Support services group IS Solutions has warned that its profits for the year to December 2000 will be hit by contract deferrals. The company said a significant US contract was postponed in the autumn and it has yet to ascertain when the agreement will be reinstated. Nancy Daniel reports.

The group's shares, which closed at 190p on Friday, slumped to 107.5p during morning trading on Tuesday. The UK business, which was strengthened by an acquisition last year, has not filled the gap left by the group's US difficulties as initially expected. Trading was also spoiled by IS Solutions' failure to conclude negotiations on a new and significant contract by the end of 2000.

The news will come as a surprise to shareholders who were treated to upbeat trading statements and figures during 2000.

For the year to 31 December 1999 IS Solutions increased pre-tax profits by 28 per cent to £1.2 million while turnover rose 35 per cent to £11.8 million. In the six months to 30 June 2000, the group cited a 33 per cent rise in pre-tax profits to £482,000.

Its prospects look somewhat poorer now. Pre-tax profits for the second half of the year will be broadly similar to that reported for the first six months which suggests full-year profits of less than £1 million.