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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Statpro Group Plc | LSE:SOG | London | Ordinary Share | GB0006300213 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 236.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMSOG
RNS Number : 3934W
StatPro Group PLC
01 August 2018
1 August 2018
StatPro Group plc
Solid growth in revenue and profit
StatPro Group plc, (AIM: SOG, "StatPro", "the Group"), the leading provider of portfolio analysis and asset pricing services for the global asset management industry, has published its interim results for the six months ended 30 June 2018.
Hot Features
Premium
Six months Six months % change % change
ended 30 ended at constant
June 2018 30 June 2017 currency
Restated
(3)
GBP27.24 GBP22.41
Revenue m m +22% +24%
Annualised Recurring Revenue GBP52.25 GBP53.19
("ARR") (1) m m (2%) 0%
GBP4.34
Adjusted EBITDA (2) m GBP3.53 m +23% +27%
Profit/(loss) before tax GBP0.90 GBP(1.54)
m m
Earnings/(loss) per share - basic 1.1p (2.4)p
Earnings per share - adjusted
(2) 3.4p 2.7p +26%
Interim dividend per share 0.85p 0.85p -
----------------------------------- ----------- -------------- --------- -------------
Financial highlights:
-- Group revenue up 22% to GBP27.24 million (2017: GBP22.41 million)
o Organic growth 3% (2017: 2%)
o Currency impact down 2% (2017: up 11%)
-- Adjusted EBITDA increased by 23% to GBP4.34 million (2017: GBP3.53 million) -- Profit before tax GBP0.90 million (2017: loss GBP1.54 million) -- Interim dividend maintained at 0.85 pence per share -- Free cash flow in H1 2018 GBP2.19 million (2017: GBP3.52 million)
Operating highlights:
-- StatPro Revolution underlying ARR growth of 19% (4) (2017: 9%) -- Software as a service (SaaS) as a percentage of software ARR now 84% (2017: 82%)
-- StatPro Revolution Fixed Income Attribution (FIA) beta launched - key module seeing considerable demand. First step towards achieving parity with Delta
-- Integration of Delta progressing well
-- Acquired in July 2018 ODDO BHF's regulatory risk services bureau - adds managed regulatory risk services offering
(1) Annualised Recurring Revenue is the annual value of revenue contractually committed at period end.
(2) Adjusted EBITDA and adjusted earnings/losses per share are EBITDA and earnings/losses per share after adjustment for amortisation of acquired intangible assets, acquisition transaction, redundancy and other integration costs, fair value movement on non-controlling interest put option and share based payments (notes 2 and 5).
(3) The interim and full year accounts for 2017 have been restated to take into account the adoption of IFRS 15 (see notes 1 and 3).
(4) Underlying ARR growth relates to Revolution excluding the acquired revenues from Delta and Investor Analytics and including conversions from Seven (see note 3).
Justin Wheatley, Chief Executive of StatPro, commented:
"We are pleased with the solid growth in Group revenue and profits in the first half. In particular, Revolution's underlying Annualised Recurring Revenue grew by 19%.
"The project to integrate Delta's functionality into our flagship product, Revolution, is going well. The launch of Revolution Fixed Income Attribution in July is the first step towards achieving functionality parity with Delta.
"In preparation for the planned restructure of the business into three divisions, we have appointed a new divisional CEO to lead and develop Source: StatPro, our data division. This division leverages our access to huge quantities of data covering global equities, bonds and other data such as global mutual fund information.
"In 2018 and beyond, we anticipate strong growth in specialised managed services for regulations, risk and performance. We are focused upon building our partnerships with Asset Service Providers to broaden the services they offer the asset management community."
This announcement contains inside information for the purposes of Article 7 of Regulation (EU) 596/2014 (MAR).
A presentation for analysts of the interim results will be held at 9.30am today at the offices of Instinctif Partners, 65 Gresham Street, London, EC2V 7NQ.
Enquiries:
StatPro Group plc Justin Wheatley, Chief Executive +44 (0) 20 8410 9876 Andrew Fabian, Finance Director Panmure Gordon - Nomad and Broker Corporate Finance - Freddy Crossley / Fabien Holler +44 (0) 20 7886 2500 Corporate Broking - James Stearns Instinctif Partners Adrian Duffield / Chris Birt +44 (0) 20 7457 2020
About StatPro
StatPro is a global provider of award winning portfolio analytics solutions for the investment community. The Group's cloud-based platform provides vital analysis of portfolio performance, attribution, risk and compliance. This multi-asset class analytics platform helps StatPro's clients increase assets under management, improve client service, meet tough regulations and reduce costs.
The Group's integrated and global data coverage includes over 3.2 million securities such as equities, bonds, mutual funds, FX rates, futures, options, OTCs, sector classifications and much else besides. StatPro also covers most families of benchmarks including MSCI, FTSE, Russell, NASDAQ and the open source Freedom Index.
The Group has operations in Europe, North America, South Africa and Australia, with hundreds of clients in 39 countries around the world.
StatPro has grown its Annualised Recurring Revenue from less than GBP1 million in 1999 to around GBP54 million today. Around 80% of recurring revenues are generated outside the UK. StatPro Group plc shares are listed on AIM.
Overview
The first half of the year saw a strong improvement in adjusted EBITDA, rising 23% to GBP4.34 million (2017: GBP3.53 million) with H1 revenues up 22% to GBP27.24 million (2017: GBP22.41 million). Excluding currency impact, revenue would have increased by 24%.
ARR, the core measure of the Group's strategy of growing recurring revenue contracts, was flat at constant currency at GBP52.25 million (2017: GBP53.19 million). Including the ODDO BHF contracts acquired on 2 July 2018, ARR was GBP53.74 million on a pro-forma basis.
StatPro Revolution revenues, excluding Delta acquisition, rose 15% and the StatPro Revolution ARR increased by 19% on an underlying basis. Adjusted EBITDA was up 23% to GBP4.34 million (2017: GBP3.53 million). Free cash flow decreased to GBP2.19 million from GBP3.52 million mainly due to less favourable working capital movements. The Group has maintained the interim dividend per share at 0.85p.
The integration of Delta, acquired on 15 May 2017 from UBS, is progressing well with the project phased over three to five years as StatPro incorporates Delta's functionality into its flagship product, StatPro Revolution. The Group released the beta version of Revolution Fixed Income Attribution (FIA). This is the first step towards achieving functionality parity with Delta. Throughout the transition, and until StatPro has fully integrated Delta's functionality, as planned, UBS will continue to support Delta for its clients.
The Group acquired in March 2018 the remaining shares in Infovest that it did not own and on 2 July 2018 acquired the regulatory risk service provided by ODDO BHF bank in Frankfurt. StatPro gains new clients in Germany, the expertise of the ODDO BHF risk team and adds to its existing managed services for valuations and performance measurement with risk reporting.
The Group will continue to consider making acquisitions to widen its customer base and/or increase its product portfolio.
The Group is very focused on building relationships with Asset Service Providers ("ASPs") in order to become a key partner for them in the provision of services to the asset management community. StatPro anticipates strong growth in asset management services outsourcing and has positioned itself to be a specialist provider of risk and performance managed services.
Current trading and outlook
Demand continues to grow for the Group's flagship cloud delivered services and with a developing risk services capability, the Board is positive about the prospects for H2 2018 and thereafter. Trading for the year as a whole is in line with expectations.
Operational review
Total Group revenue rose 22% compared to H1 2017 and StatPro Revolution grew 15%, excluding Delta acquisition. Record new sales of GBP6.11 million were recorded, but this was offset by a higher than usual level of cancellations at 9%.
StatPro Seven also continues to be resilient with net reductions of 1%, excluding conversions to StatPro Revolution. Professional services revenue was slightly lower at GBP0.97 million (2017: GBP1.03 million) partly reflecting the greater ease of onboarding clients with cloud-based solutions.
On 28 July 2018, the Group released the beta version of Revolution FIA. This is a key module in the Group's offering and StatPro has considerable demand for this capability. The release of FIA will enable a large number of clients of StatPro Seven to convert fully to StatPro Revolution. In the coming months, further functionality will be added to FIA to make it the most compelling fixed income solution in the market.
Notably, no other service is able to offer such a wide range of portfolio analytics, nor such speed of implementation on a single platform as StatPro Revolution. FIA has been designed to handle huge scale and the Group looks forward to rolling it out to its clients and prospects.
Managed services
StatPro has long predicted that the asset management market would shift decisively towards outsourcing non-core activities, including regulatory reports, data management, performance reporting and risk reporting. This is also driven by asset managers looking to reduce costs with external service providers benefiting from economies of scale.
The Group's aim has therefore been to equip asset service providers with the technology to offer a flexible, responsive and sophisticated service. As a result, the Group has increased its focus on asset service providers and is deploying more resource to target companies of all sizes in this market.
In order to offer this segment the best possible service, StatPro is now offering managed services and pre-sales support. Smaller asset service providers and some larger providers will find it more convenient and cost effective to sub-contract performance and risk reporting to StatPro than to establish their own teams.
Assembling the required range of skills to provide a service is expensive and needs a high minimum level of revenue to break-even. The advantage that even the smallest asset service provider has is access to the portfolio data of the client, which is the essential input. However, it is not sufficient for StatPro to provide the managed service, it is also necessary to support the asset service providers in selling the benefits of the service. StatPro therefore offers pre-sales expertise to enable our partner asset service providers to sell the service effectively.
The Group has a unique position to offer software solutions that are truly tailored to meet the needs of asset service providers. The Group's multi-tenant, highly scalable, cloud-based technology is perfectly adapted to the needs of asset service providers. StatPro is well positioned to benefit from the reduced number of software solutions asset managers have in-house and the trend towards outsourcing, helping them to reduce costs in an increasingly tough market for them.
StatPro's business model of selling services on a per portfolio basis is also designed to minimise the effects of mergers as it is likely that the market will continue to experience significant consolidation.
Infovest
In March 2018, StatPro acquired the remaining outstanding shares in Infovest, the integration and data management business. Infovest has made strong progress since StatPro acquired the initial 51% of the business in March 2016.
Infovest's revenues and profitability have continued to grow as Infovest has been able to leverage the Group's global network of clients to win new business in the US, Canada and the UK as well as its home market of South Africa.
Acquisition
On 2 July 2018, StatPro acquired the regulatory risk service of ODDO BHF. This is a widely respected service that was started nearly 15 years ago. However, the third-party software that the service was based on became dated and inflexible with a high investment cost required. The Board of ODDO BHF therefore sought a partner that could ensure that their clients would have a smooth transition to new cloud-based technology and improved services whilst maintaining capabilities of the original service.
This small acquisition brings 10 new clients in the important German market as well as expertise in offering managed risk services. The Group intends to build its planned managed services team around this core based in Frankfurt. Three of the clients are themselves asset service providers and these offer further partnership possibilities.
Source: StatPro
StatPro has made the decision to invest more in its data division and we have appointed a new divisional CEO to grow the business unit, which will be called Source: StatPro.
Source: StatPro owns a huge quantity of data covering global equities and bonds and also has access to other data such as global mutual fund information.
In addition, and to support our analytics business, we have a consolidated pass through feed of millions of indexes. We also have high quality yield curve data and automated pricing systems for complex assets. These services have been mainly focused in the past as valuable and essential input data for StatPro Revolution. Our intention now is to sell these services in their own right.
Divisional structure for 2019
As previously announced, StatPro plans to structure the business into three divisions from 2019 to make the operations of the business clearer, to provide distinct divisional management focus and to enable growth in each division based on specific divisional priorities.
The largest division, Revolution, will contain all the Group's analytics services. Source: StatPro will contain data revenues from market data and managed services, evaluated bond prices, index services, yield curves and complex asset pricing. Infovest will contain Infovest based in South Africa and SPM, the portfolio management service based in Canada.
Financial review
Revenue
Group revenue increased by 22% to GBP27.24 million (2017: GBP22.41 million). The revenue growth was driven by organic growth in StatPro Revolution, combined with the positive impact of six months of the Delta acquisition (compared with only 1.5 months in H1 2017), offset by the expected reduction in revenue for StatPro Seven and currency impacts, as shown below.
GBPm % change
Revenue bridge
H1 2017 at actual rates 22.41
Underlying growth
StatPro Revolution 0.80 +15%
StatPro Seven (0.16) (2%)
Data 0.05 +3%
Professional fees (0.04) (4%)
-------
0.65 +3%
Impact of acquisition, accounting
standard and currency
Acquisition impact 4.90
Impact of IFRS 15 (0.22)
Currency impact (0.50)
-------
H1 2018 at actual rates 27.24 +22%
----------------------------------- ------- ---------
96% of Group revenue was recurring revenue (2017: 95%).
The adoption of IFRS 15 has resulted in increased revenue in H1 2018 by GBP0.57 million (GBP0.79 million benefit for H1 2017) because of earlier recognition of software licences on non-hosted contracts. However, this is largely a timing issue and the impact on the full year is expected to be minimal (see notes 1 and 3).
Recurring revenue
The Group's SaaS business model of recurring revenue contracts provides visibility of projected revenue. ARR at the end of June 2018 was flat at constant currency at GBP52.25 million (2017: GBP53.19 million); with the addition of the contracts acquired from ODDO BHF in July 2018, Group ARR was GBP53.74 million on a pro-forma basis.
Underlying growth of StatPro Revolution ARR over the last 12-month period was 19%. Excluding the impact of conversions, StatPro Seven ARR reduced by 1%; Data ARR increased by 4%.
Group gross new sales increased by 12% to GBP6.11 million (2017: GBP5.47 million) but overall Group ARR was flat at constant currency (2017: organic increase of 3%), having been impacted by a higher than historical level of cancellations (excluding conversions) of 9%.
StatPro's revenue derives from contracts in a mix of currencies, primarily being EUR, USD, GBP and CAD and therefore the business is impacted by movements in currency rates but the spread of currencies for both revenues and costs provides an element of natural hedging in the reported results. There has been a further increase (16%) in average revenue per StatPro Revolution/cloud client to GBP86,900 (2017: GBP75,200).
Approximately 84% of new recurring contracted revenue came from existing clients (2017: 85%). Data fees were stable at GBP2.00 million (2017: GBP2.03 million) and professional services revenue was GBP0.97 million (2017: GBP1.03 million).
SaaS-based KPIs
One KPI used by SaaS businesses is the ratio of costs of acquiring each customer ("CAC") compared to the Lifetime Value of the customer contracts ("LTV"). The results for StatPro are presented below for June 2018 on a 12-month trailing basis.
All contracts (unaudited)
Year to Year to
30 June 30 June
2018 2017
Average Cost of Acquiring Customer
("CAC") (GBP'000s) 158.1 120.0
Implied Customer Lifetime (years) 10.2 12.4
Average ARR per customer (GBP'000s) 107.8 98.8
Implied Customer Lifetime Value
("LTV") (GBP'000s) 1,103 1,221
LTV: CAC 7.0 10.2
The average cost of acquiring customers has increased following the impact of the Delta acquisition and the implied life time is lower thus the LTV:CAC ratio is lower than the prior year. Nevertheless, a value of three or higher for the ratio of LTV:CAC is considered the industry benchmark for a successful SaaS business and for StatPro it is well above this figure.
Operating expenses
Operating expenses (before amortisation of intangible assets and other adjustments) increased in line with plans by 23% to GBP21.90 million (2017: GBP17.83 million); this primarily relates to the impact of an additional 4.5 months of Delta costs compared to H1 2017. Excluding the impact of currency and additional Delta costs, the increase in operating expenses was 5%. These increases related to employee, data, software and communications costs and cloud infrastructure. The average number of employees was 304 (2017: 303).
Profitability
Adjusted EBITDA increased to GBP4.34 million (2017: GBP3.53 million). Gross profit margin was 58% (2017: 59%) as shown in note 5. The adjusted EBITDA margin was 15.9% (2017: 15.7%). Excluding the impact of IFRS 15 (which brings forward revenue into H1), the adjusted EBITDA margin would have been 14.2% (2017: 12.9%).
Finance income and expense
Net finance expense was GBP1.03 million (2017: GBP0.50 million), as a result of increased average net debt associated with the financing of acquisitions.
Profit before tax
The adjusted operating profit increased year on year to GBP3.48 million (2017: GBP2.69 million). The profit before taxation was GBP0.90 million (2017: loss GBP1.54 million). H1 2017 was impacted by one off acquisition costs as shown in note 4.
Taxation
The tax charge was GBP0.18 million (2017: credit of GBP0.10 million). The overall effective tax rate on the profit is 20% (2017: 6% credit on loss).
Earnings/losses per share
Adjusted earnings per share was 3.4p (2017: 2.7p). Actual basic earnings per share was 1.1p and diluted earnings per share was 1.0p (2017: losses per share basic and diluted 2.4p).
Interim dividend
An interim dividend of 0.85 pence per ordinary share (2017: 0.85 pence) will be paid on 7 November 2018 to shareholders on the register at the close of business on 5 October 2018 (ex-div date will be 4 October 2018).
Balance sheet
The Group's net assets at the period end were GBP29.57 million (December 2017: GBP30.62 million). The primary movements in the six-month period were the decrease in intangible assets, mainly relating to the amortisation of acquired intangibles from acquisitions, and the increase in borrowings related to acquisition payments. Deferred revenue, which is a non-cash liability, was GBP16.62 million (December 2017: GBP17.89 million).
Cash flow and financing
StatPro continues to be cash generative with cash generated from operations of GBP6.13 million (2017: GBP7.48 million). The free cash flow was lower at GBP2.19 million (2017: GBP3.52 million) having been impacted by much lower working capital benefit of GBP0.22 million (2017: GBP3.30 million) and higher interest. The Group ended the period with net debt of GBP23.17 million (December 2017: GBP20.22 million). The increase in net debt arose primarily because of further payments on the Infovest and Investor Analytics acquisitions, using the Group's debt facilities.
Financing facility
As part of the acquisition of the non-controlling interest in Infovest completed in March 2018, the committed element of the multi-currency financing facilities with Wells Fargo was increased. The key features of the facilities, amounting to GBP39.8 million at 30 June 2018, are:
-- Committed to April 2022 -- GBP10 million committed revolving credit facility -- Committed term and deferred drawdown loans totalling GBP25.8 million -- GBP4.0 million uncommitted additional facility available
The primary financial covenants are linked to recurring revenue, adjusted EBITDA and available liquidity. The financing costs are amortised over the five-year term. This facility strengthens the Group's long-term financial structure and therefore the Board believes that the Group is well positioned to manage the business risks.
Acquisition
In March 2018, StatPro South Africa (Pty) Ltd. purchased a further 27.3% shares in Infovest for ZAR 30.4 million (GBP1.9 million) taking the total Group interest in Infovest to 100%.
Post-balance sheet event
On 2 July 2018, StatPro completed the acquisition of the regulatory risk service from ODDO BHF. An initial payment of EUR1.0 million (GBP0.9 million) was made in early July 2018, out of a total cash consideration of approximately EUR1.42 million (fair value of GBP1.25 million), with the remainder being payable on 2 January 2019. Further details on these acquisitions are provided in note 9.
Research and development and capex
The research and development team is now focused solely on the Group's cloud-based solutions, the StatPro Revolution platform. R&D expenditure increased to GBP4.17 million (2017: GBP3.62 million), equating to 15% of Group revenue (2017: 16%). Capitalised development costs were GBP2.53 million (2017: GBP2.62 million) and amortisation on internal development was GBP1.80 million (2017: GBP1.94 million). Capital expenditure on property, plant and equipment was GBP1.25 million (2017: GBP1.46 million), of which GBP0.89 million (2017: GBP1.09 million) was financed under finance lease arrangements.
Principal risks and uncertainties
The directors continue to evaluate the principal business risks and uncertainties affecting the Group and further discussion of the principal risks and uncertainties can be found on pages 26 to 29 of the StatPro 2017 Annual Report.
Group Income Statement
For the six months ended 30 June 2018
Notes Unaudited Unaudited Audited
Six months Six months Year
to 30 to 30 to 31
June June December
2018 2017 2017
GBP'000s GBP'000s GBP'000s
Restated Restated
Revenue * 3 27,237 22,408 49,260
Operating expenses before amortisation
of intangible assets and other
adjustments * (21,897) (17,830) (40,116)
Amortisation of acquired intangible
assets (1,518) (881) (2,243)
Amortisation of other intangible
assets (1,893) (2,034) (4,853)
Fair value movement on non-controlling
interest put option 4 - (202) (404)
Acquisition related and restructuring
costs 4 - (2,507) (3,530)
---------------------------------------- ------ ----------- ----------- ----------
Operating expenses (25,308) (23,454) (51,146)
----------- ----------- ----------
Operating profit/(loss) 1,929 (1,046) (1,886)
Finance income 24 33 61
Finance expense (1,054) (529) (1,646)
Net finance expense (1,030) (496) (1,585)
----------- ----------- ----------
Profit/(loss) before taxation 5 899 (1,542) (3,471)
Taxation * (180) 95 1,173
----------- ----------- ----------
Profit/(loss) for the period 719 (1,447) (2,298)
=========== =========== ==========
Profit attributable to non-controlling
interests 21 98 131
Profit/(loss) attributable
to equity shareholders 698 (1,545) (2,429)
----------- ----------- ----------
719 (1,447) (2,298)
=========== =========== ==========
Earnings/(loss) per share -
basic 2 1.1p (2.4)p (3.7)p
- diluted 2 1.0p (2.4)p (3.7)p
* Prior year figures have been restated (see notes 1 and 3) in relation to the implementation of IFRS 15.
Group Statement of Comprehensive Income
For the six months ended 30 June 2018
Unaudited Unaudited Audited
Six months Six months Year to
to 30 to 30 31 December
June June
2018 2017 2017
Restated Restated
GBP'000s GBP'000s GBP'000s
Profit/(loss) for the period * 719 (1,447) (2,298)
Other comprehensive income to be reclassified
to the income statement:
Net exchange differences (877) (333) (431)
Total comprehensive loss for the period (158) (1,780) (2,729)
=========== =========== =============
Attributable to:
Non-controlling interests 21 109 113
Equity shareholders * (179) (1,889) (2,842)
Total comprehensive loss for the period (158) (1,780) (2,729)
=========== =========== =============
* Prior year figures have been restated (see notes 1 and 3) in relation to the implementation of IFRS 15.
Group Balance Sheet
At 30 June 2018
Notes Unaudited Unaudited Audited
At 30 At 30 At 31
June June December
2018 2017 2017
GBP'000s GBP'000s GBP'000s
Non-current assets Restated Restated
Goodwill 10 43,708 44,447 44,404
Other intangible assets 10 19,706 21,266 20,389
Property, plant and equipment 3,754 3,457 3,303
Other receivables 128 135 86
Deferred tax assets 2,839 2,541 2,682
---------- ---------- ----------
70,135 71,846 70,864
Current assets
Trade and other receivables * 12,982 8,319 15,242
Financial instruments - other - 10 39
Current tax assets * 1,442 1,346 1,320
Cash and cash equivalents 3,239 3,354 4,311
---------- ---------- ----------
17,663 13,029 20,912
Liabilities
Current liabilities
Financial liabilities - borrowings (5,828) (4,212) (7,451)
Financial instruments - non-controlling
interest put option 9 - (1,615) (1,816)
Financial instruments - other (85) (9) (67)
Trade and other payables (10,085) (6,296) (10,435)
Current tax liabilities (461) (602) (273)
Deferred income * (16,582) (15,826) (17,825)
Provisions 11 (176) (1,284) (304)
(33,217) (29,844) (38,171)
---------- ---------- ----------
Net current liabilities (15,554) (16,815) (17,259)
---------- ---------- ----------
Non-current liabilities
Financial liabilities - borrowings (20,576) (18,062) (17,076)
Other creditors 11 (2,140) (3,443) (3,655)
Deferred tax liabilities * (2,256) (2,437) (2,192)
Deferred income (40) (40) (66)
(25,012) (23,982) (22,989)
---------- ---------- ----------
Net assets 29,569 31,049 30,616
========== ========== ==========
Shareholders' equity
Share capital 12 688 678 687
Share premium 24,600 23,537 24,454
Shares to be issued 63 63 63
Treasury shares 12 (2,298) (2,328) (2,328)
Other reserves 7,963 6,980 6,911
Retained earnings * (1,447) 1,981 687
---------- ---------- ----------
Total shareholders' equity 29,569 30,911 30,474
---------- ---------- ----------
Non controlling interests - 138 142
Total equity 29,569 31,049 30,616
========== ========== ==========
* Prior year figures have been restated (see notes 1 and 3) in relation to the implementation of IFRS 15.
Group Statement of Cash Flows
For the six months ended 30 June 2018
Unaudited Unaudited Audited
Notes Six months Six months Year to
to 30 June to 30 31 December
June
2018 2017 2017
GBP'000s GBP'000s GBP'000s
Operating activities
Cash generated from operations 6 6,127 7,479 10,676
Finance income 24 33 61
Finance costs (667) (328) (1,288)
Tax received 262 173 1,022
Tax paid (508) (753) (1,166)
------------ ----------- -------------
Net cash flow from operating activities 5,238 6,604 9,305
------------ ----------- -------------
Investing activities
Acquisition of subsidiaries and other
businesses (net of cash acquired) 9 (2,527) (10,269) (10,269)
Investment in intangible assets (2,690) (2,716) (6,028)
Purchase of property, plant and equipment (358) (365) (1,185)
Net cash flow used in investing activities (5,575) (13,350) (17,482)
------------ ----------- -------------
Financing activities
Net proceeds from bank loan 7 1,167 7,281 9,966
Net (payments to)/proceeds from finance
leases 7 (498) (280) (840)
Proceeds from issue of ordinary shares 147 - 926
Dividends paid to non-controlling
interests (76) (135) (135)
Dividends paid to shareholders (1,346) (1,327) (1,877)
------------ ----------- -------------
Net cash flow (used in)/from financing
activities (606) 5,539 8,040
------------ ----------- -------------
Net decrease in cash and cash equivalents (943) (1,207) (137)
------------ ----------- -------------
Cash and cash equivalents at start
of period 4,311 4,356 4,356
Effect of exchange rate movements (129) 205 92
------------ ----------- -------------
Cash and cash equivalents at end of
period 3,239 3,354 4,311
------------ ----------- -------------
Group Statement of Changes in Shareholders' Equity
For the six months ended 30 June 2018
Shares Other Total
Share Share to be Treasury reserves Retained shareholders' Non-controlling Total
Unaudited capital premium issued shares * earnings equity interest equity
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000 GBP'000s
At 1 January
2017 678 23,537 63 (2,328) 7,324 3,018 32,292 294 32,586
--------- --------- --------- --------- --------- --------- -------------- ---------------- ---------
Adjustment
related
to IFRS 15
(note
3) - - - - - 1,549 1,549 - 1,549
--------- --------- --------- --------- --------- --------- -------------- ---------------- ---------
At 1 January
2017
as restated 678 23,537 63 (2,328) 7,324 4,567 33,841 294 34,135
--------- --------- --------- --------- --------- --------- -------------- ---------------- ---------
Profit for the
period - - - - - (1,545) (1,545) 98 (1,447)
Other
comprehensive
income - - - - (344) - (344) 11 (333)
Total
comprehensive
income - - - - (344) (1,545) (1,889) 109 (1,780)
--------- --------- --------- --------- --------- --------- -------------- ---------------- ---------
Transactions
with
owners:
Non-controlling
interests - - - - - 130 130 (130) -
Share based
payment
transactions - - - - - 144 144 - 144
Tax relating to
share option
scheme - - - - - 12 12 - 12
Dividends - - - - - (1,327) (1,327) (135) (1,462)
--------- -------------- ---------
At 30 June 2017 678 23,537 63 (2,328) 6,980 1,981 30,911 138 31,049
--------- --------- --------- --------- --------- --------- -------------- ---------------- ---------
Shares Total
to Other shareholders'
Share Share be Treasury reserves Retained equity Non-controlling Total
Unaudited capital premium issued shares * earnings interest equity
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000 GBP'000s
At 1 January
2018 687 24,454 63 (2,328) 6,911 687 30,474 142 30,616
--------- --------- --------- --------- --------- --------- -------------- ---------------- ---------
Profit for the
period - - - - - 698 698 21 719
Other
comprehensive
income - - - - (877) - (877) - (877)
Total
comprehensive
income - - - - (877) 698 (179) 21 (158)
--------- --------- --------- --------- --------- --------- -------------- ---------------- ---------
Transactions
with
owners:
Acquisition of
non-controlling
interests - - - - 1,929 (1,842) 87 (87) -
Share based
payment
transactions - - - - - 353 353 - 353
Tax relating to
share
option scheme - - - - - 33 33 - 33
Treasury shares
issued
on exercise of
share
awards - - - 30 - (30) - - -
Shares issued 1 146 - - - - 147 - 147
Dividends - - - - - (1,346) (1,346) (76) (1,422)
--------- --------- --------- --------- --------- --------- -------------- ---------------- ---------
At 30 June 2018 688 24,600 63 (2,298) 7,963 (1,447) 29,569 - 29,569
--------- --------- --------- --------- --------- --------- -------------- ---------------- ---------
* Other reserves includes a merger reserve of GBP2,369,000 (2017: GBP2,369,000), a translation reserve surplus of GBP5,594,000 (2017: GBP6,540,000) and a reserve relating to the put option held by non-controlling interests of a debit balance of nil (2017: GBP1,929,000). The merger reserve arose on acquisitions and represents the difference between the fair value and the nominal value of the shares issued. The translation reserve incorporates the gains and losses on revaluation of the net assets and liabilities of subsidiary undertakings and other currency gains and losses that are presented in equity.
Group Statement of Changes in Shareholders' Equity
For the six months ended 30 June 2018 (continued)
Shares Other Total
Share Share to be Treasury reserves Retained shareholders' Non-controlling Total
Unaudited capital premium issued shares * earnings equity interest equity
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000 GBP'000s
At 1 January
2017 678 23,537 63 (2,328) 7,324 3,018 32,292 294 32,586
--------- --------- --------- --------- --------- --------- -------------- ---------------- ---------
Adjustment
related
to IFRS 15
(note
3) - - - - - 1,549 1,549 - 1,549
--------- --------- --------- --------- --------- --------- -------------- ---------------- ---------
At 1 January
2017
as restated 678 23,537 63 (2,328) 7,324 4,567 33,841 294 34,135
--------- --------- --------- --------- --------- --------- -------------- ---------------- ---------
Loss for the
year - - - - - (2,429) (2,429) 131 (2,298)
Other
comprehensive
income - - - - (413) - (413) (18) (431)
Total
comprehensive
income - - - - (413) (2,429) (2,842) 113 (2,729)
--------- --------- --------- --------- --------- --------- -------------- ---------------- ---------
Transactions
with
owners:
Acquisition of
non-controlling
interests - - - - - 130 130 (130) -
Share based
payment
transactions - - - - - 251 251 - 251
Tax relating to
share option
scheme - - - - - 45 45 - 45
Shares issued 9 917 - - - - 926 - 926
Dividends - - - - - (1,877) (1,877) (135) (2,012)
--------- --------- --------- --------- --------- --------- -------------- ---------------- ---------
At 31 December
2017 687 24,454 63 (2,328) 6,911 687 30,474 142 30,616
--------- --------- --------- --------- --------- --------- -------------- ---------------- ---------
Notes to the interim financial information
For the six months ended 30 June 2018
1. Principal accounting policies
This interim report was approved by the Board of directors on 31 July 2018. The financial information set out in this interim report has been prepared under IFRS as adopted by the European Union and on the basis of the accounting policies set out in the statutory accounts of StatPro Group plc for the year ended 31 December 2017, amended as explained below.
There were no acquisitions in H1 2018.
New and amended accounting standards and interpretations
The following new or amended IFRS and IFRIC interpretations effective as of 1 January 2018, which impact this interim report, are as follows:
-- IFRS 9 Financial Instruments - Classification and Measurement - 1 January 2018 -- IFRS 15 Revenue from Contracts with Customers - 1 January 2018
Interpretations and revised standards that are not yet effective and have not been early adopted by the Group
The following interpretations to existing standards have been published that are mandatory for the Group's future accounting but which the Group has not adopted early. Management has not yet fully assessed the impact of this new standard.
-- IFRS 16 Leases - 1 January 2019
This report is not prepared in accordance with IAS 34, which is not mandatory. This interim report has not been audited but has been reviewed in accordance with ISRE 2410 by the Company's auditors, Ernst & Young LLP. The financial information does not constitute statutory accounts within the meaning of section 435 of the Companies Act 2006. Statutory accounts for StatPro Group plc for the year ended 31 December 2017 reported under IFRS have been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006. Copies of this report will be posted or provided electronically to shareholders. Further copies are available free of charge on request from the Company Secretary at the Company's registered office, Mansel Court, Mansel Road, London SW19 4AA.
Basis of preparation - going concern
After making appropriate enquiries, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For these reasons, the Board continues to adopt the going concern basis in preparing the interim report.
2. Earnings/losses per share
Basic earnings/(loss) per share has been calculated based on the profit after taxation of GBP0.70 million (2017: loss of GBP1.55 million) and the weighted average number of shares of 65.63 million (2017: 64.72 million). The basic earnings per share were 1.1p and diluted earnings per share were 1.0p (2017: basic and diluted loss of 2.4p).
Weighted Weighted
average Earnings average Earnings
number per number per
Earnings of shares share Earnings of shares share
Six Six Six Six Six Six
months months months months months months
to 30 to 30 to 30 to 30 to 30 to 30
June June June June June June
2018 2018 2018 2017 2017 2017
Unaudited Unaudited Unaudited Restated Restated
GBP'000s '000s pence GBP'000s '000s pence
Earnings/(loss) per
share - basic 698 65,626 1.1 (1,545) 64,715 (2.4)
Potentially dilutive
shares - 3,452 (0.1) - - -
Earnings/(loss) per
share - diluted 698 69,078 1.0 (1,545) 64,715 (2.4)
========== =========== ========== ========= =========== =========
Adjusted earnings per share are shown in the table below. The diluted adjusted earnings per share are based on potentially dilutive shares outstanding of 3.45 million (2017: 1.80 million).
Weighted Weighted
average average
number Earnings number Earnings
of per of per
Earnings shares share Earnings shares share
Six Six Six Six Six Six
months months months months months months
to to to to to to
30 30 30 30 30 30
June June June June June June
2018 2018 2018 2017 2017 2017
Unaudited Unaudited Unaudited Restated Restated
GBP'000s '000s pence GBP'000s '000s pence
Earnings/(loss) per share
- basic 698 65,626 1.1 (1,545) 64,715 (2.4)
Add back: amortisation
of acquired intangibles 1,518 - 2.3 881 - 1.4
Add back: non-controlling
interest put option - - - 202 - 0.3
Add back: acquisition-related
and restructuring costs - - - 2,507 - 3.9
Effect of tax on adjusting
items - - - (451) - (0.7)
Add back: share-based payments 37 - (0.0) 144 - 0.2
---------- ---------- ---------- --------- --------- ---------
Adjusted earnings per share 2,253 65,626 3.4 1,738 64,715 2.7
Potentially dilutive shares - 3,452 (0.1) - 1,799 (0.1)
---------- --------- ---------
Adjusted earnings per share
- diluted 2,253 69,078 3.3 1,738 66,514 2.6
========== ========== ========== ========= ========= =========
3. Revenue analysis
Revenue by type of service was as follows:
Six months Six months Change
to to
30 June 30 June
2018 2017
GBP million GBP million %
Revenue Restated
Software licences - StatPro Revolution
(including Delta) 14.34 8.80 63%
Software licences - StatPro Seven 9.93 10.55 (6%)
------------ ------------
Software licences - total 24.27 19.35 25%
Data fees 2.00 2.03 (1%)
------------ ------------
Total recurring revenue 26.27 21.38 23%
Professional services and other
revenue 0.97 1.03 (6%)
------------ ------------
Total revenue 27.24 22.41 22%
============ ============
A key performance indicator for the Group is the Annualised Recurring Revenue ("ARR") from client contracts. The movement in Annualised Recurring Revenue ("ARR") in the 12-month period to June 2018 was as follows:
Annualised Recurring Revenue June
June 2018 2017
GBP million GBP million
At 30 June 2017 53.19 36.17
Net impact of exchange rates (0.77) 1.51
At 30 June 2017 (at 30 June 2018 rates) 52.42 37.68
ARR added from acquisition - 14.53
New contracted revenue 6.11 5.47
Cancellations/reductions (6.28) (4.49)
Net (decrease)/increase (0.17) 0.98
At 30 June 2018 52.25 53.19
ARR added from acquisition of ODDO BHF 1.49 -
contracts (July 2018)
At 30 June 2018 (including contracts
acquired on pro-forma basis) 53.74 53.19
------------------------------------------ ------------ ------------
The movement in Annualised Recurring Revenue ("ARR") in the 12-month period to June 2018 by service was as follows:
Revolution Seven
(cloud) (software) Data Total
GBP million GBP GBP GBP
million million million
-------------------------------------- ------------ ----------- --------- ---------
At 30 June 2017 29.36 19.68 4.15 53.19
Net impact of exchange rates (0.32) (0.30) (0.15) (0.77)
--------------------------------------- ------------ ----------- --------- ---------
At 30 June 2017 (at 30 June
2018 rates) 29.04 19.38 4.00 52.42
New contracted revenue/increases 3.16 1.27 0.21 4.64
Conversions from Seven to Revolution 1.47 (1.47) - -
Cancellations/reductions (3.35) (1.42) (0.04) (4.81)
--------------------------------------- ------------ ----------- --------- ---------
1.28 (1.62) 0.17 (0.17)
Net increase/(decrease) 1.28 (1.62) 0.17 (0.17)
--------------------------------------- ------------ ----------- --------- ---------
Recurring licence fees as at
30 June 2018 30.32 17.76 4.17 52.25
--------------------------------------- ------------ ----------- --------- ---------
Change in total ARR 3% (10%) 0% (2%)
Change in ARR at constant currency 4% (8%) 4% 0%
Change in ARR at constant currency
(excluding impact of Delta and
Investor Analytics acquisitions) 19% (8%) 4% 2%
--------------------------------------- ------------ ----------- --------- ---------
The Annualised Recurring Revenue profile of StatPro Revolution clients was as follows:
StatPro Revolution Annualised Number Average Annualised Number Average
revenue of clients revenue revenue* of clients revenue
per client per client
*
Annualised revenue June June June June June June
bands 2018 2018 2018 2017 2017 2017
GBP'000s Number GBP'000s GBP'000s Number GBP'000s
<GBP10k 279 72 3.9 360 100 3.6
GBP10k - GBP50k 3,098 121 25.6 3,281 132 24.9
GBP50k-GBP100k 3,723 50 74.5 4,467 58 77.0
GBP100k-GBP200k 10,391 74 140.4 9,749 71 137.3
>GBP200k 12,829 32 400.9 11,385 28 406.6
----------- ------------ ------------ ----------- ------------ ------------
Total 30,320 349 86.9 29,242 389 75.2
-------------------- ----------- ------------ ------------ ----------- ------------ ------------
* at constant currency
Impact of IFRS 15
Six Six Six Six Year Year Year
months months months months to to to
to to to to
30 30 June 30 June 30 31 31 31
June June December December December
2018 2017 2017 2017 2017 2017 2017
GBP GBP GBP GBP GBP GBP GBP
million million million million million million million
Revenue IFRS As Adjustment Restated As Adjustment Restated
15 previously for previously for
reported IFRS reported IFRS
15 15
Software licences
- StatPro
Revolution
(including Delta) 14.34 8.80 - 8.80 23.47 - 23.47
Software licences
- StatPro Seven 9.93 9.76 0.79 10.55 19.78 (0.08) 19.70
-------- ----------- ----------- --------- ----------- ----------- ---------
Software licences
- total 24.27 18.56 0.79 19.35 43.25 (0.08) 43.17
Data fees 2.00 2.03 - 2.03 4.07 - 4.07
-------- ----------- ----------- --------- ----------- ----------- ---------
Total recurring
revenue 26.27 20.59 0.79 21.38 47.32 (0.08) 47.24
Professional
services
and other revenue 0.97 1.03 - 1.03 2.02 - 2.02
-------- ----------- ----------- --------- ----------- ---------
Total revenue 27.24 21.62 0.79 22.41 49.34 (0.08) 49.26
======== =========== =========== ========= =========== =========== =========
With effect from 1 January 2018, the Group has implemented the following accounting standard:
-- IFRS 15 Revenue from Contracts with Customers
The main areas considered by the directors in performing this assessment are outlined below.
Accounting for licences
IFRS 15 contains new guidance on accounting for licences, which requires an entity to consider:
a) whether the licence is distinct from other goods and services; and
b) whether the licence provides a 'right to use' software in its current form or a 'right to access' content that changes over time.
Particular consideration was given to accounting for some legacy term licences for a subset of StatPro Seven software products that are not hosted, i.e. they are installed on-premise. The total annualised recurring contract value of these products is approximately GBP6.3 million and these are no longer sold to new customers as an on-premise solution. These licences are considered distinct from support and maintenance services included in the contract and provide a 'right to use' software that does not significantly change over the term of the contract.
Under the previous accounting policy, the Group recognised revenue for the combined licence and support and maintenance fee on a straight-line basis over the term of the contract. Under IFRS 15, the Group is required to recognise revenue in respect of the licence upfront on delivery based on its standalone selling price and recognise revenue in respect of support and maintenance on a straight-line basis over the term of the contract.
The Directors have considered the contractual arrangements and determined that they contain a series of annual performance obligations as the Group is required to deliver a licence key annually. Therefore, whilst the monthly phasing of revenue differs under IFRS 15, and therefore results in an increase of around 16% of revenue on H1 2018, an impact of around 1% for the year as a whole is expected, unless contracts are not renewed. The impact of this on the opening balance sheet at 1 January 2017 was to decrease deferred income by GBP1.92 million and to increase brought forward reserves by GBP1.92 million. The impact on 2018 EBITDA was an increase of GBP0.57 million. The Group continues to transition to cloud-based services in line with its strategy.
The Directors consider that for all other revenue streams, the customer cannot benefit from the licence without a related service provided by the Group and consequently, these are not considered distinct from other services included in the contract. Therefore, there has been no change to revenue recognition for other revenue streams.
Direct costs of obtaining a contract
IFRS 15 requires that direct costs of obtaining a contract are capitalised and amortised over the period these are expected to be recovered.
The main direct cost of obtaining a contract incurred by the Group is sales commissions. Under the Group's previous accounting policy, these were expensed immediately as incurred. Under IFRS 15, these are capitalised and written off over the life of the customer contract. The impact of this on the opening balance sheet was to increase brought forward reserves by approximately GBP0.21 million. The impact on 2018 EBITDA was a decrease of GBP0.01 million.
The profile of cash receipts or payments is not affected by this standard.
The impact on the balance sheet including the opening reserves as at 1 January 2017 was as follows:
Trade
and
other Deferred Deferred
debtors income tax liability Reserves
GBP'000s GBP'000s GBP'000s GBP'000s
Balances as at 1 January
2017 - as previously reported 12,051 (17,601) (1,416) 3,018
Impact of earlier revenue
recognition 1,917 1,917
Impact of commission charges 205 205
Impact of deferred tax (573) (573)
--------- --------- --------------- ---------
205 1, 917 (573) 1,549
Balances as at 1 January
2017 - as restated 12,256 (15,684) (1,989) 4,567
========= ========= =============== =========
The tax profit and loss impact of the restatement was GBP0.17 million additional tax charge for H1 2017 and GBP0.03 million additional tax credit for FY 2017.
4. Adjusting items
There were no one-off adjusting items in H1 2018. One-off adjusting items amounting to a total of GBP2.71 million were incurred in H1 2017. These included: GBP2.51 million related to the acquisition of Delta and associated restructuring charges in the core business. The fair value movement on the non-controlling interest put option of GBP0.20 million relates to Infovest.
Six months Six months
to to
June 2018 June 2017
GBP'000s GBP'000s
Total Total
========================================= ============ ===========
Fair value movement on non-controlling
interest put option - 202
Acquisition transaction, redundancy and
other integration costs - 2,507
Total adjusting items - 2,709
------------------------------------------ ----------- -----------
5. Adjusted profit before taxation, adjusted operating profit, adjusted EBITDA and gross margin analysis
a) Adjusted profit before taxation
Unaudited Unaudited Audited
Six months Six months Year to
to 30 to 30 31 December
June June
2018 2017 2017
Restated Restated
GBP'000s GBP'000s GBP'000s
Profit/(loss) before taxation 899 (1,542) (3,471)
Add back: amortisation on acquired intangible
assets 1,518 881 2,243
Add back: fair value movement on non-controlling
interest put option - 202 404
Add back: acquisition-related and restructuring
costs - 2,507 3,530
Add back: share-based payments 37 144 626
----------- ----------- -------------
Adjusted profit before tax 2,454 2,192 3,332
=========== =========== =============
b) Adjusted operating profit
` Unaudited Unaudited Audited
Six months Six months Year to
to 30 to 30 31 December
June June
2018 2017 2017
Restated Restated
GBP'000s GBP'000s GBP'000s
Operating profit/(loss) 1,929 (1,046) (1,886)
Add back: amortisation on acquired intangible
assets 1,518 881 2,243
Add back: fair value movement on non-controlling
interest put option - 202 404
Add back: acquisition-related and restructuring
costs - 2,507 3,530
Add back: share-based payments 37 144 626
----------- ----------- -------------
Adjusted operating profit 3,484 2,688 4,917
=========== =========== =============
c) Adjusted EBITDA
Unaudited Unaudited Audited
Six months Six months Year to
to 30 to 30 31 December
June June
2018 2017 2017
Restated Restated
GBP'000s GBP'000s GBP'000s
Operating profit/(loss) 1,929 (1,046) (1,886)
Add back: depreciation of property, plant
and equipment 754 743 1,504
Add back: amortisation on purchased intangible
assets 97 95 417
Add back: amortisation on acquired intangible
assets 1,518 881 2,243
Add back: fair value movement on non-controlling
interest put option - 202 404
Add back: acquisition-related and restructuring
costs - 2,507 3,530
Add back: share-based payments 37 144 626
----------- ----------- -------------
Adjusted EBITDA 4,335 3,526 6,838
=========== =========== =============
Adjusted EBITDA margin 15.9% 15.7% 13.9%
d) Gross profit margin analysis
Gross profit margin analysis helps us assess the profitability of incremental revenue as the business evolves into a pure cloud business and the costs drivers begin to change. As there are a number of methodologies for allocating costs, we have described how we have allocated the cost elements. The Board's view is that, as the business grows, the inherent scalability of cloud technology will lead to greater profitability in the future.
Unaudited Unaudited Audited
Six months Six Year
to 30 months to 31
June to 30 December
June
2018 2017 2017
Restated Restated
% % %
Revenue 100.0% 100.0% 100.0%
Cost of services (42.5%) (40.6%) (41.4%)
----------- ---------- ----------
Gross profit margin 57.5% 59.4% 58.6%
R&D costs (5.9%) (5.2%) (5.4%)
Sales & Marketing
costs (9.1%) (10.8%) (11.0%)
General & Administration
costs (26.7%) (28.4%) (29.6%)
----------- ---------- ----------
(41.7%) (44.4%) (46.0%)
Share based payments 0.1% 0.7% 1.3%
----------- ---------- ----------
Adjusted EBITDA 15.9% 15.7% 13.9%
=========== ========== ==========
Definition of cost category for gross margin analysis:
Cost of services includes Client Service employee salaries, Data employee salaries, Development employee salaries related to support, contractors' costs, data costs, costs of software and hardware maintenance.
R&D includes the element of Development employee salaries that relates to new research and development.
Sales & marketing includes Sales and Marketing employee salaries, external marketing costs and sales commissions.
General & administration includes the Finance, HR and IT employee salaries, communications costs, occupancy costs, professional fees, travel and expenses, and other costs.
Six Six Year
months months to 31
to 30 to 30 December
June June
General & Administration 2018 2017 2017
costs
Restated Restated
% % %
Finance, HR &
Administration (2.2%) (1.9%) (2.6%)
IT & Internal
projects (5.3%) (4.9%) (4.8%)
Executive management (2.0%) (2.3%) (1.8%)
Employee-related
costs (7.3%) (6.4%) (8.6%)
-------- --------- ----------
(16.8%) (15.5%) (17.8%)
Property & communications (6.8%) (8.8%) (7.9%)
Professional fees, insurance
and other (3.1%) (4.1%) (3.9%)
-------- --------- ----------
(9.9%) (12.9%) (11.8%)
-------- --------- ----------
Total General & Administration
costs (26.7%) (28.4%) (29.6%)
-------- --------- ----------
Free cash flow
Unaudited Unaudited Audited
Six months Six months Year
to 30 to 30 to 31
June June December
2018 2017 2017
GBP'000s GBP'000s GBP'000s
Cash generated from operations before
acquisition and restructuring costs 6,351 8,762 13,765
Net interest paid (643) (295) (1,227)
Net tax paid (246) (580) (144)
Purchase of property, plant and equipment (358) (365) (1,185)
Investment in intangible assets (2,690) (2,716) (6,028)
----------- ----------- ----------
Free cash flow (before adjusting items) 2,414 4,806 5,181
----------- ----------- ----------
Acquisition-related and restructuring
costs (224) (1,283) (3,089)
----------- ----------- ----------
Free cash flow 2,190 3,523 2,092
=========== =========== ==========
Property, plant and equipment amounting to GBP0.89 million acquired under finance leases is excluded from the cash flow on PPE.
6. Reconciliation of profit before tax to net cash inflow from operating activities
Unaudited Unaudited Audited
Six
Six months months
to 30 to 30 Year to
June June 31 December
2018 2017 2017
Restated Restated
GBP'000s GBP'000s GBP'000s
Profit/(loss) before taxation 899 (1,542) (3,471)
Net finance expense 1,030 496 1,585
----------- ---------- -------------
Operating profit/(loss) 1,929 (1,046) (1,886)
Fair value movement on non-controlling
interest put option - 202 404
Acquisition-related, restructuring costs
and negative goodwill - 2,507 3,530
Depreciation of property, plant and equipment 754 743 1,504
Amortisation of intangible assets 3,411 2,915 7,096
Decrease/(increase) in receivables 2,091 3,501 (888)
(Decrease)/increase in payables and provisions (830) (433) 2,971
(Decrease)/increase in deferred income (1,041) 229 408
Share-based payments 37 144 626
----------- ---------- -------------
Net cash inflow from operating activities
before acquisition and restructuring costs 6,351 8,762 13,765
----------- ---------- -------------
Acquisition-related and restructuring costs (224) (1,283) (3,089)
----------- ---------- -------------
Net cash inflow from operating activities 6,127 7,479 10,676
=========== ========== =============
7. Reconciliation of net cash flow to movement in net debt
At 1 January Non-cash Exchange At 30 June
2018 Cash flow changes differences 2018
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
--------------------------- ------------- ---------- --------- ------------ -----------
Cash and cash equivalents
(per balance sheet) 4,311 (943) - (129) 3,239
Overdrafts - - - - -
--------------------------- ------------- ---------- --------- ------------ -----------
Cash and cash equivalents
(per statement of cash
flows) 4,311 (943) - (129) 3,239
Finance leases (1,456) 498 (892) (3) (1,853)
Bank, other loans and
derivatives (23,071) (1,167) (132) (181) (24,551)
--------------------------- ------------- ---------- --------- ------------ -----------
Net debt (20,216) (1,612) (1,024) (313) (23,165)
--------------------------- ============= ========== ========= ============ ===========
At 1 January Non-cash Exchange At 30 June
2017 Cash flow changes differences 2017
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
--------------------------- ------------- ---------- --------- ------------ -----------
Cash and cash equivalents
(per balance sheet) 4,356 (1,207) - 205 3,354
Overdrafts - - - - -
--------------------------- ------------- ---------- --------- ------------ -----------
Cash and cash equivalents
(per statement of cash
flows) 4,356 (1,207) - 205 3,354
Finance leases (1,228) 280 (1,073) 3 (2,018)
Bank, other loans and
derivatives (13,192) (7,281) (94) 311 (20,256)
--------------------------- ------------- ---------- --------- ------------ -----------
Net debt (10,064) (8,208) (1,167) 519 (18,920)
--------------------------- ============= ========== ========= ============ ===========
8. Dividend
An interim dividend for 2018 of 0.85 pence per ordinary share (2017: 0.85 pence) will be paid on 7 November 2018 to shareholders on the register on 5 October 2018. A final dividend for 2017 of 2.05 pence per ordinary share was paid on 30 May 2018.
9. Acquisitions
Acquisition payment for Investor Analytics
In January 2018, StatPro Inc. made the final payment of US$ 1.0 million (GBP0.7 million) in relation to the acquisition in 2016 of Investor Analytics.
Acquisition of further shares in Infovest
In March 2018, StatPro South Africa (Pty) Ltd. purchased a further 27.3% shares in Infovest for ZAR 30.4 million (GBP1.9 million) taking the total Group interest in Infovest to 100%.
Acquisition of ODDO BHF's regulatory risk service
On 2 July 2018, StatPro completed the First Closing of the acquisition from ODDO BHF of its regulatory risk service. The acquisition adds a full, managed service for regulatory risk reporting capability, which will use StatPro's existing Revolution platform, thus expanding the service delivery options for StatPro clients. It also adds ten new clients to StatPro's client base in Germany and Luxembourg. The service will be marketed by StatPro throughout the EU. Other highlights are:
-- ODDO BHF risk services has annualised recurring revenues of approximately EUR1.7 million -- Expected to enhance Group adjusted eps in 2019 -- Enhances StatPro's solutions with managed regulatory risk services offering
StatPro will take on the employees of ODDO BHF risk services in Frankfurt, where they will be integrated with StatPro's existing operations.
Fair value of assets acquired Provisionally
and liabilities acquired estimated
fair value
GBP'000
Trade debtors 372
Intangible asset - Brand and
client contract 998
--------------
1,370
Deferred income (372)
--------------
(372)
--------------
Total identifiable net assets
at fair value 998
Goodwill arising on acquisition 247
--------------
Fair value of purchase consideration 1,245
==============
10. Goodwill and other intangible assets
Other intangible assets decreased, mainly due to the amortisation of acquired intangible assets. Goodwill movements resulted from revaluations due to currency movements.
11. Other creditors and provisions
Other creditors greater than one year were GBP2.14 million, mainly relating to the deferred consideration due on Delta.
Provisions of GBP0.18 million at 30 June 2018 (December 2017: GBP0.30 million) relates to residual deferred contingent consideration and provisions for redundancies and onerous contracts. On 25 July 2017, former shareholders of SiSoft Sarl lodged an appeal against the French Commercial Court's decision on the valuation of the shares purchased by StatPro. The Court is expected review the appeal in Q4 2018. Management believe there is no merit in the appeal as the valuation was backed by an expert's report and no further amount has been provided.
June June June June
Provisions - Group 2018 2018 2018 2017
Contingent Redundancies Total Total
consideration and onerous
contracts
GBP'000s GBP'000s GBP'000s GBP'000s
At 1 January 41 263 304 680
Utilised in the
period - (126) (126) (1,899)
Arising in the
period - - - 2,507
Exchange differences 3 (5) (2) (4)
At 30 June 44 132 176 1,284
=============== ============= ========= =========
12. Share capital and treasury shares
139,358 shares were issued during the period (2017: nil) and 40,000 shares were transferred from treasury to satisfy share awards. At 30 June 2018, there were 68,833,650 shares (2017: 67,813,650 shares) in issue including 3,058,713 (2017: 3,098,713) held in treasury (65,774,937 excluding treasury shares). The treasury shares do not accrue dividends and are excluded from the earnings per share calculation.
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 2018, which comprises the Group Income Statement, Group Statement of Comprehensive Income, Group Balance Sheet, Group Statement of Cash Flows, Group Statement of Changes in Shareholders' Equity and the related notes 1 to 12. 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.
This report is made solely to the Company in accordance with guidance contained in International Standard on Review Engagements 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our work, for this report, or for the conclusions we have formed.
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 Interim Report in accordance with the AIM Rules issued by the London Stock Exchange which require that it is presented and prepared in a form consistent with that which will be adopted in the Company's annual accounts having regard to the accounting standards applicable to such annual accounts.
As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRS's as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with the AIM Rules issued by the London Stock Exchange.
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.
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 2018 is not prepared, in all material respects, in accordance with the accounting policies outlined in Note 1, which comply with IFRS's as adopted by the European Union and in accordance with the AIM Rules issued by the London Stock Exchange.
Ernst & Young LLP
London
31 July 2018
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
IR LFFFIDIILVIT
(END) Dow Jones Newswires
August 01, 2018 02:00 ET (06:00 GMT)
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