28th Sep 2006 08:44
IS Solutions PLC28 September 2006 Issued by Citigate Dewe Rogerson Ltd, BirminghamDate: Thursday, 28 September 2006 IS Solutions plcInterim Results for the six months ended 30th June 2006 • IS Solutions returns to top-line growth via the strategy of diversifying into value-added software products • Turnover £3.38 million (2005: £2.57 million) up 31% • Pre-tax profits £128,000 (2005: £105,000) up 22% • EPS 0.53 pence (2005: 0.40 pence) up 32% • Cash remains strong at £1.7 million at the half-year stage • Acquisitions integrating well • Interim dividend proposed of 0.17 pence (2005: 0.13 pence) Chairman Barrie Clark said:In the first half of the year we have experienced growth in all three areas ofproducts, projects and support, leading to a better balanced business with lessreliance on winning large projects to achieve growth. The Board continues to seek to broaden our portfolio with complementary productsand services whether by resale agreements or acquisition. The Directors remain optimistic about the Group's prospects for the year as awhole. FULL STATEMENT ATTACHED Enquiries:John Lythall, Managing Director Katie Dale/Liz RudmanIS Solutions Plc Citigate Dewe Rogerson LtdTel: 01932 893333 Tel: 0121 455 8370www.issolutions.co.uk -2- IS Solutions plc Interim Results for the six months ended 30th June 2006 STATEMENT BY THE CHAIRMAN, BARRIE CLARK The interim results for the six months ended 30th June 2006 are in line with theBoard's expectations. Pre-tax profits increased by 22% to £128,000 (2005: £105,000) and earnings pershare moved up by 32% to 0.53p (2005: 0.40p) with an increase in turnover of 31%to £3.38 million (2005: £2.57 million). Cash remains strong at £1.7 million(31st December 2005: £2.1 million, 30th June 2005: £1.8 million). The first half of 2006 has seen the company return to top line growth via thestrategy of diversifying into value-added software products first adopted at theend of 2004. The growth in revenue has occurred across all areas with increasesin product license sales leading to an increase in project work fromimplementation services and also in recurring revenue streams generated by thesale of support contracts. However, due to the investment required to build upthe product sales and support infrastructure we have yet to realise animprovement in gross margins in this area. As mentioned in the 2005 Report & Accounts, at the end of the first quarter 2006we purchased Candric Ltd, a small loss making IT services company, to give usthe critical mass to operate more effectively in the services arena. I ampleased to report that the consolidation of Candric into our Sunbury operationwent very well and is now complete, allowing it to contribute to the bottom lineas well as increasing the top line growth. In June of this year we also acquired the European distribution rights toWatchfire - Website scanning software for QA, Accessibility and Compliancechecking for which we first signed a reseller agreement in 2005. DividendThe Board is pleased to announce a dividend for the half year of 0.17p perordinary share (2005 half year: 0.13p), which reflects both the continuingimprovement in the trading environment and the strong balance sheet and cashposition of the Company. The interim dividend will be paid on the 1st November2006 to shareholders on the register at the close of business on the 6th October2006. OutlookIn the first half of the year we have experienced growth in all three areas ofproducts, projects and support, leading to a better balanced business with lessreliance on winning large projects to achieve growth. The Board continues to seek to broaden our portfolio with complementary productsand services whether by resale agreements or acquisition. The Directors remain optimistic about the Group's prospects for the year as awhole. -3- IS Solutions plc Consolidated Income Statement for the six months ended 30th June 2006 6 months ended Year ended 30th June 31st December 2006 2005 2005 £'000 £'000 £'000-----------------------------------------------------------------------------------Continuing operations Revenue 3,376 2,573 5,085 Cost of sales (2,176) (1,358) (2,652)----- -----------------------------------------------------------------------------Gross profit 1,200 1,215 2,433 Distribution costs (663) (699) (1,453) Administration expenses (473) (449) (971)-----------------------------------------------------------------------------------Profit fromoperations 64 67 9 Investment income 64 38 99-----------------------------------------------------------------------------------Profit before tax 128 105 108 Tax - (5) (20)-----------------------------------------------------------------------------------Profit attributableto equity holders of the parent 128 100 88-----------------------------------------------------------------------------------Earnings per share Basic 0.53 p 0.40 p 0.37 p Diluted 0.51 p 0.40 p 0.35 p----- -----------------------------------------------------------------------------Consolidated statement of changes in shareholders' equity for the period 6 months ended Year ended 30th June 31st December 2006 2005 2005 £'000 £'000 £'000------------------------------------------------------------------------------------ Profit for the period 128 100 88------------------------------------------------------------------------------------Total recognised income andexpense for the period 128 100 88 Sale of own shares 45 - - Dividends paid (65) (48) (79)------------------------------------------------------------------------------------Change in shareholders' equity for theperiod 108 52 9 Shareholders equity at start of 2,601 2,592 2,592 period---------------------------------------------------------------------- -------------Shareholders' equity at endof period 2,709 2,644 2,601------------------------------------------------------------------------------------ -4- IS Solutions plc Consolidated balance sheet as at 30th June 2006 At 30th June At 31st December 2006 2005 2005 £'000 £'000 £'000--------------------------------------------------------------------------------Non-current assets Goodwill 249 100 100 Other intangible assets 52 - - Property, plant and equipment 240 275 223 Deferred tax assets 11 - --------------------------------------------------------------------------------- 552 375 323--------------------------------------------------------------------------------Current assets Trading investments - 51 75 Trade and other receivables 1,498 1,544 999 Cash and cash equivalents 1,659 1,809 2,087-------------------------------------------------------------------------------- 3,157 3,404 3,161--------------------------------------------------------------------------------Total Assets 3,709 3,779 3,484--------------------------------------------------------------------------------Current liabilities Trade and other payables (980) (1,130) (863) Tax liabilities (10) (5) (20)-------------------------------------------------------------------------------- (990) (1,135) (883) Non-current liabilities Deferred tax liabilities (10) - ---------------------------------------------------------------------------------Total liabilities (1,000) (1,135) (883)--------------------------------------------------------------------------------Net assets 2,709 2,644 2,601--------------------------------------------------------------------------------Equity Share capital 496 496 496 Share premium account 1,786 1,783 1,783 Own shares (63) (102) (102) Retained earnings 490 467 424--------------------------------------------------------------------------------Total equity 2,709 2,644 2,601-------------------------------------------------------------------------------- -5- IS Solutions plc Consolidated Cash Flow Statement for the six months ended 30th June 2006 6 months ended Year ended 30th June 31st December 2006 2005 2005 £'000 £'000 £'000--------------------------------------------------------------------------------Operating activities Profit from operations 64 67 9 Adjustments for: Depreciation of property, plant and 45 49 108 equipment Amortisation of intangible assets 8 - - Impairment of goodwill - 19 19 (Increase)/decrease in debtors (383) (140) 405 Increase/(decrease) in creditors 46 (94) (361)----------------------------------------------------------------------------------Cash (utilised by)/generatedby operations (220) (99) 180 Income taxes repaid - 33 33----------------------------------------------------------------------------------Net cash (used in)/fromoperating activities (220) (66) 213----------------------------------------------------------------------------------Investing activities Interest received 34 38 75 Proceeds on disposal of trading 105 - - investments Purchase of tangible fixed assets (62) (31) (61) Sale of tangible fixed assets - 6 29 Acquisition of subsidiary (234) - ----------------------------------------------------------------------------------Net cash (usedin)/frominvestingactivities (157) 13 43---------------------------------------------------------------------------------Financing activities Dividends paid (65) (48) (79) Sale of own shares 14 - ----------------------------------------------------------------------------------Net cash usedin financingactivities (51) (48) (79)---------------------------------------------------------------------------------Net (decrease)/increase in cash and cashequivalents (428) (101) 177 Cash and cash equivalents at start of year 2,087 1,910 1,910---------------------------------------------------------------------------------Net funds atend of period 1,659 1,809 2,087--------------------------------------------------------------------------------- -6- IS Solutions plc Notes to the interim financial statements 1. Basis of preparationThe interim financial information for the six months ended 30 June 2006 and 30June 2005 does not constitute statutory accounts within the meaning of section240 of the Companies Act 1985 and has not been audited by the Group's auditors.The financial information for the year ended 31 December 2005 has been extractedfrom the statutory accounts for that year which have been filed with theRegistrar of Companies and which contain an unqualified audit report and did notcontain a statement under s237(2) or (3) of the Companies Act 1985. The interim financial information has been prepared on the basis of theaccounting policies and presentation required by International FinancialReporting Standards, incorporating International Accounting Standards (IAS's)and Interpretations (collectively IFRS) and on a consistent basis with thelatest published Annual Accounts. 2. Business and geographical segments Business segmentsThe group is involved solely in the supply of internet services. Geographical segmentsThe group operates entirely within the UK. 3. AcquisitionOn 22nd March 2006 the Group acquired 100% of Candric Limited. Considerationpaid was £200,000 comprising cash of £150,000 and treasury shares of £50,000. 4. Earnings per ordinary shareThe basic earnings per share figure of 0.53p (2005: interim 0.40p, final 0.37p)has been calculated on the basis of a profit attributable to the equityshareholders of the parent for the period of £128,000 (2005: interim £100,000,final £88,000) and the weighted average number of shares in issue of 24,227,572(2005 interim: 24,793,190, and final: 23,993,190). The diluted earnings pershare figure of 0.51p (2005: interim 0.40p, final 0.35p) has been calculated onthe same basis but including the dilutive effect of 689,310 share options (2005interim: nil, final: 950,000). 5. DividendsDuring the period a dividend of £65,000 (0.27p per share) was paid in relationto the year ended 31st December 2005 (2005: £48,000 (0.20p per share) inrelation to the year ended 31st December 2004). An interim dividend of 0.17p per share (2005: 0.13p) is proposed, and will bepaid on 1st November 2006 to shareholders on the register at the close ofbusiness on 6th October 2006. -7- INDEPENDENT REVIEW REPORT TO I S SOLUTIONS PLC IntroductionWe have been instructed by the company to review the financial information forthe six months ended 30 June 2006 which comprise the consolidated incomestatement, the consolidated balance sheet, the consolidated statement of changesin shareholders' equity, the consolidated cash flow statement and related notes1 to 5. We have read the other information contained in the interim report andconsidered whether it contains any apparent misstatements or materialinconsistencies with the financial information. This report is made solely to the company in accordance with Bulletin 1999/4issued by the Auditing Practices Board. Our work has been undertaken so that wemight state to the company those matters we are required to state to them in anindependent review report and for no other purpose. To the fullest extentpermitted by law, we do not accept or assume responsibility to anyone other thanthe company, for our review work, for this report, or for the conclusions wehave formed. Directors' responsibilitiesThe interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the directors. The directorsare responsible for preparing the interim report in accordance with the ListingRules of the Financial Services Authority which require that the accountingpolicies and presentation applied to the interim figures are consistent withthose applied in preparing the preceding annual accounts except where anychanges, and the reasons for them, are disclosed. Review work performedWe conducted our review in accordance with the guidance contained in Bulletin1999/4 issued by the Auditing Practices Board for use in the United Kingdom. Areview consists principally of making enquiries of group management and applyinganalytical procedures to the financial information and underlying financial dataand, based thereon, assessing whether the accounting policies and presentationhave been consistently applied unless otherwise disclosed. A review excludesaudit procedures such as tests of controls and verification of assets,liabilities and transactions. It is substantially less in scope than an auditperformed in accordance with International Standards on Auditing (UK andIreland) and therefore provides a lower level of assurance than an audit.Accordingly, we do not express an audit opinion on the financial information. Review conclusionOn the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 June 2006. Deloitte & Touche LLPChartered AccountantsReading, UK27 September 2006 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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