Half-Year Report

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.


Mike Love (Chairman) Dillistone Group Plc 020 7749 6100
Jason Starr (Chief Executive) Dillistone Group Plc 020 7749 6100
Julie Pomeroy (Finance Director) Dillistone Group Plc 020 7749 6100
Chris Fielding (Nominated Adviser) WH Ireland Limited 020 7220 1650
Tom Cooper/Paul Vann Walbrook PR 020 3176 4722
0797 122 1972

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 database (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.
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.
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