Newmark Security (LSE:NWT) — Final Results for the year ended 30 April 2020

0:02 Good morning, ladies and gentlemen, and welcome to the NEWMARK SECURITY PLC Final Results Presentation for the Year Ended 04/30/2020. Throughout this presentation, investors will be in listen only mode. Questions are encouraged and could be submitted at any time via the Q and A tab situated on the right hand corner of the screen. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where it's appropriate to do so. These will be available via our Investor Me company dashboard. I'd also like to remind you that this

0:33 presentation is being recorded. Before we begin, we'd like to submit the following poll. I'd now like to hand you over to Marie Claire Dwork, CEO and Graham Felton, CFO of NEWMARK SECURITY PLC. Good morning. It's a pleasure to meet you even if it is still virtually, and I'm delighted to have the opportunity to speak to you today. I've been CEO of NEWMARK for over seven years now. And during that time, I've instigated and overseen a number of changes and initiatives to ensure we're well positioned to take advantage of the shifting market and the sectors in which we operate. Prior to this, I spent fifteen years working for the Reuben Brothers and directly for Simon Real Estate, developing a successful portfolio of diversified assets.

1:24 Last year, this time last year, Graham Fulton joined us and he was appointed to the executive board of group finance director. His experience across a broad range of businesses brings us a great greater depth as we continue to develop our financial systems and processes. We also have Colin Leatherbauer on the line, and he's there at the end if there's any technical questions you wish to answer. Who we are? NEWMARK has two divisions that operate within what we can broadly describe as the security sector. We design, manufacture products and services that protect both personnel and their data while ensuring security to organizations' physical assets and workplaces.

2:13 We do this through GROVNER technology and SafeTel. NEWMARK has a long history of over thirty years of innovation and this coupled with our long term outlook for investing in emerging technologies and markets has allowed us to remain current, competitive, and positioned for growth. Through our divisions, we take a good position in high growth sectors providing specialist products and services that lend themselves to have high barriers to entry with a level of experience and expertise which is difficult for customers and competitors to emulate. GROVENA technology develops hardware and software for the human capital management and access control markets globally.

2:59 Secured data collection, collation, processing, and dissemination is at the heart of our offering. Put simply, we help turn diverse data into real information while increasing security and ensuring compliance and reducing time and cost for our partners.

3:22 Safetel designs, installs, and maintains a diverse range of physical security solutions to wide range of sectors. Products and services range from asset protection through building management and target hardening to counter terror products. I'm going to discuss the divisions that make up our business in more detail and the markets they operate in and their typical customer base. I will also outline the long term growth opportunities we have and how we have adapted and reacted to COVID nineteen and the pandemic. Undoubtedly, we are living in very uncertain times. Coronavirus has represented some short term challenges and made us reevaluate our business strategies, but we take great comfort in providing safe and secure workplaces, which will remain a pre objective for businesses globally for some time to come.

4:16 We have a 115 employees based in five locations, four in The UK and one in The US and Florida, and currently have 610 employees. I'll just run through some highlights of our annual report, and Graham will delve into this in a little bit more detail during his part of the presentation. Our revenue for 1920 was 18,800,000, which a 4% decrease in the previous year. Grosvenor Technologies revenue was 13,400,000, which was an increase on 22% with a gross margin of 37.8%. This is broken down into the two segments. Human capital revenue was 9,200,000, which was an increase of 32%.

5:05 Access control revenue was 4,200,000 with an increase of 4%. Safe sales revenue was at 5,400,000 with a decrease of 37%, which was anticipated at the end of some current projects for the post office and others alike. But our margin increased to 44%. This was split with revenue of products 2,700,000, and our services was also 2.7. You can see these splits on the tables by revenues and divisions on the right hand side.

5:42 At the half year, we announced that revenue would be marginally behind last year, but with an increased operating profit. We have delivered that despite COVID. We estimated without COVID, we've increased ourselves by an additional 400,000 and profit would also increase by 200,000. We will discuss a little bit further on more about the comp the impact of COVID in the presentation. We maintained gross margins and controlled our costs during this period, which has given us an improved operating profit. We obtained tax credits along with trading performance and substantially increased to our net profits and our EPS. We've increased our investment in the future and our development spend.

6:28 Previous year was 550 k, and we're increasing it to over 850,000 this year, enhancing enhancing our cloud offering and their next generation of clocks and integrating tech contactless solutions into our products.

6:49 These are some of our operational highlights. We have signed several agreements in The US in HCM over the last few months, which are really good signs in the future. Supply agreements with international retailers potentially worth 3,800,000 over the next two to three years in South America and Central America, and that could increase even further. We've just won our first major contract for GT four clocks with a minimum of 3,000 devices and some allied services will also give us a revenue of about $1,000,000 over the next three years. We're also just in the final throws of negotiations with a worldwide fashion retailer, and they will be signing up to our clocks. They have several thousand clocks in the cloud at the moment on prem, and they're taking these into the cloud. And this will sort of deliver about $10 a clock once these are all transitioned once we've delivered our new cloud platform.

7:48 Sales of our new platform in Genesys c four are performing well. We're focusing on the branding, repackaging, and doing full major launch this autumn. Our existing access control legacy Janus product sales have increased while Saturn revenue has decreased. This is something we wish it's just sort of happened because as this technology becomes more obsolete, we're pushing the Janus c four further forward. At SafeTel, we've improved our portfolio gaining traction following a comprehensive strategic review. We're expanding into new segments and addressing a broader customer base combined with products and service divisions for a leaner, more agile, and responsive business. We've had several recent contract wins there as well. The two year agreement with a leading multinational financial service company with an expected value of 1,300,000.

8:42 Another three year contract with another building society with the client branches for entrance and door controls expected at about 400,000. This could lead to additional business afterwards. And we're also in the final flows of agreeing a contract with another food major retailer even though we've begun the work, so we have not published that yet. We've also signed an executor tier one software agreements for a thousand units of g t 10 over the next two years, possibly doubling that. And all of these will be in the cloud going forward, which could give us a recurring revenue of $10,000 a month once this is completed.

9:26 This is a little bit about our business model and how we work. We've been aim listed for over twenty years and really recognized as being an innovator in the industry for the last thirty years. Our people are dedicated, passionate, and specialists in their fields. We have long standing and deep relationships right along the value chain. Investments in research and development allows us to stay ahead of the curve and ensure the highest levels of secure technologies for our customers. We provide solutions not just for our products. We design, we manufacture, and provide solutions to our customers and for long term partnerships through the provision of a consultancy advice and service and maintenance agreements.

10:12 We provide specialist products and service that continue, evaluate, innovate, and biometrics, cloud service, and mobile authentication. We are a niche provider, and so we can really meet our customer requirements very quickly. We drive efficient three efficiency through innovation while providing smart, safe, and secure workplaces. The company benefits from long term relationships with many blue chip customers, building new recurring revenue streams through our cloud based subscription service in HCM and recurring revenue opportunities in SafeTel through the service division.

10:56 Our trading update sort of update regarding COVID and how we dealt with this. We moved to remote remote working very quickly. Being a technology company within an hour of a week or two, it was a very smooth transaction transition. We have had a slowdown in customer projects, and we had a delay in supply chain for new products for civic physical security solutions division and a major delay in the people and data management division. We took a major action very quickly looking at our cash position. We furloughed about 30% of our employees at the critical time. These have now nearly all been bought back unless we've sort of made them redundant. So the sort of full team is now back.

11:43 All the staff across the board took a 10% pay cut for three months. Development spending was reviewed and reprioritized during this period.

11:55 We took action with our cash flow as well. We delayed payments in PayYE and I and VAT. We extended our cash forecasting period, and we kept close contact with our customers and reviewed risk profiles. And we extended supplier payment terms with supplier support. We took up several financing financing options. We've considered acceleration of The US invoice discounting, which was still not utilized, but it's under consideration as we have it in The UK and have not extended it to The US as yet. We've worked very closely with HSBC for the CBILS facility, which was successfully obtained for 2,000,000 over six year period on a fixed rate.

12:43 And we have potential with the bank and an offering for the bank to increase that overdraft facility and extend existing UK invoice discounting, which we haven't done as yet. So from a cash position, we're looking quite comfortable. And we have potential opportunities, proven our durability and agility in the market. And we have potential opportunities for consideration in markets we operate in, and the demand for safe and secure workplaces with a premium on contactless environments.

13:23 We've been working during this time on our contactless solutions, so we're in a good position going forward with COVID and any other pandemic that takes force. With our access control, we've have features that can be retrofitted for hands free. We're also supporting mobile credentials via smart smartphones and introducing contacts exit release buttons. And our hardware can be integrated with automatic doors for comprehensive hands free solution. In human capital management, we've introduced facial recognition in 2020 in the May, and this has been looked at by a lot of our customers now.

14:09 We've combined biometric data for powerful and reliable security, which removes the physical contact requirement. We're also reviewing touchless screens into our offering. At SafeTel and the entrance control, we're offering portals and touchless speed lanes. In those pictures, those are portals, and they'll be touchless with single person passenger checking systems. And we're combining thermal sensors to checkpoint employee temperatures.

14:42 A little bit more on the products in Grosvenor technology, access control. And access for those who don't really know what access control is, I'm gonna go a little bit more and take a little bit of a deeper dive. An access control system can often be the critical center of core end users building management systems With integrations into other security and life safety systems and the ability to manage energy usage efficiently, GROVLER technology offers representative the optimum of modern security systems. We offer two access control platforms, Satyen Advance and Janus c four, catering for all customers' needs from a single door system to an enterprise estate covering many buildings and thousands of users across the globe.

15:34 Both platforms share a leading class range of modular advanced hardware, which is what you can see on the slide on the right. From a single door system to an enterprise estate covering many buildings and thousands across across the globe, as I mentioned earlier. These ranges can be a range in single blades or multiple controllers, and this is something we developed internally in house in our own IP. We also supply this hardware as an OEM variant and has been designed to be easily integrated into other access control systems and platforms, creating other foreign recurring potential revenue opportunities.

16:21 Human capital management. In The US, arguably the home of HCM sector, we trade as GT clocks. In The US, no one could pronounce GROVENETIC technology, so we simplified it. And we use the growing GROVENETIC technology in the rest of the world. The HEM sector has evolved enormously over the last few years from simple clocking in to capture time and attendance to a broader workforce management requirements. Provides now a full suite solution for higher degrees of employee engagement and productivity. We've always been renowned for providing high quality state of the art hardware. Our time clocks are often referred to by some of our clients.

17:08 We adopt a good, better, best approach in terms of our hardware and an open protocol methodology. Sustainability is designed in, and this results in a modular build with low lifetime cost coupled with a very long product life cycle. A number of diverse macro trends have and will continue to impact our business. Global switch such as the proliferation of high speed Internet, the need for increased data privacy and security, and increasing threat of randomized terrorist attacks, all now influence how an organizations create and protect their workplaces and to interact with their staff. Grosvenor Technology has provided a variety of allied services and software to our HCM clients, adding value, reducing costs, and minimizing downtime.

18:05 As technology has evolved, this offering has become more sophisticated and even more encompassing and is provided under a prescription model, often referred to as software as a service, SaaS. The business has a strategy to generate a higher degree of recurring revenues through the promotion of its SaaS model and also develop a unique clock as a service, a clock class offering, where the hardware, software, and support service are bundled and provisioned under a software and subscription model.

18:44 Revenues from our SAPS provision are increasingly incredibly sticky. And once a device has gone live on the field, the remote services are required for the complete working life of the product. In essence, the hardware becomes useless without the services. A working life of a clock is often ten years.

19:06 This graph simply demonstrates the growth of our connected devices to our SaaS platform, and we expect this to continue to grow as we offer GT Connect, the standard part of our time clock offering. The blue dots show distribution of the time clocks connected via our US entity and the red clocks through our UK business. The larger the dot represents the concentration of the time clocks. Currently, we have just under 6,000 clocks on the cloud base, and we're anticipating this to be over 20,000 in the next twenty four months.

19:48 Last year was very much our a transitional year for Safetel. Safetel provide SafeTel provide high quality security solutions across the public and private sectors, adopting a consultative approach as clients need to evolve over time. As the types of attacks organizations faces have grown and morphed, customers' demands have become more varied, specific to industry type and often bespoke to an individual business. These demands have become varied. Safe Tail's approach has evolved to provide a completely tailored service.

20:33 We do not simply offer a standard product or service. We work with our clients collaboratively to design a complete solution that exactly fulfills the specific requirements of every customer who works with us.

20:49 Typically, these products are resistant to a blast, bullet, fire, and forced entry. Additionally, we provide cash handling equipment and that introduced more recently portals and speed lanes into our portfolio, all of which have helped organizations provide safe, secure environment for their employees and customers alike. We also have a nationwide network of field based technicians and engineers across the country providing installation, maintenance, and after sales support on both our and other people's security solutions. This ensures all products are maintained to the highest standard. This range of services reduces risk, cost, and effort for specifiers, contractors, and end users alike.

21:42 This overall approach leads to very long standing relationships, some over thirty years, a high degree of customer retention, and a significant proportion of repeat business and long term service contracts. The business serves organizations of all sizes and particularly proud of its strength and partnership of many of the blue chip clients it serves. This slide highlights the breadth of our product offering and the types of products we provide.

22:16 Counterterror and Target Harding solutions have increasingly featured in our product portfolio. And lastly, perhaps unsurprisingly, our touch of solutions have generated a great deal of customer interest. This is just in a small example of some of our customers showing the broad range of sectors and industries we serve. The products and services we provide may be specialist or niche, but the demand for the service is not. As a consequence, the end user of our ZAP products operate across diverse sectors and geography from retail to infrastructure, education to defense. Organizations, businesses of all shapes and sizes are universal in desire to increase efficiency, safety, and security while reducing costs.

23:08 This is what drives our continual success. I'm going to hand you over to Graham, who will go into more detail of our annual accounts and report.

23:28 Good afternoon, everyone. So just going through some of the numbers. You've heard from Marie Claire already on our out turn on the revenue. We communicated at the half year that will come marginally behind last year's results, which we which we have. We estimate that there's about a 400 impact on revenue due to COVID coming in towards the end of March and April. So but we still still arrived at just under 4% behind revenue. So then looking into those numbers, the people and data management division is continuing on a really strong growth in HCM.

24:17 So we've got a 32% increase year on year there in The US and the rest of the world markets. The US being a real leader on that. The access control has got an increase of 4%, which is, you know, which we've seen quite solid or good performance from from that division that line of business, especially with the introduction of new product, Janus c four, gaining traction throughout the year. Within the physical security and solutions division, then, you know, there there's there's a there's a field there's a stabilization following the 1819 restructuring program and then strategic reviews that occurred earlier in the year or or in the first half of nineteen, twenty.

25:07 At the end of the year, then then it's a it's a it's an enhanced business. There's a there's a diff there's a enhanced product range and there's a promising growth in the sales pipeline towards the end of the year, which is really showing some more than green shoots of growth.

25:32 Moving on to the income statement. So the net profit for the year is 1,100,000, which is an increase of 900,000. The and where where does that come from? So we've got slightly improved gross margins of 39.7 versus last year of 39.3. We've we've seen some of the benefit of the reduction of SafeCell's operating cost, mainly driven by SafeCell's operating cost from the restructuring in the previous year. And then we see some cost savings there, which is then added through to give a a strong improvement in proper full tax, which actually turns the reduced sales into actually increased profits compared to last year.

26:26 The then following down from that is that we've undertaken a r and research and development review on how we claim our tax credits, and that's resulted in a cash tax credit of just under 700 k, which will come through in the twenty twenty one years of realizing realizing that cash, but with but it's related to 1920 and previous the previous two years. In the cash flow, so cash flow is a bit more challenging to to go through purely because of the change of the leases standard from year on year. We're now bringing operating leases onto the balance sheet and therefore that those cash outflows are now treated as lease repayments rather than coming through as an operating expense through the profit.

27:28 So when looking at everything on a like for like basis, then our cash from operations actually increased by 334 k. And what what have we what have we done with that? We've then increased our investment in r and d by over 500,000 to $8,886 k on on on, you know, growth and future development for the for for the next for the next forthcoming years. That in the end, we end up with a net cash outflow of 425 k. And therefore, that's with the increase of the 553 k r and d. So, you know, without that take to pass, we would have been cash positive on that, but it's an intentional decision to invest in the future.

28:21 So our balance sheet. So some common themes coming through from the previous couple of slides. Net assets have improved by 1,200,000. We have that that's resulting from the increase in our development cost, which we've utilized that cash increasing cash into our development. We have just under the 700 k r and d tax credit, which contributed towards that. And we've recognized further deferred tax assets as we've got we've got some past tax losses, and we've now recognized them on the balance sheet as we are likely to be using utilizing those in the forthcoming years. And we've had a it's a it's a marginal impact on the balance sheet regarding the the leases that it's it was 20 k or 22 k on on transition for the for the accounting standard at the beginning of the year.

29:19 And so, you know, as a as a net difference. So it doesn't have a big impact on the balance sheet at all. And I will now pass you back to Mary Claire. Thank you, Graham. Well, I would like to summarize now. And the business sort of really we did adapt very quickly to COVID nineteen, and it did have an impact. But going forward, I think that's what if we went down into another lockdown, it would have less of an impact apart from our customers suffering during this because from a technology, from a development point of view, we were all able to work remotely. We've had the introduction of our contact center technologies from Grosvenor and Safetel and saw Safetel during this period when we're on lockdown, saw a huge demand for hygiene screens and PPE.

30:11 Our existing strategy remains very applicable in a post COVID world. Grosvenor Technology saw an increased interest on both HCM and access control activities. We restructured SafeTel the year before. We took about a million pounds of cost out of the business in the previous year. This has just responded favorably with the new launch products and that we have, and our pipeline is growing tremendously with the portals and the speed lanes.

30:37 We're focused on the cloud platform and our subscription based revenue recurring streams. We will launch this in May next year, the new platform, but we're signing agreements and contracts with customers that as soon as that is launched, we'll transition straight onto it. We've got continued investment in our hardware and our software within the business because we need to keep our pipeline and product line fresh. We're in a strong cash position, and the management team with the cash and with the strong management team providing great platform for growth. And over the last few months, even in COVID, we signed several new contracts and supply agreements. So in summary, we believe we've adapted well and both in terms of being able to continue to trade proactively and implement strategies that led Safetel and Grosvenor to receiving new inquiries to cater to new workplaces being created.

31:36 Both divisions are well positioned for growth with existing strategies not just being applicable, but being more relevant than they ever have been before. Providing safe, secure workplaces will remain a key objective globally for organizations to every shape and size, and we will continue to invest to meet this need today and for tomorrow. So I know we have some questions. So That's fantastic. Thank you, Mary Claire. Thank you, Graham, for for updating investors there. Just before we perhaps jump into those, Mary Claire, just a little bit of housekeeping. Ladies and gentlemen, do please continue to submit your questions via the Q and A tab on the right hand side of your screen. I would like to remind you the recording of this presentation, with a copy of the slides and the published Q and A, can be accessed via your Investor Dashboard on the Investor Meet company platform.

32:27 Lastly, before I hand back to Mary Claire and Graham, I'd like to remind you that your feedback is important to the company. Immediately after the presentation has ended, you will be redirected for the opportunity to provide feedback in order that the company can better understand your views and expectations. Very clear, Graham, perhaps before we look at some of the questions we've had during the event itself, I wanted to ask you a number of questions that have been pre submitted by ahead of today's event, if that's possible.

32:54 Perhaps if I can address these to you, Mary Claire, if that's okay. The the first one we've had through, can you run through your strategy to increase recurring revenues from your clients? And what percentage of existing revenue is recurring? Yes. Of course. Thank you very much. We're really at the very beginning of our transition into generating into more recurring revenues. Our strategy is to provide our software and even our hardware under a subscription model rather than just a capital sale that it previously was.

33:26 Thank you. That's great. Thank you very much indeed. And second one we've got here, what is your sales strategy to win new business? I can only imagine that your services are pretty sticky, and it's a big decision to change supply to you from a competitor. And second part to that is who who are your direct competition and where do you differ to win new clients? We have a relatively small market share at the moment in sectors we operate in unless really, there's no shortage of prospects to grow our sales, particularly in The US where their numbers and the volume is so much more. Our direct competition varies dependent on the geography served and the product lines. But in every market, our agility and our flexibility to deliver client specific bespoke solutions is what that really stands us to make us different to our competitors.

34:14 And sort of on the HCM, there's a few couple of large competitors, and they do not have the agility we do to react. If we have a client, save the last few months, that has a request, we'll sort of get our engineers on the case immediately. One of our clients wanted facial recognitions that wasn't embedded yet in our systems. We have four engineers work on it, and they wanted a light on the camera. We're able to deliver that within three weeks and turn that around, and that resulted into a huge sale. This is really where I've where we vary and our strongest position is. We have a great service and professional service team that are able to sort of deliver bespoke and tweaks on the hardware for our customers. Thank you. Fantastic. Thank you. And final pre submitted question, where do you like to expand your operation, what are the barriers to this?

35:07 As we quiet quietly operating regions with the highest concentration of customers in these sectors, expansion of their sales is more likely to come to from additional offerings and products and services to new clients and our existing clients rather than just in an expansion in territory served. And as I said earlier, you know, The US is such a large territory, and we're just sort of tipping the service with it. We have a very small percentage there. So, you know, further in The US and in Europe. And we have teams sort of involved in those direct sales. That's great. Thank you very much indeed. Perhaps we could just turn to some of the live q and a. I know I haven't given you a great amount of time to have a look at the next question. Your camera as well because we have Colin, our technical director.

35:54 So if anyone's got any questions about our cloud based offering that are more technical or any of our hardware, he's here to support. Fantastic.

36:02 If I could just ask you just to have a little scan through the questions that have been pre submitted and where you see ones that you can answer, if you could just read who they're from and read the question out so investors can see the question for you. That's great. Thank you. I'm very sorry. Where are those questions? Actually, next to the slide deck, you'll see little tab with q and a. If you can click on that, we'll be able to see them next to you. Graham, could you do that for me, please? You're on mute. Very clear. There might be a little bubble at the bottom of the screen that's blue that says chat. If you click on that, that will bring it up, and the q and a tab will be there. If you wouldn't mind reading out the questions and perhaps starting from the top, and we'll track down with you.

36:52 Would you like me to read it out or you What plans do you have to what plans do you have operationally in the event of a second phase of COVID, and how we manage client relationships through this time? I think we have now returned to work policy, and we are sort of doing it on a stage basis. We're not bringing in all the teams at the same time, and people are starting to go back into the office two, three days a week. And earlier, being a technology company, we have the technology to do so, and we have regular stand up meetings, the product. We have lost very little efficiency and productivity during this period, and we've stayed very close to our customers. At the beginning, there were some customers that sort of weren't working, but that all back, we opened probably during the lockdown 60 new access control accounts.

37:44 And we did over a thousand people on training online, which we'll continue to do after this because it's much more cost effective going forward. And I think we'll just do more of the same. It will be very nice to see customers face to face, and we are doing that locally. Sort of our US sales are beginning to do that. In The UK, our sales guys are doing sort of ten, twelve customer visits a week. But I think what we didn't do was we didn't follow any of our sales staff or anything else. So we continued with dialogue with our customers throughout the whole period, and we've really upskilled our online information systems. We've launched two new websites during the period, a Safe Tail one and a NEWMARK one. We're in the process of doing the global one, and we have a lot of information coming out through LinkedIn, and that's sort of causing a lot of interest and reaction.

38:36 I hope that answers your question. The next question is, can you expand on examples innovation be beyond the products in the market today? I think I'm gonna hand over to Colin on that one, and it's more about our cloud space offering, our product pipeline, and our SaaS model. So I'm gonna hand you over to Colin. Hello, everyone. Can you can you hear me? All clear. Good. Good. Sorry. I had a few problems with my camera there, but got got got there eventually. Yeah. Thank you, Mary Claire, and and hello. So, yeah, to pick up on a couple of threads there, Mary Claire mentioned our SaaS platform, and we have a we have a solution in the market today, which has got about 6,000 connections. But and as you as Mary Claire said, we're we're rapidly expanding that connectivity for connected devices to the platform.

39:36 We started a project last year to completely redevelop that platform using newer technologies, using new Microsoft Azure frameworks, and essentially bringing it completely up to date as a contemporary SaaS platform in its design. It's API first, which allows it to be fully integrated seamlessly with our downstream customers or partners solutions as opposed to having to be operated as a solution on the side. We've changed the architecture to put much more advanced audit and security measures into that platform. We've put in very relevant right now for COVID, but also for biometric legislation in both The US and with GDPR regulation in The EU.

40:25 We've put advanced attestation for biometric data consent management and COVID nineteen compliance baked into the cloud platform. So when that data is collected, it's collected and stored in a very secure irrefutable way. So that's been designed as the core of the product. We've enhanced the device remote management capability and the clock management tools to manage remote devices that run that run into thousands and thousands of devices distributed globally. We've also spent a lot of time redeveloping our middleware tools, which allows our clocks and the the the point to say what of that is that allows our clocks to talk to a variety of different HCM solutions seamlessly. One of the questions I think earlier was that Mary Claire covered it.

41:17 How do we differentiate from some of our competitors in the HCM space? We have a set of software tools that reside on the clock, but also reside in the cloud that let us collect data in the format that our partners want it and then process it and send it to whatever solution they are using. So they're not buying a a solution that just does one thing. They're buying a solution that can be configured to pretty much work much work in any any environment, any HCM solution, and and done so with a minimum amount of investment because the tools are very advanced. So we spend a lot of time looking how we can improve that process. So when we onboard new customers, that process is really optimal in terms of a software software space.

42:04 We or more move to an almost self serve model where traditionally where we've had a lot of heavy onboarding technology involved, we we the tools are now moving us to a much more seamless process of bringing new customers onto that platform. At the same time, we've been investing in our hardware platform. We have a range of time clocks that we sell into The US and rest of world markets. Some of those time clocks are seven, eight years old. Some of them are older than that. We've been refreshing that range. The GT 10, which was our first Android clock we released a couple of years ago, has been a huge success in the market. We continue to build on that theme. We are currently developing a new variant clock called, unsurprisingly, GT eight, which is a huge step forward. Again, it will be the first Android 10 clock, we believe, in the market. It has a significant performance increase.

43:03 It's a lower cost base to manufacture. It has some higher security technologies built into it. It's face recognition ready, biometric ready. So we continue to build on that shift to Android by a lot of our HCM partners, which offers a very open development platform for time clock applications. And we're leveraging Android as a as a vehicle to accelerate uptake of those clocks. I think does that answer the question or some of the questions? Difficult to tell unless someone says it. But thank you, Colin. That's great. Thank you. Yeah. Thank you, Colin. Yeah. Andrew, Mary Claire, could you say a little bit about what your competition what about what competition you see within your time clock business including within The US?

43:56 Well, it's really similar across the world. There's very few suppliers of time clocks in the world. There's a couple of large ones such as Kronos and ZK SECURITY, which are Chinese manufacturer. And then you have a number of smaller niche clock manufacturers who've been going a while, but they haven't sort of been investing in their product pipeline and in their software. And what I think what we've talked about earlier, sort of the niche providing and the agility to change the offering to our customers' requirements, Just now, without sort of mentioning names, there's very large retailer with thousands of clocks. The in the last contract we signed, we won this through a software house, and neither of them sort of anticipated the development and design and security needed.

44:47 And we were able to solve that t those problems with our team in The UK and The US. And I think to say they were boxed back is sort of an endless understatement, and these are two very large companies. So, really, that's where our agility and our flexibility and our competitive edge is. Anyone can manufacture hard work, but it's doing it well, robust with the security and the longevity of our products that is our variant. If you go to our US website, the GT Crops website, you would actually see there what some of our sort of some customer testimonials, and it's some of our software houses that we sell to in The US and what they think about us and what they say about us. And that, I think, is quite telling. So thank you, Andrew. Nick, the company has unbelievable base of quality clients.

45:39 What is what are the opportunities for cross selling solutions with some of these organizations? So we share some of the clients, but it's a very different customer and purchase person that is gonna be buying the technology to a blast resistant screen. So often, they will be speaking to sort of the payroll or the software houses in The US who are buying or in The UK who are buying our clocks and our software. And the I think I'd showed it in the diagram before, our access control is sold through distributors, and they can be a two man shop, whether all accredited or large kings in The UK. And then SafeTell is primarily to the end users, so there's not that much crossover in sort of the sales process. But where it's possible, we do share.

46:31 We had a requirement for some access control and some clocks, and we asked if SafeTell from Fitbit. It happened to go somewhere else, but we do discuss this. And as an organization and divisions, we're getting closer to see what sort of savings and what can be done as a business together. David b, well done in the perform improved performance. Back to the question of recurring revenues. Can you look at improving the viability for these investors as this will provide an important underpin of the valuation of the business? Can you give any forecast in the direction percentage of non and nonrecurring revenue, e. G, 'twenty one? We can already predict we have 10,000,050 percent as recurring revenue. And by 2023, 15,000,000, 75% recurring revenues. Thank you, David, for your question.

47:21 I think this is sort of until very recently, we used to give the hosting for free, and there was no charge. She would just be done in in charging per clock, whether it's 7 or $10 a clock. And it's at the very infancy of the beginning of this. And I said within the next two years, we're anticipating 20,000 clocks between 7 and $10 a clock. But it could be more, and there's no forecast, and I can't discuss any numbers because we don't have any out in the market at the moment. So sorry. I can't help you there, but we will make it more visible going forward, and you'll see that in our sort of half year results as well. But I can't delve into any more detail at the moment on sort of recurring revenue, but that we we understand that as a business, and we know that will help with the valuation of the company dramatically and sort of change.

48:13 Graham, you're shaking your head. Does it look like you wanna say something? Yes. Yeah, please. So just something that might help. We try to present the revenue analysis in the annual report slightly with a with a bit more clarity on this point this year. So so, yeah, plea please have a look at that. It's not forecast, obviously. It's it's it's historic data, but then we we split out what our recurring revenue is in the way of support service and SaaS contracts. And, you know, and my request talks about the the focus on the SaaS contracts, which is a real new beginning for us. But we do also have this kind of the service and the support contracts that we have within both both businesses as well. So you can and you can see from that, there's about an 18% recurring revenue percentage there.

49:06 Thank you, Graham. And, David, you're saying as a reference, I have Sofia who focus on this visibility of recurring revenue. We delivered a rerating of their business on a 10 times market cap. Completely understand that, and I anticipate, hopefully, this is where we should be somewhere in the near future. Just to give you a bit of indication when we sort of during just the sort of COVID sort of embarked on us in the pandemic, we put a freeze on the cloud development, and we reinstated it. We're starting again on the October 1 internally and some of that subcontracted. And we anticipate this to return and sort of have a payback in sort of in a year's time. But completely hear what you're saying. And in the future, I think it's difficult. We haven't had forecast out for a while. But while this is going on, I don't wanna be putting forecast and then have to retract or sort of underestimate.

49:57 I think it's a difficult time. But in the future, at some point, we will be in a position to do so. Andrew, hi. In physical, I think you said in the past that there were some of your customers who were moving to open plan environments interacting with their customers, e g banks, local authorities. Do you see any move back towards security screens, whether fixed or flexible, in order to be pandemic prepared or to be prepared against acts of violence? So the slate the screens that we were selling during the pandemic were low cost screens. We sold them to the likes of Amazon and Travis Perkins. There's a lot of them around. They don't take much technical ability, and it was whoever had them, everyone was getting their hands on them. I don't see that as one of our sort of major moves towards because the margins are small and anyone can be sort of buying those from anywhere. It's wherever you can find supply, basically.

50:53 But what we do see is sort of the use of more portals and send over to checks and so on. And so incorporating those into our speed lanes and other products, both in both divisions. So screens are not the way forward for us. We were sort of more looking at technology as a business going forward. And and get regards to acts of violence, we have our products, and we've been hunching our products to do that, the blast resistant, the bullet resistant, and the attack screens, glass, walls, doors. I think that was the last question. Yes. Thank you very much. Thank you very much to Mary Claire, Graham and Colin. Thank you. I think you've addressed all those questions you actually came from investors. And of course, the company will review any further questions submitted by investors today, and we'll publish those answers on the Investor Week company platform.

51:43 Very clear. Perhaps before I redirect investors' feedback, could I just ask you just to wrap up for investors? That'd be fantastic. Thank you. Thank you. Thank you very much for all your time, and it was great to speak to you virtually. And I'm available at any time or just drop us an email if you've got any further questions or sort of want to have a Teams or a Zoom call at any point and sort of delve in a little bit more detail. Thank you, Graham and Colin, and look forward to speaking to you, meeting you shortly. That's fantastic. Thanks again, very clear, Graham, Colin, for updating investors today. Cast investors not to close the session as you will be automatically redirected for the opportunity to provide your feedback. If you've accessed the meeting from our website, the feedback page will appear in front of you. It'll just take a couple of seconds.

52:29 And if you've accessed from the link sent via email, be asked just to log back in to submit your feedback there to the company. Would be grateful if you would do so. So on behalf of NEWMARK SECURITY PLC, an investor meet company, we'd like to thank you for attending today's presentation. That concludes today's event. Thanks again, and thank you too.