StatPro Regulatory News (SOG)

9 May 2006 07:02

Statpro Group PLC09 May 2006 For release at 07.00 a.m. Tuesday, 9 May 2006 STATPRO GROUP PLC ("StatPro" or the "Group") Acquisition Highlights: • Acquisition of Kizen, supplier of compliance solution to asset management industry • 10 client contracts helps consolidate strong position in South African asset management market Introduction In line with its strategy to acquire complementary multi-product offerings andits growth plans, StatPro, the AIM listed provider of portfolio analyticssolutions for the global asset management industry, is pleased to announce theacquisition of Kizen (Pty) Limited ("Kizen"), a South African based supplier ofcompliance software solutions to asset managers. StatPro is acquiring 100 per cent of Kizen for an initial cash consideration of£0.51 million, to be funded from the Group's existing resources. The initialcash consideration will be adjusted by Kizen's net assets as at 30 April 2006,which are estimated at approximately £0.07 million. Deferred cash considerationwill be payable by StatPro based on a multiple of between 2.2 and 2.8 times theincremental recurring revenue generated by the product acquired per annum foreach of the three years following the earlier of (i) six months after completionof the acquisition and (ii) the first sales contract for the product achievedoutside the South African market. The maximum total cash consideration payableis £7.50 million. The Board of StatPro expects the acquisition of Kizen to be earnings enhancingin its first full year of trading following the acquisition. Background to and reasons for the acquisition StatPro's strategy is to expand its product offerings and global reach byorganic investment and complementary acquisitions. The acquisition of Kizenbrings a compliance product at a time when there is increasing focus by assetmanagers on managing their risks and monitoring the compliance of theirportfolios against client mandates. The product, which will be marketed asStatPro Portfolio Compliance, will be integrated with the StatPro product suiteand is complementary, in particular, with the StatPro Risk Management system. Compliance is a high growth area and has not been fully integrated withanalytics systems to date. StatPro intends to combine its Risk and Performancesystems with the Compliance system to provide clients and prospects withoutstanding control capacity. Kizen's product is a new generation of softwareand has proved itself by gaining a strong market position in South Africa inless than two years. Combined with StatPro's broad distribution capabilities,strong client base and market position, the Board of StatPro believes thatStatPro Portfolio Compliance will be a great success. Kizen was established in Cape Town by Robert Chung, Neil Hampton, Robin Kemperand Chris Stefano in 2003. This team developed its compliance product, and nowhas 10 clients all based in South Africa. Kizen reported total revenue of R6.0million (approximately £0.54 million) for the year ended 28 February 2006, ofwhich approximately £0.32 million related to discontinued operations as thecompany is now focussing on the recurring revenue from the compliance product.Revenue for the year ended 28 February 2005 was R2.2 million. Profit before taxamounted to R1.3 million (approximately £0.11 million) in the year ended 28February 2006 compared to a loss before tax of R0.2 million (approximately £0.02million) in the previous year. As stated in the announcement on 18 April of its acquisition of ALPHAI, StatProhas an established track record of identifying and acquiring smallentrepreneurial businesses which have excellent products and technical skills.By combining these successful entrepreneurial teams into the expanding StatProglobal distribution network, and providing the investment and support to takethe products to the next stage of development, the Group has been able togenerate enhanced shareholder value. This is the seventh such acquisition thatStatPro has completed since March 2000. StatPro South Africa Kizen has six employees including the four founding directors located in itsCape Town office. The operations will be integrated within the Group's existingSouth African operations of five people also based in Cape Town led by AndrewPeddar, Managing Director of StatPro South Africa. The acquisition thus also helps reinforce StatPro's strong existing position inthe South African asset management market where the Group will have combinedrecurring revenues of approximately £1.0 million. Notice of AGM trading update The Group plans to release a trading update on 17 May 2006, the day of itsAnnual General Meeting. Commenting on the acquisition Justin Wheatley, Chief Executive of StatPro Group,said: "We believe that compliance is a high growth area and that there will beconsiderable sales benefits in offering fully integrated systems to our globalclient base. "Through the acquisition of Kizen in South Africa and our recent acquisition inAustralia, we have considerably strengthened our operations in two key marketsin a short space of time. We intend to continue to build the Group throughsimilar targeted expansion." Commenting on the transaction Neil Hampton, Director of Kizen, said: "We aredelighted to be joining the team at StatPro and look forward to integrating ourproduct to enable us to fulfil our international expansion ambitions for ourcompliance product." - Ends - For further information, please contact: StatPro Group plcJustin Wheatley, Chief Executive 020 8410 9876Andrew Fabian, Finance Director Arbuthnot Securities LimitedTom Griffiths/Neil Kirton 020 7012 2000 SmithfieldReg Hoare 020 7360 4900 Notes to Editors: StatPro Group plc is a leading provider of portfolio analyticssolutions for the global asset management industry. StatPro floated on theLondon Stock Exchange in May 2000 and transferred its listing in June 2003 toAIM. StatPro has grown its revenue from continuing operations from £1.8 millionin 1999 to £10.8 million in 2005. Kizen (Pty) Limited is a software development and marketing company based inCape Town, with recurring revenue of approximately £0.2 million and is asupplier of compliance monitoring solutions to asset managers. This information is provided by RNS The company news service from the London Stock Exchange