As the Olympics progress, the key industry in the east end of London is security. And Synectics (formerly Quadnetics) is becoming a bigger player in one of the few growth industries there, in the rest of the UK and overseas. For proof of this, consider the size of its order book. At a time of recession it has risen from £26.1m at the end of May 2011 to £35.9m last November and is now a record £40.6m.
If exceptionals (led by the defence division's closure) are ignored, underlying profits in the half year jumped by £1m to £2.8m. Network Systems, which specialises in video-based electronic surveillance systems, is the company's largest subsidiary and the star performer, too. The key to its £1m profits advance was the growth of surveillance systems for new US gaming locations. There were also strong trading performances from integration services and industrial systems. The latter business provides surveillance systems for hazardous environments such as offshore oil and gas facilities. However, the transport systems division reported a £230,000 loss, but that was struck after including a £500,000 loss from a newly acquired German surveillance business.
Unlike most businesses, Synectics seems confident about prospects - at least in the short term. The second half is traditionally weaker but brokers still expect full-year revenues to rise from £69m to £78m and for adjusted profits to climb from £3.5m to £4.3m to produce EPS of nearly 20p (16.4p in 2011).
SYNECTICS (SNX) | ||||
|---|---|---|---|---|
| ORD PRICE: | 285p | MARKET VALUE: | £49.8m | |
| TOUCH: | 280-290p | 12-MONTH HIGH: | 304p | LOW: 196.5p |
| DIVIDEND YIELD: | 2.5% | PE RATIO: | 30 | |
| NET ASSET VALUE: | 187p* | NET CASH: | £2.67m | |
| Half-year to 31 May | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 34.0 | 1.70 | 8.00 | 2.50 |
| 2012 | 38.4 | 1.70 | 7.30 | 2.50 |
| % change | +13 | - | -9 | - |
Ex-div: 22 Aug Payment: 21 Sep Aim: Electronic equipment *Includes intangible assets of £24.5m, or 139p a share | ||||
