Interim Results

SCISYS PLCINTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2014

SCISYS PLC, AIM stock code: SSY, ('SCISYS', the 'Group' or the 'Company') - the supplier of bespoke software systems and IT based solutions for its clients' core business processes is pleased to announce its Interim Results for the period ending 30 June 2014.

Financial Highlights

*Adjusted operating profit is statutory operating profit before amortisation of intangible assets arising on acquisitions (EBITA) and before share based payments and exceptional charges.

Operational Highlights

· Award of €1.2m Harwell Robotics and Autonomy Facility contract by European Space Agency;

· Additional work worth £0.6m on ongoing Warrior upgrade project;

· Three new customers won from Government Digital Service framework;

· Extension of €5m Flight Dynamics contract with ESOC;

· Total of €2m new contracts from Norddeutscher Rundfunk;

· Successful delivery of new BBC Radio Scotland system in time for the Commonwealth Games.

Mike Love, Chairman of SCISYS, commenting on the results, said:

"I am pleased to report this favourable set of results for the half year ending 30 June. During the six month period the divisions have delivered solid performances consistent with their business plans. The business restructuring undertaken last year shows tangible outcomes. The Board continues to believe that results for the full year will be in line with its expectations."

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About SCISYS

Employing circa 430 staff, SCISYS is a leading developer of Information and Communications Technology services, e-Business and advanced technology solutions. The Company operates in a broad spectrum of market sectors including Media & Broadcast, Space, Government and Defence sectors. SCISYS clients are predominantly blue chip and public sector organisations. Customers include Environment Agency, the Ministry of Defence, Airbus Defence & Space, Arqiva, Vodafone, the European Space Agency, Eumetsat, the BBC, RNLI and the National Trust. The Company has UK offices in Chippenham, Bristol and Reading and two offices located in Germany. More information is available at www.scisys.co.uk

Results Overview

I am pleased to report that the positive outlook I expressed in the 2013 Annual Report has been confirmed through this favourable set of results for the half year ending 30 June.

During the six month period the divisions have delivered solid performances consistent with their business plans. 

Adjusted operating profit was up 15% on the same period in 2013 on marginally lower revenues, as anticipated last year when the business was restructured. Pre-tax profit climbed by 86% and basic earnings per share was 90% higher than in 2013.

In addition, the Group's balance sheet remains strong.

Business Review

Enterprise Solutions & Defence (ESD)

Our ESD division performed well over the first six months of 2014, producing revenues of £7.3m and a contribution of £1.8m. Excellent progress in the defence, government and commercial markets went some way to offsetting the impact of the significant decline in the environment sector business. Work on the Warrior fighting vehicle upgrade programme continues successfully and a contract extension worth £0.6m has been added to the project. Ongoing support and maintenance contracts were renewed, which contributed to securing over £4.0m of recurring support revenue for 2014. Additional sales effort in the commercial market was rewarded by success in gaining a £0.8m order from a prestigious automotive sector customer whilst three new public sector customers were won from the new Government Digital Service procurement portal. The order book at the half year was 10% up on the 2014 opening position and the division has been recruiting to match its future resource requirements.

Space

Our Space division performed broadly in line with 2013, with margin improvements compensating for reduced revenues due to timeline delays to certain German national programmes. It continued its recovery in the UK while its German operations were bolstered by a solid performance from the Darmstadt-based operations support business. It delivered revenues of £9.3m and a contribution of £1.7m.

The UK branch of the Space division won a contract with the European Space Agency (ESA) to deliver the Harwell Robotics and Autonomy Facility (HRAF) initial pilot project. HRAF will support the development, testing and validation of autonomous systems technologies, which are essential for future space missions involving planetary rovers and robots, but it is also targeting business areas outside of Space. New work has also been secured with Eumetsat to deliver the Mission Operations Facility for its upcoming geostationary weather satellite, Meteosat Third Generation.

The German Space branch was successful in renewing the key flight dynamics contract for a further year with ESA's European Space Operations Centre (ESOC) in Darmstadt. SCISYS' engineers alongside other European Industry partners are providing an essential service to the satellite missions operated by ESOC.

The team is well on schedule to deliver the Galileo Ground Segment evolutions and to prepare the deployment of the next generation of the EGNOS (European Geostationary Navigation Overlay Service). The team also contributes to the design of the important German government projects DEOS, Heinrich Hertz as well as the French-German satellite programme MERLIN.

Media & Broadcast (MBS)

Our MBS division had a strong first half of the year. It delivered revenues of £4.4m and a contribution of £1.2m. Although order intake was under pressure, several important maintenance renewals were secured in the first half as well as ensuring Westdeutscher Rundfunk's WDR 5 radio channel went on air with the new SCISYS Onair Player software. Various smaller contracts for a variety of functional upgrades and innovative technologies, with an aggregate value of more than €2m, were won with Norddeutscher Rundfunk (NDR) - an MBS customer since 1993.

In the UK the deployment of latest dira!™ technology to the new BBC broadcasting house in London has been successfully completed and a major system upgrade was successfully rolled out to BBC Scotland in time for the Commonwealth Games.

The International business still faces challenges to secure new orders as buying decisions continue to be delayed by potential customers. Several smaller wins including enhancements to existing dira!™ systems were delivered in the Middle East & North Africa region.

Post period end news

An important project delivery was achieved with the BBC's Virtual Local Radio (ViLoR) project going live using MBS's dira!™ product. For the current phase the ViLoR project involves an initial four local radio stations being equipped with the latest in-studio capabilities and a dira!™ based "private cloud" software platform.

Amongst a number of notable contract wins post-June, SCISYS has been contracted to supply the System and Information Management (SIMS) system for the next 12 vessels in the RNLI's latest class of lifeboat, the Shannon. This extension adds a further 12 boats to the contract to be supplied over two years, starting in Q4 2014.

Airbus Defence and Space has placed an order for the development of the flight software responsible for the rover navigation and self-locating on the Mars surface which is to be used on the ExoMars programme. The European Space Agency (ESA) established the ExoMars programme to investigate the Martian environment and to demonstrate new technologies paving the way for a future Mars sample return mission in the 2020s. Two missions are foreseen within the ExoMars programme: one consisting of an Orbiter plus an Entry, Descent and Landing Demonstrator Module, to be launched in 2016, and the other, featuring a rover, with a launch date of 2018.

Financial Review

Adjusted operating profit, before exceptional costs, share based payment charges and amortisation arising on 2012's acquisition of MakaluMedia was 15% higher at £1.5m (June 2013: £1.3m) whilst EBITA increased 40% to £1.4m (June 2013: £1.0m) and the statutory profit from operations rose by 56% to £1.4m (June 2013: £0.9m). The adjusted operating margin improved to 7.0% (June 2013: 6.1%). Total revenues were down 1% to £21.1m (June 2013: £21.4m) and the professional fees' component fell by 7% to £16.7m (June 2013: £18.0m). Adjusted basic earnings per share increased 19% to 4.3p (June 2013: 3.6p). The profit before tax for the period rose by 86% to £1.3m (June 2013: £0.7m) and the basic earnings per share climbed 90% higher at 4.0p (June 2013: 2.1p).

Following the significant operational restructuring of the Group in late 2013, only a minimal residual level of exceptional costs were incurred in the first half of 2014. Combined with the small share based payment charges reflecting the costs of the Group's share incentive schemes, this resulted in aggregate adjusting items to statutory profit figures below £0.1m (June 2013: £0.4m). The intangible assets created on the acquisition of MakaluMedia were fully amortised by the end of 2013. Accordingly, we anticipate that future comparisons of performance will be focused on unadjusted profitability measures.

At the end of the reporting period, the Group had bank deposits (comprising cash and cash equivalents less overdrafts) of £2.8m (June 2013: £3.3m). Unutilised working capital facilities totalled £4.5m (June 2013: £3.4m). Group debt excluding bank overdrafts at the period end was £4.6m (June 2013: £5.4m).

The resulting net debt was £0.9m lower than the 2013 year end position at £1.8m (June 2013: £2.1m).

The effective tax rate for the first half of 2014 was 11% (June 2013: 18%) which is lower than the standard rates in the Group's operating jurisdictions because SCISYS continues to benefit from the tax credit system for UK expenditure on Research & Development. The rate is expected to remain relatively low whilst successive governments continue to offer incentives for innovative R&D investment.

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 2014.

Dividend

The Board is declaring an interim dividend up 10% of 0.44p per share (June 2013: 0.40p), to be paid on 13 November 2014 to shareholders on the register as at 17 October 2014.

Outlook

Our strategy is to continue to develop our core competences and products and to provide solutions in our existing markets while seeking out new opportunities in adjacent markets.

The results for the first half year together with the post-period order intake provide a solid foundation for achievement of Board expectations for the full year. The June order book was 2% higher than the 2014 opening position, which provides additional underpinning for the second half.

Alongside investment into organic growth opportunities in existing and new markets, more acquisitions will remain a core tenet of corporate strategy. Accordingly, the Company remains committed to its strategic targets.

Mike Love

Chairman

24/9/14

Consolidated Income Statement

Consolidated Statement of Comprehensive Income

Consolidated Statement of Changes in Equity

Consolidated Statement of Financial Position

Consolidated Statement of Cash Flows

Notes to the Unaudited Interim Report

For the six months to 30 June 2014