Dillistone Group (DSG: LSE), the UK-based supplier of recruitment software to the executive search industry, today reported revenue for the six months ended 30 June 2017 of £4.83 million, an increase of 0.4% compared with £4.81 million a year ago.

The group also announced that it is launching a new product called GatedTalent, designed to allow executives to share information with multiple recruiters in a confidential manner. It stated it was “redefining the relationship between executives and recruiters and revolutionising data management.”

Commenting on the results and prospects Mike Love, Non-Executive Chairman, said, “As previously announced, trading in the first few months of the year was challenging, although we have seen some improvement in incoming orders since then. The group has had a challenging first half to the year with revenue growth not keeping pace with increased costs.”

“The cost increase is due in part to our investment in GatedTalent (loss of £0.18 million), which we do not expect to start generating revenue until 2018,” Love said. “Recurring revenues represented 77% of revenues. Loss after tax, which includes the GatedTalent expenditure, was £0.02 million (2016 profit: £0.49 million).”

“The early response to our new product GatedTalent is extremely positive and we are excited at its potential. This new product is essentially a start up being developed within the auspices of an established business. We believe that it has the potential to transform the nature of our business and to deliver significant shareholder value.”

The group also announced that it has agreed to raise £400,000 through the issue of convertible loan notes. “This money will be used to help fund the development and rollout of GatedTalent. No Interim dividend will be paid at this time and future dividends will depend on the performance of the group,” Love said.

Dillistone stated that it believes the launch of GatedTalent has the potential to be transformational for the group.

Although “GatedTalent is not expected to be profitable before 2020,”Love said, “the Board is very excited by its potential and is therefore confident about the long-term success of the group. The group continues to invest in its other products to ensure that they remain relevant for the changing market place. Dillistone expects full year operational and statutory results to be in line with market expectations before acquisition related items and any write down of intangibles in respect of the lost contract.”

In trading today Dillistone Group traded at £53.00, up 1.92% on the day. Based on its current share price the company has a market value of £10.23 million.