Dillistone : Final Results for the year ended 31 December 2022 (25 April 2023)

25 April 2023

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 2022.

Highlights

• Revenue increased by 2% to £5.699m. First revenue growth since 2016.
• Adjusted* loss before tax decreased to £0.453m (2021: £0.687m) - an improvement of 34%.
• Adjusted* EBITDA increased to £0.949m (2021: £0.747m) - an improvement of 27%.
• Recurring revenues represented 89% (2021: 89%) of Group revenue, which covers administration expenses (excluding depreciation and amortisation).
• Total Annual Contract Value (TACV) up 4% to £4.99m (2021: £4.79m)
• Order book increased by 3% year on year.
• Adjusted operating cash from operating activities 45% up at £1.189m (2021: £0.819m).
• Cash at period end of £0.433m. The Board does not expect the Group to require additional funding.

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

"I am pleased to report continued progress for 2022, delivering financial performance in line with expectations while paying down debt, delivering sector leading customer service and continuing to invest for the future."

"The underlying business has improved. The Group has increased revenue, decreased adjusted loss and improved cash generation. We have delivered on our strategy and present results in line with market expectations."

"The Board is pleased to report a positive start to the year. We expect to see year on year growth in recurring revenue across both our Executive Search and Contingency sectors in H1 and remains confident of achieving market expectations for the full year."

Definitions:

• EBITDA adjusted for furlough support
• Operating cash adjusted for Government support received
• (Loss) before tax adjusted for furlough, Government support and exceptional costs associated with Covid
• TACV is the total annual recurring revenue of all signed contracts, whether invoiced and included in deferred revenue or still to be deployed and/or not yet invoiced

See note 7 for a reconciliation to adjusted figures

Investor Presentation: 3pm on Tuesday 25 April 2023

Jason Starr, Chief Executive, and Ian Mackin, Finance Director, will hold an investor presentation to cover the results and prospects at 3pm on Tuesday 25 April 2023.

The presentation will be hosted through the digital platform Investor Meet Company. Investors can sign up to Investor Meet Company and add to meet Dillistone Group Plc via the following link https://www.investormeetcompany.com/dillistone-group-plc/register-investor. For those investors who have already registered and added to meet the Company, they will automatically be invited.

Questions can be submitted pre-event to dillistone@walbrookpr.comor in real time during the presentation via the "Ask a Question" function.

Mello Investor Conference, Chiswick, London - Tuesday 23 and Wednesday 24 May 2023

Dillistone announces that it expects to present at the Mello investor conference in Chiswick, London, on Tuesday 23 and Wednesday 24 May 2023. Investors wishing to attend can find more details at www.melloevents.com.

Annual Report and Accounts - The final results announcement can be downloaded from the Company's website (www.dillistonegroup.com). Copies of the Annual Report and Accounts (in addition to the notice of the Annual General Meeting) will be sent to shareholders by 19 May 2023 for approval at the Annual General Meeting to be held on 13 June 2023.

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

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.

CHAIRMAN'S STATEMENT

I am pleased to report continued progress in 2022, delivering financial performance in line with expectations while paying down debt, delivering sector leading customer service and continuing to invest for the future.

The underlying business has improved. The Group has increased revenue, decreased adjusted loss and improved cash generation. We have delivered on our strategy and present results in line with market expectations.

The Group achieved its first annual total and recurring revenue growth since 2016. Total revenue for the year was up 2% to £5.699m, with recurring revenue increasing 1% to £5.051m.

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.

Excluding furlough and Government support received in 2021, adjusted EBITDA increased by 27% to £0.949m (FY2021: £0.747m). The adjusted operating loss before acquisition related, furlough and other items fell by 58% to (£0.156m) (FY2021: (£0.375m)).

Adjusted net cash from operating activities, excluding Government support, is up 45% at £1,189m (FY2021: £0.819m) with a similarly adjusted net change in cash and cash equivalents up 58% at (£0.362m) (FY2021: (£0.853m)).

Dividends

The Group is not recommending a final dividend in respect of the year to 31 December 2022 (2021: nil).

Staff

I and the Board would like to pay tribute to our employees across the Group, acknowledging their commitment and contribution in facing the challenges of the last few years. It is as a result of their combined efforts that we are heading into 2023 with optimism.

Corporate governance

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

stakeholders.

We welcomed Ian Mackin to the Group Board as Finance Director in June, stepping up from Financial Controller. Ian replaced Joanne Curd who resigned to further pursue her voluntary works.

Outlook

Current economic conditions are challenging for the recruitment industry and as a result we have seen a number of our existing clients reduce headcount - and therefore licences - and new client signups are typically of lower value than anticipated.

Generally speaking, any economic slowdown is likely to impact our executive search clients more than our contingency ones. However, despite this environment, we are pleased to see that in Q1 2023, our next generation executive search software, Talentis was our best performing product in terms of both number of new client sales and TACV growth. Individual order values remain low, partly reflecting the state of the market, but the Group expects this to change as the economy recovers.

The Board is pleased to report a positive start to the year. We expect to see year on year growth in recurring revenue across both our Executive Search and Contingency sectors in H1 and remain confident of achieving market expectations for the full year.

Giles Fearnley

Non-Executive Chairman

CEO's Review

Dillistone Group Plc is a global leader in the supply of solutions and services to the recruitment sector worldwide, working with executive search, contingent recruiting and in- house staffing teams in over 1,200 organisations.

We split our products into two groups - products primarily targeting contingency recruiters (largely, but not exclusively, in the United Kingdom) and products targeting executive search firms and in-house executive search teams across the globe.

Contingency recruitment products:

Our products serving this sector are:

• Infinity, which is an established recruitment CRM used primarily by agencies in the UK, but also with users in Asia and Australia. It enables recruitment businesses to manage prospects, clients, candidates and jobs in one place and offers deep integration to Office365 and other recruitment industry complementary solutions. It is one of the few solutions in the UK market with extensive functionality for permanent, contract and temporary jobs all in one system;
• ISV.Online, which is an online skills testing product used by both recruitment agencies and corporate organisations and has a strong international footprint. It allows recruiters and HR professionals to test individuals using our extensive portfolio of existing tests or to create their own unique tests to meet their requirements; and
• Mid-Office,which is a comprehensive pay & bill solution that allows recruitment businesses and back office service providers to process timesheets and bridges the gap between paying workers and invoicing clients. It can be used standalone or integrated to other recruitment systems including our Infinity product.

Contingency review:

• We delivered strong growth in the recurring revenue associated with this part of our business, generating a combined £3.44m in recurring revenue, (FY2021 £3.04m revenue) an increase of 13%.
• In December 2021 we announced a major contract win. We are pleased to report this was successfully implemented in H1 2022 and the client is now an active reference site.
• Summer 2022 saw us win a similarly sized contract and this was successfully implemented in H2. Once again, the client - who switched from a direct competitor
  - is now an active reference site for us.

Since year end, we have announced what has the potential to be our largest contract win yet, and we expect to deliver a large part of this contract in 2023.The year saw us discontinue our legacy VDQ product. During the year we were able to successfully migrate over half of our VDQ customers to the Infinity platform. Infinity offers greater functionality and is priced at a premium to VDQ. As a result, recurring revenue from this group of clients grew by 96% over the year.

Infinity is used by permanent, contract and temporary recruitment agencies. However, an increasing percentage of our new contract wins are from firms that are focussed, at least in part on the temporary recruitment sector, validating our decision to focus our efforts on this sector of the market.

Many of our Infinity clients also use our Mid-Office product to facilitate payments to temporary staff. We have also continued to develop this product and expect to deliver a significant upgrade to this product during the second quarter.