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ASSA ABLOYAnnual Report For the year ended 30 April 2001 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 Page 2 3 6 11 13 14 18 18 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 Broker: Joint Broker: P R Consultants: M Dwek (Chairman) S Rajwan (Chief Executive) B Beecraft FCA (Finance Director) A Reid FCA (Non-Executive Director) M Rapoport (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« Plc 1 Waterloo Street Birmingham B2 5PG Williams de Broe« Plc 1 Waterloo Street Birmingham B2 5PG Seymour Pierce Ellis Limited Talisman House Jubilee Walk Three Bridges Crawley West Sussex RH10 1LQ Shandwick International Aldermary House 15 Queen Street London EC4N 1TX Newmark Technology Group PLC 2 CHAIRMAN’S STATEMENT Overview We have had another extremely busy year, the highlight of which was the successful £otation of our Dutch subsidiary, Vema N.V., on the Alternative Investment Market (‘‘AIM’’) in May 2001, giving it a market capitalisation of nearly »6 million at that time. The Group received special publicity as Vema was the ¢rst company to list Global Depository Receipts (‘‘GDRs’’) on AIM, as well as being the ¢rst Dutch issuer to £oat on the market. The GDR allows investors to purchase foreign shares in their domestic market and enables the issuing company to raise capital in overseas markets instead of only its home market. The result of the £otation was that our interest in Vema was reduced to 51 per cent and so the company will continue to be consolidated within our results. Although this process was expensive in terms of time and e¡ort on our part, as well as costly in terms of the services of our professional advisors. I believe that this will assist Vema to develop its product range both organically and through acquisitions, and by targeting new geographical markets. We further believe that the valuation placed by the market on Vema demonstrates that the market capitalisation of the Newmark Group does not re£ect the underlying value of the businesses. Financial results The loss before amortisation of goodwill and taxation for the year was »504,000 (2000: pro¢t »160,000). Turnover for the year was »12.0 million (2000: »9.9 million). The results include a full year’s contribution from Safetell which was acquired in February 2000, compared to only two months in the preceding year. The reasons for the main variations in the results for the various divisions are set out below. Electronic Division The access control market in the UK was £at during the year, most noticeably with a slow fourth quarter where projects which had originally been planned were deferred by our customers. In addition, sales were also a¡ected by the purchasing commitment of Lik On Security in Hong Kong being rescheduled so that shipments are being made over a longer period. The emphasis in the year has been on broadening our product o¡ering which has included the provision of a new software package for the latest hardware controller, AC1. This strategy was expanded to provide a full hardware and software product family to support the low-end system requirements of our dealer base and complement the high end product already on o¡er. The introduction of MidiCE/MidiPlus in the fourth quarter to accompany the AC1 family of control hardware o¡ered the company a new product platform to aggressively target the smaller system market. Our latest Omni5 software, aimed at the mid range on-line systems, was released in May 2001. Furthermore, a new dealer plan with more focused technical support and promotional plans puts the company in a stronger and more £exible position to satisfy a wider range of installers and dealers. Since the launch of this new program and product o¡ering, this has resulted in new dealers with new projects. Newmark Technology moved into the new ¢nancial year better prepared in both product o¡ering and support activities with additional products, namely video licence plate recognition and digital CCTV transmission and recording. Newmark Technology Inc., was formed in the US last year to promote our proprietary ParSec systems designed for asset tracking solutions. We have established our sales and marketing operation in the year and substantial amounts of time and e¡ort have been invested in building long term relationships with the major security companies. The marketing and sales activities were hampered by a new requirement to obtain Underwriters Laboratories (‘‘UL’’) certi¢cation (US approval for access control, asset tagging and alarm systems). Consequently the sales activities were put on hold pending this certi¢cation. I am pleased to report that this has now been obtained in May 2001 but the direct cost of the US operation for the year was »359,000. Although we still remain con¢dent concerning the future of this part of our business, steps have been taken to reduce the level of overhead until the revenue stream has been ¢rmly established. Newmark Technology Group PLC 3 Our major target customer in the USA is ADT Inc., which is by far the largest security installation company in North America. From the outset it had been agreed initially to supply ADT via two distribution routes, Northern Computers Inc., (‘‘NCI’’) (a subsidiary of the Honeywell Group) and Casi Rusco (a subsidiary of Interlogix Group). NCI were quick to adopt the product but due to a number of factors, primarily a major restructuring within the Honeywell Group, resulted in only minimal sales to date. Casi Rusco waited until the UL certi¢cation was obtained and is now working closely with ADT to open up the market. Sales and technical programs are in progress and we anticipate increased business from them in the second half of the year. We are also targeting other OEMs and we are working with the Ademco Group, Hirsch Electronics, Doortek and others. We have succeeded in obtaining Federal Communication Commission (‘‘FCC’’) approval for our Personnel ID tag and carried out further modi¢cations to the antenna. The product has been exhibited with our customers at the major exhibitions of ISC and ASIS. Secure Locking Division Vema has developed a signi¢cant position in the Dutch market o¡ering customers a complete security locking solution. The company provides a consultancy service in order to meet the customers speci¢c requirements which involves sales and support sta¡ liaising at all stages of a system implementation. These services attract a large amount of repeat business and, together with the wide product range, enable the company to maintain its ability to generate both pro¢ts and cash. Vema Belgium, which started trading after the last year end in May 2000, was set up to replicate the successful formula of the Dutch operation. From a start up situation, the level of activity has increased over the year and the company is now pro¢table on a monthly basis. Asset Protection Division Until 1999, Drion had focused only on the Belgian banking sector but since then has embarked on an export policy which resulted in two major export contracts to Algeria together with some smaller ones in Tunisia and Albania. The income from the export market has enabled us to partly o¡set the fall in the home banking sector caused by the ongoing consolidation of companies within that sector. During the year we delivered the ¢nal portion of the second contract to Algeria and are awaiting the release of the third tender. During the year, we embarked on a new initiative to open up the commercial sector, for example museums, embassies etc., which has resulted in a very encouraging response. We are currently bidding on several major projects and we aim to develop this sector further. Safetell’s historical core business activity of Eclipse rising screens was below average for the ¢rst six months due to design changes by some of our principal customers and proposed mergers in the retail ¢nancial market. However, tight controls on direct and indirect costs improved margins and maintained pro¢tability. Sales increased to maintain a steady level in the early months of 2001 and have shown a noticeable upturn since March. A major export order to the US was secured and delivered before the year end with the possibility of repeat orders in the current year. This is a new market for us and presents exciting possibilities. Although sales in the year were below expectations, the RollerCash product line continues to win new business with customer orders secured from the Derbyshire, Nationwide and Sta¡ordshire Building Societies and good prospects for other new customers. As I reported in our interim statement, Safetell secured The Post O⁄ce contract for the supply of cash handling systems for all open plan o⁄ces until July 2003. The initial sales under this contract were completed before the end of the ¢nancial year and we anticipate an upturn in business under this contract in 2002. The InterScreen and CounterShield product lines retained their market share as niche products with increasing demand from a wider customer base. Sales of these product lines were substantially ahead of plan. Complementary product lines for ¢xed glazing solutions to add value to product installation contracts were designed, tested and implemented during the year. Newmark Technology Group PLC 4 The requirements of the Disability Discrimination Act for the providers of public services to make adequate provision for the disabled, presents a major opportunity as reception and cash counters are replaced. Safetell has developed and launched a new product line ‘‘Eye 2 Eye’’ to address this speci¢c market and the ¢rst installation was carried out in September 2001 for ARRIVA Trains Merseyside. Balance sheet and cash £ow The Group balance sheet has changed signi¢cantly in the year due to: L the reclassi¢cation of the bank loan for the original acquisition of Safetell to current liabilities (»1,333,000 at 30 April 2001) as this has been repaid from the proceeds of the Vema £otation after the year end; and L the inclusion in current liabilities of the last instalment of the consideration for Drion of »817,000 which is payable in April 2002. The balance sheet also takes no account of the proceeds of »2.88 million (before expenses) from the subscription by new shareholders of Vema received in May 2001. Appointment of new Non-Executive Director As we noted in the interim report, Michel Rapoport has joined the Board as a non-executive director bringing substantial experience of the security industry. Michel was President and Chief Executive O⁄cer in the USA of Mosler Inc.; a full service manufacturer and integrator of security systems for banking, industrial and commercial organisations. Prior to that Michel was with Pitney Bowes. We are delighted to welcome him to the Group. Employees On behalf of the Board, I would like to thank all our employees in the Group for their continuing e¡orts on behalf of the Company. The future We have been disappointed by the length of time that it has taken to develop the expected revenue stream in the USA and the state of the market in the UK during the year. With the UL certi¢cation, we have made our ¢rst shipments in the USA in the ¢rst half of the current year and would hope to build upon this in the second half. The UK security market remained £at in the ¢rst few months of the current year but the interest in our Omni 5 software is increasing all the time and we look forward to brighter times. The Asset Protection and Secure Locking divisions remain pro¢table and cash generative businesses with solid bases to produce organic growth in existing and new product and geographical markets. The Vema £otation was a success, and we will continue to seek opportunities to realise value for our shareholders. Current events throughout the world, combined with the state of the stock markets and fears over the economy are obviously of concern. However, the events of September 11 also emphasise the urgent need to increase security controls in almost every sector of the market. Although we do not believe that this will translate to immediate additional business, security companies such as ourselves should bene¢t in the medium term as companies review their security requirements. I have con¢dence in the Group that we have established from our own developments and acquisitions, and remain optimistic about the future. MAURICE DWEK Chairman Newmark Technology Group PLC 5 REPORT OF THE DIRECTORS The Directors submit their annual report and audited ¢nancial statements of the Group for the year ended 30 April 2001. 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 an investment holding company. Financial results and dividends The pre-tax loss for the year was »504,000 before amortisation of goodwill (2000: »160,000 pro¢t). The loss before taxation was »620,000 (2000: pro¢t »90,000). The directors do not 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 In May 2001, the Group’s subsidiary company Vema N.V. was admitted to trading on the Alternative Investment Market and a placing and o¡er for Global Depository Receipts in the company reduced the Newmark shareholding to 51 per cent. Vema N.V. will continue to be consolidated within the results of the Group. 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 sector which satisfy the requirements set by the Board. Share Issues In October 2000, the Company issued 11,000,000 Ordinary Shares of 5 pence each at a price of 6.5 pence per share credited as fully paid. Directors The Directors who served during the year were as follows: M Dwek S Rajwan B Beecraft A Reid M Rapoport (appointed 22 March 2001) As reported last year, Myrddin David was also a director of the Company until his death in August 2000. Details of the Directors’ service contracts are shown in the Remuneration Committee Report on pages 11 and 12. A Reid and M Rapoport retire in accordance with the articles of association. Both being eligible, o¡er themselves for re-election at the next annual general meeting. In compliance with the Combined Code their biographical information is provided in the report of the Remuneration Committee. 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 2000 (or the date of their appointment to the Board, if later) and 30 April 2001 were as follows: M Dwek(a) A Reid(b) M Rapoport Percentage holding at 30 April 2001 30 April 2001 12.4% 15,000,000 19.5% 23,608,238 0.8% 1,000,000 30 April 2000 (or date of appointment if later) 15,000,000 23,608,238 1,000,000 (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 in part 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. In the period between 30 April 2001 and 30 September 2001, A Reid acquired a further 1 million shares in the Company. There were no further changes in these shareholdings in this period. The interests of Directors (and related parties) in Share Option Schemes operated by the Company at 30 April 2001 (and which did not change in the year) 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. 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. The amount of the costs incurred in the year are shown in note 3 to the accounts. 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 as at the date of this document: Albany Life Assurance Company Limited M V. Beheer BV HSBC Global Custody Nominee (UK) Limited Pershing Keen Nominees Limited PSL982 Account PH Nominees Limited Peclt Account Percentage of class 4.9% 11.1% 5.5% 3.5% 3.9% Number of shares 5,900,000 13,447,725 6,666,666 4,181,000 4,737,000 Employee involvement The Group keeps employees informed of matters a¡ecting them and 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 Newmark Technology Group PLC 7 abilities. In the event of employees becoming disabled, every e¡ort is made to retain them in order that their employment with the Group may continue. 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. Environmental Policy The Group’s environmental policy endeavours to minimise the impact of its activities on the environment through, where possible, the proper conservation of natural resources. The Group recognises its responsibility to continually review and improve its environmental performance and, in doing so, seeks the input of architects, engineers and other professional advisers. 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 year end were 41 days (2000: 47 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. At 30 April 2001, the Board comprised an Executive Chairman, two Executive Directors and two independent Non-Executive Directors. 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 Board has considered the recommendation to introduce a Nominations Committee. However, it was decided given the small size of the Board, that nominations are to remain a matter reserved for the Board. 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 has been implemented by the Company. Newmark Technology Group PLC 8 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 Board continues to report on 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. The Directors have considered the Turnbull Report but have decided that the cost of implementing the procedures contained therein is disproportionate to expected bene¢ts at this stage of the Group’s development. 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: day to day supervision of the business by the Executive Directors, 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, Board approval of all signi¢cant capital expenditure, and all acquisitions. . . . . . 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. The Board has established two standing committees, the audit and remuneration committees, comprising the two independent Non-Executive Directors. Each committee has written terms of reference which are regularly reviewed by the Board. The Audit Committee, comprising A Reid and M Rapoport, is responsible for the appointment of external auditors, reviewing the interim and annual ¢nancial results, considering matters raised by the auditors and reviewing the internal control systems operated by the Group. The Remuneration Committee, comprising A Reid and M Rapoport meets at least once a year to review the terms and conditions of employment of Executive Directors including the provision of incentives and performance related bene¢ts. The report of the remuneration committee is set out on pages 11 and 12. 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: . . . 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, 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. Newmark Technology Group PLC 9 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 26 October 2001 Newmark Technology Group PLC 10 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 independent Non-Executive Directors and at 30 April 2001 comprised only the two existing Non-Executive Directors, Alexander Reid and Michel Rapoport. Alexander Reid is executive chairman of R.K. Harrison & Company Limited (a shareholder of the Company), a director of Yeoman Investment Trust Plc and a number of unquoted companies. He was formerly a director of the merchant bank Samuel Montagu & Co. Limited and for 15 years was a director of various investee and group companies within Invesco MIM (now Amvescap). Michel Rapoport was previously President and Chief Executive O⁄cer of Mosler Inc., a manufacturer and integrator of security systems for banking, industrial and commercial organisations. Prior to that he was Vice President of Pitney Bowes International and Chairman of Pitney Bowes France. He is Chairman of Chloralp S.A., a chloralkali manufacturer in Grenoble, France, and President of La Roche Industries Inc., an ammonia distributor based in Atlanta, U.S.A. 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 are 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 services provided to the Company by Mr Dwek. The Agreement may be terminated by either party subject to 24 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 4 April 2001, Arbury Inc. entered into a consultancy agreement with Vema N.V. (a subsidiary company) pursuant to which Mr Dwek acts as Chairman of that Company. This agreement can be terminated by 12 months’ written notice given by either party. On 30 April 1997, the Company entered into a Service Agreement with Mr Rajwan which may now be terminated by either party serving 12 months’ notice. 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. On 4 April 2001 R.K. Harrison & Company Limited entered into a consultancy agreement with Vema N.V. pursuant to which Mr Reid acts as Finance Director of Vema N.V.. This agreement can be terminated by 12 months’ written notice given by either party. 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 Group in excess of such pro¢ts as are required to generate a minimum amount of Earnings per Share for the Group may be allocated. Newmark Technology Group PLC 11 Directors’ emoluments Emoluments of the directors (including pension contributions and bene¢ts in kind) of the Company were as follows: Consultancy/ management Benefits agreement Salary »000 »000 in kind Bonus »000 »000 Fees »000 Total »000 Pension contri- butions »000 Executive Directors M Dwek(a) S Rajwan(b) B Beecraft Non-Executive Directors M David A Reid(c) M Rapoport 2000 121 L L L L L 121 151 L 100 73 L L L 173 150 L 13 7 L L L 20 10 L L L L L L L 25 L L L 2 8 L 10 14 121 113 80 2 8 L 324 350 L 10 L L L L 10 12 The directors’ share interests are detailed in the Report of the Directors on page 7. (a) The Company paid a consultancy fee to Arbury Inc., a company 51 per cent owned by M Dwek which covers salary, pension and car bene¢ts. (b) The pension contributions in respect of S Rajwan were for a money purchase pension scheme. (c) The directors’ fees in respect of A Reid were paid to R.K. Harrison & Co. Limited. Newmark Technology Group PLC 12 AUDITORS’ REPORT TO THE MEMBERS OF NEWMARK TECHNOLOGY GROUP PLC We have audited the ¢nancial statements on pages 14 to 30 which have been prepared in accordance with the historical cost convention and the accounting policies set out on pages 18 and 19. 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 and the Group’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 2001, and of the loss of the Group for the year ended 30 April 2001 and have been properly prepared in accordance with the Companies Act 1985. HACKER YOUNG Chartered Accountants Registered Auditors London 26 October 2001 Newmark Technology Group PLC 13 CONSOLIDATED PROFIT AND LOSS ACCOUNT For the year ended 30 April 2001 Turnover Cost of sales Gross pro¢t Administrative expenses pre amortisation of goodwill Amortisation of goodwill Administrative expenses L total Operating (loss)/pro¢t Interest payable (Loss)/pro¢t on ordinary activities before taxation Tax on (loss)/pro¢t on ordinary activities Amount withdrawn from reserves Loss per share L basic and diluted Notes 2 3 4 6 17 7 2001 »000 12,049 2000 »000 9,863 (7,037) (5,548) 5,012 4,315 (5,310) (116) (5,426) (414) (206) (620) (284) (904) (4,044) (70) (4,114) 201 (111) 90 (320) (230) pence pence (0.8p) (0.2p) All of the above amounts are in respect of continuing operations, inclusive of acquisitions. Newmark Technology Group PLC 14 BALANCE SHEETS as at 30 April 2001 Fixed Assets Intangible assets Tangible assets Investments Current Assets Stocks Debtors Cash at bank and in hand Group 2001 »000 Group 2000 »000 Company 2001 »000 Company 2000 »000 Notes 8 9 10 11 12 2,358 1,483 L 3,841 1,656 2,454 652 4,762 2,480 1,244 L 3,724 1,260 2,628 759 4,647 L L 7,218 7,218 L 2,665 L 2,665 L L 9,355 9,355 L 3,243 L 3,243 13 (5,466) (3,186) (1,366) (242) Creditors: amounts falling due within one year Net current (liabilities)/ assets Total assets less current liabilities Creditors: amounts falling (704) 3,137 1,461 5,185 due after more than one year 14 (665) (2,544) Provisions for liabilities and charges Capital and reserves Called up share capital Share premium Pro¢t and loss reserve Equity shareholders’ funds 15 16 17 17 (403) 2,069 6,060 5,194 (9,185) 2,069 (419) 2,222 5,510 5,051 (8,339) 2,222 1,299 8,517 L L 3,001 12,356 (1,286) L 8,517 11,070 6,060 5,194 (2,737) 8,517 5,510 5,051 509 11,070 The ¢nancial statements on pages 14 to 30 were approved by the Board of Directors on 26 October 2001 and were signed on its behalf by: M DWEK Chairman B BEECRAFT Finance Director Newmark Technology Group PLC 15 CONSOLIDATED CASH FLOW STATEMENT For the year ended 30 April 2001 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 Loan to ¢nance acquisition of property Repayment of loans Issue of shares Expenses paid in connection with share issues Net cash in£ow from ¢nancing (Decrease)/increase in cash Notes 18 20 2001 »000 236 (206) (206) (517) (402) (402) L L L L L 251 (246) 5 715 (22) 698 (191) 2000 »000 818 (111) (111) (309) (180) (180) (1,718) (80) 518 (1,280) 1,500 L (253) 1,247 L L 1,247 185 Newmark Technology Group PLC 16 STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES For the year ended 30 April 2001 Loss for the ¢nancial year Exchange di¡erence on translation of net assets and results of subsidiary undertakings Total recognised gains and losses relating to the year RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS’ FUNDS For the year ended 30 April 2001 Loss for the ¢nancial year New share capital subscribed (net of issue costs) Exchange di¡erence on translation of net assets and results of subsidiary undertakings Net reduction to shareholders’ funds Opening shareholders’ funds Closing shareholders’ funds 2001 »000 (904) 58 (846) 2001 »000 (904) 693 58 (153) 2,222 2,069 2000 »000 (230) (158) (388) 2000 »000 (230) L (158) (388) 2,610 2,222 Newmark Technology Group PLC 17 Notes to the ¢nancial statements For the year ended 30 April 2001 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 Goodwill represents the di¡erence between the costs of acquisition and the fair value of the net tangible assets acquired. In accordance with Financial Reporting Standard 10, goodwill arising on the acquisition of subsidiaries 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. Intellectual property rights and development costs Intellectual property rights and development costs are written o¡ to the pro¢t and loss account as incurred. 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 Assets acquired under hire purchase contracts and ¢nance leases are capitalised as tangible assets and depreciated over the shorter of the lease term and their useful lives. Obligations under such agreements are included in creditors net of the ¢nance charge allocated to future periods. The ¢nance element of the rental payment is charged to the pro¢t and loss account so as to produce a constant periodic rate of charge on the net obligation outstanding in each period. Rentals payable under operating leases are charged against income on a straight line basis 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 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. Newmark Technology Group PLC 18 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. The results of the foreign subsidiary undertakings are translated into sterling at the average rates of exchange for the ¢nancial year. Surpluses and de¢cits arising from changes in exchange rates during the year, in so far as they relate to the net investment in overseas subsidiaries together with surpluses or de¢cits arising from the translation of overseas subsidiaries’ results at rates ruling at the year end compared to the average rates of exchange for the ¢nancial year, are taken direct 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 or over with more than one year’s service. The assets of the scheme are held separately from those of the company. Contributions to the scheme are charged to the pro¢t and loss account so as to spread the cost of pensions over employees’ working lives with the company. The contributions are determined by a quali¢ed actuary on the basis of an annual valuation. The most recent valuation was performed in October 2000. 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 the contributions paid in respect of S Rajwan for a money purchase scheme, 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 (Loss)/pro¢t before tax and net assets UK Europe Rest of the World 2001 By origin »000 4,860 7,189 L 12,049 2001 Loss before tax »000 (990) 738 (368) (620) 2000 By origin »000 2,970 6,893 L 9,863 2001 By destination »000 4,306 6,727 1,016 2000 By destination »000 2,127 6,519 1,217 12,049 9,863 2000 Profit before tax »000 (989) 1,079 L 90 2001 Net assets »000 1,264 1,181 (376) 2,069 2000 Net assets »000 716 1,506 L 2,222 Newmark Technology Group PLC 19 3. Operating (loss)/pro¢t Operating (loss)/pro¢t is arrived at after charging the following: Group Depreciation of tangible ¢xed assets 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 2001 »000 236 82 36 64 1 194 141 2000 »000 194 142 49 23 5 103 76 Interest 4. Interest payable and similar charges Bank loans, overdrafts and other short term ¢nance 206 111 5. Employees and directors The average numbers employed by the Group (including Executive Directors) within the following categories were: Management, sales and administration Production The costs incurred in respect of these employees were: Wages and salaries Social security costs Other pension costs Number 72 58 130 Number 56 43 99 »000 3,141 446 111 3,698 »000 1,942 354 42 2,338 Details of directors’ emoluments are disclosed in the Report of the Remuneration Committee on page 12. Taxation 6. Taxation is based on the results for the year and comprises: UK Corporation taxation Overseas Corporation taxation (35/40%) Deferred taxation Taxation charge 2001 »000 L 273 11 284 2000 »000 L 309 11 320 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. Newmark Technology Group PLC 20 Loss per share 7. The calculation of the basic loss per ordinary share is based on a loss of »904,000 (2000: »230,000) and the weighted average number of shares in issue during the year of 116,625,619 (2000: 110,208,952). The options in issue have no dilutive e¡ect. 8. Intangible ¢xed assets Group Cost At 1 May 2000 Adjustment to costs accrued in previous year At 30 April 2001 Amortisation At 1 May 2000 Charge for the year At 30 April 2001 Net book value At 30 April 2001 At 30 April 2000 9. Tangible ¢xed assets Group Cost At 1 May 2000 Additions Disposals Reclassi¢cations Exchange adjustment At 30 April 2001 Depreciation At 1 May 2000 Charge for the year Disposals Reclassi¢cations Exchange adjustment At 30 April 2001 Net book value At 30 April 2001 At 30 April 2000 Freehold land and buildings »000 Plant, machinery & motor vehicles »000 Computers, fixtures & fittings »000 998 269 L L 66 1,333 111 36 L L 3 150 1,183 887 1,030 86 (84) 9 52 1,093 904 80 (57) (8) 51 970 123 126 642 74 (115) (9) 22 614 411 120 (115) 8 13 437 177 231 Goodwill »000 2,550 (6) 2,544 (70) (116) (186) 2,358 2,480 Total »000 2,670 429 (199) L 140 3,040 1,426 236 (172) L 67 1,557 1,483 1,244 Newmark Technology Group PLC 21 10. Fixed asset investments Company Investment in subsidiary companies Cost At 1 May 2000 Reversal of over accrual for costs in previous year At 30 April 2001 Provision for impairment At 1 May 2000 Impairment At 30 April 2001 Net book value At 30 April 2001 At 30 April 2000 »000 9,355 (8) 9,347 L 2,129 2,129 7,218 9,355 The provision for impairment has been calculated to state the net book value of an investment in a subsidiary company at the commercial valuation of that company. The details of the Company’s subsidiary undertakings (wholly owned unless otherwise stated) which are 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. Vema N.V.(3) 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.(4) Newmark Technology Inc. Vema (U.K.) Limited(4) Activity Trading Trading Dormant Holding Trading Trading Trading Holding Trading Trading Property Trading Trading Dormant Country of incorporation England & Wales England & Wales England & Wales Description of shares held Ordinary Ordinary Ordinary The Netherlands The Netherlands Belgium Belgium England & Wales England & Wales England & Wales Belgium Belgium USA England & Wales Ordinary Ordinary Ordinary Ordinary Ordinary and Redeemable Preference Ordinary Ordinary 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. (4) Owned by Vema N.V. Subsequent to the year end, the investments in Vema N.V. and Vema Belgie B.V. were reduced to 51 per cent. Newmark Technology Group PLC 22 11. Stocks Raw materials Work in progress Finished goods 12. Debtors Amounts falling due within one year: Amounts owed by subsidiary undertakings Trade debtors Prepayments and accrued income Other debtors 2001 Group »000 722 182 752 1,656 2000 Group »000 461 140 659 1,260 2001 Company »000 L L L 2000 Company »000 L L L L L 2001 Group »000 2000 Group »000 2001 Company »000 2000 Company »000 L 2,062 178 214 2,454 L 2,198 301 129 2,628 2,658 L 7 L 2,665 3,164 L 7 72 3,243 13. Creditors: amounts falling due within one year 2001 Group »000 1,660 935 1,009 128 1,734 L Bank loans and overdrafts (note 14) Trade creditors Accruals Other taxation and social security Other creditors Corporation tax 5,466 2000 Group »000 385 1,089 487 211 796 218 3,186 2001 Company »000 1,333 L 20 L 13 L 2000 Company »000 214 L 20 L 8 L 1,366 242 Other creditors within the Group includes an amount of »171,487 (2000: »79,835) in respect of a factoring company which is secured on trade debtors of a subsidiary company. Bank overdrafts of »Nil (2000: »46,000) are secured by a £oating charge on the assets (excluding trade debtors) of a subsidiary company, whilst further overdrafts of »109,000 (2000: »12,000) are secured by a £oating charge on the assets (excluding freehold property) of another subsidiary. Newmark Technology Group PLC 23 14. Creditors: amounts falling due after more than year Bank loans and overdrafts Other creditors(f) Group 2001 »000 662 3 Group Company Company 2000 »000 1,286 L 2000 »000 1,830 714 2001 »000 L L Company The terms of repayment, interest and security for the loan to the Company are set out as loan (c) in the analysis of Group Loans. 665 2,544 L 1,286 Group Loans are repayable as follows: Within one year Bank loans(a) Bank overdrafts Finance leases Bank loan(b) Bank loan(c) Bank loan(d) Bank loan(e) Total within one year After one and within two years Bank loans(a) Finance leases Bank loan(b) Bank loan(c) Bank loan(d) Bank loan(e) Between two and ¢ve years Bank loans(a) Bank loan(b) Bank loan(c) Bank loan(d) Bank loan(e) After ¢ve years Bank loans(a) Bank loan(b) Bank loan(c) Bank loan(d) Total after more than one year 2001 Unsecured »000 2001 Secured »000 2000 Unsecured »000 2000 Secured »000 L L L 162 L L 9 171 L L 108 L L 9 117 L 108 L L 18 126 L L L L L 243 13 117 11 L 1,333 15 L 1,489 13 3 L L 15 L 31 39 L L 46 L 85 167 L L 139 306 422 L L L 100 L L L 100 L L 101 L L L 101 L 226 L L L 226 L L L L L 13 58 L L 214 L L 285 13 L L 214 L L 227 39 L 642 L L 681 165 L 430 L 595 327 1,503 Newmark Technology Group PLC 24 (a) 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.. (b) The bank loan is repayable in quarterly instalments over 5 years. Interest is charged at 5.25 per cent per annum. (c) The bank loan was repayable in quarterly instalments over 7 years and was 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 was 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 was payable at 2% over LIBOR. This loan has been repaid in full since the year end. (d) The bank loan is repayable in quarterly instalments over 15 years and is secured on the freehold property of Newmark Onroerend Goed B.V. Interest is charged at 7.05 per cent per annum. (e) The bank loan is repayable in quarterly instalments over 5 years and interest is charged at 4.6 per cent per annum. (f) Other creditors comprised »Nil (2000: »714,000) deferred consideration. 15. Provisions for liabilities and charges Group At 1 May 2000 Exchange adjustments Charge for year Released in year At 30 April 2001 Rental provision »000 200 L L (16) Deferred taxation »000 134 9 11 L 184 154 Other »000 85 L L (20) 65 Total »000 419 9 11 (36) 403 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 eleven years of the lease. Deferred taxation provided in the ¢nancial statements is as follows: Tax e¡ect on revaluation of ¢xed assets Other timing di¡erences 2001 »000 200 (46) 154 2000 »000 180 (46) 134 Full provision for deferred taxation has been made for potential liabilities. 16. Share capital Authorised: 250,000,000 (2000: 200,000,000) Ordinary shares of 5p each Allotted, called up and fully paid: 121,208,952 (2000: 110,208,952) Ordinary shares of 5p each 2001 2000 »12,500,000 »10,000,000 »6,060,450 »5,510,450 In October 2000, the Company issued 11,000,000 Ordinary Shares credited as fully paid at 6.5p per share. The di¡erence between the total proceeds of »715,000 and the total nominal value of »550,000 has been credited to the share premium account. The total number of share options outstanding at 30 April 2001 under the Approved and Unapproved Share Option Schemes were 1,314,000 (2000: 2,068,000) and 2,574,000 (2000: 3,328,000) respectively. The subscription price payable upon the exercise of the 952,000 (2000: 1,456,000) and 2,212,000 (2000: 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 362,000 (2000: 362,000) options granted under both the Approved and Unapproved Schemes, granted in January 1999, is 8.25 pence per share. The options may be exercised within 10 years from the date of issue. Newmark Technology Group PLC 25 17. Share premium and reserves Group Accumulated reserves at 1 May 2000 Retained loss for the year Exchange di¡erences on foreign currency investments Premium on share issue Expenses of share issue Accumulated reserves at 30 April 2001 Share premium account »000 5,051 L L 165 (22) Profit and loss account »000 (8,339) (904) 58 L L 5,194 (9,185) The cumulative amount of goodwill eliminated against reserves is »7,539,000 (2000: »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 2000 Retained loss for the year Premium on share issue Expenses of share issue Accumulated reserves at 30 April 2001 Share premium account »000 5,051 L 165 (22) Profit and loss account »000 509 (3,246) L L 5,194 (2,737) (Loss)/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 loss on ordinary activities after tax dealt with in the ¢nancial statements of the parent company for the year was »3,246,000 (2000: pro¢t »13,000). 18. Reconciliation of operating (loss)/pro¢t to operating cash£ow Operating (loss)/pro¢t Depreciation and amortisation (Increase)/decrease in stocks Decrease in debtors Increase/(decrease) in creditors Operating cash £ow 19. Reconciliation of net cash £ows to movement in net debt (Decrease)/increase in cash in the year (Increase) in debt in the year Increase in net debt 2001 »000 (414) 352 (338) 293 343 236 2001 »000 (166) (51) (217) 2000 »000 201 261 125 1,016 (785) 818 2000 »000 99 (1,130) (1,031) Newmark Technology Group PLC 26 20. Analysis of net debt Cash at bank and in hand Overdrafts Debt due after one year Debt due within one year April 2000 »000 759 (58) Cash flow »000 (135) (56) Exchange movements »000 28 (3) April 2001 »000 652 (117) 701 (1,830) (327) (2,157) (1,456) (191) 1,203 (1,208) (5) (196) 25 (38) (8) (46) (21) 535 (665) (1,543) (2,208) (1,673) 21. 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, 26% (2000: 30%) of the Group’s borrowings were at ¢xed rates with Nil% (2000: Nil%) of these borrowings comprising liabilities on which no interest is paid. 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 35 million partly ¢nanced the acquisition of Drion in Belgium. A secured loan of »1.5 million ¢nanced the acquisition of Safetell International Limited but has been repaid since 30 April 2001. At the year end, 19% (2000: 37%) 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 was 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. Newmark Technology Group PLC 27 Interest rate risk of ¢nancial assets and ¢nancial liabilities The interest rate pro¢le of the Group’s ¢nancial assets at 30 April 2001 was: Sterling Dutch guilders Belgian francs US dollars Floating rate ¢nancial assets »000 356 L 171 L Fixed rate ¢nancial assets »000 L L L L Financial assets on which no interest is received »000 109 13 L 3 527 L 125 Total »000 465 13 171 3 652 The interest rate pro¢le of the Group’s ¢nancial liabilities at 30 April 2001 was: Currency Sterling Dutch guilders Belgian francs Financial liabilities on which no interest has been paid »000 L L L Fixed rate ¢nancial liabilities »000 14 232 378 Floating rate ¢nancial liabilities »000 1,333 109 259 1,701 624 L Total »000 1,347 341 637 2,325 The £oating interest rates are detailed in note 14 to the accounts. Currency Dutch guilders Belgian francs Total Fixed rate ¢nancial liabilities Weighted average period for which rate is ¢xed Years 1.50 6.76 Weighted average interest rate % 6.125 5.828 5.908 5.34 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 28 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 2001, these exposures were as follows: Net foreign currency monetary assets/(liabilities) in »000 Functional currency of Group operation Sterling Dutch guilders Belgian Francs Total US dollars (126) L L Belgian francs L (39) L German DM L (21) (66) (126) (39) (87) Maturity of ¢nancial liabilities The maturity of pro¢le of the Group’s ¢nancial liabilities at 30 April 2001 was 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 Total (126) (60) (66) (252) »000 1,660 148 211 306 2,325 Borrowing facilities The Group has various undrawn committed borrowing facilities. The facilities available at 30 April 2001 in respect of which all conditions precedent had been met were as follows: Expiring in one year or less »000 412 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 2001. Short-term ¢nancial liabilities and current portion of long-term liabilities Long term borrowings Book values »000 1,660 665 Fair values »000 1,652 468 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. 22. Other ¢nancial commitments At 30 April 2001, the Company had annual commitments under non-cancellable operating leases as follows: Plant and equipment Expiring within 1 year Expiring between 2 and 5 years inclusive Expiring in over 5 years Property leases Expiring between 2 and 5 years Newmark Technology Group PLC 29 2001 »000 59 103 8 67 2000 »000 2 94 L 67 23. Related party transactions (a) A Reid is a director of the Company and has a controlling interest in R.K. Harrison & Co. Limited. R.K. Harrison & Co. Limited received director’s fees of »7,500 during the year (2000: »7,500) 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 (2000: »121,000) in the year. (c) Amounts totalling »5,880 (2000: »4,842) 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. 24. Post balance sheet events In May 2001, the Group company Vema N.V. was admitted to trading on the Alternative Investment Market and a placing and o¡er of Global Depository Receipts in Vema N.V. reduced the Group’s shareholding to 51%. The gross proceeds from the £otation were »2.88 million. Newmark Technology Group PLC 30 NOTICE OF ANNUAL GENERAL MEETING Notice is hereby given that the Annual General Meeting of the members of Newmark Technology Group PLC will be held at 21/23 Ormside Way, Redhill, Surrey RH1 2NT on 4 December 2001 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 2001 and the auditors’ report thereon. 2. 3. 4. 5. To re-appoint A Reid, as a non-executive director of the Company. To con¢rm the appointment of Mr M Rapoport who has been appointed as a non-executive director since the last annual general meeting. 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 »12,500,000 to »15,000,000 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 10 per cent in nominal value of the issued ordinary share capital of the Company, such power to expire at the earlier of the conclusion of the next Annual General Meeting of the Company or 15 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 Newmark Technology Group PLC 31 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 26 October 2001 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 3 December 2001 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 3 December 2001. 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 2002 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 4 December 2001, 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 2001 and the auditors report thereon To re-appoint A Reid as a non-executive director of the Company To con¢rm the appointment of M Rapoport as a non-executive 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 »15,000,000 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. S133396
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