Newmark Security Regulatory News (NWT)

This announcement contains inside information for the purposes of Regulation 11 of the Market Abuse (amendment) (EU Exit) Regulations 2019/310.

14 May 2024

Newmark Security plc

("Newmark", the "Company" or the "Group")

Full year trading update

Robust year-on-year revenue growth and improved profitability

Newmark Security plc (AIM: NWT), a leading provider of electronic, software and physical security systems, today provides an update on trading for the year ended 30 April 2024 ("FY24").

Highlights

· Group expects to report robust year-on-year revenue growth with FY24 revenues of not less than £22 million (FY23: £20.3 million)

o  the revenue growth was achieved in both the People and Data Management and Physical Security divisions

· Improved profitability and cash flow generation in FY24 led to higher year end cash position of £1.1 million (30 April 2023: £0.6 million)

· Strong performance in the People, Data Management, and Physical Security divisions

· Human Capital Management ("HCM") annualised recurring revenues* ("ARR") increased by 28% year-on-year to £2.9 million for April 2024 (April 2023 ARR: £2.1 million), positively contributing to profit margins

· Combination of increased cross-selling to existing customers and new blue-chip customer wins contributed to strong second half

*ARR is calculated by annualising revenue recognised in a given month from all clients on deployed HCM subscription contracts.

All FY24 figures stated are subject to audit.

Operations

People and Data Management division - Grosvenor Technology ("Grosvenor")

The HCM division within Grosvenor delivered growth in both the US and Rest of World territories. This was achieved despite the ending of the UKG contract, which stopped contributing to revenues in Q3 FY23.

Growth was driven by winning three new customers earlier in the year, which contributed to a stronger H2, the cross-selling of new products to existing customers and increasing our share of wallet. Grosvenor's strategy to transition to a 'hardware-enabled software and services' business also continues to build momentum, underlined by customer subscriptions growing ARR by 28% to £2.9 million for April 2024 (April 2023: £2.1 million).

Recognising the growth opportunity that the US market presents, earlier in the year Grosvenor successfully relocated its US headquarters to a much larger facility in Florida, whilst third-party logistics have also been brought in-house, which has improved the ability to serve customers to a higher standard and enables more control in servicing customers and their growing needs.

Physical Security Solutions division - Safetell

Safetell delivered encouraging revenue growth supported by a strong performance in both halves of the year. The division continues to execute its strategy to broaden its customer base and grow its revenues from service and maintenance work in the UK autodoor servicing market, which rose significantly compared to the previous year.

Safetell has been targeting new sectors such as retail and critical public services, where there is strong demand for physical security solutions, whilst at the same time developing new strategic partnerships and product lines. Safetell has also achieved good growth in the Entrance Control market and has made important improvements to the processes of product delivery and installation, which have helped to reduce cost and therefore improve margins.

Financial Position

The Group's cash at 30 April 2024 was £1.1 million (30 April 2023 cash: £0.6 million). This increase was due to an improvement in operating cashflows driven by higher revenues and increased margin percentage, particularly in the second half of the year.

FY24 cashflows were also helped by an easing of inventory levels following the building up of positions over the last couple of years to mitigate against the supply chain challenges which have now eased.

The Group currently has capacity within its UK and US invoice financing facilities to provide further working capital headroom as the Group continues to grow. Banking net debt at 30 April 2024 was £2.0 million (30 April 2023: £3.0 million).

Marie-Claire Dwek, Chief Executive Officer of Newmark, commented:

"I am pleased to report that the positive momentum we experienced in the first half of the year has continued, resulting in an expected year-on-year revenue growth and improved profitability. This is testament to the success of the strategies being implemented across both divisions to drive customer acquisition, growth in recurring revenues and enhanced customer service.

"Whilst we continue to closely monitor macroeconomic events, we are excited about the opportunities building in our markets and the promising sales pipeline for the new financial year. We look forward to providing further update on our progress in due course."

About Newmark Security plc

Newmark is a leading provider of electronic, software and physical security systems that helps organisations protect human capital and provide safe spaces seamlessly and securely.

From our locations in the UK and US, we operate through subsidiary businesses positioned in specialist, high-growth markets.

We foster an open and inclusive work environment amongst our c.100 employees, serving hundreds of blue-chip customers.

Our product portfolio consists of Human Capital Management and Access Control Systems providing both hardware and software and Physical security installations to various sectors.

Newmark Security plc is admitted to trading on AIM (AIM:NWT).

For more information, please visit: www.newmarksecurity.com