25th Apr 2019 11:07
LONDON (Alliance News) - Synnovia PLC said on Thursday it expects profit for its recently ended financial year to be below market expectations, even though sales are set to grow significantly.
In addition, the company will restate its accounts for the year ended March 2018 due to a "material" overstatement of revenue amounting to GBP1.6 million. Revenue for the 2018 financial year was stated at GBP76.7 million.
Shares in the industrial components manufacturer were down 8.7% at 84.96 pence on Thursday.
The error in the financial 2018 results rose through a failure to "eliminate inter-company sales and attendant costs. As a result, revenue and cost of sales for financial 2018 will be restated in Synnovia's report for financial 2019".
For the year ended March 2019, profitability in Synnovia's Films division has been affected by delays in the segment's capacity expansion projects, which led to constrained capacity.
There was also a rise in costs for energy, packaging and logistics, which did not apply to the Industrial division. However, sales and customers in the Films division has continued to grow, Synnovia said.
Synnovia's Industrial division however saw strong sales and profit during the year, due to new business coming on stream, and the support of new acquisitions in the creasing matrix business.
"We are pleased to report continued strong organic growth across the business over the last financial year, despite the capacity constraints faced in the Films division. The Industrial division has enjoyed a good year; in particular, the bearings business has performed well and its prospects are good going forward," said Chair Faisal Rahmatallah.
"In the Films division, small delays to capacity expansion projects have restricted profit growth relative to expectations over the last six months. We enter the new financial year with these projects concluded and we now have an excellent platform in the Films division for profit growth to resume," Rahmatallah added.
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