30 October 2019 – trading update
A weak trading update has been released and results for the year ending 30 November 2019 are now anticipated to be materially below market expectations. The core Systems division, which supplies Synectics’ high end proprietary surveillance systems, has performed well in the year so far and is expected to generate results ahead of expectations. However, this has been more than offset by continued weakness in the UK integration businesses in security and mobile transport. Work on the breakthrough major European transport infrastructure project announced in July 2019 is progressing as planned and is expected to be delivered in 2020. The overall market for oil & gas infrastructure remains subdued but Synectics’ increased investment in Research & Development continues, with more resources being dedicated to its next-generation software solutions, as well as further enhancements to its Synergy software platform and cyber security resilience. Final results for the year to 30 November 2019 are due to be released on or around 25 February 2020. There are better opportunities elsewhere in the meantime so we downgrade to HOLD.