SciSys, the specialist IT firm with a base in Bristol, has plunged into a £1.1m half-year loss after being hit by problems with a large fixed-price project.
Sterling’s strength against the euro also dragged down earnings at the firm, which has its roots in the European Space Agency and has operations in Germany. Revenues for the six months to June 30 fell by 22% to £16.5m. 
Veteran chairman Mike Love described the results as “very disappointing” but said potential new contract wins would deliver a better second half.
Revenues fell by 22% to £16.5m in the six months to June 30. The £1.1m loss compares with a pre-tax profit of £1.3m for the equivalent period last year.
Dr Love said: “Our markets remain tough but opportunities exist and we are confident of winning several additional new projects in the second half. The pipeline of prospects is particularly encouraging, which bodes well for a sustained recovery. We are confident that we will achieve the revised market guidance for the full year.”
The firm said the impact of the problematic contract with an unnamed client had reduced revenues in other parts of the group as resources were committed to the project for longer than planned, reducing capacity to capitalise on other revenue generating opportunities.
It also said there had been further downward pressure on revenues in the first six months caused by deferrals of expected revenues in all divisions. However, a number of anticipated contract wins had already materialised in the second half.
The firm said in its half-year statement: “Resolving the issues on the errant project remains our short-term priority and the steps we have taken are progressing constructively. In combination with the projected ramp up from July onwards, we remain confident in achieving the revised market guidance for the full year.”
Constructive progress had been made with the client, it said, while it had also secured a contracts with the BBC, Lockheed Martin and the MoD and had extended contracts for additional maintenance and software change on the Galileo space project.
Millions of pounds were wiped off SciSys shares in June when it issued a profits warning over the contract and currency problems. It also warned it was at risk of breaching its banking covenants.
Within hours of that announcement SciSys’ shares had tumbled by 38% despite the firm’s insistence that was its banks were being supportive. Earlier this month it said it had reached agreement with its banks, triggering a part recovery in its share price.
SciSys employs nearly 450 staff across its offices in Brislington, Chippenham, Leicester and Reading and two in Germany. It develops complex IT projects in sectors such as space, defence and media for clients spanning the European Space Agency, the BBC, Airbus and the Ministry of Defence.
