Interim Results

Dillistone Group Plc
("Dillistone", the "Company" or the "Group")
Unaudited interim results for the six months ended 30 June 2011

Dillistone, the AIM quoted supplier of software for the international recruitment industry is pleased to announce its unaudited interim results for the six months ended 30 June 2011.  Highlights from the period include:

Highlights:

·    Revenue up 16% to £2.277m

      o Non-recurring revenues up 18% to £0.893m

      o Recurring revenues of £1.384m up 14%

·    Pre tax profit up 8% to £0.551m

·    Basic earnings per share up 5% to 2.34p

·    Cash of £2.138m at 30 June 2011

·    The Group continued to be debt free throughout the period

·    Increase in subscription based sales - offering increased confidence and visibility of future revenues

·    Dividend policy maintained, with interim payment of 1.1667p per share due in November

·    Launch of new FileFinder software platform - FileFinder 10

·    Early contract wins for FileFinder 10 include clients taken from direct competitors in both the UK and the US 

·    Launch of new website at www.dillistone.com

·    2 for 1 share bonus issue completed

FULL REPORT IS AVAILABLE TO DOWNLOAD HERE

Commenting on the results, Mike Love, Chairman of Dillistone, said:

"Against an unsettled economic climate, these results represent continued strong progress.  We flagged up prior to the launch of our new technology platform that we would be taking a cautious approach to delivery and roll out and stated that we did not expect to see the full impact of our new product prior to 2012. Whilst this remains our approach, we consider these numbers to be very encouraging.

"We are also delighted to announce the acquisition of Woodcote Software Limited and its subsidiaries, Voyager Software Ltd and Voyager Software (Australia) Pty Ltd.  We consider this acquisition to be transformational, in that it takes the Group from the executive search niche into a far larger market.  We believe that the acquisition will benefit the Group immediately, however, the real value will come from the growth opportunities and synergies which we have identified and which we anticipate will materialise over the coming years.  Full details of this acquisition are provided in a separate announcement."

 
Enquiries: 

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 more than 1,000 companies in more than 60 countries.

Chairman's Statement

I am delighted to report on another strong set of results from the Group.  During a period of economic uncertainty, we have delivered revenue, profit and earnings growth whilst also undertaking substantial work behind the scenes which, we believe, will help us to deliver shareholder value in the years to come.

In March, we announced the launch of FileFinder 10 - the new generation of Dillistone Systems' FileFinder software platform.  FileFinder 10 is an entirely new product, delivered from scratch over more than a two year period by a newly hired development team to take advantage of the latest technologies.

Since the launch of the product, we have sold systems to approximately 60 firms in around 20 countries.  These include firms who will be replacing products developed by our direct competitors with our new system.

Developing a new product of this scale involves a substantial investment in terms of research and development, but also has a significant impact across the wider business. Thousands of pages of supporting documentation, weeks of internal training and the creation of entirely new marketing and support documentation (including a new website at www.dillistone.com) are just three examples of this.

This level of disruption would normally be expected to have a significant impact on the performance of any company.  I am delighted, therefore, that against this backdrop, we have been able to deliver results which represent a healthy improvement on those achieved in the first half of 2010, with growth in revenue, pre-tax profits and earnings per share all delivered.

Shareholders approved the two for one bonus issue of the Company's shares at the annual general meeting in June.  The aim of this was to increase liquidity, reduce the bid-offer spread and have a positive impact on share price.  I'm delighted to report that early signs are that this proved to be successful on all counts.

We are pleased to announce that an interim dividend payment of 1.1667p per share will be payable in November.  This is in line with the interim dividend paid in respect of 2010.  On a related topic, we have identified a technical issue with the payment of dividends between 2006 and 2010.  Dividends are paid out of available profits in the holding company and by reference to the last filed annual accounts unless interim accounts are required and have been filed.  Although there were sufficient distributable reserves within the Group, those distributable reserves were not in the holding company itself at the appropriate time and the required interim accounts were not filed.  Having taken legal advice, we plan to resolve this technical issue by holding a general meeting on 29 November 2011 to consider the necessary resolutions and, assuming these are passed, to regularise the position.  Full details will be contained in a notice of meeting which will be sent to shareholders by 14 October 2011.

We are also delighted to announce the acquisition of Woodcote Software Limited and its subsidiaries, Voyager Software Ltd and Voyager Software (Australia) Pty Ltd.  We consider this acquisition to be transformational, in that it takes the Group from the executive search niche into a far larger market.  We believe that the acquisition will benefit the Group immediately, but the real value of this acquisition will come from the growth opportunities and synergies which we have identified and which we anticipate will materialise over the coming years.

Financial Performance

Revenue in the 6 months ended 30 June 2011 increased by 16% to £2.277m (2010: £1.968m) with profit before tax showing an increase of 8% to £0.551m (2010: £0.512m).  Administrative costs increased by 16% to £1.595m (2010: £1.370m), with the increase due mainly to higher depreciation and amortisation costs (increase of £0.020m), and higher salary related costs and associated provisions of £0.204m.

Recurring revenues increased by 14% to £1.384m over the comparable period last year (2010: £1.213m) and by 5% over the £1.323m of recurring revenues earned in the second half of 2010.    Recurring revenues in the 6 months to 30 June 2011 accounted for 61% of total revenues (2010: 62%). 

Non recurring revenues saw an 18% growth to £0.893m (2010: £0.755m). This reflects a significant year-on-year improvement in new contract wins and event revenues.

Regionally, our European division saw an increase in revenues of 4% and Asia Pacific saw a 28% increase.  The UK, Middle East and Africa ("UKMEA") business increased revenues by 20% and the US division showed an increase of 12% in revenues for the same period. 

Cash flow in the 6 months ended 30 June 2011 showed a net cash outflow of £0.008m (2010: inflow £0.098m).  The main elements of expenditure related to dividends in the period of £0.396m (2010: £0.396m), investment in new product development of £0.303m (2010: £0.279m) and taxes paid of £0.114m (2010: £0.035m).  At 30 June 2011 we had cash reserves of £2.138m (2010: £1.912m) and no borrowings.

The tax provision increased to £0.154m in the period to 30 June 2011 (2010: £0.134m).  This gives an effective global tax rate of 28.0% (2010: 26.2%).  The 2010 and 2011 rates have been reduced by a claim in the UKMEA for research and development tax credit reflecting the continuing development of our products.

Basic earnings per share amounted to 2.34p (2010: 2.22p).  The Board has decided to maintain the interim dividend for 2011 at the same level as was paid in respect of 2010 and accordingly, a dividend of 1.1667p per share (2010: 1.1667p) will be paid on 4 November 2011 to holders on the register on 7 October 2011.  Shares will trade ex-dividend from 5 October 2011.  Comparative earnings per share and dividend per share are restated to reflect the effect of the two for one bonus issue.

Outlook

The Group has made a strong start to the year.  Although we continue to follow a cautious approach to the delivery of our new software platform, the early signs are that the product has been well received by potential buyers.  Whilst economic conditions remain uncertain in the short term, the acquisition of Woodcote Software Limited gives the Directors further confidence in the long term growth potential of the Group.

Mike Love