Interim Results

Newmark Security PLC
25 January 2006


                NEWMARK SECURITY PLC ('NEWMARK' OR 'THE COMPANY')

                                  INTERIM REPORT
                    for the six months ended 31 October 2005

                              CHAIRMAN'S STATEMENT

The six months have been a period of restructuring and consolidation. As
announced in the last annual report and accounts, we have sold NSP Europe
Limited and closed down Concept Hardware & Security Solutions Limited which were
the two loss making activities. Our remaining businesses have all been
profitable in the period and a detailed review of their activities and results
is set out in the divisional reviews below.

The overall Group operating profit for the period was £45,000 (2004: £280,000).
The operating profit for the six months for continuing operations before
goodwill amortisation was £452,000 (2004: £699,000). Both figures exclude the
operating losses of discontinued operations of £210,000 and £234,000
respectively. Turnover for the period for continuing operations was £5.8 million
(2004: £5.9 million).

The major factor affecting the cash flow and balance sheet during the period has
been the payment of the deferred consideration for Custom Micro Products
Limited. However the balance sheet also shows other significant changes from the
last year end when the stock, debtors and creditors figures were all affected by
the timing of major contracts both before and after the year end.

ELECTRONIC DIVISION

Turnover 6 months 31 October 2005: £3,161,000 (2004: £2,998,000)
Operating profit 6 months 31 October 2005 £483,000 (2004: £585,000)
Derek Blethyn, Managing Director of Grosvenor Technology ('Grosvenor') has been
appointed as Managing Director of the Electronic Systems Division which includes
Grosvenor, Custom Micro Products ('CMP') and Newmark Technology ('NT'). Eric Dew
who has been the Engineering Director of Grosvenor for the past eleven years has
been appointed as the Technical Director for the Electronic Systems Division to
manage and control the product development teams. With clear vision and joint
management the synergistic opportunities between the different companies are now
set to be maximised.

Trading levels of Grosvenor have been similar to that achieved in the same
period last year. Turnover in NT however is down due to the further decline of
the C.Cure product range. Turnover of CMP in the 6 months was greater than in
the four month period since acquisition last year. However it was below
expectations due to an exceptionally high volume of sales to our US distributor
at the end of the last financial year resulting in lower levels of sales to that
same important customer base in the period under review. There has been a recent
uplift in orders from that source in the second half of the year but the
decreased average monthly sales has resulted in a fall in operating profit for
CMP for the period in question.

We have received a prestigious order for a government body for the next
financial year.

The eSeries controllers recently launched by Grosvenor are proving to be
significant in the company's success in a new market where very large systems
can easily be installed utilising existing pc network wiring and
infrastructures. There are many high value tenders outstanding that look likely
to convert into orders over the next financial year.

There will be another release of Grosvenor's core software JANUS in the second
quarter of 2006 which will include system interfacing to the Bosch VIDOS CCTV
system and will also provide interconnectivity with very large databases such as
Oracle and Microsoft SQL Server.

NT's Par-Sec asset management system is being updated with a completely new
generation of RFID tags and readers currently in development. This will negate
the need for readers to be connected via an additional controller as they will
connect directly to a PC network in the same way so successfully employed by the
eSeries controllers at Grosvenor.

CMP is developing a brand new range of Time & Attendance terminals, the first of
which will be launched in the second or third quarter of 2006. The new range
will run in parallel with existing products and will address market requirements
in reducing costs by utilising the latest technology and will be set to
challenge emerging markets such as hosted web/asp systems as opposed to the more
traditional on-site installations.

The core systems of Grosvenor, NT and CMP, namely JANUS/N-TEC access control,
ParSec asset protection and ViewPoint Time & Attendance have been integrated and
are ready to offer as a combined solution to the market place. The recent
agreement with Simplex Fire Systems in the Middle East, Africa and Russia
whereby N-TEC access control was launched in May 2005 into their distributor
chain has already been expanded to take these additional products starting first
quarter 2006. These products will be announced at the Intersec exhibition, the
largest security exhibition in the Middle East to be hosted in Dubai, January
2006.

ASSET PROTECTION

Turnover 6 months 31 October 2005: £2,664,000 (2004: £2,883,000)
Operating profit 6 months 31 October 2005 £248,000 (2004: £429,000)
The sales for the comparative period last year included an exceptional order
from Abbey for counterwork which amounted to £662K of sales in that period,
whereas the sales value of such counterwork in the half year under review
amounted to only £84K. This shortfall in sales was partly offset by increased
sales of cash handling equipment to the Post Office including a contract for the
supply of BiDi Safes and Flip Top Tills of £200K. Unfortunately the Post Office
cancelled the Horizon project to install RollerCash machines and Flip Top Tills
ordered in January 2005 and, although the products are being diverted to the
sub-post office network, the majority will be shipped in the second half year.
The Eclipse rising screen programmes were maintained with long-term customers in
retail finance and petrol retailing, whilst CounterShield continues to find a
wider acceptance with a number of clients, including police forces.

The contract to maintain all locks for security doors for HBOS remains
successful and the client has consented to a price revision to reflect the
higher than expected demand. The new contracts to maintain rising screen
equipment originally supplied by other OEMs have also proved to be successful.
Safetell has now achieved its strategic aim of dominating the rising screen
service market sector. We have renewed one major maintenance contract in January
2006 which will provide £1.2 million service revenue over two years including
£140,000 per annum of additional business.

Gross margin slipped by 1.3 per cent. in the period reflecting competitive
pricing of the Post Office contracts, changes in product mix, and additional
training and support costs with the growth of the service business.
Administration costs increased with some one-off property refurbishment costs,
additional property lease costs required by the change in product mix, and the
requirement for additional engineering support.

The second half is expected to be similar to the first half with some
improvements in the sale of CounterShield and Eye2Eye. The company expects to
exceed £2 million service revenue for the first time in the current financial
year.

CONCLUSION

Safetell's level of trading performance in the first six months is expected to
continue in the second half year, whilst CMP results should be higher in the
second half with the higher level of orders from our US distributor.

Whilst Grosvenor has enjoyed considerable success in winning new business, the
timing of orders continues to be difficult to predict. One such sizeable
contract, which Grosvenor had believed would be in progress in the current
financial year, has unfortunately been delayed by the customer and will now fall
into the next financial year. Although it is pleasing that the business is not
being lost to competitors, nonetheless such a delay will impact our results for
the year ended 30 April 2006. The operating profit from continuing operations
for the full year before amortisation of goodwill will be approximately £1.0
million.
                      CONSOLIDATED PROFIT AND LOSS ACCOUNT
                    for the six months ended 31 October 2005

               Notes   Unaudited   Unaudited   Unaudited   Audited   Unaudited
                       Six months  Six months  Six months  Year      Six months
                       ended 31    ended 31    ended 31    ended 30  ended 31
                       October     October     October     April     October
                       2005        2005        2005        2005      2004
                       Before      Goodwill    Total       Total     Total
                       goodwill    and         £'000       £'000     £'000
                       and         exceptional
                       exceptional items
                       items       £'000
                       £'000
TURNOVER
Continuing
operations                 5,825   --              5,825    12,348       5,881
Discontinued
operations                   323   --                323     1,286         748

                           6,148   --              6,148    13,634       6,629
Cost of                   (3,759)  --             (3,759)   (8,150)     (4,044)
sales

Gross profit               2,389   --              2,389     5,484       2,585

Administrative
expenses                  (2,147)  --             (2,147)   (4,699)     (2,120)

Amortisation
of goodwill                   --   (197 )           (197)     (371)       (185)

Administrative
expenses-total           (2,147 )  (197 )         (2,344 )  (5,070 )    (2,305 )

OPERATING
PROFIT/(LOSS)

Continuing
operations                   452   (197 )            255     1,148         514
Discontinued
operations                  (210 )   --             (210 )    (734 )      (234 )

                             242   (197 )             45       414         280
Loss on
closure/disposal of
subsidiaries                  --   (149 )           (149 )     (13 )       --

PROFIT/(LOSS)ON ORDINARY
ACTIVITIES BEFORE
INTEREST AND
TAXATION                     242   (346 )           (104 )     401         280

Interest
receivable                    22   --                 22        52          14

Interest-discount 
charge on
deferred
consideration               (139 ) --               (139 )    (275 )      (130 )

Interest
payable                      (47 ) --                (47 )    (139 )       (36 )

PROFIT/(LOSS)
ON ORDINARY
ACTIVITIES
BEFORE
TAXATION                      78   (346 )           (268 )     39         128

Tax on
ordinary
activities         2         (40 )  --               (40 )   (106 )      (100 )

PROFIT/(LOSS)
FOR THE YEAR
AFTER TAX                     38   (346 )           (308 )    (67 )       28
Minority                      --    --                --       --         --
interest

                              38   (346 )           (308 )    (67 )       28

                       Pence       Pence       Pence       Pence     Pence
Earnings/(loss) 
per share
--- basic and
diluted            4        0.01   (0.10 )     (0.09 )     (0.02 )        0.01
--- Continuing
business           4        0.07   (0.06 )      0.01        0.14          0.06
---
Discontinued
business           4       (0.06 ) (0.04 )     (0.10 )     (0.16 )       (0.05 )

                           
                            CONSOLIDATED BALANCE SHEET
                             as at 31 October 2005

                        Notes   Unaudited        Audited        Unaudited
                                31 October 2005  30 April 2005  31 October 2004
                                £'000            £'000          £'000
FIXED ASSETS
Intangible
assets                                   6,665          6,820            6,969
Tangible
assets                                     872            803            1,039

                                         7,537          7,623            8,008

CURRENT ASSETS
Stocks                                   1,330          1,664            1,323
Debtors                                  1,928          2,968            2,722
Cash at bank
and in hand                              1,300          3,205            2,659

                                         4,558          7,837            6,704

CREDITORS:
amounts
falling due
within one
year                                    (3,783 )       (6,467 )         (5,026 )

NET CURRENT
ASSETS                                     775          1,370            1,678

TOTAL ASSETS
LESS CURRENT
LIABILITIES                              8,312          8,993            9,686

CREDITORS:
amounts
falling due
after more
than one year                           (5,123 )       (5,488 )         (6,031 )
Provisions for
liabilities
and charges                               (177 )         (185 )           (201 )

NET ASSETS                               3,012          3,320            3,454

CAPITAL AND RESERVES
Called up
share capital                            3,617          3,617            3,834
Share premium                              432            432               --
Merger reserve                             801            801              801
Profit and
loss reserve                3           (1,901 )       (1,593 )         (1,478 )

EQUITY
SHAREHOLDERS'
FUNDS                                    2,949          3,257            3,157
Minority
interest                                    63             63              297

                                         3,012          3,320            3,454

                        
                        CONSOLIDATED CASH FLOW STATEMENT
                    for the six months ended 31 October 2005

                                         Unaudited     Audited     Unaudited
                                         Six months    Year ended  Six months
                                         ended         30 April    ended
                                         31 October    2005        31 October
                                         2005          £'000       2004
                                         £'000                     £'000

NET CASH
INFLOW/(OUTFLOW) FROM
OPERATING
ACTIVITIES                                       151         786           (149)

RETURNS ON INVESTMENT AND SERVICING OF
FINANCE
Interest received                                 22          52            14
Interest paid                                    (47)       (139)          (36)

NET CASH OUTFLOW FROM
RETURNS ON INVESTMENTS
AND SERVICING
OF FINANCE                                       (25 )       (87 )         (22 )

TAXATION                                        (201 )      (404 )         (89 )

CAPITAL EXPENDITURE AND FINANCIAL
INVESTMENT
Purchase of
tangible fixed
assets                                          (212 )      (277 )         (63 )
Receipts from sale of
tangible fixed
assets                                           --          247            --

NET CASH
OUTFLOW FROM
CAPITAL
EXPENDITURE
AND FINANCIAL
INVESTMENT                                     (212 )        (30 )         (63 )

ACQUISITIONS
Purchase of
subsidiary
undertakings                                 (1,825 )       (918 )        (946 )
Net cash
acquired on
purchase of
subsidiary
undertakings                                     --          563           563

NET CASH
OUTFLOW ON
ACQUISITIONS                                 (1,825 )       (355 )        (383 )

DISPOSALS
Costs related to closure/sale of                 --           --            --
subsidiaries
Cash disposed
of with business                                (11 )         --            --

NET CASH
OUTFLOW FROM
DISPOSALS                                       (11 )         --            --

NET CASH
OUTFLOW BEFORE
FINANCING                                    (2,123 )        (90 )        (706 )

FINANCING
New finance loans                               247          329           150
Repayment of loans                              (29 )       (209 )          (7 )

                                                 218         120           143
Issue of shares                                   --       1,643         1,700

NET CASH INFLOW 
FROM FINANCING                                   218       1,763         1,843

(DECREASE)/INCREASE 
IN CASH                                       (1,905 )     1,673         1,137
   
                             
                              NOTES TO THE ACCOUNTS

1. BASIS OF ACCOUNTS
The unaudited interim figures for the six months ended 31 October 2005 have been
prepared on a basis consistent with the accounting policies disclosed in the
Group's 2005 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 2005 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. RESERVES
                Profit and loss reserve Merger reserve    Total other reserve
                £'000                   £'000             £'000

At 1 May 2005   (1,593 )                801               (792 )
Retained loss
for the period  (308 )                  --                (308 )

As at 31
October 2005    (1,901 )                801               (1,100 )

4. EARNINGS PER SHARE
                                                     Pence per share     £'000
Loss after taxation and minority interest                      (0.09 )    (308 )
Goodwill amortisation                                           0.06       197
Discount charge on deferred consideration                       0.04       139
Loss on closure/disposal of subsidiaries                        0.04       149
Losses of discontinued operations                               0.05       179

Earnings before goodwill amortisation, interest
discount,
loss on closure/disposal of subsidiaries
and losses of discontinued operations                           0.10       356

The profit per share has been calculated based on the weighted average number of
shares in issue during the period, which was 361,755,016 shares (2004:
303,750,433).
                 Unaudited Six months   Audited Year ended  Unaudited Six months
                 nded 31 October 2005  30 April 2005 ended       31 October 2004
                                Total                Total                 Total
                                Pence                Pence                 Pence
Earnings/(loss)per share 
before amortisation
of goodwill, losses of
discontinued operations,
loss on closure/disposal 
of subsidiaries and 
discount charge on              0.10                 0.35                   0.07
deferred consideration

5. The loan notes of £1.5 million are repayable on 24 July 2006. The Company
issued warrants to the loan note holders to subscribe for ordinary shares at a
price of 1p per ordinary share. The loan note holders have informed the Company
that, at this point in time, they will exercise the option to take up the shares
at this price, and accordingly loan notes have been included as £750,000 in
creditors amounts falling due within one year, and £750,000 in creditors falling
due after more then one year.

6. DIVIDENDS
No interim dividend is proposed (2004: Nil).

7. The company issued shares to the value of £150,000 on 1 November 2005 to
Arbury Inc., in consideration for the termination of Mr Dwek's contract as an
executive director.

8. A copy of the interim report has been sent to shareholders and copies are
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 one month.


Enquiries:

Brian Beecraft
Finance Director, Newmark Security plc: 07977 467 295

Mark Percy
Seymour Pierce Limited: 020 7107 8000






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