TIDMNWT
RNS Number : 5992O
Newmark Security PLC
31 January 2019
Dissemination of a Regulatory Announcement that contains inside
information according to REGULATION (EU) No 596/2014 (MAR).
31 January 2019
Newmark Security plc
("Newmark", the "Company" or the "Group")
Interim Results
for the six months ended 31 October 2018
Newmark Security plc (AIM: NWT), a leading provider of
electronic and physical security systems, is pleased to announce
its unaudited interim results for the six months ended 31 October
2018.
HIGHLIGHTS
Financials
-- Revenue from continuing operations increased 19.5% to GBP9.8m (HY 2017: GBP8.2m)
-- Operating profit from continuing operations of GBP0.5m (HY 2017: operating loss of GBP0.3m)
-- Earnings per share from continuing operations of 0.09 pence
(HY 2017: loss per share of 0.10 pence)
-- Cash outflow from operating activities was GBP0.7m (HY 2017: 0.1m).
Electronic Division
-- Revenue increased by 27.7% to GBP5.06m (HY 2017: GBP3.96m)
-- Human capital management revenue increased by 53.0% to GBP3.0m (HY 2017: GBP2.0m)
-- Access control revenue increased by 2.4% to GBP2.03m (HY 2017: GBP1.98m)
Asset Protection Division
-- Revenue increased by 11.9% to GBP4.76m (HY 2017: GBP4.26m)
Commenting on the results, Maurice Dwek, Chairman of Newmark,
said:
"The Board was pleased with the growth achieved in the first
half of the year and the consequent return to profitability. The
higher level of revenue within the electronic division is expected
to continue in the second half of the year, although the revenue
within the asset protection division is expected to be lower due to
seasonality factors as in previous years and for the other reasons
set out in my report in full."
"In addition, Brian Beecraft has notified the Board of his
intention to retire in October this year. Brian has been the
Company's Finance Director for 21 years and the Board would like to
thank him for his contribution during that time."
Copies of the interim results for the six months ended 31
October 2018 will shortly be sent to shareholders and will be
available on the Company's website www.newmarksecurity.com.
For further information:
Newmark Security plc
Marie-Claire Dwek, Chief Executive Tel: +44 (0) 20 7355 0070
Officer www.newmarksecurity.com
Brian Beecraft, Group Finance Director
Allenby Capital Limited Tel: +44 (0) 20 3328 5656
(Nominated Adviser and Broker)
James Reeve / Liz Kirchner
CHAIRMAN'S STATEMENT
I am pleased to announce the Group's interim results for the six
months ended 31 October 2018, a period of significant growth and
return to profitability.
There was an increase in Group revenue of 19.5% from
GBP8,218,000 to GBP9,822,000 which included an increase in revenue
within the electronic division of 27.7% from GBP3,960,000 to
GBP5,056,000. This continued the strong performance in the previous
financial year. Within this figure, revenue from Human Capital
Management increased by 53.0% from GBP1,979,000 to GBP3,028,000
whilst access control revenues increased by 2.4% from GBP1,981,000
to GBP2,028,000. Revenue in the asset protection division increased
by 11.9% from GBP4,258,000 to GBP4,766,000. The increases in
revenue, combined with the cost cutting measures in previous years,
resulted in an operating profit of GBP486,000 (2017: loss
GBP328,000). Earnings per share from continuing operations were
0.09 pence (2017: loss per share 0.10p).
Financial summary
Electronic Division- Grosvenor Technology
Revenue GBP5,056,000 (2017: GBP3,960,000)
Human Capital Management ("HCM")
Revenue increased by 53.0% from GBP1.98m to GBP3.03m
Excluding the US operation, HCM revenue increased by 9.8% from
the corresponding period last year to GBP1,560k. Revenue from the
legacy range of RS terminals declined, but this was more than
compensated for by an increase in revenues in the contemporary IT
series. There were no significant end-user projects completed in
the period, the growth coming organically across a number of
well-established customers.
Revenues in our American company increased 264% from GBP558k to
GBP1,468k for the six-month period. Growth was seen across all
variants of the proprietary Linux based IT series terminals in
addition to the first significant sales of the Android based GT-10
terminal.
We have reported previously that the US represents the greatest
area of opportunity for Grosvenor Technology's HCM business due to
the sheer proportion of the world's major HCM software vendors that
are based in that territory. The investment made in products,
services and business development activities in prior periods has
continued to take effect and the impressive growth seen in the
previous financial year has continued. Revenues were driven by two
new major clients, Workforce Software and Ultimate Software, both
of whom entered into supply agreements for their flagship
terminals, as reported in previous periods.
In addition, a new project for another new customer saw orders
placed for 1,000 units of the IT51 terminal complete with a 5 years
software-as-a-service (SaaS) bundle. The SaaS element of this deal
will contribute towards the Company's recurring revenue ambitions,
which remain a key goal in the longer term. Negotiations are now
underway with that customer, which is a Tier 1 HCM software vendor,
with a view to that client taking an OEM variant of the GT-10
terminal. These negotiations are likely to conclude during the
second half of the year.
Grosvenor is seeking to create a further supply chain in the US
to support the growth in that region.
Continued development of our SaaS platforms
In the HCM markets generally, growth continues to be facilitated
through the technological drivers of high-speed internet
availability and the subsequent mass shift to Cloud based
computing. This shift means that the traditionally challenging to
serve and highly fragmented Small and Medium-Sized Business
(SME/SMB) market is well within the reach of HCM providers
leveraging a SaaS based business model.
Grosvenor developed the Custom Exchange and Assist IT software
suite several years ago, as an 'On-Premise' deployment. Our
applications remain hugely powerful solutions and key
differentiators for Grosvenor, encompassing advanced data
management/transformation and terminal provisioning, remote
diagnostics and service capability.
Internal development has continued to focus on the provision of
these added services on a 'as a service' basis, increasingly
cloud-based, that aid software vendors to reap additional value
from their hardware post-deployment. Grosvenor will continue to
invest and develop HCM software platforms with a Cloud and API
first approach, positioning the company as an accessible SaaS
solution provider. This shift from "On Prem" to "Cloud SaaS" also
affords the opportunity to an alternative or additional business
model where Software, Services and Terminals are 'bundled' as a
'Clock as a Service' offering, generating further long-term
recurring revenue potential.
Access Control
Overall, Access Control revenues remained relatively stable,
with revenue of GBP2,028k compared to GBP1,981k in the
corresponding period, an increase of 2.4%.
As previously reported, the Janus product is no longer installed
in 'new' systems as the platform utilises an historic and now
unsupported version of the MS Windows(TM) operating system. As
anticipated, the Janus revenues in this period reduced to GBP570k,
a fall of 14% compared to GBP663k in the corresponding period last
year.
The Janus to Sateon upgrade programme was very busy as this
initiative reached its conclusion at the end of the half year. In
addition, the Sateon Advance hardware and software offering
continued to show strong growth as an increasing number of security
installers became repeat customers, as they chose to adopt the
platform as their standard access control offering.
Sateon revenues were also positively affected in the period by
sales of the OEM variant of the Advance hardware, which allows
third parties to utilize the hardware in a non-proprietary way on
their own access control platforms. To date, sales of the OEM
variant have been limited to one major client, although exploratory
conversations continue with a number of global third-party access
control providers in the US and EMEA. As a consequence of the above
factors, Sateon sales increased 10.7% to GBP1,458k.
Development in the period was focused on pre-launch work for the
new Security Management System (SMS) which is being developed in
conjunction with Slovakian based Gamanet a.s. The new platform is
intended to be launched in the second half of the current financial
year. The market is moving away from stand-alone Access Control
solutions towards integrated Access Control, Intruder, CCTV and
Fire and Building Management into a single platform, such as with
SMS. This solution will see Grosvenor Technology remain at the
cutting edge of advances in the market for access control solutions
and will offer a number of third-party integrations at launch.
Asset Protection Division - Safetell
Revenue GBP4,766,000 (2017: GBP4,258,000)
Safetell revenue was 11.9% higher than the corresponding period
last year, mainly as a result of the contribution from projects
completed by the Service Division. This work saw the turnover of
the division increase by 34.5% compared to the corresponding period
last year. Trading conditions remain challenging in the products
division, and the increased uncertainty of Brexit continued to
result in budget cuts and cancellation of planned work within that
division by customers, including the government departments that
Safetell has traditionally supplied. Cost saving initiatives
implemented in the period resulted in margins being maintained.
Products Division revenue was 2% lower than the corresponding
period last year as a result of the delayed completion of a major
project. Despite delays in the Post Office Network Transformation
Programme, revenue from that source was only 1.3% lower than the
previous period. However, overall Cash Handling revenue increased
by 13.2% due to increased sales to new customers. The Products
Division's work is mostly customer project based and revenue of
non-Cash Handling equipment decreased by 6.5% as a result of fewer
customer programmes. Revenue from Eclipse Rising Screens was 25.5%
lower than the corresponding period last year as a result of
continued branch closures by long standing financial institution
customers. Revenue for Fixed Glazing products increased despite
clients moving away from ballistic protection counters and screens
to less secure open counter trading to improve customer relations.
The second half of the financial year is expected to be challenging
for the Products Division as there are no large projects in the
pipeline and revenue will rely on smaller repeat orders from long
standing customers and new smaller projects. The Board continues to
review the level of stock holdings in the light of the ongoing
uncertainty of the potential impact of Brexit.
During this period, the Service Division revenue was 34.5%
higher than the corresponding period last year. Revenue growth was
only partly attributable to timing of work with some programmes
concentrated in the first six months of the current year. Margins
were maintained due to cost cutting efforts supported by excellent
service provided by our multiskilled field technicians and improved
mix of work. Annual contracts were renewed as expected and we
consider no change in our contract retention rates in the short
term. Some new initiatives on service offering are developing and,
whilst small in terms of overall revenue, there is no reason why
they should not continue to grow.
We continue to explore and develop other product and service
offerings, and these will reduce our reliance on rising screen and
cash handling product revenue streams in the future.
Balance sheet and cash flow
Trade and other receivables increased in the six months due to
the increased level of sales especially in the period prior to the
end of the six months, but also due to the settlement of accounts
related to large projects shortly after the period end. Inventories
also increased due to the continuing higher level of activity and
concerns over Brexit, but also due to the requirement to hold stock
in escrow for one of the customers under the terms of their new
supply agreement.
Retirement of Group Finance Director
Brian Beecraft, the Group Finance Director, has provided notice
to the Company of his intended retirement in October 2019. The
Board has commenced the search for a new Finance Director and
further updates will be provided in due course.
Outlook
The Board was pleased with the growth achieved in the first half
of the year and the consequent return to profitability. The higher
level of revenue within the electronic division is expected to
continue in the second half of the year, although the revenue
within the asset protection division is expected to be lower due to
seasonality factors as in previous years and the reasons outlined
above.
M DWEK Chairman
31 January 2018
CONSOLIDATED INCOME STATEMENT
For the six months ended 31 October 2018
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
31 October 31 October 30 April
2018 2017 2018
Notes GBP'000 GBP'000 GBP'000
Revenue 9,822 8,218 16,052
Cost of sales (year ended 30
April 2018
Including GBP698,000 exceptional
impairment of development cost) (5,891) (4,922) (10,958)
------------ ------------ --- -----------
Gross profit 3,931 3,296 5,094
Administrative expenses (including
exceptional items) 2 (3,445) (3,624) (6,971)
------------ ------------ --- -----------
Profit/(loss) from operations
before exceptional items 486 (328) (1,039)
Exceptional impairment provision
of development costs
Exceptional redundancy costs
- - (698)
- - (140)
------------------------------------ ------ ------------ ------------ --- -----------
Profit/(loss) from operations 486 (328) (1,877)
Finance costs (25) (25) (50)
461 (353) (1,927)
Tax (charge)/credit 3 (29) (96) 172
------------ ------------ --- -----------
Profit/(loss) for the period
/year from continuing operations
Loss of discontinued operation
net of tax 432 (449) (1,755)
2 - - (113)
Profit/(loss) for the period/year 432 (449) (1,868)
============ ============ === ===========
Attributable to:
- Equity holders of the parent 432 (449) (1,868)
Earnings/(loss) per share
- Basic (pence) 4 0.09p (0.10p) (0.40p)
============ ============ === ===========
- Diluted (pence) 4 0.09p (0.10p) (0.40p)
============ ============ === ===========
Earnings/(loss) per share from
continuing operations
- Basic (pence) 4 0.09p (0.10p) (0.38p)
============ ============ === ===========
- Diluted (pence) 4 0.09p (0.10p) (0.38p)
============ ============ === ===========
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 31 October 2018
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
31 October 31 October 30 April
2018 2017 2018
GBP'000 GBP'000 GBP'000
Profit/(loss) for the period/year 432 (449) (1,868)
Foreign exchange gains on retranslation
of overseas operation 1 (15) (8)
------------ ------------ ----------
Total comprehensive income for the
period/year 433 (464) (1,876)
------------ ------------ ----------
Attributed to:
* Equity holders of the parent 433 (464) (1,876)
------------ ------------ ----------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 31 October 2018
Unaudited Unaudited Audited
31 October 31 October 30 April
2018 2017 2018
GBP'000 GBP'000 GBP'000
ASSETS
Non-current assets
Property, plant and equipment 486 522 378
Intangible assets 4,737 5,777 4,734
Total non-current assets 5,223 6,299 5,112
============ ============ ==========
Current assets
Inventory 2,199 1,538 1,608
Trade and other receivables 4,356 3,315 2,834
Cash and cash equivalents 658 641 1,069
Total current assets 7,213 5,494 5,511
------------ ------------ ----------
Total assets 12,436 11,793 10,623
============ ============ ==========
LIABILITIES
Current liabilities
Trade and other payables 3,667 2,932 3,051
Other short term borrowings 1,192 81 491
Provisions - 100 -
Total current liabilities 4,859 3,113 3,542
------------ ------------ ----------
Non-current liabilities
Long term borrowings 115 51 53
Provisions 100 100 100
Deferred tax 5 193 4
Total non-current liabilities 220 344 157
------------ ------------ ----------
Total liabilities 5,079 3,457 3,699
TOTAL NET ASSETS 7,357 8,336 6,924
============ ============ ==========
Capital and reserves attributable
to equity holders of the company
Share capital 4,687 4,687 4,687
Share premium reserve 553 553 553
Merger reserve 801 801 801
Foreign exchange difference
reserve (132) (140) (133)
Retained earnings 1,408 2,395 976
7,317 8,296 6,884
Minority interest 40 40 40
------------ ------------ ----------
TOTAL EQUITY 7,357 8,336 6,924
============ ============ ==========
CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 31 October 2018
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
31 October 31 October 30 April
2018 2017 2018
(restated)
GBP'000 GBP'000 GBP'000
Cash flow from operating activities
Net profit/(loss) after tax
from ordinary activities 432 (449) (1,868)
Adjustments for:
Depreciation, amortisation and
impairment 357 505 1,582
Interest expense 25 25 50
Gain on sale of property, plant
and equipment (20) (21) (21)
Income tax expense/(credit) 29 96 (80)
Operating profit/(loss) before
changes in working capital and
provisions 823 156 (337)
(Increase)/decrease in trade
and other receivables (1,506) (28) 453
(Increase)/decrease in inventories (586) 103 38
Increase/(decrease) in trade
and other payables 572 (356) (349)
Cash generated from operations (697) (125) (195)
Income taxes paid (4) - -
Cash flows from operating activities (701) (125) (195)
------------ ------------ ----------
Cash flow from investing activities
Payment for property, plant
and equipment (117) (1,548) (1,576)
Sale of property, plant and
equipment 20 1,493 1,525
Research and development expenditure (173) (475) (368)
(270) (530) (419)
------------ ------------ ----------
Cash flow from financing activities
Bank loan received - 840 840
Bank loan repaid - (840) (840)
Repayment of finance lease creditors (31) (45) (80)
Proceeds from invoice discounting 616 - 447
Interest paid (25) (25) (50)
560 (70) 317
------------ ------------ ----------
Decrease in cash and cash equivalents (411) (725) (297)
Cash and cash equivalents at
beginning of period/year 1,069 1,370 1,370
Exchange difference on cash
and cash equivalents - (4) (4)
------------ ------------ ----------
Cash and cash equivalents at
end of period/year 658 641 1,069
============ ============ ==========
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Merger Foreign Retained Non-controlling Total
capital premium reserve exchange earnings interest
reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 May 2018 4,687 553 801 (133) 976 40 6,924
Profit for the
period - - - - 432 - 432
Other comprehensive
income - - - 1 - - 1
--------- --------- --------- ---------- ---------- ---------------- --------
Total comprehensive
income for the
period - - - 1 432 - 433
--------- --------- --------- ---------- ---------- ---------------- --------
As at 31 October
2018 4,687 553 801 (132) 1,408 40 7,357
--------- --------- --------- ---------- ---------- ---------------- --------
At 1 May 2017 4,687 553 801 (125) 2,844 40 8,800
Loss for the period _ _ _ _ (449) _ (449)
Other comprehensive
income _ _ _ (15) _ _ (15)
--------- --------- --------- ---------- ---------- ---------------- --------
Total comprehensive
income for the
period _ _ _ (140) (449) _ (464)
--------- --------- --------- ---------- ---------- ---------------- --------
As at 31 October
2017 4,687 553 801 (140) 2,395 40 8,336
--------- --------- --------- ---------- ---------- ---------------- --------
NOTES TO THE UNAUDITED INTERIM RESULTS FOR THE SIX MONTHSED 31
OCTOBER 2018
1. BASIS OF ACCOUNTS
The financial information for the six months ended 31 October
2018 and 31 October 2017 does not constitute the Group's statutory
financial statements for those periods within the meaning of
Section 434(3) of the Companies Act 2006 and has neither been
audited or reviewed pursuant to guidance issued by the Auditing
Practices Board. The annual financial statements of Newmark
Security PLC are prepared in accordance with IFRS as adopted by the
European Union. The principal accounting policies used in preparing
the interim results are those that the Group expects to apply in
its financial statements for the year ended 30 April 2019 and are
unchanged from those disclosed in the Group's Annual Report for the
year ended 30 April 2018.
The comparative financial information for the year ended 30
April 2018 included within this report does not constitute the full
statutory accounts for that period. The statutory Annual Report and
Financial Statements for 2018 have been filed with the Registrar of
Companies. The Independent Auditors' Report on that Annual Report
and Financial Statement for 2018 was unqualified, did not include
references to any matters to which the auditors drew attention by
way of emphasis without qualifying their report and did not contain
a statement under section 498(2)-498(3) of the Companies Act
2006.
After making enquiries, the directors have a reasonable
expectation that the Company and the Group have adequate resources
to continue in operational existence for the foreseeable future.
Accordingly, they continue to adopt the going concern basis in
preparing the half-yearly condensed consolidated financial
statements.
2. ADMINISTRATIVE EXPENSES
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
31 October 31 October 30 April
2018 2017 2018
GBP'000 GBP'000 GBP'000
Exceptional redundancy
costs - - 140
Other 3,445 3,624 6,831
3,445 3,624 6,971
============ ============ ==========
3. TAXATION
The tax charge is based on the results for the period after
adjustment for losses brought forward.
4. EARNINGS PER SHARE
Earnings per share has been calculated based on the weighted
average number of shares in issue during the period, which was
468,732,316 shares (2017: 468,732,316).
5. DIVIDENDS
No interim dividend is proposed (2017: Nil).
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END
IR BRGDBUUXBGCG
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