StatPro Group PLC – Interim Results

For immediate release
8 August 2004

STATPRO GROUP PLC

(“StatPro” or the “Group”)

Interim results for the six months ended 30 June 2004

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 2004.

Six months ended            Six months ended
                                        30 June 2004                30 June 2003

Turnover                               £4.26 million               £4.06 million
Loss before tax                      (£0.11) million             (£0.08) million
Adjusted profit before tax *           £0.17 million               £0.07 million
Basic earnings/(loss) per share                 0.0p                      (0.3)p
Adjusted earnings per share *                   0.9p                        0.2p

* before goodwill amortisation and exceptional item (note 1)

Highlights

  • Turnover from software licence fees up 13% to £3.62 million (2003 – £3.19 million)
  • Annual value of continuing recurring revenues increased to £7.96 million (2003 – £7.55 million)
  • Proportion of software revenue on multi-year contracts up to 40% (2003 – 29%)
  • Annual recurring revenue of Risk product increased by 65% to £0.33 million since acquisition in October 2003

Commenting on the results, Carl Bacon, Chairman of StatPro said: ‘There has been a steady flow of new software contracts during the first six months of 2004, albeit at a slightly slower rate than expected. Indeed, improvements in our core products, the successful introduction of our risk product and additional reporting tools, have significantly increased sales activity and we anticipate that this should lead to a faster rate of signed contracts in the coming months.’

– Ends –

For further information, please contact:

StatPro Group plc

Justin Wheatley, Chief Executive On 2 August: 020 7067 0700
Andrew Fabian, Finance Director Thereafter: 020 8410 9876

Corporate Synergy Plc

Justin Lewis/Edward Vandyk 020 7448 4400

Weber Shandwick Square Mile

Mike Kirk/Rachel Taylor 020 7067 0700

A briefing for analysts will be held at 9.15 for 9.30am today at the offices of Weber Shandwick Square Mile, Fox Court, 14 Gray’s Inn Road, London, WC1X 8WS.

Notes to Editors:

StatPro Group plc is a leading provider of portfolio analytics solutions for the global asset management industry, which floated on the London Stock Exchange in May 2000. StatPro transferred its listing in June 2003 to AIM and has grown its continuing revenue from £1.8 million in 1999 to £8.4 million in 2003.

CHIEF EXECUTIVE’S REVIEW

Highlights

The bear market for software systems for the asset management industry is showing some signs of improvement. Sales activity in the first six months of 2004 has markedly increased compared to last year. However, it may take a little longer for the improvement in market conditions to convert into a faster rate of sales and we remain cautious until we see more evidence of this. Nevertheless, we are pleased with our progress and have started to establish ourselves as an important provider of risk management systems in the European market. Regulatory changes in Germany and Italy (for example, UCITS III, a European Directive that regulates unit trusts and mutual funds) mean that there has been more interest in risk management systems that cover a wide range of asset types. StatPro Risk Management (SRM) permits analysis of risk for any type of asset and as a result we have received a significant increase in enquiries for this type of software. More significantly, we have acquired three new SRM clients in the first half of 2004.

At the beginning of 2004, we concluded two agreements to resell third party software systems for reporting and we have been actively promoting these products to our clients. We are pleased that, for both systems, we have signed new contracts with existing clients and that we have a growing pipeline of interest from prospective clients.

Both of our original core products, StatPro Composites and StatPro Performance and Attribution, continue to sell steadily and whilst signing contracts remains generally slow, there is an increase in potential orders for these products too. On a regional basis, it appears that the North American market is improving steadily, as are markets in most of continental Europe. South Africa remains a buoyant market for us and the opening of our new office in Cape Town has been appreciated by our clients, with interest for all our products. In the UK, the market is a little slower and there seems to be a general trend towards consolidation of asset managers and also outsourcing of back office departments.

Product development

A key objective for our research and development team has been to increase the scalability of the StatPro Performance and Attribution system. This has been achieved and we can now process high volumes of accounts many times faster than before. This increased speed across a large number of accounts enables us to offer the complex attribution analysis software to private client asset managers as well as institutional clients, significantly broadening our potential market. We intend to continue this drive for improved performance and scalability in our products. Our Risk product (SRM) is already extremely scalable and our largest client uses it to quantify risk for over 340,000 portfolios per day.

The StatPro Fixed Income attribution system is currently scheduled to be ready by the beginning of 2005 and there is a strong general demand for this product amongst our existing clients.

Strategy

Our strategy remains both to sell a wider range of products to existing clients and to ensure that our broadened and improved product range opens up new client opportunities. It is clear that our coherent product offering gives our existing and potential clients comfort that we can be more than simply a software supplier, but also a strategic partner.

Outlook

The general increase in market activity should translate into increased sales. The increase in the number of products we offer will also result in more opportunities to sell. For these reasons, we believe that on the basis of current market conditions being sustained there will be an improvement in sales over the next six-month period.

Justin Wheatley
Chief Executive

OPERATING AND FINANCIAL REVIEW

Overview

The first half of 2004 has been characterised by an increase in sales activity but the conversion of prospects to signed agreements remains protracted. We have continued to invest in our infrastructure to provide improved client services and sales coverage, with our Italian office now integrated into the Group, and the new South African office fully operational. We have also increased our investment in new products, in particular with the acquisition of a 51% shareholding in SiSoft, which has developed an advanced internet based solution to be marketed as StatPro GIPS Manager. Despite these investments and recognised revenue being slightly below our original expectations, the operating profit before goodwill amortisation and exceptional item increased marginally to £0.23 million (2003 – £0.16 million).

Turnover

Turnover increased by 5% to £4.26 million (2003 – £4.06 million). At constant exchange rates turnover growth was 7%. Software licence revenue grew by 13% as a result of the net growth in value of annual licence agreements. This was offset by a fall in professional services revenue of 21%. As expected, there was also a reduction in other recurring revenues from TAP (StatPro’s original product) royalties of 38%.

The split of revenue by type was as follows:

  Six months to        Six months to           Year to
                                30 June              30 June       31 December
                                   2004                 2003              2003
                              £ million            £ million         £ million
Turnover
Software licences                  3.62                 3.19              6.66
Professional services              0.46                 0.58              1.24
Other recurring revenue            0.18                 0.29              0.53
                              --------------------------------------------------
                                   4.26                 4.06              8.43
                              --------------------------------------------------

We made 20 sales in the first half of 2004 (2003 – 19), of which nine (2003 – nine) were additional modules or users to existing contracts. The strongest regional market for new business in the first half was in Europe with new clients signed in Germany and France. The product with the highest revenue growth rate is now our risk product acquired in October 2003. At the time of acquisition the recurring revenue for StatPro Risk Management systems was approximately £0.20 million and by the end of June 2004, this had grown by 65% to annualised recurring revenue of £0.33 million. The proportion by value of recurring software licences on multi-year contracts increased to 40% at the end of June 2004 (2003 – 29%) from 33% at the end of December 2003.

The annual value of continuing recurring revenue, which is analysed below, increased to £7.96 million at 30 June 2004 from £7.55 million at 30 June 2003.

 At 30 June 2004   At 30 June 2003  At 31 December 2003
                       Annualised value  Annualised value     Annualised value
                              £ million         £ million            £ million

Recurring revenues
Software licences                  7.54              7.00                 7.38
Other recurring revenue            0.42              0.55                 0.53
                              --------------------------------------------------
Total recurring revenue            7.96              7.55                 7.91
                              --------------------------------------------------

The following table shows the net growth in software licence revenue and the impact of foreign exchange on the contract values:

Annualised value         At 31     Net impact    At 1    New contracted    At 30
    Six month
£ million             December    of exchange January    revenue(net of     June   growth rate
                          2003          rates    2004    cancellations)     2004             %
                                                                                  (at constant
                                                                                      exchange
                                                                                         rates)

Recurring revenues
Software licences        7.38           (0.16)   7.22             0.32      7.54            +4

 

Operating expenses

Operating expenses (before goodwill amortisation and exceptional item) amounted to £4.03 million in the first half of 2004 (2003 – £3.90 million). The growth in expenses arose mainly from the additional costs associated with the Italian and South African offices, and an increased investment in research and development, to ensure we remain at the forefront of performance and risk analytics technology. The exceptional item of £0.09 million (2003 – nil) relates to compensation for loss of office and related expenses.

                           Six months to       Six months to           Year to
                                 30 June             30 June       31 December
                                    2004                2003              2003
                               £ million           £ million         £ million

Revenue                             4.26                4.06              8.43
Operating expenses *               (4.03)              (3.90)            (7.78)
                             ---------------------------------------------------
Operating profit *                  0.23                0.16              0.65
Goodwill amortisation              (0.19)              (0.15)            (0.32)
Exceptional item                   (0.09)                  -                 -
                             ---------------------------------------------------
Operating (loss)/profit            (0.05)               0.01              0.33
                             ---------------------------------------------------

* before goodwill amortisation and exceptional item

Employees

The average number of employees during the first six months of 2004 increased to 83 (2003 – 77). At the end of June 2004 we had a total of 86 employees, situated in eight offices (London, Paris, New York, Milan, Frankfurt, Luxembourg, Cape Town and Brisbane).

Interest

Net interest expense, which results from interest accrued on bank loans and finance leases, less interest earned on cash and deposits, reduced to £0.06 million (2003 – £0.09 million) as a result of a lower average net debt.

Taxation and Earnings/(loss) per share

Loss before taxation increased to £0.11 million (2003 – £0.08 million). A provision has been made for corporation tax for an overseas subsidiary. Earnings per share amounted to 0.0p (2003 – loss of 0.3p). Earnings per share before goodwill amortisation and exceptional item improved to 0.9p (2003 – 0.2p).

Cash flow

There was a modest operating cash inflow during the first six months of £0.04 million (2003 – £0.83 million). Whilst there was an increased inflow from debtors in the first half of 2004 of £0.81 million (2003 – £0.67 million), the overall working capital movement was an outflow of £0.22 million. In the comparative period in 2003, there was a benefit of a favourable net working capital movement of £0.54 million following the restructuring in July 2002. During the period we repaid the convertible loan of £1.00 million and we repaid £0.30 million of our bank loan facility. Regardless of external factors, we will continue to manage the business with a view to generating positive operating cash flow for the year.

Balance sheet

The Group’s net liabilities increased to £2.79 million (2003 – £2.90 million) from £2.71 million at 31 December 2003. The level of debtors falling due within one year, of which the major component is trade debtors, decreased to £1.94 million (2003 – £2.45 million). The short-term creditors of £5.72 million (2003 – £6.84 million) includes deferred income, a non-cash liability, of £4.37 million (2003 – £4.34 million). The largest factor in the reduction in short term creditors was the repayment of the convertible loan of £1.00 million in January 2004.

The cash balance at the end of June 2004 was £0.87 million (2003 – £1.71 million). The Group’s net debt at 30 June 2004 amounted to £0.35 million compared to £0.20 million at 31 December 2003 and £0.75 million at the end of June 2003.

Dividends

Given the accumulated losses and the continued investment in growing the business, the Directors are not proposing to recommend any dividend at present.

Andrew Fabian
Finance Director

Consolidated Profit and Loss Account

 Notes     Unaudited     Unaudited      Audited
                                     Six months to Six months to      Year to
                                           30 June       30 June  31 December
                                              2004          2003         2003
                                             £'000         £'000        £'000

Turnover - continuing operations             4,258         4,065        8,426

Operating expenses before
goodwill amortisation and
exceptional item                            (4,026)       (3,900)      (7,775)
Amortisation of goodwill                      (189)         (152)        (321)
Exceptional item                   2           (93)            -            -

Operating expenses                          (4,308)       (4,052)      (8,096)
                                         ---------------------------------------
Operating (loss)/profit -
continuing operations                          (50)           13          330

Net interest payable                           (58)          (91)        (184)
                                         ---------------------------------------

(Loss)/profit on ordinary
activities before taxation                    (108)          (78)         146

Taxation                           3            (4)          (12)         (14)
                                         ---------------------------------------

(Loss)/profit after taxation                  (112)          (90)         132

Equity minority interests                      115             -           70
                                         ---------------------------------------

Retained profit/(loss) for the
period                                           3           (90)         202
                                         =======================================
Earnings/(loss) per share -
basic and diluted                  4           0.0p         (0.3)p        0.6p

Earnings per share - before
amortisation of goodwill and
exceptional item                               0.9p          0.2p         1.6p

Statement of Group Total Recognised Gains and Losses

Unaudited       Unaudited       Audited
                                   Six months to   Six months to       Year to
                                         30 June         30 June   31 December
                                            2004            2003          2003
                                           £'000           £'000         £'000

Profit/(loss) for the financial period         3             (90)          202
Exchange differences offset in reserves       35             (22)          (52)
                                         ---------------------------------------
Total recognised gains and losses for
the period                                    38            (112)          150
                                         =======================================

Consolidated Balance Sheet Notes

Notes   Unaudited   Unaudited      Audited
                                                  As at       As at        As at
                                                30 June     30 June  31 December
                                                   2004        2003         2003
                                                  £'000       £'000        £'000

Fixed assets
Intangible assets                         5         634         564          737
Tangible assets                                     527         595          561
                                         -----------------------------------------
                                                  1,161       1,159        1,298

Current assets
Debtors - amount falling due after
one year                                            285         280          297
Debtors - amount falling due within
one year                                          1,935       2,449        2,728
Cash at bank and in hand                            870       1,709        2,292
                                         -----------------------------------------
                                                  3,090       4,438        5,317
Creditors - amounts falling due
within one year
Convertible loan                          6           -        (986)      (1,000)
Others                                           (5,721)     (5,850)      (6,690)
                                         -----------------------------------------
                                          7      (5,721)     (6,836)      (7,690)

Net current liabilities                          (2,631)     (2,398)      (2,373)

Total assets less current
liabilities                                      (1,470)     (1,239)      (1,075)

Creditors - amounts falling due after
more than one year
Deferred income                                    (130)       (196)        (150)
Bank loans                                       (1,165)     (1,441)      (1,457)
Finance lease obligations                           (21)        (28)         (27)
                                         -----------------------------------------
                                                 (1,316)     (1,665)      (1,634)

Net liabilities                                  (2,786)     (2,904)      (2,709)
                                         =========================================

Capital and reserves
Called up share capital                             331         329          331
Share premium account                             8,559       8,558        8,559
Warrant reserve                                     424         424          424
Profit and loss account                         (11,915)    (12,215)     (11,953)
                                         -----------------------------------------
Equity shareholders' deficit                     (2,601)     (2,904)      (2,639)
                                         =========================================
Equity minority interests                          (185)          -          (70)
                                         -----------------------------------------
Capital employed                                 (2,786)     (2,904)      (2,709)
                                         =========================================

Consolidated Cash Flow Statement

  Unaudited       Unaudited       Audited
                                       Six months to  Six months to       Year to
                                             30 June        30 June   31 December
                                                2004           2003          2003
                                               £'000          £'000         £'000

Net cash inflow from operating activities         35            827         1,572

Returns on investments and servicing of finance
Interest received                                  6             22            34
Interest paid                                    (81)           (82)         (138)
Issue costs in respect of bank loan               (5)             -           (10)
                                           -----------------------------------------
Net cash outflow from returns on
investments and servicing of finance             (80)           (60)         (114)

Taxation
Tax received/(paid)                                -              -             -

Capital expenditure and financial investment
Purchase of tangible fixed assets                (88)           (61)          (99)
                                           -----------------------------------------
Net cash outflow from capital expenditure        (88)           (61)          (99)

Acquisitions and disposals
Cash subscription on acquisition of
subsidiary undertaking                          (100)             -          (282)
Costs incurred on acquisition of
subsidiary undertaking                            (6)             -           (32)
Cash acquired on acquisition of
subsidiary undertaking                           120              -           411
                                           -----------------------------------------
Net cash inflow from acquisitions
and disposals                                     14              -            97

Net cash (outflow)/inflow before
management of liquid resources and financing    (119)           706         1,456

Management of liquid resources
Movement in short-term deposits                1,199           (149)         (448)

Financing
Repayment of bank loan                          (300)          (499)         (499)
Repayment of convertible loan                 (1,000)             -             -
Repayment of debt assumed on acquisition           -              -          (167)
Proceeds from issue of ordinary shares             -             18            21
Capital element of finance lease payments         (3)            (2)           (5)
                                           -----------------------------------------
Net cash outflow from financing               (1,303)          (483)         (650)
                                           -----------------------------------------

(Decrease)/increase in cash in the period       (223)            74           358
                                           =========================================

Reconciliation of net cash flow to movement in net debt

Unaudited       Unaudited            Audited
                              Six months to   Six months to            Year to
                               30 June 2004    30 June 2003   31 December 2003
                                      £'000           £'000              £'000

(Decrease)/increase in cash
in the period                          (223)             74                358
Movement in short-term deposits      (1,199)            149                448
Repayment of finance leases               3               2                  5
Convertible loan repayment            1,000               -                  -
Bank loan repayment                     300             499                499
Loan assumed on acquisition
of StatPro Italia                         -               -               (167)
Repayment of loan assumed on
acquisition of StatPro Italia             -               -                167
Debt assumed on acquisition
of SiSoft                               (30)              -                  -
Other non-cash movements                 (5)            (47)               (79)
                                     --------------------------------------------
Movement in net debt                   (154)            677              1,231
Net debt at beginning of period        (197)         (1,428)            (1,428)
                                     --------------------------------------------
Net debt at end of period              (351)           (751)              (197)
                                     ============================================

Reconciliation of operating (loss)/profit to net cash flow from operating activities

 Unaudited       Unaudited            Audited
                              Six months to   Six months to            Year to
                               30 June 2004    30 June 2003   31 December 2003
                                      £'000           £'000              £'000

Operating (loss)/profit                 (50)             13                330
Depreciation of tangible fixed assets   113             126                239
Amortisation of goodwill                189             152                321
Decrease in debtors                     806             666                461
(Decrease)/increase in
creditors (excluding deferred income)  (345)            162                 (9)
Movement in deferred income            (681)           (288)               282
Exchange differences                      3              (4)               (52)
                                     --------------------------------------------
Net cash inflow from
operating activities                     35             827              1,572
                                     ============================================

Notes to the interim financial statements

1. Profit before tax, amortisation and exceptional items

 Unaudited       Unaudited            Audited
                              Six months to   Six months to            Year to
                               30 June 2004    30 June 2003   31 December 2003
                                      £'000           £'000              £'000
(Loss)/profit on ordinary
activities before taxation             (108)            (78)               146
Add: Amortisation of goodwill           189             152                321
Exceptional item                         93               -                  -
                                     --------------------------------------------
Profit before taxation,
amortisation, and exceptional items     174              74                467
                                     --------------------------------------------

2. Exceptional item. The exceptional item of £0.09 million (2003 – nil) relates to compensation for loss of office and related expenses.

3. Taxation. A provision has been made for corporation tax for an overseas subsidiary.

4. Earnings/(loss) per share. Basic earnings/(loss) per share has been calculated based on the profit after taxation and minority interests of £3,000 (June 2003 – loss of £0.09 million) and the weighted average number of shares 33,089,244 (June 2003 – 32,869,135). The diluted loss per share was the same as the basic loss per share as there were no potentially dilutive shares outstanding as at 30 June 2004 (2003 – nil).

5. Goodwill and amortisation. The cost of goodwill arising in the period amounted to £0.09 million relating to the subscription of a 51% shareholding in SiSoft and adjustments to fair values following the StatPro Italia acquisition in 2003.

6. Convertible loan. The convertible loan of nominal value £1.00 million was repaid at par on 2 January 2004.

7. 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:

                                      As at          As at               As at
                               30 June 2004   30 June 2003    31 December 2003
                                      £'000          £'000               £'000

Bank loans and finance leases            35              5                   5
Convertible loan                          -            986               1,000
Trade creditors                         369            379                 335
Corporation tax                          18             12                  14
Other tax and social security           348            292                 401
Other creditors and accruals            577            827                 857
Deferred income                       4,374          4,335               5,078
                                    ---------------------------------------------
                                      5,721          6,836               7,690
                                    =============================================

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 2003. 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 2003, on which the auditors gave an unqualified opinion, have been delivered to the Registrar of Companies.

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.

– Ends –

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