16th Jul 2007 07:01
Newmark Security PLC16 July 2007 NEWMARK SECURITY PLC Final results for the year ended 30 April 2007 HIGHLIGHTS • Turnover from continuing operations up by 13% from £11.8m to £13.4m, with 16% increase in electronic division and 10% growth in asset protection division • Gross margin increase from 41.2% to 43.3% overall • Profit from operations for continuing businesses 66% higher, £1.632m compared to £0.981m • Earnings per share for continuing businesses increased by 127% (basic and diluted) to 0.25p (2006: 0.11p) • Earnings per share before interest discount, losses of discontinued operations, provision for exchange losses and warrant revaluation increased by 43% to 0.30p (2006: 0.21p) • Total net assets increased by 51%, from £3.446m to £5.210m • Cash flow from operating activities increased by 173% from £0.539m to £1.470m • Completion of earn-out period for Grosvenor Technology and maximum payable under the earn-out. Grosvenor Executive directors have agreed to sign contracts for a further three years • Financial statements produced for the first time in accordance with International Financial Reporting Standards • Trading for the start of the current year have been encouraging and the Board is confident that further growth in the business will be achieved in this year CHAIRMAN'S STATEMENT Overview The year has been a period of consolidation with all businesses continuing to beprofitable, the completion of the earn out period for Grosvenor Technology andthe repayment of the loan note. Our financial statements have been produced in accordance with InternationalFinancial Reporting Standards (IFRS) for the first time. Comparative informationfor the year ended 30 April 2006 has been restated on an IFRS basis. Fulldetails of IFRS accounting policies applied and reconciliation of comparativefigures between UK GAAP and IFRS are included within the financial statements.The major ongoing impact on the operating profit of the Group is that we are nowrequired to capitalise development costs which fulfill certain criteria as setout in the accounting policies. Previously such expenditure was written off asincurred. The earn out period for the acquisition of Grosvenor Technology expired on 31October 2006, and, as expected, the maximum payable of £3.5 million has beenachieved over the four year period. On agreement of the accounts for the period,unsecured loan notes denominated in Euros were issued in accordance with theacquisition agreement. These may be settled in cash on 1 November 2007 at theearliest. Unfortunately, the loan notes were issued at a time when the Euro wasparticularly strong and we have been required to make a £111,000 exchange lossprovision. Interest payable on these loan notes was fixed at a quarter per cent.below base as part of the agreement, and has been accrued in the incomestatement accordingly. However, in order to comply with IFRS, we are required todiscount the valuation of the loan notes using an assumed third party marketrate and this has been adjusted as a finance charge in the income statement. Thethree directors of the company who remained with the Group after acquisitionhave agreed to remain with the Group for at least a further three years. The loan notes issued by the Company in 2003 were settled on 24 July 2006. Whenthe loan notes were issued, warrants were attached so that the loan note holderscould subscribe for ordinary shares of 1p each in the Company at a price of 1pper ordinary share. These warrants are captured under the heading of embeddedderivatives under IFRS, and therefore were fair valued at the date oftransition. The warrants were then revalued at April 2006 and the exercise date,and the changes in valuation are accounted for as other finance gains or lossesin the income statement. The loan note holders exercised these warrants so thathalf of the loan notes were settled by issue of shares, the other half by cashpayments. Turnover for the year from continuing businesses was £13,422k compared to£11,839k, an increase of 13 per cent. Gross margin for the year from continuingoperations was £5,817k (43.3 per cent. of sales) compared to £4,876k (41.2 percent.). Safetell turnover increased by 10 per cent. whilst Grosvenor Technologybenefited from the BAE Systems contract announced in the year. The US market forCustom Micro Products recovered from the low levels of the previous year. Withinthe Electronic Division, there was an improvement in margin overall, whilstthere was also an improvement within Safetell as the increase in turnoverimproved utilisation of staff and yielded other efficiencies. Earnings per share are shown in the income statement as 0.25p (2006: 0.11p).However, the earnings per share before interest discount adjustments, losses ofdiscontinued operations, provision for exchange loss and warrant revaluation are0.30p (2006: 0.21p) as calculated in note 10 to the accounts. As a consequence of the increase in turnover and fall in number of employees,turnover per employee rose from £100,390 to £117,737. Both CMP and Safetell are the leaders in their particular markets whilstGrosvenor is a major force at the upper price end of the access control market.There were no environmental issues having a major impact on the Group in theyear. The Group continues to invest in research and development which will benefit theresults in the future. The Disability Discrimination Act will, we believe, have an increasing impact onthe needs of some of our customers when the requirements are realised morefully, and this would benefit Safetell in particular. The Group net assets have increased in the year from £3.4 million to £5.2million partly reflecting the translation of half of the outstanding loan notesinto shares. Turnover varies month by month due to the timing and amounts of the types ofcontracts that we are involved in, particularly within Safetell. The assetprotection division had two very busy months before the year end which hasinflated the working capital position on the balance sheet at the year end. A detailed review of their activities, results and future developments is setout in the divisional results below. Financial results The operating profit for the year was £1,632,000 (2006: £981,000). Turnover for the year for continuing operations was £13.4 million (2006: £11.8million). The main commercial factors affecting the results of the divisions areset out below. Electronic Division Turnover £7,441,000 (2006: £6,407,000)Operating profit £1,685,000 (2006: £1,100,000) Turnover in Grosvenor Technology increased by some 19 per cent. in the year to£4.3 million, and was accompanied by a 2 per cent. increase in margin. Each yearturnover includes a number of larger contracts which vary in size and aredifficult to predict in terms of timing. During the year under review, wecompleted the sale of our JANUS access control and security management system toBAE Systems at their major sites in Warton, Samlesbury, Brough and others. Thetotal sales value, including JANUS software exceeded £0.5 million. BAE Systemshas been using JANUS for some years on other sites and now has the potential tolink all of the systems together as an all encompassing 'Enterprise Solution.' As predicted, the eSeries door controller, due to its ease of connectivity oncorporate networks around the world, has played a large part in this success andlooks set to be the deciding factor for other large contracts still to come. To further support these larger 'Enterprise' type access control systems we havedeveloped a brand new web connected application called Admin Manager. AdminManager is part of the Head Office suite of programs and has the potential tocombine multiple systems together in a world-wide network of systems. Thebenefits to the user are many fold and include connections to corporate HRsystems, centralisation of employee records and a secure web connection fromanywhere in the world. There are separate versions of Admin Manager for JANUS,N-TEC (Simplex distributorship) and Siteguard (Tyco distributorship) and forcommercial reasons the different Admin Manager applications are notinterchangeable and do not support each other's protocols. Turnover in Newmark Technology increased in the year by 6 per cent. to £451k butthis was offset by a reduction in margin. We now have two distributors in Russiavia the Simplex Fire distributorship and the first order for our Russian versionof N-TEC has been received (£50K) for the prestigious Naberezhnaya Tower Complexin Moscow, again using eSeries controllers and has been shipped already in thecurrent year. We have temporarily suspended UL approvals on the N-TEC product as there are newideas that we wish to incorporate within the certification application andchanges or additions to an already UL certified product requires re-evaluation. At Custom Micro Products, turnover increased by 14 per cent. overall and wasaided by a recovery in sales to the US following a drop in the previous year. We have started manufacturing the RS21 terminal (Revised Series) ready forproduct launch and as announced last year, the RS21 is fully compatible with theexisting 2100 terminals and eliminates the need for our own in-housemanufacturing. The Revised Series offers snap-together components which thecustomer assembles at the point of installation. This idea has been very wellreceived and allows us to ship the product within a couple of days fromreceiving an order rather than the traditional 3-4 week delay for manufacturing.There will be a crossover period between the 2100 terminal phasing out and theRS21 terminal phasing in. On 14 June we announced the strategic merger of Grosvenor Technology and CustomMicro Products. The two companies will merge under the name of GrosvenorTechnology and continue to operate from their respective facilities in Bishop'sStortford in Hertfordshire and Poole in Dorset. The remit of the newly combined business is to provide innovative products and services targeteddirectly to the needs of key channels within the access control anddata-collection industries. Combining the two businesses under a single brand enables us to better positionthe company to meet the future needs of our customers. The developmentproposition, with the two teams working as one, is an easier migration to newerand more powerful technologies and the opportunity for wider and greatlyenhanced product offerings. The merger also offers the best use of companysynergies and consistency of application, with more efficient systems andprocedures throughout. To this end it is envisaged that we will embark upon astaff restructuring process as soon as the merger process has been completed. It is important that we maintain the identity and the unique branding of theCustom Micro products and to this end we have created the 'CUSTOM' brand-name asan umbrella for the existing catalogue of products and the brand-new RevisedSeries products. This will make it easier for customers to identify and managethe CUSTOM products from within the Grosvenor Technology product range. Our next generation product, also announced last period, has been branded as'SATEON' Intelligent Time Clocks and Terminals. The SATEON range also takes onthe new form of snap- together modules enabling off-shore manufacturing andinstaller assembly on-site. To facilitate this, intelligence has been designedon-board each module so that they are aware of each other and automaticallyconfigure themselves when connected. SATEON terminals are specifically targeted at the ASP.NET environment and willallow us to enter the business of recurring revenue streams where terminals andinternet hosted services are offered by us on a monthly rental to our existingcustomer base where they will benefit from our economies of scale and ourcentralised and managed back-end systems. The first SATEON terminal, the IT3100,is at an advanced stage of development on the hardware side and we expect toenter this business during the course of 2008. Asset Protection Division Turnover £5,981,000 (2006: £5,432,000)Operating profit £520,000 (2006: £490,000) Total sales increased by 10.1 per cent. from product/contract sales growth of6.9 per cent. and service revenue growth of 15.5 per cent. Eclipse rising screen programmes were maintained with various long-termcustomers in retail finance, petrol retailing and some Police forces. Twoprevious major customers who had completed their branch programmes some yearsago have renewed purchases for a fresh round of branch refurbishments. Anothercustomer lost to a competitor in 2000 has been won back. The value ofreconfiguration/ refurbishment works for Eclipse dropped below the value of newinstallations with less work required for Abbey. Eye2Eye sales were disappointing in the first half of the year but accelerateddramatically in the second half, 8 of the 11 units sold in the year arose in thelast two months to new customers with repeat business expected in the newfinancial year. Two more new rail customers placed orders in the last two monthsof the year under review for delivery in the current year. Rail OperatingCompanies remain the market focus for this product with additional demand fromPolice and Local Authorities. Sales to the Post Office of RollerCash and BiDi Safe were similar to last yearwith the notable addition of the first six Post Office branches in WH Smith.That trial proved successful and a programme has been announced of approximately70 more such combinations before the end of 2008. Woolwich branches invested inthe third and final phase of equipment for their branches before adopting aBarclays format. A client driven development contract for payment/merchandise transfer hatcheswas completed at the end of the year with the first prototype installed in May.Although unit prices are relatively low, the volume for this retail customercould be substantial with opportunities to sell to other retailers. Following 18 months of preparation, the South African market has been openedwith a partner who will act as a manufacturing licensee for Eclipse risingscreens and as a sub-distributor for RollerCash. The first order was taken inMarch for rising screens that was installed in June and one RollerCash isundergoing branch trials. Service and maintenance revenue increased by 15 per cent. mainly due to thecomprehensive contract for all Abbey branches won at the beginning of 2006 andnew work for Shell night pay window maintenance. This part of the business isset to grow further. Percentage gross margin was maintained at last year's level on the increasedturnover. Manufacturing efficiencies were achieved in the last 2 months on theincreased volume in Eye2Eye resulting in much better margin for this product.Other manufacturing efficiencies are being introduced to improve margin on otherproducts. The first months of the new financial year have continued at the average rate ofthe year under review but with increases expected to occur from the late summeronwards. Some of this additional business has been announced by customers butnot yet confirmed. Balance sheet and cash flow The change to IFRS accounts has resulted in changes to both the balance sheetand cash flow although, in respect of the latter, these are mainlypresentational. Goodwill has been frozen at the amortised cost figure at thedate of transition to IFRS, 1 May 2005. This figure will now remain unchangedsubject only to annual impairment reviews. Intangible assets also now includedevelopment costs which meet the criteria set out in note 1, and will be writtenoff over the expected life of the new product. Trade debtors and creditors areboth higher than the previous year end, due in particular to very busy tradingmonths towards the end of the year in the Asset Protection Division. Bothoperating divisions also undertake substantial contracts which impinge upon thelevel of working capital at any one point in time. The Grosvenor deferred consideration of £3.5 m will be paid from cash balances,which at the end of April were close to £2 million, and the balance fromfacilities currently being agreed with the Group's bankers. Current liabilitieslast year included £1.5 million loan notes which have been settled in the year,half by the issue of shares and the other half in cash from the proceeds of abank loan repayable over three years. Overall net assets increased from £3.4million to £5.2 million. The improvement in profit for the year increased the cash flow from operatingactivities by £0.9 million, from £0.6 million to £1.5 million. Cash outflow frominvesting activities fell from £2.3 million to £0.3 million, primarily due tothe previous year including the payment of the deferred consideration for theacquisition of Custom Micro Products Limited, £1.9 million. There was however acash outflow from financing activities of £0.5 million compared to an inflow of£0.3 million last year. The figures for the year under review include thepartial repayment of the loan taken out to finance the repayment of the loannotes, whilst the previous year included the proceeds from loan notes issued. Employees The Board would again like to express their gratitude to all employees for theircontribution to the success of the business in which they work. Summary The Board is pleased by the results achieved in the year and believe that thishas resulted from the efforts made in previous years to secure a solid base forthe Group. Trading for the start of the current year has been encouraging.Although the results for the first half of the current year may be lower thanthe profit for the first six months of the year under review due to the impactof the contract for BAE Systems last year, the Board believes that furthergrowth will be achieved in the current year. M DWEKChairman 16 July 2007 FINANCIAL STATEMENTS CONSOLIDATED INCOME STATEMENTfor the year ended 30 April 2007 2007 2006 £'000 £'000Revenue 13,422 11,839Cost of sales (7,605) (6,963)Gross profit 5,817 4,876Provision for exchange loss (111) -Administrative expenses (4,074) (3,895)Profit from operations 1,632 981Finance income 30 31Finance costs (113) (102)Other finance (losses)/gains (44) 147Profit before tax 1,505 1,057Tax expense (368) (149)Profit for the year from continuing operations 1,137 908Post-tax loss related to discontinued (48) (519)operationsProfit for the year 1,089 389Attributable to:- Equity holders of the parent 1,089 389Earnings per shareContinuing operations- Basic and diluted (pence) 0.25p 0.11pDiscontinued operations- Basic and diluted (pence) (0.01p) (0.14p) CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSEfor the year ended 30 April 2007Profit for the year 2007 2006 £'000 £'000Profit for the year 1,089 389Foreign exchange gains/(losses) on retranslation of overseasoperations 1 (39)Total recognised income and expense for the year 1,090 350Attributable to:- Equity holders of the parent 1,090 350 CONSOLIDATED BALANCE SHEETat 30 April 2007 2007 2007 2006 2006 £'000 £'000 £'000 £'000ASSETSNon-current assetsProperty, plant and equipment 880 941Intangible assets 7,136 6,944Deferred tax assets 37 116 Total non-current assets 8,053 8,001 Current assetsInventories 1,381 1,256Trade and other receivables 3,196 2,326Cash and cash equivalents 1,948 1,373 Total current assets 6,525 4,955 Total assets 14,578 12,956LIABILITIESCurrent liabilitiesTrade and other payables 3,173 2,608Other short term borrowings 3,930 1,623Corporation tax liability 1,443 1,324Provisions 113 113Total current liabilities 8,659 5,668Non-current liabilitiesLong term borrowings 553 301Provisions 156 172Other creditors - 3,369 Total non-current liabilities 709 3,842 Total liabilities 9,368 9,510 TOTAL NET ASSETS 5,210 3,446Capital and reserves attributable to equityholders of the companyShare capital 4,490 3,740Share premium reserve 493 493Merger reserve 801 801Foreign exchange difference reserve (38) (39)Warrant reserve - 248Retained earnings (600) (1,861) 5,146 3,382Minority interest 64 64 TOTAL EQUITY 5,210 3,446 The financial statements were approved by the Board of Directors and authorisedfor issue on 16 July 2007. M DwekDirector CONSOLIDATED CASH FLOW STATEMENTfor the year ended 30 April 2007 Note 2007 2007 2006 2006 £'000 £'000 £'000 £'000Cash flow from operating activitiesNet profit after tax from ordinaryactivities 1,089 389Adjustments for:Depreciation 348 302Investment income (30) (31)Interest expense 113 311Other finance losses 158 251Loss on sale of discontinuing operations - 192Income tax expense 347 57Costs settled by share issues - 184Share option charge 38 21Warrant revaluation (114) (398)Operating profit before changes in workingcapital and provisions 1,949 1,278(Increase)/decrease in trade and otherreceivables (798) 385(Increase)/decrease in inventories (125) 316Increase/(decrease) in trade and otherpayables 654 (1,017)Cash generated from operations 1,680 962Income taxes paid (210) (423)Cash flows from operating activities 1,470 539Cash flow from investing activitiesAcquisition of subsidiary, net of cashacquired - (1,937)Disposal of subsidiary, net of cashdisposed - (25)Payments for property, plant & equipment (242) (329)Sale of property, plant & equipment 47 24Research & development expenditure (269) (112)Interest received 30 31 (434) (2,348)Cash flow from financing activitiesProceeds from loan notes - 225Proceeds from loan 750 -Repayment loan notes (750) -Repayment of bank loans (194) -Repayment of finance lease creditors (154) (106)Interest paid (113) (112) (461) 7Increase/(decrease) in cash and cashequivalents 575 (1,802) Earnings per share 2007 2006 £'000 £'000NumeratorEarnings used in basic and diluted EPS-continuingoperations 1,137 908(Losses) used in basic and dilutedEPS-discontinued operations (48) (519) No. No.DenominatorWeighted average number of shares used in basic anddiluted EPS-continuing and discontinued operations 429,437,268 367,856,416 Employee share options have been excluded from the calculation of diluted EPS astheir exercise price is greater than the weighted average share price during theyear (i.e. they are out-of-the-money) and therefore would not be advantageousfor the holders to exercise those options. Further information concerning shareoptions is set out in note 28. The basic earnings per share before interest discount, losses of discontinuedoperations, provision for exchange losses and warrant revaluation has also beenpresented since, in the opinion of the directors, this provides shareholderswith a more appropriate measure of earnings derived from the Group's businesses.It can be reconciled to basic earnings per share as follows: 2007 2006 pence penceBasic earnings per share (pence) 0.25 0.11Discount charge on deferred consideration 0.04 0.07Losses of discontinued operations 0.01 0.14Provision for foreign exchange loss 0.03 -Warrant revaluation (0.03) (0.11)Earnings per share before interest discount, losses ofdiscontinued operations, provision for foreign exchange lossand warrant revaluation 0.30 0.21 2007 2006 £'000 £'000Reconciliation of earningsProfit used for calculation of basic earnings per share 1,089 389Discount charge on deferred consideration 158 251Losses of discontinued operations 48 519Provision for foreign exchange loss 111 -Warrant revaluation (114) (398)Earnings before interest discount, losses of discontinuedoperations, provision for foreign exchange loss and warrantrevaluation 1,292 761 Basis of preparation The financial information set out above for the years ended 30 April 2007 and2006 does not constitute the Group's statutory accounts within the meaning ofSection 240 of the Companies Act 1985 but is derived from those accounts. Statutory accounts for the year ended 30 April 2006 have been filed with theRegistrar of Companies. The results have been prepared using accountingpolicies consistent with those used in the preparation of the statutoryaccounts. The financial information for the year ended 30 April 2006 has been extractedfrom the statutory accounts for that year and then adjusted for InternationalFinancial Reporting Standards (IFRS). The accounts have been filed with the Registrar of Companies and contain an unqualified audit report. The financialinformation for 2007 has been extracted from the unaudited statutory accountsfor the year ended 30 April 2007. The audited accounts for the year ended 30 April 2007 will be delivered to the Registrar of Companies following theCompany's Annual General Meeting. Dividend No dividend has been proposed in respect of the year. RESTATED INTERIM RESULTS TO 31 OCTOBER 2006 IN ACCORDANCE WITH IFRS NEWMARK SECURITY PLC CONSOLIDATED INCOME STATEMENT For the six months ended 31 October 2006 Note Unaudited Audited Unaudited Six months Year ended Six months ended ended 31 October 2006 30 April 2006 31 October 2005 £'000 £'000 £'000Revenue 6,398 11,839 5,825Cost of sales (3,620) (6,963) (3,473) ---------- ---------- ----------Gross profit 2,778 4,876 2,352Administrative expenses (1,871) (3,895) (1,884) ---------- ---------- ----------Profit from operations 907 981 468Finance income 16 31 22Finance costs (36) (102) (47)Other finance(losses)/gains (17) 147 (4) ---------- ---------- ----------Profit before tax 870 1,057 439Tax expense 2 (241) (149) (97) ---------- ---------- ----------Profit for the yearfrom continuingoperations 629 908 342Post-tax loss relatedto discontinuedoperations (30) (519) (305) ---------- ---------- ----------Profit for the year 599 389 37 ========== ========== ==========Attributable to: 599 389 37 -Equity holders of the parent ========== ========== ========== Earnings per shareContinuing operations-Basic and diluted (pence) 5 0.15p 0.11p 0.09 ========== ========== ==========Discontinued operations-Basic and diluted (pence) (0.01p) (0.14p) (0.08p) ========== ========== ========== CONSOLIDATED BALANCE SHEET At 30 April 2007 Notes Unaudited Audited Unaudited 31 October 2006 30 April 31 October 2006 2005 £'000 £'000 £'000ASSETSNon-current assetsProperty, plant and equipment 981 941 872Intangible assets 7,059 6,944 6,850Deferred tax assets 65 116 42 --------- --------- ----------Total non-current assets 8,105 8,001 7,764 --------- --------- ---------- Current assetsInventories 1,482 1,256 1,330Trade and other receivables 2,889 2,326 1,928Cash and cash equivalents 1,148 1,373 1,300 --------- --------- ----------Total current assets 5,519 4,955 4,558 --------- --------- ---------- Total assets 13,624 12,956 12,322 --------- --------- ---------- LIABILITIESCurrent liabilitiesTrade and other payables 2,643 2,608 2,330Other short term borrowings 375 1,623 874Corporation tax liability 1,420 1,324 549Provisions 113 113 113 --------- --------- ----------Total current liabilities 4,551 5,668 3,866 --------- --------- ---------- Non-current liabilitiesLong term borrowings 718 301 1,037Provisions 158 172 141Other creditors 3,500 3,369 4,086 --------- --------- ----------Total non-current liabilities 4,376 3,842 5,264 --------- --------- ----------Total liabilities 8,927 9,510 9,130 --------- --------- ----------TOTAL NET ASSETS 4,697 3,446 3,192 ========= ========= ========== Capital and reserves attributableto equity holders of the companyShare capital 3 4,490 3,740 3,617Share premium reserve 4 493 493 432Merger reserve 4 801 801 801Foreign exchange differencereserve 4 (42) (39) -Warrant reserve 4 - 248 511Retained earnings 4 (1,109) (1,861) (2,232) --------- --------- ---------- 4,633 3,382 3,129Minority interest 64 64 63 --------- --------- ----------TOTAL EQUITY 4,697 3,446 3,192 ========= ========= ========== CONSOLIDATED CASH FLOW STATEMENTS For the year ended 30 April 2007 Notes Unaudited Audited Unaudited Six months Year Six months ended ended ended 31 October 2006 30 April 2006 31 October 2005 £'000 £'000 £'000Cash flow from operatingactivitiesNet profit after tax fromordinary activities 599 389 37Adjustments for:Depreciation 178 302 140Investment income (16) (20) (22)Interest expense 36 300 47Other finance losses 131 251 139Loss on sale ofdiscontinuing - 192 149operationsIncome tax expense 226 57 43Costs settled by share - 184 -issuesShare option charge 19 21 -Warrant revaluation (114) (398) (135) ---------- --------- -----------Operating profit beforechanges in working capital and provisions 1,059 1,278 398(Increase)/decrease in tradeand other receivables (560) 385 655(Increase)/decrease ininventories (225) 316 226(Increase)/Decrease in tradeand other payables (71) (1,017) (1,110) ---------- --------- -----------Cash generated from 203 962 169operationsIncome taxes paid (21) (423) (201) Cash flows from operatingactivities 182 539 (32) ---------- --------- ----------- Cash flow from investingactivitiesAcquisition of subsidiary,net of cash acquired - (1,937) (1,825)Disposal of subsidiary, netof cash disposed - (25) (11)Payment for property, plantand equipment (143) (329) (190)Sale of property, plant andequipment - 24 -Research and developmentexpenditure (115) (112) (18)Interest received 16 31 22 ---------- --------- ----------- (242) (2,348) (2,022) ---------- --------- ----------- Cash flow from financingactivitiesProceeds from loan notes - 225 225Proceeds from loans 750 - -Repayment loan notes (750) - -Repayment of bank loans (62) - -Repayment of finance leasecreditors (74) (106) (29)Interest paid (36) (112) (47) ---------- --------- ----------- (172) 7 149 ---------- --------- ----------- Decrease in cash and cashequivalents (232) (1,802) (1,905) ========== ========= =========== NOTES TO THE ACCOUNTS 1. BASIS OF ACCOUNTS The unaudited interim figures for the six months ended 31 October 2006 have beenrestated in accordance with International Financial Reporting Standards (IFRSs)and its interpretations issued by the International Accounting Standards Board(IASB) and with those parts of the Companies Act 1985 applicable to companiespreparing their reports under IFRS. The comparative figures for the year ended30 April 2006 and six months ended 31 October 2005 have been restated on thesame bases. These figures do not constitute statutory accounts within the meaning of Section240 of the Companies Act 1985. The results for the year ended 30 April 2006 arean abridged version of the full accounts, which received an unqualified auditreport and have been filed with the Registrar of Companies, as restated forIFRS. 2. TAXATION The tax charge is disproportionate to the profit for the period due to theeffect on profits of items not deductible for tax purposes, and the use oflosses brought forward. 3. SHARE CAPITAL During the period, the following shares were issued: Number of Share capital shares £'000Shares in issue at 1 May 2006 373,957,816 3,739,578Share issues 1p per share 75,000,000 750,000 ----------- -----------Shares in issue at 31 October 2006 448,957,816 4,489,578 =========== =========== The shares issued in the period related to the exercise of warrants by loan noteholders to subscribe for ordinary shares of 1p each in the company. 4. SHARE PREMIUM AND RESERVES Share premium Merger Retained Foreign exchange Warrant reserve reserve earnings reserve £'000 £'000 £'000 £'000 £'000At 1 May 2006 493 801 (1,861) (39) 248Retainedprofit forthe - - 599 - (114)periodShare basedpaymentsprovision - - 19 - -Exchangedifferencesonforeigncurrency - - - (3) -investments ------- -------- -------- -------- --------As at 31October 2006 493 801 (1,243) (42) 134 ======= ======== ======== ======== ======== 5. EARNINGS PER SHARE Pence per share £'000Profit after taxation and minority interest 0.15 599Discount charge on deferred consideration 0.03 131Losses of discontinued operation 0.01 30Warrant revaluation (0.03) (114) ----------- ------------Earnings per share before interest discount,losses 0.16 646of discontinued operations, and warrant =========== ============revaluation The earnings per share has been calculated based on the weighted average numberof shares in issue during the period, which was 414,311,077 shares (2005:361,755,016). Unaudited Audited Unaudited Six months Year ended Six month ended ended 31 October 2006 30 April 2006 31 October 2005 Total Total Total Pence Pence PenceEarnings per share beforelosses of discontinuedoperations, discountcharge and warrantvaluation 0.16 0.21 0.10 6. DIVIDENDS No interim dividend is proposed (2005;Nil). Enquiries Maurice Dwek, Chairman, Newmark Security PLC 020 7355 0070 Brian Beecraft, Finance Director, Newmark Security PLC Mark Percy, Seymour Pierce Limited 020 7107 8000 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Newmark Security