(ARI) Active Risk

AIM:ARI

ACTIVE RISK GROUP PLC

("Active Risk" or "the Group",

formerly "Strategic Thought Group plc")

Half Year Results

for the six months ended 30 September 2011

Active Risk Group has developed and sells its innovative risk management software solution, Active Risk Manager ("ARM"). ARM is used by many leading international companies and on some of the world's most demanding projects. ARM is a web-based solution and recognised as the only comprehensive enterprise risk management software available today.

Key Points

·     Steady progress in H1

·     Revenue up by 12% to £3.39m (2010: £3.02m), including:

-     software licence sales of ARM up by 10% to £1.13m (2010: £1.03m)

-     services revenues up by 6% to £0.42m (2010: £0.39m)

-     support revenues up by 15% to £1.80m (2010: £1.57m)

·     12 major new ARM customers added

·     Reduction in loss before share-based payment charges, interest and tax ("LBIT") to £0.56m (2010: loss of £0.79m)

·     Statutory loss before tax of £0.63m - includes debit of £0.07m relating to share based payments (2010: loss before tax of £0.31m - includes credit of £0.48m relating to share based payments)

·     Underlying  loss per share reduced to 1.8p (2010: underlying loss per share of 2.7p)

Statutory loss per share of 2.0p (2010: loss per share of 1.1p)

·     Net cash up to £3.8m at 30 Sept 2011 (30 Sept 2010: £1.8m; 31 March 2011: £2.2m)

·     Placing in June 2011 raised £1.36m (net of expenses)

·     Change of name to "Active Risk Group plc" from "Strategic Thought Group plc"

·     Sales pipeline encouraging

Lynton Barker, Chairman of Active Risk, said,

"In the last year, we returned the Group to profitability, having made a number of fundamental organisational changes, including moving existing resource into frontline selling. We are now pleased to report that the Group has continued to make progress.  Licence sales of our risk management software product, ARM, in the six months to 30 September 2011 are 10% ahead of the same period last year.

We have made a good start to the second half of the year, adding a further five contracts since 30 September, including a major global construction company. Our financial position is robust and although current problems in Europe and slow economic growth in the US are factors of concern, at this stage our sales pipeline is sufficiently advanced for us to believe that the Group is positioned to meet market expectations."  

Enquiries:

ACTIVE RISK GROUP PLC

CHAIRMAN'S STATEMENT

Introduction

In the last financial year, we returned the Group to profitability, having made a number of fundamental organisational changes, including moving existing resource into frontline selling.  I am now pleased to report that the Group has continued to make progress.  Licence sales of our risk management software product, ARM, in the six months to 30 September 2011 are 10% ahead of the same period last year, with 12 new customers added.    

We took the decision to invest further in the US during the first half, strengthening the sales and marketing team there.  The impact so far has been positive, with increased in-bound leads and we are expanding into new markets for which ARM is a good fit.   We also intend to open a sales office in Australia in the second half to exploit the momentum we are seeing in that marketplace. 

I am pleased to report that the ongoing development of ARM is progressing well, in line with the three year product roadmap we crystallised in the last financial year. 

We also completed the name change of the Group, in the first half, to 'Active Risk Group plc' (from 'Strategic Thought Group plc').  This has allowed us to capitalise on the strong market position of ARM, which remains a market-leading solution in enterprise-wide risk management. 

While the general economic backdrop creates uncertainties, the sales pipeline continues to look encouraging and therefore sets the platform for the Group to meet current market expectations.  The Group's financial position remains robust, with net cash at £3.8m at the half year.   

Results

Total revenue for the six months to 30 September 2011 rose by 12% to £3.39m against the same period last year (2010: £3.02m), with increased contributions from all activities.  Software licence sales of ARM were up by 10% on the comparable period last year to £1.13m (2010: £1.03m).  Income from support revenues was 15% higher at £1.80m (2010: £1.57m), reflecting the increased licence sales of ARM. Services revenues were up by 6% year on year to £0.42m (2010: £0.39m).

Cost of sales, which includes the costs of our software development, consulting and support resources, was slightly lower than last year at £1.54m (2010: £1.59m).

On a like-for-like basis, administrative expenses before share-based payment costs were 13% lower than last year at £1.01m (2010: £1.16m).  This reflects the actions we took to reduce costs over the last financial year.  A charge of £0.07m for share-based payments (2010: credit of £0.48m) resulted in unadjusted administrative expenses of £1.08m (2010: £0.68m).

Selling and distribution costs were higher at £1.41m (2010: £1.06m) due to the investments we made in the sales and marketing team.

Before share-based payment charges, interest and tax, the loss before tax ("LBIT") was reduced to £0.56m (2010: £0.79m).  The Group's loss before tax was £0.63m (2010: loss before tax of £0.31m) and the loss per share was 2.0p (2010: 1.1p).

The Group's balance sheet remains robust.  Net cash at 30 September 2011 stood at £3.8m, significantly higher than at the same point last year (30 September 2010: £1.8m; 31 March 2011: £2.2m).  It includes the proceeds of a placing of 2.9m new ordinary shares in June, which raised £1.36m after expenses.

Dividend

As in previous years, the Group will not be paying an interim dividend.  Our focus is to build cash reserves that are appropriate for the scale of our business.  Higher levels of profitability are required before a dividend can be reasonably covered.

Operating Review

Software licence sales

We continued to make progress in both signing new ARM customers and selling additional licences to existing customers. During the period, the Group won contracts with 12 new customers (compared to ten for the previous year).  Our new wins for ARM included the following:

·   Emirates Nuclear Energy Corporation (ENEC)

·   Roads & Transport Authority, Dubai (RTA)

·   Fortescue, one of the world's largest producers and sea-borne traders of iron ore, based in Australia

·   Mirvac, a leading integrated real estate group in Australia

·   Ausenco, a global leader in engineering and project management services for the resources and energy sectors, with its corporate headquarters in Brisbane, Australia

·   United Airlines

We continue to win additional business from our existing customer base and I am pleased to report further contract wins from:

·   Alstom

·   Federal Aviation Agency

Sales Pipeline

We have strengthened our sales and marketing team in the US and this investment has so far proved positive with an increase in inbound leads and an expansion into new markets for the US.  Having made strong progress in Australia, including doubling our customer base there over the last six months, we will be opening a sales office in Australia in the second half of the year to take advantage of ARM's excellent fit for the strong economy.

Product Development

ARM 5.0 was released in early 2011.  More than 20% of our customer base is now using this release and customer feedback has been positive.   ARM 5.1 will be released in the second half of the year with further improvements in its functionality.

Outlook

I am encouraged by results in the first half and the steady progress the Group is making.  We have made a good start to the second half of the year, adding a further five contracts since 30 September, including a major global construction company. Our financial position is robust and although current problems in Europe and slow economic growth in the US are factors of concern, at this stage our sales pipeline is sufficiently advanced for us to believe that the Group is positioned to meet market expectations.  

Lynton Barker

Executive Chairman

Notes to the Accounts

1.            Basis of preparation

The unaudited interim accounts were approved by the Board of Directors on 9 November 2011 and have been prepared under the accounting policies set out in the 2011 annual report and in accordance with IAS34.

The financial information contained in this interim report does not constitute statutory accounts, as defined by S434 of the Companies Act 2006.  Statutory accounts for Active Risk Group plc for the year ended 31 March 2011, on which the auditors gave an unqualified opinion, have been delivered to the Registrar of Companies.

The Directors confirm that the Group has adequate resources to continue its operational existence for the foreseeable future and therefore continue to adopt the going concern basis for the preparation of the Interim Results.

The Directors believe that there is only one reportable segment and, therefore, no segmental disclosures required under IFRS 8 'Operating Segments' have been presented.

5. Interim statement

A copy of this interim statement will be sent to shareholders.  Additional copies are available on the Group's website, www.activerisk.com, or on request from the Group's registered office:

1 Grenfell Road

Maidenhead

Berkshire

SL6 1HN