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Synectics PLC - Interim Results

RNS Number : 8666S
Synectics PLC
14 July 2020
 

 

 

 

 

 

 

Synectics plc

('Synectics', the 'Company' or the 'Group')

Interim results for the six months ended 31 May 2020

 

Synectics plc (AIM: SNX), a leader in the design, integration and support of advanced security and surveillance systems, reports its unaudited interim results for the six months ended 31 May 2020.

 

Headlines

·     

Substantial impact from Covid-19 on our customers' operations, especially in the gaming sector

 

·     

Revenue £23.0 million (2019: £33.6 million)

 

·     

Underlying loss before tax1 £(2.0) million (2019: profit £1.2 million)

 

·     

Loss before tax £(2.3) million (2019: profit £1.2 million)

 

·     

Order book £26.1 million (2019: £25.9 million)

 

·     

Net cash as at 31 May 2020 of £4.6 million (30 Nov 2019: £3.6 million)

 

·     

Actions taken to reduce costs and re-focus operations around customer requirements, with four operational sites due to be closed by the end of the year.

 

·     

Board expects a noticeably improved underlying trading result in second half

 

 

1 Underlying profit represents profit before tax and non-underlying items (which comprise amortisation of acquired intangibles and restructuring costs incurred in respect of the consolidation of the Group's head office from Studley to the existing premises in Sheffield). 

 

 

Commenting on the results, Paul Webb, Chief Executive of Synectics, said: 

"Whilst results this year will be significantly affected by the impact of Covid-19, our relatively strong financial position has allowed us to re-structure our Integration businesses and to continue our investment in Technology development.

This investment is opening a range of future opportunities for Synectics in software applications for enterprise-level operational security management systems

Our approach puts us in position to take advantage of these opportunities as they arise, and to support our customers as they emerge from their individual pandemic scenarios."

For further information, please contact:

Synectics plc

Tel: +44 (0) 114 280 2828

Paul Webb, Chief Executive

 

David Coghlan, Chairman

David Bedford, Finance Director

 

email: info@synecticsplc.com

www.synecticsplc.com

 

 

Shore Capital

Tel: +44 (0) 20 7408 4050 

Tom Griffiths / Henry Willcocks

 

 

Media enquiries:

Intelligent Conversation

Tel: +44 (0) 161 694 3979

Claire Evans

 

email: claire@weareic.com

 

 

 

 

Chairman's Statement

 

Overview

 

The global market background faced by Synectics in the period under review was not the one planned for or expected. Many of the Group's major customers have suffered unprecedented disruptions as a result of the global Covid-19 pandemic. Our largest customer sector, where Synectics is a long-term partner to many of the world's principal casinos and gaming resorts, was virtually shut down. Likewise, our public transportation customers have faced business declines, typically in the order of 90%.

 

Having assessed Synectics' position in these changed circumstances, the Board acted quickly to redirect the Group's short-term focus to protecting our people, our customers and the fabric of our business. Fortunately, we were able to take the necessary actions from a position of financial strength.

 

Synectics' results for the half year to 31 May 2020 suffered substantially from this disruption in our end markets, with revenues down over 30% and a corresponding unavoidable move into operating losses. The biggest impacts were in the Systems division, in particular the gaming sector across Asia Pacific and North America, where normal upgrade work and most planned major projects were put on hold by customers. In contrast, government-related infrastructure and high security business generally held up well.

 

It was an especially positive sign, and a tribute to the resourcefulness of Synectics' staff and our customer, that progress on the large, and strategically important, Deutsche Bahn Berlin security operations software system continued successfully on schedule. The Company has continued its investment in the development roadmap of its core Synergy platform. It has been encouraging to see, even in these unique times, the increasing level of interest from prospective customers and global IT systems integrators in Synectics' vision for the future of enterprise-level security operations control.

 

Results

 

Synectics' revenue for the first half declined by 32% to £23.0 million, compared with £33.6 million in the same period last year. The Group recorded a consolidated underlying loss before tax1 of £2.0 million (2019: profit £1.2 million). After charging £0.28 million for non-underlying items, principally incurred in respect of the consolidation of the Group's head office from Studley to the existing premises in Sheffield, the loss before tax was £2.3 million (2019: profit £1.2 million).

 

The underlying diluted loss per share1 for the half year was 9.4p (2019: profit 6.2p).

 

More details on these results are set out in the divisional reports below.

 

Net cash at 31 May 2020 was £4.6 million (30 November 2019: £3.6 million) with confirmed facilities of £5.0 million in place if required. It remains the case that Synectics' businesses turn a relatively substantial portion of their profits into free cash flow, although short-term working capital balances can fluctuate significantly.  

 

1 Underlying profit represents profit before tax and non-underlying items (which comprise amortisation of acquired intangibles and restructuring costs incurred in respect of the consolidation of the Group's head office from Studley to the existing premises in Sheffield).  Underlying earnings per share are based on profit after tax but before non-underlying items.

 

 

Dividend

 

In view of the losses incurred during the half year, and the continuing uncertainty in global markets, the Board has decided not to declare an interim dividend. The position will be reviewed at the time of the release of the Company's audited final results for the year ending 30 November 2020.

 

 

Business Review

 

Systems

 

Synectics' Systems division provides specialist electronic surveillance systems, based on its proprietary technology, to global end customers with large-scale highly complex security requirements, particularly for oil & gas operations, gaming, transport & infrastructure protection, and high security & public space applications.

 

 

£000

Six months ended

31 May

 2020

Six months ended

31 May

 2019

Year

ended

30 Nov

2019

 

 

 

 

Revenue

12,568

19,108

40,529

Gross margin2

44.9%

42.3%

42.0%

Operating profit/(loss)2

(731)

2,338

4,691

Operating margin2

(5.8)%

12.2%

11.6%

 

 

2 Before non-underlying items and Group central costs.

 

The effective closure of almost all major casino and gaming resorts globally had a substantial impact on the Systems division's first half revenues. Synectics' total revenues from the gaming sector in the half year were down just over 60%, compared with the same period in 2019. Much of the shortfall represented expected repeat work from long-term customers, required to maintain government-regulated surveillance systems, so is not lost and should return once these businesses are up and running again.

 

Revenue from other customer sectors served by the Systems division, including transport networks, high security applications and oil & gas, was much less affected by the market disruptions. Most of the Systems division revenue from these sectors is government or quasi-government related and, as such, less exposed to current restrictions on commercial activity.

 

Europe, Middle East & Africa (Revenue £6.9 million, 2019: £7.5 million)

 

In the oil & gas sector, the Company recently announced that it had won a large contract to provide surveillance for a new offshore field development in Saudi Arabia. This is one of a few major new projects that is going ahead in this sector.

 

Further work has been secured for a number of London boroughs, as well as several other high-profile sites in central London. Field support activity for critical sites has been maintained throughout the period.

 

Good progress continues on the S-Bahn project for Deutsche Bahn, as mentioned above.

 

To better support our work with Deutsche Bahn and BVG (Berliner Verkehrsbetriebe, the local public transport operator), we have decided to focus our operations in Germany where these customers are based.  As a result, the Company's office in Munich will close, and re-locate to Berlin before the end of this financial year. Further details are contained in Note 8 below.

 

Asia Pacific (Revenue £4.0 million, 2019: £7.7 million)

 

It was pleasing during this difficult period to have been awarded a support contract for a further five years by a major casino resort in South East Asia, which was recently announced. Many expected casino upgrade projects in the region have been delayed, most likely until 2021, due to the almost complete shutdown of the sector in the region for most of the period.

 

In the oil & gas sector, some expansion work has continued in Indonesia, but otherwise activity was significantly reduced, with essential support work only being carried out.

 

North America (Revenue £1.6 million, 2019: £3.9 million)

 

A contract for a new-build casino in Pennsylvania was secured and delivered in the period, however completion of installation has been delayed and is now expected by the end of this financial year.

Activity in the region overall was markedly reduced, and consequently previous plans to increase business development resources and expand activities in the region have been delayed until 2021.

 

Technology Development

 

Continued investment in our intellectual property and technology base within the Systems division remains an important priority for the Group, and our investment has continued at previously planned levels despite the impact of the Covid-19 pandemic on the Group's business.

 

Expenditure on technology development during the six-month period was £2.1 million (2019: £1.5 million) of which £0.4 million (2019: £0.3 million) was capitalised and the remainder expensed to profit and loss.  £0.2 million of previously capitalised development was amortised in the period.  These figures are included within the results of the Systems division.

 

Changes to our development methodology and organisation implemented last year, alongside increased investment, enabled us to continue improvements in our development and product management programmes.  

 

Significant enhancements to the Synergy platform include a new cybersecurity management system that proactively monitors the cybersecurity of customer systems and advises them how to maintain a high level of vigilance.

 

Synectics' new Cloud-based evidence management solution is now being actively used by public sector clients, giving their extended teams and affiliates secure remote access while maintaining full control and traceability of the entire chain of evidence, including video, images and documents, thus supporting their compliance with local regulations and GDPR.

 

Our Synergy software platform is leading the way in providing customers with precisely configured 'command and control' solutions that provide verifiable feedback to help identify, respond to and resolve incidents. With our new developments, we are expanding the reach of Synergy by bringing the control room into the field - giving remote teams greater situational awareness, and the control room the real-time intelligence that they need to manage incidents faster and more effectively than before.

 

New technology developments are constantly emerging from manufacturers of specific security applications, such as video analytics, artificial intelligence, and other related systems.  By working with our customers' choice of technology manufacturing partners on integrations we are able to leverage their solutions through our Synergy platform.  Taken as a whole, this approach enables a Synergy-controlled system to unlock new levels of pre-emptive threat detection and intelligent automation that set Synectics apart.

 

Our developments remain focused on markets where safety, security and surveillance are fundamental to our customers' operations. Our Synergy platform provides the foundation of integrated solutions that can be configured to meet the exacting requirements of each customer.

 

By the end of this year, we will also release a new range of COEX camera stations to  our  oil & gas customers. The new cameras incorporate advanced cybersecurity features, 4K video capability, and built-in analytics, ensuring our 30-year reputation for specialist camera innovation in these industries continues into a new decade.

 

Integration & Managed Services

 

Synectics' Integration & Managed Services ('IMS') division is a leading UK provider of electronic security systems, supporting large-scale and multi-site systems through its nationwide network of service engineers, security-cleared personnel, and an in-house 24-hour monitoring centre and helpdesk. Its main markets are in public space, public transport, and critical infrastructure.

IMS operates independently, providing products and technology from both Synectics' Systems division, and other "best-in-class" providers.

 

£000

Six months ended

31 May

 2020

Six months ended

31 May

 2019

Year

ended

30 Nov

2019

 

 

 

 

Revenue

11,186

14,738

28,603

Gross margin2

24.0%

22.1%

21.9%

Operating profit/(loss)2

(209)

100

(26)

Operating margin2

(1.9)%

0.7%

(0.1)%

 

 

2 Before non-underlying items and Group central costs.

 

 

Synectics' security integration business remains one of the UK's largest and most capable providers of security systems and services.

 

The division's poor operating results over the last 18 months are principally due to an ongoing multi-year decline in the UK bus market, the main clients for Synectics' on-vehicle security systems. This effect was exacerbated by the major market disruptions caused by Covid-19 in the first half of this year. Nevertheless, the recently announced award of a major contract renewal by Stagecoach, and new orders for hybrid vehicles for operators in Ireland, supports an expectation of some increase in activity as bus manufacturers return to production.

 

New security integration business won in the first half came primarily from government and public sector clients. Unsurprisingly, delays and lengthened procurement cycles were a feature of the period, though the pipeline of expected new business remains relatively resilient. Synectics' position as a leading supplier of security systems to landmark buildings, major infrastructure operators and government agencies should protect this area of the business from any extended downturn in the commercial sector.

 

Notable wins in the period were a new control room for West Midlands Police and upgraded systems for a number of local authorities across the UK, as well as other Government agencies.

 

Organisation

 

Market shocks of the magnitude experienced in the first half of 2020 have clearly required action to protect Synectics' business. In addition to taking advantage of UK Government job protection initiatives, agreeing management compensation cuts and suspending the payment of a final dividend, the Company has thoroughly reviewed, and reduced its cost base.

 

In addition, steps have been taken to accelerate the planned review of certain operations and physical sites within the Group's UK integration activities. The decision has been taken to merge Synectics' on-vehicle security integration business (Synectics Mobile Systems) with the Nottingham-based high-security integration activities (Quadrant Security Group). As a result, two operating sites will close during the second half of this financial year. Provision for the costs of these changes will be charged as a non-underlying item in the second half of this financial year and are expected to amount to approximately £0.9m. Further details are contained in Note 8 below.

 

This new entity, which will trade as Synectics Security, provides the foundation for a stronger and more capable business, suitably positioned to deliver long-term growth and increasingly significant profit contributions.

 

Strategy

 

Important progress was made in the first half towards building on the recent market breakthroughs achieved by Synectics' Synergy platform in the field of security operations control for transport and infrastructure. The scale and complexity of such systems has meant that, up to now, the market has largely been supplied by very costly and inflexible bespoke software solutions. The latest versions of Synergy offer typically 75% - 90% of the required functionality in its standard commercial-off-the-shelf core modules, with only the limited remainder requiring bespoke software code. The available benefits to customers in cost, delivery timescales and, most importantly, project risk management, are considerable.

Following on from the Deutsche Bahn project won last year, and long-term work for BVG, also in Berlin, Synectics is in the process of bidding or preparing a small number of similar proposals elsewhere. As a result, positive engagement is underway with prospective customers as well as, critically, major IT systems integrators with global footprints. These latter potential partners will be key to enabling Synectics to increase the pace at which it can scale its market penetration.

 

People

 

The last few months have been particularly hard for employees in most companies. In line with Synectics' long-standing culture, our people have stepped up brilliantly to support colleagues and customers through the Covid-19 pandemic-induced difficulties, and to share the sacrifices needed for the Company to survive and prosper.

 

The Group was quick to instigate a specific programme to keep employees connected to the business and each other. We are making extensive use of video conferencing and other communication tools to facilitate continued effective teamwork and engagement, and to minimise any potential sense of isolation. The Group continues to utilise a growing range of remote capabilities to work creatively with customers on new ways of delivering projects and services.

 

On behalf of the Board and shareholders, I would like to thank all of our employees most sincerely for their exceptional and much valued efforts.

 

Outlook

 

As casinos and gaming resorts start to re-open in North America and Asia, regular maintenance and upgrade revenues from installed gaming systems should begin to pick up quite soon. However, the Board expects that the majority of delayed orders for new surveillance projects and major upgrades in this sector are unlikely to return until calendar 2021.

 

In other customer sectors of the Systems division, transport, high security and oil & gas all look to be picking up somewhat in the second half of the current financial year.

 

The Group's UK security integration activities are generally holding up quite well and, despite the evident challenges, are expected to produce a result for the current financial year as a whole at a similar level to the prior year.

 

There is still a high degree of uncertainty around revenue forecasts, even for the relatively short-term future. Nevertheless, the Board expects that Synectics will produce a noticeably improved underlying trading result in the second half of this financial year compared to the first half.

 

 

David Coghlan

Chairman

14 July 2020

 

 

 

Consolidated Income Statement

For the six months ended 31 May 2020

 

 

Notes

Unaudited
six months ended
31 May 2020

 £000

(IFRS 16)

 Unaudited
   six months ended
31 May 2019

 £000

(IAS 17)

Revenue

3

23,022

33,568

Cost of sales

 

(14,862)

(22,193)

Other income2

 

189

-

Gross profit

 

8,349

11,375

Operating expenses

 

(10,514)

(10,107)

Other income2

 

344

-

(Loss)/profit from operations, before non-underlying items

 

(1,821)

1,268

Non-underlying items1

 

(277)

(12)

(Loss)/profit from operations

 

(2,098)

1,256

Finance income

 

51

84

Finance costs

 

(227)

(122)

(Loss)/profit before tax

 

(2,274)

1,218

Income tax credit/(expense)

5

458

(183)

(Loss)/profit for the period attributable to equity holders of the Parent Company

 

(1,816)

1,035

Basic (loss)/earnings per share

7

(10.7p)

6.2p

Diluted (loss)/earnings per share

7

(10.7p)

6.1p

Underlying (loss)/basic earnings per share

7

(9.4p)

6.2p

Underlying diluted (loss)/earnings per share

7

(9.4p)

6.2p

 

1Non-underlying items represent the amortisation of acquired intangible assets and restructuring costs incurred in respect of the consolidation of the Group's head office from Studley to the existing premises in Sheffield.

2Other income represents government grant income received in relation to Covid-19. See basis of preparation (note 2) for further detail.

 

 

 

Consolidated Statement of Comprehensive Income

For the six months ended 31 May 2020

 

 

 

 

 

Unaudited
six months ended
31 May 2020

 £000

(IFRS 16)

 

 Unaudited
   six months ended
31 May 2019

£000

(IAS 17)

(Loss)/profit for the period

 

 

(1,816)

1,035

Items that will not be reclassified subsequently to profit or loss

 

 

 

 

Re-measurement gain on defined benefit pension scheme, net of tax

 

 

-

84

 

 

 

-

84

Items that may be reclassified subsequently to profit or loss

 

 

 

 

Exchange differences on translation of foreign operations

 

 

537

91

Losses on a hedge of a net investment taken to equity

 

 

(171)

(17)

 

 

 

366

74

Total comprehensive (loss)/income for the period attributable to equity holders of the Parent Company

 

 

(1,450)

1,193

 

 

Consolidated Statement of Financial Position

As at 31 May 2020

 

 

 

 

 

Unaudited
31 May 2020

 £000

(IFRS 16)

 

 

Unaudited
31 May 2019

£000

(IAS 17)


 

 

30 Nov 2019

   £000

(IAS 17)

Non-current assets

 

 

 

 

Property, plant and equipment1

 

6,100

2,752

 

2,904

Intangible assets

 

22,047

21,485

21,712

Retirement benefit asset

 

687

283

687

Deferred tax assets

 

1,780

774

1,259

 

 

30,614

25,294

26,562

Current assets

 

 

 

 

Inventories

 

6,947

10,247

7,076

Trade and other receivables

 

12,619

14,898

17,536

Contract assets1

 

7,173

10,472

7,933

Tax assets

 

25

97

35

Cash and cash equivalents

 

4,600

5,337

3,580

 

 

31,364

41,051

36,160

Total assets

 

61,978

66,345

62,722

Current liabilities

 

 

 

 

Trade and other payables

 

(13,902)

(20,587)

(14,821)

Contract liabilities

 

(3,016)

(3,072)

(4,062)

Lease liabilities1

 

(906)

-

-

Tax liabilities

 

(490)

(457)

(384)

Current provisions2

 

(542)

(486)

(1,366)

 

 

(18,856)

(24,602)

(20,633)

Non-current liabilities

 

 

 

 

Non-current provisions2

pProvisions

 

(489)

(433)

(321)

Lease liabilities1

 

(2,294)

-

-

 

Deferred tax liabilities

 

(807)

(662)

(807)

 

 

(3,590)

(1,095)

(1,128)

Total liabilities

 

(22,446)

(25,697)

(21,761)

Net assets

 

39,532

40,648

40,961

Equity attributable to equity holders of the Parent Company

 

 

 

 

Called up share capital

 

3,559

3,559

3,559

Share premium account

 

16,043

16,043

16,043

Merger reserve

 

9,971

9,971

9,971

Other reserves

 

(1,453)

(1,582)

(1,499)

Currency translation reserve

 

1,086

1,139

720

Retained earnings

 

10,326

11,518

12,167

Total equity

 

39,532

40,648

40,961

 

 

 

 

 

1Right of use assets (included in property, plant and equipment) and lease liabilities arose on transition to IFRS 16 on 1 December 2019. See note 7.

 

 

2The 31 May 2019 balance sheet is re-presented for the reclassification of warranty provision from accruals to provisions, consistent with the 2019 annual report.

 

 

Consolidated Statement of Changes in Equity

For the six months ended 31 May 2020

 

 

Called up

share

capital

£000

Share

premium

account

£000

 

Merger

reserve

£000

 

      Other

  reserves

       £000

Currency

translation

reserve

£000

 

Retained

earnings

£000 

 

 

Total

£000

At 30 November 2018

3,559

16,043

9,971

(1,748)

1,065

11,830

40,720

IFRS 15 opening balance adjustment

-

-

-

-

-

(808)

(808)

Tax on IFRS 15 opening balance adjustment

-

-

-

-

-

115

115

At 1 December 2018

3,559

16,043

9,971

(1,748)

1,065

11,137

40,027

Profit for the period

-

-

-

-

-

1,035

1,035

Other comprehensive income

 

 

 

 

 

 

 

Currency translation adjustment

-

-

-

-

74

-

74

Re-measurement gain on defined benefit pension scheme, net of tax

-

-

-

-

-

84

84

Total other comprehensive income

-

-

-

-

74

84

158

Total comprehensive income for the period

-

-

-

-

74

1,119

1,193

Dividends paid

-

-

-

-

-

(590)

(590)

Credit in relation to share-based payments

-

-

-

-

-

18

18

Share scheme interests realised in the period

-

-

-

166

-

(166)

-

At 31 May 2019

3,559

16,043

9,971

(1,582)

1,139

11,518

40,648

Profit for the period

-

-

-

-

-

595

595

Other comprehensive income

 

 

 

 

 

 

 

Currency translation adjustment

-

-

-

-

(419)

-

(419)

Re-measurement loss on defined benefit pension scheme, net of tax

-

-

-

-

-

330

330

Total other comprehensive income

-

-

-

-

(419)

330

(89)

Total comprehensive income for the period

-

-

-

-

(419)

925

506

Dividends paid

-

-

-

-

-

(220)

(220)

Credit in relation to share-based payments

-

-

-

-

-

27

27

Share scheme interests realised in the period

-

-

-

83

-

(83)

-

At 30 November 20191

3,559

16,043

9,971

(1,499)

720

12,167

40,961

 

 

 

 

 

 

 

 

Loss for the period

-

-

-

-

-

(1,816)

(1,816)

Other comprehensive income

 

 

 

 

 

 

 

Currency translation adjustment

-

-

-

-

366

-

366

Re-measurement gain on defined benefit pension scheme, net of tax

-

-

-

-

-

-

-

Total other comprehensive income

-

-

-

-

366

-

366

Total comprehensive (loss) / income for the period

-

-

-

-

366

(1,816)

(1,450)

Dividends paid

-

-

-

-

-

-

-

Credit in relation to share-based payments

-

-

-

-

-

21

21

Share scheme interests realised in the period

-

-

-

46

-

(46)

-

At 31 May 2020

3,559

16,043

9,971

(1,453)

1,086

10,326

39,532

 

2 The Group implemented IFRS 16 with effect from 1 December 2019. As described in note 7, the Group adopted the modified retrospective approach to implementation and therefore required no adjustment to brought forward retained earnings.

 

Consolidated Cash Flow Statement

For the six months ended 31 May 2020

 

 

 

 

 

 

 

 

Unaudited
six months ended
31 May 2020

 £000

(IFRS 16)

Unaudited
six months ended
31 May 2019

£000

(IAS 17)

Cash flows from operating activities

 

 

 

 

(Loss)/profit for the period

 

 

(1,816)

1,035

Income tax (credit)/expense

 

 

(458)

183

Finance income

 

 

(51)

(84)

Finance costs

 

 

227

122

Depreciation and amortisation charge

 

 

1,075

496

Profit on disposal of non-current assets

 

 

-

 

-

Net foreign exchange differences

 

 

89

23

Net movement in provisions

 

 

(656)

(63)

Share-based payment charge

 

 

21

18

Operating cash flows before movement in working capital

 

 

(1,569)

1,730

Decrease/(increase) in inventories

 

 

160

(185)

Decrease/(increase) in trade, other and contract receivables

 

 

6,051

(8,051)

(Decrease)/increase in trade, other and contract payables

 

 

(2,194)

5,121

Cash generated from operations

 

 

2,448

(1,385)

Tax paid

 

 

-

(198)

Net cash from/(used in) operating activities

 

 

2,448

(1,583)

Cash flows from investing activities

 

 

 

 

Purchase of property, plant and equipment

 

 

(207)

(267)

Capitalised development costs

 

 

(419)

(265)

Purchased software

 

 

(41)

(5)

Net cash used in investing activities

 

 

(667)

(537)

Cash flows from financing activities

 

 

 

 

Lease payments

 

 

(599)

-

Repayment of borrowings

 

 

-

-

Interest paid

 

 

(117)

(38)

Dividends paid

 

 

-

(590)

Net cash used in financing activities

 

 

(716)

(628)

Effect of exchange rate changes on cash and cash equivalents

 

 

(45)

(29)

Net increase/(decrease) in cash and cash equivalents

 

 

1,020

(2,777)

Cash and cash equivalents at the beginning of the period

 

 

3,580

8,114

Cash and cash equivalents at the end of the period

 

 

4,600

5,337

 

Notes

1.      General information

2.      Basis of preparation

3.      Segmental analysis

Revenue by operating segment

 

 

Unaudited
six months
ended
31 May 2020
£000

Revenue

 

 

 

Systems

 

12,568

Integration & Managed Services

 

11,186

Total segmental revenue

 

23,754

Reconciliation to consolidated revenue:

 

 

Intra-Group sales

 

(732)

 

 

23,022

         

 

1 Re-presented in line with the 2019 annual report. Synectics' UK on-vehicle surveillance activities, previously reported within the Systems segment, is now included in the Integration & Managed Services segment.


 

Underlying operating result by operating segment

 

 

 

 

Unaudited
six months
ended
31 May 2020
£000

(IFRS 16)

Unaudited
six months
ended
31 May 2019
£000

(IAS 17)

(Re-presented1)

Underlying operating profit

 

 

 

Systems

 

(731)

2,338

Integration & Managed Services

 

(209)

100

Total segmental underlying operating profit

 

(940)

2,438

Reconciliation to consolidated underlying operating profit:

 

 

 

Central costs

 

                (881)

(1,170)

 

 

(1,821)

1,268

 

1 Re-presented in line with the 2019 annual report. Synectics' UK on-vehicle surveillance activities, previously reported within the Systems segment, is now included in the Integration & Managed Services segment.

 

Underlying operating profit from operations is reconciled to total profit from operations as follows:

 

 

Unaudited
six months
ended
31 May 2020
£000

(IFRS 16)

Unaudited
six months
ended
31 May 2019
£000

(IAS 17)

Underlying operating profit

 

(1,821)

1,268

Non-underlying items

 

(277)

(12)

 

 

(2,098)

1,256

 

4.      Income tax expense

.

 

5.      Dividends

No interim dividend (2019: 1.3p per share) has been announced or will be paid for the financial year 2020.

 

 

6.      Earnings per share

Earnings per share are as follows:

 

 

Unaudited
six months
ended

31 May 2020
Pence per share

Unaudited
six months
ended

Basic (loss)/earnings per share

 

(10.7)

6.2

Diluted (loss)/earnings per share

 

(10.7)

6.1

Underlying basic (loss)/earnings per share

 

(9.4)

6.2

Underlying diluted (loss)/earnings per share

 

(9.4)

6.2

 

 

 

 

The calculations of basic and underlying earnings per share are based upon:

 

 

 

 

 

£000

£000

(Loss)/earnings for basic and diluted earnings per share

 

(1,816)

1,035

Non-underlying items

 

277

12

Impact of non-underlying items on tax expense for the period

 

(51)

(4)

(Loss)/earnings for underlying basic and underlying diluted earnings per share

 

(1,590)

1,043

 

 

 

 

 

 

 

000

Weighted average number of ordinary shares - basic calculation

 

16,902

16,771

Dilutive potential ordinary shares arising from share options1

 

-

123

Weighted average number of ordinary shares - diluted calculation

 

16,902

16,894

 

1 Under IFRS no allowance is made for the dilutive impact of share options which reduce a loss. The basic and diluted EPS measures are therefore the same for the half year ended 31 May 2020.

 

 

7.     Change in accounting policies

Right of use assets

 

Land & Buildings

Motor Vehicles

Total

Balance at 1 December 2019

 

3,031

403

3,434

Balance at 31 May 2020

 

2,946

280

3,226

Lease liabilities

 

Land & Buildings

Motor Vehicles

Total

Balance at 1 December 2019

 

2,985

398

3,383

Balance at 31 May 2020

 

2,920

280

3,200

 

 

1 Dec 2019

£'000

Right of use assets presented in plant, property and equipment

 

3,434

Lease liabilities

 

(3,383)

Prepaid rent reclassified from prepayments to right of use assets on transition

51

 

1 Dec 2019

£'000

Operating lease commitment at 30 November 2019 as disclosed in the Group's consolidated financial statements

4,659

Impact of discounting using the incremental borrowing rate at 1 December 2019

(713)

Recognition exemption for leases of low value assets

(563)

Lease liabilities recognised at 1 December 2019

3,383

8.     Post balance sheet events

9.    

- Ends -

 


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
 
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