Under chief executive Justin Wheatley, StatPro grew strongly during a transformational calendar 2006, though the market focused on below-forecast profits, despite the shortfall arising almost entirely due to sterling’s strength and the group’s dollar exposure. The figures were strong despite currency constraint, with adjusted pre-tax profits surging 56% higher to £2.6m, shy of the £2.9m envisaged by house broker Arbuthnot. Turnover grew by 35% to 14.6m, with organic growth good at 18% and acquisitions accounting for 17%.

As important as the headline numbers was growth in the recurring element of sales to £12.5m, which now represents 85% of the top line, and offers management and investors bags of visibility.

Of last year’s acquisitions, Australia’s Alphai and Kizen (a South African compliance product) were small bolt-on deals, with the most important deal being FRI, almost as big as StatPro in terms of sales. FRI, acquired for £25m, is a leading source of data on bonds and strengthened the group’s hand in the North American market. The deal also brings cross-selling benefits, with StatPro able to sell data as well as software to its clients.

This year analysts are looking for growth in profits to £4.9m and in earnings to 7p (5.8p) from a top-line £23m, ahead of £6.5m from £28m by 2008. We think the forward rating of 13.7 times looks undemanding, given the group’s great cash-generative characteristics, recent move to dividends and healthy forecast earnings growth for the next two years. Buy.