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SciSys
- BY: Andrew Hore |
- POSTED: 01/04/2008 |
IT business SciSys is on course to return to profit in 2008.
Full year revenues were flat at £25.6m but an underlying profit of £1.6m in 2006 was turned into a loss of £1.4m. SciSys broke even in the second half thanks to the contribution from its German acquisition VCS. The slump into loss was caused by problem contracts in the public sector and Management has had to make provisions for these. These provisions should cover the expected losses.
Net debt is £700,000 and there are spare banking facilities. However, management has taken the view that it is prudent to conserve its resources and isn’t paying a final dividend.
House broker Landsbanki forecasts a profit of £1.1m on revenues of £32.5m in 2008. This is a downgraded forecast but it appears achievable particularly as SciSys has a good first half order book. At 25p, up 2.75p on the day, the shares are trading on 12.5 times forecast earnings.
VCS has been a good acquisition and it is waiting to see if it has won two separate pieces of business. It has taken SciSys into the broadcast sector, thereby reducing its dependence on space and the public sector.
Executive chairman Mike Love acquired 700,000 shares at 21.5p each, taking his stake to 15%. He has spent £618,000 on shares since taking charge of the company last November.
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