Innovative Software Direct plc
LSE : ISDP

May 31, 2011 10:27 ET

UNAUDITED PRELIMINARY RESULTS FOR THE 12 MONTH PERIOD ENDED 31 DECEMBER 2010

31 May 2011
                                 INNOVATIVE SOFTWARE DIRECT PLC ("ISD")
                                                    
         UNAUDITED PRELIMINARY CONSOLIDATED RESULTS FOR THE 12 MONTH PERIOD TO 31 DECEMBER 2010

CHAIRMAN'S STATEMENT


Consolidated Results for the Period to 31.12.2010
    
    The Directors announce the results for the 12 months to 31.12.2010
    *       Group Turnover was £1.7m and the Gross Trading Profit was £838k
    *       The aggregate net operating profit of the trading subsidiaries was £70,772 (2009: £328). After
            PLC costs, interest, tax and amortisation, the Group loss for the year was £350k.
    *       The  Group's  accounting policy on revenue recognition for maintenance income results  in  a
            deferred income provision as at 31 December 2010 of £206k (2009 - £235k). This is the portion of invoiced
            sales that relate to future periods, all of which will reverse during the current financial year, however
            the income is non-refundable.


Overview of 2010
    
    *       ISD and its subsidiaries provide managed Voice and Data solutions and services.
    *       Historically the Group has been overwhelmingly dependent on capital equipment sales, exposing it
            to economic conditions and budget cutbacks. However during the year the Group has continued the process
            of focussing a greater proportion of its business towards contracted services and has also increased
            penetration in the SME hardware space.
    *       The Directors are pleased to announce that notwithstanding the impact of the Economic Climate,
            the Trading Companies returned to profit during the year, and importantly its Managed Services/Contracted
            Incomes increased significantly and above expected levels. The impact of the reduction in overheads
            undertaken in 2009-10 has had a positive impact in the year and are expected to continue moving forwards.
            The drive into Managed Services means the business model will be less labour intensive and the overhead
            structure subsequently less as a percentage of Revenues.
    *       Sales have remained level with the prior year although with lower margins as the sales mix has
            changed towards annuity based revenue streams. The business achieved a lower customer churn rate than the
            previous year, better than the industry average. The trading companies have increased contracted sales
            revenues and added over 30 new clients. The Group was successful in the award of a managed services
            contract with a large government department.
    *       The  cost  reduction exercise implemented in the previous year has meant  that  the  trading
            subsidiaries returned to profitability in 2010 as planned. However the Board identified that the existing
            trading companies alone could not support the level of parent company overhead and that action was
            required to address this imbalance.
    *       Higher than anticipated Legal and Professional Costs incurred at Group level, meant that the
            overall position resulted in an after tax loss of £349,797 which is similar to 2009. It is anticipated
            that most of the Legal and Professional Fees incurred during the year, would not be repeated which will
            have a positive impact in the coming years.


Outlook
    
    *      The  Board's  strategy remains that of moving the business into high growth emerging  market
           segments, whilst retaining the position in its traditional core market of VoIP solutions. The Board
           welcomed the appointment of a new Director based in the USA to assist with the mergers and acquisitions
           programme.
    *      However it has become clear during the year that the Board's objective of growth via acquisition
           was unattainable in the current organisational structure with limitations placed upon access to funding
           for such growth plans.
    *      In December 2010 therefore the Board resolved to sell the subsidiary companies to a USA based
           company IA Global Inc., in order for the better funding and achievement of the growth opportunities
           available. The Board are in the process of finalising this transaction and are exploring possible future
           business opportunities available to the Group.

Chairman

31 May 2011



PRELIMINARY RESULTS

UNAUDITED CONSOLIDATED PROFIT & LOSS ACCOUNT FOR THE 12 MONTH PERIOD ENDED 31 DECEMBER 2010

                                                            Notes                   UNAUDITED            AUDITED
                                                                              12 MONTH PERIOD    12 MONTH PERIOD
                                                                                        ENDED              ENDED
                                                                                  31 DECEMBER        31 DECEMBER
                                                                                         2010               2009
                                                                                    GBP £'000          GBP £'000
                                                                                                                
Turnover                                                                                1,731              1,729
Cost of sales                                                                           (893)              (811)
Gross Profit                                                                              838                918
Distribution costs                                                                        (3)                  -
Administrative expenses                                                               (1,158)            (1,247)
Other operating income                                                                      -                  5
Operating Loss                                                                          (323)              (324)
Interest receivable                                                                         -                  1
Interest payable and similar charges                                                     (21)               (28)
Loss on ordinary activities before taxation                                                                     
                                                                                        (344)              (351)
Taxation                                                                                  (6)                  4
Loss for the financial year                                                             (350)              (347)
                                                                                                                
                                                                                                                

                                                                                                                
                                                                                                                
Loss per share undiliuted and diluted (pence)                 2                    (2.1)pence         (2.3)pence
                                                                                                                
                                                                                                                
                                                                                                                


UNAUDITED CONSOLIDATED BALANCE SHEETS
AS AT 31 DECEMBER 2010
                                                                                    UNAUDITED            AUDITED
                                                                                        AS AT              AS AT
                                                                                  31 DECEMBER        31 DECEMBER
                                                                                         2010               2009
                                                                                    GBP £'000          GBP £'000
                                                                                                                
FIXED ASSETS                                                                                                    
Intangible assets                                                                         892              1,020
Tangible assets                                                                             8                 10
                                                                                                                
                                                                                          900              1,030
                                                                                                                
CURRENT ASSETS                                                                                                  
Stocks                                                                                    399                409
Debtors                                                                                   199                342
Cash at bank and in hand                                                                  192                 31
                                                                                                                
                                                                                          790                782
                                                                                                                
CURRENT LIABILITIES                                                                   (1,256)            (1,182)
                                                                                                                
NET CURRENT LIABILITIES                                                                 (466)              (400)
                                                                                                                
TOTAL ASSETS LESS CURRENT LIABILITIES                                                                           
                                                                                          434                630
                                                                                                                
PROVISION FOR LIABILITIES AND CHARGES                                                                           
                                                                                            -                  6
                                                                                                                
NET ASSETS                                                                                434                636
                                                                                                                
CAPITAL AND RESERVES                                                                                            
Called up share capital                                                                   326                257
Share Premium Account                                                                   2,787              2,705
Share based payments reserve                                                               28                 31
Profit & Loss Account                                                                 (2,707)            (2,357)
                                                                                                                
SHAREHOLDERS' FUNDS                                                                       434                636



The  following  notes  are  included  to provide additional clarity  and  explanation  of  the  financial
information above.


    1.      LOSS PER SHARE
                                                                                               
    The calculation of the loss per share is based on the loss on ordinary activities after taxation of £349,797
    (2009: £346,949) and the weighted average number of shares of £16,438,607(2009: £14,995,838)




Notes to the announcement

1       Full  accounts  for  the  Company for the year, are expected to receive an unqualified  auditors'
        report.  The  auditors are however expected to modify the audit report, by the  inclusion  of  an
        emphasis  of matter paragraph in relation to going concern. Once the audited accounts  have  been
        prepared  and  signed, a full announcement will be made of the content of the  auditors'  report.
        The  Directors  are however confident of the appropriateness of the going concern basis  for  the
        preparation of the accounts.

2       The directors of the Company do not propose the payment of a dividend.

3       The  financial  information has not been audited or reviewed by the auditors  or  extracted  from
        audited  information. This financial statement does not constitute statutory accounts within  the
        meaning of Section 435 of the Companies Act 2006.



The Directors of the Issuer accept responsibility for this announcement.


                                               --- ENDS---


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