Annual Report For the year ended 30 April 2000 INDEX DIRECTORS, SECRETARY AND ADVISERS CHAIRMAN’S STATEMENT REPORT OF THE DIRECTORS REPORT OF THE REMUNERATION COMMITTEE REPORT OF THE AUDITORS ACCOUNTS ACCOUNTING POLICIES NOTES TO THE ACCOUNTS NOTICE OF MEETING 2 3 6 10 12 13 17 17 31 Newmark Technology Group PLC 1 DIRECTORS, SECRETARY AND ADVISERS Company registration number: 3339998 Registered O⁄ce: 21/23 Ormside Way Redhill Surrey RH1 2NT Directors: Secretary: Bankers: Solicitors: Auditors: Nominated Adviser: Nominated Brokers: P R Consultants: M Dwek (Chairman) S Rajwan (Chief Executive) B Beecraft FCA (Finance Director) A Reid FCA (Non-executive Director) B Beecraft FCA Bank of Scotland PLC Olswang 90 Long Acre London WC2E 9TT Hacker Young St. Alphage House 2 Fore Street London EC2Y 5DH Williams de Broe« 1 Waterloo Street Birmingham B2 5PG Williams de Broe« 1 Waterloo Street Birmingham B2 5PG Ellis & Partners Limited Talisman House 16 The Courtyard East Park Crawley Sussex RH10 6AS Shandwick International Aldermary House 15 Queen Street London EC4N 1TX Newmark Technology Group PLC 2 CHAIRMAN’S STATEMENT Overview I stated in my report last year that the Group would build upon the solid foundations that had been established in the previous two years, and that we would continue to grow both organically and by acquisition. I was delighted to announce in our interim report that we had completed the acquisition of Safetell International Limited. The Safetell Group specialises in the provision and maintenance of physical security equipment for the protection of sta¡ at transaction counters primarily in banking, retail and public authorities. The main customers for this product are building societies in the UK. At the end of April, we also established Vema Belgium which, like our existing subsidiary company Vema in Holland, operates in the area of electronic and electromechanical locking. The company also has a distribution agreement within Belgium for E¡E¡, the branded electronic lock. The year to 30 April 2000 has also been one of consolidation and reorganisation. In order to provide a clearer focus, the Group’s activities have been restructured during the year into three operational divisions: Asset Protection, Secure Locking and Electronic, which incorporate our subsidiary companies as follows: Asset Protection Secure Locking Electronic Ateliers Drion (Belgium) Vema (Holland) Newmark Technology UK Safetell International (UK) Vema (Belgium) Newmark Technology (USA) Newmark Security Products (UK) These divisions o¡er a comprehensive range of products and services which are aimed at ensuring safety of personnel and security of assets. I am delighted to inform you of our distribution arrangement for ParSec, our proprietary asset tracking system, with ADT, a subsidiary of Tyco Inc. ADT is the leading electronic security services company in the USA with more than 220 sales and service o⁄ces. Newmark is collaborating with ADT both in the UK and the USA to market ParSec through ADT’s extensive branch networks and we are very positive about the e¡ect of this arrangement on expected sales of ParSec systems. Financial results and developments Pro¢t before taxation was »160,000 before amortisation of goodwill compared to »218,000 in the preceding year on a restated basis. Turnover for the year was »9.9 million (1999: »8.0 million). The results include a two month contribution from Safetell, plus a full year’s pro¢ts from Drion compared to two weeks in the preceding year. During the year, your Board decided to change the accounting policy in respect of development costs. Previously expenditure had been capitalised when incurred to be amortised later against relevant income streams from those products. The Board has now decided to adopt what it feels is a more prudent policy of writing o¡ development costs as incurred. The prior years ¢gures in the accounts have been restated on the same basis. The amount of such expenditure written o¡ in the year under review was »142,000. The results have also been a¡ected by the strength of sterling on the translation of the results of our operations in Holland and Belgium. The pro¢t before tax for the year would have been »85,000 greater if the exchange rates for 1998/99 had continued to apply. Asset Protection Division This division specialises in physical security equipment for the protection of sta¡ at transaction counters, including pay boxes, glass security screens and doors, and safes. As I commented in the interim report, Drion’s main customers historically have been blue chip companies in the Belgian banking sector. However, due to the consolidation within the banking Newmark Technology Group PLC 3 sector, activity has been lower than anticipated at the time of acquisition. There are signs of increased activity in the current year. I also reported at the interim that a further major contract was expected to be completed in Algeria during the second half of the year. However, due to changes in the customer’s requirements, a substantial proportion of the contract was not completed and shipped by the year end. As the work involved represents short term contracts, pro¢t is not taken until the work is completed and installed. These contracts will be completed and installed, and the pro¢ts thereon included in the results for the current year. We are actively seeking other export opportunities. Safetell has traded satisfactorily in the two months since acquisition. The company has major blue chip customers in the ¢nancial sector in the UK, and is also bene¢ting from the increased range of products in its portfolio. The addition of Safetell, based in the UK, is already starting to produce opportunities to sell Drion’s secure cash handling systems into UK banking clients. In particular, we are now able to provide the alternative solutions of rising screen or ¢xed glass security to our customers in the UK. We will also explore further the possibility of selling rising screens to mainland Europe. Secure Locking Division This division supplies sophisticated electronic and electromechanical locking systems to a wide variety of high security applications including prisons, hospitals, museums and government o⁄ces. In addition to our distribution centres in the UK and the Netherlands, during the year we opened a third centre in Brussels to provide improved access to the Belgian market. Vema Holland has maintained its ability to generate substantial pro¢ts and cash, and with the expansion into the Belgian market, we expect further growth this year. Vema Belgium will adopt the successful model for operations used in Holland. The Board believes that this will be a successful new venture, building upon the existing formula of Vema Holland. Electronic Division This division provides integrated security management systems designed to control access of personnel and track asset movements. An updated version of our Omni 4 software access control has been released on the market with substantial improvements over the previous release. We are also developing new packages of the product targeted at di¡erent markets, and we believe that this will generate additional revenue. Our proprietary ParSec systems are designed for innovative asset tracking solutions for the commercial, government and industrial market places. Growth in turnover has been held back until now due to technical and supply problems which have now been overcome. Federal Communications Commission approval has now been obtained in the USA, and with the distribution arrangements in place with ADT, we are expecting sales of ParSec to increase steadily in both the UK and USA. Initial orders have been received and the potential market for this product is very substantial. Balance sheet and cash £ow Intangible assets, comprising purchased goodwill, have increased by »1.3 million in the year following the acquisition of Safetell. Purchased goodwill has been capitalised in accordance with Financial Reporting Standard 10, and your Board has decided that this should be amortised over 20 years. Trade debtors have fallen signi¢cantly over the year despite the acquisition of Safetell. This primarily re£ects the realisation of the exceptionally high level of sales in the last few months of the previous year, as well as the success of our e¡orts in improving working capital controls and the impact of exchange rates. The increase in borrowings represents the loan for the ¢nancing of the acquisition of Safetell. The cash £ow statement re£ects these movements with net cash in£ow from operating activities increasing from »0.2 million in 1999 to »0.8 million for the year just ended. Newmark Technology Group PLC 4 The Board has decided that it would not be prudent to declare a dividend for the year ended 30 April 2000, but will review this policy during the current year. Employees I am pleased to welcome the sta¡ of Safetell to the Group, together with other new employees of our subsidiaries. On behalf of the Board, I wish to congratulate all sta¡ for the progress made in their own companies during the year and to thank them for their hard work. The Future Each division is now focused on organic expansion of its operations. Asset Protection and Secure Locking are sound, cash generative businesses. The companies have a strong reputation in their markets and a quality client base, providing a solid foundation from which to achieve good organic growth in both existing and new geographical markets. The Electronic division has required much e¡ort and investment to date, however I feel that in ParSec we have now achieved the successful development of a unique and proprietary system for asset tracking. We are very excited about the potential for ParSec and with the distribution strength of ADT behind this product we believe that it will become an increasingly important part of Newmark’s operations. Overall, I am optimistic about the current year. The signi¢cant investment we have made to date both internally in product development and externally in strategic acquisitions is starting to reap rewards and the di⁄culties which have inhibited our progress in previous years are now overcome. The refocusing and strengthening of our Asset Protection, Secure Locking and Electronic divisions have positioned the Group well for the coming year. We look forward to the future with con¢dence and anticipate strong growth and value creation. MAURICE DWEK Chairman Newmark Technology Group PLC 5 REPORT OF THE DIRECTORS The Directors submit their third annual report and audited ¢nancial statements for the year ended 30 April 2000. Principal activities The Group is principally engaged in the design, manufacture and supply of products and services for the security of assets and personnel. The principal activity of the Company is that of investment holding company. Financial results and dividends There was a pre-tax pro¢t in the year of »160,000 before amortisation of goodwill (1999 »218,000 on a restated basis). After amortisation of goodwill of »70,000 (1999: »Nil) pro¢ts before tax were »90,000. The directors do not believe that it is opportune this year to recommend the payment of a dividend. A review of the business and future prospects is given in the Chairman’s Statement on page 3. Future developments The Board continues to seek to improve the pro¢tability and cash £ow of the Group from existing activities and to acquire suitable businesses within the security business sector which satisfy the requirements set by the Board. Acquisitions of businesses On 28 February 2000, the Company acquired the entire issued share capital of Safetell International Limited (‘‘Safetell’’). Safetell has two wholly owned subsidiaries, Safetell Security Screens Limited and Safetell Limited. The total consideration of »1.5 million, which was payable in cash on completion, was ¢nanced by a bank loan repayable over 7 years. Directors The Directors who served during the year were as follows: M Dwek S Rajwan B Beecraft M Veldhoen (resigned 30 September 1999) M David A Reid The Board learned with regret of the death of Myrddin David during August this year. Myrddin had made a signi¢cant contribution to the company during his period of directorship, and his knowledge and experience of the security industry will be greatly missed. Our thoughts are with his family at this time. Details of the Directors’ service contracts and their options to acquire ordinary shares of the Company at 30 April 2000 are shown in the Remuneration Committee Report on pages 10 and 11. Research and development The Group is committed to on-going research and development. The strategy is based upon market demand to meet identi¢ed security needs in conjunction with a commercial assessment of the short to medium term pro¢tability of each project. Newmark Technology Group PLC 6 Directors’ interests The bene¢cial and other interests of the Directors in the shares of the Company as at 30 April 1999 (or the date of their appointment to the Board, if later) and 30 April 2000 were as follows: M Dwek(a) A Reid(b) Percentage holding at 30 April 2000 30 April 2000 13.6% 15,000,000 21.2% 23,608,238 30 April 1999 (or date of appointment if later) 15,000,000 19,199,138 (a) These shares are held in the name of Arbury Inc., 51 per cent of the equity share capital of which is, at the date of this report, bene¢cially owned by M Dwek. (b) These shares are held in the name of R.K. Harrison & Co. Limited, a company the issued equity share capital of which is, at the date of this report, owned as to 70.7 per cent by A Reid of which 64.5 per cent is a bene¢cial holding and 6.2 per cent is a non bene¢cial holding, and the R.K. Harrison Retirement Bene¢t Scheme in which A Reid has a bene¢cial interest. On 27 April 1999 M. Veldhoen Beheer BV and MV Beheer BV granted to Arbury Inc, and S Rajwan options to purchase respectively 13,447,725 and 4,409,100 ordinary shares of 5 pence each. The options were exercisable by Arbury Inc., and Mr Rajwan in whole or in part for the period to 1 April 2000. The price per share payable under each of the options on exercise was 7.5 pence. By an agreement dated 5 April 2000, the option to Arbury Inc., was extended to 11 May 2001. On the same date A. Reid acquired from S. Rajwan the option to purchase from M. Veldhoen Beheer BV 4,409,100 shares. On the same date, A. Reid exercised that option. In the period between 30 April 2000 and 23 August 2000 there were no further changes in these shareholdings. The interests of Directors (and related parties) in Share Option Schemes operated by the Company at 30 April 2000 were as follows: S Rajwan B Beecraft Number of Ordinary Shares under the Approved Scheme 420,000 250,000 Number of Ordinary Shares under the Unapproved Scheme 1,680,000 250,000 The Directors had no other interests in the shares or share options of the company or its subsidiaries. Substantial shareholdings Apart from the Directors’ shareholdings detailed above, the Directors have been noti¢ed of the following additional shareholding of 3 per cent or more of the issued ordinary share capital of the Company: Albany Life Assurance Company Limited M V. Beheer BV HSBC Global Custody Nominee (UK) Limited PH Nominees Limited Percentage of class 5.4% 12.2% 6.0% 3.2% Number of shares 5,900,000 13,447,725 6,666,666 3,532,000 Employee involvement The Group keeps employees informed of matters a¡ecting them, and the employees have regular opportunities to meet and have discussions with their managers. Disabled persons The Group gives sympathetic consideration to the employment of disabled people. Whilst no special facilities are provided for training the disabled, all employees are given equal opportunities for training and promotion, having regard to their particular aptitudes and abilities. In the event of employees becoming disabled, every e¡ort is made to retain them in order that their employment with the Company may continue. Newmark Technology Group PLC 7 Share option schemes The Company has two employee share option schemes which enable employees and Executive Directors to be granted options to subscribe for Ordinary Shares. The Approved Scheme has been approved by the Inland Revenue in accordance with Section 185 of, and Schedule 9 to, the Income and Corporation Taxes Act 1988 (‘‘Taxes Act’’), the Unapproved Scheme not requiring such approval. The Schemes require that exercise of options be subject to the satisfaction of certain performance criteria. The Remuneration Committee administers and operates each Scheme. The maximum number of Ordinary Shares in respect of which options may be granted under each Scheme is equivalent to 5 per cent in aggregate, of the Company’s issued Ordinary share capital. Charitable and political contributions There were no political or charitable contributions during the year (1999: Nil). Payment of suppliers The Group requires its operational management to settle terms of payment with suppliers when agreeing the terms of the transaction, to ensure that suppliers are aware of these terms and to abide by them. Trade creditors at the period end were 47 days (1999: 56 days) of average supplies for the period. Corporate governance The Company has complied throughout the year with the provisions set out in Section 1 of the Principles of Good Governance and Code of Best Practice (‘‘the Combined Code’’) which embraces the work of the Cadbury, Greenbury and Hempel Committees, in so far as this is practical and appropriate for a small public limited company, with the exception of certain matters set out below. The Board comprised during the year an Executive Chairman, two Executive Directors and two Non-Executive Directors. A further Executive Director resigned from the Board on 30 September 1999. The Board meets regularly to exercise full and e¡ective control over the Group. The Board has a number of matters reserved for its consideration, with the principal responsibilities being to monitor performance and to ensure that there are proper internal controls in place to agree overall strategy and acquisition policy, to approve major capital expenditure and to review budgets. The Board will also consider reports from senior members of the management team. There is a clear division of responsibilities between the Chairman and Chief Executive. The Chairman takes responsibility for the conduct of the Group and overall strategy whilst the Chief Executive is required to develop and lead day to day business strategies and actions. Under the Company’s Articles of Association the appointment of all directors must be approved by the shareholders in General Meeting, and additionally two directors are required to submit themselves for re-election at each Annual General Meeting. Additionally, each director has undertaken to submit themselves for re-election at least every three years. The appointment of new directors is considered by the Board as a whole and a separate nomination committee is not considered necessary. Any Director may, in furtherance of his duties, take independent professional advice where necessary, at the expense of the Company. All directors have access to the Company Secretary whose appointment and removal is a matter for the Board as a whole, and who is responsible to the Board as a whole and who is responsible to the Board for ensuring that agreed procedures and applicable rules are observed. The Company maintains an ongoing dialogue with its institutional shareholders. The Combined Code requires proxy votes to be counted and announced after any vote on a show of hands and this was agreed at the 1999 Annual General Meeting. The Combined Code requires Directors to review, and report to shareholders on, the Group’s system of internal control. In September 1999 guidance to this requirement was provided to Directors by the publication of Internal Control: Guidance for Directors on the Combined Code (‘‘The Turnbull Report’’). The Company has adopted the transitional rules issued by the London Stock Exchange dated 27 September 1999. In respect of the year under review the Board continues to report on Newmark Technology Group PLC 8 internal ¢nancial control in accordance with the guidance on internal control and ¢nancial reporting that was issued by the Institute of Chartered Accountants in England and Wales in 1994. Following publication of the Turnbull Report the Directors are considering the procedures necessary to implement the guidance. The Directors acknowledge their responsibility for the Group’s systems of internal ¢nancial control which are designed to provide reasonable assurance that the assets of the Group are safeguarded and that transactions are properly authorised and recorded. The Directors have reviewed the e¡ectiveness of the Group’s systems of internal ¢nancial control and found no matters which indicated that the system of internal ¢nancial control could not provide reasonable assurance that the objectives above were satis¢ed. During the year, key controls were: . . Maintaining a clear organisational structure with de¢ned lines of responsibility, Production of management information, with comparisons against budget, . . Maintaining the quality and integrity of personnel, . Each Group company is responsible for the preparation of a budget for the following year, which is presented to and required to be agreed by the Board before the beginning of that year. The subsidiary is required to report actual performance against that plan each month. Board approval of all signi¢cant capital expenditure, and all acquisitions. Day to day supervision of the business by the Executive Directors, The Board has established the Audit Committee comprising the Non-Executive Director. The Audit Committee is responsible for ensuring that the ¢nancial performance of the Group is properly monitored and reported on, and reviewing any reports from the auditors regarding accounts and internal control systems. The report of the Remuneration Committee is set out on pages 10 and 11. After making enquiries, the Directors believe that the Group has su⁄cient ¢nancial resources to continue in operational existence for the foreseeable future. The accounts have therefore been produced on the going concern basis. Directors’ responsibilities Company law requires the Directors to prepare ¢nancial statements for each ¢nancial year which give a true and fair view of the state of a¡airs of the Company and the Group for that period. In preparing those ¢nancial statements, the directors are required to: (i) select suitable accounting policies and apply them consistently and make judgements and estimates that are reasonable and prudent; state whether applicable accounting standards have been followed; and (ii) (iii) prepare the ¢nancial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business. The Directors are responsible for maintaining proper accounting records which disclose with reasonable accuracy at any time the ¢nancial position of the Company and to enable them to ensure that the ¢nancial statements comply with the Companies Act 1985. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors con¢rm that the ¢nancial statements comply with the above requirements. Auditors A resolution for the re-appointment of Hacker Young, Chartered Accountants, as auditors of the Company is to be proposed at the Annual General Meeting. By order of the Board B BEECRAFT Secretary 18 September 2000 Newmark Technology Group PLC 9 REPORT OF THE REMUNERATION COMMITTEE Authority The Remuneration Committee is responsible for approving the remuneration of Executive Directors. The remuneration of Non-Executive Directors is approved by the full Board of the Company. Membership The majority membership of the Remuneration Committee is required to comprise Non-Executive Directors and during the year comprised only the two existing Non-Executive Directors, Myrddin David and Alexander Reid. Myrddin David spent 33 years in the RAF Security Branch, leaving MoD London as Director of RAF Security, Provost-Marshall and Chief of Air Force Police in 1984 to join Royal Dutch Shell Group. He spent ten years travelling to operating companies in the Royal Dutch Shell Group to advise on security and asset protection. He retired as Head of Group Security in 1994 to form MD Associates, consultants in corporate security. Alexander Reid is executive chairman of R.K. Harrison & Company Limited (a shareholder of the Company), a director of Yeoman II Investment Trust Plc and a number of unquoted companies. He was formerly a director of the merchant bank Samuel Montagu & Co. Limited and for ¢fteen years was a director of various investee and group companies within Invesco MIM (now Amvescap). Remuneration policy The Group’s policy is to o¡er remuneration packages which are appropriate to the experience, quali¢cations and level of responsibility of each Executive Director, and in line with Directors of comparable public companies. Service and consultancy agreements The Company entered into a Consultancy Agreement with Arbury Inc., on 1 September 1997 for the Company’s use of Mr Dwek. The Agreement may now be terminated by either party subject to twenty four months’ notice being served. Arbury Inc is paid a fee in line with the level of responsibilities of Mr Dwek who is also entitled to the provision of a car for which the Company will meet all running expenses. On 30 April 1997 the Company entered into a Service Agreement with Mr Rajwan which may now be terminated by either party serving twelve months’ notice. There was a Management Agreement between Vema B.V. and Vema Beheer B.V. for the provision to Vema B.V. of the substantially full time services of Mr Veldhoen. This agreement was for an initial period of two years from the date of acquisition of Vema B.V. and terminated on 30 September 1999. The Company entered into a Service Agreement on 5 June 1998 with Mr Beecraft which may now be terminated by either party serving six months’ notice. Bonus scheme The Executive Directors are entitled to receive bonuses pursuant to a bonus scheme based upon the Group’s performance. Under the Scheme, up to 10 per cent of the consolidated net pre-tax pro¢ts of the Company in excess of such pro¢ts as are required to generate a minimum amount of Earnings per Share for the Company may be allocated. Newmark Technology Group PLC 10 Directors’ emoluments Emoluments of the directors (including pension contributions and bene¢ts in kind) of the Company were as follows: Consultancy/ management Bene¢ts agreement Salary »000 »000 in kind Bonus »000 »000 Fees Total »000 »000 Pension contri- butions »000 Executive Directors M Dwek(a) S Rajwan M Veldhoen(b) B Beecraft Non-Executive Directors M David A Reid 1999 121 C 30 C C C 151 176 C 80 C 70 C C 150 120 C 10 C C C C 10 10 25 C C C C C 25 C C C C C 7 7 14 10 146 90 30 70 7 7 350 316 C 12 C C C C 12 11 The directors share interests are detailed in the Report of the Directors on page 6. (a) The Company paid a consultancy fee to Arbury Inc., which is 51 per cent owned by M Dwek, and covers salary, pension and car bene¢ts. (b) The Company paid a management fee to Vema Beheer B.V., which is wholly owned by M Veldhoen. (c) The directors’ fees in respect of A Reid were paid to R.K. Harrison & Co. Limited. (d) The pension contributions in respect of S Rajwan were for a money purchase pension scheme. Newmark Technology Group PLC 11 AUDITORS’ REPORT TO THE MEMBERS OF NEWMARK TECHNOLOGY GROUP PLC We have audited the ¢nancial statements on pages 13 to 30 which have been prepared in accordance with the historical cost convention and the accounting policies set out on pages 17 and 18. Respective responsibilities of Directors and Auditors As described in the directors’ report the company’s directors are responsible for the preparation of ¢nancial statements. It is our responsibility to form an independent opinion, based on our audit, on those statements and to report our opinion to you. Basis of opinion We conducted our audit in accordance with Auditing Standards issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the ¢nancial statements. It also includes an assessment of the signi¢cant estimates and judgements made by the directors in the preparation of the ¢nancial statements, and of whether the accounting policies are appropriate to the company’s circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with su⁄cient evidence to give reasonable assurance that the ¢nancial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the ¢nancial statements. Opinion In our opinion the ¢nancial statements give a true and fair view of the state of the a¡airs of the Company and of the Group at 30 April 2000, and of the loss of the Group for the year ended 30 April 2000 and have been properly prepared in accordance with the Companies Act 1985. HACKER YOUNG Chartered Accountants Registered Auditors London 18 September 2000 Newmark Technology Group PLC 12 CONSOLIDATED PROFIT AND LOSS ACCOUNT For the year ended 30 April 2000 Turnover Continuing operations Acquisitions Cost of sales Gross pro¢t Administrative expenses pre amortisation Amortisation of goodwill Administrative expenses ^ total Operating pro¢t Continuing operations Acquisitions Interest payable Pro¢t on ordinary activities before taxation Tax on ordinary activities Amount withdrawn from reserves Earnings per share 2000 »000 1999 (Restated) »000 9,303 560 9,863 (5,548) 7,729 276 8,005 (4,931) 4,315 3,074 (4,044) (70) (2,760) $ (4,114) (2,760) 201 157 44 (111) 90 (320) (230) 314 243 71 (96) 218 (282) (64) pence (0.2p) pence (0.1p) Notes 2 4 5 7 18 8 There is no di¡erence between the pro¢t on ordinary activities before taxation and the retained pro¢t for the period stated above and their historical cost equivalents. The notes on pages 17 to 30 form part of these ¢nancial statements. Newmark Technology Group PLC 13 BALANCE SHEETS As at 30 April 2000 Fixed Assets Intangible assets Tangible assets Investments Current Assets Stocks Debtors Cash at bank and in hand Creditors: amounts falling due within one year Notes 9 10 11 12 13 Group 2000 »000 2,480 1,244 $ 3,724 1,260 2,628 759 4,647 Group (Restated) 1999 »000 1,152 1,300 $ 2,452 1,316 3,417 912 5,645 Company Company 2000 »000 $ $ 9,355 9,355 $ 3,243 $ 3,243 1999 »000 $ $ 7,652 7,652 $ 3,449 $ 3,449 14 (3,186) (3,519) (242) (44) Net current assets 1,461 2,126 3,001 3,405 Total assets less current liabilities Creditors: amounts falling due after more than one year Provisions for liabilities and charges Net assets Capital and reserves Called up share capital Share premium Pro¢t and loss reserve 5,185 4,578 12,356 11,057 (2,544) (1,825) (1,286) (419) (143) $ $ $ 2,222 2,610 11,070 11,057 5,510 5,051 (8,339) 5,510 5,051 (7,951) 5,510 5,051 509 5,510 5,051 496 15 16 17 18 18 Equity shareholders’ funds 2,222 2,610 11,070 11,057 The ¢nancial statements on pages 13 to 30 were approved by the Board of Directors on 18 September 2000 and were signed on its behalf by: M DWEK Chairman B BEECRAFT Finance Director The notes on pages 17 to 30 form part of these ¢nancial statements. Newmark Technology Group PLC 14 CONSOLIDATED CASH FLOW STATEMENT For the year ended 30 April 2000 Net cash in£ow from operating activities Returns on investments and servicing of ¢nance Interest paid Net cash out£ow from returns on investments and servicing of ¢nance Taxation Capital expenditure and ¢nancial investment Purchase of tangible ¢xed assets Net cash out£ow from capital expenditure and ¢nancial investment Acquisitions Purchase of subsidiary undertakings Costs related to prior year acquisitions Net cash acquired on purchase of subsidiary undertakings Net cash out£ow from acquisitions Financing Loan to partly ¢nance acquisition of subsidiary undertakings Repayment of secured loans Issue of shares Expenses paid in connection with share issues Net cash in£ow from ¢nancing Increase in cash 2000 »000 818 1999 (Restated) »000 195 Notes 19 (111) (96) (111) (309) (96) (729) (180) (143) (180) (143) (1,718) (80) 518 (1,280) 1,500 (253) 1,247 $ $ 1,247 185 (1,746) (77) 900 (923) 583 (34) 549 1,850 (97) 2,302 606 23 21 Newmark Technology Group PLC 15 STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES For the year ended 30 April 2000 (Loss)/pro¢t for the ¢nancial year Currency translation di¡erences on foreign currency net investments Total recognised gains and losses relating to the year 2000 »000 1999 (Restated) »000 1999 (Adjust- ment) »000 1999 (Reported) »000 (230) (64) (284) (158) 18 $ (388) (46) (284) 220 18 238 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS’ FUNDS For the year ended 30 April 2000 (Loss)/pro¢t for the ¢nancial year New share capital subscribed (net of issue costs) Goodwill charged to reserves Currency translation di¡erences on foreign currency net investments Net addition to shareholders’ funds Opening shareholders’ funds Closing shareholders’ funds 2000 »000 1999 (Restated) »000 1999 (Adjust- ment) »000 1999 (Reported) »000 (230) (64) (284) 220 $ $ 2,353 (115) (158) (388) 2,610 2,222 18 2,192 418 2,610 $ $ $ (284) (257) (541) 2,353 (115) 18 2,476 675 3,151 Newmark Technology Group PLC 16 Notes to the ¢nancial statements for the year ended 30 April 2000 1. Accounting policies The ¢nancial statements have been prepared in accordance with applicable accounting standards in the United Kingdom and under the historical cost convention. The consolidated ¢nancial statements include the results of subsidiaries since the date of acquisition. The principal accounting policies which the directors have adopted are set out below. Turnover Turnover represents the invoiced value of goods sold and services rendered as principal excluding value added tax and trade discounts. Goodwill In accordance with Financial Reporting Standard 10, goodwill arising on the acquisition of subsidiaries in the year is capitalised as an intangible asset and amortised over its useful economic life of 20 years. The Board consider that the activities of the subsidiaries acquired will be ongoing, and they will contribute to the Group’s earnings for over 20 years. Goodwill arising on the acquisition of subsidiaries in previous years was written o¡ immediately against reserves. The Group has adopted the transitional arrangement allowed by FRS10 in that this goodwill remains eliminated against reserves and will be charged to the pro¢t and loss account on the subsequent disposal of the businesses to which it relates. Goodwill represents the di¡erence between the costs of acquisition and the fair value of the net tangible assets acquired. Intellectual property rights and development costs Intellectual property rights and development costs are written o¡ to the pro¢t and loss account as incurred. In previous years their costs were capitalised and depreciated/amortised over the useful life of those costs. This change of accounting policy has been accounted for as a prior year adjustment, and the results for the previous year have been restated accordingly. The impact of this change of policy is set out in note 9 to the ¢nancial statements. Tangible ¢xed assets The Group’s tangible ¢xed assets are stated at cost less depreciation. Provision for depreciation is made in equal annual instalments to write o¡ the cost less estimated residual value of each asset over its estimated useful life as follows: Freehold land Freehold buildings Plant and machinery Fixtures and ¢ttings Motor vehicles Computer equipment Nil 5% per annum 20% per annum 10% per annum 25% per annum 25% per annum Leased assets and obligations Where the Company retains substantially all the risks and rewards of ownership of an asset subject to a lease, the lease is treated as a ¢nance lease. Other leases are treated as operating leases. Payments under operating leases are charged to the pro¢t and loss account, as incurred, over the lease term. Fixed asset investments Fixed asset investments are recorded at cost less any provision for impairments. Stock and work in progress Stocks and work in progress are stated at the lower of cost and net realisable value. Cost is determined on an average cost basis. The cost of work in progress and ¢nished goods comprises Newmark Technology Group PLC 17 materials, direct labour and attributable production overheads. Net realisable value is based on estimated selling price less further costs expected to be incurred to completion and disposal. Deferred taxation Provision is made for deferred tax using the liability method in respect of timing di¡erences to the extent that it is probable that the liability will crystallise in the foreseeable future. Foreign currencies The assets and liabilities of overseas subsidiary undertakings are translated into sterling at the rates of exchange ruling at the balance sheet date. Foreign exchange di¡erences arising on the translation of the opening net assets of those subsidiaries are taken directly to reserves. Assets and liabilities denominated in foreign currencies are translated into sterling at the rate of exchange ruling at the balance sheet date, trading results are translated at the average exchange rate for the ¢nancial period. Gains or losses arising from trading operations are dealt with in the pro¢t and loss account. Pensions Vema operates an optional non-contributory ¢nal salary pension scheme for sta¡ aged 25 years with more than one year’s service. Safetell operates a fully insured money purchase scheme open to all employees and more than half are members. The scheme is funded and its assets are held by an insurance company in a separate trustee administered fund. Both the company and employees make contributions to the fund. In addition to this and the contributions paid in respect of S Rajwan, the other employees of the Group contribute to state schemes. Contributions are charged to the pro¢t and loss account when paid. 2. Analysis by geographical area The analysis by geographical area of the group’s turnover, pro¢t before taxation and net assets is set out below: Turnover UK Europe Rest of the World Total Pro¢t before tax and net assets UK Europe 2000 By origin »000 2,970 6,893 ? 9,863 1999 By origin »000 2,618 5,387 ? 8,005 2000 By destination »000 2,127 6,519 1,217 1999 By destination »000 1,556 5,492 957 9,863 8,005 2000 Pro¢t before tax »000 (989) 1,079 1999 (Restated) Pro¢t before tax »000 (813) 1,031 2000 Net assets »000 (252) 2,474 1999 (Restated) Net assets »000 (148) 2,758 90 218 2,222 2,610 Newmark Technology Group PLC 18 3. Cost of sales and other operating income and expenses Turnover Cost of sales Continuing »000 9,303 (5,185) Year ended 30 April 2000 Acquisitions »000 560 (363) Gross pro¢t Administrative expenses Operating pro¢t 4,118 (3,961) 157 197 (153) 44 4. Operating pro¢t Operating pro¢t is arrived at after charging the following: Group Depreciation of tangible ¢xed assets Amortisation of goodwill Research and development Auditors’ remuneration Parent company auditors Audit fees Other auditors Audit fees Non audit services Operating lease rentals Motor vehicles and computer equipment Property Interest 5. Interest payable and similar charges Bank loans, overdrafts and other short term ¢nance 1999 (Restated) Total »000 8,005 (4,931) 3,074 (2,760) 314 Total »000 9,863 (5,548) 4,315 (4,114) 201 2000 »000 194 70 142 49 23 5 103 76 111 1999 »000 100 ? 284 35 8 15 86 58 96 6. Employees and directors The average numbers employed by the Group (including Executive Directors) within the following categories were: Number Number 51 Management, sales and administration 7 Production 56 43 The costs incurred in respect of these employees were: Wages and salaries Social security costs Other pension costs 99 58 »000 1,942 354 42 2,338 »000 1,291 143 25 1,459 Details of directors’ emoluments are disclosed in the Report of the Remuneration Committee on page 10. Newmark Technology Group PLC 19 Taxation 7. Taxation is based on the results for the year and comprises: UK Corporation taxation Overseas taxation (35/40%) Overseas taxation prior year Taxation charge 2000 »000 ? 320 ? 320 1999 »000 ? 290 (8) 282 The tax charge for the year is disproportionate to the result for the year due to the non availability of tax relief on the losses incurred in the UK for the year. 8. Earnings per share The calculation of earnings per ordinary share is based on a loss of »230,000 (1999: »64,000) and the weighted average number of shares in issue during the year of 110,208,952 (1999: 78,624,067). The options in issue have no dilutive e¡ect. 9. Intangible ¢xed assets Group Cost At 1 May 1999 (as originally reported) Prior year adjustment At 1 May 1999 (restated) Additions At 30 April 2000 Amortisation At 1 May 1999 Charge for the year At 30 April 2000 Net book value At 30 April 2000 At 30 April 1999 (as previously reported) Goodwill »000 Development Costs »000 Intellectual Property Rights »000 Total »000 1,693 (541) 1,152 1,398 2,550 ? (70) (70) 2,480 322 (322) 219 (219) ? ? ? ? ? ? ? ? ? ? ? ? ? ? 322 219 1,693 1,152 ? 1,152 1,398 2,550 ? (70) (70) 2,480 1,152 Intellectual property rights and development costs are now written o¡ to the pro¢t and loss account as incurred. In previous years, these costs were capitalised to be depreciated/ amortised over the useful life of these costs. This change of accounting policy has been accounted for as a prior year adjustment, and the results for the previous year have been restated accordingly. If there had been no change of accounting policy in the year, the pro¢t before tax would have increased by »92,000, »142,000 capitalised less »50,000 amortisation (1999: »284,000, »284,000 capitalised less »Nil amortisation). It is not practical to determine the costs which would otherwise have been deemed to be irrecoverable. Newmark Technology Group PLC 20 Freehold land and buildings »000 Plant, machinery & motor vehicles »000 Computers, ¢xtures & ¢ttings »000 1,211 37 70 ? (157) (163) 998 206 22 70 ? (157) (30) 111 887 1,005 867 57 257 (24) (8) (119) 1,030 769 57 214 (24) (8) (104) 904 126 98 416 86 184 ? (5) (39) 642 219 115 109 ? (5) (27) 411 231 197 10. Tangible ¢xed assets Group Cost At 1 May 1999 Additions Acquisitions of businesses Disposals Transfer to depreciation (see below) Exchange adjustment At 30 April 2000 Depreciation At 1 May 1999 Charge for the year Acquisitions of businesses Disposals Transfer to cost (see above) Exchange adjustment At 30 April 2000 Net book value At 30 April 2000 At 30 April 1999 11. Fixed asset investments Company Investment in subsidiary companies Cost At 1 May 1999 Acquisitions in the year At 30 April 2000 Provision for impairment At 1 May 1999 Impairment Reversal of impairment At 30 April 2000 Total »000 2,494 180 511 (24) (170) (321) 2,670 1,194 194 393 (24) (170) (161) 1,426 1,244 1,300 »000 7,652 1,703 9,355 ? 389 (389) ? The impairment in value arises because the actual cash£ows for the year were less than those forecast at the time the 30 April 1999 accounts were prepared to the extent that they would have resulted in an impairment being recognised when the impairment review was carried out at that time. A current calculation of value in use, based on the most up to date information available, shows that this impairment has now reversed. The discount rate used in the 30 April 2000 value in use calculation was 12.4 per cent (1999: 13.33 per cent). Newmark Technology Group PLC 21 The details of the Company’s subsidiary undertakings (which are all wholly owned) and involved in the supply of access control and other security products, are as follows: Name Newmark Technology Limited Newmark Security Products Limited Newmark Technology (C-Cure Division) Limited Vema B.V. Newmark Technology S.A. Ateliers Drion S.A.(2) Safetell International Limited Safetell Limited(1) Safetell Security Screens Limited(1) Newmark Onroerend Goed B.V.(2) Vema Belgie B.V.(3) Country of incorporation England & Wales England & Wales Description of shares held Ordinary Ordinary England & Wales The Netherlands Belgium Belgium England & Wales England & Wales England & Wales Belgium Belgium Ordinary Ordinary Ordinary Ordinary Ordinary and Redeemable Preference Ordinary Ordinary Ordinary Ordinary The investments in subsidiary companies are held directly by the Company apart from the following: (1) Owned by Safetell International Limited (2) Owned by Newmark Technology S.A. (3) Owned by Vema B.V. 12. Stocks Raw materials Work in progress Finished goods 13. Debtors Amounts falling due within one year: Amounts owed by subsidiary undertakings Trade debtors Prepayments and accrued income Other debtors 2000 Group »000 461 140 659 1999 Group »000 286 42 988 2000 Company »000 ? ? ? 1999 Company »000 ? ? ? 1,260 1,316 ? ? 2000 Group »000 1999 Group »000 2000 Company »000 1999 Company »000 ? 2,198 301 129 2,628 ? 2,994 169 254 3,417 3,164 ? 7 72 3,243 3,412 ? 17 20 3,449 Newmark Technology Group PLC 22 14. Creditors: amounts falling due within one year Bank loans and overdrafts Trade creditors Accruals Other taxation and social security Other creditors Corporation tax payable 2000 Group »000 385 1,089 487 211 796 218 1999 Group »000 454 1,184 160 56 1,343 322 2000 Company »000 214 ? 20 ? 8 ? 1999 Company »000 ? ? ? ? 44 ? 3,186 3,519 242 44 Other creditors within the Group includes an amount of »79,835 (1999: »610,338) in respect of a factoring company which is secured on trade debtors of a subsidiary company. Bank overdrafts of »46,000 (1999: »Nil) are secured by a £oating charge on the assets (excluding trade debtors) of a subsidiary company, whilst further overdrafts of »12,000 (1999: »310,000) are secured by a £oating charge on the assets (excluding freehold property) of another subsidiary. 15. Creditors: amounts falling due after more than year Bank loans and overdrafts Other creditors(f) Group 2000 »000 1,830 714 Group Company Company 1999 »000 ? ? 2000 »000 1,286 ? 1999 »000 883 942 2,544 1,825 1,286 ? Company The terms of repayment, interest and security for the loan to the Company are set out as loan (e) in the analysis of Group Loans. Group Loans are repayable as follows: Within one year Bank loans(a) Bank loans(b) Bank overdrafts Bank loan(d) Bank loan(e) Total within one year After one and within two years Bank loans(b) Shareholder’s loan(c) Bank loan(d) Bank loan(e) 2000 Unsecured »000 2000 Secured »000 1999 Unsecured »000 1999 Secured »000 ? ? ? 100 ? 100 ? ? 101 ? 101 ? 13 58 ? 214 285 13 ? ? 214 227 ? ? ? 117 ? 117 ? ? 117 ? 117 12 15 310 ? ? 337 15 153 ? ? 168 Newmark Technology Group PLC 23 2000 Unsecured »000 2000 Secured »000 1999 Unsecured »000 1999 Secured »100 Between two and ¢ve years Bank loans(b) Bank loan(d) Bank loan(e) After ¢ve years Bank loans(b) Bank loan(d) Bank loan(e) ? 226 ? 226 ? ? ? ? 39 ? 642 681 165 ? 430 595 ? 349 ? 349 ? ? ? ? Total after more than one year 327 1,503 466 45 ? ? 45 204 ? ? 204 417 (a) The bank loan was repayable in monthly instalments of »1,667. Interest is charged at 3 per cent over base rate. The loan was secured by a ¢xed and £oating charge over the assets of Newmark Security Products Limited a wholly owned subsidiary company, and was repaid in full during the year. (b) The bank loan is repayable in quarterly instalments over 20 years. Interest is charged at 6.125 per cent over the ¢rst 5 years and the loan is secured on the freehold property of Vema B.V.. (c) The shareholder’s loan (which has been interest free) was secured by a debenture over the assets of Newmark Technology Limited, a wholly owned subsidiary company. Interest was charged on the loan from 1 May 1999 at 2 per cent over base rate. The loan which was by R K Harrison & Co. Limited, the company in which A Reid has a controlling interest, was repaid in full during the year. (d) The bank loan is repayable in quarterly instalments over 5 years. Interest is charged at 5.25 per cent per annum. (e) The bank loan is repayable in quarterly instalments over 7 years and is secured by a composite debenture and cross guarantee by the Company and Newmark Technology, incorporating a ¢xed and £oating charge over all the assets and undertaking of these companies. There is also a ¢rst ¢xed charge over the Company’s shares in Safetell International Limited and all monies guarantees from Safetell supported by debentures over their assets and undertakings. Interest is payable at 2% over LIBOR. (f) Other creditors comprises »Nil (1999: »125,000) deferred consideration on the acquisition of Drion which is payable by equal monthly instalments after one and within two years, and a further »714,000 (1999: »817,000) deferred consideration which is payable between two and ¢ve years from the balance sheet dates. 16. Provisions for liabilities and charges Group At 1 May 1999 Exchange adjustments Transfer from current taxation On businesses acquired in year Rental provision »000 ? ? ? 200 Deferred taxation »000 143 (20) 11 ? Other »000 ? ? ? 85 Total »000 143 (20) 11 285 At 30 April 2000 200 134 85 419 The rental provision relates to the excess of Safetell’s contractual legal obligation over the current market rental, and will be reversed over the remaining twelve years of the lease and was provided as a fair value adjustment as the obligation existed prior to the date of acquisition. Deferred taxation provided in the ¢nancial statements is as follows: Tax e¡ect on revaluation of ¢xed assets Other timing di¡erences Full provision for deferred taxation has been made for potential liabilities. Newmark Technology Group PLC 24 2000 »000 180 (46) 134 1999 »000 205 (62) 143 17. Share capital Authorised: 200,000,000 (1999: 150,000,000) Ordinary shares of 5p each »10,000,000 »7,500,000 Allotted, called up and fully paid: 110,208,952 (1999: 110,208,952) Ordinary shares of 5p each »5,510,450 »5,510,450 The total number of share options granted under the Approved and Unapproved Share Option Schemes were 3,328,000 (1999: 2,056,000) and 2,068,000 (1999: 3,288,000) respectively. The subscription price payable upon the exercise of the 1,484,000 (1999: 1,484,000) and 2,716,000 (1999: 2,716,000) Approved and Unapproved Share Options respectively granted in October 1997 is 14.5 pence per share. The exercise price for the other 572,000 options granted under both the Approved and Unapproved Schemes, granted in January 1999, is 8.25 pence per share. 250,000 Approved and Unapproved Share Options were granted on 28 October 1999 with an exercise price of 7p. The options may be exercised within 10 years from the date of issue. 18. Share premium and reserves Group Accumulated reserves at 1 May 1999 (as originally reported) Prior year adjustment Accumulated reserves at 1 May 1999 (restated) Retained loss for the year Exchange adjustments Accumulated reserves at 30 April 2000 Share premium account »000 5,051 ? Pro¢t and loss account (Restated) »000 (7,410) (541) 5,051 ? ? 5,051 (7,951) (230) (158) (8,339) The cumulative amount of goodwill eliminated against reserves is »7,539,000. This goodwill will be charged in the pro¢t and loss account on any eventual disposal of the businesses to which it related. Company Accumulated reserves at 1 May 1999 Retained pro¢t for the year Accumulated reserves at 30 April 2000 Share premium account »000 5,051 ? Pro¢t and loss account »000 496 13 5,051 509 Pro¢t attributable to the members of the parent company As permitted by section 230 of the Companies Act 1985, the parent company has not presented its own pro¢t and loss account. The pro¢t on ordinary activities after tax dealt with in the ¢nancial statements of the parent company for the year was »13,000 (1999: »221,000). Newmark Technology Group PLC 25 19. Reconciliation of operating pro¢t to operating cash£ow Operating pro¢t Expenditure in year ¢nanced by share issues Depreciation and amortisation Increase in stocks Increase in debtors Increase in creditors Operating cash £ow 20. Reconciliation of net cash £ows to movement in net debt 2000 »000 201 ? 261 125 1,016 (785) 818 1999 (Restated) »000 314 100 100 (52) (1,012) 745 195 2000 »000 99 (1,130) (1,031) 1999 »000 607 (554) 53 Increase in cash in the year Increase in debt in the year Increase in (net debt)/cash 21. Analysis of net debt Cash at bank and in hand Overdrafts Debt due after one year Debt due within one year April 1999 »000 912 (310) Cash £ow »000 (28) 213 Exchange movements »000 (125) 39 April 2000 »000 759 (58) 602 (883) (144) (1,027) (425) 185 (1,045) (202) (1,247) (1,062) (86) 98 19 117 31 701 (1,830) (327) (2,157) (1,456) 22. Financial instruments The Group’s ¢nancial instruments comprise borrowings, cash resources, and various items, such as trade debtors, trade creditors, etc, that arise directly from its operations. The main purpose of these ¢nancials instruments is to raise ¢nance for the Group’s operations. It is, and has been throughout the year, the Group’s policy that no trading in ¢nancial instruments shall be undertaken. The main risks arising from the Group’s ¢nancial instruments are interest rate risk, liquidity risk and foreign currency risk. The Board reviews and agrees policies for managing each of these risks. These policies have remained unchanged during the year and are summarised below. Interest rate risk The Group ¢nances its operations through a mixture of retained pro¢ts and bank borrowings. The Group borrows at ¢xed rates of interest on long term loans to secure the Group’s exposure to interest rate £uctuations. At the year end, 30% (1999: 65%) of the Group’s borrowings were at ¢xed rates with Nil% (1999: 11%) of these borrowings comprising liabilities on which no interest is paid. Newmark Technology Group PLC 26 Liquidity risks Short-term £exibility in borrowings is achieved by overdraft facilities in the UK and Holland, and by discounting trade debtors in the UK. A long term loan existed in Holland at the date of acquisition of Vema, secured on the freehold property. An unsecured loan of BEF 35m has partly ¢nanced the acquisition of Drion in Belgium during the current year. A secured loan of »1.5 million has ¢nanced the acquisition of Safetell International Limited in the year. At the year end, 37 per cent (1999: 12 per cent) of the Group’s borrowings were due to mature in more than ¢ve years. Foreign currency risk The Group has two signi¢cant overseas subsidiaries operating in Holland and Belgium, and the Belgian acquisition has been partly ¢nanced by a loan in Belgian francs. The sales of the UK companies are predominantly priced and invoiced in sterling, whilst the Dutch and Belgian companies invoice their customers exclusively in their respective national currencies. Interest rate risk of ¢nancial assets and ¢nancial liabilities The interest rate pro¢le of the Group’s ¢nancial assets at 30 April 2000 was: Sterling Dutch guilders Belgian francs Floating rate ¢nancial assets »000 364 ? 384 Fixed rate ¢nancial assets »000 ? ? ? Financial assets on which no interest is received »000 ? 11 ? 748 ? 11 Total »000 364 11 384 759 The interest rate pro¢le of the Group’s ¢nancial liabilities at 30 April 2000 was: Currency Sterling Dutch guilders Belgian francs Total »000 1,546 242 427 2,215 Floating rate ¢nancial liabilities »000 1,546 12 ? Fixed rate ¢nancial liabilities »000 ? 230 427 Financial liabilities on which no interest has been paid »000 ? ? ? 1,558 657 ? The £oating interest rates are detailed in note 15 to the accounts. Currency Dutch guilders Belgian francs Total Fixed rate ¢nancial liabilities Weighted average period for which rate is ¢xed Years 2.5 4.0 Weighted average interest rate % 6.125 5.250 5.556 3.5 > Currency exposures Gains and losses from the Group’s net investment overseas are recognised in the statement of total recognised gains and losses. Newmark Technology Group PLC 27 The table below shows the Group’s currency exposures that give rise to the net currency gains and losses recognised in the pro¢t and loss account. Such exposures comprise the monetary assets and monetary liabilities of the Group that are not denominated in the operating currency of the operating unit involved. As at 30 April 2000, these exposures were as follows: Functional currency of Group operation Sterling Dutch guilders Total Net foreign currency monetary assets (liabilities) in »000 US dollars (81) (22) (103) Other Total (4) ? (4) (85) (22) (107) Maturity of ¢nancial liabilities The maturity of pro¢le of the Group’s ¢nancial liabilities at 30 April 2000 were as follows: In one year or less or on demand In more than one year but not more than two years In more than one year but not more than ¢ve years In more than ¢ve years »000 338 281 765 831 2,215 Borrowing facilities The Group has various undrawn committed borrowing facilities. The facilities available at 30 April 2000 in respect of which all conditions precedent had been met were as follows: Expiring in one year or less »000 371 Fair values of ¢nancial liabilities Set out below is a comparison by category of book values and fair values of the Group’s ¢nancial liabilities as at 30 April 2000. Short-term ¢nancial liabilities and current portion of long-term liabilities Long term borrowings Book values »000 386 1,827 Fair values »000 371 1,212 The fair values shown above have been calculated by discounting cash £ows at prevailing interest rates. The fair values of all other monetary assets and liabilities is equal to their book values. Newmark Technology Group PLC 28 23. Acquisitions On 28 February 2000, the Company acquired the entire share capital of Safetell International Limited (‘‘Safetell’’) for a consideration of »1.5 million payable on completion. The assets and liabilities of Safetell which have been accounted for under acquisition accounting rules were as follows: Book value »000 Revaluation to fair value »000 Provisional fair value »000 Fixed assets Tangible Current assets Stocks Debtors Bank and cash Total assets Creditors Creditors Provisions Total liabilities Net assets Purchased goodwill Total purchase consideration Comprises: Cash Costs 118 202 525 518 1,363 674 89 763 600 1,103 1,703 1,500 203 1,703 ? ? ? ? ? ? 200 200 (200) 200 ? ? ? ? 118 202 525 518 1,363 674 289 963 400 1,303 1,703 1,500 203 1,703 The trading results of Safetell for the eleven months of that company’s statutory accounts for the thirteen months to 30 April 2000, that were earned in the period prior to acquisition and therefore not included in the Group results, were as follows: Turnover Pro¢t before tax Taxation Pro¢t after tax »000 2,983 210 (56) 154 The pro¢t after tax of Safetell for the previous twelve month statutory accounts was »138,000. In addition to the goodwill arising in respect of Safetell above, there was a further »80,000 goodwill adjustment in respect of Ateliers Drion formed in the previous ¢nancial year and »15,000 in respect of other new subsidiary companies. Newmark Technology Group PLC 29 24. Other ¢nancial commitments At 30 April 2000 the Company had annual commitments under non-cancellable operating leases as follows: Plant and equipment Expiring within 1 year Expiring between 1 and 5 years inclusive Expiring in over 5 years 2000 »000 2 94 ? 1999 »000 51 109 ? 25. Related party transactions (a) A Reid is a director of the company, and has a controlling interest in R K Harrison & Co. Limited which, as stated in note 15, had a loan of »153,225 to Newmark Technology Limited, a wholly owned subsidiary, and was repaid in the year. Interest was charged on the loan from 1 May 1999 at 2% over base rate. R K Harrison & Co. Limited received directors’ fees of »7,500 during the year (1999: »5,000) in respect of Mr. Reid. (b) M Dwek is a director of the company, and owns 51% of the share capital of Arbury Inc., which received consultancy fees from the company of »121,000 (1999: »99,000) in the year. (c) M Veldhoen is a director of the company, and owns the entire share capital of Vema Beheer B.V., which received management fees from the group of »30,000 (1999: »77,000) in the year. (d) Amounts totalling »4,842 (1999: »19,250) were paid on an arm’s length basis during the year to a company of which B Beecraft is a director, in respect of consultancy and other accountancy services. Newmark Technology Group PLC 30 NOTICE OF ANNUAL GENERAL MEETING Notice is hereby given that the Annual General Meeting of Newmark Technology Group PLC will be held at 21/23 Ormside Way, Redhill, Surrey RH1 2NT on 26 October 2000 at 11.30 a.m. for the purposes of considering and, if thought ¢t, passing the following resolutions which will be proposed as Ordinary Resolutions and Special Resolutions as speci¢ed: ORDINARY RESOLUTIONS 1. To receive, consider and adopt the report of the Directors, and the annual accounts for the period ended 30 April 2000 and the auditors’ report thereon. 2. 3. 4. 5. To re-appoint M Dwek, as a director of the company. To re-appoint S Rajwan, as a director of the company. To re-appoint Hacker Young as auditors and to authorise the directors to determine their remuneration. To increase the authorised share capital of the Company from »10,000,000 to »12,500,000 by the creation of 50 million new ordinary shares of 5 pence each ranking pari passu in all respects as one class of shares with the existing ordinary shares in the capital of the Company. 6. Directors’ authority to allot shares That the Directors be, and they are hereby, generally and unconditionally authorised pursuant to section 80 of the Companies Act 1985 (the ‘‘Act’’), in substitution for any existing authorities conferred upon the Directors pursuant to that section, to exercise all the powers of the Company to allot relevant securities of the Company (as de¢ned in that section) to such persons at such times and on such terms as they think proper up to an aggregate nominal amount equal to one third in nominal value of the ordinary share capital of the Company in issue, such authority to expire upon the earlier of the conclusion of the next Annual General Meeting of the Company or the date (if any) on which the said authority is revoked, varied or renewed, save that the Company may, prior to the expiry of such period, make any o¡er or agreement which would or might require relevant securities to be allotted after the expiry of such period and the Directors may allot relevant securities in pursuance of such o¡er or agreement notwithstanding such expiry; and SPECIAL RESOLUTION 7. Partial exclusion of pre-emption rights That, subject to the passing of resolution 6 above, the Directors be and they are hereby empowered pursuant to section 95(1) of the Act to allot equity securities (as de¢ned in Section 94(2) of the Act) of the Company for cash pursuant to the general authority of the Directors under section 80 of the Act conferred by resolution 6 above as if the provisions of section 89(1) of the Act did not apply to such allotment provided that the power conferred by this Resolution shall be limited to the allotment: (a) of equity securities in connection with an o¡er of such securities by way of rights to holders of ordinary shares in proportion (as nearly as may be practical) to their respective holdings of such shares but subject to such exclusions or other arrangements as the Directors may deem necessary or expedient in relation to fractional entitlements or any legal or practical problems under the laws of any territory or the requirements of any regulatory body or stock exchange; and (b) otherwise than pursuant to paragraph (a) above, of equity securities (to the extent that they are relevant shares within the meaning of Section 94 of the Act or to the extent that they are other equity securities giving the right to subscribe for or convert into relevant shares) up to an aggregate nominal amount not exceeding ten per cent in nominal value of the issued ordinary share capital of the Company, such power to expire at the earlier of the conclusion Newmark Technology Group PLC 31 of the next Annual General Meeting of the Company or ¢fteen months from the date of this resolution whichever is the earlier, save that the Company may, prior to the expiry of such period, make any o¡er or agreement which would or might require equity securities to be allotted after the expiry of such period and the Directors may allot equity securities in pursuance of such o¡er or agreement notwithstanding such expiry. By order of the Board B G Beecraft 18 September 2000 Registered O⁄ce 21/23 Ormside Way Redhill Surrey RH1 2NT Notes: 1. A member entitled to attend and vote at the meeting may appoint one or more proxies to attend and, on a poll, to vote 2. 3. instead of him. A proxy need not be a member of the company. In relation to uncerti¢cated shares, only those persons who are registered on the relevant register 48 hours before the time of the meeting shall be entitled to attend and vote at the meeting. The following documents are available for inspection at the company’s registered o⁄ce during normal business hours on any weekday (excluding Saturdays) until 25 October 2000 and will also be available for inspection at the place of the annual general meeting for at least 15 minutes prior to and until the conclusion of the meeting: (a) a register in which are recorded details of all transactions in the shares of the company in respect of all Directors and their families; (b) a copy of every service contract between the company and any Director of the company. 4. Valid forms of proxy, duly signed, together with the Power of Attorney or authority (if any) under which they are signed (or a certi¢ed copy of such power or authority) must be lodged with the Company Secretary at the Registered O⁄ce by no later than 11.30 a.m. on 25 October 2000. Completion of a form of proxy will not a¡ect the right of a member to attend and vote at the meeting. 5. Directors authority to allot shares: 6. Under Section 80 of the Companies Act 1985, the Directors may not exercise any powers of the Company to allot relevant securities (as de¢ned in that section) unless authorised to do so by the Company in general meeting or by its articles. Resolution 6 authorises allotment of up to one third of the issued share capital of the Company for the period to the conclusion of the Annual General Meeting in 2001 or until such time as the authority is revoked, whichever is earlier. It replaces all previous authorities and is in line with the institutional guidelines followed by other publicly listed companies. Partial exclusion of pre-emption rights: Section 89 of the Companies Act 1985 requires that a public company allotting shares for cash must ¢rst o¡er them to existing shareholders following a statutory procedure which is both costly and cumbersome. Resolution 7 enables the Directors to allot shares up to an aggregate nominal amount of ten per cent of the ordinary share capital of the Company in issue. It replaces all previous such powers. The taking of powers of this sort is reasonably standard practice for public companies and the Directors believe that the limited powers provided by this resolution will maintain a desirable degree of £exibility. Unless previously revoked or varied the disapplication will expire on the conclusion of the next Annual General Meeting of the Company or 14 months from the date of the passing of this resolution whichever is earlier. Newmark Technology Group PLC 32 NEWMARK TECHNOLOGY GROUP PLC Form of Proxy Annual General Meeting I/We (name(s) in full)............................................................................................................................ of ............................................................................................................................................................ ................................................................................................................................................................ ................................................................................................................................................................ being (a) holder/holders of Ordinary Shares of the above-named Company and entitled to vote at general meetings thereof hereby appoint the Chairman of the meeting or ................................................................................................................................................................ as my/our proxy to vote for me/us on my/our behalf at the Annual General Meeting of the holders of Ordinary Shares of the Company to be held at 11.30 a.m. on 26 October 2000, and at any adjournments thereof, and direct the proxy to vote for/against the resolutions to be proposed thereat as detailed below. Note: If it is desired to appoint any other person, please insert his/her name and address above and delete the words ‘‘the Chairman of the meeting or’’. Signed .................................................................................................................................................... Date ....................................................................................................................................................... Please indicate with an ‘‘X’’ in the appropriate box below how you wish your vote to be cast. If the form is returned without any indication as to how the proxy shall vote on any particular matter, the proxy will vote or may abstain as he/she thinks ¢t. For Against 1. 2. 3. 4. 5. 6. 7. To receive the report of the Directors and the annual accounts for the period ended 30 April 2000 and the auditors report thereon To re-appoint M Dwek as a director of the Company To re-appoint S Rajwan as a director of the Company To re-appoint Hacker Young as auditors and to authorise the directors to determine their remuneration To increase the authorised share capital of the company to »12,500,000 by the creation of 50 million new ordinary shares of 5p each To generally and unconditionally authorise the Directors to allot securities pursuant to section 80 of the Companies Act 1985 To partially disapply the statutory pre-emption rights pursuant to section 95(1) of the Companies Act 1985 Printed by greenaways, a member of the ormolu group London, Edinburgh, Leeds, Manchester, New York, Paris, Hong Kong, Singapore, Tokyo. 127400