RNS Number:1713O
Dicom Group PLC
18 February 2008
Regulatory Announcement
DICOM Group plc
Interim Results 2008 - Six Months to 31 December 2007
Basingstoke, 18 February 2008 - DICOM Group plc ('DICOM' or the 'Company'), a
leading provider of Intelligent Capture & Exchange solutions, today announces
Interim Results for the six months ended 31 December 2007.
Financial Highlights of the Interim Results (prepared under IFRS)
* Turnover up 5% to �82.4m (2006: �78.5m)
- Software licence turnover up 4% and software services up 18% in
constant currency terms
- Total software business revenues up 10% in constant currency terms
* Gross profit margins increased to 55.9% (2006: 54.6%)
* Adjusted operating profits up 15% to �8.1m (2006: �7.0m), an increase
of 19% in constant currency terms
* Adjusted operating profit margins up to 9.8% (2006: 9.0%)
* Pre-tax profits up 1% to �6.1m (2006: �6m)
* Adjusted earnings per share up 15% to 6.9p (2006: 6.0p)*
* Net funds of �24.4m (�38.2m at 30 June 2007) after spending �11.2m on
share buy back**
* Proposed interim dividend up 15% to 0.82p (2006: 0.71p)
* * Further details with regards to the calculation of adjusted earnings
and adjusted profits are set out in note 6 to the financial results.
* ** Further details with regards to technical issues concerning the
share buy back are set out in the Chief Financial Officer's Financial Review.
Operating Highlights
* Achieved major customer wins at ING-DiBa, Emirates Airlines, Deutsche
Bank, Prudential and China Merchant Bank
* Remarketing agreement with HP to sell Kofax Intelligent Capture &
Exchange solutions
* Received numerous industry awards:
- Technology Partner of the Year from Open Text Corporation
- Editor's Choice Award from Document Manager Magazine
- Named on Software Magazine's 25th Annual Software 500 List
* Hosted Transform 07 in Budapest during November with more than 500
attendees and partners from 30 countries
Post-Period End Activity
* Reorganisation to position DICOM better for future growth:
- Restructured corporation into vertically aligned, worldwide functions
with global managers
- Restructured the sales function into three groups better aligned with
DICOM's products, markets and customers
- Affected headcount reductions
* Implementation of unified branding:
- Proposal to change the name of the Company to "Kofax plc"
Commenting, Reynolds C. Bish, Chief Executive Officer of DICOM Group said:
"The strategic review I've conducted since joining DICOM in November 2007 has
shown that the company remains fundamentally well positioned and financially
sound but also that some strategic changes are necessary. In addition to
accelerating previously announced changes in strategy, we have started to affect
these further changes through the restructuring of both the company and our
sales organization and with our proposed corporate rebranding. These moves have
better focused all of our resources and we expect the appointment of an EVP of
Worldwide Field Operations to further improve our sales management, productivity
and visibility, plus provide a clearer focus on, and better execution of, key
revenue growth strategies.
"I and the Board remain confident that we will be able to continue to achieve
10% revenue growth in constant currency terms in our software business, with a
higher than expected contribution from software services offsetting lower growth
in software licenses during the remainder of this fiscal year. More importantly,
despite an uncertain economic environment at the present time we remain enthused
about DICOM's market opportunities and continue to target double digit revenue
growth in our software business in future years."
Webcast
There will be a webcast available on the Company's website
(http://www.dicomgroup.com) from 2pm today.
For further information, please contact:
DICOM Group plc Financial Dynamics
Reynolds C. Bish Chief Executive Officer James Melville-Ross
Stefan Gaiser Chief Financial Officer Juliet Clarke
Gabriele Rosenbusch Head of Investor Relations
Tel: +44 (0) 800 6520 616 Tel : +44 (0) 20 7831 3113
e-mail: stefan_gaiser@dicomgroup.com e-mail: dicom@fd.com
gabriele_rosenbusch@dicomgroup.com
About DICOM Group plc
DICOM Group plc (LSE: DCM) is a leading provider of Intelligent Capture &
Exchange solutions. For more than 20 years, DICOM has provided award-winning
solutions that automate document-driven business processes by managing the
transformation and exchange of business-critical information arising in paper,
fax and electronic formats in a more accurate, timely and cost-effective manner.
These solutions provide a verifiable return on investment to thousands of
customers in financial services, manufacturing, retail, government, healthcare,
business process outsourcing and other markets. DICOM delivers these solutions
through a global network of more than 1,200 authorised partners, and its own
sales and service organisations in the more than 60 countries throughout the
Americas, EMEA and Asia Pacific. For more information, visit www.dicomgroup.com.
Chief Executive's Review
Business Review
Operational overview
I am pleased to report that the company achieved 10% year on year growth in our
software licenses and services business in constant currency terms. Strong
growth in services offset lower than anticipated growth in licenses, which
together contributed to gross margin increasing to 55.9% from 54.6%. Adjusted
operating profits increased 15% year on year (19% in constant currency terms),
and operating margins increased to 9.8% from 9.0%. In addition, adjusted EPS
increased by 15% (20% in constant currency terms).
Major customer wins during the period included ING-DiBa, Emirates Airlines,
Deutsche Bank, Prudential and China Merchant Bank. A further endorsement of our
products came in the form of a remarketing agreement with HP for our Intelligent
Capture & Exchange solutions, including our Document Exchange Server software,
which will be integrated with HP imaging and printing products to provide a more
complete solution for customers.
We are also pleased to note that DICOM has received a number of industry awards,
including:
"Technology Partner of the Year 2007" by Open Text Corporation, a global leader
in ECM, Editor's Choice Award from Document Manager Magazine and Software
Magazine's Software 500 ranking of the world's largest software and service
providers.
Reorganisation
Since my arrival as CEO, I have conducted a thorough review of the strategy,
structure and branding of the company. Following this review it is clear that
certain additional measures are now needed to accelerate progress with DICOM's
stated strategy of focusing on the software license and services portion of its
business.
As a result of my review, DICOM's organizational structure has been reorganized
to better align and focus its resources. In the past, most line and staff
functions were decentralized and widely distributed throughout the world, with
both regional and country managers acting as general managers and being
responsible for all of these functions and for revenue generation. With this
reorganization, all line and staff responsibilities have now been consolidated
into vertically aligned, worldwide functions under global managers reporting to
me. The essential purpose of this change is to enable us to execute in a more
consistent and cost effective manner and to focus management efforts more
clearly on revenue generation activities.
In addition, DICOM's sales function has been reorganized to better align and
focus our resources. In the past, the sales function was decentralized and
widely distributed throughout the world, with regional and country managers
being responsible for selling all of the company's products. With this
reorganization, the sales function has now been separated into three groups
better aligned with DICOM's products, markets and customers, namely: (1)
applications software, (2) OEM software, and (3) our European hardware
distribution business. We are confident that this will allow sales employees to
better focus their selling efforts, create clearer lines of authority,
responsibility and accountability as well as improve sales management and
increase sales productivity. To support this change, we will be appointing an
Executive Vice President of Worldwide Field Operations to manage the sales
function and all other customer facing activities on a global basis.
Proposed Change of Name
As a further consequence of my strategic review, the Board is proposing to
change the name of the company to "Kofax plc". There has been confusion both
internally and externally over the various brands used by the company in the
past, many of which have arisen through acquisition. Among all DICOM brands and
products, Kofax clearly emerges as the brand with the highest awareness among
stakeholders on a worldwide basis, having been recognised as the leading capture
software for the past twenty years. Furthermore, the respected products and
innovations that have emerged from Kofax most closely define the direction in
which the company is now heading.
Assuming the necessary resolution is passed by shareholders on 18 February 2008,
it is anticipated that the change of name, and trading under the new ticker '
KFX', will take effect from 8.00am on 19 February 2008. The ISIN number for the
Company's shares will remain unchanged.
Board Changes
On 5 November 2007 I succeeded Rob Klatell as Chief Executive Officer and a
member of the Board of Directors of DICOM. Along with the rest of the Board, I
would like to thank Rob for his efforts on behalf of the Company.
As a result of the reorganisation described above, Urs Niederberger, previously
DICOM's Chief Operating Officer, has now resigned from the Board of Directors.
The Board would like to extend its thanks to Urs for his efforts on behalf of
the company over the past ten years and wish him well in his future endeavours.
Exceptional Charge
As a consequence of the restructuring and rebranding proposal described above,
DICOM has now made approximately 50 redundancies, closed certain facilities and
will record an exceptional charge of �3.5 to �3.8 million in the second half of
this financial year. It is expected that these changes will lead to significant
cost savings over time, which will allow the Board to increase its investment in
initiatives that will drive growth in our software business, including the
hiring of key personnel, improving our corporate infrastructure and supporting
the rebranding process.
Revenue Growth Strategies
With a view to delivering long term shareholder value, I have identified and we
will be executing on four key revenue growth strategies, namely: (1) increasing
market share in our current markets, (2) establishing a leading position in the
front office capture market, (3) extending our market reach with a new hybrid
go-to-market model and (4) augmenting our organic growth with very carefully
selected and planned strategic acquisitions in order to gain competitive
advantage.
Our first revenue growth strategy is to increase market share by taking
advantage of documented growth opportunities in our existing markets and thereby
grow our revenues with or exceed those market growth rates. We will seek to
maintain and extend our market leader position in batch capture by better
leveraging our existing channel partners and installed base of end users and
expanding our global network of channel partners. In addition, we will aim to
improve our newly secured top five position in the transaction capture market by
further leveraging our channel partners and better selling these solutions into
our installed base of end users.
Secondly, we will aim to establish a top five position in the front office or ad
hoc capture market using our Document Exchange Server software and related new
software product offerings. These solutions are designed to facilitate the
capture and processing of documents where they originate as opposed to
centralized, back office environments, and thereby make our customers more
competitive in addition to enabling significant cost savings. This allows us to
enter a new segment of the market with a different and more important value
proposition, which we believe is more strategic to both our end user customers
and channel partners and will allow us to further leverage these assets.
Thirdly, we intend to move to a hybrid go-to-market model to expand our market
reach. This will continue to utilize and expand our existing channels of
resellers, VARs and system integrators, but also extend our sales efforts to
include significantly more direct engagements with larger end user customers at
the enterprise level of the market. Direct engagements in these opportunities
will allow us to better meet customer needs and strengthen our competitive
position while allowing us to still honour the contributions of our channel
partners when appropriate.
Outlook
I and the Board are confident that we will be able to continue to achieve 10%
revenue growth in constant currency terms in our software business this fiscal
year, with a higher than expected contribution from software services continuing
to offset lower growth in software licenses. More importantly, despite an
uncertain economic environment at the present time, we remain enthused about
DICOM's market opportunities and continue to target double digit revenue growth
in our software business in future years.
Extraordinary General Meeting
The Company will be convening an extraordinary general meeting to address the
technical issues concerning reserves as described in the Financial Review,
notice for which will be dispatched to all shareholders shortly.
Reynolds C. Bish
Chief Executive Officer
Financial Review
Software Business turnover
The table below provides a summary of our software licence turnover by capture
market segment and product line. Batch Capture and Transaction Capture turnover
both grew by 8% in constant currency terms. Overall Applications Software
turnover was negatively impacted by a continuing decline in Communications
software, which decreased 17%. Our OEM turnover continued to grow substantially
but such growth was offset by an expected continuing decline in image processing
software sales, resulting in only 2% overall growth in constant currency terms.
Total license sales growth is reported at 4% in constant currency terms.
Software services continued to grow strongly, up 18% in constant currency terms.
Growth in total Software Business is reported at 10% in constant currency terms.
Software business breakdown FY08 FY08 FY07 % Change
6 months to 31 December 2007 constant constant
currency currency
Applications Software �m �m �m
Batch Capture 12.7 13.0 11.9 8%
Transactional Capture 4.1 4.2 3.9 8%
Communications 2.5 2.5 3.0 (17%)
Total Applications Software 19.3 19.7 18.8 4%
OEM 8.2 8.6 8.4 2%
Software Licenses 27.5 28.3 27.2 4%
Software Services 18.1 18.4 15.5 18%
Total Software Business 45.6 46.7 42.7 10%
Revenue by geographic segments
The information set out in the table below provides the breakdown of sales per
geographic segment. Revenue in the Americas decreased by 3%, mainly driven by a
decrease in license sales of 9%. Reported revenue in the Americas has been
negatively impacted by the weakened USD which is down 7% compared to the
previous year period. Revenue in constant currency terms is up 4% in the
Americas. EMEA enjoyed a very strong performance in license sales with growth of
16%. Software services grew at 13%. With the Hardware distribution business
essentially flat, overall growth comes down to 7%.
Due to strong license sales growth in Asia-Pacific in the last financial year we
are able to report a substantial increase in software services of 114%. The
hardware business in Asia has been discontinued other than as a short term
accommodation for some customers and hence is reporting a substantial decrease.
Nevertheless overall revenue growth in Asia amounts to 18% with a noticeable
increase in our software business of 29%.
Geographic turnover Americas Asia EMEA Total
6 months to 31 Dec 2007
�m % change �m % change �m % change �m % change
Software Licences 13.3 (9%) 2.1 0% 12.1 16% 27.5 1%
Software Services 6.7 10% 1.5 114% 9.6 13% 17.8 17%
Hardware - - 0.3 (40%) 26.6 2% 26.9 0%
Hardware Services - - 0.1 0% 10.1 9% 10.2 9%
Total 20.0 (3%) 4.0 18% 58.4 7% 82.4 5%
Total 31 December 2006 20.7 3.5 54.4 78.5
Taxation
The tax charge of DICOM is reported at �2.3m which equates to an effective tax
rate of 38% of pre-tax profits. The charge on the adjusted EPS is reported at
�2.7m which represents an adjusted effective tax rate of 30% on adjusted pre-tax
profits. The difference between the effective tax and the adjusted effective tax
rate is mainly due to a release of deferred tax provisions on intangible assets.
Earnings per share
Basic Earnings per share are reported at 4.3p, a decline of 7%. Adjusted
Earnings per share increased 15% to 6.9p from 6.0p in the comparable period. The
Adjusted Earnings per share calculation excludes certain charges, including
amortisation of intangible assets, share based payments, restructuring charges,
goodwill reductions arising from the utilisation of previously unrecognised tax
losses and fair value adjustments on financial instruments. Please see the Notes
to the Financial Statements concerning further information about the basis upon
which these calculations were made.
Cash Flow
Operating cash flow before restructuring payments are reported at �5.5m (2006:
�4.9m). Net cash inflow from operations amounts to �0.5m, down from �3.0m which
is solely due to higher tax payments and restructuring payments. The Group has
spent �1.8m for tangible assets in the first six months to December 2007
compared to �1.9 in the comparable period. In addition, the Group spent �0.8m on
earn-out agreements for past acquisitions and �0.7m for acquistion of
minorities. The purchases of tangible assets and the above mentioned payments
result in a total cash outflow from investing activities of �2.9m compared to
�4.6m. The cash outflow from financing activities amount to �13.1m after having
spent �11.2m on the share buy-back and the final dividend payment relating to
the year ending 30 June 2007 of �1.3m (technical issues concerning these
payments are described below). The Group therefore ended the period with a net
funds position of �24.4m compared to �38.2m.
Share Buy Back
The Company announced its intention to buy back Company's issued share capital
at the time of its Preliminary Results in August 2007. As per 18 February 2008
this programme has resulted in trades being entered into by the Company in
respect of 6.7% of the Company's issued share capital.
A technical issue has arisen in respect of the Company's ability to finally
settle those trades. The Company's individual and consolidated accounts have
always been prepared, reported upon and laid before shareholders in accordance
with the Companies Act and there have always been sufficient reserves within the
Group for the Group to have implemented the share buy back programme.
Unfortunately, those reserves have not yet been transmitted to the Company as
technically required by the applicable legislation.
As a result, the Group is required to complete the transmission of the reserves
to the Company before the buy back trades can finally be settled as a technical
matter. The Board has been advised that this defect is remediable and
anticipates that the Group's reserves position and therefore the final
settlement of these trades will be regularised shortly. The Company will be
writing to the relevant shareholders shortly in respect of the resolution of
this technical problem.
In the interests of providing as full information as possible to the Company's
shareholders, notes have been included in the financial statements to illustrate
the Group's financial position as subject to these technical difficulties in
implementing the buy back programme as they prevailed at and to 31 December
2007. The position illustrated in those notes will be redundant once the Group's
reserves position has been regularised and the relevant trades finally settled.
Final Dividend
At the annual general meeting on 13 November 2007, the Company declared a final
dividend of 1.41p per ordinary share, the amount of which was paid on 14
December 2007 to all shareholders on the Register on 16 November 2007. The final
dividend was approved by shareholders in accordance with the Company's articles
of association and there were sufficient reserves within the Group for the
Company to have paid that dividend in accordance with the Companies Act.
Unfortunately, that dividend is similarly affected by the problem of the Group's
reserves not yet having been transmitted to the Company as required by the
applicable legislation.
The Company has been advised that it may have theoretical claims against past
and present shareholders in respect of the recovery of the amount of that
dividend as a result of this technical issue.
It is not the intention of the Board ever to pursue these claims. In the
interests solely of finally remedying the position and releasing the theoretical
claims arising as a result of this technical difficulty, the Company will be
convening a further extraordinary general meeting shortly.
Equally in the interests of providing as full information as possible to the
Company's shareholders, notes have been included in the financial statements to
illustrate the Group's financial position as subject to these technical
difficulties in the payment of the final dividend as they prevailed at and to 31
December 2007. The position illustrated in those notes will similarly become
redundant should shareholders approve the resolutions to be proposed at the
extraordinary general meeting described above.
Interim Dividend
Conditionally upon receipt from Group companies of dividends sufficient to
create the necessary distributable reserves, the Board has resolved to pay an
interim dividend of 0.82p per ordinary share (2006: 0.71p). This represents an
increase of 15% over the previous period. Subject to the resolution of the
technical difficulties concerning the Group's reserves described above, which
the Board anticipates will be regularised shortly, the dividend will be paid on
9 May 2008 to shareholders on the register as of 11 April 2008.
Stefan Gaiser
Chief Financial Officer
Consolidated Income Statement (IFRS)
In �'000 Note 6 months to 6 months to Year to
31 December 31 December 30 June
2007 2006 2007
unaudited unaudited audited
restated
Revenue 2 82,358 78,518 160,243
Cost of sales (36,355) (35,651) (69,873)
Gross profit 46,003 42,867 90,370
(39,496) (37,617) (81, 553)
Adjusted operating profit before* 8,081 7,048 15,543
Amortisation of acquired intangible assets (1,155) (1,155) (2,309)
Reduction in goodwill arising on the utilisation
of previously unrecognised tax losses - - (104)
Restructuring costs - - (3,200)
Share-based payment (419) (643) (1,113)
Operating profit 6,507 5,250 8,817
Share of results of associated undertakings 110 55 57
Finance income 530 771 1,361
Finance expense (1,057) (60) (118)
Profit before tax 6,090 6,016 10,117
Tax expense 4 (2,307) (1,920) (2,098)
Profit for the period 3,783 4,096 8,019
Attributable to
Equity holders of the parent 3,743 4,031 7,945
Minority interests 40 65 74
3,783 4,096 8,019
Earnings per ordinary share 6
> basic 4.3p 4.6p 9.1p
> diluted 4.3p 4.4p 8.8p
> adjusted 6.9p 6.0p 15.1p
* Adjusted operating profit is KPI used by the
group to help in assessing the underlying
trading results of the Group.
Consolidated Statement of Recognised
Income and Expense
in �'000
Exchange differences arising on retranslation
of foreign operations and net investment hedge 3,946 (1,792) (2,648)
Tax on items taken directly to or transferred
from equity (219) - 995
Actuarial gain on defined benefit pension plan 72 - 162
Net (expense)/income recognised directly
in equity - - (1,491)
Profit for the period 3,783 4,096 8,019
Total recognised income and expense 7,582 2,304 6,528
Attributable to
Equity holders of the parent 7,542 2,239 6,454
Minority interests 40 65 74
Total 7,582 2,304 6,528
Consolidated Balance Sheet (IFRS)
In �'000 Note At At At
31 December 31 December 30 June
2007 2006 2007
unaudited unaudited audited
restated
Non-current assets
Intangible assets 69,710 67,996 68,043
Tangible assets 4,281 4,045 3,652
Deferred tax assets 2,385 2,009 2,294
Investments 1,131 1,067 940
77,507 75,117 74,929
Current assets
Inventories 9,467 8,364 7,328
Trade and other receivables 39,966 35,935 36,843
Investments 197 169 178
Cash and cash-equivalents 13 25,990 29,089 39,210
75,620 73,557 83,559
Total assets 153,127 148,674 158,488
Current liabilities
Trade and other payables (43,138) (39,977) (42,803)
Other financial liabilities (1,547) (777) (1,078)
Liabilities for current tax (2,154) (3,835) (2,796)
Provisions (1,054) - (2,750)
(47,893) (44,589) (49,427)
Non-current liabilities
Other payables (8,562) (6,585) (7,946)
Financial liabilities (7) (224) (11)
Employee benefits (323) (557) (330)
Deferred tax liabilities (2,606) (3,567) (2,533)
(11,498) (10,933) (10,820)
Total liabilities (59,391) (55,522) (60,247)
Net assets 93,736 93,152 98,241
Capital and reserves
Called up share capital 9 2,229 2,202 2,223
Share premium account 10 59,198 57,940 58,965
Foreign exchange reserve 10 2,170 (1,591) (1,557)
Merger reserve 10 1,717 1,717 1,717
ESOP shares 10 (535) (526) (525)
Treasury shares 10 (11,220) - -
Profit and loss account 10 40,177 33,209 37,262
Shareholder's equity 11 93,736 92,951 98,085
Minority interests - equity - 201 156
Total equity 93,736 93,152 98,241
Consolidated Cash Flow Statement (IFRS)
In �'000 Note 6 months to 6 months to Year to
31 December 31 December 30 June
2007 2006 2007
unaudited unaudited audited
restated
Cash flows from operating activities
Operating profit 6,507 5,250 8,817
Depreciation and amortisation 2,319 2,399 4,737
Share-based payment expense 419 643 1,113
Reduction in goodwill arising on the utilisation
of previously unrecognised tax losses - - 104
Movement in working capital (3,496) (4,682) (753)
Movement in provision (204) (540) 2,210
Other non-cash movements (30) 1,786 (57)
Cash generated from operations before restructuring 5,515 4,856 16,171
Payment under restructuring charge (1,492) - -
Cash generated from operations 4,023 4,856 16,171
Income tax paid (3,545) (1,811) (3,258)
Net cash inflow from operating 478 2,991 12,913
Cash flows from investing activities
Purchase of tangible assets, licences and
similar rights (1,833) (1,040) (1,917)
Disposal of tangible assets, licences and
similar rights 41 82 154
Acquisition of subsidiaries, net of cash acquired (839) (1,570) (1,079)
Acquisition of minorities (667) - (1,683)
Disposal of subsidiaries, net of cash disposed (16) (2,628) (1,464)
Sale of non-current investments - - 89
Movement in long term loans to non-current
investments - - 12
Interest received 418 528 1,222
Net cash outflow from investing activities (2,896) (4,628) (4,666)
Cash flows from financing activities
Issue of share capital 494 1,491 2,529
Increase/(decrease) in short term borrowings 3 (81) (126)
Decrease in long term borrowings - - (20)
Dividends paid to shareholders 5 (1,254) (1,083) (1,712)
Share buy back 12 (11,220) - -
Dividends paid to minority interests (69) - -
Capital element on finance lease payments (5) (7) (6)
Finance cost paid (1,048) (55) (104)
Net cash outflow/(inflow) from financing
activities (13,099) 265 561
Net decrease/(increase) in cash and (15,517) (1,318) 8,808
cash-equivalents in the period
Cash and cash-equivalents at start of the period 38,566 30,991 30,991
Exchange rate effects 1,775 (962) (1,233)
Cash and cash-equivalents at the end of
the period 24,824 28,711 38,566
Cash and cash-equivalents consists of:
Cash and cash-equivalents 13 25,990 29,089 39,210
Overdrafts (1,166) (378) (644)
24,824 28,711 38,566
Notes to the Financial Statements
NOTE 1 BASIS OF PREPARATION
This condensed consolidated interim financial information for the six months
ended 31 December 2007 has been prepared in accordance with the Disclosure and
Transparency Rules of the Financial Services Authority and with IAS 34, "Interim
Financial Reporting" as adopted by the European Union.
The interim financial information should be read in conjunction with the annual
financial statements for the year ended 30 June 2007. The accounting policies
adopted in these condensed consolidated interim financial statements are
consistent with those of the annual financial statements for the year ended 30
June 2007 except for the following new standards, amendments to the standards
and interpretations which are mandatory for the financial year ending 30 June
2008 and have been adopted in these condensed consolidated interim statements.
The adoption of these standards and interpretations has had no material impact
on these condensed interim statements:
* IFRIC 10, "Interims and impairment", effective for annual
periods beginning on or after 1 November 2006.
* IFRS 7, "Financial instruments; Disclosures", effective
for annual periods beginning on or after 1 January 2007. IAS1, "Amendments to
capital disclosures", effective for annual periods beginning on or after 1
January 2007. As this interim report contains only condensed financial
statements, and as there are no material financial instruments related
transactions in the period, full IFRS 7 disclosures are not required at this
stage. The full IFRS 7 disclosures, including the sensitivity analysis to market
risk and capital disclosures required by the amendment of IAS 1, will be given
in the annual financial statements.
* IFRS 4, "Insurance contracts", revised implementation
guidance, effective when an entity adopts IFRS 7.
* IFRIC 11, IFRS 2, "Group and treasury share transactions",
effective for annual periods beginning on or after 1 March 2007.
The following new standards, amendments to standards and interpretations have
been issued and are subject to EU endorsement. They are not effective for the
financial year ending 30 June 2008 and have not been adopted early:
* IFRIC 12, "Service concession arrangement", effective for
annual periods beginning on or after 1 January 2008. Management do not expect
this interpretation to be relevant for the Group.
* IFRIC 13, "Customer Loyalty Programmes", effective for
annual periods beginning on or after 1 July 2008. Management do not expect this
interpretation to be relevant for the Group.
* IFRIC 14, "IAS 19 - The Limit on a Defined Benefit Asset,
Minimum Funding Requirements and their Interaction", effective for annual
periods beginning on or after 1 January 2008. Management do not expect this
interpretation to be relevant for the Group.
* IFRS 8, "Operating segments", effective for annual periods
beginning on or after 1 January 2009. Management will review the impact of this
standard on adoption, taking into account the management and organisation
structure at that time.
* IAS 23, "Borrowing Costs" (revised), effective for annual
periods beginning on or after 1 January 2009. Management do not expect this
revision to be relevant for the Group.
The interim financial information is also subject to notes that have been
included to illustrate aspects of the Group's financial position to and as at 31
December 2007 solely reflecting the technical position of the Group as a result
of the difficulties in respect of the Group's share buy back programme and the
Company's final dividend for the year ended 30 June 2007 arising from the
Group's distributable reserves not having been transmitted to the Company for
the purposes of those distributions to shareholders.
The financial information contained in this interim statement does not amount to
statutory financial statements within the meaning of section 240 Companies Act
1985. The financial statements for the year ended 30 June 2007, from which
information has been extracted, were prepared under IFRS and have been delivered
to the Registrar of Companies. The report of the auditors was unqualified in
accordance with section 235 of the Companies Act 1985 and did not contain a
statement under section 237 (2) or (3) Companies Act 1985. The interim financial
statements were approved by the Board of Directors on 14 February 2008.
Comparatives
The comparatives for the half year ended 31 December 2006 have been restated to
reflect the prior year adjustments as disclosed in the Annual Report for the
year ended 30 June 2007. The net impact of these adjustments has been a decrease
to net assets as at 31 December 2006 and net assets as at 1 July 2006 of
�363,000. There is no impact to the profit of the group.
In addition the presentation of certain prior year figures have been adjusted,
so disclosure is on a consistent basis with the current year figures.
NOTE 2 SEGMENT INFORMATION
Revenue split 6 months to 6 months to Year to
in �'000 31 December 2007 31 December 2006 30 June
unaudited unaudited 2007
Revenue audited
Licences 27,510 27,161 55,518
Services 18,119 15,505 32,097
Hardware 26,833 26,708 53,328
Hardware Maintenance 9,897 9,144 19,300
82,358 78,518 160,243
Finance revenue 572 771 1,361
Total 82,930 79,289 161,604
Primary reporting
The Group's operations are managed and reviewed across three distinct
geographical regions. The sales and services of the Group are managed within
each geographic region for both operational and internal management reporting
purposes. Although each geographical region operates separately, however the
nature of operations is similar.
�'000 America EMEA Asia-Pacific Elimination Total
6 months to 31 December
2007 unaudited
Revenue external 20,013 58,322 4,023 - 82,358
Revenue inter-segment 6,942 523 - (7,465) -
Segment revenue 26,955 58,845 4,023 (7,465) 82,358
Gross profit 15,400 28,781 1,822 - 46,003
Adjusted operating profit* 4,936 3,408 (263) - 8,081
Operating profit (segment
result) 4,879 1,961 (333) - 6,507
Share of results of
associated undertakings - 110 - - 110
Finance income - - - - 530
Finance expense - - - - (1,057)
Profit before tax - - - - 6,090
Taxation - - - - (2,307)
Profit after tax - - - - 3,783
Balance sheet
Segment assets 81,121 105,515 6,317 (67,298) 125,655
Equity accounted investments - 1,131 - - 1,131
Unallocated assets - - - - 26,341
Total assets** - - - - 153,127
Segment liabilities (11,979) (38,879) (3,440) (1,401) (55,699)
Unallocated liabilities - - - - (3,692)
Total liabilities** - - - - (59,391)
* Adjusted operating profit is stated before adding back amortisation of
acquired intangibles, reduction in goodwill arising on the utilisation of
previously unrecognised tax losses carried forward, restructuring costs and the
share-based payment expense.
Unallocated assets and liabilities comprise net funds and tax related items.
** These items within this note are predicated upon the technical regularisation
of the Company's share buy back programme which is intended to be concluded by:
(i) the due transmission of certain of the Group's reserves to the Company; and
(ii) arrangements to be entered into with certain of the Company's shareholders
who were subject to the Company's share buy back programme. To illustrate the
Group's financial position subject to this technical regularisation, the
following presentation would apply:
�'000 America EMEA Asia-Pacific Elimination Total
6 months to 31 December
2007 unaudited
Balance sheet
Segment assets 81,121 114,906 6,317 (67,298) 135,046
Equity accounted investments - 1,131 - - 1,131
Unallocated assets - - - - 26,341
Total assets - - - - 162,518
Segment liabilities (11,979) (40,133) (3,440) (1,401) (56,953)
Unallocated liabilities - - - - (3,692)
Total liabilities - - - - (60,645)
NOTE 2 SEGMENT INFORMATION (CONTINUED)
�'000 America EMEA Asia-Pacific Elimination Total
6 months to 31 December
2006 unaudited
Revenue external 20,654 54,405 3,459 - 78,518
Revenue inter-segment 7,365 604 - (7,969) -
Segment revenue 28,019 55,009 3,459 (7,969) 78,518
Gross profit 14,060 28,313 494 - 42,867
Adjusted operating profit* 3,682 4,000 (634) - 7,048
Operating profit (segment
result) 3,522 2,368 (640) - 5,250
Share of results of associated
undertakings - 55 - - 55
Finance income - - - - 771
Finance expense - - - - (60)
Profit before tax - - - - 6,016
Taxation - - - - (1,920)
Profit after tax - - - - 4,096
Balance sheet
Segment assets 68,676 103,877 4,359 (58,598) 118,314
Equity accounted investments - 1,067 - - 1,067
Unallocated assets - - - - 29,293
Total Assets - - - - 148,674
Segment liabilities (9,315) (39,430) (2,146) - (50,891)
Unallocated liabilities - - - - (4,631)
Total liabilities - - - - (55,522)
* Adjusted operating profit is stated before adding back amortisation of
acquired intangibles, reduction in goodwill arising on the utilisation of
previously unrecognised tax losses carried forward, restructuring costs and the
share-based payment expense.
Unallocated assets and liabilities comprise net funds and tax related items.
Note 2 Segment information (Continued)
�'000 America EMEA Asia-Pacific Elimination Total
Year to 30 June 2007 audited
Revenue external 42,178 111,035 7,030 - 160,243
Revenue inter-segment 16,591 3,451 - (20,042) -
Segment revenue 58,769 114,486 7,030 (20,042) 160,243
Gross profit 29,603 59,307 1,460 - 90,370
Adjusted operating profit 7,453 8,849 (759) - 15,543
Operating profit (segment result) 6,518 4,380 (2,081) - 8,817
Share of results of associated - 57 - - 57
undertakings
Finance income - - - - 1,361
Finance expense - - - - (118)
Profit before tax - - - - 10,117
Taxation - - - - (2,098)
Profit after tax - - - - 8,019
Balance sheet
Segment assets 70,357 99,809 4,727 (57,433) 117,460
Equity accounted investments - 940 - - 940
Unallocated assets - - - - 40,088
Total Assets - - - - 158,488
Segment liabilities (10,871) (39,565) (2,715) (3,309) (56,460)
Unallocated liabilities - - - - (3,787)
Total liabilities - - - - (60,247)
* Adjusted operating profit is stated before adding back amortisation of
acquired intangibles, reduction in goodwill arising on the utilisation of
previously unrecognised tax losses carried forward, restructuring costs and the
share-based payment expense.
Unallocated assets and liabilities comprise net funds and tax related items.
NOTE 3 PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION
�'000 6 months to 31 6 months to 31 Year to
December December 30 June
2007 2006 2007
unaudited unaudited audited
restated
Profit on ordinary activities before
taxation is stated after charging:
Total staff costs 28,529 27,516 56,155
Depreciation of tangible fixed assets 947 1,011 1,981
Amortisation of intangible assets 1,372 1,334 2,756
Goodwill adjustment - recognition of deferred
tax asset from prior year business acquisition - - 104
Restructuring charge - - 3,200
Gain on disposal of tangible fixed assets (30) (23) (56)
Foreign currency exchange gain/(loss) 149 (93) (175)
Auditors' remuneration 307 227 696
Operating lease expense 2,440 2,435 4,555
Other operating expenses 5,782 5,210 12,337
Total operating expenses 39,496 37,617 81,553
Costs in the above table associated to research and development were �6.5m
(2006: �5.4m).
NOTE 4 TAX EXPENSE
The reasons for the difference between the actual tax charge and the rate of
corporation tax in the UK applied are as follows:
�'000 6 months to 6 months to Year to
31 December 2007 31 December 2006 30 June 2007
Total profit before tax 6,090 6,016 10,117
Expected tax expense based on the standard rate
in the UK of 30% 1,827 1,805 3,035
Tax losses not recognised in current period and
different tax rates applied in overseas jurisdiction 872 423 934
Utilisation of previously unrecognised tax losses (234) (254) (1,055)
Adjustments for provision in prior periods 11 62 54
Expenses not deductible for tax purposes and income not
subject to tax 46 134 (564)
Changes in tax rate (101) - -
Tax on share of results of associated undertakings (33) (17) (17)
Other differences (81) (233) (289)
Total tax expense on operations 2,307 1,920 2,098
NOTE 5 DIVIDENDS - EQUITY
6 months to 6 months to
31 December 2007 31 December 2007
per share �'000
In respect of - ordinary shares of 2.5p
Final dividend paid for 2007 1.41p 1,254*
Total dividend 1.41p 1,254*
*This note is prepared on the basis of the regularisation of the final dividend
paid for 2007 which is intended to be concluded by: (i) the due transmission of
certain of the Group's reserves to the Company; (ii) arrangements to be entered
into with certain of the Company's shareholders who were subject to the
Company's share buy back programme; and (iii) approval by shareholders at a
forthcoming extraordinary general meeting of the Company. To illustrate the
Group's financial position subject to this technical regularisation, the
following presentation would apply:
6 months to 6 months to
31 December 2007 31 December 2007
per share �'000
In respect of - ordinary shares of 2.5p
Final dividend paid for 2007 - -
Total dividend - -
Year to Year to
30 June 2007 30 June 2007
per share �'000
In respect of - ordinary shares of 2.5p
Final dividend paid for 2006 1.23p 1,083
Interim dividend paid for 2007 0.71p 629
Total dividend 1.94p 1,712
Six months to Six months to
31 December 2006 31 December 2006
per share �'000
In respect of - ordinary shares of 2.5p
Final dividend paid for 2006 1.23p 1,083
Total dividend 1.23p 1,083
NOTE 6 EARNINGS PER SHARE
Basic earnings per share of 4.3p (2006: 4.6p) for the year to 31 December 2007
have been calculated based on the profit attributable to shareholders of
�3,743,000 (2006: �4,031,000) using the weighted average number of ordinary
shares in issue totalling 87.1m* (2006: 87.4m) during the period.
Adjusted earnings per share of 6.9p (2006: 6.0p) for the year to 31 December
2007 are based on profit of �6,048,000 (2006: �5,239,000), being adjusted for
the expenses as stated below using the weighted average number of ordinary
shares in issue totalling 87.1m* (2006: 87.4m) during the period. The Board
considers that adjusted EPS better reflects the underlying performance of the
Group.
Reconciliation of adjusted profit 6 months to 31 6 months to 31 Year to
�'000 December December 30 June
2007 2006 2007
unaudited unaudited audited
Profit for the period attributable to the
equity holders of the parent 3,743 4,031 7,945
Reduction in goodwill arising on the utilisation
of previously unrecognised tax losses - - 104
Amortisation of acquired intangible assets 1,155 1,155 2,309
Restructuring costs - - 3,200
Share-based payment expense 419 643 1,113
Fair value adjustments on financial instruments 1,085 (236) (112)
Tax effect of above (354) (354) (1,350)
Adjusted profit for the period attributable
to the equity holders of the parent 6,048 5,239 13,209
Reconciliation of adjusted pre tax profit 6 months to 6 months to Year to
�'000 31 December 31 December 30 June
2007 2006 2007
unaudited unaudited audited
Profit on ordinary activities before taxation 6,090 6,016 10,117
Reduction in goodwill arising on the utilisation
of previously unrecognised tax losses - - 104
Amortisation of intangible assets 1,155 1,155 2,309
Restructuring costs - - 3,200
Share-based payment 419 643 1,113
Fair value adjustments on financial instruments 1,085 (236) (112)
Adjusted profit before tax 8,749 7,578 16,731
Diluted earnings per share of 4.3p (2006: 4.4p) for the year to 31 December 2007
have been calculated based on the post tax profit attributable to equity holders
of the parent of �3,743,000 (2006: �4,031,000) using 88.0m* (2006: 90.6m)
ordinary shares, the difference to the basic calculation representing the
additional shares that would be issued on the conversion of all the dilutive
potential ordinary shares.
Adjusted, diluted earnings per share of 6.9p (2006: 5.8p) for the year to 31
December 2007 have been calculated based on profit of �6,048,000 (2006:
�5,239,000), being adjusted for the operating expenses as stated above using
88.0m* (2006: 90.6m) ordinary shares.
*These calculations of the number of ordinary shares are prepared on the basis
of the technical regularisation of the Group's share buy back programme which is
intended to be concluded by: (i) the due transmission of certain of the
Group's reserves to the Company; and (ii) arrangements to be entered into with
certain of the Company's shareholders who were subject to the Company's share
buy back programme.
The Group's position for the year to 31 December 2007 subject to this
regularisation would be predicated upon a weighted average number of ordinary
shares in issue totalling 88.8m, giving a basic earnings per share of 4.2p and
an adjusted earnings per share of 6.8p; and a diluted earnings per share of 4.2p
and adjusted diluted earnings per share of 6.7p.
NOTE 7 PROVISIONS
�'000 Group
At 1 July 2006 (540)
Arising during the year -
Utilised 540
At 31 December 2006 -
Arising during the year (2,660)
Utilised 450
At 30 June 2007 (2,750)
Arising during the year (170)
Utilised 1,866
At 31 December 2007 (1,054)
Last financial year the Company has started to implement a restructuring plan,
which involved the reorganisation of the business and the manner in which the
business is conducted.
NOTE 8 ACQUISITION OF MINORITIES
At the end of December 2007 the Group bought the minority shares of DICOM
Informationstechnologie GmbH Austria for consideration of �667,000 this gave a
rise of goodwill of �547,000, taking ownership of 100%.
NOTE 9 SHARE CAPITAL
The share capital of the Group and Company is as follows:
Authorised Authorised Issued, called Issued, called
up and fully up and fully
paid paid
number �'000 number �'000
At 30 June 2006 132,000,000 3,300 87,161,136 2,179
Issued under option scheme - - 917,507 23
At 31 December 2006 - - 88,078,643 2,202
Issued under option scheme - - 837,723 21
At 30 June 2007 - - 88,916,366 2,223
Issued under option scheme - - 242,249 6
At 31 December 2007 - - 89'158,615 2,229
All shares rank pari passu with the exception of shares held as treasury shares
and by the ESOP of which the rights attached are currently not exercisable.
NOTE 10 RESERVES
�'000 Share Foreign Merger Treasury ESOP Profit and Total
premium exchange reserve shares shares loss account
account reserve
Group at 1 July -
2006 56,685 209 1,717 (502) 29,618 87,727
Net profit for the
period
attributable to the
equity holders of
the parent - - - - - 4,031 4,031
Dividends paid to
shareholders of
the parent company - - - - - (1,083) (1,083)
Foreign
Exchange
adjustments on
consolidation - (1,800) - - (24) - (1,824)
Actuarial gain - - - - - - -
Changes in ESOP shares - - - - - - -
New share
capital issued 1,255 - - - - - 1,255
Share-based
payment charge - - - - - 643 643
Tax on items
taken directly to
equity - - - - - - -
Group at 31
December 2006 57,940 (1,591) 1,717 - (526) 33,209 90,749
Net profit for the
period
attributable to the
equity holders of
the parent - - - - - 3,914 3,914
Dividends paid to
shareholders of the
parent company - - - - - (629) (629)
Foreign exchange
adjustments on
consolidation - 34 - - 1 - 35
Actuarial gain - - - - - 162 162
Changes in ESOP
shares - - - - - - -
New share capital
issued 1,025 - - - - - 1,025
Share-based
payment charge - - - - - 470 470
Tax on items taken
directly to equity - - - - - 136 136
Group at 30 June
2007 58,965 (1,557) 1,717 - (525) 37,262 95,862
Net profit for the
period attributable
to the equity
holders of the
parent - - - - - 3,743 3,743
Dividends paid to
shareholders of
the parent
company - - - - - (1,254)* (1,254)*
Foreign exchange
adjustments on
consolidation - 3,946 - - - (65) 3,881
Actuarial gain - - - - - 72 72
Changes in
Treasury shares - - - (11,220)** - - (11,220)**
Changes in ESOP
shares - - - - (10) - (10)
New share
capital issued 233 - - - - - 233
Share-based
payment charge - - - - - 419 419
Tax on items taken
directly to equity - (219) - - - - (219)
Group at 31
December 2007 59,198 2,170 1,717 (11,220) (535) 40,177 91,507
Within the cumulative profit and loss account reserve is �4,217,000 (2006:
�2,909,000) relating to the share options granted to subsidiary employees.
The following describes the nature and purpose of each kind of reserve:
Reserve Description and purpose
Share premium account Amount subscribed for share capital in excess of nominal value
Foreign exchange reserve Gain/(loss) arising on retranslating the net assets of foreign operations
into sterling
Merger reserve Reserve arising on acquisitions prior to the transition to IFRS for which
merger accounting was applied
Treasury shares Weighted average cost of own shares held by the parent company. As per
December the company held 5,930,000** (2006: no shares).
ESOP shares Weighted average cost of own shares held by the ESOP trust. As per
December, the ESOP held 858,800 shares in DICOM Group plc (2006: 858,800
shares).
Profit and loss account Cumulative net gains and losses recognised in the Consolidated Income
Statement and in the statement of recognised income and expenses, excluding
those items recognised in other reserves
* These items within this note are predicated upon the technical regularisation
of the Company's final dividend paid for 2007 which is intended to be concluded
by: (i) the due transmission of certain of the Group's reserves to the Company;
(ii) arrangements to be entered into with certain of the Company's shareholders
who were subject to the Company's share buy back programme; and (iii) approval
by shareholders at a forthcoming extraordinary general meeting of the Company.
To illustrate the Group's financial position subject to this technical
regularisation, the following presentation would apply:
** These items within this note are predicated upon the technical regularisation
of the Company's share buy back programme which is intended to be concluded by:
(i) the due transmission of certain of the Group's reserves to the Company; and
(ii) arrangements to be entered into with certain of the Company's shareholders
who were subject to the Company's share buy back programme. To illustrate the
Group's financial position subject to this technical regularisation, the
following presentation would apply:
�'000 Share Foreign Treasury Profit and
Premium Exchange Merger shares ESOP Loss
account reserve reserve shares account Total
Group at 30
June 2007 58,965 (1,557) 1,717 - (525) 37,262 95,862
Net profit for the
period attributable
to the equity holders
of the parent - - - - - 3,743 3,743
Dividends paid to
shareholders of the
parent company - - - - - (1,254) (1,254)
Foreign exchange
adjustments on
consolidation - 3,946 - - - (65) 3,881
Actuarial gain - - - - - 72 72
Changes in Treasury
shares - - - (3,083) - - (3,083)
Changes in ESOP
shares - - - - (10) - (10)
New share capital
issued 233 - - - - - 233
Share-based
payment charge - - - - - 419 419
Tax on items taken
directly to equity - (219) - - - - (219)
Group at 31
December 2007 59,198 2,170 1,717 (3,083) (535) 40,177 99,644
NOTE 11 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' EQUITY
�'000 6 months to 6 months to Year to
31 December 2007 31 December 2006 30 June
restated 2007
Shareholders' equity at start of the year 98,085 89,906 89,906
Net profit for the period excluding minority interests 3,743 4,031 7,945
Dividends (1,254)* (1,083) (1,712)
Exchange differences arising on retranslation of
foreign operations 3,881 (1,824) (1,789)
Actuarial gain on defined benefit pension plans 72 - 162
Net proceeds from issue of share capital 239 1,278 2,324
Share-based payment expense 419 643 1,113
Tax on items taken directly to equity (219) - 136
Changes in ESOP shares (10) - -
Changes in Treasury shares (11,220)** - -
Shareholders' equity at end of the year 93,736 92,951 98,085
* This item within this note is predicated upon the technical regularisation of
final dividend paid for 2007 which is intended to be concluded by: (i) the due
transmission of certain of the Group's reserves to the Company; (ii)
arrangements to be entered into with certain of the Company's shareholders who
were subject to the Company's share buy back programme; and (iii) approval by
shareholders at a forthcoming extraordinary general meeting of the Company. To
illustrate the Group's financial position subject to this technical
regularisation, the table below sets forth the amended position:
** This item within this note is predicated upon the technical regularisation of
the Company's share buy back programme which is intended to be concluded by: (i)
the due transmission of the Group's reserves to the Company; and (ii)
arrangements to be entered into with certain of the Company's shareholders who
were subject to the Company's share buy back programme. To illustrate the
Group's financial position subject to this technical regularisation, the
following presentation would apply:
�'000 6 months to 31 6 months to 31 Year to
December 2007 December 2006 30 June
restated 2007
Shareholders' equity at start of the year 98,085 89,906 89,906
Net profit for the period excluding minority interests 3,743 4,031 7,945
Dividends (1,254) (1,083) (1,712)
Exchange differences arising on retranslation of foreign
operations 3,881 (1,824) (1,789)
Actuarial gain on defined benefit pension plans 72 - 162
Net proceeds from issue of share capital 239 1,278 2,324
Share-based payment expense 419 643 1,113
Tax on items taken directly to equity (219) - 136
Changes in ESOP shares (10) - -
Changes in Treasury shares (3,083) - -
Shareholders' equity at end of the year 101,873 92,951 98,085
NOTE 12 SHARE BUY BACK
On 28 August 2007 the Board announced its intention to initiate a buy back of
its current issued share capital under the authority given to it at the last
Annual General Meeting. In the meantime the Board has contracted to purchase
5,930,000 of its ordinary shares of 2.5p each on the London Stock Exchange
between 30 August 2007 and 4 December 2007 for a weighted average price of 1.89p
(between 1.68p and 2.04p). The Company intends to hold the purchased shares as
treasury stock.
The completion of the settlement of those purchases is subject to technical
difficulties concerning the transmission of the Group's reserves to the Company.
The technical regularisation of the Company's share buy back programme is
intended to be concluded shortly by: (i) the due transmission of certain of the
Group's reserves to the Company; and (ii) arrangements to be entered into with
certain of the Group's shareholders who were subject to the Company's share buy
back programme.
Following completion of the settlement of the purchase of these shares subject
to the regularisation described above, the Company will hold 6.7% of its
ordinary shares in treasury and will have 83,222,615 ordinary shares in issue
(excluding treasury shares).
NOTE 13 ANALYSIS OF NET FUNDS
�'000 At At At
31 December 31 December 30 June
2007 2006 2007
restated
Cash in hand, at bank 19,828 18,404 25,425
Current asset investments 6,162 10,685 13,785
Total cash and cash equivalents 25,990 29,089 39,210
Overdrafts (1,166) (378) (644)
Debt due within 1 year (368) (396) (343)
Debt due after 1 year (4) (23) (3)
Finance leases (16) (47) (24)
Total debt and finance leases (1,554) (844) (1,014)
Net funds 24,436 28,245 38,196
NOTE 14 RELATED PARTY TRANSACTIONS
6 months to 6 months to Year to
�'000 31 December 31 December 30 June
2007 2006 2007
Sales to associated undertakings 1,318 1,194 1,645
Purchases from associated undertakings 471 441 197
At 31 December 2007 the associated undertakings owed �177,500 (2006 �240,000) to
the Group. The transactions set out above took place with Alos GmbH, Cologne,
Germany. Sales to and purchases from associates are made at normal market
prices.
Total compensation paid to key management personnel
�'000 31 December 31 December 30 June
2007 2006 2007
Short-term employee benefit 405 424 1,118
Post-employment pension benefits 35 33 68
Share-based payments 98 55 147
Total compensation paid to key
management personnel 538 512 1,333
Directors' interests
The beneficial interest of the current Directors and their families in the
issued share capital of the Group are in total number of shares as follows:
31 December 2006 1,598,212
30 June 2007 796,856
31 December 2007 879,756
Directors' interests in share option
Directors' hold 2,312,000 share options as per 31 December 2007, 700,000 options
were granted during the six months. No share options lapsed during the year. The
exercise periods end between 2010 to 2018 with exercise prices between 73p to
247p.
NOTE 15 CONTINGENT LIABILITIES
In June 2006 the Group was informed that a patent infringement complaint was
formally filed against one of its subsidiaries by a company which holds a patent
on a certain technology. To this date the Group has not received any demand that
the Group take a licence or cease any allegedly infringing activities. The Group
has obtained the service of outside counsel for purposes of mounting a defence
against and resolving the action brought by that patent holder. Currently the
ultimate exposure in the litigation remains unknown. The Directors note that in
the event of an unfavourable judgement the related costs would not be expected
to be material to the Group's future operating results.
As a technical matter, the Group had: (i) a contingent liability to its
shareholders in respect of the distribution constituted by the final dividend
for the financial year to 30 June 2007 paid to its shareholders on 14 December
2007 in light of the fact of its not having been paid consistently with
technical requirements under the Companies Act; and (ii) a contingent liability
to certain shareholders in respect of the shares represented by certain buy
backs effected during the period to 31 December 2007, in light of their not
being capable of being settled for the same reasons.
These contingent liabilities were subject to an opposite balance of contingent
liability to the Company of those persons as a result of their having received
sums from the Company in contravention of those technical requirements.
These theoretical liabilities are intended to be subject to elimination by: (i)
the due transmission of certain of the Group's reserves to the Company; (ii)
arrangements to be entered into with certain of the Company's shareholders who
were subject to the Company's share buy back programme; and (iii) approval by
the Company's shareholders at a forthcoming extraordinary general meeting of the
Company.
NOTE 16 EVENTS AFTER THE BALANCE SHEET DATE
On 25 January the Group announced a reorganisation of the operational structure.
As part of the reorganisation, Urs Niederberger, Chief Operating Officer and
Executive Director, stood down from the Board of Directors with immediate effect
and will leave the company as of 15 February 2008.
To strengthen the brand of the company, the Board proposes to change the name of
the company to "Kofax plc" at the Extraordinary General Meeting on 18 February
2008.
Due to these changes, the Group will make approximately 50 redundancies, close
certain facilities and record an exceptional charge of �3.5m to �3.8m in the
second half of the financial year 2008.
Furthermore the Board appointed Bradford Weller as General Counsel and Company
Secretary, replacing Stefan Gaiser with immediate effect who remains Chief
Financial Officer and Executive Director of the Group.
NOTE 17 ANALYSIS OF EXCHANGE RATES USED FOR CONSOLIDATION
Analysis of exchange rates used for consolidation
At At At
31 December 2007 31 December 2006 30 June 2007
Average Closing Average Closing Average Closing
rate rate rate rate rate rate
US Dollar 2.03 2.00 1.90 1.96 1.93 2.00
Euro 1.44 1.36 1.48 1.49 1.48 1.48
Swiss Franc 2.38 2.25 2.34 2.39 2.38 2.45
In order to determine constant currency growth rates, the 2008 half year results
in constant currency have been translated using the 2007 half year average
exchange rates as disclosed in the table above. These have been compared to the
prior 31 December 2006 results to determine the constant currency growth rates.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR TRMMTMMBBTLP
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