Thursday, 24 September 2009

SciSys returns to profit (just)

(By Tola Sargeant, 09:30am Thursday 24th September ‘09) AIM-listed IT services group SciSys has made progress in its drive to return to profitable trading. Its interim results for the six months to 30th June '09 reveal a PBT of £0.1m (H1 08: £0.5m loss) and 5% growth in revenue to £20.3m. SciSys can also have some confidence in its 2010 performance having secured various new contract wins in the year to date worth in excess of £30m.

Almost all of SciSys’ growth can be attributed to its Government division where clients include the Environment Agency, Metropolitan Police and Ministry of Defence. Government saw an almost 30% jump in revenues during the period to £7.2m. Profitability in the division also improved dramatically as SciSys cut the number of external contractors used.

However, PBT at the group’s other three divisions – Space, Media & Broadcast, and Support – declined by 24-48%. Delays to procurement decisions held back Media & Broadcast, although it did sign a strategically important deal with the BBC worth £10-£15m between 2009 and 2013. The Space division, which was restructured in 2008, has seen margins come under pressure following delays in the completion of some projects within the UK.

All in all, there may be early signs that efforts to turn around the company are bearing fruit but there is still a long way to go. Management remain rightly ‘mindful of uncertain market conditions’ and ‘take a cautious view’ on the trading outlook. In the months ahead they need to keep the focus firmly on organic growth and, most importantly, improving margins. In the meantime, we wouldn’t be surprised to see SciSys, which rejected Microgen’s advances in April 2008 (see SciSys rejects Microgen approaches), attracting interest from other potential buyers.

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