Reviewing AIM listed Newmark Security Plc And LSE listed Strategic Equity Capital Plc & Biffa Plc

Newmark Security Plc

Newmark Security Plc is a United Kingdom based holding company which is a leading provider of electronic and physical security systems. The company provides its services through its subsidiaries, Grosvenor Technology Limited and Safetell Limited both of which are United Kingdom based and through Grosvenor Technology LLC which is based out of the United States of America. All the above subsidiary entities have a very well-established client base. The objective of Newmark Security Plc is to help clients address some of the major security issues concerning them in an atmosphere of ever-intensifying global security environment, as well as aiding them in reducing their carbon output and meet their sustainability objectives. The company’s business strategy is focused on delivering growth through the development of new products and services, often supporting country specific customer requirements.

The shares of the company are listed on the AIM segment of the London Stock Exchange where they trade with the ticker name NWT.

Financial Update.

The company on 19 September 2019 came out with its preliminary results for the year ended 30 April 2019.

  • The Turnover of the company from continuing operations during the year was £19.6 million, an increase of 22 per cent over 2018 turnover of £16.0 million.
  • The Gross margin of the company from continuing operations for the year before exceptional items increased to 39.7 per cent whereas in 2018 the same was 36.1 per cent.
  • The Profit from continuing operations of the company after exceptional items for the year was £292,000 whereas for 2018 the company suffered a Loss on that account of £1,877,000.
  • The Earnings per share of the company for the year was 0.04 pence whereas for the year 2018 the company suffered a Loss of 0.40 pence per share.

Source – Company’s annual results statement published on 19 September 2019.

Stock performance at the London Stock Exchange

Price Chart as on 01 October 2019, before the market close (Source: Thomson Reuters)

On 01 October 2019, at the time of writing the report (before the market close, GMT 10.01 AM), NWT shares were trading on the London Stock Exchange at GBX 0.639.

The stock has a 52-week High of GBX 1.47 and a 52-week low of GBX 0.6. The total market capitalization of the company was £3.05 million.

Outlook

The year has been a turnaround period for the company, and the management is elated with the return of the company to profitability during this financial year after two years of turmoil when the company was in the red. The management hopes to continue to build on the momentum gained and post higher profits in future periods as well.

Strategic Equity Capital Plc

Strategic Equity Capital Plc is a public limited company incorporated and domiciled in the United Kingdom, registered in England and Wales under the Companies Act 2006 whose shares are publicly traded.

The Company is an investment company that carries on its business as an investment trust within the meaning of Sections 1158/1159 of the Corporation Tax Act 2010.

The shares of the company are listed on the London Stock Exchange where they trade with the ticker name SEC.

Financial update

The company on 15 February 2019 came out with interim financial statement for the six-month period ended 31 December 2018.

  • During the six-month period ended 31 December 2018, the company’s share price at the London Stock Exchange fell by 10.9 per cent. The Net Asset Value (NAV) per share during this period fell by 10.2 per cent and the NAV total return per share during this period was negative 9.5 per cent. The share price discount to NAV of the company for the company ended the period at 16.1 per cent. Although not so encouraging performance at the first glance, the company’s Investment Manager’s performance compares well when looked at in comparison to the FTSE Small Cap ex Investment Companies Total Return Index (“FTSE Small Cap Index”), which also fell by 13.9 per cent during the reported period.
  • Despite the half-year’s performance, however, the company’s long-term track record remains positive. Over the past five years, the company has delivered an annualized growth in NAV per share of 8.0 per cent, which is far ahead from the returns generated from the FTSE Small Cap Index by 3.7 per cent per annum. It needs to be emphasized here again that this growth in the Company’s NAV has been achieved minus the use of gearing.
  • During the reported period, the company’s shares at the London Stock Exchange continued to trade at a discount to the NAV. During the six months period ending on 31 December 2018, the discount on share prices to NAV averaged 14.8 per cent, which towards the end of the period stood at 16.1 per cent. During the six-month period however, the company bought back 1,945,369 of its own shares.

Source – Company’s six-month results statement published on 15 February 2019.

Stock performance at the London Stock Exchange

Price Chart as on 01 October 2019, before the market close (Source: Thomson Reuters)

On 01 October  2019, at the time of writing the report (before the market close, GMT 10.01 AM), SEC shares were trading on the London Stock Exchange at GBX 220.388.

The stock has a 52-week High of GBX 233.00 and a 52-week low of GBX 185.00. The total market capitalization of the company was £139.16 million.

Outlook

The approach of the company has always been is to follow a rigorous, consistent and a disciplined investment process.  The company is of the opinion that more and more of its investors now are concentrating on fundamental valuation of assets, which in the current volatile and uncertain times is the best protection available. The company expects that its portfolio will benefit from a positive re-rating in the times to come.

Biffa Plc

Biffa Plc is a United Kingdom domiciled company providing waste management solutions. The company provides services in collection of waste, conditioning, processing of waste and disposal of unusable waste and recovery of recyclables. The company is also engaged in the production and sale of electricity derived from waste disposal and the marketing of recovered recyclable items, like paper, ceramics, metals and plastic. The company’s Industrial & Commercial business vertical provides its services to customers in the corporate sector, industrial sector, commercial sector and in the public sector. The company through its two divisions provides these services to its clients. Its Resource Recovery & Treatment division focuses on the treatment, recycling and disposal of waste, including hazardous waste materials. Its Energy division includes the energy production operations from landfill gas and from anaerobic digestion processes.

The shares of the company are listed on the London Stock Exchange where they trade with the ticker name BIFF

Financial Update

The company on 5 June 2019 came out with its full year financial statements for the period ending on 29 March 2019.

  • The Underlying growth in the Net Revenue of the company was at 4.4 per cent to £1,030.8 million while in 2018 it was £1,006.1 million. Of this growth, 1.5 per cent was organic and 2.9 per cent was due to acquisitions. The Underlying growth in Statutory Revenue was at 3.3 per cent to £1,091.2 million, while in 2018 it stood at £1,076.7 million.
  • The Growth in Underlying EBITDA for the period was 0.5 per cent at £150.7 million, and that for the Underlying Operating Profit was at 0.6 per cent to £81.7 million; this performance was after having withstood the negative effects of Chinese import restrictions on commodity prices and decline in the Municipal division.
  • The Underlying PAT of the company was up 7.5 per cent leading to Underlying EPS of 20.6 pence (with statutory EPS at 7.2 pence) and an enhanced final dividend of 4.9 pence per share. The fall in the statutory PAT and EPS are on account of one-off exceptional items owing to onerous contracts, legacy loan amortization and GMP provisions.

Source – Company’s annual results statement published on 5 June 2019.

Stock performance at the London Stock Exchange

Price Chart as on 01 October 2019, before the market close (Source: Thomson Reuters)

On 01 October  2019, at the time of writing the report (before the market close, GMT 11.42 AM), BIFF shares were trading on the London Stock Exchange at GBX 237.00.

The stock has a 52-week High of GBX 268.00 and a 52-week low of GBX 171.80. The total market capitalization of the company was £597.50 million.

Outlook

The company had a good year, growing its business and making progress in all of its key strategic priorities. The company is set to grow its business further next year.

Looking out, the management believes that Biffa Plc is well positioned to adapt as the society and the economy evolves. At the company’s core, it is a service business and stands ready to provide the services needed to ensure that the country receives the much-needed adaptations or changes in how it manages its waste.