Redstone Announces Unaudited Interim Results 6 months ended 30th September 2008

Thursday 18 December 2008

Redstone (AIM:RED.L), a leading provider of Integrated IT and Communications Solutions in the UK and Ireland, today announces its financial results for the six months ended 30 September 2008.

FINANCIAL HIGHLIGHTS

• Revenues up by 10% (9% organic) to £106.0m (H108: £96.6m)
• Gross Profit up by 4% to £38.2m (H108: £36.6m)
• Adjusted EBITDA* decreased by 23% to £5.1m (H108: £6.5m)
• Adjusted Profit Before Tax** decreased to £2.8m (H108: £4.8m)
• Loss Before Tax of £1.8m (H108: Profit £0.2m)
• Cash of £7.2m (H108: £10.9m); Net debt £26.6m (H108: £20.7m)

*before interest, tax, depreciation, amortisation, exceptional items and stock compensation charge.
** before amortisation of intangibles, exceptional items and stock compensation charge.

OPERATIONAL HIGHLIGHTS

• Significant large scale OneNet projects completed or nearing completion.
• First BSF Schools completed in Lancashire.
• Telecoms Division moves away from BT/Redstone Network to give better functionality and flexibility.
• With the exception of BSF, nearly all commercial large scale OneNet projects now deferred.
• Company-wide cost reduction programme now initiated reducing overheads by circa £7m.
• Strong revenue performance in Managed Services as demand for security products and services rises.
• Launch of “Redstone Select” tele-marketing initiative directed at cross-selling to the SME market.
• Net cash outflow expected to reverse in H2 as working capital unwinds.

Martin Balaam, Chief Executive Officer, Redstone, commented, “Redstone has continued to develop its proposition and increase its cross-selling within its own customer base building on the prior period?s success. However the business has seen a significant reduction in orders, specifically in large scale ICT projects in recent months. We have acted decisively by materially reducing our cost base as Redstone believes that the reduced levels of activity will exist for the foreseeable future.

“The Board has taken a pragmatic approach and, to the extent that Redstone can support it, we have continued to invest in long term organic growth opportunities such as BSF, Fibre To The Home (FTTH), SME, cross selling, security products and OneNet capabilities.

“The Board expects that the market will continue to be challenging, however cost reduction measures have been implemented in order to maintain EBITDA levels during the second half of the year and potentially into the following year unless it sees the major project pipeline restored.

“The Board is taking a cautious view with regards to the current economic environment and will seek to ensure that the Group is well positioned to take advantage of improved trading and financial market conditions as and when they arise.”

Click here to read the full RNS Announcement

Click here to read view the full Redstone Half Year Report

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