StatPro performed well in the first half of 2008. Revenue was up by 15% to £13.07 million (H1 2007: £11.32 million) and sales of new software and data contracts were up 73% to £2.02 million (H1 2007: £1.17 million). However, profits were down in the first half by 45% to £1.02 million (H1 2007: £1.86 million); principally due to an exceptional charge related to the integration of Performa and the restructuring of our JSE team. In addition, with higher interest charges our profit before tax on an adjusted basis was also down by 9% to £1.90 million (H1 2007: £2.09 million), but adjusted EBITDA was up 8% to £2.92 million (H1 2007: £2.71 million). Most importantly, the value of our recurring annual contracts increased 26% to £23.78 million (June 2007: £18.81 million).

There are currently mixed signals from the market about what conditions will be like over the next six months, but it has become clear recently that achieving the expected new business level in the second half will be a much more challenging task. For that reason, we are planning the business on the basis of a more cautious outlook: putting on hold budgeted expansion of our cost base and also cautioning that current expectations could be difficult to meet should new sales slow down.
We believe that StatPro’s robust business model puts us in great stead during difficult market times. Furthermore, we believe we are in a position to offer our clients many ways to save money through consolidation of services. One new service is our Index service and we will also be making a concerted effort to move our existing clients to our “Software as a Service” (SaaS) model, thus saving on their IT costs. Another new service that looks likely to do well is our Complex Asset Pricing service that we have just launched.

Operations
The main events in the first half of 2008 were the acquisition of Performa Consultants UK Limited (“Performa”) and the migration of the Johannesburg Stock Exchange (“JSE”) development team from Toronto to Cape Town. Both these events went well and are expected to deliver cost savings of at least £1.0 million per annum. We were very pleased to enter into a profitable five year contract with JSE to deliver their new back office system with a dedicated team of nine people. It is also much easier to provide support now the whole team is based in South Africa.

We have continued to expand our North America sales team and have opened a new office in Boston. Whilst we still maintain a small office in New York, we have decided that strategically it makes more sense for us to base our planned growth in the vital US market in Boston, and we now have 10 employees there. We believe that our new products will give us the opportunity to increase our addressable market in the US and so fuel our growth.

We have appointed a new CEO to run our Australian business and he is due to join in October. We believe that Australia offers us significant growth opportunities similar to our successful South African business. We also intend to branch out into Asia now that we are able to offer SaaS type products which greatly reduce the cost of local support and sales.
We completed the move of our Montreal office earlier in the year (having moved our Toronto office late last year) and we have invested significantly in infrastructure that will aid our growth over the coming years. Importantly both our Toronto and Montreal offices have large capacity hosting facilities that will allow us to provide our clients with a variety of SaaS solutions and we are looking to increase significantly the number of SaaS clients from the current 20.

The result of this reorganisation is that StatPro is in good shape to grow further and develop new services for our clients in a more efficient manner.

Acquisition
Performa, a supplier of GIPS® compliance software, which was acquired on 20 February 2008, has been fully integrated into StatPro and we have already made some additional sales on the back of the acquisition. There are some significant one off costs associated with the integration, but the annual savings compensate for this. Our next challenge is to transfer our clients onto one single platform for our GIPS® solution as we now have two products. The strategy has been agreed and the development will take approximately 18 months to complete.

Strategy
We are about to launch our full Index Service which means we will be able to offer our clients an integrated solution for their analytics needs rather than just a software solution. Our objective is to offer clients more services so that they can reduce their costs. We believe this will help drive our business significantly as it also reduces the complexity of support and upgrades, whilst increasing case size.

Cross-selling has always been at the heart of StatPro’s strategy and our move to a centralised SaaS structure will accelerate our ability to do this. The trend is now clear with Asset Managers that they wish to out-source as many non-core critical services as possible so as to keep their focus on the management of money and we believe that we are well suited to help them.

Our new service for Complex Assets Prices (CAP), for assets such as CDO, CDS, IRS and other OTC derivative products, has been launched successfully and we are entering test phases with a number of clients. This service is likely to be driven by worsening market conditions as the mis-pricing of complex assets was one of the causes of the credit crunch. Based on the reception our new service has received so far in the US and Europe we remain confident that CAP will be a significant driver for our growth in 2009 and beyond. We also believe that this new service is less likely to be affected by current market conditions.

People
StatPro continues to grow and change and its ability to do so is down to the high quality of our people, many of whom are leading experts in their field. StatPro is very lucky to have such a talented team that is able to make such a difference. I would like to offer them my hearty thanks for all their efforts.

Dividend
The board is pleased to announce an interim dividend of 0.50p per share which is an increase of 11.1% on last year’s interim dividend of 0.45p. We intend to maintain a progressive dividend policy reflecting the balance between the investment needs of the business and growth in the underlying cash and earnings per share, as well as our confidence in our future.

Outlook
Despite benign conditions during the first half of the year, it is now the view of the Board that our market is likely to experience a worsening in trading conditions in the second half. Evidence of prospects and clients delaying decision making whilst cutting their own costs is now accumulating across the US and Europe. This points to the likelihood that financial belts are being tightened. Experience shows us that it is new sales that are impacted, rather than existing business. We also believe that some of the products we offer, being driven by regulation, will continue to sell well, but other products may see a slow down in new sales.

The Board also believes that StatPro needs to continue to invest in its business for long term growth. This investment together with the possibility of a slowing of new sales, therefore imply that it is likely that revenues and profits for the full year will be lower than expected.

Whilst this slow down will impact the growth in revenues from new business, the business continues to see a high level of recurring revenue (86% of total revenues) with a high level of renewals of recurring contracts (94%) which gives us a good defensive position in the current environment. Whilst we cannot affect the macro–economic environment, we will do everything we can to maximise our own opportunities.

Justin Wheatley
Chief Executive
1 August 2008