Synectics Regulatory News (SNX)

Synectics plc

("Synectics" or the "Group")

Trading Update

Synectics plc (AIM: SNX), a leader in the design, integration, control and management of advanced surveillance technology and networked security systems, provides the following update on trading for the year ending 30 November 2019.

Results for the year ending 30 November 2019 are now anticipated to be materially below market expectations. The Group's core Systems division, supplying Synectics' high end proprietary surveillance systems globally, has performed well in the year so far and is expected to generate results ahead of the Board's expectations. However, this positive momentum has been more than offset by continued weakness in the Group's UK integration businesses in security and mobile transport.

Based on the pipeline of expected new orders, and customer schedules initially indicated, the Group had anticipated a significant improvement in revenue and profits from its Integration and Managed Service division in the second half of this year. However, the weak performance reported at the half year has continued. UK market conditions remain difficult and, with apparent uncertainty among Synectics' private and particularly public sector customers, the pattern of order deferrals and customer-led delays in the progress of existing contracts continues.

In addition, the Group's on-vehicle security activities were expected to deliver an acceptable positive profit contribution in the current financial year. However, with the disruption from the bankruptcy of a bus manufacturer customer and new bus registrations in the UK market continuing to be substantially down year-on-year, this will not now be the case.

By contrast, the Group's core Systems division, with the majority of its revenues generated outside the UK, has made solid progress throughout the year and its results are expected to be ahead of the Board's expectations. In particular, Synectics has made substantial progress in its target market sectors of Transport & Infrastructure and High Security and continues to achieve excellent results from its Gaming surveillance activities in the Far East and North America.

The Group's competitive position continues to benefit both from its focus on sophisticated high-end customers with increasingly specialised security and surveillance needs and from investment committed to enhancing Synectics' core technology.

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 and the Group's revenues in the sector remain at a similar level to last year and well below historical levels.

The Group's 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. The Board sees increasing opportunities to capitalise on emerging software technology applications to expand Synectics' position at the forefront of the market for complex surveillance solutions and is determined that the Group will continue to invest appropriately to grasp those opportunities.

Synectics will release final audited results for the year to 30 November 2019 on or around 25 February 2020.

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