Shares in SciSys jumped 4p to 41p each on the news that the IT services business has won a £3.5m contract with the Environment Agency.
SciSys develop an IT solution for the Carbon Reduction Scheme, which is using a ‘cap and trade’ approach to reduce energy use by large public and private organisations. The development phase will last 15months and there will be a further 3.5years of support revenues.
The management team has been built up at SciSys and this has helped to turnaround its business. There will be benefits in 2009 from the full integration of the space business of VCS – which was bought in 2007 - with the original SciSys business.
Government business was behind budget last year but other new contracts should be won in the next couple of months to add to the Environment Agency business. Management also says that the government appears to be paying its bills more quickly.
The overall order book is strengthening and there is a good pipeline of potential contracts.
Revenues are expected to be flat at £38.2m in 2009. The 2008 loss of £1.2m should be turned into a 2009 profit of £200,000. Longer-term, operating margins could return to 6% plus.
Net cash was £1.4m at the end of 2008 and it has improved in the first quarter of 2009.
SciSys is valued at £11.7m.
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