23 Mar 2010 07:00
| Issued by Citigate Dewe Rogerson Ltd, Birmingham | |
| Date: Tuesday, 23 March 2010 | Embargoed: 7.00am |
IS Solutions Plc
("IS Solutions" or "the Company")
Preliminary Results for the year ended 31 December 2009
| Financial Highlights | |
| ·; Revenue £9.78 million (2008: £8.85 million) | +10.51%
|
| ·; Profit (before tax and amortisation of other intangible assets) £654,000 (2008: £551,000 also excluding AIM transfer costs) |
+18.69%
|
| ·; Profit from operations £621,000 (2008: £349,000) | +77.94%
|
| ·; Profit before tax £594,000 (2008: £452,000) | +31.42%
|
| ·; Diluted earnings per share 2.22 pence (2008: 1.82 pence) | +21.98%
|
| ·; Final dividend 0.77 pence giving a total for the year of 1.10 pence (2008: 1.00 pence) |
+10.00%
|
| ·; Strong cash generation continued, with year-end net cash of £1.24m after acquiring the HO freehold for £2.1million | |
"Through our focus on 'selling in' our business skills and Analytics as a 'Managed Service' to both existing and new customers, we have seen strong growth in both revenue and bottom line during 2009.
The recession has driven clients to invest in analytical systems to allow a better understanding of their customers' needs with the purpose of driving up the retention of existing customers and the winning of new ones. It is this area that experienced the most growth in the latter part of 2009 and, coupled with the demand we are already experiencing in the early part of 2010, leads the Board to be optimistic about the future, notwithstanding the economic situation we find ourselves in."
Barrie Clark, Chairman
Chairman's Statement attached
| Enquiries: |
|
| John Lythall, Managing Director | Fiona Tooley or Keith Gabriel |
| IS Solutions Plc | Citigate Dewe Rogerson |
| Tel: Today +44 (0)20 7600 1658 (9-11am) | Tel: +44 (0) 121 362 4035 |
| Thereafter +44 (0) 1932 893333 | Mobile: +44 (0)7785 703523 (FMT) |
| www.issolutions.co.uk |
|
| Ticker: AIM: ISL | Geoff Nash/ Charlotte Stranner |
|
| FinnCap |
|
| Tel: +44 (0) 203 207 3253 |
IS Solutions Plc
Preliminary Results for the year ended 31 December 2009
Statement by the Chairman, Barrie Clark
In a year of recession, the Board is pleased to announce that, through our focus on 'selling in' our business skills and Analytics as a 'Managed Service' to both existing and new customers, we have seen strong growth in both revenue and bottom line during 2009. We have developed a strong portfolio of business skills to offer our clients, built around leading software products in their class.
Financial Results
The Group is reporting an overall solid and credible performance for the year ended December 2009 which is reflected in turnover increasing in the year by 10.51% to £9.78 million (2008: £8.85 million).
Group profit (before tax and amortisation of intangible assets of £60,000 (2008: £99,000 also including AIM transfer costs)) rose by 18.69% to £654,000 (2008: £551,000). Profit before tax increased by 31.42% year on year to £594,000 (2008: £452,000).
Operating profit showed a very strong improvement year on year, rising from £349,000 in 2008 to £621,000 in 2009, an increase of 77.94%.
Diluted earnings per share rose to 2.22 pence, an increase of 21.98% over the comparable period (2008: 1.82 pence).
The Group continues to operate a strong balance sheet and, although the business utilised some of its cash to acquire a freehold property in 2009, the cash position remains strong. Cash flow from operations was £834,000 (2008: £325,000) leaving cash at the year end of £1.24 million (2008: £1.76 million). Net assets at 31 December 2009 were £3.54 million compared to £3.00 million in 2008. The business continues to operate well within its banking facilities which are in place and not due for renewal until 2011.
Overview
Against an economic background of recession, the second half of the year proved resilient with the Group achieving strong growth in top line revenue and an even stronger growth at the operating profit level. The 77.94% increase in operating profit has more than offset the loss of interest earned on our cash which, in 2009 was £9,000 against £103,000 in 2008.
With the reduction in both commercial interest rates and the drop in interest earned on our cash, the Board acted to gain a better return from our cash by utilising some of it in the purchase of our 18,000 sq. ft. central facility in Sunbury-on-Thames, Middlesex, which we completed in September 2009 at a cost of £2.10 million. This action, as we indicated to shareholders at the half year will yield a substantial reduction in our operating costs this year and, in the long term will prove beneficial to the business as it continues to build its market position and widen its customer profile. As we have highlighted above, the Group still retains a positive cash position should any other commercial or trading opportunities appear in the short to medium term.
Looking at IS Solutions business areas:
As in 2008, the Services (project and recurring revenues) side has produced very strong growth with sales increasing by 15.15% over 2008 to £6.46 million (2008: £5.61 million). The Company maintained a strong focus on increasing its Managed Services throughout the year which is reflected in our recurring revenue stream, up 12.37% to £3.56 million in the year being reported upon.
Although end-user product sales dropped during the year, the distribution product (third party sales) saw a small improvement giving an overall product revenue increase of 2.4%, rising by £79,000 to £3.33 million: this can be analysed as £1.90 million distribution and £1.43 million end-user sales.
Personnel
Once again the Board would like to express its appreciation and thanks to all employees for their on-going support and in particular their hard work and commitment in 2009. It is the teamwork and commitment to quality shown by our employees that allows us to build the strong and sustainable relationships we have with our clients and suppliers which will carry us through the current economic turbulence.
Dividend
In 2007, the Company increased the dividend by 100% reflecting the underlying strength of the business and due to the uncertainty surrounding the economy, the Board decided to hold the dividend at the same level in 2008.
On the back of the strong trading results and on-going cash generation in 2009, the Board is pleased to announce a return to dividend growth, with the Directors proposing an increase of 10.00% in the dividend for the year as a whole.
Therefore, the Board will be recommending to shareholders a final dividend of 0.77 pence which, with the interim dividend of 0.33 pence paid in October 2009, gives a total of 1.10 pence in 2009 (2008: 1.00 pence).
The final dividend which is subject to shareholders' approval at the AGM (which is to be held on 20 May 2010) has an ex-dividend date of 28 April 2010 and will be paid on 28 May 2010 to shareholders on the Register at close of business on 30 April 2010.
Outlook
2009 saw a strong demand for our Managed Services which has continued into 2010 resulting in the addition of a number of new clients especially in the financial sector. The recession has driven clients to invest in Analytical systems to allow a better understanding of their customers' needs with the purpose of driving up the retention of existing customers and the winning of new ones. It is this area that experienced the most growth in the latter part of 2009 and, coupled with the demand we are already experiencing in the early part of 2010, leads the Board to be optimistic about the future, notwithstanding the economic situation we find ourselves in.
The spread of products and services, coupled with our strong balance sheet, gives the Board confidence for the future and leaves the Group well placed and in a position to take advantage of new opportunities such as acquisitions or partnerships.
I am pleased to inform shareholders that our working partnership with SAS was recognised earlier this month at the SAS Partner Awards 2010 where IS Solutions was presented with 'Hosting Partner of the Year - 2009' - a great tribute to our people.
As a Company, we look forward to updating shareholders further as the year progresses.
23 March 2010
| Consolidated income statement for the year ended 31 December 2009 | |||
|
| 2009 | 2008 | |
|
| £'000 | £'000 | |
| Continuing operations |
|
| |
|
| Revenue | 9,783 | 8,854 |
|
| Cost of sales | (6,543) | (5,855) |
| Gross profit | 3,240 | 2,999 | |
|
| Distribution costs | (1,790) | (1,565) |
|
| Administration expenses | (928) | (1,177) |
|
| Other operating income | 99 | 92 |
| Profit from operations | 621 | 349 | |
|
| Investment revenues | 9 | 103 |
|
| Finance costs | (14) | - |
|
| Other gains and losses | (22) | - |
| Profit before tax | 594 | 452 | |
|
| Tax | (61) | (22) |
| Profit for the period attributable to equity holders of the parent/total comprehensive income for the period | 533 | 430 | |
| Earnings per share |
|
| |
|
| Basic | 2.23 p | 1.83 p |
|
| Diluted | 2.22 p | 1.82 p |
| Consolidated statement of changes in equity for the year ended 31 December 2009 | ||||
|
| Notes | 2009 | 2008 | |
|
|
| £'000 | £'000 | |
|
| Purchase of own shares |
| (10) | (515) |
|
| Sale of own shares |
| 249 | 235 |
|
| Share-based payments |
| 11 | 14 |
| Total expense recognised directly in equity |
| 250 | (266) | |
|
| Profit for the year/total comprehensive income for the year |
| 533 | 430 |
|
| Dividends paid | 2 | (238) | (238) |
| Change in shareholders' equity for the year |
| 545 | (74) | |
|
| Shareholders' equity at start of year |
| 2,997 | 3,071 |
| Shareholders' equity at end of year |
| 3,542 | 2,997 | |
| Consolidated balance sheet as at 31 December 2009 | |||
|
| 2009 | 2008 | |
|
| £'000 | £'000 | |
| Non-current assets |
|
| |
|
| Goodwill | 1,147 | 603 |
|
| Other intangible assets | 30 | 90 |
|
| Property, plant and equipment | 2,290 | 141 |
|
| Deferred tax asset | 64 | 99 |
|
| Derivative financial instruments | 18 | - |
|
| 3,549 | 933 | |
| Current assets |
|
| |
|
| Trade and other receivables | 2,366 | 2,070 |
|
| Cash and cash equivalents | 1,243 | 1,757 |
|
| 3,609 | 3,827 | |
| Total assets | 7,158 | 4,760 | |
| Current liabilities |
|
| |
|
| Trade and other payables | (2,019) | (1,676) |
|
| Tax liabilities | (38) | (69) |
|
| Borrowings | (143) | - |
|
| (2,200) | (1,745) | |
| Non-current liabilities |
|
| |
|
| Borrowings | (1,410) | - |
|
| Deferred tax liabilities | (6) | (18) |
|
|
| (1,416) | (18) |
| Total liabilities | (3,616) | (1,763) | |
| Net assets | 3,542 | 2,997 | |
| Equity |
|
| |
|
| Share capital | 496 | 496 |
|
| Share premium account | 1,786 | 1,786 |
|
| Own shares | (20) | (280) |
|
| Retained earnings | 1,280 | 995 |
| Attributable to equity holders of the parent | 3,542 | 2,997 | |
| Consolidated cash flow statement for the year ended 31 December 2009 | |||
|
| 2009 | 2008 | |
|
| £'000 | £'000 | |
| Operating activities |
|
| |
|
| Profit from operations | 621 | 349 |
| Adjustments for: |
|
| |
|
| Depreciation of property, plant and equipment | 98 | 116 |
|
| Gain on disposal of property, plant and equipment | (3) | (1) |
|
| Amortisation of intangible assets | 60 | 37 |
|
| Impairment of goodwill | - | 25 |
|
| Share-based payments | 11 | 14 |
| Operating cash flows before movements in working capital | 787 | 540 | |
|
| Increase in debtors | (296) | (594) |
|
| Increase in creditors | 343 | 379 |
| Cash generated by operations | 834 | 325 | |
|
| Income taxes paid | (69) | (20) |
| Net cash from operating activities | 765 | 305 | |
| Investing activities |
|
| |
|
| Interest received | 9 | 74 |
|
| Interest paid | (14) | - |
|
| Purchase of trading investments | - | (250) |
|
| Purchase of derivative financial instruments | (40) | - |
|
| Proceeds on sale of trading investments | - | 279 |
|
| Purchase of property, plant and equipment | (2,254) | (109) |
|
| Proceeds on disposal of property, plant and equipment | 10 | 6 |
|
| Acquisition of subsidiaries | (298) | (311) |
| Net cash used in investing activities | (2,587) | (311) | |
| Financing activities |
|
| |
|
| Dividends paid | (238) | (238) |
|
| New borrowings | 1,600 | - |
|
| Repayment of borrowings | (47) | - |
|
| Purchase of own shares | (7) | (503) |
| Net cash from/(used in) financing activities | 1,308 | (741) | |
| Net decrease in cash and cash equivalents | (514) | (747) | |
|
| Cash and cash equivalents at start of year | 1,757 | 2,504 |
| Cash and cash equivalents at end of year | 1,243 | 1,757 | |
1. Business and geographical segments
For management purposes the group reports its revenue and gross profit analysed into three segments. No allocation of other income and costs to these segments is made because the directors consider that any such allocation would be arbitrary. Any allocation of assets and liabilities to these segments would also be arbitrary.
| Business segments 2009 | Licence sales | Project work | Recurring revenues | Total £'000 | |
|
| External sales | 3,326 | 2,895 | 4,044 | 10,265 |
|
| Adjustment for agency basis | - | - | (482) | (482) |
|
| Reported revenue | 3,326 | 2,895 | 3,562 | 9,783 |
|
| Segment result (gross profit) | 532 | 1,100 | 1,608 | 3,240 |
|
| Other operating costs and income |
|
|
| (2,619) |
|
| Investing and financing activities |
|
|
| (27) |
|
| Profit before tax |
|
|
| 594 |
|
| Major customers (over 10% of revenue) |
|
|
|
|
|
| Customer 1 | - | 950 | 1,520 | 2,470 |
| Business segments 2008 | Licence sales | Project work | Recurring revenues | Total £'000 | |
|
| External sales | 3,246 | 2,438 | 3,645 | 9,329 |
|
| Adjustment for agency basis | - | - | (475) | (475) |
|
| Reported revenue | 3,246 | 2,438 | 3,170 | 8,854 |
|
|
|
|
|
|
|
|
| Segment result (gross profit) | 584 | 975 | 1,440 | 2,999 |
|
| Other operating costs and income |
|
|
| (2,650) |
|
| Investing and financing activities |
|
|
| 103 |
|
| Profit before tax |
|
|
| 452 |
|
| Major customers (over 10% of revenue) |
|
|
| |
|
| Customer 1 | - | 655 | 1,000 | 1,655 |
|
| Customer 2 | - | 750 | 419 | 1,169 |
| Geographical segments | |
|
| The group operates entirely within the UK. |
2. Dividends
|
| 2009 | 2008 | |
| Amounts recognised as distributions to equity holders | £'000 | £'000 | |
|
| Final dividend for the year ended 31 December 2008 of 0.67p (2007: 0.67p) | 158 | 158 |
|
| Interim dividend for the year ended 31 December 2009 of 0.33p (2008: 0.33p) | 80 | 80 |
|
|
| 238 | 238 |
|
| Proposed final dividend for the year ended 31 December 2009 of 0.77p | 190 |
|
|
The proposed final dividend is subject to shareholders' approval at the AGM and has not been included as a liability in these financial statements. | |||
3. The Group has sufficient financial resources to cover budgeted future cash-flows, together with contracts with a number of customers and suppliers across different geographic areas and industries. As a consequence, the Directors believe that the Group is well placed to manage its business risks successfully despite the current uncertain economic outlook.
After having reviewed the future plans and projections for the business, the Directors believe that the Company and its subsidiary undertakings have adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the financial statements.
4. The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December 2009 or 2008. Statutory accounts for 2008, which were prepared under IFRS, have been delivered to the Registrar of Companies, and those for 2009 will be delivered following the Company's Annual General Meeting. The auditors have reported on those accounts; their report was unqualified and did not contain statements under Section 498(2) or (3) of the Companies Act 2006. The auditors' reports on the accounts for the 12 months to 31 December 2008 were unqualified and did not include a statement under Section 237(2) or (3) of the Companies Act 1985.
5. This preliminary announcement has been prepared on the basis of the accounting policies as stated in the financial statements for the year ended 31 December 2008. Whilst the financial information included in the preliminary announcement has been completed in accordance with IFRS, the announcement does not itself contain sufficient information to comply with IFRS.
6. Copies of the Report and Accounts will be issued to shareholders shortly. Further copies will also be available from the company's registered office: Windmill House, 91-93 Windmill Road, Sunbury-on-Thames, Middlesex, TW16 7EF and will also be available to download from our website www.issolutions.co.uk.