Half Yearly Report

RED24 PLC

HALF YEARLY REPORT FOR THE SIX MONTHS TO 30 SEPTEMBER 2014

Red24 plc ("red 24" or the "Group") is pleased to announce its unaudited results for the half year to 30 September 2014.

Highlights:

· Revenue from continuing operations increased by 1.5% to £3.27 million (H1 2013: £3.22 million)

· Profit before tax from continuing operations increased by 6.5% to £487k (H1 2013: £457k)

· Interim dividend of 0.23p, a 4.5% increase on interim dividend last year.

· Earnings per share from continuing operations increased by 14% to 0.81p (H1 2013: 0.71p)

· New contract wins to support business travel clients in Australasia and to support medical assistance clients in North America

· All product development milestones met

Simon Richards, Chairman, commented:

"We are pleased to report further growth in our business in the first half of the year. The increase in revenue and profit before tax from continuing business has flowed through to earnings per share. 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.

Our balance sheet has continued to get stronger and we remain confident about the ongoing prospects for our business. Accordingly we are pleased to announce a further increase in the dividend payable to shareholders."

Enquiries:

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 half year report, which shows continued growth in our profitability and a further strengthening of our balance sheet. I am also pleased to announce an increase in our interim dividend to 0.23p which will be paid on 24 February 2015 to those shareholders on the register at 29 January 2015.

Financial Overview

Overall revenue has increased modestly to £3,269,000 from £3,220,000 and profit before tax has increased by 6.5% to £487,000 from £457,000. This is ahead of our expectations for the first half year and arose because, as in the previous year, there was a major incident which boosted the revenues for the half year.

Recurring revenue from our underlying base of non-response work has grown by 3%. In addition the broader client base has led to a higher than expected level of response work which accounts for the rest of the growth in revenue. This will not necessarily be the case for the year as a whole.

Earnings per share have grown by 14%. This partly reflects the improved profit before tax but it is also due to a reduction in the proportion of our profit earned in South Africa and to the purchase of shares in the company by the Employee Benefit Trust. The Trust now holds 550,000 shares and this serves to reduce the number of shares in issue for the purposes of the earnings per share calculation.

Net cash has increased by 6% despite the purchase of shares by the Trust and the payment of the final dividend for last year, which reflects both the continued profitability of the business and the receipt of the first instalment from the sale of our interest in Linx. The balance sheet continues to be strong and provides a sound basis to take advantage of any suitable acquisition opportunities that may arise.

Outlook and risks

We are winning a number of new contracts and seeing steady growth in response work on existing contracts and whilst the regulatory environment in the UK is not helpful to the introduction of new financial products and services by our customers, the Board are hopeful that the speed of our recovery from the reduction in revenue following the loss of a major contract, which we announced in August 2014, will be rather faster than the recent falls in the share price seem to imply. The business continues to perform steadily and the Board considers that the appraisal of key risks and uncertainties contained in the full year report remains valid.

Staff and Board

The Board continues to be grateful to staff for their industry and application and they remain crucial to the quality of service provided and to creating an environment where we can attract good quality people to work for us. We are delighted to welcome Lorraine Adlam to the Board as an independent non-executive director. Lorraine has worked with high growth companies in the insurance markets and has the experience to identify new opportunities whilst ensuring that our growth continues to be managed in the right way.

Simon Richards

Chairman

7 November 2014

CHIEF EXECUTIVE'S REPORT

I am pleased to report that, in a busy half year, the goals we have set ourselves in terms of product development and the increase in our geographic reach have all been met and, 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.

Business model

The heart of the red24 business model 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 they face.

The CRM represents a substantial investment and a relatively high fixed cost with the result that the gain or loss of a major contract makes a significant difference to our overall profitability and it has not been possible to manage the loss of the biggest contract we held with our largest key distributor without implementing staff reductions.

The net effect of this lost contract will be felt in the second half of this year and, more particularly, in the coming financial year, though we are working hard to gain sufficient new revenues to offset this loss as rapidly as possible. We continue to invest substantially in product development and red24 "App" is now available for smart phones and tablets enabling clients to access our information service on the go. We have also achieved ISO27001 data security standards and both of these developments have been well received by our clients.

In addition a major project is underway to enhance significantly our travel tracker product which will keep it to the fore in the market place for those charged with the care of their business travelers. Development to date is on course and on budget and we expect the new product to be available to clients towards the end of this financial year.

We have re-examined the way in which we are organised and have concluded that it would make more sense to do away with the business segment distinction, which has been under review following the sale of our training business last year. We will continue to report to shareholders a breakdown of our revenue streams and these are shown below:

Revenue generation

Our business continues to enjoy four distinct streams of revenue: travel assistance, including accident and healthcare, special risks, consulting and product safety.

Travel assistance has maintained revenues in the half year (on a constant currency basis). Whilst we continue to work with HSBC internationally, this is the revenue stream that will be most severely affected by the exclusion, from November, of our identity theft service from two significant books of business with that bank. We continue to have faith in that service which enjoyed good levels of utilization and customer satisfaction and we believe that our practical approach to resolving identity theft issues is in tune with consumer demand for such a service as distinct from the more "compensatory" approach adopted by most competitors.

In 2013 income from special risk business was exceptionally buoyant due to a major incident in Syria. This revenue derives from support to clients facing complex crises which require highly experienced consultants familiar with local conditions and with the modus operandi of the causative agents of the crisis. 2014 has been a busy year with a larger number of smaller crises and continues to attract new business. The new office in Munich, which primarily serves this unit, is meeting expectations.

Consulting revenues have been exceptional in the half year as demand for both close protection and evacuation planning services has increased and, in August, we were asked by a new Far Eastern client to organise a large evacuation from North Africa involving several hundred of their staff. This was successfully completed and represents our largest operation to date.

red24 Assist, our product safety business, showed a 10% decline in revenues, despite the launch of an analytical tool and new training modules. This may reflect a market that is maturing and in which market leading underwriters are clearly identifiable. We work with the majority of them and are considering how these market changes will affect our approach to the market overall.

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. 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.

Key performance indicators

The key performance indicators for the group are those that communicate the financial performance to shareholders and are summarized as follows:

Maldwyn Worsley-Tonks

Chief Executive

7 November 2014

UNAUDITED CONSOLIDATED INCOME STATEMENT

For the six months ended 30 September 2014

UNAUDITED STATEMENT OF COMPREHENSIVE INCOME

UNAUDITED CONSOLIDATED BALANCE SHEET

As at 30 September 2014

UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 September 2014

UNAUDITED CONSOLIDATED CASH FLOW

For the six months ended 30 September 2014

Notes to the unaudited financial information:

1. Accounting policies 

Basis of preparation

This report was approved by the directors on 7 November 2014.

From 1 April 2007, the Group has adopted International Financial Reporting Standards ("IFRS") and the International Financial Report Interpretations Committee ("IFRIC") interpretations in the preparation of its consolidated financial statements.

The accounting policies applied in this unaudited interim financial information are those that the Group expects to apply in the annual financial statements for the year ended 31 March 2015, which will be prepared in accordance with IFRS, and those parts of the Companies Act 2006 that remain applicable to companies reporting under IFRS.

The financial information for the six months ended 30 September 2014 is unaudited and does not constitute statutory accounts within the meaning of Section 435 of the Companies Act 2006. Statutory accounts for the year ended 31 March 2014 have been filed with the Registrar of Companies and contain a report from the auditors that is unqualified. The results for the year ended 31 March 2014 disclosed in this report are an abridged version of the company's audited financial statements. It does not constitute the Financial Statements for that period. Copies of the statutory accounts may be obtained from the Company and are also available on our website at www.red24.com .

Principal accounting policies of the Group

This financial information has been prepared on the basis of the recognition and measurement requirements of IFRSs in issue that either are endorsed by the EU and effective (or available for early adoption) at 30 September 2014 are expected to be effective (or available for early adoption) at 31 March 2015. Based on these adopted and unadopted IFRSs, the directors have made assumptions about the accounting policies expected to be applied when the annual IFRS financial statements are prepared for the year ending 31 March 2015.

The adopted IFRSs that will be effective (or available for early adoption) in the annual financial statements for the year ending 31 March 2015 are still subject to change and to additional interpretations and therefore cannot be determined with certainty. Accordingly, the accounting policies for the annual period will be determined finally only when the annual financial statements are prepared for the year ending 31 March 2015.

2. Taxation

The underlying tax charge is based on the expected effective tax rate for the full year to 31 March 2015.

Notes to the unaudited financial information:

3. Earnings per share

The earnings per share for the six months ended 30 September 2014 have been calculated based on the profit on ordinary activities after taxation divided by the weighted average number of shares in issue during the period.

4. Segmental Information

For management purposes the Group is now organised as a single unit and this is the basis on which the group now reports its management information to the group board.

The Group's operations are located in the United Kingdom, the United States and in the Republic of South Africa. The following tables provide an analysis of the Group's sales by location of customer, irrespective of the origin of the services, a geographical analysis of the location of segment assets and liabilities and an analysis of capital expenditure.

Notes to the unaudited financial information:

3. Segmental Information (continued)

5. Copies of this half yearly financial report are available on the Company's website www.red24.com and printed copies will be available for at least one month from the Company's administrative offices at The Coach House, Bill Hill Park, Wokingham, Berkshire RG40 5QT.