TIDMNWT
RNS Number : 3983Y
Newmark Security PLC
09 September 2020
Dissemination of a Regulatory Announcement that contains inside
information according to REGULATION (EU) No 596/2014 (MAR).
Newmark Security plc
("Newmark", the "Company" or the "Group")
Final Results
Newmark Security plc (AIM: NWT), a leading provider of
electronic and physical security systems, is pleased to announce
its audited results for the year ended 30 April 2020.
Highlights
Financial highlights:
-- Revenue was marginally behind last year as communicated in
the interim report at GBP18.77 million (2019: GBP19.58 million), a
decrease of 4%
-- Gross profit increased to 39.7% (2019: 39.3%)
-- Operating Profit before exceptional items was GBP604,000 (2019: GBP638,000)
-- Operating Profit after exceptional items was GBP305,000 (2019: GBP286,000)
-- Tax credit of GBP896,000 (2019: charge GBP25,000)
-- Profit after tax for the year of GBP1,127,000 (2019: GBP189,000)
-- Earnings per share of 0.24 pence (2019: 0.04 pence)
-- Cash generated from operations before exceptional items was GBP1,267,000 (2019: GBP518,000)
-- Investment in development increased to GBP886,000 (2019: GBP333,000)
-- Net Assets of GBP8,302,000 (2019: GBP7,114,000)
Operational highlights:
-- People and Data Management division (Grosvenor Technology)
o Revenues from Human Capital Management (HCM) increased by 32%
to reach GBP9,142,000 (2019: GBP6,908,000)
-- New US HCM contracts signed following the year end are good
signs for the future
o Access Control revenues grew by 4% to GBP4,215,000 (2019:
GBP4,071,000)
-- Existing Access Control Legacy Janus product revenue
increased by 27% whilst Sateon revenue decreased by 19%
-- The new platform Janus C4 was released at the end of the
previous year. The Integrated Security Management and Access
Control product provides a single-platform, multi discipline
solution and reached GBP383,000 of revenue (2019: GBP35,000).
-- Physical Security Solutions division (Safetell)
o Revenue decreased by 37% to GBP5,410,000 (2019: 8,604,000)
from the expected reduction on the Post Office Network
Transformation project combined with the continued decrease in
demand from high street banks and building societies.
o Following the main restructuring in the Physical Security
Solutions division in the prior year a number of strategic reviews
were carried out which have resulted in an improved product
portfolio where we have seen some green shoots of future profitable
growth
Commenting on the results, Maurice Dwek, Chairman of Newmark
Security, said "Whilst the current year results will be adversely
affected by COVID-19, I remain confident that there will be medium
to long-term growth in both our divisions' core markets. In the
People and Data Management division, we continue to build a greater
proportion of recurring revenues, in line with our long-term
strategy. In particular, the provision of Software-as-a-Service
(SaaS) in the HCM sector is likely to increase further, as the
value we can add in enhancing data protection is recognised by new
and existing partners. Our Physical Security Solutions division
continues to benefit from last year's restructure, as we increase
the range of products we offer, through new product development and
certification. With increasing crime rates and the continued threat
of terrorism, our leadership team has also identified new markets
and customers that will firmly position Safetell for future growth.
"
For further information:
Newmark Security plc
Marie-Claire Dwek, Chief Executive Tel: +44 (0) 20 7355
Officer 0070
Graham Feltham, Group Finance www.newmarksecurity.com
Director
Allenby Capital Limited Tel: +44 (0) 20 3328
(Nominated Adviser and Broker) 5656
James Reeve / Liz Kirchner
(Corporate Finance)
Amrit Nahal (Sales & Broking)
CHAIRMAN'S STATEMENT
Overview
It has been a year of real progress for Newmark Security, in
which we have refocused the strategic direction of the Company,
rebranded our US operation, and positioned ourselves for future
growth.
Continued progress and profitability
I am pleased to report a period of continued profitability for
the Group this year, which has been helped by good growth in our
sales in North America. The US represents a lucrative market for
our People and Data Management division, and our US business,
Grosvenor Technology LLC, has been rebranded as 'GT Clocks',
allowing us to market the business and trade under a name that is
more relevant for the US market. It puts a renewed focus on the
provision of timeclocks, alongside the relevant services we can
provide to both manage and maintain the devices remotely and,
importantly, ensure the secure management of our clients' data.
Following a business reorganisation of our Physical Security
Solutions division, Safetell, at the end of the 2019 financial
year, we have seen the division delivering improved gross margins
that have added to the profitability of the Group this year,
despite lower revenue.
Performance in line with management's expectations
Overall performance across the Group during the year has been in
line with expectations, with revenue for the year from operations
slightly down at GBP18,767,000 (2019: GBP19,583,000), despite
COVID-19 impacting trading in the last two months of the financial
year. Profit from operations was GBP305,000 (2019: GBP286,000).
Revenue in the People and Data Management division (Grosvenor)
increased by 22% from GBP10,979,000 to GBP13,357,000, while revenue
in the Physical Security Solutions division (Safetell) decreased by
37% from GBP8,604,000 to GBP5,410,000. A full Financial Review of
our results is included below.
Our people and the response to COVID-19
Although it only affected the latter part of our financial year,
the COVID-19 pandemic had a major impact on our people and the
business, both operationally and financially, particularly in the
final month before year-end. The Board has been extremely pleased
with the rapid response from our management team, and the way they
have acted to keep our people and communities safe, protect and
maintain jobs and protect the business.
I would like to take this opportunity to express the Board's
appreciation to all colleagues for their tremendous efforts during
the year, especially in the light of recent challenges. We have a
strong leadership team, and this has made a real difference as we
continue to prove ourselves as an established leader in markets of
increasing importance in the areas of data and physical
security.
Board and governance
The Board and its Committees maintain a robust governance
framework, using individuals' experience to provide independent
challenge and ensure that good governance is promoted across the
Group. We follow the Quoted Companies Alliance Corporate Governance
Code ("QCA Code"), and details on how the Company applies the
principles of the QCA Code are set out in our Corporate Governance
section of the annual report.
As reported at half-year, our Group Finance Director, Brian
Beecraft, retired during the year. Following a short handover with
Brian, Graham Feltham became Group Finance Director in October
2019.
I was also pleased to welcome Terence Yap as a new Independent
Non-Executive Director in May 2020. He has more than 25 years'
experience in various industries, including Telecommunications,
Security and Smart Cities Development, and is the Chairman of
Guardforce AI, a group focusing on delivering technologically
innovative security solutions within the Asia Pacific region.
Terence further enhances the balance of Directors and the skill
sets available to the Board, and we will benefit greatly from his
strategic advice as we plan the next phase of Newmark's growth.
Going concern
The Board continues to have a reasonable expectation that the
Company and the Group have adequate resources to continue in
operational existence for the foreseeable future. There will be an
impact on the business due to the COVID-19 crisis, as described
above and elsewhere in this report. However, we have worked closely
with our bank (HSBC) and secured financing via a CBILS
government-backed loan to the value of GBP2million, with
opportunities to extend invoice financing and overdraft facilities
if required. Overall, the business has performed better than our
own forecasting had suggested during the COVID-19 period and we are
optimistic that this trend will continue in these uncertain times.
With the post year end securing of two significant customer
agreements, with more in the pipeline, this puts us in a good
position for the next twelve months.
Dividend
The Board is not recommending the payment of a dividend for the
year ended 30 April 2020 (2019: GBPNil).
Outlook
Whilst the current year results will be adversely affected by
COVID-19, I remain confident that there will be medium to long-term
growth in both our divisions' core markets. In the People and Data
Management division, we continue to build a greater proportion of
recurring revenues, in line with our long-term strategy. In
particular, the provision of Software-as-a-Service (SaaS) in the
HCM sector is likely to increase further, as the value we can add
in enhancing data protection is recognised by new and existing
partners.
Our Physical Security Solutions division continues to benefit
from last year's restructure, as we increase the range of products
we offer, through new product development and certification. With
increasing crime rates and the continued threat of terrorism, our
leadership team has also identified new markets and customers that
will firmly position Safetell for future growth.
Maurice Dwek
Chairman
8 September 2020
CHIEF EXECUTIVE OFFICER'S REVIEW
Overview
We strengthened our presence in high-growth, specialist markets
in data and security during the 12 months to 30 April 2020.
Following the impact of the COVID-19 pandemic, we are also
developing 'new workplace' solutions that are helping organisations
to re-think the way they work.
Building a sustainable business
Our products have become the industry standard in people and
data security and Newmark Security benefits from long-term
relationships with many blue-chip customers and is generating a
greater proportion of its revenues from recurring services. That is
reflected in a good set of results for the year, and is helping us
to build a business that has long-term stability and sustainability
at its core.
We were pleased with our performance in the year, despite the
impact of COVID-19 at the end of the financial year. We saw a
continued increase in revenue within the People and Data Management
division of 22% to GBP13,357,000 (2019: GBP10,979,000). This
included revenue from Human Capital Management (HCM), which was up
32% to GBP9,142,000 (2019: GBP6,908,000), and revenue from Access
Control, which increased by 4% to GBP4,215,000 (2019:
GBP4,071,000). Revenue in the Physical Security Solutions division
decreased by 37% to GBP5,410,000 (2019: GBP8,604,000), following
the changes we made at Safetell last year. Improved margins and
cost efficiencies meant that Group operating profit before
exceptional items was consistent at GBP604,000 (2019: GBP638,000)
and which resulted in an operating profit after exceptional items
of GBP305,000 (2019: 286,000).
Grosvenor Technology performed very well this year while the
restructure and strategic turnaround at Safetell in the UK has
positioned that business for growth. We are introducing new
products that will help us increase our reach to more customers in
new markets, and I believe we have excellent growth potential
across all our businesses.
The impact of COVID-19
The COVID-19 virus has had an enormous impact on economic and
personal life around the world. It affected Newmark in the last few
months of our financial year, contributing to the modest drop in
revenue compared to last year. While we have seen slowdowns in some
sectors, such as retail and hospitality, other sectors have
remained steady, or even buoyant.
Despite incredibly challenging conditions, the Group continued
to trade in all divisions. Like most businesses, we had to take
very quick action, and I'm immensely proud of the way our people
worked extremely hard to handle different kinds of pressures. They
adapted brilliantly to new ways of working, while we also took the
difficult decision to furlough up to 30% of our colleagues at the
height of the crisis. By employing technology to ensure our
remaining colleagues were able to work seamlessly from home, we
maintained productivity levels throughout and supported the opening
of 40 new accounts.
As the world changed, we knew we had to change too. Safetell,
who have years of experience in supplying screens and products for
banking and the Post Office, created a product line of hygiene
screens and security hatches, which were sold to organisations such
as Amazon and Travis Perkins. We also developed new security
portals with temperature and touchless sensors. Grosvenor
Technology has received enquiries from clients globally looking for
new ways to interact with access control door readers and
traditional timeclocks. As a consequence, we are now marketing a
range of existing and new touchless solutions, such as proximity
cards and facial recognition.
Additional details on the impact of COVID-19 on our business and
people is contained in the annual report.
Overview of Divisional performance
People and Data Management division - continued good
performance
Following its significant growth trend over the last few years,
Grosvenor Technology continued to perform well this year and is the
focus of our investment strategy in the development of new products
and services.
Human Capital Management (HCM) - US operations driving
growth
Our HCM sales in North America delivered the most significant
growth this year. This growth was in line with our expectations, as
our major US clients continued the roll out of Grosvenor
Technology's 'next generation' hardware.
During the year, we rebranded our US business as 'GT Clocks',
which has enabled us to create marketing that is more specific and
relevant for our US customers.
Grosvenor's UK-based HCM business, which serves the rest of the
world outside of North America, also saw a growth in sales, due to
a general uplift across a number of mostly European customers, as
opposed to significant growth from any single client.
We are supporting the growth of the division with increased
investment in new products and services, developing our HCM
software platforms with a Cloud and API (Application Programming
Interface) first approach. A Cloud and API first approach
prioritises utilising a Cloud infrastructure along with APIs to
provide seamless connectivity between back-end and front-end
systems for customers. This development is focused on providing
added services on a Software as a Service (SaaS) basis, which
enables us to create additional value from our hardware
post-deployment. This also allows for a business model where
Software, Services and Terminals are bundled as a 'Clock as a
Service' (ClaaS) offering, generating long-term recurring revenue
potential.
Access Control - move toward an integrated platform
Overall, we delivered revenue growth in Access Control this
year, in part due to price increases in the market. We launched our
new Security Management System (SMS), Janus C4, which was developed
in conjunction with our software development partner based in
Slovakia.
The market is moving away from stand-alone Access Control
solutions, towards integrated Access Control, Intruder, CCTV, Fire
and Building Management, all provided within a single platform. I
believe Janus C4 represents an excellent opportunity for growth,
and the solution has been well received by both existing and
prospective customers. As with all new Access Control sales there
is an inevitable lag between pipeline generation and an upturn in
revenue and to help decrease this lag and to further support
clients adopting the Janus C4 platform, we have invested in
additional training resource.
To rapidly adapt to COVID-19 working environments, we launched
several training courses as online webinars, a move that has been
very popular with installation engineers. While the majority of our
Janus C4 customers and prospects have been new clients, many of our
traditional customers have begun to consider Janus C4 as a natural
next step and some Sateon clients began to migrate to Janus C4
during the period, a trend we expect to continue at additional pace
in future years.
The development of Sateon software is now limited to critical
bug fixes and maintenance, although Sateon product family sales
continue to be bolstered by sales of the OEM variant, used as a
component within our customers offering, of the Sateon Advance.
This allows third parties to use the hardware in a non-proprietary
way on their own access control platforms. We added a second OEM
customer during the year and continue to explore further options
with global third-party access control providers.
Physical Security Solutions division - progress following
strategic review
While Safetell generated considerably lower revenue than last
year, the business achieved increased margins and performed in line
with internal expectations. This slowdown resulted from the
expected reduction in the volume of work as the Post Office Network
Transformation programme came to an end, as well as lower demand
from high street banks and buildings societies and less project
work coming into Safetell's service division.
Safetell has been dominant for many years in the rising screen
market, but we have long recognised the need to diversify its
customer base and product range. That is why we carried out a
full-scale review of the division and, last year, we implemented
significant changes, combining the product and service divisions
and aligning divisional resources into central teams to create a
much leaner organisation that offers real value to our
customers.
During the year, the reorganisation started to bear fruit, and
this is reflected in our improved performance, delivering improved
gross margins that have added to the profitability of the Group.
With increases in crime rates and the continued threat of
terrorism, I am confident the division is well placed to make the
most of opportunities for growth over the next few years and to
gain market share.
People
I would like to convey my personal thanks to all of our
colleagues for playing their part in what has overall been a
successful year for Newmark Security. The changes at Safetell saw
Anton Pieterse, the division's Managing Director, leave the Group
in November 2019. I would like to thank Anton for his long period
of service, and I warmly welcome Paul Lovell to the role. Paul
joined the Group in 1991 working in various capacities and, as an
accountant who qualified with KPMG, he has a wealth of experience
that will benefit and support Safetell as it enters a new period of
growth.
Looking ahead
With lockdown only now beginning to ease, the year has started
slowly. Some clients are understandably taking longer to commit to
activities, or postponing them for an indefinite period. However,
we have many projects ongoing and there are many more we hope to
win again when the time is right. I believe we have adapted well,
both in terms of being able to continue to trade and proactively
implement strategies that have led to Safetell and Grosvenor
Technology receiving new enquiries to cater for the new workplaces
being created by many businesses.
Both divisions are well positioned for a post COVID-19 world,
with existing strategies becoming more relevant than ever before.
Providing safe and secure workplaces will remain a key objective
globally for organisations of every shape and size and we will
continue to invest to meet this need. It remains difficult to say
exactly how the market will develop over the next 12 months, but
we've done what was needed - we've reduced cost in the business,
we've protected our workforce, and we have continued to adapt to
the needs of our customers. The year ahead will be challenging
owing to the COVID-19 impact, but I am sure we have the right
strategy, the best people, and the resources we need to build a
solid platform for future sustainable growth.
Marie-Claire Dwek
Chief Executive Officer
8 September 2020
OUR DIVISIONS - People and Data Management (previously
Electronic Division)
Increase/ Percentage
Divisional revenue 2020 2019 (decrease) change
GBP'000 GBP'000 GBP'000 %
People and Data Management
division
Legacy Janus 1,549 1,218 331 27%
Sateon Advance 2,283 2,818 (535) (19%)
Janus C4 383 35 348 994%
Total Access control 4,215 4,071 144 4%
-------- -------- ------------ -----------
HCM Rest of world 3,238 2,393 845 35%
HCM US 5,904 4,515 1,389 31%
Total HCM 9,142 6,908 2,234 32%
-------- -------- ------------ -----------
Division total 13,357 10,979 2,378 22%
-------- -------- ------------ -----------
Grosvenor Technology enjoyed another year of growth across both
its lines of business and regions, but primarily driven by our
Human Capital Management (HCM) business in North America. In this
region, where we rebranded as 'GT Clocks,' we continued to see
strong performance as the relevance of our specialist offering
gained traction in the sector. The growth trend we have enjoyed in
recent years in this region means our US based business generated
44% of our total revenues for this division.
We have received new enquiries from new and existing HCM vendors
looking not just for hardware, but for an organisation that can
facilitate people-data security solutions. As US state-by-state
legislature pertaining particularly to biometric data evolves, we
are well positioned to take advantage of this growing demand for
data security and management. First and foremost, however, we have
built a reputation for highly reliable and performant hardware and
during this period we opened or continued negotiations with several
'Tier 1' HCM solutions providers considering their next generation
'timeclocks' decisions. We have successfully concluded one
negotiation with a new 'Tier 1' vendor and, with our support, one
of our HCM solution partners also closed another agreement to
supply a major international retailer through an existing partner
in the first half of FY2020/21 potentially worth up to $3.8m over
the next two to three years. The news of the merger between
Ultimate Software and Kronos, which we expect will result in a
transfer of orders away from us over time to the Kronos clock, is
disappointing, however we have benefited from this relationship and
will continue to work with Ultimate into the foreseeable future. As
in previous reports, we still feel the HCM business in the Americas
is our area of greatest opportunity and during the period we
increased our Business Development resource to leverage this.
In our Rest of World HCM business, we also experienced
significant growth, increasing revenues by 35% as we have continued
to grow the strong partnerships with our existing HCM clients, many
of which have increased their spend with us. Although this growth
has largely come from hardware sales, we again have seen increased
enquiries for our subscription 'data management' services, a trend
we expect to see continue in 2020/21.
To cater for, and drive this growing need, we intend to continue
to invest in developing our offering from a Cloud first, to an
eventual cloud only methodology. We remain fully committed to
offering a suite of services to ensure people-data of all types is
completely secure, whether at rest or in transit and we expect this
to be a major recurring revenue generator for years to come.
The period also saw us launch a new mid-tier device (GT4), which
we expect to replace sales of its predecessor timeclock in this
market sector, as well as creating sales from new clients globally.
Following the year end we have received our first major contract
for the GT4, from a US client committed to purchasing a minimum of
3,000 devices and some allied services in the next three years
valued in excess of $1million.
We have also shown positive movement in Access Control (AC)
revenues achieving growth of 4% across our three product
families.
As reported last year, the Sateon platform is considered mature
and complete, with development efforts limited to essential bug
fixes and maintenance. The last iteration of this platform however,
Sateon Advance, is still purchased by many AC installers and
integrators and many of these still install this product into new
projects. This helped limit the decline in sales to 19% and the
line played an important role in sustaining overall AC revenues as
we gain traction in our new product line Janus C4. Our legacy AC
range, Janus, continues to maintain its sales.
The majority of our sales, marketing and training activities
have been linked to promotion of our new product line, Janus C4,
and as a consequence we have seen the burgeoning sales begin to
gain traction. Janus C4 isn't 'just another' AC product. Developed
in collaboration with a Slovakian Security Management System (SMS)
software business it utilises the same class-leading hardware as
our popular Sateon Advance product, but has been designed to take
advantage of the market trend towards the integration of
traditionally disparate offerings such as CCTV, Fire Safety,
Intrusion Detection and Energy Management, to create a completely
seamless, single platform solution that protects buildings and the
people within them, at the same time as reducing energy consumption
and carbon emissions.
OUR DIVISIONS - Physical Security Solutions division (previously
Asset Protection division)
Increase/ Percentage
Divisional revenue 2020 2019 (decrease) change
GBP'000 GBP'000 GBP'000 %
Physical Security Solutions
division
Products 2,695 4,810 (2,115) (44%)
Service 2,715 3,794 (1,079) (28%)
Division total 5,410 8,604 (3,194) (37%)
-------- -------- ------------ -----------
At Safetell, we create safe and secure workplaces for our
customers - designing, installing and maintaining a diverse range
of physical security solutions to a wide range of sectors.
Our security products and services are used in many environments,
including:
* NHS * Education and Local Authorities * Stadia, Leisure and * Government, Police and Pri
Hospitality sons
* Finance, Safety Deposit Centres * Corporate Buildings
and Jewellers * Retail, ATM and Petr * Data Centres and Utilities
ol Forecourts
-------------------------------------- --------------------------- ---------------------------------
A transitional year for our Physical Security Solutions
division
While Safetell is best known for supplying and installing fast
rising screens in the banking sector, our team of industry experts
are here to provide a professional service and a personal response
to all our customers' needs. We carried out a full-scale review and
reorganisation of the division last year and are making good
progress in expanding our product range and widening our customer
base.
However, Safetell remains a business in transition, having
generated significantly lower revenue this year - largely due to
the end of the Post Office Network Transformation programme, and
lower volumes in our traditional client base of banks and building
societies. During the reorganisation, we combined our product and
service divisions, and aligned our divisional resources into
central teams, to create a much leaner organisation that offers
even better value to our customers. This has helped us to improve
our gross margins and maintain performance in line with
expectations prior to the impact of COVID-19.
A simplified, more agile and responsive organisation
Transforming our Safetell business has dramatically reduced
overheads, while simplifying reporting lines and management
structures. This has allowed for quicker and better decision
making, and we are building a much more agile and responsive
operation, which has already been tested during the COVID-19
crisis. Many of our clients operate from critical locations, such
as hospitals, retail sites, financial hubs, and major buildings
(e.g. the Shard in London). Within a week of lockdown in March, we
were designing and supplying new screens and products to meet their
urgent needs during the pandemic.
We are building long-term relationships that our customers
can trust by offering:
Bespoke design Professional Specialist installation Aftersales support
capability to and experienced teams dedicated and extended
help select the project management to working in lifetime warranties
most appropriate teams with specialist disciplined and to maintain our
solutions to knowledge of challenging environments products to the
meet various demanding site highest standards
business needs conditions and
high-risk locations
----------------------- -------------------------- ---------------------
The growth opportunity - what makes Safetell different
The continuing threats of crime and terrorism have made physical
security a priority for businesses in most sectors, while
additional concerns around COVID-19 have increased demand for new
and innovative solutions, as we have all been forced to adapt to
new ways of working together. While we do not foresee a significant
overall growth in the market for physical security products and
services, we are ideally placed to make the most of the growth
opportunities ahead and to gain market share.
As Safetell emerges as a leaner but more energetic and flexible
organisation, we believe we are one of the few businesses of our
type to offer a one-stop shop approach in a fragmented market. Our
new website puts a firm focus on our expanding product range, and
the wide range of bespoke services that gives us a competitive
advantage in the market.
We know that most customers will come to us with a requirement
for a single product, rather than a 'solution', but that can
quickly become an opportunity to upsell. We have extensive
expertise in every product we sell, with highly qualified and
experienced technical engineers who can create the bespoke designed
solutions that will ultimately save our customers money and make
them safer.
This is how we build long-standing client relationships. Unlike
most of our direct competitors, our people are multi-skilled, and
we build ongoing revenue streams through our follow-up services,
which include locksmiths, pneumatic experts, CCTV/speech systems
and much more. We are even able to install third party products
where necessary and support them via a service contract.
While the expansion of the business may not initially come
directly from our service business, we believe that as our product
sales increase, this will drive the integrated service business.
Most of the products we are installing now will generate service
work for Safetell, particularly those products with mechanical
aspects, rather than traditional static elements like screens. This
service offering will help us build recurring revenue streams and
deepen our relationships with customers.
Our fully accredited product portfolio is designed to meet
the changing needs of our customers:
BUILDING SECURITY ASSET PROTECTION ENTRANCE CONTROL OTHER PRODUCTS
------------------------------------------------------------ ---------------------------------------------------------- -------------------------------------------------------
* Manual attack and ballistic resistant cash counters, * Customised cash and asset storage and protection * Certified Secure Portals and Revolving Doors * Counter terror and target hardening solutions
windows and moving security screens
* Cash and speech transfer units * Integrated Speed Gates to control the flow of staff * Range of 'touchless' security solutions
* Bullet resistant doors and partitions and visitors to buildings
* Storage functions to reduce risk of harm or damage to * Other standard and bespoke physical products and
* Interlocking door airlocks a secure environment * Door automation and remote locking solutions services
------------------------------------------------------------ ---------------------------------------------------------- -------------------------------------------------------
FINANCIAL REVIEW
Revenue
Group revenue reduced by (4%) to GBP18.77million (2019:
GBP19.58million). The revenue performance has arrived as expected
at a marginal reduction to last year which, given the impact to the
Group in April 2020 from COVID-19 and the year of transition for
our Physical Security Solutions division, has been a strong
performance. Further commentary and discussion can be found in the
divisional sections.
Key Performance Indicators
Increase/ Percentage
Revenue 2020 2019 (decrease) change
GBP'000 GBP'000 GBP'000 %
People and Data Management
division
Access control 4,215 4,071 144 3.5%
HCM 9,142 6,908 2,234 32.3%
13,357 10,979 2,378 21.7%
Physical Security Solutions
division
Products 2,695 4,810 (2,115) (44.0%)
Service 2,715 3,794 (1,079) (28.4%)
5,410 8,604 (3,194) (37.1%)
Group revenue 18,767 19,583 (816) (4.2%)
-------- -------- ------------ -----------
Gross profit margins have remained consistent at 39.7% (2019:
39.3%). Physical Security Solutions division obtained a gross
profit of 44.4% (2019: 39.6%) and Data and People Management
division reaching 37.8% (2019: 31.2%) the combined weighting of
margins and product mix has resulted in the margins remaining
consistent with last year.
Increase/ Percentage
2020 2019 (decrease) change
GBP'000 GBP'000 GBP'000 %
Gross profit before exceptional
items 7,449 7,765 (316) (4.1%)
Gross Profit before exceptional
items percentage 39.7% 39.7%
Gross profit 7,449 7,705 (256) (3.3%)
Gross profit percentage 39.7% 39.3%
Operating expenses & average employees
Operating expenses before exceptional items have fallen by 4.1%
to GBP6.85million (2019: GBP7.13million). This has mainly been the
result of the restructuring exercise in the Physical Security
Solutions division carried out in the previous year resulting in a
fall in average employees by 27% to 53 (2019: 73) countered by the
growth in the People and Data Management division mainly in
development with further roles in sales, customer services and
marketing resulting in an increase of 13% to 59 employees (2019:
52). Overall average employees have fallen 10% to reach 115 (2019:
128) with a resulting 12% reduction in wages and salaries of
GBP952,000 to GBP6,979,000 (2019: GBP7,931,000).
Exceptional costs
During the year exceptional costs of GBP299,000 (2019:
GBP352,000) were incurred with GBP167,000 (2019: GBP352,000) from a
continuation of streamlining and realignment of positions mainly in
Safetell. Other exceptional costs of GBP132,000 (2019: nil) were
incurred with GBP82,000 of asset impairment as Safetell vacated one
of the division's leased properties. A further GBP50,000 incurred
on a Group rationalisation project which commenced during the year
with an objective of making the Group fit for purpose and
efficient. The overarching objective is to reduce the number of
companies from 17 to 4 unless management identifies a requirement
to keep any of the companies that are currently dormant.
Profitability
Profit before tax grew by GBP17,000 to GBP231,000 (2019:
GBP214,000). At the interim an improved level of profitability was
expected compared to last year, which has been realised. COVID -19
reduced April revenues by an estimated GBP400,000 which resulted in
an estimated fall in gross profit of GBP200,000. Without the impact
of COVID-19 the performance of the Group would have been
significantly improved and exceeded the expectations set at the
time of announcement of our half year results.
Taxation
A tax credit of GBP896,000 (2019: charge GBP25,000) was
recognised in the year. This resulted from a current tax credit of
GBP583,000 (2019: charge GBP45,000) which was recognised following
the review of the Research and Development claim process in the
second half of the year. This resulted in a tax credit of
GBP612,000 being a current year claim of GBP176,000 and revised
claims for prior years of GBP436,000. An additional element of the
claim related to RDEC (Research and Development Expenditure Claim)
which resulted in a GBP75,000 credit shown within operating profit.
A deferred tax credit of GBP313,000 (2019: GBP20,000) was driven by
the recognition of a deferred tax asset relating to losses of
GBP450,000 countered by other movements of (GBP137,000).
Earnings per share
Earnings per share increased by 0.20p to 0.24p (2019: 0.04p).
The increase in earnings per share is mainly attributed to the
current tax credit and the recognition of deferred tax assets
supported by a consistent year on year profit before tax.
Balance sheet
Net assets have increased by GBP1,188,000 to GBP8,302,000 (2019:
GBP7,114,000). This is mainly derived from an increased investment
in development of GBP553,000 and an increase in current and
deferred tax assets of GBP1,000,000. Other working capital
movements contributed by a reduction in debtors of GBP269,000 and a
reduction in trade and other payables of GBP741,000 of which
GBP239,000 of the reduction related to a payment of prior year
restructuring at Safetell and the remainder is due to a reduction
in trading activities around the year end somewhat impacted by
COVID-19. Invoice discounting was utilised by an additional
GBP212,000 to GBP905,000 (2019: 693,000) with the Group's cash
position falling by GBP421,000. The introduction of IFRS 16 Leases
created additional assets of GBP766,000 and an associated
additional liability related to leases previously classified as
operating of GBP848,000 at the end of the year.
Research & Development
The Group has increased its investment by GBP540,000 to
GBP873,000 (2019: GBP333,000) in the People and Data Management
division. The investment has been focused on the cloud development
of GT Connect, our SaaS platform. Clock development continued with
enhancements to our existing GT10 offering and we are excited to
have started development work on our next generation device. We
have continued to work with our software partner on our new Janus
C4 access control product. With the onset of COVID-19 we have
reviewed the extent of our development work and prioritised to
safeguard our cash expenditure.
Cashflow
During the year we have reduced our cash levels by GBP421,000 to
GBP620,000 (2019: GBP1,041,000). Cash generated from operations
before exceptional items increased by GBP749,000, however this
excludes payments of GBP415,000 of lease liability payments now
classified in financing activities following the adoption of IFRS
16. Adjusting for this movement, the like for like increase year on
year is GBP334,000. Exceptional cash payments were made in regard
to both prior and current year employment termination costs of
GBP362,000 (2019: GBP113,000). With other minor variances and the
additional investment in R&D of GBP553,000 the group had a
resulting decrease in cash of GBP421,000.
Post Balance Sheet events
Following a detailed review of the potential impact of COVID-19
on the business Newmark Security PLC entered into a Coronavirus
Business Interruption Loan Agreement with HSBC for a Loan facility
of GBP2,000,000 at a fixed rate of 4.69% for a period of six years
with the first year being interest free under the Business
Interruption Payment Scheme.
CONSOLIDATED INCOME STATEMENT FOR THE YEAR 30 APRIL 2020
2020 2019
Notes GBP'000 GBP'000
Revenue 18,767 19,583
Cost of sales (2019 includes GBP60,000 exceptional
redundancy costs) (11,318) (11,878)
Gross profit 7,449 7,705
Administrative expenses (includes exceptional
costs of GBP299,000 (2019:GBP292,000)) (7,144) (7,419)
Profit from operations before exceptional
items 604 638
Exceptional redundancy costs (167) (352)
Other exceptional costs (132) -
---------------------------------------------------- ------ --------- ---------
Profit from operations 305 286
Finance costs (74) (72)
Profit before tax 231 214
Tax credit/(charge) 3 896 (25)
Profit for the year 1,127 189
--------- ---------
Attributable to:
- Equity holders of the parent 1,127 189
--------- ---------
Earnings per share
- Basic (pence) 0.24 0.04
- Diluted (pence) 0.24 0.04
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
2020 2019
GBP'000 GBP'000
Profit for the year 1,127 189
Foreign exchange on the retranslation of overseas
operation 26 1
Total comprehensive income for the year 1,153 190
-------- --------
Attributable to:
- Equity holders of the parent 1,153 190
-------- --------
The notes in the annual report and accounts form part of these
financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 30 APRIL
2020
2020 2019
Note GBP'000 GBP'000
ASSETS
Non-current assets
Property, plant and equipment 1,262 491
Intangible assets 5,234 4,753
Deferred tax 329 16
Total non-current assets 6,825 5,260
-------- --------
Current assets
Inventory 2,544 2,599
Trade and other receivables 3,664 3,246
Cash and cash equivalents 620 1,041
Total current assets 6,828 6,886
-------- --------
Total assets 13,653 12,146
-------- --------
LIABILITIES
Current liabilities
Trade and other payables 3,246 3,987
Other short-term borrowings 1,351 796
Total current liabilities 4,597 4,783
-------- --------
Non-current liabilities
Long term borrowings 654 149
Provisions 100 100
Total non-current liabilities 754 249
-------- --------
Total liabilities 5,351 5,032
-------- --------
TOTAL NET ASSETS 8,302 7,114
-------- --------
Capital and reserves attributable to equity
holders of the company
Share capital 4,687 4,687
Share premium reserve 553 553
Merger reserve 801 801
Foreign exchange difference reserve (106) (132)
Retained earnings 2,327 1,165
Total attributed to equity holders 8,262 7,074
Non-controlling interest 40 40
TOTAL EQUITY 8,302 7,114
-------- --------
The financial statements were approved by the Board of Directors
and authorised for issue on 8 September 2020.
MC DWEK
Director
The notes set out in the annual report and accounts form part of
these financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 April 2020
2020 2019
Notes GBP'000 GBP'000
Cash flow from operating activities before
exceptional items
Net profit after tax from ordinary activities 1,127 189
Adjustments for: Depreciation, amortisation
and impairment 1,022 619
Exceptional items* 299 352
Interest expense 74 72
Gain on sale of property, plant and equipment (58) (32)
Share based payment 13 -
Income tax (credit)/expense 3 (896) 25
Operating profit before changes in working
capital and provisions 1,581 1,225
Decrease/(Increase) in trade and other receivables 290 (414)
Decrease/(Increase) in inventories 71 (991)
(Decrease)/increase in trade and other payables (675) 698
Cash generated from operations before exceptional
items 1,267 518
Exceptional items (362) (113)
Cash generated from operations after exceptional
items 905 405
Income taxes paid - (45)
Cash flows from operating activities 905 360
Cash flow from investing activities
Acquisition of property, plant and equipment (150) (196)
Sale of property, plant and equipment 43 53
Research and development expenditure (886) (333)
(993) (476)
-------- --------
Cash flow from financing activities
Principal paid on lease liabilities (2019:
Finance lease payments) (475) (87)
Proceeds from invoice discounting 212 246
Interest paid on lease liabilities (44) (17)
Interest paid (30) (55)
(337) 87
-------- --------
Decrease in cash and cash equivalents (425) (29)
Cash and cash equivalents at beginning of
year 1,041 1,069
Exchange differences on cash and cash equivalents 4 1
Cash and cash equivalents at end of year 620 1,041
-------- --------
*Exceptional items for 2019 have been represented to show cash
paid during the year and allocated from the movement in trade and
other payables. Trade and other payables increase of GBP698,000 was
previously stated at GBP937,000 with GBP239,000 being the unpaid
exceptional items.
The notes set out in the annual report and accounts form part of
these financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Amounts
attributable
Foreign to owners
Share Share Merger exchange Retained of the Non-controlling Total
capital premium reserve reserve earnings parent interest equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 30 April
2019 4,687 553 801 (132) 1,165 7,074 40 7,114
Impact of IFRS
16 Lease
transition - - - - 22 22 - 22
At 1 May 2019
as restated 4,687 553 801 (132) 1,187 7,096 40 7,136
Profit for the
year - - - - 1,127 1,127 - 1,127
Other
comprehensive
income - - - 26 - 26 - 26
Total
comprehensive
income for
the year - - - 26 1,127 1,153 - 1,153
-------- -------- -------- --------- --------- ------------- ---------------- --------
Transactions
with owners
Share based
payment - - - - 13 13 - 13
As at 30 April
2020 4,687 553 801 (106) 2,327 8,262 40 8,302
-------- -------- -------- --------- --------- ------------- ---------------- --------
At 1 May 2018 4,687 553 801 (133) 976 6,884 40 6,924
Profit for the
year - - - - 189 189 - 189
Other
comprehensive
income - - - 1 - 1 - 1
Total
comprehensive
income for
the year - - - 1 189 190 - 190
-------- -------- -------- --------- --------- ------------- ---------------- --------
As at 30 April
2019 4,687 553 801 (132) 1,165 7,074 40 7,114
-------- -------- -------- --------- --------- ------------- ---------------- --------
The notes set out in the annual report and accounts form part of
these financial statements.
1. Accounting policies
Newmark Security PLC (the "Company") is a public limited company
registered in England & Wales. The consolidated financial
statements of the Company for the year ended 30 April 2020 comprise
the Company and its subsidiaries (together referred to as the
"Group").
Basis of preparation
The financial information has been abridged from the audited
financial information for the year ended 30 April 2020.
The financial information set out above does not constitute the
Company's consolidated statutory accounts for the years ended 30
April 2020 or 2019, but is derived from those accounts. Statutory
accounts for 2019 have been delivered to the Registrar of Companies
and those for 2020 will be delivered following the Company's Annual
General Meeting. The Auditors have reported on those accounts;
their reports were unqualified, did not draw attention to any
matters by way of emphasis without qualifying their reports and did
not contain statements under s498(2) or (3) Companies Act 2006 or
equivalent preceding legislation.
Accounting policies have been consistently applied consistently
with those set out in the 2019 financial statements, as amended
when relevant to reflect the adoption of new standards, amendments
and interpretations which became effective in the year. The only
new standard which had a significant impact on these financial
statements is the adoption of IFRS 16 Leases as set out below.
While the financial information included in this preliminary
announcement has been prepared in accordance with the recognition
and measurement criteria of International Financial Reporting
Standards ('IFRS'), this announcement does not itself contain
sufficient financial information to comply with IFRS. The Group
will be publishing full financial statements that comply with IFRS
in September 2020.
The following principal accounting policies have been applied
consistently in the preparation of these financial statements:
New standards, interpretations and amendments effective from 1
May 2019
New standards impacting the Group that have been adopted in the
Group annual financial statements for the year ended 30 April 2020,
and which have given rise to changes in the Company's accounting
policies are:
-- IFRS 16 Leases issued January 2016 and effective for annual
periods beginning on or after 1 January 2019 see note 4
No new standards that are not yet effective have been early
adopted or are expected to have a material impact on the Group's
profit or loss.
Going concern
Based on the Group's latest trading, future expectations and
associated cash flow forecasts, the Directors have considered the
Group cash requirements and are confident that the Company and the
Group will be able to continue trading for a period of at least
twelve months following approval of these financial statements.
In August 2021, the Group secured a GBP2million financing
facility from its bankers, HSBC, via the Coronavirus Business
Interruption Loan Scheme ("CBILS"). This loan is for a term of 6
years, with the first year being interest, repayment and covenant
free under the Business Interruption Payment scheme The covenant
requires the Group to deliver a pre-debt service cashflow of 1.2
times the level of debt service commencing for the year end 30
April 2022. Along with existing cash of circa GBP1.25million as at
31 July 2020 and existing overdraft facility of GBP200,000 this
loan financing provides the Group with a healthy cash plus
overdraft position of circa GBP3.45million which the Directors'
believe is more than adequate to continue trading. Other sources of
financing were reviewed with HSBC such as extending the UK invoice
discounting from 85% to 100% coverage, commencing invoice
discounting within the US, as s well as increasing the current
overdraft facility from GBP200,000 to GBP400,000. The Group is
currently operating ahead of expectations, with the first quarter
coming in ahead of budget and a number of new wins secured,
expected to provide further headroom, and therefore have been able
to recommence on-hold development projects without to the need to
pursue these additional financing options further, however they
remain available to the Group subject to the standard approval
processes. The forecasts assumed a short term reduction in trading
due to the UK lockdown earlier in the year, along with remedial
actions implemented to support the Group's cash position. Remedial
actions undertaken relate to staff furlough, staff pay cuts, rent
reductions, re-prioritisation of development expenditure, deferral
of payments to HMRC and reduced overhead expenditure.
Further scenario testing and sensitivity analysis was completed
to model various severe but possible COVID-19 scenarios,
specifically additional lockdowns and prolonged periods of customer
uncertainty. Directors have assessed that the most likely impact on
the Group of these scenarios would be a reduction in revenue
receipts. It was assessed that the Group could absorb the impact of
approximately a prolonged 20% reduction in forecast receipts and
associated materials cost outflows over the next 12 months to
September 2021 without any implementing any cost cutting measures.
This percentage increases to up to 30% when the cost saving impact
of previously utilised remedial actions are taken resulting in a
10-15% saving of cash outflows. Finally Directors modelled the
impact of a second, more severe lockdown period, noting that the
Group could sustain shorter periods of revenue and material cost
reductions of up to 80%.
Owing to the Group's effectiveness in reacting to the first
lockdown and in the, hopefully unlikely, event of a second national
lockdown we are extremely confident that the Group would be able to
respond quickly and effectively with remote working and detailed
review of resourcing requirements. Accordingly, the Directors
consider it appropriate to prepare the financial statements on a
going concern basis.
Leases
IFRS 16 was adopted 1 May 2019 without restatement of
comparative figures. For an explanation of the transitional
requirements that were applied see Note 4.
The following policies apply subsequent to the date of initial
application, 1 May 2019. Lease liabilities are measured at the
present value of the contractual payments due to the lessor over
the lease term, with the discount rate determined by reference to
the rate inherent in the lease unless (as is typically the case)
this is not readily determinable, in which case the group's
incremental borrowing rate on commencement of the lease is used.
Variable lease payments are only included in the measurement of the
lease liability if they depend on an index or rate. In such cases,
the initial measurement of the lease liability assumes the variable
element will remain unchanged throughout the lease term. Other
variable lease payments are expensed in the period to which they
relate.
On initial recognition, the carrying value of the lease
liability also includes:
-- amounts expected to be payable under any residual value guarantee;
-- the exercise price of any purchase option granted in favour
of the Group if it is reasonable certain to assess that option;
-- any penalties payable for terminating the lease, if the term
of the lease has been estimated on the basis of termination option
being exercised.
Right of use assets are initially measured at the amount of the
lease liability, reduced for any lease incentives received, and
increased for:
-- lease payments made at or before commencement of the lease;
-- initial direct costs incurred; and
-- the amount of any provision recognised where the group is
contractually required to dismantle, remove or restore the leased
asset (typically leasehold dilapidations)
Subsequent to initial measurement lease liabilities increase as
a result of interest charged at a constant rate on the balance
outstanding and are reduced for lease payments made. Right-of-use
assets are amortised on a straight-line basis over the remaining
term of the lease or over the remaining economic life of the asset
if, rarely, this is judged to be shorter than the lease term. When
the Group revises its estimate of the term of any lease (because,
for example, it re-assesses the probability of a lessee extension
or termination option being exercised), it adjusts the carrying
amount of the lease liability to reflect the payments to make over
the revised term, which are discounted using a revised discount
rate. The carrying value of lease liabilities is similarly revised
when the variable element of future lease payments dependent on a
rate or index is revised, except the discount rate remains
unchanged. In both cases an equivalent adjustment is made to the
carrying value of the right-of-use asset, with the revised carrying
amount being amortised over the remaining (revised) lease term. If
the carrying amount of the right-of-use asset is adjusted to zero,
any further reduction is recognised in profit or loss.
All leases are accounted for by recognising a right-of-use asset
and a lease liability except for:
-- Leases of low value assets; and
-- Leases with a duration of 12 months or less.
2. Segment information
Description of the types of products and services from which
each reportable segment derives its revenues
The Group has two main reportable segments:
-- People and Data Management division (previously called the
Electronic division) - This division is involved in the design,
manufacture and distribution of access-control systems (hardware
and software) and the design, manufacture and distribution of HCM
hardware only, for time-and-attendance, shop-floor data collection,
and access control systems. This division contributed
71.2 per cent. (2019: 56.1 per cent.) of the Group's
revenue.
-- Physical Security Solutions division (previously called the
Asset Protection division) - This division is involved in the
design, manufacture, installation and maintenance of fixed and
reactive security screens, reception counters, cash management
systems and associated security equipment. This division
contributed 28.8 per cent. (2019: 43.9 per cent.) of the Group's
revenue.
Factors that management used to identify the Group's reportable
segments
The Group's reportable segments are strategic business units
that offer different products and services. The two divisions are
managed separately as each involves different technology, and sales
and marketing strategies. Operating segments are reported in a
manner consistent with the internal reporting provided to the chief
operating decision maker.
Segment assets and liabilities exclude group company
balances.
People Physical
and Data Security
Management Solutions
division division Total
2020 2020 2020
GBP'000 GBP'000 GBP'000
Revenue from external customers 13,357 5,410 18,767
------------ ----------- --------
Finance cost 50 24 74
Depreciation 324 280 604
Amortisation 405 - 405
Segment profit before income tax 1,623 (12) 1,611
------------ ----------- --------
Additions to non-current assets 999 132 1,131
Disposal of non-current assets - 159 159
Reportable segment assets 10,250 2,961 13,211
Reportable segments liabilities 3,022 1,782 4,804
People Physical
and Data Security
Management Solutions
division division Total
2019 2019 2019
GBP'000 GBP'000 GBP'000
Revenue from external customers 10,979 8,604 19,583
------------ ----------- --------
Finance cost 50 10 60
Depreciation 87 194 281
Amortisation 314 - 314
Segment profit before income tax 1,035 321 1,356
------------ ----------- --------
Additions to non-current assets 454 310 764
Disposal of non-current assets - 21 21
Reportable segment assets 9,216 3,113 12,329
Reportable segments liabilities 2,499 1,984 4,483
Reconciliation of reportable segment revenues, profit or loss,
assets and liabilities to the Group's corresponding amounts:
2020 2019
GBP'000 GBP'000
Revenue
Total revenue for reportable segments 18,767 19,583
Profit or loss before income tax expense
Total profit or loss for reportable
segments 1,611 1,356
Parent company salaries and related
costs (755) (596)
Other parent company costs (625) (540)
Profit before income tax expense 231 220
Corporation taxes 896 (25)
Profit after income tax expense 1,127 195
-------- --------
Assets
Total assets for reportable segments 13,211 12,329
Parent company assets * 442 (183)
Group's assets 13,653 12,146
-------- --------
Liabilities
Total liabilities for reportable segments 4,804 4,483
Parent company liabilities 547 549
Group's liabilities 5,351 5,032
-------- --------
*PLC bank overdraft is set off against other group cash balances
and has therefore been included within the asset line owing to an
offsetting arrangement that is in place with HSBC.
There was one customer that accounted for more than 10% of Group
revenue at GBP3.5million (2019: no customer had greater than 10% of
revenue).
Geographical information:
Non-current assets
by location of assets
2020 2019
GBP'000 GBP'000
UK 6,456 5,243
USA 40 1
6,496 5,244
------------ -----------
Reportable Reportable
segment Group segment Group
totals PLC Totals totals PLC Totals
2020 2020 2020 2019 2019 2019
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Other material items
Additions to non-current
assets 1,131 43 1,174 764 7 771
Disposals non-current
assets 159 66 225 21 - 21
Depreciation and amortisation 1,009 14 1,023 595 24 619
3. Tax
2020 2019
GBP'000 GBP'000
Current tax expense
UK corporation tax on profit for the
year (176) 42
Overseas corporation tax 29 3
Adjustment to provision in prior periods (436) -
(583) 45
-------- --------
Deferred tax expense
Origination and reversal of temporary
differences 137 (20)
Recognition of previously unrecognised
deferred tax assets (450) -
(313) (20)
-------- --------
Total tax (credit) / charge (896) 25
-------- --------
The reasons for the differences between the actual tax credit
for the year and the standard rate of corporation tax in the UK
applied to profits for the year are as follows:
2020 2019
GBP'000 GBP'000
Profit for the year 1,127 189
Income tax charge/(credit) for the year (896) 25
Profit before income tax 231 214
-------- --------
Expected tax credit based on the standard
rate of corporation tax in the UK of 19.0
per cent. (2019: 19.0 per cent) 44 41
Research and development allowances (176) (82)
Effects on profits on items not taxable or
deductible for tax purposes 23 (3)
Recognition of previously unrecognised deferred
tax assets (450) -
Utilisation of unrecognised deferred tax 61 -
Temporary differences on deferred tax liabilities 35 25
Different tax rates applied in overseas
jurisdictions 3 41
Adjustments for tax credit relating to previous
periods (436) 3
Total tax (credit)/charge (896) 25
-------- --------
The Group has the following tax losses, subject to agreement by
HMRC Inspector of Taxes, available for offset against future
trading profits as appropriate:
2020 2019
GBP'000 GBP'000
Management expenses 185 199
Trading losses 4,678 5,178
4,863 5,377
-------- --------
2020 2019
A deferred tax asset has not been recognised
for the following GBP'000 GBP'000
Management expenses - 34
Trading losses 338 744
338 778
-------- --------
4. Lease transition
The group mainly enters into leases for properties, vehicles and
office equipment such as photocopiers. In the assessment of the
right of use asset valuation management consider available
extension and termination options and apply the most likely
contract end date that will be utilised.
On implementation of IFRS 16 Leases the modified retrospective
approach was adopted, where leases were measured from lease
commencement using the discount rate applicable at the date of
transition on 1 May 2019. Practical expedients were taken for short
term leases that had less than 1 year remaining and low value
leases. The group recognised the following adjustments through
reserves. The weighted average discount rate was 3.2%.
Property,
plant
and Lease
equipment liabilities Reserves
As at 30 April 2019 491 (252) 1,165
Right of use asset recognised 1,202 (1,180) 22
As at 1 May 2019 1,693 (1,432) 1,187
----------- ------------- ---------
Total
GBP'000
Minimum operating lease commitment at 30 April
2019 1,382
Short term lease not included in IFRS 16 transition (30)
Less effect of discounting using the incremental
borrowing rate as at 1 May 2019 (172)
Lease liability for leases classified as operating
under IAS 17 1,180
Leases previously classified as finance under
IAS 17 252
1,432
--------
5. Subsequent events
Following a detailed review of the potential impact of COVID-19
on the business Newmark Security PLC entered into a Coronavirus
Business Interruption Loan Agreement with HSBC for a Loan facility
of GBP2,000,000 at a fixed rate of 4.69% for a period of six years
with the first year being interest free under the Business
Interruption Payment Scheme.
6. Dividends
The Directors are not proposing a final dividend (2019: nil
pence).
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END
FR SSMFUAESSEEU
(END) Dow Jones Newswires
September 09, 2020 02:00 ET (06:00 GMT)
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