IS Solutions cautions on business flow

Shares in IS Solutions, a solution provider for IT services, were lower on Tuesday despite a strong set of results after cautioning on the possible effects of 'external factors', which it believes could have an impact on its anticipated business flow over the remainder of 2012.

In the half year to the end of June revenue rose 11.5% from £4.054m to £4.524m, while group profit before tax increased 8.7% from £0.31m to £0.34m. Diluted earnings per share leapt 17.9% from 1.06p to 1.25p.

The interim dividend was boosted by 0.04p to 0.44p.

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Chairman of the company, Barrie Clark, said: "The board is pleased to announce a return to top line growth (and continuing bottom line growth) in the first half of the year as all three areas of the business reported an increase in turnover and an advance in earnings per share by 18%."

"As a business, we are now experiencing extended lead times this, we believe, reflects the general overall mood within the economy as some of our customers experience a slowing in their market sectors.

"Taking into account these factors, and although, through the spread of our business and our high level of recurring revenues (currently 69.3% of total GP), we are to an extent shielded from the prevailing uncertainties at home and overseas, and whilst we have a number of client opportunities ahead of us in the planning, we have to be mindful of external factors which could have an impact on our anticipated business flow over the remainder of 2012."

In terms of the company's individual businesses, Projects saw a 12.8% rise in sales, which were generated by all three areas of Web analytics, Portals and Enterprise Content Management (ECM). However, the firm experienced a small reduction in gross margin of around 1% as it elected to utilise contractors in certain areas rather than recruit in the current economic climate.

In Managed Services, the mainstay of the firm which generates its recurring income, delivered revenue growth of 4.0%, contributing 69.3% of the total gross profit (2011: 72.8%).

Product sales, the least predictable area of its business, experience growth in the first half, with a 46% increase in turnover from a low point in 2011 of £496,000 to £724,000 by the end of the first half of the current financial year.

The share price fell 5.31% to 53.50p by 14:57.

NR