Dillistone Group Plc
(“Dillistone”, the “Company” or the “Group”)
Dillistone Group Plc, the AIM quoted supplier of software for the international recruitment industry, announces its results for the six months ended 30 June 2020.
Key points of the unaudited interim report:
• The management of our cost base and better operational performance, has led to improved performance in H1 2020, versus the same period in 2019, despite Covid-19 having a significant negative impact on our clients and therefore our revenue
• Operating profit of £0.048m before acquisition related items (2019: loss £0.044m)
• Group is cash generative at an operational level
• Cash balances of £1.732m at 30 June 2020 (2019: £0.769m)
• CBIL loan of £1.5m received in June 2020
• Recurring revenue of £3.0m (2019: £3.5m)
• Recurring revenue covers 101% of operational overheads (2019: 91%)
• Recurring revenues represent 90% of total revenue (2019: 83%)
• NED Mike Love to retire from the Board, in line with long term plan, on the announcement of the interim results.
Commenting on the results and prospects, Giles Fearnley, Non-Executive Chairman, said:
“Any business serving the recruitment sector is going to find a global pandemic to be a difficult environment to operate through. However, despite this, the Group is delighted to report significantly improved operational performance in the period under review.
“Whilst Covid-19 will continue to impact our revenues, the steps we’ve taken to manage our costs while also continuing to invest in product development will benefit the business through the medium and long term.
“I would like to take this opportunity to sincerely thank Dr Mike Love for his services to the Company. Mike was our Chairman for many years, prior to stepping into the role of NED in January, with a view to retiring at the time of our Interim results announcement. Mike remains fully supportive of the Board strategy and a committed shareholder.”
|Giles Fearnley||Chairman||via Walbrook PR|
|Jason Starr||Chief Executive||via Walbrook PR|
|Julie Pomeroy||Finance Director||via Walbrook PR|
|Chris Fielding||WH Ireland Limited (Nominated Adviser)||020 7220 1650|
|Tom Cooper/Paul Vann||Walbrook PR||020 7933 8780
0797 122 1972
Notes to Editors:
Temporary Recruitment Software: https://www.voyagersoftware.com/temporary-recruitment-agency-software/
ISV Skills Testing: https://www.isv.online
2020 started well for the Group with our early months delivering results ahead of internal expectations. The Covid-19 pandemic has obviously had a significant impact on our clients (predominantly recruitment companies) and therefore our business.
Nevertheless, I am able to report a significantly improved set of results following the steps taken in 2019 to reorganise the business and the decisive action by management in the early days of the pandemic.
The business has returned to profit (before acquisition related items) and has put in place a cost base that reflects current revenues. The streamlined operating structure has allowed us to do this without negatively impacting on our service levels. Indeed, our Trustpilot scores since January 1st have seen us achieve an excellent rating with 4.5 stars out of a maximum of 5.
Government support clearly played a part in our H1 results and, with this expecting to be ending, we have now taken further steps to minimise our cost base. This will lead to some reorganisation costs being reported in H2.
Following the 2019 reorganisation, the previous divisional structure has been amalgamated under one trading name, Ikiru People, and therefore divisional results will no longer be reported.
Revenue in the six months ended 30 June 2020 amounted to £3.359m, down £0.824m (20%) (2019: £4.183m) due to Covid-19 and loss of clients and / or reductions in users, coupled with the withdrawal of a product in December 2019. Recurring revenues decreased by 13% to £3.029m over the comparable period last year (2019: £3.469m) and represented 90% of total revenues (2019: 83%). Non-recurring revenues were down at £0.290m (2019: £0.549m).
Cost of sales reduced to £0.328m (2019: £0.419m). Excluding amortisation and depreciation, administration expenses reduced by £0.774m to £2.305m (2019: £3.079m) in part reflecting the 2019 reorganisation and in part the impact of Covid-19. Such administration expenses are covered 131% by recurring revenue (2019: 113%). Excluding acquisition related items, depreciation and amortisation decreased by 7% to £0.678m (2019: £0.729m). Including such operational amortisation in administrative costs they are covered 101% by recurring revenue (2019: 91%).
Administrative costs also include £0.106m (2019: £0.198m) relating to the amortisation of acquisition intangibles. In 2019, administration costs also included reorganisation costs of £0.115m (2020: £nil). The loss for the period before taxation reduced to £0.110m (2019: loss £0.397m). The Group generated a profit after tax and before acquisition related costs of £0.019m. The loss for the period was £(0.088m) (2019: £(0.320m)).
There is a tax credit for the period of £0.022m (2019: credit £0.077m). The 2019 and 2020 tax credits have benefited from claims in the UK for research and development tax credits reflecting the continuing development of our products. Also, the tax credit was impacted through the increase in the rate for deferred tax to 19% (2019:17%).
Cash generated from operating activities was £0.403m (2019: £0.225m). Total cash flows in the 6 months ended 30 June 2020 showed a net inflow of £1.043m (2019: inflow £0.063m). The main elements of non-operating expenditure related to investment in new product development of £0.499m (2019: £0.615m) and the receipt of £1.500m from the CBIL loan scheme and a loan under the US payroll protection program of £0.086m. At 30 June 2020, we had cash reserves of £1.732m (2019: £0.769m) and £2.309m in borrowings (2019: £0.885m).
In view of the Covid-19 pandemic and the uncertainty this has brought, the Board has decided not to pay an interim dividend this year (2019: nil).
The Group continues to invest in its products which it sees as fundamental to the future success of the Group. Dillistone is an innovator and thought leader in the recruitment sector, designing and launching technology solutions for recruiters whose working practices are ever evolving.
The Board restructured our product portfolio in 2019, withdrawing certain products from the market, and refocussing our development expenditure on projects that, we believe, will deliver long term benefits to shareholders. We expect to begin to see the benefit of this strategy in 2021.
Development remains high on our agenda and we are continuing to invest in both current and new products which will enable the recruiters of the future. We are excited by the opportunities that this investment will deliver and look forward to updating the market further.
While Covid-19 will continue to impact upon our revenues, with a stable core business through our long-term underlying client base, a strong balance sheet as a result of our £1.5m CBIL loan, administrative overheads (excluding depreciation, amortisation and other one off costs) that are covered by our recurring revenue, improved operational performance and ongoing investment in product development, we believe we are well positioned to deliver growth as we emerge from the current crisis.