StatPro Regulatory News (SOG)

STATPRO GROUP PLC

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

Interim results for the six months ended 30 June 2013

StatPro Group plc (AIM: SOG), the AIM listed provider of portfolio analysis and asset pricing services for the global asset management industry, announces its interim results for the six months ended 30 June 2013.

Financial Highlights:

·; Annualised recurring revenue contract value** for StatPro Revolution up 124% to £2.38 million (2012: £1.06 million)

·; Total annualised recurring revenue contract value** was flat year on year at £30.33 million (2012: £30.45 million) with a renewal rate of 91% (2012: 94%)

·; StatPro Revolution related recurring revenue*** increased to £6.37 million and 24% of total software revenue (2012: £2.76 million and 11%)

·; Recurring revenue in the period was 93% of total revenue (2012: 94%)

·; Adjusted EBITDA* reduced by 9% to £3.24 million (2012: £3.58 million) as a result of increased cloud expenditure

·; Net cash of £2.84 million (June 2012: net debt of £3.92 million)

·; Interim dividend increased by 6% to 0.85p (2012: 0.80p)

Operating Highlights:

·; StatPro Revolution client numbers increased to 220 at 30 June 2013 (2012: 111)

·; New features released in H1 2013 include a premium subscription UCITS IV**** module

·; StatPro R+ beta launched in July 2013, the cloud replacement for StatPro Seven

·; Continued growth of the sales pipeline

* 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 intangible assets, share based payments and exceptional items (notes 2, 4 and 5)

** at constant currency

*** defined as the total recurring revenue from clients whose subscription includes StatPro Revolution

**** UCITS IV refers to the European Directive related to Undertakings for Collective Investment in Transferable Securities

Commenting on the results, Justin Wheatley, Chief Executive of StatPro said: "StatPro Revolution, our innovative cloud-based portfolio analytics service, continues to gain momentum. It has more than 220 customers around the world and with 24% of our recurring revenue now coming from clients whose subscription includes the service, its appeal is evident. We believe StatPro Revolution has immense potential, with first mover advantage, and the plan is to capitalise on this opportunity to build a very focused business with a strong foundation for highly scalable expansion. The strength of the offering, combined with a growing sales pipeline, means we look to the future with confidence."

- Ends -

For further information, please contact:

A briefing for analysts will be held at 9.30am today at the offices of

Newgate Threadneedle, 5th Floor, 33 King William Street, London, EC4R 9AS

About StatPro

StatPro is a global provider of portfolio analytics for the investment community. Our cloud-based services provide vital analysis of portfolio performance, attribution and risk. Hundreds of investment professionals use our cloud services directly or through a fund administrator/partner to perform sophisticated analysis, reporting and distribution every day.

With nearly 20 years of experience and expertise, we believe analytics should be sophisticated yet simple and useful as well as secure. StatPro data coverage includes global equities, global bonds, global mutual funds, most families of benchmarks, FX rates, sector classifications and much else besides.

StatPro has grown its recurring revenue from less than £1 million in 1999 to around £30 million at 30 June 2013 and currently enjoys a renewal rate of approximately 91%. StatPro floated on the main market of the London Stock Exchange in May 2000 and transferred its listing to AIM in June 2003. The Group has operations in Europe, North America, South Africa, Asia and Australia and approximately 425 clients in 36 countries around the world. Approximately 80% of recurring revenues are generated outside the UK.

CHIEF EXECUTIVE'S REVIEW

Highlights

We have made excellent progress in the first half of 2013, delivering growth across our key StatPro Revolution metrics. Annualised recurring revenue from StatPro Revolution grew strongly by 124% to £2.38 million (2012: £1.06 million) and total revenue from all clients whose subscription includes StatPro Revolution rose 131% to £6.37 million (2012: £2.76 million) to represent 24% of all software contracts (2012: 11%). At the end of June 2013 we had 220 clients of StatPro Revolution (2012: 111). Total revenue in the first half of 2013 grew 3% to £16.53 million (2012: £16.08 million) and profit before tax grew 32% to £1.89 million (2012: £1.44 million).

StatPro Revolution and its sister product StatPro R+, represent a significant opportunity for StatPro to grow its business in a broader market segment and all around the world. We raised further capital in November 2012 and we have been focusing on building our infrastructure to ensure that we can take full advantage of this opportunity. We intend to grow our sales team significantly and have established a training programme to ensure that all our new sales recruits have an optimal chance of success. We are also strengthening our client services team to ensure that the on-boarding process of winning new business is as smooth as possible. The continued investment has had a small impact on our adjusted operating profit margins, which decreased in the period to 16.2% (2012 18.4%), but we are satisfied that as StatPro Revolution gains traction our operating margins will rise again in the coming years.

StatPro Revolution

StatPro Revolution has achieved its highest sales and this is in part due to the ever improving functionality of the service. We have added a wide range of new features such as stock level attribution and a new UCITS IV risk monitoring module. The risk monitoring module was launched at the end of May 2013 (priced as an extra $200 per portfolio per month) and has already made an impact to sales with four new clients in June. We believe that the UCITS regulations will be a strong driver of sales for StatPro Revolution over the coming years, as will the Alternative Investment Fund Managers Directive ("AIFMD"), recently introduced by the European Commission. We are focusing our development on offering more regulation-based functionality and on making the service even easier to share with other people and companies.

StatPro R+/StatPro Seven

Our migration plans for getting existing clients of StatPro Seven to add StatPro Revolution and switch to StatPro R+ are advancing very well with more and more existing clients adopting StatPro Revolution to enhance their distribution capability. Acceptance of cloud-based software is growing with each passing month and many companies are now taking the view that they only want cloud-based services as this will help them reduce their costs and improve their efficiency. With clients whose subscription includes StatPro Revolution now representing 24% of our recurring revenues by value and a strong pipeline of other clients in the process of buying StatPro Revolution, we are confident that our migration plans are going well. Meanwhile, the StatPro Seven and Data revenue remains robust with a renewal rate (measured on a trailing twelve month basis) of 91% (2012: 94%), in line with management's expectations.

We will only be able to fully replace all the StatPro Seven software once the full version of StatPro R+ is released, so we are very pleased that the first beta release of StatPro R+ has just been launched on time in July 2013. The new service is extremely impressive already and we have started presentations to our clients to give them a glimpse of what the future holds. The core aim of StatPro R+ is to reduce operational cost through big efficiency gains in data processing and greatly enhanced accuracy. StatPro R+ uses modern methods to control and check data and highlight errors using new visual graphical interfaces. This means that a single person can now manage far greater volumes of data. The speed and scalability of StatPro R+ using the public cloud means that calculation times have been reduced to minutes from hours. We are on track to achieve our stated objective of releasing the full version of StatPro R+ by the end of 2014.

Strategy

Our strategy continues to be based on three lines of growth. Firstly, we are growing our own sales team to ensure that we can achieve a much higher level of direct sales. Secondly, we are building our distribution network via fund administrators and other software companies so that we can create a significant indirect sales channel. Thirdly, we want to build on our own existing clients to convert them to the StatPro Revolution suite of products.

We are also looking to work with other companies to supply their products on our platform and to use the recently released StatPro Revolution Web API to work with system integrators to create bespoke products for their clients. This open policy is specifically designed to ensure that StatPro can collaborate with as many companies as possible to offer our clients a solution that fits their needs.

People

I am constantly impressed at the vitality and ability of the people who work at StatPro. It is this ingredient that makes a difference to a company, both as a place to work and also to ensure success. Switching software platforms is a complex process that requires energy, determination and skill and the people who work at StatPro are proving that they have it.

Dividend

The Board is pleased to announce an interim dividend of 0.85p per share which is an increase of 6% on last year's interim dividend of 0.80p per share. This is in line with our progressive dividend policy reflecting the balance between the investment needs of the business and the growth in the underlying cash and earnings per share as well as our confidence in the future.

Outlook

We are very pleased at the progress that we have made with both the development of StatPro Revolution and the new sales in H1 2013. Our pipeline is growing and so is our sales team. Our relentless marketing of StatPro Revolution is having its effect in both spreading the word and in gaining greater acceptance of cloud-based services. The underlying technology of StatPro Revolution allows us to build new features and deploy them many times faster than our competitors using traditional software. For these reasons, we are looking forward to the rest of the year and beyond.

Justin Wheatley

Group Chief Executive

FINANCIAL REVIEW

Overview

The Board made the decision in early 2012 to develop and promote solely cloud-based technology solutions and later in that year, the Company raised approximately £6 million in a placing to allow increased investment in cloud services from a stronger balance sheet. The Board continues to believe that StatPro Revolution has immense potential with "first mover" advantage and the plan is to capitalise on this opportunity to build a very focused business with a strong foundation for highly scalable expansion.

The focus of H1 2013 has been to invest in the sales team and building on partnerships with fund administrators. We have also started to increase our development and web design team as well as strengthening our client services team. The concentration of the sales and client services teams' efforts on StatPro Revolution resulted in an increase of approximately 124% in annualised recurring revenue for the cloud-based service to £2.38 million (2012: £1.06 million at constant currency) over the last twelve month period.

During the first six months of 2013 revenue increased by 3% to £16.53 million (2012: £16.08 million). Profit before tax was up 32% to £1.89 million (2012: £1.44 million), although last year's profit was impacted by the exceptional restructuring charge of £0.95 million. Adjusted EBITDA reduced to £3.24 million (2012: £3.58 million) as a result of the additional spending in 2013 in transforming the business to a pure-cloud technology operation, and we nevertheless delivered an overall adjusted EBITDA margin close to 20% whilst continuing to invest.

The StatPro Seven and Data products achieved an underlying adjusted EBITDA of £4.63 million (2012: £4.81 million); this was slightly lower than the prior year mainly due to lower data overage revenue. The StatPro Revolution service, still in investment mode, achieved an EBITDA loss of £1.39 million (2012: £1.23 million). Net expenditure on StatPro Revolution increased by 50% from £1.47 million to £2.21 million and StatPro Revolution revenue increased by 242% to £0.82 million (2012: £0.24 million).

Revenue

Revenue increased by 3% (2% at constant currency) to £16.53 million (2012: £16.08 million). The revenue in the EMEAA region increased by 3% (at actual rates and at constant currency) to £10.43 million (2012: £10.09 million), and revenue in the North American region increased by 2% at actual rates (flat at constant currency) to £6.10 million (2012: £5.99 million). Recurring revenue in the period was 93% (2012: 94%) of total revenue. New recurring revenue contracted in H1 2013 was lower than the comparative period although over 50% of new business related to StatPro Revolution. The renewal rate (measured on a trailing twelve month basis) reduced to 91% (2012: 94%), in line with management's expectations. There was an increase of 242% in revenue for StatPro Revolution recognised in H1 2013 compared to the prior year. As previously reported, data overage fell in H2 2012 and thus data revenue in H1 2013 was lower by 17% than the comparative period, although it was 1% higher on a sequential six month basis. Professional services revenue grew by 19% to £1.12 million (2012: £0.94 million).

The split of revenue by type is as follows:

Recurring revenue

The annualised value of contracted recurring revenue at 30 June 2013 of £30.33 million was at a similar level to the prior year (2012: £30.45 million at constant currency/£30.21 million at actual June 2012 rates) as illustrated below:

The proportion by value of recurring software licences on multi-year contracts (licence agreements with more than one year remaining contractually committed) was 81% at the end of June 2013 (2012: 83%). New business from existing clients was 80% (2012: 71%) and the proportion of software clients on our SaaS solution increased to 53% (2012: 46%).

Whilst recurring revenue directly relating to StatPro Revolution is currently only 8% of the Group total it is growing at a higher rate as the service is developed on a highly scalable technology platform. The profile of our client numbers and revenues is a skewed distribution. At one extreme are a number of fund administrator partners (typically large custodian banks) who have contracted for, say, a minimum of 100 portfolios and we expect the number of portfolios (and hence recurring revenue) to increase as they promote the service to their wide client base. At the other end are a large number of clients who have signed for just one portfolio. Whilst the revenue per client for these smaller clients is much lower than our current average there is a significantly larger market of potential clients and we are focusing on growing both these target markets in addition to prospecting existing clients.

The revenue distribution profile for StatPro Revolution is as follows:

Operating expenses

Operating expenses (before amortisation of intangible assets and exceptional items) increased by 5% (4% at constant currency) to £12.16 million in the first half of 2013 (2012: £11.64 million) as a result of increased expenditure on cloud services.

Exceptional items

As announced earlier this month, the Board decided to agree an out-of-court settlement in relation to the SiSoft acquisition deferred consideration dispute, and as a result there is an exceptional charge of £0.34 million in H1 2013. Further details are provided in note 4.

The exceptional item in H1 2012 of £0.95 million related to the one-off charge associated with the restructuring in January 2012.

Employees

The average number of employees during the first six months of 2013 was 246 (2012: 257). The number of employees currently in the Group is 247, situated in eleven offices in Europe, North America, South Africa, Asia and Australia.

Investment in intangible assets

Total spend on research and development in H1 2013 was slightly higher at £2.31 million (2012: £2.16 million) representing a higher level of investment at 14% of total revenue (2012: 13%). The focus on cloud technology has allowed us to be more productive whilst continuing to invest in innovative improvements. The level of capitalisation of intangible assets reduced to £1.83 million (2012: £1.97 million) and the amortisation of intangible assets (excluding acquired intangible assets) increased year on year to £1.80 million (2012: £1.56 million).

Earnings before interest, tax, depreciation and amortisation

The adjusted EBITDA in H1 2013 reduced by 9% to £3.24 million (2012: £3.58 million). The adjusted EBITDA margin was 19.6% (2012: 22.2%) with an adjusted EBITDA margin for StatPro Seven and Data of £4.63 million (29.5%) compared with £4.81 million (30.4%) in H1 2012 as shown in note 5. The adjusted EBITDA loss on StatPro Revolution was £1.39 million (2012: £1.23 million).

Finance income and expense

The net financing expense reduced to £0.12 million (2012: £0.28 million) and mainly relates to non-cash financing charges. We exercised our option to extend our financing facilities with The Royal Bank of Scotland plc until May 2016, and we retain an option to extend for a further year, subject to customary covenants and terms.

Profit before taxation

Profit before tax increased by 32% to £1.89 million from £1.44 million, the prior period being impacted by the restructuring charge; adjusted profit before tax reduced by 5% (6% at constant currency) to £2.56 million (2012: £2.68 million).

Taxation

The total tax charge was £0.59 million (2012: £0.40 million). The underlying rate of tax is approximately 27% (2012: 28%) but the exceptional item relating to an investment has no associated income tax deduction resulting in an actual tax rate of 31%. The net tax paid in the period was £0.77 million (2012: £0.79 million).

Earnings per share

Basic earnings per share increased by 12% to 1.9p (2012: 1.7p) as the restructuring impacted earnings in the prior period; thus the adjusted earnings per share reduced to 2.9p (2012: 3.3p). The average number of shares in issue in the period was 67.48 million (2012: 61.36 million). The diluted earnings per share was 1.9p (2012: 1.7p) based on potentially dilutive shares outstanding of 0.07 million (2012: 0.21 million).

Cash flow

Cash generated from operations (before exceptional items) during the first six months of 2013 was £3.58 million (2012: £4.72 million). Our net cash was £2.84 million at 30 June 2013 (2012: net debt £3.92 million); this was below the December 2012 level (£3.67 million) as we increased the final dividend for 2012 (1.90 pence per share) to £1.28 million (2012: £1.14 million) and there was a working capital outflow of £1.32 million (2012: £0.32 million).

Balance sheet

The Group's net assets increased to £49.77 million at June 2013 (Dec 2012: £49.62 million). The level of trade and other receivables, of which the major component is trade debtors, increased to £7.78 million (Dec 2012: £6.96 million). The major component of creditors is deferred income, a non-cash liability, which amounted to £13.57 million (Dec 2012: £13.45 million). Provisions of £2.01 million (Dec 2012: £1.71 million), relate to deferred contingent consideration for the acquisition of the non-controlling interest in SiSoft Sarl (see notes 4 and 11), onerous contracts and the restructuring provision.

Share capital and treasury stock

No shares were issued during the period (2012: 90,333). At 30 June 2013, there were 67,703,650 shares (Dec 2012: 67,703,650 shares) in issue including 225,000 held in treasury (67,478,650 excluding treasury shares). The treasury shares do not accrue dividends and are excluded from the earnings per share calculation.

Interim dividend

The directors have declared an increased interim dividend of 0.85 pence per ordinary share (2012: 0.80 pence), which will be paid on 6 November 2013 to shareholders on the register at the close of business on 11 October 2013.

Principal risks and uncertainties

The directors continue to evaluate the principal business risks and uncertainties affecting the Group and further discussion of the principal risks and uncertainties can be found on pages 33 to 35 of the 2012 Annual Report.

Andrew Fabian

Finance Director

Group Income Statement

Group Statement of Comprehensive Income

Group Balance Sheet

* Other reserves includes a merger reserve of £2,369,000 (2012: £2,369,000) and a translation reserve surplus of £8,440,000 (2012: £8,939,000). The merger reserve arose on acquisitions and represents the difference between the fair value and the nominal value of the shares issued. 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 presented in equity.

Notes to the interim financial information

1. This interim report was approved by the Board of directors on 30 July 2013. The financial information set out in this interim report has been prepared under IFRS as adopted by the European Union and on the basis of the accounting policies set out in the statutory accounts of StatPro Group plc for the year ended 31 December 2012, amended as explained below. The following new standards, amendments to standards and interpretations are mandatory for the first time in the current period and have no significant impact on the Group consolidated results or financial position.

International Accounting Standards ("IAS/IFRS")

IAS 1 (revised) Presentation of Financial Statements

IAS 19 (amendment) Employee Benefits

IFRS 7 (amendment) Offsetting financial assets and liabilities

IFRS 13 (revised) Fair Value Measurement

This report is not prepared in accordance with IAS 34, which is not mandatory. This interim report has not been audited but has been reviewed in accordance with ISRE 2410 by the Company's auditors, Ernst & Young LLP. The financial information does not constitute statutory accounts within the meaning of section 435 of the Companies Act 2006. Statutory accounts for StatPro Group plc for the year ended 31 December 2012 reported under IFRS have been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006. Copies of this report will be posted or provided electronically 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.

Basis of preparation - going concern

After making appropriate enquiries, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For these reasons, the Board continues to adopt the going concern basis in preparing the Group financial statements.

2. Earnings per share.

Basic earnings per share has been calculated based on the profit after taxation of £1.30 million (2012: £1.04 million) and the weighted average number of shares of 67.48million (2012: 61.36 million). The diluted earnings per share were 1.9p (2012: 1.7p) based on potentially dilutive shares outstanding of 0.07 million (2012: 0.21 million).

Adjusted earnings per share are shown in the table below.

3. Revenue analysis

Revenue for the period is analysed as follows:

4. Exceptional items

H1 2013 - Increase in deferred consideration for SiSoft

As announced earlier this month, the Board agreed an out-of-court settlement on the SiSoft acquisition deferred consideration, and as a result there is an exceptional charge of £0.34 million in H1 2013.

Background

SiSoft developed an advanced web-based Composites solution, which is integrated into StatPro Seven's Composites module. In 2010, StatPro announced its intention to exercise its option to acquire the 49% minority interest in SiSoft. However, as previously announced, the non-controlling shareholders, consisting of two parties owning 55% and 45% of the minority interest, disputed elements of the calculation of the deferred consideration and the matter has been progressing through the French courts.

Deferred Consideration - partial settlement

Under the formula stipulated by the acquisition agreements, the deferred consideration was originally estimated at approximately €1.6 million (£1.4 million). Following further review, the directors determined that it was in the interests of the Company to propose an out of court settlement with the non-controlling shareholders to minimise the risk of a protracted dispute and to mitigate further legal costs and management time involved in the ongoing dispute. The offer was accepted by representatives of 55% of the non-controlling shareholders in SiSoft and, as a result, €1.16 million (£1.0 million) was paid in early July 2013.

Remaining interest

The Court has now made a provisional judgment regarding the remaining 45% non-controlling interest and whilst most of the original elements of the claim (making up the bulk of the value) made by the non-controlling shareholders have now been rejected by the Court, the Court has appointed an expert to review the remaining elements at dispute to assist in evaluating the merits and the quantification of the claim.

The Board expects the remaining deferred consideration payable to the 45% shareholder party to be in the range of €0.7 million - €1.1 million (approximately £0.6 million - £0.9 million) and has increased the provision by approximately €0.4 million (£0.34 million). There is no tax deduction available on this provision as it relates to a capital item. The Board remains confident that our analysis of the case is robust and will provide an update when appropriate.

H1 2012 - Restructuring costs

In the first half of 2012, the exceptional item of £0.95 million related to severance payments following a restructuring to re-focus the business on Cloud technology.  

5. Adjusted profit before taxation, adjusted operating profit margin, and adjusted EBITDA

a) Adjusted profit before taxation

b) Adjusted operating profit

c) Adjusted EBITDA

* The impact of currency movements on adjusted EBITDA performance relating to Seven and Data for H1 2013 compared to the prior year was approximately £0.05 million

6. Free cash flow

7. Reconciliation of profit before tax to net cash inflow from operating activities

8. Reconciliation of net cash flow to movement in net cash/(debt)