StatPro Regulatory News (SOG)

1 Aug 2005 07:00

Statpro Group PLC01 August 2005 For release at 07.00 a.m. Monday, 1 August 2005 STATPRO GROUP PLC ("StatPro", the "Group", or the "Company") Interim results for the six months ended 30 June 2005 StatPro Group plc, the AIM listed provider of portfolio analytics solutions forthe global asset management industry, announces its results for the six monthsended 30 June 2005. Six months ended Six months ended Change 30 June 2005 30 June 2004 RestatedStatutory results (unaudited)Turnover £5.02 million £4.26 million +18%Profit before tax £0.55 million £0.26 million +111%Earnings per share - basicand diluted 1.4p 1.1p +27% Business performance measuresEBITDA (under UK GAAP - see note 3) £0.49 million £0.35 million +42%Cash generated from operations (after investment in developmentactivities - see note 7) £0.33 million £0.03 million +937% Highlights: • Recurring annualised software revenue increased to £9.01 million since year end (Dec 2004: £8.41 million) • Multi-year licence contracts increased to 51% (Dec 2004: 44%) • Further period of positive operating cash inflow with repayment of remaining bank debt of £1.2 million achieved in the period • Balance sheet restructured: • Warrants restructuring completed reducing potential dilution of earnings per share • Share premium account reduced allowing dividend payments out of future profits • On 1 July 2005, Delve Limited, a supplier of enterprise and web reporting solutions to asset managers, was acquired The AIM rules require AIM listed companies to adopt International FinancialReporting Standards ("IFRS") by 2007 at the latest. The Board has decided toadopt IFRS early during the current financial year in order to follow bestpractice. Therefore, these interim results are being reported, and thecomparative results for 2004 have been restated, under IFRS. Commenting on the results, Justin Wheatley, Chief Executive of StatPro said: "StatPro has excellent prospects based on a growing range of products, anexpanding client base and an encouraging new business pipeline. "We look forward to improving our current position during the rest of the yearand beyond. We anticipate continued momentum in revenue and profitability in thesecond half of the current year, reflecting the impact of the new clients won inthe last twelve months." - Ends - For further information, please contact: StatPro Group plc www.statpro.comJustin Wheatley, Chief Executive On 1 August: 020 7360 4900Andrew Fabian, Finance Director Thereafter: 020 8410 9876 SmithfieldReg Hoare/Sara Musgrave 020 7360 4900 Corporate Synergy PlcJustin Lewis/Rhod Cruwys 020 7448 4400 A briefing for analysts will be held at 9.15 for 9.30am today at the offices of Smithfield, 78 Cowcross Street, London, EC1M 6HE High resolution images are available for the media to view and download free ofcharge from www.vismedia.co.uk CHIEF EXECUTIVE'S REVIEW StatPro Group plc is a leading provider of portfolio analytics solutions for theglobal asset management industry with 185 client contracts in 25 countries.StatPro now offers eight products and has grown its annualised recurringsoftware revenue from less than £1 million in 1999 to £9.0 million in 2005. StatPro listed on the London Stock Exchange in May 2000 and was admitted to AIMin June 2003. The Company is headquartered in London and has 103 employees. Highlights We are very pleased to announce our results which reflect the continued progressmade by the Group. We have met our objectives in every area of the business andStatPro today is a very much stronger business than it was three years ago. In the first half of 2005, we have continued to generate operating cash, raisingour rate of revenue growth to 18% and increasing our net operating profit marginto 11.4% from 7.5%. More significantly, our profit before tax has more thandoubled to £0.55 million from £0.26 million. Reflecting our view on the level ofoperating margin that a software business in our sector should be able toachieve, one of our key objectives is to raise net operating profit margin to20% over the next few years. We have tidied up our balance sheet with the warrant swap and successfullyapplied to the Court to reduce the share premium account in preparation to payour maiden dividend. With the acquisition of Delve we have added anotherexcellent product to our range. We continue to see the benefits of ourcross-selling strategy with 51% clients now on multi-year contracts. StatPro'sstaff are of high calibre and their morale is also high with the outlook for theCompany being excellent. We continue to focus on cash and although the first half is normally less cashgenerative than the second, we have improved our position quite significantlyversus last year with a cash inflow from operations (after investment indevelopment activities) of £0.33 million (2004 - £0.03 million). In the earlypart of the year we also repaid our outstanding bank debt of £1.2 million andour net cash position was £1.71 million as at 30 June 2005. This includes theproceeds of £0.54 million received in June when 4.225 million warrants at 80p,which had been exchanged for 1.69 million warrants at 32p, were exercised. Acquisition of DelveOn 1 July 2005 we completed the acquisition of Delve Limited. Delve providesenterprise reporting software. We had previously entered into a marketingarrangement with Delve to sell its products as part of our suite but bothcompanies felt that it would be more beneficial if Delve were part of StatPro sothat Delve's very strong technical team could focus on product development andStatPro could maximise sales. The acquisition falls neatly into StatPro's statedstrategy of buying small, highly focused companies with good products butlimited distribution capacity and then using our network of client relationshipsto promote the product. We feel confident that many of our clients will beinterested in the Delve solution and that sales will develop quickly. Sales New licence sales in the first half have been at the same level as the secondhalf of last year, with Europe continuing to lead the way achieving two thirdsof new sales. This excellent performance was driven by new regulations on riskin Germany, Luxembourg and Italy introduced by local industry regulators. Thesame regulatory impact is now also being seen in Ireland, France and Holland andwe anticipate an increase in sales in these territories in the second half. Wehave also made our first sales of our StatPro Fixed Income system ("SFI") whichnow has a growing order book. The official launch of SFI is planned for January2006, but we have four clients using it in beta form and further clients thatwill also be using a beta version in the fourth quarter of 2005. We believe thatthere is a clear market opportunity for a high quality fixed income attributionsystem such as SFI to take advantage of customer demand, which we intend tograsp - indeed we expect this product to make a growing contribution to revenuesin 2006. Generally, it is our Risk product, SRM, that is leading our sales success at themoment. We now have 20 SRM clients and annual revenues of £1.26 million comparedto £0.93 million at the end of 2004. This strong sales growth is likely tocontinue in Europe based on regulation-based market drivers. However, we arealso seeing a growing interest for the product in markets where there is no suchdriver, based on SRM's powerful analysis of complex instruments such asmortgage-backed securities and structured products of all kinds. It was also encouraging that revenue from professional services increased by 50%to £0.69 million compared with the first half of last year (2004 - £0.46million). Strategy At its core, StatPro's strategy remains to develop strong relationships withasset managers and to grow the number of products each client uses. Thisstrategic approach is achievable due to our tightly focused range of productsthat all perform some form of portfolio analytics, be it performance,attribution or risk. The benefit to our clients is that we can offer a group ofproducts on a far more cost effective basis than if they sourced each productfrom a separate supplier. As of today StatPro offers eight products which have either been developedinternally or acquired in recent years. The Board believes that the intellectualproperty represented by these products is a very valuable asset. In addition to this we have forged a number of relationships with custodianbanks and fund administrators that act as gatekeepers to large numbers of assetmanagers. Our partners need our expertise in analytics as this field is becomingincreasingly complex and rule-bound. UCITS III (a European Union regulationgoverning risk reporting) is the key driver in Europe and we have a considerablepipeline of business as a result. Whilst we concentrate on growing our sales organically, we review opportunitiesto consolidate markets if such acquisitions can be earnings enhancing or provideus with a product that complements our portfolio analytics range. To date wehave been able to make such acquisitions for a relatively modest cost and wherethe integration risk is low, and we will continue to follow this model wherepossible. Outlook StatPro has excellent prospects based on a growing range of products, anexpanding client base and an encouraging new business pipeline. We expect toimprove our margins due to the operational gearing inherent in growing ourrevenues. We expect that continued cash generation will enable investment ingrowth opportunities, such as product acquisitions, product and servicedevelopment, new offices and additional staff, as well as to pay dividends. We look forward to improving our current position over the rest of the year andbeyond. We anticipate continued momentum in revenue and profitability in thesecond half of the current year, reflecting the impact of the new clients won inthe last twelve months. The Board believes that following three years of good cash generation and therestructuring of the Company's balance sheet, dividends can now be paid out offuture profits. I would like to extend, once again, my thanks to all our staff who have workedso hard to make StatPro the solid success that it is today and I look forward toseeing even better results in the future. Justin WheatleyChief Executive OPERATING AND FINANCIAL REVIEW Overview There was a marked improvement in new business achieved in the first half of2005 compared with the comparative period. The combination of improved newlicence business over the past twelve months, a high retention rate, and higherlevels of professional services, resulted in revenue increasing by 18% over thecomparable period in 2004. The Group increased its operating profit to £0.57million (2004 - £0.32 million) and increased the net cash position to £1.71million at the end of June 2005 (2004 - net debt of £0.35 million). The Grouphas now repaid its remaining bank debt amounting to £1.2 million during thefirst two months of the period (whilst retaining the loan facility). The initialconsideration for the acquisition of Delve paid on 1 July 2005 was financed fromexisting cash resources. The balance sheet has been restructured: the warrants issued as part of theflotation were restructured raising £0.54 million and reducing the potentialfuture dilution of earnings per share. The share premium account has been usedto offset the deficit on the profit and loss account in the Company balancesheet allowing dividends to be paid out of future profits. As a result the Groupis in a very robust financial position and the Directors have now established adividend policy. IFRS The AIM rules require AIM listed companies to adopt International FinancialReporting Standards ("IFRS") by 2007 at the latest. The Board has decided toadopt IFRS early during the current financial year in order to follow bestpractice. Therefore, these interim results are being reported, and thecomparative results for 2004 have been restated, under International FinancialReporting Standards ("IFRS"). The primary standards that impact the results forStatPro are as follows: •IFRS 3, Business combinations and IAS 36, Impairment of assets (resulting in goodwill being "frozen" with effect from 1 January 2004 and no longer being amortised but subject to annual impairment reviews) •IAS 38, Intangible assets (resulting in software development costs being capitalised and amortised over the expected useful life of the development) •IFRS 2, Share-based payment (resulting in costs being attributed to the value of share options issued to employees) The impact of these changes compared with the accounting treatment under UK GAAPis summarised in note 1. Further information on the effects of IFRS are includedwithin the relevant commentary within this operating and financial review. Therestated results for the full and half year for 2004 have been reviewed by theGroup's auditors but have not been audited. Also, we understand that theEuropean Union will not formally adopt IFRS until 31 December 2005 and thereforethere may be further amendments to individual standards during 2005. Therefore,whilst we do not expect any material changes it is possible that there may befurther adjustments that arise when we issue our full year audited accounts for2005 under IFRS in 2006. Turnover Turnover increased by 18% to £5.02 million (2004 - £4.26 million). The impact ofexchange rates on turnover and profit were immaterial in the period. Softwarelicence revenue grew by 17% and there was an improvement in the level ofprofessional services revenue of 50%. As anticipated, there was a furtherreduction in other recurring revenues from TAP (StatPro's original product)royalties by 39% albeit this income now represents an immaterial proportion ofrevenues. The split of revenue by type was as follows: ----------- ----------- ----------- Six months to Six months to Year to 30 June 30 June 31 December 2005 2004 2004 £ million £ million £ millionTurnoverSoftware licences 4.22 3.62 7.49Professional services 0.69 0.46 1.21Other recurring revenue 0.11 0.18 0.37 5.02 4.26 9.07 ----------------------- ----------- ----------- ----------- We made 20 sales in the first half of 2005 (2004 - 20), of which nine (2004 -nine) were additional modules or users to existing contracts. Although the levelof sales by number was the same as 2004, the average values were significantlyhigher. The strongest regional market for new business in the first half was inContinental Europe. Our risk product again exhibited the fastest growth rate.The value of the recurring revenue for StatPro Risk Management systems increasedby 35% (42% at constant exchange rates) from £0.93 million at the end ofDecember 2004 to £1.26 million by the end of June 2005. The latest version of StatPro Fixed Income ("SFI") was released to a number ofclients and whilst we do not anticipate significant new business from thisproduct in 2005 we do expect growth in revenue from SFI from 2006 onwards. TheBoard is currently planning to exercise its option at the earliest date(November 2005) to acquire the minority interest in StatPro Australia (thecompany that developed the forerunner to SFI). The consideration will be linkedto revenue levels of SFI and the current estimate is that the cash considerationwill be approximately £0.20 million. The proportion by value of recurring software licences on multi-year contracts(licence agreements with more than one year remaining contractually committed)increased to 51% at the end of June 2005 (2004 - 40%) from 44% at the end ofDecember 2004. The annual value of continuing recurring revenue, which is analysed below,increased to £9.01 million from £8.41 million at 31 December 2004, a growth of9% at constant exchange rates. ------------ ----------- ----------- At 30 June 2005 At 30 June 2004 At 31 December 2004 Annualised Annualised Annualised value value value £ million £ million £ millionRecurring revenuesSoftware licences 9.01 7.54 8.41Other recurringrevenue 0.22 0.42 0.37Total recurringrevenue 9.23 7.96 8.78---------------------- ------------ ----------- ----------- The following table shows the net growth in software licence revenue and theimpact of foreign exchange on the contract values: Annualised At 31 Net New contracted At 30 Six month growthvalue December impact of revenue (net June rate % (at£ million 2004 exchange of cancellations) 2005 constant exchange rates rates) RecurringrevenuesSoftwarelicences 8.41 (0.12) 0.72 9.01 +9--------------- ------- --------- ---------- -------- -------- Operating expenses Operating expenses (before amortisation of intangibles and exceptional item)amounted to £3.84 million in the first half of 2005 (2004 - £3.41 million). Thegrowth in expenses arose mainly from a higher average level of employees, andthe additional costs associated with third party data costs for risk. Development costs The Group continues to increase its investment in research and development, toensure we remain at the forefront of performance and risk analytics technology.Development costs, which under UK GAAP were previously written off, are nowcapitalised under IFRS, where recognition criteria are met. As a result there isnow an intangible asset of £1.84 million (including acquired software)recognised on the Group's balance sheet relating to the carrying value ofprevious developments where the Board expects the benefits to be recoveredthrough incremental revenue from future sales. As a result of the implementationof the change in accounting development costs capitalised in the period to endJune 2005 amounted to £0.81 million (2004 - £0.63 million). The Board hasdecided to amortise its development expenditure over a three year period andtherefore the amortisation of intangibles amounted to £0.60 million for theperiod to end June 2005 (2004 - £0.43 million). The carrying values, which areanalysed by product, are considered carefully by the Board and if there has beenany impairment in any development costs then the carrying value is written downaccordingly. As a result of the implementation of this new standard, there is anet benefit to the profit and loss of £0.21 million in the first half of 2005(2004 - £0.20 million) compared to UK GAAP. Employees The average number of employees during the first six months of 2005 increased to90 (2004 - 83). At the end of June 2005 we had a total of 98 employees, situatedin eight offices (London, Paris, New York, Milan, Frankfurt, Luxembourg, CapeTown and Brisbane). During July, five employees joined with Delve and they havebeen integrated into our existing London office. We are currently planning toopen an office in San Francisco in August to support our growing client base onthe west coast of the US. Share based payments In common with many high-growth technology enterprises, StatPro has issued anumber of share options to executives and employees. Under IFRS, the optionsmust be valued based on a market or estimated market value at inception and thiscost is spread over the option vesting period (generally three years). As thereis no readily available market price for the options the Board has used anindependent model to evaluate the fair value of the options. There are a numberof assumptions which affect the value and the Board has considered carefullythese assumptions in order to derive an appropriate charge for the cost ofoptions. As a result there is a charge of £0.02 million (2004 - £0.02 million)relating to share based payments. There is no cash impact to the Group as aresult of this new accounting standard. Goodwill amortisation Under IFRS, goodwill on acquisitions has been "frozen" with effect from 1January 2004 and is no longer amortised but subject to annual impairmentreviews. Goodwill on acquisitions since 1 January 2004 is reviewed and allocatedto its underlying intangible components. As a result the £64,000 of goodwill forour investment in SiSoft has been categorised as software product costs andamortised over a three year period. Goodwill arising on acquisitions prior to 1January 2004 has been reviewed and to the extent that some of the goodwill wouldnow be deemed to be development costs under IFRS then a reduction to thepreviously reported goodwill has been made and an equivalent increase in thevalue of intangible assets applied. These adjustments result in correspondingadjustments to the goodwill carrying value at 1 January 2004 and theamortisation of intangibles since that date. As a result there is noamortisation of goodwill in the restated accounts for 2004 or the first half of2005. InterestNet interest expense, which results from interest and fees accrued on bank loansand finance leases, less interest earned on cash and deposits, reduced to £0.02million (2004 - £0.06 million) as a result of a significantly lower average debtduring the period. Profit before tax The profit before tax increased by 111% to £0.55 million from £0.26 million. Theadjusted earnings before interest, tax, depreciation, amortisation of goodwilland exceptional items, ("EBITDA"), a performance measure previously reportedunder UK GAAP, amounted to £0.49 million (as shown in note 3) for the six monthsto the end of June 2005 compared to £0.35 million for the comparable period in2004. The full year EBITDA under UK GAAP for 2004 was £0.98 million. Taxation A provision has been made for corporation tax for an overseas subsidiary. It isestimated that the level of further deferred tax that could now be recognised isapproximately equal to the level of deferred tax asset released and the grouplevel of deferred tax recognised therefore remains at £1.47 million. The levelof deferred tax will be reviewed in detail at the end of 2005. Minority Interests There is profit attributable to minority interests in the period amounting to£0.06 million (2004 - loss of £0.12 million). Earnings per share Earnings per share (basic and diluted) increased by 27% to 1.4p (2004 - 1.1p).The adjusted earnings per share (before exceptional items) was unchanged at 1.4p(2004 - 1.4p). For the full year 2004 (which included an exceptional deferredtax credit equivalent to 4.4p per share) the adjusted earnings per share was3.4p. Cash flow There was an improved cash inflow from operating activities before investment indevelopment activities during the first six months of 2005 amounted to £1.14million (2004 - £0.66 million). The investment in development activitiesamounted to £0.81 million (2004 - £0.63 million). As a result, the cash inflowfrom operating activities after investment in development activities increasedfrom £0.03 million to £0.33 million in the first six months of 2005 (see note6). During the period we repaid bank loans amounting to £1.20 million. The proposalto swap the warrants originally issued on flotation in May 2000 for newwarrants, which were then exercised in June 2005, resulted in a reduction ofpotential dilution to shareholders and the proceeds amounted to £0.54 million.In combination with other exercises of employee options a total of £0.56 millionof cash was received on issue of shares in the first half of 2005. Balance sheet The Group's net assets as reported under IFRS increased to £1.89 million (June2004 - net liabilities of £1.27 million) from £0.74 million at 31 December 2004.The level of trade and other receivables, of which the major component is tradedebtors, was lower than the level at the end of December 2004 but increased to£2.15 million at the end of June 2005 compared to last year (June 2004 - £1.93million). The short-term creditors of £6.72 million (June 2004 - £5.72 million)includes deferred income, a non-cash liability, of £5.04 million (June 2004 -£4.37 million). The cash balance at the end of June 2005 was £1.78 million (June2004 - £0.87 million). The Group's net funds at 30 June 2005 amounted to £1.71million (June 2004 - net debt amounted to £0.35 million). Post balance sheet event On 1 July 2005, the Company acquired 100% of the share capital of Delve, aleading supplier of enterprise and web reporting solutions to asset managers,for cash amounting to £0.55 million and deferred consideration of approximatelytwo times the future recurring revenue of the product payable over a three yearperiod. Dividend PolicyStatPro has now had three years of operating cash generation, and the directorsare now implementing a dividend policy. Following the resolution approved at theAnnual General Meeting, the reduction of share premium account against thedeficit on the profit and loss account was confirmed by the Court on 22 June2005, subject to certain conditions, including the establishment of a reserve(currently non-distributable) of £1.69 million. As a result the legal barrier topaying dividends has now been removed and dividends can now be paid out offuture distributable profits. The Board is proposing to introduce a progressivedividend when there are sufficient distributable reserves in the Company where,in each full year, an interim dividend is paid in November with the finaldividend (being the major part of the dividend) declared when the preliminaryresults are announced and paid in late May. Andrew FabianFinance Director Consolidated Profit and Loss Account Notes Unaudited Unaudited Unaudited Six months Six months Year to to to 31 30 June 30 June December 2005 2004 2004 As restated As restated £'000 £'000 £'000Continuing operationsTurnover 5,017 4,258 9,072------------------------- ------- ---------- --------- ----------Operating expenses beforeamortisation of intangiblesand exceptional item (3,841) (3,411) (7,087) Amortisation of intangibles (602) (433) (877)Exceptional item 2 - (93) (93)------------------------- ------- ---------- --------- ---------- Operating expenses (4,443) (3,937) (8,057) Operating profit 574 321 1,015 Interest receivable 10 8 22Interest payable (30) (66) (139) Profit before taxation 554 263 898 Taxation 2, 4 (9) (4) 1,435 Profit for the period fromcontinuing operations 545 259 2,333 Profit/(loss) attributable tominority interests 61 (115) (163)Profit attributable to equityshareholders 484 374 2,496Profit for the period 545 259 2,333 Earnings per share fromcontinuing operations - basic 5 1.4p 1.1p 7.5p- diluted 5 1.4p 1.1p 7.4p Statement of Recognised Income and Expense Unaudited Unaudited Unaudited Six months to Six months to Year to 30 June 30 June 31 December 2005 2004 2004 £'000 £'000 £'000 Profit after tax 545 259 2,333Net exchange differences offsetin reserves net of tax 11 35 (11)Share based payments 23 16 31Gain from warrant conversion 66 - - Total recognised gains andlosses for the period 645 310 2,353 Consolidated Balance Sheet Notes Unaudited Unaudited Unaudited As at As at As at 30 June 30 June 31 December 2005 2004 2004 As restated As restated £'000 £'000 £'000 Non current assetsGoodwill 708 708 708Intangible assets 1,835 1,438 1,624Property, plant and equipment 468 527 509Other receivables 285 285 286Deferred tax assets 1,472 - 1,472 4,768 2,958 4,599 Current assetsTrade and other receivables 2,145 1,935 2,350Cash and cash equivalents 1,775 870 2,149 3,920 2,805 4,499 LiabilitiesCurrent liabilitiesFinancial liabilities - (41) (35) (40)borrowingsTrade and other payables (1,637) (1,294) (1,723)Current tax liabilities (5) (18) (7)Deferred income (5,035) (4,374) (5,289) 6 (6,718) (5,721) (7,059) Net current liabilities (2,798) (2,916) (2,560) Non-current liabilitiesFinancial liabilities - (22) (1,186) (1,211)borrowingsDeferred income (63) (130) (85) (85) (1,316) (1,296) Net assets/(liabilities) 1,885 (1,274) 743 Shareholders' equityOrdinary shares 350 331 332Share premium 903 8,559 8,562Warrant reserve 2 424 424Other reserve * 1,695 - -Retained earnings (893) (10,403) (8,342) Total shareholders'equity/(deficit) 2,057 (1,089) 976Minority interest in equity (172) (185) (233) Total equity/(deficit) 1,885 (1,274) 743 * The Other Reserve is currently non-distributable Consolidated Cash Flow Statement Unaudited Unaudited Unaudited Six months to Six months to Year to 30 June 30 June 31 December 2005 2004 2004 As restated As restated £'000 £'000 £'000Cash flows from operating activitiesCash generated from operations 1,145 663 2,717Interest received 7 6 16Interest paid (5) (81) (99)Issue costs in respect of bank loan (5) (5) (5)Tax paid (11) - (44) Net cash from operating activities 1,131 583 2,585 Cash flows from investing activitiesAcquisition of subsidiaries (net ofcash acquired) - 14 14Investment in intangible assets -development costs (813) (631) (1,261)Proceeds from sale of property,plant and equipment 22 - -Purchase of property, plant and equipment (87) (88) (175) Net cash used in investing activities (878) (705) (1,422) Cash flows from financing activitiesRepayment of bank loan (1,200) (300) (300)Repayment of convertible loan - (1,000) (1,000)Proceeds from issue of ordinaryshares 564 - 4Capital element of finance leasepayments (2) (3) (7) Net cash used in financing activities (638) (1,303) (1,303) Effects of exchange rate changes 11 3 (3) Net decrease in cash and cashequivalents (374) (1,422) (143) Cash and cash equivalents at startof period 2,149 2,292 2,292 Cash and cash equivalents at end ofperiod 1,775 870 2,149 Reconciliation of operating profit to net cash flow from operating activities Unaudited Unaudited Unaudited Six months to Six months to Year to 30 June 2005 30 June 2004 31 December 2004 As restated As restated £'000 £'000 £'000 Operating profit 574 321 1,015Depreciation of tangiblefixed assets 103 113 221Amortisation of intangibles 602 433 877Decrease in debtors 206 806 389Increase/(decrease) in creditors (excluding deferred income) (86) (345) 38Movement in deferred income (276) (681) 146Share based payments 23 16 31Profit on disposal of fixed asset (1) - -Net cash generated from operations 1,145 663 2,717----------------------------- -------- -------- --------- Reconciliation of net cash flow to movement in net debt Unaudited Unaudited Unaudited Six months to Six months to Year to 30 June 2005 30 June 2004 31 December 2004 As restated As restated £'000 £'000 £'000 (Decrease)/increase in cash and cash equivalents in the period (374) (1,422) (143)Movement of finance leases (4) 3 7Convertible loan repayment - 1,000 1,000Bank loan repayment 1,200 300 300Debt assumed on acquisitionof SiSoft - (30) (30)Other non-cash movements (8) (5) (39)Movement in net debt 814 (154) 1,095Net cash/(debt) at beginningof period 898 (197) (197)Net cash/(debt) at end of period 1,712 (351) 898----------------------------- -------- -------- --------- The difference between the net decrease in cash and cash equivalents reportedabove under IFRS and the amount reported/restated under UK GAAP relates to thewider definition of cash and cash equivalents which under IFRS includes moneymarket deposits. Notes to the interim accounts 1. Reconciliation between UK GAAP and IFRS Reconciliation of Profit after tax for the period between UK GAAP and IFRS Six months Six months Year to to 30 June to 30 June 31 December 2005 2004 2004 Profit after tax- UK GAAP 237 (112) 1,597 Investment in intangible 813 631 1,261assets - development costsAmortisation of intangibles (602) (433) (877)Amortisation of goodwill 120 189 383Share based payments (23) (16) (31) 308 371 736Profit after tax- IFRS 545 259 2,333-------------------- -------- -------- ------- ------- ------- -------- Reconciliation of Capital employed and Total equity/(deficit) between UK GAAPand IFRS Unaudited Unaudited Unaudited As at As at As at 30 June 30 June 31 December 2005 2004 2004 As restated As restated Capital employed - UK GAAP (308) (2,786) (1,119)Investment in intangible assets -development costs 1,757 1,310 1,521Intangibles acquired - software acquired 78 128 103Goodwill adjustment 358 74 238 Total equity/(deficit) - IFRS 1,885 (1,274) 743---------------------- ----------- --------- ---------- Reconciliation of Retained earnings between UK GAAP and IFRS Unaudited Unaudited Unaudited As at As at As at 30 June 30 June 31 December 2005 2004 2004 As restated As restatedRetained earnings - UK GAAPOpening position - UK GAAP (10,204) (11,953) (11,953)Development costs - opening position 1,521 1,098 1,098Goodwill - opening restatement 383 - -Goodwill - fair value adjustment - 30 -Intangibles - opening restatement (42) (3) (3)Opening position - IFRS (8,342) (10,828) (10,858)Total recognised gains and losses forthe 645 310 2,353periodTransfer from share premium 6,865 - - (832) (10,518) (8,505)Minority interests (61) 115 163Retained earnings - IFRS (893) (10,403) (8,342)---------------------- ----------- --------- ---------- 2. Exceptional item. There were no exceptional items in the first half of 2005. The exceptional item of £0.09 million in 2004 relates to compensation for loss of office and related expenses. In the full year results for 2004 there was an exceptional deferred tax credit of £1.47 million. 3. Adjusted earnings before interest, tax, depreciation, amortisation of goodwill ("EBITDA") Unaudited Unaudited Unaudited Six months to Six months to Year to 30 June 2005 30 June 2004 31 December 2004 As restated As restated £'000 £'000 £'000 Profit/(loss) after tax - UK GAAP 237 (112) 1,597Tax 9 4 (1,435)Interest 20 58 117 Operating profit/(loss) - UK GAAP 266 (50) 279Depreciation of tangible fixed assets 103 113 221Amortisation of goodwill 120 189 383Exceptional operating item - 93 93 EBITDA - UK GAAP 489 345 976--------------------------- -------- -------- ---------- 4. Taxation. A provision has been made for corporation tax for an overseas subsidiary. It is estimated that the level of further deferred tax that could now be recognised is approximately equal to the level of deferred tax asset released and the Group level of deferred tax recognised therefore remains at £1.47 million. In the full year results for 2004 there was an exceptional deferred tax credit amounting to £1.47 million. 5. Basic earnings per share. Basic earnings per share has been calculated based on the profit after taxation and minority interests of £0.48 million (2004 - £0.37 million) and the weighted average number of shares of 33,407,258 (June 2004 - 33,089,244). The diluted earnings per share in 2005 are 1.4p (2004 - 1.1p) based on potentially dilutive shares outstanding amounting to 453,970 (2004 - 377,747). 6. Creditors - amounts falling due within one year. The largest component of short-term creditors relates to deferred income, which is a non-cash liability, as shown in the following analysis: Unaudited Unaudited Unaudited As at As at As at 30 June 2005 30 June 2004 31 December 2004 As restated As restated £'000 £'000 £'000 Bank loans and finance leases 41 35 40Trade creditors 464 369 394Corporation tax 5 18 7Other creditors and accruals 810 577 827Other tax and social security 363 348 502Deferred income 5,035 4,374 5,289 6,718 5,721 7,059 7. Cash generated from operations - reconciliation from statutory heading to business performance measure Unaudited Unaudited Unaudited As at As at As at 30 June 2005 30 June 2004 31 December 2004 As restated As restated £'000 £'000 £'000Cash generated from operations 1,145 663 2,717Investment in intangible assets - development costs (813) (631) (1,261)Cash generated from operations after development costs 332 32 1,456 8. The financial information set out in this interim statement 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 2004 except that adjustments have been made to reflect changes in accounting standards from UK GAAP as a result of the introduction of IFRS. This interim statement has not been audited but has been reviewed by the Company's auditors PricewaterhouseCoopers LLP. 9. The financial information does not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985. Statutory accounts for StatPro Group plc for the year ended 31 December 2004 reported under UK GAAP, on which the auditors gave an unqualified opinion, have been delivered to the Registrar of Companies. The figures presented here for 2004 have been restated under IFRS. 10. Copies of this statement will be posted 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. This information is provided by RNS The company news service from the London Stock Exchange