Final Results

IS Solutions PLC
28 March 2008


Issued by Citigate Dewe Rogerson Ltd, Birmingham
Date: Friday, 28 March 2008
                                                               Embargoed: 7.00am


                        IS Solutions plc (the 'Company')

providers of a range of Internet design, website development and systems support
                     services to public and private sector


            Preliminary Results for the year ended 31 December 2007


   'Continuing track record of strong cash generation, improving markets and
                                   prospects'


•  Overall strong performance with results ahead of market expectations

•  Strategy of achieving top-line growth and improving profitability through 
   diversification into value-added products reflected in pre-tax profits
   up 43% to £410,000 (2006: £286,000)

•  Adjusted Diluted Earnings per share (before the recognition of a deferred 
   tax asset) up 38% to 1.59p (2006: 1.16p). Unadjusted EPS 1.86p (2006: 1.16p)

•  Final Dividend proposed: 0.67p per share (2006: 0.33p) up 101%
   Dividend for the year 1.0p-a total increase of 100%

•  Net Cash at year end of £2.5 million (2006: £1.6m)


'The Board is alert to the current background of economic uncertainty created by
the disruption in financial markets and, in view of this uncertainty, considers
it prudent to be cautious on future prospects. However, at this stage in this
new financial year the Company has not experienced any particular easing in
demand for its products and services. This, together with the width and scope of
the products and services we offer throughout the business give grounds for our
relative confidence in the medium term. The Board also continues to seek
opportunities for growth by acquisition.'

                                                          Barrie Clark, Chairman



                            FULL STATEMENT ATTACHED


Enquiries:

John Lythall, Managing Director                      Fiona Tooley / Keith Gabriel

IS Solutions Plc                                     Citigate Dewe Rogerson Ltd
Tel: [phone]                              Tel: [phone]
www.issolutions.co.uk                                Mobile: [phone]
Ticker: ISL.L



                                IS Solutions plc
            Preliminary Results for the year ended 31 December 2007


STATEMENT BY THE CHAIRMAN

Our on-going strategy of achieving top line growth and improving profitability
through diversifying into value-added software products and product license
sales has been reflected in these results being reported. This trend is also
continuing.


Financial Results

I am pleased to report an overall strong performance in 2007 by the Group which
is shown in our profits being reported and which are also ahead of market
expectations.

Pre-tax profits for the year ended 31 December 2007, pre-intangible amortisation
of £30,000 (2006: £23,000) rose by 42% to £440,000 (2006: £309,000). Whilst
reported profit before tax increased by 43% to £410,000 (2006: £286,000).

Diluted earnings per share, inclusive of the recognition of a deferred tax asset
of £63,000 (not part of the underlying growth in earnings), increased by 60% to
1.86 pence (2006: 1.16 pence). For comparative purposes, before the tax asset
recognition, the increase was 38% to 1.59 pence and net assets at 31 December
2007 stood at £3.07 million (2006: £2.8 million). Cash-flow from operations has
again been strong and cash and cash equivalents as at 31 December 2007 stood at
£2.5 million (2006: £1.6 million).


Overview

In light of the sale of Vendor Software updates becoming an increasing feature
of the Group's operating model and in-line with industry peers, the audit
committee and the Board has decided to change the Group's accounting treatment
for these sales from an invoiced basis to a net revenue basis thus, only the
gross profit element from these contracts will now be included under Group
revenues.  On this basis, turnover for the full year increased by 18% to £7.9
million (2006 restated: £6.7 million). If this change had not been made revenue
for 2007 would have been £8.5 million for 2007 (2006: £6.9 million) which is
slightly ahead of market expectations.

The strong software product sales reported at the half year continued for the
remainder of the year  with Web Analytics performing particularly well as
clients increasingly seek to gain more useable information from their websites:
the agreement signed with SAS (Business Intelligence products) in the second
half has already resulted in its first small order being secured  in December.

Professional Services benefited from product led sales both in Projects and
Webservices (support contracts) contributing to an 88% increase in Group
operating profit to £302,000 (2006: £161,000). Watchfire did particularly well
with six new contracts being won in the period; in the latter part of the year,
Watchfire was bought by IBM which we believe should lead to greater acceptance
of its products in the marketplace. 2007 also saw an increase in the deployment
of Content Management Services as clients demand greater control of the delivery
of content to their websites.


Personnel

Once again the Board would like to express its appreciation and thanks to all
employees for their support through the whole of 2007. It is the teamwork and
commitment to quality shown by our employees that has allowed us to build the
strong and sustainable relationships we have with our clients and suppliers.

I would also like to take this opportunity to welcome Roger McDowell who joined
us as an Independent Non-Executive Director on 22 January 2008.

Mr McDowell brings to the Board over 30 years of senior management experience.
The Directors consider that Roger's comprehensive understanding of business, in
particular public companies, will add a wealth of experience to the Company and
will complement the existing skills already on the Board.


Dividend

At the half year the Board announced that it had reviewed the future dividend
policy of the Group in the light of its historic cash balances, a continuing
track record of strong cash generation, improving markets and prospects.

Trading in the second half continued in the same vein and as a result the Board
is pleased to propose subject to shareholder approval, a similar increase in the
final dividend from 0.33 pence to 0.67 pence per share. With an increase in the
interim payment of 101% to 0.33 pence this gives a total for the year of 1.0
pence per share (2006: 0.5 pence), a total increase for the year of 100%.

The final dividend which is subject to shareholders' approval at the AGM, to be
held on 15 May 2008, will be paid on 23 May 2008 to shareholders on the Register
at close of business on 25 April 2008.


Outlook

The Board is alert to the current background of economic uncertainty created by
the disruption in financial markets and, in view of this uncertainty, considers
it prudent to be cautious on future prospects. However, at this stage in this
new financial year the Company has not experienced any particular easing in
demand for its products and services. This, together with the width and scope of
the products and services we offer throughout the business  give grounds for our
relative confidence in the medium term.

The Board also continues to seek opportunities for growth by acquisition.



Consolidated income statement for the year ended 31 December 2007
                                                                                  2007        2006
                                                                                          Restated
                                                                                 £'000       £'000
Continuing operations
                       Revenue                                                   7,894       6,680
                       Cost of sales                                           (5,078)     (4,142)

Gross profit                                                                     2,816       2,538
                       Distribution costs                                      (1,670)     (1,469)
                       Administration expenses                                   (844)       (908)

Profit from operations                                                             302         161
                       Investment revenues                                         108          99
                       Other gains and losses                                       -           26

Profit before tax                                                                  410         286
                       Tax                                                          50          -
Profit for the period attributable to equity holders                               460         286
Earnings per share
                       Basic                                                    1.89 p      1.18 p
                       Diluted                                                  1.86 p      1.16 p


Consolidated statement of changes in shareholders' equity for the year
                                                                                  2007        2006
                                                                                 £'000       £'000

                       Profit for the year                                         460         286

Total recognised income and expense for the year                                   460         286
                       Purchase of own shares                                     (70)        (11)
                       Sale of own shares                                           21          50
                       Share-based payments                                          2          -
                       Dividends                                                 (161)       (107)

Change in shareholders' equity for the year                                        252         218
                       Shareholders' equity at start of year                     2,819       2,601

Shareholders' equity at end of year                                              3,071       2,819






Consolidated balance sheet as at 31 December 2007
                                                                                  2007        2006
                                                                                 £'000       £'000
Non-current assets
                       Goodwill                                                    254         254
                       Other intangible assets                                       7          37
                       Property, plant and equipment                               127         185
                       Deferred tax assets                                          86          22

                                                                                   474         498
Current assets
                       Trade and other receivables                               1,224       1,754
                       Cash and cash equivalents                                 2,504       1,563
                                                                                 3,728       3,317

Total Assets                                                                     4,202       3,815

Current liabilities
                       Trade and other payables                                (1,110)       (989)
                       Tax liabilities                                            (20)          -
                                                                               (1,130)       (989)

Non-current liabilities
                       Deferred tax liabilities                                    (1)         (7)

Total liabilities                                                              (1,131)       (996)

Net assets                                                                       3,071       2,819

Equity
                       Share capital                                               496         496
                       Share premium account                                     1,786       1,786
                       Own shares                                                 (97)        (66)
                       Retained earnings                                           886         603

Attributable to equity holders of the parent                                     3,071       2,819






Consolidated cash flow statement for the year ended 31 December 2007
                                                                                  2007        2006
                                                                                 £'000       £'000
Operating activities
                Profit from operations                                             302         161
Adjustments for:
                Depreciation of property, plant and equipment                      114         109
                Gain on disposal of property, plant and equipment                  (2)         (1)
                Amortisation of intangible assets                                   30          23
                Share-based payments                                                 2          -

Operating cash flows before movements in working capital                           446         292
                Decrease/(increase) in debtors                                     530       (631)
                Increase in creditors                                              121          41

Cash generated by operations                                                     1,097       (298)

Net cash from operating activities                                               1,097       (298)


Investing activities
                Interest received                                                  108          69
                Proceeds on disposal of trading investments                         -          105
                Disposal of operations                                              -           26
                Purchase of property, plant and equipment                         (60)        (75)
                Proceeds on disposal of property, plant and equipment                6           5
                Acquisition of subsidiaries                                         -        (238)

Net cash from/(used in) investing activities                                        54       (108)


Financing activities
                Dividends paid                                                   (161)       (107)
                Purchase of own shares                                            (49)        (11)

Net cash used in financing activities                                            (210)       (118)

Net increase/(decrease) in cash and cash equivalents                               941       (524)
                Cash and cash equivalents at start of year                       1,563       2,087

Cash and cash equivalents at end of year                                         2,504       1,563




                                     Notes


1          Business and geographical segments

For management purposes the Group reports its revenue and gross profit by vendor
generated third party sales (Distribution) and sales direct to the Group's own
customers (Direct). No allocation of operating costs and other income to these
segments is made because the directors consider that any such allocation would
be arbitrary and therefore not meaningful.


Business segments 2007                        Direct       Distribution       Unallocated        Total

     Revenue                                   6,861              1,033                -         7,894
     Gross profit                              2,711                105                -         2,816
     Other income and expense                     -                  -            (2,356)      (2,356)

     Segment result                            2,711                105           (2,356)          460

     Assets                                    1,159                 -              3,043        4,202
     Liabilities                               (612)              (100)             (419)      (1,131)




Business segments 2006

There were no reported distribution sales in 2006, and consequently no
comparative segmental analysis is provided.


            Geographical segments

            The Group operates entirely within the UK.



2          Dividends
                                                                                      2007       2006
Amounts recognised as distributions to equity holders                                £'000      £'000

    Final dividend for the year ended 31 December 2006 of 0.33p                         80         65
    (2005: 0.27p)

    Interim dividend for the year ended 31 December 2007 of 0.33p                       81         42
    (2006: 0.17p)
                                                                                       161        107

    Proposed final dividend for the year ended 31 December 2007 of 0.67p               163


The proposed final dividend is subject to shareholders' approval at the AGM and
has not been included as a liability in these financial statements.

3   The financial information set out above does not constitute the Company's 
    statutory accounts for the years ended 31 December 2007 or 2006. Statutory 
    accounts for 2006, which were prepared under IFRS, have been delivered
    to the Registrar of Companies, and those for 2007 will be delivered 
    following the company's annual general meeting.  The auditors have reported 
    on those accounts; their report was unqualified and did not contain 
    statements under Section 237(2) or (3) of the Companies Act 1985.

4   Other than as set out in note 5, the preliminary announcement has been 
    prepared on the basis of the accounting policies as stated in the financial
    statements for the year ended 31 December 2006. Whilst the financial 
    information included in the preliminary announcement has been completed in 
    accordance with IFRS, the announcement does not itself contain sufficient 
    information to comply with IFRS.

5   Change in accounting policy and reclassification of cost of sales as
    distribution costs

    Previously the Group presented the amounts invoiced on the resale of vendor
    maintenance contracts as gross revenue in the income statement. These 
    contracts are an increasingly significant feature of the Group's revenue 
    and it is now believed to be more appropriate to treat the Group as an agent
    rather than principal and to reflect only the commission earned on such 
    transactions as revenue. The comparative reported revenue figures were 
    restated accordingly and this had the effect of decreasing revenue and cost 
    of sales by £229,000 in 2006.

    Also included in cost of sales in 2006 were certain departmental costs
    previously considered to be production costs but now more properly 
    identified as internal support costs. The comparative cost of sales for 2006
    has been reduced and distribution costs have been increased by £189,000.

    Neither adjustment has any effect on reported operating profit or 
    shareholders' equity.

6   The Annual General Meeting will be convened for Thursday 15 May 2008.

7   Copies of the Report and Accounts will be posted to Shareholders on
    23 April 2008.  Further copies will be available after that date from the
    company's registered office: Windmill House, 91-93 Windmill Road,
    Sunbury-on-Thames, Middlesex, TW16 7EF and will also be available to 
    download from our website www.issolutions.co.uk



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