Stilo Regulatory News (STL)

6 Sep 2006 07:01

Stilo International PLC06 September 2006 6 September 2006 STILO INTERNATIONAL PLC INTERIM RESULTS FOR SIX MONTHS ENDED 30 JUNE 2006 Stilo International plc ("Stilo" or the "Company"), the AIM quoted software andservices company, today announces its Interim Results for the six months ended30 June 2006. Highlights • Profit before taxation, before exceptional items and amortisation of goodwill, of £86,000 (2005: £237,000 loss). The Company has shown a trading profit for the second successive six month period (H2 2005, trading profit £52,000). • Acquisition of Engineering Solutions business from Proceed Holdings Limited, completed 31 July 2006. • Sales Revenues increased by 21% to £1,096,000 (2005: £905,000) • Software licence revenues increased by 18% to £418,000 (2005: £354,000) • Revenue from professional services increased by 72% to £295,000 (2005: £172,000) • Operating costs, excluding exceptional items and goodwill amortisation, reduced by 11% to £989,000 (2005: £1,117,000) • Customers in this period included Boeing, International Atomic Energy Agency, Wolters Kluwer, Hewlett Packard, IBM, Canadian Competition Bureau, Toshiba and the European Parliament. Barry Welck, Chairman, commenting on the Company's performance, stated, 'The Board is pleased to report the second successive six month period oftrading profitability, with an increase in sales revenues and reduction inoverheads. In the second half of 2006, the Company will make additionalinvestments in sales and marketing in order to promote its growing range ofproducts, professional services and industry solutions. The recent acquisition of the Engineering Solutions business from ProceedHoldings Limited has got off to a very encouraging start, and we will continueto look to grow the business organically and through further acquisitions.' Enquiries: Les Burnham, Chief Executive, Stilo International plc 01793 441444 Russell Cook, Charles Stanley Securities 020 7739 8200 Chairman's Statement I am pleased to announce Stilo's unaudited interim results for the six monthsended 30 June 2006 and to report upon the continued progress made by the Companyduring the period. Strategy Stilo provides leading solutions for Product Lifecycle Management, DocumentManagement and e-Publishing to customers in Aerospace & Defence, Manufacturing,IT, Telecommunications, Publishing and Government. Stilo e-publishing solutions deliver high quality information that isup-to-date, precisely tailored and widely accessible through online portals,distributed media, high-quality print and mobile devices. These solutionsleverage: • Content engineering services that provide customers with access to Stilo's extensive experience in delivering solutions that deploy XML to enable content re-use and optimised single-source publishing. • OmniMark, the world's leading content processing platform, that delivers a proven answer to the challenges of large-scale content conversion to XML, complex content integration and advanced multi-format publishing. The acquisition of the Engineering Solutions business of Proceed HoldingsLimited, completed 31 July 2006, has enabled Stilo to establish a specialistcapability in the provision of solutions for SAP customers, delivered by IT andengineering experts with a deep understanding of the SAP marketplace, includingProduct Lifecycle Management, Document Management, Data Migration and SAPPackaged Services. Operating from offices in the UK, France and North America, we support anextensive list of customers including Boeing, IBM, International Atomic EnergyAgency, Wolters Kluwer, Hewlett Packard, Canadian Competition Bureau, Toshibaand the European Parliament Results The Company has continued to build upon the trading improvements seen in thesecond half of 2005. The interim trading profit before taxation, and before exceptional items andgoodwill was £86,000 (2005: £237,000 loss). This was the second successive sixmonth period that Stilo has shown a trading profit (H2 2005: trading profit£52,000 profit). Total sales revenues for the period increased by 21% to £1,096,000 (2005:£905,000), including a 72% growth in professional services revenues to £295,000(2005: £172,000). Software licence sales increased by 18% to £418,000 (2005:£354,000) although timing differences between the periods for one large saleaccounted for this increase. Total operating costs, excluding exceptional itemsand goodwill amortisation, have been further reduced by 11% compared to the sameperiod in 2005, following the decision to close the Company's Mechelen office inBelgium. Non-recurring exceptional costs for the period totalled £39,000, comprisingstaff redundancy costs. The goodwill amortisation of £147,000 relates to the purchase of OmniMarkTechologies Corporation in 2001, and to the purchase of Xia Systems Corporation,Content Engineering Division, in 2004. Annual maintenance revenues, now comprising 153 contracts, were sustained at£383,000. The Company had a cash balance of £321,000 as at 30 June 2006 (30 June 2005:£340,000). Acquisition of Engineering Solutions business 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. Stilo Products OmniMark OmniMark provides an application development and high performance run-timeenvironment for XML content processing applications. Users of OmniMark productsare able to reduce significantly the time and costs of developing andmaintaining new content processing applications, whilst ensuringhigh-performance levels of execution which is especially critical to major webapplications. Stilo Industry e-Publishing Solutions Interactive Technical Information Publisher (iTIP) The iTIP solution has evolved over a 10 year period as a proven approach todistributing complex technical information to large and widely-distributed usercommunities. iTIP is an integrated approach to delivering technicaldocumentation using simple web browsers and low-cost add-on components so thatorganizations can maximize the benefits of electronic distribution while keepingcosts as low as possible. Stilo has implemented this solution formission-critical equipment systems across the Aerospace & Defence sector and hasadapted its use in performance support applications for others sectors such asTransportation. Conversion Factory The Stilo Conversion Factory reduces cost, improves quality, mitigates risk andshortens schedules for content conversion projects. As an increasing number ofenterprise applications come to rely on rich content, encoded in XML, the needgrows for a scalable and adaptable conversion capability that can be tightlyintegrated with existing processes and tools. The Stilo Conversion Factory meets this requirement with the proven combinationof a robust conversion platform, process best practices, and implementationservices guided by almost 20 years of data conversion experience. Outlook The Board is pleased to report the second successive six month period of tradingprofitability, with an increase in sales revenues and reduction in overheads. Inthe second half of 2006, the Company will make additional investments in salesand marketing in order to promote its growing range of products, professionalservices and industry solutions. The recent acquisition of the Engineering Solutions business from ProceedHoldings Limited has got off to a very encouraging start, and we will continueto look to grow the business organically and through further acquisitions. Barry WelckChairman6 September 2006 Consolidated Profit and Loss Accountfor the six months ended 30 June 2006 Six months Six months Year to to 30 June to 30 June 31 December 2006 2005 2005 Unaudited Unaudited Audited £'000 £'000 £'000 Turnover - continuing 1,096 905 2,099 Cost of sales (23) (31) (83) ___________ ___________ ___________Gross profit 1,073 874 2,016 Administrative expenses - normal (989) (1,117) (2,209) - exceptional (39) (40) (73) - amortisation of goodwill (147) (155) (301) ___________ ___________ ___________ Operating loss - continuing (102) (438) (567) Exceptional item - division closure costs - - (28)Interest receivable 2 6 8 ___________ ___________ ___________ Loss on ordinary activities before taxation (100) (432) (587)Taxation - - 52 ___________ ___________ ___________ Loss for the period (100) (432) (535) ___________ ___________ ___________ Loss per share - basic and fully diluted (note 5) (0.11p) (0.48p) (0.6p) ___________ ___________ ___________ Consolidated Statement of Total Recognised Gains and Lossesfor the six months ended 30 June 2006 Six months Six months Year to to 30 June to 30 June 31 December 2006 2005 2005 Unaudited Unaudited Audited £'000 £'000 £'000Loss for the financial period (100) (432) (535) Exchange adjustments on foreign currency investments (1) 3 (15) ___________ ___________ ___________Total recognised losses relating to the period (101) (429) (550) ___________ ___________ ___________ Consolidated Balance Sheetas at 30 June 2006 As at As at As at 30 June 30 June 31 December 2006 2005 2005 Unaudited Unaudited Audited £'000 £'000 £'000 Fixed assetsIntangible assets 1,459 1,757 1,606Tangible assets 59 81 64 ___________ ___________ ___________ 1,518 1,838 1,670Current assetsDebtors 652 566 632Cash at bank and in hand 321 340 373 ___________ ___________ ___________ 973 906 1,005Creditors:Amounts falling due within one year (589) (620) (672) ___________ ___________ ___________ Net current assets 384 286 333 ___________ ___________ ___________ Total net assets 1,902 2,124 2,003 ___________ ___________ ___________ Capital and reservesCalled up share capital 5,423 5,423 5,423Share premium account 5,349 5,349 5,349Merger reserve 658 658 658Profit and loss account (9,528) (9,306) (9,427) ___________ ___________ ___________ Equity shareholders' funds 1,902 2,124 2,003 ___________ ___________ ___________ Consolidated Cash Flow Statementfor the six months ended 30 June 2006 Six months to 30 Six months to 30 Year to June June 31 December 2006 2005 2005 £'000 £'000 £'000 Unaudited Unaudited Audited Net cash outflow from operating activities (48) (363) (320) Returns on investments and servicing of financeInterest received 2 6 8 ___________ ___________ ___________ Net cash inflow from returns on investments andservicing of finance 2 6 8 ___________ ___________ ___________ Tax credit received - 50 50 Capital expenditurePurchase of tangible fixed assets (6) (12) (19)Proceeds from disposal of fixed assets - ___________ ___________ ___________ Net cash outflow from capital expenditure (6) (12) (19) ___________ ___________ ___________ Acquisitions and disposalsGoodwill purchased - - (5) ___________ ___________ ___________ Net cash outflow from acquisitions and disposals - - (5)Net cash outflow before management of liquid resourcesand financing (52) (319) (286) Management of liquid resourcesDecrease in short term deposits 87 236 227 Increase / (decrease) in cash 35 (83) (59) ___________ ___________ ___________ Notes to the Interim Resultsfor the six months ended 30 June 2006 1. The interim results are unaudited and do not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. The figures for the year ended 31 December 2005 have been extracted from the statutory accounts which have been reported on by the Company's auditors and have been delivered to the Registrar of Companies. The auditor's report did not contain any statement under Section 237(2), (3) or (4) of the Companies Act 1985. 2. The interim financial statements have been prepared in accordance with applicable accounting standards and under the historical cost convention. 3. The principal accounting policies have remained unchanged from those set out in the 2005 accounts. 4. The results of Stilo Corporation (formerly OmniMark Technologies Corporation) and its subsidiaries have been consolidated using the acquisition method and the goodwill arising on consolidation is being amortised over 10 years. Goodwill arising upon the acquisition of Xia Systems is being amortised over 3 years. 5. 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 exercise price of the share options was more than the average share price for the period and therefore no adjustment to the basic earnings per share is necessary in respect of shares under option. The weighted average number of ordinary shares in issue for the six months to 30 June 2006 was 90,228,470 shares (30 June 2005: 90,228,470 shares). 6. Copies of this report will be sent to shareholders shortly and will be available to the public from the company's registered office, 2 Bloomsbury Street, London, WC1B 3ST. This information is provided by RNS The company news service from the London Stock Exchange