20 Sep 2010 07:00
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: +44 (0) 1932 893333 | Tel: +44 (0) 121 362 4035 |
| www.issolutions.co.uk | Mobile: +44 (0) 7785 703523 (FMT) |
| Ticker: AIM: ISL |
|
|
| Geoff Nash/ Charlotte Stranner |
|
| FinnCap |
|
| Tel: +44 (0) 203 207 3253 |
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 |
|
|
|
| |
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| The group operates entirely within the UK. |
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|
| |
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.