Interim Results

RNS Number : 9131S

IS Solutions PLC

20 September 2010

 



Issued by Citigate Dewe Rogerson Ltd, Birmingham

Date: Monday, 20 September 1010

IS Solutions Plc

Interim Results

for the six months ended 30 June 2010

Financial Highlights
·      Revenue £6.41 million (2009: £5.12 million)	+25.2%
·      Recurring Income now accounts for 64% of gross profit
·      Adjusted PBT £253,000 (2009: £213,000)	+18.8%
·      Profit from operations £232,000 (2009: £178,000)	+30.3%
·      Earnings per share 0.79 pence (2009: 0.71 pence)	+11.3%
·      Interim dividend 0.36 pence	+9.1%

"Despite a high level of economic uncertainty both at home and abroad, the Board is pleased to announce continued growth which is reflected in these half-year results for the period ended 30 June 2010."

"The expected benefits from our global partnership with SAS,one of the largest independent vendors in the business intelligence marketwill begin to feed through in 2011."

"In the meantime, our significant investment and strong focus on Managed Service Offerings will result in an increasing level of recurring revenue. This, coupled with the on-going improvement in operating profit, continuing cash generation and half year trading results, leads the Board to be confident of achieving market expectations for the full year ending December 2010."

Enquiries:
John Lythall, Managing Director	Fiona Tooley or Keith Gabriel
IS Solutions Plc	Citigate Dewe Rogerson
Tel: [phone]	Tel: [phone]
www.issolutions.co.uk	Mobile: [phone] (FMT)
Ticker: AIM: ISL
	Geoff Nash/ Charlotte Stranner
	FinnCap
	Tel: [phone]

IS Solutions Plc

Interim Results for the six months ended 30 June 2010

Statement by the Chairman, Barrie Clark

Despite a high level of economic uncertainty both at home and abroad, the Board is pleased to announce continued growth which is reflected in these half-year results for the period ended 30 June 2010.

Financials

Revenue increased by 25.2% to £6.41 million (2009: £5.12 million).  Adjusted Profit Before Tax increased by 18.8% to £253,000 (2009: £213,000) whilst profit from operations increased by 30.3% to £232,000 (2009: £178,000). Earnings per share grew to 0.79p (2009: 0.71p) an increase of 11.3%.

Cash flow from operations has again been positive with £214,000 generated in the half year (2009: £735,000);  Due to the low interest rates for deposits currently available, the Board elected to purchase trading investments equivalent to £500,000 thereby leaving cash at the half year at  £0.55 million (31 December 2009: £1.24 million).

Although our Project revenue decreased during the first half of the year as a consequence of a reduced spend within our clients own business models, we are very pleased to report that our emphasis on increasing the level of recurring revenue stream over the past few years has more than offset this reduction, with recurring income now accounting for 63.9% of our gross profit. This, when combined with the recent partnership agreement made with SAS Institute Inc. ("SAS") and announced on 4 August 2010, should see this area of our business continuing to grow.

Dividend

Last year, the total dividend was raised by 10% on the back of strong trading and cash generation.  Despite in recent weeks a little uncertainty creeping into the overall economic outlook as the general focus continues on managing UK PLC spend and sustained recovery as well as rises in VAT etc., we as a business remain positive about the opportunities open to us.

Against this backdrop and so as to ensure that we can continue to grow and invest in the business, the Board feels that to both balance its belief and also manage the short-term realistically, it is appropriate to be prudent at this half year and to increase the interim dividend by no more than 0.03p from 0.33 pence to 0.36 pence per ordinary share.

This interim dividend will be paid on 15 October 2010 to shareholders on the Register at the close of business on 1 October 2010.

Outlook

The expected benefits from our global partnership with SAS,one of the largest independent vendors in the business intelligence marketwill begin to feed through in 2011.

In the meantime, our significant investment and strong focus on Managed Service Offerings will result in an increasing level of recurring revenue. This, coupled with the on-going improvement in operating profit, continuing cash generation and half year trading results, leads the Board to be confident of achieving market expectations for the full year ending December 2010.

The Directors look forward to updating shareholders on its progress at the end of the year.

20 September 2010

Consolidated income statement for the six months ended 30 June 2010
		6 months ended		Year ended
		30 June		31 December
		2010	2009	2009
		£'000	£'000	£'000
Continuing operations
	Revenue	6,409	5,119	9,783
	Cost of sales	(4,925)	(3,602)	(6,543)
Gross profit		1,484	1,517	3,240
	Distribution costs	(907)	(889)	(1,790)
	Administration expenses	(396)	(499)	(928)
	Other operating income	51	49	99
Profit from operations		232	178	621
	Investment revenues	3	6	9
	Finance costs	(20)	-	(14)
	Other gains and losses	-	-	(22)
Profit before tax		215	184	594
	Tax	(20)	(18)	(61)
Profit attributable to equity holders of the  parent/total comprehensive income for the  period		195	166	533
Earnings per share
	Basic	0.79 p	0.71 p	2.23 p
	Diluted	0.78 p	0.70 p	2.22 p

Consolidated statement of changes in equity for the six months ended 30 June 2010
		6 months ended		Year ended
		30 June		31 December
		2010	2009	2009
		£'000	£'000	£'000
	Purchase of own shares	-	-	(10)
	Sale of own shares	-	3	249
	Share-based payments	8	5	11
Total expense recognised directly in equity		8	8	250
	Profit for the period	195	166	533
	Dividends paid	(190)	(157)	(238)
Change in shareholders' equity for the period		13	17	545
	Shareholders' equity at start of period	3,542	2,997	2,997
Shareholders' equity at end of period		3,555	3,014	3,542

Consolidated balance sheet as at 30 June 2010
		At 30 June		At 31 December
		2010	2009	2009
		£'000	£'000	£'000
Non-current assets
	Goodwill	1,147	1,134	1,147
	Other intangible assets	-	60	30
	Property, plant and equipment	2,318	100	2,290
	Deferred tax assets	64	77	64
	Derivative financial instruments	18	-	18
		3,547	1,371	3,549
Current assets
	Trading investments carried at fair value	500	-	-
	Trade and other receivables	1,610	1,510	2,366
	Cash and cash equivalents	550	1,810	1,243
		2,660	3,320	3,609
Total assets		6,207	4,691	7,158
Current liabilities
	Trade and other payables	(1,141)	(1,594)	(2,019)
	Tax liabilities	(29)	(71)	(38)
	Borrowings	(143)	-	(143)
		(1,313)	(1,665)	(2,200)
Non-current liabilities
	Borrowings	(1,339)	-	(1,410)
	Deferred tax liabilities	-	(12)	(6)
		(1,339)	(12)	(1,416)
Total liabilities		(2,652)	(1,677)	(3,616)
Net assets		3,555	3,014	3,542
Equity
	Share capital	496	496	496
	Share premium account	1,786	1,786	1,786
	Own shares	(17)	(274)	(20)
	Retained earnings	1,290	1,006	1,280
Attributable to equity holders of the parent		3,555	3,014	3,542

Consolidated cash flow statement for the six months ended 30 June 2010
		6 months ended		Year ended
		30 June		31 December
		2010	2009	2009
		£'000	£'000	£'000
Operating activities
	Profit from operations	232	178	621
Adjustments for:
	Depreciation of property, plant and equipment	66	46	98
	Gain on disposal of  property, plant and equipment	-	(2)	(3)
	Amortisation of intangible assets	30	30	60
	Share-based payments	8	5	11
Operating cash flows before movements in working capital		336	257	787
	Decrease/(increase) in debtors	756	560	(296)
	(Decrease)/increase in creditors	(878)	(82)	343
Cash generated by operations		214	735	834
	Income taxes paid	(35)	-	(69)
Net cash from operating activities		179	735	765
Investing activities
	Interest received	3	6	9
	Interest paid	(20)	-	(14)
	Purchase of trading investments	(500)	-	-
	Purchase of derivative financial instruments	-	-	(40)
	Purchase of property, plant and equipment	(94)	(12)	(2,254)
	Proceeds on disposal of property, plant and equipment	-	9	10
	Acquisition of subsidiary	-	(531)	(298)
Net cash used in investing activities		(611)	(528)	(2,587)
Financing activities
	Dividends paid	(190)	(157)	(238)
	New borrowings	-	-	1,600
	Repayment of borrowings	(71)	-	(47)
	Sale/(purchase) of own shares (net)	-	3	(7)
Net cash (used in)/from financing activities		(261)	(154)	1,308
Net (decrease)/increase in cash and cash equivalents		(693)	53	(514)
	Cash and cash equivalents at start of year	1,243	1,757	1,757
Cash and cash equivalents at end of period		550	1,810	1,243

Notes to the interim financial statements

1          Basis of preparation

The interim financial information for the six months ended 30 June 2010 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 2009  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 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.

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.

The comparative information has been restated to conform with the requirements of IFRS 8. 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.

Business segments 2010		License sales	Project work	Recurring revenues	Total £'000
	External sales	3,652	1,278	2,359	7,289
	Adjustment for agency basis	(596)	-	(284)	(880)
	Reported revenue	3,056	1,278	2,075	6,409
	Segment result (gross profit)	364	172	948	1,484
	Other operating costs and income				(1,252)
	Investing and financing activities				(17)
	Profit before tax				215
Business segments 2009		License sales	Project work	Recurring revenues	Total £'000
	External sales	2,318	1,537	1,596	5,451
	Adjustment for agency basis	-	-	(332)	(332)
	Reported revenue	2,318	1,537	1,264	5,119
	Segment result (gross profit)	308	451	758	1,517
	Other operating costs and income				(1,339)
	Investing and financing activities				6
	Profit before tax				184
Geographical segments
	The group operates entirely within the UK.

3          Earnings per share

	6 months ended		Year ended
	30/06/2010	30/06/2009	31/12/2009
Earnings attributable to equity holders of the parent	£195,000	£166,000	£533,000
Weighted average of ordinary shares in issue	24,793,190	24,793,190	24,793,190
Weighted average of own shares	(78,677)	(1,362,730)	(932,922)
Weighted average for calculating basic EPS	24,714,513	23,430,460	23,860,268
Effective dilutive share options	182,655	129,892	126,378
Weighted average for calculating diluted EPS	24,897,168	23,560,352	23,986,646

4          Dividends

	6 months ended		Year ended
	30/06/2010	30/06/2009	31/12/2009
Amounts recognised as distributions to equity holders	£'000s	£'000s	£'000s
Interim dividend for the year ended 31/12/2009 of .33p	-	-	80
Final dividend for the year ended 31/12/2009 of.77p (2008: .67p)	190	157	158
	190	157	238

An interim dividend of 0.36p per share (eighty nine thousand pounds) will be paid on 15 October 2010 to shareholders on the register at the close of business on 1 October 2010.

 

END

 

 

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