Final Results

17 June 2014

RED24 PLC

(the "Group", "Company" or "red24")

Final Results

Red24 plc, the crisis management assistance company, is pleased to announce its audited final results for the year ended 31 March 2014.

The Company's full annual report and accounts (the "Accounts") for the year ended 31 March 2014 will be available at its newly refreshed website, www.red24plc.com, during the course of today. Copies of the Accounts and notice of the Company's forthcoming annual general meeting will be posted to shareholders by the end of June 2014.

Financial Highlights:

· Revenue from continuing operations increased by 10% to £5.89 million (2013: £5.36 million)

· Profit before tax up 9% to £0.85 million (2013: £0.78 million)

· Cash balances up 12% to £2.30 million (2013: £2.05 million)

· Total dividend payment for the year increased by 12.5% to 0.45p per share (2013: 0.40p) comprising of an interim dividend of 0.22p and a final dividend of 0.23p per share which will, subject to shareholder approval, be payable on 18 September 2014 to shareholders on the register on 29 August 2014

· Basic EPS from continuing operations up 6% to 1.33p (2013: 1.26p)

· Proposed sale back of the Company's 25% interest in Linx International Limited ("Linx") to Linx and its principal shareholder subject to shareholder approval

Operational Highlights:

· Retail unit added Liberty Mutual as a major client in February 2014, with a large number of new and renewed contracts which provide the Board with visibility over a substantial proportion of future revenues

· Due to growing business in mainland Europe, and Germany in particular, the Group has established an office in Munich; and

· The Group is building its cyber-crime service as the UK starts to recognize its importance.

Simon Richards, Chairman of red24, commented:

"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.

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."

Board Change, Sale of Investment in Linx and Related Party Transaction

In July 2013, red24 announced the combination of the Company's former subsidiary, Arc Training International Ltd ("Arc") with Linx (effectd by means of a sale of Arc) for which red24 would receive in consideration a 25% interest in the enlarged entity. The anticipated benefits to both red24 and Linx of this arrangement have not materialised and consequently, Linx and red24 have agreed that Linx and David Gill, its principal shareholder, will repurchase red24's interest in Linx. David Gill has resigned from the board of red24 with effect from 16 June 2014. The proposed sale value of £375,000 in cash comprises of the carrying value of the investment in red24's financial statements plus legal costs relating to the sale, and is proposed to be receivable in three equal installments (the first at completion, and subsequently on first and second anniversaries of completion). Red24 intend to reinvest the proceeds of the sale in ongoing product development and growth of the business.

This transaction is being treated as a "substantial property transaction" in accordance with the Companies Act 2006 by virtue of David Gill having until today been a director of red24, and being a director of and principal shareholder in Linx. As such, the transaction with a connected party remains subject to the approval of red24's shareholders. This will be sought at the forthcoming annual general meeting, notice of which will be provided separately in due course.

The directors of the Company (excluding Simon Richards, who is not considered independent due to his appointment until today as a director of Linx on behalf of red24), having consulted with its nominated adviser, consider the terms of the proposed transaction described above to be fair and reasonable insofar as the Company's shareholders are concerned.

Enquiries:

About red24

Red24 is a crisis assistance company that provides a range of security and business support services, offering preventative and reactive advice to help organisations and individuals to avoid or manage security and business risks to themselves, their families and their businesses. Its products and services are distributed through leading international financial service companies.

Chairman's statement

Introduction

I am pleased to present our report for the year ended 31 March 2014.

Financial Overview

The business continues to grow in line with our expectations. Revenue from continuing operations has increased by 9.9% to £5,886,707 from £5,355,642 achieved last year. All of this growth has been achieved organically. Profit before tax of £854,905 is a substantial increase on the previous year's £781,177. Earnings per share have only increased by 6% as the tax charge continues to increase as a proportion of profits as we have fully utilised historical UK losses and as a result of generating an increasing proportion of our earnings in South Africa where the tax rate is higher than in the UK. On 31 July 2013 we sold our training business and this has been treated as a discontinued activity in the current year and the previous year has been restated to provide a proper comparison.

The net assets per share continue to increase and are now 7.8p per share up from 6.4p last year. In January 2013 we completed the purchase of the building housing our Crisis Response Management Centre in Cape Town. The local bank loan to fund part of the purchase remains our only debt.

The Board has implemented the change to a twice yearly dividend. In February 2014 an interim dividend of 0.22p was paid to shareholders and a final dividend of 0.23p is recommended for approval at the AGM, which is a 15% increase on the final dividend paid in September 2013.

The Board are pleased to note that the average share price in the year was significantly higher at 16.28p compared to 12.71p in the previous year and 11.47p in the year before that. Thus shareholders have seen a total return of just over 30% in the last twelve months. We believe this reflects not just improved market conditions for AIM listed shares but also recognises the Board's commitment to the sustainable long term growth of the business.

We have worked hard to build up a reputation with well established clients for high quality work and we see future growth both from our existing services and also from the addition of other services that are likely to be of assistance to those clients.

Although there are risks to any business, the Board feel encouraged by the progress of the last year and are confident of further progress to come. As a company with a Scottish registered office, red24 plc could be affected by the results of the referendum on independence this September. It is not easy to predict what the regulatory and fiscal consequences of a Yes vote would be, but we would hope that mechanisms would be put in place to enable the company to re-register in England, as the business has no other connection with Scotland.

Our staff are absolutely crucial to the quality of service provided and to creating an environment where we can attract good quality people who want to come to work for us. The Board are most grateful to all the staff for their hard work and are gratified that so many of them are choosing to build their careers with the group.

Simon Richards

Chairman

16 June 2014

Chief Executive's Report

red24 is a crisis management assistance group that is organised into two segments, security assistance and business support. We have developed an excellent reputation for assisting clients in minimising risks to their personnel, operations and profitability.

Business model

The heart of our business operation is our 24/7 Crisis Response Management Centre (CRM) in Cape Town. This state of the art response centre is staffed 24 hours a day, 365 days a year by a dedicated team of multi-lingual customer service representatives, regional analysts and experienced security professionals. The centre enables our experts to give accurate impartial, up to the minute information and advice to our clients.

Across the group clients are offered escalating levels of assistance that are appropriate to the threat.

Security assistance

This segment comprises our global security service which is organized into three customer facing units: retail, including accident and health insurance; consulting; and special risks. We publish a threat forecast annually and this is available on our significantly enhanced website www.red24.com 

Our retail unit has benefitted from the recruitment of additional sales resources and revenues grew by 15% during the year. The retail service is generally provided to banks and insurance companies to particular parts of their customer base, a model we describe as volume mandatory. In recent years HSBC and AIG have been the major users of this service, but we were delighted to add Liberty Mutual as a major client with effect from February 2014 as well as gaining a number of other accounts. We are finding that many financial institutions are keen to purchase both security and medical assistance services together and this has led to our working with different medical assistance partners in different parts of the world.

Our consulting unit provides clients with support in terms of detailed reports, planning and training and provides a range of response services including security reviews, check in services and travel tracker through to close protection and evacuation services. Our travel tracker is a cost effective solution for many corporate HR departments and the growth in the service has led the Board to decide to invest in a significant enhancement to the service which should be available toward the end of the coming financial year and enable new client "take on" to be significantly faster.

Our special risk unit provides support to clients facing complex crises which require highly experienced consultants familiar with the local conditions and modus operandi of the causative agents of the crisis. This unit acts for a number of insurance companies and had a particularly busy year with a major incident in Syria.

Looking forwards we are pleased that almost all clients are renewing when the time comes; albeit sometimes at lower income levels if their own revenues have not reached their expectations. We continue to attract new clients and are pleased to have attracted insurers from continental Europe and believe there are significant opportunities there, particularly in Germany and we are actively investigating the opening of a Munich office.

Business Support

This segment now comprises our product safety advisory service, red24Assist, our environmental advisory service, green24, and our cyber crime product.

Red24Assist is our product contamination service that is the clear market leading choice of insurers active in this field. Revenues grew by over 10% in the year as more insured businesses, particularly in the United States became aware of the benefits available to them through their insurer. In the coming year we intend to develop a number of additional support services, particularly training, to both support insured end clients and help to give insurers a competitive edge when writing this business.

Our environmental service does not generate stand alone revenues and forms part of our overall offering, particularly red24Assist. It is now available as an open access to individuals and corporates as part of commitment to sustainable living.

We continue to see an opportunity to use our business model to develop a cyber-crime service to support insurers in the UK and this went live with our first insurer in April 2013. In the US roughly 50% of businesses insure against cyber-crime, in the UK this percentage is 5% or less and we believe this will increase in the next few years as awareness of the issue grows, albeit slowly.

Linx International Limited

In July 2013 the Board decided that the medium-term challenges facing our classroom based security management training business were such that shareholder interests would be best served by putting Arc Training International Ltd (Arc), with its strong position in Africa and the Middle East, together with Perpetuity Training Ltd, with its strong position in the UK and with an already established on-line training platform.

Linx International Ltd, the owners of Perpetuity Training Ltd, acquired Arc from the group on 31 July 2013 in exchange for a 25% stake in the enlarged Linx. Whilst the merging of the two training businesses has progressed smoothly and that the cost savings achieved have created rather more than the sum of the two stand alone businesses, there are certain cultural differences between ourselves and Linx. 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.

The Board and Linx have mutually concluded that it would be best if Linx and their principal shareholder, David Gill, acquired the Group's stake in Linx and an in principle agreement to do so has been reached. As David Gill is a director of red24 this agreement is with a connected party and so the transaction requires shareholders approval. This will be sought at the forthcoming annual general meeting.

Principal risks and uncertainties

There are a number of principal risks and uncertainties which could have a material effect on the group. Some of these risks and uncertainties are external to the group and largely outside the group's control. Foremost amongst these is the economic environment, which remains a challenging one as many governments struggle with debt constraints. This has implications for the relative value of currencies, not least sterling, which is our reporting currency. The past two years have seen significant growth in our dollar revenues and costs, and we also have a significant rand cost base in South Africa. The impact of currency movements on our earnings cannot be reliably forecast and remains an area of uncertainty.

Risks and uncertainties that are largely within the control of the group include the maintenance of the group's competitive position to ensure the achievement and collection of sufficient revenue to meet the group's objectives. The group maintains significant cash reserves both to mitigate against the possibility of periods of reduced working capital and to ensure adequate working capital is available to meet any sudden increase in the level of response work clients may require. Internally, the dependence on one or two key accounts for a significant proportion of our revenue remains a key risk but the Board is endeavouring to reduce this risk by broadening the customer base. Other normal business risks include dependence on the continued availability of key personnel to ensure that our clients receive the level of service they are entitled to expect, and the ability of the group to continue to provide that level of service. The reputation of the group is critical to its continued success and it works hard to develop and protect that reputation by ensuring that it only associates itself with activities that are appropriate for a business in its sector.

Looking forward

To date the Group has been able to expand organically by recruiting appropriate specialists in the desired fields without the need for acquisitions. However the Board is mindful that acquisition remains an additional avenue to growth and, particularly in overseas markets, may be a more effective means of achieving growth.

We have a good pipeline of new business, and see significant opportunities in Europe that can be serviced form our prospective office in Munich. Most of these opportunities are likely to benefit the second half of the year to March 2015 and lead to the year as a whole to show continued growth; however, the first half year is unlikely to receive the benefit of the major assignment in the Middle East that boosted the half year to September 2013.

Expansion in areas outside our reporting currency is affected by exchange rate movements. Almost half our revenue is now denominated in US dollars, even where our clients are the UK arm of US insurers, whereas 47% of our costs are incurred in Rand. The Board are seeking to increase the proportion of costs that are incurred in US dollars. Exchange rate movements are influenced by many complex factors and whilst the Board continues to believe that it is neither practical nor desirable to hedge these risks fully, we have taken steps to secure what we believe to be a favourable opportunity to purchase forward 60% of our forecast Rand requirements for the coming year.

Key performance indicators

The key performance indicators ("KPIs") for the group are those that communicate the financial performance and strength of the group, as a whole, to shareholders. A summary of the KPI's is as follows (derived from continuing operations only):

Maldwyn Worsley-Tonks

Chief Executive

16 June 2014

CONSOLIDATED INCOME STATEMENT AND CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 March 2014

CONSOLIDATED STATEMENT OF coMPREHENSIVE INCOME

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

CASH FLOW STATEMENTS

For the year ended 31 March 2014

1 Discontinued activity

The business of Arc Training International Limited, which was sold on 31 July 2013, has been treated as a discontinued activity and the segmental information and the notes to the profit and loss account have been restated accordingly.

2 Revenue and segment analysis

For management purposes the group is currently organised into two divisions - security assistance and business support. This reflects how the group reports its management information to the Chief Operating Decision Maker which is deemed to be the group board of directors. The security assistance segment provides preventative and reactive security advice to customers across the globe, whilst the business support segment comprises the provision of advice on product safety with particular emphasis on food and the provision of web based environmental advice.

The following tables provide details of revenue, profit, assets and liabilities and capital expenditure by business segment:

No single customer accounts for more than 10% of the revenue of the other assistance segment. For the security segment the two key distributors each account for more than 10% of group revenue; one distributor accounts for 23.4% (2013: 20.0%) and the other accounts for 10.4% (2013:12.9%).

The group's operations are located in the United Kingdom, in the Republic of South Africa and in the USA. The following table provides an analysis of the group's sales by location of customer, irrespective of the origin of the services, and a geographical analysis of the location of segment assets and additions to property, plant and equipment and intangible assets.