Sheffield surveillance firm Synectics produces 'considerable positive turnaround' in financial performance

Activity levels in the major end-user markets that the Sheffield-based firm serves generally continued to gather momentum, particularly in oil and gas and in US gaming.

That recovery is as yet less evident in casinos and gaming resorts in Asia-Pacific where leisure travel has remained subdued.

Although there are signs of increased customer activity in this region, firm business remains “patchy and difficult to predict”.

Operating profit for the first half of 2022 is estimated to be approximately £400,000, in contrast to the operating loss of around £800,000 that it made in the same period last year.

Revenues are around £23m, up from £22m the previous year. Net cash as at 31 May 2022 was approximately £3.9m.

The improved results were largely driven by revenue growth of approximately 20 per cent in the company's core Systems division as markets severely affected by the pandemic began their recovery.

Synectics added that although the division experienced some disruption to its supply chains from global issues, proactive management meant that there was no material impact on delivery schedules or margins.

The Systems division's gross margins in the first half of 2022 held up strongly, reflecting both its ability to pass on cost increases, and further progress in the group's strategy of increased software content in its deliveries.

Paul Webb, chief executive of Synectics, said: "A strong team performance has meant we have been able to deliver our goals for this period despite increasing challenges in the supply chain and with markets still subdued.

“We have all been working through our 'return to work' challenges, and are in good shape now to push on together and deliver further improved results in the second half of this financial year and beyond.”

The company said good progress was made in the first half of 2022 on its large projects for advanced infrastructure surveillance, including Deutsche Bahn in Berlin and the Cloud-based deployment of Synergy for the City of London Corporation and City of London Police.

Synectics Security, the group's UK-focused integration division, experienced a decline in revenues compared to the same period last year due principally to customer-led delays on several major projects that had been expected to be largely completed in the half.

However, an improvement in the mix of business resulted in higher gross margins and an operating profit in the first half of 2022 expected to be at a similar level to the result achieved in the same period last year.

The board said it is pleased with Synectics' performance in the first half of 2022 and continues to expect further acceleration in the trajectory of improvement in the second half of the financial year.