Polish IT firm Sygnity counts on higher margins, upholds 2013-2015 strategy

By bne IntelliNews May 29, 2014

Listed IT company Sygnity sees factors that may lead to an increase of its gross margin on sales in coming quarters - these include its backlog, characterised by higher profitability, according to the company's CFO Wieslaw Strak.

He explained that the gross margin's decline to 19.0% in Q1 of the firm's FY 2014 (i.e. Q1 of calendar year 2014) from 20,8% a year before was in line with the company's plans. If it was not for a purchase of a license for one of the firm's products, the margin would amount to around 20.0%, he stressed.

In the entire H1 of FY 2014, Sygnity reported net profit of PLN 8.21mn (up by 0.3% y/y) and EBIT up to PLN 13.70mn from PLN 12.80mn a year before, on sales revenue of PLN 253.97mn, down by 3.2% on the year. Its net profit margin was 3.2%, operating margin - 5.4% and gross margin on sales - 19.8%.

In February, Sygnity's president Janusz R. Guy said that in the middle of its financial year, Sygnity plans to revise its 2013-2015 strategy. Earlier, he did not rule raising margins included in its 2013-2015 strategy. Currently, Guy upheld the strategy.

The strategy, published in 2012, stipulates for the average net profit margin of 4.8% in 2013-2015 (with the financial years starting on Oct 1 of each year) vs. -3.4% in 2010-2012, with average annual revenue of PLN 550mn vs. PLN 534mn in 2010-2012. The average operating margin in 2013-2015 is expected at 6.2%, while the gross margin on sales - at 21.1%.

Sygnity also reported that its backlog for H2 of FY 2014 was up by 75% y/y to PLN 186mn. Guy stressed it secures revenue equal to 92% of last year's total, including 104% of last year's value of contracts in the "public" segment and 96% - in the banking and finances segment.

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