Final Results

RNS Number : 7194A
IS Solutions PLC
25 March 2013
 

IS Solutions Plc

Audited Preliminary Results

for the year ended 31 December 2012

 

"Strong performances from our Projects and Managed Services

underpins seventh year of successive growth"

 

Highlights

2011

Ø Revenue

£9.21m

£9.06m

+1.62%

Ø Profit before tax*

£895,000

£835,000

+7.18%

Ø Post tax profit*

£833,000

£768,000

+8.46%

Ø Earnings per share

- adjusted*, fully diluted

 

3.28p

 

3.05p

 

+7.54%

Ø Increase in dividend

-interim(paid)

-final (proposed)

 * Before goodwill impairment and share based payments

 

0.44p

1.00p

 

0.40p

0.90p

+10.00%


Ø Recurring Revenues:  produced growth in revenue of 2.5%, contributing 68.8% of the total GP (2011: 66.7%)

Ø Projects:  showed strong revenue growth of 23% being generated by all three areas of  Web Analytics, Portals and Enterprise Content Management (ECM)

 

"..one area of our business very much favoured by the low growth/no growth economic situation we find ourselves in is, - Analytics - the reason being that clients look to achieve better retention of customers and an increased proportion of their expenditure through a better understanding of their behaviour.

 

"Having a strong balance sheet with net cash, coupled with the growth coming from Analytics and recurring income that supplies 50% of our revenue and around 69% of our gross profit, leads the Board to be reasonably optimistic for another year of growth in terms of sales and earnings.

 

"We look forward to updating stakeholders on our progress as the year unfolds."

Barrie Clark, Chairman

 

Enquiries:



IS Solutions Plc

FinnCap

TooleyStreet Communications Ltd

John Lythall, Managing Director

Nominated Broker & Adviser

IR & Media Relations

+44 (0) 1932 893333

Ed Frisby/Rose Herbert - Corporate Finance

Stephen Norcross - Corporate Broking

Fiona Tooley, Director

Tel: +44 (0) 121 309 0099


Tel: +44 (0) 207 220 0500

Mobile: +44 (0)7785 703523







Editor's Note

IS Solutions is a systems integrator and value-added reseller focused on three web-related areas - portals, content/document management, with specialities in business intelligence and 'big data' analytics. Based in Sunbury-on-Thames, the Group was founded in 1985 and became a listed PLC 1997. The business currently employs 105 staff, including 20 in Chennai, India, who provide product development and support. It also has a strong blue-chip client base which includes Toyota and Toshiba as well as BP, BT, GSK, HMRC, M&S and RBS.

 

Ticker: AIM: ISL

 

Accreditation: ISO27001

E-mail:  moreinfo@issolutions.co.uk

 

Website: www.issolutions.co.uk

Follow us  www.linkedin.com/company/issolutions

 

 

IS Solutions Plc

Audited Preliminary Results for the year ended 31 December 2012

Statement by the Chairman, Barrie Clark

The Board is pleased to announce a return to top line growth and the seventh successive year of growth in adjusted PBT following a strong second half performance in 2012.

Financials

Revenue in the year under review improved by 1.62% to £9.208 million (2011: £9.061 million) producing a 7.18% growth in profit before tax (before goodwill write down and share-based payments), from £835,000 in 2011 to £895,000.  On the same basis, adjusted post tax profit increased by 8.46% to £833,000 (2011: £768,000).  Fully diluted earnings per share, on the same basis, rose by 7.54% to 3.28p (2011: 3.05p). Unadjusted post tax profits were £730,000 and unadjusted EPS was 2.87p.

Cash at the year-end stood at £70,000 (2011: £531,000) however, debtors were £333,000 higher and creditors £398,000 lower than 2011, giving a swing of £731,000.  Within three weeks of the start of 2013 cash had risen to £600,000.

Due to the continuing low interest rates available for deposits, the Board elected once again to continue with its trading investment of £500,000 (initial value).  At the 2012 year-end, these investments were valued at £561,000 (2011: £526,000); should it be deemed appropriate we are able to convert back to cash within a month.  In July 2012, the Company's £500,000 bank facility was renewed for a further year.  Interest cover stood at 24 times (2011: 23.6 times).

In addition to our trading investments we invested a further £100,000 in Speed-Trap Holdings Ltd - a fundamental part of our growing Analytics business and, our total investment to date within this operation is £800,000

As a result of our concentration on our higher margin Services business and away from the less predictable Product Sales, we have seen our Return on Sales ('ROS') continuing to improve and move ahead of last year - up by 0.56% to 9.72% (2011: 9.16%).

Looking at our business:-

Projects:  Sales showed strong revenue growth of 23% being generated by all three areas of Web Analytics, Portals and Enterprise Content Management (ECM), however, we have experienced a small reduction in gross margin of c.2% as day rates were held at the previous year's level due to the economic environment.

Recurring Revenues:  This is the mainstay of our business generating, as it does, the majority of our recurring income; 2012 produced growth in revenue of 2.5%, contributing 68.8% of the total GP (2011: 66.7%).  Although this is at a lower level of revenue growth compared to previous years it reflects a change in the mix of this business area and in fact hides a significant growth in the Support contracts which has been offset by a continuing decline in the license maintenance revenue -  due principally to the lack of renewals from the public sector.

 

Product Sales:  This area of our business is the least predictable - the first half of 2012 produced a strong growth in revenue over the previous year however, this was followed by a much lower second half -resulting in an overall drop in revenue in Product Sales of 26.9%.  Despite this, it has been very encouraging that the business still recorded an overall increase in revenue due to the growth in the Services area of our business more than offsetting the shrinkage in this arena.

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

Dividend

Adjusted Earnings per share advanced in the period by 8.25% compared to 2011.  However, against the current outlook for the UK and the on-going downward revisions of economic growth on a worldwide basis, the Board feels it is prudent to take a cautious approach to cash management.

The Board will be recommending to shareholders an increase in the final dividend to 1.00 pence (2011: 0.90p).  This, together with the interim dividend of 0.44 pence (2011: 0.40p) paid in October 2012 gives a total for the year of 1.44p (2011: 1.30p), an increase of 10%.

Subject to shareholder approval at the Annual General Meeting, the final dividend will be paid on 31 May 2013, to qualifying shareholders on the Register at the close of business on 10 May 2013.  The ex-dividend date is 8 May 2013.  The dividend is covered 2.48 times by profit after taxation (2011: 2.59 times).

Outlook

As a Board, we continue to be cautiously optimistic in our view going forward. On the one hand the global economic situation stumbles on without showing any inclination to improve by any significant degree.  Against this background our clients are naturally ensuring, as much as is possible, that they will get the Return on Investment they strive for before committing to additional new projects.

On the other hand, one area of our business very much favoured by the low growth/no growth economic situation we find ourselves in is, - Analytics - the reason being that clients look to achieve better retention of customers and an increased proportion of their expenditure through a better understanding of their behaviour.

Having a strong balance sheet with net cash, coupled with the growth coming from Analytics and recurring income that supplies 50% of our Revenue and around 69% of our gross profit, leads the Board to be reasonably optimistic for another year of growth in terms of sales and earnings.

We look forward to updating stakeholders on our progress as the year unfolds.

Date: 25 March 2013

 Consolidated statement of comprehensive income for the year ended 31 December 2012

 

 

 

 

2012

2011

 

 

 

 

£'000

£'000

 

Continuing operations

 

 

 

 

 

Revenue

 

9,208

9,061

 

 

Cost of sales

 

(5,321)

(5,344)

 

Gross profit

 

3,887

3,717

 

 

Distribution costs

 

(2,293)

(2,154)

 

 

Administration expenses

 

(842)

(727)

 

 

Other operating income

 

38

61

 

Profit from operations

 

790

897

 

 

Investment income

 

-

4

 

 

Finance costs

 

(33)

(38)

 

 

Other gains and losses

 

35

(33)

 

Profit before tax

 

792

830

 

 

Tax

 

(62)

(67)

 

Profit for the period

 

 

730

763

 

 

Gains on property revaluation

 

-

50

 

Total comprehensive income for the period

attributable to equity holders of the parent

730

813

 

Earnings per share

 

 

 

 

 

Basic

 

2.94p

3.08p

 

 

Diluted

 

2.87p

3.03p

 

 

 

 

 

 

 

Consolidated statement of changes in equity for the year ended 31 December 2012

 

 

 

 

2012

2011

 

 

 

 

£'000

£'000

 

 

Purchase of own shares

 

(8)

(83)

 

 

Sale of own shares

 

3

55

 

 

Share-based payments

 

3

5

 

 

Gains on property revaluation

 

-

50

 

Total income/(loss) recognised directly in equity

(2)

27

 

 

Profit for the year

 

730

763

 

 

Issue of share capital

 

34

29

 

 

Dividends paid

 

(335)

(295)

 

Change in shareholders' equity for the year

427

524

 

 

Shareholders' equity at start of year

 

4,418

3,894

 

Shareholders' equity at end of year

 

4,845

4,418

 

 

 

Consolidated balance sheet as at 31 December 2012

 

 

 

 

2012

2011

 

 

 

 

£'000

£'000

 

Non-current assets

 

 

 

 

 

Goodwill

 

1,018

1,118

 

 

Other intangible assets

 

56

-

 

 

Property, plant and equipment

 

2,361

2,425

 

 

Investments

 

800

700

 

 

Deferred tax assets

 

17

19

 

 

 

 

4,252

4,262

 

Current assets

 

 

 

 

 

Investments

 

561

526

 

 

Trade and other receivables

 

2,672

2,339

 

 

Cash and cash equivalents

 

70

531

 

 

 

 

3,303

3,396

 

Total assets 

 

7,555

7,658

 

Current liabilities

 

 

 

 

 

Trade and other payables

 

(1,541)

(1,939)

 

 

Tax liabilities

 

(57)

(38)

 

 

Borrowings

 

(155)

(151)

 

 

 

 

(1,753)

(2,128)

 

Non-current liabilities

 

 

 

 

 

Borrowings

 

(957)

(1,112)

 

 

 

 

(957)

(1,112)

 

Total liabilities

 

(2,710)

(3,240)

 

Net assets

 

4,845

4,418

 

Equity

 

 

 

 

 

Share capital

 

503

499

 

 

Share premium account

 

1,842

1,812

 

 

Revaluation reserve

 

50

50

 

 

Retained earnings

 

2,450

2,057

 

Attributable to equity holders of the parent

4,845

4,418

 

 

These financial statements of IS Solutions Plc, registered number 01892751, were approved by the Board of Directors and authorised for issue on 25 March 2013 and were signed on its behalf by:

 

J Lythall, Director

 

 

 

Consolidated cash flow statement for the year ended 31 December 2012

 

 

 

 

2012

2011

 

 

 

 

£'000

£'000

 

Operating activities

 

 

 

 

 

Profit from operations

 

790

897

 

Adjustments for:

 

 

 

 

 

Depreciation of property, plant and equipment

161

139

 

 

Gain on disposal of property, plant and equipment

-

(1)

 

 

Impairment of goodwill

 

100

-

 

 

Share-based payments

 

3

5

 

Operating cash flows before movements in working capital

1,054

1,040

 

 

Increase in debtors

 

(333)

(110)

 

 

(Decrease)/increase in creditors

 

(398)

272

 

Cash generated by operations

 

323

1,202

 

 

Income taxes paid

 

(41)

(57)

 

Net cash from operating activities

 

282

1,145

 

Investing activities

 

 

 

 

 

Interest received

 

-

4

 

 

Interest paid

 

(33)

(38)

 

 

Purchase of non-current investments

(100)

(500)

 

 

Capitalisation of development costs

 

(56)

-

 

 

Purchase of property, plant and equipment

(97)

(223)

 

 

Proceeds on disposal of property, plant and equipment

-

10

 

Net cash used in investing activities

 

(286)

(747)

 

Financing activities

 

 

 

 

 

Issue of new share capital

 

34

29

 

 

Dividends paid

 

(335)

(295)

 

 

Repayment of borrowings

 

(151)

(147)

 

 

Purchase of own shares (net)

 

(5)

(28)

 

Net cash used in financing activities

 

(457)

(441)

 

Net decrease in cash and cash equivalents

(461)

(43)

 

 

Cash and cash equivalents at start of year

531

574

 

Cash and cash equivalents at end of year

70

531

 

 

 

 

Notes

1.    Business and geographical segments

 

 

The Group has adopted IFRS 8 Operating Segments with effect from 1 January 2009.  IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the Chief Executive to allocate resources to the segments and assess their performance.  The Group has one reportable 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.  The principal activity of the Group is split into three categories:

·     Product sales

·     Project work

·     Recurring revenues

 

No allocation of other income and costs to these categories is made because the Directors consider that any such allocation would be arbitrary.  Any allocation of assets and liabilities to these categories would also be arbitrary.  The reporting below is consistent with that provided to the Chief Executive.

 

 

 

Continuing operations 2012

Product

sales

Project

work

Recurring

revenues

Total

£'000

 

 

External sales

1,482

3,052

5,556

10,090

 

 

Adjustment for agency basis

-

-

(882)

(882)

 

 

Reported revenue

1,482

3,052

4,674

9,208

 

 

 

 

 

 

 

 

 

Segment result (gross profit)

296

915

2,676

3,887

 

 

Other operating costs and income

 

 

 

(3,097)

 

 

Investing and financing activities

 

 

 

2

 

 

Profit before tax

 

 

 

792

 

 

Major customers (over 10% of revenue)

 

 

 

 

 

Customer 1

-

1,287

1,200

2,487

 

 

 

 

 

 

 

 

Continuing operations 2011

Product

sales

Project

work

Recurring

revenues

Total

£'000

 

 

External sales

2,027

2,475

6,040

10,542

 

 

Adjustment for agency basis

-

-

(1,481)

(1,481)

 

 

Reported revenue

2,027

2,475

4,559

9,061

 

 

 

 

 

 

 

 

 

Segment result (gross profit)

446

792

2,479

3,717

 

 

Other operating costs and income

 

 

 

(2,820)

 

 

Investing and financing activities

 

 

 

(67)

 

 

Profit before tax

 

 

 

830

 

 

Major customers (over 10% of revenue)

 

 

 

 

 

Customer 1

-

1,028

1,200

2,228

 

The accounting policies of the reportable segments are the same as the Group's accounting policies.

 

Geographical information:  The Group operates entirely within the UK.

 

 

 

 

2.    Dividends


2012

2011

 

 

£'000

£'000

 

Amounts recognised as distributions to equity holders



 

Final dividend for the year ended 31 December 2011 of 0.90p (2010: 0.79p).

224

190

 

Interim dividend for the year ended 31 December 2012 of 0.44p (2011: 0.40p.)

111

105

 

 

335

295

 

Proposed final dividend for the year ended 31 December 2012 of 1.00p.

250

 

 

 

 

The proposed final dividend is subject to shareholders' approval at the AGM in May 2013, and has not been included as a liability in these financial statements.

 

3.    Annual Report & General Meeting

 

 

The Company's Report and Accounts for the year ended 31 December 2012 together with the Notice of Annual General Meeting are being sent to shareholders shortly and will be available to view on the Company's website:  www.issolutions.co.uk.

 

The Annual General Meeting will be held at 10.00 am on Thursday, 23 May 2013 at the Company's Registered office in Sunbury-on-Thames.

 

 


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