Member Info for dab808

Hi all,

So I attended the AGM yesterday and the Proactive Investor session. I am going to get my DYOR, none of the below constitutes a recommendation and some of it might be considered interpretation so I accept no liability for any decisions made by investors on the back of the information below etc etc out the way.

AGM
Present at the meeting were Maurice, Marie-Claire, Paul, the registrars, investor relations and myself and two other shareholders. One holds approx. 11%, another 1.5%, I myself own 1.3%.

The AGM was upbeat. Although we were looking at the April 22 Year end and approving those accounts, along with the AGM resolutions the real business was were we are today. All resolutions were approved as per the RNS.

After the meeting closed we discussed the following:

US going great. Expanding and significant pipeline. Fulfilment now being handled out of the US with stocks being held in the new offices. We are well positioned, no reason why we should not see continued growth. Very little competition, plenty of business to go around. Margins improving due to software sales and reoccurring income.

Questioned around the 2 to 3 x revenue in the next 3-5 years. Marie-Claire stood by this statement in the AGM and repeated it in the Proactive presentation. She highlighted that our loss of UKG (announced a while ago) has impacted revenue growth although revenues will hold up, this was out of our control due to a takeover, it presents a challenge in the story we want to tell but not in the underlying performance. In fact margins are now higher and further price rises have been pushed through without issue. I interpret from the 2nd half profit will be much higher although revenues will be similar.

Inventories, cash and expansion capital challenges. I asked the question around how our capital and cash position are impacting growth and what options have we explored about boosting this. We are undervalued and have we considered a US listing.

We have had contracts slip due to availability of chips and equipment. We are holding more inventories to help mitigate this but one very large contract has gone back that would have already been banked (don't forget we are expecting 2H to be better even without this). As we are holding more inventories this is using more cash so we are reliant on invoice financing and our expansion plans are not as aggressive as they could otherwise be.

We have explored what we can do to raise money in the US. We have not ruled out this option. Things were progressing back in October/November, but then the markets/UK was in a bit of a turmoil so this went onto the back burner. All shareholder agreed this would be a good thing to consider. I made the point that we have an opportunity now and need to consider how we raise money, expand at a pace to maximise the opportunities in front of us.

Hi Hedgehog,

I'll feedback on the investor presentation. With one more session at proactive investor later today they could be waiting before they update it although the more information available in the public domain the better.

It should be an interesting AGM, I imagine there is some frustration that efforts are not being reflected in the share price (those there today will own considerably more than me). And like you I am very keen to understand more about plans for growth (thanks for the 2 to 3x revenue point from the presentation, that is worth exploring), plans for a US manufacturing plant, plans to raise working capital (need to look at the cost of the invoice financing). I will share what I learn, if you have any questions, let me know.
Regards
David

Got to be a bid rumour somewhere. Can't find anything yet. Loving it though...

I'm with you in that it would be good to hear from them. I hold 60,000 shares for my misfortune.

Again happy with the direction we are headed as a business but I think it will be important at the AGM to raise that in the last 10 years we have the following stats taken from the accounts:

In 2013/14 we were valued at £6m compared to todays £4m.
During that time we have seen net assets of the business fall from £11.6m to £7.5m (as stated in EoY accounts)
We have made next losses of £2.2m during the period and made net losses of £6.35m since 2016.
We have paid shareholders £0.8m in dividends in the last 10 years although £0.0m (nothing) in the last 6 years.
We have paid our CEO a total of £2.4m in renumeration, £1.7m of this in the last 6 years.

I think it is fair to say that times have been turbulent, the business has been somewhat resilient and we are coming out on the other side. But I also think it is fair to say that in the next 18 months, investors need to see some returns through consistently increasing profitability. I don't care too much about dividends although they are always nice, but profit is vital, we can talk about new investment but these need to be funded through new money.

So I am very pro-Newmark but this is an interesting read ahead of the AGM. That said I'll be voting against the directors renumeration at the AGM and questioning the company's statement that Marie-Claire uses "We aim to deliver sustainable value for our shareholders and our broader stakeholder community through our position in high-growth, specialist markets in data and security and our long-term outlook.". I have seen no sustainable returns in a lot of years with the business worth less and no longer giving me a dividend.

https://simplywall.st/stocks/gb/tech/aim-nwt/newmark-security-shares/news/should-shareholders-reconsider-newmark-security-plcs-lonnwt

There is some basic house keeping that is needed to up our professionalism. Social media is unfortunately a requirement and we have two twitter accounts for one company, neither of which is being used.

If you are registered for https://www.investormeetcompany.com (it is free) you can access the video, and presentation including the Q&A. I was on a flight but watched it back yesterday. Unfortunately, it wasn't as slick as I would like to see the delivery, there is no real sell and Marie Claire lacks that engagement factor.

There is one slide which stood out in terms of predictions for the future.
2018 clocks 500 HCM revenue £0.9m
2019 clocks 3,000 HCM revenue £4m
2020 clocks 5,000 HCM revenue £5.9m
2021 clocks 7,000 HCM revenue £6.5m
2022 clocks 13,000 HCM revenue £8.7m
2023 clocks 22,000 (no revenue prediction)
2024 clocks 34,000 (no revenue prediction)
2025 clocks 54,000 (no revenue prediction)

This looks very promising

OMG. We have two accounts!
@grosvenortech
@Grosvenor_tech
I am still seeing nothing from 2023 on either.

Let's see if we get some new investors tomorrow on the back of the presentation this evening. Fingers crossed they see the value and we can push higher. I really can's see many sellers between here are 75p, there might be a few happy to get out but who'd want to let the significant chance of a big multi bagger go cheap when the turn around looks so strong.

So giving thought to how we improve the company profile and coverage, I thought I would look at our social media coverage. So, there is Twitter, used by most journalists and with a # or @ we can reach a new audience. Reddit, Linked in, Facebook, and a host of other sites. Guess what, we don't use anything that I can find. Our last Newmark Security tweet was 2017! Grosvenor Technology tweet 2019..... Another question for the team! How can we expect to reach investors if we are not proactively reaching out. Have we DM'd Questor, Simon Thompson, Ian Cowie etc?? Now is the time!

Investor Presentation

Newmark Security plc (AIM: NWT), a leading provider of electronic and physical security systems, is pleased to announce that Marie-Claire Dwek (CEO) and Paul Campbell-White (CFO) will provide a live presentation relating to the company's recently announced Full Year and Interim Results via the Investor Meet Company platform on 8th Feb 2023 at 10:00am GMT.



The presentation is open to all existing and potential shareholders. Questions can be submitted pre-event via your Investor Meet Company dashboard up until 9am the day before the meeting or at any time during the live presentation.

A further update, this time to shareholders - unfortunately I am on a flight to Edinburgh :(

Investors can sign up to Investor Meet Company for free and add to meet Newmark Security plc via:

https://www.investormeetcompany.com/newmark-security-plc/register-investor

I am very pleased with my investment as well. Let's hope as the markets perform nicely, buyers look for opportunities and they stumble on this one. Still no real interest since the results and trading update. Hello? P/E of 4, a growing top line in growing markets!

I've decided to attend the proactive investor session. It is free to register and attend. They will also post the session on YouTube, so if getting to London is a hassle, you'll be able to watch it there. I've not been to an AGM since the pandemic. They are normally quite a small affair, 3-4 management, chairman and some non-execs plus around 8-10 investor attendees. It is more an opportunity to chat before and after about strategy, issues, and risks. Nothing price sensitive can be discussed, although I am going to raise questions around what options have been looked at around improving capital, lack of liquidity in the stock, the Safetell strategy, and transparency on its cost base verses GT. Interestingly I cannot see any coverage of todays update. I think it might have confused the wires given final results last week. Yes the RNS is out but no coverage is very unusual. We normally drop when the news is poor but no uplift today is a little disappointing. Great we are getting out to tell our story but we need more coverage. That then gives us capital opportunities.

Balance sheet and financing

Inventory increased during the period by £0.1 million to £3.9 million at 31 October 2022 to secure the purchase and adequate supply of certain components in advance of the usual lead times in response to the continued global supply chain challenges.

Cash at 31 October 2022 was £0.1 million, down £0.1 million during the period since 30 April 2022. The Group has an unused £0.2 million UK overdraft facility at the balance sheet date.

Total borrowings decreased by £0.3 million in the period to £5.1 million at the balance sheet date primarily due to CBILS loan repayments which started in September 2021. Subsequent to the balance sheet date, in January 2023, the UK invoice financing facility was increased by £0.6 million to £2.3 million to provide further working capital headroom as the Group continues to grow. The Group also has a $2 million US invoice financing facility.

We are pleased to announce we have signed a GT Connect and support contract with one of the largest US retailers based in Mexico in the second half of FY23. This contract will help accelerate our growth in HCM recurring revenues.

Looks likely we'll exceed £1m of profit this year. The story is a growth story and we should be on a P/E of 20x. That is £2.50 from here. We are at 4x! Can't resist but buy a few more today because this is just absurd. It's like no one cares but I have sent a message to Marie-Claire and team to congratulate them for these results!

Boom! Looks good as a first pass.

Also had it confirmed we are holding another investor session with Proactive on the 28th of February.

Are you coming to the AGM Hedgehog? Or if I set up a session with Marie-Claire do you want in? I could ask Kim in investor relations to set something up. You could send her your details direct so we don't need to post anything on the boards. She'd then just need to work on a date we can both make and set up a call. Let me know.

As you allude, it was a very different business in 2015. I can recall that the revenue growth was driven by a post office upgrade in the physical division that was a 18 month/2 year contract. Back then the revenues were the opposite of today with physical double that of the electronic. It was what left me to significantly reduce at the top 150p-225p in today's money. This is what is so exciting, who removes human capital management and access once you have it in? It is growth, growth, growth. We should be telling the market that what was £14m in GT last year has an outlook of £18m this year, £24m in 2024. Plus a Safetell strategy play moves it from decline to growth. These numbers are all made up DYOR etc but this is not the same story and with my holding I'm keen the management tell, tell, tell. I will be asking Marie-Claire to run me a session of what has been presented next week (I can't make the session plus I don't see why I should pay when I own what I do). I am one of the buyers in the last 10 days, multiple times I have been in and I am now at 1.3%.

Marie-Claire's summary (pages 10-12) reads very well. In there is a paragraph about considering setting up a North American Manufacturing Facility to mitigate supply chain risks. If likely, this would potentially provides the perfect opportunity to list in the US, raising the cash on the back of the GT success story. The two graphs on slide 12 sell the story nicely.