Dillistone Group

International recruitment software supplier Dillistone, a debt-free concern boasting comforting levels of recurring revenues, is confident about meeting its 2010 numbers.

Interims to June from Dillistone, chaired by well-followed technology entrepreneur Mike Love and behind executive search and selection software product Filefinder, used by recruitment companies and in-house recruitment teams alike, were encouraging. Pre-tax profits perked up from £471,000 to £512,000, as revenue increased 8% to almost £1.97m, reflecting a strong start to the year. From earnings of 6.67p (2009: 6.42p), dividends were maintained at 3.5p.

Half-year highlights included recurring revenues 6% up on the second half of 2009 at more than £1.2m, accounting for a reassuring 62% of the top line, whereas non-recurring turnover put on 22% at £755,000 on the back of a ‘significant’ year on-year improvement in new contract wins.

Dillistone's Asia Pacific business proved the geographical star turn, reporting sales increased 77%, with the UK, Middle East and Africa arm achieving a 17% revenue advance. Amid ongoing economic uncertainty, the sales performances from the European and US divisions were less impressive, with revenues declining by 19% in Europe and edging up by only 2% across the pond.

With reassuring cash reserves of £1.9m and a strong project pipeline, analysts see Dillistone delivering annual pre-tax profits of £1.2m (2009: £1.1m) as turnover moves north from £3.7m to £4m.

Based on an estimated earnings increase from 15p to 15.5p and a maintained 10.5p dividend, the shares, recommended by Growth Company Investor at 175p in October 2008, sell on a single figure p/e and offer a bumper 7.2% yield. Existing investors should consider augmenting their holdings at these levels.