Surveillance group Synectics secures 61% profit growth

WARWICKSHIRE-based security and surveillance group Synectics is predicting a strong year building on a solid performance during 2012 which saw underlying pre-tax profits rocket 61%.

The Studley company, formerly Quadnetics, is a leader in the design, integration, control and management of advanced surveillance technology and networked security systems.

For the year ended November 30, 2012, consolidated revenue grew by 12% to £77m (2011: £69.1m), with underlying pre-tax profit £5.7m. Underlying operating margin was 7.4% (2011: 5.1%), while underlying diluted earnings per share increased by 56% to 25.2p (2011: 16.2p).

Group pre-tax profit was £4.7m (2011: £2.5m), after exceptional and non-underlying items totalling £0.9m (2011: £1m). These comprised mainly costs on the disposal of the group’s defence activities, and a net gain of £0.3m from adjustments to the deferred consideration estimate and carrying value of the group’s German subsidiary, Indanet.

The group generated positive net cash flow of £3.4m during the year, bringing net cash at year-end, after deducting all borrowings, to £4.6m (2011: £1.3m).

The group’s consolidated order book at November 30, 2012 stood at £36.9m, compared with £35.9m.

David Coghlan, chairman, said: “Recent new contract awards and a substantial pipeline of expected orders underpin our confidence in the continuing momentum of the business.  On this basis, the board expects that Synectics will deliver another good result in the current financial year.”

John Shepherd, group chief executive, said the momentum created by the business in the first half had continued throughout the year, enabling the business to deliver a significantly improved performance compared with last year.  

“It is pleasing to report that we have achieved a further significant improvement in underlying profit as well as generating £3.4m of cash,” he said.

“In spite of the continuing global economic uncertainties, we have grown our sales of large integrated electronic security systems around the world, capitalising on our increasing brand recognition and investment in proprietary software and hardware technology.

“Our current order book and pipeline give us confidence of achieving a strong performance in 2013.”

Important new business won in the period included a six year contract to provide service and maintenance at Magnox nuclear reactor sites across the UK and a new data centre for a large UK corporate customer.
 
Sheffield-based Synectics Network Systems, which provides specialist video-based electronic surveillance systems, enjoyed a strong performance with revenue and profits both up.

Co-located with the Synectics Technology Centre, which provides R&D, products and systems expertise to each of the group’s other divisions, revenue reached £17.8m (2011: £16.2m) and operating profit was £4.8m (2011: £3.8m).

The division benefitted from continued strength in the US gaming market, particularly in the first half, and from solid growth within most of its core customer sectors in the UK and the Middle East.

SNS is beginning to open up substantial opportunities for further growth in the Far East.  Following significant business and sales activity generated in the region last year, the group has opened a new operating hub for Synectics in Singapore.
 
“We are close to finalising an important contract for this new Singapore subsidiary and expect to report on further developments shortly,” it said.