StatPro Regulatory News (SOG)

10 Mar 2008 07:00

Statpro Group PLC10 March 2008 Monday, 10 March 2008 STATPRO GROUP PLC ("StatPro" or the "Group") Preliminary Results for the Year ended 31 December 2007 StatPro Group plc, the AIM listed provider of portfolio analytics and datasolutions for the global asset management industry, announces its unauditedpreliminary results for the year ended 31 December 2007. Year ended Year ended Change 31 December 31 December 2007 2006 Unaudited Audited Turnover £24.07 million £14.60 million +65%Profit before tax £4.57 million £1.14 million +302%Adjusted profit before tax * £5.03 million £2.79 million +80%Basic earnings per share 7.0p 3.3p +112%Adjusted earnings per share * 7.9p 6.3p +25%Dividend per share - final proposedfor year 1.05p 0.7p +50%Dividend per share - total proposedfor year 1.5p 1.0p +50% Financial highlights • Recurring annualised revenue increased to £20.27 million (2006: £17.66 million) • Adjusted operating profit margin* increased to 25.0% (2006: 19.7%) • Strong free cash flow** of £4.39 million (2006: £1.95 million) • Total dividend increased by 50% to 1.5p (2006: 1.0p) Operational highlights • Acquisition of Initram Data Inc. completed in July 2007 • Integration of North American business completed • Average number of products for top 30 clients is now 4.5 products per client (2006: 3.7) • Acquisition of Performa completed in February 2008: • provider of software to asset managers (product market drivers are GIPS(R) and MiFID) • 25 client contracts with recurring annualised revenue of £2.1 million • Strong cross-selling opportunities to largely UK blue-chip client base • Value of recurring annualised contracts for Group now over £22 million * Adjusted profit before tax, adjusted earnings per share and adjusted operating profit are profit before tax, earnings per share and operating profit after adjustment for amortisation of acquired intangibles and exceptional items (notes 3 and 10)** Free cash flow is defined as cash generated from operations less investment in internally generated intangible assets (note 6) Commenting on the results, Justin Wheatley, Chief Executive of StatPro said: "Westarted 2008 in a very strong position; we have a healthy new business pipelineand with the benefits of the recent acquisition of Performa to come, we now haveover £22m of recurring annualised revenue. "To date there is little evidence that the problems of the credit markets arespilling over into our markets; if they do then we are confident that we arewell placed to take appropriate action. In the event that conditions remainbenign, then we expect to have another good year in 2008. "We aim to keep our adjusted operating profit margins at or above 25% and wewill be alert for any opportunities to consolidate the market to improve thesemargins. We will provide a further update on trading at our AGM on 21 May 2008." - Ends - For further information, please contact: StatPro Group plcJustin Wheatley, Chief Executive On 10 March: 020 7360 4900Andrew Fabian, Finance Director Thereafter: 020 8410 9876 SmithfieldReg Hoare/ Tania Wild 020 7360 4900 Arbuthnot Securities LimitedTom Griffiths/ Alasdair Younie 020 7012 2000 A briefing for analysts will be held at 9.30am today at the offices of Smithfield, 10 Aldersgate Street, London, EC1A 4AH Notes to Editors: StatPro Group plc is a leading provider of portfolio analyticsand data solutions for the global asset management industry. StatPro floated onthe London Stock Exchange in May 2000 and transferred its listing in June 2003to AIM. StatPro has grown its recurring revenue from less than £1 million in1999 to over £22 million today. CHIEF EXECUTIVE'S REVIEW Highlights2007 has been a very good year for StatPro. Our revenue grew 65% to £24.07million (2006: £14.60 million); our profit before tax rose 302% to £4.57 million(2006: £1.14 million) and by 80% on an adjusted profit before tax basis to £5.03million (2006: £2.79 million). Underlying organic revenue growth was 22% (2006:18%) reflecting the benefits of our core strategy of cross-selling products toour existing clients. Earnings per share rose 112% to 7.0p (2006: 3.3p); adjusted earnings per sharerose 25% to 7.9p (2006: 6.3p). Free cash flow rose 125% to £4.39 million (2006:£1.95 million). In 2005 we set StatPro the goal to produce operating margins ofabove 20% within 3 years. In 2007 our adjusted operating margins increased to25.0% (2006: 19.7%) and we aim to maintain or improve this margin for 2008. Recurring Revenue ModelStatPro's business model is based around selling software, data and services forannual rental fees on long term contracts. We have always followed this businessmodel as we believe that it provides great stability not only to our business,but also for our clients. Often referred to as "Software as a Service (SaaS)",the important point is that the model brings a business high visibility ofrevenues and this allows for better long term planning. At the end of 2007 our recurring contracts for software and data had anannualised value of £20.27 million (2006: £17.66 million). Of these contracts71% by value are contracted to the end of 2008 and beyond (2006: 57%) and thetotal value of contracted revenue amounts to £28.0 million (2006: £24.4million). We have not seen any immediate impact on business activity to date due to theglobal credit crisis, but were this to change, we feel very confident that ourrobust business model will stand us in good stead. In addition, it is the natureof our products that they are needed in good times as well as bad: for ourclients, explaining portfolio losses is as important as explaining gains anddemonstrating management of risks undertaken on behalf of investors is at apremium. Clients also seek value and excellent support from their suppliers. Agood reputation for service and expertise is vital to win business during toughmarkets. StatPro has demonstrated that it has the people, the expertise andscale to offer market leading portfolio analytics and data services whatever themarket conditions. AcquisitionsFRIThe integration of FRI was completed during 2007 and we saw the benefits of thishard work with a substantial improvement in the performance of our NorthAmerican operations in the second half of the year. Combining two businesses ofroughly equal size located in different time zones is not easy, but our NorthAmerican business is very much a StatPro business now and completely focused onsales and support of our analytics products and the production and sale of dataservices. The loss making real time data business was disposed of during 2007and the Johannesburg Stock Exchange ("JSE") project was put onto a firmercommercial footing for the future by creating a dedicated development andsupport team in South Africa. One of our aims was to launch new data services to our analytics clients and westarted delivering index data to three clients by the end of 2007, havinglaunched the service in late November. As we expand the range of indices weprovide we expect to build on this promising start. The credit crisis has highlighted the need for accurate and independent pricingof complex assets and our proposed new OTC Pricing service has progressed wellduring 2007. We now expect to launch this service during the first half of 2008and early signs are that it will be very much in demand by custodian banks andasset managers. InitramIn July 2007 we acquired Initram, a supplier of Canadian bond prices. Initramhas been fully integrated into our operations in Montreal. PerformaOn 20th February 2008 we completed the acquisition of Performa Consultants UKLimited ("Performa"), a specialist provider of GIPS (R) software. Performabrings an additional £2.1 million per annum in recurring software contracts with25 clients mainly in the UK, but also in the US and Europe. In common with otheracquisitions, we see the opportunity to cross-sell our products to our newclients, together with consolidation benefits as we integrate our UK operationsin one site. Overall, the Board believes the acquisition will be earningsenhancing for 2008. Performa is highly respected in the asset management community and we intend tobuild on this to develop new services based around our GIPS (R) software asthese standards have seen a revival based on the MiFID regulations as it iseasier for companies to comply with MiFID if they already comply with GIPS (R). New BusinessOverall sales of new software contracts have been in line with our expectations.New contracts, net of cancellations, were £2.04 million (2006: £2.10 million);the renewal rate was 94% (2006: 95%). We achieved higher than expected sales ofprofessional services amounting to £4.79 million (2006: £2.12 million). Sales ofsoftware and data to existing clients comprised 63% of new business with 37%coming from new clients. New sales were split 41% in North America and 59% in UK, Europe and the rest of the world. However, North American sales weresignificantly stronger in the second half of 2007 as the fruits of integratingthe North American business came to bear. We were also pleased with a number ofsignificant sales to FRI clients of StatPro's suite of analytics products. StrategySince 2000 it has been StatPro's stated aim to leverage the benefits of ouracquisition strategy to cross-sell our products to all our clients. Thisstrategy can be shown to have worked with the average number of products perclient now 1.9 (2006: 1.6) whilst our top 30 clients, who representapproximately 50% of our recurring rental contracts, have an average of 4.5contracts each (2006: 3.7). We will continue to seek to build on this success with further acquisitions,like that of Performa, provided that such acquisitions are earnings enhancing. PeopleThe Board and I would like to thank all our colleagues at StatPro for yetanother excellent year of hard work. The dedication and expertise of the peopleat StatPro sets our business apart and will make the difference in making 2008an even better year for us. DividendThe Board is pleased to recommend that the final dividend for 2007 be 1.05p pershare, which, together with the interim dividend of 0.45p, makes a totaldividend of 1.5p for 2007, a 50% increase on the 2006 dividend of 1.0p pershare. We intend to maintain a progressive dividend policy reflecting thebalance between the investment needs of the business and growth in underlyingcash and earnings per share. OutlookWe started 2008 in a very strong position; we have a healthy new businesspipeline and with the benefits of the recent acquisition of Performa to come, wenow have over £22m of recurring annualised revenue.To date there is little evidence that the problems of the credit markets arespilling over into our markets; if they do then we are confident that we arewell placed to take appropriate action. In the event that conditions remainbenign, then we expect to have another good year in 2008. We aim to keep our adjusted operating profit margins at or above 25% and we willbe alert for any opportunities to consolidate the market to improve thesemargins. We will provide a further update on trading at our AGM on 21 May 2008. Justin WheatleyChief Executive FINANCIAL REVIEW OverviewDuring 2007 we successfully completed the integration of the four businessesacquired in 2006 and 2007. There has been a substantial step change in the scaleof the business operations resulting in a 65% increase in revenue in 2007 (ofwhich approximately 43% relates to acquisitions and 22% is underlying growth),and an increase in adjusted operating profit by 109% to £6.03 million (2006:£2.88 million). We have achieved an adjusted operating profit margin of 25.0%(2006: 19.7%) exceeding our short term target of 20%. We continue to generatestrong operating cash flow and repaid £2.01 million of our term loan in theyear. Key business integration projects included: • agreement signed for additional work on major systems development project for the Johannesburg Stock Exchange; • transfer of contracts in real-time data division to Tenfore Systems Limited; and, • recovery of cash on working capital balance relating to the FRI acquisition. AcquisitionsStatPro Canada expanded its operations by acquiring Initram Data Inc.("Initram"), a Montreal based data provider in July 2007, for a total cashconsideration (before expenses) of C$3.0 million (£1.41 million) with C$2.1million (£0.99 million) paid on completion and the balance payable over twoyears. Through this acquisition we acquired further data clients (approximately£0.33 million annualised revenue at the acquisition date) and new prospects andan excellent team who will help us accelerate the growth of our global databusiness. In line with its strategy of acquiring complementary businesses andconsolidating the sector, on 20 February 2008, StatPro completed the acquisitionof Performa Consultants UK Limited ("Performa"), a supplier of softwaresolutions to asset managers for complying with Global Investment PerformanceStandards (GIPS(R)). This acquisition brings with it new largely blue chipclients, a highly professional team and significant cross-selling opportunities.The recurring revenue on acquisition was approximately £2.1 million per annum. StatPro acquired 100 per cent of Performa for a consideration (before expenses)of £7.0 million. The consideration will be increased by the value of Performa'snet current assets at completion, above an agreed minimum level, ofapproximately £0.8 million. The total consideration will be satisfied by acombination of £6.6 million in cash and the issue to the vendors of 1,372,020ordinary shares of 1p each at an effective price of 86.6p, based on the averageclosing mid-price of StatPro's ordinary shares for the ten day trading periodprior to the date of completion. The cash element of the consideration is beingfinanced by an increase to a total of £22.5 million in committed bankingfacilities from the Group's existing bankers. StatPro is now a transformed business with over £22 million of recurringrevenue, a coherent product suite and a more balanced geographical footprint.With our business model of repeat revenue multi-year contracts and focus onincreasing operating margin and cash generation, the business is now in a strongposition to benefit from the investments made over the past few years. TurnoverGroup turnover increased by 65% (2006: 35%) to £24.07 million (2006: £14.60million), of which £0.17 million (1%) related to the acquisition in the year. Atconstant exchange rates the revenue would have increased by 67% to £24.41million. Adjusting for the revenue impact of acquisitions in 2006 and 2007 theunderlying growth rate was approximately 22% as shown in the table below. Year to Year to Growth 31 December 31 December year on 2007 2006 year £ million £ million %Group revenueTotal revenue as reported 24.07 14.60 65Acquisition in 2007 (0.17) -Acquisitions in 2006 (8.34) (1.86) -------- -------Underlying revenue 15.56 12.74 22----------------- -------- ------- --------- The split of revenue for the year by type was as follows: Year to Year to Growth 31 December 31 December year on 2007 2006 year £ million £ million %Group revenueSoftware licences 15.23 11.66 31Data fees 4.05 0.82 394 -------- -------Total recurring revenue 19.28 12.48 54 Professional services revenue 4.79 2.12 126 -------- ------- 24.07 14.60 65 ----------------- -------- ------- --------- Software licence revenue grew by 31% to £15.23 million (2006: £11.66 million).Data revenue increased by 394% to £4.05 million reflecting the full year impactof the acquisition of the data division (2006: £0.82 million). The level ofprofessional services revenues increased by 126% to £4.79 million (2006: £2.12million) due to both the contribution from acquisitions and a strongerperformance from existing operations. The Group continues to have excellentvisibility of revenue with a high percentage of recurring revenue at 80% (2006:85%) of total revenue. Whilst this percentage of recurring revenue is lower thanin the prior year due to the higher professional services revenue fees, it isconsidered high by industry standards. Recurring revenueThe annualised recurring revenue from software licences and data fees at the endof December 2007 was £20.27 million (2006: £17.66 million). New contracts, netof cancellations, amounted to £2.04 million (2006: £2.10 million). The netimpact of the revaluation of contracts to the year end exchange rates amountedto an increase of £0.99 million. Therefore, before the impact of the acquisitionand disposal, there was an increase in annualised recurring revenue of 17% yearon year (12% at constant exchange rates). Contracts acquired amounted to £0.33million and contracts terminated on disposal of the real-time data businessamounted to £0.75 million. Software licences and data fees Annualised recurring % of starting contract value year value £m At 31 December 2006 17.66 New contracted revenue (netof cancellations) 2.04 11.6%Net impact of exchange rates 0.99 5.6% -------- -------Net increase in year 3.03 17.2% Net recurring value (beforeimpact of acquisition and disposal) 20.69 Contracts acquired withacquisition 0.33 1.8%Contracts transferred/terminated on disposal (0.75) (4.2%) -------- -------Net impact of acquisitionand disposal (0.42) (2.4%) Net increase in contractedannualised revenue 2.61 14.8% At 31 December 2007 20.27------------------------- -------- -------- ------- Approximately 63% of new recurring contracted revenue arose from existingclients (2006: 40%). Following the acquisition of Performa in February 2008, the current level ofrecurring revenue is in excess of £22 million. The proportion by value of recurring software licences and data clients at theend of 2007 secured to the end of 2008 or beyond increased to 71% (2006: 57%).We now have 38 (2006: 29) client groups each subscribing more than £150,000 perannum and 13 (2006: 11) at over £300,000 per annum. StatPro's top thirty clientgroups have on average 4.5 products per client (2006: 3.7) with an averagerecurring value of contracts of £341,000 per annum (2006: £297,000). Theweighted average length of contracts committed is over 16 months, resulting inapproximately £28.0 million of revenue being contracted as at 31 December 2007(2006: £24.4 million), and our renewal rate remains high by industry standardsat 94% (2006: 95%). Operating expenses and exceptional items Operating expenses (before amortisation of intangibles and exceptional items)increased by 57% to £16.19 million (2006: £10.29 million) principally as aresult of a 70% increase in the average number of employees during the year from141 to 239, predominantly through acquisitions. We ended 2007 with 253 employees(2006: 233). Following the acquisition of Performa in February 2008, which added19 people to the business, the number of employees today is 272. Following the FRI acquisition in late 2006 we conducted a review of our NorthAmerican property requirements. We moved premises in Toronto as the existingoffice lease was due to terminate in 2007. We also moved offices in New York,closed a small satellite office in San Francisco and opened a small office inSeattle to service our growing US west coast clients. In early 2008 we moved ourMontreal office, where the existing lease was in the final year. We also plan toopen a small office in Boston in the first half of 2008. These moves haveresulted in an increase in capital expenditure above our normal level but isexpected to improve operational efficiencies. Other costs for the business which have increased in the year relate to dataacquired from third parties, exchange fees and other costs such astelecommunications required to deliver an integrated data and software service. Adjusted operating profit marginThe Group increased its operating profit by 354% to £5.57 million (2006: £1.23million). Adjusted operating profit increased by 109% to £6.03 million (2006:£2.88 million) as shown in note 3 and as a result, the adjusted operating profitmargin increased to 25.0% (2006: 19.7%). Investment in research and developmentThe Group continues to increase its investment in research and development. Thecarrying value of development costs, including acquired technology and customercontracts, amounted to £5.07 million (2006: £4.55 million). Developmentexpenditure is amortised over a three year period as this is the period that thedirectors expect the benefits to arise from the expenditure incurred. Customercontracts are amortised over a period of between three and seven years as thisis the period that the directors expect the benefits to arise from thecontracts. The amortisation of intangibles amounted to £2.32 million in 2007(2006: £1.67 million), of which £0.46 million related to acquired intangibles(2006: £0.23 million). The carrying values, which are analysed by product, areconsidered carefully by the Board and if there has been any impairment in anydevelopment costs then the carrying value is written down accordingly. InterestAs a result of the interest arising on the loan drawn down in October 2006 tofinance the acquisition of FRI there was a significant increase in the netinterest expense in 2007 amounting to £1.00 million (2006: £0.09 million). Partof this interest charge relates to the unwinding of discount on deferredconsideration amounting to £0.16 million (2006: nil). Profit before tax The profit before taxation increased by 302% to £4.57 million (2006: £1.14million). At constant exchange rates the profit before taxation would haveincreased by 305% to £4.61 million. The adjusted profit before taxation grew by80% to £5.03 million (2006: £2.79 million). Taxation The tax charge amounted to £0.82 million (2006: net credit £0.08 million) givingan effective tax rate of 18%. The Group level of deferred tax asset was £1.74million (2006: £2.27 million) and amounts to 46% (2006: 57%) of the potentialdeferred tax asset for the Group. In the opinion of the directors there is areasonable degree of probability that this deferred tax asset will berecoverable against tax on trading profits in future years. Earnings per shareBasic earnings per share amounted to 7.0p (2006: 3.3p). Fully diluted earningsper share in 2007 were 6.8p (2006: 3.2p) based on potentially dilutive sharesoutstanding amounting to 1,757,282 (2006: 1,587,334). Adjusted earnings pershare, which is earnings per share adjusted for amortisation of acquiredintangibles and exceptional items was 7.9p (2006: 6.3p). Balance Sheet The Group's net assets increased to £25.01 million at 31 December 2007 (2006:£17.97 million). This increase was mainly as a result of the net profitsattributable to equity shareholders of £3.72 million, an increase in equityduring the year of £0.69 million and exchange differences through reservesamounting to £3.02 million. Non-current and current assetsGoodwill arising on acquisitions during the year amounted to £2.34 million ofwhich the main movements were for Initram and for the remaining minorityinterest in StatPro Italia. Other net adjustments to goodwill relate toadjustments to the estimated deferred consideration and the adjustment forrecovery of cash on the FRI acquisition. The carrying value for goodwill arisingon all acquisitions has been reviewed and there have been no impairments to anygoodwill. The revaluation of goodwill to year end exchange rates resulted in anet increase of £4.13 million. Total capital expenditure amounted to £1.22 million in 2007 (2006: £0.30million). The increase relates predominantly to office moves following the NorthAmerican acquisitions. Included within non-current assets is deferred tax of£1.74 million (2006: £2.27 million). The level of current assets decreased to£8.16 million (2006: £8.68 million). Increased new business and acquisitionsresulted in an increase in trade debtors, the largest component of debtors,amounting to £4.98 million at the end of 2007 (2006: £3.78 million). The levelof cash and cash equivalents reduced to £0.95 million (2006: £3.33 million). Current and non-current liabilitiesThe main movements in creditors were an increase in deferred income, a reductionin accruals and movements resulting from the repayment of £2.01 million of theterm loan and deferred consideration. At 31 December 2007, there is an estimated£3.05 million deferred consideration remaining (2006: 4.07 million) arising onacquisitions, which is the directors' current projection of the fair value thatwill ultimately be due under the various transactions. However, this amount isuncertain and the eventual payments may be higher or lower than this amount. Thedirectors will review this estimate at each balance sheet date and adjustments,if any, will be made to the goodwill carrying value and the deferredconsideration. The level of trade and other payables (excluding corporation taxand deferred income) reduced slightly to £4.70 million (2006: £4.77 million).Deferred income, which is a non-cash liability, amounted to £9.11 million (2006:£8.67 million). Cash flow and financingThere was another year of solid cash generation; cash generated from operationsbefore investment in internally generated intangible assets during 2007 amountedto £7.03 million (2006: £3.89 million). The free cash flow (cash generated fromoperations less investment in internally generated intangible assets) of £4.39million (2006: £1.95 million), was 125% higher year on year (see note 6). Thenet cash investment in acquisitions amounted to £3.38 million during the year,including payments of deferred consideration on prior year acquisitions. The netproceeds of share issues during the year amounted to £0.69 million. The acquisition and deferred consideration paid in 2007 on past acquisitionswere financed through existing resources. Higher financing costs of interest anddividends and an adverse exchange movement on translation of the currency debthave resulted in an increase in the net debt at 31 December 2007 to £10.13million (2006: £7.68 million). The directors believe that optimising the use ofthe balance sheet in this way is in the best interests of the shareholders. Share capital and reservesThe issued share capital amounted to £0.53 million (2006: £0.52 million)representing 53,114,334 shares of 1p nominal value (2006: 52,168,820) and theshare premium account has increased to £14.27 million (2006: £13.57 million) asa result of the issue of 945,514 shares during the year. The equity minority interests amounting to a net profit of £0.03 million (2006:net loss of £0.11 million) relate to the minorities' share of profits lesslosses for the year. The equity minority interests of £0.04 million (2006: £0.14million) have been deducted in computing the total capital employed. Post balance sheet eventsOn 20 February 2008, we completed the acquisition of Performa Consultants UKLimited a supplier of software solutions to asset managers for complying withGlobal Investment Performance Standards (GIPS(R)). The cash element of theconsideration is being financed by an increase to a total of £22.5 million incommitted banking facilities from the Group's existing bankers as outlinedbelow. As part of the acquisition of Performa, 1,372,020 ordinary shares of 1peach were issued to the vendors, and as a result, StatPro currently has54,486,354 ordinary shares in issue. DividendThe directors are recommending a final dividend for 2007 of 1.05p per share(2006: 0.7p) making a total dividend for 2007 of 1.5p per share (2006: 1.0p). Itis intended to pay the dividend on 28 May 2008 to all shareholders on theregister at the close of business on 25 April 2008. In accordance with IFRS,this dividend is not accrued in these financial statements. Dividends paid in2007 amounted to £0.62 million (2006: £0.30 million). The Board intends tomaintain a progressive dividend policy reflecting the balance between theinvestment needs of the business and the growth in underlying cash and earningsper share. Financial risk managementThe current and projected financial risks of the Group are managed by the GroupFinance team. The primary risk relates to financing facilities and this ismitigated by ensuring very tight control of cash and detailed forecasting of thebusiness cash flows. The Company has arranged a committed bank facility amounting to a total of £22.5million on competitive terms. £12 million of the facility is a term loan whichwas drawn down in October 2006 to part finance the FRI acquisition. £2.01million of the loan was repaid in 2007 and is not available to be re-drawn. £7million of the facility is a term loan which was drawn down in February 2008 topart finance the Performa acquisition. The remaining £3.5 million facility isprimarily available for working capital purposes, of which £0.59 million wasdrawn at 31 December 2007. As at 29 February 2008, the Group had net debt ofapproximately £17 million. The financial risk profile has further increased as the balance sheet is gearedbut the directors believe that this financial structure is in the best interestsof the shareholders given the strong recurring revenue and the projectedoperating cash inflow. Andrew FabianFinance Director Group income statementfor the year ended 31 December 2007 Notes Year to Year to Year to Year to 31 31 31 31 December December December December 2007 2007 2007 2006 Unaudited Unaudited Unaudited Audited £'000 £'000 £'000 £'000 Continuing Acquisitions Total operations Group Revenue 2 23,903 171 24,074 14,604--------------------- ------ -------- -------- -------- -------Operating expensesbefore amortisationof intangibles andexceptional items (16,051) (139) (16,190) (10,288)Amortisation ofinternally generatedintangibles (1,857) - (1,857) (1,435)Amortisation ofacquired intangibles 3 (451) (8) (459) (234)Exceptional items 4 - - - (1,421)--------------------- ------ -------- -------- -------- ------- Operating expenses (18,359) (147) (18,506) (13,378) -------- -------- -------- ------- Operating profit 3 5,544 24 5,568 1,226 -------- -------- Interest receivable 66 106Interest payable (1,062) (195) -------- ------- Profit beforetaxation 3 4,572 1,137 Taxation 8 (821) 77 -------- ------- Profit for the year 3,751 1,214 ======== ======= Profit/(loss) attributable tominority interests 33 (110)Profit attributableto equity shareholders 3,718 1,324 -------- ------- 3,751 1,214 ======== ======= Earnings per sharefrom continuingoperations - basic 10 7.0 3.3p - diluted 10 6.8 3.2p Statement of recognised income and expense Year to Year to 31 December 31 December 2007 2006 £'000 £'000 Profit after tax 3,751 1,214Net exchange differences offset in reserves net oftax 2,990 (970) --------- ---------Total recognised income for the year 6,741 244 ========= ========= Attributable to:Minority interests 5 (91)Equity shareholders 6,736 335 Consolidated balance sheetat 31 December 2007 Notes As at As at 31 December 31 December 2007 2006 £'000 £'000 Unaudited AuditedAssetsNon-current assetsGoodwill 36,163 29,869Intangible assets 5,072 4,550Property, plant and equipment 1,742 846Other receivables 274 316Deferred tax assets 1,737 2,269 --------- --------- 44,988 37,850 Current assetsTrade and other receivables 7,205 5,352Cash and cash equivalents 950 3,327 --------- --------- 8,155 8,679LiabilitiesCurrent liabilitiesFinancial liabilities - borrowings (2,744) (1,857)Trade and other payables (4,700) (4,767)Current tax liabilities (44) (53)Deferred income (8,984) (8,562)Provisions - contingent consideration (1,682) (1,484) --------- --------- (18,154) (16,723) --------- --------- --------- ---------Net current liabilities (9,999) (8,044) --------- --------- Non-current liabilitiesFinancial liabilities - borrowings (8,339) (9,145)Other creditors and accruals (149) -Deferred income (125) (109)Provisions - contingent consideration (1,367) (2,581) --------- --------- (9,980) (11,835) --------- --------- --------- ---------Net assets 25,009 17,971 ========= ========= Shareholders' equityOrdinary shares 531 522Share premium 14,273 13,570Shares to be issued 874 896Other reserves 3,132 116Retained earnings 6,237 3,008 --------- ---------Total shareholders' equity 25,047 18,112Minority interest in equity (38) (141) --------- ---------Total equity 12 25,009 17,971 ========= ========= Group cash flow statementfor the year ended 31 December 2007 Notes Year to Year to 31 December 31 December 2007 2006 £'000 £'000 Unaudited AuditedCash flows from operating activitiesCash generated from operations 5, 6 7,026 3,889Interest received 66 106Interest paid (1,008) (12)Tax paid (86) (105)Tax received 286 - -------- --------Net cash from operating activities 6,284 3,878 -------- -------- Cash flows from investing activitiesAcquisition of/increased investment insubsidiaries (net of cash acquired) (3,382) (24,517)Investment in intangible assets -development 6 (2,640) (1,939)costsPurchase of property, plant and equipment (1,218) (302) -------- --------Net cash used in investing activities (7,240) (26,758) -------- -------- Cash flows from financing activitiesRepayment of bank loan (2,009) -Net proceeds from bank loan/overdraft 562 11,788Proceeds from issue of ordinary shares 690 12,836Dividends paid to equity shareholders (618) (298) -------- --------Net cash (used in)/from financing activities (1,375) 24,326 -------- -------- Effects of exchange rate changes (46) 28 -------- -------- Net (decrease)/increase in cash and cashequivalents (2,377) 1,474 Cash and cash equivalents at start of year 3,327 1,853 -------- --------Cash and cash equivalents at end of year 950 3,327 ======== ======== Notes to the preliminary financial statements 1. AnnouncementThis announcement was approved by the Board of directors on 7 March 2008. Thepreliminary results for the year ended 31 December 2007 are unaudited. Thefinancial information set out in this announcement does not constitute theCompany's statutory accounts for the years ended 31 December 2007 or 31 December2006. The financial information set out in the announcement has been prepared onthe basis of the accounting policies set out in the statutory accounts ofStatPro Group plc for the year ended 31 December 2006. The financial informationfor the year ended 31 December 2006 is derived from the statutory accounts forthat year, which have been delivered to the Registrar of Companies. The auditorsreported on those accounts and their report was unqualified. 2. Revenue analysis Turnover by destination 2007 2007 2007 2006 Unaudited Unaudited Unaudited Audited £'000 £'000 £'000 £'000 Continuing Acquisition Total Total operations United Kingdom 3,294 - 3,294 2,784Continental Europe 7,073 - 7,073 6,836North America 11,348 171 11,519 3,550Rest of the World 2,188 - 2,188 1,434 -------- -------- -------- -------- Total 23,903 171 24,074 14,604 -------- -------- -------- -------- Analysis of recurring revenue by type Type Sterling Sterling Percentage Sterling Sterling Percentage value at value at value at value at 31 December 31 December 31 31 2007 2007 December December 2006 2006 Unaudited Unaudited Audited Audited £ £ £ £ millions millions millions millionsSoftwarelicences 16.51 81.5% 13.87 78.5%Data fees- Real Time(disposed of in 2007) - - 0.75 4.2%Data fees- Data service 3.76 18.5% 3.04 17.3% ------ ------ ------ ------Total Data fees 3.76 18.5% 3.79 21.5% ------ ------ ------ ------ 20.27 100.0% 17.66 100.0% Analysis of recurring revenue by region Region Sterling value at Percentage Sterling value at Percentage 31 December 2007 31 December 2006 Unaudited Audited £ millions £ millions United Kingdom 3.20 15.8% 2.86 16.2%ContinentalEurope 6.52 32.2% 5.63 31.9%North America 8.50 41.9% 7.54 42.7%Rest of World 2.05 10.1% 1.63 9.2% ------ ------ ------ ------ 20.27 100.0% 17.66 100.0% Analysis of recurring revenue by currency Currency Currency Year end Sterling value at Percentage value exchange rate 31 December 2007 Millions 31 December 2007 Unaudited £ millionsPoundssterling £3.49 1.000 3.49 17.2%Euro €8.87 1.361 6.52 32.2%US Dollar US$7.61 1.991 3.82 18.8%CanadianDollar C$9.56 1.965 4.87 24.0%Othercurrencies 1.57 7.8% ------ 20.27 100.0% Currency Currency Year end Sterling value at Percentage value exchange rate 31 December 2006 Millions 31 December 2006 Audited £ millionsPoundssterling £3.20 1.000 3.20 18.1%Euro €8.33 1.484 5.61 31.8%US Dollar US$8.56 1.957 4.38 24.8%CanadianDollar C$7.41 2.278 3.25 18.4%Othercurrencies 1.22 6.9% ------ 17.66 100.0% 3. Adjusted profit before taxation and adjusted operating margin Adjusted profit before taxation 2007 2006 Unaudited Audited £'000 £'000 Profit before taxation 4,572 1,137Add back: Amortisation of acquired intangibles 459 234Add back: Exceptional items (note 4) - 1,421 --------- --------Adjusted profit before tax 5,031 2,792 ========= ======== Adjusted operating profit 2007 2006 Unaudited Audited £'000 £'000 Operating profit 5,568 1,226Add back: Amortisation of acquired intangibles 459 234Add back: Exceptional items (note 4) - 1,421 --------- --------Adjusted operating profit 6,027 2,881 ========= ======== Adjusted operating profit margin 25.0% 19.7% The adjusted profit before tax for 2006 has been restated to include the impactof amortisation on acquired intangibles for comparability purposes. 4. Exceptional items. There were no exceptional items in 2007. The exceptionalitems of £1.42 million in 2006 relates to severance payments, onerous leases andother contracts, and costs relating to restructuring the operations of thecombined Group. 5. Reconciliation of operating profit to net cash inflow from operatingactivities 2007 2006 Unaudited Audited £'000 £'000 Operating profit 5,568 1,226Depreciation of tangible fixed assets 418 261Amortisation of intangibles 2,316 1,669Increase in debtors (1,640) (490)(Decrease)/increase in creditors (excluding deferredincome) (169) 898Movement in deferred income 406 232Share based payments 127 58Net loss on disposal of fixed assets - 35 -------- --------Net cash inflow from operating activities 7,026 3,889 ======== ======== 6. Free cash flow - reconciliation from statutory heading to businessperformance measure 2007 2006 Unaudited Audited £'000 £'000 Cash generated from operations 7,026 3,889Investment in intangible assets - development costs (2,640) (1,939) -------- --------Cash generated from operations less investment ininternally generated intangible assets 4,386 1,950 ======== ======== 7. Reconciliation of net cash flow to movement in net debt 2007 2006 Unaudited Audited £'000 £'000 (Decrease)/increase in cash and cash equivalents inthe year (2,377) 1,474Movement on overdraft and other loans (562) -Movement on bank loans 2,009 (11,788)Exchange movement on bank loans (1,600) 825Other non-cash movements 72 (4)Movement in net debt (2,458) (9,493)Net (debt)/cash at beginning of year (7,675) 1,818 -------- --------Net debt at end of year (10,133) (7,675) ======== ======== 8. Taxation The taxation reconciliation for the year is as follows: Tax reconciliation 2007 2006 Unaudited Audited £'000 £'000 Profit before taxation 4,572 1,137 Current taxTax charge on profit before tax at standard rate ofcorporation tax in the UK of 30% (2006: 30%) (1,372) (341)Effects of:Items allowable for tax purposes 360 140Accelerated capital allowances 228 6Other temporary differences - (361)Differences in tax rates (93) 6Tax losses arising in year and adjustment for previousperiods (455) -Tax losses utilised 1,145 497Total current tax charge on ordinary activities (187) (53) Deferred taxOrigination and reversal of temporary differences (968) 130Recognition of deferred tax asset 327 -Differences in tax rates (57) -Adjustment in respect of previous periods 64 -Total deferred tax (634) 130 Total taxation (charge)/credit (821) 77 The tax impact of the exceptional items is as follows: 2007 2006 £'000 £'000 Tax charge on profit before tax and exceptional items (821) (349)Tax credit on exceptional items - 426 Net tax (charge)/credit on profit before tax and afterexceptional items (821) 77 9. Acquisitions During 2007 the Company acquired the entire share capital of Initram Data Inc.On 20 February 2008 the Company acquired the entire share capital of PerformaConsultants UK Limited. The provisional fair values and goodwill arising on theacquisitions are as follows: Initram Performa Unaudited Unaudited £'000 £'000 Book value of net assets acquired 11 1,265Fair value adjustments:- Intangible assets (technology and client contracts) 93 1,500- Other fair value adjustments - (400)Goodwill 1,309 5,885 -------- -------- 1,413 8,250 ======== ======== Initial cash consideration including costs and adjustments fornet assets acquired 1,024 7,062Shares issued - 1,188Deferred consideration 389 - -------- -------- 1,413 8,250 ======== ======== 10. Earnings per share Basic earnings per share is calculated by dividing the profit attributable toordinary shareholders by the weighted average number of ordinary shares in issueduring the year as set out below. Earnings per share - basic and diluted Earnings Weighted Earnings Earnings Weighted Earnings average per share average per number of number of share shares shares Unaudited Unaudited Unaudited Audited Audited Audited 2007 2007 2007 2006 2006 2006 £'000 '000 pence £'000 '000 pence -------- -------- -------- ------- ------- ------Earnings pershare - basic 3,718 52,771 7.0 1,324 40,225 3.3 -------- -------- -------- ------- ------- ------Potentiallydilutiveshares - 1,757 (0.2) - 1,587 (0.1) -------- -------- -------- ------- ------- ------Earnings pershare -diluted 3,718 54,528 6.8 1,324 41,812 3.2 ======== ======== ======== ======= ======= ====== Adjusted earnings per share Earnings Weighted Earnings Earnings Weighted Earnings average per share average per number of number of share shares shares Unaudited Unaudited Unaudited Audited Audited Audited 2007 2007 2007 2006 2006 2006 £'000 '000 pence £'000 '000 pence Earnings pershare - basic 3,718 52,771 7.0 1,324 40,225 3.3Effect ofamortisationof acquiredintangibles 459 0.9 234 - 0.5Effect ofoperatingexceptionalitems - - 1,421 - 3.5Effect of taxon exceptionalitems - - (426) - (1.0) -------- -------- -------- ------- ------- ------Adjusted earnings per share 4,177 52,771 7.9 2,553 40,225 6.3Potentially dilutiveshares - 1,757 (0.2) - 1,587 (0.2) -------- -------- -------- ------- ------- ------Diluted adjustedearnings pershare 4,177 54,528 7.7 2,553 41,812 6.1 ======== ======== ======== ======= ======= ====== The adjusted earnings per share information has been provided in order to assistthe reader to understand the underlying performance of the business on acomparable basis. The adjusted profit before tax for 2006 has been restated toinclude the impact of amortisation on acquired intangibles for comparabilitypurposes. 11. DividendThe directors are recommending a final dividend for 2007 of 1.05p per share(2006: 0.7p). This dividend is not accrued in these financial statements. Ifapproved by a resolution at the 2008 Annual General Meeting, it is intended topay the dividend on 28 May 2008 to all shareholders on the register at the closeof business on 25 April 2008. 12. Statement of changes in shareholders' equity Share Share Shares Retained Other Minority Total Capital premium to be earnings reserves Interests account issued UnauditedGroup £'000 £'000 £'000 £'000 £'000 £'000 £'000 At 1 January2007 522 13,570 896 3,008 116 (141) 17,971Shares issued 9 703 (22) - - - 690Profit forthe year - - - 3,718 - 33 3,751Dividends paid - - - (618) - - (618)Lapse ofwarrants - - - 2 (2) - -Share basedpayments - - - 127 - - 127Minorityinterestacquired - - - - - 98 98Exchangedifferencesoffset inreserves - - - - 3,018 (28) 2,990 ------ ------- ------ ------- ------- ------- --------At 31December 2007 531 14,273 874 6,237 3,132 (38) 25,009 ====== ======= ====== ======= ======= ======= ======== Other reserves includes merger reserve and translation reserve This information is provided by RNS The company news service from the London Stock Exchange