14 Sep 2009 07:00
Issued by Citigate Dewe Rogerson Ltd, Birmingham
Date: 14 September 2009
Embargoed: 7.00am
IS Solutions plc
Interim Results for the six months ended 30 June 2009
| Revenue £5.12million (2008: £3.64 million) | +40.4% |
| Adjusted Operating profit* £213,000 (2008: £157,000) | +36% |
| Pre-tax profit £184,000 (2008: £189,000) | -2% |
| Earnings per share 0.71p (2008: 0.71p) | - |
| Interim dividend 0.33p (2008: 0.33p) | - |
| Strong cash generation resulted in cash and cash equivalents at the half year increasing to £1.81 million(31 December 2008: £1.76 million) | |
*Pre amortisation and share based payments
"With an increasing recurring revenue stream and a high level of project revenues, coupled with the continued improvement in operating profit the Board remains confident of meeting market expectations for the full year."
Barrie Clark, Chairman
FULL STATEMENT ATTACHED
| Enquiries: | |
| John Lythall, Managing Director | Keith Gabriel/Fiona Tooley |
| IS Solutions Plc | Citigate Dewe Rogerson Ltd |
| Tel: 01932 893333 | Tel: 0121 362 4035 |
| www.issolutions.co.uk | |
| Ticker: AIM: ISL | |
| Charles Cunningham | |
| FinnCap | |
| Tel: +44 (0) 207 600 1658 |
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IS Solutions plc
Interim Results for the six months ended 30 June 2009
Statement by the Chairman, Barrie Clark
Against a continuing background of economic uncertainty, the Board is pleased to announce the interim results for the period ended 30 June
Revenue increased by 40.4% to £5.12 million (2008: £3.64 million) of which, 19% was organic and 21% from last year's acquisition. Adjusted operating profit increased by 36% to £213,000 (2008: £157,000) and earnings per share were unchanged at 0.71p (2008: 0.71p) caused by a drop of £40,000 in the interest earned on our cash holdings. Cash flow from operations has again been positive with cash and cash equivalents at the half year increasing to £1.81 million (31 December 2008: £1.76 million). To further improve our operating position, the Company completed the purchase of its headquarters building in Sunbury on Thames (announced on 4 September 2009) which will lead to a reduction in overheads as we move forward into next year.
During the year we also invested in establishing a branch office in the Indian sub-continent to help reduce our operating costs and assist us in being more competitive once the UK economy starts to grow again. This, coupled with strong recurring revenues from a quality client base, has allowed us to retain staff through the recession thereby enabling us to respond to any upturn.
Dividend
In the current economic climate the Board continues to look carefully at its level of dividend. With continued strong cash generation from operations, improving markets and prospects, and the first half results being in line with our expectations, the Board has held the interim dividend at last year's level at 0.33p per ordinary share. The interim dividend will be paid on 30 October 2009 to shareholders on the register at the close of business on 25 September 2009.
Outlook
With an increasing recurring revenue stream and a high level of project revenues, coupled with the continued improvement in operating profit the Board remains confident of meeting market expectations for the full year.
| Consolidated income statement for the six months ended 30 June 2009 | ||||
| 6 months ended | Year ended | |||
| 30 June | 31 December | |||
| 2009 | 2008 | 2008 | ||
|
| Restated | |||
|
| £'000 | £'000 | £'000 | |
| Continuing operations |
| |||
| Revenue | 5,119 | 3,644 | 8,854 | |
|
| Cost of sales | (3,602) | (2,309) | (5,855) |
| Gross profit | 1,517 | 1,335 | 2,999 | |
| Distribution costs | (889) | (762) | (1,565) | |
| Administration expenses | (499) | (476) | (1,177) | |
| Other operating income | 49 | 46 | 92 | |
| Profit from operations | 178 | 143 | 349 | |
| Investment income | 6 | 46 | 103 | |
| Profit before tax | 184 | 189 | 452 | |
| Tax | (18) | (24) | (22) | |
| Profit attributable to equity holders of the parent | 166 | 165 | 430 | |
| Earnings per share |
| |||
| Basic | 0.71 p | 0.71 p | 1.83 p | |
|
| Diluted | 0.70 p | 0.70 p | 1.82 p |
| Consolidated statement of changes in equity for the six months ended 30 June 2009 | ||||
| 6 months ended | Year ended | |||
| 30 June | 31 December | |||
| 2009 | 2008 | 2008 | ||
|
| £'000 | £'000 | £'000 | |
| Purchase of own shares | - | (331) | (515) | |
| Sale of own shares | 3 | 16 | 235 | |
| Share-based payments | 5 | 7 | 14 | |
| Total expense recognised directly in equity | 8 | (308) | (266) | |
| Profit for the period | 166 | 165 | 430 | |
| Dividends paid | (157) | (160) | (238) | |
| Change in shareholders' equity for the period | 17 | (303) | (74) | |
| Shareholders' equity at start of period | 2,997 | 3,071 | 3,071 | |
| Shareholders' equity at end of period | 3,014 | 2,768 | 2,997 | |
| Consolidated balance sheet as at 30 June 2009 | ||||
| At 30 June | At 31 December | |||
| 2009 | 2008 | 2008 | ||
|
| £'000 | £'000 | £'000 | |
| Non-current assets |
| |||
| Goodwill | 1,134 | 254 | 603 | |
| Other intangible assets | 60 | - | 90 | |
| Property, plant and equipment | 100 | 144 | 141 | |
| Deferred tax assets | 77 | 61 | 99 | |
|
| 1,371 | 459 | 933 | |
| Current assets |
| |||
| Trading investments carried at fair value | - | 250 | - | |
| Trade and other receivables | 1,510 | 1,244 | 2,070 | |
| Cash and cash equivalents | 1,810 | 1,860 | 1,757 | |
|
| 3,320 | 3,354 | 3,827 | |
| Total assets | 4,691 | 3,813 | 4,760 | |
| Current liabilities |
| |||
| Trade and other payables | (1,594) | (1,025) | (1,676) | |
|
| Tax liabilities | (71) | (20) | (69) |
| (1,665) | (1,045) | (1,745) | ||
| Non-current liabilities |
| |||
| Deferred tax liabilities | (12) | - | (18) | |
| Total liabilities | (1,677) | (1,045) | (1,763) | |
| Net assets | 3,014 | 2,768 | 2,997 | |
|
| ||||
| Equity |
| |||
| Share capital | 496 | 496 | 496 | |
| Share premium account | 1,786 | 1,786 | 1,786 | |
| Own shares | (274) | (368) | (280) | |
| Retained earnings | 1,006 | 854 | 995 | |
| Attributable to equity holders of the parent | 3,014 | 2,768 | 2,997 | |
| Consolidated cash flow statement for the six months ended 30 June 2009
| ||||
| 6 months ended | Year ended | |||
| 30 June | 31 December | |||
| 2009 | 2008 | 2008 | ||
|
| £'000 | £'000 | £'000 | |
| Operating activities |
| |||
| Profit from operations | 178 | 143 | 349 | |
| Adjustments for: |
| |||
| Depreciation of property, plant and equipment | 46 | 52 | 116 | |
| Gain on disposal of property, plant and equipment | (2) | (2) | (1) | |
| Amortisation of intangible assets | 30 | 7 | 37 | |
| Impairment of goodwill | - | - | 25 | |
| Share-based payments | 5 | 7 | 14 | |
| Operating cash flows before movements in working capital | 257 | 207 | 540 | |
| Decrease/(increase) in debtors | 560 | (20) | (594) | |
| (Decrease)/increase in creditors | (82) | (85) | 379 | |
| Cash generated by operations | 735 | 102 | 325 | |
| Income taxes paid | - | - | (20) | |
| Net cash from operating activities | 735 | 102 | 305 | |
| Investing activities |
| |||
| Interest received | 6 | 46 | 74 | |
| Purchase of trading investments | - | (250) | (250) | |
| Proceeds on disposal of trading investments | - | - | 279 | |
| Purchase of property, plant and equipment | (12) | (74) | (109) | |
| Proceeds on disposal of property, plant and equipment | 9 | 7 | 6 | |
| Acquisition of subsidiary | (531) | - | (311) | |
| Net cash (used in)/from investing activities | (528) | (271) | (311) | |
| Financing activities |
| |||
| Dividends paid | (157) | (160) | (238) | |
| Sale/(purchase) of own shares | 3 | (315) | (503) | |
| Net cash used in financing activities | (154) | (475) | (741) | |
| Net increase/(decrease) in cash and cash equivalents | 53 | (644) | (747) | |
| Cash and cash equivalents at start of year | 1,757 | 2,504 | 2,504 | |
| Cash and cash equivalents at end of period | 1,810 | 1,860 | 1,757 | |
Notes to the interim financial statements
1. Basis of preparation
The interim financial information for the six months ended 30 June 2009 and 30 June 2008 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 2008 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. The comparative amounts for revenue, cost of sales and distribution costs to June 2008 have been restated to comply with the change in accounting policies adopted in those annual accounts, as has the segmental analysis.
2. Business and geographical segments
For management purposes the Group reports its revenue and gross profit by vendor generated third party sales (distribution) and sales to the Group's own customers (direct). No allocation of operating costs and other income is made because the directors consider that any such allocation would be arbitrary.
| Business segments 2009 | Direct | Distribution | Unallocated | Total | |
| Revenue | 3,984 | 1,135 | - | 5,119 | |
| Gross profit | 1,434 | 83 | - | 1,517 | |
| Other income and expense | - | - | (1,351) | (1,351) | |
| Segment result | 1,434 | 83 | (1,351) | 166 | |
| Assets | 1,461 | - | 3,230 | 4,691 | |
| Liabilities | (437) | - | (1,240) | (1,677) | |
|
Business segments 2008 | Direct | Distribution | Unallocated | Total | |
| Revenue | 3,198 | 446 | - | 3,644 | |
| Gross profit | 1,307 | 28 | - | 1,335 | |
| Other income and expense | - | - | (1,170) | (1,170) | |
| Segment result | 1,307 | 28 | (1,170) | 165 | |
| Assets | 1,148 | - | 2,665 | 3,813 | |
| Liabilities | (708) | - | (337) | (1,045) | |
|
Geographical segments | |||||
| The group operates entirely within the UK. | |||||
3. Earnings per share
| 6 months ended | Year ended | ||
| 30/06/2009 | 30/06/2008 | 31/12/2008 | |
| Earnings attributable to equity holders of the parent | £166,000 | £165,000 | £430,000 |
| Weighted average of ordinary shares in issue | 24,793,190 | 24,793,190 | 24,793,190 |
| Weighted average of own shares | (1,362,730) | (1,403,998) | (1,254,024) |
| Weighted average for calculating basic EPS | 23,430,460 | 23,389,192 | 23,539,166 |
| Effective dilutive share options | 129,892 | 201,000 | 81,559 |
| Weighted average for calculating diluted EPS | 23,560,352 | 23,590,192 | 23,620,725 |
4. Dividends
During the period a dividend of £157,000 (0.67p per share) was paid in relation to the year ended 31 December 2008 (2008: £160,000 (0.67p per share) in relation to the year ended 31 December 2007).
An interim dividend of 0.33p per share (2008: 0.33p) is proposed, and will be paid on 30 October 2009 to shareholders on the register at the close of business on 25 September 2009.