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Diligent Half Year Loss $US5.85m

Fuseworks Media
Fuseworks Media

Wellington, Aug 28 NZPA - Diligent Board Member Services has posted a loss of $US5.85 million ($NZ8.43 million) for its first six months trading as a company listed on the New Zealand stock exchange.

The New York-based software company listed in New Zealand last December, with shares at the issue price of $1. They last traded in mid-August at 22c.

Today chairman Rick Bettle said the result was disappointingly behind where the company had hoped to be when it listed.

"As a US-based company, we are acutely aware of the impact the global credit crunch is having on organisations," he said.

That had certainly affected Diligent's business , with market conditions in its biggest market, the US, likely to remain challenging for some time yet.

"However, there are encouraging signs that give the board confidence going forward that our sales strategies will bear fruit in reasonable time," Mr Bettle said.

For the six months to the end of June a net 43 licences were added, compared to 11 in the same period a year earlier.

Sales momentum had picked up after a slow start to the year, reflecting the benefits from Diligent's investment in sales and marketing. Diligent now had a fully trained sales force of 16, compared to three at the same time last year.

Net sales in the first half were $US1.29m, while annualised licence fees -- reflecting the ongoing yearly value of licences in effect at a given date -- were $US810,000.

The sales pipeline, of all the prospects who had expressed interest in Diligent, had about tripled during the first half, Mr Bettle said.

Diligent was achieving its revised May forecast sales targets.

The company now had 117 licence agreements, compared to 45 this time last year, generating ongoing annuity income of $US2.87m.

Given the continued uncertainty around market conditions, contributing to sales not coming through as hoped, conservative measures were being taken to scale Diligent's operating expenses.

As previously noted, in the likely event Diligent did not hit the annualised licence fee target outlined in its IPO prospectus, the warranty by the company's founding shareholder, DBMS LLC, would be triggered in whole or part, Mr Bettle said.

That would result in the surrender to the company of up to 14m shares currently owned by DBMS into treasury stock. The net effect would be an increase in the pro rata shareholdings of all other shareholders of up to 16 percent.

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