Stilo Regulatory News (STL)

19 Mar 2008 07:45

Stilo International PLC19 March 2008 19 March 2008 STILO INTERNATIONAL PLC Preliminary announcement of results for twelve months ended 31 December 2007 Stilo International plc ("Stilo" or the "Company") (LSE:STL), the AIM quotedsoftware and services company, today announces its unaudited results for thetwelve months ended 31 December 2007. Highlights • Sales revenues increased by 8% to £2,436,000 (2006: £2,264,000) • Profit before taxation, before exceptional items and write-down of intangible assets, of £73,000 (2006: £9,000) • Basic earnings per share of 0.09p (2006: loss per share 0.16p) • Results adversely affected by a weak US dollar by £95,000 compared to the average rates in 2006 • Collaborative software development successfully completed with major North American customer • Development of Stilo Migrate, the world's first on-demand content migration service, nearing completion • Consolidation of European operations Barry Welck, Chairman, commenting on the Company's performance, stated, "The Company has made steady progress in 2007, increasing both sales revenuesand profits, notwithstanding the adverse exchange rate effects of trading inNorth America. Having consolidated operations in Europe, we have invested significantly in thedevelopment of Stilo Migrate, the world's first on-demand content migrationservice, due to be released in 2008. We have received considerable earlyinterest in Migrate, and have already won an initial order from a majorhigh-tech customer prior to its general release. With a strong opening orderbook for professional services in North America, the impending launch of a new,jointly developed solution for the Aviation industry, and the release ofOmniMark v9 later in 2008, we look forward to the future with confidence." Enquiries: Stilo International plc 01793 441444Les Burnham, Chief Executive Charles Stanley Securities 020 7149 6000Nominated AdviserRussell Cook Chairman's Statement I am pleased to announce Stilo's unaudited results for the twelve months ended31 December 2007 and to report upon the continued progress made by the Companyduring the period. Strategy Stilo provides software and services to help major enterprises automate theprocessing of technical and complex information. Operating from offices in the UK and Canada, we support customers in Aerospace &Defence, Manufacturing, IT, Telco, High Tech, Publishing and Government. Ourclients include Boeing, Airbus, IBM, SAP, BAe, Wolters Kluwer, ThomsonPublishing, British Library, Japan Patent Office and the European Parliament. In the latter part of 2007, we re-organised our operations into the followingcomplementary business divisions, to better reflect our key sales and marketingfocus i.e. • Content Processing Solutions • On-Demand Content Migration Services • Solutions for users of SAP ERP systems In each area of expertise, Stilo can justifiably claim a position of marketleadership. Results The company is pleased to announce that it has returned a trading profit for thesecond consecutive year. In 2007, results show a trading profit (beforeexceptional items and amortisation of intangibles) for the year of £73,000(2006: £9,000). For the first time, there was a profit from continuingoperations, after taxation of £94,000 (2006: restated - £144,000 loss). Total sales revenue for the period increased by 8% to £2,436,000 (2006:£2,264,000). Administrative expenses, excluding exceptional items, rose slightly in the yearto £2,128,000 (2006: £2,102,000) although this includes a full year of the SAPsolutions business acquired in August 2006 from Proceed Engineering Solutions.In Europe, with the closure of the Paris office, cost savings of £230,000 wereachieved, compared to 2006. European operations are now centred in the UK. Non-recurring exceptional costs for the year totalled £105,000, consisting ofstaff redundancy costs, associated legal fees and office closure costs. At 31 December 2007, the cash position had reduced to £236,000 (2006: £420,000),although there were higher trade receivables at 31 December 2007, and collectionof these in the early part of 2008, meant that by 29 February 2008, the groupcash position was £466,000. In the Content Processing Solutions business, sales decreased to £1,602,000(2006: £1,840,000), primarily as a result of declining software orders andcustomer delays in placing project service contracts. However, this was offsetby cost reductions in Europe referred to above. Professional services revenue inNorth America increased by 22% to £409,000 (2006: £334,000), and the ContentProcessing business overall continued to be underpinned by recurring annualsoftware maintenance revenues of £731,000 in 2007, generated from 170 customercontracts. The group suffered adverse effects from trading in North America with revenuedeflated as a result of a weak US dollar. The adverse impact on the results was£95,000 compared to the average rates in 2006. Research and development expenditure totalled 10% of sales revenues, at £245,000(2006: £155,000), including investment relating to the ongoing development ofOmniMark and the development of Stilo Migrate which commenced in the second halfof 2007. Expenditure on Stilo Migrate has been capitalised in 2007 as anintangible asset. The SAP Solutions business achieved sales revenue of £834,000 in the year (2006:£412,000) and made a positive contribution to overall profitability. In August 2007 the Company paid a sum of £90,000 in deferred consideration ("Initial Deferred Consideration") to Proceed Holdings. The Initial DeferredConsideration was payable based upon the achievement of a turnover target of noless than £750,000 for Engineering Solutions in the year ended 31 July 2007. Asannounced at the time of the acquisition, Proceed Holdings agreed to reinvestthe sum of £90,000 by subscribing for 4,500,000 new 1p Ordinary shares in Stiloat 2p per share. The accompanying results for the year ended 31 December 2007 have been preparedfor the first time (for a full year) in accordance with International FinancialReporting Standards as adopted by the European Union as now required for AIMcompanies. Content Processing Solutions Stilo specialises in building high-performance content processing solutions thatacquire, enrich and ultimately deliver content to enterprise information portalsand supply chain partners. With over twenty years experience in content engineering, we build solutionsthat process content in all its forms, including combinations of data, plaintext, hypertext and markup text (XML, SGML, HTML). Typical applications includeperformance support portals for equipment maintenance engineers in the Aerospaceand Defense, Automotive and Engineering sectors, where immediate access todetailed information can be of critical importance. We are particularly pleased to report the successful completion in late 2007 ofa collaborative software development with a major Air Cargo Services provider inNorth America. Details remain confidential, prior to its planned launch in April2008, but the application will be marketed by our development partner into theAviation sector, with Stilo providing technical support services to prospectivecustomers as required. We are optimistic as to the potential new marketopportunity this represents. When developing content processing solutions for clients, we typically deployStilo's OmniMark content processing platform within enterprise informationarchitectures. OmniMark is a well-proven technology, designed from the groundup, to address the requirements of high-performance, enterprise contentprocessing applications. It is used throughout the content lifecycle, includingthe initial conversion of content from legacy formats to XML/SGML, and duringthe enrichment and delivery of that content to publishing systems or othertarget applications.. OmniMark is deployed in publishing systems across a range of market sectors.Customers for OmniMark during the period included Boeing, Wolters Kluwer, IBM,International Atomic Energy Agency and the European Parliament. The BritishLibrary was a new customer in 2007, using OmniMark in their e-journals INGESTproject, whereby the Library will accept e-journals from Scientific & Technicalpublishers, archive them, and subsequently make them generally available online.The project forms one part of a wider Library initiative to archive and manage awhole range of digital publications in the future. On-Demand Content Migration Services During 2007 we began the development of Stilo Migrate, the world's firston-demand content migration service. It is the embodiment of Stilo's extensivecontent engineering expertise and advanced content processing technology, and isreflective of the general market adoption of Software as a Service (SaaS).Scheduled to launch in 2008, Stilo Migrate is set to revolutionise the marketfor content migration services, massively simplify the content conversionprocess, and significantly reduce associated project timescales and costs.Accessible 24x7 from anywhere in the world, it will enable users to uploadsource documents over the internet and migrate content to target XML formats, ona pay-as-you-use basis. Stilo is very encouraged at the potential market opportunity and the initialinterest shown by leading companies, as XML becomes increasingly adopted byorganisations around the world for single-source publishing applications. Solutions for users of SAP ERP systems In the UK, Stilo provides consulting services to users of SAP ERP systems,specialising in the disciplines of Product Lifecycle Management and DocumentManagement. We offer global clients high-level strategic consulting anddevelopment services, and our customers include Augusta Westland, BAe Systemsand Waters Micromass. In late 2007 we launched the first of a range of low-costStilo software solutions that enable customers to rapidly extend thefunctionality, and therefore value, of existing SAP ERP installations. Research and Development In 2007 we invested 10% of sales revenues in Research and Development and intendto increase this further in 2008, primarily in the ongoing development ofOmniMark and Stilo Migrate. Both OmniMark v9 and the initial version of StiloMigrate are scheduled for release in 2008. Operations During 2007, European operations were consolidated in the UK, with the closureof Stilo SARL and the Paris office. Significant cost savings have been made as aresult, whilst customer service levels have been maintained. As at 31 December 2007, the group employed 27 full-time employees, with 14located in North America and 13 in Europe. Outlook The Company has made steady progress in 2007, increasing both sales revenues andprofits, notwithstanding the adverse exchange rate effects of trading in NorthAmerica. Having consolidated operations in Europe, we have invested significantly in thedevelopment of Stilo Migrate, the world's first on-demand content migrationservice, due to be released in 2008. We have received considerable earlyinterest in Migrate, and have already won an initial order from a majorhigh-tech customer prior to its general release. With a strong opening orderbook for professional services in North America, the impending launch of a new,jointly developed solution for the Aviation industry, and the release ofOmniMark v9 later in 2008, we look forward to the future with confidence. Unaudited Group Income Statement Year ended 31 December 2007 2006 (restated) £'000 £'000 Unaudited AuditedRevenue 2,436 2,264 Cost of sales (240) (157) ________ ________ Gross profit 2,196 2,107 Administrative expenses (2,128) (2,102)Exceptional expenses (105) (169)Write down of intangible assets (30) - ________ ________ Operating loss (67) (164) Finance Income 5 4 ________ ________Loss before tax (62) (160)Income tax 156 16 ________ ________Profit / (loss) for the year 94 (144) ________ ________Earnings / (loss) per share - basic and diluted 0.09p (0.16)p ________ ________ Group Statement of Recognised Income and Expense for the year ended 31 December 2007 2006 £'000 £'000 Unaudited AuditedForeign currency translation differences 26 (32) _________ _________Net income / (expense) recognised directly in equity 26 (32)Profit / (loss) for the year 94 (144) _________ _________Total recognised income and expense for the year attributable to the equity 120 (176)shareholders or the parent _________ _________ Unaudited Group Balance Sheet As at 31 December 2007 2006 (restated) £'000 £'000 Unaudited AuditedNon-current assetsGoodwill and other intangible assets 1,895 1,804Plant and equipment 32 37Deferred tax asset 100 - _________ _________ 2,027 1,841Current assetsTrade and other receivables 725 557Income tax receivable 56 17Cash and cash equivalents 236 420 _________ _________ 1,017 994 Total Assets 3,044 2,835 _________ _________ Current LiabilitiesTrade and other payables 816 727 _________ _________ Equity attributable to equity holdersof the parentCalled up share capital 5,568 5,523Shares to be issued - 45Share premium account 5,485 5,485Merger reserve 658 658Profit and loss account (9,483) (9,603) _________ _________Total equity 2,228 2,108 _________ _________Total equity and liabilities 3,044 2,835 _________ _________ Unaudited Group Cash Flow Year ended 31 December 2007 2006 (restated) Unaudited Audited £'000 £000 £'000 £'000Cash flows from operating activities(Loss) before taxation (62) (160)Adjustment for depreciation and amortisation 61 38Adjustment for investment income (5) (4)Adjustment for foreign exchange differences 11 -(Increase)/decrease in trade and other (168) 17receivablesIncrease in payables 89 23 _________ _________Cash generated from operations (74) (86)Tax credit received 17 57 _________ _________Net cash utilised in operating activities (57) (29) Cash flows from investing activitiesFinance income 5 4Acquisition of intangible assets (106) -Purchase of plant and equipment (26) (11)Goodwill purchased (90) (108) _________ _________Net cash used in investing activities (217) (115) Financing activitiesIssue of ordinary share capital 90 191 _________ _________Net cash in from financing activities 90 191 Net (decrease) / increase in cash and cash (184) 47equivalents Cash and cash equivalents at beginning of year 420 373 _________ _________Cash and cash equivalents at end of year 236 420 _________ _________ Notes to the unaudited preliminary financial results 1. The figures for the year ended 31 December 2007 and 2006 do notconstitute statutory accounts within the meaning of S.240 of the Companies Act1985. The figures for the year ended 31 December 2007 have been extracted fromthe statutory accounts for that year which have yet to be delivered to theRegistrar of Companies and on which the auditor has yet to issue an opinion. Thefigures for the year ended 31 December 2006 have been extracted from thestatutory accounts for that year which have been delivered to the Registrar ofCompanies and on which the auditor has issued an unqualified audit report,having been restated under International Financial Reporting Standards. Nostatement has been made by the auditor under Section 237(2) or (3) of theCompanies Act 1985 in respect of either of these sets of accounts. Thisannouncement was approved by the board of directors on 18 March 2008. 2. The consolidated financial statements have, for the first time, beenprepared in accordance with International Financial Reporting Standards adoptedby the International Accounting Standards Board ('IASB') and interpretationsissued by the International Financial Reporting Interpretations Committee of theIASB (together 'IFRS') as endorsed by the European Union. The information inthis preliminary statement has been extracted from the unaudited financialstatements for the year ended 31 December 2007 and as such, does not contain allthe information required to be disclosed in the financial statements prepared inaccordance with the International Financial Reporting Standards ('IFRS'). 3. Earnings per Share. The basic earnings per share is calculated on theprofit for the financial year of £94,000 (2006: restated - £144,000 loss), andon the weighted average number of shares in issue during the year of 102,103,470(2006: 91,936,803). The fully diluted earnings per share takes account ofoutstanding options which results in a weighted average number of shares inissue during the year of 109,651,090 (2006: 91,636,803). 4. The directors do not recommend the payment of a final dividend (2006:£nil). 5. These financial statements are presented in sterling as that is thecurrency of the primary economic environment in which the Group operates. 6. Copies of the 2007 Annual Report and Accounts will be posted toshareholders in April. Further copies may be obtained by contacting the CompanySecretary at the registered office. The annual general meeting is due to be heldat 2 Bloomsbury Street, London at 11.30am on 22 May 2008. This information is provided by RNS The company news service from the London Stock Exchange