Interest payable                                             (1,062)      (195)
                                                             --------    -------

Profit before
taxation                  3                                   4,572      1,137

Taxation                  8                                    (821)        77
                                                             --------    -------

Profit for the year                                           3,751      1,214
                                                             ========    =======

Profit/(loss)
attributable to
minority interests                                               33       (110)
Profit attributable
to equity shareholders                                        3,718      1,324
                                                             --------    -------
                                                              3,751      1,214
                                                             ========    =======

Earnings per share
from continuing
operations - basic       10                                     7.0        3.3p
           - diluted     10                                     6.8        3.2p

 

Statement of recognised income and expense

        Year to       Year to
                                                    31 December   31 December
                                                           2007          2006
                                                          £'000         £'000

Profit after tax                                          3,751         1,214
Net exchange differences offset in reserves net of
tax                                                       2,990          (970)
                                                        ---------     ---------
Total recognised income for the year                      6,741           244
                                                        =========     =========

Attributable to:
Minority interests                                            5           (91)
Equity shareholders                                       6,736           335

Consolidated balance sheet at 31 December 2007

Notes            As at             As at
                                                 31 December       31 December
                                                        2007              2006
                                                       £'000             £'000
                                                   Unaudited           Audited
Assets
Non-current assets
Goodwill                                              36,163            29,869
Intangible assets                                      5,072             4,550
Property, plant and equipment                          1,742               846
Other receivables                                        274               316
Deferred tax assets                                    1,737             2,269
                                                     ---------         ---------
                                                      44,988            37,850

Current assets
Trade and other receivables                            7,205             5,352
Cash and cash equivalents                                950             3,327
                                                     ---------         ---------
                                                       8,155             8,679
Liabilities
Current liabilities
Financial liabilities - borrowings                    (2,744)           (1,857)
Trade and other payables                              (4,700)           (4,767)
Current tax liabilities                                  (44)              (53)
Deferred income                                       (8,984)           (8,562)
Provisions - contingent consideration                 (1,682)           (1,484)
                                                     ---------         ---------
                                                     (18,154)          (16,723)
                                                     ---------         ---------

                                                     ---------         ---------
Net current liabilities                               (9,999)           (8,044)
                                                     ---------         ---------

Non-current liabilities
Financial liabilities - borrowings                    (8,339)           (9,145)
Other creditors and accruals                            (149)                -
Deferred income                                         (125)             (109)
Provisions - contingent consideration                 (1,367)           (2,581)
                                                     ---------         ---------
                                                      (9,980)          (11,835)
                                                     ---------         ---------
                                                     ---------         ---------
Net assets                                            25,009            17,971
                                                     =========         =========

Shareholders' equity
Ordinary shares                                          531               522
Share premium                                         14,273            13,570
Shares to be issued                                      874               896
Other reserves                                         3,132               116
Retained earnings                                      6,237             3,008
                                                     ---------         ---------
Total shareholders' equity                            25,047            18,112
Minority interest in equity                              (38)             (141)
                                                     ---------         ---------
Total equity                               12         25,009            17,971
                                                     =========         =========

Group cash flow statement for the year ended 31 December 2007

            Notes       Year to       Year to
                                                     31 December   31 December
                                                            2007          2006
                                                           £'000         £'000
                                                       Unaudited       Audited
Cash flows from operating activities
Cash generated from operations               5, 6          7,026         3,889
Interest received                                             66           106
Interest paid                                             (1,008)          (12)
Tax paid                                                     (86)         (105)
Tax received                                                 286             -
                                                          --------      --------
Net cash from operating activities                         6,284         3,878
                                                          --------      --------

Cash flows from investing activities
Acquisition of/increased investment in
subsidiaries (net of cash acquired)                       (3,382)      (24,517)
Investment in intangible assets -
development                                      6        (2,640)       (1,939)
costs
Purchase of property, plant and equipment                 (1,218)         (302)
                                                          --------      --------
Net cash used in investing activities                     (7,240)      (26,758)
                                                          --------      --------

Cash flows from financing activities
Repayment of bank loan                                    (2,009)            -
Net proceeds from bank loan/overdraft                        562        11,788
Proceeds from issue of ordinary shares                       690        12,836
Dividends paid to equity shareholders                       (618)         (298)

                                                          --------      --------
Net cash (used in)/from financing activities              (1,375)       24,326
                                                          --------      --------

Effects of exchange rate changes                             (46)           28
                                                          --------      --------

Net (decrease)/increase in cash and cash
equivalents                                               (2,377)        1,474

Cash and cash equivalents at start of year                 3,327         1,853
                                                          --------      --------
Cash and cash equivalents at end of year                     950         3,327
                                                          ========      ========

Notes to the preliminary financial statements

1. Announcement

This announcement was approved by the Board of directors on 7 March 2008. The preliminary results for the year ended 31 December 2007 are unaudited. The financial information set out in this announcement does not constitute the Company’s statutory accounts for the years ended 31 December 2007 or 31 December 2006. The financial information set out in the announcement has been prepared on the basis of the accounting policies set out in the statutory accounts of StatPro Group plc for the year ended 31 December 2006. The financial information for the year ended 31 December 2006 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.

2. Revenue analysis

Turnover by destination       2007             2007           2007        2006
                         Unaudited         Unaudited      Unaudited     Audited
                             £'000            £'000          £'000       £'000
                        Continuing      Acquisition          Total       Total
                        operations

United Kingdom               3,294                -          3,294       2,784
Continental Europe           7,073                -          7,073       6,836
North America               11,348              171         11,519       3,550
Rest of the World            2,188                -          2,188       1,434
                            --------         --------       --------    --------
                Total       23,903              171         24,074      14,604
                            --------         --------       --------    --------

 

Analysis of recurring revenue by type

Type       Sterling    Sterling    Percentage   Sterling   Sterling   Percentage
           value at    value at                 value at   value at
        31 December 31 December                       31         31
               2007        2007                 December   December
                                                    2006       2006
          Unaudited   Unaudited                  Audited    Audited
                  £           £                        £          £
           millions    millions                 millions   millions
Software
licences                  16.51         81.5%                13.87         78.5%
Data fees
- Real Time
(disposed
of in 2007)       -                        -       0.75                     4.2%
Data fees
- Data
service        3.76                     18.5%      3.04                    17.3%

             ------                    ------    ------                   ------
Total Data
fees                       3.76         18.5%                 3.79         21.5%
                         ------        ------               ------        ------
                          20.27        100.0%                17.66        100.0%

Analysis of recurring revenue by region

Region         Sterling value at   Percentage   Sterling value at   Percentage
                31 December 2007                 31 December 2006
                       Unaudited                          Audited
                      £ millions                       £ millions

United Kingdom              3.20         15.8%               2.86         16.2%
Continental
Europe                      6.52         32.2%               5.63         31.9%
North America               8.50         41.9%               7.54         42.7%
Rest of World               2.05         10.1%               1.63          9.2%
                          ------        ------             ------        ------
                           20.27        100.0%              17.66        100.0%

Analysis of recurring revenue by currency 
Currency    Currency          Year end          Sterling value at    Percentage
               value     exchange rate           31 December 2007
            Millions  31 December 2007                  Unaudited
                                                       £ millions
Pounds
sterling       £3.49             1.000                       3.49         17.2%
Euro           Euro8.87             1.361                       6.52         32.2%
US Dollar    US$7.61             1.991                       3.82         18.8%
Canadian
Dollar       C$9.56              1.965                       4.87         24.0%
Other
currencies                                                   1.57          7.8%
                                                           ------
                                                            20.27        100.0%

Currency    Currency          Year end          Sterling value at    Percentage
               value     exchange rate           31 December 2006
            Millions  31 December 2006                    Audited
                                                       £ millions
Pounds
sterling       £3.20             1.000                       3.20         18.1%
Euro           Euro8.33             1.484                       5.61         31.8%
US Dollar    US$8.56             1.957                       4.38         24.8%
Canadian
Dollar        C$7.41             2.278                       3.25         18.4%
Other
currencies                                                   1.22          6.9%
                                                           ------
                                                            17.66        100.0%

3. Adjusted profit before taxation and adjusted operating margin

 

Adjusted profit before taxation
                                                             2007         2006
                                                        Unaudited      Audited
                                                            £'000        £'000

Profit before taxation                                      4,572        1,137
Add back: Amortisation of acquired intangibles                459          234
Add back: Exceptional items (note 4)                            -        1,421
                                                          ---------     --------
Adjusted profit before tax                                  5,031        2,792
                                                          =========     ========

Adjusted operating profit
                                                             2007         2006
                                                        Unaudited      Audited
                                                            £'000        £'000

Operating profit                                            5,568        1,226
Add back: Amortisation of acquired intangibles                459          234
Add back: Exceptional items (note 4)                            -        1,421
                                                          ---------     --------
Adjusted operating profit                                   6,027        2,881
                                                          =========     ========

Adjusted operating profit margin                             25.0%        19.7%

The adjusted profit before tax for 2006 has been restated to include the impact of amortisation on acquired intangibles for comparability purposes.

4. Exceptional items. There were no exceptional items in 2007. The exceptional items of £1.42 million in 2006 relates to severance payments, onerous leases and other contracts, and costs relating to restructuring the operations of the combined Group.

5. Reconciliation of operating profit to net cash inflow from operating activities

 

                                            2007        2006
                                                         Unaudited     Audited
                                                             £'000       £'000

Operating profit                                             5,568       1,226
Depreciation of tangible fixed assets                          418         261
Amortisation of intangibles                                  2,316       1,669
Increase in debtors                                         (1,640)       (490)
(Decrease)/increase in creditors (excluding deferred
income)                                                       (169)        898
Movement in deferred income                                    406         232
Share based payments                                           127          58
Net loss on disposal of fixed assets                             -          35
                                                            --------    --------
Net cash inflow from operating activities                    7,026       3,889
                                                            ========    ========

6. Free cash flow – reconciliation from statutory heading to business performance measure

 

                                                              2007        2006
                                                         Unaudited     Audited
                                                             £'000       £'000

Cash generated from operations                               7,026       3,889
Investment in intangible assets - development costs         (2,640)     (1,939)
                                                            --------    --------
Cash generated from operations less investment in
internally generated intangible assets                       4,386       1,950
                                                            ========    ========

7. Reconciliation of net cash flow to movement in net debt

 

    2007       2006

                                                      Unaudited    Audited
                                                          £'000      £'000

(Decrease)/increase in cash and cash equivalents in
the year                                                 (2,377)     1,474
Movement on overdraft and other loans                      (562)         -
Movement on bank loans                                    2,009    (11,788)
Exchange movement on bank loans                          (1,600)       825
Other non-cash movements                                     72         (4)
Movement in net debt                                     (2,458)    (9,493)
Net (debt)/cash at beginning of year                     (7,675)     1,818
                                                        --------   --------
Net debt at end of year                                 (10,133)    (7,675)
                                                        ========   ========

 

8. Taxation

The taxation reconciliation for the year is as follows:

 

Tax reconciliation                                             2007       2006
                                                          Unaudited    Audited
                                                              £'000      £'000

Profit before taxation                                        4,572      1,137

Current tax
Tax charge on profit before tax at standard rate of
corporation tax in the UK of 30% (2006: 30%)                 (1,372)      (341)
Effects of:
Items allowable for tax purposes                                360        140
Accelerated capital allowances                                  228          6
Other temporary differences                                       -       (361)
Differences in tax rates                                        (93)         6
Tax losses arising in year and adjustment for previous
periods                                                        (455)         -
Tax losses utilised                                           1,145        497
Total current tax charge on ordinary activities                (187)       (53)

Deferred tax
Origination and reversal of temporary differences              (968)       130
Recognition of deferred tax asset                               327          -
Differences in tax rates                                        (57)         -
Adjustment in respect of previous periods                        64          -
Total deferred tax                                             (634)       130

Total taxation (charge)/credit                                 (821)        77

The tax impact of the exceptional items is as follows:
                                                                2007      2006
                                                               £'000     £'000

Tax charge on profit before tax and exceptional items           (821)     (349)
Tax credit on exceptional items                                    -       426

Net tax (charge)/credit on profit before tax and after
exceptional items                                               (821)       77

9. Acquisitions

During 2007 the Company acquired the entire share capital of Initram Data Inc. On 20 February 2008 the Company acquired the entire share capital of Performa Consultants UK Limited. The provisional fair values and goodwill arising on the acquisitions are as follows:

 

 Initram     Performa
                                                       Unaudited    Unaudited
                                                           £'000        £'000

Book value of net assets acquired                             11        1,265
Fair value adjustments:
- Intangible assets (technology and client contracts)         93        1,500
- Other fair value adjustments                                 -         (400)
Goodwill                                                   1,309        5,885
                                                          --------     --------
                                                           1,413        8,250
                                                          ========     ========

Initial cash consideration including costs and adjustments for
net assets acquired                                         1,024        7,062
Shares issued                                                   -        1,188
Deferred consideration                                        389            -
                                                          --------     --------
                                                            1,413        8,250
                                                          ========     ========

10. Earnings per share

Basic earnings per share is calculated by dividing the profit attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the year as set out below.

 

Earnings per share - basic and diluted

               Earnings     Weighted    Earnings   Earnings  Weighted  Earnings
                             average   per share              average       per
                           number of                        number of     share
                              shares                           shares
               Unaudited   Unaudited   Unaudited    Audited   Audited   Audited
                    2007        2007        2007       2006      2006      2006
                   £'000        '000       pence      £'000      '000     pence
                 --------    --------    --------    -------   -------    ------
Earnings per
share - basic      3,718      52,771         7.0      1,324    40,225       3.3
                 --------    --------    --------    -------   -------    ------
Potentially
dilutive
shares                 -       1,757        (0.2)         -     1,587      (0.1)
                 --------    --------    --------    -------   -------    ------
Earnings per
share -
diluted            3,718      54,528         6.8      1,324    41,812       3.2
                 ========    ========    ========    =======   =======    ======

 

Adjusted earnings per share

 

djusted earnings per share

                    Earnings    Weighted    Earnings   Earnings  Weighted  Earnings
                                 average   per share              average       per
                               number of                        number of     share
                                  shares                           shares
                   Unaudited   Unaudited   Unaudited    Audited   Audited   Audited
                        2007        2007        2007       2006      2006      2006
                       £'000        '000       pence      £'000      '000     pence

Earnings per
share - basic          3,718      52,771         7.0      1,324    40,225       3.3
Effect of
amortisation
of acquired
intangibles              459                     0.9        234         -       0.5
Effect of
operating
exceptional
items                      -                       -      1,421         -       3.5
Effect of tax
on exceptional
items                      -                       -       (426)        -      (1.0)
                     --------    --------    --------    -------   -------    ------
Adjusted earnings
per share              4,177      52,771         7.9      2,553    40,225       6.3
Potentially dilutive
shares                     -       1,757        (0.2)         -     1,587      (0.2)
                     --------    --------    --------    -------   -------    ------
Diluted adjusted
earnings per
share                  4,177      54,528         7.7      2,553    41,812       6.1
                     ========    ========    ========    =======   =======    ======

The adjusted earnings per share information has been provided in order to assist the reader to understand the underlying performance of the business on a comparable basis. The adjusted profit before tax for 2006 has been restated to include the impact of amortisation on acquired intangibles for comparability purposes.

11. Dividend The directors are recommending a final dividend for 2007 of 1.05p per share (2006: 0.7p). This dividend is not accrued in these financial statements. If approved by a resolution at the 2008 Annual General Meeting, it is intended to pay the dividend on 28 May 2008 to all shareholders on the register at the close of business on 25 April 2008.

12. Statement of changes in shareholders’ equity

 

 Share     Share   Shares   Retained      Other    Minority       Total
            Capital   premium    to be   earnings   reserves   Interests
                      account   issued                                     Unaudited
Group         £'000     £'000    £'000      £'000      £'000       £'000       £'000

At 1 January
2007            522    13,570      896      3,008        116        (141)     17,971
Shares
issued            9       703      (22)         -          -           -         690
Profit for
the year          -         -        -      3,718          -          33       3,751
Dividends
paid              -         -        -       (618)         -           -        (618)
Lapse of
warrants          -         -        -          2         (2)          -           -
Share based
payments          -         -        -        127          -           -         127
Minority
interest
acquired          -         -        -          -          -          98          98
Exchange
differences
offset in
reserves          -         -        -          -      3,018         (28)      2,990
              ------   -------   ------    -------    -------     -------    --------
At 31
December
2007            531    14,273      874      6,237      3,132         (38)     25,009
              ======   =======   ======    =======    =======     =======    ========

Other reserves includes merger reserve and translation reserve

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