Thruvision Group Plc reported a sharp rise in first-half revenue on Tuesday, but shares were falling on a warning that full-year sales would fall short of market expectations as weakness in the UK retail distribution market persisted.
Revenue for the six months ended 30 September rose 36% to £2.6m, driven by a strong performance in entrance security, where sales jumped to £1.6m from £0.2m a year earlier, including a large 'Material2' order in Asia.
Retail distribution revenue fell to £1.0m from £1.6m, while no customs sales were recorded in the period.
Gross profitability weakened significantly because of heavy discounting of legacy products to reduce inventory.
Adjusted gross margins fell 22.5 percentage points to 27.9%, while statutory gross margins declined to 17.4% from 34.0%.
Adjusted gross profit slipped 24% to £0.7m.
The adjusted EBITDA loss narrowed to £1.6m from £2.1m, and the adjusted loss before tax improved to £1.9m from £2.4m.
Thruvision said its statutory operating loss was £2.4m, slightly lower than last year's £2.5m loss.
The AIM-traded company completed an oversubscribed £2.75m equity raise in July at 1p per share, supporting liquidity as it worked through stock reductions.
It reported £2.1m of cash at the end of September, compared with £0.4m at the end of March, although that had reduced to £1.65m by 24 November.
The board said it now expected full-year revenue to be between £5m and £7m, below previous expectations, reflecting continued weakness in the UK retail distribution market.
Management said the second half had seen no improvement in that segment, offsetting gains in the US retail distribution market and government orders in Asia.
"Revenue in the first half grew by 36% to £2.6m, made up of a number of smaller orders from new and existing customers, mainly in the US retail distribution market, and a large award from a new government customer in south-east Asia," said executive chairman Tom Black.
"However, the UK retail distribution market has been much weaker and this has continued into the second half.
"As a result, the board has concluded that current market expectations for the full year are unlikely to be achieved and now expects revenue to be between £5m and £7m."
At 1042 GMT, shares in Thruvision Group were down 23.64% at 0.63p.
Reporting by Josh White for Sharecast.com.