Interim Results

IS Solutions PLC 28 September 2000 IS Solutions Plc Interim Results Thursday, 28 September 2000 Analysts' Presentation - 9.30am Press Briefing - 10.30am - 12.00noon @ Citigate Dewe Rogerson 26 Finsbury Square London EC2A 1DS Tel: 020 7282 8000 IS Solutions Plc Interim Results for the six months ended 30th June 2000 Turnover £6.53m +53% Profit before tax £482,000 +33% Earnings per share 1.39p +31% Interim dividend 0.35p +10% Strong performance from the US Successful realignment to a services based operation 3 web-projects completed - two for IS Solutions' strategic partner, BroadVision High level of activity from the UK business AXL acquisition in April integrating well, and broadens the Group's activities Group balance sheet remains strong 'The US is now a strong contributor to the bottom line and has a full order book to the end of this year with the necessary resources in place. The emphasis both in the US & UK is on recruitment for further growth. In July the UK operation moved into new premises which will allow us to accommodate the growth in the Internet Arena. The Board views the future with optimism.' Barrie Clark, Chairman FULL STATEMENT ATTACHED Enquiries: John Lythall, Chief Executive Fiona Tooley IS Solutions Plc Citigate Dewe Rogerson Today: 020 7282 8000 (8.00am - 12.30pm) Today: 020 7282 8000 Thereafter: 01932 893333 Thereafter: 0121 631 2299 www.issolutions.co.uk -2- IS Solutions Plc Interim Results STATEMENT BY THE CHAIRMAN, BARRIE CLARK I am pleased to report good progress within the Group, and particularly the successful realignment of our US business, which is now contributing strongly to the Group's profits. This, taken with the drive for revenue growth in the UK, has allowed the Group to increase turnover by 52.6% to £6.53m (1999: £4.28m) and increase profit before tax by 33.2% to £482k (1999: £362k). The profit before tax is after a bad debt in the UK of £109k, which related to revenue recognised in 1999 from a sale to an early stage '.com' company which subsequently went into receivership. The Company has no other exposure of this type. Earnings per share for the period were 1.39p (1999: 1.06p) and the balance sheet remains healthy, with net tangible assets at 30th June standing at £4.97m (1999: £2.53m) with net cash at £1.34m (1999: £1.93m), the large changes in the cash and asset position being due to the AXL acquisition and the investment for revenue growth. An interim dividend of 0.35p per share (1999:0.32p) will be paid on the 9th November 2000 to all shareholders on the Register at the close of business on 13th October 2000. UK It has been a very busy year for the UK starting with the acquisition of AXL in April. AXL has 3 aspects to its business: Real Time Financial Information Services (including real-time data feed handling and presentation products and services), for clients such as Merrill Lynch, Proquotes and Standard & Poors. Internet based Projects and Services (including web hosting, delayed market pricing and intranet componentware), clients include the London Stock Exchange, Capita IRG and Mazda. Facilities Management (FM) Services (AXL or client-sited FM and network management services) for such clients as Marks & Spencer, Thomas Cook and the NHS. The integration of AXL with IS Solutions has progressed well. It is intended that AXL will concentrate on building up a strong product portfolio in Financial Information Services supported by a strong FM arm. This will assist in broadening the Group's activities after strong growth in the Internet related arena. As announced in July IS Solutions acquired a 26% stake in Open Methods Limited. Open Methods is a company specialising in project methodology and consultancy in the Internet arena, and IS Solutions has worked closely with the company on existing client projects. Our stake will allow us to be influential in standard methodology developed for Internet projects and also provide access to high quality consultants as well as related training for our own staff. continued... -3- US The move to a services based operation, away from hardware sales, has gone very well for the US with the completion of three web based projects. Two of these were for BroadVision, a strategic partner of IS Solutions and a leader in one-to-one technology for the web. By the end of 2000, we expect the transition to a services led activity within the US to be completed, therefore allowing it to return to revenue growth in 2001. Outlook The US is now a strong contributor to the bottom line and has a full order book to the end of this year with the necessary resources in place. The emphasis both in the US & UK is on recruitment for further growth. In July the UK operation moved into new premises which will allow us to accommodate the growth in the Internet Arena. The Board views the future with optimism. 28 September 2000 -4- IS Solutions Plc Interim Results Consolidated Profit and Loss Account for the six months ended 30th June 2000 Note 6 months ended Year ended 30th June 31st December 2000 1999 1999 £'000 £'000 £'000 Turnover Continuing operations 6,300 4,277 11,818 Acquisitions 229 - - 2 Group turnover 6,529 4,277 11,818 Cost of sales (4,320) (2,713) (7,950) Gross profit 2,209 1,564 3,868 Distribution costs (1,060) (805) (1,740) Administration expenses (690) (431) (979) Operating profit Continuing operations 429 328 1,149 Acquisitions 30 - - Group operating profit 459 328 1,149 Interest receivable and 25 36 62 similar income Interest payable and (2) (2) (6) similar charges 2 Profit on ordinary 482 362 1,205 activities before taxation Tax on profit on 3 (145) (110) (367) ordinary activities Profit on ordinary 337 252 838 activities after taxation Dividends 5 (85) (76) (229) Retained profit 252 176 609 Earnings per 6 1.39p 1.06p 3.51p ordinary share Diluted earnings 6 1.35p 1.04p 3.42p per ordinary share Dividends per 5 0.35p 0.32p 0.96p ordinary share -5- IS Solutions Plc Interim Results Consolidated Balance Sheet as at 30th June 2000 At 30th June At 31st December 2000 1999 1999 £'000 £'000 £'000 Fixed assets Intangible assets 2,114 - - Tangible assets 894 425 634 3,008 425 634 Current assets Stocks 125 110 85 Debtors 3,213 3,048 3,044 Cash at bank and in hand 1,341 1,927 2,273 4,679 5,085 5,402 Creditors Amounts falling due within (2,715) (2,978) (3,098) one year Net current assets 1,964 2,107 2,304 Total assets less current 4,972 2,532 2,938 liabilities Net assets 4,972 2,532 2,938 Capital and reserves Called up share capital 496 95 95 Share premium account 2,170 791 791 Profit and loss account 2,306 1,646 2,052 Equity shareholders' funds 4,972 2,532 2,938 -6- IS Solutions Plc Interim Results Consolidated Cash Flow Statement for the six months ended 30th June 2000 6 months ended Year ended 30th June 31st December 2000 1999 1999 £'000 £'000 £'000 Net cash flow from operating (41) 111 1,151 activities Returns on investments and servicing of finance Interest received 25 36 62 Interest paid - - (2) Interest element of finance (2) (2) (4) lease rentals Dividends paid (151) (127) (203) Net cash flow from returns on (128) (93) (147) investments and servicing of finance Taxation - (16) (308) Capital expenditure Purchase of tangible fixed (311) (146) (473) assets Sale of tangible fixed assets 8 4 19 Net capital expenditure (303) (142) (454) Acquisition of subsidiary Purchase of subsidiary (2,360) - - Cash acquired with subsidiary 123 - - Net cost of acquisition (2,237) - - Cash flow before use of liquid (2,709) (140) 242 resources and financing Financing Issue of ordinary share capital 1,780 - - Capital element of finance (5) (13) (22) lease rental payments Net cash flow from financing 1,775 (13) (22) (Decrease)/Increase in cash in (934) (153) 220 period -7- IS Solutions Plc Interim Results Net Cash Flow from Operating Activities 6 months ended Year ended 30th June 31st December 2000 1999 1999 £'000 £'000 £'000 Operating profit 459 328 1,149 Net depreciation charge 162 94 197 Change in working capital (662) (311) (195) Net cash flow from operating (41) 111 1,151 activities Reconciliation of Net Cash Flow to Movement in Net Funds 6 months ended Year ended 30th June 31st December 2000 1999 1999 £'000 £'000 £'000 (Decrease)/Increase in cash in (934) (153) 220 the period Cash flow arising from lease 5 13 22 financing Translation differences 2 12 (15) Movement in net funds in the (927) (128) 227 year Net funds at 1st January 2000 2,268 2,041 2,041 Net funds at 30th June 2000 1,341 1,913 2,268 Statement of Total Recognised Gains and Losses 6 months ended Year ended 30th June 31st December 2000 1999 1999 £'000 £'000 £'000 Profit for the period 252 176 609 Currency translation 2 12 (15) differences Total recognised gains and 254 188 594 losses -8- IS Solutions Plc Interim Results Notes 1. Basis of Preparation The interim financial statements have been prepared on the basis of accounting policies set out in the Group financial statements for the year ended 31st December 1999. The statements are unaudited but have been reviewed by KPMG Audit Plc, and their report is set out on page 9. 2. Segmental Analysis Turnover arises from the distribution, design and installation of computer hardware and software systems. 6 months ended Year ended 30th June 31st December 2000 1999 1999 £'000 £'000 £'000 Turnover UK 5,544 3,646 9,113 USA 985 631 2,705 6,529 4,277 11,818 Profit before Taxation UK 328 390 1,188 USA 154 (28) 17 482 362 1,205 Net Assets/(Liabilities) UK 4,976 2,651 3,057 USA (4) (119) (119) 4,972 2,532 2,938 3. Taxation The taxation charge for the six months ended 30th June 2000 is based on an estimated effective rate of 30% for the full year. 4. Share Capital On 5th April 2000 187,369 fully paid ordinary shares (nominal value £3,747) were issued for a consideration of £1,780,000. Subsequently a bonus issue of four new fully paid ordinary shares for each old ordinary share was made. Dividends and earnings per share figures have been adjusted to reflect this. 5. Dividends The Directors have elected to pay an interim dividend of 0.35p per ordinary share (1999: interim dividend 0.32p, final dividend 0.96p) on 9th November 2000 to shareholders on the Register at 13th October 2000. continued... -9- 6. Earnings per Share The basic earnings per share figure of 1.39p (1999: 1.05p) has been calculated on the basis of profit after tax of £337,000 (1999: £252,000) and the weighted average number of shares in issue of 24,304,178 (1999: 23,856,345). The diluted earnings per share figure of 1.35p has been calculated on the basis that 24,890,678 shares had been in issue in the period (1999: 24,120,345). 7. Interim Results The interim results are unaudited and do not comprise full accounts within the meaning of Section 240 of the Companies Act 1985. Full accounts for the year ended 31st December 1999, on which the auditors gave an unqualified report, have been delivered to the Registrar of Companies 8. The interim statement is being posted to shareholders week commencing 9th October 2000. Copies of this statement are available from the Registered office (Windmill House, 91-93 Windmill Road, Sunbury-on-Thames, Middlesex, TW16 7EF).

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