Half Yearly Report

RED24 PLC

HALF YEARLY REPORT FOR THE SIX MONTHS TO 30 SEPTEMBER 2010

Red24 plc ("red 24" or the "Group") is pleased to announce its unaudited results for the half year to 30 September 2010.

Highlights

·; Revenue increased by 33% to £2.48 million (H1 2009: £1.87 million).

·; Profit before tax of £302k (H1 2009: £231k).

·; EPS of 0.57p (H1 2009: 0.43p).

·; Growth in customer base leads to 35% increase (2009: 30%) in red24 segment revenues.

·; Dividend increased by 60% to 0.24p (2009: 0.15p).

Simon Richards, Chairman, commented:

We are pleased with the continued growth in the business in the first half year. Both business segments show 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 60% increase in the dividend which remains well covered by earnings.

Enquiries:

red24 is a provider of a range of security assistance services, offering risk management, preventative and reactive advice to help individuals and organisations to avoid and manage security risks to themselves, their families and their organisations. The services are supplied to leading international financial service companies.

CHAIRMAN'S STATEMENT

Introduction

I am pleased to present our half year report showing continued profitability and further strengthening of our balance sheet. I am also particularly pleased to report a substantial increase in the dividend from 0.15p to 0.24p per share, which will be paid on 17 January 2011 to those shareholders on the register at 17 December 2010.

Financial Overview

Overall revenue has increased by 33% to £2,479,000 from £1,866,000 and the profit before tax has increased by 31% to £302,000 from £231,000. In this half year both segments of the business have shown revenue growth in excess of 20%, which is pleasing and beyond our budget expectations.

The business continues to generate cash and for the first time we have a strategic cash reserve in the parent company which is available should the right acquisition opportunity present itself. Further, in line with our commitment to pursue a progressive dividend policy, the cash generation has enabled the Board to declare an increase in the dividend of 60%. The total cash cost of the dividend is £116,000 and this is five times covered by last years retained profits.

The Board is conscious that the cash balances are currently receiving very little by way of interest earnings but consider that the advantage of greater flexibility that short term deposits offer outweighs the potential interest earnings that might be obtained from a portfolio of fixed interest securities.

The results for the half year continue to be adversely affected by exchange rate movements. This is due to the fact that almost all of our revenue in is in dollars or sterling whereas 47% of our costs are incurred in rand, which has appreciated by 5% against the dollar and 1% against sterling during the half year, despite a significantly higher rate of inflation. The other impact of the downward trend of the dollar is that sales invoiced in dollars tend to be worth less in local currency terms when payment is actually received, whether this is in the UK or South Africa. The impact of exchange rate movements on our results is complex and, whilst the Board believes that it is neither practicable nor desirable to fully hedge these risks, they are trialing a new system that aims to reduce their impact.

red24TM

red24 is a global security service providing preventative and reactive advice to help individuals and businesses avoid and manage personal risks to themselves, their staff and their families.

Revenues for the red24 business segment grew by some 36% when compared with the same period last year. This year we have planned to more fully recover our central corporate costs through charges to the business segment. The charge to the red24 segment has increased by £84,000 in the half year and this has caused the reported segment profits to fall back to £302,000 from £360,000. The strength of the rand on the cost base also held back profitability.

Much of the growth in revenues in the half year has come from the additional services provided to writers of special risk insurance business. Although these clients are US insurers we actually invoice their UK operations and so these are included in the UK sales line in the geographic analysis of sales, and these contracts are responsible for 75% of the increase in UK sales.We continue to recruit additional staff in these fields and believe there is the opportunity to win more business in this area.

Our travel tracker product continues to win new clients and is responsible for most of the rest of the increase in UK sales with seven major corporations taking the product in the last six months. Welcome as this broadening of our customer base is, we continue to work very closely with our key distribution channels - HSBC and Chartis, to develop more business with them. red24 inc, our US subsidiary, has received a licence to trade in both Washington DC and New York, and we believe this will assist with servicing our US customers.

Training

Training revenues have risen by 21% in the half year and profit has increased from £14,000 to £45,000. This has been most encouraging and one of our training courses in July attracted a record number of delegates so that two courses had to be run in parallel. The affects of the squeeze on training budgets, evident in the downturn, appears to have passed, at least for the moment.

In the first quarter Arc Training received government recognition as an approved training provider, which should make it easier for overseas students to obtain visas, which has been an issue in the past. At the same time, overseas work continues to grow and prospects for the second half appear encouraging. Although we have been unable to recruit suitable full time trainers we have managed to find sufficient suitable specialist trainers to continue to develop our range of courses.

Outlook and risks

Clearly the economic environment remains unsettled and further turmoil in the months ahead cannot be excluded. The impact of governmental budgetary cutbacks in the UK on the company is unlikely to be material, but the outlook for the US dollar is an external economic factor that could have a material negative impact. Nonetheless, the business has continued to perform steadily and the Board considers that the appraisal of key risks and uncertainties contained in the full year report remains valid.

The Board continues to be encouraged by the solid progress of the business and the strength of the balance sheet.

Simon Richards

Chairman

 November 2010

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 4 November 2010.

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 2011, 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 2010 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 2010 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 2010 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 or Seymour Pierce Limited.

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 2010 or are expected to be effective (or available for early adoption) at 31 March 2011. 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 2011.

The adopted IFRSs that will be effective (or available for early adoption) in the annual financial statements for the year ending 31 March 2011 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 2011.

2. Earnings per share

The earnings per share for the six months ended 30 September 2010 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 - red24 and Training. These divisions are the basis on which the group reports its management information to the group board. The red24 segment provides preventative and reactive advice to customers across the globe, whilst the Training segment provides training in security management both in the UK and overseas.

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 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.