StatPro Regulatory News (SOG)

STATPRO GROUP PLC

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

Interim results for the six months ended 30 June 2012

StatPro Group plc (AIM: SOG), the AIM listed provider of portfolio analytics and data solutions for the global asset management industry, announces its interim results for the six months ended 30 June 2012.

Financial Highlights:

·; Annualised recurring revenue contract value** up 7% to £30.21 million (2011: £28.17 million) with renewal rate of 94% (2011: 93%)

·; Annualised recurring revenue contract value** for StatPro Revolution up more than six-fold to £1.02 million (2011: £0.16 million)

·; Recurring revenue in the period was 94% of total revenue (2011: 94%)

·; Exceptional charge of £0.95 million (2011: nil) following restructuring in H1 2012

·; Adjusted EBITDA* increased by 24% to £3.58 million (2011: £2.89 million)

·; Net debt reduced to £3.92 million (2011: £5.15 million)

·; Interim dividend increased by 7% to 0.80p (2011: 0.75p)

Operating Highlights:

·; Good progress on StatPro Revolution, our innovative cloud-based portfolio analysis platform launched in 2011

·; Sales of StatPro Revolution have reached 111 clients, including 10 fund administrators

·; Continued growth of the sales pipeline

·; Percentage of analytics clients on hosted StatPro Seven platform increased to 46% (2011: 34%)

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

** at constant currency

Commenting on the results, Justin Wheatley, Chief Executive of StatPro said: "We have taken further strides forward in the execution of our strategy. Sales of StatPro Revolution have been strong and we enter the second half of 2012 with good momentum. When the full range of StatPro Revolution Plus modules have been developed, fully replacing StatPro Seven, it will form, together with StatPro Revolution, a single integrated solution to manage the computation of performance and distribution of portfolio analysis and compliance on any scale to any type of asset manager. We believe we are unique in this vision and remain confident that our investment in new cloud technology will ensure that StatPro has a bright future. Current business levels are satisfactory and we believe that we will meet market expectations for the full year."

- Ends -

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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 for hundreds of asset managers, fund administrators, RIAs, CEOs, heads of risk, sales directors, marketing managers and authorised corporate directors. They are now using our cloud services and software products to perform sophisticated analysis, reporting and distribution every day.

With 18 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 £30 million at end June 2012 and currently enjoys a renewal rate of approximately 94%. StatPro floated on the London Stock Exchange in May 2000 and transferred its listing in June 2003 to AIM. The Group has operations in Europe, North America, South Africa, Asia and Australia and around 350 clients in 28 countries around the world. Approximately 80% of recurring revenues are generated outside the UK.

CHIEF EXECUTIVE'S REVIEW

Highlights

We are pleased with the results for the first half of the year, demonstrating growth against the comparable period and a strong uptake of StatPro Revolution. Revenue increased 3% to £16.08 million (2011: £15.61 million) and adjusted profit before tax was up 29% to £2.68 million (2011: £2.07 million). An exceptional charge of £0.95 million (2011: nil) following the restructuring in January 2012 reduced headline profit before tax by 20% to £1.44 million (2011: £1.79 million). Cash generation remained strong with cash flow generated by operations (before exceptional items) of £4.72 million (2011: £4.66 million) and net debt reduced to £3.92 million (2011: £5.15 million). Our underlying annualised recurring revenues grew 7% to £30.21 million (2011: £28.17 million) with the annualised recurring revenue from StatPro Revolution growing six-fold to £1.02 million (2011: £0.16 million).

The key sales focus has been to sell StatPro Revolution to fund administrators and to our existing clients. At 30 June 2012 we had 111 clients for StatPro Revolution (2011: 16) of which 10 are fund administrators (2011: 1), including four in the top 15 worldwide, by assets under administration. Ten of these clients are existing StatPro Seven clients that have also bought StatPro Revolution (2011: 1) with the remaining 101 clients being new to StatPro.

StatPro Revolution has proven its universal appeal by achieving sales in all regions of the world (North America, South America, Europe, Middle East, Africa, Asia and Australia) and to companies operating in many diverse sectors (mutual funds, hedge funds, asset management, pension funds, fund advisory, private wealth, asset consulting and fund administration). StatPro has held hundreds of meetings with clients and prospects (in addition to the 111 clients secured) and the feedback from these meetings has been overwhelmingly positive. Our key message is that our service can help our clients meet their regulatory duties and win new business as well as protecting existing assets under management. StatPro Revolution greatly simplifies an otherwise complex process and by so doing reduces the total cost of ownership significantly. At a time when many companies in the financial services industry are beset by many troubles on many fronts, this is proving to be a welcome message.

StatPro Seven

We took the decision to stop actively marketing StatPro Seven at the beginning of the year in order to focus all the sales team on StatPro Revolution. Sales for StatPro Seven have remained steady in the first half of 2012 and further sales are expected in the second half of the year. We are replacing StatPro Seven with cloud-based StatPro Revolution Plus, and the first phase of this will be released in 2013 with the full replacement of StatPro Seven being due at the end of 2014. Overall renewal levels for StatPro Seven in the first half remained strong at 94%. Our objective is to preserve, grow and convert the StatPro Seven client base to a combination of StatPro Revolution and StatPro Revolution Plus over the next several years.

Development

We continue to invest in our new technology. Our total development costs have decreased slightly in H1 at £2.16 million (2011: £2.48 million) as we have reduced expenditure on StatPro Seven in line with our product development strategy.

The focus on StatPro Revolution development is twofold: to expand our coverage of assets and add compliance capabilities. We aim to offer special modules within StatPro Revolution that will allow a user to manage regulatory environments, including UCITS IV compliance, Solvency II or others, with the minimum technical complexity. StatPro already offers UCITS compliance via StatPro Seven, but this new service will have a far wider appeal and be far simpler and more affordable to deploy.

StatPro Revolution Plus

When the full range of StatPro Revolution Plus modules have been developed, fully replacing StatPro Seven, it will form, together with StatPro Revolution, a single integrated solution to manage the computation of performance and distribution of portfolio analysis and compliance on any scale to any type of asset manager. As a result of the services residing in only one instance in one location, the solution will greatly reduce current complexity, and thereby cost, making a compelling commercial solution to the asset management industry.

The first phase of StatPro Revolution Plus will be released in 2013 offering external performance calculation for high volumes of portfolios. The objective of StatPro Revolution Plus is to provide clients with significantly greater scale and speed than they currently have with existing systems and at the same time, make the business of managing vast quantities of data much easier. Cloud computing allows scale to be managed interactively and StatPro Revolution Plus will automatically "rent" or "release" IT infrastructure required.

Strategy

StatPro has been firmly focused on transforming itself from a niche provider of financial applications into a cloud-based supplier of portfolio analytics for the whole asset management industry. We realised several years ago that the only way to resolve the immense complexity of current solutions is to reinvent the process using the latest technology. The benefits to our clients from this technology are manifest and varied but the key drivers at the moment are sales and governance. StatPro Revolution can be used to help senior managers have an instant overview of the portfolios for which they have a fiduciary responsibility, allowing them more time than current systems to find and fix problems. The transparency provided by StatPro Revolution is also a compelling service offering to new and existing clients of an asset manager as each portfolio can be shared with others as they choose. We are therefore working with many fund administrators to help build an integrated service for fund managers where their data is automatically fed into StatPro Revolution, ready for immediate analysis.

People

StatPro has a broad based team of truly talented people comprising skilled developers, highly knowledgeable domain experts, experienced salesmen, dedicated client services people and all the other support and administration staff, working together on our big strategic initiative. I would like to thank them for their continued efforts to make StatPro special.

Dividend

The Board is pleased to announce an interim dividend of 0.80p per share which is an increase of 7% on last year's interim dividend of 0.75p per share. We intend to maintain a 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 remain confident that our investment in new cloud technology, in the form of StatPro Revolution and StatPro Revolution Plus, will ensure that StatPro has a bright future. Current business levels are satisfactory and we believe that we will meet market expectations for the full year.

Justin Wheatley

Chief Executive

FINANCIAL REVIEW

Overview

During the first six months of 2012, revenue increased by 3% to £16.08 million (2011: £15.61 million). Adjusted EBITDA increased by 24% to £3.58 million (2011: £2.89 million) as a result of the restructuring to focus the business on cloud technology, coupled with a good level of new business and high renewals. We have made good progress on building our customer base for StatPro Revolution, with client numbers increasing to 111 (2011: 16) and recurring revenue of £1.02 million (2011: £0.16 million) as at end June 2012. Recurring annualised contracted revenue, our key performance indicator, also increased to £30.21 million (2011: £28.17 million at constant currency). Total spend on research and development in H1 2012 was slightly lower at £2.16 million (2011: £2.48 million) as we reduced overall R&D expenditure to focus on pure cloud services; nevertheless, this still represents a high level of investment commitment of 13% of total revenue (2011: 16%).

Our net debt reduced to £3.92 million at 30 June 2012 compared to twelve months ago (2011: £5.15 million), but increased slightly from December 2011 (£3.40 million) as we increased the final dividend to £1.14 million (2011: £1.04 million) and paid £0.71 million (2011: nil) under our restructuring initiative (see exceptional items below).

Revenue

Revenue increased by 3% to £16.08 million (2011: £15.61 million); at constant currency the revenue would have increased by 6%. The revenue in EMEAA region increased to £10.09 million (2011: £10.05 million, 5% at constant currency), and revenue in the North American region increased to £5.99 million (2011: £5.56 million, 8% at constant currency). Recurring revenue in the period amounted to 94% (2011: 94%) of total revenue. New recurring revenue contracted in H1 2012 was higher than the comparative period and the level of cancellations was below the previous year. The renewal rate (measured on a trailing twelve month basis) increased to 94% (2011: 93%). There was only a modest revenue contribution for StatPro Revolution in H1 2012 as the contracts signed were weighted towards the end of the first half. Data revenue increased by 17% but this was offset by a 1% drop in revenue from StatPro Seven. The split of revenue by type was as follows:

Recurring revenue

The annualised value of contracted recurring revenue increased by 7% million to £30.21 million at 30 June 2012 from £28.17 million (at constant currencies) at 30 June 2011 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 83% at the end of June 2012 (2011: 80%). New business from existing clients was 71% (2011: 73%) and the proportion of software clients on our SaaS solution increased to 46% (2011: 34%). Professional services revenue was flat at £0.94 million (2011: £0.94 million).

StatPro Revolution

The key strategic objective for StatPro remains the successful promotion of StatPro Revolution, our innovative cloud-based portfolio analysis platform, and we have made further progress in 2012 as follows:

·; Sales of StatPro Revolution have reached 111 clients, including 10 fund administrators

·; The sales pipeline continues to grow and we hope to build upon this success and momentum.

Operating expenses

Operating expenses (before amortisation of intangible assets and exceptional items) reduced by 3% to £11.64 million in the first half of 2012 (2011: £12.06 million); at constant currency the reduction was 1%. The lower cost base was due mainly to employee cost savings following the restructuring in January 2012 (see exceptional items below).

Exceptional items

There is an increasing demand by clients wanting to migrate to cloud technology away from traditional software, and given our increased confidence in StatPro Revolution's commercial potential, we decided to accelerate our plans to invest in cloud technology and focus all our sales efforts on StatPro Revolution.

As a result of these decisions, we made some changes to our business organisation in January 2012, as previously reported, which resulted in a reduction in our ongoing operational costs of approximately £1.8 million per annum. The one-off charge associated with the restructuring amounting to £0.95 million, of which £0.71 million impacted the operating cash flow in H1 2012. This switch of emphasis, whereby we will focus on promoting StatPro Revolution, may impact revenue growth initially but is expected to lead to much higher sales productivity in the future.

Employees

The average number of employees during the first six months of 2012 was similar to last year at 257 (2011: 256) although staff numbers reduced during the period as a result of the restructuring. The number of employees currently in the Group is 249 employees, situated in eleven offices in Europe, North America, South Africa, Asia and Australia.

Investment in intangible assets

We reduced slightly our overall investment in research and development following the restructuring, although we have increased expenditure on StatPro Revolution, and StatPro Revolution Plus (the cloud-based upgrade path for StatPro Seven). The focus on cloud technology has allowed us to be more productive whilst continuing to invest in innovative improvements in our cloud services. We continue to expect to deliver the first modules of StatPro Revolution Plus in 2013. The level of investment in intangible assets increased to £1.97 million (2011: £1.69 million) and the amortisation of intangibles (excluding acquired intangibles) increased year on year to £1.56 million (2011: £1.23 million).

Earnings before interest, tax, depreciation and amortisation

The adjusted EBITDA in H1 2012 increased by 24% to £3.58 million (2011: £2.89 million). The adjusted EBITDA margin improved from 18.5% to 22.2% with an improvement in the margin for StatPro Seven and Data from £4.10 million (26.3%) to £4.81 million (30.4%) in H1 2012 as shown in note 5. The net loss on StatPro Revolution was flat at £1.23 million (2011: £1.21 million).

Finance income and expense

The net financing expense reduced slightly to £0.28 million (2011: £0.31 million). As previously announced, on 28 May 2012 an agreement was signed with The Royal Bank of Scotland plc to extend our existing financing facilities until May 2015, with an option to extend for a further two years, subject to customary covenants and terms. The facility is now £10 million (£8 million of which is now available as a revolving credit facility) reducing by £0.5 million tranches every six months to £7.5 million in May 2015. Although the Board remains focused on repaying our debt, this restructured facility strengthens our financial position and provides financing options at a commercial cost and provides more flexibility than the previous arrangement, which was negotiated in early 2009.

Profit before taxation

Profit before tax reduced by 20% to £1.44 million from £1.79 million, being impacted by the restructuring costs of £0.95 million (2011: nil); adjusted profit before tax increased by 29% to £2.68 million (2011: £2.07 million). At constant currency rates, profit before tax would have been higher by approximately £0.16 million.

Taxation

The total tax charge amounted to £0.40 million (2011: £0.45 million), giving an underlying rate of tax of approximately 28% (2011: 25%). The net tax paid in the period was £0.79 million (2011: £0.24 million).

Earnings per share

The restructuring impacted earnings in the period compared to the comparative period and basic earnings per share reduced to 1.7p (2011: 2.2p) although adjusted earnings per share increased to 3.3p (2011: 2.7p). The average number of shares in issue in the period were virtually unchanged at 61.36 million (2011: 60.76 million). The diluted earnings per share were 1.7p (2011: 2.2p) based on potentially dilutive shares outstanding of 0.21 million (2011: 1.35 million).

Cash flow

Cash inflow from operating activities (excluding exceptional items) during the first six months of 2012 amounted to £4.72 million (2011: £4.66 million). Excluding exceptional items, working capital in H1 2012 amounted to an outflow of £0.32 million (2011: inflow of £0.57 million). The operating cash flow in H1 2012 was also impacted by exceptional items of £0.71 million (2011: £0.42 million) following the restructuring in 2012. In the period to end June 2012, we paid a final dividend for 2011 of 1.85 pence per share, which amounted to £1.14 million (2011: £1.04 million).

Balance sheet

The Group's net assets reduced to £43.40 million at June 2012 (Dec 2011: £43.83 million). The level of trade and other receivables, of which the major component is trade debtors, increased to £7.26 million (Dec 2011: £6.14 million). There was a reduction in net debt to £3.92 million at 30 June 2012 from £5.15 million at 30 June 2011, although this was slightly higher than at end December 2011 (£3.40 million) as a result of exceptional payments. The major component of creditors is deferred income, a non-cash liability, which amounted to £13.79 million (Dec 2011: £13.17 million). Provisions of £1.88 million at 30 June 2012 (Dec 2011: £1.74 million), relate to deferred contingent consideration for the acquisition of the non-controlling interest in SiSoft Sarl, onerous contracts and the restructuring provision.

Share capital and treasury stock

During the period, 90,333 shares were issued under employee option schemes. As at 30 June 2012, there were 61,644,037 shares (Dec 2011: 61,553,704 shares) in issue including 225,000 held in treasury (61,419,037 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 0.80 pence per ordinary share (2011: 0.75 pence), which will be paid on 7 November 2012 to shareholders on the register at the close of business on 12 October 2012, reflecting the Board's confidence in the business prospects. The Board intends to maintain a progressive dividend policy reflecting the balance between the investment needs of the business and maintaining an appropriate dividend cover.

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 28 to 30 of the 2011 Annual Report.

Andrew Fabian

Finance Director

Group Income Statement

Group Statement of Comprehensive Income

*Restated for prior year adjustment per note 1

Group Balance Sheet

* Other reserves includes merger reserve of £2,369,000 (2011: £2,369,000) and translation reserve of a surplus of £8,939,000 (2011: £10,308,000). 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 presented in equity.

Notes to the interim financial information

1. This interim report was approved by the Board of directors on 31 July 2012. 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 2011, 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")

IFRS 1 (amendment) First-time adopters - Hyperinflation and removal of fixed dates (not EU endorsed)

IFRS 7 (amendment) Disclosures about transfers of financial assets

IAS 1 (revised) Presentation of Financial Statements

IAS 12 (amendment) Deferred tax - recovery of underlying assets

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 2011 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.

Restatement

As disclosed in our 2011 Annual Report and Accounts, the financial statements were restated to correct prior period deferred tax liabilities in respect of the following:

1. Fair value adjustments on acquisition of development costs and customer contracts; and

2. Timing differences on internally generated intangible assets, specifically capitalised research and development costs.

The 2011 Annual Report and Accounts includes the full details of the adjustments. In this interim report we reflect the adjustments as they would have impacted the H1 2011 comparative results.

At 31 December 2010, goodwill on acquisition increased by £1,034,000 (previously reported as £52,583,000) and the deferred tax liability increased to £1,622,000 (previously reported as nil). The impact to reserves was a decrease in retained earnings of £677,000 (previously reported as £13,190,000) and an increase in the foreign exchange reserve (within other reserves) of £89,000 (previously reported as £12,462,000). The impact on the tax charge for the half year period to 30 June 2011 was a reduction of £62,000. This had the effect of increasing earnings per share from 2.1p per share as previously reported to 2.2p per share as disclosed in note 2.

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 £1.04 million (2011: £1.35 million) and the weighted average number of shares of 61.36million (2011: 60.76 million). The diluted earnings per share were 1.7p (2011: 2.2p) based on potentially dilutive shares outstanding of 0.21 million (2011: 1.35 million).

Adjusted earnings per share are shown in the table below.

*Restated for prior year adjustment per Note 1

3. Revenue analysis

Revenue for the period is analysed as follows:

4. Exceptional items

In the first half of 2012 the exceptional item amounting to £0.95 million relates to severance payments following a restructuring to re-focus the business on Cloud technology. The estimated attributable tax credit on the exceptional charge is £0.27 million. The cash outflow in H1 2012 amounted to £0.71 million. There were no operating exceptional items in 2011. The cash outflow of £0.42 million in H1 2011 related to an exceptional cost provision from 2010.

.

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 2012 compared to the prior year was approximately £0.18 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 debt

Net debt is the total cash and cash equivalents and borrowings, cash and cash equivalents are illustrated below.