REG - Synectics PLC - Final Results
04/03/2025 07:15
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RNS Number : 1838Z Synectics PLC 04 March 2025
4 March 2025
Synectics plc
("Synectics", the "Company" or the "Group")
Final results for the year ended 30 November 2024
Strong performance in FY24 with positive momentum in all key markets
Robust order book at year-end underpins confidence for FY25 and beyond
Synectics plc (AIM: SNX), a leader in advanced security and surveillance
solutions, announces its audited final results for the year ended 30 November
2024 ("FY24").
Financial highlights
· Revenue increased by 13.6% to £55.8 million (FY23: £49.1 million)
· Underlying operating profit(1) increased by 56.8% to £4.8 million
(FY23: £3.1 million)
· Underlying EBITDA(2) increased by 27.2% to £6.2 million (FY23: £4.8
million)
· Underlying earnings per share(3) increased significantly to 21.6p
(FY23: 14.2p)
· Record cash balance at 30 November 2024 of £9.6 million with no bank
debt(4) (30 November 2023: £4.6 million, no bank debt)
· Strong order book at 30 November 2024 of £38.5 million (30 November
2023: £29.2 million)
· Recommended final dividend of 2.5 pence per share (FY23: 3.0p) giving
an increased total dividend up 50% to 4.5p per share (FY23: 3.0p)
(1) Underlying operating profit represents profit before tax, finance costs
and non-underlying items; see note 4 to the financial statements.
(2) Underlying EBITDA represents profit before finance costs, tax,
depreciation, amortisation and non-underlying items.
(3) Underlying earnings per share are based on underlying profit after tax but
before non-underlying items.
(4) Excluding IFRS 16 lease liabilities.
Operational highlights
· Strong results, with record gross margins and adjusted profit before
tax being materially ahead of recently upgraded market expectations(5),
supported by a solid year of growth in all sectors, particularly within Gaming
· Strong order book, boosted by consistent contract wins across all of
the Group's sectors, which has continued into FY25
· New AI capabilities with the launch of Synergy DETECT and upcoming
launch of Synergy SEARCH
· Rebrand of Synectics Security to Ocular Integration ("Ocular"),
reflecting a broader transformation programme designed to sharpen Ocular's
focus on delivering cutting-edge security solutions and innovations across its
focus sectors
( 5)Prior to the release of this announcement, FY 2024 market expectations
were for revenue of £57.0m and adjusted profit before tax of £4.3m
The footnotes above apply throughout this announcement.
Post-period end events & outlook
· Continued momentum in contract wins, including material Gaming awards
announced in the US and South-East Asia worth an aggregate $4.9 million
· Product enhancement initiatives underway to support the development
of additional AI capabilities for Synergy, along with an alternative COEX
range suitable for the offshore renewables market
· Strategic redefinition of its focus sectors will enable the Group to
better align with current market dynamics and opportunities
Commenting on the results, Amanda Larnder, Chief Executive Officer and Chief
Financial Officer, said:
"I am immensely proud of our strong performance in FY24 and the positive
momentum we have built heading into FY25, which is backed by a robust order
book. During FY25, we are investing in strategic initiatives across our
products, operations, and in strengthening customer and partner relationships
to ensure sustainable growth in future years.
"We are confident that our commitment to delivering operational excellence
combined with our innovative offerings position us to be a trusted leader in
our chosen markets, enabling us to seize new and exciting business
opportunities."
For further information, please contact:
Synectics plc Tel: +44 (0) 114 280 2828
Amanda Larnder, Chief Executive Officer and Chief Financial Officer www.synecticsplc.com
(https://url.avanan.click/v2/___http:/www.synecticsplc.com___.YXAxZTpzaG9yZWNhcDphOm86NTYwYTllNmRlNmEwMDZmMWYwNTkzZGIxYTRhYzMwZGI6NjpmZDdmOjU4MjU3MDliNWJmOWIyMGFjMjkxZGZhYzcwNzk1ZjUxY2FkNGM5NWQyYWU4ODAxMTUxOTg3ZDc1ZmNkYjk3NWI6cDpG)
Claire Stewart, Company Secretary
email: info@synecticsplc.com
Shore Capital Tel: +44 (0) 20 7408 4090
Corporate Advisory - Tom Griffiths / David Coaten
Corporate Broking - Fiona Conroy
Vigo Consulting Tel: +44 (0) 20 7390 0230
Jeremy Garcia / Fiona Hetherington / Peter Jacob
synectics@vigoconsulting.com (mailto:synectics@vigoconsulting.com)
About Synectics plc
Synectics plc (AIM: SNX) is a leader in advanced security and surveillance
solutions that help protect people, property and assets around the world.
It transforms customer operations by seamlessly integrating systems,
technologies, and data into a unified solution-enhancing safety, improving
efficiency, and enabling smarter, faster decision-making and response
capabilities.
With its technical expertise, decades of experience, and strong partnerships,
Synectics sets itself apart by delivering innovation and service that drive
real value and long-term success.
Find out more at www.synecticsplc.com. (http://www.synecticsplc.com.)
Chair's Statement
I am delighted to announce that revenues increased in the year to £55.8
million (FY23: £49.1 million) with underlying EBITDA(2) up 27.2% to £6.2
million (FY23: £4.8 million). We ended the year with both a record cash
balance of £9.6 million (FY23: £4.6 million) and a record order book of
£38.5 million (£29.2 million).
I was appointed as Chair of the Board in April 2024, taking over from Steve
Coggins who had served the Company excellently for 20 years. Subsequently, in
July 2024, Jon Kempster was appointed as an independent Non-executive Director
and as Chair of the Audit Committee.
In August 2024, we received the sad news of the sudden death of the CEO, Paul
Webb. Paul played a fundamental role in the growth of the Company. Amanda
Larnder, the CFO, took over the role on an interim basis and was appointed as
the permanent CEO in November.
We are in advanced discussions to appoint a permanent CFO to support Amanda
which we hope to announce in due course. In the meantime, we have recruited an
interim Group Finance Director to provide support in the intervening period.
Throughout the year, we reaffirmed our status as a leading security and
surveillance provider supporting global businesses. Our growing reputation was
evidenced by the large number of contract wins announced throughout the year.
Our expertise, particularly in the oil and gas, gaming and public sectors,
provides excellent growth opportunities for expansion into adjacent markets
and sectors.
Our focus remains clear in building our reputation further by delivering
solutions that customers can rely on to meet the challenges that they envisage
in these rapidly evolving and challenging times. Product development remains a
key focus with management at all levels looking to ensure that Synectics
remains at the forefront of innovation and first-class customer support.
The Board is committed to bringing future success for the Company.
It would be remiss of me not to thank our shareholders, and all our employees
for their commitment in providing both these excellent results and future
opportunities.
I look forward to bringing news of further successes to you in due course.
Bob Holt
Non-Executive Chair
3 March 2025
Chief Executive Officer's Statement
I am pleased to present my first report as Chief Executive Officer, for the
financial year ended 30 November 2024 ("FY24").
FY24 was a strong year for Synectics, with growth in all sectors. We made
encouraging operational and financial progress, underpinned by positive
momentum in our key markets. We are strategically investing in our people,
operations and products to ensure that we are well-positioned for growth, and
I am excited to be leading the next stage of our story.
I am extremely proud of the team's achievements in FY24, which have enabled
the positive progress that we made. I would like to express my sincere thanks
to all our employees for their continued hard work and dedication.
Having recently been appointed as the Company's CEO, I want to take a moment
to honour the legacy of our former CEO and friend, Paul Webb, who passed away
in August 2024. Paul was a dedicated leader who steered Synectics with passion
and vision. I am committed to carrying forward his legacy by upholding the
values in which he believed and pursuing a future for the Company that he
would be proud of.
Financial Summary
It is particularly pleasing to report double-digit revenue and underlying
operating profit growth in FY24. Revenue increased by 13.6% to £55.8 million
(FY23: £49.1 million) with record gross margins of 42.9% (FY23: 40.7%).
Underlying operating profit was up by 56.8% to £4.8 million (FY23: £3.1
million), materially ahead of recently upgraded market expectations(5).
Underlying EBITDA(2) increased by 27.2% to £6.2 million (FY23: £4.8
million), with underlying EPS up significantly to 21.6 pence (FY23: 14.2
pence). The order book at 30 November 2024 was robust at £38.5 million (30
November 2023: £29.2 million).
Our financial position remains strong. Synectics is debt free and the
excellent cash generation in the year led to a record cash balance of £9.6
million (FY23: £4.6 million) at the year end, providing sufficient funds to
deliver our plans for future organic growth and take advantage of
opportunities as they arise.
As a result of the strong performance, the Board is recommending (subject to
shareholder approval) the payment of a final dividend of 2.5 pence per share
(FY23: 3.0 pence per share), to be paid on 16 May 2025 to shareholders on the
register at the close of business on 25 April 2025 (ex-dividend date of 24
April 2025). Following the reinstatement of the payment of an interim dividend
of 2.0 pence per share (FY23: nil), this will take the total dividend payable
for FY24 to 4.5 pence per share (FY23: 3.0 pence per share).
Refresh of strategy
During the last few months, we have been undertaking a review of the existing
strategy to better align our long-term objectives and growth ambitions with
market opportunities.
This renewed focus on excellence and innovation is encapsulated in our guiding
principles of "Know More. Serve Better. Innovate Always." Our primary goal is
to accelerate organic growth to achieve sustainable increases in revenue,
EBITDA, and cash flow. To support this, we may also explore targeted strategic
acquisitions that enhance our existing capabilities or customer base. In
addition, we will be introducing subscription pricing for our core Synergy
technology by the end of FY25, aiming to drive increased levels of recurring
revenues and deepen customer engagement.
Our growth strategy is categorised into the following priorities:
- Expanding our market presence in our existing markets as well as
into new or adjacent markets by clearly focusing on target sectors where
Synectics possesses the highest level of skill and knowledge;
- Investing in technology to position ourselves as leaders in
technological advancements, enabling us to capitalise on bringing innovative
solutions to our customers;
- Maintaining excellent customer relationships by providing the
highest quality service; and
- Developing our existing partner relationships and building new
ones to provide an effective channel to our global markets.
Progress is being made across each of these strategic priorities, particularly
in expanding our market presence. We have strengthened our sales organisation,
investing in new resource to target key sectors, including North American
gaming, tribal gaming (casinos located on reservation land), UK transport and
infrastructure and international business development. We have identified
promising growth potential in new markets and geographies such as the UAE,
Infrastructure in North America and Asia, global datacentres, and renewable
energy, and we are currently performing a comprehensive competitive analysis
to determine our ability to compete in these markets.
Partnerships remain a cornerstone of our strategy, and we are committed to
developing strong relationships with system integrators and complementary
technology companies. The launch of a unified partner programme has been
kickstarted with an online portal and improved training. During 2025, we will
invest in a Programme Lead to manage our partner relationships and ensure that
our partners are empowered to promote our solutions effectively.
As we move into 2025, we have strategically redefined our sector focus to
better align with current market dynamics and emerging opportunities. Our new
sectors are now critical infrastructure, energy, public space, transport, and
leisure and hospitality, (previously reported as oil & gas, gaming and
public space, transport and infrastructure ("PSTI")), and the Company's FY25
results will be reported in this way. This evolution reflects our commitment
to expanding our reach and expertise in areas where we can deliver the most
value and innovation, whilst also addressing growing demands for enhanced
security and surveillance solutions in these critical domains.
Ensuring that we have the optimal go-to-market strategy for both existing
markets and new opportunities is crucial to our success. As we move forward,
we are confident that our refreshed strategy will drive significant progress
and ensure that we capitalise on the growing opportunities within our markets.
Continued innovation
Ongoing innovation is essential. In markets characterised by evolving
regulations, rising security and safety threats and the emergence of new
technologies, we have to be able to help customers in navigating these
transformations effectively.
We made significant investment during FY24 into our proprietary software,
Synergy, to ensure it can continue to meet the challenging and demanding needs
of our customers.
In April, we announced the latest version of Synergy, which was launched with
improved tools for incident management and team collaboration, a new mobile
app, simplified web-based system access and remote camera sharing.
In November, we announced the launch of Synergy DETECT, offering new AI
capabilities including twelve AI-powered tools to streamline real-time
detection and analysis.
Integrations have always been at the heart of how Synectics operates. We are
seeing this become increasingly important across our markets, where the trend
towards connectivity and unified platforms is becoming more prevalent and
provides better management and response capabilities, as well as efficiencies
and cost savings. Synergy can evolve swiftly to accommodate and integrate new
technology developments as they emerge, to ensure that it always remains a
leading solution for customers. We will continue to invest in this area.
Current areas of investment include AI capabilities for event notification and
forensic searching, hybrid Synergy, focus on SaaS, our Transport offering,
edge-based Video Analytics in our COEX 4K cameras and an alternative COEX
range suitable for offshore renewables.
Business Review - Synectic Systems
Synectic Systems develops and delivers its proprietary, technology-led
solutions to specialist markets globally - including gaming, oil and gas,
public space, transport and critical infrastructure - through local systems
integrators and channel partners. Capabilities centre around a proprietary
software platform, Synergy, that is tailored to the unique requirements of
each customer, and specialist hardware for oil and gas markets built on our
COEX camera range.
FY24 FY23 Inc/dec
Revenues - EMEA £18.4m £15.0m 22%
Revenues - North America £7.1m £5.0m 43%
Revenues - Asia-Pacific £10.4m £12.0m (13)%
Total revenue £35.9m £32.0m 12%
Gross margin 49.4% 46.4% 3.0 ppts
Underlying operating profit(6) £6.1m £4.1m 50%
Underlying operating margin 17.0% 12.7% 4.3 ppts
Demand for our solutions remained strong and our ability to meet the precise
requirements of our customers remains a key market differentiator.
Throughout FY24, contract momentum was positive, and we have announced several
large contract wins, underpinned by a good level of repeat business from our
existing customer base for upgrades and new installations.
A key contract signed in the year was a $13.2 million project for the upgrade
and expansion of one of the world's most successful and highest-profile gaming
resorts in South-East Asia. Synectic Systems has been working with this
customer since 2014, and this contract reflects the strength of Synergy's
proven expertise in delivering tailored, high-performance and reliable
solutions. Furthermore, we expanded our presence in North America with a
series of contract wins across both large and medium-sized casinos, while also
strengthening our footprint in other regions, including the Philippines and
Cambodia.
Revenues in Synectic Systems increased by 12.1% to £35.9 million (FY23:
£32.0 million), with underlying operating profit(1) up 49.8% to £6.1 million
(FY23: £4.1 million), reflecting a solid year of growth and performance.
The significant increase in operating profit is reflective of the high level
of operational gearing, combined with the sector mix of higher margin gaming
sales replacing slightly lower margin oil and gas sales as a proportion of the
business' total revenue.
Revenues in oil and gas have increased by 5% year-on-year. The oil and gas
market is closely linked to global economic conditions and geopolitical
events, which in turn have driven fluctuating demand, in particular due to
energy transitions and geopolitical tensions. Oil and gas infrastructure
remains critical to national economies with an increasing need for enhanced
security measures. Threats are increasing to both digital and physical
infrastructure due to risks of sabotage, theft and terrorism; therefore we
expect investment in security and surveillance solutions to rise in order to
protect these critical assets.
In FY23, we noted that there was a continued delay, particularly in North
America, in the refurbishment of large casinos following the pandemic leading
to an overall slower than expected recovery in the gaming market. However,
we started to see an increase in this activity in FY24 and overall good
momentum in global gaming as regulatory conditions continue to evolve and
there is a focus on preventing fraud, as well as enhancing the player
experience. Revenues in gaming increased by 20% year-on-year, predominantly
due to the sector's recovery in North America.
The tribal gaming market, which covers casinos that are located on reservation
land, represents the other major source of US gaming, although this is not an
area from which Synectic Systems had previously generated revenues. During the
year, we hired specific sales resources to focus on this part of the gaming
market and we are making good inroads here.
Revenues in PSTI increased by 11% compared to FY23. Despite ongoing challenges
in the public space sector, driven by budgetary constraints, local authorities
still need to prioritise resilience against various threats, including crime
and public safety. In addition, it is recognised that significant investment
is needed in infrastructure, including utilities, healthcare and prisons, in
the UK, and globally. During the year, Synectic Systems was awarded a £0.8
million contract with a new customer, a major UK utility provider, to deliver
a multi-site deployment of Synergy, further work was undertaken with National
Grid, and Synergy is now deployed in five NHS Trusts.
Demand is continuing to increase for both new projects and investment in
existing infrastructure, including upgrades and expansions, in all our market
sectors. Operating in growing markets, and with a low market share,
significant opportunities exist to further expand our footprint within these
core markets. In addition, we are also actively exploring adjacent sectors
to drive future growth.
We are establishing a presence in the UAE and have recently received a trade
licence in this region. The UAE is projected to see significant investment in
the coming years across various sectors, particularly mega-resorts,
infrastructure development, and gated communities. As the country aims to
diversify its economy and enhance its position as a global tourism and
investment hub, substantial funds are being directed toward hospitality and
infrastructure. Given the deep expertise we have in these sectors, we should
be well poised to capitalise on the opportunities in this region.
Additionally, we are exploring opportunities in two potential new sectors:
datacentres, as the UK Government has recently designated this sector as
Critical National Infrastructure ("CNI"), thus increasing compliance
requirements in relation to security measures and operational standards for
datacentres; and the offshore renewable energy sector, which tends to share
similar security challenges to offshore oil and gas, and lends itself to an
alternative range of our COEX cameras, which have been proven to work in the
most challenging environments.
(6)After research and development expenditure, but before non-underlying costs
(see note 4 to the financial statements) and allocated central costs.
Business Review - Ocular
Ocular delivers integrated solutions, service, and support directly to
end-users in the UK and Ireland - principally within public space, transport,
and national infrastructure - utilising a combination of the Group's
proprietary technology and third-party products
FY24 FY23 Inc/(dec)
Revenue £21.3m £18.3m 17%
Gross margin 29.2% 28.3% 0.9 ppts
Underlying operating profit(7) £1.6m £1.3m 22%
Underlying operating margin 7.4% 7.1% 0.3 ppts
The business, previously known as Synectics Security, was rebranded as Ocular
Integration ("Ocular") in November 2024. This rebranding signifies a broader
transformation programme designed to sharpen Ocular's focus on delivering
cutting-edge security solutions and innovations across identifiable sectors,
including public space, transport, and critical national infrastructure. The
change also creates a clearer distinction between Synectic Systems and Ocular,
as an independent systems integrator, providing enhanced clarity for
stakeholders.
Progress since the re-branding has been positive, with the team focused on
refining and developing Ocular's go-to-market strategy and ensuring its
solutions directly address customer challenges. This includes a targeted
approach to key sectors where Ocular possesses a proven ability to provide
excellent customer service and secure sales. In addition, as well as the
appointment of a new Sales Director, we have invested in strengthening the
wider sales team to support the future growth of the business.
Revenues in Ocular increased by 17% to £21.3 million in the year (FY23:
£18.3m), with underlying operating profit up 22% to £1.6 million (FY23:
£1.3 million).
This positive progress reflects the increased traction in transport sales,
primarily driven by new vehicle registrations and the drive towards
zero-emission vehicles. Security sales remained broadly flat year-on-year.
During the year, Ocular was awarded over £6.0 million worth of contracts, as
part of an ongoing framework agreement, to deliver security improvement works
for the National Grid estate. Ocular now supports 32 sites throughout National
Grid's estate.
The UK transport market is moving towards a more sustainable, secure, and
connected future, with substantial investment aimed at improving
infrastructure and services. This includes investment in upgrading and
integrating transport systems, increasing emphasis on the safety of passengers
and communities, leading to enhancing surveillance systems, a shift towards
the electrification of fleets and an increasing focus on smart transport
solutions, which enable real-time communication between vehicles and central
systems.
The UK security market continues to grow, fuelled by increasing investment,
technological integration, a heightened focus on the importance of security,
and active political support. Organisations are increasingly looking for
innovative, flexible, and reliable security solutions to mitigate risks and
enhance safety in an evolving threat landscape.
With a renewed leadership team and improved go-to-market strategy, Ocular is
now focused on increasing market share in these growing markets by delivering
a more focused strategy and leveraging its deep market expertise to deliver
innovative technical solutions.
(7) Before non-underlying costs (see note 4 to the financial statements) and
allocated central costs.
People
Our people are critical to the success of the business, and we are committed
to investing in and empowering them.
In the last year, we invested significantly in learning and development
resources for our employees. In addition, recognising the importance of our
leaders and managers, we have invested in a new Management Development
Programme, aimed at supporting our managers to motivate and engage with their
teams and to enhance overall organisational performance.
Employee well-being remains a top priority and we have expanded our mental
health initiatives. I am extremely pleased that we have recently been
accredited as a Real Living Wage employer, reflecting our commitment to
ensuring fair pay and supporting the well-being of our valued team members.
I am committed to fostering a positive and inclusive culture that enhances
employee well-being and enables our people to thrive. This is a top priority
of mine in 2025 and beyond.
Sustainability
Another area in which we are making good progress is sustainability. The
environment, and climate change in particular, is increasingly becoming a
concern for businesses globally as the world transitions to net-zero.
I am pleased with our progress in this area as we have completed phase two of
our four-phase sustainability plan. As part of this, we have analysed the
materiality assessment performed in FY23 and developed our ESG framework,
identifying our three ESG strategic pillars which will support our goal of
becoming a responsible, reliable and sustainable partner to our customers and
wider stakeholders. Our three pillars are: advancing governance and building
trust; developing people and delivering social value; and reducing
environmental footprint and playing a role in the low carbon transition.
Throughout FY25 we will be using our ESG framework to develop our roadmap and
integrate sustainability across the business.
Outlook
Following a good start to FY25, trading to date is in line with the Board's
expectations, with our strong order book underpinning confidence in FY25 and
beyond.
The Board is focused on delivering sustainable growth and, as such, it is
undertaking a number of strategic initiatives across the Group, which include
ongoing product development, the strengthening of our sales channels,
implementing operational efficiencies and developing out our subscription
pricing models. These investments, which lay the foundations to unlock future
opportunities and position the Group for sustained long-term success, will be
reflected in FY25; while we expect to maintain double digit growth in FY25 and
for the results to increase in line with upgraded market expectations, full
margin potential will be achieved in future years when the returns on these
investments are delivered.
We are confident that our commitment to delivering operational excellence
positions us to be a trusted leader in our chosen markets, enabling us to
seize new and exciting business opportunities. I am very enthusiastic about
the Group's prospects and look forward to updating shareholders on further
progress in due course.
Amanda Larnder
Chief Executive Officer and Chief Financial Officer
3 March 2025
Consolidated Income Statement
For the year ended 30 November 2024
2024 2023
Underlying Non-underlying items (note 4) Underlying Non-underlying items
(note 4)
Total Total
Note £000 £000 £000 £000 £000 £000
Revenue 3 55,809 - 55,809 49,128 - 49,128
Cost of sales (31,866) - (31,866) (29,121) - (29,121)
Gross profit 23,943 - 23,943 20,007 - 20,007
Operating expenses (19,151) (531) (19,682) (16,951) (302) (17,253)
Operating profit 4,792 (531) 4,261 3,056 (302) 2,754
Finance income 25 - 25 - - -
Finance costs (112) - (112) (101) - (101)
Profit before tax 4,705 (531) 4,174 2,955 (302) 2,653
Income tax (charge)/credit 5 (1,049) 54 (995) (559) 69 (490)
Profit for the year 3,656 (477) 3,179 2,396 (233) 2,163
Earnings per share 7
Basic 18.8p 12.8p
Diluted 18.3p 12.8p
Consolidated Statement of Comprehensive Income
For the year ended 30 November 2024
2024 2023
£000 £000
Profit for the year 3,179 2,163
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations 83 (28)
Losses on net investment in a foreign operation taken to equity (119) -
(36) (28)
Tax on items that may be reclassified 30 -
Total comprehensive income for the year 3,173 2,135
Total comprehensive income for the year attributable to equity holders of the 3,173 2,135
Parent
Consolidated Statement of Financial Position
As at 30 November 2024
2024 2023
Note £000 £000
Non-current assets
Property, plant and equipment 3,801 3,739
Intangible assets 22,248 21,128
Deferred tax assets 5 1,488 2,262
27,537 27,129
Current assets
Inventories 9,244 5,069
Trade and other receivables 14,124 13,868
Contract assets 5,378 6,954
Cash and cash equivalents 9,559 4,604
38,305 30,495
Total assets 65,842 57,624
Current liabilities
Trade and other payables (13,665) (11,270)
Contract liabilities (6,428) (3,033)
Lease liabilities (701) (573)
Tax liabilities (268) (90)
Current provisions (556) (606)
(21,618) (15,572)
Non-current liabilities
Non-current provisions (741) (794)
Lease liabilities (1,189) (1,365)
Deferred tax liabilities 5 (963) (1,016)
(2,893) (3,175)
Total liabilities (24,511) (18,747)
Net assets 41,331 38,877
Equity attributable to equity holders of the Parent Company
Called up share capital 3,559 3,559
Share premium account 16,043 16,043
Merger reserve 9,971 9,971
Other reserves (1,417) (1,436)
Currency translation reserve 906 912
Retained earnings 12,269 9,828
Total equity 41,331 38,877
Consolidated Statement of Changes in Equity
For the year ended 30 November 2024
Called up Share Currency
share premium Merger Other translation Retained
capital account reserve reserves reserve earnings Total
£000 £000 £000 £000 £000 £000 £000
At 1 December 2022 3,559 16,043 9,971 (1,436) 940 7,925 37,002
Profit for the year - - - - - 2,163 2,163
Other comprehensive income
Currency translation adjustment - - - - (28) - (28)
Total other comprehensive income - - - - (28) - (28)
Total comprehensive income for the year - - - - (28) 2,163 2,135
Transactions with owners in their capacity as owners
Dividends paid - - - - - (338) (338)
Share scheme interests realised in the year - - - - - - -
Credit in relation to share-based payments - - - - - 78 78
At 30 November 2023 3,559 16,043 9,971 (1,436) 912 9,828 38,877
Profit for the year - - - - - 3,179 3,179
Other comprehensive income
Currency translation adjustment - - - - (36) - (36)
Tax relating to components of other comprehensive income - - - - 30 - 30
Total other comprehensive income - - - - (6) - (6)
Total comprehensive income for the year - - - - (6) 3,179 3,173
Transactions with owners in their capacity as owners
Dividends paid - - - - - (845) (845)
Share scheme interests realised in the year - - - 19 - - 19
Credit in relation to share-based payments - - - - - 107 107
At 30 November 2024 3,559 16,043 9,971 (1,417) 906 12,269 41,331
Consolidated Cash Flow Statement
For the year ended 30 November 2024
2024 2023
Note £000 £000
Cash flows from operating activities
Profit for the year 3,179 2,163
Income tax charge 995 490
Finance income (25) -
Finance costs 112 101
Depreciation and amortisation charge 1,360 1,779
Net foreign exchange differences 191 318
Non-underlying items 531 302
Inventory write down - 316
Cash flow relating to non-underlying items incurred in current or previous (366) (539)
years
Movement in provisions and other non-cash movement 3 41
Share-based payment charge 107 78
Operating cash inflow before movement in working capital 6,087 5,049
Increase in inventories (4,292) (1,166)
Decrease / (increase) in receivables and contract assets 1,132 (5,686)
Increase in payables and contract liabilities 5,636 4,403
Cash generated from operations 8,563 2,600
Tax (paid) / received (47) 434
Net cash generated from operating activities 8,516 3,034
Cash flows from investing activities
Purchase of property, plant and equipment (407) (273)
Capitalised development costs (1,193) (950)
Purchased software (326) (171)
Net cash used in investing activities (1,926) (1,394)
Cash flows from financing activities
Lease payments (754) (835)
Interest received 25 -
Other interest paid (33) (13)
Dividends paid to equity holders of the parent 6 (845) (338)
Net cash used in financing activities (1,607) (1,186)
Net increase in cash and cash equivalents 4,983 454
Effect of exchange rates on cash and cash equivalents (28) (106)
Cash and cash equivalents at the beginning of the year 4,604 4,256
Cash and cash equivalents at the end of the year 9,559 4,604
Notes to the financial statements
1 Basis of preparation
The information contained within this announcement has been extracted from the
audited financial statements which have been prepared in accordance with
UK-adopted International Accounting Standards and applicable law. They have
been prepared using the historical cost convention except where the
measurement of balances at fair value is required.
Going concern
The Directors have considered the Group's current activities and future
prospects, financial performance, liquidity position and risks and
uncertainties affecting the business, which are set out in the Strategic
Report of the financial statements, in assessing the appropriateness of the
going concern assumption. The Directors continue to monitor the effects of
global events on the business and will react accordingly if any material risks
arise.
When assessing the going concern assumption, the Directors have reviewed the
year-to-date actual results, as well as detailed financial forecasts and the
Group's funding position for the period through to August 2026. This review
includes in depth scenario modelling and stress testing of budget and strategy
planning.
Opportunities continue to emerge in the gaming sector, particularly in Asian
and North American markets. Synectics' credentials are reinforced through
high profile wins in 2024, bolstered by the appointment of new, senior sales
resources.
Oil & Gas remains highly active, generating very significant levels of
pipeline opportunity. Our approach of leveraging existing relationships and
developing new, cutting-edge digital solutions, alongside seeking procurement
and cost engineering savings, will ensure that we are a technological leader,
whilst remaining price competitive.
PSTI continues to be an active, competitive sector, with opportunities to grow
our share in the On-Vehicle market through both new customers and new
propositions, alongside ongoing activity in Utilities and contracts in aligned
sectors such as Emergency Services, NHS and Universities.
Investment in both people and products in 2025, with a view to expanding our
presence in existing and aligned sectors, reflects confidence in the external
market opportunity and Synectics' ability to exploit this.
Forecasting and stress testing
The Directors have undertaken a rigorous budgeting and forecasting process
with management to understand the impact of the economic environment on the
future of the Group. The assumptions used in the financial forecasts are based
on recent financial performance, management's extensive industry experience
and reflect expectations of future market conditions.
The base case shows a positive cash balance throughout the year with no
requirement to utilise the £3 million overdraft facility. Sensitivity and
stress testing has been performed on the base case model; various plausible
but severe downside scenarios were applied which considered general downturns
resulting in reductions in revenue and margins and the related impact on
working capital. Under these downsides, the Directors have not considered any
mitigating factors that would be applied. The scenario testing applied
confirmed that, even with no mitigating factors, the overdraft facility would
not need to be utilised and that there would be sufficient headroom within the
facility throughout the outlook period. The base case was then reverse stress
tested and the level of deterioration required for the Group to become close
to the banking headroom was deemed to be highly unlikely.
Cash and funding position
Positive cash balances were maintained throughout the year and ended the year
at £9.6 million (2023: £4.6 million). Undrawn overdraft facilities of £3
million were held throughout the year. Despite the central forecast indicating
that the Group should not require to draw upon the overdraft facilities for
the foreseeable future, management is in the process of renewing, as a matter
of prudence, the overdraft facility of £3 million with HSBC Bank until
February 2026. Whilst the renewal process is still underway at the time of
signing these accounts, the bank has indicated that the facilities are
expected to be renewed as previously.
Conclusion
Based on the analysis above, the Group has sufficient liquidity headroom
throughout the forecast period and therefore the Directors have a reasonable
expectation that the Group has adequate resources to continue in operational
existence for the outlook period without material uncertainty. Accordingly,
the Directors conclude it is appropriate to continue to adopt the going
concern basis in preparing the Financial Statements.
2 Segmental
2024 2023
Synectic Systems Ocular Central Total Synectic Systems Ocular Central Total
£000 £000 £000 £000 £000 £000 £000 £000
Revenue
External customers 35,881 21,349 - 57,230 32,015 18,261 - 50,276
Intra-Group (1,421) - - (1,421) (1,148) - - (1,148)
34,460 21,349 - 55,809 30,867 18,261 - 49,128
Expenses
Cost of inventories recognised as an expense (12,114) (10,850) (81) (23,045) (11,896) (9,144) (1) (21,041)
Employee benefit expenses (11,416) (5,650) (2,007) (19,073) (9,739) (5,231) (1,678) (16,648)
Amortisation of intangible assets (380) (2) (9) (391) (707) (1) (7) (715)
Depreciation of tangible assets - owned (199) (42) (39) (280) (244) (30) (31) (305)
Depreciation of tangible assets - right-of-use (443) (246) - (689) (575) (184) - (759)
Net foreign exchange losses (171) 11 (40) (200) (327) (1) 4 (324)
Movement in inventories provision recognised as an expense (290) (40) - (330) (213) (103) - (316)
Rental income received - 46 - 46 - 50 - 50
Payroll support(8) 242 - - 242 - - - -
Other (3,621) (2,987) (689) (7,297) (3,115) (2,317) (582) (6,014)
Underlying operating profit 6,068 1,589 (2,865) 4,792 4,051 1,300 (2,295) 3,056
Non-underlying items
Legal costs - - - - (156) - (51) (207)
Write-off of deferred consideration - (100) - (100) - - - -
Pension buy-out costs - - (21) (21) - - (81) (81)
Restructuring and transformation costs (250) (103) (57) (410) (10) - (4) (14)
Total operating profit 5,818 1,386 (2,943) 4,261 3,885 1,300 (2,431) 2,754
Total assets 24,912 10,455 - 35,367 24,031 9,019 - 33,050
Total liabilities (17,132) (6,131) - (23,263) (12,814) (5,744) - (18,558)
Total segmental net assets 7,780 4,324 - 12,104 11,217 3,275 - 14,492
Goodwill - - 19,645 19,645 - - 19,653 19,653
Cash and borrowings - - 9,559 9,559 - - 4,604 4,604
Unallocated - - 23 23 - - 128 128
Total net assets 7,780 4,324 29,227 41,331 11,217 3,275 24,385 38,877
(8) Payroll support is a Covid related employee retention credit received in
the US
No single customer contributed 10% or more to the Group's revenues in either
year.
3 Revenue from contracts with customers
Disaggregated revenue information
Set out below is the disaggregation of the Group's revenue from contracts with
customers:
Synectic Systems Ocular 2024
Revenue by contract location 2024 £000 £000 £000
UK and Europe 9,781 21,291 31,072
North America 7,141 - 7,141
Middle East & Africa 7,165 49 7,214
Asia-Pacific 10,373 9 10,382
34,460 21,349 55,809
Revenue by contract location 2023 Synectic Systems Ocular 2023
£000 £000 £000
UK and Europe 9,127 18,013 27,140
North America 5,001 - 5,001
Middle East & Africa 4,750 238 4,988
Asia-Pacific 11,989 10 11,999
30,867 18,261 49,128
Contract balances
2024 2023
£000 £000
Contract assets 5,378 6,954
Contract liabilities (6,428) (3,033)
Contract assets relate to revenue earned from ongoing contracts not yet
invoiced. Contract liabilities relate to payments in advance of revenue
recognition in relation to ongoing projects and multi-year service and
maintenance contracts. As such, the balance on these accounts varies and
depends on: (i) the number of ongoing projects at the year-end; and (ii) the
timing of payments under the terms of each individual contract, with payment
sometimes before and sometimes after satisfaction of the corresponding
performance obligation.
The decrease of £1.6m in contract assets is mainly driven by the reduction in
projects ongoing at the year-end within Ocular.
The £3.4m increase in contract liabilities is mainly driven by advanced
invoicing on a large project within Synectic Systems.
No expected credit loss has been recognised in relation to the contract assets
as the Group's historical and forward-looking experience shows that no credit
losses have been incurred.
Performance obligations
The transaction price allocated to the remaining performance obligations
(unsatisfied or partially unsatisfied) as at 30 November 2024 that are
expected to be recognised over more than one year is £3.5 million (2023:
£5.9 million). These performance obligations relate predominantly to the
provision of service and maintenance contracts and are as follows:
2024 2023
£000 £000
Less than two years 1,786 3,326
Two to five years 1,660 2,043
More than five years 55 569
4 Non-underlying items
2024 2023
£000 £000
Costs associated with legal matters - 207
Costs associated with restructuring and transformation 410 14
Write-off of deferred consideration 100 -
Costs associated with the buy-out of the defined benefit pension scheme 21 81
531 302
Cost associated with legal matters in 2023 relate to a confidential legal
matter in the US which has now been settled.
Costs associated with restructuring and transformation relate to team
restructures and third-party transformational support aimed at enhancing
operational efficiency and positioning the company for the future.
As at 30 November 2022, a deferred consideration asset was recognised in
relation to the contingent consideration payable on the sale of SSS Management
Services Ltd ('SSS'). The consideration was contingent on certain
performance criteria of SSS in the twelve months following the sale, which
have not been met. Therefore, the consideration will no longer be received,
and the asset has been written off.
Costs associated with the buy-out of the defined benefit pension scheme
represent costs incurred by the Group in relation to winding up the scheme,
which has now been fully wound-up.
5 Taxation
2024 2023
Tax charge £000 £000
Current income tax
UK tax - -
Overseas tax 346 91
Adjustments in respect of prior periods (96) -
Total current tax charge 250 91
Deferred tax
Origination and reversal of temporary differences 727 431
Adjustments in respect of prior periods 18 (32)
Total deferred tax charge 745 399
Income tax charge reported in the consolidated income statement 995 490
Further analysed as tax relating to:
Underlying profit 1,049 559
Non-underlying items (54) (69)
Reconciliation of tax charge for the year
The corporation tax assessed for the year differs from the standard rate of
corporation tax in the UK of 25% (2023: 23%). The differences are explained
below:
2024 2023
£000 £000
Profit before tax 4,174 2,653
Tax on profit on ordinary activities before tax at standard rate of 25% (2023: 1,044 610
23%)
Effects of:
Differences in overseas tax rates (172) (98)
Tax losses not recognised 84 125
Utilisation of previously unrecognised tax losses (2) (94)
Research and development (99) (83)
Other differences - (15)
Effect of changes in tax rates and tax laws 39 33
Expenses not deductible for tax purposes 179 44
Adjustment in respect of prior periods (78) (32)
Total tax charge for the year 995 490
The Group's tax rate is sensitive to a geographic mix of profits and reflects
a combination of higher rates in the UK and US and lower rates in Singapore
and Macau along with R&D tax relief in the UK. The Group's effective tax
rate has increased in 2024 as unrecognised tax losses in Singapore were fully
utilised in 2023.
Deferred tax
The deferred tax in the Consolidated Statement of Financial Position relates
to the following:
Property, Other
plant and temporary
equipment differences Losses Total
Deferred tax (liability)/asset £000 £000 £000 £000
At 1 December 2022 (566) (76) 2,311 1,669
Credited/(charged) to the Income Statement 19 (92) (326) (399)
Currency translation adjustment - (2) (22) (24)
At 30 November 2023 (547) (170) 1,963 1,246
(Charged)/credited to the Income Statement (169) 18 (594) (745)
Credited to the Statement of Comprehensive Income - 30 - 30
Currency translation adjustment - - (6) (6)
At 30 November 2024 (716) (122) 1,363 525
Factors that may affect future tax charges
Deferred tax assets of £1.4 million (2023: £2.0 million) have been
recognised in relation to legal entities which suffered a tax loss in the
current or preceding periods. The assets are recognised based upon future
taxable profit forecasts for the entities concerned.
The Group has further losses which may be available to be carried forward for
offset against the future taxable profits of certain Group companies amounting
to approximately £3.9 million (2023: £3.8 million). No deferred tax asset
(2023: £nil) in respect of these losses has been recognised at the year-end
as the Group does not currently anticipate being able to offset these against
future profits.
6 Dividends
The following dividends were paid by the Company during the year:
2024 2023
Pence Pence
per share £000 per share £000
Final dividend paid in respect of prior year but not recognised as a liability 3.0 516 2.0 344
in that year
Interim dividend paid in respect of current year 2.0 344 - -
5.0 860 2.0 344
Total dividend paid, net of shares held by the share trust 5.0 845 2.0 338
Recommended final dividend for the year ended 30 November 2.5 430 3.0 515
Subject to shareholders' approval at the Company's forthcoming Annual General
Meeting, which is to be held on 7 May 2025, the Directors recommend the
payment of a final dividend of 2.5p per share (2023: 3.0p per share) to be
paid on 16 May 2025 to shareholders on the register as at the close of
business on 25 April 2025 (the shares being marked ex-dividend on 24 April
2025). The Company paid an interim dividend of 2.0p during the year (2023:
£nil) and therefore the proposed FY24 total dividend is 4.5p per share (2023:
3.0p per share).
7 Earnings per share
2024 2023
Pence per Pence per
share share
Basic earnings per share 18.8 12.8
Diluted earnings per share 18.3 12.8
Underlying basic earnings per share 21.6 14.2
Underlying diluted earnings per share 21.1 14.2
Profit per share has been calculated by dividing the profit attributable to
equity holders of the Parent after taxation for each financial year by the
weighted average number of ordinary shares in issue and ranking for dividend
during the year.
The calculations of basic and underlying earnings per share are based upon:
2023
2024
£000 £000
Earnings for basic and diluted earnings per share 3,179 2,163
Non-underlying items 531 302
Impact of non-underlying items on tax credit for the year (54) (69)
Earnings for underlying basic and underlying diluted earnings per share 3,656 2,396
2024 2023
000 000
Weighted average number of ordinary shares - basic calculation 16,891 16,889
Dilutive potential ordinary shares arising from share options 471 1
Weighted average number of ordinary shares - diluted calculation 17,362 16,890
8 Company Information
The financial information set out herein does not constitute statutory
accounts as defined in Section 434 of the Companies Act 2006 as it does not
contain all the information required to be disclosed in the financial
statements prepared in accordance with UK-adopted International Accounting
Standards. The financial information for the year ended 30 November 2024 has
been extracted from the Group's audited financial statements which were
approved by the Board of Directors on 3 March 2025 and which, if adopted by
the members at the Annual General Meeting, will be delivered to the Registrar
of Companies for England and Wales.
The financial information for the year ended 30 November 2023 has been
extracted from the Group's audited financial statements which have been
delivered to the Registrar of Companies for England and Wales.
The reports of the auditors on both these financial statements were
unqualified, did not include any references to any matters to which the
auditors drew attention by way of emphasis without qualifying their report and
did not contain a statement under Section 498(2) or Section 498(3) of the
Companies Act 2006.
Copies of these results, and the full financial statements when published,
will be available on the Company's website at www.synecticsplc.com and at the
Company's registered office: Synectics plc, Synectics House, 3-4 Broadfield
Close, Sheffield, S8 0XN.
Forward-looking statements
This report may contain certain statements about the future outlook for
Synectics plc. Although the Directors believe their expectations are based on
reasonable assumptions, any statements about future outlook may be influenced
by factors that could cause actual outcomes and results to be materially
different.
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