Euro to Sterling exchange rate was 8% better for SSY YoY
Companies: Scisys
AIM-listed software company Scisys (LSE: SSY) announced solid half-year results this morning for the six months ending 30 June.
The group's results show a marked improvement from last year's setbacks, with revenues up 35% to £22.2m and operating profit of £1.1m, up from a £1.1m loss last year. Basic EPS was 2.8p, up from a 4.9p loss per share last year.
Favourable forex rates made a significant contribution to the results, as the average euro-sterling exchange rate for the period was €1.28/£, an 8% increase from 2015: €1.38/£. As approximately half of the Group's business is conducted in euros, the weakened sterling boosted revenues to record levels.
Better trading performance was reflected in an improved cash flow, with the Group reporting £5.6m in cash, up 86%, and £4.2m in debt, down 14%.
finnCap covered the update in its morning note earlier today:
"The strong first half performance has seen revenue recover from the low point in H1 LY (caused by a one-off problem contract) and returning to levels seen in H1 2013 and 2014. Its European sales (ie Space) also received an additional boost by the Euro strengthening in June, adding c.5% to growth. Headline operating margin was slightly lower than usual due to FX hedging losses, but the underlying divisions have all performed well; professional fees up 40% YoY and 16% HoH; divisional margins are also strong, delivering 29% blended margin ahead of corporate overheads. Cash production was equally impressive, swinging the group back into a substantive net cash position and seeing the reintroduction of the interim dividend. In response, we lift revenue expectations by 7%; however, given the rather exceptional hedging loss, we leave adj. PBT and target price unchanged."
Company Chairman Mike Love, said:
"We are pleased with this bounce back to profitability and healthy organic growth in revenues at the half-year mark. At this point in time we fully anticipate that we can achieve the uplift in full year market expectations as announced in our trading update in August."
