Kofax® Limited (NASDAQ and LSE: KFX), a leading provider of
smart process applications for the business critical First Mile™ of
customer interactions, today reported its unaudited financial
results for the second quarter and six months ended December 31,
2013.
IFRS Financial Highlights:
- Software license revenue increased
21.4% to $30.4 million (Prior Year or PY: $25.0 million), and for
the six months increased 16.3% to $54.8 million (PY: $47.1
million)
- Total revenues increased 16.2% to $74.0
million (PY: $63.7 million), and for the six months increased 12.6%
to $139.5 million (PY: $123.8 million)
- Income from operations increased 18.7%
to $4.5 million (PY: $3.8 million) or a 6.1% margin (PY: 6.0%), and
for the six months increased 1.2% to $3.9 million (PY: $3.9
million) or a 2.8% margin (PY: 3.1%)
- Diluted earnings per share (EPS) was
$0.03 (PY: $0.01), and for the six months was $0.05 (PY:
$0.00)
- Cash generated (used) by operations was
($0.2) million (PY: $0.6 million), and for the six months was $18.2
million (PY: $9.2 million)
- Quarter end cash was $81.2 million (PY:
$87.0 million)
Non-IFRS Financial Highlights:
- Software license revenue increased
30.0% to $32.6 million (PY: $25.1 million), and for the six months
increased 23.9% to $58.5 million (PY: $47.2 million)
- Total revenues increased 20.7% to $77.0
million (PY: $63.9 million), and for the six months increased 16.6%
to $144.6 million (PY: $124.0 million)
- Adjusted earnings before interest,
taxes, depreciation and amortization (EBITDA) increased 29.1% to
$13.0 million (PY: $10.1 million) or a 16.8% margin (PY: 15.7%),
and for the six months increased 30.3% to $21.3 million (PY: $16.3
million) or a 14.7% margin (Prior Year: 13.2%)
- Adjusted diluted EPS was $0.08 (PY:
$0.07), and for the six months was $0.13 (PY: $0.10)
- Adjusted cash generated (used) by
operations was $3.9 million (PY: $3.6 million), and for the six
months was $23.7 million (PY: $14.9 million)
A summary of Kofax’s unaudited revenues and adjusted EBITDA for
the second quarter and six months compared to the prior year on
both an IFRS and non-IFRS basis is as follows:
IFRS Quarter Six Months
Unaudited Y/Y %
Y/Y % $M Change
Total $M Change
Total Software Licenses 30.4 21.4% 41.0% 54.8 16.3%
39.3% Maintenance Services 33.5 8.7% 45.3% 65.6 8.1% 47.0%
Professional Services 10.1 29.1% 13.7%
19.1 18.9% 13.7%
Total Revenues 74.0
16.2% 100.0% 139.5 12.6% 100.0%
Income from Operations
4.5 18.7% 3.9 1.2%
Margin
6.1% 2.2%
2.8% -10.1%
Non-IFRS Quarter Six Months
Unaudited Y/Y %
Y/Y % $M Change
Total $M Change
Total Software Licenses 32.6 30.0% 42.3% 58.5 23.9%
40.5% Maintenance Services 33.8 9.3% 43.9% 66.2 8.9% 45.8%
Professional Services 10.6 35.6% 13.8%
19.9 24.1% 13.7%
Total Revenues 77.0
20.7% 100.0% 144.6 16.6% 100.0%
Adjusted EBITDA
13.0 29.1% 21.3 30.3%
Margin
16.8% 7.0%
14.7% 11.8%
Operating Highlights:
- Closed an increasing number of
mid-sized software license transactions:
- 50 greater than $100,000 (PY: 32) and 2
greater than $1 million (PY: 2), and for the six months 85 greater
than $100,000 (PY: 70) and 4 greater than $1 million (PY: 3)
- These periods again included two of the
largest sales in the history of the Company at $7.6 million to a
U.S. government agency during the first quarter and $3.7 million to
a major global insurance company based in the U.S. during the
second quarter
- “Legacy capture” software license
revenue increased 17.7% and “mobile and new or acquired products”
increased 107.4%, and for the six months 13.0% and 100.8%,
respectively, on a Non IFRS basis
- Launched numerous new software products
and releases, including:
- Kofax TotalAgility™ 7.0, which the
Company believes is the first unified platform for the development
and deployment of smart process applications and has been well
received to date
- Kofax AP Automation, which can be used
with any accounting or ERP system and offers “out-of-the-box”
integration with Microsoft Dynamics AX, Kofax Mailroom Automation
and Kofax Customer Onboarding solutions, all built on the Kofax
TotalAgility 7.0 platform
- An update to Kofax Medical Claims
Add-on Pack to support Centers for Medicare and Medicaid (CMS)
regulations related to the Affordable Care Act taking effect in
January 2014
- Kapow Enterprise 9.3, which features a
redesigned interface to simplify the user experience and encompass
the entire information supply chain from data acquisition to
enrichment, persistence, exploration and distribution
- Continued receiving recognition for
Kofax’s software products and solutions from independent sources,
including:
- DM Magazine recognized Kofax
TotalAgility as a Product of the Year in its 2013 Document Manager
Awards
- Mortgage banking executives selected
Kofax Mobile Capture™ for Mortgage Banking Magazine’s 2013
"Harnessing Mobile Award”
- Attendees at FinovateAsia 2013 in
Singapore voted Kofax Mobile Capture Best of Show
- Database Trends and Applications
Magazine named Kapow Enterprise 9.3 as a Trendsetting Product of
2014
- The Analyst One web site included
Kapow’s platform on its list of 24 breakthrough technologies every
analyst should be aware of
- Received an extension to patent number
8,345,981 from the United States Patent and Trademark Office
covering reverse matching technology to determine the validity of
data extracted from documents captured using a mobile device and
correcting erroneous or suspicious data, thus ensuring its
accuracy
- Welcomed Grant Johnson as the Company’s
new Chief Marketing Officer
- Extended the term of the Company’s
existing, undrawn $40.0 million revolving line of credit facility
with Bank of America Merrill Lynch to June 30, 2016
- Implemented corporate structure changes
to create a new parent corporation for Kofax, which maintains a
premium listing on the London Stock Exchange and listed on NASDAQ
effective as of December 5, 2013
- Two full service securities brokerage
firms based in the U.S. initiated financial analyst coverage on
Kofax
Commenting on these results, Reynolds C. Bish, Chief Executive
Officer, said: “We’re pleased with our performance during the
second quarter and first half of this fiscal year, which was in
line with our expectations for those periods as well as our
previous revenue growth guidance for fiscal year 2014. We continue
to invest in strengthening and growing our sales organization and
expanding our research and development efforts in order to drive
faster software license revenue growth in the future. We continue
to realize improved sales execution across all geographies and
product lines, including our legacy capture as well as mobile and
new or acquired product offerings in the faster growing segments of
our target markets, and the introduction of additional new product
and solution offerings. We’re therefore sufficiently confident in
our outlook to reaffirm our previous revenue growth guidance and
now provide adjusted EBITDA margin guidance for fiscal year 2014 on
a constant currency basis as follows:
IFRS
Non-IFRS Software License Revenue Growth
Low Double Digits Mid to High Teens
Total Revenues Growth Mid to High Single
Digits Low Double Digits Adjusted EBITDA
Margin 12.5 – 13.5% 14.5
– 15.5%
Webcast
Chief Executive Officer Reynolds C. Bish and Chief Financial
Officer Jamie Arnold will present these results and conduct a
question and answer session in the London offices of FTI Consulting
today at 1:00 p.m. U.K. time / 8:00 a.m. U.S. Eastern Standard
time.
A live webcast and accompanying presentation can be listened to
and viewed, and questions can be asked via the webcast console
instant messaging facility, through the investor relations section
of the Company’s website at:
http://investor.kofax.com/events.cfm.
The audio only portion of the webcast can be listened to and
questions can be verbally asked as follows:
Live
Replay Access Code U.K.
+44 (0) 1452 555566 +44 (0)1452
550000 31147206 U.S. +1
(866) 966 9439 +1 (866) 247 4222
31147206
A replay of the webcast and a transcript of the presentation
will be posted on the Company’s investor relations site by 5:00
p.m. U.K. time / 12:00 p.m. U.S. Eastern Standard Time on February
5.
About Kofax
Kofax Limited is a leading provider of innovative smart capture
and process automation software and solutions for the business
critical First Mile of customer interactions. These begin with an
organization’s systems of engagement, which generate real time,
information intensive communications from customers, and provide an
essential connection to their systems of record, which are
typically large scale, rigid enterprise applications and
repositories not easily adapted to more contemporary technology.
Success in the First Mile can dramatically improve an
organization’s customer experience and greatly reduce operating
costs, thus driving increased competitiveness, growth and
profitability. Kofax software and solutions provide a rapid return
on investment to more than 20,000 customers in financial services,
insurance, government, healthcare, business process outsourcing and
other markets. Kofax delivers these through its own sales and
service organization, and a global network of more than 800
authorized partners in more than 75 countries throughout the
Americas, EMEA and Asia Pacific. For more information, visit
kofax.com.
Safe Harbor Statement
This document contains forward looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended.
Such statements are subject to risks and uncertainties that could
cause actual results to vary materially from those projected in the
forward looking statements. The Company may experience significant
fluctuations in future operating results due to a number of
economic, competitive, and other factors, including, among other
things, our reliance on third-party manufacturers and suppliers,
government agency budgetary and political constraints, new or
increased competition, changes in market demand, and the
performance or reliability of our products. These factors and
others could cause operating results to vary significantly from
those in prior periods, and those projected in forward looking
statements. Additional information with respect to these and other
factors, which could materially affect the Company and its
operations, are included in certain forms the Company has filed
with the Securities and Exchange Commission.
Non-IFRS Financial Measures
Management uses financial measures, both IFRS and non-IFRS, in
analyzing and assessing the overall performance of the business and
making operational decisions. We have provided and believe that the
non-IFRS financial measures and supplemental reconciliation to IFRS
financial measures are useful to investors and other users of our
financial statements because the non-IFRS financial measures may be
used as additional tools to compare our performance across peer
companies, periods and financial markets. Please refer to the Chief
Financial Officer’s Review for a discussion of the non-IFRS
financial measures and supplemental reconciliation to IFRS
financial measures for more information regarding the non-IFRS
measures.
Company Names
Except as otherwise required by the context, references to
“Kofax,” “the Company,” “we,” “us” and “our” are to (1) Kofax plc,
a company organized under the laws of the U.K. and listed on the
London Stock Exchange, or Kofax U.K., for all periods prior to
December 5, 2013, and (2) Kofax Limited, a company organized under
the laws of Bermuda and listed on the London Stock Exchange and
NASDAQ, or Kofax Bermuda, for all periods thereafter.
© 2014 Kofax Limited “Kofax” is a registered
trademark and “First Mile”, “TotalAgility” and “Kofax Mobile
Capture” are trademarks of Kofax Limited. All other trademarks are
the property of their respective owners.
Chief Executive Officer’s Review
Financial Performance
During the second quarter and six months ended December 31,
2013, we continued to progressively realize the benefits expected
to result from the October 2012 reorganization of our sales force
to better focus its resources, improve its execution and
productivity, increase the number of mid-sized software license
transactions and reduce our reliance on large, seven figure
sales.
Non-IFRS software license revenues increased 30.0% to $32.6
million, and for the six months increased 23.9% to $58.5 million,
and non-IFRS total revenues increased 20.7% to $77.0 million, and
for the six months increased 16.6% to $144.5 million.
During these periods we closed an increasing number of mid-sized
software license transactions, as outlined below:
Quarter
Six Months FY13
FY14 FY13 FY14
Sales > $100,000 32 50
70 85 Sales > $1 million 2
2 3 4
The second quarter and six months ended December 31, 2013 once
again included two of the largest sales in the history of the
Company. One was for $7.6 million to a U.S. government agency
during the first quarter, and another for $3.7 million to a major
global insurance company based in the U.S. during the second
quarter.
We were very pleased with the “legacy capture” software license
revenue growth rate, and we continued to realize significantly
faster growth in the “mobile and new or acquired products” portion
of our business. Legacy capture software license revenue increased
17.7%, and mobile and new or acquired products increased 107.4%,
and for the six months 13.0% and 100.8%, respectively, on a
non-IFRS basis. Part of the mobile and new or acquired products
software license revenue growth was attributable to the
contributions of the Altosoft and Kapow acquisitions during
calendar year 2013, but it was nonetheless impressive without that
effect, and bookings in this part of our business were even
stronger.
During the second quarter we closed a $1.25 million smart
process application software license sale to a major global
financial services company based in Western Europe that we believe
will be delivered and recognized as revenue during the current
quarter ending March 31, 2014. This solution is being built on
Kofax Total Agility 7.0, so this sale is an early and very positive
indicator of this exciting new product’s market potential.
In addition, during January 2014 we closed a $950K mobile
software license sale to one of the five largest U.S. based banks,
which included the recently announced Kofax Mobile Capture
Platform, and frameworks for Mobile Bill Pay and Mobile Check
Deposit apps.
While the increased number of mid-sized software license
transactions and both “legacy capture” and “mobile and new or
acquired products” software license revenue growth rates are
encouraging, we cannot guarantee that these metrics will
continually improve on a sequential quarter over quarter basis. We
therefore caution readers to consider and evaluate these metrics on
the basis of longer term trends rather than variations arising from
a single quarter’s results.
As a result of this revenue growth and prudently managing our
operating expenses, non- IFRS adjusted EBITDA increased 29.1% to
$13.0 million or a 16.8% margin, and for the six months increased
30.3% to $21.3 million or a 14.7% margin.
We ended the second quarter with cash of $81.2 million and
reported adjusted cash generated from operations of $3.9 million
for the quarter and $23.7 million for the six months. In addition,
our existing, undrawn $40.0 million revolving line of credit
facility with Bank of America Merrill Lynch remains available and
has been extended to June 30, 2016.
During the second quarter we also implemented the corporate
structure changes to create a new parent corporation for Kofax,
which continues to maintain a premium listing on the London Stock
Exchange, and we listed on NASDAQ effective as of December 5, 2013
through the offering of 2.3 million new common shares. All Kofax
common shares now trade on and between both exchanges, and this has
to date resulted in a higher share price and increased trading
volumes and liquidity in our common shares. Following the NASDAQ
listing, we were pleased to see two full service securities
brokerage firms based in the U.S. initiate financial analyst
coverage on the Company. We expect additional U.S. firms to
initiate coverage during fiscal year 2014.
As a result of the foregoing, our balance sheet remains strong,
we have the resources needed to fund organic revenue growth while
executing our acquisition strategy and we have access to the
world’s leading financial markets for technology companies.
Changes in currency exchange rates did not have a material
effect on our financial performance during the second quarter and
six months ended December 31, 2013.
All of the foregoing was in line with our expectations for the
second quarter and six months ended December 31, 2013. In light of
these results and financial position, we remain confident in our
business and optimistic about our future.
Operating Highlights
Our investments in research and development allowed us to
successfully launch a number of new software products and solutions
during the second quarter, including:
- Kofax TotalAgility™ 7.0, which the
Company believes is the first unified platform for the development
and deployment of smart process applications and has been well
received to date
- Kofax AP Automation, which can be used
with any accounting or ERP system and offers “out-of-the-box”
integration with Microsoft Dynamics AX, Kofax Mailroom Automation
and Kofax Customer Onboarding solutions, all built on the Kofax
TotalAgility 7.0 platform
- An update to Kofax Medical Claims
Add-on Pack to support Centers for Medicare and Medicaid (CMS)
regulations related to the Affordable Care Act taking effect in
January 2014
- Kapow Enterprise 9.3, which features a
redesigned interface to simplify the user experience and encompass
the entire information supply chain from data acquisition to
enrichment, persistence, exploration and distribution
These investments also resulted in the issuance of an extension
to Kofax’s patent number 8,345,981 from the United States Patent
and Trademark Office. This covers reverse matching technology to
determine the validity of data extracted from documents captured
using a mobile device and correcting erroneous or suspicious data,
thus ensuring its accuracy.
During the second quarter we were also pleased to continue
receiving widespread recognition for our software products and
solutions, including:
- DM Magazine recognized Kofax
TotalAgility as a Product of the Year in its 2013 Document Manager
Awards
- Mortgage banking executives selected
Kofax Mobile Capture™ for Mortgage Banking Magazine’s 2013
"Harnessing Mobile Award”
- Attendees at FinovateAsia 2013 in
Singapore voted Kofax Mobile Capture Best of Show
- Database Trends and Applications
Magazine named Kapow Enterprise 9.3 as a Trendsetting Product of
2014
- The Analyst One web site included
Kapow’s platform on its list of 24 breakthrough technologies every
analyst should be aware of
Finally, we welcomed Grant Johnson as our new Chief Marketing
Officer, who brings extensive and very relevant global senior
management and enterprise software marketing experience to
Kofax.
Guidance
We’re pleased with our performance during the second quarter and
first half of this fiscal year, which was in line with our
expectations for those periods as well as our previous revenue
growth guidance for fiscal year 2014. We continue to invest in
strengthening and growing our sales organization and expanding our
research and development efforts in order to drive faster software
license revenue growth in the future. We also continue to realize
improved sales execution across all geographies and product lines,
including our legacy capture as well as mobile and new or acquired
product offerings in the faster growing segments of our target
markets, and the introduction of additional new product and
solution offerings. We’re therefore sufficiently confident in our
outlook to reaffirm our previous revenue growth guidance and now
provide adjusted EBITDA margin guidance for fiscal year 2014 on a
constant currency basis as follows:
IFRS
Non-IFRS Software License Revenue Growth
Low Double Digits Mid to High Teens
Total Revenues Growth Mid to High Single
Digits Low Double Digits Adjusted EBITDA
Margin 12.5 – 13.5% 14.5
– 15.5%
Non-IFRS guidance does not reflect the write off of
substantially all of the deferred revenues of acquired companies as
of their acquisition dates as a result of IFRS purchase accounting
guidelines.
Thank You
Our performance is the direct result of the dedication and hard
work of our valued employees, indirect channel partners and
suppliers, and the continued support of our customers and
shareholders. I would like to once again use this opportunity to
sincerely thank all of these stakeholders for their on-going
contributions to our success.
Reynolds C. BishChief Executive OfficerFebruary 4, 2014
Chief Financial Officer’s Review
The first half of fiscal year 2014 continued the trends which
began to emerge in the second half of the fiscal year 2013. For
both the three months and six months ended December 31, 2013, we
generated growth in every revenue line item and every geography. We
expanded our sales organization, particularly the number of quota
carrying sales reps, as well as invested in our product development
organization both, of which position us for continued growth. We
significantly enhanced our product set with the acquisition of
Kapow in July and the introduction of Kofax Total AgilityTM 7.0 in
October. Finally, we strengthened our balance sheet with the
extension of our $40.0 million revolving line of credit, and
increased the liquidity in our shares and enhanced shareholder
value when we completed our NASDAQ listing on December 5, 2013. On
December 5, 2013, Kofax (U.K.) became a wholly-owned subsidiary of
Kofax (Bermuda). Kofax (Bermuda) was incorporated solely for this
purpose. The scheme of arrangement will have no effect on the
manner in which our business is conducted and the results continue
to present the results of the Group applying the appropriate
accounting principles.
There are a couple of items I want to note before continuing
with my review. First, we are and in the future will be providing
three month and year-to-date financial information and statements.
Second, with the exception of the section titled “Discussion of
Non-IFRS Measures”, the Chief Financial Officer’s refers to IFRS
financial measures.
Revenues
The following tables present revenues by financial statement
line, as well as in total for each of our geographic regions:
Three Months EndedDecember
31,
% of Total Revenues 2013
2012 % Change 2013 2012 ($ in
thousands, except percentages) Software license $ 30,385 $
25,017 21.4 % 41.0 % 39.3 % Maintenance services 33,491 30,804 8.7
% 45.3 % 48.3 % Professional services 10,173 7,883
29.1 % 13.7 % 12.4 %
Total revenues $ 74,049 $ 63,704 16.2 %
100.0 % 100.0 %
Three Months EndedDecember
31,
% of Total Revenues 2013 2012 % Change
2013 2012 ($ in thousands, except percentages)
Americas $ 41,354 $ 34,520 19.8 % 55.8 % 54.2 % EMEA 27,756 24,839
11.7 % 37.5 % 39.0 % Asia Pacific 4,939 4,345 13.7 %
6.7 % 6.8 %
Total revenues $ 74,049 $ 63,704 16.2 % 100.0 %
100.0 %
Six Months EndedDecember
31,
% of Total Revenues 2013 2012 % Change
2013 2012 ($ in thousands, except percentages)
Software license $ 54,829 $ 47,149 16.3 % 39.3 % 38.1 % Maintenance
services 65,588 60,680 8.1 % 47.0 % 49.0 % Professional services
19,043 16,010 18.9 % 13.7 % 12.9 %
Total
revenues $ 139,460 $ 123,839 12.6 % 100.0 % 100.0 %
Americas $ 78,850 $ 67,109 17.5 % 56.6 % 54.2 % EMEA 51,498
47,683 8.0 % 36.9 % 38.5 % Asia Pacific 9,112 9,047
0.7 % 6.5 % 7.3 %
Total revenues $ 139,460 $ 123,839 12.6 %
100.0 % 100.0 %
Software license revenues increased $5.4 million, or 21.4%, in
the three months ended December 31, 2013, due to a $3.8 million
increase in our legacy capture products and a $1.6 million increase
in mobile and new or acquired products. Software license revenues
increased $3.1 million in Americas, $1.4 million in EMEA, and $0.9
million in Asia Pacific.
Software license revenues increased $7.7 million, or 16.3%, in
the six months ended December 31, 2013, due to a $5.5 million
increase in our legacy capture products and a $2.4 million increase
in our mobile and new or acquired products. Software license
revenues increased $4.9 million in Americas, $2.1 million in EMEA,
and $0.7 million in Asia Pacific.
Maintenance services revenue increased $2.7 million, or 8.7%, in
the three months ended December 31, 2013 due to an increase of $1.3
million or 8.4% in the Americas and $1.5 million or 11.6% in EMEA
offset by a decrease of $0.1 million or 6.7% in Asia Pacific. In
the six months ended December 31, 2013, maintenance services
revenue increased $4.9 million, or 8.1%, due to an increase of a
$2.5 million or 8.2% in the America and $2.8 million or 10.8% in
EMEA offset by a decrease of $0.4 million or 9.3% in Asia Pacific.
The increase in maintenance services revenue is primarily due to
continued high maintenance contract renewal rates and the expansion
of our installed base from prior quarter software license sales and
to a lesser extent, maintenance revenues from our acquisition of
Kapow and Altosoft.
Professional services revenue increased $2.3 million, or 29.1%,
in the three months ended December 31, 2013 due to an increase of
$2.4 million or 64.8% in the Americas offset by a decrease of $0.1
million in EMEA and Asia Pacific or a 1.1% and 11.5% decrease,
respectively. In the six months ended December 31, 2013,
professional services revenue increased $3.0 million, or 18.9%, due
to an increase of $4.4 million or 60.5% in the Americas offset by a
decrease of $1.1 million or 15.0% in EMEA and $0.3 million or 14.5%
in Asia Pacific. The increase in professional services revenue is
primarily due to incremental professional services arrangements
from our acquisition of Kapow as well as several large capture
projects in the Americas.
Costs and Expenses
Cost of Software Licenses
Cost of software licenses primarily consists of royalties to
third-party software developers as well as personnel costs related
to the distribution of our software licenses and associated costs
such as facilities and related overhead charges.
The following table reflects cost of software license revenues,
in dollars and as a percentage of software license revenues:
Three Months EndedDecember
31,
Change
Six Months EndedDecember
31,
Change 2013 2012 $
% 2013 2012 $ %
(in thousands, except percentages) Cost of software license $ 3,029
$ 2,295 $ 734 32.0% $ 5,685 $ 4,726 $ 959 20.3% % of software
license revenues 10.0% 9.2% 10.4% 10.0%
Cost of software licenses increased by $0.7 million, or 32.0%,
in the three months ended December 31, 2013 and $1.0 million, or
20.3%, in the six months ended December 31, 2013 which is generally
the result of increases in software license revenues as well as a
shift to more royalty bearing products. Royalty costs vary by
product, as applicable, and accordingly, the cost of software
licenses as a percentage of the software license revenues can
fluctuate based on the mix of software licenses sold.
Cost of Maintenance Services
Cost of maintenance services primarily consists of personnel
costs for our staff who respond to customer inquiries as well as
associated costs such as facilities and related overhead charges.
The following table shows cost of maintenance services, in dollars
and as a percentage of maintenance services revenue:
Three Months EndedDecember
31,
Change
Six Months EndedDecember
31,
Change 2013 2012 $
% 2013 2012 $ %
(in thousands, except percentages) Cost of maintenance services $
5,079 $ 4,537 $ 542 11.9% $ 9,886 $ 8,763 $ 1,123 12.8% % of
maintenance services revenue 15.2% 14.7% 15.1% 14.4%
Cost of maintenance services increased $0.5 million, or 11.9%,
in the three months ended December 31, 2013 as we increased our
technical support organization to support a larger installed base
as well as to support Altosoft and Kapow customers. Cost of
maintenance services increased $1.1 million, or 12.8%, in the six
months ended December 31, 2013 as we increased our technical
support organization to support a larger installed base as well as
to support Altosoft and Kapow customers.
Cost of Professional Services
Cost of professional services primarily consists of personnel
costs for our staff of consultants and trainers, other associated
costs such as facilities and related overhead charges, travel
related expenses and the cost of contractors, whom we engage from
time to time to assist us in delivering professional services.
The following table shows cost of professional services, in
dollars and as a percentage of professional services revenue:
Three Months EndedDecember
31,
Change
Six Months EndedDecember
31,
Change 2013 2012 $
% 2013 2012 $ %
(in thousands, except percentages) Cost of professional services $
8,218 $ 7,205 $ 1,013 14.1% $ 15,847 $ 14,130 $ 1,717 12.2% % of
professional services revenue 80.8% 91.4% 83.2% 88.3%
Cost of professional services increased $1.0 million, or 14.1%,
in the three months ended December 31, 2013 primarily due to a $0.4
million increase in compensation costs largely associated with our
acquisitions of Altosoft and Kapow. Cost of professional services
increased $1.7 million, or 12.2%, in the six months ended December
31, 2013 due to a $0.5 million increase in compensation costs
largely for that same reason. Our gross margin on professional
services increased 10.6% and 5.1% in the three months and six
months ended December 31, 2013, respectively as we were able to
better utilize our professional services staff.
Research and Development
Research and development expenses consist primarily of personnel
costs incurred in connection with the design, development, testing
and documentation of our software products and technology as well
as associated costs such as facilities and related overhead
charges. All research and development expenses are expensed as
incurred. The following table shows research and development
expense, in dollars and as a percentage of total revenues:
Three Months EndedDecember
31,
Change
Six Months EndedDecember
31,
Change 2013 2012 $
% 2013 2012 $ %
(in thousands, except percentages) Research and development $ 9,951
$ 8,433 $ 1,518 18.0% $ 19,028 $ 16,904 $ 2,124 12.6% % of total
revenues 13.4% 13.2% 13.6% 13.6%
Research and development expenses increased $1.5 million, or
18.0%, in the three months ended December 31, 2013 due to a $1.3
million increase in compensation costs largely associated with our
acquisitions of Altosoft and Kapow as well as increased headcount
to support or mobile and new or acquired products. Research and
development expenses increased $2.1 million, or 12.6%, in the six
months ended December 31, 2013 due to a $1.9 million increase in
compensation costs largely for those same reasons
Sales and Marketing
Sales and marketing expenses consist primarily of personnel
costs related to our sales and marketing staff, costs for trade
shows, advertising and other lead generating activities, as well as
associated costs such as facilities and related overhead
charges.
The following table shows sales and marketing expense, in
dollars and as a percentage of total revenues:
Three Months EndedDecember
31,
Change
Six Months EndedDecember
31,
Change 2013 2012 $
% 2013 2012 $ %
(in thousands, except percentages) Sales and marketing expense $
30,502 $ 23,720 $ 6,782 28.6% $ 58,541 $ 48,205 $ 10,336 21.4% % of
total revenues 41.2% 37.2% 42.0% 38.9%
Sales and marketing expenses increased $6.8 million, or 28.6%,
in the three months ended December 31, 2013 due to a $4.4 million
increase in compensation costs largely associated with our
acquisitions of Altosoft and Kapow and consistent with our plan to
increase investment in the sales organization. Sales and marketing
expenses increased $10.3 million, or 21.4%, in the six months ended
December 31, 2013 due to a $6.1 million increase in compensation
costs largely for those same reasons.
General and Administrative
General and administrative expenses consist primarily of
personnel costs for our executive, finance, human resource and
legal functions, as well as associated costs such as facilities and
related overhead charges. Also included in general and
administrative expenses are costs associated with legal,
accounting, tax and advisory fees.
The following table shows general and administrative expense, in
dollars and as a percentage of total revenues:
Three Months EndedDecember
31,
Change
Six Months EndedDecember
31,
Change 2013 2012 $
% 2013 2012 $ %
(in thousands, except percentages) General and administrative
expense $ 9,695 $ 9,907 $ (212) (2.1)% $ 18,886 $ 19,235 $ (349)
(1.8)% % of total revenues 13.1% 15.5% 13.5% 15.5%
General and administrative expenses decreased $0.2 million, or
2.1%, in the three months ended December 31, 2013 primarily due to
a decrease in depreciation and amortization expense as well as
reduced share-based payment expense. General and administrative
expenses decreased $0.4 million, or 1.8%, in the six months ended
December 31, 2013 primarily due to those same reasons.
Amortization of Acquired Intangible Assets - We record
amortization expense relating to our acquired intangible assets
using the straight-line method over the estimated useful life of
the respective asset. Our intangible assets include acquired
contractual and customer relationships, technology and trade names,
each based on their fair values ascribed in accounting for the
initial business acquisition. The following table shows expense
related to the amortization of acquired intangible assets, in
dollars and as a percentage of total revenues:
Three Months EndedDecember
31,
Change
Six Months EndedDecember
31,
Change 2013 2012 $
% 2013 2012 $ %
(in thousands, except percentages) Amortization of acquired
intangible assets $ 2,340 $ 1,619 $ 721 44.5% $ 4,564 $ 3,226 $
1,338 41.5% % of total revenues 3.2% 2.5% 3.3% 2.6%
Amortization of acquired intangible assets increased $0.7
million, or 44.5%, to $2.3 million in the three months ended
December 31, 2013, due to additional amortization of acquired
intangible assets arising from our acquisitions of Altosoft and
Kapow. Amortization of acquired intangible assets increased $1.3
million, or 41.5%, to $4.6 million in the six months ended December
31, 2013, due to that same reason.
Acquisition-related Costs - Acquisition-related costs include
those costs related to acquisitions and consist of (i) costs
directly attributable to our acquisition strategy and the
evaluation, consummation and integration of our acquisitions and
(ii) transition compensation costs.
The following table shows Acquisition-related costs, in dollars
and as a percentage of total revenues:
Three Months EndedDecember
31,
Change
Six Months EndedDecember
31,
Change 2013 2012 $
% 2013 2012 $ %
(in thousands, except percentages) Acquisition-related costs $
(2,208) $ 1,505 $ (3,713) (246.7) % $ (105) $ 2,943 $ (3,048)
(103.6)% % of total revenues (3.0)% 2.4% (0.1)% 2.4%
Acquisition-related costs decreased $3.7 million, or 246.7%, to
a $2.2 million credit in the three months ended December 31, 2013
due to a decrease in the fair value of contingent consideration
related to the Singularity and Altosoft acquisitions as well as
other acquisition costs of $0.4 million related to the acquisition
of Kapow.
Acquisition-related costs decreased $3.0 million, or 103.6%, to
a $0.1 million credit in the six months ended December 31, 2013 due
to a $2.5 million decrease in the fair value of contingent
consideration related to the Singularity and Altosoft acquisitions
as well as direct acquisition costs of $0.7 million related to the
acquisition of Kapow.
Other Operating Expense, net - Other operating expenses, net
consists of all income or expense that is not directly attributable
to one of our other operating revenue or expense lines. The
following table shows other operating expenses, net, in dollars and
as a percentage of total revenues:
Three Months EndedDecember
31,
Change
Six Months EndedDecember
31,
Change 2013 2012 $
% 2013 2012 $ %
(in thousands, except percentages) Other operating expenses, net $
2,923 $ 678 $ 2,245 331.6% $ 3,231 $ 1,857 $ 1,374 74.0% % of total
revenues 3.9% 1.1% 2.3% 1.5%
Other operating expenses increased $2.2 million, or 331.6% to
$2.9 million in the three months ended December 31, 2013 and
increased $1.4 million, or 74.0% to $3.2 million in the six months
ended December 31, 2013 as a result of the costs associated with
the NASDAQ listing.
Finance Income (Expense), net – Finance income (expense), net
consists primarily of foreign exchange gains or losses related to
our intercompany receivables and payables, to fair value
adjustments relating to forward contracts or other financial
instruments and to a lesser extent to interest income (expense).
The following table shows finance income (expense), net, in dollars
and as a percentage of total revenues:
Three Months EndedDecember
31,
Change
Six Months EndedDecember
31,
Change 2013 2012 $
% 2013 2012 $ %
(in thousands, except percentages) Finance income (expense), net $
465 $ (1,657) $ 2,122 (128.0)% $ 4,153 $ (1,779) $ 5,932 (333.6)% %
of total revenues 0.6% (2.6)% 3.0% (1.4)%
Finance income (expense) net, fluctuated $2.1 million in the
three months ended December 31, 2013 and $5.9 million in the six
months ended December 31, 2013 representing a swing from loss to
income primarily due to unrealized foreign exchange gains related
to revaluing non-functional currency denominated intercompany
positions.
Income tax expense – The following table shows income tax
expense, in dollars and as a percentage of profit from continuing
operations:
Three Months EndedDecember
31,
Change
Six Months EndedDecember
31,
Change 2013 2012 $
% 2013 2012 $ %
(in thousands, except percentages) Income tax expense $ 2,648 $
1,651 $ 997 60.3% $ 3,258 $ 2,440 $ 818 33.5% Income from
continuing operations $ 4,985 $ 2,148 $ 8,050 $ 2,071 Effective tax
rate 53.1% 76.9% 40.5% 117.8%
Income tax expense increased by $1.0 million, or 60.3%, to $2.7
million during the three months ended December 31, 2013 and
increased by $0.8 million, or 33.5%, to $3.3 million during the six
months ended December 31, 2013. Increased income tax expense was
the result of greater income from continuing operations for the
three and six months ended December 31, 2013 as compared to the
three and six months ended December 31, 2012. Effective tax rates
decreased, due to the relatively disproportionate effect of
significant expenses during the three and six months ended December
31, 2012 that are not deductible for tax purposes.
Liquidity and Capital Resources
Historically, we have financed our business primarily through
our cash on hand as well as cash flows from operations. We had
$81.2 million of cash and cash equivalents at December 31, 2013,
compared to $93.4 million at June 30, 2013. The majority of our
cash is held in U.S. dollars, Euros and to a lesser extent, British
Pounds. We had no outstanding debt as of June 30, 2013. On October
14, 2013, the Company extended its $40.0 million revolving line of
credit to June 30, 2016. Subject to certain conditions, borrowings
under the credit facility can be denominated in U.S. dollars, Euros
and certain other currencies, can be made in the US and certain
other countries and can be increased by an additional $10.0
million. The credit facility is available for general corporate
purposes, including acquisitions. As of December 31, 2013, we had
$39.5 million available under this revolving credit facility, as
$0.5 million is used to guarantee letters of credit in certain
operating facilities and payroll services.
The following tables set forth the summary of our cash
flows:
Three Months EndedDecember
31,
2013 2012 Change ($ in
thousands)
Cash generated from (used in) Operating
activities $ (186 ) $ 597 $ (783 ) Investing activities (2,011 )
(3,081 ) 1,070 Financing activities 11,627 (896 ) 12,523 Exchange
rate effects (196 ) 132 (328 )
Net
increase (decrease) $ 9,234 $ (3,248 ) $ 12,482
Six Months EndedDecember
31,
2013 2012 Change ($ in thousands)
Cash
generated from (used in) Operating activities $ 18,220 $ 9,205
$ 9,015 Investing activities (43,193 ) (5,025 ) (38,168 ) Financing
activities 11,814 566 11,248 Exchange rate effects 979
1,163 (184 )
Net increase
(decrease) $ (12,180 ) $ 5,909 $ (18,089 )
Operating Activities
Net cash used in operating activities was $0.2 million in the
three months ended December 31, 2013, compared to cash generated
from operating activities of $0.6 million in the three months ended
December 31, 2012, a net decrease of $0.8 million. That decrease
was primarily attributable to a $0.7 million increase in cash paid
for taxes in the quarter.
Net cash generated from operating activities was $18.2 million
in the six months ended December 31, 2013, compared to $9.2 million
in the six months ended December 31, 2012, an increase of $9.0
million. That increase was primarily attributable to a $12.5
million increase in deferred revenue offset by a $3.7 million
decrease in provisions and other assets.
Investing Activities
Net cash used in investing activities was $2.0 million in the
three months ended December 31, 2013, compared to $3.1 million in
the three months ended December 31, 2012, a decreased use of cash
of $1.0 million. The primary use of cash in the current period was
a $0.8 million in payment associated with our acquisition of
Atalasoft and $0.5 million in purchases of fixed assets.
Net cash used in investing activities was $43.2 million in the
six months ended December 31, 2013, compared to $5.0 million in the
six months ended December 31, 2012, an increased use of $38.2
million. The primary use of cash in the current period was a $40.3
million payment associated with our acquisition of Kapow, $0.7
million deferred consideration payment for the Altosoft
acquisition, and $1.1 million earnout payment for the Atalasoft
acquisition. Additionally, we purchased $2.0 million of fixed
assets.
Financing Activities
Net cash generated from financing activities was $11.6 million
in the three months ended December 31, 2013, compared to net cash
used of $0.9 million in the three months ended December 31, 2012 an
increase of $12.5 million due primarily to $12.4 in net proceeds
from our NASDAQ listing.
Net cash generated from financing activities was $11.8 million
in the six months ended December 31, 2013, compared to $0.6 million
in the six months ended December 31, 2012 an increase of $11.2
million due primarily to $12.4 million in net proceeds from NASDAQ
listing offset by decreases of $0.6 million from net purchases of
employee benefit shares and proceeds from option exercises,
issuance of share capital and interest paid.
Exchange Rate Effects
We operate in many countries around the world, and maintain cash
balances in locations in currencies other than the U.S. dollar. In
the three months ended December 31, 2013 cash and cash equivalents
decreased by $0.2 million due to changes in foreign exchange rate,
while during the three months ended December 31, 2012 our cash and
cash equivalents increased by $0.1 million. During the six months
ended December 31, 2013 cash and cash equivalents increased by $1.0
million due to changes in foreign exchange rates, while during the
six months ended December 31, 2012 our cash and cash equivalents
increased by $1.2 million due to changes in foreign exchange rates,
as we maintained more cash on hand in U.S. dollars this period. Our
cash and cash equivalents will continue to fluctuate in the future,
as foreign currency exchange rates vary over time.
Treasury Management
On October 14, 2013, the Company extended the term of its $40.0
million revolving line of credit with Bank of America Merrill Lynch
to June 30, 2016. Subject to certain conditions, borrowings under
the credit facility can be denominated in U.S. dollars, euros and
certain other currencies and can be made in the U.S. and certain
other countries. The credit facility is available for general
corporate purposes, including acquisitions, is secured by certain
assets of the Company and can be increased by an additional $10.0
million. As of December 31, 2013 $39.5 million was available as
$0.5 million has been used to guarantee letters of credit in
certain operating facilities and payroll services.
The Company has significant overseas subsidiaries, which operate
principally in their local currencies. Where appropriate, intra
group borrowings are arranged in functional currencies of the
borrower to centralize the foreign exchange impact and provide a
natural hedge against exchange rate movement risks.
The Company hedges certain foreign currency cash and cash flows
relating to transactions in accordance with policies set by the
Board of Directors. Assessment of the credit risk profile of the
Company’s key customers and resellers is centralized for increased
focus.
Reconciliation of Non-IFRS Measures
Management uses financial measures, both IFRS and non-IFRS, in
analyzing and assessing the overall performance of the business and
for making operational decisions. We have provided and believe that
the non-IFRS financial measures and supplemental reconciliation to
IFRS financial measures are useful to investors and other users of
our financial statements because the non-IFRS financial measures
may be used as additional tools to compare business performance
across peer companies, periods and financial markets.
While we use non-IFRS measures as a tool to enhance our
understanding of certain aspects of our financial performance, we
do not believe that these non-IFRS measures are a substitute for,
or are superior to, the information provided by IFRS results. As
such, the presentation of non-IFRS measures is not intended to be
considered in isolation or as a substitute for any measure prepared
in accordance with IFRS. The primary limitations associated with
the use of non-IFRS measures as compared to IFRS results are that
non-IFRS measures may not be comparable to similarly titled
measures used by other companies in our industry and that non-IFRS
measures may exclude financial information that some investors may
consider important in evaluating our performance. We compensate for
these limitations by providing disclosure of the differences
between non-IFRS measures and IFRS results, including providing a
reconciliation of each non-IFRS measure to IFRS results, in order
to enable investors to perform their own analysis of our operating
results.
Non-IFRS Revenues - We define Non-IFRS revenue as revenue, as
reported under IFRS, increased to include revenue that is
associated with our historic acquisitions that has been excluded
from reported results for a given period due to the effects of
purchase accounting. In accordance with IFRS purchase accounting,
an acquired company’s deferred revenue at the date of acquisition
is subject to a fair value adjustment which reduces the deferred
amount and revenues recognized subsequent to an acquisition. We
include Non-IFRS revenue to allow for more complete comparisons to
the financial results of our historical operations, forward-looking
guidance and the financial results of peer companies. We believe
these adjustments are useful to management and investors as a
measure of the ongoing performance of the business. Additionally,
although acquisition related revenue adjustments are non-recurring
we may incur similar adjustments in connection with any future
acquisitions. The tables below provide a reconciliation of IFRS
revenues to Non-IFRS revenues related to all of our historic
acquisitions:
Three Months Ended December 31, 2013 Three
Months Ended December 31, 2012
Revenues (asreportedunder
IFRS)
AcquisitionFair
ValueAdjustment
Non-IFRSRevenues
Revenues (asreportedunder
IFRS)
AcquisitionFair
ValueAdjustment
Non-IFRSRevenues
($ in thousands) ($ in thousands) Software licenses $ 30,385 $
2,187 $ 32,572 $ 25,017 $ 42 $ 25,059 Maintenance services 33,491
297 33,788 30,804 112 30,916 Professional services 10,173
516 10,689 7,883 − 7,883 Total
revenues $ 74,049 $ 3,000 $ 77,049 $ 63,704 $ 154 $ 63,858
Six Months Ended December 31, 2013 Six Months Ended
December 31, 2012
Revenues (asreportedunder
IFRS)
AcquisitionFair
ValueAdjustment
Non-IFRSRevenues
Revenues (asreportedunder
IFRS)
AcquisitionFair
ValueAdjustment
Non-IFRSRevenues
($ in thousands) ($ in thousands) Software licenses $ 54,829 $
3,702 $ 58,531 $ 47,149 $ 85 $ 47,234 Maintenance services 65,588
603 66,191 60,680 112 60,792 Professional services 19,043
830 19,873 16,010 − 16,010 Total
revenues $ 139,460 $ 5,135 $ 144,595 $ 123,839 $ 197 $ 124,036
Non-IFRS Income from Operations - We define Non-IFRS income from
operations as income from operations, as reported under IFRS,
excluding the effect of acquisition fair value adjustment to
revenue, share-based payment expense, depreciation expense,
amortization of acquired intangible assets, acquisition-related
costs, restructuring costs and other operating expense, net.
Share-based payment expense, depreciation expense and amortization
of acquired intangible assets in our Non-IFRS income from
operations reconciliation represent non-cash charges which are not
considered by management in evaluating our operating performance.
Acquisition-related costs consist of: (i) costs directly
attributable to our acquisition strategy and the evaluation,
consummation and integration of our acquisitions (composed
substantially of professional services fees including legal,
accounting and other consultants and to a lesser degree to our
personnel whose responsibilities are devoted to acquisition
activities), and (ii) transition compensation costs (composed
substantially of contingent payments for shares that are treated as
compensation expense and retention payments that are anticipated to
become payable to employees, as well as severance payments to
employees whose positions were made redundant). These
acquisition-related costs are not considered to be related to the
organic continuing operations of the acquired businesses and are
generally not relevant to assessing or estimating the long-term
performance of the acquired assets. Restructuring costs are not
considered in assessing our performance as we have not generally
incurred such costs for our continuing operations. Other operating
expense, net represents items that are not necessarily related to
our recurring operations and which therefore are not, under IFRS,
included in other expense lines. Accordingly, we exclude those
amounts when assessing Non-IFRS income from operations. At times
when we are communicating with our shareholders, analysts and other
parties we refer to Non-IFRS income from operations as adjusted
EBITDA.
We assess Non-IFRS income from operations as a percentage of
total Non-IFRS revenues and by doing so; we are able to evaluate
our relative performance of our revenue growth compared to the
expense growth for those items included in Non-IFRS income from
operations. This measure allows management and our Board of
Directors to compare our performance against that of other
companies in our industry that may be of different sizes.
The following table provides a reconciliation of IFRS income
from operations to Non-IFRS income from operations and presents
Non-IFRS income from operations as a percentage of total
revenues.
Three Months EndedDecember
31,
Six Months EndedDecember
31,
2013 2012 2013 2012 ($ in
thousands) Income from operations $ 4,520 $ 3,805 $ 3,897 $ 3,850
Acquisition fair value adjustment to revenues 3,000 154 5,135 197
Share-based payment expense 1,117 829 1,866 1,191 Depreciation and
amortization expense 1,288 1,465 2,670 3,048 Amortization of
acquired intangible assets 2,340 1,619 4,564 3,226
Acquisition-related costs (2,208 ) 1,505 (105 ) 2,943 Other
operating expenses, net 2,922 678
3,231 1,857 Non-IFRS income from
operations $ 12,979 $ 10,055 $ 21,258 $ 16,312
Non-IFRS income from operations as a
percentage of adjusted revenues
16.8 % 15.7 % 14.7 % 13.2 %
Adjusted Cash Flows from Operations - We define Adjusted cash
flows from operations as net cash inflows from operating
activities, as reported under IFRS, adjusted for income taxes paid
or refunded and payments under restructurings. Income taxes paid is
included in this reconciliation as the timing of cash payments and
receipts can vary significantly from year-to-year based on a number
of factors, including the influence of acquisitions on our
consolidated tax attributes. Payments for restructurings relate to
a specific activity that is not part of ongoing operations. The
table below provides a reconciliation of IFRS cash flows from
operations to Adjusted cash flows from operations:
Three Months EndedDecember
31,
Six Months EndedDecember
31,
2013 2012 2013 2012 ($ in
thousands) Cash flows from operations $ (186 ) $ 597 $ 18,220 $
9,205 Income taxes paid 3,568 2,927 4,870 4,778 Payments under
restructuring 488 27 588 867
Adjusted cash flows from operations $ 3,870 $ 3,551 $ 23,678
$ 14,850
Adjusted cash flow from operations increased $0.3 million to
$3.9 million for the three months ended December 31, 2013 as a
result of increased tax and restructuring payments combined with
decreases in cash flow from operations.
Adjusted cash flow from operations increased $8.8 million to
$23.7 million for the six months ended December 31, 2013 as a
result of increased cash flows from operations and tax payments
combined with a decrease in payments under restructuring.
Adjusted diluted earnings per share - We define Adjusted diluted
earnings per share as diluted earnings per share, as reported under
IFRS, adjusted by certain items that are also excluded from our
Non-IFRS income from operations and which are discussed above. The
most comparable IFRS metrics, ‘income (loss) from continuing
operations, after tax’ and ‘earnings per share – diluted’, also
include the reconciling items finance income (expense), net, and
the impacts of income taxes on each of the other reconciling items.
Therefore, we include this non-IFRS measure in order to provide a
more complete comparison of our earnings per share from one period
to another.
The tables below provide a reconciliation of our Adjusted
diluted earnings per share, and our associated Non-IFRS income
(loss) from continuing operations, after tax:
Reconciliation of Adjusted Diluted Earnings Per Share
For the Three Months Ended December 31, 2013
2012
Per DilutedShare
Per DilutedShare
($ in thousands, except per share data) Income from
continuing operations, after tax $ 0.03 $ 2,337 $ 0.01 $ 497
Acquisition fair value adjustment to revenues 0.03 3,000 0.00 154
Share-based payment expense 0.01 1,117 0.01 829 Amortization of
intangible assets 0.03 2,340 0.02 1,619 Acquisition-related costs
(0.03 ) (2,208 ) 0.01 1,505 Net finance and other income and
expense 0.03 2,457 0.03 2,335 Tax effect of above (0.02 )
(1,671 ) (0.01 ) (1,126 ) Adjusted diluted earnings per
share $ 0.08 $ 0.07
For the Six Months
Ended December 31, 2013 2012
Per DilutedShare
Per DilutedShare
($ in thousands, except per share data) Income/(loss) from
continuing operations, after tax $ 0.05 $ 4,792 $ (0.00 ) $ (369 )
Acquisition fair value adjustment to revenues 0.06 5,135 0.00 197
Share-based payment expense 0.02 1,866 0.01 1,191 Amortization of
intangible assets 0.05 4,564 0.04 3,226 Acquisition-related costs
(0.00 ) (105 ) 0.03 2,943 Net finance and other income and expense
(0.01 ) (922 ) 0.04 3,636 Tax effect of above (0.04 ) (3,761
) (0.02 ) (1,879 ) Adjusted diluted earnings per share $
0.13 $ 0.10
Supplemental Information
The following supplemental information is used to reconcile IFRS
Income from operations to Non-IFRS Income from operations:
Share based payment expense recognized by functional line in the
Condensed Consolidated Income Statements is as follows:
For the Three Months
EndedDecember 31,
2013 2012 ($ in thousands) Cost of maintenance
services $ 17 $ − Cost of professional services 16 − Research and
development 210 129 Selling and marketing 567 323 General and
administrative 307 377 Total share-based payment
expense $ 1,117 $ 829
For the Six Months EndedDecember
31,
2013 2012 ($ in thousands) Cost of maintenance
services $ 31 $ − Cost of professional services 41 1 Research and
development 350 204 Selling and marketing 936 411 General and
administrative 508 575 Total share-based payment
expense $ 1,866 $ 1,191
Depreciation and amortization expense recognized by functional
line in the Condensed Consolidated Income Statements is as
follows:
For the Three Months
EndedDecember 31,
2013 2012 ($ in thousands) Cost of software
licenses $ 8 $ 16 Cost of maintenance services 117 140 Cost of
professional services 193 260 Research and development 399 402
Selling and marketing 392 423 General and administrative 179
224 Total depreciation and amortization expense $ 1,288 $
1,465
For the Six Months EndedDecember
31,
2013 2012 ($ in thousands) Cost of software licenses
$ 22 $ 33 Cost of maintenance services 247 294 Cost of professional
services 413 553 Research and development 802 821 Selling and
marketing 809 885 General and administrative 377 462
Total depreciation and amortization expense $ 2,670 $ 3,048
Going Concern
Our financial statements have been prepared on the basis that
the Company is a going concern. In connection with this
presentation, the Board has reviewed the Company's forecasts and
budgets, borrowing facilities, plans and various other analyses to
determine the level of uncertainties in the business. The use of
the going concern basis of accounting is appropriate because there
are no material uncertainties relating to events or conditions that
may cast significant doubt about the ability of the Company to
continue as a going concern.
Principal Risks and Uncertainties
The principal risks and uncertainties facing the Company were
disclosed on pages 12 and 13 of Kofax plc’s 2013 Annual Report,
which presents the results of the Company prior to the structural
change, in which Kofax plc. became a wholly-owned subsidiary of
Kofax Limited. Kofax Limited was incorporated solely for this
purpose. This change will not have any effect on the manner in
which our business is conducted.
James Arnold, Jr.Chief Financial OfficerFebruary 3, 2014
Kofax Limited Unaudited Condensed Consolidated Income
Statements
($ in thousands, except per share
amounts)
For the Three Months Ended
For the Six Months Ended
December 31,2013
December 31,2012
December 31,2013
December 31,2012
Software licenses
30,385 25,017
54,829 47,149
Maintenance services
33,491 30,804
65,588 60,680
Professional services
10,173 7,883
19,043 16,010
Total revenues 74,049 63,704
139,460 123,839
Cost of software licenses
3,029 2,295
5,685
4,726 Cost of maintenance services
5,079 4,537
9,886
8,763 Cost of professional services
8,218 7,205
15,847 14,130 Research and development
9,951 8,433
19,028 16,904 Sales and marketing
30,502 23,720
58,541 48,205 General and administrative
9,695 9,907
18,886 19,235 Amortization of acquired intangible assets
2,340 1,619
4,564 3,226 Acquisition-related costs
(2,208) 1,505
(105) 2,943 Other operating expenses,
net
2,923 678
3,231 1,857
Operating costs and
expenses 69,529 59,899
135,563 119,989
Income from operations 4,520 3,805
3,897 3,850
Finance income
754 65
4,599 116 Finance
expense
(289) (1,722)
(446) (1,895)
Income
from continuing operations, before tax 4,985 2,148
8,050 2,071 Income tax expense
2,648 1,651
3,258 2,440
Income/(loss)
attributable to equity holders of the Parent 2,337 497
4,792 (369)
Earnings/(loss) per share >
Basic
0.03 0.01
0.06 (0.00) > Diluted
0.03
0.01
0.05 (0.00)
Kofax Limited Unaudited
Condensed Consolidated Statements of Comprehensive Income
($ in thousands)
For the Three Months Ended
For the Six Months Ended
December 31,2013
December 31,2012
December 31,2013
December 31,2012
Income/(loss) attributable to equity holders of the
Parent 2,337 497
4,792 (369)
Other
comprehensive income/(loss) Items that may be subsequently
reclassified to profit or loss Exchange gains/(losses) arising
on translation of foreign operations
(1,830) 1,928
(1,110) 4,106 Income tax relating to items that may be
reclassified
(2) (43)
(12) 22
(1,832) 1,885
(1,122) 4,128
Items that will not be reclassified to
profit or loss Actuarial (losses)/gains on defined benefit
pension plans
398 127
339 252 Income tax relating to
items that will not be reclassified
(59) (21)
(59)
(40)
339 106
280 212
Other comprehensive
income/(loss) for the period, net of tax Total comprehensive
income for the period, net of tax, attributable to equity holders
of the Parent (1,493) 1,991
(842) 4,340
Income/(loss) attributable to equity holders of the Parent
844 2,488
3,950 3,971
Kofax Limited
Unaudited Condensed Consolidated Statements of Financial
Position
($ in thousands)
December 31, 2013 June 30, 2013
Current assets: Cash and cash equivalents
81,233
93,413 Trade receivables, net
60,486 60,929 Inventories
1,528 1,800 Deferred tax assets
609 2,024 Other
current assets
9,234 8,657 Total current assets
153,090 166,823 Other non-current assets
3,468 3,671
Property and equipment
4,599 4,510 Deferred tax assets
26,126 14,350 Intangible assets
232,732 189,789 Total
assets
420,015 379,143 Current liabilities Trade and
other payables
36,969 35,504 Deferred income – current
72,610 62,955 Current tax liabilities
10,578 10,106
Provisions – current
7,899 8,397 Total current liabilities
128,056 116,962 Employee benefits
3,210 3,018
Deferred income – non-current
7,657 5,095 Deferred tax
liabilities
18,098 14,607 Provisions – non-current
5,873 2,334 Shareholders’ equity Share capital
97 95 Share premium account
31,634 18,957 Employee
benefit shares
(15,712) (15,294) Treasury shares
(15,980) (15,980) Merger reserve
2,835 2,835 Retained
earnings
236,052 227,197 Currency translation adjustment
18,195 19,317 Total Shareholders’ equity
257,121
237,127 Total liabilities and Shareholders’ equity
420,015
379,143
Kofax Limited Unaudited Condensed
Consolidated Statements of Changes in Equity
($ in thousands)
ShareCapital
Share PremiumAccount
EmployeeBenefitShares
TreasuryShares
MergerReserve
RetainedEarnings
CurrencyTranslationAdjustment
TotalEquity
As of June 30, 2012 94 17,091 (17,386) (15,980) 2,835
216,585 14,701 217,940 Loss for the period – – – – – (369) –
(369) Other comprehensive income, net of tax – – – – – 212 4,128
4,340 Total comprehensive income for the period – – – – – (157)
4,128 3,971 Tax on equity awards – – – – – 1,173 – 1,173
Share-based payment expense – – – – – 1,503 – 1,503 Changes in
employee benefit shares – – (953) – – – – (953) New share capital
issued 1 1,783 – – – – – 1,784 As of December 31, 2012 95 18,874
(18,339) (15,980) 2,835 219,104 18,829 225,418 Profit for
the period – – – – – 10,370 – 10,370 Other comprehensive income,
net of tax – – – – – (891) 488 (403) Total comprehensive income for
the period – – – – – 9,479 488 9,967 Tax on equity awards – – – – –
1,012 – 1,012 Share-based payment expense – – – – – (110) – (110)
Changes in employee benefit shares – – 3,045 – – (2,288) – 757 New
share capital issued – 83 – – – – – 83 As of June 30, 2013 95
18,957 (15,294) (15,980) 2,835 227,197 19,317 237,127 Profit
for the period
– – – – –
4,792 – 4,792 Other comprehensive income, net
of tax
– – – – – 280
(1,122) (842) Total comprehensive income for the
period
– – – – – 5,072
(1,122) 3,950 Tax on equity awards
– –
– – – 2,088 – 2,088
Share-based payment expense
– – – –
– 1,866 – 1,866 Changes in employee
benefit shares
– – (418) – –
(171) – (589) New share capital issued
2 12,677 – – – – –
12,679 As of December 31, 2013
97 31,634
(15,712) (15,980) 2,835 236,052
18,195 257,121 Kofax Limited
Unaudited Condensed Consolidated Statements of Cash Flows
($ in thousands)
For the Six Months Ended
December 31,2013
December 31,2012
Cash flows from operating activities Income from continuing
operations before tax 8,050 2,071 Adjustments to reconcile profit
before tax to net cash flows: Finance income (4,599) (116) Finance
expense 446 1,895 Depreciation and amortization 7,287 6,274
Share-based payment expense 1,866 1,191 Changes in operating assets
and liabilities: Trade receivables, net 3,508 11,550 Other assets
618 (1,591) Trade and other payables (47) (5,893) Deferred income
9,562 (2,878) Provisions (3,013) 2,347 Payments under restructuring
– personnel (588) (867) Income taxes paid (4,870) (4,778) Net cash
inflow from operating activities 18,220 9,205 Cash flows
from investing activities Purchase of property and equipment,
licenses and similar rights (2,177) (1,233) Acquisition of
subsidiaries, net of cash acquired* (41,085) (4,499) Proceeds from
sale of discontinued operations − 600 Interest received 69 107 Net
cash outflow from investing activities (43,193) (5,025) Cash
flows from financing activities Issue of share capital 313 1,746
Proceeds from initial public offering 12,366 - Purchases of and
proceeds from employee benefit shares (589) (959) Interest paid
(276) (221) Net cash inflow from financing activities 11,814 566
Net increase/(decrease) in cash and cash equivalents
(13,159) 4,746 Cash and cash equivalents at start of the period
93,413 81,122 Exchange rate effects 979 1,163 Cash and cash
equivalents at the end of the period 81,233 87,031
* The Group cash outflow from acquisitions is net of $1.3
million cash acquired from the Kapow acquisition and also includes
payments of contingent consideration related to the Atalasoft
acquisition of $1.2 million and deferred consideration related to
the Altosoft acquisition of $0.7 million.
NOTE 1 ACCOUNTING POLICIES
1.1 Basis of presentation
The unaudited Condensed Consolidated Interim Financial
Statements for the six months ended December 31, 2013 have been
prepared in accordance with IAS 34, “Interim Financial Reporting”
and the Disclosure and Transparency Rules of the Financial Services
Authority.
On December 5, 2013, the Group effected an initial public
offering of 2,300,000 shares of common stock at a price to the
public of $5.85 per share. The shares began trading on the NASDAQ
Global Select Market on that exchange under the ticker symbol
"KFX." All of the shares of common stock being offered were by
Kofax; there were no selling Kofax shareholders. Additionally, the
Group established Kofax Limited as the parent company through a
scheme of arrangement under Part 26 of the U.K. Companies Act of
2006. As part of the scheme, the Group established a new par value
of $0.001 per share replacing the 2.5 pence per under Kofax plc.
The reorganization of the Group has been accounted for in
accordance with the principles of merger accounting as applicable
to group reorganizations. The consolidated financial statements are
therefore presented as if Kofax Limited had been the parent company
of the Group throughout the periods presented. Share capital and
share premium mounts in the comparative periods have been
retroactively adjusted to reflect such establishment.
The Condensed Consolidated Interim Financial Statements do not
include all information and disclosures as required in the
Consolidated Annual Financial Statements, and should be read in
conjunction with the Group’s Consolidated Annual Financial
Statements of Kofax plc for the year ended June 30, 2013 and
prospectus dated November 28, 2013.
The Condensed Consolidated Interim Financial Statements were
approved by the Board of Directors on February 3, 2014.
1.2 Summary of significant accounting policies
The accounting policies adopted in preparation of the Condensed
Consolidated Interim Financial Statements are consistent with those
followed in preparation of the Consolidated Annual Financial
Statements for the year ended June 30, 2013.
The adoption of the standards/ interpretations that have become
effective for the current fiscal year have already been outlined in
detail in the Consolidated Annual Financial Statements for the year
ended June 30, 2013 and were not considered to have a significant
impact on these Condensed Consolidated Interim Financial
Statements.
1.3 Seasonality of operations
Many contracts, particularly those sold through the direct sales
force, are finalized in the latter portions of any given quarter.
Additionally, Group revenue may vary from quarter to quarter,
depending on the timing and size of license revenue, which may
contain individually large contracts in any given period. The first
and third fiscal quarters have historically been seasonally weaker
than the second and fourth quarters. This information is provided
to allow for a proper appreciation of the results, however
management have concluded that this does not constitute “highly
seasonal” as considered by IAS 34 Interim Financial Reporting.
NOTE 2 BUSINESS COMBINATIONS
Acquisition of Kapow
On July 31, 2013, Kofax acquired 100% of the shares of Kapow
Technologies Holdings, Inc. (Kapow), a company incorporated in the
United States, specializing in data integration software. Kapow’s
software will assist in Kofax’s ability to integrate smart process
applications with third party software for content import and
export purposes as well as data validation during a business
process. In addition, it will assist in penetrating the emerging
electronic content transformation segment of the multichannel
capture market, and is highly complementary to the recent
acquisition of Altosoft’s business intelligence and analytics
products. The acquisition will be accounted for using the
acquisition method.
The consolidated financial statements include the results of
Kapow during the five month period from the acquisition date. The
provisional fair value of the identifiable assets and liabilities
of Kapow, at the acquisition date, are as follows:
July 31, 2013 ($ in thousands) Current assets: Cash
and cash equivalents 1,276 Trade receivables, net 3,048 Other
current assets 461 Total current assets 4,785 Other non-current
assets 87 Property and equipment 99 Deferred tax assets 8,703
Technology−intangible 10,700 Customer relationships−intangible
5,400 In-process R&D−intangible 700 Trade names−intangibles 200
Total assets 30,674 Current liabilities Trade and other
payables 536 Other current liabilities 961 Deferred income –
current 1,076 Total current liabilities 2,573 Other liabilities 25
Deferred tax liabilities 6,384 Total liabilities 8,982 Net
assets acquired 21,692 Consideration paid in cash at time of
closing 40,524 Deferred consideration 6,624 Total consideration
47,148 Goodwill arising from acquisition 25,456
Analysis of cash flows on acquisition:
($ in thousands) Cash outflow at time of closing 40,524
Less: cash acquired 1,276 Total cash consideration 39,248
The provisional goodwill of $25.5 million includes the value of
acquired technologies, and expected synergies arising from the
acquisition and the workforce, which is not separately
recognizable. None of the goodwill is expected to be deductible for
tax purposes.
From the date of acquisition, Kapow has contributed $2.5 million
of revenues and $4.0 million of net loss to the Group. If the
combination had taken place at the beginning of the fiscal year,
revenues from Kapow’s operations would have been approximately $3.5
million higher and the net income would have decreased by
approximately $5.0 million and would have made the Group’s total
revenues $140.4 million and net income $3.8 million.
NOTE 3 OPERATING SEGMENTS
The Group operates one business segment, the software business.
All products and services are considered one solution to customers
and are operated and analyzed under one income statement provided
to and evaluated by the chief operating decision maker (CODM). The
CODM manages the business based on the key measures for resource
allocation, based on a single set of financial data that
encompasses the Group’s entire operations for purposes of making
operating decisions and assessing financial performance. The
Group’s CODM is the Chief Executive Officer.
There are no reportable assets that meet the criteria under IFRS
8 to be reported under the single operating segment.
Entity-wide Disclosures
The following revenue information is based on the location of
the customer:
Americas UK Germany
Rest ofEMEA
Asia-Pacific
Total
External Revenues forthe Three
Months Ended
($ in thousands) December 31,
2013 41,354 7,256 5,201 15,299 4,939
74,049 December 31,
2012 34,520 6,555 4,330 13,954 4,345
63,704
Americas UK Germany
Rest ofEMEA
Asia-Pacific
Total
External Revenues forthe Six
Months Ended
($ in thousands) December 31, 2013 78,850 14,060 9,423
28,015 9,112
139,460 December 31, 2012 67,109 14,620 8,504
24,559 9,047
123,839
The following table presents non-current assets by subsidiary
location:
America UK Germany
Rest ofEMEA
Asia-Pacific
Total Non-current assets ($ in thousands)
As of December 31, 2013 154,584
35,502 6,536 35,577 6,985
239,184 As of June 30, 2013
116,054 34,806 6,078 33,734 6,407
197,079
Non-current assets for this purpose consist of property and
equipment, intangible assets, and other non-current assets–
excluding security deposits and deferred tax assets.
NOTE 4 OPERATING COSTS AND EXPENSES
Operating costs and expenses include the following key
elements:
For the Three Months Ended For the Six
Months Ended
December 31,2013
December 31,2012
December 31,2013
December 31,2012
($ in thousands) Staff costs excluding share-based payment expense
44,331 36,435 83,973 72,724 Share-based payment expense 1,117 829
1,866 1,191 Depreciation of property and equipment 576 729 1,249
1,468 Amortization of acquired intangible assets – technology and
contractual relationships 2,340 1,619 4,564 3,226 Amortization of
intangible assets – licenses and similar rights 712 736 1,421 1,580
Total remuneration for principal auditors 709 1,078 1,145 1,946
Operating lease expense – minimum lease payments 2,030 2,075 4,008
4,047 Acquisition related costs (2,208) 1,505 (105) 2,943 Third
party royalties and commissions 4,080 2,969 7,899 5,821 Travel and
entertainment 3,317 2,719 6,421 5,458 Consultants, contractors and
advisors 3,443 2,525 6,728 5,495 Direct marketing costs 2,499 2,306
5,589 5,451 Utilities, maintenance and repair 1,613 1,529 3,278
2,987 Other administrative costs 4,970 2,845 7,527 5,652 Total
operating costs and expenses 69,529 59,899 135,563 119,989
Amortization of acquired intangibles is a component of both cost
of sales and general and administrative expenses. Amortization of
acquired technology intangible assets of $2.9 million (December 31,
2012: $2.3 million) relates to cost of sales, and amortization of
other intangible assets of $1.7 million (December 31, 2012: $0.9
million) relates to general and administrative expenses.
For the Three Months Ended For the
Six Months Ended
December 31,2013
December 31,2012
December 31,2013
December 31,2012
($ in thousands) Total cost of sales comprises: Cost of software
licenses 3,029 2,295 5,685 4,726 Cost of maintenance services 5,079
4,537 9,886 8,763 Cost of professional services 8,218 7,205 15,847
14,130 Amortization of acquired technology intangible assets 1,630
1,159 2,910 2,310 Total cost of sales 17,956 15,196 34,328 29,929
Total general and administrative comprises: General and
administrative 9,695 9,907 18,886 19,235 Amortization of other
acquired intangibles assets 710 460 1,654 916 Total general and
administrative expenses 10,405 10,367 20,540 20,151
NOTE 5 INCOME TAX EXPENSE
The components of income tax expense related to current income
tax expense and deferred income tax expense were as follows:
Three Months EndedDecember
31,
Six Months EndedDecember
31,
2013 2012 2013 2012 (in
thousands) Current income tax expense Income tax on profits for the
period 4,608 2,056 7,625 4,027 Adjustment for provision in prior
periods 131 (89) (322) (170) Total current income tax expense 4,739
1,967 7,303 3,857 Deferred income tax expense Reversal of
temporary differences (2,091) (188) (4,307) (1,289) Adjustment for
provision in prior periods − (128) 262 (128) Total deferred income
tax expense (2,091) (316) (4,045) (1,417) Total income tax
expense 2,648 1,651 3,258 2,440
The effective tax rate (income tax expense as a percentage of
income from continuing operations) can be influenced by the
disproportionate effect of significant expenses that are not
deductible for tax purposes, together with non-recognition of
certain tax losses, and certain income items that do not attract a
tax charge.
NOTE 6 EARNINGS PER SHARE
The table below presents the computation of basic and diluted
earnings per share:
For the Three Months Ended For the Six
Months Ended
December 31,2013
December 31,2012
December 31,2013
December 31,2012
($ in thousands, except per share data)
Income/(loss) from continuing operations,
after tax
2,337 497 4,792 (369) Earnings/(loss) per share > Basic
0.03 0.01 0.06 (0.00) > Diluted 0.03 0.01 0.05 (0.00)
The difference between the diluted and basic calculation is due
to the additional shares that would be issued on the conversion of
all the dilutive ordinary shares. The table below presents the
computation of basic and diluted shares:
For the Three Months Ended For the Six
Months Ended
December 31,2013
December 31,2012
December 31,2013
December 31,2012
($ in thousands) Weighted average number of shares outstanding*
85.9 84.4 85.5 84.1 Dilutive impact of share options 2.3 1.6 2.1
1.6
Dilutive impact of Long Term Incentive
Plan (LTIPs)
3.5 3.2 3.5 3.2 Diluted shares 91.7 89.2 91.1 88.9
*excluding employee benefit shares and Treasury shares
NOTE 7 PROVISIONS
PersonnelRestructuring
OnerousLease
ContingentConsideration
Others Total ($ in thousands) As of
June 30, 2013 586 644 8,090 1,411 10,731 Arising during the period
– – 9,596 99 9,695 Reversed against income statement – – (3,458)
(92) (3,550) Utilized during the period (602) (278) (2,072) (972)
(3,924) Exchange differences 16 26 749 29 820 As of December 31,
2013 – 392 12,905 475 13,772 Current – 330 7,554 15 7,899
Non-current – 62 5,351 460 5,873 As of December 31, 2013 – 392
12,905 475 13,772
Contingent consideration relates to deferred consideration,
contingent consideration, and employee retention payments
associated with acquisitions in prior periods and in the six months
ended December 31, 2013. On July 25, 2013, the Altosoft share
purchase agreement was amended to allow for achievement of earnings
targets based on cumulative results in the first two years of the
assessment. Management assessed a number of scenarios and based on
those scenarios, estimated for financial accounting purposes, that
$3.7 million of the contingent consideration will be paid to former
shareholders.
In relation to the acquisition of Kapow, an additional $6.6
million of deferred consideration is included in provisions, of
which $1.9 million is expected to be paid during the third quarter
of 2013, with an additional $2.2 million to be paid one year from
closing and $2.5 million to be paid two years from closing, with
said amounts being subject to certain indemnification terms and
conditions.
Additionally, the threshold for the contingent consideration and
related retention bonuses related to the acquisition of Singularity
was not achieved in the second measurement period. Accordingly
provisions totaling $3.6 million have been reversed against the
income statement.
NOTE 9 RELATED PARTY TRANSACTIONS
Directors’ interests in share options and LTIPs
Directors who are also executive officers of the Group held
1,199,800 LTIP shares as of December 31, 2013, of which 300,000
were granted during the six month period ended December 31, 2013
and no LTIPs were vested during the six months ended December 31,
2013. For the remaining LTIPs, based upon performance criteria and
other factors, shares become subject to release three years after
their issuance. Market prices of the shares were between 146.0
pence and 361.5 pence at the grant dates.
Directors who are also executive officers of the Group held
1,950,000 share options as of December 31, 2013, and no options
were granted during six month period ended December 31, 2013, nor
did any share options lapse during the period. The exercise periods
are between calendar years 2012 and 2020 with exercise prices of
the shares between 146 pence and 240 pence.
NOTE 10 CONTINGENT LIABILITIES
There are no material pending or threatened lawsuits against the
Group except for one filed November 29, 2012 in which the Group was
named as a defendant in a lawsuit filed by Scan EMEA Holding GmbH
in Zurich, Switzerland, alleging that the Group breached its
contract with Scan EMEA Holding GmbH in connection with the January
2011 agreement to sell the Group’s hardware business. As of
December 31, 2013, the Group assessed the merits of the lawsuit,
believe it would not have a material adverse effect on its
business, results of operations or financial condition and has
vigorously litigated this matter and taken other actions available
to it to mitigate any potential loss. Concurrent with filing the
lawsuit Scan EMEA withheld €1.5 million of the final €2.0 million
payment associated with their purchase of the Group’s hardware
business.
In January 2014, Scan EMEA Holding GmbH was acquired by Spigraph
International SA a pan-European value-added reseller of scanners
and capture and image processing software. In conjunction with that
transaction, the Group entered into a settlement agreement that
resulted in Scan EMEA Holding GmbH waiving the claim.
NOTE 11 SUBSEQUENT EVENTS
No subsequent events other than described in Note 10 have been
identified requiring disclosure.
RESPONSIBILITY STATEMENT OF THE EXECUTIVE
DIRECTORS IN RESPECT OF THE INTERIM FINANCIAL STATEMENTS
We confirm that to the best of our knowledge:
The condensed consolidated set of financial statements has been
prepared in accordance with IAS 34, “Interim Financial Reporting”
as adopted by the EU;
The interim management report includes a fair review of the
information required by:
a) DTR 4.2.7 R of the Disclosure and Transparency Rules, being
an indication of important events that have occurred during the
first six months of the financial year and their impact on the
condensed set of financial statements and a description of the
principal risks and uncertainties for the remaining six months of
the year; and
b) DTR 4.2.8 R of the Disclosure and Transparency Rules, being
related party transactions that have taken place in the first six
months of the current financial year and that have materially
affected the financial position or performance of the entity during
that period and any changes in the related party transactions
described in the last annual report that could do so.
Reynolds C. BishChief Executive OfficerFebruary
3, 2014
James Arnold, Jr.Chief Financial
OfficerFebruary 3, 2014
Source: KofaxRNS
Media Contact:Kofax LimitedColleen Edwards,
+1-949-783-1582Vice President, Corporate
Communicationscolleen.edwards@kofax.comorInvestor
Contacts:MKR Group Inc.Todd Kehrli,
+1-323-468-2300kfx@mkr-group.comorFTI ConsultingSophie McMillan,
+44 (0) 20 7831 3113kofax@fticonsulting.com
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