Security firm’s bet on smart city technology comes in

Advanced security and surveillance business, Synectics reports revenues were down 4.6% for the first half of the year to 31 May 2021 when compared with the same period in 2020 but noted its smart city security offering was driving positive results.

The Sheffield-based business noted that revenue fall reflected the “further decline in casino and gaming resorts surveillance” an area the business is a market leader.

Despite this the business has seen operating results improve with the loss before tax reduced by £1.5m and standing at £0.8m, with the cost reduction actions of the previous year delivering the expected savings.

Away from the casino and gaming resort market the business has seen a strong performance in its Synergy surveillance platform for smart cities, with the Berlin S-Bahn system successfully launching at the start of the calendar year and the City of London Corporation in conjunction with the City of London Police ordering a “similarly innovative, cloud-based surveillance control system”. Alongside this the business was awarded a contract worth over £1m from West Midlands Police to equip its new event control suite. The result of this strong performance forthe business’s security division was revenues of over £13m and ahead of the same period last year.

Paul Webb

SynecticsPaul Webb, chief executive of Synectics explained how the growth of the security division came as a result of foresight in 2018 that the oil and gas industry – a key area of operations for the business – was becoming “much more challenging”. This lead to the business looking for a market that would fit with Synectics strengths and having done town centre surveillance for 30 years the opportunities provided by smart city upgrades appeared to be it.

The decision led to the business to increase its R&D spending as it looked to be a market leader in the area and ensured that last year it ring fenced the investment. In the first half of the year R&D spend has dropped slightly, something Webb says is just part of the “natural cycle”.

Looking ahead Webb believes there will be opportunities both in large world leading cities like Berlin and London but that the advantage of its system is its hybrid approach which allows the technology systems to integrate with existing offers and can be made more affordable for other areas – evidenced by the West Midlands contract.

Webb also added that these operations help to change the business financially as they also include longer term support contracts of 5-years and up which over the lifecycle deliver significant returns to the business.

Internationally the business reported a near return to revenue levels for its Europe, Middle East and Africa operations with revenues of £6.5m for the period versus £6.9m in 2020 and similarly in North America where revenue returned to £1.6m.

However the continued restrictions in the Asia Pacific market saw a further reduction in revenue from the gaming sector and also the oil and gas sector with revenue down over 57% with the board noting it doesn’t expect “any meaningful recovery in this region until 2022″.

Webb explained:”Before Covid the gaming and casinos sector was our strongest market and now the sector is still continuing to be affected by Covid. There is however no reason to not expect that to recover into next year and we’re starting to see some signs of activity in North America in recent weeks.”

He noted that Las Vegas is opening up for conferencing activity again and that travel around North America is becoming easier after what he describes as “quite inconsistent Covid rules across America”. He also adds that although the Asia Pacific market may take longer market predictions are for a “quick rebound within the gaming sector” and that leisure travel and activity won’t just recover but will “bounce back quite hard” as people look to get away after 24 months of restrictions and lockdowns.

Looking ahead the Synectics chairman, David Coghlan noted that his view on the timing, profile and end point of the global pandemic recovery in the firm’s markets remained “highly uncertain” with no “tangible evidence of improvements in certain sectors and markets in more recent months”.

Despite this the group’s order book at the end of the first half of the year is 19% higher than at the end of the previous financial year.

Coghlan added: “The board is increasingly confident that Synectics. will record revenue growth and modest positive operating profitability in the second half of this financial year.”

Longer term he cautioned that 2022 “remains subject to significant macroeconomic uncertainty”.

Webb concludes that the future looks positive, as despite the challenges of Covid the business has been able to restructure to reduce costs – re-shoring all its back office functions to Sheffield and North Lincolnshire while also generating and delivering the deployment of new products which will be “fantastic reference customers: going forward