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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