Prior to publication, the information contained within this announcement was deemed by the Company to constitute inside information as stipulated under the UK Market Abuse Regulation. With the publication of this announcement, this information is now considered to be in the public domain.

Newmark Security plc

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

Trading update, notice of AGM, capital reorganisation and Investor Meet Company presentation

Newmark Security plc (AIM: NWT), a leading provider of electronic and physical security systems, announces the following trading update and notice of its annual general meeting and a proposed capital reorganisation.

Trading update

As noted in the Group's final results for the year ended 30 April 2021 ("FY 2021 results"), the Company has maintained a key focus on cash in light of the challenges faced in managing inventory levels and dealing with the global shortage of components needed to build products. The worsening supply chain issues facing multiple sectors and businesses of all sizes have been well documented in recent weeks and, unfortunately, Newmark has not been immune to these challenges. These issues include material increases in freight costs and shipping timeframes, as well as increasing component costs and reduced availability.

The Company has sought to bolster levels of stock held in order to build in a buffer to ensure that the global supply chain issues do not impact the Group's ability to fulfil existing and anticipated client orders, and to better withstand the risk of future supply-chain disruption. This increased working capital outlay, coupled with the significantly higher freight costs and increased component costs, has negatively impacted gross margins and cashflows in the first four months of the year ending 30 April 2022.

As a result of this, the Company has instigated a number of initiatives to improve profitability and cashflows. These initiatives, together with increasing demand from the United States and an improvement in revenues and margins in September, provides the Board with confidence that the Group is well positioned to navigate these market conditions for the rest of the financial year.

Notice of AGM

The Company will hold its Annual General Meeting ("AGM") on 10 November 2021 at Holmes Hotel, 83 Chiltern Street, London W1U 6NF. The Company is keen to welcome shareholders in person to the AGM this year unless the COVID-19 situation changes such that this would no longer be possible. The Company requests that any shareholders intending to attend the AGM in person register their intention as soon as practicable by emailing [email protected]. All shareholders are encouraged to vote electronically or to lodge a form of proxy in advance of the meeting. Full details can be found in the notice of AGM.

Copies of the Company's Annual Report for the year ended 30 April 2021, which includes notice of the AGM, will be posted to shareholders today and made available on the Company's website https://newmarksecurity.com/ 

Investor Meet presentation

For shareholders that are unable to attend the AGM, the Company will host a presentation through the digital platform, Investor Meet Company at 2:00 p.m. on 8 November 2021. Investors can sign up to Investor Meet Company for free and add to meet Newmark Security via:

https://www.investormeetcompany.com/newmark-security-plc/register-investor

Capital Reorganisation

As part of the business of the AGM, the Company is proposing a reorganisation of its share capital ("Capital Reorganisation") which will involve a sub-division and subsequent consolidation of the Company's share capital. The Board believes that the Capital Reorganisation could:

·    improve the liquidity of the Company's shares and increase trading volumes;

·    improve investor perception of the Company; and

·    improve marketability of the Company's shares.

In addition, the Company's shares are currently trading on AIM at a price which is below their nominal value of one pence per share. The issue of new shares by a company incorporated in England and Wales at a price below their nominal value is prohibited by the Companies Act 2006 and, accordingly, without undertaking the Capital Reorganisation, the ability of the Company to undertake fundraisings in future is restricted.

The Capital Reorganisation will require some amendments to be made to the Company's Articles of Association. Resolutions will be put to shareholders at the AGM for the purposes of approving the Capital Reorganisation, including approving amendments to the Company's Articles of Association.  

Details of the Capital Reorganisation

The Capital Reorganisation will involve:

·    a sub-division of the existing ordinary shares of one pence each in the capital of the Company ("Existing Ordinary Shares") that will create two classes of shares, intermediate ordinary shares with a nominal value of 0.1 pence ("Intermediate Ordinary Shares") and deferred shares with a nominal value of 0.9 pence ("Deferred Shares"); and

·    following completion of the Sub-division, the consolidation of every 50 intermediate Ordinary Shares into one new ordinary share of 5 pence each ("New Ordinary Share").

Subject to the passing of the relevant resolutions at the AGM, the Capital Reorganisation will take effect at the close of business on the date of the AGM ("Record Date").

The proportion of the issued ordinary share capital of the Company held by each shareholder immediately before and after the Capital Reorganisation will remain, save for fractional entitlements, unchanged.

New share issue

To effect the Capital Reorganisation, it will be necessary to issue such minimum number of additional Existing Ordinary Shares so that the aggregate nominal value of the ordinary share capital of the Company is exactly divisible by 50.  It is therefore expected that 34 Existing Ordinary Shares will be issued at nominal value to the Company Secretary prior to the date of the AGM.

Fractions

No shareholder will be entitled to a fraction of a New Ordinary Share and where, as a result of the Consolidation, any shareholder would otherwise be entitled to a fraction of a New Ordinary Share in respect of their holding of Existing Ordinary Shares at the Record Date (a "Fractional Shareholder"), such fractions will be aggregated with the fractions of New Ordinary Shares to which other Fractional Shareholders may be entitled so as to form full New Ordinary Shares and sold in the market. The costs, including the associated professional fees and expenses, that would be incurred in distributing such proceeds are likely to exceed the total net proceeds distributable to such Fractional Shareholders. The Board is therefore of the view that, as a result of the disproportionate costs in such circumstances, it would not be in the Company's best interests to distribute such proceeds of sale and the proceeds will instead be retained for the benefit of the Company or donated to charity.

The provisions set out above mean that any such Fractional Shareholders will not have a resultant proportionate shareholding of New Ordinary Shares exactly equal to their proportionate holding of Existing Ordinary Shares. Shareholders with only a fractional entitlement to a New Ordinary Share (i.e. those shareholders holding a total of fewer than 50 Existing Ordinary Shares at the Record Date) will cease to be a shareholder of the Company.

Accordingly, shareholders currently holding fewer than 50 Existing Ordinary Shares who wish to remain a shareholder following the Consolidation would need to increase their shareholding to at least 50 Existing Ordinary Shares prior to the Record Date. Shareholders in this position are encouraged to obtain independent financial advice as appropriate before taking any action.

Shareholders with holdings of Existing Ordinary Shares in both certificated and uncertificated form will be treated as having separate holdings for the purpose of calculating their entitlement to New Ordinary Shares.

Shareholder approval

Shareholder approval is needed in order to effect the Capital Reorganisation. The resolutions to approve the steps of the Capital Reorganisation must each be passed by an ordinary resolution of shareholders in order for the Capital Reorganisation to become effective.

Admission of, and dealings in, the New Ordinary Shares

Application will be made for the New Ordinary Shares to be admitted to trading on AIM and, assuming that the relevant resolutions are passed by shareholders at the AGM, dealings in the Existing Ordinary Shares are expected to cease at the close of business on 10 November 2021 and dealings in the New Ordinary Shares are expected to commence at 8:00 a.m. on 11 November 2021.

ISIN and SEDOL codes

The New Ordinary Shares will have a new ISIN and SEDOL, which will become effective from Admission. The ISIN code for the New Ordinary Shares will be GB00BNYM9W73 and the SEDOL code for the New Ordinary Shares will be BNYM9W7.

Issued share capital

Immediately following the Capital Reorganisation, the issued share capital of the Company is expected to be 9,374,647 New Ordinary Shares and 468,732,350 Deferred Shares.

Rights of the New Ordinary Shares and the Deferred Shares

Other than a change in nominal value, the New Ordinary Shares will have the same rights and be subject to the same restrictions as the Existing Ordinary Shares from which they will be derived, including voting, dividend and other rights. Following the Capital Reduction each shareholder will hold 50 New Ordinary Shares for every one Existing Ordinary Share held immediately before the Capital Reorganisation.

The Directors consider that the Deferred Shares will have no effect on the respective economic interests of shareholders.

The Deferred Shares will have no income or voting rights. The only right attaching to a Deferred Share will be to receive the amount paid up on that Deferred Share (i.e. 0.9 pence) on a winding-up of the Company or other return of capital once the holders of New Ordinary Shares have received the amount of £100,000,000 per New Ordinary Share. The Deferred Shares will effectively be valueless.

The Deferred Shares will not be admitted to trading on AIM and will be non-transferable.

The Deferred Shares shall have the rights and be subject to the restrictions set out in the Company's Articles of Association as amended pursuant to resolution 8 in the Notice of Annual General Meeting.

Share certificates

If you hold a share certificate in respect of your Existing Ordinary Shares, your certificate will no longer be valid from the time the proposed Capital Reorganisation becomes effective and will be cancelled. If you hold more than 50 Existing Ordinary Shares on the Record Date you will be sent a new share certificate evidencing the New Ordinary Shares to which you are entitled following the Capital Reorganisation. Such certificates are expected to be despatched by no later than 24 November 2021. Upon receipt of the new certificate, shareholders should destroy any old certificates. Pending the despatch of the new certificates, transfers of certificated New Ordinary Shares will be certified against the Company's share register.

No share certificates will be issued in respect of the Deferred Shares.

Uncertificated shares

If you hold your Existing Ordinary Shares in uncertificated form, you should expect to have your CREST account credited with the New Ordinary Shares to which you are entitled on implementation of the Capital Reorganisation on 11 November 2021 or as soon as practicable after the Capital Reorganisation becomes effective.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

STATISTICS RELATING TO THE CAPITAL REORGANISATION

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