Stilo Regulatory News (STL)

8 Mar 2006 07:02

Stilo International PLC08 March 2006 STILO INTERNATIONAL PLC8th March 2006 PRELIMINARY RESULTS FOR YEAR ENDED 31 DECEMBER 2005 Stilo International plc ("Stilo" or the "Company") provides specialist contentengineering software and services to help customers design, build and managee-Publishing solutions. The Company today announces its preliminary results forthe year ended 31 December 2005. Highlights •Sales revenues (from continuing activities) increased by 9% to £2.099m (2004: £1.916m) •Trading loss reduced to £185,000 (2004: £663,000) •Trading profit of £52,000 for the period July - December 2005 •Cash balance of £373,000 as at 31 December 2005 (2004: £659,000, 30 June 2005: £340,000) •Operating expenses (excluding exceptional items) reduced by 14% to £2.510m (2004: £2.928m) •Successful integration of Xia Systems Corporation •Services revenues increased by 105% to £567,000 (2004: £276,000) •Annual maintenance revenues increased 16% to £800,000 (2004: £688,000) •Customers during 2005 included Italian Parliament, Boeing, Toshiba and the International Atomic Energy Agency •OmniMark 8 released Q4 2005 •Introduction of e-Publishing solutions strategy Barry Welck, Chairman, says "After several years of reducing losses, the Company is moving closer to annualprofitability. Sales have increased, overheads have been reduced and the cashposition stabilized. The outlook is very positive. We have begun 2006 in a much stronger position than 2005, with a solid pipelineof services income, maintenance contracts and improved software orders in thefirst two months of the year, and running ahead of budget. Our new solutionsstrategy will improve the effectiveness by which we take our products andservices to market in the future, and will enable us to build up ourintellectual property based upon solving critical customer problems. The Board is committed to an aggressive growth strategy. 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 7953 2000Ian Seaton, Bankside Consultants 020 7367 8891 CHAIRMAN'S STATEMENTOVERVIEWStilo provides specialist content engineering software and services to help ourcustomers design, build and manage e-Publishing solutions.These solutions are of critical importance to our customers. This is truewhether they operate in the aerospace sector and need to provide the very latestmaintenance and technical documentation, are a commercial publisher that needsto expand progressively the range of products offered to customers or agovernment body that needs to meet stringent public reporting requirements.We integrate best-of-breed content management tools with our own technologycomponents in order to automate the acquisition of content, its conversion andenrichment, prior to publication via online portals, CDRom, print or mobiledevices.The growing adoption of XML (eXtensible Markup Language) has made itincreasingly important for organisations to implement solutions and contentprocessing technologies capable of working not only with XML but also withhistorically used content formats which continue to be deployed for compellingbusiness reasons. Stilo's technology, expertise and solutions are perfectlysuited to exploiting this environment and their importance continues to grow.OPERATIONS2005 was a year of consolidation following closure of the UK KnowledgeEngineering Division and the acquisition of Xia Systems (Content EngineeringDivision), Canada, in December 2004. It also represented a time of change forthe Company, evolving from a software tools vendor to becoming a provider ofe-Publishing solutions.At the end of 2005 the Company employed 25 staff, with 15 based in Ottawa,Canada, 4 in the UK and 6 in Europe. With a development team in Ottawa, andsales and professional services personnel based in North America and Europe, weserve a global customer base. RESULTSFollowing the closure of the Knowledge Engineering Division and the acquisitionof Xia Systems (Content Engineering Division) at the end of 2004, there was aslow start to the year. However, the business then improved significantly. The full year trading loss, before goodwill amortisation and exceptional costs,was £185,000 (2004: £663,000). This was made up of a loss for the first half ofthe year of £237,000, and a profitable second half of the year. This representeda much improved performance over the previous year and a step closer toachieving annual profitability. A 9% increase in sales revenues to £2.099m (2004: £1.916m) included asignificant increase in service income to £567,000 (2004: £276,000), as our newsolutions strategy became effective and the successful impact of the Xia Systems(Content Engineering Division) acquisition was felt in North America. Incomefrom maintenance contracts increased by 16% to £800,000 (2004: £688,000). Operating expenses, excluding exceptional items, were reduced to £2.510m (2004:£2.928m), with savings from the closure of the Knowledge Engineering Divisionbeing partially offset by the acquisition of Xia Systems' personnel. The goodwill amortisation of £301,000 relates to the purchase of OmnimarkTechnologies Corporation in 2001, and to the purchase of Xia Systems (ContentEngineering Division) in 2004. Non-recurring exceptional costs for the year totaled £101,000, consisting ofstaff redundancy costs and further write-downs from the closure of the KnowledgeEngineering Division. The Group retained a positive cash balance of £373,000 at 31 December 2005(2004: £659,000; 30 June 2005: £340,000). PRODUCTS, SERVICES and SOLUTIONS PRODUCTS Stilo's core technology, OmniMark, is a highly respected and well-establishedcontent processing platform and the preferred choice of many blue-chip customersfor converting, enhancing and publishing rich content assets. Users of OmniMarkproducts are able to reduce significantly the time and costs of developing andmaintaining new content processing applications. Ongoing product development isundertaken by our development team based in Ottawa, Canada. OmniMark 8 wassuccessfully released in Q4 2005. There were 215 customer contracts for annual OmniMark maintenance at 31 December2005. SERVICES Stilo's core professional services competencies include:• Enterprise content management solution design • Content analysis and XML schema definition • Content processing application development • Complete content lifecycle process deployment and optimisation Over the last twenty years, Stilo personnel have built up a number ofspecialisations that are quite unique in the marketplace. For example, Stiloemployees were at the vanguard when CDROMs became a widespread e-Publishingphenomenon and it was Stilo expertise that made possible some of the mostsuccessful commercial offerings in this area. In the Aerospace and Defencesectors, Stilo has provided core technology and critical inputs to the largestprojects of standardisation as illustrated by the recent provision of consultingservices to Boeing in North America. The acquisition of Xia Systems (Content Engineering Division), Canada, inDecember 2004, significantly improved Stilo's services capabilities and itssuccessful integration helped grow services revenues in North America from£63,000 in 2004 to £341,000 in 2005. e-PUBLISHING SOLUTIONS In 2005 Stilo embarked upon a strategy of providing customers with e-Publishingsolutions to address particular business problems in the areas of technicaldocumentation, content conversion to XML and reference publishing. Stilo'sproducts, expertise and re-usable technology components, along with leadingthird party content management tools, provide 'total solutions' which acquire,manage and publish content to multiple delivery channels. Initial solutions offerings include: Stilo iTIP (interactive Technical Information Platform) Stilo's iTIP distributes complex technical information to large and widelydisseminated communities of users. The iTIP solution provides an integratedapproach to delivering technical documentation using simple web browsers so thatorganisations can maximize the benefits of electronic distribution, provide easyto use feedback mechanisms to enhance knowledge acquisition and qualityimprovements, whilst keeping deployment costs low. The combination of these capabilities makes the iTIP environment a completesolution for organisations which create, manage and deliver technicalinformation across the full product lifecycle, including mission-criticalequipment systems in the aerospace and defence, automotive, transportation,manufacturing and process engineering sectors. Stilo Conversion Factory The Stilo Conversion Factory reduces cost, improves quality, reduces risk andshortens schedules for content conversion projects. As an increasing number ofenterprise applications come to rely on rich content, which is encoded in XML,the need has emerged for a scaleable and adaptable conversion capability, whichcan be tightly integrated with existing processes and tools. The StiloConversion Factory provides this capability, converting any legacy document orsource format into any new target format. CUSTOMERS With offices in the UK, North America and France, Stilo supports customers in abroad range of market sectors including publishing, aerospace, automotive,telecommunications, IT, government and defence. Our customers includeLexisNexis, Boeing, Lockheed Martin, Airbus, Alcatel, IBM, SAP, BAe Systems,European Parliament, Italian Parliament and the International Atomic EnergyAgency. PROSPECTS In 2005 significant changes were made to the management team to support theexecution of the newly introduced e-Publishing solutions strategy. This ishaving a major positive impact upon operations and sales. Several developmentteam members have been transferred to services to support a growing order book. After several years of reducing losses, the Company is moving closer to annualprofitability. Sales have increased, overheads have been reduced and the cashposition stabilized. The outlook is very positive. We have begun 2006 in a much stronger position than 2005, with a solid pipelineof services income, maintenance contracts and improved software orders in thefirst two months of the year, and running ahead of budget. Our new solutionsstrategy will improve the effectiveness by which we take our products andservices to market in the future, and will enable us to build up ourintellectual property based upon solving critical customer problems. The Board is committed to an aggressive growth strategy. We will actively pursueacquisition and partnering opportunities that complement our growing range ofproducts, services and solutions. Barry WelckChairman Results for the year ended 31 December 2005Consolidated Profit and Loss Account 2005 2004 £'000 £'000 Turnover - continuing 2,099 1,916- discontinued - 160 _________ _________ 2,099 2,076Cost of sales (83) (102) _________ _________ Gross profit 2,016 1,974 Administrative expenses - normal (2,510) (2,928)- exceptional (73) (118) _________ _________ Operating loss - continuing (567) (669)- discontinued - (403) _________ _________ (567) (1,072) Exceptional item - division (28) (254)closure costsInterest receivable 8 27 _________ _________Loss on ordinary activities (587) (1,299)before taxationTaxation 52 46 _________ _________Loss on ordinary activities (535) (1,253)after taxation _________ _________Loss for the financial year (535) (1,253) _________ _________ ========= =========Loss per share (pence) (0.6) (1.56) _________ _________ =========Fully diluted loss per share (0.6) (1.56)(pence) _________ _________ ========= Statement of Total Recognised Gains and LossesFor the year ended 31 December 2005 2005 2004 £'000 £'000 Loss for the financial year (535) (1,253)Net investment in overseas subsidiaries (15) (45) _________ _________ (550) (1,298) _________ _________ Consolidated Balance Sheet as at 31 December 2005 2005 2004 £'000 £'000Fixed assetsIntangible assets 1,606 1,902Tangible assets 64 83 _________ _________ 1,670 1,985Current assetsDebtors 632 584Cash at bank and in hand 373 659 _________ _________ 1,005 1,243 Creditors: amounts falling due within one year (672) (675) _________ _________Net current assets 333 568 _________ _________ 2,003 2,553 _________ _________ Capital and reservesCalled up share capital 5,423 5,423Share premium account 5,349 5,349Merger reserve 658 658Profit and loss account (9,427) (8,877) _________ _________Equity shareholders' funds 2,003 2,553 _________ _________ Consolidated Cash Flow StatementFor the year ended 31 December 2005 2005 2004 £'000 £000 £'000 £'000 Net cash outflow from operating (320) (504)activities Returns on investments andservicing of financeInterest received 8 27 _________ _________Net cash inflow from returns oninvestments and 8 27servicing of finance Taxation Tax credit received 50 91 Capital expenditurePurchase of tangible fixed (19) (25)assetsProceeds from disposal of fixed - 4assets _________ _________Net cash outflow from capital (19) (21)expenditure Acquisitions and disposalsClosure costs - (219)Acquisition of division - (110)Goodwill purchased 5 - _________ _________Net cash outflow from (5) (329)acquisitions and disposals _________ _________Net cash outflow beforemanagement of liquid (286) (736)resources and financing Management of liquid resourcesDecrease / (increase) in short 227 (113)term deposits Financing Issue of ordinary share capital - 1,000Share issue costs - (79) _________ _________ - 921 _________ _________(Decrease) / Increase in cash (59) 72 _________ _________ ========= ========= Notes to the Preliminary Announcement For the year ended 31 December 2005 1. The financial information in this announcement does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. Statutory accounts for the previous financial year ended 31 December 2004 have been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified and did not contain any statement under section 237(2) or (3) of the Companies Act 1985. The auditors have given an unqualified report, and did not contain any statement under section 237(2) or (3) of the Companies Act 1985, on these statutory accounts. Copies of the Company's Report and Accounts will be sent to shareholders shortly and will be available at the registered office of the Company: 2 Bloomsbury Street, London WC1B 3ST. 2. The consolidated accounts include the accounts of the Company and its subsidiary undertakings and have been prepared using acquisition accounting principles. 3. The basic earnings per share is calculated on the weighted average number of shares in issue during the year of 90,228,470 (2004: 80,228,470). 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 90,228,470 (2004: 80,228,470). 4. The directors do not recommend the payment of a final dividend (2004: nil). This information is provided by RNS The company news service from the London Stock Exchange