SSY.L Regulatory News (SSY)

SciSys PLC

TRADING STATEMENT

SciSys PLC, AIM stock code: SSY, ('SciSys' or the 'Company') - the supplier of bespoke software systems, IT based solutions and support services to the Media Broadcast, Space, Government & Defence, Environment and Application Support sectors is pleased to release the following trading statement ahead of its AGM on 26 May.

The Directors are happy to report that they currently anticipate results for the first half of 2011 will be consistent with market expectations for the full year.

SciSys opened the year with a comfortable order book position of £26.5m and order intake for 2011 to date is in line with expectations.

While its trading outlook remains positive, the Company recognises the continuing impact of the UK Government's 2010 spending review on deferrals of potential projects and programmes in the UK public sector.

Nevertheless with over 50% of its business derived from outside the UK and with a broad spread of customers in other markets, SciSys believes that it is sufficiently resilient to withstand any adverse conditions in the UK public sector.

The Company continues to show healthy cash flows which are reflected in the strength of its balance sheet. The Directors have considered the most appropriate use of surplus cash resources. Pending identification of short term acquisition opportunities, the Directors are pleased to announce that SciSys has agreed to purchase the freehold in its headquarters building, for a consideration of £5.04 million.

The Chippenham property provides office accommodation of 44,000 square feet over two storeys and exchange of contracts has occurred with the purchase expected to complete before the end of May 2011.

The Company considers that this acquisition will have an immediate positive impact on profitability by removing a substantial rent liability. The property will be sublet on a long term lease to its wholly owned subsidiary company, SciSys UK Ltd, which is currently the primary occupier, and SciSys will also seek to install other tenants in the building to generate additional income.

The transaction is to be funded partly from cash held by the Company, partly from a commercial loan from a UK Bank over a term of five years and partly by way of a loan from the Company's Executive Chairman, Dr Mike Love, over a term of three years.

The loan from Dr Love is a related party transaction under AIM rules. The interest rate applicable to the loan will be 5.25 per cent above the base rate of National Westminster Bank plc and an arrangement fee will also be payable on drawdown. That fee will be a minimum of £10,000, together with an additional £6,000 if the amount drawn down exceeds £500,000 (up to the maximum amount of the loan, being £1 million). If the Company fails to repay the loan in full on or before the due date (May 2014), Dr Love shall be entitled to convert any amount outstanding into ordinary share capital, provided that:

(i) the aggregate nominal value of the ordinary shares to be issued does not exceed £362,581 and/or

(ii) the conversion will not result in Dr Love and persons acting in concert with him carrying more than a combined interest of 29.9 per cent of the voting rights in the Company. Any conversion will be by reference to the average mid market closing price of an ordinary share over the 5 business days preceding the Company receiving notice of conversion from Dr Love.

The Directors (excluding Dr Love), having consulted with SciSys' Nominated Advisor, Canaccord Genuity, are satisfied that the terms of the loan from Dr Love are fair and reasonable insofar as the Company's shareholders are concerned.  

Given the Company's strong balance sheet, and subject to continued satisfactory trading, it is the Directors' current intention to continue with the progressive dividend policy announced in 2009.

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