Interim Results

Reliance Security Group PLC 30 November 2006 EMBARGOED UNTIL 7.00 AM THURSDAY 30 NOVEMBER 2006 PRESS RELEASE Reliance Security Group plc Interim Results for the six months to 27 October 2006 â€¢Turnover up 5.5% to Â£165.9 m (2005: Â£157.4m) â€¢Profit before tax up 2.7% to Â£5.9m (2005: Â£5.8m pre exceptionals*) â€¢Forward Facilities Management order book Â£724m (Â£716m at April 2006) â€¢Earnings per share up 11.2% to 19.8p (2005:17.8p pre exceptionals*) â€¢Dividend per share up 6.7% to 4.8p (2005: 4.5p) Brian Kingham, Chairman commenting on the results said: 'The first half year has delivered to our expectations with steadily improving market conditions, increased sales and a gradual build up in new business prospects. The uncertainties surrounding private security regulation are lifting and we have seen improved market conditions and new business wins. Our facilities management and business process outsourcing activities, in which we are continuing to invest, have enjoyed increased sales in this large and growing market' 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: Julian Nicholls Managing Director 01895 205 002 Mark Harrison Group Finance Director 01895 205 002 (* 2005 comparatives have been restated for the effect of adoption of FRS 20 accounting standard on share options) Chairman's interim statement for the six months ended 27 October 2006 The first half year has delivered to our expectations with steadily improving market conditions, increased sales and a gradual build up in new business prospects. The uncertainties surrounding private security regulation are lifting and we have seen improved market conditions and new business wins. Our facilities management and business process outsourcing activities, in which we are continuing to invest, have enjoyed increased sales in this large and growing market. Results Turnover for the six months to 27 October 2006 increased by 5.5% to Â£165.9 million (2005: Â£157.4 million). Pre-tax profit was Â£5.9 million (2005: Â£5.8 million pre exceptionals) and earnings per share were 19.8p (2005:17.8p pre exceptionals). Cash flow has again been strong and, with Â£1.6 million cash generated in the first half, we ended the half-year with net cash of Â£22.7 million (April 2006: Â£21.1 million). There were no exceptional items during the period (2005: Â£1.5 million, primarily relating to net costs incurred in preparing for security industry regulation) Dividend The directors have decided to pay an increased interim dividend of 4.8p per share (2005: 4.5p), payable on 19 January 2007 to shareholders on the register at 29 December 2006. Security Services Turnover was up 5.4% at Â£98.9million (2005: Â£93.8 million). Segment operating profit was Â£1.6 million (2005: Â£1.3 million pre exceptional), reflecting a strong performance in our manned security business. As a result, operating margin, the ratio of segment profit to turnover, increased to 1.6% (2005:1.3%). Effective control over working capital, which excludes cash balances, resulted in net operating liabilities of Â£0.3 million (2005: Â£1.6 million). The new management team is now fully established and has made excellent progress in bringing renewed vigour to our work to innovate in customer care, people development and teamwork. We have won important long-term contracts with Sainsbury's, Pilkington, DHL, Deloitte and others. Regulation of the private security industry, which became effective in March 2006, continues to have a positive impact. With welcome support from our Regulator, the Security Industry Authority, recovery of the substantial additional costs incurred in complying with regulation has been negotiated with our customers and is now largely reflected in our terms of business. This new environment, whilst heralding higher costs for our customers, with increased pressure for substitution, has helped to widen the market for our services. It has given further impetus to the development of the 'wider policing' family and a mixed economy of public, private, charitable and 'not for profit' provision of policing and security services. Facilities Management Turnover was up 5.5% at Â£67.1 million (2005: Â£63.6 million) due to both new contract starts and growth in existing contracts. Segment operating profit was Â£4.2 million (2005: Â£3.9 million) and segment operating margin was 6.2% (2005: 6.1%). During the period we have improved the profitability of continuing contracts. Overheads increased, reflecting further investment in business development resources to drive continuing growth. We maintained effective control over working capital and, with no significant increase in our contract start-up costs, we have reduced our operating assets over the past twelve months by 3.0%. The first half has been a busy period; not only have we increased our pipeline of opportunities, but we have mobilised a number of important contracts, including with Infineum UK Limited, the AA, Panasonic, Slough Shopping Centre and Indesit. We also participated in the ground breaking ceremony for our new 30 year PFI contract with the Kent Police Authority. 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) had increased slightly to Â£724 million (April 2006: Â£716 million). People The Reliance Academy has continued to support the enhancement of our people's knowledge and performance. In September we were delighted to be recognised by the Corporate Research Foundation as one of the best companies in Britain to work for. We are profiled in Guardian Books 'Britain's Top Employers'. As previously announced we welcomed Mark Harrison as Group Finance Director on 10 October 2006, having previously been chief financial officer of ACR Logistics UK (formerly Hays Logistics) until its sale earlier this year. Neil French our former Group Finance Director, and latterly non executive director, resigned from the board on 6 October 2006. I take this opportunity to thank Neil for his fantastic support and his work in building the strong financial management regime that we now enjoy. We continue to strengthen our operating company boards. In July 2006, we were delighted to welcome Mark Underwood as Managing Director of Reliance Secure Task Management Ltd. Mark has a record of success in setting up large, complex outsourced operations and brings us specialist experience in IT solutions. In September 2006 we welcomed Peter Fisher as Managing Director of Reliance Integrated Services Ltd. Peter, formerly with the AA, brings to the Group strong marketing skills and service industry branding expertise. Outlook The security services market continues to adjust to the higher costs of a regulated environment. There are new market opportunities and a ready demand for substitution and technological change which the Group is well resourced to meet. We anticipate further improvement in market conditions favouring a greater emphasis on higher value added services, as well as longer term contractual relationships with customers. Our markets in facilities management and business process outsourcing are large and diverse. We have continued to invest in new skills and technologies to meet customer demands for innovation and change and we look forward to continuing steady growth. The Group remains well positioned for long-term growth and the board's expectations for the full year remain unchanged. Brian Kingham Chairman 30 November 2006 INDEPENDENT REVIEW REPORT TO RELIANCE SECURITY GROUP PLC Introduction We have been instructed by the company to review the financial information for the 26 week period ended 27 October 2006 which comprises the consolidated profit and loss account, the consolidated statement of total recognised gains and losses, the consolidated balance sheet, the consolidated 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 26 week period ended 27 October 2006. Deloitte & Touche LLP Chartered Accountants London 30 November 2006 Reliance Security Group plc Consolidated profit and loss account for the six months ended 27 October 2006 Unaudited Unaudited Audited Restated (*) Restated (*) Six months to Six months to Year to 27 October 28 October 28 April 2006 2005 2006 Notes Â£'000 Â£'000 Â£'000 --------------------- ------ --------- --- ---------- --------- -------- Turnover: Group and share of joint venture - excluding exceptional item 3 165,948 157,360 317,483 - exceptional item 4 - - 758 --------------------- ------ --------- --- ---------- --------- -------- 165,948 157,360 318,241 Less: share of joint venture's turnover (714) - (259) --------------------- ------ --------- --- ---------- --------- -------- Group turnover 3,4 165,234 157,360 317,982 ---------- --------- -------- Cost of sales - excluding exceptional item (134,320) (128,273) (257,598) - exceptional item 4 - (1,244) (3,828) ---------- --------- -------- Total cost of sales (134,320) (129,517) (261,426) --------------------- ------ --------- --- ---------- --------- -------- Gross profit 30,914 27,843 56,556 ---------- --------- -------- Administrative expenses - excluding exceptional items (26,214) (24,455) (48,835) - exceptional items 4 - (264) (398) ---------- --------- -------- Total administrative expenses (26,214) (24,719) (49,233) --------------------- ------ --------- --- ---------- --------- -------- Group operating profit excluding share of joint venture and associate 4,700 3,124 7,323 ---------- --------- -------- Share of joint venture's operating profit/(loss) 3 344 (90) 154 Share of associate's operating profit 3 755 598 1,274 ---------- --------- -------- Total share of operating profits of joint venture and associate 1,099 508 1,428 --------------------- ---------- --------- -------- Operating profit: Group and share of joint venture and associate 3 5,799 3,632 8,751 --------------------- ---------- --------- -------- Finance income/(charges) ---------- --------- -------- Group 480 632 1,050 Joint venture (350) - (137) Associate 8 8 13 ---------- --------- -------- Net finance income 138 640 926 --------------------- ---------- --------- -------- Profit on ordinary activities before taxation 5,937 4,272 9,677 Tax on profit on ordinary activities 5 (1,784) (1,281) (2,830) --------------------- ---------- --------- -------- Profit on ordinary activities after taxation and for the period 7 4,153 2,991 6,847 --------------------- ---------- --------- -------- Earnings per ordinary share Basic 6 19.8p 13.1p 30.9p --------------------- ---------- --------- -------- Diluted 6 19.4p 13.1p 30.9p --------------------- ---------- --------- -------- Dividend per ordinary share for the period 4.8p 4.5p 20.0p --------------------- ---------- --------- -------- All of the activities of the Group are classed as continuing. (*) The restatements relate to the adoption of FRS 20 as set out in note 2. Reliance Security Group plc Consolidated statement of total recognised gains and losses for the six months ended 27 October 2006 Unaudited Unaudited Audited Six months to Restated (*) Restated (*) 27 October Six months to Year to 2006 28 October 28 April 2005 2006 -------------------------- ------ --------- --- --------- --------- Note Â£'000 Â£'000 Â£'000 -------------------------- ------ --------- --- --------- --------- Profit/(loss) for the period - Group 3,625 2,657 5,943 --------- --- --------- --------- - Joint venture (6) (90) 17 - Associate 534 424 887 --------- --- --------- --------- Total recognised gains and losses relating to the period 4,153 2,991 6,847 --------- --------- Prior year adjustment in respect of adoption of FRS 20 2 139 -------------------------- ------ --------- --- --------- --------- Total recognised gain since last financial statements 4,292 -------------------------- ------ --------- --- --------- --------- (*) The restatements relate to the adoption of FRS 20 as set out in note 2. Reliance Security Group plc Consolidated balance sheet as at 27 October 2006 Unaudited Unaudited Audited Restated (*) Restated (*) 27 October 28 October 28 April 2006 2005 2006 Note Â£'000 Â£'000 Â£'000 -------------------------- ----- --------- --------- -------- Fixed assets Tangible assets 5,511 5,702 5,445 Investments --------- --------- -------- Share of gross assets of 10,402 10,290 10,602 joint venture Share of gross liabilities of joint venture (10,524) (10,513) (10,718) --------- --------- -------- Share of net liabilities of joint venture (122) (223) (116) Associated undertaking 131 231 135 Others 1,702 467 1,701 --------- --------- -------- Total investments 1,711 475 1,720 7,222 6,177 7,165 Current assets Stocks 1,714 1,468 1,725 Debtors: amounts due within one year 40,755 34,841 36,488 Debtors: amounts due after more than one year 3,474 4,718 3,493 Cash at bank and in hand 22,831 33,452 24,557 68,774 74,479 66,263 Liabilities: amounts falling due within one year Borrowings (61) (3,379) (3,376) Creditors (45,985) (41,630) (41,250) Corporation tax (2,257) (1,793) (2,069) -------------------------- ----- --------- --------- -------- (48,303) (46,802) (46,695) -------------------------- ----- --------- --------- -------- Net current assets 20,471 27,677 19,568 -------------------------- ----- --------- --------- -------- Total assets less current liabilities 27,693 33,854 26,733 Liabilities: amounts falling due after more than one year Borrowings (93) (154) (124) Other creditors (60) (23) (44) -------------------------- ----- --------- --------- -------- (153) (177) (168) -------------------------- ----- --------- --------- -------- Net assets 27,540 33,677 26,565 -------------------------- ----- --------- --------- -------- Capital and reserves Called up share capital 1,095 1,165 1,095 Capital redemption reserve 70 - 70 Share premium account 2,534 2,534 2,534 Own shares held (5,025) (2,825) (5,025) Revaluation reserve 232 152 232 Share option reserve 229 85 157 Profit and loss account 28,405 32,566 27,502 -------------------------- ----- --------- --------- -------- Equity shareholders' funds 7 27,540 33,677 26,565 -------------------------- ----- --------- --------- -------- (*) The restatements relate to the adoption of FRS 20 as set out in note 2. Reliance Security Group plc Consolidated cash flow statement for the six months ended 27 October 2006 Unaudited Unaudited Audited Six months to Six months to Year to 27 October 28 October 28 April 2006 2005 2006 Notes Â£'000 Â£'000 Â£'000 --------------------------- ------ --------- --------- ------- Net cash inflow from operating activities 8 6,183 8,367 11,835 --------------------------- --------- --------- ------- Dividends from associate 539 441 1,005 --------------------------- ------ --------- --------- ------- Returns on investment and servicing of finance Interest received 602 710 1,238 Interest paid (98) (137) (281) Interest element of finance lease repayments (8) (22) (31) --------------------------- ------ --------- --------- ------- Net cash inflow from returns on investment and servicing of finance 496 551 926 --------------------------- ------ --------- --------- ------- Taxation UK corporation tax paid (1,384) (2,033) (3,399) --------------------------- ------ --------- --------- ------- Capital expenditure and financial investment Purchase of tangible fixed assets (962) (472) (1,389) Sale of tangible fixed assets - 4 18 Loan advanced to joint venture - (1,122) (1,122) Purchase of fixed asset investment (2) - - --------------------------- ------ --------- --------- ------- Net cash outflow from capital expenditure and financial investment (964) (1,590) (2,493) --------------------------- ------ --------- --------- ------- Equity dividends paid (3,250) (3,301) (4,245) --------------------------- ------ --------- --------- ------- Net cash inflow before financing 1,620 2,435 3,629 --------------------------- ------ --------- --------- ------- Financing Payments to redeem equity shares - - (7,660) Payments to acquire treasury shares - - (2,200) Payments of expenses on redemption of equity shares and acquisition of treasury shares - - (236) Repayment of ESOP loan (3,315) - - Capital element of finance lease repayments (31) (90) (83) --------------------------- ------ --------- --------- ------- Net cash outflow from financing (3,346) (90) (10,179) --------------------------- ------ --------- --------- ------- (Decrease)/increase in cash in the period (1,726) 2,345 (6,550) --------------------------- ------ --------- --------- ------- Reconciliation of cash flow to movement in net cash (Decrease)/increase in cash in the period (1,726) 2,345 (6,550) Repayment of ESOP loan 3,315 - - Cash flow from finance leases 31 (155) (122) --------------------------- ------ --------- --------- ------- Movement in net cash in the period 1,620 2,190 (6,672) Net cash at start of period 21,057 27,729 27,729 --------------------------- ------ --------- --------- ------- Net cash at end of period 9 22,677 29,919 21,057 --------------------------- ------ --------- --------- ------- Reliance Security Group plc Notes 1 Preparation of interim report The financial information for the 26 weeks ended 27 October 2006 and ended 28 October 2005 is unaudited and does not constitute full accounts within the meaning of the Companies Act 1985. The financial information for the 52 weeks ended 28 April 2006 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 27 October 2006 have been prepared using the same accounting policies set out in the Annual Report and Accounts for the year ended 28 April 2006 with the exception of the adoption of Financial Reporting Standard 20 Share-based payment (FRS 20). The Group had previously estimated the value of its share options in accordance with UITF 17 Employee Share Schemes. The adoption of FRS 20 has resulted in the Group restating its operating profit, net assets and reserves for the prior periods to reflect the revised basis of calculating the charges and liabilities relating to its share options issued since November 2002. Under FRS 20 equity-settled share based payments are measured at fair value at the date of grant and this is expensed on a straight-line basis over the vesting period, based on the Group's estimate of the shares that will eventually vest. In addition, the Group has estimated the corresponding charge to class 1A National Insurance Contributions (NIC) which will arise on its estimate of the number of shares which will eventually vest. Deferred tax is recognised in respect of the total charge made. A transfer to a share option reserve is made each period to match the fair value of the share options which has been charged to the profit and loss account. The Group's estimated liability to NIC is held as a creditor on the balance sheet. The adoption of FRS 20 has resulted in a lower profit and loss account charge than under UITF 17. The charges for the periods ended 28 April 2006 and 28 October 2005 are Â£70,000 and Â£63,000 lower before tax respectively and Â£49,000 and Â£44,000 lower after tax respectively. The opening net assets and reserves for the periods ended 28 April 2006 and 28 October 2005 have been increased by Â£147,000 to reflect the cumulative effect of the implementation of FRS 20 on the prior periods, while the opening net asset position for the period ending 27 October 2006 has increased by Â£296,000. The increases in closing net assets and reserves for 28 April 2006 and 28 October 2005 were Â£149,000 and Â£72,000 respectively, reflecting the restatement of profit after tax and a transfer made to the share option reserve of Â£100,000 and Â£28,000 respectively. The net impact of the cumulative effect of implementation of FRS 20 on the opening net assets, the restated profit after tax and the transfer to the share option reserve have created an opening balance for the six months ended 27 October 2006 on the share option reserve of Â£157,000 and increased the opening balance on the profit and loss reserve by Â£139,000, which has been recorded as a prior year adjustment in the statement of total recognised gains and losses. 3 Segmental information Restated (*) Six Months to 27 October 2006 Six Months to 28 October 2005 -------------------- ------------------- Security Facilities Total Security Facilities Total Services Management Services Management Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 ------------------ -------- --------- ------- -------- -------- ------- Group turnover 98,862 66,372 165,234 93,790 63,570 157,360 ------------------ -------- --------- ------- -------- -------- ------- Share of joint venture's turnover - 714 714 - - - ------------------ -------- --------- ------- -------- -------- ------- Turnover: Group and share of joint venture 98,862 67,086 165,948 93,790 63,570 157,360 ------------------ -------- --------- ------- -------- -------- ------- Group operating profit before exceptional items, excluding share of joint venture and associate 1,631 3,069 4,700 1,252 3,380 4,632 -------- --------- ------- -------- -------- ------- Share of joint venture's operating profit /(loss) - 344 344 - (90) (90) Share of associate's operating profit - 755 755 - 598 598 -------- --------- ------- -------- -------- ------- Total share of operating profits of joint venture and associate before exceptional items - 1,099 1,099 - 508 508 ------------------ -------- --------- ------- -------- -------- ------- Operating profit before exceptional items: Group and share of joint venture and associate 1,631 4,168 5,799 1,252 3,888 5,140 ------------------ -------- --------- ------- -------- -------- ------- Group operating exceptional items - - - (1,371) (137) (1,508) ------------------ -------- --------- ------- -------- -------- ------- Profit/(loss) on ordinary activities before finance income/(charges) 1,631 4,168 5,799 (119) 3,751 3,632 ------------------ -------- --------- ------- -------- -------- ------- In accordance with the equity method adopted for accounting for associates, Group turnover excludes its share of turnover of its associated undertaking of Â£14,908,005 (2005: Â£10,502,000). (*) See note 2 3 Segmental information (continued) Restated (*) Six Months to 27 October 2006 Six Months to 28 October 2005 ------------------ ------------------- Security Facilities Total Security Facilities Total Services Management Services Management Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 ------------------ ------- --------- ------ ------- -------- -------- Group operating assets/(liabilities) (252) 4,894 4,642 (1,607) 5,046 3,439 Share of joint venture's net liabilities - (122) (122) - (223) (223) Share of associate's net assets - 131 131 - 231 231 ------------------ ------- --------- ------ ------- -------- -------- Total operating assets/(liabilities) (252) 4,903 4,651 (1,607) 5,054 3,447 ------------------ ------- --------- ------ ------- -------- -------- Reconciliation of total operating assets to total net assets: Total operating assets 4,651 3,447 Items excluded: Net cash 22,677 29,919 Investments in other participating interests 581 467 Amounts due from joint venture 1,122 1,122 Taxation payable (2,257) (1,793) Deferred taxation 710 402 Net interest receivable 56 113 --------------- ---------- --------- ------ ------- -------- -------- Total net assets (*) 27,540 33,677 --------------- ---------- --------- ------ ------- -------- -------- Operating assets are those net assets controlled by Reliance's operating divisions. (*) See note 2. 4 Exceptional items Unaudited Unaudited Audited Six months to Six months to Year to 27 October 28 October 28 April 2006 2005 2006 Â£'000 Â£'000 Â£'000 -------------------------- ---------- --------- -------- Turnover Revenue received towards cost of implementation of Private Security Industry Act - - 758 Cost of sales Cost of preparation for implementation of Private Security Industry Act - (1,244) (3,828) Administrative expenses ---------- --------- -------- Cost of preparation for implementation of Private Security Industry Act - (179) (312) Legal and professional costs of re-listing on AIM - (85) (86) ---------- --------- -------- - (264) (398) -------------------------- ---------- --------- -------- Total exceptional charge - (1,508) (3,468) Tax credit on exceptional charge - 453 1,040 -------------------------- ---------- --------- -------- - (1,055) (2,428) -------------------------- ---------- --------- -------- All revenue and expenditure relating to compliance with the Private Security Industry Act 2001 has been treated as regular, non-exceptional items within turnover, cost of sales and administrative expenses since the Act came into force on 20 March 2006. 5 Taxation Corporation tax for the six months to 27 October 2006 has been calculated using an effective rate of 30% (six months ended 28 October 2005: 30%, year ended 28 April 2006: 29%). 6 Earnings per share Unaudited Unaudited Audited Restated (*) Restated (*) --------------- --------------- --- --------------- Six months ended Six months ended Year to 27 October 2006 28 October 2005 28 April 2006 --------------- --------------- --- --------------- Basic Diluted Basic Diluted Basic Diluted pence pence pence pence pence pence per per per per per per Â£'000 share share Â£'000 share share Â£'000 share share --------------- ------ ------ ------- ------ ------ ------- --- ------ ------ ------- Profit for the period attributable to equity shareholders 4,153 19.8p 19.4p 2,991 13.1p 13.1p 6,847 30.9p 30.9p Add back: Exceptional items (see note 4) - - - 1,055 4.7p 4.7p 2,428 11.0p 11.0p --------------- ------ ------ ------- ------ ------ ------- --- ------ ------ ------- Earnings excluding exceptional items 4,153 19.8p 19.4p 4,046 17.8p 17.8p 9,275 41.9p 41.9p --------------- ------ ------ ------- ------ ------ ------- --- ------ ------ ------- (*) See note 2 Unaudited Unaudited Audited ----------- ----------- --------- Six months Six months Year to 28 ended 27 ended 28 April 2006 October 2006 October 2005 Number Number Number -------------------------- ----------- ----------- --------- Weighted average number of shares 21,912,855 23,305,592 22,808,186 Weighted average number of shares held in treasury (400,000) - (142,857) -------------------------- ----------- ----------- --------- Weighted average number of shares held in ESOP trust (542,599) (542,599) (542,599) -------------------------- ----------- ----------- --------- Shares used to calculate basic earnings per share 20,970,256 22,762,993 22,122,730 Dilutive potential shares 417,170 - - -------------------------- ----------- ----------- --------- Shares used to calculate diluted earnings per share 21,387,426 22,762,993 22,122,730 -------------------------- ----------- ----------- --------- 7 Reconciliation of movement in equity shareholders' funds Unaudited Unaudited Unaudited Six months to Year ended Six months to 28 October 28 April 27 October 2005 2006 2006 Â£'000 Â£'000 Â£'000 -------------------------------- --------- --------- ---------- At start of the period as previously stated 33,812 33,812 26,269 Prior period adjustments as a result of adoption of FRS20(*) 147 147 296 -------------------------------- --------- --------- ---------- At start of period as restated (*) 33,959 33,959 26,565 Purchase of own shares - (10,096) - Profit on ordinary activities after taxation 2,991 6,847 4,153 Share based payments 28 100 72 Dividends paid (3,301) (4,245) (3,250) -------------------------------- --------- --------- ---------- At end of the period as restated (*) 33,677 26,565 27,540 -------------------------------- --------- --------- ---------- Called Capital Share Own Revaluation Share Profit Six months up redemption premium shares reserve option and loss to 27 share reserve account held reserve account October capital 2006 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 ---------- ------- -------- ------- ------ -------- ------ ------ --------- At start of the period as previously stated 1,095 70 2,534 (5,025) 232 - 27,363 26,269 Prior period adjustments as a result of adoption of FRS20 (*) - - - - - 157 139 296 ---------- ------- -------- ------- ------ -------- ------ ------ --------- At start of period as restated (*) 1,095 70 2,534 (5,025) 232 157 27,502 26,565 Purchase of own shares - - - - - - - - Profit on ordinary activities after taxation - - - - - - 4,153 4,153 Share based payments - - - - - 72 - 72 Dividends paid - - - - - - (3,250) (3,250) ---------- ------- -------- ------- ------ -------- ------ ------ --------- At end of the period as restated (*) 1,095 70 2,534 (5,025) 232 229 28,405 27,540 ---------- ------- -------- ------- ------ -------- ------ ------ --------- 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 8 Reconciliation of operating profit to net cash inflow from operating activities Unaudited Unaudited Audited Restated(*) Restated(*) Six months Six months Year ended ended ended 27 October 28 October 28 April 2006 2005 2006 Â£'000 Â£'000 Â£'000 --------- -------- -------- -------- Operating profit 4,700 3,124 7,323 Depreciation charges 893 1,151 2,272 Loss/(profit) on disposal of fixed assets 4 (2) (3) Share option expense 72 28 100 Decrease/(increase) in stocks 11 (3) (260) (Increase)/decrease in debtors (4,248) 3,622 2,317 Increase in creditors 4,751 447 86 -------------------- --------- -------- -------- -------- Net cash inflow from operating activities 6,183 8,367 11,835 ----------------- ----- --------- -------- -------- -------- (*) See note 2 9 Analysis and reconciliation of net cash Audited Unaudited -------- -------------- 28 April Cash 27 October 2006 flow 2006 Â£'000 Â£'000 Â£'000 -------------------- --------- -------- -------- -------- Cash at bank and in hand 24,557 (1,726) 22,831 -------------------- --------- -------- -------- -------- Loan due within one year (3,315) 3,315 - Finance leases (185) 31 (154) --------------------------- -------- -------- -------- Total borrowings (3,500) 3,346 (154) ----------------- ----- --------- -------- -------- -------- Net cash 21,057 1,620 22,677 ----------------- ----- --------- -------- -------- -------- 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 D IR AKCKDFBDDPDB

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