TIDMSOG
RNS Number : 5125Z
StatPro Group PLC
15 March 2017
15 March 2017
StatPro Group plc
Strong growth in StatPro Revolution drives revenue
StatPro Group plc, ("StatPro", "the Group", AIM:SOG), the AIM
listed provider of cloud-based portfolio analysis and asset pricing
services for the global asset management industry, today announces
its unaudited preliminary results for the year ended 31 December
2016.
2016 2015 Change Constant
currency
(1)
GBP30.19
Revenue GBP37.55 m m 24% 16%
Annualised Recurring Revenue GBP28.70
(2) GBP39.27 m m 37% 18%
GBP(10.12) GBP2.41
(Loss)/profit before tax m m n/a n/a
GBP4.04
Adjusted EBITDA (3) GBP5.10 m m 26% 5%
(Loss)/earnings per share
- basic (15.4)p 2.4p n/a
- adjusted (3) 3.5p 2.6p 35%
Dividend per share - total
for year 2.9p 2.9p -
----------------------------------------------- ----------- --------- ------- ----------
Financial highlights:
-- Group revenue increased by 24% to GBP37.55 million (2015: GBP30.19 million)
-- Group Annualised Recurring Revenue ("ARR") (2) increased by
18% at constant currency to GBP39.27 million (2015: GBP33.36
million (1) )
-- Adjusted EBITDA (3) up 26% to GBP5.10 million (2015: GBP4.04 million)
-- Goodwill impairment, acquisition, restructuring costs and
other one-off adjusting items of GBP11.38 million (2015: nil)
impacted the reported profit and earnings per share
-- Net cash inflow from operating activities before acquisition
and restructuring costs increased to GBP8.91 million (2015: GBP6.55
million)
-- Adjusted earnings per share up 35% to 3.5p from 2.6p
-- Full year dividend maintained at 2.9 pence per share
Operational highlights
-- Positive adjusted EBITDA contributions from 2016 acquisitions
o US-based Investor Analytics ("IA"), leading cloud-based
complementary risk solution business, now fully integrated and
marketed as Revolution Alpha
o Majority shareholding (now 72.7%) in South African Infovest
Consulting, software business specialising in data warehouse and
reporting solutions
-- Successful launch of StatPro Revolution Performance module in September 2016
-- Achieved record value of new contracts for StatPro Revolution
adding ARR of GBP3.78 million (2015: GBP3.17 million (1) ),
including two banner deals signed in H1 2016 by large fund
administrators
-- StatPro Revolution ARR grew 32% at constant currency excluding acquisitions
(1) At constant currency based on restating the prior year at
the closing or average currency rate.
(2) Annualised Recurring Revenue is the annual value of revenue
contractually committed at year end.
(3) Adjusted EBITDA and adjusted earnings per share are EBITDA
and earnings per share after adjustment for amortisation of
acquired intangible assets, goodwill impairment, acquisition and
restructuring costs, negative goodwill, fair value movement in
non-controlling interest put option, movements in contingent
consideration and share based payments (notes 5, 6 and 8).
Justin Wheatley, Chief Executive of StatPro, commented:
"2016 was a pivotal year for us. We made two acquisitions,
successfully launched Revolution Performance, won significant new
business for this core new service and achieved our best year ever
for new contracts for StatPro Revolution. Revenue and profitability
were in line with our expectations.
"The market for portfolio risk management and analytics is
rapidly changing as technology evolves and asset managers
streamline their businesses by outsourcing infrastructure, software
and data to service providers.
"We have positioned our products to benefit from these changes
and to service them directly or via our many fund administration
clients.
"Our total forward order book of contracted revenue is now GBP46
million and the current financial year has started well. We aim to
continue our steady accretion of annualised recurring revenue
whilst benefiting from the operational leverage inherent within our
business."
- Ends -
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) 596/2014 (MAR).
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 - Tom Salvesen
Instinctif Partners
Adrian Duffield / Lauren Foster +44 (0) 20 7457 2020
A briefing for analysts on the results will be held at 9.30am
today at the offices of
Instinctif Partners, 65 Gresham Street, London, EC2V 7NQ
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.
StatPro has grown its Annualized Recurring Revenue from less
than GBP1 million in 1999 to around GBP39 million at the end of
December 2016. The Group has operations in Europe, North America,
South Africa, Asia and Australia, with hundreds of clients in 36
countries around the world. Approximately 80% of recurring revenues
are generated outside the UK. StatPro Group plc shares are listed
on AIM.
Overview
2016 saw total revenue increase by 24% to GBP37.55 million
(2015: GBP30.19 million) and adjusted EBITDA rose 26% to GBP5.10
million (2015: GBP4.04 million). This growth in revenue was driven
by strong underlying growth in StatPro Revolution of 48% at
constant currency (60% at actual rates), combined with the positive
impact of the acquisitions. On a constant currency basis, excluding
revenue from acquisitions, revenue increased 2%.
Adjusted earnings per share rose 35% to 3.5p (2015: 2.6p). Net
cash inflow from operating activities before acquisition and
restructuring costs increased to GBP8.91 million (2015: GBP6.55
million).
Group ARR rose 37% to GBP39.27 million (2015: GBP28.70 million).
Excluding acquisitions on a constant currency basis, Group ARR
increased by 6%. Excluding acquisitions on a constant currency
basis, StatPro Revolution ARR rose 32%.
The Group reviewed the goodwill on historic transactions, which
resulted in a non-cash impairment charge of GBP9.72 million, which
impacted the reported profits and earnings per share.
The Board is recommending that the full year dividend is
maintained at 2.9p per share (2015: 2.9p).
The launch of Revolution Performance in September 2016 was well
received with over 500 people attending 12 launch events around the
world, including around 200 people in London.
As a result of the marketing and sales effort, the Group fully
expects to convert a significant number of its client contracts
during 2017, as well as win new business from prospects.
Strategic positioning
Having positioned StatPro early as a true cloud-based service,
the Group has developed a significant commercial advantage in its
market. StatPro's investment in StatPro Revolution has put the
Group in a strong position for the coming years. No other company
in the sector has the cloud-based technology StatPro has
developed.
StatPro's objective is to expand the functionality offered in
StatPro Revolution so that it becomes the broadest-based portfolio
risk and performance platform in the market. Most services
available in the market have a bias towards either risk or
performance, but none has managed to be the best in both areas.
However, risk and performance use materially the same data sources
and the resultant duplication of effort facing most asset managers
makes them extremely inefficient.
Regardless of how markets are performing, asset managers need to
understand their performance and risk and report it to their
clients.
The Group's collective knowledge across many markets in multiple
analytics disciplines has helped build a very broad range of highly
sophisticated analytics, designed to suit the needs of all types of
asset managers across all the major markets.
StatPro believes it can offer a best in class solution for both
areas from a functional perspective. In addition, because of its
cloud-based technology, the superior processing power of StatPro
Revolution means that clients can process more information at a
much faster rate.
The Group will continue to consider making acquisitions to widen
its customer base and/or increase its product portfolio.
Current trading and outlook
With the full suite of Revolution services launched, StatPro is
in a strong position to capitalise on the investments it has made
in its cloud-based technology. StatPro now has more than ten
clients using Revolution Performance and more than 30 clients
scheduled to review the service in the coming months. The huge
potential improvements in productivity they can achieve due to the
scalability of StatPro Revolution are compelling.
The total forward order book of contracted revenue increased by
9% to GBP46.00 million of which GBP21.40 million relates to StatPro
Revolution.
The Group achieved its best level ever for new contracts signed
in the year for StatPro Revolution (including IA sales) adding ARR
of GBP3.78 million (2015: GBP3.17 million at constant
currency).
Trading in 2017 has started well. In March 2017, the Group
signed a six-year contract for StatPro Revolution with a leading
European asset manager for a minimum value of approximately EUR3
million. The Group expects another year of good growth in sales of
StatPro Revolution.
Acquisitions
The Group's acquisition in January 2016 of Investor Analytics
("IA") has augmented this strategy. IA offers clients broader risk
functionality, as well as a multi-tenant technology. The Group's
challenge has been to make IA available to clients directly within
the Revolution platform.
The Group has recently completed the first part of the physical
integration of IA into StatPro Revolution with the latest release
in February 2017. The service has been renamed Revolution Alpha.
This means that StatPro can now start actively marketing Revolution
Alpha to its broad client base.
The Group is also investing in expanding the capability of
Revolution Alpha, adding Fundamental Factor Models, which simplify
client access to core risk information and combines it with
performance data in reports for their own clients.
IA made a positive contribution to adjusted EBITDA in 2016. Net
ARR reduced to $4.0 million at the end of 2016 from $4.8 million on
acquisition in January 2016 as new sales were impacted by IA not
being fully integrated into StatPro and also there were a number of
hedge fund clients closing down.
The Group's investment in Infovest has also proven profitable,
with revenues and profits rising strongly during 2016. As a result,
the Group has raised its shareholding in Infovest to 72.7% on 22
February 2017.
Infovest will remain as a separate brand that offers StatPro's
clients data management solutions. These solutions enable a more
rapid implementation of the StatPro Revolution Service and ensure
customisable dissemination of reports. StatPro provides the
standardised analytics and data service and Infovest provides the
customised integration service. The combination is already proving
to be very effective for clients.
Operational review
StatPro had its best year yet for sales of StatPro Revolution
with organic revenue growth up GBP2.95 million (48%) on a constant
currency basis (2015: GBP2.23 million or 64%). The two biggest
deals of the year occurred in the first half, with State Street and
National Australia Bank ("NAB") committing to Revolution
Performance before its official launch. Both these client contracts
are likely to expand significantly in value over the coming
years.
Fund administrators are winning a growing share of the
performance and risk analytics market as asset managers seek to
outsource data management and production of standard reports.
However, asset managers want to keep the most sophisticated
analysis in house. StatPro Revolution is ideally suited to serve
this objective as its cloud-based technology allows collaboration
between the fund administrator and the asset manager, where the
fund administrator manages the data and the asset manager accesses
the results on a self-service basis.
As the Group completes the implementation for these two
significant clients, it believes that they will serve as excellent
references for its many prospects. NAB spoke at two of StatPro's
launch events, endorsing StatPro Revolution with eight clients live
on the system by 1 October 2016, having only signed with StatPro in
May 2016. They are planning to have all 36 clients live by the end
of 2017.
StatPro Revolution now represents 38% of ARR (2015: 27%).
Revenue from StatPro Seven that can be converted to Revolution is
now GBP7.53 million and most of the new growth in Revolution
revenues is coming from new sales rather than converted StatPro
Seven contracts.
StatPro Seven ARR was GBP19.74 million at the end of 2016, down
5% excluding acquisitions on a constant currency basis. StatPro
Seven Composites experienced growth of 5% at constant currency as
the Group saw increased interest in GIPS(R) (Global Investment
Performance Standards) from clients in the UK and the US.
The element of StatPro Seven software not scheduled for
conversion to a cloud-based solution, and which is still being
developed, represents GBP12.21 million in ARR. StatPro believes
that this revenue will remain resilient for the foreseeable
future.
Data contracts represent GBP4.49 million of ARR and grew 6% at
constant currency during 2016. The Group has taken measures to
streamline and improve the efficiency of its data service over the
last two years. The benefits of this exercise are showing in
greater client satisfaction and retention.
A large part of the Group's data operation is integral to
StatPro Revolution's data service, providing millions of prices for
assets and indexes each day.
All regions have seen improvements in performance, especially
Australia, following the NAB contract signing. Overall, the best
performing region was the UK followed by continental Europe. South
Africa had a good year and remains one of the strongest markets.
The addition of Infovest consolidates this position. In the US, the
main success was the State Street contract and the acquisition of
IA, bringing with it an office with talented risk experts in New
York City.
Financial review
Group revenue increased by 24% to GBP37.55 million (2015:
GBP30.19 million). The revenue contribution from the two
acquisitions made in 2016 was GBP4.15 million. The underlying
revenue increase at constant currency was 2%.
Revenue growth was driven by strong underlying growth in StatPro
Revolution of 48% at constant currency (60% at actual rates),
combined with the positive impact of the acquisitions, offset by
the expected reduction in revenue for StatPro Seven of 13% at
constant currency (5% at actual rates).
Revenue bridge GBPm
2015 at actual rates 30.19
Change year
on year at constant
Underlying growth currency
StatPro Revolution 2.95 48%
StatPro Seven (2.70) (13%)
Data 0.10 3%
Professional fees 0.22 12%
0.57 2%
Impact of acquisitions
and currency
Acquisitions 4.15
Currency impact 2.64
-------
7.36
--------
2016 at actual rates 37.55
--------
93% of Group revenue in 2016 was recurring revenue (2015:
95%).
Contracted revenue
The total forward order book of contracted revenue increased by
9% to GBP46.00 million at 31 December 2016 (2015 at constant
currency: GBP42.10 million). The value of contracted revenue signed
during 2016 was GBP14.01 million (2015: GBP11.71 million).
The proportion by value of recurring software licences and data
clients secured to the end of 2017 or beyond amounted to 69% (2015:
71%); the weighted average length of contracts committed was 15
months (2015: 16 months).
The Group achieved its best level yet for new contracts signed
in the year for StatPro Revolution (including IA sales) adding ARR
of GBP3.78 million (2015: GBP3.17 million at constant currency),
which increased the forward order book of contracted revenue for
StatPro Revolution by 28% to GBP21.40 million (2015 at constant
currency: GBP16.67 million).
This record level of contracted sales was underpinned by two
banner deals, which were signed in H1 2016, demonstrating the
endorsement of StatPro's platform solution, including StatPro
Revolution Performance by large fund administrators.
Excluding the contracts acquired from IA, the forward order book
of contracted revenue for StatPro Revolution increased by 14% to
GBP19.05 million.
Professional services revenue increased by 44% at constant
currency (56% at actual rates) to GBP2.56 million (2015: GBP1.64
million), including GBP0.57 million in Infovest. Excluding the
impact of the acquisition, professional services revenue grew by
12% at constant currency.
Recurring revenue
The Group's SaaS business model of recurring revenue contracts
continues to provide excellent visibility of revenue. The ARR at
the end of December 2016 increased by 37% over the previous 12
months to GBP39.27 million (2015: GBP28.70 million).
Excluding the impact of acquisitions and currency rates, the
organic growth in Group ARR was 6%. Approximately 83% of new
recurring contracted revenue came from existing clients (2015:
85%).
The net growth rate for StatPro Revolution's ARR was 68% (2015:
46%). The organic growth in StatPro Revolution ARR was 32%,
excluding the impact of acquisitions and currency rates (see note
3).
The ARR for StatPro Seven reduced by 2% overall at constant
currency to GBP19.74 million (2015: GBP20.17 million), as expected.
Excluding the impact of acquisitions, StatPro Seven's ARR reduced
by 5% at constant currency.
StatPro Seven ARR can be split into two parts: those modules
that are set to be converted to Revolution over the next few years,
amounting to GBP7.53 million (SPA, SFI & SRM), and the balance
of GBP12.21 million is for modules that are still being marketed
(primarily SC, SPM and SPC).
The ARR from cloud services (StatPro Revolution and IA) is now
GBP15.04 million, representing 38% of the Group total (2015: 27%)
and has grown at a higher rate than other services.
There has been an increase of 54% in average revenue per StatPro
Revolution client to GBP50,100 (2015: GBP32,500 at constant
currency), including the impact of IA, where average revenue per IA
client is approximately GBP82,400.
The organic growth of average ARR per client for StatPro
Revolution was 39%. Further analysis on revenue and ARR is provided
in note 3.
Acquisitions
During 2016, StatPro completed two acquisitions.
Investor Analytics
On 21 January 2016, StatPro acquired the entire share capital of
Investor Analytics LLC for cash consideration of US$10 million
(including deferred consideration). The restructuring and
integration of the business including simplifying and reducing data
feeds, administrative services and other costs, and moving to a
smaller office in New York, was achieved as planned. Acquisition
and restructuring costs of GBP1.06 million, including transaction
fees, were incurred in 2016.
The Group has made good progress on the product integration (now
marketed as Revolution Alpha) with Alpha accessible by single
sign-on on the Revolution platform, which makes it possible to
market Alpha to StatPro's large Revolution client base.
During 2016, IA experienced a higher rate of cancellations than
normal due to seven of its hedge fund clients unexpectedly closing
their funds. Nevertheless, the adjusted EBITDA contribution from
Investor Analytics was in line with the Board's expectations.
Acquisition of majority control of Infovest
With effect from 1 March 2016, StatPro South African (Pty) Ltd
acquired a 51% shareholding (increased to 72.7% on 22 February
2017) in Infovest Consulting (Pty) Ltd, a South African
headquartered software provider, specialising in data warehouse,
ETL and reporting software for the asset management industry.
The consideration was made via the transfer of StatPro Portfolio
Control ("SPC") licence agreements to Infovest, which Infovest
supports on behalf of StatPro. Infovest is managed on a standalone
basis and the Board is pleased to report that the revenue and
profit growth were in line with expectations.
The non-controlling interest since acquisition amounted to
GBP0.09 million (representing the non-controlling interest share of
net profit after tax). Further details on these acquisitions are in
note 15.
SaaS-based KPIs
The Group has been a leading pioneer in the use of SaaS metrics
within AIM quoted companies. One such measure is the cost of
acquiring each customer ("CAC") in comparison with the Lifetime
Value of the customer contracts ("LTV").
Having introduced these new KPIs in 2015, and following a
review, StatPro have refined the methodology for the calculation
using three year averages for retention rates (and the exclusion of
conversions from sales and cancellations) as the Group believes
this is a fairer measure, compared to a one year calculation.
2016 2015
Average Cost of Acquiring Customer
("CAC") (GBP'000s) 98.0 85.8
Implied Customer Lifetime (years) 14.3 12.6
Average ARR per customer (GBP'000s) 88.6 80.0
Implied Customer Lifetime Value
("LTV") (GBP'000s) 1,267 1,005
LTV: CAC 12.9 11.7
Generally 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 adjusting items, increased by 28% (20% at constant currency)
to GBP30.25 million (2015: GBP23.72 million). Excluding the impact
of acquisitions and currency movements, the underlying increase was
6%. The average number of employees increased to 266 (2015: 242) as
a result of the acquisitions.
Goodwill impairment
As part of the annual review of goodwill impairment, StatPro
identified an impairment charge of GBP9.72 million. Goodwill is
assessed against the business cash flows as one cash generating
unit. The Group reassessed and reduced future cashflows of legacy
revenue as part of its strategy of converting to cloud revenue, due
to changes in perceived market conditions. This impairment charge
has been allocated to goodwill arising from the Group's acquisition
of FRI, a Canadian business, acquired in October 2006 and whose
value had increased significantly in 2016 as a result of the
strength of the Canadian dollar. There is no cash or tax impact of
this charge.
Movements on contingent consideration
Included in the fair value of purchase consideration was a
provision of GBP0.19 million for contingent consideration for
Investor Analytics, but as the conditions for this payment were not
met, the provision has now been released. The Group also resolved
the dispute with non-controlling interests in SiSoft resulting in a
net release of a provision for contingent consideration amounting
to GBP0.09 million.
Non-controlling interest put option
There is a liability based on the fair value at 31 December 2016
of the non-controlling interest in Infovest, in the event that
StatPro is required by a put option to buy out those interests.
This liability has increased by GBP0.63 million since the half-year
value in June 2016.
Acquisition related, restructuring charges and negative
goodwill
Acquisition related and restructuring charges amounting to a
total of GBP1.48 million were incurred. These include: GBP1.06
million for acquisition of IA, of which GBP0.47 million are for
transaction costs and the remainder reorganisation costs,
redundancies and onerous leases. GBP0.42 million relate to a
reorganisation of the Paris office including redundancy costs and
onerous leases. There was also a credit of GBP0.18 million negative
goodwill arising on the Infovest acquisition.
Finance income and expense
Net finance expense was GBP0.79 million (2015: GBP0.29 million),
which is mainly due to the finance costs of the Group's credit
facility. Non-cash interest charges amounted to GBP0.12 million.
The debt has arisen following the acquisition of Investor Analytics
and the share buyback.
Profitability
The loss before taxation was GBP10.12 million (2015: profit
GBP2.41 million), which was impacted by the goodwill impairment and
other adjusting items including amortisation of acquired intangible
assets, acquisition and restructuring costs, movements in
contingent consideration and share based payments. The adjusted
EBITDA was up 26% at actual rates (5% at constant currency) to
GBP5.10 million (2015: GBP4.04 million). The impact of currency
movements on the adjusted EBITDA was GBP0.86 million. Gross profit
margin (see note 6) was 61.1% (2015: 61.4%).
Adjusted profit before taxation increased by 4% to GBP2.68
million (2015: GBP2.56 million).
The reconciliation from adjusted EBITDA to loss before taxation
is shown below.
2016 2015 Change
GBP'000s GBP'000s %
Adjusted EBITDA 5,104 4,044 26%
Depreciation of property, plant
and equipment (1,327) (996)
Amortisation on purchased intangible
assets (316) (196)
--------- ---------
Adjusted operating profit 3,461 2,852 21%
Amortisation on acquired intangible
assets (1,060) (32)
Share based payments (361) (121)
Goodwill impairment (9,724)
Other one-off adjusting items (1,654)
--------
Total one-off adjusting items (11,378) -
--------- ---------
Operating (loss)/profit (9,338) 2,699 n/a
Net finance expense (786) (290)
--------- ---------
(Loss)/profit before taxation (10,124) 2,409 n/a
--------- ---------
Taxation
The tax credit was GBP0.07 million (2015: charge GBP0.79
million). The underlying effective tax rate on adjusted profit
before tax was approximately 16% (2015: 33%). The Group tax rate is
lower than the prior year primarily due to the benefits of R&D
tax credits in the UK and South Africa and the utilisation of
historic tax losses not previously recognised.
(Loss)/earnings per share
Actual loss per share was 15.4p (2015: earnings 2.4p) and
diluted loss per share was 15.1p (2015: earnings 2.4p), primarily
driven by the impact of goodwill impairment and other one-off
charges.
Adjusted earnings per share increased by 35% to 3.5p (2015:
2.6p).
Dividends
The Directors are recommending maintaining the final dividend of
2.05p per share (2015: 2.05p) making a total dividend for 2016 of
2.9p per share (2015: 2.9p).
The final dividend will be paid on 26 May 2017 to all
shareholders on the register at the close of business on 28 April
2017.
Total dividends paid in 2016 were GBP1.88 million (2015: GBP1.96
million), which was lower than the prior year as a result of the
share buyback in March 2016. The dividend cover, calculated as
adjusted eps: dividends per share, was 1.21 times (2015: 0.90).
Balance sheet
The Group's net assets at the year-end reduced to GBP32.59
million (2015: GBP41.52 million), the reduction being primarily due
to the goodwill impairment of GBP9.72 million and the increase in
financial liabilities. Net assets were also impacted by the
goodwill and assets acquired with the two acquisitions in 2016.
The main increase in the liabilities was the increase in
borrowings related to the acquisition of IA and share buy-back.
Deferred income, which is a non-cash liability, increased to
GBP17.60 million (2015: GBP13.31 million) and the deferred tax
liability increased to GBP1.42 million (2015: GBP0.23 million).
Cash flow and financing
StatPro continues to be cash generative with cash generated from
operations before acquisition and restructuring costs of GBP8.91
million (2015: GBP6.55 million); after payment for acquisition and
restructuring costs, cash generated from operations was GBP7.45
million.
The Group ended the year with net debt of GBP10.06 million
(2015: net cash GBP1.28 million). The increase in net debt arose as
a result of the financing of the IA acquisition and share buyback
using the Group's debt facilities.
The free cash flow, before acquisition and restructuring
payments, was GBP0.65 million (2015: GBP0.62 million inflow). The
free cash flow was impacted by higher levels of investment in
property, plant and equipment and intangibles, tax and interest
payments.
The Group also makes use of finance leases for certain IT
projects where there are commercial advantages to do so. Total
finance leases (included in the net debt figure above) amounted to
GBP1.23 million (2015: GBP0.27 million).
Share buyback
On 11 March 2016, the Company purchased 2,873,713 shares at a
price of 72p per share. This was financed by its debt facility with
Wells Fargo.
Research and development and capex
The research and development team is now focused almost entirely
on the Group's cloud-based solutions, the StatPro Revolution
platform. The Group committed a similar proportion (16%) of its
revenue to R&D expenditure compared to the prior year at
GBP5.94 million (2015: GBP4.93 million). This was an increase of
14% at constant currency and the increase was driven by Revolution
Performance and the IA integration.
Development costs of GBP4.57 million were capitalised in the
year (2015: GBP4.05 million) and amortisation on internal
development was GBP3.88 million (2015: GBP3.54 million).
Expenditure on other intangible assets was GBP0.37 million
(2015: GBP0.08 million) and total capital expenditure on property,
plant and equipment was GBP1.52 million (2015: 0.88 million).
Post balance sheet events
Deferred consideration relating to acquisition of Investor
Analytics
As planned, a further deferred payment of US$ 2.0 million was
paid to former IA shareholders on 23 January 2017.
Acquisition of further shares in InfoVest
On 22 February 2017, StatPro South Africa (Pty) Ltd. purchased a
further 21.7% shares in Infovest for ZAR 19.1 million (GBP1.2
million) taking the total Group interest in Infovest to 72.7%. The
Directors believe that the purchase of this additional interest
will be earnings enhancing in the current year (see note 15).
Financing facility
The Group has a financing facility with Wells Fargo for
acquisitions, share buy backs and general corporate purposes. As
part of the acquisition of Investor Analytics in January 2016, the
financing facilities were increased.
At 31 December 2016, the Group had net debt of GBP10.06 million
and total credit facilities of GBP25.2 million available, of which
GBP17.7 million was committed.
In February 2017, the Group took the option to convert GBP4
million of the uncommitted GBP7.5 million facility to a committed
element. The detailed components of the current total facilities
available are:
-- GBP10 million committed revolving credit facility
-- GBP4 million committed term loan
-- US$8.475 million committed term loan
-- US$1 million committed deferred drawdown loan
-- GBP3.5 million uncommitted additional facility available
The facility is committed to July 2020, subject to compliance
with agreed covenants, primarily linked to recurring revenue,
adjusted EBITDA and available liquidity. The financing costs are
being amortised over the original 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.
GROUP INCOME STATEMENT FOR THE YEARED 31 DECEMBER 2016
Notes 2016 2016 2016 2015
GBP'000s GBP'000s GBP'000s GBP'000s
Existing Acquisitions Total
operations
Revenue 3 33,392 4,153 37,545 30,187
Operating expenses before amortisation
of intangible assets and other
adjusting items (26,676) (3,578) (30,254) (23,722)
Amortisation of acquired intangible
assets - (1,060) (1,060) (32)
Amortisation of other intangible
assets (4,191) - (4,191) (3,734)
Goodwill impairment 5 (9,724) - (9,724) -
Fair value movement on non-controlling
interest put option 5 - (628) (628) -
Movements in provisions for contingent
consideration 86 186 272 -
Acquisition related, restructuring
costs and negative goodwill 5 (415) (883) (1,298) -
--------------------------------------------------------- ------ ----------- ------------- --------- ---------
Operating expenses 4 (40,920) (5,963) (46,883) (27,488)
----------- ------------- --------- ---------
Operating (loss)/profit (7,528) (1,810) (9,338) 2,699
Finance income 33 9
Finance expense (819) (299)
--------- ---------
Net finance expense (786) (290)
--------- ---------
(Loss)/profit before taxation 6 (10,124) 2,409
Taxation 7 74 (788)
--------- ---------
(Loss)/profit for the year (10,050) 1,621
--------- ---------
Profit attributable to non-controlling 94 -
interests
(Loss)/profit attributable to equity
shareholders (10,144) 1,621
--------- ---------
(10,050) 1,621
========= =========
(Loss)/earnings per share - basic 8 (15.4)p 2.4p
-
diluted 8 (15.1)p 2.4p
GROUP STATEMENT OF COMPREHENSIVE INCOME FOR THE YEARED 31
DECEMBER 2016
2016 2015
GBP'000s GBP'000s
(Loss)/profit for the year (10,050) 1,621
Other comprehensive income to be reclassified
to the income statement:
Net exchange differences 6,606 (4,012)
Total comprehensive loss for the year (3,444) (2,391)
========= =========
Attributable to:
Non-controlling interests 139 -
Equity shareholders (3,583) (2,391)
Total comprehensive loss for the year (3,444) (2,391)
========= =========
BALANCE SHEET AT 31 DECEMBER 2016
Notes Group Group
2016 2015
GBP'000s GBP'000s
Non-current assets
Goodwill 44,759 42,460
Other intangible assets 10,937 6,153
Property, plant and equipment 2,742 2,233
Other receivables 9 134 147
Deferred tax assets 516 807
--------- ---------
59,088 51,800
Current assets
Trade and other receivables 9 12,051 8,264
Current tax assets 2,674 198
Cash and cash equivalents 4,356 2,203
--------- ---------
19,081 10,665
Liabilities
Current liabilities
Financial liabilities - borrowings (8,459) (118)
Financial liabilities - non-controlling (2,557) -
interest put option
Financial instruments - other (32) (41)
Trade and other payables 10 (7,573) (4,654)
Current tax liabilities (485) (1,106)
Deferred income (17,534) (13,217)
Provisions 11 (680) (642)
(37,320) (19,778)
--------- ---------
Net current liabilities (18,239) (9,113)
--------- ---------
Non-current liabilities
Financial liabilities - borrowings (5,961) (801)
Other creditors and accruals 10 (819) (47)
Deferred tax liabilities (1,416) (233)
Deferred income (67) (89)
(8,263) (1,170)
--------- ---------
Net assets 32,586 41,517
========= =========
Shareholders' equity
Share capital 678 678
Share premium 23,537 23,537
Shares to be issued 63 63
Treasury shares (2,328) (249)
Other reserves 7,324 2,692
Retained earnings 3,018 14,796
--------- ---------
Total shareholders' equity 32,292 41,517
--------- ---------
Non-controlling interests 294 -
Total equity 32,586 41,517
========= =========
GROUP STATEMENT OF CASH FLOWS FOR THE YEARED 31 DECEMBER
2016
Group Group
2016 2015
GBP'000s GBP'000s
Operating activities
Cash generated from operations 12 7,454 6,548
Finance income 30 9
Finance costs (530) (93)
Tax received 453 -
Tax paid (1,747) (832)
--------- ---------
Net cash flow from operating activities 5,660 5,632
--------- ---------
Investing activities
Acquisition of subsidiaries (net of (4,786) -
cash acquired)
Investment in intangible assets (4,940) (4,127)
Purchase of property, plant and equipment (1,518) (881)
Proceeds from the disposal of property,
plant and equipment 13 9
Net cash flow used in investing activities (11,231) (4,999)
--------- ---------
Financing activities
Net proceeds from bank loans and derivatives 11,685 639
Net (payments to)/proceeds from finance
leases (330) 269
Proceeds from issue of ordinary shares - 64
Purchase of own shares (2,079) -
Dividends paid to shareholders (1,877) (1,960)
Net cash flow from/(used in) financing
activities 7,399 (988)
--------- ---------
Net increase/(decrease) in cash and
cash equivalents 1,828 (355)
--------- ---------
Cash and cash equivalents at 1 January 2,203 2,692
Effect of exchange rate movements 325 (134)
Cash and cash equivalents at 31 December 4,356 2,203
========= =========
GROUP STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE
YEARED 31 DECEMBER 2016
Share Share Shares Treasury Other Retained Non-controlling Total
capital premium to shares reserves earnings interests equity
be
issued
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
At 1 January
2015 677 23,474 63 (249) 6,704 15,016 - 45,685
--------- --------- --------- --------- --------- --------- ---------------- ---------
Profit for
the year - - - - - 1,621 - 1,621
Other
comprehensive
income - - - - (4,012) - - (4,012)
--------- --------- --------- --------- --------- --------- ---------------- ---------
Total
comprehensive
income - - - - (4,012) 1,621 - (2,391)
--------- --------- --------- --------- --------- --------- ---------------- ---------
Transactions
with owners:
Share based
payment
transactions - - - - - 121 - 121
Tax relating
to share
option scheme - - - - - (2) - (2)
Shares issued 1 63 - - - - - 64
Dividends - - - - - (1,960) - (1,960)
--------- --------- --------- --------- --------- --------- ---------------- ---------
1 63 - - - (1,841) - (1,777)
--------- --------- --------- --------- --------- --------- ---------------- ---------
At 31 December
2015 678 23,537 63 (249) 2,692 14,796 - 41,517
========= ========= ========= ========= ========= ========= ================ =========
Share Share Shares Treasury Other Retained Non-controlling Total
capital premium to shares reserves earnings interests equity
be
issued
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
At 1 January
2016 678 23,537 63 (249) 2,692 14,796 - 41,517
--------- --------- --------- --------- --------- --------- ---------------- ---------
Profit for the
year - - - - - (10,144) 94 (10,050)
Other
comprehensive
income - - - - 6,561 - 45 6,606
--------- --------- --------- --------- --------- --------- ---------------- ---------
Total
comprehensive
income - - - - 6,561 (10,144) 139 (3,444)
--------- --------- --------- --------- --------- --------- ---------------- ---------
Transactions
with owners:
Put option
relating
to
non-controlling
interests - - - - (1,929) - - (1,929)
Non-controlling
interests - - - - - - 155 155
Purchase of own
shares - - - (2,079) - - - (2,079)
Share based
payment
transactions - - - - - 220 - 220
Tax relating
to share option
scheme - - - - - 23 - 23
Shares issued - - - - - - - -
Dividends - - - - - (1,877) - (1,877)
--------- --------- --------- --------- --------- --------- ---------------- ---------
- - - (2,079) (1,929) (1,634) 155 (5,487)
--------- --------- --------- --------- --------- --------- ---------------- ---------
At 31 December
2016 678 23,537 63 (2,328) 7,324 3,018 294 32,586
========= ========= ========= ========= ========= ========= ================ =========
Other reserves include merger reserves of GBP2,369,000 (2015:
GBP2,369,000), translation reserve of GBP6,884,000 (2015:
GBP323,000) and a reserve for the put option held by
non-controlling interest of a debit balance of GBP1,929,000 (2015:
nil). The merger reserve arose on acquisitions and represents the
difference between the fair value of shares issued and the nominal
value of the shares. The translation reserve incorporates the gains
and losses on revaluation of the net assets and liabilities of
subsidiary undertakings and other currency gains and losses that
are treated as part of equity.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARED 31 DECEMBER
2016
1. Announcement
This announcement was approved by the Board of directors on 14
March 2017. The preliminary results for the year ended 31 December
2016 are unaudited. The financial information set out in this
announcement does not constitute the Company's statutory accounts
for the years ended 31 December 2016 or 31 December 2015. The
financial information set out in the announcement has been prepared
on the basis of the accounting policies set out in the statutory
accounts of StatPro Group plc for the year ended 31 December 2015.
This condensed consolidated financial information does not
constitute statutory accounts within the meaning of Section 434 of
the Companies Act 2006. The auditor's report on the financial
statements for the year ended 31 December 2015 was unqualified and
did not contain a statement under Section 498 of the Companies Act
2006. The financial statements for the year ended 31 December 2015
have been delivered to the Registrar of Companies.
2 Segmental information
The Group's operating segments have been determined based on the
information regularly reviewed by the Group Executive Board, which
has been identified as the Chief Operating Decision Maker ("CODM").
With the strategic focus of the business to move fully to cloud
technology solutions, and following an analysis of the management
information reviewed by the Chief Operating Decision Maker, the
Board considers the business operates with one cash generating unit
("CGU").
All revenue, profit/(loss) before taxation and total assets are
attributable to the principal activity of the Group, being the
development, marketing and distribution of software, data solutions
and related professional services to the global asset management
industry. Additional disclosures of revenue by service are provided
in these notes but, as there is only one CGU, there is no analysis
of profit by service/type of revenue.
3 Revenue analysis
Revenue by type of service was as follows:
2016 2016 2016 2015
Existing Acquisitions Total Change
GBP GBP million GBP GBP %
million million million
Revenue
StatPro Revolution 9.13 3.13 12.26 5.72 114%
StatPro Seven 18.47 0.45 18.92 19.49 (3%)
Data fees 3.81 - 3.81 3.34 14%
--------- ------------- --------- ---------
Total recurring revenue 31.41 3.58 34.99 28.55 23%
Professional services and
other revenue 1.99 0.57 2.56 1.64 56%
--------- ------------- --------- ---------
Total revenue 33.40 4.15 37.55 30.19 24%
========= ============= ========= =========
Percentage of total revenue
that is recurring 94% 86% 93% 95%
A key performance indicator for the Group is the Annualised
Recurring Revenue ("ARR") from client contracts. The movement in
ARR in the year was as follows:
Revolution Seven (software) Data Total
(cloud)
GBP million GBP million GBP GBP
million million
As at 31 December 2015 7.80 17.41 3.49 28.70
Net impact of exchange rates 1.15 2.76 0.75 4.66
------------ ----------------- --------- ---------
At 1 January 2016 (at December
2016 rates) 8.95 20.17 4.24 33.36
New contracted revenue/ increases 2.44 1.62 0.33 4.39
Conversions from Seven to
Revolution 1.13 (1.13) - -
Cancellations / reductions (0.70) (1.48) (0.08) (2.26)
------------ ----------------- --------- ---------
2.87 (0.99) 0.25 2.13
ARR from acquisitions (including
sales/cancellations) 3.22 0.56 - 3.78
------------ ----------------- --------- ---------
Net increase/(decrease) 6.09 (0.43) 0.25 5.91
Recurring licence fees as
at 31 Dec 2016 15.04 19.74 4.49 39.27
============ ================= ========= =========
Change in total ARR 93% 13% 29% 37%
Change in ARR at constant
currency 68% (2%) 6% 18%
Change in ARR at constant
currency excluding acquisitions 32% (5%) 6% 6%
The ARR distribution profile for StatPro Revolution is as
follows:
Annualised Annualised Number Average Annualised Number Average
Revenue Revenue of Clients Revenue Revenue of Clients Revenue
Bands per Client * per Client
*
---------------- ----------- ------------ ------------ ----------- ------------ ------------
2016 2016 2016 2015 2015 2015
GBP'000s Number GBP'000s GBP'000s Number GBP'000s
---------------- ----------- ------------ ------------ ----------- ------------ ------------
<GBP2k 59 49 1.2 86 69 1.2
GBP2k-GBP10k 282 58 4.9 406 73 5.6
GBP10k-GBP50k 2,243 102 22.0 2,121 85 25.0
GBP50k-GBP100k 2,955 38 77.8 2,517 29 86.8
>GBP100k 9,496 53 179.2 3,819 19 201.0
----------- ------------ ------------ ----------- ------------ ------------
Total 15,035 300 50.1 8,949 275 32.5
---------------- ----------- ------------ ------------ ----------- ------------ ------------
*At constant currency
4 Operating expenses
2016 2015
GBP'000s GBP'000s
Operating expenses relate to:
Staff costs
- Research and development 5,943 4,930
- Other staff costs 12,693 9,633
- Share based payment 361 121
- Internal development costs capitalised (4,570) (4,052)
--------- ---------
Total staff costs 14,427 10,632
Depreciation of property, plant and equipment 1,327 996
Amortisation of intangible assets 5,251 3,766
Operating lease rentals in respect of:
- Land and buildings 1,910 1,512
- Other 20 19
Auditors' remuneration 256 199
Goodwill impairment 9,724 -
Fair value movement on non-controlling
interest put option 628 -
Movements in provisions for contingent
consideration (272) -
Acquisition related, restructuring costs
and negative goodwill 1,298 -
Other operating expenses 11,790 10,384
Exchange differences 524 (20)
Total operating expenses 46,883 27,488
========= =========
5 Goodwill impairment and other adjusting items
The profit and earnings have been adjusted for the following
items in order to provide a fairer view of the underlying
performance of the business. Further details are provided in notes
6 and 8.
Goodwill impairment
As part of the annual review of goodwill impairment, StatPro
identified an impairment charge of GBP9.72 million. Goodwill is
assessed against the business cash flows as one cash generating
unit. The Group reassessed and reduced future cashflows of legacy
revenue as part of its strategy of converting to cloud revenue, due
to changes in perceived market conditions. This impairment charge
has been allocated to goodwill arising from the Group's acquisition
of FRI, a Canadian business, acquired in October 2006 and whose
value had increased significantly in 2016 as a result of the
strength of the Canadian dollar. There is no cash or tax impact of
this charge.
Movements on contingent consideration
Investor Analytics
Included in the fair value of purchase consideration was a
provision of GBP0.19 million for contingent consideration but, as
the conditions for this payment were not met, the provision has now
been released.
SiSoft
The dispute over the buy-out of the 22% non-controlling interest
in SiSoft that was not owned by StatPro has finally been resolved
in the French Commercial Court. StatPro's approach to the valuation
has been vindicated by the Court and costs have also been awarded
in StatPro's favour. As a result there was a net release of a
provision for contingent consideration amounting to GBP0.09
million.
Non-controlling interest put option
There is an obligation (in the event of the death of a
shareholder in Infovest) for StatPro to buy-out the non-controlling
interest, and therefore a liability based on the fair value at 31
December 2016 of the non-controlling interest has been made. This
is estimated to be GBP2.56 million and the movement in the
liability since June 2016 was GBP0.63 million.
Acquisition related, restructuring charges and negative
goodwill
Acquisition related and restructuring charges amounting to a
total of GBP1.48 million were incurred. These include: GBP1.06
million related to the acquisition of IA, of which GBP0.47 million
related to transaction costs and the remainder related to
reorganisation costs, redundancies and onerous leases; GBP0.42
million relating to a reorganisation of the Paris office including
redundancy costs and onerous leases. There was also a credit of
GBP0.18 million negative goodwill arising on the Infovest
acquisition.
2016 2016 2016 2015
GBP'000s GBP'000s GBP'000s GBP'000s
Existing Acquisitions Total
operations
Goodwill impairment (9,724) - (9,724) -
Movements in provisions for contingent -
consideration
Release of provision for SiSoft
following settlement 86 - 86 -
Release of provision for contingent
consideration for IA - 186 186 -
------------ ------------- --------- ---------
86 186 272 -
Fair value movement on non-controlling
interest put option - (628) (628) -
Acquisition related, restructuring
costs and negative goodwill
Acquisition transaction, redundancy
and other integration costs - (1,062) (1,062) -
Redundancies and onerous lease
on Paris restructuring (415) - (415) -
Negative goodwill on Infovest acquisition - 179 179 -
------------ ------------- --------- ---------
(415) (883) (1,298) -
Total of adjusting items (10,053) (1,325) (11,378) -
============ ============= ========= =========
6 Adjusted profit before taxation, adjusted operating profit
margin and adjusted EBITDA
In order to provide the reader of the accounts with profit
measures that more clearly demonstrate the underlying business
performance from year to year a number of adjusted profit measures
are shown below.
a) Adjusted profit before taxation
2016 2015
GBP'000s GBP'000s
(Loss)/profit before taxation (10,124) 2,409
Add back: amortisation on acquired intangible
assets 1,060 32
Add back: goodwill impairment 9,724 -
Add back: fair value movement on non-controlling 628 -
interest put option
Add back: movements in provisions for (272) -
contingent consideration
Add back: acquisition related, restructuring 1,298 -
costs and negative goodwill
Add back: share based payments 361 121
Adjusted profit before tax 2,675 2,562
========= =========
b) Adjusted operating profit
2016 2015
GBP'000s GBP'000s
Operating (loss)/profit (9,338) 2,699
Add back: amortisation on acquired intangible
assets 1,060 32
Add back: goodwill impairment 9,724 -
Add back: fair value movement on non-controlling 628 -
interest put option
Add back: movements in provisions for (272) -
contingent consideration
Add back: acquisition related, restructuring 1,298 -
costs and negative goodwill
Add back: share based payments 361 121
Adjusted operating profit 3,461 2,852
========= =========
c) Adjusted EBITDA
2016 2015
GBP'000s GBP'000s
Operating (loss)/profit (9,338) 2,699
Add back: depreciation of property, plant
and equipment 1,327 996
Add back: amortisation on purchased intangible
assets 316 196
Add back: amortisation on acquired intangible
assets 1,060 32
Add back: goodwill impairment 9,724 -
Add back: fair value movement on non-controlling 628 -
interest put option
Add back: movements in provisions for (272) -
contingent consideration
Add back: acquisition related, restructuring 1,298 -
costs and negative goodwill
Add back: share based payments 361 121
Adjusted EBITDA 5,104 4,044
========= ===================
Adjusted EBITDA margin 13.6% 13.4%
d) Gross profit margin analysis
Gross profit margin analysis helps us assess the profitably 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.
2016 2015
-------------------------------- -------- --------
Revenue 100.0% 100.0%
Cost of services (38.9%) (38.6%)
-------------------------------- -------- --------
Gross profit margin 61.1% 61.4%
R&D costs (5.4%) (4.2%)
Sales & Marketing costs (10.3%) (11.3%)
General & Administration costs (32.8%) (32.9%)
-------------------------------- -------- --------
(48.5%) (48.4%)
Share based payments 1.0% 0.4%
-------- --------
Adjusted EBITDA 13.6% 13.4%
-------------------------------- -------- --------
Definition of cost category for gross margin analysis:
Cost of services includes Clients Services 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. These are
analysed in further details below.
General & Administration costs
Finance, HR & Administration (3.2%) (4.6%)
IT & Internal projects (4.7%) (5.1%)
Executive management (2.7%) (2.3%)
Employee related costs including travel (7.4%) (5.8%)
-------- --------
(18.0%) (17.8%)
Property & communications (9.8%) (10.3%)
Professional fees, insurance and other (5.0%) (4.8%)
-------- --------
(14.8%) (15.1%)
-------- --------
Total G&A (32.8%) (32.9%)
-------- --------
e) Free cash flow
2016 2015
GBP'000s GBP'000s
Cash generated from operations before acquisition
and restructuring costs 8,905 6,548
Net interest paid (500) (84)
Net tax paid (1,294) (832)
Purchase of property, plant and equipment (1,518) (881)
Investment in intangible assets (4,940) (4,127)
--------- ---------
Free cash flow before acquisition and restructuring
costs 653 624
--------- ---------
Acquisition related and restructuring costs (1,451) -
Free cash flow after acquisition and restructuring
costs (798) 624
========= =========
7 Taxation
2016 2015
GBP'000s GBP'000s
Current tax
Current tax on profits for the year 1,512 (1,223)
Adjustments in respect of prior years 205 272
--------- ---------
Total current tax 1,717 (951)
Total deferred tax (1,643) 163
Income tax credit/(expense) 74 (788)
========= =========
The tax impact of the adjusting items is as follows:
2016 2015
GBP'000s GBP'000s
Tax charge on profit before tax and adjusting
items (395) (788)
Tax credit on adjusting items 469 -
Tax credit/(charge) on profit before tax and
after adjusting items 74 (788)
========= =========
The tax on the Group's profit before tax differs from the
standard rate of corporation tax in the UK of 20.0% (2015: 20.25%)
as follows:
2016 2015
GBP'000s GBP'000s
(Loss)/profit before tax (10,124) 2,409
--------- ---------
Tax credit/(charge) on (loss)/profit before tax
at standard rate of corporation tax in the UK of
20.0% (2015: 20.25%) 2,025 (488)
Tax effects of:
Non-taxable income and non-deductible expenses 777 (552)
Non- deductible impairment of goodwill (1,945) -
Unrecognised deferred tax movement (1,144) (183)
Recognition of previously unrecognised deferred
tax asset 33 260
Adjustments in respect of prior years 205 272
Difference in tax rates on current tax (901) (157)
Difference in tax rates on deferred tax 1,024 60
--------- ---------
Tax credit/(charge) 74 (788)
========= =========
8 Earnings per share
Earnings per share - basic and diluted
Earnings Weighted Earnings Earnings Weighted Earnings
average per average per
number share number share
of shares of shares
2016 2016 2016 2015 2015 2015
GBP'000s '000s pence GBP'000s '000s pence
Earnings per share
- basic (10,050) 65,272 (15.4) 1,621 67,568 2.4
Potentially dilutive
shares - 1,285 0.3 - 551 (0.0)
--------- ----------- --------- --------- ----------- ---------
Earnings per share
- diluted (10,050) 66,557 (15.1) 1,621 68,119 2.4
---------------------- --------- ----------- --------- --------- ----------- ---------
Earnings per share - adjusted
Earnings Weighted Earnings Earnings Weighted Earnings
average per average per
number share number share
of of
shares shares
2016 2016 2016 2015 2015 2015
GBP'000s '000s pence GBP'000s '000s pence
Earnings per share - basic (10,050) 65,272 (15.4) 1,621 67,568 2.4
Add back: Amortisation on
acquired intangible assets 1,060 - 1.6 32 - 0.0
Add back: Goodwill impairment 9,724 - 14.9 - - -
Add back: Non-controlling
interest put option 628 - 1.0 - - -
Add back: Movements in provisions
for contingent consideration (272) - (0.4) - - -
Add back: Acquisition related,
restructuring costs and
negative goodwill 1,298 - 2.0 - - -
Effect of tax on adjusting
items (469) - (0.7) - - -
Add back: share based payments 361 - 0.5 121 - 0.2
--------- --------- --------- --------- ---------
Adjusted earnings per share 2,280 65,272 3.5 1,774 67,568 2.6
Potentially dilutive shares - 1,285 (0.1) - 551 (0.0)
--------- --------- --------- --------- --------- ---------
Adjusted earnings per share
- diluted 2,280 66,557 3.4 1,774 68,119 2.6
----------------------------------- --------- --------- --------- --------- --------- ---------
The adjusted earnings per share information has been provided in
order to assist the reader to understand the underlying performance
of the business on a comparable basis. Potentially dilutive shares
exclude any anti-dilutive share options.
9 Trade and other receivables
Current assets: trade and other receivables
2016 2015
GBP'000s GBP'000s
Trade receivables 9,182 6,219
Other receivables 420 111
Prepayments 1,603 1,464
Accrued income 404 286
VAT recoverable 332 109
Rental deposits 110 75
--------- ---------
12,051 8,264
========= =========
Non-current assets: other receivables
2016 2015
GBP'000s GBP'000s
Rental deposits 134 147
--------- ---------
134 147
========= =========
10 Trade and other payables
Current liabilities: trade and other payables
2016 2015
GBP'000s GBP'000s
Trade creditors 984 1,416
Other creditors and accruals 2,040 2,053
Deferred consideration 1,609 -
Other taxation and social security 2,940 1,185
7,573 4,654
========= =========
Non-current liabilities: other creditors
2016 2015
GBP'000s GBP'000s
Other creditors 33 47
Deferred consideration 786 -
819 47
========= =========
The non-current "Other creditors and accruals" of GBP0.03
million (2015: GBP0.05 million) relates to lease inducements, which
are amortised over the period of the relevant lease.
11 Provisions
Provisions of GBP0.68 million at 31 December 2016 (2015: GBP0.64
million) relates to contingent consideration for a number of
acquisitions and provisions for redundancies and onerous contracts.
It includes an amount for the acquisition of the non-controlling
interest in SiSoft Sarl and the contingent element of the deferred
consideration for Investor Analytics. Total movement on provisions
for the Group is as follows:
2016 2016 2016 2015
Contingent Redundancies Total Total
consideration and onerous
contracts
GBP'000s GBP'000s GBP'000s GBP'000s
At 1 January 642 - 642 738
Arising in the year 186 1,474 1,660 -
Utilised in the year 0 (1,451) (1,451) (55)
Released in year (272) - (272) -
Exchange differences 101 - 101 (41)
At 31 December 657 23 680 642
=============== ============= ========= =========
The contingent consideration relates to the SiSoft and Investor
Analytics ("IA") acquisitions. The dispute over the buy-out of the
22% non-controlling interest in SiSoft that was not owned has
finally been resolved in the French Commercial Court. StatPro's
approach to the valuation has been vindicated by the Court and
costs have also been awarded in StatPro's favour. As a result there
was a net release of a provision for deferred consideration
amounting to GBP0.09 million. The settlement payment has been made
in February 2017. The balance of the redundancies and onerous
contracts is expected to be paid in 2017.
12 Reconciliation of (loss)/profit before tax to net cash inflow
from operating activities
Group Group
2016 2015
GBP'000s GBP'000s
(Loss)/profit before taxation (10,124) 2,409
Net finance expense 786 290
--------- ---------
Operating (loss)/profit (9,338) 2,699
Goodwill impairment 9,724 -
Fair value movement on non-controlling interest
put option 628 -
Movements in provisions for contingent consideration (272) -
Acquisition related, restructuring costs and
negative goodwill 1,298 -
Depreciation of property, plant and equipment 1,327 996
Loss on disposal of property, plant and equipment 29 11
Amortisation of intangible assets 5,251 3,766
(Increase)/decrease in receivables (1,937) (782)
Decrease in payables and provisions 380 (1,402)
Increase in deferred income 1,453 1,139
Share based payments 362 121
--------- ---------
Net cash inflow from operating activities before
acquisition and restructuring costs 8,905 6,548
--------- ---------
Acquisition related and restructuring costs (1,451) -
--------- ---------
Net cash inflow from operating activities after
acquisition and restructuring costs 7,454 6,548
========= =========
13 Analysis of changes in net (debt)/cash
At Cash Non-cash Exchange At 31
1 January flow changes differences December
2016 2016
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
Cash and cash equivalents
(per balance sheet) 2,203 1,828 - 325 4,356
Overdrafts - - - - -
----------- --------- --------- ------------- ----------
Cash and cash equivalents
(per statement of cash
flows) 2,203 1,828 - 325 4,356
Finance leases (269) 330 (1,289) - (1,228)
Bank, other loans and derivatives (650) (11,685) 80 (937) (13,192)
Net (debt)/cash 1,284 (9,527) (1,209) (612) (10,064)
=========== ========= ========= ============= ==========
At 1 Cash Non-cash Exchange At 31
January flow changes differences December
2015 2015
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
Cash and cash equivalents
(per balance sheet) 2,692 (355) - (134) 2,203
Overdrafts - - - - -
--------- --------- --------- ------------- ----------
Cash and cash equivalents
(per statement of cash
flows) 2,692 (355) - (134) 2,203
Finance leases - (269) - - (269)
Bank, other loans and derivatives (12) (639) - 1 (650)
Net cash 2,680 (1,263) - (133) 1,284
========= ========= ========= ============= ==========
14 Contingent liabilities
As is normal for a group of this size and scope of operations,
Group companies are involved in a number of potential legal claims
and disputes from time to time arising from our activities, none of
which are expected to have a material impact on the Group's
financial results.
15 Acquisitions
Acquisition of Investor Analytics
On 21 January 2016, StatPro Inc. (a wholly owned subsidiary of
the Company) acquired the entire share capital of Investor
Analytics LLC, the US-headquartered, cloud-based risk analytics'
company to hedge funds and asset managers for a cash consideration
of $10 million (including deferred consideration of US$3 million).
Additional contingent payment of up to $6 million was theoretically
payable dependent on securing a number of new contract wins but
this has not occurred and so the contingency (fair value GBP0.19
million) has lapsed. The fair value of the total consideration was
$10.12 million (GBP7.16 million).
Highlights of the acquisition are:
-- Complementary Risk Factor and Monte Carlo models to add to
StatPro's Historical Simulation risk model
-- Significantly increases StatPro's US presence, enhancing geographical reach
-- Annualised Recurring Revenue ("ARR") of $4.8 million (GBP3.3 million)
-- Earnings enhancing in 2016 on a pro-forma basis following
completion of the integration programme
-- 53 client contracts - all new client relationships for StatPro
-- Cash consideration:
o $7 million on closing
o Two deferred payments - $2 million after one year and $1 million after two years
Additional contingent payment of up to $6 million was
theoretically payable dependent on securing a number of new
contract wins but this has not occurred and so the contingency has
lapsed.
Based on unaudited results for the year ended 31 December 2015,
IA reported revenue of approximately $5.0 million (of which
approximately 94% was recurring) and an EBITDA loss of
approximately $0.3 million. Cost synergies have been achieved for
data feeds, administrative services, property and other costs. The
one-off charges associated with achieving these, including
transaction costs for the acquisition, was GBP1.06 million.
The tables below provides the allocation of the purchase price
to the fair value of intangible and tangible assets acquired as
required under IFRS 3. There have been some changes to the
provisional fair values that were presented at the interim report,
the main effect being to reduce goodwill by about GBP1.38 million
following a review of the intangible asset valuations and deferred
tax assumptions. There is no deferred tax liability shown as the
consideration is tax deductible. Goodwill relates to certain items
attributable to specific intangible assets such as the workforce
but the main element relates to the synergies expected from
combining the two businesses and being able to cross-sell
complementary risk solutions. The fair values of the assets and
liabilities are presented below.
Fair value of assets acquired
and liabilities assumed
Fair
value
GBP'000
Property, plant and equipment 66
Trade debtors 275
Other receivables 219
Cash and cash equivalents 129
Brand and client contract 2,825
Technology 1,082
--------
4,596
Deferred income (631)
Other creditors and provisions (430)
--------
(1,061)
--------
Total identifiable net assets
at fair value 3,535
Goodwill arising on acquisition 3,626
--------
Fair value of purchase consideration 7,161
========
Acquisition of Infovest
With effect from 1 March 2016, StatPro South Africa (Pty) Ltd.
(a wholly owned subsidiary of the Company) acquired 51% of the
share capital of Infovest Consulting (Pty) Ltd, a South African
headquartered software provider, specialising in data warehouse,
ETL and reporting software for the asset management industry. The
purchase has been made via the transfer of StatPro Portfolio
Control ("SPC") licence agreements to Infovest, which StatPro
provides to South African clients and which Infovest currently
supports on behalf of StatPro.
Highlights of the acquisition are:
-- Acquisition of 51% of Infovest
-- Purchase settled by the transfer of SPC licence contracts to InfoVest
-- Joint marketing agreement signed to promote each other's products and services
-- Justin Wheatley, StatPro CEO and Craig Arenhold, CEO StatPro
South Africa joined Infovest Board, although the business is
managed independently
-- Acquisition was earnings enhancing in 2016
Given increased regulations there is a growing demand for
compliance management solutions such as SPC, which is a module of
one of StatPro's products, StatPro Seven. By taking a majority
stake in Infovest, StatPro will benefit from this expanding market
as well as improving the product and services it offers.
Infovest's data warehouse software is a cost effective solution
for asset managers and service providers to manage their internal
data effectively in order to provide both input data to other
systems and for reporting. The success of implementing a solution
such as StatPro Revolution Performance depends on a client's
ability to provide data in a reliable manner. Infovest's software
is designed to do precisely this.
In addition, StatPro and InfoVest have entered into a joint
marketing agreement to promote each other's products and services
as part of StatPro. InfoVest products will keep their current
branding, whilst benefitting from the marketing reach of
StatPro.
Based on unaudited results for the year ended 28 February 2016,
Infovest reported revenue of ZAR 20.7 million (approximately GBP1.0
million), including approximately GBP0.19 million revenue for
supporting SPC. There have been some minor changes to the
provisional fair values that were presented at the interim report.
The provisional fair values of the assets and liabilities are
presented below.
Fair value of assets acquired and
liabilities assumed
Fair
value
GBP'000
Property, plant and equipment 34
Trade debtors 329
Other receivables 34
Cash and cash equivalents 67
Brand and client contract 276
Technology 178
--------
918
Deferred income (405)
Other creditors and provisions (52)
Deferred tax liability (127)
--------
(584)
--------
Total identifiable net assets at
fair value 334
Non-controlling interest measured
at fair value (155)
Goodwill arising on acquisition (179)
--------
Fair value of purchase consideration -
========
The negative goodwill arises as there was no deemed
consideration following the transfer of SPC contracts and the
goodwill is credited to the profit and loss as an adjusting item
(see note 5).
There is also a liability included in the Group balance sheet
amounting to GBP2.56 million (fair value of GBP1.93 million at
acquisition date) relating to Infovest due to the requirement to
include a fair value, as defined by IFRS 13, for the theoretical
potential amount that StatPro would pay to buy out the
non-controlling shareholders under certain circumstances (see note
5).
On 22 February 2017, StatPro South Africa (Pty) Ltd. purchased a
further 21.7% shares in Infovest for ZAR 19.1 million (GBP1.2
million) taking the total Group interest in Infovest to 72.7%.
16 Goodwill and other intangible assets
As part of the annual review of goodwill impairment, StatPro
identified an impairment charge of GBP9.72 million. Goodwill is
assessed against the business cash flows as one cash generating
unit. The Group reassessed and reduced future cashflows of legacy
revenue as part of its strategy of converting to cloud revenue, due
to changes in perceived market conditions. This impairment charge
has been allocated to goodwill arising from the Group's acquisition
of FRI, a Canadian business, acquired in October 2006 and whose
value had increased significantly in 2016 as a result of the
strength of the Canadian dollar. There is no cash or tax impact of
this charge.
The net increase in goodwill since 31 December 2015 of GBP2.30
million relates to increases due to the acquisition of IA amounting
to GBP3.63 million and exchange gains of GBP8.39 million on
revaluation of goodwill denominated in foreign currencies, offset
by the goodwill impairment charge of GBP9.72 million. Other
intangible assets comprise internally generated development costs
capitalised, acquired intangible assets (client contracts,
technology and brands) and purchased intangible assets.
17 Share capital and treasury shares
No shares were issued during the year (2015: 106,000). 2,873,713
shares were purchased into treasury in March 2016. At 31 December
2016, there were 67,813,650 shares (2015: 67,813,650 shares) in
issue including 3,098,713 (2015: 225,000) held in treasury
(64,714,937 excluding treasury shares). The treasury shares do not
accrue dividends and are excluded from the earnings per share
calculation.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR JAMFTMBIBMIR
(END) Dow Jones Newswires
March 15, 2017 03:00 ET (07:00 GMT)
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