Good morning ladies and gentlemen and welcome to the Newmark Security plc Interim Results Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged.
They can be submitted at any time via the Q& A tab that is situated on the right-hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and will publish those responses where it is appropriate to do so. Before we begin, as usual, we would just like to submit the following poll, and if you could give that your kind attention, I'm sure the company would be most grateful. I would now like to hand you over to the Executive Management team from Newmark Security plc. Marie-Claire. Good morning.
Good morning. Thank you very much. So I am Marie-Claire Dweck, CEO of Newmark Security, and I'm joined here by CFO Paul Wong. Today we'll present a handful of slides that will give you a preview of how we are framing our plan to accelerate growth over the next five years together with our interim results at the end of 2025. Half year, I just want to start with despite the first half loss that we certainly anticipated due to ourselves being second half weighted and investment in strategic initiatives, we are looking forward to a very positive EBITDA for the year. Well, for those of you who don't know us, a good place to begin is in the context of what we do. So let me describe the problem we solve.
The common challenge for our primary clients, both human capital management, HCM software partners and enterprise, is to manage their resources more effectively. As you're aware, HCM software partners is a major growth category that we're investing heavily in putting technology at the heart of this opportunity, increasingly with the help of AI, to turn managerial bureaucracy into machine-driven autonomy. But there's a data gap that exists between the physical world occupied by real people in an organization and the digital world where AI needs to operate. This is the gap we fill, taking care of identity, credentials of employees and colleagues, managing them securely and in accordance with strict compliance regulations, and controlling access and timekeeping recording so our clients HCM systems can be optimized. It's where the AI data gap meets the reality that HCM needs in order to operate more effectively.
So we introduce ourselves as follows. Newmark is a technology innovator that focuses on people's data and device management through time clocks, software and services. We link the digital and the physical worlds, connecting enterprise with its people to enable the future of autonomous HCM operations. This includes biometric identity and security, time and workforce management and employee data compliance. We've been operating in this space for over 30 years and we've grown to a team of over 100 specialists who spend all their time obsessing about innovations in people's data and devices, especially the ones we can make available to our software partners and end users clients.
Sustained obsession has created market leadership with a better all-around proposition that includes the highest quality devices, software and services, all of which we can quickly connect and make available to our clients so they can develop the increasingly autonomous future of the HCM operation that they try to create. Operating in headquarters in the U.K. and in the U.S., Newmark has a strong presence across North America, the U.K. and Europe and with the acceleration of AI adoption across every enterprise, it's a very exciting time for our customers who need a responsive partner that can offer the highest quality, well-architected products that enable their advanced strategies. Crucially, this is enabling us to target full share of wallet which includes replacing low-end device manufacturers from China. Put simply, our task is to scale innovation.
Newmark's primary market and growth focus is through its growth technology brand Grover Technology. Here our model is enterprise platform driven, with GT Connect being at the center of everything we do. GT Connect is an enabling platform that connects devices, data services and people to the enterprise and with the ERP system they run. Our service model can be seen as a stack shown from the bottom to the top that enables HCM operations. Firstly, we deploy a complete range of devices, time clocks from entry level to premium, giving clients a sliding scale of pricing to suit their needs and budget. All of our devices come with services attached, meaning they're all connected using GT Connect to bring their devices, data and services together onto one secure cloud platform from where everything can be remotely controlled. Our remote services fall into two categories device management and data management.
With over 35,000 monthly subscriptions generating over 12 million monthly clock ins, a number that is fast rising through our growing partnerships. Crucially, at the touch of a button we can see the status of every connected device, quickly diagnose issues and securely manage their configuration in the cloud. Data management brings the power and the protection of secure cloud protocols onto your enterprise data from highly sensitive biometric identities and templates for every one of your employees to audible data collection and analytics over people's physical engagements such as time clocks and in and out, together with system management of security, storage and data backup. All of this data is maintained with strict security and compliance. This removes a major headache for organizations investing in advancing HCM operations. Whether HCM operations software partners need a specialist expertise in linking the digital and the physical world safely and effectively.
As I mentioned at the time of reporting in our previous full-year results in 2025, we were excited and embarked on our new five-year strategy growth plan. Our strategy for growth can be understood in three layers with key initiatives aimed at accelerating growth at each level. The first is revenue growth, which is entirely focused on expanding our existing and new HCM partnerships. Here we continue to seek and onboard traditional HCM partners as well as actively working to displace other incumbents such as low-cost manufacturers by offering sliding scale pricing to high-quality devices with differentiated services. This drives maximum competitive advantage right across the market from end to end. It allows us to target full shared wallets for the larger national and global partners who themselves want to serve the broadest range possible to the market.
The second is margin growth, which continues to pursue a strategy of increasingly high margin recurring revenue by attaching services to all new business. This also includes pushing services to every existing partner where they might not currently be taking advantage of the latest enhancements made possible by constantly advancing software and services. The third layer is all about scaling quality innovation, where we're currently investing further to take our exciting offer direct to end users by leveraging existing marketplaces and emerging alliances with the world leading HCM brands Oracle, Workday and SAP. We've already started work on this, adapting our per employee monthly subscription model, signing our first partnership agreement with Oracle, integrating our hardware and software, and have now begun the early stage of market testing led by a well connected domain specialist in this area.
As this opportunity develops, our intention is to continue to invest to scale in this space, giving us additional resilience in our direct market channel. We've continued to execute the strategy of building a hardware enabled software and services business and selling customers a RAP subscription to build stronger recurring revenues. This division delivered revenue of £6.5 million, up 8% during the period with subscriptions based annual recurring revenues increasing by 3.30% year on year to £3 million in October 2024. GT's HCM growth was driven by a strong performance in North America where sales were up 16%, with one of our largest North American partners experiencing a robust start to the year in terms of demand for GT10 devices. We're also in advanced discussions with partners to introduce our next generation GT10 Mark II to replace the existing GT10 MK1 in this fiscal year.
Demand for GT4 and low-cost GT4 Lite devices has been particularly strong with orders in the latter helping to displace its main low-cost competitor in the North American market. Sales in the rest of the world were slightly lower year-on-year after our largest rest of the world partner completed a series of acquisitions which impacted the business. Since this period sales have been much stronger and new contracts won with two new major retailers and we expect the full year pro forma performance to be up on last year. Our partners acquisitions have led to expansion in new European territories and as such we stand to benefit directly from this expansion as a sole provider of time clocks software and hardware solutions for them.
To provide a little more detail on what I said about Oracle on the previous slide, earlier in the year we announced the pending launch of GT Time in partnership with Oracle to target direct to enterprise market and expansion of data security and compliance. A senior U.S. consultant with specific experience on working in the global ATM marketplaces has been hired to accelerate the rollout of GT Time and to gain further momentum for this key strategic initiative. We are pleased to report the clock and cloud based Oracle software integration has been completed certified with Oracle. We're also pleased to report there has been already progress with early business development, creating sales opportunity and pipeline.
In addition to time clocks and software, Grover also designs and makes class leading access control hardware that is easy to scale and extend so it can deliver much more than just access control in transition to our newest products delivering growth in demand for Janus D4 and future products with significant and well qualified pipeline targeted for conversion this year and beyond. We are still working hard on the development of Janus C4 Ultra, an advanced new hybrid cloud product with substantial potential being jointly developed with our partners. Gamanet Access Control did experience a slower start to the period than was initially anticipated with sales being impacted by delays to upgrade projects and our software partner for the new Janus C4 Ultra taking longer to have the product ready for launch.
However, these delays have been resolved and the sales pipeline for the second half is much stronger, positioning the business for a much better end to the year. While Access Control continues to make a meaningful contribution, Management will in due course be reviewing the Division's longer term strategy to assess how it can deliver better value to the group. In the immediate term, Management has taken a strategic decision to focus Grosvenor's investment resources on HCM to take advantage of the growing market demand for data security and compliance and accelerate the development of its sales pipeline. Safetell has been providing innovative physical solutions for over 25 years, creating safe spaces for employees and colleagues where overall demand is strong and growing, including door services, entrance control screens and counters and bespoke projects.
The highlight in H1 was the continued growth of services and maintenance revenue up by 38% in accordance with the long term strategy, providing increased forward visibility that adds significant value and reflects the advantage of our high quality operations in this space. As previously disclosed in their group's AGM statement, the timing of four significant contracts being delayed until H2 will see Safetell generate the majority of its revenue through the latter part of the year. Consequently, H1's revenue decreased by 13% to $2.4 million compared with the corresponding period prior. In terms of operations and building its sales pipeline, Safetell has performed well in accordance with a strategic long term plan which includes growing share of services and maintenance work and auto door servicing market. It's also invested in talent to strengthen its support services and installation teams.
Amazing senior hire to optimize its operations, all of which is already helping to make the division more efficient and deliver on contracts more profitably. Reflecting on some of the projects and contract highlights in the period, Safetell successfully extended existing contracts with two large banking customers, a major gasoline retailer and completed the installation of physical security in a new major football stadium. In terms of growing its revenue pipeline for H2 and beyond, the division won a series of new automatic door services and contracts with blue chip organizations including a national retailer, a train operator and a major pharmaceutical business, as well as contracts with a major housing trust, U.K. charity and a large university in the north of England. I'm going to hand over to Paul now to run through some of the group's key financials for the half year.
Thanks, Marie-Claire. As usual, all of our results announcements are published on our website at newmarksecurity.com, so let me now take you through a brief summary of our half-year performance. The highlight was undoubtedly the continued growth in annual recurring revenues in accordance with our stated long-term strategy. Notably, the core HCM business is enjoying a sustained period of growth that is set to deliver full-year success at higher margins. This strong performance is somewhat masked by delayed access control project upgrades and the timing of large contracts in Safetell. This is why it is worth understanding the business unit detail.
As explained by Marie-Claire earlier, our Consolidated Group reporting shows the following headline revenue of GBP 10.2 million compared to GBP 10.4 million in the prior year but with normal H2 weighted cyclicality and a number of known opportunities, I feel confident about achieving growth for the full year as already mentioned, but worth repeating we achieved an ARR of GBP 3 million at October 2024, up 30% on the prior year. We delivered gross profit of GBP 3.9 million which is flat year on year. Gross profit margin increased by 0.9 percentage points to 38.1% due to a combination of high margin HCM recurring revenues and improved HCM product margins as component prices have slightly reduced.
The EBITDA decreased by GBP 0.3 million year on year to GBP 0.5 million as a result of the 10% increase in overheads driven by inflationary cost rises and investment in strategic initiatives following the approval of the new five year strategic growth plan in June 2024. This investment includes increases in the headcount, marketing and professional fees. This increase in overheads resulted in a GBP 0.4 million loss after tax in the period and the GBP 0.046 loss per share. As Marie-Claire has previously stated, this loss was anticipated and we expect it to reverse in H2. We maintained our investment in research and development in the period of GBP 0.2 million as we continue to develop our products. The Group's cash at bank at 31st of October 2024 was GBP 0.3 million up GBP 0.3 million on the prior year.
Whilst this is GBP 0.8 million lower than the 30th of April 2024 cash balance, the year-end figure was artificially higher due to timings of large receipts. Net debt excluding leases was down 40% to GBP 2.2 million at 31st of October as a result of an increase in cash CBILS, loan repayment and a reduction in the use of invoice finance facilities year on year.
Thank you so much, Paul. So in summary, it's been a strong first half driving further growth in services with high product margins and growth in annualized recurring revenues, strengthening our cash flow and our balance sheet. Our operations remain focused on continuing their performance with strong execution in building divisional sales pipelines, developing new partnerships and extending existing relationships. Our increased investment is reflected in the lower EBITDA number at the half year, but we believe we will deliver a net positive impact by investing in the people and the systems to both enhance customer services and efficiencies. I'm delighted that we continue to win and extend contracts with blue chip customers which is a great testament to our people and our service offering.
Like here, like last year, our sales pipeline group-wide is weighted to the second half, and at this stage I fully expect to surpass our previous full year's performance. I said at the end of last year with the operating team and platform we have now built, the future is extremely exciting for Newmark. That is the end of our presentation, and we look forward to your questions.
Perfect. Marie-Claire, Paul, if I may just jump back in and thank you very much indeed for your presentation this morning, and what I'll do is I'll just bring back up your cameras for the Q& A. Ladies and gentlemen, please do continue to submit your questions just by using the QA tab that's situated on the right hand corner of your screen, but just while the team take a few moments to review those questions that were submitted already. I'd just like to remind you that a recording of this presentation, along with a copy of the slides and the published Q& A can all be accessed via your investor dashboard. Marie-Claire, Paul, as you can see there, we have received a number of questions and thank you to all of those on the call for taking the time to submit their questions.
But, guys, at this point, if I may, just hand back to you just to read out those questions and give your responses where it's appropriate to do so. If I pick up from you at the end, that would be great. Thank you.
Thank you very much. I will start with the first question which is a pre-submitted question. Are there any more threats or opportunities with the recent acquisitions of your customers Workforce or Paycor? So we were not aware of these two acquisitions and I'm sure their staff weren't aware at all. But in essence both acquisitions deliver huge opportunities for us because Workforce was purchased by ADP and we're speaking to ADP and that just enlarges the workforce sales team and we will have much more reach with that. So even those sales for Workforce Software slowed down for the first half while things were settling in. We anticipate a stronger second half and this going forward to be very positive for us. And Paycor was purchased by Paychex and the same thing.
We don't anticipate any downside on this and no negatives and anticipate this being a good thing for us. But, forward-looking, I don't see and we possibly wouldn't know about any of these going forward. How is new customer acquisition developing in the rest of the world? Are there any major customers apart from Protime and are there any contacts with ATOSS Software AG? So, we are working on the rest of the world. We have a team doing that. We have a number of customers. So, Protime we might talk about the most because of that, our largest, but we probably have 15 other European customers based in the U.K. and the rest of Europe and we're constantly working on new partners in the U.S. and Europe.
So that's a prime focus of ours and part one of our strategy and we've spoken to, we sort of looked at ATOSS Software and I don't think they could be a customer because they don't have hardware. But we're looking to speak to them and they came across our desk two, three weeks ago as well as an executive team. The third pre-submitted question, if the share price still does not reflect the value of the company, are there measures such as share buyback or redemptions of dividend payout scheme? Well, thank you for that question. No, because we continue to make strategic investments in our DTE platform in other areas. So we're not looking at sort of returning any dividends at the moment, but as the share price grows and as profits grow, that was something we will look to in the future. Why has the performance.
This is from Benedict. Why has the performance and profitability deteriorated compared so much in H2 of 2024? What are the prospects of Access Control? Sales have been stagnated or declining for years. So as we said in the presentation, very much second half weighted. A couple of these acquisitions did take a bearing on H1. They're looking to recover in H2. So we're looking for H2 and we're always, for some unusual reason, second half weighted and anticipate this being the same. And we're seeing we've got the pipeline, we've got the sales coming through and we're already more positive in the second half. What are the prospects for Access Control? And as I said in the presentation, we're looking at other strategic options, we're looking at sort of other products we can deliver.
We thought as an executive team and as a board focusing on HCM, where we're going to see a lot more growth. As time goes on, we are looking at Access Control as well. David, thank you for your question. The team at Safetell have done a fantastic job to turn around the business. It must be frustrating during this period to have gone backwards given a strong pipeline. How can we better manage the delivery of the pipeline and make money when moves to initiatives disrupt our plan? We must be left and fixed with costs to cover. That hurts the business. We are relooking this. We're constantly looking at our costs. We did have to make some investment. As we've grown the business, as you're saying, David, and sales have grown.
Second half weighted. Again, we've invested in operations. We bought someone to help us for delivery and efficiency and growth margins, which is already bearing fruit and a lot of these projects move from the first half to the second half and will move to 2025, 2026. But always looking at this and agree with you, the team has done a great job delivering sales in a sort of refining operational margin and I believe we've now done this. And so as sales come in, we'll be delivering better margins and better profits for the years ahead. Tom, there's quite a few questions. I'll just keep going. Tom, your reference to Oracle GT partnership is progressing. With software integration completed, how significant is this partnership in future revenues and what's the next step? It's hugely significant. This GT platform is very significant.
So we talk about Oracle being one of the partners we have now working with Workday as well and we'll be a direct partner with them. And we've brought forward the SAP which we're going to do in a couple of years and going to do that integration and complete that this year. We look to deliver a lot more revenue through these two platforms with other partners and it's a very exciting opportunity and probably one of the most exciting opportunities we've seen for a while. So we're onboarding new partners as we go forward selling services, but this is a sort of key strategic development for us. David, revenues for GT over second half 2024 have gone backwards. Can you explain more on this in the GP revenue position and the risk we need to manage?
We're constantly managing the risk and the sales team are looking to drive revenues as hard as they can for H2. We're sort of halfway through H2 and we see this as positive, but it's a key focus while looking at all the other strategic deliverables that we're working on. Benedict, what is Newmark's expected EBIT margin at the end of the strategic plan or in the current financial year? Paul, I heard you on ramp one.
So yeah, we expect our margins to increase in the second half of the year. So again we do expect an increase in margin year on year based on our latest forecast, which is great news. As said, driven by our move to primarily HCM recurring revenues, which is fantastic. Our five-year plan also is predicated on really driving those recurring revenues which again will be pushing margins up. So we definitely are expecting every year for our percentage margins to increase over the five-year period.
Thank you. Paul, last question. Do you think for Michael, the 16% growth rate in North America HCM business is sustainable? Well, we're very excited by this fact, especially given the economic position in the U.K. for next year. We're forecasting driving more than 50% of Grosvenor sales in the U.S. and that number sort of increasing as a group revenue and especially with delivering the GT platform. So yes, I do think that. And more sustainable. And that comes to the end of the questions, unless anyone has any other comments.
Absolutely. Marie-Claire, Paul, if I may just jump back in there. Thank you very much indeed for being so generous for your time then addressing all of those questions that came in from investors this morning, but Marie-Claire, perhaps before really just looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and the company. If I could please just ask you for a few closing comments just to wrap up with, that'd be great.
So what's clear to us is sort of looking at our results. It's not clear what second half, how second-half weighted we are because we don't have forecasts out there. But this is sort of a deliverable and something we understood and an investment in the future we decided to make because we see the growth in the business coming forward and the deliverables in the next five years as huge. So this is not a negative something we anticipated. So please rest assured, our cash position is positive as well. It's just a matter of timing. We have our banks supporting us; we're in a very good position. So the supply chain is positive. Our customers are very happy with us. We're displacing low-cost Chinese manufacturers. Nearly all our customers are taking services now. So it's a very, very positive outlook for the future.
Meanwhile, sort of discussed, HCM Safetell is growing. Pipeline has grown to the highest level. Work in hand is at the highest level. It's just a matter of timing, and access control took off to a slow start this year, but it's certainly picked up for the second half, so good times ahead for us.
Marie-Claire, that's great and thank you once again for updating investors this morning. Could I please ask investors not to close this session as you will now be automatically redirected for the opportunity to provide your feedback in order the management team can really better understand your views and expectations. This will only take a few moments to complete, but I'm sure will be greatly valued by the company. On behalf of the management team of Newmark Security plc, we would like to thank you for attending today's presentation that now concludes today's session. Good morning to you all.