TIDMSOG
RNS Number : 2777H
StatPro Group PLC
31 July 2019
31 July 2019
StatPro Group plc
Continued increase in profitability as cloud services continue
to grow strongly
StatPro Group plc, (AIM: SOG, "StatPro", "the Group"), a 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 2019.
Six months Six months % change % change
ended 30 ended 30 at constant
June 2019 June 2018 currency
Restated
(3)
GBP28.25 GBP27.24
Revenue m m +3.7% +3.2%
Annualised Recurring Revenue GBP56.48 GBP52.25
("ARR") (1) m m +8.1% +5.7%
GBP5.68
Adjusted EBITDA (2) m GBP5.18 m +9.7% +10.2%
(Loss)/profit before tax (GBP0.26) GBP0.81 m
m
Earnings per share - adjusted
(2) 3.8p 3.3p +15%
(Loss)/earnings per share - basic (0.3)p 1.0p
Interim dividend per share 0.85p 0.85p -
----------------------------------- ----------- ----------- --------- -------------
Financial highlights:
-- Group revenue up 3.7% to GBP28.25 million (2018: GBP27.24 million)
o Recurring revenue grew to 98% (2018: 96%) of total Group revenue
o Revolution platform ARR grew by 22.9% (4) (2018: 19.0%) to
GBP17.64 million (2018: GBP14.35 million)
o Software as a service (SaaS) as a percentage of software ARR grew to 85% (2018: 84%)
-- Adjusted EBITDA increased by 9.7% to GBP5.68 million (2018: GBP5.18 million)
-- Free cash flow (before acquisition and restructuring costs)
increased to GBP3.53 million from GBP3.16 million
Operating highlights:
-- Strategic partnership signed with J.P. Morgan to develop Risk
and Performance Attribution capabilities for portfolio managers and
distribute through J.P. Morgan's data and analytics platform
-- Environmental, social and governance ("ESG") research and
index business unit of ECPI acquired in July 2019
-- Fixed Income module released on StatPro Revolution - enabling
final phase of conversions of clients from StatPro Seven to
Revolution
(1) Annualised Recurring Revenue is the annual value of revenue
contractually committed at period end.
(2) Adjusted EBITDA and adjusted earnings/loss per share are
EBITDA and earnings/loss per share after adjustment for
amortisation of acquired intangible assets, acquisition
transaction, redundancy and other integration costs, and
share-based payments (see notes 2 and 5).
(3) The interim and full year accounts for 2018 have been
restated to take into account the adoption of IFRS 16 and deferred
tax (see note 1) and the SiSoft provision (see note 4).
(4) Underlying ARR growth relates to revenue on the Revolution
platform and excludes the acquired cloud revenues from Delta and
Investor Analytics, and includes clients converted from Seven and
other products at constant currency (see note 3).
Justin Wheatley, Chief Executive of StatPro, commented:
"We have continued to execute on our strategy to grow
organically whilst switching our clients from legacy software onto
our expanding Revolution platform cloud service - which saw another
period of strong ARR growth.
"The stand-out development in H1 was our new partnership with
J.P. Morgan. It strengthens our market position and equally
importantly, it is a step change in our distribution capacity.
"As we approach the end of our conversion programme - which will
result in a marked improvement in margins - we are developing our
routes to market and also expanding our services for both our fund
administration and asset manager clients."
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/Kay Larsen/Chantal
Woolcock +44 (0) 20 7457 2020
About StatPro
StatPro Group (www.statpro.com) provides cloud-based portfolio
analytics, asset data services and data management tools for the
global asset management industry and asset management service
providers.
The Group has 10 offices in Europe, North America, South Africa
and Australia, servicing 450+ clients in 38 countries. It is
organised into three divisions: Revolution, Source: StatPro and
Infovest.
Revolution is a global provider of award-winning portfolio
analytics solutions. The cloud-based platform offers vital analysis
of portfolio performance, attribution, risk and compliance.
Revolution helps clients reduce costs, improve client communication
and control investment decisions.
Source: StatPro is a global market data business and provides
Data-as-a-Service to Revolution to enable analytics. The division's
integrated and global data coverage includes millions of securities
covering the full range of financial instruments and
benchmarks.
Infovest supplies data management solutions for the global asset
management market, including data warehouse technology, ETL,
compliance and reporting tools, as well as portfolio management
solutions.
StatPro Group plc shares are listed on AIM.
Overview
At the start of the year, StatPro was reorganised into three
divisions - Revolution (analytics), Source: StatPro (data) and
Infovest (data integration). All three divisions performed well
with the business units working closely together to provide clients
with effective solutions. The new structure has also provided more
visibility for the products and services of Source: StatPro (data)
and Infovest (data integration).
The key strategic development in H1 2019 was the new partnership
announced with J.P. Morgan's Data and Analytics business. StatPro
and J.P. Morgan will develop Risk and Performance Attribution
capabilities for portfolio managers for distribution through J.P.
Morgan's flagship data and analytics platform.
This agreement represents a significant new channel partnership
for StatPro services.
The first half of the year saw adjusted EBITDA increase by 9.7%
to GBP5.68 million (2018: GBP5.18 million) with H1 revenues up 3.7%
to GBP28.25 million (2018: GBP27.24 million). ARR, the core measure
of the Group's strategy of growing recurring revenue contracts, was
up 8.1% to GBP56.48 million (2018: GBP52.25 million). Including the
ECPI contracts acquired on 1 July 2019, ARR was GBP57.27 million on
a pro-forma basis.
StatPro Revolution ARR growth accelerated to 22.9% at constant
currency to GBP17.64 million (2018: GBP14.35 million).
Free cash flow (before one-off restructuring and acquisition
costs) increased to GBP3.53 million from GBP3.16 million.
Current trading and outlook
StatPro expects to see overall growth accelerate as a result of
the new divisional structure and the continued expansion of
functionality now available on Revolution. With the operational
gearing of Revolution's cloud-based technology, the Group also
expects to see continued growth in margins, particularly over the
next few years as the remaining clients of StatPro Seven switch to
cloud services.
There were a number of notable deals in H1 and the Group has a
healthy H2 pipeline.
The Group continues to trade in line with expectations for the
current financial year.
Divisional review
Revolution
The strategy of the Revolution division is to provide a
world-class, cloud-based analytics platform that covers every type
of analytics needed in the middle or front office for any asset
class of any asset manager.
The core functions are performance, attribution (in a wide
variety of forms) and risk. Out of these core functions various
applications are built such as regulatory reporting, client
reporting, exposure monitoring and investment decision support.
Whilst the division currently comprises a number of products
(Revolution, Delta, Alpha and StatPro Seven), the operational aim
is to consolidate all the clients on these products onto the
Revolution platform within three years.
Divisional revenue grew 3.4% to GBP23.0 million (2018: GBP22.2
million) and adjusted EBITDA rose 11.2% to GBP4.6 million (2018:
GBP4.2 million).
ARR grew 7.8% to GBP45.5 million (2018: GBP42.2 million). ARR
arising solely from the Revolution platform grew 22.9% to GBP17.64
million (2018: GBP14.35 million) at constant currency. ARR from the
Delta platform grew by 5.8%. Consulting revenue continued to
decline, as expected, to GBP0.45 million (2018: GBP0.70 million) as
cloud-based solutions do not require the same level of professional
services as traditional software. The division is focused on
building ARR which now represents 98% of its revenue.
In March 2019, the Fixed Income module was released on StatPro
Revolution enabling the final phase of conversions of clients from
StatPro Seven to Revolution. The importance of this was exemplified
by the win announced in early July 2019 when a large insurance
company signed up to convert to Revolution and agreed to a 77%
uplift in subscription.
There remains about GBP5.0 million in ARR on three modules of
StatPro Seven that can now convert to StatPro Revolution. The Group
expects to complete this process over the next two to three
years.
There is around GBP7.6 million of ARR in the GIPS Composites
module of StatPro Seven that will be upgraded to be part of
Revolution from the end of this year with the beta release coming
out in September 2019.
Importantly for the clients of GIPS Composites, there is no
conversion to do as all inputs and outputs remain the same. Only
the user interface changes as it becomes part of the Revolution
platform. StatPro expects the process of upgrading clients of GIPS
Composites to Revolution GIPS to be completed over the next two
years.
This means that the process of conversion will be all but
completed by the end of 2021. The benefits of this will be
opportunities to increase the subscription base via uplifts in
contract values, and a significant reduction in overlapping costs
estimated at over GBP1.0 million per annum including the removal of
the management distraction.
Delta is also being moved from UBS's IT platform to form part of
the Revolution platform on AWS. This too will involve no changes to
the inputs and outputs for the clients of Delta. This makes the
move of Delta clients to Revolution an upgrade rather than a
conversion.
The Group expects this process to be completed by the end of
2020. Once the clients of Delta have all moved to the Revolution
platform, further savings will be made estimated to be around
GBP1.5 million a year.
StatPro plans to increase the size of this Division's salesforce
steadily in order to maximise sales growth by direct sales and via
indirect sales channels such as the recently announced partnership
with J.P. Morgan. It is expected to be a significant new source of
business opportunity.
In order to optimise the J.P. Morgan opportunity, the Group will
support its large salesforce with product specialists. J.P. Morgan
has numerous asset management, hedge fund and pension fund clients
which it serves across the world and a large salesforce to promote
the service. The initial focus will be in Europe and Asia, but in
2020, the Group will be targeting the huge US market once it has
added J.P. Morgan's wide coverage of US assets to the platform.
The combination of Revolution Delta and the J.P. Morgan data
will make Revolution best in class.
Source: StatPro
The strategy of the Source: StatPro division is to monetise and
expand its extensive data assets. In order to make Revolution
straightforward to implement, high quality market data is needed.
This was the key strategic reason why the Group acquired FRI in
2006.
The Group's data now can be sold in its own right to feed
multiple systems. By expanding the Group's coverage for data
clients, StatPro will also expand its coverage of data for
Revolution clients in a symbiotic relationship. Revolution also
produces meta data as part of its analytics, such as credit curves,
and this data can be sold in its own right as well.
Divisional revenue (including intra-group revenue) grew 6.7% to
GBP4.2 million (2018: GBP3.9 million) and adjusted EBITDA was flat
at GBP0.34 million (2018: GBP0.35 million). ARR rose 8.0% to GBP5.8
million (2018: GBP5.4 million). Adding the acquisition of ECPI,
proforma ARR is GBP6.6 million.
Source: StatPro is subdivided into three groups of services:
Valuations, Indexes and Meta Data. Under Valuations, StatPro
currently provides a global equity price feed with fundamental data
and corporate actions. It also provides an evaluated bond pricing
service for about 100,000 bonds daily covering global sovereign and
corporate debt as well as selected US Municipal bonds.
The Group aims to expand this coverage to several million bonds
in the course of the next 18 months as it deploys the credit curves
generated by Delta to the valuations team. In a market where the
number of bond evaluation services has been dramatically
consolidated, there is a real need for alternative sources of data.
This will help drive sales.
Index services include index delivery to Revolution as an
additional service and the supply of indexes into other platforms
that a client might have. The larger asset managers and fund
administrators might have 10 to 50 different applications that need
index data. The complexity of managing the multiple formats of
index providers and the multiple destinations of that data, as well
as the task of keeping an audit of licencing usage, makes this an
ideal task to outsource.
StatPro has already signed up numerous clients to this new
service and expects the revenue generated to cover the costs within
12 months.
The Meta Data service consists of credit curves, global equity
factor models and complex asset pricing services. The credit curves
originated from Delta and are of extremely high quality. The global
equity factor model will be enhanced by the ESG data and provides a
multi-faceted view of the investible world equity market. The
complex asset pricing service is a by-product of the Group's risk
service. It is frequently very difficult for clients to value
hard-to-price illiquid assets and, in the absence of traded or
evaluated prices, StatPro can offer model prices.
Separately, the Group publishes its indexes under the brand name
of "The Freedom Index". These indexes will consist of both global
equity and global bond indexes. The recent acquisition of ECPI adds
extremely valuable ESG (Environment, Social and Governance) indexes
and research data to the service. StatPro is looking to develop
further specialist value-added indexes where supply is limited. The
ESG research data will also be integrated into Revolution to
provide clients with enhanced ways to analyse their portfolios.
The division will expand its sales team and leverage the
extensive Group client base to cross-sell its services. There is a
real opportunity to develop the division's revenue.
Infovest
The strategy of Infovest is to provide simplified data
integration for asset managers as well as compliance and portfolio
management solutions. The success or failure of any implementation
of an analytics solution depends on the quality of the input data.
Infovest's visual ETL (Extract, Transform, Load) tools make data
management straight forward, providing a business analyst an easy
way to manage a large number of complex operations on data.
Divisional revenue was flat at GBP2.6 million (2018: GBP2.6
million) and adjusted EBITDA rose 6.6% to GBP0.69 million (2018:
0.65 million). ARR however grew 11.2% to GBP5.2 million (2018: 4.7
million). Consulting revenue was down to GBP0.15 million (2018:
GBP0.27 million) as the focus of the division has swung to building
ARR.
Infovest has three products, Infostore, Compliance and Portfolio
Management. Infovest has been extremely useful for the Group since
it was fully acquired in early 2018. The software was used to
enable StatPro to migrate the 10 clients using the ODDO-BHF service
off the acquired risk service to Revolution. Migrating 10 clients
with 2,500 portfolios in under nine months would not have been
possible without the Infovest platform.
Infovest has also been selected to replace the previous platform
used for the Index Service in the Source: StatPro division. It is
the ideal platform to handle multiple inputs and outputs whilst
maintaining full visibility on all processes. Source: StatPro is
also using Infovest for The Freedom Index.
There is frequently interest in using some aspect of Infovest to
enable smooth implementations. StatPro anticipates further growth
in the European markets which is the focus of Infovest's expansion
from its South African home market. The Infovest division is
expected to grow well as demonstrated by the strong growth in
organic ARR over the last 12 months.
Financial review
Revenue
Group revenue increased by 3.7% to GBP28.25 million (2018:
GBP27.24 million). The revenue increase was driven by growth in
Group ARR including solid growth in ARR from clients on the StatPro
Revolution platform (including conversions) of 22.9% at constant
currency (2018: 19.0%).
These results are therefore presented under the new divisional
reporting regime and the revenue bridge from H1 2018 is shown
below.
Revolution Infovest Source: StatPro Intra-group Group
GBPm GBPm GBPm GBPm GBPm
Revenue bridge
H1 2018 at actual
rates 22.23 2.57 3.94 (1.50) 27.24
Change year on
year 0.76 (0.01) 0.26 - 1.01
----------- --------- ---------------- ------------ ------
H1 2019 at actual
rates 22.99 2.56 4.20 (1.50) 28.25
------------------- ----------- --------- ---------------- ------------ ------
Change % 3.4% (0.4%) 6.7% - 3.7%
------------------- ----------- --------- ---------------- ------------ ------
Both Revolution and Source: StatPro saw positive revenue growth
but Infovest was flat due to lower consulting revenue. The
percentage of Group revenue that is recurring revenue grew to 98%
(2018: 96%) and one-off professional consulting revenue reduced to
2% (2018: 4%) as StatPro's cloud services are becoming simpler to
implement and configure.
Recurring revenue
Over the last year, there has been an increase in the rate of
new contract revenue, coupled with a higher renewal rate. As a
result, Group ARR increased by 8.1% in the 12 months to the end of
June 2019 to GBP56.48 million (2018: GBP52.25 million). With the
addition of the contracts acquired from ECPI on 1 July 2019, Group
ARR was GBP57.27 million on a pro-forma basis.
The ARR by division (excluding intra-group revenue) at the end
June of 2019 was as follows:
As at 30 As at 30
ARR by division June June
2019 2018 Change
GBPm GBPm %
Revolution 45.46 42.18 7.8%
Infovest 5.19 4.67 11.2%
Source: StatPro (excluding intra-divisional
revenue) 5.83 5.40 8.0%
--------- ---------
56.48 52.25 8.1%
--------- ---------
Group gross new sales (excluding conversions) increased by 19%
to GBP5.50 million (2018: GBP4.64).
Approximately 87% of new recurring contracted revenue came from
existing clients (2018: 84%).
StatPro's revenue derives from contracts in a mix of currencies,
primarily being EUR, USD, GBP and CAD. 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 (13%) in average revenue per
client to GBP122,200 (2018: GBP107,800).
SaaS-based KPIs
The ratio of costs of acquiring each customer ("CAC") compared
to the Lifetime Value of the customer contracts ("LTV"), an
important KPI used by SaaS businesses, on a 12-month trailing basis
is:
All contracts (unaudited) Year to 30 Year to 30
June June
2019 2018
Average Cost of Acquiring Customer
("CAC") (GBP'000s) 181.2 158.1
Implied Customer Lifetime (years) 11.9 10.2
Average ARR per customer (GBP'000s) 122.2 107.8
Implied Customer Lifetime Value ("LTV")
(GBP'000s) 1,459 1,103
LTV: CAC 8.0 7.0
Whilst the average cost of acquiring customers has increased,
the average ARR is up, as is the implied customer lifetime,
resulting in a 14% increase in the LTV:CAC ratio.
Operating expenses
Operating expenses (before amortisation of intangible assets and
other adjustments) were 3.8% lower at GBP20.99 million (2018:
GBP21.83 million). Excluding the impact of currency and additional
ODDO-BHF costs, the reduction in operating expenses was 5.5%. The
average number of employees reduced to 285 (2018: 304).
Profitability
The underlying profitability of the business continued to
improve with adjusted EBITDA increasing to GBP5.68 million (2018:
GBP5.18 million). The adjusted EBITDA margin was 20.1% (2018:
19.0%).
Gross profit margin increased to 54.0% (2018: 53.0%).
All divisions reported a positive adjusted EBITDA, and
Revolution and Infovest increased their EBITDA margins to 20.2%
(from 18.8%) and 27.1 % (from 25.3%) respectively. Additional
investment in the Source: StatPro division resulted in a small
reduction in adjusted EBITDA and the margin reduced to 8.2% from
8.9%.
Divisional results - adjusted EBITDA
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
Six months Six months Six months Six months
to 30 to 30 Six months to 30 to 30 Six months
June June to 30 June June June to 30 June
2019 2019 2019 2018 2018 2018
Revenue Adjusted Adjusted Revenue Adjusted Adjusted
EBITDA EBITDA EBITDA EBITDA
margin margin
GBP000s GBP000s % GBP000s GBP000s %
Revolution 22,991 4,642 20.2 22,230 4,173 18.8
Infovest 2,561 694 27.1 2,571 651 25.3
Source: StatPro 4,201 343 8.2 3,936 352 8.9
----------- ----------- ----------- -----------
29,753 5,679 28,737 5,176
less: intra-divisional
revenue (1,500) (1,500)
----------- ----------- ------------ ----------- ----------- ------------
Total 28,253 5,679 20.1 27,237 5,176 19.0
=========== =========== ============ =========== =========== ============
Group adjusting items
One-off adjusting items of GBP1.13 million include:
-- GBP0.56 million for additional onerous contractual costs in
relation to the ODDO-BHF acquisition; and,
-- GBP0.57 million related to additional restructuring and
redundancy charges following the implementation of the new
divisional structure.
In addition, the provision for the SiSoft litigation has been
increased by GBP1.03 million following the ruling by the French
Court of Appeal. StatPro is still contemplating the merits of
whether to appeal to the French Supreme Court ("Cour de
cassation"). This has been treated as a prior year adjustment and
the 2018 profit and loss and balance sheet restated accordingly to
reflect this (see note 4).
IFRS 16 'Leases'
IFRS 16 'Leases' is effective for the current year ending 31
December 2019 and requires all leases to be recognised on the
balance sheet (with some limited exceptions). The Group has adopted
the full retrospective application rather than the modified
retrospective application.
As a result of the adoption of IFRS 16, the profit before tax
was impacted by additional non-cash cost of GBP0.03 million (2018:
GBP0.09 million) and adjusted EBITDA increased by GBP0.97 million
(2018: GBP0.84 million) as result of including right-of-use assets
on the balance sheet (see note 1). The impact on adjusted eps was
immaterial.
Finance income and expense
Net finance expense was GBP1.26 million (2018: GBP1.18 million),
as a result of increased average net debt associated with the
financing of acquisitions, the impact of the unwinding of the
discount on deferred consideration and the IFRS 16 impact.
(Loss)/profit before tax
The adjusted operating profit increased by 10% to GBP3.92
million (2018: GBP3.55 million). The loss before taxation was
GBP0.26 million (2018: profit GBP0.81 million).
Taxation
The tax credit was GBP0.06 million (2018: charge GBP0.16
million).
Earnings/losses per share
Adjusted earnings per share was up 15% to 3.8p (2018: 3.3p).
Actual basic loss per share was 0.3p (2018: earnings per share
1.0p) and diluted loss per share was 0.3p (2018: diluted earnings
per share 0.9p).
Interim dividend
An interim dividend of 0.85 pence per ordinary share (2018: 0.85
pence) will be paid on 6 November 2019 to shareholders on the
register at the close of business on 4 October 2019 (ex-div date
will be 3 October 2019).
Cash flow and financing
StatPro continues to be cash generative with cash generated from
operations of GBP7.04 million (2018: GBP7.02 million). The free
cash flow (before one-off restructuring and acquisition costs)
increased year-on-year to GBP3.53 million (2018: GBP3.16 million).
The Group ended the period with net debt (excluding lease
liabilities) of GBP24.21 million (December 2018: GBP23.35 million).
The increase in net debt arose primarily because of the deferred
payment on the ODDO-BHF acquisition, using the Group's debt
facilities, and payments related to restructuring costs.
Balance sheet
The Group's net assets at the period end were GBP26.10 million
(December 2018: GBP26.22 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,
increased to GBP17.45 million (December 2018: GBP17.08
million).
Financing facility
In April 2019, StatPro increased and extended its financing
facilities with Wells Fargo Capital Finance. The facility has been
increased by adding an additional GBP5.2 million of committed
facility and an additional GBP6 million of uncommitted capital.
This secured financing facility is available for acquisitions,
share buy-backs and general corporate purposes.
Following the increase, the total facilities are approximately
GBP48.8 million and comprise:
-- GBP10 million committed revolving credit facility
-- GBP28.8 million committed term/deferred drawdown multi-currency loans
-- GBP10 million uncommitted additional facility available
The term for the committed facility has been extended to April
2024, subject to compliance with agreed covenants, primarily linked
to recurring revenue, adjusted EBITDA and available liquidity. The
financing costs are being amortised over the term of the loan. This
facility strengthens the Group's long-term financial structure and
provides financing flexibility at a competitive cost, and the Board
believes that the Group is well-positioned to manage the business
risks. In the absence of any corporate activity, the increasing
operating cash generation and growing adjusted EBITDA is expected
to result in reduced future gearing.
Post-balance sheet event - Acquisition
On 1 July 2019, StatPro acquired the environmental, social and
governance ("ESG") research and index business unit ("ECPI") from
ECPI Group Srl for a total estimated consideration (including
deferred contingent consideration) of EUR2.9 million (GBP2.6
million), payable in cash.
ECPI has annualised recurring revenues of approximately EUR0.9
million (GBP0.8 million) and generated EUR0.3 million (GBP0.2
million) EBITDA in 2018. It will enhance Source: StatPro's
benchmark offerings with growing demand for ESG ratings and
indices.
Research and development and capex
R&D expenditure was GBP4.44 million (2018: GBP4.17 million),
equating to 15.7% of Group revenue (2018: 15.3%). The focus of
R&D remains the enhancement of the Revolution platform.
Capitalised development costs were GBP3.64 million (2018: GBP2.53
million) and amortisation on internal development was GBP3.45
million (2018: GBP1.80 million). As a result, the net impact to the
profit and loss account in relation to development costs reduced to
GBP0.19 million (2018: GBP0.73 million). Capital expenditure on
property, plant and equipment was GBP0.92 million (2018: GBP1.25
million), of which GBP0.55 million (2018: GBP0.89 million) was
financed under 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 32 to 35 of
the StatPro 2018 Annual Report.
Group Income Statement
For the six months ended 30 June 2019
Notes Unaudited Unaudited Audited
Six months Six months Year
to 30 to 30 to
June June 31 December
2019 2018 2018
GBP'000s GBP'000s GBP'000s
Restated Restated
Revenue 3 28,253 27,237 54,841
Operating expenses before amortisation
of intangible assets and other
adjustments * (20,994) (21,830) (42,194)
Amortisation of acquired intangible
assets (1,510) (1,518) (3,161)
Amortisation of other intangible
assets (3,624) (1,893) (5,498)
Increase in SiSoft legal provision
* 4 - - (1,030)
Acquisition-related and restructuring
costs 4 (1,126) - (2,977)
------------------------------------------------------ ------ ----------- ----------- -------------
Operating expenses (27,254) (25,241) (54,860)
----------- ----------- -------------
Operating profit/(loss) 999 1,996 (19)
Finance income * 62 59 124
Finance credit - fair value reduction
in deferred consideration - - 399
Finance expense * (1,322) (1,243) (2,678)
Net finance expense (1,260) (1,184) (2,155)
----------- ----------- -------------
(Loss)/profit before taxation 5 (261) 812 (2,174)
Taxation * 58 (163) 506
----------- ----------- -------------
(Loss)/profit for the period (203) 649 (1,668)
=========== =========== =============
Profit attributable to non-controlling
interests - 21 21
(Loss)/profit attributable to
equity shareholders (203) 628 (1,689)
----------- ----------- -------------
(203) 649 (1,668)
=========== =========== =============
(Loss)/earnings per share - basic 2 (0.3)p 1.0p (2.6)p
- diluted 2 (0.3)p 0.9p (2.6)p
* Prior year figures have been restated in relation to the
implementation of IFRS 16 and deferred tax (see note 1) and the
SiSoft provision (see note 4).
Group Statement of Comprehensive Income
For the six months ended 30 June 2019
Unaudited Unaudited Audited
Six months Six months Year to
to 30 to 30 31 December
June June
2019 2018 2018
Restated Restated
GBP'000s GBP'000s GBP'000s
(Loss)/profit for the period * (203) 649 (1,668)
Other comprehensive income to be reclassified
to the income statement:
Translation of foreign operations 1,153 (838) (979)
Net (loss)/gain on hedge of net investments (61) (39) (143)
Total comprehensive income/(loss) for the
period - restated 889 (228) (2,790)
=========== =========== =============
Attributable to:
Non-controlling interests - 21 21
Equity shareholders * 889 (249) (2,811)
Total comprehensive income/(loss) for the
period - restated 889 (228) (2,790)
=========== =========== =============
* Prior year figures have been restated in relation to the
implementation of IFRS 16 and deferred tax (see note 1) and the
SiSoft provision (see note 4).
Group Balance Sheet
At 30 June 2019 Notes Unaudited Unaudited Audited
At 30 At 30 At 31 December
June June
2019 2018 2018
GBP'000s GBP'000s GBP'000s
Non-current assets Restated Restated
Goodwill 10 45,203 43,708 44,069
Other intangible assets 10 18,592 19,706 19,632
Property, plant and equipment * 1 2,142 2,054 2,200
Right-of-use assets * 1 6,316 6,084 5,302
Financial lease asset * 578 863 742
Other receivables 227 128 155
Deferred tax assets * 1,024 1,197 970
---------- ---------- ---------------
74,082 73,740 73,070
Current assets
Trade and other receivables * 1 14,425 12,962 12,925
Financial lease asset * 1 396 377 386
Financial instruments - other - - 47
Current tax assets * 2,180 1,459 2,881
Cash and cash equivalents 3,919 3,239 2,571
---------- ---------- ---------------
20,920 18,037 18,810
Liabilities
Current liabilities
Financial liabilities - borrowings
* 1 (4,250) (4,834) (7,022)
Financial instruments - other (73) (85) (30)
Lease liabilities * 1 (2,881) (2,910) (2,769)
Trade and other payables * 1 (9,382) (9,727) (9,164)
Current tax liabilities - (461) -
Deferred income (17,422) (16,582) (17,054)
Provisions 11 (1,622) (176) (1,891)
(35,630) (34,775) (37,930)
---------- ---------- ---------------
Net current liabilities (14,710) (16.738) (19,120)
---------- ---------- ---------------
Non-current liabilities
Financial liabilities - borrowings
* (23,877) (19,717) (18,900)
Lease liabilities * (4,876) (5,003) (4,148)
Other creditors 11 (3,472) (2,140) (3,605)
Deferred tax liabilities * (1,023) (614) (1,053)
Deferred income (27) (40) (26)
(33,275) (27,514) (27,732)
---------- ---------- ---------------
Net assets 26,097 29,488 26,218
========== ========== ===============
Shareholders' equity
Share capital 12 689 688 688
Share premium 24,669 24,600 24,600
Shares to be issued - 63 -
Treasury shares (2,298) (2,298) (2,298)
Other reserves 8,810 7,963 7,718
Retained earnings * 1 (5,822) (1,528) (4,539)
---------- ---------- ---------------
Total shareholders' equity 26,048 29,488 26,169
---------- ---------- ---------------
Non-controlling interests 49 - 49
Total equity 26,097 29,488 26,218
========== ========== ===============
* Prior year figures have been restated in relation to the
implementation of IFRS 16 and deferred tax (see note 1) and the
SiSoft provision (see note 4).
Group Statement of Cash Flows
For the six months ended 30 June 2019
Unaudited Unaudited Audited
Notes Six months Six months Year to
to 30 June to 30 31 December
June
2019 2018 2018
GBP'000s GBP'000s GBP'000s
Operating activities Restated Restated
Cash generated from operations * 6 7,037 7,024 14,641
Finance income * 62 59 124
Finance costs * (1,084) (856) (2,295)
Tax received 889 262 584
Tax paid (221) (508) (1,347)
------------ ----------- -------------
Net cash flow from operating activities 6,683 5,981 11,707
------------ ----------- -------------
Investing activities
Acquisition of subsidiaries and other
businesses (net of cash acquired) 9 (362) (2,527) (3,417)
Investment in intangible assets (4,155) (2,690) (6,901)
Purchase of property, plant and equipment (372) (358) (893)
Net cash flow used in investing activities (4,889) (5,575) (11,211)
------------ ----------- -------------
Financing activities
Net proceeds from bank loan 7 2,124 1,167 2,089
Net payment of lease liabilities/proceeds
from finance leases * 7 (1,451) (1,379) (2,850)
Proceeds from financial assets * 160 138 295
Proceeds from issue of ordinary shares 70 147 147
Dividends paid to non-controlling
interests - (76) (76)
Dividends paid to shareholders (1,350) (1,346) (1,904)
------------ ----------- -------------
Net cash flow used in financing activities (447) (1,349) (2,299)
------------ ----------- -------------
Net increase/(decrease) in cash and
cash equivalents 1,347 (943) (1,803)
------------ ----------- -------------
Cash and cash equivalents at start
of period 2,571 4,311 4,311
Effect of exchange rate movements 1 (129) 63
------------ ----------- -------------
Cash and cash equivalents at end of
period 3,919 3,239 2,571
------------ ----------- -------------
* Prior year figures have been restated in relation to the
implementation of IFRS 16 and deferred tax (see note 1) and the
SiSoft provision (see note 4).
Group Statement of Changes in Shareholders' Equity
For the six months ended 30 June 2019
Shares Total
to Other shareholders'
Unaudited - Share Share be Treasury reserves Retained equity Non-controlling Total
restated 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
--------- --------- --------- --------- --------- --------- -------------- ---------------- ---------
Adjustment
related
to IFRS 16
(note
1) - - - - - (11) (11) - (11)
--------- --------- --------- --------- --------- --------- -------------- ---------------- ---------
At 1 January
2018 as
restated 687 24,454 63 (2,328) 6,911 676 30,463 142 30,605
--------- --------- --------- --------- --------- --------- -------------- ---------------- ---------
Profit for the
period - - - - - 628 628 21 649
Other
comprehensive
loss - - - - (877) - (877) - (877)
Total
comprehensive
loss - restated - - - - (877) 628 (249) 21 (228)
--------- --------- --------- --------- --------- --------- -------------- ---------------- ---------
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
- restated 688 24,600 63 (2,298) 7,963 (1,528) 29,488 - 29,488
--------- --------- --------- --------- --------- --------- -------------- ---------------- ---------
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
2019 688 24,600 - (2,298) 7,718 (4,539) 26,169 49 26,218
--------- --------- --------- --------- --------- --------- -------------- ---------------- ---------
Loss for the
period - - - - - (203) (203) - (203)
Other
comprehensive
income - - - - 1,092 - 1,092 - 1,092
Total
comprehensive
income - - - - 1,092 (203) 889 - 889
--------- --------- --------- --------- --------- --------- -------------- ---------------- ---------
Transactions
with owners:
Share-based
payment
transactions - - - - - 280 280 - 280
Tax relating
to share
option
scheme - - - - - (10) (10) - (10)
Shares issued 1 69 - - - - 70 - 70
Dividends - - - - - (1,350) (1,350) - (1,350)
--------- --------- --------- --------- --------- --------- -------------- ---------------- ---------
At 30 June
2019 689 24,669 - (2,298) 8,810 (5,822) 26,048 49 26,097
--------- --------- --------- --------- --------- --------- -------------- ---------------- ---------
* Other reserves include a merger reserve of GBP2,369,000 (2018:
GBP2,369,000) and a translation reserve surplus of GBP6,441,000
(2018: GBP5,594,000). 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 2019 (continued)
Shares Total
to Other shareholders'
Audited - Share Share be Treasury reserves Retained equity Non-controlling Total
restated 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
--------- --------- --------- --------- --------- --------- -------------- ---------------- ---------
Adjustment
related
to IFRS 16
(note
1) - - - - - (11) (11) - (11)
--------- --------- --------- --------- --------- --------- -------------- ---------------- ---------
At 1 January
2018 as
restated 687 24,454 63 (2,328) 6,911 676 30,463 142 30,605
--------- --------- --------- --------- --------- --------- -------------- ---------------- ---------
Loss for the
year - - - - - (1,689) (1,689) 21 (1,668)
Other
comprehensive
loss - - - - (1,122) - (1,122) - (1,122)
Total
comprehensive
loss - restated - - - - (1,122) (1,689) (2,811) 21 (2,790)
--------- --------- --------- --------- --------- --------- -------------- ---------------- ---------
Transactions
with owners:
Acquisition
of
non-controlling
interests -
Infovest - - - - 1,929 (1,842) 87 (87) -
Acquisition
of
non-controlling
interests -
Vesti.ai - - - - - - - 49 49
Share-based
payment
transactions - - - - - 207 207 - 207
Lapse of share
options related
to past
acquisition - - (63) - - 63 - - -
Tax relating
to share option
scheme - - - - - (20) (20) - (20)
Treasury shares
issued on
exercise
of share awards - - - 30 - (30) - - -
Shares issued 1 146 - - - - 147 - 147
Dividends - - - - - (1,904) (1,904) (76) (1,980)
--------- --------- --------- --------- --------- --------- -------------- ---------------- ---------
At 31 December
2018 - restated 688 24,600 - (2,298) 7,718 (4,539) 26,169 49 26,218
--------- --------- --------- --------- --------- --------- -------------- ---------------- ---------
Notes to the interim financial information
For the six months ended 30 June 2019
1. Principal accounting policies
This interim report was approved by the Board of directors on 30
July 2019. 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 2018,
amended as explained below.
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 2018 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.
New and amended accounting standards and interpretations
The following new or amended IFRS effective as of 1 January
2019, which impacts this interim report, is as follows:
-- IFRS 16 Leases - 1 January 2019
Interpretations and revised standards that are not yet effective
and have not been early adopted by the Group
There are no interpretations to existing standards (including
IFRIC interpretations) that have been published, nor any that are
mandatory for the Group's future accounting, but which the Group
has not adopted early.
IFRS 16 'Leases'
IFRS 16 'Leases' is effective for the year ending 31 December
2019 and requires all leases to be recognised on the balance sheet
(with some limited exceptions). Previously, IAS 17 'Leases' only
required leases categorised as finance leases to be recognised on
the balance sheet, with leases categorised as operating leases not
recognised. In broad terms, the impact is to recognise a lease
liability and corresponding asset for the operating lease
commitments, with an impact on the opening balance sheet, which has
been restated. Where the Group has entered a sub-lease as lessor, a
financial asset has been recognised; rental income is no longer
included in the profit and loss but instead financial income is
recognised. StatPro has taken advantage of the practical expedient
in IFRS 16.C3 not to reassess whether a contract contained a
lease.
The Group has adopted the full retrospective application rather
than the modified retrospective application.
Summary of new accounting policies
Set out below are the new accounting policies of the Group upon
adoption of IFRS 16.
Right-of-use assets
The Group recognises right-of-use assets at the commencement
date of the lease (i.e. the date the underlying asset is available
for use). Right-of-use assets are measured at cost, less
accumulated depreciation and impairment losses and adjusted for
remeasurement of lease liabilities. The cost of right-of-use assets
includes the amount of initial direct costs incurred and any lease
payments made at or before the commencement of the lease, less any
direct incentives received. The recognised right-of-use assets are
depreciated on a straight-line basis over the shorter of the
estimated useful life and the lease term. Right-of-use assets are
subject to impairment.
Lease liabilities
The Group recognises lease liabilities based on the net present
value of the future lease payments to be made over the lease term,
measured at the inception. The lease payments include any fixed
payments less any lease incentives receivable, variable lease
payments that depend on an index or rate and amounts to be paid
under residual value guarantees.
In calculating the present value of lease payments, the Group
uses the incremental borrowing rate at the lease commencement date
if the interest rate implicit in the lease is not readily
determinable. The carrying amount of lease liabilities is
remeasured if there is a modification or change in the lease term
or change in assessment to purchase the underlying asset.
Lease payments
In the cash flow statement, interest payments in respect of
lease liabilities have been included within operating cash flows,
and principal payments in respect of lease liabilities are included
in financing activities.
Short-term and low value assets leases
The Group has applied the short-term lease recognition exemption
to certain leases. It also applies the lease of low value assets
recognition exemption to leases of office equipment that are
considered low value. Short-term and low value assets leases are
expensed in a straight-line basis over the lease term.
Amounts recognised in the statement of financial position and
profit and loss
For the six months ended June 2019, the impact of the new
standard has resulted in additional depreciation of GBP0.85 million
(H1 2018: GBP0.77 million and FY 2018: GBP1.56 million) and
additional interest of GBP0.16 million (H1 2018: GBP0.15 million
and FY 2018: GBP0.30 million). There was a corresponding reduction
in operating costs (excluding depreciation) of GBP0.97 million (H1
2018: GBP0.84 million and FY 2018: GBP1.70 million).
On initial implementation (i.e. as at 1 January 2018), the net
asset value of right of use assets for the Group has increased by
approximately GBP5.12 million, and there has been a corresponding
increase in lease liabilities of GBP6.87 million. In addition,
there was an additional financial asset in relation to a sub-lease
amounting to GBP1.35 million and some working capital adjustments
as shown below. These balance sheet reporting changes have no
impact on the cash flow or financial covenants related to the
Group's financial facilities.
The impact on the balance sheet including the opening reserves
as at 1 January 2018 was as follows:
Property, Other Financial
plant Financial creditors liabilities Deferred
and Right-of-use lease Other and - Leasehold tax
equipment assets assets debtors accruals borrowings liability asset Reserves
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
Balances as at
1 January 2018
- as previously
reported 3,303 - - 371 (5,443) (24,527) - 2,682 687
Impact of
recognition
of assets in use - 5,123 1,351 (53) 440 - (6,874) 2 (11)
Re-classifications (1,182) 1,182 - - - 1,456 (1,456) - -
Balances as at
1 January 2018
- as restated 2,121 6,305 1,351 318 (5,003) (23,071) (8,330) 2,684 676
========== ============= ========== ========= ========== ============ ========== ========= =========
The main impacts are on right-of-use assets being capitalised
and the creation of a corresponding lease liability. In addition, a
financial asset relating to a sub-lease has been created. There
were also adjustments in relation to rental accruals and lease
inducements as a result of the accounting standard change. The tax
profit and loss impact of the restatement was GBP17,000 additional
tax credit for H1 2018 and GBP30,000 additional tax credit for FY
2018.
Deferred tax asset and liability
The H1 2018 and FY 2018 deferred tax assets and liabilities have
been restated by GBP1.64 million and GBP1.34 million respectively
to take into account the requirement under IAS 12 to net off
deferred tax assets and liabilities where there is a legally
enforceable right of set off. There is no impact on the net assets
or reserves presented in the balance sheet, the profit and loss
account or on the cash flow statement.
There were no acquisitions completed in H1 2019.
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/loss per share
Basic earnings/(loss) per share has been calculated based on the
loss after taxation of GBP0.20 million (2018: profit of GBP0.63
million) and the weighted average number of shares of 65.82 million
(2018: 65.63 million). Actual basic loss per share was 0.3p (2018:
earnings per share 1.0p) and diluted loss per share was 0.3p (2018:
diluted earnings per share 0.9p).
Weighted Weighted
average Earnings average Earnings
number per number per
Earnings of shares share Earnings of shares share
Six Six Six Six
months months months Six months months Six months
to 30 to 30 to 30 to 30 to 30 to 30
June June June June June June
2019 2019 2019 2018 2018 2018
Unaudited Unaudited
Unaudited Unaudited Unaudited - restated Unaudited - restated
GBP'000s '000s pence GBP'000s '000s pence
(Loss)/earnings
per share - basic (203) 65,816 (0.3) 628 65,626 1.0
Potentially dilutive
shares - 2,877 - - 3,452 (0.1)
(Loss)/earnings
per share - diluted (203) 68,693 (0.3) 628 69,078 0.9
========== =========== ========== ============ =========== ============
Adjusted earnings per share are shown in the table below. The
diluted adjusted earnings per share are based on potentially
dilutive shares outstanding of 2.88 million (2018: 3.45
million).
Weighted
Weighted average
average Earnings number Earnings
number per of per
Earnings of shares share Earnings shares share
Six Six Six Six Six Six
months months months months months months
to 30 to 30 to 30 to to to
June June June 30 30 30
June June June
2019 2019 2019 2018 2018 2018
Unaudited Unaudited Unaudited Unaudited- Unaudited Unaudited-
restated restated
GBP'000s '000s pence GBP'000s '000s pence
(Loss)/earnings per share
- basic (203) 65,816 (0.3) 628 65,626 1.0
Add back: amortisation
of acquired intangibles 1,510 - 2.3 1,518 - 2.3
Add back: acquisition-related
and restructuring costs 1,126 - 1.7 - - -
Effect of tax on adjusting
items (236) - (0.3) - - -
Add back: share-based
payments 280 - 0.4 37 - 0.0
---------- ----------- ---------- ----------- ---------- -----------
Adjusted earnings per
share 2,477 65,816 3.8 2,183 65,626 3.3
Potentially dilutive shares - 2,877 (0.2) - 3,452 (0.1)
---------- ----------- ----------
Adjusted earnings per
share - diluted 2,477 68,693 3.6 2,183 69,078 3.2
========== =========== ========== =========== ========== ===========
3. Revenue analysis
Revenue by division and by type of service was as follows:
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
Six months Six months Six months Six months Six months Six months
to 30 to 30 to 30 to to to
June June June 30 June 30 June 30 June
2019 2019 2019 2018 2018 2018
GBP000s GBP000s GBP000s GBP000s
Recurring Professional Total Recurring Professional Total revenue
revenue services revenue revenue services
and other and
revenue other
revenue
Revolution 22,542 449 22,991 21,528 702 22,230
Infovest 2,410 151 2,561 2,300 271 2,571
Source: StatPro 4,201 - 4,201 3,936 - 3,936
----------- ------------- ----------- ----------- ------------- --------------
29,153 600 29,753 27,764 973 28,737
less: intra-divisional
revenue (1,500) - (1,500) (1,500) - (1,500)
----------- ------------- ----------- ----------- ------------- --------------
Total revenue 27,653 600 28,253 26,264 973 27,237
=========== ============= =========== =========== ============= ==============
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
2019 was as follows:
Annualised Recurring Revenue June
June 2019 2018
GBP million GBP million
At 30 June 2018 52.25 53.19
Net impact of exchange rates 1.19 (0.77)
At 30 June 2018 (at 30 June 2019 rates) 53.44 52.42
ARR from acquisition - ODDO BHF contracts 1.33 -
(July 2018)
New contracted revenue (excluding conversions) 5.50 4.64
Cancellations/reductions (excluding conversions) (3.79) (4.81)
Net increase/(decrease) 1.71 (0.17)
At 30 June 2019 56.48 52.25
ARR from acquisition - ECPI (July 2019) 0.79 -
At 1 July 2019 (including contracts acquired
on pro-forma basis) 57.27 52.25
--------------------------------------------------- ------------ ------------
The movement in Annualised Recurring Revenue ("ARR") in the
12-month period to June 2019 by division was as follows:
Revolution Infovest Source: Total
StatPro
*
GBP million GBP million GBP million GBP million
------------------------------------ ------------ ------------ ------------ ------------
At 30 June 2018 42.18 4.67 5.40 52.25
Net impact of exchange rates 0.80 0.16 0.23 1.19
------------------------------------- ------------ ------------ ------------ ------------
At 30 June 2018 (at 30 June
2019 rates) 42.98 4.83 5.63 53.44
ARR from acquisition - ODDO
BHF contracts (July 2018) 1.33 - - 1.33
New contracted revenue/increases 4.32 0.79 0.39 5.50
------------ ------------ ------------ ------------
Conversions from Seven/Source:
StatPro to Revolution 0.75 - - 0.75
(0.71) - (0.04) (0.75)
------------ ------------ ------------ ------------
Cancellations/reductions (3.21) (0.43) (0.15) (3.79)
------------------------------------- ------------ ------------ ------------ ------------
1.15 0.36 0.20 1.71
Net increase 2.48 0.36 0.20 3.04
------------------------------------- ------------ ------------ ------------ ------------
Recurring licence fees as at
30 June 2019 * 45.46 5.19 5.83 56.48
------------------------------------- ------------ ------------ ------------ ------------
Change in total ARR 7.8% 11.2% 8.0% 8.1%
Change in ARR at constant currency 5.8% 7.5% 3.6% 5.7%
Change in ARR at constant currency
(excluding impact of ODDO-BHF
acquisition) 2.7% 7.5% 3.6% 3.2%
------------------------------------- ------------ ------------ ------------ ------------
* Excludes intra-divisional ARR
The ARR from clients on the StatPro Revolution platform
increased by 22.9% (2018: 19.0%) at constant currency to GBP17.64
million (2018: GBP14.35 million).
4. Adjusting items
One-off adjusting items amounting to a total of GBP1.13 million
were incurred in H1 2019, as shown below.
Six months Six months
to to
June 2019 June 2018
GBP'000s GBP'000s
Total Total
============================================== =========== ===========
Additional costs on onerous contract acquired
with ODDO-BHF acquisition 556 -
Redundancy and other integration costs 570 -
Total adjusting items 1,126 -
---------------------------------------------- ----------- -----------
GBP0.56 million related to additional onerous contractual costs
in relation to the ODDO-BHF acquisition, arising from a delay in
the effective termination date for certain contracts that were
acquired as part of the transaction.
GBP0.57 million related to additional restructuring and
redundancy charges in the core business and the North American
management structure as part of the implementation of the new
divisional structure.
The additional provision of GBP1.03 million on the SiSoft
litigation arose following the ruling by the French Court of Appeal
on 12 March 2019 that unexpectedly overturned previous French
commercial court judgments and was contrary to the Court-appointed
independent expert's report on the matter. Following a review of
the full details of the French judgement, and a further review of
the French legal advice and other information that was available
when the 2018 Annual Report was authorised by the Board on 15 March
2019, the Board has concluded that the H2 and full year 2018
accounts (profit and loss and balance sheet) should be restated.
The Board has concluded that the financial implications of this
legal advice (which was reliable information that was available to
the company and could reasonably be expected to have been obtained
and taken into account) were omitted when concluding on the
provision in respect of the SiSoft litigation in the 2018 Annual
Report and therefore this has been treated as a prior year
adjustment, as required under IAS8.
StatPro is still contemplating the merits of whether to appeal
to the French Supreme Court ("Cour de Cassation").
The one-off adjusting items in 2018 did not impact the H1 2018
results.
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
2019 2018 2018
Restated Restated
GBP'000s GBP'000s GBP'000s
(Loss)/profit before taxation (261) 812 (2,174)
Add back: amortisation on acquired intangible
assets 1,510 1,518 3,161
Add back: increase in SiSoft provision - - 1,030
Add back: acquisition-related, restructuring
costs and finance credit 1,126 - 2,578
Add back: share-based payments 280 37 207
----------- ----------- -------------
Adjusted profit before tax 2,655 2,367 4,802
=========== =========== =============
b) Adjusted operating profit
` Unaudited Unaudited Audited
Six months Six months Year to
to 30 to 30 31 December
June June
2019 2018 2018
Restated Restated
GBP'000s GBP'000s GBP'000s
Operating profit/(loss) 999 1,996 (19)
Add back: amortisation on acquired intangible
assets 1,510 1,518 3,161
Add back: increase in SiSoft provision - - 1,030
Add back: acquisition-related and restructuring
costs 1,126 - 2,977
Add back: share-based payments 280 37 207
----------- ----------- -------------
Adjusted operating profit 3,915 3,551 7,356
=========== =========== =============
c) Adjusted EBITDA
Unaudited Unaudited Audited
Six months Six months Year to
to 30 to 30 31 December
June June
2019 2018 2018
Restated Restated
GBP'000s GBP'000s GBP'000s
Operating profit/(loss) 999 1,996 (19)
Add back: depreciation of property, plant
and equipment and right-of-use assets 1,595 1,528 3,149
Add back: amortisation on purchased intangible
assets 169 97 204
Add back: amortisation on acquired intangible
assets 1,510 1,518 3,161
Add back: increase in SiSoft provision - - 1,030
Add back: acquisition-related and restructuring
costs 1,126 - 2,977
Add back: share-based payments 280 37 207
----------- ----------- -------------
Adjusted EBITDA 5,679 5,176 10,709
=========== =========== =============
Adjusted EBITDA margin 20.1% 19.0% 19.5%
Excluding the impact of IFRS 16 (which reduced operating costs
but increased depreciation and financing costs), the adjusted
EBITDA margin would have been 16.7% (2018: 15.9%).
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 cost drivers change, as well as understanding the
relative profitability of each division. As there are a number of
methodologies for allocating costs, we have described how we have
allocated the cost elements. Following a review in 2018, changes
were made to the allocation of costs. The primary changes were to
show all research and development costs in full and to allocate
overhead costs (such as occupancy, communications and IT services
as well as executive management costs) to the related functions.
The analysis for H1 2018 has been restated for these reasons and
also the impact of IFRS 16.
Definition of cost category for gross margin analysis:
-- Cost of services includes Clients Services employee salaries
and related costs, Data employee salaries and related costs,
contractor costs, data costs, costs of software and hardware
maintenance.
-- R&D includes all Research and Development employee
salaries and related costs and direct IT costs
-- Sales & marketing includes Sales and Marketing employee
salaries and related costs, external marketing costs and sales
commissions.
-- General & administration includes the Finance and HR
employee salaries and related costs professional fees, and other
general costs,
Communications costs, occupancy costs, travel and expenses,
executive management and internal IT and projects costs have now
been allocated to the relevant functions on an appropriate pro-rata
basis.
Unaudited Unaudited Audited
Six months Six months Year to
to to 31 December
30 June 30 June
2019 2018 2018
Restated Restated
% % %
Revenue 100.0% 100.0% 100.0%
Cost of services (46.0%) (47.0%) (47.0%)
----------- ----------- -------------
Gross profit margin 54.0% 53.0% 53.0%
R&D costs (15.7%) (15.3%) (15.5%)
Sales & Marketing costs (11.4%) (12.0%) (11.6%)
General & Administration
costs (6.8%) (6.7%) (6.4%)
----------- ----------- -------------
Adjusted EBITDA 20.1% 19.0% 19.5%
=========== =========== =============
Free cash flow
Unaudited Unaudited Audited
Six months Six months Year to
to to 30 31 December
30 June June
2019 2018 2018
Restated Restated
GBP'000s GBP'000s GBP'000s
Cash generated from operations
before acquisition and restructuring
costs 8,407 7,248 16,509
Net interest paid (1,022) (797) (2,171)
Net tax received/(paid) 668 (246) (763)
Purchase of property, plant and
equipment (372) (358) (893)
Investment in intangible assets (4,155) (2,690) (6,901)
----------- ----------- -------------
Free cash flow (before adjusting
items) 3,526 3,157 5,781
----------- ----------- -------------
Acquisition-related and restructuring
costs (1,370) (224) (1,868)
----------- ----------- -------------
Free cash flow 2,156 2,933 3,913
=========== =========== =============
The cash flow statement and free cash flow have been restated as
a result of IFRS 16.
6. Reconciliation of (loss)/profit before tax to net cash inflow from operating activities
Unaudited Unaudited Audited
Six months
Six months to 30 Year to
to 30 June June 31 December
2019 2018 2018
Restated Restated
GBP'000s GBP'000s GBP'000s
(Loss)/profit before taxation (261) 812 (2,174)
Net finance expense 1,260 1,184 2,155
------------ ----------- -------------
Operating profit/(loss) 999 1,996 (19)
Acquisition-related, restructuring costs
and SiSoft provision 1,126 - 4,007
Depreciation of property, plant and equipment 1,595 1,528 3,149
Amortisation of intangible assets 5,134 3,411 8,659
(Increase)/decrease in receivables (1,550) 2,091 2,645
Increase/(decrease) in payables and provisions 482 (774) (991)
Increase/(decrease) in deferred income 368 (1,041) (1,148)
Gain on disposal of right-of-use asset (27) - -
Share-based payments 280 37 207
------------ ----------- -------------
Net cash inflow from operating activities
before acquisition and restructuring
costs 8,407 7,248 16,509
------------ ----------- -------------
Acquisition-related and restructuring
costs (1,370) (224) (1,868)
------------ ----------- -------------
Net cash inflow from operating activities 7,037 7,024 14,641
============ =========== =============
7. Reconciliation of net cash flow to movement in net debt (excluding lease liabilities)
This alternative performance measure is provided to assist the
reader to understand the Group' financial indebtedness.
At 1 January Non-cash Exchange At 30 June
2019 Cash flow changes differences 2019
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
--------------------------- ------------- ---------- --------- ------------ -----------
Cash and cash equivalents
(per balance sheet) 2,571 1,347 - 1 3,919
Overdrafts - - - - -
--------------------------- ------------- ---------- --------- ------------ -----------
Cash and cash equivalents
(per statement of cash
flows) 2,571 1,347 - 1 3,919
Bank, other loans and
derivatives (25,922) (2,124) (83) 2 (28,127)
--------------------------- ------------- ---------- --------- ------------ -----------
Net debt (excluding lease
liabilities) (23,351) (777) (83) 3 (24,208)
--------------------------- ============= ========== ========= ============ ===========
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
Bank, other loans and
derivatives (23,071) (1,167) (132) (181) (24,551)
--------------------------- ------------- ---------- --------- ------------ -----------
Net debt (excluding lease
liabilities) (18,760) (2,110) (132) (310) (21,312)
--------------------------- ============= ========== ========= ============ ===========
8. Dividend
An interim dividend for 2019 of 0.85 pence per ordinary share
(2018: 0.85 pence) will be paid on 6 November 2019 to shareholders
on the register on 4 October 2019. A final dividend for 2018 of
2.05 pence per ordinary share was paid on 29 May 2019.
9. Acquisitions
Acquisition of ECPI
On 1 July 2019, StatPro acquired the environmental, social and
governance ("ESG") research and index business unit ("ECPI") from
ECPI Group Srl for a total estimated consideration (including
deferred contingent consideration) of EUR2.9 million (GBP2.6
million), payable in cash (with a fair value of GBP2.32
million).
Highlights
-- ECPI has annualised recurring revenues of approximately
EUR0.9 million (GBP0.8 million) and generated EUR0.3 million
(GBP0.2 million) EBITDA in 2018
-- Acquisition enhances Source: StatPro's benchmark offerings
with growing demand for ESG ratings and indices
ECPI provides ESG indices and benchmarks and related services
including constructing client specific benchmarks. It carries out
ESG research and produces ratings on an active universe of
approximately 3,500 companies (total universe of 4,500+) globally
and uses these ratings to qualify companies for inclusion into a
series of ESG investable indices, or to provide portfolio screening
services.
The consideration for the acquisition comprises:
-- initial cash consideration of EUR0.9 million (GBP0.8 million)
paid on completion on 1 July 2019 in cash from existing debt
facilities
-- deferred contingent consideration (payable in March 2022)
currently estimated to be an additional EUR2.0 million
-- deferred contingent consideration is calculated based on two
times the net increase in ARR to December 2021, is capped at EUR10
million and subject to a reduced multiple if the EBITDA of the
business unit is less than 20% margin.
StatPro expects annual revenue levels for the acquired service
to remain broadly similar for 2019 and will incorporate ECPI
revenues from completion in July 2019. StatPro has taken on the
employees of ECPI ESG research and index unit in Milan, where they
have been integrated with StatPro Italia's existing operations.
Fair value of assets acquired and liabilities
assumed
Provisionally
estimated
fair value
GBP'000
Other receivables 66
Cash and cash equivalents 314
Brand and client contracts 572
Technology 453
--------------
1,405
Deferred income (134)
Other creditors and provisions (112)
Deferred tax liability (286)
--------------
(532)
--------------
Total identifiable net assets at fair value 873
Goodwill arising on acquisition 1,446
--------------
Fair value of purchase consideration 2,319
==============
The acquisition payment of GBP0.36 million in H1 2019 was the
deferred consideration payment on the ODDO-BHF acquisition paid on
2 January 2019.
10. Goodwill and other intangible assets
Goodwill movements resulted from revaluations due to currency
movements.
Other intangible assets decreased, mainly due to the
amortisation of acquired intangible assets.
11. Other creditors and provisions
Other creditors greater than one year were GBP3.47 million,
mainly relating to the deferred consideration due on Delta.
Provisions of GBP1.62 million at 30 June 2019 (December 2018:
GBP1.89 million) relates to residual deferred contingent
consideration and provisions for redundancies and onerous
contracts. The movements in H1 2019 relate to the items described
in note 4.
June June June June
Provisions - Group 2019 2019 2019 2018
Contingent Redundancies Total Total
consideration and onerous
contracts
GBP'000s GBP'000s GBP'000s GBP'000s
At 1 January -
restated 1,071 820 1,891 304
Utilised in the
period - (1,370) (1,370) (126)
Arising in the
period - 1,126 1,126 -
Exchange differences 4 (29) (25) (2)
At 30 June 1,075 547 1,622 176
=============== ============= ========= =========
12. Share capital and treasury shares
70,000 ordinary shares were issued during the period (2018:
139,358). At 30 June 2019, there were 68,903,650 shares (2018:
68,833,650 shares) in issue including 3,058,713 (2018: 3,058,713)
held in treasury (65,844,937 excluding treasury shares). The
treasury shares do not accrue dividends and are excluded from the
earnings per share calculation.
Growth Share Plan
Following the approval by the shareholders at the Annual General
Meeting on 23 May 2019 of the Growth Share Plan and as previously
announced, 1,080,000 growth shares (split equally between A, B and
C shares) were subscribed for on 25 June 2019 by members of the
management team. The values per Growth Share were determined by an
independent valuation expert and amounted to an average of around
13.3 pence per share. Under current accounting rules these are
treated as a liability (included in sundry creditors with a total
value of GBP0.14 million) until they vest (which will only occur if
the relevant performance targets are met).
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 2019, 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 2019 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
30 July 2019
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 SDDFUSFUSESW
(END) Dow Jones Newswires
July 31, 2019 02:01 ET (06:01 GMT)
Statpro (LSE:SOG)
Historical Stock Chart
From May 2024 to Jun 2024
Statpro (LSE:SOG)
Historical Stock Chart
From Jun 2023 to Jun 2024
