TIDMSOG
RNS Number : 6302H
StatPro Group PLC
14 March 2018
14 March 2018
StatPro Group plc
Revolution sales and Delta acquisition drive strong growth
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
2017.
2017 2016 Change Constant
currency
(1)
GBP37.55
Revenue GBP49.34 m m +31% +26%
Annualised Recurring Revenue GBP39.27
(2) GBP53.04 m m +35% +39%
GBP5.10
Adjusted EBITDA (3) GBP6.95 m m +36% + 24%
GBP(3.36) GBP(10.12)
Loss before tax m m n/a n/a
Adjusted earnings per share
(3) 5.9p 3.4p 74%
Loss per share - basic (3.6)p (15.5)p n/a
Dividend per share - total
for year 2.9p 2.9p -
------------------------------- ----------- ----------- ------- ----------
Financial highlights:
-- Group revenue increased by 31% to GBP49.34 million (2016:
GBP37.55 million), 2% organic growth
-- Group Annualised Recurring Revenue ("ARR") (2) increased by
35% to GBP53.04 million (2016: GBP39.27 million)
o StatPro Revolution ARR increased organically by 13%
-- Adjusted EBITDA (3) increased 36% to GBP6.95 million (2016: GBP5.10 million)
-- Adjusted profit before taxation increased 29% to GBP3.45
million (2016: GBP2.68 million), before acquisition, restructuring
costs and other adjusting items of GBP6.80 million (2016: GBP12.80
million)
-- Adjusted earnings per share up 74% to 5.9p (2016: 3.4p)
-- Full year dividend maintained at 2.9 pence per share
-- Net cash inflow from operating activities increased 43% to
GBP10.68 million (2016: GBP7.45 million)
Operational highlights
-- Delta made positive adjusted EBITDA contribution
-- Notably high value of new contracts - new ARR (excluding
conversions) of GBP4.79 million (2016: GBP4.39 million)
-- Group to be structured into three divisions in 2019:
o Revolution - Analytics division, comprising Revolution, Seven,
Delta and Alpha
o Source: StatPro - data division
o Infovest - integration and data management division,
comprising Infovest and StatPro Portfolio Management ("SPM")
(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, 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:
"The transformative acquisition of Delta in May 2017 was the
defining point of the year - expanding our portfolio analytics
capabilities as well as driving adjusted EBITDA and recurring
revenue growth.
"The integration of Delta's capabilities into our flagship
Revolution platform is on course. Once completed, we will be able
to provide the only cloud-based, multi-tenant portfolio analytics
solution with a broad range of functions across performance, risk
and regulation.
"Our improving cloud technology platform will be key to further
organic growth in 2018 - offering fund administration clients
significant improvements in efficiency and capabilities.
"We ended 2017 strongly and expect to continue to see further
organic revenue and profit growth in 2018. We have started the
current financial year in line with our expectations."
- 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
/ James Stearns
Instinctif Partners
Adrian Duffield / Chris Birt +44 (0) 20 7457 2020
A briefing for analysts on the results will be held at 10.30am
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.
The Group has operations in Europe, North America, South Africa,
and Australia, with hundreds of clients in 39 countries around the
world.
StatPro has grown its Annualised Recurring Revenue from less
than GBP1 million in 1999 to around GBP53 million at the end of
December 2017. Over 80% of recurring revenues are generated outside
the UK. StatPro Group plc shares are listed on AIM.
Overview
2017 has been a transformative year for StatPro, adding Delta to
the business in May 2017 and expanding the Group's portfolio
analytics capabilities as a result. Revenue grew 31% to GBP49.34
million (2016: GBP37.55 million) and adjusted EBITDA grew 36% to
GBP6.95 million (2016: GBP5.10 million). Excluding acquisitions and
on a constant currency basis, revenues rose 2%.
ARR grew 35% to GBP53.04 million (2016: GBP39.27 million),
driven by the acquisition of Delta and by the 13% organic growth in
ARR in StatPro Revolution. Excluding conversions to Revolution,
StatPro Seven was up 3% on constant currency terms.
Adjusted earnings per share rose 74% to 5.9p up from 3.4p in
2016. Cash generated from operations increased 43% to GBP10.68
million (2016: GBP7.45 million) and free cashflow, before
acquisitions and restructuring payments jumped to GBP5.18 million
(2016: GBP0.65 million).
The Board is recommending the maintenance of the full year
dividend at 2.9p per share (2016: 2.9p)
Strategic positioning
Going into 2018, StatPro is in a strong position with its
StatPro Revolution platform. StatPro has the only cloud-based,
multi-tenant portfolio analytics solution that can provide such a
broad range of functions across performance, risk and
regulation.
The key to StatPro Revolution's platform is its ability to
integrate with clients' other solutions via its Application
Programme Interface ("API"). By making StatPro's services easy to
use, it greatly reduces the total cost of ownership for clients,
who can process their data faster and with far less effort to
operate. The platform can also handle volume and complexity with
equal ease.
As StatPro Revolution matures with additional functionality, so
it is becoming increasingly attractive to more and more asset
managers and fund administrators. With the benefit of its API,
StatPro is able to integrate with a number of complementary
platforms for services such as research and asset analysis.
Consequently, the Group expects to broaden the reach of its
analytics.
In addition to Revolution revenue (including the recent
acquisitions of Delta and Alpha), StatPro also has a data revenue
stream and revenue from its Infovest subsidiary.
In 2019, the Group plans to structure the business into three
divisions to make the operations of the business clearer, to
provide distinct divisional management focus and to enable growth
in each division based on specific divisional priorities.
The largest division, Revolution, will contain all the Group's
analytics services including Revolution, StatPro Seven, Delta and
Alpha.
Source: StatPro will contain data revenues from market data
managed services, evaluated bond prices, index services, yield
curves and complex asset pricing.
Infovest will contain Infovest based in South Africa and SPM,
the portfolio management service based in Canada.
Each division will be run by a dedicated managing director
supported by a divisional board. Each division will offer the
others highly complementary services, but each will operate
independently. Acquisitions will be made when appropriate to boost
each respective division and improve their capabilities. All three
divisions will focus mainly on asset management companies and fund
administrators as clients.
Revolution, the analytics division, aims to be the best provider
of portfolio analytics by covering the broadest range of
functionality, ease of use and quality of service. All this is
based on the underlying technology.
Source: StatPro, the data division, provides a sophisticated
pricing service for the most complex assets. The Group's analytics
capabilities allow the production of high quality meta-data that
other companies struggle to provide. StatPro has yet to exploit
fully this rich source of intellectual property, but there is an
excellent opportunity to do so now.
Infovest, the integration and data management division, offers
configurable solutions for clients to manage their data flows in an
effective and efficient way to reduce cost and complexity using the
Group's data warehouse, ETL (Extract, Transform and Load) and
reporting tools. The two units in this division will be able to use
resources in the Group to put together complete solutions for asset
managers and fund administrators.
These divisions will provide a clearer and more simplified
structure for StatPro, benefitting clients by having a wider range
of services available from the combined capabilities of the
Group.
At the heart of StatPro's strategy is the conviction that great
technology allows the Group to offer clients the best service
possible. With the market under constant pressure from regulators
and competitors, not to mention new technology, StatPro's services
remain appreciated by clients.
Current trading and outlook
Sales activity accelerated in the fourth quarter last year and
the Group is seeing key fund administration clients starting to
increase their use of Revolution significantly.
StatPro's view remains that if fund administrators offer a more
efficient performance service, there will be a stronger trend
towards outsourcing. The key is StatPro's Revolution platform,
which offers fund administration clients significant improvements
in efficiency.
In 2018, the Group is engaging with a number of parties about
partnering with their platforms to offer an enhanced combined
service. Integration using APIs is the key to this strategy and it
also offers clients by far the best way to provide joint services
from best of breed companies. One of the core objectives is to be
the provider of portfolio analytics solutions for the growing
number of financial information platforms. Many fund administrators
and investment banks have these or are building them.
The Group has started the current financial year in line with
the Board's expectations and is on course to show solid revenue and
profit growth.
Acquisitions
In May 2017, the Group completed the First Closing of the
acquisition of Delta from UBS. This acquisition is a significant
strategic move for StatPro. Delta is one of the most respected
fixed income risk and attribution solutions on the market. Having
its roots in UBS's investment banking division where fixed income
expertise is second to none, Delta was built to offer UBS clients a
first-class analysis service. It also has very few competitors able
to offer a comparable service.
The Delta team has swiftly integrated with StatPro, with
development efforts focused on enhancing Revolution to enable it to
reach functional parity within three to four years. Currently the
Delta product is supported by the UBS IT platform and UBS provides
its data requirements. This support will no longer be required when
functional parity with Revolution is achieved.
The joint objective of both UBS and StatPro has been to ensure
that the clients of Delta have a smooth transition and can take
their time to prepare to switch systems as and when it suits them.
The Group has communicated this message extensively with Delta's
clients and this has been very well received.
In addition, StatPro is also implementing plans to enable an
automated switchover for any Delta clients with all their
portfolios to Revolution in case any client wishes to take
advantage of Revolution's extensive functionality. The Group
expects these plans to be completed by the end of March 2018.
Delta has made a positive contribution to StatPro's adjusted
EBITDA in 2017 and is expected to continue to do so in 2018. Delta
won additional business in 2017 from new clients and existing
clients. This is testament to the high-quality team working at
Delta and the strong co-operation between them and StatPro.
StatPro increased the Group's holding in Infovest in South
Africa in February 2017 to 72.7% and to 100% on 23 February 2018.
Acquiring the shares at approximately six times EBITDA is earnings
per share enhancing for the Group. Infovest had a good end to the
year and has strong growth prospects for 2018.
StatPro Revolution
One larger fund administrator client has increased the number of
portfolios on Revolution during 2017 from around 100 to over 1,200
and is on course for further significant additions during 2018.
StatPro's services enable fund administration clients to sell
their own services better, which in turn drives the Group's success
as they win business.
Whilst overall organic growth was modest at 2%, Revolution grew
11% on a constant currency basis excluding acquisitions. As
Revolution approaches functional parity with StatPro Seven, the
number of projects to load client data onto Revolution is growing
fast. The process of conversion has been rigorous to achieve the
best results for the Group's clients, who see the benefits and the
efficiency savings they can make.
Product development
A number of key enhancements were made to Revolution during
2017: The integration of Alpha into the Revolution GUI (graphical
user interface) and a wide range of analytics enhancements,
including fund-in-fund analysis and fees schedules. In early 2018,
the Group will release configurable dashboards. This will enable
clients to specify precisely what each user can see making the
platform simpler and clearer to use.
The most important release in 2018 will be the new Fixed Income
Attribution module planned for July. This is the first major step
in reaching functional parity with Delta and it will be possible
for a number of clients to use Revolution as an alternative to
Delta from this point.
The project to reach parity with Delta falls into two sections:
Quality Parity and Flexibility Parity. Quality Parity will be
reached when the quality of pricing and analytics in Revolution
meets the same standard or better than Delta. The Group expects to
achieve this by June 2019.
Flexibility Parity relates to how the data can be used. Delta
allows its' clients to configure any view of their portfolio they
may wish. StatPro believes Flexibility Parity will be achieved by
the end of 2021 at the latest.
There is significant demand in the market for a high quality
fixed income attribution and risk solution and the Group's service
will be the first available on a modern cloud-based platform.
StatPro's fund administration partners have expressed interest in
being able to offer this service to their clients.
Once the Group has released its fixed income attribution module,
StatPro will have the broadest range of analytics offered by any
single platform. Being able to calculate transaction-based
performance, equity and fixed income attribution and multi-asset
risk, factor risk and fixed income risk, together with a wide range
of regulatory reporting all in one platform is unique. Being able
to access this huge and unmatched source of data from anywhere and
integrate it using an API into any other platform is
Revolutionary.
Financial review
Group revenue increased by 31% to GBP49.34 million (2016:
GBP37.55 million). The revenue contribution from the Delta
acquisition was GBP9.26 million. The organic revenue increase at
constant currency was 2%.
Revenue growth was driven by solid underlying growth in StatPro
Revolution of 11% at constant currency (16% at actual rates),
combined with the positive impact of the acquisition, offset by a
reduction in revenue for professional fees. StatPro Seven revenue
was down 1% at constant currency (up 5% at actual rates) and data
revenue grew by 1% at constant currency (7% at actual rates).
96% of Group revenue in 2017 was recurring revenue (2016:
93%).
The proportion by value of recurring software licences and data
clients secured to the end of 2018 or beyond amounted to 71% (2016:
69%); the weighted average length of contracts committed was 13
months (2016: 15 months).
The Group achieved a high level of new contracts signed in the
year adding ARR of GBP4.79 million (2016: GBP4.39 million)
excluding conversions from StatPro Seven.
Professional services revenue was down by 25% at constant
currency (21% at actual rates) to GBP2.02 million (2016: GBP2.56
million), including GBP0.76 million in Infovest.
TABLE 1
GBPm Change year-on-year
at constant
currency
Revenue bridge
2016 at actual rates 37.55
Organic growth
StatPro Revolution 1.46 11%
StatPro Seven (0.23) (1)%
Data 0.04 1%
Professional fees (0.67) (25)%
------------------------------------ ------- --------------------
0.60 2%
Impact of acquisition and currency
Acquisition 9.26
Currency impact 1.93
------------------------------------ ------- --------------------
11.19
------------------------------------ ------- --------------------
2017 at actual rates 49.34
------------------------------------ ------- --------------------
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 2017 increased by 39% (2016: 18%) over the
previous 12 months to GBP53.04 million (2016: GBP38.13 million at
constant currency).
Excluding the impact of acquisitions and currency rates, the
organic growth in Group ARR was 1%. Approximately 82% of new
recurring contracted revenue came from existing clients (2016:
83%).
The overall growth rate for StatPro Revolution's ARR was 100%
(2016: 93%). The organic growth in StatPro Revolution ARR was 13%
(2016: 32%), excluding the impact of acquisitions in 2016 and 2017
and currency rates (see note 3).
The ARR for StatPro Seven reduced by 3% (2016: 5%) at constant
currency to GBP18.92 million (2016: GBP19.46 million). Excluding
the impact of conversions to Revolution, StatPro Seven's ARR
increased by 3% 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 GBP6.30 million (SPA, SFI & SRM), and the balance
of GBP12.62 million is for modules that are still being marketed
(primarily SC, SPM and SPC).
The ARR from cloud services (StatPro Revolution, Alpha and
Delta) is now GBP30.06 million, representing 57% of the Group total
(2016: 38%) and has grown at a higher rate than other services.
There has been an increase of 67% in average revenue per StatPro
Revolution client to GBP81,500 (2016: GBP48,700 at constant
currency), including the impact of Delta, where average revenue per
Delta client is approximately GBP132,000. The organic growth of
average ARR per client for StatPro Revolution was 22% (2016: 39%).
Further analysis on revenue and ARR is provided in note 3.
Acquisitions
During 2017, StatPro completed one acquisition and increased its
investment in an existing subsidiary:
-- Delta
On 15 May 2017, StatPro completed the First Closing of the
acquisition, from UBS, of its risk and performance analytics
service, Delta. An initial payment of approximately GBP7.5 million
has been made, out of a total cash consideration of approximately
EUR13 million (GBP11.2 million), with the remainder being paid over
three years. The fair value of the total consideration is GBP10.55
million.
-- Increase in majority control of Infovest
The Group increased its shareholding in Infovest Consulting
(Pty) Ltd ("Infovest"), from 51.0% to 72.7% in February 2017. The
consideration for the additional 21.7% shareholding was ZAR 19.1
million (GBP1.15 million) in cash. The outstanding 27.3% was bought
in February 2018 - see below.
SaaS-based KPIs
An important KPI for SaaS-based businesses is the cost of
acquiring each customer ("CAC") in comparison with the Lifetime
Value of the customer contracts ("LTV") and the table below shows
the results for StatPro.
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. The figure has gone
down due to investment in the sales team in 2017 and a slightly
lower implied customer lifetime but the Implied Customer Lifetime
Value has increased by 6% to GBP997,000.
TABLE 2
2017 2016
------------------------------------------- ----- ----
Average Cost of Acquiring Customer ("CAC")
(GBP'000s) 128.6 96.1
Implied Customer Lifetime (years) 9.4 10.8
Average ARR per customer (GBP'000s) 106.1 86.6
Implied Customer Lifetime Value ("LTV")
(GBP'000s) 997 938
LTV: CAC 7.8 9.8
------------------------------------------- ----- ----
Operating expenses
Operating expenses, before amortisation of intangible assets and
other adjusting items, increased by 32% (26% at constant currency)
to GBP40.08 million (2016: GBP30.25 million). Excluding the impact
of acquisitions and currency movements, the underlying increase was
1%. The average number of employees increased to 295 (2016:
266).
Non-controlling interest put option
The re-assessment of the liability based on the fair value of
the non-controlling interest put option in Infovest resulted in an
increase of GBP0.40 million during 2017 due to a combination of
growth in Infovest revenue and profits and a stronger South African
Rand, although overall the acquisition of further shares in
Infovest reduced the non-controlling interest put option to GBP1.82
million (2016: GBP2.56 Million).
Acquisition-related and restructuring charges
Acquisition-related and restructuring charges amounting to a
total of GBP3.53 million were incurred. These include: GBP2.30
million for the acquisition of Delta, of which GBP1.02 million were
for transaction costs and the remainder being redundancies and
onerous contracts. In addition, GBP1.23 million relates to
restructuring of the core business following the Delta acquisition,
predominantly relating to the restructuring of the European sales
and support team.
Finance income and expense
Net finance expense increased to GBP1.59 million (2016: GBP0.79
million), due to the increase in net debt following the
acquisitions in 2016 and 2017. Non-cash interest charges amounted
to GBP0.33 million.
Profitability
The adjusted EBITDA was up 36% to GBP6.95 million (2016: GBP5.10
million). The impact of currency movements on the adjusted EBITDA
was GBP0.64 million. The adjusted EBITDA margin increased to 14.1%
(2016: 13.6%). Gross profit margin (see note 6) reduced to 58.7%
(2016: 61.1%).
Adjusted profit before taxation increased by 29% to GBP3.45
million (2016: GBP2.68 million). The reconciliation from adjusted
EBITDA to loss before taxation is shown in table 3 below.
The loss before taxation was GBP3.36 million (2016: GBP10.12
million), the results being impacted by adjusting items including
amortisation of acquired intangible assets, acquisition and
restructuring costs, movements in fair value of put option for
Infovest and share-based payments.
TABLE 3
2017 2016 Change
GBP'000s GBP'000s %
---------------------------------------------- -------- -------- ------
Adjusted EBITDA 6,951 5,104 +36%
Depreciation of property, plant and equipment (1,504) (1,327)
Amortisation on purchased intangible assets (417) (316)
---------------------------------------------- -------- -------- ------
Adjusted operating profit 5,030 3,461 +45%
Amortisation on acquired intangible assets (2,243) (1,060)
Share-based payments (626) (361)
Goodwill impairment - (9,724)
Other adjusting items (3,934) (1,654)
---------------------------------------------- -------- -------- ------
Total adjusting items (6,803) (12,799)
---------------------------------------------- -------- -------- ------
Operating loss (1,773) (9,338) +81%
Net finance expense (1,585) (786)
---------------------------------------------- -------- -------- ------
Loss before taxation (3,358) (10,124) +67%
---------------------------------------------- -------- -------- ------
Taxation
The tax credit was GBP1.15 million (2016: GBP0.07 million). The
underlying effective tax rate on adjusted profit before tax was
approximately 23% (2016: 16%). The Group has benefitted from
R&D tax credits in the UK and South Africa and the utilisation
of historic tax losses not previously recognised.
Loss per share
Adjusted earnings per share increased by 74% to 5.9p (2016:
3.4p) as shown in note 8. Actual and diluted loss per share was
3.6p (2016: loss 15.5p), primarily driven by the impact of one-off
adjusting items.
Dividends
The directors are recommending maintaining the final dividend of
2.05p per share (2016: 2.05p) making a total dividend for 2017 of
2.9p per share (2016: 2.9p). The final dividend will be paid on 30
May 2018 to all shareholders on the register at the close of
business on 27 April 2018.
The dividend cover, calculated as adjusted eps:dividends per
share, was 2.03 times (2016: 1.17). Total dividends paid in 2017
were GBP2.01 million (2016: GBP1.88 million) including dividends of
GBP0.14 million (2016: nil) paid to non-controlling interests.
Balance sheet
The Group's net assets at the year-end reduced to GBP29.15
million (2016: GBP32.59 million), the reduction being primarily due
to the loss in the year and the increase in financial liabilities.
The increase in net debt arose as a result of the financing of the
Delta acquisition using the Group's debt facilities. Net assets
were also impacted by the goodwill and assets acquired with the
acquisition in 2017.
Deferred income, which is a non-cash liability, increased to
GBP19.73 million (2016: GBP17.60 million), the deferred tax
liability increased to GBP1.62 million (2016: GBP1.42 million) and
deferred tax assets increased to GBP2.68 million (2016: GBP0.52
million).
Cash flow and financing
StatPro continues to be cash-generative with cash generated from
operations after payment for acquisition and restructuring costs of
GBP10.68 million (2016: GBP7.45 million). The Group ended the year
with net debt of GBP20.22 million (2016: GBP10.06 million). The
free cash flow, before acquisition and restructuring payments,
increased to GBP4.59 million (2016: GBP0.65 million).
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
GBP1.46 million (2016: GBP1.23 million).
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. R&D expenditure of GBP8.01 million was incurred
(2016: GBP5.94 million). The increase of 35% (28% at constant
currency) was driven by Revolution and the Delta integration
project and overall the expenditure was a similar proportion of
revenue (16%) as in prior years.
Development costs of GBP6.02 million were capitalised in the
year (2016: GBP4.57 million) and amortisation on internal
development was GBP4.44 million (2016: GBP3.88 million). Capital
expenditure on property, plant and equipment was GBP2.30 million
(2016: GBP1.52 million), of which approximately GBP1.11 million was
financed under finance leases.
Post balance sheet events
Deferred consideration relating to acquisition of Investor
Analytics
As planned, a further and final deferred payment of US$ 1.0
million was paid to former IA shareholders on 23 January 2018.
Acquisition of further shares in Infovest
On 23 February 2018, StatPro South Africa (Pty) Ltd. purchased a
further 27.3% shares in Infovest for ZAR 30.4 million (GBP1.9
million) taking the total Group interest in Infovest to 100%.
Financing facility
The Group has a financing facility with Wells Fargo for
acquisitions, share buybacks and general corporate purposes. During
2017, as part of the acquisition of Delta, the financing facilities
were increased. At 31 December 2017, the Group had net debt of
GBP20.22 million and total credit facilities of GBP40.5 million
available, of which GBP33 million is committed to April 2022,
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
therefore the Board believes that the Group is well positioned to
manage the business risks.
Principal financial risks
The principal business risks and uncertainties affecting the
Group are described in the Group's Annual Report. For each category
of risk, the directors have identified means by which the risk can
be managed or reduced in a cost-effective way, whilst accepting
that some risks cannot be completely eliminated. The Brexit process
currently underway in the UK is not expected to have any adverse
impact on the Group, which has operations in the UK and continental
Europe.
GROUP INCOME STATEMENT FOR THE YEARED 31 DECEMBER 2017
2017 2017 2017 2016
GBP'000s GBP'000s GBP'000s GBP'000s
Notes Existing Acquisition Total
operations
------------------------------------------ ------ ------------ ------------ --------- ---------
Revenue 3 40,078 9,259 49,337 37,545
------------------------------------------ ------ ------------ ------------ --------- ---------
Operating expenses before amortisation
of intangible assets and other
adjustments (32,190) (7,890) (40,080) (30,254)
Amortisation of acquired intangible
assets (843) (1,400) (2,243) (1,060)
Amortisation of other intangible
assets (4,853) - (4,853) (4,191)
Goodwill impairment 5 - - - (9,724)
Fair value movement on non-controlling
interest put option 5 (404) - (404) (628)
Movements in provisions for contingent
consideration 5 - - - 272
Acquisition-related, restructuring
costs and negative goodwill 5 (1,227) (2,303) (3,530) (1,298)
------------------------------------------ ------ ------------ ------------ --------- ---------
Operating expenses 4 (39,517) (11,593) (51,110) (46,883)
------------------------------------------ ------ ------------ ------------ --------- ---------
Operating profit/(loss) 561 (2,334) (1,773) (9,338)
Finance income 61 33
Finance expense (1,646) (819)
------------------------------------------ ------ ------------ ------------ --------- ---------
Net finance expense (1,585) (786)
------------------------------------------ ------ ------------ ------------ --------- ---------
Loss before taxation (3,358) (10,124)
Taxation 7 1,147 74
------------------------------------------ ------ ------------ ------------ --------- ---------
Loss for the year (2,211) (10,050)
------------------------------------------ ------ ------------ ------------ --------- ---------
Profit attributable to non-controlling
interests 131 94
Loss attributable to equity shareholders (2,342) (10,144)
------------------------------------------ ------ ------------ ------------ --------- ---------
(2,211) (10,050)
------------------------------------------ ------ ------------ ------------ --------- ---------
Loss per share - basic and diluted 8 (3.6)p (15.5)p
------------------------------------------ ------ ------------ ------------ --------- ---------
GROUP STATEMENT OF COMPREHENSIVE INCOME FOR THE YEARED 31
DECEMBER 2017
2017 2016
GBP'000s GBP'000s
------------------------------------------------------ --------- ---------
Loss for the year (2,211) (10,050)
Other comprehensive income to be reclassified to the
income statement:
Net exchange differences (431) 6,606
------------------------------------------------------ --------- ---------
Total comprehensive loss for the year (2,642) (3,444)
------------------------------------------------------ --------- ---------
Attributable to:
Non-controlling interests 113 139
Equity shareholders (2,755) (3,583)
------------------------------------------------------ --------- ---------
Total comprehensive loss for the year (2,642) (3,444)
------------------------------------------------------ --------- ---------
BALANCE SHEET AT 31 DECEMBER 2017
2,017 2,016
Notes GBP'000s GBP'000s
----------------------------------------- ------ --------- ---------
Non-current assets
Goodwill 44,404 44,759
Other intangible assets 20,389 10,937
Property, plant and equipment 3,303 2,742
Other receivables 9 86 134
Deferred tax assets 2,682 516
------ --------- ---------
70,864 59,088
Current assets
Trade and other receivables 9 15,073 12,051
Financial instruments - other 39 -
Current tax assets 1,294 2,674
Cash and cash equivalents 4,311 4,356
----------------------------------------- ------ --------- ---------
20,717 19,081
Liabilities
Current liabilities
Financial liabilities - borrowings (7,451) (8,459)
Financial liabilities - non-controlling
interest put option (1,816) (2,557)
Financial instruments - other (67) (32)
Trade and other payables 10 (10,435) (7,573)
Current tax liabilities (273) (485)
Deferred income (19,665) (17,534)
Provisions 11 (304) (680)
----------------------------------------- ------ --------- ---------
(40,011) (37,320)
----------------------------------------- ------ --------- ---------
Net current liabilities (19,294) (18,239)
----------------------------------------- ------ --------- ---------
Non-current liabilities
Financial liabilities - borrowings (17,076) (5,961)
Other creditors and accruals 10 (3,655) (819)
Deferred tax liabilities (1,619) (1,416)
Deferred income (66) (67)
----------------------------------------- ------ --------- ---------
(22,416) (8,263)
----------------------------------------- ------ --------- ---------
Net assets 29,154 32,586
----------------------------------------- ------ --------- ---------
Shareholders' equity
Share capital 687 678
Share premium 24,454 23,537
Shares to be issued 63 63
Treasury shares (2,328) (2,328)
Other reserves 6,911 7,324
Retained earnings (775) 3,018
----------------------------------------- ------ --------- ---------
Total shareholders' equity 29,012 32,292
----------------------------------------- ------ --------- ---------
Non-controlling interests 142 294
----------------------------------------- ------ --------- ---------
Total equity 29,154 32,586
----------------------------------------- ------ --------- ---------
GROUP STATEMENT OF CASH FLOWS FOR THE YEARED 31 DECEMBER
2017
2017 2016
Notes GBP'000s GBP'000s
------------------------------------------ ------ --------- ---------
Operating activities
Cash generated from operations 12 10,676 7,454
Finance income 61 30
Finance costs (1,288) (530)
Tax received 1,022 453
Tax paid (1,166) (1,747)
------------------------------------------ ------ --------- ---------
Net cash flow from operating activities 9,305 5,660
------------------------------------------ ------ --------- ---------
Investing activities
Acquisition of subsidiaries and
other businesses (net of cash acquired) 15 (10,269) (4,786)
Investment in intangible assets (6,028) (4,940)
Purchase of property, plant and
equipment (1,185) (1,518)
Proceeds from the disposal of property,
plant and equipment - 13
------------------------------------------ ------ --------- ---------
Net cash flow used in investing
activities (17,482) (11,231)
------------------------------------------ ------ --------- ---------
Financing activities
Net proceeds from bank loans and
derivatives 13 9,966 11,685
Net payments on finance leases 13 (840) (330)
Proceeds from issue of ordinary 926 -
shares
Purchase of own shares - (2,079)
Dividends paid to non-controlling (135) -
interests
Dividends paid to shareholders (1,877) (1,877)
------------------------------------------ ------ --------- ---------
Net cash flow from financing activities 8,040 7,399
------------------------------------------ ------ --------- ---------
Net (decrease)/increase in cash
and cash equivalents (137) 1,828
------------------------------------------ ------ --------- ---------
Cash and cash equivalents at 1
January 4,356 2,203
Effect of exchange rate movements 92 325
------------------------------------------ ------ --------- ---------
Cash and cash equivalents at 31
December 4,311 4,356
------------------------------------------ ------ --------- ---------
GROUP STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE
YEARED 31 DECEMBER 2017
Share Share Shares Treasury Other Retained Total Non-controlling Total
to shareholders'
capital premium be shares reserves earnings equity interests equity
issued
GBP'000s 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 - 41,517
----------------- --------- --------- --------- --------- --------- --------- -------------- ---------------- ---------
Loss for the
year - - - - - (10,144) (10,144) 94 (10,050)
Other
comprehensive
income - - - - 6,561 - 6,561 45 6,606
----------------- --------- --------- --------- --------- --------- --------- -------------- ---------------- ---------
Total
comprehensive
income - - - - 6,561 (10,144) (3,583) 139 (3,444)
----------------- --------- --------- --------- --------- --------- --------- -------------- ---------------- ---------
Transactions
with
owners:
Put option
relating
to
non-controlling
interests - - - - (1,929) - (1,929) - (1,929)
Non-controlling
interests - - - - - - - 155 155
Purchase of own
shares - - - (2,079) - - (2,079) - (2,079)
Share-based
payment
transactions - - - - - 220 220 - 220
Tax relating to
share option
scheme - - - - - 23 23 - 23
Dividends - - - - - (1,877) (1,877) - (1,877)
----------------- --------- --------- --------- --------- --------- --------- -------------- ---------------- ---------
- - - (2,079) (1,929) (1,634) (5,642) 155 (5,487)
----------------- --------- --------- --------- --------- --------- --------- -------------- ---------------- ---------
At 31 December
2016 678 23,537 63 (2,328) 7,324 3,018 32,292 294 32,586
----------------- --------- --------- --------- --------- --------- --------- -------------- ---------------- ---------
Share Share Shares Treasury Other Retained Total Non-controlling Total
to shareholders'
capital premium be shares reserves earnings equity interests equity
issued
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
----------------- --------- --------- --------- --------- --------- --------- -------------- ---------------- ---------
At 1 January
2017 678 23,537 63 (2,328) 7,324 3,018 32,292 294 32,586
----------------- --------- --------- --------- --------- --------- --------- -------------- ---------------- ---------
Loss for the
year - - - - - (2,342) (2,342) 131 (2,211)
Other
comprehensive
income - - - - (413) - (413) (18) (431)
----------------- --------- --------- --------- --------- --------- --------- -------------- ---------------- ---------
Total
comprehensive
income - - - - (413) (2,342) (2,755) 113 (2,642)
----------------- --------- --------- --------- --------- --------- --------- -------------- ---------------- ---------
Transactions
with
owners:
Acquisition of
non-controlling
interests - - - - - 130 130 (130) -
Share-based
payment
transactions - - - - - 251 251 - 251
Tax relating to
share option
scheme - - - - - 45 45 - 45
Shares issued 9 917 - - - - 926 - 926
Dividends - - - - - (1,877) (1,877) (135) (2,012)
----------------- --------- --------- --------- --------- --------- --------- -------------- ---------------- ---------
9 917 - - - (1,451) (525) (265) (790)
----------------- --------- --------- --------- --------- --------- --------- -------------- ---------------- ---------
At 31 December
2017 687 24,454 63 (2,328) 6,911 (775) 29,012 142 29,154
----------------- --------- --------- --------- --------- --------- --------- -------------- ---------------- ---------
Other reserves include merger reserves of GBP2,369,000 (2016:
GBP2,369,000), translation reserve of GBP6,471,000 (2016:
GBP6,884,000) and a reserve for the put option held by
non-controlling interest of a debit balance of GBP1,929,000 (2016:
GBP1,929,000). The merger reserve arose on acquisitions and
represents the difference between the fair value of shares issued
and the nominal value of the shares. The translation reserve
incorporates the gains and losses on revaluation of the net assets
and liabilities of subsidiary undertakings and other currency gains
and losses that are treated as part of equity.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARED 31 DECEMBER
2017
1. Announcement
This announcement was approved by the Board of directors on 13
March 2018. The preliminary results for the year ended 31 December
2017 are unaudited. The financial information set out in this
announcement does not constitute the Company's statutory accounts
for the years ended 31 December 2017 or 31 December 2016. 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 2016.
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 2016 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 2016
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 continues to 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:
2017 2017 2017 2016
Existing Acquisition Total Change
Operations
GBP million GBP million GBP million GBP million %
----------------------------- ------------ ------------ ------------ ------------ -------
Revenue
StatPro Revolution 14.21 9.26 23.47 12.26 91%
StatPro Seven 19.78 - 19.78 18.92 5%
Data fees 4.07 - 4.07 3.81 7%
----------------------------- ------------ ------------ ------------ ------------ -------
Total recurring revenue 38.06 9.26 47.32 34.99 35%
Professional services and
other revenue 2.02 - 2.02 2.56 (21%)
----------------------------- ------------ ------------ ------------ ------------ -------
Total revenue 40.08 9.26 49.34 37.55 31%
----------------------------- ------------ ------------ ------------ ------------
Percentage of total revenue
that is recurring 95% 100% 96% 93%
----------------------------- ------------ ------------ ------------ ------------
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
(cloud) (software) Data Total
GBP million GBP million GBP million GBP million
---------------------------------- ------------ ------------ ------------ ------------
As at 31 December 2016 15.04 19.74 4.49 39.27
Net impact of exchange
rates (0.44) (0.28) (0.42) (1.14)
---------------------------------- ------------ ------------ ------------ ------------
At 1 January 2017 (at December
2017 rates) 14.60 19.46 4.07 38.13
ARR from acquisitions 14.47 - - 14.47
New contracted revenue/increases 2.32 2.12 0.35 4.79
Conversions from Seven
to Revolution 1.09 (1.09) - -
Cancellations/reductions (2.42) (1.57) (0.36) (4.35)
---------------------------------- ------------ ------------ ------------ ------------
0.99 (0.54) (0.01) 0.44
Net increase/(decrease) 15.46 (0.54) (0.01) 14.91
---------------------------------- ------------ ------------ ------------ ------------
Recurring licence fees
as at 31 December 2017 30.06 18.92 4.06 53.04
---------------------------------- ------------ ------------ ------------ ------------
Change in total ARR 100% (4%) (10%) 35%
Change in ARR at constant
currency 106% (3%) 0% 39%
Change in ARR at constant
currency excluding acquisitions 7% (3%) 0% 1%
---------------------------------- ------------ ------------ ------------ ------------
Revolution ARR reported above includes cloud revenues acquired
from Investor Analytics in 2016 and Delta in 2017. Excluding these
components, the organic increase in Revolution ARR at constant
currency was 13%.
The ARR distribution profile for StatPro Revolution is as
follows:
Annualised Number Average Annualised Number Average
revenue of clients revenue revenue of clients revenue
per client * per client
*
Annualised revenue bands 2017 2017 2017 2016 2016 2016
--------------------------
GBP'000s Number GBP'000s GBP'000s Number GBP'000s
-------------------------- ----------- ------------ ------------ ----------- ------------ ------------
<GBP10k 335 86 3.9 357 111 3.2
GBP10k-GBP50k 3,172 124 25.6 2,141 99 21.6
GBP50k-GBP100k 4,526 58 78.0 3,199 41 78.0
GBP100k-GBP200k 9,336 68 137.3 5,231 39 134.1
>GBP200k 12,688 33 384.5 3,670 10 367.0
-------------------------- ----------- ------------ ------------ ----------- ------------ ------------
Total 30,057 369 81.5 14,598 300 48.7
-------------------------- ----------- ------------ ------------ ----------- ------------ ------------
*At constant currency
IFRS 15, 'Revenue from contracts with customers', deals with
revenue recognition and establishes principles for reporting
information to users of financial statements about the nature,
amount, timing and uncertainty of revenue and cash flows arising
from an entity's contracts with customers. The standard replaces
IAS 18, 'Revenue', and IAS 11, 'Construction contracts', and
related interpretations. The standard is effective for annual
periods beginning on or after 1 January 2018, and earlier
application is permitted. The group is working towards the
implementation of IFRS 15 with effect from 1 January 2018 and has
carried out an impact assessment as part of this process. The Group
intends to apply the full retrospective approach to the
transition.
The directors anticipate there will be no material impact within
a financial year on any of the Group's revenue streams.
Particular consideration was given to accounting for some legacy
term licences for a subset of StatPro Seven software products that
are not hosted, i.e. they are installed on premise. The total
annualised recurring contract value of these products is
approximately GBP7.3 million and these are no longer sold to new
customers as an on-premise solution. These licences are considered
distinct from support and maintenance services included in the
contract and provide a 'right to use' software that does not
significantly change over the term of the contract.
The Directors have considered the contractual arrangements and
determined that they contain a series of annual performance
obligations as the Group is required to deliver a licence key
annually. Therefore, whilst the monthly phasing of revenue would
differ under IFRS 15, there is no impact of the change within a
financial year, unless contracts are not renewed. The impact on the
full year 2017 revenue is not expected to be material, however the
phasing between the first and second half of the year will change
and there will be an impact on the opening balance sheet. The
impact on 2018 revenue is difficult to predict, as it will depend
on the timing of any contracts that are not renewed. The Group
continues to transition to cloud-based services in line with its
strategy.
The Directors consider that, for all other revenue streams, the
customer contract cannot benefit from the licence without a related
service provided by the Group and consequently, these are not
considered distinct from other services included in the contract.
There is therefore expected to be no material change to revenue
recognition for other revenue streams, other than from on-premise
legacy term licences.
The profile of cash receipts or payments is not affected by this
standard.
4 Operating expenses
2017 2016
GBP'000s GBP'000s
---------------------------------------- --------- ---------
Operating expenses relate to:
Staff costs
- Research and development 6,600 5,943
- Other staff costs 17,319 12,693
- Share-based payments 626 361
- Internal development costs
capitalised (6,023) (4,570)
---------------------------------------- --------- ---------
Total staff costs 18,522 14,427
Depreciation of property, plant
and equipment 1,504 1,327
Amortisation of intangible assets 7,096 5,251
Operating lease rentals in respect
of:
- Land and buildings 1,797 1,910
- Other 20 20
Auditors' remuneration 247 256
Goodwill impairment - 9,724
Fair value movement on non-controlling
interest put option 404 628
Movements in provisions for
contingent consideration - (272)
Acquisition-related, restructuring
costs and negative goodwill 3,530 1,298
Other operating expenses 17,873 11,790
Exchange differences 117 524
---------------------------------------- --------- ---------
Total operating expenses 51,110 46,883
---------------------------------------- --------- ---------
5 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 as shown in the table below. Further
details are provided in notes 6 and 8.
2017 2017 2017 2016
GBP'000s GBP'000s GBP'000s GBP'000s
Existing Acquisition Total
operations
------------------------------------------- ------------ ------------ --------- ---------
Goodwill impairment - - - (9,724)
Movements in provisions for contingent
consideration
Release of provision for SiSoft
following settlement - - - 86
Release of provision for contingent
consideration for IA - - - 186
------------------------------------------- ------------ ------------ --------- ---------
- - - 272
Fair value movement on non-controlling
interest put option (404) - (404) (628)
Acquisition-related, restructuring
costs and negative goodwill
Acquisition transaction, redundancy
and other integration costs - (2,303) (2,303) (1,062)
Redundancies and onerous lease on
restructuring (core) (1,227) - (1,227) (415)
Negative goodwill on Infovest acquisition - - - 179
------------------------------------------- ------------ ------------ --------- ---------
(1,227) (2,303) (3,530) (1,298)
------------------------------------------- ------------ ------------ --------- ---------
Total of adjusting items (1,631) (2,303) (3,934) (11,378)
------------------------------------------- ------------ ------------ --------- ---------
Non-controlling interest put option
The fair value of the buy-out of the non-controlling interest
put option in Infovest was estimated to be GBP1.82 million at 31
December 2017 and the movement in the liability through the profit
and loss in 2017 was GBP0.40 million.
Acquisition related, and restructuring charges
Acquisition-related and restructuring charges amounting to a
total of GBP3.53 million were incurred. These include: GBP2.30
million for the acquisition of Delta, of which GBP1.02 million were
for transaction costs and the remainder being post-acquisition
redundancies and onerous contracts. In addition, GBP1.23 million
relates to restructuring of the core business following the Delta
acquisition, predominantly relating to the restructuring of the
European sales and support team.
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
2017 2016
GBP'000s GBP'000s
---------------------------------------------- --------- ---------
Loss before taxation (3,358) (10,124)
Add back: amortisation on acquired
intangible assets 2,243 1,060
Add back: goodwill impairment - 9,724
Add back: fair value movement on
non-controlling interest put option 404 628
Add back: movements in provisions
for contingent consideration - (272)
Add back: acquisition-related, restructuring
costs and negative goodwill 3,530 1,298
Add back: share-based payments 626 361
---------------------------------------------- --------- ---------
Adjusted profit before tax 3,445 2,675
---------------------------------------------- --------- ---------
b) Adjusted operating profit
2017 2016
GBP'000s GBP'000s
---------------------------------------------- --------- ---------
Operating loss (1,773) (9,338)
Add back: amortisation on acquired
intangible assets 2,243 1,060
Add back: goodwill impairment - 9,724
Add back: fair value movement on
non-controlling interest put option 404 628
Add back: movements in provisions
for contingent consideration - (272)
Add back: acquisition-related, restructuring
costs and negative goodwill 3,530 1,298
Add back: share-based payments 626 361
---------------------------------------------- --------- ---------
Adjusted operating profit 5,030 3,461
---------------------------------------------- --------- ---------
c) Adjusted EBITDA
2017 2016
GBP'000s GBP'000s
---------------------------------------------- --------- ---------
Operating loss (1,773) (9,338)
Add back: depreciation of property,
plant and equipment 1,504 1,327
Add back: amortisation on purchased
intangible assets 417 316
Add back: amortisation on acquired
intangible assets 2,243 1,060
Add back: goodwill impairment - 9,724
Add back: fair value movement on
non-controlling interest put option 404 628
Add back: movements in provisions
for contingent consideration - (272)
Add back: acquisition-related, restructuring
costs and negative goodwill 3,530 1,298
Add back: share-based payments 626 361
---------------------------------------------- --------- ---------
Adjusted EBITDA 6,951 5,104
---------------------------------------------- --------- ---------
Adjusted EBITDA margin 14.1% 13.6%
---------------------------------------------- --------- ---------
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.
2017 2016
-------------------------------- -------- --------
Revenue 100.0% 100.0%
Cost of services (41.3)% (38.9)%
================================ -------- --------
Gross profit margin 58.7% 61.1%
R&D costs (5.5)% (5.4)%
Sales & Marketing costs (10.9)% (10.3)%
General & Administration costs (29.5)% (32.8)%
-------------------------------- -------- --------
(45.9)% (48.5)%
Share-based payments 1.3% 1.0%
-------------------------------- -------- --------
Adjusted EBITDA 14.1% 13.6%
-------------------------------- -------- --------
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, contractor 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 detail below.
General & Administration costs 2017 2016
-------------------------------------- -------- --------
Finance, HR & Administration (2.6)% (3.2)%
IT & Internal projects (4.8)% (4.7)%
Executive management (1.8)% (2.7)%
Employee-related costs (8.5)% (7.4)%
-------------------------------------- -------- --------
(17.7)% (18.0)%
Property & communications (7.9)% (9.8)%
Professional fees, insurance and
other (3.9)% (5.0)%
-------------------------------------- -------- --------
(11.8)% (14.8)%
-------------------------------------- -------- --------
Total General & Administration costs (29.5)% (32.8)%
-------------------------------------- -------- --------
e) Free cash flow
2017 2016
GBP'000s GBP'000s
--------------------------------------- --------- ---------
Cash generated from operations before
acquisition and restructuring costs 13,765 8,905
Net interest paid (1,227) (500)
Net tax paid (144) (1,294)
Purchase of property, plant and
equipment (1,185) (1,518)
Investment in intangible assets (6,028) (4,940)
--------------------------------------- --------- ---------
Free cash flow before acquisition
and restructuring costs 5,181 653
Acquisition-related and restructuring
costs (3,089) (1,451)
--------------------------------------- --------- ---------
Free cash flow after acquisition
and restructuring costs 2,092 (798)
--------------------------------------- --------- ---------
Property, plant and equipment amounting to GBP1.11 million
acquired under finance leases is excluded from the cash flow.
7 Taxation
2017 2016
GBP'000s GBP'000s
--------------------------------- --------- ---------
Current tax
Current tax on profits for the
year (111) 1,512
Adjustments in respect of prior
years (1,142) 205
--------------------------------- --------- ---------
Total current tax (1,253) 1,717
Total deferred tax 2,400 (1,643)
--------------------------------- --------- ---------
Income tax credit 1,147 74
--------------------------------- --------- ---------
The tax impact of the adjusting items is as follows:
2017 2016
GBP'000s GBP'000s
--------------------------------- --------- ---------
Tax credit/(charge) on profit
before tax and adjusting items 537 (395)
Tax credit on adjusting items 610 469
--------------------------------- --------- ---------
Tax credit on profit before
tax and after adjusting items 1,147 74
--------------------------------- --------- ---------
The tax on the Group's profit before tax differs from the
standard rate of corporation tax in the UK of 19.25% (2016: 20.0%)
as follows:
2017 2016
GBP'000s GBP'000s
---------------------------------------- --------- ---------
Loss before tax (3,358) (10,124)
---------------------------------------- --------- ---------
Tax credit on loss before tax
at standard rate of corporation
tax in the UK of 19.25% (2016:
20.0%) 646 2,025
Tax effects of:
Non-taxable income and non-deductible
expenses 1,182 777
Non-deductible impairment of
goodwill - (1,945)
Unrecognised deferred tax movement 188 (1,144)
Recognition of previously unrecognised
deferred tax asset 543 33
Adjustments in respect of prior
years (1,142) 205
Difference in tax rates (199) 123
Effect of change in tax rates (71) -
---------------------------------------- --------- ---------
Tax credit 1,147 74
---------------------------------------- --------- ---------
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 of
shares shares
2017 2017 2017 2016 2016 2016
GBP'000s '000s pence GBP'000s '000s pence
------------------------------------ --------- --------- --------- --------- --------- ---------
Loss per share - basic and diluted (2,342) 64,810 (3.6) (10,144) 65,272 (15.5)
------------------------------------ --------- --------- --------- --------- --------- ---------
Earnings per share - adjusted
Earnings Weighted Earnings Earnings Weighted Earnings
average per average per
number share number share
of of
shares shares
2017 2017 2017 2016 2016 2016
GBP'000s '000s pence GBP'000s '000s pence
------------------------------------ --------- --------- --------- --------- --------- ---------
Loss per share - basic (2,342) 64,810 (3.6) (10,144) 65,272 (15.5)
Add back: Amortisation on acquired
intangible assets 2,243 - 3.5 1,060 - 1.6
Add back: Goodwill impairment - - - 9,724 - 14.9
Add back: Non-controlling interest
put option 404 - 0.6 628 - 1.0
Add back: Movements in provisions
for contingent consideration - - - (272) - (0.4)
Add back: Acquisition-related,
restructuring costs and negative
goodwill 3,530 - 5.4 1,298 - 2.0
Effect of tax on adjusting items (610) - (0.9) (469) - (0.7)
Add back: share-based payments 626 - 0.9 361 - 0.5
------------------------------------ --------- --------- --------- --------- --------- ---------
Adjusted earnings per share 3,851 64,810 5.9 2,186 65,272 3.4
Potentially dilutive shares - 2,505 (0.2) - 1,285 (0.1)
------------------------------------ --------- --------- --------- --------- --------- ---------
Adjusted earnings per share -
diluted 3,851 67,315 5.7 2,186 66,557 3.3
------------------------------------ --------- --------- --------- --------- --------- ---------
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. The basic loss per share
for 2016 has been adjusted to 15.5p from the 15.4p previously
reported to exclude the non-controlling interests share of profit.
The reported diluted loss per share for 2016 has been adjusted to
15.5p from the 15.1p previously reported as there is no dilution in
loss per share when there is an overall loss.
9 Trade and other receivables
Current assets: trade and other receivables
2017 2016
GBP'000s GBP'000s
------------------- --------- ---------
Trade receivables 10,475 9,182
Other receivables 285 420
Prepayments 1,793 1,603
Accrued income 2,193 404
VAT recoverable 195 332
Rental deposits 132 110
------------------- --------- ---------
15,073 12,051
------------------- --------- ---------
Non-current assets: other receivables
2017 2016
GBP'000s GBP'000s
----------------- --------- ---------
Rental deposits 86 134
----------------- --------- ---------
86 134
----------------- --------- ---------
10 Trade and other payables
Current liabilities: trade and other payables
2017 2016
GBP'000s GBP'000s
------------------------------ --------- ---------
Trade creditors 1,398 984
Other creditors and accruals 5,443 2,040
Deferred consideration 738 1,609
Other taxation and social
security 2,856 2,940
------------------------------ --------- ---------
10,435 7,573
------------------------------ --------- ---------
Non-current liabilities: other creditors
2017 2016
GBP'000s GBP'000s
------------------------ --------- ---------
Other creditors and
accruals 151 33
Deferred consideration 3,504 786
------------------------ --------- ---------
3,655 819
------------------------ --------- ---------
The non-current "Other creditors and accruals" of GBP0.15
million (2016: GBP0.03 million) relate to lease inducements, which
are amortised over the period of the relevant lease.
11 Provisions
Provisions of GBP0.30 million at 31 December 2017 (2016: GBP0.68
million) relate to contingent consideration and provisions for
redundancies and onerous contracts. Total movement on provisions
for the Group is as follows:
2017 2017 2017 2016
Contingent Redundancies Total Total
consideration and onerous
contracts
GBP'000s GBP'000s GBP'000s GBP'000s
---------------------- --------------- ------------- --------- ---------
At 1 January 657 23 680 642
Arising in the
year - 3,530 3,530 1,660
Utilised in
the year (616) (3,265) (3,881) (1,451)
Released in
the year - (21) (21) (272)
Exchange differences - (4) (4) 101
---------------------- --------------- ------------- --------- ---------
At 31 December 41 263 304 680
---------------------- --------------- ------------- --------- ---------
The balance of the redundancies and onerous contracts is
expected to be paid in 2018.
12 Reconciliation of loss before tax to net cash inflow from
operating activities
2017 2016
GBP'000s GBP'000s
------------------------------------------------------ --------- ---------
Loss before taxation (3,358) (10,124)
Net finance expense 1,585 786
------------------------------------------------------- --------- ---------
Operating loss (1,773) (9,338)
Goodwill impairment - 9,724
Fair value movement on non-controlling interest
put option 404 628
Movements in provisions for contingent consideration - (272)
Acquisition-related, restructuring costs and
negative goodwill 3,530 1,298
Depreciation of property, plant and equipment 1,504 1,327
Loss on disposal of property, plant and equipment - 29
Amortisation of intangible assets 7,096 5,251
(Increase)/decrease in receivables (924) (1,937)
Increase/(decrease) in payables and provisions 2,971 380
Increase in deferred income 331 1,453
Share-based payments 626 362
------------------------------------------------------- --------- ---------
Net cash inflow from operating activities
before acquisition and restructuring costs 13,765 8,905
Acquisition-related and restructuring costs (3,089) (1,451)
------------------------------------------------------- --------- ---------
Net cash inflow from operating activities
after acquisition and restructuring costs 10,676 7,454
------------------------------------------------------- --------- ---------
13 Analysis of changes in net (debt)/cash
At 1 Cash Non-cash Exchange At 31
January flow changes differences December
2017 2017
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
----------------------------------- --------- --------- --------- ------------- ----------
Cash and cash equivalents
(per balance sheet) 4,356 (137) - 92 4,311
Overdrafts - - - - -
----------------------------------- --------- --------- --------- ------------- ----------
Cash and cash equivalents
(per statement of cash flows) 4,356 (137) - 92 4,311
Finance leases (1,228) 840 (1,107) 39 (1,456)
Bank, other loans and derivatives (13,192) (9,966) (226) 313 (23,071)
----------------------------------- --------- --------- --------- ------------- ----------
Net debt (10,064) (9,263) (1,333) 444 (20,216)
----------------------------------- --------- --------- --------- ------------- ----------
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 cash/(debt) 1,284 (9,527) (1,209) (612) (10,064)
=========== ========= ========= ============= ==========
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 Delta
On 15 May 2017, StatPro completed the First Closing of the
acquisition from UBS of its risk and performance analytics service,
Delta. An initial payment of approximately GBP7.5 million has been
made, out of total cash consideration of approximately EUR13
million (GBP11.2 million), with a fair value of GBP10.55 million.
The remaining payments will be paid as follows:
-- In May 2019 - approximately GBP1.4 million
-- In May 2020 - approximately GBP2.3 million
Delta enables StatPro to extend its risk and performance
analytics service from the middle office to the front office of
asset managers.
The acquisition is phased over three to five years as StatPro
incorporates Delta's cloud-based functionality into its flagship
product, StatPro Revolution.
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. The goodwill is not deductible for tax
purposes.
The business was operated as part of a larger business unit and
it is not practicable to disclose pre-acquisition results.
Fair value of assets acquired and
liabilities assumed
Fair value
GBP'000
Trade debtors 2,240
Intangible asset - Brand and client
contract 2,359
Intangible asset - Technology 8,436
-----------
13,035
Deferred income (1,867)
Other creditors and provisions (611)
Deferred tax liability (429)
-----------
(2,907)
-----------
Total identifiable net assets at fair
value 10,128
Goodwill arising on acquisition 422
-----------
Fair value of purchase consideration 10,550
===========
Increase in shareholding in Infovest
The Group increased its shareholding in Infovest Consulting
(Pty) Ltd ("Infovest"), a South African-headquartered software
provider, specialising in data warehouse, ETL and reporting
software for the asset management industry, from 51.0% to 72.7% in
February 2017. The consideration for the additional 21.7%
shareholding was ZAR 19.1 million (GBP1.15 million) in cash. The
transaction resulted in the derecognition of GBP1.15 million of the
non-controlling interest put option and a GBP130,000 equity
transfer from non-controlling interest to the retained earnings
reserve.
The valuation of this buy-out is based on a formula linked to
recurring revenue but with a minimum profit level with the multiple
being just under eight times adjusted EBITDA. The remaining
non-controlling interest were acquired in February 2018 (see note
18 below).
Total cash payments on acquisitions in 2017 were as follows:
GBP million
Delta initial payment 7.53
Investor Analytics deferred payment 1.59
Infovest increase 1.15
------------
Total 10.27
============
16 Goodwill and other intangible assets
There was an increase in goodwill in 2017 of GBP0.42 million
relating to the Delta acquisition. The net reduction overall in
goodwill of GBP0.36 million is due to the impact of currency
revaluations of goodwill. 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
880,642 shares were issued during the year (2016: nil). At 31
December 2017, there were 68,694,292 shares (2016: 67,813,650
shares) in issue including 3,098,713 (2016: 3,098,713) held in
treasury (65,595,579 excluding treasury shares). The treasury
shares do not accrue dividends and are excluded from the earnings
per share calculation.
18 Post balance sheet events
Deferred consideration relating to acquisition of Investor
Analytics
As planned, a further and final deferred payment of US$ 1.0
million (GBP0.7 million) was paid to former IA shareholders on 23
January 2018.
Acquisition of further shares in Infovest
On 23 February 2018, StatPro South Africa (Pty) Ltd. purchased a
further 27.3% shares in Infovest for ZAR 30.4 million (GBP1.9
million) taking the total Group interest in Infovest to 100%.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR JJMBTMBMBTIP
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March 14, 2018 03:01 ET (07:01 GMT)
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