StatPro Group PLC – Half Yearly Report

For immediate release
3 August 2011

STATPRO GROUP PLC

(“StatPro”, the “Group”, or the “Company”)

Interim results for the six months ended 30 June 2011

StatPro Group plc (AIM: SOG), the AIM listed provider of portfolio analytics and data solutions for the global asset management industry, announces its interim results for the six months ended 30 June 2011.

Six months ended 30 June 2011 Six months ended 30 June 2010 Change
Revenue £15.61 million £16.63 million -6%
Annualised recurring contract value* £29.66 million £28.73 million +3%
Profit before tax £1.79 million £3.59 million -50%
Adjusted profit before tax** £2.11 million £3.36 million -37%
Adjusted EBITDA** £2.89 million £4.21 million -31%
Adjusted operating profit margin** 15.5% 22.2%
Earnings per share – basic 2.1p 4.5p -53%
                               – adjusted** 2.6p 4.4p -41%
Interim dividend per share 0.75p 0.7p +7%

Financial Highlights:

  • Annualised recurring revenue contract value* up 3% to £29.66 million (2010: £28.73 million) with renewal
  • rate of 91% (2010: 90%)
  • Recurring revenue in the period amounted to 94% of total revenue (2010: 93%)
  • Adjusted EBITDA and adjusted earnings per share reduced in period as a result of:
    • disposal of Johannesburg Stock Exchange (“JSE”) contract, (2010: £0.82 million contribution)
    • increased net expenditure on StatPro Revolution to £1.45 million (2010: £0.20 million)
  • Net debt reduced to £5.15 million (2010: £6.31 million)
  • Interim dividend increased by 7% to 0.75p (2010: 0.7p) reflecting Board’s confidence in the future prospects of the business

Operating Highlights:

  • Good progress on StatPro Revolution, our new innovative cloud-based portfolio analysis and research service, following its official launch in March 2011:
    • Increased trial users leading to over 20 client contracts with an aggregate of over 200 portfolios
    • 5 marketing launch events in key markets leading to increased web traffic
    • Increased marketing of StatPro Revolution also having beneficial impact on sales leads for StatPro Seven
  • Percentage of analytics clients on hosted StatPro Seven platform increased to 34% (2010: 24%)

*  at constant  currency

** Adjusted profit before tax, adjusted earnings per share, adjusted operating profit and adjusted EBITDA are profit before tax, earnings per share, operating profit and EBITDA after adjustment for amortisation of acquired intangibles, share based payments and exceptional items (notes 2, 4 and 5)

Commenting on the results, Justin Wheatley, Chief Executive of StatPro said: “We remain focused on building both our StatPro Revolution business and our StatPro Seven hosted business. With nearly £30 million in recurring revenues, healthy profits and strong operating cash flow, we continue to enjoy a sound financial position. This, combined with the new products and additional functionality we have built in recent years, puts StatPro in a very strong position for future growth. We therefore remain confident of a successful outcome for the year and firmly believe the future prospects of the Group to be extremely exciting.”

– Ends –

For further information, please contact:

StatPro Group plc www.statpro.com
Justin Wheatley, Chief Executive 020 8410 9876
Andrew Fabian, Finance Director
Cenkos Securities
Stephen Keys 020 7397 8926
Adrian Hargrave 020 7379 8922
Julian Morse (Sales) 020 7397 1931
Threadneedle Communications
Caroline Evans-Jones/Hilary Millar/Josh Royston 020 7653 9850

A briefing for analysts will be held at 9.30am today at the offices of  Threadneedle Communications, 3rd Floor, Aldermary House, 10-15 Queen Street, London, EC4N 1TX

About StatPro

StatPro is a leading provider of portfolio analytics and data solutions for the global asset management industry. The Company sells a SaaS-based Analytics and Data platform on a rental basis to investment management companies allowing them to analyse portfolio performance, attribution, risk and GIPS® compliance. StatPro also provides market data and valuation feeds including a Complex Asset Pricing service.

StatPro has grown its recurring revenue from less than £1 million in 1999 to £30 million at end June 2011 and currently enjoys a renewal rate of approximately 91%. StatPro floated on the London Stock Exchange in May 2000 and transferred its listing in June 2003 to AIM.  The Company has operations in Europe, North America, South Africa and Australia, with approximately 80% of recurring revenues being generated outside the UK.

CHIEF EXECUTIVE’S REVIEW

Highlights

We are very pleased with the progress we have made so far with our new service StatPro Revolution. We launched the service in March this year and we have already signed up over 20 clients with over 200 portfolios between them and we have also seen evidence that the sales cycles for StatPro Revolution are shorter than those typically experienced for StatPro Seven. Our successful marketing activity has led to meetings with many more prospects and we are developing an encouraging pipeline of potential new business. A further positive aspect is that we have seen an increase in interest in StatPro Seven as a result of our additional marketing of StatPro Revolution.

The high level of investment we are making in StatPro Revolution, coupled with the disposal of the JSE contract, have, as expected, resulted in a reduction in our revenues to £15.61 million (2010: £16.63 million) and reduced our profit before tax to £1.79 million (2010: £3.59 million). We continue to enjoy a positive operating cash flow and reduced net debt to £5.15 million at 30 June 2011 (2010: £6.31 million) while continuing to invest in the business.

StatPro Seven

Continued uncertainty in the financial markets has made decision making by some prospects slower especially in regards to StatPro Seven and it is possible that this uncertainty will last for some time. However, we have won some significant contracts in the first half of 2011, especially in Europe. Renewal rates remain strong at 91% or better and this forms the bedrock of our business. We also continue to make progress in moving our clients to our hosted platform with 34% of clients by value now on the hosted StatPro Seven service (2010 H1: 24%).

Drivers for new business continue to be regulations such as UCITS IV relating to risk management, where our expertise in liquidity risk, as well as value at risk, is proving key. Another driver is the need for clients to communicate better and faster and sell into increasingly competitive and fragile markets.

We have continued to invest in additional functionality for our StatPro Seven platform, and now have the ability to automatically produce risk figures for any type of bond. We believe this should prove a valuable source of additional revenue for our fixed income analytics business in StatPro Seven as well as for StatPro Revolution. This new service once again underscores the considerable IP that StatPro possesses as a business.

StatPro Revolution and Cloud Technology

We are very pleased with our progress with StatPro Revolution having generated over 20 new clients and over 200 portfolio sales since its launch in March 2011. It is clear that there is an appetite for using Revolution as a communication tool to help support the sales process as well as giving more transparency to all involved in managing, supporting and analysing their portfolios. We have seen a marked increase in levels of interest following the various events we have held and a steady rise in web-based traffic which has more than doubled since the end of December 2010 with over 800 prospects having taken up trials of the service.

It is our opinion that our early move to both a hosted platform for StatPro Seven and our cloud based SaaS offering, StatPro Revolution, positions our business well for the future. Clients want greater flexibility, better communication power and the possibility to harness the new social media tools that have been developed in the consumer market and have now been adapted for business. In the past, our industry used to focus on how to calculate the numbers, whereas now the focus is on how to communicate the numbers and we are leading the field in this change. As far as we are aware, StatPro Revolution remains a unique offering in our sector and it has certainly broadened our potential market significantly.

Investment

We are both increasing our development team for StatPro Revolution allowing us to add further functionality to the service and increasing our sales teams in all regions. During the second half we expect to increase the global marketing and sales team to approximately 36 from 27 at the beginning of the year. We also intend to increase the general marketing expenditure for events and online marketing and are building up our capabilities in data.

Outlook

We remain focused on building both our StatPro Revolution business and our StatPro Seven hosted business. With nearly £30 million in recurring revenues, healthy profits and strong operating cash flow, we continue to enjoy a sound financial position. This, combined with the new products and additional functionality we have built in recent years, puts StatPro in a very strong position for future growth. We therefore remain confident of a successful outcome for the year and firmly believe the future prospects of the Group to be extremely exciting.

Justin Wheatley

Chief Executive

FINANCIAL REVIEW

Overview

The first six months of 2011 was a significant period of development for StatPro. We increased expenditure on developing, supporting and marketing our new cloud-based service StatPro Revolution to £1.45 million in the period (2010: £0.20 million) while remaining profitable and cash-generative.  Overall revenue and profits for H1 2011 are in line with our expectations but lower than the comparative period, as previously indicated, as we are no longer benefiting from the contribution from the Johannesburg Stock Exchange (“JSE”) contract, having accelerated the conclusion of that transaction in 2010.  Gaining new software clients in the current markets remains challenging but nevertheless we have managed to increase overall recurring annualised contracted revenue, our key performance indicator, to £29.66 million (June 2010: £28.73 million at constant currency).

Our net debt reduced to £5.15 million at 30 June 2011 (June 2010: £6.31 million) at a time of increasing capital expenditure and dividends.

Revenue

Revenue reduced by 6% to £15.61 million (2010: £16.63 million); at constant currency the revenue would have reduced by 7%. Overall recurring revenue during the period fell by 6% as a result of the termination of the JSE contract, and data fee revenue was 1% lower.  Excluding the impact of the JSE contract revenue which was disposed of in 2010 as shown in the table below, software analytics revenue increased by 2%; Recurring revenue in the period amounted to 94% (2010: 93%) of total revenue.

New recurring business signed in H1 2011 was satisfactory and the level of cancellations was in line with our internal budgets with a renewal rate of approximately 91% (2010: 90%).

The split of revenue by type was as follows:

Six months to Six months to Year to
30 June 30 June 31 December
2011 2010 2010
£ million £ million £ million
Revenue
Software licences 12.47 12.27 24.60
Software licences – JSE (disposal in 2010) 1.03 1.80
Total software licences 12.47 13.30 26.40
Data fees 2.20 2.23 4.45
Total recurring revenue 14.67 15.53 30.85
Professional services and other revenue 0.94 1.10 2.28
Total revenue 15.61 16.63 33.13

Recurring revenue

The annualised value of contracted recurring revenue increased by 3% to £29.66 million at 30 June 2011 from £28.73 million at 30 June 2010 and by 1% from £29.35 million (at constant currencies) at 31 December 2010 as illustrated:

FINANCIAL REVIEW (continued)

Annualised recurring contract value £ million
At 31 December 2010 29.38
Net impact of exchange rates (0.03)
At 1 January 2011 (at 30 June 2011 rates) 29.35
Cancellations/reductions (1.28)
New contracted revenue 1.59
At 30 June 2011 29.66
Renewal rate 91%

The proportion by value of recurring software licences on multi-year contracts (licence agreements with more than one year remaining contractually committed) was 80% at the end of June 2011 (2010: 80%).  New business from existing clients was 73% (2010: 65%) and the proportion of software clients on our SaaS solution increased to 34% (2010: 24%). Professional services revenue was lower by 15%, reflecting challenging markets and also a tendency to a lower level of consulting associated with implementing our SaaS offering.

StatPro Revolution

The key strategic objective for StatPro in 2011 remains the successful launch and promotion of StatPro Revolution, our innovative cloud-based portfolio analysis and research service, and we are pleased to report that we have made good progress in the first three months following the launch as follows:

  • 5 marketing launch events in key markets leading to increased web traffic
  • Increased trial users leading to over 20 client contracts with an aggregate of over 200 portfolios
  • Increased marketing of StatPro Revolution also having beneficial impact on sales leads for StatPro Seven

Whilst the revenue for StatPro Revolution in the period was immaterial and it is therefore still too early to quantify or confirm any trends, we are seeing good levels of initial interest and it appears that sales cycles for StatPro Revolution are shorter than those typically experienced for StatPro Seven.

Operating expenses

Operating expenses (before amortisation of intangible assets and exceptional items) increased by 2% to £12.10 million in the first half of 2011 (2010: £11.80 million), although at constant currency the increase was 1%. The main areas of increased expenditure relate to a larger sales team and increased expenditure on StatPro Revolution development, marketing and data.

Employees

The average number of employees during the first six months of 2011 increased by 3% to 256 compared with 249 in the first half of 2010. The number of employees currently in the Group is 264 employees, situated in ten offices in Europe, North America, South Africa and Australia.  We plan to open our Asian office based in Hong Kong in September 2011.

Investment in intangible assets

We increased our investment in research and development, in particular on StatPro Revolution, and this resulted in an increased level of investment in intangible assets of £1.69 million (2010: £1.44 million). The amortisation of intangibles (excluding acquired intangibles) also increased year on year to £1.23 million (2010: £1.17 million).

Earnings before interest, tax, depreciation and amortisation

As a result of increased investment in StatPro Revolution of £1.45 million (2010: £0.20 million) and also the impact of the loss of the JSE contract disposed of in 2010 (2010: £0.82 million contribution), the adjusted EBITDA in H1 2011 reduced to £2.89 million (2010: £4.21 million).  Nevertheless, the core business continues to generate a solid positive operating cash flow.

Finance income and expense

The net financing expense reduced slightly to £0.31 million (2010: £0.33 million) as the level of net debt reduced although effective interest rates, while remaining historically low, were marginally higher than the prior period.

Profit before taxation

Profit before tax reduced by 50% to £1.79 million from £3.59 million and adjusted profit before tax reduced by 37% to £2.11 million (2010: £3.36 million), both measures being impacted by the investment in StatPro Revolution and also the impact of the disposal of the JSE contract.

Taxation

The total tax charge amounted to £0.51 million (2010: £0.83 million), giving an underlying rate of tax of approximately 28% (2010: 23%). The Group has now recognised or utilised available historic tax losses and therefore will incur a full tax charge which is higher than the UK rate due to higher overseas tax rates and some overseas tax losses not being recognised.  Nevertheless, the cash tax was lower than the charge. The level of deferred tax asset increased to £0.80 million (Dec 2010: £0.70 million) as a result of a deferred tax credit.

Earnings per share

The investment in StatPro Revolution, disposal of the JSE contract and a higher tax rate all impacted earnings in the period compared to the comparative period and basic earnings per share reduced to 2.1p (2010: 4.5p) and adjusted earnings per share reduced to 2.6p (2010: 4.4p).  The average number of shares in issue in the period were virtually unchanged at 60.76 million (2010: 60.65 million). The diluted earnings per share were 2.1p (2010: 4.4p) based on potentially dilutive shares outstanding of 1.35 million (2010: 1.73 million).

Cash flow

Cash inflow from operating activities (excluding exceptional items) during the first six months of 2011 amounted to £4.66 million (2010: £6.24 million).  Working capital in H1 2011 amounted to an inflow of £0.57 million (2010: £0.86 million) and was lower than H1 2010 which benefited from the advance payment under the JSE contract (which totalled £2.5 million including the software disposal proceeds). The operating cash flow in H1 2011 was also impacted by exceptional items of £0.42 million (2010: nil) following the restructuring in 2010.

In the period to end June 2011, we paid a final dividend for 2010 of 1.7 pence per share (£1.04 million). In the comparative period, we paid a second interim and a final dividend of a total of 1.5 pence per share (£0.92 million).

Balance sheet

The Group’s net assets increased to £44.13 million at June 2011 (Dec 2010: £43.72 million).  The level of trade and other receivables, of which the major component is trade debtors, reduced to £6.01 million (Dec 2010: £7.91 million). There was a reduction in net debt to £5.15 million at 30 June 2011 from £5.52 million at December 2010 and £6.31 million at 30 June 2010.

The major component of creditors is deferred income, a non-cash liability, which amounted to £12.75 million (Dec 2010: £13.76 million).  Provisions of £1.94 million at 30 June 2011 (Dec 2010: £2.31 million), relate to deferred contingent consideration for the acquisition of the non-controlling interest in SiSoft Sarl, onerous contracts and the restructuring provision.

Share capital and treasury stock

During the period, 77,200 shares were issued.  In order to reduce dilution, options over a total number of 127,000 shares were partly net settled resulting in a payment including tax liability of £0.52 million and the issue of 11,117 shares. As at 30 June 2011, there were 61,029,432 shares (Dec 2010: 60,952,232 shares) in issue including 225,000 held in treasury (60,804,432 excluding treasury shares). The treasury shares will not accrue dividends and are excluded from the earnings per share calculation.

Interim dividend

The directors have declared an increased interim dividend of 0.75 pence per ordinary share (2010: 0.7 pence), which will be paid on 2 November 2011 to shareholders on the register at the close of business on 7 October 2011, reflecting the Board’s confidence in the business prospects.  The Board intends to maintain a progressive dividend policy reflecting the balance between the investment needs of the business and maintaining an appropriate dividend cover.

Principal risks and uncertainties

The directors continue to evaluate the principal business risks and uncertainties affecting the Group and further discussion of the principal risks and uncertainties can be found on pages 33 to 35 of the 2010 Annual Report.

Andrew Fabian

Finance Director

Group Income Statement
Notes Unaudited Unaudited Audited
Six months to 30 June Six months to 30 June Year to 31       December
2011 2010 2010
£’000 £’000 £’000
Revenue 15,608 16,629 33,131
Operating expenses before amortisation of intangible assets (12,056) (11,796) (23,481)
Amortisation of acquired intangible assets (226) (243) (486)
Amortisation of other intangible assets (1,227) (1,169) (2,379)
Exceptional item – gain on disposal of software 4 502 502
Exceptional item – restructuring costs 4 (958)
Operating expenses (13,509) (12,706) (26,802)
Operating profit 2,099 3,923 6,329
Finance income 4 39 44
Finance expense (312) (372) (752)
Net finance expense (308) (333) (708)
Profit before taxation 1,791 3,590 5,621
Taxation (508) (826) (1,455)
Profit for the period 1,283 2,764 4,166
Profit attributable to non-controlling interests 35 35
Profit attributable to equity shareholders 1,283 2,729 4,131
1,283 2,764 4,166
Earnings per share – basic 2 2.1p 4.5p 6.8p
                                  – diluted 2 2.1p 4.4p 6.6p

Group Statement of Comprehensive Income

Unaudited Unaudited Audited
Six months to 30 June Six months to 30 June Year to 31 December
2011 2010 2010
£’000 £’000 £’000
Profit for the period 1,283 2,764 4,166
Other comprehensive income:
Net exchange differences 126 1,818 3,892
Total comprehensive income for the period 1,409 4,582 8,058
Attributable to:
Non-controlling interests 34 34
Equity shareholders 1,409 4,548 8,024
Total comprehensive income for the period 1,409 4,582 8,058

Group Balance Sheet

Notes Unaudited Unaudited  Audited
As at       30 June As at                30 June As at                31 December
2011 2010 2010
£’000 £’000 £’000
Non-current assets
Property, plant and equipment 2,606 2,716 2,490
Goodwill 10 53,014 51,043 52,583
Intangible assets 10 5,994 5,169 5,761
Other receivables 305 315 131
Deferred tax assets 795 718 699
62,714 59,961 61,664
Current assets
Trade and other receivables 6,006 5,344 7,906
Financial instruments 44
Current tax assets 13 125 189
Cash and cash equivalents 1,528 804 1,757
7,547 6,273 9,896
Liabilities
Current liabilities
Financial liabilities – borrowings (188) (820) (886)
Other current financial liabilities (146) (115)
Trade and other payables (3,582) (3,305) (3,522)
Current tax liabilities (740) (909) (542)
Deferred income (12,695) (12,589) (13,630)
Provisions 11 (1,723) (1,523) (2,029)
(19,074) (19,146) (20,724)
Net current liabilities (11,527) (12,873) (10,828)
Non-current liabilities
Financial liabilities – borrowings (6,491) (6,297) (6,394)
Other creditors and accruals (295) (333) (317)
Deferred income (52) (67) (131)
Provisions 11 (221) (106) (277)
(7,059) (6,803) (7,119)
Net assets 44,128 40,285 43,717
Shareholders’ equity
Ordinary shares 12 610 609 610
Share premium 17,215 17,092 17,176
Shares to be issued 528 544 528
Treasury shares 12 (249) (517) (249)
Other reserves 12,588 10,388 12,462
Retained earnings 13,436 12,169 13,190
Total shareholders’ equity 44,128 40,285 43,717
Group Statement of Cash Flows
Unaudited Unaudited Audited
Notes Six months to30 June Six months to30 June Year to
31 December
2011 2010 2010
£’000 £’000 £’000
Cash flows from operating activities
Net cash inflow from operating activities (before exceptional items) 7 4,659 6,239 10,661
Cash payments in respect of exceptional item – restructuring costs (421) (139)
Cash generated from operations 7 4,238 6,239 10,522
Interest received 4 39 44
Interest paid (206) (221) (557)
Tax received 16 63
Tax paid (254) (88) (1,024)
Net cash from operating activities 3,798 5,969 9,048
Cash flows from investing activities
Acquisition of subsidiaries (net of cash acquired) (303) (328)
Investment in intangible assets (1,686) (1,444) (3,457)
Disposal of software 1,102 1,102
Purchase of property, plant and equipment (620) (667) (944)
Net cash used in investing activities (2,306) (1,312) (3,627)
Cash flows used in financing activities
Repayment of borrowings (4,850) (4,888)
Proceeds from issue of ordinary shares 39 30 50
Payment for net settlement of share options (52) (444) (487)
Acquisition of treasury shares (517) (517)
Disposal of treasury shares 317
Dividends paid to shareholders (1,042) (921) (1,348)
Net cash used in financing activities (1,055) (6,702) (6,873)
Net increase/(decrease) in cash and cash equivalents 437 (2,045) (1,452)
Cash and cash equivalents at start of period 871 2,247 2,247
Effect of exchange rate movements 32 (218) 76
Cash and cash equivalents at end of period 1,340 (16) 871
In the second half of 2010, management included the bank overdraft within cash and cash equivalent as they believe it is an integral part of the cash management of the Group. The comparative amounts for 30 June 2010 have been re-presented accordingly.

Group Statement of Changes in Shareholders’ Equity

Unaudited Share capital Share premium Shares to be issued Treasury shares Other reserves* Retained earnings Non-controlling interest Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
At 1 January 2010 607 16,913 695 8,569 10,773 29 37,586
Profit for the period 2,729 35 2,764
Other comprehensive income 1,819 (1) 1,818
Total comprehensive income 1,819 2,729 34 4,582
Share based payments 32 32
Acquisition of non-controlling interest (63) (63)
Acquisition of treasury shares (517) (517)
Net settlement of share options (444) (444)
Shares issued 2 179 (151) 30
Dividends paid        –        –        –        –        – (921)        – (921)
At 30 June 2010 609 17,092 544 (517) 10,388 12,169 40,285

 

Unaudited Share capital Share premium Shares to be issued Treasury shares Other reserves* Retained earnings Non-controlling interest Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
At 1 January 2011 610 17,176 528 (249) 12,462 13,190 43,717
Profit for the period 1,283 1,283
Other comprehensive income 126 126
Total comprehensive income 126 1,283 1,409
Share based payments 57 57
Shares issued 39 39
Net settlement of share options (52) (52)
Dividends paid (1,042) (1,042)
At 30 June 2011 610 17,215 528 (249) 12,588 13,436 44,128

* Other reserves includes merger reserve of £2,369,000 (2010: £2,369,000) and translation reserve of a surplus of £10,219,000 (2010: £8,019,000).  The merger reserve arose on acquisitions and represents the difference between the fair value of shares issued and the nominal value of the shares.  The translation reserve incorporates the gains and losses on revaluation of the net assets and liabilities of subsidiary undertakings and other currency gains and losses that are presented in equity.

Notes to the interim financial information

1.      This interim report was approved by the Board of directors on 2 August 2011. The financial information set out in this interim report has been prepared under IFRS as adopted by the European Union and on the basis of the accounting policies set out in the statutory accounts of StatPro Group plc for the year ended 31 December 2010, amended as explained below. The following new standards, amendments to standards and interpretations are mandatory for the first time in the current period and have no significant impact on the Group consolidated results or financial position.

International Accounting Standards (“IAS/IFRS”)
IFRIC 14 (amendment) Prepayments of a Minimum Funding Requirement, from 1 January 2011
IAS 24 (revised) Related Party Transactions, from 1 January 2011
IAS 32 (amendment) Classification of Rights Issues from 1 February 2010
IFRS 3 (amendment) Business Combinations
IAS 27 (amendment) Consolidated and Separate Financial Statements
IFRIC 13 (amendment) Customer Loyalty Programmes

This report is not prepared in accordance with IAS 34, which is not mandatory. This interim report has not been audited but has been reviewed in accordance with ISRE 2410 by the Company’s auditors Ernst & Young LLP. The financial information does not constitute statutory accounts within the meaning of section 435 of the Companies Act 2006. Statutory accounts for StatPro Group plc for the year ended 31 December 2010 reported under IFRS have been delivered to the Registrar of Companies.  The auditors’ report on those accounts was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006.  Copies of this report will be posted or provided electronically to shareholders. Further copies are available free of charge on request from the Company Secretary at the Company’s registered office, StatPro House, 81-87 Hartfield Road, London SW19 3TJ.

2.      Earnings per share.

Basic earnings per share has been calculated based on the profit after taxation and minority interests of £1.28 million (2010: £2.73 million) and the weighted average number of shares of 60.76 million (2010: 60.65 million).  The diluted earnings per share were 2.1p (2010: 4.4p) based on potentially dilutive shares outstanding of 1.35 million (2010: 1.73 million).

Earnings Weighted average number of shares Earnings per share Earnings Weighted average number of shares Earnings per share
Six months to30 June Six months to30 June Six months to30 June Six months to 30 June Six months to 30 June Six months to 30 June
2011 2011 2011 2010 2010 2010
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
£’000 ‘000 pence £’000 ‘000 pence
Earnings per share – basic 1,283 60,762 2.1 2,729 60,650 4.5
Potentially dilutive shares 1,345 (0.0) 1,732 (0.1)
Earnings per share – diluted 1,283 62,107 2.1 2,729 62,382 4.4

Adjusted earnings per share are shown in the table below.

Earnings Weighted average number of shares Earnings per share Earnings Weighted average number of shares Earnings per share
Six months to 30 June Six months to 30 June Six months to 30 June Six months to 30 June Six months to 30 June Six months to30 June
2011 2011 2011 2010 2010 2010
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
£’000 ‘000 pence £’000 ‘000 pence
Earnings per share – basic 1,283 60,762 2.1 2,729 60,650 4.5
Add back: amortisation of acquired and purchased intangible assets 266 0.4 243 0.4
Add back: share based payments 57 0.1 32 0.1
Add back: exceptional items (502) (0.8)
Tax credit on exceptional losses       – 141       – 0.2
Adjusted earnings per share 1,606 60,762 2.6 2,643 60,650 4.4
Potentially dilutive shares 1,345 (0.0) 1,732 (0.2)
Adjusted earnings per share – diluted 1,606 62,107 2.6 2,643 62,382 4.2

3.             Revenue analysis

Revenue for the period is analysed as follows:

Unaudited Unaudited Audited
Six months to 30 June Six months to 30 June  

Year to 31 December

2011 2010 2010
£’000 £’000 £’000
EMEAA 10,052 10,661 21,372
North America 5,556 5,968 11,759
Total 15,608 16,629 33,131

4.             Exceptional items

In H1 2010, the Company made an exceptional gain on disposal of software of £0.50 million, being the difference between the cash received for the software element (£1.10 million) and the carrying value and associated costs of the software (£0.60 million), following the disposal of non-core software and related services under the JSE contract for a total consideration of £2.50 million.

The exceptional restructuring cost of £0.96 million in the second half of 2010 relates to severance payments, and onerous leases, following a restructuring to re-focus the business on SaaS. The cash outflow in 2010 amounted to £0.14 million. There were no operating exceptional items in 2011. The cash outflow of £0.42 million in H1 2011 related to an exceptional cost provision.

5.             Adjusted profit before taxation, adjusted operating profit margin, and adjusted EBITDA

a)             Adjusted profit before taxation

Unaudited Unaudited Audited
Six months to 30 June Six months to 30 June Year to           31 December
2011 2010 2010
£’000 £’000 £’000
Profit before taxation 1,791 3,590 5,621
Add back: Amortisation of purchased intangible assets 40 41
Add back: Amortisation of acquired intangible assets 226 243 486
Add back: Share based payments 57 32 78
(Deduct)/add back: Exceptional items (502) 456
Adjusted profit before tax 2,114 3,363 6,682

b)            Adjusted operating profit

` Unaudited Unaudited Audited
Six months to 30 June Six months to 30 June Year to           31 December
2011 2010 2010
£’000 £’000 £’000
Operating profit 2,099 3,923 6,329
Add back: Amortisation of purchased intangible assets 40 41
Add back: Amortisation of acquired intangible assets 226 243 486
Add back: Share based payments 57 32 78
(Deduct)/add back: Exceptional items (502) 456
Adjusted operating profit 2,422 3,696 7,390
Adjusted operating profit margin 15.5% 22.2% 22.3%

c)             Adjusted EBITDA

Unaudited Unaudited Audited
Six months to 30 June Six months to 30 June Year to           31 December
2011 2010 2010
£’000 £’000 £’000
Operating profit 2,099 3,923 6,329
Add back: Depreciation of property, plant and equipment 463 514 1,062
Add back: Amortisation of purchased intangible assets 40 41
Add back: Amortisation of acquired intangible assets 226 243 486
Add back: Share based payments 57 32 78
(Deduct)/add back: Exceptional items (502) 456
Adjusted EBITDA 2,885 4,210 8,452
Adjusted EBITDA margin 18.5% 25.3% 25.5%

6.             Cash flow – reconciliation from statutory heading to business performance measures

a)             Cash generated from operations

Unaudited Unaudited Audited
Six months to 30 June Six months to 30 June Year to         31 December
2011 2010 2010
£’000 £’000 £’000
Cash generated from operations 4,238 6,239 10,522
Investment in intangible assets (1,617) (1,444) (3,457)
Cash generated from operations less internally generated intangible assets 2,621 4,795 7,065

b)            Free cash flow

Unaudited Unaudited Audited
Six months to 30 June Six months to 30 June Year to         31 December
2011 2010 2010
£’000 £’000 £’000
Cash generated from operations 4,238 6,239 10,522
Net interest paid (202) (182) (513)
Net tax paid (238) (88) (961)
Purchase of property, plant and equipment (620) (667) (944)
Investment in intangible assets (1,686) (1,444) (3,457)
Free cash flow 1,492 3,858 4,647
Free cash flow per share 2.5p 6.4p 7.7p

7.             Reconciliation of profit before tax to net cash inflow from operating activities

Unaudited Unaudited Audited
Six months to 30 June Six months to 30 June Year to 31 December
2011 2010 2010
£’000 £’000 £’000
Profit before taxation 1,791 3,590 5,621
Net finance expense 308 333 708
Operating profit 2,099 3,923 6,329
Exceptional item – gain on disposal of software (502) (502)
Exceptional item – restructuring costs 958
Operating profit before exceptional items 2,099 3,421 6,785
Depreciation of property, plant and equipment 463 514 1,062
Amortisation of intangible assets 1,453 1,412 2,865
Decrease/(increase) in trade and other receivables 1,766 1,757 (383)
Increase/(decrease) in creditors and provisions 157 (800) (600)
(Decrease)/increase in deferred income (1,350) (97) 854
Loss on disposal of property, plant and equipment 14
Share based payments 57 32 78
Net cash inflow from operating activities before exceptional items 4,659 6,239 10,661
Cash payments in respect of exceptional restructuring costs (421) (139)
Net cash inflow from operating activities 4,238 6,239 10,522

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

Unaudited Unaudited Audited
Six months to 30 June Six months to 30 June Year to 31 December
2011 2010 2010
£’000 £’000 £’000
Increase/(decrease) in cash and cash equivalents in the period 437 (2,045) (1,452)
Movement on borrowings 4,850 4,888
Exchange movements 32 (132) 120
Other non-cash movements (97) (95) (188)
Movement in net debt 372 2,578 3,368
Net debt at beginning of period (5,523) (8,891) (8,891)
Net debt at end of period (5,151) (6,313) (5,523)

Net debt is the total of cash and cash equivalents and borrowings, cash and cash equivalents are illustrated below.

Cash and cash equivalents

Cash and cash equivalents in the cash flow statement is shown net of any overdrafts. The presentation of financing activities for H1 2010 has been amended to reflect this in the cashflow. The following table provides a reconciliation of the cash and cash equivalents in the balance sheets to the amounts presented in the cash flow statements.

Unaudited Unaudited Audited
Six months to 30 June Six months to 30 June Year to 31 December
2011 2010 2010
£’000 £’000 £’000
Cash and cash equivalents (per balance sheet) 1,528 804 1,757
Financial liabilities – borrowings (188) (820) (886)
Cash and cash equivalents (per cash flow statement) 1,340 (16) 871

9.             Dividend

An interim dividend for 2011 of 0.75 pence per ordinary share (2010: 0.7 pence) will be paid on 2 November 2011 to shareholders on the register on 7 October 2011.  A final dividend for 2010 of 1.7 pence per ordinary share was paid on 25 May 2011.

10.           Goodwill and other intangible assets

The increase in goodwill since 31 December 2010 of £0.43 million relates mainly to exchange gains in reserves on revaluation of goodwill denominated in foreign currencies.  Other intangible assets comprise internally generated development costs capitalised and acquired intangible assets (technology assets and client contracts).  The main movements in other intangible assets in the period were additions amounting to £1.69 million and amortisation amounting to £1.45 million.

11.           Provisions

Provisions of £1.94 million at 30 June 2011 (Dec 2010: £2.31 million) relate to deferred contingent consideration for the acquisition of the non-controlling interest in SiSoft Sarl, onerous contracts and the restructuring provision.

12.           Share capital and treasury shares

During the period, 77,200 shares were issued.  In order to reduce dilution, options over a total number of 127,000 shares were partly net settled resulting in a payment including tax liability of £0.52 million and the issue of 11,117 shares. As at 30 June 2011, there were 61,029,432 shares in issue (Dec 2010: 60,952,232 shares) including 225,000 held in treasury (60,804,432 excluding treasury shares). The treasury shares will not accrue dividends and are excluded from the earnings per share calculation.

Independent review report to StatPro Group plc

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2011, which comprises the Group Income Statement, Group Statement of Comprehensive Income, Group Balance Sheet, Group Statement of Cash Flows, Group Statement of Changes in Shareholders’ Equity and the related notes 1 to 12. We have read the other information contained in the half yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the Company in accordance with guidance contained in International Standard on Review Engagements 2410 (UK and Ireland) “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our work, for this report, or for the conclusions we have formed.

Directors’ Responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the Interim Report in accordance with the AIM Rules issued by the London Stock Exchange which require that it is presented and prepared in a form consistent with that which will be adopted in the Company’s annual accounts having regard to the accounting standards applicable to such annual accounts.

As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRS’s as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with the AIM Rules issued by the London Stock Exchange.

Our Responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2011 is not prepared, in all material respects, in accordance with the accounting policies outlined in Note 1, which comply with IFRS’s as adopted by the European Union and in accordance with the AIM Rules issued by the London Stock Exchange.

Ernst & Young LLP

London

2 August 2011

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