Interim Results

RNS Number : 6959O
Dillistone Group PLC
24 September 2013
 



24 September 2013

 


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

Interim Results

 

Dillistone Group Plc, the AIM quoted supplier of recruitment software, is pleased to announce its unaudited Interim results for the six months ended 30 June 2013.

 

Highlights:

 

·     Revenue up 6% to £3.81m

Recurring revenues up 7% to £2.41m

Non-recurring revenues up 4% to £1.21m

Third party revenues up 6% to £0.20m

·     Operating profits up 17% to £0.81m

·     Basic EPS excluding amortisation of acquisition intangibles  up 11% to 3.69p

·     EBITDA up 13% to £1.07m

·     The Group continues to be debt free; cash of £1.90m at 30 June 2013 (2012: £1.57m)

·     Dillistone Systems (www.dillistone.com) delivers highest ever H1 sales (£2.52m, up 6%)

·     Voyager Software (www.voyagersoftware.com) revenue increased by 7% to £1.31m

·     Further synergies delivered from the Voyager Software acquisition

·     FCP Internet (www.evolvedb.co.uk), acquired in July 2013, will contribute to profits in H2

·     4% increase in interim dividend to 1.25p (2012: 1.2p)

 

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

 

"These are an encouraging set of results.  We have delivered good revenue growth in both of our divisions in the first half of the year, and have entered the second half with a strong pipeline.  Our results in the second half will be augmented by the acquisition of FCP Internet, completed in early July, which is expected to be immediately earnings enhancing.

 

"The Board expects to make further progress in the second half of the year."

 

 

Webinar:

 

Group Chief Executive Jason Starr and Finance Director Julie Pomeroy will host a webinar and Q+A session to review these results at 3pm today.  To register to attend this webinar, please visit: http://www.dillistonegroup.com/news.aspx?newsID=66

 

 

Investor Lunch:

 

In addition, Dillistone will be holding an Investor Lunch on 13 November 2013 for Private Client Investment Managers and Private Investors.  Those wishing to attend should contact Tom Cooper on tom.cooper@winningtons.co.uk or 020 3176 4722.

 

 

Contacts:

 

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)

Chris Fielding

Head of Corporate Finance

020 7220 1650




Winningtons

Tom Cooper / Paul Vann

020 3176 4722

0797 122 1972

tom.cooper@winningtons.co.uk

 

Notes to Editors:

Dillistone Group Plc (www.dillistonegroup.com) is a leader in the supply and support of recruitment software. It has two main trading businesses: Dillistone Systems, which targets the executive search industry (www.dillistone.com) and Voyager Software which targets other recruitment markets (www.voyage.co.uk). Dillistone was admitted to AIM, a market operated by the London Stock Exchange plc, in June 2006.

 



 

Chairman's Statement

 

The Group has enjoyed a good first half, with good progress in both of its divisions.

 

Dillistone Systems (www.dillistone.com) has delivered its best ever H1 revenue performance, with revenue of £2.52m showing growth of 6% on the previous year.  Although 6% revenue growth is pleasing, it actually understates the performance of the Division in the market. New business order values are significantly up in H1 of 2013 and, with both conversion rates and average contract values having increased in the period under review, the Division carries a strong implementation pipeline into the 2nd half.  This sales growth has helped the Division deliver a 10% increase in operating profits.

 

Voyager Software (www.voyagersoftware.com) has also enjoyed a good trading period with a highlight being the winning of its largest ever contract.  This contract is expected to be implemented in H2.  Revenue in this Division is up by 7%, although operating profits are down 8% due, in part, to increasing resources within the Division in anticipation of future growth.  As with Dillistone Systems, Voyager Software is carrying a strong pipeline into the second half.

 

The Group is a consolidator in what is a highly fragmented recruitment software market.  I am happy to say that the Voyager Software acquisition - completed in September 2011 and the first in the history of the Group - has been integrated well.  In addition to the cost savings and revenue benefits already delivered, we are also seeing operational improvements made as a result of implementing "best practice" processes across the Group.

 

In July 2013, the Group acquired FCP Internet Holdings.  FCP Internet (www.evolvedb.co.uk) offers a comparable product to Voyager Software's Infinity product and presents further resource sharing opportunities.  Integration of the FCP Internet business with the Voyager Software division has begun, with the relocation of the FCP Internet team to existing Group offices having been successfully completed.  FCP Internet is already contributing to the visibility of the future revenues and will contribute to profits in the second half.

 

Improved trading in existing divisions, along with the expectation of earnings enhancement from the acquisition of FCP Internet, gives the Group much to be positive about.  The Board is however conscious of the risk of overstretching resources.  As a result, the Group has recruited additional staff to strengthen its depth of management over recent months, and this will continue in H2.  This will help prepare our businesses for future organic and acquisitive growth.

 

Financial Performance

 

Revenue in the 6 months ended 30 June 2013 increased by 6% to £3.81m (2012: £3.60m).  Recurring revenues increased by 7% to £2.41m over the comparable period last year (2012: £2.25m) and represented 63% of total revenues (2012: 63%).  Non recurring revenues increased 4% to £1.21m (2012: £1.16m).

 

Costs of sales increased to £0.45m (2012: £0.44m) with administrative costs increasing by 4% to £2.56m (2012: £2.47m).  Administrative costs included £0.05m (2012: £0.11m) relating to the amortisation of acquisition intangibles.  Depreciation, excluding amortisation of acquisition intangibles, increased by 56% to £0.21m (2012: £0.14m).

 

Profit before tax and amortisation of acquisition intangibles increased by 6% to £0.86m (2012: £0.81m).  Profit before tax and after amortisation of acquisition intangibles was up 17% at £0.82m (2012: £0.70m).

 

The tax provision remained static at £0.17m in the period to 30 June 2013 (2012: £0.17m). This gave an effective global tax rate of 21.0% (2012: 24.3%).  The 2012 and 2013 rates have been reduced by a claim in the UKMEA for research and development tax credits reflecting the continuing development of our products.  The falling UK tax rates have also had a positive impact on the charge which is offset by the higher rates of corporation tax payable in the US and Australia.

 

Basic EPS rose 11% to 3.69p (2012: 3.33p) before amortisation of acquisition intangibles and 22% to 3.54p after such amortisation. 

 

The Board was pleased to note press reports earlier this year that the Company was the highest yielding software company on the London market.  We continue to follow a progressive dividend policy and, reflecting this, the Board has decided to increase the interim dividend for 2013 by 4%.  Accordingly, a dividend of 1.25p per share (2012: 1.2p) will be paid on 6 November 2013 to holders on the register on 4 October 2013.  Shares will trade ex-dividend from 2 October 2013. 

 

Cash generated from operating activities increased by 19% to £1.07m (2012: £0.9m).  Total cash flow in the 6 months ended 30 June 2013 showed a net cash inflow of £0.23m (2012: outflow £0.02m).  The main elements of non-operating expenditure related to dividends paid in the period of £0.46m (2012: £0.43m) and investment in new product development of £0.34m (2012: £0.36m).  At 30 June 2013 we had cash reserves of £1.90m (2012: £1.57m) and no borrowings.

 

Investor Relations

 

The Group is pleased to announce that we will be offering increased opportunities for investors to speak with our management team.  This will include an interactive webinar, scheduled to take place on the day of the results.  It is our anticipation that the webinar will become a regular event, timed to coincide with every major announcement by the Group.  In addition, we will be hosting a lunch for Private Client Investment Managers and Private Investors in London in November. 

 

Strategy

 

The Group remains committed to a strategy of both organic and acquisitive growth.  The acquisition of Voyager Software proved to be earnings enhancing, and it is anticipated that the acquisition of FCP Internet will follow suit.  As with Dillistone Systems, both Voyager Software and FCP Internet are cash generative and so will support our aim to follow a progressive dividend strategy, subject to the cash needs of the business. 

 

Outlook

 

Good sales growth and visibility across the business, supported by the earnings enhancing acquisition of FCP Internet, gives the Board confidence that the Group will make further progress in the remainder of the year. 

 

 

Mike Love

23 September 2013



 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 

 






Year ended

 

Note

     6 Months ended 30 June

31 Dec

 

2013

2012

2012

 

Unaudited

Unaudited

Audited

 

£'000

£'000

£'000

 

Revenue

3

3,814

3,598

7,052

 

Cost of sales

(446)

(437)

(864)

 

Gross profit

3,368

3,161

6,188

 

Administrative expenses

(2,557)

(2,467)

(4,675)

 






 

Result from operating activities

3

811

694

1,513

 






 

Analysed as:





 

Result from operating activities before amortisation of acquisition intangibles and exceptional items


856

807

1,671

 

Amortisation of acquisition intangibles and exceptional items

4

(45)

(113)

(158)

 

Result after acquisition intangibles and exceptional items


811

694

1,513

 






 

Financial income


6

6

-

 

Profit before tax


817

700

1,513

 






 

Tax expense

5

(172)

(170)

(278)

 

Profit for the period/year


645

530

1,235

 






 

Other comprehensive income:





 

Currency translation differences


(15)

(9)

(11)

 

Total comprehensive income for period/year


630

521

1,224

 






 

Earnings per share (pence)





 

Basic

7

3.54

2.91

6.79

 

Diluted


3.42

2.90

6.76

 






 

Earnings per share (pence) before amortisation of acquisition intangibles and exceptional items

Basic

3.69

3.33

7.20


Diluted

3.56

3.32

7.18


 

 





 



 

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION



As at

 

As at 30 June

31 Dec

 

2013

2012

2012

 

Unaudited

Unaudited

Audited

 

ASSETS

£'000

£'000

£'000

 

Non-current assets




 

Goodwill

2,490

2,490

2,490

 

Intangible assets

3,177

2,853

3,048

 

Property plant & equipment

108

141

124

 


5,775

5,484

5,662

 

Current assets




 

Inventories

38

95

62

 

Trade and other receivables

1,960

1,811

1,715

 

Cash and cash equivalents

1,903

1,569

1,643

 


3,901

3,475

3,420

 

Total assets

8,959

 





 

EQUITY AND LIABILITIES




 

Equity




 

Share capital

910

910

910

 

Share premium

451

451

451

 

Merger reserve

365

365

365

 

Share option reserve

95

45

68

 

Retained earnings

2,718

2,039

2,528

 

Translation reserve

137

154

152

 

Total equity

4,676

3,964

4,474

 





 

Liabilities




 

Non current liabilities




 

Trade and other payables

52

210

256

 

Deferred tax

576

571

592

 

Current liabilities




 

Trade and other payables

4,140

3,928

3,609

 

Current tax payable

232

286

151

 

Total liabilities

5,000

4,995

4,608

 





 

Total liabilities and equity

8,959

 

 

The interim report was approved by the Board of directors and authorised for issue on 23 September 2013.  They were signed on its behalf by:

 

 

JS Starr                                              J P Pomeroy

 

 

 

 

CONSOLIDATED STATEMENT OF CASH FLOWS

Year ended

6 months ended 30 June

31 Dec

2013

2012

2012

Unaudited

Unaudited

Audited

£'000

£'000

£'000

Operating Activities




Profit from operations

811

694

1,513

Less taxation paid

(113)

(30)

(250)

Adjustment for




Depreciation and amortisation

258

250

553

Share option expense

27

20

47

Other including foreign exchange adjustments arising from operations

(14)

6

9

Operating cash flows before movements




in working capital

969

940

1,872

(Increase) / Decrease in receivables

(260)

(88)

(4)

Decrease / (Increase) in inventories

25

(83)

(51)

Increase / (Decrease) in payables

340

129

(149)

Net cash generated from operating activities

1,074

898

1,668





Investing Activities




Interest received

6

6

13

Purchases of property plant and equipment

(31)

(41)

(69)

Investment in development costs

(339)

(361)

(803)

Additional acquisition payments

(26)

(98)

(98)

Net cash used in investing activities

(390)

(494)

(957)





Financing Activities




Dividends paid

(455)

(425)

(643)

Net cash used by financing activities

(455)

(425)

(643)





Net change in cash and cash equivalents

229

(21)

68

 

Cash and cash equivalents at beginning of the period

1,643

1,617

1,617





Effect of foreign exchange rate changes

31

(27)

(42)





Cash and cash equivalents at end of period

1,903

1,569

1,643


 


 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

Share

Share

Merger

Retained

Share

Foreign

Total

capital

premium

Reserve

earnings

option

exchange

£'000

£'000

£'000

£'000

£'000

£'000

£'000










Balance at 31 December 2011

910

451

365

1,934

24

163


3,847










Comprehensive income









Profit for the 6 months ended 30 June 2012

-

-

-

530

-

-


530










Other comprehensive income









Exchange differences on translation of overseas operations

-

-

-

-

-

(9)


(9)










Total comprehensive income

-

-

-

530

-

(9)


521










Transactions with owners









Share option charge

-

-

-

-

21

-


21

Dividends paid

-

-

-

(425)

-

-


(425)










Balance at 30 June 2012

910

451

365

2,039

45

154


3,964










Comprehensive income









Profit for the 6 months ended 31 Dec 2012

-

-

-

705

-

-


705










Other comprehensive income









Exchange differences on translation of overseas operations

-

-

-

-

-

(2)


(2)










Total comprehensive income

-

-

-

705

-

(2)


703










Transactions with owners









Share option charge

-

-

-

2

23

-


25

Dividends paid

-

-

-

(218)

-

-


(218)










Balance at 31 December 2012

910

451

365

2,528

68

152


4,474










Comprehensive income









Profit for the 6 months ended 30 June 2013

-

-

-

645

-

-


645

 










Other comprehensive income









Exchange differences on translation of overseas operations

-

-

-

-

-

(15)


(15)










Total comprehensive income

-

-

-

645

-

(15)


630










Transactions with owners









Issue of share capital

-

-

-

-

-

-


-

Share option charge

-

-

-

-

27

-


27

Dividends paid

-

-

-

(455)

-

-


(455)










Balance at 30 June 2013

910

451

365

2,718

95

137


4,676



 

 

 

 

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 2013 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 on pages 10 - 14. 

 

These interim financial statements have not been audited nor have they been reviewed by the auditors under ISRE 2410 of the Auditing Practices Board.  The financial information set out in this report does not constitute statutory accounts as defined by the Companies Act 2006.  The comparative figures for the year ended 31 December 2012 were derived from the statutory accounts for that year which have been delivered to the Registrar of Companies. Those accounts received an unqualified audit report which did not contain statements under sections 498(2) or (3) (accounting records or returns inadequate, accounts not agreeing with records and returns or failure to obtain necessary information and explanations) of the Companies Act 2006.

 

The interim financial statements have been prepared on the basis of the accounting policies set out in the December 2012 financial statements of Dillistone Group Plc and on a going concern basis.  They are presented in sterling which is also the functional currency of the parent company.  They do not include all of the information required in annual financial statements in accordance with IFRS and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 December 2012.

 

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 3rd Floor, 50-52 Paul Street, London, EC2A 4LB.  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.         Segment reporting

 




Year ended


6 Months ended 30 June

31 Dec

 


2013

2012

2012

 


£'000

£'000

£'000

 

Revenue




 

Dillistone Systems

2,521

2,375

4,666

 

Voyager Software

1,307

1,223

2,386

 

Less intercompany

(14)

-

-

 

Total revenue

3,814

3,598

7,052

 

 

 

Results by division







Year ended

 


6 Months ended 30 June

31 Dec

 


2013

2012

2012

 


£'000

£'000

£'000

 





Results from operating activities




Dillistone Systems

811

738

1,631

 

Voyager Software

220

239

438

 


1,031

977

2,069

 

Unallocated expenses

(175)

(170)

(398)

 

Exceptional Charges

(45)

(113)

(158)

 

Result from operating activities

811

694

1,513

 

 

 

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

 


2013

2012

2012

 


£'000

£'000

£'000

 

UKMEA

2,286

2,028

4,069

 

Europe

471

494

926

 

Americas

674

649

1,239

 

Asia Pacific

383

427

818

 


3,814

3,598

7,052

 





 

 

3.         Segment reporting (continued)

 

Business Segment




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




Year ended

 


6 months ended 30 June

31 Dec

 


2013

2012

2012

 


£'000

£'000

£'000

 

Recurring

2,410

2,251

4,529

 

Non recurring

1,206

1,161

2,140

 

Third party revenues

198

186

383

 


3,814

3,598

7,052

 





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.

 

 

4.         Amortisation of acquisition intangibles and exceptional items




Year ended


6 months ended 30 June

31 Dec


2013

2012

2012


£'000

£'000

£'000

Estimated change in fair value of contingent consideration

-

-

(153)

Unwinding of discount on contingent consideration

-

-

13

Payment in respect of onerous contract

-

-

56

Tax costs relating to options exercised pre acquisition of Woodcote

-

-

28

Amortisation of acquisition intangibles

45

113

227

Total

45

113

171

 

 

5.         Tax




Year ended

6 months ended 30 June

31 Dec

2013

2012

2012

£'000

£'000

£'000

Current tax charge

188

163

251

Deferred tax charge

2

38

101

Deferred tax re acquisition intangibles

(18)

(31)

(74)

Total

172

170

278

 

The tax charge is impacted by the higher rates of corporation tax payable in the US and Australia partially offset by the R&D tax credits available to both Dillistone Systems and Voyager Software and the reduction in the longer term UK tax rates which impact on provided deferred tax.

 

6.         Dividends

 

The Board has decided to pay an interim dividend of 1.25 p per share (2012: 1.2p) on 6 November 2013 to holders on the register on 4 October 2013.  Shares will trade ex-dividend from 2 October 2013.

 

 

7.         Earnings per Share




Year ended

6 months ended 30 June

31 Dec

2013

2012

2012

Basic earnings per share




Profit attributable to ordinary shareholders

£645,000

£530,000

£1,235,000





Weighted average number of shares

18,205,190

18,197,354

18,201,294





Basic earnings per share (pence)

3.54

2.91

6.79





Diluted earnings per share




Profit attributable to ordinary shareholders

£645,000

£530,000

£1,235,000





Diluted weighted average number of shares

18,877,634

18,261,929

18,261,915





Diluted earnings per share (pence)

3.42

2.90

6.76


 

8.         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.

 

 

9.         Post Balance Sheet event

 

On 8 July 2013 the Group completed the acquisition of FCP Internet Holdings Limited ("Holdings"). The acquisition is consistent with the Group's strategy of enhancing strength and achieving scale through acting as a consolidator in a largely fragmented market.

 

Holdings is a non-trading holding company. Its wholly owned subsidiary and sole asset, FCP Internet Limited ("FCP") (www.evolvedb.co.uk/), sells its Evolve software product to its target market of recruitment agencies.  This product, which is wholly delivered through a Software as a Service ("SaaS") model, is designed to facilitate the filling of vacancies and is used by hundreds of users around the World.  FCP operates in the same market sector as the Group's Voyager Software business and is UK based.

 

 

 


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