Stilo Regulatory News (STL)

13 Sep 2005 07:00

Stilo International PLC13 September 2005 13 September 2005 STILO INTERNATIONAL PLC INTERIM RESULTS FOR 6 MONTHS ENDED 30 JUNE 2005 Stilo International plc ("Stilo" or the "Company"), the AIM quoted XML ContentEngineering solutions company, today announces its Interim Results for the 6months ended 30 June 2005. Highlights • Loss before taxation before exceptional items and amortization of goodwill of £237,000 masks successive trading improvement in the last four quarters. Q1 2005 trading loss of £193,000, Q2 2005 trading loss of £44,000. • Profitable trading in June, July and August with positive momentum set to continue in H2. • Successful integration of Xia Systems (Content Engineering Division). • Maintenance revenues from content engineering software increased by 15% to £378,000. • First sale of Stilo CF2, Stilo's content processing framework, to a major publishing company, worth £170,000. • Customers in this period include Boeing, International Atomic Energy Agency (IAEA), Wolters Kluwer, Lockheed Martin, Sikorsky Aircraft, United Airlines, Italian Parliament, Snecma Moteurs and Lamy. • OmniMark v8 scheduled for release in Q4 2005. • New XML solutions to be launched in Q3 2005. Barry Welck, Chairman, commenting on the Group's performance, stated, "The Board is pleased to say that after five years of fundamental losses theCompany now sees the likelihood of month on month profitability. For the firsttime we have had three consecutive months of profitability. The business modelis sustainable with overheads in line with revenues, with an increasingportfolio of saleable products and solutions. The Board understands the challenges ahead and are now considering how Stilo canbecome a significantly larger enterprise with sustainable profits, withoutchallenging the foundations in place and within current cash constraints. The results for the period do not show the significant progress being made bythe Company, with timing differences of one large customer adversely affectingannual comparisons. Successive trading improvements have been made in theprevious four quarters, with profitable trading in the three months up to theend of August 2005, which the management expects to continue in the second half. With the successful integration of Xia Systems accomplished, and new solutionsand product releases planned for the second half, the Company is well placed tofurther build upon its improving trading performance." Enquiries: Les Burnham, Chief Executive, Stilo International plc 01793 441444 Russell Cook, Charles Stanley & Co. Limited 020 7739 8200 Ian Seaton, Bankside Consultants 020 7367 8891 Chairman's Statement I am pleased to announce Stilo's unaudited results for the six months ended 30June 2005 and to report upon the progress made by the Company during the period. The Company continues its transformation to an XML solutions organisation,providing both specialist services and supporting technologies. Strategy Stilo is a global company specializing in Content Engineering. By developingmarket-leading technologies which drive high-value solutions, Stilo deliverssignificant benefits to blue chip companies and organisations for which thequality, timeliness and cost-effectiveness of the content of information is acritical factor for success.Stilo provides XML content processing tools and solutions which helporganisations solve complex content conversion and publishing problems. By applying highly efficient automation to complex content processes, Stilohelps customers contain existing systems infrastructure and support costs. Byseeking ways to leverage the technology assets and personnel skills that acustomer already possesses, Stilo can often postpone, or, even better, eliminatecompletely the need to invest in completely new infrastructure and capabilities. Results There was a slow start to the year following the closure of the KnowledgeEngineering Division and acquisition of Xia Systems Corporation (contentengineering division) at the end of 2004, now successfully integrated. The interim trading loss of £237,000 masks the successive improvements which theCompany has made in the last four quarters in its trading position. A tradingloss of £193,000 in Q1 was followed by a much reduced trading loss of £44,000 inQ2 and profitable trading in June, July and August is expected to continue inthe second half of 2005. Total sales revenues for the period were £905,000 (2004: £1,231,000). Timingdifferences between the periods for one large sale account for the majority ofthis reduction. Total operating costs have been reduced by 16% compared to thesame period in 2004 following the closure of the Knowledge Engineering Division,and are now running at approximately £2.2m annually. Loss before taxation beforeexceptional items and goodwill amortization for the period was £237,000 (2004:£128,000 loss). Non-recurring exceptional costs for the period totalled £40,000, comprisingstaff redundancy costs. The goodwill amortisation of £155,000 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 over 200 contracts, grew 15% to£378,000. The Company had a cash balance of £340,000 as at 30 June 2005. Customers During H1 the first sale of StiloCF2, which provides a framework for managingcontent processing tasks, was made to a leading publisher and implementation isnow underway. A Stilo project team is currently involved in improving publishing processes atthe International Atomic Energy Agency in Vienna. The Italian Parliamentrecently purchased OmniMark to help publish parliamentary proceedings to theWeb. In North America consulting assignments are being undertaken at Boeing,helping them to better manage technical information. Other customers during theperiod include Wolters Kluwer, Lockheed Martin, Sikorsky Aircraft, UnitedAirlines, Snecma Moteurs and Lamy. Our blue chip customers and level ofconsulting assignments reflect the high quality software and expertise thatStilo provides. Partners Stilo's products and expert professional services complement those offered byvendors of content management systems and leading systems integrators. Softwaretechnology partners include Documentum and SAP. Toshiba distributes Stiloproducts in Japan. Products and Technologies 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. OmniMark version 8 is planned for release in Q4 2005. Stilo CF2 StiloCF2 provides a framework which enables organizations to improve themanagement of what can be typically hundreds of inter-related content processingapplications, reducing the time and costs of implementing and maintainingenterprise publishing systems. The first implementation of StiloCF2 has recentlybegun. Interactive Technical Information Platform (ITIP) Originally developed for the Canadian Military, ITIP provides design engineers,system maintainers, operators and instructors with an interactive viewingcapability, providing Web-access to repositories of existing information andsources of technical documentation. Initial marketing of ITIP is now underway,with encouraging preliminary results. Content Processing Solutions The first of a planned set of XML content processing solutions is planned to belaunched in Q3 2005, comprising both technology and professional services. Thesewill provide full content lifecycle support to customers, incorporating contentconversion and publishing capabilities. Outlook The Board is pleased to say that after five years of fundamental losses theCompany now sees the likelihood of month on month profitability. For the firsttime we have had three consecutive months of profitability. The business modelis sustainable with overheads in line with revenues, with an increasingportfolio of saleable products and solutions. The Board understands the challenges ahead and are now considering how Stilo canbecome a significantly larger enterprise with sustainable profits, withoutchallenging the foundations in place and within current cash constraints. The results for the period do not show the significant progress being made bythe Company, with timing differences of one large customer adversely affectingannual comparisons. Successive trading improvements have been made in theprevious four quarters, with profitable trading in the three months up to theend of August 2005, which the management expects to continue in the second half. With the successful integration of Xia Systems accomplished, and new solutionsand product releases planned for the second half, the Company is well placed tofurther build upon its improving trading performance. Barry WelckChairman13 September 2005 Consolidated Profit and Loss Accountfor the six months ended 30 June 2005 Six months Six months Year to to 30 June to 30 June 31 December 2005 2004 2004 Unaudited Unaudited Audited £'000 £'000 £'000 Turnover - continuing 905 1,143 1,916- discontinued - 88 160 Cost of sales (31) (45) (102) --------- --------- ----------Gross profit 874 1,186 1,974 Administrative expenses - normal (1,117) (1,326) (2,664)- exceptional (40) (108) (118)- amortisation of goodwill (155) (132) (264) --------- --------- ----------Operating loss - continuing (438) (140) (669)- discontinued - (240) (403) Exceptional item - division closurecosts - - (254)Interest receivable 6 12 27 --------- --------- ----------Loss on ordinary activities beforetaxation (432) (368) (1,299)Taxation - - 46 --------- --------- ----------Loss for the period (432) (368) (1,253) --------- --------- ----------Loss per share (note 5) (0.48p) (0.52p) (1.56p) --------- --------- ---------- Consolidated Statement of Total Recognised Gains and Lossesfor the six months ended 30 June 2005 Six months Six months Year to to 30 June to 30 June 31 December 2005 2004 2004 Unaudited Unaudited Audited £'000 £'000 £'000Loss for the financial period (432) (368) (1,253) Exchange adjustments on foreigncurrency investments 3 (13) (45) --------- --------- ----------Total recognised losses relating tothe period (429) (381) (1,298) --------- --------- ---------- Consolidated Balance Sheetas at 30 June 2005 As at As at As at 30 June 30 June 31 December 2005 2004 2004 Unaudited Unaudited Audited £'000 £'000 £'000Fixed assetsIntangible assets 1,757 1,939 1,902Tangible assets 81 134 83 --------- --------- ---------- 1,838 2,073 1,985Current assetsDebtors 566 889 584Cash at bank and in hand 340 1,215 659 --------- --------- ---------- 906 2,104 1,243Creditors: (620) (707) (675)Amounts falling due within one year --------- --------- ----------Net current assets 286 1,397 568 --------- --------- ----------Total net assets 2,124 3,470 2,553 --------- --------- ----------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 (9,306) (7,960) (8,877) --------- --------- ----------Equity shareholders' funds 2,124 3,470 2,553 --------- --------- ---------- Consolidated Cash Flow Statementfor the six months ended 30 June 2005 Six months to Six months to Year to 30 June 30 June 2005 2004 31 December £'000 £'000 2004 Unaudited Unaudited £'000 AuditedNet cash outflowfrom operatingactivities (363) (187) (504) Returns on investments and servicingof financeInterest received 6 12 27 --------- --------- ----------Net cash inflow fromreturns oninvestments andservicing of finance 6 12 27 --------- --------- ----------Tax received 50 - 91 Capital expenditurePurchase of tangiblefixed assets (12) (5) (25)Proceeds fromdisposal of fixedassets - 4 --------- --------- ----------Net cash outflowfrom capitalexpenditure (12) (5) (21) --------- --------- ----------Acquisitions and disposalsClosure costs - - (219) Acquisition ofdivision - - (110) --------- --------- ----------Net cash outflowfrom acquisitionsand disposals - - (329)Net cash outflowbefore management ofliquid resources andfinancing (319) (180) (736) Management of liquid resourcesDecrease /(increase) in shortterm deposits 236 (600) (113) Financing Issue of ordinaryshare capital - 1,000 1,000 Share issue costs - (79) (79) --------- --------- ----------Net cash inflow fromfinancing - 921 921 (Decrease) /increase in cash (83) 141 72 --------- --------- ---------- Notes to the Interim Accountsfor the six months ended 30 June 2005 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 2004 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 auditors' 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 2004 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. 5. The basic earnings per share is calculated on the weighted average number of shares in issue during the year. 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 2005 was 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