StatPro Group PLC – Interim Results

For immediate release
10 September 2001

STATPRO GROUP PLC

(“StatPro” or the “Group”)

Interim Announcement

StatPro Group plc, a leading supplier of performance measurement software for the asset management industry worldwide, announces its interim results for the six months ended 30 June 2001.

Highlights

  • Continuing turnover up 137% to £3.03 million (June 2000 – £1.28 million)
  • 110 contracts signed at the end of June up from 74 at the start of 2001 and 43 at the end of June 2000
  • Annual value of recurring revenues increased by 48% since beginning of 2001 to £6.04 million
  • Improved operating cash outflow of £1.44 million (June 2000 – £2.04 million)
  • Oversubscribed placing completed raising £1.69 million new equity after expenses
  • Completion of banking facility for up to £3 million and cash balance of £2.50 million (June 2000 – £4.83 million)
  • Redemption of remaining £1.72 million convertible loan notes in August 2001 eliminating potentially dilutive effect of 2.15 million shares

Commenting on the results, Carl Bacon, Chairman of StatPro said: “We have grown from 74 contracts at the start of 2001 to 110 at the end of June. There remains a requirement for fund managers to improve operational performance and comply with industry standards, resulting in a continued demand for specialist performance measurement software and related services. Against a backdrop of economic uncertainty in the financial services sector, we will continue to focus on winning new business and providing excellent service to our growing global customer base.”

For further information, please contact:

StatPro Group plc

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

Buchanan Communications

RMark Edwards/ Jeremy Garcia 020 7466 5000

CHIEF EXECUTIVE’S REVIEW

Introduction

The first half of 2001 has been a successful period for StatPro as it continues to grow the number and average value of its contracts while demonstrating the strength of the business model by delivering strong financial results in line with market expectations.

Financial highlights

Turnover within the continuing business increased by 137% to £3.03 million (June 2000 – £1.28 million). Actual sales invoiced in the first half increased by 105% to £3.58 million (June 2000 – £1.75 million). In the current environment of some uncertainty in the financial services sector and the world economy in general, this has been a very satisfactory performance. The annual value of recurring revenue has increased to £6.04 million from £4.09 million at 31 December 2000 and from £2.59 million at 30 June 2000. Our deferred income balance at the end of June 2001 was £2.52 million, compared with £0.78 million at 30 June 2000 and in addition, the order book of signed licences and related consultancy not invoiced at 30 June 2001 amounted to £0.51 million (June 2000 – nil). This provides a solid foundation for further growth in the second half of 2001.

Review of the period

The number of contracts grew from 74 at the start of the year to 110 and the average value of new contracts increased by 33% to £52,000 compared to the average value at the start of the year. StatPro signed its largest ever contract of £1.125 million over 5 years with a major global asset manager. We have an enviable client list and are building up a reputation in the market for good quality software combined with excellent service and support. We have continued with significant marketing activity and held 17 marketing events in key financial centres, attended by over 400 asset management professionals globally during the first half of 2001. These product days are well attended by existing and prospective clients and help to raise the profile and the brand awareness of the Group. The product days also provide a forum for our clients and our strategic alliance partners to talk about the capabilities of StatPro with their peers in the global asset management industry. Our business model reinforces the good working relationships we are developing with our client base.

Financing

StatPro successfully raised further equity of £1.74 million (before expenses) by way of a placing in June 2001 and completed a debt facility in August 2001 (up to £3 million) at an attractive rate in difficult market conditions. The placing was oversubscribed and has increased our institutional shareholder base. The debt facility provides us with an alternative source of finance as our business continues to grow. It is credit to the strength of the business that we have secured this facility whilst still loss making. Our focus remains to become cash flow positive on a month by month basis by the end of 2001. Nevertheless, it is expedient and useful to have the financial resources to accelerate our planned expansion into the Far East and the US, and to have the ability to move quickly to acquire new products as opportunities arise.

Management Team

We recruited Paul Hackett who joined us in early April as CEO for our United States operations and we have confidence that Paul’s significant expertise in the financial services sector will lead to solid growth in the US client base during 2001 and beyond. Prior to joining StatPro, Paul was General Manager of I/B/E/S Inc. with responsibility for sales, client services and marketing. During his time with I/B/E/S Inc. Paul succeeded in achieving significant growth in the recurring revenue base for the Americas and Japan region.

Future Prospects

The current environment in the financial services sector and the world economy in general is undoubtedly less buoyant than in 1999 and early 2000. Nevertheless, StatPro provides software and support services that are increasingly in demand by global asset managers. We have focused on building a structure that can deliver future success and we have made considerable progress. We also believe that we are now in a position where the cost base will not have to expand as fast and is able to handle substantially more business. The outlook for the remainder of 2001 looks positive and we expect to continue to sign new contracts at a steady rate.

Justin Wheatley
Chief Executive
10 September 2001

OPERATING AND FINANCIAL REVIEW

Turnover

Turnover within the continuing business increased by 137% to £3.03 million (June 2000 – £1.28 million). The group’s accounting policy for revenue recognition is to spread the revenue over the contract life. Actual sales invoiced in the first half increased by 105% to £3.58 million (June 2000 – £1.75 million). As a result our deferred income balance at the end of June 2001 was £2.52 million, compared with £0.78 million at 30 June 2000. In addition, the order book of signed licences and related consultancy not invoiced at 30 June 2001 amounted to £0.51 million (June 2000 – nil).

The annual value of recurring revenue has increased to £6.04 million from £4.09 million at 31 December 2001 and from £2.59 million at 30 June 2000. This is analysed as follows:

30 June           30 June       31 December
                                       2001              2000              2000
                           Annualised value  Annualised value  Annualised value
                                  £ million         £ million         £ million
Recurring revenues
Software licences                      4.79              1.38              2.92
Other recurring revenue                1.25              1.21              1.17
                                       6.04              2.59              4.09

 

Our strongest market for software licences has been the UK with growth of 118% in recurring licence revenues to £1.68 million since the start of 2001 but some growth has been experienced in all territories:

30 June              30 June          31 December
                                2001                 2000                 2000
                    Annualised value     Annualised value     Annualised value
                           £ million            £ million            £ million

UK                              1.68                 0.32                 0.77
US                              0.97                 0.26                 0.80
Europe                          1.99                 0.80                 1.29
Rest of the World               0.15                    -                 0.06
Software licences               4.79                 1.38                 2.92

 

The average value per new contract signed in 2001 increased by 33% to £52,000 from the average for all contracts as at 31 December 2000 of £39,000, and by 62% compared to the average as at 30 June 2000 of £32,000.

Operating expenses and goodwill amortisation

Operating expenses have been tightly controlled within our existing planned expansion. The average number of employees during the first 6 months of 2001 has increased to 106 from 79 in the comparable period. As a result of the Group’s investments during 2000 in our sales and marketing and client services teams, and operational infrastructure to support a larger client base, operating expenses (before amortisation) have increased to £5.16 million (June 2000 – £3.24 million). The goodwill arising on the acquisition of AMS in 2000 is being amortised over five years and the amortisation for the six months to 30 June 2001 amounted to £0.15 million. In the comparable period the amortisation charge amounted to £0.07 million reflecting the charge for a three-month period from the acquisition to 30 June 2000. The operating loss before goodwill amortisation amounted to £2.13 million (June 2000 – £1.96 million).

Interest

Net interest expense, which results from interest accrued on the convertible debt and finance leases, less interest earned on cash and deposits, amounted to £0.05 million (June 2000 – net interest income £0.04 million). Interest on the convertible loan is charged at 9% on the carrying value in accordance with FRS 4. As a result, £0.03 million of accrued interest representing the difference between the charge and the amount actually paid, was credited to the convertible loan in the six months to June 2001. Following the redemption of the convertible loan stock on 17 August 2001 the discount of approximately £0.26 million at the time of redemption, representing the difference between the nominal value and the carrying value of the debt, will be written off and will be recognised in full in the interest expense in the second half of 2001.

Loss per share

Loss before taxation amounted to £2.33m (June 2000 – £1.98 million). No current liability to corporation tax is expected given the operating losses incurred by the group. The loss per share before amortisation decreased to 7.3p (June 2000 – 8.0p) and loss per share after goodwill amortisation decreased to 7.8p (June 2000 – 8.3p).

Cash flow

The net cash outflow from operating activities was significantly reduced to £1.44 million (June 2000 – £2.04 million) as the management team focused on maximising cash generation and tightly controlling costs within planned growth in the drive towards becoming cash flow positive on a month by month basis. Capital expenditure was much lower than in the comparable period – £0.10 million (June 2000 – £0.30 million) since the majority of the investment in the group’s infrastructure was completed during 2000. The net operating cash outflow of £1.44 million was more than offset by the proceeds of the share placing raising £1.69 million after expenses, and overall there was a modest increase in net funds since the start of the year of £0.11 million. Cash at bank and in hand (including short-term deposits) amounted to £2.50 million compared with £2.39 million at 31 December 2000 and £4.83 million at 30 June 2000. As previously announced, the group has also completed a secured debt facility of up to £3 million in August 2001. The facility has been partly drawn down on 17 August 2001 in order to redeem the outstanding convertible loan stock of £1.72 million nominal value.

Balance Sheet

The group’s net assets reduced to £1.90 million from £2.51 million at 31 December 2000 and from £3.90 million at 30 June 2000. Net assets after adding back deferred income, which is a non-cash liability, amounted to £4.42 million compared with £4.51 million at 31 December 2000 and £4.68 million at 30 June 2000.

Current assets

The level of debtors increased to £2.68 million (2000 – £1.53 million), the major component being trade debtors, reflecting the growth in the business. The increase in short term creditors to £3.82 million (June 2000 – £1.60 million) is mainly attributable to an increase in the deferred income to £2.52 million (June 2000 – £0.76 million) as a result of growth in the value of our recurring licence revenue.

Share capital and reserves

The share capital increased to £0.32 million representing 32,223,986 shares of 1p nominal value (June 2000 – £0.27 million). During the period the movements were the issue of 120,000 shares under an employee share option scheme in April and a placing of 2,800,000 shares in June. As a result the share premium account increased to £8.50 million (June 2000 – £5.36 million).

Dividends

The Directors currently propose to continue to invest in growing the business and are not proposing to pay any dividends in the near future.

Summary

The financial results for the first half are in line with expectations. The directors will continue to invest the group’s resources in strengthening the sales, marketing and consulting team, expansion into new markets, and to look for suitable acquisitions of complementary products.

Andrew Fabian
Finance Director
10 September 2001

Consolidated Profit and Loss Account

Notes      Six           Six           Year 
                                           months        months             to
                                               to            to    31 December
                                          30 June       30 June           
                                             2001          2000           2000
                                            £'000         £'000          £'000

Turnover - continuing operations   1        3,031         1,278          3,172

Administrative expenses before            (5,162)       (3,235)        (7,882)
goodwill amortisation
Amortisation of goodwill                    (146)          (71)          (219)

Administrative expenses                   (5,308)       (3,306)        (8,101)

Operating loss - continuing               (2,277)       (2,028)        (4,929)
operations                                            

Net interest (payable)/receivable            (49)           43              50
Loss on ordinary activities before        (2,326)      (1,985)         (4,879)
taxation                                           

Taxation                           2            -            -               -
Loss after taxation                       (2,326)      (1,985)         (4,879)

Loss per share - before                    (7.3)p       (8.0)p          (17.6)p
amortisation of goodwill

Loss per share - basic             3       (7.8)p       (8.3)p          (18.4)p

Statement of Group Total Recognised Gains and Losses

 

                                                        Six     Six     
                                                     months  months        Year
                                                         to      to          to
                                                    30 June 30 June 31 December
                                                       2001    2000        2000
                                                      £'000   £'000       £'000

Loss for the financial period                        (2,326) (1,985)     (4,879)

Exchange gains/(losses) offset in                        22     (54)        (45)
reserves

Total recognised gains and losses for                (2,304) (2,039)     (4,924)
the period

 

Consolidated Balance Sheet

 As at      As at     As at
                                                  30 June    30 June        31
                                                     2001       2000  December
                                                                          2000
                                                    £'000      £'000     £'000

Fixed Assets
Intangible assets                                   1,095      1,393     1,241
Tangible assets                                       928        805       968
                                                    2,023      2,198     2,209

Current Assets
Debtors - amount falling due after one year           390        278       412
Debtors - amount falling due within one year        2,293      1,249     2,356
Cash at bank and in hand                            2,500      4,826     2,390
                                                    5,183      6,353     5,158

Creditors - Amounts falling due within one        (3,821)    (1,599)   (3,373)
year
Net current assets                                  1,362      4,754     1,785

Total assets less current liabilities               3,385      6,952     3,994

Creditors - Amounts falling due after more
than one year
Convertible loan notes                            (1,452)    (2,891)   (1,425)
Finance lease obligations                            (31)      (159)      (62)
                                                  (1,483)    (3,050)   (1,487)

Net assets                                          1,902      3,902     2,507

Capital and reserves
Called up share capital                               322        270       293
Share premium account                               8,500      5,363     6,830
Warrant reserve                                       424        424       424
Profit and loss account                           (7,344)    (2,155)   (5,040)
Equity shareholders' funds                          1,902      3,902     2,507

Consolidated Cash Flow Statement

Six       Six 
                                                  months    months         Year
                                                      to        to           to
                                                 30 June   30 June  31 December
                                                    2001      2000         2000
                                                   £'000     £'000        £'000

Net cash outflow from operating activities       (1,441)   (2,044)      (4,061)

Returns on investments and servicing of
finance
Interest received                                     38        70          191
Interest paid                                       (48)       (5)        (120)
Issue costs in respect of convertible loan             -         -        (200)
Net cash (outflow)/inflow from returns on           (10)        65        (129)
investment

Taxation
Tax paid                                             (8)         -          (6)

Capital expenditure and financial investment
Proceeds from sale of tangible fixed assets            -         -           12
Purchase of tangible fixed assets                   (99)     (302)        (694)
Net cash outflow for capital expenditure            (99)     (302)        (682)

Acquisitions and disposals
Acquisition of subsidiary undertaking                  -     (404)        (410)
(including expenses)

Net cash outflow before management of liquid
resources and financing                          (1,558)   (2,685)      (5,288)

Management of liquid resources

Movement in short term deposits                        -   (4,000)      (1,850)

Net cash inflow from financing activities

Financing
Issue of ordinary shares                           1,739     1,615       2,167
Issue costs in respect of shares issued             (40)         -       (432)
Capital element of finance lease payments           (31)      (27)        (65)
Proceeds from issue of warrants                        -       424         424
Proceeds from issue of convertible loan                -     2,891       2,976
Net cash inflow from financing                     1,668     4,903       5,070

Increase/(Decrease) in cash in the period            110   (1,782)      (2,068)

Reconciliation of net cash flow to movement in net funds

 Six      Six     
                                                 months   months         Year
                                                     to       to           to
                                                30 June  30 June  31 December
                                                   2001     2000         2000
                                                  £'000    £'000        £'000

Increase/(Decrease) in cash in the period           110  (1,782)        (2,068)
Movement in short term deposits                       -    4,000          1,850
Issue of convertible loan (net of issue costs)        -  (2,891)        (2,776)
Movement on finance leases                           31    (159)          (121)
(Increase)/Decrease from financing -               (27)        -          1,371
convertible loan
Other non-cash movements                              -        -           (20)
Movement in net funds                               114    (832)        (1,764)
Net funds at beginning of period                    844    2,608          2,608
Net funds at end of period                          958    1,776            844

Reconciliation of operating loss to net cashflow from operating activities

 Six       Six
                                                 months    months         Year
                                                     to        to           to
                                                30 June   30 June  31 December
                                                   2001      2000         2000
                                                  £'000     £'000        £'000

Operating Loss                                  (2,277)   (2,028)      (4,929)
Depreciation of tangible fixed assets               143       103          244
Amortisation of goodwill                            146        71          219
Decrease/(Increase) in debtors                       85     (841)      (2,039)
(Decrease)/Increase in creditors (excluding        (74)       232          832
deferred income)
Movement in deferred income                         514       464        1,641
Loss on sale of tangible fixed assets                 -         9           31
Exchange differences                                 22      (54)         (60)
Net cash outflow from operating activities      (1,441)   (2,044)      (4,061)

Notes to the interim financial statements

1. Segmental Analysis

Turnover split geographically by origin is as follows:

 Six months to      Six months to                 Year to
                        30 June 2001       30 June 2000        31 December 2000
                               £'000              £'000                   £'000

United Kingdom                 2,052                698                   1,878
USA                              231                 58                     162
Europe                           748                522                   1,132
Rest of the World                  -                  -                       -
                               3,031              1,278                   3,172

Turnover split geographically by destination is as follows:

ix months to      Six months to                 Year to
                        30 June 2001       30 June 2000        31 December 2000
                               £'000              £'000                   £'000

United Kingdom                 1,716                566                   1,563
USA                              240                 66                     188
Europe                           936                646                   1,347
Rest of the World                139                  -                      74
                               3,031              1,278                   3,172

Reconciliation of sales invoiced to group turnover is as follows:

  Six months to       Six months to                  Year to
                      30 June 2001        30 June 2000         31 December 2000
                             £'000               £'000                    £'000

Sales invoiced               3,584               1,748                    4,840
Deferred income              (553)               (470)                  (1,668)
Group turnover               3,031               1,278                    3,172

 

2. Taxation. No current year corporation tax has been provided as the group is not anticipating a corporation tax liability given the operating losses incurred by the operating companies within the group.

3. Loss per share. Loss per share has been calculated based on the loss after taxation of £2.326 million (June 2000 – £1.985 million) and the weighted average number of shares of 29,793,764 (June 2000 – 23,980,952). The diluted loss per share is the same as the basic loss per share since the group is making losses.

4. Post balance sheet event. On 17 August 2001 the secured convertible loan notes were redeemed at par value of £1.72 million by drawing down on the secured bank facility of up to £3 million arranged for such purpose. The profit and loss impact of the redemption will be an additional interest charge of approximately £0.26 million to be recognised in the second half of 2001.


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