Synectics (LSE:SNX) — Final Results

0:01 Good afternoon, ladies and gentlemen, and welcome to the SYNECTICS PLC Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged. They can be submitted at any time via the Q and A tab that's just situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today, and we'll publish those responses where it's appropriate to do so on the Investor Meet company platform. And before we begin, I would like to

0:32 submit the following poll. And if you could give that your kind attention, I'm sure that would be most appreciated by the company. And I would now like to hand you over to CEO, Paul Webb. Paul, good afternoon, sir. Thanks very much, Jake, and thanks to everyone for your time and attention this afternoon. We're here to run you through the final results for 2023 for SYNECTICS PLC. And just before we do that, give me a few minutes to just tell you a bit about ourselves for those of you who know us less well. So we always talk about, security and surveillance systems, but specifically SYNECTICS is a a market leader in some specific core markets. And those markets characterize really where security is either critical or or fundamental to operations.

1:19 Often regulated markets where our experience and our expertise is really highly valued and and helps customers ensure compliance with those regulations. And we deliver solutions that are often technically and logistically challenging. And to a very high profile and often blue chip customer base globally. Our solutions are largely built on our own intellectual property, either our SYNECTICS software platform or our COEX explosion protected camera range in the oil and gas market. And we build long term relationships with both our end users and our channel partners, and this is really, really important to us. In the end, though it's seen as a tech technical business, we are a very human business because we know ultimately that what we do is protecting people or keeping people safe, and so do our customers.

2:10 This trying to lay out our global business is set out here in just a few numbers, but let me elaborate on those a little bit. We got almost quarter of a million channels of of video under management by our synergy command and control software platform. About a 150,000 of those are in, you know, around a 100 casinos globally, including some iconic properties like Marina Bay Sands in Asia and Wynn in Las Vegas in The US. So we've got a very significant operating footprint there. More than 10,000 coax cameras operating, being supplied in the last ten years. And they've been supplied to all major oil and gas companies and smaller ones as well, not just the the major ones that will were referenced today where we've had large contracts this year, but just for every company you can name all around the world.

3:04 We provide systems to Lincoln transport providers, Deutsche Bahn in Berlin, Irish Rail, Stagecoach in The UK, and TFL. All of these use our systems and rely on them. So that's 5,000,000,000 passengers at Journeys a year protected by our systems. In public space, which is our heritage, it's almost 100 towns, cities, London boroughs, and they use SYNECTICS, our system. And we're extending that sort of public space reach now into stadia, tourist attractions, universities, and now in health care, etcetera. And in critical infrastructure, National Grid and other critical infrastructure sites use and trust our systems. So, I mean, all we're a trusted brand in our sectors. We're a well known and trusted brand in our sectors, and we're really focused on understanding and serving our customers well.

3:59 So I'll move on to to look at the performance of 2023 now. Headline results there. I'll only touch on those. Amanda will will go into those in more details a little later. But overall, strong results, well ahead of market expectations. Yes, they're underpinned by a buoyant oil and gas market in 2023, we've made really good progress elsewhere also. And I'll elaborate on that over the next minutes. So you can see really good solid growth in revenues here. And our operational gating really shows through in very strong profit growth. When the order book closed very strongly, we're really pleased with that with good project wins in all sectors and almost all geographies.

4:45 And I'm pleased to say that our sales momentum is continuing into 2024. We're pleased we've been able to continue to invest in our technology. We protected our technology investments right through the the difficult years prior to this, the post pandemic years. And, I'll go into some more details, highlights and details of that shortly. But it's really important to us to continue to invest in technology because we want to maintain our strong position as a trusted brand and the go to provider in the sectors we operate in. And noting that oil and gas was particularly strong last year, and it will continue to be so, but all our sectors now really offer growth prospects, and we'll continue to focus on those markets where we have real expertise and experience.

5:35 So I'll a quick look now at our two operating divisions. SYNECTICS operates two divisions, systems and security, with two slightly different business models. I'll focus first on SYNECTICSystems, which develops and delivers its proprietary technology led solutions to specialist markets globally, including gaming, oil and gas, public space, transport, critical infrastructure, as I've touched on just now. And these are almost exclusively delivered through local systems integrators, local service partners, local channel partners on a global basis. The capabilities center around our proprietary software platform, SYNECTIC, and that's tailored to each customer's unique requirements. And also specialist hardware for oil and gas built on our COEX camera range.

6:25 And looking at performance in this division, Amanda will will go through the sort of regional and sector performance in more detail a bit later. But in overview, yeah, strong demand from oil and gas sector in 2023. That is continuing and is expected to continue. It is a cyclical market, but it's it's pretty strong at the moment. We've seen a marked recovery in the gaming market in Asia, which has been strong after you know, the the gaming market was essentially closed for two years. And whilst the the gaming sector is now recovered in terms of all the casinos are open, the the visitor numbers are back at the similar levels to pre pandemic. And in most jurisdictions, gross gaming revenues are also at the same levels they were pre pandemic.

7:14 We've seen a delay. It's particularly in major refurbishments and North American market particularly was more subdued in 2023. But there are encouraging signs as we enter into 2024 of some recovery in the North American market as well. We've made some progress in The UK in public space, but over the last few years and and and currently, it's quite constrained, the market, with mainly budget constraints. So as I mentioned a few minutes ago, we've been sort of expanding into adjacent territories. Our Heartland, our traditional business is in local authority based town center systems, and that's still a we still have a big footprint there, still very important to us. But looking at health care universities and and other similar opportunities.

8:05 At the very end of last year, we announced the the award of a a a large project for a major major UK financial institution. That was our nest at the end of last year. That's providing our synergy platform to the whole back office estate of this financial institutions, data centers, cash centers, the like. That's a project worth around a million pound. That'll be deployed through 2024 and bodes well for some other significant projects that are in our sites. Just looking at some of the projects we have done and and announced through with the year, I'll just give you a highlight on a couple of the larger ones. But oil and gas has seen and continues to see a steady stream of new project awards. This is just one of them. It was the largest one we had last year, and it's worth about £5,500,000 across two separate project awards from Saudi Aramco.

9:02 Further work from Saudi Aramco is expected. Indeed, we've secured already over £1,000,000 worth of further orders since this this last tranche for this development field since then. It's important to note that only half of this project was taken to revenue last year. So the strong oil and gas revenues you'll see shortly are not just based on one large order, but a steady stream of project awards throughout the year. And the latest generation of our coax cameras was specified for this project by by the end user. So underlying the importance of continuing our technology development and keeping our products and solutions at the forefront of what our customers expect and need from us. Another project which we announced early in last year, an important win for us really, as it's one of the very few new casino resorts that were completed and opened during last year.

9:59 It's a project in The Philippines that, so we announced that fairly early last year. The solution was selected by the owner based on the the operational excellence, really, of our system in their previous property. They have started to build a third, but that's a few years away still. But the key point here is that we're now renowned as best in class for integrated systems for these sort of large casino resort operations, and we're hopeful. Now we're expecting other similar projects in this year and beyond. I'll move on now to talk about our other operating division, SYNECTICS security division. It's SYNECTICS security operates a service and reseller model.

10:46 It supplies integrated security solutions directly to end users in The UK and Ireland, principally within public space, transport, and national infrastructure using the combination of both our group's proprietary technology or also other third party products as well.

11:05 Same performance in this division during the year, but really good gross margins. I'm a come on and talk about those in more detail later. But very strong gross margins, particularly when you compare them with the sort of sector norms. It's quite normal for security integration in The UK that gross margins are in the sort of teens or even barely double digits territory. So what that these have been steadily progressing over the last few years. So very, very pleased with the progression in gross margin and a steady increase in revenue from last year. We do believe there's potential for further progress in this division. There there are opportunities out there. I think that that the constraints in local authority budgets means that the sort of heartland of the business in in UK town and city centers is not an area we're expecting significant growth in the short term, but there are plenty of other opportunities. So we're currently reviewing the go to market strategy and the business development focus here because we we really do expect to make further progress here in the near term.

12:08 On a significant post year end, we announced some contracts that were awarded for for National Grid to this integration division. I don't wanna talk about those a little more now. So from a group perspective, National Grid is a long term customer. It's been a long term customer of SYNECTICS systems and using its synergy software in its central control room for many years now. And this was refreshed and upgraded a few years ago. Some of you may remember an RNS announcing that fairly significant software system sale to National Grid a couple of few years ago. And National Grid continued to develop its use of SYNECTRIE centrally and across its estate.

12:54 But this contract is completely different. National Grid use a small number of prequalified contractors across its estate nationally to carry out work on the ground, physical work at at numerous sites around the country. So SYNECTICS security division were awarded a framework contract actually back in late twenty twenty two, but we don't know usually announce frameworks. We announce real contracts, real projects that we can deliver against. And we undertook works last year in excess of £1,000,000 for for National Grid under this framework. But subsequently, we've been awarded contracts to deliver system hardware site upgrades, on-site upgrades to over 13 sites in the country during 2024.

13:41 And the aggregate of those awards is is in excess of £4,000,000. So around £5,000,000 under this framework contract in the last year or two. And, hey, there could be more to come.

13:57 In terms of technology, I'll go on to talk about our sort of road map in in a few moments. Important to say here that we don't develop our own AI and analytics. I know it's the flavor of the month, but we keep on integrating the the constantly changing best in class options for our customers in terms of video analytics or or AI automation. And we really believe this provides a significant benefit for our customers who are not locked into one technology or one set of functionality that that we or anyone else develop. But we can keep on evolving and, you know, integrating more than one AI technology into the same system for our customers as necessary. So we keep on adding sector specific features to our product and, again, as I said before, to keep it relevant and at the forefront of our market.

14:51 In terms of our road map, I won't I won't run through all this detail. I'll just pull out a few highlights here about where our investment is focused now in 2024. I've I've just mentioned AI. So we we will continue to to increase integrations and any new analytics type technologies that come up as they're useful for our customers, we'll build them into our platform. But we're also committed to delivering native forensic search capabilities within SYNECTICS, which will will will be launched and developed during this year, allowing users to search their video evidence in ways they could only imagine have imagined previously. And we've all got images and seen on TV people, policemen sitting there for hours and hours recording and rewinding and fast forwarding and playing through, looking for certain scenarios.

15:45 And the the forensic search capabilities using AI that we're developing in the product will really cut that down and really really accelerate the the ability to search that video evidence. We're continuing to develop our our our cloud platform. We have a few early adopter customers using SYNECTICS in the cloud, notably City of London Police. But more customers also using the cloud portal for evidence sharing. And we really see some opportunity now to get a broader deployment both from existing customers and new customers by developing on the solutions we created a few years ago for for our early adopters. We're doing some work on a subscription model of our systems as a sold as a a capital purchase with some ongoing software support arrangements.

16:39 But the intention is that we lead with a subscription model for our software in the future so that that licensing facility is being developed and will be released in the next major iteration of of the SYNECTIC platform. And a lot of work going into the mobile application and web clients that, you know, enhances the capability of the system. We we have very control room centric systems, but increasingly, people are looking to make use of the power of the platform beyond the control room. So you'll see, more releases on that during the year, and, we've already got a number of these in in play with early adopters and and beta trials. So before I pass over to Amanda to actually talk about the the results for 2023, I'm not gonna read through all these opportunities, but it's probably the the first time since 2013, really, that we're looking at all the sectors, all the markets that we operate in, really seem to offer us real growth opportunities.

17:41 Our long experience, our expertise, and our sector know how really positions us well. And we're developing real opportunities in all of these market sectors and geographies right now. We've increased our focus on business development. We've hired more business development staff in recent months not to go out and just prospect for anything they can find because we can see real projects, real opportunities out there in the market that's that we're determined to to take and positions us really well for significant growth over the next couple of years.

18:15 So before I pass over, just to sum up, you know, we're very clear. Our strategy remains to develop and capitalize on the market leading positions we do have. We have great experience. We can leverage that experience. We have some fantastic long term relationships, which we build on too. We're focusing more on driving sales through partnerships rather than just deployment and service through the partners and increasing our our our recurring revenue on the basis of subscription, as I said before. Okay. Well, hopefully, that gave you a quick whirlwind snapshot through the business and and where we're at and, what we're focusing on in the near future. And with that, I'll hand over to Amanda who'll take you through the results. Thanks, Paul. Good afternoon, everyone.

19:02 I'll start by going through some financial KPIs and a high level summary of the underlying income statement for 2023, and then I'll highlight in a bit more detail, behind that over the next few slides. So we're obviously really pleased with the strong financial performance in the year. Revenue up 26% to 49,100,000, and that's driven predominantly by our systems business where revenues excluding intercompany sales have increased 37% year on year. Contracted recurring revenue in the second bar chart along, that's up slightly from prior year, but we expect this to become much more prominent in the future as we continue to look at the subscription models that that Paul mentioned a couple of slides ago. Gross profit was up 20% to 20,000,000.

19:50 And although gross margins continue to remain strong, it was down 1.8 percentage points compared to the prior year mainly due to the business mix, and I'll touch on that a bit more in a minute. So underlying EBITDA measures our operational profit before noncash items, so interest, tax, depreciation, amortization, as well as non underlying items, which tend to be one one off in nature. So the higher revenues and the continued strong gross margins combined with our high operational gearing has meant the underlying EBITDA has increased nearly 50% to 4,800,000. Operating profit has also therefore increased a 165% from 1,200,000 to 3,100,000 ahead of previous market expectations.

20:36 The operating margin has increased to 6.2% after taking into account an increase in operating expenses, which was predominantly due to inflation across the cost base, in both labor and other admin expenses. And, again, I'll look at that in a bit more detail shortly. Underlying earnings per share was 14.2p, more than double that in prior year. It's not quite as high, as the increase in profit before tax. That's due to the increase in effective tax rate year on year. So the effective rate in the current year was about 19% for underlying results. That compares with the credits, obviously, a negative rate in the prior year. Couple of different reasons for that, but mainly, the increase in the, corporation tax rate for The UK as well as some one off changes that we

21:24 had in the prior year rate due to, changes in international rates and a couple of one off, tidy up items in the tax calculation. So moving on to look at revenue in a bit more detail. The bridge on the left shows the regional revenue movements, since f y twenty two, and the table underneath that shows the total revenue in the year. On the right hand side, the graphs give a flavor of how the revenues are made up by sector. So there's been, revenue progression in terms of monetary value in all sectors year on year. But you can see from the graphs how oil and gas now accounts for about a quarter of total, group revenues, and that's up from about 15% a couple of years ago.

22:12 Within EMEA, revenues are up over 50%, to 13,900,000, and that's predominantly due to oil and gas where revenue more than doubled in the region year on year. And in addition, whilst generally, public trace public space transport and infrastructure have remained, more challenging. As Paul noted, you know, we've secured some significant contracts there, so that's also led to, revenue progress progression in that sector, within EMEA. Revenues in Asia Pacific, have doubled from 6,000,000 to 12,000,000 year on year, and that's due to both the increased activity in oil and gas as well as strong recovery in the Asian gaming markets, both of which we, expect to continue going forward.

22:59 So progress, has been more disappointing in North America where revenues reduced by 2,600,000 to 5,000,000. That's due to slow progress in gaming where refurbishments of the large casinos continue to be delayed. We expect to see that coming back in future as casinos, start to recover their cash flows again following COVID. And then in in addition, in North America, revenues are also down compared to 2022, due to oil and gas, where we had a large one off refinery project in the previous year, where we haven't had sort of such a similar significant project going through in the current year. And then the security business has seen a modest steady revenue growth for the last few half year periods with revenue for the year increasing 1,700,000 to 18,300,000.

23:57 Okay. I'll move on to the revenue profile. So the top graph shows consolidated revenue over the last few halves, and this highlights the revenue progression since 2021. So you can see the second half of twenty twenty three, has been the strongest half since the start of the pandemic and really quite significantly up on the previous

24:20 periods. And it's not unusual for our business for revenue and profits to be second half weighted. Obviously, this year, that's particularly been the case, due to the continued growth in some of those, projects in the latter months. And the bottom graph on this slide illustrates the order book, at the year end point for each of the last three years. So total order book was up at 29,200,000, and that's nearly 5,000,000 ahead of last year's position. Within that graph, the lighter gray area demonstrates the amount expected to be traded in the next financial year. So that's about 80%, of the total order book at the end of twenty twenty three, and that's quite a lot ahead of where we've been the previous couple of years. So based on the order book and the pipeline of opportunities that we can see, we're confident of the continued growth throughout 2024.

25:14 So I'll move on now to look at gross profit and gross margins. So gross profit increased by 3,400,000 to 20,000,000 year on year, and that's due to increased sales volumes, particularly within systems. Gross margin percent has fallen slightly, as I mentioned, by 1.8 percentage points. It it is worth noting here, though, that gross margins for both, f y twenty three and f y twenty two, both over 40% are actually record margins for the group. Now I've highlighted on this bridge the year on year margin movements in the graph. Really, there's two key movements to highlight. So the biggest, movement in the margin is the sales mix due to the increase in oil and gas as a proportion of the group's revenue. So that impacts the mix of of hardware versus software.

26:02 But also within oil and gas itself, that mix can change year on year, and it's dropped slightly from '22 to '23. Secondly, staff costs, so pay rises were implemented from January, and there tends to be a bit of a lag in terms of being able to pass on some of this increase to our customers. And we've also increased our headcount to cope with the increased demand and continued growth expected in oil and gas. And if I look at the division separately, the reduction in systems margin, therefore, that relates to oil and gas. And the increase in the security margin is due to a continued focus by the business on driving higher margin projects as as Paul mentioned earlier, as well as an element of material savings within the year, feels like quite an an achievement given the current climate in terms of cost of materials.

26:57 So pulling that all together to move on to looking at operating profit. So the first block in this graph relates to the gross profit increase. And then I mentioned earlier that operating expenses were up quite materially at nine and a half percent. So there's a few things that I'll pick out here. The first of which is staff costs. So about half of that increase is, due to increased bonus and commission payments, which have been particularly low in previous years, but have obviously increased in line with the results. Another significant portion of the increase is due to pay rises, and the remaining element relates to, increased headcount, particularly around our sales and business development heads where we've increased that to support the future growth of the business.

27:48 The overheads increase of 900,000, relates to some prudent provisions for uncertainties that we've made as well as, increased travel costs. And then as everybody's seeing at the moment, the inflationary pressures, so the increases there across the business, particularly, significant within, from utilities, professional services, and consultancy. Development and technology costs were 3,200,000 for the year, that's consistent with 2022. But the amount that we've capitalized to the balance sheet has increased by 700,000, as we focus more in 2023 on new releases and features, to our synergy software. And it's it's probably more of a normalized level of of capitalization where capitalization has been slightly lower in the last couple of years.

28:41 So that increase has had a positive impact on the income statement as more costs are capitalized to the balance sheet. And then finally, the results were negatively impacted by a foreign exchange loss of 300,000, which related to a retranslation of monetary items on the balance sheet. And then lastly, now I'll look at the cash position. So the business has retained a strong cash position as well as no bank debt. We had a good cash inflow of 5,500,000 relating to operating activities, which is quite a lot higher than the profit due to noncash items such as depreciation, amortization, etcetera, that are included within profit. We had a relatively large working capital outflow in the year of 2,400,000.

29:29 That included an increase in stock levels to support longer lead times as well as the increase needed for oil and gas. In addition, there was quite a significant increase in debtors at year end. That's just because of the increase in revenue year on year, but also the weighting of that revenue to the second half and actually in particular into the fourth quarter, meaning that a lot of that revenue was then invoiced and sat in debtors at the year end. CapEx, returned to more normalized levels for the business, but driven in particular this time by an increase in capitalized development costs. And then the, 400,000 cash tax, so we continue to benefit from the SME r and d tax relief scheme. We elected to take that in cash for one of the recent years, and we got that in in the year. So those factors then led to a free cash inflow of 2,200,000 compared to 1,300,000 in the previous year.

30:24 We paid a dividend to shareholders of 300,000 relating to f y twenty two final, and 500,000 was paid out in relation to the one off non underlying items. So that meant we finished the year with 4,600,000 cash on the balance sheet. And we also have a 3,000,000 facility, which is unutilized, but we do keep due to potential swings within working capital, so particularly where we have increased levels of oil and gas activity. So the cash position, strengthens our overall balance sheet position where net assets at the year end were 38,900,000. And then finally, reflecting our increased results, we're proposing a final dividend to shareholders of 3p, up from 2p in the prior year.

31:11 That's back to you, Paul. Thank you. Thanks, Jake, for turning my microphone on before I get to it. Thanks, Amanda, for running through that. I think very comprehensive looking at our results for last year. Not much more to say here, really. But in summary, we're really, really pleased with the the progress we've been able to make in the last year. We have a really solid basis now for for further growth. And we have a really robust order book and a strong pipeline of new opportunities and new business development opportunities in the markets we serve, which means that sales momentum sales growth momentum is carried on into this year, and we are really confident in delivering significant further progress during the year.

32:01 Okay. Thanks for that. And if you give us a moment, we'll we'll have a look at the questions and try and answer some of those. Perfect, Paul. Amanda, thank you very much indeed for your presentation this afternoon. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab that situates on the right hand corner of your screen. But just while the team take a few moments to review those questions that were submitted already, I would like to remind you that a recording of this presentation along with a copy of the slides and the published Q and A can be accessed via your investor dashboard. Amanda, Paul, as you can see there in the Q and A tab, we have received a number of questions from investors, and thank you to all of those on the call for taking the time to submit their questions. Paul, Amanda, if I may, at this point, just hand back to you just to read out those questions and give your responses where it's appropriate to do so. And then I'll pick up from you at the end. Thank you. Okay. Do you wanna pick up the first one, Amanda?

32:55 Yep. Sure. So thank you for the question. That's from Ashton b. Why was there such a large increase in the proportion of technology development spend that was capitalized in 2023 relative to 2022? So I think I sort of we've I kinda touched on that, in the presentation. The the pre 2022 and previous couple years, it was fair to say the technology, amounts capitalized have been a bit lower, where we had focused more on, maintenance and some other costs within the, within the development. Recently, though, the capitalization has returned to more normal levels. So the costs we're incurring specifically are relating more to to features and releases and updates that meet the qualifying criteria. So examples of those particularly around cloud or mobile services like that. Don't know if there's anything you want to add, Paul, to that? Or No.

33:55 I think we have a very modest and prudent approach to capitalization. It's Yeah. Great. Beth asks what your competitive advantages and why would the customer use your systems over your competitors as well. Oh, that's the stuff you can look at on our website around what our products and systems offer. But, essentially, we don't win on price. We don't sell. We don't have the lowest priced systems and solutions. But what hopefully you got from the first part of the presentation is we are very focused on specific markets. We have long experience and and expertise in those markets. We don't have a product that's generically offered into the security industry. So most of our customers really value our expertise, our experience, and sector specific features. It's a lot of the technology development is around features that are very specific for sectors as we understand what it's like to operate a major casino gaming floor. We understand the pressures on a a city center surveillance director.

34:59 So I guess that's that's the overall thing. There's lots of small details how we compete and, and what's fantastic and compelling about our solutions. But but, essentially, it's that, long earned expertise and, experience. Simon says, you mentioned a strong order book and sales momentum. So how much visibility do you have over the coming year, and what are the main factors propelling sales forward? I've covered some of the ground that we've said before already. But visibility, we've got we've got more in the order book and and pipeline now than we've had any time probably since 2013.

35:44 Amanda showed you the the size of the order book, 29,200,000. 80% of that should trade out during this year. So a big part of this year covered more than we've had for many years. The programs we're involved in are quite potentially quite large, quite complex, quite logistically challenging. So they don't happen in in very short order. In when that Zuluth project in oil and gas we talked about this year, we've been working on for three three years years before it was awarded to us, and that's not atypical. So I'd say it's slightly different in different sectors, but in oil and gas, we have reasonably good visibility of our projects for two one, two, three years ahead, timing and actually winning them is quite difficult to predict.

36:32 And the same with gaming really as well. We got we got we got a good visibility on what projects and programs are likely to happen. And One big opportunity tool for us always is the is the refurbish on the upgrades of systems that typically have a seven year operating life on the basis they're computer based systems. So, you know, we know which of the major properties are due or some of them becoming overdue for upgrade and replacement. And, obviously, it takes a bit of time to build a new casino resort. So so we know we know for a fair way ahead what what the the opportunities are, whether we can win them or close them in that time scale is, you know, is what we're always working on. I would say for for 2024, the order book and and the the pipeline of orders that we are expecting to win covers 2024.

37:24 And the main variable is is timing. So whether these programs are given the green light now or in a few months' time or later in the year. But, say, we you've got significant amount of opportunities in in in our core markets for the next one or two years, and just the timing and phasing of that is the is is the main factor that's that's a bit variable now to predict. So I'll I'll start the next one, Paul, and you can add if you want. So question from Alex c. How operationally geared is the business? And from here, what's driving profit growth? So, the business is highly operationally geared. I mean, you can see that in the year from the 26% growth in revenue, you know, drops down to the 165% or so increase in, operating profit.

38:21 We've taken some steps, during the year as well, to strengthen our team where it comes to the expected growth, in oil and gas. So even within, the gross margins, you know, obviously, by far, labor staff costs are our are our biggest costs. Even within gross margins, they're quite semi fixed. So, you know, you'll start to see it's really that that the sales volumes, the revenue growth will will drop down into, the bottom line. Yeah. It's a big, big drop through of any revenue growth in there. So we're we're very confident of of getting some of that in this year now. Alex asked again a 3,000,000,200,000 invested in technology development and what leverage does this bring to the business? Well, a big chunk of that is essential sort of maintenance and incremental upgrades to our product suite, which we're doing all the time and making major and minor releases, feature pack releases all the time, and they're all published on the website. There's plenty of newsletters you can sign up to if you wanna see the cadence of of new development releases, and that's a big chunk of the the the expenditure.

39:36 Another part of that is applied to to customers' projects. We try to do less these days in the way of totally bespoke solutions for customers, but there's often an element of tailoring, adapting products for for individual customer projects. But what we have been doing more so in this last year and into '24 is investing in the in the future platform, which again is necessary. As I mentioned when I looked at the technology slide earlier, you know, some of the features that some of the features and functionalities that we have already, there is a mobile app. There is some web client. There is a cloud based presence. But we really see that as these have been picked up by some early adopters, we see ways to develop those on to make them applicable to a broader a broader target customer base. And there's demand from existing customers to to add some of these features, functionalities, and expand their systems, but also we see real opportunities to take into outside our customer set, but within the same market spaces where we we know and understand what people need.

40:53 Perfect. Paul, Amanda, if I may just jump back in there, and thank you very much indeed for being so generous of your time then addressing all of those questions that came in from investors this afternoon. And of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended just for you to review to then add any additional responses, of course, where it's appropriate to do so. And we'll publish all those responses out on the platform. But, Paul, perhaps before really just looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself the company, if I could please just ask you for a few closing comments to wrap up with, that would be great. Yeah. Well, we're really pleased with the performance and the progress we've made in the last year. And I got a note that was really delivered by our fantastic team. It's all built on fantastic efforts of our team. I just finally like to say really that, keep watching because there's more to come.

41:45 Perfect, Paul. That's great. And thank you once again for updating investors, this afternoon. Could I please ask investors not to close this session? Shall now be automatically redirected for the opportunity to provide your feedback in order the management team can really better understand your views and expectations. This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of management team of SYNECTICS PLC, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all. Thanks very much. Thanks everyone for your time.