Newmark Security plc Annual Report 2001

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FY2001 Annual Report · Newmark Security plc

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Annual 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

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

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

2
8
L

121
113
80

2
8
L

324

350

L
10
L

L
L
L

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.

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

3
4

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

(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

(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

(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

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

3,001

12,356

(1,286)

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

2001
»000
236

(206)

(517)

(402)

L
L

L
251
(246)

5
715
(22)

698

(191)

2000
»000
818

(111)

(309)

(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)

(846)

2001
»000

(904)
693

(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

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

64
1

194
141

2000
»000
194
142

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

»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.

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

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

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

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

243

13
117
11
L
1,333
15
L

1,489

13
3
L
L
15
L

39
L
L
46
L

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

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)

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)

(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

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

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

2000
»000

2
94
L

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.

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

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:

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

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