Interim Results

IS Solutions PLC 27 September 2002 I S Solutions Plc Interim Results 6 months ended 30 June 2002 Chairmans Statement The interim results for the 6 months ended 30 June 2002 are in line with our trading statement made on 22 May 2002. Turnover for the Group was £3.62 million (2001: £5.9 million) and there was an operating loss before tax and amortisation of goodwill of £661,000 (2001 profit: £70,000). This includes a bad debt of £222,000 from a client of our US operation, previously reported in our statement of 22 May. Cash still remains strong at £667,000 (year end 2001: £758,000) and the company had a net inflow of cash from operating activities of £30,000. In view of the continuing difficult trading conditions the Board has elected not to pay any interim dividend. UK The UK has three main areas of revenue two of which (IT Outsourcing Services and Financial Products) have performed strongly but were not able to offset the severe downturn in revenues from our Projects Division as the large corporates continued to reign back on capital expenditure. As a result of this the headcount in our Sunbury operation was reduced in June by some 20 per cent. This, along with other savings, was necessary to ensure that the Group remained in a cash generative position, which the Board considers important in the current economic climate. We have recently launched a new recurring revenue service, 'EyeSite', which is being well received by the market. EyeSite is a new range of services from IS Solutions that enables the detailed capturing of accurate information about the activity of visitors to all of a client's web-based applications. EyeSite produces precise information which enables our clients to make much better assessments of ROI than has been possible before. For more detailed information please visit our website. USA The US operation, which is mainly project based, has suffered a very severe turndown in the first half. As a result of this the headcount has also been reduced there and the remaining staff are currently on a four day week. The Board continues to monitor the prospects for the US and is considering the future of the operation against the likelihood of a continuing downturn. Outlook The outlook remains uncertain in the Company's markets and has led your Board to take the steps described above to ensure that the Group will continue to operate with no gearing and with cash in hand. In recent weeks we have seen an increase in the number of requests for quotations across services and projects although these have yet to convert into an increase in order intake. Whilst visibility remains poor, the signs are the most encouraging that we have seen this year. The Board believes that the second half position will reflect the benefit of the cost cutting undertaken though no improvement in market conditions is expected. Barrie Clark Chairman 27 September 2002 Consolidated Profit and Loss Account for the six months ended 30th June 2002 6 months ended Year ended 30th June 31st December Note 2002 2001 2001 £'000 £'000 £'000 Turnover Continuing operations 3,537 5,904 10,873 Acquisitions 84 - - -------- -------- -------- Group turnover 2 3,621 5,904 10,873 Cost of sales (2,165) (3,954) (6,489) -------- -------- -------- Gross profit 1,456 1,950 4,384 Distribution costs (1,258) (1,151) (2,723) Administration expenses (1,080) (969) (1,896) -------- -------- -------- Operating loss Continuing operations (855) (170) (235) Acquisitions (27) - - -------- -------- -------- Group operating loss (882) (170) (235) Investment income 3 11 16 Interest payable and similar charges - (2) (3) -------- -------- -------- Loss/profit on ordinary activities before amortisation (661) 70 215 Amortisation of Goodwill (218) (231) (437) -------- -------- -------- Loss on ordinary activities before taxation 2 (879) (161) (222) Tax on profit on ordinary activities 3 17 (21) (21) -------- -------- -------- Loss on ordinary activities after taxation (862) (182) (243) Equity minority interests 10 - (21) -------- -------- -------- Loss for the period (852) (182) (264) Dividends 4 - (20) (60) -------- -------- -------- Transferred to reserves (852) (202) (324) -------- -------- -------- Earnings per ordinary share 5 (3.48)p (0.73)p (0.98)p Earnings per share before goodwill amortisation (2.60)p 0.20 p 0.78 p Diluted earnings per ordinary share 5 (3.48)p (0.73)p (0.98)p Dividends per ordinary share 4 - 0.08 p 0.24 p Consolidated Balance Sheet as at 30th June 2002 At 30th June At 31st December 2002 2001 2001 £'000 £'000 £'000 Fixed assets Intangible assets 1,345 1,591 1,590 Tangible assets 571 825 704 Investments 29 68 29 ------- ------- ------- 1,945 2,484 2,323 Current assets Stocks - 77 - Debtors 2,364 2,900 2,943 Cash at bank and in hand 667 824 758 -------- -------- -------- 3,031 3,801 3,701 Creditors Amounts falling due within one year (1,382) (1,714) (1,545) -------- -------- -------- Net current assets 1,649 2,087 2,156 -------- -------- -------- Total assets less current liabilities 3,594 4,571 4,479 Equity minority interests (12) - (17) -------- -------- -------- Net assets 3,582 4,571 4,462 -------- -------- -------- Capital and reserves Called up share capital 496 496 496 Share premium account 2,133 2,133 2,133 Profit and loss account 953 1,942 1,833 -------- -------- -------- Equity shareholders' funds 3,582 4,571 4,462 -------- -------- -------- Consolidated Cash Flow Statement for the six months ended 30th June 2002 6 months ended Year ended 30th June 31st December 2002 2001 2001 £'000 £'000 £'000 Net cash flow from operating activities 30 (366) (132) Returns on investments and servicing of finance Interest received 3 11 16 Interest paid - (2) (3) -------- -------- -------- Net cash flow from returns on investments and servicing of finance 3 9 13 -------- -------- -------- Taxation (2) (7) (188) Capital expenditure Purchase of intangible fixed assets - - (165) Purchase of tangible fixed assets (105) (245) (269) Sale of tangible fixed assets 46 21 63 Purchase of Investments - - 39 -------- -------- -------- Net capital expenditure (59) (224) (332) -------- -------- -------- Acquisitions Purchase of subsidiary (3) - (39) Cash acquired with subsidiary 8 - 31 -------- -------- -------- Net cost of acquisition 5 - (8) -------- -------- -------- Equity dividends paid (40) (174) (194) Cash flow before use of liquid resources and financing (63) (762) (841) -------- -------- -------- Decrease in cash in period (63) (762) (841) -------- -------- -------- Net cash flow from operating activities 6 months ended Year ended 30th June 31st December 2002 2001 2001 £'000 £'000 £'000 Operating loss (882) (170) (235) Net depreciation charge 219 286 401 Amortisation of goodwill 218 231 437 Change in working capital 475 (713) (735) -------- -------- -------- Net cash flow from operating activities 30 (366) (132) -------- -------- -------- Reconciliation of net cash flow to movement in net funds 6 months ended Year ended 30th June 31st December 2002 2001 2001 £'000 £'000 £'000 Decrease in cash in the period (63) (762) (841) Translation differences (28) 15 28 Movement in net funds in the year (91) (747) (813) Net funds at 1 January 2002 758 1,571 1,571 -------- -------- -------- Net funds at 30 June 2002 667 824 758 -------- -------- -------- Statement of total recognised gains and losses 6 months ended Year ended 30th June 31st December 2002 2001 2001 £'000 £'000 £'000 Loss for the period (852) (202) (324) Currency translation differences (28) 15 28 -------- -------- -------- Total recognised gains and losses (880) (187) (296) -------- -------- -------- Notes to the interim financial statements 1. Basis of Preparation The interim financial statements have been prepared on the basis of accounting policies set out in the Group financial statements for the year ended 31 December 2001. The statements are unaudited but have been reviewed by KPMG Audit Plc. 2. Segmental Analysis Turnover arises from the distribution, design and installation of computer hardware and software systems. 6 months ended Year ended 30th June 31st December 2002 2001 2001 £'000 £'000 £'000 Turnover UK 3,461 5,544 10,004 USA 160 360 869 -------- -------- ---------- 3,621 5,904 10,873 -------- -------- --------- Loss before Taxation UK (540) 328 (214) USA (339) (489) (8) -------- -------- -------- (879) (161) (222) -------- -------- -------- Net Assets/(Liabilities) UK 3,925 4,575 4,473 USA (343) (4) (11) -------- -------- -------- 3,582 4,571 4,462 -------- -------- -------- 3. Taxation The taxation credit for the six months ended 30 June 2002 is based on an estimated effective rate of 30% for the full year. 4. Dividends The Directors have elected not to pay an interim dividend (2001 interim dividend 0.08p, final dividend 0.16p). 5. Earnings per Share The basic earnings per share figure of (3.48)p (2001: (0.73)p) has been calculated on the basis of a loss after tax of £862,000 (2001: £182,000) and the weighted average number of shares in issue of 24,793,190 (2001: 24,793,190). The diluted earnings per share figure of (3.48)p has been calculated on the basis that 24,793,190 shares had been in issue in the period (2001: 24,793,190). 6. Interim Results The interim results are unaudited and do not comprise full accounts within the meaning of Section 240 of the Companies Act 1985. Full accounts for the year ended 31st December 2001, on which the auditors gave an unqualified report, have been delivered to the Registrar of Companies. Copies of this statement will be posted to all shareholders in the week commencing 21st October 2002. Further copies are available from the registered office. This information is provided by RNS The company news service from the London Stock Exchange

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