25th Jun 2007 07:01
Red24 PLC25 June 2007 red24 plc PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MARCH 2007 red24 plc ("red24" or the "Group") is pleased to announce it's preliminaryresults for the year ended 31 March 2007. The Company's Report and Accounts forthe year have been sent to shareholders and will be available on the Company'swebsite, www.red24plc.com, from today. red24, is a provider of security risk management services, offering preventativeand reactive advice to help individuals avoid and manage personal risks tothemselves and their families. The products are distributed through leadinginternational financial service companies. Highlights •Turnover increased 39% to £2.8m (2006: £2.0m) •Loss before tax reduced to £353k (2006: £700k) •Key accounts of HSBC and AIG showing strong growth •Hogg Robinson, Ace Insurance and International Air Passengers Association client wins •Name changed to red24 plc to reflect the growing importance of the brand Simon Richards, Chairman, commented: "I am pleased to announce that the Group has made considerable steps on its wayto profitability with strong turnover growth and losses before tax almosthalved. "We expect to continue to grow our relationships with existing and new partnersin the financial service and insurance industries and envisage increasing growthin the worldwide adoption of our products." Enquiries: red24 plcSimon Richards, Chairman Tel: 0208 080 0217 HB Corporate Luke Cairns/Cecil Jordaan Tel: 020 7510 8600 Threadneedle Communications Josh Royston, Graham Herring Tel: 0207 936 9606 Chairman's Statement Change of name On 8 March 2007 shareholders approved a change of name to red24 plc, areflection of the growing importance of this family of products to our business. Financial Overview Turnover demonstrated a healthy 39% year on year growth to £2,786,393, while theloss before tax of £352,804 compares favourably with the loss of £700,045 in theprevious financial year (as restated). Although this improvement is welcome itfalls below the targets we set ourselves for the year of reaching a cash flowbreakeven. However, although we have incurred an outflow before financing of£249,740, this was a reduction in the outflow, in the previous year, of£418,003. In the previous year we had been able to raise £320,000 of new equity but,whilst the share price remains below par, this outflow has had to continue to befunded by debt which carries an interest burden and has slowed the achievementof profitability. The Board consider that a share price below par does notreflect the very significant progress that the business has made in the last twoyears and whilst a reduction in the par value remains an option, the Board donot consider that such a course would be in the best interests of thoseshareholders who have supported us from the outset. As a result any fundraisingplans for the current financial year will have to remain flexible. However, theydo include the extension of the life of the debt instrument to March 2009.red24 red24 is a global security service providing preventative and reactive advice tohelp individuals avoid and manage personal risks to themselves and theirfamilies. In June 2005 we entered into an agreement with HSBC Bank plc toincorporate red24's personal security service as part of HSBC's Premier bankingoffering and ID imposter into their HSBC Plus banking offering. red24 is verypleased to have been part of a very successful account for HSBC and the totalnumber of their customers with red24 is now well over 700,000. We believe thisproves the value of red24 as a product differentiator when included, on amandatory basis, in financial service products. Awareness of red24 has grown significantly in the last year and our personnelappear regularly on Sky News, Fox and the BBC to comment on security relatedtopics. The demand for our services, as shown from our distribution partnersacross four continents, underlies the fact that our focus on personal securityassistance is a message that resonates across cultures, languages and borders.Our experience of working in challenging cultural environments around the worldin the past three years has given us a better understanding of how quickly ourservices can reach the market in various regulatory environments. By the end ofthe financial year we had established contractual commitments in the UK, Japan,Korea, Singapore and the USA and in the next financial year we expect acontinuation of this growth. In the interim statements I spoke of our new distribution agreement with AIGInternational Services which is for five years and provides a significantregular cash flow to the Group. I am pleased to report that utilisation of thisservice is growing steadily and contributed over $300,000 in the present year.Korean and Chinese language websites have been developed for AIG customers andwe are confident that revenues from the Far East will continue to grow. To helpservice this we have opened, at modest expense, an office in Tokyo to facilitateany responses that may be required in that region. Other high profile new customers have started to take product from us in recentmonths - Hogg Robinson Group, Ace Insurance and the International Air PassengersAssociation to name three. As yet the revenues from these sources do notcompensate for the loss of business from Hiscox which I reported in theinterims. Increasingly we are finding that red24 responses, and indeed our trainingcourses, lead to consultancy work - very rarely is it the other way round - andso we have decided to integrate our consulting business within the red24response framework, offering security consulting as an ancillary service to ourcore products. This reduces costs and helps to ensure that all our work is of aconsistently high standard. Training Our training business is the recognised leader in security management trainingand is at the forefront in driving forward qualifications and standards in thesecurity business sector. Clients include all of the five largest UKmultinational companies and seven out of the top ten corporations in the world(Fortune 500). Financially it was a year of two contrasting halves. In the first half revenuesrose by 30% but recruiting the right staff proved difficult. In the second halfwe were successful in attracting an additional trainer but the one-off courses,that so buoyed second half revenues last year, did not materialise, and, as aresult revenues for the year as a whole were only up 10% and profitability fell.This is the second significant factor holding back our progress in the secondhalf. The more positive news is that an additional trainer has enabled us to increasethe number of courses we can offer in the rest of 2007, particularly to meetdemand for the Security Management courses that are accredited by MiddlesexUniversity. This should lead to increased revenues and margins with littleadditional overhead. All of our courses are accredited by Skills for Security,the UK skills and standards body for the security business sector. Outlook red24 is strongly positioned as a leading provider of security risk managementservices to meet the growing requirement for greater protection for thosetravelling, whether on business or for pleasure. We have invested heavily toensure that our service levels are at the standard required from ourdistribution partners and have the systems in place to cater for a much greaterlevel of call handling and response to our members' needs. This gives usconsiderable scope for substantial growth without a proportionate increase inour direct costs. Whilst competition in these markets has undoubtedly increased the overall sizeof the market, it is growing rapidly and we remain well placed to win asignificant share of this business. We expect to continue to grow ourrelationships with existing and new partners in the financial service andinsurance industries and envisage increasing growth in the worldwide adoption ofour products. Staff Finally, I would like to thank all my colleagues and staff for their support andunfailing enthusiasm for something which we all regard as a very specialproject. Simon RichardsChairman 25 June 2007 red24 plc(formerly ARC Risk Management Group Plc)Consolidated Profit and Loss AccountFor the Year Ended 31 March 2007 2007 2006 (restated) Notes £ £ Turnover 2,786,393 2,008,683 Cost of sales (864,340) (503,398) Gross profit 1,922,053 1,505,285 Administrative expenses (2,221,350) (2,187,794) Operating loss (299,297) (682,509) Interest receivable 4,822 3,839Interest payable (58,329) (21,375) Loss on ordinary activities before taxation (352,804) (700,045) Taxation 41,021 156,973 Loss for the YEAR (311,783) (543,072) ========= ========= BAsic Loss per share (PENCE) 4 (0.10p) (0.18p) ======= =======DILUTED LOSS PER SHARE (PENCE) 4 (0.10p) (0.18p) ======= ======= All turnover and results arose from continuing operations. CONSOLIDATED STATEMENT OF Total recognised gains and losses 2007 2006 (restated) £ £Loss for the year (311,783) (543,072) Currency translation difference on opening capital andreserves of overseas subsidiary (5,332) 3,519 Total gains and losses recognised for the year (317,115) (539,553)Prior year adjustment (as explained in note 2) (109,630) - Total losses recognised since the last annual report (426,745) (539,553) ======== ======== red24 plc(formerly ARC Risk Management Group Plc)Consolidated Balance Sheet31 March 2007 2007 2006 (restated) £ £ £ £Fixed assets 183,360 256,020Intangible assetsTangible assets 98,250 102,918 -------- -------- 281,610 358,938Current assetsDebtors: amounts falling due 602,342 357,798within one yearDebtors: amounts falling dueafter more than 172,499 156,973one yearCash at bank and in hand 127,900 307,366 ------ --- ------ --- 902,741 822,137Creditors: amounts falling duewithin one year (1,252,571) (951,937) ------ --- ------ ---Net current liabilities (349,830) (129,800) ------ ------Total assets less current liabilities (68,220) 229,138Creditors: amounts falling dueafter more than one year (64,446) (91,059) ------ ------ Net (LIABILITIES)/assets (132,666) 138,079 ======= =======capital and reserves 3,047,108 3,032,108 Called up share capitalShare premium account 557,553 557,553Fair value reserve 146,500 115,130Profit and loss account (3,883,827) (3,566,712) --------- ---------Equity shareholders' (DEFICIT) (132,666) 138,079/funds ======= ======= red24 plc(formerly ARC Risk Management Group Plc)Consolidated Cash Flow StatementFor the Year Ended 31 March 2007 2007 2006 Notes (Restated) £ £ £ £Net cash outflow from operating activities 5 (a) (186,010) (389,052)Returns on investments andservicing of finance Interest received 4,822 3,839Interest paid (16,363) (15,213)Interest element of financelease rental payments (6,998) (4,262) ------ ------ Net cash outflow from returnson investments and servicing of finance (18,539) (15,636) Capital expenditurePayments to acquire tangible (46,176) (13,315)fixed assetsProceeds on sale of tangible fixed assets 985 Net cash outflow from capital expenditure (45,191) (13,315) ------ ------ Net cash outflow before financing (249,740) (418,003) FinancingCapital element of financelease rental payments (17,065) (6,708) Issue of ordinary share capital 15,000 320,000 Expenses of issue of ordinaryshare capital - (6,650) Repayment of bank loans (9,878) (10,008)Issue of loan notes and share warrants 100,000 275,000 ------- ------- Net cash inflow from financing 88,057 571,634 ------ -------(Decrease)/increase in cash 5 (c) (161,683) 153,631 ======= ======= Notes: 1. The financial information contained in this document does not constitute statutory accounts within the meaning of section 240 Companies Act 1985. The figures for the years ended 31 March 2006 and 2007 have been extracted from the audited statutory accounts. The statutory accounts for 2007 will be delivered tothe Registrar of Companies in due course. The accounts for both years ended 31 March 2006 and 2007 received an unqualified auditors' report, save for matters of emphasis relating to going concern, and did not contain statements under the Companies Act 1985, s 237(2) or (3). 2. The group has changed its accounting policy for share based payments following the introduction of FRS20 "Share based Payment". The group issues equity-settled share based payments to certain employees. Equity settled share based payments are measured at fair value at the date of grant. The fair value determined at the grant date is expensed on a straight line basis over the vesting period, based on the group's estimate of options that will eventually vest. The assumptions underlying the number of awards expected to vest are subsequently adjusted to reflect conditions prevailing at the balance sheet date. At the vesting date of an award, the cumulative expense is adjusted to take account of the awards that actually vest. The total expense recognised in the Profit & Loss account from share basedtransactions, all equity-settled, amounted to £28,770 (2006: £64,630). Inaddition the change in accounting policy has resulted in a charge for prioryears, amounting in aggregate to £109,630, and is shown as a prior yearadjustment and comparative figures for previous years have been restated to showthe position had this policy been adopted at the time. Other accounting policies are consistent with those used in previous years. 3. Copies of the report and accounts for the year to 31 March 2007 will beavailable in due course from the Company's office at The Coach House, Bill Hill Park, Wokingham, Berkshire RG40 5QT. 4. Loss per share 2007 2006 (restated) Attributable loss (£) (311,783) (543,072) ================ ================Average number of ordinary shares in issue 303,716,315 296,635,494 ================ ================Basic loss per share (pence) (0.10p) (0.18p) ================ ================ Fully diluted loss per share is the same as basic loss per share. 5. Notes to the cash flow statement (a) Reconciliation of operating loss to net cash outflow from operatingactivities 2007 2006 (restated) £ £Operating loss (299,297) (682,509)Charge attributed to employee share options 28,770 64,630Depreciation charges 26,819 25,091Amortisation charges 72,660 72,660Loan note cost of issue 2,600 -Loss on disposal of tangible fixed assets 199 1,638Increase in debtors (266,124) (97,401)Increase in creditors 248,363 226,839 ------- -------Net cash outflow from operating activities (186,010) (389,052) ======= ======= (b) Analysis of changes in net debt 1 April Cash Other 31 March 2006 flows movements 2007 £ £ £ £Cash at bank and in hand 307,366 (161,683) (17,783) 127,900Debt due within one year (281,408) (90,121) (12,309) (383,838)Debt due after more than oneyear (50,794) - 10,008 (40,786) ------ ------- ------ ------- (24,836) (251,804) (20,084) (296,724)Finance leases due within oneyear (6,816) 460 - (6,356)Finance leases after more thanone year (40,265) 16,605 (23,660) ------ ------- ------ -------Net debt (71,917) (234,739) (20,084) (326,740) ====== ======= ====== ======= Included in other movements on cash at bank and in hand is a foreign exchangemovement of £17,783. (c) Reconciliation of net cash flow movement to movement in net debt 2007 2006 £ £Decrease/ (increase) in cash 161,683 (153,631)(Decrease)/ increase in finance leases (17,065) 47,081Decrease in bank loan (9,879) (10,008)Increase in loan notes 102,300 271,400Translation difference 17,783 - ------- -------Increase in net debt 254,822 154,842Opening net debt/(funds) 71,917 (82,925) ------- -------Closing net debt 326,739 71,917 ======= ======= This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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