REG - Newmark Security PLC - Half-year Report
27/01/2022 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220127:nRSa7719Za&default-theme=true
RNS Number : 7719Z Newmark Security PLC 27 January 2022
This announcement contains inside information for the purposes of Regulation
11 of the Market Abuse (amendment) (EU Exit) Regulations 2019/310.
27 January 2022
Newmark Security plc
("Newmark", the "Company" or the "Group")
Interim Results
for the six months ended 31 October 2021
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 2021 ("H1 FY22").
HIGHLIGHTS
Financials
· Revenue increased by 23% to £9.7m (H1 FY21: £7.9m)
· Loss from operations of £0.8m (H1 FY21: loss of £0.2m)
· Loss before tax of £0.9m (H1 FY21: loss of £0.3m)
· Loss per share of 0.17 pence (H1 FY21: loss of £0.05
pence)
· Cash outflow from operating activities was £0.9m (H1
FY21: inflow of £0.4m)
People and Data Management division
· Revenue increased by 28% to £7.13m (H1 FY21: £5.56m)
· Human capital management revenue increased by 32% to
£5.5m (H1 FY21: £4.1m)
· Access control revenue increased by 18% to £1.7m (H1
FY21: £1.4m)
Physical Security Solutions division
· Revenue increased by 12% to £2.57m (H1 FY21: £2.30m)
Commenting on the results, Maurice Dwek, Chairman of Newmark, said:
"The Group has continued to be proactive at finding solutions for its
customers despite the continued COVID issues and the global supply chain
challenges. This client focussed approach has resulted in higher revenues
across both divisions, with the strongest performance being from Human Capital
Management sales in the US. We continue to invest in new products and services
to meet current and future customer needs. For the full year, the Board
expects the Group to show an increase in revenue compared to last year,
although at a lower margin due to increases in componentry and freight costs.
On behalf of the Board, I would like to extend my thanks for all the hard work
and resilience shown from the team throughout this period."
Copies of the interim results for the six months ended 31 October 2021 will be
made available on the Company's website www.newmarksecurity.com
(http://www.newmarksecurity.com)
For further information:
Newmark Security plc
Marie-Claire Dwek, Chief Executive
Officer
Tel: +44 (0) 20 7355 0070
Paul Campbell-White, Chief Financial
Officer
www.newmarksecurity.com
(http://www.newmarksecurity.com)
Allenby Capital Limited
Tel: +44 (0)
20 3328 5656
(Nominated Adviser and Broker)
James Reeve / Liz Kirchner (Corporate Finance)
Amrit Nahal (Sales & Corporate broking)
CHAIRMAN'S STATEMENT
I am pleased to announce the Group's unaudited interim results for the six
months ended 31 October 2021 ("H1 FY22").
Both Grosvenor and Safetell have seen year on year revenue growth in the first
six months of the year. In Grosvenor, our People and Data Management Division,
there have been increases in both the Human Capital Management (HCM) and
Access Control (AC) businesses. Easing of lockdown and travel restrictions
have made it easier for our teams to attend sites in both a sales and
installation capacity and we have been able to meet with key customers and
suppliers in person again to continue to foster our strong relationships. In
Safetell, our Physical Security Solutions division, there has been growth in
projects and supply work as we continue to reduce our reliance on our legacy
banking sector products.
The Group has continued to be proactive at finding solutions for its customers
despite the continued COVID issues and the global supply chain challenges
pushing up componentry and freight prices. These underlying factors, along
with strategic projects taken at lower margins, have meant that the first half
has been a loss-making period. We expect to finish the year ahead of last year
in terms of revenue but expect that the loss position will be increased
against the prior year. However, we have instigated a number of initiatives
to improve profitability and cashflows which have already resulted in reduced
losses for Q2 versus Q1.
In September 2021 we welcomed our new Chief Financial Officer, Paul
Campbell-White, into the business and Paul has already begun to add value to
the Group in this short space of time.
Post the half year, at our AGM in November, the shareholders approved a share
reorganisation of the business which resulted in a fifty-fold reduction in the
number of shares in circulation.
Group performance
Revenue Six months Six months Increase/ Percentage change
31 October 2021
31 October 2020
(decrease)
£'000 £'000 £'000 %
People and Data Management division 7,129 5,560 1,569 28%
Physical Security Solutions division 2,568 2,297 271 12%
Group revenue 9,697 7,857 1,840 23%
There was an overall increase in Group revenue of 23.4% to £9,697,000 (H1
FY21: £7,857,000). Revenue has been strong throughout the first half, led by
the growth in the US HCM business which was especially good against the back
drop of continued COVID restrictions and the global supply chain issues
resulting in longer product lead times. Gross profit in value terms is also up
year on year although the gross profit percentage has fallen by four points to
33.2% (H1 FY21: 37.2%). This is predominantly driven by two large HCM
contracts at the start of the year which had lower margins, combined with an
increase in the Access Control sales which are at a lower percentage profit.
The two HCM projects undertaken at reduced margins were seen as strong
strategic projects to build long-term relationships with both the software
house and the end user.
Administrative expenses have increased by 29.4% to £3,855,000 (H1 FY21:
£3,143,000). This is as a result of two main themes, 1) the cost saving
initiatives actioned in the first half of last year during the worst part of
the COVID pandemic including furloughing staff and a 10% pay cut among the
staff not being replicated in the first half of this year and 2) the first six
months of this year has seen administrative costs increase as the business is
gearing up for increased future activity in line with its business plan. The
Group has made an H1 FY22 operating loss before exceptional items of £637,000
(H1 FY21: loss of £50,000). For H1 FY22, the Group made a loss per share of
0.17 pence (H1 2020: loss per share of 0.05p).
People and Data Management Division - Grosvenor Technology
Six months Six months Increase/ Percentage change
31 October 2021
31 October 2020
(decrease)
£'000 £'000 £'000 %
People and Data Management division
Legacy Janus 843 701 142 20%
Sateon Advance 558 629 (71) (11%)
Janus C4 270 91 179 197%
Total Access Control 1,671 1,421 250 18%
HCM US 4,209 2,605 1,604 62%
HCM ROW 1,249 1,534 (285) (19%)
Total HCM 5,458 4,139 1,319 32%
Division total 7,129 5,560 1,569 28%
HCM revenue increased by 32% to £5,458,000 (H1 FY21: £4,139,000)
It has been a strong first half of the year in the HCM business, with the US
market being particularly successful with revenue of £4,209,000 (H1 FY21:
£2,605,000), a 62% increase. This has been driven by contracts with large US
software providers.
We have continued to build on our strong relationships with our existing
customers and are engaging with several Tier 1 target HCM software providers
and potential clients. They are speaking to us about the possibility of GT
Clocks (the Company's trading name in the US) providing its next generation
hardware and, due to the easing in the travel restrictions, we have completed
more face to face meetings again. We also delivered the first orders for our
newest Clock (GT8), which launched in April 2021.
In our Rest of World HCM business, we have also continued negotiations with
several Tier 1 clients for both products and services. Whilst we have seen a
19% reduction in revenue in this area, we have onboarded some key staff to
lead the growth of this sector moving forwards.
Product Development - Hardware and Software
We continue to invest in development of both hardware and software platforms
to support our anticipated further growth in the HCM market globally. Our
hardware, electronics, and embedded software teams have been working on
updates to our facial recognition and temperature detection software and our
next clock. Additionally, focus remained on developing added-value services,
intended to be provisioned on an 'as a service' basis, increasingly
cloud-based, aiding software vendors to reap additional value from their
hardware post-deployment.
We continue to see growth in the HCM market being facilitated through the
technology 'drivers' of high-speed internet availability and the subsequent
mass shift to Cloud based computing. We are developing our HCM software
platforms with a Cloud and Application Programming Interface ("API") first
approach. A Cloud and API first approach prioritises utilising a Cloud
infrastructure along with APIs to provide seamless connectivity and
integration between back-end and front-end systems for customers.
During the period, three of our longstanding US HCM clients agreed to
subscribe to our Cloud provisioned software, remotely connecting new and/or
existing timeclock devices with our platform. By the close of the period, c.
5,400 'edge' devices globally were connected to our platform and we expect
this number to more than double by the end of the financial year. The upgraded
version of our Cloud provisioning software is due to be launched in Spring
2022 which will further drive subscription growth.
Access Control
Revenue increased by 18% to £1,671,000 (H1 FY21: £1,421,000)
Revenues from our Access Control lines of business have been another
success story for the first half of the year. Easing of UK lockdown
restrictions have undoubtedly helped us as we are now able to attend client
premises to complete project installations.
Janus C4, our Security Management System (SMS), which is still fairly new into
the market, has seen continued year on year revenue growth of 197%, to
£270,000. The onboarding of new partners has been driven by our ability to
conduct face-to-face sales visits and conduct installations after many months
of disruption.
Our legacy Janus product range has seen increased revenue of 20% to £843,000.
Although this platform is no longer installed in 'new' systems as it is based
on a now unsupported version of a MS Windows™ Web browser, we have seen
increased need for expansion and maintenance packs from existing customers.
Sateon (our previous flagship access control platform) sales have continued to
decrease during the period in line with management expectations. A reduction
was always anticipated as the focus of the sales and business development
activity has been on Janus C4. Sateon product family sales include an OEM
variant of Sateon Advance hardware to third parties for non-proprietary
integration with their own access control platforms. The largest of these
partners is based in Belgium and has seen its business severely disrupted
through the restrictions brought about because of the pandemic.
Physical Security Solutions Division - Safetell
Six months Six months Increase/ Percentage change
31 October 2021
31 October 2020
(decrease)
£'000 £'000 £'000 %
Physical Security Solutions division
Projects 1,540 1,221 319 26%
Maintenance and call outs 747 906 (159) (18%)
Supply only 281 170 111 65%
Division total 2,568 2,297 271 12%
Safetell revenue has been another positive with sales revenue 12% higher than
the corresponding period last year at £2,568,000. The Safetell management
team continues to transform the business and the last six months has seen the
introduction of new product lines, new strategic partnerships struck, and new
clients onboarded. Our traditional work of installing and maintaining rising
screens has continued to be impacted by the reduction in the number of bank
and post offices across the country but we have now further diversified our
product offering by bringing auto door and entrance control into our product
portfolio.
Our project revenue has shown 26% year on year growth at £1,540,000. In a
short space of time, we have forged strong experience in the design and
installation of security screens in the retail sector and have worked with
most of the large supermarket chains in the year to date. We have also
completed phase 1 of a large project with a major police force.
We have installed our first entrance control product during the period and
have continued to grow our maintenance contract with a large petrol retailer
by an additional 100 sites. We have also negotiated a new rising screen
maintenance contract with a large UK bank which commenced in November 2021.
Our autodoor maintenance contract with a large University has also increased,
with additional sites now onboarded. We continue to build on existing
relationships in this sector as well as targeting specific projects with new
partners.
The company's website has been refreshed in the period and additional features
added. There is increased technical information, easier product offering
navigation and information along with making it mobile optimised. This will
become a larger part of the sales arsenal over time as more customer
interactive features are intended.
Safetell has agreed a key strategic step of appointing a new full time
Managing Director to replace Paul Lovell, who left the business at the end of
June 2021. Nick Shannon will commence his role in February 2022 and has strong
sector experience including recent roles within G4S Secured Solutions and
Chubb Fire and Safety. We would like to place on record our thanks to Bob
Darke, our interim Managing Director, who has done an excellent job of guiding
the management team throughout the past six months and has made significant
strides to improve various areas of the business.
Balance sheet and financing
The Group utilised £448,000 of its £600,000 UK overdraft facility at the
balance sheet date, although it also had £211,000 of cash in the US.
Subsequent to the balance sheet date this overdraft facility has been
increased to £700,000 until the end of March 2022 in order to provide
additional headroom as the Company navigates the unprecedented global supply
chain challenges.
Short term borrowings have risen as we drew down on our UK invoice discounting
facility during the period. This facility has recently been increased to
£1.7 million.
The Group has had to utilise its invoice discounting facility along with some
of the overdraft as a result of the losses incurred and the increase in
inventories within Grosvenor. At the balance sheet date overall Group
inventory stood at £3.7 million, a £1.3 million increase from the prior year
and £0.6 million more than at the 30 April 2021 balance sheet. The increase
in inventory was required in order to minimize disruption to our supply chain
and to fulfil our growing HCM orders.
Outlook
The outlook is still difficult to predict as we continue to deal with the
effects of the COVID pandemic and the global supply chain issues that have
gone hand in hand with this. However, based on current pipeline and estimates,
we anticipate that revenue will be ahead of last year as we continue to grow
our US HCM revenues. Unfortunately, this is not expected to be reflected in
the net profit/(loss) which we are anticipating will be below last year. This
is due to continued pressure on margins as the supply chain issues push up
purchase and freight costs, coupled with additional administrative costs as we
have setup the business for further future growth.
We continue to manage our cash position carefully and are in regular contact
with our bank. We are currently exploring setting up a US invoice discounting
facility as a result of the strong US growth and are also looking at other
financing options to ensure we remain well placed to deal with the
uncertainties.
On behalf of the Board, I would like to extend my thanks for all the hard
work and resilience shown from the team throughout this period.
M DWEK
Chairman
27 January 2022
CONSOLIDATED INCOME STATEMENT
For the six months ended 31 October 2021
Unaudited Unaudited Audited
Six months Six months Year
ended
ended
ended
31 October 31 October 30 April
2021 2020 2021
Notes £'000 £'000 £'000
Revenue 9,697 7,857 17,658
Cost of sales (6,474) (4,933) (11,029)
Gross Profit 3,223 2,924 6,629
Administrative expenses (4,043) (3,143) (6,667)
(Loss)/ profit from operations before exceptional items (637) (50) 79
Exceptional redundancy costs (183) (169) (181)
Other exceptional costs - - 64
(Loss)/profit from operations (820) (219) (38)
Finance costs (59) (48) (88)
(Loss)/profit before tax (879) (267) (126)
Tax credit 104 18 297
(Loss)/profit for the period/year (775) (249) 171
Attributable to:
- Equity holders of the parent (775) (249) 171
Earnings per share
- Basic (pence) 2 (0.17) (0.05) 0.04
- Diluted (pence) 2 (0.17) (0.05) 0.04
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 31 October 2021
Unaudited Unaudited Audited
Six months Six months Year
ended
ended
ended
31 October 31 October 30 April
2021 2020 2021
£'000 £'000 £'000
(Loss)/ profit for the period/year (775) (249) 171
Foreign exchange on the retranslation of overseas operation 43 (59) (196)
Total comprehensive income for the period/year (732) (308) (25)
Attributable to:
- Equity holders of the parent (732) (308) (25)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 31 October 2021
Unaudited Unaudited Audited
31 October 31 October 30 April
2021 2020 2021
£'000 £'000 £'000
ASSETS
Non-current assets
Property, plant and equipment 1,058 1,123 1,088
Intangible assets 5,630 5,237 5,505
Deferred tax 205 328 206
Total non-current assets 6,893 6,688 6,799
Current assets
Inventory 3,689 2,405 3,125
Trade and other receivables 4,188 3,581 4,438
Cash and cash equivalents 211 1,696 484
Total current assets 8,088 7,682 8,047
Total assets 14,981 14,370 14,846
LIABILITIES
Current liabilities
Trade and other payables 3,306 3,270 3,782
Bank overdraft 448 - -
Other short-term borrowings 1,604 601 627
Total current liabilities 5,358 3,871 4,409
Non-current liabilities
Long term borrowings 1,965 2,405 2,047
Provisions 100 100 100
Total non-current liabilities 2,065 2,505 2,147
Total liabilities 7,423 6,376 6,556
TOTAL NET ASSETS 7,558 7,994 8,290
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 (259) (165) (302)
Retained earnings 1,736 2,078 2,511
Total attributed to equity holders 7,518 7,954 8,250
Non-controlling interest 40 40 40
TOTAL EQUITY 7,558 7,994 8,290
CONSOLIDATED CASH FLOW STATEMENTS
For the six months ended 31 October 2021
Unaudited Unaudited Audited
Six months Six months Year
ended
ended
ended
31 October 31 October 30 April
2021 2020 2021
£'000 £'000 £'000
Cash flow from operating activities
Net (loss) / profit after tax from ordinary activities (775) (249) 171
Adjustments for: Depreciation, amortisation and impairment 606 453 1,033
Exceptional items 183 169 117
Interest expense 55 48 88
Gain on sale of property, plant and equipment 2 (3) (5)
Share based payment - - 13
Income tax (credit)/expense (104) (18) (297)
Operating (loss)/profit before changes in working capital and provisions (33) 400 1,120
(Increase)/decrease in trade and other receivables (445) (357) (805)
(Increase)/decrease/in inventories (545) 115 (652)
(Decrease)/increase in trade and other payables (87) 35 582
Cash generated from operations before exceptional items (1,110) 193 245
Exceptional items (183) (169) (244)
Cash generated from operations (1,293) 24 1
Income taxes received 374 397 369
Cash flows from operating activities (919) 421 370
Cash flow from investing activities
Acquisition of property, plant and equipment (265) (88) (272)
Sale of property, plant and equipment - 5 -
Research and development expenditure (417) (228) (744)
(682) (311) (1,016)
Cash flow from financing activities
Bank loans received - 2,000 2,000
Bank overdraft received 448 - -
Principal paid on lease liabilities (267) (111) (487)
Proceeds/(repayments) from invoice discounting 1,226 (863) (905)
Interest paid on lease liabilities (39) (32) (37)
Interest paid (16) (16) (51)
1,352 978 520
(Decrease)/increase in cash and cash equivalents (249) 1,088 (126)
Cash and cash equivalents at beginning of period/year 484 620 620
Exchange differences on cash and cash equivalents (24) (12) (10)
Cash and cash equivalents at end of period/year 211 1,696 484
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share premium Merger reserve Foreign exchange reserve Retained earnings Amounts attributable to owners of the parent Non-controlling interest Total
capital
equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 May 2021 4,687 553 801 (302) 2,511 8,250 40 8,290
(Loss) for the period - - - - (775) (775) - (775)
Other comprehensive income - - - 43 - 43 - 43
Total comprehensive income for the year - - - 43 (775) (732) - (732)
As at 31 October 2021 4,687 553 801 (259) 1,736 7,518 40 7,558
At 30 April 2020 4,687 553 801 (106) 2,327 8,262 40 8,302
(Loss) for the period - - - - (249) (249) - (249)
Other comprehensive (loss) - - - (59) - (59) - (59)
Total comprehensive income for the year - - - (59) (249) (308) - (308)
As at 31 October 2020 4,687 553 801 (165) 2,078 7,954 40 7,994
NOTES TO THE ACCOUNTS
1. BASIS OF ACCOUNTS
The financial information for the six months ended 31 October 2021 and 31
October 2020 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 IFRSs 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 ending 30 April 2022 and are unchanged from those disclosed in the
Group's Annual Report for the year ended 30 April 2021.
The comparative financial information for the year ended 30 April 2021
included within this report does not constitute the full statutory accounts
for that period. The statutory Annual Report and Financial Statements for 2021
have been filed with the Registrar of Companies. The Independent Auditors'
Report on that Annual Report and Financial Statement for 2021 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. EARNINGS PER SHARE
The 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 (H1
FY21: 468,732,316).
3. DIVIDENDS
No interim dividend is proposed (H1 FY21: Nil).
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR BCGDBUSDDGDLRecent news on Newmark Security
See all newsRCS - Newmark Security PLC - North America Partnership Agreement with Synerion
AnnouncementREG - Newmark Security PLC - Holding(s) in Company
AnnouncementREG - Newmark Security PLC - Trading Update
AnnouncementREG - Newmark Security PLC - Holding(s) in Company
AnnouncementREG - Newmark Security PLC Thalassa Holdings - Holding(s) in Company
Announcement