Share Name Share Symbol Market Type Share ISIN Share Description
Dillistone Group LSE:DSG London Ordinary Share GB00B13QQB40 ORD 5P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  +0.00p +0.00% 67.00p 64.00p 70.00p 67.00p 67.00p 67.00p 8,919 07:47:59
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Support Services 10.0 0.4 2.7 25.0 13.18

Dillistone Group PLC Half-year Report

28/09/2017 7:01am

UK Regulatory (RNS & others)


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Dillistone Group PLC

28 September 2017

Dillistone Group Plc

("Dillistone", the "Company" or the "Group")

Interim Results

Dillistone Group Plc, the AIM quoted supplier of software and services for the recruitment sector, is pleased to announce its interim results for the six months ended 30 June 2017.

Highlights include:

Operational:

   --    Announcement of phase one launch of GatedTalent, the innovative global executive database. 

-- Funding arrangement of GBP400k agreed via Directors' convertible loan notes to help continue GatedTalent marketing, development and rollout - to be drawn down during Q4 2017.

Financial:

   --    Revenue up 0.4% to GBP4.829m 
   --    Recurring revenue up 10% to GBP3.711m 
   --    Recurring revenues represent 77% of total revenue 
   --    Recurring revenues cover 90% of administrative and product development cost base 
   --    Both Dillistone Systems and Voyager Software divisions profitable 

-- Loss for period after acquisition related items and costs charged against profit in respect of GatedTalent

-- Cash balances of GBP1.114m at 30 June 2017 (2016: GBP1.611m) and debt of GBP0.072m (2016: GBP0.242m)

-- No interim dividend proposed (2016: 1.375p) to support funding of GatedTalent product development

Commenting on the results, the new product launch and prospects, Mike Love, Non-Executive Chairman, said:

"As previously announced, trading in the first few months of the year was challenging, although we have seen some improvement in incoming orders since then.

"We are pleased that recurring revenues in both divisions are at record levels providing good forward visibility of cash flows and largely covering the Group's administrative and product development cost base.

"The early response to our new product GatedTalent is extremely positive and we are excited at its potential. This new product is essentially a start up being developed within the auspices of an established business. We believe that it has the potential to transform the nature of our business and to deliver significant shareholder value.

"As clear evidence of our belief in the opportunity, I am pleased to report that the Directors and PDMRs have entered into an agreement to subscribe for convertible loan notes of GBP400,000. The Group received several indicative offers of funding from both existing and new investors. These offers included both debt and equity options. The Directors and PDMRs' loan is in financial terms equivalent to the best offer received but without any of the constraints on the business. This money will be used to help fund the development and rollout of GatedTalent. No Interim dividend will be paid at this time and future dividends will depend on the performance of the Group."

Dr Mike Love

Chairman

Results and New Product Webinar - A webinar covering Dillistone's half year results and the launch of GatedTalent will be held at 3pm on Tuesday 3 October 2017 hosted by Jason Starr, Chief Executive, and Julie Pomeroy, Finance Director. Those wishing to participate should register at https://attendee.gotowebinar.com/register/2506095248269576963 or contact Tom Cooper on 020 7933 8780, 0797 122 1972 or tom.cooper@walbrookpr.com.

This announcement contains inside information for the purposes of Article 7 of Regulation 596/2014.

Enquiries:

 
 Dillistone Group 
  Plc 
 Mike Love                        Chairman                           020 7749 6100 
 Jason Starr                      Chief Executive                    020 7749 6100 
 Julie Pomeroy                    Finance Director                   020 7749 6100 
 
 WH Ireland Limited (Nominated 
  adviser) 
                                  Head of Corporate 
 Chris Fielding                   Finance                            020 7220 1650 
 
 Walbrook PR 
 Tom Cooper / 
  Paul Vann                                                          020 7933 8780 
                                                                     0797 122 1972 
                                                         tom.cooper@walbrookpr.com 
 
 

Notes to Editors:

Dillistone Group Plc (www.dillistonegroup.com) is a leader in the supply and support of software and services to the recruitment industry. It has five brands operating through three divisions: Dillistone Systems, which targets the executive search industry (www.dillistone.com); Voyager Software, which targets other recruitment markets (www.voyagersoftware.com); and GatedTalent, the next generation executive recruitment database (www.GatedTalent.com).

Dillistone has made three acquisitions: Voyager Software in September 2011, FCP Internet in July 2013 and ISV Software in September 2014. The Group operates under the FileFinder, Infinity, Evolve, ISV and GatedTalent brands.

Dillistone was admitted to AIM, a market operated by the London Stock Exchange plc, in June 2006. The Group employs over 100 people globally with offices in London (head office) Basingstoke and Southampton, Frankfurt, New Jersey and Sydney.

Chairman's Statement

As our financial results show and as previously announced, the Group has had a challenging first half to the year with revenue growth not keeping pace with increased costs.

The continuing move to SaaS related products from outright purchase models has contributed to a 10% growth in recurring revenue and a corresponding GBP0.256m reduction in non-recurring revenue. Recurring revenues were positively impacted by exchange rates but importantly grew in each of our divisions at a local currency level. This shift in revenue type is beneficial to the Group in the longer term.

The cost increase is due in part to our investment in GatedTalent (loss of GBP0.182m) which we do not expect to start generating revenue until 2018.

Total revenue increased by 0.4% to GBP4.829m. Recurring revenues represented 77% of revenues. Loss after tax, which includes the GatedTalent expenditure, was GBP0.024m (2016 profit: GBP0.489m).

Despite this, we are pleased that recurring revenues in both divisions are at record levels providing good forward visibility and largely covering the Group's administrative and product development cost base.

The Board is pleased to report that the Directors and PDMRs have agreed to put in place a GBP0.400m convertible loan note to provide the continued funding for GatedTalent. The loan notes carry an interest rate of 8.15% and a conversion price of 71.6p. The loan note has a 3-year duration but with various rights for early conversion or repayment. Further details are included in the press release issued on 28 September 2017.

As announced in June, the Group has been informed that a contract with a major client is likely to expire later this year or early next. This contract, which is with a client using a legacy product acquired as a result of an acquisition made several years ago, is worth in the region of GBP600,000 per annum in contribution terms to the Group. An amendment to the contract has been agreed which will give the client the rights to terminate at 3 months' notice during the contract term to 30 November 2018 (which can be extended by agreement). At this stage, the timing of the exit is unclear and so no impairment has been recognised in these interim statements nor has a detailed review been carried out of the remaining useful economic life. A full and comprehensive review will be carried out at the yearend when the position should be clearer. Any required adjustment will have no impact on cash.

Divisional review

Dillistone Systems had a slow start to the year but we have seen improvement since then in terms of the volume and value of new business wins. However, a significant majority of our new clients have been new or young businesses, with relatively few users, purchasing on a subscription, as opposed to a licence model, which made it impossible for the business to catch up on the poor start. The Board is pleased to note that the division is currently in talks with a number of larger potential clients.

The introduction of GDPR in May 2018 and the launch of GatedTalent (www.GatedTalent.com), which will link directly with FileFinder, are both expected to result in an improvement in sales over the next 12 months.

Dillistone Systems (www.dillistone.com) reported revenues of GBP2.244m (2016: GBP2.265m) with recurring revenues up 14% to GBP1.833m and non-recurring revenues down 37% to GBP0.411m.

As anticipated, Divisional profits are down to GBP0.030m in the period as cost increases exceeded growth in revenue.

Voyager Software (www.voyagersoftware.com) has seen revenue grow by 2% in the period to GBP2.585m (2016: GBP2.546m) with recurring revenue up 6% to GBP1.878m.

We are continuing to invest in extending our Infinity product, in particular to further support the temporary recruitment sector as well as the universal demand for real-time data analytics by adding native Microsoft Power BI integration. Other investments include adding to our mobile app suite to cover candidate availability and job searching, as well as integrating with the latest ISV Online skills testing and training solution.

Divisional profits fell 15% to GBP0.350m in the period, in part due to increased depreciation and amortisation charges up GBP0.101m on 30 June 2016.

As mentioned GatedTalent (www.GatedTalent.com) is our new product which will be sold through our wholly owned subsidiary, and new division, GatedTalent Limited. GatedTalent is a new portal designed to allow executives to share their own information with recruiters. Further information is provided in a separate announcement. It is not expected to generate revenue until 2018. In the period, costs of GBP0.182m were charged against profit and GBP0.093m was capitalised as development expenditure.

Financial Performance

Revenue in the six months ended 30 June 2017 increased by 0.4% to GBP4.829m (2016: GBP4.811m). Recurring revenues increased by 10% to GBP3.711m over the comparable period last year (2016: GBP3.384m) and represented 77% of total revenues (2016: 70%). Non-recurring revenues were down at GBP0.873m (2016: GBP1.129m). Revenue benefited slightly from the fall in sterling; using 2016 rates revenue for the period would have been GBP4.664m.

Cost of sales increased by 13% in H1 2017 mainly due to the continued roll out of third party data centres for hosting our cloud products. Administration expenses rose 16% in H1 2017, mainly due to increased salary costs and GBP0.182 million of expenditure associated with the development of GatedTalent. Depreciation and amortisation increased 18% to GBP0.551m (2016: GBP0.467m). Administrative costs also included GBP0.189m (2016: GBP0.189m) relating to the amortisation of acquisition intangibles.

EBITDA fell 44% to GBP0.670m (2016: GBP1.204m). Total depreciation and amortisation, including amortisation of acquisition intangibles, increased to GBP0.740m (2016: GBP0.656m) resulting in a loss before tax of GBP0.075m (2016: profit GBP0.538m).

There is a tax credit for the period of GBP0.051m (2016: charge GBP0.049m). The 2016 and 2017 tax charge and credit have benefited from claims in the UK for research and development tax credits reflecting the continuing development of our products and losses generated by GatedTalent.

Cash generated from operating activities remained strong at GBP1.064m (2016: GBP1.347m). Total cash flow in the 6 months ended 30 June 2017 showed a net outflow of GBP0.434m (2016: outflow GBP0.070m). The main elements of non-operating expenditure related to dividends paid in the period of GBP0.551m (2016: GBP0.541m) and investment in new product development of GBP0.595m (2016: GBP0.539m) and deferred consideration payments in respect of acquisitions GBP0.220m (2016: GBP0.212m). At 30 June 2017, we had cash reserves of GBP1.114m (2016: GBP1.611m) and GBP0.072m in borrowings (2016: GBP0.242m).

In view of the fund raising carried out to develop GatedTalent, we have decided not to pay an interim dividend. Future dividends will depend on Group performance.

IFRS 15

IFRS 15 comes into force on 1 January 2018. The Group is working on fully understanding the implications of this new standard. The major impact is likely to be in respect of various outright licence sales which require a support contract where some of the non-recurring licence income will need to be spread. Other adjustments may be required. The introduction of IFRS 15 is also likely to mean prior year numbers will need to be restated.

Strategy

The Group believes that the launch of GatedTalent has the potential to be transformational for the Group, taking it from a supplier of CRM solutions in a crowded market to potentially being the custodian of one of the World's largest private pools of executive drafted biographical information. If successful, this new platform has the potential to be highly profitable in its own right, while also delivering a very significant competitive advantage to other Group products.

Outlook

The introduction of GDPR in May 2018 will drive potentially significant change to the recruitment sector and in particular executive recruitment. With the introduction of GatedTalent, the Group feels well positioned to help existing and new clients manage the changes that GDPR brings. GatedTalent is not expected to realise significant revenue before 2018 nor to be profitable before 2020. However, the Board is very excited by its potential and is therefore confident about the long-term success of the Group.

The Group continues to invest in its other products to ensure that they remain relevant for the changing market place.

The Group expects full year operational and statutory results to be in line with market expectations before acquisition related items and any write down of intangibles in respect of the lost contract.

Mike Love

Chairman

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 
                            Note      6 Months ended       Year ended 
                                          30 June              31 Dec 
                                        2017        2016         2016 
                                   Unaudited   Unaudited      Audited 
                                     GBP'000     GBP'000      GBP'000 
 Revenue                     4         4,829       4,811        9,963 
 Cost of sales                         (782)       (694)      (1,478) 
                                  ----------  ----------  ----------- 
 Gross profit                          4,047       4,117        8,485 
 Administrative expenses             (4,117)     (3,569)      (8,073) 
                                  ----------  ----------  ----------- 
 
 Result from operating 
  activities                 4          (70)         548          412 
 
 Analysed as: 
 Result from operating 
  activities before 
  acquisition related 
  items                                  119         737        1,463 
 
 Acquisition related 
  items                      5         (189)       (189)      (1,051) 
                                  ----------  ----------  ----------- 
 Result after acquisition 
  related items                         (70)         548          412 
--------------------------------  ----------  ----------  ----------- 
 
 Financial income                          1           3            3 
 Financial cost                          (6)        (13)         (23) 
                                  ----------  ----------  ----------- 
 (Loss)/profit before 
  tax                                   (75)         538          392 
 
 Tax income/(expense)        6            51        (49)          134 
                                  ----------  ----------  ----------- 
 (Loss) /profit for 
  the period                            (24)         489          526 
 
 Other comprehensive income net 
  of tax: 
 Currency translation 
  differences                            (7)         (4)           16 
                                  ----------  ----------  ----------- 
 Total comprehensive 
  income for period 
  net of tax                            (31)         485          542 
                                  ----------  ----------  ----------- 
 
 Earnings per share 
  (pence) 
 Basic                       8        (0.12)        2.48         2.68 
 Diluted                              (0.12)        2.46         2.62 
 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

 
                                                        As at 
                                      As at 30 June    31 Dec 
                                   2017        2016      2016 
                              Unaudited   Unaudited   Audited 
 ASSETS                         GBP'000     GBP'000   GBP'000 
 Non-current assets 
 Goodwill                         3,415       3,415     3,415 
 Intangible assets                5,087       6,084     5,263 
 Property plant & 
  equipment                         289         259       215 
                             ----------  ---------- 
                                  8,791       9,758     8,893 
 Current assets 
 Inventories                          4           9         5 
 Trade and other 
  receivables                     2,317       1,961     2,196 
 Cash and cash equivalents        1,114       1,611     1,537 
                             ----------  ----------  -------- 
                                  3,435       3,581     3,738 
                             ----------  ----------  -------- 
 Total assets                    12,226      13,339    12,631 
                             ----------  ----------  -------- 
 
 EQUITY AND LIABILITIES 
 Equity 
 Share capital                      983         983       983 
 Share premium                    1,631       1,631     1,631 
 Merger reserve                     365         365       365 
 Retained earnings                3,150       3,956     3,725 
 Share option reserve                86          70        85 
 Translation reserve                110          97       117 
                             ----------  ----------  -------- 
 Total equity                     6,325       7,102     6,906 
 
 Liabilities 
 Non current liabilities 
 Trade and other 
  payables                            -         178        15 
 Borrowings                           -          72         - 
 Deferred tax                       716         980       784 
 Current liabilities 
 Trade and other 
  payables                        4,933       4,599     4,599 
 Borrowings                          72         170       158 
 Current tax payable                180         238       169 
                             ----------  ----------  -------- 
 Total liabilities                5,901       6,237     5,725 
 
 Total liabilities 
  and equity                     12,226      13,339    12,631 
                             ----------  ----------  -------- 
 

The interim report was approved by the Board of directors and authorised for issue on 27 September 2017. They were signed on its behalf by:

   JS Starr                                              J P Pomeroy 

CONSOLIDATED STATEMENT OF CASH FLOWS

 
                                                               As at 
                                       As at 30 June          31 Dec 
                                        2017         2016       2016 
                                   Unaudited    Unaudited    Audited 
                                     GBP'000      GBP'000    GBP'000 
 Operating Activities 
 (Loss)/profit before tax               (75)          538        392 
 Adjustment for 
  Financial income                       (1)          (3)        (3) 
  Financial cost                           6           13         23 
  Depreciation and amortisation          741          656      2,069 
  Share option expense                     1          (1)         16 
  Other including foreign 
   exchange 
   adjustments arising from 
   operations                            (4)         (16)         31 
                                  ----------  -----------  --------- 
 Operating cash flows before 
  movements in working capital           668        1,187      2,528 
 
 Increase in receivables                (55)        (155)      (487) 
 Decrease in inventories                   1            8         11 
 Increase in payables                    456          211         62 
 Add taxation (paid)/repaid              (6)           96         24 
 
 Net cash generated from 
  operating activities                 1,064        1,347      2,138 
                                  ----------  -----------  --------- 
 
 Investing Activities 
 Interest received                         1            3          3 
 Finance cost                            (2)          (5)        (8) 
 Purchases of property plant 
  and equipment                         (45)         (40)       (70) 
 Investment in development 
  costs                                (595)        (539)    (1,056) 
 Contingent consideration 
  paid                                 (220)        (212)      (212) 
                                  ----------  -----------  --------- 
 Net cash used in investing 
  activities                           (861)        (793)    (1,343) 
                                  ----------  -----------  --------- 
 
 Financing Activities 
 Bank loan repayments made              (86)         (83)      (167) 
 Dividends paid                        (551)        (541)      (811) 
                                  ----------  -----------  --------- 
 Net cash used by financing 
  activities                           (637)        (624)      (978) 
                                  ----------  -----------  --------- 
 
 Net change in cash and 
  cash equivalents                     (434)         (70)      (183) 
 
 Cash and cash equivalents 
  at beginning of the period           1,537        1,595      1,595 
 
 Effect of foreign exchange 
  rate changes                            11           86        125 
 
 Cash and cash equivalents 
  at end of period                     1,114        1,611      1,537 
                                  ----------  -----------  --------- 
 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 
                             Share      Share     Merger    Retained      Share    Foreign     Total 
                           capital    premium    Reserve    earnings     option   exchange 
                           GBP'000    GBP'000    GBP'000     GBP'000    GBP'000    GBP'000   GBP'000 
 
  Balance at 
   31 December 
   2015                        983      1,631        365       4,008         71        101     7,159 
 
  Comprehensive 
   income 
  Profit for 
   the 6 months 
   ended 30 June 
   2016                          -          -          -         489          -          -       489 
                                                                                                   - 
  Other comprehensive                                                                              - 
   income 
  Exchange differences 
   on translation 
   of overseas 
   operations                    -          -          -           -          -        (4)       (4) 
  Total comprehensive 
   income                        -          -          -         489          -        (4)       485 
                         ---------  ---------  ---------  ----------  ---------  ---------  -------- 
 
  Transactions 
   with owners 
  Share option 
   charge                        -          -          -           -        (1)          -       (1) 
  Dividends 
   paid                          -          -          -       (541)          -          -     (541) 
 
  Balance at 
   30 June 2016                983      1,631        365       3,956         70         97     7,102 
                         ---------  ---------  ---------  ----------  ---------  ---------  -------- 
 
  Comprehensive 
   income 
  Profit for 
   the 6 months 
   ended 31 Dec 
   2016                          -          -          -          37          -          -        37 
                                                                                                   - 
  Other comprehensive                                                                              - 
   income 
  Exchange differences 
   on translation 
   of overseas 
   operations                    -          -          -           -          -         20        20 
  Total comprehensive 
   income                        -          -          -          37          -         20        57 
                         ---------  ---------  ---------  ----------  ---------  ---------  -------- 
 
  Transactions 
   with owners 
  Share option 
   charge                        -          -          -           2         15          -        17 
  Dividends 
   paid                          -          -          -       (270)          -          -     (270) 
 
  Balance at 
   31 December 
   2016                        983      1,631        365       3,725         85        117     6,906 
                         ---------  ---------  ---------  ----------  ---------  ---------  -------- 
 
  Comprehensive 
   income 
  Loss for the 
   6 months ended 
   30 June 2017                  -          -          -        (24)          -          -      (24) 
                                                                                                   - 
  Other comprehensive                                                                              - 
   income 
  Exchange differences 
   on translation 
   of overseas 
   operations                    -          -          -           -          -        (7)       (7) 
  Total comprehensive 
   income                        -          -          -        (24)          -        (7)      (31) 
                         ---------  ---------  ---------  ----------  ---------  ---------  -------- 
 
  Transactions 
   with owners 
  Share option 
   charge                        -          -          -           -          1          -         1 
  Dividends 
   paid                          -          -          -       (551)          -          -     (551) 
 
  Balance at 
   30 June 2017                983      1,631        365       3,150         86        110     6,325 
                         ---------  ---------  ---------  ----------  ---------  ---------  -------- 
 

NOTES TO THE INTERIM

 
  NOTES TO THE UNAUDITED INTERIM REPORT 
 

CONSOLIDATED STATEMENT OF

   1.         Basis of Preparation 

The financial information for the six months ended 30 June 2017 included in this condensed interim report comprises the consolidated statement of comprehensive income, the consolidated statement of financial position, the consolidated statement of cash flows, the consolidated statement of changes in equity and the related notes.

The financial information in these interim results is that of the holding company and all of its subsidiaries (the Group). It has been prepared in accordance with the recognition and measurement requirements of International Financial Reporting Standards as adopted for use in the EU (IFRSs) but does not include all of the disclosures that would be required under IFRSs. The accounting policies applied by the Group in this financial information are the same as those applied by the Group in its financial statements for the year ended 31 December 2016 and are those which will form the basis of the 2017 financial statements.

The comparative financial information presented herein for the year ended 31 December 2016 does not constitute full statutory accounts for that period. The Group's annual report and accounts for the year ended 31 December 2016 have been delivered to the Registrar of Companies. The Group's independent auditor's report on those statutory accounts was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

In preparing the interim financial statements the directors have considered the Group's financial projections, borrowing facilities and other relevant financial matters, and the board is satisfied that there is a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason, the directors continue to adopt the going concern basis in preparing the financial statements.

Dillistone Group Plc is the Group's ultimate parent company. It is a public listed company and is domiciled in the United Kingdom. The address of its registered office and principal place of business is 50 Leman St, London, E1 8HQ. Dillistone Group Plc's shares are listed on the Alternative Investment Market (AIM).

   2.         Share Based Payments 

The Company operates two share option schemes. The fair value of the options granted under these schemes is recognised as an employee expense with a corresponding increase in equity. The fair value is measured at grant date and spread over the period at the end of which the option holder may exercise the option. The fair value of the options granted is measured using the Black-Scholes model.

3. Reconciliation of adjusted operating profits to consolidated statement of comprehensive income

30 June 2017 and 30 June 2016

 
                             Adjusted   Acquisition                Adjusted   Acquisition 
                            operating       related               operating       related 
                              profits         items                 profits         items 
                                                            30                                    30 
                              30 June                     June      30 June                     June 
                                 2017         2017*       2017         2016         2016*       2016 
 
                              GBP'000       GBP'000    GBP'000      GBP'000       GBP'000    GBP'000 
 
 Revenue                        4,829             -      4,829        4,811             -      4,811 
 
 Cost of sales                  (782)             -      (782)        (694)             -      (694) 
 
 Gross profit                   4,047             0      4,047        4,117             0      4,117 
 
 Administrative 
  expenses                    (3,928)         (189)    (4,117)      (3,380)         (189)    (3,569) 
 
 Results from 
  operating activities            119         (189)       (70)          737         (189)        548 
 
 Financial income                   1             -          1            3             -          3 
 Financial cost                   (2)           (4)        (6)          (5)           (8)       (13) 
 
 Profit/(loss) 
  before tax                      118         (193)       (75)          735         (197)        538 
 
 Tax expense/(income)              17            34         51         (83)            34       (49) 
 
 Profit/(loss) 
  for the year                    135         (159)       (24)          652         (163)        489 
 
 Other comprehensive 
  income net of 
  tax: 
 Currency translation 
  differences                     (7)             -        (7)          (4)             -        (4) 
 
 Total comprehensive 
  income for the 
  year net of tax                 128         (159)       (31)          648         (163)        485 
                          -----------  ------------  ---------  -----------  ------------  --------- 
 

Earnings per share - from continuing activities

 
 Basic        0.68p        (0.12)p   3.31p    2.48p 
 Diluted      0.68p       (0.12)p    3.28p   2.46p 
 
 

* see accounts note 5

31 December 2016

 
                                Adjusted   Acquisition 
                               operating       related 
                                 profits         items 
                             31 December         2016*   31 December 
                                    2016                        2016 
 
                                 GBP'000       GBP'000       GBP'000 
 
 Revenue                           9,963             -         9,963 
 
 Cost of sales                   (1,478)             -       (1,478) 
                            ------------  ------------  ------------ 
 
 Gross profit                      8,485             -         8,485 
 
 Administrative expenses         (7,022)       (1,051)       (8,073) 
 
 Results from operating 
  activities                       1,463       (1,051)           412 
 
 Financial income                      3             -             3 
 Financial cost                      (8)          (15)          (23) 
 
 Profit before tax                 1,458       (1,066)           392 
 
 Tax income                         (63)           197           134 
 
 Profit for the year               1,395         (869)           526 
 
 Other comprehensive 
  income net of tax: 
 Currency translation 
  differences                         16             -            16 
 
 Total comprehensive 
  income for the year 
  net of tax                       1,411         (869)           542 
                            ------------  ------------  ------------ 
 

Earnings per share - from continuing activities

 
 Basic      7.10p   2.68p 
 Diluted    6.95p   2.62p 
 

* see accounts note 5

   4.         Segment reporting 
 
                                                Year ended 
                          6 months ended 30 
                                       June       31 Dec 
                             2017      2016         2016 
                          GBP'000   GBP'000      GBP'000 
 Revenue 
 Dillistone Systems         2,244     2,265        4,858 
 GatedTalent                    -         -            - 
 Voyager Software           2,585     2,546        5,105 
 Total revenue              4,829     4,811        9,963 
                      -----------  --------  ----------- 
 
 
 
 
   Results by division 
                                                   Year ended 
                            6 months ended 30 
                                         June          31 Dec 
                               2017      2016            2016 
                            GBP'000   GBP'000         GBP'000 
 
 Results from operating 
  activities 
 Dillistone Systems              30       417             205 
 GatedTalent                  (182)         -               - 
 Voyager Software               350       412             632 
                             ------  --------  -------------- 
                                198       829             837 
 
 Central                       (79)      (92)            (94) 
 
 Amortisation of 
 acquisition intangibles 
 and other items              (189)     (189)           (331) 
 Result from operating 
  activities                   (70)       548             412 
                             ======  ========  ============== 
 
 
 
 Geographical segments 
 The following table provides an analysis of 
  the Group's revenues by geographical market. 
 
                                                                  Year ended 
                                   6 months ended 
                                       30 June                        31 Dec 
                                             2017      2016             2016 
                                          GBP'000   GBP'000          GBP'000 
 UK                                         3,440     3,486            7,142 
 Europe                                       474       452            1,047 
 US                                           703       679            1,388 
 Australia                                    212       194              386 
                                            4,829     4,811            9,963 
                                  ===============  ========  =============== 
 
 
 
 
 
   Business Segment 
 The following table provides an analysis of the 
  Group's revenues by products and services. 
                                                                                 Year ended 
                                                                6 months ended 
                                                                       30 June       31 Dec 
                                                                2017      2016         2016 
                                                             GBP'000   GBP'000      GBP'000 
 Recurring                                                     3,711     3,384        7,027 
 Non recurring                                                   873     1,129        2,370 
 Third party revenues                                            245       298          566 
                                                               4,829     4,811        9,963 
                                                     ===============  ========  =========== 
 
 Recurring income includes all support services, 
  software as a service income (SaaS) and hosting 
  income. Non-recurring income includes sales of 
  new licenses, and income derived from installing 
  those licenses including training, installation, 
  and data translation. Third party revenues arise 
  from the sale of third party software. 
 
 

The Group notes IFRS15 Revenue from Contracts with Customers which is to be adopted for all accounting periods beginning on or after 1 January 2018. The Group is working on fully understanding the implications of this new standard. The Group has yet to decide upon the transitional arrangements to adopt, but an adjustment in respect of prior years is expected. The major impact is likely to be in respect of various outright license sales which require a support contract where some the non-recurring license income will need to be spread. Other adjustments may be required.

   5.         Acquisition related items 
 
                                                     Year ended 
                                    6 months ended 
                                           30 June       31 Dec 
                                    2017      2016         2016 
                                 GBP'000   GBP'000      GBP'000 
 Estimated change in 
  fair value of contingent 
  consideration                        -         -         (48) 
 Amortisation of acquisition 
  intangibles                        189       189          379 
 Additional amortisation 
  on change of estimated 
  useful life of platform 
  technology                           -         -         720* 
 
                                     189       189        1,051 
 Unwinding of discount 
  on contingent consideration          4         8           15 
 
 Total                               193       197        1,066 
                                ========  ========  =========== 
 

*The decision to change the estimated useful life of certain assets was made at the time of the preparation of the 2016 final accounts. Accordingly, as the decision had not been made at the time of the preparation of the interim accounts to June 2016, no adjustment has been included.

Impairments to intangibles are reviewed normally at the year end. As previously stated the Group has been informed that a contract with a major client is likely to expire later this year or early next. This contract, which is with a client using an acquired legacy product, is worth in the region of GBP600,000 per annum in contribution terms to the Group. An amendment to the contract has been agreed which will give the client the rights to terminate at 3 months' notice during the contract term to 30 November 2018 (which can be extended by agreement). At this stage, the timing of the exit is unclear and so no impairment has been recognised in these interim statements nor has a detailed review been carried out of the remaining useful economic life. A full and comprehensive review will be carried out at the yearend when the position should be clearer. The intangibles that are impacted, their original and outstanding lives together with the value of such intangibles at 30 June 2017 are shown below:

 
 Intangible              Original   Remaining     Value of 
  asset                   life       life at 30    intangibles 
                                     June 2017     at 30 June 
                                                   2017 in GBP000s 
----------------------  ---------  ------------  ----------------- 
 Developed 
  technology             6          2             53 
----------------------  ---------  ------------  ----------------- 
 Contractual 
  and non-contractual 
  relationship           10         6             836 
----------------------  ---------  ------------  ----------------- 
 
   6.         Tax 
 
                                                       Year ended 
                                      6 months ended 
                                             30 June       31 Dec 
                                      2017      2016         2016 
                                   GBP'000   GBP'000      GBP'000 
 Current tax charge                     17        73          178 
 Prior year adjustment 
  - current tax                          -         -         (91) 
 Deferred tax release 
  charge                              (34)        10        (100) 
 Prior year adjustment 
  - deferred tax                         -         -         (50) 
 Deferred tax re acquisition 
  intangibles                         (34)      (34)         (68) 
 Prior year adjustment 
  - deferred tax re acquisition 
  intangibles                            -         -          (3) 
                                  --------  --------  ----------- 
 Total                                (51)        49        (134) 
                                  ========  ========  =========== 
 

The tax charge is impacted by the higher rates of corporation tax payable in the US and Australia offset by the R&D tax credits available to both Dillistone Systems and Voyager Software and GatedTalent Limited. Deferred tax has been provided at 17%.

   7.         Dividends 

In view of its investment in GatedTalent and the related fund-raising exercise, the Board has decided not to pay an interim dividend (2016: 1.375p per share).

   8.         Earnings per Share 
 
                                                           Year ended 
                                     6 months ended 
                                         30 June               31 Dec 
                                       2017         2016         2016 
 Basic earnings per 
  share 
 (Loss)/ profit attributable 
  to ordinary shareholders      GBP(24,000)   GBP489,000   GBP526,000 
 
 Weighted average number 
  of shares                      19,668,021   19,668,021   19,668,021 
 
 Basic (loss)/earnings 
  per share (pence)                  (0.12)         2.48         2.68 
                               ============  ===========  =========== 
 
 Diluted earnings per 
  share 
 (Loss)/ profit attributable 
  to ordinary shareholders      GBP(24,000)   GBP489,000   GBP526,000 
 
 Diluted weighted average 
  number of shares               19,668,021   19,857,686   20,082,096 
 
 Diluted earnings per 
  share (pence)                      (0.12)         2.46         2.62 
                               ============  ===========  =========== 
 
   9.         Related party transactions 

The Company has a related party relationship with its subsidiaries, its directors, and other employees of the Company with management responsibility. There were no transactions with these parties during the period outside the usual course of business.

There were no transactions with any other related parties.

   10.       Cautionary statement 

This Interim Report has been prepared solely to provide additional information to shareholders to assess the Company's strategies and the potential for these strategies to succeed. The Interim Report should not be relied on by any other party or for any other purpose. The Interim Report contains certain forward-looking statements with respect to the financial condition, results of operations and businesses of the Company. These statements are made in good faith based on the information available to them up to the time of their approval of this report. However, such statements should be treated with caution as they involve risk and uncertainty because they relate to events and depend upon circumstances that will occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements. The continuing uncertainty in global economic outlook inevitably increases the economic and business risks to which the Company is exposed. Nothing in this announcement should be construed as a profit forecast.

This information is provided by RNS

The company news service from the London Stock Exchange

END

IR BIGDCCDDBGRR

(END) Dow Jones Newswires

September 28, 2017 02:01 ET (06:01 GMT)

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