TIDMREDT
RNS Number : 3933P
Red24 PLC
08 June 2015
8 June 2015
RED24 PLC
(the "Group", "Company" or "red24")
Final Results
red24 plc, the crisis assistance company, is pleased to announce
its audited final results for the year ended 31 March 2015.
Financial Highlights:
-- Revenue from continuing operations increased by 1% to GBP5,947,246 (2014: GBP5,886,707)
-- Profit before tax up 25% to GBP1,066,398 (2014: GBP854,905)
-- Cash balances up 48% to GBP3,417,956 (2014: GBP2,302,577)
-- Dividend payment for the year increased by 11% to 0.50p per
share (2014: 0.45p). Final dividend of 0.27p per share recommended
(2014: 0.23p).
-- Basic EPS from continuing operations up 38% to 1.83p (2014: 1.33p)
Operational Highlights:
-- Cost reductions and improved levels of new business led to record profit before tax.
-- Improvements to Red24 Assist and the travel tracker product
were well received ensuring new business wins
-- Awarded "Risk Management Firm of the Year, 2015" (Finance Monthly)
-- Post year end, exchanged contracts for the acquisition of
RISQ Worldwide Pte. Ltd. ("RISQ Worldwide") to enhance business in
Asia and broaden the product offering in London.
Simon Richards, Chairman, commented:
"During this last year, we have shown that our business is both
robust and flexible, and it is a tribute to our staff that we have
been able to deliver record profits before tax, in what was a
testing period. We have added new business contracts world-wide,
improved our key products and strengthened our position in the
competitive global business of crisis assistance. I am looking
forward to the next 6 to 12 months for red24, and, having recently
announced the acquisition of RISQ Worldwide, I believe it will be
an exciting period for our business and a rewarding one for our
shareholders."
Enquiries:
Red24 plc
Simon Richards, Chairman Tel: 0203 291 2424
Maldwyn Worsley-Tonks, Chief
Executive
finnCap
Julian Blunt, Corporate Finance Tel: 0207 220 5000
Victoria Bates, Corporate
Broking
Yellow Jersey
Philip Ranger, Tel: 07768 534641
red24 is a crisis assistance company that provides a range of
security and business support services, offering preventative and
reactive advice to help organisations and individuals to avoid or
manage security and business risks to themselves, their families
and their businesses. Its products and services are distributed
through leading international financial service companies.
Chairman's statement
Introduction
I am pleased to present our report for the year ended 31 March
2015.
Financial Overview
The business continues to develop successfully and for many of
our KPIs in a way that has exceeded our expectations. Revenue has
increased by 1% to GBP5,947,246 from GBP5,886,707 achieved last
year, despite the loss of our largest single contract. We responded
swiftly to the news of this loss both to reduce our fixed cost base
and to win new contracts. As a result we have achieved a record
profit before tax of GBP1,066,398 as against the previous year's
GBP854,905. The research and development investment in our travel
tracker product attracts a tax credit in the UK and this has
reduced the tax charge, so basic earnings per share show a
substantial increase to 1.83p per share from 1.33p, this
improvement was also assisted by the purchase in the year of
1,050,000 shares by the Employee Benefit Trust, which serves to
reduce the number of shares in issue for earnings per share
calculation purposes.
The net assets per share continue to increase and are now 8.7p
per share up from 7.6p last year. In January 2013 we completed the
purchase of the building housing our Crisis Response Management
Centre in Cape Town. The local bank loan to fund part of the
purchase remains our only debt.
The Board are recommending a final dividend of 0.27p be paid in
September, which is an increase of 17% on the 0.23p final dividend
paid last year, and brings the dividend return for the year as a
whole to 0.50p as compared to 0.45p last year.
The share price has had a volatile year and was understandably
depressed by the August news of the loss of a major contract. Since
then we have worked hard to ensure that the fundamentals of the
business remain very sound and to communicate the fact that the
business still has considerable potential to develop. This work is
beginning to be reflected in an improved share price, so enhancing
shareholders overall return.
Outlook
We have worked hard to build up a reputation with well
established clients for high quality work and we see future growth
both from our existing services and also from the addition of other
services that are likely to be of assistance to those clients.
Although there are risks to any business, the Board feel
encouraged by the way we have continued to progress over the last
year, despite the loss of one of our key contracts which
represented the realization of one of the biggest risk factors that
the business faced, and are confident of further progress to
come.
Staff
Our staff are absolutely crucial to the quality of service
provided and to creating an environment where we can attract good
quality people who want to come to work for us. The Board are most
grateful to all the staff for their hard work and are gratified
that so many of them are choosing to build their careers with the
group.
Simon Richards
Chairman
5 June 2015
Chief Executive's Report
red24 is a crisis management assistance group that provides a
range of security and business support services. Our business
continues to enjoy four distinct streams of revenue: travel
assistance, including accident and healthcare, special risks,
consulting and product safety. We have developed an excellent
reputation for assisting clients in minimising risks to their
personnel, operations and profitability and this reputation is key
to our ability to grow the business into related areas and to
expanding our geographic coverage.
Business model
The heart of our business operation is our 24/7 Crisis Response
Management Centre (CRM) in Cape Town. This state of the art
response centre is staffed 24 hours a day, 365 days a year by a
dedicated team of multi-lingual customer service representatives,
regional analysts and experienced security professionals. The
centre enables our experts to give accurate impartial, up to the
minute information and advice to our clients. Across the group
clients are offered escalating levels of assistance that are
appropriate to the threat.
Travel assistance
Our travel assistance service has been significantly enhanced by
the investment in our travel tracker product which has placed it
onto a new technical platform that will make it both easier to
interface with new clients and with new travel data bases. The
product was launched at the business travel show in London in
February 2015 and met with a most encouraging response from FTSE350
companies and higher education establishments and we think this
will help materially in ensuring that this revenue stream is
maintained in 2016, notwithstanding the loss of the major book of
business from HSBC.
The loss of the HSBC Premier and Advance books in the UK was
announced last August but has only impacted the revenue numbers in
the current calendar year. We have been working hard to diversify
our revenue base in recent years and the numbers show that
significant progress has been made. Regulatory changes in the UK
make it unlikely that the revenues lost will be replaced by like
for like income and given the relatively high fixed cost base that
the CRM represents we responded quickly to the bad news to reduce
the cost base. Unfortunately this could not be done without
implementing some staff reductions, the cost of which was taken in
the first half year. I am pleased to say that the improved level of
new business means we are once again recruiting.
We were pleased to be awarded the title of Risk Management Firm
of the Year, 2015, by Finance Monthly and believe the year under
review has seen our reputation continue to grow.
Special risks
Our special risks business had a busy year and dealt with a
record number of kidnappings and other attempts at extortion -
Mexico and Indonesia were particular trouble spots. None of these
incidents resulted in the prolonged incident in the Middle East
that so affected the 2014 numbers. We continue to publish our
respected "Threat forecast" and have added new books of business
over the year. The office we set up in Munich, primarily to service
this unit, is meeting expectations and has created a number of
promising opportunities.
Consulting and response
Throughout the year this unit has been busy with requests for
close protection work and for evacuation planning services. In
August a new Far Eastern client requested a large evacuation from
Libya involving several hundred of their staff. This was
successfully completed and represents our largest operation to
date.
Product safety
Red24 Assist our product safety brand, showed an increase in
revenue in the second half year following the launch of a new
analytical tool and new training modules. This has kept our
offering ahead of the competition and is helping to ensure that
contracts are renewed and that new business is won.
Principal risks and uncertainties
There are a number of principal risks and uncertainties which
could have a material effect on the group. Some of these risks and
uncertainties are external to the group and largely outside the
group's control. Foremost amongst these is the economic
environment, which remains a challenging one as many governments
struggle with debt constraints. This has implications for the
relative value of currencies, not least sterling, which is our
functional and reporting currency. The past two years have seen
significant growth in our dollar revenues and costs, and we also
have a significant rand cost base in South Africa. The impact of
currency movements on our earnings cannot be reliably forecast and
remains an area of uncertainty, though the Board do seek to reduce
uncertainty by using forward foreign exchange contracts to purchase
rand for the forthcoming twelve months.
Risks and uncertainties that are largely within the control of
the group include the maintenance of the group's competitive
position to ensure the achievement and collection of sufficient
revenue to meet the group's objectives. The group maintains
significant cash reserves both to mitigate against the possibility
of periods of reduced working capital and to ensure adequate
working capital is available to meet any sudden increase in the
level of response work clients may require. Internally we have
worked hard, and with some success, to broaden the customer base
and reduce dependence on key accounts. Other normal business risks
include dependence on the continued availability of key personnel
to ensure that our clients receive the level of service they are
entitled to expect, and the ability of the group to continue to
provide that level of service. The reputation of the group is
critical to its continued success and it works hard to develop and
protect that reputation by ensuring that it only associates itself
with activities that are appropriate for a business in its
sector.
Looking forward
To date the group has been able to expand organically by
recruiting appropriate specialists in the desired fields without
the need for acquisitions. However the Board is mindful that
acquisition remains an additional avenue to growth and,
particularly in overseas markets, may be a more effective means of
achieving growth. To this end, in June 2015, we announced the
acquisition of Risq Worldwide, a Singapore based company
specialising in corporate investigations, business intelligence and
employment background screening. This will significantly enhance
our business in Asia, adds a number of blue-chip clients and
broadens our product offering in London.
We have a good pipeline of new business, and see significant
opportunities in Europe and in Asia. Whether the revenue lost can
be fully recovered by organic growth in a single year remains to be
seen, but we are pleased with the level of new business achieved
thus far.
Expansion in areas outside our reporting currency is affected by
exchange rate movements. Almost half our revenue is now denominated
in US dollars, even where our clients are the UK arm of US
insurers, whereas almost 50% of our costs are incurred in Rand.
Exchange rate movements are influenced by many complex factors and
whilst the Board continues to believe that it is neither practical
nor desirable to hedge these risks fully, we have taken steps to
secure what we believe to be a favourable opportunity to purchase
forward 80% of our forecast Rand requirements for the coming
year.
Key performance indicators
The key performance indicators ("KPIs") for the group are those
that communicate the financial performance and strength of the
group, as a whole, to shareholders. A summary of the KPI's is as
follows (derived from continuing operations only):
2015 2014
GBP'000 GBP'000
Financial
Revenue 5,947 5,887
Gross profit 4,418 4,533
Profit before tax 1,066 855
Earnings per share 1.83p 1.33p
Available cash 3,418 2,303
Maldwyn Worsley-Tonks
Chief Executive
5 June 2015
Corporate Social Responsibility Report
The red24 brand and our corporate values are the key to our
approach to Corporate Social Responsibility (CSR). Our CSR strategy
is focused on the following key issues:
Business Ethics
The Board is committed to maintaining high ethical standards
across the group and expect the same commitment from our staff,
customers and suppliers. Our reputation is vital to our continued
business success and we do not tolerate any form of bribery,
corruption or fraud. We have anti-bribery policies in place of
which all employees are made aware when they join as well as
through the group intranet and through training.
Employee engagement
The Board recognise that our employees are fundamental to our
success. As a professional services business we have a highly
skilled workforce who assist in delivering our strategic
objectives. The Board aim to ensure that there are equal
opportunities for all employees and that decisions affecting
employees are taken based on merit and not on such factors as race,
gender, nationality or religious beliefs. In South Africa there are
legislative requirements that expect the workforce to be reflective
of the mix of peoples in the Western Cape. The board regularly
monitor progress towards this.
Many of the group's employees have become shareholders through
the share loan scheme. In 2013 an employee benefit trust was
created. The Board have provided a loan of GBP125,000 to the
Trustees to acquire shares in the market and, at 31 March 2015 the
Trust held 1,050,000 shares in the Group. The Board intend that
these shares will be used to satisfy staff share awards made as
part of a longer term incentive scheme. The remaining step will be
to create a new, approved, Enterprise Management Incentive Scheme
open to all qualifying staff.
The optional defined contribution pension schemes, introduced in
2012, for all staff based in either South Africa or the United
Kingdom, have been taken up 80% of our staff.
Health and safety
The Board are committed to providing a safe workplace for all
our staff and to ensure that our services are provided in a way
that delivers our services safely for clients and staff, including
contractors. Responsibility for health and safety rests with the
Chief Executive.
Sustainability
The Board monitor staffing needs to ensure that it is regularly
reviewed and appropriate plans put in place to ensure we retain and
develop the necessary levels of skills and take action where
necessary.
We monitor and work to minimise our impact on the environment.
We measure our carbon footprint and work to reduce it. We provide
the green24 website as an open access one, allowing individuals and
corporates to live and work in a more sustainable way.
Community engagement
Red24 established a charity committee in 2007, "Project
Infundo", which means education. Through the work of this committee
we support educational initiatives. In Cape Town, we assist a
disadvantaged primary school in Constantia and a teacher
improvement programme in Khayelitsha; whilst in London we assist a
community voluntary charity.
On behalf of the Board
J E A Mocatta
Secretary
5 June 2015
Directors Report
Year ended 31 March 2015
The directors present their report and the audited financial
statements of the company and of the group for the year ended 31
March 2015.
PRINCIPAL ACTIVITIES AND BUSINESS REVIEW
red24 plc is incorporated in Scotland and domiciled in England.
Its shares are listed on the AIM Market ("AIM") of the London Stock
Exchange. The company acts as a holding company. The principal
activities of its wholly-owned trading subsidiaries are the
provision of security risk management and other assistance
services. These activities are expected to continue for the
foreseeable future.
A fair review of the business, and its future prospects,
including consideration of the principal risks facing the group and
a review of our performance against financial key performance
indicators is contained in the Strategic Report. The Board intend
to adopt non-financial key performance indicators in the coming
year.
The Board exercises proper and appropriate corporate governance
for the group. It ensures that there are effective systems of
internal controls in place to manage the shareholders' interests
and the group's assets, including the assessment and management of
the risks to which the group's businesses are exposed. A discussion
of the principal risks is contained in the strategic review and in
note 28 to the financial statements.
RESULTS FOR THE YEAR
The financial result for the year ended 31 March 2015 and the
comparative result for the year ended 31 March 2014 are set out in
the Consolidated Income Statement and Consolidated Statement of
Comprehensive Income. An interim dividend of 0.23p per share (2014:
0.22p) was paid on 24 February 2015. A final dividend of 0.27p per
share (2014: 0.23p) will be recommended to the AGM on 4 August
2015, to be paid on 18 September 2015.
DIRECTORS
S A Richards, J E A Mocatta and M S H Worsley-Tonks held office
throughout the year. D J Gill was appointed on 1 August 2013 and
resigned on 16 June 2014. L Adlam was appointed on 1 October
2014.
M S H Worsley-Tonks retires by rotation at the forthcoming
annual general meeting and, being eligible, offers himself for
re-election. L Adlam, having been appointed since the last Annual
General Meeting and, being eligible, offers herself for
re-election.
BIOGRAPHIES OF DIRECTORS
Simon Richards, who is a Chartered Accountant, is the company's
executive chairman. Simon has been a director since 1995 and
oversaw the company's first listing on AIM in 1999 and the
re-listing on the acquisition of the security business in 2002. He
also acts as the part time finance director as well as being the
chairman of Sidebell Limited.
Maldwyn Worsley-Tonks joined the Board in 2003 and has been the
group's chief executive since 2007. Maldwyn has overseen the
profitable development of the group. A former Lieutenant Colonel in
the British Army, having commanded a regular Parachute Battalion,
he has many years' experience in the security industry and is an
expert in crisis contingency planning for businesses.
John Mocatta, who is a Chartered Accountant, is the company's
senior non-executive director and joined the Board in 1999 to
assist in the AIM listing and to be the independent voice of
shareholders. He is a specialist in corporate finance and has
previously been both an executive and a non-executive director of a
number of public and private companies.
Lorraine Adlam joined the board in October 2014 as a
Non-Executive Director. She has over thirty years' experience in
the insurance sector in a variety of roles including CEO of a
Lloyd's Underwriting business and Chairman of Howden Insurance
Brokers Ltd. Lorraine is an expert practitioner in financial and
professional lines, with significant experience in strategy,
business development and investor relations.
DIRECTORS' INTERESTS
The interests of the directors in the company's share capital,
including shares held by companies controlled by the directors,
were as follows:
31 March 2015
Ordinary Ordinary
Ordinary share share
shares options options
of 1p each (iv) (v)
S A Richards (i) 630,000 - -
J E A Mocatta (ii) 650,000 - -
M S H Worsley-Tonks 963,500 500,000 750,000
L Adlam 50,000 - -
1 April 2014
Ordinary Ordinary Ordinary
Ordinary share share share
shares options options options
of 1p each (iii) (iv) (v)
S A Richards (i) 610,000 50,000 - -
J E A Mocatta (ii) 630,000 50,000 - -
M S H Worsley-Tonks 943,500 175,000 500,000 750,000
D J Gill 13,181 - - -
(i) S A Richards is interested in the shares of Sidebell
Limited, which held 13,389,250 ordinary shares of 1p each at 31
March 2015 (1 April 2014: 13,389,250 ordinary shares of 1p
each).
S A Richards is also interested in the shares of Financial &
General Securities Limited, which held 440,000 ordinary shares of
1p each at 31 March 2015 (1 April 2014: 260,000).
(ii) J E A Mocatta is also interested in 18,000 (1 April 2014:
12,000) ordinary shares held in trust for his granddaughter.
(iii) On 16 April 2004 options over ordinary shares of 1p each
at a price of 18.75p per share were granted to directors and
certain employees. These options were exercisable between 16 April
2006 and 15 April 2014, when they lapsed.
(iv) On 2 March 2010 options over ordinary shares of 1p each at
a price of 8p per share were granted to M S H Worsley-Tonks. These
options are exercisable between 31 March 2013 and 31 March
2016.
(v) On 8 August 2012 options over ordinary shares of 1p each at
a price of 10.5p per share were granted to M S H Worsley-Tonks.
These options are exercisable between 8 August 2015 and 8 August
2018.
SUBSTANTIAL SHAREHOLDINGS
The following shareholders had advised the company of holding an
interest of 3 per cent or more in the issued ordinary share capital
of the company at 6 May 2015:
Percentage
Number of of issued
ordinary ordinary
shares of share
1p each capital
Sidebell Limited 13,389,250 27.33
J M Briggs and EMIS 8,576,500 17.51
Hargreave Hale Nominees 2,700,000 5.51
Pershing Nominees 2,061,035 4.21
PFS Downing Active Management
Fund 2,049,056 4.18
Hargreaves Lansdown Nominees 1,855,455 3.79
Barclays Wealth Management 1,652,068 3.37
Jarvis Investment Management 1,633,107 3.33
TD Waterhouse Nominees Europe 1,507,923 3.08
DIRECTORS' AND OFFICERS LIABILITY INSURANCE
During the year the company has maintained insurance to
indemnify the directors against potential claims arising from the
performance of their duties.
RELATED PARTIES
The group considers that the Directors, their spouses and
children and other companies or businesses of which the Directors,
their spouses or children are either directors or principals, or
both, are related parties. Full details of transactions with
related parties are disclosed in note 27 to these accounts. The
interests of related parties in the shares of the company are set
out above.
Equal opportunities
The group endorses and supports the principles of equal
employment opportunities. It is the policy of the group to provide
equal employment opportunities to all qualified individuals, which
ensures that all employment decisions are made, subject to legal
obligations, on a non-discriminatory basis.
Disabled employees
Applications for employment by disabled persons are always fully
considered, bearing in mind the aptitudes of the applicant
concerned. In the event of members of staff becoming disabled,
every effort is made to ensure that the training, career
development and promotion opportunities of disabled persons should,
as far as possible, be identical with those of other employees.
PRODUCT DEVELOPMENT
The group invests in its products and services on a continuous
basis to ensure that its offerings remain at the forefront of those
on offer in the market place.
Suppliers' payment terms
It is the policy of the group to agree terms of payment with its
suppliers when trading relationships are established, to ensure
that the terms of payment are clear and to abide by the agreed
terms, provided the suppliers meet their obligations. Payable days
at 31 March 2015 were 26 (2014: 19) for the group and 32 (2014: 32)
for the company.
FINANCIAL INSTRUMENTS
Details of the financial instruments of the company and its
subsidiary undertakings are contained in note 28.
Employee participation
The group values the involvement of its employees and keeps them
informed of matters affecting them and on the various factors
affecting the performance of the group. Employees are encouraged to
become shareholders in the company.
STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITOR
Each of the directors confirms that, so far as he is aware,
there is no relevant audit information of which the company's
auditor is unaware, and that he has taken all steps that he ought
to have taken as a director in order to make himself aware of any
relevant audit information and to establish that the company's
auditor is aware of that information.
Auditor
A resolution proposing that Baker Tilly UK Audit LLP, Chartered
Accountants, be appointed as auditor of the company will be put to
the members at the Annual General Meeting. Baker Tilly UK Audit LLP
has indicated its willingness to continue in office.
On behalf of the Board
J E A Mocatta
Secretary
5 June 2015
Corporate Governance Statement
The company is committed to high standards of corporate
governance. The board is accountable to the company's shareholders
for good corporate governance. The company has complied
substantially throughout the period with the corporate governance
guidelines for smaller quoted companies issued by the Quoted
Companies Alliance and details are provided below.
Application of the Principles of Good Governance
At the year end, the Board consisted of two executive directors
and two non-executive directors. Both non-executive directors are
regarded as independent. The full Board met 12 times during the
year (2014: 12) and receives appropriate information from
management in advance of its meetings. Certain functions are
delegated to Board Committees.
The Remuneration Committee is chaired by the senior independent
non-executive director and consists of that director, the other
non-executive director and the Chairman. Its key role is to make
recommendations to the Board, within agreed terms of reference, on
the Company's framework of executive remuneration and its cost and
to determine on behalf of the Board specific remuneration packages
for the Executive Directors.
The Audit Committee consists of the Chairman and the two
non-executive directors, two of whom are Chartered Accountants. The
Committee, which is chaired by the senior non-executive director,
meets with the independent auditor to consider the group's
financial reporting in advance of its publication.
The Board considers that its structure is appropriate to its
present stage of development and that both non-executive directors
are independent of the executives in both character and
judgement.
Internal control
The Board has overall responsibility for ensuring that the group
maintains a system of internal control to provide it with
reasonable assurance regarding the reliability of information used
within the business and for publication and that assets are
safeguarded. There are inherent limitations in any system of
internal control and, accordingly, even the most effective system
can provide only reasonable, and not absolute, assurance with
respect to the preparation of financial information and the
safeguarding of assets.
The key features of the internal control system that operated
during the year may be summarised as follows:
-- Board responsibility for overall strategy and for approving budgets, forecasts and plans;
-- Board and business heads participate in the annual strategic
planning process which sets the framework for the budgets of
individual business units;
-- clear lines of authority, responsibility and financial
accountability within each business unit, ensuring an appropriate
organisational structure for planning, executing, controlling and
monitoring its business operations;
-- consideration and review by the Board of monthly management
accounts which compare actual results with budgets and prior years'
results;
-- regular reporting of legal, accounting, human resources and
health and safety developments and issues to the Board; and
-- comprehensive accounting policies and regular reviews of compliance with those policies.
The Audit Committee reviews the operation and effectiveness of
this framework on a regular basis and, on behalf of the Board, has
reviewed the half yearly report and the annual financial statements
along with the nature and scope of the external audit.
The directors consider that there have been no weaknesses in
internal financial control that have resulted in any material
losses, contingencies or uncertainties requiring disclosure in the
group's financial statements.
RElations WItH SHAREHOLDERS
The Chairman and Chief Executive make themselves available to
major shareholders on request and periodically attend meetings with
and presentations to shareholders. The Annual General Meeting is
normally attended by all directors and shareholders are invited to
ask questions during the meeting and to meet with directors after
the formal proceedings have ended.
Going concern
Having made enquiries, the directors have a reasonable
expectation that the company and the group as a whole will have
adequate resources to continue in operational existence for the
foreseeable future. For this reason they continue to adopt the
going concern basis in preparing the accounts.
AUDITOR INDEPENDENCE
The Audit Committee undertakes a formal assessment of the
external auditor's independence each year which includes:
-- a review of non-audit services provided to the group and related fees;
-- receipt from the auditor of a written report detailing
relationships with the company and any other parties that could
affect independence or the perception of independence;
-- a review of the auditor's own procedures for ensuring
independence of the audit firm and partners and staff involved in
the audit, including the regular rotation of the audit partner;
and
-- obtaining written confirmation from the auditor that, in
their professional judgement, they are independent.
An analysis of the fees payable to the external audit firm in
respect of both audit and non-audit services during the year is set
out in note 4 to the financial statements.
On behalf of the board
J E A Mocatta
Audit Committee Chairman
5 June 2015
Remuneration Report
Year ended 31 March 2015
The Remuneration Committee comprises J E A Mocatta, as Chairman,
L Adlam and S A Richards.
Policy on remuneration of executive directors
The purpose of the Remuneration Committee is to consider all
aspects of executive directors' remuneration and determine the
specific remuneration packages of each of the executive directors
and, as appropriate, other senior executives, ensuring that the
remuneration packages are competitive within the service industry
and reflect both group and personal performance.
The current remuneration packages of the executive directors
consist of basic salary, share options and a discretionary
bonus.
M S H Worsley-Tonks has a letter of appointment dated 1 April
2008, which is capable of termination by twelve months notice by
either party.
S A Richards has a letter of appointment dated 23 September
2004, which is capable of termination by twelve months notice by
either party.
Non-Executive DirectorS
The remuneration of the Non-Executive Directors is set by the
Board as a whole.
John Mocatta & Co has agreed to provide the services of J E
A Mocatta, as a non-executive director, under a letter of
appointment dated 23 September 2004, which is capable of
termination by the giving of twelve months notice by either
party.
L Adlam has a letter of appointment dated 1 October 2014, which
is capable of termination by six months notice by the company and
at no notice by the director.
Directors' remuneration
The emoluments of the individual directors, which comprise
salaries or fees and bonus were as follows:
2015
Salary Bonus
or fees GBP Total
GBP GBP
S A Richards 90,700 13,600 104,300
J E A Mocatta 42,036 - 42,036
M S H Worsley-Tonks 133,900 26,800 160,700
L Adlam 12,000 - 12,000
D Gill 5,015 - 5,015
283,651 40,400 324,051
Directors' remuneration
2014
Salary
or fees Bonus Total
GBP GBP GBP
S A Richards 88,000 9,900 97,900
J E A Mocatta 41,250 - 41,250
M S H Worsley-Tonks 130,000 19,500 149,500
D J Gill 16,000 - 16,000
275,250 29,400 304,650
DIRECTORS' BENEFITS
None of the directors received any benefits in kind during the
year or during the previous year, nor were any pension
contributions made on behalf of any director in either year. On 1
August 2013 the group introduced a three times salary death in
service benefit scheme of which the executive directors are
members.
DIRECTORS' INTERESTS IN SHARES AND OPTIONS
The interests of the directors holding office at 31 March 2015
in the company's share capital, including share options and also
including shares held by companies controlled by the directors, are
shown in the directors' report.
The Board believe that the direct participation in the equity of
the company leads to a significant reduction in staff turnover and
is an effective method of ensuring that the longer term interests
of staff and shareholders coincide. In 2013 the Board set up an
Employee Benefit Trust with the intention of empowering the Trust
to acquire shares at appropriate opportunities to satisfy future
staff share awards. At 31 March 2015 1,050,000 shares (2014: Nil)
had been acquired by the trust. In the coming year a new Enterprise
Management Incentive Scheme is planned.
Executive directors, managers and staff will all be eligible to
participate in the scheme after a minimum length of service and the
Board envisage that the present system of discretionary cash
bonuses will move to one where there is a short and long term
element to the award, the former will continue to be paid in cash
and the later by way of share options, under the EMI Scheme for
those eligible.
The Board are pleased to note that at 31 March 2015 20 members
of staff (2014: 33) were shareholders in the company.
J E A Mocatta
Remuneration Committee Chairman
5 June 2015
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The directors are responsible for preparing the Strategic Report
and the Directors' Report and the financial statements in
accordance with applicable law and regulations.
Company law requires the directors to prepare group and company
financial statements for each financial year. The directors are
required by the AIM Rules of the London Stock Exchange to prepare
group financial statements in accordance with International
Financial Reporting Standards ("IFRS") as adopted by the European
Union ("EU") and have elected under company law to prepare the
company financial statements in accordance with IFRS as adopted by
the EU.
The financial statements are required by law and IFRS adopted by
the EU to present fairly the financial position of the group and
the company and the financial performance of the group. The
Companies Act 2006 provides in relation to such financial
statements that references in the relevant part of that Act to
financial statements giving a true and fair view are references to
their achieving a fair presentation.
Under company law the directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the group and the company and of
the profit or loss of the group for that period.
In preparing the group and company financial statements, the
directors are required to:
a. select suitable accounting policies and then apply them consistently;
b. make judgements and accounting estimates that are reasonable and prudent;
c. state whether they have been prepared in accordance with IFRSs adopted by the EU;
d. prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the group and the
company will continue in business.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the group's and the
company's transactions and disclose with reasonable accuracy at any
time the financial position of the group and the company and enable
them to ensure that the financial statements comply with the
Companies Act 2006. They are also responsible for safeguarding the
assets of the group and the company and hence for taking reasonable
steps for the prevention and detection of fraud and other
irregularities.
The directors are responsible for the maintenance and integrity
of the corporate and financial information included on the red24
plc website.
Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation
in other jurisdictions.
CONSOLIDATED INCOME STATEMENT AND CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
For the year ended 31 March 2015
CONSOLIDATED INCOME STATEMENT Notes 2015 2014
GBP GBP
Continuing operations
REVENUE 3 5,947,246 5,886,707
Cost of sales (1,528,926) (1,354,137)
Gross profit 4,418,320 4,532,570
Administrative expenses (3,341,116) (3,653,153)
Operating PROFIT 4 1,077,204 879,417
Finance income 5 13,211 4,498
Finance costs 6 (24,017) (29,010)
PROFIT before tax 3 1,066,398 854,905
Tax charge 10 (178,240) (202,592)
PROFIT FOR THE YEAR FROM CONTINUING OPERATIONS 888,158 652,313
Discontinued operations
Profit from discontinued operations 11 - 173,808
PROFIT FOR THE YEAR ATTRIBUTABLE TO THE
OWNERS OF THE PARENT 24 888,158 826,121
Earnings per share from continuing operations
Basic 13 1.83 p 1.33 p
Diluted 13 1.82 p 1.32 p
Earnings per share from continuing and
discontinued operations
Basic 13 1.83 p 1.69 p
Diluted 13 1.82 p 1.68 p
CONSOLIDATED STATEMENT OF coMPREHENSIVE INCOME
Group Group
Notes 2015 2014
GBP GBP
Profit for the year 888,158 826,121
Other comprehensive income for the year net of
tax
Items that may be subsequently reclassified to
profit or loss
Revaluation of property 19,184
Currency translation differences 24 (3,308) (56,947)
Total comprehensive income for the year attributable
to owners of the parent 904,034 769,174
The accompanying notes are an integral part of these financial
statements.
STATEMENTS OF CHANGES IN EQUITY
For the year ended 31 March
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable Share Share Other Revaluation Retained
to owners of capital premium reserves reserves earnings Total
the parent GBP GBP GBP GBP GBP GBP
Balance at 1
April 2013 489,834 223,652 53,160 60,244 2,316,061 3,142,951
Total comprehensive
income for the
year - - - (56,947) 826,121 769,174
Transactions
with owners
Share based
payments - - 940 - - 940
Dividends paid - - - - (205,728) (205,728)
Total transactions
with owners - - 940 - (205,728) (204,788)
Balance at 31
March 2014 489,834 223,652 54,100 3,297 2,936,454 3,707,337
Total comprehensive
income for the
year - - - 15,876 888,158 904,034
Transactions
with owners
Own shares acquired - - (121,586) - - (121,586)
Share based
payments - - (12,130) - 21,170 9,040
Dividends paid - - - - (222,218) (222,218)
Total transactions
with owners - - (133,716) - (201,048) (334,764)
Balance at 31
March 2015 489,834 223,652 (79,616) 19,173 3,623,564 4,276,607
COMPANY STATEMENT OF CHANGES IN EQUITY
Share Share Other Retained
Attributable to capital premium reserves earnings Total
owners of the parent GBP GBP GBP GBP GBP
Balance at 1 April
2013 489,834 223,652 53,160 834,316 1,600,962
Total comprehensive
income for the year - - - 809,985 809,985
Transactions with
owners
Share based payments - - 940 - 940
Dividends paid - - - (205,728) (205,728)
Total transactions
with owners - - 940 (205,728) (204,788)
Balance at 31 March
2014 489,834 223,652 54,100 1,438,573 2,206,159
Total comprehensive
income for the year - - - 423,835 423,835
Transactions with
owners
Own shares acquired - - (121,586) - (121,586)
Share based payments - - (12,130) 21,170 9,040
Dividends paid - - - (222,218) (222,218)
Total transactions
with owners - - (133,716) (201,048) (334,764)
Balance at 31 March
2015 489,834 223,652 (79,616) 1,661,360 2,295,230
BALANCE SHEETS
31 March 2015
Group Group Company Company
2015 2014 2015 2014
ASSETS Notes GBP GBP GBP GBP
NON-CURRENT ASSETS
Intangible assets 14 432,335 280,106 27,791 21,768
Property, plant
& equipment 15 756,170 743,369 - -
Investment in group
companies 16 - - 408,334 408,334
Investments 17 - 372,000 - 372,000
Deferred tax assets 18 51,315 35,800 38,100 35,800
Trade and other
receivables 19 6,490 13,981 537,414 553,358
1,246,310 1,445,256 1,011,639 1,391,260
Current assets
Trade and other
receivables 19 905,501 1,264,321 212,899 120,599
Cash and cash equivalents 20 3,417,956 2,302,577 1,359,576 957,426
4,323,457 3,566,898 1,572,475 1,078,025
Assets classified
as held for sale 17 250,000 - 250,000 -
TOTAL ASSETs 5,819,767 5,012,154 2,834,114 2,469,285
capital and reserves
Called up share
capital 23 489,834 489,834 489,834 489,834
Share premium account 24 223,652 223,652 223,652 223,652
Other reserves 24 (79,616) 54,100 (79,616) 54,100
Revaluation reserves 24 19,173 3,297 - -
Retained earnings 24 3,623,564 2,936,454 1,661,360 1,438,573
EQUITY ATTRIBUTABLE
TO OWNERS OF THE
PARENT 24 4,276,607 3,707,337 2,295,230 2,206,159
NON-CURRENT LIABILITIES
Deferred tax liabilities 18 43,549 4,902 - -
Borrowings 22 215,370 240,726 - -
258,919 245,628 - -
CURRENT LIABILITIES
Trade and other
payables 21 1,180,485 887,325 538,884 263,126
Corporation tax 86,350 154,215 - -
Borrowings 22 17,406 17,649 - -
1,284,241 1,059,189 538,884 263,126
TOTAL EQUITY AND
LIABILITIES 5,819,767 5,012,154 2,834,114 2,469,285
The accompanying notes are an integral part of these financial
statements.
CASH FLOW STATEMENTS
For the year ended
31 March 2015
Group Group Company Company
2015 2014 2015 2014
Notes GBP GBP GBP GBP
Cash generated
from operating
activities 11,25 1,642,496 1,087,079 441,640 186,249
Investing activities
Interest received 13,211 4,498 21,619 35,990
Dividend received - - 180,000 380,000
Investment in
subsidiary - - - (180,000)
Trade investment 122,000 (5,032) 122,000 (5,032)
Purchase of intangibles (217,020) (103,684) (19,305) (20,722)
Purchase of property,
plant & equipment (46,017) (73,473) - -
Cash disposed
of with subsidiary - (270,355) - -
Net cash (used
in)/generated
from investing
activities (127,826) (448,046) 304,314 210,236
Financing activities
Dividends paid (222,218) (205,728) (222,218) (205,728)
Interest paid (24,017) (29,010) - -
Purchase of own
shares (121,586) - (121,586) -
Bank loans repaid (19,651) (75,402) - -
Net cash used
in financing activities (387,472) (310,140) (343,804) (205,728)
Net increase in
cash and cash
equivalents 25 1,127,198 328,893 402,150 190,757
Cash and cash
equivalents at
the beginning
of the year 2,302,577 2,048,675 957,426 766,669
Effect of foreign
exchange rate
changes (11,819) (74,991) - -
Cash and cash
equivalents at
the end of the
year 3,417,956 2,302,577 1,359,576 957,426
The accompanying notes are an integral part of these financial
statements.
NOTES TO THE FINANCIAL STATEMENTS
31 March 2015
1 Accounting policies
(a) Basis of preparation
From 1 April 2007, the group and company have adopted
International Financial Reporting Standards ("IFRS") and the
International Financial Report Interpretations Committee ("IFRIC")
interpretations as adopted by the European Union ("EU") in the
preparation of its financial statements and those parts of the
Companies Act 2006 applicable to companies reporting under IFRS.
The financial statements have been prepared under the historical
cost basis, except for trade investments and land and buildings
which have been measured at fair value.
The accounts are prepared on a going concern basis. In assessing
whether the going concern assumption is appropriate, the directors
have taken into account relevant available information about the
future including profit and cash forecasts for the next two
financial years and the assumptions on which they are based.
Afterreviewing this information, the directors consider that it is
appropriate to prepare the financial statements on a going concern
basis.
(b) Basis of consolidation
The consolidated financial statements include the financial
statements of the company and all of the entities controlled by the
company (its subsidiaries) made up to 31 March each year. Control
is obtained when the company has exposure or rights to the variable
returns from the involvement in the investee entity and the ability
to affect those returns through its power over the investee. The
acquisition of subsidiaries is accounted for using the acquisition
method. The cost of an acquisition is measured as the cash paid and
the fair value of other assets given, equity instruments issued and
liabilities incurred or assumed at the date of exchange of
contracts. Costs directly attributable to the acquisition are
expensed as incurred.
The results of subsidiaries sold or acquired are included in the
consolidated income statement up to, or from, the date control
passes. Where necessary, adjustments are made to the financial
statements of subsidiaries to bring the accounting policies used
into line with those used by the group. All intra-group
transactions, balances, income and expenses are eliminated on
consolidation.
The company has not presented its own income statement as
permitted by Section 408 of the Companies Act 2006. The profit for
the year was GBP423,835 (2014: GBP809,985).
(c) Revenue recognition
Revenue represents the fair value of the consideration received
or receivable in respect of services provided in the normal course
of business, net of discounts, value added tax and other sales
related taxes. Sales of services are recognised when the services
have been provided, services invoiced in advance are treated as
deferred income and income is accrued where services have been
provided but not yet invoiced.
Interest income is accrued on a time-apportioned basis. Dividend
income is accounted for when received.
(d) Cost of sales, gross profit and operating profit
Cost of sales represent the fair value of costs directly
incurred in the supply of goods sold and services provided. Costs
are recognised at the time when the goods have been supplied or the
services have been provided. Costs relating to still to be provided
services are carried forward in other receivables to the extent it
is considered probable they will be recovered.
1 Accounting policies (continued)
(d) Cost of sales, gross profit and operating profit (continued)
Gross profit is defined as revenue recognised less cost of
sales.
Operating profit is arrived at after deducting all
administrative expenses from gross profit, including restructuring
and impairment costs, but before finance income and finance
costs.
(e) Borrowing costs
All borrowing costs are recognised in the income statement in
the period in which they are incurred. Interest costs are accrued
on a time basis by reference to the principal outstanding at the
effective interest rate applicable.
(f) Taxation
The tax credit or expense represents the sum of the current tax
expense and deferred tax.
The tax currently payable is based on the taxable profit for the
year. Taxable profit differs from net profit as reported in the
income statements because it excludes items of income and expense
that are taxable or deductible in other years and it further
excludes items that are never taxable or deductible. The group's
liability for current tax is calculated using the applicable rate
for the period the taxable profits are earned in.
Deferred tax is provided in full, using the liability method, on
temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the financial
statements.
Deferred tax assets are recognised to the extent that it is
probable that future taxable profits will be available against
which the temporary differences can be utilised.
Deferred tax is measured at the average tax rates that are
expected to apply in the periods in which timing differences are
expected to reverse, based on tax rates and laws that have been
enacted or substantively enacted by the balance sheet date.
Deferred tax is measured on a non-discounted basis. Deferred tax is
charged or credited in the income statement, except where it
relates to items charged or credited directly to equity, in which
case the deferred tax is also dealt with in equity.
Deferred tax is provided on temporary timing differences arising
on investments in subsidiary companies, except where the timing of
the reversal of the temporary difference is controlled by the group
and it is probable that the temporary difference will not reverse
in the foreseeable future.
(g) Intangible assets
Goodwill, being the excess of the cost of acquisition over the
fair value of net assets, including any intangible assets
identified, acquired, is capitalised. Goodwill is not amortised but
is tested at least annually for impairment and carried at cost less
accumulated impairment provisions.
Goodwill is allocated to cash generating units for the purpose
of impairment testing. If the recoverable amount of the cash
generating unit is less than the carrying amount of the unit, then
any goodwill is considered to be impaired. Impairment losses
recognised for goodwill are not reversed in subsequent periods.
1 Accounting policies (continued)
(g) Intangible assets (continued)
The recoverable amounts of the cash generating units are
determined from value in use calculations. The group prepares cash
flow forecasts from the most recent financial budgets approved by
management. The cash flows are discounted at an appropriate
interest rate, based on the likely cost of loan capital, to
determine value in use.
Intellectual properties, including computer software licences,
training courses, websites and trademarks are capitalised at cost
and are amortised on a straight-line basis over their estimated
useful economic lives of between one and three years.
(h) Investment
A trade investment is an entity over which the group does not
have significant influence and that is neither a subsidiary, an
associate nor a joint venture. Such investments are initially
measured at fair value, to which transaction costs are added. Such
assets are financial assets and any gain or loss arising on
remeasurement is recognised in profit and loss.
(i) Property, plant & equipment and depreciation
Land and buildings held for use in the provision of services, or
for administrative purposes, are initially valued at cost,
including transaction costs. Subsequent to initial measurement land
and buildings are revalued regularly and held in the balance sheet
at the revalued amount, being the fair value at the date of
revaluation, less any subsequent accumulated depreciation. A gain
or loss arising from a change in fair value is included in taken to
a revaluation reserve in the period in which it arises.
Plant and equipment is valued at cost less accumulated
depreciation and less provisions for impairment. Depreciation is
provided at the following annual rates in order to write off each
asset, on a straight-line basis, over its estimated useful
life:
Buildings 3% per annum
Fixtures, fittings and equipment 16.67% to 50% per annum
Motor vehicles 20% per annum
The depreciation charge is time apportioned in the year of
acquisition and disposal of assets. Freehold land is not
depreciated.
(j) Product development
Product development is written off to the income statement as
incurred unless the directors are satisfied as to the technical,
commercial and financial viability of individual projects. In this
situation, the expenditure is deferred and amortised over the
period during which the company is expected to benefit.
(k) Foreign currency translation
The individual financial statements of each group company are
presented in the currency of the primary economic environment in
which it operates (its functional currency). For the purposes of
the consolidated financial statements, the results and financial
position of each group company are expressed in sterling, which is
the functional currency of the company, and the presentation
currency for the consolidated financial statements.
1 Accounting policies (continued)
(k) Foreign currency translation (continued)
In preparing the financial statements of the individual
companies, transactions expressed in currencies other than the
entity's functional currency (foreign currencies) are translated at
rates of exchange approximating to those ruling at the date of the
transaction. At each balance sheet date, monetary assets and
liabilities that are denominated in foreign currencies are
retranslated at rates ruling at the balance sheet date. Non
monetary items that are measured in terms of historical cost in a
foreign currency are not retranslated.
Exchange differences arising on the settlement of monetary
items, and on the retranslation of monetary items, are included in
the profit or loss before tax for the period.
In presenting the consolidated financial statements the assets
and liabilities of the overseas subsidiary are translated at the
rate ruling at the balance sheet date. The results of the overseas
subsidiary have been translated at the average exchange rate ruling
during the year. Differences arising on retranslation are added to
or deducted from the group's translation reserve.
(l) Financial assets
Trade receivables, loans and other receivables that have fixed
or determinable payments that are not quoted in an active market
are classified as "Loans and receivables". These receivables are
initially recognised at fair value and subsequently measured at
their amortised cost using the effective interest rate method less
any provision for impairment.
Financial assets are assessed for indications of impairment at
each balance sheet date. Financial assets are impaired where there
is objective evidence that, as a result of one or more events that
occurred after the initial recognition of the financial asset, the
estimated future cash flows of the asset have been impacted. For
trade and other receivables the carrying amount is reduced by an
allowance reflecting the impairment. When a trade receivable is
uncollectible it is written off against the allowance, subsequent
recoveries of amounts previously written off are credited against
the allowance account. Changes in the carrying amount of the
allowance are reflected in the income statement.
Cash and cash equivalents comprise cash in hand and on demand
deposits, and other short-term highly liquid investments that are
readily convertible to a known amount of cash and are subject to an
insignificant risk of changes in value.
(m) Financial liabilities and equity
Financial liabilities and equity are classified according to the
substance of the contractual arrangements entered into. An equity
instrument is any contract that evidences a residual interest in
the assets of the group after deducting all its liabilities. Equity
instruments are recorded at the proceeds received, net of direct
issue costs.
The component parts of compound instruments are classified
separately as financial liabilities and equity in accordance with
the substance of the transaction. At the date of issue the fair
value of the liability is estimated using the prevailing market
interest rate for a similar non-convertible instrument. This amount
is recorded as a liability on an amortised cost basis until
extinguished on conversion or upon the instrument reaching
maturity. The equity component is determined by deducting the
amount of the liability component from the fair value of the
compound instrument as a whole. This is recognised in equity
through other reserves and is not subsequently re-measured.
1 Accounting policies (continued)
(m) Financial liabilities and equity (continued)
Other financial liabilities are initially measured at fair
value, net of transaction costs, and subsequently at amortised cost
using the effective interest method. Interest bearing bank loans
and overdrafts together with obligations under finance leases are
classified as "Borrowings".
(n) Net cash
Net cash is defined as the excess of cash and cash equivalents
over borrowings.
(o) Investments
Non-current investments representing investments in subsidiary
undertakings are valued at cost less any provision for impairment
in the value of the investment.
Held-for-sale investments that do not have a quoted market price
are held at fair value, where that can be reliably measured,
otherwise they are held at cost less any identified impairment
losses at the end of each reporting period.
(p) Dividends
Dividend payments are recognised as liabilities once they are
appropriately authorised and no longer at the discretion of the
company.
(q) Share based payments
The group issues equity-settled share based payments to certain
employees. Equity settled share based payments are measured at fair
value at the date of grant. The fair value determined at the grant
date is expensed on a straight line basis over the vesting period,
based on the group's estimate of options that will eventually vest.
Fair value is measured by use of the Black Scholes model. The
assumptions underlying the number of awards expected to vest are
subsequently adjusted to reflect conditions prevailing at the
balance sheet date. At the vesting date of an award, the cumulative
expense is adjusted to take account of the awards that actually
vest.
(r) Leased assets and obligations
An asset is acquired when substantially all the risks and
rewards are transferred and is capitalised as an asset under a
finance lease with the corresponding liability to the finance
company included in trade and other payables. Depreciation on
assets held under finance leases is provided in accordance with the
policy noted in (i) above. Finance lease payments are treated as
consisting of capital and interest elements and the interest is
charged to the income statement on a constant rate basis over the
period of the agreement. Finance charges are charged directly to
income. All other leases are operating leases.
Rentals receivable or payable under operating leases are
credited or charged to the income statement on a straight line
basis over the lease term.
(s) Adoption of new and revised standards
In the current financial year the group has adopted the
following improvements to IFRSs which were effective for this
financial period. These have had no material impact on the
financial statements of the Group:
-- IAS 27 'Separate financial statements';
-- IAS 28 'Investments in associates and joint ventures';
-- IFRS 10 'Consolidated financial statements';
-- IFRS 11 'Joint arrangements';
-- IFRS 12 'Disclosure of interests in other entities';
1 Accounting policies (continued)
(s) Adoption of new and revised standards (continued)
At the date of authorisation of these financial statements, the
following Standards and Interpretations, which have not yet been
applied in these financial statements, were in issue but not yet
effective:
-- IAS 1 'Disclosure initiative';
-- IAS 19 'Employee benefits';
-- IAS 32 'Offsetting financial assets and financial
liabilities';
-- IAS 34 'Interim financial reporting';
-- IFRS 5 'Discontinued operations';
-- IFRS 9 'Financial Instruments';
-- IFRS 13 'Fair value measurement'.
-- IFRS 15 'Revenue from contracts with customers'.
The directors do not anticipate that they will have a material
impact on the financial statements.
2 Critical accounting judgements and key sources of estimation uncertainty
Estimates and judgements are evaluated on a continual basis and
are based on historical experience together with expectations of
future events believed to be reasonable at the time. In considering
the possible impairment of intangible assets and in recognising
deferred tax assets, estimates of future revenues are particularly
critical. The directors have prepared forecasts of revenues and
expenses covering the next two financial years to assist in the
making of estimates and judgements.
In the process of applying the group's accounting policies,
which are described in note 1, the directors have made the
following judgements that have the most significant effect on the
amounts recognised in the financial statements.
Critical accounting judgement - Revenue recognition
Much of the group's revenue comes from business that relates to
the provision of services over a period of time. Invoiced revenue
may cover more than one accounting period and these revenues are
time apportioned to the accounting period to which they relate and
the obligation for future service is shown in deferred income. Even
after recognition as revenue on a time apportioned basis, there may
be uncertainty as to the costs relating to these revenues for some
time afterwards and there may remain an obligation for future
service. An estimate of this obligation has been made by the
directors, using their experience of similar contracts, and
deducted from recognised revenue.
Estimation uncertainty - Life of intangible assets
The group depends on its intangible assets to generate revenue
and invests to develop and maintain its intangible assets. New
intangible assets are recognised on the balance sheet and tested
annually for impairment, as described further in note 14. The
estimates supporting these impairment tests are based on future
revenue projections and discount rates and are inherently
uncertain.
3 Revenue and segment analysis
Following the sale of the training business in 2013 the
management of the group has been reorganised into a single
operating segment. The segment recognises four streams of revenue
each of which is supported by the Crisis Response Management Centre
(CRM) in Cape Town. The Chief Operating Decision Maker which is
deemed to be the group board of directors, receives reports of
revenue and cost of sales by revenue stream but it is considered
neither desirable nor practical to allocate the administrative
overheads to those revenue streams.
The following tables provide details of revenue and profit for
each revenue stream:
Revenue Stream 31 March 2015
Travel Special Consultancy Product Consolidated
assistance Risks & response Safety
GBP GBP GBP GBP GBP
Revenue 2,192,504 1,595,008 1,143,468 1,016,266 5,947,246
Gross profit 2,175,231 1,197,888 363,008 682,193 4,418,320
Administrative costs (3,341,116)
Operating profit 1,077,204
Finance income 13,211
Finance expense (24,017)
Profit before tax 1,066,398
Tax charge (178,240)
Profit after tax 888,158
Revenue Stream 31 March 2014
Travel Special Consultancy Product Consolidated
assistance Risks & response Safety
GBP GBP GBP GBP GBP
Revenue 2,460,205 1,349,088 1,024,009 1,053,405 5,886,707
Gross profit 2,286,337 1,045,422 457,111 743,700 4,532,570
Administrative costs (3,653,153)
Operating profit 879,417
Finance income 4,498
Finance expense (29,010)
Profit before tax 854,905
Tax charge (202,592)
Profit from discontinued
operations 173,808
Profit after tax and
discontinued operations 826,121
3 Revenue and segment analysis (continued)
The group's operations are located in the United Kingdom, in the
Republic of South Africa and in the USA. The following tables
provide 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 additions to
property, plant and equipment and intangible assets.
Geographic segment Segment Segment Segment Segment
Revenue Revenue assets assets liabilities liabilities
2015 2014 2015 2014 2015 2014
GBP GBP GBP GBP GBP GBP
United Kingdom 2,832,560 3,147,275 2,516,860 2,355,520 903,301 519,032
South Africa 37,447 31,585 1,628,882 1,629,620 465,296 657,472
Rest of Europe 471,844 618,445 - - - -
United States of
America 1,821,225 1,876,342 18,401 20,709 21,492 -
Rest of the World 784,170 213,060 - - - -
5,947,246 5,886,707 4,164,143 4,005,849 1,390,089 1,176,504
Shared corporate
assets - - 1,655,624 1,006,305 153,071 128,313
5,947,246 5,886,707 5,819,767 5,012,154 1,543,160 1,304,817
The following tables provide details of capital expenditure and
amortisation by geographic segment:
Intangible assets
Geographic segment Capital Capital
expenditure expenditure Amortisation Amortisation
2015 2014 2015 2014
GBP GBP GBP GBP
United Kingdom 217,020 103,345 55,878 27,861
South Africa - 339 8,226 10,388
217,020 103,684 64,104 38,249
Property, plant
& equipment
Geographic segment Capital Capital
expenditure expenditure Amortisation Amortisation
2015 2014 2015 2014
GBP GBP GBP GBP
United Kingdom 4,836 3,278 5,216 6,232
South Africa 41,181 70,195 27,994 17,241
United States - - 1,545 -
46,017 73,473 34,755 23,473
Two customers accounted for more than 10% of group revenue; one,
a distributor, accounts for 14.0% (2014: 23.4%) and the other,
which followed a major response, also accounts for 14.0%
(2014:10.4%).
4 Operating profit
The operating profit is stated 2015 2014
after charging : GBP GBP
Amortisation of intangible assets 64,104 38,249
Depreciation of property, plant
and equipment 34,755 23,473
Operating lease rentals - land
and buildings 65,591 46,351
- equipment 6,179 4,486
(Gain)/loss on foreign exchange
transactions (103,482) 81,389
Share based payments 9,040 940
Fees payable to the auditor for
the audit of the company and group
annual accounts 16,850 21,050
Audit of the company's subsidiaries
pursuant to legislation 18,150 17,450
Fees payable to the auditor and
their associates for other services:
Other services pursuant to legislation 1,800 3,400
Fees payable for the audit of
the South African subsidiaries 12,001 12,096
Fees payable to the auditor's
associates for the other services 13,524 1,175
Auditor's remuneration includes GBP36,800 (2014: GBP41,900) in
respect of the group auditor, of which GBP35,000 (2014: GBP38,500)
relates to audit services and GBP1,800 (2014: GBP3,400) to non
audit services. Other services comprise GBP1,500 (2014: GBP3,400)
relating to a review of the group's half year report and the
provision of a registered office GBP300 (2014: GBPNil).
5 Finance income 2015 2014
GBP GBP
Bank and other interest receivable 13,211 4,498
13,211 4,498
6 Finance costs 2015 2014
GBP GBP
Interest on bank loans and overdrafts 24,017 29,010
7 Employees 2015 2014
Number Number
(a) Average monthly number of
employees of the group, including
executive directors, during the
year:
Consultants and sales 11 11
Office and management 73 73
84 84
7 Employees (continued) 2015 2014
GBP GBP
(b) Staff costs including executive
directors:
Wages and salaries 2,002,207 2,201,390
Social security costs 124,729 130,695
Pension and medical benefits 84,602 81,667
Share based payments 9,040 9,040
2,220,578 2,422,792
Employee costs are included in administrative expenses in the
consolidated income statement. Employee costs of GBPNil (2014:
GBP21,000) have been capitalised in intangible assets.
8 Share based payments
The company has issued share options, none of which are subject
to performance conditions, to certain directors and employees. The
options cannot be exercised in the first three years following
their grant and, under normal circumstances, the options lapse if
an employee leaves the group.
On 16 April 2004, the company granted 1,595,000 options to
subscribe for ordinary shares of 1p each under the company's
general share option scheme, exercisable at 18.75p per share
between 16 April 2006 and 15 April 2014, all of which have now
lapsed.
On 2 March 2010, the company granted 500,000 options to
subscribe for ordinary shares of 1p each under the company's
executive share option scheme, exercisable at 8p per share between
31 March 2013 and 31 March 2016.
On 8 August 2012 the company granted 750,000 options to
subscribe for ordinary shares of 1p each under the company's
executive share option scheme, exercisable at 10.5p per share at
any time between 8 August 2015 and 8 August 2018.
At 31 March 2015 1,250,000 outstanding options are exercisable
(2014: 1,562,500) at a weighted average exercise price of 9.5p
(2014: 11.35p).
The total charge recognised in administration expenses in the
income statement from share based transactions, all equity-settled,
amounted to GBP9,040 (2014: GBP9,040).
The following movement took place in the year:
2004 2010 2012
Series Series Series Total
At 1 April 2014 312,500 500,000 750,000 1,562,500
Lapsed/cancelled during
the year (312,500) - - (312,500)
At 31 March 2015 - 500,000 750,000 1,250,000
The following movements took place in the previous year:
2004 2010 2012
Series Series Series Total
At 1 April 2013 432,500 500,000 750,000 1,682,500
Lapsed/cancelled
during the year (120,000) - - (120,000)
At 31 March 2014 312,500 500,000 750,000 1,562,500
8 Share based payments (continued)
Fair value is determined by use of the Black Scholes model using
the following assumptions:
2012 2010
Series Series
8 August 2 March 2010
Grant date 2012
Exercise price 10.5p 8p
Shares issued under
option 750,000 500,000
Weighted average share
price 8p 8p
Vesting period 3 years 3 years
Expected volatility 41% 51%
Contractual expiry 8 November 31 March
date 2017 2016
Option life taken
as expected life 3 years 3 years
Weighted average remaining
life 5 years 4 years
Risk free rate 2.5% 3.5%
Expected dividend
yield 3.0% 2.0%
Probability of option
vesting 90% 90%
Fair value per option 4p 3p
The expected volatility of all equity compensation benefits is
based on the expected volatility of the underlying share price over
the term of the option. This has been calculated using historical
share price data.
9 Directors' emoluments
The total emoluments of the directors, who are considered to be
the key management personnel, were as follows:
2015 2014
GBP GBP
Salaries, fees and bonuses 324,051 304,650
Social security costs 32,562 35,682
Share based payments 9,040 9,040
365,653 349,372
Bonus payments were made to the executive directors during the
year, and for the previous year, based on a percentage of annual
salary, as shown in the remuneration report. The executive
directors are members of the group death in service scheme. Other
than that, the directors received no benefits in kind during the
year or during the previous year, nor were any pension
contributions made on behalf of any director in either year.
Details of the highest paid director are shown in the remuneration
report and details of the directors' interests in share options are
given in the directors' report.
10 Taxation
(a) Analysis of income tax charge for the year
2015 2014
GBP GBP
Current tax
United Kingdom 57,620 48,205
Overseas 97,482 132,215
155,102 180,420
Deferred tax:
United Kingdom 35,360 10,810
Overseas (12,222) 11,362
178,240 202,592
(b) Factors affecting the income
tax charge for the year
The charge for the year can be
reconciled to the profit per the 2015 2014
income statement as follows: GBP GBP
Profit before taxation 1,066,398 854,905
Profit on ordinary activities multiplied
by the standard rate of corporation
tax in the UK of 21% (2014: 23%) 223,944 196,628
Effects of:
Permanent differences (15,057) 2,337
Temporary differences 3,043 164
Utilisation of tax losses not
previously recognised in deferred
tax (54,308) (33,269)
Adjustments to prior periods (789) 2,901
Difference in overseas tax rates 21,407 33,831
Income tax charge 178,240 205,592
(c) Factors affecting tax charge for future years
The company has capital losses for tax purposes at 31 March 2015
of GBP605,994 (2014: GBP605,994) available to carry forward against
future capital gains and excess management expenses of GBP882,917
(2014: GBP1,123,152), subject to acceptance by H M Revenue &
Customs. The UK trading subsidiaries have no losses for corporation
tax purposes at 31 March 2015 available to carry forward against
profits from the same trade (2014: GBP18,824).
10 Taxation (continued)
(c) Factors affecting tax charge for future years (continued)
The group and the company have deferred tax assets not included
in the financial statements as recovery is not sufficiently
certain, calculated at a corporation tax rate of 20% (2014: 21%),
as follows:
Group Company
2015 2014 2015 2014
GBP GBP GBP GBP
Tax losses carried forward:
Capital losses 121,199 127,259 121,199 127,259
Management expenses 138,500 204,133 138,500 204,133
Trading losses - 3,953 - -
Non-current asset temporary
differences 1,042 979 - -
260,741 336,324 259,699 331,392
The deferred tax asset in respect of trading losses is
recoverable against future profits from the same trade.
11 Discontinued operations
On 31 July 2013 the group disposed of Arc Training International
Limited, which carried on a security management training business.
The disposal was made in exchange for an investment in the
purchaser, Linx International Limited. On 12 August 2014 the group
agree to sell this investment for GBP375,000 in three equal
tranches, the first of which was completed on that day and the
remaining two fall due on 12 August 2015 and 12 August 2016. The
group anticipates that both these tranches will be completed when
they fall due and accordingly the investment is considered as an
asset held for sale in these financial statements.
The results of the discontinued operation, which have been
included in the consolidated income statement, were as follows:
Period
to 31 July
2013
GBP
Revenue 327,996
Expenses (149,677)
Gross profit 178,319
Administrative expenses (118,937)
Operating profit
59,382
Interest receivable 35
Profit before tax 59,417
Attributable tax expense -
59,417
Profit on disposal 114,391
Net profit attributable to discontinued
operations 173,808
12 Dividends per share 2015 2014
The following dividends per share
were paid by the group:
Interim dividend 0.23p 0.22p
The following dividends per share
are proposed by the group:
Final dividend 0.27p 0.23p
The interim dividend for 2015 was paid on 24 February 2015 at a
total cost of GBP110,247 (2014: paid on 18 February 2014 at a total
cost of GBP107,763).
The payment of the final dividend remains discretionary until
paid. The final proposed dividend for 2015 of 0.27p per share
(2014: 0.23p) was not recognised at the year end and will be paid
on 18 September 2015 subject to authorisation by shareholders at
the forthcoming Annual General Meeting. The final dividend for 2014
was paid on 18 September 2014 at a total cost of GBP111,971.
13 Earnings per share 2015 2014
Attributable profit for the year
from continuing operations (GBP) 888,158 652,313
Weighted average number of ordinary
shares in issue for the purposes
of basic earnings per share 48,477,670 48,983,355
Effect of dilutive potential ordinary
shares on exercise of options 434,410 520,580
Weighted average number of ordinary
shares in issue for the purposes
of diluted earnings per share 48,912,080 49,503,935
Earnings per share from continuing
operations
Basic earnings per share (pence) 1.83p 1.33p
Diluted earnings per share (pence) 1.82p 1.32p
Earnings per share from continuing
and discontinued operations
Basic earnings per share (pence) 1.83p 1.69p
Diluted earnings per share (pence) 1.82p 1.68p
14 Intangible assets
Intellectual
Property Goodwill Total
Group GBP GBP GBP
Cost
At 1 April 2013 183,421 257,556 440,977
Foreign currency adjustment (16,745) - (16,745)
Additions 103,684 - 103,684
Disposals (20,551) (120,000) (140,551)
At 1 April 2014 249,809 137,556 387,365
Foreign currency adjustment (1,053) - (1,053)
Additions 217,020 - 217,020
At 31 March 2015 465,776 137,556 603,332
Amortisation and impairment
At 1 April 2013 92,059 - 92,059
Foreign currency adjustment (5,847) - (5,847)
Amortisation charge for
the year 38,249 - 38,249
Disposals (17,202) - (17,202)
At 1 April 2014 107,259 - 107,259
Foreign currency adjustment (366) - (366)
Amortisation charge for
the year 64,104 - 64,104
At 31 March 2015 170,997 - 170,997
Carrying amount
At 31 March 2015 294,779 137,556 432,335
At 31 March 2014 142,550 137,556 280,106
At 1 April 2013 91,362 257,556 348,918
At 31 March 2015 the group had capital commitments of GBP20,008
(2014: GBPNil).
14 Intangible assets (continued)
Intellectual
Property Total
Company GBP GBP
Cost
At 1 April 2013 27,634 27,634
Additions 20,722 20,722
At 31 March 2014 48,356 48,356
Additions 19,305 19,305
At 31 March 2015 67,661 67,661
Amortisation and impairment
At 1 April 2013 23,732 23,732
Amortisation charge for the year 2,856 2,856
At 31 March 2014 26,588 26,588
Amortisation charge for the year 13,282 13,282
At 31 March 2015 39,870 39,870
Carrying amount
At 31 March 2015 27,791 27,791
At 31 March 2014 21,768 21,768
At 1 April 2013 3,902 3,902
The goodwill acquired in a business combination is allocated, at
acquisition, to the cash generating segments that are expected to
benefit from that business combination. At the date of transition
to IFRS the carrying amount of goodwill had been allocated as
security assistance GBP137,566 and training courses GBP120,000; the
latter was disposed of during the previous year.
The group tests goodwill annually for impairment or more
frequently if there are indications that goodwill might be
impaired. Charges for amortisation and impairment of goodwill and
intellectual property are included within administrative
expenses.
The recoverable amounts of the cash generating units are
determined from value in use calculations. The group prepares cash
flow forecasts from the most recent financial budgets approved by
management. The cash flows are then discounted at an appropriate
interest rate to determine value in use.
The forecast cash flows for the next two years, taking forecast
revenues, based upon historical experience, and anticipated
expenditure are then discounted at a rate of ten percent per annum
to arrive at a recoverable amount for each cash generating unit.
This shows that each cash generating unit has a recoverable amount
in excess of the carrying value of goodwill and that no charge for
impairment in necessary.
The key assumptions are those regarding discount rate, growth
rates, expected sales and direct costs during the period. Growth
forecasts are based on the experience of the past three years. A
discount rate of 10% has been applied based on the cost of loan
capital.
15 Property, plant & equipment
Group Other Fixtures,
Land and fixed fittings
buildings assets and equipment Total
GBP GBP GBP GBP
Cost
At 1 April 2013 811,690 4,374 220,641 1,036,705
Foreign currency adjustment (176,122) (949) (33,201) (210,272)
Additions (779) - 74,252 73,473
Revaluation (1,570) - - (1,570)
Disposals - - (35,472) (35,472)
At 1 April 2014 633,219 3,425 226,220 862,864
Foreign currency adjustment (15,009) (81) (4,014) (19,104)
Additions - - 46,017 46,017
Revaluation 19,184 - - 19,184
Disposals - - (3,737) (3,737)
At 31 March 2015 637,394 3,344 264,486 905,224
Depreciation
At 1 April 2013 2,706 3,027 144,287 150,020
Foreign currency adjustment (587) (656) (20,034) (21,277)
Revaluation (2,119) - - (2,119)
Charge for the year - 342 23,131 23,473
Disposals - - (30,602) (30,602)
At 1 April 2014 - 2,713 116,782 119,495
Foreign currency adjustment - (64) (1,646) (1,710)
Charge for the year - 334 34,421 34,755
Disposals - - (3,486) (3,486)
At 31 March 2015 - 2,983 146,071 149,054
Carrying amount
At 31 March 2015 637,394 361 118,415 756,170
At 31 March 2014 633,219 712 109,438 743,369
At 1 April 2013 808,984 1,347 76,354 886,685
The depreciation has been charged to administrative
expenses.
The group's freehold property was valued on 21 January 2015 by
Pears Property Group of Cape Town, independent valuers, at Rand
11,436,000 compared to its historic cost of R 11,135,165.
16 Investment in group companies Company
Investments in subsidiary companies: GBP
Cost
At 1 April 2013 1,767,338
Additions 180,000
Disposals (20,000)
At 31 March 2014 and 31 March 2015 1,927,338
Impairment provisions
At 1 April 2013 and 31 March 2014 and
31 March 2015 1,519,004
Net book amount
At 31 March 2014 and 31 March 2015 408,334
At 1 April 2013 248,334
The subsidiary companies at 31 March 2015 and their activities
during the year were:
Percentage
Held directly: of ordinary Activity
share
capital
held
red24 Operations 100% Security risk management
Limited services
red24 CRM (Pty) 100% Security risk management
Limited services
red24 Sales Limited 100% Security risk management
services
red24 Inc 100% Security risk management
services
Green 24 Limited 100% Environmental assistance
Silvermine Properties 100% Property ownership
(Pty) Limited
The red24 Employees' 100% Employee equity
Share Trust participation
All of the subsidiary companies are incorporated in Great
Britain and registered in England and Wales, with the exception of
red24 CRM (Pty) Limited and Silvermine Properties (Pty) Limited,
which are incorporated and registered in South Africa and red24 Inc
which is incorporated in the United States of America.
The company's investment in red24 CRM (Pty) Limited includes
R1,300,000 5% convertible redeemable cumulative preference shares
of R1 each. The company has waived its right to the dividend due on
these shares up to 31 March 2015. For the year to 31 March 2015
this would have amounted to R65,000 (GBP3,710).
The company's loan to red24 CRM (Pty) Limited is subordinated in
favour of that company's creditors until such time as the assets of
that subsidiary exceed its liabilities.
Each year the company reviews the carrying value of the
investment in each subsidiary against the amount estimated to be
recoverable from that subsidiary, if recovery is not reasonably
foreseeable then the investment is considered impaired and a charge
made.
17 Investments/ Available-for-sale financial assets
Linx International Limited ("Linx"), a company incorporated in
England & Wales, was the company's sole trade investment. Linx
offers security consulting services and also acts as the holding
company of a group that provides security management training, both
in the United Kingdom and overseas. At 31 March 2014 the group held
a 25% stake in the equity of Linx and that stake was held directly
by the parent company.
The group does not consider that it exercises significant
influence over Linx and, on 12 August 2014 agreed to sell down its
holding in Linx in three equal instalments at a fixed price of
GBP125,000 per instalment. At the 31 March 2015 the group holds
16.67% of the equity in Linx but is contracted to sell it in the
two remaining instalments which are due to complete on 12 August
2015 and 12 August 2016. The directors expects these instalments to
be completed on or before the due date and the investment is
considered as held for sale.
The movements on the investment in the consolidated financial
statements is shown below:
GBP
Fair value at date of acquisition 372,000
At 31 March 2014 372,000
Sold during the year (122,000)
At 31 March 2015 250,000
18 Deferred tax
The deferred tax assets and liabilities represent the
following:
Group Company
Tax losses Tax losses
carried Temporary carried
Total forward differences forward
GBP GBP GBP GBP
At 1 April 2013 54,046 46,800 7,246 23,800
Foreign currency
adjustment (976) - (976) -
Income statement
charge/(credit) (22,172) (11,000) (11,172) 12,000
At 1 April 2014 30,898 35,800 (4,902) 35,800
Foreign currency
adjustment 6 - 6 -
Income statement
(charge)/credit (23,138) 2,300 (25,438) 2,300
At 31 March 2015 7,766 38,100 (30,334) 38,100
Assets 51,315 38,100 13,215 38,100
Liabilities (43,549) - (43,549) -
7,766 38,100 (30,334) 38,100
The deferred tax assets recognised in respect of tax losses
carried forward represent GBP38,100 (2014: GBP35,800) and relate
entirely to UK companies. Tax losses, which may be carried forward
indefinitely, are recoverable against future profits from the same
trade and in the country in which they were incurred.
19 Trade and other receivables
Group Company
2015 2014 2015 2014
Current assets: GBP GBP GBP GBP
Trade receivables (i) 716,554 905,497 - -
Provisions for impairment
(ii) (44,115) (28,953) - -
672,439 876,544 - -
Due from subsidiary
undertakings (iii) - - 166,851 72,000
Other receivables 36,738 73,815 10,010 17,679
Prepayments and accrued
income 196,324 313,962 36,038 30,920
905,501 1,264,321 212,899 120,599
Non-current assets:
Due from subsidiary
undertakings (iii) - - 557,414 613,077
Provisions for impairment
(ii) - - (20,000) (60,000)
Net amount due from
subsidiary undertakings
(iii) - - 537,414 553,077
Other receivables 6,490 13,981 - 281
6,490 13,981 537,414 553,358
(i) The average credit period on sales of services is 43 days
(2014: 55 days). Trade receivables over 120 days at the balance
sheet date, that have not been received within 60 days of the
balance sheet date, are provided for in full, less any element of
deferred income. Other trade receivables over 60 days at the
balance sheet date are provided for on estimated irrecoverable
amounts. The carrying value of trade and other receivables is
considered to be the same as their fair value.
Included in trade receivables are receivables with a carrying
amount of GBP339,560 (2014: GBP460,040) that are designated in
foreign currencies, of which GBP253,569 (2014: GBP436,527) are
designated in US dollars and GBP85,991 (2014: GBP23,513) in other
currencies.
Included in the group's trade receivables are debtors with a
carrying amount of GBP95,093 (2014: GBP127,192) which are overdue
at the balance sheet date for which the group has not provided as
there has not been a significant change in credit quality and the
group believes that these amounts are still recoverable. The group
does not hold any collateral over these balances. The ageing of
amounts past due but not impaired is as follows:
2015 2014
GBP GBP
60-90 days 88,756 132,959
90-120 days 6,337 33,720
120+ days - 48,047
95,093 214,726
At the balance sheet date only one customer who owed GBP112,000
(2014: GBP125,734) accounted for more than 10% of the balance due
to the group in trade and other receivables.
19 Trade and other receivables (continued)
(ii) Movement in the allowances against trade and other receivables:
Group Company
Trade receivables Due from subsidiary
undertakings
2015 2014 2015 2014
GBP GBP GBP GBP
Balance at 1 April 28,953 53,431 60,000 70,000
Increase/(decrease)
in provision 15,162 (24,478) - -
Release of provision
to income statement - - (40,000) (10,000)
Balance at 31 March 44,115 28,953 20,000 60,000
(iii) With the exception of the loan made to Silvermine
Properties (Pty) Ltd to purchase the property the amounts due from
subsidiary companies are unsecured and interest to 31 March 2015
has been waived. There are no fixed terms for repayment. GBP236,914
(2014: GBP284,240) was due to the company from Silvermine
Properties (Pty) Ltd and this loan is denominated in Rand and bears
interest at 9% per annum.
20 Cash and cash equivalents
Group Company
2015 2014 2015 2014
GBP GBP GBP GBP
Cash and cash equivalents 3,417,956 2,302,577 1,359,576 957,426
Cash and cash equivalents comprise cash held in short-term bank
deposits with a maturity of three months or less. The carrying
amount of these assets approximated to their fair value.
Repatriation of funds to the UK is subject to South African
exchange control legislation; at 31 March 2015 GBP686,209 (2014:
GBP432,814) was held with banks in South Africa.
21 Trade and other payables due within one year
Group Company
2015 2014 2015 2014
GBP GBP GBP GBP
Trade payables 193,140 138,845 42,846 29,434
Due to subsidiary
companies - - 385,813 134,813
Other taxation and
social security 116,805 96,850 10,825 13,368
Accruals and deferred
income 870,540 651,630 99,400 85,511
1,180,485 887,325 538,884 263,126
The average credit period taken on purchases of services is 26
days (2014: 19 days). The carrying value of trade and other
payables is considered to be the same as their fair value.
Included in group trade payables are payables with a carrying
amount of GBP80,826 (2014: GBP68,162) that are designated in
foreign currencies, of which GBP72,747 (2014: GBP41,281) are
designated in US dollars and GBP8,079 (2014: GBP26,881) in other
currencies.
22 Borrowings
Due within one year Group Company
2015 2014 2015 2014
GBP GBP GBP GBP
Bank loan 17,406 17,649 - -
17,406 17,649 - -
Due after more than Group Company
one year
2014 2014 2015 2014
GBP GBP GBP GBP
Bank loan 215,370 240,726 - -
215,370 240,726 - -
The carrying value of borrowings is considered to be the same as
their fair value.
The loan is secured by a fixed charge over the land and
buildings of Silvermine Properties (Pty) Limited. The loan is being
repaid at the rate of R62,650 (2014: R62,058) per calendar month.
The interest charged on the loan is 2.75% per annum over the prime
rate of Standard Bank of South Africa.
23 Share capital
Authorised
Number of shares Number GBP
Ordinary shares of
1p each
At 1 April 2013 and 31 March
2014 and 2015 75,000,000 750,000
issued & Fully paid
Number of shares Number GBP
At 1 April 2013 and 31 March
2014 and 2015 48,983,355 489,834
24 Share capital and reserves
Group
Retained Share Share Other Revaluation
earnings capital premium reserves reserves Total
GBP GBP GBP GBP GBP GBP
1 April 2013 2,316,061 489,834 223,652 53,160 60,244 3,142,951
Exchange differences
on translation
of overseas
operations - - - - (56,947) (56,947)
Profit for the
year 826,121 - - - - 826,121
Share based
payments - - - 9,040 - 9,040
Adjustments
for lapsed share
based payments - - - (8,100) - (8,100)
Payment of dividend (205,728) - - - - (205,728)
31 March 2014 2,936,454 489,834 223,652 54,100 3,297 3,707,337
Exchange differences
on translation
of overseas
operations - - - - (3,308) (3,308)
Revaluation
of property - - - - 19,184 19,184
Profit for the
year 888,158 - - - - 888,158
Own shares purchased - - - (121,586) - (121,586)
Share based
payments - - - 9,040 - 9,040
Adjustments
for lapsed share
based payments 21,170 - - (21,170) - -
Payment of dividend (222,218) - - - - (222,218)
31 March 2015 3,623,564 489,834 223,652 (79,616) 19,173 4,276,607
Company
Retained Share Share Other
earnings capital premium reserves Total
GBP GBP GBP GBP GBP
1 April 2013 834,316 489,834 223,652 53,160 1,600,962
Profit for the year 809,985 - - - 809,985
Share based payments - - - 9,040 9,040
Adjustments for
lapsed share
based payments - - - (8,100) (8,100)
Payment of dividend (205,728) - - - (205,728)
31 March 2014 1,438,573 489,834 223,652 54,100 2,206,159
Profit for the year 423,835 - - - 423,835
Own shares purchased - - - (121,586) (121,586)
Share based payments - - - 9,040 9,040
Adjustments for
lapsed share
based payments 21,170 - - (21,170) -
Payment of dividend (222,218) - - - (222,218)
31 March 2015 1,661,360 489,834 223,652 (79,616) 2,295,230
The share premium reserve records the premium above the par
value of the shares paid on the issue of shares by the company,
less the costs of the issue of shares.
Retained earnings is the balance of profit retained by the group
and company and is the group and company's distributable
reserve.
Other reserves represent the cumulative amount charged to the
income statement in respect of the company's share options as set
out in note 8 and the own share reserve representing the cost of
shares acquired by the Employee Benefit Trust which held 1,050,000
shares at 31 March 2015 (2014: Nil).
24 Share capital and reserves (continued)
The following table provides further detail on these
reserves:
Other reserves Group and company
Own share Share
reserve option
GBP reserve Total
GBP GBP
1 April 2013 - 53,160 53,160
Share based payments - 9,040 9,040
Adjustments for lapsed based
payments - (8,100) (8,100)
1 April 2014 - 54,100 54,100
Own shares purchased (121,586) - (121,586)
Share based payments - 9,040 9,040
Adjustments for lapsed based
payments - (21,170) (21,170)
31 March 2015 (121,586) 41,970 (79,616)
The revaluation reserves comprise the translation reserve and
the reserve arising from the adjustment to fair value of group
property. The translation reserve arises from currency differences
arising on the retranslation of foreign currency balances as
explained in accounting policy 1(k), there is no tax effect.
Revaluation reserves Group
Revaluation Translation
reserve reserve Total
GBP GBP GBP
1 April 2013 - 60,244 60,244
Exchange differences on translation of overseas
operations - (56,947) (56,947)
1 April 2014 - 3,297 3,297
Revaluation of property 19,184 - 19,184
Exchange differences on translation of overseas
operations - (3,308) (3,308)
31 March 2015 19,184 (11) 19,173
25 Notes to the cash flow statement
(a) Cash generated from operating activities
Group Group Company Company
2015 2014 2015 2014
Operating activities GBP GBP GBP GBP
Profit before tax,
including that
on discontinued
activities 1,066,398 1,028,713 423,835 809,985
Adjustments for:
Finance income (13,211) (4,498) (201,619) (771,058)
Finance costs 24,017 29,010 - -
Depreciation and
amortisation 98,859 61,722 13,282 2,856
Fair value adjustments - (114,391) - -
Share based payments 9,040 940 9,040 9,040
Exchange gains
and losses 14,160 (1,056) - -
Income tax paid (222,967) (139,878) - -
(Increase)/decrease
in receivables 355,547 163,328 (78,656) 34,740
Increase in payables 310,653 63,189 275,758 100,686
Cash generated
from operating
activities 1,642,496 1,087,079 441,640 186,249
25 Notes to the cash flow statement (continued)
(b) Analysis of changes in net cash
1 April Cash Other 31 March
2014 movements movements 2015
Group GBP GBP GBP GBP
Cash and cash equivalents 2,302,577 1,127,198 (11,819) 3,417,956
Bank loans (258,375) 19,651 5,948 (232,776)
Net cash 2,044,202 1,146,849 (5,871) 3,185,180
Company
Cash and cash equivalents 957,426 402,150 - 1,359,576
Included in other movements on cash and cash equivalents is a
foreign exchange movement of GBP(11,819) (2014: GBP74,991).
(c) Reconciliation of net cash flow movement to movement in net cash
Group Company
2015 2014 2015 2014
GBP GBP GBP GBP
Increase in cash 1,127,198 328,893 402,150 190,757
Decrease in bank loans 19,651 75,402 - -
Translation difference (5,871) 9,633 - -
Increase in net cash 1,140,978 413,928 402,150 190,757
Opening net cash 2,044,202 1,630,274 957,426 766,669
Closing net cash 3,185,180 2,044,202 1,359,576 957,426
26 Operating lease commitments
At 31 March 2015 the group was committed to making minimum lease
payments under non-cancellable operating leases as follows:
Group
Office equipment Land and buildings
2015 2014 2015 2014
GBP GBP GBP GBP
Within one year 1,148 1,148 34,918 34,918
Between one and two
years 1,148 1,148 - 34,918
Between two and five
years - 1,148 - -
2,296 3,444 34,918 69,836
Operating leases represent rental payments payable by the group
for its UK office property and items of office equipment. The
average contractual life of these leases is one year and only one
of the lease obligations extends beyond 31 March 2016. The property
lease extends to March 2016, with an overdue rent review in March
2015, otherwise the rents are fixed.
27 Related party transactions
Since 1 January 2005, the company has paid Sidebell Limited
amounts for the use of Sidebell's offices and the use of
accountancy services. S A Richards, a director of the company, has
a minority interest in the share capital of Sidebell Limited. In
the year to 31 March 2015, these amounts were GBP2,000 per month,
totalling GBP24,000 (2014: GBP24,000). The balance due to Sidebell
Limited at 31 March 2015 was GBPNil (2014: GBPNil).
The directors' report sets out the interests of the directors in
the share capital of the company, the director's received the same
dividends per share as other shareholders. In addition all the
directors hold share options under the group's share option scheme
and these are also disclosed in that report. Key management
remuneration is as follows:
2015 2014
GBP GBP
Salaries 324,051 304,650
Social security costs 32,562 35,682
Share-based payments 9,040 9,040
365,653 349,372
Refer to the remuneration report, and note 9, for further
details of the remuneration of directors employed by the
company.
During the year the company entered into the following
transactions with its subsidiaries:
2015 2014
GBP GBP
Management charges receivable 852,000 660,000
Dividends receivable 180,000 200,000
Licence fee receivable 120,000 120,000
Amounts owed by subsidiaries at
year end 704,265 685,077
Amounts owed to subsidiaries at
year end 385,813 134,813
The management charges reflect a charge to partly recover the
time of the group directors and the cost of central services such
as administrative offices, the conduct of the audit and the
maintenance of professional insurances.
As shown in note 19, impairment provisions totalling GBP20,000
(2014: GBP60,000) have been made against the amounts shown as due
from subsidiaries in the table above.
28 Financial instruments and risk summary
(a) Financial risk policies and objectives
The group's financial instruments comprise cash and cash
equivalents, trade and other receivables, trade and other payables,
loans and finance leases. Details of the significant accounting
policies in relation to these financial assets and liabilities are
disclosed in note 1 to the financial statements.
28 Financial instruments and risk summary (continued)
(a) Financial risk policies and objectives
All financial assets are categorised as loans and receivables as
follows:
Group Company
Non-current financial 2015 2014 2015 2014
assets:: GBP GBP GBP GBP
Trade and other receivables 6,490 385,981 537,414 925,358
6,490 385,981 537,414 925,358
Current financial
assets:
Trade and other receivables 709,177 950,359 176,861 89,679
Cash and cash equivalents 3,417,956 2,302,577 1,359,576 957,426
4,127,133 3,252,936 1,536,437 1,047,105
Total 4,133,623 3,638,917 2,073,851 1,972,463
All financial liabilities are categorised at amortised cost as
follows:
Group Company
Current financial 2015 2014 2015 2014
liabilities: GBP GBP GBP GBP
Trade and other payables 193,140 138,845 428,659 164,247
Accruals 350,948 343,387 - -
Bank loan 17,406 17,649 - -
561,494 499,881 428,659 164,247
Non-current financial
liabilities:
Bank loan 215,370 240,726 - -
Total 776,864 740,607 428,659 164,247
The Board's principal objective in managing its financial assets
and liabilities is to ensure that the operating units have
sufficient working capital for their day-to-day needs. Surplus cash
is maintained on call deposits with the clearing bankers to the
operating units, as the group is not yet sufficiently cash
generative to warrant a separate treasury function or take
advantage of greater returns that may be available from other
sources or maturities. The group does derive income in overseas
currencies, principally the US dollar, and does incur expenses in
overseas currencies, principally the costs of its South African
operation which is Rand based.
At 31 March 2015 the group had purchased R5 million (2014: R10
million) forward for sterling at a rate of R17.90: GBP1 (2014:
R18.09:GBP1) and R5 million (2014: Nil) forward for dollars at a
rate of R11.36: $1 exercisable at any time between 1 April 2015 and
30 September 2015, the fair value of the financial liability is
immaterial to the financial statements. No other forward contracts
have been entered into to further hedge these exposures.
28 Financial instruments and risk summary (continued)
(b) Capital risk management
The directors consider the company's capital comprises its share
capital and reserves and bank and other loans. In general the group
finances its operations from equity share issues and from the
retention of profits. To ensure that equity markets remain open to
the group as a source of capital, the market price of the group's
shares is regularly reviewed by the Board, to check it remains
above par value. The group's investment in South Africa includes
the property there; this purchase was financed through a
combination of retained earnings and locally sourced bank finance
to act as a hedge against country and currency risk.
(c) Foreign currency risk and sensitivity
The group has two overseas subsidiaries whose functional
currencies are Rand and another whose functional currency is US
dollars. In addition the group undertakes transactions denominated
in foreign currencies, principally US dollars, hence exposures to
exchange rate fluctuations arise. The carrying amount of the
group's foreign currency denominated financial assets and financial
liabilities at the reporting date is as follows:
Assets Liabilities
2015 2014 2015 2014
GBP GBP GBP GBP
Rand 545,554 277,804 236,644 338,494
Dollar 881,291 923,703 72,747 60,924
Other currencies 91,004 15,119 6,621 26,969
1,517,849 1,216,626 316,012 426,387
The company does not have any exposure to foreign currencies as
all its transactions are in sterling. The group's exposure to the
Rand is such that were the Rand to appreciate by 10% against
sterling the cost of its operations in South Africa would rise by
GBP147,905 (2014: GBP158,327), this would be mitigated by a rise in
the value in the group's Rand assets of GBP115,613 (2014:
GBP78,245). The group's exposure to the US dollar is such that were
the dollar to depreciate by 10% against sterling profit would be
reduced by GBP84,312 (2014: GBP100,275). The Board are aware that
these are significant risks and the impact of currency movements on
earnings cannot be reliably forecast and remains an area of
uncertainty.
(d) Market risk
The group's activities expose it to the financial risks of
changes in foreign currency exchange rates (see section (c)) and
interest rates (see section (g)). As explained above, the group
has, for the present, accepted exposure to these risks.
(e) Liquidity risk
Ultimate responsibility for liquidity risk management rests with
the board of directors, which regularly reviews the short, medium
and long term funding and liquidity requirements. As a general
principle the board consider that equity remains the most
appropriate source of funds for the business and endeavours to
maintain access to equity capital markets to fund medium and long
term liquidity requirements. However, where significant overseas
investments are contemplated an evaluation of currency, country and
other risk factors are taken into account and opportunities to
finance a proportion of that investment locally will be considered.
Financial assets are maintained on short term deposit to assist
with the management of day-to-day working capital requirements.
28 Financial instruments and risk summary (continued)
(f) Fair value of financial instruments
There is no material difference between the fair value and
carrying value of financial assets and liabilities.
(g) Interest rate risk
The group has financial assets of GBP4,113,623 at 31 March 2015
(2014: GBP3,266,917) comprising cash deposits and trade and other
receivables. Trade and other non-interest bearing receivables have
been excluded from the following tables as they are non-interest
bearing.
The interest rate profile of the group's financial assets,
excluding trade and other receivables was:
Floating Floating
rate deposits Average rate deposits Average
2015 rate 2014 rate
Group GBP 2015 GBP 2014
Currency
Sterling 2,294,485 0.1% 1,621,566 0.1%
Rand 491,826 6% 201,611 6%
Dollar 614,145 0% 473,266 0%
Euro 17,500 0% 6,134 -
3,417,956 2,302,577
Company
Sterling 1,359,576 0.1% 957,426 0.1%
Rand 236,914 9% 284,240 9%
1,596,490 1,241,666
The group has financial liabilities of GBP776,864 (2014:
GBP740,607).
The interest rate profile of the group's financial liabilities,
excluding trade and other payables, at 31 March 2015 was:
Average
Floating Fixed rate Total financial rate of
rate liabilities liabilities liabilities floating
Group GBP GBP GBP rate liabilities
Currency
Rand bank loan 232,776 - 232,776 9.0%
The interest rate profile of the group's financial liabilities,
excluding trade and other payables, at 31 March 2014 was:
Average
Floating Fixed rate Total financial rate of
rate liabilities liabilities liabilities floating
Group GBP GBP GBP rate liabilities
Currency
Rand bank loan 258,375 - 258,375 9.0%
28 Financial instruments and risk summary (continued)
(g) Interest rate risk (continued)
The following table details the remaining contractual maturity
for the group's financial liabilities. The table is based on the
earliest date on which the group can be required to pay. The table
includes both principal cash flows and interest, or an estimate of
interest for floating rate instruments and excludes trade and other
payables as the contractual maturities are all due within one year
of the balance sheet date.
Due in Due in Due in
Due within one to two to over five
Group one year two years five years years Total
2015 GBP GBP GBP GBP GBP
Floating rate
bank loan 41,902 41,902 125,706 23,266 232,776
- Average
rate 9.0%
41,902 41,902 125,706 23,266 232,776
2014 GBP GBP GBP GBP GBP
Floating rate
bank loan 42,505 42,505 127,515 45,850 258,375
- Average
rate 8.5%
42,505 42,505 127,515 45,850 258,375
(h) Credit risk
Credit risk refers to the risk that a counterparty will default
on its contractual obligations resulting in financial loss to the
group. The group has a credit policy of only dealing with
creditworthy counterparties as a means of mitigating this risk. The
group's exposure to credit risk is monitored on a monthly basis and
remedial action taken where appropriate.
The group endeavour to ensure a spread of customers to avoid the
risks associated with concentration of credit. At the balance sheet
date one customer accounted for 15.6% (2014: 13.9%) of the group's
trade and other receivables, no other customer accounted for more
than 10%. These receivables are within their trading terms but
nonetheless present an ongoing risk. The group is endeavouring to
mitigate this risk by gaining new customers at a faster rate than
business with these two counterparties develops.
The group's maximum exposure to credit risk on its financial
assets is GBP4,113,623
(2014: GBP3,268,499). For the company its maximum exposure,
excluding amounts due from subsidiaries, is GBP1,369,586 (2014:
GBP975,386). The group does not hold any collateral against these
financial assets.
29 Contingent liabilities
The company has a contingent liability in respect of the value
added tax of certain subsidiary companies under a group
registration and is therefore jointly and severally liable for all
the other group companies' debt in this respect. At 31 March 2015
the maximum potential liability was GBP90,871 (2014:
GBP63,479).
30 Post balance sheet event
On 29 May the company contracted to acquire the entire share
capital of RISQ Worldwide Holdings Pte. Limited and it's wholly
owned subsidiary RISQ Worldwide Pte. Limited, both companies are
incorporated in Singapore. Completion is due on 1 July 2015 and the
initial consideration is SGD550,000 with additional contingent
consideration of up to SGD1,000,000 payable, depending on
performance, for the years to 30 June 2016 and 30 June 2017.
DIRECTORS AND OFFICERS
DIRECTORS
S A Richards, MA MSc FCA (Executive Chairman)
M S H Worsley-Tonks MBE (Chief Executive Officer)
L Adlam (Non-Executive Director)
J E A Mocatta, MA FCA (Non-Executive Director)
SECRETARY
J E A Mocatta, MA FCA
REGISTERED OFFICE: ADMINISTRATIVE OFFICE:
Breckenridge House The Coach House
274 Sauchiehall Street Bill Hill Park
Glasgow G2 3EH Wokingham
Berkshire RG40 5QT
NOMINATED ADVISER AND BANKERS:
BROKER:
finnCap Limited HSBC Bank plc
60 New Broad Street 26-28 Broad Street
London EC2M 1JJ Reading
Berkshire RG1 2BU
REGISTRARS: SOLICITORS:
Capita Registrars PXS Field Seymour Parkes LLP
34 The Registry 1 London St
Beckenham Reading RG1 4QW
Kent BR3 4TU
INDEPENDENT AUDITOR:
Baker Tilly UK Audit LLP
Chartered Accountants
25 Farringdon Street
London EC4A 4AB
This information is provided by RNS
The company news service from the London Stock Exchange
END
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