Synertec confirms strong momentum with impressive full-year results as it strategically positions for a low-carbon future
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With its multi-channel tech platform now established, the company is positioned to capitalise on the global sustainability megatrend.
For diversified technology and engineering company Synertec (ASX:SOP), the groundwork has been laid for strong and sustainable growth following a multi-year period of project development.
That strong outlook was a key theme that emerged from the company’s annual results, where it highlighted a pick-up in revenue momentum combined with the balance sheet strength to pursue further growth opportunities.
Those operational improvements have taken place in line with the group’s broader strategic goal – to pursue long-term growth with commercial solutions that contribute to the global clean energy transition.
Looking ahead, Synertec said it’s already seeing signs of a pick-up in activity as the economy emerges from the pandemic, with a number of projects restarting that were previously deferred.
In particular, the company has flagged exciting opportunities in energy and waste-water management, as it executes on the commercialisation strategy for its three core technologies.
Among SOP’s existing clients is oil and gas giant Santos, with whom it’s signed a Memorandum of Understanding (MoU) to develop a renewable energy power system based on solar and battery inputs to power Santos’ Myalla coal-seam-gas development in Roma, Queensland.
Following pilot programs with Chinese state-owned energy supermajors, the company is also developing its Composite Dry Powder (CDP) technology toward its promise of an environmentally friendly and economically scalable treatment of oil and gas drilling mud and cuttings.
Further to this, the company’s precise, safe and environmentally friendly technology for marine vessel LNG transfer, the Custody Transfer System, is nearing commercialisation through a strategic partner, one of the world’s largest providers of LNG shipping solutions.
For longer-term shareholders who participated in the company’s July 2020 share placement, Synertec’s management team has already delivered a return on investment of more than 350%.
And as it converts its multi-year investment strategy into a material uplift in revenues, the company is optimistic of further returns to come as it capitalises on the ‘sustainability megatrend’.
With a technology led, ESG-focused growth strategy, Synertec expects the investments made by both long-term shareholders and the management team “will drive outstanding returns from a business delivering scalable growth in revenue and profitability.”
Synertec closed out FY21 with full-year revenues of $8.4m. Reflecting its strong operating momentum, revenue in H2 ($4.9m) was 40% higher than H1 ($3.5m).
In addition, SOP’s engineering consulting division delivered its strongest year on record, with a steady pipeline of new work already planned for FY22 which has seen Synertec expand its current workforce by 50%.
The company also derived a material amount of revenue from key infrastructure sectors such as water, rail, energy and advanced manufacturing.
“Each of these sectors has been specifically identified by the Australian Government as industries which will lead Australia’s economic recovery from the impacts of the COVID-19 pandemic,” the company noted.
The group flagged an FY21 EBITDA result in line with FY20, with its investments producing a loss of $1.3m before corporate development costs, due in part to one-off costs associated with conducting business remotely due to the pandemic, and an unexpected lift in the cost of indemnity insurance.
In light of those results, SOP expects that its near-term revenue outlook will leave it well placed to drive towards profitability in the years ahead.
And the business is optimistic it can leverage the benefits of around $1.5m worth of investment that it made in FY21 building out its ESG-focused technology platform.
The company has also managed its cash position prudently, and is well-placed to fund further investment in key growth initiatives with a strong balance sheet following the successful execution of its $7.1m share placement earlier this month.
This article was developed in collaboration with Synertec, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.