|SCISYS reported a strong H1, with revenues up 35% to a record £22.2m and the group returned comfortably to profit, despite being held back by currency hedging due to the slide in the pound against the euro. The performance partly reflects the impact of a problem project in H115, which led to deferrals. The group has also been winning new business and had a strong closing order book at £35m. Cash flow was very strong, with the group returning to a net cash position of £1.4m from £1.0m net debt at end-December. We have upgraded our adjusted operating profit forecasts by 12% in FY16 and 8% in FY17. Given the potential for margin recovery and the improving growth profile, in combination with a strong balance sheet, we believe the stock looks attractive on c 12x our FY17e earnings.
|Thanks for the article AISHAH.
Strong breakout here today.|
It was good news pretty much all around at Scisys as it revealed results for the first half of 2016 (to June 30), and a marked contrast to the dreadful ‘perfect storm’ effect of the year ago period (see here).
Revenue was up 35% to £22.1m while operating profit reversed from a £1.1m loss to a £1.1m profit, despite an FX hit impacting hedging contracts in the immediate aftermath of the EU exit vote – essentially Scisys took all the H216 and FY17 pain in June 2016, but will reap top line rewards going forward). The company also improved its cash position, swapping £1.9m of net debt for £1.2m of net cash. In a nutshell, H1 was all about the “bounce back” as chairman Mike Love described it.
Speaking with the management team it is apparent there is no shortage of activity within the company and all three core divisions moved forward. Enterprise Solutions and Defence revenue was up 79%, Space rose 22% and Media and Broadcasting saw a 12% uplift, with margin improvements across all three too.
CEO Klaus Heidrich highlighted several areas of activity that show the company is making active use of its expertise to colonise adjacent areas, such as the rapidly growing commercial space flight sector. Of particular note is the post period contract – a “stunning win” according to Heidrich - with new internet telecommunications enterprise OneWeb for the Pleniter product which will be used to plan a major mission of several hundred satellites. Scisys has also partnered with PTScientists and their “Mission to the Moon” as part of the Google Lunar-X-Price competition. Its marine defence contract with the MoD was also a standout in ESD, and the contracts with South Africa Broadcasting Corp and a large UK radio broadcaster also helped drive performance within the up and coming Media and Broadcasting division.
What was also interesting was that although the contribution of the acquired Xibis business is tiny, technology transfer and cross customer conversations are happening between it and ESD, as Xibis apparently infuses ESB with new ideas and mobile and web approaches. This is definitely a development to watch.|
|Yes very good results here, I am surprised that they didn't highlight an adjusted PBT and EPS figure, adding back the £500k from currency hedging in the first half, it is a fair calculation imo.
Adjusted EPS is 4.3p, by adding back the £500k and deducting tax at 15%.
They say that if sterling remains at these lower levels during the second half, then there will be a good currency gains. So same performance again in H2 would see basic eps of 4.3p and then additional profits over this on currency gains.
Edit, Last four years H1/H2 weighting = 45/55|
|Very pleased with those results! :-)|
|Hopefully that is the bottom of the move now printed.
|Nice delayed trade for 17k shares at 85p. Looks good here imo.|
The good news for Scisys keeps rolling in this year (see Scisys – strong start to 2016 continues). Its Enterprise Solutions & Defence (ES&D) division was at the centre of an ‘annus horribilis’ for Scisys last year, when it suffered due to a problem contract (see Scisys back on form in 2016). But today, Scisys announces a new contract to add to the proof that the division is moving on and building business in new areas.
Scisys has won a contract with the Ministry of Defence (MoD)’s Defence Science & Technology Laboratory (Dstl) to deliver further research and development services. The contract, which was awarded through the MoD's Framework Agreement for Technical Support Design & Engineering, comprises an initial one-year phase of work valued at £1.2 million, with the potential for this to grow to £3 million as subsequent phases begin during the next two years. Scisys highlights that this is another win in maritime defence – an area that has become a focus recently. The company will create and demonstrate a new decision support system for the Royal Navy, enabling it to tackle increasingly complex air threats.
Of course, following issues delivering a fixed price contract last year, Scisys is keen to highlight that it already has a strong reputation for delivery of “innovate R&D” with Dstl. Now it has another opportunity to solidify that reputation.|
|Opened a new position in here this morning.|
|The drop on Friday was surprising with the low volume of transactions. Nice MOD contract announced today will strengthen sentiment, and then we have interims to look forward to later this month.
Agree with others here about the impressive cash generation which reversed a £1.0m Net position at the star of the year, to a reported Net cash position of £1.4m last month.
|Surprising drop on low volume?|
|SCISYS says it has maintained the encouraging start to the year, as reported at the AGM in June. Strong cash generation has continued, with net cash rising from £0.3m at end-April to £1.4m at end-June. Around half of group revenues are in euros, and if the euro-sterling exchange rate remains around current levels throughout FY16, SCISYS has indicated that current FY16 consensus forecasts will be significantly exceeded even after allowing for hedging impacts. We will review our forecasts following the interims in September, when we will have more information. Given the scope for upgrades, in combination with a strong balance sheet, we believe the stock looks attractive on c 12x our FY17e earnings.
SciSys' strong start to 2016 continues
SciSys has built on its encouraging start to the year (see SciSys back on form in 2016) and does not expect any adverse consequences as a result of the UK’s EU referendum outcome in June, quite the opposite in fact.
The group conducts about half its business in euros, supplying bespoke software systems, IT-based solutions, web & mobile application development and support services to the Space, Defence, Media & Broadcast, Government & Commercial sectors. It’s therefore set to benefit from a weaker pound. According to the management team, if the euro-sterling exchange rate stays at broadly the same as its current level for the remainder of 2016, full year expectations will be “significantly exceeded” even after allowing for costs of c£0.5m incurred for currency hedging in the first half.
Importantly, trading has also remained strong resulting in buoyant cash flows in H1 and enabling SciSys to move from a £1m net debt position at the start of the year, to £1.4m net cash at the end of June. We’re pleased to see the order book is also well up on a year ago, underpinned by a sizeable pipeline of prospective new business opportunities. This bodes well for the remainder of 2016, particularly as SciSys’ full year trading performance is traditionally biased towards the second half. We’ll bring you more detail when first half results are published in September.|
|finnCap has revised tp to 100p|
|And here it is:
"The Board does not expect any adverse consequences as a result of June's EU referendum outcome. Indeed, if the euro-sterling exchange rate stays in a broad range around its current level for the remainder of 2016, the Board envisages that its current full year expectations will be significantly exceeded even after allowing for costs of approximately GBP0.5m incurred in the first half-year in respect of currency hedging."
Terrific cash flows too converting a net debt position into £1.4m net cash!
Would not be surprised if the likes of SCSW and Techinvest now cover SSY. MKt cap only £26m. dyor|
|Directors saw value back in May when they purchsed shares at 70p. Sterling weakness will certainly be a big kicker imo.|
|Moving up very nicely of late. Downing LLP crossed 10% end of July|
|Re-reading the report for 2015 I see that c50% of sales are to the Eurozone and that the strength of the £ against the Euro reduced SSY's profits.
This year the fall in the £ should be of substantial benefit to our profits but uncertainties about our future trading terms with the EU affect SSY more than most other companies that I have invested in.
It would obviously be sensible for both sides to continue trading much as before but I fear that discord amongst the politicians may intervene. HMG's decision to postpone its decision on Hinkley Point will make poor relations with the French government worse and they have great influence within the EU.|
|SciSys back on form in 2016
SciSys is keen to show the market that its ‘blip’ is behind it. UKHotViews readers will remember that the company had an ‘annus horribilis’ in 2015 due to problems with one major fixed price development project in its Enterprise Solutions & Defence (ESD) division. Now, it seems like everything is back on track; today’s trading statement highlights an “encouraging start to 2016” in line with a similar statement back in March (see SciSys back on track after challenging FY15).
As well as existing contracts going to plan, order intake has been strong, particularly across the Space and Media & Broadcast divisions (see SciSys on the international broadcast & media circuit). Across those two sectors, contracts have been secured this year totalling £6.7m, of which £4.1m is expected to be recognised in 2016. The result is an order book, at £35.5m, which is 21% ahead of a year ago and only 5% off the order book high in December last year. Though no firm statement has been made on profitability, the Group does state it has made “excellent progress in returning to previous levels of profitability”. And importantly, the cash position improved from a net debt of £1.0m at the start of the year, to £0.3m at the end of April. SciSys followers will know that trading and cashflow is usually stronger in the second half of the year, so this bodes well.
This is all good news for SciSys. But we certainly don’t think the company is resting on its laurels. The management team continues to look for ways to grow the business both organically and via acquisition. We are particularly keen to see how it manages to transfer its technology expertise – in areas like autonomy, robotics and Earth observation – across sectors. SciSys is an Aladdin’s cave of specialist capability and maximising the potential of those treasures, as client’s embark on more complex digital transformation, could help boost growth further.
|Another good announcement. I am surprised it is taking the share price so long to recover. Maybe a good half year report and increased interim dividend will get it back to 90p and to 100 by this time next year.|
|That's a confident statement. Might add more.|
|Added today - Been on my watchlist for a while. Nice contract win on 29th April. Directors buying yesterday - Chairman bought £29k worth. 2016 fcst pe/ of around 11 and peg of 0.03. dyor|
|Very quiet on here|
|Another good contract win this week. This stock will rise steadily now|