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NWT: NEWMARK SECURITY PLC: Half-yearly Report



  NWT: NEWMARK SECURITY PLC: Half-yearly Report

UK Regulatory Announcement

LONDON

                                                               29 January 2013

                             Newmark Security PLC

                          (“Newmark” or the “Group”)

                               Interim Results

Newmark Security PLC (AIM: NWT), a leading provider of electronic and physical
security systems, today announces its interim results for the six months ended
31 October 2012.

Highlights:

Group

  * Revenue up by 32% from £6.2m to £8.2m
  * Profit from operations £0.8m (2011: £Nil)
  * Earnings per share 0.14p (2011: loss per share 0.02p)

Electronic Division

  * Revenue up by 8% from £3.0m to £3.3m
  * Revenue from UK based OEM clocks division ahead of plan with several large
    projects and growth in US operation
  * SATEON 2.5 to be released first quarter 2013 with improved maps module
  * UL certification obtained enabling access control sales into the US

Asset Protection Division

  * Revenue up by 55% from £3.2m to £5.5m
  * Large orders received in period from Post Office for cash handling
    equipment and from two financial institutions for Eclipse Rising Screens
  * Recent announcement of an additional order for £3.9m for the supply of
    time-delayed security safes to the Post Office Limited branch network of
    which £2.6m will be required during the period January to March 2013.

Commenting on the results, Maurice Dwek, Chairman of Newmark Security plc,
said: “The Board is delighted with the recovery in trading profits in the
period and anticipates that the results for the full year will be materially
above market expectations. The Board expects that it will recommend the
payment of a final dividend for the full year”.

For further information:

Newmark Security PLC              
Maurice Dwek, Chairman             Tel: +44 (0) 20 7355 0070
Brian Beecraft, Finance Director   www.newmarksecurity.com
                                    

Seymour Pierce Limited                         
Mark Percy / David Foreman, Corporate Finance   Tel: +44 (0) 20 7107 8000
                                                www.seymourpierce.com
                                                 

Notes to editors

Newmark Security PLC is a leading provider of electronic and physical security
systems, which focus on personal security and the safety of assets. Operating
through two established and wholly owned divisions, Grosvenor Technology
(Electronic) and Safetell (Asset Protection), the Group listed on AIM in 1997.

Founded in 1989 Grosvenor Technology provides state of the art access control,
security and data acquisition systems delivered via its flagship JANUS access
platform and its CUSTOM brand OEM product range. Clients include BAE Systems,
UK Air Traffic Control, BSkyB, Merrill Lynch (Europe, Middle East and Asia) as
well as M&S, Morrisons, Tesco, Network Rail, British Royal Palaces, government
departments and many universities. More information can be found at
www.gtl.biz

Offering staff and asset protection since 1987, Safetell is the UK’s leading
provider of fixed and reactive security screens, reception counters, cash
management systems and associated security equipment. Safetell’s customers
range from leading blue chip organisations to single sites including banks and
building societies, police forces and the Post Office, local authorities and
government departments, forecourt retailers and supermarket chains. More
information can be found at www.safetell.co.uk

CHAIRMAN’S STATEMENT

Overview

The Board is pleased to announce the Group’s interim results for the six
months ended 31 October 2012.

The statement of comprehensive income shows an increase in revenue of 32 per
cent. from £6,218,000 to £8,223,000.

Earnings per share were 0.14 per share (2011: loss per share 0.02 pence).

A detailed review of the activities, results and future developments of each
division is set out below.

Electronic Division

Turnover £3,263,000 (2011: £3,009,000)

Revenue from the UK based OEM clocks division was ahead of plan including
several large projects, one for a major retailer and another for a supermarket
chain but due to their size, were at lower margins. We continue to attract new
customers throughout Europe and our efforts to secure new business in this
area is starting to pay off with our first two project orders from Poland. A
number of new partners in Romania are also showing good interest.

A major requirement for this market is a low-end clock with cut-down
functionality compared to our current mid-range clock the IT31. This product
is currently in development and due for release Q3 2013. The IT11 clock will
be a high volume unit and will underpin our commitment to supplying the entire
range of clocks for our partners.

Revenue in the US operation for OEM clocks was 140 per cent higher than the
corresponding period last year. This is still below expectations due to the
time taken integrating with new customers. However we have been sufficiently
encouraged to employ a technical project manager in Florida to assist new
customers with earlier and more in-depth training and support, and provide a
permanent in-country technical resource.

SATEON continues to be positively received by installers and end users alike
as we push to promote it at home and abroad. The market is gaining awareness
and confidence in the SATEON brand and we are building a respectable sales
pipeline.

SATEON 2.5 is undergoing final testing for release during the first quarter of
2013 and is a significant milestone in our development. SATEON 2.5 includes a
much improved maps module with mapping capabilities for alarm management, CCTV
control, and wide-ranging site navigation all within the standard SATEON
browser. In addition, for the first time ever, we also have Underwriters
Laboratories certification approval for our access control system to enable
sales to be made to the US.

SATEON 2.5 also includes an improved integration to a prominent international
fire detection panel, where alongside the other new mid to high end features,
this will open up completely new markets.

In the UK, we are pleased to report several project gains including a 100 door
system for a UK council, an 80 door system for a defense research and
development establishment, and a 30 door system for a worldwide brand
electronics manufacturer. Internationally, SATEON orders have been received
for five regional airports in Libya, a schools project in UAE and smaller
systems in both Greece and Croatia.

In addition to these project wins, we have successfully upgraded a number of
legacy JANUS systems to SATEON, some of which will also serve as SATEON
reference sites with the added benefit of having long-term experience of other
Grosvenor Technology products.

As previously reported there is a significant opportunity to offer SATEON as
an upgrade to the many hundreds of legacy JANUS and Tyco Siteguard access
systems in the UK. SATEON 2.5 will make this an easier choice for the end user
particularly if they have JANUS graphics installed where the new SATEON maps
module far outweighs the capabilities of a JANUS system. Not only will such
upgrades quickly increase the footprint of SATEON in the UK, but should also
increase recurring revenue for software support.

SATEON remains a long term project for Grosvenor Technology and future product
development is underpinned by an exciting and innovative roadmap. Much of the
roadmap is based around integration with third-party databases and other
technology products to meet the demands of the Enterprise customer
particularly in government, transportation and the education sectors. With the
completion of SATEON 2.5 this brand new development phase starts immediately
and we intend to continue releasing new versions at approximately 6 month
intervals.

Asset Protection Division

Turnover £4,960,000 (2011: £3,209,000)

Safetell’s sales were 55 per cent. higher than the corresponding period last
year due to large orders received from the Post Office and the supply of
Eclipse Rising Screens to two financial institutions who are undertaking
refurbishment programmes. The Service Division continued to benefit from
long-term service contracts during this period. The gross profit was also
substantially higher due to the increased level of sales, and we are also
seeing the benefit of the new product development completed last year as this
increases the margin of products previously sourced from third parties.

Product Division Sales are 157 per cent. better than the same period last year
principally due to large orders received for time delay cash handling
equipment from the Post Office in April. All the cash handling equipment was
procured, but the anticipated rollout of equipment to the Post Office branches
was far less than originally planned.

Orders for the Eclipse Rising Screens increased by 67 per cent. including
those from two long standing customers in retail finance that started branch
refurbishment programmes. We also received orders for Eclipse Rising Screens
from Building Societies opening new branches, a first order for an Eclipse
Rising Screen from a financial institution in Ireland that is improving branch
security and a first order for a railway station cash desk. The successful
installation of the latter in October should result in additional future
orders.

Eye2Eye sales increased by 141 per cent. as orders carried over from the
previous year were completed. CounterShield sales continue to be disappointing
due to public sector budget cuts. The sales of cash management equipment to a
large bank have decreased after the client reduced its budget but we have
managed to increase the margins after redesigning the products and making
efficiency improvements.

The Service Division sales were 11 per cent. lower than the same period last
year but operating profits were only 4 per cent. down due to much improved
margins which have been achieved by strict labour control and pricing
increases where possible.

Beyond that the significant supply contract with the Post Office for cash
handling equipment should provide the Service Division with much increased
revenues over the next few years once installation has taken place and
warranties expired. We continue to seek new banking customers to spread our
customer base further.

The development of the new design Cash Transit Case is progressing
satisfactorily and the results of the internal destruction tests have been
very promising. These tests have assisted the team in making additional
improvements to both mechanical and electronic components. The final design
will be tested with Loomis before the end of our financial year, and the case
will be introduced to G4S and the Post Office early in 2013 with the aim of
developing a version to meet their specific needs.

Balance sheet and cash flow

Cash flow from operating activities increased in the period from £457,000 to
£675,000 despite an adverse movement in trade debtors due to the quantum of
sales and the timing thereof, and the settlement of some one-off outstanding
creditors from the previous year end.

There was a net outflow of cash in the period of £266,000 which included the
repayment of the loan notes taken out in the previous financial year.

Inventories were maintained at the same level as the last year end, whilst
trade debtors reflected the timing of sales in the period. Creditors reduced
overall despite the higher volume of trading due to the payment of certain
creditors from last year end as referred to above.

OUTLOOK

The Board is delighted with the recovery in trading profits in the period and
anticipates that the results for the full year will be materially above market
expectations. The Board expects that it will recommend the payment of a
dividend for the full year.

M DWEK
Chairman
28 January 2013
 
 

STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 31 October 2012

                                      Unaudited Six   Audited    Unaudited Six
                                      months          Year       months
                                      ended 31        ended 30   ended 31
                                      October         April      October
                                      2012            2012       2011
                              Notes   £’000           £’000      £’000
                                                                  
Revenue                               8,223           13,094     6,218
Cost of sales                         (4,756)         (7,826)    (3,759)
Gross profit                          3,467           5,268      2,459
                                                                  
Administrative expenses pre           (2,668)         (4,903)    (2,437)
legal costs
Legal costs                           –               (176)      (40)
Administrative expenses –             (2,668)         (5,079)    (2,477)
total
                                                                  
Profit/(loss) from operations         799             189        (18)
Finance costs                         (65)            (127)      (58)
                                                                  
Profit/(loss) before tax              734             62         (76)
Tax (expense)/credit          2       (96)            115        –
                                                                  
Profit/(loss) and total
comprehensive income for the          638             177        (76)
year
                                                                  
Attributable to:
– Equity holders of the               638             177        (76)
parent
                                                                  
Earnings/(loss) per share
– Basic (pence)               4       0.14            0.04       (0.02)
– Diluted (pence)                     0.14            0.04       (0.02)
                                                                  

All activities relate to continuing operations.

There are no other components of comprehensive income.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 31 October 2012

                                        Unaudited      Audited      Unaudited
                                        31 October     30 April     31 October
                                        2012           2012         2011
                              Notes     £’000          £’000        £’000
ASSETS
Non-current assets
Property, plant and equipment           677            709          683
Intangible assets                       10,970         10,699       10,531
                                                                     
Total non-current assets                11,647         11,408       11,214
                                                                     
Current assets
Inventories                             1,528          1,520        1,703
Trade and other receivables             2,853          2,373        2,786
Cash and cash equivalents               2,704          2,100        –
                                                                     
Total current assets                    7,085          5,993        4,489
Total assets                  2         18,732         17,401       15,703
                                                                     
LIABILITIES
Current liabilities
Trade and other payables                3,465          3,535        3,057
Other short term borrowings             3,011          2,147        1,095
Corporation tax liability               71             4            –
Provisions                              81             81           109
                              4                                      
Total current liabilities               6,628          5,767        4,261
                                                                     
Non-current liabilities
Long term borrowings                    231            424          355
Provisions                              84             84           84
Deferred tax                            349            324          454
                                                                     
Total non-current liabilities           664            832          893
Total liabilities                       7,292          6,599        5,154
                                                                     
TOTAL NET ASSETS                        11,440         10,802       10,549
                                                                     
Capital and reserves
attributable to equity
holders of the company
Share capital                           4,504          4,504        4,504
Share premium reserve         3         502            502          502
Merger reserve                3         801            801          801
Foreign exchange difference   3         (175)          (175)        (175)
reserve
Retained earnings             3         5,768          5,130        4,877
                                                                     
                                        11,400         10,762       10,509
Minority interest                       40             40           40
                                                                     
TOTAL EQUITY                            11,440         10,802       10,549
                                                                     

CONSOLIDATED CASH FLOW STATEMENTS

For the six months ended 31 October 2012

                                          Unaudited    Audited      Unaudited
                                          Six months   Year ended   Six months
                                          ended        30 April     ended
                                          31 October                31 October
                                          2012         2012         2011
                                  Notes   £’000        £’000        £’000
Cash flow from operating
activities
Net profit/(loss) after tax from          638          177          (76)
ordinary activities
Adjustments for: Depreciation and         438          913          397
amortisation
Interest expense                          65           127          58
Income tax expense                        96           (115)        -
                                                        
Operating profit before changes           1,237        1,102        379
in working capital and provisions
(Increase)/decrease in trade and          (480)        403          3
other receivables
(Increase) in inventories                 (8)          (51)         (234)
(Decrease)/increase in trade and          (64)         568          210
other payables
                                                                     
Cash generated from operations            685          2,022        358
Income taxes (paid)/received              (10)         92           99
                                                                     
Cash flows from operating                 675          2,114        457
activities
                                                                     
Cash flow from investing
activities
Payment for property, plant and           (56)         (136)        (76)
equipment
Sale of property, plant and               -            1            -
equipment
Research and development                  (556)        (1,131)      (605)
expenditure
                                                                     
                                          (612)        (1,266)      (681)
Cash flow from financing
activities
Proceeds from loan notes                  -            105          -
Repayment of loan notes                   (105)        -            -
Repayment of bank loans                   (74)         (96)         (24)
Repayment of finance lease                (85)         (134)        (69)
creditors
Dividend paid                             -            (125)        (125)
Interest paid                             (65)         (127)        (58)
                                                                     
                                          (329)        (377)        (276)
(Decrease)/increase in cash and           (266)        471          (500)
cash equivalents
                                                                     

NOTES TO THE ACCOUNTS

1. BASIS OF ACCOUNTS

These condensed consolidated financial statements have been prepared in
accordance with IAS 34, “Interim Financial Reporting”, as adopted by the
European Union. They do not include all disclosures that would otherwise be
required in a complete set of financial statements and should be read in
conjunction with the 2012 Annual Report. The financial information for the
half years ended 31 October 2012 and 31 October 2011 does not constitute
statutory accounts 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 comparative
financial information for the year ended 30 April 2012 included within this
report does not constitute the full statutory accounts for that period. The
statutory Annual Report and Financial Statements for 2012 have been filed with
the Registrar of Companies. The Independent Auditors’ Report on that Annual
Report and Financial Statement for 2012 was unqualified, did not draw
attention to any matters by way of emphasis, and did not contain a statement
under 498(2) or 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. TAXATION

The tax charge is affected by the effect of reliefs on research and
development expenditure, and the use of losses brought forward.

3. STATEMENT OF CHANGES IN EQUITY

                                                                    Foreign
                               Share       Merger      Retained     exchange
                               premium     reserve     earnings     reserve
                               £’000       £’000       £’000        £’000
At 1 May 2012                  502         801         5,130        (175)
Total comprehensive income     –           –           638          –
for the period
As at 31 October 2012          502         801         5,768        (175)
                                                                              

4. 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 450,432,316 shares
(2011: 450,432,316).

5. DIVIDENDS

No interim dividend is proposed (2011: Nil).

Contact:

NEWMARK SECURITY PLC
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