It’s amazing what can be achieved when one is forced to focus the mind. Following a small decrease in revenues from its Government division in H1 (down 0.3% - see SciSys cites contract, project and payment delays), SciSys, SITS supplier to the government, space, and broadcast & media sectors, entered H2 assuming that things would worsen. In actual fact, when the year closed revenues from the Government, Defence and Environment sectors were 12% higher in FY10 than in FY09. New contracts were signed with the UK Environment Agency (see SciSys inks £2m public sector deal with Capgemini), Polish Institute of Meteorology & Water Management and the Irish Environmental Protection Agency. When some of the large projects it was expecting to contribute in 2010 were put on hold, SciSys went all out to “find alternative revenues to cover the shortfall”. Just imagine what it could have achieved if it had put that much energy into the business in the good times!
Overall that meant that SciSys achieved an increase of 5% in total revenues to £43.6 million. Adjusted operating profit increased by 24% to £2.1 million and operating profit increased from £0.6 million to £1.7 million. Most of the increase in profitability was thanks to the Media & Broadcast division, and in particular to its contract with the BBC. Despite growing public sector revenues, margins were squeezed in this area due to pricing pressure associated with long-term application support contracts. Contribution was 12% lower than in 2009. Margins in the Space division were negatively impacted by the cost of restructuring the UK operations.
SciSys entered 2011 in a much stronger financial position than previously following strong cash generation in Q4. The company has sorted out problems related to the implementation of new contractor payments system at the European Space Agency and it appears it is being paid again! Net cash funds stood at £4.9 million at the end of the year compared to £2.4 million at the end of 2009.
Hopefully the renewed vigour for winning new business will continue no matter what the market conditions...