23rd Sep 2010 07:00
embargoed until 7.00am Thursday 23rd September 2010
SciSys plc
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2010
SciSys ("SciSys" or "the Group"), the supplier of IT services and business critical IT systems to meet its clients' operational requirements, is pleased to announce its Interim Results for the period ending 30 June 2010. Its clients are primarily in the Space, Government, Defence, Environment and Media/Broadcast sectors and are predominantly blue chip companies, government and quasi-government organisations. Customers include the Environment Agency, the Ministry of Defence, Astrium, Arqiva, Cable & Wireless, the European Space Agency (ESA), the BBC, the RNLI, Deutsche Welle and the Coal Authority.
SciSys is listed on AIM (stock code SSY).
Financial Highlights
·; Revenue up 3% to £20.9m (June 2009: £20.3m)
·; Professional fees up 4% to £16.8m (June 2009: £16.1m)
·; Adjusted operating profit up 33% to £0.8m (June 2009: £0.6m)
·; Profit before tax of £0.6m (June 2009: £0.1m)
·; Adjusted basic earnings per share up 14% to 2.4p (June 2009: 2.1p)
·; Basic earnings per share of 1.9p (June 2009: 0.5p)
·; Group net cash at 30 June 2010 of £2.8m (30 June 2009: £1.3m)
·; Working capital headroom in excess of £7m
·; Interim dividend declared of 0.33p per share
Operational Highlights
·; Underlying value of various new contract wins from established and new customers year to date in excess of £20m
·; Media and Broadcasting Division awarded first call off contract with the BBC worth in excess of £9m
·; Space Division awarded prime contractor position on ESA frame contract
·; SciSys selected for major outsource contract involving the Environment Agency
·; Significant new contract win post period end with Egypt Radio & Television Union
Mike Love, Chairman of SciSys, commenting on the results, said:
"We are pleased to report that revenues and profits are in line at the half year point with our expectations. This followed the flow of positive contract wins achieved in the second half of 2009 which gave us an excellent opening position for 2010. However, we have started to see discretionary spending cuts by the UK Government and decisions on new contracts are starting to prove quite protracted. Consequently we continue to take a cautious view on our trading outlook for the remainder of this year and beyond. Our focus is on achieving further improvement in margins and building a healthy open order book position for 2011."
For further information please contact:
|
SciSys plc |
|
|
|
Mike Love |
Executive Chairman |
Tel : +44 (0) 1249 466 466 |
|
Chris Cheetham |
Financial Director |
|
|
Winningtons |
Tom Cooper |
T : +44 (0) 797 1221972 E-mail : [email protected] |
|
Canaccord Genuity |
Simon Bridges
|
T : +44 (0) 20 7050 6500 |
Executive Chairman's Statement
In this 2010 Interim Report the Board is pleased to confirm that the Group remains firmly on track. Results for the first six months of 2010 are in line with our expectations and the outlook for the full year remains positive, despite the current uncertainties in the markets we serve.
We are pleased to report an increase in operating margins and a corresponding increase in profits before tax taking into account finance costs, exceptional charges and all share based payments.
Cash flows have been positive during the period with net cash in the business at 30 June 2010 advancing to £2.8m. This has been achieved despite an increase in debtors of £0.8m, which is primarily due to the delays SciSys is facing in receiving payments from ESA, due to the problems ESA is having with its new payments system. The Board is maintaining its progressive dividend policy and declaring an Interim dividend payment of 0.33p per share.
Adjusted operating profits for the period were up by 33% at £0.8m with revenues up 3%.
Once again high levels of repeat business were won during the period from our established client base, including major contract wins from the BBC, the Environment Agency and ESA. The underlying value of the various new contract wins from established and new customers in the year to date is in excess of £20m.
These contracts help underpin our business and build the opening order book position that we need for 2011 which is a key focus.
SciSys is now organised around five divisions, each managed as a profit centre with its own executive team responsible for the profit and loss performance of the division. The Government & Defence and Environment Divisions are the two divisions most vulnerable to the problems associated with the UK Government spending reviews and we have started to see discretionary spending cuts and decisions on new contracts becoming more protracted. Our Space, Media & Broadcast and Support divisions, which account for circa 65% of total revenues, are less sensitive to any impact. In addition over 50% of revenues are derived from outside the UK which gives further resilience.
Led by Dave Gawthorpe, our Government & Defence Division has been very successful during the first half of 2010 in winning over £2m of new orders across a broad spectrum of clients. This includes substantial items of work for a police authority, variation orders on the RNLI and UK Digital Switch Over projects and work in the transport sector for Invensys. By the end August 2010, the Division only had a limited amount of remaining new sales requirement to fulfil its order intake and contribution targets for the full year. Nevertheless the Division has experienced a number of deferments and cancellations on spending programmes for which we had reasonable expectations of winning new work. This includes the deferment, until at least the beginning of the second quarter of 2011, of any decision on the Warrior replacement programme, a defence procurement programme on which SciSys believes it is well positioned to win a major project.
Our Environment Division, led by Heather Dinham has delivered a strong performance in the first half of the year. This included a new customer win with the Irish Environmental Protection Agency. Paradoxically, the UK Government's spending review whilst creating some inevitable challenges has opened as much opportunity for the Division as it has created risk and uncertainty. Propositions are in negotiation with the Division's major customers which could potentially see additional work outsourced to SciSys in order for the UK Government to achieve its targeted overall cost savings. At this time, until these negotiations are clearer, we remain cautious on the outlook for this year and remain focused on building the opening order book for 2011.
Our Media & Broadcast Division, led by Klaus Heidrich and Karl Willi Pieper, is in a strong position to meet or exceed its targets for 2010. Results in the first half were marginally held back as the Division experienced some delays on the Deutsche Welle project and faced a slow start up of the BBC work. It has a solid order book for the foreseeable future. The recent announcement of a major contract award for an audio production, play-out and archive facility for the Egyptian Radio & Television Union is early evidence that the Division is delivering on its stated strategy of expanding its activities into new international markets. This contract is worth circa £1.5m and provides a vital reference installation in the Middle East/North African territory. The Division has a number of further strong sales prospects on the international stage.
The Space Division continues to operate as a single international division under the leadership of Horst Wulf. This year we saw a very tangible benefit arising from the merger of the SciSys and VCS space activities into a single division, when SciSys was chosen as the sole UK prime contractor for the ESA GFC8 frame contract award. As a result SciSys will be eligible to tender for work arising from the European Space Operation Centre (ESOC) which is part of ESA. The total value of work indicated in the invitation to tender to be let through the frame contracts is projected to be circa €20m per annum and is expected to include opportunities on a wide range of space missions and infrastructure developments. VCS, the Group's wholly owned German subsidiary was also appointed as a Qualified Partner, a status which will allow the Group to take a subcontractor position behind the other non-UK primes as and when appropriate.
At the operating level, the underlying margins within the Division remain under pressure following delays in the completion of projects within the UK. This issue continues to attract substantial commercial focus from senior management. Overall however most major programmes are continuing on schedule and have seen a number of substantial deliveries achieved during the period, including deliveries on the strategically important Galileo programme, which includes the OPF, SCPF and GNMF facilities and CSIM simulator.
Other significant project wins during the period include contracts for the on-board software work for the Earthcare programme, extensions to the Lisa Pathfinder project, work on the Earth Observation Hub Mission Control System, and the MICCRO Robotics project which is pending final approval from the German Federal Ministry of Economics.
SciSys' Support Division continues to benefit from high levels of repeat business. Led by Roger Hughes, it has delivered an encouraging first half performance and is well positioned to maintain the pattern in the second half. It will benefit in the second half from the major outsource contract won in conjunction with CapGemini and BT awarded by the Environment Agency. At minimum this will protect the current levels of support revenue that the Division earns from the EA account for the foreseeable future. Additionally it has opened the prospect of winning extra work in supporting legacy applications with the EA. Going forward into 2011 the Division will see significant benefit from the RNLI, CRC and Coal Authority work for which it will be providing additional support services.
Dividend
The Directors indicated at the AGM in May 2010 that the Board expected to maintain its progressive dividend policy at the interim stage, subject to the continued strength of trading. They can now confirm that an Interim dividend of 0.33p per share will be paid on 17 November 2010 to shareholders on the register as at 22 October 2010. The shares are expected to go ex-dividend on 20 October 2010.
Financial Director's Statement
I am pleased to report a growth in profit on what has been a period of relatively modest sales growth. The total revenue for the Group was £20.9m (June 2009: £20.3m). Adjusted operating profit, before amortisation, share based payment charges and non-recurring items was £0.8m (June 2009: £0.6m) and adjusted basic earnings per share was 2.4p (June 2009: 2.1p). The statutory profit from operations was £0.7m (June 2009: £0.1m). The profit before tax for the period was £0.6m (June 2009: £0.1m) and the basic earnings per share were 1.9p (June 2009: 0.5p).
The share based payment charge shown on the face of the Income Statement reflects the costs of the Group's share incentive schemes. The charge does not affect the Group cash flow. Non-recurring items represent restructuring costs incurred in aligning future operating costs with anticipated income.
At the end of the reporting period, the Group had bank deposits (comprising cash and cash equivalents less overdrafts) of £3.7m (June 2009: £2.8m). Unutilised working capital facilities totalled £4.3m (June 2009: £4.3m). Group debt excluding bank overdrafts at the period end was £0.9m (June 2009: £1.5m).
The resulting liquidity position was net cash of £2.8m (June 2009: £1.3m). Sterling strengthened against the Euro during the half year to June 2010 which reduced the reported value of Euro cash deposits held in Germany. However, foreign exchange losses for the period were mitigated by the exercise of currency hedging options which were put in place in February.
SciSys continues to benefit from the tax credit system for UK expenditure on Research & Development. The effective tax rate for the Group was a charge of 11% of pre-tax profit for the half year (June 2009: credit 54%).
The half year accounts are presented on a basis consistent with policies to be adopted for the Annual Report and Accounts for the year ended 31 December 2010.
Outlook
At the half year point, revenues, profits, and margins are in line with our expectations. The flow of positive contract wins achieved in the second half of 2009 gave us an excellent opening position for 2010. However, we have started to see discretionary spending cuts by the UK Government and decisions on new contracts are proving quite protracted. Mindful of this pattern and the more general uncertain market conditions which currently prevail across the UK software and IT services sector, we continue to take a cautious view on our trading outlook for the remainder of this year and beyond. Our focus remains on the continued improvement in margins and building a healthy order book position for 2011.
Consolidated Income Statement
|
|
Unaudited Six months to 30 June 2010 £000 |
Unaudited Six months to 30 June 2009 £000 |
Audited Year ended 31 December 2009 £000 |
|
Revenue (note 2) |
20,916 |
20,281 |
41,720 |
|
Net operating costs |
(20,262) |
(20,172) |
(41,141) |
|
Operating profit |
654 |
109 |
579 |
|
"Adjusted operating profit" being operating profit before amortisation of intangible assets arising on business combinations, share based payments and exceptional charges |
807 |
565 |
1,676 |
|
Amortisation of intangible assets |
- |
(428) |
(857) |
|
Share based payments |
(63) |
(28) |
(67) |
|
Exceptional charges (note 3) |
(90) |
- |
(173) |
|
Operating profit |
654 |
109 |
579 |
|
Finance costs |
(56) |
(56) |
(114) |
|
Finance income |
9 |
32 |
45 |
|
Profit before tax |
607 |
85 |
510 |
|
Tax (charge)/credit (note 4) |
(69) |
46 |
(171) |
|
|
|
|
|
|
Profit for the period |
538 |
131 |
339 |
|
All profit for the period is attributable to equity holders of the parent |
|||
|
Earnings per share (note 6) |
|
|
|
|
|
|
|
|
|
Basic |
1.9p |
0.5p |
1.2p |
|
Diluted |
1.8p |
0.4p |
1.1p |
|
|
|
|
|
Consolidated Statement of Comprehensive Income
|
|
Unaudited Six months to 30 June 2010 £000 |
Unaudited Six months to 30 June 2009 £000 |
Audited Year ended 31 December 2009 £000 |
|
|
|
|
|
|
Profit for the period |
538 |
131 |
339 |
|
|
|
|
|
|
Other comprehensive expense |
|
|
|
|
|
|
|
|
|
Currency translation differences on foreign currency investments |
(577) |
(830) |
(527) |
|
|
|
|
|
|
Other comprehensive expense |
(577) |
(830) |
(527) |
|
|
|
|
|
|
Total comprehensive expense for the period attributable to equity holders of the parent |
(39) |
(699) |
(188) |
Consolidated Statement of changes in Equity
|
For the six months ended 30 June 2010 |
|
|
|
|
|
|
|||||
|
|
Share Capital |
Share Premium |
Merger Reserve |
Capital Redemption Reserve |
Translation Reserve |
Retained Earnings |
TOTAL |
||||
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
||||
|
|
|
|
|
|
|
|
|
||||
|
Balance as at 1 January 2010 |
7,265 |
130 |
943 |
83 |
1,646 |
4,659 |
14,726 |
||||
|
|
|
|
|
|
|
|
|
||||
|
Total comprehensive income for the period |
|
|
|
|
|
|
|
||||
|
Profit |
- |
- |
- |
- |
- |
538 |
538 |
||||
|
Other comprehensive income |
|
|
|
|
|
|
|
||||
|
Foreign currency translation |
- |
- |
- |
- |
(577) |
- |
(577) |
||||
|
|
|
|
|
|
|
|
|
||||
|
Total comprehensive income for the period |
- |
- |
- |
- |
(577) |
538 |
(39) |
||||
|
|
|
|
|
|
|
|
|
||||
|
Transactions with owners, recorded directly in equity |
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||
|
Contributions by and distributions to owners |
|
|
|
|
|
|
|
||||
|
Dividends paid |
- |
- |
- |
- |
- |
(202) |
(202) |
||||
|
Charge for share based payments |
- |
- |
- |
- |
- |
63 |
63 |
||||
|
|
|
|
|
|
|
|
|
||||
|
Total contributions by and distributions to owners |
- |
- |
- |
- |
- |
(139) |
(139) |
||||
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||
|
Balance as at 30 June 2010 |
7,265 |
130 |
943 |
83 |
1,069 |
5,058 |
14,548 |
||||
Consolidated Statement of changes in Equity (continued)
|
For the six months ended 30 June 2009 |
|
|
|
|
|
|
|
|
Share Capital |
Merger Reserve |
Capital Redemption Reserve |
Translation Reserve |
Retained Earnings |
TOTAL |
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
|
|
|
|
|
|
|
|
Balance as at 1 January 2009 |
7,120 |
943 |
83 |
2,173 |
4,636 |
14,955 |
|
|
|
|
|
|
|
|
|
Total comprehensive income for the period |
|
|
|
|
|
|
|
Profit |
- |
- |
- |
- |
131 |
131 |
|
Other comprehensive income |
|
|
|
|
|
|
|
Foreign currency translation |
- |
- |
- |
(830) |
- |
(830) |
|
|
|
|
|
|
|
|
|
Total comprehensive income for the period |
- |
- |
- |
(830) |
131 |
(699) |
|
|
|
|
|
|
|
|
|
Transactions with owners, recorded directly in equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributions by and distributions to owners |
|
|
|
|
|
|
|
Charge for share based payments |
- |
- |
- |
- |
28 |
28 |
|
Investment in own shares |
- |
- |
- |
- |
(4) |
(4) |
|
|
|
|
|
|
|
|
|
Total contributions by and distributions to owners |
- |
- |
- |
- |
24 |
24 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as at 30 June 2009 |
7,120 |
943 |
83 |
1,343 |
4,791 |
14,280 |
Consolidated Statement of changes in Equity (continued)
|
For the year ended 31 December 2009 |
|
|
|
|
|
|
|||||
|
|
Share Capital |
Share Premium |
Merger Reserve |
Capital Redemption Reserve |
Translation Reserve |
Retained Earnings |
TOTAL |
||||
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
||||
|
|
|
|
|
|
|
|
|
||||
|
Balance as at 1 January 2009 |
7,120 |
- |
943 |
83 |
2,173 |
4,636 |
14,955 |
||||
|
|
|
|
|
|
|
|
|
||||
|
Total comprehensive income for the period |
|
|
|
|
|
|
|
||||
|
Profit |
- |
- |
- |
- |
- |
339 |
339 |
||||
|
Other comprehensive income |
|
|
|
|
|
|
|
||||
|
Foreign currency translation |
- |
- |
- |
- |
(527) |
- |
(527) |
||||
|
|
|
|
|
|
|
|
|
||||
|
Total comprehensive income for the period |
- |
- |
- |
- |
(527) |
339 |
(188) |
||||
|
|
|
|
|
|
|
|
|
||||
|
Transactions with owners, recorded directly in equity |
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||
|
Contributions by and distributions to owners |
|
|
|
|
|
|
|
||||
|
Dividends paid |
- |
- |
- |
- |
- |
(87) |
(87) |
||||
|
Charge for share based payments |
- |
- |
- |
- |
- |
67 |
67 |
||||
|
Issue of shares |
145 |
130 |
- |
- |
- |
- |
275 |
||||
|
Free share award |
- |
- |
- |
- |
- |
(275) |
(275) |
||||
|
Investment in own shares |
- |
- |
- |
- |
- |
(21) |
(21) |
||||
|
|
|
|
|
|
|
|
|
||||
|
Total contributions by and distributions to owners |
145 |
130 |
- |
- |
- |
(316) |
(41) |
||||
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||
|
Balance as at 31 December 2009 |
7,265 |
130 |
943 |
83 |
1,646 |
4,659 |
14,726 |
||||
Consolidated Statement of Financial Position
|
|
Unaudited 30 June 2010 £000 |
Unaudited 30 June 2009 £000 |
Audited 31 December 2009 £000 |
|
Non-current assets |
|
|
|
|
Property, plant and equipment |
3,720 |
3,927 |
4,102 |
|
Goodwill |
5,603 |
5,603 |
5,603 |
|
Other intangible assets |
112 |
542 |
98 |
|
|
9,435 |
10,072 |
9,803 |
|
Current assets |
|
|
|
|
Inventories |
863 |
368 |
375 |
|
Trade and other receivables |
12,600 |
11,812 |
11,596 |
|
Income tax receivable |
129 |
169 |
- |
|
Cash and cash equivalents |
3,721 |
3,423 |
3,888 |
|
|
17,313 |
15,772 |
15,859 |
|
|
|
|
|
|
Total assets |
26,748 |
25,844 |
25,662 |
|
Equity |
|
|
|
|
Issued share capital |
7,265 |
7,120 |
7,265 |
|
Share premium |
130 |
- |
130 |
|
Retained earnings |
5,058 |
4,791 |
4,659 |
|
Merger reserve |
943 |
943 |
943 |
|
Translation reserve |
1,069 |
1,343 |
1,646 |
|
Other reserves |
83 |
83 |
83 |
|
Equity attributable to equity holders of the parent |
14,548 |
14,280 |
14,726 |
|
Current liabilities |
|
|
|
|
Trade and other payables |
10,345 |
8,572 |
8,931 |
|
Bank overdraft and loans |
32 |
1,182 |
486 |
|
Income tax payable |
106 |
- |
118 |
|
Deferred income |
576 |
335 |
145 |
|
|
11,059 |
10,089 |
9,680 |
|
Non-current liabilities |
|
|
|
|
Bank loans |
846 |
922 |
957 |
|
Deferred tax |
295 |
553 |
299 |
|
|
1,141 |
1,475 |
1,256 |
|
|
|
|
|
|
Total liabilities |
12,200 |
11,564 |
10,936 |
|
|
|
|
|
|
Total equity and liabilities |
26,748 |
25,844 |
25,662 |
Consolidated Statement of Cash Flows
|
|
Unaudited Six months to 30 June 2010 £000 |
Unaudited Six months to 30 June 2009 £000 |
Audited Year ended 31 December 2009 £000 |
|
Cash flow from operating activities |
|
|
|
|
Profit before tax |
607 |
85 |
510 |
|
Net finance costs |
47 |
24 |
69 |
|
|
|
|
|
|
Operating profit |
654 |
109 |
579 |
|
|
|
|
|
|
(Increase)/decrease in trade receivables |
(1,493) |
478 |
687 |
|
Increase/(decrease) in trade payables |
1,844 |
(428) |
(241) |
|
Depreciation and amortisation |
306 |
761 |
1,519 |
|
Profit on sale of property, plant and equipment |
- |
2 |
3 |
|
Share based payments |
63 |
28 |
67 |
|
Tax paid |
(168) |
(130) |
(355) |
|
Net cash flow from operating activities |
1,206 |
820 |
2,259 |
|
|
|
|
|
|
Cash flow from investing activities |
|
|
|
|
Proceeds from disposal of property, plant and equipment |
- |
8 |
9 |
|
Purchase of property, plant and equipment |
(228) |
(353) |
(690) |
|
Investment in own shares |
- |
(4) |
- |
|
Interest received |
9 |
32 |
45 |
|
Net cash flow from investing activities |
(219) |
(317) |
(636) |
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
Dividends paid |
(202) |
- |
(87) |
|
Interest paid |
(56) |
(56) |
(114) |
|
Investment in own shares |
- |
- |
(21) |
|
New bank loan |
- |
500 |
500 |
|
Debt repayments |
(26) |
(26) |
(555) |
|
Net cash flow from financing activities |
(284) |
418 |
(277) |
|
|
|
|
|
|
Net increase in cash and cash equivalents |
703 |
921 |
1,346 |
|
|
|
|
|
|
Cash and cash equivalents at the start of the period |
3,449 |
2,508 |
2,508 |
|
Exchange and other movements |
(431) |
(635) |
(405) |
|
|
|
|
|
|
Cash and cash equivalents at the end of the period |
3,721 |
2,794 |
3,449 |
|
Cash and cash equivalent deposits held in non-UK based banks |
2,558 |
3,423 |
3,886 |
|
Cash and cash equivalent deposits held by employee share trusts |
2 |
- |
2 |
|
Net bank deposits/(overdraft) with UK based banks |
1,161 |
(629) |
(439) |
|
|
3,721 |
2,794 |
3,449 |
Notes to the Unaudited Interim Report
1. Basis of preparation of Interim Financial Information & Statement of Compliance
SciSys plc (the "Company") is a UK company incorporated in England & Wales. The consolidated half year financial statements of the Company for the six months to 30 June 2010 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 2010. These policies are unchanged from those set out by the Group in its consolidated financial statements for the year ended 31 December 2009 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. The following new standards and interpretations have been endorsed by the EU during 2010 but have no impact on the financial results or presentation:
·; Amendment to IFRS2 Share Based Payment
·; IFRS3 (Revised 2008) Business Combinations
·; IAS27 (Revised 2008) Consolidated & Separate Financial Statements
·; Amendment to IAS39 Financial Instruments: Recognition & Measurement
·; IFRIC 12 Service Concession Arrangements
·; IFRIC 15 Construction of Real Estate
·; IFRIC 17 Non Cash Distributions
·; IFRIC 18 Transfers of Assets from Customers
The interim financial information for the six months ended 30 June 2010 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 2009. These published accounts have been reported on by the Group's auditors and have been delivered to the Registrar of Companies. The report of the auditors was (1) unqualified; (2) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (3) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.
The preparation of these consolidated half year financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. In preparing these consolidated half year financial statements, the significant judgements made by management in applying the Group's accounting policies and the key areas of estimation were the same as those that applied to the consolidated financial statements for the year ended 31 December 2009.
The Interim Report was approved by the Directors on 16 September 2010.
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 large corporations and public sector organisations through the following five divisions: Space Government & Defence (G&D) Environment (ENV) Media & Broadcast (M&B) Applications Support (SUP)
In 2009, the activities of the Government & Defence and Environment divisions were combined in a single division, Government (GOV). The presentation of the segmental analysis tables has been adapted to aid comparability with previous periods.
Divisional results, assets and liabilities represent items directly attributable to a division. Unallocated expenses comprise central overheads and corporate expenses. Assets and liabilities which are allocated to operating divisions comprise trade receivables, amounts recoverable on contracts, inventories and payments received on account. |
|
|
Information about reportable segments |
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
External revenues |
Space |
G&D |
ENV |
GOV |
M&B |
SUP |
Total |
|
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
|
6 months ended 30 June 2010 |
|
|
|
|
|
|
|
|
|
Professional fees revenue |
5,675 |
2,339 |
4,034 |
6,373 |
3,381 |
1,511 |
16,940 |
|
|
Other revenue |
1,683 |
395 |
404 |
799 |
1,299 |
103 |
3,884 |
|
|
External revenue for reportable segments |
7,358 |
2,734 |
4,438 |
7,172 |
4,680 |
1,614 |
20,824 |
|
|
Other external revenue |
|
|
|
|
|
|
92 |
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated revenue |
|
|
|
|
|
|
20,916 |
|
|
|
|
|
|
|
|
|
|
|
|
6 months ended 30 June 2009 |
|
|
|
|
|
|
|
|
|
Professional fees revenue |
5,696 |
|
|
6,055 |
2,967 |
1,427 |
16,145 |
|
|
Other revenue |
2,065 |
|
|
1,137 |
694 |
60 |
3,956 |
|
|
External revenue for reportable segments |
7,761 |
|
|
7,192 |
3,661 |
1,487 |
20,101 |
|
|
Other external revenue |
|
|
|
|
|
|
180 |
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated revenue |
|
|
|
|
|
|
20,281 |
|
|
|
|
|
|
|
|
|
|
|
|
Year ended 31 December 2009 |
|
|
|
|
|
|
|
|
|
Professional fees revenue |
11,312 |
|
|
11,802 |
6,584 |
2,902 |
32,600 |
|
|
Other revenue |
5,411 |
|
|
1,965 |
1,314 |
87 |
8,777 |
|
|
External revenue for reportable segments |
16,723 |
|
|
13,767 |
7,898 |
2,989 |
41,377 |
|
|
Other external revenue |
|
|
|
|
|
|
343 |
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated revenue |
|
|
|
|
|
|
41,720 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
|
Information about reportable segments (continued) |
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax |
Space |
G&D |
ENV |
GOV |
M&B |
SUP |
Total |
|
|
|
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
|
|
|
6 months ended 30 June 2010 |
|
|
|
|
|
|
|
|
|
|
|
Reportable segment contribution |
455 |
729 |
1,601 |
2,330 |
979 |
746 |
4,510 |
|
|
|
|
Other contribution |
(22) |
(47) |
(70) |
(117) |
134 |
(31) |
(36) |
|
|
|
|
Attributable overheads |
|
|
|
|
|
(429) |
(429) |
|
|
|
|
Contribution |
433 |
682 |
1,531 |
2,213 |
1,113 |
286 |
4,045 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Central overheads |
|
|
|
|
|
|
(3,391) |
|
|
|
|
EBITA |
|
|
|
|
|
|
654 |
|
|
|
|
Finance costs |
|
|
|
|
|
|
(56) |
|
|
|
|
Finance income |
|
|
|
|
|
|
9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax |
|
|
|
|
|
|
607 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6 months ended 30 June 2009 |
|
|
|
|
|
|
|
|
|
|
|
Reportable segment contribution |
1,113 |
|
|
1,987 |
337 |
683 |
4,120 |
|
|
|
|
Other contribution |
7 |
|
|
(115) |
213 |
(20) |
85 |
|
|
|
|
Attributable overheads |
- |
|
|
- |
- |
(417) |
(417) |
|
|
|
|
Contribution |
1,120 |
|
|
1,872 |
550 |
246 |
3,788 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Central overheads |
|
|
|
|
|
|
(3,251) |
|
|
|
|
EBITA |
|
|
|
|
|
|
537 |
|
|
|
|
Amortisation of intangible assets arising on business combinations |
|
|
|
|
|
|
(428) |
|
|
|
|
Finance costs |
|
|
|
|
|
|
(56) |
|
|
|
|
Finance income |
|
|
|
|
|
|
32 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax |
|
|
|
|
|
|
85 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended 31 December 2009 |
|
|
|
|
|
|
|
|
|
|
|
Reportable segment contribution |
1,986 |
|
|
3,342 |
1,573 |
1,394 |
8,295 |
|
|
|
|
Other contribution |
(109) |
|
|
(12) |
236 |
(1) |
114 |
|
|
|
|
Attributable overheads |
- |
|
|
- |
- |
(811) |
(811) |
|
|
|
|
Contribution |
1,877 |
|
|
3,330 |
1,809 |
582 |
7,598 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Central overheads |
|
|
|
|
|
|
(6,162) |
|
|
|
|
EBITA |
|
|
|
|
|
|
1,436 |
|
|
|
|
Amortisation of intangible assets arising on business combinations |
|
|
|
|
|
|
(857) |
|
|
|
|
Finance costs |
|
|
|
|
|
|
(114) |
|
|
|
|
Finance income |
|
|
|
|
|
|
45 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before tax |
|
|
|
|
|
|
510 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Information about reportable segments (continued) |
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
Group assets |
Space |
G&D |
ENV |
GOV |
M&B |
SUP |
Total |
|
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
|
As at 30 June 2010 |
|
|
|
|
|
|
|
|
|
Reportable segment - non-current assets |
2,223 |
- |
- |
- |
3,380 |
- |
5,603 |
|
|
Reportable segment - current assets |
6,580 |
1,057 |
1,323 |
2,380 |
1,917 |
962 |
11,839 |
|
|
|
8,803 |
1,057 |
1,323 |
2,380 |
5,297 |
962 |
17,442 |
|
|
Other - non-current assets |
|
|
|
|
|
|
3,832 |
|
|
Other - current assets |
|
|
|
|
|
|
5,474 |
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
|
|
|
|
|
26,748 |
|
|
|
|
|
|
|
|
|
|
|
|
As at 30 June 2009 |
|
|
|
|
|
|
|
|
|
Reportable segment - non-current assets |
2,223 |
|
|
- |
3,380 |
- |
5,603 |
|
|
Reportable segment - current assets |
5,276 |
|
|
3,317 |
987 |
503 |
10,083 |
|
|
|
7,499 |
|
|
3,317 |
4,367 |
503 |
15,686 |
|
|
Other - non-current assets |
|
|
|
|
|
|
4,469 |
|
|
Other - current assets |
|
|
|
|
|
|
5,689 |
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
|
|
|
|
|
25,844 |
|
|
|
|
|
|
|
|
|
|
|
|
As at 31 December 2009 |
|
|
|
|
|
|
|
|
|
Reportable segment - non-current assets |
2,223 |
|
|
- |
3,380 |
- |
5,603 |
|
|
Reportable segment - current assets |
5,537 |
|
|
3,619 |
1,346 |
679 |
11,181 |
|
|
|
7,760 |
|
|
3,619 |
4,726 |
679 |
16,784 |
|
|
Other - non-current assets |
|
|
|
|
|
|
4,200 |
|
|
Other - current assets |
|
|
|
|
|
|
4,678 |
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
|
|
|
|
|
25,662 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Information about reportable segments (continued) |
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
Group liabilities |
Space |
G&D |
ENV |
GOV |
M&B |
SUP |
Total |
|
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
|
As at 30 June 2010 |
|
|
|
|
|
|
|
|
|
Reportable segment - current liabilities |
1,599 |
263 |
277 |
540 |
675 |
837 |
3,651 |
|
|
Other - non-current liabilities |
|
|
|
|
|
|
1,141 |
|
|
Other - current liabilities |
|
|
|
|
|
|
7,408 |
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
|
|
|
|
12,200 |
|
|
|
|
|
|
|
|
|
|
|
|
As at 30 June 2009 |
|
|
|
|
|
|
|
|
|
Reportable segment - current liabilities |
1,631 |
|
|
433 |
487 |
684 |
3,235 |
|
|
Other - non-current liabilities |
|
|
|
|
|
|
1,475 |
|
|
Other - current liabilities |
|
|
|
|
|
|
6,854 |
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
|
|
|
|
11,564 |
|
|
|
|
|
|
|
|
|
|
|
|
As at 31 December 2009 |
|
|
|
|
|
|
|
|
|
Reportable segment - current liabilities |
1,200 |
|
|
1,009 |
369 |
756 |
3,334 |
|
|
Other - non-current liabilities |
|
|
|
|
|
|
1,256 |
|
|
Other - current liabilities |
|
|
|
|
|
|
6,346 |
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
|
|
|
|
10,936 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Geographical split |
|
|
|
UK |
Rest of Europe |
Other |
Total |
|
|
|
|
|
|
£000 |
£000 |
£000 |
£000 |
|
|
6 months ended 30 June 2010 |
|
|
|
|
|
|
|
|
|
Revenue from external customers by location of customers |
11,199 |
9,481 |
236 |
20,916 |
|||
|
|
|
|
|
|
|
|
|
|
|
|
As at 30 June 2010 |
|
|
|
|
|
|
|
|
|
Non-current assets: |
|
|
|
|
|
|
|
|
|
Intangible assets |
|
|
|
- |
5,715 |
- |
5,715 |
|
|
Tangible assets |
|
|
|
1,138 |
2,582 |
- |
3,720 |
|
|
|
|
|
|
|
|
|
|
|
|
6 months ended 30 June 2009 |
|
|
|
|
|
|
|
|
|
Revenue from external customers by location of customers |
10,304 |
9,808 |
169 |
20,281 |
|||
|
|
|
|
|
|
|
|
|
|
|
|
As at 30 June 2009 |
|
|
|
|
|
|
|
|
|
Non-current assets: |
|
|
|
|
|
|
|
|
|
Intangible assets |
|
|
|
- |
6,145 |
- |
6,145 |
|
|
Tangible assets |
|
|
|
1,181 |
2,746 |
- |
3,927 |
|
|
|
|
|
|
|
|
|
|
|
|
Year ended 31 December 2009 |
|
|
|
|
|
|
|
|
|
Revenue from external customers by location of customers |
19,487 |
21,891 |
342 |
41,720 |
|||
|
|
|
|
|
|
|
|
|
|
|
|
As at 31 December 2009 |
|
|
|
|
|
|
|
|
|
Non-current assets: |
|
|
|
|
|
|
|
|
|
Intangible assets |
|
|
|
- |
5,701 |
- |
5,701 |
|
|
Tangible assets |
|
|
|
1,185 |
2,917 |
- |
4,102 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3. Exceptional charges
|
|
Unaudited Six months to 30 June 2010 £000 |
Unaudited Six months to 30 June 2009 £000 |
Audited Year ended 31 December 2009 £000 |
|
|
|
|
|
|
Restructuring costs |
90 |
- |
173 |
Restructuring costs comprise severance payments to employees who left the Group on grounds of redundancy under a programme commenced in 2007 to align operating costs with current and projected revenues.
4. Taxation
|
|
Unaudited Six months to 30 June 2010 £000 |
Unaudited Six months to 30 June 2009 £000 |
Audited Year ended 31 December 2009 £000 |
|
|
|
|
|
|
Current tax charge/(credit) |
42 |
(10) |
486 |
|
Deferred tax charge/(credit) |
27 |
(36) |
(315) |
|
Total |
69 |
(46) |
171 |
The charge for taxation for the six months ended 30 June 2010 reflects the anticipated effective rate for the period.
5. Impairment of goodwill
|
|
Goodwill is tested for impairment every half year based on management's estimation of the value in use of the cash generating units (CGUs) to which the goodwill has been allocated. The value in use calculation is dependent upon management's estimate of future cashflows expected to arise from the CGU and a suitable discount rate.
Management has considered the estimates of cashflows and applicable discount rates and has concluded that no impairment is necessary at 30 June 2010.
|
6. Earnings per share
The calculation of the Group basic and diluted earnings per ordinary share is based on the following data:
|
|
Unaudited Six months to 30 June 2010 £000 |
Unaudited Six months to 30 June 2009 £000 |
Audited Year ended 31 December 2009 £000 |
|
|
|
|
|
|
Profit attributable to shareholders |
538 |
131 |
339 |
|
Number of shares |
'000 |
'000 |
'000 |
|
Basic weighted average number of shares |
28,935 |
28,394 |
28,490 |
|
Diluted weighted average number of shares |
30,341 |
29,719 |
29,840 |
The weighted average number of shares for the calculation of basic earnings per share excludes own shares held in treasury and in the SciSys No2 Employee Share Trust which have been awarded under the Executive Share Ownership Plan.
The weighted average number of shares for the calculation of diluted earnings per share includes own shares held in treasury and in the SciSys No2 Employee Share Trust which have been awarded under the Executive Share Ownership Plan together with EMI, CSOP and unapproved share options outstanding during the period.
7. Adjusted earnings per share
|
|
Unaudited Six months to 30 June 2010 £000 |
Unaudited Six months to 30 June 2009 £000 |
Audited Year ended 31 December 2009 £000 |
|
Basic |
2.4p |
2.1p |
5.0p |
|
Diluted |
2.3p |
2.0p |
4.8p |
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 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 Six months to 30 June 2010 £000 |
Unaudited Six months to 30 June 2009 £000 |
Audited Year ended 31 December 2009 £000 |
|
|
|
|
|
|
Profit attributable to shareholders |
538 |
131 |
339 |
|
|
|
|
|
|
Adjusted for: |
|
|
|
|
Amortisation of intangible assets |
- |
428 |
857 |
|
Share based payments |
63 |
28 |
67 |
|
Exceptional charges (note 3) |
90 |
- |
173 |
|
|
|
|
|
|
Adjusted earnings |
691 |
587 |
1,436 |
The weighted average number of shares for the calculation of basic earnings per share excludes own shares held in treasury and in the SciSys No2 Employee Share Trust which have been awarded under the Executive Share Ownership Plan.
The weighted average number of shares for the calculation of diluted earnings per share includes own shares held in treasury and in the SciSys No2 Employee Share Trust which have been awarded under the Executive Share Ownership Plan together with EMI, CSOP and unapproved share options outstanding during the period.
8. Dividends
For year ending 31 December 2009, the Company paid an interim dividend of 0.3 pence per share in November 2009 and a further interim dividend of 0.7 pence per share in March 2010. The Board is recommending payment of an interim dividend for 2010 of 0.33p per share.
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.
Related Shares:
SSY.L