Newmark Security PLC Trading Update (5898K)
22 September 2016 - 10:37PM
UK Regulatory
TIDMNWT
RNS Number : 5898K
Newmark Security PLC
22 September 2016
22 September 2016
NEWMARK SECURITY PLC
("Newmark" or the "Group")
Trading Update
Newmark Security plc (AIM: NWT) provides the following trading
update.
As announced in the Group's preliminary results for the year
ended 30 April 2016 ("FY16"), the Board observed in the Outlook
section that: "Operating profit for the current financial year
ending 30 April 2017 ("FY17") would be significantly lower than
FY16. This reflected the fact that the strategy of material
investment in new products, new customer acquisition and new
geographies has taken longer to be realised than originally
anticipated. The opportunity pipeline continues to grow but the
conversion in to sales has been slower than hoped."
The Board today announces that these delays and other
operational difficulties persist and despite implementing a number
of cost cutting measures, the Group now expects results for the
current financial year to be materially below market expectations
and now expect to report a loss for FY17.
Further details of current trading and outlook of the individual
operating segments of the Group is set out below.
Asset Protection Division Review (FY16: Segment revenue of
GBP14.1m; segment PBT GBP2.8m)
Historically revenue within the asset protection business has
varied substantially from one year to the next due to the timing of
major refurbishment programmes for long standing customers and, to
date, we have not received details of any such programmes in this
financial year. The revenue stream within this division during the
last few years has included substantial sales of cash handling
equipment to the Post Office as part of their Network
Transformation Programme. As stated previously, this revenue stream
was expected to reduce during FY17 and the Company has been seeking
to replace this revenue stream by broadening its product range.
Despite being appointed as UK distributor of an industry-leading
manufacturer's doors and partitions range, new orders and sales
have been considerably slower than anticipated in the first four
months of the current financial year, and the pipeline and outlook
for the rest of the year is not sufficient for the Board to have
confidence the recent slowdown will be reversed in the immediate
future.
Electronic Division Review (FY16: Segment revenue of GBP7.6m;
segment PBT GBP(0.5m))
Continuing the trend observed during FY16, current trading has
shown a clear divergence of revenue between the JANUS and SATEON
product lines. Sales of JANUS continue to decline year-on-year,
whilst SATEON revenues are increasing.
SATEON revenues have increased almost 100% compared with the
corresponding period last year but this has been offset by the
decline in JANUS revenue. While sales of SATEON enterprise level
projects have outperformed expectations, penetration of the high
volume mid-tier market has been limited, partly due to a delayed
release of the new variant of SATEON. Significant revenues from
this new release are now not anticipated until the next financial
year. In addition, some national systems integrators, key clients
of the electronic division, have recently issued profit warnings as
projects have been delayed or postponed post Brexit.
Workforce management ("WFM") sales in the UK have remained flat
following the completion of the programmes in the last two
financial years of roll out programmes for one of the world's
largest apparel retailers and one of the world's largest
supermarket chains.
Further afield, performance in the APAC region continues to
disappoint as the Hong Kong office tries to establish sales and
distribution channels and conduct business development activities.
However, the US office has shown 8% growth in WFM revenue compared
to the corresponding period last year which is in line with
expectations. Focus remains on growing both existing customers
share of wallet and establishing new channel partners, as the
company prepares to launch a new Android based WFM terminal next
month, sales of which should benefit the Group in the next
financial year.
There are significant opportunities for this Android device in
new and adjacent sectors across all geographies in which the Group
operates and these are being investigated to ensure revenues can be
yielded form this upcoming product range in as short a lead time as
possible.
Marie-Claire Dwek, Newmark CEO, commented:
"The results for the year to date have been very disappointing
albeit in a period of investment and challenging markets. We have
and continue however, to initiate programmes to cut costs which
will improve our financial position going forward, whilst
continuing with the launch of new products which the Board are
optimistic will underpin future growth."
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014. Upon publication of
this announcement, this information is now considered to be in the
public domain.
---ENDS---
For further information:
Newmark Security plc +44 (0) 20 7355 0070
Marie-Claire Dwek, Chief www.newmarksecurity.com
Executive Officer
Brian Beecraft, Finance
Director
Cantor Fitzgerald Europe
David Foreman, Michael Reynolds
(Corporate Finance)
David Banks, Alex Pollen
(Sales) +44 (0) 20 7894 7000
Yellow Jersey PR Limited
Dominic Barretto +44 (0) 7768 537 739
This information is provided by RNS
The company news service from the London Stock Exchange
END
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