NEWMARK SECURITY PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS
YEAR ENDED 30 APRIL 2022
Company number: 3339998
YEAR ENDED 30 APRIL
2022
Our mission is to protect human capital
in safe spaces by creating trusted
ecosystems in the workplace using
best-in-class security products enabled
by SaaS-based cloud control and
enterprise-class services.
With our 2025 strategy firmly in focus,
we continue to take bold steps to
achieving our goals, demonstrating
resilience to global impacts, a long-term
sustainable business model and a
strong will to win.
Marie-Claire Dwek, CEO
Company number: 3339998
CONTENTS
About Newmark Security ........................................................................................................................... 1
At a Glance ................................................................................................................................................ 2
Highlights ................................................................................................................................................... 3
Strategic Report
Chairman’s Statement ............................................................................................................................... 5
Business Model.......................................................................................................................................... 7
Chief Executive Officer’s Review ............................................................................................................. 10
Our Divisions – People and Data Management ....................................................................................... 13
Our Divisions – Physical Security Solutions.............................................................................................. 18
Financial Review ...................................................................................................................................... 21
Principal Risks and Uncertainties ............................................................................................................. 23
S172 Statement ....................................................................................................................................... 25
Corporate Governance
Our Board ................................................................................................................................................ 28
Governance Principles ............................................................................................................................. 30
Directors’ Report ..................................................................................................................................... 34
Directors’ Remuneration Report ............................................................................................................. 38
Independent Auditor’s Report ................................................................................................................. 40
Financial Report
Financial Statements ............................................................................................................................... 48
Shareholder Information
Shareholder Information ......................................................................................................................... 87
Newmark Security PLC – Report and Financial Statements 2022
ABOUT NEWMARK SECURITY
Newmark helps organisations to protect human capital
in safe spaces, with secure cloud control of their people's
access, time keeping and identity data at work.
Safe. Seamless. Secure.
Newmark Security PLC (AIM:NWT) delivers long-term shareholder value through the provision of products and services in the
security and enterprise data sectors. From its locations in the UK and North America, Newmark operates through subsidiary
businesses that are well-positioned in specialist, high-growth markets with a reputation for innovation and quality leadership
established through 25-years of engineering excellence.
Grosvenor Technology serves the Access Control and
Human Capital Management markets globally, providing
cloud-controlled solutions that combine hardware, software
and services to collect and secure people’s access, time
keeping and identity data at work. These solutions help
companies maintain privacy, ensure compliance and reduce
operating costs, and are increasingly provisioned as-a-service
through recurring subscriptions.
Safetell provides physical security installations and services
to numerous end-users across the public and private sectors,
with a broad product portfolio ranging from Entrance Control
and Automatic Doors to a wide array of Building and Asset
Protections solutions. Safetell works collaboratively with
clients to design complete security solutions which builds
long-standing relationships, high degrees of customer
retention and significant proportions of repeat business.
As a leading provider of electronic and physical security systems, Newmark’s products and services have become the industry
standard in people and data security in the workplace. Our solutions help organisations to ensure people feel safe in their
environment, can seamlessly access workspaces to be productive, and have the essential reassurance that their identity data is
kept securely, in compliance with the most stringent data protection measures.
Newmark benefits from long-term relationships with many blue-chip customers and incremental partnerships with influential
software vendors, particularly in North America. By continuously investing in innovative technology for high-growth security
markets that focus on protecting human capital, the Newmark strategy is generating an increasing proportion of its revenues
from recurring services, building a business that has long-term stability and sustainability at its core.
1
AT A GLANCE
Year ended 30 April 2022
Newmark Security PLC – Report and Financial Statements 2022
Revenue
£19.1m
+8% (2021: £17.7m)
People & Data Management
Division
£14.5m
+15% (2021: £12.6m)
Physical Security Solutions
Division
£4.6m
-8% (2021: £5.0m)
Revenue split by division and line of business
HCM
Access Control
Safetell Products
Safetell Service
10%
18%
2021
£17.7m
55%
17%
8%
16%
16%
2022
£19.1m
60%
Employees
103
-8% (2021: 112)
Locations
5
(2021: 5)
2
Newmark Security PLC – Report and Financial Statements 2022
HIGHLIGHTS
Year ended 30 April 2022
Revenue
Gross profit margin
EBITDA
£19.1m
+8.4% (2021: £17.7m)
Operating (loss)/profit
before exceptional items
-£1.1m
(2021: Profit £0.1m)
Cash generated from operations
before exceptional items
-£1.4m
(2021: £0.2m)
People & Data Management
Division Revenue
£14.5m
+15% (2021: £12.6m)
Annual Recurring Revenue
from HCM SaaS and ClaaS
£0.9m
+605% (2021: £0.1m)
Physical Security Solutions
Division Revenue
£4.6m
-8% (2021: £5.0m)
33.5%
-4.0% pts (2021: 37.5%)
£0.03m
-97% (2021: Profit £1.0m)
(Loss)/profit after tax
(Loss)/earnings per share
-£0.8m
(2021: Profit £0.2m)
-0.32p
(2021: Earnings 0.03 pence)
Investment in development
Net assets
£0.8m
(2021: £0.7m)
HCM
Revenue
£11.4m
+18% (2021: £9.7m)
Access Control – Janus C4 Revenue
£0.8m
+137% (2021: £0.4m)
Products
Revenue
£3.1m
-3% (2021: £3.2m)
£7.6m
(2021: £8.2m)
Access Control Revenue
Revenue
£3.1m
+4% (2021: £3.0m)
Service
Revenue
£1.5m
-19% (2021: £1.8m)
3
Newmark Security PLC – Report and Financial Statements 2022
STRATEGIC REPORT
4
Newmark Security PLC – Report and Financial Statements 2022
CHAIRMAN’S STATEMENT
focused strategy, we have taken
the right measures to drive our
business forward with disciplined
execution.
By working towards an optimal
structure and product mix, we are
now extremely well-placed to scale
our business, converting the
opportunities we have already
identified, expanding our network
of partners, and embedding our
range of solutions as subscriptions
that we can jointly promote.
This has been an exciting year in
the evolution of our business
model, strengthened by the
increasing traction we are
achieving in North America, with
solid development progress across
all lines of business and a
tremendous opportunity to
convert this effort into incremental
revenue growth in North America,
the UK and Rest of World markets.
Board and governance
The Board and its Committees
continue to maintain a robust
governance framework, led by our
Chief Financial Officer, Paul
Campbell-White, supported by the
experience of an enhanced
leadership team to provide
independent challenge and ensure
that good governance is promoted
across the Group.
We follow the Quoted Companies
Alliance Corporate Governance
Code (“QCA Code”), and details on
how the Company applies the
principles of the QCA Code are set
out in our Corporate Governance
section on pages 31 to 33.
Going concern
The Board continues to have a
reasonable expectation that the
Company and the Group have
adequate resources to continue in
operational existence for the
foreseeable future. We are in a
stable position following market
emergence from the restrictions of
COVID-19, although cash remains a
key focus. We have taken steps to
mitigate the challenges we face
managing our inventory levels and
dealing with the global shortage of
components we need to build our
products.
During the year the Group
increased its UK invoice
discounting facility to £1.7 million
and secured a new $2 million US
facility. This, together with an
increased overdraft to £0.7 million
has helped finance the Group’s
working capital needs in the year
to 30 April 2022 (“FY22”).
However, as a result of a
combination of customer price
rises, cost savings and unwinding
of inventories, the Group has
reduced cash outflows at the end
of the year and therefore the
overdraft facility has now reverted
back to the original £0.2 million.
The Group’s first covenant to be
tested for the £2 million HSBC
CBILs facility will be for the year
ended 30 April 2023 and requires
the Group to deliver a pre-debt
service cashflow of 1.2 times the
level of debt service. The latest
forecast of the Group results in
exceeding the debt service
covenant test by 51% and will be
tested again when a revised
forecast is completed in February.
The Group is currently trading
ahead of this forecast and has
returned to profit after tax and
operating cashflow generation in
FY23.
Overview
As we emerge from another
COVID-impacted year, I am
particularly pleased with the
progress we have made in
executing our strategy and setting
the right foundations for our
continued success. We are
delivering on our strategic targets
and achieving recurring revenue
growth whilst taking prudent cost
management initiatives that have
enabled us to keep focusing on our
new product pipeline. By offering
complete solutions that are
genuinely best-in-class, our
reputation with clients is highly
trusted and growing.
Our proactive approach through
the pandemic has demonstrated
our ability to manage the business
for the long-term, building
credibility with new clients and
strengthening existing
relationships through our
willingness to be flexible and adapt
to their needs. Our ability to
provide technical solutions and
hardware without requiring us to
physically attend a site has been a
huge advantage and will be an
important factor as we scale.
We have seen the value of staying
agile and prioritising our
investments to create sustainable
growth. With high confidence in
our product portfolio and client-
5
Newmark Security PLC – Report and Financial Statements 2022
advantage, offering complete
security solutions with services
that bring rapid response to
customers’ needs, targeting new
markets where demand is strong
and growing.
Once again, I am confident we are
set up for growth. We are in a
strong position to benefit from the
exciting opportunities that our
teams across the Group have
worked hard to develop in the past
year. We are forecasting revenue
growth for the coming year and
year to date results show we are
on target to achieve this.
On behalf of the Board, I would like
to extend my thanks for all the
hard work and resilience shown by
our teams in what has been
another challenging but highly
productive year. I look forward to a
successful year ahead.
Maurice Dwek
Chairman
20 January 2023
We are optimistic that our growth
will continue in the next 12
months, but with reduced
investment outlays. A full analysis
of the Group’s going concern
assessment is included in the
Directors’ Report on page 35.
Accordingly, the directors consider
it appropriate to prepare the
accounts on a going concern basis.
Dividend
The Board is not recommending
the payment of a dividend for the
year ended 30 April 2022 (2021:
£Nil).
Outlook
While the Group has again been
affected by the global pandemic
and restrictions imposed in the UK
and internationally, I am pleased
with the progress we have made
this year. Despite inflationary
pressures, we look forward with
cautious optimism, particularly for
the continued growth of our HCM
business in North America, and we
expect to benefit from the
execution of our 2025 strategy
which will see us build a greater
proportion of recurring revenues.
The outlook for our HCM business
in the Rest of the World is also very
promising, as we develop our
capabilities, expand a wide range
of partnership opportunities and
onboard new customers.
Our Physical Security Solutions
division, Safetell, will pursue its
part of the strategy, growing its
share of the Entrance Control and
Automatic Door servicing market
and by continuing to press its
6
Newmark Security PLC – Report and Financial Statements 2022
BUSINESS MODEL
7
© 2022 Newmark Security Plc. Strictly Confidential.TIMECLOCK CONTROLCLOCK-AS-A-SERVICEGT CONNECT ●GT8 /GT10 TIMECLOCK●TECHNICAL SUPPORT ●DEVICE MANAGEMENT ●DATA SERVICES●ACCESS CONTROLSOLUTIONSJANUS C4 ●ACCESS CONTROL DEVICES●TECHNICAL SUPPORT ●DEVICE MANAGEMENT ●DATA SERVICES●SECURE CLOUD CONTROLSOFTWARE-AS-A-SERVICECOMPATIBLE IOT DEVICES ●REAL-TIME STATUS ●DEVICE DIAGNOSTICS ●BI DASHBOARDS ●SECURE DATA PROCESSING ●PII CLOUD VAULT ●AUDIT TRAIL ●GT ConnectHCM AppsAC AppsPIICloud VaultBiometricsAnalycsIdentyControlModuleTimeclockControlModuleDeviceIntegrationDesignOEMAccessControlModuleGT CONNECTTIMECLOCK CONTROLACCESS CONTROLIDENTITY CONTROLGT CONNECTCLAASCLOCKAS-A-SERVICEJANUS C4ACSACCESSCONTROLSOLUTIONSGT CONNECTSAASSECURE CLOUDCONTROL1●GT8Timeclock●Door, OSDP & I/O Blades ●Single & Mul-Blade Controllers●Analycs●Biometrics●PII Cloud Vault●GT CONNECTSECURE CLOUD CONTROLPeople & data servicesISO27001 Certified with triple redundancy data backup◼Remote Device ManagementManage and configure your networked devices centrally. Keep them up-to-date and secure with a single click. Includes remote setup assistance and expert support.◼Identy ManagementBiometric and personal data can be managed, distributed and backed-up securely and automacally across networked devices to assist in compliance with data protecon laws.◼Technical SupportGT Connect is supported by our dedicated Technical Support team. Expert troubleshoong of technical problems with guaranteed SLA response mes to resolve issues quickly.◼Data ManagementSimplify integraons from your devices to your enterprise soware with ease using our cloud-to-cloud plaorm. Data is transferred via a single encrypted connecon keeping your operaonal costs low.◼Remote Device DiagnoscsAccess to our cloud diagnosc plaorm. Your team can provide ulmate support and service to customers with advanced tools, eliminang engineer visits and reducing downme.◼System ManagementSeamless backup and recovery services ensure your data is always secure, always available and automacally backed up in the cloud, providing unrivalled protecon against data loss.SERVICESCREATING TRUSTED ECOSYSTEMS IN THE WORKPLACE WITH SECURE CLOUD CONTROLSecure cloud control ofall compable devices and the data they collectLifeme hardware warranty that protects your devices with the opon to let us manage them for you●GT10 Timeclock
Newmark Security PLC – Report and Financial Statements 2022
8
© 2022 Newmark Security Plc. Strictly Confidential.TIME CLOCK CONTROLCLOCK-AS-A-SERVICEGT CONNECT ●GT8 /GT10 TIMECLOCK●TECHNICAL SUPPORT ●DEVICE MANAGEMENT ●DATA SERVICES●ACCESS CONTROLSOLUTIONSJANUS C4 ●ACCESS CONTROL DEVICES●TECHNICAL SUPPORT ●DEVICE MANAGEMENT ●DATA SERVICES●SECURE CLOUD CONTROLSOFTWARE-AS-A-SERVICECOMPATIBLE IOT DEVICES ●REAL-TIME STATUS ●DEVICE DIAGNOSTICS ●BI DASHBOARDS ●SECURE DATA PROCESSING ●PII CLOUD VAULT ●AUDIT TRAIL ●GT ConnectHCM AppsAC AppsPIICloud VaultBiometricsAnalyticsIdentyControlModuleTimeclockControlModuleDeviceIntegrationDesignOEMAccessControlModuleGT CONNECTTIMECLOCK CONTROLACCESS CONTROLIDENTITY CONTROLGT CONNECTCLAASCLOCKAS-A-SERVICEJANUS C4ACSACCESSCONTROLSOLUTIONSGT CONNECTSAASSECURE CLOUDCONTROL1●GT8Timeclock●Door, OSDP & I/O Blades ●Single & Mul-Blade Controllers●Analycs●Biometrics●PII Cloud Vault●GT CONNECTSECURE CLOUD CONTROLPeople & data servicesISO27001 Certified with triple redundancy data backup◼Remote Device ManagementManage and configure your networked devices centrally. Keep them up-to-date and secure with a single click. Includes remote setup assistance and expert support.◼Identy ManagementBiometric and personal data can be managed, distributed and backed-up securely and automacally across networked devices to assist in compliance with data protecon laws.◼Technical SupportGT Connect is supported by our dedicated Technical Support team. Expert troubleshoong of technical problems with guaranteed SLA response mes to resolve issues quickly.◼Data ManagementSimplify integraons from your devices to your enterprise soware with ease using our cloud-to-cloud plaorm. Data is transferred via a single encrypted connecon keeping your operaonal costs low.◼Remote Device DiagnoscsAccess to our cloud diagnosc plaorm. Your team can provide ulmate support and service to customers with advanced tools, eliminang engineer visits and reducing downme.◼System ManagementSeamless backup and recovery services ensure your data is always secure, always available and automacally backed up in the cloud, providing unrivalled protecon against data loss.SERVICESCREATING TRUSTED ECOSYSTEMS IN THE WORKPLACE WITH SECURE CLOUD CONTROLSecure cloud control ofall compable devices and the data they collectLifetime hardware warranty that protects your devices with the option to let us manage them for you●GT10 Timeclock
Newmark Security PLC – Report and Financial Statements 2022
9
© 2022 Newmark Security Plc. Strictly Confidential.1PHYSICAL SECURITY SOLUTIONSPRODUCT PORTFOLIOBuilding SecurityManual attack and ballistic resistant cash counters, windows and moving security screensBullet resistant doors and partitionsSecurity portalsEntrance ControlCertified secure portals and revolving doorsIntegrated speed gates to control the flow of staff and visitors to buildingsAutomatic doors and remote locking solutionsAsset ProtectionCustomised cash and asset storage and protectionCash and speech transfer unitsStorage functions to reduce risk of harm or damage to a secure environmentOther ProductsCounter-terror and target hardening solutionsA range of ‘touchless’ security solutionsOther standard and bespoke physical products and servicesComplete security solutionsSafetell is the UK’s leading provider and installer of fully-integrated physical security solutions with accredited products, comprehensive services, certified maintenance engineers and responsive customer support–all in one place.
CHIEF EXECUTIVE OFFICER’S REVIEW
Newmark Security PLC – Report and Financial Statements 2022
innovation and software
development, we have enhanced
our solutions offering across all
lines of business. This puts the
business in a very strong position
to execute on its strategic plan
without requiring significant new
development. This is already
driving new client contracts and is
building an extremely healthy
pipeline for the year ahead.
This enormous effort has been
achieved by an extremely
committed and resilient team, to
whom I am very grateful and
especially proud of their significant
progress and achievements.
Performance
Group revenue has grown once
again, increasing by 8% year-on-
year to £19.1 million. This was
primarily driven by Human Capital
Management (HCM) sales in North
America, up by 34% to £8.7 million.
HCM has a rapidly growing
recurring services contribution
with Software-as-a-Service (SaaS)
and Clock-as-a-Service (ClaaS)
annual recurring revenues (ARR)
increasing over 600% to £0.9
million by April 2022. This growth
was driven by the first full year of
our ClaaS subscription service.
Our Access Control business grew
by 4% year-on-year to £3.1 million
which was in line with expectations
in a year that continued to be
impacted by COVID-restrictions on
physical site visits, causing delays
to new projects and installations.
Despite this, our new Access
Control product, Janus C4, has
been well-received by the market
and is starting to generate
anticipated returns, with sales up
137% at £0.8 million.
In a similarly difficult environment
for physical product sales and
servicing, Safetell, our Physical
Security Solutions division,
dropped back slightly with
revenues down 8% to £4.6 million.
The team responded quickly,
undertaking numerous cost-cutting
and re-organisation measures that
saw gross margin levels increase to
40.4%. With a number of new and
exciting national opportunities in
the pipeline this puts the business
in a very confident position for a
return to top and bottom-line
growth in the year ahead.
Outlook
People and Data Management
division - Grosvenor Technology
Looking ahead, we will continue to
build on the positive momentum
we have achieved in Human Capital
Management and Access Control,
focusing on converting a rising
number of opportunities in these
fast-growing markets with our
newly developed products and
software. Our goal, to create
longer-term and higher margin
contracts with our partners and
customers, will be accelerated as
we launch our upgraded HCM SaaS
platform, GT Connect. This will
further increase recurring
revenues, driving towards an
ambitious ARR target. A key
component of this success will be
achieved by maintaining our
ongoing commitment to deliver
highly secure data processing,
complying with international
standards such as ISO 27001.
To mitigate further supply chain
effects and logistics, we are
exploring the establishment of a
new manufacturing facility in North
America, with the intention of
streamlining the delivery of in-
10
Overview
In another very challenging year,
the gradual easing of restrictions
imposed by Covid signalled a
welcome return and the
beginnings of a staged recovery as
traditional businesses began to
emerge.
Many of our blue-chip clients were
impacted whilst their recovery
efforts were hit by knock-on
effects felt right across the supply
chain, with the rising cost of goods
and services and, in many cases,
delivery and logistical delays.
In this context, Newmark was quick
to adapt, taking several bold and
critical steps that have made a
significant difference to the speed
and profile of our own recovery
and forward momentum.
Throughout this year, we have
continuously adapted our
products, software and operations
to ensure our long-term
partnerships remain well-served
and growing, expanding our
product portfolio, investing in
hardware adaptations to
accommodate available
componentry, building up valuable
stock reserves and further
integrating software to accelerate
partner take-up and throughput.
In the year ended 30 April 2022
(FY22), following three years of
substantial investment in product
Newmark Security PLC – Report and Financial Statements 2022
country products in this fast-
growing market.
On behalf of the Board, I would
also like to take this opportunity to
thank our outgoing Commercial
Director, Andy Rainforth, who
wanted to take on a new challenge
closer to home. Andy’s significant
contribution, particularly helping
the business navigate the recent
impacts of the pandemic, has been
tremendous and we are
enormously grateful for the 8 years
of service he has given.
I am also delighted to formally
announce the appointment of
Colin Leatherbarrow as Managing
Director of Grosvenor Technology,
stepping up from his former role as
Chief Technology Officer. Colin is
ideally placed to drive forward our
ambitious growth plans in this
business, having already led
significant innovation and
development across our
technology operations since joining
in October 2017.
Physical Security Solutions division -
Safetell
With access measures easing in
recent months, the team has been
hugely productive having
successfully launched new
products, expanded our client
base, and formed new
partnerships. Several delayed
projects have now recommenced
as we target larger contracts in
entrance control, build national
scale relationships for our
Autodoor Service Department and
extend our long-established
banking experience to meet the
growing demand for security
screens across retailers of all sizes.
We were delighted to welcome
Nick Shannon, who joined in
February 2022 from G4S Secured
Solutions to head up the division.
He will lead the strategic focus to
build the services side of the
business with the aim of increasing
11
the proportion of recurring
revenues. I am delighted to report
that this work is already well
underway and showing early signs
of success, targeting significant
growth in the year ahead.
Financial
Whilst sharp increases in
componentry and freight costs
have impacted Group margins, we
have implemented a programme of
strict cost control and increased
prices to mitigate the effect of
higher costs. This has resulted in
reduced losses for the second half
of the year compared to H1. As we
look forward, we expect to see the
full benefit of the price rises and
cost savings in the next financial
year (FY23), whilst we start to
utilise our recent investments in
products and infrastructure to fuel
our accelerating growth.
To facilitate this, we have secured
a $2 million US invoice discounting
facility to provide additional
working capital headroom. We
have also invested to mitigate
supply chain challenges by securing
additional inventory to satisfy
ongoing customer demand and
stay ahead of the competition. Our
working capital level is expected to
ease as we reduce the inventory
we are currently holding, allowing
for improved cash flow generation.
As we build on our positive
momentum, I am reassured that
we have strong governance in
place with appropriate commercial
controls to achieve a very positive
market and financial result over
the forthcoming year, accelerating
us towards our 2025 strategy.
I am very grateful for the support
of our new CFO, Paul Campbell-
White, who has made a
tremendous contribution, helping
to ensure that sound financial
discipline underpins our
operations, and all investment
decisions continue to align with
our strategic goals.
Strategy
As a strategic priority, our product
initiatives have been carefully
designed to increase recurring
revenues, enabling us to make a
powerful evolution from hardware
to hardware-enabled software and
services, based on providing
‘secure cloud control’.
By offering secure cloud control of
people's access, time keeping and
identity data at work, we are
shifting the strategic value
paradigm, raising the customer
focus from its former dependency
on hardware ‘clocks’ and ‘access
terminals’, to one that empowers
the intelligent enterprise. Through
our solutions, customers will gain
the capability to enable and
connect a broad range of internet-
enabled devices securely in the
cloud with unified software control
– creating a trusted ecosystem in
the workplace.
Establishing ourselves as an
experienced and trusted security
partner on whom our customers
rely, has been an essential factor in
our success for over 25 years. Over
the past year, we have succeeded
in turning this trust into expanded
partnerships that reach beyond
pure products and hardware
subscription models, into more
complete solutions – increasingly
contracted via ongoing service
arrangements that are based on
combining hardware flexibility,
secure cloud control and specialist
support services. Leveraging our
expertise in data security, our clear
strategy is to generate sustainable,
high quality recurring revenues
that will scale and extend, over and
beyond the product lifecycle, into
the longer-term.
The favourable characteristics of
subscription-based business
models make them particularly
attractive to our customers, as
worldwide consumption of
software-as-service continues to
grow strongly. Newmark, and in
particular our People and Data
Management Division, continue to
follow this servitization trend with
confidence.
As our business model evolution to
hardware-enabled software-as-a-
service gathers pace, our focus
remains on winning trusted, long-
term partnerships fulfilled by our
unique combination of best-in-
class products with market leading
software and expert, specialist
support services that put
customers in control.
In an increasingly risk-aware
enterprise environment, we have
been working hard to broaden our
reach and reputation as a trusted
security partner, becoming a go-to
brand for customers who are
seeking this control to simplify the
growing complexity of security and
compliance requirements in the
intersection between physical and
digital worlds.
Our strategic focus and approach
are opening a substantial market
opportunity in which we now
occupy a commanding position
with key strategic partners. Our
aim is to scale this model across an
expanded partnership channel,
matching this drive with speed of
execution to secure greater market
share. Converting our hard-earned
competitive advantage will take
time and we will continue to invest
in people and infrastructure to
drive business growth as we
pursue an ambitious and
achievable 2025 market strategy
with a strong will to win.
Marie-Claire Dwek
Chief Executive Officer
20 January 2023
Newmark Security PLC – Report and Financial Statements 2022
Five years of consecutive revenue growth:
HCM in North America: £m
10.0
8.0
6.0
4.0
2.0
0.0
8.7
5.9
6.5
4.0
0.9
1.2
2017
2018
2019
2020
2021
2022
“I am delighted with the continued progress we
are making in North America, growing our
pipeline of orders and expanding our partnerships
with top tier software vendors. Operationally, we
are well-positioned to match this demand with
market-leading products, expert-led services and
responsive support, and we are looking forward to
growing our share of this important market in the
year ahead. This is fuelling our growth in recurring
revenues from timeclock cloud connections.”
The rapid growth of timeclock cloud connections:
15,000
10,000
5,000
-
13,000
7,000
5,000
3,000
500
2018
2019
2020
2021
2022
12
Newmark Security PLC – Report and Financial Statements 2022
OUR DIVISIONS –
PEOPLE AND DATA MANAGEMENT
Revenue information
£'000
HCM North America
HCM Rest of World
Total HCM
Janus C4
Sateon Advance
Legacy Janus
Total Access Control
2022
8,726
2,716
11,442
833
1,010
1,274
3,117
2021
6,509
3,150
9,659
351
1,146
1,491
2,988
Division Total
14,559
12,647
Performance overview
Grosvenor Technology (Grosvenor)
is a market leader in Human
Capital Management and Access
Control solutions that helps
organisations to protect and
manage their most valuable assets
– people in the workplace.
This year has marked an important
moment of transition for
Grosvenor, with significant
progress in the evolution of our
business model that now
encompasses hardware-enabled
software and services, centred
around providing customers with
‘secure cloud control’.
Our reputation for best-in-class
products combined with the
reliability of our services and
support has been a key factor in
our success over the last twelve
months, and together with
numerous transformation
initiatives, is building momentum.
Overall, it has been a strong year
with top line revenue growth of
15% to £14.6 million, primarily
driven by strong growth of the
13
North American HCM business and
our expanding relationships with
Tier 1 software partners.
Growth was driven by traditional
timeclock sales assisted by the first
full year of our new GT8 timeclock,
although there was also an
increasing contribution from
recurring services revenues.
HCM SaaS and ClaaS revenues
quadrupled to reach an ARR of
£0.9 million in April 2022. As a
central tenet of our strategic plan,
we are confident this growth
trajectory will result in an even
greater share of revenue in FY23.
HCM Rest of World continued to
trade consistently on an underlying
basis, working to increase future
share-of-wallet across a number of
smaller partners. However, there
was a decline of 14% in the year
primarily due to one of our
European partners requesting that
all billing be put through our North
American business during FY22.
Access Control revenues increased
by 4% to £3.1 million, with sales of
our new Janus C4 product
beginning to take-off, replacing
Increase/
(decrease)
Percentage
change
2,217
(434)
1,783
482
(136)
(217)
129
1,912
34%
(14%)
18%
137%
(12%)
(15%)
4%
15%
former legacy products with
revenues of £0.8 million up 100%
on the previous year, despite being
another heavily COVID-impacted
year.
Below the headline growth, key
milestone achievements have
included an ambitious upgrade to
our product strategy, re-
platforming our core cloud control
software, GT Connect, and evolving
the service model that underpins
our lifetime warranty product, GT
Protect.
These essential transformation
steps have been achieved against a
backdrop of solid trading, despite
the effects of the pandemic and
global supply chain challenges that
we have faced over the last 12
months. Our substantive progress
now puts the business in a
commanding position to capitalise
on the competitive advantage we
have built, enabling us to
confidently target growth in the
months ahead.
Accelerating growth in North
America
Confidently building forward with a
strong and growing reputation
A model opportunity to broaden
European HCM
Newmark Security PLC – Report and Financial Statements 2022
The success of our North American
HCM operations continued to
deliver double-digit growth for the
fifth consecutive year, with
revenues increasing by 34% to £8.7
million. With even stronger
prospects and pipeline leading into
the next year, this shows every sign
of continuing well into the future.
Once again, we have benefitted
from our partnerships with major
software vendors such as Paycor,
UKG and Workforce Software.
We are also extremely proud of
our work with Paycor, creating a
model partnership which
encompasses all of our services
consumed on a recurring basis,
enabling us to supply directly to
their very large base of end-
customers.
With UKG, the anticipated further
reduction in revenues, as a result
of the merger between Ultimate
and Kronos, did not materialise. In
fact, revenue significantly
increased in FY22 due to the ease
with which our clocks integrate
with the Ultimate software
platform.
In addition, we continue to actively
support Workforce Software to
enhance and scale their services
with customers, including a
significant opportunity with one of
the world’s largest retailers.
We have worked hard across our
full range of partners to achieve
increasing share-of-wallet across
the majority of our North American
accounts, now acting as their
preferred provider.
We are converting our reputation
for excellence in product and
reliability of service into fast-
growing recurring revenues. Our
platform-based recurring services
has 100% customer retention,
demonstrating the attractiveness
of the model and the power of our
strategic positioning. This included
notable successes with AOD,
Insperity and Azure, previously as
purchasers of hardware-only
products and now selling fully
packaged hardware, software and
service subscriptions.
Our strong reputation has also
enabled us to attract several new
and large partnership
opportunities which we are
hopeful will convert into
substantial contracts in the next
year, having received excellent
engagement and excitement
through early product
demonstration and engineering
reviews. Our traditional strength in
engineering, supported by an
enhanced strategic and
commercial approach, gives us a
high degree of confidence in
success.
Whilst many of the major HCM
software vendors are based in
North America, the Rest of World
opportunity appears more
fragmented and yet we have
attracted a number of key
European partners who have been
essential to our local strategy.
Internationally, the emerging
overlap in HCM and Access Control
creates a new cloud-based
opportunity for combined
solutions, and together these
represent a very large market for
our future growth.
Most notably during the year we
have been working with Protime,
our largest European partner, to
develop additional functionality
within our Android feature set that
enables them to adopt the new
GT8 timeclock. As a result of this
investment, we are confident this
will provide an incremental growth
channel for sales of GT8 hardware,
software and related services as
these devices become embedded.
Protime is another great example
of a model partnership based on
mutual collaboration, flexibility and
adaptation, which embodies our
strategic evolution towards
recurring revenues based on the
combination of hardware, software
and support.
In a similar approach to our North
America sales, we are delivering
targeted activities to raise our
share-of-wallet across our
European partners and have a
strong pipeline of new partners we
are working to bring on-stream in
FY23.
14
Newmark Security PLC – Report and Financial Statements 2022
Product update
Modular GT8 timeclock
Advanced facial recognition for the
COVID-era
Accurately identifying people,
verifying they are who they say they
are at a point in time and place, is no
trivial task, even though its
increasing prevalence and availability
in devices like smartphones means it
is now widely adopted by
mainstream consumers. Far more
than for a single user, timeclocks and
access control devices must have the
capability to identify a person from
thousands of individual employee or
visitor records in only a matter of
seconds. The additional complexity
of creating touchless experiences
that identify individuals wearing face
masks, and can also perform an
accurate temperature check, were
yet further challenges driven by the
pandemic.
With over 25 years of engineering
experience, once again Grosvenor
rose to meet this need on behalf of
its customers, developing a full range
of readers and biometric technology
that works seamlessly with our
devices. Last year we launched
advanced facial recognition
capability on all our GT10 and GT8
Android devices, as well as an
optional temperature screening
module for the GT8. This reinforced
our ability to design and market
best-in-class timeclocks and access
control products, fit for the COVID
and post-pandemic era.
15
Modular design reduces
development costs for new devices
GT8, our latest Android-based
timeclock released at the end of the
prior year, continues to gain traction
in the market with its combination of
performance, ease-of-use and
enhanced cyber security. This builds
on the previous success of the GT10
timeclock launched in 2017-2018,
with our hardware designs receiving
certification locally and globally. In
addition to existing European (CE),
US (FCC) and global (UL) standards
conformity, this year we also added
Mexican (NOM) and Indian (BIS)
certifications to our key products,
recognising the strategic importance
of new territories where we see
demand and future growth
opportunity.
During this year, we have continued
with our policy of modular design
and reuse to reduce development
costs and reinvent the efficiency of
our innovation projects, radically
shortening the time it takes to bring
new products to market. An example
of this is the current redesign of the
GT10 device, which will be a valuable
addition to our product range. This
new timeclock will benefit from
reusing a significant part of the GT8
design, PCBA and firmware. This will
be launched in H1 FY23.
Trusted ecosystems in the
workplace – ensuring complete
data integrity from end-to-end
At the core of our security
proposition is our commitment to
data security, privacy and
connectivity across cloud-connected
global estates of timeclock and
access control devices. Our
commitment to create trusted
ecosystems in our customers’
workplaces spans edge devices (IoT),
multiple systems integrations and is
unified by secure cloud control.
Our devices encrypt data at rest and
in transmission, along with strong
authentication mechanisms, to
ensure data and Personally
Identifiable Information (PII) is
managed securely, meeting all levels
of compliance. Whilst regulations
vary greatly across different
territories, our flexible middleware
enables us to impose the
appropriate rules globally and locally,
with control at the edge and in the
cloud.
Our platform also delivers real-time
remote diagnostics with advanced
remote sessions, event logging,
secure firmware, and application
updates, giving us the ability to
efficiently update devices en masse.
Pushing out the latest software,
security patches or application
releases to thousands of devices can
now happen at the press of a button.
To validate the integrity of our
systems, during the year we
commissioned an independent third-
party to conduct a comprehensive
and successful Penetration Test on
both our cloud services and edge
devices.
We were also delighted to achieve
certification for the internationally
recognised standard ISO 27001 for
information management, which
focuses on confidentially, integrity
and availability of data, again
underpinning our in-depth and
systematic approach to data security,
privacy and risk management.
The next generation of secure cloud
control with GT Connect
In the last twelve months our
existing cloud platform, GT Services,
has controlled over 13,000
connected devices, generating
millions of transactions per month,
securely processing biometric finger
and facial templates in real-time, and
acting as a trusted middleware data
transformation agent. This enabled
our software to continue to fulfil its
mission-critical role generating time
and attendance payroll data for
hundreds of thousands of employees
globally.
The incremental technology behind
these results, whilst impressive, has
some limitations as we scale and we
therefore continued with our
strategic commitment to invest
Newmark Security PLC – Report and Financial Statements 2022
2. Accelerated product migration:
during the year, we completed the
development of a new C4 Migration
Tool that enables legacy sites to
upgrade to Janus C4, making the
transition simple, convenient and
painless. In parallel, we have also
developed a Controller Upgrade
Utility that can be used in the field to
upgrade C2 controllers to be
compatible with Janus C4, saving
significant time, effort and cost for
customers. These measures clearly
signal our product intent, driving
confidence in our support, reassuring
customers in their ongoing journey
with Grosvenor.
3. Next generation Advance Driver:
alongside our new migration tools,
we have released a new Advance
Driver for Janus C4 which contains
newly designed Advance controller
firmware that enhances the
performance of all sites and fixes
minor legacy scaling issues reported
at some larger sites.
4. Signature product line from HID
Global: due to supply chain issues
and shortage of low frequency
components, HID Global has
launched a new range of Signo™
readers that only contain high
frequency chips. Our partnership
with HID Global allows us to provide
customers with much desired HID®
products as part of our combined
solution.
5. New software support agreement
for Janus C4: in April we launched a
new software support agreement for
Janus C4 and are now seeing this
being taken up by customers across
the country. This provides an
additional revenue stream and
provides end-users with direct
support from Grosvenor.
Looking ahead, we have reviewed
and enhanced our 2025 Roadmap for
Access Control, with several design
commitments that will bring forward
additional features requested by
users to continue our product
leadership into the future. This
includes a further commitment to
develop solutions in close
collaboration with our software
partner, Gamanet.
Janus C4 Security Management System
heavily in developing the next
generation of the GT Connect
platform, ready for launch.
The upgraded GT Connect is as
efficient as it is scalable and removes
previous limitations, with a new
cloud architecture, advanced multi-
tenanted hosting, an enhanced
security model and operating on a
microservices framework. The new
platform is capable of high
transaction throughput and
unlimited scaling, ensuring high
service availability whilst running the
latest IoT-based device protocols
with an API-first design and a
modern user interface.
With the development and testing
complete, this platform moved into a
BETA phase during H1 FY23 with a
small group of customers. Scheduled
for broad customer release in H2
FY23, GT Connect will be the core
platform on which we will base all
new software recurring services.
Stepping-up preparation behind-
the-scenes to accelerate Access
Control
Sales of Janus C4 are now
accelerating as expected as the focus
of our sales efforts, meanwhile much
progress has been made behind-the-
scenes, with many initiatives brought
forward to accelerate growth in
FY23. These include:
1. Portfolio rationalisation: we have
now announced the end-of-life of
our legacy Janus & Sateon systems,
which will continue to be supported
until the end-of-life date, set for April
2023. This brings to a close systems
that have been in the market for
over 30 years and have formed the
basis of our early reputation as a
security solutions provider. Our
decision will free valuable capacity
and enable us to shift our focus onto
Sateon Advance and Janus C4 as the
priorities for customer transition and
growth over the next year. This
streamlined journey will enable us to
enhance the benefits we bring to all
our customers.
16
Newmark Security PLC – Report and Financial Statements 2022
The visible customer advantage of
de-risking our supply chain
Well-documented global shortages
in silicon fabrication, key
componentry and logistics mean
that supply chain challenges seem
likely to continue for at least the
next twelve months. To counter
this our teams have worked
tirelessly to identify additional
supplies, new delivery routes and
alternative componentry. Our
proactive approach has already
created a visible advantage with
customers, attracting new
prospective customers into the
pipeline who have been unable to
source devices from their former
suppliers.
A major step forward for Newmark
has been the appointment of an
experienced full-time Global
Operations and Supply Chain
Director in North America, Brian
Hack. He has ensured the steady
supply of components and
hardware with advanced planning,
integrated product schedules and
engineering co-ordination. Our
engineers work continuously with
product and supply chain
management to identify
opportunities to de-risk hardware,
where necessary redeveloping the
electronics and firmware to utilise
alternative components. This has
remained a key activity through
this year, and we expected it to
remain so well into next year.
A total focus on executing the plan
With the substantial progress and
preparations made this year, our
task becomes one of focused
execution in the months ahead, to
leverage the considerable
investments we have made. With a
significant programme of
development now completed, we
have been able to reduce the
overall development team size and
composition, looking forward with
a renewed focus on research to
plan and sequence the next
generation of market leading
hardware, software and services.
We continue to invest in quality
initiatives and procedures,
reducing the level of product turn-
backs or fails. This includes
significant progress we have made
using the Lean/Kaizen
methodology, which will continue.
A direct operational impact has
already been achieved, improving
metrics across both customer
interactions and equipment
reliability.
Data security and privacy will
always continue to be a priority,
operating a mature framework of
policies, risk-management
procedures, and monthly senior
management governance, chaired
by our Data Protection Officer.
Generating trust and confidence
through specialist Customer and
Professional Services teams
Presenting a human face to
customers is central to our success
and is the best opportunity to
demonstrate our specialist
expertise. We will continue to
develop our Customer Helpdesk
experience with enhanced training,
documentation, and systems, to
ensure customers get the critical
support they need, precisely when
they need it.
Our Professional Services team,
now present in three continents,
remains a key differentiator that
can be used efficiently to leverage
significant scale through and with
our partners. Whilst enterprise
customers will always demand a
tailored solutions approach, with
effective onboarding we deliver
Grosvenor solutions fully
integrated into partner solutions,
mobilising our partners’ customer-
facing teams, and removing huge
bottlenecks and extra work
downstream with their customers.
As we grow our global partner
relationships, we will need to
match this with the continuity of
an effective Professional Services
response, one which benefits from
the careful preparations we have
made this year.
17
OUR DIVISIONS –
PHYSICAL SECURITY SOLUTIONS DIVISION
Newmark Security PLC – Report and Financial Statements 2022
Revenue information
£'000
Products
Service
Division Total
Performance overview
Safetell continues to develop its
presence in the UK as a leading
provider and installer of integrated
door solutions and physical
security.
To accelerate our growth strategy,
we were delighted to appoint a
new managing director, Nick
Shannon, who joined in February
2022 from G4S Secured Solutions
and brings significant industry and
leadership experience, as well as a
valuable network of relationships
across the sector.
Overall, this was a year which saw
the gradual easing of lockdown
restrictions and a phased return to
normal contact. However, the
challenges felt by physical
businesses remained acute, as they
began to focus on priorities for
recovery whilst many battled staff
shortages and office closures due
to the emergence of the Omicron
variant.
Against this backdrop, our
installation and maintenance
services were particularly affected,
down 19% to £1.5 million. This was
further impacted by a contraction
in our traditional rising screen
market due to an accelerated
reduction in the number of bank
branches across the country.
2022
3,131
1,455
4,586
2021
3,220
1,791
5,011
Increase/
(decrease)
Percentage
change
(89)
(336)
(425)
(3%)
(19%)
(8%)
Although trading throughout the
year was below expectations, with
top line revenue down 8% to £4.6
million, early efforts to implement
cost reduction measures meant
that gross margin increased slightly
to 40.4% (2021: 40.1%).
In the face of globally challenging
operating conditions, our
experienced team acted with
enormous resilience to adapt and
build ahead, using this time to
diversify our product offering by
bringing automatic doors and
entrance control into our product
portfolio, as well as investing to
further enhance our customer
service and support response. By
leveraging deep knowledge of
security standards in traditional
markets, we have also targeted
entry into several new high growth
sectors with crucial early success.
With access measures normalised
in recent months, our return to
growth has already begun. Several
delayed projects have now
recommenced and demand for
security products and services
appears to have recovered to
above pre-pandemic levels. This
provides confidence the business is
now very well-positioned to
achieve its ambitious growth
strategy.
Targeting larger contracts in
entrance control
Entrance control products typically
generate larger contracts and build
on our core capabilities across the
group. Orders and pipeline growth
from government, blue light and
custodial sectors remained strong
throughout the year, and we have
secured and completed our first
orders in new office, industrial and
data centre environments with a
growing bank of quotations for
future work.
We see further opportunities to
use our knowledge of standards
and experience working in very
high security environments,
opening-up new sectors for our
physical products and installation
services such as data centres,
utilities, and distribution logistics,
where the solution and the
customer’s protection of their
service is more important than the
cost. Our early successes in each of
these sectors confirm that entering
and competing in these markets is
achievable with the right products
and services. Maintenance services
that follow-on from initial
installation will also help to grow
our Autodoor Service Department.
18
Newmark Security PLC – Report and Financial Statements 2022
Building recurring service revenues,
with a focus on automatic doors
In the automatic door market, we
have strengthened our focus on
building recurring service revenues
and are proud of our record in
repairing and upgrading customer
doors rather than replacing them.
We have added a further 100 sites
during the last year and now
provide call-out support for over
1,800 sites, with a growing national
footprint.
A strategic priority in our long-term
plan is to grow service and
maintenance work in the UK
autodoor servicing market,
estimated at twice the size of
Safetell’s traditional target
markets. We anticipate this will
generate strong recurring revenues
and account for an increasing
share of turnover in the coming
years.
In FY22, service and maintenance
of automatic doors grew in-line
with expectation, including two
significant wins for our Autodoor
Service Department; one for a
leading high street bank and
another extending our
maintenance contract with a
national petrol retailer by an
additional 100 sites, due to the
excellent service we have already
provided. The advantage of having
all of our service engineers security
cleared to BS7858, the UK standard
for vetting of people employed in
the security sector, coupled with
our ‘Repair-not-replace’ mentality,
continues to strike a positive chord
with our customers, particularly
those with larger national estates.
In addition, the rapid and
continuous growth of high security
environments, such as data
centres, provides a significant
scaling opportunity for Safetell. By
focusing on developing
partnerships with established
Facilities Management providers,
leveraging our reputation for
19
quality, service and rapid response,
we are already being invited to
support a range of new
infrastructure projects. This
includes several examples in the
government and nuclear power
sectors, giving us earlier than
anticipated entry into highly
selective markets. Looking ahead,
we will seek to extend this through
frameworks and accreditations
relevant to our services, such as
the UK CNI (Critical National
Infrastructure).
Providing national organisations
with high quality security solutions
in building and asset protection
In the building and asset protection
market, we have maintained our
focus on high quality standards as
a leading provider of high
specification, physical security
solutions.
Sales of our traditional physical
security products, such as security
walls, doors, screens, counters and
cash transfer units, remained
steady and, whilst the growth
anticipated fell just short of
expectations, down 3% to £3.1
million, it was broadly in line with
the previous years. This was
accompanied by strong pipeline
and forward momentum which we
expect to contribute to a very
positive FY23, including:
– A renewal of a two-year rising
screen maintenance contract with
a leading high street bank which
commenced in November 2021.
– The completion of a £1 million
colleague protection screens roll-
out for a national retail chain; with
a follow-on £0.2 million order of
screens, a further a £1 million
order pipeline and new discussions
with other national chains.
– The completion of phase 1 of a
large project with a major police
force.
– We have continued our
impressive record of innovation
with two of our traditional
products recently re-certified by
The Loss Prevention Certification
Board (LPCB).
– We are investing in the
development of new low-cost
protection screen variants for
smaller retailers who are facing the
impact of a national rise in armed
robbery and assaults but who
cannot afford high-end security
installations for individual stores.
Whilst our traditional work of
installing and maintaining rising
screens has continued to be
impacted by the reduction in the
number of banks across the
country, we have forged strong
experience in the design and
installation of security screens in
the retail sector and have worked
with many of the large
supermarket and national chains.
This, whilst further diversifying our
product portfolio in automatic
doors and entrance control, means
the business is now better
balanced and strategically well-
placed to capitalise on a larger and
growing addressable market.
Organising for competitive
advantage in fast-growing security
markets
In what has been a busy and
productive year for our Safetell
team, with the introduction of new
product lines, new strategic
partnerships and onboarding of
new clients, a number of
organisational improvements have
also been undertaken.
The reorganisation of the business
has been completed with the
appointment of a new managing
director. Additionally, at the
beginning of the new financial
year, the business will further
invest in sales and marketing to
support its two key growth areas in
automatic door servicing and
entrance control.
Operational improvements in the
year have primarily focused on
back-office processes, such as
resource prioritisation and
planning, as well as the strategic
realignment of service operations
to ensure maximum competitive
advantage in our chosen markets.
This included improvements in
technology to assist dynamic
routing of service engineers, as
well as enhanced service
information and support to ensure
customers needing to urgently
resolve any access or maintenance
issues within their revenue-critical
operations, can receive faster
response and shorter time-to-
resolution.
The global and UK economic
environment also prompted a
sourcing review of our
manufacturing and logistics
suppliers to ensure we continue to
be as efficient and competitive as
we can be, as well as creating
broader and more localised
options for enhanced customer
response. All of these measures
provided valuable reassurance in
the resilience and stability of our
operating platform that can more
easily be scaled as we grow.
Fast forward with focused
execution
With reorganisation now
completed, we will continue to
drive focused execution in each of
our business lines as opportunities
to support our growing base of
customers develop, reflected by a
strong and growing pipeline that
already extends well into the next
year and beyond.
Increasing threats from crime and
terrorism have made physical
protection and security a priority
for businesses in most sectors and,
as many businesses prepare to
meet the new ‘Protect Duty’
Newmark Security PLC – Report and Financial Statements 2022
legislation, which is expected to
come into force in 2023, we expect
this to drive many new
opportunities to help customers
create safer spaces for their
employees and colleagues.
Whilst maintaining trust in our
products continues to be a priority,
we continue to invest and
emphasise the strength of our
customer service, offering full-
service solutions and rapid
response for support and
maintenance.
As a clear strategic focus,
combining our competitive
advantage with the high levels of
customer trust we have earned,
will increasingly translate into long-
term partnerships with a growing
proportion of recurring service
revenues. With these foundations
in place and already showing
results, the business will remain on
track to benefit from further
efficiency gains as it scales.
“As we grow our contracts and reputation for service
excellence across traditional and new sectors, I am more
confident than ever that this business has a bright future and
will grow to meet the ambitious targets we have set. With a
solid outlook for the year ahead, our early wins in new sectors
already demonstrate this, and as we grow our efficiency will
increase, whilst always keeping our customers at the forefront
of everything we do. These relationships are at the very centre
of our strategy to build a more sustainable, long-term product
and services business and strong brand upon which customers
feel entirely confident to rely.”
Nick Shannon, MD
20
Newmark Security PLC – Report and Financial Statements 2022
FINANCIAL REVIEW
Revenue
Key Performance Indicators
People and Data Management Division
HCM
Access Control
Physical Security Solutions Division
Products
Service
2022
£'000
11,442
3,117
14,559
3,131
1,455
4,586
2021
£'000
9,659
2,988
12,647
3,220
1,791
5,011
Group Revenue
19,145
17,658
Group revenue increased by 8.4%
to £19.1 million (2021: £17.7
million) driven by a strong HCM
performance in North America.
Revenues in the Physical Security
Solutions division were impacted
by further lockdown restrictions
and the decline in the traditional
rising screens market as more
banks and building societies close.
Further commentary and
discussion can be found in the
relevant divisional sections.
Gross profit margins have reduced
to 33.5% (2021: 37.5%) due to a
rise in operating costs of the
People and Data Management
division. Their gross margins
decreased to 31.4% (2021: 36.5%)
as a result of the significant
increase in componentry and
freight costs arising from global
supply chain challenges. However,
customer price rises in the second
Gross Profit
Gross Profit Margin
21
half of the year have helped reduce
the impact of these cost increases.
The Physical Security Solutions
division achieved a gross profit of
40.4% (2021: 40.1%) with the small
increase due to headcount savings.
Administrative expenses and
average employees
Administrative expenses before
exceptional items have increased
by 15% to £7.5 million (2021: £6.5
million). This has mainly been the
result of the one-off COVID-19
related savings incurred last year
such as furloughs, which saved
£0.2 million group-wide
contractual pay reductions along
with other savings in travel and
marketing. There has also been an
increase in consultancy costs to
support the execution of the
strategic business plan, partly
offset by a £0.1 million foreign
currency gain due to the increase
2022
£'000
6,419
33.5%
2021
£'000
6,629
37.5%
Increase/
(decrease)
£'000
Percentage
change
%
1,783
129
1,912
(89)
(336)
(425)
1,487
18.5%
4.3%
15.1%
(2.8%)
(18.8%)
(8.5%)
8.4%
in the value of the USD versus GDP.
Overall average employees have
decreased to 103 (2021: 112)
driven by reductions in Safetell and
Grosvenor UK, partly offset by an
increase in Grosvenor US. Staff
costs increased by £0.3 million or
5% to £7.1 million (2021: £6.8
million).
Exceptional costs
During the year exceptional costs
of £0.1 million (2021: £0.1 million)
were incurred relating to
continued streamlining of positions
in Grosvenor and Safetell. In 2021
there were £0.2 million of
restructuring costs and an
exceptional credit of £0.1 million
related to the exit of a lease
commitment at Safetell whereby
the asset had been written down
by £0.1 million in the prior year.
Increase/
(decrease)
£'000
Percentage
change
%
(210)
(3.2%)
Newmark Security PLC – Report and Financial Statements 2022
Profitability
The current year loss from
operations before exceptional items
was £1.1 million (2021: profit £0.1
million). The decline in profitability
was caused by the impact of global
supply chain challenges on gross
margins and an increase in costs to
execute the strategic business plan.
Loss after tax for the year was £0.8
million (2021: profit £0.2 million).
This is after tax credits which are
discussed in more detail below.
Taxation
A tax credit of £0.6 million (2021:
£0.3 million) was recognised in the
year. This resulted from a current tax
credit of £0.4 million (2021: £0.4
million) due to the continued R&D
claims at Grosvenor of £0.3 million
and for Safetell of £0.1 million and a
£0.2 million deferred tax credit
(2021: £0.1 million charge). The
credit was primarily from the
recognition of tax losses.
Earnings per share
Loss per share was 0.32p (2021:
earnings of 0.03p) being a reduction
of 0.35p. The decrease was due to
the reduction in profitability in FY22.
Balance sheet
Net assets have reduced by £0.6
million to £7.6 million (2021: £8.2
million) due to the loss after tax for
the year. This is presented as a
decrease in cash and cash
equivalents of £0.3 million to £0.2
million (2021: £0.5 million) and an
increase in short term borrowings of
£2.4 million to £3.0 million due to
drawing down of invoicing
discounting from both the UK and
new $2 million US facility and
increase in lease payments. The rise
in property, plant and equipment
and long-term borrowings is mainly
as a result of the £0.9 million prior
year adjustment to reflect a longer
lease term for a land and buildings
lease term. See note 2 of the
financial statements for further
details of this adjustment. Inventory
has increased by £0.9 million to £4.0
million with additional purchases of
scarce processors and screens to
secure future supply and some
impact of the global componentry
shortage on prices. Trade and other
receivables decreased by £0.5 million
primarily due to a reduction in
corporation tax recoverable related
to the R&D tax credit. At the prior
year end there were two years of
R&D tax credits due, whereas there
was only one year due at 30 April
2022. Trade and other payables have
decreased by £0.7 million as result of
unwinding of prior year creditor
balances.
Research & Development (R&D)
The Group has slightly increased its
R&D investment at £0.8 million
(2021: £0.7 million) in the People
and Data Management division. The
investment this year has been
focused on the cloud development
of GT Connect, our upgraded SaaS
platform which will be launched in
FY23. There has also been further
development on facial recognition
technology for our clocks.
Cashflow
During the year cash reduced by £0.3
million to £0.2 million (2021: £0.5
million). Cash generated from
operating activities decreased by
£1.0 million to an outflow of £0.6
million (2021: inflow £0.4 million)
mainly driven by a decrease in
operating profits and a £1.2 million
working capital outflow due to
higher inventories and creditor
outflows. There was also a £0.1
million outflow from exceptional
items and a net tax receipt of £0.8
million (2021: £0.4 million) due to
two years of R&D tax credits. As
mentioned above, we have
continued investment in research
and development and also property
plant and equipment of £1.3 million
(2021: £1.0 million), the increase
coming from investment in ClaaS
clocks. The main financing
movements related to the
drawdown of £2.3 million of invoice
discounting from both the UK and US
facilities (2021: £0.9 million
repayment), lease principal
repayments of £0.4 million (2021:
£0.5 million) and £0.3 million of
interest and repayments from the
Coronavirus Business Interruption
Loan Scheme (“CBILS”) which started
to be paid back from September
2021 over a 5-year term.
Cashflow forward currency
contracts
During the year we executed our
foreign exchange strategy by
entering into forward contracts. The
strategy effectively hedges 75% of
excess USD and reduces the level of
volatility compared to using spot
rates. The contracts manage our
currency mismatch between an
increasing US Dollars (USD) position
from revenues and the existing cost
base in both GBP and Euros. The
adopted process involved currency
forecasting three quarters ahead and
taking out tranches of forward
contracts for 25% of each of the
forecasted quarters relating to our
excess USD position.
22
Newmark Security PLC – Report and Financial Statements 2022
PRINCIPAL RISKS AND UNCERTAINTIES
Risk management is integral to the
way the Board and leadership team
manage the Group and each
divisional Managing Director
monitors and reports on their most
significant risks on a continuing
basis. Risks are reviewed by the
Board on a quarterly basis and
actions are taken as appropriate to
provide reasonable mitigation
against those risks.
The principal risks facing the
business, the potential impact and
mitigating actions are detailed
below:
Market conditions
The risk of further future
lockdowns could result in a year of
depressed trading activity and
delays in customer projects. The
impact is somewhat reduced by
the geographic spread and the
nature of our customers.
Commercially, we have been
sensitive to the evolving demands
of our customers but we also
operationally monitor activity
levels for support and new
business. The Chief Financial
Officer monitors cashflows and
potential financing opportunities
and discusses these regularly with
the Board to support the reduced
cash generation from lower levels
of trading. Lag effects of COVID-19
such as the global componentry
shortage have constricted certain
lines of supply which has meant
longer lead times for ordering and
an increase in cost to purchase.
The Group monitors the position
regularly with detailed inventory
modelling done by Grosvenor’s
Operations and Supply Chain
Director. Brexit has resulted in an
additional administration burden
but, as yet, has not significantly
impacted trading. Customer prices
were put up significantly in the
23
year ended 30 April 2022 to
minimize the impact of increasing
componentry and freight costs.
Sales of new products
The Group has incurred substantial
strategic expenditure on new
developments within the People
and Data Management division,
based on market intelligence. Due
to the dynamic nature of the
market itself there is a risk of
market needs moving during the
development process. The Group
mitigates this risk by carrying out
customer trials and ascertaining
features required by customers.
Service agreements
The majority of service revenues
within the Physical Security
Solutions division are from 1 to 3-
year service agreements and there
is the risk that these may not be
renewed due to cost reduction
programmes, by managing the
contract externally or by utilising
in-house resource. If the service
agreements are not renewed it is
likely that those customers would
still require our services but would
be charged on a call out basis
without an overriding contract
resulting in less certainty over
future revenues. The Company has
service level agreements with
these customers which are closely
monitored and holds regular
meetings with those customers to
check on their satisfaction levels.
Input prices and availability
Operating performance is
impacted by the pricing and
availability of its key inputs, which
include electronic components,
steel and security glass. The pricing
and availability of such inputs can
be quite volatile at times due to
supply and demand dynamics and
the input costs of the supply base.
The Group manages the effect of
such demands through a rigid
procurement process, long-term
relationships with suppliers,
economic purchasing, multiple
suppliers and inventory
management. It has also been able
to adapt to the exceptional
componentry availability issues
experienced since 2021 by re-
designing certain products to
reduce the risk of not having
enough inventory to meet
demand.
Quality control
There is the potential for functional
failure of products when in use,
thereby leading to warranty costs
and damage to our reputation.
Quality control procedures are
therefore an essential part of the
process before the product is
delivered to the customer. With
the support of external quality
auditors, the quality control
systems are reviewed and
improved on an on-going basis to
ensure that the Group is
addressing this risk through a
certification process which is
undertaken by a recognised and
reputable authority before being
brought to market.
Credit risk
Credit risk is the risk of financial
loss to the Group if a customer fails
to meet its obligations, and the
Group is mainly exposed to credit
risk from credit sales. It is Group
policy to assess the credit risk of
new customers before supplying
goods or services with purchase
limits established for each
customer, which represents the
maximum open amount they can
order without requiring approval.
Newmark Security PLC – Report and Financial Statements 2022
A weekly review of the trade
receivables’ ageing analysis is
undertaken, and customers’ credit
is reviewed continuously.
Customers that become “high risk”
are placed on a restricted
customer list, and future credit
sales are made only with the
approval of the local management
otherwise pro forma invoices are
raised requiring payment in
advance.
Liquidity risk
Liquidity risk arises from the
Group’s management of working
capital and the finance charges and
principal repayments on its debt
instruments. It is the risk that the
Group will encounter difficulty in
meeting its financial obligations as
they fall due.
The Chief Financial Officer receives
weekly reports of balances on all
bank accounts and regular cash to
assess the required level of short-
term financing to draw down on.
Market risk
Market risk is the risk that the fair
value or future cash flows of a
financial instrument will fluctuate
because of changes in interest
rates (interest rate risk), foreign
exchange rates (currency risk) or
other market factors (other price
risk). Foreign exchange risk arises
when individual Group entities
enter transactions denominated in
a currency other than their
functional currency. Liabilities are
settled with the cash generated
from the individual group entities’
operations in that currency
wherever possible, otherwise the
liabilities are settled in the
functional currency of the group
entities. During the year a forward
contract currency strategy was
implemented to reduce the
volatility of exchange rate
fluctuations to the Group.
“Whilst it has been a challenging year, significant steps have
been made to ensure growth in the coming year is sustainable.
These steps include a combination of customer price increases,
cost savings and improved commercial measures.”
Paul Campbell-White, Chief Financial Officer.
24
Newmark Security PLC – Report and Financial Statements 2022
S172 STATEMENT
The Companies Regulations 2018 require Directors to explain how they considered the interests of key stakeholders and the
broader matters when performing their duty to promote the success of the Company under s172. This includes considering
the interest of other stakeholders which will have an impact on the long-term success of the company. This s172 statement
explains how the Directors act accordingly.
Key Board decisions
During the year the Board started
to deliver on the Strategic Business
Plan which was approved by the
Board in the last financial year.
The Strategic Business Plan spans
the year to 30 April 2025 and has a
number of significant workstreams
attributed to it driving increased
shareholder value.
1. Initiate a North American
expansion plan and market
intelligence forum at Grosvenor
ensuring considered and
executable plans are in place. This
involves investment in people and
processes which support scalable
and sustainable growth in the
existing business and to drive both
ClaaS and SaaS uptake.
2. Invest in enterprise-wide
internal systems at Grosvenor to
support the effective roll out of
SaaS and ClaaS as well as
streamlining processes and further
enabling staff capability.
3. Invest in our people by
communicating core values,
investing in our skills inventory and
mobilising recruitment.
25
© 2022 Newmark Security Plc. Strictly Confidential.1•Wider team meetings used to ensure understanding and engagement in business priorities•Fair dealings and management of issues and grievances•Significant emphasis placed on employee safety enhanced regarding COVID outbreak and return to workplace•Employee questionnaires utilised to engage and obtain sentiment•Focus on the right people in the right role with good support and training programmes with succession planning in place•Regular updates and meetings with HSBC•Communications with customers and suppliers has been focus over last 12 months to explain impact of COVID and supply chain disruption•Trade shows and exhibitions with our own stands utilised to engage with our customer base•Online training initiated for Installers•Continuously improve websites•Understanding our customers’ needs and providing solutions in partnership is the underpinning ethos behind our operations•Group HR operates seamlessly across the divisions and acts truly to ensure fit for purpose practices are in place•Finance is integrated with decision making and ensures adequate controls are in place •Focus on improved systems and processes to support our people to perform eg ISO•The decisions of the Board and with wider business are reflected within budgets and 5 year plans, which are then flexed and updated for changing environments•Formally the Board consists of a PLC Board however each quarter the PLC Board combines with the Exec teams of each division for presentations and strategic discussions•Regular updates and announcements provided to the market•Closely engage with Allenby, our brokers, to ensure fair practices are in place•Attendance on retail events such as Mello provides engagement with investors with the presentations made available on our website•Utilise Investor Relations and Financial PR experts to support when needed•Provide solutions to facilitate the proper usage of Personally Identifiable Information when utilising our products•We will commence a programme for measuring and improving the impact we have on the community and the environment in 2024Promote successto our shareholdersLong-term impact of Board decisionsInterestof our employeesInterestof other stakeholdersImpact of community and environmentHigh standardsof business conductAct fairly between shareholders
Newmark Security PLC – Report and Financial Statements 2022
The Board and Shareholders
approved a reorganisation of
Newmark’s share capital in
November 2021 which involved a
50:1 sub-division and subsequent
consolidation of the Company's
share capital. This was done to:
• improve the liquidity of the
Company's shares and increase
trading volumes;
• improve investor perception of
the Company; and
• improve marketability of the
Company's shares.
The impact of COVID and resulting
supply chain challenges led to
significant cash outflows in the
year to 30 April 2022. As a result,
during the year the Board
approved the following measures
to increase the Group’s banking
facilities. These included:
• secured a $2 million US invoice
discounting facility;
• increased the UK invoice
discounting facility; and
• increased the UK overdraft limit,
although this went back to the
original £0.2 million limit in August
2022
The Board also approved cost
cutting measures to help improve
the Group’s profitability in the year
to 30 April 2023.
Approval
The Strategic Report was approved
by order of the Board on
20 January 2023.
M-C Dwek
Director
26
Newmark Security PLC – Report and Financial Statements 2022
27
OUR BOARD
Chairman’s Introduction
The Board and its Committees
have a fundamental role in the
governance framework by using
their wide experience in providing
independent challenge and
support and ensuring that good
governance is promoted across the
different businesses within the
Group. The Board is responsible for
the success of the Group and
providing leadership within the
framework of existing controls and
ensures that its duties to
shareholders and other
stakeholders are understood.
The Board
A summary of the career history of
each of the Directors is given
below showing their vast
experience in senior management
positions across a wide variety of
industries.
Maurice Dwek
Chairman
Maurice Dwek was the founder of
the Dwek Group in 1963 as a
distributor of PVC products with
factories involved in engineering
and other consumer products. The
company was listed on the London
Stock Exchange in 1973 and he was
Director of Subsidiary Companies
and subsequently responsible for
Group acquisitions and disposals.
He disposed of this interest in 1988
through a management buyout.
Subsequently he was Chairman of
Arlen PLC (electronics) and Owen &
Robinson PLC (sports footwear,
retailing and jewellery) and floated
Newmark Security on the
Alternative Investment Market of
the London Stock Exchange in 1997
acting as Executive Chairman until
2005.
Newmark Security PLC – Report and Financial Statements 2022
Marie-Claire Dwek
Chief Executive Officer
Paul Campbell-White
Chief Financial Officer
Marie-Claire Dwek was Marketing
Director of Newmark Technology
Limited (specialised electronic
security systems) 1996-2000,
responsible for the planning,
leadership and strategic marketing.
Between 2002–2013 Marie-Claire
was responsible for the
management and investment in
various property portfolios for
Motcomb Estates and joined
Newmark Security as Chief
Executive Officer in 2013. Marie-
Claire regularly attends training
courses and modules for executive
development e.g., Cranfield
University. Any changes in the
business environment are
monitored and researched closely
within the leadership team and
with the CEO. Strategic responses
are formed accordingly and
executed with Board approval.
Trade journals and news articles
are used to keep abreast of current
market conditions.
Paul Campbell-White is a Fellow
Chartered Accountant qualifying in
2000 whilst working with KPMG.
Subsequent to KPMG, Paul worked
at ITV plc, a leading UK media
group for ten years in a variety of
Group and Divisional Roles. Paul
was previously Chief Financial
Officer of Brave Bison Group plc
(AIM: BBSN), a digital media and
technology company, and Chief
Financial Officer of Warner Bros.
TV Production UK. Prior to those
appointments, he was Group
Financial Controller of Shine
Group, an international television
production and distribution group
and Interim Group Financial
Controller at Channel 4. Most
recently, he has been Interim Chief
Commercial Officer of CognitionX,
a technology company in the
events space.
28
Newmark Security PLC – Report and Financial Statements 2022
Michel Rapoport
Non-Executive Director
Robert Waddington
Non-Executive Director
Terence Yap
Non-Executive Director
Robert Waddington qualified as a
Chartered Accountant in 1964. He
was a director of Hambros Bank
Ltd from 1984 to1997, and
director/chairman of several
private companies involved in
engineering, property, and steel
stockholding between 1996 and
2008. He was also a director from
1997 to 2006 of Stanley Leisure
PLC, a UK Stock Exchange listed
company operating in the Betting
and Gaming industries. Robert
therefore contributes his
experience from holding senior
positions in different businesses as
well as his financial and accounting
knowledge. Robert stepped down
from his position on the Newmark
Board on 8 September 2022.
Michel Rapoport held various
senior positions in Ripolin (paint) in
Paris between 1974-79 including
President 1976-79. He then
worked at Alcatel (telephony and
electronics) 1979-91 including
President Mailing and Shipping
products division 1990-91. He
moved to Pitney Bowes between
1991-95 where he was Chairman
Pitney Bowes France and Vice
President Pitney Bowes
International. Michel was president
and CEO of Mosler ($300m
revenue physical and electronic
security products and services)
1995-2001 and was President and
CEO at Laroche Industries Inc.,
(chemical product manufacturer
and distributor) between 2001 and
2005. He has been managing
partner of SAR Industries (real
estate holdings) since 2007. Michel
thus brings to the Board his
experience from holding senior
positions in similar industries, and
his knowledge of operating in
North American markets which is
particularly relevant given the
growth in revenue from that
source in the current year.
Terence Yap, a Singapore citizen
resident in Hong Kong, is currently
the Chairman of Guardforce AI Co
Ltd, a group focusing on delivering
technologically innovative security
solutions within the Asia Pacific
region. Prior to this he was Chief
Executive of Guardforce Cash
Solutions (Thailand) a leading
security solution provider with
more than 12,000 international
employees. From 2006 to 2014 he
was Chief Financial officer of China
Security and Surveillance
Technology, Inc which was listed
on both the NYSE and Dubai
International Financial Exchange.
Throughout his career Mr Yap has
developed specific skill sets
regarding change management,
investor relations, capital market
operations and corporate
restructuring. Mr Yap has over 25
years’ experience in the
telecommunications and security
sectors and is a member of the
Hong Kong Security Services
Training Board, a Fellow member
of the Hong Kong Institute of
Directors, a Fellow member of the
Chartered Management Institute
(UK) and a member of the
Australian Institute of Company
Directors.
29
GOVERNANCE PRINCIPLES
Newmark Security PLC – Report and Financial Statements 2022
We have adopted the Quoted
Companies Alliance Corporate
Governance Code (“QCA Code”) to
assist in putting into place an
effective corporate governance
framework which will deliver
results. Your Board understands
that good governance is one of the
foundations of its sustainable
growth strategy. The Chairman is
responsible for Corporate
Governance in the Group. There
were no key governance related
matters that occurred in the year
and no significant changes in
governance arrangements.
Details on how the Company
applies the principles of the QCA
Code are set out below.
Principle 1: Establish a strategy and
business model which promote
long-term value for shareholders
Newmark Security is a leading
provider of people and data
management and physical security
solutions through its subsidiaries,
Grosvenor Technology Limited and
Safetell Limited, in the UK, and
Grosvenor Technology LLC in the
USA, with exports to Europe and
USA, and worldwide through our
established customer base. The
Company aims to help address
some of the major challenges
facing corporations in an
environment of ever-increasing
global security concerns and add
value for all our stakeholders
through partnership and
innovation. We will continue to
develop exceptional and secure
products backed up by industry
leading support. The Company
strategy is focused on delivering
growth through the development
of new products, providing its
customers with much-needed
peace of mind whilst also
improving business efficiency and
flexibility through innovative
technology. The three core
markets served, Access Control,
Human Capital Management
(HCM) and physical security, are
anticipated by industry analysts to
grow significantly in the medium to
long-term. The company takes a
‘deep and narrow’ approach in
each of these markets through the
provision of products and services
that are highly developed and
specialist, thus delivering tangible
added value to its downstream
partners and creating barriers to
entry to potential competitors.
Grosvenor Technology’s products
are at the cutting edge of access
control and human capital
management technology. The
business is well positioned to
capitalise on the crossover
between these two aspects of
electronic security and continued
investment ensures that it stays at
the forefront of this marketplace.
Long term strategies are in place to
increase recurring revenues
through the provision of more
cloud-based services on an
ongoing basis, particularly in the
HCM sector. This is envisaged to
deliver greater shareholder value
over time as both quantity and
quality of earnings increase
through this strategy.
Safetell is one of the industry
leaders in high-demand physical
security products and is perfectly
placed to service the industry. The
market for asset security products
and services is fast growing with
the ever-increasing threat of
terrorism and crime placing
security high on the priority list for
corporate clients. It is the policy of
the Company to maintain the
highest standards of product
quality meeting statutory and
regulatory requirements by the
control of its sales, purchasing,
production, delivery, installation
and service activities.
The principal risks and
uncertainties associated with the
business activities are set out on
page 23 of the Strategic Report.
Principle 2: Seek to understand and
meet shareholder needs and
expectations
The Company engages with
shareholders through a variety of
traditional and digital media. In
addition to regulatory
announcements and reports, the
Company communicates through a
variety of channels. The CEO
participates in yearly interviews
with online investor news
platforms and channels as well as
giving regular non-material
updates on social media platforms.
The Company makes
announcements in industry, trade
and general business publications
and through RNS feeds.
The Board members attend AGMs
and welcome shareholder
attendance. Our corporate broker
maintains a dialogue with our
institutional investors and arranges
meetings with the Executive
Directors as required. The website
contains an overview of the
markets operated in, the
Company’s vision and strategy and
multi-media detail of the separate
Physical Security Solutions and
People and Data Management
divisions. Historic reports,
statements, announcements and
share price information are also
accessible within the website –
https://newmarksecurity.com.
30
Newmark Security PLC – Report and Financial Statements 2022
Principle 3: Take into account
wider stakeholder and social
responsibilities and their
implications for long-term success
(see also s172 section)
The Company recognises that
there are several resources and
relationships that are considered
to be strategically important. These
include major clients, key suppliers,
value added resellers and our
banking partners, and these
relationships are managed at a
senior level within each division
with the most important receiving
additional executive attention.
The Company further identifies the
need to nurture and develop
relationships with all stakeholder
groups. Feedback is gathered from
customers through sales and
marketing functions with key
customer meetings. Regular
supplier reviews are conducted to
ensure the Company’s and
vendors’ needs and ambitions are
met.
The Company recognises the
importance of its employees to its
achievements. Regular internal
communication meetings are
conducted across all sites to
ensure employees are
knowledgeable about a range of
topics. Questions and suggestions
are encouraged through a range of
formal and informal channels
directly to divisional Managing
Directors. These employee
feedback channels have led to
tangible outputs and changes to
working practices. Our staff expect
to be able to work in a safe and
comfortable environment, and to
be provided with the necessary
skills and knowledge to perform
their work to the required
standard. We provide ongoing
training wherever required and
conduct routine appraisals with the
staff.
31
Principle 4: Embed effective risk
management, considering both
opportunities and threats,
throughout the organisation
The Board has overall responsibility
for the Group’s systems of internal
control and risk management. The
Board identifies the major business
risks with management and
establishes appropriate procedures
to measure and manage those
risks. These involve a system of
measurement, control and
reporting on a variety of internal
and external factors. There are
detailed procedures for the
production of budgets covering
profit and loss accounts, balance
sheets and cash flows. Monthly
subsidiary and group management
accounts are produced with
comparisons against budget and
prior year.
Management also reports on major
changes in the business
environment including any possible
impact on forecasts.
The principal risks and
uncertainties associated with the
business activities are set out in
the Strategic Report on page 23.
Principle 5: Maintaining the Board
as a well-functioning, balanced
team led by the Chair
The Chairman’s role is to ensure
that the Board operates effectively
to deliver the long-term success of
the Group. This includes ensuring
that the Non-Executive Directors
always have access to the
executive management team to
provide both support and
challenge, all directors are able to
express their views openly at Board
meetings and that all directors are
encouraged to bring independent
judgement to bear on all issues.
There are specific instructions in
place for the timetable and
content of Board papers so that
the directors are properly briefed
before the Board meetings. 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, to approve major
capital expenditure and to review
budgets.
At 30 April 2022, the Board
comprised a Non-Executive
Chairman, two Executive Directors
and three Non-Executive Directors.
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.
Board meetings are held a
minimum of four times a year and
the Board of the Parent Company
also attend the Board meetings of
the subsidiary companies on the
same day. All members of the
Board attended all four Board
meetings held over the last year.
The Board members also have
discussions during the year on the
progress of the Group and any
particular issues which arise. All
Directors commit the time
necessary to meet their
responsibilities as directors. There
were two meetings of both the
Audit and Remuneration
Committee during the year, both
of which were attended by all
members of those committees.
For the year under review two of
the four Non-Executive Directors
are considered to be independent.
These are Terence Yap and Robert
Waddington. Maurice Dwek and
Michel Rapoport are not
considered to be independent in
view of their substantial
Newmark Security PLC – Report and Financial Statements 2022
shareholdings in the Company.
However, the Board considers that
both Mr Dwek and Mr Rapoport
bring a wealth of experience from
across a range of businesses, as
well as their knowledge of being
involved in listed and other
companies together with their
experience of the People and Data
Management and the Service
industry.
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 for ensuring that agreed
procedures and applicable rules
are observed.
Marie-Claire Dwek and Paul
Campbell-White, as Executive
Directors, are full-time employees
of the company during the year.
There are no minimum time
commitments for the Non-
Executive Directors who spend
whatever time is required to fulfil
their duties and responsibilities.
Principle 6: Ensure that between
them the Directors have the
necessary up-to-date experience,
skills and capabilities
The CEO works closely with the
senior leadership teams of the
subsidiary companies to keep
abreast of market trends,
economic trends, technological
advances and customer
expectations to remain agile and
adjust to the changing times. She
meets with customers and
suppliers on a regular basis. She
also regularly attends security
exhibitions in the UK and
worldwide as well as forums,
corporate and networking events,
and keeps the Board up to date
with all developments.
Changes in the business and
economic environment are
discussed fully at Board meetings.
The Board is informed of changes
in accounting requirements by the
Company auditors and in
regulatory requirements by the
NOMAD via the Chief Financial
Officer.
Principle 7: Evaluate Board
performance based on clear and
relevant objectives, seeking
continuous improvement
The Chairman carried out an
evaluation of the Board during the
year and deemed that it was
working satisfactorily, in particular:
1. The good mix of skills and
experience of the Board members.
2. The amount of challenge and
expression of views at meetings.
3. The attendance of all the
Company Board members at the
subsidiary company Board
meetings.
4. The level of information, both
financial and operational, available
prior to and at the Board meetings.
5. Matters arising at each meeting
are followed up promptly and the
results reported back to Board
members.
The performance of the Board is
kept under continuous review. The
Board does not consider that it is
appropriate to perform a more
formal board appraisal process
utilising third parties at the current
date, taking into consideration the
size and nature of the Company.
However, this will be kept under
review and the board will consider
on an annual basis whether to
implement a more formal appraisal
process.
Principle 8: Promote a corporate
culture that is based on ethical
values and behaviours
The Group aims to have a
corporate culture that keeps staff
satisfied in their roles and fully
motivated so that staff retention
levels are high, and absenteeism is
low. All senior management are
aware of our culture. Staff are
encouraged to submit ideas and
suggestions as to how this can be
achieved. The Group also tries to
ensure that the staff have the
appropriate lifestyle benefits and
are provided with appropriate
development training, both
internally and externally.
All senior leadership team
members (including Group Human
Resources manager) attend
monthly management meetings,
attended by both Executive
Directors, to report on their
department’s activities and where
relevant to highlight any issues
with customers, suppliers,
employees or other stakeholders.
The Group is committed to
maintaining high standards for the
environment, and our relationship
with employees, customers and
suppliers. The Group is committed
to being environmentally friendly
and we have identified the key
waste streams from our businesses
so that the amount of landfill is
reduced by separating waste into
these different streams. Records
are maintained as evidence that
these forms of waste are separated
and collected by licensed waste
collection companies, and these
are reported at management
meetings. Our efforts with
stakeholder groups are detailed
under principle 3 above.
Principle 9: Maintain governance
structures and processes that are
fit for purpose and support good
decision making by the board
The Chief Executive Officer, Marie-
Claire Dwek, is responsible for the
day-to-day management of the
business, developing the Group’s
strategy for discussion with the
Board and then implementing that
32
Newmark Security PLC – Report and Financial Statements 2022
Principle 10: Communicate how
the company is governed and
performing by maintaining a
dialogue with shareholders and
other relevant stakeholders
The Board communicates with
shareholders through the annual
report and accounts, interim
report other regulatory
announcements, the Annual
General Meeting (AGM) and one-
on-one meetings with both existing
and potential shareholders. At the
end of the Annual General Meeting
shareholders are encouraged to
express their views to the
Directors. Corporate information is
available to shareholders and other
stakeholders on the Company
website including details of the
activities of the different
businesses, and announcement.
The Company also receives
updates from its corporate brokers
on the views of shareholders.
The Directors’ remuneration report
is on pages 38 and 39 and an
overview of the Audit Committee’s
duties and activities during the
year are on page 36 and on the
Corporate Governance section of
the Company’s website.
M Dwek
Chairman
20 January 2023
strategy. The Chief Financial
Officer, Paul Campbell-White, is
responsible for the financial
reporting of the Group and
supporting the CEO in developing
and implementing the Group
strategy. The two Executive
Directors have prime responsibility
for engagement with shareholders.
The Non-Executive Directors,
Michel Rapoport, Robert
Waddington and Terence Yap are
responsible for bringing their
expertise and judgement in
assisting in the development of
strategy and measuring its
performance, challenging the
Executive Directors and reviewing
their performance. All Directors are
required to notify the Company
Secretary of any conflicts of
interest and there have been no
such relationships declared.
The Audit Committee assists the
Board, and its terms of reference
are included on the company
website. Its composition, duties
and main activities during the year
is included in the Report of the
Directors. The terms of reference
of the Remuneration Committee
are included on the company web
site. Its composition, duties and
main activities during the year is
included in the Directors’
Remuneration report. There is no
Nomination Committee. Given the
size of the business, all senior
appointments are considered by
the Board as a whole. The matters
reserved for the Board are set out
under Principle 5. The Board will
continue to monitor the
governance framework in line with
the Group’s plans for growth and
will make further adjustments and
improvements as required.
33
Newmark Security PLC – Report and Financial Statements 2022
DIRECTORS’ REPORT
The Directors submit their annual
report and audited financial
statements of the Group for the
year ended 30 April 2022.
Financial results and dividends
The Board is proposing a dividend
of Nil per share (2021: Nil per
share).
Directors
The Directors who served during
the year and to the date of signing
were as follows:
M Dwek
M-C Dwek
G Feltham
(resigned 3 September 2021)
P Campbell-White
(appointed 17 September 2021)
M Rapoport
R Waddington (resigned 8
September 2022)
T Yap
Details of the Directors’ service
contracts are shown in the
Directors’ remuneration report on
page 38. M Dwek and T Yap retire
in accordance with the articles of
association. M Dwek and T Yap
being eligible, offer themselves for
re-election at the next annual
general meeting.
Financial instruments
For full details of changes to the
Group’s management of its
financial instruments and its
general objectives, policies and
processes in respect of financial
instruments, please refer to note
19 to the financial statements.
Likely future developments in the
business of the Company
Information on likely future
developments, exposure to
relevant risks and subsequent
events in the business of the Group
has been included in the Strategic
Report and in note 27 -
Subsequent events.
Directors’ interests
The beneficial and other interests
of the Directors in the shares of the
Company as at 30 April 2022 and
30 April 2021 were as follows:
M Dwek (a)
M Rapoport
R Waddington
M-C Dwek
G Feltham (left the Company during the year)
Percentage holding at
30 April 2022
30 April 2022(b)
30 April 2021
20.2%
12.5%
1.0%
0.5%
-
1,895,989
1,171,100
98,000
50,000
-
94,799,467
58,555,000
4,400,000
2,500,000
800,000
(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, beneficially owned by
M Dwek. (b) These holdings are lower than the prior year as a result of the 50:1 share re-organisation that took place on 10 November 2021.
The interests of Directors in Share Option Schemes operated by the Company at 30 April 2022 and 30 April 2021 were as
follows:
M-C Dwek
G Feltham (left the Company during the year)
573,363
0
28,668,274
5,900,000
Number of Ordinary Shares under
the EMI Scheme 30 April 2022
Number of Ordinary Shares under
the EMI Scheme 30 April 2021
The 30 April 2022 options for M-C
Dwek above have been restated
for the 50:1 share re-organisation
that took place on 10 November
2021.
The Directors had no other
interests in the shares or share
options of the Company or its
subsidiaries.
Research & Development (R&D)
The Group is committed to on-
going R&D. 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 development costs
capitalised in the year was
£764,000 (2021: £731,000). This is
discussed further in the Financial
Review.
34
revised forecast is completed in
February. As a consequence of the
revised forecast findings, the
Group would explore the existing
covenant test level with our
Banking partners, HSBC, should the
covenant headroom fall short of
the target. Further scenario testing
and sensitivity analysis was
completed to model certain criteria
that would indicate a potential
covenant breach against the latest
formally approved budget. Given
the 51% headroom in the latest
covenant calculation, it would take
a large reduction in Gross Material
Margin to result in a covenant
breach at April 2023. However,
management are confident that
the shortfalls will not occur
particularly given we are only a few
months away from the year end
but are undertaking regular
reviews and forecasts to ensure
this.
The Group is currently trading
ahead of budget and has returned
to profit after tax and operating
cashflow generation in FY23.
Management are confident that
the Group would be able to meet
loan repayments and working
capital needs. The Group is
expected to be able to operate
within existing finance facilities,
based on Management’s detailed
monthly cashflow forecasts to
January 2024. Should profits or
cashflow movements fall behind
expectations in this period the
Group expects to be able to utilise
more of its current UK and US
invoice discounting facilities and
also extend the overdraft facility.
Accordingly, the Directors consider
it appropriate to prepare the
financial statements on a going
concern basis.
Newmark Security PLC – Report and Financial Statements 2022
Going concern
Based on the Group’s latest
trading, future expectations and
associated cash flow forecasts, the
Directors have considered the
Group cash requirements and
forecast covenant compliance and
are confident that the Company
and the Group will be able to
continue trading for a period of at
least twelve months following
approval of these financial
statements, being the going
concern period.
In August 2020, the Group secured
a £2 million financing facility from
its bankers, HSBC, via the
Coronavirus Business Interruption
Loan Scheme (“CBILS”). This loan is
for a term of 6 years, with the first
year being interest, repayment and
covenant free under the Business
Interruption Payment scheme. The
original covenant required the
Group to deliver a pre-debt service
cashflow of 1.2 times the level of
debt service commencing for the
year end 30 April 2022, based on
audited accounts. As a result of the
Strategic Business Plan certain
investments were identified and
factored into a forward looking
model. Management identified
that the investments and cash
outlay may result in a potential
default of the covenant and
therefore the Directors agreed a
waiver of the debt service ratio to
be replaced by a Tangible Net
Worth (“TNW”) test applicable for
the year ended 30 April 2022
based on audited accounts. This
test used the calculation of Net
Assets less Intangible Assets and
required the result to exceed £3.1
million. In the year ended 30 April
2022 profitability and cashflows
were significantly impacted by the
COVID-19 pandemic, increase in
freight costs and the global
componentry shortage as the
Group had to increase stock levels
to meet anticipated demand and
pay higher prices for many
components. As a result of this, in
January 2022, HSBC agreed to a
waiver of the year ended 30 April
2022 covenant calculation. The
35
first covenant to be tested will be
for the year ended 30 April 2023
and requires the Group to deliver a
pre-debt service cashflow of 1.2
times the level of debt service
commencing, based on audited
accounts. No other financing
facilities of the Group have any
covenant requirements.
In September 2021, the Group
increased its UK invoice
discounting facility with HSBC to
£1.7 million to provide additional
working capital headroom. At 30
April 2022, £1.4 million was being
utilized. In February 2022, the
Group secured a 3-year $2 million
invoice discounting facility with
Seacoast National Bank against
invoices raised from our US
operation. At 30 April 2022, $1.1
million of the facility was being
utilized. The level of invoice
discounting available varies with
the open book of trade debtors at
any point in time and therefore the
level of financing fluctuates. In
January 2023 the Group increased
the UK invoice discounting facility
by another £0.6 million to £2.3
million.
As at 30 April 2022 the Group had
a £0.4 million overdraft facility with
its bankers, HSBC, although none
was utilized as the Group had a
positive bank balance of £0.2
million at year end. This overdraft
facility was reduced to £0.2 million
on 31 July 2022.
The Group’s going concern
assessment is based on the Group
returning to net cashflow
generation in the year to 30 April
2023. This is forecast to be a result
of the combination of the impact
of increasing customer prices in
the second half of the last financial
year, continued growth in
revenues, cost savings introduced
in May 2022 and stock levels
starting to unwind from their
historic high levels.
The latest forecast of the Group
results in exceeding the debt
service covenant test by 51% and
will be tested more fully when a
Newmark Security PLC – Report and Financial Statements 2022
Audit Committee
Directors’ responsibilities
The Audit Committee comprises R
Waddington, M Dwek, M Rapoport
and T Yap and a copy of its written
terms of reference are included on
the web site. The Audit Committee
principal duties are as follows:
• Reviewing and approving the
interim results for the six months
ended 31 October 2021.
• Agreement of the independence
of the auditors and their planning
report for the year-end financial
statements including the proposed
audit fees and non-audit services.
• Reviewing and approving the
audited annual report and
accounts for the year ended 30
April 2022.
• Discussion with the external
auditors of any accounting or
financial issues arising in the
course of their work.
• Discussion of the auditors’
assessment of the adequacy of
internal controls.
The main areas of activity during
the year included:
• Discussion of the development
costs capitalised.
• Impairment reviews of the
underlying businesses.
• Review and discussion of going
concern and forecasts including
the impact of COVID-19 and supply
chain disruption.
Remuneration Committee
The Remuneration Committee
comprises M Rapoport, M Dwek, R
Waddington and T Yap and 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 Directors’
Remuneration report is set out on
pages 38 and 39 and the terms of
reference are on the website.
The Directors are responsible for
preparing the annual report and
the financial statements in
accordance with applicable law
and regulations.
Company Law requires the
Directors to prepare financial
statements for each financial year.
Under that law the Directors have
elected to prepare the Group
financial statements in accordance
with international accounting
standards in conformity with the
requirements of the Companies
Act 2006 and the Company
financial statements in accordance
with United Kingdom Generally
Accepted Accounting Practice
(United Kingdom Accounting
Standards and applicable law).
Under Company Law the Directors
must not approve the financial
statements unless they are
satisfied that they give a true and
fair view of the situation of the
Group and Company and of the
profit or loss of the Group for that
period. The Directors are also
required to prepare financial
statements in accordance with the
rules of the London Stock Exchange
for companies trading securities on
the Alternative Investment Market.
In preparing these financial
statements, the Directors are
required to:
• Select suitable accounting
policies and then apply them
consistently.
• Make judgements and
accounting estimates that are
reasonable and prudent.
• State whether the Group
financial statements have been
prepared in accordance with
international accounting standards
in conformity with the
requirements of the Companies
Act 2006, subject to any material
departures disclosed and explained
in the financial statements and the
company financial statements in
accordance with United Kingdom
Generally Accepted Accounting
Practice (United Kingdom
Accounting Standards and
applicable law).
• Prepare the financial statements
on the going concern basis unless it
is inappropriate to presume that
the Group and Company will
continue in business.
The Directors are responsible for
keeping adequate accounting
records that are sufficient to show
and explain the Company’s
transactions and disclose with
reasonable accuracy at any time
the financial position of the
Company and enable them to
ensure that the financial
statements comply with the
requirements of the Companies
Act 2006. They are also responsible
for safeguarding the assets of the
Company and hence for taking
reasonable steps for the
prevention and detection of fraud
and other irregularities.
All of the current Directors have
taken all the steps that they ought
to have taken to make themselves
aware of any information needed
by the Company’s auditors for the
purposes of their audit and to
establish that the auditors are
aware of that information. The
Directors are not aware of any
relevant audit information of which
the auditors are unaware.
Website publication
The Directors are responsible for
ensuring the annual report and
financial statements are made
available on a website. Financial
statements are published on the
Group’s website in accordance
with legislation in the United
Kingdom governing the
preparation and dissemination of
financial statements, which may
vary from legislation in other
jurisdictions.
36
Newmark Security PLC – Report and Financial Statements 2022
The maintenance and integrity of
the Group’s website is the
responsibility of the Directors. The
Directors’ responsibility also
extends to the ongoing integrity of
the financial statements contained
therein.
Approval
This Directors Report was
approved by order of the Board on
20 January 2023.
M-C Dwek
Director
37
DIRECTORS’ REMUNERATION REPORT
Newmark Security PLC – Report and Financial Statements 2022
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 2022 comprised four existing
Non-Executive Directors, Maurice
Dwek, Michel Rapoport and Robert
Waddington and Terrance Yap.
The relevant parts of the career
history of the members of the
Remuneration Committee are
summarised in the Corporate
Governance section on pages 28
and 29.
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. Bonuses are awarded
based on company performance as
contractually stipulated.
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. The
Company entered into a service
agreement on 12 April 2013 with
Ms M-C Dwek which may be
terminated by either party serving
twelve months’ notice. The
Company entered into a service
agreement on 9 September 2019
with Mr Feltham which may be
terminated by either party serving
six months’ notice. Mr Feltham left
the business on 3 September 2021.
The Company entered into a
service agreement on 6 September
2021 with Mr Campbell-White
which may be terminated by either
party serving six months’ notice.
Loss of office
When determining any loss of
office payment for a departing
Director the Committee will always
seek to minimise cost to the
Company while complying with the
contractual terms and seeking to
reflect the circumstances in place
at the time. The Committee
reserves the right to make
additional payments where such
payments are made in good faith in
discharge of an existing legal
obligation (or by way of damages
for breach of such an obligation);
or by way of settlement or
compromise of any claim arising in
connection with the termination of
an Executive Director’s office or
employment.
Director’s emoluments
Emoluments of the directors
(including pension contributions)
of the Company during the year
ended 30 April 2022 were as
follows:
38
Newmark Security PLC – Report and Financial Statements 2022
Consultancy
agreement
£'000
Salary**
£'000
Fees
£'000
Bonus
£'000
Other
Benefits*
£'000
Total
£'000
Pension
£'000
-
-
-
80
-
-
-
80
78
208
114
112
-
-
-
-
434
333
-
-
-
-
25
25
25
75
75
-
5
-
-
-
-
-
5
79
28
8
1
34
-
-
-
71
52
236
127
113
114
25
25
25
665
617
24
3
2
-
-
-
-
29
31
Executive Directors
M-C Dwek
P Campbell-White
G Feltham
Non-Executive
Directors
M Dwek (a)
M Rapoport
R Waddington
T Yap
2022
2021
Total
including
pension
£'000
260
130
115
114
25
25
25
694
648
*Includes £6,000 for share options expense ** Includes compensation for loss of office for G Feltham
Emoluments of the highest paid Director were £260,000 (2021: £337,000). Bonus payments are based on performance against set targets at an increasing
percentage of salary for the extent of exceeding the agreed targets. The Directors’ share interests are detailed in the Directors’ Report on page 34. (a) The
Company paid a consultancy fee of £80,000 (2021: £78,000) to Arbury Inc., a company 51 per cent. owned by M Dwek.
Share option schemes
The Newmark Security PLC EMI
Share Option Plan enables the
Board to grant qualifying share
options under the HM Revenue &
Custom’s Enterprise Management
Incentive (“EMI”) tax code and also
unapproved share options to
employees and directors.
share option schemes are set out
in note 25 to the financial
statements.
The Remuneration Committee has
administered and operated the
scheme. Further details of the
The number of approved share
options issued to the Directors as
at 30 April 2022 are as follows:
Name
M-C Dwek
M-C Dwek
M-C Dwek
M-C Dwek
M-C Dwek
No. of options
247,272
38,191
22,857
146,250
118,793
Date of grant
August 2013
September 2014
September 2015
October 2019
October 2019
Exercise price payable
90p
90p
90p
90p
50p
options granted in October 2019
have now lapsed.
Approval
This remuneration report was
approved by order of the Board on
20 January 2023.
M-C Dwek
Director
The number of options and
exercise price payable above have
been restated to reflect the 50:1
share re-organisation that took
place on 10 November 2021.
There were no options granted or
exercised during the year with
162,500 (2021: 2,005,952) vesting.
These options vested before the
50:1 share re-organisation.
G Feltham left the Company on 3
September 2021 and his 5,900,000
39
INDEPENDENT AUDITOR’S REPORT
Newmark Security PLC – Report and Financial Statements 2022
TO THE MEMBERS OF
NEWMARK SECURITY
PLC
Opinion on the financial
statements
In our opinion:
• the financial statements give a
true and fair view of the state of
the Group’s and of the Parent
Company’s affairs as at 30 April
2022 and of the Group’s loss for
the year then ended;
• the Group financial statements
have been properly prepared in
accordance with UK adopted
international accounting standards;
• the Parent Company financial
statements have been properly
prepared in accordance with
United Kingdom Generally
Accepted Accounting Practice; and
• the financial statements have
been prepared in accordance with
the requirements of the
Companies Act 2006.
We have audited the financial
statements of Newmark Plc (the
‘Parent Company’) and its
subsidiaries (the ‘Group’) for the
year ended 30 April 2022 which
comprise, the consolidated income
statement, the consolidated and
Parent Company statement of
financial position, the consolidated
statement of cash flows, the
consolidated and Parent Company
statement of changes in equity and
notes to the financial statements,
including a summary of significant
accounting policies.
The financial reporting framework
that has been applied in the
preparation of the Group financial
statements is applicable law and
UK adopted international
accounting standards. The financial
reporting framework that has been
applied in the preparation of the
Parent Company financial
statements is applicable law and
United Kingdom Accounting
Standards, including Financial
Reporting Standard 101 Reduced
Disclosure Framework (United
Kingdom Generally Accepted
Accounting Practice).
Basis for opinion
We conducted our audit in
accordance with International
Standards on Auditing (UK) (ISAs
(UK)) and applicable law. Our
responsibilities under those
standards are further described in
the Auditor’s responsibilities for
the audit of the financial
statements section of our report.
We believe that the audit evidence
we have obtained is sufficient and
appropriate to provide a basis for
our opinion.
Independence
We remain independent of the
Group and the Parent Company in
accordance with the ethical
requirements that are relevant to
our audit of the financial
statements in the UK, including the
FRC’s Ethical Standard as applied to
listed entities, and we have fulfilled
our other ethical responsibilities in
accordance with these
requirements.
Conclusions relating to going
concern
In auditing the financial
statements, we have concluded
that the Directors’ use of the going
concern basis of accounting in the
preparation of the financial
statements is appropriate.
Given our assessment of risk and
the significance of this area, we
have determined going concern to
be a key area of focus for the audit.
Our evaluation of the Directors’
assessment of the Group’s and the
Parent Company’s ability to
continue to adopt the going
concern basis of accounting and
response to the key audit matter is
included in the “Key Audit Matters”
section below.
Based on the work we have
performed, we have not identified
any material uncertainties relating
to events or conditions that,
individually or collectively, may
cast significant doubt on the Group
and the Parent Company’s ability
to continue as a going concern for
a period of at least twelve months
from when the financial
statements are authorised for
issue.
Our responsibilities and the
responsibilities of the Directors
with respect to going concern are
described in the relevant sections
of this report.
40
Newmark Security PLC – Report and Financial Statements 2022
Overview
100% (2021: 100%) of Group profit before tax
Coverage1
100% (2021: 100%) of Group revenue
100% (2021: 97%) of Group total assets
Key audit matters
Revenue recognition
Going concern
Recoverability of goodwill and non-current assets
Group financial statements as a whole
2022
2021
Materiality
£276,000 (2021: £182,000) based on 1.5% of average revenue for the past two years (2021: 1%
of average revenue was used to account for the temporary fluctuation of performance as a
result of COVID-19.)
An overview of the scope of our
audit
Our Group audit was scoped by
obtaining an understanding of the
Group and its environment,
including the Group’s system of
internal control, and assessing the
risks of material misstatement in
the financial statements. We also
addressed the risk of management
override of internal controls,
including assessing whether there
was evidence of bias by the
Directors that may have
represented a risk of material
misstatement.
Audit work to respond to the
assessed risks was performed
directly by the Group audit
engagement team, full scope audit
procedures were performed on all
four operating entities within the
Group, which were the significant
components of the Group.
Analytical procedures were carried
out where relevant on the non-
significant components. All work
was carried out by the Group
engagement team.
Key audit matters
Key audit matters are those
matters that, in our professional
judgement, were of most
significance in our audit of the
financial statements of the current
period and include the most
significant assessed risks of
material misstatement (whether or
not due to fraud) that we
identified, including those which
had the greatest effect on: the
overall audit strategy, the
allocation of resources in the audit,
and directing the efforts of the
engagement team. These matters
were addressed in the context of
our audit of the financial
statements as a whole, and in
forming our opinion thereon, and
we do not provide a separate
opinion on these matters.
Key audit matter
Going concern
(Note 1)
The financial statements explain how the
Board has formed a judgement that it is
appropriate to adopt the going concern
basis of preparation for the financial
statements of the Group and Parent
Company.
That judgement is based on an
evaluation of the inherent risks to the
Group’s and Company’s business model
and how those risk might affect the
Group’s and Company’s financial
resources or ability to continue
How the scope of our audit addressed the key audit
matter
We obtained an understanding on going concern
assessment and process.
We obtained and reviewed post-year-end trading and
covenant forecasts for the CBILs loan, to test that the
Directors have reasonably evaluated the risk in respect
of covenant compliance, including related sensitivity
analysis.
We obtained and reviewed communication with the
Group’s primary bankers with regards to the financing,
specifically their view on the likely outcomes should Debt
Service Covenants fail in the future. We also had direct
1 These are areas which have been subject to a full scope audit by the Group engagement team
41
operations over a period of at least
twelve months from the date of
approval of the accounts.
The risk most likely to adversely affect
the Group’s and Parent Company’s
available financial resources and have an
impact on its ability to meet its
obligations over this period is the
Group’s covenant compliance in respect
of external funding to maintain
cashflows, covenant compliance and
increased uncertainty around the
longer-term impact on the economy and
impact on Group operations. The first
covenant measurement point is 30 April
2023, but by reference to the audited
accounts for the year then ended.
Because of the significance of the
judgements in this area we considered
going concern to be a key audit matter.
As detailed in note 1 and 3, the Group’s
revenue relates to the sale of products
and services recognised at a point in
time (delivery), and services recognised
over time.
There is a risk around the identification
of performance obligations and
application of IFRS 15 for material
contracts and that revenue around the
year end is recognised in the appropriate
period.
We therefore determined the
recognition of revenue to be a key audit
matter.
Revenue
Recognition
(Notes 1 and 3)
Newmark Security PLC – Report and Financial Statements 2022
conversations with the Group’s primary bankers on the
same subject matter.
We compared cash requirements in the forecasts to the
available facilities of the Group with actual cash level
post year-end.
We reviewed the accuracy and reasonableness of the
Directors’ forecast through assessment of the accuracy
of retrospective reviews; consideration of the Directors’
future business plans and any projects in the pipeline
We reviewed the disclosures in the financial statements
against best practice guidance and accounting standards.
Key observations:
Our observations are set out in the conclusions relating
to going concern section of our report.
We reviewed management’s assessment of the
separable performance obligations in revenue contracts
against the requirements of IFRS 15, and cross checked
this against the underlying contracts. We also tested
sales on a sample basis over the year to confirm
appropriate and consistent revenue recognition policies
had been applied.
We performed a three-way matching test of revenue
transactions recognised during the year (invoice, delivery
and settlement) on a sampling basis.
We selected a sample of products dispatched in the final
month of the year and the first month post year end
from goods dispatched note listing and confirmed the
timing and associated performance obligation has been
applied correctly.
We tested a sample of post year-end credit notes to
related invoices to verify that the revenue was valid and
recognised in the correct period.
We reviewed material (based on performance
materiality) manual journals to revenue to confirm that
they had been posted in line with normal business
transactions or supporting evidence obtained from
management.
In respect of service income, we looked at a sample of
contracts to assess whether we were satisfied that the
services revenue was appropriately recognised over time
and we calculated expectations in respect of related
accrued and deferred income and compared this with
management's calculations.
42
Newmark Security PLC – Report and Financial Statements 2022
Recoverability of
goodwill - Group
(Notes 1, and
12)
Recoverability of
Parent Company
Investment in
subsidiaries –
Parent Company
(Notes 1,and 3)
The Group’s accounting policy in relation
to impairment of goodwill is included
within note 1 and further explained in
note 12 of the Group financial
statements. The Parent Company’s
accounting policy on investment in
subsidiaries is included within Company
note 1.
Accounting standards require
management to perform an impairment
review annually to consider possible
impairment in goodwill and consider
whether there are any indicators of
impairment impacting investments in
subsidiaries balance in the Parent
Company.
Management exercise significant
judgement in determining the
underlying assumptions used in the
impairment review of the two operating
cash generating units (CGUs). These
assumptions include the discount rate,
the forecast operating margins and the
growth rate. Increased uncertainty is
noted on operating results in the short
to medium term due to the aftereffects
of COVID-19, the Russian-Ukraine war
outbreak and the consequential effects
on the supply chain and sales.
Due to these various judgements
exercised by management, this area
concluded to a key audit matter.
Key observations:
We did not identify any indicators to suggest that
revenue had not been recognised appropriately in
accordance with IFRS 15.
We have assessed management’s impairment review: we
recalculated the CGU component’s value in use using our
calculated discount rate, based on applicable gearing,
risk and equity premiums, and methodology in line with
accounting standards and compared these values against
the CGU component value and the investment in
subsidiaries value.
We have challenged and assessed the reasonableness of
the CGU component level FY23 budgets and expected
growth rate assumptions within the impairment models
through discussions with management, comparisons to
the industry and, where appropriate, agreement to
supporting documentation and historical trends.
We have performed sensitivity analysis over the key
assumptions used by management, specifically the
discount rate, long term growth rate and operating
profit.
We reviewed the disclosures in Group note 12 and
Parent Company note 3 against accounting standard
requirements, including the impact of changes in key
assumptions.
Key observations:
We did not identify anything to suggest that
management’s impairment review failed to incorporate
all critical considerations impacting the recoverability of
goodwill in the Group or investments held in subsidiaries
in the Parent Company.
Our application of materiality
We apply the concept of
materiality both in planning and
performing our audit, and in
evaluating the effect of
misstatements. We consider
materiality to be the magnitude by
which misstatements, including
omissions, could influence the
economic decisions of reasonable
users that are taken on the basis of
the financial statements.
In order to reduce to an
appropriately low level the
probability that any misstatements
exceed materiality, we use a lower
materiality level, performance
materiality, to determine the
extent of testing needed.
Importantly, misstatements below
these levels will not necessarily be
evaluated as immaterial as we also
take account of the nature of
identified misstatements, and the
particular circumstances of their
occurrence, when evaluating their
effect on the financial statements
as a whole.
Based on our professional
judgement, we determined
materiality for the financial
statements as a whole and
performance materiality as follows:
43
Newmark Security PLC – Report and Financial Statements 2022
Group financial statements
Parent Company financial statements
2022
£
2021
£
2022
£
2021
£
Materiality
276,000
182,000
151,800
125,000
Basis for determining
materiality
1.5% of average
revenue for 2022 and
2021
1% of average
revenue for 2021 and
2020
55% of Group
materiality
2% Parent Company
Net assets
Rationale for the
benchmark applied
Loss making entity, revenue is key
performance driver.
1% of Average revenue used in 2021 to
mitigate COVID- 19 impact. Operations
expected to normalise going forward and thus
1.5% of average revenue was used in 2022.
The Parent Company is a holding entity. As
part of Group reporting consideration,
materiality. used by audit team is the lower of
Group allocated materiality and statutory
materiality.
In the current year, the Parent Company
materiality was restricted to a percentage of
Group materiality. In 2021 the statutory
materiality was the lower of the two.
Performance
materiality
Basis for determining
performance
materiality
193,000
127,000
106,300
87,500
70% Group materiality based on various
factors including the expected total value of
known and likely misstatements, brought
forward misstatements, and the number of
material estimates.
70% materiality based on various factors
including the expected total value of known
and likely misstatements, brought forward
misstatements, and the number of material
estimates.
Component materiality
We set materiality for each
component of the Group based on
a percentage of between 35% and
55% of Group materiality
dependent on the size and our
assessment of the risk of material
misstatement of that component.
Component materiality ranged
from £96,000 to £151,800. In the
audit of each component, we
further applied performance
materiality levels of between 60%
and 70% of the component
materiality to our testing to ensure
that the risk of errors exceeding
component materiality was
appropriately mitigated.
Reporting threshold
We agreed with the Audit
Committee that we would report
to them all individual audit
differences in excess of £5,300
(2021: £3,600). We also agreed to
report differences below this
threshold that, in our view,
warranted reporting on qualitative
grounds.
Other information
The directors are responsible for
the other information. The other
information comprises the
information included in the Annual
report other than the financial
statements and our auditor’s
report thereon. Our opinion on the
financial statements does not
cover the other information and,
except to the extent otherwise
explicitly stated in our report, we
do not express any form of
assurance conclusion thereon. Our
responsibility is to read the other
information and, in doing so,
consider whether the other
information is materially
inconsistent with the financial
statements or our knowledge
obtained in the course of the audit,
or otherwise appears to be
materially misstated. If we identify
such material inconsistencies or
apparent material misstatements,
we are required to determine
whether this gives rise to a
material misstatement in the
financial statements themselves. If,
based on the work we have
performed, we conclude that there
is a material misstatement of this
other information, we are required
to report that fact.
We have nothing to report in this
regard.
Other Companies Act 2006
reporting
Based on the responsibilities
described below and our work
performed during the course of the
audit, we are required by the
Companies Act 2006 and ISAs (UK)
to report on certain opinions and
matters as described below.
44
Newmark Security PLC – Report and Financial Statements 2022
Strategic report
and Directors’
report
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the Strategic report and the Directors’ report for the financial year for
which the financial statements are prepared is consistent with the financial statements; and
• the Strategic report and the Directors’ report have been prepared in accordance with applicable
legal requirements.
In the light of the knowledge and understanding of the Group and Parent Company and its
environment obtained in the course of the audit, we have not identified material misstatements in
the strategic report or the Directors’ report.
Matters on
which we are
required to
report by
exception
We have nothing to report in respect of the following matters in relation to which the Companies Act
2006 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the Parent Company, or returns adequate for
our audit have not been received from branches not visited by us; or
• the Parent Company financial statements are not in agreement with the accounting records and
returns; or
• certain disclosures of Directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of Directors
As explained more fully in the
Directors’ report, the Directors are
responsible for the preparation of
the financial statements and for
being satisfied that they give a true
and fair view, and for such internal
control as the Directors determine
is necessary to enable the
preparation of financial statements
that are free from material
misstatement, whether due to
fraud or error.
In preparing the financial
statements, the Directors are
responsible for assessing the
Group’s and the Parent Company’s
ability to continue as a going
concern, disclosing, as applicable,
matters related to going concern
and using the going concern basis
of accounting unless the Directors
either intend to liquidate the
Group or the Parent Company or
to cease operations, or have no
realistic alternative but to do so.
Auditor’s responsibilities for the
audit of the financial statements
Our objectives are to obtain
reasonable assurance about
whether the financial statements
45
as a whole are free from material
misstatement, whether due to
fraud or error, and to issue an
auditor’s report that includes our
opinion. Reasonable assurance is a
high level of assurance, but is not a
guarantee that an audit conducted
in accordance with ISAs (UK) will
always detect a material
misstatement when it exists.
Misstatements can arise from
fraud or error and are considered
material if, individually or in the
aggregate, they could reasonably
be expected to influence the
economic decisions of users taken
on the basis of these financial
statements.
Extent to which the audit was
capable of detecting irregularities,
including fraud
Irregularities, including fraud, are
instances of non-compliance with
laws and regulations. We design
procedures in line with our
responsibilities, outlined above, to
detect material misstatements in
respect of irregularities, including
fraud. The extent to which our
procedures are capable of
detecting irregularities, including
fraud is detailed below:
• We obtained an understanding of
the legal and regulatory
frameworks through our
accumulated knowledge and
consideration of sector information
that is applicable to the Group.
• We considered these risks to be
highest within areas of material
estimation, including impairment
of goodwill and non-financial
assets, calculation of provisions
against inventory and receivables
and valuation of deferred tax
assets (items included in the KAM),
as well as transactions around the
year end and manual journals at
component and consolidation
level.
• We focused on laws and
regulations that could give rise to a
material misstatement in the
financial statements, including, but
not limited to, accounting
standards, Companies Act 2006
and certain requirements from UK
and US tax legislation and with the
assistance of our internal tax
specialists.
• Our tests included, but were not
limited to, agreement of the
financial statement disclosures to
underlying supporting
documentation, review of
Newmark Security PLC – Report and Financial Statements 2022
Use of our report
This report is made solely to the
Parent Company’s members, as a
body, in accordance with Chapter 3
of Part 16 of the Companies Act
2006. Our audit work has been
undertaken so that we might state
to the Parent Company’s members
those matters we are required to
state to them in an auditor’s report
and for no other purpose. To the
fullest extent permitted by law, we
do not accept or assume
responsibility to anyone other than
the Parent Company and the
Parent Company’s members as a
body, for our audit work, for this
report, or for the opinions we have
formed.
Nick Poulter (Senior Statutory
Auditor)
For and on behalf of BDO LLP,
Statutory Auditor
Guildford, UK
20 January 2023
BDO LLP is a limited liability
partnership registered in England
and Wales (with registered number
OC305127)
correspondence with legal
advisors, enquiries of management
and review of board minutes.
• We also addressed the risk of
management override of internal
controls, including testing journals
and evaluating whether there was
evidence of bias by the Directors
that represented a risk of material
misstatement due to fraud. To
address the risk of fraud due to
revenue recognition through our
journals testing we obtained a list
of journal entries to revenue and
reviewed manual postings with
values greater than predetermined
thresholds.
• We communicated relevant
identified laws and regulations and
potential fraud risks to all
engagement team members and
remained alert to any indications
of fraud or non-compliance with
laws and regulations throughout
the audit.
Our audit procedures were
designed to respond to risks of
material misstatement in the
financial statements, recognising
that the risk of not detecting a
material misstatement due to
fraud is higher than the risk of not
detecting one resulting from error,
as fraud may involve deliberate
concealment by, for example,
forgery, misrepresentations or
through collusion. There are
inherent limitations in the audit
procedures performed and the
further removed non-compliance
with laws and regulations is from
the events and transactions
reflected in the financial
statements, the less likely we are
to become aware of it.
A further description of our
responsibilities is available on the
Financial Reporting Council’s
website at:
www.frc.org.uk/auditorsresponsibilities
. This description forms part of our
auditor’s report.
46
Newmark Security PLC – Report and Financial Statements 2022
47
Newmark Security PLC – Report and Financial Statements 2022
FINANCIAL STATEMENTS
Consolidated income statement for the year end 30 April 2022
Revenue
Cost of sales
Gross profit
Administrative expenses
(Loss)/profit from operations before exceptional items
Exceptional redundancy costs
Other exceptional credits
Loss from operations
Finance costs
Loss before tax
Tax credit
(Loss)/profit for the year
Attributable to:
- Equity holders of the parent
(Loss)/earnings per share
- Basic (pence)
- Diluted (pence)
Consolidated statement of comprehensive income
(Loss)/profit for the year
Foreign exchange on the retranslation of overseas operation
Total comprehensive loss for the year
Attributable to:
- Equity holders of the parent
The notes on pages 52 to 79 form part of these financial statements.
2022
£'000
As restated
2021
£'000
Notes
3
19,145
17,658
(12,726)
(11,029)
6,419
6,629
(7,633)
(6,662)
4
4
4
7
8
9
9
(1,090)
(124)
-
(1,214)
(220)
(1,434)
630
(804)
(804)
(0.32)
(0.32)
2022
£'000
(804)
143
(661)
84
(181)
64
(33)
(113)
(146)
297
151
151
0.03
0.03
As restated
2021
£'000
151
(196)
(45)
(661)
(45)
48
Newmark Security PLC – Report and Financial Statements 2022
Consolidated statement of financial position at 30 April 2022
ASSETS
Non-current assets
Property, plant and equipment
Intangible assets
Deferred tax
Total non-current assets
Current assets
Inventory
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Other short-term borrowings
Total current liabilities
Non-current liabilities
Long term borrowings
Provisions
Total non-current liabilities
Total liabilities
TOTAL NET ASSETS
Capital and reserves attributable to equity holders
of the company
Share capital
Share premium reserve
Merger reserve
Foreign exchange difference reserve
Retained earnings
Total attributed to equity holders
Non-controlling interest
TOTAL EQUITY
Note
10
11
8
14
15
16
17
18
21
22
23
23
23
23
2022
£'000
2,088
5,564
410
8,062
3,983
3,979
157
8,119
As restated
2021
£'000
As restated
2020
£'000
2,017
5,505
206
7,728
3,125
4,438
484
8,047
2,186
5,234
329
7,749
2,544
3,664
620
6,828
16,181
15,775
14,577
3,105
2,958
6,063
2,447
100
2,547
8,610
7,571
4,687
553
801
(159)
1,649
7,531
40
7,571
3,782
602
4,384
3,066
100
3,166
7,550
8,225
4,687
553
801
(302)
2,446
8,185
40
8,225
3,246
1,301
4,547
1,673
100
1,773
6,157
8,257
4,687
553
801
(106)
2,282
8,217
40
8,257
The financial statements were approved by the Board of Directors and authorised for issue on 20 January 2023.
Paul Campbell-White
Director
The notes on pages 52 to 79 form part of these financial statements.
49
Newmark Security PLC – Report and Financial Statements 2022
Consolidated statement of cash flows for the year ended 30 April 2022
Cash flow from operating activities before exceptional items
Net (loss)/profit after tax from ordinary activities
Adjustments for: Depreciation, amortisation and impairment
Exceptional items
Finance cost
Gain on sale of property, plant and equipment
Share based payment
Income tax credit
Operating (loss)/profit before changes in working capital and provisions
Decrease/(increase) in trade and other receivables
(Increase)/decrease in inventories
(Decrease)/increase in trade and other payables
Cash generated from operations before exceptional items
Exceptional items
Cash generated from operations after exceptional items
Income taxes received
Cash flow from operating activities
Cash flow from investing activities
Acquisition of property, plant and equipment
Sale of property, plant and equipment
Research and development expenditure
Cash flow from financing activities
Bank loans (paid)/received
Principal paid on lease liabilities
Proceeds/(repayment) on invoice discounting
Interest paid on lease liabilities
Interest paid
Decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Exchange differences on cash and cash equivalents
Cash and cash equivalents at end of year
The notes on pages 52 to 79 form part of these financial statements.
Notes
4
4
7
4
8
2022
£'000
(804)
1,248
124
220
(30)
7
(630)
135
(29)
(856)
(658)
(1,408)
16
(124)
10
11
18
24
17
24
(1,532)
871
(661)
(561)
30
(766)
(1,297)
(267)
(376)
2,263
(48)
(84)
1,488
(470)
484
143
157
As restated
2021
£'000
151
1,028
117
113
(5)
13
(297)
1,120
(805)
(652)
582
245
(244)
1
369
370
(272)
-
(744)
(1,016)
2,000
(487)
(905)
(37)
(51)
520
(126)
620
(10)
484
50
Total
equity
£'000
8,225
(804)
143
(661)
7
7,571
Total
equity
£'000
8,302
(45)
8,257
171
(20)
151
(196)
(45)
13
8,225
40
-
-
-
-
40
40
-
40
-
-
-
-
-
-
40
Newmark Security PLC – Report and Financial Statements 2022
Consolidated statement of changes in equity
Share
capital
£'000
Share
premium
£'000
Merger
reserve
£'000
Foreign
exchange
reserve
Retained
earnings
Amounts
attributable
to owners of
the parent
Non-
controlling
interest
£'000
£'000
£'000
£'000
At 1 May 2021 (as restated)
Loss for the year
Other comprehensive income
Total comprehensive income/(loss)
for the year
Transactions with owners
Share based payment
4,687
-
-
-
-
553
-
-
-
-
801
-
-
-
-
(302)
-
143
2,446
(804)
-
8,185
(804)
143
143
(804)
(661)
-
7
7
7,531
As at 30 April 2022
4,687
553
801
(159)
1,649
Share
capital
£'000
Share
premium
£'000
Merger
reserve
£'000
Foreign
exchange
reserve
Retained
earnings
Amounts
attributable
to owners of
the parent
Non-
controlling
interest
£'000
£'000
£'000
£'000
At 1 May 2020
Effect of prior year adjustment
At 1 May 2020 (as restated)
Profit for the year
Effect of prior year adjustment
Profit for the year (as restated)
Other comprehensive loss
Total comprehensive income/(loss)
for the year
Transactions with owners
Share based payment
4,687
-
4,687
-
-
-
-
-
-
553
-
553
-
-
-
-
-
-
801
-
801
-
-
-
-
-
-
(106)
-
(106)
-
-
-
(196)
2,327
(45)
2,282
171
(20)
151
-
8,262
(45)
8,217
171
(20)
151
(196)
(196)
151
(45)
-
13
13
8,185
As at 30 April 2021 (as restated)
4,687
553
801
(302)
2,446
See note 2 for details of prior year adjustment.
The notes on pages 52 to 79 form part of these financial statements.
51
Newmark Security PLC – Report and Financial Statements 2022
1. Accounting policies
Newmark Security PLC (the
“Company”) is a public limited
company, limited by shares, registered
number 3339998 in England & Wales.
The consolidated financial statements
of the Company for the year ended 30
April 2022 comprise the Company and
its subsidiaries (together referred to as
the “Group”).
Basis of preparation
The consolidated financial statements
have been prepared on a historical
cost basis.
The principal accounting policies
adopted in the preparation of the
financial statements are set out below.
The policies have been consistently
applied to all the years presented,
unless otherwise stated. These
consolidated financial statements have
been prepared in accordance with
international accounting standards in
conformity with the requirements of
the Companies Act 2006.
The preparation of financial
statements in conformity with IFRSs
requires management to make
judgements, estimates and
assumptions that affect the
application of policies and reported
amounts of income and expenses, and
assets and liabilities. These
judgements and assumptions are
based on historical experience and
various other factors that are believed
to be reasonable under the
circumstances, the result of which
form the basis of making the
judgements about carrying values of
assets and liabilities. Actual results
may differ from these estimates.
These estimates and underlying
assumptions are reviewed on an
ongoing basis. Any revisions to the
accounting estimates are recognised
in the period in which the revision is
made.
None of the new standards or
amendments to standards have had
any impact on the accounting policies
of the group in the year.
No new standards that are not yet
effective have been early adopted or
are expected to have a material
impact on the Group’s profit or loss.
Going concern
Based on the Group’s latest trading,
future expectations and associated
cash flow forecasts, the Directors have
considered the Group cash
requirements and forecast covenant
compliance and are confident that the
Company and the Group will be able
to continue trading for a period of at
least twelve months following
approval of these financial statements,
being the going concern period.
In August 2020, the Group secured a
£2 million financing facility from its
bankers, HSBC, via the Coronavirus
Business Interruption Loan Scheme
(“CBILS”). This loan is for a term of 6
years, with the first year being
interest, repayment and covenant free
under the Business Interruption
Payment scheme. The original
covenant required the Group to
deliver a pre-debt service cashflow of
1.2 times the level of debt service
commencing for the year end 30 April
2022, based on audited accounts. As a
result of the Strategic Business Plan
certain investments were identified
and factored into a forward looking
model. Management identified that
the investments and cash outlay may
result in a potential default of the
covenant and therefore the Directors
agreed a waiver of the debt service
ratio to be replaced by a Tangible Net
Worth (“TNW”) test applicable for the
year ended 30 April 2022 based on
audited accounts. This test used the
calculation of Net Assets less
Intangible Assets and required the
result to exceed £3.1 million. In the
year ended 30 April 2022 profitability
and cashflows were significantly
impacted by the COVID-19 pandemic,
increase in freight costs and the global
componentry shortage as the Group
had to increase stock levels to meet
anticipated demand and pay higher
prices for many components. As a
result of this, in January 2022, HSBC
agreed to a waiver of the year ended
30 April 2022 covenant calculation.
The first covenant to be tested will be
for the year ended 30 April 2023 and
requires the Group to deliver a pre-
debt service cashflow of 1.2 times the
level of debt service commencing,
based on audited accounts. No other
financing facilities of the Group have
any covenant requirements.
In September 2021, the Group
increased its UK invoice discounting
facility with HSBC to £1.7 million to
provide additional working capital
headroom. At 30 April 2022, £1.4
million was being utilized. In February
2022, the Group secured a 3 year $2
million invoice discounting facility with
Seacoast National Bank against
invoices raised from our US operation.
At 30 April 2022, $1.1 million of the
facility was being utilized. The level of
invoice discounting available varies
with the open book of trade debtors at
any point in time and therefore the
level of financing fluctuates. In
January 2023 the Group increased the
UK invoice discounting facility by
another £0.6 million to £2.3 million.
As at 30 April 2022 the Group had a
£0.4 million overdraft facility with its
bankers, HSBC, although none was
utilized as the Group had a positive
bank balance of £0.2 million at year
end. This overdraft facility was
reduced to £0.2 million on 31 July
2022.
The Group’s going concern assessment
is based on the Group returning to net
cashflow generation in the year to 30
April 2023. This is forecast to be a
result of the combination of the
impact of increasing customer prices
in the second half of the last financial
year, continued growth in revenues,
cost savings introduced in May 2022
and stock levels starting to unwind
from their historic high levels.
52
Newmark Security PLC – Report and Financial Statements 2022
The latest forecast of the Group
results in exceeding the debt service
covenant test by 51% and will be
tested more fully when a revised
forecast is completed in February. As a
consequence of the revised forecast
findings, the Group would explore the
existing covenant test level with our
Banking partners, HSBC, should the
covenant headroom fall short of the
target. Further scenario testing and
sensitivity analysis was completed to
model certain criteria that would
indicate a potential covenant breach
against the latest formally approved
budget. Given the 51% headroom in
the latest covenant calculation it
would take a large reduction in Gross
Material Margin to cause in a
covenant breach at April 2023.
However, management are confident
that the shortfalls will not occur
particularly given we are only a few
months away from the year end but
are undertaking regular reviews and
forecasts to ensure this.
The Group is currently trading ahead
of budget and has returned to profit
after tax and operating cashflow
generation in FY23.
Management are confident that the
Group would be able to meet loan
repayments and working capital
needs. The Group is expected to be
able to operate within existing finance
facilities, based on Management’s
detailed monthly cashflow forecasts to
January 2024. Should profits or
cashflow movements fall behind
expectations in this period the Group
expects to be able to utilise more of its
current UK and US invoice discounting
facilities and also extend the overdraft
facility. Accordingly, the Directors
consider it appropriate to prepare the
financial statements on a going
concern basis.
Segment reporting
Operating segments are reported in a
manner consistent with the internal
reporting provided to the chief
operating decision-maker. The chief
53
operating decision-maker has been
identified as the management team
comprising the Chief Executive Officer
and Chief Financial Officer.
Basis of consolidation
The Group financial statements
consolidate the results of the company
and all of its subsidiary undertakings
drawn up to 30 April 2022 Subsidiaries
are entities controlled by the group.
The company controls a subsidiary if
all three of the following elements are
present: power over the subsidiary;
exposure to variable returns from the
subsidiary; and the ability of the
investor to use its power to affect
those variable returns. The financial
statements of subsidiaries are
included in the consolidated financial
statements from the date that control
commences until the date that control
ceases.
Revenue
Performance obligations and timing of
revenue recognition
The majority of the group’s revenue is
derived from selling hardware, with
revenue recognised at a point in time
when control of the goods has
transferred to the customer. This is
generally when the goods are
delivered to the customer. However,
for export sales, control might also be
transferred when delivered either to
the port of departure or port of arrival,
depending on the specific terms of the
contract with a customer. There is
limited judgement needed in
identifying the point control passes:
once physical delivery of the products
to the agreed location has occurred,
the group no longer has physical
possession, usually will have a present
right to payment (as a single payment
on delivery) and retains none of the
significant risks and rewards of the
goods in question.
Software sales are recognised when
the license key is given to the
customer, as the customer has a right
to use the Group’s intellectual
property as it exists at a point in time
when the licence is granted (a ‘passive’
license). There is ongoing support
provided but this is a distinct separate
performance obligation, and provided
under a separate contract. There are
no significant upgrades provided that
are fundamental to the ongoing use of
the license by the customer.
The Group provides support and
service contracts to customers, which
are invoiced separately to the goods
and software noted above and are
considered to be distinct performance
obligations. The revenue from
support, Software-as-a-Service (SaaS)
and Clocks-as-a-Service (ClaaS)
contracts in the people and data
management division is recognised
over time as the customer
simultaneously receives and consumes
the benefits of the service over the life
of the contract. The revenue is
recognised straight line over the life of
the contract.
In the Physical Security Solutions
division, most service revenue is
recognised at a point in time and is
based on the company fulfilling its
performance obligations with work
completed in any given month. For
some smaller contracts a regular fee is
charged for a period of service rather
than per visit and is therefore
recognised over time.
The Group also provide maintenance
and installation services. Revenue for
maintenance contracts is recognised
at a point in time, as and when
maintenance work is performed for
the customer and is based on the level
of work required at that time. Revenue
for installation services is also
recognised at a point in time, when
the work has been completed. Where
there is an additional fee for project
management relating to the
installation, this is treated as one
performance obligation and invoiced
when the installation is complete.
Newmark Security PLC – Report and Financial Statements 2022
Determining the transaction price
The Group’s revenue is derived from
fixed price contracts for each revenue
stream and therefore the amount of
revenue to be earned from each
contract is determined by reference to
those fixed prices.
Allocating amounts to performance
obligations
For most contracts, there is a fixed
unit price for each product or service
sold, with reductions given for bulk
orders placed at a specific time.
Therefore, there is no judgement
involved in allocating the contract
price to allocate to each revenue
stream sold to one customer. Where a
customer orders more than one
service (i.e. product, installation and
ongoing service), the Group is able to
determine the split of the total
contract price between each revenue
stream by reference to each
standalone selling price (all revenue
streams are capable of being, and are,
sold separately).
Payment terms
Payment for all revenue streams noted
above is due between 30 and 60 days
after the invoice is raised. For all
revenue recognised at a point in time,
the invoice is raised when the product
or service has been supplied. Deferred
income arises where invoices relate to
maintenance visits for several sites
and not all have been visited at year
end. Accrued income is recognised
following a service visit that requires
an application process to be adhered
to under the main contract spanning
1-3 years. Once the application
process is finalised an invoice is raised
and the value is removed from
accrued income.
For service revenue recognised over
time, the invoice is raised on a
monthly basis for most customers.
Business combinations
The consolidated financial statements
incorporate the results of business
combinations using the purchase
method. In the consolidated
statement of financial position, the
acquiree’s identifiable assets, liabilities
and contingent liabilities are initially
recognised at their fair values at the
acquisition date. The results of
subsidiaries acquired or disposed of
during the year are included in the
consolidated income statement from
the effective date of acquisition or up
to the effective date of disposal as
appropriate.
Goodwill
Goodwill represents the excess of the
cost of a business combination over
the interest in the fair value of
identifiable assets, liabilities and
contingent liabilities acquired. Cost
comprises the fair values of assets
given, liabilities assumed and equity
instruments issued.
Goodwill is capitalised as an intangible
asset with any impairment in carrying
value being charged to the income
statement.
Where the fair value of identifiable
assets, liabilities and contingent
liabilities exceed the fair value of
consideration paid, the excess is
credited in full to the income
statement.
Impairment of non-financial assets
Impairment tests on goodwill are
undertaken annually on 30 April.
Other non-financial assets are subject
to impairment tests whenever events
or changes in circumstances indicate
that their carrying value may not be
recoverable. Where the carrying value
of an asset exceeds its recoverable
amount (i.e. the higher of value in use
and fair value less costs to sell), the
asset is written down accordingly. In
assessing value in use, the estimated
future cash flows are discounted to
their present value using a pre-tax
discount rate that reflects the current
market assessment of the time value
of money and risk specific to the asset.
Where it is not possible to estimate
the recoverable amount of an
individual asset, the impairment test is
carried out on the asset’s cash-
generating unit (i.e. the lowest group
of assets in which the asset belongs
for which there are separately
identifiable cash flows). Goodwill is
allocated on initial recognition to each
of the Group’s cash- generating units
that are expected to benefit from the
synergies of the combination giving
rise to the goodwill.
Impairment charges are included in
the cost of sales line item in the
income statement for research and
development and in the
administration line for goodwill. An
impairment loss in respect of goodwill
is not reversed. In respect of other
assets, an impairment loss is reversed
if there has been a change in the
estimates used to determine the
recoverable amount. An impairment
loss is reversed only to the extent that
the asset’s carrying amount does not
exceed the carrying amount that
would have been determined, net of
depreciation or amortisation, if no
impairment had been recognised.
In testing for impairment,
management has to make judgements
and estimates about future events
which are uncertain. Adverse results
compared to these judgements could
alter the decision of whether an
impairment is required.
Foreign currency
The consolidated financial statements
are presented in sterling, which is the
main functional currency of the
Group’s operating entities.
Transactions entered into by Group
entities in a currency other than the
functional currency of the primary
economic environment in which it
operates are recorded at the rates
ruling when the transactions occur.
Foreign currency monetary assets and
liabilities are translated at the rates
ruling at the statement of financial
position date. Exchange differences
54
Newmark Security PLC – Report and Financial Statements 2022
arising on the retranslation of
unsettled monetary assets and
liabilities are similarly recognised
immediately in the income statement.
The results and financial position of all
Group companies that have a
functional currency different from the
presentation currency are translated
into the presentation currency as
follows:
(i) assets and liabilities are translated
at the closing rate at the date of the
statement of financial position;
(ii) income and expenses are
translated at average exchange rates;
and
(iii) all resulting exchange differences
are recognised as a separate
component of equity.
On disposal of a foreign operation, the
cumulative exchange differences
recognised in the foreign exchange
reserve relating to that operation up
to the date of disposal are transferred
to the income statement as part of the
profit or loss on disposal.
Financial assets
The Group’s financial assets comprise
trade and other receivables, accrued
income, cash and cash equivalents.
Trade and other receivables, excluding
VAT receivables, are measured initially
at fair value and subsequently at
amortised cost using the effective
interest rate method, less provision for
impairment. Impairment provisions for
current trade receivables are
recognised based on the simplified
approach within IFRS 9 using a
provision matrix in the determination
of the lifetime expected credit losses.
During this process the probability of
the non-payment of the trade
receivables is assessed. This
probability is then multiplied by the
amount of the expected loss arising
from default to determine the lifetime
expected credit loss for the trade
receivables. For trade receivables,
which are reported net, such
provisions are recorded in a separate
55
provision account with the loss being
recognised within overheads in the
consolidated statement of
comprehensive income. On
confirmation that the trade receivable
will not be collectable, the gross
carrying value of the asset is written
off against the associated provision.
Financial liabilities
Financial liabilities are obligations to
pay cash and are recognised when the
Group becomes a party to the
contractual provisions of the
instrument. The Group’s financial
liabilities comprise trade payables,
other payables, overdraft, accruals,
loan and invoice discount account. All
financial liabilities are measured
initially at fair value and subsequently
at amortised cost using the effective
interest method.
Cash flow hedges
Cash flow hedges are accounted for
under fair value. Fair value is
calculated by establishing the mark to
market value. Movements on the fair
value are reflected in the income
statement with the fair value being
reflected in current assets or liabilities
on the balance sheet.
Share-based payments
Where share options are awarded to
employees, the fair value of the
options at the date of grant is charged
to the income statement over the
vesting period. Equity settled share
options are recognised with a
corresponding credit to equity.
Non-market vesting conditions are
taken into account by adjusting the
number of equity instruments
expected to vest at each statement of
financial position date so that,
ultimately, the cumulative amount
recognised over the vesting period is
based on the number of options that
eventually vest. Market vesting
conditions are factored into the fair
value of the options granted. As long
as all other vesting conditions are
satisfied, a charge is made irrespective
of whether the market vesting
conditions are satisfied. The
cumulative expense is not adjusted for
failure to achieve a market vesting
condition.
Leases
For any new contracts entered into
the Group considers whether a
contract is, or contains a lease. A lease
is defined as ‘a contract, or part of a
contract, that conveys the right to use
an asset for a period of time in
exchange for consideration’. To apply
this definition the Group assesses
whether the contract meets three key
evaluations which are whether:
• the contract contains an identified
asset, which is either explicitly
identified in the contract or implicitly
specified by being identified at the
time the asset is made available to the
Group;
• the Group has the right to obtain
substantially all of the economic
benefits from use of the identified
asset throughout the period of use,
considering its rights within the
defined scope of the contract; and
• the Group has the right to direct the
use of the identified asset throughout
the period of use. The Group assess
whether it has the right to direct ‘how
and for what purpose’ the asset is
used throughout the period of use.
Lease liabilities are measured at the
present value of the contractual
payments due to the lessor over the
lease term, with the discount rate
determined by reference to the rate
inherent in the lease unless (as is
typically the case) this is not readily
determinable, in which case the
group’s incremental borrowing rate on
commencement of the lease is used.
Variable lease payments are only
included in the measurement of the
lease liability if they depend on an
index or rate. In such cases, the initial
measurement of the lease liability
assumes the variable element will
remain unchanged throughout the
Newmark Security PLC – Report and Financial Statements 2022
lease term. Other variable lease
payments are expensed in the period
to which they relate.
On initial recognition, the carrying
value of the lease liability also
includes:
• amounts expected to be payable
under any residual value guarantee;
• the exercise price of any purchase
option granted in favour of the Group
if it is reasonably certain to assess that
option; and
• any penalties payable for
terminating the lease, if the term of
the lease has been estimated on the
basis of termination option being
exercised.
Right of use assets are initially
measured at the amount of the lease
liability, reduced for any lease
incentives received, and increased for:
• lease payments made at or before
commencement of the lease;
• initial direct costs incurred; and
• the amount of any provision
recognised where the group is
contractually required to dismantle,
remove or restore the leased asset
(typically leasehold dilapidations).
Subsequent to initial measurement
lease liabilities increase as a result of
interest charged at a constant rate on
the balance outstanding and are
reduced for lease payments made.
Right-of-use assets are amortised on a
straight-line basis over the remaining
term of the lease or over the
remaining economic life of the asset if,
rarely, this is judged to be shorter than
the lease term. When the Group
revises its estimate of the term of any
lease (because, for example, it re-
assesses the probability of a lessee
extension or termination option being
exercised), it adjusts the carrying
amount of the lease liability to reflect
the payments to make over the
revised term, which are discounted
using a revised discount rate. The
carrying value of lease liabilities is
similarly revised when the variable
element of future lease payments
dependent on a rate or index is
revised, except the discount rate
remains unchanged. In both cases an
equivalent adjustment is made to the
carrying value of the right-of-use
asset, with the revised carrying
amount being amortised over the
remaining (revised) lease term. If the
carrying amount of the right-of-use
asset is adjusted to zero, any further
reduction is recognised in profit or
loss.
All leases are accounted for by
recognising a right-of-use asset and a
lease liability except for:
• leases of low value assets; and
• leases with a duration of 12 months
or less.
Internally generated intangible
assets (research and development
costs)
Expenditure on research activities is
recognised as an expense in the period
in which it is incurred. Expenditure on
internally developed products is
capitalised if it can be demonstrated
that:
• it is technically feasible to develop
the product for it to be sold;
• adequate resources are available to
complete the development;
• there is an intention to complete and
sell the product;
• the group is able to sell the product;
• sale of the product will generate
future economic benefits; and
• expenditure on the project can be
measured reliably.
Capitalised hardware and firmware
development costs are amortised over
seven years being the period the
Group expected to benefit from selling
the products developed. Amortisation
is charged from when the asset is
ready for use and the expense is
included within the cost of sales line in
the income statement.
Software development costs are
generally written off over four years
which is deemed to be an accurate
reflection of the useful economic life
of the products developed.
Each project is reviewed individually
between Finance and the Technical
Director regularly to ascertain
appropriate accounting treatment.
Development expenditure not
satisfying the above criteria and
expenditure on the research phase of
internal projects are recognised in the
income statement as incurred.
Licences, patents, trademarks and
copyright
Costs associated with licences,
patents, trademarks, copyrights etc.
are capitalised as incurred and are
amortised over the expected life of the
asset of seven years or to another
period if specified in the contract.
Taxation
Income tax expense represents the
sum of the tax currently payable or
receivable and deferred tax.
Research & Development (R&D) claims
are made each year on the basis that
the Group overcomes technological
uncertainties. This work is carried out
for the internal development of
hardware and software in the Groups
own products and services that it sells
and also carries out this work on
behalf of other companies. The
internal development R&D claim
results in a deduction that can be used
to reduce tax payable or shown as a
credit within current tax, at a reduced
rate, as a cash tax credit. Where the
Group performs the research and
development on behalf of other
companies a Research and
Development Expenditure Credit
(RDEC) is claimed whereby a credit is
received within administration costs as
reducing the costs to serve.
Current tax
The tax currently payable is based on
taxable profit for the year. Taxable
profit differs from profit as reported in
the income statement because it
56
Newmark Security PLC – Report and Financial Statements 2022
excludes items of income or expense
that are taxable or deductible in other
years and it further excludes items
that are never taxable or deductible.
The Group’s liability for current tax is
calculated using tax rates that have
been enacted or substantively enacted
by the statement of financial position
date unless the tax is adjusted
regarding a previous period whereby
the appropriate rate is used
accordingly.
Deferred taxation
Deferred tax assets and liabilities are
recognised where the carrying amount
of an asset or liability in the statement
of financial position differs from its tax
base, except for differences arising on:
• the initial recognition of goodwill;
• the initial recognition of an asset or
liability in a transaction which is not a
business combination and at the time
of the transaction affects neither
accounting nor taxable profit; and
• investments in subsidiaries and
jointly controlled entities where the
group is able to control the timing of
the reversal of the difference and it is
probable that the difference will not
reverse in the foreseeable future.
Recognition of deferred tax assets is
restricted to those instances where it
is probable that taxable profit will be
available against which the difference
can be utilised.
The amount of the asset or liability is
determined using tax rates that have
been enacted or substantively enacted
by the statement of financial position
date and are expected to apply when
the deferred tax liabilities/(assets) are
settled/(recovered). Deferred tax
balances are not discounted.
Deferred tax assets and liabilities are
offset when the Group has a legally
enforceable right to offset current tax
assets and liabilities and the deferred
tax assets and liabilities relate to taxes
levied by the same tax authority on
either:
• the same taxable Group company; or
57
• different Group entities which intend
either to settle current tax assets and
liabilities on a net basis, or to realise
the assets and settle the liabilities
simultaneously, in each future period
in which significant amounts of
deferred tax assets or liabilities are
expected to be settled or recovered.
Property, plant and equipment
Items of property, plant and
equipment are recognised at cost. As
well as the purchase price, cost
includes directly attributable costs and
the estimated present value of any
future costs of dismantling and
removing items. The corresponding
liability is recognised within provisions.
Depreciation is provided on all items
of property, plant and equipment to
write off the carrying value of items
over their expected useful economic
lives. It is applied at the following
rates:
Short leasehold improvements
– evenly over the length of the lease
Plant and machinery
– 20% per annum straight line
Fixtures and fittings
– 10-15% per annum straight line
Computer equipment
– 25-33.3% per annum straight line
Motor vehicles
– 25-33% per annum reducing balance
Inventories
Inventories are initially recognised at
cost, and subsequently at the lower of
cost and net realisable value. Cost
comprises all costs of purchase, costs
of conversion and other costs incurred
in bringing the inventories to their
present location and condition.
Weighted average cost is used to
determine the cost of ordinarily
interchangeable items.
Net realisable value is the estimated
selling price in the ordinary course of
business, less estimated costs
necessary to make the sale.
Provisions
Provisions are recognised for liabilities
of uncertain timing or amount that
have arisen as a result of past
transactions, where it is probable that
the Group will be required to settle
the obligation, and a reliable estimate
can be made of the amount of the
obligation.
The amount recognised as a provision
is the best estimate of the
consideration required to settle the
present obligation at the statement of
financial position date, taking into
account the risks and uncertainties
surrounding the obligation.
Dilapidation provisions are provided
on leasehold properties where the
terms of the lease require the Group
to make good any changes made to
the property during the period of the
lease. Where a dilapidation provision
is required the Group recognises an
asset and provision equal to the
discounted cost of restating the
property to its original state. The asset
is included within the overall cost of
the right of use asset and depreciated
over the remaining term of the lease.
Cash and cash equivalents
Cash and cash equivalents in the cash
flow statement include cash in hand,
deposits held at call with banks, other
short-term highly liquid investments
with original maturities of three
months or less, and bank overdrafts.
Bank overdrafts are included in
borrowings in current liabilities in the
statement of financial position.
Borrowing costs
Borrowing costs are recognised as an
expense in the period in which they
are incurred.
Dividends
Dividends are recognised when they
become legally payable. In the case of
interim dividends to equity
shareholders, this is when paid. In the
case of final dividends, this is when
Newmark Security PLC – Report and Financial Statements 2022
approved by the shareholders at the
AGM.
Pension costs
Contributions to the company’s
defined contribution pension scheme
are charged to the consolidated
income statement in the year in which
they become payable.
Holiday pay provision
A liability is recognised to the extent of
any unused holiday pay entitlement
which has accrued at the balance
sheet date and carried forward to
future periods. This is measured at the
undiscounted salary costs of the
future holiday entitlement and so
accrued at the balance sheet date.
Government grants
A government grant is recognised only
when there is reasonable assurance
that the Group will comply with any
conditions attached to the grant and
that the grant will be received. The
grant is recognised net against the
costs that they are intended to
compensate.
Non-controlling interests
Non-controlling interests are
recognised at the Group’s
proportionate share in the recognised
amounts of the acquiree’s identifiable
net assets. The total comprehensive
income of non-wholly owned
subsidiaries is attributed to owners of
the parent and to the non-controlling
interests in proportion to their relative
ownership interests.
Critical accounting estimates and
judgements
The estimates and assumptions that
have a significant risk of causing a
material adjustment to the carrying
amounts of assets and liabilities within
the next financial year are discussed
below.
Estimates
(a) Estimate – cash forecasts used for
value in use of cash-generating units
and going concern review
The Group tests annually whether
goodwill, intangible and tangible
assets have suffered any impairment,
in accordance with the accounting
policy stated above. The recoverable
amounts of cash-generating units have
been determined based on value-in-
use calculations derived from cash
forecasts. These calculations require
the use of estimates as detailed in
note 12 including forecasts from
formally approved cash projections to
April 2025. Management uses
judgement to estimate the extent and
timing of future cashflows. The
forecasts used to assess the going
concern within the review period to
April 2024 are based on the same
operating forecasts as the impairment
review.
(b) Estimate – Useful economic life
The useful economic life used for
intangible assets is an estimate based
on a review of the historical,
commercial and technical experience
of senior members of the
management team. The key estimate
is that Capitalised hardware and
firmware development costs are
amortised over seven years being the
period the Group expected to benefit
from selling the products developed.
Judgements
(a) Judgement – Development costs
Development costs on internally
developed products are capitalised if it
can be demonstrated that the
expenditure meets the criteria set out
on page 56. These costs are amortised
over the period that the Group
expects to benefit from selling the
products developed. The judgements
concerning compliance with the above
criteria and the expected useful life of
these assets are made using the
historical, commercial and technical
experience of senior members of the
management team.
(b) Judgement – value of recognised
deferred tax relating to losses
The Group tests the recoverability of
tax losses based on recent results
combined with Management’s
projections. Management reviews
profitability over a period of 5 years
and assesses the utilisation of tax
losses prior to being in a position of
tax paying. Management uses
judgement to estimate the quantum
of taxable losses that will be utilised
and recognises a deferred tax asset as
appropriate. See note 8.
2. Prior year adjustment
On adoption of IFRS 16 (“Leases”) in
the year ended 30 April 2020, the
initial recognition of one of the
Subsidiary’s right of use land and
building leases was based on a 5 year
lease term. A subsequent review of
this lease during the year ended 30
April 2022 highlighted that the lease
term was in fact 15 years and not 5
years as per the original interpretation
of the lease agreement. The
recognition of an additional 10 years
of lease term has resulted in a prior
year adjustment to increase right of
use land and buildings asset net book
value at 30 April 2020 and 30 April
2021 by £924,000 and £929,000
respectively. The corresponding lease
creditor increased at 30 April 2020 and
30 April 2021 by £969,000 and
£994,000 respectively. The lease
creditor adjustment is split between
short-term and long-term borrowings
as shown in the table below. The
overall impact is a reduction in total
net assets and corresponding
reduction in retained earnings at these
dates of £45,000 and £65,000
respectively. In respect of the income
statement for the year ended 30 April
2021, this resulted in a reduction in
the depreciation charge of £5,000 and
an increase in the lease interest cost
of £25,000. Net impact on the profit
before tax is a reduction of £20,000.
58
Newmark Security PLC – Report and Financial Statements 2022
2. Prior Year adjustment (continued)
Changes to the statement of financial position
Property, plant and equipment
Right of use land buildings
Cost
Depreciation
Net book value
Other short-term borrowings
Lease creditor
Long-term borrowings
Lease creditor
Capital and reserves
Retained earnings
Changes to the income statement
As
previously
reported
Adjustment
at 1 May
2020
Adjustment
at 30 April
2021
As restated
at 30 April
2021
£'000
£'000
£'000
£'000
614
(294)
320
911
13
924
-
5
5
1,525
(276)
1,249
(386)
50
(25)
(361)
(288)
(1,019)
-
(1,307)
2,511
(45)
(20)
2,446
As
previously
reported
Adjustment
As restated
£'000
£'000
£'000
Loss from operations is after charging for:
Depreciation of property, plant and equipment
(560)
5
(555)
Finance Costs
Lease interest cost
(37)
(25)
(62)
59
Newmark Security PLC – Report and Financial Statements 2022
3. Revenue
The Group has disaggregated revenue into various categories in the following table which is intended to:
• depict how the nature, amount, timing of revenue are affected by economic data and the relationship with the revenue recognition
policy above.
People and Data
Management division
Physical Security
Solutions division
Product sales (includes hardware and
software)
Installation and Professional Services
Support, Service and SaaS contracts
Recurring revenue - point in time
Recurring revenue - over time
Revenue recognised as follows
Point in time
Over time
2022
£'000
2021
£'000
13,468
180
11,941
241
-
910
-
465
14,558
12,647
13,648
910
14,558
12,182
465
12,647
2022
£'000
3,132
-
1,455
-
4,587
4,587
-
4,587
Total
2022
£'000
2021
£'000
16,600
180
1,455
910
15,161
241
1,575
681
2021
£'000
3,220
-
1,575
216
5,011
19,145
17,658
4,795
216
5,011
18,235
910
19,145
16,977
681
17,658
Support, Service, SaaS and ClaaS contracts have a recurring nature to the contracts whereby the customer has purchased products
along with a contract usually spanning 12 – 36 months for maintenance and call outs, warranty, technical support or for SaaS contracts
– device, data and identity management services. The nature of certain contracts such as support, maintenance, SaaS and ClaaS are
consumed over the course of the contract whereas the customer benefits from service and call out obligations at the time of delivery.
Primary Geographic Markets
UK
USA
Belgium
Canada
Netherlands
Middle East
Sweden
Switzerland
Ireland
Other
2022
£'000
8,039
8,287
1,029
766
476
71
86
58
59
274
2021
£'000
8,425
7,237
854
416
676
37
20
81
43
285
19,145
17,658
There were two customers that accounted for more than 10% of Group revenue at £3.2 million and £2.5 million respectively (2021:
one customer accounted for more than 10% of revenue at £3.2 million).
60
Newmark Security PLC – Report and Financial Statements 2022
4. Loss from operations
This has been arrived at after charging/(crediting):
Staff costs
Exceptional redundancy costs
Exceptional adjustments for onerous lease surrender
Depreciation of property, plant, and equipment
Amortisation of intangibles assets
Foreign exchange differences
(Profit) on disposal of tangible non-current assets
Auditors remuneration:
Audit fees payable to the Company's auditor for the audit of:
- Company annual accounts
- Group annual accounts
Other fees payable to the Company's auditors:
- Audit of subsidiary companies
- Tax compliance
Note
5
10
11
2022
£'000
7,119
124
-
542
706
(130)
(30)
2022
£'000
20
42
70
32
As restated
2021
£'000
6,781
181
(64)
560
473
17
(5)
2021
£'000
15
25
45
30
164
115
Exceptional costs
During the year exceptional costs of £124,000 (2021: £117,000) were incurred due to restructuring costs in Grosvenor, Safetell and the
parent company. In the prior year there were £181,000 of restructuring costs mainly in Grosvenor and an exceptional £64,000 credit
related to the exit of a lease commitment at Safetell whereby the asset had been written down in the previous year.
5. Staff costs
Staff costs (including the Executive Directors and excluding exceptional redundancy
costs) comprise:
Wages and salaries
Share options expense
Defined contribution pension costs
Employer's national insurance contributions and similar taxes
The average numbers employed (including the Executive Directors) were:
Management, sales and administration
Production
2022
£'000
6,048
7
286
778
7,119
2022
No.
49
54
103
2021
£'000
5,861
13
261
646
6,781
2021
No.
56
56
112
Furlough credits of £183,000 were received during the prior year and recognised in the lines where the costs were incurred.
61
Key management remuneration (comprising the Executive Directors and Directors of subsidiary companies):
Newmark Security PLC – Report and Financial Statements 2022
Salaries*
Employers national insurance contributions and similar taxes
Share options expense
2022
£'000
842
131
7
1,025
2021
£'000
1,202
103
13
1,407
The emoluments of the Directors of the parent company are set out in the Directors’ remuneration report on pages 38 and 39.
*Includes termination costs of £30,000 in current year.
6. Segment information
Description of the types of products and services from which each reportable segment derives its revenues
The Group has two main reportable segments:
• People and Data Management division – This division is involved in the design, manufacture and distribution of access control
systems (hardware and software) and the design, manufacture and distribution of HCM hardware only, for time-and-attendance, shop-
floor data collection, and access control systems. This division contributed 76.0% (2021: 71.6%) of the Group’s revenue.
• Physical Security Solutions division (previously called the Asset Protection division) – This division is involved in the design,
manufacture, installation and maintenance of fixed and reactive security screens, reception counters, cash management systems and
associated security equipment. This division contributed 23.9% (2021: 28.4%) of the Group’s revenue.
Factors that management used to identify the Group’s reportable segments
The Group’s reportable segments are strategic business units that offer different products and services. The two divisions are managed
separately as each involves different technology, and sales and marketing strategies. Operating segments are reported in a manner
consistent with the internal reporting provided to the chief operating decision maker.
Segment assets and liabilities exclude group company balances.
People and
Data
Management
division
2022
£'000
Physical
Security
Solutions
division
2022
£'000
Total
2022
£'000
Revenue from external customers
14,558
4,587
19,145
Finance cost
Depreciation
Amortisation
Segment profit/(loss) before income tax
Additions to non-current assets
Disposal of non-current assets
Reportable segment assets
Reportable segments liabilities
99
304
703
312
20
228
-
(103)
1,292
488
13,094
4,722
158
198
2,299
1,530
119
532
703
209
1,450
686
15,392
6,252
62
Newmark Security PLC – Report and Financial Statements 2022
As restated
People and
Data
Management
division
2021
£'000
Physical
Security
Solutions
division
2021
£'000
As restated
Total
2021
£'000
Revenue from external customers
12,647
5,011
17,658
Finance cost
Depreciation
Amortisation
Segment profit before income tax
Additions to non-current assets*
Disposal/modification of non-current assets
Reportable segment assets
Reportable segments liabilities
54
296
470
1,120
1,012
322
11,586
3,569
18
246
-
161
254
440
2,515
1,435
72
542
470
1,281
1,266
762
14,101
5,004
Reconciliation of reportable segment revenues, profit or loss, assets and liabilities to the Group’s corresponding amounts:
Revenue
Total revenue for reportable segments
Profit or loss before income tax expense
Total profit or loss for reportable segments
Parent company salaries and related costs
Other parent company costs
Loss before income tax expense
Corporation taxes
(Loss)/profit after income tax expense
Assets
Total assets for reportable segments
Parent company assets
Group's assets
Liabilities
Total liabilities for reportable segments
Parent company liabilities
Group's liabilities
2022
£'000
As restated
2021
£'000
19,145
17,658
209
(809)
(834)
(1,434)
630
(804)
15,392
789
16,181
6,252
2,358
8,610
*
**
1,281
(868)
(534)
(121)
297
176
14,101
1,674
15,775
5,004
2,546
7,550
*PLC bank overdraft is set off against other group cash balances and has therefore been included within the asset line owing to an
offsetting arrangement that is in place with HSBC.
**Parent company liabilities include dormant companies’ intercompany balances which eliminate fully on consolidation therefore do
not feature in the consolidated financial statements.
63
Geographical information:
Non-current assets by location of assets
UK
USA
Other material items
Additions to non-current assets
Disposals and modifications of
non-current assets
Depreciation and amortisation
7. Finance costs
Lease interest cost
Bank loans and overdraft
Invoice discounting
8. Tax and Deferred tax
Current tax expense
UK corporation tax on profit for the year
Overseas corporation tax
Adjustment to provision in prior periods
Deferred tax expense
Origination and reversal of temporary differences
Effect of change in corporation tax rate
Adjustment to provision in prior periods
Total tax (credit) / charge
Newmark Security PLC – Report and Financial Statements 2022
2022
£'000
7,092
560
7,652
as restated
2021
£'000
7,522
209
7,731
Reportable
segment
totals
2022
£'000
1,450
623
1,235
PLC
2022
£'000
-
-
13
Group
Totals
2022
£'000
1,450
623
1,248
As restated
Reportable
segment
totals
2021
£'000
PLC
2021
£'000
As restated
Group Totals
2021
£'000
1,266
762
1,022
-
-
16
1,266
762
1,033
2022
£'000
44
101
75
220
2022
£'000
(338)
-
(88)
(426)
(159)
(61)
16
(204)
(630)
As restated
2021
£'000
62
17
34
113
2021
£'000
(337)
42
(125)
(420)
169
-
(46)
123
(297)
The reasons for the differences between the actual tax credit for the year and the standard rate of corporation tax in the UK applied to
profits for the year are as follows:
64
Newmark Security PLC – Report and Financial Statements 2022
8. Tax and Deferred tax (continued)
Loss before income tax
Expected tax (credit)/charge based on the standard rate of corporation tax in
the UK of 19.0% (2021: 19.0%)
Research and development allowances
Effects on profits on items not taxable or deductible for tax purposes
Effects of corporation tax change
Losses arising in year where no deferred tax recognised
Recognition of previously unrecognised deferred tax assets
Write-off of previously recognised deferred tax assets
Difference arising from utilisation of capital allowances
Different tax rates applied in overseas jurisdictions
Adjustments for tax credit relating to previous periods
2022
£'000
(1,434)
(272)
(142)
24
(61)
25
(178)
6
4
(71)
As restated
2021
£'000
(146)
(28)
(199)
(81)
-
-
46
-
71
11
(125)
35
Total tax (credit)
(630)
(297)
The Group has the following tax losses, subject to agreement by HMRC Inspector of Taxes, available for offset against future trading
profits as appropriate:
Management expenses
Trading losses
A deferred tax asset has not been recognised for the following:
Management expenses
Trading losses
Deferred tax
2022
£'000
170
5,203
5,373
2022
£'000
170
732
902
2021
£'000
177
4,591
4,768
2021
£'000
8
1,691
1,699
Deferred tax is calculated in full on temporary differences under the liability method using a tax rate of 19% (2021: 19%). The March
2021 Budget announced a further increase to the main rate of corporation tax to 25% from 1 April 2023 and was substantively enacted
in May 2021. The £61,000 increase in net deferred tax assets as a result of this change in tax rate is recorded in the year ended 30 April
2022.
Deferred tax assets have been recognised in respect of all temporary timing differences giving rise to deferred tax assets if it is
probable that these assets will be recovered. The movements in deferred tax assets and liabilities (prior to the offsetting of balances
within the same jurisdiction as permitted by IAS12) during the period are shown below. Deferred tax assets and liabilities are only
offset where there is a legally enforceable right of offset and there is an intention to settle the balances net.
Details of the deferred tax liability, and amounts (charged)/credited to the consolidated income statement are as follows:
65
Newmark Security PLC – Report and Financial Statements 2022
Accelerated
capital
allowances
Other temporary
and deductible
differences Available losses
146
(113)
33
185
(39)
146
(526)
(146)
(672)
(442)
(84)
(526)
586
463
1,049
586
-
586
Total
206
204
410
329
(123)
206
Asset/(liability)
At 1 May 2021
Income statement (charge)/credit
At 30 April 2022
Asset/(liability)
At 1 May 2020
Income statement (charge)/credit
At 30 April 2021
Deferred tax assets have been recognised in respect of available losses which are expected to be matched against future trading
profits. Management reviews the estimate mid-year and assesses whether latest projections impact the level of recognised deferred
tax. Management allow for a fluctuation in projections and apply a level of cautiousness to recognition so that it allows for profit
fluctuations. A 10% fluctuation in future profitability could result in a change of £17,000 to the recognition of deferred tax.
There are unrecognised deferred tax assets as listed above, which have not been recognised due to the uncertainty of the timing of
future profits.
9. Earnings per share (EPS)
Numerator
(Loss)/profit used in basic and diluted EPS
Denominator
Weighted average number of shares used in basic EPS
Weighted average number of dilutive share options
Weighted average number of shares used in diluted EPS
2022
£'000
(804)
As restated
2021
£'000
151
252,267,880
-
252,267,880
468,732,316
5,939,692
474,672,008
The total number of share options are disclosed in note 25. The weighted average number of dilutive share options relate to options,
without any performance criteria, issued with an exercise price being less than the year end average mid-market price.
The weighted average number of shares reduced during the year as a result of the 50:1 share re-organisation which was approved at
the Company’s AGM on 10 November 2021.
The basic earnings per share before 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 earnings
per share as follows:
Earnings per share - basic and diluted
Exceptional costs
Earnings per share before exceptional items
Reconciliation of earnings
Profit for calculation of basic and diluted earnings per share
Exceptional costs
Profit before exceptional items
2022
£'000
(0.32)
0.05
(0.27)
(804)
124
(680)
As restated
2021
£'000
0.03
0.02
0.05
151
117
268
66
Newmark Security PLC – Report and Financial Statements 2022
10. Property, Plant and Equipment
Right of
use land
and
buildings
(as
restated)
£'000
Right of
use plant,
machinery
and motor
vehicles
£'000
1,525
-
(37)
4
1,492
(276)
-
(2)
(174)
(452)
853
124
(146)
3
834
(489)
137
-
(174)
(526)
Leasehold
improvements
£'000
Plant,
machinery
and motor
vehicles
£'000
Computers,
fixtures and
fittings
£'000
562
11
(212)
-
361
(454)
194
-
(36)
(296)
262
51
(106)
2
209
(214)
80
(2)
(47)
(183)
1,517
499
(185)
18
1,849
(1,269)
185
(5)
(111)
(1,200)
Total (as
restated)
£'000
4,719
685
(686)
27
4,745
(2,702)
596
(9)
(542)
(2,657)
1,040
308
65
26
649
2,088
1,886
62
(138)
(283)
(2)
1,525
(343)
138
160
1
(232)
(276)
697
188
(29)
-
(3)
853
(314)
24
-
-
(199)
(489)
686
29
(153)
-
-
562
(567)
153
-
-
(40)
(454)
283
61
(80)
-
(2)
262
(281)
80
-
2
(15)
(214)
1,426
182
(79)
-
(12)
1,517
(1,287)
79
-
8
(69)
(1,269)
4,978
522
(479)
(283)
(19)
4,719
(2,792)
474
160
11
(560)
(2,702)
1,249
364
108
48
248
2,017
Cost
Balance at 1 May 2021
Additions
Disposals
Net exchange differences
Balance at 30 April 2022
Depreciation
Balance at 1 May 2021
Disposals
Net exchange differences
Depreciation
Balance at 30 April 2022
Net book value 30 April
2022
Cost
Balance at 1 May 2020
Additions
Disposals
Lease modification
Net exchange differences
Balance at 30 April 2021
Depreciation
Balance at 1 May 2020
Disposals
Lease modification
Net exchange differences
Depreciation
Balance at 30 April 2021
Net book value 30 April
2021
67
Newmark Security PLC – Report and Financial Statements 2022
11. Intangible assets
Goodwill
£'000
Development
costs
£'000
Licenses,
patents
and
copyrights
£'000
Other
£'000
Gross carrying amount
Balance at 1 May 2021
Additions - internally developed
Additions - external costs
Balance at 30 April 2022
Amortisation and impairment
Balance at 1 May 2021
Amortisation
Balance at 30 April 2022
6,872
-
-
6,872
(4,137)
-
(4,137)
*
9,412
257
507
10,176
(6,686)
(695)
(7,381)
Carrying amount 30 April 2022
2,735
2,795
Gross carrying amount
Balance at 1 May 2020
Additions - internally developed
Additions - external costs
Balance at 30 April 2021
Amortisation and impairment
Balance at 1 May 2020
Amortisation
Balance at 30 April 2021
6,872
-
-
6,872
(4,137)
-
(4,137)
*
8,681
501
230
9,412
(6,222)
(464)
(6,686)
Carrying amount 30 April 2021
2,735
2,726
61
-
1
62
(23)
(8)
(31)
31
48
-
13
61
(17)
(6)
(23)
38
9
-
-
9
(3)
(3)
(6)
3
9
-
-
9
-
(3)
(3)
6
Total
£'000
16,354
257
508
17,119
(10,849)
(706)
(11,555)
5,564
15,610
501
243
16,354
(10,376)
(473)
(10,849)
5,505
*balance includes impairment provisions for Goodwill of £4,137,000 and Development costs of £3,578,000 totalling £7,715,000
The Group has no contractual commitments for development costs (2021: £Nil).
12. Goodwill and impairment
The carrying amount of goodwill is allocated to the cash generating units (CGU’s) as follows:
People and Data Management division
2022
£'000
2,735
2021
£'000
2,735
The recoverable amounts have been determined from value in use calculations based on cash flow projections from formally approved
projections from the Strategic Business Plan updated with the results from the annual budget process covering a three year period to
30 April 2025. The discount rate that was applied was 12.5% for the People and Data Management division (2021: 17%), representing
the pre-tax discount rate that reflects the current market assessment of the time value of money and risk specific to the asset. The
compound revenue growth rate for the People and Data Management division increased to 21% (2021: 16%). The growth rate reflects
68
Newmark Security PLC – Report and Financial Statements 2022
the impact of customer expansion supported by existing products and products being delivered in the short term. The gross margin
assumed in the forecasts is 32% to 38% (2021: 38% to 42%) with the decline due to change in product mix and impact of lower
percentage margins for larger customers. The impairment review applied sensitivities reducing the long term growth rate to 1% which
indicated no impairment. If the discount rate is increased to 20%, there is no impairment. In order for the carrying value to equate to
the value in use the discount rate would need to increase to 58%.
13. Subsidiaries
The subsidiaries of Newmark Security PLC, all of which have been included in these consolidated financial statements, are as follows in
the current and prior year:
Name
Custom Micro Products Limited
Newmark Technology Limited
Newmark Technology (C-Cure Division) Limited
Safetell International Limited
Safetell Limited
Safetell Security Screens Limited
Vema B.V.
Vema N.V.
Vema UK Limited
Grosvenor Technology Limited
Newmark Group Limited
Sateon Limited
ATM Protection (UK) Limited
ATM Protection Limited
Grosvenor Technology LLC
Country of
incorporation
Great Britain
Great Britain
Great Britain
Great Britain
Great Britain
Great Britain
The Netherlands
The Netherlands
Great Britain
Great Britain
Great Britain
Great Britain
Great Britain
Great Britain
USA
Proportion of
ownership
interest (*)
100%
100%
100%
100%
100%
100%
100%
98%
100%
100%
100%
100%
86.70%
86.70%
100%
Activity
Dormant
Dormant
Dormant
Dormant
Trading
Dormant
Holding
Dormant
Dormant
Trading
Dormant
Dormant
Dormant
Dormant
Trading
(2a)
(2b)
(2c)
(2d)
(2e)
(2a)
(1) The shares held in all companies are ordinary shares
(2) The investments in subsidiary companies are held directly by the Company apart from the following:
(a) Owned by Grosvenor Technology Limited
(b) Owned by Vema BV 51%, Newmark Security PLC 47%.
(c) Owned by Vema NV
(d) Owned by Safetell Limited
(e) 100 per cent. Owned by ATM Protection (UK) Limited
(3) The registered offices for Group companies are as follows:
For all the companies incorporated in Great Britain and the Netherlands the registered office is 91 Wimpole Street, London
W1G 0EF apart from Safetell Limited, Safetell International Limited and Safetell Security Screens Limited registered office is
Unit 46, Fawkes Avenue, Dartford, Kent DA1 1JQ.
Grosvenor Technology LLC registered office is 3009 Green Street Florida USA.
69
Newmark Security PLC – Report and Financial Statements 2022
14. Inventories
Raw materials and consumables
Work in progress
Finished goods and goods for resale
Less provision for slow moving and obsolete stock
Opening provision
Stock written off
Provided for in year
Closing provision
The amount of inventories consumed in the year was £8,286,000 (2021: £7,530,000).
15. Trade and other receivables
Trade receivables
Less provision for impairment
Trade receivables (net)
Other receivables
Accrued income
Prepayments
Corporation tax recoverable
2022
£'000
2,345
168
1,755
(285)
3,983
2022
£'000
(293)
73
(65)
(285)
2022
£'000
3,075
(35)
3,040
281
43
285
330
3,979
2021
£'000
1,719
220
1,497
(293)
3,125
2021
£'000
(350)
57
-
(293)
2021
£'000
2,496
(40)
2,456
429
103
631
819
4,438
At 30 April 2022 £2,261,000 (2021: £nil) of trade receivables had been transferred to a provider of invoice discounting services. The
Group is committed to secure any of the debts transferred and therefore continues to recognise the debts sold within trade receivables
until the debtors repay or default. Since the trade receivables continue to be recognised, the business model of the Group is not
affected. The proceeds from transferring the debts are included in other financial liabilities until the debts are collected or the Group
makes good any losses incurred by the service provider.
The Group applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss provision for
trade receivables and contract assets. To measure expected credit losses on a collective basis, trade receivables and contract assets are
grouped based on similar credit risk and aging. The contract assets have similar risk characteristics to the trade receivables for similar
types of contracts.
The expected loss rates for the Physical Security Solutions division are based on the historical credit losses experienced over the three
year period prior to the period end, the risk profile of the customer mix and the assumption that this mix will not change significantly.
Credit insurance also exists for those customers where it is believed that there might be a credit risk.
70
Newmark Security PLC – Report and Financial Statements 2022
The expected loss rates for the People and Data Management division are also based on the historical credit losses experienced over
the three year period prior to the period end, the ageing of debtors, the credit control procedures which are in place and the type of
business customer which is not expected to change significantly. Where necessary for customers with a different risk profile and for
new customers, the customer’s most recent financial and any forward looking information is reviewed on an individual basis.
The historical loss rates are then reviewed for current and forward-looking information on macroeconomic factors affecting the
Group’s customers which are normally not expected to change significantly in the geographic areas in which those customers are
based. Any balances past due which are over credit insurance limits will also be considered for provision.
At 30 April 2022 trade receivables of £497,000 (2021: £174,000) were past due but not impaired. The ageing analysis of these
receivables is as follows:
As at 30 April 2022
Gross carrying amount
Loss provision
Expected Loss ratio
As at 30 April 2021
Gross carrying amount
Loss provision
Expected Loss ratio
Current
30 days past due
60 days past due
120 days past due
£'000
2,578
-
0.0%
2,322
(30)
(1.3%)
£'000
£'000
£'000
287
(6)
(2.1)%
111
(2)
(1.8%)
145
(8)
(5.5%)
9
-
65
(21)
(32.3%)
54
(8)
0.0%
(14.8%)
Total
£'000
3,075
(35)
(1.2%)
2,496
(40)
(1.6%)
Certain contracts require an applications process to be followed whereby the services are carried out, validated with the customer and
then invoiced. These amounts are recorded as accrued income collected in the year, without impairment, prior to validation and
following the service. These total £43,000 (2021: £103,000) and are not included in the above table.
Movements on Group provisions for impairment of trade receivables are as follows:
Opening balance
Increase/(decrease) in provisions
Closing balance
2022
£'000
40
(5)
35
2021
£'000
54
(14)
40
The movement on the provision for impaired receivables has been included in the administrative expense line in the income statement.
16. Trade and other payables
Trade payables
Other tax and social security
Other payables
Deferred income
Accruals
Holiday pay provision
Corporation tax payable
All deferred income brought forward in 2022 and 2021 has been fully recognised in the current year.
71
2022
£'000
1,021
1,118
289
268
366
43
-
3,105
2021
£'000
2,085
473
160
282
727
36
19
3,782
17. Short-term borrowings
Lease creditor (note 24)
Invoice discount accounts
Bank loan
Newmark Security PLC – Report and Financial Statements 2022
2022
£'000
297
2,261
400
2,958
As restated
2021
£'000
361
-
241
602
The UK invoice discount account is secured by a debenture on all assets of Grosvenor Technology Limited, and a corporate guarantee
and indemnity from the parent company and Safetell Limited. The US invoice discount account is secured by a debenture on all assets
of Grosvenor Technology LLC.
In August 2020, the Group secured a £2 million financing facility from its bankers, HSBC, via the Coronavirus Business Interruption Loan
Scheme (“CBILS”). This loan is for a term of 6 years, with the first year being interest, repayment and covenant free under the Business
Interruption Payment scheme. The interest is at a fixed annual interest rate of 4.69%. The covenant requires the Group to deliver a pre-
debt service cashflow of 1.2 times the level of debt service commencing for the year end 30 April 2023. The covenant for the year to 30
April 2022 was waived by HSBC.
Information about fair values on the financial liabilities is given in note 20.
18. Long-term borrowings
Lease creditor (note 24)
Bank loan
Information about fair values on the financial liabilities is given in note 20.
2022
£'000
1,114
1,333
2,447
As restated
2021
£'000
1,307
1,759
3,066
19. Financial instruments
The Group’s overall risk management programme seeks to minimise potential adverse effects on the Group’s financial performance.
The Group’s financial instruments comprise cash, borrowings and liquid resources, and various items such as trade receivables and
payables that arise directly from its operations. The Group is exposed through its operations to one or more financial risks the details of
which are disclosed in the Strategic report on page 23.
72
Newmark Security PLC – Report and Financial Statements 2022
19. Financial instruments (continued)
Financial instruments
Categories of financial assets and liabilities are detailed below:
Current financial assets
Trade and other receivables*
Cash and cash equivalents
Total current financial assets
*includes accrued income and excludes VAT receivable
Current financial liabilities
Trade and other payables
Accruals and holiday pay provision
Loans and borrowings (2021: as restated)
Total current financial liabilities
Non-current financial liabilities
Loans and borrowings (2021: as restated)
Total non-current financial liabilities
Total financial liabilities
Financial instrument risk exposure management
Amortised cost
2022
£'000
3,064
157
3,221
2021
£'000
2,665
484
3,149
Financial liabilities
measured at amortised cost
2021
£'000
2022
£'000
1,310
409
2,958
4,677
2,447
2,447
7,124
2,245
763
602
3,610
3,066
3,066
6,676
The Group is exposed to risks that arise from its use of financial instruments. This note describes the Group’s objectives, policies and
processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks
is presented throughout these financial statements.
There have been no substantive changes in the Group’s exposure to financial instrument risks, apart from as mentioned within the
expected credit loss review in note 15, its objectives, policies and processes for managing those risks or the methods used to measure
them from previous periods unless otherwise stated in this note.
Principal financial instruments
The principal financial instruments used by the Group, from which financial instrument risk arises are:
• Trade receivables, other receivables excluding VAT and accrued income
• Cash and cash equivalents including overdrafts
• Trade and other payables including holiday pay and accruals
• Invoice discounting
• Lease liabilities.
General objectives, policies and processes
The Board has overall responsibility for the determination of the Group’s risk management objectives and policies. The overall objective
of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group’s competitiveness and
flexibility. Further details regarding these policies are set out below.
73
Newmark Security PLC – Report and Financial Statements 2022
19. Financial instruments (continued)
Liquidity risk
Liquidity risk arises from the Group’s management of working capital and the finance charges and principal repayments on its debt
instruments. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due.
The Group’s policy is to ensure that the Group has sufficient funds to meet its liabilities when they become due. The Group has one
major central bank facility under which any overdrafts can be offset against cash balances held by other UK subsidiaries. Both
Grosvenor Technology Limited and Safetell Limited have invoice discounting facilities. The Group Finance Director receives daily reports
of all bank and invoice discount accounts, and the balance of the available invoice discount facility.
Overdraft and banking facilities are renewed annually.
Budgets are prepared by each subsidiary and approved by the Group Board so that the cash requirements of the Group facility are
anticipated and revised forecasts will be produced for any major variances from budget.
The maturity analysis of the undiscounted financial liabilities measured at amortised cost is as follows:
up to 3 months
3 to 6 months
6 to 12 months
Later than 1 year and not later than 5 years
Credit Risk
2022
£'000
1,915
196
279
2,857
5,247
As restated
2021
£'000
3,111
178
429
3,403
7,121
Credit risk is the risk of financial loss to the Group if a customer fails to meet its obligations, and the Group is mainly exposed to credit
risk from credit sales.
In line with Group policy potential new customers are subject to a financial review, including where possible, external credit ratings,
before goods or services are supplied. This is used to set credit terms and purchase limits (representing the maximum open amount
they can order without requiring approval) for each customer. A monthly review of the trade receivables’ ageing analysis is undertaken
and customers’ credit is reviewed continuously. Customers that become “high risk” are placed on a restricted customer list, and future
credit sales are made only with the approval of the local management otherwise pro forma invoices are raised requiring payment in
advance. Credit insurance is obtained by the Group when considered appropriate. A review of the existing credit loss exposure can be
found in note 14.
Foreign currency risk
The Group’s main foreign currency risk is the short-term risk associated with financial assets denominated in US dollars and Euros
relating to the UK operations whose functional currency is sterling. The risk arises on the difference between exchange rates at the
time the invoice is raised to when the invoice is settled by the customer. The Group is exposed to currency risk on financial liabilities
which are denominated in currencies other than sterling and this risk is measured against costs of purchasing in foreign currencies. The
Group is also exposed to currency risk on the translation of profits generated in the US.
The group’s foreign exchange strategy effectively hedges 75% of excess USD and reduces the level of volatility compared to using spot
rates. The contracts manage our currency mismatch between an increasing USD position generated from revenues and the existing
cost base in both GBP and euros. The adopted process involved currency forecasting three quarters ahead and taking out tranches of
forward contracts for 25% of each of the forecasted quarters relating to our excess USD position. Given the volatility in foreign
currency rates experienced in early 2022, the Group paused with taking out new hedges. Therefore at 30 April 2022 there was only
one contract in place for $250,000 which would translate to £186,860 in the first half of the next financial year. Subsequent to the year
end, the hedging policy was recommenced and as at 30 June 2022 contracts were in place for $2,950,000 to convert into a mixture of
GBP and euros over the following 12 months.
74
Newmark Security PLC – Report and Financial Statements 2022
19. Financial instruments (continued)
Functional currency of individual entity
As of 30 April the net exposure to foreign exchange risk in currencies other than the functional currency of that operating company was
as follows:
Net foreign currency financial assets/(liabilities)
Pound sterling
US Dollar
Euro
2022
£'000
453
453
2021
£'000
1,234
1,234
2022
£'000
(167)
(167)
2021
£'000
(412)
(412)
The effect of a 10% strengthening of the Euro and Dollar against Sterling at the statement of financial position date on the Euro/Dollar
denominated trade and other receivables and payables carried at that date would, all other variables held constant, have resulted in a
net decrease in pre-tax profit for the year and decrease of net assets of £32,000 (2021: £91,000). A 10% weakening in the exchange
rates would, on the same basis, have increased pre-tax profit and increased net assets by £26,000 (2021: £75,000).
Capital
The Group considers its capital to comprise its ordinary share capital, share premium account, foreign exchange reserve and
accumulated retained earnings.
In managing its capital, the Group’s primary objective is to ensure its continued ability to provide a consistent return for its equity
shareholders through capital growth and distributions. The Group seeks to maintain a gearing ratio that balances risks and returns at an
acceptable level and also to maintain a sufficient funding base to enable the Group to meet its working capital and strategic investment
needs. In making decisions to adjust its capital structure to achieve these aims, the Group considers not only its short-term position but
also its long-term operational and strategic objectives.
Loan covenants are disclosed in note 17.
The cash-to-adjusted-capital ratios were as follows:
Loans and borrowings
Less cash and cash equivalents
Net borrowings
Total equity
Net borrowings to adjusted capital ratio
20. Financial assets and liabilities
2022
£'000
5,405
(157)
5,248
7,571
69.3%
As restated
2021
£'000
3,668
(484)
3,184
8,225
38.7%
Fixed rate liabilities at 30 April 2022 comprise of the £1,733,000 bank loan being repaid on monthly instalments ending August 2026
and £1,410,000 of lease liabilities with a remaining life of between 1 to 10 years.
The weighted average interest rate of fixed rate liabilities at 30 April 2022 is 3.94% (2021: 3.95%).
75
Newmark Security PLC – Report and Financial Statements 2022
Fair values
The book value and fair values of fixed rate financial liabilities are as follows:
Bank Loan
Lease liabilities (2021 as restated)
Book value
2022
£'000
1,733
1,411
3,144
Fair value
2022
£'000
1,943
1,584
3,527
Book value
2021
£'000
Fair value
2021
£'000
2,000
1,668
3,668
2,242
1,870
4,112
Fair values of financial liabilities have been determined by discounting cash payments at prevailing market rates of interest having
regard to the specific risks attaching to them.
The fair values of all other financial assets and liabilities at 30 April 2022 and 2021 are equal to their book value.
21. Provisions
As at 1 May 2021 and 30 April 2022
Leasehold
dilapidations
£'000
100
Leasehold dilapidations relate to the estimated cost of returning a leasehold property to its original state at the end of the lease in
accordance with the lease terms. On recognition of the initial provision, an equal amount was recognised as part of the cost of the
leasehold improvements. This cost is recognised as depreciation of leasehold improvements over the remaining term of the lease.
The main uncertainty relates to estimating the cost that will be incurred at the end of the lease.
22. Share capital
Allotted, called up and fully paid
Ordinary share of 5p each
Ordinary shares of 1p each
Deferred shares of 0.9p each
2022
2021
Number
£’000
Number
£’000
9,374,647
-
468,732,350
469
-
4,219
4,687
-
468,732,316
-
-
4,687
-
4,687
At the Annual General Meeting held on 10 November 2022, the Company sought shareholder approval for a sub-division and
consolidation of the Company’s share capital (“Capital Reorganisation”). The shareholders passed the resolution, and as of 11
November 2022, the new ordinary shares were admitted to trading on AIM. As a result of the Capital Reorganisation, each existing
ordinary share was subdivided into one new ordinary share of 0.1 pence and one new deferred share of 0.9 pence. Immediately
following the sub-division, shareholders received one consolidated ordinary share of 5 pence for every 50 ordinary shares of 0.1 pence.
Prior to the Capital Reorganisation, the Company’s ordinary share capital consisted of 468,732,350 ordinary shares of 1 pence, and
subsequent to the Capital Reorganisation, the Company’s ordinary share capital consists of 9,374,647 ordinary shares of 5 pence with
voting rights listed on AIM and 468,732,350 deferred shares of 0.9 pence with no voting rights.
The new ordinary shares have the same rights and benefits as the ordinary shares which existed before the consolidation, including
voting, dividend and other rights.
76
Newmark Security PLC – Report and Financial Statements 2022
The new deferred shares do not have any commercial value, are not tradable, and do not have any entitlement to voting or dividend
rights. Shareholder certificates were not issued for the new deferred shares.
23. Reserves
The share premium account represents the excess of the subscription price of shares issued over the nominal value of those shares,
less expenses of issue.
The merger reserve arose in the year ended 30 April 2003 when the Company made an offer to the Global Depository Receipt (“GDR”)
holders of Vema N.V. for the 49 per cent. of the issued share capital of that company not already owned by the Group. The offer
represented 1.5 Newmark shares for each GDR and the merger reserve represented the excess of market value over nominal value of
the shares issued. Retained earnings represents the cumulative amount of retained profits/losses each year as reported in the income
statement. Foreign exchange reserve represents the cumulative exchange differences on the retranslation of foreign operations.
24. Leases
The group’s liabilities relating to leased assets are as follows:
Lease Liability at 30 April 2021 (as restated)
Additions
Interest payments
Interest expense
Lease payments
Lease Liability at 30 April 2022
Lease Liability at 30 April 2020
Prior year adjustment (see note 2)
Lease Liability at 30 April 2020 (as restated)
Additions
Interest payments
Interest expense (as restated)
Lease surrendered (non cash)
Lease modification (non cash)
Lease payments
Lease Liability at 30 April 2021 (as restated)
2022
£’000
(1,668)
(119)
48
(48)
376
(1,411)
2021
£’000
(1,100)
(969)
(2,069)
(248)
37
(62)
64
123
487
(1,668)
The group mainly enters into leases for properties, vehicles and office equipment such as photocopiers. In the assessment of the
right of use asset valuation management consider available extension and termination options and apply the most likely contract
end date that will be utilised.
77
Newmark Security PLC – Report and Financial Statements 2022
24. Leases (continued)
The lease liability repayment profile is shown below:
Lease payments
Finance charges
Net present values at 30 April 2022
Lease payments
Finance charges
Net present values at 30 April 2021
(as restated)
Total
£'000
1,589
(178)
1,411
Total
£'000
1,730
(62)
1,668
Within
1 yr
£'000
336
(39)
297
Within
1 yr
£'000
379
(18)
361
1-2
years
£'000
219
(35)
184
1-2
years
£'000
336
(15)
321
2-3
years
£'000
150
(25)
125
2-3
years
£'000
219
(8)
211
3-4
years
£'000
133
(20)
113
3-4
years
£'000
150
(5)
145
4-5
years
£'000
751
(59)
692
4-5
years
£'000
646
(16)
630
The nature of the right of use assets contracts are described below:
No of right of use
assets leased
Range of remaining
term (years)
No of leases with
option to purchase
No of leases with
termination option
Office building
Vehicles
Other Equipment
4
22
2
1-10
0-4
0-2
-
11
1
2
-
-
See note 10 for further disclosures of the Group’s Right of Use Assets. There are no leases with extension options or leases with
variable payment terms linked to an index. There are no significant short term or variable lease expense payments however the
Newmark Security PLC main office is a short term rental agreement with the rentals being reflected through administration expenses of
£45,000 (2021: £56,000).
25. Share-based payments
In April 2007, the Group adopted the Newmark Security PLC EMI Share Option Plan which enabled the Board to grant qualifying share
options under the HM Revenue and Custom’s Enterprise Management Incentive (“EMI”) tax code and also unapproved share options
to employees and directors. A new EMI Share Option Plan was set up in September 2019.
The EMI share options vest and become exercisable 3 years from the date of grant (subject to leaver and takeover provisions), or such
other period of time specified by the Remuneration Committee.
78
Newmark Security PLC – Report and Financial Statements 2022
Date of Grant
August 2013
August 2014
September 2015
May 2016
October 2019
October 2019
October 2019
2022
Subscription price
payable (pence)
2022
No. of options
2021
Subscription price
payable (pence)
2021
No. of options
90
90
90
146
90
50
85
247,272
38,191
22,857
40,000
146,250
118,791
0
1.800
1.800
1.800
2.920
1.800
1.000
1.700
12,363,636
1,909,589
1,142,857
2,000,000
7,312,500
5,939,692
5,900,000
Weighted average share prices
86
613,361
1.72
36,568,274
• Share options modified in October 2019 by cancelling and issuing new options retaining the same traits as the cancelled share options
with an updated subscription price at a weighted average impact of 0.22p
• All issued share options were adjusted on 10 November 2022 following the 50:1 share re-organisation in line with share plan rules.
This resulted in the number of options reduced by 50 times and the exercise price increased by 50 times
• No new share options were issued during the year to 30 April 2022
The remaining weighted average contractual lives for both Approved and Unapproved Options under this scheme were 3.6 years
(2021: 5.3 years). The total number of exercisable share options outstanding at 30 April 2022 was 445,820 (2021: 19,853,582). The
share based remuneration expense for equity settled schemes was £7,000 (2021: £13,000).
26. Related party transactions
Details of Directors’ remuneration are given in the Directors’ Remuneration report on pages 38 to 39.
27. Subsequent events
Robert Waddington, a non-executive director of the Company, decided on 6 July 2022 to step down from the Board of Directors and
left the business on 8 September 2022.
79
Newmark Security PLC – Report and Financial Statements 2022
Company statement of financial position
At 30 April 2022 Financial Statements
Company number: 3339998
Note
2022
£’000
Fixed assets
Investment in subsidiaries
Tangible assets
Intangible assets
Deferred tax asset
Current assets
Debtors
Creditors: amounts falling due within one year
Net current liabilities
Total assets less current liabilities
Amounts falling due after one year
Long term borrowings
Net assets
Capital and reserves
Called up share capital
Share premium account
Merger reserve
Profit and loss account
Shareholder’s funds
4,707
(13,773)
3
4
4
5
6
7
8
8
8
2022
£’000
14,236
17
3
-
14,256
(9,066)
5,190
(1,338)
3,852
4,687
553
801
(2,189)
3,852
2021
£’000
4,133
(12,767)
2021
£’000
16,361
21
6
35
16,423
(8,634)
7,789
(1,772)
6,017
4,687
553
801
(24)
6,017
The Company’s loss for the current year was £2,172,000 (2021: loss £278,000).
The notes on pages 82 to 85 form part of these financial statements.
These financial statements were approved by the Board of Directors and authorised for issue on 20 January 2023.
P Campbell-White
Director
80
Newmark Security PLC – Report and Financial Statements 2022
Company statement of changes in equity
01 May 2021
Comprehensive Income/(loss) for the year
Income and total comprehensive income/(loss) for the year
Transaction with owners
Share based payments
30 April 2022
01 May 2020
Comprehensive Income/(loss) for the year
Income and total comprehensive income/(loss) for the year
Transaction with owners
Share based payments
Share
capital
Share
premium
Merger
reserve
Retained
earnings
Total
equity
4,687
553
801
(24)
6,017
-
-
4,687
4,687
-
-
-
-
553
553
-
-
-
-
-
-
(2,172)
(2,172)
801
(2,189)
7
7
3,852
801
241
6,282
(278)
(278)
13
(24)
13
5,921
30 April 2021
4,687
553
801
The notes on pages 82 to 85 form part of these financial statements.
81
1. Accounting policies
Basis of preparation
The financial statements have been
prepared in accordance with Financial
Reporting Standard 100 Application of
Financial Reporting Requirements
(“FRS 100”) and Financial Reporting
Standard 101 Reduced Disclosure
Framework) (“FRS 101”). All policies
are the same for the Group and
company except as noted.
Disclosure exemptions adopted
In preparing these financial
statements the company has taken
advantage of all disclosure exemptions
conferred by FRS 101. Therefore,
these financial statements do not
include:
• Certain comparative information as
otherwise required by the UK
endorsed IFRS;
• Certain disclosures regarding the
company’s capital;
• A statement of cash flows;
• The effect of future accounting
standards not yet adopted;
• Disclosure of related party
transactions with other wholly owned
members of the Group headed by
Newmark Security PLC;
• The disclosure of the remuneration
of key management personnel; and
• Separate disclosure of lease maturity
analysis.
In addition, and in accordance with
FRS 101 further disclosure exemptions
have been adopted because
equivalent disclosures are included in
the company’s consolidated financial
statements. These financial
statements do not include certain
disclosures in respect of:
• Share based payments; and
• Financial instruments.
Newmark Security PLC – Report and Financial Statements 2022
Profit and Loss Account
Under Section 408 of the Companies
Act 2006 the Company is exempt from
the requirement to present its own
profit and loss account. The loss for
the year ended 30 April 2022 is
£2,172,000. (2021: loss of £278,000).
Tangible and Intangible assets
Items of property, plant and
equipment and intangible website
costs are recognized at cost.
Depreciation is provided to write off
the cost, less estimated residual
values, of all fixed assets evenly over
their expected useful lives. It is
calculated at the following rates:
Computer equipment
– 33% per annum straight line
Fixtures and fittings
– 10% per annum straight line
Motor vehicles
– over the term of the lease, usually 3
years on a straight line basis.
Website costs are amortised
– 33% per annum straight line
Dividends
Dividends are recognized when they
become legally payable. In the case of
interim dividends to equity
shareholders, this is when paid. In the
case of final dividends, this is when
approved by the shareholders at the
Annual General Meeting (“AGM”).
Investments
Investments in subsidiary undertakings
are stated at cost less provision for
impairment, if any. The carrying values
are reviewed for impairment when
events or changes in circumstances
indicate that the carrying value may
not be recoverable.
Intercompany balances
Balances between Group companies
which reflect trading and funding
activity are short term. Balances
between group companies are interest
free and due on demand. Impairment
provisions for intercompany balances
are recognized based on a forward
looking expected credit loss model.
The methodology used to determine
the amount of the provision is based
on whether there has been a
significant increase in credit risk since
initial recognition of the financial
asset. For those where the credit risk
has not increased significantly since
initial recognition of the financial
asset, twelve month expected credit
losses along with gross interest
income are recognized. For those for
which credit risk has increased
significantly, lifetime expected credit
losses along with the gross interest
income are recognized. For those that
are determined to be credit impaired,
lifetime expected credit losses along
with interest income on a net basis are
recognized.
Critical accounting estimates and
judgements
The estimates and assumptions that
have a significant risk of causing a
material adjustment to the carrying
amounts of assets and liabilities within
the next financial year are discussed
below.
(a) Estimated impairment of
investment in subsidiaries
Where indicators of an impairment
exist the carrying value is compared to
the recoverable amount to identify the
extent of the impairment.
The recoverable amounts are
determined based on value-in-use
calculations. These calculations
require the use of estimates as
detailed in note 3 of the company
accounts.
82
Newmark Security PLC – Report and Financial Statements 2022
2. Staff costs
Staff costs (including the Executive Directors) comprise:
Wages and salaries
Defined contribution pension costs
Employer’s national insurance contributions and similar taxes
The average numbers employed (including the Executive Directors) were:
Office and management
3. Investments in subsidiaries
Cost
At 30 April 2022 and 30 April 2021
Impairment provision
At 30 April 2021
Impairment
At 30 April 2022
Net book value
At 30 April 2022 and 30 April 2021
2022
£’000
675
34
100
809
2022
No.
4
4
2021
£’000
656
32
68
756
2021
No.
4
4
£’000
21,869
5,508
2,125
7,633
14,236
The subsidiaries of Newmark Security PLC are listed in note 13 of the Group financial statements.
Impairment reviews were completed for operating cash generating units of People and Data Management division and the Physical
Security Solutions division. The recoverable amounts have been determined from value in use calculations based on cash flow
projections from formally approved projections covering a three-year period to 30 April 2025 (2021: four-year period). The discount
rate that was applied was 12.5% for the People and Data Management division (2021: 17%) and 12.5% for the Physical Security
Solutions division (2021: 15%), representing the pre-tax discount rate that reflects the current market assessment of the time value of
money and risk specific to the asset.
The compound revenue growth rate for the People and Data Management division increased to 21% (2021: 16%). The growth rate
reflects the impact of customer expansion supported by existing products and products being delivered in the short term. The gross
margin assumed in the forecasts is 32% to 38% (2021: 38% to 42%).
For the People and Data Management division the growth rate reflects the impact of customer expansion supported by existing
products and products being delivered in the short term. The impairment review applied sensitivities reducing the long-term growth
rate to 1% which indicated no impairment. If the discount rate is increased to 20%, there is no impairment. In order for the carrying
value to equate to the value in use the discount rate would need to increase to 70%.
For the Physical Security Solutions division, the compound annual revenue growth rate for the year ended April 2022 to the year ended
April 2025 is growing at a 15% rate (2021: 6%). The gross margin assumed in the forecasts is 43% (2021: 40% to 41%). The impairment
review applied sensitivities reducing the long-term growth rate to 1% which indicated no impairment. If the discount rate is increased
to 20%, there is no impairment. In order for the carrying value to equate to the value in use the discount rate would need to increase
to 29%.
The £2,125,000 impairment during the year is due to a re-assessment of the carrying value of an investment in a dormant entity,
Custom Micro Products Limited. The full carrying value has now been provided for as at 30 April 2022.
83
Newmark Security PLC – Report and Financial Statements 2022
4. Tangible and intangible assets
Right of use
Motor vehicles
£'000
Computers
Fixtures and
Fittings
£'000
Total Tangible
assets
£'000
Intangible
Website costs
£'000
Cost
Balance at 1 May 2021
Additions
Balance at 30 April 2022
Depreciation
Balance at 1 May 2021
Depreciation
Balance at 30 April 2022
Net book value 30 April 2022
Cost
Balance at 1 May 2020
Balance at 30 April 2021
Depreciation
Balance at 1 May 2020
Depreciation
Balance at 30 April 2021
Net book value 30 April 2021
5. Debtors
`
34
-
34
(13)
(8)
(21)
13
34
34
(4)
(9)
(13)
21
11
7
18
(11)
(3)
(14)
4
11
11
(7)
(4)
(11)
-
Amount due from Group undertakings
Prepayments
All amounts shown under debtors fall due for payment within one year.
45
7
52
(24)
(11)
(35)
17
45
45
(11)
(13)
(24)
21
2022
£'000
4,695
12
4,707
9
-
9
(3)
(3)
(6)
3
9
9
-
(3)
(3)
6
2021
£'000
4,125
8
4,133
84
Newmark Security PLC – Report and Financial Statements 2022
6. Creditors: amounts falling due within one year
Bank overdraft*
Bank loan
Trade payables
Amount due to group undertakings
Other taxation and social security
Lease creditor
Accruals
2022
£'000
939
400
27
11,815
408
8
176
13,773
2021
£'000
141
241
47
11,815
262
8
253
12,767
*The overdraft relates to a Group composite overdraft facility, which is in a net cash positive position at the year end and there is a
legal right and intention to settle this net.
In August 2020, the Group secured a £2 million financing facility from its bankers, HSBC, via the Coronavirus Business Interruption Loan
Scheme (“CBILS”). This loan is for a term of 6 years, with the first year being interest, repayment and covenant free under the Business
Interruption Payment scheme. The covenant requires the Group to deliver a pre-debt service cashflow of 1.2 times the level of debt
service commencing for the year end 30 April 2023.
7. Long-term borrowings
Lease creditor
Bank loan
2022
£'000
5
1,333
1,338
2021
£'000
14
1,758
1,772
The lease arises on a motor vehicle which is denominated sterling and is for a period of 36 months.
8. Capital and Reserves
Details of the Company’s called-up share capital are disclosed in note 22 of the Group financial statements.
A description of reserves is disclosed in note 23 of the Group financial statements.
85
Newmark Security PLC – Report and Financial Statements 2022
86
Newmark Security PLC – Report and Financial Statements 2022
DIRECTORS, SECRETARY AND ADVISORS
Country of incorporation of
parent company:
England and Wales
Legal form:
Public company limited by shares
Directors:
M Dwek
M-C Dwek
P Campbell-White
M Rapoport
T Yap
Registered office:
91 Wimpole Street, London W1G 0EF
Company number:
3339998
Auditors:
BDO LLP, 31 Chertsey Street, Guildford, Surrey GU1 4HD
Nominated Adviser and Brokers:
Allenby Capital Limited, 5 St. Helens Place, London EC3A 6AB
Registrars:
Link Asset Services, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU
Solicitors:
Bracher Rawlins LLP, 77 Kingsway, London WC2B 6SR
87