10th Mar 2015 11:12
LONDON (Alliance News) - Synectics PLC saw its shares fall Tuesday after it said it swung to a loss in its last financial year as it was hit by the drop in oil prices, management failings in its integration and managed services business and increased costs and operational gearing as a result of recent investments that were meant to support growth.
Shares in the security and surveillance systems maker were down 8.7% at 137.00 pence Tuesday morning after it reported a GBP3.7 million pretax loss in the 12 months to November 30 compared with a GBP6.6 million profit a year earlier as revenue fell to GBP64.6 million, from GBP82.4 million.
It blamed the sharp oil price decline in recent months as well as increased unrest in the Middle East for causing oil and gas industry clients to delay projects. Revenue in this sector fell by 46% on the year, or GBP10 million.
However, it also blamed what it described as management failings in its integration and managed services business. It said changes introduced by new management of the unit in 2013 led to high staff turnover and less effective oversight of large, complex projects. That meant several of these projects suffered lower margins and one recorded substantial losses.
Synectics said it had taken "radical action" to correct matters, but not before GBP8.2 million was knocked off revenue and GBP3.5 million of profits compared with the previous financial year.
Still, the company said it is better placed for the current financial year and expects to report improved results. It has moved to cut its overheads by an annualised GBP2.2 million, and ended the last year with an order book of GBP28.6 million, up from GBP28.1 million at the end of the previous year.
"Although the impact of the decline in the global oil & gas market last year was not foreseen, Synectics has fully addressed those issues within its control that contributed to the poor financial performance in 2014," Chairman David Coghlan said. "With a leaner cost base, strengthened order books in early 2015, and under the leadership of new Chief Executive Paul Webb, we expect the group to deliver significantly improved results in the current financial year."
By Steve McGrath; [email protected]; @stevemcgrath1
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