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(Sharecast News) - Electronic, software and physical security systems provider Newmark Security confirmed a return to profitability in the financial year just ended on Wednesday.
The AIM-traded firm said in its trading update that it experienced year-on-year revenue growth, primarily driven by strong performance in the people, data management, and physical security divisions.
It said one of the key factors driving revenue growth was its focus on product innovation and efficient software systems, enhancing its solutions offering and resulting in securing new client contracts.
Newmark Security also saw a significant increase in human capital management (HCM) annualised recurring revenues, which were ahead 133% year-on-year at £2.1m for April.
Looking at its financial position, the company's cash at the end of the financial year on 30 April stood at £0.6m - a notable improvement from £0.2m a year earlier.
The board said the increase was mainly driven by higher revenues, an improved gross margin percentage, and lower overhead costs.
Despite supply chain challenges, Newmark said it successfully managed to build inventory to meet ongoing customer demand.
It was expecting inventory levels to ease in the 2024 financial year, allowing for further cash flow generation.
To support its continued growth, Newmark increased its UK invoice financing facility by £0.5m in January, bringing the total to £2.3m.
The additional funding was providing the company with greater working capital headroom as it continued to expand.
"We are pleased to report that the business has returned to full-year profitability," said chairman Maurice Dwek.
"This is the result of the hard work that commenced in the previous financial year, which has seen us optimise our operations, put through necessary price increases to mitigate the inflationary environment and enhance our product offering to meet the needs of our customers."
Dwek said that overall, Newmark was a "much stronger business" with a platform to drive future growth.
"Looking ahead, the business has made a good start to the 2024 financial year with its new revenue pipeline.
"Whilst the board cautiously observes current macro events, it remains confident in Newmark's product and service offering."
At 1456 BST, shares in Newmark Security were up 3.36% at 58.4p.
Reporting by Josh White for Sharecast.com.