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Stilo International PLC  -  STL   

Preliminary Results

Released 07:00 15-Mar-2018

RNS Number : 7640H
Stilo International PLC
15 March 2018
 

15 March 2018                         

 

STILO INTERNATIONAL PLC

Preliminary Announcement of Results
for Year Ended 31 December 2017

 

 

Stilo International plc ("Stilo", the "Group" or the "Company") today announces its results for the year ended 31 December 2017. The Company develops software tools and cloud services that help organisations create and process structured content in XML format so that it can be more easily stored, managed, re-used, translated and published to multiple print and digital channels.

 

 

FINANCIAL HIGHLIGHTS

·    8% increase in sales revenues to £1,894,000 (2016: £1,761,000).

·    Profit before tax of £309,000 (2016: £318,000).

·    10% increase in operating costs, net of capitalised development costs, to £1,578,000
(2016: £1,437,000).

·    Increased investment in total product development to £656,000 (2016: £538,000) of which £213,000 capitalised (2016: £204,000).

·    Improved cash position of £1,621,000 as at 31 December 2017 (2016: £1,466,000).

·    Final dividend proposed of 0.05 pence per Ordinary Share, providing an 11% increase in total dividend to 0.10 pence for the year (2016: total 0.09 pence).

 

 

BUSINESS HIGHLIGHTS

 

·    Significant OmniMark software licence orders received from the Japan Patent Office.

 

·    7% increase in Migrate revenues, with customers for the period including GE, Brocade, Qualcomm, Tyco, ITT, Microchip, Tibco, Cisco, Deltek, RSSB (Rail and Safety Standards Board), Motorola, TetraPak, Viewpoint, AMAT Varian and Atmel.  

 

·    6% increase in recurring software maintenance revenues to £929,000 (2016: £871,000).

 

·    Release of trial version of AuthorBridge v2.

 

·    Launch of new web site (www.stilo.com).

 

  

David Ashman, Chairman, commenting on the Company's performance, stated:

 

I am pleased to report that in 2017 we increased sales by 8% to £1,894,000 and continued to invest in new product development and marketing initiatives while maintaining our levels of profitability.

 

Sales of OmniMark software licences to Japan were particularly strong and we saw a healthy increase in Migrate revenues as the XML DITA market grew encouragingly from previous levels. Recurring software maintenance revenues also increased during the period.

 

The development of AuthorBridge has taken longer than we expected, as v2 development continues into 2018. However, we recognise that this is a multi-year endeavour which will serve to underpin the future growth of the Company, and are encouraged by the feedback so far received from early customers.   

 

Our reported profits are stated after the capitalisation of AuthorBridge development costs, as mandated by IFRS reporting standards and we anticipate amortising the accumulated capitalised costs (which now amount to £688,000) over a ten year period starting in the current financial year, following the general release of AuthorBridge v2.

 

With increasing cash reserves, I am pleased to propose the payment of a final dividend of 0.05 pence per share, providing a total dividend for the year of 0.10 pence per share.

 

 

OUTLOOK

The Directors are aware that material orders from two key customers for OmniMark and Migrate will not be repeated in 2018 and the revenue shortfall will need to be offset by new business sales to maintain the current level of revenues. To support this we are undertaking additional investments in sales and marketing with the objective of further broadening the customer base and accelerating the growth of AuthorBridge.

We are encouraged by the sales pipeline for new business prospects, but at the current time it is far too early to know what the outcome will be for 2018. However, Stilo has the balance sheet, and product portfolio, not to shy away from incurring costs today in order to steepen the Company's 's long term growth curve and to deliver sustainable value growth to investors.

 

 

 

 

 

ENQUIRIES

 

Stilo International plc
Les Burnham, Chief Executive

T +44 (0)1793 441444

 

SPARK Advisory Partners
(Nominated Adviser)
Neil Baldwin T +44 (0) 203 368 3554
Mark Brady  T +44 (0) 203 368 3551

 

SI Capital (Broker)

Nick Emerson

T +44 (0) 1483 413500

 

 

 

 

CHAIRMAN'S STATEMENT

 

I am pleased to report that in 2017 we increased sales by 8% to £1,894,000 and continued to invest in new product development and marketing initiatives while maintaining our levels of profitability.

 

Sales of OmniMark software licences to Japan were particularly strong and we saw a healthy increase in Migrate revenues as the XML DITA market grew encouragingly from previous levels. Recurring software maintenance revenues also increased during the period.

 

The development of AuthorBridge has taken longer than we expected, as v2 development continues into 2018. However, we recognise that this is a multi-year endeavour which will serve to underpin the future growth of the Company, and are encouraged by the feedback so far received from early customers. 

 

Our reported profits are stated after the capitalisation of AuthorBridge development costs, as mandated by IFRS reporting standards and we anticipate amortising the accumulated capitalised costs (which now amount to £688,000) over a ten year period starting in the current financial year, following the general release of AuthorBridge v2.

 

With increasing cash reserves, I am pleased to propose the payment of a final dividend of 0.05 pence per share, providing a total dividend for the year of 0.10 pence per share.

 

 

David Ashman

Chairman

15 March 2018  

 

 

 

 

 

BUSINESS OVERVIEW

 

Stilo develops software tools and cloud services that help organisations create and process structured content in XML format, so that it can be more easily stored, managed, re-used, translated and published to multiple print and digital channels.

 

Over recent years, many organisations have adopted industry specific XML standards eg Publishing (DocBook), Aerospace & Defence (S1000D), Finance (XBRL), Life Sciences (SPL), Software and High Tech (DITA). Stilo made the decision some years ago to focus new product development and marketing efforts on the emerging DITA standard. This standard originated within IBM to support the publishing of its technical documentation and has been increasingly adopted by other software and high tech companies. DITA is now beginning to make inroads into additional market sectors including Manufacturing, Life Sciences and Publishing.

 

In order to diversify beyond the DITA market, we have recently undertaken research into the XML JATS (Journal Article Tag Suite) market for scientific and scholarly publishers. Initial indications are that this could represent a promising new business opportunity for Stilo, and we will seek to address this through the incremental development of AuthorBridge and Migrate.

 

We continue to build upon our strong reputation for excellent products and supporting technical expertise, resulting from many years of experience in the structured content marketplace. With offices in the UK and Canada, we support clients throughout North America, Europe and Japan.   

 

 

 

PRODUCTS AND CUSTOMERS

 

OmniMark

 

Stilo's core technology is OmniMark, a long-established development platform used to build high-performance content processing applications integral to enterprise publishing solutions.

 

Users include Boeing, Pratt and Whitney, EADS, Thomson Publishing and Wolters Kluwer.

 

Sales for the year included orders from the European Parliament and the Japan Patent Office.

 

Migrate

 

Migrate is the world's first cloud XML content conversion service and utilises OmniMark technology. Through advanced levels of automation, it enables organisations to improve turnaround times, reduce operating costs and take direct control of their work schedules, providing an attractive alternative to traditional outsourced conversion services.

 

Migrate sales for the year include orders from GE, Brocade, Qualcomm, Tyco, ITT, Microchip, Tibco, Cisco, Deltek, RSSB (Rail and Safety Standards Board), Motorola, TetraPak, Viewpoint, AMAT, Varian and Atmel. 

 

Using Migrate, we have helped our customers convert over one million pages of content to the DITA format.

 

AuthorBridge

 

AuthorBridge is a web-based XML authoring tool, designed for occasional content contributors who have no knowledge of XML or its complexities. It is currently targeted at large enterprises, which are looking to extend the use of DITA across different business units and potentially support thousands of users.

 

Development of AuthorBridge is progressing well, albeit with some slippage against original schedules. Its initial deployment in production at IBM, following extensive co-operation and testing by the central Information Developer Tools team, serves as a good foundation upon which we can build future sales.

 

The ongoing development of AuthorBridge continues into 2018, as we add functionality that is necessary to advance sales more generally in the DITA market.

 

Planned developments in 2018 also include support for the XML JATS (Journal Article Tag Suite) standard for scientific and scholarly publishers, and for the NISO-STS (Standards Tagging Set) standards developed by NISO (National Information Standards Organisation).

 

Sales analysis by geographic region

 

Our customers typically comprise large organisations, and are spread globally. Geographic sales revenues were derived as follows:

 

Region                          2017                 2016

 

UK                                 2%                   2%

Rest of Europe               12%                 10%

North America               51%                 49%

South America                3%                   9%

Asia                              32%                 30%

 

North America continues to represent a significant proportion of sales revenues as adoption of the DITA XML standard has been primarily led by corporations with their headquarters based in the USA. It is anticipated that adoption of the DITA XML standard will spread internationally over the coming years.

 

Technical expertise

 

Our technical team includes leading experts in the development of XML content processing technologies and along with our support services, are very highly regarded by customers.

 

OmniMark is used in the development of Migrate, and both Migrate and OmniMark technologies are used in AuthorBridge, which results in very efficient integrated development and support activities.

 

Operations

 

Stilo operates from offices located in Swindon, UK and Ottawa, Canada. The technical team is based in our Ottawa office.

 

As of 31 December 2017, there were 18 permanent employees in the Group, complemented by the use of contractors. In 2018 we will be making additional investments in the recruitment of development personnel, but it is not anticipated that we will be growing headcount significantly, as we look to contain our costs and scale the business through technology sales.

 

FINANCIAL RESULTS

 

The results for the year ended 31 December 2017 have been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards as adopted by the European Union.

 

In 2017, the results for Stilo show a decrease in EBITDA to £315,000 (2016: £327,000). Pre-tax profits were £309,000 (2016: £318,000). 

 

Total sales revenues for the year increased by 8% to £1,894,000 (2016: £1,761,000). The Group continued to benefit from recurring revenue from software maintenance contracts of £929,000 (2016: £871,000) which represents 49% (2016: 49%) of annual sales revenue.

 

 

 

The Group continues to maintain careful control over operating costs. Investment in additional development staff has meant that operating costs increased in the year. Operating expenses, excluding capitalised development costs, were £1,591,000 (2016: £1,449,000).

 

Investment in research and development continued in 2017, with total expenditure for the year of £656,000 (2016: £538,000). As a result of this investment, Stilo continues to benefit from research and development tax credits. Of this expenditure, £213,000 (2016: £204,000) relating to the development of AuthorBridge has been capitalised, and the total accumulated capitalised costs will be depreciated over a 10 year period, commencing in 2018.

 

There was a cash balance of £1,621,000 as at 31 December 2017 (31 December 2016: £1,466,000), and Stilo remains entirely un-geared. This Statement of Financial Position stability provides a sound financial base for the Group and will support continued investment in product development, sales and marketing. Further investment in staff recruitment is expected in 2018, however, overall costs will continue to be carefully managed in order to maintain cash reserves at a satisfactory level.

 

Total trade receivables were £126,000 (2016: £348,000), equating to 24 days (2016: 72 days). Overdue amounts are closely monitored.

 

DIVIDENDS

 

The Board recommends the payment of a final dividend for the year of 0.05 pence per Ordinary Share which, if approved by the shareholders at the AGM on 23 May 2018, will be paid on 30 May 2018 to shareholders on the register on 20 April 2018. The shares will be marked ex-dividend on 19 April 2018. If approved, payment of the final dividend will bring the total dividends paid to shareholders for the year to 0.10 pence per Ordinary Share.

 

The Board's policy is to maintain payment of a steady and progressive dividend, well covered and paid subject to maintaining sufficient funds within the business with regard to prudent forecasts of future capital requirements, without the need for debt funding.

 

OUTLOOK

 

The Directors are aware that material orders from two key customers for OmniMark and Migrate will not be repeated in 2018 and the revenue shortfall will need to be offset by new business sales to maintain the current level of revenues. To support this, we are undertaking additional investments in sales and marketing with the objective of further broadening the customer base and accelerating the growth of Authorbridge.

 

We are encouraged by the sales pipeline for new business prospects, but at the current time it is far too early to know what the outcome will be for 2018.  However, Stilo has the balance sheet, and product portfolio, not to shy away from incurring costs today in order to sharpen the Group's long term growth curve and deliver sustainable value growth to investors.

 

 

Group Income Statement

Year Ended 31 December 2017

 

 

Note 

2017 

£'000 

2016 

£'000 

 

 

 

 

Continuing operations

 

 

 

Revenue

 

1,894 

1,761 

 

 

 

 

Cost of sales

 

(13)

 (12)

 

 

                

                

 

 

 

 

Gross profit

 

1,881 

1,749 

 

 

 

 

Administrative expenses

 

(1,578)

(1,437)

 

 

                

                

 

 

 

 

Operating profit

 

303 

312 

 

 

 

 

Finance income

   

 

 

                

                

 

 

 

 

Profit before tax

 

309 

318 

 

 

 

 

Income tax

 

13 

 

 

                

                

 

 

 

 

Profit for the year

 

 

 

attributable to the equity shareholders of the parent company

 

313 

331 

 

 

                

                

 

 

 

 

Earnings per share attributable to equity shareholders of the parent:

 

 

 

Earnings per share - basic

3

0.28p

0.29p

 

 

                

                

 

 

 

 

Earnings per share - diluted

3

0.26p

0.28p

 

 

                

                

 

 

 

 

Dividends paid per share

4

0.10p

0.09p

 

 

                

                

 

 

 

 

 

 

 

Group Statement of Comprehensive Income

Year Ended 31 December 2017

 

 

 

2017 

£'000 

2016 

£'000 

 

 

 

 

Profit for the year

 

313 

331 

 

 

                

                

 

 

 

 

Other comprehensive income

 

 

 

Items that may subsequently be reclassified to profit and loss

 

 

 

Foreign currency translation differences

 

(32)

200 

 

 

                

                

 

 

 

 

Other comprehensive income for the year, net of tax

 

(32)

200 

 

 

                

                

 

 

 

 

Total comprehensive income for the year

 

281 

531 

 

 

                

                

 

 

 

 

 

 

 

 

Group Statement of Financial Position

as at 31 December 2017

 

 

2017

2016

 

£'000

£'000

 

 

 

Non-current assets

 

 

Goodwill

1,660

1,660 

Other intangible assets

688

482 

Investments

-

Plant and equipment

12

18 

Deferred tax asset

50

50 

 

                

                

 

2,410

2,210 

Current assets

 

 

Trade and other receivables

170

390 

Income tax asset

54

59 

Cash and cash equivalents

1,621

1,466 

 

                

                

 

 

 

 

1,845

1,915 

 

                

                

 

 

 

Total assets

4,255

4,125 

 

                

                

Current liabilities

 

 

Trade and other payables

504

589 

Non-current liabilities

 

 

Other payables

13

 

                

                

 

 

 

Total liabilities

517 

598 

 

                

                

 

 

 

Equity attributable to equity shareholders of the parent company

 

 

 

 

 

Called up share capital

1,139

1,138 

Share premium

29

29 

Merger reserve

658

658 

Retained earnings

1,912

1,702 

 

                

                

 

 

 

Total equity

3,738

3,527 

 

                

                

 

 

 

Total equity and liabilities

4,255

4,125 

 

                

                

 

 

 

Group Statement of Changes in Equity

for the year ended 31 December 2017

Attributable to the equity shareholders of the parent

 

Called up share capital
£'000

Share premium account
£'000

Merger reserve
£'000

Retained 
 earnings 
£'000 

Total 
£'000 

 

 

 

 

 

 

Balance at 1 January 2016

1,124

13

658

1,227 

3,022 

Comprehensive income

 

 

 

 

 

Profit for the financial year

331 

331 

Other comprehensive income

200 

200 

 

                

                

                

                

                

Total comprehensive income

531 

531 

Transactions with owners

 

 

 

 

 

Share based payment transactions

46 

46 

Dividends paid

(102)

(102)

Shares issued

14 

16 

30 

 

                

                

                

                

                

Total transactions with owners

14 

16 

(56)

(26)

 

                

                

                

                

                

 

 

 

 

 

 

Balance at 1 January 2017

1,138

29

658

1,702 

3,527 

Comprehensive income

 

 

 

 

 

Profit for the financial year

-

-

-

313 

313 

Other comprehensive income 

-

-

-

(32)

(32)

 

                

                

                

                

                

Total comprehensive income

-

-

-

281 

281 

Transactions with owners

 

 

 

 

 

Share based payment transactions

-

-

-

43 

43 

Dividend paid

-

-

-

(114)

(114)

Shares issued

1

-

-

 

                

                

                

                

                

Total transactions with owners

1

-

-

(71)

(70)

 

                

                

                

                

                

Balance at 31 December 2017

1,139

29

658

1,912 

3,738 

 

                

                

                

                

                

 

 

 

Group Cash Flow Statement

for the year ended 31 December 2017

 

 

       2017

    2016

 

£'000 

£'000 

£'000 

£'000 

 

 

 

 

 

Cash flow from operating activities

 

 

 

 

Profit before taxation

309 

 

318 

 

Adjustment for depreciation

12 

 

15 

 

Adjustment for investment income

(6)

 

(6)

 

Adjustment for foreign exchange differences

 

124 

 

Adjustment for share-based payments

43 

 

46 

 

 

                

 

                

 

 

 

 

 

 

Operating cash flows before movements in working capital

366 

 


497 


 

Decrease/(increase) in trade and other receivables

220 

 

(187)

 

(Decrease)/increase in trade and other payables

(81)

 

97 

 

 

                

 

                

 

 

 

 

 

 

Cash generated from operations

 

505 

 

407 

Tax paid

 

(50)

 

(45)

Tax credit received

 

58 

 

49 

 

 

                

 

                

 

 

 

 

 

Net cash generated from operating activities

 

513 

 

411 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

Finance income

 

 

 6 

Development costs

 

(213)

 

(204)

Purchase of equipment

 

(6)

 

 (11)

 

 

                

 

                

 

 

 

 

 

Net cash used in investing activities

 

(213)

 

(209)

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

Dividends paid

 

(114)

 

(102)

Issue of ordinary share capital

 

 

30 

 

 

                

 

                

 

 

 

 

 

Net cash used in financing activities

 

(113)

 

(72)

 

 

                

 

                

 

 

 

 

 

Net increase in cash and cash equivalents

 

187 

 

130 

Cash and cash equivalents at beginning of year

 

1,466 

 

1,318 

Exchange gains on cash and cash equivalents

 

(32)

 

18 

 

 

                

 

                

 

 

 

 

 

Cash and cash equivalents at end of year                

 

1,621 

 

1,466 

 

 

                

 

                

 

 

 

 

 

 

 

 

Notes to the preliminary financial results

 

1.    The figures for the years ended 31 December 2017 and 2016 do not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. The figures for the year ended 31 December 2017 have been extracted from the statutory accounts for that year on which the auditor has issued an unqualified audit report which have yet to be delivered to the Registrar of Companies. The figures for the year ended 31 December 2016 have been extracted from the statutory accounts for that year which have been delivered to the Registrar of Companies and on which the auditor has issued an unqualified audit report. No statement has been made by the auditor under Section 498(2) or (3) of the Companies Act 2006 in respect of either of these sets of accounts. This announcement was approved by the board of directors on 14 March 2018 and authorised for issue on 15 March 2018.

 

2.    The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards adopted by the International Accounting Standards Board ('IASB') and interpretations issued by the International Financial Reporting Interpretations Committee of the IASB (together 'IFRS') as endorsed by the European Union. The information in this preliminary statement has been extracted from the audited financial statements for the year ended 31 December 2017 and as such, does not contain all the information required to be disclosed in the financial statements prepared in accordance with the International Financial Reporting Standards ('IFRS').

 

3.    Earnings per Share. Earnings per share is based on the profit for the year after tax of £313,000 (2016: £331,000), and the weighted average number of ordinary shares in issue during the year of 113,854,048 (2016: 112,846,662). The fully diluted earnings per share takes account of outstanding options which results in a weighted average number of shares in issue during the year of 119,241,436 (2016: 118,276,189). 

 

4.    DIVIDENDS

 

Ordinary                                                                                                          2017            2016

                                                                                                                      £'000           £'000

 

Final 2016 paid (0.05 pence per share (2015: 0.05 pence per share))                        57                56

Interim 2017 paid (0.05 pence per share (2016: 0.04 pence per share))                     57               46

                                                                                                                    -------------------         -------------------

                                                                                                                        114              102

                                                                                                                 ========       ========

 

The directors recommend the payment of a final dividend of 0.05 pence per Ordinary Share (2016: 0.05 pence per share) to be paid on 30 May 2018 to those shareholders on the register on 20 April 2018.

 

The proposed dividend is not included as a liability in these financial statements as it is subject to shareholders' approval.

 

5.    These financial statements are presented in sterling as that is the currency of the primary economic environment in which the Group operates.

 

6.    Copies of the 2017 Annual Report and Accounts will be made available to shareholders in April. Copies may be obtained by contacting the Company Secretary at the registered office. The 2017 Annual Report and Accounts will be available to download from the investor relations section on the Company's website www.stilo.com.

 

The annual general meeting is due to be held at the offices of RSM UK Audit LLP, 25 Farringdon Street, London EC4A 4AB at 11.30am on 23 May 2018.


This information is provided by RNS
The company news service from the London Stock Exchange
 
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Preliminary Results - RNS