For immediate release
1 August 2005
STATPRO GROUP PLC
(“StatPro”, the “Group” or the “Company”)
Interim results for the six months ended 30 June 2005
StatPro Group plc, the AIM listed provider of portfolio analytics solutions for the global asset management industry, announces its results for the six months ended 30 June 2005. Six months ended Six months ended Change 30 June 2005
Six months ended Six months ended Change 30 June 2005 30 June 2004 Restated Statutory results (unaudited) Turnover £5.02 million £4.26 million +18% Profit before tax £0.55 million £0.26 million +111% Earnings per share - basic and diluted 1.4p 1.1p +27% Business performance measures EBITDA (under UK GAAP - see note 3) £0.49 million £0.35 million +42% Cash generated from operations (after investment in development activities - see note 7) £0.33 million £0.03 million +937%
- Recurring annualised software revenue increased to £9.01 million since year end (Dec 2004: £8.41 million)
- Multi-year licence contracts increased to 51% (Dec 2004: 44%)
- Further period of positive operating cash inflow with repayment of remaining bank debt of £1.2 million achieved in the period
- Balance sheet restructured:
* Warrants restructuring completed reducing potential dilution of earnings per share
* Share premium account reduced allowing dividend payments out of future profits
- On 1 July 2005, Delve Limited, a supplier of enterprise and web reporting solutions to asset managers, was acquired
The AIM rules require AIM listed companies to adopt International Financial Reporting Standards (‘IFRS’) by 2007 at the latest. The Board has decided to adopt IFRS early during the current financial year in order to follow best practice. Therefore, these interim results are being reported, and the comparative results for 2004 have been restated, under IFRS.
Commenting on the results, Justin Wheatley, Chief Executive of StatPro said: ‘StatPro has excellent prospects based on a growing range of products, an expanding client base and an encouraging new business pipeline. ‘We look forward to improving our current position during the rest of the year and beyond. We anticipate continued momentum in revenue and profitability in the second half of the current year, reflecting the impact of the new clients won in the last twelve months.’
– Ends –
StatPro Group plc
|Justin Wheatley, Chief Executive||020 8410 9876|
|Andrew Fabian, Finance Director|
Corporate Synergy Plc
|Justin Lewis/Rhod Cruwys||020 7448 4400|
|Reg Hoare/Sara Musgrave||020 7360 4900|
A briefing for analysts will be held at 9.15 for 9.30am today at the offices of Smithfield, 78 Cowcross Street, London, EC1M 6HE
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CHIEF EXECUTIVE’S REVIEW
StatPro Group plc is a leading provider of portfolio analytics solutions for the global asset management industry with 185 client contracts in 25 countries. StatPro now offers eight products and has grown its annualised recurring software revenue from less than £1 million in 1999 to £9.0 million in 2005.
StatPro listed on the London Stock Exchange in May 2000 and was admitted to AIM in June 2003. The Company is headquartered in London and has 103 employees.
We are very pleased to announce our results which reflect the continued progress made by the Group. We have met our objectives in every area of the business and StatPro today is a very much stronger business than it was three years ago.
In the first half of 2005, we have continued to generate operating cash, raising our rate of revenue growth to 18% and increasing our net operating profit margin to 11.4% from 7.5%. More significantly, our profit before tax has more than doubled to £0.55 million from £0.26 million. Reflecting our view on the level of operating margin that a software business in our sector should be able to achieve, one of our key objectives is to raise net operating profit margin to 20% over the next few years.
We have tidied up our balance sheet with the warrant swap and successfully applied to the Court to reduce the share premium account in preparation to pay our maiden dividend. With the acquisition of Delve we have added another excellent product to our range. We continue to see the benefits of our cross-selling strategy with 51% clients now on multi-year contracts. StatPro’s staff are of high calibre and their morale is also high with the outlook for the Company being excellent.
We continue to focus on cash and although the first half is normally less cash generative than the second, we have improved our position quite significantly versus last year with a cash inflow from operations (after investment in development activities) of £0.33 million (2004 – £0.03 million). In the early part of the year we also repaid our outstanding bank debt of £1.2 million and our net cash position was £1.71 million as at 30 June 2005. This includes the proceeds of £0.54 million received in June when 4.225 million warrants at 80p, which had been exchanged for 1.69 million warrants at 32p, were exercised.
Acquisition of Delve
On 1 July 2005 we completed the acquisition of Delve Limited. Delve provides enterprise reporting software. We had previously entered into a marketing arrangement with Delve to sell its products as part of our suite but both companies felt that it would be more beneficial if Delve were part of StatPro so that Delve’s very strong technical team could focus on product development and StatPro could maximise sales. The acquisition falls neatly into StatPro’s stated strategy of buying small, highly focused companies with good products but limited distribution capacity and then using our network of client relationships to promote the product. We feel confident that many of our clients will be interested in the Delve solution and that sales will develop quickly.
New licence sales in the first half have been at the same level as the second half of last year, with Europe continuing to lead the way achieving two thirds of new sales. This excellent performance was driven by new regulations on risk in Germany, Luxembourg and Italy introduced by local industry regulators. The same regulatory impact is now also being seen in Ireland, France and Holland and we anticipate an increase in sales in these territories in the second half. We have also made our first sales of our StatPro Fixed Income system (‘SFI’) which now has a growing order book. The official launch of SFI is planned for January 2006, but we have four clients using it in beta form and further clients that will also be using a beta version in the fourth quarter of 2005. We believe that there is a clear market opportunity for a high quality fixed income attribution system such as SFI to take advantage of customer demand, which we intend to grasp – indeed we expect this product to make a growing contribution to revenues in 2006.
Generally, it is our Risk product, SRM, that is leading our sales success at the moment. We now have 20 SRM clients and annual revenues of £1.26 million compared to £0.93 million at the end of 2004. This strong sales growth is likely to continue in Europe based on regulation-based market drivers. However, we are also seeing a growing interest for the product in markets where there is no such driver, based on SRM’s powerful analysis of complex instruments such as mortgage-backed securities and structured products of all kinds.
It was also encouraging that revenue from professional services increased by 50% to £0.69 million compared with the first half of last year (2004 – £0.46 million).
At its core, StatPro’s strategy remains to develop strong relationships with asset managers and to grow the number of products each client uses. This strategic approach is achievable due to our tightly focused range of products that all perform some form of portfolio analytics, be it performance, attribution or risk. The benefit to our clients is that we can offer a group of products on a far more cost effective basis than if they sourced each product from a separate supplier.
As of today StatPro offers eight products which have either been developed internally or acquired in recent years. The Board believes that the intellectual property represented by these products is a very valuable asset.
In addition to this we have forged a number of relationships with custodian banks and fund administrators that act as gatekeepers to large numbers of asset managers. Our partners need our expertise in analytics as this field is becoming increasingly complex and rule-bound. UCITS III (a European Union regulation governing risk reporting) is the key driver in Europe and we have a considerable pipeline of business as a result.
Whilst we concentrate on growing our sales organically, we review opportunities to consolidate markets if such acquisitions can be earnings enhancing or provide us with a product that complements our portfolio analytics range. To date we have been able to make such acquisitions for a relatively modest cost and where the integration risk is low, and we will continue to follow this model where possible.
StatPro has excellent prospects based on a growing range of products, an expanding client base and an encouraging new business pipeline. We expect to improve our margins due to the operational gearing inherent in growing our revenues. We expect that continued cash generation will enable investment in growth opportunities, such as product acquisitions, product and service development, new offices and additional staff, as well as to pay dividends.
We look forward to improving our current position over the rest of the year and beyond. We anticipate continued momentum in revenue and profitability in the second half of the current year, reflecting the impact of the new clients won in the last twelve months.
The Board believes that following three years of good cash generation and the restructuring of the Company’s balance sheet, dividends can now be paid out of future profits.
I would like to extend, once again, my thanks to all our staff who have worked so hard to make StatPro the solid success that it is today and I look forward to seeing even better results in the future.
OPERATING AND FINANCIAL REVIEW
There was a marked improvement in new business achieved in the first half of 2005 compared with the comparative period. The combination of improved new licence business over the past twelve months, a high retention rate, and higher levels of professional services, resulted in revenue increasing by 18% over the comparable period in 2004. The Group increased its operating profit to £0.57 million (2004 – £0.32 million) and increased the net cash position to £1.71 million at the end of June 2005 (2004 – net debt of £0.35 million). The Group has now repaid its remaining bank debt amounting to £1.2 million during the first two months of the period (whilst retaining the loan facility). The initial consideration for the acquisition of Delve paid on 1 July 2005 was financed from existing cash resources.
The balance sheet has been restructured: the warrants issued as part of the flotation were restructured raising £0.54 million and reducing the potential future dilution of earnings per share. The share premium account has been used to offset the deficit on the profit and loss account in the Company balance sheet allowing dividends to be paid out of future profits. As a result the Group is in a very robust financial position and the Directors have now established a dividend policy.
The AIM rules require AIM listed companies to adopt International Financial Reporting Standards (‘IFRS’) by 2007 at the latest. The Board has decided to adopt IFRS early during the current financial year in order to follow best practice. Therefore, these interim results are being reported, and the comparative results for 2004 have been restated, under International Financial Reporting Standards (‘IFRS’). The primary standards that impact the results for StatPro are as follows:
- FRS 3, Business combinations and IAS 36, Impairment of assets (resulting in goodwill being ‘frozen’ with effect from 1 January 2004 and no longer being amortised but subject to annual impairment reviews)
- LAS 38, Intangible assets (resulting in software development costs being capitalised and amortised over the expected useful life of the development)
- IFRS 2, Share-based payment (resulting in costs being attributed to the value of share options issued to employees)
The impact of these changes compared with the accounting treatment under UK GAAP is summarised in note 1. Further information on the effects of IFRS are included within the relevant commentary within this operating and financial review. The restated results for the full and half year for 2004 have been reviewed by the Group’s auditors but have not been audited. Also, we understand that the European Union will not formally adopt IFRS until 31 December 2005 and therefore there may be further amendments to individual standards during 2005. Therefore, whilst we do not expect any material changes it is possible that there may be further adjustments that arise when we issue our full year audited accounts for 2005 under IFRS in 2006.
Turnover increased by 18% to £5.02 million (2004 – £4.26 million). The impact of exchange rates on turnover and profit were immaterial in the period. Software licence revenue grew by 17% and there was an improvement in the level of professional services revenue of 50%. As anticipated, there was a further reduction in other recurring revenues from TAP (StatPro’s original product) royalties by 39% albeit this income now represents an immaterial proportion of revenues.
The split of revenue by type was as follows:
———– ———– ———–
Six months to Six months to Year to 30 June 30 June 31 December 2005 2004 2004 £ million £ million £ million Turnover Software licences 4.22 3.62 7.49 Professional services 0.69 0.46 1.21 Other recurring revenue 0.11 0.18 0.37 5.02 4.26 9.07 ----------------------- ----------- ----------- -----------
We made 20 sales in the first half of 2005 (2004 – 20), of which nine (2004 – nine) were additional modules or users to existing contracts. Although the level of sales by number was the same as 2004, the average values were significantly higher. The strongest regional market for new business in the first half was in Continental Europe. Our risk product again exhibited the fastest growth rate. The value of the recurring revenue for StatPro Risk Management systems increased by 35% (42% at constant exchange rates) from £0.93 million at the end of December 2004 to £1.26 million by the end of June 2005.
The latest version of StatPro Fixed Income (‘SFI’) was released to a number of clients and whilst we do not anticipate significant new business from this product in 2005 we do expect growth in revenue from SFI from 2006 onwards. The Board is currently planning to exercise its option at the earliest date (November 2005) to acquire the minority interest in StatPro Australia (the company that developed the forerunner to SFI). The consideration will be linked to revenue levels of SFI and the current estimate is that the cash consideration will be approximately £0.20 million.
The proportion by value of recurring software licences on multi-year contracts (licence agreements with more than one year remaining contractually committed) increased to 51% at the end of June 2005 (2004 – 40%) from 44% at the end of December 2004.
The annual value of continuing recurring revenue, which is analysed below, increased to £9.01 million from £8.41 million at 31 December 2004, a growth of 9% at constant exchange rates.
------------ ----------- ----------- At 30 June 2005 At 30 June 2004 At 31 December 2004 Annualised Annualised Annualised value value value £ million £ million £ million Recurring revenues Software licences 9.01 7.54 8.41 Other recurring revenue 0.22 0.42 0.37 Total recurring revenue 9.23 7.96 8.78 ---------------------- ------------ ----------- -----------
The following table shows the net growth in software licence revenue and the impact of foreign exchange on the contract values:
nnualised At 31 Net New contracted At 30 Six month growth value December impact of revenue (net June rate % (at £ million 2004 exchange of cancellations) 2005 constant exchange rates rates) Recurring revenues Software licences 8.41 (0.12) 0.72 9.01 +9 --------------- ------- --------- ---------- -------- --------
Operating expenses (before amortisation of intangibles and exceptional item) amounted to £3.84 million in the first half of 2005 (2004 – £3.41 million). The growth in expenses arose mainly from a higher average level of employees, and the additional costs associated with third party data costs for risk.
The Group continues to increase its investment in research and development, to ensure we remain at the forefront of performance and risk analytics technology. Development costs, which under UK GAAP were previously written off, are now capitalised under IFRS, where recognition criteria are met. As a result there is now an intangible asset of £1.84 million (including acquired software) recognised on the Group’s balance sheet relating to the carrying value of previous developments where the Board expects the benefits to be recovered through incremental revenue from future sales. As a result of the implementation of the change in accounting development costs capitalised in the period to end June 2005 amounted to £0.81 million (2004 – £0.63 million). The Board has decided to amortise its development expenditure over a three year period and therefore the amortisation of intangibles amounted to £0.60 million for the period to end June 2005 (2004 – £0.43 million). The carrying values, which are analysed by product, are considered carefully by the Board and if there has been any impairment in any development costs then the carrying value is written down accordingly. As a result of the implementation of this new standard, there is a net benefit to the profit and loss of £0.21 million in the first half of 2005 (2004 – £0.20 million) compared to UK GAAP.
The average number of employees during the first six months of 2005 increased to 90 (2004 – 83). At the end of June 2005 we had a total of 98 employees, situated in eight offices (London, Paris, New York, Milan, Frankfurt, Luxembourg, Cape Town and Brisbane). During July, five employees joined with Delve and they have been integrated into our existing London office. We are currently planning to open an office in San Francisco in August to support our growing client base on the west coast of the US.
Share based payments
In common with many high-growth technology enterprises, StatPro has issued a number of share options to executives and employees. Under IFRS, the options must be valued based on a market or estimated market value at inception and this cost is spread over the option vesting period (generally three years). As there is no readily available market price for the options the Board has used an independent model to evaluate the fair value of the options. There are a number of assumptions which affect the value and the Board has considered carefully these assumptions in order to derive an appropriate charge for the cost of options. As a result there is a charge of £0.02 million (2004 – £0.02 million) relating to share based payments. There is no cash impact to the Group as a result of this new accounting standard.
Under IFRS, goodwill on acquisitions has been ‘frozen’ with effect from 1 January 2004 and is no longer amortised but subject to annual impairment reviews. Goodwill on acquisitions since 1 January 2004 is reviewed and allocated to its underlying intangible components. As a result the £64,000 of goodwill for our investment in SiSoft has been categorised as software product costs and amortised over a three year period. Goodwill arising on acquisitions prior to 1 January 2004 has been reviewed and to the extent that some of the goodwill would now be deemed to be development costs under IFRS then a reduction to the previously reported goodwill has been made and an equivalent increase in the value of intangible assets applied. These adjustments result in corresponding adjustments to the goodwill carrying value at 1 January 2004 and the amortisation of intangibles since that date. As a result there is no amortisation of goodwill in the restated accounts for 2004 or the first half of 2005.
Net interest expense, which results from interest and fees accrued on bank loans and finance leases, less interest earned on cash and deposits, reduced to £0.02 million (2004 – £0.06 million) as a result of a significantly lower average debt during the period.
Profit before tax
The profit before tax increased by 111% to £0.55 million from £0.26 million. The adjusted earnings before interest, tax, depreciation, amortisation of goodwill and exceptional items, (‘EBITDA’), a performance measure previously reported under UK GAAP, amounted to £0.49 million (as shown in note 3) for the six months to the end of June 2005 compared to £0.35 million for the comparable period in 2004. The full year EBITDA under UK GAAP for 2004 was £0.98 million.
A provision has been made for corporation tax for an overseas subsidiary. It is estimated that the level of further deferred tax that could now be recognised is approximately equal to the level of deferred tax asset released and the group level of deferred tax recognised therefore remains at £1.47 million. The level of deferred tax will be reviewed in detail at the end of 2005.
There is profit attributable to minority interests in the period amounting to £0.06 million (2004 – loss of £0.12 million).
Earnings per share
Earnings per share (basic and diluted) increased by 27% to 1.4p (2004 – 1.1p). The adjusted earnings per share (before exceptional items) was unchanged at 1.4p (2004 – 1.4p). For the full year 2004 (which included an exceptional deferred tax credit equivalent to 4.4p per share) the adjusted earnings per share was 3.4p.
There was an improved cash inflow from operating activities before investment in development activities during the first six months of 2005 amounted to £1.14 million (2004 – £0.66 million). The investment in development activities amounted to £0.81 million (2004 – £0.63 million). As a result, the cash inflow from operating activities after investment in development activities increased from £0.03 million to £0.33 million in the first six months of 2005 (see note 6).
During the period we repaid bank loans amounting to £1.20 million. The proposal to swap the warrants originally issued on flotation in May 2000 for new warrants, which were then exercised in June 2005, resulted in a reduction of potential dilution to shareholders and the proceeds amounted to £0.54 million. In combination with other exercises of employee options a total of £0.56 million of cash was received on issue of shares in the first half of 2005.
The Group’s net assets as reported under IFRS increased to £1.89 million (June 2004 – net liabilities of £1.27 million) from £0.74 million at 31 December 2004. The level of trade and other receivables, of which the major component is trade debtors, was lower than the level at the end of December 2004 but increased to £2.15 million at the end of June 2005 compared to last year (June 2004 – £1.93 million). The short-term creditors of £6.72 million (June 2004 – £5.72 million) includes deferred income, a non-cash liability, of £5.04 million (June 2004 – £4.37 million). The cash balance at the end of June 2005 was £1.78 million (June 2004 – £0.87 million). The Group’s net funds at 30 June 2005 amounted to £1.71 million (June 2004 – net debt amounted to £0.35 million).
Post balance sheet event
On 1 July 2005, the Company acquired 100% of the share capital of Delve, a leading supplier of enterprise and web reporting solutions to asset managers, for cash amounting to £0.55 million and deferred consideration of approximately two times the future recurring revenue of the product payable over a three year period.
StatPro has now had three years of operating cash generation, and the directors are now implementing a dividend policy. Following the resolution approved at the Annual General Meeting, the reduction of share premium account against the deficit on the profit and loss account was confirmed by the Court on 22 June 2005, subject to certain conditions, including the establishment of a reserve (currently non-distributable) of £1.69 million. As a result the legal barrier to paying dividends has now been removed and dividends can now be paid out of future distributable profits. The Board is proposing to introduce a progressive dividend when there are sufficient distributable reserves in the Company where, in each full year, an interim dividend is paid in November with the final dividend (being the major part of the dividend) declared when the preliminary results are announced and paid in late May.
Consolidated Profit and Loss Account
Notes Unaudited Unaudited Unaudited Six months Six months Year to to to 31 30 June 30 June December 2005 2004 2004 As restated As restated £'000 £'000 £'000 Continuing operations Turnover 5,017 4,258 9,072 ------------------------- ------- ---------- --------- ---------- Operating expenses before amortisation of intangibles and exceptional item (3,841) (3,411) (7,087) Amortisation of intangibles (602) (433) (877) Exceptional item 2 - (93) (93) ------------------------- ------- ---------- --------- ---------- Operating expenses (4,443) (3,937) (8,057) Operating profit 574 321 1,015 Interest receivable 10 8 22 Interest payable (30) (66) (139) Profit before taxation 554 263 898 Taxation 2, 4 (9) (4) 1,435 Profit for the period from continuing operations 545 259 2,333 Profit/(loss) attributable to minority interests 61 (115) (163) Profit attributable to equity shareholders 484 374 2,496 Profit for the period 545 259 2,333 Earnings per share from continuing operations - basic 5 1.4p 1.1p 7.5p - diluted 5 1.4p 1.1p 7.4p
Statement of Recognised Income and Expense
Unaudited Unaudited Unaudited Six months to Six months to Year to 30 June 30 June 31 December 2005 2004 2004 £'000 £'000 £'000 Profit after tax 545 259 2,333 Net exchange differences offset in reserves net of tax 11 35 (11) Share based payments 23 16 31 Gain from warrant conversion 66 - - Total recognised gains and losses for the period 645 310 2,353
Consolidated Balance Sheet
Notes Unaudited Unaudited Unaudited As at As at As at 30 June 30 June 31 December 2005 2004 2004 As restated As restated £'000 £'000 £'000 Non current assets Goodwill 708 708 708 Intangible assets 1,835 1,438 1,624 Property, plant and equipment 468 527 509 Other receivables 285 285 286 Deferred tax assets 1,472 - 1,472 4,768 2,958 4,599 Current assets Trade and other receivables 2,145 1,935 2,350 Cash and cash equivalents 1,775 870 2,149 3,920 2,805 4,499 Liabilities Current liabilities Financial liabilities - (41) (35) (40) borrowings Trade and other payables (1,637) (1,294) (1,723) Current tax liabilities (5) (18) (7) Deferred income (5,035) (4,374) (5,289) 6 (6,718) (5,721) (7,059) Net current liabilities (2,798) (2,916) (2,560) Non-current liabilities Financial liabilities - (22) (1,186) (1,211) borrowings Deferred income (63) (130) (85) (85) (1,316) (1,296) Net assets/(liabilities) 1,885 (1,274) 743 Shareholders' equity Ordinary shares 350 331 332 Share premium 903 8,559 8,562 Warrant reserve 2 424 424 Other reserve * 1,695 - - Retained earnings (893) (10,403) (8,342) Total shareholders' equity/(deficit) 2,057 (1,089) 976 Minority interest in equity (172) (185) (233) Total equity/(deficit) 1,885 (1,274) 743
* The Other Reserve is currently non-distributable
Consolidated Cash Flow Statement
Unaudited Unaudited Unaudited Six months to Six months to Year to 30 June 30 June 31 December 2005 2004 2004 As restated As restated £'000 £'000 £'000 Cash flows from operating activities Cash generated from operations 1,145 663 2,717 Interest received 7 6 16 Interest paid (5) (81) (99) Issue costs in respect of bank loan (5) (5) (5) Tax paid (11) - (44) Net cash from operating activities 1,131 583 2,585 Cash flows from investing activities Acquisition of subsidiaries (net of cash acquired) - 14 14 Investment in intangible assets - development costs (813) (631) (1,261) Proceeds from sale of property, plant and equipment 22 - - Purchase of property, plant and equipment (87) (88) (175) Net cash used in investing activities (878) (705) (1,422) Cash flows from financing activities Repayment of bank loan (1,200) (300) (300) Repayment of convertible loan - (1,000) (1,000) Proceeds from issue of ordinary shares 564 - 4 Capital element of finance lease payments (2) (3) (7) Net cash used in financing activities (638) (1,303) (1,303) Effects of exchange rate changes 11 3 (3) Net decrease in cash and cash equivalents (374) (1,422) (143) Cash and cash equivalents at start of period 2,149 2,292 2,292 Cash and cash equivalents at end of period 1,775 870 2,149
Reconciliation of operating profit to net cash flow from operating activities
Unaudited Unaudited Unaudited Six months to Six months to Year to 30 June 2005 30 June 2004 31 December 2004 As restated As restated £'000 £'000 £'000 Operating profit 574 321 1,015 Depreciation of tangible fixed assets 103 113 221 Amortisation of intangibles 602 433 877 Decrease in debtors 206 806 389 Increase/(decrease) in creditors (excluding deferred income) (86) (345) 38 Movement in deferred income (276) (681) 146 Share based payments 23 16 31 Profit on disposal of fixed asset (1) - - Net cash generated from operations 1,145 663 2,717 ----------------------------- -------- -------- ---------
Reconciliation of net cash flow to movement in net debt
Unaudited Unaudited Unaudited Six months to Six months to Year to 30 June 2005 30 June 2004 31 December 2004 As restated As restated £'000 £'000 £'000 (Decrease)/increase in cash and cash equivalents in the period (374) (1,422) (143) Movement of finance leases (4) 3 7 Convertible loan repayment - 1,000 1,000 Bank loan repayment 1,200 300 300 Debt assumed on acquisition of SiSoft - (30) (30) Other non-cash movements (8) (5) (39) Movement in net debt 814 (154) 1,095 Net cash/(debt) at beginning of period 898 (197) (197) Net cash/(debt) at end of period 1,712 (351) 898 ----------------------------- -------- -------- ---------
The difference between the net decrease in cash and cash equivalents reported above under IFRS and the amount reported/restated under UK GAAP relates to the wider definition of cash and cash equivalents which under IFRS includes money market deposits.
Notes to the interim accounts
1. Reconciliation between UK GAAP and IFRS Reconciliation of Profit after tax for the period between UK GAAP and IFRS
Six months Six months Year to to 30 June to 30 June 31 December 2005 2004 2004 Profit after tax- UK GAAP 237 (112) 1,597 Investment in intangible 813 631 1,261 assets - development costs Amortisation of intangibles (602) (433) (877) Amortisation of goodwill 120 189 383 Share based payments (23) (16) (31) 308 371 736 Profit after tax- IFRS 545 259 2,333 -------------------- -------- -------- ------- ------- ------- --------
Reconciliation of Capital employed and Total equity/(deficit) between UK GAAP and IFRS
Unaudited Unaudited Unaudited As at As at As at 30 June 30 June 31 December 2005 2004 2004 As restated As restated Capital employed - UK GAAP (308) (2,786) (1,119) Investment in intangible assets - development costs 1,757 1,310 1,521 Intangibles acquired - software acquired 78 128 103 Goodwill adjustment 358 74 238 Total equity/(deficit) - IFRS 1,885 (1,274) 743 ---------------------- ----------- --------- ----------
Reconciliation of Retained earnings between UK GAAP and IFRS
Unaudited Unaudited Unaudited As at As at As at 30 June 30 June 31 December 2005 2004 2004 As restated As restated Retained earnings - UK GAAP Opening position - UK GAAP (10,204) (11,953) (11,953) Development costs - opening position 1,521 1,098 1,098 Goodwill - opening restatement 383 - - Goodwill - fair value adjustment - 30 - Intangibles - opening restatement (42) (3) (3) Opening position - IFRS (8,342) (10,828) (10,858) Total recognised gains and losses for the 645 310 2,353 period Transfer from share premium 6,865 - - (832) (10,518) (8,505) Minority interests (61) 115 163 Retained earnings - IFRS (893) (10,403) (8,342) ---------------------- ----------- --------- ----------
2. Exceptional item. There were no exceptional items in the first half of 2005. The exceptional item of £0.09 million in 2004 relates to compensation for loss of office and related expenses. In the full year results for 2004 there was an exceptional deferred tax credit of £1.47 million.
3. Adjusted earnings before interest, tax, depreciation, amortisation of goodwill (‘EBITDA’)
Unaudited Unaudited Unaudited Six months to Six months to Year to 30 June 2005 30 June 2004 31 December 2004 As restated As restated £'000 £'000 £'000 Profit/(loss) after tax - UK GAAP 237 (112) 1,597 Tax 9 4 (1,435) Interest 20 58 117 Operating profit/(loss) - UK GAAP 266 (50) 279 Depreciation of tangible fixed assets 103 113 221 Amortisation of goodwill 120 189 383 Exceptional operating item - 93 93 EBITDA - UK GAAP 489 345 976 --------------------------- -------- -------- ----------
4. Taxation. A provision has been made for corporation tax for an overseas subsidiary. It is estimated that the level of further deferred tax that could now be recognised is approximately equal to the level of deferred tax asset released and the Group level of deferred tax recognised therefore remains at £1.47 million. In the full year results for 2004 there was an exceptional deferred tax credit amounting to £1.47 million.
5. Basic earnings per share. Basic earnings per share has been calculated based on the profit after taxation and minority interests of £0.48 million (2004 – £0.37 million) and the weighted average number of shares of 33,407,258 (June 2004 – 33,089,244). The diluted earnings per share in 2005 are 1.4p (2004 – 1.1p) based on potentially dilutive shares outstanding amounting to 453,970 (2004 – 377,747).
6. 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 Unaudited As at As at As at 30 June 2005 30 June 2004 31 December 2004 As restated As restated £'000 £'000 £'000 Bank loans and finance leases 41 35 40 Trade creditors 464 369 394 Corporation tax 5 18 7 Other creditors and accruals 810 577 827 Other tax and social security 363 348 502 Deferred income 5,035 4,374 5,289 6,718 5,721 7,059
7. Cash generated from operations – reconciliation from statutory heading to business performance measure
Unaudited Unaudited Unaudited As at As at As at 30 June 2005 30 June 2004 31 December 2004 As restated As restated £'000 £'000 £'000 Cash generated from operations 1,145 663 2,717 Investment in intangible assets - development costs (813) (631) (1,261) Cash generated from operations after development costs 332 32 1,456
8. 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 2004 except that adjustments have been made to reflect changes in accounting standards from UK GAAP as a result of the introduction of IFRS. This interim statement has not been audited but has been reviewed by the Company’s auditors PricewaterhouseCoopers LLP.
9. 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 2004 reported under UK GAAP, on which the auditors gave an unqualified opinion, have been delivered to the Registrar of Companies. The figures presented here for 2004 have been restated under IFRS.
10. 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.