Synectics Plc warned in a Tuesday update that it expected poorer results in the second half ending November 30, citing the economic effects of Covid-19. The London, United Kingdom-listed firm is a supplier of security and surveillance technology to land-based casino resorts, including venues in Asia-Pacific.
The pandemic had “continued to impact activity across all of Synectics’ markets,” but had “particularly affected its largest market sector, global casinos and gaming, where the recovery in the second half of the company’s financial year is now unlikely to take place as previously expected,” said the firm.
Synectics had stated in its interim numbers for the six months to May 31, issued on July 14, that it anticipated “a noticeably improved underlying trading result in the second half”.
In the fiscal first half, the group reported a loss of just over GBP1.8 million (US$2.3 million) compared to a slightly more than GBP1.0 million profit in the same reporting period a year earlier.
Revenue for the six months ended May 31, 2020 declined by 31.4 percent year-on-year, to GBP23.0 million, from nearly GBP33.6 million.
The firm said in its Tuesday lookahead for the second half that it “had expected that easing of travel restrictions and the reopening in early summer of casinos in the U.S. and Asia would result in some [business] recovery during the second half of this year.”
But it added: “However, it has become increasingly evident that the vast majority of planned surveillance system projects and upgrades in this sector will now be delayed beyond 2020.”
Synectics said that an initiative flagged in its interim results – either closure or scaling down of several operating sites in its integration and managed services division, in order to reduce costs, was progressing as planned.
The group stated that its net cash balance as at August 31 was GBP7.3 million, compared to GBP4.6 million as of May 31, and that it had additional undrawn bank facilities amounting to GBP5 million.
The increase in cash held resulted “largely from lower working capital needed to support reduced revenues, a position that will unwind, at least in part, as revenues recover to more normal levels”, said the firm.
“We remain confident in our long-term growth prospects as our software and technology capabilities continue to open up new opportunities in evolving markets for our security and surveillance technology,” said Synectics’ chief executive Paul Webb, as quoted in the update.
On September 16, Dave Dalleske, vice president sales for Asia Pacific at Synectics, was one of the panellists during a “Safety and Security” strand of the casino industry’s Global Gaming Expo (G2E) Asia Online Conference 2020, moderated by GGRAsia.
Synectics opened a Macau office in 2015, which it said at the time, was to support its effort in catering for casino sector growth in the Asia-Pacific region.
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