StatPro Group PLC – Interim Results

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%

Highlights:

  • 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

Smithfield

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

High resolution images are available for the media to view and download free of charge from www.vismedia.co.uk

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.

Highlights

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.

Sales

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).

Strategy

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.

Outlook

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.

Justin Wheatley
Chief Executive

OPERATING AND FINANCIAL REVIEW

Overview

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.

IFRS

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

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

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.

Development costs

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.

Employees

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.

Goodwill amortisation

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.

Interest

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.

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. The level of deferred tax will be reviewed in detail at the end of 2005.

Minority Interests

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.

Cash flow

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.

Balance sheet

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.

Dividend Policy

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.

Andrew Fabian
Finance Director

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.

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