RED24 PLC

HALF YEARLY REPORT FOR THE SIX MONTHS TO 30 SEPTEMBER 2009

Red24 plc ("red 24" or the "Group") is pleased to announce its results for the half year to 30 September 2009.

Highlights

• Revenue increased by 16% to £1.87 million (H1 2008: £1.61 million).

• Profit before tax of £231k (H1 2008: £198k).

• EPS of 0.43p (H1 2008: 0.39p).

• Growth in customer base leads to 30% increase in red24 segment revenues.

• Early repayment of £125k of Loan Notes

• Maiden dividend of 0.15p declared.

Simon Richards, Chairman, commented:

We are pleased with the growth in the business in the first half year and with the previously announced extension to our contract with AIG. The growth in the revenue stream for the red24 segment augurs well for the medium term prospects for the business notwithstanding the adverse exchange rate movements that have held back the growth in profitability this half year. We are particularly pleased to declare a maiden dividend to shareholders and aim to make this a regular part of shareholder returns.

Enquiries:

red24 is a provider of a range of security risk management services, offering preventative and reactive advice to help individuals and organisations to avoid and manage security risks to themselves, their families and their organisations. The products are distributed through 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 particularly pleased to report that a maiden dividend of 0.15p per share will be paid on 18 January 2010 to those shareholders on the register at 18 December 2009.

Financial Overview

Overall revenue has increased by 16% to £1,866,000 from £1,608,000 and the profit before tax has increased to £231,000 from £198,000. As a result shareholders funds have increased by £161,000.

Cash flow has continued to be positive and we repaid early £125,000 of Loan notes during the half year. The interest saving will benefit the periods ahead. Our aim is to repay all external debt by the end of the financial year whilst maintaining an adequate reserve of working capital.

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 30% in the half year and segment profit rose to £426,000 from £378,000. Profit growth has been held back both by the fact that two thirds of the additional revenue has been at lower margin than budgeted and by the impact of the strength of the rand against both sterling and the dollar which has tended to increase the costs of our Crisis Risk Management Centre (CRM) in Cape Town with no offsetting growth in the value of our foreign currency revenues. In the first half of this year the average rate was R12.8:£1 compared with R15.0:£1 last year a movement that has  increased our South African administration costs by15%.  

Our key distribution channels remain HSBC and AIG Travel Assist. HSBC continue to provide red24 services as part of its Premier and Plus banking offerings and this half year have added red24 to the First Directory account offered by its First Direct subsidiary. In September we were delighted to announce a five year extension to our contract with AIG Travel Assist to offer its customers in America and Asia red24 on an exclusive basis. We believe that much of our success with HSBC is down to training its relationship managers in the product so they can explain it with confidence to their customers and this helps ensure we are a valued part of the overall offering. We believe a similar approach will assist AIG and so have taken on a security specialist, based in New York, to develop the business in that market. A similar position will be created in Asia in due course.

We have had some success in broadening our offering to corporate customers who are generally adding red24 to their staff intranet. This gives opportunities for the sale of other security services and our consulting business has had a strong half year. A recent example of this is the addition of HRG Rennies as a client. We will be advising HRG Rennies staff on their travel to South Africa for the 2010 World Cup. With our local knowledge and experience in advising international corporations, red24 is ideally placed to provide the most detailed security advice to any business likely to travel to South Africa for the tournament.

We continue to advise insurance underwriters on aspects of their special risk business, particularly product contamination. This market appears to be very fluid at the moment and we have recruited additional staff in order to offer a fuller range of special risk advice. We believe that this will bring in additional business in the short and medium term, which will help fuel the next phase of our growth.

Training 

Training revenues have fallen 19% in the half year and profit has fallen to £44,000 from £51,000. In part this is because a course normally held in May was brought forward to March and so fell outside the half year but, in any event, trading conditions were difficult in the half year. Overseas work continues to grow and prospects for the second half appear encouraging so that the year as a whole should turn out to be more profitable than last year. 

Outlook and risks

Clearly the economic environment remains unsettled and further turmoil in the months ahead cannot be excluded. 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 hope that shareholders are too. It is a sign of further progress that we feel able to declare a maiden dividend. 

Simon Richards

Chairman

4 November 2009 

UNAUDITED CONSOLIDATED INCOME STATEMENT

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 2009.

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 2010, 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 2009 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 2009 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 2009 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 2009 or are expected to be effective (or available for early adoption) at 31 March 2010. 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 2010.

The adopted IFRSs that will be effective (or available for early adoption) in the annual financial statements for the year ending 31 March 2010 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 2010. 

      2.   Earnings per share

The earnings per share for the six months ended 30 September 2009 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.

      3.   Share capital

On 31 March 2009 the Court of Sessions gave approval to the Cancellation of deferred shares on the same terms as those approved by shareholders on 5 August 2008.

Notes to the unaudited financial information:

      4.   Segmental Information

For management purposes the group is currently organized in to two divisions - red24 and Training. These divisions are the basis on which the group reports its primary segment information.

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.

       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.

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