Half-year results - six months ended 30 June 2012

RNS Number : 9417L

IS Solutions PLC

11 September 2012

 

Issued by TooleyStreet Communications

Date: Tuesday 11 September 2012

Immediate Release

IS Solutions Plc

Half-year results for the six month period ended 30 June 2012

"Solid return to top line growth in all three areas of the business"

and

"18% advance in Earnings per share"

Financial Highlights:	June 2012	June 2011
·      Revenue	£4.524m	£4.054m	+11.5%
·      Group Profit before Tax	£337,000	£310,000	+8.7%
·      Diluted Earnings Per Share	1.25p	1.06p	+17.9%
·      Interim dividend	0.44p	0.40p	+10%
·      Cash at 30 June 2012	£204,000	£Nil
Commercial/Sector Highlights:
·      growth in web analytics, portals and ECM project work                                               +12.8% ·      Product sales uplift                                                                                                    +46% ·      Managed Services -                                                                                                    + 4%      -recurring income remains around 69.3% of GP

"The Board is pleased to announce a return to top line growth (and continuing bottom line growth) in the

first half of the year as all three areas of the business reported an increase in turnover and an advance in

earnings per share by 18%."

"As a business, we are now experiencing extended lead times this, we believe, reflects the general

overall mood within the economy as some of our customers experience a slowing in their market sectors.

"Taking into account these factors, and although, through the spread of our business and our high level

of recurring revenues (currently 69.3% of total GP), we are to an extent shielded from the prevailing

uncertainties at home and overseas, and whilst we have a number of client opportunities ahead of us in

the planning, we have to be mindful of external factors which could have an impact on our anticipated

business flow over the remainder of 2012."

                                                                                                   Barrie Clark, Chairman

Enquiries:
IS Solutions Plc	FinnCap Nomad & Broker	TooleyStreetCommunications IR & media relations
John Lythall, Managing Director	Corporate Finance: Ed Frisby /Rose Herbert Corporate Broking: Stephen Norcross	Fiona Tooley Tel:[phone]
Tel: [phone]	Tel: [phone]	Graeme Cull
www.issolutions.co.uk		Tel: [phone]
Ticker: AIM: ISL
		Office: [phone]

I S Solutions Plc

Half-year results for the six months ended 30 June 2012

Statement by the Chairman, Barrie Clark

The Board is pleased to announce a return to top line growth (and continuing bottom line growth) in the first half of the year as all three areas of the business reported an increase in turnover.

Financials

Revenue was up by 11.59% to £4.524 million (2011: £4.054 Million) producing a growth of 8.71% in Profit before tax, from £310,000 in 2011 to £337,000.  Post tax profit increased by 17.41% to £317,000 (2011: £270,000). Fully diluted earnings per share, on the same basis rose by 17.92% to 1.25p (2011: 1.06p).

Cash at 30 June 2012  stood at £204,000 (2011: £Nil): also, due to the continuing low interest rates available for deposits, the Board has elected to continue with its trading investments equivalent to a value of up to £500,000.  At the half year, this trading investment was valued at £538,000 and if deemed appropriate we are able to convert back to cash within a month. In July 2012, the Company's bank facility of £550,000 was renewed for a further year.

It is pleasing to see all areas of our business showing growth both at the revenue level and in gross profit contribution terms.

·      Projects:

Sales showed strong growth of 12.8% 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.1% as we elected to utilise contractors in certain areas rather than recruit in the current economic climate.

·      Managed Services

This is the mainstay of our business which generates our recurring income, and this first half produced growth in revenue of 4%, contributing 69.3% of the total GP (2011: 72.8%). This lower level of growth compared to previous years reflects a change in the mix of this business area; whilst we have seen significant growth in the Support contracts it has been offset by a continuing drop in the license maintenance revenue as a result of a lack of renewals from government departments, it was also slightly affected by the completion of a three-year Analytics contract which ended in Q1.

·      Product Sales

This area of our business is the least predictable - however, through concentrating on higher margin areas more closely aligned to the company's three main markets of Analytics, Portals and ECM, we are very pleased to report a return to growth in the first half - whilst maintaining GP at 27% - with an increase of 46% in turnover - albeit from a low point in 2011 of £496,000 to £724,000 by the end of the first half of the current financial year.

Dividend

Earnings per share advanced in the period by 17.92% compared to HY2011 however, against the outlook for the UK and downward revisions of economic growth on a worldwide basis, the Board feels it is prudent to take a cautious approach to cash management.

An interim dividend of 0.44 pence (2010: 0.40p), up 10% over the comparable 2011 half-year will be paid on 14 October 2012, to qualifying shareholders on the Register at the close of business on

28 September 2012.

Outlook

As a business, we are now experiencing extended lead times from initial client contact to closing business; more recently we have also witnessed that the length of time and level of scrutiny required by clients before committing to projects has increased - this, we believe, reflects the general overall mood within the economy as some of our customers experience a slowing in their market sectors.

Taking into account these factors, and although, through the spread of our business and our high level of recurring revenues (currently 69.3% of total GP), we are to an extent shielded from the prevailing uncertainties at home and overseas, and whilst we have a number of client opportunities ahead of us in the planning, we have to be mindful of external factors which could have an impact on our anticipated business flow over the remainder of 2012.

On behalf of the Board of IS Solutions Plc

11 September 2012

	Consolidated income statement for the six months ended 30 June 2012
				six months ended		Year ended
				30 June		31 December
				2012	2011	2011
				£'000	£'000	£'000
	Continuing operations
		Revenue		4,524	4,054	9,061
		Cost of sales		(2,656)	(2,288)	(5,344)
	Gross profit			1,868	1,766	3,717
		Distribution costs		(1,174)	(1,062)	(2,154)
		Administration expenses		(379)	(396)	(727)
		Other operating income		26	26	61
	Profit from operations			341	334	897
		Investment revenues		-	3	4
		Finance costs		(16)	(19)	(38)
		Other gains and losses		12	(8)	(33)
	Profit before tax			337	310	830
		Tax		(20)	(40)	(67)
	Profit for the period			317	270	763
		Gains on property revaluation		-	-	50
	Total comprehensive income for the period attributable to equity holders of the parent			317	270	813
	Earnings per share
		Basic		1.27 p	1.09 p	3.28 p
		Diluted		1.25 p	1.06 p	3.23 p
	Consolidated statement of changes in equity  for the six months ended 30 June 2012
				six months ended		Year ended
				30 June		31 December
				2012	2011	2011
				£'000	£'000	£'000
		Purchase of own shares		-	-	(83)
		Sale of own shares		-	-	55
		Share-based payments		2	3	5
		Gains on property revaluation		-	-	50
	Total expense recognised directly in equity			2	3	27
		Profit for the period		317	270	763
		Issue of share capital		-	-	29
		Dividends paid		(224)	(196)	(295)
	Change in shareholders' equity for the period			95	77	524
		Shareholders' equity at start of period		4,418	3,894	3,894
	Shareholders' equity at end of period			4,513	3,971	4,418

	Consolidated balance sheet as at 30 June 2012
				At 30 June		At 31 December
				2012	2011	2011
				£'000	£'000	£'000
	Non-current assets
		Goodwill		1,118	1,118	1,118
		Property, plant and equipment		2,394	2,317	2,425
		Investments		700	700	700
		Deferred tax assets		8	24	19
		Derivative financial instruments		-	10	-
				4,220	4,169	4,262
	Current assets
		Investments		538	541	526
		Trade and other receivables		2,111	2,445	2,339
		Cash and cash equivalents		204	-	531
				2,853	2,986	3,396
	Total assets			7,073	7,155	7,658
	Current liabilities
		Trade and other payables		(1,353)	(1,628)	(1,939)
		Tax liabilities		(19)	(73)	(38)
		Borrowings		(151)	(295)	(151)
				(1,523)	(1,996)	(2,128)
	Non-current liabilities
		Borrowings		(1,037)	(1,188)	(1,112)
				(1,037)	(1,188)	(1,112)
	Total liabilities			(2,560)	(3,184)	(3,240)
	Net assets			4,513	3,971	4,418
	Equity
		Share capital		499	496	499
		Share premium account		1,812	1,786	1,812
		Revaluation reserve		50	-	50
		Own shares		-	(12)	-
		Retained earnings		2,152	1,701	2,057
	Attributable to equity holders of the parent			4,513	3,971	4,418

	Consolidated cash flow statement for the six months ended 30 June 2012
				six months ended		Year ended
				30 June		31 December
				2012	2011	2011
				£'000	£'000	£'000
	Operating activities
		Profit from operations		341	334	897
	Adjustments for:
		Depreciation of property, plant and equipment		76	62	139
		Gain on disposal of  property, plant and equipment		-	(1)	(1)
		Share-based payments		2	3	5
	Operating cash flows before movements in working capital			419	398	1,040
		(Increase)/decrease in debtors		228	(216)	(110)
		Decrease in creditors		(586)	(39)	272
	Cash generated by operations			61	143	1,202
		Income taxes paid		(28)	-	(57)
	Net cash from operating activities			33	143	1,145
	Investing activities
		Interest received		-	3	4
		Interest paid		(16)	(19)	(38)
		Purchase of non-current investments		-	(500)	(500)
		Purchase of property, plant and equipment		(45)	(87)	(223)
		Proceeds on disposal of property, plant and equipment		-	9	10
	Net cash used in investing activities			(61)	(594)	(747)
	Financing activities
		Issue of new share capital		-	-	29
		Dividends paid		(224)	(196)	(295)
		Repayment of borrowings		(75)	(73)	(147)
		Purchase of own shares (net)		-	-	(28)
	Net cash used in financing activities			(299)	(269)	(441)
	Net movement in cash and cash equivalents			(327)	(720)	(43)
		Cash and cash equivalents at start of year		531	574	574
	Cash and cash equivalents at end of period			204	(146)	531

	Notes to the interim financial statements
1	Basis of preparation
	The interim financial information for the six months ended 30 June 2012 does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006 and has not been audited by the Group's auditors. The financial information for the year ended 31 December 2011 has been extracted from the statutory accounts for that year which have been filed with the Registrar of Companies and which contain an unqualified audit report and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.
	The interim financial information has been prepared on the basis of the accounting policies and on a consistent basis with the latest published annual accounts.  Those financial statements were prepared in accordance with International Financial Reporting Standards, incorporating International Accounting Standards (IAS's) and Interpretations (collectively IFRS).
2	Business and geographical segments
	The Group has one reportable business 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, as shown below. No allocation of other income and costs to these categories is made because the Directors consider that any such allocation would be arbitrary, as would be any allocation of assets and liabilities.
	Continuing operations 2012		License sales	Project work	Recurring revenues	Total £'000
		External sales	724	1,303	3,010	5,037
		Adjustment for agency basis	-	-	(513)	(513)
		Reported revenue	724	1,303	2,497	4,524
		Segment result (gross profit)	196	378	1,294	1,868
		Other operating costs and income				(1,527)
		Investing and financing activities				(4)
		Profit before tax				337
	Continuing operations 2011		License sales	Project work	Recurring revenues	Total £'000
		External sales	496	1,155	3,314	4,965
		Adjustment for agency basis	-	-	(911)	(911)
		Reported revenue	496	1,155	2,403	4,054
		Segment result (gross profit)	134	347	1,285	1,766
		Other operating costs and income				(1,432)
		Investing and financing activities				(24)
		Profit before tax				310
	Geographical segments
	The Group operates entirely within the UK.

3	Earnings per share			six months ended 30 June		Year ended 31 December
				2012	2011	2011
		Earnings attributable to equity holders of the parent		£317,000	£270,000	£813,000
		Weighted average of ordinary shares in issue		24,937,578	24,793,190	24,793,190
		Weighted average of own shares		-	(41,654)	(24,935)
		Weighted average for calculating basic EPS		24,937,578	24,751,536	24,768,255
		Effective dilutive share options		418,778	600,893	366,954
		Weighted average for calculating diluted EPS		25,356,356	25,352,429	25,135,209

4	Dividends			six months ended 30 June		Year ended 31 December
				/2012	/2011	2011
	Amounts recognised as distributions to equity holders			£'000	£'000	£'000
	Interim dividend for the year ended 31/12/2011 of 0.40p			-	-	99
	Final dividend for the year ended 31/12/2011 of 0 .90p (2010: 0.79p)			224	196	196
				224	196	295
	An interim dividend of 0.44p per share will be paid on 14 October 2012 to shareholders on the register at the close of business on 28 September 2012.			110
5	Current liabilities - borrowings			six  months ended 30 June		Year ended 31 December
				2012	2011	2011
				£'000	£'000	£'000
		Bank mortgage		151	149	151
		Bank overdraft		-	146	-
				151	295	151
	This statement will be posted to shareholders and a copy will be available on the Company's website, www.issolutions.co.uk.
6.

 

END

 

 

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