SCISYS Group

LN: SSY

£74.5m market cap

251p last close

SCISYS Group provides a range of professional services in support of the planning, development and use of computer systems in the space, media/broadcast and defence sectors, as well as to other public and private sector enterprises.

Investment summary

The Canadian IT services company CGI is acquiring SCISYS for 254.15p in cash. The offer price represents a 24.6% premium and values the entire issued and to be issued ordinary share capital of SCISYS at c £78.9m. In addition, SCISYS shareholders will receive the final dividend of 1.73p. With a market capitalisation of c $19bn, CGI is a giant in the IT services space. Notably, in 2012 CGI acquired Logica, the LSE-listed UK IT services leader, at a c 60% premium, valuing Logica at c £2bn including debt, or c 0.5x EV/sales. The SCISYS offer price translates to c 20x our FY19 earnings forecast, which falls to c 19x in FY20e and 18x in FY21e. Alternatively, the offer values the business at c 1.2x FY20e revenues and c 11x EBITDA.

Y/E Dec
Revenue (£m)
EBITDA (£m)
PBT (£m)
EPS (p)
P/E (x)
P/CF (x)
2017A 53.2 5.4 3.6 9.3 27.0 7.0
2018A 58.4 6.5 4.6 13.1 19.2 13.1
2019E 61.5 6.7 5.0 12.7 19.8 11.6
2020E 63.5 7.0 5.4 13.4 18.7 11.2
Last updated on 19/07/2019
Industry outlook

SCISYS is a specialist provider of high-value IT solutions, focusing on specialist markets of space, media and broadcast, and defence sectors, along with other public and private sector enterprises. In recent years, weakness across the group’s significant public sector customer base has been offset by strong performances from space and defence. The acquisition of ANNOVA Systems in 2016 added critical mass to the Media & Broadcast activities while extending the previous radio-focused offering into television and online.

Last updated on 19/07/2019
Sector
TMT
Share price graph
Balance sheet
Forecast net debt (£m) 0.3
Forecast gearing ratio (%) 1
Price performance
%
1m
3m
12m
Actual 0.4 30.1 44.3
Relative* (1.0) 29.6 48.8
52-week high/low 252.0p/140.5p
*% relative to local index
Key management
Mike Love Chairman
Klaus Heidrich CEO
Chris Cheetham FD

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