Final Results

RNS Number : 2824E

Dillistone Group PLC

05 April 2011

 



5 April 2011

Dillistone Group Plc

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

Final results for the year ended 31 December 2010

Dillistone, the AIM quoted supplier of recruitment software, is pleased to announce its audited results for the year ended 31 December 2010.

Highlights for the year:

§ Revenues up 16% to £4.3m with non recurring revenues up 31%

§ Record level of recurring revenues at £2.5m

§ Operating profits up 9% to £1.2m

§ Final dividend of 7p per share recommended, making total dividend for year of 10.5p

§ Cash funds of £2.1m up 18%.  The Group remains debt free

§ Clients in 61 countries world wide

§ Delivery of our largest ever US based implementation

§ FileFinder 10 launched on 31 March 2011

Commenting on the results, Mike Love, Non-Executive Chairman, said:

"Dillistone has made excellent progress in 2010 despite the broader economic uncertainty.  We have grown the client base, invested in product development and delivered an increase in profits.

"We are a market leader in the executive recruitment software industry where our products are business critical to our clients.  We are committed to investing in maintaining and building on that advantage for the benefit of both clients and shareholders.  The release of 'FileFinder 10' is evidence of this strategy."

Annual Report and Accounts

The final results announcement can be downloaded from the Company's website (www.dillistone.com). Copies of the Annual Report and Accounts (as well as the notice of Annual General Meeting) will be sent to shareholders by 30 April 2011 for approval at the Annual General Meeting to be held on 13 June 2011.

Contacts:

Mike Love (Chairman)                      Dillistone Group Plc                 020 7749 6100

Jason Starr (Managing Director)     Dillistone Group Plc                020 7749 6100

Julie Pomeroy (Finance Director)   Dillistone Group Plc                 020 7749 6100

Emily Staples (Nomad)                      Religare Capital Markets         020 7444 0800

Daniel Briggs (Broker)                     Religare Capital Markets         020 7444 0500

Tom Cooper                                       Winningtons Financial PR       020 3176 4722

                                                                                                                 0797 122 1972

[e-mail]

Notes to Editors:

Dillistone Group Plc is a leader in the supply and support of recruitment software to the search and selection market.  Dillistone was admitted to AIM, a market operated by the London Stock Exchange plc, in June 2006.

Dillistone develops, publishes and supports FileFinder, its executive recruitment software, for recruitment companies and in-house recruitment teams.  FileFinder provides tailored workflow and approaching 24 hour support for global users, to mirror the profile and demands of an executive search assignment.  FileFinder has been adopted by around 1,000 companies in more than 60 countries.

Chairman's Statement

Results Overview

We entered 2010 with some signs of an improving market, following a very difficult 2009 for the sector and this has been borne out by our results for the year which saw revenue increase by 16% to £4.3m and operating profits increase by 9% to £1.2m.  These results are in line with market expectations. 

Dillistone is a leading player in the executive recruitment software sector and our continued investment in product development is fundamental to retaining this position in the market.  To this end, we have spent over £0.6m in 2010 and launched the new, next generation, release of our core FileFinder product, FileFinder 10, on 31 March 2011.  This major new version of FileFinder has been in development since 2008 and represents the realisation of an investment of over £1m.  Further details of FileFinder 10 are contained in the Managing Director's Business Review.

Strategy

Dillistone's strategy is to continue to grow the business both organically and through acquisition.  Our organic growth is underpinned by our commitment to product development which ensures that the business continues to command a leading role in the sector and that FileFinder is a natural choice for consideration by customers when looking to acquire software in our field.

The Board is also actively pursuing an acquisition strategy.  This entails consideration of firms offering:

·     executive search products that would increase our share of our core markets; and

·     products that would broaden our offering to the recruitment sector.

Investor Relations

The executive management have invested significant time meeting with both existing and potential investors including private client brokers.  During 2010 we gained a new significant institutional investor and an additional investment from an existing institutional investor. 

To help increase liquidity and marketability of our shares, a resolution will be included at the next Annual General Meeting (AGM) in June to approve a two for one bonus issue of the Company's shares.  Further details will be included in the AGM papers.  Having taken appropriate advice, the Board believes that the bonus Issue may enhance and thereby strengthen the equity base of the Company.

Dillistone will continue to review opportunities to broaden its shareholder base. 

Dividends

An interim dividend of 3.5p per share was paid in November 2010.  The Board has recommended a final dividend of 7p per share, subject to shareholder approval, payable on 21 June 2011 to holders on the register on 20 May 2011. Shares will trade ex-dividend from 18 May 2011.  This takes the total dividend for the year to 10.5p (2009: 10.5p).  For the avoidance of doubt, the recommended dividend of 7p per share, which is subject to shareholder approval, is in respect of existing ordinary shares only and not in respect of any new ordinary shares issued as a result of the two for one bonus issue.

Board Changes

Jim McLaughlin resigned as Executive Chairman and Finance Director in February 2010 and I stepped into the role of Non-Executive Chairman.  Julie Pomeroy joined us as Finance Director in April 2010 and has also become Company Secretary.  Giles Fearnley became a Non-Executive Director in May 2010 and is Chair of the audit committee.  

Alistair Milne also joined the Board as Director of Support Services with effect from January 2011.  Alistair has been with the Group since 2003, and continues as a Director of our UK subsidiary, Dillistone Systems Ltd.

Staff

Our staff are fundamentally important to the success of the business.   It is through their efforts, commitment and determination that we continue as a leading player in the executive search software industry and have been able to produce strong results for 2010.  On behalf of the Board I would like to take this opportunity to thank all of them.

Outlook

The Group continues to work hard to maintain its position in the sector.  The launch of our new FileFinder product, FileFinder 10, will underpin this.  

We have started 2011 well with a strong order book.  However, our approach to the launch of FileFinder 10 is to cautiously roll it out in the first few months.  Consequently, we expect trading in the first half of the year to be broadly in line with H1 2010.  We expect revenues to increase more strongly once clients and potential clients have had the opportunity to see the benefits of the new product.  We anticipate that the real benefits of the investment in FileFinder 10 will be seen in 2012 and beyond.

Dillistone will continue to actively search for suitable acquisitions to enhance its product portfolio and deliver shareholder value.  Dillistone also enjoys a strong balance sheet and remains debt free.  As such, the Board considers it is well placed to compete in the global market place in which it operates.

Dillistone has made excellent progress in 2010 and I look forward to updating you further at the time of our Annual General Meeting in June.

Dr Mike Love

Chairman

Business Review

2010 has proven to be a good year for the business.  Once again, we believe that we have implemented more systems, in more countries, for more executive search firms, than any comparable supplier.  Worldwide, we were signing up an average of 3 new clients every week, with this representing a 50% increase on incoming orders over 2009.  We have grown our recurring revenue base to record levels (£2.5m against £2.3m in 2009) and have maintained our excellent reputation for delivery, with 2010 seeing us implement our largest ever US contract (which also represents our largest contract win since our floatation in 2006). 

The year has also seen us implement our software outside of our traditional markets, with successful implementations at major corporations (ranked up to Fortune 100 level) and at a number of academic and venture capital institutions. This has been achieved despite much of our focus being on preparing for the launch of our "next generation" software application, FileFinder 10, and despite our target markets still suffering from a degree of economic uncertainty.

We continue to offer our FileFinder products for both outright purchase and under the software as a service (SaaS) model.  The latter continues to grow, with 18% of new licence sales in 2010 being under this model (9% in 2009).  By offering our products under both models we are able to ensure the delivery of returns to our shareholders in both the short and longer terms. 

UK, Middle East and Africa (UKMEA)

Our regional split is somewhat arbitrary, as all of our regions are expected to provide service to all of our clients.  That said, our largest region remains UKMEA which accounted for 43% of total sales at £1.8m (2009: £1.5m). 

Europe

Our European business continued to feel the effects of the economic downturn with revenues down by 15% to £0.8m (2009: £1.0m).  The profits for our European operation in 2010 were £0.1m (2009: £0.8m) after carrying a £0.5m recharge from the UKMEA business. 

USA

Our US office is based in New Jersey and primarily looks after our US, Canadian and South American business.  We saw revenues increase by 30% in 2010 to £1.1m (2009: £0.8m).   The US operations accounted for 25% of total sales in 2010 (2009: 22%). 

Australia

Our Asia Pacific business is primarily looked after by our office in Sydney, Australia, and has bounced back strongly after a very difficult 2009.  Revenues grew by 60% to £0.6m (2009:  £0.4m) and accounted for 13% of total sales (2009: 10%). 

As mentioned in the Chairman's Statement, product development is fundamental to retaining a leading position in the executive recruitment software market.  On 31 March 2011, we announced the general availability of our "Next Generation" FileFinder system, FileFinder 10.

FileFinder 10 has been in development since 2008 and represents the culmination of an investment of more than £1m.  Whilst the product shares many characteristics of previous versions, it has been entirely re-written to take full advantage of Microsoft's .NET Framework.

We believe that the new version of the software will bring many advantages to our user base and, in turn, we believe that this will be beneficial to our shareholders:

·    FileFinder 10 has a new interface designed to be both more attractive and intuitive. We believe that this will increase our conversion rate and reduce training requirements, thereby allowing us to implement more systems, more quickly;

·    the new product may be delivered, when required, entirely on a Microsoft platform.  Our historical technology (combining Powerbuilder and Sybase SQL Anywhere) was considered to be disadvantageous, particularly when bidding for corporate clients;

·    the new product has been designed to better meet the specific needs of larger executive search firms.  We believe that, over time, this will see an increase in our average contract size for new business wins;

·    our decision to develop the new generation of FileFinder software using an industry standard platform should make it easier to achieve synergies from any acquisitions we might make; and

·    continuing development is important if we are to maintain our support and SaaS contracts.  We believe that the launch of FileFinder 10 will facilitate increased client retention.

In the build up to the launch of FileFinder 10 on 31 March 2011, we presented the product to a number of existing and potential clients.  Feedback was extremely positive, to such an extent that we now have a waiting list of existing clients wishing to upgrade.  This waiting list includes clients in 11 countries.  In addition to this, we have won a number of contracts from firms wishing to implement FileFinder for the first time.  This includes firms in both Europe and the United States, and includes a number of firms which plan to implement FileFinder having previously used competing systems.

The launch of FileFinder 10 is a major step for the business and one which, we believe, will lead to substantial long term benefits.  However, it is important for the reputation of the Company that we manage the roll out of the product cautiously.  Our budget for the first half of the year reflects this and it is the opinion of the Board that Dillistone will not fully enjoy the benefits of the new product until 2012.

Jason Starr

Managing Director

Financial Review

Overview

Total revenues increased by 16.3% to £4.3m (2009: £3.7m), with operating profits up 9.4% to £1.2m (2009: £1.1m).  Recurring revenues increased by 8.2% to its highest ever level of £2.5m (2009: £2.3m).  Non-recurring revenues saw an increase of 30.8% to £1.7m from £1.3m in 2009.

Administrative costs rose 17.1% to £2.9m (2009: £2.5m).  This was after a fairly austere 2009 which saw expenditure fall from over £3.0m in 2008 by not awarding staff bonuses, reductions in general marketing and administrative expenditure and staff reductions through natural wastage.

Costs increased in 2010 in part due to some one-off costs in 2010 as well as increased marketing related spend which helped us deliver higher sales.  Selective recruitment was also carried out with average staff numbers (excluding directors) in the Group rising from 43 in 2009 to 46 in 2010.  Administration costs also include Director and staff bonuses of £0.1m in 2010 (2009: £nil).  Excluding 2010 bonuses, administrative costs rose by approximately 11%.

Tax has been provided at an effective rate of 26.2% (2009: 22.6%).  This rate reflects the R&D tax credits that have been claimed, though not yet agreed, as well as the higher rates of corporation tax that are payable in the US and Australia. 

Profits for the year rose 4.2% to £0.9m (2009: £0.8m).  Basic EPS rose 2.5% to 15.39p (2009: 15.02p) while fully diluted EPS rose 4.2% to 15.30p (2009: 14.68p).

Capital expenditure

Dillistone invested £0.7m in fixed assets and product development during the year (2009: £0.6m) of which £0.6m was spent on development costs (2009: £0.5m). 

Trade and other receivables

£0.1m (2009: £nil) has been included in non-current assets, reflecting extended payment  or billing terms agreed with customers. 

Trade and other payables

This liability includes income which has been billed in advance but is not recognised at that time.  This principally relates to support renewals which have been billed in December 2010 but that are in respect of services to be delivered in 2011.  This also impacts on debtors at the year end.  Support income is recognised monthly over the period to which it relates.  It also includes deposits taken for work which has not yet been completed as such income is only recognised when the work is complete or the client software goes "live".

Cash

Dillistone finished the year with cash funds of £2.1m (2009: £1.8m) and remains debt free.  Operating activities generated strong cash flows which were invested in development costs and also payment of dividends to shareholders.  

Julie Pomeroy

Finance Director

Consolidated Income statement

	Note	2010		2009
		£'000		£'000
Revenue	3	4,251		3,655
Cost of sales		(187)		(113)
Gross profit		4,064		3,542
Administrative expenses		(2,889)		(2,468)
Results from operating activities	4	1,175		1,074
Financial income	5	7		7
Profit before tax		1,182		1,081
Tax expense	6	(310)		(244)
Profit for the year		872		837
Other comprehensive income:
Currency translation differences		59		(17)
Total comprehensive income for the year		931		820

Earnings per share - from continuing activities

Basic	7		15.39p	15.02p
Diluted	7		15.30p	14.68p

Consolidated statement of changes in Equity

		Share		Share		Retained		Share		Foreign		Total
		capital		premium		earnings		option		exchange
		£'000		£'000		£'000		£'000		£'000		£'000
Balance at 31 December 2008		270		-		1,634		40		123		2,067
Comprehensive income
Profit for the year ended
31 December 2009		-		-		837		-		-		837
Other comprehensive income
Exchange differences on translation of overseas operations		-		-		-		-		(17)		(17)
Transactions with owners
Issue of share capital		13		30		-		-		-		43
Transfer share option reserve on exercised options		-		-		30		(30)		-		-
Dividends paid		-		-		(594)		-		-		(594)
Balance at 31 December 2009		283		30		1,907		10		106		2,336
Comprehensive income
Profit for the year ended
31 December 2010		-		-		872		-		-		872
Other comprehensive income
Exchange differences on translation of overseas operations		-		-		-		-		59		59
Transactions with owners
Share option charge		-		-		-		2		-		2
Dividends paid		-		-		(595)		-		-		(595)
Balance at 31 December 2010		283		30		2,184		12		165		2,674

Consolidated Statement of Financial Position as at 31 December 2010

		Group
	Notes	2010		2009
ASSETS		£'000		£'000
Non-current assets
Intangible assets	8	1,689		1,167
Property plant and equipment	9	71		95
Trade and other receivables	11	68		-
		1,828		1,262
Current assets
Inventories	10	55		56
Trade and other receivables	11	1,346		1,260
Cash and cash equivalents		2,147		1,820
		3,548		3,136
Total assets		5,376		4,398
EQUITY AND LIABILITIES
Equity attributable to owners of the parent
Share capital	13	283		283
Share premium		30		30
Retained earnings		2,184		1,907
Share option reserve	15	12		10
Translation reserve		165		106
Total equity		2,674		2,336
Liabilities
Non current liabilities
Deferred tax liability	6	197		94
Current liabilities
Trade and other payables	12	2,408		1,925
Current tax payable		97		43
Total liabilities		2,702		2,062
Total liabilities and equity		5,376		4,398

Consolidated Cash Flow Statement	2010		2010		2009		2009
Operating activities	£'000		£'000		£'000		£'000
Profit from operations	1,175				1,074
Less taxation paid	(155)				(286)
Adjustment for
Depreciation and amortisation	183				160
Share option expense	2				-
Operating cash flows before	1,205				948
movement in working capital
Decrease/(increase) in receivables	(154)				46
Decrease/(increase) in inventories	1				(5)
(Decrease)/increase in payables	483				(403)
Net cash generated from operating activities			1,535				586
Investing activities
Interest received	7				7
Purchases of property plant and
equipment	(56)				(20)
Investment in development costs	(623)				(537)
Net cash used in investing activities			(672)				(550)
Financing activities
Proceeds from issue of share capital	-				43
Dividends paid	(595)				(594)
Net cash used by financing activities			(595)				(551)
Net increase/(decrease)  in cash and cash equivalents			268				(515)
Cash and cash equivalents at			1,820				2,352
beginning of year
Effect of foreign exchange rate changes			59				(17)
Cash and cash equivalents at end of year			2,147				1,820

Notes to the Accounts

1.         Basis of preparation

While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRSs), this announcement does not itself contain sufficient information to comply with IFRSs. The Company expects to publish full financial statements that comply with IFRSs by the end of April 2011.

The financial information set out in the announcement does not constitute the Company's statutory accounts for the years ended 31 December 2010 or 2009. The financial information for the year ended 31 December 2009 is derived from the statutory accounts for that year which have been delivered to the Registrar of Companies and those for 2010 will be delivered following the Company's annual general meeting.  The auditors have reported on those accounts; their reports were (i) unqualified, (ii) did not include reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006. 

2.         Principal accounting policies

The principal accounting policies adopted are consistent with those of the annual financial statements for the year ended 31 December 2009 as described in those financial statements.

3.         Segment reporting

Management principally monitors the Group's operations in terms of geographical areas and accordingly the segment reporting is presented below by geographical area.

Geographical segments

The following tables provide an analysis of the Group's revenue, assets, liabilities and additions by geographic market.

For the year ended 31 December 2010
	UKMEA		Europe		USA		Asia-Pacific		Total
	£'000		£'000		£'000		£'000		£'000
Segment revenue	1,810		823		1,051		567		4,251
Depreciation and amortisation expense	177		1		3		2		183
Segment result	892		138		239		145		1,414
Central costs									(239)
Operating profit									1,175
Income tax expense	163		-		101		46		310
Additions of non-current assets	677						2		679
Segment assets	2,587		867		889		539		4,882
Central assets - goodwill									494
Total assets									5,376
Segment liabilities	1,572		440		532		159		2,703
For the year ended 31 December 2009
	UKMEA		Europe		USA		Asia-Pacific		Total
	£'000		£'000		£'000		£'000		£'000
Segment revenue	1,528		963		810		354		3,655
Depreciation and amortisation expense	157		-		2		1		160
Segment result	178		761		358		150		1,447
Central costs									(373)
Operating profit									1,074
Income tax expense	148		-		49		47		244
Additions of non-current assets	557		-		-		-		557
Segment assets	2,487		678		626		113		3,904
Central assets - goodwill									494
Total assets									4,398
Segment liabilities	1,082		456		505		19		2,062

Business segment

The following table provides an analysis of the Group's revenue by business segment

Revenue

			2010		2009
			£'000		£'000
Recurring income			2,536		2,344
Non-recurring income			1,715		1,311
			4,251		3,655

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.

It is not possible to allocate assets and additions between recurring and non-recurring income.

4.         Results from operating activities

			2010			2009
			£'000			£'000
Result from operating activities is stated after charging:
Depreciation			82			83
Amortisation			101			77
Gain on foreign exchange transactions			-			(38)
Operating lease rentals - land and buildings			118			104
Money purchase pension contributions			22			26
Fees receivable by the Group auditors:
Audit of financial statements			15		25
Other services:
Audit of accounts of subsidiary of the Company			14		12
Other services relating to taxation			11		13
All other services			17		4

5.         Financial income

			2010		2009
			£'000		£'000
Interest receivable			7		7

6.         Tax expense

			2010		2009
			£'000		£'000
Current tax			207		150
Deferred tax			103		94
Income tax expense for the year			310		244
Factors affecting the tax charge for the year
Profit before tax			1,182		1,081
UK rate of taxation			28%		28%
Profit before tax multiplied by the UK rate of taxation			331		302
Effects of :
Overseas tax rates			37		(1)
Deferred tax not provided			3		13
Enhanced R&D relief			(76)		(70)
Disallowed expenses			15		-
Rate change impact on deferred tax			(16)
Prior Year adjustments			13		-
Exchange rate			3		-
Tax expense			310		244

Deferred tax provided in the financial statements is as follows:

		Group
		2010		2009
		£'000		£'000
Accelerated intangible amortisation		197		94

7.         Earnings per share

			2010		2009
Profit attributable to ordinary shareholders			£872,000		£837,000
Weighted average number of shares			5,665,441		5,572,440
Basic earnings per share			15.39 pence		15.02 pence
Weighted average number of shares after dilution			5,699,857		5,701,325
Fully diluted earnings per share			15.30 pence		14.68 pence

8.         Intangible assets

Group			Development costs		Goodwill		Total
			£'000		£'000		£'000
Cost
At 1 January 2009			510		494		1,004
Additions			537		-		537
At 31 December 2009			1,047		494		1,541
Additions			623		-		623
At 31 December 2010			1,670		494		2,164
Amortisation
At 1 January 2009			297		-		297
Charge for the year			77		-		77
At 31 December 2009			374		-		374
Charge for the year			101		-		101
At 31 December 2010			475		-		475
Carrying amount
At 31 December 2010			1,195		494		1,689
At 31 December 2009			673		494		1,167
At 31 December 2008			213		494		707

9.         Property, plant and equipment

Group		Land and buildings		Office & computer equipment		Fixtures and fittings		Total
		£'000		£'000		£'000		£'000
Cost
At 1 January 2009		163		250		25		438
Additions		-		20		-		20
At 31 December 2009		163		270		25		458
Currency impact		-		3		3		6
Additions		-		56		-		56
At 31 December 2010		163		329		28		520
Depreciation
At 1 January 2009		77		179		23		279
Charge for the year		33		50		1		84
At 31 December 2009		110		229		24		363
Currency impact		-		3		1		4
Charge for the year		33		47		2		82
At 31 December 2010		143		279		27		449
Carrying Amount
At 31 December 2010		20		50		1		71
At 31 December 2009		53		41		1		95
At 31 December 2008		85		71		2		158

10.       Inventories

		Group
		2010		2009
		£'000		£'000
Licences for resale		55		56

11.       Trade and other receivables

		Group
		2010		2009
		£'000		£'000
Trade and other receivables*		1,161		1,164
Prepayments and accrued		253		96
income
		1414		1,260

*Trade and other receivables includes £68,000 (2009: £nil) receivable in more than one year and have been included in non-current assets.

12.       Trade and other payables

		Group
		2010		2009
		£'000		£'000
Trade and other payables		352		294
Deferred income		1,799		1,523
Accruals		257		108
		2,408		1,925

13.       Share capital

						2010		2009
						£'000		£'000
Allotted, called up and fully paid
5,665,441 ordinary shares of 5 pence each						283		283

During 2009, 265,441 ordinary shares of 5 pence were issued for a consideration of £42,879.

14.       Operating lease arrangements

The Group leases offices under non-cancellable operating lease agreements.

At 31 December 2010 the Group had future total commitments under non-cancellable operating leases as follows:

		2010		2009
		£'000		£'000
Commitments payable:
Within one year		83		84
Between two and five years		203		244

15.     Share options

As at 31 December 2010, 11 employees including directors (2009: 12 employees including directors) held options (granted on 3 May 2006 and 14 September 2007) over a total of 33,884 (2009:  35,884) ordinary shares at an average exercise price of 187.74p (2009: 204.44p), as follows:

Date of grant	No of shares under option at 31 December 2009	Exercised during the year	Lapsed during the year	No of shares under option at 31 December 2010	Exercise price
3 May 2006	11,884	-	-	11,884	16.15p
14 September 2007	24,000	-	(2,000)	22,000	297.5p
	35,884	-	(2,000)	33,884

No directors exercised share options during the year.  The Company's share price on 31 December 2010 was 175p.

The weighted average time to expiry of the share options outstanding at 31 December 2010 was 6.2 years (2009: 7.3 years).Details of individual expiry dates are shown above.

The fair value of all options granted is shown as an employee expense with a corresponding increase in equity. The employee expense is recognised equally over the time from grant until vesting of the option. The employee expense for the year was £2,000 (2009: £4,000).  The fair value has been measured using the Black Scholes model. The expected volatility is based on the historic volatility adjusted for any expected changes in future volatility.  The material inputs to the model have been:

		Granted in year ended
		31 December 2006		31 December 2007
Average share price at grant		£0.16		£2.97
Average exercise price		£0.16		£2.97
Expected volatility		10%		10%
Expected life		3 years		3 years
Expiry date		3 May 2016		14 Sept 2017
Expected dividend yield		nil		nil
Risk-free rate of return		5%		5%

16.       Employees

The average number of employees was:

			2010		2009
Operations			46		43
Management			4		4
Employee numbers			50		47

Their aggregate remuneration comprised:

			2010		2009
			£'000		£'000
Wages and salaries			2,093		1,799
Social security costs			234		206
Pension costs			22		29
			2,349		2,034

The aggregate remuneration includes directors' remuneration and costs totalling £457,000 (2009: £356,000) that have been capitalised in intangible assets.  Further details relating to directors' remuneration are disclosed in the financial statements.

17.       Control

The ultimate controlling parties, by way of their significant holding of shares in Dillistone Group Plc, were:

	Ordinary Shares
J Starr		1,184,811
R Howard		1,174,811

18.       Related party transactions

Company

The Company has a related party relationship with its subsidiaries, its directors, and other employees of the Company with management responsibility.

During the year the Company received a management charge of £72,000 (2009: £nil) and a dividend of £nil from its subsidiary company Dillistone Systems (US) Inc (2009: £309,743). At the year end Dillistone Systems (US) Inc owed the Company £70,000 (2009: £nil).

During the current year Dillistone Systems Limited paid a dividend of £1,500,000 (2009: £285,000) to Dillistone Group Plc. The Company was recharged salary expenses by Dillistone Systems Limited of £422,000 (2009: £380,000), and was paid a management charge of £240,000 (2009: £254,000). At the year end Dillistone Systems Limited was owed £513,000 (2009: £1,225,000).

The Company received a management charge during the year from Dillistone Systems (Australia) Pty Limited of £48,000 (2009: £nil) and at the year end owed it £33,000 (2009: £59,000).

Management charges payable by Group members to Dillistone Group Plc relate to management support provided directly to them.

The directors received dividends paid by the Company of £289,000 (2009: £360,000).

19.       Dividends

The dividends paid in 2010 and 2009 were £595,000 (10.5p per share) and £594,000 (10.5p per share) respectively. A final dividend in respect of the year ended 31 December 2010 of £397,000 (7p per share) will be paid on 21 June 2011. These financial statements do not reflect this dividend.

 

END

 

 

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