Final Results

For Release at 07.00 Wednesday, 12 March 2014

STATPRO GROUP PLC

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

Preliminary Results for the Year ended 31 December 2013

StatPro Group plc, (AIM:SOG), the AIM listed provider of cloud-based portfolio analysis and asset pricing services for the global asset management industry, today announces its unaudited preliminary results for the year ended 31 December 2013.

Highlights:

· StatPro Revolution annualised recurring revenue increased by 114% to £3.20 million at 31 December 2013 (2012: £1.49 million**), ahead of expectations

· StatPro Revolution related recurring revenue*** increased to £9.19 million at 31 December 2013 (2012: £3.92 million**), representing 37% of total software recurring revenue (2012: 16%**)

· StatPro Revolution now has 34 fund administrator partners (2012: 21), a key strategic target market

· Adjusted EBITDA lower at £5.46 million (2012: £6.73 million), mainly due to increased spending on StatPro Revolution

· Increase in Group net cash to £4.00 million at 31 December 2013 (2012: £3.67 million)

· Release of key new features for StatPro Revolution in 2013, including the UCITS module and enhanced sharing

· Good progress on StatPro R+ development, with beta launches during 2013

* Adjusted EBITDA and adjusted earnings per share are EBITDA and earnings per share after adjustment for amortisation of acquired intangible assets, share based payments and exceptional items (notes 5 and 7)

** Annualised recurring contract revenue is the annual value of revenue contractually committed at year end. Comparative is at constant currency.

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

Justin Wheatley, Chief Executive, commented: 

"This has been a year of considerable progress for the Group as StatPro Revolution begins to gain traction in terms of clients, users and revenue. We see evidence of escalating momentum and, as the word spreads throughout the market, the pipeline of new business opportunities continues to grow. It has been our view from early on that the productivity gains possible through new cloud technology will cause significant change in our market. The significant investments we have made in recent years mean we are well positioned to take advantage of this shift and with a clear roadmap and growing momentum we look forward to 2014 and beyond."

- Ends -

For further information, please contact:

A briefing for analysts on the results will be held at 2.30pm 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 £29 million at 31 December 2013. 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 450 clients in 36 countries around the world. Approximately 80% of recurring revenues are generated outside the UK.

Chief Executive's Review

We are pleased with the excellent progress achieved during the year in transforming our business to a purely cloud-based analytics provider. We have seen a significant increase in our existing clients signing up to StatPro Revolution as the word spreads about its unique capabilities to help asset managers increase sales, improve their client service, comply with regulations and reduce their costs. It is our view that we can help clients greatly reduce the complexity of their client reporting process by replacing old technology with new.

The number of clients using StatPro Revolution grew to 257 in 33 countries by year end (2012: 156 in 22 countries) and StatPro Revolution recurring revenue increased by 114% to £3.20 million (2012: £1.49 million). We successfully grew the number of our fund administrator partners to 34 by year end (2012: 21). Fund administrators are core partners, ensuring that we can provide our clients with a smooth implementation process of StatPro Revolution.

Financial Highlights

We are pleased to report that revenue for 2013 increased to £32.49 million (2012: £32.00 million). As expected, our profits before tax reduced to £3.11 million (2012: £3.78 million) following increased investment in development, sales and client services for our cloud services. Cash generated from operations was lower at £9.40 million (2012: £10.18 million), but our net cash position at the end of the year increased to £4.00 million (2012: 3.67 million). Adjusted earnings per share reduced to 4.5p (2012: 5.9p) and the Board has recommended an increase in the full year dividend to 2.8p per share (2012: 2.7p).

A key performance indicator is the measure of the total value of contracts we have with clients who have also subscribed for StatPro Revolution. This grew by 134% to £9.19 million (2012: 3.92 million) and represents 37% (2012: 16%) of our total recurring software revenues, a strong indication that we are making good progress in demonstrating to our existing clients the benefits of StatPro Revolution. Total annualised recurring revenues grew to £28.72 million (2012: £28.47 million). There was a reduction in revenues from StatPro Seven to £24.02 million (2012: £24.60 million) and data revenues to £4.21 million (2012: £4.69 million), counteracted by an increase in StatPro Revolution subscriptions generating overall growth.

Strategic focus

Our three areas of focus are: existing clients, fund administrators and the growing private wealth market. Our existing clients are a readymade market place for StatPro Revolution and we are making steady progress in this area. We believe that in the course of 2014, as we add functionality to StatPro Revolution, we will see an even greater uptake. 

Fund administrators are a key focus for us as they hold the investment book of record for many asset managers. This means that once they have built an automated data connection to StatPro Revolution, adding more of their clients is a relatively straightforward process. It is our view that fund administrators will win a growing market share of the performance reporting market as outsourcing this function is an economically logical action for most asset managers.

However, we also think that our combined solution of StatPro R+ and StatPro Revolution will enable fund administrators to offer a more flexible, more responsive and more sophisticated service than they could do otherwise, due to our leading-edge technology.

Lastly, the private wealth market offers us many opportunities. This is in part because it is relatively under-serviced in the area of sophisticated analysis, yet the companies in this market are quick to adopt any tool that will give them an advantage over rivals. It is also a growing trend among the larger asset managers to merge their asset management and private wealth businesses, to reap economies of scale and provide institutional investment skills to the private wealth market. Such organisations need and want self-service solutions like StatPro Revolution in the same way that banks have adopted online banking: they effectively outsource the responsibility of reporting to the individual client and cut costs significantly. We already have a number of large private banks as clients of StatPro Revolution and we believe that we can grow our revenues in this area.

Business transformation

The biggest challenge for StatPro is the business transformation from supplier of traditional software solutions to a new cloud-based service provider. It has been our view from early on that the economic reality of the productivity gains possible through new cloud technology will cause significant change in our market. The complexity of old processes will be swept away and replaced with entirely new technology platforms. One very large asset manager client has a project to replace 100 separate back-office systems with just one cloud solution. We believe that this type of project will happen increasingly frequently and StatPro is well placed to take advantage of this as we have made the necessary and significant investments to do so.

As we have said before, it will take a number of years to complete the business transformation, where most of our clients have wholly or partly migrated to StatPro Revolution and StatPro R+, but we believe we remain on track to achieve a successful transformation.

Reinventing the performance reporting process

With the launch of the beta version of StatPro R+ in 2013 and its combination with StatPro Revolution, we believe that our new technology will make asset managers rethink how they structure their performance teams. Data management has become a massively labour intensive and complex task for many organisations and StatPro R+ offers a means of greatly simplifying this as well as offering significant increases in scale and speed. Our new technology will make it practical for organisations to operate client reporting on a daily basis rather than the current industry standard of monthly reporting. The issues of checking data and getting sign-off by the compliance function are also dealt with in an efficient and transparent way. It is also possible to offer more detailed analysis for smaller portfolios, such as private wealth, and consequently expand the number of reported portfolios.

On the information distribution side, asset managers are increasingly realising that the self-service model of client reporting is the strategic route they must adopt. Sending out standard reports, which are known to be neither wanted nor understood, is a very unproductive activity. On the other hand, a solution like StatPro Revolution, where, subject to permission, you can see which clients have logged on and when and what type of analysis they were interested in, provides invaluable intelligence, as well as being much cheaper to run. This is a radical turning point for the industry, and StatPro is well placed to profit from this evident market trend.

Development

There were several significant version releases of StatPro Revolution in 2013. At the start of the year we launched our very popular stock-level attribution analysis. We followed that with the launch of our first premium module in May 2013 for UCITS reporting. This has proven popular and now represents about 6% of StatPro Revolution recurring revenue. In the second half of 2013, we focused on adding extra sharing functionality so that clients can share precisely what they want within StatPro Revolution, including specified portfolios and time periods. This means that a mutual fund company can share information on its funds up to a particular date, avoiding revealing its current position, whilst being transparent to its distributors and investors. It also greatly simplifies the management of the process.

In 2014, we have an ambitious schedule of development, starting with the release of our AIFMD module which is a complement to our UCITS module. All alternative investment fund managers ("AIFM") in the EU must comply with the new directive which stipulates how they report on their derivatives exposure. Our new module provides a simple and cost effective way to achieve this and we expect it to receive a good level of uptake. Following this, we intend to deliver an extended fixed income attribution module for which we have significant demand as well as add to the risk management capabilities of StatPro Revolution. With these two developments, we will be able to offer existing clients (approximately 55) of StatPro Seven fixed income and risk modules (SFI & SRM) a functionally superior upgrade.

People

I would like to thank all our employees for the great work they have done in 2013. Transforming a business is not easy, but everyone has made a great effort to contribute to the process, and I also know that everyone is very proud of the new products and services that we offer.

Dividend

In line with our policy of paying a progressive dividend, which aims to balance return to investors with our investment needs, we are pleased to announce an increase in our full year dividend to 2.8p per share in 2013 (2012: 2.7p).

Outlook

As StatPro Revolution begins to gain critical mass in terms of clients, users and revenue, we believe that the next steps become clearer. As our clients use StatPro Revolution more, we note the pick-up of additional subscriptions, with approximately one third of revenues coming from repeat purchases. As our clients begin to share their portfolios with others outside their companies, we note that we have more in-bound calls from prospects. As we get more practised at selling StatPro Revolution, we see our pipeline of opportunities growing steadily. As our products add more functionality and capacity, we can cover more needs of asset managers. For all these and other reasons we believe that 2014 will be a good year for StatPro.

Justin Wheatley

Chief Executive

Financial Review

Overview

During 2013, we have continued to invest in transforming StatPro into a pure cloud solution business. We have increased investment in several areas of the business with a focus on sales operations, client services, development and cloud infrastructure. The annualised contracted revenues of cloud-based StatPro Revolution have grown by 114% (at constant currency) to £3.20 million (2012: £1.49 million). The increased expenditure on cloud services (StatPro Revolution) coupled with the reduction in software licence revenues and data overagefrom our non-cloud activities (StatPro Seven and Data) has resulted in a reduction in adjusted EBITDA to £5.46 million (2012: £6.73 million), as expected. We also increased our StatPro Revolution related recurring revenue (defined as the total recurring revenue from clients whose subscription includes StatPro Revolution) to £9.19 million (2012: £3.92 million), giving us confidence that the transition is progressing well with existing clients.

The underlying adjusted EBITDA (at constant currency) is shown in the table below.

Underlying performance

Key performance indicators

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:

*at constant currency

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

Revenue

Overall, Group revenue increased by 2% (at constant currency and at actual rates) to £32.49 million (2012: £32.00 million).

Revenue by segment

Revenue increased in the EMEAA region by 2% (at constant currency and at actual rates) to £20.45 million (2012: £20.08 million). In the North American region revenue increased by 1% (2% at constant currency) to £12.04 million (2012: £11.92 million) as shown below.

Revenue by type

StatPro Seven software licence revenue fell by 2% (at constant currency and at actual rates) to £24.02 million (2012: £24.60 million) as we focus our efforts on cloud technology and not proactively selling non-cloud solutions. This was offset by an increase in StatPro Revolution revenue by 204% to £2.19 million (2012: £0.72 million). Data fees fell by 10% (9% at constant currency) for the year to £4.21 million (2012: £4.69 million) as expected due to a lower level of data overage. Professional services revenue increased by 4% to £2.07 million (2012: £1.99 million).

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

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 (94%) of total revenue (2012: 94%). The annualised recurring revenue from software licences and data fees at the end of December 2013 increased by 1% at constant currency to £28.72 million (2012: £28.47 million). The net growth rate for StatPro Revolution was 114% (2012: 234%) and the net cancellation rate for StatPro Seven/Data was 5% (2012: 0%). New contracts signed in the year were £3.24 million (2012: £3.11 million).

Approximately 77% of new recurring contracted revenue arose from existing clients (2012: 71%). The proportion by value of recurring software licences and data clients at the end of 2013 secured to the end of 2014 or beyond amounted to 78% (2012: 81%); the weighted average length of contracts committed was 16 months (2012: 17 months).

Recurring revenue relating to StatPro Revolution is now 11% of the Group total and it is growing at a higher rate as the service is developed on a highly scalable technology platform. The total recurring revenue from clients whose subscription includes StatPro Revolution was £9.19 million (2012: £3.92 million) representing 37% (2012: 16%) of our total software recurring revenue, a KPI we are focused on increasing.

The revenue distribution profile for StatPro Revolution is as follows:

*at constant currency

Operating expenses (before amortisation of intangible assets and exceptional items) increased by 7% (8% at constant currency) to £24.71 million (2012: £23.02 million). The increase in expenditure related to several areas of the business, mainly sales operations, client services, development and cloud infrastructure. The average number of employees was 249 (2012: 253), although we ended the year with 255 employees, up 5% in the year (2012: 242).

Exceptional items

As previously announced, the Board decided to agree an out-of-court settlement in relation to the SiSoft acquisition contingent consideration dispute, and as a result there is an exceptional charge of £0.35 million. There is no tax deduction available as it is a capital item. Further details are provided in note 4. The exceptional item in 2012 of £0.98 million relates to the one-off charge for restructuring in January 2012.

Adjusted operating margin

As a result of increased investment in cloud technology and the growth of our sales and client services teams, the operating profit reduced to £3.39 million (2012: £4.28 million). The adjusted operating profit also reduced by 22% year on year to £4.33 million (2012: £5.53 million) as shown in note 5, with the adjusted operating margin reducing to 13.3% (2012: 17.3%). The adjusted EBITDA (note 5) reduced by 19% to £5.46 million (2012: £6.73 million).

Research and development and capex

The research and development team is now focused solely on cloud-based solutions, StatPro Revolution and StatPro R+ (the cloud upgrade path for StatPro Seven). Research and development expenditure increased overall by 6% to £4.44 million (2012: £4.18 million), equating to 14% of Group revenue (2012: 13%). The total expenditure on StatPro Revolution (and R+) including marketing and other costs was £4.92 million (2012: £3.70 million).

Development costs of £3.40 million were capitalised in the year (2012: £3.21 million) and amortisation on internal development increased to £3.40 million (2012: £3.06 million). Expenditure on other intangible assets was £0.08 million (2012: £0.34 million) and total capital expenditure on property plant and equipment was £0.93 million (2012: £0.64 million).

Finance income and expense

Net finance expense reduced to £0.27 million (2012: £0.49 million), and is mainly the finance costs of our currently unutilised credit facility.

Profit before tax

Profit before taxation decreased by 18% to £3.11 million (2012: £3.78 million). After adjusting for amortisation of acquired intangible assets, share based payments and exceptional items, the adjusted profit before taxation reduced by 20% to £4.05 million (2012: £5.04 million). The impact of currency movements increased adjusted profit before taxation by £0.29 million (i.e. approximately 9% impact).

Taxation

The tax charge is £1.03 million (2012: £1.10 million). The underlying tax rate (before the impact of exceptional item) is around 30% and the overall effective tax rate is 33% (2012: 29%). This is higher than the prevailing UK rate largely due to unrelieved losses in our development company StatPro International Sarl and also the impact of the non-deductible exceptional increase in SiSoft deferred consideration.

Earnings per share

Basic earnings per share decreased by 28% to 3.1p (2012: 4.3p). Diluted earnings per share decreased to 3.1p (2012: 4.3p) based on 0.07 million (2012: 0.25 million) potentially dilutive shares outstanding. Adjusted earnings per share (note 7) reduced by 24% to 4.5p (2012: 5.9p).

Balance Sheet

The Group's net assets reduced to £46.91 million (2012: £49.62 million), mainly as a result of a reduction in goodwill due to currency translation movements.

Cash flow and financing

2013 was another year of positive cash generation with cash inflow from operating activities (before exceptional payments) of £9.40 million (2012: £10.18 million). The Group ended the year with net cash of £4.00 million (2012: £3.67 million). The Group nevertheless retains its long-term financing facility which was undrawn at 31 December 2013.

Dividends

The directors are recommending an increased final dividend of 1.95p per share (2012: 1.9p) making a total dividend for 2013 of 2.8p per share (2012: 2.7p). The final dividend will be paid on 21 May 2014 to all shareholders on the register at the close of business on 25 April 2014. Total dividends paid in 2013 amounted to £1.86 million (2012: £1.63 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. When proposing the dividend, the Board satisfies itself that the current and projected level of dividend cover is appropriate. The dividend cover (calculated as adjusted eps: dividends per share) was 1.6 times (2012: 2.2).

Principal risks and uncertainties

The principal business risks and uncertainties affecting the Group are described in the Annual Report. For each category of risk, the directors have identified means by which the risk can be managed or reduced in a cost effective way, whilst accepting that some risks cannot be completely eliminated.

Andrew Fabian

Finance Director

GROUP INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2013

(Unaudited)

GROUP STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2013

(Unaudited)

GROUP BALANCE SHEET AS AT 31 DECEMBER 2013

(Unaudited)

GROUP STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2013

(Unaudited)

GROUP STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE YEAR ENDED 31 DECEMBER 2013

(Unaudited)

Other reserves include merger reserves of £2,369,000 (2012: £2,369,000) and translation reserve of £5,281,000 (2012: £8,407,000). 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.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

1. Announcement

This announcement was approved by the Board of directors on 11 March 2014. The preliminary results for the year ended 31 December 2013 are unaudited. The financial information set out in this announcement does not constitute the Company's statutory accounts for the years ended 31 December 2013 or 31 December 2012. 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 2012. 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 2012 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 2012 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"). The Group Executive Board considers the business to be split into two primary geographical markets: EMEAA and North America. 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. 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.

For the year ended 31 December 2013:

For the year ended 31 December 2012:

3 Operating expenses

4 Exceptional items

2013 - Increase in contingent consideration for SiSoft

As announced in July 2013, the Board agreed an out-of-court settlement on the SiSoft acquisition contingent consideration, and as a result there is an exceptional charge of £0.35 million in 2013, and a remaining liability of £0.73 million.

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 contingent consideration and the matter has been progressing through the French courts.

Contingent consideration - partial settlement

Under the formula stipulated by the acquisition agreements, the contingent consideration was originally estimated at approximately €1.6 million (£1.3 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 on-going dispute. The offer was accepted by representatives of 55% of the non-controlling shareholders in SiSoft and, as a result, €1.16 million (£0.99 million) was paid in July 2013.

Remaining interest

The Court has now made a provisional judgment regarding the remaining 22% 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 contingent consideration payable to the 22% 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 (£0.35 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. Refer to note 10 for more detail.

2012 - Restructuring costs

The exceptional item in 2012 of £0.98 million was the one-off charge associated with the restructuring in January 2012 to re-focus the business on Cloud technology.

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

In order to provide the reader of the accounts with profit measures that more clearly demonstrate the underlying business performance from year to year a number of adjusted profit measures are shown below.

Adjusted profit before taxation

Adjusted operating profit

Adjusted EBITDA

Free cash flow

6 Taxation

The tax impact of the exceptional items is as follows:

The tax on the Group's profit before tax differs from the standard rate of corporation tax in the UK of 23.5% (2012: 24.5%) as follows: