30 Sep 2008 07:00
Issued by Citigate Dewe Rogerson Ltd, Birmingham
Date: Tuesday, 30 September 2008
Embargoed: 7.00am
IS Solutions plc
("the Group")
Interim Results for the six months ended 30 June 2008
| Turnover £3.64 million (2007: £3.88 million) | |
| Pre-tax profit £189,000 (2007: £181,000) | +4.4% |
| Operating profit £143,000 (2007: £133,000) | +7.5% |
| Earnings per share 0.71p (2007: 0.71p) | |
| Interim dividend 0.33p (2007: 0.33p) | |
| Gross margin 37.2% (2007: 35.6%) | +4.5% |
| Cash, cash equivalents and investment instruments at the half year stood at £2.11 million (2007: £2.17 million) | |
| Acquisition of Chapter26 in July 2008, integrating well | |
"Despite the continued uncertainty in the financial markets and its potential impact on the overall economy, the Group has continued to see a robust demand for its services from our long standing clients, resulting in an increase in our recurring revenue streams. Although this demand has been offset to some extent by lower product sales, the Board believes the forecasts for the full year should be achievable."
Barrie Clark, Chairman
FULL STATEMENT ATTACHED
| Enquiries: | |
| John Lythall, Managing Director | Keith Gabriel |
| IS Solutions Plc | Citigate Dewe Rogerson Ltd |
| Tel: 01932 893333 | Tel: 0121 455 8370 |
| www.issolutions.co.uk | |
| (AIM: ISL) | |
| Sandy Fraser/Neil McDonald | |
| Brewin Dolphin Limited | |
| Tel: 0845 213 4217 |
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IS Solutions plc
Interim Results for the six months ended 30 June 2008
Statement by the Chairman, Barrie Clark
Against a background of continuing economic uncertainty, the Board is pleased to announce that the interim results for the six months ended 30 June 2008 are in line with expectations.
Pre-tax profits for the period increased by 4.4% to £189,000 (2007: £181,000) and earnings per share were unchanged at 0.71p (2007: 0.71p) due to a higher tax charge. Turnover dropped by 6.2% to £3.64 million (2007: £3.88 million restated) though gross margins improved by 1.6 percentage points (up from 35.6% to 37.2%) reflecting a shift in business towards the more profitable projects and support areas of the Group. Cashflow from operations has again been positive and cash, cash equivalents and investment instruments at the half year stood at £2.11 million (31 December 2007: £2.50 million, 30 June 2007: £2.17 million), the reduction in cash has resulted from the increased dividend payment and the purchase of Treasury shares.
The first half of the year has seen a continuing improvement in operating profit to £143,000 (2007: £133,000), an increase of 7.5%. This has been driven by an increase in our projects and recurring revenue streams of 7.6%.
Product sales are down on last year reflecting the tightening economic situation but this is being offset by the above mentioned projects growth.
In July 2008 we completed the acquisition of Chapter26 Ltd, a company specialising in Enterprise Content Management built around EMC Documentum software. This, coupled with our existing Departmental Content Management practice, will allow us to offer clients a complete service in this arena.
Dividend
Last year the Board reviewed the dividend policy of the Group in the light of its historic cash balances, continuing track record of strong cash generation from operations and improving markets and prospects. Although the general market conditions have deteriorated considerably the Board believes that the Group's strong balance sheet, coupled with the first half results being in line with its expectations, is sufficient to allow it to hold the interim dividend at last year's level of 0.33p (2007 half year: 0.33p) per ordinary share. The interim dividend will be paid on 7 November 2008 to shareholders on the register at the close of business on 10 October 2008.
Outlook
Despite the continued uncertainty in the financial markets and its potential impact on the overall economy, the Group has continued to see a robust demand for its services from our long standing clients, resulting in an increase in our recurring revenue streams. Although this demand has been offset to some extent by lower product sales, the Board believes the forecasts for the full year should be achievable.
Barrie Clark, Chairman
30 September 2008
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IS Solutions plc
| Consolidated income statement for the six months ended 30th June 2008 | ||||
| 6 months ended | Year ended | |||
| 30th June | 31st December | |||
| 2008 | 2007 | 2007 | ||
|
| Restated | |||
|
| £'000 | £'000 | £'000 | |
| Continuing operations |
| |||
| Revenue | 3,644 | 3,884 | 7,894 | |
|
| Cost of sales | (2,259) | (2,501) | (5,078) |
| Gross profit | 1,385 | 1,383 | 2,816 | |
| Distribution costs | (812) | (743) | (1,670) | |
| Administration expenses | (430) | (507) | (844) | |
| Profit from operations | 143 | 133 | 302 | |
| Investment income | 46 | 48 | 108 | |
| Profit before tax | 189 | 181 | 410 | |
| Tax | (24) | (8) | 50 | |
| Profit attributable to equity holders of the parent | 165 | 173 | 460 | |
| Earnings per share |
| |||
| Basic | 0.71 p | 0.71 p | 1.89 p | |
|
| Diluted | 0.70 p | 0.70 p | 1.86 p |
| Consolidated statement of changes in shareholders' equity for the period | ||||
| 6 months ended | Year ended | |||
| 30th June | 31st December | |||
| 2008 | 2007 | 2007 | ||
|
| £'000 | £'000 | £'000 | |
| Total recognised income and expense for the period | 165 | 173 | 460 | |
| Purchase of own shares | (331) | - | (70) | |
| Sale of own shares | 16 | 2 | 21 | |
| Share-based payments | 7 | - | 2 | |
| Dividends paid | (160) | (80) | (161) | |
| Change in shareholders' equity for the period | (303) | 95 | 252 | |
| Shareholders equity at start of period | 3,071 | 2,819 | 2,819 | |
| Shareholders' equity at end of period | 2,768 | 2,914 | 3,071 | |
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IS Solutions plc
| Consolidated balance sheet as at 30th June 2008 | ||||
| At 30th June | At 31st December | |||
| 2008 | 2007 | 2007 | ||
|
| £'000 | £'000 | £'000 | |
| Non-current assets |
| |||
| Goodwill | 254 | 254 | 254 | |
| Other intangible assets | - | 22 | 7 | |
| Property, plant and equipment | 144 | 176 | 127 | |
| Deferred tax assets | 61 | 11 | 86 | |
|
| 459 | 463 | 474 | |
| Current assets |
| |||
| Trading investments carried at fair value | 250 | - | - | |
| Trade and other receivables | 1,244 | 1,584 | 1,224 | |
| Cash and cash equivalents | 1,860 | 2,171 | 2,504 | |
|
| 3,354 | 3,755 | 3,728 | |
| Total assets | 3,813 | 4,218 | 4,202 | |
| Current liabilities |
| |||
| Trade and other payables | (1,025) | (1,300) | (1,110) | |
|
| Tax liabilities | (20) | - | (20) |
| (1,045) | (1,300) | (1,130) | ||
| Non-current liabilities |
| |||
| Deferred tax liabilities | - | (4) | (1) | |
| Total liabilities | (1,045) | (1,304) | (1,131) | |
| Net assets | 2,768 | 2,914 | 3,071 | |
|
| ||||
| Equity |
| |||
| Share capital | 496 | 496 | 496 | |
| Share premium account | 1,786 | 1,786 | 1,786 | |
| Own shares | (368) | (64) | (97) | |
| Retained earnings | 854 | 696 | 886 | |
| Total equity | 2,768 | 2,914 | 3,071 | |
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IS Solutions plc
| Consolidated cash flow statement for the six months ended 30th June 2008 | |||||
| 6 months ended | Year ended | ||||
| 30th June | 31st December | ||||
| 2008 | 2007 | 2007 | |||
|
| £'000 | £'000 | £'000 | ||
| Operating activities |
| ||||
| Profit from operations | 143 | 133 | 302 | ||
| Adjustments for: |
| ||||
| Depreciation of property, plant and equipment | 52 | 55 | 114 | ||
| Gain on disposal of property, plant and equipment | (2) | (2) | (2) | ||
| Amortisation of intangible assets | 7 | 15 | 30 | ||
| Share-based payments | 7 | - | 2 | ||
| Operating cash flows before movements in working capital | 207 | 201 | 446 | ||
| (Increase)/decrease in debtors | (20) | 170 | 530 | ||
| (Decrease)/increase in creditors | (85) | 311 | 121 | ||
| Cash generated by operations | 102 | 682 | 1,097 | ||
| Net cash from operating activities | 102 | 682 | 1,097 | ||
| Investing activities |
| ||||
| Interest received | 46 | 48 | 108 | ||
| Purchase of trading investments | (250) | - | - | ||
| Purchase of property, plant and equipment | (74) | (50) | (60) | ||
| Proceeds on disposal of property, plant and equipment | 7 | 6 | 6 | ||
| Net cash (used in)/from investing activities | (271) | 4 | 54 | ||
| Financing activities |
| ||||
| Dividends paid | (160) | (80) | (161) | ||
| (Purchase)/sale of own shares | (315) | 2 | (49) | ||
| Net cash used in financing activities
| (475) | (78) | (210) | ||
| Net (decrease)/increase in cash and cash equivalents | (644) | 608 | 941 | ||
| Cash and cash equivalents at start of year | 2,504 | 1,563 | 1,563 | ||
| Cash and cash equivalents at end of period | 1,860 | 2,171 | 2,504 | ||
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IS Solutions plc
Notes to the interim financial statements
1. Basis of preparation
The interim financial information for the six months ended 30th June 2008 and 30th June 2007 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 31st December 2007 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 2007 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
The Group reports its revenue and gross profit by direct sales (to its own customers) and distribution sales (vendor generated third party sales). Analysis of other income and operating costs to these segments would be entirely arbitrary and is not provided.
| Business segments 2008 | Direct | Distribution | Unallocated | Total | |
| Revenue | 3,198 | 446 | - | 3,644 | |
| Gross profit | 1,357 | 28 | - | 1,385 | |
| Other income and expense | - | - | (1,220) | (1,220) | |
| Segment result | 1,357 | 28 | (1,220) | 165 | |
| Assets | 1,148 | - | 2,665 | 3,813 | |
| Liabilities | (708) | - | (337) | (1,045) | |
| Business segments 2007 | Direct | Distribution | Unallocated | Total | |
| Revenue | 3,284 | 600 | - | 3,884 | |
| Gross profit | 1,323 | 60 | - | 1,383 | |
| Other income and expense | - | - | (1,210) | (1,210) | |
| Segment result | 1,323 | 60 | (1,210) | 173 | |
| Assets | 980 | - | 3,238 | 4,218 | |
| Liabilities | (740) | - | (564) | (1,304) | |
| Geographical segments | |||||
| The group operates entirely within the UK. | |||||
continued…
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3. Earnings per ordinary share
| 6 months ended | Year ended | ||
| 30/06/2008 | 30/06/2007 | 31/12/2007 | |
| Earnings attributable to equity holders of the parent | £165,000 | £173,000 | £460,000 |
| Weighted average of ordinary shares in issue | 24,793,190 | 24,793,190 | 24,793,190 |
| Weighted average of own shares | (1,403,998) | (565,618) | (482,285) |
| Weighted average for calculating basic EPS | 23,389,192 | 24,227,572 | 24,310,905 |
| Effective dilutive share options | 201,000 | 419,870 | 361,977 |
| Weighted average for calculating diluted EPS | 23,590,192 | 24,647,442 | 24,672,882 |
4. Dividends
During the period a dividend of £160,000 (0.67p per share) was paid in relation to the year ended 31st December 2007 (2007: £80,000 (0.33p per share) in relation to the year ended 31st December 2006).
An interim dividend of 0.33p per share (2007: 0.33p) is proposed, and will be paid on 7th November 2008 to shareholders on the register at the close of business on 10th October 2008.