Final Results

Dillistone Group PLC 16 April 2008 16th April 2008 DILLISTONE GROUP PLC PRELIMINARY ANNOUNCEMENT FOR THE YEAR ENDED 31 DECEMBER 2007 Dillistone Group Plc ('Dillistone' or 'the Group'), the AIM listed supplier of Recruitment Software, is pleased to announce its preliminary results for the year ended 31st December 2007. Highlights for the period: 2007 2006 â€¢Revenue +23% Â£4.07m Â£3.30m â€¢Profit before tax +30% Â£1.20m Â£923k â€¢Profit after tax +26% Â£804k Â£637k â€¢Earnings per share (basic) +24% 14.9p 12.0p â€¢Cash at Bank +185% Â£1.534m Â£539k â€¢Operating Margin +4% 29% 28% â€¢Recurring revenues increased by 29% to Â£1.67m, representing 41% of total turnover â€¢Proposed final dividend of 6p per share recommended, making total dividend for year of 8.5p â€¢Clients in over 50 countries world wide Commenting on the results, Jason Starr, Managing Director said: 'We are very pleased with the continued global growth of Dillistone in 2007. Particularly significant is that 7 out of our 25 largest implementations within the period were into the world's 'emerging markets' and that many major contracts were won where clients moved over to Dillistone from direct competitors. This is an endorsement of our position as the market leader in the global Recruitment Software industry. 'Revenue growth has been complemented by an enhanced operating margin and strong profits, demonstrating a robust performance across the business. The Group has been very cash generative and gives us a strong platform to continue to develop in 2008 despite the economic uncertainty seen recently in world markets.' Contacts: Jim McLaughlin - Dillistone Group Plc 01934 710 509 Chairman & Finance Director John Wakefield - Blue Oar Securities 0117 933 0020 Tom Cooper - Winningtons 0797 122 1972 CHAIRMAN'S STATEMENT I am pleased to present the annual report of the company for the year ended 31 December 2007. Financial Performance The momentum we enjoyed in the year ended December 2006 flowed through into the year covered by this report, with record profits and turnover for the Group as a whole. We benefited from the considerable investment in the development of a new version of our FILEFINDER product which was launched in March 2007, winning some significant orders from new and existing clients. The financial results for the year ended 31 December 2007 show substantial growth in both turnover and profits over 2006. Revenue in the year increased by 23% to Â£4,066,463 (2006 - Â£3,301,362), and profits before tax increased by 30% to Â£1,196,213 (2006 - Â£923,118) despite severe weakening of both the Australian and US Dollars against the pound, which together accounted for approximately 26% sales. Sales and profits growth in both the UK and European markets have been particularly strong. The USA saw the effects of a weakening dollar impact on the results, together with a slowdown in overall business activity. In late 2006 we decided to offer our product on a 'Software as a Service' basis in the US market and, whilst this has a negative impact on both revenue and results in the short term, it has improved the proportion and value of the revenue earned on a recurring basis, which will have a positive long term impact on quality of earnings. Recurring revenues (mainly arising from support agreements) increased by 29% in the year, from Â£1.288m to Â£1.666m, whilst non recurring revenues (mainly from new license sales) increased by 19% from Â£2.014m to Â£2.401m. Recurring revenues now comprise 41% of Group turnover (2006- 39%) and help to provide a cushion against any slowdown, which may arise in new business as a result of a slowdown in overall economic activities. Operating margins were enhanced from 28% in 2006 to 29% in 2007, reflecting the strong sales growth together with tight control over operating costs. Cashflow has continued to reflect the profitable performance of the business, and at the end of the year we held cash balances of Â£1,533,649, compared with Â£538,591 at the beginning of the year. The cash balance at 31 December 2007 reflects the payment of an interim dividend of Â£135,000, and capital expenditure of some Â£110,741. The Group has no borrowings whatsoever. Earnings per share increased by 24% to 14.90p per share (2006 -12.0p per share). We paid an interim dividend of 2.5p per share in October 2007, and the board has recommended that a final dividend of 6p per share should be paid, subject to shareholder approval, on 23 May 2008 to holders on the register on 25 April. Shares will trade Ex-Dividend from 23 April 2008. The total dividend for the year will be 1.75 times covered by earnings, a little less than envisaged at the time of the flotation, but covered some 2.34 times by the cash generation of the business. Staff As part of the flotation process, share options were granted to all our staff through both EMI approved and unapproved share schemes. I am pleased that we were able to introduce these schemes on favourable terms for them, which is particularly important in a services business and I look forward to welcoming them as shareholders in due course. During the year we granted additional options to a small number of employees, and at the end of the year, our staff held options over 347,934 ordinary shares in the company, representing 6% of the current issued share capital after exercise of the options. These options will mature from May 2009, and demonstrate the value placed on our staff, who have performed outstandingly well throughout the year. Prospects We announced in February 2008 that the order intake in the final quarter of 2007 had been the highest ever recorded by the Group since its formation, and I am pleased to be able to confirm that this positive trend has continued. Order intake for the year as a whole was some 31% ahead of the previous year, and at the year end we held the highest value of confirmed orders we have ever experienced. This has led to a very good start to the current year. However, the effects of the global credit squeeze appear to have made larger clients currently more apprehensive about committing themselves to ordering new systems, certainly in the short term, and the outlook for the longer term in the financial recruitment markets is less visible at the present time. Our strong balance sheet and substantial cash reserves at the year end, together with the increasing value of recurring revenue contracts means that the Group is relatively well protected against any short term slowdown in economic activity. The excellent start we have enjoyed in the first part of 2008 also assists in this regard, and the Board believes that the Group is well positioned for another successful year. Jim McLaughlin 15 April, 2008 MANAGING DIRECTOR'S REPORT 2007 was another excellent year with significant improvements in revenues, profits and earnings. Sales growth was achieved in both recurring and non recurring revenues. The 29% increase in recurring revenues was delivered as a result of both strong support sales and an increasing number of new system sales, delivered on a 'Software as a Service' basis. The period saw us win 153 new business contracts which were implemented in 37 countries. Our global spread is particularly pleasing - we now have clients in over 50 countries - with our largest ten implementations in 2007 featuring clients in UK, USA, Denmark, India, Asia Pacific and Russia along with a pan-EMEA business. The emerging markets proved to be particularly important to us, with 7 of our 25 largest implementations coming from the Middle East, Asia, Eastern Europe and Central and Southern America. These contract wins are particularly significant as they often confer on us 'market leadership' status in these regions. As these markets continue to grow, we should enjoy continued success as a result of these early wins. Also pleasing was the fact that 2007 saw us attract a record number of clients from direct competitors. We believe that this is partly down to our ongoing product development, but also down to a desire amongst the leading search firms to invest in systems from a global leader. The corporate sector continues to be a small but growing niche for us, with a further Fortune 100 company introducing our system in 2007 for its internal talent acquisition. DIVISIONAL REVIEW UK, Middle East and India Our home region once again generated excellent results, with a 52.22% increase in profit. It should be noted, however, that a number of the larger clients invoiced from the UK - particular Spengler Fox - featured significant international work. The results of these contracts therefore fall within the accounts of our UK subsidiary, even though the profits were actually earned overseas. In addition to Spengler Fox, significant contract wins in the UK also included Hays Executive - the Executive Search division of the UK's largest Recruitment firm - and Norman Broadbent. Each of these firms switched to FILEFINDER from a direct competitor. Europe Our European business also performed to an exceptional level, with year on year profits up 32%. European executive search firms are often smaller than their counterparts in the UK and US, and so this performance reflects volume of new business wins rather than scale. Our performance in Russia and Eastern Europe was particularly pleasing, with a number of significant contract wins. Asia Pacific Our Australia and Asia pacific business unit again performed very well, with year on year results up 46.8%. Strategically important contract wins in the region included The Wright Company and Jo Fisher Executive Search. The region also benefited from a major marketing push in November, when a conference organised by the Group in Hong Kong attracted over 200 delegates from 19 countries to discuss Executive Talent Acquisition in Asia. The event proved significant, and provided us with an opportunity for exclusive exposure to our FILEFINDER product to leading firms in the region whilst also contributing a small profit. United States Whilst the headline performance of our US business unit was disappointing, this does not reflect fully the actual achievements of the business. Profits fell by 9.3% based on sales which increased by 6%, but in practice, whilst realised revenues were relatively flat, incoming orders grew significantly. Our decision to offer FILEFINDER on a 'software as a service' model in the US (where clients rent the software rather than purchase it) caused us some short term pain but means that 57% of revenues should recur in 2008. In 2007, the percentage was just 29%. Clearly, this decision should go a long way towards mitigating the effects of the economic downturn in the region. A number of major wins in the region are subject to non-disclosure agreements, but include a Fortune 100 company and a number of search firms - including one internationally known - which are switching to FILEFINDER from US based competitors. PRODUCT STRATEGY 2007 was a major year in the development of FILEFINDER. In March, we launched FILEFINDER 8. FILEFINDER 8 is the latest iteration of our main product and features both a new interface and extensive new functionality. This was followed in September by the launch of a new release of our 'FFImport' module. The new FFImport, compared to its predecessor, features significant additional functionality for our clients and a lower cost of implementation for us. As the year closed, our next generation tool for handheld devices, FFMobile, was in the final stages of beta testing and was released in January 2008. FFMobile is provided as an add-on to our core FILEFINDER platform. We believe that FILEFINDER is used by more Executive Search firms than any other product, and are committed to a development path that will maintain that position. Beyond FILEFINDER, we continue to develop a number of additional products and services which are designed to both increase brand awareness of our organisation whilst also providing additional revenue streams. In 2007 we ran conferences in London and Hong Kong and provided 'executive search training skills' courses in a number of countries. Between the training we provide in FILEFINDER and our more generic courses in executive search skills, we believe we probably provide third party training to more retained executive search professionals than any other organization. 2008 will see us extend our conference and training portfolio with events in New York, Frankfurt and London and the launch of online webinar training. PEOPLE Our performance in 2007 reflects the fact that our group companies are made up of an exceptional team of people. I'd like to take this opportunity to thank them for all of their efforts during the year. For the business to continue to perform it is important that we retain and develop our staff and, to that end, we issued new options over 30,000 shares to new members of staff and existing option holders whose responsibilities within the business had increased since they were awarded their original options before the flotation. We are confident that if we can continue to retain our key staff, then our business will continue to perform better than others in our sector. CORPORATE DEVELOPMENT The board is acutely aware that the Group's future success is dependent on our ability to continue to meet the needs of the executive recruitment sector. As such, it continues to actively consider ways in which this may be done - through either the development of existing products or the creation of new ones. We have a strong balance sheet and high cash reserves with which to pursue these goals and we continue to consider opportunities to take advantage of these assets in a way which would enhance the overall group position, its earnings and overall profitability. Jason Starr 15 April 2008 CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2007 2007 2006 Â£ Â£ Revenue 4,066,463 3,301,362 Cost of sales (236,951) (274,481) ----------- ----------- Gross profit 3,829,512 3,026,881 Administrative expenses (2,659,390) (2,107,724) ----------- ----------- Results from operating activities 1,170,122 919,157 Financial income 26,091 3,961 ----------- ----------- Profit before tax 1,196,213 923,118 Tax expense (391,838) (285,913) ----------- ----------- Profit for the year 804,375 637,205 =========== =========== Earnings per share - from continuing activities Basic 14.90p 12.00p Diluted 14.05p 11.63p CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2007 Share Share Retained Share Foreign Total capital premium earnings option exchange Â£ Â£ Â£ Â£ Â£ Â£ Balance at 31 December 105,000 106,237 427,238 - 14,822 653,297 2005 Profit for the year ended 31 December - - 637,205 - - 637,205 2006 Bonus issue from 155,000 (106,237) (48,763) - - - reserves Issue of 10,000 240,000 - - - 250,000 share capital Costs of the - (240,000) (936) - - (240,936) issue Fair value of equity settled share option - - - 13,316 - 13,316 expense Exchange differences - - - - (21,002) (21,002) on Translation of overseas operations Dividends - - (535,096) - - (535,096) paid ------- ------- ------- ------ ------- ------- Balance at 270,000 - 479,648 13,316 (6,180) 756,784 31 December 2006 Profit for the year - - 804,375 - - 804,375 ended 31 December 2007 Fair value of equity - - - 13,462 - 13,462 settled share option expense Exchange differences - - - - 23,916 23,916 on translation of overseas operations Dividends - - (135,000) - - (135,000) paid ------- ------- ------- ------ ------- ------- Balance at 31 December 2007 270,000 - 1,149,023 26,778 17,736 1,463,537 ======= ======= ======= ====== ======= ======= CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2007 Group 2007 2006 Â£ Â£ ASSETS Non-current assets Intangible assets 639,835 630,271 Property plant and equipment 155,390 181,476 Investments - - ----------- ----------- 795,225 811,747 Current assets Inventories 2,334 21,210 Trade and other receivables 1,284,190 827,633 Cash and cash equivalents 1,533,649 538,591 ----------- ----------- 2,820,173 1,387,434 ----------- ----------- Total assets 3,615,398 2,199,181 =========== =========== EQUITY AND LIABILITIES Equity Share capital 270,000 270,000 Retained earnings 1,149,023 479,648 Share option reserve 26,778 13,316 Translation reserve 17,736 (6,180) ----------- ----------- Total equity 1,463,537 756,784 Liabilities Non current liabilities Deferred tax liability 3,000 8,603 Current liabilities Trade and other payables 1,848,038 1,205,219 Current tax payable 300,823 228,575 ----------- ----------- Total liabilities 2,151,861 1,442,397 ----------- ----------- Total liabilities and equity 3,615,398 2,199,181 =========== =========== CONSOLIDATED CASH FLOW STATEMENT AS AT 31 DECEMBER 2007 2007 2007 2006 2006 Â£ Â£ Â£ Â£ Operating activities Profit from operations 1,170,122 919,157 Less taxation paid (319,590) (287,323) Adjustment for Depreciation and amortisation 126,606 94,582 Share option expense 13,462 13,316 Loss on disposal 657 1,117 ---------- --------- Operating cash flows before movement in working capital 991,257 740,849 (Increase) in receivables (456,557) (122,501) Decrease in inventories 18,876 11,204 Increase in payables 637,216 201,735 ---------- --------- Net cash generated from 1,190,792 831,287 operating activities Investing activities Interest received 26,091 3,961 Purchase of property plant and equipment (35,653) (191,485) Investment in development (75,088) (73,888) costs ---------- --------- Net cash used in investing (84,650) (261,412) activities Financing activities Proceeds from issue of share - 250,000 capital Share capital issue costs - (240,936) Dividends paid (135,000) (535,096) ---------- --------- Net cash used by financing (135,000) (526,032) activities --------- --------- Net increase in cash and cash 971,142 43,843 equivalents Cash and cash equivalents at 538,591 515,750 beginning of year Effect of foreign exchange 23,916 (21,002) rate --------- --------- changes Cash and cash equivalents at 1,533,649 538,591 end of year ========= ========= NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007 1. Basis of Accounting The above financial information does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. The above figures for the year ended 31 December 2007 are an abridged version of the company's accounts which will be reported on by the auditors, despatched to the shareholders and filed with the Registrar of Companies shortly. The audited accounts for the year ended 31 December 2006 have been delivered to the Registrar of Companies and the report of the auditors was unqualified and did not contain statements under Section 237(2) or (3) Companies Act 1985. The financial information in this announcement has been prepared on the basis of the accounting policies set out in the interim financial statements for the 6 months ended 30 June 2007. The announcement was approved by the board of directors on 15 April 2008. 2. Segment reporting Geographical segments The following tables provide an analysis of the Group's revenue. 2007 2006 Â£ Â£ UK 2,180,172 1,747,803 Europe 845,745 640,483 USA 633,597 598,807 Asia-Pacific 406,949 314,269 ----------- ----------- 4,066,463 3,301,362 ----------- ----------- Business segment The following table provides an analysis of the Group's revenue by business segment 2007 2006 Â£ Â£ Recurring income 1,665,870 1,287,531 Non-recurring income 2,400,593 2,013,831 ----------- ----------- 4,066,463 3,301,362 ----------- ----------- Recurring income includes all support services, and web hosting income. Non-recurring income includes sales of new licenses, and income derived from installing those licenses including training, installation, and data translation. 3. Earnings per share Basic earnings per share 2007 2006 Profit attributable to ordinary shareholders Â£804,375 Â£637,205 Weighted average number of shares 5,400,000 5,309,890 Basic earnings per share 14.90p 12.00p =========== =========== Weighted average number of shares after dilution 5,726,811 5,481,201 Fully diluted earnings per share 14.05p 11.63p =========== =========== 4. Copies of accounts The annual report will be sent to shareholders in due course. Copies of this announcement and the full statutory accounts can be obtained, when available, free of charge, from the Company's registered office at Third Floor, 50-52 Paul Street, London EC2A 4LB or on the Company's website: www.dillistone.com This information is provided by RNS The company news service from the London Stock Exchange

Companies

Dillistone Group (DSG)

Full Archive

UK 100

Latest directors dealings

All directors dealings today