Upbeat SciSys hints at acquisitions in bullish trading statement

May 31, 2012

Specialist software developer SciSys issued an upbeat trading statement ahead of today’s annual general meeting, suggesting it could soon hit the acquisition trail. The company, which has a major base in Bristol and its head office in Chippenham, says it opened the year with a comfortable order book of £26.7m and the order intake for 2012 to date is in line with expectations. 

SciSys, which supplies bespoke software and IT-based support services to the media broadcast, space, government and defence, environment and application support sectors, says its order book further improved to stand at £28.8m by the end of March, a growth of 8% across the period. This excludes any material benefit from its expected participation in the Warrior Armoured Fighting Vehicle upgrade programme later in the year.

While the trading outlook remains positive, it says the government's spending squeeze continues to make the outlook for potential UK public sector projects and programmes somewhat uncertain.  Nevertheless, with 45% of its business derived from outside the UK and with a broad spread of customers in other markets, SciSys remains confident that it is sufficiently resilient to withstand any adverse conditions in the UK public sector.  Hedging contracts are in place to protect its euro earnings from significant deterioration in the €/£ exchange rate.

It adds that first half trading is more buoyant than originally budgeted due to a combination of contract wins, operating efficiencies and deferred costs.  As a result, the anticipated imbalance caused by a weaker first half is expected to be less pronounced and the board is “increasingly confident of meeting expectations for the full year”.

SciSys remains cash generative and, despite having taken on debt to part-fund the £5m purchase of its Chippenham headquarters in May 2011, the company says it is now well placed to consider acquisition opportunities. Meanwhile it granted a 10-year lease on part of its surplus office space in Chippenham in February which will generate income in line with market rents.

The company, which also has two centres in Germany and another in Reading, has a workforce of 430. Its blue chip and public sector clients include the Environment Agency, the Ministry of Defence, Astrium, Arqiva, Cable & Wireless, the European Space Agency, Eumetsat, the BBC, the National Archives and Transport for London.

It raised its annual dividend by 10% in March on the back of a rise in 2011 pre-tax profits from £1.57m to £2m and the directors intend “to continue with the progressive dividend policy introduced in 2009”.


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