For immediate release
10 September 2001
STATPRO GROUP PLC
(“StatPro” or the “Group”)
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.
- 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|
|RMark Edwards/ Jeremy Garcia||020 7466 5000|
CHIEF EXECUTIVE’S REVIEW
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.
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.
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.
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.
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.
10 September 2001
OPERATING AND FINANCIAL REVIEW
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).
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).
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.
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.
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).
The Directors currently propose to continue to invest in growing the business and are not proposing to pay any dividends in the near future.
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.
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.