Final Results

Reliance Security Group PLC 29 June 2006 THURSDAY 29 JUNE 2006 PRESS RELEASE Reliance Security Group plc Preliminary announcement of results for the Year ended 28 April 2006 •Turnover up 2.3% to £317.5m (2005: £310.3m) •Profit before tax and exceptional items: £13.1m (2005: £15.6m) •Earnings per share before exceptional items: 41.7p (2005: 47.4p) earnings per share 30.7p (2005: 61.3p) •Dividend per share up 7.0% to 20.0p (2005: 18.7p) •Challenging market conditions in Security Services •Organic growth in FM •Continuing investment in growth markets •Forward FM order book £716m (2005: £731m) Brian Kingham, Chairman, commenting on the results said: 'We have achieved results in line with our expectations despite challenging conditions in the security services market. Our businesses in facilities management and business process outsourcing have performed well. We are utilising our strong financial position to continue to invest in growth markets.' Notes to Editors Reliance is an established market leader in the provision of contract security, facilities management, support services, and business process outsourcing. Reliance employs over 12,000 people from a network of offices throughout the UK. For further information : Brian Kingham Chairman 020 7730 9716 Julian Nicholls Group Managing Director 01895 205002 Chairman's Statement Introduction The Group's results for the year to 28 April 2006 are in line with expectations. In the security services market, conditions have remained challenging with continuing pressure on margins. We have devoted extensive management effort and incurred considerable expense in complying with government regulation, which came into effect in March 2006. The diversion of resource has resulted in some slippage in our security market share. Nonetheless, we expect that regulation will have a gradual beneficial effect. We have reorganised the security division and its senior management team to take full advantage of the new dynamics of a regulated security market. We are exploiting the extensive growth opportunities in the diverse, £60 billion per annum facilities management and business process outsourcing market. We have won a wide range of new contracts and important contracts have been successfully renewed. This will help to offset the effect of the expiry of our electronic monitoring contract in March 2006. We continue to invest in developing complementary new products and services to meet customers' requirements for organisational change, process improvement and the application of the latest technologies. We have invested significantly in business development resource and activity levels are high. Results Turnover for the year to 28 April 2006 increased by 2.3% to £317.5 million (2005: £310.3 million). Pre-exceptional, pre-tax profit for the year was £13.1 million (2005: £15.6 million). Excluding exceptional items, earnings per share was 41.7p (2005: 47.4p). The net exceptional pre-tax charge of £3.5 million (2005: net exceptional profit of £3.0 million) is explained fully in the Financial Review below. Net cash generated from operations was £11.8 million (2005: £15.7 million) and we ended the year with net cash of £21.1 million (2005: £27.7 million), notwithstanding the £10.1 million outlay of the cash return to shareholders in December. Dividend A final dividend is proposed of 15.5p making a total for the year of 20.0p, 7.0% higher than last year (2005: final dividend 14.5p, total 18.7p). The proposed final dividend is subject to approval at the AGM on 7 September 2006 and payable on 22 September 2006 to shareholders on the register on 1 September 2006. Strategy Recognising the requirement to adapt to changes in markets, technologies and customer needs, the board regularly reviews the strategy for the group and its operating businesses. The latest such review confirmed our long-term strategy. Our strategy continues to be built around differentiating Reliance from other suppliers - primarily through innovation, service quality, people development and teamwork - enabling us to outperform our competitors in both growth and margins, thus generating superior value for our shareholders. Our security services business is undergoing major changes as a result of Government regulation. In a market worth £3 billion per annum we are strengthening our leadership position and responding robustly to consolidation, offering customers an innovative balance of technology and manpower services. We will increase our already substantial presence in the larger and faster growing markets of facilities management and business process outsourcing. We will continue to grow recurring revenues by expanding the range of complementary services delivered under long term contracts to both public and private sector customers. We seek to establish leadership positions in specific niches where we have specialist knowledge and the necessary core competencies. We will maintain a strong balance sheet enabling us to consider acquisition opportunities which can broaden or strengthen our core businesses. Community The group has a strong tradition of working with voluntary, charitable and not for profit organisations with complementary aims and capabilities. We seek to increase our support and encouragement of those working to promote innovation, enterprise and the development of young people. We were delighted this year to help bring Made In Brunel, a breathtaking array of innovation and design from the students of Brunel University, to the wider international audience in central London. Our work with Crime Concern, Cumberland Lodge, the Police Service and numerous community groups serves to enrich our experience and capacity to serve our customers. People I welcome this opportunity to express on behalf of the board our warmest thanks to our people. Their enthusiasm, dedication and professionalism is the very heart of our business and is what enables us to offer a Reliance difference. Nowhere was this better demonstrated than in the care and concern for our customers and the speed of response shown by our people in London on 7 July 2005. I cannot over emphasise the importance we attach to constantly refreshing and renewing the many initiatives we take to support and enable our people to perform their work better. Finding new and imaginative ways to help them achieve high levels of efficiency and customer care is a core strength of the group and one we work tirelessly to sustain and elevate. The renewal of our Investors In People accreditation this year serves to emphasise the towering significance of best practice and the rewards of constantly improving and innovating in the leadership and management of our people. Investors In People offers a persuasive set of principles for improving business performance and competitiveness through a planned approach to setting and communicating business objectives and developing the training and skills required to achieve them. Our long term strength, our ability to grow and to offer customers products and services in which they see significant value, is dependent on constantly learning, improving and developing skills. In the last year we have taken further initiatives. Our work with the business school at Brunel University has enabled us to strengthen the Reliance Academy and increase its contribution in supporting the extensive efforts of our people to enhance their knowledge and performance. Board During the year we announced the retirements from the group board of Neil French, as Group Finance Director, and Tony Hales, as a non-executive director, as well as the appointment of David Walter as a non-executive director. Neil remains on the board in a non-executive capacity to oversee the transition to his successor. At the year end, Mark Radcliffe retired and Roger Wood was appointed as a non-executive director. Mark has given Reliance unstinting and invaluable support and advice over a long period and we are deeply grateful. We wish him a long and happy retirement. We are delighted to welcome Roger to the board. His extensive experience in technology and service businesses will be invaluable, especially in the further development of our business process outsourcing activities. We continue to strengthen our operating company boards through internal promotions and attracting accomplished managers who share our passion for the values that inspire the success of Reliance. Michael Carre was appointed managing director of Reliance Security Services and Sandra Burrell, Chris Burnell, Mark Tuckwell and Ian Foster, all established Reliance managers, also joined its board. Future The potential for future organic growth remains highly attractive, particularly now we have strengthened the senior management teams in all three of our major businesses. However, the year ahead will be challenging, with the expiry of a number of large contracts in 2006 making us dependent on winning further significant new business. The beneficial effects of security industry regulation will also take time to materialise. We enjoy a strong competitive position in large and growing markets. We have consistently invested in developing our businesses and positioning them for growth, which is being steadily realised. We expect to see further growth in demand for our services. The public sector is moving strongly to a mixed economy model for bringing innovation and change in the delivery of services. We are well placed to operate in a broader spectrum of public sector markets which we have yet to access. In the private sector we expect increased demand as businesses seek to rationalise their supply chain for services and implement change and improvement in business processes. Our forward order book remains healthy and we continue to enjoy a strong financial position. Brian Kingham Chairman Operational Review During my first year with Reliance, I have had the opportunity to witness first hand the excellent and inspiring work which our colleagues perform for our customers. I have also been able to observe and learn from our customers the tangible difference which we make to their businesses and the importance which they attach to the services we provide. I am excited by the opportunities which are presented in both our Facilities Management and Security Services markets and the firm foundation they give us to build and develop the group. This year, however, has been a year of mixed performance but, despite the challenges which we have faced, it has also been marked by successes. Security Services Turnover was £187.8 million (2005: £192.7 million) and segment operating profit before exceptional items and excluding the Group's share of its associate was £4.9 million (2005: £5.0 million). This reduction in both turnover and profit to a large extent reflects the impact of a rather turbulent and unpredictable market in the run up to regulation and licensing in March 2006. Our electronic security business, Reliance High-Tech, continued to improve and exceeded expectations, but only has a marginal impact on the overall result at this stage of its development. Meeting the requirements of the Private Security Industry Act has been challenging and has caused some distraction within the business. During the year we have trained and tested nearly 7,000 people to regulatory standards and we have done so without disrupting the service to our customers. It is a tribute to the Reliance project team that we have also achieved Approved Contractor Status for manpower security, door supervision and CCTV operation. As the market settles in its new regulated environment, I believe that the pressure will relax, and that we will start to see a shift towards improved margins. In order to prepare for the changes in the market we have restructured the management team and significantly strengthened its sales and marketing capabilities. We have made good progress this year in developing our reputation for excellence in customer service and innovation. As we continue to seek ways to differentiate and respond to the needs of our customers, we are increasingly aware of their changing priorities. During the course of the year our mobile response activity, Patrol Net, has been established as a separate business unit with a centralised command centre and enhanced capabilities. This has already led to the development of a number of new services, including the provision of escorts for lone workers and security risk assessments for multi-site customers. Among others, we have won significant new contracts with Boots, Matalan, the Co-op and Phones 4U. The integration of manpower security and mobile response is an increasingly popular requirement for retail customers with high street premises and we have recently been awarded a contract to provide this service to New Look stores. The trend among our customers to seek improved effectiveness and economy through the integration of technology, remote monitoring, site based services and mobile response has continued this year. Remote surveillance and monitoring are important constituents in the mix of services which are required. Our state of the art remote surveillance centre is already well established and we continue to invest in the latest software and systems to extend our leadership in this area. We were delighted to win the award for the 'Best Integrated Security Solution' at the 2005 Security Excellence Awards. This award was presented to Reliance for demonstrating the best integration of manpower and electronic security systems at BMW where we have worked closely with our customer to reshape and improve their security provision while reducing cost. British Security Industry Association awards were also won for 'Best Use of Technology' for our work in integrating manpower and electronic security for Harper Collins and C&J Clark. In 2006 we also won a major contract with ITV for this integrated service. We have made good progress in our electronic security business by winning significant new contracts with Air Products, the National Offender Management Service (NOMS), Trinity Mirror, and Bank of America. We are continuing to differentiate our services by staying at the forefront of technology. The public sector remains an important part of our activity, where we have contracts with NHS hospitals, universities and colleges of further education, local authorities and social housing providers. Our work with the public sector also extends to the wider policing family where a good example of this is Project Griffin, an initiative launched by the City of London Police in 2004. Its purpose is to better equip private security businesses to assist in the event of a major incident. We have trained over 170 officers in London and are participating in the extension of the project to Manchester. Facilities Management Turnover was £129.7 million (2005: £117.5 million), and segment operating profit including the Group's share of its joint venture and associate but before exceptional items was £7.3 million (2005: £8.3 million). This year we have improved our capability to develop solutions for our customers by strengthening our business development resource. We have also appointed new managing directors to our business process outsourcing and facilities management businesses. We were obviously disappointed not to renew our electronic monitoring contract in Scotland but heartened by the fact that this had nothing to do with service quality, which the Scottish Executive made a point of publicly praising. The result of our continued attention to delivering the highest standards of service and of developing our understanding of our customers has been the renewal and extension of many of our other contracts and the securing of new business. Our forward order book remains strong at £716 million (2005: £731 million). Our 100% record of delivery of over 400,000 items, together with service improvements from the application of new IT systems, was instrumental in the award of a new five year contract with the Forensic Science Service. We have been awarded a new four year contract to provide custody services to West Mercia Police, and our contract with Thames Valley Police has been extended and broadened in the range of services we provide. Our facilities management contract with British Telecom has been renewed for a further three years. Our focus on working closely with our customers has again offered us significant opportunity for increasing our business with them. Our contracts with Centrex training colleges and 3M are good examples of where we have added new buildings, locations and services to existing arrangements. The market for the provision of business process outsourcing and facilities management continues to grow. Our position as market leader in the provision of custody services has recently been enhanced with a new four year contract with Warwickshire Police. We have also been contracted by Devon & Cornwall Police to provide a range of facility services across their estate. Other notable contract wins include the provision of facility services to Durham University and the AA. During the year we have continued to mobilise our Private Finance Initiative contracts. The year saw the opening of the latest, purpose built, detainee handing and investigation centre for Sussex Police in Eastbourne. For Cleveland Police we commenced early services and construction on the Middlesbrough & Langbaurgh Divisional Headquarters. The construction and mobilisation of new headquarters for the Health & Safety Executive in Merseyside was completed, as was the new headquarters for Gloucestershire Police. The Gloucestershire building is of remarkable environmentally sensitive design and among its features is the utilisation of the latest technology in geothermal heating and cooling. By the end of January 2006, on time and on budget, some 450 police staff had taken occupancy. Reliance is providing full facility services, including manpower security, electronic security and access control, catering, cleaning and janitorial services, reception, porterage, registry and estate management. Operational Outlook Overall, I am pleased with the progress that we have made in our businesses over the financial year and I am looking forward to building on this over the coming months. All our businesses have exciting potential, which we remain committed to realising. Julian Nicholls Group Managing Director Financial Review Overview In the year to 28 April 2006 the Group turnover increased 2.3% to £317.5 million (2005: £310.3 million) before exceptional income of £0.8 million (2005: £nil). Pre-exceptional profit on ordinary activities before taxation was 16.4% lower at £13.1 million (2005: £15.6 million) largely due to the expiry in 2005 of a significant contract in the facilities management sector, the absence of a contribution from our former investment in Safe Estates Services Ltd following divestment in December 2004 and challenging market conditions in our security services sector. Net cash was £21.1 million (2005: £27.7 million) reflecting good levels of organic cash generation in the year partly offset by the £10.1 million outlay of the cash return to shareholders (described below) and £3.3 million net cash outflow largely relating to the regulation of the private security industry. The return on operating assets (being the ratio of profit on ordinary activities, before net finance income and exceptional items, to operating assets was 255.2% (2005: 191.2%) and the return on shareholders' funds (profit after tax, excluding exceptionals, to net assets) was 35.1% (2005: 31.9%). On 16 December 2005 1,792,737 shares were acquired by the company for an aggregate cash consideration of £9.9 million, of which 400,000 shares were transferred into treasury and the balance were cancelled. As a result the company now has a total of 21,512,855 shares in issue (excluding treasury shares). Transaction costs were £0.2 million. Exceptional Items Pre-tax net exceptional costs were £3.5 million (2005: net income £3.0 million) and largely relate to the cost of compliance with security industry regulation in England & Wales of £4.1 million (2000: £0.6 million) net of amounts recovered from customers of £0.8 million (2005: £nil). After 20 March 2006, the date from which security industry regulation became effective, our related manpower security revenue and costs will be recognised within turnover, cost of sales and overheads in the usual way. £0.1 million of costs relating to the Group's transfer to the AIM Market in August 2005 have also been treated as exceptional. The prior year exceptional net income comprised a profit of £4.3 million arising from the disposal of Safe Estates Services Ltd, a £0.7 million write down of the goodwill relating to Goldrange Limited, the Group's event security business, and £0.6 million of regulation related costs. Accounting Matters Accounting policies There has been no significant change in accounting policies during the year other than the adoption of FRS 21 in respect of dividends which are now recognised when declared. Accordingly the proposed final dividend has not been recorded as a liability and prior years have been restated. International Financial Reporting Standards The Group is not yet required to adopt International Financial Reporting Standards, under the AIM Market's reporting regime, until its 2007/08 financial year. As previously indicated, the adoption of IFRS is not expected to have a material impact on reported earnings per share and the impact on consolidated net assets is expected to be immaterial. Group Results Operating margin Group gross margin excluding exceptionals has decreased to 18.8% (2005: 19.9%) partly due to the ending of a higher margin contract in the facilities management sector. Effective cost control has resulted in Group administration costs reducing to £48.9 million (2005: £49.5 million); as a percentage of turnover these costs have decreased to 15.4% (2005: 16.0%). Group operating margin, being the ratio of pre-exceptional operating profit to turnover, has decreased to 3.4% (2005: 3.9%) which reflects decreased gross margins. Net interest receivable Notwithstanding the outlay of the cash return to shareholders of £10.1 million (2005: £nil) net interest receivable increased to £0.9 million (2005: £0.6 million) reflecting improved returns on deposits and increased net cash balances up to December 2005. Taxation The net taxation charge for the year, excluding exceptional items, was £2.8 million (2005: £4.7 million) which represents an effective tax rate of 29.4% (2005: 31.1%), reflecting the utilisation of brought forward tax losses in a subsidiary undertaking. The net exceptional charge of £3.5 million is fully tax deductible; the net exceptional profit of £3.0 million in the prior year resulted in a tax credit of £0.2 million. Earnings per share Earnings per share, before exceptional items, was 41.7 pence per share (2005: 47.4p). At 28 April 2006, following the earlier tender offer there were 21,512,855 (2005: 23,305,592) shares in issue, excluding 400,000 treasury shares but including 542,599 (2005: 542,599) shares held by the employee share ownership trust. Dividends The 2006 interim dividend paid was 4.5 pence per share (2005: 4.2 pence per share). The final proposed dividend is 15.5 pence per share (2005: 14.5 pence per share) although changes in accounting policy discussed above require this to be reported in 2006/07. Dividend cover before exceptional items is 2.2 times (2005: 2.5 times); the Board considers this level of dividend cover entirely appropriate given the Group's cash balances Cash flow The Group's underlying cash generation has again been strong. EBITDA, excluding exceptional items, declined by 15.7% to £13.0 million (2005: £15.4 million) principally reflecting a reduction in operating profit. The cash outflow relating to exceptional items was £3.3 million (2005: £0.6 million). However, effective cash controls resulted in a reduction in working capital of £2.3 million (2005: £0.9 million). Consequently, net cash inflow from operating activities was £11.8 million (2005: £15.7 million). Dividends received from associates were £1.0 million (2005: £1.4 million) and net interest received was £0.9 million (2005: £0.5 million), the latter reflecting higher returns on deposits and higher cash balances prior to the cash return to shareholders in December. Corporation tax paid was £3.4 million (2005: £3.2 million). The net cash outflow from capital expenditure and investing activities was £2.5 million (2005: £0.2 million). This comprises of a long term loan of £1.1 million which was advanced to a PFI special purpose company (2005: £nil) and net capital expenditure of £1.4 million (2005: £1.2 million), reflecting an increased spend on IT systems. There were no disposals of current asset investments in the year (2005: proceeds of £1.0 million). There were no cash flows associated with acquisitions and disposals (2005: £7.0 million net cash inflow). The prior year figure reflects the sale of the Group's interest in its associate, Safe Estates Services Ltd, and a payment relating to the completion of an earn-out arrangement. Dividends paid, excluding dividends paid in respect of shares held by the employee share ownership trust, increased by 7.8% to £4.2 million (2005: £3.9 million). Cash inflow before financing was £3.6 million (2005: £17.3 million). The net cash outflow from financing was £10.2 million (2005: £0.3 million), reflecting the £9.9 million cash return to shareholders and associated costs of £0.2 million (2005: £nil). The decrease in cash in the year was £6.6 million (2005: increase £17.0 million). For management purposes, the Group focuses on free cash flow, being cash flow from operating activities less tax and interest paid plus dividends received from associates. Over time, the Group expects to achieve free cash flow of approximately 70% of pre-exceptional, pre-tax profit. In aggregate, over the years 2002 to 2006 the Group's free cash flow has been 91.7% of pre-exceptional, pre-tax profit. The Group will incur an increased level of capital expenditure in 2006/07, largely IT related, and expects to make further but less substantial investments in PFI special purpose companies. These factors notwithstanding, the Group expects to be modestly cash generative, overall, in 2006/07. The Group's policy is to maintain committed, medium term borrowing facilities that are more than sufficient to meet its foreseeable medium term financing requirements. Segment Results The security services and facilities management segments include the results of those of the Group's businesses, joint ventures and associated undertakings that provide site based security services and facilities management services respectively to customers. Central administrative costs and operating assets have been allocated to the two segments. A more detailed analysis is set out in note 3 to the accounts below. Security Services Turnover decreased 2.5% to £187.8 million (2005: £192.7 million) and operating profit before exceptionals and the Group's share of its associate decreased 2.0% to £4.9 million (2005: £5.0 million) largely reflecting tougher market conditions in security services. The prior year associate's profit of Safe Estates Services Ltd was £1.8 million. Segment operating margin excluding the Group's share of its associate remains unchanged at 2.6% (2005: 2.6%). Facilities Management Turnover increased 10.3% to £129.7 million (2005: £117.5 million) and operating profit excluding exceptionals but including the Group's share of the profit from its joint venture and associate decreased 12.0% to £7.3 million (2005: £8.3 million) largely reflecting the ending of a significant contract. Operating margin excluding exceptionals and the Group's share of profit from its associate but including the Group's share of profit from its joint venture was 4.6% (2005: 6.0%). The Group's share of the profit from its joint venture and associate is £1.4 million (2005: £1.1 million). Reliance Security Group plc Consolidated profit and loss account for the year ended 28 April 2006 Pre-exceptional Exceptional items items 2006 2006 2006 2005 Notes £'000 £'000 £'000 £'000 --------------------- ------ ---------- --------- --------- --------- Turnover: Group and share of joint venture 3, 4 317,483 758 318,241 310,257 Less: share of joint venture's turnover 3 (259) - (259) - --------------------- ------ ---------- --------- --------- --------- Group turnover - continuing operations 3 317,224 758 317,982 310,257 ---------- --------- --------- --------- Cost of sales - excluding exceptional item (257,598) - (257,598) (248,568) - exceptional item 4 - (3,828) (3,828) (386) ---------- --------- --------- --------- Total cost of sales (257,598) (3,828) (261,426) (248,954) --------------------- ------ ---------- --------- --------- --------- Gross profit 59,626 (3,070) 56,556 61,303 Administrative expenses ---------- --------- --------- --------- - excluding exceptional items (48,905) - (48,905) (49,493) - exceptional items 4 - (398) (398) (888) ---------- --------- --------- --------- Total administrative expenses (48,905) (398) (49,303) (50,381) --------------------- ------ ---------- --------- --------- --------- Group operating profit excluding share of joint venture and associates - continuing operations 10,721 (3,468) 7,253 10,922 ---------- --------- --------- --------- Share of joint venture's operating profit/(loss) 3 154 - 154 (138) - continuing operations Share of associate's operating profits 3 1,274 - 1,274 1,181 - continuing operations Share of associate's operating profits 3 - - - 1,818 - discontinued operations ---------- --------- --------- --------- Total share of operating profits of joint venture and associates 1,428 - 1,428 2,861 --------------------- ------ ---------- --------- --------- --------- Operating profit: Group and share of joint venture and associates 3 12,149 (3,468) 8,681 13,783 --------------------- ------ ---------- --------- --------- --------- Non-operating exceptional gain on disposal of investment in associate 4 - - - 4,256 --------------------- ------ ---------- --------- --------- --------- Profit on ordinary activities before finance income/(charges) 12,149 (3,468) 8,681 18,039 Finance income/(charges) ---------- --------- --------- --------- Group 1,050 - 1,050 555 Joint venture (137) - (137) - Associates 13 - 13 20 ---------- --------- --------- --------- Net finance income 926 - 926 575 --------------------- ------ ---------- --------- --------- --------- Profit on ordinary activities before taxation 13,075 (3,468) 9,607 18,614 Tax on profit on ordinary activities 4, 5 (3,849) 1,040 (2,809) (4,673) --------------------- ------ ---------- --------- --------- --------- Profit on ordinary activities after taxation and for the year 7 9,226 (2,428) 6,798 13,941 --------------------- ------ ---------- --------- --------- --------- 2006 2005 Notes £'000 £'000 ---------------------- ------ --------- --------- Earnings per ordinary share Basic Continuing operations 30.7p 37.1p Discontinued operations - 24.2p ---------------------- ------ --------- --------- 6 30.7p 61.3p ---------------------- ------ --------- --------- Diluted Continuing operations 30.7p 36.8p Discontinued operations - 24.1p ---------------------- ------ --------- --------- 6 30.7p 60.9p ---------------------- ------ --------- --------- Dividend per ordinary share for the year 20.0p 18.7p ---------------------- ------ --------- --------- There are no material differences between reported and historical cost profits and losses. The Group has no recognised gains or losses other than the results as set out above and, therefore, no statement of total recognised gains and losses has been prepared. Reliance Security Group plc Consolidated balance sheet as at 28 April 2006 Restated (*) 2006 2005 Notes £'000 £'000 -------------------------- ----- --------- -------- Fixed assets Tangible assets 5,445 6,138 --------- -------- Investments Share of gross assets of joint venture 10,602 7,675 Share of gross liabilities of joint venture (10,718) (7,808) --------- -------- Share of net liabilities of joint venture (116) (133) Associated undertaking 135 253 Others 1,701 467 --------- -------- Total investments 1,720 587 -------------------------- ----- --------- -------- 7,165 6,725 -------------------------- ----- --------- -------- Current assets Stocks 1,725 1,465 Debtors: amounts due within one year 36,488 37,767 Debtors: amounts due after more than one year 3,553 4,253 Cash at bank and in hand 24,557 31,107 -------------------------- ----- --------- -------- 66,323 74,592 -------------------------- ----- --------- -------- Liabilities: amounts falling due within one year Borrowings (3,376) (3,378) Creditors (41,250) (41,177) Corporation tax (2,069) (2,750) -------------------------- ----- --------- -------- (46,695) (47,305) -------------------------- ----- --------- -------- Net current assets 19,628 27,287 -------------------------- ----- --------- -------- Total assets less current liabilities 26,793 34,012 -------------------------- ----- --------- -------- Liabilities: amounts falling due after more than one year Borrowings (124) - Other creditors (400) (200) -------------------------- ----- --------- -------- (524) (200) -------------------------- ----- --------- -------- -------------------------- ----- --------- -------- Net assets 26,269 33,812 -------------------------- ----- --------- -------- Capital and reserves Called up share capital 1,095 1,165 Capital redemption reserve 70 - Share premium account 2,534 2,534 Own shares held (5,025) (2,825) Revaluation reserve 232 152 Profit and loss account 27,363 32,786 -------------------------- ----- --------- -------- Equity shareholders' funds 7 26,269 33,812 -------------------------- ----- --------- -------- (*) See note 1 Reliance Security Group plc Consolidated cash flow statement for the year ended 28 April 2006 2006 2005 Notes £'000 £'000 --------------------------- ------ -------- -------- Net cash inflow from operating activities 8 11,835 15,726 --------------------------- ------ -------- -------- Dividends from associate 1,005 1,421 --------------------------- ------ -------- -------- Returns on investment and servicing of finance Interest received 1,238 809 Interest paid (281) (293) Interest element of finance lease repayments (31) (30) --------------------------- ------ -------- -------- Net cash inflow from returns on investment and servicing of finance 926 486 --------------------------- ------ -------- -------- Taxation UK corporation tax paid (3,399) (3,199) --------------------------- ------ -------- -------- Capital expenditure and financial investment Purchase of tangible fixed assets (1,389) (1,252) Sale of tangible fixed assets 18 11 Loan advanced to joint venture (1,122) - Purchase of fixed asset investment - (32) Repayment of fixed asset investment - 20 Sale of current asset investment - 1,036 --------------------------- ------ -------- -------- Net cash outflow from capital expenditure and financial investment (2,493) (217) --------------------------- ------ -------- -------- Acquisitions and disposals Purchase of subsidiary undertaking - deferred consideration paid - (266) Purchase of interest in joint venture - (5) Sale of interest in associate - 7,260 --------------------------- ------ -------- -------- Net cash inflow from acquisitions and - 6,989 disposals --------------------------- ------ -------- -------- Equity dividends paid (4,245) (3,938) --------------------------- ------ -------- -------- Net cash inflow before financing 3,629 17,268 --------------------------- ------ -------- -------- Financing Payments to redeem equity shares (7,660) - Payments to acquire treasury shares (2,200) - Payments of expenses on redemption of equity shares, and acquisition of treasury shares (236) - Proceeds from exercise of options in shares held through the ESOP trust - 8 Capital element of finance lease repayments (83) (266) --------------------------- ------ -------- -------- Net cash outflow from financing (10,179) (258) --------------------------- ------ -------- -------- (Decrease)/increase in cash in the year (6,550) 17,010 --------------------------- ------ -------- -------- Reconciliation of net cash flow to movement in net cash (Decrease)/increase in cash in the year (6,550) 17,010 Cash flow from finance leases (122) 266 --------------------------- ------ -------- -------- Movement in net cash in the year (6,672) 17,276 Net cash at start of year 27,729 10,453 --------------------------- ------ -------- -------- Net cash at end of year 9 21,057 27,729 --------------------------- ------ -------- -------- Reliance Security Group plc Notes to the preliminary statement for the year ended 28 April 2006 The financial information set out above does not constitute the Group's statutory accounts for the years ended 28 April 2006 or 29 April 2005, but is derived from those accounts. Statutory accounts for 29 April 2005 have been delivered to the Registrar of Companies and those for 28 April 2006 will be delivered following the Company's annual general meeting. The auditors have reported on those accounts: their reports were unqualified and did not contain statements under s.237(2) or (3) Companies Act 1985. 1. Accounting convention The Group accounts have been prepared in accordance with applicable United Kingdom accounting standards and under the historical cost convention, as modified by the revaluation of land and buildings. This preliminary announcement has been prepared on the basis of the accounting policies laid down in those accounts. Accounting policies have been consistently applied in dealing with items which are considered material in relation to the Group's accounts, subject to the two changes in the year as set out below. The financial years of all Group companies are the 52 or 53 weeks up to the Friday before, or falling on, the accounting reference date of 30 April. The Group adopted Financial Reporting Standard 21 Events After the Balance Sheet Date (FRS 21) and Financial Reporting Standard 22 Earnings per Share (FRS 22) during the year. The adoption of FRS 21 has resulted in the Group restating its closing net assets for the prior year to exclude dividends proposed but not yet declared at the balance sheet date. This exclusion of proposed dividends previously reported within current liabilities has increased closing net assets at 29 April 2005 by £3,301,000. In addition the figure for opening net assets for the year ended 29 April 2005 has similarly been increased by £2,982,000. The adoption of FRS 22 has not led to any adjustment to the previously reported figures for basic and diluted earnings per share. Additional analysis of the earnings between those attributable to continuing and discontinued operations, including comparative figures, has been reported in note 6 as required by the standard. 2. Consolidation The consolidated profit and loss account and balance sheet incorporate the accounts of Reliance Security Group plc, its subsidiary undertakings and its share of the profits/losses and net assets/liabilities of its joint ventures and associates. The results of subsidiary undertakings, joint ventures or associates acquired or sold during the year are included in the consolidated profit and loss account from or to the date on which control passed. 3 Segmental information Security Facilities Security Facilities Services Management Total Services Management Total 2006 2006 2006 2005 2005 2005 £'000 £'000 £'000 £'000 £'000 £'000 ------------------ -------- --------- ------- -------- -------- ------- Group turnover - excluding exceptional revenue 187,818 129,406 317,224 192,730 117,527 310,257 Exceptional revenue 673 85 758 - - - ------------------ -------- --------- ------- -------- -------- ------- Group turnover 188,491 129,491 317,982 192,730 117,527 310,257 Share of joint venture's turnover - 259 259 - - - ------------------ -------- --------- ------- -------- -------- ------- Turnover: Group and share of joint venture 188,491 129,750 318,241 192,730 117,527 310,257 ------------------ -------- --------- ------- -------- -------- ------- Group operating profit before exceptional items, excluding share of joint venture and associate - continuing operations 4,880 5,841 10,721 4,979 7,217 12,196 -------- --------- ------- -------- -------- ------- Share of joint venture's operating profit/(loss) - continuing operations - 154 154 - (138) (138) Share of associate's operating profits - continuing operations - 1,274 1,274 - 1,181 1,181 Share of associate's operating profits - discontinued operations - - - 1,818 - 1,818 -------- --------- ------- -------- -------- ------- Total share of operating profits of joint venture and associates before exceptional items - 1,428 1,428 1,818 1,043 2,861 -------- --------- ------- -------- -------- ------- Operating profit before exceptional items: Group and share of joint venture and associates 4,880 7,269 12,149 6,797 8,260 15,057 -------- --------- ------- -------- -------- ------- Group operating exceptional items (3,295) (173) (3,468) (1,274) - (1,274) -------- --------- ------- -------- -------- ------- Operating profit: Group and share of joint venture and associates 1,585 7,096 8,681 5,523 8,260 13,783 -------- --------- ------- -------- -------- ------- Non-operating exceptional gain on disposal of investment in associate - - - 4,256 - 4,256 -------- --------- ------- -------- -------- ------- Profit on ordinary activities before finance income/(charges) 1,585 7,096 8,681 9,779 8,260 18,039 -------- --------- ------- -------- -------- ------- In accordance with the equity method adopted for accounting for associates, Group turnover excludes its share of turnover of associated undertakings of £30,050,000 (2005: £31,564,000). Security Facilities Security Facilities Restated(*) Services Management Total Services Management Total 2006 2006 2006 2005 2005 2005 £'000 £'000 £'000 £'000 £'000 £'000 ------------------- ------- --------- ------ ------- -------- -------- Group operating assets/(liabilities) (880) 5,621 4,741 3,870 3,884 7,754 Share of joint venture's net liabilities - (116) (116) - (133) (133) Share of associate's net assets - 135 135 - 253 253 ------------------- ------- --------- ------ ------- -------- -------- Total operating assets/(liabilities) (880) 5,640 4,760 3,870 4,004 7,874 ------------------- ------- --------- ------ ------- -------- -------- Reconciliation of total operating assets to total net assets: Total operating assets 4,760 7,874 Items excluded: Net cash 21,057 27,729 Investments in other participating interests 579 467 Loan to joint venture 1,122 - Taxation payable (2,069) (2,750) Deferred taxation 769 460 Net interest receivable 51 32 ---------------- ---------- --------- ------ ------- -------- -------- Total net assets (*) 26,269 33,812 ---------------- ---------- --------- ------ ------- -------- -------- Operating assets are those net assets controlled by Reliance's operating divisions. (*) See note 1 4 Exceptional items 2006 2005 £'000 £'000 -------------------------- ---------- --------- Operating exceptional items -------------------------- ---------- --------- Turnover Revenue received towards cost of implementation of Private Security Industry Act 758 - Cost of sales Cost of implementation of Private Security (3,828) (386) Industry Act Administrative expenses ---------- --------- Cost of implementation of Private Security Industry Act (312) (218) Impairment of goodwill held in respect of Goldrange Limited - (670) Legal and professional costs of re-listing on AIM (86) - ---------- --------- (398) (888) -------------------------- ---------- --------- Total operating exceptional charge (3,468) (1,274) Non-operating exceptional item Gain on disposal of investment in associate - Safe Estates Services Limited - 4,256 -------------------------- ---------- --------- Total exceptional (charge)/gain (3,468) 2,982 Tax credit on exceptional (charge)/gain 1,040 181 -------------------------- ---------- --------- (2,428) 3,163 -------------------------- ---------- --------- The net cash outflow in the year in respect of the operating exceptional items was £3,310,000 (2005: £604,000). There were no tax credits or charges relating to the exceptional goodwill write- off or gain on disposal of the investment in associate in the year ended 29 April 2005. 5 Taxation Corporation tax, excluding tax credits on exceptional charges, for the year ended 28 April 2006 has been calculated at an effective rate of 29.4% (2005: 31.1%). 6 Earnings per share 2006 2005 --------------- ---------------- Basic Diluted Basic Diluted pence pence pence pence per per per per £'000 share share £'000 share share -------------------- ----- ------- ------- ------ ------- ------- Profit for the period attributable to equity shareholders Continuing operations 6,798 30.7p 30.7p 8,429 37.1p 36.8p Discontinued operations - - - 5,512 24.2p 24.1p -------------------- ----- ------- ------- ------ ------- ------- 6,798 30.7p 30.7p 13,941 61.3p 60.9p Add back/(deduct): Exceptional items (see note 4) 2,428 11.0p 11.0p (3,163) (13.9p) (13.8p) -------------------- ----- ------- ------- ------ ------- ------- Earnings excluding exceptional items 9,226 41.7p 41.7p 10,778 47.4p 47.1p -------------------- ----- ------- ------- ------ ------- ------- Represented by Continuing operations 9,226 41.7p 41.7p 9,522 41.9p 41.6p Discontinued operations - - - 1,256 5.5p 5.5p -------------------- ----- ------- ------- ------ ------- ------- 9,226 41.7p 41.7p 10,778 47.4p 47.1p -------------------- ----- ------- ------- ------ ------- ------- 2006 2005 Number Number ---------------------------- -------- -------- Weighted average number of shares 22,808,186 23,305,592 Weighted average number of shares held in treasury (142,857) - Weighted average number of shares held in ESOP trust (542,599) ( 544,907) ---------------------------- -------- -------- Shares used to calculate basic earnings per share 22,122,730 22,760,685 Dilutive potential shares - 138,557 ---------------------------- -------- -------- Shares used to calculate diluted earnings per share 22,122,730 22,899,242 ---------------------------- -------- -------- The basic and diluted earnings per share have been calculated in accordance with FRS 22, based on profit after tax and the weighted average number of ordinary shares in issue during the year, less own shares held in treasury and by the ESOP trust. 7 Reconciliation of movement in equity shareholders' funds Called up Capital Share Own Profit share redemption account shares Revaluation and loss Restated(*) capital reserve premium held reserve account 2006 2005 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 ----------------- -------- -------- -------- -------- -------- -------- -------- -------- Group At start of the year as previously stated 1,165 - 2,534 (2,825) 152 29,485 30,511 20,819 Prior period adjustment for proposed dividends (*) - - - - - 3,301 3,301 2,982 ----------------- -------- -------- -------- -------- -------- -------- -------- -------- At start of year as restated 1,165 - 2,534 (2,825) 152 32,786 33,812 23,801 Share based payments - - - - - - - 8 Reclassification - - - - 80 (80) - - Purchase of own shares (70) 70 - (2,200) - (7,896) (10,096) - Profit on ordinary activities after taxation - - - - - 6,798 6,798 13,941 Dividends paid - - - - - (4,245) (4,245) (3,938) ----------------- -------- -------- -------- -------- -------- -------- -------- -------- At end of the year as restated (*) 1,095 70 2,534 (5,025) 232 27,363 26,269 33,812 ----------------- -------- -------- -------- -------- -------- -------- -------- -------- In accordance with s.264 Companies Act 1985 the value of own shares held must be deducted from the profit and loss account of the Company in calculating its distributable reserves. (*) See note 1 8 Reconciliation of operating profit to net cash inflow from operating activities 2006 2005 £'000 £'000 -------------------- ------- ------- Operating profit 7,253 10,922 Depreciation charges 2,272 3,045 Amortisation of goodwill - 88 Exceptional goodwill impairment - 670 (Profit)/loss on the sale of fixed assets (3) 85 (Increase)/decrease in stocks (260) 205 Decrease/(increase) in debtors 2,317 (6,756) Increase in creditors 256 7,467 -------------------- ------- ------- Net cash inflow from operating activities 11,835 15,726 -------------------- ------- ------- 9 Analysis and reconciliation of net cash 2005 Cash flow 2006 £'000 £'000 £'000 --------------------------- -------- -------- ------- Cash at bank and in hand 31,107 (6,550) 24,557 --------------------------- -------- -------- ------- Loan due within one year (3,315) - (3,315) Finance leases and hire purchase contracts (63) (122) (185) --------------------------- -------- -------- ------- Total borrowings (3,378) (122) (3,500) --------------------------- -------- -------- ------- Net cash 27,729 (6,672) 21,057 --------------------------- -------- -------- ------- This information is provided by RNS The company news service from the London Stock Exchange

Companies

Resolute Mining Limited NPV (DI) (RSG)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today