StatPro Group PLC – Interim Results

For immediate release
4 August 2003

STATPRO GROUP PLC

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

Interim results for the six months ended 30 June 2003

StatPro Group plc, a leading AIM listed provider of performance measurement solutions for the global asset management industry, announces its results for the six months ended 30 June 2003.

Highlights

  • Turnover up 18% to £4.06 million (2002 – £3.43 million)
  • Annual value of continuing recurring revenues increased to £7.55 million (2002 – £6.62 million)
  • Operating profit of £0.01m (2002 – loss of £1.63m), benefiting from revenue growth and last year’s reorganisation
  • Generated an operating cash inflow of £0.83 million (2002 – outflow £0.63 million) – cash positive for last twelve months
  • Successful transfer of listing to AIM to allow greater flexibility

Commenting on the results, Carl Bacon, Chairman of StatPro said: “Whilst we retain a cautious outlook for the second half of 2003, there are some signs of an improvement in our market as IT projects that have been delayed are being reactivated. In the meantime, our key financial objectives are to build further on the progress made in the first half, to continue to generate cash from operations and to put the Company firmly into profit for the year as a whole.”

– Ends –

For further information, please contact:

StatPro Group plc

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

Weber Shandwick Square Mile

Reg Hoare/Rachel Taylor 020 7067 0700

A briefing for analysts will be held at 9.15 for 9.30am today at the offices of Weber Shandwick Square Mile, Fox Court, 14 Gray’s Inn Road, London, WC1X 8WS.

Notes to Editors:

StatPro Group plc is a leading provider of performance measurement solutions for the global asset management industry, which floated on the London Stock Exchange in May 2000. StatPro has grown its annual recurring software revenue base from less than £1.0 million on flotation to £7.0 million at 30 June 2003. StatPro transferred its listing to AIM on 16 June 2003.

CHIEF EXECUTIVE’S REVIEW

Highlights

2003 started under difficult circumstances with a very uncertain political and economic situation globally, which has resulted in asset managers continuing to be cautious about their investments in IT projects. Although there are some limited signs that conditions may improve as markets stabilise, the outlook remains tough. Despite these troubled times, it is pleasing to report that StatPro has continued to grow with turnover for the six months to 30 June 2003 up 18% to £4.06 million (2002 – £3.43 million). We have also made an operating profit of £0.01 million, which, while modest, is a significant improvement on the £1.63 million loss for the first six months of last year.

This improvement in the Company’s performance is most evidenced by the fact that we have generated a positive operating cash inflow of £0.83 million compared to an operating cash outflow of £0.63 million for the same period last year. Since we generated a positive operating cash flow for the second half of last year, we have now been operationally cash flow positive for the last twelve months. We will continue to focus on cash generation for the rest of the year as our main financial objective.

Regional performance and sales

In the first six months of 2003 we made 19 sales of which nine were to existing clients. For the first time, we have won clients in California and we have found that activity in the US (apart from New York) is generally picking up. We have also signed new contracts in France, Italy, Norway, Singapore, South Africa and the UK. We have focused on multi-year contracts, both for new clients and converting existing clients to longer term contracts. At the start of the year, £1.1 million of our annualised software licence fee revenue was contracted for more than one year and its value had risen to nearly £2.0 million by 30 June 2003 (representing approximately 29% of our current recurring software licence revenue). We aim to continue to increase the level of multi-year contracts. Our total annualised recurring revenues now stand at £7.55 million and covers our current annual cash operating expenses.

Whilst the prime objective of StatPro is to build recurring revenues from software sales, we have put considerable effort into building up our consulting sales over the last 12 months. The result is that we have increased consulting sales by 53% compared to the same period last year to £0.58 million (2002 – £0.38 million). With asset managers making cutbacks in staffing levels, we have seen a rise in demand for our expertise in performance measurement. Reviews of implementations undertaken by our consultants have also helped clients use our systems more productively. This in turn has helped us achieve sales of additional software modules to existing clients. We expect this trend to continue and are actively seeking to increase system usage with all our clients as this will lead to further and more profitable sales.

Product development

Our product development continues to be vital to maintaining the performance advantage and deeper analysis capabilities of our systems and to ensure that they remain core applications for our clients.

In pursuit of these objectives, we will be releasing several new modules over the next few months, which we have been developing during the first half of 2003. Our main project is the integration of our Fixed Income system with our Performance and Attribution system. These will form a new “Data Hub” to which we will be able to add an increasing number of portfolio analysis products. It will still be possible, however, for clients to subscribe for each product individually and then add other modules as they require. We believe that this flexibility will allow us to target an even wider market. It will also facilitate our product alliances with other companies that supply complementary products to our target market. Many clients are thus seeking an integrated solution without necessarily acquiring all systems from one provider.

Strategy

StatPro’s strategy has always been to expand its product range to enable cross selling of products to existing clients. We intend to continue to pursue this approach by seeking to acquire further complementary products. We believe that current market conditions are likely to yield a number of opportunities and we will continue to review these as appropriate.

AIM

In line with this strategy and as previously announced, on 16 June 2003 the Company’s listing was transferred to the Alternative Investment Market of the London Stock Exchange (“AIM”) from the Official List of the UK Listing Authority (the “Official List”). The principal reason for the transfer was that the Directors believe that this will allow the Company to take advantage of the greater degree of flexibility afforded by AIM in implementing its strategy of acquiring additional products, given the lower costs of complying with the AIM listing rules. The transfer to AIM will enable the Company to act quickly when opportunities do arise without incurring the disproportionately large expenses of being a fully listed company. In addition to lower costs, StatPro should also benefit from AIM’s focus on smaller, fast growing companies.

Outlook

Although we remain cautious about the outlook for the second half of 2003, there are signs that our market will improve as IT projects that have been held back for several years are being reactivated. In the meantime our financial objectives are to build further on the progress made in the first half of 2003, to continue to generate cash from operations and to put the Company firmly into profit for the year as a whole.

Justin Wheatley
Chief Executive

OPERATING AND FINANCIAL REVIEW

Overview

Our revenue has grown for the seventh consecutive half-year period since flotation and the business has made an operating profit of £0.01 million in the six months to the end of June 2003 compared with an operating loss of £1.63 million in the comparable period. Following the operating cash inflow achieved in the second half of 2002 of £0.15 million, the business generated an operating cash inflow of £0.83 million in the six months to the end of June 2003, resulting in a total operating cash inflow of £0.98 million over the past twelve months.

Turnover

Turnover increased by 18% to £4.06 million (2002 – £3.43 million). Software licence revenue grew by 25%, and consulting revenue grew by 53%. This was offset by a fall in other recurring revenues of 41% primarily due to the absence of revenue from the Swiss agency agreement, which was terminated in August 2002. The split of revenue by type was as follows:

Six months to       Six months to            Year to
                                    30 June             30 June        31 December
                                       2003                2002               2002
                                  £ million           £ million          £ million
Turnover
Software licences                      3.19                2.56               5.52
Other recurring revenue                0.29                0.49               0.75
Other revenue                          0.58                0.38               0.96
                                     -------------------------------------------------
                                       4.06                3.43               7.23
                                     -------------------------------------------------

We made 19 sales in the first half of 2003 (2002 – 15), of which 9 (2002 – 5) were additional modules or users to existing contracts. The total number of contracts increased from 136 at the start of the year to 146 at the end of June 2003 (2002 – 135); taking into account three notified cancellations, of which only one is expected to affect revenue in 2003, the number of continuing contracts is 143 (2002 – 130). The proportion of recurring revenue on multi-year contracts increased from 18% at the end of December 2002 to 29% at the end of June 2003.

The annual value of continuing recurring revenue, which is analysed below, increased to £7.55 million at 30 June 2003 from £6.62 million at 30 June 2002 (excluding revenue from the terminated Swiss agency agreement) and from £6.85 million at 31 December 2002.

 At 30 June       At 30 June         At 31 December
                                          2003             2002                   2002
                                    Annualised       Annualised             Annualised
                                         value            value                  value
                                     £ million        £ million              £ million
Recurring revenues
Software licences                         7.00             5.98                   6.28
Other recurring revenue                   0.55             0.64                   0.57
                                      -----------------------------------------------------
Continuing recurring revenue              7.55             6.62                   6.85
Recurring revenue from Swiss agency *        -             0.35                      -
                                      -----------------------------------------------------
Total recurring revenue                   7.55             6.97                   6.85
                                      -----------------------------------------------------

* Terminated on 1 August 2002

Operating expenses

The restructuring implemented in July 2002 has reduced operating expenses (before goodwill amortisation) by £1.02 million (21%) to £3.90 million (2002 – £4.92 million) in the first half of 2003. The average number of employees during the first six months of 2003 was 77 (2002 – 107). The increase in turnover coupled with tight control over our cost base has enabled StatPro to achieve an operating profit in the first half of 2003, as shown in the following table:

Six months to       Six months to            Year to
                                    30 June             30 June        31 December
                                       2003                2002               2002
                                  £ million           £ million          £ million

Revenue                                4.06                3.43               7.23
Operating expenses *                  (3.90)              (4.92)             (8.83)
                                  -----------------------------------------------------
Operating profit/(loss) *              0.16               (1.49)             (1.60)
Goodwill amortisation                 (0.15)              (0.14)             (0.29)
                                  -----------------------------------------------------
Operating profit/(loss)
(before exceptional items)             0.01               (1.63)             (1.89)
Exceptional items                         -                   -              (0.31)
                                  -----------------------------------------------------
Operating profit/(loss)                0.01               (1.63)             (2.20)
                                  -----------------------------------------------------

* before goodwill amortisation and exceptional items

Goodwill amortisation

The goodwill amortised during the six months to 30 June 2003 of £0.15 million (2002 – £0.14 million), which predominantly relates to the goodwill arising on the acquisition of AMS in 2000, continues to be amortised over five years. The operating profit before goodwill amortisation amounted to £0.16 million (2002 – loss of £1.49 million).

Interest

Net interest expense, which results from interest accrued on bank loans, the convertible loan and finance leases, less interest earned on cash and deposits, was £0.09 million (2002 – £0.05 million).

Taxation and Loss per share

Loss before taxation reduced by 95% to £0.08 million (2002 – £1.68 million). A provision has been made for corporation tax for an overseas subsidiary. Earnings per share before goodwill amortisation amounted to 0.2p (2002 – loss per share of 4.8p) and loss per share after goodwill amortisation decreased to 0.3p (2002 – 5.2p).

Cash flow

In line with the Directors’ commitment to the previously stated goals of generating cash, the business had an operating cash inflow during the first 6 months of £0.83 million (2002 – outflow of £0.63 million). The business has therefore generated a total operating cash inflow of £0.98 million over the twelve-month period to the end of June 2003. This has allowed the Group to repay £0.50 million of its bank loan facility during the first half of the year.

Balance sheet

The Group’s net liabilities increased to £2.90 million (2002 – £2.15 million) from £2.81 million at 31 December 2002. The level of debtors, of which the major component is trade debtors, decreased to £2.73 million (2002 – £3.08 million). The short- term creditors of £6.84 million (2002 – £5.52 million) includes deferred income, a non-cash liability, of £4.34 million (2002 – £3.82 million).

The Group’s net debt at 30 June 2003 amounted to £0.75 million compared to £1.43 million at 31 December 2002 and £1.51 million at the end of June 2002. The unsecured convertible loan of £1.00 million nominal value issued in July 2002 is repayable on 2 January 2004 and is therefore now shown on the balance sheet as a current creditor at its carrying value of £0.99 million. The cash balance at the end of June 2003 was £1.71 million (2002 – £0.25 million).

Dividends

The Directors currently propose continued investment in growing the business and are therefore not proposing to recommend any dividend at present.

Andrew Fabian
Finance Director
Consolidated Profit and Loss Account Notes

 Notes            Unaudited       Unaudited       Audited
                                                           Six months to   Six months to       Year to
                                                                 30 June         30 June   31 December
                                                                    2003            2002          2002
                                                                   £'000           £'000         £'000

Turnover - continuing operations                                   4,065           3,432         7,229

Operating expenses before
goodwill amortisation                                             (3,900)         (4,917)       (8,832)
Amortisation of goodwill                                            (152)           (146)         (294)
Exceptional items                                1                     -               -          (306)

Operating expenses                                                (4,052)         (5,063)       (9,432)
                                                           ----------------------------------------------

Operating profit/(loss) - continuing operations                       13          (1,631)       (2,203)

Net interest payable                                                 (91)            (52)         (170)
                                                           ----------------------------------------------

Loss on ordinary activities before taxation                          (78)         (1,683)       (2,373)

Taxation                                          2                  (12)              -             -
                                                           ----------------------------------------------

Loss after taxation                                                  (90)         (1,683)       (2,373)
                                                           ==============================================

Loss per share - basic                            3                 (0.3)p          (5.2)p        (7.3)p
Earnings/(loss) per share -
before amortisation of goodwill and
exceptional items                                                     0.2p          (4.8)p        (5.5)p

 

Statement of Group Total Recognised Gains and Losses

 Unaudited       Unaudited       Audited
                                                             Six months to   Six months to       Year to
                                                                   30 June         30 June   31 December
                                                                      2003            2002          2002
                                                                     £'000           £'000         £'000

Loss for the financial period                                          (90)         (1,683)       (2,373)
Exchange differences offset in reserves                                (22)            (20)          (19)
                                                              ---------------------------------------------
Total recognised gains and losses for the period                      (112)         (1,703)       (2,392)
                                                              =============================================

Consolidated Balance Sheet

Notes            Unaudited       Unaudited       Audited
                                                                   As at           As at         As at
                                                                 30 June         30 June   31 December
                                                                    2003            2002          2002
                                                                   £'000           £'000         £'000

Fixed assets
Intangible assets                                                    564             803           716
Tangible assets                                                      595             798           674
                                                              ---------------------------------------------
                                                                   1,159           1,601         1,390

Current assets
Debtors - amount falling due after one year                          280             313           308
Debtors - amount falling due within one year                       2,449           2,769         3,087
Cash at bank and in hand                                           1,709             246         1,486
                                                              ---------------------------------------------
                                                                   4,438           3,328         4,881
Creditors - amounts falling due within one year
Convertible loan                                  4                 (986)              -             -
Others                                                            (5,850)         (5,517)       (6,269)
                                                              ---------------------------------------------
                                                  5               (6,836)         (5,517)       (6,269)

Net current liabilities                                           (2,398)         (2,189)       (1,388)

Total assets less current liabilities                             (1,239)           (588)            2

Creditors - amounts falling due after more
than one year
Deferred income                                                     (196)              -          (213)
Convertible loan                                   4                   -               -          (971)
Bank loans                                                        (1,441)         (1,562)       (1,602)
Finance lease obligations                                            (28)              -           (26)
                                                              ---------------------------------------------
                                                                  (1,665)         (1,562)       (2,812)

Net liabilities                                                   (2,904)         (2,150)       (2,810)
                                                              ==============================================

Capital and reserves
Called up share capital                                              329             325           328
Share premium account                                              8,558           8,515         8,541
Warrant reserve                                                      424             424           424
Profit and loss account                                          (12,215)        (11,414)      (12,103)
                                                              ---------------------------------------------
Equity shareholders' deficit                                      (2,904)         (2,150)       (2,810)
                                                              =============================================

 

Consolidated Cash Flow Statement

Unaudited       Unaudited       Audited
                                                           Six months to   Six months to       Year to
                                                                 30 June         30 June   31 December
                                                                    2003            2002          2002
                                                                   £'000           £'000         £'000

Net cash inflow/(outflow) from
operating activities                                                 827            (631)         (476)

Returns on investments and servicing of finance
Interest received                                                     22              10            22
Interest paid                                                        (82)            (54)         (143)
Issue costs in respect of bank loan                                    -               -           (27)
Issue costs in respect of convertible loan                             -               -           (43)
                                                           --------------------------------------------------
Net cash outflow from returns on investments and
servicing of finance                                                 (60)            (44)         (191)

Taxation
Tax received                                                           -               1             -

Capital expenditure and financial investment
Purchase of tangible fixed assets                                    (61)           (119)         (162)
                                                           --------------------------------------------------
Net cash outflow for capital expenditure                             (61)           (119)         (162)

Acquisitions and disposals
Deferred consideration proceeds
from disposal of subsidiary undertaking                                -               -            89
Cash subscription on acquisition of subsidiary undertaking             -               -           (53)
Costs incurred on acquisition of subsidiary undertaking                -               -           (12)
Cash acquired on acquisition of subsidiary undertaking                 -               -            55
                                                           --------------------------------------------------
Net cash inflow from acquisitions and disposals                        -               -            79

Net cash inflow/(outflow) before management of liquid
resources and financing                                              706            (793)         (750)

Management of liquid resources
Movement in short-term deposits                                     (149)            600          (151)

Financing
Proceeds from bank loan                                                -               -           250
Repayment of bank loan                                              (499)              -           (51)
Proceeds from issue of ordinary shares                                18              19            48
Capital element of finance lease payments                             (2)            (30)          (61)
Proceeds from issue of convertible loan                                -               -         1,000
                                                           --------------------------------------------------
Net cash (outflow)/inflow from financing                            (483)            (11)        1,186
                                                           --------------------------------------------------

Increase/(decrease) in cash in the period                             74            (204)          285
                                                           ==================================================

Reconciliation of net cash flow to movement in net debt

   Unaudited       Unaudited       Audited
                                                           Six months to   Six months to       Year to
                                                                 30 June         30 June   31 December
                                                                    2003            2002          2002
                                                                   £'000           £'000         £'000

Increase/(decrease) in cash in the period                             74            (204)          285
Movement in short-term deposits                                      149            (600)          151
Issue of convertible loan (net of issue costs)                         -               -          (957)
Repayment on finance leases                                            2              30            61
Bank loan (net of issue costs)                                         -               -          (223)
Bank loan repayment                                                  499               -            51
Other non-cash movements                                             (47)             (9)          (67)
                                                           --------------------------------------------------
Movement in net debt                                                 677            (783)         (699)
Net debt at beginning of period                                   (1,428)           (729)         (729)
                                                           --------------------------------------------------
Net debt at end of period                                           (751)         (1,512)       (1,428)
                                                           ==================================================

Reconciliation of operating profit/(loss) to net cash flow from operating activities

   Unaudited       Unaudited       Audited
                                                           Six months to   Six months to       Year to
                                                                 30 June         30 June   31 December
                                                                    2003            2002          2002
                                                                   £'000           £'000         £'000

Operating profit/(loss)                                               13          (1,631)       (2,203)
Depreciation of tangible fixed assets                                126             160           301
Amortisation of goodwill                                             152             146           294
Decrease in debtors                                                  666             456            58
Increase/(decrease) in creditors
(excluding deferred income)                                          162              67          (151)
Movement in deferred income                                         (288)            187         1,186
Loss on disposal of fixed assets                                       -               -            58
Exchange differences                                                  (4)            (16)          (19)
                                                           --------------------------------------------------
Net cash inflow/(outflow) from operating activities                  827            (631)         (476)
                                                           ==================================================

Notes to the interim financial statements

1. Exceptional items. The operating exceptional item of £0.31 million included in total operating expenses relates to the expenses of the restructuring undertaken in 2002 including redundancy costs, onerous leases and asset write offs.

2. Taxation. A provision has been made for corporation tax for an overseas subsidiary.

3. Loss per share. Loss per share has been calculated based on the loss after taxation of £0.09 million (June 2002 – £1.68 million) and the weighted average number of shares of 32,869,135 (June 2002 – 32,322,284). The diluted loss per share is the same as the basic loss per share since the Group is making losses.

4. Convertible loan. The convertible loan is repayable at par on 2 January 2004 and is therefore now shown as a current liability. The loan can be converted into ordinary shares at the rate of 60p per share.

5. Creditors – amounts falling due within one year. The largest component of short-term creditors relates to deferred income, which is a non-cash liability, as shown in the following analysis:

Unaudited       Unaudited       Audited
                                                                   As at           As at         As at
                                                                 30 June         30 June   31 December
                                                                    2003            2002          2002
                                                                   £'000           £'000         £'000

   Bank loans and finance leases                                       5             196           315
   Convertible loan                                                  986               -             -
   Trade creditors                                                   379             588           240
   Corporation tax                                                    12               -             -
   Other tax and social security                                     292             213           418
   Other creditors and accruals                                      827             705           690
   Deferred income                                                 4,335           3,815         4,606
                                                             ---------------------------------------------
                                                                   6,836           5,517         6,269
                                                             =============================================
6. The financial information set out in this interim statement 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 2002. This interim statement has not been audited but has been reviewed by the Company's auditors' PricewaterhouseCoopers LLP. The financial information does not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985. Statutory accounts for StatPro Group plc for the year ended 31 December 2002, on which the auditors gave an unqualified opinion, have been delivered to the Registrar of Companies.
7. Copies of this statement will be posted 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.

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