30 Sep 2013 07:00
Issued by TooleyStreet Communications | |
Date: Monday, 30 September 2013 | Immediate Release |
IS Solutions Plc
Half-year Results for the six month period ended 30 June 2013
"Strong Q2 bookings in Analytics and Enterprise Content Management helps continued growth in revenue and profit for the business"
Financial highlights: | Six months ended | % increase | |
June 2013 | June 2012 | ||
· Revenue | £4.96million | £4.52m | +9.6% |
· Group profit before tax | £345,000 | £337,000 | +2.4% |
· Diluted earnings per share | 1.29pence | 1.25p | +3.2% |
· Confidence underpins increase in Interim dividend | 0.48pence | 0.44p | +9.1% |
· Strong cash position | £657,000 | £204,000 | |
Commercial highlights: | |
Ø Solid new business wins underpins performance for full year | |
Ø Strong order bookings as part of 'Big Data' revolution | |
Ø Encouraging pipeline of opportunities ahead | |
Ø Analytics is the fastest growing area with 39% of bookings in Support Services | |
Ø With our historic high levels of recurring revenues, the Board continues to be optimistic for the future | |
"The business is continuing to witness top and bottom line growth; the more recent flow of positive news about the UK economy has matched our own experience and is reflected in both strong bookings and new business in our Analytics and ECM business areas and these will help underpin our growth and development for the rest of the year and into 2014.
Barrie Clark, Chairman,
IS Solutions Plc
Enquiries: | ||
IS Solutions Plc John Lythall, Managing Director Tel: +44 (0) 1932 893333 www.issolutions.co.uk Ticker: AIM: ISL |
FinnCap Nomad & Broker Corporate Finance: Ed Frisby Corporate Broking: Stephen Norcross Tel: +44 (0) 207 220 0500 |
TooleyStreet Communications IR & media relations Fiona Tooley Tel:+44 (0) 7785 703523 Office: +44 (0) 121 309 0099 |
I S Solutions Plc
Half-year results for the six months ended 30 June 2013
Statement by the Chairman, Barrie Clark
The Board is pleased to announce the business is continuing to witness top and bottom line growth and the strong Q2 order book has provided an encouraging and solid foundation going into the second half of the financial year.
Financials
Revenue in the first half was up by 9.64% to £4.960 million (2012: £4.524m) whilst Profit before tax increased from £337,000 in the comparable 2012 period to £345,000 by June 2013, a growth of 2.37%. Post tax profit at £330,000 (2012: £317,000), also higher by 4.10%. Fully diluted earnings per share rose by 3.2% to 1.29 pence (2012: 1.25p).
The Group continues to generate cash and at the half year stage our cash position stood at £657,000 (2012: £204,000).
Reflecting the UK as a whole, 2013 started slowly and during the Q1 period this trend continued, however, we remained focused on servicing our clients and targeting new business and we were pleased to see that a combination of our own actions and the market outlook brightening, our Q2 period performance helped to put us back on track for growth, and positioning us well for the rest of this financial year.
Looking at the progress made during the first half in the three key areas of our business:-
· Analytics:
Bookings in the first half of 2013 showed an increase of 258% over the second half of 2012 and an increase of 120% over the whole of 2012. Analytics is the fastest growing area of our business and accounted for 46% of the total Company bookings in this period, 39% of which was in Support Services thus increasing the level of recurring revenue as we go forward. It is pleasing to report that a large part of this growth came from a major contract win which we believe is likely to be added to as time progresses.
· Portals
Bookings for this area of our business dropped by 16% over the second half of 2012 due to budget constraints for one of our major clients. Portals represented 35% of first half total bookings. Activity did pick up in the second quarter with the pipeline (new business being quoted) on the increase as we move into the third quarter.
· Enterprise Content Management (ECM)
Our third area of business also showed strong growth in bookings and by the close of the half year was showing a 56% increase over the second half of 2012. ECM now accounts for 19% of total bookings.
It is not surprising that we are experiencing strong bookings in the areas of Analytics and ECM as they are both part of the 'Big Data' revolution that we all hear so much about - with the improvements that we appear to be experiencing in the UK economy we are hoping also for a return to growth in the Portals business as we go through the year.
Dividend
Earnings per share advanced in the period by 3.2% compared to HY2012. Therefore, in line with our progressive dividend policy, the Board is declaring a 9.1% uplift in the half year dividend to 0.48 pence (2012: 0.44p); this will be paid on 25 October 2013, to qualifying shareholders on the Register at the close of business on 11 October 2013.
The Directors remain confident that, based on the Company's first half performance which finished with strong bookings by the end of Q2 and the pipeline of opportunities that are beginning to open up looking forward, the business is capable of achieving the current market expectations for EPS growth.
Outlook
Firstly looking back on the half, the first quarter of 2013 gave us a very slow start to the year as the UK economy almost stumbled back into recession. However, the more recent flow of positive news about the UK economy has matched our own experience and is reflected in both strong bookings and new business in our Analytics and ECM business areas and these will help underpin our growth and development for the rest of the year and into 2014.
Against this background and with our historic high levels of recurring revenues, the Board continues to be optimistic for the future, and looks forward to keeping shareholders updated with its progress.
On behalf of the Board
30 September 2013
I S Solutions Plc Consolidated statement of comprehensive income for the six months ended 30 June 2013
| ||||||
Six months ended | Year ended | |||||
30 June | 31 December | |||||
2013 | 2012 | 2012 | ||||
£'000 | £'000 | £'000 | ||||
Continuing operations | ||||||
Revenue | 4,960 | 4,524 | 9,208 | |||
Cost of sales | (3,174) | (2,656) | (5,321) | |||
Gross profit | 1,786 | 1,868 | 3,887 | |||
Distribution costs | (998) | (1,174) | (2,293) | |||
Administration expenses | (467) | (379) | (842) | |||
Other operating income | 7 | 26 | 38 | |||
Profit from operations | 328 | 341 | 790 | |||
Finance costs | (13) | (16) | (33) | |||
Other gains and losses | 30 | 12 | 35 | |||
Profit before tax | 345 | 337 | 792 | |||
Tax | (15) | (20) | (62) | |||
Profit for the period | 330 | 317 | 730 | |||
Total comprehensive income for the period attributable to equity holders of the parent | 330 | 317 | 730 | |||
Earnings per share | ||||||
Basic | 1.32p | 1.27p | 2.92p | |||
Diluted | 1.29p | 1.25p | 2.86p | |||
Consolidated statement of changes in equity for the six months ended 30 June 2013
| ||||||
six months ended | Year ended | |||||
30 June | 31 December | |||||
2013 | 2012 | 2012 | ||||
£'000 | £'000 | £'000 | ||||
Purchase of own shares | (31) | - | (8) | |||
Sale of own shares | 27 | - | 3 | |||
Share-based payments | 2 | 2 | 3 | |||
Total expense recognised directly in equity | (2) | 2 | (2) | |||
Profit for the period | 330 | 317 | 730 | |||
Issue of share capital | 31 | - | 34 | |||
Dividends paid | (251) | (224) | (335) | |||
Change in shareholders' equity for the period | 108 | 95 | 427 | |||
Shareholders' equity at start of period | 4,845 | 4,418 | 4,418 | |||
Shareholders' equity at end of period | 4,953 | 4,513 | 4,845 | |||
I S Solutions Plc Consolidated balance sheet as at 30 June 2013
| ||||||
At 30 June | At 31 December | |||||
2013 | 2012 | 2012 | ||||
£'000 | £'000 | £'000 | ||||
Non-current assets | ||||||
Goodwill | 1,018 | 1,118 | 1,018 | |||
Other tangible assets | 47 | - | 56 | |||
Property, plant and equipment | 2,302 | 2,394 | 2,361 | |||
Investments | 800 | 700 | 800 | |||
Deferred tax assets | 17 | 8 | 17 | |||
4,184 | 4,220 | 4,252 | ||||
Current assets | ||||||
Investments | - | 538 | 561 | |||
Trade and other receivables | 3,593 | 2,111 | 2,672 | |||
Cash and cash equivalents | 657 | 204 | 70 | |||
4,250 | 2,853 | 3,303 | ||||
Total assets | 8,434 | 7,073 | 7,555 | |||
Current liabilities | ||||||
Trade and other payables | (2,672) | (1,353) | (1,541) | |||
Tax liabilities | (25) | (19) | (57) | |||
Borrowings | (162) | (151) | (155) | |||
(2,859) | (1,523) | (1,753) | ||||
Non-current liabilities | ||||||
Borrowings | (622) | (1,037) | (957) | |||
Total liabilities | (3,481) | (2,560) | (2,710) | |||
4,953 | 4,513 | 4,845 | ||||
Equity | ||||||
Share capital | 506 | 499 | 503 | |||
Share premium account | 1,870 | 1,812 | 1,842 | |||
Revaluation reserve | 50 | 50 | 50 | |||
Retained earnings | 2,527 | 2,152 | 2,450 | |||
Attributable to equity holders of the parent | 4,953 | 4,513 | 4,845 | |||
I S Solutions Plc Consolidated cash flow statement for the six months ended 30 June 2013
| ||||||
six months ended | Year ended | |||||
30 June | 31 December | |||||
2013 | 2012 | 2012 | ||||
£'000 | £'000 | £'000 | ||||
Operating activities | ||||||
Profit from operations | 328 | 341 | 790 | |||
Adjustments for: | ||||||
Depreciation of property, plant and equipment | 83 | 76 | 161 | |||
Amortisation of intangible assets | 9 | - | - | |||
Impairment of goodwill | - | - | 100 | |||
Share-based payments | 2 | 2 | 3 | |||
Operating cash flows before movements in working capital | 422 | 419 | 1,054 | |||
(Increase)/decrease in debtors | (921) | 228 | (333) | |||
Increase/(decrease) in creditors | 1,131 | (586) | (398) | |||
Cash generated by operations | 632 | 61 | 323 | |||
Income taxes paid | (47) | (28) | (41) | |||
Net cash from operating activities | 585 | 33 | 282 | |||
Investing activities | ||||||
Interest paid | (13) | (16) | (33) | |||
Purchase of non-current investments | - | - | (100) | |||
Proceeds on sale of trading investments | 591 | - | - | |||
Capitalisation of development costs | - | - | (56) | |||
Purchase of property, plant and equipment | (24) | (45) | (97) | |||
Net cash used in investing activities | 554 | (61) | (286) | |||
Financing activities | ||||||
Issue of new share capital | 31 | - | 34 | |||
Dividends paid | (251) | (224) | (335) | |||
Repayment of borrowings | (328) | (75) | (151) | |||
Purchase of own shares (net) | (4) | - | (5) | |||
Net cash used in financing activities | (552) | (299) | (457) | |||
Net movement in cash and cash equivalents | 587 | (327) | (461) | |||
Cash and cash equivalents at start of year | 70 | 531 | 531 | |||
Cash and cash equivalents at end of period | 657 | 204 | 70 | |||
I S Solutions Plc Notes to the interim financial statements
| ||||||
1. | Basis of preparation | |||||
The interim financial information for the six months ended 30 June 2013 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 2012 has been extracted from the statutory accounts for that year which have been filed with the Registrar of Companies and which contain an audit report with 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). | ||||||
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. 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 2013: | ||||||
| License sales £'000 | Project work £'000 | Recurring revenues £'000 |
Total £'000 | ||
External sales | 4,301 | 1,873 | 2,296 | 8,470 | ||
Adjustment for agency basis | (3,200) | - | (310) | (3,510) | ||
Reported revenue | 1,101 | 1,873 | 1,986 | 4,960 | ||
Segment result (gross profit) | 213 | 359 | 1,214 | 1,786 | ||
Other operating costs and income | (1,458) | |||||
Investing and financing activities | 17 | |||||
Profit before tax | 345 | |||||
Continuing operations 2012: | ||||||
License sales £'000 | Project work £'000 | Recurring revenues £'000 |
Total£'000 | |||
External sales | 724 | 1,303 | 3,010 | 5,037 | ||
Adjustment for agency basis | - | - | (513) | (513) | ||
Reported revenue | 724 | 1,303 | 2,497 | 4,524 | ||
Segment result (gross profit) | 196 | 378 | 1,294 | 1,868 | ||
Other operating costs and income | (1,527) | |||||
Investing and financing activities | (4) | |||||
Profit before tax | 337 | |||||
Geographical segments | ||||||
The Group operates entirely within the UK. | ||||||
3. | Earnings per share | six months ended 30 June | Year ended 31 December | |||
2013 | 2012 | 2012 | ||||
Earnings attributable to equity holders of the parent | £330,000 | £317,000 | £730,000 |
| ||
Weighted average of ordinary shares in issue | 25,146,291 | 24,937,578 | 24,937,578 | |||
Weighted average of own shares | (80,343) | - | - | |||
Weighted average for calculating basic EPS | 25,065,948 | 24,937,578 | 24,937,578 | |||
Effective dilutive share options | 449,290 | 418,778 | 539,568 | |||
Weighted average for calculating diluted EPS | 25,515,238 | 25,356,356 | 25,477,146 | |||
4. | Dividends | six months ended 30 June | Year ended 31 December | |
2013 | 2012 | 2012 | ||
£'000 | £'000 | £'000 | ||
Amounts recognised as distributions to equity holders | ||||
Interim dividend for the year ended 31/12/12 of 0.44p | - | - | 99 | |
Final dividend for the year ended 31/12/12 of 1.00p (2011: 0.90p) | 251 | 224 | 236 | |
251 | 224 | 335 | ||
An interim dividend of 0.48p per share will be paid on 25 October 2013 to shareholders on the register at the close of business on 11 October 2013. The ex-dividend date is 9 October 2013 | 121 | |||
5. | Current liabilities - borrowings | six months ended 30 June | Year ended 31 December | |
2013 | 2012 | 2012 | ||
£'000 | £'000 | £'000 | ||
Bank mortgage | 162 | 151 | 155 | |
6. | This statement will be posted to shareholders and a copy will be available on the Company's website. | |||