Synectics (LSE:SNX) — Interim Results

0:01 Good afternoon, and welcome to the SYNECTICS PLC Interim Results Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be split at any time by the Q and A tab situated in the right hand corner of your screen. 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. How the company will review all questions submitted today and publish responses where it is appropriate to do so. Before we begin, I'd like to make the following poll.

0:30 I'd now like to hand you over to Paul Webb, CEO. Good afternoon to you, sir. Thanks very much, Alessandro. It's a pleasure to be here to present the interim results for SYNECTICS PLC to you this afternoon. I'll do some brief introductions in a moment, then I'll take you through the headline results. Then my colleague will take you through the the KPIs and the financial performance of the business, and I'll come back and put some more color into the the operating performance and summarize at the end. There is on the presentation at the end, there is a appendix of a company profile for those of you who are not familiar with the business. We won't be going through that this afternoon, but it'll be available online for you to look at later.

1:15 And we're happy to take any questions as we finish the presentation. So with that, let's go on to introductions. I'm Paul Webb, chief executive. Been with the business quite a while now. Been in this role since 2015. Two long stints in the surveillance industry. So electronic surveillance and security has been my business for a long time with roles across lots of areas. Introduce my colleague, Amanda, who's rejoined us. Amanda?

1:45 Thanks, Paul. Good afternoon, everyone. It's great to be here following my appointment last week. To give a little bit of background, I'm a chartered accountant qualified with Ernst and Young. I originally joined SYNECTICS back in 2012, and I was group financial controller and subsequently acting finance director, through to early twenty twenty when at that point I transitioned the remaining, head office functions from the West Midlands through to, our offices in Sheffield.

2:21 Since leaving the business at that point, I've worked with a number of, both listed and nonlisted businesses, particularly on, transactions. So supporting through the sale of a business, and the preparation of an IPO as an example. It's a fantastic joy time to rejoin the business, and, I'm really looking forward to, supporting the business through its next phase. Thanks, Amanda. It's a real it's a real pleasure to have Amanda back alongside me in with the business. She's really strengthened our senior management team going forward. So really pleased with that. While I'm on it, there's been another a couple of other changes to the board or plan changes to the board announced recently. Last month, we had a new nonexec director. Andrew Lockwood joined us. He's already engaged with the business quite a bit. He's been up to the to the offices and the factory a couple of times.

3:13 He has a background in enterprise software sales in the health care industry, so really relevant experience that can help us as we go into our next phase of growth and, and progress in the business. And and many of you will have noticed the that David Coughlin, our longtime chairman, announced, just in the last few weeks, his intention to retire from the board probably by the end of this year. He's, sixteen years as chairman, twenty three years where he's steering this business. I've had the pleasure to know him for most of that time, and he clearly has earned the earned the opportunity to step back and and remain as an active, engaged senior shareholder. So we expect that transition to be completed by the end of this year, but there's no specific time constraints on that. David will stay with us and support the transition as it takes.

4:07 Okay. Let's go on to the the headline results for the last period. I mean, mean, the headline really has to be the strong, substantial turnaround of profits against the same period last year. And we'll show you on the next couple of slides how that sort of profit transition has, happened in two phases of cost control and structural changes to the operating footprint last year, followed by genuine organic growth and the the highly geared business has shown with with modest revenue increases in the period. It's saying the profits come through very strongly in there. Really proud of the team. The it's a really strong team performance to deliver this, this period's results. There's been a lot of headwinds.

4:52 There's been certainly challenges in the supply chain that we've managed very effectively, had minimal disruption to our customer base from that. And some of the markets we operate in are clearly still subdued, and I'll cover that in a bit more detail,

5:08 in a while. I mean, order book's solid. It's a similar level to this time last year. That's about 30,000,000. But 16,000,000 of that is is intended to trade in the remaining part of this year. So a substantial part of the the next half revenue is already in the bag in the order book. And the pipeline of expected orders is well, it's as strong as we've seen since the since the pandemic, really. Got strong, good coverage over the the second half and into the first half of next year. But I would say probably the the, certainty around timing. There's more uncertainty around timing than they're usually at this time of year, but, in a stronger position than it has been for a couple of years. So absolutely would expect us to be able to deliver the second half results, get some momentum going forward, and already looks quite strong and buoyant as we as we look into potential performance of 2023.

6:07 The cash at the end of the period was stronger than we expected. It's it's been managed very well through the the last few years. Probably an underlying cash of about 3,900,000, but the snapshot at the end of May, 4,200,000. No bank debt. We haven't had any bank debt for a while. And we do maintain a facility that's been undrawn. Some of the large projects that we win from time to time do have short term requirements for larger bits of working capital, so we still feel it's prudent to have that around us. What we're most proud of is the strong gross margins in both businesses, both operating divisions. It's been a key strategic thing for us over the last few years to drive those forward, to get better quality earnings to go after better margin work and the and the mix of business, which I'll cover in more detail in a few minutes' time. So very pleased with the performance there as in both in both businesses.

7:07 And as I said, we we expect further progress, further improvements in the second half of this year. Typically, the second half of the year is much stronger than the first half for us, just normal seasonal events. That's been not necessarily the case in the last one or two years, whether there are obviously other events in that, but we we expect that to return to be the case. So we should see good second half this year. But, clearly, whilst there is momentum in some of although there's more activity in some of the major end markets where we focus on, some of those are clearly still subdued, and so we should see significant further opportunity to recover in those areas in the in the coming year or two.

7:54 So with that, I'll move on to the KPIs. I'll ask Amanda to pick those up and and and from that into the into the results. Thanks, Paul. So revenue, of 22,800,000 for the half. And as Paul's mentioned, that is a modest increase, so about 4% on the comparative period. The operational gearing of the business has meant that that relatively, small increase in revenue has, dropped down to show, a good improvement in the operating results. So we can see here, an improvement in profit before tax, 2,500,000, diluted earnings per share to 2.4p per share, and return on capital employed to 1.8%.

8:41 I think it's useful, at this point to point out that when comparing, half one and half two in 2021, the reason for the turnaround, in those halves was due to the cost savings and efficiencies that the business had, implemented during the last couple of years. So this is really the first half that we're seeing, that increase in results due to the improvement in trading. Free cash flow, that is a 400,000 operating cash inflow offset with 200,000 of capitalization. And, total r and d spend, which is a key for the business, has remained at consistent levels with, previous halves.

9:27 We've capitalized 200,000 of that in the period, and the remainder has been expensed to the income statement. So in terms of revenue, we've seen a considerable increase in our systems division revenue, and that's been offset with a decline in revenues in our security division. And we'll talk a little bit, more about that shortly. We're really pleased with the, improvement in the gross margin, and the total group margin is 39.5% for the period, and that's compared to 35.5% in the comparative period. There's been no non underlying items in the half. So after considering the finance costs, which relate to the, deemed interest on the, IFRS 16, lease charges, the profit before tax, is 500,000, which is a considerable turnaround on the loss of 800,000 in the comparative half.

10:30 Tax charge for the period is 100,000, and that leaves profit for the period of 400,000.

10:40 So taking, a look at our segmental reporting here, we've seen some considerable improvement in systems revenue. That's just over 20% compared to the comparative half. When combining that with the really strong gross margins, in the period, that's driven an increased operating result to 6.1% compared to the negative 4.9% in the comparative half. That revenue has been predominantly driven by increase in our oil and gas revenues and gaming revenues. Within our security division, some customer led delays there on major projects has meant that we've seen a decline in revenues. However, again, some really great performance, in gross margin there, which has led to an improved operating result of, 4.9%.

11:38 So just moving on to, our balance sheet, and I'll take a look at some of the key movements since the year end. The reduction in fixed assets is, quite simply the depreciation, being in advance of capital additions for the period. And similarly, the reduction in intangibles is, depreciation of 500,000 being offset with capitalization of 200,000. We've seen a reduction in cash of, just over 400,000 in the half. I'll take a look at that on the next slide. And other net current assets or our working capital, we've seen an increase there of 1,300,000. And that really, is in our current assets, so in particular, our project work in progress and also some in stock as well.

12:28 That is due to the delays that I mentioned previously, which has meant that perhaps we've not invoiced some projects where we thought we would have got to the invoicing stage at this point. And so there's more sat in project whip, or otherwise that we've got some items sat in our stock that we haven't currently yet been able to deliver to the customer site. Both net tax assets and provisions, are consistent with the year end, and that's really where we would expect them to be at this stage. And we continue to see an unwind in the lease liability as we've had no new leases in the period.

13:09 And this slide, looks at our cash flow for the half. You can see we have, a net cash outflow, as I mentioned, of just over 400,000. That's driven by a cash inflow from operations of 400,000 offset with 800,000, of cash from investing and financing activities. So you can see that the biggest impact in the cash flow from operations is the increase in working capital that I've mentioned. Other notable cash movements are the capital expenditure of 200,000 that relates predominantly to development costs, the lease payments of 400,000, and the 2021 final dividend of 300,000, which has been paid in the current half.

13:59 And I'll hand back over to you, Paul. Thanks, Amanda. So just look looking at the two divisions now. Really pleased with the improved results in, in systems divisions, our core business, international business based on our own proprietary software technology into a number of, vertical markets that we're focused on. Really good that we've seen revenue growth there. There's clearly a lot of room to get further growth or further recovery over the next next couple of periods. The strong margins are great. The strong margins largely, the increasing soft software content of our solutions, but also reflect our ability to pass on some cost increases from the supply chain.

14:47 So we're really pleased with that. At fifty point four, it's never been over 50% before. It's a bit higher than we'd expect to sustain. The high forties is where we expect it to settle down. That's where where we'd be targeting. Those of you who followed us for a while will realize that four or five years ago, we were about 40% gross margin in this division. That's been increasing steadily period on period. And, you know, we're very comfortable with high forties as appropriate gross margin for the business. And we've continued control over the operating costs. We're targeting an operating margin of mid teens percent there, which we should be able to get to with relatively modest increases in revenue over the next year or so.

15:34 You'll see that the the relatively small increase in in revenue in the last last period has shown a a big change in the operating profit. So highly geared, this business, and and we'll see a good drop through as as that revenue increases over the next couple couple of of periods. The revenue in the period's not not really one single big project contribute to that. It's a lot of smaller elements from a lot of work from existing customers continuing and completing some projects. The The notable win during the period was that was announced was a long term contract for National Grid. National Grid have been a been a customer for a number of years, but they made the commitment early this year to to use our synergy software platform across the whole estate, and this is software licensing and support for five years across that estate.

16:29 Also should give an opportunity to generate further revenue through that period as their state expands and continues. Also, a number of oil and gas projects that that was a significant part of our business some years ago. In the current period and over the next year or so, looks like there are more opportunities there than we've seen for a while. That certainly happened in this last half, and we expect further momentum in that area as we go ahead. I look at I look at their division regionally now because I think that gives you a good insight into into the progress that we've made and the progress that we expect to make going forward.

17:14 I mentioned at the outset that we usually have a seasonally stronger second half, and that's been the case for most of the years I've been involved in the business. Certainly, I'll go bottom up on this slide. From Asia Pacific,

17:30 we usually have a very strong second half weighting. The first quarter, December, January, February for us, it's usually quite affected by Christmas, New Year, but also lunar New Year. So we usually have a weak q one, which means that we we we have a stronger second half. The the first half year on year against last year has obviously seen a quite substantial improvement. Both oil and gas and gaming have seen progress from the yeah. Albeit low levels of of twenty twenty one first half. But we expect the the second half weighting to continue through into this year. So I'd expect to see a similar h two increase as as we saw last year in the year that's ahead. I mean, that said, it'll be some time. It'll be into 2023 before we see meaningful improvements and progress in in this region.

18:25 You may remember that we generated revenues of about 17,000,000 from Asia Pacific across gaming and oil and gas only in 2019. So obviously, a long way to go from recovery in this region. I expect some progress in the second half. And clearly, there's room for further recovery in the year following that. Travel and doing business in the region remains difficult. It is open. We can travel, but there are restrictions and and difficulties in that, which means that though we will see second half improvements, the larger projects that we're focusing on are slated for 2023 now. In North America, our activities there are almost exclusively in casino operations.

19:12 Whilst they have all reopened, and we have seen a year on year increase in the first half. Again, we expect the second half seasonal weighting to to come into play. I'd expect further progress in the second half here. But we should note that some of the major casino operators, notably Caesars, Penn Gaming, and a few others have have indicated to their shareholders that straightforward recovery in the second half is possibly not as strong as they'd previously been signaling. Current economic conditions, high fuel costs, cost of living stuff means that that they are not seeing that as straightforward straightforward as they were a few months ago. The the Las Vegas, for example, is heavily dependent on on on dropping weekend business from Southern California, and they're certainly seeing that not to the levels that they were expecting a few months ago.

20:07 In Europe, EMEA, UK business, that was much less affected than our two other regions by the pandemic. Our footprint there is much more heavily in public space, high security transport infrastructure. A lot of those were critical critical businesses, critical operations, and that didn't see the same decline through the pandemic that the the other sectors had done. In the core markets around public space, transportation, revenue's about flat on on last year. And the uptick we've seen there is primarily due to improvements in the oil and gas market, essentially The Middle East, where we've seen not major new projects, but additions, additions, upgrades, refurbishments in in oil and gas facilities in Saudi Arabia, in Abu Dhabi, Qatar, and a few other places. So good to see some some progress there. Our pipeline of opportunities in oil and gas is as strong as it's been since 2014, 2015.

21:09 Sort of expect further momentum in in that sector over the next couple of years. And pretty solid performance in public space and transportation. It's sort of flat flat year on year, but not built on a new major project, but built really on continuing work for existing major customers in that region. So good progress. Should have a strong second half on the seasonal weighting, but clearly a lot of opportunity for further recovery beyond the second half of this year. We mentioned r and d spend. It's been largely the same as the previous years. Preferred technology development as we don't do much R. We develop solutions to meet our customers' emerging and evolving needs focused on a deep understanding of their operations in the in the sectors they work in.

22:03 And And that will continue. The the gross spend, it's a tiny bit down from last year. That's, that's just due to a few open vacancies in the business in in that area, rather than planned reduction in spend. And Amanda mentioned that the capitalization was only about 200,000 of that 1,600,000 spend. That's because the the work in the in the in the first half of this year predominantly completing and finishing off some customer projects and delivering. So you will see increased capitalization in the second half of this year as we focus more on some new features for the product set that will be released into the market next year. At the moment, we've been deploying first first deployments of our fourth generation SYNECTIC platform with some extensions into into cloud based deployment, into mobile connectivity and web connectivity and and further integrations into third party systems that will continue.

23:09 And we've been productizing that work from those early deployments to to make it applicable to a broader set of customers going forward. And saying that, we've actually increased our marketing activity in the period as well. So we've we've started doing more online, more webinars, doing more through newsletters and mailing list, social media. And that's had a really good uptake and some some really good progress on the on the content of those and and a lot of people signing up for for that. Clearly important that we get the the the stories around the the capabilities of the product platform and the deployments we've done. Some of them are quite groundbreaking, early deployments in a fully native cloud solution out to a broader audience. And so I'm really pleased that we've had a good uptake on that. Interestingly, quite a few people from the investor community have registered as well and been receiving some of the news and newsletters, even a few have joined some of the the the the webinars and seminars, which I must admit are quite technical. They're really aimed at either security industry professionals or end users in in in the relevant sectors.

24:22 But having had some feedback from a few investors around them, the the interest they have in those, but maybe they didn't quite understand some of the content. We will will be evolving some of that content to make it applicable to a a broader audience and and potentially put it on platforms such as this. We're looking forward to doing that later in the year. And in parallel to this marketing activity to try and get the message in front of a broader set of customer prospects, it's really important for us, our existing customers, many of whom are long standing customers that have been with us for a long time, and they they get a lot of value and use out of our systems. We need them as advocates. We need them as reference sites for new prospects, new new potential deployments. And so we've been really stepping up the game in terms of connecting connecting with with them. Them. We've always done that.

25:13 It's always been so important to us, mostly face to face over the years. But the last couple of years has meant we've had to look at other ways of doing so. So, with some online tips, newsletters, lot of direct email communication, social media stuff. We've we've really stepped up the the non face to face face to face communication with that user community, trying to build a bit of a community spirit and some advocacy there, which is going really, really well. We've refreshed the the look and feel of not a major brand refresh, but the look and feel modernized the look of some of this content. And, yeah, some of you may be pleased that you'll see that, following through into the look and feel of our corporate communications.

25:59 So things like this presentation or any reports, etcetera, will benefit from that, modest, modest image refresh over the next period.

26:11 Moving on to the security division. Really pleased with the performance in that business over the last couple of years. You may remember that was formed from consolidating a couple of businesses that were operating in that space a couple of years ago. And, generally, that's performed really, really well. Real focus on trying to improve the gross margins with we're looking at better quality, higher value work, and that's been progressing quite well. A little disappointed with the revenue for the half. It's a bit below what we'd hoped and expected. And as Amanda said earlier, largely due to some delays, customer side delays on a couple of major projects as a a couple of projects that have taken a bit longer to get going, and they've had some customers customers not ready to receive some of the product that that's meant that's been slightly below what we'd hoped in the first half. That'll correct itself in the second half of both the both the projects with significant delays are moving full speed ahead at the moment, and they will complete in the year

27:17 slightly later than had been anticipated. With the strong control of the cost base and strong gross margins in in in the business, we were able to post an operating profit ahead of the same period last year. So we're really pleased with that. I talked about trying to move into sort of higher margin, better quality business, and it's really pleasing to get some wins in that government research facility classified project, but but decent margins on that. And and further work with a number of UK police forces, notably City of London. And a lot of work over the last six, nine months with West Midlands Police in advance of the Commonwealth Games, which is imminent. That would be a fantastic reference site, reference project, and a blueprint for the future where there's multi agency application here. It's a police operated system using our SYNECTIC platform, links into local authorities, transport operators, stadia operators, etcetera. So fantastic blueprint for the technical combination of systems across across different agencies.

28:29 And, yeah, the business is underpinned by ongoing work with a number of number of important clients, and and that will continue going forward. Funding and availability of spend in The UK public sector, which is the the biggest area this business unit operates in, has still, you know, been tied as being constrained. But there are specific opportunities and specific funding available, and we're trying to work with end users in that space to to help them specify and apply for funding to allow projects to go ahead. You just go and ask for funding to replace an aging ten year old system. It's quite hard to get money released. But if we can bring some new functionality, bring some some real benefits into into those those systems with, you know, elements that we've deployed elsewhere. So elements of the cloud, using the cloud to share evidence between agencies, elements of the the the the mobile extensions to the product platform to to allow people not in the control room to get connected into instant management and what's going on. It it it open ups it opens up some opportunities for funding around making streets safer and making work better, reducing their operating cost, not needing to drive down to control rooms to burn CDs or video, but share that through the cloud. So with a with a targeted approach, we we think think there's some some decent opportunities for, for further development in the revenues in

30:00 this sector over the next few periods. Okay. So that's a a brief summary of the performance in the two business units over the year. Let me just summarize that, and then we'll start looking at some questions. I mean, clearly, the the the big takeaway is the turnaround in profitability. So we're really pleased with that that everything we did in the prior year to tighten the operating footprint wasn't just cost savings around lower activity, but really structural tightening of the business. We closed about five operating sites over the last couple of years, and business is operating really strongly from a more centralized position. So really pleased that you've seen that coming through and and starting to see the the the gearing drop through, modest increases in in revenue, will make, significant difference to the profitability of the business going forward.

30:59 Good to see resumption in the revenue growth in the core business, in the systems business. It should be stronger in the second half. It will be stronger going forward. But clearly, there's a lot of space to to further to further increase, further recovery in those sectors with with some of them still very, very much subdued. Really proud of the strong gross margins, and that's been delivered against the background of supply chain difficulties, cost base increases, managed to pass most of those through, a change in the mix, the mix of the product, more software centric solutions, and, and our strategy as well of targeting the sorts of projects that we can add more value to. So all those coming together, starting to deliver, you can see the margins coming through. So we're very proud and pleased with that. And, you know, based on that, the the order book is pretty solid.

31:58 A lot's in the order book to deliver in the second half. The pipeline of expected orders is really good, really strong, especially going into 2023. So you should see solid performance to continue continue in the second half of this year, and the trajectory of of growth and continued recovery will continue well beyond the second half of this year. Okay. Well, thanks everyone for listening. Let's see if they've got any questions. Paul, Amanda, thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions just using the q and a tab situated in the top right hand corner of your screen. But just while the company take a few moments to review those questions submitted today, I'd 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. Paul, Amanda, as you can see, we've received a number of questions throughout today's presentation, and thank you to all the investors for submitting those. Could I just ask you to read out those questions and give responses where it's appropriate to do so? And then I'll pick from pick up from you both at the end.

33:00 We'll do. Thanks. Okay. First question we got is from Simon asking about the road map. What does their technology road map look like in terms of developments and other areas of specific focus? So let me just see if I can jump quickly to that technology slide and move from there. Okay. It should be there now. So we've we've got a lot of plans in the road map. Initially, it's looking at things that productizing things that we've already deployed in the in the first instance to a number of places. The work the work in generating our fourth generation product platform was really looking at a hybrid hybrid approach to the cloud. It's very important to us that we're we we don't come up with cool stuff and hope people buy it. Our development, our technology development is very much focused around solving customers' problems. And our deep sector expertise, our deep engagement in a number of sectors rather than the general security industry means that we can see and know problems or or or or requirements that as they're coming up from our customers.

34:16 So the work we've been doing on building the fourth generation platform, it's really important that there's a there's a future upgrade path for all our customers, many of which long term. So many people are sort of stopping and building a new product on a new cloud based technology. We've not done that. We've got a hybrid approach. City of London, one of the large projects we we we started doing last year. They have a a cloud first, policy, so the deployment for them is purely cloud native. Many cases, customers are having a hybrid, deployment, so there's some physical hardware and some functionality delivered through the cloud. And increasingly, we're seeing about our systems are very strong on instant management, and they've been very much control room based.

35:04 Our strength has been around where operators are using control rooms to proactively manage the safety and security of people and assets. But increasingly, we're seeing the need to take that functionality beyond the control room and include people that are out in the field and other operators into the instant response. So there's been early deployments of those into a number of the high profile projects I've mentioned, productizing that and making that available to broader a broader set of customers and deploying elements of that at the time and speed that suits them is is a big part of what's gonna happen going forward. Third party integrations is really important, always have been important and a differentiator for our product platform.

35:51 There are more of those planned. Their integrations deeper integrations into some specific systems in the certain sectors we're working in working in. There have been some advances in stuff around transportation over the last year on the back of certain projects, and we've got a couple of road map ideas in mind to do some deeper integrations in the casino sectors or some gaming technology, which will become available over the next period. And one thing we have done, over over the years, our our, integration into third party systems has always been led by us. We've we've delivered the integrations and made sure we've controlled those. We have developed a software development kit and interface for selected partners that will allow us to the scaling of our solutions and let in selected third party customers or or partners or developers to to develop integrations into our system, which has has not been the case before. So those are the those are the key things that we're working on at the moment.

36:58 We're probably the full year and the next presentation here, we'll probably do a a more significant presentation on road map. I would encourage you all, actually. I mentioned that our our newsletter newsletter and and the the online webinars, if you want more in-depth idea of what's in the technology road map, a lot of that's available on the on our on our life on our webinars. And so if you sign up to our newsletter or have a look on our website, you can get a lot more insight into that road map. But we may do a Capital Markets Day at some point later in the year. And certainly, next time around, we'll we'll put an expanded presentation around the the technology road map at that time.

37:44 Okay. Thanks for that question, Simon. None for you yet, Amanda. But next one is from Mark. Would you look at any potential acquisitions to accelerate your growth geographically? I think our answer to that is similar to to last time. We would look at acquisitions that gave us market access. So we'd if in in the the past, we've done a number of acquisitions both in market access and in technology. Technology additions are not what we're looking at. We've got an agnostic platform that's command and control platform that would interface to any any brand of third party technology. We're not looking at making acquisitions in that area.

38:30 But if we could find if we could find acquisitions that would help us to enter certain geographies, certain sectors that are interesting to us, then we'd certainly would be looking at those going forward. I mentioned before in North America, we're almost exclusively in gaming. Early twenty twenty, we told this community that we would start looking at trying to take some of our other market sectors into the into North America. That got put on ice in the pandemic. And at the moment, my priority in North America is to recover our position in gaming where we have big opportunity to do so. But, you know, we will look again at opportunities in other sectors in North America, and maybe that's an area where an acquisition would be an attractive way to to gain some ground there.

39:22 Question from Thierry. Do you have any recurring or contracted revenues? We we are planning to add this recurring repeat revenue KPI into our suite next time around. We talked about this last time out with a with a few people. And generating more recurring revenues is is an important priority for the business. It's about 20% or so of our revenue now is contracted recurring revenues and chunk of that on on the order book. What we we do do have, however, is is a significant amount of repeat revenue where from our incumbent position as service partner with a number of NGs is we get not contracted, but expected repeat revenue as they have sort of additions, etcetera. And that's quite significant to our recurring and repeat revenue together.

40:14 It's more than half our business. So new projects, new customers, we need for growth, but but it is quite significant, significant, the the repeat revenue in the business. And it's our intention to to publish recurring and repeat revenues as in a simplistic KPI way next time around. Another question of competitive landscape. What does the competitive landscape look like post pandemic? I think that the answer to that is sector by sector, region by region different. It doesn't feel massively different in The UK and and and Europe than than pre pandemic. I think that's probably the case.

41:00 I I think we'll see that changing and emerging more so in North America and Asia as as recovery starts there. But at at the moment, essentially, the competitive landscape is similar. We're seeing seeing potentially price pressures in some markets that may be stronger than they were before with, you know, increasing costs and and pressures in there, but we've we've never sold or worked on a lowest price basis. We need to demonstrate the value that's offered by our systems. Our pricing is in the high, you know, the high side of of the industry, and we we demonstrate the value that we offer in that. So so at the moment, the competitive landscape looks similar.

41:46 Just looking for the opportunities to to open back up as these markets recover and start investing. I suppose very much related, do you believe you can regain the level of turnover you had in Asia in 2019? Or some of that business being lost to local competitors? It's it's clearly the case that some business in Asia over a number of years, oil and gas particularly, have been picked up by local suppliers, local markets. We were working on projects in the past in Asia with European integrators who were delivering projects in Asia with our technology. We've been building relationships more with local integrated partners in the region pre pandemic, and that will continue post pandemic. So there's clearly local supply pressures in certain parts of the market, particularly in the mainstream security market. But by continuing our focus on on the niche sectors that that we're strong in and we're strong in before pandemic, then we believe we can remain competitive and do really well against local competitors.

43:01 The strength of the business in Asia in a couple of years pre pandemic was built around new builds in the casino market, new builds in the leisure resorts. The pace of that has slowed down, so the the growth in gaming in Asia will be significantly driven by replacement systems for existing operators in in places like Macau and and Singapore and other places. But there will be new builds. There will be new projects out there, but probably not the same pace they were in twenty fifteen, sixteen, seventeen where we did phenomenally well and had a significant market share of the new builds in Asia during that period. Last question I can see on the screen is, congratulations on the national national grid contract. How long do these transactions typically take from scoping to completing?

43:55 Well, I'll I'll answer that more generally and also specifically around National Grid. National Grid were a customer for a number of years prior to this long term contract. We've been deploying systems for them for a few years. So the the the the long high value contract has been on the back of good performance and supply and systems for three or four years. We've been able to name them recently when we first talked about it was a project for a a UK power utility. So that's that's that's a long term relationship that's that's that's developed into something that's recurring revenue, contracted recurring revenue, you know, a long commitment to working together for the future. But I say, typically, these sort of large infrastructure type projects are typically taking two years plus from from scoping or initial engagement through to to having a project awarded.

44:54 And to completing can be a lot longer because they the deployment cycle can be quite long. So they take some time. When I talk about our pipeline of opportunities being strong and and and quite full, we define pipeline as pipeline of expected orders. A lot of businesses call pipeline their sales funnel. We call it sales funnel. All the opportunities you can see out there, whether they're imminent or whether you're feeling like they're 90% yours, 75% yours. When we call sales pipeline, order pipeline, it's stuff we really expect to convert and and and trade. Our funnel of opportunities into the longer term future is clearly much more substantial. And and so we have quite a lot of projects in in all sectors in that sales funnel going out for a number of years, some of them up to five years out.

45:45 Oil and gas projects were often doing front end design for five years out from deployment, infrastructure type projects, typically about two years. Casino projects are normally known about for a year or so ahead, although, obviously, new builds take a while so that, you know, there there are some new build projects in Asia that are in the in our sites in this or 2025 deployment time scale. So it depends on the sector, depends on the region to a degree. But, yeah, a couple of years to get the big projects over the line. But we're definitely focusing on on on on customers and contracts and projects that can then deliver value for a number of years, not a single capital deployment, but that can deliver a revenue stream for a number of years beyond.

46:36 And that's where the focus is when we're looking at spending two years to identify and convert a project. It needs to have a a revenue life of three or five years or so beyond that. Okay. I can't see any more questions on the side at the the moment. Moment. So But, Paul, thank you very much for that. I think you actually managed to address all those questions from investors. And, of course, the company will review all questions submitted today, and we'll publish those responses on the investor meet company platform. But just before redirecting investors to provide you with their feedback, which I know is particularly important you both, Paul, could I just ask you for a few closing comments? Yeah. Thanks very much. Thanks, everyone, for taking the time to listen to us today. Feels like we're in a good place. We delivered what we said we would in the first half of this year. We set that bar in New Orleans did it. A strong team effort and really wanna thank the whole team around that. It's a it's really a team performance to deliver this half.

47:29 We should be in a good place to continue that progress going forward in the second half of the year. And, really, the opportunity ahead of us for further recovery in the markets we operate in and further growth in the in in the markets we're targeting means that, you know, should have very, very strong prospects ahead of us, so onwards and upwards. And really nice to have Amanda back alongside. It's good to be back, Paul. Paul, Amanda, thanks very much for updating investors today. Could I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete, but I'm sure will be greatly valued by the company. On behalf of the management team of SYNECTICS PLC, we'd like to thank you for attending today's presentation, and good afternoon to you all.

48:20 Thanks,