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

 

10 September 2024

 

Newmark Security plc

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

 

Final Results

for the year ended 30 April 2024

 

 

Newmark Security plc (AIM: NWT), a leading provider of electronic, software, and physical security systems and installations is pleased to announce its audited results for the year ended 30 April 2024 ("FY24").

 

Group financial highlights:

·      Revenue up 10% to £22.3 million (2023: £20.3 million)

·      Gross profit margin increased by 0.9% pts to 38.5% (2023: 37.6%)

·      EBITDA up 50% to £2.2 million (2023: £1.5 million)

·      Operating profit of £0.8 million (2023: £0.3 million)

·      Profit after tax of £0.1 million (2023: £0.4 million)

·      Earnings per share of 1.4p (2023: 3.8p per share)

·      Investments in research and development £0.4 million (2023: £0.5 million)

·      Cash generated from operations £2.8 million (2023: £1.7 million)

·      Cash at bank of £1.1 million at year end (2023: £0.6 million)

·      Net debt excluding leases of £2.0 million at year end (2023: £3.3 million)

 

Business highlights:

Grosvenor

·      Continued growth of Human Capital Management ("HCM") division across US and Rest of World territories with revenue up 7% to £13.5 million. Increase driven by a combination of rising demand from existing customers and from three new large client wins

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

·      GT Connect continues to be a driving force in HCM's growth strategy

·      Signed partnership agreement in Q4 with Oracle for our new Direct-to-Enterprise (D2E) offering, GT Time

·      Rapid growth of Janus C4 product helped to balance customer transition from Sateon Advance and Legacy Janus

·      Successful relocation of Grosvenor's US headquarters to larger facility in Florida

Safetell

·      Revenue grew 23% to £5.8 million

·      Fulfilled a large order of protection screens for one of the UK's 'big four' supermarket chains

·      Rolled out five new ballistic protection systems for a new money exchange client, with 22 more planned

·      Multiple new contracts for auto door maintenance covering universities, a major convenience retailer and a train station operator

·      Grew revenues from service and maintenance with UK auto-door servicing up 51%

·      New sales orders within Entrance Control grew 74% with new partnerships in construction and direct sales to end-users

 

Outlook

·      The Board is cautiously optimistic on the outlook for the full year, building on partnerships signed in 2024

·      Data security and compliance continues to drive strong market demand

·      Commenced implementation of new five-year business plan to drive further growth in recurring revenue streams and service offering

 

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

 

The FY24 annual report and accounts are available to view on the Company's website, www.newmarksecurity.com.

 

Maurice Dwek, Chairman of Newmark, commented:

 

"The Group went from strength to strength over the course of the year. Both divisions delivered growth through customer acquisition and increased recurring revenue streams, leading to improved profitability and cash generation. At the same time, both divisions continued to develop their respective products and services platforms to fully cater for the needs of their customers.

 

"Whilst there have been numerous successes during the year, the impact of GT Connect continues to be a driving force in HCM's growth strategy, delivering new customer subscriptions and 28% growth in ARR. Building on this, we are pleased to confirm the pending launch of GT Time in partnership with Oracle, a dedicated product to target the Direct to Enterprise market and the expansion of data security and compliance.

"Safetell also delivered an impressive performance, which included growing its revenues from service and maintenance work in the UK auto-door servicing market by 51%, signing new customers across retail and critical public services and delivering 74% growth in the Entrance Control market.

"We have entered the new financial year with confidence and an exciting pipeline of new business opportunities. Having put the Group on a much stronger footing we have now embarked on a new five-year growth plan. This will see us continue to build on our platform, further enhance our products and services and meeting the needs of today's customers. We look forward to providing  further updates on this progress."  

 

 

 

Newmark Security plc Marie-Claire Dwek, Chief Executive Officer Paul Campbell-White, Chief Financial Officer	Tel: +44 (0) 20 7355 0070 www.newmarksecurity.com
Allenby Capital Limited (Nominated Adviser and Broker)	Tel: +44 (0) 20 3328 5656
James Reeve / Liz Kirchner / Lauren Wright (Corporate Finance) Amrit Nahal / Tony Quirke (Sales & Corporate Broking)

About Newmark Security plc

Newmark is a leading provider of electronic, software and physical security systems and installations 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: https://newmarksecurity.com/

 

 

Safe. Seamless. Secure

 

CHAIRMAN'S STATEMENT

 

Overview

The year to 30 April 2024 ("FY24") has been another impressive period for Newmark, characterised by objectives met and results achieved in each area of our growth strategy. Strengthened by notable key partnership successes, and markets that have responded favourably as we launched even more competitive full-service propositions, our teams have been busy converting this into measurable success, driving positive revenue growth across every territory, from North America to the UK, Europe and the Rest of World.

Following previous years' considerable efforts expended in navigating post-pandemic recovery, global impacts and turbulence in the supply chain, we are now seeing our resilience and hard work pay-off in the form of a committed and confident team delivering to a consistent plan that is clearly working.

As our security solutions become ever more relevant and valuable to customers, our continuously improving results reflect the progress we have made in serving customers and partners. Our cautious and selective approach translates into sustainable long-term relationships by targeting and nurturing those who appreciate the speed and responsive nature of our services, the quality of our products and the agility with which we are able to shape and adapt our solutions to precisely meet their needs. This of course has been greatly improved by our investment in software and systems, most notably our GT Connect platform that is enabling us to scale with confidence at the pace of our human capital management (HCM) partners. As they expand and accelerate to meet their own ambitions, we can respond, elevating our role above other suppliers and manufacturers to become a trusted partner highly supportive of their own strategies for growth. As a crucial key to the next stage of our scaling journey, this approach has already led to important gains in share-of-wallet, giving us the privilege to serve some of our major global partnerships exclusively, a position we will work hard to expand and protect in the months and years to come.

Board and governance

The Board and its Committees continue to maintain a robust governance framework, supported by an experienced leadership team.

We follow the Quoted Companies Alliance Corporate Governance Code (QCA Code), and details on how the Company applies the principles of the QCA Code are set out in our Corporate Governance section in the Annual Report.

Going concern

The Board continues to have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Following the pandemic, we have driven a robust recovery by delivering year-on-year growth to return to a healthy cash generative position. Growing levels of recurring revenues provide increasing stability in our outlook and, whilst we continue to closely monitor global macroeconomic events, supply chain issues have eased the pressure to hold additional inventory of stock and components, further easing cashflow.

We are optimistic that our growth will continue in the next 12 months, supported by the investments we have made in FY23 and FY24. A full analysis of the Group's going concern assessment is included in the Directors' Report in the Annual Report. Accordingly, the directors consider it appropriate to prepare the accounts on a going concern basis.

Dividend

The Board is not recommending the payment of a dividend for the year ended 30 April 2024 (2023: £Nil).

Outlook

The Group is in good health and performing well. I am delighted with the focus, optimism and diligence displayed by the team as we continue charting our progress, expanding our opportunities and accelerating our growth.

In our People and Data Management division, Grosvenor, as we benefit from important new relationships gained in FY24 we anticipate the year ahead will deliver further positive gains encouraged by the high quality of our solutions and increasingly invaluable nature of our services. This has put us in a compelling position to add holistic value to our partners and become strategically critical, acting as a trusted enabling partner and supporting them in a globally ambitious context. Targeting further growth in subscriptions and recurring revenues will be a natural consequence of our partner-focused scaling approach.

Our Physical Security Solutions division, Safetell, is also very well-positioned to make a positive contribution to group margin in FY25, with enhanced products, services and reference projects that bring confidence to an exciting pipeline of prospects, whilst pursuing its strategy to prioritise the development and transition to long-term recurring revenues from auto-door servicing.

As before, and evidenced by the progress made in FY24, I remain entirely convinced of the strategy and positive outlook for growth ahead. The Executive Team and our many talented employees have worked hard to put both divisions in a strong position in each of their respective markets and this is now showing in our results, with significant further gains to come. Once again, we are forecasting revenue growth for the coming year and year-to-date results indicate that we are on target to achieve this.

On behalf of the Board, I would like to extend my thanks for all the hard work and dedication shown by our teams in what has been another highly productive year, outgrowing previous losses and legacy transitions, and out-competing numerous other suppliers to win more business with our partners. The broadening array of opportunities this presents us with enables us to drive forward with great confidence and address an exciting market opportunity. I look forward to adding 2025 to a series of many successful years ahead.

 

Maurice Dwek
Chairman

9 September 2024

 

CHIEF EXECUTIVE OFFICER'S REVIEW

Overview

I am delighted to report on another year of successful growth and am extremely proud of the way in which it has been achieved by our hard-working team pursuing a clearly defined strategy with enormous focus and dedication.

Once again, numerous performance gains across the Group were added as the positive momentum of FY23 continued throughout FY24 in both the People and Data Management and Physical Security divisions, resulting in healthy year-on-year revenue growth with improved profitability. This is testament to the disciplined execution of precise strategies being implemented across both divisions to drive customer acquisition, growth in recurring revenues and enhanced customer service.

In a year where we onboarded the largest number of new clients in our history, we look forward to the opportunities this presents for an even bigger year ahead, and I am enormously proud and grateful for what our team has accomplished together.

Performance

Group revenue grew again, increasing by 10% year-on-year to £22.3 million (2023: £20.3 million) with gross profit also increasing, up 12% to £8.6 million (2023: £7.6 million). This was driven by positive performances in both divisions.

With HCM sales in FY24 matching last year's success, up by 7% to £13.5 million, Grosvenor again delivered an improved gross margin of 39.7% contributing a gross profit of £6.5 million (2023: 38.6%, £6.0 million).

Access Control delivered a flat performance at £3.0 million, balancing strong sales of Janus C4 which increased by 20% to £2.1 million (2023: £1.7 million), whilst managing a migration from our Legacy Janus and Sateon Advance products. The net effect was to neutralise the migration-related decrease of 3% experienced in 2023, with this upward trend set to continue.

Safetell revenues grew by an impressive 23% to £5.8 million building quickly on the modest but important growth turnaround achieved in FY23. Benefitting from consistent execution of its strategy to deploy an enhanced range of products, product revenues rose by 30% to £3.7 million. Service revenues grew by 11.5% to £2.1 million, as the business succeeded in positively balancing strong new business growth with continued decline in demand for legacy rising screen services in the banking sector.

Safetell also delivered a 0.9% points improvement in gross margin in FY24, growing to 35.3%, contributing a gross profit of £2.1 million (2023: £1.6 million). Whilst this division is yet to return to full profitability this result confirmed its upward trajectory.  Safetell is set to continue this growth via scaling up recurring revenues through new servicing contracts, supplemented by a growing pipeline of high margin installations and the deployment of identified new products and services.

Financial

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 increasing margins, 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: £3.3 million).

With the oversight of our CFO, Paul Campbell-White, we continue to exercise strong commercial controls, ensuring that sound financial discipline underpins our operations, and all investment decisions are aligned with our strategic goals.

Divisional highlights

People and Data Management division - Grosvenor Technology

The HCM division within Grosvenor delivered solid growth in both the US and Rest of World territories. This was achieved despite the anticipated ending of the UKG contract, which stopped contributing to revenues in Q3 FY23. This growth was driven by winning three new customers earlier in the year, which contributed to a stronger H2, as well as the cross-selling of new products to existing customers and several key initiatives aimed at increasing our share-of-wallet.

Our innovation efforts with GT Connect and the drive to attach services to all devices, as well as launching an entry-level proposition combining device, software and services, has produced substantial results creating enhanced value for our partners and enabling us to become the sole supplier in key strategic accounts.

Grosvenor's strategy to attach services to all devices is creating a transformative cumulative effect, accelerating the transition to a 'hardware-enabled software and services' business, underlined by customer subscriptions growing ARR by 28% to £2.9 million for April 2024 (April 2023: £2.1 million).

This shift has also enabled the planned launch of GT Time, our new Direct-to-Enterprise (D2E) offering. This will enable us to target the global workforce management marketplace by partnering with established technology leaders operating in this space. Signing a partnership agreement with the first of these operators, Oracle, in Q4 FY24 is a hugely exciting milestone that we have carefully planned to explore in FY25.

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 auto-door servicing market. This segment grew by an impressive 51% during the year, adding important new partnerships and contracts.

Safetell has also been targeting new sectors such as retail and critical public services, where there is strong demand for physical security solutions. At the same time, it has been developing new strategic partnerships and product lines. In keeping with its strategic plan, Safetell has achieved very high growth in the Entrance Control market with a 74% increase in new sales orders, developing new partnerships in construction and direct sales to end-users. Operationally, it has made important improvements to the processes of product delivery and installation, which have helped to reduce costs and therefore improve margins.

Outlook

In an HCM market environment that has been welcoming of our strategy to attach services and deliver our full-service proposition across a range of price points, we are excited about the opportunities for building in our markets and the promising sales pipeline for the year ahead.

We expect a number of important new partnerships, added in FY24, to begin ramping up orders in FY25  as they win new clients with the addition of our compelling combined proposition. This is further encouraged by our ability through GT Connect to empower them to easily and powerfully deliver new services to their end-users and customers.

Whilst we remain cautious in our approach, excitement is also building to see how the D2E market responds as we launch our direct proposition, GT Time, in partnership with Oracle.

With data security and compliance driving strong market demand, this is an opportunity which we will continue to research and explore, to understand and map the service expansion opportunities that are possible by delivering managed compliance and more advanced biometrics-as-a-service.

In Access Control, we continue to balance the transition from Sateon Advance and Legacy Janus towards the rapid growth of Janus C4, as we push further in partnership with Gamanet, to launch the new hybrid-cloud Janus C4 Ultra, a pioneering new product with significant market potential.

As we continue to monitor macroeconomic events closely, the expert systems and processes used to monitor our supply chain and control inventory will continue to be managed tightly. This will ensure we maintain our increasing edge in customer delivery, made easier through our new US location, as well as taking opportunities to improve stock turnover and cashflow where possible, just as we did this year.

Equally encouraging prospects exist in Safetell, with key reference projects delivered in FY24 that we are expecting to leverage and convert into further growth in FY25. This includes a particular focus on critical infrastructure hardening projects, driven by a number of external factors, that may have the potential to drive a network effect.

We will also continue to complete and extend reference projects for a number of major brands operating nationwide building estates, seeking to upgrade entrance controls and entrances to the consistently high standards we have demonstrated and installed with our new range of products.

As already mentioned, building incremental recurring revenues in Door Services will remain central to our plan, expanding regional and national partnerships and adding new contracts. This includes reviewing the opportunity to extend our capability to include the servicing of security shutters, a key component of many auto-door servicing contracts that we are now beginning to explore.

Strategy

We enter FY25 in great shape, full of confidence that continued focus on our strategy will sustain our positive performance and help us extend our leadership in the fast-growing segments in which we operate.

Our focus on converting recurring revenues across both divisions continues, supported by our investments in services and software that are unlocking these opportunities at an accelerated rate.

Having already achieved much of what we set out in our original 2021 Growth Strategy, we enter FY25 having approved a strategic business plan outlining how we expect to grow over the next five years (the "2029 Strategic Growth Plan"). The 2029 Strategic Growth Plan includes stretching internal targets for revenue and EBITDA growth, as well as lowering debt and increasing net assets.

With many operational improvements now accomplished, an excellent team in place and a commitment to a set of clearly defined strategies that have already proven successful in practice, we have returned the business to a position of strong cash generation. In the immediate near-term, we will seek to leverage this position wisely and remain undistracted in our focus to continue driving this growth using the same formula, grateful and appreciative of the encouragement that investors are giving us.

With the right strategy, the right team and disciplined orchestration, we continue to execute our plan with great success, energised by our customers and partners, and are optimistic for our future focused on the many growth opportunities ahead.

Marie-Claire Dwek

Chief Executive Officer

9 September 2024

 

OUR DIVISIONS - People and Data Management

Revenue information

£'000	2024	2023	Increase/ (decrease)	% change
HCM North America	9,443	8,830	613	7%
HCM Rest of World	4,009	3,721	288	8%
Total HCM	13,452	12,551	901	7%
Janus C4	2,083	1,729	354	20%
Sateon Advance	903	1,063	(160)	(15%)
Legacy Janus	31	231	(200)	(87%)
Total Access Control	3,017	3,023	(6)	(0%)
Division Total	16,469	15,574	895	6%

 

Performance overview

Grosvenor Technology (Grosvenor) is a market leader in timeclocks, access and identity data control for the Human Capital Management (HCM) and Access Control markets, helping organisations to protect and manage their most valuable assets - people in the workplace.

Once again, FY24 has been another solid year of progress with top line revenue growth of 6% to £16.5 million (2023: £15.6 million), an increase of £0.9 million driven by strong growth of the HCM business and our expanding relationships with software partners, which have been strengthened in both the US and the European market.

Execution against a five-pillar growth strategy, conceived to underpin the Group's 2029 Strategic Growth Plan with a clear operational focus, has yielded extremely positive results. Hardware product sales, led by the GT8 and GT4 units, exceeded annual planned targets in both the North American and Rest of World (ROW) markets. US-based HCM sales grew by 7% to reach revenues of £9.4 million (2023: £8.8 million). This was matched by equivalent progress with key European HCM partners, as ROW markets delivered similar underlying growth of 8% to reach revenues of £4.0 million (2023: £3.7 million), resulting in a 7% year-on-year improvement in HCM revenues overall.

HCM recurring subscriptions grew by 23% year-on-year, reaching 30,639 subscriptions by year-end, representing an exit ARR of £2.9 million (2023: £2.1 million), an increase of 28% on FY23.

In addition to this growth, significant strategic progress has been achieved in developing our partnerships and establishing our cloud control technology, GT Connect, at the centre of our market leading proposition. This has led to important gains in share-of-wallet, with new product-service combinations propelling us to replace global competitors operating at the lower end of the market for the first time. It has also enabled the launch of new Direct-to-Enterprise (D2E) offerings that are marketplace-ready, with per-employee pricing. Our recent partnership with one of the world's leading workforce management technology brands, Oracle is a hugely significant milestone that opens a very exciting opportunity as we begin exploring the global D2E marketplace in FY25.

Access Control delivered a flat performance at £3.0 million. This was the result of balancing the strong growth in sales of Janus C4, increasing by 20% to £2.1 million (2023: £1.7 million) adding £0.4 million revenues, whilst managing a migration from our Legacy Janus and Sateon Advance products, which reduced by a combined £0.4 million. Whilst the outturn fell slightly below expectations, it neutralised the migration-related decrease of 3% experienced in 2023. The continued strong performance of Janus C4 and the opportunity to upgrade a number of key national accounts bodes well for a more positive FY25 and a return to stronger growth with the anticipated launch of our Janus C4 Ultra product.

Across the division, combined gross margin grew by 1.1% points to 39.7% (2023: 38.6%), increasing gross profit by £0.5 million to £6.5 million (2023: £6.0 million). This improvement was largely achieved through customer price increases and cost control measures.  Cost reductions were achieved by lowering manufacturing and logistics costs with the normalisation of componentry prices returning to pre-pandemic levels.

Overall, the strong performance in HCM product sales drove a divisional gain that provides a positive financial backdrop to what has been a substantial year of execution and evolution, with operational gains and strategic successes that will continue to propel Grosvenor throughout the next phase of growth and beyond FY25.

Expanding partnerships driving HCM growth

As before, Grosvenor's strategic growth continues to be driven through partnerships with a broad array of fast-growing HCM providers. The substantial progress made in expanding share-of-wallet across our existing partnerships produced another year of impressive gains, with some notable partner successes and a combined net growth of the top 15 partnerships of 35%.

In North America, we achieved major gains with two of our largest US partners, growing by 52% and 43% respectively. In both cases, we now supply the complete range of GT devices from entry level to premium, with sliding scale pricing and services attached to all clocks, including where this wasn't already in place. This broader and more flexible strategic approach, combined with our new entry-level GT4 Lite device, drove faster growth and enabled us to replace a major global manufacturer who was previously only supplying low-end devices with no services. These important wins translate into longer-term recurring revenues from services with a superior customer relationship. The success of this approach opens the opportunity to further extend this model across other partnerships in FY25.

Our major European partnership grew by 21% overall, partly driven by new territory operations. As we had anticipated, this partner appears to be pursuing a highly aggressive territorial expansion strategy across Europe which we continue to support as they bring on new national partners in Spain, Germany and beyond.

End-user partnerships also delivered positive growth and customer value in FY24. For one of the Big 3 UK supermarkets, we successfully completed the first phase of a hardware replacement project, providing the supermarket with a seamless and efficient solution, and the right fit for their immediate and longer-term needs. We are now planning a further hardware replacement project for a top 10 UK retailer, attaching GT Connect to provide them with the same level of excellence, efficiency and control. Our focus on delivering the best possible customer experience, combined with our innovative technology and integrated services, makes us the ideal partner for these large-scale hardware replacement initiatives.

Our strong base of innovation-focused global partners, with expanding operations in North America and Europe also provides an exceptionally strong pipeline of prospects looking forward. As each prosecutes their own strategies for growth focused on territorial and competitive service advancement, we will continue to deploy our five-pillar approach, making every effort to enable their success as we seek to fully leverage our platform and become the solution of choice for global enterprise operations.

Access Control also drove some notable partnership successes, with OEM hardware sales (controllers and blades in end-to-end solutions) remaining buoyant, particularly through our HCM European partners. The timeless value of good account management combined with excellent support to key customer projects proved particularly valuable in a year where spend with public sector partners continued. Private sector business toughened considerably, as a number of construction customers responded to uncertain global conditions with project delays and spending freezes. In a crowded competitive market occupied by major global brands, our attention was naturally focused where our track record was already strong, commissioning major projects with a significant blue light customer. This more than made up for the reduction in support for legacy installations. Meanwhile, upgrading large Sateon installations to Janus C4 has provided us with an excellent stream of ready-made opportunities with a further £2.5 million pipeline targeted for conversion in FY25 and beyond.

 

OUR DIVISIONS - Physical Security

 

Revenue information

£'000	2024	2023	Increase/ (decrease)	% change
Products	3,690	2,840	850	30%
Service	2,118	1,900	218	11%
Division Total	5,808	4,740	1,068	23%

 

Performance overview

Safetell continues to raise its growth trajectory, deploying new products, winning important new reference customers and demonstrating a clear market advantage as a leading provider and installer of integrated door solutions and physical security.

FY24 was an important year of strategic execution that delivered substantial growth following its turnaround in FY23. FY24 revenues increased by 23% year-on-year to £5.8 million, a significant step-up from the previous year's modest but transformative increase of 3%. This demonstrated the positive effect of our strategy, deploying an enhanced range of products, with product revenues up 30% to £3.7 million. The headline growth of service revenues, up 11% to £2.1 million, was the net result of balancing stronger growth in target sectors whilst managing anticipated ongoing decline in the banking market, with continued reduction in demand for legacy rising screen services.

The three-pillar growth strategy, previously identified as part of the original five-year planning process in 2021, has been considerably strengthened under the leadership of MD, Nick Shannon. FY24 saw a concerted focus on growing market share in entrance control, gaining traction with differentiated products in physical security and increasing support for regional and national door servicing demand. This prioritised focus and planning yielded extremely positive results, with substantial progress in door services, which grew by 51%, and an even greater increase in entrance control orders, which grew by 74%. Overall, new sales orders grew by 5% year-on-year and order pipeline expanded by 23%, reaching £11.7 million across all target sectors, with £5.5 million in potential opportunities added in the year. This completed an important year of all-round growth as a backdrop to a financial performance that saw substantial year-on-year gains in every area.

Trading throughout the year was in line with expectations, with the continued improvement in results through this growth strategy only slightly muted by the long-expected loss of a large high street bank rising screen servicing contract, as it sought to rationalise its high street estate and remove the provision of these security measures for its workers. Despite this, overall gross margin grew by 0.9% points to 35.3%, increasing gross profit by £0.5 million to £2.1 million (2023: £1.6 million). This was an impressive gain in profitability on FY23.

Looking ahead, we expect this upward trajectory to continue as the business continues to demonstrate its ability to manage the ongoing contraction of its legacy services through the replacement of a healthy mix of business, built on selectively growing and scaling a foundation of recurring revenues from new servicing contracts, supplemented by high margin installation projects and the deployment of identified new products and services.

Against a background of considerable macro-economic uncertainty across the UK, the planned mitigation measures taken in FY23 produced a welcome impact for Safetell in FY24. In particular, sourcing alternative product manufacturers in China delivered clear advantages through the year, both in terms of improved product quality, more competitive costs and reduced lead times. These advantages were borne out in the delivery of key contracts with major national brands and pave the way for significant expansion potential in FY25.

Once again, a very positive demand outlook across all our target sectors, coupled with a stronger pipeline and a range of highly competitive products in our portfolio, means our confidence is buoyant as the business continues to execute with discipline and focus to go from strength-to-strength.

 

FINANCIAL REVIEW

Revenue		2024		2023		Increase/ (decrease)		Percentage change
		£'000		£'000		£'000		%
People and Data Management Division
HCM		13,452		12,551		901		7%
Access Control		3,017		3,023		(6)		(0%)
		16,469		15,574		895		6%
Physical Security Solutions Division
Products		3,690		2,840		850		30%
Service		2,118		1,900		218		11%
		5,808		4,740		1,068		23%
Group Revenue		22,277		20,314		1,963		10%

 

Group revenue increased by 10% to £22.3 million (2023: £20.3 million) driven by growth in both People and Data Management and Physical Security Solutions Divisions.  The driver of growth in People and Data Management was in HCM which experienced increases in both North American and Rest of World. This was due to the combined impact of increased demand from existing customers, customer price rises, new customers won and growth of recurring revenues from SaaS (GT Connect) and ClaaS products. There has also been revenue increase from both Products and Services in the Physical Security Solutions Division. Growth from Products is driven by a focus on newer products such as entrance control and retail screens.

Growth from Servicing is due to legacy bank and building society clients upgrade projects as well as new auto-door servicing and repairs.  Further commentary and discussion can be found in the relevant divisional sections.

		2024		2023		Increase/ (decrease)		Percentage change
		£'000		£'000		£'000		%
Gross Profit		8,585		7,638		947		12%
Gross Profit Margin		38.5%		37.6%

 

Gross profit margins have increased to 38.5% (2023: 37.6%) due to increases from both divisions. The People and Data Management division gross margin increased to 39.7% (2023: 38.6%) as a result of customer price rises, cost control measures and a higher proportion of high margin recurring revenues. Cost reductions were achieved by lowering manufacturing and logistics costs with both componentry prices and logistic costs returning to near pre-pandemic levels. The Physical Security Solutions division achieved a gross profit margin of 35.3% (2023: 34.4%) the increase is primarily due to changes made in the operations team to optimise how contracts are sold and delivered.

Administrative expenses and average employees

Administrative expenses have risen by 6% to £7.8 million (2023: £7.4 million). This has mainly been the result of an increase in headcount, additional property costs and inflationary cost pressures. Overall average employees have increased to 102 (2023: 99) driven by increases in Grosvenor UK and US to support the HCM growth.  Staff costs (which are included in both cost of sales and administrative expenses) increased by £1.0 million or 14% to £8.3 million (2023: £7.3 million).

Finance costs

Finance costs have increased by £0.1 million to £0.4 million (2023: £0.3 million) due to higher interest rates and additional lease interest costs.

Profitability

The current year profit from operations was £0.8 million (2023:  £0.3 million). The increase in profitability was the result of a combination of an increase in gross profits from higher revenues and improved gross margin percentages.

 

Profit after tax for the year was £0.1 million (2023:  £0.4 million).  This is after the tax charge which is discussed in more detail below.

 

Taxation

A tax charge of £0.3 million (2023: £0.4 million credit) was recognised in the year.  The 2023 tax credit was a result of a catch-up of R&D claims in both Grosvenor and Safetell. The 2024 charge for both current and deferred tax is primarily a result of adjustments to prior periods relating to a change in assumptions for the Grosvenor R&D tax claims.  No corporation tax was paid in the year.

Earnings per share

Earnings per share was 1.43p (2023: 3.77p) being a decrease of 2.34p. The decrease was due to the tax charge incurred in FY24.

Balance sheet

Net assets have increased by £0.2 million to £8.1 million (2023: £7.9 million). Property, plant and equipment decreased by £0.2 million to £2.7 million mainly from right of use buildings depreciation. Intangible assets have decreased by £0.2 million to £5.2 million due to amortisation of development costs and in particular the first full year of GT Connect.  Inventory has decreased by £1.4 million to £2.7 million due to unwinding of componentry and finished goods that were stock-piled as a result of previous supply chain issues. Trade and other receivables reduced by £0.4 million primarily due to the fact there was an abnormally large trade receivable balance in the Physical Security Solutions Division at prior year end. Cash and cash equivalents increased by £0.5 million to £1.1 million (2023: £0.6 million). Trade and other payables decreased by £1.1 million to £3.5 million (2023: £4.6 million) due to timings of creditor payments. The £0.4 million decrease in short term borrowings to £3.0 million was due to a reduction in the amount drawn down of the Group's invoicing financing facilities.   Bank net debt decreased by £1.3 million in FY24 to £2.0 million at 30 April 2024 due to an increase in cash and repayments relating to invoice financing and CBILs facilities.

Research & Development (R&D)

The Group has decreased its R&D investment to £0.4 million (2023: £0.5 million) in the People and Data Management division. The reduction is due to the completion of the development of GT Connect, our upgraded SaaS platform which was launched in the second half of FY23.

Cashflow

During the year cash increased by £0.5 million to £1.1 million (2023: £0.6 million). Cash generated from operating activities increased by £0.9 million to £3.0 million (2023: £2.1 million) mainly driven by an increase in operating profits and an improvement in working capital due to lower inventories and partially offset by creditor outflows. There was also a tax receipt of £0.2 million (2023: £0.4 million) from R&D tax credits. Cashflow from investing activities remained flat year on year at £0.8 million (2023: £0.8 million). The financing movements related to the repayment of £0.4 million of invoice financing from the UK and US facilities (2023: £0.3 million draw down), lease principal repayments of £0.6 million (2023: £0.4 million) and £0.4 million of repayments from the Coronavirus Business Interruption Loan Scheme ("CBILS") which started to be paid back from September 2021 over a 5-year term.  There was also £0.3 million of interest paid on the debt facilities (2023: £0.3 million).

Forward currency contracts

During the year we executed our foreign exchange strategy by entering into forward contracts. The strategy effectively hedges 75% of excess USD and reduces the level of volatility compared to using spot rates. The contracts manage our currency mismatch between an increasing US Dollars (USD) position from revenues and the existing cost base in both GBP and Euros. The adopted process involved currency forecasting three quarters ahead and taking out tranches of forward contracts for 25% of each of the forecasted quarters relating to our excess USD position.

 

CONSOLIDATED INCOME STATEMENT FOR THE YEAR END 30 APRIL 2024

		2024		2023
	Note	£'000		£'000
Revenue		22,277		20,314
Cost of sales		(13,692)		(12,676)
Gross profit		8,585		7,638
Administrative expenses		(7,811)		(7,354)
Profit from operations		774		284
Finance costs		(386)		(348)
Profit/(loss) before tax		388		(64)
Tax (charge)/credit	3	(254)		417
Profit for the year		134		353
Attributable to:
- Equity holders of the parent		134		353
Earnings per share
- Basic (pence)		1.43		3.77
- Diluted (pence)		1.35		3.69

 

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
		2024		2023
		£'000		£'000
Profit for the year		134		353
Foreign exchange on the retranslation of overseas operation		18		(22)
Total comprehensive income for the year		152		331
Attributable to:
- Equity holders of the parent		152		331

 

The notes in the annual report and accounts form part of these financial statements.