10th Nov 2014 11:04
LONDON (Alliance News) - Red24 PLC Monday said its revenue and pretax profits slightly increased during the first half of the year, but warned it expects revenue to fall in the second half following the loss of a substantial contract with HSBC Holdings PLC.
For the first half of the year ended September 30, the security services company saw its pretax profit increase to GBP487,000 compared to GBP457,000. The increase is due to revenue also seeing a slight increase to GBP3.26 million from GBP3.22 million a year earlier.
Red24 also benefited from lower administration costs of GBP1.8 million from GBP1.9 million in the first half of 2013.
As a result of the growth during the first half, Red24 have increased the interim dividend to 0.23 pence per share compared to a dividend of 0.22p in the first half of 2013.
The company said that revenue from travel assistance fell during the first half, totalling GBP1.0 million from GBP1.3 million a year earlier, and it is expecting revenue to fall further in the second half due to losing significant contracts with HSBC for its identity theft service.
"Whilst the loss of identity theft revenues from HSBC will impact our second half year, the achievement of these strategic aims will be of significant benefit to the medium-term organic growth of the business," it said in a statement.
Income from its special risk business also fell, to GBP793,000 from GBP1.1 million in the first half of 2013. Revenue from Red24's consulting division increased due to demand for close protection and evacuation planning increasing. Revenue for the division increased to GBP939,000 from GBP333,000 a year earlier.
The Red24 Assist division, which is a product-safety business, reported a 10% decline in revenue due to the market maturing, down to GBP491,000 from GBP549,000 in the first half of 2013.
"To date the group has been able to expand organically by recruiting appropriate specialists in the desired fields without the need for acquisitions. The board is, however, mindful that acquisitions remain another path to growth and continue to explore options, in particular in overseas markets and in broadening the range of assistance offered to clients," Red24 said in a statement.
The company is winning a number of new contracts, but stated that the UK regulatory environment is not helping its customers to launch new financial products, it said in a statement.
"Although the previously announced loss of a substantial contract will have an adverse effect on the level of recurring revenues for the second half of the year and beyond, the board are pleased with the level of new business wins and future opportunities that will mitigate this effect," said Chairman Simon Richards.
"Our balance sheet has continued to get stronger, and we remain confident about the ongoing prospects for our business," he added.
Red24 shares were up 3.5% to 10.23 pence per share Monday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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