Interim Results

Reliance Security Group PLC 01 December 2005 EMBARGOED UNTIL 7.00 AM THURSDAY 1 DECEMBER 2005 PRESS RELEASE Reliance Security Group plc Interim Results for the six months to 28 October 2005 • Results in line with expectations • Turnover up 5.2% to £157.4m (2004: £149.5m) • Profit before tax and exceptional items £5.7m (2004: £6.8m) • Profit before tax £4.2m (2004: £6.8m) • Basic earnings per share before exceptional items 17.6p (2004: 20.7p), basic earnings per share 12.9p (2004: 20.7p) • Dividend per share up 7.1% to 4.5p (2004: 4.2p) • Net cash £29.9m (£27.7m at April 2005) • Challenging market conditions in Security Services • Organic growth in FM • Continuing investment in growth markets • Forward order book £756m (£731m at April 2005) Brian Kingham, Chairman, commenting on the results said: 'We have achieved results in line with our expectations despite challenging conditions in the security services market. Our businesses in facilities management and business process outsourcing have performed well. We are continuing to invest in growth markets. We have a healthy forward order book and a strong financial position.' Notes to Editors Reliance is an established market leader in the provision of contract security, facilities management, support services, and business process outsourcing. Reliance employs over 12,000 people from a network of offices throughout the UK. For further information: Brian Kingham Chairman 020 7730 9716 Neil French Group Finance Director 01895 205 002 Chairman's interim statement for the six months ended 28 October 2005 The Group's results for the first half of this year are in line with expectations, following the expiry of our electronic monitoring contract in England in April and the disposal of the Group's interest in Safe Estates Services Limited last December. We continue to make progress in securing new business opportunities and our forward order book remains healthy. Results Turnover for the six months to 28 October 2005 increased by 5.2% to £157.4 million (2004: £149.5 million). Pre-exceptional, pre-tax profit was £5.7 million (2004: £6.8 million). Excluding exceptional items, earnings per share were 17.6p (2004: 20.7p). Cash generation has again been strong and we ended the half-year with net cash of £29.9 million (2004: £15.0 million). In total, we have recognised a net exceptional pre-tax charge of £1.5 million (2004: £nil). This primarily comprises a charge of £1.4 million (2004: £nil) relating to costs incurred in preparing for security industry regulation, net of amounts recovered from customers from special price increases for that purpose. Dividend The directors have decided to pay an interim dividend of 4.5p per share (2004: 4.2p), payable on 20 January 2006 to shareholders on the register at 30 December 2005. Return of cash to shareholders Subject to shareholder approval, the previously announced cash return to shareholders of approximately £10 million will be effected by an on-market tender offer to shareholders to acquire part of their holdings for cash. A separate announcement is being made and full details of the proposals are being posted to shareholders today. Security services Turnover was £93.8 million (2004: £97.4 million) reflecting challenging conditions in the manpower security market. Segment operating profit, before exceptional items, was £1.2 million (2004: £3.2 million), reflecting the reduction in turnover, generally high operational gearing and, in particular, the absence of a contribution (2004: £1.4 million) from Safe Estates, our former void property services associate. As a result, operating margin, the ratio of segment profit to turnover, fell to 1.3% (2004: 3.3%), despite a further slight increase in gross margins. Excluding the contribution from Safe Estates, the prior year operating margin was 1.9%. Good control over working capital and the divestment of the Group's interest in Safe Estates resulted in a reduction in operating resources, which exclude cash balances. Net operating liabilities were £1.7 million (2004: net operating assets £7.6 million). As previously indicated, market conditions in security services have remained difficult, particularly in manpower security, which we believe continues to be adversely affected by uncertainty concerning regulation of the private security industry in 2006. Nevertheless, we have won important new contracts with Corus Steel, The British Land Company, New Look and ITV, amongst others. Regulation of the private security industry, in the form of licensing and appropriate training of all security personnel, is due to take effect in March 2006. Our preparations for this are well advanced; by the end of December we expect to have completed all of the required additional training and certification and to have submitted over 80% of the required licence applications to the Regulator. The creation of a regulated security environment, whilst heralding higher costs for businesses and the public sector, is stimulating a new round of change and innovation in the application of information and communications technology. A very different industry is already taking shape, demanding unparalleled economy, flexibility and speed of response. We have continued to invest in change and improvement to meet these new circumstances. Facilities management Turnover was up 22.0% at £63.6 million (2004: £52.1 million); a full six months' contribution from the two prisoner escorting and court custody services contracts, new contract starts and growth in existing contracts more than offset the absence of revenue from the electronic monitoring contract in England. Segment operating profit rose by 12.0% to £3.9 million (2004: £3.4 million) and segment operating margin was 6.1% (2004: 6.6%). We have improved the profitability of continuing contracts, but an adverse change in the mix of contracts has more than offset this and, as a result, gross margins have fallen slightly. Overheads increased, albeit more slowly than turnover, reflecting further investment in business development resources to provide for continuing growth. We continued to exercise effective control over working capital and, despite a significant investment in contract start-up costs in the second half of last year, we kept the increase in operating assets, over the past twelve months, to 14.4%. The return on operating assets, before exceptional items, was 157% (2004: 160%). At the end of the half-year, our forward order book (being the sales value of contracts currently in hand over the remaining life of those contracts) was approximately £756 million (2004: £700 million). Although we were disappointed to have been unsuccessful in our bid to renew our important Scottish electronic monitoring services contract, progress continues to be made in securing new business. Most notably, with our partners Haden Building Management / Balfour Beatty and Carillion PLC, we have signed agreements to extend the £100 million per annum facilities management contract with BT for a further three years, to 31 March 2009. The extended contract is expected to generate annual turnover of approximately £25 million for Reliance. Board As previously announced, Neil French, who has been Group Finance Director since April 2001, has decided to retire from the business at the end of December. A search is currently under way to identify a successor and Neil will remain on the board for a period of time to oversee an orderly transition. David Walter has been appointed as a non-executive director with effect from 1 December, having recently retired as a partner of KPMG where he worked in a variety of advisory and business management roles for over 30 years. Sir Anthony Burden, a former president of the Association of Chief Police Officers, has been appointed deputy chairman of Reliance Security Services Limited and Reliance Secure Task Management Limited. Tony Hales, who has been a non-executive director since January 2001, steps down from the Board with effect from 1 December in order to concentrate on his other interests. We are delighted to welcome David and Sir Anthony and warmly thank Neil and Tony for their contribution to the Group over the last few years. Outlook In the security services market, there are uncertainties in the immediate future and we expect conditions to remain difficult into the next financial year. The market will take time to adjust to the higher costs of a regulated environment, with its increased pressure for substitution and technological change. In due course, we anticipate better market conditions favouring a greater emphasis on higher value added services as well as longer term contractual relationships with customers. We expect continued growth in the facilities management and business process outsourcing markets, where we are investing in higher value added skills and technical capabilities. The board's expectations for the Group's trading performance in the full year remain unchanged. Brian Kingham Chairman 1 December 2005 Independent review report to Reliance Security Group plc Introduction We have been instructed by the Company to review the financial information for the six months ended 28 October 2005 which comprises the Group profit and loss account, the Group balance sheet, the Group cash flow statement and related notes 1 to 10. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. This report is made solely to the Company in accordance with Bulletin 1999/4 issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the Company those matters we are required to state to them in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this report, or for the conclusions we have formed. Directors' responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by, the directors. The directors are also responsible for ensuring that the accounting policies and presentation applied to the interim figures are consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with the guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of group management and applying analytical procedures to the financial information and underlying financial data and based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with International Standards on Auditing (UK and Ireland) and therefore provides a lower level of assurance than an audit. Accordingly, we do not express an audit opinion on the financial information. Review Conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 28 October 2005. Deloitte & Touche LLP Chartered Accountants London 1 December 2005 Reliance Security Group plc Consolidated profit and loss account for the six months ended 28 October 2005 Unaudited Unaudited Audited ------------------------------- Six months Six months Year to to to Pre-exceptional Exceptional 28 October 29 October 29 April items items 2005 2004 2005 Notes £'000 £'000 £'000 £'000 £'000 ------------------------------------------------------------------------------------------------- Group turnover - continuing 3 157,360 - 157,360 149,531 310,257 operations ----------------------------------------------------------- Cost of sales - excluding exceptional item (128,273) - (128,273) (121,079) (248,568) - exceptional item 4 - (1,244) (1,244) - (386) ----------------------------------------------------------- Total cost of sales (128,273) (1,244) (129,517) (121,079) (248,954) ------------------------------------------------------------------------------------------------- Gross profit 29,087 (1,244) 27,843 28,452 61,303 ----------------------------------------------------------- Administrative expenses - excluding exceptional items (24,518) - (24,518) (23,521) (49,493) - exceptional items 4 - (264) (264) - (888) ----------------------------------------------------------- Total administrative expenses (24,518) (264) (24,782) (23,521) (50,381) ------------------------------------------------------------------------------------------------- Group operating profit 4,569 (1,508) 3,061 4,931 10,922 excluding share of joint venture and associates - continuing operations ----------------------------------------------------------- Share of joint venture's 3 (90) - (90) (221) (138) operating loss - continuing operations Share of associate's operating 3 598 - 598 571 1,181 profits - continuing operations Share of associate's operating 3 - - - 1,386 1,818 profits - discontinued operations ----------------------------------------------------------- Total share of operating 508 - 508 1,736 2,861 profits of joint venture and associates ------------------------------------------------------------------------------------------------- Operating profit: Group and 3 5,077 (1,508) 3,569 6,667 13,783 share of joint venture and associates ------------------------------------------------------------------------------------------------- Non-operating exceptional gain 4 - - - - 4,256 on disposal of investment in associate ------------------------------------------------------------------------------------------------- Profit on ordinary activities 5,077 (1,508) 3,569 6,667 18,039 before finance income/(charges) ------------------------------------------------------------------------------------------------- Finance income/(charges) Group 632 - 632 139 555 Associates 8 - 8 (4) 20 ------------------------------------------------------------------------------------------------- Profit on ordinary activities before 5,717 (1,508) 4,209 6,802 18,614 taxation Tax on profit on ordinary 5 (1,715) 453 (1,262) (2,094) (4,673) activities ------------------------------------------------------------------------------------------------- Profit on ordinary activities 7 4,002 (1,055) 2,947 4,708 13,941 after taxation and for the period ------------------------------------------------------------------------------------------------- Consolidated profit and loss account (continued) for the six months ended 28 October 2005 Unaudited Audited -------------------------------------- Six months Six months Year to to to 28 October 29 October 29 April 2005 2004 2005 Notes £'000 £'000 £'000 ------------------------------------------------------------------------------------------ Earnings per ordinary share Basic Continuing operations 12.9p 16.5p 37.1p Discontinued operations - 4.2p 24.2p ------------------------------------------------------------------------------------------ 6 12.9p 20.7p 61.3p ------------------------------------------------------------------------------------------ Diluted Continuing operations 12.9p 16.5p 36.8p Discontinued operations - 4.2p 24.1p ------------------------------------------------------------------------------------------ 6 12.9p 20.7p 60.9p ------------------------------------------------------------------------------------------ Dividend per ordinary share for 4.5p 4.2p 18.7p the period Reliance Security Group plc Consolidated balance sheet as at 28 October 2005 Unaudited Audited --------------------------------- Restated(*) Restated(*) 28 October 29 October 29 April 2005 2004 2005 Notes £'000 £'000 £'000 -------------------------------------------------------------------------------- Fixed assets Intangible assets: goodwill - 710 - Tangible assets 5,702 7,080 6,138 --------------------------------- Investments Share of gross assets of joint venture 10,290 4,621 7,675 Share of gross liabilities of joint venture (10,513) (4,842) (7,808) --------------------------------- Share of net liabilities of joint venture (223) (221) (133) Associates 231 3,364 253 Others 467 485 467 --------------------------------- Total investments 475 3,628 587 -------------------------------------------------------------------------------- 6,177 11,418 6,725 -------------------------------------------------------------------------------- Current assets Stocks 1,468 2,309 1,465 Debtors: amounts due within one year 34,841 37,872 37,767 Debtors: amounts due after more than one year 4,776 1,336 4,253 Cash at bank and in hand 33,452 18,492 31,107 -------------------------------------------------------------------------------- 74,537 60,009 74,592 -------------------------------------------------------------------------------- Liabilities: amounts falling due within one year Borrowings (3,379) (3,493) (3,378) Creditors (41,630) (40,105) (41,177) Corporation tax (1,793) (2,299) (2,750) -------------------------------------------------------------------------------- (46,802) (45,897) (47,305) -------------------------------------------------------------------------------- Net current assets 27,735 14,112 27,287 -------------------------------------------------------------------------------- Total assets less current liabilities 33,912 25,530 34,012 Liabilities: amounts falling due after more than one year Borrowings (154) (3) - Other creditors (300) - (200) -------------------------------------------------------------------------------- (454) (3) (200) -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Net assets 33,458 25,527 33,812 -------------------------------------------------------------------------------- Capital and reserves Called up share capital 1,165 1,165 1,165 Share premium account 2,534 2,320 2,534 Own shares held (2,825) (2,831) (2,825) Revaluation reserve 152 152 152 Profit and loss account 32,432 24,721 32,786 -------------------------------------------------------------------------------- Equity shareholders' funds 7 33,458 25,527 33,812 -------------------------------------------------------------------------------- (*) See note 2 Reliance Security Group plc Consolidated cash flow statement for the six months ended 28 October 2005 Unaudited Audited ----------------------------------- Six months Six months Year to to to 28 October 29 October 29 April 2005 2004 2005 Notes £'000 £'000 £'000 -------------------------------------------------------------------------------- Net cash inflow from operating activities 8 8,367 7,656 15,726 -------------------------------------------------------------------------------- Dividends from associates 441 564 1,421 -------------------------------------------------------------------------------- Returns on investment and servicing of finance Interest received 710 259 809 Interest paid (137) (164) (293) Interest element of finance lease repayments (22) (2) (30) -------------------------------------------------------------------------------- Net cash inflow from returns on investment and servicing of finance 551 93 486 -------------------------------------------------------------------------------- Taxation UK corporation tax paid (2,033) (1,363) (3,199) -------------------------------------------------------------------------------- Capital expenditure and financial investment Purchase of tangible fixed assets (472) (675) (1,252) Sale of tangible fixed assets 4 10 11 Loan advanced to joint venture (1,122) - - Purchase of fixed asset investment - - (32) Repayment of fixed asset investment - - 20 Sale of current asset investment - - 1,036 -------------------------------------------------------------------------------- Net cash outflow from capital expenditure and financial investment (1,590) (665) (217) -------------------------------------------------------------------------------- Acquisitions and disposals Purchase of subsidiary undertakings - deferred consideration paid - (223) (266) Purchase of interest in joint venture - - (5) Sale of interest in associate - 1,463 7,260 -------------------------------------------------------------------------------- Net cash inflow from acquisitions and disposals - 1,240 6,989 -------------------------------------------------------------------------------- Equity dividends paid (3,301) (2,982) (3,938) -------------------------------------------------------------------------------- Net cash inflow before financing 2,435 4,543 17,268 -------------------------------------------------------------------------------- Financing Proceeds from exercise of options in shares held through the ESOP trust - - 8 Capital element of finance lease repayments (90) (148) (266) -------------------------------------------------------------------------------- Net cash outflow from financing (90) (148) (258) -------------------------------------------------------------------------------- Increase in cash in the period 2,345 4,395 17,010 -------------------------------------------------------------------------------- Reconciliation of net cash flow to movement in net cash Increase in cash in the period 2,345 4,395 17,010 Cash flow from finance leases (155) 148 266 -------------------------------------------------------------------------------- Movement in net cash in the period 2,190 4,543 17,276 Net cash at start of period 27,729 10,453 10,453 -------------------------------------------------------------------------------- Net cash at end of period 9 29,919 14,996 27,729 -------------------------------------------------------------------------------- Reliance Security Group plc Notes 1 Preparation of interim report The financial information for the 26 weeks ended 28 October 2005 and ended 29 October 2004 is unaudited and does not constitute full accounts within the meaning of the Companies Act 1985. The financial information for the 52 weeks ended 29 April 2005 does not constitute statutory accounts but has been extracted from the full accounts for that year which have been delivered to the Registrar of Companies. The auditors' report was unqualified and did not contain a statement under Section 237 (2) or (3) of the Companies Act 1985. The financial years of all Group companies are the 52 or 53 weeks up to the Friday before, or falling on, the accounting reference date of 30 April. 2 Principal accounting policies The results for the 26 weeks ended 28 October 2005 have been prepared using the same accounting policies set out in the Annual Report and Accounts for the year ended 29 April 2005 with the exception of the adoption of Financial Reporting Standard 21 Events After the Balance Sheet Date (FRS 21) and Financial Reporting Standard 22 Earnings per Share (FRS 22). The adoption of FRS 21 has resulted in the Group restating its closing net assets for the prior periods to exclude dividends proposed but not yet declared at the balance sheet date. This exclusion of proposed dividends previously reported within current liabilities has increased closing net assets at 29 October 2004 by £956,000 and at 29 April 2005 by £3,301,000. In addition the figure for opening net assets for the six month period ended 29 October 2004 has similarly been increased by £2,982,000. The adoption of FRS 22 has not led to any adjustment to the previously reported figures for basic and diluted earnings per share. Additional analysis of the earnings between those attributable to continuing and discontinued operations, including comparative figures, has been reported in note 6 as required by the standard. Reliance Security Group plc Notes (continued) 3 Segmental information Six Months to 28 October 2005 Six Months to 29 October 2004 ----------------------------------------------------------------- Security Facilities Total Security Facilities Total Services Management Services Management £'000 £'000 £'000 £'000 £'000 £'000 --------------------------------------------------------------------------------------------- Turnover 93,790 63,570 157,360 97,440 52,091 149,531 --------------------------------------------------------------------------------------------- Group operating profit 1,220 3,349 4,569 1,836 3,095 4,931 before exceptional items, excluding share of joint venture and associates - continuing operations ---------------------------------------------------------------- Share of joint venture's - (90) (90) - (221) (221) operating loss - continuing operations Share of associate's - 598 598 - 571 571 operating profits - continuing operations Share of associate's - - - 1,386 - 1,386 operating profits - discontinued operations ---------------------------------------------------------------- Total share of operating - 508 508 1,386 350 1,736 profits of joint venture and associates before exceptional items --------------------------------------------------------------------------------------------- Operating profit before 1,220 3,857 5,077 3,222 3,445 6,667 exceptional items: Group and share of joint venture and associates --------------------------------------------------------------------------------------------- Group operating exceptional (1,371) (137) (1,508) - - - items --------------------------------------------------------------------------------------------- (Loss)/profit on ordinary (151) 3,720 3,569 3,222 3,445 6,667 activities before finance income/(charges) --------------------------------------------------------------------------------------------- No turnover was reported in the period for the Group's joint venture, Gloucestershire FM Services Limited. In accordance with the equity method adopted for accounting for associates, Group turnover excludes its share of turnover of associated undertakings of £10,502,000 (2004: £16,650,000). Reliance Security Group plc Notes (continued) 3 Segmental information (continued) Six Months to 28 October 2005 Six Months to 29 October 2004 ----------------------------------------------------------------- Security Facilities Total Security Facilities Restated(*) Services Management Services Management Total £'000 £'000 £'000 £'000 £'000 £'000 ----------------------------------------------------------------------------------------------- Group operating assets/ (1,746) 4,908 3,162 4,880 3,856 8,736 (liabilities) Share of joint venture's net - (223) (223) - (221) (221) liabilities Share of associates' net - 231 231 2,700 664 3,364 assets ----------------------------------------------------------------------------------------------- Total operating assets/ (1,746) 4,916 3,170 7,580 4,299 11,879 (liabilities) ----------------------------------------------------------------------------------------------- Reconciliation of total operating assets to total net assets: Total operating assets 3,170 11,879 Items excluded: Net cash 29,919 14,996 Investments in other participating 467 485 interests Amounts due from joint venture 1,122 - Taxation payable (1,793) (2,299) Deferred taxation 460 435 Net interest 113 31 receivable ----------------------------------------------------------------------------------------------- Total net assets (*) 33,458 25,527 ----------------------------------------------------------------------------------------------- Operating assets are those net assets controlled by Reliance's operating divisions. (*) The figure for total net assets reported for 2004 has been restated to reflect the exclusion from current liabilities of the interim dividend proposed but not yet declared at the balance sheet date of £956,000 following the adoption of FRS 21 (see note 2). Reliance Security Group plc Notes (continued) 4 Exceptional items Unaudited Audited ------------------------------------------- Six months to Six months to Year to 28 October 29 October 29 April 2005 2004 2005 £'000 £'000 £'000 ----------------------------------------------------------------------------------------------- Operating exceptional items ----------------------------------------------------------------------------------------------- Cost of sales Cost of preparation for implementation of Private (1,244) - (386) Security Industry Act Administrative expenses ------------------------------------------- Cost of preparation for implementation of Private (179) - (218) Security Industry Act Impairment of goodwill held in respect of Goldrange - - (670) Limited Legal and professional costs of re-listing on AIM (85) - - ------------------------------------------- (264) - (888) ----------------------------------------------------------------------------------------------- Total operating exceptional charge (1,508) - (1,274) Non-operating exceptional item Gain on disposal of investment in associate - Safe Estates Services Limited - - 4,256 ----------------------------------------------------------------------------------------------- Total exceptional (charge)/gain (1,508) - 2,982 Tax credit on exceptional (charge)/gain 453 - 181 ----------------------------------------------------------------------------------------------- (1,055) - 3,163 ----------------------------------------------------------------------------------------------- There were no tax credits or charges relating to the exceptional goodwill write-off or gain on disposal of the investment in associate in the year ended 29 April 2005. 5 Taxation Corporation tax for the six months to 29 October 2005 has been calculated using an effective rate of 30% (six months ended 29 October 2004: 31%, year ended 29 April 2005: 31%). Reliance Security Group plc Notes (continued) 6 Earnings per share Unaudited Audited ---------------------------------------------------------------------------------------------------- Six months ended 28 October Six months ended 29 October Year to 29 April 2005 2005 2004 ---------------------------------------------------------------------------------------------------- Basic Diluted Basic Diluted Basic Diluted pence per pence per pence per pence per pence per pence per £'000 share share £'000 share share £'000 share share --------------------------------------------------------------------------------------------------------------------- Profit for the period attributable to equity shareholders Continuing 2,947 12.9p 12.9p 3,754 16.5p 16.5p 8,429 37.1p 36.8p operations Discontinued - - - 954 4.2p 4.2p 5,512 24.2p 24.1p operations --------------------------------------------------------------------------------------------------------------------- 2,947 12.9p 12.9p 4,708 20.7p 20.7p 13,941 61.3p 60.9p Add back/ (deduct): Exceptional 1,055 4.7p 4.7p - - - (3,163) (13.9p) (13.8p) items (see note 4) --------------------------------------------------------------------------------------------------------------------- Earnings 4,002 17.6p 17.6p 4,708 20.7p 20.7p 10,778 47.4p 47.1p excluding exceptional items --------------------------------------------------------------------------------------------------------------------- Represented by Continuing 4,002 17.6p 17.6p 3,754 16.5p 16.5p 9,522 41.9p 41.6p operations Discontinued - - - 954 4.2p 4.2p 1,256 5.5p 5.5p operations --------------------------------------------------------------------------------------------------------------------- 4,002 17.6p 17.6p 4,708 20.7p 20.7p 10,778 47.4p 47.1p --------------------------------------------------------------------------------------------------------------------- Unaudited Audited ---------------------------------------------- 28 October 29 October Year to 29 2005 2004 April 2005 Number Number Number ------------------------------------------------------------------------------------------------ Weighted average number of shares 23,305,592 23,305,592 23,305,592 Weighted average number of shares held in (542,599) (545,399) (544,907) ESOP trust ------------------------------------------------------------------------------------------------ Shares used to calculate basic earnings 22,762,993 22,760,193 22,760,685 per share Dilutive potential shares - 2,404 138,557 ------------------------------------------------------------------------------------------------ Shares used to calculate diluted earnings 22,762,993 22,762,597 22,899,242 per share ------------------------------------------------------------------------------------------------ The basic and diluted earnings per share have been calculated in accordance with FRS 22, based on profit after tax and the weighted average number of ordinary shares in issue during the period, less shares held by the ESOP trust. Reliance Security Group plc Notes (continued) 7 Reconciliation of movement in equity shareholders' funds Unaudited Audited Unaudited Restated(*) Restated(*) Called up Share Own Revaluation Profit Six months Six months Year share premium shares reserve and loss to 28 to 29 ended 29 capital account held account October October April 2005 2004 2005 £'000 £'000 £'000 £'000 £'000 £,000 £'000 £'000 ----------------------------------------------------------------------------------------------------- Group At start of the 1,165 2,534 (2,825) 152 29,485 30,511 20,819 20,819 period as previously stated Prior period - - - - 3,301 3,301 2,982 2,982 adjustment for proposed dividends (*) ----------------------------------------------------------------------------------------------------- At start of 1,165 2,534 (2,825) 152 32,786 33,812 23,801 23,801 period as restated Share based - - - - - - - 8 payments Profit on - - - - 2,947 2,947 4,708 13,941 ordinary activities after taxation Dividends paid - - - - (3,301) (3,301) (2,982) (3,938) ----------------------------------------------------------------------------------------------------- At end of the 1,165 2,534 (2,825) 152 32,432 33,458 25,527 33,812 period as restated (*) ----------------------------------------------------------------------------------------------------- In accordance with s.264 Companies Act 1985 the value of own shares held must be deducted from the profit and loss account of the Company in calculating its distributable reserves. (*) See note 2 Reliance Security Group plc Notes (continued) 8 Reconciliation of operating profit to net cash inflow from operating activities Unaudited Unaudited Audited Six months Six months Year ended ended ended 28 October 29 October 29 April 2005 2004 2005 £'000 £'000 £'000 ----------------------------------------------------------------------------------- Operating profit 3,061 4,931 10,922 Depreciation charges 1,151 1,605 3,045 Amortisation of goodwill - 48 88 Exceptional goodwill impairment - - 670 (Profit)/loss on the sale of fixed assets (2) 7 85 (Increase)/decrease in stocks (3) (639) 205 Decrease/(increase) in debtors 3,622 (4,003) (6,756) Increase in creditors 538 5,707 7,467 ----------------------------------------------------------------------------------- Net cash inflow from operating 8,367 7,656 15,726 activities ----------------------------------------------------------------------------------- 9 Analysis and reconciliation of net cash Audited Unaudited ------------------------------------- 29 April 28 October 2005 Cash flow 2005 £'000 £'000 £'000 ----------------------------------------------------------------------------------- Cash at bank and in hand 31,107 2,345 33,452 ----------------------------------------------------------------------------------- Loan due within one year (3,315) - (3,315) Finance leases and hire purchase contracts (63) (155) (218) ----------------------------------------------------------------------------------- Total borrowings (3,378) (155) (3,533) ----------------------------------------------------------------------------------- Net cash 27,729 2,190 29,919 ----------------------------------------------------------------------------------- 10 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 or from the Company's website www.reliancesecurity.co.uk. This information is provided by RNS The company news service from the London Stock Exchange

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