statpro group plc annual report & accounts 2013

StatPro Group plc

Annual R

eport & Accounts 2013

StatPro Group plc Annual Report & Accounts 2013

x x

Strategic Report Governance Financial Statements

StatPro has grown its recurring revenue from less than £1 million

in 1999 to approximately£29 million at 31 December 2013. We floated on the main market of

the London Stock Exchange in May 2000 and transferred our

listing to AIM in June 2003.

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Performance

Level of risk

Compliance withregulations

Using our expertise from the last 20 years,we provide the analysis of investment portfolios

and report it to the owners and managers

WHATWE DO

Our solutions help the investment industrybe more transparent and responsive

to their clients

We charge an annual subscriptionfor our services

People and businesses have some money to investThey look for investment managers to manage that money

They use systems from companies like StatPro

StatPro uses the latest cloud technology to simplifyhow investment portfolios are managed, analysed and reported

Investment Managersneed to understand howthat money is managed and its…

We are a global provider of portfolio analytics for the investment industry

To access this report online visit www.statpro.com/investors

Strategic Report

1 2013 Highlights 2 At a Glance 4 Our Business 5 Chairman’s Statement 6 Market Overview 8 StatPro’s Strategy 10 Chief Executive’s Review 12 Chief Executive’s Q&A

14 Financial Review 20 Operational Review 21 Marketing Strategy 22 Sales and Partnerships23 Client Services 24 Product Strategy 26 Our People 28 Principal Risks and

Uncertainties

Financial Statements

45 Independent Auditor’s Report

47 Group Income Statement 47 Group Statement of

Comprehensive Income48 Balance Sheets 49 Statement of Cash Flows50 Group Statement

of Changes in Shareholders’ Equity

51 Company Statement of Changes in Shareholders’ Equity

52 Notes to the Financial Statements

86 Five Year Record 87 Financial Calendar 88 Directors and Advisers ibc StatPro Office Locations

Governance

32 Introduction to Corporate Governance

33 Corporate Governance 36 Board of Directors 36 Group Executive

Board and other Senior Executives

38 Directors’ Report 41 Remuneration Report

CONTENTS

1

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Jun 2011 Dec 2011 Dec 2012Jun 2012 Jun 2013 Dec 2013Dec 2010

Number of clientsAnnualised recurring revenue £'000s (at Dec '13 exchange rates)

StatPro Revolution recurring revenue

Number of clientsAnnualised recurring revenue £'000s (at Dec '13 exchange rates)

tatPro Revolution recurring revenue

50 111 156 220 25716

£’00

0s p

er a

nnum

2013 HIGHLIGHTS

2013 2012 Change

Revenue £32.49 million £32.00 million +2%Profit before tax £3.11 million £3.78 million -18%

Adjusted EBITDA* £5.46 million £6.73 million -19%

Annualised recurring contract revenue** £28.72 million £28.47 million ++1%Net contract growth rate – StatPro Revolution** 114% 234%

Cash flow from operating activities (before exceptional items) £9.40 million £10.18 million -8%

Net cash £4.00 million £3.67 million +9%Earnings per share – basic 3.1p 4.3p -28% – adjusted* 4.5p 5.9p -24%

Dividend per share – total for year 2.8p 2.7p +4%

Highlights:• StatPro Revolution annualised recurring revenue increased by 114% to £3.20 million at 31 December 2013

(2012: £1.49 million**), ahead of expectations• StatPro Revolution related recurring revenue*** increased to £9.19 million at 31 December 2013

(2012: £3.92 million**), representing 37% of total software recurring revenue (2012: 16%**)• StatPro Revolution now has 34 fund administrator partners (2012: 21), a key strategic target market • Adjusted EBITDA lower at £5.46 million (2012: £6.73 million), mainly due to increased spending on StatPro Revolution• Increase in Group net cash to £4.00 million at 31 December 2013 (2012: £3.67 million)• Release of key new features for StatPro Revolution in 2013, including the UCITS module and enhanced sharing• Good progress on StatPro R+ development, with beta launches during 2013

* Adjusted EBITDA and adjusted earnings per share are EBITDA and earnings per share after adjustment for amortisation of acquired intangible assets, share based payments and exceptional items (notes 3 and 10).

** Annualised recurring contract revenue is the annual value of revenue contractually committed at year end. Comparative is at constant currency.*** Defined as the total recurring revenue from clients whose subscription includes StatPro Revolution.


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Asset ManagerThird Party AdministratorPension FundsPrivate WealthOther

Annualised contract value by client type

5%5%

19%

63%

8%

AT A GLANCE

EMEAAIn the EMEAA region revenue increased by 2%*to

£20.5 million(2012: £20.1 million)

NorthAmericaIn the North American region revenue increased by 2%*to

£12.0 million(2012: £11.9 million)

56Research and Development

Employees

Selling, distribution and client services

2711 Operations, management

and administration

84Research and Development

Employees

Selling, distribution and client services

5126 Operations, management

and administration

Office locations Office locations

United KingdomContinental EuropeRest of the WorldNorth America

Annualised contract value by region

37%

32%

18%

13%

Our focus in 2013 has been on the further development of StatPro Revolution and StatPro R+, the cloud-based version of StatPro Seven.

BostonUnited States

Montréal & TorontoCanada

LondonUnited Kingdom

MilanItaly

LuxembourgLuxembourg

Hong KongHong Kong

Cape TownSouth Africa

SydneyAustralia

FrankfurtGermany

ParisFrance* At constant currency

3

1,200

1,000

800

600

400

200

0<£2k £2k–£10k £10k–£50k £50k–£100k >£100k

160

100

120

140

80

60

40

20

0<£2k £2k–£10k £10k–£50k £50k–£100k >£100k

£’00

0s p

er a

nnum

Num

ber o

f clie

nts

December 2012 December 2013

December 2012 December 2013

Annualised revenue Number of clients

• June StatPro announces

partnership with CACEIS

•

Q1 Q2 Q3 Q42013 Milestones

• February– StatPro

launches new Web API and

developer programme

•

March StatPro launches App Store

within StatPro Revolution

•March –StatPro announces

partnership with

Interactive Data

Corporation

•May RBC launch

White Paper on fixed

income co-branded with

StatPro

•[May –Risk Limits Monitoring

module added to StatPro

Revolution to support UCITS

IV compliance (this advanced

analytics is provided as a

premium service)

October– Sharing and

user management

launched within

StatPro Revolution

•November APEX Fund

Services and StatPro

host joint event in

Dublin

December StatPro

Revolution clients

reach 250

StatPro Revolution now has 34 fund administrator partners (2012: 21)

• September

StatPro

sales team expands from

23 to 30

•

August StatPro

adds Freedom

Indexes to

StatPro Revolution

StatPro Revolution annualised recurring revenue analysis by contract value

Revolution

Seven

R+

XYZ


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our businessMaking sharing the key focus for StatPro was the main theme for us in 2013; this is our unique selling point.

Internally, we realigned teams to be global rather than regional, hired and trained new staff to ensure that we can capitalise on the opportunity that our new products offer us. Externally, we widened our network of partners for StatPro Revolution through fund administrators and platform providers (see more from page 20 onwards in the Operational Review). We also launched a beta version of StatPro R+ (cloud-based replacement for StatPro Seven). We improved communication with our partners through a dedicated handbook and we conducted a series of events to communicate with our existing clients about the forthcoming release of StatPro R+.

Through better communication and sharing we were able to assist our partners and clients to increase their sales, improve client service, meet regulations and reduce their costs. This has increased both StatPro Revolution revenue and the potential market.

SharingThe key value proposition of StatPro Revolution is its ability to share access to any portfolio with anyone, anywhere. We do not charge for users, so our clients can share at will. This creates a new self-service approach to client reporting that will truly revolutionise the asset management market, just like internet banking revolutionised the retail banking market.

We believe every portfolio is a network: someone owns it, someone provides advice on it, someone manages it, someone checks it complies with regulations, someone tries to ensure it is profitable, someone is concerned about the risk. All these people have an active interest in knowing what is going on in that portfolio at any given time. StatPro Revolution manages this effortlessly.

Sharing our expertise with clients and partners is important, because if we can communicate how best to sell our products, our partners can actively sell on our behalf, generating a snowball effect, leading to more clients and additional sales.

In 2013, we hired 13 new sales people for our London, Boston, Hong Kong, Luxembourg, Cape Town and Paris offices. After attending one of two 12-week courses in the UK, they returned to their teams armed with a wealth of knowledge to sell StatPro Revolution. This sales training process has proved extremely useful in getting relatively inexperienced people up to scratch very quickly and making sales. We also completed the partner handbook and delivered several training courses and joint events with partners and fund administrators who, as part of our own network, can support our sales goals. Further

information about this can be found in the Operational Review from page 20.

Reviewing the performance functionSince the replacement of StatPro Seven by StatPro R+ began, we have not only rewritten all our analytical software from scratch, but we have also redesigned the workflow to be more efficient. Performance analysis software has in the past been built around the structure of traditional performance teams, but with the advent of new technology, the way performance analysis is provided can be changed and, in addition, the organisation of performance teams can also be changed and this needs to be reflected in the new software.

Without performance and risk analysis, the asset managers cannot communicate appropriately with their clients nor control risk effectively. It is often the case that many people are complacent about performance and risk right up to the moment when something dramatic happens in the market, at which point they need a complete understanding of what is happening and more importantly need to communicate this understanding immediately with their clients. But putting a modern performance process in place is a complex and expensive operation so companies must plan ahead. We think this means that outsourcing will become increasingly popular, but outsourcing will not work unless the service offered is responsive, flexible and sophisticated.

StatPro R+ has been designed to address this requirement and we will be targeting the outsourcers with it. Built from scratch, it reengineers the portfolio performance process to maximise scale, frequency and speed and minimise errors.

pages 8 and 10For more information on our sharing value proposition

page 12 onwardsFor further information about how we’re communicating migration to this new product

page 25Read about the roadmap for StatPro R+

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Whilst markets remain volatile, the prospects for the asset management industry look brighter than last year.

chairman’s statement

Carl Bacon

ProgressI am pleased to report that the Group increased total annualised recurring revenue by 1% to £28.7 million (2012: £28.5 million at constant currency) including a 114% increased contribution from StatPro Revolution of £3.2 million (2012: £1.5 million). Total revenue increased by 2% to £32.5 million (2012: £32.0 million). Owing to increased investment primarily in sales, client services and infrastructure related to StatPro Revolution, adjusted profit before tax decreased by 20% to £4.1 million (2012: £5.0 million). StatPro Revolution related recurring revenue now amounts to £9.2 million (2012: £3.9 million), representing 37% of total software recurring revenue (2012: 16%).

DividendYour Board is proposing a final dividend of 1.95p per share for 2013 payable on 21 May 2014 to all shareholders on the register at the close of business on 25 April 2014, taking the total dividend to 2.8p per share (2012: 2.7p per share) an increase of 4%. We intend to maintain a progressive dividend policy.

ProductsIn 2013, total research and development expenditure increased by 6% to £4.4 million (2012: £4.2 million) representing 14% of Group revenue. The total cash expenditure on StatPro Revolution including marketing and other costs incurred in 2013 amounted to £4.9 million (2012: £3.7 million).

During the year, we launched the beta version of StatPro R+, the cloud replacement for StatPro Seven. Simplification will be our motto for 2014; we will continue to develop valuable features to help our clients tackle increased regulation, the refocusing of the performance analytics function and, uniquely, our clients will be able to share their analysis with all the stakeholders in the investment decision process.

PeopleAs your Company is transformed to a pure, cloud-based analytics provider, our employees have continued to excel and again I take this opportunity to thank them for their enthusiasm, resourcefulness and sheer determination to meet your Company’s objectives.

ProspectsWhilst markets remain volatile, the prospects for the asset management industry look brighter than last year. Asset managers are reviewing their investment in technology with regulation, reducing costs and communication remaining key drivers: your Company is well placed as asset managers seek to eliminate complexity and update their processes.

Carl BaconChairman14 March 2014

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market actors and their regulatory bodies is critical to fulfilling the regulatory obligations of the SEC. The 2008 financial crisis is recognised as a showcase for the risks to the stability of the markets that ineffective information sharing among supervisory authorities represents.”

While discussing this with our clients in 2013, we heard that sharing of relevant information to relevant parties in a controlled manner is a requirement in today’s heavily regulated environment. Those entities that do not have appropriate systems, skilled individuals, a compliance culture with rigorous oversight and an effective challenge process, will be subject to regulatory criticism.

TechnologyAs expected, the clear benefits of the cloud and other new technologies are causing all companies to reassess how they do things. The availability of the technology, the pressure from regulations and the demands of a new generation of impatient investors are making it clear that companies must invest to stay competitive. One example is a large European asset manager that has decided to rationalise over 100 systems into two services, both of which are cloud-based. The savings they will generate in fees, IT infrastructure, management time and operating costs are huge.

market overviewThere are three main drivers affecting the asset management market at the moment: regulation, technology and client expectations.

Announcing our partnership with CACEIS (FundForum International, Monaco, June 2013)

Neil Smyth talks to TSAM Europe about the biggest challenges currently affecting buy-side operation professionals (London, March 2013)

Tackling the UCITS IV regulations with StatPro Revolution, with our European partners (StatPro breakfast, Luxembourg, May 2013)

The driversThere are three main drivers affecting the asset management market at the moment: regulation, technology and client expectations. In a sense all three drive each other. Regulators can ask for more because the technology exists to do so. Technology has given clients (especially the younger generations) a taste of what to expect in terms of immediacy and self-service systems. The growing mass of people with money to invest is driving regulators to protect investors, who are of course also voters.

Regulations that drive the desire to shareIn Europe, the focus of regulations has been on UCITS, AIFMD and MIFID (Markets in Financial Instruments Directive). In the USA the focus has been on the Dodd Frank regulations and form PF filing requirements. All larger asset managers are affected by regulation in Europe or America because of the global and interconnected nature of the asset management market. For instance, nearly a third of assets in UCITS funds are managed by American firms.

All alternative investment funds in Europe will have to comply with the new AIFMD regulations by 1 July 2014. This requires

them to be transparent about their leverage and liquidity risk. It is broadly equivalent to the UCITS regulations on risk that have been in place for ordinary mutual funds that are marketed across borders in Europe.

Greater transparency and better communication with investors has been a topic discussed for many years. Some people want to protect information about the investments in their portfolios to avoid being copied. Other people recognise that transparency builds trust and that this is worth the risk of ideas being stolen if it generates more sales. The regulatory framework of information sharing is a patchwork of laws derived from diverse fields such as bank secrecy, data protection, company information disclosure laws, tax laws and financial services regulations. From a compliance point of view, there are different considerations from integrity and market conduct (everything is sensitive and providing up-to-date information will cause regulatory problems) to communication with clients (advisers and clients should know what risks the investment manager is taking on a real time basis).

In April 2012, in the House Financial Services Committee, U.S. Securities and Exchange Commission (SEC) Chairman, Mary Schapiro, stated that “effective information sharing between financial

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StatPro Revolution portfolio analysis - risk analytics dashboard

Backtesting with the Risk Limits Monitoring Module

in StatPro Revolution

Although StatPro R+ is still in beta, tests demonstrate that it calculates over 100 times faster than StatPro Seven, based on the same infrastructure cost. This sort of benefit is not unique to StatPro; other companies will be profiting from the possibilities of the new technology. However, to take advantage of this technology, companies must create solutions that have been purpose built for the cloud. They cannot simply put old software into a cloud environment and expect it to be more efficient. This means that there is still much investment to be made by the companies that currently supply the asset management market and also opportunities for new market entrants who are faster to adopt the new technology.

ClientsGeneration X and Y have much greater familiarity with new technology and are typically either making more money or inheriting it or both. They are much less likely to go to a financial adviser and, if they

do, they are often baffled by the arcane nature of the client reporting they are subjected to. Many are used to using internet stock market sites to make investments and there are many innovative social investing websites being created to make investing online even easier. Mutual fund platforms and the huge growth of cheap Exchange-Traded Funds (ETFs) are also driving new behaviour. If asset managers and financial advisers are to convince this new breed of very demanding investors to use their services, they will need to invest in new technology. It is the nature of such change that it is at first slow to happen and then sudden. We are witnessing this effect with a number of clients, some small, some extremely large. Where one competitor seizes an advantage, others will follow quickly.

Consequences for the marketWe foresee that the process for providing performance measurement will change considerably over the next few years.

Self-service information distribution solutions like StatPro Revolution will be essential for asset managers and financial advisers so that they can communicate quickly and efficiently with everyone in their network, both internally and externally.

On the other hand, the process of extracting and managing accounting data and transforming it into performance-ready data is likely to be outsourced by many companies. This is because the data management process lends itself to scale. This is where StatPro R+ comes into play as it has been designed to manage huge quantities of data at high speeds with a full audit and quality controls. We will mainly target companies offering performance measurement outsourcing or very large businesses with it.

The combined technology of StatPro R+ and StatPro Revolution will enable asset managers and financial advisers, great or small, to meet regulations, the new challenges of technology and the changing demands of their clients.

page 24Find out more about tackling compliance with StatPro Revolution in the Product Strategy

page 9Find out more about how we’re working with partners in the StatPro Strategy section

page 21Read how we’re focusing on the sharing message in our marketing

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StatPro’S strategySimplification is the key theme for us.

StatPro Revolution and StatPro R+ will greatly simplify the complex processes which our clients use to produce portfolio analytics and distribute it. At StatPro we are also reorganising how we work to simplify and standardise how we develop, sell and support our services so that we can ensure the highest possible quality. Simplification also means that we can scale our business comfortably.

Commercial strategyCommercially we are focused on three core markets for StatPro Revolution: our existing clients, fund administrators and private wealth businesses.

Existing clientsOur existing clients are largely the bigger asset managers with sophisticated requirements for analytics. These clients are under pressure to justify their fees and improve their client service as well as meet new regulations. Their only hope is to adopt new technology. Our approach is to persuade our clients that they should add StatPro Revolution to their installation of StatPro Seven so that they can start providing information on their portfolios more widely throughout their organisations. This approach is working well. During the course of 2014, we hope to deliver much of the remaining analytics that can be performed in StatPro Seven in StatPro Revolution and as we do, more clients will begin the migration process.

In early 2015, we will deliver the first beta of the full replacement of StatPro Seven with StatPro R+. After that we expect to start upgrading our clients. Because of our focus on fund administrators, we will also be able to offer our clients the option of upgrading to an outsourced solution as well. Rather than seeing outsourcing as competition to our software solutions, we see it as highly complementary and we want to be the solution of choice for outsourcers. This approach will mean that many of our current clients will be able to leverage outsourced data management coupled with StatPro Revolution for self-service information distribution. Because of the technology, they will still be able to oversee every aspect of the process, without having to do all the work.

Generally we are working with our existing clients to explain to them how our strategy is built around helping to make them as efficient as possible. Whereas a few years ago talk of the cloud might have caused concerns, we increasingly hear the message that ‘we only want cloud-based products’. The market is moving rapidly in our direction.Generate more sales

Improve their client service

Meet tough regulations

Reduce costs

StatPro products enable our clients to:

Our unique selling point is that users can share their portfolio analysis directly with as many people as they want for no extra cost

Sales

Marketing

FundManagers

SeniorManagement

Compliance

Consultants

Clients

External Data SourcesIT Platforms

PortfolioAnalytics

External Data SourcesIT Platforms

PerformanceMANAGEMENT

Internal Data Sources

Automated Self-Service

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Fund administratorsFund administrators and other outsourcers are looking for ways to add value to the asset management process by picking up low value added tasks and reaping economies of scale. However, many are finding that their existing infrastructure is now too expensive and cumbersome. This means that on the one hand they cannot meet the new requirements of their larger clients and on the other they are too expensive for the smaller clients with less sophisticated needs. Once again, only technology can solve this problem and we have great expectations of StatPro R+ that it will enable our partners to provide a flexible, responsive and sophisticated service to any type of client, all from one platform.

Private wealthIt is clear that the trend towards a growing number of millionaires is set to continue. This has meant tremendous growth for private wealth companies of all sizes. The challenges they have are around regulation and the changing requirements of their clients who are of course more and more familiar with new technology. Right now, anyone younger than 30 doesn’t really know about the world without the internet. In ten years, the younger generation will be running things. Change will happen.

Once again the only way to meet the challenges for the private wealth market is to use technology. Increasingly asset managers are being bypassed as wealth managers use standardised investment products like ETFs to create holistic portfolios for their clients. Mass customisation is the theme, combined with lower fees. In Europe this is especially important as the new MIFID II regulations force advisers to declare all fees to their clients. This means that most are adopting an advisory fee as a percentage of assets. They are also bound by the regulations to be able to demonstrate that they have acted in the best interests of the client. So the ability to keep relevant information about why the investment was recommended is vital.

We are just beginning to open up this exciting new market and we already have a number of private wealth businesses as clients, including some very large private banks. We believe that StatPro R+ will also do well in this market as the volumes of data is sometimes quite staggering and StatPro R+ is perfectly suited to this level of scale and speed requirements.

ConclusionFundamentally, we see that the market trends for technology in our area of expertise are moving towards two quite different solutions:

On the one hand, there is the fragmentation and vast expansion of the information distribution process, which requires a Self-Service solution, not a push solution. This is solved with StatPro Revolution.

On the other hand, the data management side of the business will experience massive consolidation as businesses seek economies of scale. This is what StatPro R+ is designed to do, enabling scale, speed and automation. It will enable Perfect Data.

All of our target market segments require both of our services to maximise their efficiency.

page 24Read more about these products and their development in the Product Strategy

page 23Further information on what this means for clients is detailed in the Client Services Review

From automated data management to self-service portfolio analytics

Justin Wheatley


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We are pleased with the excellent progress achieved during the year in transforming our business to a purely cloud-based analytics provider. We have seen a significant increase in our existing clients signing up to StatPro Revolution as the word spreads about its unique capabilities to help asset managers increase sales, improve their client service, comply with regulations and reduce their costs. It is our view that we can help clients greatly reduce the complexity of their client reporting process by replacing old technology with new.

The number of clients using StatPro Revolution grew to 257 in 33 countries by year end (2012: 156 in 22 countries) and StatPro Revolution recurring revenue increased by 114% to £3.20 million (2012: £1.49 million). We successfully grew the number of our fund administrator partners to 34 by year end (2012: 21). Fund administrators are core partners, ensuring that we can provide our clients with a smooth implementation process of StatPro Revolution.

Financial highlightsWe are pleased to report that revenue for 2013 increased to £32.49 million (2012: £32.00 million). As expected, our profits before tax reduced to £3.11 million

(2012: £3.78 million) following increased investment in development, sales and client services for our cloud services. Cash generated from operations was lower at £9.40 million (2012: £10.18 million), but our net cash position at the end of the year increased to £4.00 million (2012: 3.67 million). Adjusted earnings per share reduced to 4.5p (2012: 5.9p) and the Board has recommended an increase in the full year dividend to 2.8p per share (2012: 2.7p).

A key performance indicator is the measure of the total value of contracts we have with clients who have also subscribed for StatPro Revolution. This grew by 134% to £9.19 million (2012: £3.92 million) and represents 37% (2012: 16%) of our total recurring software revenues, a strong indication that we are making good progress in demonstrating to our existing clients the benefits of StatPro Revolution. Total annualised recurring revenues grew to £28.72 million (2012: £28.47 million). There was a reduction in revenues from StatPro Seven to £24.02 million (2012: £24.60 million) and data revenues to £4.21 million (2012: £4.69 million), counteracted by an increase in StatPro Revolution subscriptions generating overall growth.

Strategic focusOur three areas of focus are: existing clients, fund administrators and the growing private wealth market. Our existing clients are a ready-made marketplace for StatPro Revolution and we are making steady progress in this area. We believe that in the course of 2014, as we add functionality to StatPro Revolution, we will see an even greater uptake.

Fund administrators are a key focus for us as they hold the investment book of record for many asset managers. This means that once they have built an automated data connection to StatPro Revolution, adding more of their clients is a relatively straightforward process. It is our view that fund administrators will win a growing market share of the performance reporting market as outsourcing this function is an economically logical action for most asset managers.

However, we also think that our combined solution of StatPro R+ and StatPro Revolution will enable fund administrators to offer a more flexible, more responsive and more sophisticated service than they could do otherwise, due to our leading-edge technology.

Lastly, the private wealth market offers us many opportunities. This is in part because it is relatively under-serviced in the area of sophisticated analysis, yet the companies in this market are quick to adopt any tool that will give them an advantage over rivals. It is also a growing trend among the larger asset managers to merge their asset management and private wealth businesses, to reap economies of scale and provide institutional investment skills to the private wealth market. Such organisations need and want self-service solutions like StatPro Revolution in the same way that banks have adopted online banking: they effectively outsource the responsibility of reporting to the individual client and cut costs significantly. We already have a number of large private banks as clients of StatPro Revolution and we believe that we can grow our revenues in this area.

CHIEF EXECUTIVE’S REVIEW

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Business transformationThe biggest challenge for StatPro is the business transformation from supplier of traditional software solutions to a new cloud-based service provider. It has been our view from early on that the economic reality of the productivity gains possible through new cloud technology will cause significant change in our market. The complexity of old processes will be swept away and replaced with entirely new technology platforms. One very large asset manager client has a project to replace 100 separate back-office systems with just one cloud solution. We believe that this type of project will happen increasingly frequently and StatPro is well placed to take advantage of this as we have made the necessary and significant investments to do so.

As we have said before, it will take a number of years to complete the business transformation, where most of our clients have wholly or partly migrated to StatPro Revolution and StatPro R+, but we believe we remain on track to achieve a successful transformation.

Reinventing the performance reporting processWith the launch of the beta version of StatPro R+ in 2013 and its combination with StatPro Revolution, we believe that our new technology will make asset managers rethink how they structure their performance teams. Data management has become a massively labour-intensive and complex task for many organisations and StatPro R+ offers a means of greatly simplifying this as well as offering significant increases in scale and speed. Our new technology will make it practical for organisations to operate client reporting on a daily basis rather than the current industry standard of monthly reporting. The issues of checking data and getting sign-off by the compliance function are also dealt with in an efficient and transparent way. It is also possible to offer more detailed analysis for smaller portfolios, such as private wealth, and consequently expand the number of reported portfolios.

On the information distribution side, asset managers are increasingly realising that the self-service model of client reporting is the strategic route they must adopt. Sending out standard reports, which are known to be neither wanted nor understood, is a very unproductive activity. On the other hand, a solution like StatPro Revolution, where, subject to permission, you can see which clients have logged on and when and what type of analysis they were interested in, provides invaluable intelligence, as well as being much cheaper to run. This is a radical turning point for the industry, and StatPro is well placed to profit from this evident market trend.

Development There were several significant version releases of StatPro Revolution in 2013. At the start of the year we launched our very popular stock-level attribution analysis. We followed that with the launch of our first premium module in May 2013 for UCITS reporting. This has proven popular and now represents about 6% of StatPro Revolution recurring revenue. In the second half of 2013, we focused on adding extra sharing functionality so that clients can share precisely what they want within StatPro Revolution, including specified portfolios and time periods. This means that a mutual fund company can share information on its funds up to a particular date, avoiding revealing its current position, whilst being transparent to its distributors and investors. It also greatly simplifies the management of the process.

In 2014, we have an ambitious schedule of development, starting with the release of our AIFMD module which is a complement to our UCITS module. All alternative investment fund managers (AIFM) in the EU must comply with the new directive which stipulates how they report on their derivatives exposure. Our new module provides a simple and cost-effective way to achieve this and we expect it to receive a good level of uptake. Following this, we intend to deliver an extended fixed income attribution module for which we have significant demand as well as add to the risk management capabilities of StatPro

Revolution. With these two developments, we will be able to offer existing clients (approximately 55) of StatPro Seven fixed income and risk modules (SFI & SRM) a functionally superior upgrade.

PeopleI would like to thank all our employees for the great work they have done in 2013. Transforming a business is not easy, but everyone has made a great effort to contribute to the process, and I also know that everyone is very proud of the new products and services that we offer.

DividendIn line with our policy of paying a progressive dividend, which aims to balance return to investors with our investment needs, we are pleased to announce an increase in our full year dividend to 2.8p per share in 2013 (2012: 2.7p).

OutlookAs StatPro Revolution begins to gain critical mass in terms of clients, users and revenue, we believe that the next steps become clearer. As our clients use StatPro Revolution more, we note the pick-up of additional subscriptions, with approximately one-third of revenues coming from repeat purchases. As our clients begin to share their portfolios with others outside their companies, we note that we have more in-bound calls from prospects. As we get more practised at selling StatPro Revolution, we see our pipeline of opportunities growing steadily. As our products add more functionality and capacity, we can cover more needs of asset managers. For all these and other reasons we believe that 2014 will be a good year for StatPro.

Justin WheatleyGroup Chief Executive14 March 2014

StatPro SevenClients

StatProR+ Launch

StatPro R+ BetaLaunch

All StatPro Sevenfeatures within

StatPro R+

Option 1Start using StatProRevolution now

Option 2Wait for certainfeatures firstin StatPro R+

Option 3Move over when all featuresare fully integratedinto StatPro R+

2014

2015


12

CHIEF EXECUTIVE’S Q&A

Q How does StatPro sell to prospects who have a competitor solution ingrained in their processes?

Every company is looking to gain a commercial advantage and in the asset management business, that frequently comes down to the level of service that is provided to clients. If company A provides its clients with daily access to online analysis of their portfolios and company B only sends their clients standard reports once a month, two weeks after the month end (this is predominantly the current standard), then company B is in danger of losing business to company A. StatPro R+ and StatPro Revolution necessitates a rethink about processes and this applies to our prospects and clients alike.

Q Are there some clients of StatPro Seven who wouldn’t naturally migrate to StatPro R+?

When the cloud was first mentioned, many people said ‘never’. However, things are changing rapidly and most people can now see that architecturally and technically, cloud-based solutions are better for pretty much everything, including security. StatPro is proud to have Deutsche Bank and Credit Suisse Private Bank amongst its clients for StatPro Revolution and they would not have subscribed if they had concerns about security. Nevertheless, there are some organisations, such as sovereign wealth funds, that will be the most reluctant to make the switch. However, we believe that in a few years even they may well be ready for migration.

The path to revolution

13

Q What is the market perception of StatPro R+ creating ‘efficiencies’ for performance teams?

Currently the larger asset managers have quite large teams of performance measurers, yet all of them work on a monthly data production cycle. We believe that StatPro R+ will make it possible to flip that to a daily production cycle. That is more than a 20-fold increase in productivity (assuming weekends are excluded). There will be no need for them to have the IT infrastructure, nor to manage market data. A big change will be not needing to manage complex performance report production, but rather using StatPro Revolution’s self-service capability to improve client service. So roles will change, but the quantity of work may stay the same.

Q How is revenue affected by the realignment of the client services teams to StatPro Revolution?

We have seen the number of StatPro Seven clients adopting StatPro Revolution greatly increase in 2013 and we expect this to continue. StatPro Revolution enables our clients to extract more value out of their performance function and so the client service teams need to help our clients realise these gains. We have found that thanks to StatPro Revolution we are getting exposure to more parts of our clients’ businesses and, as we understand our clients better, so we can help them more. We expect the realignment of the client service teams to boost revenue.

Q How can StatPro identify the tipping point for StatPro Revolution?

We cannot be certain when or if this might happen. What we do know is that by sheer hard work, we are getting more and more recognition in the marketplace. We have gone from being a relatively anonymous back office provider to a new name in the front office with a distinctive brand. We now need to translate that into hard currency, but that will also take more hard work. Judging by the huge increase in cold calling, webex calls and meetings, we are getting the message out to the market, but there is always more to do.

Q Are the fund administrators happy with the price point of StatPro Revolution?

I think that we have established a price norm for portfolio analytics. It is a considerably lower price point than most other solutions can provide it for except for very high volumes of portfolios (and we offer volume discounts). Our fund administrator partners tend to pass on the cost of StatPro Revolution, but also charge a data management fee on top. This is perfectly reasonable from our perspective as there is a lot of value in managing the data properly. We hope that when StatPro R+ is fully ready, fund administrators will use it to provide additional services to asset managers.

Q Will we change the $100 per month model for StatPro Revolution?

We already have four tariffs for portfolios: Platinum, Gold, Silver and Bronze. The price per portfolio, per month is $300, $100, $15 and $5. You have to buy Silver in packs of 10 and Bronze in packs of 50 portfolios. The distinction between the portfolio types is the level of functionality you get. In essence, the Silver and Bronze are suitable for the private wealth market and the Platinum and Gold portfolios are designed for the asset management and hedge fund community. We have no current intention of changing these price points, although volume buyers can get discounts on a per portfolio basis.


14

FINANCIAL REVIEW

1Underlying performance

Overview During 2013, we have continued to invest in transforming StatPro into a pure cloud solution business. We have increased investment in several areas of the business with a focus on sales operations, client services, development and cloud infrastructure. The annualised contracted revenues of cloud-based StatPro Revolution have grown by 114% (at constant currency) to £3.20 million (2012: £1.49 million). The increased expenditure on cloud services (StatPro Revolution) coupled with the reduction in software licence revenues and data overage from our non-cloud activities (StatPro Seven and Data) has resulted in a reduction in adjusted EBITDA to £5.46 million (2012: £6.73 million), as expected. We also increased our StatPro Revolution related recurring revenue (defined as the total recurring revenue from clients whose subscription includes StatPro Revolution) to £9.19 million (2012: £3.92 million), giving us confidence that the transition is progressing well with existing clients.

The underlying adjusted EBITDA (at constant currency) is shown in table 1.

2013

£million

2012 £million

Change%

EBITDA relating to:Seven and Data 7.80 9.01 (13%)

Revolution (2.48) (2.28) (9%)

FX impact 0.14 –

Adjusted EBITDA 5.46 6.73 (19%)

Adjusted EBITDA margin 16.8% 21.0%

Key performance indicatorsThe key performance indicators (KPIs) that are monitored by the Board, and by the Group Executive Board as part of the regular monthly management reporting, are shown in table 2.

The KPIs are discussed in detail below in the relevant sections of this Financial Review.

RevenueOverall, Group revenue increased by 2% (at constant currency and at actual rates) to £32.49 million (2012: £32.00 million).

Revenue by segmentRevenue increased in the EMEAA region by 2% (at constant currency and at actual rates) to £20.45 million (2012: £20.08 million). In the North American region revenue increased by 1% (2% at constant currency) to £12.04 million (2012: £11.92 million) as shown in table 3.

Revenue by typeStatPro Seven software licence revenue fell by 2% (at constant currency and at actual rates) to £24.02 million (2012: £24.60 million) as we focus our efforts on cloud technology and not proactively selling non-cloud solutions. This was offset by an increase in StatPro Revolution revenue of 204% to £2.19 million (2012: £0.72 million). Data fees fell by 10% (9% at constant currency) for the year to £4.21 million (2012: £4.69 million) as expected due to a lower level of data overage. Professional services revenue increased by 4% to £2.07 million (2012: £1.99 million), as shown in table 4.

15

Andrew Fabian

2

2013 2012Change

%

New sales of recurring licences and data £3.24 million £3.11 million 4%

New sales of consulting £2.07 million £1.99 million 4%

Annualised recurring revenue* £28.72 million £28.47 million 1%

Annualised recurring revenue* – StatPro Revolution £3.20 million £1.49 million 114%

StatPro Revolution related recurring revenue* £9.19 million £3.92 million 134%

StatPro Revolution related recurring revenue – % of software 37% 16%

Net contract growth rate – StatPro Revolution* 114% 234%

Financial and operational KPIs

Adjusted operating margin 13.3% 17.3%


Adjusted EBITDA £5.46 million £6.73 million (19%)

Net cash £4.00 million £3.67 million 9%

* At constant currency

Client-related KPIs

Recurring revenue The Group’s business model of Software as a Service (SaaS) and recurring revenue contracts continues to provide excellent visibility of revenue with the recurring revenue element being a high percentage (94%) of total revenue (2012: 94%). The annualised recurring revenue from software licences and data fees at the end of December 2013 increased by 1% at constant currency to £28.72 million (2012: £28.47 million). The net growth rate for StatPro Revolution was 114% (2012: 234%) and the net cancellation rate for StatPro Seven/Data was 5% (2012: 0%). New contracts signed in the year were £3.24 million (2012: £3.11 million), as shown in table 5.


16

Approximately 77% of new recurring contracted revenue arose from existing clients (2012: 71%). The proportion by value of recurring software licences and data clients at the end of 2013 secured to the end of 2014 or beyond amounted to 78% (2012: 81%); the weighted average length of contracts committed was 16 months (2012: 17 months). StatPro Revolution revenue profileRecurring revenue relating to StatPro Revolution is now 11% of the Group total and it is growing at a higher rate as the service is developed on a highly scalable technology platform. The total recurring revenue from clients whose subscription includes StatPro Revolution was £9.19 million (2012: £3.92 million) representing 37% (2012: 16%) of our total software recurring revenue, a KPI we are focused on increasing.

The revenue distribution profile for StatPro Revolution is as shown in table 6.

FINANCIAL REVIEW ...continued

3

2013

£million

2012 £million

Change %

EMEAA 20.45 20.08 2%

North America 12.04 11.92 1%

Total 32.49 32.00 2%

Revenue

Operating expenses Operating expenses (before amortisation of intangible assets and exceptional items) increased by 7% (8% at constant currency) to £24.71 million (2012: £23.02 million). The increase in expenditure related to several areas of the business, mainly sales operations, client services, development and cloud infrastructure. The average number of employees was 249 (2012: 253), although we ended the year with 255 employees, up 5% in the year (2012: 242).

Exceptional items As previously announced, the Board decided to agree an out-of-court settlement in relation to the SiSoft acquisition contingent consideration dispute, and as a result there is an exceptional charge of £0.35 million. There is no tax deduction available as it is a capital item. Further details are provided in note 3. The exceptional item in 2012 of £0.98 million relates to the one-off charge for restructuring in January 2012.

Adjusted operating marginAs a result of increased investment in cloud technology and the growth of our sales and client services teams, the operating profit reduced to £3.39 million (2012: £4.28 million). The adjusted operating profit also reduced by 22% year on year to £4.33 million (2012: £5.53 million) as shown in note 3, with the adjusted operating margin reducing to 13.3% (2012: 17.3%). The adjusted EBITDA (note 3) reduced by 19% to £5.46 million (2012: £6.73 million).

Research and development and capexThe research and development team is now focused solely on cloud-based solutions, StatPro Revolution and StatPro R+ (the cloud upgrade path for StatPro Seven) and research and development expenditure increased overall by 6% to £4.44 million (2012: £4.18 million), equating to 14% of Group revenue (2012: 13%). The total expenditure on StatPro Revolution (and R+) including marketing and other costs was £4.92 million (2012: £3.70 million).

17

42013

£million

2012 £million

Change %

RevenueSoftware licences – StatPro Seven 24.02 24.60 (2%)

Software licences – StatPro Revolution 2.19 0.72 204%

Software licences – total 26.21 25.32 4%

Data fees 4.21 4.69 (10%)

Total recurring revenue 30.42 30.01 1%

Professional services and other revenue 2.07 1.99 4%

Total revenue 32.49 32.00 2%

Percentage of total that is recurring 94% 94%

Development costs of £3.40 million were capitalised in the year (2012: £3.21 million) and amortisation on internal development increased to £3.40 million (2012: £3.06 million). Expenditure on other intangible assets was £0.08 million (2012: £0.34 million) and total capital expenditure on property, plant and equipment was £0.93 million (2012: £0.64 million).

Finance income and expense Net finance expense reduced to £0.27 million (2012: £0.49 million), and is mainly the finance costs of our currently unutilised credit facility.

Profit before tax Profit before taxation decreased by 18% to £3.11 million (2012: £3.78 million). After adjusting for amortisation of acquired intangible assets, share based payments and exceptional items, the adjusted profit before taxation reduced by 20% to £4.05 million (2012: £5.04 million). The impact of currency movements increased adjusted profit before taxation by £0.29 million (i.e. approximately 9% impact).

TaxationThe tax charge is £1.03 million (2012: £1.10 million). The underlying tax rate (before the impact of exceptional items) is around 30% and the overall effective tax rate is 33% (2012: 29%). This is higher than the prevailing UK rate largely due to unrelieved losses in our development company StatPro International Sarl and also the impact of the non-deductible exceptional increase in SiSoft contingent consideration.

Earnings per shareBasic earnings per share decreased by 28% to 3.1p (2012: 4.3p). Diluted earnings per share decreased to 3.1p (2012: 4.3p) based on 0.07 million (2012: 0.25 million) potentially dilutive shares outstanding. Adjusted earnings per share (note 10) reduced by 24% to 4.5p (2012: 5.9p).


18

FINANCIAL REVIEW ...continued

Balance sheetThe Group’s net assets reduced to £46.91 million (2012: £49.62 million), mainly as a result of a reduction in goodwill due to currency translation movements.

Cash flow and financing2013 was another year of positive cash generation with cash inflow from operating activities (before exceptional payments) of £9.40 million (2012: £10.18 million). The Group ended the year with net cash of £4.00 million (2012: £3.67 million). The Group nevertheless retains its long-term financing facility which was undrawn at 31 December 2013.

DividendsThe directors are recommending an increased final dividend of 1.95p per share (2012: 1.9p) making a total dividend for 2013 of 2.8p per share (2012: 2.7p). The final dividend will be paid on 21 May 2014 to all shareholders on the register

at the close of business on 25 April 2014. Total dividends paid in 2013 amounted to £1.86 million (2012: £1.63 million). The Board intends to maintain a progressive dividend policy reflecting the balance between the investment needs of the business and the growth in underlying earnings per share (eps). When proposing the dividend, the Board satisfies itself that the current and projected level of dividend cover is appropriate. The dividend cover (calculated as adjusted eps: dividends per share) was 1.6 times (2012: 2.2).

Principal financial risks The principal business risks and uncertainties affecting the Group are described on pages 28 to 31. 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. Details of key financial risks are considered below.

Financial risk management The current and projected financial risks of the Group are managed by the Group finance team. The primary risk relates to financing facilities and this is mitigated by ensuring very tight control of cash and detailed forecasting of business cash flows.

Liquidity riskThe Group’s cash position is closely monitored with weekly updates from all overseas operations and daily updates of cash collected from customers. Any aged debtor balance that is overdue is investigated to ascertain the reason and to resolve the situation promptly. Monitoring procedures for short-term cash projections allow the Group finance team to closely monitor the key liquidity and other financial ratios to ensure that there is sufficient liquidity in the business at all times and sufficient headroom in relation to the banking covenants.

5Annualised

recurring contract revenue

2013

£million

Annualised recurring contract revenue

2012 £million

As at 31 December 2012 29.52 29.41Net impact of exchange rates (1.05) (0.96)

At 1 January 2013 (at Dec 2013 rates) 28.47 28.45

New contracted revenue 3.24 3.11Cancellations/reductions (2.99) (2.04)

Net increase 0.25 1.07

Recurring licence fees as at 31 December 2013 28.72 29.52

Software licences and data fees

19

Financing facilitiesThe Company retains its senior debt facility with The Royal Bank of Scotland plc (RBS), which is committed to May 2016, subject to compliance with agreed covenants. The Company has the option to extend the facility for a further year to May 2017 (subject to RBS Credit Committee approval). At 31 December 2013, the Group had both net cash of £4.00 million and undrawn credit facilities of £8.50 million available to support its business operations and therefore the Board believes that the Group is well positioned to manage the business risks.

Foreign exchange risk managementThe Group is exposed to exchange rate fluctuations given that the majority of its revenue is non-sterling based. The Group also has a significant proportion of its costs in the same currencies as its revenues and therefore there is a reasonable degree of natural reduction in overall currency risk.

All material foreign currency transaction exposures (i.e. sales and purchase contracts denominated in a different currency to the local reporting currency) are hedged through use of foreign exchange contracts as soon as the amount and timing of the exposure is identified with reasonable certainty. The Group’s policy is not to hedge profit and loss translation exposures.

As part of our liability management, we have made use of currency swaps with a total principal value of approximately £5.19 million denominated in USD, CAD, and EUR, to create synthetic currency hedges in order to provide a partial hedge against movements in the fair value of investments in overseas subsidiaries. As the Group continues to grow and generates increased profits overseas in foreign currencies this exchange rate exposure is expected to increase.

Interest rate risk managementThe Group is exposed to interest rate risk and an increase in interest rates would increase the interest payable on the Group’s banking facility. Given the Group’s current net cash position and the benign outlook for interest rates, the Board has decided not to undertake any interest rate hedging but will review the position from time to time.

The risk to rising interest rates (should the Group return to a net debt position) would be partly mitigated by an increase in interest income from surplus cash and deposits, where the policy is to seek to maximise interest return without exposure to inappropriate liquidity or counterparty risk.

Andrew FabianGroup Finance Director14 March 2014

6

Annualised revenue bands

Annualised revenue

2013

£’000s

Number of clients

2013 Number

Average revenue

per client 2013

£’000s

Annualisedrevenue*

2012 £'000s

Number of clients

2012 Number

Average revenue

per client 2012

£'000s

<£2k 135 136 1.0 98 108 0.9£2k-£10k 262 68 3.9 123 30 4.1£10k-£50k 883 34 26.0 186 9 20.7£50k-£100k 920 13 70.8 355 5 71.0>£100k 996 6 166.0 731 4 182.8

Total 3,196 257 12.4 1,493 156 9.6

* At constant currency

StatPro Revolution


20

OPERATIONAL REVIEW

As a Group, we continued to focus on enhancing our overall service for our clients in 2013. Maintaining high service levels and ensuring we adhere to the latest industry security standards remain top priorities for the team.

A key message given to all our staff is that every single person within StatPro can positively affect how a client or prospect feels about StatPro. Understanding and appreciating this is an important part of our culture and something that we must never become complacent about.

Client experience isn’t just about service, even though it is a very important part, it’s about how StatPro first makes that prospect or client view StatPro, what that interaction is like, did the message resonate, did the sales resource engage in a timely and polite manner, were product/tariff questions answered clearly and succinctly, did the on-boarding go well, is the after-sale service functionally deep, as well as courteous, was the financial transaction itself pain free, is the system available all the time, does the product simply just work?

You can read in the Marketing Strategy how we’re working more with clients to support both our business goals through sharing of communication and efforts (page 21). The Sales and Partnerships section on page 22 also details how the sales team has been reorganised to reflect the segmented profiles of our new clients. Please also read on page 23 in the Client Services review how in 2013 we refocused on simplifying what is complex and making it available to those that require the information.

As a globally focused client service team, we continually assess what our clients require from us and we adapt our processes to ensure we are aligned to meet their needs. Of course these teams also rely on each other to support the client-focused message, gather feedback on the product and deliver a tailored, yet simple and scalable service to our clients whether they are new to StatPro or a long-standing customer.

This focus continues in 2014 as we look to use third party tools and the best practices to improve our service as this will ultimately lead to increased revenue via our subscription-based business model. 2013 was a good year. Thanks to everyone in the client services team for their diligence and hard work. 2014 will hold more challenges but we’re confident that the structural changes we’ve put in place will allow us to improve our service further and that will allow for greater client satisfaction and growth.

Andrew PeddarGroup COO14 March 2014

Andrew Peddar

As a globally focused client service team, we continually assess what our clients require from us and we adapt our processes to ensure we are aligned to meet their needs.

21

OPERATIONAL REVIEW / Marketing Strategy

Neil Smyth

Our message in 2013 and 2014 is focused on the benefits of our cloud-based platforms. The debate on the adoption of cloud computing is almost over as we hear from clients and partners that the cloud is an accepted delivery mechanism for software and one which many companies now understand and actively pursue in their software strategy. By focusing on the benefits, the marketing message is more of a business conversation versus a technical one. All our clients and prospects want to increase sales, improve client service, meet regulations, and reduce costs. These are the four fundamental elements to StatPro’s

A poll suggests the top key goals for investment managers are:

86%

75%

67%

offerings and our clients are realising these benefits by using the products to produce and distribute their portfolio analysis both internally and externally.

In 2013 we had more engagement with our partners globally as we continue to build our network (in line with the StatPro Strategy set out on page 8). In the autumn of 2013 we held a joint conference with Apex Fund Services in Dublin with over 50 attendees to discuss industry regulations and how StatPro Revolution is helping clients meet them in a cost-effective way. We are in the process of planning

more joint partner events across Europe, North America and South Africa after the positive feedback. We continue to work closely with TD Ameritrade and attended their global client conference in the USA where over 1,600 investment advisers come together to learn about industry trends and new technology to help them deliver a better service to their clients.

Our marketing strategy for 2014 will continue to focus on our four key benefits but also on the unique selling point of StatPro Revolution; the ability to share portfolio analysis to anyone at no extra cost. Since Q3 2013, we have been promoting our new sharing feature that allows StatPro Revolution users to take control of their portfolio analysis distribution. It is no longer about managing software installations and delivering static reports to clients; the future of analysis distribution is about Self-Service reporting, managing users, content, and access, to enable online and interactive analysis for anyone across multiple devices. We continue to promote this unique benefit through content-based campaigns using statpro.com, webinars, white papers, videos, infographics, exhibitions and StatPro-hosted events whilst analysing the marketing mix to ensure improvement of this message to analysts and influencers, partners, clients and prospects throughout the year.

Helping clients and prospects understand this unique selling proposition (USP) whilst working with sales and client services is the key goal of the 2014 marketing strategy.

Who Shares Wins!

January 30, 2013: investit.com/clients-at-top-of-investment-management-2013-agenda

Increase client retention by improving client management and on-boarding

Client reporting and information delivery

New client acquisition

$$

Portfolios Compliance Department

FundAdministrators

AssetManagers

Distribution Platform

ACDs, Directors, Trustees,Management Companies Outsourced

Investment Advisors

IndependentFinancialAdvisors

&RegisteredInvestment

Advisors

PrivateWealth Advisors

InsuranceHouses


22

OPERATIONAL REVIEW / Sales and Partnerships

The StatPro sales and account management activity is built around a team of over 30 people located across 11 offices. Owing to the wide appeal of StatPro Revolution this large team has now been reorganised to reflect the segmented profiles of our new clients as we now see StatPro Revolution gaining traction from the private banking and pension funds markets while continuing its growth in the asset management space. Global accounts and third party partners are now also managed by a dedicated corporate account team.

In order to cover direct sales but also assist partners and distributors marketing StatPro Revolution, we will increase our resources in 2014.

During 2014, we will look to drive even further the usage of StatPro Revolution through the sharing functionality and through dedicated training and communication with respect to the clients’ guidelines and objectives. Understanding the complexity and the vision of our clients requires dedicated effort but this is made simpler with the ease of deployment of StatPro Revolution. Our clients are then able to access a global and unique analytics service whilst benefiting from one team with expertise in the relevant country.

The partnership programme for fund administrators and third party distributors initiated in 2012 proved successful with 34 companies now

sharing our ambition to offer a unique analytics platform to their clients.

The sharing capabilities offered by StatPro Revolution will support the extension of the number of users and we look forward to seeing this grow in 2014. By sharing our open platform to partners looking for analytics features or adding new services via third parties in the StatPro store we are confident of StatPro Revolution’s future.

As we continue to add additional analytical functionality to StatPro Revolution, especially with advanced risk management,

Michel Lempicki

we will be in a position to start migrating certain clients from our StatPro Seven platform during 2014. This process will be accelerated once the full version of StatPro R+, our cloud-based replacement for StatPro Seven, is released commercially in early 2015. StatPro R+ is a highly scalable production system for managing and producing portfolio performance and returns data that can then be analysed and distributed using StatPro Revolution.

StatPro Revolution: Seamless use across the investment industry

$$

Portfolios Compliance Department

FundAdministrators

AssetManagers

Distribution Platform

ACDs, Directors, Trustees,Management Companies Outsourced

Investment Advisors

IndependentFinancialAdvisors

&RegisteredInvestment

Advisors

PrivateWealth Advisors

InsuranceHouses

Marc Zandt

23

The ongoing support and account management is excellent. The support team is extremely responsive and we are able to benefit from the e-support system and the StatPro user groups. Overall, we have had a very positive experience with StatPro; they have shown expertise, commitment and dedication.

OPERATIONAL REVIEW / Client Services

With experience of development, implementations, upgrades, banking and finance, infrastructure and hosting, we’re fanatical about client service.

As detailed in the StatPro Strategy (page 8) our products and services focus on simplifying what is complex and making it available to those that require the information our solutions calculate and provide. This is true for StatPro Revolution, StatPro Seven and the forthcoming StatPro R+.

As a globally focused client service team we continually assess what our clients require from us and we adapt our processes to ensure we are aligned to meet our clients’ needs.

In 2013 we adjusted the global teams to adopt a ‘hub and spoke’ model in respect to service delivery. Certain core support and oversight functions are being centralised in key locations to allow for efficient focused implementations and ongoing support across our 11 offices.

The model is geared to achieve standardisation, increase scalability, remove duplication and apply focus to ensure we have the defined processes needed for an efficient and valuable service offering. In a nutshell, our aim is to ensure our clients get true value out of the products we have developed for a rapidly changing market. This enables our clients to focus on growing their own businesses while we ensure they have the platform to demonstrate the value they create.

Marc joined StatPro South Africa in February 2008, as an Account Manager focusing on developing relationshipswith current clients and developing new business. In 2011 he became StatPro South Africa CEO, with responsibility for growing the business across the region. At the start of 2013 Marc became Global Services Director responsible for managing all our services with our clients globallyand is now based in London.


24

PRODUCT STRATEGY2013 focused on sharing, compliance and StatPro R+ development.

StatPro RevolutionDevelopment has been driven by two strategic themes:

ComplianceAs detailed previously, 2013 focused on UCITS (for mutual funds) and AIFMD (the equivalent for hedge funds). Therefore, StatPro Revolution development was dedicated to the integrated compliance solution enabling our clients to tackle the increased regulatory pressure they must adhere to. The new feature covers three key aspects:

• UCITS IV Global Exposure: regulating the risk limits that a fund is permitted to undertake;

• AIFMD Commitment Calculation: limits on the leverage a hedge fund is allowed to take; and

• UCITS IV Investment Restrictions: integrating the above two with compliance tools.

StatPro released the first module ‘Risk Limits Monitoring’, in May 2013, and we released the second part in early March 2014.

SharingDuring 2013, StatPro invested in the social aspect of StatPro Revolution, with the aim of increasing the distribution and usage of the product virally. StatPro has been externally audited and certified to both ISO 27001 and SSAE 16 information security standards. We have been developing our cloud technology since early 2008, bringing open collaboration and information control to the investment management community. We believe keeping performance data locked away in the middle office doesn’t serve anyone. Sharing portfolio information with your network makes it more powerful, usable and more likely to enhance business decision making or client relationships. Sharing portfolio analysis data across the organisation adds value to the data immediately: it can be analysed, audited and improved. Controlled sharing also adds value to the team producing such information, raising its profile across the wider business.

The new sharing features allow our clients the control they need when deciding how much of the portfolio they share, and with whom they share it. It’s all about users, content and access control. It can be centrally managed and monitored while still being quick and easy to accomplish. Such control enables rapid deployment of business information to any user with a full audit trail and without the hassle and expense of managing local applications.

StatPro R+In 2013, StatPro launched the beta version of StatPro R+, the cloud-based solution for computing accurate performance measurement in the fastest and most flexible way, and the replacement for StatPro Seven. With StatPro R+, StatPro solves two key issues in the industry when measuring performance:

• Speed and scalability: the first beta tests on client portfolios reduced the computational time by a factor of around 100 using the cloud, for the same infrastructural costs.

• Flexibility: StatPro R+ uses technology to simplify the work of the performance measurement team, give them the flexibility to design efficient production workflows, customising imports and controls.

Speed and flexibility mean ultimately that performance measurers will be able to perform their tasks faster and more efficiently, significantly boosting the productivity of these teams.

25

Dario Cintioli

2014/2015The development plan for both StatPro Revolution and StatPro R+ focuses on the functional completion of the two products. The objective is to introduce all those pieces of functionality that can serve the analytics and reporting needs of a large asset manager with the dual objective of starting the migration of bigger StatPro Seven clients while selling more actively at the top end of the buy-side industry.

StatPro Revolution development:

• AIFMD/UCITS commitment approach calculation: we look to enable the analysis of commitment (exposure and computing exposure) according to the EU rules with regards to derivatives. Hedge funds use derivatives and the AIFMD rules open the issue of computing commitment when derivatives are involved.

• The automation of report production: we want to change the industry and allow our clients to start reporting interactively on the web, while also enabling clients to continue to operate their traditional reporting activity efficiently.

• Fixed income attribution versus benchmark analysis: StatPro Revolution will become one of the only products in the industry covering every aspect of fixed income performance measurement, with fully integrated data, dramatically simplifying the access to sophisticated and beautiful fixed income analytics.

• Advanced Risk Management: relative risk, risk factor decomposition, sensitivity and many other exciting analyses will be released in the module providing more reasons for the front office to use StatPro Revolution.

StatPro R+ development:In 2013 we released the so-called ‘external’ performance capabilities as a beta, which is the ability to compute the returns of a fund or other portfolio, starting from information on the total market value and ‘external’ transactions, like subscriptions, redemptions and fees.

In 2014 and early 2015 we will be completing StatPro R+ with the ability to perform transactional security-level (internal performance) calculations. This means that StatPro R+ will manage each individual security, computing the true performance generated by all trades in that asset. The sum of all assets’ internal performance is later reconciled with the ‘official’ external performance, delivering very accurate and detailed calculations.

StatPro has always had a large knowledge base on how to make these calculations. Where StatPro R+ adds value is the speed of calculation and in the flexibility of managing the controls and data management processes for cleaning the data, while ensuring the perfect numbers with the smallest possible costs.

Dario CintioliProduct Director 14 March 2014

2014 – Roadmap

Our People


26

employees across the globe…and growing

255

Dae-Jun Kim

StatPro Revolution Sales Specialist, Hong Kong, China

DJ’s prime focus is to increase awareness of StatPro Revolution within the Asia-Pacific region, focusing on Singapore, Korea and Indonesia. He is passionate about StatPro Revolution and enjoys building new partnerships and selling to new prospects.

Gillian Wood

Performance ConsultantSydney, Australia

Gillian Wood heads up the client services team for the Asia Pacific region. Her role is not only to ensure that her team is well trained and knowledgeable on the StatPro suite of products, but to work with StatPro clients on elements such as data integration, training and analysis of results. She shares her valuable knowledge to ensure our clients are getting the best out of the product as well as integrating client feedback with the development team to improve StatPro products.

Swati Bhoumick

Marketing ManagerBoston, US

Swati manages the marketing for StatPro in North America. Her responsibilities include running integrated marketing campaigns, content creation, PR, lead generation and nurturing, events planning and execution, and social media management. Swati is excited about building analyst relations in 2014 and leveraging the contacts made to increase StatPro’s brand awareness among its key target market.

The emphasis at StatPro is on teamwork. We promote a culture of close collaboration across the business to ensure that we deliver and meet client expectations.

27

Vicken Krikorian

Index and Equity Data OperationsMontréal, Canada

Vicken manages the index and equity data operations team in Montréal, ensuring a seamless link with data suppliers to StatPro Revolution. Working with several departments globally, Vicken’s team reviews the data quality from suppliers, adds new indexes through automated flows and ensures the data remains a high standard to ensure good client service. The diversity of ideas, due to the global nature, makes for a strong team.

Thomas Schnücker

Team Leader, Technical Application SpecialistFrankfurt, Germany

Thomas runs a team of the best technical StatPro application experts in Europe, ensuring business continuity for clients, helping them access and use StatPro services and applications whilst automating their business processes around StatPro.

Nicola Wylie

Billing and Salesforce AdministratorLondon, UK

Nicola provides administration support to StatPro’s online billing process, working with our clients to provide them with a first class billing and payment experience. As part of her role she works closely with our Sales Team and Revolution Product Specialists, utilising cloud-based systems such as SalesForce and Zuora to support our sales admin process. Nicola enjoys getting the most out of systems and automating processes for efficiency.

Anthony Leak

Cloud Orchestration and Operations EngineerCape Town, South Africa

Anthony is responsible for the architecture and development of the cloud infrastructure of StatPro R+. Using the cloud to host StatPro R+ is allowing us to change the way we approach software development and infrastructure. Through continuous deployment we are able to provide our clients with the latest features and enhancements and ensure we continue to provide great products through scalable capabilities.

Internal Environment

Information & Communication

Control Activities

Risk Response

Risk Assessment

Event Identification

Objective Setting

Monitoring

Subsidiary

Business Unit

Division

Entity-Level

Strategic

Operations

Reporting

Compliance


28

PRINCIPAL RISKS AND UNCERTAINTIESStatPro has outlined its strategy in this Annual Report. Key to the successful outcome is our understanding of StatPro’s market drivers:

Transparency To ensure that StatPro adds the most value possible to its clients, it must listen and understand their requirements:

• StatPro uses client ‘new feature’ requests and sales team feedback to prioritise product enhancement.

• StatPro also employs suitable financially qualified staff (e.g. to CFA level, even on the product development team) to ensure that we understand our clients’ needs and their issues.

Regulation By understanding the impact of unfolding regulatory changes and updating its products in time, StatPro helps clients meet new regulatory requirements.

Competition StatPro has significant resources to deliver on what is required, yet is small enough to react to changing market threats or opportunities. Such agility is a key corporate attribute.

Cloud To allay customer concerns regarding their data being in the ‘cloud’, StatPro has invested in both the ISO 27001 and SSAE 16 certifications. StatPro has embraced the best cloud product development and management practices for over three years, and has partnered with industry-leading IT services suppliers to ensure the best service availability and security.

Outsourcing StatPro has invested in its own products with best-practice procedures for its own staff to ensure that clients’ requirements are routinely met.

StatPro’s approach to risk – Enterprise Risk Management frameworksAn Enterprise Risk Management (ERM) framework provides a holistic approach that aligns an organisation’s strategic, operational, reporting and compliance objectives across all levels to manage all key business risks and opportunities. The goal is to maximise value for the entire enterprise.

The interaction between business objectives, risk framework components and organisational level is best illustrated by the Committee of Sponsoring Organisations of the Treadway Commission’s (COSO) ERM Cube.

The ISO 31000 ‘Risk Management – Principles and Guidelines’ standard (published 2009) complements COSO’s ERM framework by addressing the management system that supports the design, implementation, maintenance and improvement of ERM processes.

A

Figure A COSO’s ERM Cube

29

Context Controls

1. Business Strategy fails: ‘StatPro’s updated business strategy fails to identify new markets and/or products; and/or fails to improve on its current offerings.’

• StatPro continues to make considerable investment in StatPro Revolution, and will also migrate its ‘traditional’ asset performance and valuation products to the ‘cloud’ with the launch of StatPro R+ in late 2014/early 2015. If market take-up of StatPro Revolution (or StatPro R+) does not meet expectations, or current clients fail to sign up for the planned cloud-based products over current ‘hosted’ or ‘installed’ products, the ‘cloud’ investment won’t have been maximised. Indeed, legacy-product clients may leave for competitor offerings that they feel more comfortable with.

• Product design, complemented by a sufficient marketing and sales effort is key to identifying and winning new clients; at the same time convincing them of the merits of cloud technology (fast provisioning, lower cost, security and availability).

• Continual investment in development and quality assurance.

• Regular monitoring and reporting of project development and quality; user-acceptance testing of enhancements.

• StatPro actively promotes itself within the asset management industry.

• StatPro uses cost-effective online advertising tools to track interest in its products, enabling effective/efficient marketing and sales efforts.

• The Board has regular meetings with all teams to ensure that products and services meet market requirements.

• Continually update market and competitor intelligence.

• Continually monitor user feedback and internal KPIs.

Group Risks – Top 4The Group risk assessment has identified the following top 4 risks that StatPro must manage at the corporate level:


30

3. Clients not satisfied: ‘StatPro’s reputation suffers as clients’ expectations are not met.’

• StatPro anticipates (as many successful products do in an ‘infinite’ digital market) that StatPro Revolution will reach a ‘tipping point’ (when a critical mass of users act as product evangelists to further convince potential users to try or subscribe for the service), leading to ‘exponential’ growth.

• To reach the ‘tipping point’ sooner, StatPro must ensure that existing clients are ‘on-boarded’ as quickly and as smoothly as possible, thereby enhancing their customer experience and increasing their likelihood of becoming product evangelists.

• Ensure a good understanding of clients’ needs.

• Allocate an account manager to manage the client relationship.

• Escalate any issues to director level.

• Proactive account management.

• Long-term contracts foster client commitment.

Context Controls

2. Sales target not met: StatPro not signing sufficient new contracts.’

• Since making the share placement in November 2012 we have communicated to our shareholders our strategic direction for building cloud-related revenue growth. If our externally announced targets are not met this could cause uncertainty in the marketplace for our reputation and lower revenues could put pressure on our EBITDA and cash generation.

• Continuous control over the sales process and close monitoring of the sales pipeline by regional sales directors.

• Targets are set each year and territory performance is monitored against them.

• The sales pipeline is managed in salesforce and is updated with reasons for lost opportunities e.g. sales performance, functionality etc.

• Actions are identified in the sales strategy meeting to manage the strategy and competitive positioning.

• Monthly updates of sales forecasts are made.

• StatPro has implemented both traditional below-the-line marketing strategies such as event hosting and sponsorship and cost-effective online advertising tools to track and report interest in its products, thereby enabling a more effective and efficient marketing and sales effort.

PRINCIPAL RISKS AND UNCERTAINTIES ...continued

X

X

The principal financial risks of the Group are outlined in the Finance Review.

The Strategic report on pages 1 to 31 is approved by the Board.

By order of the Board.

Andrew FabianCompany Secretary14 March 2014

31

Context Controls

4. Unavailability of hosted services due to infrastructure outage: ‘StatPro’s IT systems unavailable to StatPro and its clients as and when needed.’

• Loss of Company’s service may induce its clients to seek alternative suppliers and could have a material adverse effect on its business.

• Where there is system unavailability (which can arise from hardware malfunction or capacity issues, or networking and power supply stability problems), these incidents are analysed in detail and all root causes addressed and controlled.

• StatPro IT use a follow-the-sun support arrangement which implies that global regions ensure that system integrity is maintained.

• The hosted environment alignment project was initiated to mitigate the shortcomings of all hosted platforms and provide a consistent and manageable service. As part of this project a series of important infrastructure upgrades have been performed.

• Data centres and back-up facilities outsourced to specialist providers.

• Disaster recovery plans in place and regularly tested.

• Continual investment in appropriate technology to ensure meeting service level agreements.

PRINCIPAL RISKS AND UNCERTAINTIES ...continued

PLC Board

Remuneration CommitteeAudit Committee Nominations Committee

32


INTRODUCTION TO CORPORATE GOVERNANCE

This section of our Annual Report explains how the Board and each of its committees function. The Board oversees the Company’s financial reporting, risk management and regulatory compliance functions. It also sets executive remuneration and oversees executive appointments. These roles are fulfilled by the Board and its three committees shown below. The Board and its committees meet regularly, discuss matters by phone when necessary, and circulate minutes and relevant papers in advance of each meeting.

My aim as Chairman is to create a diverse, inclusive and effective Board, which is fully informed about the business and able to provide the executive membership with an appropriate balance of challenge and support. My relationship with our CEO and our interaction with the non-executive directors is of key importance for a climate of open communication and constructive debate. I run annual Board evaluations, which provide useful feedback to drive improvements in the Board’s and committees’ work.

Carl Bacon, Non-Executive ChairmanStuart Clark, Non-Executive DirectorMark Adorian, Non-Executive DirectorJane Tozer, Non-Executive DirectorJustin Wheatley, Group Chief ExecutiveAndrew Fabian, Group Finance Director

Stuart Clark - ChairmanCarl BaconMark AdorianJane Tozer

Jane Tozer - ChairmanCarl BaconMark AdorianStuart Clark

Mark Adorian - ChairmanCarl BaconJane TozerStuart Clark

33

corporate governance

Compliance with the UK Corporate Governance CodeYour Company is listed on the Alternative Investment Market of the London Stock Exchange (AIM), so the Company is not required to comply with the UK Corporate Governance Code, which applies only to fully listed companies. Nevertheless, the Company is committed to high standards of corporate governance and the Board is accountable to the Company’s shareholders. This statement describes how the Company applies the principles of good corporate governance, and the Company’s adherence with the UK Corporate Governance Code to the appropriate level.

The workings of the Board and its committeesThe BoardThe Board comprises the Non-Executive Chairman, the Group Chief Executive, the Group Finance Director and three other non-executive directors. It is responsible to shareholders for the proper management of the Company. Directors’ biographies appear on pages 36 to 37 and demonstrate their range of relevant experience, bringing independent judgement to bear on issues of strategy, performance, resources, industry knowledge and standards of conduct.

All directors have access to the Company Secretary, who is responsible for company secretarial matters and compliance with relevant statutory obligations. All directors have access to training to enable them to comply with their duties as a director.

To enable the Board to discharge its duties, all directors have full and timely access to all relevant information. The Board meets at least quarterly and has adopted a formal schedule of matters specifically reserved for decision by it, thus ensuring that it exercises control over appropriate strategic, financial, operational and compliance issues. At its meetings the Board reviews trading performance, ensures adequate financing, sets and monitors strategy, examines investment and acquisition opportunities and discusses reports to shareholders. The directors can also take independent professional advice as appropriate at the Company’s expense. The Chairman meets at least once a year with the non-executive directors without the executive directors present.

The performance of the executive directors is reviewed annually by the non-executive directors. On resignation from the Board a non-executive director would be invited to provide a written statement to the Chairman for circulation to the Board, if he or she were to have any unresolved concerns about the running of the Company. The overall effectiveness of the Board and its sub-committees is reviewed by the Board as a whole through annual completion and discussion of a questionnaire.

The Board believes that the level of sales consulting to promote StatPro Revolution provided by Mark Adorian in 2012 and 2013 means that he may no longer be considered independent under the UK Corporate Governance code, although the Board believes that Mark Adorian is independent of mind and continues to act in the interests of all shareholders.

Stuart Clark is the Senior Independent Director and is available to the shareholders for any concerns which have not been resolved by contact with the Chairman, Chief Executive or other executives, or for which such contact is inappropriate.

Audit CommitteeThe Audit Committee is chaired by Jane Tozer. The Audit Committee also comprises the Chairman (Carl Bacon), Mark Adorian and Stuart Clark, and meets at least three times annually. The Audit Committee receives reports from the Group’s external auditors and its meetings are also attended, by invitation, by the Group Finance Director.

The Audit Committee reviews the Company’s financial matters, as set out in written terms of reference, including the interim results and the Annual Report and Accounts, before their submission to the Board. It monitors the controls in force to ensure the integrity of financial information reported to shareholders.

The Audit Committee reviews the appointment of external auditors, discusses the nature and scope of the audit and reviews the external auditor’s remuneration both for audit and non-audit work. The Audit Committee assesses annually the qualification, expertise and resources, the independence of the external auditors, and the effectiveness of the audit process.

The Audit Committee reviews the whistleblower policy and process for staff and receives reports on all issues raised through this process.

Remuneration and Nominations CommitteesThe Remuneration Committee is responsible for determining the contract terms, remuneration and other benefits for executive directors, including performance-related bonus schemes and participation in the Group’s Long Term Incentive Scheme. Stuart Clark was appointed chairman of the Remuneration Committee with effect from 1 July 2013 (previously Mark Adorian) and the other members are Carl Bacon, Mark Adorian and Jane Tozer.

34


corporate governance ...continued

The Remuneration Report, which includes details of directors’ remuneration, pension entitlements and directors’ interests, together with information on service contracts, is set out on pages 41 to 44.

Mark Adorian is the chairman of the Nominations Committee and the other committee members are Carl Bacon, Stuart Clark and Jane Tozer. The Nominations Committee reviews and nominates appointments to the Board. All such appointments are then reviewed and approved by the full Board.

Six scheduled Board meetings were held in 2013. During the year, there were three Audit Committee meetings, three Remuneration Committee meetings and no Nominations Committee meetings. The number of scheduled Board meetings and sub-committee meetings attended by each director during the year were as follows:

Scheduled Board

meetings

Audit Committee

meetings

Remuneration Committee

meetings

Nominations Committee

meetings

CR Bacon 6/6 3/3 3/3 n/aJMBT Wheatley 6/6AM Fabian 6/6MC Adorian 6/6 3/3 3/3 n/aSJ Clark 6/6 3/3 3/3 n/aJE Tozer 6/6 3/3 3/3

Group Executive BoardThe Group Executive Board (GEB) is the executive committee, which comprises the executive directors and other senior executives of the Group who meet at least ten times per year to discuss strategic and operational matters. Regional executive boards and product-focused committees have been established to deal with other executive matters within clearly defined terms of reference established by the Board.

On 1 January 2013 a number of changes were made to the members and roles within the Group Executive Board. Andrew Peddar was appointed Group Chief Operating Officer and Marc Zandt was promoted to the GEB as Global Services Director. On 1 January 2014 Michel Lempicki was appointed as Global Accounts Director.

The members of the Group Executive Board and their roles and responsibilities are:

Justin Wheatley, Group Chief ExecutiveAndrew Fabian, Group Finance DirectorAndrew Peddar, Group Chief Operating OfficerDario Cintioli, Product DirectorMichel Lempicki, Global Accounts DirectorNeil Smyth, Marketing and Technology DirectorMarc Zandt, Global Services Director

The Group Executive Board has the following sub-committees:

Regional BoardsEMEAA Region (Europe, South Africa and Asia Pacific) and North American RegionOperational decisions on implementing the Group’s strategy, including sales and client services strategy and expenditure and recruitment plans, are delegated to senior executives in the Group’s regions, within clearly defined terms of reference and overall budgets established by the Board.

Product strategyOperational decisions on implementing the Group’s product strategy, including development plans and related expenditure and recruitment plans, are delegated to the Product Director who works with other senior executives on product-focused committees, within clearly defined terms of reference and overall budgets established by the Board.

35

Relations with shareholdersCommunications with shareholders are very important. There is a regular dialogue with institutional shareholders and market analysts, including presentations after the Company’s preliminary announcement of the annual and interim results and any other major announcements.

Internal controls and risk management During the year, the Board has formally reviewed the Group’s risk profile and reported on the effectiveness of the Group’s system of internal controls and management of Group risk. This review addresses internal financial controls and other risks and controls of the business. The directors acknowledge that they are responsible for the Company’s system of internal control, which is designed to manage rather than eliminate business risks and which provides reasonable but not absolute assurance against material misstatements or loss.

The Company has established risk management procedures which the Board considers appropriate to a group of StatPro’s size and complexity. During the year the risk management procedures were reviewed by the directors. This is achieved through a series of reports and meetings of specific committees including the Information Security Committee. The Company has a Group Risk Manual, which sets out the key risks and the controls in place to manage these risks, and identifies actions to be taken to eliminate or mitigate risks as appropriate.

Each senior executive is responsible for managing risks in his or her area of responsibility, and making regular reports on risk issues to both the main Board, Audit Committee and the Group Executive Board. This risk analysis is embedded in risk review meetings in the Group Executive Board, and covers all business risks including commercial, financial, operational, legal and environmental risks. These reports include the potential impact to the business of each key risk and its likelihood of occurrence, plus details of mitigating actions and insurance policies including specific cover for the Company and/or its directors.

Recommendations on internal controls and risk improvement are reviewed by the Audit Committee and the Board.

A statement of the directors’ responsibilities in respect of the financial statements is set out on page 39 and a statement on going concern is below.

Financial controlsThe Group has established written expenditure approval, delegation of authority and authorisation levels, segregation of duties and other control procedures including accounting policies and procedures.

Budgetary process Each year the Board approves the annual budget and key risk areas are identified. Performance is monitored and relevant action is taken throughout the year through regular reporting to the Board of variances from the budget, updated forecasts for the year and information on the key risk areas.

Investment appraisal Major capital and other project expenditure is controlled by a budgetary process and authorisation levels set by the Board. For capital expenditure above specified levels, and for acquisitions and disposals, detailed written proposals must be submitted to the Board for approval.

Internal audit The Group currently does not have an internal audit function as the directors consider this to be inappropriate given the size of the Group. However, this is reviewed by the Board annually. An element of internal audit assurance is provided through internal staff working on specific projects, for example reviewing the policies and procedures relating to information security, including the effectiveness of related internal controls.

Going concernAfter making appropriate enquiries and for the reasons set out in the Directors’ Report, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing these financial statements (see note 1).


36

board of directors

Carl Bacon CIPM (1 2 3)

Non-Executive ChairmanJustin WheatleyGroup Chief Executive

Andrew Fabian FCA FCTGroup Finance Director

Mark Adorian (1 2 3)

Non-Executive Director and Chairman of the Nominations Committee

Stuart Clark (1 2 3)

Senior Independent Director and Chairman of the Remuneration Committee

Jane Tozer MBE OBE (1 2 3)

Non-Executive Director and Chairman of the Audit Committee

History: History: History: History: History: History:

Carl, 51, previously worked as Director of Risk Control and Performance at F&C Investment Management Limited and prior to that was Vice President – Head of Performance at JP Morgan Investment Management Inc. He is a founder member of both the Investment Performance Council and GIPS®, previous chair of the GIPS Executive Committee, and a member of the Advisory Board of the Journal of Performance Measurement. Carl is a director of the Freedom Index Company and is also the author of ‘Practical Portfolio Performance Measurement & Attribution’ and ‘Practical Risk-adjusted Performance Measurement’.

Justin, 49, began his career in 1989 as a salesman with Micropal, a provider of independent information on mutual funds. He set up an agency for Micropal in 1991 in Switzerland and grew the business to cover France and Luxembourg. In 1994, he founded StatPro, floating the business in May 2000 raising £5 million to build up StatPro’s international expansion. StatPro’s revenues have grown from under £3 million to over £30 million since 2000. He has day-to-day responsibility for the Group.

Prior to joining StatPro, Andrew, 52, was Group Financial Controller at William Baird PLC. and has previously held senior finance roles at De La Rue plc and Deloitte & Touche. He is a Fellow of both the ICAEW and the Association of Corporate Treasurers (ACT) and served for three years on the ACT’s governing council. Andrew is responsible for the global finance function at StatPro. Andrew was appointed Company Secretary on 25 January 2012. In 2012, Andrew was awarded a ranking in the ‘Hot 20 FDs’ in the TMT sector by BDO LLP.

Mark, 51, was previously Managing Director of Standard & Poor’s Fund Services. Mark co-founded Micropal, the global fund performance analysis company, in 1986, becoming their Sales and Marketing Director in 1987. In 1992 he became Managing Director of Micropal, and subsequently in 1997 negotiated the sale of Micropal to Standard & Poor’s, a division of the McGraw-Hill Companies. Between 1999 and 2001, Mark was Managing Director of Standard & Poor’s Fund Services. Mark chairs the Group’s Nominations Committee.

Stuart, 66, has been employed in the financial information industry since 1968. From 1995 to 2009 Stuart held various senior positions at IDC. As President and CEO from 2000, Stuart led the business through nine years of continuous and strong growth, with revenues more than doubling to US$750 million and with profitability and cash flow growing more than threefold. IDC consistently outperformed the market in growth over that period and, at around 30%, had close to the highest EBITA margin amongst major comparable players in its industry. Stuart is also non-executive chairman of Ipreo Holdings LLC, a New York-based leading provider of deal execution platforms, market intelligence and investor communication tools. Stuart is the Senior Independent Director and chairs the Group’s Remuneration Committee.

Jane, 66, began her career with IBM, after which she was CEO of Softwright Systems Ltd., taking it from start-up to trade sale. Jane has since held a portfolio of non-executive directorships including quoted technology companies, investment trusts, the John Lewis Partnership, the DWP and the MoJ, and technology start-ups. Jane is currently a non-executive director of F&C Global Smaller Companies plc, JP Morgan Income & Growth plc, Asthma UK, the Information Technologists’ Company Charitable Trust and her local Citizen’s Advice Bureau. She also runs ITNEA, a networking association for Chairmen and Non-Executive Directors of quoted technology companies, and is a member of the Warwick Business School Advisory Board. Jane was awarded an MBE for services to the IT sector in 1991, and an OBE for services to the public service and voluntary sector in 2009. Jane is an Independent Director and chairs the Group’s Audit Committee.

Joined StatPro: Joined StatPro: Joined StatPro: Joined StatPro: Joined StatPro: Joined StatPro:

2000 Founder, 1994 2000 2002 2009 2012

Expertise: Expertise: Expertise: Expertise: Expertise: Expertise:

Carl’s expertise in risk, performance measurement and GIPS enables him to add value to product development and StatPro’s business strategy. As he continues to publish and teach in these fields, external market knowledge is brought to the StatPro Board.

Justin has done many things, from sales to product development and design, to the acquisition of ten companies and running a public business that covers over ten offices around the world. Today his focus is implementing the strategy for growing StatPro Revolution into the leading portfolio analysis service.

Andrew has significant experience in the financial services sector and is a chartered accountant and qualified corporate treasurer.

Mark’s career in the asset management industry and experience in business growth adds value to the StatPro Board. His understanding of market data in this industry supports the business and strategy.

Stuart brings experience in managing a global data organisation as well as more than 40 years working in the financial industry. His experience at IDC and now at Ipreo, enables Stuart to add growth, acquisition and market intelligence value to StatPro.

Jane brings a wealth of experience from start-up to advisory within StatPro’s marketplace, supporting the growth strategy with the appropriate level of formality and governance.

1 Member of the Audit Committee2 Member of the Remuneration Committee3 Member of the Nominations Committee

Group ExecutiveBoard

Justin Wheatley, Group Chief ExecutiveAndrew Fabian, Group Finance DirectorAndrew Peddar, Group Chief Operating OfficerDario Cintioli, Product DirectorMichel Lempicki, Global Accounts DirectorNeil Smyth, Marketing and Technology DirectorMarc Zandt, Global Services Director

37

Carl Bacon CIPM (1 2 3)

Non-Executive ChairmanJustin WheatleyGroup Chief Executive

Andrew Fabian FCA FCTGroup Finance Director

Mark Adorian (1 2 3)

Non-Executive Director and Chairman of the Nominations Committee

Stuart Clark (1 2 3)

Senior Independent Director and Chairman of the Remuneration Committee

Jane Tozer MBE OBE (1 2 3)

Non-Executive Director and Chairman of the Audit Committee

History: History: History: History: History: History:

Carl, 51, previously worked as Director of Risk Control and Performance at F&C Investment Management Limited and prior to that was Vice President – Head of Performance at JP Morgan Investment Management Inc. He is a founder member of both the Investment Performance Council and GIPS®, previous chair of the GIPS Executive Committee, and a member of the Advisory Board of the Journal of Performance Measurement. Carl is a director of the Freedom Index Company and is also the author of ‘Practical Portfolio Performance Measurement & Attribution’ and ‘Practical Risk-adjusted Performance Measurement’.

Justin, 49, began his career in 1989 as a salesman with Micropal, a provider of independent information on mutual funds. He set up an agency for Micropal in 1991 in Switzerland and grew the business to cover France and Luxembourg. In 1994, he founded StatPro, floating the business in May 2000 raising £5 million to build up StatPro’s international expansion. StatPro’s revenues have grown from under £3 million to over £30 million since 2000. He has day-to-day responsibility for the Group.

Prior to joining StatPro, Andrew, 52, was Group Financial Controller at William Baird PLC. and has previously held senior finance roles at De La Rue plc and Deloitte & Touche. He is a Fellow of both the ICAEW and the Association of Corporate Treasurers (ACT) and served for three years on the ACT’s governing council. Andrew is responsible for the global finance function at StatPro. Andrew was appointed Company Secretary on 25 January 2012. In 2012, Andrew was awarded a ranking in the ‘Hot 20 FDs’ in the TMT sector by BDO LLP.

Mark, 51, was previously Managing Director of Standard & Poor’s Fund Services. Mark co-founded Micropal, the global fund performance analysis company, in 1986, becoming their Sales and Marketing Director in 1987. In 1992 he became Managing Director of Micropal, and subsequently in 1997 negotiated the sale of Micropal to Standard & Poor’s, a division of the McGraw-Hill Companies. Between 1999 and 2001, Mark was Managing Director of Standard & Poor’s Fund Services. Mark chairs the Group’s Nominations Committee.

Stuart, 66, has been employed in the financial information industry since 1968. From 1995 to 2009 Stuart held various senior positions at IDC. As President and CEO from 2000, Stuart led the business through nine years of continuous and strong growth, with revenues more than doubling to US$750 million and with profitability and cash flow growing more than threefold. IDC consistently outperformed the market in growth over that period and, at around 30%, had close to the highest EBITA margin amongst major comparable players in its industry. Stuart is also non-executive chairman of Ipreo Holdings LLC, a New York-based leading provider of deal execution platforms, market intelligence and investor communication tools. Stuart is the Senior Independent Director and chairs the Group’s Remuneration Committee.

Jane, 66, began her career with IBM, after which she was CEO of Softwright Systems Ltd., taking it from start-up to trade sale. Jane has since held a portfolio of non-executive directorships including quoted technology companies, investment trusts, the John Lewis Partnership, the DWP and the MoJ, and technology start-ups. Jane is currently a non-executive director of F&C Global Smaller Companies plc, JP Morgan Income & Growth plc, Asthma UK, the Information Technologists’ Company Charitable Trust and her local Citizen’s Advice Bureau. She also runs ITNEA, a networking association for Chairmen and Non-Executive Directors of quoted technology companies, and is a member of the Warwick Business School Advisory Board. Jane was awarded an MBE for services to the IT sector in 1991, and an OBE for services to the public service and voluntary sector in 2009. Jane is an Independent Director and chairs the Group’s Audit Committee.

Joined StatPro: Joined StatPro: Joined StatPro: Joined StatPro: Joined StatPro: Joined StatPro:

2000 Founder, 1994 2000 2002 2009 2012

Expertise: Expertise: Expertise: Expertise: Expertise: Expertise:

Carl’s expertise in risk, performance measurement and GIPS enables him to add value to product development and StatPro’s business strategy. As he continues to publish and teach in these fields, external market knowledge is brought to the StatPro Board.

Justin has done many things, from sales to product development and design, to the acquisition of ten companies and running a public business that covers over ten offices around the world. Today his focus is implementing the strategy for growing StatPro Revolution into the leading portfolio analysis service.

Andrew has significant experience in the financial services sector and is a chartered accountant and qualified corporate treasurer.

Mark’s career in the asset management industry and experience in business growth adds value to the StatPro Board. His understanding of market data in this industry supports the business and strategy.

Stuart brings experience in managing a global data organisation as well as more than 40 years working in the financial industry. His experience at IDC and now at Ipreo, enables Stuart to add growth, acquisition and market intelligence value to StatPro.

Jane brings a wealth of experience from start-up to advisory within StatPro’s marketplace, supporting the growth strategy with the appropriate level of formality and governance.

1 Member of the Audit Committee2 Member of the Remuneration Committee3 Member of the Nominations Committee

EMEAA RegionCraig Arenhold, CEO, South AfricaNico Coetzee, UK Sales Director Greg Howell, Chairman, Asia PacificLaurent Laclaverie, Managing Director, Asia PacificMike Sebban, Continental Europe Sales Director

North American RegionAtif Ansari, CFO, North AmericaRasha Al-Aswad, Senior Vice President, CanadaSimon Stillwell, Senior Vice President, Sales, North America

Other SeniorExecutives

38


The directors present their annual report and the audited financial statements for the year ended 31 December 2013.

Going concernAfter 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, they continue to adopt the going concern basis in preparing the Group’s financial statements (see note 1).

Research and development The Group continues to invest in developing improved software products and services. Development expenditure incurred during the year was £4.44 million (2012: £4.18 million). In accordance with International Financial Reporting Standards (IFRS), development costs are capitalised where recognition criteria are met and written off over the useful life, currently estimated by the directors to be three years. The amount capitalised in the year was £3.40 million (2012: £3.21 million) and the total amount of amortisation was £3.40 million (2012: £3.06 million).

Results, dividends and transfers to reservesThe Group’s profit attributable to equity shareholders for the financial year was £2.08 million (2012: £2.68 million). A final dividend of 1.95p per ordinary share (2012: 1.9p) has been recommended by the directors, taking the total dividend for the year to 2.8p (2012: 2.7p). If approved by the passing of a resolution at the 2014 Annual General Meeting, it is intended to pay the final dividend on 21 May 2014 to all shareholders on the register at close of business on 25 April 2014 (ex-div date will be 23 April 2014). The profit for the year has been transferred to reserves.

Shares issued in yearDuring 2013 the Company issued no shares (2012: 6,149,946) as detailed in note 20 to the financial statements. There were 225,000 shares held in treasury at 31 December 2013 (2012: 225,000). At the forthcoming Annual General Meeting, the directors are seeking to renew the authority to allow the purchase of own shares up to a limit of 10% of the Company’s share capital.

Directors and their interestsThe directors who held office during the year were:

CR Bacon – Non-Executive ChairmanJMBT Wheatley – Group Chief ExecutiveAM Fabian – Group Finance DirectorMC Adorian – Non-Executive DirectorSJ Clark – Non-Executive DirectorJE Tozer – Non-Executive Director

All directors are subject to election at the first opportunity after their appointment, and to re-election thereafter at intervals of no more than three years in accordance with the Company’s Articles of Association. The Company’s Articles of Association require that one third of the directors, or the number nearest to one third, are to retire from office by rotation. Accordingly, CR Bacon and AM Fabian seek re-election at the forthcoming Annual General Meeting.

Directors’ interests in the Company’s share capital and share options are detailed on page 44. Directors’ interests in significant contractsDirectors’ interests in significant contracts are described in note 21 to the financial statements.

Directors’ ReportFor the year ended 31 December 2013

39

Directors’ responsibilities statementThe directors are responsible for preparing the Directors’ Report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the Group and Company financial statements in accordance with International Financial Reporting Standards as adopted by the European Union. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the Company and the profit or loss of the Group for that period.

In preparing these financial statements, the directors are required to:

• select suitable accounting policies and then apply them consistently;• make judgements and accounting estimates that are reasonable and prudent;• state whether applicable IFRSs adopted by the European Union have been followed, subject to any material departures disclosed

and explained in the financial statements; and• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and Company will

continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group and Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Group and Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Directors’ indemnity insuranceThe Company carries an appropriate level of professional indemnity insurance cover for the size of the business and also has insurance cover for Directors’ and Officers’ liability.

Disclosure of information to auditorsEach director has confirmed that:

• so far as the director is aware, there is no relevant audit information of which the Group’s auditors are unaware; and• he or she has taken all the steps that he or she ought to have taken as a director in order to make himself or herself aware of any

relevant audit information and to establish that the Group’s auditors are aware of that information.

This confirmation is given in accordance with Section 418 of the Companies Act 2006.

Substantial shareholdingsThe Company has been notified of the following disclosable holdings of voting rights in the Company’s issued share capital as at 10 March 2014:

Number of shares % of share capital

Liontrust Asset Management 12,843,304 19.0%Herald Investment Management 7,657,784 11.3%AXA Framlington 7,388,750 10.9%JMBT Wheatley 7,378,672 10.9%Artemis Investment Management 6,798,037 10.1%Brown Brothers Harriman & Co 3,423,273 5.1%MC Adorian 2,873,548 4.3%

In addition to the above holdings, JMBT Wheatley holds 69,000 Ordinary Shares (representing 0.1% of the Ordinary Share capital) in a family trust, being a trustee and potential indirect beneficiary of the trust.

40


Employment policiesThe Group acknowledges the vital role that all employees play in its success through their skills, initiative and commitment. All operations are encouraged to provide the proper resources to maximise this potential through efficient systems of recruitment, communication, training and development. It is the Group’s policy to give full and fair consideration to the employment and career development of disabled persons, commensurate with their aptitudes and abilities. The Group’s policy in respect of staff who become disabled whilst employed is to make appropriate adjustments and to assist them wherever possible to continue employment within the Group. The Group is also committed to providing equal opportunities regardless of age, gender, religion or ethnic origin.

The Group ensures that all employees are kept fully informed, as far as it is practicable, with regard to the activities of the Group, by circulation of news and regular meetings between directors, managers and other employees. The London office of StatPro, the Group’s head office and base of UK operations, retains its Investors in People (IIP) award in recognition of the investment the Company has made in its people. The award reflects our commitment to and belief in the value of our staff, their performance and their contribution to the success of the business.

Health and safetyThe Group’s policy is to ensure that, as far as is reasonably practicable, working environments exist which will minimise risk to the health and safety of employees.

Legal formThe Company is a public limited company, incorporated and domiciled in England and Wales. The Company’s Registration number is 2910629.

AuditorsA resolution to re-appoint Ernst and Young LLP as independent auditor to the Company will be proposed at the Annual General Meeting.

By order of the Board

Andrew FabianCompany Secretary14 March 2014

Directors’ Report ...continued

41

Remuneration Report

Stuart Clark is the Chairman of the Remuneration Committee (appointed 1 July 2013) and the other members of the committee are Carl Bacon, Mark Adorian and Jane Tozer. The remuneration of all executive directors and other senior executives is recommended to the Board by the Committee. The remuneration of the non-executive directors is determined by the Board. During the year the committee has reviewed salary surveys and the policies of other companies of a comparable nature and has taken professional advice in relation to the design of a new Long Term Incentive Plan.

Remuneration policyThe Group’s policy is to attract, retain and motivate high calibre executives by rewarding them with remuneration packages which reflect both individual performance and the results of the operations under their control. Packages consist of basic salary, performance-related bonuses, share options, pensions and other benefits, with a proportion of potential remuneration based upon achievement of demanding performance targets. Details of the remuneration package of each director are set out on page 43.

The Group has implemented a remuneration policy to align the executives’ interests with the objectives of all shareholders. The current focus is on the execution of the cloud strategy, and the achievement of revenue growth for StatPro Revolution.

Basic salary and benefitsSalaries are established by reference to prevailing market rates, adjusted to reflect individual performance, experience, responsibilities and skills. With effect from 1 July 2013, Justin Wheatley relocated to Boston, USA. As part of his move his remuneration package was re-denominated as a US$ amount based upon his existing remuneration package. The Remuneration Committee approved an increase in basic salary for Andrew Fabian to £155,000 with effect from 1 January 2014.

Non-executive feesFollowing a review, the fee arrangements for non-executive directors were changed during 2013. As a result of the review, the Chairman’s fee was increased to £45,000. For other non-executive directors, the basic fee increased to £35,000 (or currency equivalent) with an additional fee of £5,000 per annum applicable for being chairman of a Board committee. There have previously been no increases applied to non-executive fees for approximately ten years. Therefore, the annual fees payable were amended as follows with effect from 1 July 2013:

Non-executive directorPrevious

annual feeNew

annual fee

Carl Bacon £36,000 £45,000Mark Adorian £30,000 £35,000Jane Tozer £30,000 £40,000Stuart Clark US$45,000 US$60,000

Annual performance-related bonus schemeIn addition to basic salary, executive directors and other senior executives participate in an annual performance-related bonus scheme. Performance targets are designed to both stretch and encourage individuals whilst aligning their interests to that of the Group.

In 2013, the targets for performance-related bonuses for main Board executive directors related to the Group’s revenue growth rate for StatPro Revolution, combined with satisfactory profit generation. The Committee may also award individual discretionary bonuses. In 2013 and 2012, there were no discretionary awards. Bonuses do not form part of pensionable earnings.

42


400

0Dec 08 Dec 09 Dec 10 Dec 11 Dec 12 Dec 13

300

200

100

— StatPro Group plc— Aim All Share

Remuneration Report ...continued

Long Term Incentive Plan (LTIP)The committee is currently reviewing the LTIP arrangements for the senior executive team in consultation with external advisers and institutional shareholders.

Prior to 2013, share options have been granted to directors and eligible employees under established HMRC-approved and unapproved employee share option schemes as the Company places emphasis on the encouragement and motivation of senior executives. Options over shares to executive directors and senior executives were granted with a notional value at grant dependent upon the seniority of the participant and related to the participant’s base salary and the performance terms for those options. These options generally have a strike price based on a premium to the market price at the time and be exercisable after three years. They include performance criteria as determined by the Remuneration Committee from time to time, relating to growth in eps and other measures such as StatPro Revolution sales to ensure incentives are aligned with strategic objectives. The Remuneration Committee ensures that awards are made within the overall limits authorised by shareholders.

Details of the options outstanding under the schemes are provided in note 20 to the financial statements.

The LTIP award granted in 2010 to Justin Wheatley failed to vest and as a result options over 45,000 shares previously granted to Justin Wheatley lapsed in 2013.

Pensions and other benefitsThe Company also operates a defined contribution pension scheme for executive directors. Other benefits include allowances, life assurance and membership of a private healthcare scheme.

Service contractsEach of the executive directors has a rolling contract of service, which is terminable by no more than 12 months’ notice. In the event of termination of a service contract, compensation amounting to the notice period would be payable. Details of service agreements for each executive director are as follows:

Date of service agreement

Notice period on termination

JMBT Wheatley 31 December 2012 6 monthsAM Fabian 10 July 2000 12 months

StatPro International Sarl entered into a new employment contract with JMBT Wheatley on substantially the same terms as his previous employment contract with effect from 1 January 2013. Justin Wheatley is currently on secondment to StatPro Inc.

Non-executive directors do not have service contracts. CR Bacon and AM Fabian seek re-election at the forthcoming Annual General Meeting. Biographical details of all directors can be found on pages 36 to 37.

Performance graph

31 December 2008 = 100

43

In the opinion of the directors, the FTSE™ AIM index is the most appropriate benchmark for total shareholder return comparatives. For the five-year period from 31 December 2008 to 31 December 2013 the total shareholder return for StatPro was +154%. Over the same period the FTSE™ AIM total shareholder return was +116%.

Directors’ remuneration

2013Salary/fees

£’000s

Performance-related bonus

£’000s

Discretionary bonus £’000s

Benefits*

£’000s

Total excluding pensions

£’000sPensions

£’000s

Total 2013

£’000s

CR Bacon 41 – – – 41 – 41JMBT Wheatley 229 35 – 99 363 – 363AM Fabian 150 35 – 10 195 22 217MC Adorian 33 – – – 33 – 33SJ Clark 34 – – – 34 – 34JE Tozer 35 – – – 35 – 35

522 70 – 109 701 22 723

2012Salary/fees

£’000s

Performance-related bonus

£’000s

Discretionary bonus £’000s

Benefits*

£’000s

Total excluding pensions

£’000sPensions

£’000s

Total 2012

£’000s

CR Bacon 36 – – – 36 – 36JMBT Wheatley 164 33 – 146 343 – 343AM Fabian 142 33 – 9 184 21 205MC Fairbairn (resigned 31 December 2012) 35 – – – 35 – 35MC Adorian 30 – – – 30 – 30SJ Clark 28 – – – 28 – 28JE Tozer (appointed 1 October 2012) 8 – – – 8 – 8

443 66 – 155 664 21 685

* Benefits in kind for JMBT Wheatley and AM Fabian relate to travel and car allowances, private healthcare and life assurance. As part of JMBT Wheatley’s service agreement following his relocation to Luxembourg in October 2010, he opted to receive an accommodation allowance in lieu of salary and other benefits.

Mark Adorian and Carl Bacon have performed some consultancy services during 2013 and 2012 for the Company as detailed in note 21.

Directors’ pension arrangements The table below shows directors’ pension arrangements in respect of a defined contribution scheme.

Contribution rate

£’000s

Relevant salary £’000s

Contributions 2013

£’000s

Contributions 2012

£’000s

JMBT Wheatley 0% 229 – –AM Fabian 15% 150 22 21

StatPro operates a pension salary sacrifice arrangement where individuals can exchange their salary for Company-paid pension contributions. Where individuals exchange salary this reduces StatPro’s National Insurance contributions. For executive directors, StatPro credits this saving to the individual’s pension. As part of JMBT Wheatley’s new service agreement, JMBT Wheatley has opted to swap pension benefits for other allowances and, therefore, he received no pension contribution from the Company in 2013 or 2012.

44


Directors’ interestsInterests in shares

31 December 2013

Number

31 December 2012

Number

CR Bacon 800,000 794,000JMBT Wheatley 7,378,672 7,353,672AM Fabian 264,647 264,647MC Adorian 2,873,548 2,645,698SJ Clark 90,000 –JE Tozer 24,752 24,752MC Fairbairn (resigned 31 December 2012) n/a 779,834

In addition to the above interests, JMBT Wheatley has an interest in 69,000 Ordinary Shares (2012: 69,000) in a family trust, being a trustee and potential beneficiary of the trust.

Interests in share options This part of the Remuneration Report is audited.

As at 31 December

2012 Number

Granted in year*

Number

Exercised in year*

Number

Lapsed in year

Number

As at 31 December

2013 Number

Exercise price

penceExercise

period

JMBT Wheatley 45,000 – – – 45,000 100 2011-2015*

45,000 – – (45,000) – 135 2013-2017*

35,000 – – – 35,000 130 2014-2018*

1,000,000 – – – 1,000,000 108 2015-2022*

1,125,000 – – (45,000) 1,080,000

AM Fabian 35,000 – – – 35,000 100 2011-2015*

35,000 – – – 35,000 135 2013-2017*

35,000 – – – 35,000 130 2014-2018*

150,000 – – – 150,000 108 2015-2022*

100,000 – – – 100,000 108 2015-2019*

355,000 – – – 355,000

* Performance criteria are attached to these options

Gains made by directors on share options No directors exercised any options in 2013. In 2012, AM Fabian exercised options over 42,000 shares at a market price of 85.5p realising a gain before applicable taxes of £11,000. No other directors exercised any options in 2012.

Share priceThe highest and lowest mid-market prices of the Company’s Ordinary Shares during the year were 96.5p and 73.5p respectively, and the mid-market price on 31 December 2013 was 85p.

This report was approved by the Board on 14 March 2014.

Stuart ClarkChairman of Remuneration Committee 14 March 2014

Remuneration Report ...continued

45

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF STAtPRO GROUP PLC

We have audited the financial statements of StatPro Group plc for the year ended 31 December 2013 which comprise Group Income Statement, Group Statement of Comprehensive Income, Group Balance Sheet, Company Balance Sheet, Group and Company Statements of Cash Flows, Group Statement of Changes in Shareholders’ Equity, Company Statement of Changes in Shareholders’ Equity and the related notes 1 to 27. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent Company financial statements, as applied in accordance with the provisions of the Companies Act 2006.

This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditorAs explained more fully in the Directors’ Responsibilities Statement set out on page 39, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.

Scope of the audit of the financial statementsAn audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Group’s and the parent Company’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Annual Report and Accounts to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion on financial statementsIn our opinion:

• the financial statements give a true and fair view of the state of the Group’s and of the parent Company’s affairs as at 31 December 2013 and of the Group’s profit for the year then ended;

• the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;• the parent Company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union

and as applied in accordance with the provisions of the Companies Act 2006; and• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion on other matter prescribed by the Companies Act 2006In our opinion the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements.

46


Matters on which we are required to report by exceptionWe have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

• adequate accounting records have not been kept by the parent Company, or returns adequate for our audit have not been received from branches not visited by us; or

• the parent Company financial statements are not in agreement with the accounting records and returns; or• certain disclosures of directors’ remuneration specified by law are not made; or• we have not received all the information and explanations we require for our audit.

Andy Glover (Senior Statutory Auditor)for and on behalf of Ernst & Young LLP, Statutory AuditorLondon14 March 2014

Notes:1. The maintenance and integrity of the StatPro Group plc website is the responsibility of the directors; the work carried out by the auditors does not

involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.

2. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF STAtPRO GROUP PLC ...continued

47

GROUP INCOME STATEMENTFor the year ended 31 December 2013

Notes2013

£’000s2012

£’000s

Revenue 2 32,486 32,001

Operating expenses before amortisation of intangible assets and exceptional items (24,712) (23,016)Amortisation of acquired intangible assets 11 (402) (440)Amortisation of other intangible assets 11 (3,639) (3,292)Exceptional item – increase in contingent consideration 3 (347) –Exceptional item – restructuring costs 3 – (978)

Operating expenses 3 (29,100) (27,726)

Operating profit 3,386 4,275

Finance income 6 35 10Finance expense 6 (308) (503)

Net finance expense (273) (493)

Profit before taxation 2 3,113 3,782

Taxation 7 (1,030) (1,102)

Profit for the year 2,083 2,680

Earnings per share – basic 10 3.1p 4.3p – diluted 10 3.1p 4.3p

GROUP STATEMENT OF COMPREHENSIVE INCOME For the year ended 31 December 2013

2013 £’000s

2012 £’000s

Profit for the year 2,083 2,680Other comprehensive income to be reclassified to the income statement:Net exchange differences (3,126) (984)

Total comprehensive (loss)/income for the year (1,043) 1,696

48


BALANCE SHEETSAt 31 December 2013

Notes

Group 2013

£’000s

Group 2012

£’000s

Company 2013

£’000s

Company 2012

£’000s

Non-current assetsGoodwill 11 47,927 51,521 – –Other intangible assets 11 5,597 6,162 354 210Property, plant and equipment 12 1,883 1,974 – –Other receivables 14 135 231 14,345 13,888Deferred tax assets 17 450 384 – 9Investments 13 – – 43,362 43,183

55,992 60,272 58,061 57,290Current assetsTrade and other receivables 14 6,167 6,962 306 498Financial instruments – other 18 102 32 102 32Current tax assets 29 – – –Cash and cash equivalents 4,014 3,681 1,331 1,005

10,312 10,675 1,739 1,535LiabilitiesCurrent liabilitiesFinancial liabilities – borrowings 18 (12) (14) – –Financial instruments – other 18 (1) (38) (1) (38)Trade and other payables 15 (4,400) (4,293) (15,751) (16,512)Current tax liabilities (581) (729) (253) (275)Deferred income (12,678) (13,323) – –Provisions 16 (842) (1,530) (725) (1,319)

(18,514) (19,927) (16,730) (18,144)

Net current liabilities (8,202) (9,252) (14,991) (16,609)

Non-current liabilitiesOther creditors (154) (213) – –Deferred tax liabilities 17 (549) (887) (32) –Deferred income (41) (125) – –Provisions 16 (138) (175) – –

(882) (1,400) (32) –

Net assets 46,908 49,620 43,038 40,681

Shareholders’ equityShare capital 20 677 677 677 677Share premium 23,472 23,472 23,472 23,472Shares to be issued 63 63 63 63Treasury shares (249) (249) (249) (249)Other reserves 7,650 10,776 2,369 2,369Retained earnings 15,295 14,881 16,706 14,349

Total shareholders’ equity 46,908 49,620 43,038 40,681

The financial statements were approved by the Board of Directors on 14 March 2014 and were signed on its behalf by:

Justin Wheatley Andrew FabianDirector Director

49

STATEMENT OF CASH FLOWSFor the year ended 31 December 2013

Notes

Group 2013

£’000s

Group 2012

£’000s

Company 2013

£’000s

Company 2012

£’000s

Operating activitiesCash generated from operations (before exceptional item) 22 9,403 10,180 4,235 1,702Payments in respect of exceptional item – (947) – (9)

Cash generated from operations 9,403 9,233 4,235 1,693Finance income 35 10 28 2Finance costs (133) (316) (130) (307)Tax paid (1,616) (1,261) (594) (391)

Net cash flow from operating activities 7,689 7,666 3,539 997

Investing activitiesPayment of contingent consideration (990) – (990) –Investment in intangible assets 11 (3,482) (3,551) (1,267) (1,198)Purchase of property, plant and equipment 12 (930) (639) – –Proceeds from the disposal of property, plant and equipment – 3 – –Dividends received from subsidiaries – – 900 2,300

Net cash flow (used in)/from investing activities (5,402) (4,187) (1,357) 1,102

Financing activitiesRepayment of bank loan 23 – (6,250) – (6,250)Financing costs for bank loan modification – (169) – (169)Proceeds from issue of Ordinary Shares 20 – 5,858 – 5,858Dividends paid to shareholders 9 (1,856) (1,627) (1,856) (1,627)

Net cash flow used in financing activities (1,856) (2,188) (1,856) (2,188)

Net increase/(decrease) in cash and cash equivalents 431 1,291 326 (89)

Cash and cash equivalents at 1 January 3,681 2,447 1,005 1,094Effect of exchange rate movements (98) (57) – –

Cash and cash equivalents at 31 December 4,014 3,681 1,331 1,005

50


For the year ended 31 December 2013

GROUP STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

Share capital £’000s

Share premium

£’000s

Shares to be issued

£’000s

Treasury shares £’000s

Other reserves

£’000s

Retained earnings

£’000s

Total equity £’000s

At 1 January 2012 616 17,675 63 (249) 11,760 13,965 43,830

Profit for the year – – – – – 2,680 2,680Other comprehensive income – – – – (984) – (984)

Total comprehensive income – – – – (984) 2,680 1,696

Transactions with owners:Share based payment transactions – – – – – (159) (159)Tax relating to share option scheme – – – – – 22 22Shares issued 61 5,797 – – – – 5,858Dividends – – – – – (1,627) (1,627)

61 5,797 – – – (1,764) 4,094

At 31 December 2012 677 23,472 63 (249) 10,776 14,881 49,620


Share premium

£’000s

Shares to be issued

£’000s


Other reserves

£’000s

Retained earnings

£’000s


At 1 January 2013 677 23,472 63 (249) 10,776 14,881 49,620

Profit for the year – – – – – 2,083 2,083Other comprehensive income – – – – (3,126) – (3,126)

Total comprehensive income – – – – (3,126) 2,083 (1,043)

Transactions with owners:Share based payment transactions – – – – – 192 192Tax relating to share option scheme – – – – – (5) (5)Dividends – – – – – (1,856) (1,856)

– – – – – (1,669) (1,669)

At 31 December 2013 677 23,472 63 (249) 7,650 15,295 46,908

Other reserves include merger reserves of £2,369,000 (2012: £2,369,000) and translation reserve of £5,281,000 (2012: £8,407,000). 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.

51

COMPANY STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITYFor the year ended 31 December 2013


Share premium

£’000s

Shares to be issued

£’000s


Other reserves

£’000s

Retained earnings

£’000s


At 1 January 2012 616 17,675 63 (249) 2,369 10,904 31,378

Profit for the year – – – – – 5,209 5,209Other comprehensive income – – – – – – –

Total comprehensive income – – – – – 5,209 5,209

Transactions with owners:Share based payment transactions – – – – – (159) (159)Tax relating to share option scheme – – – – – 22 22Shares issued 61 5,797 – – – – 5,858Dividends – – – – – (1,627) (1,627)

61 5,797 – – – (1,764) 4,094

At 31 December 2012 677 23,472 63 (249) 2,369 14,349 40,681


Share premium

£’000s

Shares to be issued

£’000s


Other reserves

£’000s

Retained earnings

£’000s


At 1 January 2013 677 23,472 63 (249) 2,369 14,349 40,681

Profit for the year – – – – – 4,026 4,026Other comprehensive income – – – – – – –

Total comprehensive income – – – – – 4,026 4,026

Transactions with owners:Share based payment transactions – – – – – 192 192Tax relating to share option scheme – – – – – (5) (5)Dividends – – – – – (1,856) (1,856)

– – – – – (1,669) (1,669)

At 31 December 2013 677 23,472 63 (249) 2,369 16,706 43,038

Other reserves are merger reserves of £2,369,000 (2012: £2,369,000). The merger reserve arose on acquisitions and represents the difference between the fair value of shares issued and the nominal value of the shares. Share based payment transactions in reserves include a credit of £179,000 (2012: £38,000) relating to investments in subsidiaries.

52


1 Principal accounting policiesThe principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented unless otherwise stated.

Accounting conventionThese financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRIC interpretations endorsed by the European Union (EU) and those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The financial statements have been prepared under the historical cost convention modified to include the measurement of financial assets and liabilities at fair value through profit or loss. A summary of the significant Group accounting policies is set out below, together with an explanation of where changes have been made to previous policies on the adoption of new accounting standards in the year.

As permitted by Section 408 of the Companies Act 2006, the Company has not presented its own income statement or statement of comprehensive income. The profit after taxation for the financial year of the Company was £4,026,000 (2012: £5,209,000).

The Group and parent Company financial statements are presented in sterling and all values are rounded to the nearest thousand pounds (£000) except where otherwise indicated.

Basis of preparation – going concernThe Group operates in the asset management sector of the financial services industry and whilst many of our clients are part of banking groups most of them are relatively resilient to the challenging economic backdrop. This is because, like StatPro itself, they themselves have recurring revenue business models and, to a large extent, the services and software provided by StatPro are reasonably embedded within their core operations. StatPro has a client base of around 450 (2012: 350), which is diversified geographically and by product and with no significant client concentration. The largest client group, which comprises a number of contracts for a variety of products and in a number of territories, represents less than 6% of recurring revenue. StatPro has a level of cancellations each year but most of our contracts are multi-year agreements which roll into subsequent commitments unless written notice is given to terminate the contract. For most software contracts the annual licence fee is payable in advance and for data contracts the fees are monthly in advance. For these reasons, we have good visibility on any potential deterioration in our trading outlook and potential risks to our business.

Renewals occur throughout the year although there is a slightly greater weighting in the fourth quarter. The Board closely monitors clients that are potentially at risk of cancellation as well as the pipeline of new business.

The Group has both cash and undrawn credit facilities available to support its business operations and therefore the Board believes that the Group is well positioned to manage the business risks. In reaching their conclusion the Board has reviewed cash flow forecasts. 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 Group and Company financial statements.

Critical accounting estimates and judgementsThe preparation of financial statements under IFRS requires management to make estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, therefore not necessarily equate to the actual outcome. Estimates are made by the directors based on experience and estimates believed to be reasonable expectations of future outcomes. Critical accounting estimates and judgements are made in the following areas:

• Impairment of goodwill.• Carrying value of development assets.• Deferred tax recognition.

The accounting policies in respect of these items are set out below and further details can be found in notes 11 and 17.

Impairment of goodwillThe Group’s impairment test for goodwill and intangible assets with indefinite useful lives is based on a value in use calculation. The value in use calculation is based on a discounted cash flow model. The cash flows are derived from the budget and projections for the next five years and do not include restructuring activities that the Group is not yet committed to or significant future investments that will enhance the asset’s performance of the cash generating unit being tested. The recoverable amount is most sensitive to the discount rate used for the discounted cash flow model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes. The key assumptions used to determine the recoverable amount for the different cash generating units, including a sensitivity analysis, are disclosed further in note 11.

NOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 December 2013

53

Carrying value of development assetsDevelopment costs are capitalised in accordance with Group accounting policy. Initial recognition is based on management’s judgement that technological and economical feasibility is confirmed, usually when a product development project has reached a defined milestone according to an established project management model. In determining the amounts to be capitalised, management makes assumptions regarding the expected future cash generation of the assets, discount rates to be applied and the expected period of the benefits.

Deferred tax recognitionThe Group establishes provisions, based on reasonable estimates, for possible consequences of audits by tax authorities of the respective countries in which it operates. The amount of such provisions is based on various factors, such as experience with previous tax audits and differing interpretations of tax regulations by the taxable entity and the responsible tax authority. Management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with an assessment of the effect of future tax planning strategies.

New and amended accounting standards and interpretationsThe following new and amended IFRS and IFRIC interpretations were effective as of 1 January 2013:

• IAS 1 (amendment) Presentation of Financial Statements• IAS 19 (amendment) Employee Benefits• IFRS 7 (amendment) Offsetting financial assets and liabilities• IFRS 13 Fair Value Measurement

We believe that there are no areas within these standards which have a material impact to the Group.

Interpretations and revised standards that are not yet effective and have not been early adopted by the GroupThe following interpretations to existing standards have been published that are mandatory for the Group’s future accounting but which the Group has not adopted early. Management has not yet fully assessed the impact of these new standards but does not believe they will have any material impact on the financial statements.

• IFRS 9 Financial Instruments – Classification and Measurement – 1 January 2015*

• IFRS 10 Consolidated Financial Statements – 1 January 2014• IFRS 11 Joint Arrangements – 1 January 2014• IFRS 12 Disclosure of interest in other entities – 1 January 2014• IAS 27 (amended) Consolidated and separate financial statements – 1 January 2014• IAS 28 (amended) Investments in associates and joint ventures – 1 January 2014• IAS 32 (amendment) Offsetting financial assets and liabilities – 1 January 2014

* Not yet EU endorsed

Basis of consolidationThe Group financial statements consolidate the financial statements of the Company and its subsidiary undertakings all made up to 31 December each year. Subsidiaries are entities over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights.

RevenueRevenue represents the invoiced value of goods and services, excluding value added tax, of the following:

a) Licence revenue and related software support contracts Licence revenue and software support contract income relating to obligations under contracts is recognised in the income statement

over the period of the contract, on a monthly basis, from the start of the month in which the licence commences. Any balance not relating to the accounting period is carried forward as deferred income on the balance sheet.

54


NOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 December 2013 ...continued

b) Data fees Data fee income is recognised in the income statement over the period of the contract, on a monthly basis, from the start of the

month in which the contract commences. Any balance not relating to the accounting period is carried forward as deferred income on the balance sheet. Data overage revenue on data contracts (data revenue in excess of contracted amount) is recognised in the period that the overage was incurred.

c) Professional services revenue Income relating to consultancy projects is recognised in the income statement as a right to consideration established as a result

of performance.

d) Royalty revenue Income is recognised in the income statement as rights to consideration accrues.

Segmental reportingOperating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Group Executive Board.

Research and developmentExpenditure on research and development comprises salaries and related costs of personnel involved in software programming and development activities. Development costs are capitalised where the appropriate recognition criteria in accordance with IAS 38 are met, including the asset and related costs being separately identifiable, the use of the asset being technically feasible and intended and the asset being expected to generate future benefits. As a result there is an intangible asset relating to capitalised development costs (both internally developed and acquired) recognised on the Group’s balance sheet where the Board expects the benefits to be recovered through incremental revenue from future sales. The carrying values, which are analysed by product, are considered carefully by the Board and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

Intangible assets – customer contractsCustomer contracts acquired with acquisitions are valued based on the net contribution expected to be realised over the estimated life of the contracts and discounted at an appropriate discount rate, taking into account any tax effects. The carrying values are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

GoodwillFor business combinations before 1 January 2010, goodwill is calculated as the difference between the fair value of the consideration including all costs relating to the acquisition and the fair value of the Group’s share of the identifiable net assets of the acquired entity. In accordance with IFRS 3 (Revised), the calculation of goodwill relating to any acquisitions that completed after 1 January 2010 will not include any acquisition related costs. Goodwill is not amortised but is subject to annual impairment reviews. Goodwill arising on acquisitions prior to 1 January 2004 has been frozen with effect from 1 January 2004 and is no longer amortised but subject to annual impairment reviews.

Business combinationsThe results and net assets of subsidiary undertakings acquired are included in the Group income statement and balance sheet using the acquisition method of accounting from the effective date of acquisition, the date control is gained over the subsidiary. The results, and net assets of subsidiary undertakings disposed of, are included in the Group income statement and balance sheet using the acquisition method of accounting to the effective date of disposal. Income and expenditure relating to transactions between Group undertakings are eliminated on consolidation.

AmortisationThe cost of other intangible assets are amortised on a straight line basis over the expected useful lives of the assets as follows:

Development costs internally generated – 33% per annumCustomer contracts – over the period of the contracts (between 3 and 7 years)Other intangibles – software – between 14% and 33% per annumOther intangibles – website development costs – 33% per annumOther intangibles – trademarks – 10% per annum

55

DepreciationThe cost of property, plant and equipment is depreciated on a straight line basis over the expected useful lives of the assets as follows:

Improvements to short leasehold property – over the period of the lease (between 3 and 12 years)Office equipment – between 10% and 20% per annumFixtures and fittings – between 10% and 20% per annumComputer equipment – 33% per annum

InvestmentsInvestments in subsidiary undertakings are stated at cost, including estimated contingent consideration less any provisions for impairment.

Current and deferred taxationThe tax expense for the period comprises current and deferred tax. The current tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company’s subsidiaries operate and generate taxable income. Deferred taxation is recognised in respect of all temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements at the balance sheet date and where these transactions or events result in an obligation to pay more tax, or a right to pay less tax in the future. Temporary differences are differences between the Group’s taxable profits and its results as stated in the financial statements. Deferred taxation assets are only recognised when their recoverability is more probable than not. Deferred taxation is measured at the average tax rates that are expected to apply in the periods in which the temporary differences are expected to reverse, based on tax rates and laws that have been enacted or substantively enacted at the balance sheet date. Recognised deferred tax is measured on a non-discounted basis.

Leased assetsRentals applicable to operating leases are charged to the income statement on a straight line basis over the term of the lease.

Financial instrumentsFinancial assetsThe Group classifies its financial assets in the following categories: fair value through profit or loss, loans and receivables, and available for sale. The classification depends on the purpose for which the financial assets were acquired. The directors determine the classification of its financial assets at initial recognition.

a) Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category

if acquired principally for the purpose of use in the short term. Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this category are presented as current assets.

b) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active

market. They are presented in current assets, except for those with maturities greater than 12 months after the balance sheet date, which are presented as non-current assets.

c) Available-for-sale financial assets The Company does not hold any assets available for sale (other than investments in subsidiaries which are deemed to be assets

available for sale).

BorrowingsBorrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of prepaid transaction costs) and the redemption value (including interest) is recognised in the income statement over the period of the borrowings using the effective interest method. Borrowings are classified as current liabilities unless the facility is committed such that the Group has an unconditional right to defer settlement for at least 12 months from the balance sheet date.

56



Cash and cash equivalentsThe Group considers all bank deposits and highly liquid investments of less than three months’ maturity (which are considered to have insignificant risk to a change in value) to be cash equivalents. Bank overdrafts are excluded from cash and cash equivalents and are presented within borrowings in current liabilities on the balance sheet.

ProvisionsA provision is recognised when the Group has a legal or constructive obligation as a result of a past event; it is probable that an outflow of economic benefits will be required to settle the obligation; and a reliable estimate can be made of the amount of the obligation. If the effect is material, expected future cash flows are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability.

PensionsThe Group provides contributions on behalf of certain directors and employees to a defined contribution pension scheme. Contributions payable in the year are charged to the income statement.

Share-based paymentsIn common with many high-growth technology enterprises, the Company has issued a number of share options to executives and employees. Under IFRS, the equity-settled share-based payment awards are valued at fair value at inception and this cost is recognised over the option vesting period (typically three years). As there is no readily available market price for the options, the Board has used an independent model to estimate the fair value of the options. There are a number of assumptions that affect the value and the Board has carefully considered these assumptions in order to derive an appropriate charge for the cost of options (note 20). The financial effects of awards by the Company of options over its equity shares to employees of subsidiary undertakings are recognised by the Company in its individual statements as an increase in its investment in subsidiaries with a credit to equity equivalent to the IFRS 2 cost in subsidiary undertakings.

Dividend distributionDividend distribution to the Company’s shareholders is recognised as a liability in the Group’s financial statements in the period in which the dividend becomes a liability of the Company. In the case of an interim dividend this is on the payment date; for final dividends this arises on the passing of the relevant resolution at the Annual General Meeting of the shareholders.

Exceptional itemsSignificant items which are separately disclosed on the face of the income statement by virtue of their size or incidence to enable a full understanding of the Group’s financial performance.

Foreign currenciesTransactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the balance sheet date. All differences are taken to the income statement. The assets and liabilities of overseas subsidiary undertakings are translated at the rate of exchange ruling at the balance sheet date. The profit and loss for the year is translated at the average rate for the year. The exchange differences arising on retranslation of opening net assets are taken to other comprehensive income. The difference between the profit and loss at the average rate and closing rate are taken to other comprehensive income. All other translation differences are taken to the income statement.

2 Segmental informationThe 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. The Group Executive Board considers the business to be split into two primary geographical markets: EMEAA and North America and central costs, which relate to the expenses of the Group’s headquarters and costs directly associated with the parent Company, which are managed by the Group management team. The external debt is also held within Central.

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 systems and the provision of web-based portfolio analysis and asset pricing services to the global asset management industry. Segment assets represent those assets arising from the operating activities of those segments. Segment results exclude the impact of any intercompany recharges of revenues or costs. Revenue was generated in the UK of £6.0 million (2012: £5.9 million) with non-current assets held by UK entities totalling £31.1 million (2012: £32.6 million).

57

For the year ended 31 December 2013:EMEAA £’000s

North America

£’000sCentral

£’000sTotal

£’000s

Revenue 20,449 12,037 – 32,486Segment expense (16,262) (11,011) (1,827) (29,100)

Operating profit/(loss) 4,187 1,026 (1,827) 3,386Finance net income/(expense) 5 1 (279) (273)

Profit/(loss) before taxation 4,192 1,027 (2,106) 3,113

Statement of financial positionAssets 29,097 36,267 940 66,304Liabilities (13,205) (4,126) (2,065) (19,396)

Net assets 15,892 32,141 (1,125) 46,908

OtherPurchase of property, plant and equipment 605 325 – 930Net investment in intangible assets 2,055 160 1,267 3,482Depreciation of property, plant and equipment 418 480 – 898Amortisation of intangibles 3,555 486 – 4,041

For the year ended 31 December 2012:EMEAA £’000s

North America

£’000sCentral £’000s

Total £’000s

Revenue 20,085 11,916 – 32,001Segment expense (15,971) (10,405) (1,350) (27,726)

Operating profit/(loss) 4,114 1,511 (1,350) 4,275Finance net income/(expense) 7 1 (501) (493)

Profit/(loss) before taxation 4,121 1,512 (1,851) 3,782

Statement of financial positionAssets 29,968 39,762 1,217 70,947Liabilities (13,798) (4,290) (3,239) (21,327)

Net assets 16,170 35,472 (2,022) 49,620

OtherPurchase of property, plant and equipment 259 380 – 639Net investment in intangible assets 2,119 234 1,198 3,551Depreciation of property, plant and equipment 367 596 – 963Amortisation of other intangibles 3,126 606 – 3,732

58



3 Operating expenses2013

£’000s2012

£’000s

Operating expenses relate to:Staff costs– Research and development 4,440 4,181– Other staff costs 10,984 11,019– Share based payments 192 (159)– Internal development costs capitalised (note 11) (3,404) (3,208)

Total staff costs (note 4) 12,212 11,833

Depreciation of property, plant and equipment 898 963Amortisation of intangible assets 4,041 3,732Operating lease rentals in respect of:– Hire of computer equipment 123 138– Other operating lease rentals 1,502 1,376Auditors’ remuneration (see below) 139 186Exceptional items 347 978Other operating expenses 9,564 8,695Exchange differences 274 (175)

29,100 27,726

Auditors’ remunerationDuring the year the Group (including its overseas subsidiaries) obtained the following services from the Group’s auditor:

2013 £’000s

2012 £’000s

Audit of the financial statements 72 71Local statutory audits of subsidiaries 35 38

Total Group audit fees 107 109Audit-related assurance services 16 20Taxation compliance services 10 15Taxation advisory services 6 42

139 186

Exceptional items2013 – Increase in contingent consideration for SiSoftAs announced in July 2013, the Board agreed an out-of-court settlement on the SiSoft acquisition contingent consideration, and as a result there is an exceptional charge of £0.35 million in 2013, and a remaining liability of £0.73 million.

BackgroundSiSoft developed an advanced web-based Composites solution, which is integrated into StatPro Seven’s Composites module. In 2010, StatPro announced its intention to exercise its option to acquire the 49% minority interest in SiSoft. However, as previously announced, the non-controlling shareholders, consisting of two parties owning 55% and 45% of the minority interest, disputed elements of the calculation of the contingent consideration and the matter has been progressing through the French courts.

59

Contingent consideration – partial settlementUnder the formula stipulated by the acquisition agreements, the contingent consideration was originally estimated at approximately €1.6 million (£1.3 million). Following further review, the directors determined that it was in the interests of the Company to propose an out-of-court settlement with the non-controlling shareholders to minimise the risk of a protracted dispute and to mitigate further legal costs and management time involved in the ongoing dispute. The offer was accepted by representatives of 55% of the non-controlling shareholders in SiSoft and, as a result, €1.16 million (£0.99 million) was paid in July 2013.

Remaining interestThe Court has now made a provisional judgment regarding the remaining 22% non-controlling interest and whilst most of the original elements of the claim (making up the bulk of the value) made by the non-controlling shareholders have now been rejected by the Court, the Court has appointed an expert to review the remaining elements at dispute to assist in evaluating the merits and the quantification of the claim.

The Board expects the remaining contingent consideration payable to the 22% shareholder party to be in the range of €0.7 million – €1.1 million (approximately £0.6 million – £0.9 million) and has increased the provision by approximately €0.4 million (£0.35 million). There is no tax deduction available on this provision as it relates to a capital item. The Board remains confident that our analysis of the case is robust and will provide an update when appropriate. Refer to notes 8, 16 and 26 for more detail.

2012 – Restructuring costsThe exceptional item in 2012 of £0.98 million was the one-off charge associated with the restructuring in January 2012 to re-focus the business on cloud technology.

Adjusted profit before taxation, adjusted operating profit margin and adjusted EBITDAIn 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.

Adjusted profit before taxation2013

£’000s2012

£’000s

Profit before taxation 3,113 3,782Add back: Amortisation on acquired intangible assets 402 440Add back/(deduct): Share based payments 192 (159)Add back: Exceptional items 347 978

Adjusted profit before tax 4,054 5,041

Adjusted operating profit2013

£’000s2012

£’000s

Operating profit 3,386 4,275Add back: Amortisation on acquired intangible assets 402 440Add back/(deduct): Share based payments 192 (159)Add back: Exceptional items 347 978

Adjusted operating profit 4,327 5,534

Adjusted operating margin 13.3% 17.3%

60



Adjusted EBITDA2013

£’000s2012

£’000s

Operating profit 3,386 4,275Add back: Depreciation of property, plant and equipment 898 963Add back: Amortisation on purchased intangible assets 238 231Add back: Amortisation on acquired intangible assets 402 440Add back/(deduct): Share based payments 192 (159)Add back: Exceptional items 347 978

Adjusted EBITDA 5,463 6,728


Free cash flow

2013 £’000s

2012 £’000s

Cash generated from operations (before exceptional item) 9,403 10,180Net interest paid (98) (306)Net tax paid (1,616) (1,261)Purchase of property, plant and equipment (930) (639)Investment in intangible assets (3,482) (3,551)

Free cash flow (before exceptional item) 3,277 4,423Payments in respect of exceptional item – (947)

Free cash flow 3,277 3,476

4 EmployeesThe average number of full time equivalent employees, including executive directors, employed by the Group during the year was as follows:

2013 Number

2012 Number

By activitySelling, distribution and client services 133 133Research and development 77 78Operations, management and administration 39 42

249 253

The number of employees at the end of December 2013 was 255 (2012: 242).2013

£’000s2012

£’000s

Staff costs:Wages and salaries 13,065 12,833Share based payments (note 20) 192 (159)Social security costs 1,913 1,889Other pension costs 446 478

15,616 15,041Capitalisation of internal development costs (3,404) (3,208)

Employee costs charged to income statement (note 3) 12,212 11,833

61

5 Directors’ emolumentsDetails of the remuneration of each director, pension entitlements and share options are included in the Remuneration Report on pages 43 and 44. The number of full time equivalent employees directly employed by the Company was 1 (2012: 1). For the remuneration of key management personnel see note 21.

6 Net finance costs2013

£’000s2012

£’000s

Bank interest receivable 35 10Bank interest payable (132) (313)Amortisation of arrangement fees (176) (190)

Net finance expense (273) (493)

7 Taxation2013

£’000s2012

£’000s

Current taxCurrent tax on profits for the year (1,457) (1,345)Adjustments in respect of prior years 13 141

Total current tax (1,444) (1,204)

Total deferred tax 414 102

Income tax expense (1,030) (1,102)

The tax impact of the exceptional items is as follows:2013

£’000s2012

£’000s

Tax charge on profit before tax and exceptional items (1,030) (1,387)Tax credit on exceptional items – 285

Tax charge on profit before tax and after exceptional items (1,030) (1,102)

The portion of exchange differences taken to equity as shown in the Group Statement of Comprehensive Income on page 47 that has a tax impact solely relates to the exchange differences arising on the translation of the borrowings as disclosed in note 18. In 2013, the tax credit relating to these items is £39,000 (2012: £41,000).

The tax on the Group’s profit before tax differs from the standard rate of corporation tax in the UK of 23.5% (2012: 24.5%) as follows:

2013 £’000s

2012 £’000s

Profit before tax 3,113 3,782

Tax charge on profit before tax at standard rate of corporation tax in the UK of 23.5% (2012: 24.5%) (732) (927)Tax effects of:Non-taxable income and non-deductible expenses 116 161Unrecognised deferred tax movement 68 (403)Adjustments in respect of prior years 13 141Effect of higher overseas taxes on current taxes (218) (103)Effect of higher overseas taxes on deferred taxes (277) 29

Tax charge (1,030) (1,102)

62



8 Non-controlling interestsAs previously noted, the Group exercised its option to acquire a 49% non-controlling interest in SiSoft in June 2010, and in July 2013 we completed the acquisition of 55% of the minority interest. Vendors representing approximately 22% of the shares (i.e. 45% of the 49% minority interest) are disputing certain aspects of the valuation and we are in a legal process in the French Commercial Court to resolve the matter. There is therefore a risk that the final consideration determined by the Court including related costs will be higher than the amount provided – see notes 16 and 26. We will provide a further update if the position changes materially or on the completion of the acquisition.

9 DividendsDividends of £1.86 million (2012: £1.63 million) were declared and paid during the year as follows:

Dividend

Dividend rate

p/share

2013 Amount

£’000s

Final dividend 2012 1.9 1,282Interim dividend 2013 0.85 574

1,856

Dividend

Dividend rate

p/share

2012 Amount

£’000s

Final dividend 2011 1.85 1,135Interim dividend 2012 0.80 492

1,627

The directors have recommended a final dividend of 1.95p per Ordinary Share for 2013 (2012: 1.9p) resulting in a total dividend for the year of 2.8p per Ordinary Share (2012: 2.7p). If the 2013 final dividend is approved at the Annual General Meeting in May 2014 the dividend will be paid on 21 May 2014 to shareholders on the register at the close of business on 25 April 2014 (ex-div date 23 April 2014). In accordance with IFRS, the dividend is not provided for as a liability in the accounts until it becomes a legal liability of the Company and will therefore be recorded in the interim and annual accounts for 2014.

10 Earnings per shareBasic earnings per share is calculated by dividing the profit attributable to Ordinary Shareholders by the weighted average number of Ordinary Shares in issue during the year. Diluted earnings per share is calculated by adjusting the weighted number of Ordinary Shares outstanding to assume conversion of all dilutive potential shares into Ordinary Shares. The Company has two categories of dilutive potential Ordinary Shares: shares to be issued and share options. For the share options, a calculation is performed to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the Company’s shares) based on the monetary value of the subscription rights attached to the outstanding share options. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share options.

Earnings per share – basic and diluted

Earnings 2013

£’000s

Weighted average

number of shares

2013 ’000s

Earnings per share

2013 pence

Earnings2012

£’000s

Weighted average

number of shares

2012’000s

Earnings per share

2012 pence

Earnings per share – basic 2,083 67,479 3.1 2,680 62,168 4.3Potentially dilutive shares – 69 (0.0) – 246 (0.0)

Earnings per share – diluted 2,083 67,548 3.1 2,680 62,414 4.3

63

Earnings per share – adjusted

Earnings 2013

£’000s

Weighted average

number of shares

2013 ’000s

Earnings per share

2013 pence

Earnings2012

£’000s

Weighted average

number of shares

2012’000s

Earnings per share

2012 pence

Earnings per share – basic 2,083 67,479 3.1 2,680 62,168 4.3Add back: amortisation of acquired intangibles 402 – 0.6 440 – 0.7Add back/(deduct): share based payments 192 – 0.3 (159) – (0.2)Add back: exceptional items 347 – 0.5 978 – 1.6Tax on exceptional items – – – (285) – (0.5)

Adjusted earnings per share 3,024 67,479 4.5 3,654 62,168 5.9Potentially dilutive shares – 69 (0.0) – 246 (0.0)

Adjusted earnings per share – diluted 3,024 67,548 4.5 3,654 62,414 5.9

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.

11 Intangible assetsGroup goodwill

Cost £’000s

At 1 January 2012 52,689Exchange differences (1,168)

At 31 December 2012 51,521Exchange differences (3,594)

At 31 December 2013 47,927

The movement on goodwill relates to exchange differences of £3.59 million (2012: £1.17 million). The total goodwill of £47.93 million includes goodwill for the North American region of £31.76 million (2012: £34.53 million) and goodwill for the EMEAA region of £16.17 million (2012: £16.99 million).

Goodwill impairment reviewThe carrying value of goodwill arising on acquisition is reviewed at each balance sheet date to assess whether there has been any impairment. Goodwill arising on acquisitions is allocated to cash generating units (CGUs) by considering the Group’s share of the cash that is expected to be generated by the business or product that was acquired. The evaluation is based on management forecasts over the period five years forward and assuming a terminal value based on 3% growth thereafter. Discount rates are based upon a prudent risk-adjusted pre-tax weighted average cost of capital.

2013 2012

Discount rate for CGUsEMEAA 9% 9%North America 10% 10%

To assess for impairment, the value in use of the CGU is compared to the goodwill. If the resultant net present value of the discounted cash flows is less than the carrying value for goodwill the difference is written off through the income statement. Key assumptions in the projection of cash flows are: levels of new sales, renewal rates, growth in expenses and the discount rate. Management base these projections on the latest budgets and forecasts which take into account market conditions and economic factors. The headroom is therefore dependent upon sensitivities to these and other assumptions. The largest element of goodwill is in the North American region and if there were no growth in EBITDA in the region then this could result in impairment. However, it is not considered that there would be any impairment based on any reasonable set of assumptions.

64



2013 2012

Sensitivity for North AmericaHeadroom at 10% discount rate £10 million £16 millionHeadroom at 7.5% discount rate £36 million £48 millionDiscount rate indicating impairment 12% 13%

The Board believes the 10% discount rate as being cautious, with an acceptable range being 6%-10%. The fair value measure is also sensitive to exchange rates, and could have an impact on the goodwill impairment assessment. In particular, the value of goodwill related to the FRI acquisition is linked to the Canadian dollar, whereas the underlying projection of cash flows is linked to exchange rates for several currencies. As a result, a strengthening Canadian dollar could have an adverse impact on the measured headroom. The goodwill on all acquisitions has been reviewed and, in the opinion of the directors, there is no impairment to the carrying value at 31 December 2013 (2012: nil).

Other intangible assetsGroup

Development costs

– internally generated

£’000s

Customer contracts

– acquired £’000s

Other intangibles

– purchased £’000s

Intangible assets – total £’000s

CostAt 1 January 2013 16,929 3,075 875 20,879Additions 3,404 – 78 3,482Exchange differences – (141) (55) (196)

At 31 December 2013 20,333 2,934 898 24,165

AmortisationAt 1 January 2013 11,951 2,453 313 14,717Charge for the year 3,401 402 238 4,041Exchange differences – (141) (49) (190)

At 31 December 2013 15,352 2,714 502 18,568

Net book valueAt 31 December 2013 4,981 220 396 5,597

Included within internally generated development costs are costs capitalised of £1.87 million in relation to StatPro Revolution (2012: £2.16 million), the amortisation charge during 2013 was £1.64 million (2012: £1.47 million).

65

Development costs


£’000s

Development costs


Customer contracts


Other intangibles

– purchased £’000s

Intangible assets – total £’000s

CostAt 1 January 2012 13,721 943 3,115 605 18,384Additions 3,208 – – 343 3,551Written off – (924) – (60) (984)Exchange differences – (19) (40) (13) (72)

At 31 December 2012 16,929 – 3,075 875 20,879

AmortisationAt 1 January 2012 8,890 943 2,045 150 12,028Charge for the year 3,061 – 440 231 3,732Written off – (924) – (60) (984)Exchange differences – (19) (32) (8) (59)

At 31 December 2012 11,951 – 2,453 313 14,717

Net book valueAt 31 December 2012 4,978 – 622 562 6,162

CompanyDevelopment

costs– internally generated

£’000s

Otherintangibles

– purchased£’000s

Intangible assets– total£’000s

CostAt 1 January 2013 7,428 19 7,447Additions 1,267 – 1,267

At 31 December 2013 8,695 19 8,714

Amortisation At 1 January 2013 7,233 4 7,237Charge for the year 1,121 2 1,123

At 31 December 2013 8,354 6 8,360

Net book value At 31 December 2013 341 13 354

66



Developmentcosts


£’000s

Otherintangibles

– purchased£’000s

Intangible assets– total£’000s

CostAt 1 January 2012 6,230 19 6,249Additions 1,198 – 1,198

At 31 December 2012 7,428 19 7,447

Amortisation At 1 January 2012 5,453 2 5,455Charge for the year 1,780 2 1,782

At 31 December 2012 7,233 4 7,237

Net book value At 31 December 2012 195 15 210

Acquired and internally generated development costsExpenditure on research and development comprises salaries and related costs of personnel involved in software programming and development activities. Development costs are capitalised, where recognition criteria are met. As a result, there is an intangible asset relating to capitalised development costs (both internally developed and acquired) recognised on the Group’s balance sheet where the Board expects the benefits to be recovered through incremental revenue from future sales. Development expenditure is amortised over a three-year period as, in the opinion of the directors, this is the period over which the benefits arise. The carrying values, which are analysed by product, are considered carefully by the Board and if there has been any impairment in any development costs then the carrying value is written down accordingly. There was no impairment in 2013 (2012: nil).

Customer contractsCustomer contracts acquired were valued on acquisition by estimating the future cash flows to be derived from those contracts over a period varying between three and seven years depending on the type of contract and discounting cash flows at a discount rate of 10% (2012: 10%), adjusting for any tax impact. The resultant fair value for the acquired customer contracts is amortised over a period of between three and seven years as, in the opinion of the directors, this is the period over which the benefits arise. At each balance sheet date the current values of the original contracts are reviewed against the carrying values to assess for impairment. The acquired customer contracts have been reviewed and, in the opinion of the directors, there is no impairment to the carrying value at 31 December 2013 (2012: nil).

67

12 Property, plant and equipmentImprovements

to shortleasehold property

£’000s

Office equipment

£’000s

Fixtures and fittings £’000s

Computer equipment

£’000sTotal

£’000s

Cost At 1 January 2013 2,357 172 770 1,663 4,962Additions 125 7 34 764 930Disposals/write offs (126) (2) – – (128)Exchange differences (151) (3) (60) (198) (412)

At 31 December 2013 2,205 174 744 2,229 5,352

DepreciationAt 1 January 2013 1,483 130 617 758 2,988Charge for the year 193 24 48 633 898Disposals/write offs (95) (2) – – (97)Exchange differences (107) (2) (60) (151) (320)

At 31 December 2013 1,474 150 605 1,240 3,469

Net book value At 31 December 2013 731 24 139 989 1,883

Improvements to short

leasehold property

£’000s

Office equipment

£’000s

Fixtures and fittings £’000s

Computer equipment

£’000sTotal

£’000s

Cost At 1 January 2012 2,414 172 791 1,271 4,648Additions 30 5 9 595 639Disposals/write offs (47) (1) (1) (150) (199)Exchange differences (40) (4) (29) (53) (126)

At 31 December 2012 2,357 172 770 1,663 4,962

DepreciationAt 1 January 2012 1,353 124 515 266 2,258Charge for the year 172 26 110 655 963Disposals/write offs (9) (1) (1) (123) (134)Exchange differences (33) (19) (7) (40) (99)

At 31 December 2012 1,483 130 617 758 2,988

Net book value At 31 December 2012 874 42 153 905 1,974

As part of the financing arrangement with The Royal Bank of Scotland plc, the bank has security over certain Group assets.

CompanyThe Company had no property, plant or equipment at 31 December 2013 (2012: nil).

68



13 Investments in subsidiary undertakings2013

£’000s2012

£’000s

Company – cost and net book value At 1 January 2013 43,183 43,145Net increase in investments* 179 38

At 31 December 2013 43,362 43,183

* Included in increase in investments is £179,000 relating to share based payments transactions with subsidiaries (2012: £38,000).

The Company’s principal subsidiary undertakings at 31 December 2013 comprised the following:

Country of incorporation

Total percentage held by the

Group

Total percentage held by the

Company

StatPro Limited England and Wales 100% 100%Performa Consultants UK Limited England and Wales 100% 100%StatPro SA (formerly StatPro Benelux SA)* Luxembourg 100% –StatPro International S.a.r.l. Luxembourg 100% –StatPro (Deutschland) GmbH Germany 100% –StatPro France SARL France 100% –StatPro Italia Srl Italy 100% 100%SiSoft Sarl** France 78% 78%StatPro Suisse SARL Switzerland 100% –StatPro Inc USA 100% 100%StatPro Canada Inc Canada 100% –StatPro North America Inc Canada 100% 100%StatPro South Africa (Pty) Ltd Republic of South Africa 100% 100%StatPro Asia Ltd Hong Kong 100% 100%StatPro Australia Pty Ltd Australia 100% 100%

* In March 2013, StatPro Benelux SA was renamed StatPro SA.** StatPro Group plc has exercised its option to acquire the remaining 22% of SiSoft Sarl; however, the legal process for completion of the transfer is not

complete as some of the non-controlling holders are disputing the valuation (note 8).

All trading subsidiaries are involved in either the development, or marketing and distribution of software and data solutions and related professional services to the global asset management industry and have been included in the consolidation.

14 Trade and other receivablesGroup

2013£’000s

Group 2012

£’000s

Company 2013

£’000s

Company 2012

£’000s

Trade debtors 4,317 5,161 – –Other debtors 56 140 24 429Prepayments 1,266 1,413 282 69Accrued income 212 161 – –VAT recoverable 92 – – –Rental deposits 224 87 – –

6,167 6,962 306 498

69

The ageing of the Group’s trade debtors at 31 December 2013 is analysed as follows:

2013£’000s

2012£’000s

Neither past due nor impaired 1,632 1,391Not more than three months 2,139 3,670More than three months and not more than six months 336 65More than six months 210 35

4,317 5,161

Non-current assets: other receivables

Group 2013

£’000s

Group 2012

£’000s

Company 2013

£’000s

Company 2012

£’000s

Rental deposits 135 231 – –Receivables from subsidiaries – – 14,345 13,888

135 231 14,345 13,888

15 Trade and other payablesGroup

2013£’000s

Group 2012

£’000s

Company2013

£’000s

Company2012

£’000s

Trade creditors 769 668 48 56Other creditors and accruals 2,352 2,508 447 442Other taxation and social security 1,279 1,117 26 14Payable to subsidiaries – – 15,230 16,000

4,400 4,293 15,751 16,512

The non-current ‘Other creditors and accruals’ of £0.15 million (2012: £0.21 million) relates to lease inducements, which are amortised over the period of the relevant lease.

16 ProvisionsProvisions – Group

2013Contingent

consideration£’000s

2013Onerous

contracts£’000s

2013Restructuring

provision£’000s

2013Total

£’000s

2012Total

£’000s

At 1 January 1,319 176 210 1,705 1,735Arising in the year 347 168 – 515 978Utilised in the year (990) (90) (221) (1,301) (960)Exchange differences 49 1 11 61 (48)

At 31 December 725 255 – 980 1,705

The contingent consideration is the consideration on the SiSoft acquisition and is now due to be utilised in 2014 although it is possible that it will fall beyond 12 months. This provision was increased during the year following the out-of-court settlement reached with one of the shareholders (see notes 3, 8 and 26). The onerous contracts provision relates to onerous leases and other contracts, and is expected to be utilised within four years. The increase in the year is an onerous property lease and associated costs following a relocation of a data centre in North America. The restructuring provision is the cost of redundancies and other cost associated with the restructuring and was fully utilised in the year.

70



The ageing of provisions at 31 December 2013 is analysed as follows:

Group 2013

£’000s

Group2012

£’000s

Company2013

£’000s

Company2012

£’000s

Current 842 1,530 725 1,319Non-current 138 175 – –

980 1,705 725 1,319

17 Deferred taxationDeferred tax comprises:

Deferred taxation – GroupAssets

2013Recognised

asset£’000s

2012Recognised

asset£’000s

2013Unrecognised

asset£’000s

2012Unrecognised

asset£’000s

Accelerated capital allowances 15 34 – –Overseas tax losses 399 297 873 941Share based payments 36 53 – –

As at 31 December 450 384 873 941

Liabilities2013

(Recognised liability)

£’000s

2012(Recognised

liability)£’000s

Fair value adjustment to intangible assets (51) (162)Other timing differences (498) (725)

As at 31 December (549) (887)

The total potential underlying tax losses and other timing differences at the year end were £9.51 million (2012: £6.94 million). Of the total potential deferred tax asset of £1.32 million (2012: £1.32 million), a total of £0.45 million (2012: £0.38 million), which represents 34% (2012: 29%) of the total potential asset, was recognised at the end of the year. Deferred tax has been calculated at an estimated average rate for the Group of 20% (2012: 29%). A proportion of the deferred tax assets for the Group has been recognised as, in the opinion of the directors, this is the probable level of the recoverability of such losses.

Deferred taxation – CompanyAsset and liability

2013Recognised

asset/ (Recognised

liability)£’000s

2012Recognised

asset/ (Recognised

liability)£’000s

2013Unrecognised

asset£’000s

2012Unrecognised

asset£’000s

Share based payments 36 53 – –Other timing differences (68) (44) – –

As at 31 December (32) 9 – –

71

Movements in deferred tax assetsGroup

2013Recognised

asset£’000s

Group2012

Recognised asset

£’000s

Company2013

Recognised asset

£’000s

Company2012

Recognised asset

£’000s

As at 1 January 384 649 53 9Differences in tax rates (8) (11) (11) (3)Recognised/(utilised) in the year 84 (260) (1) 25Tax credited directly to equity (5) 22 (5) 22Exchange differences (5) (16) – –

As at 31 December 450 384 36 53

Movements in deferred tax liabilitiesGroup

2013(Recognised

liability)£’000s

Group2012


£’000s

Company2013


£’000s

Company2012


£’000s

As at 1 January (887) (1,260) (44) (194)Differences in tax rates 116 40 6 3Utilised/(recognised) in the year 222 333 (30) 147

As at 31 December (549) (887) (68) (44)

No deferred tax liability with respect to unremitted earnings has been recognised at the balance sheet date. Undistributed profits available to be remitted to the UK should meet the requirements of the UK dividend exemption and should, therefore, be exempt from UK corporation tax. No deferred tax liability has been recognised with respect to the value of the underlying subsidiaries since, in the event of a sale, a gain or loss arising on disposal should meet the UK Substantial Shareholders Exemption criteria and, therefore, be exempt from UK corporation tax. The Finance Act 2013 included legislation to reduce the main rate of corporation tax from 23% to 21% from 1 April 2014 and from 21% to 20% from 1 April 2015. As these changes were substantively enacted on 2 July 2013 and therefore before the balance sheet date, UK deferred tax is recognised at 20% in the current period. The rate changes will impact the amount of future tax payments to be made by the Company.

18 Financial instruments and financial risk managementThe Company’s and Group’s key financial risks and its approach to managing these risks are described in the Financial Review on pages 18 and 19.

a) Financial instrumentsThe Group’s financial instruments comprise cash, money market deposits, bank loans, provisions, derivative financial instruments and various other accounts receivable and accounts payable, that arise directly from its operations.

Cash and money market deposits, when held, are carried at fair value. All financial assets except derivatives belong to the category ‘loans and receivables’ in IAS 39. All financial liabilities except derivatives are held at amortised cost. The only derivative financial instruments relate to forward currency contracts which are purchased from banks and are considered Level 2 financial instruments in accordance with IFRS 7.

Bank loans are recorded at the value of the proceeds received less any direct issue costs which, due to the short-term nature of these instruments, approximates to fair value. They are subsequently stated at cost plus accrued interest, less any repayments which, due to the short-term nature of these instruments, approximates to amortised cost using the effective interest rate method.

72



Contingent consideration provision is considered a Level 3 financial instrument; further information on contingent consideration can be found in note 16.

Derivative financial instruments are used by the Group to hedge against various financial risks, such as foreign currency and interest rate risk. They are initially recognised at fair value and are designated by the entity at fair value through profit or loss.

As at 31 December 2013, the Group held forward currency hedging contracts to mitigate the effects of currency exposure relating to non-sterling financial assets and liabilities, cash flows and investments. The fair value of forward currency contracts relating to commercial transactions is recognised through the income statement; the net unrealised gain in respect of these contracts as at 31 December 2013 was £74,000 (2012: £9,000). The fair value of forward currency contracts relating to hedging of net investments designated in hedge accounting relationships is recognised through equity, and the net unrealised gain relating to these contracts recognised through equity as at 31 December 2013 was £27,000 (2012: £14,000 loss).

The Company recognises financial instruments in its accounts when it enters into a binding agreement to receive cash or other economic benefits and derecognises them once all parties to the agreement have discharged all of their obligations.

Interest income and expenses are recognised in the income statement on an accruals basis. Realised gains and losses upon expiry of derivative financial instruments are recognised on settlement of the underlying contract.

Financial assetsThe Group’s and Company’s financial assets at the year end are analysed as follows:

2013Group£’000s

2012Group£’000s

2013Company

£’000s

2012Company

£’000s

Cash and cash equivalents 4,014 3,681 1,331 1,005Financial instruments 102 32 102 32Rental deposits falling due after more than one year 135 231 – –Rental deposits falling due within one year 224 87 – –Trade debtors 4,317 5,161 – –Accrued income 212 161 – –

9,004 9,353 1,433 1,037

Financial liabilitiesCommitted facilitiesIn May 2012 an agreement was signed with The Royal Bank of Scotland plc to extend our existing financing facilities until May 2015. We exercised an option to extend the facility to May 2016 and we have an option to extend for a further year to May 2017, subject to customary covenants and terms. At 31 December 2013, the facility was £8.5 million (£6.5 million of which is available as a revolving credit facility, reducing by £0.5 million tranches every six months to a minimum of £5.5 million). This restructured facility strengthens our financial position and provides financing options at a commercial cost and provides more flexibility than the previous arrangement, which was negotiated in early 2009.

As a result the facilities available as at 31 December 2013 comprise:

• Multi-currency fully revolving three-year amortising facility amounting to an initial value of £8 million (£6.5 million at December 2013) with six-monthly repayments of £0.5 million reducing the facility to a minimum of £5.5 million.

• Flexibility to repay early with no penalty and to redraw within the amortising limits.• Option to extend for a further year to May 2017 (subject to The Royal Bank of Scotland plc Credit Committee approval and

compliance with covenants).• Multi-currency revolving working capital loan of £2.0 million (£2.0 million available at December 2013).

73

There are covenants associated with the facility primarily relating to the gearing (net debt/EBITDA), interest cover and debt service ratios. Repayments of the facilities are on a six-monthly basis and, subject to compliance with the covenants, the facility remains committed until May 2016. As part of the secured financing arrangement with The Royal Bank of Scotland plc, the bank has security over certain Group assets, including pledges over shares in certain subsidiaries.

The maturity of the Group’s financial liabilities as at 31 December 2013 was as follows:

Payable in 1 year or less£’000s

Payable in more than

1 but less than

2 years£’000s


2 but less than

5 years£’000s

31 December2013Total

£’000s

Bank loans and overdrafts 12 – – 12Trade creditors 769 – – 769Other creditors and accruals 2,352 – – 2,352Provisions – contingent consideration 725 – – 725Provisions – onerous contracts 117 28 110 255

3,975 28 110 4,113

The maturity of the Group’s financial liabilities as at 31 December 2012 was as follows:



1 but less than

2 years£’000s


2 but less than

5 years£’000s

31 December 2012Total

£’000s

Bank loans and overdrafts 14 – – 14Trade creditors 668 – – 668Other creditors and accruals 2,508 – – 2,508Provisions – contingent consideration 1,319 – – 1,319Provisions – restructuring 125 85 – 210Provisions – onerous contracts 86 90 – 176

4,720 175 – 4,895

All trade creditors are due in less than three months.

The maturity of the Company’s financial liabilities as at 31 December 2013 was as follows:



1 but less than

2 years£’000s


2 but less than

5 years£’000s

31 December 2013 Total

£’000s

Bank loans and overdrafts – – – –Trade creditors 48 – – 48Other creditors and accruals 447 – – 447Payable to subsidiaries 15,230 – – 15,230Provisions – contingent consideration 725 – – 725

16,450 – – 16,450

74



The maturity of the Company’s financial liabilities as at 31 December 2012 was as follows:



1 but less than

2 years£’000s


2 but less than

5 years£’000s


£’000s

Bank loans and overdrafts – – – –Trade creditors 56 – – 56Other creditors and accruals 442 – – 442Payable to subsidiaries 16,000 – – 16,000Provisions – contingent consideration 1,319 – – 1,319

17,817 – – 17,817

Net investment in foreign operationsAs part of our liability management, in order to provide a partial currency hedge against movements in the fair value of investments in overseas subsidiaries, we have made use of currency swaps to create synthetic currency hedges denominated in a mixture of currencies (USD, CAD, and EUR). At 31 December 2013, the Group had currency swaps in place, with a notional principal amount of £5.19 million (2012: £5.23 million) as synthetic loan hedges. The Group recognised a net gain on the hedging instrument of £0.13 million (2012: £0.14 million) in equity.

b) Financial risk managementInterest rate riskFinancial assets as at 31 December 2013

At floating interest rates

£’000s

At fixed interest rates

£’000s

Non-interest bearing

£’000sTotal

£’000s

Weighted average

interest rate%

Sterling 1,068 – 266 1,334 0.4%US dollar – – 728 728 –Euro 120 – 1,409 1,529 0.3%Swiss franc – – 165 165 –Australian dollar – – 57 57 –Canadian dollar – – 342 342 –South African rand 34 – 238 272 3.5%Hong Kong dollar – – 48 48 –

1,222 – 3,253 4,475

Financial assets as at 31 December 2012At floating

interest rates£’000s


£’000s

Non-interest bearing

£’000sTotal

£’000s

Weighted average

interest rate%

Sterling 587 – 1,193 1,780 0.2%US dollar – – 518 518 –Euro 13 – 831 844 1.5%Swiss franc – – 127 127 –Australian dollar – – 89 89 –Canadian dollar – – 343 343 –South African rand 91 – 205 296 3.5%Hong Kong dollar – – 34 34 –

691 – 3,340 4,031

75

Floating rate financial assets comprise cash, rental deposits and short-term bank deposits bearing interest based on bank base rates. The non-interest bearing financial assets represent rental deposits and cash balances held in non-interest bearing accounts in overseas entities. Trade debtors of £4.32 million (2012: £5.16 million) have been excluded from the above tables and are non-interest bearing.

Financial liabilities as at 31 December 2013At floating



£’000s

Non-interestbearing

£’000sTotal

£’000s

Canadian dollar – – 167 167US dollar – – 88 88Euro 12 – 725 737

12 – 980 992

Financial liabilities as at 31 December 2012At floating



£’000s

Non-interestbearing

£’000sTotal

£’000s

Sterling – – 78 78Canadian dollar – – 1 1US dollar – – 184 184Euro 14 – 1,476 1,490Australian dollar – – 3 3

14 – 1,742 1,756

Trade creditors, other creditors and accruals and other taxes of £4.40 million (2012: £4.29 million) have been excluded from the above tables and are non-interest bearing.

Floating rate financial liabilities predominantly relate to bank loans in sterling, Canadian dollars, US dollars and euros. Some debt is denominated in currencies in order to provide a currency hedge for profits generated by overseas subsidiaries and the investments in those overseas net assets.

As at 31 December 2013 the Group had no material borrowings and therefore it has not assumed any risk sensitivity to reasonably possible changes in interest rates (with all other variables held constant) on the Group’s profit before tax through the impact of floating rate borrowings. The Group did not assume any risk sensitivity in 2012 as it had no borrowings.

Currency riskThe Group’s principal exposure to exchange rate fluctuations arises on the translation of overseas net assets and trading results into sterling for accounting purposes. The Group has a minimal transaction risk as most of the transactions are invoiced by the entities in their local currency. Where there are material exposures, these are covered by taking out currency contracts to eliminate the exposure. However, offsetting revenues against costs in the same currency reduces this risk so that only the residual accounting profit translation element is at risk. The balance sheet exposures are minimised by reducing the net asset exposure, for example, by arranging borrowings in local currency where appropriate. Where the resulting hedge qualifies for hedge accounting under IAS 39 the gains and losses on the translation of both the loan and the investment are deferred in equity. As the Group continues to grow and generates greater net profits overseas this exchange rate exposure will increase. Following the increase in the percentage of the Group’s operations that are overseas, the exposure to US dollars and euros in particular has increased.

The table below shows the estimated sensitivity of the profit before tax and the net assets to movements in the key exchange rates to which the Group is exposed. If the US dollar and the euro strengthen/(weaken) against sterling this is expected to increase/(decrease) profits as shown below.

76



Change in GBP vs. currency

Effect on profit before

tax £’000s

2013Sterling/US dollar +5% 122

-5% (111)Sterling/euro +5% 169

-5% (153)

2012Sterling/US dollar +5% 116

-5% (105)Sterling/euro +5% 161

-5% (146)

The main balance sheet translation exposure is to the revaluation of goodwill denominated in foreign currency; the largest component relates to the goodwill arising on the acquisition of FRI, a Canadian business, and is denominated in Canadian dollars. A depreciation of 10% in sterling against the Canadian dollar would result in a £1.1 million increase in net assets and an appreciation of 10% in sterling against the Canadian dollar would result in a £1.1 million decrease in net assets.

The fair value of all financial assets and liabilities is approximately equal to book value. The Group has a forward foreign exchange facility which allows the Group to hedge foreign exchange exposures. The Group does not permit anyone in the Group to trade in financial instruments.

Counterparty credit riskThis is the risk that a counterparty will be unable to pay amounts in full when due. Credit risks are associated with deposits with banks and receivables from customers. The Group takes into account the credit risk of the counterparty to any major bank deposits but currently the level of bank deposits is such that this is not considered a material risk. There is no large concentration of credit risk with customers as the largest customer group currently represents less than 6% of projected Group revenues. The maximum exposure to credit risk comprises the value of the Group’s cash and debtor balances from time to time.

Liquidity riskThis is the risk that the Group will have insufficient funds to meet its cash obligations when due. The Group manages this risk by close monitoring of projected cash collection from customers and cash obligations to suppliers and salary payments to staff, as well as all other cash commitments. At 31 December 2013, the Group also had £8.50 million headroom under its committed revolving credit and overdraft facility in addition to cash reserves to reduce the risk that an unforeseen change in the Group’s liquidity position will result in a breach of statutory or other payment obligations.

77

The table below summarises the maturity of the Group’s financial liabilities as at 31 December 2013 and 2012 based on contractual undiscounted payments.

The Group’s liquidity risk – 31 December 2013

On demand£’000s



1 but less than

2 years£’000s


2 but less than

5 years£’000s


£’000s

Non-derivative financial liabilitiesInterest bearing loans and overdrafts – 12 – – 12Trade creditors and other payables – 3,121 – – 3,121Other liabilities – 842 28 110 980

– 3,975 28 110 4,113

Derivative financial liabilitiesForeign exchange forward contracts outflow – 7,471 – – 7,471Foreign exchange forward contracts inflow – (7,577) – – (7,577)

– (106) – – (106)

The Group’s liquidity risk – 31 December 2012

On demand£’000s



1 but less than

2 years£’000s


2 but less than

5 years£’000s


£’000s

Non-derivative financial liabilitiesInterest bearing loans and overdrafts – 14 – – 14Trade creditors and other payables – 3,176 – – 3,176Other liabilities – 1,530 175 – 1,705

– 4,720 175 – 4,895


– (36) – – (36)

78



The Company’s liquidity risk – 31 December 2013

On demand£’000s

Payable in 1 year

or less£’000s


1 but less than

2 years£’000s


2 but less than

5 years£’000s


£’000s

Non-derivative financial liabilitiesInterest bearing loans and overdrafts – – – – –Trade creditors and other payables – 495 – – 495Other liabilities – 725 – – 725Payable to subsidiaries – 15,230 – – 15,230

– 16,450 – – 16,450


– (106) – – (106)

As noted in the Financial Review, the Group has a further £8.50 million of undrawn facilities available to it under the terms of its revolving credit and working capital facilities.

The Company’s liquidity risk – 31 December 2012

On demand£’000s



1 but less than

2 years£’000s


2 but less than

5 years£’000s


£’000s

Non-derivative financial liabilitiesInterest bearing loans and overdrafts – – – – –Trade creditors and other payables – 498 – – 498Other liabilities – 1,319 – – 1,319Payable to subsidiaries – 16,000 – – 16,000

– 17,817 – – 17,817


– (36) – – (36)

Capital riskThe Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain further development of the business. The Board monitors the composition of investors as well as the return on capital, measured as earnings per share (profit attributable to shareholders divided by the weighted average number of Ordinary Shares in issue during the year). The capital managed by the Group comprises equity of £46.91 million (2012: £49.62 million) and borrowings of £12,000 (2012: £14,000) as capital.

79

19 Obligations under operating leasesThe total of future minimum lease payments under non-cancellable operating leases are:

2013£’000s

2012£’000s

Land and buildingsDue within one year 987 1,165Due between one year and five years 3,378 1,788Due beyond five years 1,301 45

5,666 2,998

2013£’000s

2012£’000s

Other leasesDue within one year 41 66Due between one year and five years 30 37Due beyond five years – 1

71 104

A new operating lease commitment was entered into in December 2013 for a period of ten years.

Other leases relate to computer equipment under operating leases.

20 Called up share capital2013

£’000s2012

£’000s

Authorised125,000,000 (2012: 125,000,000) Ordinary Shares of 1p each 1,250 1,250

Allotted, called up and fully paid67,703,650 (2012: 67,703,650) Ordinary Shares of 1p each 677 677

The Company has only one class of Ordinary Shares in issue and there are no restrictions regarding voting or other distribution or repayment rights. At 31 December 2013 the Company held 225,000 shares in treasury (2012: 225,000), and therefore 67,478,650 Ordinary Shares is the number of shares that may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company under the FSA’s Disclosure and Transparency Rules, and for earnings per share calculations. The share premium account has remained the same (2012: £23.47 million).

No shares were issued in 2013.

80



Shares issued during 2012 comprised:OrdinaryShares of

1p eachNumber

Grossproceeds/

value£’000s

Expenses£’000s

Netproceeds/

value£’000s

Employee and executive options exercised 90,333 52 – 52Share placing 6,059,613 6,120 (314) 5,806

Total 6,149,946 6,172 (314) 5,858

Outstanding options over shares in the Company:

2013 2012

Number ofoptions

‘000s

Weighted average

exercise price

Number ofoptions

‘000s

Weighted average

exercise price

Outstanding at 1 January 5,959 110p 4,989 103pGranted 450 98p 3,350 106pExercised – – (90) 60pLapsed (164) 114p (2,290) 91p

Outstanding at 31 December 6,245 109p 5,959 110pExercisable at 31 December 1,108 90p 1,114 90p

For options outstanding at 31 December 2013, the exercise price and weighted average remaining contractual lives were as shown below:

Options outstanding Options exercisable

Exercise priceNo of

shares

Weighted average

remaining life (yrs)

No ofshares

Weighted average

remaining life (yrs)

60p 225,000 1.2 225,000 1.288p 200,000 2.8 200,000 2.898p 440,000 9.2 – –100p 1,562,500 3.5 682,500 1.4108p 2,400,000 8.2 – –130p 522,500 4.2 – –135p 895,000 3.4 – –

6,245,000 5.7 1,107,500 1.6

81

Share based paymentsUnder the approved and unapproved option schemes the Remuneration Committee can grant options to employees of the Group. Options are granted with a fixed exercise price which is typically issued at a premium to the market price. The contractual life is generally ten years from date of grant although occasionally a shorter period has been chosen. Options become exercisable after three years although exceptionally the period is shorter. Options issued to directors and senior executives carry performance criteria. There are other vesting conditions for options identified in the scheme rules, including performance conditions which are in the option terms with typically eps growth above a minimum hurdle, share price growth above a minimum level and a vesting period of three years. Options are valued using the Black-Scholes option-pricing model and the fair market value after consideration of market based performance conditions has been estimated using the following key assumptions:

2013Issue

2012Issue 1

2012Issue 2

2012Issue 3

Average exercise price 98p 100p 108p 108pAverage market price at date of grant 88p 89.5p 98.5p 98.5pTotal number of options under grant (granted after November 2002) 450,000 950,000 600,000 1,800,000Average vesting period (years) 3 3 3 3Expected volatility 25% 25% 25% 25%Option life (years) 7 7 7 10Expected life (years) 5 5 5 7Risk free rate 1.03% 1.35% 0.83% 0.83%Expected dividend yield 3.07% 2.95% 2.95% 2.95%Expected lapse rate 10% 10% 10% 10%Fair value of options issued in year 12.36p 10.98p 11.37p 12.81p

The risk free rate is based on the yield to maturity of a UK government bond for a term consistent with the assumed life of the options. The average share price in the year was 86p. The expected volatility level was determined by comparing the historic and current volatility for the Company and comparing with the average volatility for companies in the same sector to determine a reasonable estimate for the future volatility. The total charge in the income statement for the year relating to employee share based payments for the Group was £192,000 (2012: credit of £159,000) and for the Company was £13,000 (2012: credit of £197,000).

There were 1,107,500 options exercisable at the balance sheet date (2012: 1,114,367), with a weighted average exercise price of 90p (2012: 90p). The weighted average remaining contractual life for options outstanding at the balance sheet date is 5.67 years (2012: 6.36 years).

21 Related party transactionsDuring the year, the Group paid a fee of £14,658 (2012: £18,695) for training courses and other services supplied by Otos Limited, of which CR Bacon is a Director. The year end creditor balance with Otos Limited was nil (2012: £4,000).

StatPro Group plc made a financial support payment of £50,000 in 2013 (2012: £25,000) to The Freedom Index Company Ltd, a not-for-profit organisation, of which CR Bacon, Chairman, is a director. The Freedom Index Company Ltd is creating the Freedom Index benchmarks, which are made available free of charge to the asset management community. CR Bacon receives no fee for his services as a Director of The Freedom Index Company Ltd.

During the year, the Group paid a fee of £76,950 (2012: £183,600) for consultancy services supplied by MC Adorian (Non-Executive Director) in relation to StatPro Revolution sales initiatives including developing the sales function. The year end creditor balance with MC Adorian was nil (2012: £19,176).

82



The Company undertakes a range of transactions, including management recharges, with its subsidiaries, which are summarised as follows:

Company

Transactions with related parties

Balances (owed by)/ due to the Company

as at31 December

2013£’000s

Balances (owed by)/ due to the Company

as at31 December

2012£’000s

Payable to subsidiariesStatPro Limited (7,294) –Performa Consultants UK Limited (1,912) (7,607)StatPro SA (801) (690)StatPro France (232) (177)StatPro Inc (371) (3,916)StatPro Canada Inc (4,620) (3,610)

(15,230) (16,000)

Receivables from subsidiaries StatPro Limited – 3,234StatPro South Africa (Pty) Ltd 87 109StatPro North America Inc 4,311 4,327StatPro International S.a.r.l. 9,947 6,218

14,345 13,888

Company

Nature of transactions

Value of transactions

2013£’000s

Value of transactions

2012£’000s

Revenue from subsidiaries 12,058 11,397Expenses recharged from subsidiaries (10,684) (9,325)Expenses recharged to subsidiaries 3,383 3,078Interest paid to subsidiaries (723) (571)Interest received from subsidiaries 839 680Dividends received from subsidiaries 900 2,300

5,773 7,559

83

Key management includes the executive directors and other members of the Group Executive Board. The compensation paid or payable to the executive directors is shown in the directors’ Remuneration Report on page 43 and the share based payment charge relating to the executive directors is £40,000 (2012: £9,000). The compensation paid or payable to key management for employee services is shown below:

Key management compensation

Year to31 December

2013£’000s

Year to31 December

2012£’000s

Salaries and other short-term employee benefits 1,393 1,223Defined contribution pension benefits 46 77Compensation for loss of office – 75

1,439 1,375Share based payment 108 (213)

1,547 1,162

22 Reconciliation of profit before tax to net cash inflow from operating activitiesGroup

2013£’000s

Group2012

£’000s

Company2013

£’000s

Company2012

£’000s

Profit before taxation 3,113 3,782 4,855 5,380Dividends received – – (900) (2,300)Net finance expense 273 493 159 380

Operating profit 3,386 4,275 4,114 3,460Exceptional items 347 978 389 9

Operating profit before exceptional items 3,733 5,253 4,503 3,469Depreciation of property, plant and equipment 898 963 – –Loss on disposal of property, plant and equipment – 62 – –Amortisation of intangible assets 4,041 3,732 1,123 1,782Decrease/(increase) in receivables 993 (501) (79) (6,699)(Decrease)/increase in payables and provisions (107) 115 (1,325) 3,345(Decrease)/increase in deferred income (347) 715 – –Share based payments 192 (159) 13 (195)

Net cash inflow from operating activities before exceptional items 9,403 10,180 4,235 1,702Cash payments in respect of exceptional item – restructuring costs – (947) – (9)

Net cash inflow from operating activities 9,403 9,233 4,235 1,693

84



23 Analysis of changes in net cash/(debt)At

1 January 2013

£’000sCash flow

£’000s

Non-cash changes

£’000s

Exchange differences

£’000s

At 31 December

2013£’000s

Cash and cash equivalents (per balance sheet) 3,681 431 – (98) 4,014Overdrafts – – – – –

Cash and cash equivalents (per statement of cash flows) 3,681 431 – (98) 4,014Bank and other loans (14) – – 2 (12)

Net cash 3,667 431 – (96) 4,002

At1 January

2012£’000s

Cash flow£’000s

Non-cash changes

£’000s

Exchange differences

£’000s

At31 December

2012£’000s

Cash and cash equivalents (per balance sheet) 2,447 1,291 – (57) 3,681Overdrafts – – – – –

Cash and cash equivalents (per statement of cash flows) 2,447 1,291 – (57) 3,681Bank loans (net of issue costs deferred) (5,846) 6,250 (415) (3) (14)

Net (debt)/cash (3,399) 7,541 (415) (60) 3,667

24 Reconciliation of net cash flow to movement in net cash/(debt)2013

Group£’000s

2012Group£’000s

2013Company

£’000s

2012Company

£’000s

Increase/(decrease) in cash and cash equivalents in the year 431 1,291 326 (89)Movement on bank loans – 6,250 – 6,250Exchange movements (96) (60) – –Other non-cash movements – (415) – (415)

Movement in net cash/(debt) 335 7,066 326 5,746Net cash/(debt) at beginning of year 3,667 (3,399) 1,005 (4,741)

Net cash at end of year 4,002 3,667 1,331 1,005

85

25 PensionsThe Company operates a defined contribution pension scheme for directors and certain employees. The total costs of pension contributions during the year were £446,000 (2012: £478,000). Contributions outstanding at the end of December 2013 were £27,000 (2012: £26,000).

26 Contingent liabilitiesAs is normal for a group of our 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.

As noted in previous Annual Reports, the Group exercised its option to acquire a 49% non-controlling interest in SiSoft in June 2010 for an estimated contingent consideration of approximately £1.3 million. The vendors were disputing certain aspects of the valuation and the process has not been completed as originally expected and a legal process in the French Commercial Court is still ongoing. In 2013, we proposed an out-of-court settlement and the offer was accepted by 55% of the minority shareholders and as a result €1.16 million (£0.99 million) was paid out in July 2013.

The Board expects the remaining contingent consideration payable to the 45% minority shareholder party (22% of total shares in SiSoft) to be in the range of €0.7 million – €1.1 million (approximately £0.6 million – £0.9 million) and has increased the provision by approximately €0.4 million (£0.35 million). It is possible that it will not be fully resolved during 2014. There is also a risk that the final consideration determined by the Court, including related costs, will be higher than the amount provided, although the Board’s estimate of the measurement of the liability has not changed (allowing for fluctuations in exchange rates – see note 16).

27 Capital commitmentsAt 31 December 2013, the Group had expenditure committed but not yet incurred of £0.46 million relating to leasehold improvements and furniture for our new London office.

86


StatPro Group plc

FIVE YEAR RECORD

2013£’000s

2012£’000s

2011£’000s

2010£’000s

2009£’000s

Revenue– Continuing operations 32,486 32,001 31,715 33,131 31,556

Operating profit– Continuing operations (before exceptional items) 3,733 5,253 4,490 6,785 7,103– Exceptional operating items (347) (978) – (456) –

3,386 4,275 4,490 6,329 7,103Net finance expense (273) (493) (627) (708) (890)Exceptional gain on re-financing – – – – 1,158

Profit before taxation 3,113 3,782 3,863 5,621 7,371Taxation (1,030) (1,102) (955) (1,480) (1,813)

Profit after taxation 2,083 2,680 2,908 4,141 5,558

Profit attributable to equity shareholders 2,083 2,680 2,908 4,106 5,569Profit/(loss) attributable to non-controlling interests – – – 35 (11)

Adjusted EBITDA* 5,463 6,728 6,118 8,452 8,629

Cash inflow from operating activities 9,403 9,233 9,925 10,522 10,147

Free cash flow 3,277 3,476 3,865 4,647 6,274

Net assetsGoodwill and other intangible assets 53,524 57,683 59,045 59,378 53,164Property, plant and equipment 1,883 1,974 2,390 2,490 2,441Other assets and receivables 6,883 7,609 7,227 8,969 8,529Cash 4,014 3,681 2,447 1,757 2,366Current liabilities (18,514) (19,927) (19,445) (20,724) (17,078)Non-current liabilities (882) (1,400) (7,834) (8,741) (11,836)

Net assets 46,908 49,620 43,830 43,129 37,586

Shareholders’ equityShare capital 677 677 616 610 607Share premium 23,472 23,472 17,675 17,176 16,913Shares to be issued 63 63 63 528 695Treasury shares (249) (249) (249) (249) –Other reserves 7,650 10,776 11,760 12,551 8,569Retained earnings 15,295 14,881 13,965 12,513 10,773

Total shareholders’ equity 46,908 49,620 43,830 43,129 37,557Non-controlling interests in equity – – – – 29

Total equity 46,908 49,620 43,830 43,129 37,586

Net cash/(debt) 4,002 3,667 (3,399) (5,523) (8,891)

Earnings per share – basic 3.1p 4.3p 4.8p 6.8p 9.3p

Earnings per share – diluted 3.1p 4.3p 4.7p 6.6p 9.1p

Adjusted earnings per share* 4.5p 5.9p 5.7p 8.2p 9.0p

Dividends per share 2.8p 2.7p 2.6p 2.4p 2.1p

* Adjusted for amortisation of acquired intangibles, share based payments and exceptional items.

87

Annual General Meeting 14 May 2014 Final dividend for 2013 21 May 2014 Interim Report for 2014 August 2014 Interim dividend for 2014 5 November 2014Preliminary announcements of 2014 results March 2015Report and Accounts for 2014 April 2015

FINANCIAL CALENDAR

88


DIRECTORS AND ADVISERS

DirectorsCR Bacon Non-Executive ChairmanJMBT Wheatley Group Chief ExecutiveAM Fabian Group Finance DirectorMC Adorian Non-Executive DirectorSJ Clark Non-Executive DirectorJE Tozer Non-Executive Director

Secretary and registered officeAM FabianMansel CourtMansel RoadWimbledonLondon SW19 4AA

RegistrarsCapita Asset ServicesThe Registry34 Beckenham RoadBeckenhamKent BR3 4TU

NOMAD and BrokerCenkos Securities Plc6.7.8 Tokenhouse YardLondon EC2R 7AS

SolicitorsBoyes TurnerAbbots HouseAbbey StreetReading RG1 3BD

Registered AuditorsErnst and Young LLP1 More London PlaceLondon SE1 2AF

BankersThe Royal Bank of Scotland plc280 BishopsgateLondon EC2M 4RB

Financial PR ConsultantsNewgate Threadneedle Communications5th Floor 33 King William Street London EC4R 9AS

Company Registration no: 2910629Incorporated in England & Wales

+44 (0)1244 304 030

StatPro Ltd.Mansel CourtMansel RoadWimbledonLondon SW19 4AAUnited Kingdom

T: +44 20 8410 9876F: +44 20 8410 9877

StatPro France SARL62 Rue de laChaussée d’Antin,75009 Paris,France

T: +33 1 40 20 1200F: +33 1 40 20 1201

StatPro International S.a.r.l.148-150 Boulevard de la Pétrusse,L-2330 Luxembourg,Luxembourg T: +352 28 37 14 48F: +352 30 74 24 40

StatPro S.A.148-150 Boulevard de la Pétrusse,L-2330 Luxembourg,Luxembourg T: +352 30 74 24 1F: +352 30 74 24 40

StatPro Italia SrlVia EdmondoDe Amicis 53,20123 Milan,Italy

T: +39 02 00 693 1F: +39 02 00 693 605

Statpro office locations

StatPro (Deutschland) GmbHTaunusanlage 1,60329 Frankfurt am Main,Germany

T: +49 69 505 060 622F: +49 69 505 060 912

From 1 May 2014Kirchnerstraße 6-8D-60311 Frankfurt am Main,Germany

StatPro Inc.99 Summer Street,Suite 1660,Boston,MA 02110,USA

T: +1 617 692 1150F: +1 617 692 1151

StatPro Canada Inc.33 Yonge Street,Suite 1101,Toronto,Ontario M5E 1G4,Canada

T: +1 416 598 9500F: +1 416 598 9530

StatPro Canada Inc.1801 McGill College Avenue,Suite 750,Montréal,Quebec H3A 2N4,Canada

T: +1 514 842 5091F: +1 514 842 8809

StatPro South Africa Pty Ltd.Level 3,Clock Tower Office Suites,V&A Waterfront,Cape Town 8001,South Africa

T: 27 21 443 2140F: 27 21 418 3835

StatPro Australia Pty Ltd.Chatswood Chambers,Level 10,815 Pacific Highway,Chatswood, Sydney,NSW 2067,Australia

T: +61 2 9884 9045F: +61 2 9884 9027

StatPro Asia Ltd.Unit 4607-11,Level 46,The Center,99 Queen’s Road Central,Hong Kong,China

T: +852 3796 7065F: +852 3796 7000

For enquiries please email:[email protected]

www.statpro.com

Annual Report 2013

StatPro Group plcMansel CourtMansel RoadWimbledonLondonSW19 4AAUnited Kingdom

T +44 20 8410 9876F +44 20 8410 9877

www.statpro.com

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