The first half of 2015 was a dismal one for Scisys (SSY). The software group's biggest headache was a fixed-price contract in the enterprise and defence division. The costs and complexities involved forced it to stomach a £1.4m write-down and distracted it from winning new contracts.
To compound matters, the Aim-listed group - whose customers include Vodafone, Halfords and the BBC - was badly hit by foreign exchange rate swings. The cost base for a large portion of Scisys's work is in sterling, but contracts are priced in euros, meaning that for every cent the euro weakened against the pound the company's bottom line shrunk by £54,000. As it was, the fluctuation in the period cost the company £0.7m.
The shares took a nose-dive at the beginning of June, when Scisys revealed the extent of its problems and warned investors it was likely to be in breach of loan covenants agreed with RBS and Barclays. Both banks have since waived any penalties and refrained from imposing more onerous conditions, other than a requirement by Barclays that Scisys hit £0.5m of cash profits for the full year. Management is confident it can reach this threshold, being comfortable with finnCap's cash-profit forecast of £1.3m.
The broker is also forecasting a loss per share of 0.3p this year, swinging to 6.3p of profit in 2016 (2014: 7.8p).
SCISYS (SSY) | ||||
|---|---|---|---|---|
| ORD PRICE: | 67p | MARKET VALUE: | £19.3m | |
| TOUCH: | 66-67p | 12-MONTH HIGH: | 95p | LOW: 36p |
| DIVIDEND YIELD: | 1.8% | PE RATIO: | na | |
| NET ASSET VALUE: | 63p* | NET DEBT: | 10% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 21.1 | 1.3 | 4.0 | 0.4 |
| 2015 | 16.5 | -1.2 | -4.9 | nil |
| % change | -22 | - | - | - |
Ex-div: na Payment: na *Includes intangible assets of £7.8m, or 27p a share. | ||||
