TIDMSTL
RNS Number : 8080X
Stilo International PLC
15 August 2018
15 August 2018
STILO INTERNATIONAL PLC
UNAUDITED INTERIM RESULTS FOR SIX MONTHSED 30 JUNE 2018
Stilo International plc ("Stilo", the "Group" or the "Company")
today announces its unaudited Interim Results for the six months
ended 30 June 2018. The Company provides 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
-- Reduction in sales revenues to GBP707,000 principally due to
the expiry of a 3 year customer contract for Migrate.
(2017: GBP910,000)
-- Reduction in operating costs to GBP657,000.
(2017: GBP759,000)
-- Post-tax profits of GBP42,000.
(2017: GBP142,000)
-- Cash of GBP1,442,000 as at 30 June 2018.
(2017: GBP1,602,000)
-- Payment of an interim dividend of 0.06 pence per Ordinary Share.
(2017:0.05 pence per share)
BUSINESS HIGHLIGHTS
-- Migrate customers for the period include Viewpoint, Arris,
Synopsis, Deltek, Varian and Tibco.
-- AuthorBridge order win at Kaplan Professional Education,
incorporating integration with the Componize for Alfresco content
management system.
-- OmniMark sales include Toshiba Digital Solutions Corporation
(Japan Patent Office), European Parliament, Qantas and
Gulfstream.
-- Launch in July of professional service to assist DITA users
to maximise content re-use, utilising OptimizeR, a new product
currently under development.
David Ashman, Chairman, commenting on the Company's performance,
stated:
"Our total sales revenues for the period decreased
significantly, principally due to the expiry of a three year
customer contract for Migrate. Changes to IFRS accounting rules in
2018 also had the effect of deferring GBP27,000 of software revenue
recognition beyond the end of December 2017 and GBP64,000 beyond
the end of June 2018 resulting in the net reduction in H1 revenue
of GBP37,000.
Nevertheless, with a reduction in operating costs for the
period, assisted by favourable exchange rates, we have still been
able to report a profit for the half year. This reflects well upon
the overall resilience of the Company. As we look to build future
sales, supported by healthy cash reserves and a strong balance
sheet, I am pleased to announce the payment of an increased interim
dividend of 0.06 pence per share."
ENQUIRIES
Stilo International plc SPARK Advisory Partners
Les Burnham, Chief Executive (Nominated Adviser)
Neil Baldwin T +44 (0) 203 368
T +44 (0)1793 441444 3554
Mark Brady T +44 (0) 203 368
3551
SI Capital (Broker)
Nick Emerson
T +44 (0) 1483 413500
CHAIRMAN'S STATEMENT
Our total sales revenues for the period decreased significantly,
principally due to the expiry of a three year customer contract for
Migrate. Changes to IFRS accounting rules in 2018 also had the
effect of deferring GBP27,000 of software revenue recognition
beyond the end of December 2017 and GBP64,000 beyond the end of
June 2018 resulting in the net reduction in H1 revenue of
GBP37,000.
Nevertheless, with an annual reduction in operating costs,
assisted by favourable exchange rates, we have still been able to
report a small profit for the half year. This reflects well upon
the overall resilience of the Company.
As we look to build future sales, supported by healthy cash
reserves and a strong balance sheet, I am pleased to announce the
payment of an increased interim dividend of 0.06 pence per
share.
David Ashman
Chairman
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 e.g. 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 The Boeing Company, Pratt and Whitney, Airbus
Defence & Space, Clarivate Analytics, and Wolters Kluwer. Sales
for the period included orders from the European Parliament,
Toshiba Digital Solutions Corporation (Japan Patent Office), Qantas
and Gulfstream.
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 users include IBM, Cisco, EMC and Oracle. Sales for the
period include orders from Viewpoint, Arris, Synopsis, Deltek,
Varian and Tibco. Using Migrate, we have helped our customers
convert over one million pages of content to the DITA format.
Complementing Migrate, we announced in July the introduction of
a new professional service utilising OptimizeR. OptimizeR is a tool
that we are developing to help automate the de-duplication of DITA
content and help maximise the opportunity for content re-use. It
will initially be used by Stilo professional services personnel and
will be productised in due course as we gain experience of various
customer use cases.
OptimizeR addresses key issues for customers who are converting
their legacy content to DITA, in addition to experienced DITA
users, and represents a promising new business opportunity. We are
encouraged by initial feedback received from prospective customers
and business partners.
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 continues to progress well in 2018,
albeit with significant slippage against original schedules. Its
initial adoption by the central Information Developer Tools team at
IBM in the USA and the Nuclear Regulatory Commission in Washington
D.C. provides a good foundation upon which we can build future
sales.
Early in 2018 AuthorBridge was selected by Kaplan Professional
Education as their web authoring tool of choice and has since been
successfully integrated with their Componize for Alfresco content
management system, The partnership with Componize is encouraging
and is already helping to generate additional business
opportunities for AuthorBridge in the DITA market.
OPERATIONS
Stilo operates from offices located in Swindon, UK and Ottawa,
Canada. The technical team is based in our Ottawa office.
As of 30 June 2018, there were 17 permanent employees in the
Company, complemented by the use of contractors. We will not be
growing headcount significantly in 2018, as we look to contain our
costs in line with the latest sales projections.
FINANCIAL RESULTS
The results for the six months ended 30 June 2018 have been
prepared in accordance with the recognition and measurement
principles of International Financial Reporting Standards as
adopted by the European Union.
In 2018 the interim results for Stilo show post-tax profits of
GBP42,000. (2017: GBP142,000)
Total sales revenues for the period decreased to GBP707,000
(2017: GBP910,000), principally due to the expiry of a 3 year
customer contract for Migrate. A reduction in maintenance revenues
and the net impact of transition to the new accounting standard
IFRS 15 were otherwise offset by increases in sales of Migrate,
OmniMark licences and initial embryonic revenues for
AuthorBridge.
The Company maintains careful control over all operating costs.
Favourable exchange rates helped as we reduced our operating costs
during the period, excluding capitalised development costs, to
GBP657,000 (2017: GBP759,000).
Investment in R & D continued in 2018, with total
expenditure for the period of GBP271,000 (2017: GBP290,000). As a
result of this investment, Stilo continues to benefit from research
and development tax credits. Of this expenditure, GBP99,000
relating to the development of AuthorBridge has been capitalised
(2017: GBP91,000), and the total accumulated capitalised costs will
be depreciated over a 10 year period, likely commencing in
2019.
There was a reduced cash balance of GBP1,442,000 as at 30 June
2018 (30 June 2017: GBP1,602,000) and Stilo remains entirely
un-geared. This balance sheet stability provides a sound financial
base for the Company and will support continued investment in
product development, sales and marketing.
DIVIDS
During the period, the final dividend for the year ended 31
December 2017 was paid, of 0.05 pence per share (2016: 0.05 pence),
providing an increased total dividend of 0.10 pence for the
year.
The Board is pleased to declare the payment of an Interim
dividend for the year ending 31 December 2018 to shareholders of
0.06 pence per share (2017: 0.05 pence per share) which will be
paid on 20 November 2018 to those shareholders on the register as
at 19 October 2018. The shares will be marked ex-dividend on 18
October 2018.
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 global market for dynamically publishing structured content
to multiple channels continues to grow, which in turn drives the
market for XML content conversion and authoring tools.
In the Company's AGM Statement of 23 May 2018 and Trading Update
of 26 July 2018 we indicated that results for the year ending 31
December 2018 would likely be impacted because of the
non-repeatability of two significant contracts that were received
in 2017. Unfortunately, during the first six months of 2018 the
Company has not made the sales breakthroughs required to compensate
for the orders shortfall.
This position is likely to continue for the second half of 2018,
as the Company looks to build the sales pipeline whilst controlling
costs in line with sales projections.
Unaudited Group Income Statement
for the six months ended 30 June 2018
Six months Six months Year to
to 30 June to 30 June 31 December
2018 2017 2017
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Revenue - Continuing Operations 707 910 1,894
Cost of sales (4) (7) (13)
-------------- -------------- --------------
Gross profit 703 903 1,881
Operating costs (657) (759) (1,578)
Amortisation of intangible assets - - -
-------------- -------------- --------------
Operating profit 46 144 303
Finance income 5 3 6
-------------- -------------- --------------
Profit before tax 51 147 309
Income tax (9) (5) 4
-------------- -------------- --------------
Profit for the period attributable
to the equity shareholders of the
parent company 42 142 313
======= ======= =======
Earnings per share
- basic (note 4) 0.04p 0.12p 0.28p
- diluted (note 4) 0.04p 0.12p 0.26p
-------------- -------------- --------------
Dividends
- dividends paid per share 0.05p 0.05p 0.10p
-------------- -------------- --------------
Unaudited Group Statement of Comprehensive Income
for the six months ended 30 June 2018
Six months Six months Year to
to 30 June to 30 June 31 December
2018 2017 2017
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Profit for the period 42 142 313
-------------- -------------- --------------
Other comprehensive income
Items that may subsequently be reclassified
to profit and loss
Foreign currency translation differences (37) (17) (32)
-------------- -------------- --------------
Total other comprehensive income (37) (17) (32)
-------------- -------------- --------------
Total comprehensive income relating
to the period 5 125 281
-------------- -------------- --------------
All comprehensive income is attributable to equity shareholders
of the parent company.
Unaudited Group Statement of Financial Position
as at 30 June 2018
As at As at As at
30 June 30 June 31 December
2018 2017 2017
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Non-current assets
Goodwill 1,660 1,660 1,660
Other Intangible assets 771 566 688
Plant and equipment 18 16 12
Deferred tax assets 50 50 50
-------------- -------------- --------------
2,499 2,292 2,410
Current assets
Trade and other receivables 209 280 170
Income tax asset 53 - 54
Cash and cash equivalents 1,442 1,602 1,621
-------------- -------------- --------------
1,704 1,882 1,845
-------------- -------------- --------------
Total Assets 4,203 4,174 4,255
======= ======= =======
Current liabilities:
Trade and other payables 472 523 504
Non-current liabilities:
Other payables 71 26 13
-------------- -------------- --------------
Total liabilities 543 549 517
Equity attributable to equity shareholders
of the parent company
Called up share capital 1,139 1,139 1,139
Share premium 29 29 29
Merger reserve 658 658 658
Retained earnings 1,834 1,799 1,912
-------------- -------------- --------------
Total equity 3,660 3,625 3,738
-------------- -------------- --------------
Total Equity and Liabilities 4,203 4,174 4,255
======= ======= =======
Unaudited Group Statement of Changes in Equity
for the six months ended 30 June 2018
Attributable to equity shareholders
of the parent company
Called Share premium
up share account Merger Retained
capital GBP'000 reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 January 2017
(audited) 1,138 29 658 1,702 3,527
Comprehensive income
Profit for the period - - - 142 142
Other comprehensive loss
Exchange adjustments -
may recycle to profit and
loss account - - - (17) (17)
---------- -------------- --------- ---------- ---------
Total comprehensive income - - - 125 125
Transactions with owners
Shared based transactions - - - 29 29
Dividend paid - - - (57) (57)
Shares Issued 1 - - - 1
Total transactions with
owners - - - (28) (27)
Balance at 30 June 2017
(unaudited) 1,139 29 658 1,799 3,625
Comprehensive income
Profit for the period - - - 171 171
Other comprehensive loss
Exchange adjustments -
may recycle to profit and
loss account - - - (15) (15)
---------- -------------- --------- ---------- ---------
Total comprehensive income - - - 156 156
Transactions with owners
Share based transactions - - - 14 14
Dividend paid - - - (57) (57)
Shares Issued - - - - -
Total transactions with
owners - - - (43) (43)
Balance at 31 December
2017 (audited) 1,139 29 658 1,912 3,738
Impact of adopting IFRS
15 - - - (27) (27)
Balance at 31 December
2017 (IFRS 15) 1,139 29 658 1,885 3,711
Comprehensive income
Profit for the period - - - 42 (42
Other comprehensive loss
Exchange adjustments -
may recycle to profit and
loss account - - - (37) (37)
---------- -------------- --------- ---------- ---------
Total comprehensive income - - - 5 5
Transactions with owners
Share based transactions - - - 1 1
Dividend paid - - - (57) (57)
Shares issued - - - - -
---------- -------------- --------- ---------- ---------
Total transactions with
owners - - - (56) (56)
Balance at 30 June 2018
(unaudited) 1,139 29 658 1,834 3,660
========== ============== ========= ========== =========
Unaudited Group Cash Flow Statement
for the six months ended 30 June 2018
Six months Six months Year to
to 30 June to 30 June 31 December
2018 2017 2017
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Profit before taxation 51 147 309
Adjustment for depreciation and
amortisation 5 6 12
Adjustment for investment income (5) (3) (6)
Adjustment for share based payments 1 29 8
Adjustment for foreign exchange
differences (13) 11 43
-------------- -------------- --------------
Operating cash flows before movements
in working capital 39 191 366
(Increase)/decrease in trade and
other receivables (39) 105 220
Increase/ (decrease) in trade
and other payables 1 (48) (81)
-------------- -------------- --------------
Cash generated from operations 1 247 505
Tax paid (60) (1) (50)
Tax credit received 52 58 58
-------------- -------------- --------------
Net cash used in/from operating
activities (7) 304 513
Cash flows from investing activities
Finance income 5 3 6
Development costs capitalised (99) (91) (213)
Purchase of plant and equipment (11) (4) (6)
-------------- -------------- --------------
Net cash used in investing activities (105) (92) (213)
Financing Activities
Dividends paid (57) (57) (114)
Issue of ordinary share capital - 1 1
-------------- -------------- --------------
Net cash used in financing activities (57) (56) (113)
-------------- -------------- --------------
Net (decrease)/increase in cash
and cash equivalents (169) 156 187
Cash and cash equivalents at beginning
of period 1,621 1,466 1,466
Exchange losses on cash and cash
equivalents (10) (20) (32)
-------------- -------------- --------------
Cash and cash equivalents at end
of period 1,442 1,602 1,621
======= ======= =======
Notes to the Interim Results
for the six months ended 30 June 2018
1. The interim results (approved by the Board of Directors and
authorised for issue on 15 August 2018) are neither audited nor
reviewed and do not constitute statutory accounts within the
meaning of Section 434 of the Companies Act 2006. The financial
information for the full preceding year is extracted from the
statutory accounts for the financial year ended 31 December 2017.
Those accounts, upon which the auditors issued an unqualified
opinion, and did not contain a statement under Section 498 (2) and
(3) of the Companies Act 2006, have been delivered to the Registrar
of Companies. As permitted, this interim report has been prepared
in accordance with UK AIM listing rules and not in accordance with
IAS 34 'Interim Financial Reporting'; therefore it is not fully in
compliance with IFRS.
2. Stilo International plc is a public limited company
incorporated in the United Kingdom. The Company is domiciled in the
United Kingdom and its ordinary shares are traded on the AIM market
of the London Stock Exchange plc. Stilo provides specialist
software and professional services.
The consolidated interim results have been prepared in
accordance with the recognition and measurement principles of IFRS
including standards and interpretations issued by the International
Accounting Standards Board, as adopted by the European Union. They
have been prepared using the historical cost convention.
The preparation of the interim results requires management to
make estimates and assumptions that affect the reported amounts of
revenues, expenses, assets and liabilities, and the disclosure of
contingent liabilities at the reporting date. If in the future such
estimates and assumptions, which are based on management's best
judgement at the reporting date, deviate from the actual
circumstances, the original estimates and assumptions will be
modified as appropriate in the year in which the circumstances
change. The interim results are presented in sterling and all
values are rounded to the nearest thousand pounds (GBP'000) except
where otherwise indicated.
The interim results of the Group for the period ended 30 June
2018 have been prepared in accordance with the accounting policies
expected to apply in respect of the financial statements for the
year ending 31 December 2018.
3. The financial position and performance of the group was
particularly affected by the adoption of the new revenue standard
IFRS 15 Revenue from contracts with customers as from 1 January
2018. In accordance with the transition provisions in IFRS 15, the
Group has adopted the new rules retrospectively with the cumulative
effect of initially applying the standard recognised at the date of
the initial application. The impact of the adoption as at 1 January
2018 was to reduce retained earnings and increase deferred income
by GBP27,000 due to a change in the recognition of revenue on
Migrate licences.
4. The basic earnings per share is calculated on the weighted
average number of shares in issue during the period. The fully
diluted earnings per share takes account of outstanding options.
The weighted average number of ordinary shares in issue for the six
months to 30 June 2018 was 113,930,470 shares (30 June 2017:
113,778,887 and 31 December 2017: 113,854,048 shares). The weighted
average number of ordinary shares in issue for the six months to 30
June 2018, for the fully diluted earnings per share, taking account
of outstanding options was 116,615,746 (30 June 2017: 119,858,713,
31 December 2017: 119,241,436).
5. Copies of this report will be available to download from the
investor relations section of the Company's website
www.stilo.com.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR QZLFFVVFXBBE
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