Synectics PLC

Synectics plc (SNX) is a Studley, the United Kingdom-based professional business support service company that delivers, manages, and designs integrated security and surveillance systems for several security environments international. The company’s business is differentiated in two division: IMS (Integration and Managed Services), and Systems.  The group mainly operates across gaming, transport and infrastructure, oil and gas, and high security and public space sectors. The company provides Synergy 3, which is a control and command software platform for security. The group was earlier known as Quadnetics Group plc.

Financial Highlights (H1 FY2019, £’000)

(Source: Interim Reports, Company Website)

In H1 FY2019, the company’s reported revenue stood at £33.6 million, a decrease from the corresponding period of the last year. The company recorded a consolidated underlying profit of £1.2 million, a decline from the £1.5 million in H1 FY18. Diluted and basic earnings per share surged by 0.2 pence and 0.3 pence to 6.1 pence and 6.2 pence respectively as compared with the previous year same period data. On an underlying basis, basic and diluted earnings per share increased to 6.2 pence.

Order intake stood at £37.6 million. This represents a book-to-bill ratio of 1.15. On 31^st May 2019, the order book stood at £28.2 million. This signifies a like-for-like surge of 23 per cent from the position at the start of the current financial year. On 31^st May 2019, net cash stood at £5.3 million.

The interim dividend per share stood at 1.3 pence, an increase from the previous year same period data. On 20th September 2019, dividend will be paid to shareholders on the register date 23th August 2019.

Share Price Performance

Daily Chart as at 23rd July 2019, before the market closed (Source: Thomson Reuters)

On 23rd July 2019, at the time of writing (before the market close, GMT 1:59 PM), Synectics PLC shares were hovering at GBX 199.50 and increased by 10.83 per cent as compared with the previous day closing price. Stock's 52 weeks High is GBX 230 and 52-weeks Low is GBX 155.50. The company’s stock beta stood at 1.16, reflecting higher volatility against the benchmark index.

Conclusion
According to the current financial statement, the current order book and the pipeline of high probability of new business, the company expects continued decent results from the group’s Gaming surveillance activities in H2 FY19. From the IMS division, the company also expect a slight increase in revenue and profits due to the healthy pipeline of seemingly imminent new business opportunities.

Although, the company believe that the position in its current marketplace continues to reinforce, the company had shown poor top-line performance in the first half of the financial year 2019. The company’s profitability margins have remained stagnant or declined. The company operates in a challenging environment which requires continuous investment, sometimes at the cost of profitability, to stay ahead of its competitors.

Based on the uncertainties and week financial performance of the company, we recommend investors to keep a “Watch” on the stock at the current price of GBX 199.50 (as on 23rd July 2019), and support from future growth catalysts needs to be evaluated at a subsequent stage.

Carclo Plc

Carclo Plc (CAR) is an Ossett; the United Kingdom-based Chemicals company incorporated in the year 1924. The company, through its subsidiaries, is engaged in the process of development, manufacturing and selling of technical plastic products. The company has divided its business into four reportable segments being CIT Technology, Aerospace, LED Technologies and Technical Plastics. The company has its operations in multiple geographic locations, which includes the Czech Republic, India, China, North America and the United Kingdom.

Recent News
On 22nd July 2019, Monday, Carclo plc issued an update on the release of its results for the year ending March 31st, 2019. The company was expected to release results on 23^rd July which has now been delayed to some other date, after finalising the banking document. For the Q1 of the financial year 2020, the company’s Aerospace Divisions and Technical Plastics division are performing well. The poor performance of Wipac business resulted in a decline in the LED Division and incurring losses for the period.

Financial Highlights – H1 Financial Year 2019 (£, thousand)

(Source: Interim Report, Company Website)
 
For the first half of the financial year 2019,the company’s revenue stood at £71,455 thousand as against £72,178 thousand for the H1 FY2018. The marginal decline in the revenue was driven by a decline in revenue from Technical Plastics business segment for the period. The company’s operating profit for the H1 FY2019 stood at £4,273 thousand versus £5,404 thousand in the H1 FY2018. In the H1 FY2019, the company’s underlying PBT (Profit before tax) declined by 22 per cent to £3,568 thousand from £4,550 thousand in the H1 FY2018. The company’s PBT for the H1 FY2019 stood at £3,352 thousand versus £4,550 thousand in the H1 FY2018. The Profit after tax attributable to shareholders was £2,539 thousand in H1 FY2019 as against £3,297 thousand in the H1 FY2018. The basic and diluted earnings per share for the H1 FY2019 stood at 3.5 pence versus 4.5 pence in H1 FY2018. The underlying earnings per share were at 3.7 pence in H1 FY2019 as against 4.5 pence in H1 FY2018.

Share Price Performance

Daily Chart as at 23rd July 2019, before the market closed (Source: Thomson Reuters)

On 23rd July 2019, at the time of writing (before the market close, GMT 1:58 PM), Carclo Plc shares were hovering at GBX 14.91 and was up by 5.74 per cent as compared with the previous day closing price. Stock's 52 weeks High is GBX 125.90, and 52-weeks Low is GBX 12.00.

Conclusion
The company’s financial performance declined for the period and the company’s highest revenue generating business Technical Plastics financial performance had also declined. The company’s operating cashflow had reduced drastically to £1.6 million in H1 FY 2019 from £3.5 million in H1 FY2018 and on the other hand the working capital requirements have also increased to £5.3 million for the period.

The company’s profitability margins have remained stagnant or declined.The company operates in a challenging environment which requires continuous investment, sometimes at the cost of profitability, to stay ahead of its competitors. The company’s LED Technologies and Aerospace business divisions have performed well.The company launched new programmes that will help to increase design and tooling profits.

Based on the above rationale and week financial performance of the company, we recommend investors to keep a “Watch” on the stock at the current price of GBX 14.91 (as on 23rd July 2019), and support from future growth catalysts needs to be evaluated at a subsequent stage.

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