Interim Results

Newmark Security PLC 23 January 2003 NEWMARK SECURITY PLC INTERIM REPORT for the six months ended 31 October 2002 CHAIRMAN'S STATEMENT RESULTS FOR THE SIX MONTHS ENDED 31 OCTOBER 2002 The first six months of the year were very much a transitional period with the major historic profits contributor, Vema, having been sold just before the end of the last financial year with the replacement acquisition, Grosvenor Technology, taking place in mid September, and therefore only contributing profits for one and a half months. In addition, we have provided for the cost of the closure of the North American sales operation and the US market will be serviced directly from the UK in future. The Group made a loss from continuing operations before exceptional items, amortisation of goodwill and interest of £394,000 (2001: loss £416,000). The results for the period include the profits of Grosvenor Technology Limited for the month and a half since the date of acquisition. The results for the six months to 31 October 2001 included the results of Vema which was sold in April 2002 and has therefore made no contribution in the six month period under review. The loss before tax for the period under review was £675,000 (2001: profit £388,000). ASSET PROTECTION DIVISION Sales in Safetell Limited were 23% higher than the same period with quotations and order intake 33% higher. The majority of the increase was in cash handling and reconfiguration work on rising screens. A contract to enhance protection against non-firearm attack for a major financial institution was won in July with the first installations in September. 29 of the 80 sites were completed by the end of the half year, with the rest completed in November and December. The new Eye2Eye product was developed further to introduce an anti-physical attack version for the Probation Service and has also now been supplied to some police stations as well. The MaxiView, wide span, moving glass screen has been developed and installed in two petrol retail sites and there are good prospects for a roll out programme for the same client in 2003. Drion domestic sales and orders received in the period were ahead of last year following some recovery in the Belgian banking sector and growth in the non-banking sector. However, the orders for the export market that we had hoped to gain have not materialised. The major tender with the CNEP bank in Algeria is on hold and we are unlikely to receive any revenue from that source in the current financial year. SECURE LOCKING DIVISION Following the sale of the Vema business in April 2002, the results of Vema NV have comprised only overhead costs incurred in the period. The company has now been delisted from the Alternative Investment Market of the London Stock Exchange. The only trading company in this division is Newmark Security Products Limited. We have been taking positive steps to increase the level of activity of this company, but whilst turnover has grown significantly in the period from a low base, the additional resources taken on in the period to increase the strength of the company for the longer term have meant that the company has incurred a loss. ELECTRONIC DIVISION The acquisition of Grosvenor Technology Limited was completed in the period and the company has been trading in line with expectations overall since acquisition. However, as the acquisition was completed in mid September, the results for the period only include one and a half months trading for this company. The closures of the Redhill offices and Rainton Bridge assembly plant of Newmark Technology Limited have now been completed. This has resulted in the elimination of the previously sizable trading losses of this company. During the period we have continued with the integration of the two businesses and the implementation of a new management and financial information system. BALANCE SHEET AND CASH FLOW The Group balance sheet has again changed significantly due to the acquisition of Grosvenor. In view of the recent trading activity of the company, we have assumed that the deferred consideration of £3.5 million payable under the acquisition agreement will be paid in full, and therefore the goodwill included within intangible fixed assets and long term creditors on the balance sheet have been computed on that basis. Many of the professional costs related to the acquisition/reverse takeover had not been paid at 31 October 2002 and were therefore accrued in other creditors together with the last two elements of the initial purchase consideration (£787,000) which have since been paid in full. The Group now owns just over 90% of Vema NV following the offer to issue Newmark shares in exchange for Vema GDRs. The acquisition of these GDRs has been accounted for in accordance with the merger accounting rules and the difference between the market and nominal value of the shares issued has been credited to a merger reserve on the balance sheet. The last instalment of the consideration for the acquisition of Drion has now been paid. CONCLUSION We are pleased with the trading results of Grosvenor in the period since the acquisition, and we look forward to the Electronic division being both profitable and cash generative in the future. Safetell has traded ahead of plan since the half year. We are furthermore optimistic that the Newmark Security Product sales will continue to increase. Maurice Dwek Executive Chairman 23 January 2003 CONSOLIDATED PROFIT AND LOSS ACCOUNT for the six months ended 31 October 2002 Notes Unaudited Unaudited Six Audited Six months Year months ended ended ended 31 October 30 April 31 October 2002 2002 2001 £'000 £'000 £'000 TURNOVER Continuing operations 3,733 6,479 3,550 Discontinued operations - 5,548 2,930 ------- ------- ------- 3,733 12,027 6,480 Cost of sales (2,455) (7,785) (3,790) ------- ------- ------- Gross profit 1,278 4,242 2,690 ------- ------- ------- Other operating income - 597 - ------- ------- ------- Administrative expenses (1,638) (5,585) (2,561) Amortisation of goodwill (99) (128) (64) ------- ------- ------- Administrative expenses total (1,737) (5,713) (2,625) ------- ------- ------- OPERATING (LOSS)/PROFIT Continuing operations (394) (1,431) (416) Discontinued operations (65) 557 481 ------- ------- ------- (459) (874) 65 Profit on part disposal of investment - 182 362 (Loss)/profit on disposal of business and net trading assets (247) 3,007 - ------- ------- ------- (LOSS)/PROFIT ON ORDINARY ACTIVITIES BEFORE INTEREST AND (706) 2,315 427 TAXATION Interest receivable/(payable) 31 (55) (39) ------- ------- ------- (LOSS)/PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION (675) 2,260 388 Tax on ordinary activities 2 - (1,517) (161) ------- ------- ------- (LOSS)/PROFIT FOR THE PERIOD AFTER TAX (675) 743 227 Minority interest 6 91 (1,702) (129) ------- ------- ------- 5 (584) (959) 98 ------- ------- ------- Pence Pence Pence (Loss)/earnings per share 7 (0.4p) (0.8p) 0.1p Loss per share before amortisation of goodwill, (loss)/profit (0.2p) (0.5p) (0.2p) on part disposal of investment and profit on disposal of business and trading assets CONSOLIDATED BALANCE SHEET as at 31 October 2002 Notes Unaudited Audited Unaudited 31 October 30 April 31 October 2002 2002 2001 £'000 £'000 £'000 FIXED ASSETS Intangible assets 7,411 2,014 2,294 Tangible assets 1,618 1,344 1,463 ------- ------- ------- 9,029 3,358 3,757 ------- ------- ------- CURRENT ASSETS Stocks 1,082 773 1,827 Debtors 2,838 1,994 2,666 Cash at bank and in hand 2,576 6,409 966 ------- ------- ------- 6,496 9,176 5,459 CREDITORS: amounts falling due within one year (5,545) (5,022) (3,685) ------- ------- ------- NET CURRENT ASSETS/(LIABILITIES) 951 4,154 1,774 ------- ------- ------- TOTAL ASSETS LESS CURRENT LIABILITIES 9,980 7,512 5,531 CREDITORS: amounts falling due after more than one year (3,940) (525) (935) Provisions for liabilities and charges (225) (453) (395) ------- ------- ------- NET ASSETS 5,815 6,534 4,201 ------- ------- ------- CAPITAL AND RESERVES Called up share capital 3 6,916 6,060 6,060 Share premium 4 5,180 5,194 5,194 Other reserves 5 (6,692) (6,750) (7,480) ------- ------- ------- EQUITY SHAREHOLDERS' FUNDS 5,404 4,504 3,774 ------- ------- ------- Minority interest 6 411 2,030 427 ------- ------- ------- 5,815 6,534 4,201 ------- ------- ------- NOTES TO THE ACCOUNTS 1. BASIS OF ACCOUNTS The unaudited results for the six months ended 31 October 2002 have been prepared on a basis consistent with the accounting policies disclosed in the Group's 2001 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 2002 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 Tax is disproportionate to the result due to the non-availability of tax relief on the UK losses for the period. 3. SHARE CAPITAL £'000 At 1 May 2002 6,060 Shares issued in the period 856 -------- At 31 October 2002 6,916 -------- By a special resolution passed at the Annual General Meeting on 10 September 2002, each of the issued ordinary shares of 5p each in the capital of the Company were sub-divided and converted into one ordinary share of 1p each and one deferred share of 4p each. During the period the Company issued 85,592,898 ordinary shares of 1p each to acquire ordinary shares in Vema N.V. The excess of the market price of the Newmark shares over their nominal value has been credited to merger reserve. 4. SHARE PREMIUM ACCOUNT £'000 At 1 May 2002 5,194 Costs in respect of shares issued in the period (14) -------- At 31 October 2002 5,180 -------- 5. RESERVES Profit and loss reserve Profit and Merger Total other loss reserve reserve reserves £'000 £'000 £'000 At 1 May 2002 (6,750) - (6,750) Retained loss for the period (584) - (584) Excess of market value over nominal value of shares issued (note - 613 613 3) Exchange adjustment 29 - 29 --------- ------- --------- At 31 October 2002 (7,305) 613 (6,692) --------- ------- --------- 6. MINORITY INTEREST £'000 At 1 May 2002 2,030 Retained loss for the period (91) Exchange adjustment 43 Minority interests purchased back in period (note 3) (1,571) --------- At 31 October 2002 411 --------- 7. LOSS PER SHARE Pence per £'000 share Loss after taxation and minority interest (0.4) (584) Amortisation of goodwill and exceptional items 0.2 346 ------- ------- Adjusted loss (0.2) (238) ------- ------- The loss per share has been calculated based on the weighted average number of shares in issue during the period, which was 135,474,431 shares (31 October 2001: 121,208,952). 8. DIVIDENDS No interim dividend is proposed (2001: Nil). 9. A copy of the interim report has been sent to shareholders and is available for inspection at the Company's registered office, Suite 3, 23 Bruton Street, London W1J 6QF, 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 Exchange

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