Interim Results

IS Solutions PLC 21 September 2007 Issued by Citigate Dewe Rogerson Ltd, Birmingham Date: Friday, 21 September 2007 Embargoed: 7.00am IS Solutions plc Interim Results for the six months ended 30 June 2007 • Turnover £4.26 million (2006: £3.38 million) up 26% • Pre-tax profit £181,000 (2006: £128,000) up 41% • Operating profit £133,000 (2006: £64,000) up 108% • Earnings per Share 0.71p (2006: 0.53p) up 34% • Cash balances at the half year risen to £2.2 million • Interim dividend 0.33p (2006: 0.17p) up 94% • Signed agreement to become partner of SAS, the market leader in business intelligence software and predictive analytics 'The solid progress achieved in the first half has continued into the third quarter of the year with significant wins in the area of web analytics. We also expect to conclude a number of further opportunities in the fourth quarter or early 2008. 'Overall, the Board believes that performance for the financial year will show further strong progress.' Barrie Clark, Chairman FULL STATEMENT ATTACHED Enquiries: John Lythall, Managing Director Fiona Tooley / Keith Gabriel IS Solutions Plc Citigate Dewe Rogerson Ltd Tel: 01932 893333 Tel: 0121 455 8370 www.issolutions.co.uk -2- IS Solutions plc Interim Results for the six months ended 30 June 2007 STATEMENT BY THE CHAIRMAN, BARRIE CLARK The interim results for the six months ended 30 June 2007 are in line with the Board's expectations and have continued the good start to the year that was noted at the time of our Preliminary announcement on 30 March 2007. Pre-tax profit increased by 41.4% to £181,000 (2006: £128,000) while basic earnings per share moved up by 34.0% to 0.71p (2006: 0.53p) and turnover by 26.1% to £4.257 million (2006: £3.376 million). Cashflow from operations has again been strong and cash balances at the half year had risen to £2.171 million (31 December 2006: £1.563 million, 30 June 2006: £1.659 million). Early in the year we extended our Adobe agreement to include sales through third parties and, as a result, the first half turnover includes £0.594 million of distribution business at 7% gross margin. Revenue from this area is expected to grow as we expand our activities in this arena. Whilst the first half of the year has seen top line growth continue, through the strategy of diversifying into value-added software products, our target of improving operating profit by driving through product license sales has also been successful and is reflected in the increase of 107.8% to £133,000 (2006: £64,000). We have also seen significant growth in Adobe sales and a number of wins in the web analytics area, based on our SpeedTrap partnership and web-based accessibility and compliance arena from our relationship with Watchfire. The Board believes that there are significant ongoing opportunities in the area of web analytics; we have recently signed an agreement to become a partner of SAS, the market leader in business intelligence software and predictive analytics, although it will be some time before we see sales resulting from this partnership due to the long sales cycle associated with this business area. The Projects business continues to benefit from product led sales along with the recurring revenue stream from contracts. Dividend The Board has reviewed the future 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. The Board has determined to improve the already progressive dividend policy, increasing the interim payment by 94.1% to 0.33p (2006 half year: 0.17p) per ordinary share. The interim dividend will be paid on 1 November to shareholders on the Register at the close of business on 5 October 2007. Outlook The solid progress achieved in the first half has continued into the third quarter of the year with significant wins in the area of web analytics. We also expect to conclude a number of further opportunities in the fourth quarter or early 2008. Overall, the Board believes that performance for the financial year will show further strong progress. -3- IS Solutions plc Consolidated income statement for the six months ended 30 June 2007 6 months ended Year ended 30 June 31 December 2007 2006 2006 £'000 £'000 £'000 Continuing operations Revenue 4,257 3,376 6,909 Cost of sales (2,964) (2,176) (4,560) Gross profit 1,293 1,200 2,349 Distribution costs (653) (663) (1,280) Administration expenses (507) (473) (908) Profit from operations 133 64 161 Investment income 48 64 99 Other gains and losses - - 26 Profit before tax 181 128 286 Tax (8) - - Profit attributable to equity holders of the parent 173 128 286 Earnings per share Basic 0.71 p 0.53 p 1.18 p Diluted 0.70 p 0.51 p 1.16 p Consolidated statement of changes in shareholders' equity for the period 6 months ended Year ended 30 June 31 December 2007 2006 2006 £'000 £'000 £'000 Profit for the period 173 128 286 Total recognised income and expense for the period 173 128 286 Purchase of own shares - - (11) Sale of own shares 2 45 50 Dividends paid (80) (65) (107) Change in shareholders' equity for the period 95 108 218 Shareholders equity at start of period 2,819 2,601 2,601 Shareholders' equity at end of period 2,914 2,709 2,819 -4- IS Solutions plc Consolidated balance sheet as at 30 June 2007 At 30 June At 31 December 2007 2006 2006 £'000 £'000 £'000 Non-current assets Goodwill 254 249 254 Other intangible assets 22 52 37 Property, plant and equipment 176 240 185 Deferred tax assets 11 11 22 463 552 498 Current assets Trade and other receivables 1,584 1,498 1,754 Cash and cash equivalents 2,171 1,659 1,563 3,755 3,157 3,317 Total Assets 4,218 3,709 3,815 Current liabilities Trade and other payables (1,300) (980) (989) Tax liabilities - (10) - (1,300) (990) (989) Non-current liabilities Deferred tax liabilities (4) (10) (7) Total liabilities (1,304) (1,000) (996) Net assets 2,914 2,709 2,819 Equity Share capital 496 496 496 Share premium account 1,786 1,786 1,786 Own shares (64) (63) (66) Retained earnings 696 490 603 Total equity 2,914 2,709 2,819 -5- IS Solutions plc Consolidated cash flow statement for the six months ended 30 June 2007 6 months ended Year ended 30 June 31 December 2007 2006 2006 £'000 £'000 £'000 Operating activities Profit from operations 133 64 161 Adjustments for: Depreciation of property, plant and equipment 55 45 109 Gain on disposal of property, plant and equipment (2) - (1) Amortisation of intangible assets 15 8 23 Decrease/(increase) in debtors 170 (383) (631) Increase in creditors 311 46 41 Net cash from /(used in) operating activities 682 (220) (298) Investing activities Interest received 48 34 69 Proceeds on disposal of trading investments - 105 105 Disposal of operations - - 26 Purchase of tangible fixed assets (50) (62) (75) Sale of tangible fixed assets 6 - 5 Acquisition of subsidiary - (234) (238) Net cash from/(used in) investing activities 4 (157) (108) Financing activities Dividends paid (80) (65) (107) Sale of own shares 2 14 (11) Net cash used in financing activities (78) (51) (118) Net increase/(decrease) in cash and cash equivalents 608 (428) (524) Cash and cash equivalents at start of year 1,563 2,087 2,087 Net funds at end of period 2,171 1,659 1,563 -6- IS Solutions plc Notes to the interim financial statements 1. Basis of preparation The interim financial information for the six months ended 30 June 2007 and 30 June 2006 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 31 December 2006 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. 2. Business and geographical segments Business segments The group is involved solely in the supply of internet services. Geographical segments The group operates entirely within the UK. 3. Earnings per ordinary share 6 months ended Year ended 30/06/2007 30/06/2006 31/12/2006 Earnings attributable to equity holders of the parent £173,000 £128,000 £286,000 Weighted average of ordinary shares in issue 24,793,190 24,793,190 24,793,190 Weighted average of own shares (436,308) (565,618) (517,231) Weighted average for calculating basic EPS 24,356,882 24,227,572 24,275,959 Effective dilutive share options 419,870 689,310 418,750 Weighted average for calculating diluted EPS 24,776,752 24,916,882 24,694,709 4. Dividends During the period a dividend of £80,000 (0.33p per share) was paid in relation to the year ended 31 December 2006 (2006: £65,000 (0.27p per share) in relation to the year ended 31 December 2005). An interim dividend of 0.33p per share (2006: 0.17p) is proposed, and will be paid on 1 November 2007 to shareholders on the register at the close of business on 5 October 2007. -7- INDEPENDENT REVIEW REPORT TO IS SOLUTIONS PLC Introduction We have been instructed by the company to review the financial information for the six months ended 30 June 2007 which comprise the consolidated income statement, the consolidated balance sheet, the consolidated statement of changes in shareholders' equity, the consolidated cash flow statement and related notes 1 to 4. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. This report is made solely to the company in accordance with Bulletin 1999/4 issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the company those matters we are required to state to them in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed. Directors' responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim report in accordance with the Listing Rules of the Financial Services Authority which require that the accounting policies and presentation applied to the interim figures are consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with the guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of group management and applying analytical procedures to the financial information and underlying financial data and, based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with International Standards on Auditing (UK and Ireland) and therefore provides a lower level of assurance than an audit. Accordingly, we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30 June 2007. Deloitte & Touche LLP Chartered Accountants Reading, UK 20 September 2007 This information is provided by RNS The company news service from the London Stock Exchange

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