Synectics shares slide on H2 profit warning

27th Oct 2014 11:32

Shares in AIM-listed Synectics tumbled by nearly a third on Monday morning after the group warned that its profits would be "significantly" below market expectations of £5m for the second half.This was due to continued contract delays and difficulties in its UK security integration activities, the control room surveillance markets operator said.The contract delays, relating mostly to its oil and gas activities, were blamed on falling global energy prices, a worsening of the political situation in the Middle East and reduced confidence in long-term investment planning in the sector generally."Until recent months Synectics' sales into projects in this sector, characterised by long gestation periods and a high degree of revenue visibility, were delivered consistently in line with management's plans. This historical record of consistency led to a degree of confidence in forecasts for Oil & Gas sector revenues in the current year that in the event has been unjustified," the group explained.Meanwhile, trading in the group's UK security integration activities in the fourth quarter is "now likely to be below the board's previous expectations", mainly due to the lengthening of procurement cycles for larger projects mostly within the UK public sector.Synetics said it remained confident in the validity of its strategy and predicted that further growth would resume "soon".Shares had fallen 30.16% to 220p by 11:54.