News blog
Red24
- BY: Andrew Hore |
- POSTED: 09/11/2008 |
Red24 moved into profit for the first time in the six months to September 2008.
The security services and trading provider has been edging towards profitability for a number of years and has finally got there. One of the problems was that the company had a cost base that was far too high. This has been changed by new chief executive Mal Worsley-Tonks.
Revenues rose by 13% to £1.61m and a loss of £306,000 was turned into a profit of £199,000.
The improvement in profitability has come from growth in the sales of the Red24 insurance policies, which provide risk assessment of individual countries and response and rescue services. These products tend to be sold as incentives for financial products.
HSBC is still the biggest customer but there are other financial companies signing up. One of these is AIG which has not helped Red24 in the short-term. If AIG is broken up then Red24 could work with the individual businesses or it could go with alternative companies in the travel market.
At 3.25p a share, Red24 is valued at £1.06m.
Red24 chairman Simon Richards has acquired 135,000 shares at 2.4p each and Sidebell Ltd, a company related to him, bought 230,000 shares at the same price. That takes Richards’ stake to 28.1%. Non-executive director John Mocatta also acquired 135,000 shares at 2.4p each, taking his shareholding to 1.12%. Mal Worsley-Tonks subscribed for 400,000 new shares at 2p each, which takes his stake to 2%..
Red24 has £380,000 of cash in the bank but there are also total borrowings of £430,000. The debt includes loan notes of £375,000, which have a 12% coupon. The loan notes are repayable in March 2009.
Management hopes that the 10.9m outstanding warrants will be exercised by then. However, they are exercisable at 3.75p a share, which is higher than the current share price. If that does not happen then there is a possibility that the loan notes could be extended.
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