Synectics shares plummet after profit warning

25th Jun 2014 09:44

Shares in Synectics, the surveillance technology and security systems group, plummeted on Wednesday after the company said results would be "significantly below market expectations" due to the current crisis in Iraq and other contract issues.The firm said it had suffered "recent negative impacts" that have substantially lowered its forecasts for the first half ended May 31st and for the full-year ending November 30th.It expects to report an underlying loss before tax of around £2.5m for the first half, compared with an underlying profit of £3.6m the year before, and has decided not to pay an interim dividend (2.5p paid last year). However, trading is expected to be strong in the second half and the board intends to keep the final dividend at the same level.Synectics has experienced delays in awarding three oil and gas surveillance systems contracts for re-building and expanding oil refineries in southern Iraq. These are worth £7m in revenue and around £2.1m of in net profit to the group and have now been removed from the company's forecasts for the second half."It is impossible to say at this stage when or whether these delays will be resolved, and the company's expectations for the 2015 financial year are not dependent on any such resolution."Meanwhile, trading in the first half has suffered from delays, inefficiencies and cost overruns with a large surveillance system integration project in the UK.The consolidation of two of its Systems division's operations facilities into a single new site in Scunthorpe has also disrupted trading more than expected.The stock was down 24.9% at 320p by 09:10.BC