25 Mar 2013 07:00
IS Solutions Plc
Audited Preliminary Results
for the year ended 31 December 2012
"Strong performances from our Projects and Managed Services
underpins seventh year of successive growth"
Highlights | 2012 | 2011 | % |
Ø Revenue | £9.21m | £9.06m | +1.62% |
Ø Profit before tax* | £895,000 | £835,000 | +7.18% |
Ø Post tax profit* | £833,000 | £768,000 | +8.46% |
Ø Earnings per share - adjusted*, fully diluted |
3.28p |
3.05p |
+7.54% |
Ø Increase in dividend -interim(paid) -final (proposed) * Before goodwill impairment and share based payments |
0.44p 1.00p |
0.40p 0.90p | +10.00% |
Ø Recurring Revenues: produced growth in revenue of 2.5%, contributing 68.8% of the total GP (2011: 66.7%) | |||
Ø Projects: showed strong revenue growth of 23% being generated by all three areas of Web Analytics, Portals and Enterprise Content Management (ECM) | |||
"..one area of our business very much favoured by the low growth/no growth economic situation we find ourselves in is, - Analytics - the reason being that clients look to achieve better retention of customers and an increased proportion of their expenditure through a better understanding of their behaviour.
"Having a strong balance sheet with net cash, coupled with the growth coming from Analytics and recurring income that supplies 50% of our revenue and around 69% of our gross profit, leads the Board to be reasonably optimistic for another year of growth in terms of sales and earnings.
"We look forward to updating stakeholders on our progress as the year unfolds." Barrie Clark, Chairman |
Enquiries: | ||
IS Solutions Plc | FinnCap | TooleyStreet Communications Ltd |
John Lythall, Managing Director | Nominated Broker & Adviser | IR & Media Relations |
+44 (0) 1932 893333 | Ed Frisby/Rose Herbert - Corporate Finance Stephen Norcross - Corporate Broking | Fiona Tooley, Director Tel: +44 (0) 121 309 0099 |
Tel: +44 (0) 207 220 0500 | Mobile: +44 (0)7785 703523 | |
Editor's Note IS Solutions is a systems integrator and value-added reseller focused on three web-related areas - portals, content/document management, with specialities in business intelligence and 'big data' analytics. Based in Sunbury-on-Thames, the Group was founded in 1985 and became a listed PLC 1997. The business currently employs 105 staff, including 20 in Chennai, India, who provide product development and support. It also has a strong blue-chip client base which includes Toyota and Toshiba as well as BP, BT, GSK, HMRC, M&S and RBS. |
Ticker: AIM: ISL
Accreditation: ISO27001 E-mail: moreinfo@issolutions.co.uk
Website: www.issolutions.co.uk Follow us www.linkedin.com/company/issolutions
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IS Solutions Plc
Audited Preliminary Results for the year ended 31 December 2012
Statement by the Chairman, Barrie Clark
The Board is pleased to announce a return to top line growth and the seventh successive year of growth in adjusted PBT following a strong second half performance in 2012.
Financials
Revenue in the year under review improved by 1.62% to £9.208 million (2011: £9.061 million) producing a 7.18% growth in profit before tax (before goodwill write down and share-based payments), from £835,000 in 2011 to £895,000. On the same basis, adjusted post tax profit increased by 8.46% to £833,000 (2011: £768,000). Fully diluted earnings per share, on the same basis, rose by 7.54% to 3.28p (2011: 3.05p). Unadjusted post tax profits were £730,000 and unadjusted EPS was 2.87p.
Cash at the year-end stood at £70,000 (2011: £531,000) however, debtors were £333,000 higher and creditors £398,000 lower than 2011, giving a swing of £731,000. Within three weeks of the start of 2013 cash had risen to £600,000.
Due to the continuing low interest rates available for deposits, the Board elected once again to continue with its trading investment of £500,000 (initial value). At the 2012 year-end, these investments were valued at £561,000 (2011: £526,000); should it be deemed appropriate we are able to convert back to cash within a month. In July 2012, the Company's £500,000 bank facility was renewed for a further year. Interest cover stood at 24 times (2011: 23.6 times).
In addition to our trading investments we invested a further £100,000 in Speed-Trap Holdings Ltd - a fundamental part of our growing Analytics business and, our total investment to date within this operation is £800,000
As a result of our concentration on our higher margin Services business and away from the less predictable Product Sales, we have seen our Return on Sales ('ROS') continuing to improve and move ahead of last year - up by 0.56% to 9.72% (2011: 9.16%).
Looking at our business:-
Projects: Sales showed strong revenue growth of 23% being generated by all three areas of Web Analytics, Portals and Enterprise Content Management (ECM), however, we have experienced a small reduction in gross margin of c.2% as day rates were held at the previous year's level due to the economic environment.
Recurring Revenues: This is the mainstay of our business generating, as it does, the majority of our recurring income; 2012 produced growth in revenue of 2.5%, contributing 68.8% of the total GP (2011: 66.7%). Although this is at a lower level of revenue growth compared to previous years it reflects a change in the mix of this business area and in fact hides a significant growth in the Support contracts which has been offset by a continuing decline in the license maintenance revenue - due principally to the lack of renewals from the public sector.
Product Sales: This area of our business is the least predictable - the first half of 2012 produced a strong growth in revenue over the previous year however, this was followed by a much lower second half -resulting in an overall drop in revenue in Product Sales of 26.9%. Despite this, it has been very encouraging that the business still recorded an overall increase in revenue due to the growth in the Services area of our business more than offsetting the shrinkage in this arena.
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 and teamwork - their knowledge and expertise are an invaluable and important asset; this, combined with their work ethic ensures we continue to give the consistency of service to clients and supplier partners that is the foundation of our business success.
Dividend
Adjusted Earnings per share advanced in the period by 8.25% compared to 2011. However, against the current outlook for the UK and the on-going downward revisions of economic growth on a worldwide basis, the Board feels it is prudent to take a cautious approach to cash management.
The Board will be recommending to shareholders an increase in the final dividend to 1.00 pence (2011: 0.90p). This, together with the interim dividend of 0.44 pence (2011: 0.40p) paid in October 2012 gives a total for the year of 1.44p (2011: 1.30p), an increase of 10%.
Subject to shareholder approval at the Annual General Meeting, the final dividend will be paid on 31 May 2013, to qualifying shareholders on the Register at the close of business on 10 May 2013. The ex-dividend date is 8 May 2013. The dividend is covered 2.48 times by profit after taxation (2011: 2.59 times).
Outlook
As a Board, we continue to be cautiously optimistic in our view going forward. On the one hand the global economic situation stumbles on without showing any inclination to improve by any significant degree. Against this background our clients are naturally ensuring, as much as is possible, that they will get the Return on Investment they strive for before committing to additional new projects.
On the other hand, one area of our business very much favoured by the low growth/no growth economic situation we find ourselves in is, - Analytics - the reason being that clients look to achieve better retention of customers and an increased proportion of their expenditure through a better understanding of their behaviour.
Having a strong balance sheet with net cash, coupled with the growth coming from Analytics and recurring income that supplies 50% of our Revenue and around 69% of our gross profit, leads the Board to be reasonably optimistic for another year of growth in terms of sales and earnings.
We look forward to updating stakeholders on our progress as the year unfolds.
Date: 25 March 2013
Consolidated statement of comprehensive income for the year ended 31 December 2012 | |||||
|
|
|
| 2012 | 2011 |
|
|
|
| £'000 | £'000 |
| Continuing operations |
|
|
| |
|
| Revenue |
| 9,208 | 9,061 |
|
| Cost of sales |
| (5,321) | (5,344) |
| Gross profit |
| 3,887 | 3,717 | |
|
| Distribution costs |
| (2,293) | (2,154) |
|
| Administration expenses |
| (842) | (727) |
|
| Other operating income |
| 38 | 61 |
| Profit from operations |
| 790 | 897 | |
|
| Investment income |
| - | 4 |
|
| Finance costs |
| (33) | (38) |
|
| Other gains and losses |
| 35 | (33) |
| Profit before tax |
| 792 | 830 | |
|
| Tax |
| (62) | (67) |
| Profit for the period |
|
| 730 | 763 |
|
| Gains on property revaluation |
| - | 50 |
| Total comprehensive income for the period attributable to equity holders of the parent | 730 | 813 | ||
| Earnings per share |
|
|
| |
|
| Basic |
| 2.94p | 3.08p |
|
| Diluted |
| 2.87p | 3.03p |
|
|
|
|
|
|
| Consolidated statement of changes in equity for the year ended 31 December 2012 | ||||
|
|
|
| 2012 | 2011 |
|
|
|
| £'000 | £'000 |
|
| Purchase of own shares |
| (8) | (83) |
|
| Sale of own shares |
| 3 | 55 |
|
| Share-based payments |
| 3 | 5 |
|
| Gains on property revaluation |
| - | 50 |
| Total income/(loss) recognised directly in equity | (2) | 27 | ||
|
| Profit for the year |
| 730 | 763 |
|
| Issue of share capital |
| 34 | 29 |
|
| Dividends paid |
| (335) | (295) |
| Change in shareholders' equity for the year | 427 | 524 | ||
|
| Shareholders' equity at start of year |
| 4,418 | 3,894 |
| Shareholders' equity at end of year |
| 4,845 | 4,418 | |
Consolidated balance sheet as at 31 December 2012 | |||||
|
|
|
| 2012 | 2011 |
|
|
|
| £'000 | £'000 |
| Non-current assets |
|
|
| |
|
| Goodwill |
| 1,018 | 1,118 |
|
| Other intangible assets |
| 56 | - |
|
| Property, plant and equipment |
| 2,361 | 2,425 |
|
| Investments |
| 800 | 700 |
|
| Deferred tax assets |
| 17 | 19 |
|
|
|
| 4,252 | 4,262 |
| Current assets |
|
|
| |
|
| Investments |
| 561 | 526 |
|
| Trade and other receivables |
| 2,672 | 2,339 |
|
| Cash and cash equivalents |
| 70 | 531 |
|
|
|
| 3,303 | 3,396 |
| Total assets |
| 7,555 | 7,658 | |
| Current liabilities |
|
|
| |
|
| Trade and other payables |
| (1,541) | (1,939) |
|
| Tax liabilities |
| (57) | (38) |
|
| Borrowings |
| (155) | (151) |
|
|
|
| (1,753) | (2,128) |
| Non-current liabilities |
|
|
| |
|
| Borrowings |
| (957) | (1,112) |
|
|
|
| (957) | (1,112) |
| Total liabilities |
| (2,710) | (3,240) | |
| Net assets |
| 4,845 | 4,418 | |
| Equity |
|
|
| |
|
| Share capital |
| 503 | 499 |
|
| Share premium account |
| 1,842 | 1,812 |
|
| Revaluation reserve |
| 50 | 50 |
|
| Retained earnings |
| 2,450 | 2,057 |
| Attributable to equity holders of the parent | 4,845 | 4,418 | ||
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These financial statements of IS Solutions Plc, registered number 01892751, were approved by the Board of Directors and authorised for issue on 25 March 2013 and were signed on its behalf by:
J Lythall, Director | ||||
Consolidated cash flow statement for the year ended 31 December 2012 | |||||
|
|
|
| 2012 | 2011 |
|
|
|
| £'000 | £'000 |
| Operating activities |
|
|
| |
|
| Profit from operations |
| 790 | 897 |
| Adjustments for: |
|
|
| |
|
| Depreciation of property, plant and equipment | 161 | 139 | |
|
| Gain on disposal of property, plant and equipment | - | (1) | |
|
| Impairment of goodwill |
| 100 | - |
|
| Share-based payments |
| 3 | 5 |
| Operating cash flows before movements in working capital | 1,054 | 1,040 | ||
|
| Increase in debtors |
| (333) | (110) |
|
| (Decrease)/increase in creditors |
| (398) | 272 |
| Cash generated by operations |
| 323 | 1,202 | |
|
| Income taxes paid |
| (41) | (57) |
| Net cash from operating activities |
| 282 | 1,145 | |
| Investing activities |
|
|
| |
|
| Interest received |
| - | 4 |
|
| Interest paid |
| (33) | (38) |
|
| Purchase of non-current investments | (100) | (500) | |
|
| Capitalisation of development costs |
| (56) | - |
|
| Purchase of property, plant and equipment | (97) | (223) | |
|
| Proceeds on disposal of property, plant and equipment | - | 10 | |
| Net cash used in investing activities |
| (286) | (747) | |
| Financing activities |
|
|
| |
|
| Issue of new share capital |
| 34 | 29 |
|
| Dividends paid |
| (335) | (295) |
|
| Repayment of borrowings |
| (151) | (147) |
|
| Purchase of own shares (net) |
| (5) | (28) |
| Net cash used in financing activities |
| (457) | (441) | |
| Net decrease in cash and cash equivalents | (461) | (43) | ||
|
| Cash and cash equivalents at start of year | 531 | 574 | |
| Cash and cash equivalents at end of year | 70 | 531 | ||
Notes | |||||||
1. Business and geographical segments | |||||||
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The Group has adopted IFRS 8 Operating Segments with effect from 1 January 2009. 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.
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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: ·; Product 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.
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| Continuing operations 2012 | Product sales | Project work | Recurring revenues | Total £'000 | ||
|
| External sales | 1,482 | 3,052 | 5,556 | 10,090 | |
|
| Adjustment for agency basis | - | - | (882) | (882) | |
|
| Reported revenue | 1,482 | 3,052 | 4,674 | 9,208 | |
|
|
|
|
|
|
| |
|
| Segment result (gross profit) | 296 | 915 | 2,676 | 3,887 | |
|
| Other operating costs and income |
|
|
| (3,097) | |
|
| Investing and financing activities |
|
|
| 2 | |
|
| Profit before tax |
|
|
| 792 | |
|
| Major customers (over 10% of revenue) |
|
|
| ||
|
| Customer 1 | - | 1,287 | 1,200 | 2,487 | |
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|
|
|
|
|
| |
| Continuing operations 2011 | Product 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 | |
| The accounting policies of the reportable segments are the same as the Group's accounting policies. | ||||||
| Geographical information: The Group operates entirely within the UK. | ||||||
2. Dividends | |||
2012 | 2011 | ||
|
| £'000 | £'000 |
| Amounts recognised as distributions to equity holders | ||
| Final dividend for the year ended 31 December 2011 of 0.90p (2010: 0.79p). | 224 | 190 |
| Interim dividend for the year ended 31 December 2012 of 0.44p (2011: 0.40p.) | 111 | 105 |
|
| 335 | 295 |
| Proposed final dividend for the year ended 31 December 2012 of 1.00p. | 250 |
|
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The proposed final dividend is subject to shareholders' approval at the AGM in May 2013, and has not been included as a liability in these financial statements. | ||
3. Annual Report & General Meeting | |
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The Company's Report and Accounts for the year ended 31 December 2012 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 Annual General Meeting will be held at 10.00 am on Thursday, 23 May 2013 at the Company's Registered office in Sunbury-on-Thames.
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