NEWMARK SECURITY PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS
YEAR ENDED 30 APRIL 2023
Company number: 3339998
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: 03339998
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
..............................................................................................................
.
37
Independent Auditor’s Report ................................................................................................................... 39
Financial Report
Financial Statements .................................................................................................................................. 45
Shareholder Information
Shareholder Information ............................................................................................................................ 86
Newmark Security PLC – Report and Financial Statements 2023
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
Newmark Security PLC – Report and Financial Statements 2023
AT A GLANCE
Year ended 30 April 2023
Revenue
£20.3m
+6% (2022: £19.1m)
People & Data Management
Division
£15.6m
+7% (2022: £14.6m)
Physical Security Solutions
Division
£4.7m
+3% (2022: £4.6m)
Revenue split by division and line of business
HCM
Access Control
Safetell Products
Safetell Service
8%
16%
16%
2022
£19.1m
60%
9%
14%
15%
2023
£20.3m
62%
Employees
99
-4% (2022: 103)
Locations
5
(2022: 5)
2
Newmark Security PLC – Report and Financial Statements 2023
HIGHLIGHTS
Year ended 30 April 2023
Revenue
Gross profit margin
EBITDA
£20.3m
+6.1% (2022: £19.1m)
Operating profit/(loss)
before exceptional items
£0.3m
(2022: Loss £1.1m)
Cash generated from operations
before exceptional items
£1.7m
(2022: -£1.4m)
People & Data Management
Division Revenue
£15.6m
+7% (2022: £14.6m)
Annual Recurring Revenue
from HCM SaaS and ClaaS
£2.1m
+133% (2022: £0.9m)
Physical Security Solutions
Division Revenue
£4.7m
+3% (2022: £4.6m)
37.6%
+4.1% pts (2022: 33.5%)
Profit/(loss) after tax
£0.4m
(2022: Loss £0.8m)
£1.5m
+4,900% (2022: £0.03m)
Earnings/loss) per share
3.8p
(2022: Loss 0.3 pence)
Investment in development
Net assets
£0.5m
(2022: £0.8m)
HCM
Revenue
£12.6m
+10% (2022: £11.4m)
Access Control – Janus C4 Revenue
£1.7m
+108% (2022: £0.8m)
Products
Revenue
£2.8m
-9% (2022: £3.1m)
£7.9m
(2022: £7.6m)
Access Control Revenue
Revenue
£3.0m
-3% (2022: £3.1m)
Service
Revenue
£1.9m
+31% (2022: £1.5m)
3
Newmark Security PLC – Report and Financial Statements 2023
STRATEGIC REPORT
4
Newmark Security PLC – Report and Financial Statements 2023
CHAIRMAN’S STATEMENT
existing relationships through
services that set us apart in how
we are able to comprehensively
meet their needs. Our ability to
provide technical solutions that
include both hardware, software
and services without requiring us
to physically attend a site is a huge
advantage and will continue to be
an important factor as we scale.
With high confidence in our
solutions and a client-focused
strategy, we are driving our
business forward with disciplined
execution. We will remain agile
and continue to prioritise our
investments to create sustainable
growth, converting the many
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 a very impressive
year, demonstrating the market-fit
of our solutions and the relevance
of our recurring business model.
Strengthened by the increasing
traction we are achieving in
software-based services, we have
once again positioned ourselves
ideally for another tremendous
opportunity to convert this effort
into incremental revenue growth
across North America, the UK,
Europe and the 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 an
experienced 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 28 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 remain in a
stable position as the slow but
steady global post-pandemic
recovery continues, although cash
remains a key focus. Once again,
we have taken steps to mitigate
the supply chain challenges we
face by retaining some additional
inventory and further innovating to
help mitigate the global shortage
of components we need to build
our products.
During the year the Group
increased its UK invoice financing
facility by £0.5 million to £2.3
million. This, together with an
overdraft facility of £0.2 million has
helped finance the Group’s
working capital needs in the year
to 30 April 2023 (FY23). In July
2023 the overdraft facility was
increased to £0.4 million to provide
additional working capital
headroom as the Group delivers its
strategic growth plan.
The Group’s next covenant to be
tested for the £2 million HSBC
CBILs facility will be for the year
ended 30 April 2024 (FY24) 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
Overview
As we see a slow but steady
recovery in the macro
environment, I am absolutely
delighted to report another year of
strong performance, made possible
by the resolute commitment and
focus of our talented Newmark
teams, as they continue to execute
our 2025 Growth Strategy. As a
result, during the year we made
substantial progress in our mission
to grow recurring revenues and
services, enabled by key
technology investments, achieving
an overall increase in revenues and
returning the business to full-year
profitability. This careful balancing
act is not to be under-estimated
and is a testament to the
leadership team’s skill and efforts
across the business.
Most notably, our focus on
software has been a key
evolutionary step in our strategy,
enabling the business to target a
large and growing market in people
and data security, and is the result
of several years of product and
service innovation that now gives
us a valuable strategic advantage in
our journey ahead.
Once again, our proactive
approach has demonstrated our
ability to manage the business for
the long-term, building credibility
with new clients and strengthening
5
Newmark Security PLC – Report and Financial Statements 2023
growing its services to achieve
national scale efficiencies as well as
optimising its product portfolio and
improving its competitive position
with broader manufacturing and
supply chain options. Already
underway, these initiatives will see
it continue to advance its share of
the Entrance Control and
Automatic Door servicing market
by pressing its advantage, offering
complete security solutions with
services that bring rapid response
to customers’ needs, as well as
targeting new market
opportunities with an enhanced
sales and marketing team.
I remain entirely convinced of the
strategy and outlook for growth.
We have worked hard to put
ourselves in a strong position in
each of our respective markets and
this is beginning to show rewards
that will be in further evidence in
the year ahead.
On behalf of the Board, I would like
to extend my thanks for all the
hard work and dedication shown
by our teams in what has been a
highly productive year, overcoming
key challenges with enormous
resolve and driving forward with
great confidence in addressing an
exciting market opportunity that is
expanding quickly. I look forward
to a successful year ahead.
Maurice Dwek
Chairman
25 September 2023
covenant test by 48% and will be
tested again when a revised
forecast is completed in October.
The Group is currently trading
ahead of this forecast and
continues to generate operating
cashflows in FY24.
We are optimistic that our growth
will continue in the next 12
months, supported by the
investments we have made in
FY23. A full analysis of the Group’s
going concern assessment is
included in the Directors’ Report
on page 34. 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 2023 (2022:
£Nil).
Outlook
The Group has again demonstrated
great resilience in the face of
continued uncertainty affecting the
macro-economic environment in
the UK and internationally. I am
absolutely delighted with the
progress we have made this year.
Despite continued inflationary
pressures, we look forward with
great optimism, particularly for the
accelerating growth of our human
capital management (HCM)
business through new and growing
partnerships in North America,
Europe and the Rest of the World.
We are already benefitting from
the execution of our 2025 Growth
Strategy and will continue to build
a greater proportion of recurring
revenues in the year ahead.
Our Physical Security Solutions
division, Safetell, is also now well-
positioned to make a greater
contribution to this strategy, by
6
Newmark Security PLC – Report and Financial Statements 2023
BUSINESS MODEL
● GT CONNECT SECURE CLOUD CONTROL
People & data services
ISO27001 Certified with triple redundancy data backup
● Analy=cs
● Biometrics
● PII Cloud Vault
● GT8
Timeclock
● GT10
Timeclock
● Door, OSDP & I/O Blades ● Single & Mul=-Blade Controllers
SECURE CLOUD
CONTROL
SOFTWARE-AS-A-SERVICE
COMPATIBLE IOT DEVICES ●
REAL-TIME STATUS ●
DEVICE DIAGNOSTICS ●
BI DASHBOARDS ●
SECURE DATA PROCESSING ●
PII CLOUD VAULT ●
AUDIT TRAIL ●
TIMECLOCK
CONTROL
CLOCK-AS-A-SERVICE
GT CONNECT ●
GT8 / GT10 TIMECLOCK ●
TECHNICAL SUPPORT ●
DEVICE MANAGEMENT ●
DATA SERVICES ●
ACCESS
CONTROL
SOLUTIONS
JANUS C4 ●
ACCESS CONTROL DEVICES ●
TECHNICAL SUPPORT ●
DEVICE MANAGEMENT ●
DATA SERVICES ●
SERVICES
CREATING TRUSTED
ECOSYSTEMS IN THE
WORKPLACE WITH
SECURE CLOUD
CONTROL
◼ Remote Device Management
Manage and configure your networked devices centrally. Keep them up-to-
date and secure with a single click. Includes remote setup assistance and
expert support.
◼ Technical Support
GT Connect is supported by our dedicated Technical Support team. Expert
troubleshoo@ng of technical problems with guaranteed SLA response @mes to
resolve issues quickly.
◼ Remote Device Diagnos1cs
Access to our cloud diagnos@c plaKorm. Your team can provide ul@mate
support and service to customers with advanced tools, elimina@ng engineer
visits and reducing down@me.
◼
◼
◼
© 2022 Newmark Security Plc. Strictly Confidential.
7
Newmark Security PLC – Report and Financial Statements 2023
GT CONNECT
SAAS
SECURE CLOUD
CONTROL
GT CONNECT
CLAAS
CLOCK
AS-A-SERVICE
JANUS C4
ACS
ACCESS
CONTROL
SOLUTIONS
Device
Integration
Design
OEM
Access
Control
Module
GT Connect
HCM Apps
AC Apps
GT CONNECT
TIMECLOCK CONTROL
ACCESS CONTROL
IDENTITY CONTROL
Timeclock
Control
Module
PII
Cloud Vault
Biometrics
Analytics
Iden;ty
Control
Module
◼ Iden1ty Management
Biometric and personal data can be managed, distributed and backed-up
securely and automa@cally across networked devices to assist in compliance
with data protec@on laws.
◼ Data Management
Simplify integra@ons from your devices to your enterprise soJware with ease
using our cloud-to-cloud plaKorm. Data is transferred via a single encrypted
connec@on keeping your opera@onal costs low.
◼ System Management
Seamless backup and recovery services ensure your data is always secure,
always available and automa@cally backed up in the cloud, providing
unrivalled protec@on against data loss.
Secure cloud control of
all compa@ble devices
and the data they collect
Lifetime hardware
warranty that protects
your devices with the
option to let us manage
them for you
1
8
Newmark Security PLC – Report and Financial Statements 2023
PHYSICAL SECURITY SOLUTIONS
PRODUCT PORTFOLIO
Building Security
Entrance Control
Manual attack and ballistic resistant cash
counters, windows and moving security screens
Bullet resistant doors and partitions
Security portals
Certified secure portals and revolving doors
Integrated speed gates to control the flow of
staff and visitors to buildings
Automatic doors and remote locking solutions
Asset Protection
Other Products
Customised cash and asset storage and
protection
Cash and speech transfer units
Storage functions to reduce risk of harm or
damage to a secure environment
Counter-terror and target hardening solutions
A range of ‘touchless’ security solutions
Other standard and bespoke physical products
and services
Complete security solutions
Safetell 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.
© 2022 Newmark Security Plc. Strictly Confidential.
9
CHIEF EXECUTIVE OFFICER’S REVIEW
Newmark Security PLC – Report and Financial Statements 2023
foundation and with much further
growth to come.
Broadening our product portfolio
once again this year, our expert
teams have deployed innovative
configuration and design
techniques to adapt existing
products and increase the range of
our offering, creating a new low-
cost clock solution that will
challenge a hitherto under-served
segment of the market with greatly
enhanced cloud services.
Our sales and commercial teams
have also been hard at work,
progressing a very exciting pipeline
of new HCM partners. With several
in advanced discussions, we have
been busy lining up a strong and
diverse spread of revenue streams
to replace the anticipated loss of
UKG in the second half of FY23
who, following the 2020 merger
with clock competitor, Kronos,
were always clear on their
intention to pursue an
independent market strategy. The
fact that they have used our
services and products this far is
testament to the quality of services
provided by our team.
As a mark of the progress we have
made with our strategy and
strongly anticipated growth, we
relocated Grosvenor's US
headquarters to a much larger
facility in Florida, and brought
third-party logistics in-house. With
triple the floor space and a greatly
improved location, this gives us
excellent headroom for growth in
both staff and inventory capacity,
as momentum continues to build.
Although the macro environment
continues to be challenging, with
weaker exchange rates causing
some downside in foreign
exchange and rising costs due to
inflation, these have been partially
offset by necessary and inevitable
price increases.
Our supply chain continues to
show resilience to global impacts,
such as the war in Ukraine, but this
has placed greater pressure on
retaining our stock of components
across a wider range of devices as
our product range continues to
grow and develop. By significantly
enhancing our focus on inventory
and supply chain management
over the last three years, we have
been able to create a strong
competitive position, and this is
one from which we can fully
support our customers and meet
all the commitments we have
undertaken.
I was especially delighted that
Safetell returned to growth once
more. As the first step in its
transformation, it achieved a
modest increase in FY23 with
further growth to come as projects
and contracts delayed by Covid
began to recover. However, these
projects have been operating
significantly behind schedule,
causing some delays in sales of
security products that tend to be
fitted at the tail end of
infrastructure and building
projects. These delays were offset
by the rise in demand for security
screens and the significant increase
in income from services. During the
year, Safetell developed a
redesigned, cost-effective retail
attack-resistant screen for
convenience stores, and this has
been subject to strong demand,
having rolled out over £1 million of
installations for major UK retailers
and built a pipeline of over £2
million for installations for FY24.
Our strategic aim, to gather more
service contracts, is also
10
Overview
This was another year of solid
execution and progress against our
strategic plan, with key
improvements across the business
driven by the significant efforts of
the whole team, and strong
business unit performances within
both our People and Data
Management and Physical Security
divisions.
Last year’s innovation efforts, in
particular the development and
adaptation of products and
services aimed at generating
increasing and new recurring
revenues, has produced extremely
positive results.
Specifically, the launch of GT
Connect has enabled us to begin to
realise our vision to create larger
trusted ecosystems in the
workplace that more broadly
connect security device hardware
with our secure cloud services,
including Bring Your Own Device
(BYOD) tablets and third-party
products that greatly extend the
reach of our solutions.
This key software enhancement
enables us to push forward with
our strategy, executing with a
collective focus to attach services
to all our products and this is
yielding a dramatic increase in the
recurring proportion of our
revenues, creating a critical
Newmark Security PLC – Report and Financial Statements 2023
progressing very strongly with
commercial discussions with
several major high street brands at
an advanced stage. We have learnt
to navigate a number of new post-
pandemic approval procedures
instituted by major brands, whilst
this has slightly extended sales
cycles, at the same time this has
added further competitive
advantage, giving us much
increased confidence for the year
ahead.
Performance
Group revenue has grown once
again, increasing by 6% year-on-
year to £20.3 million with gross
margin increasing substantially, up
19% to £7.6 million.
This performance was primarily
driven by continued success in
HCM sales, up by 10% to £12.6
million, with a greatly improved
gross margin contribution, up 32%
to £6.0 million. At the centre of
this success is the rapidly growing
high margin recurring services
contribution with Software-as-a-
Service (SaaS) and Clock-as-a-
Service (ClaaS) annual recurring
revenues (ARR) increasing by 133%
to £2.1 million by April 2023. As
our clear strategic priority, we
expect growth in HCM to
accelerate in FY24 with further
significant gains in annual recurring
revenues.
Our Access Control business
declined slightly by 3% year-on-
year to £3.0 million as it
underwent an important re-
balancing, transitioning away from
the end-of-life legacy Janus
product, with revenues declining
by £1 million, and towards the new
Janus C4 Access Control product,
with those sales increasing to £1.7
million, representing an
outstanding growth rate of 108%.
Together with a small 5% increase
in sales of Sateon Advance to £1.1
million and the new Janus C4 Ultra
11
product in the pipeline, the future
growth outlook in Access Control is
extremely positive.
Safetell revenues grew modestly by
3% to £4.7 million benefitting from
its new leadership and numerous
re-organisation measures which
started to take effect. These are
expected to have a greater impact
as we move forward. With a
number of exciting national
opportunities in the pipeline and
expected to come through in FY24,
this puts the business in a very
strong position to plan for more
aggressive growth in the year
ahead.
Financial
The Group's cash at 30 April 2023
was £0.6 million (2022: £0.2
million).
This increase was due to a
significant improvement in
operation cashflows driven by
higher revenues, increased gross
margin percentage and lower
overheads. During FY22, we
implemented a programme of
strict cost control and increased
prices to mitigate the effect of
higher componentry and freight
costs. With a full year of these
price rises and cost savings taking
effect, this resulted in improved
performance in FY23 as we began
to use our recent investments in
products and infrastructure to
accelerate growth.
Supply chain challenges have also
been successfully managed by
building inventory to satisfy
ongoing customer demand. The
inventory levels are expected to
ease in FY24, allowing for further
cash flow generation.
With the oversight of our CFO, Paul
Campbell-White, we continue to
exercise strong governance and
appropriate commercial controls,
ensuring that sound financial
discipline underpins our
operations, and all investment
decisions continue to align with
our strategic goals as we
accelerate towards our 2025
strategy.
Outlook
People and Data Management
division - Grosvenor Technology
Looking ahead to FY24, we
anticipate further substantial
growth as we continue to build on
the positive momentum we have
achieved in all our geographic
markets. With our existing
approach demonstrating clear
success, the challenge ahead will
be to accelerate the pace with the
appropriate discipline required to
scale effectively across every
region, and in particular through
our expanded presence in North
America.
Our clear intention is to gain an
increasing share of the enormous
opportunity we have created as a
market leader in secure cloud
solutions for Human Capital
Management and innovative
products for Access Control. Our
priority will be to continue
leveraging GT Connect, our
enhanced services, and a broader
range of products as we look to
further secure long-term HCM
partnerships and onboard new
customers. These efforts will
further increase recurring
revenues, driving towards an even
more ambitious ARR target.
Similarly, we will drive growth in
Access Control across public and
private markets with our recently
expanded sales team and with
further investment in next-
generation control, completing the
development of Janus C4 Ultra, a
new product which is already
creating significant new interest
and opportunity.
I am extremely grateful for the
leadership of Colin Leatherbarrow,
Newmark Security PLC – Report and Financial Statements 2023
and his talented senior team, for
their ongoing commitment to the
highest professional standards,
demonstrating great skill in
execution and driving an excellent
full-year performance. This has
been an exemplary first year for
Colin as MD, stepping up from his
former role as CTO in November
2022, bringing his expert focus to
Grosvenor’s technical and
commercial operations and making
a wholeheartedly positive impact
right across the business. As the
business expands, I am confident
we have the right team to guide
this division to the success it
deserves.
Physical Security Solutions division -
Safetell
With new leadership and renewed
strategic focus on growing services,
the team has been busy rebuilding
its operations to enable it to scale
nationally. Looking ahead, the
priority continues to be securing
national servicing contracts,
enabling efficient, profitable
operations across a growing team
of high quality, professionally
certified engineers and service
personnel.
With new projects beginning to
regain their pre-pandemic
momentum and new partnerships
being secured, the business will
also continue to optimise its
product portfolio and improve its
competitive position, with broader
manufacturing and supply chain
options already in place for FY24.
Already underway, these initiatives
will see it target larger contracts in
entrance control, build new
national scale relationships for our
Autodoor Service Department and
convert the significant pipeline we
have created for retail attack-
resistant screens as we seek to
further extend our long-
established banking experience to
meet the growing demand for
security screens across retailers of
all sizes.
By offering complete security
solutions with services that bring
rapid response to customers’
needs, as well as targeting new
market opportunities with an
enhanced sales and marketing
team, I am equally grateful to Nick
Shannon and his leadership team
for achieving revenue growth after
a number of years of decline, and
in challenging conditions. Safetell
now stands ideally placed for
further solid growth in the year
ahead.
Strategy
With data security and compliance
driving strong market demand, this
is an opportunity which we will
actively pursue to capitalise on the
trust in our operations and
reputation for engineering
excellence that we have
established over three decades.
Compliance with data remains a
strong underpinning core value,
and the business will seek to
leverage this in winning new HCM
SaaS recurring revenue business in
both the North American,
European and Rest of World
markets.
Our strategic aim remains to
increase recurring revenues and
make the powerful evolution from
hardware to hardware-enabled
software and services, based on
providing ‘secure cloud control’.
This strategy is already being
realised, and it will continue to be
the core focus underpinning all our
growth initiatives as we seek to use
our expertise in data security to
generate sustainable, high quality
revenue streams that will scale and
extend, over and beyond the
product lifecycle, into the longer-
term.
Our valuable objective remains. 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.
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, our
strategic focus and approach are
opening a substantial market
opportunity in which we now
occupy a commanding position
with key partners. Our aim in FY24
is to accelerate how we scale this
model across an expanded
partnership channel, securing
greater market share and
converting our hard-earned
competitive advantage as we
continue to execute our 2025
growth strategy reassured by the
essential feedback of our many
happy customers.
Marie-Claire Dwek
Chief Executive Officer
25 September 2023
12
Newmark Security PLC – Report and Financial Statements 2023
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
Division Total
Performance overview
Grosvenor Technology (Grosvenor)
continues to be a market leader in
time, data capture and access
solutions for Human Capital
Management and Access Control,
helping organisations to protect
and manage their most valuable
assets – people in the workplace.
Once again, it has been another
solid year with top line revenue
growth of 7% to £15.6 million,
primarily driven by strong growth
of the HCM business and our
expanding relationships with
software partners, which have
been particularly strengthened in
the European market.
The year has been a clear
illustration of the value of
executing on our 2025 Growth
Strategy, evolving our business
model to hardware-enabled
software and services. By
connecting devices to deliver
secure cloud-based control via our
newly upgraded and re-launched
software, GT Connect, we have
been able to offer customers and
13
Increase/
(decrease)
Percentage
change
2023
8,830
3,721
12,551
1,729
1,063
231
3,023
2022
8,726
2,716
11,442
833
1,010
1,274
3,117
104
1,005
1,109
896
53
(1,043)
(94)
15,574
14,559
1,015
1%
37%
10%
108%
5%
(82%)
(3%)
7%
partners enhanced services
attached to every connection, and
this now includes third party
devices for the first time.
These developments mark a major
strategic milestone for Grosvenor,
unlocking enormous market
potential across a broader range of
connected devices, as well driving
another substantial increase in
recurring revenues, as we continue
to build steady, predictable income
streams across a fast-growing base
of customers and partners.
As a consequence, HCM annualised
recurring revenues (ARR) grew by
133% to reach an ARR of £2.1
million in April 2023. These
revenues represented 12% of
Grosvenor’s 2023 revenues (2022:
4%). As a central focus of our
strategic plan, we are confident
this continued strong growth
trajectory will result in an even
greater share of revenue in FY24
and beyond.
During the year, significant overall
HCM growth was achieved in both
the North American and Rest of
World (ROW) markets, however
another strong US-based
performance was masked by the
termination of our partnership
with UKG. Whilst this had always
been foreseen following the 2020
merger between Ultimate
Software, our original HCM
partner, and Kronos, a competitor
in time clock products, in prior
years revenue had significantly
increased due to the ease with
which our clocks integrate with the
Ultimate software platform.
Although UKG’s corporate policy
decision was entirely unrelated to
the performance of solutions and
services from Grosvenor, the
notification in Q3 FY23 left a
shortfall in sales against our
original plan that we were able to
offset with substantial gains across
our other HCM partnerships, but
which combined to result in an
overall flat 1% growth in the
region. Progress with European
HCM partners gathered pace, as
ROW markets delivered underlying
growth of £1.0 million, resulting in
a 37% year-on-year improvement,
and contributing most of the 10%
growth in HCM revenues overall.
Newmark Security PLC – Report and Financial Statements 2023
Meanwhile, Access Control
solutions underwent an important
re-balancing as we transitioned
between new and end-of-life
legacy product revenue lifecycles
during FY23. Whilst at a headline
level, overall revenues decreased
by 3% to £3.0 million, sales of our
new Janus C4 product doubled to
£1.7 million (2022: £0.8 million)
and this was supported by a
modest 5% growth of Sateon
Advance to £1.1 million (2022: £1.0
million). Although this combination
was not sufficient to offset the
decline in revenues from our
legacy Janus product, which
reduced to £0.2 million (April 2022:
£1.3 million), passing through the
tail-end of this legacy removal
cycle clears the way for positive
growth across all product lines in
FY24. With additional sales
resource joining this team in FY23,
this provides an ideal platform to
add new growth from our Janus C4
Ultra product, planned for launch
2024 and which is already
generating significant customer
interest.
By taking further actions to
optimise our operations, including
putting through necessary price
increases to mitigate the
inflationary environment, and
growing recurring revenues, we
were able to significantly increase
gross margins to 38.6% (2022:
31.4%).
Below these headline financial
results, we made positive
operational progress that
produced encouraging growth
across all strategic priority areas.
With the successful delivery of an
ambitious upgrade to our product
strategy, re-platforming our core
cloud control software, GT
Connect, and evolving the service
model, the business enters FY24 in
a commanding position to address
a far broader market opportunity
with substantially enhanced
solutions and competitive
advantage.
Evolving partnerships driving HCM
growth
Grosvenor’s strategic growth
continues to be driven through key
partnerships with a variety of HCM
providers. The substantial progress
made in developing existing
partnerships produced another
year of exceptional growth, with
some notable partnership
successes.
Our major European partnership
grew by 23% with recurring
revenue nearly doubling, driven by
increased sales, planned price
increases and the compounding
annual effect of growing recurring
revenue. As we had anticipated,
this partner also began taking our
GT8 product, ordering a significant
number of units during the year.
Direct to end-user business grew in
both revenue and margin,
onboarding end-users that
included notable high-profile
customers such as Shangri-la
hotels (The Shard), Imperial
London Hotels, Dorchester Hotels
and Refresco Drinks, and all
attracted incremental service
revenues.
We achieved major US partner
success, migrating a new and large
tier 1 HCM provider to GT Connect,
leveraging the full range of
features and benefits. By achieving
the required levels of control by
their channel partners via the
advanced tenancy architecture,
this has started to drive
downstream demand via their
channel partner network following
a launch at their annual partner
event.
Another major US HCM partner
produced an outstanding growth of
27% and this was achieved through
diversification of products and
closely supporting larger projects.
The Grosvenor team also delivered
a significant foundation of the
forward outlook by migrating
existing clients from legacy to GT4,
including a number of well-known
household name brands. This is
essential groundwork for retaining
existing customers in the future.
We continue to actively support
another key partner in the US to
enhance and scale their services
with customers, and in particular
their introduction to one of the
world’s largest retailers who we
now support directly. Winning a
major national contract to provide
transactional cloud services across
all their Mexican stores has
delivered a substantial boost to our
strategy and further added to
growth in our recurring revenues.
.
14
Newmark Security PLC – Report and Financial Statements 2023
Product update
GT8 timeclock
with fingerprint and user interface
Remaining at the core of our security
proposition is our commitment to
data security, privacy, API-first
architecture, and complying with
leading industry standards, such as
IOT MQTT and AMPQ protocol
support. This strategy ensures we
maintain the broadest possible
secure connectivity across cloud-
connected global estates of
timeclock and access control devices.
During the year, we took a number
of important steps forward in
advancing our capability to create
trusted ecosystems in our
customers’ workplaces, spanning
edge devices (IoT), multiple systems
integrations and unified by secure
cloud control.
This continues to show up in the
growth of the security ecosystem we
connect and serve. In FY23,
Grosvenor controlled over 19,000
connected devices, up from 13,000
devices in FY22, generating nearly 6
million clock-ins per month.
Launching GT Connect, the next
generation of secure cloud control
In H2 FY23 we replaced the cloud
platform element of our services
with the launch of our next
generation cloud-based control
software, GT Connect. The
significantly upgraded GT Connect
platform is as efficient as it is
scalable and removes previous
limitations, with a new highly secure
15
cloud architecture, advanced multi-
tenanted hosting, an enhanced
security model and operating on a
microservices extensible framework.
This major development step
included re-platforming the entire
suite of tools to run on the Android
mobile operating system bringing the
advantages of a modern cloud-based
mobile-first architecture that is easy
to scale and fit for the future.
Of particular importance in this
upgrade is the API-first architecture
that underpins GT Connect, which
enables full, easy and seamless
embedding of all GT Connect
features into our customers’ own
solutions. This enhancement now
allows them to leverage our
technology within their existing
market offerings and provides us
with a significant indirect channel to
extend our services going forwards.
Connecting devices and attaching
services for faster recurring revenue
growth
As a result of these advances, the
new platform has become capable of
extremely robust, dynamically
scalable and unlimited transactional
throughput, and this has given us the
opportunity to expand and extend
our relationships across the entire
customer base, enabling the
attachment of services at scale.
Crucially, this also gives us the ability
to connect with non-GT devices and
leverage the full capability of GT
Connect tools and services, opening
a substantial market opportunity
with enormous potential.
This important development enables
us to extend our services using the
mobile capabilities of GT Connect to
go beyond Grosvenor-manufactured
time clocks to include connecting
Bring Your Own Device (‘BYOD’)
tablet devices, a widely anticipated
market driver in the future. This
means Grosvenor services now have
the ability to connect with a broad
range of other third-party cloud-
compatible time clocks, with GT
Connect being used by customers
and Grosvenor to entirely take over
and run third-party device estates.
By introducing GT Connect to
customers and partners, we are
rapidly expanding this service-
enablement model, putting GT
Connect at the centre of trusted and
secure workplace ecosystems. This
lies at the core of our strategy and is
both profitable and highly scalable.
As we continue to distribute this
capability, customers gain access to
intuitive, easy-to-learn tools and
services in a model that allows our
remote support to provide both
direct customer support and local
team enablement services. This
means our team of dedicated
specialists can continue to control
broad device ecosystems and local
customer teams in a way that is
unlimited by our capacity and can be
extended however fast we scale.
GT10 timeclock
with fingerprint and user interface
Extending our range and expanding
our opportunity by offering services
attached to low-cost devices
In FY23 we have further expanded
our market opportunity. With the
introduction of a new GT4-Lite
terminal, we now directly address
the full market spectrum from end-
to-end and can command a greater
share-of-wallet with customers,
capturing the lower end of the
market previously dominated by a
number of low-cost manufacturers.
Rather than compete on cost, our
goal has been to offer an affordable
Newmark Security PLC – Report and Financial Statements 2023
and flexible alternative that comes
packaged with advanced services
and the option of a rolling device
replacement service that can be
used to modernise device estates
over a longer-term. This entirely
changes the way customers think
about when to begin transforming
and upgrading their HCM services,
without being restricted by the
limitations of their existing
investments in hardware.
By offering customers this freedom,
we are now able to address a large
segment of a cyclical market that
was formerly stagnant and bring
forward the time when alternatives
can actively be sought, opening a
large, previously dormant
opportunity. This shift has already
started to translate into a fast-
growing pipeline, with some exciting
prospects particularly in the US
market, and this is anticipated to be
a key growth contributor in FY24 that
we will continue to research and
develop.
GT Connect provides the capability
to further accelerate this, facilitating
ease of adoption by new partners
with the required levels of control by
their channel partners and simple
onboarding of end-users using
standard HCM integrations. This
enables us to access major HCM
marketplaces as we seek to grow
Per-Employee-Per-Month (PEPM)
revenues via marketplace
applications to the biggest HCM
providers.
Transitioning to the next
generation of Access Control
As expected, completion in the
year of numerous product
initiatives that had been
commenced in FY22 had the
desired effect, transitioning focus
and development from long-
running legacy to our newest
products, resulting in doubling the
sales of Janus C4 with further
acceleration expected in the year
ahead.
1. Portfolio rationalisation and
accelerated migration: following
our announcement in FY22 for the
end-of-life of our legacy Janus and
Sateon systems, we continued to
support customers until the end-
of-life date in April 2023. Taking
advantage of the accelerated
migration capabilities developed in
FY22, the completion of this
product rationalisation freed
valuable capacity and enabled us
to shift our focus onto Janus C4 as
the priority for customer transition
and growth.
2. Next generation Advance Driver:
alongside using our new migration
tools, we also used our new
Advance Driver for Janus C4 which
contains updated Advance
controller firmware, enhancing the
performance of all sites and fixing
minor legacy scaling issues. Further
enhancements are planned to
accelerate configuration,
particularly linked to forthcoming
new product enhancements.
3. Janus C4 Ultra, the next step in
access control: based on our 2025
Roadmap for Access Control, we
have been working hard to develop
an exciting upgrade to Janus C4
that aims to extend our product
leadership well into the future. The
new fully cloud-based product,
Janus C4 Ultra, will contain exciting
features and additions including
mobile app access and connecting
a variety of other functions such as
fire and muster and intercom
services. Already in design, this
product is receiving a lot of interest
across our customer base and we
anticipate strong demand when it
is launched in 2024.
Preparing for growth scaling,
organising to serve customers even
better
Following the appointment of Colin
Leatherbarrow as Managing
Director of Grosvenor Technology,
stepping-up from his former role as
Chief Technology Officer and
taking up the role in November
2022, a number of wide-ranging
business reviews have been
completed to identify and
implement the operating
improvements necessary to
support the business as it scales.
These included detailed
workstreams encompassing pricing
and new commercial models,
service planning, product planning,
software development, marketing,
sales and contract management.
During the year, Grosvenor's US
headquarters were also relocated
to a much larger facility in Florida,
and third-party logistics were
brought in-house. With the tripling
of available floor space and an
improved location, we have
invested significantly in improving
our ability to serve customers and
are well-prepared for the growth
scaling we anticipate in the North
American market.
To counter ongoing global supply
chain challenges, our teams have
continued to identify additional
supplies, delivery routes and
alternative componentry, de-
risking our supply chain and
sustaining a visible competitive
advantage with customers.
Inventory levels rose slightly to
£3.7 million at April 2023 (2022:
£3.6 million) and this included £1.3
million of finished goods, with a
high proportion of parts available
for our GT10 and GT8 products,
providing a good level of cover and
confidence as we scale major new
partnerships as well as supporting
existing arrangements.
16
Newmark Security PLC – Report and Financial Statements 2023
Connected services with everything!
“Looking ahead, our strategy is simple, as we continue to seek
and onboard new HCM partners with exciting prospects
already well-advanced in our pipeline. We will continue to
attach services to all new business and push services to all
partners as a priority. With enhanced capability at the lower
and higher ends of the market, we will actively seek to displace
incumbents, offering competitive alternatives at both ends of
market to achieve full share-of-wallet, seeking to secure
exclusive partner status wherever possible. Our new GT
Connect platform also enables us to explore new opportunities,
such as seeking direct end-user business via partnerships with
Workday, Oracle and SAP using a new Per-Employee-Per-
Month subscription model. The future is expansive and full of
opportunity, and I am particularly proud to lead such a
talented team as we continue to execute strongly and with
disciplined focus.”
Colin Leatherbarrow, MD
Our VP of Global Operations, Brian
Hack, has continued to oversee
and assure the steady supply of
components and hardware
throughout FY23, with advanced
planning, integrated product
schedules and engineering co-
ordination. Once again, our
engineers have worked with
product and supply chain
management to identify
opportunities to de-risk hardware
and investigate options for using
alternative components. As
anticipated, this remained a key
activity through the year, and we
expect it to continue for the
foreseeable future.
While our main focus of
investment has been directed
towards scaling the HCM
opportunity, in the UK access
control market we have also
identified clear growth ambitions.
We have supported these with the
addition of a new regional sales
manager covering London and the
Southeast and released significant
productivity gains by supporting
the whole team with a full-time
sales administrator. These two
important enhancements greatly
enhance our go-to-market
capability and confidence in
targeting significantly higher
growth in FY24.
17
OUR DIVISIONS –
PHYSICAL SECURITY SOLUTIONS DIVISION
Newmark Security PLC – Report and Financial Statements 2023
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.
FY23 was a pivotal year for the
business, with a rapid turn-around
conducted by MD, Nick Shannon,
reversing recent years’ declining
revenues and achieving a small
increase of 3% year-on-year to
£4.7 million. This clearly
demonstrated the positive effect of
organisational changes
implemented in FY22 and the value
of our strategy to focus on growing
service revenues, up 31% year-on-
year, increasing the proportion of
income from services which rose to
40% (2022: 32%). This
transformation was achieved
despite the continuing contraction
of physical branches in the banking
market, reducing demand for
legacy rising screen services.
Our strategy to focus on services
and move away from one-off
supply of products had a notable
impact, with a 9% contraction in
product sales largely caused by
temporary order delays, now
planned in Q1 FY24, and which was
more than offset by expected gains
in service in the areas we had
prioritised.
2022
2,840
1,900
4,740
2021
3,131
1,455
4,586
Increase/
(decrease)
Percentage
change
(291)
445
154
(9%)
31%
3%
Although trading throughout the
year was in line with expectations,
with top line revenue rising, gross
margin decreased to 34% (2022:
40%). This was due to the under-
utilisation of field-based engineers
as we grow capacity in order to
build-up services revenue. As we
secure additional service contracts
in FY24, we expect this to
normalise and return a net
contribution.
With challenging economic
conditions continuing in the form
of inflationary pressures and
increased supply chain volatility,
our experienced team made
further adaptations to enhance
resilience and secure the way
ahead. This included negotiating
price increases in those open
tenders and supply agreements
where contract conditions allowed,
although in many instances this
was not possible due to either pre-
negotiated pricing or market
competition. To provide further
mitigation, we sourced two
alternative product manufacturers
in China who can deliver at higher
quality, substantially lower cost
and with materially reduced lead
times compared to previous ‘make-
to-order’ supply arrangements.
These advantages will not take
effect until FY24 however,
following from last year’s
enhancements to our product
offering that brought automatic
doors and entrance control into
our product portfolio, we have
now secured high specification
‘standardised’ alternatives across
all of the key items in our portfolio.
This will make us far more
competitive, improving our speed
of delivery and response for the
year ahead.
Whilst overall demand for security
products and services has
recovered to above pre-pandemic
levels, in FY23, we saw residual
effects of continued uncertainty in
the business environment causing
a long-tail drag on projects, with
some clients taking longer to work
through their own transformation
plans as a consequence. This
caused a slight delay in project
revenues bookings at the end of
FY23, in most cases this has only
been by a matter of months. With
those revenues now set to come
through in early FY24, this assures
a particularly strong start to the
new year. Together with a very
positive demand outlook,
evidenced by the strength of an
even more rigorously qualified
pipeline, we remain confident that
the business is well-positioned to
achieve its ambitious growth
strategy.
18
Newmark Security PLC – Report and Financial Statements 2023
Focused execution on areas of high
demand drives growth and builds
positive forward momentum
Executing on our 2025 Growth
Strategy, all of our focus areas
experienced strong demand in
FY23, enabling us to build on the
foundations laid in 2022, as we
continued to drive growth and
generate the momentum essential
to scaling the business
incrementally, in carefully planned
stages.
Our security-rated screens and
counters performed exceptionally
well throughout the year both in
the retail environment as well as
within the public sector. Key to this
success was developing a
redesigned, retail attack-resistant
screen for convenience stores
which is lightweight, flexible and
cost-effective.
This has received strong demand,
having rolled out over £1 million of
installations for major UK retailers
and built a pipeline of over £2
million for installations in FY24.
With the current robbery issues in
the convenience store market, we
believe we can further grow this
order level through 2024.
Our relationship with blue light
customers continued to grow with
an additional £0.3 million of
projects from one of the UK’s
largest Police Forces, following on
from our work in 2022. Our
development efforts in this
segment were rewarded with
orders from five other Police
Forces, creating a strong base from
which to expand. Public Sector
orders in general were strong
throughout the year, with projects
completed in multiple healthcare
settings, where our unique
Countershield ‘moving screen’
remains popular for A&E
departments, as well as prisons,
transport hubs and military
installations.
19
Our FY22 entry into the Entrance
Control market also gathered pace
in FY23, building on the early wins
achieved in 2022 with new
installations direct to end-users as
well as through the enlarged
construction sector, including
newbuild and refurbishment. The
new manufacturing arrangements
we have secured are helping us to
fill the gaps in our product range to
enable access to markets where
cost effective solutions are
required. As we continue to win
market share, we expect our
Entrance Control business to grow
significantly in 2024, with a
number of projects tendered
during 2023 moving into the
construction phase in 2024. As
before, we remain focused on
targeting the larger contracts
available in this area, which bring
the dual benefit of the
maintenance services that follow-
on from initial installation, helping
to grow our Autodoor Service
Department.
Continuing to grow recurring
service revenues, with a focus on
automatic doors
In line with our strategy, service
revenue increases were driven by
additional wins in autodoor
servicing and repairs, with new
national service contracts
contributing to a nearly five-fold
increase in recurring revenues to
£0.3 million. We expect this trend
of additional autodoor works to
continue into 2024, starting
strongly with £0.6 million in our
pipeline of service and repair
contracts already quoted. With
further growth expected, this
remains the clear strategic priority
for the future of the business.
Our record in repairing and
upgrading customer doors rather
than replacing them has continued
to be an advantage. All of our
service engineers have been
security cleared to BS7858, the UK
standard for vetting of people
employed in the security sector,
and this coupled with our ‘Repair-
not-replace’ mentality, continues
to strike a positive chord with our
customers, particularly those with
larger national estates. In the last
year, we added a further 200 doors
and now provide call-out support
across over 2,000 doors,
representing a substantial national
footprint.
This market continues to be a
strategic priority for Safetell, with
autodoor servicing in the UK
estimated at twice the size of
Safetell’s traditional markets. Our
challenge in FY24 will be to gain a
critical mass of contract volumes to
support a more efficient scaling
and deployment of our service
team at competitive margins. This
transition will be the key factor to
overcome as we transition from
high margin one-off projects and a
unique legacy rising screens service
to high volume service and repair
contracts at reduced margins but
which provide sustainable
revenues and long-term stability.
Our clear emphasis is on
generating strong recurring
revenues, and we expect the
autodoor segment to account for
an increasing share of turnover in
the coming years.
Learning how we win, generating
insights to accelerate future success
As important as our wins are,
understanding why we have lost
competitive tenders in the past has
been just as important to us in
learning how to unlock, accelerate
and scale the business. Following a
detailed review of current and past
commercial submissions in FY23,
we now have a much better
understanding of why and how to
win in key competitive scenarios,
specifically in the Security Door,
Entrance Control & Automatic
Door Installation and Service
sectors. The findings from this
review are now being channelled
into improved methods, marketing
and enhanced products to help us
gain additional market share in
2024 and beyond.
Overall, our pipeline grew steadily
throughout the year and, at the
outset of 2024, stood at [£9.5]
million, with a further [£4.6] million
of quoted ‘suspects’, compared to
a pipeline total of [£5.4] million at
the outset of 2023.
The planned investment in Sales
and Marketing during FY23
enabled the sales team to achieve
against a significantly increased
new business sales order target
from 2022, gaining new orders of
[£3.9] million within the year,
against [£3.0] million in 2022. An
increased delay in timing between
orders being received and projects
commencing served to under-
represent the significant
achievements made by our
improved team, however we are
confident this will contribute to a
stronger FY24 where this will
become fully visible.
Creating safe spaces for employees
and colleagues
The substantial progress made by a
dedicated and committed team
has delivered precisely what we’d
hoped for in FY23, returning the
business to growth, focusing on
key areas of high demand and
organising to compete and win as
we begin to address a much wider
market opportunity, particularly in
security doors and entrance
control.
The market continues to
experience rising demand for high
specification physical security
products. Increasing threats from
crime and terrorism have made
physical protection and security a
priority for businesses in most
sectors, as many businesses
prepare to meet the new ‘Protect
Duty’ legislation.
Newmark Security PLC – Report and Financial Statements 2023
Responding to the rapid and
continuous growth of high security
environments, such as data
centres, also provides a significant
scaling opportunity for Safetell,
one that we are ready for as we
continue to build trusted, long-
term partnerships with Facilities
Management providers.
Building our reputation as a trusted
service partner for the long-term
will not only translate into success
with our immediate growth
targets, it underpins our
confidence to take the next steps
on the journey we have planned.
Focused execution will continue to
prioritise recurring revenues from
services, and this transition lies at
the heart of our strategy and
approach.
“With a larger market opportunity and the advantage of much
stronger pipeline visibility as we enter FY24, I am confident
Safetell is now ready to take the next step in meeting
ambitious growth targets we have set ourselves for the year
ahead. Offering an even more competitive range of products,
with improved costs, lead times and services can only lead to
increased success. This will be further leveraged by our
improved sales and marketing capability, as we continue to
keep our customers at the forefront of everything we do,
building a strong brand upon which customers feel entirely
confident to rely for the long-term.”
Nick Shannon, MD
20
Newmark Security PLC – Report and Financial Statements 2023
FINANCIAL REVIEW
Revenue
Key Performance Indicators
People and Data Management Division
HCM
Access Control
Physical Security Solutions Division
Products
Service
Group Revenue
Group revenue increased by 6% to
£20.3 million (2022: £19.1 million)
driven by growth in HCM from
both North America and Rest of
World. This revenue increase was
due to recurring revenues from
SaaS (GT Connect) and ClaaS
products. There has also been
revenue increase from Services in
the Physical Security Solutions
Division. This growth is from
traditional bank and building
society clients as well as new auto-
door servicing and repairs. Further
commentary and discussion can be
found in the relevant divisional
sections.
Gross profit margins have
increased to 37.6% (2022: 33.5%)
Gross Profit
Gross Profit Margin
2023
£'000
12,551
3,023
15,574
2,840
1,900
4,740
2022
£'000
11,442
3,117
14,559
3,131
1,455
4,586
Increase/
(decrease)
£'000
Percentage
change
%
1,109
(94)
1,015
10%
(3%)
7%
(291)
(9%)
445
154
31%
3%
6%
20,314
19,145
1,169
due to the full year effect of
customer price rises and cost
savings in the People and Data
Management division. Their gross
margins increased to 38.6% (2022:
31.4%). The Physical Security
Solutions division achieved a gross
profit of 34.4% (2022: 40.4%) the
decrease is primarily caused by the
under-utilisation of field-based
engineers as we grow capacity to
serve new service contracts.
Administrative expenses and
average employees
Administrative expenses before
exceptional items have decreased
by 2% to £7.4 million (2022: £7.5
million). This has mainly been the
result of a decrease in consultancy
costs to support the strategic
growth plan. Overall average
employees have decreased to 99
(2022: 103) driven by reductions in
Grosvenor UK. Staff costs (which
are included in both cost of sales
and administrative expenses)
increased by £0.2 million or 2% to
£7.4 million (2022: £7.1 million).
Exceptional costs
There were no exceptional costs
during the year. In 2022, £0.1
million of exceptional costs were
incurred relating to continued
streamlining of positions in
Grosvenor and Safetell.
2023
£'000
7,638
37.6%
2022
£'000
6,419
33.5%
Increase/
(decrease)
£'000
Percentage
change
%
1,219
19%
Finance costs
Finance costs have increased by
£0.1 million to £0.3 million (2022:
£0.2 million) due to additional
invoice financing borrowings to
support higher working capital
requirements and higher interest
rates.
21
Newmark Security PLC – Report and Financial Statements 2023
Profitability
The current year profit from
operations before exceptional
items was £0.3 million (2022: loss
£1.1 million). The increase in
profitability was caused by a
combination of increase in gross
profits from higher revenues,
improved gross margins
percentages and the full year
effect of cost savings measures
introduced in the second half of
FY22.
Profit after tax for the year was
£0.4 million (2022: loss £0.8
million). This is after tax credits
which are discussed in more detail
below.
Taxation
A tax credit of £0.4 million (2022:
£0.6 million) was recognised in the
year. This resulted from a current
tax credit of £0.4 million (2022:
£0.4 million) due to the continued
R&D claims at Grosvenor and
Safetell and a £44,000 deferred tax
credit (2022: £0.2 million). The
prior year deferred tax credit was
primarily from the recognition of
tax losses.
Earnings per share
Earnings per share was 3.77p
(2022: loss 0.32p) being an
increase of 4.09p. The decrease
was due to the increase in
profitability in FY23.
Balance sheet
Net assets have increased by £0.3
million to £7.9 million (2022: £7.6
million). Property, plant and
equipment increased by £0.8
million to £2.9 million mainly from
right of use buildings (renewal of
Safetell lease and new Grosvenor
Florida office), right of use motor
vehicles and ClaaS clocks.
Inventory has increased by £0.2
million to £4.2 million with
additional purchases of finished
goods to allow extra cover for any
further supply chain delays. Trade
and other receivables increased by
£1.0 million primarily due to a rise
in trade receivables in the Physical
Security Solutions Division. Cash
and cash equivalents increased by
£0.4 million to £0.6 million (2022:
£0.6 million). Trade and other
payables increased by £1.5 million
as result of higher activity in Q4
FY23 in the Physical Security
Solutions division. The £0.4 million
increase in short term borrowings
to £3.4 million was due to drawing
down of the UK invoicing financing
facility and increase in lease
payments.
Research & Development (R&D)
The Group has decreased its R&D
investment to £0.5 million (2022:
£0.8 million) in the People and
Data Management division. The
reduction is due the completion of
the development of GT Connect,
our upgraded SaaS platform which
was launched in the second half of
FY23.
Cashflow
During the year cash increased by
£0.4 million to £0.6 million (2022:
£0.2 million). Cash generated from
operating activities increased by
£2.8 million to £2.1 million (2022:
outflow £0.7 million) mainly driven
by an increase in operating profits
and a £1.7 million improvement
working capital due to lower
inventories and creditor outflows.
There was also a net tax receipt of
£0.4 million (2023: £0.4 million)
from R&D tax credits. Cashflow
from investing activities decreased
by £0.5 million to £0.8 million
(2022: £1.3 million) primarily due
to the reduction in investment in
research and development as
mentioned above. The financing
movements related to the
drawdown of £0.3 million of
invoice financing from the UK
facility (2022: £2.3 million from UK
and US facilities), lease principal
repayments of £0.4 million (2022:
£0.4 million) and £0.4 million of
repayments from the Coronavirus
Business Interruption Loan Scheme
(“CBILS”) which started to be paid
back from September 2021 over a
5-year term. There was also £0.3
million of interest paid on the debt
facilities (2022: £0.1 million).
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 2023
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. Customer prices were
put up significantly in FY22 to
minimize the impact of increasing
componentry and freight costs and
continued to be reviewed.
23
Customer prices for certain
products were increased in FY23 to
ensure margins were maintained.
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 2023
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.
“I am very pleased that the steps we took in the second half of
the last financial year to increase customer prices, cut costs
and improve working capital management have resulted in a
return to profitability and net cashflow generation”
Paul Campbell-White, CFO
24
Newmark Security PLC – Report and Financial Statements 2023
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.
• 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
• 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
Act fairly
between
shareholders
High
standards
of business
conduct
Long-term
impact of
Board
decisions
Promote
success
to our
shareholders
Impact of
community
and
environment
Interest
of our
employees
Interest
of other
stakeholders
• 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 2024
• 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
Key Board decisions
During the year the Board
continued to deliver on the
Strategic Business Plan which was
approved by the Board in 2022.
The Strategic Business Plan spans
the years 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.
Newmark Security PLC – Report and Financial Statements 2023
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
financing facility;
• increased the UK invoice
financing 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 25
September 2023.
Marie-Claire Dwek
Director
26
Newmark Security PLC – Report and Financial Statements 2023
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 2023
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 2023
Michel Rapoport
Non-Executive Director
Terence Yap
Non-Executive Director
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 2023
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 2023
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 2023, the Board
comprised a Non-Executive
Chairman, two Executive Directors
and two 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 one of
the three Non-Executive Directors
is considered to be independent.
This is Terence Yap. Maurice Dwek
and Michel Rapoport are not
considered to be independent in
view of their substantial
shareholdings in the Company.
Newmark Security PLC – Report and Financial Statements 2023
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 2023
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 37 and 38 and an
overview of the Audit Committee’s
duties and activities during the
year are on page 35 and on the
Corporate Governance section of
the Company’s website.
Maurice Dwek
Chairman
25 September 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,
Maurice Dwek, Michel Rapoport,
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
DIRECTORS’ REPORT
Newmark Security PLC – Report and Financial Statements 2023
The Directors submit their annual
report and audited financial
statements of the Group for the
year ended 30 April 2023.
Financial results and dividends
The Board is proposing a dividend
of Nil per share (2022: 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
P Campbell-White
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 37. M Dwek is retiring by
rotation in accordance with the
Articles of Association of the
Company and 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
18 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 26 -
Subsequent events.
Directors’ interests
The beneficial and other interests
of the Directors in the shares of the
Company as at 30 April 2023 and
30 April 2022 were as follows:
M Dwek (a)
M Rapoport
R Waddington (left the Company in FY23)
M-C Dwek
Percentage holding at
30 April 2023
30 April 2023
30 April 2022
19.8%
12.8%
-
0.5%
-
1,895,989
1,201,100
-
50,000
-
1,895,989
1,201,100
98,000
50,000
(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.
The interests of Directors in Share Option Schemes operated by the Company at 30 April 2023 and 30 April 2022 were as
follows:
M-C Dwek
P Campbell-White
During FY23 M-C Dwek was
granted 83,153 options and
247,274 existing options lapsed.
During FY23 P Campbell-White was
granted 70,000 options.
The Directors had no other
interests in the shares or share
options of the Company or its
subsidiaries.
Number of Ordinary Shares under
the EMI Scheme 30 April 2023
Number of Ordinary Shares under
the EMI Scheme 30 April 2022
409,242
70,000
573,363
-
capitalised in the year was
£462,000 (2022: £764,000). This is
discussed further in the Financial
Review.
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
34
Newmark Security PLC – Report and Financial Statements 2023
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.
35
For the year ended 30 April 2023
the covenant returned to the
original pre-debt service cashflow
of 1.2 times the level of debt
service commencing, based on
audited accounts. The 2023
calculation was 1.45 so 121% of
the target. No other financing
facilities of the Group have any
covenant requirements.
In January 2023, the Group
increased its UK HSBC invoice
financing facility to £2.3 million to
provide additional working capital
headroom. At 30 April 2023, £2.0
million was being utilized. In
February 2022, the Group secured
a 3 year $2 million invoice
financing facility with Seacoast
National Bank against invoices
raised from our US operation. At
30 April 2023, $0.6 million of the
facility was being utilized. The
level of invoice financing available
varies with the open book of trade
debtors at any point in time and
therefore the level of financing
fluctuates.
At 30 April 2023 the Group had a
£0.2 million overdraft facility with
its bankers, HSBC, although none
was utilized as the Group had a
positive bank balance of £0.6
million at year end. This overdraft
facility increased to £0.4 million on
27 July 2023.
The Group’s going concern
assessment is based on the Group
continuing to generate operating
cashflows the year to 30 April
2024. 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 48% and
will be tested more fully when a
revised forecast is completed in
October. 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 48% headroom in the latest
covenant calculation it would take
a large reduction in Gross Material
Margin to cause in a covenant
breach at April 2024.
However, management are
confident that the shortfalls will
not occur but are undertaking
regular reviews and forecasts to
ensure this.
The Group is currently trading
ahead of budget and continues to
generate operating cashflows in
FY24.
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
September 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 financing facilities and also
extend the overdraft facility.
Accordingly, the Directors consider
it appropriate to prepare the
financial statements on a going
concern basis.
Audit Committee
The Audit Committee comprises 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 2022.
• Agreement of the independence
of the auditor and their planning
report for the year-end financial
statements including the proposed
audit fees and non-audit services.
Newmark Security PLC – Report and Financial Statements 2023
• Reviewing and approving the
audited annual report and
accounts for the year ended 30
April 2023.
• Discussion with the external
auditor of any accounting or
financial issues arising in the
course of their work.
• Discussion of the auditor’s
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 supply chain
disruption.
Remuneration Committee
The Remuneration Committee
comprises M Dwek, M Rapoport
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 37 and 38 and the
terms of reference are on the
website.
Directors’ responsibilities
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 UK adopted 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 UK
adopted 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.
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
25 September 2023.
Marie-Claire Dwek
Director
36
Newmark Security PLC – Report and Financial Statements 2023
DIRECTORS’ REMUNERATION REPORT
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 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 2023 were as
follows:
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
At 30 April 2023 the Remuneration
Committee comprised three
existing Non-Executive Directors,
Maurice Dwek, Michel Rapoport
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
37
Newmark Security PLC – Report and Financial Statements 2023
Consultancy
agreement
£'000
Salary**
£'000
Fees*
£'000
Bonus
£'000
Other
Benefits
£'000
Total
£'000
Pension
£'000
-
-
83
-
-
-
83
80
216
177
-
-
-
-
-
-
-
26
30
26
393
82
434
75
25
10
-
-
-
-
35
5
24
18
265
205
35
-
-
-
77
71
118
26
30
26
670
665
24
9
-
-
-
-
33
29
Executive Directors
M-C Dwek
P Campbell-White
Non-Executive
Directors
M Dwek (a)
M Rapoport
R Waddington
T Yap
2023
2022
Total
including
pension
£'000
289
214
118
26
30
26
703
694
*Includes £5,000 for share options expense for M-C Dwek and £5,0000 for Paul Campbell-White **Includes compensation for loss of office for R
Waddington
Emoluments of the highest paid Director were £289,000 (2022: £260,000). 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 £83,000 (2022: £80,000) 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 24 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 2023 are as follows:
Name
M-C Dwek
M-C Dwek
M-C Dwek
M-C Dwek
M-C Dwek
P Campbell-White
No. of options
38,191
22,857
146,250
118,791
83,153
70,000
Date of grant
September 2014
September 2015
October 2019
October 2019
June 2022
June 2022
Exercise price payable
90p
90p
90p
50p
50p
5p
During the year M-C Dwek was
awarded 83,153 options with an
exercise price of 50p and vest 1/3
in June 2023, 1/3 in June 2024 and
1/3 June 2025.
During the year 72,097 of M-C
Dwek’s existing options vested and
247,272 options lapsed.
During the year P Campbell-White
was awarded 70,000 options with
an exercise price of 5p. These
options vest after 3 years subject
to an additional share price vesting
criteria that the average closing
mid-market share price on the 10
business days preceding the date
of exercise must exceed 63.88p,
being a 75% premium to the
closing mid-market share price on
the day before grant date.
Approval
This remuneration report was
approved by order of the Board on
25 September 2023.
Marie-Claire Dwek
Director
38
Newmark Security PLC – Report and Financial Statements 2023
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF NEWMARK SECURITY PLC
Opinion
Accounting Practice; and
We have audited the financial
statements of Newmark Security plc
(the ‘parent company’) and its
subsidiaries (the ‘group’) for the year
ended 30 April 2023 which comprise
the Consolidated Income Statement,
the Consolidated and Company
Statements of Financial Position, the
Consolidated and Company
Statements of Changes in Equity, the
Consolidated Statement of Cash
Flows and the related 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).
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 2023
and of the group’s profit 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
39
•
the financial statements have been
prepared in accordance with the
requirements of the Companies Act
2006.
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 are
independent of the group and
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. We believe that the
audit evidence we have obtained is
sufficient and appropriate to provide
a basis for our opinion.
Our approach to the audit
We adopted a risk-based audit
approach. We gained a detailed
understanding of the group’s
business, the environment it
operates in and the risks it faces.
The key elements of our audit
approach were as follows:
In order to assess the risks
identified, the engagement team
performed an evaluation of
identified components and to
determine the planned audit
responses based on a measure of
materiality, calculated by
considering the significance of
components as a percentage of the
group’s total revenue and profit
before taxation and the group’s total
assets.
From this, we determined the
significance of each component to
the group as a whole and devised
our planned audit response. In order
to address the audit risks described
in the Key audit matters section
which were identified during our
planning process, we performed a
full-scope audit of the financial
statements of the parent company,
Newmark Security plc, and two of
the UK trading entities, Safetell
Limited and Grosvenor Technology
Limited and its US trading subsidiary,
Grosvenor Technology LLC. The
operations that were subject to full-
scope audit procedures made up
100% of consolidated revenues and
100% of consolidated profit after
tax.
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 year and include the
most significant assessed risks of
material misstatement (whether or
not due to fraud) 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.
Risk Description
Revenue recognition:
As detailed in note 1 to the financial statements, the
group’s revenue is generated from a number of
streams, as follows:
•
•
•
Sale of hardware;
Software licenses;
Support and maintenance
Given the material nature of revenue and the variety
of methods it is generated through, the
appropriateness of revenue recognition and
management’s application of the group’s revenue
recognition accounting policies represents a key risk
area of significant judgement in the financial
statements.
Valuation of goodwill and intangibles
The Group has a significant carrying value of
intangible assets and goodwill. The Group’s
assessment of carrying value requires significant
judgement, in particular regarding cash flows,
growth rates, discount rates and sensitivity
assumptions.
Newmark Security PLC – Report and Financial Statements 2023
Our response to the risk
We have assessed accounting policies for consistency
and appropriateness with the financial reporting
framework and in particular that revenue was
recognised when performance obligations were
fulfilled. In addition, we reviewed for the consistency
of application as well as the basis of any recognition
estimates.
We have obtained an understanding of processes
through which the businesses initiate, record, process
and report revenue transactions.
We performed walkthroughs of the processes as set
out by management, to ensure controls appropriate to
the size and nature of operations are designed and
implemented correctly throughout the transaction
cycle.
We selected a sample of transaction from each revenue
stream to confirm that revenue has been recognised in
accordance with the accounting policies and
performance obligations for the recognition have been
met. These have been vouched to invoices, delivery
notes and nominal postings.
We performed cut-off procedures to test transactions
around the year end and verified a sample of revenue
to originating documentation to provide evidence that
transactions were recorded in the correct year.
We tested a sample of post year end credit notes to
related invoices to verify that revenue has been
recorded in the correct accounting year.
We obtained a complete listing of journals posted to
revenue nominal codes and reviewed the listing for any
unexpected entries. These were then tested to
supporting evidence.
Our procedures did not identify any material
misstatements in the revenue recognised during the
year.
We obtained management's assessment, discussed the
key assumptions with management and tested the
arithmetical accuracy of the underlying models. We
challenged the assumptions and judgements used in
the impairment model, which included:
- We considered historical trading performance
by comparing recent growth rates of both
revenue and operating profit.
- We assessed the appropriateness of the
assumptions concerning growth rates and
inputs to the discount rates against latest
market expectations.
40
Newmark Security PLC – Report and Financial Statements 2023
- We performed sensitivity analysis to
determine whether an impairment would be
required if costs increase at a higher than
forecast rate.
- We reviewed the disclosures in the financial
statements.
We have not identified any matters which indicate that
the assumptions and estimates made by management
are unreasonable.
Our application of materiality
Conclusions relating to going concern
We apply the concept of materiality in
planning and performing our audit, in
determining the nature, timing and
extent of our audit procedures, in
evaluating the effect of any identified
misstatements, and in forming our
audit opinion.
The materiality for the group financial
statements as a whole was set at
£201,000. This has been determined
with reference to the benchmark of
the group’s revenue which we
consider to be an appropriate
measure for a group of companies
such as these. Materiality represents
1% of group revenue. Performance
materiality has been set at 75% of
group materiality.
The materiality for the parent
company financial statements as a
whole was set at £72,600 and
performance materiality represents
75% of materiality. This has been
determined with reference to the
parent company’s net assets, which
we consider to be an appropriate
measure for a holding company with
investments in trading subsidiaries.
Materiality represents 2% of net
assets as presented on the face of the
parent company’s Statement of
Financial Position.
41
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.
Our evaluation of the directors’
assessment of the entity’s ability to
continue to adopt the going concern
basis of accounting included:
• Reviewing management’s cash flow
forecasts for a period of at least 12
months from the date of approval of
these financial statements;
• Challenging management on key
assumptions included in their forecast
scenarios;
Considering the potential impact of
various scenarios on the forecasts;
Reviewing results post year end to the
date of approval of these financial
statements and assessing them
against original budgets;
Reviewing the forecasting accuracy
through reviewing the prior year
budgets compared to actuals;
Reviewing waiver agreement for the
breach of bank covenants; and
Reviewing management’s disclosures
in the financial statements.
•
•
•
•
•
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'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.
Other information
The other information comprises the
information included in the annual
report, other than the financial
statements and our auditor’s report
thereon. The directors are responsible
for the other information included in
the annual report. 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 audit, or
otherwise appears to be materially
misstated. If we identify such material
inconsistencies or apparent material
misstatements, we are required to
determine whether there is a material
misstatement in the financial
statements or a material
misstatement of the other
information. If, based on the work we
Newmark Security PLC – Report and Financial Statements 2023
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.
Opinions on other matters prescribed
by the Companies Act 2006
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.
Matters on which we are required to
report by exception
In the light of the knowledge and
understanding of the group and the
parent company and their
environment obtained in the course
of the audit, we have not identified
material misstatements in the
strategic report or the directors’
report.
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, 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’ responsibilities statement
set out on page 36, 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 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. 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:
Our assessment focused on key laws
and regulations the company has to
comply with and areas of the financial
statements we assessed as being more
susceptible to misstatement. These
key laws and regulations included but
were not limited to compliance with
the Companies Act 2006, UK adopted
international accounting standards,
United Kingdom Generally Accepted
Accounting Practice (UK GAAP) and
relevant tax legislation.
We are not responsible for preventing
irregularities and cannot be expected
to detect non-compliance with all laws
and regulations. Our approach to
detecting irregularities included, but
was not limited to, the following:
• Obtaining an understanding of the
legal and regulatory framework
applicable to the entity and how the
entity is complying with that
framework;
42
Newmark Security PLC – Report and Financial Statements 2023
• Obtaining an understanding of the
entity’s policies and procedures and
how the entity has complied with
these, through discussions and
sample testing of controls;
• Obtaining an understanding of the
entity’s risk assessment process,
including the risk of fraud;
• Designing our audit procedures to
•
respond to our risk assessment;
Performing audit testing over the
risk of management override of
controls, including testing of journal
entries and other adjustments for
appropriateness, evaluating the
business rationale of significant
transactions outside the normal
course of business; and
•
Reviewing accounting estimates for
bias specifically in relation to
goodwill and deferred tax assets.
Whilst considering how our audit
work addressed the detection of
irregularities, we also consider the
likelihood of detection based on our
approach. Irregularities arising from
fraud are inherently more difficult to
detect than those arising from error.
Because of the inherent limitations
of an audit, there is a risk that we
will not detect all irregularities,
including those leading to a material
misstatement in the financial
statements or non-compliance with
regulation. This risk increases the
more that compliance with law or
regulation is removed from the
events and transactions reflected in
the financial statements, as we will
be less likely to become aware of
non-compliance. The risk is also
greater regarding irregularities
occurring due to fraud rather than
error, as fraud involves intentional
concealment, forgery, collusion,
omission or misrepresentation.
A further description of our
responsibilities for the audit of the
financial statements is located on
the Financial Reporting Council’s
website at:
www.frc.org.uk/auditorsresponsibilit
ies. This description forms part of
our auditor’s report.
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.
Melanie Hopwell (Senior Statutory
Auditor)
For and on behalf of Cooper Parry
Group Limited
Statutory Auditor
Sky View
Argosy Road
East Midlands Airport
Caste Donington
Derby
DE74 2SA
25 September 2023
43
Newmark Security PLC – Report and Financial Statements 2023
44
Newmark Security PLC – Report and Financial Statements 2023
FINANCIAL STATEMENTS
Consolidated income statement for the year end 30 April 2023
Notes
2023
£'000
2022
£'000
2
20,314
19,145
3
3
6
7
8
8
(12,676)
(12,726)
7,638
6,419
(7,354)
(7,633)
284
-
284
(1,090)
(124)
(1,214)
(348)
(220)
(64)
417
353
353
3.77
3.69
2023
£'000
353
(22)
331
(1,434)
630
(804)
(804)
(0.32)
(0.32)
2022
£'000
(804)
143
(661)
331
(661)
Revenue
Cost of sales
Gross profit
Administrative expenses
Profit/(loss) from operations before exceptional items
Exceptional redundancy costs
Profit/(loss) from operations
Finance costs
Loss before tax
Tax credit
Profit/(loss) for the year
Attributable to:
- Equity holders of the parent
Earnings/(loss) per share
- Basic (pence)
- Diluted (pence)
Consolidated statement of comprehensive income
Profit/(loss) for the year
Foreign exchange on the retranslation of overseas operation
Total comprehensive profit/(loss) for the year
Attributable to:
- Equity holders of the parent
The notes on pages 49 to 76 form part of these financial statements.
45
Newmark Security PLC – Report and Financial Statements 2023
Consolidated statement of financial position at 30 April 2023
Company number: 03339998
ASSETS
Non-current assets
Property, plant and equipment
Intangible assets
Deferred tax
Total non-current assets
Current assets
Inventories
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
Share capital
Share premium reserve
Merger reserve
Foreign exchange difference reserve
Retained earnings
Total attributed to equity holders
Non-controlling interest
TOTAL EQUITY
Note
9
10
7
13
14
15
16
17
20
21
22
22
22
22
22
The financial statements were approved by the Board of Directors and authorised for issue on 25 September 2023.
Paul Campbell-White
Director
The notes on pages 49 to 76 form part of these financial statements.
2023
£'000
2,914
5,450
454
8,818
4,150
4,978
581
9,709
2022
£'000
2,088
5,564
410
8,062
3,983
3,979
157
8,119
18,527
16,181
4,559
3,402
7,961
2,537
100
2,637
10,598
7,929
4,687
553
801
(181)
2,029
7,889
40
7,929
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
46
Newmark Security PLC – Report and Financial Statements 2023
Consolidated statement of cash flows for the year ended 30 April 2023
Notes
3
3
6
3
7
9
10
17
23
16
2023
£'000
353
1,201
-
348
(37)
27
(417)
1,475
(999)
(167)
1,384
1,693
-
1,693
400
2,093
(405)
37
(462)
(830)
(400)
(394)
290
(299)
(803)
460
157
(36)
581
2022
£'000
(804)
1,248
124
220
(30)
7
(630)
135
(29)
(856)
(658)
(1,408)
(124)
(1,532)
871
(661)
(561)
30
(766)
(1,297)
(267)
(424)
2,263
(84)
1,488
(470)
484
143
157
Cash flow from operating activities before exceptional items
Profit/(loss) after tax
Adjustments for: Depreciation, amortisation and impairment
Exceptional items
Finance cost
Gain on sale of property, plant and equipment
Share based payment
Corporation tax credit
Operating profit before changes in working capital and provisions
Increase in trade and other receivables
Increase in inventories
Increase/(decrease) in trade and other payables
Cash generated from operations before exceptional items
Exceptional items
Cash generated from operations after exceptional items
Corporation tax recovered
Cash flow from operating activities
Cash flow from investing activities
Acquisition of property, plant and equipment
Sale of property, plant and equipment
Aquisition of intangible assets
Cash flow from financing activities
Bank loans paid
Principal paid on lease liabilities
Proceeds on invoice financing
Interest paid
Increase/(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 49 to 76 form part of these financial statements.
47
Consolidated statement of changes in equity
Newmark Security PLC – Report and Financial Statements 2023
Share
capital
£'000
4,687
-
-
Share
capital
£'000
4,687
-
-
At 1 May 2022
Profit for the year
Other comprehensive income
Total comprehensive income/(loss)
for the year
Transactions with owners
Share based payment
As at 30 April 2023
At 1 May 2021
Loss for the year
Other comprehensive income
Total comprehensive income/(loss)
for the year
Transactions with owners
Share based payment
As at 30 April 2022
Share
premium
Merger
reserve
Foreign
exchange
reserve
Retained
earnings
Amounts
attributable
to owners of
the parent
Non-
controlling
interest
£'000
£'000
£'000
£'000
£'000
£'000
553
-
-
801
-
-
(159)
-
(22)
1,649
353
-
7,531
353
(22)
-
-
-
(22)
353
331
-
4,687
-
553
-
801
-
(181)
27
2,029
27
7,889
Share
premium
Merger
reserve
Foreign
exchange
reserve
Retained
earnings
Amounts
attributable
to owners of
the parent
Non-
controlling
interest
£'000
£'000
£'000
£'000
£'000
£'000
553
-
-
801
-
-
(302)
-
143
2,446
(804)
-
8,185
(804)
143
-
-
-
143
(804)
(661)
-
4,687
-
553
-
801
-
(159)
7
1,649
7
7,531
The notes on pages 49 to 76 form part of these financial statements.
40
-
-
-
-
40
40
-
-
-
-
40
Total
equity
£'000
7,571
353
(22)
331
27
7,929
Total
equity
£'000
8,225
(804)
143
(661)
7
7,571
48
Newmark Security PLC – Report and Financial Statements 2023
1. Accounting policies
Newmark Security (the “Company”) is
a public limited company, limited by
shares, registered number 03339998
in England & Wales. The consolidated
financial statements of the Company
comprise the Company and its
subsidiaries (together referred to as
the “Group”).
The financial statements are for the
year ending 30 April 2023 (2022: year
ended 30 April 2022).
Basis of preparation
The primary economic environment in
which the Group operates is the UK
and therefore the consolidated
financial statements are presented in
pounds sterling (‘£’).
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 UK
adopted international accounting
standards (“IFRS”) 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.
49
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.
For the year ended 30 April 2023 the
covenant returned to the original pre-
debt service cashflow of 1.2 times the
level of debt service commencing,
based on audited accounts. The 2023
calculation was 1.45 so 121% of the
target. No other financing facilities of
the Group have any covenant
requirements.
In January 2023, the Group increased
its UK HSBC invoice financing facility to
£2.3 million to provide additional
working capital headroom. At 30 April
2023, £2.0 million was being utilised.
In February 2022, the Group secured a
3 year $2 million invoice financing
facility with Seacoast National Bank
against invoices raised from our US
operation. At 30 April 2023, $0.6
million of the facility was being
utilised. The level of invoice financing
available varies with the open book of
trade debtors at any point in time and
therefore the level of financing
fluctuates.
At 30 April 2023 the Group had a £0.2
million overdraft facility with its
bankers, HSBC, although none was
utilised as the Group had a positive
bank balance of £0.6 million at year
end. This overdraft facility increased
to £0.4 million on 27 July 2023.
The Group’s going concern assessment
is based on the Group continuing to
generate operating cashflows the year
to 30 April 2024. and stock levels
starting to unwind from their historic
high levels.
Newmark Security PLC – Report and Financial Statements 2023
The latest forecast of the Group
results in exceeding the debt service
covenant test by 48%. 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
48% headroom in the latest covenant
calculation it would take a large
reduction in gross material margin to
cause in a covenant breach at April
2024.
However, management are confident
that the shortfalls will not occur but
are undertaking regular reviews and
forecasts to ensure this.
The Group is currently trading ahead
of budget and continues to generate
operating cashflows in FY24.
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
September 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 financing
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
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 2023.
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.
50
Newmark Security PLC – Report and Financial Statements 2023
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
51
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
Newmark Security PLC – Report and Financial Statements 2023
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
provision account with the loss being
recognised within overheads in the
consolidated income statement. 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 consolidated statement of
financial position
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.
The fair value of the share options is
measured using either a Black–Scholes
or Monte Carlo model, taking into
account the terms and conditions of
the individual scheme.
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-of-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
52
Newmark Security PLC – Report and Financial Statements 2023
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
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
53
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 the
consolidated income statement.
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.
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
Newmark Security PLC – Report and Financial Statements 2023
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
• 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.
At each reporting date, inventories
are assessed for impairment. If
inventory is impaired, the carrying
amount is reduced to its selling price
less costs to complete and sell. The
impairment is recognised immediately
in the Consolidated Income
Statement.
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.
54
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 7.
Newmark Security PLC – Report and Financial Statements 2023
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 11 including forecasts from
formally approved cash projections to
April 2026. 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
September 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 53. 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
Borrowing costs
Borrowing costs are recognised as an
expense in the period in which they
are incurred.
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 consolidated
statement of financial positiondate
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.
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
55
Newmark Security PLC – Report and Financial Statements 2023
2. 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
2023
£'000
2022
£'000
13,245
89
-
2,240
13,468
180
-
910
15,574
14,558
13,334
2,240
15,574
13,648
910
14,558
2023
£'000
2,694
-
2,046
-
4,740
4,740
-
4,740
Total
2023
£'000
2022
£'000
15,939
89
2,046
2,240
16,600
180
1,455
910
2022
£'000
3,132
-
1,455
-
4,587
20,314
19,145
4,587
-
4,587
18,074
2,240
20,314
18,235
910
19,145
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
Mexico
Middle East
Sweden
Switzerland
Ireland
Rest of the world
2023
£'000
8,520
7,417
1,260
955
774
457
186
104
76
45
520
2022
£'000
8,039
8,287
1,029
766
476
-
71
86
58
59
274
20,314
19,145
There was one customer that accounted for more than 10% of Group revenue at £2 million (2022: two customers accounted for more
than 10% of revenue at £3.2 million and £2.5 million respectively).
56
Newmark Security PLC – Report and Financial Statements 2023
3. Profit/(loss) from operations
This has been arrived at after charging/(crediting):
Staff costs
Exceptional redundancy costs
Depreciation of property, plant, and equipment
Amortisation of intangibles assets
Foreign exchange differences
Profit on disposal of property, plant and equipment
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
4
9
10
2023
£'000
7,274
-
625
576
1
(37)
2023
£'000
15
37
48
-
2022
£'000
7,119
124
542
706
(130)
(30)
2022
£'000
20
42
70
32
100
164
Exceptional costs
During the year exceptional costs of £nil (2022: £124,000) were incurred. In the prior year there were £124,000 of restructuring costs
in Grosvenor Technology Limited, Safetell Limited and the parent company.
4. 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
2023
£'000
6,338
27
266
643
7,274
2023
No.
47
52
99
2022
£'000
6,048
7
286
778
7,119
2022
No.
49
54
103
57
Newmark Security PLC – Report and Financial Statements 2023
4. Staff costs (continued)
Key management remuneration (comprising the Executive Directors and Directors of subsidiary companies):
Salaries*
Employers national insurance contributions and similar taxes
Share options expense
2023
£'000
870
122
18
1,010
2022
£'000
842
131
7
980
The emoluments of the Directors of the parent company are set out in the Directors’ remuneration report on pages 37 and 38.
*Includes termination costs of £30,000 in 2022.
5. 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 77% (2022: 76%) 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% (2022: 24%) 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
2023
£'000
Physical
Security
Solutions
division
2023
£'000
Total
2023
£'000
Revenue from external customers
15,574
4,740
20,314
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
154
341
572
2,196
58
230
-
(685)
1,299
457
13,556
4,980
463
484
3,739
3,518
212
571
572
1,510
1,933
976
17,295
8,498
58
Newmark Security PLC – Report and Financial Statements 2023
5. Segment information (continued)
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/modification of non-current assets
Reportable segment assets
Reportable segments liabilities
99
304
703
312
1,292
488
13,094
4,722
20
228
-
119
532
703
(103)
209
158
198
2,299
1,530
1,450
686
15,392
6,252
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
Profit/(loss) 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
2023
£'000
2022
£'000
20,314
19,145
1,510
(604)
(970)
(64)
417
353
17,295
1,261
18,556
8,498
2,128
10,626
*
**
209
(809)
(834)
(1,434)
630
(804)
15,392
789
16,181
6,252
2,358
8,610
*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.
59
Newmark Security PLC – Report and Financial Statements 2023
5. Segment information (continued)
Geographical information:
Non-current assets by location of assets
UK
USA
2023
£'000
7,280
1,084
8,364
Reportable
segment
totals
2023
£'000
Group
Totals
2023
£'000
Reportable
segment
totals
2022
£'000
PLC
2023
£'000
1,761
171
1,933
942
1,146
34
55
976
1,201
1,443
623
1,235
PLC
2022
£'000
7
-
13
Other material items
Additions to non-current assets
Disposals and modifications of
non-current assets
Depreciation and amortisation
6. Finance costs
Lease interest cost
Bank loans and overdraft
Invoice financing
7. Tax and deferred tax
Current tax
UK corporation tax on profit for the year
Overseas corporation tax
Adjustment to provision in prior periods
Deferred tax
Origination and reversal of temporary differences
Effect of change in corporation tax rate
Adjustment to provision in prior periods
Total tax credit
2022
£'000
7,092
560
7,652
Group
Totals
2022
£'000
1,450
623
1,248
2022
£'000
44
101
75
220
2022
£'000
(338)
-
(88)
(426)
(159)
(61)
16
(204)
(630)
60
2023
£'000
49
141
158
348
2023
£'000
-
(25)
(348)
(373)
(16)
-
(28)
(44)
(417)
Newmark Security PLC – Report and Financial Statements 2023
7. Tax and deferred tax (continued)
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:
Loss before tax
Expected tax credit based on the standard rate of corporation tax in the UK
of 19.49% (2022: 19.0%)
Research and development allowances
Effects on profits on items not taxable or deductible for tax purposes
Effects of corporation tax change
Movement in deferred tax not recognised
Remeasurement of deferred tax for changes in tax rate
Fixed asset differences
Foreign tax credits
Adjustments in respect of prior period
Adjustment in respect of prior period (deferred tax)
Other movements
Total tax credit
2023
£'000
(64)
(12)
(347)
17
-
190
(14)
(25)
(247)
(28)
46
(417)
2022
£'000
(1,434)
(272)
(142)
24
(61)
-
4
6
25
(71)
(143)
-
(630)
3
The comparative figures within the reconciliation from the standard rate of tax to the effective rate of tax for the company have been
restated in order to more fairly reflect the nature of reconciling items. This restatement has no impact on the tax charge, profit after tax
or net assets.
The Group has the following tax losses, subject to agreement by HMRC Inspector of Taxes, available for offset against future trading
profits as appropriate:
2023
£’000
240
5,622
5,862
2023
£’000
240
1,425
1,665
2022
£’000
170
5,203
5,373
2022
£’000
170
732
902
Management expenses and loan relationship deficits
Trading losses
A deferred tax asset has not been recognised for the following:
Management expenses and loan relationship deficits
Trading losses
61
Newmark Security PLC – Report and Financial Statements 2023
7. Tax and deferred tax (continued)
Deferred tax
Deferred tax is calculated in full on temporary differences under the liability method using a tax rate of 25% (2022: 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:
Asset/(liability)
At 1 May 2022
Income statement (charge) / credit
At 30 April 2023
Asset/(liability)
At 1 May 2021
Income statement credit/(charge)
At 30 April 2022
Total
410
44
454
206
204
410
Fixed
Assets
(639)
(25)
(664)
146
(785)
(639)
Other temporary
and deductible
differences Available losses
-
69
69
(526)
526
-
1,049
-
1,049
586
463
1,049
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.
There are unrecognised deferred tax assets as listed above, which have not been recognised due to the uncertainty of the timing of
future profits.
8. Earnings per share (EPS)
Numerator
Profit/(loss) 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
2023
£'000
353
2022
£'000
(804)
9,374,647
190,325
9,564,972
252,267,880
-
252,267,880
The total number of share options are disclosed in note 24. 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.
62
Newmark Security PLC – Report and Financial Statements 2023
8. Earnings per share (EPS) (continued)
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 before exceptional items
Exceptional costs
Earnings per share after exceptional items
Reconciliation of earnings
Profit/(loss) before exceptional items
Exceptional costs
Profit/(loss) after exceptional items
Basic
2023
pence
3.77
-
3.77
Diluted
2023
pence
3.69
-
3.69
Basic
2022
pence
(0.32)
0.05
(0.27)
2023
£’000
353
-
353
Diluted
2022
pence
(0.32)
0.05
(0.27)
2022
£’000
(804)
124
(680)
63
Newmark Security PLC – Report and Financial Statements 2023
9. Property, Plant and Equipment
Right-of-
use land
and
buildings
£'000
Right-of-
use plant,
machinery
and motor
vehicles
£'000
Leasehold
improvements
£'000
Plant,
machinery
and motor
vehicles
£'000
Computers,
fixtures and
fittings
£'000
1,492
759
(87)
-
-
2,164
(452)
87
-
-
(243)
(608)
834
307
(474)
(17)
-
650
(526)
437
17
-
(168)
(240)
361
42
-
-
-
403
(296)
-
-
-
(24)
(320)
209
6
139
17
-
371
(183)
(97)
(17)
-
(19)
(316)
1,849
357
(351)
-
3
1,858
(1,200)
324
-
(1)
(171)
(1,048)
Total
£'000
4,745
1,471
(773)
-
3
5,446
(2,657)
751
-
(1)
(625)
(2,532)
1,556
410
83
55
810
2,914
1,525
-
(37)
4
1,492
(276)
-
(2)
(174)
(452)
853
124
(146)
3
834
(489)
137
-
(174)
(526)
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)
4,719
685
(686)
27
4,745
(2,702)
596
(9)
(542)
(2,657)
1,040
308
65
26
649
2,088
Cost
Balance at 1 May 2022
Additions
Disposals
Transfers
Net exchange differences
Balance at 30 April 2023
Depreciation
Balance at 1 May 2022
Disposals
Transfers
Net exchange differences
Depreciation
Balance at 30 April 2023
Net book value 30 April
2023
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
64
Newmark Security PLC – Report and Financial Statements 2023
10. Intangible assets
Goodwill
£'000
Development
costs
£'000
Licenses,
patents
and
copyrights
£'000
Other
£'000
Gross carrying amount
Balance at 1 May 2022
Additions - internally developed
Additions - external costs
Balance at 30 April 2023
Amortisation and impairment
Balance at 1 May 2022
Amortisation
Balance at 30 April 2023
6,872
-
-
6,872
(4,137)
-
(4,137)
*
10,176
460
-
10,636
(7,381)
(566)
(7,947)
Carrying amount 30 April 2023
2,735
2,689
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
62
-
2
64
(31)
(7)
(38)
26
61
-
1
62
(23)
(8)
(31)
31
9
-
-
9
(6)
(3)
(9)
-
9
-
-
9
(3)
(3)
(6)
3
Total
£'000
17,119
460
2
17,581
(11,555)
(576)
(12,131)
5,450
16,354
257
508
17,119
(10,849)
(706)
(11,555)
5,564
*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 (2022: £Nil).
11. Goodwill and impairment
The carrying amount of goodwill is allocated to the cash generating units (CGU’s) as follows:
People and Data Management division
2023
£'000
2,735
2022
£'000
2,735
65
Newmark Security PLC – Report and Financial Statements 2023
11. Goodwill and impairment (continued)
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 2026. The discount rate that was applied was 15% for the People and Data Management division (2022: 12.5%), 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 23% (2022: 21%). 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 35% to 39% (2022: 32% to 38%) with the increase due to growth of higher margin recurring revenue. 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 62%.
12. 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
UK
UK
UK
UK
UK
UK
The Netherlands
The Netherlands
UK
UK
UK
UK
UK
UK
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 UK 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.
(4) All the companies have a 30 April year end.
66
Newmark Security PLC – Report and Financial Statements 2023
13. 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 £8,557,000 (2022: £8,286,000).
There is no material difference between the replacement cost of stocks and the amounts stated above.
14. Trade and other receivables
Trade receivables
Less provision for impairment
Trade receivables (net)
Other receivables
Accrued income
Prepayments
Corporation tax recoverable
2023
£'000
2,870
95
1,518
(333)
4,150
2023
£'000
(285)
219
(267)
(333)
2023
£'000
3,814
(77)
3,737
301
260
378
302
4,978
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
At 30 April 2023 £2,551,000 (2022: £2,261,000) of trade receivables had been transferred to a provider of invoice financing 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 both the Physical Security Solutions division and 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 usiness customer which is not expected to change significantly. Where necessary for
67
Newmark Security PLC – Report and Financial Statements 2023
14. Trade and other receivables (continued)
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.
The credit risk associated with trade receivables is managed through the Company’s standard credit processes. The directors consider
that the carrying amount of trade receivables approximates to their fair value.
At 30 April 2023 trade receivables of £1,984,000 (2022: £497,000) were past due but not impaired. The ageing analysis of these
receivables is as follows:
As at 30 April 2023
Gross carrying amount
Loss provision
Expected Loss ratio
As at 30 April 2022
Gross carrying amount
Loss provision
Expected Loss ratio
Current 30 days past due 60 days past due
120 days past
due
£'000
£'000
£'000
£'000
1,830
-
0.0%
2,578
-
0.0%
1,766
(2)
(0.1)%
287
(6)
(2.1%)
123
(6)
95
(69)
(4.9%)
(72.6%)
145
(8)
65
(21)
(5.5%)
(32.3%)
Total
£'000
3,814
(77)
(2.0%)
3,075
(35)
(1.2%)
Movements on Group provisions for impairment of trade receivables are as follows:
Opening balance
Increase/(decrease) in provisions
Closing balance
2023
£'000
35
42
77
2022
£'000
40
(5)
35
The movement on the provision for impaired receivables has been included in the administrative expense line in the income statement.
15. Trade and other payables
Trade payables
Other taxes and social security
Other payables
Deferred income
Accruals
Holiday pay provision
All deferred income brought forward in 2023 and 2022 has been fully recognised in the current year.
2023
£'000
2,131
848
78
690
723
89
4,559
2022
£'000
1,021
1,118
289
268
366
43
3,105
68
Newmark Security PLC – Report and Financial Statements 2023
16. Short-term borrowings
Lease creditor (note 23)
Invoice financing accounts
Bank loan
2023
£'000
451
2,551
400
3,402
2022
£'000
297
2,261
400
2,958
The UK invoice financing facility 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 financing facility 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.
Information about fair values on the financial liabilities is given in note 19.
17. Long-term borrowings
Lease creditor (note 23)
Bank loan
Maturity profile of bank loan:
Up to 12 months
1 to 2 years
2 to 5 years
Total
2023
£'000
1,604
933
2,537
2023
£'000
400
400
133
933
2022
£'000
1,114
1,333
2,447
2022
£'000
400
400
533
1,333
Information about fair values on the financial liabilities is given in note 19.
18. 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.
69
18. 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
Total current financial liabilities
Non-current financial liabilities
Loans and borrowings
Total non-current financial liabilities
Total financial liabilities
Newmark Security PLC – Report and Financial Statements 2023
Amortised cost
2023
£'000
4,120
581
4,701
2022
£'000
3,064
157
3,221
Financial liabilities
measured at amortised cost
2022
£'000
2023
£'000
2,209
812
3,402
6,423
2,537
2,537
8,960
1,310
409
2,958
4,677
2,447
2,447
7,124
Financial instrument risk exposure management
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 14, 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 financing
• 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.
70
Newmark Security PLC – Report and Financial Statements 2023
18. 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 financing 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
2023
£'000
3,266
244
487
2,912
6,909
2022
£'000
1,915
196
279
2,857
5,247
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. At 30 April 2023 there were four
contracts in place for $1,350,000 which would translate to £623,366 and €564,023 in the first half of the next financial year (FY24).
Subsequent to the year end, further contracts were put in place for $2,400,000 to convert to £1,865,093 before the end of FY24.
71
Newmark Security PLC – Report and Financial Statements 2023
18. 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
2023
£'000
(112)
(112)
2022
£'000
453
453
Euro
2023
£'000
97
97
2022
£'000
(167)
(167)
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 increase in pre-tax profit for the year and decrease of net assets of £2,000 (2022: £32,000). A 10% weakening in the exchange rates
would, on the same basis, have decreased pre-tax profit and increased net assets by £1,000 (2022: £26,000).
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 16.
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
19. Financial assets and liabilities
2023
£'000
5,939
(581)
5,358
7,929
67.6%
2022
£'000
5,405
(157)
5,248
7,571
69.3%
Fixed rate liabilities at 30 April 2023 comprise of the £1,333,000 bank loan being repaid on monthly instalments ending August 2026
and £2,055,000 of lease liabilities with a remaining life of between 1 to 9 years.
The weighted average interest rate of fixed rate liabilities at 30 April 2023 is 3.97% (2022: 3.94%).
72
Newmark Security PLC – Report and Financial Statements 2023
19. Financial assets and liabilities (continued)
Fair values
The book value and fair values of fixed rate financial liabilities are as follows:
Bank Loan
Lease liabilities
Book value
2023
£'000
Fair value
2023
£'000
Book value
2022
£'000
Fair value
2022
£'000
1,333
2,055
3,388
1,495
2,280
3,775
1,733
1,411
3,144
1,943
1,584
3,527
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 2023 and 2022 are equal to their book value.
20. Provisions
As at 1 May 2022 and 30 April 2023
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.
21. Share capital
Allotted, called up and fully
paid
2023
2022
Number
£’000
Number
£’000
Ordinary share of 5p each
9,374,647
Ordinary shares of 1p each
-
Deferred shares of 0.9p each
468,732,350
469
-
4,218
4,687
9,374,647
-
468,732,35
0
469
-
4,218
4,687
At the Annual General Meeting held on 10 November 2021, 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 2021, 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.
73
Newmark Security PLC – Report and Financial Statements 2023
21. Share capital (continued)
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.
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.
22. Reserves
Called up share capital reserve represents the nominal value of the shares issued.
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.
Non-controlling interest represents the share of a non-wholly owned subsidiary’s net assets that are not directly attributable to the
shareholders of the Company. The subsidiary is the dormant company Vema N.V.
23. Leases
The group’s liabilities relating to leased assets are as follows:
Lease Liability at 30 April 2022
Additions
Interest payments
Interest expense
Lease surrendered
Lease modification
Lease payments
Lease Liability at 30 April 2023
Lease Liability at 30 April 2021
Additions
Interest payments
Interest expense
Lease payments
Lease Liability at 30 April 2022
2023
£’000
(1,411)
(1,066)
49
(49)
32
(4)
394
(2,055)
2022
£’000
(1,668)
(119)
48
(48)
376
(1,411)
74
Newmark Security PLC – Report and Financial Statements 2023
23. Leases (continued)
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.
The lease liability repayment profile is shown below:
Lease payments
Finance charges
Net present values at 30 April 2023
Lease payments
Finance charges
Net present values at 30 April 2022
Total
£'000
2,280
(225)
2,055
Total
£'000
1,589
(178)
1,411
Within
1 yr
£'000
526
(75)
451
Within
1 yr
£'000
336
(39)
297
1-2
years
£'000
413
(55)
358
1-2
years
£'000
219
(35)
184
2-3
years
£'000
419
(37)
382
2-3
years
£'000
150
(25)
125
Greater
than 4
years
years
£'000
705
(39)
666
Greater
than 4
years
years
£'000
751
(59)
692
3-4
years
£'000
217
(19)
198
3-4
years
£'000
133
(20)
113
The nature of the right of use assets contracts are described below:
Number of right of
use assets leased
Range of remaining
term (years)
Number of leases with
option to purchase
Number of leases with
termination option
Office building
Vehicles
Other Equipment
4
23
2
1-9
0-4
0-5
-
9
-
2
-
1
See note 9 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.
24. Share-based payments
In September 2019 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. Options had previously been granted under the 2007 EMI plan.
The EMI share options usually 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. All options have a 10 year life.
The table below summarises the movements in the number of share options outstanding:
75
Newmark Security PLC – Report and Financial Statements 2023
24. Share-based payments (continued)
2023
No. of options
2022
No. of options
Outstanding at beginning of year
Granted during the year
Forefeited during the year
Lapsed during the year
613,361
378,153
(40.000)
(247,272)
Outstanding at end of year
704,242
Exercisable at end of year
230,645
731,361
-
(118,000)
-
613,361
445,820
The options granted in the current and prior years are valued using the assumptions below:
Share
price
at date
of grant
(pence)
1.475
34.8
34.8
45.0
36.5
36.5
Exercise
price
(pence)
Vesting
period
and
conditions
Expected
volatility
%
146
90
50
85
50
5
a
b
c
a
c
d
43%
43%
43%
43%
51%
51%
Dividend
yield
Risk-
free
rate
Fair
value
Valuation
method
%
3%
3%
3%
3%
3%
3%
%
(pence)
-
-
-
-
-
-
36.3
2.7
5.9
5.5
12.6
26.3
Black Scholes
Black Scholes
Black Scholes
Black Scholes
Black Scholes
Monte Carlo
Date of grant
May 2016
October 2019
October 2019
October 2019
June 2022
June 2022
Notes
a) Options vest 3 years after date of grant
b) Options vest in accordance with the dates from their original vesting schedule which was 1/3 one year after date of grant,
1/3 two years after date of grant, 1/3 years after date of grant. See below for further details regarding the modification
c) Options vest 1/3 one year after date of grant, 1/3 two years after date of grant, 1/3 years after date of grant
d) Options vest 3 years after date of grant subject to an additional share price vesting criteria that the average closing mid-
market share price on the 10 business days preceding the date of exercise must exceed 63.88p, being a 75% premium to
the closing mid-market share price on the day before grant date
• Certain existing share options were modified in October 2019 by cancelling and issuing new options retaining the same traits as the
cancelled share options with an updated subscription price
• 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. The 2022 opening option
figures including numbers outstanding, exercise prices and fair values have been restated to reflect this share re-organisation
• The remaining weighted average contractual lives were 8.1 years (2022: 3.6 years). The share based remuneration expense for equity
settled schemes was £27,000 (2022: £7,000).
25. Related party transactions
Details of Directors’ remuneration are given in the Directors’ Remuneration report on pages 37 to 38.
26. Subsequent events
The Directors are not aware of any material events which occurred after the reporting date of these financial statements which will
significantly affect the financial position of the Group or the results of its operations.
76
Newmark Security PLC – Report and Financial Statements 2023
Company statement of financial position
At 30 April 2023
Company number: 03339998
Fixed assets
Investment in subsidiaries
Tangible assets
Intangible assets
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
Note
2023
£’000
3,788
(13,526)
3
4
4
5
6
7
8
8
8
8
2023
£’000
14,236
120
-
14,356
(9,738)
4,618
(986)
3,632
4,687
553
801
(2,409)
3,632
2022
£’000
4,707
(13,773)
2022
£’000
14,236
17
3
14,256
(9,066)
5,190
(1,338)
3,852
4,687
553
801
(2,189)
6,017
The Company has elected to take the exemption under section 408 of the Companies Act 2006 from presenting the Company income
statement. The Company’s loss for the current year was £230,000 (2022: loss £2,172,000).
The notes on pages 79 to 84 form part of these financial statements.
These financial statements were approved by the Board of Directors and authorised for issue on 25 September 2023.
Paul Campbell-White
Director
77
Company statement of changes in equity
01 May 2022
Comprehensive Income/(loss) for the year
Income and total comprehensive income/(loss) for the year
Transaction with owners
Share based payments
30 April 2023
01 May 2021
Comprehensive Income/(loss) for the year
Income and total comprehensive income/(loss) for the year
Transaction with owners
Share based payments
Newmark Security PLC – Report and Financial Statements 2023
Share
capital
Share
premium
Merger
reserve
Retained
earnings
Total
equity
4,687
553
801
(2,189)
3,852
-
-
4,687
4,687
-
-
-
-
553
553
-
-
-
(230)
(230)
-
801
801
-
-
10
(2,409)
10
3,632
(24)
6,017
(2,172)
(2,172)
7
30 April 2022
4,687
553
801
(2,189)
The notes on pages 79 to 84 form part of these financial statements.
7
3,852
78
Newmark Security PLC – Report and Financial Statements 2023
1. Accounting policies
Basis of preparation
The Company financial statements for
Newmark Security plc 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 Company and
company except as noted.
The financial statements are for the
year ending 30 April 2023 (2022: year
ended 30 April 2022).
The primary economic environment in
which the Company operates is the UK
and therefore the financial statements
are presented in pounds sterling (‘£’).
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 Company 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
79
statements do not include certain
disclosures in respect of:
• Share based payments; and
• Financial instruments.
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 2023 is
£230,000 (2022: loss of £2,172,000).
Tangible and Intangible fixed 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.
Land and buildings
– over the term of the lease on a
straight line basis.
Website costs are amortised
– 33% per annum straight line
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 recognised 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 recognised. 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.
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 Company’s cash- generating
units that are expected to benefit from
the synergies of the combination
giving rise to the goodwill.
Newmark Security PLC – Report and Financial Statements 2023
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.
Leases
For any new contracts entered into
the Company 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-of-use
an asset for a period of time in
exchange for consideration’. To apply
this definition the Company 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
Company;
• the Company 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 Company has the right to direct
the use of the identified asset
throughout the period of use. The
Company 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
Company’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
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
Company 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 Company 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 Company
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 the
consolidated income statement.
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.
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 Company overcomes technological
uncertainties. This work is carried out
for the internal development of
hardware and software in the
Companys own products and services
that it sells and also carries out this
work on behalf of other companies.
The internal development R&D claim
80
Newmark Security PLC – Report and Financial Statements 2023
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
Company 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
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 Company’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
Company 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.
81
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 Company 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
• 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
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 consolidated
statement of financial positiondate
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.
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.
b) Recoverability of amounts owed by
group undertakings.
The recoverability of the amounts
owed by group undertakings is
assessed on an annual basis or more
frequently when an indication of
impairment exists. Determining
whether there is an indication of
impairment requires judgement as the
assessment is based on either net
assets of the undertaking or forecast
future performance.
Newmark Security PLC – Report and Financial Statements 2023
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
The pension creditor at 30 April 2023 was £3,484 (2022: £1,655).
3. Investments in subsidiaries
Cost
At 30 April 2023 and 30 April 2022
Impairment provision
At 30 April 2022
Impairment
At 30 April 2023
Net book value
At 30 April 2023 and 30 April 2022
2023
£’000
502
33
69
604
2023
No.
2
2
2022
£’000
675
34
100
809
2022
No.
4
4
£’000
21,869
7,633
-
7,633
14,236
The subsidiaries of Newmark Security plc are listed in note 12 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 2026 (2022: three-year period). The discount
rate that was applied was 15% for the People and Data Management division (2022: 12.5%) and 15% for the Physical Security Solutions
division (2022: 12.5%), 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 23% (2022: 21%). 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 35% to 39% (2022: 32% to 38%).
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 62%.
For the Physical Security Solutions division, the compound annual revenue growth rate for the year ended April 2023 to the year ended
April 2026 is growing at a 19% rate (2022: 15%). The gross margin assumed in the forecasts is 42% to 43% (2022: 43%). 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%.
82
Newmark Security PLC – Report and Financial Statements 2023
4. Tangible and intangible fixed assets
Right-of-use
Motor vehicles
and Land &
Buildings
£'000
Computers
Fixtures and
Fittings
£'000
Total Tangible
assets
£'000
Intangible
Website costs
£'000
Cost
Balance at 1 May 2022
Additions
Disposals
Balance at 30 April 2023
Depreciation
Balance at 1 May 2022
Disposals
Depreciation
Balance at 30 April 2023
Net book value 30 April 2023
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
5. Debtors
`
34
169
(34)
169
(21)
30
(63)
(54)
115
34
34
(13)
(8)
(21)
13
18
3
-
21
(14)
-
(2)
(16)
5
11
7
18
(11)
(3)
(14)
4
Amount due from Group undertakings
Prepayments
All amounts shown under debtors fall due for payment within one year.
The amounts due from Group undertakings has no associated interest and is repayable on demand.
52
172
(34)
190
(35)
30
(65)
(70)
120
45
7
52
(24)
(11)
(35)
17
2023
£'000
3,781
7
3,788
9
-
9
(6)
(3)
(9)
-
9
9
(3)
(3)
(6)
3
2022
£'000
4,695
12
4,707
83
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
Newmark Security PLC – Report and Financial Statements 2023
2023
£'000
576
400
141
11,815
255
58
281
13,526
2022
£'000
939
400
27
11,815
408
8
176
13,773
*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.
7. Long-term borrowings
Lease creditor
Bank loan
The lease arises on a motor vehicle which is denominated sterling and is for a period of 36 months.
Maturity profile of bank loan:
Up to 12 months
1 to 2 years
2 to 5 years
Total
8. Capital and reserves
2023
£'000
53
933
986
2023
£'000
400
400
133
933
Details of the Company’s called-up share capital are disclosed in note 21 of the Group financial statements.
A description of reserves is disclosed in note 22 of the Group financial statements.
9. Contingent liabilities
The Group has entered into overdraft and invoice financing facitlies with HSBC which are guaranteed by Newmark Security plc.
2022
£'000
5
1,333
1,338
2022
£'000
400
400
533
1,333
84
Newmark Security PLC – Report and Financial Statements 2023
85
Newmark Security PLC – Report and Financial Statements 2023
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:
03339998
Auditors:
Cooper Parry Group Limited, Sky View, Argosy Road, East Midlands Airport, Castle Donington,
Derby, DE74 2SA
Nominated Adviser and Brokers:
Allenby Capital Limited, 5 St. Helens Place, London EC3A 6AB
Registrars:
Link Group, Central Square, 29 Wellington Street, Leeds LS1 4DL
Solicitors:
Bracher Rawlins LLP, 77 Kingsway, London WC2B 6SR
86