Dillistone Regulatory News (DSG)

25 Sep 2009 07:00



25 September 2009

DILLISTONE GROUP PLC

INTERIM RESULTS

FOR THE SIX MONTHS ENDED 30 JUNE 2009

Dillistone Group Plc ('Dillistone' or 'the Group'), the AIM listed global supplier of executive recruitment software, announces interim results for the six months ended 30 June 2009.

Commenting on the results, Chairman Jim McLaughlin said:

"The Group enjoys a high proportion of recurring income which has supported the lower level of new systems sales so far this year and we have been diligent about controlling our cost base to ensure that we continue to meet market expectations.

"Operating profits, although lower than for the same period last year, exceeded those recorded in the second half of 2008 when the full impact of the recession was first reflected in the Group's financial performance."

Highlights for the period:

	6 Months ended 30 June 2009	6 Months  ended 31 Dec  2008	6 Months ended 30 June 2008
Revenue	£1.822m	£2.092m	£2.516m
Operating profit	£0.466m	£0.440m	£0.932m
Profit before tax	£0.471m	£0.477m	£0.949m
Earnings per share (basic)	6.42p	6.18p	12.30p
Cash balances	£1.795m	£2.352m	£2.042m

Recurring revenues increased over 2008 by 12% to £1.203m;

Maintained interim dividend of 3.5p per share; 

Clients in over 55 countries world wide;

Resilient performance from US business;

Improving Order Book;

On current trading and prospects, Mr McLaughlin added:

"Having established some stability in a very difficult market, it does appear from recent orders received that the Group is likely to achieve its market expectations for the year as a whole and, with cash reserves, a strong balance sheet and increased recurring revenues, we are well positioned to take advantage of any upturn in global economic activity."

  

Contacts:

Jim McLaughlin Dillistone Group Plc 01934 710 509

Chairman & Finance Director

Emily Morgan Blomfield Corporate Finance 020 7489 4500

Director, Corporate Finance

Daniel Briggs Religare Hichens, Harrison 020 7382 7776

Tom Cooper/Paul Vann Winningtons 020 3043 4162

0797 122 1972

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 is unique in providing tailored workflow and 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 55 countries.

  

Chairman's Statement 

I said in my report for the year ended 31 December 2008 that the Group would see the impact of the recession in its 2009 results, and that has been the case. The year ended December 2008 saw a marked downturn in the second half when compared to the first half of that year. I am very pleased to be able to report that, as a result of strong recurring revenues, and in spite of a reduction in new system sales, operating profits for the 6 months ended 30 June 2009 exceeded those seen in the second half of 2008, when the full impact of the recession was first reflected in the financial performance of the Group.

 

Financial Performance

Revenue in the 6 months ended 30 June 2009 amounted to £1,821,940 (2008 - £2,515,902), a reduction of 28% when compared with the same period in 2008. Operating profits for the 6 months ended 30 June 2009 were £465,655 (2008 - £931,631) and profits before tax fell to £471,461, (2008 - £948,577).

However, when compared to the second half of 2008, operating profits increased slightly from £439,770 to £465,655, despite a reduction in revenue from £2.092m in the second half of 2008 to £1.822m in the period under review. Administrative costs were reduced to £1.296m in the 6 months ended 30 June 2009, when compared to £1.465m in the first half of 2008, and £1.569m in the second half of that year.

Recurring revenues increased by 12% to £1.204m when compared to the £1.071m earned in the first half of 2008, and by 2.5% over the £1.175m earned in the second half of 2008. In the first half of 2009, recurring revenues comprised some 66% of total sales, when compared to just 43% in the first half of 2008, and 56% in the second half of 2008. There was a marked difference in performance between the UK and Asia businesses, both of which suffered reductions in sales of over 40% in total sales, and our European and USA businesses, which were much less adversely affected. To illustrate the point, the USA business recorded an increase in sales of 4% in the first half of this year as a result of recurring ASP revenues. The USA business now earns some 70% of its revenues from recurring sources.

Non recurring revenues, mainly arising from the sale of new systems, universally suffered throughout the Group as orders from both existing and new clients were more difficult to come by. However, since the start of the second half we have seen what appears to be a significant improvement in the market, and this has manifested itself in a number of valuable orders.

Regionally, the UK and Asia both suffered badly in their overall performance, with the UK recording a 95% reduction in profits, and Asia 69%, both when compared to the comparable period in 2008. Our Europe business showed a small reduction in profitability of just 7%, whilst the USA increased its profits from operations by some 13% partly as a result of a concentration in its business towards the ASP model.

 

Cashflow in the 6 months ended 30 June 2009 showed an outflow of some £533,000 primarily as a result of dividends paid of £396,000 and investment in new product development of £235,000 and reflects the decision to commit resources to the further development of FILEFINDER. This latter cost compares to just £38,000 in the first half of 2008. At 30 June 2009 we had cash reserves of some £1.8m and a strong balance sheet, both of which stand the Group in good stead and leave us well positioned to take advantage of any upturn. 

 

Earnings per share amounted to 6.42p, compared with 12.30p for the corresponding period in 2008, and 6.18p per share for the second half of 2008. As announced in my annual report for 2008, the Board has decided to maintain the dividend for 2009 at the same level as was paid in respect of 2008, and accordingly, the Board has decided to pay a dividend of 3.5p per share (2008-3.5p) on 30 October 2009 to holders on the register on 9 October 2009. Shares will trade ex-dividend from 7 October 2009.

Prospects

Having established some stability in a very difficult market, it does appear from recent orders received that the Group is likely to achieve its market expectations for the year as a whole, and is well positioned to take advantage of any upturn in global economic activity. The level of recurring revenue across the Group, the cash reserves and strong balance sheet all place the Group as a leading contender to emerge well from the current recession.

Jim McLaughlin

25th September 2009

  

CONSOLIDATED INCOME STATEMENTS
			Year Ended
	6 Months ended 30 June		31 December
	2009	2008	2008
	Unaudited	Unaudited	Audited
	£	£	£
Revenue	1,821,940	2,515,902	4,608,197
Cost of sales	(60,434)	(119,473)	(202,997)
Gross profit	1,761,506	2,396,429	4,405,200
Administrative expenses	(1,295,851)	(1,464,798)	(3,033,799)
Result from operating activities	465,655	931,631	1,371,401
Financial income	5,806	16,946	54,171
Profit before tax	471,461	948,577	1,425,572
Tax expense	(119,724)	(284,573)	(427,672)
Profit for the period/year	351,737	664,004	997,900
Earnings per share (pence)
Basic	6.42	12.30	18.48
Diluted	6.17	11.60	17.50

  

CONSOLIDATED BALANCE SHEETS
			As at
	As at 30 June		31 December
	2009	2008	2008
	Unaudited	Unaudited	Audited
ASSETS	£	£	£
Non-current assets
Intangible assets	911,540	655,862	707,396
Property plant & equipment	132,222	147,877	158,443
	1,043,762	803,739	865,839
Current assets
Inventories	31,003	21,506	50,628
Trade and other receivables	1,311,385	1,333,539	1,306,748
Cash and cash equivalents	1,795,323	2,041,885	2,352,794
	3,137,711	3,396,930	3,710,170
Total Assets	4,181,473	4,200,669	4,576,009
EQUITY AND LIABILITIES
Equity
Share capital	282,976	270,000	270,000
Share premium	28,947	-	-
Share option reserve	9,254	36,476	40,427
Retained earnings	1,620,667	1,489,027	1,633,923
Translation reserve	99,084	82,939	123,749
Total Equity	2,040,928	1,878,442	2,068,099
Liabilities
Current liabilities
Trade and other payables	2,014,617	1,982,768	2,328,489
Current tax payable	122,928	336,459	176,421
	2,137,545	2,319,227	2,504,910
Non-current liabilities
Deferred tax liability	3,000	3,000	3,000
Total Liabilities	2,140,545	2,322,227	2,507,910
Total liabilities and equity	4,181,473	4,200,669	4,576,009

The financial statements were approved by the board of directors and authorised for issue on  25th September 2009. They were signed on its behalf by:
J S Starr		J McLaughlin

CONSOLIDATED CASH FLOW STATEMENTS
			Year ended
	6 Months ended 30 June		31 December
	2009	2008	2008
	Unaudited	Unaudited	Audited
	£	£	£
Operating Activities
Profit from operations	465,655	931,631	1,371,401
Less taxation paid	(173,217)	(248,937)	(552,074)
Adjustment for
Depreciation	71,610	52,938	132,712
Share option expense	-	9,698	13,649
Operating cash flows before movements
in working capital	364,048	745,330	965,688
Decrease / (Increase) in receivables	(4,637)	(49,349)	(22,558)
Decrease / (Increase) in inventories	19,625	(19,172)	(48,294)
(Decrease) / Increase in payables	(313,872)	134,730	480,451
Net cash generated from operating activities	65,164	811,539	1,375,287
Investing Activities
Interest received	5,806	16,946	54,171
Purchases of property plant and equipment	(14,088)	(22,941)	(71,747)
Investment in product development	(235,445)	(38,400)	(131,579)
Net cash used in investing activities	(243,727)	(44,395)	(149,155)
Financing Activities
Proceeds from issue of share capital	41,923	-	-
Dividends paid	(396,166)	(324,000)	(513,000)
Net cash used by financing activities	(354,243)	(324,000)	(513,000)
Net change in cash and cash equivalents	(532,806)	443,144	713,132
Cash and cash equivalents at beginning of the
Period	2,352,794	1,533,649	1,533,649
Effect of foreign exchange rate changes	(24,665)	65,092	106,013
Cash and cash equivalents at end of period	1,795,323	2,041,885	2,352,794

  

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
			Share
	Share	Share	option		Retained	Foreign	Total
	capital	premium	reserve		earnings	exchange
	£	£	£		£	£	£
Balance at 31 December 2007	270,000	-	26,778		1,149,023	17,736	1,463,537
Profit for the 6 months ended 30 June 2008	-	-	-		664,004	-	664,004
Share option expense	-	-	9,698		-	-	9,698
Exchange differences on translation
of overseas operations	-	-	-		-	65,203	65,203
Dividends paid	-	-	-		(324,000)	-	(324,000)
Balance at 30 June 2008	270,000	-	36,476		1,489,027	82,939	1,878,442
Profit for the 6 months ended 31	-	-	-		333,896	-	333,896
December 2008
Share option expense	-	-	3,951		-	-	3,951
Exchange differences on translation
of overseas operations	-	-	-		-	40,810	40,810
Dividends paid	-	-	-		(189,000)	-	(189,000)
Balance at 31 December 2008	270,000	-	40,427		1,633,923	123,749	2,068,099
Profit for the 6 months ended 30 June 2009	-	-	-		351,737	-	351,737
Issue of share capital	12,976	28,947	-		-	-	41,923
Share option release	-	-	(31,173)		31,173	-	-
Exchange differences on translation
of overseas operations	-	-	-		-	(24,665)	(24,665)
Dividends paid	-	-	-		(396,166)	-	(396,166)
Balance at 30 June 2009	282,976	28,947	9,254		1,620,667	99,084	2,040,928

  

NOTES TO THE INTERIM REPORT

1. Basis of Preparation

The financial information for the six months ended 30 June 2009 included in this interim report comprises the consolidated income statement, the consolidated balance sheet, the consolidated cash flow statement, the consolidated statement of changes in equity and the related notes. This statement has been prepared in accordance with IAS 34 "Interim Financial Reporting".

This interim financial information is unaudited but has been reviewed by the auditors and their review opinion is included in this interim report. 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 2008 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 record 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 2008 financial statements of Dillistone Group Plc.

 

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, adjusted to take into account sub-optimal exercise factor and other flaws in Black-Scholes, and taking into account the terms and conditions upon which the incentives were granted.

3. Segment reporting

Geographical segments
The following table provides an analysis of the Group's sales by geographical market.
					Year ended
	6 Months ended 30 June				31 December
	2009		2008		2008
	£		£		£
UK	720,668		1,285,633		2,256,516
Europe	527,791		570,005		1,008,035
USA	423,936		407,702		832,527
Asia Pacific	149,545		252,562		511,120
	1,821,940		2,515,902		4,608,198
Business Segment
The following table provides an analysis of the Group's sales by business segment.
					Year ended
	6 Months ended 30 June				31 December
	2009		2008		2008
	£		£		£
Recurring	1,203,759		1,071,388		2,245,943
Non Recurring	618,181		1,444,514		2,362,254
	1,821,940		2,515,902		4,608,197
Recurring income includes all support services, and web hosting income. Non recurring income includes sales of new licenses, and income derived from installing those licenses including training, installation, and data translation.

Result
			Year ended
	6 Months ended 30 June		31 December
	2009	2008	2008
	£	£	£
UK	22,737	456,307	523,611
Europe	408,923	440,668	729,318
USA	176,841	156,840	324,377
Asia Pacific	44,396	141,860	307,447
	652,897	1,195,675	1,884,753
Unallocated Expenses	(187,242)	(264,044)	(513,352)
Profit from Operations	465,655	931,631	1,371,401

 

Total assets	As at	As at	As at
	30 June 2009	30 June  2008	31 December  2008
	£	£	£
UK	2,595,856	2,792,493	3,438,892
Europe	716,558	539,621	338,609
US	554,072	684,360	583,553
Asia Pacific	314,987	184,195	214,955
	4,181,473	4,200,669	4,576,009

4. Dividends

A final dividend of 7p per share in respect of the year ended 31 December 2008 was paid on 9 June 2009. The total cost of this dividend was £396,166.

The Board has decided to pay an interim dividend of 3.5 pence per share (2008: 3.5p) on 30 October 2009 to holders on the register on 9 October 2009. Shares will trade ex-dividend from 7 October 2009.

 5. Earnings per Share

			Year ended
	6 Months ended 30th June		31 December
	2009	2008	2008
Basic earnings per share
Profit attributable to ordinary shareholders	£351,737	£664,004	£997,900
Weighted average number of shares	5,480,739	5,400,000	5,400,000
Basic earnings per share (pence)	6.42	12.30	18.48
Diluted Earnings per share
Profit attributable to ordinary shareholders	£351,737	£666,427	£997,900
Diluted weighted average number of shares	5,701,325	5,745,449	5,702,087
Diluted earnings per share (pence)	6.17	11.60	17.50

6. 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.

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