11 Sep 2012 07:00
Issued by TooleyStreet Communications
Date: Tuesday 11 September 2012
Immediate Release
IS Solutions Plc
Half-year results for the six month period ended 30 June 2012
"Solid return to top line growth in all three areas of the business"
and
"18% advance in Earnings per share"
Financial Highlights: | June 2012 | June 2011 | |
·; Revenue | £4.524m | £4.054m | +11.5% |
·; Group Profit before Tax | £337,000 | £310,000 | +8.7% |
·; Diluted Earnings Per Share | 1.25p | 1.06p | +17.9%
|
·; Interim dividend | 0.44p | 0.40p | +10% |
·; Cash at 30 June 2012 | £204,000 | £Nil | |
Commercial/Sector Highlights: | |||
·; growth in web analytics, portals and ECM project work +12.8% ·; Product sales uplift +46% ·; Managed Services - + 4% -recurring income remains around 69.3% of GP | |||
"The Board is pleased to announce a return to top line growth (and continuing bottom line growth) in the
first half of the year as all three areas of the business reported an increase in turnover and an advance in
earnings per share by 18%."
"As a business, we are now experiencing extended lead times this, we believe, reflects the general
overall mood within the economy as some of our customers experience a slowing in their market sectors.
"Taking into account these factors, and although, through the spread of our business and our high level
of recurring revenues (currently 69.3% of total GP), we are to an extent shielded from the prevailing
uncertainties at home and overseas, and whilst we have a number of client opportunities ahead of us in
the planning, we have to be mindful of external factors which could have an impact on our anticipated
business flow over the remainder of 2012."
Barrie Clark, Chairman
Enquiries: | ||
IS Solutions Plc
| FinnCap Nomad & Broker | TooleyStreetCommunications IR & media relations |
John Lythall, Managing Director | Corporate Finance: Ed Frisby /Rose Herbert Corporate Broking: Stephen Norcross | Fiona Tooley Tel:+44 (0) 7785 703523
|
Tel: +44 (0) 1932 893333 | Tel: +44 (0) 207 220 0500 | Graeme Cull |
www.issolutions.co.uk | Tel: +44 (0) 7976 228397 | |
Ticker: AIM: ISL | ||
Office: +44 (0) 121 309 0099 |
I S Solutions Plc
Half-year results for the six months ended 30 June 2012
Statement by the Chairman, Barrie Clark
The Board is pleased to announce a return to top line growth (and continuing bottom line growth) in the first half of the year as all three areas of the business reported an increase in turnover.
Financials
Revenue was up by 11.59% to £4.524 million (2011: £4.054 Million) producing a growth of 8.71% in Profit before tax, from £310,000 in 2011 to £337,000. Post tax profit increased by 17.41% to £317,000 (2011: £270,000). Fully diluted earnings per share, on the same basis rose by 17.92% to 1.25p (2011: 1.06p).
Cash at 30 June 2012 stood at £204,000 (2011: £Nil): also, due to the continuing low interest rates available for deposits, the Board has elected to continue with its trading investments equivalent to a value of up to £500,000. At the half year, this trading investment was valued at £538,000 and if deemed appropriate we are able to convert back to cash within a month. In July 2012, the Company's bank facility of £550,000 was renewed for a further year.
It is pleasing to see all areas of our business showing growth both at the revenue level and in gross profit contribution terms.
·; Projects:
Sales showed strong growth of 12.8% 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.1% as we elected to utilise contractors in certain areas rather than recruit in the current economic climate.
·; Managed Services
This is the mainstay of our business which generates our recurring income, and this first half produced growth in revenue of 4%, contributing 69.3% of the total GP (2011: 72.8%). This lower level of growth compared to previous years reflects a change in the mix of this business area; whilst we have seen significant growth in the Support contracts it has been offset by a continuing drop in the license maintenance revenue as a result of a lack of renewals from government departments, it was also slightly affected by the completion of a three-year Analytics contract which ended in Q1.
·; Product Sales
This area of our business is the least predictable - however, through concentrating on higher margin areas more closely aligned to the company's three main markets of Analytics, Portals and ECM, we are very pleased to report a return to growth in the first half - whilst maintaining GP at 27% - with an increase of 46% in turnover - albeit from a low point in 2011 of £496,000 to £724,000 by the end of the first half of the current financial year.
Dividend
Earnings per share advanced in the period by 17.92% compared to HY2011 however, against the outlook for the UK and downward revisions of economic growth on a worldwide basis, the Board feels it is prudent to take a cautious approach to cash management.
An interim dividend of 0.44 pence (2010: 0.40p), up 10% over the comparable 2011 half-year will be paid on 14 October 2012, to qualifying shareholders on the Register at the close of business on
28 September 2012.
Outlook
As a business, we are now experiencing extended lead times from initial client contact to closing business; more recently we have also witnessed that the length of time and level of scrutiny required by clients before committing to projects has increased - this, we believe, reflects the general overall mood within the economy as some of our customers experience a slowing in their market sectors.
Taking into account these factors, and although, through the spread of our business and our high level of recurring revenues (currently 69.3% of total GP), we are to an extent shielded from the prevailing uncertainties at home and overseas, and whilst we have a number of client opportunities ahead of us in the planning, we have to be mindful of external factors which could have an impact on our anticipated business flow over the remainder of 2012.
On behalf of the Board of IS Solutions Plc
11 September 2012
Consolidated income statement for the six months ended 30 June 2012 | ||||||
six months ended | Year ended | |||||
30 June | 31 December | |||||
2012 | 2011 | 2011 | ||||
£'000 | £'000 | £'000 | ||||
Continuing operations | ||||||
Revenue | 4,524 | 4,054 | 9,061 | |||
Cost of sales | (2,656) | (2,288) | (5,344) | |||
Gross profit | 1,868 | 1,766 | 3,717 | |||
Distribution costs | (1,174) | (1,062) | (2,154) | |||
Administration expenses | (379) | (396) | (727) | |||
Other operating income | 26 | 26 | 61 | |||
Profit from operations | 341 | 334 | 897 | |||
Investment revenues | - | 3 | 4 | |||
Finance costs | (16) | (19) | (38) | |||
Other gains and losses | 12 | (8) | (33) | |||
Profit before tax | 337 | 310 | 830 | |||
Tax | (20) | (40) | (67) | |||
Profit for the period | 317 | 270 | 763 | |||
Gains on property revaluation | - | - | 50 | |||
Total comprehensive income for the period attributable to equity holders of the parent | 317 | 270 | 813 | |||
Earnings per share | ||||||
Basic | 1.27 p | 1.09 p | 3.28 p | |||
Diluted | 1.25 p | 1.06 p | 3.23 p | |||
Consolidated statement of changes in equity for the six months ended 30 June 2012 | ||||||
six months ended | Year ended | |||||
30 June | 31 December | |||||
2012 | 2011 | 2011 | ||||
£'000 | £'000 | £'000 | ||||
Purchase of own shares | - | - | (83) | |||
Sale of own shares | - | - | 55 | |||
Share-based payments | 2 | 3 | 5 | |||
Gains on property revaluation | - | - | 50 | |||
Total expense recognised directly in equity | 2 | 3 | 27 | |||
Profit for the period | 317 | 270 | 763 | |||
Issue of share capital | - | - | 29 | |||
Dividends paid | (224) | (196) | (295) | |||
Change in shareholders' equity for the period | 95 | 77 | 524 | |||
Shareholders' equity at start of period | 4,418 | 3,894 | 3,894 | |||
Shareholders' equity at end of period | 4,513 | 3,971 | 4,418 | |||
Consolidated balance sheet as at 30 June 2012 | ||||||
At 30 June | At 31 December | |||||
2012 | 2011 | 2011 | ||||
£'000 | £'000 | £'000 | ||||
Non-current assets | ||||||
Goodwill | 1,118 | 1,118 | 1,118 | |||
Property, plant and equipment | 2,394 | 2,317 | 2,425 | |||
Investments | 700 | 700 | 700 | |||
Deferred tax assets | 8 | 24 | 19 | |||
Derivative financial instruments | - | 10 | - | |||
4,220 | 4,169 | 4,262 | ||||
Current assets | ||||||
Investments | 538 | 541 | 526 | |||
Trade and other receivables | 2,111 | 2,445 | 2,339 | |||
Cash and cash equivalents | 204 | - | 531 | |||
2,853 | 2,986 | 3,396 | ||||
Total assets | 7,073 | 7,155 | 7,658 | |||
Current liabilities | ||||||
Trade and other payables | (1,353) | (1,628) | (1,939) | |||
Tax liabilities | (19) | (73) | (38) | |||
Borrowings | (151) | (295) | (151) | |||
(1,523) | (1,996) | (2,128) | ||||
Non-current liabilities | ||||||
Borrowings | (1,037) | (1,188) | (1,112) | |||
(1,037) | (1,188) | (1,112) | ||||
Total liabilities | (2,560) | (3,184) | (3,240) | |||
Net assets | 4,513 | 3,971 | 4,418 | |||
Equity | ||||||
Share capital | 499 | 496 | 499 | |||
Share premium account | 1,812 | 1,786 | 1,812 | |||
Revaluation reserve | 50 | - | 50 | |||
Own shares | - | (12) | - | |||
Retained earnings | 2,152 | 1,701 | 2,057 | |||
Attributable to equity holders of the parent | 4,513 | 3,971 | 4,418 | |||
Consolidated cash flow statement for the six months ended 30 June 2012 | ||||||
six months ended | Year ended | |||||
30 June | 31 December | |||||
2012 | 2011 | 2011 | ||||
£'000 | £'000 | £'000 | ||||
Operating activities | ||||||
Profit from operations | 341 | 334 | 897 | |||
Adjustments for: | ||||||
Depreciation of property, plant and equipment | 76 | 62 | 139 | |||
Gain on disposal of property, plant and equipment | - | (1) | (1) | |||
Share-based payments | 2 | 3 | 5 | |||
Operating cash flows before movements in working capital | 419 | 398 | 1,040 | |||
(Increase)/decrease in debtors | 228 | (216) | (110) | |||
Decrease in creditors | (586) | (39) | 272 | |||
Cash generated by operations | 61 | 143 | 1,202 | |||
Income taxes paid | (28) | - | (57) | |||
Net cash from operating activities | 33 | 143 | 1,145 | |||
Investing activities | ||||||
Interest received | - | 3 | 4 | |||
Interest paid | (16) | (19) | (38) | |||
Purchase of non-current investments | - | (500) | (500) | |||
Purchase of property, plant and equipment | (45) | (87) | (223) | |||
Proceeds on disposal of property, plant and equipment | - | 9 | 10 | |||
Net cash used in investing activities | (61) | (594) | (747) | |||
Financing activities | ||||||
Issue of new share capital | - | - | 29 | |||
Dividends paid | (224) | (196) | (295) | |||
Repayment of borrowings | (75) | (73) | (147) | |||
Purchase of own shares (net) | - | - | (28) | |||
Net cash used in financing activities | (299) | (269) | (441) | |||
Net movement in cash and cash equivalents | (327) | (720) | (43) | |||
Cash and cash equivalents at start of year | 531 | 574 | 574 | |||
Cash and cash equivalents at end of period | 204 | (146) | 531 | |||
Notes to the interim financial statements | ||||||
1 | Basis of preparation | |||||
The interim financial information for the six months ended 30 June 2012 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 2011 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 on a consistent basis with the latest published annual accounts. Those financial statements were prepared in accordance with International Financial Reporting Standards, incorporating International Accounting Standards (IAS's) and Interpretations (collectively IFRS). | ||||||
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.
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. | ||||||
Continuing operations 2012 | License sales | Project work | Recurring revenues | Total£'000 | ||
External sales | 724 | 1,303 | 3,010 | 5,037 | ||
Adjustment for agency basis | - | - | (513) | (513) | ||
Reported revenue | 724 | 1,303 | 2,497 | 4,524 | ||
Segment result (gross profit) | 196 | 378 | 1,294 | 1,868 | ||
Other operating costs and income | (1,527) | |||||
Investing and financing activities | (4) | |||||
Profit before tax | 337 | |||||
Continuing operations 2011 | License sales | Project work | Recurring revenues | Total£'000 | ||
External sales | 496 | 1,155 | 3,314 | 4,965 | ||
Adjustment for agency basis | - | - | (911) | (911) | ||
Reported revenue | 496 | 1,155 | 2,403 | 4,054 | ||
Segment result (gross profit) | 134 | 347 | 1,285 | 1,766 | ||
Other operating costs and income | (1,432) | |||||
Investing and financing activities | (24) | |||||
Profit before tax | 310 | |||||
Geographical segments | ||||||
The Group operates entirely within the UK. | ||||||
3 | Earnings per share | six months ended 30 June | Year ended 31 December | |||
2012 | 2011 | 2011 | ||||
Earnings attributable to equity holders of the parent | £317,000 | £270,000 | £813,000 | |||
Weighted average of ordinary shares in issue | 24,937,578 | 24,793,190 | 24,793,190 | |||
Weighted average of own shares | - | (41,654) | (24,935) | |||
Weighted average for calculating basic EPS | 24,937,578 | 24,751,536 | 24,768,255 | |||
Effective dilutive share options | 418,778 | 600,893 | 366,954 | |||
Weighted average for calculating diluted EPS | 25,356,356 | 25,352,429 | 25,135,209 | |||
| ||||||
4 | Dividends | six months ended 30 June | Year ended 31 December | |||
/2012 | /2011 | 2011 | ||||
Amounts recognised as distributions to equity holders | £'000 | £'000 | £'000 | |||
Interim dividend for the year ended 31/12/2011 of 0.40p | - | - | 99 | |||
Final dividend for the year ended 31/12/2011 of 0 .90p (2010: 0.79p) | 224 | 196 | 196 | |||
224 | 196 | 295 | ||||
An interim dividend of 0.44p per share will be paid on 14 October 2012 to shareholders on the register at the close of business on 28 September 2012. | 110 | |||||
5 | Current liabilities - borrowings | six months ended 30 June | Year ended 31 December | |||
2012 | 2011 | 2011 | ||||
£'000 | £'000 | £'000 | ||||
Bank mortgage | 151 | 149 | 151 | |||
Bank overdraft | - | 146 | - | |||
151 | 295 | 151 | ||||
This statement will be posted to shareholders and a copy will be available on the Company's website, www.issolutions.co.uk.
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6. | ||||||