17th Jun 2014 09:02
LONDON (Alliance News) - Risk management provider Red24 PLC Tuesday reported a 9.4% increase in pretax profit in its last financial year, boosted by revenue growth in its security assistance and business support divisions.
However, Red24 also unveiled plans to sell its 25% stake in Linx International Ltd to Linx and its main shareholder, David Gill, who is also a director of Red24. The decision comes after the combination of Red24's former subsidiary, Arc Training International Ltd, with Linx in July 2013. That deal gave Red24 its stake in Linx.
But Chief Executive Maldwyn Worsley-Tonks said that the move has failed to live up to expectations due to "certain cultural differences" between Red24 and Linx, even though the merging proceeded smoothly.
"The group do not exercise significant influence over Linx and so have treated our stake as an investment. The exchange of directors has not generated as many opportunities for synergistic benefits as we had hoped and that arrangement has now come to an end," Worsley-Tonks said in a statement.
Red24 shares were Tuesday quoted at 17.62 pence, down 10%.
The move came as Red24 reported a GBP854,905 pretax profit in the year ended March 31, compared with GBP781,177 a year earlier. Revenue increased to GBP5.9 million, from GBP5.4 million, while administrative expenses rose to GBP3.7 million from GBP3.5 million.
Revenue grew by 15% in the retail unit of Red24's security assistance segment, driven by the recruitment of additional sales resources, with the company adding Liberty Mutual Holding Co Inc as a client in February, adding to HSBC Holdings PLC and American International Group Inc.
Meanwhile, Red24 said it is building its cyber-crime service in the UK, where banks, insurers and other financial institutions are looking to protect themselves from attack.
Red24 increased its full-year dividend to 0.45 pence per share, from 0.40 pence.
"We have worked hard to build up a reputation with well-established clients for high-quality work, and are seeing the rewards of this through increasing revenue and profitability. We see future growth both organically from our existing services and capabilities, but are complementing this by actively seeking compelling acquisitions, particularly in overseas markets," Chairman Simon Richards said in a statement.
"We have a good pipeline of new business, with significant opportunities in Europe, and the board feels encouraged by the progress of this last financial year and is confident of further progress to come," Richards added.
Red24, which has a Scottish-registered office, said that it hopes that mechanisms will be put in place to enable it to re-register in England in the event of a 'Yes' to independence when Scotland votes on the matter on September 18.
By Samuel Agini; [email protected]; @samuelagini
Copyright 2014 Alliance News Limited. All Rights Reserved.
Related Shares:
REDT.L