SciSys has released its results for the year to December 2011. The supplier to the government, space and broadcast & media sectors saw revenues fall and remains “confident” but “cautious” regarding the year ahead. SciSys shares are down 1.7% in early trading this morning.
SciSys’s drop in total revenue in 2011 (by 3% to £42.3m) was not unexpected, given the pronouncements from management throughout the period about the toughness of their market (see for example SciSys optimistic on 2012). The Environment division of the company seems to have had an especially tough time, thanks to the reduced governmental emphasis on all things green during these restricted economic times.
But SciSys’s underlying picture on services business performance and orders holds some positives. The Government and Defence area in particular seems to have taken some decent order momentum into 2012 (see for example SciSys bags £2.5m sub contract from Lockheed Martin. And across the company, professional services actually grew healthily in 2011, by 11% to revenues of £36.9m. That means the remainder of the business - mostly reselling of third party hardware and software - fell by a whopping 48%.
As for profits, the rise in higher margin professional services vs lower margin reselling helped. Operating profit before shared based payments and exceptionals was up 11%, which improved the operating margin from 4.9% to 5.6%.
Overall, despite a solid performance under the market circumstances, management is wise to retain its cautious view of the year ahead, especially given what non-exec Chairman Mike Love describes as “a slower start to 2012 compared with 2011”.