Interim Results

IS Solutions PLC
27 September 2002


I S Solutions Plc

Interim Results

6 months ended 30 June 2002

Chairmans Statement

The interim results for the 6 months ended 30 June 2002 are in line with our
trading statement made on 22 May 2002. Turnover for the Group was £3.62 million
(2001: £5.9 million) and there was an operating loss before tax and amortisation
of goodwill of £661,000 (2001 profit: £70,000). This includes a bad debt of
£222,000 from a client of our US operation, previously reported in our statement
of 22 May. Cash still remains strong at £667,000 (year end 2001: £758,000) and
the company had a net inflow of cash from operating activities of £30,000.

In view of the continuing difficult trading conditions the Board has elected not
to pay any interim dividend.

UK

The UK has three main areas of revenue two of which (IT Outsourcing Services and
Financial Products) have performed strongly but were not able to offset the
severe downturn in revenues from our Projects Division as the large corporates
continued to reign back on capital expenditure. As a result of this the
headcount in our Sunbury operation was reduced in June by some 20 per cent.
This, along with other savings, was necessary to ensure that the Group remained
in a cash generative position, which the Board considers important in the
current economic climate.

We have recently launched a new recurring revenue service, 'EyeSite', which is
being well received by the market. EyeSite is a new range of services from IS
Solutions that enables the detailed capturing of accurate information about the
activity of visitors to all of a client's web-based applications. EyeSite
produces precise information which enables our clients to make much better
assessments of ROI than has been possible before. For more detailed  information
please visit our website.

USA

The US operation, which is mainly project based, has suffered a very severe
turndown in the first half. As a result of this the headcount has also been
reduced there and the remaining staff are currently on a four day week. The
Board continues to monitor the prospects for the US and is considering the
future of the operation against the likelihood of a continuing downturn.

Outlook

The outlook remains uncertain in the Company's markets and has led your Board to
take the steps described above to ensure that the Group will continue to operate
with no gearing and with cash in hand.

In recent weeks we have seen an increase in the number of requests for
quotations across services and projects although these have yet to convert into
an increase in order intake.  Whilst visibility remains poor, the signs are the
most encouraging that we have seen this year.  The Board believes that the
second half position will reflect the benefit of the cost cutting undertaken
though no improvement in market conditions is expected.


Barrie Clark
Chairman
27 September 2002



Consolidated Profit and Loss Account for the six months ended 30th June 2002

                                                                          6 months ended          Year ended
                                                                              30th June        31st December
                                                             Note          2002       2001              2001
                                                                          £'000      £'000             £'000
Turnover
Continuing operations                                                     3,537      5,904            10,873
Acquisitions                                                                 84          -                 -
                                                                       --------   --------          --------
Group turnover                                                 2          3,621      5,904            10,873
Cost of sales                                                           (2,165)    (3,954)           (6,489)
                                                                       --------   --------          --------
Gross profit                                                              1,456      1,950             4,384
Distribution costs                                                      (1,258)    (1,151)           (2,723)
Administration expenses                                                 (1,080)      (969)           (1,896)
                                                                       --------   --------          --------
Operating loss
Continuing operations                                                     (855)      (170)             (235)
Acquisitions                                                               (27)         -                  -
                                                                       --------   --------          --------
Group operating loss                                                      (882)      (170)             (235)
Investment income                                                             3         11                16
Interest payable and similar charges                                         -         (2)               (3)
                                                                       --------   --------          --------
Loss/profit on ordinary activities before                                 
 amortisation                                                             (661)         70               215
Amortisation of Goodwill                                                  (218)      (231)             (437)
                                                                       --------   --------          --------
Loss on ordinary activities before taxation                    2          (879)      (161)             (222)
Tax on profit on ordinary activities                           3            17        (21)              (21)
                                                                       --------   --------          --------
Loss on ordinary activities after taxation                                (862)      (182)             (243)
Equity minority interests                                                    10         -               (21)
                                                                       --------   --------          --------
Loss for the period                                                       (852)      (182)             (264)
Dividends                                                      4             -        (20)              (60)
                                                                       --------   --------          --------
Transferred to reserves                                                   (852)      (202)             (324)
                                                                       --------   --------          --------
Earnings per ordinary share                                    5        (3.48)p    (0.73)p           (0.98)p
Earnings per share before goodwill amortisation                         (2.60)p     0.20 p            0.78 p
Diluted earnings per ordinary share                            5        (3.48)p    (0.73)p           (0.98)p
Dividends per ordinary share                                   4              -     0.08 p            0.24 p





Consolidated Balance Sheet as at 30th June 2002




                                                                         At 30th June      At 31st December
                                                                         2002     2001                 2001
                                                                        £'000    £'000                £'000
Fixed assets
Intangible assets                                                       1,345    1,591                1,590
Tangible assets                                                           571      825                  704
Investments                                                                29       68                   29
                                                                      -------  -------              -------
                                                                        1,945    2,484                2,323
Current assets
Stocks                                                                     -        77                   -
Debtors                                                                 2,364    2,900                2,943
Cash at bank and in hand                                                  667      824                  758
                                                                     -------- --------             --------
                                                                        3,031    3,801                3,701

Creditors
Amounts falling due within one year                                   (1,382)  (1,714)              (1,545)
                                                                     -------- --------             --------
Net current assets                                                      1,649    2,087                2,156
                                                                     -------- --------             --------
Total assets less current liabilities                                   3,594    4,571                4,479
Equity minority interests                                                (12)       -                  (17)
                                                                     -------- --------             --------
Net assets                                                              3,582    4,571                4,462
                                                                     -------- --------             --------
Capital and reserves
Called up share capital                                                   496      496                  496
Share premium account                                                   2,133    2,133                2,133
Profit and loss account                                                   953    1,942                1,833
                                                                     -------- --------             --------
Equity shareholders' funds                                              3,582    4,571                4,462
                                                                     -------- --------             --------





Consolidated Cash Flow Statement for the six months ended 30th June 2002


                                                                              6 months ended Year ended
                                                                             30th June        31st December
                                                                          2002      2001               2001
                                                                         £'000     £'000              £'000

Net cash flow from operating activities                                     30     (366)              (132)
Returns on investments and servicing of finance
Interest received                                                            3        11                 16
Interest paid                                                               -        (2)                (3)
                                                                      --------  --------           --------
Net cash flow from returns on investments                             
 and servicing of finance                                                    3         9                 13
                                                                      --------  --------           --------
Taxation                                                                   (2)       (7)              (188)
Capital expenditure
Purchase of intangible fixed assets                                         -         -               (165)
Purchase of tangible fixed assets                                        (105)     (245)              (269)
Sale of tangible fixed assets                                               46        21                 63
Purchase of Investments                                                     -         -                  39
                                                                      --------  --------           --------
Net capital expenditure                                                   (59)     (224)              (332)
                                                                      --------  --------           --------
Acquisitions
Purchase of subsidiary                                                     (3)        -                (39)
Cash acquired with subsidiary                                                8        -                  31
                                                                      --------  --------           --------
Net cost of acquisition                                                      5        -                 (8)
                                                                      --------  --------           --------
Equity dividends paid                                                     (40)     (174)              (194)
Cash flow before use of liquid resources
 and financing                                                            (63)     (762)              (841)

                                                                       -------- --------           --------
Decrease in cash in period                                                 (63)    (762)              (841)
                                                                       -------- --------           --------





Net cash flow from operating activities

                                                                           6 months ended         Year ended
                                                                              30th June        31st December
                                                                           2002      2001               2001
                                                                          £'000     £'000              £'000

Operating loss                                                            (882)     (170)              (235)
Net depreciation charge                                                     219       286                401
Amortisation of goodwill                                                    218       231                437
Change in working capital                                                   475     (713)              (735)
                                                                       --------  --------           --------
Net cash flow from operating activities                                      30     (366)              (132)
                                                                       --------  --------           --------





Reconciliation of net cash flow to movement in net funds
                                                                           6 months ended         Year ended
                                                                              30th June        31st December
                                                                           2002      2001               2001
                                                                          £'000     £'000              £'000

Decrease in cash in the period                                             (63)     (762)              (841)
Translation differences                                                    (28)        15                 28
Movement in net funds in the year                                          (91)     (747)              (813)
Net funds at 1 January 2002                                                 758     1,571              1,571
                                                                       --------  --------           --------
Net funds at 30 June 2002                                                   667       824                758
                                                                       --------  --------           --------




Statement of total recognised gains and losses
                                                                           6 months ended         Year ended
                                                                              30th June        31st December
                                                                           2002      2001               2001
                                                                          £'000     £'000              £'000

Loss for the period                                                       (852)     (202)              (324)
Currency translation differences                                           (28)        15                 28
                                                                       --------  --------           --------
Total recognised gains and losses                                         (880)     (187)              (296)
                                                                       --------  --------           --------




Notes to the interim financial statements


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 31
December 2001. The statements are unaudited but have been reviewed by KPMG Audit
Plc.

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
                                                         2002           2001                     2001
                                                        £'000          £'000                    £'000
Turnover
UK                                                      3,461          5,544                   10,004
USA                                                       160            360                      869
                                                     --------       --------               ----------
                                                        3,621          5,904                   10,873
                                                     --------       --------                ---------
Loss before Taxation
UK                                                      (540)            328                    (214)
USA                                                     (339)          (489)                      (8)
                                                     --------       --------                 --------
                                                        (879)          (161)                    (222)
                                                     --------       --------                 --------
Net Assets/(Liabilities)
UK                                                      3,925          4,575                    4,473
USA                                                     (343)            (4)                     (11)
                                                     --------       --------                 --------
                                                        3,582          4,571                    4,462
                                                     --------       --------                 --------



3. Taxation

The taxation credit for the six months ended 30 June 2002 is based on an
estimated effective rate of 30% for the full year.

4. Dividends

The Directors have elected not to pay an interim dividend (2001 interim dividend
0.08p, final dividend 0.16p).

5. Earnings per Share

The basic earnings per share figure of (3.48)p (2001: (0.73)p) has been
calculated on the basis of a loss after tax of £862,000 (2001: £182,000) and the
weighted average number of shares in issue of 24,793,190 (2001: 24,793,190). The
diluted earnings per share figure of (3.48)p has been calculated on the basis
that 24,793,190 shares had been in issue in the period (2001: 24,793,190).

6. 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 2001, on which the auditors gave an unqualified report, have
been delivered to the Registrar of Companies. Copies of this statement will be
posted to all shareholders in the week commencing 21st October 2002. Further
copies are available from the registered office.


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