30 Mar 2015 07:00
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Monday, 30 March 2015
IS Solutions Plc
("IS Solutions" or the "Company")
Interim results twelve-month period ended 31 December 2014
Introduction
In December last year we announced the acquisition of Speed-Trap Holdings Limited, parent company to Celebrus Technologies Limited ("Celebrus"); this was subsequently approved by shareholders in January and the consideration of approximately £7.5 million was satisfied in cash and shares.
Following this enhancement to our business, the Board took the decision to also amend the Company's accounting reference date from 31 December to 31 March. As well as some commercial benefit, this change was made primarily so that the market and investors would gain greater clarity and understanding of the new business model and trading performance and thereby deliver 'clean' operational trading results for the enlarged business with effect from 1 April 2015 onwards.
Financials for the interim period - twelve months ended 31 December 2014
The Board is pleased to announce a strong return to profit in the second six months and achieving full year results in line with market expectations.
Revenue in the period under review increased by 5.97% to £10.352 million (2013: £9.769 million) producing a growth in operating profit of 4.59% to £1.00 million compared to £959,000 in 2013. The post-tax profit increased by 1.26% to £802,000 against last year (2013: £793,000). Fully diluted earnings per share was 3.12 pence (2013: 3.08 pence).
Cash and cash equivalents at 31 December 2014 stood at £318,000 (2013: £539,000).
As mentioned in our half-year financial report issued in September 2014, early in the HY2014 period, we suffered from a cancelled contract along with a delay to another major contract. Despite this the Board decided to continue with its strategy including retaining highly skilled technical staff which had a consequential impact on the bottom line, but avoided costly re-hiring at a later date. This approach was validated, as when the delayed contract came back on stream in Q4, we were able to react quickly to the requirements and achieve a creditable result.
Looking at the period January to December 2014, our performance by area was as follows:-
Portals:
Growth in this segment remained flat year on year with a small drop in revenue of some £0.076m, from £3.883 million to £3.807 million. This has been mainly caused by one of our major clients requesting more of the work we carry out for them to be done off-shore in our Indian operation.
Analytics:
It has been a strong year for Analytics with revenue increasing by 59.2% to £4.924 million (2013: £3.093 million); this is primarily due to a large contract secured in the second six months of 2014. This contract also has a substantial level of recurring revenue contracted for the next five years with potential for further project work being generated.
Enterprise Content Management:
This area of our business suffered the most through the twelve month period; revenue fell by 41.90% from £2.792 million to £1.622 million with most of this being in product sales. It is a part of our business that is currently based on legacy technology and therefore we intend to research and implement new technology which will allow this part of our business to refocus its efforts over the short to medium term.
Summary Outlook
The second six months of this accounting period has seen the business back on track and, as we enter in effect our 'Q5' period, we do so with strong underlying demand from our Analytics sector which together with recent contract wins puts us in a good position for the 2015 financial year.
With its strong IP, the addition of Celebrus Technologies to our portfolio strengthens our offering in the Analytics arena whilst giving us the opportunity to develop a much more balanced business with stronger higher margin license sales giving rise to greater project and recurring revenue.
The integration of the two businesses has gone well, and almost complete putting us in an encouraging position as we enter our new financial year this week.
Looking at the 15-month period overall, the Board is confident that the Company will achieve current market expectations (excluding one off acquisition costs) and it looks forward to updating stakeholders further throughout the year as the enlarged business transitions from a Service-led business into a more balanced Product-led business.
Dividend
The full integration of Celebrus will be complete later in the year and the Board is currently considering the investment required to accelerate growth within this operation. Therefore, at this juncture the Company has chosen not to pay an interim dividend. However, it is the Board's intention to review the overall dividend policy going forward so as to ensure it reflects the enlarged business and its prospects going forward. On this basis we are confident that we will resume our progressive dividend policy and if appropriate, return to paying a dividend based on the performance in the financial period ending 31 March 2015 as a whole.
It is anticipated that audited Preliminary results for the 15-month period ending 31 March 2015 will be published by 31 July 2015.
Barrie Clark, Chairman
on behalf of the Board of Directors
IS Solutions Plc
30 March 2015
ENQUIRIES |
IS Solutions Plc John Lythall, Managing Director: Tel: +44 (0) 1932 893333
FinnCap (Nominated Broker & Adviser) Ed Frisby/Simon Hicks - Corporate Finance or Stephen Norcross - Corporate Broking Tel: +44 (0) 207 220 0500
TooleyStreet Communications (IR & media relations) Fiona Tooley Tel: +44 (0) 7785 703523 Email: fiona@tooleystreet.com
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Consolidated statement of comprehensive income for the twelve months ended 31 December 2014 | ||||||
Six months ended | Twelve months ended | |||||
31 December | 31 December | |||||
2014 | 2013 | 2014 | 2013 | |||
Unaudited | Unaudited | Unaudited | ||||
£'000 | £'000 | £'000 | £'000 | |||
Continuing operations | ||||||
Revenue | 6,925 | 4,809 | 10,352 | 9,769 | ||
Cost of sales | (4,209) | (2,429) | (6,539) | (5,603) | ||
Gross profit | 2,716 | 2,380 | 3,813 | 4,166 | ||
Distribution costs | (951) | (1,139) | (1,895) | (2,137) | ||
Administration expenses | (463) | (617) | (929) | (1,084) | ||
Other operating income | 10 | 7 | 13 | 14 | ||
Profit from operations | 1,312 | 631 | 1,002 | 959 | ||
Finance costs | (11) | (10) | (24) | (23) | ||
Other gains and losses | - | - | - | 30 | ||
Profit before tax | 1,301 | 621 | 978 | 966 | ||
Tax | (216) | (158) | (176) | (173) | ||
Profit for the period | 1,085 | 463 | 802 | 793 | ||
Other comprehensive income | ||||||
Gains on property revaluation | - | 121 | - | 121 | ||
Total comprehensive income for the period attributable to equity holders of the parent | 1,085 | 584 | 802 | 914 | ||
Earnings per share | ||||||
Basic | 4.29 p | 1.83 p | 3.17 p | 3.14 p | ||
Diluted | 4.22 p | 1.80 p | 3.12 p | 3.08 p | ||
Consolidated statement of changes in equity for the twelve months ended 31 December 2014 |
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Six months ended | Twelve months ended |
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31 December | 31 December |
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2014 | 2013 | 2014 | 2013 |
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Unaudited | Unaudited | Unaudited |
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£'000 | £'000 | £'000 | £'000 |
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Profit for the period | 1,085 | 463 | 802 | 793 |
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Other comprehensive income |
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Items that will be reclassified to profit and loss |
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Gains on property revaluation | - | 121 | - | 121 |
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Total comprehensive income | 1,085 | 584 | 802 | 914 |
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Transactions with owners |
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Purchase of own shares | (17) | (11) | (140) | (42) |
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Sale of own shares | 6 | (4) | 20 | 23 |
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Share-based payments | 1 | 1 | 3 | 3 |
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Issue of share capital | - | 26 | - | 57 |
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Dividends paid | - | (122) | (284) | (373) |
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Total transactions with owners | (10) | (110) | (401) | (332) |
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Change in shareholders' equity for the period | 1,075 | 474 | 401 | 582 |
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Shareholders' equity at start of period | 4,753 | 4,953 | 5,427 | 4,845 |
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Shareholders' equity at end of period | 5,828 | 5,427 | 5,828 | 5,427 |
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Consolidated balance sheet as at 31 December 2014 | ||||||||||
2014 Unaudited | 2013 | |||||||||
£'000 | £'000 | |||||||||
Non-current assets | ||||||||||
Goodwill | 1,018 | 1,018 | ||||||||
Other intangible assets | 19 | 38 | ||||||||
Property, plant and equipment | 2,365 | 2,414 | ||||||||
Investments | 800 | 800 | ||||||||
Deferred tax assets | 7 | 7 | ||||||||
4,209 | 4,277 | |||||||||
Current assets | ||||||||||
Trade and other receivables | 6,168 | 2,907 | ||||||||
Cash and cash equivalents | 318 | 539 | ||||||||
6,486 | 3,446 | |||||||||
Total assets | 10,695 | 7,723 | ||||||||
Current liabilities | ||||||||||
Trade and other payables | (4,048) | (1,427) | ||||||||
Tax liabilities | (226) | (166) | ||||||||
Borrowings | (162) | (162) | ||||||||
(4,436) | (1,755) | |||||||||
Non-current liabilities | ||||||||||
Borrowings | (431) | (541) | ||||||||
(431) | (541) | |||||||||
Total liabilities | (4,867) | (2,296) | ||||||||
Net assets | 5,828 | 5,427 | ||||||||
Equity | ||||||||||
Share capital | 509 | 509 | ||||||||
Share premium account | 1,893 | 1,893 | ||||||||
Revaluation reserve | 171 | 171 | ||||||||
Own shares | (80) | (2) | ||||||||
Retained earnings | 3,335 | 2,856 | ||||||||
Attributable to equity holders of the parent | 5,828 | 5,427 | ||||||||
Consolidated cash flow statement for the twelve months ended 31 December 2014 | |||||
2014 | 2013 | ||||
Unaudited | |||||
£'000 | £'000 | ||||
Operating activities | |||||
Profit from operations | 1,002 | 959 | |||
Adjustments for: | |||||
Depreciation of property, plant and equipment | 165 | 168 | |||
Loss on disposal of property, plant and equipment | - | 5 | |||
Amortisation of intangible assets | 19 | 18 | |||
Share-based payments | 3 | 3 | |||
Operating cash flows before movements in working capital | 1,189 | 1,153 | |||
Increase in debtors | (3,261) | (235) | |||
(Decrease)/increase in creditors | 2,621 | (114) | |||
Cash generated by operations | 549 | 804 | |||
Income taxes paid | (116) | (54) | |||
Net cash from operating activities | 433 | 750 | |||
Investing activities | |||||
Interest paid | (24) | (23) | |||
Proceeds on sale of trading investments | - | 591 | |||
Purchase of property, plant and equipment | (116) | (115) | |||
Proceeds on disposal of property, plant and equipment | - | 10 | |||
Net cash (used in)/from investing activities | (140) | 463 | |||
Financing activities | |||||
Issue of new share capital | - | 57 | |||
Dividends paid | (284) | (373) | |||
Repayment of borrowings | (110) | (409) | |||
Purchase of own shares (net) | (120) | (19) | |||
Net cash used in financing activities | (514) | (744) | |||
Net movement in cash and cash equivalents | (221) | 469 | |||
Cash and cash equivalents at start of year | 539 | 70 | |||
Cash and cash equivalents at end of period | 318 | 539 | |||
Notes to the interim financial statements | |||||||||||
Basis of preparation | |||||||||||
The interim financial information for the twelve months ended 31 December 2014 and comparative interim figures for 2013 do not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006 and have neither been audited nor reviewed by the Group's auditors. The financial information for the year ended 31 December 2013 has been extracted from the statutory accounts for that year which have been filed with the Registrar of Companies and which contain an unmodified audit opinion 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). | |||||||||||
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 2014 (12 months) |
License sales |
Project work |
Recurring revenues | Total £'000 | |||||||
External sales | 1,217 | 5,443 | 4,764 | 11,424 | |||||||
Adjustment for agency basis | - | - | (1,072) | (1,072) | |||||||
Reported revenue | 1,217 | 5,443 | 3,692 | 10,352 | |||||||
Segment result (gross profit) | 207 | 1,383 | 2,223 | 3,813 | |||||||
Other operating costs and income | (2,811) | ||||||||||
Investing and financing activities | (24) | ||||||||||
Profit before tax | 978 | ||||||||||
Continuing operations 2014 (2nd half) |
License sales |
Project work |
Recurring revenues | Total £'000 | |||||||
External sales | 569 | 4,554 | 2,089 | 7,221 | |||||||
Adjustment for agency basis | - | - | (296) | (296) | |||||||
Reported revenue | 569 | 4,554 | 1,802 | 6,925 | |||||||
Segment result (gross profit) | 104 | 1,594 | 1,018 | 2,716 | |||||||
Other operating costs and income | (1,404) | ||||||||||
Investing and financing activities | (11) | ||||||||||
Profit before tax | 1,301 | ||||||||||
Continuing operations 2013 (full year) |
License sales |
Project work |
Recurring revenues | Total £'000 | |||||||
External sales | 4,767 | 4,003 | 4,859 | 13,629 | |||||||
Adjustment for agency basis | (3,200) | - | (660) | (3,860) | |||||||
Reported revenue | 1,567 | 4,003 | 4,199 | 9,769 | |||||||
Segment result (gross profit) | 270 | 1,231 | 2,665 | 4,166 | |||||||
Other operating costs and income | (3,207) | ||||||||||
Investing and financing activities | 7 | ||||||||||
Profit before tax | 966 | ||||||||||
Continuing operations 2013 (2nd Half) |
License sales |
Project work |
Recurring revenues | Total £'000 | |||||||
External sales | 466 | 2,130 | 2,563 | 5,159 | |||||||
Adjustment for agency basis | - | - | (350) | (350) | |||||||
Reported revenue | 466 | 2,130 | 2,213 | 4,809 | |||||||
Segment result (gross profit) | 270 | 1,231 | 879 | 2,380 | |||||||
Other operating costs and income | (1,749) | ||||||||||
Investing and financing activities | (10) | ||||||||||
Profit before tax | 621 | ||||||||||
Geographical segments | |||||||||||
The Group operates entirely within the UK. | |||||||||||
Earnings per share | Six months ended | Twelve months ended | |||||||||
31 December | 31 December | ||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||
Earnings attributable to equity holders of the parent | £1,085,000 | £584,000 | £802,000 | £914,000 | |||||||
Weighted average of ordinary shares in issue | 25,436,791 | 25,270,620 | 25,436,791 | 25,270,620 | |||||||
Weighted average of own shares | (122,012) | (2,128) | (105,153) | (19,738) | |||||||
Weighted average for calculating basic EPS | 25,314,779 | 25,268,492 | 25,331,638 | 25,250,882 | |||||||
Effective dilutive share options | 380,241 | 460,479 | 380,241 | 460,479 | |||||||
Weighted average for calculating diluted EPS | 25,695,020 | 25,728,971 | 25,711,879 | 25,711,361 | |||||||
Dividends | |||||
2014 | 2013 | ||||
Amounts recognised as distributions to equity holders | £'000 | £'000 | |||
Interim dividend for the year ended 31/12/2013 of .44p | - | 99 | |||
Final dividend for the year ended 31/12/2013 of 1.00p (2012: .90p) | 284 | 274 | |||
284 | 373 | ||||
No interim dividend will be paid for the year ended 31 December 2014. | |||||
Current liabilities - borrowings | 2014 | 2013 | |||
£'000 | £'000 | ||||
Bank mortgage | 162 | 162 | |||
Editor's Note IS Solutions Plc (Ticker: AIM: ISL Accreditation: ISO27001) Established in 1985, IS Solutions is a systems integrator focusing on three business areas, namely portals, analytics and enterprise content management. Specifically, IS Solutions specialises in bringing together a range of components from various technological solutions providers and software developers to create a unified and fully functioning system for the end client. Within each of its business areas, IS Solutions generates three principal revenue streams across product sales, projects and managed services and licence maintenance. The Company was admitted to AIM in 1997 and currently operates wholly in the UK.
On 23 January 2015, the Company completed the acquisition of the entire share capital not already owned by the Company of Speed-Trap Holdings Limited ("STH"), the parent company of Celebrus Technologies Limited, a company engaged in big data feeds supplying corporates and organisations with detailed data on individual consumer interactions through internet enabled devices. Celebrus Technologies operates in the field of big data to provide business intelligence and analysis, specialising in supplying detailed data feeds on customer interactions through internet enabled devices at an individual customer level to corporates and organisations. IS Solutions has been a trading partner of Celebrus for over 10 years.
The business employs 116 staff, including 18 in Chennai, India, who provide product development and support. It also has a strong blue-chip client base which includes Toyota, Toshiba as well the AA, NHS, KBC Bank, Compare The Market™, URENCO, HMRC, M&S and RBS. |
This statement will be posted to shareholders and a copy will also be available on the Company's website, www.issolutions.co.uk email: moreinfo@issolutions.co.uk or Follow us: www.linkedin.com/company/issolutions |