9th Jul 2019 12:17
(Alliance News) - Synnovia PLC swung to a pretax loss despite record revenue in the year ended March 31, the industrial components manufacturer said Tuesday.
The company, which attributed its performance below expectations, made a GBP705,000 pretax loss on a revenue of GBP81.6 million for financial 2019. It made a pretax profit of GBP2.8 million on a revenue of GBP75.1 million in the financial 2018.
On an adjusted basis, the company recorded pretax profit of GBP3.0 million versus GBP3.4 million.
Chair of Synnovia Faisal Rahmatallah said: "To maintain our momentum, we have recruited and trained new staff, invested in new facilities and equipment, and refinanced our banking facilities post period-end. This has suppressed our profitability for the year somewhat as we continue to invest fr future growth. We consider this reinvestment policy to be the best approach for the creation of long-term shareholder value."
"Meanwhile, the board is confident that full year 2020 will be another year of significant progress," Rahmatallah said.
Synnovia invested in new facilities and hired and trained new staff which it said led to a loss, but insisted this was the best way to secure "long-term shareholder value".
The company also spent GBP6.1 million, more than previously predicted, in areas of reinvestment for the business, including GBP4.0 million to provide more capacity in its films division.
It has also set aside another GBP5.0 million in reinvestment in the upcoming year, including GBP1.3 million for a technology revamp. There will also be another GBP3.2 million to assist the move of its bearings division to Thailand, to increase its mandrels production in the US and to add conversion and recycling machinery in its films division.
The company said that sales volumes in the first quarter of financial 2020 were below the final quarter of financial 2019 because of pre-Brexit stock building by clients.
Shares in Synnovia were down 2.9% at 83.00 pence each in London on Tuesday afternoon.
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