Improved profit margins and cash generation underpin management claims of a "solid performance" last year at software group Scisys (SSY). "What was lower than expected and a bit disappointing was the top line," admits chief executive Klaus Heidrich, though this was largely due to fierce currency headwinds in Europe.
In fact, 70 per cent of the revenue decline came from a weakened euro, which fell 6 per cent against the pound between 2013 and 2014, hitting its media and broadcast and space divisions. A further drop in the value of the euro this year has been mitigated by the purchase of hedges towards the end of 2014.
The sales performance was also hampered by two problematic long-standing projects in the enterprise solutions and defence division, which were "completed at extra cost to regain the customers' confidence". Against these challenging trading conditions Scisys was able to boost its profit by cutting central overheads by 23 per cent, reaping further benefits from a group restructuring in 2013.
The financial impact of Xibis, the app developer Scisys acquired in December, was negligible in 2014. This year it is expected to add £1m in turnover and £0.2m in profit. Overall, broker finnCap forecasts adjusted pre-tax profits of £3.3m and EPS of 8.8p, up from £3.2m and 7.8p.
| SCISYS (SSY) | ||||
|---|---|---|---|---|
| ORD PRICE: | 84p | MARKET VALUE: | £24m | |
| TOUCH: | 82-86p | 12-MONTH HIGH: | 96p | LOW: 78p |
| DIVIDEND YIELD: | 1.9% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 71p* | NET CASH: | £0.3m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 43.6 | 1.6 | 3.4 | 1.10 |
| 2011 | 42.3 | 2.0 | 6.1 | 1.21 |
| 2012 | 39.1 | 2.0 | 5.7 | 1.32 |
| 2013 | 42.6 | 1.5 | 4.6 | 1.46 |
| 2014 | 40.4 | 3.0 | 7.7 | 1.61 |
| % change | -5 | +101 | +67 | +10 |
Ex-div: 18 Jun Payment: 9 Jul *Includes intangible assets of £8.2m, or 284p a share | ||||
