Synectics: Results slightly ahead of expectations, Good start to 2013. Further to go!
Synectics (LON:SNX) (360p and 2.1% of JIC Portfolio) announced a strong set of results for the year ended 30th November 2012 driven principally by an improvement in operating margin from 5.1% to 7.4%. Turnover was pretty much in line with expectations, up 12% to £77m whilst earnings per share were about 5% ahead of forecasts at 25.2p, up 56% on 2011. The dividend was increased by 7% to 7.5p The Company also increased its net cash during the year from £1.3m to £4.6m at 30th November 2012.
The outlook statement is positive with management re-affirming the target of achieving operating margins in the 8-10% range. The Chairman, David Coughlan said;
"The Group's consolidated order book at 30 November 2012 stood at £36.9 million, compared with £35.9 million the previous year. 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."
Conclusion: An excellent set of results and a good start to the current year. On consensus forecasts the shares are rated at 12.3x 2013 earnings for growth of 15% and yield 2.1%. I expect earnings forecasts for the year to November 2014 to show further strong growth and anticipate the shares making further progress. Happy holder.
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Synectics plc, formerly Quadnetics Group plc, operates in control room surveillance markets. The Company’s markets include urban surveillance, offshore adverse area surveillance (oil, gas, chemical and mining), casinos, military, banking, retail, transport (buses and trains) and prisons. The Company is engaged in high security programs globally. It operates in the United Kingdom, the United States and the Far East. In North America, it is investing in routes to market for its next generation solutions in mobile, transportation, marine, oil and gas, retail and urban surveillance programs. It is selling EX explosion rated, marine and hazardous area surveillance products into the Far East shipyards and it is working with its partner to extend the portfolio to the range of Synectics products and services. In February 2013, the Company acquired 100% interest of Indanet AG. more »
