Synnovia swings to loss after reinvestment offsets revenue growth.
Synnovia on Tuesday reported that it swung to an annual loss before tax as investment in future growth offset record revenue.
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The industrial components manufacturer reported that it swung to a loss before tax of £0.7m for the year ended 31 March, from a profit of £2.8m the year before, while adjusted pretax profit dropped from £3.4m to £3.0m
Record revenue of £81.6m, up 9% from the year before, was offset by a 12% rise in cost of sales to £57.1m and a 17% jump in administration expenses to £20.0m as the AIM traded company invested in new facilities and hired and trained new staff.
Faisal Rahmatallah, chairman of Synnovia, said: "FY2019 has been another excellent year for organic growth. To maintain our momentum, we have recruited and trained new staff, invested in new facilities and equipment, and refinanced our banking facilities post period-end. This has supressed our profitability for the year somewhat as we continue to invest for future growth. We consider this reinvestment policy to be the best approach for the creation of long-term shareholder value."
Synnovia, which changed its name from Plastics Capital during the year, stated that trading in the ongoing year has been steady despite a backdrop of poor economic conditions, though sales volumes for the first quarter were lower than those for the last quarter of its 2019 financial year.
Synnovia's shares were down 2.92% at 83.00p at 1246 BST.