REDT.L Regulatory News (REDT)

3 Jun 2005 14:31

ARC Risk Management Group PLC03 June 2005 ARC RISK MANAGEMENT GROUP PLC FINAL RESULTS FOR THE YEAR TO 31 MARCH 2005 ARC Risk Management Group plc ("the Group"), the AIM-listed provider of securityrisk management and training services, announces today its final results for theyear to 31 March 2005. HIGHLIGHTS • Turnover: £1,121,667 (2004: £971,427). • Loss before tax: £1,153,178 (2004: loss £925,246). • Reduced loss per share: 0.46p (2004: loss 0.60p). • Shareholders' funds at £294,152 (2004: £779,167). • Strengthened infrastructure is providing increased focus and reduced costs. • Development of Red24 and Red24 Alert largely completed. • Considerable progress being made in the acceptance of Red24 and Red24 Alert in both the UK and in Japan. • Increasing acceptance of our security management training courses. Commenting on today's announcement, Simon Richards, Executive Chairman of ARC,stated: "The corporate restructuring, coupled with a reduced burn rate and recentsignificant contract wins, has positioned the Group strongly for the comingyear. We anticipate an increase in positive newsflow as discussions withpotential customers crystallise into contracts and we look forward withconfidence. We believe that Red24, in particular, has the potential to producesignificant returns for shareholders." 3 June 2005 Enquiries: ARC Risk Management Group Plc 0118 977 6696Simon Richards, Chairman Hansard Communications 020 7245 1100Nicholas Nelson/Paul Foulger Seymour Pierce 020 7107 8000Mark Percy / Jeremy Porter CHAIRMAN'S STATEMENT Introduction Although the financial results for the year to 31 March 2005 show another periodof substantial losses, I am pleased to report that a great deal has beenachieved and that good progress is now being made in all the Group's areas ofoperation. The infrastructure of the Group has been strengthened by putting eachdivision into a separate subsidiary, each with its own managing director, andthis has both increased focus and helped to reduce costs. We are already seeingthe benefits in terms of increased revenues and a substantial improvement in thefinancial performance should follow. Red24 The Red24 personal security information, our core product, which providesmembers with up to the minute information and personalised advice on some 130countries, continues to be provided in both English and Japanese from our 24hour Crisis Response & Management Centre in Cape Town. Revenues have more thantrebled in the year and since the year end, Jardine Lloyd Thomson havecontracted to include membership on a mandatory basis in all their travelpolicies, which will give us over 100,000 additional members in the next year.In addition, World Nomads, the travel insurance provider to the Lonely Planetseries of guidebooks, will also be including membership within their package. Red24 Alert, which provides members with an opportunity to upgrade theirmembership to incorporate a response option if they find themselves in athreatening situation, has now become a very affordable option, both forindividuals and for banks and insurance companies who wish to offer their betterclients something extra. This is because the cost of the Group's insuranceagainst the risk of having to provide a response has fallen dramatically asmemberships have increased and this saving has been passed on to members. We arealready seeing some clients opt to upgrade the memberships they are purchasingand are hopeful that our partner in Japan, AIG International Services, will besuccessful in developing this trend among its client base. Providing the Red24 service in Japanese for 24 hours a day, seven days a weekhas been a major additional cost this year and, until very recently, there hasbeen no revenue to show for it. However, since the year end, all the complianceand marketing details have been tidied up, our staff have completed the trainingof our partner's agents and we and our partner believe the product will beattractive to many Japanese travelling abroad, whether for business or pleasure.In addition, AIG have also started to market the product in the United Statesand have already recruited 4,000 new members. A key feature of Red24 is that it lends itself to tailoring to meet potentialcustomers' own security concerns. As a result, in the United Kingdom, whereidentity theft is perceived as a major and growing problem by both individualsand financial institutions, we have developed a product called IDimposter, whichprovides advice to members both on how to avoid becoming a victim and also onwhat to do. This has struck a chord with financial institutions and we expectIDimposter to be included in the premier/platinum account of a major institutionvery shortly. This will take the number of members to well in excess of 500,000and ensure that the Red24 growth path is sustained. Consultancy Our consultants provide advice to insurance companies and their clients both tohelp them to avoid major business risks, such as product contamination, sabotageand terrorism, and to help them to deal with the aftermath when such incidentsoccur. During the year Red24 was a major client and much consultancy time was spentpreparing and vetting the standard Red24 Alert response procedures. As a result,there was less time available for external work and revenues fell. However,since the year end, there has been a noticeable increase in revenues, withsignificant work in the Philippines and Trinidad. Training Courses are run on a programme, which is based on the calendar year, and as fewdelegates wish to attend courses in the winter months, revenues are biased infavour of the first half of our financial year. However, I am pleased to reportthat, since the year end, our key Security Management Course has becomeaccredited by Middlesex University, thereby enabling delegates, who opt to doadditional home study, to complete part of a university degree whilst attendingour courses. Furthermore, both ASIS Europe and SITO, the major trainingorganizations within the security risk management industry, have recognised ourcourses as part of their drive to continuing professional education within theindustry. Throughout 2005, this will lead to additional marketing exposure forus and a number of course bookings have already been received as a part of theseinitiatives. Financial overview Developing our businesses, particularly Red24, to their current position hasbeen very expensive and could not be justified by the revenues produced to date.Our main problem has been the difficulty in estimating the length of time ittakes to introduce such an innovative product to the market and this has led toour suffering a higher "burn rate" than we would have wished. In particular, theoriginal corporate structure was too expensive and, despite the recent changes,the anticipated increase in revenues may not be sufficient to see us through toa positive cash flow. Your Board, therefore, considers it prudent to raiseadditional working capital to ensure that we achieve our goals and we expect tocomplete and announce a placing of new shares later today. Outlook The corporate restructuring, coupled with a reduced burn rate and recentsignificant contract wins, has positioned the Group well for the coming year. Weanticipate an increase in positive newsflow as discussions with potentialcustomers crystallise into contracts and we look forward with confidence. Webelieve that Red24 in particular, has the potential to produce significantreturns for shareholders. Staff Finally, I would like to thank all my colleagues and staff for their support andunfailing enthusiasm for something which we all regard as a very specialproject. Simon RichardsExecutive Chairman 3 June 2005 CONSOLIDATED PROFIT AND LOSS ACCOUNTfor the year ended 31 March 2005 2005 2004 £ £ Turnover 1,020,687 971,427Cost of sales (395,001) (368,897) Gross profit 625,686 602,530Administrative expenses (1,749,259) (1,354,516)Administrative expenses - impairment of intangiblefixed assets - (169,974)Other operating income - 1,938 Operating loss (1,123,573) (920,022) Interest receivable 9,928 1,522Interest payable (8,022) (6,746) Loss on ordinary activities before taxation (1,121,667) (925,246) Taxation - - Loss for the YEAR (1,121,667) (925,246) Accumulated losses brought forward (3,235,364) (2,310,118)Cancellation of deferred shares 1,376,000 - Accumulated losses carried forward (2,981,031) (3,235,364) Loss per share (PENCE) (0.46p) (0.60p) CONSOLIDATED BALANCE SHEETas at 31 March 2005 2005 2004 £ £ £ £Fixed assets 328,680 401,340Intangible assetsTangible assets 55,083 55,456 383,763 456,796Current assetsDebtors: amounts falling due 260,397 242,619within one yearCash at bank and in hand 153,735 544,150 414,132 786,769Creditors: amounts falling duewithin one year (442,941) (391,701) Net current (liabilities)assets (28,809) 395,068 Total assets less current 354,954 851,864liabilitiesCreditors: amounts falling dueafter more (60,802) (72,697)than one year Net assets 294,152 779,167 capital and reserves 2,712,108 3,568,108Called up share capitalShare premium account 564,203 446,423Profit and loss account (2,982,159) (3,235,364) Equity shareholders' funds 294,152 779,167 CONSOLIDATED CASH FLOW STATEMENTfor the year ended 31 March 2005 2005 2004 £ £ £ £Net cash outflow from operating (995,469) (749,394)activitiesReturns on investments andservicing of 9,928 1,522financeInterest receivedInterest paid (8,022) (6,746) Net cash INFLOW(outflow) fromreturns on 1,906 (5,224)investments and servicing offinanceCapital expenditurePayments to acquire tangible (22,225) (25,817)fixed assets NET CASH (outflow) FROM CAPITAL (22,225) (25,817)EXPENDITURE Net cash outflow before financing (1,015,788) (780,435)FinancingNew hire purchase loans - 2,867Repayment of hire purchase loans (2,399) (468)Issue of ordinary share capital 660,000 1,323,200Expenses of issue of ordinary (22,220) (30,045)share capitalRepayment of bank loans (10,008) (10,008)Other loans - (3,500) Net cash INFLOW from financing 625,373 1,282,046 (DECREASE) INCREASE in cash (390,415) 501,611 Notes: 1. The financial statements for the year ended 31 March 2005, have been prepared using accounting policies consistent with those set out in the annual report and accounts of ARC Risk Management Group plc for the year ended 31 March 2004. The financial information set out above does not constitute the company's statutory accounts for the years ended 31 March 2005 or 2004, but is derived from those accounts. Statutory accounts for 2004 have been delivered to the Registrar of Companies and those for 2005 will be delivered in due course. The auditors have reported on those accounts; their reports were unqualified, save for matters of emphasis relating to going concern, and did not contain statements under the Companies Act 1985, s 237(2) or (3). 2. The loss per share for the year ended 31 March 2005 has been calculated based on the loss on ordinary activities after taxation divided by the weighted average number of shares in issue during the period. 3. Copies of the report and accounts for the year to 31 March 2005 will be available in due course from the Company's office at The Coach House, Bill Hill Park, Wokingham, Berkshire RG40 5QT. This information is provided by RNS The company news service from the London Stock Exchange