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Sold up. Don't quite know who to blame but neither the management or the unions can save this business now.
Business customers are leaving and will never return, this announcement will mean more business tendering for new parcel contracts and more customers being lost. If I have a million parcels to send out to customers a year, I need reliability, IDS does not provide that so I am off to a competitor. Letters small and large are now too expensive, making the business case for investment in secure digital delivery of comms easy to push through. Most business now have a target to reduce their volumes and thus price increases are not working.
For everyday customers. Letters and cards are so expensive to send, these volumes will reduce as people look to digital and Amazon. For parcels you can now walk into local shops to print your labels and post your parcels, no need to use the post office.
I was just about to publish a similar thought Hedgehog and it was my rationale for buying more this week and my posting on Saturday, albeit I was a little under the influence so it was a fairly short post.
I've purchased another 15,000 shares so far this week. A shame that a seller off-loaded 10,000 otherwise we might have seen a move upwards although I am happy buying at this price. I firmly believe this will be the trading update that brings in some wider interest. Announcing £1m+ of profit, a view that trading is good and the pipeline is strong and we are now a software as a service business should encourage a few to dip in. The 24 month view, in what hopefully is a benign macro environment is compelling, a 4x bag will be fair value, x8 -12x will be a growth valuation.
Happy days.
No surprises in the update. 14% revenue increase so not all bad. Hopefully we have constrained costs to a level that demonstrates control and opportunity for the future.
The last 12 months has been very trying and I can't image where the price would be without the buy backs.
Only the start of the rise. 4x more and we will reflect the value of the business today. I am now nicely in profit but not giving any of my shares up until we hit a much more realistic valuation. The next results will only paint the picture of further profitable growth and we'll re-forecast again to 8x from here. Well done Hedgehog. The news will spread of the value and re-rate required here!
A really simple angle of questioning from me as I personally buy the fact that we can increase revenues. However what we have been poor at is managing our costs, so my questions are linked to:
18/19 income £14,517, administration costs £9,031, R&D costs £2.7m (subsidy/income £2.5m)
19/20 income £13,120, administration costs £10,611, R&D costs £5.3m (subsidy/income £2.8m)
20/21 income £10,400, administration costs £10,935, R&D costs £5.5m (subsidy/income £4.5m)
21/22 income £12,100, administration costs £12,200, R&D costs £5.6m (subsidy/income £2.2m)
You highlighted why costs had increased by £1.3m over 2021/22 but do you realise that costs have increased by over £3m since 18/19? You cannot sustain increases in costs of this nature. Will you commit to a wholesale review of the cost base in order to bring costs to a more realistic level? What level of administration expenditure do you consider reasonable to income? How are you going to improve the ratio/income so we have a sustainable business moving forward?
What proportion of the R&D costs in the last two years (£11.1m) are attributable to COVID ventilators and pathogen detectors? What do you believe is a sustainable level proportion of R&D investment given our current income? (% term would be great). Again linking to costs, how are you going to improve the ratio/income so we have a sustainable business moving forward? Why have we moved to such unsustainable levels or how can you justify this?
Safetell is winning new business and is on the turn around, it does contribute cash and is expected to become more profitable. We are fitting screens in a £1.7m contract with Tesco stores and we also have a Morrisons contract (initially 20 stores), significant opportunity across retail. Doors are starting to move, fitting, maintenance contracts (not manufacturing).
Research & development costs are not expected to increase as revenue increases. We have made the majority of the new investment we need to make and it is more about continuous improvement. We will expect to make the usual R&D offsets, more importantly is we have around £5m in tax credits. This will ensure we can retain/distribute profits without the taxman taking a significant chunk for a while.
Back to cash and inventories - supply chain issues expected to continue for another 24 months. We have plenty of room on our facilities, but higher stocks impact our cash.
We discussed the clocks position and the fact we have a huge growing opportunity with SASS. The projections show that give us 55,000 clocks by 2025 are realistic and we are on track. This is where significant revenues will be generated.
We discuss that we as investors would like for forecasts, here there was some reticence due to the headwinds faced with Brexit, Pandemics, Inflation, and War but they heard this is something we would like.
We discussed how we can promote ourselves better, more RNS's for information. If we are to raise money then a stronger share price is better no matter which route you go.
The proactive session. Pretty much the same presentation as the Meet the Investor open to investors to go and review. Marie-Claire and Paul presented well, however as an investor I felt there was no sell! The other 3 companies all were raising case so why were we there? We delivered the right messages we told the audience what we do, that we are growing, we are back to profit, that revenues could double/triple, with a US business that is flying, with a new software business model that is high margin, but we failed to show them the killer graph that despite a £20m revenue, growing revenue, back to profit and expected strong 2H, that we are trading at 45p which values the business at just over £4m. DYOR and that but come on, we need to get that message across!
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...
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
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.