25th Jan 2005 12:54
Newmark Security PLC25 January 2005 NEWMARK SECURITY PLC INTERIM REPORT for the six months ended 31 October 2004 CHAIRMAN'S STATEMENT RESULTS FOR THE SIX MONTHS ENDED 31 OCTOBER 2004 The Group made an operating profit of £465,000 before amortisation of goodwilland interest for the six months ended 31 October 2004 (2003: £132,000 continuingoperations). The results for the period include Custom Micro Products Limited (''CMP'') forthe four months since acquisition. CMP was acquired for a total consideration ofup to £2.885 million with an initial cash consideration of £800,000 paid oncompletion. There are two tranches of deferred consideration of £1.4 million and£685,000 respectively, the latter payable on the achievement of profits beforetax of £600,000 for the year ending 30 April 2005. In order to part fund theacquisition of CMP, the Group raised an additional £1,700,000 (before expenses)through a placing of 136,000,000 ordinary shares at 1.25p per share. ELECTRONIC DIVISION Turnover 6 months 31 October 2004: £2,998,000 (2003: £2,071,000).Operating profit 6 months 31 October 2004: £585,000 (2003: £443,000). The combined access control operation comprising of Grosvenor and NewmarkTechnology was ahead of plan for the period and is expected to remain so for theremainder of the year. With the release in January 2005 of the new eSeries JANUS controllers working inconjunction with JANUS 3.1 software, Grosvenor is leading the way and is set totake full advantage of the emerging IP revolution within the security industry.TCP/IP networks are in every organisation and the new JANUS hardware sitsdirectly onto these networks without any other wiring being required to enablethe controllers to 'talk' to the JANUS Main PC/server. The cost savings aresignificant for the end user. With the addition of CMP into the Group, we have integrated their Time &Attendance system into JANUS. Grosvenor will now be selling the CMP hardware andsoftware re-badged as a Grosvenor/JANUS product called ViewPoint. We have sourced and completed a move of our core hardware production to Hungarywhere substantial cost savings can be made. The new eSeries controllers areamongst the first boards to be manufactured in this way and have provedsuccessful from the start. Potential business for the coming period looks very encouraging for all of theseproducts with large corporates showing a great interest in the new system. Theunderlying business trend remains very strong with a continuing volume of steadycore business. Other contracts being sought and due to be placed include a major bank lookingto upgrade its entire security infrastructure, defence companies and governmentfacilities so a significant overall increase in revenue is expected in the nextfinancial year. CMP's revenue comprises two major elements with approximately two thirds as aresult of many small orders received from dealers with the balance from largeone-off orders typically from distributors and end users in the UK. Sinceacquisition, regular dealer revenue has been broadly in line with expectationsand several new dealers have been recruited which should increase the volume ofproduct sold through this channel in the near future. There has been significantactivity as far as potential large orders are concerned particularly in theretail, hospital and construction sectors. However, none were completed in theperiod and, as a consequence, turnover was lower than projected. These potentialcontracts have not been lost and the current expectation is that they will nowoccur in the financial year 2005/06. SECURE LOCKING DIVISION Turnover 6 months 31 October 2004: £748,000 (2003: £533,000).Operating loss 6 months 31 October 2004: £214,000 (2003: £280,000). Over the past six months, NSP Europe has made significant headway with certainkey distributors in the industry. At the beginning of 2005, NSP Europe has alsoreceived initial orders for contracts established towards the end of 2004.Since the launch of NSP Europe's standalone locking system, hotels and severallarge groups have acquired and distributed the system throughout Europe. Thecompany also received a rolling contract to install and commission the EuropeanParliament in Brussels, with the initial stage to begin at the end of January.The SIL range continues to attract demand from organisations with largeprojects, which entails continuous specified work, and thus a somewhat lengthyturnaround time. However, profits margins are good. NSP Europe's Paris based division continues to expand, having made a successfulentry into the market, developing close ties with several distributors. ASSET PROTECTION Turnover 6 months 31 October 2004: £2,883,000 (2003: £2,346,000).Operating profit 6 months 31 October 2004: £429,000 (2003: £382,000). Safetell's sales have been in line with plan and represented revenue growth of23% over last year's corresponding period. A change in product mix had anadverse effect on gross margin percentage but gross profit overall was increasedby 5.6%. Overheads were contained within 2.1% of the previous year resulting ina rise in operating profit of 11.7% compared to last year. The Eclipse rising screen programmes were maintained with long-term customers inretail finance and petrol retailing. A contract to replace counter fronts forAbbey was largely complete by the target date of 30 September. A further orderfor full height glass hampers for HBOS was awarded in October and this will becompleted in January 2005. In the area of moving glass screens, CounterShield has found acceptance with anumber of Police forces but actual sales progress remains slow. There have beena number of new customers for the Eye2Eye product but quantities remain small.However the prospects for this product remain good and the value of outstandingquotations is encouraging. The development of a modular, bullet resistant glazing system to complement thetwo anti-physical attack systems has increased market opportunities and fixedglazing sales were 72% ahead of last year. Safetell was awarded the new, 3-year Post Office contract for four sizes of CashHandling Units. Demand is dependent on Government funding for Post Officere-organisation but a single order for approximately £400,000 was received inDecember for delivery from March. The development of the new fully re-cycling,teller cash dispenser is taking longer than expected and significant sales willnot start until financial year 2005/06. The service and maintenance business increases pro-rata to the installed base ofprimary equipments. The contract to maintain all locks for security doors forHBOS is proving to be successful and the demand is higher than predictedincreasing the annual contract value by approximately 40%. The outlook for the second half is encouraging . The level of enquiries andoutstanding quotations is promising and offers good prospects for next year. SUMMARY The Group results for the first six months have been very rewarding and reflectthe changes made in the Group structure and activities in previous years. Webelieve that the outlook for the remainder of the year is very encouraging. Maurice DwekChairman25 January 2005 CONSOLIDATED PROFIT AND LOSS ACCOUNT for the six months ended 31 October 2004 Notes Unaudited Unaudited Unaudited Audited Unaudited Six Six Six Year Six months months months ended months ended ended ended 30 April ended 31 31 31 2004 31 October October October October 2004 2004 2004 Total 2003 Before Goodwill Total £'000 Total goodwill £'000 £'000 £'000 £'000TURNOVERContinuingoperations 5,695 - 5,695 9,830 4,950Acquisitions 934 - 934 - -Discontinuedoperations - - - 754 752 6,629 - 6,629 10,584 5,702 Cost of (4,044) - (4,044) (6,479) (3,511)sales Gross profit 2,585 - 2,585 4,105 2,191 Administrativeexpenses (2,120) - (2,120) (4,163) (2,374)Amortisationof goodwill - (185) (185) (298) (151)Terminationcosts - - - (167) -Administrativeexpenses-total (2,120) (185) (2,305) (4,628) (2,525) OPERATINGPROFIT/(LOSS) Continuingoperations 338 (149) 189 58 (19)Acquisitions 127 (36) 91 - -Discontinuedoperations - - - (581) (315) 465 (185) 280 (523) (334)Loss ondisposal ofsubsidiary/business - - - (1,133) (753) PROFIT/(LOSS) ON ORDINARY ACTIVITIESBEFORE INTEREST ANDTAXATION 465 (185) 280 (1,656) (1,087) Interestreceivable 14 - 14 15 3Interest-discount charge on deferredconsideration (130) - (130) (179) (89)Interest payable (36) - (36) (51) (9) PROFIT/(LOSS) ON ORDINARY ACTIVITIESBEFORE TAXATION 313 (185) 128 (1,871) (1,182) Tax onordinaryactivities 2 (100) - (100) (146) - PROFIT/(LOSS)FOR THE YEARAFTER TAX 213 (185) 28 (2,017) (1,182) Minorityinterest - - - (27) - 213 (185) 28 (2,044) (1,182) Pence Pence Pence Pence PenceEarnings/(loss) per share 0.1p (0.1p) - (1.0p) (0.6p)Earnings/(loss) per share beforeamortisation of goodwill, losses of discontinuedoperations, loss on disposal ofsubsidiary/business and discount charge on deferredconsideration 6 0.1p - 0.1p (0.2p) 0.1p CONSOLIDATED BALANCE SHEET as at 31 October 2004 Unaudited Audited Unaudited 31 30 April 31 October October 2004 2004 2003 Notes £'000 £'000 £'000FIXED ASSETSIntangible assets 6,969 5,287 5,434Tangible assets 1,039 903 955 8,008 6,190 6,389 CURRENT ASSETSStocks 1,323 893 848Debtors 2,722 1,974 2,228Cash at bank and in hand 2,659 1,522 930 6,704 4,389 4,006 CREDITORS: amounts falling due withinone year (5,026) (2,911) (3,843)NET CURRENT ASSETS 1,678 1,478 163TOTAL ASSETS LESS CURRENT LIABILITIES 9,686 7,668 6,552CREDITORS: amounts falling due aftermore than one year (6,031) (5,741) (3,868)Provisions for liabilities and (201) (201) (209)charges NET ASSETS 3,454 1,726 2,475 CAPITAL AND RESERVESCalled up share capital 3 3,834 2,131 6,978Share premium - - 5,151Merger reserve 801 801 801Profit and loss reserve 4 (1,478) (1,506) (10,788) EQUITY SHAREHOLDERS' FUNDS 3,157 1,426 2,142 Minority interest 5 297 300 333 3,454 1,726 2,475 CONSOLIDATED CASH FLOW STATEMENT for the six months ended 31 October 2004 Unaudited Audited Unaudited Six Year Six months ended months ended 30 April ended 31 2004 31 October October 2004 £'000 2003 £'000 £'000 NET CASH (OUTFLOW)/INFLOW FROMOPERATING ACTIVITIES (149) 252 (218)RETURNS ON INVESTMENT AND SERVICING OFFINANCEInterest received 14 15 3Interest paid (36) (51) (9)NET CASH OUTFLOW FROM RETURNS ONINVESTMENTS AND SERVICING OF FINANCE (22) (36) (6)TAXATION (89) - -CAPITAL EXPENDITURE AND FINANCIALINVESTMENTPurchase of tangible fixed assets (63) (235) (30)Receipts from sale of tangible fixedassets - 30 -NET CASH OUTFLOW FROM CAPITALEXPENDITURE AND FINANCIAL INVESTMENT (63) (205) (30)ACQUISITIONSPurchase of subsidiary undertakings (946) - -Net cash acquired on purchase ofsubsidiary undertakings 563 - -NET CASH OUTFLOW ON ACQUISITIONS (383) - -DISPOSALSCosts related to sale of subsidiaryundertaking, and business and tradingassets - (189) -Cash disposed of with business - (1) (1)NET CASH OUTFLOW FROM DISPOSALS - (190) (1)NET CASH OUTFLOW BEFORE FINANCING (706) (179) (255)FINANCINGNew finance loans 150 1,100 625Repayment of loans (7) (176) (246) 143 924 379Issue of shares 1,700 - -NET CASH INFLOW FROM FINANCING 1,843 924 379INCREASE IN CASH 1,137 745 124 NOTES TO THE ACCOUNTS 1. BASIS OF ACCOUNTS The unaudited results for the six months ended 31 October 2004 have been prepared on a basis consistent with the accounting policies disclosed in the Group's 2004 Report and Accounts, and do not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. The results for the year ended 30 April 2004 are an abridged version of the full accounts, which received an unqualified audit report and have been filed with the Registrar of Companies. 2. TAXATION The tax charge is disproportionate to the profit for the year due to the effect on profits of items not deductible for tax purposes, and the use of losses brought forward. 3. SHARE CAPITAL £'000At 1 May 2004 2,131Shares issued in the period 1,703At 31 October 2004 3,834 4. RESERVES Profit and Merger Total other loss reserve reserve reserve £'000 £'000 £'000At 1 May 2004 (1,506) 801 (705)Retained profit for the period 28 - 28Exchange adjustment - - -As at 31 October 2004 (1,478) 801 677 5. MINORITY INTEREST £'000At 1 May 2004 300Minority interests purchased back in period (3)At 31 October 2004 297 6. EARNINGS PER SHARE Pence per £'000 shareProfit after taxation and minority interest 0.0p 28Amortisation of goodwill and discount charge ondeferred consideration 0.1p 185 0.1p 213 The profit per share has been calculated based on the weighted average number of shares in issue during the period, which was 303,750,433 shares (2003: 212,305,266). 7. DIVIDENDS No interim dividend is proposed (2003: Nil). 8. A copy of the interim report has been sent to shareholders and is available for inspection at the Company's registered office, 57 Grosvenor Street, London W1K 3JA, during normal office hours, Saturdays, Sundays and bank holidays excepted, for 14 days from today. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Newmark Security