Final Results & Investor Presentation

08 April 2025

Dillistone Group Plc("Dillistone", the "Company" or the "Group") Final Results

& Investor Presentation

Dillistone Group Plc, the AIM quoted supplier of software for the international recruitment industry, is pleased to announce its audited final results for the 12 months ended 31 December 2024 ("FY2024").

Highlights:

· Profit before tax of £0.013m (2023: loss £0.104m), first profit before tax since 2016.

· Operating cash before working capital adjustments margin at highest point since flotation at 26.8% (FY2023: 21.6%).

· Net cash from operating activities down 10% at £0.959m (2023: £1.065m).

· CBIL debt reduced by £0.300m in the year.

· Adjusted operating profit increased by 22% to £0.269m (2023: £0.220m).

· EBITDA margin increased to 26.2% (2023: 23.5%) despite EBITDA decreasing slightly by 2% to £1.286m (2023: £1.314m).

· Recurring revenues represented 90% (2023: 89%) of Group revenue. This equates to 121% of administration + cost of sales expenses (excluding depreciation / amortisation / exceptional costs).(2023: 116%).

· Revenue decreased by 12% to £4.903m (2023: £5.595m) reflecting challenging market conditions.

Commenting on the results and prospects, Giles Fearnley, Non-Executive Chairman, said:

" I am delighted to report a positive set of results in what has been, and continues to be, a challenging period for our primary markets."

"The underlying business is primed for when the market recovers, with EBITDA margins and operational cash margins (excluding working capital moves) at levels not seen in its recent history."

"The Group has made a solid start to the year with Q1 performance in line with management expectations. While new business opportunities continue to reflect the challenging market, our improving competitiveness allowed us to achieve our best quarter for new business contract wins since Q1 2023. With recurring revenues forecast to cover 103% of administrative costs, we remain confident in our ability to achieve further progress through 2025."

Investor Presentation: 15:00 BST on Tuesday 8 April 2025

Dillistone is pleased to announce that Jason Starr and Ian Mackin will provide a live presentation relating to the Full Year Results via the Investor Meet Company platform today at 15:00 BST.

The presentation will enable existing and prospective investors the opportunity to listen to management discuss the Group's financial results for the year ended 31 December 2024. Questions can be submitted pre-event via your Investor Meet Company dashboard during the live presentation.

Investors can sign up to Investor Meet Company for free and can join the Dillistone presentation via the following link:

https://www.investormeetcompany.com/dillistone-group-plc/register-investor

Enquiries:

Notes to Editors:

Dillistone Group Plc is a leader in the supply and support of software and services to the recruitment industry. Dillistone operates through the Ikiru People (www.IkiruPeople.com) brand.

The Group develops, markets and supports the Talentis, FileFinder, Infinity, Mid-Office, ISV and GatedTalent products.

Dillistone was admitted to AIM, a market operated by the London Stock Exchange plc, in June 2006. 

Learn about our products:

Talentis Software: https://www.talentis.global/recruitment-software/

Voyager Software: https://www.voyagersoftware.com

Online Timesheets:  https://www.voyagersoftware.com/online-timesheets/

CHAIRMAN'S STATEMENT

I am delighted to report a positive set of results in what has been, and continues to be, a challenging period for our primary markets.

In a tough market, the Group has delivered profit performance in line with expectations while improving operational cash margins, continuing to pay down the CBILS loan and releasing innovative new products.

The underlying business is primed for when the market recovers, with EBITDA margins and operational cash margins (excluding working capital movements at levels not seen in its recent history. We have delivered on our strategy.

For the purposes of obtaining true comparatives, we focus on measures which are adjusted to remove items of Government support, acquisition related or exceptional items, to better understand the underlying business.

The expected drop in revenues meant that while EBITDA fell slightly (£1.286m v £1,314m), adjusted EBITDA margin increased to 26.2% (FY2023: 23.5%) reflecting the investments made by the Group in increasing efficiencies.

The adjusted operating profit before acquisition related and other items improved by 22% to £0.269m (FY2023: (£0.220m)).

Operational cash margin (excluding working capital adjustments) reached 26.8% (FY2023: 21.6%) which is the highest level since flotation in 2006. This demonstrates the strides made in efficiency and how the Group is well positioned to take advantage of a market recovery.

Net cash from operating activities dipped to £0.959m (FY2023: £1.063m) on the reduced revenue base. However, when adjusted for the fundraising in the year, the net change in cash and cash equivalents improved 10% to (£0.397m) (FY2023: (£0.441m)).

During the year the Group paid down £300k of debt, whilst raising (£0.360m) through a combination of a convertible loan (£0.300m) and the issuance of new shares (£0.060m)

Dividends

The Group is not recommending a final dividend in respect of the year to 31 December 2024 (2023: nil).

Staff

We owe our progress to our incredible team. In a challenging year for our markets, achieving such a strong outcome is a testament to their skill and dedication. I want to personally thank everyone for their hard work, commitment, and determination in delivering first-class products and services to the industries we serve.

Corporate governance

It is the Board's duty to ensure that the Group is managed for the long-term benefit of all stakeholders.

Details of our governance processes and my role as Chairman of the Board are included in the corporate governance section that follows the Strategic Report.

Outlook

The majority of our Group's revenue is generated from recruitment firms, a sector that has faced significant challenges in recent years. In our January trading statement, we stated that market conditions had impacted the size and scale of our client base. These market conditions continue.

Despite this, the Group has made a solid start to the year with Q1 performance broadly in line with management expectations. While new business opportunities continue to reflect the challenging market, our improving competitiveness allowed us to achieve our best quarter for new business contract wins since Q1 2023. With recurring revenues forecast to cover 103% of administrative costs, we remain confident in our ability to achieve further progress through 2025.

Giles Fearnley

Non-Executive Chairman

CEO's Review

Dillistone Group Plc is a global leader in recruitment technology, serving executive search firms, contingency recruiters, and in-house staffing teams across more than 1,000 organizations worldwide.

Our product portfolio is divided into two key segments:

· Solutions for contingency recruiters, primarily serving agencies in the United Kingdom but also used internationally.

· Solutions for executive search firms and in-house executive search teams, with clients ranging from sole traders to boutique firms right up to globally recognised executive search brands.

Contingency Recruitment Products

Our solutions for contingency recruiters include:

· Infinity - A powerful recruitment CRM used primarily by agencies in the UK, but also by a number of international clients. Infinity enables recruitment businesses to manage prospects, clients, candidates, and jobs within a single platform and is one of the few UK solutions that support permanent, contract, and temporary placements in one system.

· ISV.Online - A widely adopted online skills testing platform used by recruitment agencies and corporate HR teams. ISV.Online provides an extensive library of pre-built assessments and allows users to create custom tests tailored to specific hiring needs. With a strong international footprint, it helps organisations make data-driven hiring decisions.

· Mid-Office - A comprehensive pay & bill solution that streamlines payroll processing and client invoicing for recruitment businesses and back-office service providers. It supports timesheet management and integrates seamlessly with Infinity and other recruitment systems, ensuring efficient financial operations.

Contingency review:

· Reflecting market conditions, this part of our business saw a decline in revenues with £3.187m in FY2024, (FY2023 £3.46m). A significant part of this loss was down to a reduction in the number and value of new business wins.

From an operational perspective, we continued to enhance our product offerings:

· We released the first phase of our Infinity Candidate Portal, a new supplementary module for our Infinity product in Q4 2024. Customer feedback and take-up exceeded our expectations and this trend has continued into the new year. During Q1 we have released the second phase of our Candidate Portal roadmap with a further phase due for release later in the year.

· 2024 also saw us produce our online timesheets solution which will initially be paired with our Mid-Office application. This product entered beta in February 2025 and is due for general release in Q2.

In addition to the aforementioned Candidate Portal, our Infinity users received a number of significant enhancements over the year via the monthly release cycle. These included, amongst others, our Infinity Data Services which combine data from our TalentGraph along with other data providers, major enhancements to our leads management functions, additional support for the rail recruitment sector and further additions to our in-app AI tools.

Executive Search Products

Our key solutions for the executive search sector include:

· Talentis - Our latest and most advanced platform designed for executive recruiters. Talentis serves as both a research and sourcing tool and a full executive search CRM, leveraging AI-driven technology to enhance talent identification and recruitment.

· FileFinder - A well-established executive search CRM with a global user base, trusted by search professionals worldwide for managing client and candidate relationships.

· GatedTalent - A unique service that allows executives to share confidential information with our search firm clients, while also offering additional career support services.

Executive search review:

Our executive search products have suffered a challenging few years. During 2024 revenue declined to £1.716m (2023: £2.135m).

However, we are encouraged by the positive momentum in the final months of 2024 for this part of our business. In November, we began actively promoting Talentis as a competitive replacement for established executive search software, leading to a significant increase in both the number and the value of incoming orders. These orders included migrations from FileFinder as well as firms switching from direct competitors.

Many of our executive search contracts are for 12 months or more and so the impact of decisions taken by executive search firms in 2024 will directly impact our recurring revenues realised in 2025 and so, while we believe that this part of our business is firmly on the path to recovery, this will not be immediately visible in our results.

Cost savings and EBITDA Margin step-change

During 2024, the benefit of the cost restructuring which took place during 2023 bore fruit. Combined cost of sales and administration costs were down by £0.806m.

This enabled a further improvement in EBITDA margin to 26.8% (2023: 23.5%). This consolidates the step change from the margins obtained between 2017 and 2022 when the average margin was 14.9% (Covid-19 support excluded). We have also seen significant improvement in our operational cash margin (excluding working capital adjustments) which reached 26.2% (FY2023: 21.6%) and is now at the highest level since flotation in 2006.

These improvements in our financial performance give us great confidence in our ability to return to profitable and cash generative growth as the market recovers.

KPIs and financial performance

The Group's operational performance has improved significantly in recent years, with FY2024 seeing an 80% increase in adjusted profit before tax. The success measure for each of the KPIs used by management is year on year improvement.

* EBITDA adjusted for exceptional items

** Adjusted profit before tax is statutory profit before acquisition related intangible amortisation, reorganistion and other costs. See note 2 and note 5.

Strategy

The Group's strategy is to grow the business organically. This strategy is made possible through our commitment to product development, which generates the future revenue of the business. In 2024, product development equated to 17.6% of revenues (2023: 17.2%) and we will continue to invest in our products going forward.

The Group's objectives are principally to:

· Ensure our products meets the needs of the recruitment sector through continual investment and development;

· Be a leading player in all the markets we serve;

· Develop our staff; and

· Increase our profitability and deliver increased shareholder value year on year.

Financial Review

Summary

The Group saw a return to operating profitability in the year. Highlights included:

· First profit before tax since 2016

· Improvement of 22% in operating profit before acquisition, reorganisation and other items results taking it to £0.269m from £0.220m in FY2023

· Adjusted EBITDA margin increased to 26.2% from 23.5% in FY2023

This was achieved whilst maintaining the level of investment in our products.

Revenue

Group revenue decreased by 12% to £4.903m from £5.595m in FY2023.

Gross profit margin

The gross margin increased to 90% from 89%. Going forward, the management team is focused on maintaining gross margin levels, particularly during challenging economic conditions.

Adjusted EBITDA*

The adjusted EBITDA* decreased by 2% to £1.286m from £1.314m in FY2023 but pleasingly EBITDA margin was higher at 26.2%, compared to 23.5% in FY2023. This was a result of the Group's agility in responding to market conditions, agility made possible as a result the investment we've made in systems over recent years.

* Refers to segment EBITDA in note 3

Operating profit/(loss) and profit/(loss) before tax

The operating position, before acquisition related, reorganisation and other items (Adjusted operating profit) continued the recent trend by improving 22% to stand at £0.269m from £0.220m in FY2023.

Inclusive of acquisition related, reorganisation and other items, the Group made an operating profit of £0.165m compared to an operating profit of £0.051m in FY2023.

The profit before tax moved to £0.013m from a loss of (£0.104m) in FY2023 representing the first such profit since 2016. This led to a profit after tax of £0.04m (FY2023: 0.003m), with the EPS moving to 0.2p from 0.01p

This set of profit figures consolidates the progress made in recent years.

Taxation

The net tax credit for the year £0.027m (FY2023: £0.107m).

Balance sheet

The Group's net assets increased to £3.315m (FY2023: £3.217m).

Trade and other receivables decreased to £0.430m (FY2023: £0.559m). Trade and other payables also decreased to £1.712m (FY2023: £2.189m).

R&D development

The Group capitalised £0.881m in development costs in the year (FY2023: £0.963m) as the business continued its commitment to developing its products. Amortisation of development costs was £0.968m (FY2023: £0.994m).

Financing

The Group continues to pay down its bank debt. Repayment of the Government CBIL loan received in June 2020 is now well underway. This loan of £1.5m is repayable over six years, with monthly repayments having commenced in July 2021.

As a result, bank borrowings at 31 December 2024 were £0.450m (FY2023: £0.750m).

During the year, the Group raised £0.300m in the form of convertible loans to current and former Directors. This lifts the level of convertible loans to £0.700m (FY2023: £0.400m), which will not be repaid until the CBIL loan has been repaid.

In addition, the Group also issued new shares to the value of £0.060m (FY2023: nil) to a new investor to the Group.

Cashflow

Net cash from normalised operating activities decreased 10% to £0.959m (FY2023: £1.063m).

Net change in cash decreased to (£0.37m) (FY2023: (£0.441m)). Factoring in the fundraising in year of £0.360m, the operational comparison is more fairly reflected with a figure of (£0.397m) for FY2024. This still represents a 10% improvement from FY2023.

The Group finished the year with a utilisation of the bank facility (£0.074m) (2023: utilisation of the bank facility (£0.019m)).

Going forward, the Board and management teams are focused on generating revenue streams whilst balancing the Group's profitability and cash generation.

Jason Starr

Chief Executive Officer

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2024

Earnings per share

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2024

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2024

CONSOLIDATED CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2024

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2024

1. Publication of non-statutory accounts

In accordance with section 435 of the Companies Act 2006, the Directors advise that the financial information set out in this announcement does not constitute the Group's statutory financial statements for the year ended 31 December 20234 or 2023, but is derived from these financial statements. The financial statements for the year ended 31 December 2023 have been audited and filed with the Registrar of Companies. The financial statements for the year ended 31 December 2024 have been prepared in accordance with UK-adopted international accounting standards, IFRIC Interpretations and the Companies Act 2006. The financial statements for the year ended 31 December 2023 have been audited and will be filed with the Registrar of Companies following the Company's Annual General Meeting. The Independent Auditors Report on the Group's statutory financial statements for the years ended 31 December 2024 and 2023 were unqualified and did not draw attention to any matters by way of emphasis and did not contain statements under Section 498(2) or (3) of the Companies Act 2006.

2. Basis of preparation

The preliminary announcement is extracted from the consolidated financial statements of the Group. The financial statements of the subsidiaries are prepared for the same reporting date as the parent company. Consistent accounting policies are applied for like transactions and events in similar circumstances.

All intra-group balances, transactions, income and expenses and profits and losses resulting from intra-group transactions that are recognised in assets or liabilities are eliminated in full.

The Group's business activities and financial position, together with the factors likely to affect its future development, performance and position, are set out in the CEO's Review and Financial Review on pages 7 to 12. Together with the financial statements and notes which detail the results for the year, net current liability position and cash flows for the year ended 31 December 2024. The Group prepares 3 year budgets and cash flow forecasts to ensure that the Group can meet its liabilities as they fall due. 

The company has experienced a decline in turnover over a number of with years with a 12% drop in 2024 primarily as a result of the macro-economic environment in the recruitment industry.

This challenging environment has coincided with the launch of the firms new executive search platform, Talentis. The Group has invested - and continues to invest heavily in this platform. Market research have indicated that the potential for this product is significant, and this can be seen in the sales pipeline which increased markedly in November 2024.

In addition to ongoing investment in Talentis, the Company has continued to invest in existing products and the combination of a challenging market and ongoing levels of development has placed stress on the group's cash flows.

To address these conditions, management implemented cost reduction plans which have been enacted since 2023 and resulted in annualised savings of over £1.3m.

The Group meets its day to day working capital requirements through its cash balance and overdraft. It has in place a £1.5m CBIL loan, secured in June 2020, repayable over 6 years with capital repayments commencing from July 2021. This loan will be fully repaid by June 2026, which will result in additional cash flow of £300,000 per year from capital payments plus associated interest before the repayment of any other debt. 

There are two tranches of convertible loan debt, £400,000 and £300,000 for which repayment has been deferred by the holders of the convertible loans until the company attains a more favourable cash position. The debt is with current and former Directors all of whom remain supportive of the business.

To enhance the cash flow position, the Group secured an overdraft facility in February 2025 to ensure it has enough liquidity for the business needs and can continue with development of software.

The cash flow forecasts have been stress tested from the date of signing the accounts reviewing assumptions around new business with an appropriate stress test being applied. A reverse stress test was also prepared to review what reduction in revenue would be necessary to breach the overdraft limits in 2025 and 2026. Various mitigations can be put in place should the need arise to implement this. 

As at the date of this report, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the financial statements.

3. Accounting policies

This preliminary announcement has been prepared in accordance with the accounting policies adopted in the last annual financial statements for the year to 31 December 2023.

4. Reconciliation of adjusted profits to consolidated statement of comprehensive income

Earnings per share

* See note 9

5. Segment reporting

Revenue by business segment

The following table provides an analysis of the Group's revenue by product area for the 12 months of the financial year.

In the table above 'Recurring income' represents all income recognised over time, whereas 'Non-recurring income' and 'Third party revenues' represent all income recognised at a point in time. 

Recurring income includes all support services, SaaS and hosting income and revenue on perpetual licenses with mandatory support contracts deferred under IFRS 15. Non-recurring income includes sales of new licences which do not require a support contract, and income derived from installing licences including training, installation and data translation. Third party revenues arise from the sale of third party software.

It is not possible to allocate assets and additions between recurring, non-recurring income and third party revenue. No customer represented more than 10% of revenue of the Group in 2024 or 2023.

Revenue by business sector

The following table provides an analysis of the Group's revenue by market sector.

6. Geographical analysis

The following table provides an estimated of the Group's revenue by geographic market based on the Customers' country. This is provided for information only as the Board does not review the performance of the business from a geographical viewpoint. 

Revenue

Non-current assets by geographical location

7. Acquisition related, reorganisation and other costs

Reorganisation and other costs include severance payments and loss of office payments.

 8. Tax income

9. Earnings per share

Reconciliation of basic to diluted average number of shares:

There are 593,825 (2023: 1,646,500) share options not included in the above calculations, as they are underwater or have been forfeited.

The impact of the convertible loan notes in the period is not dilutive, as the EPS of the convertible loan notes is greater than the basic EPS, and therefore does not impact the calculation of the fully diluted earnings per share.