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RNS
SCISYS PLC  -  SSY   

Half-year Report

Released 07:00 21-Sep-2017

RNS Number : 3505R
SCISYS PLC
21 September 2017
 

The information communicated in this announcement includes inside information for the purposes of Article 7 of Regulation 596/2014 (MAR).

 

SCISYS PLC

(AIM: SSY)
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2017

 

SCISYS PLC ("SCISYS"), the supplier of bespoke software systems, IT-based solutions and support services to the space, media & broadcast, government, defence and commercial sectors is pleased to announce its interim results for the half year to 30 June 2017. The Directors anticipate that SCISYS will deliver full-year results at the upper end of current guidance, a view supported by the 30 June 2017 order-book value of £64m and buoyed by recent contract wins.

 

Financial and Operational Highlights:

·   Adjusted operating profit up 18% to £1.3m (2016: £1.1m).

·   Revenues up 23% to £27.2m (2016: £22.2m).

·   Record half-year order book of £64m (2016: £35m).

·   Net debt reduced from £10.2m at 31 December 2016 to £9.0m (30 June 2016: net funds £1.4m).

·   Interim dividend up 11% at 0.59 pence per share (2016: 0.53p).

·   Post-period end, December 2016 acquisition, ANNOVA, achieved major project milestone on flagship BBC contract, triggering payment of first earn out instalment in September.

·   ANNOVA's success exceeded expectations reflected in 2017 opening balance sheet, resulting in exceptional charge of £1.8m for revalued contingent consideration. 

·   Exceptional charges and amortisation arising on ANNOVA acquisition produced statutory operating loss of £1.3m (2016: £1.1m profit) and basic LPS of 4.9p (2016: EPS 2.8p).

·   Adjusted basic earnings per share reduced to 1.4p (2016: 2.8p) due to the impact of tax on exceptional charges.

·   ANNOVA secured a succession of key contract wins with existing and new customers, including Canadian broadcaster, Corus TV.

·   M&B division gained its first French customer with RTL contract win and South African Broadcasting Corporation project entered large roll-out phase.

·   ESD division secured one of seven coveted places on key Metropolitan Police Service framework.

·   Space division delivered 26% increase in first half-year contribution.

 

 

Mike Love, Chairman of SCISYS, commenting on the results, said:

"We are very pleased and buoyed by a solid operational performance and key contract wins across the Group resulting in our record order book.  We are particularly pleased by the robust performance of ANNOVA; it is already evident that this acquired business is delivering significant strategic benefit to the Group.  At this point in time we anticipate that we will deliver full-year results at the upper end of current guidance."

 



 

For further information please contact: 

SCISYS PLC


+44 (0)1249 466 466

Mike Love

Chairman


Klaus Heidrich

Chief Executive Officer


Chris Cheetham

Finance Director


finnCap (NOMAD & Broker)


+44 (0)20 7220 0500

Julian Blunt

Corporate Finance


Mia Gardner

Corporate Broking


WalbrookPR

Tom Cooper/Paul Vann


+44 (0) 20 7933 8780

+44 (0)797 122 1972

tom.cooper@walbrookpr.com

 

Notes to Editors:

 

Employing around 500 staff, SCISYS group is a leading developer of information and communications technology services, e-business, web and mobile applications, editorial newsroom and advanced technology solutions. The Company operates in a broad spectrum of market sectors, including Media & Broadcast, Space, Government, Defence and Commerce. SCISYS clients are predominantly blue-chip and public-sector organisations. Customers include the Environment Agency, the Ministry of Defence, Airbus Defence & Space, Arqiva, Vodafone, the European Space Agency, EUMETSAT, the BBC, RNLI, Interflora and the National Trust. The Company has UK offices in Chippenham, Bristol, Leicester and Reading and German offices in Bochum, Darmstadt, Dortmund and Munich. More information is available at www.scisys.co.uk

 

 

Introduction

The Board of SCISYS is pleased with the Group's results for the first half of 2017, in particular with its record order book, which stands at £64m (2016: £35m), and the performance of the recently acquired ANNOVA business.  As previously signalled, 2017 revenues and profits will be heavily weighted towards the second half of the year. This is a consequence of the phasing both in contract deliveries and the placing of new orders across the year, a pattern particularly pronounced within ANNOVA. We continue to expect an overall benefit from the weaker pound for the remainder of the year if the euro-sterling exchange rate remains at current levels.

 

Key financials

The Group's revenue totalled £27.2m (2016: £22.2m). In the six months ended 30 June 2017, the Group's adjusted operating profit was £1.3m (2016: £1.1m).  Adjusted basic earnings per share were 1.4p (2016: 2.8p).  A fuller explanation is available in the Finance Review section.

 

Operating Review

Introduction

All divisions performed well during the first half of 2017, delivering contracts on time and within budget and generating improved operating cash flows.  Across the Group we won strategic contracts and gained significant new customers, including Corus TV in Canada and RTL radio in France. We entered the second half with strong prospects for noteworthy future contract wins in all divisions, some of which have already materialised.

 

We still do not expect any adverse operational consequences as a result of Brexit in the short to medium term but continue to explore options to optimise our future trading position and prepare contingency plans in response to the continued uncertainty.

 

Enterprise Solutions & Defence (ESD) division

ESD delivered a solid first half year and has expectations of a stronger second half. The division continues to work on ongoing defence projects for the Ministry of Defence, and on delivering further research and software development services to the Defence Science and Technology Laboratory (Dstl) among many other activities.

 

Current projects are running to plan and resulted in a creditable contribution margin of 23%, given the anticipated bias towards the second half year.  The division's other projects span a wide range of commercial and public sector customers and varied software projects, including ongoing work for the Coal Authority, Vodafone, UKPN, Arqiva and Siemens.

 

Following an intense procurement process, in May 2017, ESD secured a strategic success as one of only seven organisations to gain a place on the Metropolitan Police Solution Provider Framework.  Notable other framework successes include agreements with Siemens and a G-Cloud framework for government procurement.

 

Based on the strong order book, the successful delivery and exciting opportunities in the pipeline, the division is well positioned to end the year on a strong footing.

 


Six months ended 30 June 2017

£'000

Six months ended 30 June 2016

£'000

Year ended

31 December 2016

£'000

Revenue

7,901

8,598

16,652

Contribution value

1,809

2,526

4,462

Contribution margin

23%

29%

27%

 

 

Space division

The division delivered an excellent performance during the first half year as it continued to build on previous success in contributing to the Galileo satellite navigation programme, various programmes for the European Space Agency (ESA), and also in delivering its proprietary commercial PLENITER software suite for the planning, implementation, control and operation of complete satellite missions. 

 

In February 2017, the division won a €1.9m contract with the international technology group, GMV, for the design and implementation of a mission control system to support the EUMETSAT Polar System Earth observation programme and recently renewed its customer relationship with Japan's Meteorological Agency.

 

Space division's projects ran well during the first six months of the year, including the Galileo programmes, where we are well positioned to secure substantial contract extensions in the second half of the year. New project starts include the software design, coding and verification activities for aspects of the ESA's rover mission to Mars, ExoMars.  The division also continues to be a major player in Earth-observation programmes, and work has commenced with Airbus Defence and Space for its delivery to the ongoing French-German MERLIN satellite climate mission.

 


Six months ended 30 June 2017

£'000

Six months ended 30 June 2016

£'000

Year ended

31 December 2016

£'000

 

Revenue

11,561

9,601

19,874

Contribution value

2,423

1,917

4,157

Contribution margin

21%

20%

21%

 

 

Media & Broadcast (M&B) division

M&B secured its first win in South Africa in April 2016 with a €2m contract for South Africa Broadcasting Corporation (SABC) for implementation of its proprietary dira! radio solution.  The pilot phase completed in January 2017 and the next phase is to equip 5 channels at SABC in Johannesburg, after which the system will be rolled out to 15 regional locations across South Africa. The activity is expected to pick up during the second half of the year.

 

M&B continues to develop its dira! product, with the latest innovations being delivered to a large UK media broadcaster. The division gained its first French customer and added a major private broadcaster to its portfolio by securing a contract with RTL in May.

 

The outlook for the full year is encouraging as the project deliveries are expected to gain momentum over the forthcoming months. In turn, we anticipate that this will rebuild M&B's contribution margin towards previous levels.

 


Six months ended 30 June 2017

£'000

Six months ended 30 June 2016

£'000

Year ended

31 December 2016

£'000

 

Revenue

3,539

3,503

8,026

Contribution value

728

959

2,512

Contribution margin

21%

27%

31%

 

 

ANNOVA Systems

ANNOVA has demonstrated its growing success with a number of recent contract wins based on its proprietary OpenMedia product, one of the leading newsroom computer systems worldwide. Impressively, ANNOVA has won an initial contract with Corus Entertainment, the biggest media-content company in Canada.  Corus is adding OpenMedia to its award-winning Global News operations across the country.

 

In August, ANNOVA won a strategic contract with German ARD-aktuell to develop a portal for ARD's programmes - including its primetime news programme, Tagesschau - based on the OpenMedia Newsboard product. This complemented the earlier award of a €2.5m contract with a major German public broadcaster for replacement of a competitor's installation.

 

ANNOVA achieved a key commercial milestone in its flagship long-term contract with the BBC in August. Following the successful live operation of its solution on pilot customer sites, OpenMedia will now be rolled out across the BBC estate.

 

Given the progress made by ANNOVA since its acquisition to date, the outlook for the full year and the medium term future are highly encouraging.

 


Six months ended 30 June 2017

£'000

Six months ended 30 June 2016

£'000

Year ended

31 December 2016

£'000

Revenue

3,610

n/a

n/a

EBITA*

283

n/a

n/a

EBITA margin*

8%

n/a

n/a

* other divisions are measured on their contribution to shared Group overheads whereas ANNOVA currently remains largely independent, allowing the computation of a representative EBITA

 

 

Finance Review

Results for the half year to 30 June 2017 continue to show encouraging progress, partly from the initial inclusion in the consolidated figures of results for ANNOVA Systems ("ANNOVA"), which SCISYS acquired on 31 December 2016.

 

Total revenues were up 23% to £27.2m (2016: £22.2m) and the professional fees component increased by 22% to £22.4m (2016: £18.4m). The underlying measure of trading performance, adjusted operating profit, which excludes the costs of the Group's long-term share incentive schemes, exceptional items and amortisation of intangible assets arising on business acquisition, was up 18% at £1.3m (2016: £1.1m). Adjusted basic EPS, calculated on the profit for the period before post-tax exceptional items, share-based payments and amortisation of acquisition-related intangible assets, were 1.4p (2016: 2.9p). As highlighted in our AGM statement in June, we anticipate that the second half-year financial performance will be substantially stronger than the first half.

 

The statutory operating loss was £1.3m (2016: £1.1m profit) after bearing amortisation costs relating to the ANNOVA acquisition of £1.0m (2016: £nil) and net exceptional items of £1.6m (2016: £nil). Exceptional items comprised two elements, a one-off R&D tax credit of £0.2m and a charge of £1.8m to reflect an uplift in consideration payable to ANNOVA's former owners as the acquired business surpassed its forecasts. Further explanation of these items is provided below. Basic loss per share was 4.9p (2016: EPS 2.8p).

 

The average euro-sterling exchange rate for the period was €1.16/£, which represents a 10% uplift from the comparative 2016 value of €1.28/£. Although this movement contributed to record first-half revenues, a historic high was also reached on a constant-currency basis.

 

Approximately half of the Group's business is conducted in euros. SCISYS mitigates its exposure to exchange-rate movements by entering into hedging contracts to convert forecast surplus euros into sterling at fixed forward rates. Such contracts are revalued quarterly on a mark-to-market basis. The net charge in the income statement for hedging contracts that matured in the period and on revaluation of future contracts was £0.1m (2016: £0.7m).

 

The total purchase price payable for the ANNOVA acquisition is heavily dependent on an earn-out payable over three years, linked both to average profitability and achievement of key commercial milestones in its flagship contract with the BBC. ANNOVA successfully obtained customer acceptance for a critical phase of this project three months earlier than had been provided for in the acquisition balance sheet. This triggered payment of a first earnout instalment of €2.0m in September 2017, of which 10% was satisfied in new SCISYS PLC shares, with the balance paid in cash from existing Group resources. As a result of ANNOVA's outperformance, the anticipated total contingent consideration payable was reassessed at 30 June 2017, resulting in an exceptional £1.8m charge for the first half year.

 

Net cash flow from operations increased to £2.7m (2016: £2.2m). At the end of the reporting period, the Group had bank deposits of £7.2m (30 June 2016: £5.6m). Unutilised working capital facilities totalled £4.7m (30 June 2016: £4.6m). Group debt at the period end was £16.2m (30 June 2016: £4.2m). The resulting net debt was £9.0m, a reduction of £1.2m from the 2016 year-end position of £10.2m net debt (30 June 2016: £1.4m net cash).

 

The effective tax rate for the period of 17% reflects the anticipated rate for 2017 as a whole (2016: 15%). SCISYS continues to benefit from the tax-credit system for UK expenditure on R&D in SMEs, receiving credits in the form of cash rebates from HM Revenue & Customs. Up to and including 2016 these were incorporated into the net tax charge. An accounting standard change requires R&D tax credits from 2017 to be treated as deductions from operating expenses. SCISYS anticipates that it will no longer qualify for the SME tax credit scheme in 2018 as it expects to exceed the headcount eligibility threshold. Accordingly, the above-the-line tax credit of £0.2m in the current period is treated as an exceptional item.

 

The half-year accounts are presented on a basis consistent with policies to be adopted for the Annual Report & Finance Statements for the year ending 31 December 2017.

 

 

Dividend

Our dividend for the full year to 31 December 2016 was 1.96 pence per share in line with our strategy of progressive dividend growth.  I can now confirm that an interim dividend of 0.59 pence per share will be paid on 9 November 2017 to shareholders on the register as at 13 October 2017.  The shares are expected to go ex-dividend on 12 October 2017.

 

 

Outlook

The second half of 2017 has started with some excellent new contract wins and significant deliveries on key projects. We are seeing healthy top-line growth while cash flows remain strong.

 

While our immediate focus is on exploiting the opportunity offered by the recent acquisition of ANNOVA, we continue to look for opportunities to acquire companies where there is a good market, product and cultural fit.

 

Based on current performance on projects and our new business pipeline, the Directors remain fully confident of meeting the upper end of full-year expectations, as well as the future prospects of the Group.

 

Chairman

Mike Love



 

Consolidated Income Statement

 


Unaudited

Unaudited

Audited


6 months to
30 June
2017

6 months to
30 June
2016

Year ended
31 December 2016


£'000

£'000

£'000

Revenue (note 2)

27,175

22,223

45,744

Operating costs

(28,504)

(21,165)

(42,974)

Share of results of associates

15

13

17

Operating (loss)/profit

(1,314)

1,071

2,787

"Adjusted operating profit" being operating profit before share based payments, exceptional charges and amortisation arising on business combinations 

1,252

1,090

3,231

Exceptional items (note 3)

(1,561)

(458)

Amortisation of Intangibles

(991)

Share based payments

(14)

(19)

14

Operating (loss)/profit

(1,314)

1,071

2,787

Finance costs

(388)

(99)

(186)

Finance income

6

1

1

(Loss)/profit before tax

(1,696)

973

2,602

Tax credit/(charge) (note 4)

282

(146)

(380)

(Loss)/profit for the period attributable to equity holders of the parent

(1,414)

827

2,222





(Loss)/earnings per share (note 6)




Basic

(4.9)p

2.8p

7.6p

Diluted

(4.8)p

2.7p

7.5p

 

Consolidated Statement of Comprehensive Income

 


Unaudited

Unaudited

Audited


6 months to
30 June
2017

6 months to
30 June
2016

Year ended
31 December 2016


£'000

£'000

£'000

(Loss)/profit for the period

(1,414)

827

2,222

Other comprehensive income not recycling through the Income Statement




Currency translation differences on foreign currency investments

54

826

1,105

Total comprehensive (expense)/income for the period attributable to equity holders of the parent

(1,360)

1,653

3,327

 



 

Consolidated Statement of Changes in Equity

 

For the six months ended

Share Capital

Share Premium

Merger Reserve

Capital Redemp-tion Reserve

Trans-lation Reserve

Retained Earnings

Total

30 June 2017 (unaudited)

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Balance as at 1 January 2017

7,272

143

943

83

1,521

12,751

22,713

Total comprehensive income for the period








Loss in the period

(1,414)

(1,414)

Other comprehensive income








Foreign currency translation

54

54

Total comprehensive income for the period

54

(1,414)

(1,360)

Transactions with owners, recorded directly in equity








Contributions by and distributions to owners








Share based payments

14

14

Treasury shares

(361)

(361)

Share options

74

74

Total contributions by and distributions to owners

(273)

(273)

Balance as at 30 June 2017

7,272

143

943

83

1,575

11,064

21,080

 

For the six months ended

Share Capital

Share Premium

Merger Reserve

Capital Redemp-tion Reserve

Trans-lation Reserve

Retained Earnings

Total

30 June 2016 (unaudited)

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Balance as at 1 January 2016

7,272

143

943

83

416

11,199

20,056

Total comprehensive income for the period








Profit in the period

827

827

Other comprehensive income








Foreign currency translation

826

826

Total comprehensive income for the period

826

827

1,653

Transactions with owners, recorded directly in equity








Contributions by and distributions to owners








Share based payments

19

19

Total contributions by and distributions to owners

19

19

Balance as at 30 June 2016

7,272

143

943

83

1,242

12,045

21,728

 



 

Consolidated Statement of Changes in Equity continued

 

For the year ended

Share Capital

Share Premium

Merger Reserve

Capital Redemp-tion Reserve

Trans-lation Reserve

Retained Earnings

Total

31 December 2016 (audited)

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Balance as at 1 January 2016

7,272

143

943

83

416

11,199

20,056

Total comprehensive income for the period








Profit in the period

2,222

2,222

Other comprehensive income








Foreign currency translation

1,105

1,105

Total comprehensive income for the period

1,105

2,222

3,327

Transactions with owners, recorded directly in equity








Contributions by and distributions to owners








Dividends paid

(671)

(671)

Share based payments

(14)

(14)

Exercise of share options

15

15

Total contributions by and distributions to owners

(670)

(670)

Balance as at 31 December 2016

7,272

143

943

83

1,521

12,751

22,713

 

 



 

Consolidated Statement of Financial Position

 


Unaudited

Unaudited

Audited


30 June
2017

30 June
2016

31 December
2016


£'000

£'000

£'000

Non-current assets




Property, plant and equipment

9,295

8,885

9,057

Goodwill

15,950

7,894

15,593

Other intangible assets

5,810

70

6,848

Other receivables

87

85

Interests in associates

108

84

90

Deferred tax assets

311

29

282


31,561

16,962

31,955

Current assets




Inventories

434

331

261

Trade and other receivables

20,524

13,781

19,621

Corporation tax receivable

1,027

775

1,098

Cash and cash equivalents

7,166

5,617

6,915


29,151

20,504

27,895

Total assets

60,712

37,466

59,850

Equity




Issued share capital

7,272

7,272

7,272

Share premium account

143

143

143

Merger reserve

943

943

943

Retained earnings

11,064

12,045

12,751

Translation reserve

1,575

1,242

1,521

Other reserves

83

83

83

Equity attributable to equity holders of the parent

21,080

21,728

22,713

Current liabilities




Trade and other payables

17,826

10,359

14,310

Bank overdrafts and loans

3,707

804

3,804

Corporation tax payable

31

446

190

Deferred income

245

307

459


21,809

11,916

18,763

Non-current liabilities




Bank loans

12,514

3,416

13,355

Other payables

3,627

3,408

Deferred tax

1,682

406

1,611


17,823

3,822

18,374

Total liabilities

39,632

15,738

37,137

Total equity and liabilities

60,712

37,466

59,850



 

Consolidated Statement of Cash Flows

 


Unaudited

Unaudited

Audited


6 months to
30 June
2017

6 months to
30 June
2016

Year ended
31 December 2016


£'000

£'000

£'000

Cash flow from operating activities




(Loss)/profit before tax

(1,696)

973

2,602

Net finance costs

382

98

185

Operating (loss)/profit

(1,314)

1,071

2,787

Increase in trade receivables

(1,077)

(1,604)

(3,992)

Increase in trade payables

1,717

2,706

579

Deferred consideration

1,561

3,318

Depreciation and amortisation

1,515

352

781

Share of profit of associate

(15)

(13)

(17)

Share based payments

14

19

(14)

Tax credits/(payments)

296

(303)

(1,250)

Net cash flow from operating activities

2,697

2,228

2,192

Cash flow from investing activities




Acquisition of subsidiary

(9,723)

Cash acquired with subsidiary

2,202

Proceeds from disposal of property, plant and equipment

1

Purchase of plant, property and equipment

(789)

(284)

(663)

Exercise of share options

74

15

Interest  received

6

1

1

Net cash flow from investing activities

(708)

(283)

(8,168)

Cash flows from financing activities




Dividends paid

(671)

Interest paid

(388)

(99)

(186)

Investment in own shares

(361)

Loans received

260

9,906

Debt repayments

(1,308)

(516)

(939)

Net cash flow from financing activities

(1,797)

(615)

8,110

Net increase in cash and cash equivalents

192

1,330

2,134

Cash and cash equivalents at the start of the period

6,666

3,625

3,625

Exchange and other movements

308

662

907

Cash and cash equivalents at the end of the period

7,166

5,617

6,666

Cash and cash equivalent deposits held in non-UK based banks

5,522

3,370

6,709

Net bank deposit/(overdraft) with UK based banks

1,644

2,247

(43)


7,166

5,617

6,666



 

Notes to the Unaudited Interim Report

For the six months to 30 June 2017

 

1

Basis of preparation of Interim Financial Information & Statement of Compliance

 

SCISYS PLC (the "Company") is a UK company incorporated in England & Wales. The entities consolidated in the half year financial statements of the Company for the six months to 30 June 2017 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 2017.  These policies are unchanged from those set out by the Group in its consolidated financial statements for the year ended 31 December 2016 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.  There are no new standards or interpretations endorsed by the EU during 2017 that impact on the financial results or presentation. 

 

The interim financial information for the six months ended 30 June 2017 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 2016. 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 2016.

 

The Interim Report was approved by the Directors on 14 September 2017.



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 commercial and public sector organisations through the following five divisions:

                Space

                Enterprise Solutions & Defence (ESD)

                Media & Broadcast (M&B)

                ANNOVA

                Xibis

 

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.



 



 

 

2

Segmental analysis continued







Information about reportable segments









Space

ESD

M&B

Xibis

ANNOVA

Total


£'000

£'000

£'000

£'000

£'000

£'000


6 months ended 30 June 2017 (unaudited)








Professional fees revenue

8,631

6,394

3,326

368

3,610

22,329


Other revenue

2,930

1,507

213

34

4,684


External revenue for reportable segments

11,561

7,901

3,539

402

3,610

27,013


Other external revenue






162


Consolidated revenue






27,175


6 months ended 30 June 2016 (unaudited)








Professional fees revenue

7,831

6,836

3,416

311

18,394


Other revenue

1,770

1,762

87

48

3,667


External revenue for reportable segments

9,601

8,598

3,503

359

22,061


Other external revenue






162


Consolidated revenue






22,223


Year ended 31 December 2016 (audited)








Professional fees revenue

16,293

13,284

7,541

460

37,578


Other revenue

3,581

3,368

485

412

7,846


External revenue for reportable segments

19,874

16,652

8,026

872

45,424


Other external revenue






320


Consolidated revenue






45,744

 



 

 

2

Segmental analysis continued







Information about reportable segments continued









Space

ESD

M&B

Xibis

ANNOVA

Total


(Loss)/profit before tax

£'000

£'000

£'000

£'000

£'001

£'000


6 months ended 30 June 2017 (unaudited)








Reportable segment contribution

2,087

1,809

728

44

283

4,951


Other contribution

336

336


Contribution

2,423

1,809

728

44

283

5,287


Central overheads






(5,610)


EBITA






(323)


Amortisation of intangible assets






(991)


Finance costs






(388)


Finance income






6


Loss before tax






(1,696)


6 months ended 30 June 2016 (unaudited)








Reportable segment contribution

1,885

2,526

958

5

5,374


Other contribution

32

1

33


Contribution

1,917

2,526

959

5

5,407


Central overheads






(4,336)


EBITA






1,071


Finance costs






(99)


Finance income






1


Profit before tax






973


Year ended 31 December 2016 (audited)








Reportable segment contribution

4,229

4,512

2,512

104

11,357


Other contribution

(72)

(50)

(122)


Contribution

4,157

4,462

2,512

104

11,235


Central overheads






(8,448)


EBITA






2,787


Finance costs






(186)


Finance income






1


Profit before tax






2,602

 



 

 

2

Segmental analysis continued







Information about reportable segments continued















Space

ESD

M&B

Xibis

ANNOVA

Total


Group assets

£'000

£'000

£'000

£'000

£'000

£'000


As at 30 June 2017 (unaudited)








Reportable segment - non-current assets

3,500

3,380

1,090

7,980

15,950


Reportable segment - current assets

9,093

3,971

1,139

142

5,163

19,508



12,593

3,971

4,519

1,232

13,143

35,458


Other - non-current assets






15,611


Other - current assets






9,643


Total assets






60,712


As at 30 June 2016 (unaudited)







Reportable segment - non-current assets

3,424

3,380

1,090

7,894


Reportable segment - current assets

6,950

4,609

1,416

172

13,147



10,374

4,609

4,796

1,262

21,041


Other - non-current assets






9,068


Other - current assets






7,357


Total assets






37,466


As at 31 December 2016 (audited)







Reportable segment - non-current assets

3,466

3,380

1,090

7,657

15,593


Reportable segment - current assets

6,657

6,836

1,534

288

3,209

18,524



10,123

6,836

4,914

1,378

10,866

34,117


Other - non-current assets






16,362


Other - current assets






9,371


Total assets






59,850











Space

ESD

M&B

Xibis

ANNOVA

Total


Group liabilities

£'000

£'000

£'000

£'000

£'000

£'000


As at 30 June 2017 (unaudited)








Reportable segment - current liabilities

1,773

1,549

375

2,133

5,830


Other - non-current liabilities






17,823


Other - current liabilities






15,979


Total liabilities






39,632


As at 30 June 2016 (unaudited)







Reportable segment - current liabilities

699

966

418

22

2,105


Other - non-current liabilities






3,822


Other - current liabilities






9,811


Total liabilities






15,738


As at 31 December 2016 (audited)







Reportable segment - current liabilities

1,050

1,360

265

1,788

4,463


Other - non-current liabilities






18,374


Other - current liabilities






14,300


Total liabilities






37,137



 

 

2

Segmental analysis continued






Information about reportable segments continued







UK

Rest of Europe

Other

Total


Geographical split

£'000

£'000

£'000

£'000


6 months ended 30 June 2017 (unaudited)






Revenue from external customers by location of customers

12,299

14,319

557

27,175


As at 30 June 2017






Non-current assets:






Intangible assets

21,760

21,760


Tangible assets

5,910

3,385

9,295


Interests in associates

108

108


Other receivables

87

87


Deferred tax assets

311

311


6 months ended 30 June 2016 (unaudited)






Revenue from external customers by location of customers

10,956

10,917

350

22,223


As at 30 June 2016






Non-current assets:






Intangible assets

1,090

6,874

7,964


Tangible assets

5,975

2,910

8,885


Interests in associates

84

84


Deferred tax assets

29

29


Year ended 31 December 2016 (audited)






Revenue from external customers by location of customers

22,052

22,605

1,087

45,744


As at 31 December 2016






Non-current assets:






Intangible assets

22,441

22,441


Tangible assets

5,904

3,153

9,057


Interests in associates

90

90


Other receivables

85

85


Deferred tax assets

282

282

 

3

Exceptional items






Unaudited

Unaudited

Audited



6 months to
30 June
2017

6 months to
30 June
2016

Year ended
31 December 2016



£'000

£'000

£'000


Acquisition costs

(458)


Contingent consideration

(1,786)


R&D tax credits

225


Exceptional items

(1,561)

(458)

 

Contingent consideration payable for the ANNOVA acquisition is linked both to average profitability over a 3-year earn out period and achievement of key commercial milestones. ANNOVA outperformed the first-year expectations that were reflected in projected amounts payable in the acquisition balance sheet. The anticipated total contingent consideration payable was reassessed at 30 June 2017, resulting in the exceptional charge.

 

Up to and including 2016 R&D tax credits were incorporated into the net tax charge but from 2017 these are to be treated as deductions from operating expenses. SCISYS anticipates that it will no longer qualify for the SME tax credit scheme in 2018 as it expects to exceed the headcount eligibility threshold so the above-the-line tax credit in the current period is treated as an exceptional item.

 

The 2016 acquisition costs represent fees paid to professional advisors and statutory charges relating to the acquisition of ANNOVA that do not qualify for capitalisation as costs for issuing debt or equity instruments.



 

 

4

Taxation






Unaudited

Unaudited

Audited



6 months to
30 June
2017

6 months to
30 June
2016

Year ended
31 December 2016



£'000

£'000

£'000


Current tax (credit)/charge

(114)

109

393


Deferred tax (credit)/charge

(168)

37

(13)


Total tax (credit)/charge

(282)

146

380

 

 

 

 

5

 

 

The charge for taxation for the six months ended 30 June 2017 reflects an effective rate for the period consistent with the anticipated rate for the full year.

 

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 2017.

 

6

(Loss)/earnings per share

 

The calculation of the Group basic and diluted (loss)/earnings per ordinary share is based on the following data:

 



Unaudited

Unaudited

Audited



6 months to
30 June
2017

6 months to 30 June      2016

Year ended
31 December 2016



£'000

£'000

£'000


(Loss)/profit attributable to shareholders

(1,414)

827

2,222


Number of shares

'000

'000

'000


Basic weighted average number of shares

29,005

29,043

29,047


Diluted weighted average number of shares

29,677

31,016

29,577


Basic

(4.9)p

2.8p

7.6p


Diluted

(4.8)p

2.7p

7.5p

 

The weighted average number of shares for the calculation of basic (loss)/earnings per share excludes own shares held in treasury.

 

The weighted average number of shares for the calculation of diluted (loss)/earnings per share includes own shares held in treasury together with EMI, CSOP and unapproved share options outstanding during the period.



 

 

7

Adjusted Earnings per Share






Unaudited

Unaudited

Audited



6 months to
30 June
2017

6 months to 30 June      2016

Year ended
31 December 2016


Basic

1.4p

2.9p

9.2p


Diluted

1.3p

2.9p

9.0p

 


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 post-tax 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 6  and the following earnings data:

 



Unaudited

Unaudited

Audited



6 months to
30 June
2017

6 months to 30 June      2016

Year ended
31 December 2016



£'000

£'000

£'000


(Loss)/profit attributable to shareholders

(1,414)

827

2,222







Adjusted for:





Exceptional items

1,561

458


Corporation tax

(589)


Amortisation of intangible assets

991


Deferred tax

(168)


Share based payments

14

19

(14)


Adjusted earnings

395

846

2,666

 

 

 

 

The weighted average number of shares for the calculation of basic earnings per share excludes own shares held in treasury.

 

The weighted average number of shares for the calculation of diluted earnings per share includes own shares held in treasury together with EMI, CSOP and unapproved share options outstanding during the period.

 

 

8

Dividends

 

For year ending 31 December 2016 the Company paid a final dividend of 1.43 pence per share in July 2017.  The Board is recommending payment of an interim dividend for 2017 of 0.59 pence per share, to be paid on 9 November 2017 to shareholders on the register as at 13 October 2017.

 

 

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.

 

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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