Specialist IT group SCISYS has bounced back into profit with trading figures for the half year to the end of June showing a complete recovery from its disastrous 2015.
The Chippenham-based group, which sells complex software systems to the space, defence, media and government sectors, chalked up an operating profit of £1.1m in the six months compared to a £1.1m loss this time last year.
The marked turn-around triggered another jump in the firm’s share price – they were trading this morning at 89.5p, close to their five-year of 93p achieved at the end of last month.
It was a different picture last year at SCISYS when problems with a large fixed-price project for an unnamed client caused a crisis at the normally steady firm, wiping millions of pounds off its share price and triggering a warning – unfounded as it turned out – that it was at risk of breaching its banking covenants.
Resources were also committed to the project for longer than planned, reducing capacity to capitalise on other revenue generating opportunities.
This week’s profits – which were £973,000 after tax – were achieved on record half-year revenues up 34% to £22.2m.
The firm said profitability had been hit by hedging losses as a result of wide currency fluctuations.
However it expects “significant benefit” from the weaker pound for the remainder of the year if the euro-sterling exchange rate remains at current levels.
Its order book at the end of June was £35m against £28m last time – marginally behind its record opening order book for 2016.
All divisions – which span space, government, media and defence – had performed well during the first half, it said. Contracts were delivered on time and within budget while major new contracts were won. There were also strong prospects for future contract wins in all its divisions during the second half, some of which have materialised already.
The firm said it did not expect any adverse operational consequences from Brexit in the short to medium term.
Chairman Mike Love said: “We are pleased with this bounce back to profitability and healthy organic growth in revenues at the half-year mark. At this point in time we fully anticipate that we can achieve the uplift in full-year market expectations as announced in our trading update in August.
“Given the strength of our short term pipeline we expect the top line momentum achieved during the first six months to continue for the rest of the year. Our closing order book position and recent contract wins provide a solid foundation for the second half of the year. All divisions are performing to or are exceeding budget.
“As has been seen in previous years, we anticipate a stronger trading performance in the latter half of the year, and continued organic growth well in line with our medium-term objectives. We also expect to see positive impacts on profitability from the weaker pound if this continues for the second half.
“We continue to look for opportunities to acquire companies where there is a good market, product and cultural fit.”
SCISYS employs nearly 450 staff across its offices in Chippenham, Bristol, Leicester and Reading and two in Germany. It develops complex IT projects in sectors such as space, defence and media for clients spanning the European Space Agency, the BBC, Airbus and the Ministry of Defence.
