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:+44 (0) 7785 703523

 

Tel: +44 (0) 1932 893333

Tel: +44 (0) 207 220 0500

Graeme Cull

www.issolutions.co.uk


Tel: +44 (0) 7976 228397

Ticker: AIM: ISL





Office: +44 (0) 121 309 0099

 



 

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.



 

 


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