Dillistone Systems
News & Investors
Final Results for the Year Ended 31 December 2008
15 April 2009
DILLISTONE GROUP PLC
PRELIMINARY ANNOUNCEMENT FOR THE YEAR ENDED 31 DECEMBER 2008
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 31 December 2008.
Highlights for the year:
2008 2007
- Revenue +13% £4.60m £4.10m
- Operating profit +17% £1.37m £1.17m
- Profit before tax +19% £1.43m £1.20m
- Earnings per share (basic) +24% 18.48p 14.90p
- Cash balances +53% £2.40m £1.50m
- Recurring revenues increased by 35% to £2.25m, representing 49% of total turnover
- Proposed final dividend of 7p per share recommended, making total dividend for year of 10.5p
- Clients in over 55 countries world wide
Commenting on the results, Jim McLaughlin, Executive Chairman and Finance Director said:
"The value of our support renewals for December 2008, which reflect in sales for 2009, shows a pleasing trend, and there are a number of significant prospective new clients on the horizon.
The Group will see the impact of the recession in its 2009 results, but is well positioned to withstand the effects of this because of its strong balance sheet and cash reserves. The board has decided that, in the absence of major unforeseen circumstances, it will maintain the dividend of 10.5p per share paid in respect of 2008 through into 2009, as a sign of its confidence in the businesses' ability to weather the downturn."
Annual Report and Accounts
Copies of this preliminary results announcement are available from the Company's website (www.dillistone.com). Copies of the Annual Report and Accounts will be sent to shareholders by 30 April 2009 for approval at the Annual General Meeting to be held on 5 June 2009.
Contacts:
Jim McLaughlin Dillistone Group Plc 01934 710 509
Chairman & Finance Director
Emily Morgan Blomfield Corporate Finance 01275 871 717
Director, Corporate Finance
Daniel Briggs Religare Hichens, Harrison 020 7382 7776
Tom Cooper/Paul Vann Winningtons 020 3043 4162 / 0797 122 1972
Chairman's Statement
Financial Performance
We began the year with a very high level of confirmed orders, and this contributed to an excellent start to the year, and the year as a whole produced record profits and revenues for the Group.
Revenue in the year increased by 13% to £4,608,197 (2007 - £4,066,463), and profits before tax increased by 19% to £1,425,572 (2007 - £1,196,213). These results were assisted somewhat by the weakness of the pound in the second half of the year, in particular against the US Dollar and Euro. Sales in the overseas markets held up extremely well, with increases of 19% in Europe, 26% in Asia-pacific, and 31% in the USA when measured in Sterling. When measured in local currency these increases moderated somewhat to 5%, 21% and 28% respectively, but nevertheless were creditable performances given the effects of the global economic slowdown.
I said last year that our decision to offer our product on a "Software as a Service" (SaaS) basis in the USA would have a positive impact on the revenues in that market, and I am pleased to report that this initiative appears to have been successful. Recurring revenues in the USA increased by 47% in dollar terms, and now comprises 65% of all sales in that region. Notwithstanding the localised effects of the recession in the USA, our business there performed very well, posting an impressive 75% increase in pre-tax profits, albeit with some assistance from the currency strengthening in the latter part of the year.
Recurring revenues (mainly arising from support agreements) for the Group as a whole increased by some 35% from £1.666m to £2.246m, whilst non recurring revenues fell slightly as more new clients opted for the SaaS model. Recurring revenues now comprise some 49% of sales (2007 - 41%) and the level of renewals for 2009 are at an encouraging level.
Operating margins increased further during the year from 29% in 2007 to 30% for 2008, and the pre-tax margin increased from 29% to 31%, reflecting a higher level of interest income, and controls over operating costs.
Our cashflow has continued to reflect the profitable performance of the business, and we generated an inflow of £1.226m before dividends and currency gains (2007 - £1.106m). At the year end we held cash balances of £2.353m (2007 - £1.534m). This balance is struck after the payment of dividends during the year of £513,000 (2007 - £135,000). The group continues to have no borrowings whatsoever and our balance sheet remains very strong.
Earnings per share increased by 24% to 18.48p per share (2007 - 14.90p). We paid an interim dividend of 3.5p in October 2008, and the board has recommended a final dividend of 7p per share (2007 - 6p), subject to shareholder approval, payable on 9th June 2009 to holders on the register on 8th May 2009. Shares will trade ex-dividend from 6th May 2009. The total dividend for the year, which amounts to 10.5p per share is an increase of 2p per share or 24% over 2007. The dividend is covered 1.76 times by earnings, and 2.16 times by the cash generation of the business.
Staff
Our staff again performed exceptionally well during the year, and share options that were granted in May 2006 will begin to crystallise in May 2009. At the year end, staff held options over 301,325 shares, representing 5.3% of the enlarged share capital. Some 277,000 of these options will mature in May 2009, and I look forward to welcoming the holders of these options to the share register in due course.
Prospects
During the latter part of 2008 our order intake reduced as a result of the global economic slowdown, and many of the major economies in which we trade are now in recession. A number of our clients are experiencing difficulties, with a few ceasing to trade altogether. However, the value of our support renewals for December 2008, which reflect in sales for 2009, shows a pleasing trend, and there are a number of significant prospective new clients on the horizon. Despite the slowdown, the board has committed to significant resources to further development of FILEFINDER to ensure that we retain our competitive position in the face of evolving technologies common to our market place; this will ensure that FILEFINDER is built on technologies that will serve our clients well into the next decade.
It is inevitable that the Group will see the impact of the recession in its 2009 results, but is well positioned to withstand the effects of this because of its strong balance sheet and cash reserves. The board has decided that, in the absence of major unforeseen circumstances, it will maintain the dividend of 10.5p per share paid in respect of 2008 through into 2009, as a sign of its confidence in the businesses' ability to weather the downturn. It will keep this position under constant review.
Jim McLaughlin
14th April 2009
Managing Director's Report
2008 proved to be another excellent year for the Group and I am delighted to report record levels of revenue, profits, cash generation, dividends and earnings per share. This was achieved against a somewhat gloomy economic backdrop and it should be noted that we did see a significant weakening in demand for our products and services in the final quarter of the year.
The year as a whole saw us win 142 new business contracts which were implemented in 31 countries. Our global spread is particularly pleasing - we now have clients in 56 countries. Whilst the credit crunch continues to impact on the global economy and we have certainly been hit by that, this international exposure does give us some protection against the most extreme volatility. In particular it is worth noting, given the particular concerns around the state of the UK economy, that in 2008 we generated more revenue from outside the UK (51%, up from 46% in 2007) than from within.
Our efforts to increase the use of our FILEFINDER software system by the in-house talent acquisition teams of major corporations has continued to bear fruits, and we now boast 6 of the Fortune 100 companies as clients. We are confident of extending our penetration of this space in 2009.
DIVISIONAL REVIEW
UK, Middle East and India
In previous reports, I have noted that the bulk of the Group cost base is carried by our UK business and this remains the case. The UK reported an increase in revenue of 3.5% (2008 - £2,256,516; 2007 - £2,180,172), however our increase in costs carried by the region meant that profitability in the region was almost unchanged in terms of its result, with a contribution from the region of £523,661 (2007 - £536,428).
Europe
Our European business broke the £1 million revenue mark for the first time with revenues increasing by 19% (2008 - £1,008,035; 2007 - £845,745). Profits rose by 11% (2008 - £729,318; 2007 - £656,827). This represents our best ever results within the region.
Asia Pacific
Our Asia Pacific region once again returned a pleasing set of results, with Revenue up 26% (2008 -£511,120; 2007 - £406,949) and this lead to an increase in profit of 19% (2008 - £307,447; 2007 - £258,064). Again, this is the best performance from the region yet.
United States
The United States benefited particularly from the decision to offer our FILEFINDER Software system on the SaaS model and the increase in recurring revenues, along with the fall in the value of Sterling, played a major part in our excellent results in the region. Revenue of £832,527 equates to an increase of 31% (2007 - £633,597) and this lead to an increase in profit of 75% to £324,377 (2007 - £185,339).
PRODUCT STRATEGY
We continue to invest in our core FILEFINDER product, and in early 2009 we released the latest iteration of the product, FILEFINDER 9. This product features our new "Research Zone" technology which allows users to utilise automated searches to mine the Internet for information on potential candidates and is functionality which, we believe, is groundbreaking.
Despite releasing what we believe to be the leading product in our space, we consider that it is vital that the business continues to invest in its future. Our strong balance sheet means that, whilst many of our competitors are likely to be cutting back on product development, we have actually committed to a very significant increase in our R+D budget for 2009 and 2010. We believe that this will place us in the optimum position when the global economy does recover.
During 2007 and 2008 we ran a series of conferences, webinars and training events targeting the executive search industry. Although these events made a positive contribution to profitability in the year, it was noticeable that events in the last quarter of 2008 were less well attended, and as a result, we have reduced the number of such events we will be promoting during 2009.
PEOPLE
Once again, I would like to record my appreciation for the efforts of the excellent group of people who we have working for us around the world. We are fully aware that our results are dependent on the efforts of our people and we believe that our continued investment in our staff will help us to take advantage in the economic upturn, when it comes.
Jason Starr
Read the full Preliminary Announcement for the year ended 31 December 2008 by clicking here.