SCISYS has revealed that it has been hit by cost overruns at a fixed-price development project. We note this is the group’s first significant problem project since FY07, as it has been managing its projects more effectively since then, having put more rigorous procedures in place. Trading across the rest of group has been broadly in line with expectations. However, SCISYS has also been affected by the recent strength in sterling against the euro. We have cut our forecasts, and SCISYS says it might be in breach of its UK banking covenants. Nevertheless, the business remains profitable at the pre-tax level, has banking facilities in place and a balance sheet supported by sizeable property assets.
