News blog

Red24

• BY: Andrew Hore |
• POSTED: 11/06/2013 |

Risk management and security assistance services provider Red24 continues to make progress but there were contrasting fortunes for its two divisions.

In the year to March 2013, revenues rose 12% to £6.5m and pre-tax profit 9% ahead at £940,000. Red24 still has UK tax losses but the tax charge is increasing. Net cash was £1.63m at the end of March 2013. The cash figure was one-fifth lower than one year earlier because £853,000 was invested in fixed assets – mainly the building housing the Crisis Response Management Centre in Cape Town. This helps to fix more of the cost base and there will be a full benefit this year.

All of the growth in revenues and profit came from the business support division, which provides training, product safety, environmental and cyber crime services. Revenues of the Red24Assist product safety business were treble the previous product’s level at £1m. That is nearly half of the division’s revenues. The new cyber crime service did not make a contribution.

The security assistance division made a slightly smaller contribution due to the migration of clients from the product contamination service to the red24Assist service included in the business support division. The HSBC contract has been renewed until 2017. Earlier this year, Red24 renewed three year contracts worth $996,000 a year. This division is expected to grow this year.

An interim dividend of 0.4p a share was paid last year and a final of 0.2p a share is proposed. That compares with one dividend of 0.32p a share the previous year.

At 14.38p a share, up 0.62p, Red24 is valued at £7.04m. House broker finnCap forecasts a 2013-14 profit of £1m and a slightly higher tax rate of 20%. The shares are trading on nine times prospective 2013-14 earnings. The cash pile will start to build again following the one-off spending last year. 

Download the latest AIM Journal from http://www.hubinvest.com/AIMPDFMay2013_44.pdf