Chris Heminway, Exec-Chair at Time To ACT, explains why now is the right time for the Group to IPO. Watch the video here.
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.
Not had time to read but the report is now on the website.
https://newmarksecurity.com/assets/Newmark-Annual-Report-30-April-2022.pdf
This idea I like a lot. Something radical needs to happen. This is an idea to raise with the leadership team.
I am definitely open to a strategic review of Safetell. The finals indicated that we have a new strategy to increase revenue and diversify into automatic doors in this business. The new MD from G4S obviously sees this as an area for invesment. I want to know more about the expense base of the business, investment required and returns. Grosvenor is going well and a disposal could provide the focus we need along with some capital. Reoccuring servicing income is mentioned for the doors strategy. This is not the sexy end of the business, cash movement and screens for banks has been in the decline for many years. Doors do provide a good link to Grosvenor and access systems. There was again a hint that regulation is going to drive a market in doors (probably linked to heath as safety) that again I would like to understand. I will raise questions on this when I can.
It is in line with my expectations although I need the full report which they have not yet posted on the website to really understand what is going on. From what I can read, the human capital business is doing very nicely, I like that we are investing in the US with overall Group headcount down but a message that US headcount has increased. HCM annual recurring revenues increased by over 600% year-on-year to £0.9m in April 2022 is a BIG statement. What does 22/23 look like? We need to out these numbers to give confidence to investors. I'd like to see more on the safetell/physical side. Nick Shannon's appointment in February has led to a change in strategy and there appears to be money in automatic door servicing, again re-occurring income opportunity but keen to understand the margins here (I like this as it links to access control and HCM). Safetell is the part of the business that has struggled in recent years and will impact profits if not performing (we spent millions on a box that never happened). We need to put up our prices for screens if the bank network is reducing and economies of scale are no longer working. Overall, it comes down to the numbers, which are somewhat out of date. No selling today indicates most are happy. Can't get quote to buy (only negotiated trades) which again appears a good sign. Presentation and trading statement in February will be key in whether we can start some serious upward momentum.
I have been trying to buy more but there is nothing available. I could only get a quote for 1,000 shares (nothing at 5,000, 2,500 or even 1,500) they only had 1,000. Quoted 37.88p, shouldn't have really but decided to buy them anyway. Good news will see this share fly.
There you go. 32-37p now. Order filled. It takes only a little to move this stock either way. A bit of positive activity in February could see this re-rating to double where we are today and I might then be tempted to give a little back.
Put a limit order in for another 10,000 shares today. Expires Monday. close. Let' see if we can lift that bid price a bit. Based on how my overall portfolio is performing and the profits I am taking elsewhere I am tempted to buy into the results, presentations and updates.
Tested the sell after the trade but got nothing better than 30.30, it is a strange market for NWT. I tried to purchase 10,000 but there was no instant price and I would have had to have gone for a negotiated trade. Couldn't get another 5k filled after either. I'll try again tomorrow. Life is good in the rest of the UK market. It is time for NWT to shine too!
The investor presentation planned in December was cancelled due to delays in finalising the Audit, there was a press release that the accounts were delayed, but the Audit accounts are due to be finalised by the end of January and we will be conducting presentations in February.
AGM is set for the 28th February.
I have just added another 5000 shares. Taking me to just over 100,000 now.
Doubled since last years low and very happy to have made up so much lost value. Keen to get a view from the management team on the order book, margin and how the company/market is adapting given western desires to improve sovereign chip production and IP. Played correctly significant value could be added but only if the evidence of orders and margin is there.