Synnovia PLC Trading Update and Restatement of Accounts (0119X)
April 25 2019 - 1:00AM
UK Regulatory
TIDMSYN
RNS Number : 0119X
Synnovia PLC
25 April 2019
25(th) April 2019
Synnovia plc
("Synnovia" or the "Group")
Trading Update and Restatement of Accounts
Trading Update
Further to its trading update announced on 19 February 2019,
Synnovia (AIM: SYN) announces that it expects results for the
financial year ended 31 March 2019 to show significant growth in
both sales and profits albeit, while up significantly, profits are
expected to be marginally below current market expectations.
Overall, we experienced another year of strong sales and profit
growth. Our Industrial Division, led by the bearings business, has
performed extremely well as new business came on stream after the
unexpected delays we reported in the prior year. This performance
was supported by the acquisitions completed during the past three
years in the creasing matrix business, which have continued to show
good improvement.
As previously reported, our Films Division has continued to grow
both sales and customers despite becoming capacity constrained
mid-year due to some relatively minor project delays in planned
expansion within the division. Whilst new capacity came on stream
in early calendar year 2019, it was too late to enable performance
to recover fully before the financial year came to an end.
Profitability in the Films Division was adversely affected by
these project delays, with the Group having incurred costs to meet
anticipated sales growth. In addition, there has been some modest
cost inflation in energy, packaging and logistics. None of these
factors have applied to the Industrial Division, where margins and
costs increases have been in line with expectations.
We have continued to invest heavily to add capacity and
capabilities to support the sales and profit growth being achieved.
Naturally this impacts depreciation costs, interest costs and cash
flow in the near term. We are confident that these investments will
continue to benefit shareholders over the longer run.
Restatement of Historic Accounts
The Group also reports that, while there is no effect on
reported profitability, it has recently discovered a non-material
overstatement of revenue for the financial year ended 31 March
2018. The overstatement amounts to GBP1.619 million, which
represents circa 2% of reported revenues, together with a
corresponding amount in relation to cost of sales. It is intended
that revenues and cost of sales for that year will be restated in
the forthcoming Report and Accounts for the year ended 31 March
2019. The error arose through a failure to eliminate inter-company
sales and attendant costs and additional checks have been added to
the internal review and audit processes which are designed to
prevent the such a recurrence.
Commenting, Faisal Rahmatallah, Chairman, said: "We are pleased
to report continued strong organic growth across the business over
the last financial year, despite the capacity constraints faced in
the Films Division. The Industrial Division has enjoyed a good
FY2018-19; in particular, the bearings business has performed well
and its prospects are good going forward. In the Films Division,
small delays to capacity expansion projects have restricted profit
growth relative to expectations over the last six months. We enter
the new financial year with these projects concluded and we now
have an excellent platform in the Films Division for profit growth
to resume. We continue to focus on organic growth opportunities
across the business as we enter FY2019-20."
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulation (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
For further information, please contact:
Synnovia plc Tel: 020 7978 0574
Faisal Rahmatallah, Chairman
Nick Ball, Finance Director
Cenkos Securities Tel: 020 7397 8900
(Nomad and joint broker)
Mark Connelly
Callum Davidson
Allenby Capital Limited Tel: 020 3328 5656
(Joint broker)
David Hart
Notes to Editors
Synnovia is a specialist manufacturer of industrial components
and consumables. Applications for these products vary widely and
examples include:
-- Packaging for the food manufacturing and distribution - films, sacks and pouches
-- Steering columns and instrument control knobs in the
automotive industry - plastic ball bearings
-- Hydraulic and industrial rubber hose manufacture - various types of plastic mandrel
-- Cardboard box manufacture - creasing matrices
Synnovia's business model is based on understanding customers'
problems in depth, and then developing and mass producing
proprietary, technical solutions for these problems.
The business operates through two divisions, Films and
Industrial, and has the majority of its production in six UK based
factories, with a further two factories in Asia. Approximately 50%
of its GBP83 million sales are made outside the UK to more than 80
countries.
Further information can be found on www.synnoviaplc.com
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END
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