D4T4.L Regulatory News (D4T4)

Issued by Citigate Dewe Rogerson Ltd, Birmingham

Date: Monday 26 March 2012 Immediate Release  

IS Solutions Plc

Audited Preliminary Results

for the year ended 31 December 2011

* Before tax and before share based payments.

"The Board is pleased to report another solid business performance in 2011 and recording a sixth successive year of double digit growth in profits." 

"The Company is focusing on consolidating its position in the Analytics field and, through its strong partnership with its suppliers in this area it is allowing the business to broaden the scope of its technology offering outside of 'web-based analytics' into 'pure line business analytics'."

"The overall mix of our business is to benefit from the on-going demand for Managed Services and especially so from the Analytics area. The security of Turnover and Gross profit gained from the high proportion of Recurring Revenue allows us a high level of comfort in the current insecure economic climate that surrounds us. This, coupled with a return to growth in our Projects business, leads the Board to be optimistic going forward."

I S Solutions Plc

Preliminary Results for the year ended 31 December 2011

Statement by the Chairman, Barrie Clark

The Board is pleased to report another solid business performance in 2011 and recording a sixth successive year of double digit growth in profits since 2005, driven in the main by increasing levels of Recurring Revenue as the Group strengthens its position as a leading 'Managed Services' provider in the fields of web-based analytics and portals.

Financial Results

As indicated in last year's financial reports, 2011 would be a year in which we would see a reduction in turnover and an increase in gross margin as we lessened our dependence on low margin product sales. The resultant effect of this planned strategy was that turnover reduced by 17.48% to £9.06 million (2010: £10.98 million) whilst the gross profit margin increased by 42%, up from 28.91% to 41.02%, resulting in an absolute margin increase of 12.11 percentage points.

Group profit (before tax and share-based payments) rose by 19.46% to £835,000 (2010: £699,000). Reported profit before tax increased by 21.35% year-on-year to £830,000 (2010: £684,000) and profit from operations also increased by 32.30% to £897,000 (2010: £678,000).

Diluted earnings per share rose to 3.03 pence, an increase of 23.17% over the comparable period (2010: 2.46 pence).

The Group continues to operate a strong balance sheet and retains £500,000 of its cash with HSBC Investments to offset the very poor interest being earned on cash on deposit. In 2010, this grew to £541,000 however, by the 2011 year end, it was valued at £526,000. It has since recovered to be above the 2010 level.

The Group's cash position remains strong with cash flow from Operations at £1.202 million (2011: £645,000) leaving cash at the year end of £531,000 (2011: £574,000) after having invested a further £500,000 in SpeedTrap Holdings (our total investment stands at £700,000). Net assets at 31 December 2012 were £4.42 million compared to £3.89 million in 2010.

Overview

The second half of the year again saw strong growth in our Recurring Revenue stream which increased to 50.3% of total revenue versus 41.4% in 2011 and to 66.69% of Gross profit (2010: 58.64%). The strength of our Recurring Revenues continues to shield us from the worst of any ups and downs within the economy and, as was the case last year, it is the 'Analytics' side of the business that is showing the most growth as our partnership with SAS goes from strength to strength.

An important milestone was achieved in March 2011 when the Company received ISO 27001 security accreditation. This achievement strengthens our Managed Services to existing and potential clients offering, as it does, the re-assurance that their data, and any access to it, is governed by a strict 'Code of Conduct' and technically isolated from the outside world.

The year saw a slow start to the Projects side of the business with the first half showing a drop in top line revenue (but an increase in gross profit) as we experienced some delays in project starts associated with the Japanese Tsunami. The second half however, saw a recovery and we finished the year showing an increase overall albeit small, with revenues up by 2.2% over the previous year.

As forecast in the 2010 Report & Accounts, and again at the half year, Product License sales fell from the high levels achieved in 2010 as the Company chose to concentrate on its higher margin business areas whilst increasing its Agency business within the Product License sales; this achieved the higher gross profit in this area of 22%, up from 14.00% in 2010.

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 - their knowledge and expertise are an invaluable and important asset; this, combined with their work ethic and teamwork, ensures we continue to give the consistency of service to clients and supplier partners that is the foundation of our business success.

Dividend

At the half-year, the Board increased the interim dividend. Following the strong second half performance, the Board will be recommending to shareholders an increase in the final dividend to 0.90 pence (2010: 0.79p). This, together with the interim dividend of 0.40 pence (2010: 0.36p) paid in October 2011, gives a total for the year of 1.30 pence in 2011 (2010: 1.15 p).

The final dividend, which is subject to shareholders' approval at the AGM (which is to be held on 17 May 2012), has an ex-dividend date of 9 May 2012 and will be paid on 24 May 2012 to shareholders on the Register at close of business on 11 May 2012.

Outlook

The Company is focusing on consolidating its position in the Analytics field and, through its strong partnership with its suppliers in this area it is allowing the business to broaden the scope of its technology offering outside of 'web-based analytics' into 'pure line business analytics'. This is generating opportunities for our Projects area by creating cross-technology business between the ECM (Enterprise Content Management) and Analytics areas.

The distribution led Product License sales continue to reduce as we concentrate on the Agency- based business of this area rather than the low margin supplier referred business.

The overall mix of our business is to benefit from the on-going demand for Managed Services and especially so from the Analytics area. The security of Turnover and Gross profit gained from the high proportion of Recurring Revenue allows us a high level of comfort in the current insecure economic climate that surrounds us. This, coupled with a return to growth in our Projects business, leads the Board to be optimistic going forward.

As a Company, we look forward to updating shareholders further as the year progresses.

Barrie Clark, Chairman

26 March 2012