Â· Acquisition of ALPHAI, Australiaâs leading performance measurement software
Â· 14 client contracts for ASP performance solution
Â· Extends operations and client base into Australian market
In line with its strategy to acquire a complementary multi-product offering and its growth plans, StatPro, the AIM listed provider of portfolio analytics solutions for the global asset management industry, is pleased to announce the completion on 13 April 2006 of the acquisition of Alphai Pty Limited (âALPHAIâ), an Australian based supplier of performance measurement software solutions to asset managers globally.
StatPro is acquiring 100 per cent of ALPHAI for an initial consideration (before expenses) of A$3.25 million (approximately Â£1.36 million) and a deferred consideration, based on a multiple of revenue generated by the product acquired and the incremental revenues generated in the Australian market. The initial consideration comprises 1 million ordinary shares issued at 77 pence per share and A$1.41 million (approximately Â£0.59 million) in cash on completion. The consideration will be increased by the net assets as at 31 March 2006, estimated at A$0.2 million (approximately Â£0.08 million).
The deferred consideration will be payable in cash based on a multiple of 0.5 times the recurring revenue generated by the product acquired and the incremental revenues generated in the Australian market per annum for each of the three years ending 30 April 2009. The total consideration is capped at A$15 million.
The Board is expecting the acquisition of ALPHAI to be earnings enhancing in 2006.
Background to and reasons for the acquisition StatProâs strategy is to grow its product offerings and global reach. The acquisition of ALPHAI brings an application service provider (âASPâ) performance product which will strengthen our product offering globally. The ability to offer an ASP solution (a web based solution offered as a managed service) is becoming increasingly important as an alternative
service offering in the expanding market for performance and analytics solutions.
Furthermore, by acquiring an established Australian customer base and a physical presence in Sydney, the Enlarged Group will be able to serve the Australian market with the wider StatPro suite of portfolio analytics and enhance StatProâs strategic role in the industry.
ALPHAI was established by Bruce Graham and Margaret Rennie, who developed its ASP product, Max. ALPHAI now has 14 clients based in Australia, North America and Europe and reported revenue of A$1.2 million (approximately Â£0.5 million) for the year ended 30 June 2005. Profit before tax amounted to A$0.32 million (approximately Â£0.13 million) in the year ended 30 June 2005 compared to a profit before tax of A$0.19 million (approximately Â£0.08 million) in the previous year. ALPHAIâs trading for the nine months ended 31 March 2006 is encouraging with an increase in the profit before tax compared to the same period in the previous year. ALPHAI has four employees located in its Sydney office, who will be
integrated within the Group. Bruce Graham will become Managing Director for StatPro in Australia. ALPHAI also employs a senior sales director, Rick Bernier, based in the US. As a result of this acquisition, Rick will assume the position of sales director for StatPro Inc and will help drive our growth in the North American market. Professor Andrew Colin, StatProâs Fixed Income Research Director, will also be actively supporting the Groupâs growth plans as part of the enlarged Australian operations.
StatPro has an established track record of identifying and acquiring small entrepreneurial businesses which have excellent products and technical skills. By combining these successful entrepreneurial teams into the expanding StatPro global distribution network, and providing the investment and support to take the products to the next stage of development, the Group has been able to generate enhanced shareholder value. StatPro has now completed six acquisitions since March 2000.
Application has been made for the admission of the 1,000,000 ordinary shares to trading on AIM. The new shares will rank pari passu with StatProâs existing ordinary shares and dealings are expected to commence on 21 April 2006.
The Group plans to provide a trading update at its Annual General Meeting to be held at 6.00 pm on 17 May 2006.
Commenting on the transaction Justin Wheatley, Chief Executive of StatPro Group,
said: âThis is a very exciting opportunity to expand our product offering, acquire 14 more client relationships and a base in Australia and we are confident that the acquisition of ALPHAI will be a success and earnings enhancing.â
Commenting on the transaction Bruce Graham, MD of Alphai, said: âThe combination of StatPro and ALPHAI will be a compelling force in the investment performance and attribution market. StatProâs global coverage and proven technical expertise is an excellent fit with ALPHAIâs specialist products and staff. This deal secures the continued development of the MAX software whilst expanding our resource and support base for existing and potential customers.â