Contract suspension bloodies Sagentia

Sagentia has warned that revenues for 2012 will drop below the previous year’s levels following suspension of what it called a large project with a North American start-up in the medical sector, wiping nearly 10 per cent off the company’s share price in morning trading. However, the company said it would not hold back from seeking merger and acquisition opportunities.

In an AGM trading statement, the technology consultancy said the suspension meant that revenues for the first half of 2012 would fall below the previous six months, despite the underlying business’ continued growth.

The group said actions have been taken to mitigate the suspension which it said have been effective in enhancing operating margins and that while revenue will be lower than last year, profit is anticipated to be in line with the board’s expectations. However, it wasn’t enough to stop the market from taking 8.5 pence off the share price which fell 9.8 per cent to 78.5p.

Sagentia has undertaken a thorough strategic restructure over the last couple of years, concentrating on its fee-earning work and putting an end to spin-out activities.

Following two years of declining revenues in 2009 and 2010, the company said it had turned a corner with 2011’s numbers back up. This a new setback, though only a temporary one Sagentia will hope, a result of what it called a deterioration in the macro-economic environment in the second half of the year.

Sagentia added that its balance sheet remained strong that it would continue to look for potential merger and acquisition opportunities.