Synectics plc (SNX) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to the Synectics plc investor presentation. [Operator Instructions] 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 our responses, where it's appropriate to do so on the investormeetcompany platform. Before we begin, we would like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I'd now like to hand you over to the executive management team from Synectics plc. Amanda, good morning.

Good morning, and thank you all for joining us. With me today is Paul Williams, our CFO. And today, we'll talk you through our performance for the first half of the year through to May 2026 and the factors affecting it. And then importantly, we'll update you on our transformation strategy that we launched at the start of the year. The progress that we're making and why we believe those changes can support stronger growth from FY '27 onwards. I'd just like to give a brief introduction for those less familiar with Synectics. We're a global provider of security, surveillance and operational intelligence solutions, operating in markets where security is critical. We have 2 businesses. Synectics develops our proprietary technology and provides advanced security, surveillance and operational intelligence solutions for business-critical environments globally. And Ocular is an independent U.K. systems integrations business, working directly with end customers, predominantly in transport and security markets. You can see some of our customers here. There are many others that we can't show for confidentiality reasons. But I think the important point that we'd like to note is the quality and the longevity of that customer base within those demanding markets listed there in which we're trusted to operate. We operate in some very attractive and growing markets. And at the end of 2024, we estimated that our serviceable market was more than GBP 2 billion. And there are several structural trends that are strengthening that opportunity today that I'd like to give you a brief overview of. Investment in critical infrastructure and energy resilience is increasing. So grid investment alone needs to rise materially through to 2030 to support the demand and resilience needed there. The threat environment is becoming more demanding, both physically and digitally, which is accelerating the shift in security from the more traditional monitoring towards resilience and rapid response with customers increasingly needing systems that help them detect, understand and respond to incidents quickly. Regulation and cyber requirements continue to increase, particularly in the critical environments that we serve, which raises the importance of trusted and independently assured technology. The geopolitical environment is a significant factor shaping cyber risk strategies and increasing the importance of cyber resilience and security solutions. And then finally, technology, including AI, is moving incredibly quickly. AI is creating opportunities to create genuine operational value by reducing manual work, improving the speed of response and extracting intelligence from surveillance. In addition to this, physical security, cybersecurity, data and operational systems are increasingly converging on to integrated platforms. Our 5P strategy is designed to align very closely with these market trends to create an AI-enabled cybersecure operational intelligence platform, focused on those critical markets where we already have deep expertise and trusted customer positions. Turning to the first half now. Performance was in line with our expectations before the impact of the delays to oil and gas orders and the related revenues following the conflict in the Middle East. FY '26 was already expected to be more second half weighted and those oil and gas delays have made that weighting somewhat more pronounced. I'll come back to what we're seeing in the Middle East in a minute. Gross margin increased by around 7 percentage points to 48%. We've continued to secure important new business and new customers across our priority markets. And you can see a couple of examples of those here. A $2.4 million contract with a new -- with an iconic U.S. casino customer, which is a brand-new customer for us and our first transport sector win in Southeast Asia as we look to extend our sectors in that region outside of gaming and energy. Both are strategically important wins with the potential to develop into broader customer and partner relationships over time as well. Since the period end, oil and gas order intake has been positive, primarily from customers outside of the Middle East. Alongside that, we're making good progress against the strategy that's designed to transform Synectics into a scalable product and partner-led business. And I'll come back to that after Paul takes you through the numbers. And reflecting our confidence in the strategy and the group's strong financial position, we've maintained the interim dividend at 2.2p per share. I'd now just like to spend a minute explaining what we're seeing in the Middle East because it's affected our performance in the half, but it's also important strategically as we're increasingly targeting that region for growth beyond our traditional oil and gas business. It's important to distinguish here between what we're seeing with current project timing and the underlying investment environment. The conflict has disrupted the timing of some oil and gas projects so far. Synectics is typically a small specialist part of a larger project. So the timing of our orders is dependent on the wider project schedules, some of which have moved to the right as supply chains and delivery are disrupted. We're responding to that by staying very close to customers by increasing our readiness to mobilize quickly as opportunities do convert and then continuing to improve the competitiveness of COEX, which is our specialist energy camera range. Importantly, though, the underlying strategic investment requirement in oil and gas hasn't disappeared. So major regional oil and gas producers such as ADNOC, Saudi Aramco and Qatar Energy, to name a few, continue to commit to significant CapEx and our own oil and gas pipeline continues to remain substantial. Our Middle East strategy is now broader than oil and gas and actually, the heightened security environment caused by the conflict is increasing investment in security in that region. We're seeing greater focus on resilience, on cybersecurity, critical infrastructure protection and integrated threat response. These requirements align well with Synergy with our CAPSS cyber credentials and our ability to bring different security systems together to give customers a clearer view of threats and to help them respond more effectively. So that's why for us continuing to establish a local presence in the region and developing the right partners remains strategically important. So in the near term, yes, there is some timing uncertainty in oil and gas. But longer term in the Middle East, we continue to see substantial oil and gas opportunity alongside a broader security opportunity, which is increasingly aligned with our strategy. I'll now hand over to Paul, who will take you through H1 in more detail.

Thanks, Amanda. Yes. Just talking to the H1 results then. As signaled at the year-end, we indicated that the 2026 results would really not be impacted by the new strategy that we are in the middle of implementing. So what we see here are a set of results that are very much sort of old Synectics project driven to some extent, so quite susceptible to project timing differences are not impacted by the new strategy yet as we see. We are -- that project-driven variability in revenues is in large part what we are addressing with the new strategy to move the revenue flows more towards product-led, more recurring, better in quality and sort of greater degree of predictability. In terms of the numbers themselves, we've seen a reduction in revenues from GBP 35 million in the first half of last year to GBP 22.2 million for the first half of '26. Gross margins up -- gross profit down from GBP 14.5 million to GBP 10.6 million in the half, but the margin itself up from 41%, as Amanda has said, up 6.8 percentage points to 47.8%. Revenue performance is, as we've said, reflective of the absence of that significant nonrepeating casino project from 2025 and to some extent, the delayed order intake and revenue due to that ongoing disruption in the energy market, a switch back towards a more normalized revenue phasing weighting towards the second half of the year that we typically see in prior years with Synectics. Recurring revenues remained stable at just under GBP 4 million as new sort of subscription-based product features begin to launch in the second half of the year with Scene Check and SEARCH capabilities that Amanda will speak to later in the presentation. As expected, we would not expect these revenues to begin to sort of accumulate in the recurring revenues until full year '27 and a key part of the driver of growth going forward, but not expected to impact us in the first half of this year. Margin increase driven mainly due to sort of change in product mix. So again, a project-led business such as Synectics at the moment, we typically see a different blend of products going through different projects as they go through delivery phase. And so we've seen a mix of more higher-margin sort of products going through in the first half of the year compared to what we would have seen this time last year. And we would expect typically that, that will sort of normalize a little bit in the second half of the year as those projects sort of again, that mix just changes a little bit across the second half of the year. So we wouldn't expect to extrapolate forward at the levels that we're seeing here in the first half of the year. Adjusted EBITDA dropped down to GBP 1 million. This is largely down to the decreased revenue flow in the first half of the year, but offset by those improved gross margins and some improvements for our operating expenses as well, just leading to a little bit of a reduction in operating costs from last year, H1. Looking at the Systems business, what we're seeing here is revenues have dropped significantly as we would have expected given the ship that driven predominantly by that Leisure and Hospitality sector with that large contract running through last year, a little bit of softness in APAC, Leisure and Hospitality as they recover their pipeline on the back of that large contract delivered last year. However, we expect that sort of that first half dip in APAC to be offset by an improvement in North America in Leisure and Hospitality on the back of a number of significant wins that we've announced and that Amanda spoke about at the top of the presentation coming through in the second half of the year into revenues. And as we said that, we can also see a dropoff in the Middle East-driven oil and gas projects has impacted the first half revenue for the Systems business. In terms of gross margin improvement, we can see a significant improvement in gross margin driven, as I've mentioned, by that product mix moving towards those higher-margin products and more of a maintenance plan in there, which is higher margin for us. However, we are also seeing some operational efficiencies coming through into the business as we're starting to make some improvements to the way that we operate and the way that we deliver projects coming through some of those low-hanging efficiency fruits now starting to be dealt with in the business. And also, we've maintained some strong pricing disciplines across the year in the face of global increases in hardware costs. Computer memory and storage is increasing across the globe. And we have sort of -- again, we've been working proactively within our supply chain to try to minimize the effect of that, but at the same time, sort of maintaining that pricing discipline as we're not seeing a degradation in margins as a consequence of those cost increases in our supply chain. However, as I mentioned earlier, we would expect to see that mix just moving around a little bit again across the second half of the year and we would expect to see margins kind of just normalize a little bit from those first half levels in the second half of the year. Our order book coverage entering second half is where we would expect it to be at this stage, although there remains a little bit of uncertainty around that ongoing impact of the Middle East on the energy sector. However, where possible, we have derisked as much of our outlook as we can from those particular -- for those particular projects, and I'll come back and talk about that a little bit in the outlook section. In terms of one of the advantages that we do have with the COEX camera configurations that we're building up in our operations center in Scunthorpe is that we can lean into that supply chain a little bit, we can lean into that order book and some of those orders that we're expecting to convert in the second half of the year to sort of prebuild, partially build those camera configurations, meaning that when we receive those orders, we can convert to revenue quite quickly. So again, it's just something that will impact us a little bit in the second half of the year. We have that capability to take revenue quickly once those orders are received. Although noting, again, I'll talk to this a little bit in the outlook section, noting that there's a little risk that some of those oil and gas opportunities will just push out into next year unless the orders are received within the next [indiscernible] months. Moving on to talk about Ocular. Ocular's performance was a resilient performance in sort of relatively mixed market conditions, moving just slightly downward from GBP 12.6 million of revenue to GBP 11.8 million in the half. Significant order intake from Stagecoach during the year to highlight the benefit of that relationship and that long-term strategic partnership with that customer, and we look forward to continue to expand that relationship going forward. In terms of margin improvement, yes, 5.4 percentage points up to just over 32%, which is a good level of margin for a systems integrations business, moved around a little bit by the fact that we were delivering a number of critical infrastructure projects this time last year, which typically for us are at lower margin. So as we see that product mix moving around a little bit, we've seen that improvement feeding through into the half for this year. Again, Strong pricing discipline and proactive supply chain management is helping us along the way with our profit margins or the margins on that part of the business. A little bit of a feed through then into EBITDA growth up to GBP 1.2 million from GBP 1 million last year. And looking forward, Ocular remains focused on disciplined execution and converting its pipeline across its core transport and regulated markets. Moving on just to talk a little bit about the balance sheet and the capital allocation policy. We have a strong debt-free balance sheet with healthy net cash of GBP 10.5 million at the half year. Core movements there from the year-end where we reported GBP 14.1 million of cash. We have a positive impact from -- a small positive impact from our operating activities. We do have a reduction in working capital, particularly around supply chain during the half as we have sort of leaned into our supply chain to prepurchase inventory a number of those hardware items that we need to fulfill our order book across the second half of the year, perhaps a little more than we would normally do because of those rising prices, making sure that we can secure the equipment that we need at the right time with that typically sort of 13- to 14-week lead time at the moment and also just making sure we can get that in the right price as the prices continue to increase around us. So we're working proactively there, a little bit more cash tied up in inventory than we normally see. And then we sort of, again, a little bit more CapEx gone through as we continue to invest in the products and our internal systems investments that we discussed at the year-end and set out at the year-end, a little bit of dividend going through and a little bit more cash just on tax, other nonrecurring and FX through the business. So cash where we expect it to be at the half year. And the key point here is that we have continued optionality within our capital and within our balance sheet to support growth and our shareholder returns going forward. We retain our dividend policy and announced an interim dividend of 2.2p per share payable early in September. In terms of our share purchase plan we announced, we continue to fund up to GBP 1.5 million for our employee benefit trust to continue to purchase shares in the market for the fulfillment of our share incentive plans. GBP 0.5 million spent to date and the timing of any further purchases on that just being considered alongside our wider strategic investment and capital allocation priorities. There is a little bit further information in the additional information slide parts of the presentation that we presented today, but certainly available to look at after this meeting. And with that, I'll turn back over to Amanda to walk through the strategy, please. Amanda?

Great. Thanks, Paul. So what I'd like to do now is come back to our transformation strategy and to show you what it is that we're changing and the progress that we've made so far. When we developed the strategy, our focus point was the fact that Synectics for many years has had strong technology, good customers, attractive markets. What we haven't done consistently enough is translate those strengths into scalable growth. So being able to grow revenue without the need to keep increasing costs at such high levels. The 5P strategy that I set out earlier in the year is designed to specifically address that to deliver a sustainable business with higher revenues with margin resilience, improved quality of revenue and accelerated growth by ensuring that we build the right business model to be able to create opportunity from those growing markets. During H1, we established the delivery framework that sits behind the 5Ps. We've put measurable delivery targets against each of these, so we can measure our progress against them. Overall, we're making good progress as highlighted on the slide, with most of the priorities on track and partners making solid progress, and I'll explain a bit more about those over the next few slides. The fundamental objective is simply to make Synergy easier to deploy, easier for partners to deliver more repeatable and capable of generating more recurring revenue. We've reduced average synergy deployment time from around 20 days to 15, and we're on track to make our 5-day target by the end of the year. Making Synergy simpler and quicker to deploy is critical to enabling our partners to sell and to deliver it more independently and ultimately to scaling the business. We've recently launched Scene Check and Synergy SEARCH with further subscription offerings planned with Infrastructure as a Service and hybrid storage options to be launched later this year. These products solve very practical and important customer problems. When an incident happens in one of our critical environments, speed of response really does matter and SEARCH can turn hours of manually reviewing video into minutes, helping operators to find the information that they need and to be able to respond much faster. And across an estate of hundreds of thousands of cameras, Scene Check automatically detects that each camera is still providing the view that it should, identifying cameras that may have been moved, blocked or obscured without someone having to manually inspect every single one of those feeds. This gives customers much greater confidence in the integrity of their surveillance estate, while significantly reducing the time and resource required to check it all. The final area is product innovation and competitiveness, and we've delivered a number of our key developments for the year, and we're on track with the longer-term road map. We've also achieved CAPSS certification for Synergy, which is an independent U.K. government-backed cyber assurance standard for physical security systems. CAPSS significantly strengthens our position in critical infrastructure and other high-security environments where cyber resilience is increasingly important. The next part of the strategy, our 5Ps of partners -- the 2Ps of partners and market presence is about how we take those products to market more effectively. And there are 3 things here. Firstly, partners allow us to reach significantly more customers without having to increase our own sales and delivery resource at the same time. Progress here has been slightly slower than we had originally planned because we identified that we needed to develop stronger strategic account management capability internally. So we've been strengthening that capability before accelerating the new partner acquisition, so we can ensure that we achieve strong growth from our new partners. Outside of that, good progress has been made. Around 30% of our priority partner account plans are now complete. Our new certification program has been fully designed and is now live with the first 15 partner representatives progressing through it. The second part here is creating and converting demand. So historically, we haven't really been systematic enough about where we deploy our commercial resource or how we create demand. We've now developed clear strategies for our priority markets. We're refreshing how we position and communicate the Synectics brand. And we've launched our first coordinated global digital demand generation campaigns, which are already producing early engagement. The aim is to make sure that we're targeting the right customers with a much clearer proposition, generating more qualified opportunities and ultimately improving conversion. And then the third area here is building our recurring revenue. So we're looking at all the ways we will increase the recurring element of our revenues. That includes the new subscription propositions that we started launching, also our existing software support agreements that we sell alongside Synergy, where we've already developed a new framework, and we are reviewing the commercial model and pricing that goes alongside that. We'll also be developing our hybrid cloud transition plan, including what that could mean for the way we deliver and charge for Synergy over time. And I've mentioned our Infrastructure as a Service and hybrid storage are parts of that. We'll bring all of these elements together into recurring revenue growth plan with target during Q4. We want to be able to grow revenue without our cost and organization complexity increasing at the same rate. So firstly, we are simplifying the way that the business operates. We've established our value streams within the business and the overarching future design of the business model. We're now redesigning the underlying processes. And we deliberately want to simplify those processes before automating them there's little value in us just sort of automating the current inefficient processes. The second area here is systems data and automation. Our ERP implementation is now progressing well with a go-live date expected by the end of the year. We've established a dedicated data capability for the first time. And AI is already delivering productivity benefits in those areas, where we don't need to wait for the wider process work to be completed. So that's areas such as software development, testing and documentation as well as bid preparation. And then finally here, capability and accountability. We've strengthened the leadership team. We have our full SLT complement now in place. We've strengthened areas such as marketing and data and all of our employees now have objectives aligned to the strategy and formal performance reviews. All of this is building the capability and the operating discipline that we need to be able to deliver the strategy and support the future growth. So everything that we've talked about so far is activity and progress against those strategic initiatives. What I wanted to give you here was a very early example of how some of those initiatives are beginning to work together in a real market. So this slide is a case study about our North American gaming team. All of these indicators have emerged for that team within the last few weeks. So on the product front, as I've mentioned, we launched Scene Check as a subscription proposition. Our first coordinated digital campaign supported that launch and generated inbound casino inquiries within a matter of days, which are now progressing into demonstrations. From partners newly engaged strategic partner identified more than opportunities within its first 2 weeks with us, individually ranging from around $0.7 million to $1.8 million. We're also seeing a strong increase in opportunities for an existing partner following much more structured account management with our partner. And we're seeing the product work as well affect our delivery times. A couple of significant recent upgrades that would have previously required around 3 days of our engineering effort were both completed in a day using the new upgrade tools. These are very early indicators in one sector and in one region. And as Paul said, we're not expecting the financial benefit of this broader strategy to start impacting the current year. But what they do, do is give us an early confidence in the direction that we're taking with our new strategy, and they show the sort of progress that we expect to see more broadly across the entire business as these capabilities begin to mature. So with that, I'll hand back over to Paul as we turn to the outlook and summary.

Thanks, Amanda. So in terms of our outlook for the year, we have the outlook as the headline says, remains achievable with some uncertainty around those energy projects and the timing, particularly those sort of driven out of the Middle East. We have had a positive start to the second half with strong order intake and revenue conversion post period, certainly consistent with that second half weighting. So a significant improvement entering the second half of the year with period 7 and period 8. We have a stable order book with a mix of sectors and regions, certainly reducing that reliance on the Middle East oil and gas project in our forecast, and I'll talk about that in a moment. Certainly more prudent on oil and gas in the near term, but still some dependency for the guidance itself. But the pipeline for oil and gas, as Amanda mentioned, remains strong overall. Breakeven point that we have in the business that we've talked about before, remain this strategy is part of the underlying reason for the strategy that we're implementing is to take out some of that inefficiency that we have sort of embedded within the business. And that in a period of lower revenue in the first half of the year, we've seen, we would typically see that high breakeven point impacting through to our EBITDA generation in the second half of the year as we expect that revenue to shift through to more delivery in the second half of the year as we're starting to see through period 7 and period 8. High breakeven point will sort of that revenue clearance, therefore, will sort of fall through into EBITDA more significantly than it would in the first half of the year. So consistent with how we expect the revenues and the profitability to fall into the second half of the year as a consequence of that [indiscernible]. We continue to see strong energy pipeline, as I mentioned, and we are taking steps within our operations teams to sort of make sure that we can mobilize and deliver those projects at pace as and when those customer orders through and start to convert into the second half of the year. So that's again, rapid revenue recognition on those once the orders are received for them to again underpin that second half outlook. And we remain of the view, of course, that our underlying strategic investment requirement remains, and we continue to be confident in the scale and the opportunity of that -- opportunity and scale and size of that opportunity pipeline and the nature of that [indiscernible]. In terms of the full year outlook, we've sort of introduced a little bit of a range around the expected EBITDA for the year, GBP 4.1 million at the original guidance. We still have a pathway to achieve that. However, we introduced a slight reduction to that to GBP 3.7 million to accommodate the potential for some of those Middle East oil and gas opportunities to be delayed. So our outlook is effectively GBP 4.1 million internally, subject to a number of those oil and gas opportunities being ordered through in sort of in the next sort of couple of months, certainly before October, November time frame before they start to fall over into the following year. So to the extent that those are received, and we expect to be at the upper end of that range to the extent that those oil and gas orders continue to be delayed, we'll be at the lower end of that range. And with that, I'll turn back to Amanda.

Thank you. So to summarize then, at the year-end, I described FY '26 as a transition year. And hopefully, what we've shown you today gives you a clearer picture of what we mean by that. We are building and embedding those capabilities to change our underlying business model, making our products easier to deploy, developing stronger partner and commercial channels, increasing recurring revenue and simplifying the way that we operate so that we can grow without our cost increasing at the same rate. From FY '27 onwards, we expect the financial benefits of those changes to become increasingly visible. What we're looking for is faster revenue growth, a greater proportion of higher quality and recurring revenues and ultimately better profitability as the business grows. Some of those benefits are already starting to emerge. The North American case study that I highlighted, none of those opportunities and activity would have been present without the new 5P strategy that we're now executing against. And as those capabilities start to mature, we expect the contribution to build progressively and significantly as we progress into FY '27 and beyond. So then that brings me back to our overall investment proposition. We believe that Synectics starts from very strong foundations. We operate in attractive and growing markets. We have differentiated proprietary technology, long-standing relationships with blue-chip customers, trusted positions in markets where security is critical and a strong balance sheet from which to invest in growth. And these markets aren't easy for new competitors to establish themselves. Customers need proven technology, specialist expertise and increasingly cyber and other certifications. And once our technology is embedded across these large critical security estate, replacing it can involve significant cost, complexity and operational risk. What we haven't historically done well enough is translate those strengths into sustained scalable growth, and that's really what we're doing now. So it's still obviously early. We've still got a lot to focus on for the rest of the year, but I hope we've shown you today demonstrates that we're making tangible progress against what we had planned to do, both in building those capabilities and obviously, with early visibility of some of those indicators. So our focus for the rest of the year will be to continue to execute that strategy with the view to translating into stronger financial performance from FY '27 onwards. Well, thank you for listening. That's the end of the main presentation, and Paul and I will be happy to take questions.

Perfect. Amanda, if I may just jump back in there. Thank you very much indeed for your presentation this morning. [Operator Instructions] I like to remind you that a recording of this presentation along with a copy of the slides and the published Q&A can be accessed via your investor dashboard. Guys, as you can see there, we have received a number of questions, and thank you to all of those on the call for taking the time to submit their questions. But guys, at this point, if I may just hand back to you to address those where appropriate. And if I pick up from you at the end, that would be great.

Yes. Great. Thank you. Okay. I'll start with the first question. With all the casinos in America and in noting your recent contract win there, how do you go about attracting and indeed winning contracts there? Is there a sales team based there? Would you have good old-fashioned salespeople on the ground visiting casinos, et cetera. Yes. So we have a dedicated North American sales team. We use a combination of direct customer relationships where we will -- where we go and visit casinos, and we've got very good relationships with a lot of those casinos. And we use channel partners as well to develop those opportunities. Partners are particularly important because they also already have relationships with the casino operators, and they may be delivering the wider security project as well. So our objective is to make Synectics the preferred surveillance platform. which then significantly extends the reach of our own sales team as well. And particularly in America, it's also quite a close knit industry. So our track record there and existing customer references are very valuable, and that very much contributed to that recent contract win. Casino operators need to have a high degree of trust in the technology and the supplier. And so successful installations do frequently lead to introductions and opportunities elsewhere. Next question, what do investors most misunderstand about your business? Why is the value of the business not reflected in the share price? I think the thing that's probably least visible to investors or has been historically at least is what sits underneath the financial performance of the business, probably both in terms of strength and what has historically held it back. Synectics has always relied on individual projects. So from the outside, you see quite lumpy financial performance and relatively limited growth without necessarily having understood why the business hasn't been able to grow. Hopefully, we've begun to articulate that so you can understand what we're doing now. Underneath that as well, as we shared today, we have long-standing blue-chip customers, proprietary technology and established positions in attractive markets where barriers to entry are high. So I think that partly answers the valuation question as well as we continue to demonstrate the progress against the strategy and continue to show the changes that we are making are beginning to work. I would expect that the underlying value and then the potential of the business to become much clearer to investors. Okay. Have you personally invested in shares of the company? When can investors expect to see more management and Board share purchases? Both Paul and I have personally invested in Synectics, including buying shares since taking our current roles. I can't really make commitments about future personal purchases on behalf of the Board or the management team, everybody's personal circumstances are different. There's also quite a lot of restrictions on when as directors, we are able to deal. Speaking personally, I'm very invested in the success of the business and very focused on making sure we build the long-term shareholder value that I believe this business can create. Next question. What is your competitive advantage? And why is it defensible? So I think I've touched on the competitive advantage a couple of times as well as in the investment proposition slide there. But I guess to summarize, our competitive advantage really comes from the specialist nature of the markets we choose to operate in. We don't compete in the commoditized CCTV markets. We focus on those critical environments with demanding requirements. So the things like cyber assurance, strict certifications, including hazardous area certifications, very large camera estates with thousands of cameras, proven resilience, domain-specific integrations, et cetera. So I mean, I guess our advantage isn't necessarily that competitors can't replicate very specific individual features. It's that meeting all of those requirements and establishing credibility in these markets is extremely difficult and takes years of proven performance as well as compliance with very strict certifications, and that significantly narrows the number of suppliers that can credibly compete. How is AI changing the game for you? What are the opportunities? Again, we briefly touched on AI, but it would create opportunity for us in 2 main areas. Firstly, in our products, it allows us to turn surveillance into much more useful operational intelligence, for example, helping customers find information faster, automating manual tasks, making better decisions, ultimately driving more value from surveillance systems. Internally, I've mentioned some of the benefits where we're seeing AI in place already, but the larger opportunity will come for us as we progress through our operating model work. Once we've redesigned and simplified our processes, we'll then be in a position to then identify where not just AI, but AI and further automation can really improve productivity across the business. With shares at the current levels, do you think the company is vulnerable to a takeover bid? What do you plan to do to raise the share price? I mean we can't really speculate about potential takeover activity. But in terms of the share price, I think to reiterate here, we've got a clear strategy designed to address the things that we know have historically held Synectics back from growing. And what we've tried to do at the year-end and today is to give investors greater visibility into what we're doing and why the progress that we're making against it. So as we continue to deliver the strategy, demonstrate those changes, I would expect that the underlying value then becomes reflected in the business. When you look to the future of Synectics, what is it that gives you the most excitement? I think for me, it's the opportunity to build a very different Synectics from the one that we have today, a much stronger and more resilient business that's recognized for innovation in those critical markets, has a much broader global presence and consistently delivers the financial performance that I know this business is capable. And the great thing is we have a lot of those ingredients altogether already. And so that's what makes the opportunity so exciting because we can see how we can get to achieving that. Paul, anything extra that excites you about the future of Synectics?

I think my view is the ability to transform the revenue flows from ourselves to make them more predictable, more recurring in nature, which is kind of a lot of my background is the value of that businesses. So yes, it's that ability to just transform the shape of the business. And the market itself is never going to go away. And it's only going to get more exciting from a technology perspective and being able to offer a product that really sort of really plays into that and supports that and ultimately makes people safer, I think, going forward as well is something to be proud of as well. So that's where I'm coming from. So the project, I think, overall is what excites me.

Okay. How is your competitive landscape evolving? How are you adapting to market changes? I'd refer here to the market slide that we at the beginning. I think this summarizes that quite well. We're seeing increasing security threats, much greater focus on cyber resilience, regulation, rapid technology development and the convergence of those technologies onto one platform. So we've ensured that our strategy is aligned with those market requirements. What and where is your focus right now? I think we've probably covered most of that. Obviously, our immediate focus is continuing to deliver the strategy, delivering H2 result and then putting ourselves in the strongest possible position as we enter FY '27. What features on Synergy AI suite? We need to keep adding features and innovating. I know you added [indiscernible] words. That's quite a minor feature update. Please give us an update and tell us more ideas for features that you have in mind, including Synergy search? The Synergy search, as I mentioned, is obviously now gone live. More broadly, one of the things that we've deliberately done this last year is to get the overall product strategy and road map right. We didn't want to [indiscernible] launch a series, if you like, of disconnected AI features that customers won't necessarily pay for just because AI is moving quite quickly. We wanted to be very clear about customer problems that we're solving and how each development longer-term direction of Synergy and the business. And obviously, that is increasingly towards an AI-enabled operational intelligence platform. Now we have a much clearer view of that road map. So I won't go into individual features for now for competitive reasons, but AI will remain an important part of the evolution of [indiscernible]. Can you provide an indication of your main competition in each systems and what percentage win rate on tenders in each segment? So the competitive landscape is quite different across the 2 businesses and Synectics competition varies by market. We compete with global security platform providers across sectors as well as more specialist competitors in areas such as energy and those hazardous cameras. Ocular is an integrator for its competitors are primarily other U.K. integrators. On the win rates, historically, we haven't measured the conversion consistently or accurately enough across all of our markets and the different routes to market [indiscernible] for each of the businesses. And that's one of the things that we've already changed as part of the strategy generally becoming much more disciplined about what opportunities we're pursuing, how they're qualified, how we measure conversion, set a target of 25% by the end of FY '27. Although I think the important point as well for us isn't that it's just for more. It's to really focus on the markets and the opportunities where we have the strongest ability to win. I'll hand that one over to you, Paul.

So this is with GBP 10 million in cash, is this being invested short term effectively? So you should be getting circa 3% plus on this based on last year's interest in the accounts, it appears to be less than half of that is an easy gain. Well, I mean, we do obviously have a well-established and active treasury management system within the business that's designed to make sure that our capital is available to support our operational and strategic needs wherever it happens to be needed, necessary that you could just take the balance sheet figure of 10 million and assume that that's all available to put on deposit. We have working capital requirements across the business as well and that cash resides across different countries. We do operate cooling. And yes, we do put cash on overnight deposit and we achieve competitive rates on that. So I think that we're doing everything we can on that. So there's no more easy gains around it. We're already on it. I think -- would you want to take up the next one, Amanda?