Will we have to wait until the 22nd Century......?

I last wrote about 21st Century Technology in January 2014, and since they released their half-yearly results yesterday, I thought I would take a look and see if the new management team had made any progress. In my last report, I mentioned that over the years C21 had been somewhat of a serial disappointer:-

http://michae1mouse.blogspot.co.uk/2014/01/21st-century-technology-plc.html

A quick glance at today's share price would appear to suggest that despite a change in the management team, it remains a poor performer.

So what did yesterday's interims look like? Well not entirely impressive or convincing in my opinion. Firstly, underlying profit was down to just £30,000 from £250,000 in the comparable period last year. Gross profits were £2m on reported revenues of £4.7m. Net cash had fallen to £1.3m from £2.6m and the basic and diluted loss was 0.38p per share.

If you strip out goodwill and intangibles on the balance sheet then NAV is zero.

The company usually generates good operating cash flow, but at the interim stage, there was an outflow of £362,000.

Russ Singleton, CEO of 21st Century plc did provide some positives for shareholders with the following statement:-

"We have made good progress in the first half of the year as we continue to implement our strategy to become a broadly-based systems Integrator in the transport industry. In line with our strategy the acquisition of RSL is serving to diversify earnings, add software capability and move the Group beyond providing individual solutions to our customers.

"First half trading encountered delays in the delivery of a rail contract which is now due to be delivered in in H2. As a result revenue for the second half is due to grow significantly and is underpinned by a GBP4.5m order book. We are currently undertaking a planned retendering for a major bus contract and therefore continued to be exposed to some risk. However we believe our strategy is sound and therefore look forward with cautious optimism."

Whilst there are positives to draw on going forward, they do operate in a highly competitive arena and given their past performance, I can't see anything attractive enough to make me want to invest at the moment. Current management have skin in the game and therefore have plenty of incentive to turn things around, however it may take longer than anticipated.

In many ways, the current situation at C21 reminds me of the task facing Belgravium (mentioned in yesterday's blog). Turnaround situations are unpredictable by their nature with no guarantee of eventual success. I am happy to have sold my shares and deployed my money elsewhere for the time being. The market always presents other opportunities.