Half Yearly Report

14 November 2012

RED24 PLC

HALF YEARLY REPORT FOR THE SIX MONTHS TO 30 SEPTEMBER 2012

Red24 plc ("red 24" or the "Group") is pleased to announce its unaudited results for the half year to 30 September 2012.

Highlights:

·; Revenue increased by 15.4% to £3.3 million (H1 2011: £2.9 million)

·; Profit before tax of £440k (H1 2011: £412k)

·; EPS of 0.75p (H1 2011: 0.73p)

·; Dividend increased by 25% to 0.40p (2011: 0.32p) - over four times covered by 2011 earnings

·; HSBC contract renewed for further year

·; Food safety product revenues exceed target

Simon Richards, Chairman, commented:

"We are pleased with the continued growth in the business in the first half of the year. Both business segments showed significant sales growth and this bodes well for the medium term prospects for the business. The balance sheet has continued to get stronger and we are delighted to declare a 25% increase in the dividend, which remains well covered by earnings, whilst enabling us to retain a significant strategic cash reserve."

"We continue to invest in new products, which we believe will contribute to the long term success of the group and are particularly encouraged by our new food safety product."

Enquiries:

red24 is a provider of a range of assistance services, offering risk management in a number of fields, including preventative and reactive advice to help individuals and organisations to avoid and manage security risks to themselves and their dependents. The services are supplied to 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 report, for the third year running, a further increase in the dividend from 0.32p to 0.40p per share. This will be paid on 17 January 2013 to those shareholders on the register at 14 December 2012.

Financial Overview

Overall revenue has increased by over 15% to £3,336,000 from £2,892,000 and profit before tax has increased by 6.7% to £440,000 from £412,000. The bulk of this growth has come from red24 assist - our food safety product - which was only launched in the autumn of 2011 and generated £433,000 of revenue in the half year.

While the Board are pleased with the growth in the volume of business; this is not matched by a corresponding growth in pre-tax profits. This is largely attributable to movements in the value of the dollar which has had a negative impact of £40,000 when compared to the same period last year, without which profit before tax would have increased by a much more impressive 18%. Equally, as explained in the last annual statement, our tax losses are rapidly being used up and the tax charge will continue to increase as a percentage of pre-tax profit until we reach a "normal" tax charge.

The business continues to generate cash and this has been used to fund an increase in debtors, particularly those arising from a number of major responses in Africa that took place in August. The receipt from these debtors has come through since the half year and will assist with the payment of the corporation tax due and the dividend. Furthermore, as announced at the AGM, we are purchasing our Crisis Response and Management Centre in Cape Town, with 60% of the consideration being provided by local bank debt and the remaining 40% coming from our existing cash resources in the UK. This represents a substantial increase in our investment in South Africa, and confirms your Board's commitment to long term investment in that country.

Business model

The red24 business model has been developed to provide assistance to individuals and organisations in managing their security risks. Assistance is provided on an escalating basis as threats develop:

Advice Support Response

The Board believes that this model enables the Group to offer value to clients enabling them to select the level of assistance they wish to embed in their own product and the level they wish to buy in on an ad hoc basis. This approach has enabled us to sustain margins as the business has expanded and led to opportunities to utilise the model to provide other services to clients.

We have used this model to develop new products in the environmental field and in product safety, especially for the food industry. The Board continues to examine other product proposals that fit this model and believe it realistic to envisage the development of one such product a year. In addition, work on a product to assist in the fight against information technology crime is ongoing.

Security Assistance

Our global assistance product provides preventative and reactive advice to help individuals and businesses avoid and manage personal risks to themselves, their staff and their families.

Although reported revenues for the Security Assistance segment fell 1% when compared with the same period last year, the underlying growth rate for the period was 8%. This is due to the launch of the red24 Assist product, which due to its wider scope is classified in the Other Assistance segment, but some of the customers using that service previously retained us on their product contamination book which revenues were included in the Security Assistance segment. In the half year to 30 September 2011 these revenues amounted to £196k and these should be deducted from that periods revenue to provide a like for like comparison. Segment profits were £318k compared to £458k last year, but this is almost entirely attributable to the margin on the product contamination work and a higher allocation of corporate costs.

Revenues in this segment are generally fixed for the life of the contract and the major cause of variation in profit is the level of additional response services required by clients. On the other hand, the cost base is impacted by annual inflation, particularly in South Africa and therefore margins tend to reduce over the life of the contract. We have looked at our structure and have made a senior appointment to oversee margins and ensure that our systems are appropriately structured to continue to deliver growth.

We are delighted to report that HSBC have extended their contract with us for a further year and negotiations are well advanced to extend existing insurance response contracts for a further three years with a modest increase in revenues. In the travel market we are seeing an increase in the number of opportunities available to us.

Other Assistance

This segment comprises the Arc Training International Academy for Security Management, our environmental advisory service, green 24, and our Food Safety product - red24 Assist.

For the year to 31 March 2012, training revenues exceeded £1million for the first time and it is pleasing to report further growth from this business, with revenues up 6.4% on the same period last year. This reflects an increase in delegate numbers and in the demand for courses held overseas, as prices have scarcely changed. The training business can be seasonal but, in the medium term, this performance bodes well for sustained growth as our course structure encourages repeat business.

Our product safety business only existed as a website under construction at the half year stage last year and yet has produced £433k of revenue in this half year; this is more than double the revenue generated by our previous service offering. The product has met a need in the market place and is now being used by nine underwriters of product contamination insurance. We expect revenues to continue to grow, albeit more modestly, as support and response work follows on from the initial advisory work.

Outlook and risks

Clearly the economic environment remains unsettled and further turmoil in the months ahead cannot be excluded. The impact on red24 of governmental budgetary cutbacks in the UK is unlikely to be material, but the outlook for the US dollar is an external economic factor that could have a negative impact. Nonetheless, 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

The Board continue to be grateful to staff for their industry and application. One third of whom are now shareholders in red24 through the Employee Share Loan Scheme 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. In recognition of this the Board have introduced a defined contribution pension scheme for staff in both the UK and South Africa effective 1 October.

Simon Richards

Chairman

14 November 2012

UNAUDITED CONSOLIDATED INCOME STATEMENT

UNAUDITED STATEMENT OF COMPREHENSIVE INCOME

UNAUDITED CONSOLIDATED BALANCE SHEET

UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

UNAUDITED CONSOLIDATED CASH FLOW

Notes to the unaudited financial information:

1. Accounting policies 

Basis of preparation

This report was approved by the directors on 14 November 2012.

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 2013, 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 2012 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 2012 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 2012 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 2012 or are expected to be effective (or available for early adoption) at 31 March 2013. 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 2013.

The adopted IFRSs that will be effective (or available for early adoption) in the annual financial statements for the year ending 31 March 2013 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 2013.

2. Earnings per share

The earnings per share for the six months ended 30 September 2012 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.

Notes to the unaudited financial information:

3. Segmental Information

For management purposes the Group is currently organised into two divisions - Security Assistance and Other Assistance. These divisions are the basis on which the group reports its management information to the group board. Security Assistance provides preventative and reactive security advice to customers across the globe, whilst Other Assistance provides training in security management both in the UK and overseas, environmental advice and advice on safety in relation to food and other products.

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

The Group's operations are located in the United Kingdom, the United States and in the Republic of South Africa. 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 liabilities.

4. 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.