23rd Jun 2006 07:00
ARC Risk Management Group PLC23 June 2006 ARC Risk Management Group plc Final Results for the Year to 31 March 2006 ARC Risk Management Group plc ('the Group') announces today its final resultsfor the year to 31 March 2006. ARC Risk Management Group plc is a provider of security risk managementservices, offering preventative and reactive advice to help individuals avoidand manage personal risks to themselves and their families. The products aredistributed through leading international financial service companies. Highlights: •Increase in turnover: £2,008,683 (2005: £1,020,687) - up 97% •Reduced loss before tax: £635,415 (2005: £1,121,667) •Reduced loss per share: 0.16p (2005: 0.46p) •Increase in available cash: £307,366 (2005: £153,735) •Placing raised new equity of £320,000 in June 2005 •Launch of CorporateCare product - being well received in the corporate travel market •Significant contracts in the period include: •launch of red24alert and Identity Theft Assistance Services for Hiscox Plc policyholders •'Leading insurance company' to provide red24 security services to customers •distribution agreement in Japan via AIG International Services •Considerable growth of red24 sales which now comprise 60% of group revenues Simon Richards, Executive Chairman, commented:"I am pleased to report that a great deal has been achieved in the twelve monthsunder review and that good progress is being made in all the group's areas ofoperation. The increase in turnover and halved losses are a substantialimprovement and one which demonstrates that further growth in revenues will makethe group profitable. "Across all three divisions we continue to grow our relationships with existingand new partners in the financial service and insurance industries and, forred24 in particular, we envisage increasing growth in the worldwide adoption ofour products. This has the potential to produce very significant returns forshareholders." ARC Risk Management Group plc 020 7235 1488Simon Richards, Chairman Threadneedle Communications 020 7936 9605Graham Herring/Alex White HB-Corporate 020 7510 8600Imran Ahmad Chairman's Statement IntroductionI am pleased to report that a great deal has been achieved in the twelve monthsunder review and that good progress is being made in all the group's areas ofoperation. Substantial growth in customer revenues has fed through to ourfinancial performance and, by the end of the financial year, losses had largelybeen stemmed. The revitalised infrastructure of the group, putting each divisioninto a separate subsidiary, each with its own managing director, has certainlyhelped. Financial OverviewTurnover demonstrated a healthy 97% year on year growth to £2,008,683, while theloss before tax fell from £1,121,667 in the previous financial year to £635,415incurred last year. Clearly a substantial improvement and one which demonstratesthat further growth in revenues will make the group profitable. Year end cashresources doubled from £153,735 to £307,366. Immediately after the publication of the results for the year to 31 March 2005,we successfully raised £320,000 in new equity. Subsequently the share price hasnot exceeded its par value for other than brief periods and, in consequence, theadditional finance, of which I spoke in the interim statement, has had to beprovided by way of debt finance. The Board's fundraising plans for the currentyear, which include the replacement of this debt finance in September , willcontinue to be influenced by the relationship between the share price and parvalue. Whilst the share price remains below par, our plans will continue to beto raise debt finance with warrants attached, if appropriate. red24red24 is a global security service providing preventative and reactive advice tohelp individuals avoid and manage personal risks to themselves and theirfamilies. Last June 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. These are twosignificant contracts, which have taken the total number of customers of red24to well over 500,000. Each month several thousand new customers are added andthe English language service of red24 now has sufficient mass to cover its costson a monthly basis. red24's Japanese service has taken longer to develop than expected but is nowbeing sold in Japan through AIG IS's network of agents. At present, the productis offered as a discretionary sale and take up has not been as high as we hadhoped. This is, however, consistent with our early experience in the UK andcritical mass is unlikely to be achieved until red24 is incorporated in a majorfinancial product offering on a mandatory basis. This is expected to occur inthe not too distant future. Significant investment in product development has continued. Our CorporateCareproduct has recently been launched and is being well received. A gap yearproduct has also been launched alongside a training suite aimed at equippingyoung people with the security background for their year out. Moreover, we havedeveloped our identity theft related services significantly, making our productin this area a market leader. Essentially we have developed a modular approachto the management of security risk advice, which enables us to tailor the corered24 product to meet the needs of particular markets quite readily. The modularapproach then gives an opportunity to our distributors to purchase productupgrades appropriate to their client needs and budgets. Furthermore, we havebeen developing a more retail friendly offering with a view to partnering with adistributor to offer our services directly to the public for the first time.This should open up a new revenue stream for the division without affecting ourcore focus on mandatory sales. In preparation for this avenue we have focusedmore resources on our PR activity; success to date includes the public face ofred24, David Hill QPM, appearing on Sky News six times. It is pleasing to note, as contracts come up for renewal, both that ourdistributors are tending to take the opportunity to upgrade the product they aretaking and also that feedback from their clients when using the red24 servicehas been positive. For the year as a whole we have maintained the growth inrevenues referred to in the interim statement and red24 sales, which were morethan five times those of the corresponding period last year, now comprise over60% of group revenues. ConsultancyOur consultants provide risk assessment and crisis planning both to a number ofcorporate clients and also to insurance companies and their insured. This advicehelps our clients to avoid major business risks but, should an event occur, italso prepares them to deal with the crisis thereby reducing the impact on theirbusiness. The contingency planning covers a wide range of potential risks and isnot limited to the security sector. Since the year end, the consultancy business continues to develop and I ampleased to announce that we have recently been retained as advisors to a majorinternational company to assist them with crisis response. This is in additionto renewing a significant contract in the insurance sector on which we areretained to provide special risk services. TrainingI am pleased to say that the autumn programme, coupled with a number of in-housecourses run for overseas clients, resulted in recovery of the revenue lost inthe first half. The accreditation of our key Security Management Course byMiddlesex University, thereby enabling delegates who opt to do additional homestudy to complete part of a university degree, whilst attending our courses, hasalso led to an increase in delegate numbers on the 2006 programme. OutlookARC Risk Management is strongly positioned as a leading provider of securityrisk management services. These are meeting the growing requirement for greaterprotection for those travelling, whether on business or for pleasure, marketswhich, at present, remain largely untapped.Across all three divisions we continue to grow our relationships with existingand new partners in the financial service and insurance industries and, forred24 in particular, we envisage increasing growth in the worldwide adoption ofour products. This has the potential to produce very significant returns forshareholders. StaffFinally, 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 RichardsChairman22 June 2006 ARC Risk Management Group plcCONSOLIDATED PROFIT AND LOSS ACCOUNTFor the year ended 31 March 2006 2006 2005 £ £ TURNOVER 2,008,683 1,020,687Cost of sales (503,398) (395,001) --- ---GROSS PROFIT 1,505,285 625,686Administrative expenses (2,123,164) (1,749,259) --- --- OPERATING LOSS (617,879) (1,123,573) Interest receivable 3,839 9,928Interest payable (21,375) (8,022) --- ---LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (635,415) (1,121,667) Taxation 156,973 - --- ---LOSS FOR THE YEAR (478,442) (1,121,667) === === LOSS PER SHARE (PENCE) (0.16p) (0.46p) === === All turnover and results arose from continuing operations. STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES 2006 2005 £ £ Loss for the year (478,442) (1,121,667)Currency translation difference on foreigncurrency net investments 3,519 (1,128) --- --- Total gains and losses recognised for the year (474,923) (1,122,795) === === ARC Risk Management Group plcCONSOLIDATED BALANCE SHEET31 March 2006 2006 2005 £ £ £ £FIXED ASSETS Intangible assets 256,020 328,680Tangible assets 102,918 55,083 --- --- 358,938 383,763CURRENT ASSETS Deferred tax assets 156,973 -Debtors: amounts falling due within one year 357,798 260,397Cash at bank and in hand 307,366 153,735 --- --- 822,137 414,132CREDITORS: amountsfalling due within one (951,937) (442,941)year --- ---NET CURRENT LIABILITIES (129,800) (28,809) --- ---TOTAL ASSETS LESS CURRENT LIABILITIES 229,138 354,954 CREDITORS: amountsfalling due after more (91,059) (60,802)than one year --- ---NET ASSETS 138,079 294,152 === ===CAPITAL AND RESERVES Called up share capital 3,032,108 2,712,108Share premium account 557,553 564,203Fair value reserve 5,500 -Profit and loss account (3,457,082) (2,982,159) --- ---EQUITY SHAREHOLDERS' 138,079 294,152FUNDS === === ARC Risk Management Group plcCONSOLIDATED CASH FLOW STATEMENTFor the year ended 31 March 2006 2006 2005 £ £ £ £NET CASH OUTFLOW FROM OPERATING ACTIVITIES (389,052) (995,469) RETURNS ON INVESTMENTS ANDSERVICING OF FINANCE Interest received 3,839 9,928Interest paid (15,213) (8,022)Interest element of financelease rental payments (4,262) - --- --- NET CASH (OUTFLOW)INFLOWFROM RETURNS ON INVESTMENTS AND SERVICING OF FINANCE (15,636) 1,906 CAPITAL EXPENDITUREPayments to acquire tangible fixed assets (13,315) (22,225) --- ---NET CASH OUTFLOW FROM (13,315) (22,225)CAPITAL EXPENDITURE --- ---NET CASH OUTFLOW BEFORE (418,003) (1,015,788)FINANCING FINANCINGCapital element of financelease rental payments (6,708) -Repayment of hire purchase - (2,399)Issue of ordinary share capital 320,000 660,000Expenses of issue of ordinary share capital (6,650) (22,220)Repayment of bank loans (10,008) (10,008)Issue of loan notes and share warrants 275,000 - --- --- NET CASH INFLOW FROM 571,634 625,373FINANCING --- ---INCREASE (DECREASE) IN CASH 153,631 (390,415) === === Notes: 1. The financial statements for the year ended 31 March 2006 , have been prepared using accounting policies consistent with those set out in the annual report and accounts of ARC Risk Management Group plc for the year ended 31 March 2005. The financial information set out above does not constitute the company's statutory accounts for the years ended 31 March 2006 or 2005, but is derived from those accounts. Statutory accounts for 2005 have been delivered to the Registrar of Companies and those for 2006 will be delivered in due course. The auditors have reported on those accounts; their reports were unqualified, 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 loss per share for the year ended 31 March 2006 has been calculated based on the loss on ordinary activities after taxation divided by the weighted average number of shares in issue. 3. Copies of the report and accounts for the year to 31 March 2006 will be available in due course from the Company's office at The Coach House, Bill Hill Park, Wokingham, Berkshire RG40 5QT. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
REDT.L