REG - Newmark Security PLC - Half-year Report
31/01/2025 07:00
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RNS Number : 3512V Newmark Security PLC 31 January 2025
This announcement contains inside information for the purposes of Regulation
11 of the Market Abuse (amendment) (EU Exit) Regulations 2019/310.
31 January 2025
Newmark Security plc
("Newmark", the "Company" or the "Group")
Interim Results
for the six months ended 31 October 2024
Group on track to deliver full year revenue growth
Newmark Security plc (AIM: NWT), a leading provider of electronic, software,
and physical security systems and installations, is pleased to announce its
unaudited results for the six months ended 31 October 2024 ("H1 FY25").
Maurice Dwek, Chairman of Newmark, commented:
"The Group delivered a positive first half in accordance with its strategy to
drive further growth in recurring revenue streams and service offering.
Increased investment in line with our new five-year strategic plan is
reflected in our lower reported EBITDA, however; higher HCM product margins
and growth in annualised recurring revenues helped to strengthen our cash flow
and balance sheet.
"In terms of execution, the Group has been building its divisional sales
pipelines, developing new partnerships and extending existing relationships.
At the same time, it has also invested in people and systems to both enhance
customer services and efficiencies.
"We continue to win and extend contracts with blue-chip customers, which is
testament to our people and our service offering. Like last year, our sales
pipeline across both divisions is weighted to the second half and we expect to
surpass the previous full year revenue performance.
"We are excited about the outlook and look forward to updating the market on
our progress at the full year."
Financial highlights:
· Revenue of £10.2 million (H1 FY24: £10.4 million)
· Gross profit of £3.9 million (H1 FY24: £3.9 million)
· Gross profit margin increased by 0.9% pts to 38.1%
· EBITDA of £0.5 million (H1 FY24: £0.8 million)
· Loss after tax of £0.4 million (H1 FY24 loss: £0.1 million)
· Loss per share of 4.60 pence (H1 FY24: loss per share of 0.54
pence)
· Investment in research and development of £0.2 million (H1
FY24: £0.2 million)
· Cash at bank as at 31 October 2024 of £0.3 million (H1 FY24: £0.01
million)
· Net debt excluding leases down 40% to £2.2 million (H1 FY24: £3.7
million)
Business highlights:
Grosvenor Technology
· Human Capital Management ("HCM") annualised recurring revenues*
("ARR") increased by 30% year-on-year ("YOY") to £3.0 million in October
2024, positively contributing to profit margin growth
· YOY revenue growth for HCM was 8%, with North America up 16%
· GT Connect, the division's global platform, is now processing over
12.1 million monthly clock-ins with over 35,000 monthly device subscriptions
for GT Connect and other GT Services
· Progressed Oracle - GT Time partnership with software integration
completed and testing underway
Safetell
· Grew service and maintenance revenue by 38% in accordance with long
term strategy
· Strengthened service team and made senior hire to drive business
efficiencies
· Extended existing service contracts with two large banking customers
and a major petrol retailer
· Completed the installation of physical security at a new major
football stadium
· Won a series of new automatic door service contracts with blue-chip
organisations across retail, pharma and transport
Outlook
· Strong HCM sales pipeline in both North America and Rest of the World
("ROW") markets set to deliver full year growth
· Safetell winning new contracts, growing services revenue and on
course for greater performance in H2 FY25
· Profitability has been improving with each quarter and this trend is
expected to continue into Q4 FY25
*ARR is calculated by annualising revenue recognised in a given month from all
clients on deployed HCM subscription contracts
For further information:
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 / Liz Kirchner / Lauren Wright (Corporate Finance)
Amrit Nahal / Tony Quirke (Sales & Corporate Broking)
Operational highlights:
Group performance
Revenue Six months Six months Increase/ Percentage change
to 31 October 2024
to 31 October 2023
(decrease)
£'000 £'000 £'000 %
People and Data Management division 7,833 7,629 204 3%
Physical Security Solutions division 2,390 2,737 (347) (13%)
Group revenue 10,233 10,366 (143) (1%)
Group revenue decreased by 1% YOY to £10.2 million (H1 FY24: £10.4 million),
primarily due to phasing of project deliveries from the Physical Security
Solutions division. This impact was partly offset by strong HCM growth in the
People and Data Management division.
Gross profit percentage increased by 0.9% pts to 38.1% (H1 FY24: 37.2%) due to
improvements in the People and Data Management division from enhanced product
margins and an increase in higher margin recurring revenues.
Administrative expenses increased by 10% to £4.2 million (H1 FY24: £3.8
million) driven by both inflationary cost rises and investment in strategic
initiatives following the approval of a new five-year strategic growth plan in
June 2024. This investment included increases in headcount, marketing and
professional fees.
Loss from operations was £0.3 million (H1 FY24: profit of £0.1 million).
Finance costs during the period were £0.15 million (H1 FY24: £0.18 million).
The reduction in financing costs is from reduced use of overdraft and invoice
financing facilities.
For H1 FY25, the Group made a loss per share of 4.60 pence (H1 FY24: loss per
share of 0.54 pence).
People and Data Management division - Grosvenor Technology ("Grosvenor")
Revenue information
Six months Six months Increase/ Percentage change
to 31 October 2024
to 31 October 2023
(decrease)
£'000 £'000 £'000 %
People and Data Management division
HCM North America 4,527 3,887 640 16%
HCM ROW 2,003 2,134 (131) (6%)
Total HCM 6,530 6,021 509 8%
Access Control 1,303 1,608 (305) (19%)
Division total revenue 7,833 7,629 204 3%
Human Capital Management
We have continued to execute the strategy of building a "hardware-enabled
software and services" business and selling customers a wrapped subscription
to build stronger recurring revenues. The division delivered revenue of £6.5
million (H1 FY24 £6.0 million), up 8% on the prior year, with
subscription-based annual recurring revenues increasing by 30% YOY to £3.0
million in October 2024. GT Connect, the division's global platform, is now
processing over 12.1 million monthly clock-ins and has over 35,000 monthly
device subscriptions for GT Connect and other GT Services.
HCM's growth was driven by the strong performance in North America, where
sales were up 16%, with one of our largest North American partners
experiencing a robust start to the year in terms of demand for the GT10
device. We are also in advanced discussions with partners to introduce the
next generation GT10-2 to replace the existing GT10-1, this fiscal year.
Demand for the GT4 and lower-cost GT4-Lite devices have also been
particularly strong, with orders for the latter helping to displace its main
low-cost clock competitor in the North American market.
Sales for the Rest of the World were slightly lower than H1 FY24, after our
largest ROW partner recently completed a series of acquisitions, which
resulted in a temporary slow-down in orders. However, since the period end,
sales have been much stronger with orders from two major retailers and we
expect the full year performance to be up on last year. Our partner's
acquisitions have led to its expansion into new European territories and, as
such, we stand to benefit directly from this expansion as the sole provider of
Timeclock software and hardware solutions to them.
Earlier in the year we announced the pending launch of GT Time in partnership
with Oracle to target the Direct to Enterprise market and the expansion of
data security and compliance. A senior US consultant with specific experience
in working with global HCM marketplaces has been hired to accelerate the
roll-out of GT Time and so gain further momentum for this key strategic
initiative. We are pleased to report that the Clock and Cloud based Oracle
software integration for the beta test phase has been completed including
certification by Oracle. We are also pleased to report that there has already
been progress with early business development creating sales opportunities and
pipeline.
Access Control
Access Control experienced a slower start to the period than was initially
anticipated, with sales impacted by delays to upgrade projects and our
software partner for the new Janus C4 Ultras taking longer to have the product
ready for launch. However, these delays have been resolved and the sales
pipeline for the second half is stronger, positioning the business for a much
better end to the year.
Whilst Access Control continues to make a meaningful contribution, management
will, in due course, be reviewing the division's longer-term strategy to
assess how it can deliver better value to the Group. In the immediate term,
management has taken a strategic decision to focus Grosvenor's investment
resources on HCM to take advantage of the growing market demand for data
security and compliance and accelerate the development of its sales pipeline.
Physical Security Solutions division - Safetell
Revenue information
Six months Six months Increase/ Percentage change
to 31 October 2024
to 31 October 2023
(decrease)
£'000 £'000 £'000 %
Physical Security Solutions division
Products 1,155 1,839 (684) (37%)
Service 1,235 898 337 38%
Division total revenue 2,390 2,737 (347) (13%)
As previously disclosed in the Group's AGM statement, the timings of four
significant contracts being delayed until H2 FY25 will see Safetell generate
the majority of its revenue through the latter part of the year. Consequently,
H1 FY25 revenue decreased by 13% to £2.4 million compared to the
corresponding prior period. However, the significance of the H2 FY25 revenue
weighting means the division is on track to deliver full year growth.
In terms of operations and building of its sales pipeline, Safetell has
performed well in accordance with the strategic long-term plan, which includes
growing its share of service and maintenance work in the UK automatic door
servicing market. It has also invested in talent to strengthen its support
services and installations teams and made a senior hire to optimise its
operations, all of which is already helping to make the division more
efficient and deliver on contracts more profitably.
Reflecting on some project and contract highlights in the period, Safetell
successfully extended existing service contracts with two large banking
customers, a major petrol retailer and completed the installation of physical
security at a new Premier League football stadium.
In terms of growing its revenue pipeline for H2 FY25 and beyond, the division
won a series of new automatic door service contracts with blue-chip
organisation, including a national retailer, a regional train operator and a
major pharmaceutical business, as well as contracts with a major housing
trust, a UK charity and a large university in the North of England.
Balance sheet and financing
Cash as at 31 October 2024 was £0.3 million compared to £0.01 million at the
prior year. Group had an unused £0.2 million UK overdraft facility at the
balance sheet date (H1 FY24: £0.4 million).
Net debt excluding leases fell to £2.2 million at 31 October 2024 compared to
£3.7 million at 31 October 2023. The decrease is due to a combination of
higher cash balances, CBILS loan repayments and lower invoice financing draw
downs. The UK invoice financing facility remains at £2.3 million. In
February 2025 the $2 million US invoice financing facility with Seacoast
National Bank will be replaced by a $2 million revolving credit facility with
our relationship bank, HSBC. This will provide more flexible financing and at
lower interest rates than the current US invoice financing facility.
CONSOLIDATED INCOME STATEMENT
For the six months ended 31 October 2024
Unaudited Unaudited Audited
Six months Six months Year
ended
ended
ended
31 October 31 October 30 April
2024 2023 2024
Note £'000 £'000 £'000
Revenue 10,223 10,366 22,277
Cost of sales (6,330) (6,510) (13,692)
Gross Profit 3,893 3,856 8,585
Administrative expenses (4,170) (3,801) (7,811)
(Loss)/profit from operations (277) 55 774
Finance costs (154) (181) (386)
(Loss)/profit before tax (431) (126) 388
Tax credit/(charge) - 75 (254)
(Loss)/profit for the period/year (431) (51) 134
Attributable to:
- Equity holders of the parent (431) (51) 134
Earnings per share
- Basic (pence) 2 (4.60) (0.54) 1.43
- Diluted (pence) 2 (4.60) (0.54) 1.35
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 31 October 2024
Unaudited Unaudited Audited
Six months Six months Year
ended
ended
ended
31 October 31 October 30 April
2024 2023 2024
£'000 £'000 £'000
(Loss)/profit for the period/year (431) (51) 134
Foreign exchange on the retranslation of overseas operation (75) 73 18
Total comprehensive income for the period/year (506) 22 152
Attributable to:
- Equity holders of the parent (506) 22 152
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 31 October 2024
Unaudited Unaudited Audited
31 October 31 October 30 April
2024 2023 2024
£'000 £'000 £'000
ASSETS
Non-current assets
Property, plant and equipment 2,707 2,818 2,702
Intangible assets 5,093 5,281 5,226
Deferred tax 303 454 303
Total non-current assets 8,103 8,553 8,231
Current assets
Inventory 2,640 3,712 2,738
Trade and other receivables 3,871 4,506 4,544
Cash and cash equivalents 275 7 1,137
Total current assets 6,786 8,225 8,419
Total assets 14,889 16,778 16,650
LIABILITIES
Current liabilities
Trade and other payables 3,053 3,120 3,545
Other short-term borrowings 2,564 3,370 2,978
Total current liabilities 5,617 6,490 6,523
Non-current liabilities
Long term borrowings 1,519 2,217 1,893
Provisions 110 100 110
Total non-current liabilities 1,629 2,317 2,003
Total liabilities 7,246 8,807 8,526
TOTAL NET ASSETS 7,643 7,971 8,124
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 (238) (108) (163)
Retained earnings 1,800 1,998 2,206
Total attributed to equity holders 7,603 7,931 8,084
Non-controlling interest 40 40 40
TOTAL EQUITY 7,643 7,971 8,124
CONSOLIDATED CASH FLOW STATEMENTS
For the six months ended 31 October 2024
Unaudited Unaudited Audited
Six months Six months Year
ended
ended
ended
31 October 31 October 30 April
2024 2023 2024
£'000 £'000 £'000
Cash flow from operating activities
Net (loss)/profit after tax from ordinary activities (431) (51) 134
Adjustments for: Depreciation, amortisation and impairment 745 713 1,459
Finance costs 155 181 386
Gain on sale of property, plant and equipment (2) (3) (19)
Share based payment 25 20 43
Corporation tax credit - (75) 254
Operating profit before changes in working capital and provisions 492 785 2,257
Decrease/(increase) in trade and other receivables 577 358 156
Decrease/(increase) in inventories 48 438 1,412
(Decrease)/increase in trade and other payables (400) (1,439) (1,004)
Cash generated from operations 717 142 2,821
Corporation tax recovered - 189 177
Cash flows from operating activities 717 331 2,998
Cash flow from investing activities
Acquisition of property, plant and equipment (310) (181) (415)
Sale of property, plant and equipment 2 3 19
Acquisition of intangible assets (221) (170) (438)
(529) (348) (834)
Cash flow from financing activities
Bank loans paid (200) (200) (400)
Principal paid on lease liabilities (271) (206) (565)
(Repayments)/proceeds from invoice financing (453) (12) (365)
Interest paid (112) (137) (293)
(1,036) (555) (1,623)
(Decrease)/increase in cash and cash equivalents (848) (572) 541
Cash and cash equivalents at beginning of period/year 1,137 581 581
Exchange differences on cash and cash equivalents (14) (2) 15
Cash and cash equivalents at end of period/year 275 7 1,137
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 2024 4,687 553 801 (163) 2,206 8,084 40 8,124
Profit for the period - - - - (431) (431) - (431)
Other comprehensive income - - - (75) - (75) - (75)
Transactions with owners
Share based payment - - - - 25 25 - 25
Total comprehensive income for the year - - - (75) (406) (481) - (481)
As at 31 October 2024 4,687 553 801 (238) 1,800 7,603 40 7,643
At 1 May 2023 4,687 553 801 (181) 2,029 7,889 40 7,929
Profit for the period - - - - (51) (51) - (51)
Other comprehensive income - - - 73 - 73 - 73
Transactions with owners
Share based payment - - - - 20 20 - 20
Total comprehensive income for the year - - - 73 (31) 42 - 42
As at 31 October 2023 4,687 553 801 (108) 1,998 7,931 40 7,971
NOTES TO THE ACCOUNTS
1. BASIS OF ACCOUNTS
The financial information for the six months ended 31 October 2024 and 31
October 2023 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 2025 and are unchanged from those disclosed in the
Group's Annual Report for the year ended 30 April 2024.
The comparative financial information for the year ended 30 April 2024
("FY24") included within this report does not constitute the full statutory
accounts for that period. The statutory Annual Report and Financial Statements
for FY24 have been filed with the Registrar of Companies. The Independent
Auditors' Report on that Annual Report and Financial Statement for FY24 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 loss per share figure has been calculated based on the weighted average
number of shares in issue during the period, which was 9,374,647 shares (H1
FY24: 9,374,647).
3. DIVIDENDS
No interim dividend is proposed (H1 FY24: Nil).
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