StatPro Regulatory News (SOG)

For Release at 07.00 Wednesday, 23 March 2011

STATPRO GROUP PLC

("StatPro", "the Company" or "the Group")

Preliminary Results for the Year ended 31 December 2010

StatPro Group plc (AIM:SOG), the AIM listed provider of portfolio analytics and data solutions for the global asset management industry, today announces its unaudited preliminary results for the year ended 31 December 2010.

Financial Highlights:

·; Annualised recurring contract revenue up 4% to £29.38 million (2009: £28.12 million **)

·; Improved renewal rate on recurring contracts to 92% (2009: 90%)

·; Adjusted EBITDA* reduced marginally by 2% to £8.45 million (2009: £8.63 million) in year of increased investment

·; Cash flow from operating activities (before exceptional payments) increased by 5% to £10.66 million (2009: £10.15 million)

·; Net debt reduced significantly to £5.52 million (2009: £8.89 million) and represents 0.65 x adjusted EBITDA (2009: 1.03)

·; Total dividend increased by 14% to 2.4p (2009: 2.1p)

Operational Highlights:

·; Strategic focus on transforming to pure Software as a Service ("SaaS") business using cloud technology:

§ 30% of analytics revenue now on StatPro Seven platform (2009: 20%)

§ Continued investment in StatPro Revolution amounting to £2.19 million (2009: £0.69 million), aimed at new broader market tier, with live service launched in March 2011

§ First major client contract for StatPro Revolution signed in Q1 2011 with RBC Dexia

* Adjusted profit before tax, adjusted earnings per share, adjusted operating profit and adjusted EBITDA are profit before tax, earnings per share, operating profit and EBITDA after adjustment for amortisation of acquired and purchased intangibles, share based payments and exceptional items (notes 5 and 7)

** Annualised recurring contract revenue is revenue contractually committed at year end. Comparative is at constant currency and excludes disposal.

Justin Wheatley, Chief Executive, commented:"StatPro is a robust business operating in a growth market. The steady recurring revenue from our core business provides great stability for StatPro and allows us to invest with confidence. Our accumulated expertise in portfolio analytics makes us a business with rare skills and the technology of Revolution, based on the best SaaS initiatives, provides us with an exciting opportunity for future growth. For these reasons, although we cannot be sure of economic conditions or other factors, we are looking forward to the rest of 2011 and beyond."

- Ends -

For further information, please contact:

A briefing for analysts on the results

and a demonstration of StatPro Revolution TM will be held at 9.30am today at the offices of

Threadneedle Communications, 3rd Floor, Aldermary House, 10-15 Queen Street, London, EC4N 1TX

About StatPro

StatPro is a leading provider of portfolio analytics and data solutions for the global asset management industry. The Company sells a SaaS-based Analytics and Data platform on a rental basis to investment management companies allowing them to analyse portfolio performance, attribution, risk and GIPS® compliance. StatPro also provides market data and valuation feeds including a Complex Asset Pricing service.

StatPro has grown its recurring revenue from less than £1 million in 1999 to £29 million at end December 2010 and currently enjoys a renewal rate of approximately 92%. StatPro floated on the London Stock Exchange in May 2000 and transferred its listing in June 2003 to AIM. The Company has operations in Europe, North America, South Africa and Australia, with approximately 79% of recurring revenues being generated outside the UK.

Chief Executive's Review

Overview

We are pleased with our progress in 2010. As has been shown in recent years, we have a robust business which is profitable and significantly cash generative. We operate in an expanding global market whose growth is set to accelerate and we have bolstered our product offering to cater for that demand.

The major event of 2010 for StatPro was the beta launch of cloud-based StatPro Revolution. We have been working on StatPro Revolution since 2007 and have been steadily increasing our investment in it over this period in anticipation of the growth in the global asset management industry. StatPro Revolution is so named because of its significant difference to traditional software in terms of ease of use, deployment, price and scalability. We have designed it to make it easy and free for users to share information with others and this will be the key benefit of the service to subscribers.

The investment in Revolution has impacted our profits in 2010 and we expect will continue to do so during 2011, as this is an important part of our future growth strategy. We are delighted to have our first customers for Revolution including RBC Dexia Investment Services, after it went live on 28th February 2011, and we hope to sign up many more partners and clients during the course of 2011. As noted in our January 2011 trading statement, we will also be expanding our investment during 2011 in StatPro Revolution not only in development but also for support, sales and marketing.

We continue to make excellent progress with StatPro Seven. We are working hard to move our clients to our hosted environment and now have 30% by value converted (2009: 20%). We also secured 44 new client contracts during 2010. One of our key strategies is to sell StatPro Revolution and StatPro Seven together, with StatPro Seven as the production system and StatPro Revolution as the distribution system. In this way, clients can enjoy the combined benefits of our services.

Financial Highlights

Revenue for the year was up 5% to £33.13 million (2009: £31.56 million). Adjusted profit before tax was down 3% to £6.68 million (2009: £6.90 million) reflecting the investment in Revolution which reduced operating margins to 22.3% (2009: 24.7%). Nevertheless, net debt was reduced to £5.52 million (2009: £8.89 million) and cash flow from operating activities (before exceptional payments) increased 5% to £10.66 million (2009: £10.15 million). Our renewal rate improved to 92% (2009: 90%). We still felt some residual impact of the 2008 financial crisis as consolidations and acquisitions represent the fundamental reasons behind cancellations of client contracts, however, the very stable nature of our core products, the long term contracts and recurring revenue that they provide, enable us to invest with confidence in the next generation of technology.

Regional performance

The strongest markets for us in 2010 were in the EMEAA region, in particular in Europe. Our strategy for StatPro Seven has opened up the middle market for our services and resulted in an increase in activity. There is considerable interest in risk systems and improving reporting solutions in all these markets. Our South African and Australian offices also performed well and pre-marketing of StatPro Revolution shows that there is a strong appetite for it in these markets where asset managers generally have smaller budgets. In North America, we made good progress with sales of StatPro Seven, however sales of StatPro Unlimited (data services) were lower year on year. The vast US market has considerable potential for StatPro Revolution and Seven and we stepped up our investment in sales staff during the year and we plan to recruit more sales people in 2011.

Products

The StatPro Revolution service is a powerful cloud-based service with rich functionality. It comprises two main parts; the first is a database of over 500,000 assets with historic prices, together with thousands of benchmarks and investment classifications; the second is it has an integrated suite of portfolio analytics including performance, attribution and risk together with reporting, publishing and research.

It is possible for a client to upload the historic positions in a portfolio and then see the portfolio's performance, risk and attribution with full reporting in a few minutes. As an online service, it is accessible immediately from any location with internet access.

We believe one of the biggest business benefits of the service will prove to be the ability to share the analysis. A client can "invite" an investor or colleague to see his portfolio and so share it. This feature will be of great use between professional investors such as a mutual fund manager and an independent financial adviser ("IFA") or between asset managers and pension fund clients. As all the data is in one database and shared rather than exchanged, the use and access of data is greatly simplified.

StatPro Revolution is priced at $100 per portfolio, per month for 100 users and is therefore extremely economic. A company with 20 portfolios can have up to 2,000 users for just $2,000 a month with no limit on the number of people who can access the published reports.

Through the course of 2011 we plan to add many additional features and continue to expand the database.

Strategy

We have three target markets: our existing clients, distributors and online sales.

For our existing clients, who tend to be the larger asset managers, we have now built links between StatPro Revolution and StatPro Seven. This will enable our existing StatPro Seven clients to easily integrate with StatPro Revolution, bringing them considerable benefits. Many clients have a problem reconciling front and back office performance results because the systems are not integrated. The back office role is to produce the statement of record, and the front office team often prefers analysis provided by separate terminal-based solutions. With StatPro Revolution, it is now possible to achieve both as the service provides the sort of analysis required by portfolio managers but can use the information produced by the back office.

We are also focusing on building a network of distributors for StatPro Revolution. Our first such distributor is RBC Dexia Investment Services ("RBCD") who plan to use a white-labelled version of StatPro Revolution to provide portfolio analytics to their many clients. RBCD now has the most sophisticated portfolio analytics service of any custodian and can implement a new client almost immediately. The technology of Revolution is ideal for custodian banks as they do not have to manage any complicated IT platform or worry about installing a client. Other potential distributors are market data vendors and software companies. There are many companies especially in the back office that have strong client positions in different markets. As they have the clients' portfolio data, adding StatPro Revolution to their product suite is a relatively easy task for them which will add great value to their services. We are marketing this to a wide range of companies in many parts of the world.

Finally, there is the online market. Our research shows that there are at least 25,000 companies that have $1.0 billion or less under management. The rapid development of the BRIC (Brazil, Russia, India and China) economies and other markets, means that there will soon be many more asset managers in this category. South Africa is a compelling example of the rapid growth of an asset management industry in strongly growing economies. In 2000 there was approximately $100 billion under management in South Africa, growing in just ten years to over $1 trillion. The obvious way for such newly established businesses in these markets to access portfolio analytics is via an online service providing a lower initial price point and scalability to easily expand the use of the service as they grow. Our challenge lies in making people aware that our service exists and ensuring that we progressively cover more data that is useful for each market.

People

StatPro employs around 250 people in 10 offices around the world. I would like to thank every one of them for their contribution to StatPro over the last year. We are all looking forward to 2011 and the exciting challenges that lie ahead.

Dividend

In line with our policy of paying a progressive dividend that balances our investment needs with return to investors, we are pleased to announce an increase in our dividend to 2.4p from 2.1p in 2009.

Outlook

StatPro is a robust business operating in a growth market. The steady recurring revenue from our core business provides great stability for StatPro and allows us to invest with confidence. Our accumulated expertise in portfolio analytics makes us a business with rare skills and the technology of Revolution, based on the best SaaS initiatives, provides us with an exciting opportunity for future growth. For these reasons, although we cannot be sure of economic conditions or other factors, we are looking forward to the rest of 2011 and beyond.

Justin Wheatley

Chief Executive

Financial Review

Overview

The Board continues to strive to achieve a good balance between investing for top line growth while delivering an acceptable profit margin. In 2010, StatPro made a significant increase in investment in the business whilst continuing to deliver a solid EBITDA margin and achieving revenue growth of 5% to £33.13 million (2009 £31.56 million). Adjusted EBITDA was marginally lower at £8.45 million (2009 £8.63 million) but nevertheless was still above 25% margin and this was achieved whilst increasing our spending on research and development from £3.83 million to £5.40 million, predominantly relating to an increase in expenditure on StatPro Revolution and cloud technology. We also increased our capital expenditure on property, plant and equipment to £0.94 million (2009: £0.79 million). We continue to focus on good operating cash management and we achieved a significant reduction in net debt from £8.89 million to £5.52 million.

Key performance indicators for the business

The key performance indicators ("KPIs") that are monitored by the Board, and by the Group Executive Board as part of the regular monthly management reporting, are:

The KPIs are discussed in detail in the relevant sections of this Financial Review below.

Revenue

Group revenue increased by 5% (2009: 13%) to £33.13 million (2009: £31.56 million). We achieved growth in revenue in the EMEAA region of 10% (2009: 16%) whilst revenue in the North American region fell by 3% (2009: 9% growth), mainly due to lower data fees. The analysis of revenue by region was as follows:

The split of revenue for the year by type was as follows:

Software licence revenue grew by 8% to £26.40 million (2009: £24.40 million) while, as expected, data fees reduced by 12% to £4.45 million (2009: £5.04 million) following the expiration in late 2009 of some legacy data contracts. The level of professional services revenues increased by 8% to £2.28 million (2009: £2.12 million). At constant currency (i.e. using 2009 average exchange rates), total revenue in 2010 would have been approximately £32.11 million (an increase of 2%).

Recurring revenue

The Group's business model of Software as a Service ("SaaS") and recurring revenue contracts continues to provide excellent visibility of revenue with the recurring revenue element being a high percentage (93%) of total revenue (2009: 93%). The annualised recurring revenue from software licences and data fees at the end of December 2010 was £29.38 million (2009: £28.12 million at constant currency and excluding disposal). New contracts signed in the year amounted to £3.40 million (2009: £3.47 million) and the renewal rate increased to 92% (2009: 90%). We also made further progress on our SaaS strategy by adding 44 new clients for StatPro Seven in the year and achieving 30% by revenue of our software clients now being on the SaaS platform (2009: 20%).

Approximately 63% of new recurring contracted revenue arose from existing clients (2009: 56%). The proportion by value of recurring software licences and data clients at the end of 2010 secured to the end of 2011 or beyond increased to 84% (2009: 81%); due to the profile of renewals beyond 2011 the weighted average length of contracts committed was slightly lower than the prior year at 18 months (2009: 20 months).

Operating expenses (before amortisation of intangibles and exceptional items) increased by 7% to £23.48 million (2009: £21.91 million), although at constant exchange rates the increase in expenditure was only 3%. The average number of employees increased by 2% to 248 (2009: 243) and we ended 2010 with 251 employees (2009: 246).

Exceptional items

Following a strategic review in the second half of 2010, which reaffirmed the Board's commitment to re-focusing the business on SaaS and cloud computing, the Board implemented a restructuring of non-core operations. This resulted in an exceptional charge amounting to £0.96 million in 2010; a further charge of approximately £0.24 million is anticipated to be incurred in 2011. The charges relate principally to redundancy costs and onerous leases and the cash outflow in 2010 amounted to £0.14 million.

Following the disposal of non-core software and related services under the JSE contractin the first half of 2010 for a total cash amount of £2.50 million, the Company made an exceptional gain on the software element of £0.50 million being the difference between the cash received for the software element (£1.10 million) and the carrying value and associated costs of the software (£0.60 million).

Adjusted operating profit margin

As a result of increased investment in our products and the exceptional charges described above, the operating profit reduced in 2010 to £6.33 million (2009: £7.10 million). The adjusted operating profit reduced by 5% year on year to £7.39 million (2009: £7.79 million) as shown in note 5, with the adjusted operating profit margin reducing to 22.3% (2009: 24.7%). The adjusted EBITDA (note 5) fell by 2% to £8.45 million (2009: £8.63 million).

Research and development and capex

In 2010, total research and development expenditure amounted to £5.40 million, an increase of 41% (2009: £3.83 million) and equating to 16% of Group revenue (2009: 12%) as we increased our expenditure on SaaS and cloud computing and, in particular, StatPro Revolution. The total cash expenditure on StatPro Revolution including marketing and other costs incurred in 2010 amounted to £2.19 million, which had a profit impact in the year of approximately £1.10 million after the impact of the capitalisation of development costs. In the light of the successful beta launch of StatPro Revolution in 2010, the Board approved additional cash expenditure to a level of around £4.0 million per annum for development, support infrastructure and marketing in this area during the course of 2011.

Of the total spend incurred on R&D (including purchased software), £3.46 million was capitalised (2009: £2.19 million). Amortisation (excluding amortisation of acquired intangibles) also increased to £2.38 million (2009: £1.96 million). Total capital expenditure on property plant and equipment, which relates predominantly to investments in data centres and related equipment, increased to £0.94 million (2009: £0.79 million).

Finance income and expense

Net finance expense reduced to £0.71 million (2009: £0.89 million before exceptional item) as a result of lower overall net debt. The exceptional item in 2009 amounting to £1.16 million included within financing income was the pre-tax gain on refinancing.

Profit before tax

Profit before taxation in 2010 decreased by 24% to £5.62 million as a result of exceptional items (2009: £7.37 million). After adjusting for amortisation of acquired and purchased intangibles, share based payments and exceptional items, the adjusted profit before taxation reduced by 3% to £6.68 million (2009: £6.90 million). The impact of currency movements, which was not material, increased profit before taxation by £0.08 million (i.e. less than 2% impact).

Taxation

The tax charge amounted to £1.46 million (2009: £1.81 million) giving an effective tax rate of 26% (2009: 25%). The Group has utilised further tax losses in the year and therefore continues to move towards a full tax charge. Whilst the cash tax remains lower than the charge, there was nevertheless a significant increase in the tax paid over the prior year with the UK companies operating under the quarterly instalment regime.

Earnings per share

Basic earnings per share decreased by 27% to 6.8p (2009: 9.3p). Diluted earnings per share decreased to 6.6p (2009: 9.1p) based on potentially dilutive shares outstanding amounting to 1.58 million (2009: 1.42 million). Adjusted earnings per share (note 7) reduced by 7% to 8.4p (2009: 9.0p).

Balance Sheet

The Group's net assets increased to £43.72 million at 31 December 2010 (2009: £37.59 million). This increase was mainly as a result of the net profits attributable to equity shareholders of £4.13 million, and net exchange gains (principally related to revaluation of goodwill) through reserves amounting to £3.89 million.

Non-controlling interest

StatPro exercised its option to acquire the non-controlling interest in SiSoft in June 2010 for an estimated contingent consideration of approximately £1.3 million and our estimate has not changed, but as the vendors are disputing certain aspects of the valuation, the process has not been completed in 2010 as expected. In January 2011, a legal process in the French Commercial Court was commenced to try to resolve the matter and formally complete the acquisition. It is probable that the matter will not be fully resolved during 2011 and we will provide a further update if the position changes materially or on the completion of the acquisition.

Non-current and current assets

Net movement on goodwill amounting to £5.03 million (2009: £1.79 million) relates to the estimate of the additional investment in SiSoft (£1.31 million) together with revaluation to year end exchange rates (£3.73 million).The carrying value for goodwill arising on all acquisitions has been reviewed and there have been no impairments. The level of current assets increased to £9.90 million (2009: £9.64 million excluding asset held for sale). Trade debtors, the largest component of debtors, increased to £6.04 million at the end of 2010 (2009: £5.40 million) following an increase in new business signed in December 2010. The level of cash and cash equivalents reduced to £1.76 million (2009: £2.37 million) as surplus cash was used to minimise the amount drawn under our revolving credit facility.

Current and non-current liabilities

The largest component of current and non-current liabilities was deferred income, a non-cash liability, which increased by 9% to £13.76 million (2009: £12.60 million). The other main movements in creditors related to reduction in trade and other payables, an increase in contingent consideration, an increase in provisions (following the restructuring) and reductions in the bank loan.

Cash flow and financing

2010 was another year of solid cash generation and further improvement year on year, with cash inflow from operating activities (before exceptional payments) increasing by 5% to £10.66 million (2009: £10.15 million). The net cash investment in acquisitions amounted to £0.33 million during the year (2009: £0.93 million) relating to payments of contingent consideration on past acquisitions. The proceeds of share issues during the year amounted to £0.05 million (2009: £0.49 million), mainly related to employee share options and we paid a total of £0.49 million (2009: £0.30 million) related to net settlement of share options in order to minimise potential share dilution. There was also a net outflow of £0.20 million related to buying back treasury shares. Whilst increasing the dividend we have maintained a good level of dividend cover (free cash flow: cash dividends) of 3.4 times (2009: 5.6).

Share capital and reserves

In 2010, 0.27 million shares were issued (2009: 1.21 million) and the issued share capital amounted to £0.61 million (2009: £0.61 million) representing 60.95 million shares of 1p nominal value (2009: 60.68 million). The Company purchased into treasury 475,000 shares at an average price of 107.7p and sold 250,000 at 128p leaving a balance of 225,000 shares in treasury at 31 December 2010. As a result of these share transactions, the share premium account has increased to £17.18 million (2009: £16.91 million).

Dividends

The directors are recommending a final dividend for 2010 of 1.7p per share (2009: 0.2p) making a total dividend for 2010 of 2.4p per share (2009: 2.1p). It is intended to pay the final dividend on 25 May 2011 to all shareholders on the register at the close of business on 26 April 2011. Total dividends paid in 2010 amounted to £1.35 million (2009: £1.12 million). The Board intends to maintain a progressive dividend policy reflecting the balance between the investment needs of the business and the growth in underlying earnings per share, while maintaining a minimum cash dividend cover.

Andrew Fabian

Finance Director

GROUP INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2010

GROUP STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2010

GROUP BALANCE SHEET AS AT 31 DECEMBER 2010

GROUP CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2010

In the current year, management have included the bank overdraft within cash and cash equivalents for the basis of the cash flow statement as they believe it is an integral part of the cash management of the Group. The comparative amounts for opening and closing cash and equivalents have been re-presented accordingly. 

GROUP STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE YEAR ENDED 31 DECEMBER 2010

Other reserves include merger reserves amounting to £2,369,000 (2009: £2,369,000), and translation reserve amounting to a surplus of £10,093,000 (2009: £6,200,000). The merger reserve arose on acquisitions and represents the difference between the fair value of shares issued and the nominal value of the shares. The translation reserve incorporates the gains and losses on revaluation of the net assets and liabilities of subsidiary undertakings and other currency gains and losses that are treated as part of equity. Expenses associated with shares issued in the year amounted to nil (2009: £3,000).

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2010

1. Announcement

This announcement was approved by the Board of directors on 22 March 2011. The preliminary results for the year ended 31 December 2010 are unaudited. The financial information set out in this announcement does not constitute the Company's statutory accounts for the years ended 31 December 2010 or 31 December 2009. The financial information set out in the announcement 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 2009. This condensed consolidated financial information does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. The auditor's report on the financial statements for the years ended 31 December 2009 was unqualified and did not contain a statement under Section 498 of the Companies Act 2006. The financial statements for the year ended 31 December 2009 have been delivered to the Registrar of Companies.

2 Segmental information

The Group's operating segments have been determined based on the information regularly reviewed by the Group Executive Board, which has been identified as the Chief Operating Decision Maker ("CODM"). During the year there has been a change in the information presented to and reviewed by the CODM. The reportable segments in the prior year of United Kingdom, Rest of Europe and Rest of the World are considered as EMEAA. The North American regional segment is unchanged. The reportable segments in the current year reflect the revised structure and the prior year has been re-presented accordingly. The Group Executive Board considers the business to be split into two primary geographical markets: EMEAA and North America, which are each managed by a regional CEO. Central costs relate to the expenses related to the Group's headquarters and costs directly associated with the parent Company, which are managed by the Group management team. Exceptional items relating to the software disposal in 2010 and the refinancing in 2009 are included under Central. The external debt is held within Central.

All revenue, profit/(loss) before taxation and total assets are attributable to the principal activity of the Group, being the development, marketing and distribution of software, data solutions and related professional services to the global asset management industry. Segment assets represent those assets arising from the operating activities of those segments. Segment results exclude the impact of any intercompany recharges of revenues or costs.

3 Operating expenses

4 Exceptional items

Exceptional items are summarised as follows: