RNS Number : 6114T
SCISYS PLC
31 March 2016
 

 

 

SCISYS PLC

(SSY: AIM)

 

 

Unaudited Preliminary Results for the year ended 31 December 2015

 

SCISYS PLC ("SCISYS", "the Group" or "the Company"), the supplier of bespoke software systems, IT based solutions and support services to the Media & Broadcast, Space, Government, Defence and Commercial sectors, is pleased to announce its unaudited Preliminary Results for the twelve months ended 31 December 2015.

 

 

RESULTS HIGHLIGHTS

 

·     All difficulties in one major fixed-price development project resolved;

 

·     Won a £4m contract to develop a Customs Compliance Management Information System;

 

·    

 

·    

 

·     Revenues of £36.1m (2014: £40.4m) - 4% lower at constant currency;

 

·     Earnings per share of 1.3p (2014: 7.7p) - reflecting impact of problem contract;

 

·     Operating profit fell to £0.8m (2014: £3.2m);

 

·     Reinstatement of dividends and proposed full year dividend of 1.78p (2014: 1.61p) (subject to shareholder approval at the AGM);

 

·     2016 opening order book of £37.2m (2015: £30.3m).

 

Commenting on the results and prospects, Mike Love, Chairman of SCISYS PLC said:

 

"SCISYS advised investors in June 2015 that it was experiencing difficulties in one major fixed price development project in its Enterprise Solutions & Defence (ESD) division. We made provisions at that juncture for the anticipated additional costs to complete the project and issued revised market guidance for the then anticipated full year's trading performance.

 

"In the interim the issues with the problem project have been fully resolved and concluded in a manner satisfactory to both the Company and the customer.

 

"During the second half of the year we started seeing a healthy recovery in trading with a number of significant contract wins announced at the end of 2015. We are seeing an encouraging start to 2016 and anticipate a healthy first half. However, the volatile sterling/euro exchange rate remains a factor."

 

Investor Lunch Programme

SCISYS will be holding a series of Investor Lunches in London, Bristol, Birmingham and Leeds for Private Client Investment Managers and Private Investors. Those wishing to attend should contact Tom Cooper on tom.cooper@walbrookpr.com or 020 7933 8780 or 0797 122 1972 for further details.

 

For further information please contact:

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

 

Mia Gardner

Corporate Broking

 

WallbrookPR

Tom Cooper/Paul Vann

 

+44 (0) 20 7933 8780

+44 (0)797 122 1972

tom.cooper@walbrookpr.com

 

About SCISYS:

Employing nearly 450 staff, SCISYS group is a leading developer of Information and Communications Technology services, e-Business, web and mobile applications 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, Arqiva, Vodafone, the European Space Agency, Eumetsat, the BBC, RNLI, AON, Halfords, Interflora and the National Trust. The Company has UK offices in Chippenham, Bristol, Leicester and Reading and two offices located in Germany. More information is available at www.scisys.co.uk 

 

 

CHAIRMAN'S STATEMENT

 

LOOKING BACK - A CHALLENGING YEAR

Our interim report was released in September 2015 against the backcloth of SCISYS having advised investors in the previous June that it was experiencing difficulties in one major fixed price development project in its Enterprise Solutions & Defence (ESD) division. We made provisions at that juncture for the anticipated additional costs to complete the project and issued revised market guidance for the then anticipated full year's trading performance. We also advised that while our markets remained tough, good opportunities existed and we were confident not only of having bottomed-out the problems with this ESD project but also of winning several new projects in the second half of 2015.

 

As we enter 2016 I am pleased to report that the judgements made in June 2015 were soundly based. The issues with the problem project have been fully resolved and concluded in a manner satisfactory to both the Company and the customer. During the second half of the year we started seeing a healthy recovery in trading with a number of significant contract wins announced at the end of 2015. Our opening year order book stood at £37.2m (2015: £30.3m). This is very healthy and the pipeline of prospects remains encouraging, which bodes well for a sustained recovery.

 

The trading position that we are now seeing is a testament to many individuals within and outside the Company. The Board is to be credited with scoping the depth of the problem and taking robust action in conjunction with the customer to resolve the outstanding issues. The divisional directors and the executive directors worked hard to keep the project team focused and motivated and the team itself stuck to the task at hand. Our bankers and external shareholders remained supportive during the delicate resolution of this project. My thanks go to all.

 

There is an underlying resilience in the SCISYS business model. During this period, trading in the Space and Media & Broadcast (M&B) divisions progressed in line with plans measured in constant currency terms; the strength of sterling against the euro however took the shine off the underlying strength of their performance. This had a negative impact on consolidated top line growth and the translation of profits denominated in euros.

 

2015 saw the first full year of trading for Xibis within the Group: Xibis was acquired in December 2014. Despite the founder directors leaving the business shortly after acquisition, ahead of their anticipated departure dates, the business performed close to plan and looks well set for profitable growth in 2016. We continue to seek out other acquisition opportunities.

 

Overall the positive trading in Space and M&B did not compensate for the cost of resolving the problem project within ESD and our results for the full year have suffered accordingly.

 

Key financials reflect the challenges

In the year ended 31 December 2015 SCISYS posted overall revenues of £36.1m, which were down 11% on last year (2014: £40.4m). Within this figure professional fees were 8% lower at £29.8m (2014: £32.5m). The Group delivered an operating profit of £0.8m, a 75% reduction on the £3.2m in 2014. Basic earnings per share were 1.3p (2014: 7.7p). Cash inflows remained comfortable but cash outflows were higher than in 2014. The Group's net debt position was £1.0m at the year-end (2014: £0.3m net cash). At 2.2% (2014: 7.9%), our operating margin fell back reflecting the project challenges. The Finance Director's report provides more detail on the key financial results achieved during 2015.

 

Dividend

We appreciate that the dividend is one of the important considerations for investors when acquiring or deciding to continue to hold shares in SCISYS. We nevertheless suspended the interim dividend while assessing the extent of the financial challenge associated with the project problems. We are pleased now however to confirm that the directors are reinstating dividend payments and are proposing a final dividend of 1.78p per share subject to approval by shareholders at the Annual General Meeting to be held on 9 June 2016. The proposed final dividend will be paid on 15 July 2016 to shareholders on the register at 17 June 2016. The shares will go ex-dividend on 16 June 2016. SCISYS is pleased to continue demonstrating its commitment to a progressive dividend policy.

 

Governance matching our needs

We believe in robust corporate governance. We have established strong governance frameworks throughout the Group. SCISYS is compliant with the UK Corporate Governance Code where appropriate for a company of its size. Our risk management procedures have been reviewed and tightened as a result of the problem project.

 

 

LOOKING TO THE FUTURE

Strategy focused on revenue growth and margin improvement

Notwithstanding the challenges of 2015 and an exceptional set of results which do not do SCISYS justice in respect of its current run rate or its prospects, the key elements of the Group's strategy remain unchanged. We continue to focus on revenue growth, margin improvement, management and control of risk and succession planning.

 

Outlook

Our order book at the beginning of 2016 is substantially ahead of where it was at the start of 2015 and we continue to see a number of good opportunities both in the UK and on mainland Europe that we are confident that we can convert into contract wins.

 

Organic growth continues to prove more difficult to achieve than anticipated when we set out our long term goals. Nevertheless we remain focused on maximising opportunities in our existing markets and targeting sales of  proprietary solutions in adjacent markets.

 

We also continue to look to grow through acquisition, whether as bolt-on acquisitions to our existing businesses or, like Xibis, as new members of the Group.

 

The business foundations are firm - our year-end cash position is healthy, the balance sheet is strong and the Group's robust and focused organisation keeps senior managers close to its operations.

 

We are seeing an encouraging start to 2016 and anticipate a healthy first half. However, the volatile sterling/euro exchange rate remains a factor and may dilute overall performance. Nevertheless we currently anticipate that we will return to the levels of profit and margin that investors have experienced in the recent past.

 

 

Dr. Mike Love

Chairman

 

 

 

 

Chief Executive's REview

 

A CHALLENGING YEAR BEHIND US - BACK ON TRACK AGAIN DURING THE SECOND HALF

Getting back on track during the second half of the year was our highest priority so as to demonstrate that the business was fundamentally strong and could recover quickly from an isolated failure. We were always confident that the project setback happened in isolation. We resolved it swiftly and delivered a strong performance across all parts of the business during the second half of the year.

 

Having conducted a thorough review of project controls we concluded that they were both appropriate and operating effectively. However, we have implemented enhanced risk-management procedures during the sales process to ensure that potential exposures in the future can be identified and mitigated at an early stage.

 

 

FUNDAMENTALLY STRONG DUE TO LONG-TERM CUSTOMER RELATIONSHIPS

The Board is confident of the underlying strength of SCISYS - first and foremost because of our long-term customer relationships, which remain the solid foundation of our business across all divisions. Major wins from our long-term clients across our divisions have demonstrated the resilience in our business model.

 

 

DIVISIONAL PERFORMANCE

The business delivered a very solid performance during the second half of the year, which further substantiates the earlier signs of recovery. Revenues and divisional contribution were up on the second half of 2014, even by double-digit percentages at constant currency.

 

Most positively we have been able to build a very healthy year-end order book, which is 23% better than the previous year, particularly because of major wins by our Enterprise Solutions & Defence and our Space divisions.

 

Enterprise Solutions & Defence (ESD)

The significant issues around the single failed project overshadowed the strong underlying performance of the division. The divisional contribution has been impacted massively and is down to £1.7m (2014: £3.2m). Revenues fell to £12.2m (2014: £13.5m) mainly because resources were committed to working on the problem project and could not therefore be utilised on other profit-making opportunities.

 

During the second half of the year many of the long-term sales efforts of ESD - particularly in the defence, security and maritime sectors - came to fruition and added significantly to the division's profile and track record in this area.

 

A major contract was won under the Imagery Exploitation Programme (IEP), providing improved situational awareness and analysis for enhanced intelligence-gathering capabilities across the nation's armed forces, further positioning ESD as an expert in command & control solutions and smart integration.

 

The team won a multi-year research programme with the Defence Science and Technology Laboratory (DSTL) to investigate an optimised future operations room in support of the Maritime Air Defence Command, further substantiating SCISYS' reputation as a specialist solution provider in the maritime sector.

 

Another multi-million pound project was secured with the UK Ministry of Defence (MoD) to deliver software and services to support defence supply-chain operations and movements for the design and delivery of the Customs Compliance Management Information System (CCMIS) application and the provision of on-going hosting and support services. This is further proof of SCISYS' expertise in providing sophisticated business systems.

 

A large framework contract has been agreed in the security sector that started to bear fruit late in 2015.

 

Media & Broadcast

For 2015 we expected the Media & Broadcast (M&B) division to perform below its results in 2014 because of the anticipated adverse timing of larger project opportunities. For the first half of 2015 we had to report a revenue drop of £0.9m compared with the first half of 2014 at constant currency (£1.3m at the actual exchange rate).

 

The division turned round the decline during the second half of the year. At constant currency full-year revenues were down £0.7m on 2014 (actual exchange rate: £1.7m). During this period the division again delivered a healthy margin of 32% with a contribution of £2.0m (constant currency: £2.2m).

 

The division has continued its efforts to establish growth potential. Sales activities progressed with the existing client base and with potential customers in Germany, the UK and internationally. The awarding of the second exclusive large-scale framework by the BBC was a major step in securing future revenues from its UK-based activities.

 

The scope of SCISYS' dira! product was extended further particularly around mobile computing capabilities and multimedia-based functionality. Feedback from domestic and international customers confirms that our product is evolving in the right direction. The Radio Digital Archive (RDA) project won under the BBC framework agreement partly relies on these new technologies and provides on-line search and retrieval functionality for archived content to journalists so that it can be re-used quickly and easily in future programmes.

 

Space

Our Space division performed resiliently, ending the year with £4.0m contribution at constant currency, in line with 2014. However the division suffered the most from the anticipated adverse euro/pound exchange rate, with revenues at £16.4m (2014: £18.6m) and divisional contribution at £3.3m (2014: £4.0m). Almost all of our Space revenues are euro denominated so the impact on divisional contribution was even bigger in proportion because operating costs for UK-based operations are borne in pounds. Only parts of the downside were recovered by the currency-hedging contracts that we had in place.

 

SCISYS' ongoing involvement in long-term programmes remains the foundation of its fundamentally strong performance. Examples include the European satellite-navigation system Galileo, where our Space division takes responsibility for a large proportion of the ground-segment software, as well as the European Space Agency (ESA) and its rover mission to Mars, where SCISYS experts are in charge of developing the rover visual localisation flight software, to name just a couple. As in the past decades, operations-support activities for ESA's Space Operations Centre in Darmstadt (Germany) have added a robust revenue stream.

 

SCISYS recently secured another multi-year project worth more than €5m under a programme of the European Union to maintain and enhance the Galileo Ground Mission Segment (GMS), which is the heart of the Galileo satellite-navigation system. Working closely with our long-term partner Thales Alenia Space France, this project is testament to the sustainability of the business going forward.

 

At the same time, the division is pursuing a variety of initiatives that in the future are meant to complement its traditional revenue streams. The proprietary PLENITER product suite will serve the commercial space market better, and SCISYS' expertise in earth observation and robotics and autonomy will be taken to adjacent sectors.

 

Xibis

We acquired Xibis as our fourth division late in 2014, with revenues in the range of £1m. During the first half of the year the founders decided to leave the company to pursue their non-business interests. We were able to replace the management from within the Xibis team but this change still had an impact on the performance during the first half, which delivered revenues of just £0.4m, accompanied by a small loss during the period.

 

In the second half of the year the new management team stabilised the business and returned the financial performance to planned levels, securing landmark contracts with new customers and working successfully with our ESD division to win joint projects.

 

 

RECRUITING FOR FUTURE OPPORTUNITIES

Our employees remain core to our future business success. During 2015 we saw a healthy growth in team size in our British and German operations and we have been able to attract talented graduates as well as experienced team members across the business. I am pleased to report that recruitment continues and we will focus on further improving SCISYS' reputation as a good place to work.

 

 

OUTLOOK - STRENGTHENING OUR POSITION AS A NICHE SPECIALIST

During the year our sales teams successfully generated an order book which is more than 20% ahead of its value at the end of 2014. We saw encouraging major wins during the second half of 2015 and we expect significant opportunities to materialise during the first half 2016 across all our divisions; some of which have already materialised.

 

Our main strategic objectives remain largely unchanged: growing revenues, profit and operating margin are the focal areas for the medium-term future. Further strengthening our position as niche specialists in the respective sectors addressed by our largely autonomous divisions is one central means to improve our market position. Our recent successes particularly in the defence & security sector show that this approach is bearing fruit.

 

Other growth initiatives still aim at extending the sales regions beyond current boundaries and exploiting existing capabilities in adjacent sub-sectors, based on our own product offerings wherever possible. We are reasonably optimistic of converting some of these future opportunities into tangible business in 2016.

 

We will continue to monitor currency fluctuations and potential deferrals as imminent risks to our organic growth projections. At the same time we will complement our organic growth strategy by pursuing opportunities for further acquisitions, carefully considering market price and cultural fit.

 

Our team across the SCISYS group, our shareholders, customers and other stakeholders have firmly supported SCISYS during tough times in 2015. My sincere thanks go to all of them. For 2016 we are increasingly confident of performing in line with current market guidance. We expect to take benefit from the recovery and re-strengthened position by the end of 2015, which will help to progress our growth strategy further.

 

 

Klaus Heidrich

Chief Executive
 

FINANCE DIRECTOR'S REPORT

Although the overall results are disappointing in the context of recent years, favourable indicators underpin the Board's confidence that this was a temporary reversal, predominantly affecting the first six months of 2015. Notable highlights of the year include:

 

•    The closure of the problem project well within anticipated bounds

•    The rebound in Group profitability and operating cashflow in the second-half year

•    The record order book and healthy pipeline at year-end

•    The demonstrably supportive relationships with the Group's bankers

 

Additionally, I am pleased to report that SCISYS bounced back to deliver its strongest second half-year profit performance on record.

 

Revenues

Revenues for the year of £36.1m (2014: £40.4m) were particularly depressed by the weak euro. On a constant currency basis total revenue would have been £2.5m higher. The component relating to professional fees was £29.8m (2014: £32.5m) or £31.9m in constant currency.

 

Sales to the Eurozone comprise roughly half of SCISYS' revenues so the Group's trading results are exposed to a decline in the value of the euro. Management adopts a combination of measures to mitigate this risk:

 

•  Maximising the benefit from natural hedges in intra-Group cross-border trading

•  Using currency derivatives to protect the sterling value of future euro receipts

•  Holding surplus cash in sterling-denominated deposit accounts

•  Maintaining euro overdrafts in UK working capital facilities

 

The euro/sterling exchange rate was remarkably volatile during the year, varying in a range between €1.28/£ to €1.42/£. The average rate for the year was €1.39/£ (2014: 1.25), representing a 10% devaluation in the sterling value of revenues and profits denominated in euros compared with 2014.

 

Operating profit

As anticipated in our Interim Report and the profits warning that preceded it, operating profit for the full year was severely impacted by the problems encountered in the opening six months. The underlying measure of trading performance, adjusted operating profit, which excludes costs of the Group's long term share incentive schemes, exceptional charges and any amortisation of intangible assets arising on business acquisition, dropped sharply to £0.8m (2014: £3.4m). The adjusted operating margin reduced to 2.2% (2014: 8.3%).

 

In view of the extent of losses revealed in the Interim Report, the revival in the last six months' period was remarkable. However, an element of caution should be exercised before interpreting the second-half performance as a basis for extrapolation of expectations into 2016. Part of the loss reported in the first half year reflected provisions taken for expected losses on our problem project after 30 June 2015. The successful close out of this project in October proved our downside-case estimates to be overly cautious and the subsequent release of surplus provisions boosted the figures for the latter part of the year.

 

Statutory operating profit closely followed the adjusted profit measure as there were no exceptional or amortisation charges in the year and share-based payments were at a negligible level because prior period charges were credited following a failure to achieve performance criteria for vesting of share option awards (2014: combined adjustments £0.2m). Consequently, statutory operating profit represented 99% (2014: 95%) of the adjusted operating profit measure for the year.

 

All operating divisions contributed less well than in 2014 although the second half year saw improved trading across the board. The Space division mounted a powerful comeback in the second half after a slow start to the year and the Enterprise Solutions & Defence division staged an impressive turnaround from its loss-making first six months. The Media & Broadcast division's year was more balanced but the division continued to suffer from the deferral of anticipated orders from key customers and battled against strong foreign currency headwinds alongside the Space division.

 

Central overheads were 3% lower than the prior year due to a combination of factors. The sterling value of euro-denominated central costs in Germany was depressed when translated at the average 2015 exchange rate, partially offsetting the adverse impact of the weak euro on revenues. In the UK, establishment costs were offset by income from a newly-secured tenant for surplus office space in the freehold Chippenham headquarters. As the year closed, the euro began to strengthen against sterling, resulting in the recognition of an unrealised loss of £0.1m (2014: £0.1m gain) from the valuation of future hedging contracts at 31 December. While this impact is reflected in 2015's results, the associated benefit on translation of trading at a stronger exchange rate will not be felt until 2016.

 

Earnings per share

Basic EPS were down 83% at 1.3p (2014: 7.7p). Adjusted basic EPS, calculated on the profit for the year before post-tax exceptional charges, share based payments and amortisation of acquisition-related intangible assets were 1.3p (2014: 8.2p).

 

Cash

Group net debt at the year end stood at £1.0m (2014: £0.3m net cash), an improvement of £0.9m on the June 2015 position in the Interim Report. In the light of our troubled trading year this represents a relatively favourable outcome, particularly when considering that the period included non-operating outflows of £0.8m for deferred consideration relating to the December 2014 Xibis acquisition and £0.1m for the investment in ToMM Apps. Suspension of the interim dividend helped to conserve cash prior to the closure of the problem project.

 

The Group closed the year with bank deposits (net of overdrafts) of £3.6m (2014: £5.8m), while Group borrowings amounted to £4.6m (2014: £5.5m). Unutilised working capital facilities at the year end totalled £3.6m (2014: £4.5m).

 

As announced in September 2015, SCISYS successfully renegotiated the borrowing covenants with its principal UK bankers to accommodate downgraded 2015 trading expectations, subject to the Group achieving a minimum level of EBITDA for the year of £0.5m. This threshold was exceeded by £1.0m and both lenders have reiterated their intention to provide competitive offers to renew or refinance the current £1.8m property loan when its term expires in May 2016.

 

Tax

Although overall profits declined markedly due to losses in UK-based operations, taxable profits in Germany were maintained, causing an escalation in the effective Group tax rate for the year to 39% (2014: 25%). Profits from the Group's German operations suffer tax at over 30% whereas UK trading benefits from R&D tax credits which create substantial taxable losses that are surrendered for cash rebates from HM Revenue & Customs.

 

Accounting standards
No material changes in accounting standards have impacted the Group accounts for 2015 but the separate parent company accounts for SCISYS PLC have been prepared under FRS 101 (reduced disclosure IFRS) for the first time, having previously complied with UK GAAP. Transition adjustments to 2014's comparative figures are detailed in the notes to the company accounts.

Order book

The year-end order book was 23% higher than the prior year at £37.2m (2014: £30.3m), of which £25.8m (2014: £22.5m) is deliverable within one year. Of the total order book, 51% (2014: 61%) was denominated in euros and the closing order book would have been £1.2m higher in constant currency.

 

Despite 2015 proving a challenging year overall, the second half resurgence and a record closing order book provide an encouraging platform for a return to expected levels of performance in 2016.

 

 

Chris Cheetham

Finance Director

 

 

 

 

 

 

 

Consolidated Income Statement for the year ended 31 December 2015

 

 

 

2015

2014

 

 

£'000

£'000

Revenue

 

 

 

Existing operations

 

36,106

40,330

Acquisitions

 

29

 

 

36,106

40,359

Operating costs

 

(35,299)

(37,175)

Share of results of associates

 

3

Operating profit

 

810

3,184

"Adjusted operating profit" being operating profit before share based payments, exceptional charges and amortisation arising on business combinations 

 

821

3,361

Share based payments

 

(11)

(42)

Exceptional charges

 

(135)

Operating profit

 

810

3,184

Finance costs

 

(198)

(182)

Finance income

 

2

5

Profit before tax

 

614

3,007

Tax charge

 

(241)

(766)

Profit for the period attributable to equity holders of the parent

 

373

2,241

 

 

 

 

Earnings per share

 

 

 

Basic

 

1.3p

7.7p

Diluted

 

1.2p

7.3p

 

Consolidated Statement of Comprehensive Income for the year ended 31 December 2015

 

 

2105

2014

 

£'000

£'000

Profit for the period

373

2,241

Other comprehensive expense not recycling through the Income Statement

 

 

Currency translation differences on foreign currency investments

(431)

(413)

Total comprehensive income for the period attributable to equity holders of the parent

(58)

1,828

 

 

 

Consolidated Statement of Financial Position as at 31 December 2015

 

 

 

2015

2014

 

 

£'000

£'000

Non-current assets

 

 

 

Goodwill

 

7,763

8,141

Other intangible assets

 

68

92

Property, plant and equipment

 

8,635

8,899

Interests in associates

 

62

Deferred tax assets

 

25

23

 

 

16,553

17,155

Current assets

 

 

 

Inventories

 

211

325

Trade and other receivables

 

12,299

12,334

Corporation tax receivable

 

977

429

Cash and cash equivalents

 

4,352

5,798

 

 

17,839

18,886

Total assets

 

34,392

36,041

Equity

 

 

 

Issued share capital

 

7,272

7,272

Share premium account

 

143

143

Merger reserve

 

943

943

Retained earnings

 

11,199

11,169

Translation reserve

 

416

847

Other reserves

 

83

83

Equity attributable to equity holders of the parent

 

20,056

20,457

Current liabilities

 

 

 

Trade and other payables

 

7,848

8,743

Bank overdrafts and loans

 

3,304

875

Corporation tax payable

 

738

460

Deferred income

 

113

167

 

 

12,003

10,245

Non-current liabilities

 

 

 

Bank loans

 

2,007

4,595

Other payables

 

316

Deferred tax

 

326

428

 

 

2,333

5,339

Total liabilities

 

14,336

15,584

Total equity and liabilities

 

34,392

36,041

 

 

 

Consolidated Statement of Changes in Equity

 

 

Share Capital

Share Premium

Merger Reserve

Capital Redemption Reserve

Translation Reserve

Retained Earnings

Total

2015

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Balance as at 1 January 2015

7,272

143

943

83

847

11,169

20,457

Total comprehensive income for the period

 

 

 

 

 

 

 

Profit for the period

373

373

Other comprehensive income

 

 

 

 

 

 

 

Foreign currency translation

(431)

(431)

Total comprehensive income for the period

(431)

373

(58)

Transactions with owners, recorded directly in equity

 

 

 

 

 

 

 

Contributions by and distributions to owners

 

 

 

 

 

 

 

Dividends paid

(340)

(340)

Share based payments

11

11

Treasury shares

(25)

(25)

Exercise of share options

11

11

Total contributions by and distributions to owners

(343)

(343)

Balance as at 31 December 2015

7,272

143

943

83

416

11,199

20,056

 

 

Share Capital

Share Premium

Merger Reserve

Capital Redemption Reserve

Translation Reserve

Retained Earnings

Total

2014

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Balance as at 1 January 2014

7,272

143

943

83

1,260

9,382

19,083

Total comprehensive income for the period

 

 

 

 

 

 

 

Profit for the period

2,241

2,241

Other comprehensive income

 

 

 

 

 

 

 

Foreign currency translation

(413)

(413)

Total comprehensive income for the period

(413)

2,241

1,828

Transactions with owners, recorded directly in equity

 

 

 

 

 

 

 

Contributions by and distributions to owners

 

 

 

 

 

 

 

Dividends paid

(435)

(435)

Share based payments

42

42

Treasury shares

(100)

(100)

Exercise of share options

39

39

Total contributions by and distributions to owners

(454)

(454)

Balance as at 31 December 2014

7,272

143

943

83

847

11,169

20,457

 

 

 

Consolidated Statement of Cash Flows for the year ended 31 December 2015

 

 

 

2015

2014

 

 

£'000

£'000

Cash flow from operating activities

 

 

 

Profit before tax

 

614

3,007

Net finance costs

 

196

177

Operating profit

 

810

3,184

Decrease in trade receivables

 

149

1,713

Decrease in trade payables

 

(127)

(2,103)

Deferred consideration

 

1,143

Depreciation and amortisation

 

730

795

Share of profit of associate

 

(3)

Share based payments

 

11

42

Tax (payments)/refunds

 

(583)

100

Net cash flow from operating activities

 

987

4,874

Cash flow from investing activities

 

 

 

Acquisition of subsidiary

 

(830)

(800)

Cash acquired with subsidiary

 

442

Acquisition of investment in an associate

 

(59)

Proceeds from disposal of property, plant and equipment

 

48

7

Purchase of plant, property and equipment

 

(667)

(625)

Exercise of share options

 

11

39

Interest received

 

2

5

Net cash flow from investing activities

 

(1,495)

(932)

Cash flows from financing activities

 

 

 

Dividends paid

 

(340)

(435)

Interest paid

 

(198)

(182)

Investment in own shares

 

(25)

(100)

Bank loan received

 

1,200

Debt repayments

 

(779)

(602)

Net cash flow from financing activities

 

(1,342)

(119)

Net (decrease)/increase in cash and cash equivalents

 

(1,850)

3,823

Cash and cash equivalents at the start of the period

 

5,798

2,349

Exchange and other movements

 

(323)

(374)

Cash and cash equivalents at the end of the period

 

3,625

5,798

Cash and cash equivalent deposits held in non-UK based banks

 

4,136

4,216

Net (overdraft)/cash deposits with UK based banks

 

(511)

1,582

 

 

3,625

5,798

 

 

 

Information about reportable segments

 

 

Space

ESD

M&B

Xibis

Total

External revenues

£'000

£'000

£'000

£'000

£'000

Year ended 31 December 2015

 

 

 

 

 

Professional fees revenue

12,898

9,920

6,179

805

29,802

Other revenue

3,534

2,282

176

96

6,088

External revenue for reportable segments

16,432

12,202

6,355

901

35,890

Other external revenue

 

 

 

 

216

Consolidated revenue

 

 

 

 

36,106

Year ended 31 December 2014

 

 

 

 

 

Professional fees revenue

14,531

10,753

7,149

21

32,454

Other revenue

4,028

2,730

910

8

7,676

External revenue for reportable segments

18,559

13,483

8,059

29

40,130

Other external revenue

 

 

 

 

229

Consolidated revenue

 

 

 

 

40,359

 

 

 

 

 

 

 

Space

ESD

M&B

Xibis

Total

Profit before tax

£'000

£'000

£'000

£'000

£'000

Year ended 31 December 2015

 

 

 

 

 

Reportable segment contribution

3,366

1,745

2,004

27

7,142

Other contribution

(83)

7

(76)

Contribution

3,283

1,745

2,011

27

7,066

Central overheads

 

 

 

 

(6,256)

Operating profit

 

 

 

 

810

Finance costs

 

 

 

 

(198)

Finance income

 

 

 

 

2

Profit before tax

 

 

 

 

614

Year ended 31 December 2014

 

 

 

 

 

Reportable segment contribution

3,835

3,203

2,453

(13)

9,478

Other contribution

145

28

173

Contribution

3,980

3,203

2,481

(13)

9,651

Central overheads

 

 

 

 

(6,467)

Operating profit

 

 

 

 

3,184

Finance costs

 

 

 

 

(182)

Finance income

 

 

 

 

5

Profit before tax

 

 

 

 

3,007

 

 

 

Information about reportable segments continued

 

 

Space

ESD

M&B

Xibis

Total

Group assets

£'000

£'000

£'000

£'000

£'000

As at 31 December 2015

 

 

 

 

 

Reportable segment - non-current assets

3,293

3,380

1,090

7,763

Reportable segment - current assets

6,013

4,658

800

204

11,675

 

9,306

4,658

4,180

1,294

19,438

Other - non-current assets

 

 

 

 

8,790

Other - current assets

 

 

 

 

6,164

Total assets

 

 

 

 

34,392

As at 31 December 2014

 

 

 

 

 

Reportable segment - non-current assets

3,358

3,380

1,403

8,141

Reportable segment - current assets

5,563

4,543

1,521

161

11,788

 

8,921

4,543

4,901

1,564

19,929

Other - non-current assets

 

 

 

 

9,014

Other - current assets

 

 

 

 

7,098

Total assets

 

 

 

 

36,041

 

 

 

 

 

 

 

Space

ESD

M&B

Xibis

Total

Group liabilities

£'000

£'000

£'000

£'000

£'000

As at 31 December 2015

 

 

 

 

 

Reportable segment - current liabilities

278

1,315

29

22

1,644

Other - non-current liabilities

 

 

 

 

2,333

Other - current liabilities

 

 

 

 

10,359

Total liabilities

 

 

 

 

14,336

As at 31 December 2014

 

 

 

 

 

Reportable segment - current liabilities

453

1,118

74

14

1,659

Other - non-current liabilities

 

 

 

 

5,339

Other - current liabilities

 

 

 

 

8,586

Total liabilities

 

 

 

 

15,584

 

 

 

 

 

 

 

 

UK

Rest of Europe

Other

Total

Geographical split

 

£'000

£'000

£'000

£'000

Year ended 31 December 2015

 

 

 

 

 

Revenue from external customers by location of customers

 

17,878

17,671

557

36,106

As at 31 December 2015

 

 

 

 

 

Non-current assets:

 

 

 

 

 

Intangible assets

 

1,090

6,741

7,831

Tangible assets

 

6,004

2,631

8,635

Interests in associates

 

-

62

-

62

Deferred tax assets

 

25

25

Year ended 31 December 2015

 

 

 

 

 

Revenue from external customers by location of customers

 

19,060

20,649

650

40,359

As at 31 December 2014

 

 

 

 

 

Non-current assets:

 

 

 

 

 

Intangible assets

 

8,233

8,233

Tangible assets

 

6,084

2,815

8,899

Deferred tax assets

 

23

23

 

 

 

Basic & diluted earnings per share

 

The calculation of the Group basic and diluted earnings per ordinary share is based on the following data:

 

 

 

2015

 

 

2014

 

 

Weighted average number of shares

Excluding own shares held

Net number of shares

Weighted average number of shares

Excluding own shares held

Net number of shares

Number of shares

'000

'000

'000

'000

'000

'000

Basic earnings per ordinary share

29,086

(54)

29,032

29,086

(39)

29,047

Diluted earnings per share

31,082

(54)

31,028

30,867

(39)

30,828

 

 

 

 

 

 

 

 

 

 

 

 

2015

2014

Earnings

 

 

 

 

£'000

£'000

Profit on ordinary activities after taxation

 

 

 

 

373

2,241

Basic earnings per share

 

 

 

 

1.3p

7.7p

Diluted earnings per share

 

 

 

 

1.2p

7.3p

 

Own shares held

"Own shares held" represent the number of shares held in treasury

 

Diluted earnings per share

The weighted average number of shares for the calculation of diluted earnings per share includes EMI, CSOP and unapproved share options outstanding during the period.

 

Adjusted earnings per share

 

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 pre-tax costs shown in the highlighted box on the face of the Income Statement.  The calculation of the Group basic adjusted earnings and diluted adjusted earnings per ordinary share is based on the following data:

 

 

 

2015

 

 

2014

 

 

Weighted average number of shares

Excluding own shares held

Net number of shares

Weighted average number of shares

Excluding own shares held

Net number of shares

Number of shares

'000

'000

'000

'000

'000

'000

Basic earnings per ordinary share

29,086

(54)

29,032

29,086

(39)

29,047

Diluted earnings per share

31,082

(54)

31,028

30,867

(39)

30,828

 

 

 

 

 

 

 

 

 

 

 

 

2015

2014

Earnings

 

 

 

 

£'000

£'000

Profit on ordinary activities after taxation

 

 

 

 

373

2,241

Adjusted for:

 

 

 

 

 

 

Share based payments

 

 

 

 

11

42

Exceptional charges

 

 

 

 

135

Corporation tax

 

 

 

 

(24)

Adjusted profit after taxation

 

 

 

 

384

2,394

Basic adjusted earnings per share

 

 

 

 

1.3p

8.2p

Diluted adjusted earnings per share

 

 

 

 

1.2p

7.8p

 

Own shares held

"Own shares held" represent the number of shares held in treasury

 

Diluted earnings per share

The weighted average number of shares for the calculation of diluted earnings per share includes EMI, CSOP and unapproved share options outstanding during the period.

 

 

 

Full Financial Statements

The unaudited Preliminary Report has been prepared under the historical cost convention and in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union and interpretations in issue at 31 December 2015. The Preliminary Report does not constitute statutory financial statements within the meaning of section 434 of the Companies Act 2006 and has not been audited. Comparative figures in the Preliminary Report for the year ended 31 December 2014 have been taken from the Group's audited statutory financial statements on which the Group's auditors, KPMG LLP, expressed an unqualified opinion.

 

The accounting policies adopted are consistent with those of the annual financial statements for the year ended 31 December 2014, as described in those financial statements. New standards or interpretations which came into effect for the current reporting period did not have a material impact on the net assets or results of the Group.

 

Further copies of these results, and the full financial statements when published, will be available at the Company's registered office: SCISYS PLC, Methuen Park, Chippenham, Wiltshire, SN14 0GB or on the Company website at www.scisys.co.uk.

 

Forward-looking statements

This report may contain certain statements about the future outlook for SCISYS PLC. Although the Directors believe their expectations are based on reasonable assumptions, any statements about future outlook may be influenced by factors that could cause actual outcomes and results to be materially different.

 


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