Dillistone Group Plc
(“Dillistone”, the “Company” or the “Group”)
Dillistone Group Plc (“Dillistone”, the “Company” or the “Group”), the AIM quoted supplier of software for the international recruitment industry, is pleased to announce its audited final results for the 12 months ended 31 December 2019.
• Successfully completed the group restructuring to time and at the lower end of forecast cost. New operating structure working well with reduced cost base
• Reorganisation financed through a £0.5m bank loan
• Recurring revenues1 represent 82% (2018: 82%) of Group revenue
• Adjusted operating loss2 of £0.207m (2018: profit £0.055m) before acquisition related, reorganisation and other costs
• Loss for the year of £0.842m (2018: loss £0.260m) reflecting the costs associated with reorganising the business
• Cash at 28 July 2020 was £2.1m, reflecting post period CBIL loan of £1.5m.
Current Trading & Outlook:
• The Group traded ahead of internal expectations during the early months of 2020, and speedy measures by management helped to mitigate some of the impact of Covid-19
• While revenue from existing clients has fallen, new business performance compared to the same period in 2019 has been encouraging, winning more new contracts for a higher combined value.
• The Company has taken appropriate action to maintain a strong and stable financial position throughout this current period and for the future – including accessing Government schemes and a temporary company-wide pay cut
• On 3 June 2020, secured a £1.5m loan under the UK Government’s Coronavirus Business Interruption Loan scheme (“CBIL Loan”), repayable over 6 years at an interest rate of 3.99% over base. Interest is waived in the first twelve months and monthly repayments commence in July 2021. The CBIL Loan can be repaid early without penalty.
Commenting on the results and prospects, Giles Fearnley, Non-Executive Chairman, said:
“The changes made to the business in 2019 have improved our ability to meet the needs of our global clients swiftly and efficiently, while significantly reducing our cost base, and placed the business in a situation where we had fully anticipated a return to profitability in H1 of 2020.
“After a strong start to the year, the impact of the Covid-19 pandemic has been significant but swift action to manage the cost base during this period, coupled with working to support our clients and improved new business performance, is enabling the Company to effectively work through the challenges.
“With a healthy cash balance and having protected and continued to invest in our product development, the Board is optimistic that the business will emerge strongly as the economy recovers.”
1The component elements of recurring revenues are detailed in note 5.
2 Adjusted operating profit is statutory operating profit before acquisition costs, related intangible amortisation and reorganisation and other costs. See note 4.
Annual Report and Accounts
– The final results announcement can be downloaded from the Company’s website (www.dillistonegroup.com
). Copies of the Annual Report and Accounts (in addition to the notice of the Annual General Meeting) will be sent to shareholders by 28 August 2020 for approval at the Annual General Meeting to be held on 23 September 2020.
This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.
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Notes to Editors:
Dillistone Group Plc is a leader in the supply and support of software and services to the recruitment industry. Dillistone operates through the Ikiru People (www.IkiruPeople.com
The Group develops, markets and supports the FileFinder, Infinity, Mid-Office, ISV and GatedTalent products.
Dillistone was admitted to AIM, a market operated by the London Stock Exchange plc, in June 2006. The Group employs around 100 people globally with offices in Basingstoke, Southampton, Frankfurt, New Jersey and Sydney.
2019 was a year of significant change. This started in February when the Group announced a fundamental reorganisation of the business. This involved merging the two UK offices into a single, expanded location in Basingstoke, together with also relocating and expanding our Eastleigh development facility. The Group has streamlined its corporate structures and operations, resulting in the UK businesses being combined into one trading entity and renamed Ikiru People Limited. A similar reorganisation has occurred in Australia. These changes came into effect on 31 December 2019, were delivered on time and within budget, and are delivering the planned efficiencies.
The restructuring was an important step in our plan to streamline our operating procedures while maintaining our excellent reputation for client service in order that the Group could deliver significantly improved performance starting immediately from 2020.
2020 started well for the Group with our early months delivering results ahead of internal expectations. However, the impact of the Covid-19 pandemic on our target market – the recruitment sector – is clear. We’ve seen many of our clients shrink, with some clients closing. We have additionally supported many clients through agreeing discounted periods and deferred terms.
The Board has reacted swiftly, taking advantage of various government schemes, including furloughing, and staff unanimously supporting a temporary pay-cut, including all executive and non-executive directors. In June 2020, the Company secured a loan of £1.5m under the UK Government’s Business Interruption Loan scheme. This enables us to continue to deliver and develop products with confidence.
The reorganisation in 2019 resulted in some staff working from home and this led to investment in infrastructure to support this. This therefore enabled the Group immediately to move to home working for the majority of staff as a result of the pandemic and still operate efficiently and effectively.
Looking back at 2019, overall, Group revenue fell 8% to £8.027m, of which recurring revenue fell 8% to £6.593m of which £0.130m related to the loss of a major client as previously announced.
There was an adjusted operating loss in 2019 of £0.207m (2018: Profit £0.055m), mainly due to the fall in revenue and with the full benefits of the reorganisation not expecting to be seen until 2020. The operating loss including reorganisation and acquisition related items was £1.090m (2018: loss £0.414m).
The Group is not recommending a final dividend in respect of the year to 31 December 2019 (2018: nil).
On behalf of the Board I would like to take this opportunity to thank all of our staff for their individual and collective contributions during 2019 and for the professional way they have all risen to the challenges of the pandemic, continuing to deliver for our clients. They ensured that we continued to deliver excellent service throughout 2019’s major restructuring and it is through their efforts, commitment and determination that we continue to be a leading technology provider.
It is the Board’s duty to ensure that the Group is managed for long-term benefit of all stakeholders.
We have made a number of changes to our Group Board over the last 12 months. I would like to sincerely thank my predecessor, Dr Mike Love, for his outstanding leadership of the Board over last 9 years. I am very grateful to him for staying on in a non-executive role to allow for a smooth transition.
I also thank Rory Howard and Alistair Milne who both stepped down from the Board as the restructuring completed. They have both contributed extensively to the business over very many years. I am delighted to welcome Paul Mather and Simon Warburton to the Board. Both Paul and Simon joined the Group in 2011 on the acquisition of Voyager and have been leading members of the Executive Team.
The Group was trading ahead of internal targets for 2020 prior to the impact of Covid-19 and swift action by management has helped mitigate some of the impact of the pandemic.
The majority of our clients are in the recruitment sector and this has been significantly affected by the recession. Our client base has reduced in size with many of our clients having fewer licences than previously. We believe this would be true for virtually any supplier in our sector.
However, we are pleased to report that – while revenue from existing clients has fallen – the business has improved its new business performance on the same period in 2019, winning more new contracts for a higher combined value, despite our decision to withdraw our “Evolve” product from the market. While this will not make up for the loss of revenue from existing clients, it demonstrates our ability to compete successfully and gives us confidence of a return to growth when markets return to a semblance of normality.
However, the most likely outcome for H1 will be a small and much reduced loss compared with the prior year. It remains too early to quantify the impact of the pandemic over the full year, but the Board currently expects to see an improvement on our 2019 result.
With a healthy cash balance and having protected, and now, increasing investment in our product development, the Board is optimistic that the business will emerge strongly as the economy recovers.