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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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Dicom Group | LSE:DCM | London | Ordinary Share | GB00B0L2K157 | ORD 2.5P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 183.00 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
RNS Number:1713O Dicom Group PLC 18 February 2008 Regulatory Announcement DICOM Group plc Interim Results 2008 - Six Months to 31 December 2007 Basingstoke, 18 February 2008 - DICOM Group plc ('DICOM' or the 'Company'), a leading provider of Intelligent Capture & Exchange solutions, today announces Interim Results for the six months ended 31 December 2007. Financial Highlights of the Interim Results (prepared under IFRS) * Turnover up 5% to £82.4m (2006: £78.5m) - Software licence turnover up 4% and software services up 18% in constant currency terms - Total software business revenues up 10% in constant currency terms * Gross profit margins increased to 55.9% (2006: 54.6%) * Adjusted operating profits up 15% to £8.1m (2006: £7.0m), an increase of 19% in constant currency terms * Adjusted operating profit margins up to 9.8% (2006: 9.0%) * Pre-tax profits up 1% to £6.1m (2006: £6m) * Adjusted earnings per share up 15% to 6.9p (2006: 6.0p)* * Net funds of £24.4m (£38.2m at 30 June 2007) after spending £11.2m on share buy back** * Proposed interim dividend up 15% to 0.82p (2006: 0.71p) * * Further details with regards to the calculation of adjusted earnings and adjusted profits are set out in note 6 to the financial results. * ** Further details with regards to technical issues concerning the share buy back are set out in the Chief Financial Officer's Financial Review. Operating Highlights * Achieved major customer wins at ING-DiBa, Emirates Airlines, Deutsche Bank, Prudential and China Merchant Bank * Remarketing agreement with HP to sell Kofax Intelligent Capture & Exchange solutions * Received numerous industry awards: - Technology Partner of the Year from Open Text Corporation - Editor's Choice Award from Document Manager Magazine - Named on Software Magazine's 25th Annual Software 500 List * Hosted Transform 07 in Budapest during November with more than 500 attendees and partners from 30 countries Post-Period End Activity * Reorganisation to position DICOM better for future growth: - Restructured corporation into vertically aligned, worldwide functions with global managers - Restructured the sales function into three groups better aligned with DICOM's products, markets and customers - Affected headcount reductions * Implementation of unified branding: - Proposal to change the name of the Company to "Kofax plc" Commenting, Reynolds C. Bish, Chief Executive Officer of DICOM Group said: "The strategic review I've conducted since joining DICOM in November 2007 has shown that the company remains fundamentally well positioned and financially sound but also that some strategic changes are necessary. In addition to accelerating previously announced changes in strategy, we have started to affect these further changes through the restructuring of both the company and our sales organization and with our proposed corporate rebranding. These moves have better focused all of our resources and we expect the appointment of an EVP of Worldwide Field Operations to further improve our sales management, productivity and visibility, plus provide a clearer focus on, and better execution of, key revenue growth strategies. "I and the Board remain confident that we will be able to continue to achieve 10% revenue growth in constant currency terms in our software business, with a higher than expected contribution from software services offsetting lower growth in software licenses during the remainder of this fiscal year. More importantly, despite an uncertain economic environment at the present time we remain enthused about DICOM's market opportunities and continue to target double digit revenue growth in our software business in future years." Webcast There will be a webcast available on the Company's website (http://www.dicomgroup.com) from 2pm today. For further information, please contact: DICOM Group plc Financial Dynamics Reynolds C. Bish Chief Executive Officer James Melville-Ross Stefan Gaiser Chief Financial Officer Juliet Clarke Gabriele Rosenbusch Head of Investor Relations Tel: +44 (0) 800 6520 616 Tel : +44 (0) 20 7831 3113 e-mail: stefan_gaiser@dicomgroup.com e-mail: dicom@fd.com gabriele_rosenbusch@dicomgroup.com About DICOM Group plc DICOM Group plc (LSE: DCM) is a leading provider of Intelligent Capture & Exchange solutions. For more than 20 years, DICOM has provided award-winning solutions that automate document-driven business processes by managing the transformation and exchange of business-critical information arising in paper, fax and electronic formats in a more accurate, timely and cost-effective manner. These solutions provide a verifiable return on investment to thousands of customers in financial services, manufacturing, retail, government, healthcare, business process outsourcing and other markets. DICOM delivers these solutions through a global network of more than 1,200 authorised partners, and its own sales and service organisations in the more than 60 countries throughout the Americas, EMEA and Asia Pacific. For more information, visit www.dicomgroup.com. Chief Executive's Review Business Review Operational overview I am pleased to report that the company achieved 10% year on year growth in our software licenses and services business in constant currency terms. Strong growth in services offset lower than anticipated growth in licenses, which together contributed to gross margin increasing to 55.9% from 54.6%. Adjusted operating profits increased 15% year on year (19% in constant currency terms), and operating margins increased to 9.8% from 9.0%. In addition, adjusted EPS increased by 15% (20% in constant currency terms). Major customer wins during the period included ING-DiBa, Emirates Airlines, Deutsche Bank, Prudential and China Merchant Bank. A further endorsement of our products came in the form of a remarketing agreement with HP for our Intelligent Capture & Exchange solutions, including our Document Exchange Server software, which will be integrated with HP imaging and printing products to provide a more complete solution for customers. We are also pleased to note that DICOM has received a number of industry awards, including: "Technology Partner of the Year 2007" by Open Text Corporation, a global leader in ECM, Editor's Choice Award from Document Manager Magazine and Software Magazine's Software 500 ranking of the world's largest software and service providers. Reorganisation Since my arrival as CEO, I have conducted a thorough review of the strategy, structure and branding of the company. Following this review it is clear that certain additional measures are now needed to accelerate progress with DICOM's stated strategy of focusing on the software license and services portion of its business. As a result of my review, DICOM's organizational structure has been reorganized to better align and focus its resources. In the past, most line and staff functions were decentralized and widely distributed throughout the world, with both regional and country managers acting as general managers and being responsible for all of these functions and for revenue generation. With this reorganization, all line and staff responsibilities have now been consolidated into vertically aligned, worldwide functions under global managers reporting to me. The essential purpose of this change is to enable us to execute in a more consistent and cost effective manner and to focus management efforts more clearly on revenue generation activities. In addition, DICOM's sales function has been reorganized to better align and focus our resources. In the past, the sales function was decentralized and widely distributed throughout the world, with regional and country managers being responsible for selling all of the company's products. With this reorganization, the sales function has now been separated into three groups better aligned with DICOM's products, markets and customers, namely: (1) applications software, (2) OEM software, and (3) our European hardware distribution business. We are confident that this will allow sales employees to better focus their selling efforts, create clearer lines of authority, responsibility and accountability as well as improve sales management and increase sales productivity. To support this change, we will be appointing an Executive Vice President of Worldwide Field Operations to manage the sales function and all other customer facing activities on a global basis. Proposed Change of Name As a further consequence of my strategic review, the Board is proposing to change the name of the company to "Kofax plc". There has been confusion both internally and externally over the various brands used by the company in the past, many of which have arisen through acquisition. Among all DICOM brands and products, Kofax clearly emerges as the brand with the highest awareness among stakeholders on a worldwide basis, having been recognised as the leading capture software for the past twenty years. Furthermore, the respected products and innovations that have emerged from Kofax most closely define the direction in which the company is now heading. Assuming the necessary resolution is passed by shareholders on 18 February 2008, it is anticipated that the change of name, and trading under the new ticker ' KFX', will take effect from 8.00am on 19 February 2008. The ISIN number for the Company's shares will remain unchanged. Board Changes On 5 November 2007 I succeeded Rob Klatell as Chief Executive Officer and a member of the Board of Directors of DICOM. Along with the rest of the Board, I would like to thank Rob for his efforts on behalf of the Company. As a result of the reorganisation described above, Urs Niederberger, previously DICOM's Chief Operating Officer, has now resigned from the Board of Directors. The Board would like to extend its thanks to Urs for his efforts on behalf of the company over the past ten years and wish him well in his future endeavours. Exceptional Charge As a consequence of the restructuring and rebranding proposal described above, DICOM has now made approximately 50 redundancies, closed certain facilities and will record an exceptional charge of £3.5 to £3.8 million in the second half of this financial year. It is expected that these changes will lead to significant cost savings over time, which will allow the Board to increase its investment in initiatives that will drive growth in our software business, including the hiring of key personnel, improving our corporate infrastructure and supporting the rebranding process. Revenue Growth Strategies With a view to delivering long term shareholder value, I have identified and we will be executing on four key revenue growth strategies, namely: (1) increasing market share in our current markets, (2) establishing a leading position in the front office capture market, (3) extending our market reach with a new hybrid go-to-market model and (4) augmenting our organic growth with very carefully selected and planned strategic acquisitions in order to gain competitive advantage. Our first revenue growth strategy is to increase market share by taking advantage of documented growth opportunities in our existing markets and thereby grow our revenues with or exceed those market growth rates. We will seek to maintain and extend our market leader position in batch capture by better leveraging our existing channel partners and installed base of end users and expanding our global network of channel partners. In addition, we will aim to improve our newly secured top five position in the transaction capture market by further leveraging our channel partners and better selling these solutions into our installed base of end users. Secondly, we will aim to establish a top five position in the front office or ad hoc capture market using our Document Exchange Server software and related new software product offerings. These solutions are designed to facilitate the capture and processing of documents where they originate as opposed to centralized, back office environments, and thereby make our customers more competitive in addition to enabling significant cost savings. This allows us to enter a new segment of the market with a different and more important value proposition, which we believe is more strategic to both our end user customers and channel partners and will allow us to further leverage these assets. Thirdly, we intend to move to a hybrid go-to-market model to expand our market reach. This will continue to utilize and expand our existing channels of resellers, VARs and system integrators, but also extend our sales efforts to include significantly more direct engagements with larger end user customers at the enterprise level of the market. Direct engagements in these opportunities will allow us to better meet customer needs and strengthen our competitive position while allowing us to still honour the contributions of our channel partners when appropriate. Outlook I and the Board are confident that we will be able to continue to achieve 10% revenue growth in constant currency terms in our software business this fiscal year, with a higher than expected contribution from software services continuing to offset lower growth in software licenses. More importantly, despite an uncertain economic environment at the present time, we remain enthused about DICOM's market opportunities and continue to target double digit revenue growth in our software business in future years. Extraordinary General Meeting The Company will be convening an extraordinary general meeting to address the technical issues concerning reserves as described in the Financial Review, notice for which will be dispatched to all shareholders shortly. Reynolds C. Bish Chief Executive Officer Financial Review Software Business turnover The table below provides a summary of our software licence turnover by capture market segment and product line. Batch Capture and Transaction Capture turnover both grew by 8% in constant currency terms. Overall Applications Software turnover was negatively impacted by a continuing decline in Communications software, which decreased 17%. Our OEM turnover continued to grow substantially but such growth was offset by an expected continuing decline in image processing software sales, resulting in only 2% overall growth in constant currency terms. Total license sales growth is reported at 4% in constant currency terms. Software services continued to grow strongly, up 18% in constant currency terms. Growth in total Software Business is reported at 10% in constant currency terms. Software business breakdown FY08 FY08 FY07 % Change 6 months to 31 December 2007 constant constant currency currency Applications Software £m £m £m Batch Capture 12.7 13.0 11.9 8% Transactional Capture 4.1 4.2 3.9 8% Communications 2.5 2.5 3.0 (17%) Total Applications Software 19.3 19.7 18.8 4% OEM 8.2 8.6 8.4 2% Software Licenses 27.5 28.3 27.2 4% Software Services 18.1 18.4 15.5 18% Total Software Business 45.6 46.7 42.7 10% Revenue by geographic segments The information set out in the table below provides the breakdown of sales per geographic segment. Revenue in the Americas decreased by 3%, mainly driven by a decrease in license sales of 9%. Reported revenue in the Americas has been negatively impacted by the weakened USD which is down 7% compared to the previous year period. Revenue in constant currency terms is up 4% in the Americas. EMEA enjoyed a very strong performance in license sales with growth of 16%. Software services grew at 13%. With the Hardware distribution business essentially flat, overall growth comes down to 7%. Due to strong license sales growth in Asia-Pacific in the last financial year we are able to report a substantial increase in software services of 114%. The hardware business in Asia has been discontinued other than as a short term accommodation for some customers and hence is reporting a substantial decrease. Nevertheless overall revenue growth in Asia amounts to 18% with a noticeable increase in our software business of 29%. Geographic turnover Americas Asia EMEA Total 6 months to 31 Dec 2007 £m % change £m % change £m % change £m % change Software Licences 13.3 (9%) 2.1 0% 12.1 16% 27.5 1% Software Services 6.7 10% 1.5 114% 9.6 13% 17.8 17% Hardware - - 0.3 (40%) 26.6 2% 26.9 0% Hardware Services - - 0.1 0% 10.1 9% 10.2 9% Total 20.0 (3%) 4.0 18% 58.4 7% 82.4 5% Total 31 December 2006 20.7 3.5 54.4 78.5 Taxation The tax charge of DICOM is reported at £2.3m which equates to an effective tax rate of 38% of pre-tax profits. The charge on the adjusted EPS is reported at £2.7m which represents an adjusted effective tax rate of 30% on adjusted pre-tax profits. The difference between the effective tax and the adjusted effective tax rate is mainly due to a release of deferred tax provisions on intangible assets. Earnings per share Basic Earnings per share are reported at 4.3p, a decline of 7%. Adjusted Earnings per share increased 15% to 6.9p from 6.0p in the comparable period. The Adjusted Earnings per share calculation excludes certain charges, including amortisation of intangible assets, share based payments, restructuring charges, goodwill reductions arising from the utilisation of previously unrecognised tax losses and fair value adjustments on financial instruments. Please see the Notes to the Financial Statements concerning further information about the basis upon which these calculations were made. Cash Flow Operating cash flow before restructuring payments are reported at £5.5m (2006: £4.9m). Net cash inflow from operations amounts to £0.5m, down from £3.0m which is solely due to higher tax payments and restructuring payments. The Group has spent £1.8m for tangible assets in the first six months to December 2007 compared to £1.9 in the comparable period. In addition, the Group spent £0.8m on earn-out agreements for past acquisitions and £0.7m for acquistion of minorities. The purchases of tangible assets and the above mentioned payments result in a total cash outflow from investing activities of £2.9m compared to £4.6m. The cash outflow from financing activities amount to £13.1m after having spent £11.2m on the share buy-back and the final dividend payment relating to the year ending 30 June 2007 of £1.3m (technical issues concerning these payments are described below). The Group therefore ended the period with a net funds position of £24.4m compared to £38.2m. Share Buy Back The Company announced its intention to buy back Company's issued share capital at the time of its Preliminary Results in August 2007. As per 18 February 2008 this programme has resulted in trades being entered into by the Company in respect of 6.7% of the Company's issued share capital. A technical issue has arisen in respect of the Company's ability to finally settle those trades. The Company's individual and consolidated accounts have always been prepared, reported upon and laid before shareholders in accordance with the Companies Act and there have always been sufficient reserves within the Group for the Group to have implemented the share buy back programme. Unfortunately, those reserves have not yet been transmitted to the Company as technically required by the applicable legislation. As a result, the Group is required to complete the transmission of the reserves to the Company before the buy back trades can finally be settled as a technical matter. The Board has been advised that this defect is remediable and anticipates that the Group's reserves position and therefore the final settlement of these trades will be regularised shortly. The Company will be writing to the relevant shareholders shortly in respect of the resolution of this technical problem. In the interests of providing as full information as possible to the Company's shareholders, notes have been included in the financial statements to illustrate the Group's financial position as subject to these technical difficulties in implementing the buy back programme as they prevailed at and to 31 December 2007. The position illustrated in those notes will be redundant once the Group's reserves position has been regularised and the relevant trades finally settled. Final Dividend At the annual general meeting on 13 November 2007, the Company declared a final dividend of 1.41p per ordinary share, the amount of which was paid on 14 December 2007 to all shareholders on the Register on 16 November 2007. The final dividend was approved by shareholders in accordance with the Company's articles of association and there were sufficient reserves within the Group for the Company to have paid that dividend in accordance with the Companies Act. Unfortunately, that dividend is similarly affected by the problem of the Group's reserves not yet having been transmitted to the Company as required by the applicable legislation. The Company has been advised that it may have theoretical claims against past and present shareholders in respect of the recovery of the amount of that dividend as a result of this technical issue. It is not the intention of the Board ever to pursue these claims. In the interests solely of finally remedying the position and releasing the theoretical claims arising as a result of this technical difficulty, the Company will be convening a further extraordinary general meeting shortly. Equally in the interests of providing as full information as possible to the Company's shareholders, notes have been included in the financial statements to illustrate the Group's financial position as subject to these technical difficulties in the payment of the final dividend as they prevailed at and to 31 December 2007. The position illustrated in those notes will similarly become redundant should shareholders approve the resolutions to be proposed at the extraordinary general meeting described above. Interim Dividend Conditionally upon receipt from Group companies of dividends sufficient to create the necessary distributable reserves, the Board has resolved to pay an interim dividend of 0.82p per ordinary share (2006: 0.71p). This represents an increase of 15% over the previous period. Subject to the resolution of the technical difficulties concerning the Group's reserves described above, which the Board anticipates will be regularised shortly, the dividend will be paid on 9 May 2008 to shareholders on the register as of 11 April 2008. Stefan Gaiser Chief Financial Officer Consolidated Income Statement (IFRS) In £'000 Note 6 months to 6 months to Year to 31 December 31 December 30 June 2007 2006 2007 unaudited unaudited audited restated Revenue 2 82,358 78,518 160,243 Cost of sales (36,355) (35,651) (69,873) Gross profit 46,003 42,867 90,370 (39,496) (37,617) (81, 553) Adjusted operating profit before* 8,081 7,048 15,543 Amortisation of acquired intangible assets (1,155) (1,155) (2,309) Reduction in goodwill arising on the utilisation of previously unrecognised tax losses - - (104) Restructuring costs - - (3,200) Share-based payment (419) (643) (1,113) Operating profit 6,507 5,250 8,817 Share of results of associated undertakings 110 55 57 Finance income 530 771 1,361 Finance expense (1,057) (60) (118) Profit before tax 6,090 6,016 10,117 Tax expense 4 (2,307) (1,920) (2,098) Profit for the period 3,783 4,096 8,019 Attributable to Equity holders of the parent 3,743 4,031 7,945 Minority interests 40 65 74 3,783 4,096 8,019 Earnings per ordinary share 6 > basic 4.3p 4.6p 9.1p > diluted 4.3p 4.4p 8.8p > adjusted 6.9p 6.0p 15.1p * Adjusted operating profit is KPI used by the group to help in assessing the underlying trading results of the Group. Consolidated Statement of Recognised Income and Expense in £'000 Exchange differences arising on retranslation of foreign operations and net investment hedge 3,946 (1,792) (2,648) Tax on items taken directly to or transferred from equity (219) - 995 Actuarial gain on defined benefit pension plan 72 - 162 Net (expense)/income recognised directly in equity - - (1,491) Profit for the period 3,783 4,096 8,019 Total recognised income and expense 7,582 2,304 6,528 Attributable to Equity holders of the parent 7,542 2,239 6,454 Minority interests 40 65 74 Total 7,582 2,304 6,528 Consolidated Balance Sheet (IFRS) In £'000 Note At At At 31 December 31 December 30 June 2007 2006 2007 unaudited unaudited audited restated Non-current assets Intangible assets 69,710 67,996 68,043 Tangible assets 4,281 4,045 3,652 Deferred tax assets 2,385 2,009 2,294 Investments 1,131 1,067 940 77,507 75,117 74,929 Current assets Inventories 9,467 8,364 7,328 Trade and other receivables 39,966 35,935 36,843 Investments 197 169 178 Cash and cash-equivalents 13 25,990 29,089 39,210 75,620 73,557 83,559 Total assets 153,127 148,674 158,488 Current liabilities Trade and other payables (43,138) (39,977) (42,803) Other financial liabilities (1,547) (777) (1,078) Liabilities for current tax (2,154) (3,835) (2,796) Provisions (1,054) - (2,750) (47,893) (44,589) (49,427) Non-current liabilities Other payables (8,562) (6,585) (7,946) Financial liabilities (7) (224) (11) Employee benefits (323) (557) (330) Deferred tax liabilities (2,606) (3,567) (2,533) (11,498) (10,933) (10,820) Total liabilities (59,391) (55,522) (60,247) Net assets 93,736 93,152 98,241 Capital and reserves Called up share capital 9 2,229 2,202 2,223 Share premium account 10 59,198 57,940 58,965 Foreign exchange reserve 10 2,170 (1,591) (1,557) Merger reserve 10 1,717 1,717 1,717 ESOP shares 10 (535) (526) (525) Treasury shares 10 (11,220) - - Profit and loss account 10 40,177 33,209 37,262 Shareholder's equity 11 93,736 92,951 98,085 Minority interests - equity - 201 156 Total equity 93,736 93,152 98,241 Consolidated Cash Flow Statement (IFRS) In £'000 Note 6 months to 6 months to Year to 31 December 31 December 30 June 2007 2006 2007 unaudited unaudited audited restated Cash flows from operating activities Operating profit 6,507 5,250 8,817 Depreciation and amortisation 2,319 2,399 4,737 Share-based payment expense 419 643 1,113 Reduction in goodwill arising on the utilisation of previously unrecognised tax losses - - 104 Movement in working capital (3,496) (4,682) (753) Movement in provision (204) (540) 2,210 Other non-cash movements (30) 1,786 (57) Cash generated from operations before restructuring 5,515 4,856 16,171 Payment under restructuring charge (1,492) - - Cash generated from operations 4,023 4,856 16,171 Income tax paid (3,545) (1,811) (3,258) Net cash inflow from operating 478 2,991 12,913 Cash flows from investing activities Purchase of tangible assets, licences and similar rights (1,833) (1,040) (1,917) Disposal of tangible assets, licences and similar rights 41 82 154 Acquisition of subsidiaries, net of cash acquired (839) (1,570) (1,079) Acquisition of minorities (667) - (1,683) Disposal of subsidiaries, net of cash disposed (16) (2,628) (1,464) Sale of non-current investments - - 89 Movement in long term loans to non-current investments - - 12 Interest received 418 528 1,222 Net cash outflow from investing activities (2,896) (4,628) (4,666) Cash flows from financing activities Issue of share capital 494 1,491 2,529 Increase/(decrease) in short term borrowings 3 (81) (126) Decrease in long term borrowings - - (20) Dividends paid to shareholders 5 (1,254) (1,083) (1,712) Share buy back 12 (11,220) - - Dividends paid to minority interests (69) - - Capital element on finance lease payments (5) (7) (6) Finance cost paid (1,048) (55) (104) Net cash outflow/(inflow) from financing activities (13,099) 265 561 Net decrease/(increase) in cash and (15,517) (1,318) 8,808 cash-equivalents in the period Cash and cash-equivalents at start of the period 38,566 30,991 30,991 Exchange rate effects 1,775 (962) (1,233) Cash and cash-equivalents at the end of the period 24,824 28,711 38,566 Cash and cash-equivalents consists of: Cash and cash-equivalents 13 25,990 29,089 39,210 Overdrafts (1,166) (378) (644) 24,824 28,711 38,566 Notes to the Financial Statements NOTE 1 BASIS OF PREPARATION This condensed consolidated interim financial information for the six months ended 31 December 2007 has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and with IAS 34, "Interim Financial Reporting" as adopted by the European Union. The interim financial information should be read in conjunction with the annual financial statements for the year ended 30 June 2007. The accounting policies adopted in these condensed consolidated interim financial statements are consistent with those of the annual financial statements for the year ended 30 June 2007 except for the following new standards, amendments to the standards and interpretations which are mandatory for the financial year ending 30 June 2008 and have been adopted in these condensed consolidated interim statements. The adoption of these standards and interpretations has had no material impact on these condensed interim statements: * IFRIC 10, "Interims and impairment", effective for annual periods beginning on or after 1 November 2006. * IFRS 7, "Financial instruments; Disclosures", effective for annual periods beginning on or after 1 January 2007. IAS1, "Amendments to capital disclosures", effective for annual periods beginning on or after 1 January 2007. As this interim report contains only condensed financial statements, and as there are no material financial instruments related transactions in the period, full IFRS 7 disclosures are not required at this stage. The full IFRS 7 disclosures, including the sensitivity analysis to market risk and capital disclosures required by the amendment of IAS 1, will be given in the annual financial statements. * IFRS 4, "Insurance contracts", revised implementation guidance, effective when an entity adopts IFRS 7. * IFRIC 11, IFRS 2, "Group and treasury share transactions", effective for annual periods beginning on or after 1 March 2007. The following new standards, amendments to standards and interpretations have been issued and are subject to EU endorsement. They are not effective for the financial year ending 30 June 2008 and have not been adopted early: * IFRIC 12, "Service concession arrangement", effective for annual periods beginning on or after 1 January 2008. Management do not expect this interpretation to be relevant for the Group. * IFRIC 13, "Customer Loyalty Programmes", effective for annual periods beginning on or after 1 July 2008. Management do not expect this interpretation to be relevant for the Group. * IFRIC 14, "IAS 19 - The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction", effective for annual periods beginning on or after 1 January 2008. Management do not expect this interpretation to be relevant for the Group. * IFRS 8, "Operating segments", effective for annual periods beginning on or after 1 January 2009. Management will review the impact of this standard on adoption, taking into account the management and organisation structure at that time. * IAS 23, "Borrowing Costs" (revised), effective for annual periods beginning on or after 1 January 2009. Management do not expect this revision to be relevant for the Group. The interim financial information is also subject to notes that have been included to illustrate aspects of the Group's financial position to and as at 31 December 2007 solely reflecting the technical position of the Group as a result of the difficulties in respect of the Group's share buy back programme and the Company's final dividend for the year ended 30 June 2007 arising from the Group's distributable reserves not having been transmitted to the Company for the purposes of those distributions to shareholders. The financial information contained in this interim statement does not amount to statutory financial statements within the meaning of section 240 Companies Act 1985. The financial statements for the year ended 30 June 2007, from which information has been extracted, were prepared under IFRS and have been delivered to the Registrar of Companies. The report of the auditors was unqualified in accordance with section 235 of the Companies Act 1985 and did not contain a statement under section 237 (2) or (3) Companies Act 1985. The interim financial statements were approved by the Board of Directors on 14 February 2008. Comparatives The comparatives for the half year ended 31 December 2006 have been restated to reflect the prior year adjustments as disclosed in the Annual Report for the year ended 30 June 2007. The net impact of these adjustments has been a decrease to net assets as at 31 December 2006 and net assets as at 1 July 2006 of £363,000. There is no impact to the profit of the group. In addition the presentation of certain prior year figures have been adjusted, so disclosure is on a consistent basis with the current year figures. NOTE 2 SEGMENT INFORMATION Revenue split 6 months to 6 months to Year to in £'000 31 December 2007 31 December 2006 30 June unaudited unaudited 2007 Revenue audited Licences 27,510 27,161 55,518 Services 18,119 15,505 32,097 Hardware 26,833 26,708 53,328 Hardware Maintenance 9,897 9,144 19,300 82,358 78,518 160,243 Finance revenue 572 771 1,361 Total 82,930 79,289 161,604 Primary reporting The Group's operations are managed and reviewed across three distinct geographical regions. The sales and services of the Group are managed within each geographic region for both operational and internal management reporting purposes. Although each geographical region operates separately, however the nature of operations is similar. £'000 America EMEA Asia-Pacific Elimination Total 6 months to 31 December 2007 unaudited Revenue external 20,013 58,322 4,023 - 82,358 Revenue inter-segment 6,942 523 - (7,465) - Segment revenue 26,955 58,845 4,023 (7,465) 82,358 Gross profit 15,400 28,781 1,822 - 46,003 Adjusted operating profit* 4,936 3,408 (263) - 8,081 Operating profit (segment result) 4,879 1,961 (333) - 6,507 Share of results of associated undertakings - 110 - - 110 Finance income - - - - 530 Finance expense - - - - (1,057) Profit before tax - - - - 6,090 Taxation - - - - (2,307) Profit after tax - - - - 3,783 Balance sheet Segment assets 81,121 105,515 6,317 (67,298) 125,655 Equity accounted investments - 1,131 - - 1,131 Unallocated assets - - - - 26,341 Total assets** - - - - 153,127 Segment liabilities (11,979) (38,879) (3,440) (1,401) (55,699) Unallocated liabilities - - - - (3,692) Total liabilities** - - - - (59,391) * Adjusted operating profit is stated before adding back amortisation of acquired intangibles, reduction in goodwill arising on the utilisation of previously unrecognised tax losses carried forward, restructuring costs and the share-based payment expense. Unallocated assets and liabilities comprise net funds and tax related items. ** These items within this note are predicated upon the technical regularisation of the Company's share buy back programme which is intended to be concluded by: (i) the due transmission of certain of the Group's reserves to the Company; and (ii) arrangements to be entered into with certain of the Company's shareholders who were subject to the Company's share buy back programme. To illustrate the Group's financial position subject to this technical regularisation, the following presentation would apply: £'000 America EMEA Asia-Pacific Elimination Total 6 months to 31 December 2007 unaudited Balance sheet Segment assets 81,121 114,906 6,317 (67,298) 135,046 Equity accounted investments - 1,131 - - 1,131 Unallocated assets - - - - 26,341 Total assets - - - - 162,518 Segment liabilities (11,979) (40,133) (3,440) (1,401) (56,953) Unallocated liabilities - - - - (3,692) Total liabilities - - - - (60,645) NOTE 2 SEGMENT INFORMATION (CONTINUED) £'000 America EMEA Asia-Pacific Elimination Total 6 months to 31 December 2006 unaudited Revenue external 20,654 54,405 3,459 - 78,518 Revenue inter-segment 7,365 604 - (7,969) - Segment revenue 28,019 55,009 3,459 (7,969) 78,518 Gross profit 14,060 28,313 494 - 42,867 Adjusted operating profit* 3,682 4,000 (634) - 7,048 Operating profit (segment result) 3,522 2,368 (640) - 5,250 Share of results of associated undertakings - 55 - - 55 Finance income - - - - 771 Finance expense - - - - (60) Profit before tax - - - - 6,016 Taxation - - - - (1,920) Profit after tax - - - - 4,096 Balance sheet Segment assets 68,676 103,877 4,359 (58,598) 118,314 Equity accounted investments - 1,067 - - 1,067 Unallocated assets - - - - 29,293 Total Assets - - - - 148,674 Segment liabilities (9,315) (39,430) (2,146) - (50,891) Unallocated liabilities - - - - (4,631) Total liabilities - - - - (55,522) * Adjusted operating profit is stated before adding back amortisation of acquired intangibles, reduction in goodwill arising on the utilisation of previously unrecognised tax losses carried forward, restructuring costs and the share-based payment expense. Unallocated assets and liabilities comprise net funds and tax related items. Note 2 Segment information (Continued) £'000 America EMEA Asia-Pacific Elimination Total Year to 30 June 2007 audited Revenue external 42,178 111,035 7,030 - 160,243 Revenue inter-segment 16,591 3,451 - (20,042) - Segment revenue 58,769 114,486 7,030 (20,042) 160,243 Gross profit 29,603 59,307 1,460 - 90,370 Adjusted operating profit 7,453 8,849 (759) - 15,543 Operating profit (segment result) 6,518 4,380 (2,081) - 8,817 Share of results of associated - 57 - - 57 undertakings Finance income - - - - 1,361 Finance expense - - - - (118) Profit before tax - - - - 10,117 Taxation - - - - (2,098) Profit after tax - - - - 8,019 Balance sheet Segment assets 70,357 99,809 4,727 (57,433) 117,460 Equity accounted investments - 940 - - 940 Unallocated assets - - - - 40,088 Total Assets - - - - 158,488 Segment liabilities (10,871) (39,565) (2,715) (3,309) (56,460) Unallocated liabilities - - - - (3,787) Total liabilities - - - - (60,247) * Adjusted operating profit is stated before adding back amortisation of acquired intangibles, reduction in goodwill arising on the utilisation of previously unrecognised tax losses carried forward, restructuring costs and the share-based payment expense. Unallocated assets and liabilities comprise net funds and tax related items. NOTE 3 PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION £'000 6 months to 31 6 months to 31 Year to December December 30 June 2007 2006 2007 unaudited unaudited audited restated Profit on ordinary activities before taxation is stated after charging: Total staff costs 28,529 27,516 56,155 Depreciation of tangible fixed assets 947 1,011 1,981 Amortisation of intangible assets 1,372 1,334 2,756 Goodwill adjustment - recognition of deferred tax asset from prior year business acquisition - - 104 Restructuring charge - - 3,200 Gain on disposal of tangible fixed assets (30) (23) (56) Foreign currency exchange gain/(loss) 149 (93) (175) Auditors' remuneration 307 227 696 Operating lease expense 2,440 2,435 4,555 Other operating expenses 5,782 5,210 12,337 Total operating expenses 39,496 37,617 81,553 Costs in the above table associated to research and development were £6.5m (2006: £5.4m). NOTE 4 TAX EXPENSE The reasons for the difference between the actual tax charge and the rate of corporation tax in the UK applied are as follows: £'000 6 months to 6 months to Year to 31 December 2007 31 December 2006 30 June 2007 Total profit before tax 6,090 6,016 10,117 Expected tax expense based on the standard rate in the UK of 30% 1,827 1,805 3,035 Tax losses not recognised in current period and different tax rates applied in overseas jurisdiction 872 423 934 Utilisation of previously unrecognised tax losses (234) (254) (1,055) Adjustments for provision in prior periods 11 62 54 Expenses not deductible for tax purposes and income not subject to tax 46 134 (564) Changes in tax rate (101) - - Tax on share of results of associated undertakings (33) (17) (17) Other differences (81) (233) (289) Total tax expense on operations 2,307 1,920 2,098 NOTE 5 DIVIDENDS - EQUITY 6 months to 6 months to 31 December 2007 31 December 2007 per share £'000 In respect of - ordinary shares of 2.5p Final dividend paid for 2007 1.41p 1,254* Total dividend 1.41p 1,254* *This note is prepared on the basis of the regularisation of the final dividend paid for 2007 which is intended to be concluded by: (i) the due transmission of certain of the Group's reserves to the Company; (ii) arrangements to be entered into with certain of the Company's shareholders who were subject to the Company's share buy back programme; and (iii) approval by shareholders at a forthcoming extraordinary general meeting of the Company. To illustrate the Group's financial position subject to this technical regularisation, the following presentation would apply: 6 months to 6 months to 31 December 2007 31 December 2007 per share £'000 In respect of - ordinary shares of 2.5p Final dividend paid for 2007 - - Total dividend - - Year to Year to 30 June 2007 30 June 2007 per share £'000 In respect of - ordinary shares of 2.5p Final dividend paid for 2006 1.23p 1,083 Interim dividend paid for 2007 0.71p 629 Total dividend 1.94p 1,712 Six months to Six months to 31 December 2006 31 December 2006 per share £'000 In respect of - ordinary shares of 2.5p Final dividend paid for 2006 1.23p 1,083 Total dividend 1.23p 1,083 NOTE 6 EARNINGS PER SHARE Basic earnings per share of 4.3p (2006: 4.6p) for the year to 31 December 2007 have been calculated based on the profit attributable to shareholders of £3,743,000 (2006: £4,031,000) using the weighted average number of ordinary shares in issue totalling 87.1m* (2006: 87.4m) during the period. Adjusted earnings per share of 6.9p (2006: 6.0p) for the year to 31 December 2007 are based on profit of £6,048,000 (2006: £5,239,000), being adjusted for the expenses as stated below using the weighted average number of ordinary shares in issue totalling 87.1m* (2006: 87.4m) during the period. The Board considers that adjusted EPS better reflects the underlying performance of the Group. Reconciliation of adjusted profit 6 months to 31 6 months to 31 Year to £'000 December December 30 June 2007 2006 2007 unaudited unaudited audited Profit for the period attributable to the equity holders of the parent 3,743 4,031 7,945 Reduction in goodwill arising on the utilisation of previously unrecognised tax losses - - 104 Amortisation of acquired intangible assets 1,155 1,155 2,309 Restructuring costs - - 3,200 Share-based payment expense 419 643 1,113 Fair value adjustments on financial instruments 1,085 (236) (112) Tax effect of above (354) (354) (1,350) Adjusted profit for the period attributable to the equity holders of the parent 6,048 5,239 13,209 Reconciliation of adjusted pre tax profit 6 months to 6 months to Year to £'000 31 December 31 December 30 June 2007 2006 2007 unaudited unaudited audited Profit on ordinary activities before taxation 6,090 6,016 10,117 Reduction in goodwill arising on the utilisation of previously unrecognised tax losses - - 104 Amortisation of intangible assets 1,155 1,155 2,309 Restructuring costs - - 3,200 Share-based payment 419 643 1,113 Fair value adjustments on financial instruments 1,085 (236) (112) Adjusted profit before tax 8,749 7,578 16,731 Diluted earnings per share of 4.3p (2006: 4.4p) for the year to 31 December 2007 have been calculated based on the post tax profit attributable to equity holders of the parent of £3,743,000 (2006: £4,031,000) using 88.0m* (2006: 90.6m) ordinary shares, the difference to the basic calculation representing the additional shares that would be issued on the conversion of all the dilutive potential ordinary shares. Adjusted, diluted earnings per share of 6.9p (2006: 5.8p) for the year to 31 December 2007 have been calculated based on profit of £6,048,000 (2006: £5,239,000), being adjusted for the operating expenses as stated above using 88.0m* (2006: 90.6m) ordinary shares. *These calculations of the number of ordinary shares are prepared on the basis of the technical regularisation of the Group's share buy back programme which is intended to be concluded by: (i) the due transmission of certain of the Group's reserves to the Company; and (ii) arrangements to be entered into with certain of the Company's shareholders who were subject to the Company's share buy back programme. The Group's position for the year to 31 December 2007 subject to this regularisation would be predicated upon a weighted average number of ordinary shares in issue totalling 88.8m, giving a basic earnings per share of 4.2p and an adjusted earnings per share of 6.8p; and a diluted earnings per share of 4.2p and adjusted diluted earnings per share of 6.7p. NOTE 7 PROVISIONS £'000 Group At 1 July 2006 (540) Arising during the year - Utilised 540 At 31 December 2006 - Arising during the year (2,660) Utilised 450 At 30 June 2007 (2,750) Arising during the year (170) Utilised 1,866 At 31 December 2007 (1,054) Last financial year the Company has started to implement a restructuring plan, which involved the reorganisation of the business and the manner in which the business is conducted. NOTE 8 ACQUISITION OF MINORITIES At the end of December 2007 the Group bought the minority shares of DICOM Informationstechnologie GmbH Austria for consideration of £667,000 this gave a rise of goodwill of £547,000, taking ownership of 100%. NOTE 9 SHARE CAPITAL The share capital of the Group and Company is as follows: Authorised Authorised Issued, called Issued, called up and fully up and fully paid paid number £'000 number £'000 At 30 June 2006 132,000,000 3,300 87,161,136 2,179 Issued under option scheme - - 917,507 23 At 31 December 2006 - - 88,078,643 2,202 Issued under option scheme - - 837,723 21 At 30 June 2007 - - 88,916,366 2,223 Issued under option scheme - - 242,249 6 At 31 December 2007 - - 89'158,615 2,229 All shares rank pari passu with the exception of shares held as treasury shares and by the ESOP of which the rights attached are currently not exercisable. NOTE 10 RESERVES £'000 Share Foreign Merger Treasury ESOP Profit and Total premium exchange reserve shares shares loss account account reserve Group at 1 July - 2006 56,685 209 1,717 (502) 29,618 87,727 Net profit for the period attributable to the equity holders of the parent - - - - - 4,031 4,031 Dividends paid to shareholders of the parent company - - - - - (1,083) (1,083) Foreign Exchange adjustments on consolidation - (1,800) - - (24) - (1,824) Actuarial gain - - - - - - - Changes in ESOP shares - - - - - - - New share capital issued 1,255 - - - - - 1,255 Share-based payment charge - - - - - 643 643 Tax on items taken directly to equity - - - - - - - Group at 31 December 2006 57,940 (1,591) 1,717 - (526) 33,209 90,749 Net profit for the period attributable to the equity holders of the parent - - - - - 3,914 3,914 Dividends paid to shareholders of the parent company - - - - - (629) (629) Foreign exchange adjustments on consolidation - 34 - - 1 - 35 Actuarial gain - - - - - 162 162 Changes in ESOP shares - - - - - - - New share capital issued 1,025 - - - - - 1,025 Share-based payment charge - - - - - 470 470 Tax on items taken directly to equity - - - - - 136 136 Group at 30 June 2007 58,965 (1,557) 1,717 - (525) 37,262 95,862 Net profit for the period attributable to the equity holders of the parent - - - - - 3,743 3,743 Dividends paid to shareholders of the parent company - - - - - (1,254)* (1,254)* Foreign exchange adjustments on consolidation - 3,946 - - - (65) 3,881 Actuarial gain - - - - - 72 72 Changes in Treasury shares - - - (11,220)** - - (11,220)** Changes in ESOP shares - - - - (10) - (10) New share capital issued 233 - - - - - 233 Share-based payment charge - - - - - 419 419 Tax on items taken directly to equity - (219) - - - - (219) Group at 31 December 2007 59,198 2,170 1,717 (11,220) (535) 40,177 91,507 Within the cumulative profit and loss account reserve is £4,217,000 (2006: £2,909,000) relating to the share options granted to subsidiary employees. The following describes the nature and purpose of each kind of reserve: Reserve Description and purpose Share premium account Amount subscribed for share capital in excess of nominal value Foreign exchange reserve Gain/(loss) arising on retranslating the net assets of foreign operations into sterling Merger reserve Reserve arising on acquisitions prior to the transition to IFRS for which merger accounting was applied Treasury shares Weighted average cost of own shares held by the parent company. As per December the company held 5,930,000** (2006: no shares). ESOP shares Weighted average cost of own shares held by the ESOP trust. As per December, the ESOP held 858,800 shares in DICOM Group plc (2006: 858,800 shares). Profit and loss account Cumulative net gains and losses recognised in the Consolidated Income Statement and in the statement of recognised income and expenses, excluding those items recognised in other reserves * These items within this note are predicated upon the technical regularisation of the Company's final dividend paid for 2007 which is intended to be concluded by: (i) the due transmission of certain of the Group's reserves to the Company; (ii) arrangements to be entered into with certain of the Company's shareholders who were subject to the Company's share buy back programme; and (iii) approval by shareholders at a forthcoming extraordinary general meeting of the Company. To illustrate the Group's financial position subject to this technical regularisation, the following presentation would apply: ** These items within this note are predicated upon the technical regularisation of the Company's share buy back programme which is intended to be concluded by: (i) the due transmission of certain of the Group's reserves to the Company; and (ii) arrangements to be entered into with certain of the Company's shareholders who were subject to the Company's share buy back programme. To illustrate the Group's financial position subject to this technical regularisation, the following presentation would apply: £'000 Share Foreign Treasury Profit and Premium Exchange Merger shares ESOP Loss account reserve reserve shares account Total Group at 30 June 2007 58,965 (1,557) 1,717 - (525) 37,262 95,862 Net profit for the period attributable to the equity holders of the parent - - - - - 3,743 3,743 Dividends paid to shareholders of the parent company - - - - - (1,254) (1,254) Foreign exchange adjustments on consolidation - 3,946 - - - (65) 3,881 Actuarial gain - - - - - 72 72 Changes in Treasury shares - - - (3,083) - - (3,083) Changes in ESOP shares - - - - (10) - (10) New share capital issued 233 - - - - - 233 Share-based payment charge - - - - - 419 419 Tax on items taken directly to equity - (219) - - - - (219) Group at 31 December 2007 59,198 2,170 1,717 (3,083) (535) 40,177 99,644 NOTE 11 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' EQUITY £'000 6 months to 6 months to Year to 31 December 2007 31 December 2006 30 June restated 2007 Shareholders' equity at start of the year 98,085 89,906 89,906 Net profit for the period excluding minority interests 3,743 4,031 7,945 Dividends (1,254)* (1,083) (1,712) Exchange differences arising on retranslation of foreign operations 3,881 (1,824) (1,789) Actuarial gain on defined benefit pension plans 72 - 162 Net proceeds from issue of share capital 239 1,278 2,324 Share-based payment expense 419 643 1,113 Tax on items taken directly to equity (219) - 136 Changes in ESOP shares (10) - - Changes in Treasury shares (11,220)** - - Shareholders' equity at end of the year 93,736 92,951 98,085 * This item within this note is predicated upon the technical regularisation of final dividend paid for 2007 which is intended to be concluded by: (i) the due transmission of certain of the Group's reserves to the Company; (ii) arrangements to be entered into with certain of the Company's shareholders who were subject to the Company's share buy back programme; and (iii) approval by shareholders at a forthcoming extraordinary general meeting of the Company. To illustrate the Group's financial position subject to this technical regularisation, the table below sets forth the amended position: ** This item within this note is predicated upon the technical regularisation of the Company's share buy back programme which is intended to be concluded by: (i) the due transmission of the Group's reserves to the Company; and (ii) arrangements to be entered into with certain of the Company's shareholders who were subject to the Company's share buy back programme. To illustrate the Group's financial position subject to this technical regularisation, the following presentation would apply: £'000 6 months to 31 6 months to 31 Year to December 2007 December 2006 30 June restated 2007 Shareholders' equity at start of the year 98,085 89,906 89,906 Net profit for the period excluding minority interests 3,743 4,031 7,945 Dividends (1,254) (1,083) (1,712) Exchange differences arising on retranslation of foreign operations 3,881 (1,824) (1,789) Actuarial gain on defined benefit pension plans 72 - 162 Net proceeds from issue of share capital 239 1,278 2,324 Share-based payment expense 419 643 1,113 Tax on items taken directly to equity (219) - 136 Changes in ESOP shares (10) - - Changes in Treasury shares (3,083) - - Shareholders' equity at end of the year 101,873 92,951 98,085 NOTE 12 SHARE BUY BACK On 28 August 2007 the Board announced its intention to initiate a buy back of its current issued share capital under the authority given to it at the last Annual General Meeting. In the meantime the Board has contracted to purchase 5,930,000 of its ordinary shares of 2.5p each on the London Stock Exchange between 30 August 2007 and 4 December 2007 for a weighted average price of 1.89p (between 1.68p and 2.04p). The Company intends to hold the purchased shares as treasury stock. The completion of the settlement of those purchases is subject to technical difficulties concerning the transmission of the Group's reserves to the Company. The technical regularisation of the Company's share buy back programme is intended to be concluded shortly by: (i) the due transmission of certain of the Group's reserves to the Company; and (ii) arrangements to be entered into with certain of the Group's shareholders who were subject to the Company's share buy back programme. Following completion of the settlement of the purchase of these shares subject to the regularisation described above, the Company will hold 6.7% of its ordinary shares in treasury and will have 83,222,615 ordinary shares in issue (excluding treasury shares). NOTE 13 ANALYSIS OF NET FUNDS £'000 At At At 31 December 31 December 30 June 2007 2006 2007 restated Cash in hand, at bank 19,828 18,404 25,425 Current asset investments 6,162 10,685 13,785 Total cash and cash equivalents 25,990 29,089 39,210 Overdrafts (1,166) (378) (644) Debt due within 1 year (368) (396) (343) Debt due after 1 year (4) (23) (3) Finance leases (16) (47) (24) Total debt and finance leases (1,554) (844) (1,014) Net funds 24,436 28,245 38,196 NOTE 14 RELATED PARTY TRANSACTIONS 6 months to 6 months to Year to £'000 31 December 31 December 30 June 2007 2006 2007 Sales to associated undertakings 1,318 1,194 1,645 Purchases from associated undertakings 471 441 197 At 31 December 2007 the associated undertakings owed £177,500 (2006 £240,000) to the Group. The transactions set out above took place with Alos GmbH, Cologne, Germany. Sales to and purchases from associates are made at normal market prices. Total compensation paid to key management personnel £'000 31 December 31 December 30 June 2007 2006 2007 Short-term employee benefit 405 424 1,118 Post-employment pension benefits 35 33 68 Share-based payments 98 55 147 Total compensation paid to key management personnel 538 512 1,333 Directors' interests The beneficial interest of the current Directors and their families in the issued share capital of the Group are in total number of shares as follows: 31 December 2006 1,598,212 30 June 2007 796,856 31 December 2007 879,756 Directors' interests in share option Directors' hold 2,312,000 share options as per 31 December 2007, 700,000 options were granted during the six months. No share options lapsed during the year. The exercise periods end between 2010 to 2018 with exercise prices between 73p to 247p. NOTE 15 CONTINGENT LIABILITIES In June 2006 the Group was informed that a patent infringement complaint was formally filed against one of its subsidiaries by a company which holds a patent on a certain technology. To this date the Group has not received any demand that the Group take a licence or cease any allegedly infringing activities. The Group has obtained the service of outside counsel for purposes of mounting a defence against and resolving the action brought by that patent holder. Currently the ultimate exposure in the litigation remains unknown. The Directors note that in the event of an unfavourable judgement the related costs would not be expected to be material to the Group's future operating results. As a technical matter, the Group had: (i) a contingent liability to its shareholders in respect of the distribution constituted by the final dividend for the financial year to 30 June 2007 paid to its shareholders on 14 December 2007 in light of the fact of its not having been paid consistently with technical requirements under the Companies Act; and (ii) a contingent liability to certain shareholders in respect of the shares represented by certain buy backs effected during the period to 31 December 2007, in light of their not being capable of being settled for the same reasons. These contingent liabilities were subject to an opposite balance of contingent liability to the Company of those persons as a result of their having received sums from the Company in contravention of those technical requirements. These theoretical liabilities are intended to be subject to elimination by: (i) the due transmission of certain of the Group's reserves to the Company; (ii) arrangements to be entered into with certain of the Company's shareholders who were subject to the Company's share buy back programme; and (iii) approval by the Company's shareholders at a forthcoming extraordinary general meeting of the Company. NOTE 16 EVENTS AFTER THE BALANCE SHEET DATE On 25 January the Group announced a reorganisation of the operational structure. As part of the reorganisation, Urs Niederberger, Chief Operating Officer and Executive Director, stood down from the Board of Directors with immediate effect and will leave the company as of 15 February 2008. To strengthen the brand of the company, the Board proposes to change the name of the company to "Kofax plc" at the Extraordinary General Meeting on 18 February 2008. Due to these changes, the Group will make approximately 50 redundancies, close certain facilities and record an exceptional charge of £3.5m to £3.8m in the second half of the financial year 2008. Furthermore the Board appointed Bradford Weller as General Counsel and Company Secretary, replacing Stefan Gaiser with immediate effect who remains Chief Financial Officer and Executive Director of the Group. NOTE 17 ANALYSIS OF EXCHANGE RATES USED FOR CONSOLIDATION Analysis of exchange rates used for consolidation At At At 31 December 2007 31 December 2006 30 June 2007 Average Closing Average Closing Average Closing rate rate rate rate rate rate US Dollar 2.03 2.00 1.90 1.96 1.93 2.00 Euro 1.44 1.36 1.48 1.49 1.48 1.48 Swiss Franc 2.38 2.25 2.34 2.39 2.38 2.45 In order to determine constant currency growth rates, the 2008 half year results in constant currency have been translated using the 2007 half year average exchange rates as disclosed in the table above. These have been compared to the prior 31 December 2006 results to determine the constant currency growth rates. This information is provided by RNS The company news service from the London Stock Exchange END IR TRMMTMMBBTLP
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