Newmark Security Regulatory News (NWT)

Dissemination of a Regulatory Announcement that contains inside information according to REGULATION (EU) No 596/2014 (MAR).

Newmark Security plc

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

Year-end trading update

Newmark Security plc (AIM: NWT), a leading provider of products and services in the security and data sectors announces an update on trading for the year ended 30 April 2020 ("FY 19/20") and the impact of COVID-19.

Trading for the second half of FY19/20 had continued broadly in line with management's expectations, with the Company only experiencing a slow-down in trading as a result of COVID-19 from the beginning of April onwards. As a result, subject to audit, the Company expects to report revenue for FY19/20 marginally lower than FY18/19 as previously anticipated. It is not known at this stage what the impact of COVID-19 was on Group operating profit for the year. The results would have been more favourable were it not for the impact of COVID-19 on trading in April 2020. The slowdown in trading was experienced more in the UK than it was in the Company's US operations.

During the year, Grosvenor Technology ("Grosvenor"), which specialises in data security and privacy, continued with strong growth in its Human Capital Management ("HCM") activities and saw a steady progression from its Access Control activities. Grosvenor experienced another successful year of growth in its US HCM revenues and launched the GT Clocks website, specifically designed to support its US sales. Legacy Access Control sales remained stable during the year, whilst the latest platform, Janus C4, continued to gain traction in the market.

Safetell, the Group's asset protection division, having been through a restructuring in the previous year followed by a strategic review in FY19/20, has responded favourably to newly launched product lines, winning new customer relationships and projects during this period.  Some momentum in revenues from these activities was evident before being impacted by the COVID-19 pandemic.

Impact of COVID-19

The COVID-19 pandemic and resultant restrictions put in place by governments around the globe has had an inevitable impact on the Group and its customers. The Company took action ahead of UK Government restrictions by implementing remote working across both divisions in March 2020 and, whilst the Group's core business supply chain remains intact, areas such as sales, service and installations have been impacted by social distancing but continue to operate. Some of the Group's customers' projects have been placed on hold or are being progressed with longer lead times.

Both Grosvenor and Safetell responded quickly to support critical infrastructure and other related industries as a result of the pandemic. Safetell has seen an increased demand in the supply and installation of hygiene screens and night-pay hatches, which enable retail sales transactions to take place whilst adhering to social distancing. Grosvenor has prioritised its technical support for NHS sites

and has further supported its customer base with a programme of online training.

The Group is also looking ahead to the "new normal" for its customers with expected market evolution towards 'contactless' methodologies being adopted in the HCM sector. Additionally, Safetell's advanced door portals would provide safer employee working conditions and/or customer interaction.

Outlook

Although the Group's divisions have continued to operate, it is not possible at this stage to know what the impact of COVID-19 will be on trading for the current year. The Company has taken remedial actions available to it, including a programme of staff furloughs and temporary pay reductions for all staff, and has been liaising with its financial stakeholders.

In February 2020, one of Grosvenor's US customers, Ultimate Software, announced a merger with Kronos Incorporated. Kronos manufactures its own hardware which the Board anticipates will, over time, replace the requirement for the provision of the OEM version of the GT-10 timeclock to Ultimate Software. The Company continues to have advanced discussions with a number of other major US based HCM providers with an aim to grow the US revenues further.

The Board wishes to thank all its employees, customers and suppliers for working so well together throughout this challenging period.

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