Statpro Group PLC – Interim Results

For immediate release
7 August 2000

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 interim results for the six months ended 30 June 2000.

Sales invoiced on continuing business up 126% to £1.75 million.

Highlights

  • Continuing turnover up 46% to £1.28 million
  • Invoiced turnover on continuing business up 125% to
  • £1.75 million
  • 43 contracts at the end of June up from 11 at the end of
  • 1999
  • Strategic alliances signed with:
    • Reuters Lipper
    • Russell/Mellon
    • Deloitte and Touche
  • Integration of AMS acquisition on track
  • Recruitment of sales team and overseas expansion proceeding to plan
  • Operating costs on target at £3.24 million
  • Cash balance of £4.83 million

Commenting on the results, Carl Bacon, Chairman of Statpro:

‘We are very active in our marketing in all the territories we cover and are building up a strong pipeline of new potential business. The impetus shown by fund managers to improve operational efficiencies and ensure compliance with industry standards has led to an increased demand for specialist performance measurement software and the group is well positioned to benefit from this growth market.’

– Ends –

For further information, please contact:

StatPro Group plc

Justin Wheatley, CEO 020 7466 5000

Buchanan Communications

Mark Edwards/Bobbie Swanson 020 7466 5000

CHAIRMAN’S STATEMENT

Introduction
StatPro set itself a number of tough objectives for the first half of this year and I am pleased to say we have accomplished all of them.

The most important was the flotation of your company and admission of its ordinary shares to the Official List of the London Stock Exchange and it gives me great pleasure to welcome the new shareholders following the flotation. Despite difficult market conditions, StatPro was able to proceed, which is a testament to the quality of its business, and the commitment and skill of its people. We now have funds to enable us to build distribution channels to deliver strong sales growth.

Financial highlights
I am delighted to report that sales are progressing well with invoiced revenue in the continuing business in the first half of £1.75 million, an increase of 126% over the comparable period. Continuing turnover was also up significantly by 46% to £1.28 million. We made a loss before tax in the period of £1.98 million as we continue to invest in the infrastructure to accommodate a larger sales team, develop the product range and enter new geographic markets. The net assets increased to £3.90 million mainly as a result of the cash raised in the financing in May, and at the end of June, the cash
balance was £4.83 million.

Review of the period
We wanted to develop or acquire an attribution analysis product to enhance our product range. We commenced negotiations with AMS SA in January 2000 and completed the acquisition on 31 March 2000. The integration of AMS and its product is progressing well and we have already started marketing the product in USA, UK, Germany, Belgium, Luxembourg, Switzerland and in its home market, France. We continue to have high hopes for this product.

We set an end of year target of increasing the sales force from 5 to 25 and we currently have 13 in place with further recruitment ongoing. The sales teams will form the basis of our ability to generate new business. Our Frankfurt office will open in August and we are planning to open a second office in the USA later this year.

At the beginning of the year we had 11 signed contracts for Atlas and Compass and as at 30 June we had 43 signed contracts for Atlas, Compass and the AMS product.

Progress with third parties has been equally impressive; we have signed three agreements with Reuters Lipper, Russell/Mellon, and Deloitte and Touche, thereby enhancing our profile and increasing sales opportunities.

Directors
The management team has been strengthened by the appointment in July 2000 of a full-time finance director, Andrew Fabian, who brings many years of senior finance experience from Deloitte & Touche, De La Rue plc and William Baird plc.

Nick Alexander has accepted the role of Chairman of a pre-IPO games software group and, as a result, he is leaving the Board today. I wish him well and thank him for his valuable contribution to the company’s growth and flotation. I am delighted that Charles Fairbairn takes up the role of senior non-executive director.

Future Prospects
We are very active in our marketing in all the territories we cover and are building up a strong pipeline of new potential business. The impetus shown by asset managers to improve operational efficiencies and ensure compliance with industry standards has led to an increased demand for specialist performance measurement software and the group is well positioned to benefit from this growth market.

Carl R Bacon
Chairman

Operating and financial review

Profit and Loss Account

Turnover
Turnover within the continuing business increased by 46% to £1.28 million (1999 – £874,000). As the group’s accounting policy for revenue recognition is to spread the revenue over the contract life, another performance indicator for sales growth is invoiced revenue. Actual sales invoiced in the first half increased by 126% to £1.75 million from (1999 – £772,000) as the benefits of the group’s investment in its sales and marketing team begins to bear fruit.

The integration of AMS following the acquisition on 31 March 2000 is proceeding according to plan. The contribution to turnover in the first half was a modest £27,000 although interest in both the Attribution software from our client base and the Atlas and Compass products from AMS clients is very positive, and invoiced revenue was £76,000.

Operating expenses and amortisation
Operating expenses on the continuing business before amortisation have increased to £3.24 million (1999 – £1.42 million) as the group has continued to invest in the infrastructure to accommodate a larger sales team, develop its product range and enter new geographic markets. The goodwill arising on the acquisition of AMS is being amortised over five years and the amortisation for the period since acquisition to 30 June 2000 amounted to £71,000.

Interest
Net interest income which results from interest earned on cash and deposits less interest accrued on the convertible debt amounted to £43,000 (1999 – £10,000).

Loss before tax and taxation
The loss before taxation amounted to £1.98 million (1999 – £360,000). No current liability to corporation tax is expected given the operating losses incurred by the group.

Loss per share
The loss per share before amortisation increased to 8.0p and loss per share after amortisation increased to 8.3p (1999 – 2.5p before and after amortisation and after accounting for the bonus issue in April 2000).

Balance Sheet
It should be noted that comparative figures for 30 June 1999 include the balances for Micropal France SA, which was a subsidiary at that date.

Net assets
The group’s net assets has increased to £3.90 million (1999 – £682,000). The principal reasons for this increase are summarised below.

Fixed assets
Goodwill on the AMS acquisition has been capitalised and the carrying value at the balance sheet date was £1.39 million (1999 – nil). During the year capital expenditure of £302,000 (1999 – £211,000) was incurred mainly on leasehold improvements, computer software and equipment as part of the expansion of the group’s infrastructure and operations. In addition, £186,000 of computer software was acquired under finance lease arrangements.

Current assets
The level of debtors increased to £1.53 million (1999 – £832,000), the major component being trade debtors, reflecting the growth in the continuing business. The significant increase in cash at bank and in hand to £4.83 million (1999 – £242,000) is predominantly attributable to the proceeds of share placing and issue of convertible debt and warrants amounting to £4.87 million, after expenses, in May 2000.

Convertible debt and other creditors
The long term creditors arose following the issue of convertible debt and arranging finance lease contracts. In accordance with FRS4:’Capital Instruments’, the proceeds of the convertible debt with warrants attached has been allocated between the debt and warrants. As a result an amount of £424,000 has been credited to other reserves. However, the nominal amount of convertible debt in issue at 30 June 2000 was £3.4 million. In July, debt with a nominal value of £520,000 was converted into equity, which has the effect of increasing the group’s net assets.

The increase in short term creditors to £1.60 million (1999 – £806,000) is mainly attributable to changes in trade creditors and deferred income as a result of growth in the continuing business.

Share capital and reserves
The share capital has increased to £270,000 representing 27,003,986 shares of 1p nominal value (1999 – £89,000). During the year the major movements were a bonus issue in April of 12,189,493, the issue of 790,000 shares (equivalent to 1,580,000 shares after the bonus issue) as part of the consideration for AMS in March, and the placing of 2,625,000 shares in May. As a result the share premium account has increased to £5.36 million (1999 – £806,000). Expenses of £548,000 incurred in connection with the flotation have been written off against the share premium account. The other reserve of £424,000 arose as a result of the issue of detachable warrants with the convertible debt as described above.

Cash flow
There was a net cash outflow from operating activities of £2.04 million (1999 – £413,000) as a result of continued operating expenditure on growing the business.

Acquisitions and disposals
£404,000 was paid as the cash element of the acquisition of AMS. In 1999 there were no acquisitions. The receipt of £124,000 in the first half of 1999 related to the initial receipt of proceeds in connection with the disposal of Micropal France SA.

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 business will continue to invest its group’s resources in strengthening the sales and marketing team, the development of complementary products, and expansion into new markets. The financial results for the first half are in line with expectations and the pipeline of potential sales for the second half is encouraging.

Statpro Group plc

Consolidated Profit and Loss Account

Notes Six Six Year
months months to
to to 31
30 June 30 June December
2000 1999 1999

£’000 £’000 £’000

Turnover
Continuing operations 1,251 874 1,784
Acquisition 1 27 – –

1,278 874 1,784

Discontinued operations 2 898 1,360
Group turnover 3 1,278 1,772 3,144

Administrative
expenses
before
goodwill (3,235) (2,142) (4,837)
amortisation
Amortisation of goodwill 4 (71) – –
Administrative expenses (3,306) (2,142) (4,837)

Continuing operations (1,821) (546) (1,927)
Acquisition (after goodwill
amortisation of £71,000) (207) – –
Discontinued operations 176 234
Operating loss (2,028) (370) (1,693)

Exceptional item – Profit on
disposal of discontinued
operation 3 – – 1,467
Net interest receivable 43 10 43
Loss on ordinary activities (1,985) (360) (183)
before taxation

Taxation 5 – (67) (95)
Loss after taxation (1,985) (427) (278)

Loss per share – before 6 (8.0)p (2.5)p (1.4)p
amortisation of goodwill
Loss per share – before
exceptional item 6 (8.3)p (2.5)p (8.6)p

Loss per share – basic 6 (8.3)p (2.5)p (1.4)p

Statement of group total recognised gains and losses

Six months Six months Year
to to to
30 June 30 June 31 December
2000 1999 1999

£’000 £’000 £’000

Loss for the financial period (1,985) (427) (278)

Exchange (losses)/gains offset
in reserves (54) 35 (17)

Total recognised gains and
losses for the period (2,039) (392) (295)

Statpro Group plc

Consolidated Balance Sheet

Notes As at 30 As at 30 As at 31
30 June June December
2000 1999 1999
£’000 £’000 £’000

Fixed Assets
Intangible assets 1,393 – –
Tangible assets 805 414 312
2,198 414 312

Current Assets
Debtors 1,527 832 684
Cash at bank and in hand 4,826 242 2,608
6,353 1,074 3,292

Creditors – Amounts falling due (1,599) (806) (651)
within one year
Net current assets 4,754 268 2,641

Total assets less current
liabilities 6,952 682 2,953

Creditors – Amounts falling due
after more than one year (2,891) – –
Convertible loan
Finance lease obligations (159) – –

(3,050) – –

Net assets 3,902 682 2,953

Capital and reserves
Called up share capital 270 89 113
Share premium account 5,363 806 2,956
Other reserves 7 424 – –
Profit and loss account (2,155) (213) (116)
Equity shareholders’ funds 3,902 682 2,953

Statpro Group Plc
Consolidated Cash Flow Statement
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2000 1999 1999

£’000 £’000 £’000

Net cash outflow from
operating activities (2,044) (413) (1,436)

Returns on investments and
servicing of finance
Interest received 70 10 44
Interest paid (5) – –
Net cash inflow from returns 65 10 44
on investment

Taxation

Tax paid – (1) (58)

Capital expenditure and
financial investment
Purchase of tangible fixed
assets (302) (211) (385)

Net cash outflow for capital (302) (211) (385)
expenditure

Acquisitions and disposals
Proceeds from disposal of
subsidiary undertaking – 124 1,537
Acquisition of subsidiary
undertaking (including
expenses) (404) – –
(404) 124 1,537

Equity dividends paid – (24) (24)

Net cash outflow before
management of liquid
resources and financing (2,685) (515) (322)

Management of liquid
resources
Movement in short term
deposits (4,000) 75 225

Net cash inflow from
financing activities
Financing
Issue of ordinary shares 1,615 201 2,374
Principal payments under
finance leases (27) – –
Proceeds of warrants 424 – –
Net proceeds from issue of
convertible loan 2,891 – –
4,903 201 2,374

(Decrease)/increase in (1,782) (239) 2,277
cash in the period

Major non-cash transactions

During the year the group entered into finance lease arrangements in respect of computer software with a capital value at inception of £186,000
Part of the consideration for AMS comprised 1,580,000 shares (after adjusting for the bonus issue) with a fair value of £948,000.

Six months Six months Year
ended ended ended
30 June 30 June 31 December
2000 1999 1999

£’000 £’000 £’000
Reconciliation of net cash
flow to movement in net funds
(Decrease)/Increase in cash in
the period (1,782) (239) 2,277
Movement in short term
deposits 4,000 (75) (225)
Issue of convertible loan (2,891) – –
Principal outstanding on finance
leases (159) – –
Decrease from financing –
loan conversion – 200 200
Movement in net funds 832 (114) 2,252
Net cash at beginning
of period 2,608 356 356
Net cash at end of
period 1,776 242 2,608

Reconciliation of operating loss to net cashflow from
operating activities
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2000 1999 1999

£’000 £’000 £’000

Operating Loss (2,028) (370) (1,693)
Depreciation of tangible
fixed assets 103 45 119
Amortisation of goodwill 71 – –
Increase in debtors (841) (65) (142)
Decrease in work in
progress – 19 19
Increase/(Decrease) in
creditors 696 (20) 270
Profit on sale of tangible
fixed assets 9 – 8
Exchange difference (54) (2) (17)

Net cash outflow from
operating activities (2,044) (413) (1,436)

Notes to the interim financial statements

1. Acquisition. On 31 March 2000 the group acquired AMS for an aggregate consideration of £1.298 million (before expenses), comprising £350,000 in cash and 790,000 shares (equivalent to 1.58m shares after the bonus issue in April).

2. Segmental Analysis
Turnover split geographically by destination is as follows:

Six months to Six months Year to
30 June 2000 to 30 June 1999 31 December 1999
£’000 £’000 £’000

United Kingdom 566 289 704
USA 66 19 45
Europe:
– Continuing
operations 619 566 1,035
– Acquisition 27 – –
1,278 874 1,784
Discontinued
operations – 898 1,360
1,278 1,772 3,144

Reconciliation of sales invoiced to group turnover is as follows:

Six months to Six months Year to
30 June 2000 to 30 June 1999 31 December 1999
£’000 £’000 £’000

Sales Invoiced
Continuing 1,672 772 1,905
Acquisition 76 – –
1,748 772 1,905

Discontinued – 898 1,360
Group invoiced
turnover 1,748 1,670 3,265

Deferred income (470) 102 (121)
Group turnover 1,278 1,772 3,144

3. Discontinued operations. This comprises the business of Micropal France SA which was sold in 1999 for an aggregate consideration of £1.663m. A profit of £1.437m was recognised on this disposal in 1999.

4. Amortisation of goodwill. Goodwill of £1.464m arose on the acquisition of AMS. The goodwill is being amortised over a five year period as, in the opinion of the directors, this is the period over which the benefits resulting from the purchased goodwill are expected to arise.

5. 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.

6. Loss per share. Loss per share has been calculated based on the loss after taxation of £1,985m (1999 – £427,000) and the weighted average number of shares of 23,980,952 (1999 – 17,354,903). The diluted loss per share is the same as the basic loss per share as, since the group is making losses, there are no potentially dilutive shares outstanding.

7. Other reserves. In accordance with Financial Reporting Standard 4: ‘Capital Instruments’, the proceeds of the convertible debt with detachable warrants has been allocated between the debt and warrants. As a result £424,000 has been credited to other reserves.

8. Comparative results. As this is the first period for which the company has prepared published interim financial information, the auditors have not performed any review procedures in relation to comparative information included in the interim report for the six months ended 30 June 1999.

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