Dillistone Group Plc
(“Dillistone”, the “Company” or the “Group”)
Final results for the year ended 31 December 2010
Dillistone, the AIM quoted supplier of recruitment software, is pleased to announce its audited results for the year ended 31 December 2010.
Highlights for the year:
- Revenues up 16% to £4.3m with non recurring revenues up 31%
- Operating profits up 9% to £1.2m
- Final dividend of 7p per share recommended, making total dividend for year of 10.5p
- Cash funds of £2.1m up 18%. The Group remains debt free
- Clients in 61 countries world wide
- Delivery of our largest ever US based implementation
- FileFinder 10 launched on 31 March 2011
Commenting on the results, Mike Love, Non-Executive Chairman, said: “Dillistone has made excellent progress in 2010 despite the broader economic uncertainty. We have grown the client base, invested in product development and delivered an increase in profits.
“We are a market leader in the executive recruitment software industry where our products are business critical to our clients. We are committed to investing in maintaining and building on that advantage for the benefit of both clients and shareholders. The release of ‘FileFinder 10’ is evidence of this strategy.”
Annual Report and Accounts
The final results announcement can be downloaded from the Annual Report link at the bottom of this page. Copies of the Annual Report and Accounts (as well as the notice of Annual General Meeting) will be sent to shareholders by 30 April 2011 for approval at the Annual General Meeting to be held on 13 June 2011.
|Mike Love (Chairman)||Dillistone Group Plc||020 7749 6100|
|Jason Starr (Managing Director)||Dillistone Group Plc||020 7749 6100|
|Julie Pomeroy (Finance Director)||Dillistone Group Plc||020 7749 6100|
|Emily Staples (Nomad)||Religare Capital Markets||020 7444 0800|
|Daniel Briggs (Broker)||Religare Capital Markets||020 7444 0500|
|Tom Cooper||Winningtons Financial PR||020 3176 4722
0797 122 1972
Notes to Editors:
Dillistone Group Plc is a leader in the supply and support of recruitment software to the search and selection market. Dillistone was admitted to AIM, a market operated by the London Stock Exchange plc, in June 2006.
Dillistone develops, publishes and supports FileFinder, its executive recruitment software, for recruitment companies and in-house recruitment teams. FileFinder provides tailored workflow and approaching 24 hour support for global users, to mirror the profile and demands of an executive search assignment. FileFinder has been adopted by around 1,000 companies in more than 60 countries.
We entered 2010 with some signs of an improving market, following a very difficult 2009 for the sector and this has been borne out by our results for the year which saw revenue increase by 16% to £4.3m and operating profits increase by 9% to £1.2m. These results are in line with market expectations.
Dillistone is a leading player in the executive recruitment software sector and our continued investment in product development is fundamental to retaining this position in the market. To this end, we have spent over £0.6m in 2010 and launched the new, next generation, release of our core FileFinder product, FileFinder 10, on 31 March 2011. This major new version of FileFinder has been in development since 2008 and represents the realisation of an investment of over £1m. Further details of FileFinder 10 are contained in the Managing Director’s Business Review.
Dillistone’s strategy is to continue to grow the business both organically and through acquisition. Our organic growth is underpinned by our commitment to product development which ensures that the business continues to command a leading role in the sector and that FileFinder is a natural choice for consideration by customers when looking to acquire software in our field.
The Board is also actively pursuing an acquisition strategy. This entails consideration of firms offering:
· executive search products that would increase our share of our core markets; and
· products that would broaden our offering to the recruitment sector.
The executive management have invested significant time meeting with both existing and potential investors including private client brokers. During 2010 we gained a new significant institutional investor and an additional investment from an existing institutional investor.
To help increase liquidity and marketability of our shares, a resolution will be included at the next Annual General Meeting (AGM) in June to approve a two for one bonus issue of the Company’s shares. Further details will be included in the AGM papers. Having taken appropriate advice, the Board believes that the bonus Issue may enhance and thereby strengthen the equity base of the Company.
Dillistone will continue to review opportunities to broaden its shareholder base.
An interim dividend of 3.5p per share was paid in November 2010. The Board has recommended a final dividend of 7p per share, subject to shareholder approval, payable on 21 June 2011 to holders on the register on 20 May 2011. Shares will trade ex-dividend from 18 May 2011. This takes the total dividend for the year to 10.5p (2009: 10.5p). For the avoidance of doubt, the recommended dividend of 7p per share, which is subject to shareholder approval, is in respect of existing ordinary shares only and not in respect of any new ordinary shares issued as a result of the two for one bonus issue.
Jim McLaughlin resigned as Executive Chairman and Finance Director in February 2010 and I stepped into the role of Non-Executive Chairman. Julie Pomeroy joined us as Finance Director in April 2010 and has also become Company Secretary. Giles Fearnley became a Non-Executive Director in May 2010 and is Chair of the audit committee.
Alistair Milne also joined the Board as Director of Support Services with effect from January 2011. Alistair has been with the Group since 2003, and continues as a Director of our UK subsidiary, Dillistone Systems Ltd.
Our staff are fundamentally important to the success of the business. It is through their efforts, commitment and determination that we continue as a leading player in the executive search software industry and have been able to produce strong results for 2010. On behalf of the Board I would like to take this opportunity to thank all of them.
The Group continues to work hard to maintain its position in the sector. The launch of our new FileFinder product, FileFinder 10, will underpin this.
We have started 2011 well with a strong order book. However, our approach to the launch of FileFinder 10 is to cautiously roll it out in the first few months. Consequently, we expect trading in the first half of the year to be broadly in line with H1 2010. We expect revenues to increase more strongly once clients and potential clients have had the opportunity to see the benefits of the new product. We anticipate that the real benefits of the investment in FileFinder 10 will be seen in 2012 and beyond.
Dillistone will continue to actively search for suitable acquisitions to enhance its product portfolio and deliver shareholder value. Dillistone also enjoys a strong balance sheet and remains debt free. As such, the Board considers it is well placed to compete in the global market place in which it operates.
Dillistone has made excellent progress in 2010 and I look forward to updating you further at the time of our Annual General Meeting in June.
Dr Mike Love
2010 has proven to be a good year for the business. Once again, we believe that we have implemented more systems, in more countries, for more executive search firms, than any comparable supplier. Worldwide, we were signing up an average of 3 new clients every week, with this representing a 50% increase on incoming orders over 2009. We have grown our recurring revenue base to record levels (£2.5m against £2.3m in 2009) and have maintained our excellent reputation for delivery, with 2010 seeing us implement our largest ever US contract (which also represents our largest contract win since our floatation in 2006).
The year has also seen us implement our software outside of our traditional markets, with successful implementations at major corporations (ranked up to Fortune 100 level) and at a number of academic and venture capital institutions. This has been achieved despite much of our focus being on preparing for the launch of our “next generation” software application, FileFinder 10, and despite our target markets still suffering from a degree of economic uncertainty.
We continue to offer our FileFinder products for both outright purchase and under the software as a service (SaaS) model. The latter continues to grow, with 18% of new licence sales in 2010 being under this model (9% in 2009). By offering our products under both models we are able to ensure the delivery of returns to our shareholders in both the short and longer terms.
UK, Middle East and Africa (UKMEA)
Our regional split is somewhat arbitrary, as all of our regions are expected to provide service to all of our clients. That said, our largest region remains UKMEA which accounted for 43% of total sales at £1.8m (2009: £1.5m).
Our European business continued to feel the effects of the economic downturn with revenues down by 15% to £0.8m (2009: £1.0m). The profits for our European operation in 2010 were £0.1m (2009: £0.8m) after carrying a £0.5m recharge from the UKMEA business.
Our US office is based in New Jersey and primarily looks after our US, Canadian and South American business. We saw revenues increase by 30% in 2010 to £1.1m (2009: £0.8m). The US operations accounted for 25% of total sales in 2010 (2009: 22%).
Our Asia Pacific business is primarily looked after by our office in Sydney, Australia, and has bounced back strongly after a very difficult 2009. Revenues grew by 60% to £0.6m (2009: £0.4m) and accounted for 13% of total sales (2009: 10%).
As mentioned in the Chairman’s Statement, product development is fundamental to retaining a leading position in the executive recruitment software market. On 31 March 2011, we announced the general availability of our “Next Generation” FileFinder system, FileFinder 10.
FileFinder 10 has been in development since 2008 and represents the culmination of an investment of more than £1m. Whilst the product shares many characteristics of previous versions, it has been entirely re-written to take full advantage of Microsoft’s .NET Framework.
We believe that the new version of the software will bring many advantages to our user base and, in turn, we believe that this will be beneficial to our shareholders:
- FileFinder 10 has a new interface designed to be both more attractive and intuitive. We believe that this will increase our conversion rate and reduce training requirements, thereby allowing us to implement more systems, more quickly;
- the new product may be delivered, when required, entirely on a Microsoft platform. Our historical technology (combining Powerbuilder and Sybase SQL Anywhere) was considered to be disadvantageous, particularly when bidding for corporate clients;
- the new product has been designed to better meet the specific needs of larger executive search firms. We believe that, over time, this will see an increase in our average contract size for new business wins;
- our decision to develop the new generation of FileFinder software using an industry standard platform should make it easier to achieve synergies from any acquisitions we might make; and
- continuing development is important if we are to maintain our support and SaaS contracts. We believe that the launch of FileFinder 10 will facilitate increased client retention.
In the build up to the launch of FileFinder 10 on 31 March 2011, we presented the product to a number of existing and potential clients. Feedback was extremely positive, to such an extent that we now have a waiting list of existing clients wishing to upgrade. This waiting list includes clients in 11 countries. In addition to this, we have won a number of contracts from firms wishing to implement FileFinder for the first time. This includes firms in both Europe and the United States, and includes a number of firms which plan to implement FileFinder having previously used competing systems.
The launch of FileFinder 10 is a major step for the business and one which, we believe, will lead to substantial long term benefits. However, it is important for the reputation of the Company that we manage the roll out of the product cautiously. Our budget for the first half of the year reflects this and it is the opinion of the Board that Dillistone will not fully enjoy the benefits of the new product until 2012.
Total revenues increased by 16.3% to £4.3m (2009: £3.7m), with operating profits up 9.4% to £1.2m (2009: £1.1m). Recurring revenues increased by 8.2% to its highest ever level of £2.5m (2009: £2.3m). Non-recurring revenues saw an increase of 30.8% to £1.7m from £1.3m in 2009.
Administrative costs rose 17.1% to £2.9m (2009: £2.5m). This was after a fairly austere 2009 which saw expenditure fall from over £3.0m in 2008 by not awarding staff bonuses, reductions in general marketing and administrative expenditure and staff reductions through natural wastage.
Costs increased in 2010 in part due to some one-off costs in 2010 as well as increased marketing related spend which helped us deliver higher sales. Selective recruitment was also carried out with average staff numbers (excluding directors) in the Group rising from 43 in 2009 to 46 in 2010. Administration costs also include Director and staff bonuses of £0.1m in 2010 (2009: £nil). Excluding 2010 bonuses, administrative costs rose by approximately 11%.
Tax has been provided at an effective rate of 26.2% (2009: 22.6%). This rate reflects the R&D tax credits that have been claimed, though not yet agreed, as well as the higher rates of corporation tax that are payable in the US and Australia.
Profits for the year rose 4.2% to £0.9m (2009: £0.8m). Basic EPS rose 2.5% to 15.39p (2009: 15.02p) while fully diluted EPS rose 4.2% to 15.30p (2009: 14.68p).
Dillistone invested £0.7m in fixed assets and product development during the year (2009: £0.6m) of which £0.6m was spent on development costs (2009: £0.5m).
Trade and other receivables
£0.1m (2009: £nil) has been included in non-current assets, reflecting extended payment or billing terms agreed with customers.
Trade and other payables
This liability includes income which has been billed in advance but is not recognised at that time. This principally relates to support renewals which have been billed in December 2010 but that are in respect of services to be delivered in 2011. This also impacts on debtors at the year end. Support income is recognised monthly over the period to which it relates. It also includes deposits taken for work which has not yet been completed as such income is only recognised when the work is complete or the client software goes “live”.
Dillistone finished the year with cash funds of £2.1m (2009: £1.8m) and remains debt free. Operating activities generated strong cash flows which were invested in development costs and also payment of dividends to shareholders.