Interim Results - Pre-tax Profit Up 20%

Reliance Security Group PLC 9 December 1999 RELIANCE SECURITY GROUP PLC INTERIM ANNOUNCEMENT OF RESULTS For the six months ended 29 October 1999 * Profit Before Tax of £3.4m (1998 - £2.8m), increase of 20% * Earnings per share up 25% * Operating cashflow £3.4m (1998 - £4.9m) * Dividend increase to 2.5p per share (1998 - 2.2p), up 14% * These strong first half results continue to show the reward for the last few years of investment and steady building of skills and infrastructure. * New business enquiries are running at an encouraging level. * The security, support services and facilities management markets continue to grow. Our investment in new market segments as well as our traditional core contract security business provides confidence of continued growth. For further information: Brian Kingham, Chairman 0171 730 9716 Geoff Haslehurst, Finance Director 01895 205 000 Notes to Editors: Reliance is an established market leader in the provision of contract security management, manpower, electronic surveillance and related facilities and support services. Reliance employs over 7,500 people from a network of offices throughout Great Britain. CHAIRMAN'S INTERIM STATEMENT RESULTS Sales for the six months to 29 October 1999 increased by 19% to £74.1m (1998 - £62.4m) and pre-tax profits rose by 20% to £3.4m (1998 - £2.8m) with EPS rising to 10.13p (1998 - 8.12p). Net cash generated from operations was £3.4m (1998 - £4.9m). REVIEW I am pleased to announce these strong first half results which continue to show the reward for the last few years of investment and steady building of infrastructure and skills. My annual statement in July updated the encouraging opportunities for our core contract security business along with details of the expansion of our electronic surveillance activities with the creation of Reliance High-Tech Limited. I also provided details of the new business we are creating in facilities management and integrated support services. We have continued to build and to strengthen each of these three complementary businesses. Contract security management and manpower services, our core business, has made steady progress expanding its capacities to offer customers a wider range of security options. Our people costs have risen in the period and will increase more with new regulations. The challenge for us is in enabling our people to be more valuable through training, higher levels of skill, greater specialism, better systems and the use of electronics and other devices to increase our scope and effectiveness. We have worked hard to strengthen and build on all these capacities which will remain a constant priority in the periods ahead. The integration of Reliance High-Tech Limited was successfully completed in the period bringing the central support operations under one roof resulting in a unified field installation and service capability of greater capacity and with a wider skills base. Our provision of individually designed electronic surveillance solutions is delivering increasing value added to our customers. New business enquiries are running at encouraging levels. Our Facilities Management and integrated support services business has made good progress in the period with a high level of bids for new business and the formation of partnerships with specialist providers to further strengthen our offering to the public and private sector outsourcing market. DIVIDEND The directors have pleasure in declaring an interim dividend of 2.5p (1998 - 2.2p), which will be paid on 28th January 2000 to shareholders on the register on 14th January 2000. OUTLOOK The security, support services and facilities management markets, although highly competitive, are enjoying growth. We continue to invest in the development of new market segments as well as in our traditional core business. We are confident that the growth achieved in recent years will continue. Cash generation remains strong and provides us with the ongoing flexibility to invest in future opportunities as they arise. BRIAN KINGHAM CHAIRMAN December 1999 GROUP PROFIT AND LOSS ACCOUNT for the six months ended 29 October 1999 Unaudited Audited Six months to Six months to Year to 29 October 30 October 30 April 1999 1998 1999 Notes £'000 £'000 £'000 Turnover 74,088 62,401 130,969 Cost of sales (59,885) (50,463) (105,769) Gross profit 14,203 11,938 25,200 Administrative expenses (10,976) (9,366) (18,589) Operating profit 3,227 2,572 6,611 Net interest receivable 183 258 458 Profit on ordinary activities before taxation 3,410 2,830 7,069 Tax on profit on ordinary (1,125) (991) (2,403) activities Profit for the period 2,285 1,839 4,666 Dividends (575) (504) (2,041) Retained profit for the period transferred to 4 1,710 1,335 2,625 reserves Earnings per share Basic 3 10.13p 8.12p 20.59p Diluted 3 10.06p 8.10p 20.53p Dividend per share 2.5p 2.2p 9.0p Shares issued and fully 23,005,354 22,971,354 22,978,354 paid There were no unrecognised gains or losses in the period under review. Group balance sheet as at 29 October 1999 Unaudited Audited 29 October 30 October 30 April 1999 1998 1999 £'000 £'000 £'000 Fixed assets Intangible assets - Goodwill 1,368 - - Tangible assets 6,571 4,295 4,823 Investments 925 550 527 8,864 4,845 5,350 Current assets Stocks and work in progress 1,466 551 198 Debtors 17,830 14,037 16,606 Cash at bank and in hand 5 8,498 8,820 9,729 27,794 23,408 26,533 Creditors: amounts falling due (21,065) (15,635) (18,029) within one year Net current assets 6,729 7,773 8,504 Total assets less current 15,593 12,618 13,854 liabilities Creditors: amounts falling due after more than one year (326) (433) (373) Net assets 15,267 12,185 13,481 Capital and reserves Called up share capital 1,151 1,149 1,149 Share premium account 1,827 1,746 1,753 Revaluation reserve 152 152 152 Profit and loss account 12,137 9,138 10,427 Equity shareholders' funds 4 15,267 12,185 13,481 Group cash flow statement for the six months ended 29 October 1999 Unaudited Audited Six months to Six months to Year to 29 October 30 October 30 April 1999 1998 1999 Notes £'000 £'000 £'000 Net cash inflow from operating 6 3,392 4,939 9,745 activities Returns on investment and servicing of finance Interest received 222 296 552 Interest paid (9) (9) (16) Interest element of finance lease (30) (34) (66) repayments Net cash inflow from returns on investment and servicing of finance 183 253 470 Taxation UK corporation tax paid (including - (396) (2,134) ACT) Capital expenditure and financial investment Purchase of tangible fixed assets (2,288) (416) (2,024) Purchase of High Tech (550) - - Purchase of ESOP shares (417) - - Sale of ESOP shares 19 - 23 Sale of tangible fixed assets 37 32 143 Net cash outflow from capital expenditure and financial investment (3,199) (384) (1,858) Equity dividends paid (1,563) (1,296) (1,773) Net cash (outflow)/inflow before (1,187) 3,116 4,450 financing Financing Issue of ordinary share capital 76 51 57 Capital element of finance leases (120) (88) (298) Net cash outflow from financing (44) (37) (241) (Decrease)/Increase in cash in the (1,231) 3,079 4,209 period Notes 1 Preparation of unaudited interim financial information The unaudited interim financial information which does not comprise full accounts, has been prepared on the basis of the accounting policies set out in the statutory accounts of the group for the year ended 30 April 1999, from which the results for the year have been extracted. These statutory accounts received an unqualified audit opinion and have been filed with the Registrar of Companies. 2 Taxation Corporation tax for the six months to 29 October 1999 has been calculated at the rate of 30% (1998: 31%). 3 Earnings per share The basic and diluted earnings per share for the six months to 29 October 1999 have been calculated using the profit after tax and on the weighted average number of shares in issue during the period less shares held by the ESOP trust of 22,558,467 and 22,723,215 respectively. 4 Reconciliation of movement in equity shareholders' funds 29 October 30 October 30 April 1999 1998 1999 £'000 £'000 £'000 Profit on ordinary activities 2,285 1,839 4,666 after tax Dividends (575) (504) (2,041) 1,710 1,335 2,625 New share capital subscribed 76 51 57 Net movement in Equity 1,786 1,386 2,682 shareholders' funds Opening Equity shareholders' funds 13,481 10,799 10,799 Closing Equity shareholders' funds 15,267 12,185 13,481 5 Analysis of the balances of cash and cash equivalents as shown in the balance sheet 29 October 30 October 30 April 1999 1998 1999 £'000 £'000 £'000 Cash at bank and in hand 8,498 8,820 9,729 Bank overdrafts (21) (242) (21) 8,477 8,578 9,708 6 Reconciliation of operating profit to net cash inflow from operating activities 29 October 30 October 30 April 1999 1998 1999 £'000 £'000 £'000 Operating profit 3,227 2,572 6,611 Depreciation charges 550 444 1,707 Profit on sale of fixed assets (7) - (45) (Increase) in stocks (1,268) (378) (25) (Increase)/Decrease in debtors (1,224) 1,247 (1,194) Increase in creditors 2,114 1,054 2,691 3,392 4,939 9,745 7 Analysis and reconciliation of net debt 1 May 1999 Cash flow 29 October 1999 £'000 £'000 £'000 Cash at bank and in hand 9,729 (1,231) 8,498 Overdrafts (21) - (21) 9,708 (1,231) 8,477 Debt due within one year (550) (417) (967) Finance leases (647) 83 (564) (1,197) (334) (1,531) Net funds 8,511 (1,565) 6,946 8 Distribution A copy of the financial information will be sent to all shareholders. Copies are available to the public from the Company's registered office at Boundary House, Cricketfield Road, Uxbridge, Middlesex UB8 1QG.

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