Final Results

RNS Number : 7194A

IS Solutions PLC

25 March 2013

 

IS Solutions Plc

Audited Preliminary Results

for the year ended 31 December 2012

"Strong performances from our Projects and Managed Services

underpins seventh year of successive growth"

Highlights	2012	2011	%
Ø Revenue	£9.21m	£9.06m	+1.62%
Ø Profit before tax*	£895,000	£835,000	+7.18%
Ø Post tax profit*	£833,000	£768,000	+8.46%
Ø Earnings per share - adjusted*, fully diluted	3.28p	3.05p	+7.54%
Ø Increase in dividend -interim(paid) -final (proposed)  * Before goodwill impairment and share based payments	0.44p 1.00p	0.40p 0.90p	+10.00%
Ø Recurring Revenues:  produced growth in revenue of 2.5%, contributing 68.8% of the total GP (2011: 66.7%)
Ø Projects:  showed strong revenue growth of 23% being generated by all three areas of  Web Analytics, Portals and Enterprise Content Management (ECM)

"..one area of our business very much favoured by the low growth/no growth economic situation we find ourselves in is, - Analytics - the reason being that clients look to achieve better retention of customers and an increased proportion of their expenditure through a better understanding of their behaviour. "Having a strong balance sheet with net cash, coupled with the growth coming from Analytics and recurring income that supplies 50% of our revenue and around 69% of our gross profit, leads the Board to be reasonably optimistic for another year of growth in terms of sales and earnings. "We look forward to updating stakeholders on our progress as the year unfolds." Barrie Clark, Chairman

Enquiries:
IS Solutions Plc	FinnCap	TooleyStreet Communications Ltd
John Lythall, Managing Director	Nominated Broker & Adviser	IR & Media Relations
[phone]	Ed Frisby/Rose Herbert - Corporate Finance Stephen Norcross - Corporate Broking	Fiona Tooley, Director Tel: [phone]
	Tel: [phone]	Mobile: [phone]
Editor's Note IS Solutions is a systems integrator and value-added reseller focused on three web-related areas - portals, content/document management, with specialities in business intelligence and 'big data' analytics. Based in Sunbury-on-Thames, the Group was founded in 1985 and became a listed PLC 1997. The business currently employs 105 staff, including 20 in Chennai, India, who provide product development and support. It also has a strong blue-chip client base which includes Toyota and Toshiba as well as BP, BT, GSK, HMRC, M&S and RBS.		Ticker: AIM: ISL Accreditation: ISO27001 E-mail:  [e-mail] Website: www.issolutions.co.uk Follow us  www.linkedin.com/company/issolutions

IS Solutions Plc

Audited Preliminary Results for the year ended 31 December 2012

Statement by the Chairman, Barrie Clark

The Board is pleased to announce a return to top line growth and the seventh successive year of growth in adjusted PBT following a strong second half performance in 2012.

Financials

Revenue in the year under review improved by 1.62% to £9.208 million (2011: £9.061 million) producing a 7.18% growth in profit before tax (before goodwill write down and share-based payments), from £835,000 in 2011 to £895,000.  On the same basis, adjusted post tax profit increased by 8.46% to £833,000 (2011: £768,000).  Fully diluted earnings per share, on the same basis, rose by 7.54% to 3.28p (2011: 3.05p). Unadjusted post tax profits were £730,000 and unadjusted EPS was 2.87p.

Cash at the year-end stood at £70,000 (2011: £531,000) however, debtors were £333,000 higher and creditors £398,000 lower than 2011, giving a swing of £731,000.  Within three weeks of the start of 2013 cash had risen to £600,000.

Due to the continuing low interest rates available for deposits, the Board elected once again to continue with its trading investment of £500,000 (initial value).  At the 2012 year-end, these investments were valued at £561,000 (2011: £526,000); should it be deemed appropriate we are able to convert back to cash within a month.  In July 2012, the Company's £500,000 bank facility was renewed for a further year.  Interest cover stood at 24 times (2011: 23.6 times).

In addition to our trading investments we invested a further £100,000 in Speed-Trap Holdings Ltd - a fundamental part of our growing Analytics business and, our total investment to date within this operation is £800,000

As a result of our concentration on our higher margin Services business and away from the less predictable Product Sales, we have seen our Return on Sales ('ROS') continuing to improve and move ahead of last year - up by 0.56% to 9.72% (2011: 9.16%).

Looking at our business:-

Projects:  Sales showed strong revenue growth of 23% being generated by all three areas of Web Analytics, Portals and Enterprise Content Management (ECM), however, we have experienced a small reduction in gross margin of c.2% as day rates were held at the previous year's level due to the economic environment.

Recurring Revenues:  This is the mainstay of our business generating, as it does, the majority of our recurring income; 2012 produced growth in revenue of 2.5%, contributing 68.8% of the total GP (2011: 66.7%).  Although this is at a lower level of revenue growth compared to previous years it reflects a change in the mix of this business area and in fact hides a significant growth in the Support contracts which has been offset by a continuing decline in the license maintenance revenue -  due principally to the lack of renewals from the public sector.

Product Sales:  This area of our business is the least predictable - the first half of 2012 produced a strong growth in revenue over the previous year however, this was followed by a much lower second half -resulting in an overall drop in revenue in Product Sales of 26.9%.  Despite this, it has been very encouraging that the business still recorded an overall increase in revenue due to the growth in the Services area of our business more than offsetting the shrinkage in this arena.

Personnel

Once again, the Board would like to express its appreciation and thanks to all employees both in the UK and India for their on-going support and teamwork - their knowledge and expertise are an invaluable and important asset; this, combined with their work ethic ensures we continue to give the consistency of service to clients and supplier partners that is the foundation of our business success.

Dividend

Adjusted Earnings per share advanced in the period by 8.25% compared to 2011.  However, against the current outlook for the UK and the on-going downward revisions of economic growth on a worldwide basis, the Board feels it is prudent to take a cautious approach to cash management.

The Board will be recommending to shareholders an increase in the final dividend to 1.00 pence (2011: 0.90p).  This, together with the interim dividend of 0.44 pence (2011: 0.40p) paid in October 2012 gives a total for the year of 1.44p (2011: 1.30p), an increase of 10%.

Subject to shareholder approval at the Annual General Meeting, the final dividend will be paid on 31 May 2013, to qualifying shareholders on the Register at the close of business on 10 May 2013.  The ex-dividend date is 8 May 2013.  The dividend is covered 2.48 times by profit after taxation (2011: 2.59 times).

Outlook

As a Board, we continue to be cautiously optimistic in our view going forward. On the one hand the global economic situation stumbles on without showing any inclination to improve by any significant degree.  Against this background our clients are naturally ensuring, as much as is possible, that they will get the Return on Investment they strive for before committing to additional new projects.

On the other hand, one area of our business very much favoured by the low growth/no growth economic situation we find ourselves in is, - Analytics - the reason being that clients look to achieve better retention of customers and an increased proportion of their expenditure through a better understanding of their behaviour.

Having a strong balance sheet with net cash, coupled with the growth coming from Analytics and recurring income that supplies 50% of our Revenue and around 69% of our gross profit, leads the Board to be reasonably optimistic for another year of growth in terms of sales and earnings.

We look forward to updating stakeholders on our progress as the year unfolds.

Date: 25 March 2013

Consolidated statement of comprehensive income for the year ended 31 December 2012
				2012	2011
				£'000	£'000
	Continuing operations
		Revenue		9,208	9,061
		Cost of sales		(5,321)	(5,344)
	Gross profit			3,887	3,717
		Distribution costs		(2,293)	(2,154)
		Administration expenses		(842)	(727)
		Other operating income		38	61
	Profit from operations			790	897
		Investment income		-	4
		Finance costs		(33)	(38)
		Other gains and losses		35	(33)
	Profit before tax			792	830
		Tax		(62)	(67)
	Profit for the period			730	763
		Gains on property revaluation		-	50
	Total comprehensive income for the period attributable to equity holders of the parent			730	813
	Earnings per share
		Basic		2.94p	3.08p
		Diluted		2.87p	3.03p
	Consolidated statement of changes in equity for the year ended 31 December 2012
				2012	2011
				£'000	£'000
		Purchase of own shares		(8)	(83)
		Sale of own shares		3	55
		Share-based payments		3	5
		Gains on property revaluation		-	50
	Total income/(loss) recognised directly in equity			(2)	27
		Profit for the year		730	763
		Issue of share capital		34	29
		Dividends paid		(335)	(295)
	Change in shareholders' equity for the year			427	524
		Shareholders' equity at start of year		4,418	3,894
	Shareholders' equity at end of year			4,845	4,418

Consolidated balance sheet as at 31 December 2012
				2012	2011
				£'000	£'000
	Non-current assets
		Goodwill		1,018	1,118
		Other intangible assets		56	-
		Property, plant and equipment		2,361	2,425
		Investments		800	700
		Deferred tax assets		17	19
				4,252	4,262
	Current assets
		Investments		561	526
		Trade and other receivables		2,672	2,339
		Cash and cash equivalents		70	531
				3,303	3,396
	Total assets			7,555	7,658
	Current liabilities
		Trade and other payables		(1,541)	(1,939)
		Tax liabilities		(57)	(38)
		Borrowings		(155)	(151)
				(1,753)	(2,128)
	Non-current liabilities
		Borrowings		(957)	(1,112)
				(957)	(1,112)
	Total liabilities			(2,710)	(3,240)
	Net assets			4,845	4,418
	Equity
		Share capital		503	499
		Share premium account		1,842	1,812
		Revaluation reserve		50	50
		Retained earnings		2,450	2,057
	Attributable to equity holders of the parent			4,845	4,418
	These financial statements of IS Solutions Plc, registered number 01892751, were approved by the Board of Directors and authorised for issue on 25 March 2013 and were signed on its behalf by: J Lythall, Director

Consolidated cash flow statement for the year ended 31 December 2012
				2012	2011
				£'000	£'000
	Operating activities
		Profit from operations		790	897
	Adjustments for:
		Depreciation of property, plant and equipment		161	139
		Gain on disposal of property, plant and equipment		-	(1)
		Impairment of goodwill		100	-
		Share-based payments		3	5
	Operating cash flows before movements in working capital			1,054	1,040
		Increase in debtors		(333)	(110)
		(Decrease)/increase in creditors		(398)	272
	Cash generated by operations			323	1,202
		Income taxes paid		(41)	(57)
	Net cash from operating activities			282	1,145
	Investing activities
		Interest received		-	4
		Interest paid		(33)	(38)
		Purchase of non-current investments		(100)	(500)
		Capitalisation of development costs		(56)	-
		Purchase of property, plant and equipment		(97)	(223)
		Proceeds on disposal of property, plant and equipment		-	10
	Net cash used in investing activities			(286)	(747)
	Financing activities
		Issue of new share capital		34	29
		Dividends paid		(335)	(295)
		Repayment of borrowings		(151)	(147)
		Purchase of own shares (net)		(5)	(28)
	Net cash used in financing activities			(457)	(441)
	Net decrease in cash and cash equivalents			(461)	(43)
		Cash and cash equivalents at start of year		531	574
	Cash and cash equivalents at end of year			70	531

Notes
1.    Business and geographical segments
		The Group has adopted IFRS 8 Operating Segments with effect from 1 January 2009.  IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the Chief Executive to allocate resources to the segments and assess their performance.  The Group has one reportable segment.
		The information presented to the Chief Executive for the purpose of resource allocation and assessment of segment performance is focused on the type of product sold.  The principal activity of the Group is split into three categories: ·     Product sales ·     Project work ·     Recurring revenues No allocation of other income and costs to these categories is made because the Directors consider that any such allocation would be arbitrary.  Any allocation of assets and liabilities to these categories would also be arbitrary.  The reporting below is consistent with that provided to the Chief Executive.
		Continuing operations 2012		Product sales	Project work	Recurring revenues	Total £'000
			External sales	1,482	3,052	5,556	10,090
			Adjustment for agency basis	-	-	(882)	(882)
			Reported revenue	1,482	3,052	4,674	9,208
			Segment result (gross profit)	296	915	2,676	3,887
			Other operating costs and income				(3,097)
			Investing and financing activities				2
			Profit before tax				792
			Major customers (over 10% of revenue)
			Customer 1	-	1,287	1,200	2,487
		Continuing operations 2011		Product sales	Project work	Recurring revenues	Total £'000
			External sales	2,027	2,475	6,040	10,542
			Adjustment for agency basis	-	-	(1,481)	(1,481)
			Reported revenue	2,027	2,475	4,559	9,061
			Segment result (gross profit)	446	792	2,479	3,717
			Other operating costs and income				(2,820)
			Investing and financing activities				(67)
			Profit before tax				830
			Major customers (over 10% of revenue)
			Customer 1	-	1,028	1,200	2,228
		The accounting policies of the reportable segments are the same as the Group's accounting policies.
	Geographical information:  The Group operates entirely within the UK.

2.    Dividends
		2012	2011
		£'000	£'000
	Amounts recognised as distributions to equity holders
	Final dividend for the year ended 31 December 2011 of 0.90p (2010: 0.79p).	224	190
	Interim dividend for the year ended 31 December 2012 of 0.44p (2011: 0.40p.)	111	105
		335	295
	Proposed final dividend for the year ended 31 December 2012 of 1.00p.	250
	The proposed final dividend is subject to shareholders' approval at the AGM in May 2013, and has not been included as a liability in these financial statements.

3.    Annual Report & General Meeting
	The Company's Report and Accounts for the year ended 31 December 2012 together with the Notice of Annual General Meeting are being sent to shareholders shortly and will be available to view on the Company's website:  www.issolutions.co.uk. The Annual General Meeting will be held at 10.00 am on Thursday, 23 May 2013 at the Company's Registered office in Sunbury-on-Thames.

 

END

 

 

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