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№ 144 41 filings · 2021-06-09 → 2026-05-21

NEWMARK SECURITY PLC

NWT
Industrial Goods and Services Market cap £8.95m Overall fit 430 /1000

Genuinely cheap relative to a growing recurring-revenue HCM franchise with embedded operating leverage, but only a tangential AI angle (hardware feeding workforce-management analytics, not picks-and-shovels) and rising leverage on a £9m equity base cap the score. A 'right idea, fair price' name rather than a high-conviction core AI-receiver holding.

Fair value range 130p–250p Mid case · £18m
Absolute upside +99% vs current market cap
Conviction 3/5 confidence in undervalued call
Supports the call
  • Clear repeated disclosure of HCM revenue, ARR, subscriptions and geographic mix
  • Two methodologies (EV/Sales and EV/EBITDA) converge on similar fair-value range
  • Safetell disposal simplifies the equity story
Limits the call
  • Standalone HCM profit and post-disposal cost base not separately disclosed
  • AIM micro-cap with thin liquidity and rising leverage
Methodology

Forward EV/Sales SOTP on residual HCM, sense-checked vs EV/EBITDA

In one line · bull case

A £9m AIM micro-cap whose HCM business alone — £19.5m revenue, +27% growth, embedded into Oracle/SAP/Workday/Paychex — is worth materially more once Safetell is jettisoned.

In one line · biggest risk

Rising net debt on a tiny equity base means a Safetell sale that delivers no cash and any HCM stumble could force a dilutive raise at depressed prices.

Drivers
AI beneficiary 32 /100
Hardware/SaaS for HR time-and-attendance with AI-ready NPU clocks and Legion Technologies partnership, but AI is not the value driver.
Operating leverage 58 /100
ARR drops largely to profit and HCM gross margin trending up; offset by hardware mix and heavy PLC overhead relative to scale.
Earnings vs expectations 55 /100
HCM consistently meets-to-beats; Safetell repeatedly slips, netting to broadly in-line group delivery.
Growth momentum 72 /100
HCM +27%, North America +43%, monthly subscriptions 41k→97k, ARR underlying +26%.
Moat 42 /100
Switching costs from Oracle/SAP/Workday/Paychex integrations and SOC certifications create real but narrow stickiness.
Earnings quality 48 /100
Material capitalised R&D, multiple prior-year tax adjustments, weak FY26 cash conversion on inventory build.
Management quality 52 /100
Founder-family controlled; recent Thalassa-driven board reshuffle and failed pre-emption vote show governance friction now being addressed.
Cyclicality 45 /100
Workforce management is sticky but enterprise capex on time-clocks is moderately cyclical.
Leverage 55 /100
Net debt £4.8m vs ~£2.4m EBITDA (c.2x) and rising on inventory and Safetell funding.
Value-trap signals · 4
  • Net debt nearly doubled in 12 months on a small equity base
  • Family-controlled board with recent activist pressure; pre-emption disapplication voted down at Oct-2025 AGM
  • Safetell disposal explicitly produces no net cash
  • Weak FY26 cash conversion due to inventory build

Newmark Security plc (NWT) — Investment Research Note

Executive summary

Newmark is an AIM-listed micro-cap that supplies physical "people-flow" time-clock hardware (Grosvenor / "HCM") integrated with cloud SaaS to enterprise HR/payroll platforms (Paychex, Oracle, SAP, Workday), with a legacy UK physical-security business (Safetell) about to be divested. Across the period, HCM has compounded strongly (15.4 → 19.5 £m, +27% in FY26; North America +43%) while Safetell has been a chronic profit and cash drag, prompting the FY26 strategic decision to dispose. The single most important valuation point today is whether the standalone HCM business — c. £19.5m revenue, c. £3.9m ARR, FY26 HCM operating profit up >30% — is properly reflected in a £9m market cap, given £4.8m of (rising) net debt and a Safetell disposal explicitly producing "no net cash inflow."

Fair value estimate

  • Methodology: forward EV/Sales SOTP on the HCM business that will remain after Safetell disposal, sense-checked against EV/EBITDA on group FY26 numbers.
  • Inputs: HCM FY26 revenue £19.5m (per 2026-05-21 trading update), HCM ARR £3.9m, HCM operating profit up >30% YoY off an undisclosed but inferable mid-£2m base; Safetell assumed contributing zero on disposal; group net debt (ex-leases) £4.8m at 30 Apr 2026 per the same update.
  • Sales multiple: 0.75x–1.25x forward HCM sales (£20–22m FY27) → HCM EV £15m–£28m. The range deliberately spans (i) a discount for AIM micro-cap / hardware-attached SaaS at the low end and (ii) a fair multiple for a 25%+ underlying ARR grower at the high end.
  • Equity bridge: EV £15–28m, less £5m net debt = £10–23m equity. Across 9.37m shares this is ~105p – ~245p, mid 175p, implied mid market cap **£16m**.
  • Vs current £9.0m: absolute upside to mid ≈ +80% (low end +10%, high end +155%). The current price effectively assigns no equity value to a £19.5m, 27%-growing HCM franchise — Mr Market is reading this as "AIM micro-cap with rising debt and a problem child to dispose of," which is not unreasonable but appears to overlook the post-disposal entity.

Sector context

  • Classification confirmed: ICB Industrial Goods and Services — but functionally NWT post-disposal is a vertical workforce-management subscription business with embedded hardware. Quality (recurring revenue, blue-chip channel partners) is above typical AIM industrials; leverage is above typical small-cap software; growth is in line with vertical SaaS peers.
  • Closest listed peers: Synel Industries (TASE: SYNL), Mitrefinder/Mitrec analogues, and Identiv (NASDAQ: INVE) for identity-hardware-plus-cloud. None is a clean comparable; most trade 1–2x sales.

Investment thesis

  1. HCM is now genuinely a growth engine that the market cap ignores. HCM revenue +27% to £19.5m, North America +43%, monthly subscriptions 41k → 97k, and HCM operating profit up >30% YoY 2026-05-21 full-year trading update. At £9m mcap, even modest credit for this business looks compelling.
  2. Channel embedding into Oracle / SAP / Workday / Paychex is real and starting to monetise. "Three new Tier-1 HCM partners" added in H2 FY26 incl. Legion Technologies (AI workforce mgmt), first D2E sales recorded, and integrations live with all three major HR platforms 2026-01-15 half-year report; 2025-09-04 final results. These are structural switching-cost relationships, not press-release partnerships.
  3. Catalyst: Safetell disposal removes the chronic drag. FY26 H2 alone saw £1.2m of confirmed Safetell installations slip into FY27, with a material adverse hit to profit and cash flow 2026-05-21. Disposal — "in advanced discussions" — should re-rate the residual entity by simplifying the equity story even though it brings no cash.

Key risks

  1. Balance sheet is going the wrong way. Net debt (ex-leases) rose from £2.1m to £4.8m in twelve months on inventory build, Safetell funding, and Q4 timing 2026-05-21. With group EBITDA ~£2–2.5m, net debt/EBITDA ~2x and worsening; AIM micro-caps can find financing expensive at this point.
  2. Concentration / channel dependence. Paychex/Paycor merger caused "short-term disruption" in FY25; a single Mexican customer phasing out compressed reported ARR growth to 8% (underlying 26%) 2026-05-21. Channel partner M&A or attrition is a recurring feature.
  3. Governance and key-person. Family-controlled (Maurice Dwek chair; daughter Marie-Claire CEO); Thalassa Holdings (21.3%) publicly forced board changes in Oct 2025 2025-10-15 update re shareholder letter; AGM Resolution 6 (pre-emption disapplication) failed in Oct 2025 2025-10-23 result of AGM. Governance friction is now in the open.

Operating leverage

HCM has the right shape — c. 40%+ gross margin trending up as ARR (high-margin, near-fixed-cost-to-serve) scales — but the operating leverage at group level is currently masked by Safetell losses and a heavy central / PLC cost base relative to a £9m mcap. The FY25 segmental data shows HCM-division gross margin at 42.5% (FY24: 39.7%) and a 30%+ FY26 HCM operating-profit jump on 27% revenue growth, i.e. roughly ~1.1x operating leverage at the segment line 2025-09-04 final results; 2026-05-21. ARR of £3.9m drops largely to the bottom line; the H1 FY26 admin cost base was £4.4m, so each £1 of net new ARR is meaningfully accretive once gross margin (~70%+ on services) is applied. A 10–20% revenue surprise on the HCM line in FY27 — entirely plausible given the partner pipeline and SAP/Workday first sales — would plausibly add 40–60% to group operating profit post-Safetell. Pure-software leverage is constrained by hardware mix, but the inflection is visible.

Value-trap signals

  • Rising net debt (£2.1m → £4.8m in 12 months) on a £9m equity base.
  • Family-controlled board with recent activist pressure; pre-emption disapplication voted down.
  • Safetell exit explicitly producing no net cash; Access Control under separate strategic review with no decision yet.
  • AIM micro-cap with thin liquidity (9.37m shares in issue, ~£1m daily turnover unlikely).
  • Cash conversion in FY26 weak due to inventory build for "good levels of microchips and product in stock."

Not terminal-decline signals — more "small, fragile, slightly leveraged" — but they justify the current discount in part.

Earnings vs expectations

  • FY25 (Sep 2025): full-year revenue £23m matched May 2025 trading update of "no less than £23m" — in line / slight beat.
  • H1 FY26 (Jan 2026): revenue +13% to £11.6m, EBITDA up 80%, return to operating profit vs H1 FY25 loss; management had guided that "both divisions to surpass H2 FY25 revenues and operating profits" — delivered on HCM, in line overall.
  • FY26 trading update (May 2026): group revenue "no less than £26m" (>13% growth), HCM 27% — HCM beat, but Safetell sharply missed (£1.2m slippage, net debt up materially). Mixed. Pattern: HCM consistently meets-to-beats; Safetell repeatedly disappoints. That asymmetry is exactly why the disposal is the right call.

Conviction

3 — moderate.

  • Anchoring my confidence: clear, repeated, audited disclosure of HCM revenue, ARR, subscriptions, geographic mix and gross margin; two converging methodologies (EV/Sales and EV/EBITDA) point to similar fair-value ranges; the Safetell disposal makes the residual business much easier to value.
  • Limiting my confidence: residual HCM standalone profitability is inferred rather than disclosed; transaction proceeds and timing for Safetell are not pinned down; net debt trajectory must be watched closely; AIM micro-cap discounts can persist for non-fundamental reasons (liquidity, family control); FY27 currently has only one quarter of post-disposal visibility.
Filings consulted · 45

Every document the LLM read for this note. Click any row to open the source.

  1. 2026-05-21Full Year Trading Update2026-05-21_9579962_full-year-trading-update.md0.85
  2. 2026-01-15Half Year Financial Report2026-01-15_9354393_half-year-financial-report.md0.90
  3. 2026-01-09Notice OF Interim Results2026-01-09_9342885_notice-of-interim-results.md0.90
  4. 2025-10-23Result OF Agm2025-10-23_9190452_result-of-agm.md0.26
  5. 2025-10-23Agm Statement2025-10-23_9188403_agm-statement.md0.34
  6. 2025-10-15Update RE Response TO Shareholder Letter2025-10-15_9171290_update-re-response-to-shareholder-letter.md0.72
  7. 2025-10-08Trading Update And Response TO Shareholder Letter2025-10-08_9158686_trading-update-and-response-to-shareholder-letter.md0.72
  8. 2025-09-19Posting OF Annual Report And Notice OF Agm2025-09-19_9120015_posting-of-annual-report-and-notice-of-agm.md0.81
  9. 2025-09-04Final Results2025-09-04_9087903_final-results.md0.85
  10. 2025-08-11Notice OF Results And Investor Presentation2025-08-11_9042245_notice-of-results-and-investor-presentation.md0.59
  11. 2025-05-20Full Year Trading Update2025-05-20_8886247_full-year-trading-update.md0.55
  12. 2025-03-18Trading Update2025-03-18_8783541_trading-update.md0.55
  13. 2025-01-31Half Year Report2025-01-31_8714743_half-year-report.md0.58
  14. 2025-01-23Investor Presentation Via Investor Meet Company2025-01-23_8701943_investor-presentation-via-investor-meet-company.md0.46
  15. 2025-01-13Notice OF Interim Results2025-01-13_8684247_notice-of-interim-results.md0.58
  16. 2024-10-22Result OF Agm2024-10-22_8501829_result-of-agm.md0.20
  17. 2024-10-22Agm Statement2024-10-22_8499961_agm-statement.md0.26
  18. 2024-09-26Investor Presentations2024-09-26_8440284_investor-presentations.md0.46
  19. 2024-09-20Posting OF Annual Report And Notice OF Agm2024-09-20_8429183_posting-of-annual-report-and-notice-of-agm.md0.62
  20. 2024-09-10Final Results2024-09-10_8407814_final-results.md0.65
  21. 2024-09-02Notice OF Results And Investor Presentation2024-09-02_8393545_notice-of-results-and-investor-presentation.md0.46
  22. 2024-05-14Full Year Trading Update2024-05-14_8193870_full-year-trading-update.md0.38
  23. 2024-01-25Half Year Report2024-01-25_8005403_half-year-report.md0.41
  24. 2023-12-21Notice OF Interim Results2023-12-21_7955370_notice-of-interim-results.md0.41
  25. 2023-10-31Result OF Agm2023-10-31_7850964_result-of-agm.md0.14
  26. 2023-10-31Agm Statement2023-10-31_7848925_agm-statement.md0.18
  27. 2023-10-02Posting OF Annual Report And Notice OF Agm2023-10-02_7789317_posting-of-annual-report-and-notice-of-agm.md0.43
  28. 2023-09-26Final Results2023-09-26_7777244_final-results.md0.45
  29. 2023-09-13Notice OF Results And Investor Presentation2023-09-13_7751811_notice-of-results-and-investor-presentation.md0.32
  30. 2023-05-17Year End Trading Update2023-05-17_7529977_year-end-trading-update.md0.21
  31. 2023-02-28Result OF Agm2023-02-28_7280840_result-of-agm.md0.07
  32. 2023-02-28Agm Statement2023-02-28_7237643_agm-statement.md0.10
  33. 2023-02-03Investor Presentation2023-02-03_7354634_investor-presentation.md0.17
  34. 2023-01-31Half Year Report2023-01-31_7288604_half-year-report.md0.23
  35. 2023-01-30Posting OF Annual Report And Notice OF Agm2023-01-30_7286668_posting-of-annual-report-and-notice-of-agm.md0.24
  36. 2023-01-23Final Results2023-01-23_7473451_final-results.md0.25
  37. 2022-11-302022 Annual Report Amp Accounts Update2022-11-30_7264195_2022-annual-report-amp-accounts-update.md0.24
  38. 2022-10-27Trading Update2022-10-27_7160817_trading-update.md0.21
  39. 2022-10-242022 Annual Report Amp Accounts Update2022-10-24_7156241_2022-annual-report-amp-accounts-update.md0.24
  40. 2022-05-24Year End Trading Update2022-05-24_6975121_year-end-trading-update.md0.21
  41. 2022-01-27Half Year Report2022-01-27_6996531_half-year-report.md0.23
  42. 2021-11-10Result OF Agm Amp Capital Reorganisation Completion2021-11-10_6692052_result-of-agm-amp-capital-reorganisation-completion.md0.07
  43. 2021-10-15Trading Update Agm Investor Meet Capital Reorg2021-10-15_6813280_trading-update-agm-investor-meet-capital-reorg.md0.21
  44. 2021-09-10Final Results2021-09-10_6774438_final-results.md0.25
  45. 2021-06-09Year End Trading Update2021-06-09_6663250_year-end-trading-update.md0.21

This research note was authored by a large language model after reading 41 regulatory filings published between 2021-06-09 and 2026-05-21. Each citation refers to a specific RNS announcement in the underlying data set. The note is an opinion, not advice. Do your own work before risking capital.