[February 11, 2013]

Kofax Reports Financial Results for Its Second Quarter and Six Months Ended December 31, 2012

Kofax plc (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 quarter and six months ended December 31, 2012.

Second Quarter and Six Month Financial Highlights:

• Total revenue for the quarter declined 9.0% to $63.7 million (Prior Year: $70.0 million) and 8.2% in constant currency (CC), and for the six months declined 3.6% to $123.8 million (Prior Year: $128.5 million) or 1.6% in CC
• Software license revenue for the quarter decreased 24.8% to $25.0 million (Prior Year: $33.3 million) or 24.0% in CC, and for the six months decreased 18.0% to $47.1 million (Prior Year: $57.5 million) or 16.6% in CC
• Income from operations for the quarter decreased 38.3% to $3.8 million (Prior Year: $6.2 million), and for the six months decreased 51.9% to $3.9 million (Prior Year: $8.0 million)
• Adjusted income from operations¹ (Adjusted EBITDA) for the quarter decreased 39.7% to $9.9 million (Prior Year: $16.4 million), or a 15.5% margin (Prior Year: 23.5%), and for the six months decreased 29.0% to $16.1 million (Prior Year: $22.6 million), or a 13.0% margin (Prior Year: 17.6%)
• Adjusted diluted EPS² for the quarter was $0.06 (Prior Year: $0.11), and for the six months was $0.10 (Prior Year: $0.15)
• Adjusted cash generated from operations for the quarter increased to $3.6 million (Prior Year: $2.4 million), and for the six months increased to $14.9 million (Prior Year: $2.0 million)
• Quarter end cash increased to $87.0 million (Prior Year: $62.3 million)

Second Quarter Operating Highlights:

• Announced the availability of Kofax Mobile Capture™ for Mortgage App, which allows lenders to bring the loan application process directly to borrowers at the Point of Origination™ by leveraging mobile devices to dramatically accelerate loan processing and improve the customer experience
• Kofax Web Capture received the Editor's Choice Award and Kofax's implementation at Exmoor National Park was named Government Project of the Year at the 2012 Document Manager Awards hosted by DM Magazine
• Commissioned a market assessment by Forrester, a leading global research and advisory firm, which concluded that the market for Kofax's software and maintenance services at the end user level was $7.1 billion in 2012 and forecast to grow at an 18% compound annual growth rate to $14.0 billion in 2016, and the findings of the research validated the market expansion and growth opportunities resulting from the Company's acquisition and new product development strategies

A summary of Kofax's revenues and adjusted EBITDA for the second quarter and six months ended December 31, 2012 compared to the prior year periods is as follows:

Commenting on these results, Reynolds C. Bish, chief executive officer, said: "Our second quarter software license revenue was lower than anticipated, principally due to a mid seven figure sale in EMEA slipping, which we now expect to close in a future quarter. Software license revenue in the Americas was also lower than expected as we implemented significant changes in our sales organization to improve its focus, execution and productivity. The overall decline in software license revenue occurred in our legacy capture products. We're pleased to report that our new mobile capture product revenue is growing faster than we expected and product revenues from the Singularity and Atalasoft acquisitions grew more than 100% in both as reported and constant currency during this last half year. We're also pleased with the high level of cash generated from operations and our cash of $87.0 million at quarter end."

Bish continued: "In line with our expectations, global macroeconomic conditions continue to be unpredictable and the recessionary environments evident in many Western European countries have not improved. However, because the growth in our professional services revenue is lower than we had previously expected - as a result of the mix of our software license revenue and relatively more indirect than direct sales, with our channel partners often providing these services - and the lower than expected software license revenue in Q2, we are therefore taking a conservative view and lowering our guidance for fiscal year 2013 to no to low single digit growth in total revenue on a constant currency basis and an adjusted EBITDA of approximately 10% less than that reported in fiscal year 2012."

Bish concluded: "Our new product development and acquisition strategies, coupled with the changes we've effected in our sales organization, position us to take advantage of the market expansion and growth opportunities validated in Forrester's market assessment. As a result, we believe we are now at a turning point and should begin to once again report software license and total revenue growth."

Webcast

Reynolds C. Bish and chief financial officer Jamie Arnold will present and review the results and conduct a question and answer session in the London offices of FTI Consulting on February 11 at 8:00 a.m. UK time / 3:00 a.m. Eastern Time in the US. The event will be webcast live and can be accessed as follows:

Participants are advised to dial in 15 minutes before the call in order to register in time for the start of the presentation.

The live webcast can be accessed through the investor relations section of the Company website. A replay of the webcast will be available on the investor relations section of the Company website by 1:00 p.m. UK time / 8:00 a.m. Eastern Time in the US on February 11. These can be accessed at www.kofax.com/ir/presentations.asp.

About Kofax

Kofax plc (LSE: KFX) 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 a fluid bridge 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 banking, 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.

1. Adjusted income from operations (Adjusted EBITDA) is IFRS based income from operations excluding the effects of share-based payment expense, depreciation expense, amortization of acquired intangible assets, acquisition related costs, restructuring costs and other operating expense, net.

2. Adjusted diluted EPS is calculated using adjusted income from operations (Adjusted EBITDA) reduced by depreciation and income taxes and the fully diluted shares outstanding.

© 2012 Kofax, plc. "Kofax" is a registered trademark in the US, the EU and other regions, and "First Mile", "Kofax Mobile Capture" and "Point of Origination" are trademarks of Kofax, plc. All other trademarks are the property of their respective owners.

Chief Executive Officer's Review

Financial Highlights

Total revenue for the six months declined 3.6% to $123.8 million or 1.6% in constant currency. This was driven by seasonally weak software license revenue during our first quarter and disappointing software license revenue during the second quarter, principally due to a mid seven figure sale in EMEA slipping, which we now expect to close in a future quarter. During the second quarter, software license revenue in the Americas was also lower than expected as we implemented significant changes in our sales organization to improve its focus, execution and productivity.

The overall decline in software license revenue occurred in our legacy capture products. We're pleased to report that our new mobile capture product revenue is growing faster than we expected and product revenues from the Singularity and Atalasoft acquisitions grew more than 100% in both as reported and constant currency during the last half year.

During that same period, maintenance and professional services revenues grew and offset much of the decline in software license revenue. However, the growth in our professional services revenue is lower than we had previously expected as a result of the mix of our software license revenue and relatively more indirect than direct sales, with our channel partners often providing these services.

Consistent with the decline in software license revenue and more indirect than direct sales, during the six months we closed fewer six and seven figure sales, with only six greater than $500,000, down from 14 in the prior year period, and one greater than $1 million, down from five.

Adjusted income from operations (Adjusted EBITDA) for the six months decreased 29.0% to $16.1 million, or a 13.0% margin, as a result of the decline in software license revenue, and adjusted diluted EPS for the six months was $0.10.

We're pleased with the high level of adjusted cash generated from operations for the six months of $14.9 million, compared to only $2.0 million in the prior year period, and the quarter end cash of $87.0 million, compared to only $62.3 million one year ago.

Operating Highlights

Our investments in research and development have continued to improve and add to our software product offerings in order to better serve the needs of our customers and help grow our revenue. During the six months we successfully launched:

• A free Kofax Mobile Capture app through the iTunes App Store and Google Play for demonstration and use with business cards, receipts and other documents
• Kofax Mobile Capture™ for Mortgage App, which allows lenders to bring the loan application process directly to borrowers at the Point of Origination™ by leveraging mobile devices to dramatically accelerate loan processing and improve the customer experience

This continues to exemplify how we are prudently reallocating our research and development expenditures to better focus on mobile capture in order to expand our vision well beyond the traditional capture market and access additional growth opportunities. The importance of mobile capture was recently reinforced by The Association for Information and Image Management (AIIM) in a report entitled "Distributed and Mobile Capture - Moving the Process Closer to the Customer," which contained the results of a survey revealing that mobile capture is considered a "Game Changer" for customer focused initiatives.

We were also pleased to receive continuing recognition for our software products and market presence:

• Kofax Web Capture™ was named to KMWorld Magazine's prestigious listing of "Trend Setting Products of 2012"

• Kofax Web Capture received the Editor's Choice Award and Kofax's implementation at Exmoor National Park was named Government Project of the Year at the 2012 Document Manager Awards hosted by DM Magazine
• I was honored at the 2012 British American Business Awards for leadership in the Southern California business community
• Kofax was added to the FTSE4Good Index Series, a family of share indexes for companies meeting globally recognized corporate responsibility standards

Perhaps most importantly, during the period we commissioned a market assessment by Forrester, a leading global research and advisory firm, which concluded that the market for Kofax's software and maintenance services at the end user level totaled $7.1 billion in 2012 and is forecast to increase at an 18% compound annual growth rate (CAGR) to $14.0 billion in 2016. This is composed of the capture, business process management (BPM) and information intensive vertical smart process applications (SPAs) segments:

The findings of this research also validated the market expansion and growth opportunities resulting from Kofax's acquisition and new product development strategies, reinforcing our belief that we are uniquely positioned to succeed in each of these three segments:

• The assessment concluded that Kofax had a number one, leading 15% share of the capture market, and in Forrester's recently published first "Wave" for Multichannel Capture, Kofax was shown as a "Leader" and number one in all three categories used for the ranking
• In the BPM market segment our TotalAgility product is considered to be "Visionary" in Gartner's "Magic Quadrant" for BPM and a "Leader" in Forrester's "Wave" for Dynamic Case Management
• Our vertical smart process applications strategy - first initiated almost 12 months ago - is focused on leveraging our capture, business process management, dynamic case management and mobile capabilities to provide packaged solutions for information intensive customer engagement needs across many of our existing vertical markets

No one else has the comprehensive product set needed to effectively automate and simplify the business critical "First Mile" of customer interactions and thereby optimize their experience and greatly reduced operating costs. Our solutions provide a fluid bridge between an organization's constantly evolving "Systems of Engagement" and typically rigid, large scale "Systems of Record," which are enterprise applications and repositories that cannot easily adapt to more contemporary needs such as the explosion in mobile devices. Our solutions capture and streamline the flow of business critical information throughout an organization in a more accurate, timely and cost effective manner, enabling our users to be more responsive to their customers and better grow their businesses. We have a proven track record of providing these solutions with an installed base of over 20,000 active end user customers, and we have the vertical market expertise and global hybrid go-to-market model and reach needed to penetrate a broad spectrum of the market. As a result, we are enthusiastic and confident about our future prospects.

Guidance for the Fiscal Year Ending June 30, 2013

In line with our expectations, global macroeconomic conditions continue to be unpredictable and the recessionary environments evident in many Western European countries have not improved. However, because the growth in our professional services revenue is lower than we had previously expected - as a result of the mix of our software license revenue and relatively more indirect than direct sales, with our channel partners often providing these services - and the lower than expected software license revenue in Q2, we are therefore taking a conservative view and lowering our guidance for fiscal year 2013 to no to low single digit growth in total revenue on a constant currency basis and an adjusted EBITDA of approximately 10% less than that reported in fiscal year 2012.

Our new product development and acquisition strategies, coupled with the changes we've effected in our sales organization to improve its focus, execution and productivity, position us to take advantage of the market expansion and growth opportunities validated in Forrester's market assessment. As a result, we believe we are now at a turning point and should begin to once again report software license and total revenue growth.

Thank You

Our performance is the direct result of the dedication and hard work of our valued employees, channel partners and suppliers, and the continued support of our customers and shareholders. I would like to once again thank these stakeholders for their on-going contributions to our success.

Chief Financial Officer's Review

Revenue

Total revenue decreased $4.7 million, or 3.6%, in the six months ended December 31, 2012 compared to the six months ended December 31, 2011 due to an $11.2 million, or 8.8% decrease in core capture revenue partially offset by a $6.6 million increase associated with our acquisition of Singularity. The decrease in core capture revenue resulted from a $12.0 million decrease in software license revenue, a $0.8 million decrease in professional services revenue and a $1.6 million increase in maintenance services revenue.

The following table presents the revenue by geography in dollars and as a percentage of total revenue.

Software license revenue decreased $10.4 million, or 18.0%, in the six months ended December 31, 2012, due to a $12.0 million, or 21.1%, decrease in core capture software license revenue partially offset by a $1.7 million increase associated with our acquisition of Singularity. Core capture software license revenue declined in all geographies due to a combination of sales execution issues and continued economic weakness in EMEA. Software license revenue, as a percentage of total revenue, decreased 6.7% in the six months ended December 31, 2012, due to the weakness in license sales compared to the relatively stable maintenance services revenue and the growth in professional services revenue.

Maintenance services revenue increased $3.6 million, or 6.3%, in the six months ended December 31, 2012 due to a $1.6 million, or 2.8%, increase in core capture maintenance services and a $2.0 million increase associated with our acquisition of Singularity. Our core capture maintenance services revenue, on a constant currency basis, increased in each of our geographies due primarily to high maintenance contract renewal rates as well as the expansion of our user base.

Professional services revenue increased $2.1 million, or 14.8%, in the six months ended December 31, 2012 due to a $2.9 million increase associated with our acquisition of Singularity, partially offset by an $0.8 million, or 6.1%, decrease in our core capture professional services. Core capture professional services revenue was relatively flat in EMEA and declined in the Americas and Asia Pacific (AP). Many, but not all, of our professional services engagements are associated with new software license sales, with the timing of revenue recognition of our professional services often lagging that of our software license revenue. Accordingly, the decrease in our core capture professional services in the Americas and AP has followed the relative pattern of the decrease in our software license revenue.

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. The following table reflects cost of software license revenue, in dollars and as a percentage of software license revenue:

Cost of software licenses decreased by $0.5 million, or 10.2%, in the six months ended December 31, 2012, which is generally in line with the decrease in our software license revenue. Royalty costs vary by product, as applicable, and accordingly, the cost of software licenses as a percentage of the software license revenue 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:

Cost of maintenance services increased $0.7 million, or 8.4%, in the six months ended December 31, 2012 due to $0.4 million of costs associated with our acquisition of Singularity, as well as to our core capture costs having increased by $0.3 million, or 3.7%, which was in line with the growth of core capture maintenance services revenue.

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:

Cost of professional services increased $2.0 million, or 16.7%, in the six months ended December 31, 2012 due to $2.6 million of costs associated with our acquisition of Singularity partially offset by a $0.6 million decrease in our core capture cost of professional services. Our gross margin on professional services decreased from 13.2% in the six months ended December 31, 2011 to 11.7% in the six months ended December 31, 2012 as we were not able to deploy our resources as efficiently because the professional services revenue has not increased as fast as we expected.

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 as well associated costs such as facilities and related overhead charges. Our research and development expenses have been expensed as incurred. The following table shows research and development expense, in dollars and as a percentage of total revenue:

Research and development expenses increased $0.4 million, or 2.3%, in the six months ended December 31, 2012 due to $1.7 million of costs associated with our acquisition of Singularity partially offset by a $1.3 million, or 8.3%, decrease in core capture research and development expenses. The decrease in core capture research and development expenses is due to our strategy of moving the development of certain of our more mature products to offshore sites with lower labor costs so that we can better focus on expanding our products beyond the traditional capture market.

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 revenue:

Sales and marketing expenses remained relatively flat in the six months ended December 31, 2012 as we integrated Singularity sales and marketing operations into our core capture operations while achieving savings from effecting efficiencies in our sales and marketing operations.

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 revenue:

General and administrative expenses decreased $1.4 million, or 6.8%, in the six months ended December 31, 2012, due to a $1.8 million decrease in our core capture costs partially offset by $0.4 million of costs associated with our acquisition of Singularity. The decrease in our core capture costs is due to a $1.4 million decrease in legal, accounting and tax fees and a $0.6 million decrease in share-based payment expense.

Amortization of Acquired Intangible Assets - We amortize acquired intangible assets using the straight-line method over the estimated useful life of the respective asset. Amortization of acquired intangible assets increased $1.3 million, or 69.3%, to $3.2 million in the six months ended December 31, 2012, primarily due to $1.6 million of amortization of acquired intangible assets arising from our acquisition of Singularity.

Acquisition-related Costs - Acquisition-related costs include those costs related to business and other 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. Acquisition-related costs increased $1.2 million, or 65.9%, to $2.9 million in the six months ended December 31, 2012 due to a $2.5 million increase in transition compensation costs in connection with our acquisition of Singularity partially offset by a $1.3 million decrease in direct acquisition costs. During the six months ended December 31, 2011 we incurred direct acquisition costs associated with our evaluation and due diligence associated with the business process management software market, which ultimately led to our acquisition of Singularity in December 2011.

Restructuring Costs - Restructuring costs decreased $4.7 million, or 100%, as there were no restructuring charges in the six months ended December 31, 2012. In the six months ended December 31, 2011, due to a weak economic environment in EMEA, we recorded a $4.7 million charge for staff redundancy payments associated with headcount reductions of approximately 60 personnel and future payments for excess unused facility leases in EMEA.

Other Operating Expense, net - Other operating expense, net consists of all income or expense that is not directly attributable to one of our other operating revenue or expense lines. Other operating expenses, net increased $1.1 million, or 133.6% to $1.9 million in the six months ended December 31, 2012 primarily due to professional fees incurred for attorneys, accountants and other advisors associated with the preliminary work needed for us to affect an initial public offering (IPO) in the United States.

Finance Income (Expense), net - Finance income (expense), net consists primarily of foreign exchange gains or losses related to our receivables and payables (including non-functional currency denominated intercompany transactions), to fair value adjustments relating to forward contracts or other financial instruments and to a lesser extent to interest income (expense). Finance Income (expense), net changed from a net income of $3.5 million to an expense of $1.8 million during the six months ended December 31, 2012, as the U.S. dollar weakened against each of the British pound, the euro and the Swiss franc while during the six months ended December 31, 2011, the U.S. dollar strengthened against each of those currencies.

Tax - Income tax expense decreased by $1.9 million, or 44%, to $2.4 million while the Effective Tax Rate (income tax expense as a percentage of income from continuing operations) increased 80 points to 117.8% in the period ended December 31, 2012. These movements are a function of the relatively disproportionate effect of significant expenses that are not deductible for tax purposes, coupled with lower profit from continuing operations. The Adjusted Effective Tax Rate increased by 1 point to 32.6% for the six months ended December 31, 2012 due to impact of elements of the tax charge relative to the relatively lower income from continuing operations.

Loss from Discontinued Operations, net of tax - On May 31, 2011, we completed the sale of our hardware business. In six months ended December 31, 2011, we recorded associated expense of $0.6 million, which included transaction fees, legal fees, asset values, and other administrative and transition costs. We had no such costs in the six months ended December 31, 2012.

Liquidity and Capital Resources

Historically, we have financed our business primarily through our cash flows from operations. We had $87.0 million of cash and cash equivalents at December 31, 2012, compared to $81.1 million at June 30, 2012 and $62.3 million at December 31, 2011. The majority of our cash is held in US dollars, euros and to a lesser extent, British pounds. We had no outstanding debt as of December 31, 2012. We have a revolving credit facility that provides for borrowings of up to $40.0 million and matures on June 30, 2014. As of December 31, 2012, we had $39.6 million available under this revolving credit facility.

Adjusted cash flow from operations increased $12.9 million to $14.9 million in the six months ended December 31, 2012, which reflects the return to a more normalized cash conversion ratio.

Net cash generated by operating activities increased $8.6 million to $9.2 million in the six months ended December 31, 2012 due to increased cash flows from the collection of accounts receivable offset by use of cash for a reduction in accounts payable and deferred revenue, and increased tax payments.

Net cash used in investing activities was $5.0 million primarily due to $4.5 million deferred and contingent payments associated with our December 2011 acquisition of Singularity and our May 2011 acquisition of Atalasoft. Net cash used in investing activities was $31.0 million in the six months ended December 31, 2011, primarily relating to our acquisition of Singularity which used $28.5 million in cash, and to a lesser extent relating to contingent payments in connection with our acquisition of Atalasoft.

Net cash generated from financing activities was $0.6 million in the six months ended December 31, 2012, compared to a use of $0.3 million in the six months ended December 31, 2011. The difference of $0.9 relates to an incremental $1.6 million inflow related to share capital issuances as a result of employee exercises of stock options, offset in part by a purchase of $1.0 million of our ordinary shares from the open market for our Employee Benefit Trust.

The Company has significant overseas subsidiaries, which operate principally in their local currencies. Where appropriate, intra group borrowings are arranged in local currencies to provide a natural hedge against exchange rate movement risks.

The Company hedges certain net foreign currency cash and cash flows relating to transactions in accordance with policies set by the Board.

Reconciliation of Non IFRS Measures

Management uses several financial measures, both IFRS and non-IFRS, in analyzing and assessing the overall performance of the business and for making operational decisions. We believe that these non-IFRS measures are also useful to investors and other users of our financial statements in evaluating our performance because these non-IFRS financial measures may be used as additional tools to compare business performance across peer companies and 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.

Adjusted Income from Operations - We define adjusted income from operations as income from operations excluding the effect of 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 adjusted 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 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 historically 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 adjusted income from operations. At times when we are communicating with our shareholders, analysts and other parties we refer to adjusted income from operations as EBITDA.

We assess adjusted income from operations as a percentage of total revenue and by doing so we are able to evaluate the relative performance of our revenue growth compared to the expense growth for those items included in adjusted 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 table below provides a reconciliation of IFRS income from operations to adjusted income from operations and presents adjusted income from operations as a percentage of total revenue:

Adjusted Cash Flows from Operations - We define "adjusted cash flows from operations" as cash flows from operations as reported under IFRS, adjusted for income taxes paid or received and payments under restructurings. Income tax payments 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:

Adjusted diluted earnings per share - Adjusted diluted EPS is calculated using adjusted income from operations (Adjusted EBITDA) reduced by depreciation and income taxes and fully diluted shares outstanding.

Going Concern

Our financial statements have been prepared on the basis that the Group is a going concern. In connection with this presentation, the Board has reviewed the Group's forecasts and budgets, borrowing facilities, plans and various other analyses to determine the level of uncertainties of 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 Group to continue as a going concern.

Principal Risks and Uncertainties

The principal risks and uncertainties facing the Company were disclosed on pages 11 and 12 of the Company's 2012 Annual Report. The Chief Executive Officer's Review includes an update on key risks in the second half of the current fiscal year.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

NOTE 1 ACCOUNTING POLICIES

1.1 Basis of Presentation

The unaudited Condensed Consolidated Interim Financial Statements for the six months ended December 31, 2012 have been prepared in accordance with IAS 34, "Interim Financial Reporting" and the Disclosure and Transparency Rules of the Financial Services Authority.

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 for the year ended June 30, 2012.

The financial information contained in these Condensed Consolidated Interim Financial Statements do not comprise statutory financial statements within the meaning of section 435 of the UK Companies Act 2006. The Consolidated Annual Financial Statements for the year ended June 30, 2012, 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 and did not contain a statement under section 498 of the UK Companies Act 2006.

The Condensed Consolidated Interim Financial Statements were approved by the Board of Directors on February 8, 2013.

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, 2012.

The adoption of the standards/ interpretations that have become effective for year 2013 have already been outlined in detail in the Consolidated Annual Financial Statements for the year ended June 30, 2012 and were not considered to have a significant impact on these Condensed Consolidated Interim Financial Statements.

NOTE 2 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:

The following table presents non-current assets by subsidiary location:

Non-current assets for this purpose consist of property, plant and equipment, intangible assets, and other non-current assets - excluding security deposits and deferred tax assets.

NOTE 3 OPERATING COSTS AND EXPENSES

Operating costs and expenses include of the following key elements:

Amortization of acquired intangibles is a component of both cost of sales and general and administrative expenses. Amortization of acquired technology intangible assets of $2.3 million (December 31, 2011: $1.2 million) relates to cost of sales, and amortization of other intangible assets of $0.9 million (December 31, 2011: $0.7 million) relates to general and administrative expenses.

NOTE 4 INCOME TAX EXPENSE

The components of income tax expense related to current income tax expense and deferred income tax expense were as follows:

The effective tax rate (income tax expense as a percentage of income from continuing operations) increased due to the relatively disproportionate effect of significant expenses that are not deductible for tax purposes, coupled with lower profit from continuing operations. These non-deductible expenses are excluded from adjusted profit as used for the adjusted EPS (Note 5).

NOTE 5 EARNINGS PER SHARE

Basic earnings per share (EPS) of ($0.00) (December 31, 2011: $0.08) for the six months ended December 31, 2012 for the continuing business have been calculated based on a loss from continuing operations after income taxes of $(0.4) million (December 31, 2011: $7.2 million) using the weighted average number of ordinary shares in issue totalling 84.1 million (December 31, 2011: 84.7 million) during the period.

Diluted earnings per share of ($0.00) (December 31, 2011: $0.08) for the six months ended December 31, 2012 for the continuing business have been calculated based on income from continuing operations after income taxes of $(0.4) million (December 31, 2011: $7.2 million) using 84.1 million, (December 31, 2011: 89.7 million) ordinary shares. Basic ordinary shares are used in the six months ended December 31, 2012 share calculation since the effect of potential ordinary shares upon conversion, which totals 88.9 million, would be anti-dilutive.

Adjusted earnings per share of $0.10 (December 31, 2011: $0.16) for the six months ended December 31, 2012 for the continuing business have been calculated based on Adjusted income from continuing operations after income taxes of $8.8 million (December 31, 2011: $13.3 million) using the weighted average number of ordinary shares in issue totaling 84.1 million (December 31, 2011: 84.7 million) during the period.

Adjusted diluted earnings per share of $0.10 (December 31, 2011 $0.15) for the six months ended December 31, 2012 for the continuing business have been calculated based on Adjusted income from continuing operations after income taxes of $8.8 million (December 31, 2011: $13.3 million) using 88.9 million (December 31, 2011: 89.7 million) ordinary shares.

A reconciliation of the number of shares included in EPS follows:

NOTE 6 PROVISIONS