Newmark Security plc Annual Report 2004

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FY2004 Annual Report · Newmark Security plc

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Annual Report

For the year ended 30 April 2004

INDEX

DIRECTORS, SECRETARY AND ADVISERS

CHAIRMAN’S STATEMENT

REPORT OF THE DIRECTORS

REPORT OF THE REMUNERATION COMMITTEE

REPORT OF THE INDEPENDENT AUDITORS

FINANCIAL STATEMENTS

ACCOUNTING POLICIES

NOTES TO THE FINANCIAL STATEMENTS

NOTICE OF ANNUAL GENERAL MEETING

Page

Newmark Security PLC
1

Company number;

Registered Of¢ce:

Directors:

Secretary:

Bankers:

Solicitors:

Auditors:

Nominated Adviser:

Broker:

Registrars:

DIRECTORS, SECRETARY AND ADVISERS

3339998

57 Grosvenor Street
London W1K 3JA

M Dwek (Chairman)
B Beecraft FCA (Finance Director)
M Rapoport (Non-Executive Director)
A Reid FCA (Non-Executive Director)

B Beecraft FCA

Lloyds TSB PLC
1st Floor
Navigation House
Walnut Tree Park
Walnut Tree Close
Guildford
Surrey GU1 4TR

Field Fisher Waterhouse
35 Vine Street
London EC3N 2AA

BDO Stoy Hayward LLP
Northside House
69 Tweedy Road
Bromley
Kent BR1 3WA

Seymour Pierce Limited
Bucklersbury House
3 Queen Victoria Street
London EC4N 8EL

Seymour Pierce Ellis Limited
Talisman House
Jubilee Walk
Three Bridges
Crawley
West Sussex RH10 1LQ

Capita Registrars
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU

Newmark Security PLC
2

CHAIRMAN’S STATEMENT

Overview
The Group has been very busy in the year with a number of special exercises namely the issue of secured loan
notes, sale of Drion Security in Belgium and a capital reduction. Following the year end we also completed the
acquisition of Custom Micro Products Limited as described below.

The Group announced in July 2003 that it had agreed terms for the issue of secured loan notes to raise up to
£1.5 million. The loan note holders committed to subscribe in cash for £1 million, and on agreement between
the parties, the loan note holders can subscribe in cash for up to a further £0.5 million of loan notes. The loan
notes bear interest at a rate of 6% per annum payable quarterly in arrears and are repayable three years after
the date of the instrument constituting the loan notes with an option for early repayment. As part of the
fundraising, the Company issued warrants to the loan note holders to subscribe for ordinary shares of 1p
each in the Company at any time between 24 July 2003 and 24 July 2008 at a price of 1p per ordinary share.
To date, loan notes totalling £1.3 million have been issued.

As a result of loans advanced to subsidiaries by the Company that had to be subsequently written off, the
distributable reserves of the Company were negative and the Company was therefore unable to make dividend
payments.

The Board considered options for addressing the Company’s distributable reserves position. After
full
consideration of the options available, the Board sought and obtained approval for the reduction of capital
and cancellation of the Company’s share premium account.

The Deferred Shares which carried no rights of any real value were cancelled, together with the share premium
account. As a consequence, the Company will be more likely to be able to pay dividends out of future proﬁts as
and when the Board considers it appropriate to recommend the payment of such dividends.

The ﬁnancial performance of Drion Security had not met the expectations of the Board over the last two years,
with turnover in the last ﬁnancial year remaining at the same level as the previous year and losses of £624,000
incurred for the year to 30 April 2003. This was largely due to the failure of Drion Security to obtain both a
large export order or a breakthrough in the commercial sector. Turnover in its core Belgium banking sector was
in line with expectations, but losses had continued in the ﬁrst six months of the ﬁnancial year ended 30 April
2004.

In view of these factors, in October 2003 Newmark agreed to the disposal of Drion Security to the former Chief
Executive of the Group for a maximum deferred consideration of e500,000, payable in three annual instalments
commencing in 2006 dependent upon Drion Security achieving a certain level of proﬁts after tax in each of the
ﬁnancial years ending 30 April 2006, 30 April 2007 and 30 April 2008. In view of the trading performance of
Drion Security, no allowance has been made in these accounts for any future receivable.

Financial Results
The operating proﬁt for the year for continuing operations before exceptional items and goodwill amortisation
was £356,000 (2003 – loss £410,000), both ﬁgures exclude the operating losses before exceptional items of
£414,000 and £624,000 respectively of Drion which was sold in the year. The operating proﬁt for the year is
after charging £48,000 costs relating to the capital reduction exercise. There are a number of exceptional
items in the year relating to the disposal of Drion, and underprovision for costs relating to the sale of
businesses in prior years.

Turnover for the year for continuing operations was £9.8 million (2003: £7.1 million). The main commercial
factors affecting the results of the divisions are set out below.

Electronic Division
The ﬁrst full year where Grosvenor Technology and Newmark Technology have traded as partners has seen a
marked improvement in proﬁtability for both companies.

Grosvenor Technology continues to develop its core product JANUS access control with the latest release
boasting market leading features in both software and hardware.

Newmark Technology has had to work doubly hard this year to achieve its targets due to various supply
problems including the manufacturer of our Par-Sec asset management hardware going into liquidation
necessitating starting with a new sub-contract manufacturer.

Newmark Security PLC
3

The last quarter of 2004 will see a new version of Siteguard Access. Siteguard is ADT’s own brand of JANUS,
designed by Grosvenor but manufactured and distributed under licence by Tyco to the ADT group. As in JANUS,
this latest version of Siteguard will include a seamless interface to Par-Sec asset management and so promote it
into ADT via their ’own brand’ access system.

The coming year will also see a new Par-Sec RFID long-range reader that will
include an interchangeable
frequency module. This will allow the product to be sold into more countries whereas the existing ﬁxed
frequency unit can only be sold into the UK and US markets. It will also provide a suitable migration path to
a new frequency band in the UK where regulatory changes make this a necessity before January 2007.

The underlying business trends remain very strong for both Newmark and Grosvenor with a continuing steady
volume of core business.

During the past year Grosvenor and Newmark have jointly worked to develop new relationships with key
national accounts. Both companies can capitalise from jointly being able to offer a wider choice whilst
remaining specialists with their chosen products. The outcome of these efforts should materialise with
substantial contracts in the coming year.

On the back of other successful installations and because of our extensive experience with access control data-
communications, Grosvenor is currently negotiating for various contracts in the Paciﬁc Rim with a value
including adjuncts exceeding £1 million over a three year period starting 2005.

Other contracts being sought and due to be placed within the coming year include a major bank looking to
upgrade its entire security infrastructure, defence companies and government facilities.

Asset Protection Division
Safetell’s trading throughout the year was very much in line with plan and achieved revenue growth of 10%
over the previous period. Operating efﬁciencies resulted in a further 1.2% increase in gross margin percentage.
Overheads were contained to the same level as the previous year resulting in a rise in operating proﬁt of 40%
compared to the previous year.

The Eclipse rising screen programmes were maintained with long-term customers in retail ﬁnance and petrol
retailing. The newer screen products of CounterShield and Eye2Eye continued their successful market
penetration.

The demand for ﬁxed glass security screens has continued and a third format of FlexiGlaze was in development
at the turn of the year and has since been released to the market with three installations completed by the end
of August 2004.

The demand for RollerCash and BiDi Safe cash handling equipment is dependent on the roll-out programmes of
established customers. The Post Ofﬁce contract was extended to July 2004 and sales are expected in line with
the Post Ofﬁce suburban network reorganisation. In September 2004 Safetell was awarded the next supply
contract for four of the ﬁve types of Cash Handling Units for the Post Ofﬁce. New customers are being
introduced to the product range and the OEM supplier is launching a new product (CashCycler) in late 2004.
This will move the product range into new applications of teller cash dispensers.

The imminent application of the Disability Discrimination Act in October 2004 continues to fuel demand from
public bodies to make reasonable adjustments to their service areas. Police authorities and local governments
are proving to be a good source of work for all forms of screens as the best defence against violence in the
front ofﬁce/reception areas. Abbey National commissioned a product design to improve disabled access to their
counters. The design was completed in May and the £750,000 programme should be complete by the end of
October 2004.

The service and maintenance business increases pro rata to the installed base of primary equipment. During the
year a new contract was won to maintain all locks for security doors for HBOS for a three-year period starting
in April 2004 for an initial contract value of £750,000. Further lock and door maintenance and other service
related work for third party suppliers is also being secured to improve operational efﬁciency of the service
technicians.

Secure Locking Division
NSP Europe has managed to increase turnover, as well as laying many new foundations, resulting in the
attainment of signiﬁcant contracts such as GE. The losses of the company increased in the year but having
signed these new distribution agreements towards the end of the period, it is targeted to break even in the
current year. The new foundations should lead to signiﬁcant growth in sales in this ﬁnancial year.

Newmark Security PLC
4

Our unique standalone commercial locking system which uses ‘contact less mifaire technology’ has taken some
time to develop, and has ﬁnally been launched. Since its launch it has been acquired by several large groups and
been distributed throughout Europe. It enables effective cashless vending and is a signiﬁcant advance in card
technology.

During this year, the company ofﬁcially changed its trading name to NSP Europe. This reﬂects its growing
international customer base and the opening of a Paris based ofﬁce, where the focus is clearly on the
substantial French market.

Balance sheet and cash £ow
The balance sheet varies from last year with the sale of Drion Security, but also by the agreement of a payment
schedule for the tax liability arising from the sale of the Vema business and assets in 2002. This liability was
previously shown as a current liability, whereas agreement has now been reached for payment over a three year
period. Freehold properties on the balance sheet at 30 April 2004 included premises in Belgium (related to the
Vema operation) with a net book value of e348,000. This property has been sold since the year end, and the
proceeds used to repay the associated mortgage.

The operating cash ﬂow was positive before receipt of the proceeds of the loan notes and payment of costs
related to the sale of Drion Security.

Post Balance Sheet Events
Since the year end, the Group has acquired the entire issued share capital of Custom Micro Products Limited
(‘‘CMP’’) for a total consideration of up to £2.885 million.

The initial consideration of £800,000 was satisﬁed by cash on completion, with two tranches of deferred
consideration of £1.4 million and £685,000 respectively, the latter payable on the achievement of proﬁt before
tax of £600,000 for the year ending 30 April 2005.

CMP was established in the early 1980s to exploit the market potential for microprocessor-based products.
CMP’s products are divided into the following core ranges: time and attendance systems, access control
products, shop ﬂoor data collection terminals, smart card applications, network connectivity products and
biometric readers.

CMP recorded turnover of approximately £3.35 million and pre-tax proﬁts of £500,000 as per the unaudited
management accounts for the year ended 31 January 2004.

In order to part fund the acquisition of CMP, the Group raised an additional £1,700,000 (before expenses)
through a placing of 136,000,000 ordinary shares at 1.25p per share.

Employees
The Board would like to congratulate all employees on their contribution during the year and to welcome the
employees of Custom Micro Products to the Group.

The Future
The results of Safetell were ahead of plan for the year under review, whilst Grosvenor Technology and Newmark
Technology were in line with expectations. The results of NSP Europe were disappointing with the signing of
new distribution agreements taking longer than expected. As stated above, these agreements have now been
signed and NSP Europe is projected to break even for the current year. With the continuing proﬁt
contributions of Grosvenor, Newmark and Safetell plus a four month contribution from Custom Micro
Products, the operating proﬁt for the ﬁrst six months should be comfortably ahead of the corresponding
period last year, and the outlook for the full year is most encouraging.

M DWEK
Chairman

7 October 2004

Newmark Security PLC
5

REPORT OF THE DIRECTORS

The Directors submit their annual report and audited ﬁnancial statements of the Group for the year ended
30 April 2004.

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 loss on ordinary activities after exceptional items and goodwill amortisation and before interest, tax and
minority interest in the year was £1,656,000 (2003: loss £2,725,000).

The operating proﬁt for the year before exceptional items and goodwill amortisation for continuing operations
was £356,000 (2003: loss £410,000). Turnover for the year for continuing operations was £9.8 million (2003:
£7.1 million). 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.

During the year, the Group sold its investment in Drion Security S.A. to the former Chief Executive of the Group
for a maximum deferred consideration of e500,000 subject to the level of proﬁts achieved in the future. Any
deferred consideration will be payable in three annual instalments commencing in 2006.

Directors
The Directors who served during the year were as follows:

M Dwek
S Rajwan (resigned 27 August 2003)
B Beecraft
M Rapoport
A Reid

Details of the Directors’ service contracts are shown in the Remuneration Committee Report on pages 10
and 11.

M Rapoport retires in accordance with the articles of association. M Rapoport being eligible, offers himself for
re-election at the next annual general meeting.

Directors’ interests
The beneﬁcial and other interests of the Directors in the shares of the Company as at 30 April 2003 (or the date
of their appointment to the Board, if later) and 30 April 2004 were as follows:

M Dwek(a)
M Rapoport
A Reid(b)

Percentage
holding at
30 April 2004

30 April
2004
10.0% 21,241,667
5.0% 10,555,000
16.6% 35,283,237

30 April 2003
(or date of
appointment
if later)
16,575,000
10,555,000
32,858,238

(a)

(b)

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, beneﬁcially
owned by M Dwek.
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 80.3 per cent by A Reid of which 74.8 per cent is a beneﬁcial holding and 5.5 per cent is a non beneﬁcial holding,
and the R.K. Harrison Retirement Beneﬁt Scheme in which A Reid has a beneﬁcial interest.

During the year the Group agreed terms for the issue of secured loan notes to raise up to £1.5 million. The Loan
Note Holders committed to subscribe in cash for £1 million, and on agreement between the parties, the Loan
Note Holders can subscribe in cash for up to a further £0.5 million of Loan Notes. The Loan Notes bear interest
at a rate of 6 per cent per annum payable quarterly in arrears and are repayable three years after the date of
the instrument constituting the Loan Notes with an option for early repayment. As part of the fundraising, the
Company issued warrants to the Loan Note Holders to subscribe for ordinary shares of 1p each in the Company
at any time between 24 July 2003 and 24 July 2008 at a price of 1p per ordinary share. During the year parties

Newmark Security PLC
6

related to M Dwek and A Reid subscribed for £880,000 and £220,000 of loan stock respectively. Since the year
end A Reid and parties related to M Dwek have acquired a further 18,300,000 and 16,000,000 shares
respectively.

The interests of Directors (and related parties) in Share Option Schemes operated by the Company at 30 April
2003 and 2004 were as follows:

Number of
Ordinary Shares
under the
Approved
Scheme
30 April 2004
—
500,000

Number of
Ordinary Shares
under the
Unapproved
Scheme
30 April 2004
5,000,000
1,000,000

Number of
Ordinary Shares
under the
Approved
Scheme
30 April 2003
—
500,000

Number of
Ordinary Shares
under the
Unapproved
Scheme
30 April 2003
5,000,000
1,000,000

M Dwek
B Beecraft

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 identiﬁed security needs in conjunction with a commercial assessment of the short to medium term
proﬁtability of each project. The amount of the costs incurred in the year are shown in note 3(b) to the
accounts.

Substantial shareholdings
Apart from the Directors’ shareholdings detailed above, the Directors have been notiﬁed of the following
additional shareholdings of 3 per cent or more of the issued ordinary share capital of the Company as at the
date of this document:

M V. Beheer BV
HSBC Global Custody Nominee (UK) Limited
Pershing Keen Nominees Limited
Mrs G A B Reid

Percentage
of class
4.0%
3.3%
3.5%
5.1%

Number of
shares
13,447,725
11,000,000
11,772,500
17,050,000

Employee involvement
The Group keeps employees informed of matters affecting 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 abilities. In the event of employees becoming disabled, every
effort 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 approximately 5 per cent in
aggregate of the Company’s issued Ordinary share capital. Further details of the share option schemes are in
note 16 to the accounts.

Newmark Security PLC
7

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 31 days (2003: 58 days) of average supplies for the period.

Corporate governance
The Company has complied voluntarily throughout the year as far as practicable 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 Hampel Committees, and which only applies mandatorily
to fully listed companies.

At 30 April 2004, the Board comprised an Executive Chairman, one Executive Director and two Non-Executive
Directors.

The Board meets regularly to exercise full and effective 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 was a clear division of responsibilities between the Chairman and
Chief Executive while he was on the Board. The Chairman takes responsibility for the conduct of the Group
and overall strategy.

Under the Company’s Articles of Association, the appointment of all directors must be approved by the
shareholders in General Meeting, and additionally one-third of the 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.

The Combined Code requires Directors to review, and report to shareholders on, the Group’s system of internal
In September 1999 guidance to this requirement was provided to Directors by the publication of
control.
Internal Control: Guidance for Directors on the Combined Code (‘‘The Turnbull Report’’).

The Board continues to report on internal ﬁnancial control in accordance with the guidance on internal control
and ﬁnancial 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 beneﬁts at this stage of the Group’s development.

The Directors acknowledge their responsibility for the Group’s systems of internal ﬁnancial control which are
designed to provide reasonable but not absolute assurance that the assets of the Group are safeguarded and
that transactions are properly authorised and recorded.

During the year, key controls were:

day to day supervision of the business by the Executive Directors,

maintaining a clear organisational structure with deﬁned lines of responsibility,

production of management information, with comparisons against budget,

Newmark Security PLC
8

maintaining the quality and integrity of personnel,

Board approval of all signiﬁcant 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.

The Audit Committee, comprising M Rapoport and A Reid,
is responsible for the appointment of external
auditors, reviewing the interim and annual ﬁnancial results, considering matters raised by the auditors and
reviewing the internal control systems operated by the Group.

The Remuneration Committee, comprising M Rapoport and A Reid 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 beneﬁts. The report of the remuneration committee is set out on pages 10 and 11.

After making enquiries, the Directors believe that the Group has sufﬁcient ﬁnancial 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 ﬁnancial statements for each ﬁnancial year which give a true
and fair view of the state of affairs of the Company and the Group for that period. In preparing those ﬁnancial
statements, the directors are required to:

select suitable accounting policies and apply them consistently;

make judgements and estimates that are reasonable and prudent;

state whether applicable accounting standards have been followed, subject to any material departures
disclosed and explained in the ﬁnancial statements; and

prepare the ﬁnancial statements on the going concern basis unless it is inappropriate to presume that the
Group will continue in business.

The Directors are responsible for maintaining proper accounting records which disclose with reasonable
accuracy at any time the ﬁnancial position of the Company and to enable them to ensure that the ﬁnancial
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 conﬁrm that the ﬁnancial statements comply with the above requirements.

Auditors
On 31 December 2003, BDO Stoy Hayward, the Company’s auditors, transferred its business to BDO Stoy
Hayward LLP, a limited liability partnership incorporated under the Limited Liability Partnerships Act 2000.
Accordingly, BDO Stoy Hayward resigned as auditors on that date and the directors appointed BDO Stoy
Hayward LLP as its successor. A resolution to reappoint BDO Stoy Hayward LLP as auditors will be proposed at
the next annual general meeting.

By order of the Board

B BEECRAFT
Secretary

7 October 2004

Newmark Security PLC
9

REPORT OF THE REMUNERATION COMMITTEE

Authority
The Remuneration Committee is responsible for approving the remuneration of Executive Directors. The
remuneration of Non-Executive Directors is approved by the full Board of the Company.

Membership
The majority membership of the Remuneration Committee is required to comprise independent Non-Executive
Directors and at 30 April 2004 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 Ofﬁcer 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 offer remuneration packages which are appropriate to the experience, qualiﬁcations 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
12 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 except
for lease costs.

The Company entered into a Service Agreement on 5 June 1998 with Mr Beecraft which may be terminated by
either party serving six months’ notice.

Newmark Security PLC
10

Directors’ emoluments
Emoluments of the directors (including pension contributions and beneﬁts in kind) of the Company were as
follows:

Consultancy/
management
agreement
»000

Termination
payments
»000

Salary
»000

Benefits
in kind
»000

Fees
»000

Total
»000

Executive Directors
M Dwek(a)
S Rajwan(b)(d)
B Beecraft
Non-Executive Directors
A Reid(c)
M Rapoport

2003

198
—
—

—
—

198

220

—
—
—

—
—

—

—
50
99

—
—

149

229

—
6
—

—
—

—
—
—

11
11

198
56
99

11
11

375

568

Pension
contri-
butions
»000

—
8
—

—
—

The directors’ share interests are detailed in the Report of the Directors on page 6.

(a)

(b)

(c)

The Company paid a consultancy fee of £198,433 (2003: £179,821) to Arbury Inc., a company 51 per cent
owned by M Dwek which covers salary, pension and car beneﬁts. A consultancy fee of £Nil (2003:
£31,895) was paid to Arbury Inc., by Vema NV for services as Chairman of that company. In 2003, Vema
paid a fee to Arbury Inc., of £61,904 for the termination of his consultancy contract with that company.

The salary of S Rajwan in 2003 included a special fee of £40,000 for working in Belgium at Drion. The
pension contributions in respect of S Rajwan were for a money purchase pension scheme.

Directors’ fees in respect of A Reid of £11,250 (2003: £7,500) were paid by the Company to R. K. Harrison
& Co. Limited. Vema NV paid fees to R. K. Harrison & Co. Limited of £Nil (2003: £8,045) for services as
director of that company. In 2003, Vema paid a fee to R. K. Harrison & Co. Limited, of £16,193 for the
termination of his management contract with that company.

(d)

The above emoluments exclude the payment of one year’s salary (including beneﬁts) and an ex-gratia
payment of £30,000 to S Rajwan on the termination of his employment with the Group.

Newmark Security PLC
11

REPORT OF THE INDEPENDENT AUDITORS
Independent Auditors’ Report to the Shareholders of Newmark Security PLC

We have audited the ﬁnancial statements of Newmark Security PLC for the year ended 30 April 2004 on
pages 13 to 33 which have been prepared under the accounting policies set out on pages 17 and 18.

Respective responsibilities of directors and auditors
The directors’ responsibilities for preparing the annual report and the ﬁnancial statements in accordance with
applicable law and United Kingdom Accounting Standards are set out in the Statement of Directors’
Responsibilities.

Our responsibility is to audit the ﬁnancial statement in accordance with relevant legal and regulatory
requirements and United Kingdom Auditing Standards.

We report to you our opinion as to whether the ﬁnancial statements give a true and fair view and are properly
prepared in accordance with the Companies Act 1985. We also report to you if, in our opinion, the directors’
report is not consistent with the ﬁnancial statements, if the Company has not kept proper accounting records, if
we have not received all the information and explanations we require for our audit, or if information speciﬁed
by law regarding directors’ remuneration and transactions with the group is not disclosed.

We read other information contained in the annual report and consider whether it is consistent with the
audited ﬁnancial statements. This other information comprises only the Remuneration Report, the Directors’
Report and the Chairman’s Statement. We consider the implications for our report if we become aware of any
apparent misstatements or material inconsistencies with the ﬁnancial statements. Our responsibilities do not
extend to any other information.

Our report has been prepared pursuant to the requirements of the Companies Act 1985 and for no other
purpose. No person is entitled to rely on this report unless such a person is a person entitled to rely upon this
report by virtue of and for the purpose of the Companies Act 1985 or has been expressly authorised to do so by
our prior written consent. Save as above, we do not accept responsibility for this report to any other person or
for any other purpose and we hereby expressly disclaim any and all such liability.

Basis of audit opinion
We conducted our audit in accordance with United Kingdom 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 ﬁnancial statements.
It also includes an assessment of the signiﬁcant estimates and
judgements made by the directors in the preparation of the ﬁnancial statements, and of whether the
accounting policies are appropriate to 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 sufﬁcient evidence to give reasonable assurance that the ﬁnancial
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
ﬁnancial statements.

Opinion
In our opinion the ﬁnancial statements give a true and fair view of the state of the affairs of the Company and
the Group at 30 April 2004, and of the loss of the Group for the year then ended and have been properly
prepared in accordance with the Companies Act 1985.

BDO Stoy Hayward LLP
Chartered Accountants
Registered Auditors

7 October 2004

London

Newmark Security PLC
12

CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the year ended 30 April 2004

Turnover
Continuing operations
Discontinued operations

Cost of sales

Gross pro¢t

Administrative expenses pre

amortisation of goodwill and
exceptional items
Impairment of goodwill
Amortisation of goodwill
Termination costs

Administrative expenses — total

Operating pro¢t/(loss)
Continuing operations
Discontinued operations

Loss on disposal/closure of

subsidiary/business and net
trading assets

Loss on ordinary activities

before interest
Interest receivable
Interest — discount charge on
deferred consideration

Interest payable

Loss on ordinary activities

before taxation
Tax on loss on ordinary

activities

Loss on ordinary activities

after taxation
Minority interest

Loss for the ¢nancial year
Dividends

Amount withdrawn from reserves

Loss per share
— basic and diluted
— before exceptional items and

goodwill amortisation

2004
Before
goodwill
and
exceptional
items
»000

2004
Goodwill
and
exceptional
items
»000

9,830
754

10,584
(6,479)

4,105

(4,163)
—
—
—

(4,163)

356
(414)

(58)

—
—

—

—
—
(298)
(167)

(465)

(298)
(167)

(465)

2004
Total
»000

9,830
754

10,584
(6,479)

4,105

(4,163)
—
(298)
(167)

(4,628)

58
(581)

(523)

2003
Total
»000

7,089
1,304

8,393
(5,720)

2,673

(3,932)
(806)
(287)
—

(5,025)

(645)
(1,707)

(2,352)

Notes

3(c)

—

(1,133)

(373)

(58)
15

(179)
(51)

(273)

(146)

(419)
(27)

(446)
—

(446)

(1,598)
—

—
—

(1,598)

—

(1,598)
—

(1,598)

4
4

(1,656)
15

(179)
(51)

(1,871)

(146)

(2,017)
(27)

(2,044)
—

(2,044)

pence

(1.0p)

(0.2p)

(2,725)
67

(106)
(34)

(2,798)

—

(2,798)
78

(2,720)
—

(2,720)

pence

(1.6p)

(0.8p)

Newmark Security PLC
13

BALANCE SHEETS
As at 30 April 2004

Fixed assets
Intangible assets
Tangible assets
Investments

Current assets
Stocks
Debtors: amounts falling due

within one year

Debtors: amounts falling due
after more than one year

Cash at bank and in hand

Creditors: amounts falling due

within one year

Net current asset/(liabilities)

Total assets less current

liabilities

Creditors: amounts falling due
after more than one year
Provisions for liabilities and

charges

Capital and reserves
Called up share capital
Share premium
Merger reserve
Proﬁt and loss reserve

Equity shareholders’ funds
Minority interests

Notes

8
9
10

16
17
17
17

Group
2004
»000

5,287
903
—

6,190

893

1,974

—
1,974

1,522

4,389

(2,911)

1,478

Group
2003
»000

Company
2004
»000

Company
2003
»000

5,585
1,844
—

7,429

1,239

2,389

—
2,389

806

4,434

(4,706)

(272)

—
11
15,187

15,198

—

1,242
1,308

104

1,412

(9,747)

(8,335)

—
19
15,214

15,233

—

751
822

—

822

(9,728)

(8,906)

7,668

7,157

6,863

6,327

(5,741)

(3,263)

(4,102)

(2,798)

(201)

1,726

2,131
—
801
(1,506)

1,426
300

1,726

(217)

3,677

6,963
5,151
801
(9,585)

3,330
347

3,677

—

2,761

2,131
—
801
(171)

2,761
—

2,761

—

3,529

6,963
5,151
801
(9,386)

3,529
—

3,529

The ﬁnancial statements were approved by the Board of Directors on 7 October 2004 and were signed on its
behalf by:

M DWEK
Chairman

B BEECRAFT
Finance Director

Newmark Security PLC
14

Notes
19

CONSOLIDATED CASH FLOW STATEMENT
For the year ended 30 April 2004

Net cash in£ow/(out£ow) from operating activities

Returns on investments and servicing of ¢nance
Interest received
Interest paid

Net cash (out£ow)/in£ow from returns on investments and

servicing of ¢nance

Taxation

Capital expenditure and ¢nancial investment
Purchase of tangible ﬁxed assets
Receipts from sale of tangible ﬁxed assets

Net cash out£ow from capital expenditure and ¢nancial

investment

Acquisitions
Purchase of subsidiary undertakings
Net cash acquired on purchase of subsidiary undertakings

Net cash out£ow from acquisitions

Disposals
Costs related to sale of subsidiary undertaking, and business and

trading assets

Cash disposed of with business

Net cash out£ow from disposals

Net cash out£ow before ¢nancing

Financing
New ﬁnance loans
Repayment of loans

Expenses paid in connection with share issues

Net cash in£ow/(out£ow) from ¢nancing

Increase/(decrease) in cash

2004
»000
252

15
(51)

(36)

—

(235)
30

2003
»000
(3,172)

67
(34)

—

(349)
31

(205)

(318)

—
—

—

(189)
(1)

(190)

(179)

1,100
(176)

924
—

924

745

(3,870)
1,104

(2,766)

—
—

—

(6,223)

58
(151)

(93)
(43)

(136)

(6,359)

Newmark Security PLC
15

STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
For the year ended 30 April 2004

Loss for the ﬁnancial year
Exchange difference 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 2004
GROUP

Loss for the ﬁnancial year
New share capital subscribed (net of issue costs)
Exchange difference on translation of net assets and results of subsidiary

undertakings

Net reduction to shareholders’ funds
Opening shareholders’ funds

Closing shareholders’ funds

COMPANY
Loss for the ﬁnancial year
New share capital subscribed (net of issue costs)

Reduction to shareholders’ funds
Opening shareholders’ funds

Closing shareholders’ funds

2004
»000
(2,044)

123

(1,921)

2004
»000
(2,044)
17

123

(1,904)
3,330

1,426

(785)
17

(768)
3,529

2,761

2003
»000
(2,720)

(115)

(2,835)

2003
»000
(2,720)
1,661

(115)

(1,174)
4,504

3,330

(5,289)
1,661

(3,628)
7,157

3,529

Newmark Security PLC
16

Notes to the ¢nancial statements
For the year ended 30 April 2004

NOTES TO THE FINANCIAL STATEMENTS
ACCOUNTING POLICIES

Accounting policies

1.
The ﬁnancial statements have been prepared in accordance with applicable accounting standards in the United
Kingdom and under the historical cost convention. The consolidated ﬁnancial statements include the results of
subsidiaries since the date of acquisition. The principal accounting policies which the directors have adopted are
set out below.

Basis of preparation
The ﬁnancial statements have been prepared on a going concern basis which assumes that the Group will
continue in operational existence for the foreseeable future. The Group has incurred a loss for the year ended
30 April 2004 of £2,044,000, and had net current assets of £1,478,000 and net assets of £1,726,000 at that date.

In arriving at their conclusion that it was appropriate to adopt the going concern basis the directors have had
regard to:

(a)

(b)

current trading; and

trading and cash ﬂow forecasts.

Turnover
Turnover is stated net of value added tax. Sales of equipment are recognised when the equipment is shipped to
the customer or installed. Other sales are either recognised on completion of work, or spread evenly over the
term of the contract.

Goodwill
Goodwill represents the difference between the fair value of consideration and the fair value of the separable
net tangible assets acquired.

In accordance with Financial Reporting Standard 10 (‘‘FRS 10’’), goodwill arising on the acquisition of
subsidiaries is capitalised as an intangible asset and amortised over its useful economic life. The Board
considers that there should be a presumption that the useful economic life of goodwill does not exceed a
speciﬁed maximum period, chosen here to be 20 years since after that date continued measurement is less
reliable.

Goodwill arising on the acquisition of subsidiaries prior to FRS 10 was written off immediately against reserves.
The Group has adopted the transitional arrangement allowed by FRS 10 in that this goodwill remains eliminated
against reserves and will be charged to the proﬁt and loss account on the subsequent disposal of the businesses
to which it relates.

Impairment of ﬁxed assets and goodwill
The need for any ﬁxed asset impairment write down is assessed by comparing the carrying value of the asset
against the higher of realisable value and value in use.

Contingent deferred consideration
Contingent deferred consideration is accounted for in accordance with FRS 7. The fair value of the contingent
consideration payable in cash is taken to be the estimated amount of cash value discounted to its present value.

Intellectual property rights and development costs
Intellectual property rights and development costs are written off to the proﬁt and loss account as incurred.

Newmark Security PLC
17

Tangible ﬁxed assets
The Group’s tangible ﬁxed assets are stated at cost less depreciation. Provision for depreciation is made in equal
annual instalments to write off 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 ﬁttings
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 ﬁnance 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 ﬁnance charge allocated to future periods. The ﬁnance element of the rental
payment is charged to the proﬁt 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 ﬁnished 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.

Deferred taxation
Deferred tax is provided in full in respect of taxation deferred by timing differences between the treatment of
certain items for taxation and accounting purposes. Deferred tax assets are only recognised when that asset is
regarded as recoverable. The deferred tax balance has not been discounted.

Foreign currencies
Foreign currency transactions of individual companies are translated at the rates ruling when they occurred.
Foreign currency monetary assets and liabilities are translated at the rate of exchange ruling at the balance
sheet date. Any differences are taken to the proﬁt and loss account.

The results of overseas operations are translated at the average rates of exchange during the year and the
balance sheet translated into sterling at the rate of exchange ruling on the balance sheet date. Exchange
differences which arise from translation of
foreign subsidiary
undertakings are taken to reserves.

the opening net assets and results of

All other differences are taken to the proﬁt and loss account.

Pensions
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. Grosvenor operates a
deﬁned contribution pension scheme. The assets of the scheme are held separately from those of the
company in an independently administered fund. Contributions to these schemes are charged to the proﬁt
and loss account in the year in which they become payable.

The Company also made contributions to a personal money purchase pension scheme in respect of S. Rajwan.
Other employees of the Group contribute to state schemes. Contributions are charged to the proﬁt and loss
account when paid.

Newmark Security PLC
18

Analysis by geographical area

2.
The analysis by geographical area of the Group’s turnover, proﬁt/(loss) before taxation and net assets is set out
below:

Turnover
UK
Europe
Rest of the World

Total

Pro¢t/(loss) before tax

UK
Europe
Rest of the World

Net assets

UK
Europe
Rest of the World

2004
By
origin
»000
9,830
754
—

10,584

2003
By
origin
»000
7,059
1,334
—

8,393

2004
By destination
»000
9,408
1,068
108

2003
By destination
»000
6,912
1,344
137

10,584

8,393

2004
Before goodwill
and exceptional
items
»000
161
(434)
—

2004
Goodwill
and exceptional
items
»000
(298)
(1,300)
—

(273)

(1,598)

2004
Total
»000
(137)
(1,734)
—

(1,871)

2003
Total
»000
(850)
(1,838)
(110)

(2,798)

2004
Net assets
»000
3,129
(1,403)
—

2003
Net assets
»000
2,306
2,141
(770)

1,726

3,677

Operating pro¢t/(loss)

3.
(a) Continuing and discontinued operations

Sales
Cost of sales

Gross pro¢t

Administrative expenses

pre-amortisation of goodwill
and exceptional items

Termination costs
Amortisation of goodwill
Impairment of goodwill

Administrative expenses in total

Operating pro¢t/(loss)

2004
Continuing
operations
»000
9,830
(5,777)

2004
Discontinued
2004
operations
Total
»000
»000
754 10,584
(6,479)
(702)

2003
Continuing
operations
»000
7,089
(4,518)

2003
Discontinued
operations
»000
1,304
(1,202)

2003
Total
»000
8,393
(5,720)

4,053

4,105

2,571

102

2,673

(3,697)
—
(298)
—

(3,995)

(466)
(167)
—
—

(4,163)
(167)
(298)
—

(633)

(4,628)

(581)

(523)

(2,981)
—
(235)
—

(3,216)

(645)

(951)
—
(52)
(806)

(3,932)
—
(287)
(806)

(1,809)

(5,025)

(1,707)

(2,352)

The ﬁgures shown for discontinued operations in 2003 have been restated to include the results of Drion
Security which was sold in October 2003.

Newmark Security PLC
19

(b) Operating pro¢t/(loss) is arrived at after charging the following:

Group
Depreciation of tangible ﬁxed assets
Amortisation of goodwill
Impairment of goodwill
Research and development
Auditors’ remuneration:
Parent company auditors

Audit fees
Non audit fees

Other auditors
Audit fees
Non audit services
Operating lease rentals:

Property
Motor vehicles and computer equipment

(c)

Loss on disposal/closure of subsidiary/business and trading assets

Net assets of subsidiary disposed of
Cost of disposal

Net loss on disposal (note 23)
Under provision for costs of closure/disposal in prior years
Costs of closure of operation in year

Loss on disposal/closure of subsidiary/business and net trading assets

Interest payable and similar charges

Discount charge on deferred consideration
Loan notes, bank loans, overdrafts and other short term ﬁnance

2004
»000
261
298
—
341

63
11

10
—

151
104

2004
»000
(979)
(56)

(1,035)
(98)
—

(1,133)

2004
»000
179
51

230

2003
»000
219
287
806
166

32
8

6
4

152
92

2003
»000
—
—

—
(228)
(145)

(373)

2003
»000
106
34

140

Employees and directors

5.
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
67
54

121

Number
73
60

133

»000
3,560
476
112

4,148

»000
3,238
537
138

3,913

Newmark Security PLC
20

Directors emoluments

Aggregate emoluments
Aggregate contributions under money purchase scheme
Aggregate payments for compensation for loss of ofﬁce
Emoluments of highest paid director
Aggregate contributions under money purchase scheme for highest paid director

Number of directors receiving beneﬁt under money purchase scheme

Taxation

6.
Taxation is based on the results for the year and comprises:

UK Corporation taxation
Overseas taxation
Deferred taxation

Taxation charge on loss for the year before exceptional items
Underprovision for tax in prior years

2004
»000
375
8
167
198
—

2003
»000
490
13
78
274
—

Number
1

2004
»000
—
(100)
—

(100)
(46)

(146)

2003
»000
—
—
—

—
—

—

The tax charged for the year is greater than the standard rate of corporation tax in the UK (30 per cent).

The differences are explained below:

Loss on ordinary activities before taxation

Loss on ordinary activities at the standard rate of UK corporation tax of
30% (2003: 30%)
Effects on proﬁts of items not deductible for the tax purposes
Tax losses carried forward
Timing differences including capital allowances in excess of depreciation dealt
with under deferred tax
Impairment goodwill amortisation
Interest discount charge on deferred consideration
Grossing up of foreign income
Double tax relief
Adjustment to tax charge in respect of previous periods
Higher tax rates on overseas earnings
Relief for losses brought forward
Losses not utilised
Adjustments to tax charge in respect of overseas tax
Other timing differences

Current tax charge for year

2004
»000
(1,871)

2003
»000
(2,798)

(561)
267
31

3
—
54
2
(7)
(46)
(56)
(46)
297
(100)
16

(146)

(839)
12
541

47
242
32
2
(6)
—
(31)
—
—
—
—

—

The Group has the following tax losses, subject to agreement by HM Inspector of Taxes, available for offset
against future trading proﬁts and capital gains as appropriate:

Management expenses
Non-trading deﬁcit
Trading losses
Capital losses

Newmark Security PLC
21

2004
»000
524
24
3,645
792

2003
»000
140
4
3,532
792

Loss per share

7.
The calculation of the basic loss per ordinary share is based on a loss of £2,044,000 (2003: loss £2,720,000) and
the weighted average number of shares in issue during the year of 212,747,204 (2003: 174,364,102). For every
£1 of loan note issued, the loan note holder receives a warrant entitling the loan note holder to 50 ordinary
shares of 1p each on exercise of the warrant.

The conversion of those warrants into ordinary shares would reduce the net loss per share from continuing
operations and therefore under FRS14 they are not deemed dilutive.

The options in issue have no dilutive effect.

The basic loss per share before goodwill amortisation and exceptional items has also been presented since, in
the opinion of the directors, this provides shareholders with a more appropriate measure of earnings derived
from the Group’s businesses. It can be reconciled to basic loss per share as follows:

Basic loss per share (pence)
Goodwill amortisation and exceptional items per share

Loss per share before goodwill amortisation and exceptional items

Intangible ¢xed assets

8.
Group

Cost
At 1 May 2003
Disposal in the year

At 30 April 2004

Amortisation
At 1 May 2003
Charge for the year
Disposal in the year

At 30 April 2004

Net book value
At 30 April 2004

At 30 April 2003

2004
(1.0)
0.8

(0.2)

2003
(1.6)
0.8

(0.8)

Goodwill
»000

6,992
(1,032)

5,960

1,407
298
(1,032)

673

5,287

5,585

Newmark Security PLC
22

Tangible ¢xed assets

9.
Group

Cost
At 1 May 2003
Additions
Disposals
Disposal of subsidiary (note 23)
Exchange adjustment

At 30 April 2004

Depreciation
At 1 May 2003
Charge for the year
Disposals
Disposal of subsidiary (note 23)
Exchange adjustment

At 30 April 2004

Net book value
At 30 April 2004

At 30 April 2003

Company

Cost
At 1 May 2003 and 30 April 2004

Depreciation
At 1 May 2003
Charge for the year

At 30 April 2004

Net book value
At 30 April 2004

At 30 April 2003

Freehold
land and
buildings
»000

Plant,
machinery
& motor
vehicles
»000

Computers,
fixtures &
fittings
»000

1,575
—
—
(852)
(19)

704

247
55
—
(67)
(3)

232

472

1,328

1,666
183
(50)
(908)
(5)

886

1,249
160
(30)
(854)
(4)

521

365

417

421
52
—
(149)
5

329

322
46
—
(108)
3

263

Computers,
fixtures &
fittings
»000

4
8

Total
»000

3,662
235
(50)
(1,909)
(19)

1,919

1,818
261
(30)
(1,029)
(4)

1,016

903

1,844

Total
»000

4
8

Newmark Security PLC
23

Fixed asset investments

10.
Company
Investment in subsidiary companies
Cost
At 1 May 2003
Additions

At 30 April 2004

Provision for impairment
At 1 May 2003
Provision in the year

At 30 April 2004

Net book value
At 30 April 2004

At 30 April 2003

»000
15,214
17

15,231

—
44

15,187

15,214

The provision for impairment was 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
NSP Europe Limited
Newmark Technology (C-Cure Division) Limited
Vema B.V.
Vema N.V.(3) (92% owned)
Newmark Technology S.A.
Safetell International Limited

Safetell Limited(1)
Safetell Security Screens Limited(1)
Newmark Onroerend Goed B.V.(2)
Newmark Technology Inc.
Vema U.K. Limited(4)
Concept Hardware & Security Solutions Limited(5)
Grosvenor Technology Limited
Newmark Group Limited
De Facto 992 Limited

Activity
Trading
Trading
Dormant
Holding
Property
Holding
Holding

Trading
Trading
Property
Dormant
Finance
Trading
Trading
Holding
Dormant

Country of
incorporation
England & Wales
England & Wales
England & Wales
The Netherlands
The Netherlands
Belgium
England & Wales

England & Wales
England & Wales
Belgium
USA
England & Wales
England & Wales
England & Wales
England & Wales
England & Wales

Description
of shares held
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary and
Redeemable
Preference
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary

The investments in subsidiary companies are held directly by the Company apart from the following:

(1)

(2)

(3)

(4)

(5)

Owned by Safetell International Limited

Owned by Newmark Technology S.A.

Owned by Vema B.V.

Owned by Vema N.V.

Owned by NSP Europe Limited

Newmark Security PLC
24

11. Stocks

Raw materials
Work in progress
Finished goods

12. Debtors

Amounts falling due within one year
Trade debtors
Amounts owed by subsidiary undertakings
Other debtors
Deferred tax asset (Note 15)
Prepayments and accrued income

Debtors: amounts falling due after more than one year

Debtors: total

13. Creditors: amounts falling due within one year

Bank loans and overdrafts (note 14)
Trade creditors
Amounts due to group companies
Corporation tax
Other taxation and social security
Obligations under ﬁnance leases and hire purchase
contracts
Other creditors
Accruals and deferred income

2004
Group
»000
617
88
188

893

2004
Group
»000
1,640
—
108
—
226

1,974

—

1,974

2004
Group
»000
61
715
—
397
429

—
534
775

2003
Group
»000
472
236
531

1,239

2003
Group
»000
1,818
—
312
46
213

2,389

—

2,389

2003
Group
»000
261
881
—
1,709
499

14
494
848

2004
Company
»000
—
—
—

2003
Company
»000
—
—
—

—

2004
Company
»000
—
61
—
—
5

1,242

1,308

2004
Company
»000
—
—
9,388
—
41

—
307
11

2003
Company
»000
—
61
—
—
10

751

822

2003
Company
»000
28
—
9,534
—
—

—
166

9,728

2,911

4,706

9,747

Other creditors within the Group includes an amount of £63,108 (2003: £Nil) in respect of a discount company
which was secured on trade debtors of subsidiary companies.

14. Creditors: amounts falling due after more than one year

Loan notes and bank loans
Corporation tax
Obligations under ﬁnance leases and hire purchase
contracts
Other creditors

Group
2004
»000
1,504
1,260

—
2,977

5,741

Group
2003
»000
421
—

44
2,798

3,263

Company
2004
»000
1,125
—

—
2,977

4,102

Company
2003
»000
—
—

—
2,798

2,798

Newmark Security PLC
25

Other creditors are the fair value of the contingent consideration payable in cash related to the acquisition of
Grosvenor Technology Limited, which is taken to be the estimated amount of cash value discounted to its
present value. Payment is due after the agreement of the accounts for the four years ended 31 October 2006.

Group
Loans are repayable as follows:
In one year or less
Bank loans(a)
Bank overdrafts
Finance leases
Shareholders loan(b)
Bank loan(c)
Bank loan(d)
Bank loan(e)

Total within one year

In more than one year but not more than two
years
Bank loans(a)
Finance leases
Bank loan(c)
Bank loan(d)
Bank loan(e)

In more than two year but not more than ¢ve years
Bank loans(a)
Finance leases
Bank loan(d)
Bank loan(e)
Loan notes(f)

In more than ¢ve years
Bank loans(a)
Bank loan(d)

Total after more than one year

2004
Unsecured
»000

2004
Secured
»000

2003
Unsecured
»000

2003
Secured
»000

—
20
—
—
—
—
—

—
—
—
—
—

—

—
—
—
—
—

—

—
—

—

11
—
—
—
—
30
—

9
—
—
16
—

28
—
48
—
1,125

1,201

174
104

278

1,504

—
40
—
25
137
—
17

219

—
—
—
—
11

—
—
—
—
—

—

—
—

—

20
—
14
—
—
22
—

10
14
—
18
—

30
30
54
—
—

114

179
119

298

454

(a)

(b)
(c)
(d)

(e)
(f)

The bank loan is repayable in quarterly instalments over 23 years. Interest is charged at 6.125 per cent over the ﬁrst 5 years and the loan is
secured on the freehold property of Vema N.V.
The shareholders loan was set off against the loan notes issued during the year end.
The bank loan is repayable in quarterly instalments over 1 year. Interest is charged at 5.25 per cent per annum.
The bank loan is repayable in quarterly instalments over 13 years and is secured on the freehold property of Newmark Onroerend Goed B.V.
Interest is charged at 7.05 per cent per annum.
The bank loan is repayable in quarterly instalments over 2 years and interest is charged at 4.6 per cent per annum.
The loan notes bear interest at a rate of 6 per cent per annum payable quarterly in arrears and are repayable three years after the date of the
instrument constituting the loan notes with an option for early repayment. As part of the fundraising, the Company issued warrants to the
loan note holders to subscribe for ordinary shares of 1p each in the Company at any time between 24 July 2003 and 24 July 2008 at a price
of 1p per ordinary share. The loan notes are secured by a ﬁxed and ﬂoating charge on the assets of the UK subsidiary companies, and are
repayable on 24 July 2006.

Newmark Security PLC
26

15. Provisions for liabilities and charges

Group
At 1 May 2003
Released in year

At 30 April 2004

Rental
provision
»000
152
(16)

Deferred
taxation
»000
—
—

136

—

Other
»000
65
—

Total
»000
217
(16)

201

The rental provision relates to the excess of Safetell’s contractual legal obligation at date of acquisition over the
market rental, and will be reversed over the remaining nine years of the lease.

There is no provision in respect of deferred tax at 30 April 2004 (2003: £Nil). A deferred tax asset of £Nil (2003:
£46,000) was recorded within debtors in respect of timing differences on capital allowances which was released
during the year.

Other provisions relate predominantly to maintenance costs arising in respect of safety regulatory requirements,
and are expected to reverse within one to two years of the balance sheet date.

16. Share capital

Authorised:
1,015,164,192 (2003: 1,015,164,192) Ordinary shares of 1p each
Nil (2003: 121,208,952) Deferred shares of 4p each

Allotted, called up and fully paid:
213,083,766 (2003: 211,523,766) Ordinary shares of 1p each
Nil (2003: 121,208,952) Deferred shares of 4p each

2004
»

2003
»

10,151,642
—

10,151,642
4,848,358

£10,151,642

£15,000,000

2,130,838
—

2,115,238
4,848,358

£2,130,838

£6,963,596

At an extraordinary general meeting in the year, approval was given for the reduction of capital by cancelling
all the deferred shares and the share premium account. This reduction in capital was subsequently approved by
the courts. The balances from the above were transferred to the proﬁt and loss account.

The total number of share options outstanding under the Approved and Unapproved Share Option Schemes
were:

Date of grant
October 1997
January 1999
December 2001
September 2002

Total

Subscription
price payable
14.5p
8.25p
5p
2p

2004
Approved
28,000
250,000
125,000
125,000

2004
Unapproved
28,000
250,000
125,000
6,075,000

2003
Approved
448,000
250,000
125,000
125,000

2003
Unapproved
1,708,000
250,000
125,000
7,575,000

528,000

6,478,000

948,000

9,658,000

The options may be exercised within 10 years from the date of issue.

Newmark Security PLC
27

17. Share premium and reserves

Group
Accumulated reserves at 1 May 2003
Retained loss for the year
Capital reduction (note 16)
Exchange differences on foreign currency investments

Share
premium
account
»000
5,151
—
(5,151)
—

Merger
reserve
»000
801
—
—
—

Profit and
loss
account
»000
(9,585)
(2,044)
10,000
123

Accumulated reserves at 30 April 2004

—

801

(1,506)

The cumulative amount of goodwill eliminated against reserves is £4,079,000 (2003: £4,079,000). This goodwill
will be charged in the proﬁt and loss account on any eventual disposal of the businesses to which it related.

Company
Accumulated reserves at 1 May 2003
Capital reduction
Retained loss for the year

Accumulated reserves at 30 April 2004

Share
premium
account
»000
5,151
(5,151)
—

—

Merger
reserve
»000
801
—
—

801

Profit and
loss
account
»000
(9,386)
10,000
(785)

(171)

Loss 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 proﬁt
and loss account. The loss on ordinary activities after tax dealt with in the ﬁnancial statements of the parent
company for the year was £785,000 (2003: loss £5,289,000).

18. Minority interests

At 1 May
Minority interest purchased back in year
Share of proﬁts/(loss) in year
Exchange differences

At 30 April

2004
»000
347
(17)
27
(57)

300

19. Reconciliation of operating loss to net cash in£ow/(out£ow) from operating activities
2004
»000
(523)
559
69
—
147

Operating loss
Depreciation, amortisation and impairment of goodwill
Decrease/(increase) in stocks
Decrease in debtors
Increase/(decrease) in creditors and provisions

Net cash inﬂow/(outﬂow) from operating activities

252

2003
»000
2,030
(1,710)
(78)
105

347

2003
»000
(2,352)
1,312
(194)
537
(2,475)

(3,172)

Newmark Security PLC
28

20. Reconciliation of net cash £ows to movement in net (debt)/funds

Increase/(decrease) in cash
(Increase)/decrease in debt in the year from cash ﬂows

(Decrease) in net (debt)/funds resulting from cash ﬂows
Cash and debt disposed of on sale of Drion
Exchange adjustments

Movement in net (debt)/funds

21. Analysis of changes in net (debt)/funds

2004
»000
745
(924)

(179)
51
19

(109)

2003
»000
(6,359)
93

(6,266)
—
—

(6,266)

Cash at bank and in hand
Overdrafts

Debt due after one year
Debt due within one year

Net funds

April
2003
»000
806
(71)

735

(465)
(204)

(669)

Cash flow
»000
719
26

745

(1,068)
144

(924)

(179)

Disposed
of with
subsidiary
»000
—
—

Exchange
adjustments
»000
(3)
—

April 2004
»000
1,522
(45)

—

14
37

(3)

15
7

1,477

(1,504)
(16)

(1,520)

(43)

Financial instruments

22.
The Group’s ﬁnancial 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 ﬁnancials instruments is to
raise ﬁnance for the Group’s operations.

It is, and has been throughout the year, the Group’s policy that no trading in ﬁnancial instruments shall be
undertaken.

The main risks arising from the Group’s ﬁnancial 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 ﬁnances its operations through a mixture of retained proﬁts, bank borrowings and loan notes. The
Group borrows at ﬁxed rates of interest on long term loans to secure the Group’s exposure to interest rate
ﬂuctuations. At the year end, 100 per cent (2003: 100 per cent) of the Group’s borrowings were at ﬁxed rates
with Nil per cent of these borrowings comprising liabilities on which no interest is paid.

Liquidity risks
Short-term ﬂexibility in borrowings is achieved by overdraft facilities in the UK.

A long term loan existed in the Netherlands at the date of acquisition of Vema, secured on the freehold
property.

At the year end, 18 per cent (2003: 40 per cent) of the Group’s borrowings were due to mature in more than
ﬁve years.

Foreign currency risk
The sales of the UK companies are predominantly priced and invoiced in sterling, whilst the Belgian company
invoiced its customers exclusively in Euros.

Newmark Security PLC
29

Interest rate risk of ﬁnancial assets and ﬁnancial liabilities
The interest rate proﬁle of the Group’s ﬁnancial assets at 30 April 2004 was:

Currency
Sterling

Floating
rate
financial
assets
»000
1,522

Fixed rate
financial
assets
»000
—

Financial assets
on which no
interest is
received
»000
—

Total
»000
1,522

The interest rate proﬁle of the Group’s ﬁnancial assets at 30 April 2003 was:

Currency
Sterling
Euros
Dollars

Floating
rate
financial
assets
»000
705
98
3

806

Fixed rate
financial
assets
»000
—
—
—

Financial assets
on which no
interest is
received
»000
—
—
—

—

Total
»000
705
98
3

806

The interest rate proﬁle of the Group’s ﬁnancial liabilities at 30 April 2004 was:

Currency
Sterling
Euros

Floating
rate
financial
liabilities
»000
20
—

Financial
liabilities on
which no
interest has
been paid
»000
—
—

Fixed rate
financial
liabilities
»000
1,125
420

1,545

—

Total
»000
1,145
420

1,565

The interest rate proﬁle of the Group’s ﬁnancial liabilities at 30 April 2003 was:

Currency
Euros

Currency
Sterling
Euros

Total

Floating
rate
financial
liabilities
»000
—

Financial
liabilities on
which no
interest has
been paid
»000
—

Fixed rate
financial
liabilities
»000
682

—

682

—

Total
»000
682

682

Fixed rate financial liabilities Fixed rate financial liabilities
Weighted
average
period for
which rate
is fixed
2003
Years
—
12.9

Weighted
average
period for
which rate
is fixed
2004
Years
2.7
18.3

Weighted
average
interest
rate
2003
%
—
6.1

Weighted
average
interest
rate
2004
%
6.0
6.6

6.2

6.6

6.1

12.9

Newmark Security PLC
30

Currency exposures
Gains and losses from the Group’s net investment overseas are recognised in the statement of total recognised
gains and losses.

The table below shows the Group’s currency exposures that give rise to the net currency gains and losses
recognised in the proﬁt 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 2004, these exposures were as follows:

Functional currency of Group operation
Sterling

Total

As at 30 April 2003:

Sterling

Total

Maturity of ﬁnancial liabilities
The maturity proﬁle of the Group’s ﬁnancial liabilities 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 ﬁve years
In more than ﬁve years

Net foreign currency
monetary assets/
(liabilities) in »000
Total
(196)

US dollars
(25)

(25)

(196)

(34)

(66)

Euros
(171)

(171)

(32)

2004
»000
86
1,278
28
173

1,565

2003
»000
275
53
114
298

740

Borrowing facilities
The Group has no undrawn committed borrowing facilities. The facilities available in respect of which all
conditions precedent had been met were as follows:

Fair values of ﬁnancial liabilities
Set out below is a comparison by category of book values and fair values of the Group’s ﬁnancial liabilities:

Short-term ﬁnancial liabilities and current portion of
long-term liabilities
Long term borrowings

Book
values
2004
»000

61
1,504

Fair
values
2004
»000

60
1,324

Book
values
2003
»000

275
465

Fair
values
2003
»000

270
404

The fair values shown above have been calculated by discounting cash ﬂows at prevailing interest rates. The fair
values of all other monetary assets and liabilities is equal to their book values.

Newmark Security PLC
31

23. Disposal
On 30 October 2003, the Group disposed of its investment in Drion Security S.A.

Net assets disposed of:

Tangible ﬁxed assets
Stocks
Debtors
Cash
Creditors
Debt
Waiver Group loan

Professional costs

Loss on disposal

»000
880
277
367
1
(708)
(51)
213

979
56

1,035

The company was sold to the former Chief Executive of the Group for a maximum deferred consideration of
e500,000, payable in three annual instalments commencing in 2006, depending upon Drion Security achieving
a certain level of proﬁts after tax in each of the three ﬁnancial years to 30 April 2008.
In view of the
uncertainty, no allowance has been made in these accounts for any future recovery.

24. Other ¢nancial commitments
At 30 April 2004, the Company had annual commitments under non-cancellable operating leases as follows:

Plant and equipment
in one year or less
in more then one year but not more than two years
in more than two year but not more than ﬁve years
in more than ﬁve years

Property leases
in one year or less
in more than one year but not more than two years
in more than two years but not more than ﬁve years
in more than ﬁve years

2004
»000

2003
»000

7
25
68
—

—
20
—
144

4
20
21
—

40
32
20
79

25. 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 £11,250 from the Company during the year (2003:
£7,500) in respect of Mr. Reid. Vema NV paid fees of £Nil (2003: £8,045) to R. K. Harrison & Co. Limited for
services as director of that company. In 2003 Vema paid a fee to R. K. Harrison & Co. Limited of £16,193
for the termination of his management contract with that company.

(b) M Dwek is a director of the Company and owns 51 per cent of the share capital of Arbury Inc., which
received consultancy fees from the Company of £198,433 (2003: £179,821) in the year. A consultancy fee
of £Nil (2003: £31,985) was paid to Arbury Inc. by Vema NV for services as Chairman of that Company. In
2003 Vema paid a fee to Arbury Inc., of £61,904 for the termination of his consultancy contract with that
company.

(c)

Amounts totalling £Nil (2003: £2,700) 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. The amounts
outstanding at 30 April 2004 was £Nil (2003: £Nil).

These amounts are included in directors emoluments.

Newmark Security PLC
32

26. Post balance sheet events
Since the year end, the Group has acquired the entire issued share capital of Custom Micro Products Limited
(‘‘CMP’’), for a total consideration of up to £2.885 million.

In order to part fund the acquisition of CMP, the Group raised an additional £1,700,000 (before expenses)
through a placing of 136,000,000 ordinary shares at 1.25p per share.

Newmark Security PLC
33

NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that an Annual General Meeting of the above named Company will be held at
57 Grosvenor Street, London W1K 3JA on 18 November 2004 at 11 a.m. for the following purposes:

ORDINARY BUSINESS
1.

To receive and adopt the ﬁnancial statements and reports of the Directors and auditors for the ﬁnancial
period ended 30 April 2004.

To re-appoint M. Rapoport as a director of
re-appointment.

the Company, who retires and offers himself

for

To re-appoint BDO Stoy Hayward LLP as the auditors of the Company until the next Annual General
Meeting and to authorise the Directors to ﬁx their remuneration.

SPECIAL BUSINESS
To consider and, if thought ﬁt, to pass the following Resolution as an Ordinary Resolution:

That the Directors be and they are hereby generally and unconditionally authorised in accordance with
section 80 of the Companies Act 1985 (the ‘‘Act’’) to allot relevant securities (as deﬁned in that section)
up to a maximum aggregate nominal amount of £1,745,419; and this authority will (unless renewed)
expire at the conclusion of the next Annual General Meeting of the Company but the Company may,
before this authority expires, make an offer or agreement which would or might require relevant
securities to be allotted after the authority expires and the Directors may allot relevant securities
pursuant to such offer or agreement as if the authority conferred hereby had not expired.

To consider and, if thought ﬁt, to pass the following Resolution as a Special Resolution:

That the Directors be and they are hereby empowered pursuant to section 95 of the Act to allot equity
securities (within the meaning of section 94 of the Act) for cash pursuant to the authority conferred by
Resolution 4 above as if section 89(1) of the Act did not apply to any such allotment provided that this
power shall be limited to:

(a)

the allotment of equity securities in connection with an issue in favour of the holders of ordinary
shares of the Company in proportion (as nearly as may be) to their respective holdings of ordinary
shares, subject only to exclusions or other arrangements which the Directors may deem necessary or
expedient to deal with fractional entitlements, legal or practical problems arising in any overseas
territory or the requirements of any regulatory body or stock exchange in any territory; and

(b)

the allotment (otherwise than pursuant to sub-paragraph (a) above) of equity securities up to an
aggregate nominal amount of £872,709,

and the power hereby granted shall expire at the conclusion of the next Annual General Meeting of the
Company save that the Company may before such expiry make an offer or agreement which would or
might require equity securities to be allotted after such expiry but otherwise in accordance with the
foregoing provisions of this power in which case the Directors may allot equity securities in pursuance
of such offer or agreement as if the power conferred hereby had not expired.

By order of the Board
B G Beecraft
Company Secretary

7 October 2004
Registered Ofﬁce
57 Grosvenor Street
London W1K 3JA

Notes:
1.

A member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and, on a poll, vote instead of him. A proxy
need not be a member of the Company.
To be effective, completed forms of proxy and the power of attorney or other authority (if any) under which they are signed or a copy of that
power or authority certiﬁed notarially or in accordance with the Powers of Attorney Act 1971 must be lodged in accordance with the
instructions printed thereon, not later than 48 hours before the time appointed for the meeting or any adjourned meeting.
The following documents are available for inspection at the company’s registered ofﬁce during normal business hours on any weekday
(excluding Saturdays, Sundays and public holidays) until 17 November 2004 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)
(b)

a register in which are recorded details of all transactions in the shares of the company in respect of all Directors and their families;
a copy of every service contract between the company and any Director of the company.

Newmark Security PLC
34

Completion and return of a form of proxy will not preclude a member from attending and voting at the meeting in person should he wish to
do so.
The Company, pursuant to Regulation 41 of the Uncertiﬁcated Securities Regulations 2001, speciﬁes that only those members registered in
the register of members of the Company 48 hours before the time of the meeting shall be entitled to attend and vote at this meeting in
respect of the number of shares registered in their name at that time. Changes to entries in the register of members after that time shall be
disregarded in determining the rights of any person to attend or vote at this meeting.
In the case of joint holder, the vote of the senior who tenders a vote whether in person or by proxy will be accepted to the exclusion of the
votes of the other joint holders and for this purpose seniority will be determined by the order in which the names stand in the register of
members of the Company in respect of the relevant joint holding.
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
deﬁned in that section), unless authorised to do so by the Company in general meeting or by its articles. Resolution 4 authorises allotment
sufﬁcient to cover the existing warrants and options granted by the Company and allotment of up to an amount approximately equal to (but
not exceeding) one third of the issued share capital of the Company for the period to the conclusion of the Annual General Meeting in 2004
or until such time as the authority is revoked, carried or renewed 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 of cash must ﬁrst offer them to existing shareholders
following a statutory procedure which is both costly and cumbersome, Resolution 5 enables the Directors to allot sufﬁcient shares to cover
the existing warrants and options of the Company and to allot shares up to an aggregate nominate amount of twenty ﬁve 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 ﬂexibility. Unless previously revoked or varied the disapplication will expire
on the conclusion of the next Annual General Meeting of the Company or 15 months from the date of the passing of this resolution
whichever is earlier.

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Newmark Security PLC
36

NEWMARK SECURITY PLC

Proxy for Annual General Meeting

I/We the undersigned, being (a) Member(s) of

the Company, HEREBY APPOINT the Chairman of

the

Meeting or ... ....... ........ ....... ........ ....... ....... ........ ....... ........ ....... ....... ........ ....... ........ ....... ........ ....... ....... .
(Note 1) as my/our Proxy to vote for me/us and on my/our behalf at the Annual General Meeting of the
Company to be held at 57 Grosvenor Street, London W1K 3JA on 18 November 2004 at 11.00 a.m. and at any
adjournment thereof.

For

Against

(Note 2)

ORDINARY RESOLUTIONS

To receive and adopt the ﬁnancial statements and reports of the
directors and auditors for the ﬁnancial period ended 30 April 2004.

To re-appoint M. Rapoport as a director of the Company.

To re-appoint BDO Stoy Hayward LLP as the auditors of the Company
and authorise the Directors to ﬁx their remuneration.

To approve the granting of authority pursuant to Section 80 of the
Companies Act 1985 to allot relevant securities.

SPECIAL RESOLUTIONS

To approve the granting of authority under Section 95 of the
Companies Act 1985 to allot equity securities.

Dated this .... ....... ........ ....... ........ ....... ....... ........ .....day of. ....... ....... ........ ....... ........ ....... ........ ....... ..2004

Signature...... ....... ........ ....... ........ ....... ....... ........ ....... ........ ....... ....... ........ ....... ........ ....... ........ ....... ....... .

Full name(s) in which shares are registered.... ........ ....... ........ ....... ....... ........ ....... ........ ....... ........ ....... ....... .

.... ........ ....... ....... ........ ....... ........ ....... ....... ........ ....... ........ ....... ....... ........ ....... ........ ....... ........ ....... ....... .
PLEASE USE BLOCK LETTERS

Notes:
1.

If any other proxy is desired strike out ‘‘the Chairman of the Meeting or’’ and insert the name or names preferred. Any alterations to this
form must be initialled. A proxy need not be a member of the Company.
Please indicate with an ‘‘X’’ in the relevant box marked ‘‘For’’ or ‘‘Against’’ how you wish the proxy to vote on the resolutions. When no ‘‘X’’ is
inserted the proxy will at his or her discretion vote as he or she thinks ﬁt or abstain from voting.
The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorised in writing or, if the
appointor is a corporation, either under the common seal or under the hand of an ofﬁcer or attorney so authorised.
In the case of joint holders of a share the vote of the ﬁrst-named holder on the Register of Members (whether voting in person or by proxy)
will be accepted to the exclusion of the votes of the other joint holders in respect of the joint holding.
This form of proxy and the power of attorney or other authority (if any) under which it is signed, or a notarially certiﬁed copy of such power
or authority, should be returned so as to reach the Company Registrar, Capita Registrars, not less than 48 hours before the time appointed
for holding the meeting or adjourned meeting at which the person named in the instrument proposes to vote and, in default, the instrument
of proxy shall not be treated as valid.
Completion and return of this form of proxy will not preclude members from attending and voting in person at the meeting should they
subsequently decide to do so. Pursuant to regulation 41 of The Uncertiﬁcated Securities Regulations 2001, members will be entitled to attend
and vote at the meeting if they are registered on the Company’s register of members 48 hours before the time appointed for the meeting or
any adjournment thereof.

Newmark Security PLC
37

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