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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 : 3230B
SCISYS PLC
20 September 2018
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 2018
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 2018. The Directors anticipate that SCISYS will deliver further year-on-year growth in 2018, and that trading results will be more evenly spread over the two halves of the financial year than in previous years.
Financial and Operational Highlights:
-- Adjusted operating profit up to GBP2.5m (2017: GBP1.2m restated). -- Revenues up 13% to GBP28.7m (2017: GBP25.3m restated). -- Half-year order book approaching GBP100m (2017: GBP64m). -- Net debt reduced to GBP3.3m (2017: net debt GBP9.0m). -- Interim dividend up 10% at 0.65 pence per share (2017: 0.59p). -- Adjusted basic earnings per share 6.1p (2017: 1.4p).
-- ESD division had a particularly strong first half year, with a number of key contract extensions.
-- M&B division renewed a long-term BBC maintenance contract extension by at least 7 years.
-- Early termination of Annova ring-fencing arrangements agreed with former owners to close out the earnout period and accelerate potential integration gains.
-- BBC's flagship TV news programmes now running live on OpenMedia software.
-- Space division had an excellent first half year and secured a EUR3.9m contract for the EGNOS programme.
Mike Love, Chairman of SCISYS, commenting on the results, said:
"We are delighted by our continued solid operational performance and key contract renewals. In particular, our Space division's contract win with Airbus for developing the global navigational EGNOS V3 ground segment is encouraging evidence of our ability to continue participation in EU-funded programmes. Cash flow is healthy and our balance sheet increasingly strong. We expect our financial results to be more evenly spread over the year. The board also expects, based on current performance, to deliver further year-on-year growth for 2018."
For further information please contact:
Hot Features
Premium
SCISYS PLC +44 (0)1249 466 466
Mike Love Chairman
------------------- ---------------------------
Klaus Heidrich Chief Executive
Officer
------------------- ---------------------------
Chris Cheetham Finance Director
------------------- ---------------------------
finnCap (NOMAD & Broker) +44 (0)20 7220 0500
---------------------------
Julian Blunt Corporate Finance
------------------- ---------------------------
Julian Blunt Corporate Broking
------------------- ---------------------------
WalbrookPR +44 (0) 20 7933 8780
Tom Cooper/Paul Vann +44 (0)797 122 1972
tom.cooper@walbrookpr.com
---------------------------
Notes to Editors:
About SCISYS:
Employing around 580 staff, SCISYS group is a leading developer of information and communications technology services, e-business, web and mobile applications, editorial newsroom solutions and advanced technology solutions. The Company operates in a broad spectrum of market sectors, including Media & Broadcast, Space, Government and Defence and Commercial sectors. SCISYS clients are predominantly blue-chip and public-sector organisations. Customers include the Environment Agency, the Ministry of Defence, Airbus Defence & Space, Thales Alenia Space, Arqiva, Vodafone, the European Space Agency, Eumetsat, the BBC, Radio France, RTL, RNLI, Pets at Home, Siemens and the National Trust. The Company has UK offices in Chippenham, Bristol, Leicester and Reading and German offices in Bochum, Dortmund, Darmstadt 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 2018. In particular - in contrast to the trend of previous years, where performance has weighed heavily towards the second half of the year - we expect 2018 revenues and profits to be more evenly spread throughout the year due to the anticipated phasing of order intake and the increasing proportion of time & materials contract work in the revenue mix.
Key financials
The Group's revenue totalled GBP28.7m (2017: GBP25.3m restated under IFRS 15). In the six months ended 30 June 2018, the Group's adjusted operating profit was GBP2.5m (2017: GBP1.2m restated). Adjusted basic earnings per share were 6.1p (2017: 1.4p). A fuller explanation is available in the Finance Review section.
Operating Review
Introduction
All divisions performed ahead of, or in line with, management's expectation during the first half of 2018, delivering contracts on time and within budget and generating improved operating cash flows. Across the Group we have secured important contract extensions for our support work with key customers, including the BBC, Vodafone, Siemens and several defence primes. We are seeing an increase in the number of contracts performed on a time-and-materials basis.
We still do not expect any adverse operational consequences as a result of Brexit. However, we continue to progress our contingency planning, including any re-domiciliation, in order to protect shareholder value and cement the Group's position when carrying out and bidding for both UK and EU-funded work after Brexit. We currently expect these contingency plans to be put into effect during the course of 2018.
Enterprise Solutions & Defence (ESD) division
ESD delivered an excellent first half year performance. The division continues to work on ongoing defence projects for the Ministry of Defence (MoD), as well as in the maritime sphere, securing key long-term support contract extensions with major primes. Current projects are running to plan and resulted in a contribution margin of 29%.
ESD secured a key systems-integration framework with UK Power Networks, a long-standing customer, for whom SCISYS also carries out support services for its billing systems.
The division won a new contract to develop a dashboard and reporting tool for Vodafone, for the 111 non-emergency number. It also signed a separate contract extension with Vodafone for continued non-emergency telecommunications work.
The division's other projects span a wide range of commercial and public-sector customers and varied software projects, including ongoing work for the RNLI, Coal Authority, Public Health England and Edmundson Electrical. Our work with Siemens continues to expand in the arena of software engineering for automatic train controls and signalling systems. This has built a pipeline of opportunities in the transport and logistics sector, part of which crystallised with the recent Future Bus Systems win secured with Trapeze for Transport for London. ESD has successfully maintained its roster of existing, long-term customers.
The division continues to support the MoD with its Waterguard Project, enabling the MoD to be tax efficient and comply with HMRC regulations for military equipment export/import. Xibis, our web and mobile-app specialist subsidiary, now reports into the ESD division. Its revenues and margin targets remain on track. Xibis and EDS continue to collaborate on ongoing mobile-application development work for Pets at Home and Angel Trains.
Six months ended Six months ended Year ended
30 June 2018 30 June 2017 31 December
GBP'000 GBP'000 2017
Restated GBP'000
Restated
Revenue 9,556 8,113 16,978
Contribution value 2,790 1,853 4,307
Contribution margin 29% 23% 25%
Space division
Our Space division made an excellent start to 2018. It secured a key EUR3.9m win with Airbus Defence and Space (Airbus) for developing the global navigation EGNOS V3 ground segment infrastructure. Airbus is the prime contractor to the European Space Agency (ESA) and the European GNSS Agency. This regional satellite-based augmentation system is used to improve the performance of global navigational satellite systems. The division also secured contract extensions for its existing work for the EU-funded Galileo programme, and continued its ongoing work for ESA at the European Space Operations Centre in Darmstadt. The division's programme of work on Germany's flagship Heinrich Hertz satellite mission continues to perform to schedule.
The Space division also secured contract wins with the UK Space Agency for autonomous robotics software development and Earth Observation projects. Our robotics team has won a contract with a UK commercial customer for a remote tunnel inspection project, extending its robotics software platform.
It has made further inroads into the commercial space sector, for example by delivering simulation software to Astroscale Limited. The division is also developing fuel consumption optimisation algorithms and simulation software for Sky and Space Global and its Pearls nano-satellite project.
The 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 new contracts in the second half of the year.
Six months ended Six months ended Year ended
30 June 2018 30 June 2017 31 December 2017
GBP'000 GBP'000 GBP'000
Restated Restated
Revenue 11,184 9,845 20,023
Contribution value 3,349 2,420 4,845
Contribution margin 30% 25% 24%
Media & Broadcast (M&B) division
M&B renewed its long-standing maintenance contract with the BBC in February, cementing its strong relationship with the BBC. M&B continues to support the BBC by providing radio audio editing, production and archiving systems, and is also working towards closer integration of dira! with the OpenMedia solution provided by Annova to the BBC. The roll out of its ViLoR solution is progressing well, through which local radio is hosted virtually using central datacentres.
The delivery of dira! radio production and playout systems to the South African Broadcasting Corporation (SABC) is on schedule and two channels went live at RTL, the French commercial network. M&B won a key contract with the British Library, under which SCISYS will deliver a national Digital Radio Archive Management solution that will capture and preserve a representative part of the UK's radio output. This demonstrates the adaptability of dira! beyond the broadcasting arena, as this project will use dira! modules.
As anticipated, the first half year's contribution was behind 2017 on higher revenues but M&B's performance is expected to improve in the second half year despite slow progress with the recently won weConnect project.
Six months ended Six months ended Year ended
30 June 2018 30 June 2017 31 December 2017
GBP'000 GBP'000 GBP'000
Revenue 3,848 3,539 8,715
Contribution value 604 728 2,635
Contribution margin 16% 21% 30%
ANNOVA Systems
Annova has performed solidly during the first half of 2018 and the deployment of its OpenMedia software to the BBC's operation continued over the summer. Installation into the BBC's London W1 newsroom was successful, marking a key milestone in this flagship project.
The division continues to make advances on current projects, including those with the ARD group of German broadcasters, of which the recently won customer Radio Bremen is a member. It has maintained solid operational progress for its growing roster of clients, such as the German broadcasters MDR and NDR, Czech Radio, Radio France and Corus in Canada.
In common with M&B, Annova anticipated that it would report a weaker first six months than in 2017, although the division expects a significant improvement in performance in the second half of the year.
Six months ended Six months ended Year ended
30 June 2018 30 June 2017 31 December 2017
GBP'000 GBP'000 GBP'000
Revenue 3,957 3,610 7,291
EBITA* 206 283 510
EBITA margin* 5% 8% 7%
* other divisions are measured on their contribution to shared Group overheads whereas Annova currently remains largely independent, allowing the computation of a representative EBITA
While both M&B and Annova's first-half revenues are somewhat behind the board's expectations, the overall outlook for both divisions remains in line with Group expectations.
Finance Review
Results for the half year to 30 June 2018 show a significant step up from the comparative period for 2017. This was foreseen in the June AGM trading update, when the Directors signalled that financial results for the full year 2018 would be more balanced between the two halves than in recent years.
Total revenues were up 13% to GBP28.7m (2017: GBP25.3m as restated in accordance with IFRS 15 - see below) and the professional-fees component increased by 24% to GBP27.6m (2017: GBP22.3m). 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 - more than doubled to GBP2.5m (2017: GBP1.2m restated). 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 6.1 p (2017: 1.4p).
IFRS 15: Revenue from contracts with customers has been implemented with effect from 1 January 2018 and comparative figures for 2017 have been restated to reflect retrospective application of this new standard. Under IFRS 15, only the mark-up on pass-through costs of third-party products and services -- where SCISYS acts as an "Agent" rather than a "Principal" - is reported as revenue, whereas previously the revenues and the related third-party cost of sales were reported gross. The reduction in previously reported revenues for the first half of 2017 was GBP1.9m (2017 full year: GBP3.8m) while the impacts on reported professional fees and profits were negligible.
The statutory operating profit was GBP1.2m (2017: GBP1.3m loss) after bearing amortisation costs relating to the December 2016 ANNOVA Systems GmbH ("Annova") acquisition of GBP0.6m (2017: GBP1.0m) and an exceptional charge of GBP0.7m (2017: GBP1.6m net).
The exceptional charge comprised two components. The first element recognised the contractual liability for a fixed and final earnout payment of GBP0.6m to Annova's former owners. This sum is consideration for early termination of the acquisition ring-fence agreement, enabling accelerated achievement of potential medium-term benefits in our combined media-sector operations by the removal of constraints on collective management. Second, there was a GBP0.1m exceptional charge for external professional advice in relation to the development and implementation of the Group's contingency plans to mitigate any adverse impact of Brexit on cross-border operations, particularly in the space sector.
Exceptional charges in the comparative 2017 period comprised a one-off R&D tax credit of GBP0.2m and a GBP1.8m charge to reflect increased contingent consideration payable to Annova's former owners.
Basic earnings per share were 2.6p (2017: Loss per share 4.9p).
Net cash flow from operations increased to GBP3.1m (2017: GBP2.7m). At the end of the reporting period, the Group had bank deposits of GBP9.4m (2017: GBP7.2m). Unutilised working capital facilities totalled GBP4.2m (30 June 2017: GBP4.7m). Group debt at the period end was GBP12.7m (2017: GBP16.2m). The resulting net debt was GBP3.3m, a reduction of GBP2.6m from the 2017 year-end position of GBP5.9m net debt (30 June 2017: GBP9.0m).
Following a buoyant sales performance in the final quarter of 2017, order intake for the first six months of 2018 has remained strong. The M&B division's renewal of its BBC maintenance contract announced in February lifted the order book value over GBP100m for the first time and the level has been maintained marginally below this threshold throughout the first half of the year (2017: GBP64m).
The effective tax rate for the period of 21% reflects the anticipated rate for 2018 as a whole (2017: 17%).
The half-year accounts are presented on a basis consistent with policies to be adopted for the Annual Report & Accounts for the year ending 31 December 2018.
Dividend
Our dividend for the full year to 31 December 2017 was 2.16 pence per share, in line with our strategy of progressive dividend growth. I can now confirm that an interim dividend of 0.65 pence per share will be paid on 8 November 2018 to shareholders on the register as at 12 October 2018. The shares are expected to go ex-dividend on 11 October 2018.
Outlook
The second half of 2018 has started with strategic contract wins and solid performances deliveries on key projects. We are seeing healthy revenue growth, while cash flows remain strong.
Following the early end of the ring-fencing agreement with Annova's former owners, we have started the internal integration project of our Annova and M&B divisions, which are planned to operate as one division from 2019 onwards.
Based on current performance on projects, a buoyant order book and our new business pipeline, the Directors are confident that SCISYS will achieve year-on-year growth in 2018 and that the future prospects of the Group continue to look highly encouraging.
Mike Love,
Chairman
Consolidated Income Statement
Unaudited Unaudited Unaudited
Restated Restated
6 months 6 months Year ended
to to 31 December
30 June 30 June 2017
2018 2017
GBP'000 GBP'000 GBP'000
----------- --------------
Revenue (note 2) 28,721 25,269 53,337
Operating costs (27,509) (26,601) (48,792)
Share of results of associates - 15 39
--------------------------------------------- ----------- ----------- --------------
Operating profit/(loss) 1,212 (1,317) 4,584
----------- --------------
"Adjusted operating profit" being operating
profit before share based payments,
exceptional charges and amortisation
arising on business combinations 2,526 1,249 4,491
Exceptional items (666) (1,561) 2,075
Amortisation of Intangibles (626) (991) (1,982)
Share based payments (22) (14) -
----------- --------------
Operating profit/(loss) 1,212 (1,317) 4,584
--------------------------------------------- ----------- ----------- --------------
Finance costs (232) (388) (718)
Finance income (5) 6 8
--------------------------------------------- ----------- ----------- --------------
Profit/(loss) before tax 975 (1,699) 3,874
Tax (charge)/credit (200) 282 (593)
--------------------------------------------- ----------- ----------- --------------
Profit/(loss)for the period attributable
to equity holders of the parent 775 (1,417) 3,281
--------------------------------------------- ----------- ----------- --------------
Earnings/(loss) per share (note 5)
Basic 2.6p (4.9p) 11.3p
Diluted 2.6p (4.8p) 11.0p
--------------------------------------------- ----------- ----------- --------------
Consolidated Statement of Comprehensive Income
Unaudited Unaudited Unaudited
Restated Restated
6 months 6 months Year ended
to to 31 December
30 June 30 June 2017
2018 2017
GBP'000 GBP'000 GBP'000
----------- --------------
Profit/(loss) for the period 775 (1,417) 3,281
Other comprehensive income not recycling
through the Income Statement
Currency translation differences on
foreign currency investments 57 54 369
----------- --------------
Total comprehensive income/(expense)
for the period attributable to equity
holders of the parent 832 (1,363) 3,650
------------------------------------------ ----------- ----------- --------------
Consolidated Statement of Changes in Equity
Capital
For the six months Share Share Merger Redemp-tion Trans-lation Retained
ended Capital Premium Reserve Reserve Reserve Earnings Total
30 June 2018 (unaudited) GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- ---------- ---------- ---------- -------------- -------------- ----------- ---------
Adjusted balance
as at 1 January
2018 7,329 268 943 83 1,890 15,133 25,646
Total comprehensive
income for the period
Profit for the period - - - - - 775 775
Other comprehensive
income
Foreign currency
translation - - - - 57 - 57
Total comprehensive
income for the period - - - - 57 775 832
-------------------------- ---------- ---------- ---------- -------------- -------------- ----------- ---------
Transactions with
owners, recorded
directly in equity
Contributions by
and distributions
to owners
Share based payments - - - - - 22 22
Treasury shares - - - - - - -
Share options - - - - - 57 57
Total contributions
by and distributions
to owners - - - - - 79 79
-------------------------- ---------- ---------- ---------- -------------- -------------- ----------- ---------
Balance as at 30
June 2018 7,329 268 943 83 1,947 15,987 26,557
-------------------------- ---------- ---------- ---------- -------------- -------------- ----------- ---------
Restated
Capital
For the six months Share Share Merger Redemp-tion Trans-lation Retained
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
Adjustment on initial
application of IFRS15
(net of tax) - - - - - (3) (3)
-------------------------- ---------- ---------- ---------- -------------- -------------- ----------- ---------
Adjusted balance
as at 1 January
2017 7,272 143 943 83 1,521 12,748 22,710
Total comprehensive
income for the period
Loss for 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 11,061 21,077
-------------------------- ---------- ---------- ---------- -------------- -------------- ----------- ---------
Consolidated Statement of Changes in Equity continued
Restated
Capital
Share Share Merger Redemp-tion Trans-lation Retained
For the year ended Capital Premium Reserve Reserve Reserve Earnings Total
31 December 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
Adjustment on initial
application of IFRS15
(net of tax) - - - - - (68) (68)
------------------------ ---------- ---------- ---------- -------------- -------------- ----------- ---------
Adjusted balance
as at 1 January
2017 7,272 143 943 83 1,521 12,683 22,645
Total comprehensive
income for the period
Profit for the period - - - - - 3,349 3,349
Other comprehensive
income
Foreign currency
translation - - - - 369 - 369
Total comprehensive
income for the period - - - - 369 3,349 3,718
------------------------ ---------- ---------- ---------- -------------- -------------- ----------- ---------
Transactions with
owners, recorded
directly in equity
Contributions by
and distributions
to owners
Dividends paid - - - - - (586) (586)
Issue of new shares 57 125 - - - - 182
Treasury shares - - - - - (471) (471)
Exercise of share
options - - - - - 158 158
Total contributions
by and distributions
to owners 57 125 - - - (899) (717)
------------------------ ---------- ---------- ---------- -------------- -------------- ----------- ---------
Balance as at 31
December 2017 7,329 268 943 83 1,890 15,133 25,646
------------------------ ---------- ---------- ---------- -------------- -------------- ----------- ---------
Consolidated Statement of Financial Position
Unaudited Unaudited Unaudited
Restated Restated
30 June 30 June 31 December
2018 2017 2017
GBP'000 GBP'000 GBP'000
---------------------------------------
Non-current assets
Property, plant and equipment 9,165 9,295 9,261
Goodwill 15,902 15,950 15,913
Other intangible assets 4,467 5,810 5,173
Other receivables 94 87 92
Interests in associates - 108 -
Deferred tax assets 23 311 26
--------------------------------------- ----------- ----------- -------------
29,651 31,561 30,465
Current assets
Inventories 133 434 321
Contract assets 12,795 10,478 10,256
Trade and other receivables 12,415 10,043 11,091
Corporation tax receivable 500 1,027 450
Cash and cash equivalents 9,394 7,166 8,021
-----------
35,237 29,148 30,139
--------------------------------------- ----------- ----------- -------------
Total assets 64,888 60,709 60,604
--------------------------------------- ----------- ----------- -------------
Equity
Issued share capital 7,329 7,272 7,329
Share premium account 268 143 268
Merger reserve 943 943 943
Retained earnings 15,987 11,061 15,133
Translation reserve 1,947 1,575 1,890
Other reserves 83 83 83
Equity attributable to equity holders
of the parent 26,557 21,077 25,646
--------------------------------------- ----------- ----------- -------------
Current liabilities
Trade and other payables 11,944 11,995 10,452
Contract liabilities 10,010 5,831 7,026
Bank overdrafts and loans 2,469 3,707 2,290
Corporation tax payable 731 31 347
Deferred income 211 245 240
--------------------------------------- ----------- ----------- -------------
25,365 21,809 20,355
Non-current liabilities
Bank loans 10,263 12,514 11,667
Other payables 914 3,627 -
Provisions 929 - 1,572
Deferred tax 860 1,682 1,364
--------------------------------------- ----------- ----------- -------------
12,966 17,823 14,603
Total liabilities 38,331 39,632 34,958
Total equity and liabilities 64,888 60,709 60,604
--------------------------------------- ----------- ----------- -------------
Consolidated Statement of Cash Flows
Restated Restated
Unaudited Unaudited Unaudited
6 months 6 months Year ended
to to 31 December
30 June 30 June 2017
2018 2017
GBP'000 GBP'000 GBP'000
-------------------------------------------
Cash flow from operating activities
Profit/(loss) before tax 975 (1,699) 3,874
Net finance costs 237 382 710
------------------------------------------- ---------- ---------- -------------
Operating profit/(loss) 1,212 (1,317) 4,584
(Increase)/decrease in trade receivables (1,068) 9,404 8,520
Increase in contract assets (2,539) (10,478) (10,256)
Increase/(decrease) in trade payables 1,055 (4,114) (921)
Increase in contract liabilities 2,983 5,831 7,026
Deferred consideration 616 1,561 (1,626)
Depreciation and amortisation 1,224 1,515 3,081
Share of profit of associate - (15) (39)
Share based payments 22 14 -
Tax (payments)/credits (371) 296 147
Net cash flow from operating activities 3,134 2,697 10,516
------------------------------------------- ---------- ---------- -------------
Cash flow from investing activities
Investment in associate (20) - 82
Proceeds from disposal of property,
plant and equipment - 1 4
Purchase of plant, property and equipment (244) (789) (1,259)
Exercise of share options 57 74 158
Interest received (5) 6 8
Net cash flow from investing activities (212) (708) (1,007)
------------------------------------------- ---------- ---------- -------------
Cash flows from financing activities
Dividends paid - - (586)
Interest paid (232) (388) (718)
Issue of new shares - - 182
Investment in own shares - (361) (471)
Loans received - 260 262
Debt repayments (1,244) (1,308) (3,716)
Net cash flow from financing activities (1,476) (1,797) (5,047)
------------------------------------------- ---------- ---------- -------------
Net increase in cash and cash equivalents 1,446 192 4,462
Cash and cash equivalents at the start
of the period 8,021 6,666 6,666
Exchange and other movements (73) 308 (3,107)
Cash and cash equivalents at the end
of the period 9,394 7,166 8,021
------------------------------------------- ---------- ---------- -------------
Cash and cash equivalent deposits held
in non-UK based banks 9,025 5,522 6,435
Net bank deposit with UK based banks 369 1,644 1,586
9,394 7,166 8,021
------------------------------------------- ---------- ---------- -------------
Notes to the Unaudited Interim Report
For the six months to 30 June 2018
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 2018 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 2018. These policies are set out by
the Group in its consolidated financial statements for the
year ended 31 December 2017 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 two new standards
or interpretations endorsed by the EU during 2018. IFRS 15
Revenue from contracts with customers (see Note 8) has had
an impact on the financial results and presentation whereas
IFRS 9 Financial Instruments has been adopted but has not had
an impact on either measurement or disclosures.
The interim financial information for the six months ended
30 June 2018 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 2017. These published accounts
have been reported on by KPMG, the Group's previous 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 2017.
The Interim Report was approved by the Directors on 19 September
2018.
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 four divisions:
Space
Enterprise Solutions & Defence (ESD) (Includes Xibis from
1 January 2018)
Media & Broadcast (M&B)
ANNOVA Systems (Annova)
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,
contract assets, inventories and contract liabilities.
2 Segmental analysis continued
Information about reportable
segments
Space ESD M&B Annova Total
External revenues GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- --------- --------- --------- --------- ---------
6 months ended 30 June
2018 (unaudited)
Professional fees revenue 11,100 8,862 3,678 3,957 27,597
Other revenue 84 694 170 - 948
---------
External revenue for reportable
segments 11,184 9,556 3,848 3,957 28,545
------------------------------------- --------- --------- --------- ---------
Other external revenue 176
Consolidated revenue 28,721
------------------------------------- --------- --------- --------- --------- ---------
6 months ended 30 June
2017 (unaudited)
Professional fees revenue 8,631 6,762 3,326 3,610 22,329
Other revenue 2,930 1,541 213 - 4,684
IFRS 15 Adjustment (1,716) (190) - - (1,906)
------------------------------------- --------- --------- --------- --------- ---------
Restated other revenue 1,214 1,351 213 - 2,778
---------
External revenue for reportable
segments 9,845 8,113 3,539 3,610 25,107
------------------------------------- --------- --------- --------- ---------
Other external revenue 162
Consolidated revenue 25,269
------------------------------------- --------- --------- --------- --------- ---------
Year ended 31 December
2017 (unaudited)
Professional fees revenue 18,629 14,164 7,958 7,291 48,042
Other revenue 4,842 3,193 757 - 8,792
IFRS 15 Adjustment (3,448) (379) - - (3,827)
------------------------------------- --------- --------- --------- --------- ---------
Restated other revenue 1,394 2,814 757 - 4,965
---------
External revenue for reportable
segments 20,023 16,978 8,715 7,291 53,007
------------------------------------- --------- --------- --------- ---------
Other external revenue 330
Consolidated revenue 53,337
------------------------------------- --------- --------- --------- --------- ---------
2 Segmental analysis continued
Information about reportable
segments continued
Space ESD M&B Annova Total
Profit/(loss) before tax GBP'000 GBP'000 GBP'000 GBP'001 GBP'000
--------------------------------- --------- --------- --------- --------- ---------
6 months ended 30 June
2018 (unaudited)
Reportable segment contribution 3,311 2,790 604 206 6,911
Other contribution 38 - - - 38
--------- --------- --------- --------- ---------
Contribution 3,349 2,790 604 206 6,949
------------------------------------- --------- --------- --------- ---------
Central overheads (4,423)
------------------------------------- --------- --------- --------- --------- ---------
Total adjusted EBITA 2,526
Exceptional items and
share based payments (688)
------------------------------------- --------- --------- --------- --------- ---------
EBITA 1,838
Amortisation of intangible
assets comprising acquired
software solution (258)
Amortisation of intangible
assets comprising acquired
order book (368)
------------------------------------- --------- --------- --------- --------- ---------
Operating profit 1,212
Finance costs (232)
Finance income (5)
Profit before tax 975
------------------------------------- --------- --------- --------- --------- ---------
6 months ended 30 June
2017 (unaudited)
Reportable segment contribution 2,087 1,853 728 283 4,951
IFRS 15 adjustment (3) - - - (3)
------------------------------------- --------- --------- --------- --------- ---------
Restated reported segmental
contribution 2,084 1,853 728 283 4,948
Other contribution 336 - - - 336
---------
Contribution 2,420 1,853 728 283 5,284
------------------------------------- --------- --------- --------- ---------
Central overheads (4,035)
------------------------------------- --------- --------- --------- --------- ---------
Total adjusted EBITA 1,249
Exceptional items and
share based payments (1,575)
------------------------------------- --------- --------- --------- --------- ---------
EBITA (326)
Amortisation of intangible
assets (991)
------------------------------------- --------- --------- --------- --------- ---------
Operating loss (1,317)
Finance costs (388)
Finance income 6
Loss before tax (1,699)
------------------------------------- --------- --------- --------- --------- ---------
Year ended 31 December
2017 (unaudited)
Reportable segment contribution 4,891 4,274 2,625 510 12,300
IFRS 15 adjustment (68) - - - (68)
------------------------------------- --------- --------- --------- --------- ---------
Restated reported segmental
contribution 4,823 4,274 2,625 510 12,232
Other contribution 22 33 10 - 65
---------
Contribution 4,845 4,307 2,635 510 12,297
------------------------------------- --------- --------- --------- ---------
Central overheads (7,806)
------------------------------------- --------- --------- --------- --------- ---------
Total adjusted EBITA 4,491
Exceptional items and
share based payments 2,075
------------------------------------- --------- --------- --------- --------- ---------
EBITA 6,566
Amortisation of intangible
assets comprising acquired
software solution (1,246)
Amortisation of intangible
assets comprising acquired
order book (736)
------------------------------------- --------- --------- --------- --------- ---------
Operating profit 4,584
Finance costs (718)
Finance income 8
Profit before tax 3,874
------------------------------------- --------- --------- --------- --------- ---------
2 Segmental analysis continued
Information about reportable
segments continued
Space ESD M&B Annova Total
Group assets GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- --------- --------- --------- --------- ---------
As at 30 June 2018 (unaudited)
Reportable segment - non-current
assets 3,507 1,110 3,380 7,905 15,902
Reportable segment - current
assets 9,905 7,659 2,938 3,045 23,547
---------
13,412 8,769 6,318 10,950 39,449
-------------------------------------- --------- --------- --------- ---------
Other - non-current assets 13,749
Other - current assets 11,690
Total assets 64,888
-------------------------------------- --------- --------- --------- --------- ---------
As at 30 June 2017 (unaudited)
Reportable segment - non-current
assets 3,500 1,090 3,380 7,980 15,950
Reportable segment - current
assets 9,093 4,113 1,139 5,163 19,508
IFRS 15 adjustments (3) - - - (3)
-------------------------------------- --------- --------- --------- ---------
Restated reportable segments
- current
assets 9,090 4,113 1,139 5,163 19,505
---------
12,590 5,203 4,519 13,143 35,455
-------------------------------------- --------- --------- --------- ---------
Other - non-current assets 15,611
Other - current assets 9,643
Total assets 60,709
-------------------------------------- --------- --------- --------- --------- ---------
As at 31 December 2017
(unaudited)
Reportable segment - non-current
assets 3,511 1,090 3,380 7,931 15,912
Reportable segment - current
assets 9,185 6,633 1,446 2,862 20,126
IFRS 15 adjustments (68) - - - (68)
-------------------------------------- --------- --------- --------- --------- ---------
Restated reportable segments
- current
assets 9,117 6,633 1,446 2,862 20,058
12,628 7,723 4,826 10,793 35,970
-------------------------------------- --------- --------- --------- ---------
Other - non-current assets 14,553
Other - current assets 10,081
Total assets 60,604
-------------------------------------- --------- --------- --------- --------- ---------
Space ESD M&B Annova Total
Group liabilities GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- --------- --------- --------- --------- ---------
As at 30 June 2018 (unaudited)
Reportable segment - current
liabilities 2,533 4,191 699 2,576 9,999
Other - non-current liabilities 12,966
Other - current liabilities 15,366
Total liabilities 38,331
-------------------------------------- --------- --------- --------- --------- ---------
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 31 December 2017
(unaudited)
Reportable segment - current
liabilities 1,164 3,231 727 1,905 7,027
Other - non-current liabilities 14,603
Other - current liabilities 13,328
Total liabilities 34,958
-------------------------------------- --------- --------- --------- --------- ---------
2 Segmental analysis continued
Information about reportable
segments continued
Rest of
UK Europe Other Total
Geographical split GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------- -------- -------- -------- --------
6 months ended 30 June 2018
(unaudited)
Revenue from external customers
by location of customers 15,438 12,206 1,077 28,721
As at 30 June 2018
Non-current assets:
Intangible assets - 20,369 - 20,369
Tangible assets 5,917 3,248 - 9,165
Other long term assets - 117 - 117
----------------------------------------- -------- -------- -------- --------
6 months ended 30 June 2017
(unaudited)
Revenue from external customers
by location of customers 12,299 14,319 557 27,175
IFRS 15 adjustment (190) (1,716) - (1,906)
Restated revenue from external
customers by location of customers 12,109 12,603 557 25,269
----------------------------------------- -------- -------- -------- --------
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 long term assets - 398 - 398
----------------------------------------- -------- -------- -------- --------
Year ended 31 December 2017
(unaudited)
Revenue from external customers
by location of customers 28,485 27,273 1,406 57,164
IFRS 15 adjustment (379) (3,448) - (3,827)
Restated revenue from external
customers by location of customers 28,106 23,825 1,406 53,337
----------------------------------------- -------- -------- -------- --------
As at 31 December 2017
Non-current assets:
Intangible assets - 21,086 - 21,086
Tangible assets 5,847 3,414 - 9,261
Other long term assets - 118 - 118
----------------------------------------- -------- -------- -------- --------
3 Exceptional items
Unaudited Unaudited Unaudited
6 months 6 months
to to Year ended
30 June 30 June 31 December
2018 2017 2017
GBP'000 GBP'000 GBP'000
-------------------------- ----------- ---------- -------------
R&D tax credits - 225 450
Contingent consideration (616) (1,786) 1,625
Other (50) - -
Exceptional items (666) (1,561) 2,075
------------------------------ ----------- ---------- -------------
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. The exceptional charge recognised in 2018 represents the contractual liability for a fixed and final earn out payment to Annova's former owners. The sum is consideration for early termination of the acquisition ring-fence agreement enabling accelerated achievement of potential medium-term benefits in combined media-sector operations by the removal of constraints on collective management. The anticipated total contingent consideration payable is reassessed at the end of each half-year reporting period based on the latest trading forecasts.
The "Other" exceptional item relates to charges for external professional advice regarding the development and implementation of the Group's contingency plans to mitigate any adverse impact of Brexit on cross-border operations, particularly in the space segment.
Up to and including 2016 R&D tax credits were incorporated into the net tax charge but from 2017 these are treated as deductions from operating expenses. 2017 was also the final year in which the Company qualified for the SME tax credit scheme as it has subsequently exceeded the headcount threshold for eligibility. Consequently the non-recurring high credit in 2017 was treated as an exceptional item.
4 Taxation
Unaudited Unaudited Unaudited
6 months 6 months
to to Year ended
30 June 30 June 31 December
2018 2017 2017
GBP'000 GBP'000 GBP'000
----------------------------- ----------- ----------- --------------
Current tax charge/(credit) 702 (114) 617
Deferred tax credit (502) (168) (24)
Total tax charge/(credit) 200 (282) 593
--------------------------------- ----------- ----------- --------------
The charge for taxation for the six months ended 30 June 2018 reflects an effective rate for the period consistent with the anticipated rate for the full year.
5 Earnings/(loss) per share
The calculation of the Group basic and diluted earnings/(loss)
per ordinary share is based on the following data:
Restated Restated
Unaudited Unaudited Unaudited
6 months 6 months
to to Year ended
30 June 30 June 31 December
2018 2017 2017
GBP'000 GBP'000 GBP'000
-------------------------------------------- ----------- ----------- --------------
Profit/(loss) attributable to shareholders 775 (1,414) 3,349
IFRS15 adjustment - (3) (68)
-------------------------------------------- ----------- ----------- --------------
Restated profit/(loss) attributable
to shareholders 775 (1,417) 3,281
-------------------------------------------- ----------- ----------- --------------
Number of shares '000 '000 '000
-------------------------------------------- ----------- ----------- --------------
Basic weighted average number of
shares 29,366 29,005 29,154
Diluted weighted average number
of shares 30,005 29,677 29,723
-------------------------------------------- ----------- ----------- --------------
Basic 2.6p (4.9)p 11.3p
Diluted 2.6p (4.8)p 11.0p
-------------------------------------------- ----------- ----------- --------------
The weighted average number of shares for the calculation of basic earnings/(loss) per share excludes own shares held in treasury.
The weighted average number of shares for the calculation of diluted earnings/(loss) per share includes own shares held in treasury together with EMI, CSOP and unapproved share options outstanding during the period.
6 Adjusted Earnings per Share Restated Restated
Unaudited Unaudited Unaudited
6 months 6 months
to to Year ended
30 June 30 June 31 December
2018 2017 2017
----------------------------- ----------- -----------
Basic 6.1p 1.4p 9.8p
Diluted 5.9p 1.3p 9.6p
--------------------------------- ----------- ----------- -------------
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
5 and the following earnings data:
Unaudited Unaudited Unaudited
6 months 6 months
to to Year ended
30 June 30 June 31 December
2018 2017 2017
GBP'000 GBP'000 GBP'000
-------------------------------------------- ----------- ----------- --------------
Profit/(loss) attributable to shareholders 775 (1,414) 3,349
IFRS15 adjustment - (3) (68)
Restated profit/(loss) attributable
to shareholders 775 (1,417) 3,281
Adjusted for:
Exceptional items 666 1,561 (2,075)
Corporation tax (203) (589) -
Amortisation of intangible assets 626 991 1,982
Deferred tax (106) (168) (337)
Share based payments 22 14 -
-------------------------------------------- ----------- ----------- --------------
Adjusted earnings 1,780 392 2,851
-------------------------------------------- ----------- ----------- --------------
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.
7 Dividends
For year ended 31 December 2017 the Company paid a final dividend
of 1.57 pence per share in July 2018. The Board is recommending
payment of an interim dividend for 2018 of 0.65 pence per
share, to be paid on 8 November 2018 to shareholders on the
register as at 12 October 2018.
8 Impact of changes in accounting policies
Impact of IFRS 15 Revenue from contracts with customers
The Group has initially applied IFRS15 and IFRS 9 with effect from 1 January 2018. Under the transition method chosen, comparative information has been restated following the change in accounting policy. The Group has included additional line items as their omission would make the financial statements potentially misleading.
Implementation of the new IFRS 15 standard had a minor impact on the phasing of anticipated operating profits, although reported revenues and costs are more significantly reduced when compared with the previously applied treatment because the Company acts as an agent in certain circumstances.
If IFRS 15 had been applied in 2017, revenues would have been GBP3.827,000 lower for the full year and GBP1,906,000 lower for the six months ended 30 June 17. Operating profits for 2017 would have been GBP68,000 lower for the full year and GBP3,000 lower for the six months ended 30 June 2017.
The Group IFRS 15 policy deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entities contracts with customers.
With effect from 1 January 2018 the Group takes into account principal v agent considerations. In situations where the Group acts in the capacity of an agent, simply passing the third party goods and services to customers through its books, only the mark-up element is disclosed as revenue, whereas previously the full contract value was recognised and included as "Other revenue" in the segmental analysis, Note 2.
Where the customer simultaneously receives and consumes the benefit revenue is recognised in line with performance of the service.
For the delivery of unique customer solutions, recognition of Performance Over Time revenues is subject to an enforceable right to payment (cost plus profit) if the customer were to terminate without the Company's default before expiry of the natural contract term.
Revenue from consultancy and other professional services that have been identified as being Performance Over Time are recognised by reference to the degree of completion of the contract. The input measure used to calculate Performance Over Time for a performance obligation is by reference to own labour costs incurred by the balance sheet date as a percentage of the total estimated own labour costs to completion of the performance obligation. Revenues associated with subcontractors or bought-in goods that contribute to a performance obligation are recognised when the customer's goods are purchased and when the subcontractor's deliverables are accepted.
Where the Company's own licenced products and configuration services are required to create the customer's unique solution, without which the customer obtains no benefit, the licences and services are recognised together as a single performance obligation. If Performance over Time applies these revenues are recognised over time on as for professional service revenues. Licences sold without the need for configuration services (e.g. additional concurrent users) are recognised at the Point in Time when the licences are transferred to the customer.
Maintenance services are considered to be Service Warranty and involve standing ready to provide the services for handling calls, defect fixing and delivery of new releases to the customer on a regular basis. Revenue is recognised evenly over the time period (eg. at one twelfth of the annual charge per month).
Revenues for enhancements to systems already owned by customers are recognised as Performance Over Time as for professional services.
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 news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
IR BLGDCLXBBGIC
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