Stilo Regulatory News (STL)

15 Mar 2007 07:01

Stilo International PLC15 March 2007 15th March 2007 STILO INTERNATIONAL PLC PRELIMINARY RESULTS FOR YEAR ENDED 31 DECEMBER 2006 Stilo International plc ("Stilo" or the "Company"), the provider of specialistsolutions for product lifecycle management, document management, data migrationand e-Publishing, today announces its preliminary results for the year ended 31December 2006. Highlights • Achievement of major milestone - the first full year that Stilo has reported a trading profit • Trading profit for the year of £9,000 (2005: £185,000 loss) • Sales revenues from continuing activities increased by 8% to £2.264m (2005: £2.099m) • Cash balance of £420,000 as at 31 December 2006 (2005: £373,000) • Operating expenses (excluding exceptional items) reduced by 5% to £2.395m (2005: £2.510m) • Acquisition and successful integration of the Engineering Solutions business of Proceed Holdings Limited in the UK • New share issue in November 2006 raised £150,000 at 2p per share • Annual recurring maintenance revenues of £750,000 in 2006 • Customers during 2006 included Boeing, IBM, International Atomic Energy Agency, Wolters Kluwer, BAe Systems, Westland Helicopters and the European Parliament. Barry Welck, Chairman, says "The 2006 financial results are the best in Stilo's history, and the Companycontinues to evolve as a provider of enterprise solutions to corporate clients. Operating in niche, expanding markets provides us with a firm foundation forgrowing the business in the future, and we anticipate continued improvement inthe Company's performance during 2007. In addition, we will actively pursueacquisition and partnering opportunities that complement our growing range ofproducts, services and solutions." Enquiries Les Burnham, Chief Executive, Stilo International plc 01793 441444Russell Cook, Charles Stanley Securities 020 7 149 6000 CHAIRMAN'S STATEMENT OVERVIEW & STRATEGY Stilo provides leading solutions for Product Lifecycle Management, DocumentManagement, Data Migration and e-Publishing to customers in Aerospace & Defence,Manufacturing, IT, Telecommunications, Publishing and Government. Our solutionstypically comprise a combination of services and software. On 31 July 2006 Stilo broadened the range of enterprise solutions offered tocorporate customers through the purchase of the Engineering Solutions businessof Proceed Holdings Ltd in the UK. The Engineering Solutions team brought toStilo a deep understanding of the SAP(R) market-place, associated high-levelconsulting skills and third-party software applications expertise. Operating from offices in the UK, France and North America, we support anextensive list of customers including Boeing, IBM, International Atomic EnergyAgency, Wolters Kluwer, BAe Systems, Westland Helicopters and the EuropeanParliament. Our strategy is to grow the company organically and by acquisition, expandingand deepening the range of niche solutions and services we provide to corporatecustomers. In November 2006 a new share issue raised £150,000 at 2p per share, providingfurther working capital for the Company in order to help fund existing andpotential future development, and to enable the Company to take advantage of anysmall acquisition opportunities that may arise. RESULTS After several years of reducing losses, in 2006 the group returned a smalltrading profit (before exceptional items and amortisation of goodwill) for theyear of £9,000 (2005: £185,000 loss). This is the first full year that Stilo hasreported a trading profit, and represents the achievement of a major milestonein the ongoing advancement of the Company. Total sales revenue for the period increased by 8% to £2,264,000 (2005:£2,099,000) and the cash position stabilised, with cash of £420,000 as at 31December 2006 (2005: £373,000). Operating expenses, excluding exceptional items, were reduced to £2,395,000(2005: £2,510,000), with savings from cost reductions in Europe offset by theacquisition of personnel in the Engineering Solutions business. Non-recurring exceptional costs for the year totalled £169,000, consisting ofstaff redundancy costs and a write-down of irrecoverable costs on a developmentproject. The goodwill amortisation of £293,000 relates to the purchase of OmniMarkTechnologies Corporation in 2001, and to the purchase of Xia Systems (ContentEngineering Division) in 2004. In the e-Publishing solutions business, sales increased by 10% in North Americato £1,389,000 (2005: £1,262,000). However, this was offset by a lower level ofsales in Europe to £451,000 (2005: £828,000), primarily as a result of decliningsoftware orders. During the course of the year, overheads in Europe were reducedsignificantly through a lowering of staff numbers, the closure of our Belgiumoffice, and a move to smaller offices in Paris. Sales operations have beenre-located from Paris to the UK. The e-publishing business overall was underpinned by recurring annual softwaremaintenance revenues of £750,000 in 2006, generated from 170 customer contracts. The Engineering Solutions business got off to a good start in 2006, achievingsales revenues of £412,000 in the five month period following acquisition, andmaking a positive contribution to overall profitability. Provision has been made in the accounts for the first part of the contingentconsideration relating to the purchase of the Engineering Solutions business.This consideration is £90,000, payable in August 2007. The consideration will beused by the vendor to subscribe for 4,500,000 new Stilo 1p Ordinary Shares. Thisconsideration has been provided as there is a reasonable expectation that thefirst performance target for the business (a sales turnover in excess of£750,000 for the year ended 31 July 2007) will be met. At the end of 2006, the group employed 30 staff, with 13 based in the UK, 14 inNorth America and 3 in Europe. PRODUCTS, SERVICES and SOLUTIONS e-Publishing OmniMark OmniMark provides an application development and high performance run-timeenvironment for XML content processing applications. Users of OmniMark are ableto reduce significantly the time and costs of developing and maintaining newcontent processing applications, whilst ensuring high-performance levels ofexecution which is especially critical to major web applications. OmniMark hasbeen deployed by customers around the world over a fifteen year period, and is arobust, well-proven technology. Solution Components In 2007 Stilo is bringing to market a range of Stilo solution components, foruse by those responsible for implementing e-Publishing solutions includingsystem integrators, solutions architects, application developers and publishingmanagers. The solution components are intended to assist organisations leveragethe power of XML in their publishing strategies - reducing production costs,shortening cycle-times and improving the quality of published information. Integrated Solutions Stilo combines services and technology to build integrated e-Publishingsolutions, including the Stilo Interactive Technical Information Publisher(iTIP) and the Stilo Conversion Factory. Stilo's iTIP has evolved over a ten year period as a proven approach todistributing complex technical information to large and widely-distributed usercommunities. The Stilo Conversion Factory reduces costs, improves quality, mitigates risk andshortens schedule times for content conversion projects. Solutions for SAP Customers Product Lifecycle Management mySAPTM Product Lifecycle Management (mySAP PLM) provides the mostcomprehensive end-to-end solution available to help manage the product lifecycleat every stage from design to disposal. Stilo is one of the UK's leading specialists in mySAP PLM, delivering innovativeand practical solutions to many of the leading names in the European and globalaerospace, defence, manufacturing, pharmaceutical and telecommunicationsindustries. Document Management Solutions Stilo has teamed up with market-leading solution providers to integrate, wherenecessary, proven tools and techniques at every stage of the document managementprocess; from capturing, indexing, storage, retrieval, formatted output andarchiving - saving time and money, boosting business process efficiency andhelping customers get more out of their SAP systems. Data Migration Services Stilo provides a professional and cost-effective data migration service thatensures a coherent, consistent and effective process for transferring data intoSAP systems. Combining our proven best practices and templates with standard SAP tools andload methods, we can customise a data migration solution to suit customerspecific needs - reducing the risks and costs involved, while helping tomaximise the return from customer SAP investments. Software Partners In the UK Stilo is a reseller of solutions from Easy Software (UK) plc and SEALSystems AG. Solutions from SEAL Systems simplify and speed up the generation, administrationand distribution of documents and technical papers. EasySoftware is the world'ssecond largest provider of data archiving and document capture solutions to SAPcustomers. OUTLOOK The 2006 financial results are the best in Stilo's history, and the Companycontinues to evolve as a provider of enterprise solutions to corporate clients. Operating in niche, expanding markets provides us with a firm foundation forgrowing the business in the future, and we anticipate continued improvement inthe Company's performance during 2007. In addition, we will actively pursueacquisition and partnering opportunities that complement our growing range ofproducts, services and solutions. Results for the year ended 31 December 2006 Consolidated Profit and Loss Account for the year ended 31 December 2006 2006 2005 £'000 £'000Turnover 2,264 2,099 _________ _________ 2,264 2,099Cost of sales (157) (83) _________ _________ Gross profit 2,107 2,016 Administrative expenses - normal (2,395) (2,510)- exceptional (169) (73) _________ _________ Operating loss (457) (567) _________ _________ (457) (567) Exceptional item - division closure costs - (28)Interest receivable 4 8 _________ _________Loss on ordinary activities before taxation (453) (587)Taxation 16 52 _________ _________Loss on ordinary activities after taxation (437) (535) _________ _________Loss for the financial year (437) (535) _________ _________Loss per share (pence) (0.5) (0.6) _________ _________Fully diluted loss per share (pence) (0.5) (0.6) _________ _________ Statement of Total Recognised Gains and LossesFor the year ended 31 December 2006 2006 2005 £'000 £'000Loss for the financial year (437) (535)Exchange adjustment arising on the re-translation of net assets of overseas (32) (15)subsidiaries _________ _________Total recognised losses for the financial year (469) (550) _________ _________ Consolidated Balance Sheet as at 31 December 2006 2006 2005 £'000 £'000Fixed assetsIntangible assets 1,511 1,606Tangible assets 37 64 _________ _________ 1,548 1,670Current assetsDebtors 574 632Cash at bank and in hand 420 373 _________ _________ 994 1,005Creditors: amounts falling due within one year (727) (672) _________ _________Net current assets 267 333 _________ _________ 1,815 2,003 _________ _________Capital and reservesCalled up share capital 5,523 5,423Shares to be issued 45 -Share premium account 5,485 5,349Merger reserve 658 658Profit and loss account (9,896) (9,427) _________ _________Equity shareholders' funds 1,815 2,003 _________ _________ Consolidated Cash Flow Statement For the year ended 31 December 2006 2006 2005 £'000 £000 £'000 £'000Net cash outflow from operating activities (86) (320) Returns on investments and servicing of financeInterest received 4 8 _________ _________Net cash inflow from returns on investments and servicing of finance 4 8 TaxationTax credit received 57 50 Capital expenditurePurchase of tangible fixed assets (11) (19)Proceeds from disposal of fixed assets - - _________ _________Net cash outflow from capital expenditure (11) (19) Acquisitions and disposalsGoodwill purchased (108) (5) _________ _________Net cash outflow from acquisitions and disposals (108) (5) _________ _________Net cash outflow before management of liquid (144) (286)resources and financing Management of liquid resources(Increase) / decrease in short term deposits (8) 227 Financing Issue of ordinary share capital 200 -Share issue costs (9) - _________ _________ 191 - _________ _________Increase / (decrease) in cash 39 (59) _________ _________ Notes to the Preliminary Announcement For the year ended 31 December 2006 1. The financial information in this announcement for the years ended 31December 2006 and 2005 does not constitute statutory accounts as defined inSection 240 of the Companies Act 1985. Statutory accounts for the previousfinancial year ended 31 December 2005 have been delivered to the Registrar ofCompanies. The auditors' report on those accounts was unqualified and did notcontain any statement under section 237(2) or (3) of the Companies Act 1985. Thefinancial information in this announcement has been extracted from the statutoryaccounts for the year ended 31 December 2006 The auditors have given anunqualified report, on the statutory accounts for the year ended 31 December2006 and that report did not contain any statement under section 237(2) or (3)of the Companies Act 1985, on these statutory accounts. Statutory financialstatements for this year will be filed following the Annual General Meeting.Copies of the Company's Report and Accounts will be sent to shareholders shortlyand will be available at the registered office of the Company: 2 BloomsburyStreet, London WC1B 3ST. This announcement was approved by the board of directors on 14 March 2007. 2. The consolidated accounts include the accounts of the Company and itssubsidiary undertakings and have been prepared using acquisition accountingprinciples. 3. The basic earnings per share is calculated on the weighted averagenumber of shares in issue during the year of 91,636,803 (2005: 90,228,470). Thefully diluted earnings per share takes account of outstanding options whichresults in a weighted average number of shares in issue during the year of91,636,803 (2005: 90,228,470). 4. The directors do not recommend the payment of a final dividend (2005:nil). 5. On 31 July 2006, the Company completed the acquisition of the EngineeringSolutions business from Proceed Holdings Limited in the UK. Engineering Solutions provides Product Lifecycle Management, Data Migration andDocument Management solutions to a number of major customers of SAP enterprisesoftware. Following the acquisition, Stilo has employed five full-time EngineeringSolutions staff, as well as obtaining access to Engineering Solution'sestablished base of sub-contractors. In addition Stilo acquired certain existingcustomer contracts, solutions IP and a pipeline of prospective business. Financial Consideration The maximum total consideration will be £440,000 of which £100,000 was paid oncompletion, comprising £100,000 cash of which £50,000 was applied by ProceedHoldings to subscribe for 2,500,000 new Stilo 1p ordinary shares (the"Completion Shares") at 2.0p per share, compared with a closing mid-market priceon 31 July 2006 of 2.125p per share. The Company will pay up to a further£90,000 by way of Initial Deferred Consideration on or before 25th August 2007,subject to the turnover of Engineering Solutions for the year to 31st July 2007being not less than £750,000. All of the Initial Deferred Consideration will beapplied by Proceed Holdings to subscribe for up to a further 4,500,000 new 1pordinary Stilo shares at 2.0p per share. The Company will pay a Final DeferredConsideration on or before 20th August 2008 comprising a maximum cashconsideration of £250,000 subject to the Engineering Solutions achieving acombined profit before tax in the two years to 31st July 2008 of not less than£300,000. Of the Final Deferred Consideration, up to £100,000 will be applied byProceed Holdings to subscribe for up to 5,000,000 new Stilo 1p ordinary sharesat 2.0p per share. This information is provided by RNS The company news service from the London Stock Exchange