Scisys's (SSY) first half turned out better than management of the computer systems developer anticipated following a gloomy year-end outlook. While revenue was well down, most of the fall was accounted for by a drop-off in low-margin hardware sales. In fact, professional fees, the key measure of top-line progress, only fell 4 per cent, most of which was accounted for by the weakening of the euro. This was a good result given the very strong start Scisys had in 2011 when the public sector went on a spending spree ahead of the government's austerity programme.
The most impressive progress reported by the company was an increase in underlying operating margin from 5.5 per cent to 6.4 per cent, which gets Scisys close to its 2013 target of 7 per cent. Margins should be helped further by renting out space in the group's recently repurchased Chippenham headquarters. Underlying operating profit nudged ahead by 3 per cent to £1.3m while adjusted EPS shot up 19 per cent to 3.1p, helped by a lower tax charge.
With minimal debt and the key margin target now close to being achieved, Scisys's management is on the look out for potential acquisitions to kick-start sales growth and there are hopes that a purchase could be made in the coming 12 months. So, although broker finnCap forecasts a fall in full-year pre-tax profit from £2.2m to £1.9m to produce adjusted EPS of 6.6p, a strong earnings uplift to £3m and 8.4p, respectively, is expected in 2013 (6.4p in 2011).
Scisys (SSY) | ||||
|---|---|---|---|---|
| ORD PRICE: | 57p | MARKET VALUE: | £17m | |
| TOUCH: | 55-59p | 12-MONTH HIGH: | 60p | LOW: 43p |
| DIVIDEND YIELD: | 2.2% | PE RATIO: | 9 | |
| NET ASSET VALUE: | 59p* | NET DEBT: | 5% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 22.0 | 1.05 | 2.20 | 0.36 |
| 2012 | 19.6 | 0.93 | 2.40 | 0.40 |
| % change | -11 | -11 | +9 | +11 |
Ex-div: 17 Oct Payment: 14 Nov *Includes intangible assets of £6m, or 20p a share | ||||
