Shares in CCTV camera supplier 21st Century Technology (C21:AIM) tumble more than a third as it warns of big losses in the year to 31 December 2016.
Profitability is struggling because of lower volumes of new vehicle orders among UK bus operators, in which 21st Century Tech installs devices, as well as pressure on its ticketing technology business.
Even a five-year contract renewal with Firstgroup’s (FGP) First Bus service will not be enough to stave off a heavily loss-making year.
Croydon-headquartered 21st Century Tech eked out an underlying operating profit of around £52,000 in 2015.
‘It was anticipated that the slow start to the year would be followed by a pick-up in trading in the second half of 2016 although this is proving slower to materialise,’ said chief executive Russ Singleton.
‘With the uncertainty associated with the First Bus contract renewal now removed, the company can now direct more focus on a number of framework agreements, bids and tenders currently under negotiation, particularly in Fleet Systems which specialises in on-board systems and integrated systems in the Passenger Transport Authority and Local Authority markets.’
Cash balances at 21st Century Tech were just £1.2 million at 30 June 2016, though this is slightly higher than at its 31 December 2015 year-end.
Disappointing trading performance means management may consider a sale of the RSL business it bought for £1.3 million in May 2015.
It marks another chapter in a chequered history for London-quoted CCTV businesses. Rival Indigovision (IND:AIM) is so out of favour with investors it trades at a discount to tangible book value.
Synectics (SNX:AIM), another rival to 21st Century Tech, has also struggled in recent years because of its exposure to oil and gas markets though hit a purple patch in recent months after securing surveillance and security deals at casinos in the US and Asia.
21st Century Technology will report interim results ‘towards the end of September’ according to today’s statement. Shares in the business trade 35% lower at 1.53p, valuing it at around £1.8 million.
Tangible book value at 21st Century Tech is close to zero, according to its last year-end.
Disclosure: The author owns shares in FirstGroup.
