Preliminary Results 2011

RNS Number : 0155A

IS Solutions PLC

26 March 2012

 



Issued by Citigate Dewe Rogerson Ltd, Birmingham

Date:    Monday 26 March 2012                                                                    Immediate Release    

IS Solutions Plc

Audited Preliminary Results

for the year ended 31 December 2011

2011 Financial Highlights
·      Revenue £9.06 million (2010: £10.98 million)
·      Recurring income accounted for 50.3% of revenue (2010: 41.4%) ·      Gross profit margin increased by 42% rising to 41.02% (2010: 28.91%)	+12 points
·      Reported profit from operations £897,000 (2010: £678,000)	+32.3%
·      Group profit* £835,000 (2010: *£699,000)	+19.46%
·      Diluted earnings per share 3.03 pence (2010: 2.46 p)	+23.17%
·      Final dividend  0.90p (2010: 0.79 p) ·      Total for the year 1.30p (2010: 1.15p)	+13.04%
·      Strong balance sheet and cash position at year end of £531,000             (2010: £574,000)

* Before tax and before share based payments.

"The Board is pleased to report another solid business performance in 2011 and recording a sixth successive year of double digit growth in profits." 

"The Company is focusing on  consolidating its position in the Analytics field and, through its strong partnership with its suppliers in this area it is allowing the business to broaden the scope of its technology offering outside of 'web-based analytics' into 'pure line business analytics'."

"The overall mix of our business is to benefit from the on-going demand for Managed Services and especially so from the Analytics area. The security of Turnover and Gross profit gained from the high proportion of Recurring Revenue allows us a high level of comfort in the current insecure economic climate that surrounds us. This, coupled with a return to growth in our Projects business, leads the Board to be optimistic going forward."

Enquiries:
John Lythall, Managing Director	Fiona Tooley
IS Solutions Plc Tel: [phone]	Investor, Media & Corporate Relations Tel: [phone]
	Ed Frisby/Rose Herbert - Corporate Finance Stephen Norcross - Corporate Broking
www.issolutions.co.uk	FinnCap Securities
Ticker: AIM: ISL	Tel: [phone]

I S Solutions Plc

Preliminary Results for the year ended 31 December 2011

Statement by the Chairman, Barrie Clark

The Board is pleased to report another solid business performance in 2011 and recording a sixth successive year of double digit growth in profits since 2005, driven in the main  by increasing levels of Recurring Revenue as the Group  strengthens its position as a leading 'Managed Services' provider in the fields of web-based analytics and portals.

Financial Results

As indicated in last year's financial reports, 2011 would be a year in which we would see a reduction in turnover and an increase in gross margin as we lessened our dependence on low margin product sales. The resultant effect of this planned strategy was that turnover reduced by 17.48% to £9.06 million (2010: £10.98 million) whilst the gross profit margin increased by 42%, up from 28.91% to 41.02%, resulting in an absolute margin increase of 12.11 percentage points.

Group profit (before tax and share-based payments) rose by 19.46% to £835,000 (2010: £699,000). Reported profit before tax increased by 21.35% year-on-year to £830,000 (2010: £684,000) and profit from operations also increased by 32.30% to £897,000 (2010: £678,000).

Diluted earnings per share rose to 3.03 pence, an increase of 23.17% over the comparable period (2010: 2.46 pence).

The Group continues to operate a strong balance sheet and retains £500,000 of its cash with HSBC Investments to offset the very poor interest being earned on cash on deposit. In 2010, this grew to £541,000 however, by the 2011 year end, it was valued at £526,000. It has since recovered to be above the 2010 level.

The Group's cash position remains strong with cash flow from Operations at £1.202 million (2011: £645,000) leaving cash at the year end of £531,000 (2011: £574,000) after having invested a further £500,000 in SpeedTrap Holdings (our total investment stands at £700,000). Net assets at 31 December 2012 were £4.42 million compared to £3.89 million in 2010.

Overview

The second half of the year again saw strong growth in our Recurring Revenue stream which increased to 50.3% of total revenue versus 41.4% in 2011 and to 66.69% of Gross profit (2010: 58.64%). The strength of our Recurring Revenues continues to shield us from the worst of any ups and downs within the economy and, as was the case last year, it is the 'Analytics' side of the business that is showing the most growth as our partnership with SAS goes from strength to strength.

An important milestone was achieved in March 2011 when the Company received ISO 27001 security accreditation. This achievement strengthens our Managed Services to existing and potential clients offering, as it does, the re-assurance that their data, and any access to it, is governed by a strict 'Code of Conduct' and technically isolated from the outside world.

The year saw a slow start to the Projects side of the business with the first half showing a drop in top line revenue (but an increase in gross profit) as we experienced some delays in project starts associated with the Japanese Tsunami. The second half however, saw a recovery and we finished the year showing an increase overall albeit small, with revenues up by 2.2% over the previous year.

As forecast in the 2010 Report & Accounts, and again at the half year, Product License sales fell from the high levels achieved in 2010 as the Company chose to concentrate on its higher margin business areas whilst increasing its Agency business within the Product License sales; this achieved the higher gross profit in this area of 22%, up from 14.00% in 2010.

Personnel

Once again, the Board would like to express its appreciation and thanks to all employees both in the UK and India for their on-going support - their knowledge and expertise are an invaluable and important asset; this, combined with their work ethic and teamwork, ensures we continue to give the consistency of service to clients and supplier partners that is the foundation of our business success.

Dividend

At the half-year, the Board increased the interim dividend. Following the strong second half performance, the Board will be recommending to shareholders an increase in the final dividend to 0.90 pence (2010: 0.79p). This, together with the interim dividend of 0.40 pence (2010: 0.36p) paid in October 2011, gives a total for the year of 1.30 pence in 2011 (2010: 1.15 p).

The final dividend, which is subject to shareholders' approval at the AGM (which is to be held on 17 May 2012), has an ex-dividend date of 9 May 2012 and will be paid on 24 May 2012 to shareholders on the Register at close of business on 11 May 2012.

Outlook

The Company is focusing on consolidating its position in the Analytics field and, through its strong partnership with its suppliers in this area it is allowing the business to broaden the scope of its technology offering outside of 'web-based analytics' into 'pure line business analytics'. This is generating opportunities for our Projects area by creating cross-technology business between the ECM (Enterprise Content Management) and Analytics areas.

The distribution led Product License sales continue to reduce as we concentrate on the Agency- based business of this area rather than the low margin supplier referred business.

The overall mix of our business is to benefit from the on-going demand for Managed Services and especially so from the Analytics area. The security of Turnover and Gross profit gained from the high proportion of Recurring Revenue allows us a high level of comfort in the current insecure economic climate that surrounds us. This, coupled with a return to growth in our Projects business, leads the Board to be optimistic going forward.

As a Company, we look forward to updating shareholders further as the year progresses.

Barrie Clark, Chairman

26 March 2012

	Consolidated statement of comprehensive income for the year ended 31 December 2011
			2011			2010
			£'000			£'000
	Continuing operations
		Revenue	9,061			10,981
		Cost of sales	(5,344)			(7,806)
	Gross profit		3,717			3,175
		Distribution costs	(2,154)			(1,825)
		Administration expenses	(727)			(760)
		Other operating income	61			88
	Profit from operations		897			678
		Investment revenues	4			5
		Finance costs	(38)			(40)
		Other gains and losses	(33)			41
	Profit before tax		830			684
		Tax	(67)			(65)
	Profit for the period attributable to equity holders of the parent		763			619
		Gains on property revaluation	50			-
	Total comprehensive income for the period		813			619
	Earnings per share
		Basic	3.08 p			2.51 p
		Diluted	3.03 p			2.46 p
	Consolidated statement of changes in equity for the year ended 31 December 2011
			2011		2010
			£'000		£'000
		Purchase of own shares	(83)		(13)
		Sale of own shares	55		10
		Share-based payments	5		15
		Gains on property revaluation	50		-
	Total income recognised directly in equity		27		12
		Profit for the year	763		619
		Issue of share capital	29		-
		Dividends paid	(295)		(279)
	Change in shareholders' equity for the year		524		352
		Shareholders' equity at start of year	3,894		3,542
	Shareholders' equity at end of year		4,418		3,894
	Consolidated balance sheet as at 31 December 2011
			2011	2010
			£'000	£'000
	Non-current assets
		Goodwill	1,118	1,118
		Property, plant and equipment	2,425	2,300
		Investments	700	200
		Deferred tax assets	19	47
		Derivative financial instruments	-	18
			4,262	3,683
	Current assets
		Investments	526	541
		Trade and other receivables	2,339	2,229
		Cash and cash equivalents	531	574
			3,396	3,344
	Total assets		7,658	7,027
	Current liabilities
		Trade and other payables	(1,939)	(1,667)
		Tax liabilities	(38)	(56)
		Borrowings	(151)	(147)
			(2,128)	(1,870)
	Non-current liabilities
		Borrowings	(1,112)	(1,263)
			(1,112)	(1,263)
	Total liabilities		(3,240)	(3,133)
	Net assets		4,418	3,894
	Equity
		Share capital	499	496
		Share premium account	1,812	1,786
		Revaluation reserves	50	-
		Own shares	-	(12)
		Retained earnings	2,057	1,624
	Attributable to equity holders of the parent		4,418	3,894

	Consolidated cash flow statement for the year ended 31 December 2011
				2011	2010
				£'000	£'000
	Operating activities
		Profit from operations		897	678
	Adjustments for:
		Depreciation of property, plant and equipment		140	108
		Gain on disposal of property, plant and equipment		(2)	-
		Amortisation of intangible assets		-	30
		Impairment of goodwill		-	29
		Share-based payments		5	15
	Operating cash flows before movements in working capital			1,040	860
		Decrease/(increase) in debtors		(110)	137
		(Decrease)/increase in creditors		272	(352)
	Cash generated by operations			1,202	645
		Income taxes paid		(57)	(36)
	Net cash from operating activities			1,145	609
	Investing activities
		Interest received		4	5
		Interest paid		(38)	(40)
		Purchase of non-current investments		(500)	(200)
		Purchase of current investments		-	(500)
		Purchase of property, plant and equipment		(223)	(118)
		Proceeds on disposal of property, plant and equipment		10	-
	Net cash used in investing activities			(747)	(853)
	Financing activities
		Issue of new share capital		29	-
		Dividends paid		(295)	(279)
		Repayment of borrowings		(147)	(143)
		Purchase of own shares (net)		(28)	(3)
	Net cash used in financing activities			(441)	(425)
	Net decrease in cash and cash equivalents			(43)	(669)
		Cash and cash equivalents at start of year		574	1,243
	Cash and cash equivalents at end of year			531	574

1	Business and geographical segments
	The Group has adopted IFRS 8 Operating Segments with effect from 1 January 2010. IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the Chief Executive to allocate resources to the segments and assess their performance. The Group has one reportable 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. The principal activity of the Group is split into three categories of product sold:             - License sales             - Project work             - Recurring revenues. No allocation of other income and costs to these categories is made because the Directors consider that any such allocation would be arbitrary. Any allocation of assets and liabilities to these categories would also be arbitrary. The reporting below is consistent with that provided to the Chief Executive.
	Continuing operations 2011			Licence sales		Project   work			Recurring revenues			Total       £'000
			External sales	2,027			2,475			6,040			10,542
			Adjustment for agency basis	-			-			(1,481)			(1,481)
			Reported revenue	2,027			2,475			4,559			9,061
			Segment result (gross profit)	446			792			2,479			3,717
			Other operating costs and income										(2,820)
			Investing and financing activities										(67)
			Profit before tax										830
			Major customers (over 10% of revenue)
			Customer 1	-			1,028			1,200			2,228
	Continuing operations 2010			Licence sales		Project   work			Recurring revenues			Total       £'000
			External sales	4,609			2,421			5,345			12,375
			Adjustment for agency basis	(596)			-			(798)			(1,394)
			Reported revenue	4,013			2,421			4,547			10,981
			Segment result (gross profit)	562			751			1,862			3,175
			Other operating costs and income										(2,497)
			Investing and financing activities										6
			Profit before tax										684
			Major customers (over 10% of revenue)
			Customer 1	-			1,024			1,169			2,193
	Geographical information
		The group operates entirely within the UK.

2	Dividends			2011	2010
	Amounts recognised as distributions to equity holders			£'000	£'000
		Final dividend for the year ended 31 December 2010 of 0.79p (2009: 0.77p)		190	190
		Interim dividend for the year ended 31 December 2011 of 0.40p (2010: 0.36p)		105	89
				295	279
		Proposed final dividend for the year ended 31 December 2011 of 0.90p		224
	The proposed final dividend is subject to shareholders' approval at the AGM and has not been included as a liability in these financial statements.
3	The Company's Report and Accounts for the year ended 31 December 2011 together with the notice of Annual General Meeting are being sent to shareholders shortly and will be available to view on the Company's website: www.issolutions.co.uk.  The Company's Annual General Meeting will be held at 10 am on 17 May 2012 at the company's offices in Sunbury-on-Thames.

 

END

 

 

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