Scisys posts profit warning after project complications and weakness of the euro

Computer software group Scisys warned its profits in 2015 will be lower than expected after experiencing difficulties in its enterprise solutions and defence division and the weakness of the euro.The group said that since entering into the system integration phase, it realised that the size and complexity of the project has been underestimated. As a result, it will make provisions for the anticipated additional cost to complete the project.The weakeness of the euro also hurt its growth and had an impact in profits, which will see a "substancial short fall" this year compared to previous forecasts.On the bright side, Scisys said it remains profitable, but it may breach some of its UK banking covenants.Chairman Mike Love said: "The board views a profits warning as deeply regrettable and wholly disappointing given the strong and robust results achieved in the preceding five years.He added that "this failure in estimation and breakdown in controls is an isolated incident among many current successful projects. Scisys remains fundamentally strong and confident in its long term ambitions".FinnCap analysts said that this was a one-off issue from a company that has a track record of strong cash generation, anticipating that the progressive dividend will be unchanged."Overall, this is disappointing but is a ring-fenced issue and procedures have been amended to ensure no recurrence."The company remains a high-quality business on a very low rating, and weakness on the back of this news may provide an opportunity for longer-term investors," the broker added.Shares plunged 37.38% to 51.66p on Thursday at 08:48.