Contract risk remains an issue at security screen installer Newmark Security (NWT:AIM), despite impressive numbers for the first six months of the year and increasing earnings diversification.

Shares in the stock gained 0.4p or 20% to trade at 2.43p in early trade as it doubled pre-exceptional operating profit to £1.6 million in the six months to end-October.

The business is valued at £11.2 million

NEWMARK SECURITY - Comparison Line Chart (Rebased to first)

The improvements were driven by sales to the Post Office (PO) of its time-delayed cash handling equipment as well as increased demand for security screens it installs for public and private sector customers.

Newmark successfully renewed two of three large contracts due to expire over the course of 2014 – primarily relating to its security screens business – but its deal with the Post Office remains in limbo.

There was no update on negotiations in Newmark’s most recent update. In its annual report, released in 4 August, management states: ‘we remain confident of finalising the PO Network Transformation support contract’.

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Issue Date: 30 Jan 2015