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Fft100 you wanted a forecast so here's my thoughts on profits.
In 1H23 all was wonderful, we had UKG baked into the numbers and we made a £500k operating profit.
UKG continued into the 2H 23 but only partially, let's assume 2 months and we made a £200k loss in the 2H 23. (Full year £300k profit plus tax rebate so £400k)
So the differential in 1H over 2H was -£700k.
When UKG ended, we effectively started to lose £150k of profit in the 2H 23 per month (from month 9) of the year, steadily reducing.
So what about 1H 24, well we made a £100k loss. 1H 24 is a £600k improvement in 2H 23. However, if loses of £150k per month had continued (no UKG revenues) then actually the loss would have been £900k and thus we we’re £800k improved (with continued growth).
So - in the 2H 24 the growth trajectory is therefore a minimum of £800k of profit, and thus £700k of FY 2024 is the absolute minimum. However, if the upside of growth is consistent (new contracts etc) we could be nearer FY number of £1.5m.
So to summarise, I believe there will be a profit between £0.7m and £1.5m for FY 2024! And for FY 2025 based on similar a similar approach a minimum of £1.5m to £3m.
Strong BUY
Allenby Capital's Company Note on NWT is a 14-page document, featuring a current NWT price of 91p at the top.
Note that their research is intended for professionals and institutional investors, so lesser mortals should perhaps stop reading now!
Here are a few extracts:-
"Interims from Newmark Security plc, a leading provider of electronic and physical security systems, indicate further progress against its 2025 Growth Strategy of increasing the proportion of recurring revenue and services. Hardware-enabled software and services substantially increases Newmark’s addressable market, offers greater revenue visibility and margin accretion. At Grosvenor Technology (Human Capital Management and Access Control), annualised recurring revenue increased 77% in H1 to £2.3m meanwhile Safetell, the provider and maintainer of integrated doors solutions and physical security division, maintained its revenue growth (+24%) following its 2022 restructuring, product portfolio refresh and increased focus on services revenue. Newmark returned to profit in Q2 and this has continued in H2 and management anticipates FY revenue growth in both divisions. As higher gross margins and operational gearing come through, we would anticipate a rapid growth in profits."
"The loss of UKG had been anticipated for some time following the acquisition of Kronos Inc by Ultimate Software, a customer of Newmark’s GT clocks, in 2020, and subsequent renaming. Kronos was a multinational provider of workforce management and HCM software but also a major manufacturer of time clocks. The combination of two large HCM software companies but also one of the largest device manufacturers has created an opportunity for independents, such as Grosvenor, and it has secured three additional HCM software providers in H1. This has derisked the division but also created additional software and services revenue opportunities.
Within HCM, revenue in North America fell 20%, reflecting the UKG loss, to £3.9m but increased 42% in Rest of World to £2.1m, continuing the trend of FY23. Excluding the impact of UKG, underlying revenue growth for North America was 8%. Grosvenor has been successful in displacing competitor clock products through its entry level devices coupled with recurring revenue services and can also offer a higher level of cybersecurity with GT Connect achieving ISO 27001 certification."
"Management reports that the company returned to profit after tax in Q2 and this trend is continuing in H2. Overall, FY24 revenue is expected to grow in both Safetell and Grosvenor, despite the UKG loss, supported by a good spread of public and private sector contracts. As higher gross margin revenue streams grow, coupled with the effect of operational gearing, we would anticipate an acceleration in in profit growth. The current financing facilities are sufficient to execute its current plans."
https://www.allenbycapital.com/our-research/
I've noticed that some of the material on NWT's website has just been refreshed, and here's a snippet that is particularly worth noting:-
"Through our dedication to providing exceptional security supported by beneficial value-add services, we are strongly positioned for exponential – and profitable – growth."
https://newmarksecurity.com/about/
Exponential profitable growth: that's as bullish as I've seen from the company - people who aren't known for their hyperbole - and it does highlight just how confident they are of the outlook here.
This heading on the home page is also new:-
"The Innovators of Security"
https://newmarksecurity.com/
This is a noticeably greater emphasis on the company's cutting-edge innovation: innovation which helps to distinguish it, and make it so special.
And it certainly seems sensible to emphasise this.
"Ensuring Data Privacy in the Digital Age
... Building Trust With ISO27001
Data security goes beyond just technological realms; it necessitates the need for greater awareness and responsibility from everyone; those that hand out data, as well as those that collect, process and store it. And this is where standards like ISO27001 play a pivotal role.
ISO27001 is, essentially, a blueprint for data protection. It outlines best practices for everything from employee training and access controls to incident response protocols and risk management. By implementing this comprehensive framework, businesses can create robust defences against data breaches and cultivate a culture of data security.
But while more business embrace this standard, there is still a way to go. We should all accept responsibility for managing and protecting our digital lives, and Data Privacy Day serves as the perfect opportunity to remind us of that.
At Grosvenor Technology, we prioritise the security of data above all else, and we encourage you to do the same."
https://www.grosvenortechnology.com/insights/ensuring-data-privacy-in-the-digital-age/
"Data Privacy Day (known in Europe as Data Protection Day)[1] is an international event that occurs every year on 28 January.[2] The purpose of Data Privacy Day is to raise awareness and promote privacy and data protection best practices. It is currently observed in the United States, Canada, Qatar[3], Nigeria, Israel[4] and 47 European countries."
https://en.wikipedia.org/wiki/Data_Privacy_Day
Another excellent new article just added to Grosvenor Technology's website: and a very apposite one, just ahead of Data Privacy/Protection Day tomorrow:-
"Insights
Ensuring Data Privacy in the Digital Age
Data security goes beyond just technological realms; it necessitates the need for greater awareness and responsibility from everyone; those that hand out data, as well as those that collect, process and store it.
Paul Smith
Head of Quality & Compliance
The digital revolution has entirely transformed our lifestyles and landscapes; from the daily scrolling of social media to the loyalty cards that exchange data for deals, our information is captured and catalogued in an abundance of ways.
But this increase in data collection and processing goes hand-in-hand with the more sinister practice of data theft. A recent report by Cybersecurity Ventures estimates that a global cyberattack will occur every 11 seconds in 2023, highlighting the urgency of robust data protection measures.
While malicious actors undoubtedly pose a significant threat, a surprising statistic emerges: 22% of data breaches stem from human error. This underscores the critical role of employee awareness and training in safeguarding sensitive information.
Types of cybersecurity threats typically include:
Phishing
Is the practice of sending fraudulent emails that resemble emails from reputable sources. The aim is to steal sensitive data like credit card numbers and login information. It’s the most common type of cyber-attack.
Ransomware
Is a type of malicious software. It is designed to extort money by blocking access to files or the computer system until the ransom is paid. Paying the ransom does not guarantee that the files will be recovered or the system restored, however.
Malware
Is a type of software designed to gain unauthorised access or to cause damage to a computer. It can steal data, disrupt operations, and even cause permanent damage.
Social engineering
Is a tactic that adversaries use to trick you into revealing sensitive information. They can solicit a monetary payment or gain access to your confidential data. Social engineering can be combined with any of the threats listed above to make you more likely to click on links, download malware, or trust a malicious source. ..."
https://www.grosvenortechnology.com/insights/ensuring-data-privacy-in-the-digital-age/
"Newmark Security hails underlying growth, expects stronger second half
Published: 08:23 25 Jan 2024 GMT
Newmark Security PLC (AIM:NWT) reported first-half underlying revenue and gross profit growth and said it is on track for a stronger second half.
Revenues of £10.4 million were generated in the six months ended 31 October 2023, down 2% year on year, which mostly reflected the People & Data Management (P&DM) division, Grosvenor Technology, losing its partner UKG after its merger the previous year.
Underlying earnings (EBITDA) came to £0.8 million, compared to £1.1 million a year earlier, and a loss after tax of £0.1 million was reported versus £0.5 million pre-tax profit last time.
Grosvenor’s sales were down 9% to £7.6 million, but this was partly offset by strong growth in the Physical Security Solutions division, Safetell, where sales grew 24%.
If stripping out the UKG impact, underlying group revenue grew 11% and underlying gross profit increased by £0.2 million.
Newmark said the group returned to profit after tax in the second quarter of the financial year.
The strong trading trend is expected to continue into the second half of the financial year, with both electronic and physical security systems divisions to grow in the full year.
“The group's existing financing facilities are sufficient to execute its current plans and both divisions are anticipating stronger sales in the second half, supported by a good spread of public and private sector contracts,” the company said.
Chairman Maurice Dwek said it was a successful period for Newmark as both divisions continued to execute their strategies and build a better platform for growth, as shown by 77% growth in subscription-based recurring revenues for Grosvenor’s Human Capital Management arm and Safetell’s 100% sales growth of entrance control products.
Dwek also pointed to the number of blue-chip clients being won across public and private sectors, including a ‘big four’ supermarket, a major UK utility and multiple police forces.
“Our sales pipeline is expanding and we are on track for stronger second half, with both divisions set to deliver full year revenue growth,” he said.
"Whilst we are watchful of the macroeconomic outlook and pending elections, the people and data security market continues to grow and we are confident that the group is in a stronger position to capitalise on the opportunities this will bring.”"
https://www.proactiveinvestors.co.uk/companies/news/1039349/newmark-security-hails-underlying-growth-expects-stronger-second-half-1039349.html
Hi Hedgehog,
This was a worse case scenario and delays the significant multi-bagging out a bit but not far. I am confident that there is nothing to really get concerned about. I'm out in the Alps this week so won't really get stuck into the detailed numbers until next week. When I do, I will pick up with Marie Claire on key areas like the revenues, debt and cashflow. To fft100's point we really are a bit lame on forecasts or just giving a bit more detail around what 3 new clients mean in terms of revenues etc. Why not state we expect each to be worth a million or so (potentially more), why not call out we expect to be in profit (we have stated it will be materially higher so why not call out 'profit'. Still, we are where we are, and that is 40% higher in price terms than FY results. A buying opportunity for those who don't want to miss out.
Cheers
"The fact is we'd have made around £1.1m in the 1H without the loss of UKG. That is a key piece of info we needed to have the direction of travel."
Totally agree Dab - and the loss is being rapidly replaced.
Allenbys note is out. Doesnt contain any forecasts - even for 2024 that ends in 3 months ! - and basically just restates this mornings RNS. It does mention the underlying profit figure for H1 of 1.1m as reported by Dabs below. It also says that no fund raising will be required.
The remaining pages of the note are basically a primer on NWT including case studies.
Apologies. not sure why that appeared again. Is it possible to edit/delete a post ?
Usual complete lack of meaningful info regarding current trading. It is now 3m into H2 and the commentary about H2 could have been written last October. How dabs can say that growth is continuing or that it will be a great H2 based on the H2 commentary is beyond me, unless he has had a private chat with them. I though NWT were supposed to be upping the info. This shows no change.
They treat it like a private company and should take it private
I agree on the lack of outlook fft100. I'll feed that back.
They have acted on the feedback to give us greater clarity on the UKG impact so we can do the numbers.
The fact is we'd have made around £1.1m in the 1H without the loss of UKG. That is a key piece of info we needed to have the direction of travel.
All businesses have their ups and downs. To me the direction of travel on the growth remains strong. We will be profitable in 2H and then will not make a loss again.
Usual complete lack of meaningful info regarding current trading. It is now 3m into H2 and the commentary about H2 could have been written last October. How dabs can say that growth is continuing or that it will be a great H2 based on the H2 commentary is beyond me, unless he has had a private chat with them. I though NWT were supposed to be upping the info. This shows no change.
They treat it like a private company and should take it private
HE1 HIT HELIUM AND HYDROGEN [SEE RNS BELOW]
GET IN QUICKLY.. SHOULD DO 200% PLUS
https://www.lse.co.uk/rns/itumbula-west-1-well-has-successfully-reached-td-vmkkvswza9v67ua.html
Agreed Brightstine
Results are behind the curve but the growth continues. Might see the pullback today but it'll be temporary. 2H looks profitable and year on year will look excellent.
Back to the 70's but hopefully no lower. Then build from there towards the full year. US HCM will show stronger growth YoY with 3 new active customers and the rest of world is flying. Safetel turning nicely too.
I think there is definate Jam tomorrow and it ain't far away...
Buying opportunity for me if we fall to far...
Ouch!
Revenue down
Gross profit down
Profit switched to a loss
£0.6m decrease in cash
Cash at end of period of just £7k
More jam tomorrow. Doesn't justify a share price at a 7 year high. Tin hats today.
So a lovely move into the 90s today for NWT, ahead of its interim results tomorrow: up 5p (5.8%) to 91p (90p - 92p), on 25,986 NWT shares traded.
Which is a new seven year high (consolidation-adjusted).
100p is now within touching distance: just one good day could day could see it breached.
And above 100p there looks to be little chart resistance until about the 150p level.
Remember that it's also Burns Night tomorrow, so a wee dram or two of the 'water of life' could be well in order for NWT shareholders.
Though I may well also have a G&T: which seems only fitting, to toast the success of GT Clocks in America, LOL!
And in the meantime, please enjoy this quite delightful display of Scottish music and dance, to help get you in the mood:-
https://www.youtube.com/watch?v=XzKVXnoZR88
Very amusing Hedgehog. 1 trading day left before 1H RNS and the publication of the analyst's note. Exciting times.
Cracking trading volumes on the build up. Someone I'd using a broker to add given the unknown trades. These look to me to be orders being filled. The price rises to draw out some sales then the big buys go through.
Let's hope they continue.....
NWT's noteworthy rise to 84p this week, combined with some copious autodoors posting, has prompted some more 'stock-&-roll' analysis from myself.
This time using 'The Doors Greatest Hits' - to help illustrate NWT's investment credentials:-
https://en.wikipedia.org/wiki/Greatest_Hits_(The_Doors_album)
Track listing, Side one:-
1. "Hello, I Love You" (from "Waiting for the Sun")
- Savvy investors discovering NWT for the first time.
2. "Light My Fire" (from "The Doors")
- NWT anticipating a long-overdue press tip.
3. "People Are Strange" (from "Strange Days")
- NWT sceptics.
4. "Love Me Two Times" (from "Strange Days")
- NWT's TWO quality subsidiaries: Grosvenor Technology & Safetell.
5. "Riders on the Storm" (from "L.A. Woman")
- NWT's skilful navigating of some rough market conditions recently.
Track listing, Side two:-
1. "Break On Through (To the Other Side)" (from "The Doors")
- NWT powering towards the 100p+ level.
2. "Roadhouse Blues" (from "Morrison Hotel")
- Misery at missing out on NWT.
3. "Not to Touch the Earth" (from "Waiting for the Sun")
- NWT's rocket-like trajectory.
4. "Touch Me" (from "The Soft Parade")
- Problem addressed by NWT's touchless technology.
5. "L.A. Woman" (from "L.A. Woman")
- Marie-Claire's 'California chic'.
Hedgehog100 Posts: 3,396 Price: 82.00 Strong Buy
RE: Automatic Doors Benefits & Market Opportunity 17 Jan 2024 17:01
" ... So pro rata, this could potentially translate into annual autodoors revenue to Safetell of £10s of millions, potentially yielding annual autodoors profit of a few £M. ..."
Going back to my estimate of potential NWT autodoors servicing profit, I've been doing some further research which supports my view:-
"Record UK is the largest direct provider of automatic door services in the UK. With over 90 directly employed service engineers, we provide a true 365, 24/7 provision of services.
Currently responsible for over 32,000 automatic doors, we are the contracted provider of services to a number of major UK National clients and more local and personal services to a highly diverse range of customers."
https://www.recorduk.co.uk/en/automatic-door-servicing-and-maintenance
"RECORD U.K. LIMITED
Company number SC124392"
"21 Aug 2023 Full accounts made up to 31 December 2022
View PDF Full accounts made up to 31 December 2022 - link opens in a new window - 31 pages(31 pages)"
Some extracts from this latest annual report from Record U.K.:-
"The principal activities of the company are the design, manufacture, supply, installation, service and maintenance of automatic door systems and aluminium shop fronts."
"During 2022 the business recorded turnover of £41,594,557 ..., gross profit of £14,543,988 ..., operating profit of £2,808,940 ..."
"Profit on ordinary activities before taxation 2,414,920"
https://find-and-update.company-information.service.gov.uk/company/SC124392/filing-history
O.K., not all of this is from just servicing-maintenance of autodoors, as it also installs etc.
But NWT also provides autodoors installations, and looks to have certain advantages that Record U.K. doesn't.
"Security trends to watch in 2024
... Touchless entry
Touchless access is a vital access control technology trend for 2024, gaining popularity in public and commercial spaces for safety and convenience. Touchless access control solutions combine security and safety with touchless entry, eliminating the need for physical contact or credentials at the door.
The touchless access control trend includes improved physical signal configuration, enhanced motion-sensing technology, and the widespread adoption of biometric technology. These advancements contribute to a secure and user-friendly access control environment, supporting the evolving needs of high-traffic areas and ensuring compatibility with the latest access control trends.
Remote management
Remote security and access management have transformed security capabilities in recent years and are expected to be prominent trends in 2024. Remote management can be a game changer for business owners, allowing administrators to control and adapt security systems without being on-site.
Remote management of access control systems provides flexibility and agility in responding to dynamic security challenges. Administrators can monitor access logs, update user permissions, and respond to real-time security incidents, all from a centralised and remote interface. This capability is particularly valuable for organisations with multiple locations or those embracing flexible work arrangements.
Looking ahead to 2024, the world of security is undergoing a transformation. The trends we’ve explored here—integrating systems, strengthening retail security, addressing unique challenges in the UK, embracing automation, and advancing access control—are not just futuristic ideas. They’re the building blocks of a proactive defense against emerging threats.
Organizations that recognise these trends as essential components, rather than optional upgrades, position themselves to lead and keep their people safe. Whether it’s through touchless entry or remote management, these advancements aren’t just about keeping up; they’re about staying ahead and actively shaping the security landscape.
Connect with our team today and embark on the journey to upgrade your security for 2024—let’s navigate the evolving landscape together with confidence and resilience."
https://newmarksecurity.com/insights/security-trends-to-watch-in-2024/
"Security trends to watch in 2024
... Access control
Data reporting
Access control goes beyond allowing or denying entry; it’s about making informed decisions. The spotlight on data reporting in access control systems is pivotal. This involves collecting and analysing data on entry and exit patterns, user behaviours, and system activities. This data-driven approach empowers enterprises to gain insights into potential vulnerabilities, adapt to changing threats, and address security gaps.
For example, an unusual spike in access attempts during non-business hours could indicate a security threat that requires immediate attention. This trend aligns with the broader growth of big data analytics, illustrating the increasing need for solutions that go beyond securing doors to providing operational insights.
IoT integration
The Internet of Things (IoT) has transformed access control, introducing intelligence and adaptability. In 2024, connected devices will continue to gain popularity, contributing to dynamic access management systems that stay one step ahead of security challenges.
IoT integration in access control extends beyond traditional vital cards and PIN codes. Smart devices, such as biometric scanners and mobile access applications, communicate with access control systems to provide secure and convenient entry. This interconnected ecosystem enhances security and user experience, creating a more seamless and flexible access control environment. ..."
https://newmarksecurity.com/insights/security-trends-to-watch-in-2024/
"Security trends to watch in 2024
... UK physical security budgets to rise
A recent World Security Report from G4S found violent criminals pose more threat to UK company security than any other European nation. In a survey of more than 1,700 Chief Security Officers, 42% reported potential violent threat, above the global and European figures of 33% and 30% respectively.
It means that 87% of UK CSOs expect the number of physical threats to increase in 2024. In response, 40% said security budgets will increase significantly over the next 12 months, with half saying that increasing physical security measures is their top priority for the year.
Physical security automation
Physical security automation is a trend that should not be overlooked in the pursuit of heightened efficiency and real-time response. Embracing automation streamlines routine security tasks, allowing organisations to focus on strategic threat management. From automated surveillance to responsive access control, these solutions are a key element of future security systems.
Automation in physical security means routine and repetitive tasks can be completed without human intervention. Security cameras equipped with intelligent algorithms can identify and track intruders, triggering automated responses such as alerting security personnel or even autonomously controlling access points. This not only improves response times but also reduces the risk of mistakes. ..."
https://newmarksecurity.com/insights/security-trends-to-watch-in-2024/
New on NWT's website, a very interesting and useful article outlining key physical security and access control trends in 2024.
An article which certainly helps to highlight NWT's cutting edge expertise in these areas, and the pressing demand for its products and services in them.
"Security trends to watch in 2024"
https://newmarksecurity.com/insights/
"Insights
Security trends to watch in 2024
In an era where security threats are becoming more sophisticated, the need for advanced and integrated security solutions has never been more critical. As we enter 2024, several key trends will shape the landscape of physical security and access control. This article explores these trends, and their potential impact.
Physical security
System integrations
In 2024, one of the standout security trends will be integrating security systems with broader business and site management solutions. Traditionally, security systems have operated in silos, posing challenges in real-time threat detection and response. Integrated security platforms offer a joined-up alternative, allowing businesses to efficiently unify security and business operations. Integration enables a more holistic and proactive approach to security, improving the speed and efficiency of threat detection and response.
For example, if a surveillance camera detects suspicious activity, the access control system can automatically restrict entry to that specific area. This level of coordination enhances the overall effectiveness of security measures, creating a unified response system, and is increasingly how organisations want to approach physical security.
Increased retail security
Figures from the British Retail Consortium show that violence and abuse aimed towards retail workers almost doubled in the 2021-22 financial year compared with before the pandemic. And over the last 12 months, shoplifting from UK stores has made headlines on numerous occasions, with worries that theft is going largely unpunished.
In the face of a significant surge in violence, abuse, and theft within the retail sector, the imperative to fortify against physical threats has never been more apparent. Physical security products emerge as the paramount line of defense, standing as formidable barriers to protect both individuals and valuable assets. Manual attack-resistant barriers, ballistic and blast-resistant security screens, doors, walling, and glazing play a pivotal role in creating a robust security infrastructure. ..."
https://newmarksecurity.com/insights/security-trends-to-watch-in-2024/
As regards how good some maintenance businesses can be as investments, Mears Group (MER) is a stellar example: a former fifty-bagger, low to high.
And MER in late 1999 was as low as 10p/share, before it c. 10-bagged, to c. 100p, in about a year and a half.
That relatively rapidly c. ten-bagging was a classic re-rating upwards situation, of the type that now looks to be underway at NWT.
And it shows how investor perception of a stock can change, as a company's business changes.
MER had been a lowly-rated cleaning stock, but a move into maintenance transformed it.
With the combination of soaring profits and a soaring rating turbo-charging its share price.
As with MER, increasing profits and an increased rating for the transformed NWT should go hand in hand, complementing and enhancing each other's impact to create a double positive whammy.
For example:-
• Doubling earnings & a doubled rating = a quadrupled s.p.
• Trebling earnings & a trebled rating = a 9-fold rise in s.p. (i.e. 1,000%).
• Quadrupling earnings & a quadrupled rating = a 16-fold rise in s.p.
NWT's shareholders base - most of which is long term - seems pretty sticky, so should require some quite aggressive bidding from buyers to wrestle away significant amounts of shares from them.
This should be an ongoing process over quite some time, underpinned by ongoing growth from the company.