REG - Newmark Security PLC - Half-year Report
31/01/2023 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:20230131:nRSe3212Oa&default-theme=true
RNS Number : 3212O Newmark Security PLC 31 January 2023
This announcement contains inside information for the purposes of Regulation
11 of the Market Abuse (amendment) (EU Exit) Regulations 2019/310.
31 January 2023
Newmark Security plc
("Newmark", the "Company" or the "Group")
Interim Results
for the six months ended 31 October 2022
Newmark Security plc (AIM: NWT), a leading provider of electronic, software,
and physical security systems and installations is pleased to announce its
unaudited interim results for the six months ended 31 October 2022 ("H1
FY23"). The Board of Newmark is pleased to reiterate positive momentum and the
Group returning to profitability.
Financial highlights:
· Revenue up 10% to £10.6m (H1 FY22: £9.7m)
· Gross profit margin increased by 5.7% pts to 38.9% (H1 FY22:
33.2%)
· EBITDA of £1.1m (H1 FY22 EBITDA loss: £0.03m)
· Operating profit of £0.5m (H1 FY22 loss: £0.6m)
· Profit after tax of £0.5m (H1 FY22 loss: £0.8m)
· Earnings per share of 4.89 pence (H1 FY22: loss per share 0.17
pence)
· Investment in research and development £0.3m (H1 FY22: £0.4m)
· Net assets of £8.2m (H1 FY22: £7.6m)
Key business highlights:
· Returning to profitability is a testament that our strategic
business plan has set the right foundations for sustainable growth
· Human Capital Management ("HCM") annual subscription-based
recurring revenues increased by 260 % year-on-year to £1.3m positively
contributing to our profit margins
· Substantially increased net profit margins despite the
inflationary cost pressures and higher cost of funding to fuel our growth
· Continued focus on cost management initiatives and product
innovation
· Further customer base expansion driven by our product offering
and end-to-end solutions
· Efficient management of our supply chain makes for stability and
uninterrupted sales, underpinning the Group's competitive edge
Operational highlights:
Group performance
Revenue Six months to Six months to Increase/ Percentage change
31 October 2022
31 October 2021
(decrease)
£'000 £'000 £'000 %
People and Data Management division 8,415 7,129 1,286 18%
Physical Security Solutions division 2,210 2,568 (358) (14%)
Group revenue 10,625 9,697 928 10%
Group revenue increased by 10% year-on-year to £10.6 million (H1 FY22: £9.7
million), driven by a strong performance in the People and Data Management
division with double-digit growth in both HCM and Access Control.
Gross profit in value terms is up year-on-year and the gross profit percentage
has substantially increased by over 5.7 percentage points to 38.9% (H1 FY22:
33.2%). This result is due to a combination of H2 FY22 price rises flowing
into higher H1 FY23 revenues, product mix and increased higher margin HCM
recurring revenues.
Administrative expenses have decreased by 11% to £3.6 million (H1 FY22: £4.0
million) driven by a number of cost-saving initiatives. Operating profit
before exceptional items of £0.5 million (H1 FY22: loss of £0.6 million).
Finance costs during the period came to £0.15 million (H1 FY22: £0.06
million). This increase resulted from additional invoice financing borrowings
to support higher working capital requirements and higher interest rates.
Group's earnings per share reached 4.89 pence (H1 FY22: loss per share of
0.17p).
People and Data Management division - Grosvenor Technology ("Grosvenor"):
Hardware-enabled software and services
Revenue information
Six months to Six months to Increase/ Percentage change
31 October 2022
31 October 2021
(decrease)
£'000 £'000 £'000 %
People and Data Management division
HCM US 4,875 4,209 666 16%
HCM ROW 1,507 1,249 258 21%
Total HCM 6,382 5,458 924 17%
Janus C4 1,022 270 752 279%
Sateon Advance 838 558 280 50%
Legacy Janus 173 843 (670) (79%)
Total Access Control 2,033 1,671 362 22%
Division total revenue 8,415 7,129 1,286 18%
Human Capital Management ("HCM")
The business achieved revenue growth of 17% to reach £6.4 million (H1 FY22
£5.5 million), primarily driven by strong HCM business growth from both the
US and Rest of World (ROW) regions as we have been expanding our relationships
with Tier 1 software partners.
Our growth is driven by strong market demand for reliable data security
solutions and intelligence. We are capitalising on this opportunity to
continue winning in the marketplace by being a trusted security partner for
our customers, offering cutting-edge, end-to end solutions. Through our
advanced secure cloud control systems of people's access, identity and
attendance, we are raising the quality and speed of intelligence creating the
new workplace ecosystems.
Key achievements during the period included re-platforming our core cloud
control software, GT Connect, and evolving warranty and support services with
GT Protect. We have seen substantial progress in our HCM hardware-enabled SaaS
strategy with HCM annual recurring revenue increasing by 260% year-on-year to
£1.3 million in April 2022 driven by SaaS and ClaaS (clocks as a service).
We continued our successful partnership with major software vendors enabling
us to supply directly to their large customer base. We are working with our
partners to increase our share-of-wallet acting as their preferred supplier
and new partnerships are being established to help us deliver our growth
targets. We are pleased to announce we have signed a GT Connect and support
contract with one of the largest US retailers based in Mexico in the second
half of FY23. This contract will help accelerate our growth in HCM recurring
revenues.
Access Control
The Access Control line of business has been another success story for the
first half of the year. Revenue increased by 22% to £2.0 million (H1 FY22:
£1.7 million).
Janus C4, our Security Management System (SMS), has seen continued
year-on-year revenue growth of 297%, to £1.0 million. 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. The increase in
sales is also due to upgrades from our legacy Sateon and Janus ranges.
Grosvenor Product update
During H1 FY23, Grosvenor has undertaken the following product developments:
· Advanced facial recognition in GT Clocks
· Changed to a modular design for GT Clocks, which reduces
development costs for new devices
· The new GT Connect secure cloud control platform, released in the
second half of 2023 is highly scalable with modern cloud architecture,
advanced multi-tenanted hosting and an enhanced security model operating on a
microservices framework
· Accelerated product migration of Janus C4, simplifying transition and
released our new advanced driver that enhances the performance at all sites.
In addition, we launched our new software support agreement providing
additional revenue streams
Physical Security Solutions division - Safetell - Diversifying our product
portfolio
Revenue information
Six months to Six months to Increase/ Percentage change
31 October 2022
31 October 2021
(decrease)
£'000 £'000 £'000 %
Physical Security Solutions division
Products 1,483 1,821 (338) (19%)
Service 727 747 (20) (3%)
Division total revenue 2,210 2,568 (358) (14%)
Safetell revenue has decreased by 14% to £2.2 million compared to the
corresponding prior period. We are in the process of transforming the division
with a revised strategic plan, led by our new, highly experienced management
and sales team that is setting the direction for sustainable growth. 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. The demand for
these products has been continuously increasing so we have shifted our product
offering to capture this market opportunity.
We have also seen significant demand for our safety screens in the retail
sector given the current economic climate and the need to protect their
staff. We are pleased with the progress made so far as we delivered two
large retail projects in H1 FY23, with another one secured for H2.
Despite the revenue decline in the six months to 31 October 2022, gross
margins have increased from 38.7% in H1 FY22 to 41.9% in H1 FY23. This is a
result of the implementation of operational efficiencies and cost saving
initiatives.
Safetell Product update
A strategic priority in our long-term plan is to grow service and maintenance
work in the UK autodoor servicing market, estimated at twice the size of
Safetell's traditional target markets.
Major initiatives to strengthen our competitive position in fast-growing
security markets have included:
· Focusing on the retail sector following strong market demand
· New strategic partnerships and onboarding of new clients
· Introduction of new product lines
· Investment in human capital, strengthening our sales
organisational structure
· Investment in sales and marketing to support the two key areas
(automatic door servicing and entrance control)
Balance sheet and financing
Inventory increased during the period by £0.1 million to £3.9 million at 31
October 2022 to secure the purchase and adequate supply of certain components
in advance of the usual lead times in response to the continued global supply
chain challenges.
Cash at 31 October 2022 was £0.1 million, down £0.1 million during the
period since 30 April 2022. The Group has an unused £0.2 million UK
overdraft facility at the balance sheet date.
Total borrowings decreased by £0.3 million in the period to £5.1 million at
the balance sheet date primarily due to CBILS loan repayments which started in
September 2021. Subsequent to the balance sheet date, in January 2023, the UK
invoice financing facility was increased by £0.6 million to £2.3 million to
provide further working capital headroom as the Group continues to grow. The
Group also has a $2 million US invoice financing facility.
Current trading
· Robust year-to-date trading performance
· Increased gross margins and positive operating performance
· The transition to high-margin hardware-enabled SaaS HCM business
continues, positively contributing to our profitability
· Sufficient inventory levels allow us to provide an uninterrupted
supply of products to our customers
Maurice Dwek, Chairman of Newmark, commented:
"I am pleased to announce a strong trading and financial performance over this
period which highlights our focus on our strategic priorities, customer
service excellence, product innovation and complete product offering. We are
effectively managing the supply chain, pricing and spending across our
business alongside with our focus on efficiency, resulting in these positive
results today.
Looking ahead, we are pleased with our robust commercial pipeline and
trajectory of high-margin recurring income reflected in the year-to-date
performance. Combined with our cost-saving initiatives, strong global market
demand for internet-enabled software control devices and investment in human
capital, we expect 2023 to be a year of profitable growth".
Newmark Security Plc Tel: +44 (0) 20 7355 0070
Marie-Claire Dwek, Chief Executive Officer www.newmarksecurity.com (http://www.newmarksecurity.com)
Paul Campbell-White, Chief Financial Officer
Allenby Capital Limited Tel: +44 (0) 20 3328 5656
(Nominated Adviser and Broker)
James Reeve / Lauren Wright (Corporate Finance)
Amrit Nahal (Sales & Corporate Broking)
About Newmark Security plc
Newmark is a leading provider of electronic, software and physical security
systems and installations that helps organisations protect human capital and
provide safe spaces seamlessly and securely.
From our locations in the UK and US, we operate through subsidiary businesses
positioned in specialist, high-growth markets.
We foster an open and inclusive work environment amongst our c.100 employees,
serving hundreds of blue-chip customers.
Our product portfolio consists of Human Capital Management and Access Control
Systems providing both hardware and software and physical security
installations to various sectors.
Newmark Security plc is admitted to trading on AIM (AIM: NWT).
For more information, please visit: https://newmarksecurity.com/
(https://newmarksecurity.com/)
Safe. Seamless. Secure
CONSOLIDATED INCOME STATEMENT
For the six months ended 31 October 2022
Unaudited Unaudited Audited
Six months Six months Year
ended
ended
ended
31 October 31 October 30 April
2022 2021 2022
Note £'000 £'000 £'000
Revenue 10,625 9,697 19,145
Cost of sales (6,491) (6,474) (12,726)
Gross Profit 4,134 3,223 6,419
Administrative expenses (3,616) (4,043) (7,633)
Profit/(loss) from operations before exceptional items 518 (637) (1,090)
Exceptional redundancy costs (183) (124)
Profit/(loss) from operations 518 (820) (1,214)
Finance costs (147) (59) (220)
Profit/(loss) before tax 371 (879) (1,434)
Tax credit 87 104 630
Profit/(loss) for the period/year 458 (775) (804)
Attributable to:
- Equity holders of the parent 458 (775) (804)
Earnings per share
- Basic (pence) 2 4.89 (0.17) (0.32)
- Diluted (pence) 2 4.89 (0.17) (0.32)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 31 October 2022
Unaudited Unaudited Audited
Six months Six months Year
ended
ended
ended
31 October 31 October 30 April
2022 2021 2022
£'000 £'000 £'000
Profit/(loss) for the period/year 458 (775) (804)
Foreign exchange on the retranslation of overseas operation 147 43 143
Total comprehensive income for the period/year 605 (732) (661)
Attributable to:
- Equity holders of the parent 605 (732) (661)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 31 October 2022
Unaudited Unaudited Audited
31 October 31 October 30 April
2022 2021 2022
£'000 £'000 £'000
ASSETS
Non-current assets
Property, plant and equipment 2,115 1,058 2,088
Intangible assets 5,615 5,630 5,564
Deferred tax 406 205 410
Total non-current assets 8,136 6,893 8,062
Current assets
Inventory 3,880 3,689 3,983
Trade and other receivables 4,504 4,188 3,979
Cash and cash equivalents 63 211 157
Total current assets 8,447 8,088 8,119
Total assets 16,583 14,981 16,181
LIABILITIES
Current liabilities
Trade and other payables 3,211 3,306 3,105
Bank overdraft - 448 -
Other short-term borrowings 2,930 1,604 2,958
Total current liabilities 6,141 5,358 6,063
Non-current liabilities
Long term borrowings 2,151 1,965 2,447
Provisions 100 100 100
Total non-current liabilities 2,251 2,065 2,547
Total liabilities 8,392 7,423 8,610
TOTAL NET ASSETS 8,190 7,558 7,571
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 (12) (259) (159)
Retained earnings 2,121 1,736 1,649
Total attributed to equity holders 8,150 7,518 7,531
Non-controlling interest 40 40 40
TOTAL EQUITY 8,190 7,558 7,571
CONSOLIDATED CASH FLOW STATEMENTS
For the six months ended 31 October 2022
Unaudited Unaudited Audited
Six months Six months Year
ended
ended
ended
31 October 31 October 30 April
2022 2021 2022
£'000 £'000 £'000
Cash flow from operating activities
Net profit/(loss) after tax from ordinary activities 458 (775) (804)
Adjustments for: Depreciation, amortisation and impairment 569 606 1,248
Exceptional items - 183 124
Interest expense 147 55 220
Gain on sale of property, plant and equipment (15) 2 (30)
Share based payment 14 - 7
Income tax (credit)/expense (87) (104) (630)
Operating profit/(loss) before changes in working capital and provisions 1,086 (33) 135
(Increase)/decrease in trade and other receivables (525) (445) (29)
Decrease/(increase) in inventories 103 (545) (856)
Increase/(decrease) in trade and other payables 106 (87) (658)
Cash generated from operations before exceptional items 770 (1,110) (1,408)
Exceptional items - (183) (124)
Cash generated from operations 770 (1,293) (1,532)
Income taxes received - 374 871
Cash flows from operating activities 770 (919) (661)
Cash flow from investing activities
Acquisition of property, plant and equipment (173) (265) (561)
Sale of property, plant and equipment 15 - 30
Research and development expenditure (304) (417) (766)
(462) (682) (1,297)
Cash flow from financing activities
Bank loans repaid (200) - (267)
Bank overdraft received - 448 -
Principal paid on lease liabilities (158) (267) (376)
(Repayments)/proceeds from invoice discounting (34) 1,226 2,263
Interest paid on lease liabilities (26) (39) (48)
Interest paid (127) (16) (84)
(545) 1,352 1,488
(Decrease)/increase in cash and cash equivalents (237) (249) (470)
Cash and cash equivalents at beginning of period/year 153 484 484
Exchange differences on cash and cash equivalents 147 (24) 143
Cash and cash equivalents at end of period/year 63 211 157
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 2022 4,687 553 801 (159) 1,649 7,531 40 7,571
Profit for the period - - - - 458 458 - 458
Other comprehensive income - - - 147 - 147 - 147
Transactions with owners
Share based payment - - - - 14 14 - 14
Total comprehensive income for the year - - - 147 472 619 - 619
As at 31 October 2022 4,687 553 801 (12) 2,121 8,150 40 8,190
At 30 April 2021 4,687 553 801 (302) 2,511 8,250 40 8,290
(Loss) for the period - - - - (775) (775) - (775)
Other comprehensive (loss) - - - 43 - 43 - 43
Total comprehensive income for the year - - - 43 (775) (732) - (732)
As at 31 October 2022 4,687 553 801 (259) 1,736 7,518 40 7,558
NOTES TO THE ACCOUNTS
1. BASIS OF ACCOUNTS
The financial information for the six months ended 31 October 2022 and 31
October 2021 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 2023 and are unchanged from those disclosed in the
Group's Annual Report for the year ended 30 April 2022.
The comparative financial information for the year ended 30 April 2022
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 2022 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 9,374,647 shares (H1
FY22: 468,732,316).
At the Annual General Meeting held on 10 November 2022, the Company sought
shareholder approval for a sub-division and consolidation of the Company's
share capital ("Capital Reorganisation"). The shareholders passed the
resolution, and as of 11 November 2022, the new ordinary shares were admitted
to trading on AIM. As a result of the Capital Reorganisation, each existing
ordinary share was subdivided into one new ordinary share of 0.1 pence and one
new deferred share of 0.9 pence. Immediately following the sub-division,
shareholders received one consolidated ordinary share of 5 pence for every 50
ordinary shares of 0.1 pence.
Prior to the Capital Reorganisation, the Company's ordinary share capital
consisted of 468,732,350 ordinary shares of 1 pence, and subsequent to the
Capital Reorganisation, the Company's ordinary share capital consists of
9,374,647 ordinary shares of 5 pence with voting rights listed on AIM and
468,732,350 deferred shares of 0.9 pence with no voting rights. The new
ordinary shares have the same rights and benefits as the ordinary shares which
existed before the consolidation, including voting, dividend and other rights.
3. DIVIDENDS
No interim dividend is proposed for H1 FY23 (H1 FY22: 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 BIGDBXDXDGXGRecent news on Newmark Security
See all newsREG - Newmark Security PLC - Director dealing
AnnouncementREG - Newmark Security PLC - Half-year Report
AnnouncementREG - Newmark Security PLC - Notice of Interim Results
AnnouncementREG - Newmark Security PLC - Holding(s) in Company
AnnouncementREG - Newmark Security PLC - Holding(s) in Company
Announcement