StatPro Group PLC – Final Results

For immediate release
12 March 2007

STATPRO GROUP PLC

(“StatPro” or the “Group”)

Preliminary Results for the Year ended 31 December 2006

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 2006.

Year ended      Year ended
                                         31 December     31 December
                                                2006            2005   Change
Turnover                              £14.60 million  £10.79 million      +35%
Profit before tax (before exceptional
items) (note 3)                        £2.56 million   £1.64 million      +56%
Profit before tax (after exceptional
items)                                 £1.14 million   £1.64 million      -31%
Basic earnings per share                         3.3p            4.6p     -28%
Adjusted earnings per share (note 8)             5.8p            4.6p     +26%
Dividend per share - final proposed
for year                                         0.7p            0.5p     +40%
Dividend per share - total proposed
for year                                         1.0p            0.5p    +100%

Financial highlights

  • Recurring annualised revenue up by 75% to £17.66 million (2005: £10.10 million)
  • Recurring revenue recognised in the year of £12.48 million (2005: £9.13 million) represents 85% of total revenue (2005: 85%)
  • Net operating margin was 18.1% before exceptional items (2005: 15.4%) overall and 19.2% on continuing operations before exceptional items
  • Strong free cash flow (cash generated from operations less investment in internally generated intangible assets) of £1.95 million (2005: £1.42 million)
  • Year end net debt of £7.68 million (2005: net cash £1.82 million) lower than expected due to cash generation ahead of expectations and currency gain on debt
  • Increased final dividend recommended of 0.7p per share resulting in total dividend of 1.0p (2005: final and total for year 0.5p)

Operational highlights

  • Completion of three strategic acquisitions in 2006 transforming the business resulting in:* increased opportunities in large North American market
    * StatPro’s widest ever range of products
    * ability to offer integrated data and software solutions
  • FRI integration and reduction of annualised costs by £1.0 million in line with expectations – active cross selling underway
  • Average number of products for top 30 clients is now 3.7 products per client

Commenting on the results, Justin Wheatley, Chief Executive of StatPro said: ‘We enter 2007, as we did in 2006, with considerable confidence. We have a large pipeline of prospects, a growing number of existing clients and a wider range of products and data that meet the complex requirements of increasingly demanding asset managers, who we believe are planning to increase investment in their systems. The average value of contracts is expected to be higher than in previous years and our goal remains to achieve net operating margins of over 20%.

‘We have had a satisfactory start to the current financial year with further progress on the integration of FRI and our cross selling initiatives, and overall performance is in line with our expectations. We will provide a further update on trading at our AGM on 16 May 2007.’

– Ends –

For further information, please contact:

StatPro Group plc

Justin Wheatley, Chief Executive On 12 March: 020 7360 4900
Andrew Fabian, Finance Director  Thereafter: 020 8410 9876

Arbuthnot Securities Limited

Tom Griffiths/Neil Kirkton 020 7012 2000

Smithfield

Reg Hoare/Miranda Good 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 £17.7 million in 2006.

CHIEF EXECUTIVE’S REVIEW

Highlights

This year has been another one of solid performance by StatPro with strong organic growth complemented by three significant acquisitions. Organic revenue grew by 18% from £10.79 million to £12.74 million and including acquisitions, revenue increased by 35% (2005: 19%) to £14.60 million. More importantly, profit before tax and exceptional items increased by 56% to £2.56 million (2005: £1.64 million) and adjusted earnings per share increased by 26% to 5.8p (2005: 4.6p). The net operating margin in 2006 was 18.1% before exceptional items (2005: 15.4%) overall and 19.2% (2005: 15.4%) on continuing operations before exceptional items.

The exceptional costs for 2006, totaling £1.42 million (2005: nil), primarily relate to restructuring costs incurred as a result of the acquisition of FRI Corporation (FRI). Prior to the acquisition we had identified a series of cost savings we could make and we acted swiftly to implement these initiatives reducing costs for the combined business going forward by approximately £1.0 million per annum. Following the acquisition, we implemented our accounting policies on software revenue recognition at FRI. This policy, which is more conservative than FRI’s in terms of revenue recognition, has had the effect of reducing its contribution compared to that expected at the time of the acquisition. We issued 15.25 million of new shares raising £13.16 million before expenses in two placings of ordinary shares during the year to strengthen the balance sheet and to part fund the acquisition of FRI and we welcome all our new shareholders.

At the end of 2006 StatPro’s annualised recurring revenue contracts amounted to £17.66 million up from £10.10 million at the start of the year and recognised recurring revenue accounted for 85% of total revenues (2005: 85%). Cash generation was strong with £1.95 million free cash flow (2005: £1.42 million). In October 2006 we borrowed £12.0 million to complete the acquisition of FRI, but net debt at the end of 2006 was lower than expected at £7.68 million (2005: net cash £1.82 million) due to improved cash generation and a currency gain on our Canadian dollar debt.

Acquisitions

FRI

We made three acquisitions in 2006 the most significant of which was FRI based in Canada which was completed on 24 October 2006 for a total consideration including expenses of CAD56.46 million (£26.62 million). FRI has two principal lines of business; one is a price feed service for asset managers and custodians; the other a portfolio management system for asset managers. StatPro has identified that there is significant synergy between the data requirements of our existing clients and the FRI service.

Furthermore, the Directors believe we can develop a series of new services by combining StatPro’s expertise with FRI’s products. Most important amongst these is a planned service to price complex assets such as Credit Default Swaps (CDS), Collateralised Debt Obligations (CDO) and Over-The-Counter structured products (OTCs) and many others besides. There has been a significant proliferation of these assets over the last few years to the extent that more and more asset managers use them. Having independent valuations of these assets is vital in order to comply with the many new regulations that have been introduced. We are planning to launch this service at the end of 2007.

We also will be providing our clients with other data services such as an index service and a fixed income data feed for our product StatPro Fixed Income (SFI). This is in addition to improving and expanding the existing excellent price feed service already offered by FRI. Early indications suggest that this data service will make a positive contribution to our numbers in 2007.

FRI’s portfolio management system (Raison) has been renamed StatPro Portfolio Management (SPM). This is a market leading product with a strong client base in Canada. We intend to market this initially in North America only and we have changed the business model from a licence fee and support model to an annual licence model. Whilst this has a short term impact on the revenue, the directors believe that in the long run this is the best way to build significant shareholder value. SPM has a solid pipeline of prospects and is expected to make a positive contribution to our results for 2007.

Alphai

In April 2006 we acquired an Australian business called Alphai that develops performance software. We are integrating this product into our Web Service platform and we expect to launch this late in 2007. This acquisition has also given us a foothold in the Australian market and we recently won a significant new client there for our SPA and SFI products which we hope will be the first of many in the territory.

Kizen

In May 2006 we acquired a South African business based in Cape Town that develops compliance software. The acquisition has helped reinforce StatPro’s strong existing position in the South African asset management market where the Group now has recurring revenues of around £1.4 million. We have been pleased with Kizen’s progress to date having sold five systems since the acquisition and we expect to build on this in 2007.

New Business

Sales were strong in all regions in 2006 compared with 2005 and previous years. In Europe we had another good year with our Risk, Fixed Income and Performance products all doing well. In South Africa we had an outstanding year with eight new clients and many sales to existing clients. The UK market was good, but a number of opportunities were delayed into 2007. The US market finally improved following a few difficult years with new sales up strongly with a number of significant deals signed with custodian banks.

60% of new business by value came from new clients and 40% from existing clients. The average number of products per client is 1.6. Following our acquisitions this ratio tends to fall (as a result of an increased number of clients with initially only one product), but the average number of products per client for our top 30 clients by total recurring revenue is now 3.7 products and those top 30 represent about 50% of our recurring revenues.

Sales progress was made for all products, but the best performers were Risk (SRM) and Fixed Income (SFI). Indeed there is a strong interrelationship between these two products as they are both required by clients to help analyse the risk and return from complex credit instruments and StatPro’s continued expertise in this domain has helped cement our position in the market as a leading supplier.

Strategy

Our strategy remains to build strong relationships with our clients and provide them with a coherent product platform that delivers both better value and better analysis. This means that we have grown the Group by acquiring new products and investing in such products for growth, rather than developing products from inception. Since StatPro was founded in 1994 we have made eight acquisitions in total, all of them adding a new product, new skills, new clients and new territories.

The acquisition of FRI allows us to provide our clients with data for the first time so that we will now be able to offer a complete service. As we expand our product base, we believe that our offering becomes more attractive not least because our critical mass is now such that we can offer the highest quality service to asset managers of all sizes. Including FRI our regional balance now means that approximately 43% of our recurring revenue comes from North America and 48% from the UK and Continental Europe with the Rest of the World (predominantly South Africa and Australia) having about 9%.

Completing the acquisition of a company is the first step; integration and maximisation of efficiencies in the enlarged group is the vital process to generate value. Four months after completion, the integration of FRI is progressing well and we have a number of specific integration projects for each functional area of our business processes. Not least amongst these is to promote our existing products to the FRI clients and the FRI products to the StatPro clients in order to achieve cross-sales. Sales processes typically take an average of six months to a year, so we are very pleased that we already have our first cross sell of a StatPro product to an FRI client and that the pipeline for further cross sells is looking promising. The integration stage will be substantially completed by the end of the third quarter of 2007 when we will be able to launch a new range of services which combine software with data.

The focus of our expertise is now firmly on the burgeoning market of complex assets and we believe that StatPro is very well placed to benefit from the expertise and intellectual property that is vested in our software. Barriers to entry into this market are becoming higher and we believe that few competitors possess both the expertise and the geographical infrastructure to deliver the level of global service that we offer. We will seek to build on this lead in 2007.

People

As previously announced, Dominic Wheatley resigned from the Board in January 2007. Dominic had been a non-executive director since 1999 helping guide the Company through its major transition from an unquoted loss-making business to a successful profitable dividend paying AIM listed Company. The business has been transformed over the past eight years and has grown both organically and by acquisition. The Board expresses its deep gratitude to Dominic for his contribution, advice and support and wishes him well in his other business ventures.

StatPro’s continuing success is all about people and the expertise in the business. I welcome new colleagues who have recently joined and warmly congratulate all my colleagues on an excellent performance in 2006 and once more urge everyone to make 2007 StatPro’s best year yet.

Dividend

We paid our maiden dividend for 2005 in May 2006 of 0.5p per share and an interim dividend for 2006 of 0.3p per share in November 2006 and the Board now recommends the payment of a final dividend of 0.7p for 2006 on 30 May 2007 to those shareholders on the register on 27 April 2007 making a total dividend of 1.0p per share for 2006 (2005: 0.5p 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 enter 2007, as we did in 2006, with considerable confidence. We have a large pipeline of prospects, a growing number of clients and a wider range of products and data that meet the complex requirements of increasingly demanding asset managers, who we believe are planning to increase investment in their portfolio analytics systems. The average value of contracts is expected to be higher than in previous years and our goal remains to achieve net operating margins of over 20%.

StatPro is now a truly international business with just 16% of recurring revenue deriving from UK based clients. This has resulted in an increased exposure to currencies, predominantly US dollar, Canadian dollar and euro. Whilst we have costs in all these currencies, we have a residual profit exposure on the translation of results into sterling. We will continue to take reasonable measures to hedge our exchange risk including matching currencies of loans against net overseas investments and expected cash flows.

We have had a satisfactory start to the current financial year with further progress on the integration of FRI and our cross selling initiatives, and overall performance is in line with our expectations. We will provide a further update on trading at the AGM on 16 May 2007.

Justin Wheatley
Chief Executive

FINANCIAL REVIEW

Overview

Three acquisitions were completed during the year including a major transformational acquisition in North America (FRI Corporation). The recurring annualised value of new contracts signed during 2006 was 52% higher than that achieved in 2005. With organic revenue growth and through acquisitions the Group has increased its recurring revenue substantially to £17.66 million (2005: £10.10 million) and there is now a greater weighting of contracts in the US and Canada. The Group increased its operating profit before exceptional items by 59% to £2.65 million (2005: £1.66 million) and by 47% on the continuing operations before exceptional items.

Acquisition of FRI Corporation

The acquisition of FRI Corporation was financed through a mixture of debt and equity. The balance sheet was strengthened by the issue of equity and the gearing was increased as a result of the bank debt finance but the directors believe that the shareholders will benefit from the Group’s financial gearing.

Turnover

Group turnover increased to £14.60 million (2005: £10.79 million), of which £1.87 million related to acquired businesses. StatPro has maintained its record of growing revenue each year since its flotation in 2000 and the growth rate has picked up in 2006 to 35% (2005: 19%) including the contribution from acquisitions of 17%.

We have applied StatPro’s more conservative accounting policy to FRI in relation to revenue recognition. The impact of exchange rates on revenue and profit was not material to the Group’s results for the year although the fall in the Canadian dollar in the last quarter of 2006 by around 9%, combined with the change in accounting policy, did impact FRI’s reported revenue and profit before tax compared to our original expectations.

Software licence revenue grew by 28% to £11.66 million (2005: £9.13 million). Around 60% of new licence revenue was from new clients. Data revenue (derived from the acquisition of FRI), amounted to £0.82 million for the two months since the acquisition. Total recurring fees represent 85% (2005: 85%) of annual revenue. The level of professional services revenues of £2.12 million was up by 28% compared to the prior year (2005: £1.66 million) due to the higher level of new business and the contribution from acquisitions.

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

The split of revenue for the year by type was as follows:
                               Year to               Year to            Growth
                      31 December 2006      31 December 2005      year on year
                             £ million             £ million                 %
Group revenue
Software licences                11.66                  9.13               +28
Data fees                         0.82                     -               n/a
                                -------               -------           -------
Total recurring fees             12.48                  9.13               +37

Professional services             2.12                  1.66               +28
                                -------               -------           -------
                                 14.60                 10.79               +35

Recurring revenue

The annualised recurring revenue from software licences and data fees at the end of December 2006 grew to £17.66 million (2005: £10.10 million), an increase of 75% year on year (21% before impact of acquisitions and exchange rate movements). Included within recurring revenue is revenue from data which is not committed but relates to ‘overage’. One of the initiatives since the completion of the acquisition of FRI is to endeavour to secure as much of this uncommitted recurring revenue as possible and to move data contracts, which tend to be only one year commitments, to longer term contracts to secure the recurring revenue further.

New contracts, net of cancellations, amounted to £2.10 million (2005: £1.37 million). Contracts acquired amounted to £6.51 million based on the exchange rate at the relevant acquisition date. The net impact of the revaluation of contracts to the year end exchange rates amounted to a reduction of £1.05 million due to a significant fall in the value of currencies (principally the US dollar and Canadian dollar) against sterling at 31 December 2006 compared with 31 December 2005.

 Growth
                                                                                              rate
                                                                                        (excluding
                                                                                         contracts          Net

                                                                                          acquired       growth
                               New contracted                                                  and         rate
                       At 31          revenue      Contracts    Net impact      At 31     exchange   (including
Annualised          December          (net of  acquired with   of exchange  
December         rate    contracts
value                   2005   cancellations)   acquisitions         rates       2006   movements)    acquired)
                   £ million        £ million      £ million     £ million  £ million            %            %

Recurring
revenues
Software
licences
and
data fees              10.10             2.10           6.51        (1.05)     17.66          +21          +75

The proportion by value of recurring software licences on multi-year contracts (licence agreements with more than one year remaining contractually committed) increased to 57% at the end of 2006 from 53% at the end of 2005. We now have 29 (2005: 21) client groups each subscribing more than £150,000 per annum.

The range of products in our current offering has been greatly enhanced in the last year with the addition of StatPro Portfolio Management (‘SPM’), StatPro Portfolio Compliance (‘SPC’) and StatPro Data Service (‘SDS’). The directors believe that opportunities for selling data solutions in combination with our enhanced analytics product suite will lead to future growth for the business.

Operating expenses and exceptional items

Operating expenses (before amortisation of intangibles and exceptional items) increased by 29% to £10.29 million (2005: £7.97 million) as a result of a 44% increase in the average number of employees during the year from 98 to 141, predominantly as a result of acquisitions. The major increase resulted from the acquisition of FRI, which brought 110 people in two offices (Toronto and Montreal). The Alphai acquisition resulted in us acquiring five new employees and a Sydney office and the Kizen acquisition (six additional employees) allowed us to integrate our two offices in Cape Town. We ended 2006 with 233 employees (2005: 105) situated in eleven offices (London, Paris, Milan, Frankfurt, Luxembourg, Toronto, Montreal, New York, San Francisco, Cape Town and Sydney). 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.

The operating expenses (excluding exceptional items) relating to the acquisitions amounted to £1.51 million. As part of the restructuring of the business operations we incurred exceptional costs amounting to £1.42 million (2005: nil). These costs relate to redundancies and other terminations, onerous lease commitments and other integration and restructuring costs and are expected to result in reduced annual operating expenses going forward of around £1.0 million, in line with expectations. The cash element incurred in 2006 was approximately £0.33 million.

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 £4.55 million (2005: £2.31 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 investments. The estimated useful life for customer contracts varies between three and seven years. The amortisation of intangibles amounted to £1.67 million in 2006 (2005: £1.15 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

Prior to the acquisition of FRI Corporation, which was partly debt financed, the Group was generating net interest income. As a result of the interest on the loan drawn down in October 2006 to finance the acquisition of FRI there was a net interest expense for the year as a whole amounting to £0.09 million (2005: £0.02 million).

Profit before tax

The profit before taxation and exceptional items grew by 56% to £2.56 million (2005: £1.64 million). The profit before taxation after exceptional items reduced by 31% to £1.14 million (2005: £1.64 million).

Taxation

There was a net credit to taxation amounting to £0.08 million as a result of the deferred tax credit exceeding the current tax charge of £0.05 million. In 2005 there was a nil tax charge overall. The Group level of deferred tax recognised increased mainly as a result of deferred tax arising on acquisitions in 2006 to £2.27 million (2005: £1.52 million). In the opinion of the directors this deferred tax asset will be recoverable with reasonable certainty against tax on trading profits in future years and the level of the deferred tax balance is considered reasonable in the light of future probability of recovery of the whole amount of deferred tax. The recognised deferred tax asset amounts to 57% (2005: 61%) of the potential deferred tax asset for the Group.

Earnings per share

Basic earnings per share amounted to 3.3p (2005: 4.6p). Adjusted earnings per share before exceptional items were 5.8p (2005: 4.6p). Fully diluted earnings per share in 2006 were 3.2p (2005: 4.5p) based on potentially dilutive shares outstanding amounting to 1,587,334 (2005: 426,591).

Balance Sheet

The Group’s net assets increased substantially to £19.68 million at 31 December 2006 from £3.03 million at 31 December 2005. This was mainly as a result of an increase in equity during the year of £14.94 million (including exchangeable shares on FRI acquisition) and the net profits attributable to equity shareholders of £1.32 million.

Non-current and current assets

Goodwill arising on acquisitions during the year amounted to £28.76 million; the principal component related to the acquisition of FRI Corporation. The goodwill relating to the acquisition of Delve, which was completed in 2005, has been adjusted by £0.24 million reflecting an adjustment to the estimated deferred consideration. Goodwill arising on all acquisitions has been reviewed and there have been no impairments to any goodwill.

Total capital expenditure amounted to £0.30 million in 2006 (2005: £0.19 million). Included within non-current assets is deferred tax of £2.27 million (2005: £1.52 million). Deferred tax amounting to £0.49 million at 31 December 2005 previously reported as current has been reclassified into non-current assets. The level of current assets increased to £8.68 million (2005: £5.61 million). Increased new business and acquisitions resulted in an increase in trade debtors, the largest component of debtors, amounting to £3.78 million at the end of 2006 (2005: £3.09 million). The level of cash and cash equivalents increased to £3.33 million (2005: £1.85 million).

Current and non-current liabilities

The main movements in creditors have arisen following the increase in deferred income, creditors and accruals relating to the exceptional charges and the bank debt arising in 2006. There is also an estimated £4.07 million deferred consideration 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 finance leases, corporation tax and deferred income) increased to £4.77 million (2005: £1.99 million). Deferred income, which is a non-cash liability, amounted to £8.67 million (2005: £6.56 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 2006 amounting to £3.89 million (2005: £3.16 million). The free cash flow (cash generated from operations less investment in internally generated intangible assets) of £1.95 million (2005: £1.42 million), was 38% higher year on year (see note 5) and this includes the impact of approximately £0.33 million of exceptional cash costs. The net cash investment in acquisitions amounted to £24.52 million during the year, the bulk of which related to the cash consideration and associated costs payable for FRI Corporation. The net proceeds of share issues during the year amounted to £12.84 million.

The acquisition of FRI Corporation was part funded by a new £14.5 million facility with our existing bankers, replacing our existing facility. £12 million is a term loan repayable over five years in quarterly instalments, of which approximately £1.86 million is repayable during 2007; the remainder is a £2.5 million working capital facility. The net debt position at 31 December 2006 was £7.68 million (2005: net cash £1.82 million). This net debt was lower than expected due to an improved cash generation and a currency gain on the Canadian dollar element of our debt. The directors believe that the gearing up of the balance sheet is in the best interests of the shareholders.

Share capital and reserves

The issued share capital amounted to £0.52 million (2005: £0.35 million) representing 52,168,820 shares of 1p nominal value (2005: 35,049,744) and the share premium account has increased to £13.57 million (2005: £0.89 million) as a result of the issue of 17,119,076 shares during the year. The bulk of this related to the two placings made in the year; 3.25 million shares were placed in May 2006 at 80p per share to strengthen the balance sheet and 12 million shares were placed at 88p per share for the acquisition of FRI Corporation. As part of the acquisition of FRI Corporation 1,446,573 exchangeable shares in FRI were created and retained by the sellers of FRI, which exchangeable shares are exchangeable for ordinary shares in StatPro. During November and December 2006 a total of 499,905 were exchanged resulting in the issue of an equivalent number of StatPro shares. 946,668 exchangeable shares in FRI were outstanding at 31 December 2006 and are classified as shares to be issued on the balance sheet. As part of the acquisition of Alphai, 1,000,000 shares were issued. The equity minority interests amounting to a net loss of £0.11 million (2005: net profit of £0.07 million) relate to the minorities’ share of profits less losses for the year.

The equity minority interests of £0.14 million (2005: £0.05 million) have been deducted in computing the total capital employed.

Post balance sheet events

The Company paid out £0.24 million of deferred consideration in early January 2007 being the first instalment of the deferred consideration for Delve completed in July 2005. During March 2007 the directors expect to pay approximately £1.20 million consideration for the 49% of StatPro Italia that is not currently owned by the Company, of which approximately £0.12 million will be reinvested by the recipients in StatPro shares to be issued at 97.5 pence per share as announced on 21 December 2006 and the balance in cash.

Dividend

The directors are recommending a final dividend for 2006 of 0.7p per share (2005: 0.5p) making a total dividend for 2006 of 1.0p per share (2005: 0.5p). It is intended to pay the dividend on 30 May 2007 to all shareholders on the register at the close of business on 27 April 2007. Under IFRS, this dividend is not accrued in these financial statements. A dividend of the same amount will are also be payable by FRI on each exchangeable share that remains outstanding, subject to having sufficient distributable reserves in FRI Corporation. Dividends paid in 2006 amounted to £0.30 million. Going forward we intend 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.

Andrew Fabian
Finance Director

Group income statement for the year ended 31 December 2006

Notes   Year to 31     Year to 31  Year to 31 Year to 31
                                   December       December    December   December
                                       2006           2006        2006       2005
                                  Unaudited      Unaudited   Unaudited    Audited
                                      £'000          £'000       £'000      £'000
                                 Continuing   Acquisitions       Total
                                 operations

Group Revenue                2       12,737          1,867      14,604     10,786
--------------------------------------------------------------------------------
--
Operating expenses
before amortisation
of intangibles and
exceptional items                    (8,780)        (1,508)    (10,288)    (7,969)
Amortisation of
intangibles                          (1,511)          (158)     (1,669)    (1,154)
Exceptional items        3, 4          (674)          (747)     (1,421)         -
--------------------------------------------------------------------------------
--

Operating expenses                  (10,965)        (2,413)    (13,378)    (9,123)
                                     --------       --------    --------   --------

Operating profit                      1,772           (546)      1,226      1,663
                                     -----------------------

Interest receivable                                                106         18
Interest payable                                                  (195)       (42)
                                                                --------   --------

Profit before
taxation                     3                                   1,137      1,639

Taxation                     6                                      77          -
                                                                --------   --------

Profit for the year                                              1,214      1,639
                                                                ========   ========

Profit/(loss)
attributable to
minority interests                                                (110)        69
Profit attributable
to equity
shareholders                                                     1,324      1,570
                                                                --------   --------
                                                                 1,214      1,639
                                                                ========   ========

Earnings per share
from continuing
operations - basic           8                                     3.3p       4.6p
- diluted                    8                                     3.2p       4.5p

Statement of recognised income and expense

                                                        Year to       Year to
                                                    31 December   31 December
                                                           2006          2005
                                                      Unaudited       Audited
                                                          £'000         £'000
Profit after tax                                          1,214         1,639
Net exchange differences offset in reserves net of
tax                                                         738           (81)
                                                         --------      --------
Total recognised income for the year                      1,952         1,558
                                                         ========      ========
Attributable to:
Minority interests                                          (91)           78
Equity shareholders                                       2,043         1,480

Consolidated balance sheet
at 31 December 2006

                                                                         As at
                                                       As at       31 December
                                                 31 December              2005
                                                        2006           Audited
                                        Notes      Unaudited        (Restated)
                                                       £'000             £'000
Assets
Non-current assets
Goodwill                                    7         31,577             3,053
Intangible assets                                      4,550             2,308
Property, plant and equipment                            846               466
Other receivables                                        316               174
Deferred tax assets                                    2,269             1,522
                                                     ---------         ---------
                                                      39,558             7,523

Current assets
Trade and other receivables                            5,352             3,759
Cash and cash equivalents                              3,327             1,853
                                                     ---------         ---------
                                                       8,679             5,612

Liabilities
Current liabilities
Financial liabilities - borrowings                    (1,857)              (35)
Trade and other payables                              (4,767)           (1,987)
Current tax liabilities                                  (53)              (26)
Deferred income                                       (8,562)           (6,487)
Provisions - contingent consideration                 (1,484)                -
                                                     ---------         ---------
                                                     (16,723)           (8,535)

Net current liabilities                               (8,044)           (2,923)

Non-current liabilities
Financial liabilities - borrowings                    (9,145)                -
Deferred income                                         (109)              (75)
Provisions - contingent consideration                 (2,581)           (1,500)
                                                     ---------         ---------
                                                     (11,835)           (1,575)

Net assets                                            19,679             3,025
                                                     =========         =========

Shareholders' equity
Ordinary shares                            10            522               350
Share premium                              10         13,570               891
Shares to be issued                        10            896                 -
Other reserves                             10          1,824               (90)
Retained earnings                          10          3,008             1,924
                                                     ---------         ---------
Total shareholders' equity                            19,820             3,075
Minority interest in equity                10           (141)              (50)
                                                     ---------         ---------
Total equity                                          19,679             3,025
                                                     =========         =========

The consolidated balance sheet for 31 December 2005 has been restated (see note
1)

Group cash flow statement
for the year ended 31 December 2006

                                                         Year to       Year to
                                                     31 December   31 December
                                                            2006          2005
                                             Notes     Unaudited       Audited
                                                           £'000         £'000
Cash flows from operating activities
Cash generated from operations                   5         3,889         3,155
Interest received                                            106            18
Interest paid                                                (12)          (13)
Issue costs in respect of bank loan                            -            (5)
Tax paid                                                    (105)          (31)
                                                         ---------     ---------
Net cash from operating activities                         3,878         3,124
                                                         ---------     ---------

Cash flows from investing activities
Acquisition of/increased investment in
subsidiaries (net of cash acquired)                      (24,517)         (858)
Investment in intangible assets -

development                                      5        (1,939)       (1,738)
costs
Proceeds from sale of property, plant and
equipment                                                      -            22
Purchase of property, plant and equipment                   (302)         (188)
                                                         ---------     ---------
Net cash used in investing activities                    (26,758)       (2,762)
                                                         ---------     ---------

Cash flows from financing activities
Repayment of bank loan                                         -        (1,200)
Net proceeds from bank loan                               11,788             -
Proceeds from issue of ordinary shares                    12,836           551
Capital element of finance lease payments                      -            (2)
Dividends paid to equity shareholders                       (298)            -
                                                         ---------     ---------
Net cash from/(used) in financing activities              24,326          (651)
                                                         ---------     ---------

Effects of exchange rate changes                              28            (7)
                                                         ---------     ---------

Net increase/(decrease) in cash and cash
equivalents                                                1,474          (296)

Cash and cash equivalents at start of year                 1,853         2,149
                                                         ---------     ---------

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

Reconciliation of net cash flow to movement in net (debt)/cash

                                                               2006       2005
                                                          Unaudited    Audited
                                                              £'000      £'000
Increase/(decrease) in cash and cash equivalents in the
year                                                          1,474       (296)
Repayment on finance leases                                       -          2
Bank loan repayment                                               -      1,200
Net bank loan assumed in year                               (11,788)         -
Exchange gain on bank loan                                      825          -
Other non-cash movements                                         (4)        14
                                                           ----------   --------
Movement in net (debt)/cash                                  (9,493)       920
Net cash at beginning of year                                 1,818        898
                                                           ----------   --------
Net (debt)/cash at end of year                               (7,675)     1,818
                                                           ==========   ========

Reconciliation of operating profit to net cash inflow from operating activities

                                                              2006        2005
                                                         Unaudited     Audited
                                                             £'000       £'000
Operating profit                                             1,226       1,663
Depreciation of tangible fixed assets                          261         202
Amortisation of intangibles                                  1,669       1,154
Increase in debtors                                           (490)     (1,254)
Increase in creditors (excluding deferred income)              898         193
Movement in deferred income                                    232       1,130
Share based payments                                            58          59
Net loss on disposal of fixed assets                            35           8
                                                          ----------    --------
Net cash inflow from operating activities                    3,889       3,155
                                                          ==========    ========

Notes to the preliminary financial statements

1. Announcement
This announcement was approved by the Board of directors on 9 March 2007. The
preliminary results for the year ended 31 December 2006 are unaudited. The
financial information set out in this announcement does not constitute the
Company's statutory accounts for the years ended 31 December 2006 or 31 December
2005. 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 2005. The financial information
for the year ended 31 December 2005 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.

The consolidated balance sheet for 31 December 2005 has been restated as
follows. Deferred tax amounting to £0.49 million previously classified as
current has been reclassified as non-current. The translation reserve loss
amounting to £0.09 million previously reported as part of retained earnings
together with the warrant reserve amounting to £2,000 have been included in
other reserves.

2. Turnover by destination

                              2006            2006            2006         2005
                         Unaudited       Unaudited       Unaudited      Audited
                             £'000           £'000           £'000        £'000
                        Continuing
                        operations    Acquisitions           Total        Total

United Kingdom               2,784               -           2,784        2,478
Continental Europe           6,668             168           6,836        5,559
North America                2,193           1,357           3,550        1,778
Rest of World                1,092             342           1,434          971
                           --------        --------       --------     --------
           Total            12,737           1,867          14,604       10,786
                           ========        ========       ========     ========

Analysis of recurring revenue by type

                                      Sterling value at 31
                                             December 2006
                                                 Unaudited
Type                                            £ millions           Percentage
Software licences                                    13.87                78.5%
Data fees                                             3.79                21.5%
                                                   --------            --------
                                                     17.66               100.0%
Data includes overage which is expected revenue but not committed amounting to
£0.40 million

Analysis of recurring revenue by region

                                      Sterling value at 31
                                             December 2006
                                                 Unaudited
Region                                          £ millions           Percentage
United Kingdom                                        2.86                16.2%
Continental Europe                                    5.63                31.9%
North America                                         7.54                42.7%
Rest of World                                         1.63                 9.2%
                                                   --------            --------
                                                     17.66               100.0%

Analysis of recurring revenue by currency

                                                 Sterling value at
                   Currency   Year end exchange   31 December 2006
                      value                rate          Unaudited
Currency           Millions    31 December 2006         £ millions    Percentage
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. Profit before taxation

                                                            2006          2005
                                                       Unaudited       Audited
                                                           £'000         £'000
Profit before taxation                                     1,137         1,639
Add back: Exceptional items                                1,421             -
                                                        ----------     ---------
Profit before tax and exceptional items                    2,558         1,639
                                                        ==========     =========

4. Exceptional items. 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. There were no exceptional
items in 2005.

5. Free cash flow - reconciliation from statutory heading to business
performance measure

                                                              2006        2005
                                                         Unaudited     Audited
                                                             £'000       £'000
Net cash inflow from operating activities                    3,889       3,155
Investment in intangible assets - development costs         (1,939)     (1,738)
                                                          ---------   ---------
Cash generated from operations less investment in
internally generated                                         1,950       1,417
intangible assets                                         =========   =========

Cash generated from operations is after the impact of exceptional cash costs of
approximately £0.33 million in 2006 (2005: nil)

6. Taxation

The taxation reconciliation for the year is as follows:

                                                              2006        2005
                                                         Unaudited     Audited
                                                             £'000       £'000
Profit before taxation                                       1,137       1,639

Current tax
Tax charge on profit before tax at standard rate of
corporation tax in the                                        (341)       (492)
UK of 30% (2005: 30%)
Effects of:
Expenses allowable/(not deductible) for tax purposes           140        (111)
Accelerated capital allowances                                   6         (26)
Other temporary differences                                   (361)        108
Differences in tax rates                                         6           -
Tax losses utilised                                            497         471
                                                            -------     -------
Total current tax on ordinary activities                       (53)        (50)

Deferred tax
Origination and reversal of timing differences                 130          50
                                                            -------     -------
Total taxation credit/(charge)                                  77           -

The tax impact of the exceptional items is as follows:

                                                               2006       2005
                                                          Unaudited    Audited
                                                              £'000      £'000
Tax charge on profit before tax and exceptional items          (349)         -
Tax credit on exceptional items                                 426          -
Net tax credit on profit before tax and after               --------    -------
exceptional items                                                77          -

7. Acquisitions

During the year the Company acquired the entire share capital of Alphai Pty
Limited and Kizen (Pty) Limited and the entire issued ordinary share capital of
FRI Corporation. The provisional fair values and goodwill arising on the
acquisitions are as follows:
                                                    Alphai     Kizen       FRI
                                                 Unaudited Unaudited Unaudited
                                                     £'000     £'000     £'000
Share of net assets acquired                            94        62     4,172
Allocated to intangible assets (technology
and client contracts)                                  350       100     1,521
Other fair value adjustments                           (10)        -    (3,911)
Goodwill                                             2,196     1,729    24,839
                                                   ---------  --------  --------
                                                     2,630     1,891    26,621
                                                   =========  ========  ========

Initial cash consideration including costs and
adjustments for net                                    843       639    24,774
assets acquired (excluding cash acquired)
Share consideration including shares to be issued      770         -     1,273
Deferred consideration - provisional estimate        1,017     1,252       574
                                                   ---------  --------  --------
                                                     2,630     1,891    26,621
                                                   =========  ========  ========

The difference between the total movement in goodwill for the year of £28.52
million and the goodwill on acquisitions during the year of £28.76 million was
due to a reduction in provisional estimate for deferred consideration on Delve
amounting to £0.24 million.

8. 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

                         Weighted                          Weighted
                          average                           average
                        number of    Earnings             number of   Earnings
             Earnings      shares   per share   Earnings     shares  per share
            Unaudited   Unaudited   Unaudited    Audited    Audited    Audited
                 2006        2006        2006       2005       2005       2005
                £'000        '000       Pence      £'000       '000      Pence
Earnings
per
share -         1,324      40,225         3.3      1,570     34,211        4.6
basic
Potentially
dilutive
shares              -       1,587        (0.1)         -        427       (0.1)
Earnings
per            -------    --------     -------    -------   --------    -------
share -         1,324      41,812         3.2      1,570     34,638        4.5
diluted

Adjusted earnings per share

                         Weighted                          Weighted
                          average                           average
                        number of    Earnings             number of   Earnings
             Earnings      shares   per share   Earnings     shares  per share
            Unaudited   Unaudited   Unaudited    Audited    Audited    Audited
                 2006        2006        2006       2005       2005       2005
                £'000        '000       Pence      £'000       '000      Pence
Earnings
per
share -         1,324      40,225         3.3      1,570     34,211        4.6
basic
Effect of
operating
exceptional
item            1,421           -         3.5          -          -          -
Effect of
tax
credit on
exceptional
item             (426)          -        (1.0)         -          -          -
                -------     -------     -------     ------    -------     ------

Adjusted
earnings
per
share           2,319      40,225         5.8      1,570     34,211        4.6
excluding
exceptional
items

Potentially
dilutive
shares              -       1,587        (0.3)         -        427       (0.1)
                -------     -------     -------     ------    -------     ------
Diluted
earnings
per
share           2,319      41,812         5.5      1,570     34,638        4.5
excluding
exceptional
items

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.

9. Dividend
The directors are recommending a final dividend for 2006 of 0.7p per share
(2005: 0.5p). This dividend is not accrued in these financial statements. If
approved by a resolution at the Annual General Meeting, it is intended to pay
the dividend on 30 May 2007 to all shareholders on the register at the close of
business on 27 April 2007.

10. Statement of changes in shareholders' equity

              Share     Share   Shares   Retained      Other    Minority       Total
            capital   premium    to be   earnings   reserves   interests   Unaudited
                      account   issued
Group         £'000     £'000    £'000      £'000      £'000       £'000       £'000
At 1
January
2006            350       891        -      1,924        (90)        (50)      3,025
Shares
issued          172    12,679      896          -      1,195           -      14,942
Profit for
the
year              -         -        -      1,324          -           -       1,324
Dividends
paid              -         -        -       (298)         -           -        (298)
Share based
payments          -         -        -         58          -           -          58
Minority
interest
acquired          -         -        -          -          -        (110)       (110)
Exchange
differences
offset in
reserves          -         -        -          -        719          19         738
At 31
December     -------  -------    ------    -------    -------      -------  
--------
2006            522    13,570      896      3,008      1,824        (141)     19,679

Other reserves includes warrant reserve, merger reserve, translation reserve
(previously reported in retained earnings

 

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