Interim Results - six months

RNS Number : 6032E

IS Solutions PLC

30 September 2008

 



Issued by Citigate Dewe Rogerson Ltd, Birmingham

Date: Tuesday, 30 September 2008

Embargoed: 7.00am

IS Solutions plc

('the Group')

Interim Results for the six months ended 30 June 2008

Turnover £3.64 million (2007: £3.88 million)
Pre-tax profit £189,000 (2007: £181,000)	+4.4%
Operating profit £143,000 (2007: £133,000)	+7.5%
Earnings per share 0.71p (2007: 0.71p)
Interim dividend 0.33p (2007: 0.33p)
Gross margin 37.2% (2007: 35.6%)	+4.5%
Cash, cash equivalents and investment instruments at the half year stood at £2.11 million (2007: £2.17 million)
Acquisition of Chapter26 in July 2008, integrating well

'Despite the continued uncertainty in the financial markets and its potential impact on the overall economy, the Group has continued to see a robust demand for its services from our long standing clients, resulting in an increase in our recurring revenue streams. Although this demand has been offset to some extent by lower product sales, the Board believes the forecasts for the full year should be achievable.'

Barrie Clark, Chairman

FULL STATEMENT ATTACHED

Enquiries:
John Lythall, Managing Director	Keith Gabriel
IS Solutions Plc	Citigate Dewe Rogerson Ltd
Tel: [phone]	Tel: [phone]
www.issolutions.co.uk
(AIM: ISL)
Sandy Fraser/Neil McDonald
Brewin Dolphin Limited
Tel: [phone]

  -2-

IS Solutions plc

Interim Results for the six months ended 30 June 2008

Statement by the Chairman, Barrie Clark

Against a background of continuing economic uncertainty, the Board is pleased to announce that the interim results for the six months ended 30 June 2008 are in line with expectations.

Pre-tax profits for the period increased by 4.4% to £189,000 (2007: £181,000) and earnings per share were unchanged at 0.71p (2007: 0.71p) due to a higher tax charge. Turnover dropped by 6.2% to £3.64 million (2007: £3.88 million restated) though gross margins improved by 1.6 percentage points (up from 35.6% to 37.2%) reflecting a shift in business towards the more profitable projects and support areas of the Group. Cashflow from operations has again been positive and cash, cash equivalents and investment instruments at the half year stood at £2.11 million (31 December 2007: £2.50 million, 30 June 2007: £2.17 million), the reduction in cash has resulted from the increased dividend payment and the purchase of Treasury shares.

The first half of the year has seen a continuing improvement in operating profit to £143,000 (2007: £133,000), an increase of 7.5%. This has been driven by an increase in our projects and recurring revenue streams of 7.6%.

Product sales are down on last year reflecting the tightening economic situation but this is being offset by the above mentioned projects growth.

In July 2008 we completed the acquisition of Chapter26 Ltd, a company specialising in Enterprise Content Management built around EMC Documentum software. This, coupled with our existing Departmental Content Management practice, will allow us to offer clients a complete service in this arena.

Dividend

Last year the Board reviewed the dividend policy of the Group in the light of its historic cash balances, continuing track record of strong cash generation from operations and improving markets and prospects. Although the general market conditions have deteriorated considerably the Board believes that the Group's strong balance sheet, coupled with the first half results being in line with its expectations, is sufficient to allow it to hold the interim dividend at last year's level of 0.33p (2007 half year: 0.33p) per ordinary share. The interim dividend will be paid on 7 November 2008 to shareholders on the register at the close of business on 10 October 2008.

Outlook

Despite the continued uncertainty in the financial markets and its potential impact on the overall economy, the Group has continued to see a robust demand for its services from our long standing clients, resulting in an increase in our recurring revenue streams. Although this demand has been offset to some extent by lower product sales, the Board believes the forecasts for the full year should be achievable.

Barrie Clark, Chairman

30 September 2008

-3-

IS Solutions plc

Consolidated income statement for the six months ended 30th June 2008
		6 months ended		Year ended
		30th June		31st December
		2008	2007	2007
			Restated
		£'000	£'000	£'000
Continuing operations
	Revenue	3,644	3,884	7,894
	Cost of sales	(2,259)	(2,501)	(5,078)
Gross profit		1,385	1,383	2,816
	Distribution costs	(812)	(743)	(1,670)
	Administration expenses	(430)	(507)	(844)
Profit from operations		143	133	302
	Investment income	46	48	108
Profit before tax		189	181	410
	Tax	(24)	(8)	50
Profit attributable to equity holders of the parent		165	173	460
Earnings per share
	Basic	0.71 p	0.71 p	1.89 p
	Diluted	0.70 p	0.70 p	1.86 p

Consolidated statement of changes in shareholders' equity for the period
		6 months ended		Year ended
		30th June		31st December
		2008	2007	2007
		£'000	£'000	£'000
Total recognised income and expense for the period		165	173	460
	Purchase of own shares	(331)	-	(70)
	Sale of own shares	16	2	21
	Share-based payments	7	-	2
	Dividends paid	(160)	(80)	(161)
Change in shareholders' equity for the period		(303)	95	252
	Shareholders equity at start of period	3,071	2,819	2,819
Shareholders' equity at end of period		2,768	2,914	3,071

  -4-

IS Solutions plc

Consolidated balance sheet as at 30th June 2008
		At 30th June		At 31st December
		2008	2007	2007
		£'000	£'000	£'000
Non-current assets
	Goodwill	254	254	254
	Other intangible assets	-	22	7
	Property, plant and equipment	144	176	127
	Deferred tax assets	61	11	86
		459	463	474
Current assets
	Trading investments carried at fair value	250	-	-
	Trade and other receivables	1,244	1,584	1,224
	Cash and cash equivalents	1,860	2,171	2,504
		3,354	3,755	3,728
Total assets		3,813	4,218	4,202
Current liabilities
	Trade and other payables	(1,025)	(1,300)	(1,110)
	Tax liabilities	(20)	-	(20)
		(1,045)	(1,300)	(1,130)
Non-current liabilities
	Deferred tax liabilities	-	(4)	(1)
Total liabilities		(1,045)	(1,304)	(1,131)
Net assets		2,768	2,914	3,071
Equity
	Share capital	496	496	496
	Share premium account	1,786	1,786	1,786
	Own shares	(368)	(64)	(97)
	Retained earnings	854	696	886
Total equity		2,768	2,914	3,071

  -5-

IS Solutions plc

Consolidated cash flow statement for the six months ended 30th June 2008
			6 months ended		Year ended
			30th June		31st December
			2008	2007	2007
			£'000	£'000	£'000
Operating activities
		Profit from operations	143	133	302
Adjustments for:
		Depreciation of property, plant and equipment	52	55	114
		Gain on disposal of property, plant and equipment	(2)	(2)	(2)
		Amortisation of intangible assets	7	15	30
		Share-based payments	7	-	2
Operating cash flows before movements in working capital			207	201	446
		(Increase)/decrease in debtors	(20)	170	530
		(Decrease)/increase in creditors	(85)	311	121
Cash generated by operations			102	682	1,097
Net cash from operating activities			102	682	1,097
Investing activities
		Interest received	46	48	108
		Purchase of trading investments	(250)	-	-
		Purchase of property, plant and equipment	(74)	(50)	(60)
		Proceeds on disposal of property, plant and equipment	7	6	6
Net cash (used in)/from investing activities			(271)	4	54
Financing activities
	Dividends paid		(160)	(80)	(161)
	(Purchase)/sale of own shares		(315)	2	(49)
Net cash used in financing activities			(475)	(78)	(210)
Net (decrease)/increase in cash and cash equivalents			(644)	608	941
	Cash and cash equivalents at start of year		2,504	1,563	1,563
Cash and cash equivalents at end of period			1,860	2,171	2,504

  -6-

IS Solutions plc

Notes to the interim financial statements

1.    Basis of preparation

The interim financial information for the six months ended 30th June 2008 and 30th June 2007 does not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985 and has not been audited by the Group's auditors. The financial information for the year ended 31st December 2007 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 s237(2) or (3) of the Companies Act 1985.

The interim financial information has been prepared on the basis of the accounting policies and presentation required by International Financial Reporting Standards, incorporating International Accounting Standards (IAS's) and Interpretations (collectively IFRS), and on a consistent basis with the latest published annual accounts. The comparative amounts for revenue, cost of sales and distribution costs to June 2007 have been restated to comply with the change in accounting policies adopted in those annual accounts, as has the segmental analysis.

2.    Business and geographical segments

The Group reports its revenue and gross profit by direct sales (to its own customers) and distribution sales (vendor generated third party sales). Analysis of other income and operating costs to these segments would be entirely arbitrary and is not provided.

Business segments 2008		Direct	Distribution	Unallocated	Total
	Revenue	3,198	446	-	3,644
	Gross profit	1,357	28	-	1,385
	Other income and expense	-	-	(1,220)	(1,220)
	Segment result	1,357	28	(1,220)	165
	Assets	1,148	-	2,665	3,813
	Liabilities	(708)	-	(337)	(1,045)
Business segments 2007		Direct	Distribution	Unallocated	Total
	Revenue	3,284	600	-	3,884
	Gross profit	1,323	60	-	1,383
	Other income and expense	-	-	(1,210)	(1,210)
	Segment result	1,323	60	(1,210)	173
	Assets	980	-	3,238	4,218
	Liabilities	(740)	-	(564)	(1,304)
Geographical segments
	The group operates entirely within the UK.

continued…

  -7-

3.    Earnings per ordinary share

	6 months ended		Year ended
	30/06/2008	30/06/2007	31/12/2007
Earnings attributable to equity holders of the parent	£165,000	£173,000	£460,000
Weighted average of ordinary shares in issue	24,793,190	24,793,190	24,793,190
Weighted average of own shares	(1,403,998)	(565,618)	(482,285)
Weighted average for calculating basic EPS	23,389,192	24,227,572	24,310,905
Effective dilutive share options	201,000	419,870	361,977
Weighted average for calculating diluted EPS	23,590,192	24,647,442	24,672,882

4.    Dividends

During the period a dividend of £160,000 (0.67p per share) was paid in relation to the year ended 31st December 2007 (2007: £80,000 (0.33p per share) in relation to the year ended 31st December 2006).

An interim dividend of 0.33p per share (2007: 0.33p) is proposed, and will be paid on 7th November 2008 to shareholders on the register at the close of business on 10th October 2008.

 

END

 

 

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