CTP.L Regulatory News (CTP)

10 December 2010

Redstone plc

("Redstone", "the Company" or "the Group")

Redstone Managed Solutions Limited Security Business sold to Management

Redstone plc (AIM:RED.L), the network-based provider of end-to-end managed services, has sold the security business of Redstone Managed Solutions Limited ("RMSL") to RMS Managed ICT Security Limited, a company owned by RMSL's current management team, including Robert Cavan, Managing Director, for a total consideration of £1 million.

£0.1 million has been received on the signing of the sale and purchase agreement and £0.4 million will be received in cash upon completion of the sale. The balance of consideration will be realised from the net current assets of the security business, which are to be retained by Redstone, and 3.5% loan notes to be redeemed on or before 31 March 2011. The loan notes will be secured by a first charge over the assets of RMS Managed ICT Security Limited.

In accordance with TUPE regulations, 58 staff members, who are mostly based at the RMSL Stoke office, will transfer to RMS Managed ICT Security Limited

The security business of RMSL provides security software and consultancy solutions around the IT infrastructure of a client encompassing implementation, ongoing management, support and staff training. RMSL has strategic partnerships with leading software vendors including McAfee, Computer Associates, Sophos, IBM, Websense and Microsoft.

In the year to 31 March 2010 the security business of RMSL reported revenues of £9.2m and EBITDA of £0.06m. At completion, which is expected to occur on or around 14 January 2011, net assets of the security business (net of inter-company receivables and property interests) are forecast to be approximately £0.65m, of which approximately £0.35m will be retained by Redstone as part of the consideration. 

The sale is in line with the Group's ongoing review process to dispose of and discontinue certain non-core assets and businesses, in order to deliver cost savings and drive higher margin revenue streams. It provides cash to reduce borrowings and will allow the remaining components of the Group to be consolidated and refocused around providing network based end-to-end managed services offering in accordance with the new strategy.

Tony Weaver, Chief Executive of Redstone, commented: "We are pleased to have now substantially completed our review of non core activities and subsequent asset disposals. Redstone is now focused on maximising the operational efficiencies available in the retained businesses and re-aligning the Group to delivery of the new strategy."

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