Dillistone Group Posts Challenging Year but Secures £1.5m Fundraise and Pivots to Acquisition-Led Growth

Dillistone final results 2025: weaker profits, stronger funding position, and a very different strategy

Dillistone’s 2025 numbers are a mixed bag. The core trading picture was still tough, with revenue down 14% to £4.202 million and adjusted operating profit slipping to £0.166 million from £0.269 million. But the bit that really changes the investment case is not the historic result – it is the £1.500 million fundraise completed after the year end and the company’s shift towards acquisition-led growth.

In plain English, the old business had a difficult year, but it kept generating cash from operations and has now bought itself time and flexibility. That matters because before the fundraise, the balance sheet looked tight.

Dillistone 2025 results at a glance: the key numbers retail investors need

Metric	FY2025	FY2024
Revenue	£4.202 million	£4.903 million
Recurring revenue	£3.750 million	£4.394 million
Adjusted EBITDA	£1.190 million	£1.286 million
EBITDA margin	28.3%	26.2%
Adjusted operating profit	£0.166 million	£0.269 million
Loss before tax	(£0.343 million)	£0.013 million profit
Net cash from operating activities	£1.082 million	£0.959 million
Net assets	£3.014 million	£3.315 million
Basic EPS	(1.46p)	0.20p

Dillistone revenue and profit analysis: a tough market is still biting

The company is still dealing with a weak recruitment market, and that showed up clearly in the sales line. Revenue fell to £4.202 million, with recurring revenue down 15% to £3.750 million and non-recurring revenue down 19% to £0.320 million.

That said, this is not a business falling apart. Gross margin was still very high at 89.5%, only slightly below 89.7% last year, and recurring revenue still made up 89% of total revenue. For a software business, that kind of recurring base is valuable because it makes earnings more predictable than one-off project work.

Management also pointed out that recurring revenue equated to 122% of administration plus cost of sales expenses, excluding depreciation, amortisation and exceptional costs. That is a slightly clunky metric, but the message is straightforward – the subscription-style income still covers the day-to-day running costs of the operating business.

The real sting came below the operating line. Dillistone swung to a loss before tax of £0.343 million, compared with a £0.013 million profit in 2024, mainly because of £0.300 million of exceptional items. Of that, £0.257 million was a write-down of a software asset.

In my view, that distinction matters. A write-down is unpleasant because it says part of a past investment is not worth what it once was, but it is not the same thing as cash flooding out of the business this year. The cash flow statement backs that up, with intangible impairment added back in operating cash flow.

Cash flow, debt reduction and the £1.5 million fundraise: why the balance sheet story matters most

This is where the announcement gets more encouraging. Net cash from operating activities rose 13% to £1.082 million, despite lower revenue. That tells you management has done a decent job on cost control and working capital in a rough market.

The group also reduced its CBIL loan by £0.300 million during the year, leaving bank loan borrowings of £0.150 million at 31 December 2025, down from £0.450 million. The last CBIL repayment is due in June 2026. Once that is gone, the company says it releases £0.300 million per year to free cash flow.

There is a catch, though. Year-end cash was still weak. The group ended 2025 with a utilisation of the bank facility of £0.211 million, compared with £0.074 million the year before. So without fresh capital, this would have remained a tight situation.

That is why the post year-end £1.500 million equity raise is the biggest line in the whole release. The board says it has stabilised the balance sheet and “fundamentally improves the strength of the balance sheet”. Based on the figures here, I think that is fair. It takes the company from edging along with an overdraft to having some breathing room.

There was also a helpful debt tweak. The earliest redemption date on £0.374 million of loan notes was deferred to June 2028. That reduces short-term pressure further.

Dillistone acquisition-led growth strategy: a new chapter, but still short on detail

This is no longer just a recruitment software story. Dillistone says it is transitioning to a serial acquirer and will adopt an M&A-driven model focused on buying “high-quality, cash-generative businesses”.

The plan is to own businesses that can run fairly independently, while the group provides capital allocation, governance and oversight. That usually means lower integration risk than trying to smash everything together, and it can work well if management is disciplined.

But investors should be honest about what is missing. There are no acquisition targets disclosed, no sector-by-sector shopping list beyond a broad preference for resilient, cash-generative companies, and no financial hurdle rates set out in this RNS. So the strategy is interesting, but still early-stage.

There is also a leadership transition happening at the same time. Jason Starr says this is likely to be his final statement as CEO, and the search for a new chief executive is underway. A new strategy plus new leadership can be powerful, but it also adds execution risk.

Ikiru People and Talentis outlook: some signs the core software business may be turning

If you strip out the strategy pivot, the underlying operating business did show a few genuinely positive signs. New business orders in FY2025 were up 12% year on year, and the company says the first quarter of 2026 delivered its best order book for three years.

Talentis also appears to have improved in the second half. Exit annual recurring revenue, or ARR, was up 67% in H2 2025, user numbers on the platform rose 50%, and the average number of users per new client in H2 trebled versus the average at the end of H1.

Just as important, contract quality improved. Between January 2024 and May 2025, 82% of new users signed on a month-to-month basis. From June 2025 to December 2025, 86% of new users signed contracts for 12 months or longer. That is exactly the sort of shift you want to see in a SaaS business.

What this Dillistone RNS means for shareholders in 2026

My read is this: the 2025 results themselves are not great, but they are better than the headline loss first suggests. Revenue fell sharply, profit took a hit, and the business was still ending the year using its bank facility. That is the negative side.

The positive side is more interesting. Cash generation held up, debt is being cleared down, the audit was unqualified, the fundraise has materially de-risked the near-term balance sheet, and the core trading update for early 2026 sounds better than the 2025 headline numbers.

For shareholders, the big question now is whether management can turn a stabilised software business into a credible buy-and-build platform. If Ikiru People returns to organic growth and the board makes smart acquisitions, this could look like a well-timed reset. If not, the £1.500 million raise merely buys time.

So overall, I would call this cautiously positive. The historic year was challenging, no doubt about it, but the funding and strategic reset are the real story now. Dillistone has given itself a second chance. The next few updates need to show it can use it well.