Interim Results

4th Aug 2008 07:00



For release at 07.00 a.m.

Monday, 4 August 2008

STATPRO GROUP PLC

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

Interim results for the six months ended 30 June 2008 

StatPro Group plc, 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 2008.  

	Six months ended 30 June 2008	Six months ended 30 June 2007	Change
Revenue	£13.07 million	£11.32 million	+15%
Profit before tax	£1.02 million	£1.86 million	-45%
Adjusted profit before tax*	£1.90 million	£2.09 million	-9%
Adjusted EBITDA*	£2.92 million	£2.71 million	+8%
Adjusted operating margin*	20.1%	22.2%
Annualised recurring contract value	£23.78 million	£18.81 million	+26%
Earnings per share - basic	1.6p	3.0p	-47%
- adjusted*	3.1p	3.4p	-9%
Interim dividend per share	0.50p	0.45p	+11%

Highlights:

Underlying professional services revenue** up by 80% to £1.67 million (2007: £0.93 million)

Adjusted EBITDA up 8% and underpinned by stronger recurring revenue element

Continued solid cash generated from operations amounting to £3.42 million (2007: £2.89 million)

Net debt reduced to £16.2 million from £17.1 million (following acquisition of Performa in February)

Exceptional restructuring charge in H1 2008 of £0.56 million (2007: nil) relating to integration of Performa and other initiatives resulting in £1.0 million of projected annualised cost savings

Investment in integrated Index products and Complex Asset Pricing service showing early promise

* adjusted for exceptional items and amortisation of acquired intangibles (see note 4)

** revenue adjusted for JSE integration and real time revenue in 2007

Commenting on the results, Justin Wheatley, Chief Executive of StatPro said: "We believe that StatPro's robust business model puts us in great stead during difficult market times. Despite benign conditions during the first half of the year, it is now the view of the Board that our market is likely to experience a worsening in trading conditions in the second half. 

 

Whilst we cannot affect the macro-economic environment, we will do everything we can to maximise our own opportunities."

 

- Ends -

For further information, please contact: 

StatPro Group plc	www.statpro.com
Justin Wheatley, Chief Executive	On 4 August: 020 7360 4900
Andrew Fabian, Finance Director	Thereafter: 020 8410 9876
Smithfield
Reg Hoare/ Will Henderson	020 7360 4900
Arbuthnot Securities Limited
Tom Griffiths/Alasdair Younie	020 7012 2000

A briefing for analysts will be held at 11.15 for 11.30am today at the offices of 

Smithfield, 10 Aldersgate Street, London, EC1A 4HJ

High resolution images are available for the media to view and download free of charge from www.vismedia.co.uk

About StatPro

Notes to Editors: StatPro Group plc is a leading provider of portfolio analytics and data solutions for the global asset management industry. StatPro floated on the London Stock Exchange in May 2000 and transferred its listing in June 2003 to AIM. StatPro has grown its recurring revenue from less than £1 million in 1999 to £23.8 million at end June 2008.

  CHIEF EXECUTIVE'S REVIEW

StatPro performed well in the first half of 2008. Revenue was up by 15% to £13.07 million (H1 2007: £11.32 million) and sales of new software and data contracts were up 73% to £2.02 million (H1 2007: £1.17 million). However, profits were down in the first half by 45% to £1.02 million (H1 2007: £1.86 million), principally due to an exceptional charge related to the integration of Performa and the restructuring of our JSE team. In addition, with higher interest charges our profit before tax on an adjusted basis was also down by 9% to £1.90 million (H1 2007: £2.09 million), but adjusted EBITDA was up 8% to £2.92 million (H1 2007: £2.71 million).  Most importantly, the value of our recurring annual contracts increased 26% to £23.78 million (June 2007: £18.81 million). 

There are currently mixed signals from the market about what conditions will be like over the next six months, but it has become clear recently that achieving the expected new business level in the second half will be a much more challenging task. For that reason, we are planning the business on the basis of a more cautious outlook: putting on hold budgeted expansion of our cost base and also cautioning that current expectations could be difficult to meet should new sales slow down. 

We believe that StatPro's robust business model puts us in great stead during difficult market times. Furthermore, we believe we are in a position to offer our clients many ways to save money through consolidation of services. One new service is our Index service and we will also be making a concerted effort to move our existing clients to our "Software as a Service" (SaaS) model, thus saving on their IT costs. Another new service that looks likely to do well is our Complex Asset Pricing service that we have just launched.

Operations

The main events in the first half of 2008 were the acquisition of Performa Consultants UK Limited ("Performa") and the migration of the Johannesburg Stock Exchange ("JSE") development team from Toronto to Cape Town. Both these events went well and are expected to deliver cost savings of at least £1.0 million per annum. We were very pleased to enter into a profitable five year contract with JSE to deliver their new back office system with a dedicated team of nine people. It is also much easier to provide support now the whole team is based in South Africa. 

We have continued to expand our North America sales team and have opened a new office in Boston. Whilst we still maintain a small office in New York, we have decided that strategically it makes more sense for us to base our planned growth in the vital US market in Boston, and we now have 10 employees there. We believe that our new products will give us the opportunity to increase our addressable market in the US and so fuel our growth.

We have appointed a new CEO to run our Australian business and he is due to join in October. We believe that Australia offers us significant growth opportunities similar to our successful South African business. We also intend to branch out into Asia now that we are able to offer SaaS type products which greatly reduce the cost of local support and sales.

We completed the move of our Montreal office earlier in the year (having moved our Toronto office late last year) and we have invested significantly in infrastructure that will aid our growth over the coming years. Importantly both our Toronto and Montreal offices have large capacity hosting facilities that will allow us to provide our clients with a variety of SaaS solutions and we are looking to increase significantly the number of SaaS clients from the current 20.

The result of this reorganisation is that StatPro is in good shape to grow further and develop new services for our clients in a more efficient manner.

Acquisition

Performa, a supplier of GIPS compliance software, which was acquired on 20th February 2008, has been fully integrated into StatPro and we have already made some additional sales on the back of the acquisition. There are some significant one off costs associated with the integration, but the annual savings compensate for this. Our next challenge is to transfer our clients onto one single platform for our GIPS solution as we now have two products. The strategy has been agreed and the development will take approximately 18 months to complete.

Strategy

We are about to launch our full Index Service which means we will be able to offer our clients an integrated solution for their analytics needs rather than just a software solution. Our objective is to offer clients more services so that they can reduce their costs. We believe this will help drive our business significantly as it also reduces the complexity of support and upgrades, whilst increasing case size. 

Cross-selling has always been at the heart of StatPro's strategy and our move to a centralised SaaS structure will accelerate our ability to do this. The trend is now clear with Asset Managers that they wish to out-source as many non-core critical services as possible so as to keep their focus on the management of money and we believe that we are well suited to help them.

Our new service for Complex Assets Prices (CAP), for assets such as CDO, CDS, IRS and other OTC derivative products, has been launched successfully and we are entering test phases with a number of clients. This service is likely to be driven by worsening market conditions as the mis-pricing of complex assets was one of the causes of the credit crunch. Based on the reception our new service has received so far in the US and Europe we remain confident that CAP will be a significant driver for our growth in 2009 and beyond. We also believe that this new service is less likely to be affected by current market conditions.

People

StatPro continues to grow and change and its ability to do so is down to the high quality of our people, many of whom are leading experts in their field. StatPro is very lucky to have such a talented team that is able to make such a difference. I would like to offer them my hearty thanks for all their efforts.

Dividend

The board is pleased to announce an interim dividend of 0.50p per share which is an increase of 11.1% on last year's interim dividend of 0.45p. We intend to maintain a progressive dividend policy reflecting the balance between the investment needs of the business and growth in the underlying cash and earnings per share, as well as our confidence in our future.

Outlook

Despite benign conditions during the first half of the year, it is now the view of the Board that our market is likely to experience a worsening in trading conditions in the second half. Evidence of prospects and clients delaying decision making whilst cutting their own costs is now accumulating across the US and Europe.  This points to the likelihood that financial belts are being tightened. Experience shows us that it is new sales that are impacted, rather than existing business. We also believe that some of the products we offer, being driven by regulation, will continue to sell well, but other products may see a slow down in new sales.

The Board also believes that StatPro needs to continue to invest in its business for long term growth. This investment together with the possibility of a slowing of new sales, therefore imply that it is likely that revenues and profits for the full year will be lower than expected.

Whilst this slow down will impact the growth in revenues from new business, the business continues to see a high level of recurring revenue (86% of total revenues) with a high level of renewals of recurring contracts (94%) which gives us a good defensive position in the current environment. Whilst we cannot affect the macro-economic environment, we will do everything we can to maximise our own opportunities.

Justin Wheatley

Chief Executive

  FINANCIAL REVIEW

 

Overview 

The underlying contracted recurring revenue, which is our key performance indicator, has grown by 26% over the last twelve months and the proportion of the Group's total revenue that is recurring has increased to 86% (2007: 82%). In the current uncertain trading environment, StatPro's business model of strong and growing recurring revenue with long term contracts provides a good foundation and strength to the business.

In February 2008, StatPro completed the acquisition of 100% of the share capital of Performa Consultants UK Limited ("Performa") and the team has now been integrated into our UK operations. The integration of this acquisition has progressed to plan and the financial contribution is beginning to bear fruit. Performa has generated over £0.4 million operating cash in the four months since acquisition and around 50% adjusted operating margin.

During 2007, we completed a number of key business integration projects relating to the integration of the North American business, namely transfer of real-time data division and Johannesburg Stock Exchange ("JSE") project, following its acquisition in 2006.  The interim results for 2007 reflected some additional revenue arising from these non-core integration projects. 

The loss making real-time data business was transferred at the end of 2007 and there was £0.65 million of revenue associated with this business unit in H1 2007. In 2008, the JSE project has been restructured as a self-contained team based in South Africa which provides better service to the client. This has impacted the level of integration revenue in 2008 compared to the prior year but overall the project is now on a firmer financial footing. 

The integration of Performa, transfer of development and support team on the JSE project to South Africa and refocusing of the Canadian SPM development team on core StatPro software projects resulted in a one-off exceptional restructuring charge (severance payments and onerous lease contracts) of £0.56 million incurred in the first half of 2008. The projected cost savings arising from these actions amount to over £1.0 million per annum.

Overall the adjusted EBITDA in H1 grew from £2.71 million to £2.92 million and the business continues to generate a solid positive operating cash flow. The adjusted operating margin reduced from 22.2% in H1 2007 to 20.1% in H1 2008 but in large part this reduction was due to the impact of lower integration revenue in 2008.

Acquisition

Performa was acquired in February 2008 for a consideration of £7.74 million (including adjustment for net assets acquired of £0.74 million but before transaction costs). The acquisition was financed partly by shares issued to vendors at 86.6 pence per ordinary share (£1.19 million) and partly by an increased debt facility (£6.55 million). The cash acquired in the business amounted to £1.27 million so the net cost was effectively £6.47 million. Based on the acquired contracts amounting to £2.08 million and the projected profitability of the integrated business, the directors are satisfied with the financial progress to date on the acquisition.

Intangible assets acquired with the business amounted to £1.42 million and the goodwill amounted to £6.03 million.

Turnover

Turnover increased by 15% to £13.07 million (2007: £11.32 million). The Performa acquisition contributed 7% of the growth. Adjusting for acquisitions and non-core revenue the underlying growth rate was approximately 21% as shown below.

  

	Six months to 30 June 2008 £ million	Six months to 30 June 2007 £ million	Growth %
Group revenue
Total revenue as reported	13.07	11.32	15
Acquisition in 2008 - Performa	(0.76)	-
Acquisition in 2007 - Initram	(0.17)	-
Real time data (discontinued in 2007)	-	(0.65)
JSE integration project	(0.13)	(0.77)
Underlying revenue	12.01	9.90	21

New recurring business signed in H1 increased by 73% compared to H1 2007 and was in line with our expectations. The level of cancellations is as budgeted and the renewal rate remains approximately 94%. The impact of exchange rate movements increased the revenue by around 7% compared to the exchange rates applying in H1 2007. There was no material impact of exchange rate movements on profit before tax because of the level of matching of revenue and expenses within each overseas business operation.

The split of revenue by type was as follows:

	Six months to 30 June 2008 £ million	Six months to 30 June 2007 £ million	Year to 31 December 2007 £ million
Turnover
Software licences	9.51	7.28	15.23
Data fees - core valuation data	1.76	1.69	3.27
Data fees - real time data (service discontinued)	-	0.35	0.78
Total data fees	1.76	2.04	4.05
Total recurring revenue	11.27	9.32	19.28
Professional services and other revenue	1.80	2.00	4.79
Total revenue	13.07	11.32	24.07

Recurring revenue

Overall recurring revenue grew by 21%; recurring software licence revenue grew by 31% and core data fees (excluding real-time service which was discontinued in 2007) grew by 4%. The proportion by value of recurring software licences on multi-year contracts (licence agreements with more than one year remaining contractually committed) was 64% at the end of June 2008 compared to 56% at the end of June 2007. This was lower than the 71% at the end of December 2007 due to the inclusion of the Performa contracts. New business from existing clients was 65% (2007: 68%) and our top 30 clients have an average of 4.6 products per client (2007: 3.9). The revenue per client for our top 30 increased to £381,000 per annum from £341,000 per annum at end December 2007 and from £315,000 per annum on 30 June 2007.

The annual value of continuing recurring revenue increased by 17% to £23.78 million from £20.27 million at 31 December 2007, and by 26% from £18.81 million at 30 June 2007.

  

Software licences and data fees		Annualised recurring contract value £m	% of starting year value
At 31 December 2007		20.27
New contracted revenue (net of cancellations)	1.28		6.3%
Net impact of exchange rates	0.15		0.7%
Net increase in year		1.43	7.0%
Net recurring value (before impact of acquisition)		21.70
Contracts acquired with acquisition	2.08	2.08	10.3%
Net increase in contracted annualised revenue	3.51		17.3%
At 30 June 2008		23.78

Underlying professional services revenue increased by 80% as show below. However, there was an overall reduction in professional fees by 10% compared with H1 2007 where, as described above, we had benefited from integration projects revenue. 

	Six months to 30 June 2008 £ million	Six months to 30 June 2007 £ million	Growth %
Professional services and other revenue
Underlying professional services revenue	1.67	0.93	80
Real time data (discontinued in 2007) - one off fee	-	0.30
JSE integration project	0.13	0.77
Total professional services and other revenue	1.80	2.00	-10

Operating expenses

Operating expenses (before amortisation of intangibles and exceptional items) amounted to £9.47 million in the first half of 2008 (2007: £8.00 million) including £0.36 million relating to Performa. The growth in expenses arose mainly from the impact of an increased number of employees. Additional costs were also incurred on investing in a larger infrastructure, including the opening of the Boston office, additional IT facilities to improve the hosted services offered to clients and an increase in data acquired from third parties in our expanding data business. 

Exceptional items

The integration of Performa, transfer of development and support team on the JSE project to South Africa and refocusing of the Canadian SPM development team on core StatPro software projects resulted in a one-off exceptional restructuring charge (redundancies and onerous lease contracts) of £0.56 million incurred in the first half of 2008. The projected cost savings arising from these actions amount to over £1.0 million per annum.

Employees

The average number of employees during the first six months of 2008 increased to 253 (2007: 238). The number of employees has increased to a total of 261 employees today, situated in twelve offices in Europe, North America, South Africa and Australia at the end of June 2008. The increase was mainly due to the additional staff joining with the acquisition of Performa.

Development costs

We have increased our effort on developing a number of new products and services including Data Indices, Complex Asset Pricing and Software as a Service ("SaaS"). As a result there has been an increase in expenditure on development which the board considers an important investment in the future ability for the business to grow market share.

Development costs incurred in the period which are capitalised under IFRS where recognition criteria are met, amounted to £1.49 million (2007: £1.10 million). The amortisation of intangibles including development costs and acquired intangibles amounted to £1.29 million (2007: £1.04 million). The carrying value of intangibles (including acquired intangibles) recognised amounted to £6.65 million (Dec 2007: £5.07 million).

Earnings before Interest, Tax, Depreciation and Amortisation

Overall the adjusted EBITDA in H1 grew from £2.71 million to £2.92 million and the business continues to generate a solid positive operating cash flow. The adjusted operating margin reduced from 22.2% in H1 2007 to 20.1% H1 2008 but in large part this reduction was due to the impact of lower JSE integration revenue in 2008.

Interest 

Net interest expense amounted to £0.73 million (2007: £0.42 million). The increase in interest was due to the increased level of debt (£7.0 million) used to finance the Performa acquisition. Included within interest expense is £0.06 million (2007: £0.08 million) relating to the unwinding of discounts on deferred consideration.

Profit before tax

The profit before tax reduced to £1.02 million from £1.86 million. The adjusted profit before tax reduced to £1.90 million from £2.09 million.

Taxation

Tax charged amounted to £0.13 million (2007: £0.28 million). The level of deferred tax asset amounted to £1.74 million (Dec 2007 - £1.74 million).

Earnings per share 

Basic earnings per share reduced to 1.6p (2007: 3.0p). Adjusted earnings per share reduced to 3.1p (2007: 3.4p). The average number of shares in issue in the period increased by 3% to 54,063,787 (2007: 52,579,651) mainly as a result of shares issued in February 2008 to part finance the Performa acquisition. The diluted earnings per share were 1.6p (2007: 2.9p) based on potentially dilutive shares outstanding amounting to 1,273,118 (2007: 1,791,131).

Cash flow

Cash inflow from operations before investment in development activities during the first six months of 2008 amounted to £3.42 million (2007: £2.89 million). The investment in development activities was £1.49 million (2007: £1.10 million). As a result, the cash inflow from operations after investment in development activities amounted to £1.93 million (2007: £1.78 million) in the first six months of 2007 (see note 4). 

In May 2008 the final dividend for 2007 amounting to 1.05 pence per share (£0.58 million) was paid.

Balance sheet

The Group's net assets increased to £26.14 million at June 2008 (Dec 2007: £25.01 million). The level of trade and other receivables, of which the major component is trade debtors, reduced to £6.99 million (Dec 2007: 7.21 million).

The increase in net debt in the period was mainly due to increased debt used to finance the acquisition of Performa offset by repayments of debt during the period. 

The major component of creditors is deferred income, a non-cash liability, which amounted to £9.98 million (Dec 2007: £9.11 million). The level of deferred contingent consideration is estimated at £2.82 million at the end of June 2008 (Dec 2007: £3.05 million). Approximately £1.32 million is expected to be paid in 2008.

Financial facilities

The Company has a committed bank facility amounting to a current total of approximately £19.9 million (£16.4 million of term loans and £3.5 million of working capital) on competitive terms. £12 million of the original facility was drawn down in October 2006 to part finance the FRI acquisition and £7 million of the facility was drawn down in February 2008 to part finance the Performa acquisition. Term loan repayments amounting to a total of £2.63 million have been repaid (£1.27 million in H1 2008).

The remaining element of the facility (£3.5 million) is primarily available for working capital purposes. These facilities, which are subject to the covenants normally associated with secured debt of this type, remain committed until December 2011 although repayments of the term loans are not available to be re-drawn. As at 30 June 2008, the Group had net debt of £16.15 million.

Interim dividend 

The directors intend to pay an increased interim dividend of 0.50 pence per ordinary share (2007: 0.45 pence) on 29 October 2008 to shareholders on the register at the close of business on 3 October 2008, 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 a prudent dividend cover.

Principal risks and uncertainties

The directors continue to evaluate the principal business risks and uncertainties affecting the Group. The following is a summary of the principal business risks and uncertainties, although it is not intended to be an exhaustive list:

Loss of key customer contracts

Insufficient level of new business contracted or delays in contract completion

Competitor products 

Inability to recruit or retain high calibre management and employees

Loss of good reputation 

Development failure or undetected errors in software

Data or software hosting delivery failure

Technological change

Insufficient working capital or other financing 

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

	Notes	Unaudited Six months to 30 June 2008	Unaudited Six months to 30 June 2008	Unaudited Six months to 30 June 2008	Unaudited Six months to 30 June 2007	Audited Year to 31 December 2007
		£'000 Continuing operations	£'000 Acquisition	£'000 Total	£'000	£'000
Group Revenue
Continuing operations		12,310	760	13,070	11,319	24,074
Operating expenses before amortisation of intangibles		(9,118)	(356)	(9,474)	(7,999)	(16,190)
Amortisation of internally generated intangibles		(975)	-	(975)	(810)	(1,857)
Amortisation of acquired intangibles		(243)	(74)	(317)	(229)	(459)
Exceptional items		(311)	(253)	(564)	-	-
Operating expenses		(10,647)	(683)	(11,330)	(9,038)	(18,506)
Operating profit		1,663	77	1,740	2,281	5,568
Interest receivable				43	49	66
Interest payable				(768)	(473)	(1,062)
Profit before taxation				1,015	1,857	4,572
Taxation				(129)	(279)	(821)
Profit for the period				886	1,578	3,751
Profit attributable to minority interests				28	19	33
Profit attributable to equity shareholders				858	1,559	3,718
				886	1,578	3,751
Earnings per share from continuing operations - basic	2			1.6p	3.0p	7.0p
- diluted	2			1.6p	2.9p	6.8p

Statement of Recognised Income and Expense 

		Unaudited Six monthsto 30 June 2008	Unaudited Six months to 30 June 2007	Audited Year to 31 December 2007
		£'000	£'000	£'000
Profit for the period		886	1,578	3,751
Net exchange differences offset in reserves net of tax		(443)	608	2,990
Total recognised gains and losses for the period		443	2,186	6,741
Attributable to:
Minority interests		28	3	5
Equity shareholders		415	2,183	6,736

  Consolidated Balance Sheet

		Unaudited As at 30 June 2008	Unaudited As at 30 June 2007	Audited As at 31 December 2007
		£'000	£'000	£'000
Non current assets
Goodwill		41,341	31,473	36,163
Intangible assets		6,646	4,614	5,072
Property, plant and equipment		2,362	935	1,742
Other receivables		333	320	274
Deferred tax assets		1,737	2,043	1,737
		52,419	39,385	44,988
Current assets
Trade and other receivables		6,986	4,611	7,205
Cash and cash equivalents		1,502	2,218	950
		8,488	6,829	8,155
Liabilities
Current liabilities
Financial liabilities - borrowings		(1,675)	(1,857)	(2,744)
Trade and other payables		(4,244)	(3,794)	(4,700)
Current tax liabilities		(75)	(47)	(44)
Deferred income		(9,877)	(7,939)	(8,984)
Provisions - contingent consideration		(1,319)	(862)	(1,682)
		(17,190)	(14,499)	(18,154)
Net current liabilities		(8,702)	(7,670)	(9,999)
Non-current liabilities
Financial liabilities - borrowings		(15,978)	(8,748)	(8,339)
Other creditors and accruals		-	-	(149)
Deferred income		(100)	(98)	(125)
Provisions - contingent consideration		(1,504)	(2,552)	(1,367)
		(17,582)	(11,398)	(9,980)
Net assets		26,135	20,317	25,009
Shareholders' equity
Ordinary shares		546	528	531
Share premium		14,340	14,084	14,273
Shares to be issued		827	875	874
Other reserves		3,863	740	3,132
Retained earnings		6,569	4,228	6,237
Total shareholders' equity		26,145	20,455	25,047
Minority interest in equity		(10)	(138)	(38)
Total equity		26,135	20,317	25,009

  

Consolidated Cash Flow Statement 

		Unaudited Six months to 30 June 2008	Unaudited Six months to 30 June 2007	Audited Year to 31 December 2007
		£'000	£'000	£'000
Cash flows from operating activities
Cash generated from operations		3,420	2,886	7,026
Interest received		43	49	66
Interest paid		(562)	(552)	(1,008)
Tax paid		(193)	(35)	(86)
Tax received		-	-	286
Net cash from operating activities		2,708	2,348	6,284
Cash flows from investing activities
Acquisition of subsidiaries (net of cash acquired)		(5,482)	(1,081)	(3,382)
Investment in intangible assets - development costs		(1,494)	(1,104)	(2,640)
Proceeds from sale of property, plant and equipment		-	-	-
Purchase of property, plant and equipment		(884)	(268)	(1,218)
Net cash used in investing activities		(7,860)	(2,453)	(7,240)
Cash flows from financing activities
Repayment of bank loan		(1,270)	(934)	(2,009)
Net proceeds from bank loan/overdraft		7,689	-	562
Proceeds from issue of ordinary shares		17	499	690
Dividends paid to shareholders		(582)	(376)	(618)
Net cash from/(used in) financing activities		5,854	(811)	(1,375)
Effects of exchange rate changes		(150)	(193)	(46)
Net increase/(decrease) in cash and cash equivalents		552	(1,109)	(2,377)
Cash and cash equivalents at start of period		950	3,327	3,327
Cash and cash equivalents at end of period		1,502	2,218	950

  

Reconciliation of operating profit to net cash flow from operating activities 

	Unaudited Six months to 30 June 2008	Unaudited Six months to 30 June 2007	Audited Year to 31 December 2007
	£'000	£'000	£'000
Operating profit	1,740	2,281	5,568
Depreciation of tangible fixed assets	303	197	418
Amortisation of intangibles	1,292	1,039	2,316
Decrease/(increase) in debtors	1,183	717	(1,640)
(Decrease)/increase in creditors (excluding deferred income)	(829)	(751)	(169)
(Decrease)/increase in deferred income	(329)	(634)	406
Share based payments	60	37	127
Net cash generated from operating activities	3,420	2,886	7,026

Reconciliation of net cash flow to movement in net debt

	Unaudited Six months to 30 June 2008	Unaudited Six months to 30 June 2007	Audited Year to 31 December 2007
	£'000	£'000	£'000
Increase/(decrease) in cash and cash equivalents in the period	552	(1,109)	(2,377)
Movement on overdraft and other loans	(879)	-	(562)
Movement on bank loan	(5,540)	934	2,009
Exchange differences on bank loans and overdrafts	39	(525)	(1,600)
Other non-cash movements	(190)	(12)	72
Movement in net debt	(6,018)	(712)	(2,458)
Net debt at beginning of period	(10,133)	(7,675)	(7,675)
Net debt at end of period	(16,151)	(8,387)	(10,133)

Statement of changes in shareholders' equity

	Share capital	Share premium account	Shares to be issued	Retained earnings	Other reserves *	Minority interests	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 1 January 2008	531	14,273	874	6,237	3,132	(38)	25,009
Shares issued	15	67	(47)	(4)	1,174	-	1,205
Profit for the period	-	-	-	858	-	28	886
Dividend	-	-	-	(582)	-	-	(582)
Share based payments	-		-	60	-	-	60
Exchange differences offset in reserves	-		-	-	(443)	-	(443)
At 30 June 2008	546	14,340	827	6,569	3,863	(10)	26,135

* Other reserves includes merger reserve and translation reserve.  Notes to the interim financial information

 

Analysis of recurring revenue by type

Type	Sterling value at 30 June 2008 Unaudited £ millions	Percentage	Sterling value at 30 June 2007 Unaudited £ millions	Percentage	Sterling value at 31 December 2007 Audited £ millions	Percentage
Software licences	19.86	83.5%	14.87	79.1%	16.51	81.5%
Data fees - Real Time (disposed of in 2007)	-	-	0.74	3.9%	-	-
Data fees - Data service	3.92	16.5%	3.20	17.0%	3.76	18.5%
Total Data fees	3.92	16.5%	3.94	20.9%	3.76	18.5%
	23.78	100.0%	18.81	100.0%	20.27	100.0%

Analysis of recurring revenue by region

Region	Sterling value at 30 June 2008Unaudited  £ millions	Percentage	Sterling value at 30 June 2007Unaudited £ millions	Percentage	Sterling value at 31 December 2007 Audited  millions	Percentage
United Kingdom	5.74	24.2%	2.94	15.6%	3.20	15.8%
Continental Europe	6.55	27.5%	5.96	31.7%	6.52	32.2%
North America	8.78	36.9%	8.01	42.6%	8.50	41.9%
Rest of World	2.71	11.4%	1.90	10.1%	2.05	10.1%
	23.78	100.0%	18.81	100.0%	20.27	100.0%

Analysis of recurring revenue by currency

As at 30 June 2008 Currency	Currency value millions	Exchange rate 30 June 2008	Sterling value at  30 June 2008 Unaudited £ millions	Percentage
Pounds sterling	£5.88	1.000	5.88	24.7%
Euro	€8.64	1.263	6.84	28.8%
US Dollar	US$7.58	1.990	3.81	16.0%
Canadian Dollar	C$9.95	2.019	4.93	20.7%
Other currencies			2.32	9.8%
			23.78	100.0%

As at 30 June 2007 Currency	Currency value millions	Exchange rate 30 June 2007	Sterling value at  30 June 2007 Unaudited £ millions	Percentage
Pounds sterling	£3.29	1.000	3.29	17.5%
Euro	€8.84	1.486	5.95	31.6%
US Dollar	US$8.86	2.006	4.42	23.5%
Canadian Dollar	C$7.98	2.134	3.74	19.9%
Other currencies			1.41	7.5%
			18.81	100.0%

As at 31 December 2007 Currency	Currency value millions	Exchange rate 31 December 2007	Sterling value at  31 December 2007 Audited £ millions	Percentage
Pounds sterling	£3.49	1.000	3.49	17.2%
Euro	€8.87	1.361	6.52	32.2%
US Dollar	US$7.61	1.991	3.82	18.8%
Canadian Dollar	C$9.56	1.965	4.87	24.0%
Other currencies			1.57	7.8%
			20.27	100.0%

 

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

 

Adjusted profit before taxation

	Unaudited Six months to  30 June 2008	Unaudited Six months to  30 June 2007	Audited Year to 31 December 2007
	£'000	£'000	£'000
Profit before taxation	1,015	1,857	4,572
Add back: Amortisation on acquired intangibles	317	229	459
Add back: Exceptional items	564	-	-
Adjusted profit before tax	1,896	2,086	5,031

Adjusted operating profit 

	Unaudited Six months to  30 June 2008	Unaudited Six months to 30 June 2007	Audited Year to 31 December 2007
	£'000	£'000	£'000
Operating profit	1,740	2,281	5,568
Add back: Amortisation on acquired intangibles	317	229	459
Add back: Exceptional items	564	-	-
Adjusted operating profit	2,621	2,510	6,027

Adjusted operating profit margin

20.1%

22.2%

25.0%

Adjusted EBITDA

	Unaudited Six months to 30 June 2008	Unaudited Six months to 30 June 2007	Audited Year to 31 December 2007
	£'000	£'000	£'000
Operating profit	1,740	2,281	5,568
Add back: Depreciation of fixed assets	303	197	418
Add back: Amortisation on acquired intangibles	317	229	459
Add back: Exceptional items	564	-	-
Adjusted EBITDA	2,924	2,707	6,445

The operating exceptional items of £564,000 included in total operating expenses in 2008 related to severance payments, onerous leases and other contracts, and costs relating to restructuring the operations of the combined Group. There were no exceptional items in 2007.

5. Cash generated from operations - reconciliation from statutory heading to business performance measure

	Unaudited Six months to 30 June 2008	Unaudited Six months to 30 June 2007	Audited Year to 31 December 2007
	£'000	£'000	£'000
Cash generated from operations	3,420	2,886	7,026
Investment in intangible assets - development costs	(1,494)	(1,104)	(2,640)
Cash generated from operations less internally generated intangible assets	1,926	1,782	4,386

6. Dividend. An interim dividend for 2008 amounting to 0.50 pence per ordinary share (2007: 0.45 pence) will be paid on 29 October 2008 to shareholders on the register on 3 October 2008. A final dividend for 2007 amounting to 1.05 pence per ordinary share was paid on 28 May 2008 to shareholders on the register on 25 April 2008. Under IFRS dividends are accounted for when paid and not when proposed or declared.

7. Acquisition

On 20 February 2008 the Company acquired 100% of the ordinary shares (100% of the voting shares) of Performa Consultants UK Limited a UK business based in London that develops composites software. The acquisition has helped reinforce StatPro's existing strong position in the composites software market. The total consideration (including consideration for net asset adjustment on completion) amounting to £7.74 million (before costs) was satisfied by a combination of £6.55 million in cash and the issue to the vendors of 1,372,020 ordinary shares of 1p each at an effective price of 86.6p based on the average closing mid-price of StatPro's ordinary shares for the ten day trading period prior to the date of completion.

The provisional fair values of assets and liabilities of Performa acquired were as follows:

		Performa  book value		Fair value adjustments (provisional)		Total  fair value (provisional)
		£'000		£'000		£'000
Intangible fixed assets - technology		-		105		105
Intangible fixed assets - client contracts		-		1,317		1,317
Fixed assets		93		(54)		39
Debtors		753		-		753
Other receivables		81		-		81
Cash		1,270		-		1,270
Creditors		(1,050)		(609)		(1,659)
Net assets		1,147		759		1,906
Net assets acquired						1,906
Goodwill						6,034
						7,940
Satisfied by:
Initial cash consideration including costs and adjustments for net assets						6,752
Shares issued						1,188
Total consideration (including costs)						7,940

The provisional fair value adjustments relate to the valuation of intangible assets, value of fixed assets acquired and the adjustment of deferred revenue on client contracts to align the accounting policies. The goodwill is attributable to the client contract cross-selling potential, the skills of the team of the business and the significant synergies arising from the combined composites software business.

  Independent review report to StatPro Group plc

Introduction

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2008, which comprises the income statement, balance sheet, statement of changes in equity, cash flow statement and related notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the AIM Rules for Companies which require that the financial information must be presented and prepared in a form consistent with that which will be adopted in the company's annual financial statements.

This interim report has been prepared in accordance with the basis set out in Note 1.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of the AIM Rules for Companies and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2008 is not prepared, in all material respects, in accordance with the basis set out in Note 1 and the AIM Rules for Companies.

PricewaterhouseCoopers LLP

Chartered AccountantsLondon

1 August 2008

Notes:

(a) The maintenance and integrity of the StatPro Group plc web site is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the interim report since it was initially presented on the web site. 

(b) Legislation in the United Kingdom governing the preparation and dissemination of financial information may differ from legislation in other jurisdictions.

ENDIR FKDKPFBKDDFK

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