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Dillistone Group PLC (DSG)

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Friday 27 September, 2019

Dillistone Group PLC

Half-year Report

RNS Number : 8750N
Dillistone Group PLC
27 September 2019
 

 

Dillistone Group Plc

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

Interim Results

 

The Board of Dillistone Group Plc, the AIM quoted supplier of software for the international recruitment industry, is pleased to announce its Interim Results for the six months ended 30 June 2019.

Key points of the unaudited interim report for the six months ended 30 June 2019

·    Reorganisation progressing well

·    Recurring revenue of £3.5m (2018: £3.6m)

·    Recurring revenues represent 83% of total revenue (2018: 81%)

·    Both Dillistone Systems and Voyager Software divisions profitable

·    Reduced loss in https://www.GatedTalent.com division of £(0.257m) (2018: loss of £0.315m) based on significant revenue growth to £0.134m (2018: £0.014m). Division now approximately at EBITDA breakeven (before Group charges) on a monthly basis.

·    Operating loss of £0.044m before acquisition and reorganisation related items (2018 profit: £0.17m)

·    Group is cash generative at an operational level

·    Reorganisation costs incurred in period totalled £0.115m

·    Cash balances of £0.769m at 30 June 2019 (30 June 2018: £1.065m)

·    Bank loan of £0.5m received in June 2019 to finance reorganisation

 

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

"The reorganisation and transfer of operations to Basingstoke is progressing to plan and we are on track with delivering the anticipated cost savings and improved efficiencies within the business.  We anticipate that our two largest divisions, Dillistone Systems and Voyager Software, will both be profitable in 2019.  GatedTalent is now enjoying month on month revenue growth and while - as expected - it will be loss making in the full year, we anticipate that it will make a profit at EBITDA level (before Group charges) in the fourth quarter.  We are confident that the Group will move back into sustained profitable trading with positive cashflows next year. However, with the continuing uncertainty over Brexit in the UK, and ongoing economic uncertainty in the wider world, the Group does expect revenue to be down on its previous expectations and this will result in a loss in the year to 31 December 2019."

 

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

 

Enquiries:

 

Dillistone Group Plc

 

 

Mike Love

Chairman

Via Walbrook PR

Jason Starr

Chief Executive

 

Julie Pomeroy

Finance Director

 

 

 

 

WH Ireland Limited (Nominated adviser)

 

 

Chris Fielding

Managing Director - Corporate Finance & COO CIB

020 7220 1650

 

 

 

Walbrook PR

 

 

Tom Cooper /

Paul Vann

 

020 7933 8780

 

 

0797 122 1972

 

 

[email protected]

         

 

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 platform (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 Basingstoke, Eastleigh, Frankfurt, New Jersey and Sydney.

 

 

Dillistone Group websites and publicly available resources include:

Dillistone Systems: https://www.Dillistone.com

FileFinder: https://www.dillistone.com/executive-search-software/

ISV Skills Testing: https://www.ISV.online

Introducing Voyager: https://www.Voyagersoftware.com

Voyager Business Intelligence: https://www.voyagersoftware.com/recruitment-software-blog/introducing-new-voyager-business-intelligence.html

Voyager Infinity: https://www.voyagersoftware.com/products/infinity-connected-recruitment-software.html

GatedTalent:  https://www.GatedTalent.com

How CEOs are hired:  https://www.gatedtalent.com/insights/ceo-jobs-and-the-executive-career-strategy/

Advice for Executives: https://www.gatedtalent.com/insights/executive-jobs-search-advice-from-executive-recruiters/

What is Executive Search: https://www.gatedtalent.com/insights/what-is-executive-search/

What is Retained Executive Search?: https://www.gatedtalent.com/insights/retained-executive-search-firm/

Executive job boards: https://www.gatedtalent.com/insights/how-do-executives-find-jobs-not-on-executive-job-boards/

Advice for Executive Interviews: https://www.gatedtalent.com/insights/executive-interview-questions-from-top-executive-search-firms-2019/

How to optimize your LinkedIn profile: https://www.gatedtalent.com/insights/linkedin-profile-optimization-for-executives/

How do search firms find executives? https://www.gatedtalent.com/insights/how-executive-search-firms-find-candidates/

LinkedIn Profile Optimization service: https://www.gatedtalent.com/optimization-services/

The Executive Search Process:  https://www.gatedtalent.com/insights/what-is-the-retained-executive-search-process/

Headhunters, and why they won't get you a job:  https://www.gatedtalent.com/insights/headhunters-find-a-job/

 

 

 

 

Chairman's Statement

The Group reorganisation exercise announced in February is progressing well with the expanded office space in Basingstoke fully functional.  Our London facility largely closed on 30 August, and we will have exited the building prior to the year end, in line with our plan.  We are in the process of relocating our Eastleigh offices and this will be completed in Q4.

We are now beginning to see the benefits of the reorganisation with teams across the businesses being increasingly integrated.  The ability to leverage knowledge across the Group is helping to accelerate performance and improve the quality of our services to our clients.  This is particularly noticeable in our product development effort, which allows us to use skills developed for one product to be more rapidly deployed into other products.  We expect to launch additional functionality for our Dillistone, Voyager and GatedTalent divisions later this year, with a significant amount of 'cross team' effort having underpinned this work.

In the six months to June 2019 we have incurred £0.115m in reorganisation costs, which include redundancy and severance payments as well as duplicate running costs. These costs will continue to be incurred with the closure of the office in London and the final steps in the reorganisation being completed in the second half of the year.  We've previously stated that these costs are likely to be in the region of £0.500m-£0.900m.  Our current expectations are that these costs are likely to be less than £0.600m.  The reorganisation is being funded through our own cash resources and from a bank loan of £0.500m taken out in June 2019.  Starting in 2020, the reorganised business will allow us to deliver improved results to our shareholders and improved services to our clients.

Revenue amounted to £4.183m, down £0.267m (6%) of which £0.130m related to the previously announced loss of a major client in 2018.  Recurring revenues represented 83% of revenues (2018: 81%).  Loss for the period was £(0.320m) (2018: £(0.173m) and incorporated the loss in the GatedTalent division of £0.257m (2018: loss of £0.315m).  Orders in the 6 months to 30 June 2018 significantly benefited from the introduction of the GDPR in May 2018 and accordingly 2019 orders are down on the same period in 2018.  However, orders are broadly in line with those in the second half of 2018.

Divisional review

Dillistone Systems (https://www.dillistone.com) reported revenues of £2.101m (2018: £2.122m).  Divisional profits have doubled to £0.200m (2018: £0.100m).  The period has seen development work focussed on enhancing the product such that it is easier to deploy and with improved usability.  The initial release of these developments will commence later in the year. 

Voyager Software (https://www.voyagersoftware.com) reported revenues of £1.948m (2018: £2.314m) with recurring revenue down £0.224m to £1.588m due mainly to the loss of the major legacy contract in February 2018.  The fall in revenue is also, in part, due to a change in business model on the sale of one of the Voyager products which has resulted in lower revenues but higher margins.  The overall effect of this change is essentially neutral in the period.  Divisional profits reduced to £0.139m (2018: £0.307m) in the period.

GatedTalent's (https://www.gatedtalent.com ) revenue increased significantly in the period rising to £0.134m (2018: £0.014m) and continues to grow on a monthly basis.  An increasing proportion of revenue comes from sale of services to individuals rather than to businesses.  In the period, it made a loss of £(0.257m) (2018: loss of £0.315m).  While we anticipate continue healthy growth in revenues, GatedTalent is nevertheless expected to be loss making in 2019.

Financial Performance

Revenue in the six months ended 30 June 2019 decreased by 6% to £4.183m (2018: £4.450m).  Recurring revenues decreased by 4% to £3.469m over the comparable period last year (2018: £3.626m) and represented 83% of total revenues (2018: 81%).  Non-recurring revenues were down at £0.549m (2018: £0.601m). 

Cost of sales reduced by £0.153m in H1 2019 due to lower third-party costs resulting from the change in business model of two of the Voyager products and in part due to the loss of the major contract in 2018.  Excluding amortisation and depreciation, administration expenses reduced by £0.195m in H1 2019, again in part due to the lost contract and also through appropriate cost savings. In addition, the impact of IFRS 16 was to reduce administration costs in 2019 by £0.060m, while increasing amortisation by £0.051m and interest cost by £0.017m.   Excluding acquisition related items, depreciation and amortisation increased 24% to £0.729m (2018: £0.587m) including the IFRS 16 adjustment.  Administrative costs also include £0.198m (2018: £0.235m) relating to the amortisation of acquisition intangibles and reorganisation costs of £0.115m (2018: £nil). The loss for the period before taxation increased to £0.397m (2018: £0.234m). 

There is a tax credit for the period of £0.077m (2018: credit £0.061m).  The 2018 and 2019 tax credits have benefited from claims in the UK for research and development tax credits reflecting the continuing development of our products.

Cash generated from operating activities was £0.225m (2018: £0.617m).  Total cash flows in the 6 months ended 30 June 2019 showed a net inflow of £0.063m (2018: outflow £0.318m).  The main elements of non-operating expenditure related to investment in new product development of £0.615m (2018: £0.748m) and the net receipt of £0.493m from the bank loan.  At 30 June 2019, we had cash reserves of £0.769m (2018: £1.065m) and £0.885m in borrowings (2018: £0.401m).

In view of the short term cost associated with the restructuring process, the Board has decided not to pay an interim dividend this year. 

Strategy

The Group is well down the path of streamlining our business, as announced in 2019.  However, we continue to invest in our future, with significant new product functionality expected on our FileFinder, Infinity and GatedTalent platforms in the coming months.

Outlook

While we have some final steps still to complete, we are pleased to report that the cost of our restructuring process is expected to be at the lower end of expectations. Additionally, our anticipation is that the level of running costs taken out of the business will be as good if not better than we had previously hoped.  We expect both Dillistone Systems and Voyager Software to be profitable in the full year, with GatedTalent reporting reduced losses on higher revenue.  However, with the continuing uncertainty over Brexit in the UK, and ongoing economic uncertainty in the wider world, the Group does expect revenue to be down on its previous expectations and this will result in a loss in the year to 31 December 2019. In the longer term, the reduced cost base of the Group, along with the improved operating structure and our ongoing investment in product development will deliver growth in the business. 

Next year, we fully expect to trade profitably and to generate cash.

 

Mike Love
 

 

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 

 

Note

6 Months ended 30 June

Year ended 31 Dec

 

 

2019

2018

2018

 

 

Unaudited

Unaudited

 Audited

 

 

£'000

£'000

£'000

Revenue

4

4,183

4,450

8,692

Cost of sales

 

(419)

(572)

(1,054)

Gross profit

 

3,764

3,878

7,638

Administrative expenses

 

(4,121)

(4,096)

(8,052)

 

 

 

 

 

Result from operating activities

4

(357)

(218)

(414)

 

 

 

 

 

Analysed as:

 

 

 

 

Result from operating activities before acquisition related items

 

(44)

17

55

 

 

 

 

 

Acquisition and reorganisation related items

5

(313)

(235)

(469)

Result after acquisition related items

(357)

(218)

(414)

 

 

 

 

 

Financial income

 

-

-

1

Financial cost

 

(40)

(16)

(38)

(Loss) before tax

 

(397)

(234)

(451)

 

 

 

 

 

Tax income

6

77

61

191

(Loss) for the period

 

(320)

(173)

(260)

 

 

 

 

 

Other comprehensive income net of tax:

 

 

 

Currency translation differences

 

(26)

(3)

(30)

Total comprehensive (loss) for period net of tax

 

(346)

(176)

(290)

 

 

 

 

 

Earnings per share (pence)

 

 

 

 

Basic

8

(1.63)

(0.88)

(1.32)

Diluted

 

(1.63)

(0.88)

(1.32)

 

 

 

 

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

 

 

 

 

As at 30 June

As at

 

2019

2018

31 Dec 2018

 

Unaudited

Unaudited

Audited

ASSETS

£'000

£'000

£'000

Non-current assets

 

 

 

Goodwill

3,415

3,415

3,415

Intangible assets

4,542

4,728

4,754

Right of use assets

763

-

-

Property plant & equipment

69

279

113

 

8,789

8,422

8,282

Current assets

 

 

 

Inventories

2

3

3

Trade and other receivables

1,750

1,883

1,522

Cash and cash equivalents

769

1,065

725

 

2,521

2,951

2,250

Total assets

11,310

11,373

10,532

 

 

 

 

EQUITY AND LIABILITIES

 

 

 

Equity

 

 

 

Share capital

983

983

983

Share premium

1,631

1,631

1,631

Merger reserve

365

365

365

Convertible loan reserve

14

14

14

Retained earnings

1,367

1,872

1,687

Share option reserve

112

99

106

Translation reserve

37

90

63

Total equity

4,509

5,054

4,849

 

 

 

 

Liabilities

 

 

 

Non current liabilities

 

 

 

Trade and other payables

559

732

690

Lease liabilities

772

-

-

Borrowings

645

388

390

Deferred tax

393

543

489

Current liabilities

 

 

 

Trade and other payables

4,265

4,886

4,370

Lease liabilities

39

-

-

Borrowings

240

13

14

Current tax (receivable)/payable

(112)

(243)

(270)

Total liabilities

6,801

6,319

5,683

 

 

 

 

Total liabilities and equity

11,310

11,373

10,532

The interim report was approved by the Board of directors and authorised for issue on 26 September 2019.  They were signed on its behalf by:

 

JS Starr                                               J P Pomeroy
 

 

 

 

 

CONSOLIDATED STATEMENT OF CASH FLOWS

 

 

 

 

As at 30 June

 

 

2019

2018

2018

 

Unaudited

 Unaudited

Audited

 

 

 

 

 

 £'000

 £'000

 £'000

Operating Activities

 

 

 

(Loss) before tax

(397)

(234)

(451)

Adjustment for

 

 

 

  Financial income

-

-

(1)

  Financial cost

40

16

38

  Depreciation and amortisation

918

822

1,714

  Share option (gain)/expense

6

(2)

5

  Other including foreign exchange adjustments arising from operations

(20)

4

70

Operating cash flows before movements in working capital

547

606

1,375

 

 

 

 

(Decrease)/increase in receivables

(234)

(219)

171

Decrease in inventories

1

1

-

Increase/(decrease) in payables

(229)

206

(471)

Add taxation repaid

140

23

65

 

 

 

 

Net cash generated from operating activities

225

617

1,140

 

 

 

 

Investing Activities

 

 

 

Interest received

-

-

1

Purchases of property plant and equipment

(7)

(36)

(55)

Proceeds from sale of assets

10

-

-

Investment in development costs

(615)

(748)

(1,481)

Contingent consideration paid

-

(146)

(146)

Net cash used in investing activities

(612)

(930)

(1,681)

 

 

 

 

Financing Activities

 

 

 

Finance cost

(23)

(5)

(33)

Payment of lease obligations

(20)

-

-

Bank Loan less repayments

493

-

-

Dividends paid

-

-

(98)

Net cash generated from/(used in) financing activities

450

(5)

(131)

 

 

 

 

Net change in cash and cash equivalents

63

(318)

(672)

Cash and cash equivalents at beginning of the period

725

1,390

1,390

Effect of foreign exchange rate changes

(19)

(7)

7

 

 

 

 

Cash and cash equivalents at end of period

769

1,065

725

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

 

 Share

 Share

 Merger

Retained

Convertible

 Share

 Foreign

 

 Total

 

capital

premium

Reserve

earnings

loan reserve

option

exchange

 

 

 

 £'000

 £'000

 £'000

 £'000

£'000

 £'000

 £'000

 

£'000

 

 

 

 

 

 

 

 

 

 

983

1,631

365

1,687

14

106

63

 

4,849

 

 

 

 

 

 

 

 

 

Loss for the 6 months ended 30 June 2019

 -

 -

 -

(320)

-

 -

 -

 

(320)

 

 

 

 

 

 

 

 

-

Exchange differences on translation of overseas operations

 -

 -

 -

 -

-

 -

(26)

 

(26)

Total comprehensive (loss)

 -

 -

 -

(320)

-

-

(26)

 

(346)

Transactions with owners

 

 

 

 

 

 

 

 

 

 -

 -

 -

 -

-

6

 -

 

6

 

 

 

 

 

 

 

 

 

 

Balance at 30 June 2019

983

1,631

365

1,367

14

112

37

 

4,509

 

 

 

 

 

 

 

 

 

983

1,631

365

2,045

14

101

93

 

5,232

 

 

 

 

 

 

 

 

 

Loss for the 6 months ended 30 June 2018

 -

 -

 -

(173)

-

 -

 -

 

(173)

 

 

 

 

 

 

 

 

-

Exchange differences on translation of overseas operations

 -

 -

 -

 -

-

 -

(3)

 

(3)

Total comprehensive (loss)

-

-

-

(173)

-

-

(3)

 

(176)

 

 

 

 

 

 

 

 

 

Share option charge

-

-

-

-

-

(2)

-

 

(2)

 

 

 

 

 

 

 

 

 

 

Balance at 30 June 2018

983

1,631

365

1,872

14

99

90

 

5,054

 

 

 

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 2019 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 2018 and are those which will form the basis of the 2019 financial statements other than IFRS 16 which came into force on 1 January 2019.

IFRS 16 requires the recognition of a right-of-use asset and lease liability for all leases.  The Group has adopted the standard in full using the modified retrospective approach, whereby the right-of-use asset is recognised at the date of initial application (1 January 2019) and the lease liability is measured based on remaining payments. There is no effect on prior year figures and no need to re-state comparatives (refer to note 9 for further details).

The comparative financial information presented herein for the year ended 31 December 2018 does not constitute full statutory accounts for that period. The Group's annual report and accounts for the year ended 31 December 2018 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 12 Cedarwood, Crockford Lane, Chineham Business Park, Basingstoke, RG24 8WD.  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 2019 and 30 June 2018

 

 

 

Adjusted operating profits

Acquisition and reorganisation related items

 

 

Adjusted operating profits

Acquisition and reorganisation related items

 

 

 

30-Jun-19

 2019*

30-Jun-19

 

30-Jun-18

 2018*

30-Jun-18

 

 

 

 

 

 

 

 

 

 

 

£'000

£'000

 £'000

 

£'000

£'000

 £'000

 

 

 

 

 

 

 

 

 

Revenue

 

4,183

-

4,183

 

4,450

-

4,450

 

 

 

 

 

 

 

 

 

Cost of sales

 

(419)

-

(419)

 

(572)

-

(572)

 

 

 

 

 

 

 

 

 

Gross profit

 

3,764

-

3,764

 

3,878

-

3,878

 

 

 

 

 

 

 

 

 

Administrative expenses

 

(3,808)

(313)

(4,121)

 

(3,861)

(235)

(4,096)

 

 

 

 

 

 

 

 

 

Results from operating activities

 

(44)

(313)

(357)

 

17

(235)

(218)

 

 

 

 

 

 

 

 

 

Financial income

 

-

 -

-

 

-

 -

-

Financial cost

 

(38)

(2)

(40)

 

(16)

 -

(16)

 

 

 

 

 

 

 

 

 

Profit/(loss) before tax

 

(82)

(315)

(397)

 

1

(235)

(234)

 

 

 

 

 

 

 

 

 

Tax expense/(income)

 

40

37

77

 

16

45

61

 

 

 

 

 

 

 

 

 

Profit/(loss) for the year

 

(42)

(278)

(320)

 

17

(190)

(173)

 

 

 

 

 

 

 

 

 

Other comprehensive income net of tax:

 

 

 

 

 

 

 

 

Currency translation differences

 

(26)

-

(26)

 

(3)

-

(3)

 

 

 

 

 

 

 

 

 

Total comprehensive income/ (loss) for the year net of tax

 

(68)

(278)

(346)

 

14

(190)

(176)

 

 

Earnings per share - from continuing activities

 

Basic

 

 

(0.21)p

 

(1.63)p

0.09p

(0.88)p

Diluted

 

 

(0.21)p

 

(1.63)p

0.09p

(0.88)p

 

                       

 

*  see accounts note 5

 

 

31 December 2018

 

 

Adjusted operating profits

Acquisition and reorganisation related items

 

 

 

31 December

2018

 2018*

31 December 2018

 

 

 

 

 

 

 

£'000

£'000

 £'000

 

 

 

 

 

Revenue

 

8,692

-

8,692

 

 

 

 

 

 

 

Cost of sales

 

(1,054)

-

(1,054)

 

 

 

 

 

 

 

Gross profit

 

7,638

-

7,638

 

 

 

 

 

 

 

Administrative expenses

 

(7,583)

(469)

(8,052)

 

 

 

 

 

 

 

Results from operating activities

 

55

(469)

(414)

 

 

 

 

 

 

Financial income

 

1

-

1

Financial cost

 

(38)

-

(38)

 

 

 

 

 

Profit/(loss) before tax

 

18

(469)

(451)

 

 

 

 

 

Tax income

 

102

89

191

 

 

 

 

 

Profit for the year

 

120

(380)

(260)

 

 

 

 

 

Other comprehensive income net of tax:

 

 

 

 

Currency translation differences

 

(30)

-

(30)

 

 

 

 

 

Total comprehensive income/(loss) for the year net of tax

 

90

(380)

(290)

 

 

Earnings per share - from continuing activities

 

Basic

0.61p

(1.32)p

Diluted

0.61p

(1.32)p

 

*  see accounts note 5

 

 

4.         Segment reporting

 

 

 

Year ended

 

 

6 months ended 30 June

31 Dec

 

 

2019

2018

2018

 

 

£'000

£'000

£'000

 

Revenue

 

 

 

 

Dillistone Systems

2,101

2,122

4,195

 

GatedTalent

134

14

68

 

Voyager Software

1,948

2,314

4,429

 

Total revenue

4,183

4,450

8,692

 

Results by division

 

 

 

 

 

 

Year ended

 

 

6 months ended 30 June

31 Dec

 

 

2019

2018

2018

 

 

£'000

£'000

£'000

 

 

 

 

 

Results from operating activities

 

 

 

Dillistone Systems

200

100

79

 

GatedTalent

(257)

(315)

(612)

 

Voyager Software

139

307

528

 

 

82

92

(5)

 

 

 

 

 

 

Central

(126)

(75)

60

 

 

 

 

 

 

Amortisation of acquisition intangibles and reorganisation costs

(313)

(235)

(469)

 

Result from operating activities

(357)

(218)

(414)

 

                         

 

 

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

 

 

2019

2018

2018

 

 

£'000

£'000

 

UK

2,888

3,189

6,188

 

Europe

480

518

1,007

 

US

624

562

1,118

 

Australia

191

181

379

 

 

4,183

4,450

8,692

 

 

 

 

 

                       

 

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

 

 

2019

2018

2018

 

 

£'000

£'000

£'000

 

Recurring

3,469

3,626

7,154

 

Non recurring

549

601

1,169

 

Third party revenues

165

223

369

 

 

4,183

4,450

8,692

 

 

 

 

 

 

'Recurring income' represents all income recognised over time, whereas 'Non-recurring income' represents all income recognised at a point in time.  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.

               

 

5.         Acquisition related items and reorganisation costs

 

 

 

Year ended

 

6 months ended 30 June

31 Dec

 

2019

2018

2018

 

£'000

£'000

£'000

Reorganisation costs

115

-

-

Amortisation of acquisition intangibles

198

235

469

 

 

 

 

 

 

 

 

 

313

235

469

Interest on bank loan to finance reorganisation

2

-

-

 

 

 

 

Total

315

235

469

 

 

6.         Tax

 

 

 

Year ended

 

6 months ended 30 June

31 Dec

 

2019

2018

2018

 

£'000

£'000

£'000

 

 

 

 

Current tax

18

(96)

(165)

Prior year adjustment - current tax

-

-

(7)

Deferred tax charge/(release)

(58)

80

64

Prior year adjustment - deferred tax

-

-

6

Deferred tax re acquisition intangibles

(37)

(45)

(89)

Tax (income) for the period

(77)

(61)

(191)

 

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 rates between 19% and 17%. 

 

7.         Dividends

 

In view of its continuing investment in GatedTalent, the Board has decided not to pay an interim dividend (2018: nil per share).

 

8.         Earnings per Share

 

 

 

Year ended

 

6 months ended 30 June

31 Dec

 

2019

2018

2018

 

 

 

 

Basic earnings per share

 

 

 

(Loss) attributable to ordinary shareholders

£(320,000)

£(173,000)

£(260,000)

 

 

 

 

Weighted average number of shares

19,668,021

19,668,021

19,668,021

 

 

 

 

Basic (loss) per share (pence)

(1.63)

(0.88)

(1.32)

 

 

 

 

Diluted earnings per share

 

 

 

(Loss) attributable to ordinary shareholders

£(320,000)

£(173,000)

£(260,000)

 

 

 

 

Diluted weighted average number of shares

19,668,021

19,668,021

19,668,021

 

 

 

 

Diluted (loss) per share (pence)

(1.63)

(0.88)

(1.32)

 

 

9.         Effect of IFRS 16

 

The Group adopted IFRS16 "Leases" with effect from 1 January 2019.  For relevant transactions this has resulted in the group recognising right-of-use assets and lease liabilities in the statement of financial position, and finance costs and depreciation in the statement of comprehensive income. Leases classified as operating leases under previous accounting requirements did not require recognition of related assets or liabilities.  Instead the lease payments were recognised in the statement of comprehensive income on a straight-line basis over the lease term.

 

The Group has applied the modified retrospective approach method with recognition of transitional adjustments on the date of initial application, being 1 January 2019, without restatement of comparative figures.  In addition, IFRS 16 allows for a practical expedient not to recognise right-of-use assets and liabilities for leases with less than 12 months of lease term remaining as of the date of initial application, which the Group has applied.

 

On adoption of IFRS 16, the Group recognised right-of-use assets and lease liabilities in relation to leases of office space.  The right-of-use assets were recognised by reference to the measurement of the lease liability on that date. Lease liabilities were measured at the present value of the remaining lease payments, including estimates for items such as dilapidation cost obligations under the lease, discounted using the Group's incremental borrowing rate (being the rate at which a similar borrowing could be obtained from an independent creditor under comparable terms and conditions).  The rate applied was 5%.  Right-of-use assets are amortised on a straight-line basis.

 

The effects of adopting IFRS 16 for the periods ending 30 June 2019 are as follows:

 

Impact on the Consolidated Interim Statement of Comprehensive Income:

 

 

As

IFRS16

Amounts without

(Unaudited)

 

reported

adjustments

adoption of IFRS16

 

 

£000

£000

£000

Revenue

4,183

-

4,183

Cost of sales

(419)

-

(419)

Gross profit

3,764

-

3,764

Administrative expenses

(4,121)

(9)

(4,130)

Profit from operations

(357)

(9)

(366)

Finance expense

(40)

17

(23)

Profit before tax

(397)

8

(389)

Tax income

77

-

77

Total comprehensive income for the year

(320)

8

(312)

 

 

 

 

Earnings per ordinary share:

 

 

 

Basic

(1.63)p

-

(1.59)p

Diluted

(1.63)p

-

(1.59)p

 

 

Impact on the Consolidated Interim Statement of Financial Position:

 

 

 

As reported

IFRS16

Amounts without adoption of IFRS16

 

(Unaudited)

adjustments

 

 

£'000

£'000

£'000

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

Goodwill

 

3,415

-

3,415

 

Other intangible assets

 

4,542

-

4,542

 

Property, plant and equipment

 

69

-

69

 

Right-of-use assets

 

763

(763)

-

 

 

 

8,789

(763)

8,026

 

Current assets

 

 

 

 

 

Inventories

 

2

-

2

 

Trade and other receivables

 

1,750

-

1,750

 

Cash and cash equivalents

 

769

-

769

 

Total current assets

 

2,521

-

2,521

 

Total assets

 

11,310

(763)

10,547

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

Current

 

 

 

 

 

Trade and other payables

 

(4,265)

(40)

(4,305)

 

Lease liabilities

 

(39)

39

-

 

Corporation tax

 

112

-

112

 

Current borrowings

 

(240)

-

(240)

 

Total current liabilities

 

(4,432)

(1)

(4,433)

 

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

Trade and other payables

 

(559)

-

(559)

 

Lease liabilities

 

(772)

772

-

 

Borrowings

 

(645)

-

(645)

 

Deferred tax liabilities

 

(393)

-

(393)

 

Net assets

 

4,509

8

4,517

 

 

 

 

 

 

 

Equity

 

 

 

 

 

Share capital

 

983

-

983

 

Share premium 

 

1,631

-

1,631

 

Merger reserve

 

365

-

365

 

Convertible loan reserve

 

14

-

14

 

Retained earnings

 

1,367

8

1,375

 

Share option reserve

 

112

-

112

 

Translation reserve

 

37

-

37

 

Total equity

 

4,509

8

4,517

 

 

 

 Impact on the Consolidated Interim Statement of Cash Flows:

 

 

 

As reported

IFRS16 adjustments

Amounts without adoption of IFRS16

 

Unaudited

 

 

 

 

 £'000

 £'000

 £'000

 

Operating Activities

 

 

 

 

(Loss) before tax

(397)

8

(389)

 

Adjustment for

 

 

 

 

  Financial cost

40

(17)

23

 

  Depreciation and amortisation

918

(51)

867

 

  Share option (gain)/expense

6

-

6

 

  Other including foreign exchange adjustments arising from operations

(20)

-

(20)

 

Operating cash flows before movements in working capital

547

(60)

487

 

 

 

 

 

 

(Decrease) in receivables

(234)

-

(234)

 

Decrease in inventories

1

-

1

 

Increase/(decrease) in payables

(231)

40

(191)

 

Add taxation repaid

140

-

140

 

 

 

 

 

 

Net cash generated from operating activities

223

(20)

203

 

 

 

 

 

 

Investing Activities

 

 

 

 

Purchases of property plant and equipment

(7)

-

(7)

 

Proceeds from sale of assets

10

-

10

 

Investment in development costs

(615)

-

(615)

 

Contingent consideration paid

-

-

-

 

Net cash used in investing activities

(612)

-

(612)

 

 

 

 

 

 

Financing Activities

 

 

 

 

Finance cost

(23)

-

(23)

 

lease payments

(20)

20

-

 

Bank Loan less repayments

495

-

495

 

Net cash used by financing activities

452

20

472

 

Net change in cash and cash equivalents

63

-

63

 

                   

 

 

10.       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. 

 

The Directors and certain key management participated in the issue of convertible loan notes in 2017 which carry interest at 8.15% per annum payable quarterly in arrears.

There were no transactions with any other related parties.

 

11.       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 news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.
 
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