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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Scisys Group Plc | LSE:SSY | London | Ordinary Share | IE00BD9PKV79 | ORD 25P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 253.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMSSY
RNS Number : 3505R
SCISYS PLC
21 September 2017
The information communicated in this announcement includes inside information for the purposes of Article 7 of Regulation 596/2014 (MAR).
SCISYS PLC
(AIM: SSY)
INTERIM RESULTS FOR THE SIX MONTHSED 30 JUNE 2017
SCISYS PLC ("SCISYS"), the supplier of bespoke software systems, IT-based solutions and support services to the space, media & broadcast, government, defence and commercial sectors is pleased to announce its interim results for the half year to 30 June 2017. The Directors anticipate that SCISYS will deliver full-year results at the upper end of current guidance, a view supported by the 30 June 2017 order-book value of GBP64m and buoyed by recent contract wins.
Financial and Operational Highlights:
-- Adjusted operating profit up 18% to GBP1.3m (2016: GBP1.1m). -- Revenues up 23% to GBP27.2m (2016: GBP22.2m). -- Record half-year order book of GBP64m (2016: GBP35m).
-- Net debt reduced from GBP10.2m at 31 December 2016 to GBP9.0m (30 June 2016: net funds GBP1.4m).
-- Interim dividend up 11% at 0.59 pence per share (2016: 0.53p).
-- Post-period end, December 2016 acquisition, ANNOVA, achieved major project milestone on flagship BBC contract, triggering payment of first earn out instalment in September.
-- ANNOVA's success exceeded expectations reflected in 2017 opening balance sheet, resulting in exceptional charge of GBP1.8m for revalued contingent consideration.
-- Exceptional charges and amortisation arising on ANNOVA acquisition produced statutory operating loss of GBP1.3m (2016: GBP1.1m profit) and basic LPS of 4.9p (2016: EPS 2.8p).
-- Adjusted basic earnings per share reduced to 1.4p (2016: 2.8p) due to the impact of tax on exceptional charges.
-- ANNOVA secured a succession of key contract wins with existing and new customers, including Canadian broadcaster, Corus TV.
-- M&B division gained its first French customer with RTL contract win and South African Broadcasting Corporation project entered large roll-out phase.
-- ESD division secured one of seven coveted places on key Metropolitan Police Service framework. -- Space division delivered 26% increase in first half-year contribution.
Mike Love, Chairman of SCISYS, commenting on the results, said:
"We are very pleased and buoyed by a solid operational performance and key contract wins across the Group resulting in our record order book. We are particularly pleased by the robust performance of ANNOVA; it is already evident that this acquired business is delivering significant strategic benefit to the Group. At this point in time we anticipate that we will deliver full-year results at the upper end of current guidance."
For further information please contact:
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+44 (0)1249 466
SCISYS PLC 466
------------------------------------------- ---------------------------
Mike Love Chairman
---------------------- ------------------- ---------------------------
Klaus Heidrich Chief Executive
Officer
---------------------- ------------------- ---------------------------
Chris Cheetham Finance Director
---------------------- ------------------- ---------------------------
finnCap (NOMAD +44 (0)20 7220
& Broker) 0500
------------------------------------------- ---------------------------
Julian Blunt Corporate Finance
---------------------- ------------------- ---------------------------
Mia Gardner Corporate Broking
---------------------- ------------------- ---------------------------
WalbrookPR +44 (0) 20 7933
Tom Cooper/Paul 8780
Vann +44 (0)797 122
1972
tom.cooper@walbrookpr.com
------------------------------------------- ---------------------------
Notes to Editors:
Employing around 500 staff, SCISYS group is a leading developer of information and communications technology services, e-business, web and mobile applications, editorial newsroom and advanced technology solutions. The Company operates in a broad spectrum of market sectors, including Media & Broadcast, Space, Government, Defence and Commerce. SCISYS clients are predominantly blue-chip and public-sector organisations. Customers include the Environment Agency, the Ministry of Defence, Airbus Defence & Space, Arqiva, Vodafone, the European Space Agency, EUMETSAT, the BBC, RNLI, Interflora and the National Trust. The Company has UK offices in Chippenham, Bristol, Leicester and Reading and German offices in Bochum, Darmstadt, Dortmund and Munich. More information is available at www.scisys.co.uk
Introduction
The Board of SCISYS is pleased with the Group's results for the first half of 2017, in particular with its record order book, which stands at GBP64m (2016: GBP35m), and the performance of the recently acquired ANNOVA business. As previously signalled, 2017 revenues and profits will be heavily weighted towards the second half of the year. This is a consequence of the phasing both in contract deliveries and the placing of new orders across the year, a pattern particularly pronounced within ANNOVA. We continue to expect an overall benefit from the weaker pound for the remainder of the year if the euro-sterling exchange rate remains at current levels.
Key financials
The Group's revenue totalled GBP27.2m (2016: GBP22.2m). In the six months ended 30 June 2017, the Group's adjusted operating profit was GBP1.3m (2016: GBP1.1m). Adjusted basic earnings per share were 1.4p (2016: 2.8p). A fuller explanation is available in the Finance Review section.
Operating Review
Introduction
All divisions performed well during the first half of 2017, delivering contracts on time and within budget and generating improved operating cash flows. Across the Group we won strategic contracts and gained significant new customers, including Corus TV in Canada and RTL radio in France. We entered the second half with strong prospects for noteworthy future contract wins in all divisions, some of which have already materialised.
We still do not expect any adverse operational consequences as a result of Brexit in the short to medium term but continue to explore options to optimise our future trading position and prepare contingency plans in response to the continued uncertainty.
Enterprise Solutions & Defence (ESD) division
ESD delivered a solid first half year and has expectations of a stronger second half. The division continues to work on ongoing defence projects for the Ministry of Defence, and on delivering further research and software development services to the Defence Science and Technology Laboratory (Dstl) among many other activities.
Current projects are running to plan and resulted in a creditable contribution margin of 23%, given the anticipated bias towards the second half year. The division's other projects span a wide range of commercial and public sector customers and varied software projects, including ongoing work for the Coal Authority, Vodafone, UKPN, Arqiva and Siemens.
Following an intense procurement process, in May 2017, ESD secured a strategic success as one of only seven organisations to gain a place on the Metropolitan Police Solution Provider Framework. Notable other framework successes include agreements with Siemens and a G-Cloud framework for government procurement.
Based on the strong order book, the successful delivery and exciting opportunities in the pipeline, the division is well positioned to end the year on a strong footing.
Six months Six months Year ended
ended 30 ended 30 31 December
June 2017 June 2016 2016
GBP'000 GBP'000 GBP'000
-------------- ----------- ----------- -------------
Revenue 7,901 8,598 16,652
-------------- ----------- ----------- -------------
Contribution
value 1,809 2,526 4,462
-------------- ----------- ----------- -------------
Contribution
margin 23% 29% 27%
-------------- ----------- ----------- -------------
Space division
The division delivered an excellent performance during the first half year as it continued to build on previous success in contributing to the Galileo satellite navigation programme, various programmes for the European Space Agency (ESA), and also in delivering its proprietary commercial PLENITER software suite for the planning, implementation, control and operation of complete satellite missions.
In February 2017, the division won a EUR1.9m contract with the international technology group, GMV, for the design and implementation of a mission control system to support the EUMETSAT Polar System Earth observation programme and recently renewed its customer relationship with Japan's Meteorological Agency.
Space division's projects ran well during the first six months of the year, including the Galileo programmes, where we are well positioned to secure substantial contract extensions in the second half of the year. New project starts include the software design, coding and verification activities for aspects of the ESA's rover mission to Mars, ExoMars. The division also continues to be a major player in Earth-observation programmes, and work has commenced with Airbus Defence and Space for its delivery to the ongoing French-German MERLIN satellite climate mission.
Six months Six months Year ended
ended 30 ended 30 31 December
June 2017 June 2016 2016
GBP'000 GBP'000 GBP'000
-------------- ----------- ----------- -------------
Revenue 11,561 9,601 19,874
-------------- ----------- ----------- -------------
Contribution
value 2,423 1,917 4,157
-------------- ----------- ----------- -------------
Contribution
margin 21% 20% 21%
-------------- ----------- ----------- -------------
Media & Broadcast (M&B) division
M&B secured its first win in South Africa in April 2016 with a EUR2m contract for South Africa Broadcasting Corporation (SABC) for implementation of its proprietary dira! radio solution. The pilot phase completed in January 2017 and the next phase is to equip 5 channels at SABC in Johannesburg, after which the system will be rolled out to 15 regional locations across South Africa. The activity is expected to pick up during the second half of the year.
M&B continues to develop its dira! product, with the latest innovations being delivered to a large UK media broadcaster. The division gained its first French customer and added a major private broadcaster to its portfolio by securing a contract with RTL in May.
The outlook for the full year is encouraging as the project deliveries are expected to gain momentum over the forthcoming months. In turn, we anticipate that this will rebuild M&B's contribution margin towards previous levels.
Six months Six months Year ended
ended 30 ended 30 31 December
June 2017 June 2016 2016
GBP'000 GBP'000 GBP'000
-------------- ----------- ----------- -------------
Revenue 3,539 3,503 8,026
-------------- ----------- ----------- -------------
Contribution
value 728 959 2,512
-------------- ----------- ----------- -------------
Contribution
margin 21% 27% 31%
-------------- ----------- ----------- -------------
ANNOVA Systems
ANNOVA has demonstrated its growing success with a number of recent contract wins based on its proprietary OpenMedia product, one of the leading newsroom computer systems worldwide. Impressively, ANNOVA has won an initial contract with Corus Entertainment, the biggest media-content company in Canada. Corus is adding OpenMedia to its award-winning Global News operations across the country.
In August, ANNOVA won a strategic contract with German ARD-aktuell to develop a portal for ARD's programmes - including its primetime news programme, Tagesschau - based on the OpenMedia Newsboard product. This complemented the earlier award of a EUR2.5m contract with a major German public broadcaster for replacement of a competitor's installation.
ANNOVA achieved a key commercial milestone in its flagship long-term contract with the BBC in August. Following the successful live operation of its solution on pilot customer sites, OpenMedia will now be rolled out across the BBC estate.
Given the progress made by ANNOVA since its acquisition to date, the outlook for the full year and the medium term future are highly encouraging.
Six months Six months Year ended
ended 30 ended 30 31 December
June 2017 June 2016 2016
GBP'000 GBP'000 GBP'000
-------------- ----------- ----------- -------------
Revenue 3,610 n/a n/a
-------------- ----------- ----------- -------------
EBITA* 283 n/a n/a
-------------- ----------- ----------- -------------
EBITA margin* 8% n/a n/a
-------------- ----------- ----------- -------------
* other divisions are measured on their contribution to shared Group overheads whereas ANNOVA currently remains largely independent, allowing the computation of a representative EBITA
Finance Review
Results for the half year to 30 June 2017 continue to show encouraging progress, partly from the initial inclusion in the consolidated figures of results for ANNOVA Systems ("ANNOVA"), which SCISYS acquired on 31 December 2016.
Total revenues were up 23% to GBP27.2m (2016: GBP22.2m) and the professional fees component increased by 22% to GBP22.4m (2016: GBP18.4m). The underlying measure of trading performance, adjusted operating profit, which excludes the costs of the Group's long-term share incentive schemes, exceptional items and amortisation of intangible assets arising on business acquisition, was up 18% at GBP1.3m (2016: GBP1.1m). Adjusted basic EPS, calculated on the profit for the period before post-tax exceptional items, share-based payments and amortisation of acquisition-related intangible assets, were 1.4p (2016: 2.9p). As highlighted in our AGM statement in June, we anticipate that the second half-year financial performance will be substantially stronger than the first half.
The statutory operating loss was GBP1.3m (2016: GBP1.1m profit) after bearing amortisation costs relating to the ANNOVA acquisition of GBP1.0m (2016: GBPnil) and net exceptional items of GBP1.6m (2016: GBPnil). Exceptional items comprised two elements, a one-off R&D tax credit of GBP0.2m and a charge of GBP1.8m to reflect an uplift in consideration payable to ANNOVA's former owners as the acquired business surpassed its forecasts. Further explanation of these items is provided below. Basic loss per share was 4.9p (2016: EPS 2.8p).
The average euro-sterling exchange rate for the period was EUR1.16/GBP, which represents a 10% uplift from the comparative 2016 value of EUR1.28/GBP. Although this movement contributed to record first-half revenues, a historic high was also reached on a constant-currency basis.
Approximately half of the Group's business is conducted in euros. SCISYS mitigates its exposure to exchange-rate movements by entering into hedging contracts to convert forecast surplus euros into sterling at fixed forward rates. Such contracts are revalued quarterly on a mark-to-market basis. The net charge in the income statement for hedging contracts that matured in the period and on revaluation of future contracts was GBP0.1m (2016: GBP0.7m).
The total purchase price payable for the ANNOVA acquisition is heavily dependent on an earn-out payable over three years, linked both to average profitability and achievement of key commercial milestones in its flagship contract with the BBC. ANNOVA successfully obtained customer acceptance for a critical phase of this project three months earlier than had been provided for in the acquisition balance sheet. This triggered payment of a first earnout instalment of EUR2.0m in September 2017, of which 10% was satisfied in new SCISYS PLC shares, with the balance paid in cash from existing Group resources. As a result of ANNOVA's outperformance, the anticipated total contingent consideration payable was reassessed at 30 June 2017, resulting in an exceptional GBP1.8m charge for the first half year.
Net cash flow from operations increased to GBP2.7m (2016: GBP2.2m). At the end of the reporting period, the Group had bank deposits of GBP7.2m (30 June 2016: GBP5.6m). Unutilised working capital facilities totalled GBP4.7m (30 June 2016: GBP4.6m). Group debt at the period end was GBP16.2m (30 June 2016: GBP4.2m). The resulting net debt was GBP9.0m, a reduction of GBP1.2m from the 2016 year-end position of GBP10.2m net debt (30 June 2016: GBP1.4m net cash).
The effective tax rate for the period of 17% reflects the anticipated rate for 2017 as a whole (2016: 15%). SCISYS continues to benefit from the tax-credit system for UK expenditure on R&D in SMEs, receiving credits in the form of cash rebates from HM Revenue & Customs. Up to and including 2016 these were incorporated into the net tax charge. An accounting standard change requires R&D tax credits from 2017 to be treated as deductions from operating expenses. SCISYS anticipates that it will no longer qualify for the SME tax credit scheme in 2018 as it expects to exceed the headcount eligibility threshold. Accordingly, the above-the-line tax credit of GBP0.2m in the current period is treated as an exceptional item.
The half-year accounts are presented on a basis consistent with policies to be adopted for the Annual Report & Finance Statements for the year ending 31 December 2017.
Dividend
Our dividend for the full year to 31 December 2016 was 1.96 pence per share in line with our strategy of progressive dividend growth. I can now confirm that an interim dividend of 0.59 pence per share will be paid on 9 November 2017 to shareholders on the register as at 13 October 2017. The shares are expected to go ex-dividend on 12 October 2017.
Outlook
The second half of 2017 has started with some excellent new contract wins and significant deliveries on key projects. We are seeing healthy top-line growth while cash flows remain strong.
While our immediate focus is on exploiting the opportunity offered by the recent acquisition of ANNOVA, we continue to look for opportunities to acquire companies where there is a good market, product and cultural fit.
Based on current performance on projects and our new business pipeline, the Directors remain fully confident of meeting the upper end of full-year expectations, as well as the future prospects of the Group.
Chairman
Mike Love
Consolidated Income Statement
Unaudited Unaudited Audited
6 months 6 months Year
to to ended
30 June 30 June 31 December
2017 2016 2016
GBP'000 GBP'000 GBP'000
Revenue (note 2) 27,175 22,223 45,744
Operating costs (28,504) (21,165) (42,974)
Share of results of associates 15 13 17
------------------------------------ ----------- ----------- --------------
Operating (loss)/profit (1,314) 1,071 2,787
"Adjusted operating profit"
being operating profit before
share based payments, exceptional
charges and amortisation arising
on business combinations 1,252 1,090 3,231
Exceptional items (note 3) (1,561) - (458)
Amortisation of Intangibles (991) - -
Share based payments (14) (19) 14
Operating (loss)/profit (1,314) 1,071 2,787
------------------------------------ ----------- ----------- --------------
Finance costs (388) (99) (186)
Finance income 6 1 1
------------------------------------ ----------- ----------- --------------
(Loss)/profit before tax (1,696) 973 2,602
Tax credit/(charge) (note 4) 282 (146) (380)
------------------------------------ ----------- ----------- --------------
(Loss)/profit for the period
attributable to equity holders
of the parent (1,414) 827 2,222
------------------------------------ ----------- ----------- --------------
(Loss)/earnings per share (note
6)
Basic (4.9)p 2.8p 7.6p
Diluted (4.8)p 2.7p 7.5p
------------------------------------ ----------- ----------- --------------
Consolidated Statement of Comprehensive Income
Unaudited Unaudited Audited
6 months 6 months Year
to to ended
30 June 30 June 31 December
2017 2016 2016
GBP'000 GBP'000 GBP'000
(Loss)/profit for the period (1,414) 827 2,222
Other comprehensive income
not recycling through the Income
Statement
Currency translation differences
on foreign currency investments 54 826 1,105
Total comprehensive (expense)/income
for the period attributable
to equity holders of the parent (1,360) 1,653 3,327
-------------------------------------- ----------- ----------- --------------
Consolidated Statement of Changes in Equity
Capital
For the six Share Share Merger Redemp-tion Trans-lation Retained
months ended Capital Premium Reserve Reserve Reserve Earnings Total
30 June 2017
(unaudited) GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance as at
1 January 2017 7,272 143 943 83 1,521 12,751 22,713
Total comprehensive
income for the
period
Loss in the
period - - - - - (1,414) (1,414)
Other comprehensive
income
Foreign currency
translation - - - - 54 - 54
Total comprehensive
income for the
period - - - - 54 (1,414) (1,360)
----------------------- ---------- ---------- ---------- -------------- -------------- ----------- ---------
Transactions
with owners,
recorded directly
in equity
Contributions
by and distributions
to owners
Share based
payments - - - - - 14 14
Treasury shares - - - - - (361) (361)
Share options - - - - - 74 74
Total contributions
by and distributions
to owners - - - - - (273) (273)
----------------------- ---------- ---------- ---------- -------------- -------------- ----------- ---------
Balance as at
30 June 2017 7,272 143 943 83 1,575 11,064 21,080
----------------------- ---------- ---------- ---------- -------------- -------------- ----------- ---------
Capital
For the six Share Share Merger Redemp-tion Trans-lation Retained
months ended Capital Premium Reserve Reserve Reserve Earnings Total
30 June 2016
(unaudited) GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance as at
1 January 2016 7,272 143 943 83 416 11,199 20,056
Total comprehensive
income for the
period
Profit in the
period - - - - - 827 827
Other comprehensive
income
Foreign currency
translation - - - - 826 - 826
Total comprehensive
income for the
period - - - - 826 827 1,653
----------------------- ---------- ---------- ---------- -------------- -------------- ----------- ---------
Transactions
with owners,
recorded directly
in equity
Contributions
by and distributions
to owners
Share based
payments - - - - - 19 19
Total contributions
by and distributions
to owners - - - - - 19 19
----------------------- ---------- ---------- ---------- -------------- -------------- ----------- ---------
Balance as at
30 June 2016 7,272 143 943 83 1,242 12,045 21,728
----------------------- ---------- ---------- ---------- -------------- -------------- ----------- ---------
Consolidated Statement of Changes in Equity continued
Capital
For the year Share Share Merger Redemp-tion Trans-lation Retained
ended Capital Premium Reserve Reserve Reserve Earnings Total
31 December
2016 (audited) GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance as at
1 January 2016 7,272 143 943 83 416 11,199 20,056
Total comprehensive
income for the
period
Profit in the
period - - - - - 2,222 2,222
Other comprehensive
income
Foreign currency
translation - - - - 1,105 - 1,105
Total comprehensive
income for the
period - - - - 1,105 2,222 3,327
----------------------- ---------- ---------- ---------- -------------- -------------- ----------- ---------
Transactions
with owners,
recorded directly
in equity
Contributions
by and distributions
to owners
Dividends paid - - - - - (671) (671)
Share based
payments - - - - - (14) (14)
Exercise of
share options - - - - - 15 15
Total contributions
by and distributions
to owners - - - - - (670) (670)
----------------------- ---------- ---------- ---------- -------------- -------------- ----------- ---------
Balance as at
31 December
2016 7,272 143 943 83 1,521 12,751 22,713 ----------------------- ---------- ---------- ---------- -------------- -------------- ----------- ---------
Consolidated Statement of Financial Position
Unaudited Unaudited Audited
30 June 30 June 31 December
2017 2016 2016
GBP'000 GBP'000 GBP'000
-------------------------------
Non-current assets
Property, plant and equipment 9,295 8,885 9,057
Goodwill 15,950 7,894 15,593
Other intangible assets 5,810 70 6,848
Other receivables 87 - 85
Interests in associates 108 84 90
Deferred tax assets 311 29 282
------------------------------- ----------- ----------- -------------
31,561 16,962 31,955
Current assets
Inventories 434 331 261
Trade and other receivables 20,524 13,781 19,621
Corporation tax receivable 1,027 775 1,098
Cash and cash equivalents 7,166 5,617 6,915
29,151 20,504 27,895
------------------------------- ----------- ----------- -------------
Total assets 60,712 37,466 59,850
------------------------------- ----------- ----------- -------------
Equity
Issued share capital 7,272 7,272 7,272
Share premium account 143 143 143
Merger reserve 943 943 943
Retained earnings 11,064 12,045 12,751
Translation reserve 1,575 1,242 1,521
Other reserves 83 83 83
Equity attributable to equity
holders of the parent 21,080 21,728 22,713
------------------------------- ----------- ----------- -------------
Current liabilities
Trade and other payables 17,826 10,359 14,310
Bank overdrafts and loans 3,707 804 3,804
Corporation tax payable 31 446 190
Deferred income 245 307 459
------------------------------- ----------- ----------- -------------
21,809 11,916 18,763
Non-current liabilities
Bank loans 12,514 3,416 13,355
Other payables 3,627 - 3,408
Deferred tax 1,682 406 1,611
------------------------------- ----------- ----------- -------------
17,823 3,822 18,374
Total liabilities 39,632 15,738 37,137
Total equity and liabilities 60,712 37,466 59,850
------------------------------- ----------- ----------- -------------
Consolidated Statement of Cash Flows
Unaudited Unaudited Audited
6 months 6 months Year
to to ended
30 June 30 June 31 December
2017 2016 2016
GBP'000 GBP'000 GBP'000
--------------------------------------
Cash flow from operating activities
(Loss)/profit before tax (1,696) 973 2,602
Net finance costs 382 98 185
-------------------------------------- ----------- ----------- --------------
Operating (loss)/profit (1,314) 1,071 2,787
Increase in trade receivables (1,077) (1,604) (3,992)
Increase in trade payables 1,717 2,706 579
Deferred consideration 1,561 - 3,318
Depreciation and amortisation 1,515 352 781
Share of profit of associate (15) (13) (17)
Share based payments 14 19 (14)
Tax credits/(payments) 296 (303) (1,250)
Net cash flow from operating
activities 2,697 2,228 2,192
-------------------------------------- ----------- ----------- --------------
Cash flow from investing activities
Acquisition of subsidiary - - (9,723)
Cash acquired with subsidiary - - 2,202
Proceeds from disposal of property,
plant and equipment 1 - -
Purchase of plant, property
and equipment (789) (284) (663)
Exercise of share options 74 - 15
Interest received 6 1 1
Net cash flow from investing
activities (708) (283) (8,168)
-------------------------------------- ----------- ----------- --------------
Cash flows from financing activities
Dividends paid - - (671)
Interest paid (388) (99) (186)
Investment in own shares (361) - -
Loans received 260 - 9,906
Debt repayments (1,308) (516) (939)
Net cash flow from financing
activities (1,797) (615) 8,110
-------------------------------------- ----------- ----------- --------------
Net increase in cash and cash
equivalents 192 1,330 2,134
Cash and cash equivalents at
the start of the period 6,666 3,625 3,625
Exchange and other movements 308 662 907
Cash and cash equivalents at
the end of the period 7,166 5,617 6,666
-------------------------------------- ----------- ----------- --------------
Cash and cash equivalent deposits
held in non-UK based banks 5,522 3,370 6,709
Net bank deposit/(overdraft)
with UK based banks 1,644 2,247 (43)
7,166 5,617 6,666
-------------------------------------- ----------- ----------- --------------
Notes to the Unaudited Interim Report
For the six months to 30 June 2017
1 Basis of preparation of Interim Financial Information
& Statement of Compliance
SCISYS PLC (the "Company") is a UK company incorporated
in England & Wales. The entities consolidated
in the half year financial statements of the
Company for the six months to 30 June 2017 comprise
the Company and its subsidiaries (together referred
to as the "Group"). The Group reports its financial
results in accordance with International Financial
Reporting Standards ("IFRS") as adopted by the
European Union ("EU").
This interim results announcement is prepared
in accordance with the IFRS accounting policies
expected to be applied by the Group at 31 December
2017. These policies are unchanged from those
set out by the Group in its consolidated financial
statements for the year ended 31 December 2016
and available on the Group's website at www.scisys.co.uk.
As permitted, this interim report has been prepared
in accordance with the AIM rules and not in
accordance with IAS 34 'Interim Financial Reporting'
and is therefore not fully compliant with IFRS.
There are no new standards or interpretations
endorsed by the EU during 2017 that impact on
the financial results or presentation.
The interim financial information for the six
months ended 30 June 2017 is unaudited and does
not include all of the information required
to constitute statutory accounts within the
meaning of section 434 of the Companies Act
2006. It should therefore be read in conjunction
with the audited financial statements for the
year ended 31 December 2016. These published
accounts have been reported on by the Group's
auditors and have been delivered to the Registrar
of Companies. The report of the auditors was
(1) unqualified; (2) did not include a reference
to any matters to which the auditors drew attention
by way of emphasis without qualifying their
report and (3) did not contain a statement under
section 498 (2) or (3) of the Companies Act
2006.
The preparation of these consolidated half year
financial statements requires management to
make judgements, estimates and assumptions that
affect the application of accounting policies
and the reported amounts of assets and liabilities,
income and expense. Actual results may differ
from these estimates. In preparing these consolidated
half year financial statements, the significant
judgements made by management in applying the
Group's accounting policies and the key areas
of estimation were the same as those that applied
to the consolidated financial statements for
the year ended 31 December 2016.
The Interim Report was approved by the Directors
on 14 September 2017.
2 Segmental analysis
The management structure and reporting of financial
information to the chief operating decision
maker (the Board) is the basis used to define
operating segments.
The Group provides IT services to commercial
and public sector organisations through the
following five divisions:
Space
Enterprise Solutions & Defence (ESD)
Media & Broadcast (M&B)
ANNOVA
Xibis
Divisional results, assets and liabilities represent
items directly attributable to a division. Unallocated
expenses comprise central overheads and corporate
expenses. Assets and liabilities which are allocated
to operating divisions comprise trade receivables,
amounts recoverable on contracts, inventories
and payments received on account.
Segmental analysis
2 continued
Information
about reportable
segments
Space ESD M&B Xibis ANNOVA Total
External
revenues GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------- --------- --------- --------- --------- --------- ---------
6 months
ended 30
June 2017
(unaudited)
Professional
fees revenue 8,631 6,394 3,326 368 3,610 22,329
Other revenue 2,930 1,507 213 34 - 4,684
---------
External
revenue for
reportable
segments 11,561 7,901 3,539 402 3,610 27,013
----------------------- --------- --------- --------- --------- ---------
Other external
revenue 162
Consolidated
revenue 27,175
----------------------- --------- --------- --------- --------- --------- ---------
6 months
ended 30
June 2016
(unaudited)
Professional
fees revenue 7,831 6,836 3,416 311 - 18,394
Other revenue 1,770 1,762 87 48 - 3,667
--------- --------- ---------
External
revenue for
reportable
segments 9,601 8,598 3,503 359 - 22,061
----------------------- --------- --------- --------- --------- ---------
Other external
revenue 162
Consolidated
revenue 22,223
----------------------- --------- --------- --------- --------- --------- ---------
Year ended
31 December
2016 (audited)
Professional
fees revenue 16,293 13,284 7,541 460 - 37,578
Other revenue 3,581 3,368 485 412 - 7,846
--------- --------- ---------
External
revenue for
reportable
segments 19,874 16,652 8,026 872 - 45,424
----------------------- --------- --------- --------- --------- ---------
Other external
revenue 320
Consolidated
revenue 45,744
----------------------- --------- --------- --------- --------- --------- ---------
Segmental analysis
2 continued
Information
about reportable
segments
continued
Space ESD M&B Xibis ANNOVA Total
(Loss)/profit
before tax GBP'000 GBP'000 GBP'000 GBP'000 GBP'001 GBP'000
----------------------- --------- --------- --------- --------- --------- ---------
6 months
ended 30
June 2017
(unaudited)
Reportable
segment contribution 2,087 1,809 728 44 283 4,951
Other contribution 336 - - - - 336
---------
Contribution 2,423 1,809 728 44 283 5,287
--------------------------- --------- --------- --------- --------- ---------
Central overheads (5,610)
--------------------------- --------- --------- --------- --------- --------- ---------
EBITA (323)
Amortisation
of intangible
assets (991)
Finance costs (388)
Finance income 6
Loss before
tax (1,696)
--------------------------- --------- --------- --------- --------- --------- ---------
6 months
ended 30
June 2016
(unaudited)
Reportable
segment contribution 1,885 2,526 958 5 - 5,374
Other contribution 32 - 1 - - 33
--------- --------- ---------
Contribution 1,917 2,526 959 5 - 5,407
--------------------------- --------- --------- --------- --------- ---------
Central overheads (4,336)
--------------------------- --------- --------- --------- --------- --------- ---------
EBITA 1,071
Finance costs (99)
Finance income 1
Profit before
tax 973
--------------------------- --------- --------- --------- --------- --------- ---------
Year ended
31 December
2016 (audited)
Reportable
segment contribution 4,229 4,512 2,512 104 - 11,357
Other contribution (72) (50) - - - (122)
--------- --------- ---------
Contribution 4,157 4,462 2,512 104 - 11,235
--------------------------- --------- --------- --------- --------- ---------
Central overheads (8,448)
--------------------------- --------- --------- --------- --------- --------- ---------
EBITA 2,787
Finance costs (186)
Finance income 1
Profit before
tax 2,602
--------------------------- --------- --------- --------- --------- --------- ---------
Segmental analysis
2 continued
Information about reportable
segments continued
Space ESD M&B Xibis ANNOVA Total
Group assets GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- --------- --------- --------- --------- --------- ---------
As at 30 June
2017 (unaudited)
Reportable
segment -
non-current
assets 3,500 - 3,380 1,090 7,980 15,950
Reportable
segment -
current assets 9,093 3,971 1,139 142 5,163 19,508
---------
12,593 3,971 4,519 1,232 13,143 35,458
-------------------------- --------- --------- --------- --------- ---------
Other - non-current
assets 15,611
Other - current
assets 9,643
Total assets 60,712
-------------------------- --------- --------- --------- --------- --------- ---------
As at 30 June 2016
(unaudited)
Reportable
segment -
non-current
assets 3,424 - 3,380 1,090 - 7,894
Reportable
segment -
current assets 6,950 4,609 1,416 172 - 13,147
--------- --------- ---------
10,374 4,609 4,796 1,262 - 21,041
-------------------------- --------- --------- --------- --------- ---------
Other - non-current
assets 9,068
Other - current
assets 7,357
Total assets 37,466
-------------------------- --------- --------- --------- --------- --------- ---------
As at 31 December
2016 (audited)
Reportable
segment -
non-current
assets 3,466 - 3,380 1,090 7,657 15,593
Reportable
segment -
current assets 6,657 6,836 1,534 288 3,209 18,524
--------- --------- ---------
10,123 6,836 4,914 1,378 10,866 34,117
-------------------------- --------- --------- --------- --------- ---------
Other - non-current
assets 16,362
Other - current
assets 9,371
Total assets 59,850
-------------------------- --------- --------- --------- --------- --------- ---------
Space ESD M&B Xibis ANNOVA Total
Group liabilities GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- --------- --------- --------- --------- --------- ---------
As at 30 June
2017 (unaudited)
Reportable
segment -
current liabilities 1,773 1,549 375 - 2,133 5,830
Other - non-current
liabilities 17,823
Other - current
liabilities 15,979
Total liabilities 39,632
-------------------------- --------- --------- --------- --------- --------- ---------
As at 30 June 2016
(unaudited)
Reportable
segment -
current liabilities 699 966 418 22 - 2,105
Other - non-current
liabilities 3,822
Other - current
liabilities 9,811
Total liabilities 15,738
-------------------------- --------- --------- --------- --------- --------- ---------
As at 31 December
2016 (audited)
Reportable
segment -
current liabilities 1,050 1,360 265 - 1,788 4,463
Other - non-current
liabilities 18,374
Other - current
liabilities 14,300
-------------------------- --------- --------- --------- --------- --------- ---------
Total liabilities 37,137
-------------------------- --------- --------- --------- --------- --------- ---------
2 Segmental analysis continued
Information about reportable
segments continued
Rest
UK of Europe Other Total
Geographical split GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ -------- ----------- -------- --------
6 months ended 30 June
2017 (unaudited)
Revenue from external
customers by location
of customers 12,299 14,319 557 27,175
As at 30 June 2017
Non-current assets:
Intangible assets - 21,760 - 21,760
Tangible assets 5,910 3,385 - 9,295
Interests in associates - 108 - 108
Other receivables - 87 - 87
Deferred tax assets - 311 - 311
---------------------------------- -------- ----------- -------- --------
6 months ended 30 June
2016 (unaudited)
Revenue from external
customers by location
of customers 10,956 10,917 350 22,223
As at 30 June 2016
Non-current assets:
Intangible assets 1,090 6,874 - 7,964
Tangible assets 5,975 2,910 - 8,885
Interests in associates - 84 - 84
Deferred tax assets - 29 - 29
---------------------------------- -------- ----------- -------- --------
Year ended 31 December
2016 (audited)
Revenue from external
customers by location
of customers 22,052 22,605 1,087 45,744
As at 31 December 2016
Non-current assets:
Intangible assets - 22,441 - 22,441
Tangible assets 5,904 3,153 - 9,057
Interests in associates - 90 - 90
Other receivables - 85 - 85
Deferred tax assets - 282 - 282
---------------------------------- -------- ----------- -------- --------
3 Exceptional items
Unaudited Unaudited Audited
6 months 6 months Year
to to ended
30 June 30 June 31 December
2017 2016 2016
GBP'000 GBP'000 GBP'000
-------------------------- ----------- ----------- --------------
Acquisition costs - - (458)
Contingent consideration (1,786) - -
R&D tax credits 225 - -
Exceptional items (1,561) - (458)
------------------------------ ----------- ----------- --------------
Contingent consideration payable for the ANNOVA acquisition is linked both to average profitability over a 3-year earn out period and achievement of key commercial milestones. ANNOVA outperformed the first-year expectations that were reflected in projected amounts payable in the acquisition balance sheet. The anticipated total contingent consideration payable was reassessed at 30 June 2017, resulting in the exceptional charge.
Up to and including 2016 R&D tax credits were incorporated into the net tax charge but from 2017 these are to be treated as deductions from operating expenses. SCISYS anticipates that it will no longer qualify for the SME tax credit scheme in 2018 as it expects to exceed the headcount eligibility threshold so the above-the-line tax credit in the current period is treated as an exceptional item.
The 2016 acquisition costs represent fees paid to professional advisors and statutory charges relating to the acquisition of ANNOVA that do not qualify for capitalisation as costs for issuing debt or equity instruments.
4 Taxation
Unaudited Unaudited Audited
6 months 6 months Year
to to ended
30 June 30 June 31 December
2017 2016 2016
GBP'000 GBP'000 GBP'000
------------------------------ ----------- ----------- --------------
Current tax (credit)/charge (114) 109 393
Deferred tax (credit)/charge (168) 37 (13)
Total tax (credit)/charge (282) 146 380
---------------------------------- ----------- ----------- --------------
The charge for taxation for the six months ended
30 June 2017 reflects an effective rate for
the period consistent with the anticipated rate
5 for the full year.
Impairment of goodwill
Goodwill is tested for impairment every half
year based on management's estimation of the
value in use of the cash generating units (CGUs)
to which the goodwill has been allocated. The
value in use calculation is dependent upon management's
estimate of future cashflows expected to arise
from the CGU and a suitable discount rate.
Management has considered the estimates of cashflows
and applicable discount rates and has concluded
that no impairment is necessary at 30 June 2017.
6 (Loss)/earnings per share
The calculation of the Group basic and diluted
(loss)/earnings per ordinary share is based
on the following data:
Unaudited Unaudited Audited
6 months 6 months Year
to to 30 ended
30 June June 31 December
2017 2016 2016
GBP'000 GBP'000 GBP'000
------------------------------- ----------- ----------- --------------
(Loss)/profit attributable
to shareholders (1,414) 827 2,222
------------------------------- ----------- ----------- --------------
Number of shares '000 '000 '000
------------------------------- ----------- ----------- --------------
Basic weighted average number
of shares 29,005 29,043 29,047
Diluted weighted average
number of shares 29,677 31,016 29,577
------------------------------- ----------- ----------- --------------
Basic (4.9)p 2.8p 7.6p
Diluted (4.8)p 2.7p 7.5p
------------------------------- ----------- ----------- --------------
The weighted average number of shares for the calculation of basic (loss)/earnings per share excludes own shares held in treasury.
The weighted average number of shares for the calculation of diluted (loss)/earnings per share includes own shares held in treasury together with EMI, CSOP and unapproved share options outstanding during the period.
7 Adjusted Earnings per Share
Unaudited Unaudited Audited
6 months 6 months Year
to to 30 ended
30 June June 31 December
2017 2016 2016
-----------------------------
Basic 1.4p 2.9p 9.2p
Diluted 1.3p 2.9p 9.0p
--------------------------------- ----------- ----------- --------------
In order to present a measure of earnings per
share which is more representative of the Group's
underlying operating performance, earnings are
adjusted to be net of the post-tax costs shown
in the highlighted box on the face of the Income
Statement.
The calculation of the Group adjusted basic
and diluted earnings per ordinary share is based
on the number of shares in Note 6 and the following
earnings data:
Unaudited Unaudited Audited
6 months 6 months Year
to to 30 ended
30 June June 31 December
2017 2016 2016
GBP'000 GBP'000 GBP'000
---------------------------- ----------- ----------- --------------
(Loss)/profit attributable
to shareholders (1,414) 827 2,222
Adjusted for:
Exceptional items 1,561 - 458
Corporation tax (589) - -
Amortisation of intangible
assets 991 - -
Deferred tax (168) - -
Share based payments 14 19 (14)
---------------------------- ----------- ----------- --------------
Adjusted earnings 395 846 2,666
---------------------------- ----------- ----------- --------------
The weighted average number of shares for the
calculation of basic earnings per share excludes
own shares held in treasury.
The weighted average number of shares for the
calculation of diluted earnings per share includes
own shares held in treasury together with EMI,
CSOP and unapproved share options outstanding
during the period.
8 Dividends
For year ending 31 December 2016 the Company
paid a final dividend of 1.43 pence per share
in July 2017. The Board is recommending payment
of an interim dividend for 2017 of 0.59 pence
per share, to be paid on 9 November 2017 to
shareholders on the register as at 13 October
2017.
Interim Report
The Interim Report will be posted to shareholders
shortly and for those shareholders who have elected
to receive communications electronically it will
be available to view on the SCISYS website at
www.scisys.co.uk. Copies will also be available
at SCISYS PLC's Registered Office at Methuen Park,
Chippenham, Wiltshire, SN14 0GB.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR BLGDCIBDBGRG
(END) Dow Jones Newswires
September 21, 2017 02:00 ET (06:00 GMT)
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