11 Dec 2012 07:00
11 December 2012
Redstone plc
("Redstone", "the Company" or "the Group")
Unaudited Interim Results for the six months ending 30 September 2012
Redstone plc (AIM:RED), a leading provider of network based end to end managed services, technology and infrastructure solutions, today announces its half year results for the six months ended 30 September 2012.
Operating Highlights
§ Adjusted EBITDA* increased by £0.6 million or 29.1% to £2.5 million (H1 2011 £1.9 million)
§ Adjusted EBITDA* from annuity activities (before central costs) increased by £0.8 million or 43% to £2.6 million (H1 2011 £1.8 million), representing 82.8% of adjusted EBITDA* before central costs (H1 2011 65.6%)
§ Adjusted EBITDA* return on revenue 8.8% (H1 2011 5.3%)
§ Gross profit margins increased to 52.7% (H1 2011 44.0%)
§ Contracts comprising approximately £23.3 million of managed service revenue over 3 years won or extended in the first half of the financial year
§ Operating Expenses (comprising selling & distribution costs and administrative expenses), including integration and strategy costs, decreased by £2.1 million or 12.9% to £14.1 million (H1 2011 £16.2 million)
§ Operating profit increased by £1.0 million or 237.1% to £0.6 million (H1 2011 £0.4 million operating loss)
§ Post period acquisition of Maxima Holdings plc ("Maxima") for share consideration of £9.9 million
§ Successful placing raising £3 million to fund the reorganisation of the Group following the acquisition of Maxima, and to cover the transaction fees incurred in the acquisition
Tony Weaver, Chief Executive of Redstone commented:
"I am pleased to announce that Redstone has delivered a strong increase in profits in the half year which vindicates our strategic prioritising of managed service business, selective bidding of infrastructure projects in a difficult market and continuous re-alignment of the cost base. The business is now being organised into two distinct divisions, Managed Services and Infrastructure Solutions.
These are exciting times in the development of Redstone, which has been significantly accelerated by the acquisition of Maxima. I look forward to integrating the two managed services operations, and demonstrating its potential for delivering shareholder value. We have stated previously our 10% target return on revenue for adjusted EBITDA*; following the acquisition of Maxima we are revising this target to 15%."
*Before net finance costs, tax, depreciation, amortisation, integration & strategy costs and share based payments
Enquiries:
Redstone plc Tony Weaver, Chief Executive Peter Hallett, Chief Financial Officer | Tel. +44 (0)845 201 0000
|
finnCap Marc Young / Charlotte Stranner | Tel. +44 (0)20 7220 0500 |
Newgate Threadneedle Josh Royston / Hilary Millar | Tel. +44 (0)20 7653 9850
|
12/13 Interim Results
Chairman's Statement
Dear Shareholder
I am pleased to report the results of the Group for the six months ended 30 September 2012, a period which saw the Group return a profit on ordinary activities before taxation of £0.2 million (H1 2011 Loss of £1.5 million). This is the first profit before taxation ever returned by the Group.
This period has also seen the Group continue its progress towards a previously stated aim of increasing the adjusted EBITDA* return on revenue to a target of 10%. Adjusted EBITDA* in the period was £2.5 million (H1 2011 £1.9 million), a 29.1% increase on last year, and representing a return on revenue of 8.8% (H1 2011 5.3%).
This increase in adjusted EBITDA* has been driven by both an increase in gross margin and a further significant reduction in operating costs (selling, distribution and administrative costs and expenses). Gross margin increased to 52.7% (H1 2011 44.0%), which represents a further increase on the 49.6% recorded in the second half of the last financial year. In addition operating expenses reduced by £2.1 million or 12.9% to £14.1 million (H1 2011 £16.2 million), reflecting management's continuous realignment of costs to the operating environment.
A key strategic priority of the Group is profitable growth in managed services, and the period has seen a significant shift in the revenue and adjusted EBITDA* mix of the business, as the Group actively pursued this policy. Therefore, whilst in a difficult market total revenue decreased by £7.8 million or 21.8% to £28.0 million (H1 2011 £35.8 million), the Group increased adjusted EBITDA* (before central costs) from the annuity business by £0.8 million or 38.1% to £2.6 million (H1 20112 £1.8 million) whilst adjusted EBITDA* (before central costs) from the project business shrank by £0.4 million or 43.4% to £0.5 million (H1 2011 £0.9 million).
Project revenue decreased by £5.0m (64.5% of the total decrease in revenue) or 28.0% to £13.0 million (H1 2011 £18.0 million), as a result of delayed commencement of the final two phases of the significant data centre project for a major international bank, and also as the business declined to participate in low margin contract bids. Annuity revenues decreased by £2.8 million or 15.5% to £15.1 million (H1 2011 £17.9 million) of which £3.4 million of the decrease was attributable to two Campus contract losses for which notice was served almost two years ago. Therefore the underlying growth in the Annuity business was £0.7 million or 4.6%.
The total profit for the period was £0.4 million (H1 2011 loss of £1.7 million) an increase of £2.2 million or 126.2%.
Acquisition of Maxima Holdings plc & Share Placing
On 9 November 2012 the Group acquired Maxima Holdings plc ("Maxima") through a court sanctioned Scheme of Arrangement (under part 25 of Companies Act 2006) for a consideration of £9.9 million, satisfied by the issue of 987,319,228 new ordinary shares at 1p per share. Maxima shareholders received 28 new Redstone shares for every ordinary share held.
Simultaneously, the Group completed a successful placing of 300,000,000 new ordinary shares at 1p, raising £3 million before expenses to fund the reorganisation of the Group following the acquisition of Maxima, and to cover the transaction fees incurred in the acquisition.
The acquisition of Maxima is strategically important for the Group, as it provides immediate and significant critical mass to our managed service business through enhanced revenues, customer scale and technical capability, and accelerates the development of Redstone's Cloud capability both technically and commercially. Redstone and Maxima are complementary in terms of technical capabilities and when combined will provide good potential for cross selling into each company's respective client bases.
For the year ended May 2012, Maxima reported revenues of £28.2 million (£24.0 million of which was managed services), adjusted operating profit from continuing operations of £1.3 million, and an adjusted loss before taxation of £0.7 million. On 31 May 2012 Maxima borrowings totalled £3.9 million.
We are moving quickly to integrate Maxima and extract the identified £2.3 million of annualised synergy benefits, and to re-assess all options for maximising shareholder value from the integrated managed service business.
Bank Financing
On 22 June 2012 the Group signed a new £15.5 million Revolving Credit Facility ("RCF") with Barclays Bank PLC on commercial terms. The granting of the new RCF marked the return to relationship banking following the comprehensive restructuring of the Group which was completed in 2011, during which the Bank played a crucial supportive role.
The new RCF replaces the existing term loan and overdraft facility, and extends available committed facilities for three years to 1 July 2015. This is a net extension of 18 months on the old facility and provides up to £2.4 million of working capital headroom.
On 12 November 2012 the Group extended the new RCF by a further £6.2 million to accommodate the existing borrowings of Maxima and provide for its future working capital requirements. The extended facility is subject to the same terms as the RCF dated 22 June 2012, save for some easing of certain short term covenants and a revised facility reduction schedule.
In the six months to 30 September 2012, borrowings increased by £0.6 million to £11.4 million (31 March 2012 £10.8 million).
Cash generated from operations increased to £0.6 million (H1 2011 £0.1 million), a 1,180% increase. However, this was applied in interest payments of £0.4 million (H1 2011 £0.9 million), re-organisation costs of £0.2 million (H1 2011 £0.9 million) and capital expenditure of £0.7 million (H1 2011 £0.4 million)
Employees and the Board
The reshaping of the Group following the acquisition of Maxima is now in progress. Inevitably this creates a period of uncertainty for all employees, both in Maxima and Redstone as we integrate the two managed service businesses. We will complete this process as quickly and sympathetically as possible to minimise business disruption and uncertainty.
We thank all employees for their co-operation and fortitude during this period, and acknowledge and thank them for their efforts.
Outlook
While the uncertain economic outlook shows little sign of improving, the steps taken by Redstone to reduce dependence on the discretionary project market and focus on added value managed services have proven effective in the first half of the financial year.
Despite the difficult market conditions, we have established Redstone's credentials as a sound and stable business and confirmed the strength of our brand with our clients. The acquisition of Maxima immediately confers critical mass to the managed service offering, particularly in cloud based services, which will provide a platform for profitable growth.
Whilst there is much to do in integrating the Maxima business, we are confident that the benefits which will accrue to the shareholders from the combined business will increase prospective overall returns despite difficult market conditions. To that end we are revising our adjusted EBITDA* target return on revenue from 10% to 15%. The business is now being re-organised into two distinct divisions; Managed Services and Infrastructure Solutions.
We look forward with confidence to returning value to all our shareholders.
Richard Ramsay
Non-Executive Chairman
11 December 2012
*Before net finance costs, tax, depreciation, amortisation, integration & strategy costs and share based payments
Redstone PLC
12/13 Interim Results
Chief Executive's Review
Business Development
The business has continued to develop its position as the leading mid-market provider of network based end-to-end managed services, technology and infrastructure solutions, by delivering customer applications over leading edge technologies across our high speed resilient network.
On 28 June 2012 we announced the renewal of a managed services contract for a further 3 years by an existing international banking client. The contract has historically delivered revenue in excess of £5 million per annum and will see Redstone provide managed services and infrastructure technology throughout the UK.
In addition, I am pleased to announce the following contract wins:-
·; £6.2 million contract to deliver managed WAN set-up and connectivity over a three year period for over 1,900 sites for a leading charitable organisation. This follows a successful pilot programme and Redstone previously being nominated as preferred bidder (announced on 13 October 2011)
·; £0.25 million contract to provide MPLS network connectivity across three sites over a three year period for a leading insurance group. An opportunity to extend this to connect a number of additional sites would potentially see the value of this contract rise to £0.6 million.
·; As announced yesterday, Redstone has won a £1.8 million contract to provide a managed WAN over Redstone's MPLS core network over a three year period in over 70 sites for a leading services company.
The above contract wins show that Redstone remains a trusted partner of sophisticated global institutions and major corporate clients and retains the high degree of expertise required to design, deliver and manage complex and sensitive IT infrastructure installations in a competitive market.
Operational Capability
Redstone has continued to invest in its core network and also to selectively develop new capability which enhance or complement the existing product set.
In order to meet the growing demand for increased traffic over our WAN we have begun a programme of upgrading our core network, created a further Point of Presence (POP) in our Hoddesdon data centre and have invested in technology to further optimise our core network.
We have also made further investment in our cloud platform to increase the available capacity. The same data centre footprint will now support more than 3,000 virtual servers at reduced energy and cooling costs and introduces multi-platform cloud capabilities. This investment has enabled us to increase the flexibility and granularity of our offerings and broaden our target market. We have continued to invest in Aruba and their leading wireless solutions for mobility and Bring Your Own Device (BYOD).
Capital investment in these areas in the six months to 30 September 2012 totalled £0.7 million.
In addition to enhancing the asset base for the shared service platform, the business has invested operating expenses of £0.3 million in the first six months of the financial year, in a dedicated cloud services management team. The team have generated a strong pipeline of opportunities and leads which will generate incremental revenue in the second half year following the capital investment in this area.
The acquisition of Maxima materially impacts on our managed services capability, and it is appropriate to report future trading activity by segmenting the business by network based managed services revenue and infrastructure project revenue. Approximately two thirds of combined revenues will comprise network based managed services and one third infrastructure solutions project business.
Trading & Profitability
Whilst the financial highlights are covered in detail in the CFO's Financial Review, I am particularly pleased to report a £0.5 million or 29.1% increase in adjusted EBITDA* to £2.4 million (H1 2011 £1.9 million) and we have continued to drive improved profitability towards our stated adjusted EBITDA* target return of 10% of revenue, achieving an 8.8% return for the period (H1 2011 5.3%).
This has been achieved through prioritising profitable managed service business, where a significant shift in business mix has resulted in strong profit growth in the annuity business, driven by improved margin mix and continuous reduction in operating capability and cost in less profitable activity. The continual re-alignment of capacity and direct overhead has enabled us to operate profitably in a difficult market, and be more selective in competitive project bids.
Gross margin has increased to 52.7% (H1 2011 44.0%). In addition gross margin has similarly increased from the 49.6% recorded for the second half of the last financial year.
In addition operating expenses (selling distribution and administrative costs and expenses) have decreased by £2.1 million or 12.9% to £14.1 million (H1 2011 £16.2 million).
Resulting annuity adjusted EBITDA* (before central costs) increased by £0.8 million or 43.0% to £2.6 million (H1 2011 £1.8 million), whilst project adjusted EBITDA* (before central costs) decreased by £0.4 million or 43.4% to £0.5 million (H1 2011 £0.9 million), and central costs decreased by £0.2 million to £0.6 million (H1 2011 £0.8 million)
Total group revenue decreased by £7.8 million or 21.8% to £28.0 million (H1 2011 £35.8 million), with decreases of £2.8 million or 15.5% in annuity revenues to £15.1 million (H1 2011 £17.9 million) and £5.0 million or 28.0% in project revenue to £13.0 million (H1 2011 £18.0 million).
Annuity revenue reflects two campus contracts which were lost in the first half of the financial year and which accounted for a revenue decrease of £3.4 million. The underlying increase in the annuity business was therefore £0.7 million or 4.6%.
Annuity network connectivity and cloud services revenue was relatively flat in the first half. This was mainly due to the protracted pilot scheme for the £6.2 million 3 year WAN rollout for the leading charitable organisation referred to above. It is now expected that the roll out will step up significantly in Q4 and in the new financial year. In addition cloud services capability has been further developed during the first six months, and is now in a position where significant pipeline opportunities can now be converted.
Project revenue, whilst adversely affected by a more selective bidding policy, was more affected by the deferred commencement of the final two phases of the £21.9 million project for a mission critical data centre for a leading UK Bank, representing approximately 50% of the total project. The first part of the final two phases commenced in November, with the final phase expected to commence prior to 31 March 2013.
As noted above, annuity adjusted EBITDA* (before central costs) of £2.6 million (H1 2011 £1.8 million) now comprised 82.8% (H1 2011 65.6%) of total adjusted EBITDA* (before central costs). These are recurring earnings, and evidence the solid base on which the Group's profitable growth strategy will continue to be focussed.
Outlook
The business has performed strongly in a very difficult market, and our strategic priority to concentrate on added value managed services has stood us in good stead. The strength of the Redstone brand carries credibility and authority in the market and particularly in the financial services sector, where mission critical systems are routinely entrusted to the Group both on material and complex projects and increasingly in continuing managed services.
The acquisition of Maxima will provide the Group with immediate critical mass in the provision of managed services, expanding the scope of current capability and providing to both Redstone and Maxima a high quality captive client base for cross selling of complementary services not currently provided by the respective businesses. The combined business will represent a powerful presence in the provision of cloud based services, which will be almost unique within the targeted mid-market.
The acquisition brings in required management expertise in the area of managed services. To that end, we have appointed Fraser Fisher, the incoming Managing Director of the Maxima managed services business, as the Managing Director of the operating business.
These are exciting times in the development of Redstone, which has been significantly accelerated by the acquisition of Maxima. I look forward to integrating the two managed services operations as soon as possible, and demonstrating its potential for delivering shareholder value. We have stated previously our 10% target return on revenue for adjusted EBITDA*; following the acquisition of Maxima we are revising this target to 15%.
Tony Weaver
Chief Executive
11 December 2012
*Before net finance costs, tax, depreciation, amortisation, integration & strategy costs and share based payments
Redstone PLC
12/13 Interim Results
Financial Review
Revenue
Group revenue decreased by £7.8 million or 21.8% to £28.0 million (H1 2011 £35.8 million), with decreases of £2.8 million or 15.5% in annuity revenue and £5.0 million or 28.0% in project revenue.
The fall in annuity revenue was principally driven by the loss of two Campus contracts on which notice was served almost two year ago. These contracts accounted for £3.4 million (43.9%) of the total decrease in turnover. Therefore the underlying growth in annuity revenue was £0.6 million or 4.6%. Annuity network connectivity and cloud services revenue was relatively flat in the first half. This was mainly due to the protracted pilot scheme for the £6.2 million 3 year WAN rollout for the leading charitable organisation referred to above. It is now expected that the roll out will step up significantly in Q4 and in the new financial year. In addition cloud services capability has been further developed during the first six months, and is now in a position where significant pipeline opportunities can now be converted.
The decline in project revenue, was largely attributable to a more selective bidding policy, and was also affected by the deferred commencement of the final two phases of the £21.9 million project for a mission critical data centre for a leading UK Bank, representing approximately 50% of the total project. The first part of the final two phases commenced in November, with the final phase expected to commence prior to 31 March 2013. ICT project revenue was flat versus last year
The annuity/project revenue split for the half year was 53.8%:46.2% (H1 2011 50.8%:49.2%).
Gross Profit
Whilst gross profit decreased by 6.4% or £1.0 million to £14.8 million (H1 2011 £15.8 million), the gross margin increased significantly to 52.7% H1 20(11 44.0%). The gross margin represents a further increase on the 49.6% recorded for the second half of last financial year.
Gross profit decreased by £0.7 million in the annuity business on lower revenues, which were largely due to the impact of the two Campus contracts referred to above. However, gross margin increased to 69.9% (H1 2011 62.8%) driven by improved margins from connectivity and cloud, and reported campus margins being boosted by the loss of the two low margin campus contracts. In addition, last year's re-organisation helped to reduce the direct cost of delivery.
Gross profit decreased by £0.3 million in the projects business, reflecting more selective bidding of projects and delay in the commencement of the final phases of a major data centre referred to above. However, gross margin increased to 32.6% (H1 2011 25.4%), as the business benefitted from a re-alignment of the cost base to a lower volume environment, undertaken in Q3 last year.
Operating Expenses
Operating expenses (comprising selling and distribution costs and administrative expenses) including integration and strategy costs, decreased by £2.1 million or 12.9% to £14.1 million (H1 2011 £16.2 million).
The £2.1 million decrease in operating expenses includes a £0.4 million decrease in integration and strategic costs to £0.2 million (H1 2011 £0.6 million) and a £0.1 million decrease in share based payments.
The underlying decrease in operating expense, excluding integration and strategy costs and share based payments is £1.6 million, an 11.3% reduction, reflecting the realisation of cost savings arising from restructuring in 10/11, together with further annualised savings identified in Q3 of last year.
Adjusted EBITDA* and Profitability
Adjusted EBITDA* for the period was £2.5 million (H1 2011 £1.9 million) an increase of £0.6 million or 29.1%.
Adjusted EBITDA* (before central costs) was £3.1 million (H1 2011 £2.7 million) an increase of £0.4 million or 13.3%. Adjusted EBITDA* (before central costs) attributable to the annuity and project businesses was £2.6 million and £0.5 million (H1 2011 £1.8 and £0.9 million) respectively, representing an increase of 43.0% and a decrease of 43.4% respectively.
The annuity/project adjusted EBITDA* (before central costs) split for the year is 82.8%:17.2% (H1 2011 65.6%:34.4%), resulting from strategic prioritising of annuity managed services.
Central costs decreased by £0.2 million to £0.6 million (H1 2011 £0.8 million) largely due to Ian Smith's move to non-executive status.
Integration and strategic costs amounted to £0.2 million (H1 2011 £0.6 million), and mainly comprise redundancy payments and employment related costs of staff made redundant as a consequence of integration, cost review and re-alignment.
The resulting operating profit of £0.6 million (H1 2011 loss £0.5 million) has increased by 237.1%.
Net finance costs amounted to £0.4 million (H1 2011 £1.0 million). The charge for the period includes £0.5 million of interest on bank borrowings (H1 2011 £0.6 million), and a £0.1 million fair value reduction in the interest rate swap "mark to market" liability (H1 2011 £0.4 million increase).
The resulting profit before taxation is £0.2 million (11/12 loss £1.5 million), an increase in profitability of £1.7 million or 112.5%. The tax credit for the period of £0.3 million (11/12 £0.2 million) arises predominately from the reduction in deferred taxation liabilities in line with amortisation of intangible assets recognised on acquisition.
Overall Result for the Period
The resulting profit for the period is £0.4 million (H1 2011 loss £1.7 million), an increase of £2.2 million or 126.2%.
Basic (and diluted) earnings per share have increased by 0.063p or 130.0% to a 0.01p (H1 2011 loss of 0.05p).
Basic (and diluted) adjusted EBITDA* per share has increased by 0.09p or 119.2% to 0.08p (H1 2011 0.07p)
Cash Flow
Cash generated from continuing operating activities was £0.6 million (H1 2011 £0.1 million). This was made up of cash inflow from trading activity of £2.5 million (H1 2011 £2.2 million) offset by an increase in working capital of £1.8 million (H1 2011 £2.1 million).
Integration and strategic costs absorbed £0.2 million of cash (H1 2011 £0.9 million), and largely comprises redundancy and related employment costs of employees made redundant under reorganisation and continuing realignment of costs in the current year.
£0.4 million of cash was consumed by net finance charges (H1 2011 £0.4 million).
Cash flows from investing activities amounted to an outflow of £0.7 million (H1 2011 £0.4 million) comprising the purchase of tangible and intangible assets of £0.7 million (H1 2011 £0.4 million).
Cash flows from financing activities principally reflect a realignment of borrowings under a new £15.5 million Revolving Credit Facility signed on 22 June with Barclays Bank PLC. The facility provided funds to repay all the existing term loans outstanding, and to reduce the overdraft facility to £5.0 million from £8.0 million.
Therefore £10.0 million was drawn under the facility of which £5.3 million (H1 2011 £0.3 million) was used to repay the outstanding terms loan, £3.0 million was used to reduce the overdraft to the agreed level under the new facility, and the balance of £1.7 million used to provide additional working capital headroom.
There were no shares issued in the period (H1 2011 £2.4 million).
The resulting net increase in cash and cash equivalents amounted to £4.0 million (H1 2011 £0.6 million).
Borrowings and Bank Facilities
Total borrowings (net of cash and cash equivalents) amounted to £11.4 million (31 March 2012 £10.8 million) an increase of 5.9% or £0.6 million.
Resultant gearing based on enterprise value (the aggregate of total equity and total borrowings) is 42.7% (31 March 2012 42.3%) arising from increased borrowings and increase in the total equity to £15.4 million (31 March 2012 £14.8 million).
As referred to above, on 22 June 2012 the Group signed a new £15.5 million Revolving Credit Facility ("RCF") with Barclays Bank PLC on commercial terms. The granting of the new RCF marks the return to relationship banking following comprehensive restructuring of the Group which was completed in 2011, during which the Bank played a crucial supportive role.
The new RCF replaces the existing term loan and overdraft facility, and extends available committed facilities for 3 years to 1 July 2015. This is a net extension of 18 months on the old facility and provides up to £2.4 million of additional funding which will provide further working capital headroom rather than increase core borrowing.
The RCF has fixed semi-annual repayment terms culminating in a bullet payment of £10 million at the end of its term on 1 July 2015.
On 12 November 2012 the Group extended the new RCF by a further £6.2 million to accommodate the existing borrowing of Maxima and provide for its future working capital requirements. The extended facility is subject to the same terms as the RCF dated 22 June 2012, save for some easing of certain short term covenants and a revised facility reduction schedule.
In addition the Group has the ability to raise capital lease or hire purchase finance in the ordinary course of business to a maximum of £3.0 million.
Equity
Total equity has increased by £0.6 million to £15.4 million (31 March 2012 £14.8 million). The increase comprises the net profit for the period of £0.4 million, and share based payments in the period of £0.2 million.
Peter J Hallett
Chief Financial Officer
11 December 2012
*Before net finance costs, tax, depreciation, amortisation, integration & strategy costs and share based payments
Consolidated Income Statement
Unaudited Six months ended 30 September 2012 | Unaudited Six months ended 30 September 2011 | Audited Year ended 31 March 2012 | ||
Note | £000 | £000 | £000 | |
Continuing operations | ||||
Revenue | 2 | 28,035 | 35,845 | 67,199 |
Cost of sales | (13,269) | (20,068) | (35,864) | |
Gross profit | 14,766 | 15,777 | 31,335 | |
Selling and distribution costs | (2,278) | (2,015) | (4,685) | |
Administrative expenses | (11,860) | (14,220) | (26,869) | |
Adjusted EBITDA* | 2,473 | 1,915 |
5,192 | |
Depreciation | (649) | (641) | (1323) | |
Amortisation of intangibles | (826) | (885) | (1,814) | |
Integration and strategic costs included within administrative expenses | 3 | (220) | (623) | (1,619) |
Share-based payments | (150) | (224) | (655) | |
Operating Profit/(Loss) | 628 | (458) | (219) | |
Net finance costs | (442) | (1,031) | (1,380) | |
Profit/(Loss) on ordinary activities before taxation | 186 | (1,489) | (1,599) | |
Tax on profit/(loss) on ordinary activities | 262 | 196 | 903 | |
Profit/(Loss) for the period from continuing operations (attributable to shareholders of the parent Company) | 448 | (1,293) | (696) | |
Loss for the period from discontinued operations | - | (416) | (891) | |
Profit/(Loss) for the period | 448 | (1,709) | (1,587) | |
Earnings per share | ||||
Basic earnings per share | 4 | 0.01 p | (0.05) p | (0.02) p |
Diluted earnings per share | 4 | 0.01 p | (0.05) p | (0.02) p |
*earnings from continuing operations before interest, tax, depreciation, amortisation, integration and strategic costs and share-based payments.
The above consolidated income statement should be read in conjunction with the accompanying notes.
Consolidated statement of comprehensive income
Unaudited Six months ended 30 Sep 12 £000 | Unaudited Six months ended 30 Sep 11 £000 | Audited Year ended 31 Mar 12 £000 | |
Profit/(Loss) for the period | 448 | (1,709) | (1,587) |
Gain on revaluation of Cambridge MAN | - | - | 150 |
Currency translation differences | - | - | (354) |
Total comprehensive income | 448 | (1,709) | (1,791) |
Consolidated Statement of Changes in Equity
|
| Called up share capital | Share premium account | Merger reserve (a) | Capital redemption reserve (b) | Translation reserve (c) | Revaluation reserve(e) | Retained earnings | Total equity |
|
| £000 | £000 | £000 | £000 | £000 | £000 | £000 | £000 |
At 1 April 2011 |
| 17,092 | 27,714 | 216 | 5,683 | (287) | 4,705 | (43,523) | 11,600 |
Total comprehensive income |
| - | - | - | - | - | - | (1,709) | (3,891) |
Transactions with owners: |
|
|
|
|
|
|
|
|
|
Share based payments |
| - | - | - | - | - | - | 224 | 224 |
Share Issue less costs |
| 212 | 2,257 | - | - | - | - | - | 2469 |
At 30 September 2011 |
| 17,304 | 29,971 | 216 | 5,683 | (287) | 4,705 | (45,008) | 12,584 |
Total comprehensive income |
| - | - | - | - | (354) | 150 | 122 | (82) |
Transactions with owners: |
|
|
|
|
|
|
|
|
|
Share based payments |
| - | - | - | - | - | - | 177 | 177 |
Share issue costs |
| 230 | 1,874 | - | - | - | - | - | 2,104 |
At 1 April 2012 |
| 17,534 | 31,845 | 216 | 5,683 | (641) | 4,855 | (44,709) | 14,783 |
Total comprehensive income |
| - | - | - | - | - | - | 448 | 448 |
Transactions with owners: |
|
|
|
|
|
|
|
|
|
Share based payments |
| - | - | - | - | - | - | 150 | 150 |
At 30 September 2012 |
| 17,534 | 31,845 | 216 | 5,683 | (641) | 4,855 | (44,111) | 15,381 |
(a) Merger reserve
The merger reserve resulted from the acquisition of Redstone Communications Limited (formerly Redstone Network Services Limited) and represents the difference between the value of the shares acquired (nominal value plus related share premium) and the nominal value of the shares issued.
(b) Capital redemption reserve
The capital redemption reserve arose on the elimination of deferred shares and represents the nominal value of the deferred shares.
(c) Translation reserve
The translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries.
(d) Repurchase of own shares
Shares in Redstone plc purchased by and held in the Employee Benefit Trust have been recognised in retained earnings, in accordance with SIC 12 and IAS 32.
(e) Revaluation reserve
The Directors have revalued the metropolitan area network assets (MAN) residing in the property plant and equipment. This is permitted under IAS 16 where the value attributed to an asset is less than its fair value.
Fair value of the MAN has been established by the discounting of the cash flow of future income arising from the asset. The current operational MAN owned by the group are the network in Cambridge and Portsmouth.
The effective date of the revaluation was 31 March 2012 and the principal assumptions used in the valuation model were as follows:
·; Annualised value of the current contract base £1.6 million per annum
·; Annual revenue growth - years 1 - 2, 20%; years 3 - 4, 5% thereafter 2.5%
·; Discount rate applied to cash flows - 15%
·; The future pricing of contracts is based on the average value of current contracts in the base
The fair value of the revalued assets was established at £5.65 million, resulting in a non distributable revaluation surplus of £4.85 million as at 30 September 2012
The carrying amount that would have been recognised had the asset continued to be carried under the cost model was £0.8 million at 30 September 2012
Consolidated Balance Sheet
Unaudited 30 September 2012 | Unaudited 30 September 2011 | Audited 31 March 2012 | ||
Note | £000 | £000 | £000 | |
Assets | ||||
Non-current assets | ||||
Intangible assets | 22,698 | 24,297 | 23,488 | |
Property, plant and equipment | 8,176 | 7,807 | 8,174 | |
Other non-current assets | 406 | 630 | 540 | |
31,280 | 32,734 | 32,202 | ||
Current assets | ||||
Inventories | 1,064 | 710 | 869 | |
Trade and other receivables | 15,340 | 19,800 | 15,921 | |
Deferred tax asset | 2,070 | 1,602 | 1,973 | |
Income tax receivable | 17 | 10 | 15 | |
Cash and cash equivalents | 170 | 153 | 290 | |
18,661 | 22,275 | 19,068 | ||
Total assets | 49,941 | 55,009 | 51,270 | |
Equity and liabilities | ||||
Equity | ||||
Called up share capital | 17,534 | 17,304 | 17,534 | |
Share premium account | 31,845 | 29,971 | 31,845 | |
Other reserves | 10,113 | 10,317 | 10,113 | |
Retained deficit | (44,111) | (45,008) | (44,709) | |
Total equity | 15,381 | 12,584 | 14,783 | |
Current liabilities | ||||
Trade and other payables | 18,480 | 23,288 | 20,677 | |
Deferred consideration | - | 2,500 | - | |
Borrowings | 6 | 3,812 | 6,759 | 7,431 |
Provisions | 185 | 271 | 194 | |
22,477 | 32,818 | 28,302 | ||
Non-current liabilities | ||||
Derivative financial instruments | 1,750 | 2,023 | 1,828 | |
Borrowings | 6 | 7,827 | 4,647 | 3,690 |
Provisions | 914 | 844 | 911 | |
Deferred tax liability | 1,592 | 2,093 | 1,756 | |
12,083 | 9,607 | 8,185 | ||
Total liabilities | 34,560 | 42,425 | 36,487 | |
Total equity and liabilities | 49,941 | 55,009 | 51,270 |
Consolidated Cash Flow Statement
Unaudited Six months ended 30 September 2012 | Unaudited Six months ended 30 September 2010 | Audited Year ended 31 March 2011 | |||
Note | £000 | £000 | £000 | ||
Cash flows from continuing operating activities | |||||
Cash generated in operations | 7 | 640 | 50 | 3,379 | |
Cashflow absorbed by integration and strategy costs | (220) | (893) | (1,795) | ||
Income tax paid | (2) | (10) | (15) | ||
Cash flows generated/(absorbed) by continuing operating activities | 418 | (853) | 1,569 | ||
Net Finance charges paid | (363) | (410) | (836) | ||
Net cash flows generated/(absorbed) by continuing operating activities | 55 | (1263) | 733 | ||
Cash flows from investing activities | |||||
Purchase of property, plant and equipment | (658) | (345) | (1,277) | ||
Purchase of intangible assets | (35) | (26) | (148) | ||
Acquisition of subsidiaries, net of cash acquired | - | - | (500) | ||
Sale of property plant and equipment | - | - | 32 | ||
Net cash flows used in investing activities | (693) | (371) | (1,893) | ||
Cash flows from financing activities | |||||
Proceeds of revolving credit facility drawdown | 10,000 | - | - | ||
Proceeds of issue of shares | - | 2,650 | 2,650 | ||
Costs of share issue | - | (181) | (190) | ||
Repayment of term loans | (5,363) | (250) | (750) | ||
Net cash flows generated from financing activities | 4,637 | 2,219 | 1,710 | ||
Net increase in cash and cash equivalents | 3,999 | 585 | 550 | ||
Cash and cash equivalents at beginning of period |
(5,641) |
(6,191) | (6191) | ||
Cash and cash equivalents at end of period | (1,642) | (5,606) | (5,641) | ||
Notes to the half-yearly financial information
1 Basis of preparation and general information
The interim financial information is unaudited.
The Company is a limited liability company incorporated and domiciled in England. The address of its registered office is Redstone plc, Kirtlington Business Centre, Slade Farm, Kirtlington, OX5 3JA. The Company is listed on the London Stock Exchange AIM. This condensed consolidated interim financial information was approved for issue on 11 December 2012.
This condensed, consolidated half-yearly financial information for the half-year ended 30 September 2012 has been prepared in accordance with IAS 34, 'Interim financial reporting' as adopted by the European Union. The consolidated half-yearly financial information should be read in conjunction with the annual financial statements for the year ended 31 March 2012, which have been prepared in accordance with IFRSs as adopted by the European Union.
This condensed consolidated interim financial information does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 March 2012 were approved by the Board of directors on 04 July 2012 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under sections 498 (2) or (3) of the Companies Act 2006.
The interim report was approved by the Board on 11 December 2012.
Accounting policies
The accounting policies adopted are consistent with those of the previous financial year.Exceptional items are disclosed and described separately in the financial statements where it is necessary to do so to provide further understanding of the financial performance of the Group. They are material items of income or expense that have been shown separately due to the significance of their nature or amount.Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.
Going Concern
The consolidated half-yearly financial information of Redstone plc has been prepared on the going concern basis and in accordance with EU adopted International Financial Reporting Standards (IFRS), IFRIC interpretations and the Companies Act 2006 applicable to companies reporting under IFRS. The consolidated half-yearly financial information has been prepared under the historical cost convention, as modified by the revaluation of financial assets and financial liabilities (including derivative financial instruments) at fair value through profit or loss.
The Directors are required to be satisfied that the Group has adequate resources to continue in business for the foreseeable future. The validity of this assumption depends on the ability of the Group to meet its cash flow forecasts and the continuing support of its bankers by providing adequate overdraft facilities and of its debt holders and shareholders. In November 2012 the Group has raised further equity finance and it has facilities with Barclays Bank through to 1 July 2015. The nature of the group's business is such that there can be considerable variation in cash inflows, and the timing thereof. Whilst this adds risk to the group's ability to forecast cash and in the current economic environment there can be no absolute certainty that the Group will achieve its EBITDA forecasts, the present cash flow forecasts indicate that the Group will be able to operate within the present overdraft facilities for at least 12 months from the date of approval of these financial statements. For these reasons the Directors believe the going concern basis to be appropriate.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies.
2 Segment reporting
Operating segments are reported in a manner consistent with the internal reporting to the Chief Operating Decision Maker ('CODM'). The CODM has been identified as the Group Chief Executive and the Chief Financial Officer. The Group Chief Executive and the Chief Financial Officer are jointly responsible for resources allocation and assessing the performance of the operating segments. The operating segments are defined by distinctly separate product offerings or markets.
(a) Unaudited for the six months ended 30 September 2012
Continuing Operations | Project | Annuity | Central | Total | |
£000 | £000 | £000 | £000 | ||
Total segment revenue | 12,954 | 15,693 | - | 28,647 | |
Inter segment revenue | - | (612) | - | (612) | |
Revenue | 12,954 | 15,081 | - | 28,035 | |
Adjusted operating costs* | (12,425) | (12,529) | (608) | (25,562) | |
Adjusted EBITDA* | 529 | 2,552 | (608) | 2,473 | |
Depreciation | (93) | (418) | (138) | (649) | |
Share based payments | - | - | (150) | (150) | |
Amortisation of intangible assets | (290) | (435) | (101) | (826) | |
Integration and strategic costs | (52) | (142) | (26) | (220) | |
Segment result | 95 | 1,556 | (1,023) | 628 | |
Net finance costs | - | - | (442) | (442) | |
Tax | 54 | 208 | - | 262 | |
Profit for the year from continuing operations | 149 | 1,764 | (1,465) | 448 | |
Assets and liabilities | |||||
Segment assets | 16,742 | 32,552 | 647 | 49,941 | |
Segment liabilities | 6,882 | 8,769 | 18,909 | 34,560 | |
Other segment information | |||||
Capital expenditure | |||||
Property, plant and equipment | 95 | 563 | - | 658 | |
Intangibles - software | 25 | 2 | 8 | 35 |
* earnings from continuing operations before interest, tax, depreciation, amortisation, integration and strategic costs and share-based payments.
(b) Unaudited for the six months ended 30 September 2011
Continuing Operations | Project | Annuity | Central | Total | |
£000 | £000 | £000 | £000 | ||
Total segment revenue | 17,990 | 18,551 | - | 36,541 | |
Intersegment revenue | - | (696) | - | (696) | |
Revenue | 17,990 | 17,855 | - | 35,845 | |
Adjusted operating costs* | (17,055) | (16,070) | (805) | (33,930) | |
Adjusted EBITDA* | 935 | 1,785 | (805) | 1,915 | |
Depreciation | (40) | (372) | (229) | (641) | |
Share based payments | (6) | (18) | (200) | (224) | |
Amortisation of intangible assets | (324) | (455) | (106) | (885) | |
Integration and strategic costs | (122) | (481) | (20) | (623) | |
Segment result | 443 | 459 | (1,360) | (458) | |
Net finance costs | - | - | (1,031) | (1,031) | |
Tax | 10 | 186 | - | 196 | |
Loss for the year from continuing operations | 453 | 645 | (2,391) | (1,293) | |
Assets and liabilities | |||||
Segment assets | 18,288 | 35,619 | 1,102 | 55,009 | |
Segment liabilities | 8,188 | 14,037 | 20,200 | 42,425 | |
Other segment information | |||||
Capital expenditure | |||||
Property, plant and equipment | 47 | 298 | - | 345 | |
Intangibles - software | 6 | 21 | - | 26 |
* earnings from continuing operations before interest, tax, depreciation, amortisation, integration and strategic costs and share-based payments.
c) Audited for the year ended 31 March 2012
Continuing Operations | Project | Annuity | Central | Total | |
£000 | £000 | £000 | £000 | ||
Total segment revenue | 32,842 | 35,521 | - | 67,081 | |
Inter segment revenue | - | (1,164) | - | (1,164) | |
Revenue | 32,842 | 34,357 | - | 67,199 | |
Adjusted operating costs* | (30,305) | (30,392) | (1,310) | (62,007) | |
Adjusted EBITDA* | 2,537 | 3,965 | (1,310) | 5,192 | |
Depreciation | (81) | (828) | (414) | (1,323) | |
Share based payments | (67) | (223) | (365) | (655) | |
Amortisation of intangible assets | (635) | (888) | (291) | (1,814) | |
Integration and strategic costs | (473) | (920) | (226) | (1,619) | |
Segment result | 1,281 | 1,106 | (2,606) | (219) | |
Net finance costs | - | - | (1,380) | (1,380) | |
Tax | 105 | 798 | - | 903 | |
Loss for the year from continuing operations | 1,386 | 1,904 | (3,986) | (696) | |
Assets and liabilities | |||||
Segment assets | 18,354 | 32,378 | 538 | 51,270 | |
Segment liabilities | 8,075 | 10,217 | 18,195 | 36,487 | |
Other segment information | |||||
Capital expenditure | |||||
Property, plant and equipment | 225 | 1,052 | - | 1,277 | |
Intangibles - software | 2 | 4 | 142 | 148 | |
* earnings from continuing operations before interest, tax, depreciation, amortisation, integration and strategic costs and share-based payments.
3 Integration and strategic costs
In accordance with the Group's policy of integration and strategic costs the following charges/ (credits) were incurred:
Unaudited Six months ended 30 September 2012 | Unaudited Six months ended 30 September 2011 | Audited Year ended 31 March 2012 | |
£000 | £000 | £000 | |
Costs of integration: Staff redundancy costs and compromise agreements |
119 |
52 | 232 |
Staff costs incurred up to the date of termination | 69 | 594 | 1,224 |
Other costs | 32 | 18 | 35 |
Other strategic costs: Aborted transaction costs |
- |
20 | 33 |
Re organisation costs | - | - | 95 |
Occupancy costs | - | (61) | - |
220 | 623 | 1,619 |
4 Profit per share
Basic profit per share of 0.01p per share (31 March 2012: loss per share (0.02p) and 30 September 2011 loss per share (0.05p)) is calculated using a profit from continuing operations of £448,000 (31 March 2012: loss £696,000 and 30 September 2011: loss £1,293,000) and a weighted average number of shares of 3,102,419,622 (31 March 2012: 2,868,106,472 and 30 September 2011: 2,689,033,084).
There was no significant dilutive effect of share options at 30 September 2012 nor at 31 March 2012 and 30 September 2011.
In addition, adjusted EBITDA* per share has been shown on the grounds that it is a common metric used by the market in monitoring similar businesses. This measure is derived as follows:
Unaudited Six months ended 30 September 2012
| Unaudited Six months ended 30 September 2011
| Audited Year ended 31 March 2012
| |
£000 | £000 | £000 | |
Profit/(loss) from continuing operations for the period | 448 | (1,293) | (696) |
Net finance expense | 442 | 1031 | 1,380 |
Tax credit | (262) | (196) | (903) |
Depreciation | 649 | 641 | 1,323 |
Amortisation of intangibles | 826 | 885 | 1,814 |
Share based payments | 150 | 224 | 655 |
Integration and strategic costs | 220 | 623 | 1,619 |
Adjusted EBITDA* | 2,473 | 1,915 | 5,192 |
Basic adjusted EBITDA* per share 0.08p 0.07p 0.18p
Diluted adjusted EBITDA* per share 0.08p 0.07p 0.17p
*earnings from continuing operations before interest, tax, depreciation, amortisation, integration and strategy costs and share based payments.
5 Goodwill
Converged Solutions | Managed Solutions | Total | |||
£000 | £000 | £000 | |||
Goodwill net carrying amount 30 September 2012, 30 September 2011 and 31 March 2012 | 10,062 | 5,906 | 15,968 | ||
Goodwill is reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. Goodwill was allocated for impairment testing purposes to cash generating units (CGUs) Converged Solutions and Managed Solutions, in the period under review the business in Fujin Systems Limited was hived up into Converged Solutions.
The recoverable amount of the continuing CGUs was based on a value in use calculation using forecast cash flow projections extrapolated for a further 4 years by growth rates applicable to each unit. An appropriate terminal value based on a perpetuity calculation using 2% real growth was then added. Discount rates were then applied to these projections ranging from 12% to 15% reflecting management's expected risk profile for each CGU.
In addition to revenue growth, the key assumptions used in the impairment testing were as follows:
Gross margin percentage;
Discount rate; and
Rates of growth in cash generating units beyond the budget period, and in determining the terminal value.
Gross margins have been based on flat or declining margins starting at current levels. Where declining margins have been assumed at 0.5% per year in certain CGU's, this allows for cost increases from network providers, suppliers and competitive market influences. This has been assumed in respect of part of Redstone Converged Solutions. The assumption of margins remaining flat assumes a mix of cost savings in service delivery offset by competitive market influences. This has been applied in respect of Redstone Managed Solutions and part of Redstone Converged Solutions.
A discount rate of 15% was applied to the Converged Solutions CGU because they are dependent on strong relationships with certain key suppliers and the projects it delivers are complex in nature. A discount rate of 12% was applied to the Managed Solutions which reflects management's estimate of ROCE required. The Managed Solutions CGU have an element of recurring revenue through maintenance contracts and this reduces the risk inherent in the businesses.
After the initial period covered by the latest budget, revenues are projected to grow at between 3% and 5% for the following 4 years. Cost growth after the budget period was projected at between 1% and 3%. Cost growth assumptions were linked to the revenue growth assumptions with an allowance for the decline in gross margins as set out above. Capital expenditure growth after the budget forecast period is projected at 2% across divisions where there is significant capital spend.
6 Borrowings
Unaudited Six months ended 30 September 2012 | Unaudited Six months ended 30 September 2011 | Audited Year ended 31 March 2012 | |
£000 | £000 | £000 | |
Current | |||
Bank loan | 2,000 | 1,000 | 1,380 |
Overdrafts | 1,812 | 5,759 | 5,931 |
3,812 | 6,759 | 7,431 | |
Non - current | |||
Bank loan | 7,827 | 4,647 | 3,690 |
As at 30 September 2012, arrangement fees of £171,000 (30 September 2011: £98,000 and 31 March 2012: 74,000) are included within borrowings.
At 30 September 2012 the Group held a total facility with Barclays Bank PLC of £15 million (30 September 2011 £14.0 million and 31 March 2012 £13.2 million). This was a revolving credit facility with a loan of up to £10:0 million (30 September 2011: £6.0 million and 31 March 2012: 5.2 million) and an overdraft facility of £5.0 million (30 September 2011: £8.0 million and 31 March 2012: 8.0 million). As at 30 September 2012, the amount outstanding was £11.4 million (30 September 2011: £11.2 million and 31 March 2012: £10.7 million).
Subsequent to 30 September 2012 the Group has amended the terms of its existing senior debt facilities with Barclays Bank PLC to effect an increase of £6.2 million principally to accommodate the bank loan of an acquired company, Maxima Holdings plc.
7 Net Cash flows from continuing operating activities
Unaudited Six months ended 30 September 2012
| Unaudited Six months ended 30 September 2011 | Audited Year ended 31 March 2012 | |
£000 | £000 | £000 | |
Profit/(loss) on ordinary activities before tax | 186 | (1,489) | (1,599) |
Adjustments for: | |||
Cash absorbed by integration and strategic costs | 220 | 893 | 1,795 |
Net finance costs | 442 | 1,031 | 1,380 |
Depreciation of property, plant and equipment | 649 | 641 | 1,323 |
Amortisation of intangible assets | 826 | 885 | 1,814 |
Equity-settled share based payments | 150 | 224 | 518 |
Loss on disposal of property, plant and equipment | - | - | 2 |
Movements in working capital : | |||
Increase in inventories | (195) | 152 | (7) |
Decrease in trade and other receivables | 496 | 344 | 3,365 |
(Decrease) in trade and other payables | (2,263) | (2,522) | (5,162) |
Decrease/(Increase) in non-current assets | 134 | 7 | 96 |
Decrease in provisions | (5) | (116) | (146) |
Cash generated by continuing operations | 640 | 50 | 3,379 |
8 Subsequent events
On 9 November 2012 the company received the consent of the court for the acquisition of the entire issued share capital of Maxima Holdings plc by a scheme of arrangement under part 26 of the Companies Act 2006. The total consideration of £9.9 million was funded by the issue of 987,319,228 new ordinary shares at 1p per share (28 Redstone shares for each Maxima share).
The related transaction costs and provision for the subsequent costs of restructuring the combined entity were funded by the issue of an additional 300,000,000 new ordinary shares at 1p per share, raising £3m in cash before expenses.
The company has secured increased banking facilities of £6.2 million in order to accommodate the debt within Maxima.
9 Contingent liabilities
The Group's subsidiaries and the Company are currently, and may be from time to time, involved in a number of legal proceedings. Whilst the outcome of current outstanding actions and claims remains uncertain, it is expected that they will be resolved without a material impact on the Group's financial position.
The banking facilities in place are secured through fixed and floating charges over all property and assets of the Redstone Group.
Statement of Directors' Responsibilities
The Directors confirm that this condensed set of financial statements has been prepared in accordance with IAS 34 as adopted by the European Union.
The Directors of Redstone plc are listed in the Redstone plc Annual Report and Accounts for 31 March 2012.
The Directors are responsible for the maintenance and integrity of the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. A copy of the interim results can be found on the Company's website www.redstone.com.
By order of the Board
Advisers
Financial Adviser and Broker
FinnCap, 60 New Broad Street London, EC2M 1JJ
Auditors
PricewaterhouseCoopers LLP, 1 Harefield Road, Uxbridge, UB8 1EX
Solicitors
Beechcroft LLP, 100 Fetter Lane, London, EC4A 1BN
Registrars
Capita IRG Plc, The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU
Principal Bankers
Barclays Bank plc, 54 Lombard Street, London, EC3V 9EX
Company Number
3336134
Further details can be found on the Redstone website at the following address: www.redstone.com