Final Results for the Year Ended 31 December 2021

RNS Number : 9067L

London Security PLC

18 May 2022

 

London Security plc

Final Results for the Year Ended 31 December 2021

Chairman's statement

 J.G. Murray, Chairman

Financial Highlights

Financial highlights of the audited results for the year ended 31 December 2021 compared with the year ended 31 December 2020 are as follows:

• revenue of £166.6 million (2020: 152.7 million);

• operating profit of £27.2 million (2020: £24.7 million);

• profit for the year of £20.0 million (2020: £18.0 million);

• cash of £35.7 million (2020: 37.5 million);

• earnings per share for the year of 1.62 (2020: £1.46); and

• a dividend per share of £0.80 (2020: £0.60).

Trading review

The financial highlights illustrate that the Group's revenue increased by £13.9 million (9.1%) to £166.6 million and operating profit increased by £2.5 million (10.1%) to 27.2 million. These results reflect:

• a good response to the impact of Covid-19. Many of our businesses were severely hampered by Covid-19 throughout 2020, but the easing of restrictions in 2021 allowed our business to capitalise on the rebound in the economies in which we operate;

• the positive impact of acquisitions in 2021 in the United Kingdom, Denmark, Belgium, France and Germany;

• improved performance from our service business in continental Europe;

• continued improvement from newer service offerings (e.g. emergency lights and passive fire protection); and

• the movement in the Euro to Sterling average exchange rate, which had an adverse effect of £3.4 million on reported revenue and £0.7 million on operating profit. A more detailed review of this year's performance is given in the Financial Review and the Strategic Report.

Acquisitions

It remains a principal aim of the Group to grow through acquisition. Acquisitions are being sought throughout Europe and the Group will invest at prices where an adequate return is envisaged by the Board. In the year under review the Group acquired established security businesses and grew its presence in Denmark, the UK, Belgium, the Netherlands, Germany and France with the acquisition of service contracts from smaller well-established businesses for integration into the Group's existing subsidiaries.

Management and staff

2021 was a year in which the staff were required to operate under challenging conditions, and on behalf of the shareholders, I would like to express thanks and appreciation for their contribution as essential service providers. The health and wellbeing of our people is our highest priority. The Group recognises that we can only achieve our aims with talented and dedicated colleagues who provide outstanding customer service in every area of the business.

Dividends

A final dividend in respect of 2020 of 0.40 per ordinary share was paid to shareholders on 9 July 2021. An interim dividend in respect of 2021 of 0.40 per ordinary share was paid to shareholders on 26 November 2021. The Board is recommending the payment of a final dividend in respect of 2021 of £0.42 per ordinary share to be paid on 8 July 2022 to shareholders on the register on 10 June 2022. The shares will be marked ex-dividend on 9 June 2022.

Covid-19 impact assessment

The Group is responsible for maintaining, manufacturing and supplying fire protection and fire suppression equipment throughout Europe and has been designated as essential contractor status by a number of our clients including care, health, housing and food production services. It was essential that we continued to meet our obligations and continued to operate from our factories and that our field-based service engineers continued to visit our customers' sites for essential responsive and planned maintenance.

In 2021 there was largely a return to normality in our business although there were still some restrictions on our operations in some countries to help reduce transmission. The high level of business failures predicted by some commentators did not occur. We must be prepared for further disruption should further waves materialise in any of the countries in which we operate.

During 2021 the Group traded strongly despite the interruptions caused by varying levels of temporary restrictions imposed by the governments of the countries in which we operate. This reflects the essential nature of the services we provide. At the date of this report we have a full service force in the field and have experienced a strong start to 2022. The experience of 2021 shows the resilience of our business.

Future prospects

The London Security Group has a healthy balance sheet, strong cash reserves and a track record for good cash generation. The Board therefore considers that the Group is well placed to capitalise on the increase in demand we are seeing for our products and services. The Group plans to continue to grow through acquisitions

Annual General Meeting

The Annual General Meeting ("AGM") will be held at 2 Jubilee Way, Elland, West Yorkshire HX5 9DY, on 22 June 2022 at 11.30 am. On 21 February 2022 the UK government announced the end of restrictions in response to Covid -19. The Company confirms that shareholders are able to attend in person should they wish to do so. However, we strongly encourage shareholders to vote on all resolutions by completing the enclosed form of proxy for use at that Meeting, which you are requested to return in accordance with the instructions on the form.

J.G. Murray

Chairman

17 May 2022

Consolidated income statement

 for the year ended 31 December 2021

			2021	2020
		Notes	£'000	£'000
	Revenue		166,634	152,723
	Cost of sales		(43,096)	(37,387)
	Gross profit		123,538	115,336
	Distribution costs		(59,974)	(56,281)
	Administrative expenses		(36,740)	(33,027)
	Net impairment gain/(loss) on financial assets	1	350	(1,328)
	Operating profit		27,174	24,700
	EBITDA*		36,273	33,547
	Depreciation and amortisation		(9,099)	(8,847)
	Operating profit		27,174	24,700
	Finance income		28	78
	Finance costs		(204)	(201)
	Finance costs - net		(176)	(123)
	Profit before income tax		26,998	24,577
	Income tax expense		(6,990)	(6,536)
	Profit for the year		20,008	18,041
	Profit is attributable to:
	Equity shareholders of the Company		19,907	17,853
	Non-controlling interest		101	188
			20,008	18,041
	Earnings per share
	Basic and diluted	2	162.4p	145.6p

*  Earnings before interest, tax, depreciation and amortisation.

The above results are all as a result of continuing operations.

Consolidated statement of comprehensive income

 for the year ended 31 December 2021

		2021	2020
	Notes	£'000	£'000
Profit for the financial year		19,907	17,853
Other comprehensive (expense)/income:
Items that may be reclassified subsequently to profit or loss:
- currency translation differences on foreign currency net investments		(3,782)	2,396
Items that will not be reclassified subsequently to profit or loss:
- actuarial loss recognised in the Nu-Swift Pension Scheme		(70)	(4,554)
- movement on deferred tax relating to the Nu-Swift Pension Scheme surplus		25	1,594
- actuarial gain/(loss) recognised in the Ansul Pension Scheme		104	(17)
- movement on deferred tax relating to the Ansul Pension Scheme deficit		(26)	5
Other comprehensive expense for the year, net of tax		(3,749)	(576)
Equity shareholders of the Company		16,158	17,277
Non-controlling interest		101	188
Total comprehensive income for the year		16,259	17,465

Consolidated statement of changes in equity

 for the year ended 31 December 2021

	Share	Share premium	Capital redemption	Merger	Other	Retained	Non-controlling	Total
	capital	account	reserve	reserve	reserve	earnings	interest	equity
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 1 January 2020	123	344	1	2,033	6,442	106,882	349	116,174
Total comprehensive income for the year
Profit for the financial year	-	-	-	-	-	17,853	188	18,041
Other comprehensive (expense)/income:
- exchange adjustments	-	-	-	-	2,396	-	-	2,396
- actuarial loss on pension schemes	-	-	-	-	-	(4,571)	-	(4,571)
- net movement on deferred tax relating to pension deficit	-	-	-	-	-	1,599	-	1,599
Total comprehensive (expense)/income for the year	-	-	-	-	2,396	14,881	188	17,465
Contributions by and distributions to owners of the Company:
- dividends	-	-	-	-	-	(7,356)	-	(7,356)
Distribution to non-controlling interest	-	-	-	-	-	-	(160)	(160)
At 31 December 2020 and 1 January 2021	123	344	1	2,033	8,838	114,407	377	126,123
Total comprehensive income for the year
Profit for the financial year	-	-	-	-	-	19,907	101	20,083
Other comprehensive (expense)/income:
- exchange adjustments	-	-	-	-	(3,782)	-	-	(3,782)
- actuarial gain on pension schemes	-	-	-	-	-	34	-	34
- net movement on deferred tax relating to pension deficit	-	-	-	-	-	(1)	-	(1)
Total comprehensive (expense)/income for the year	-	-	-	-	(3,782)	19,940	101	16,259
Contributions by and distributions to owners of the Company:
- dividends	-	-	-	-	-	(9,807)	-	(9,807)
Distribution to non-controlling interest	-	-	-	-	-	-	(150)	(150)
Reduction in non-controlling interest	-	-	-	-	-	(468)	(210)	(678)
At 31 December 2021	123	344	1	2,033	5,056	124,072	118	131,747

The merger reserve is not a distributable reserve. The other reserve relates entirely to the effects of changes in foreign currency exchange rates.

Consolidated statement of financial position

 as at 31 December 2021

		2021	2020
	Notes	£'000	£'000
Assets
Non-current assets
Property, plant and equipment		13,990	13,046
Right of use assets		4,297	3,254
Intangible assets		70,074	66,311
Deferred tax asset		778	790
Retirement benefit surplus		380	445
		89,519	83,846
Current assets
Inventories		16,423	14,953
Trade and other receivables		33,021	33,174
Cash and cash equivalents		35,681	37,456
		85,125	85,583
Total assets		174,644	169,429
Liabilities
Current liabilities
Trade and other payables		(28,061)	(27,582)
Income tax liabilities		(1,607)	(2,074)
Borrowings		(2,430)	(2,518)
Lease liabilities		(1,603)	(1,451)
Provision		(13)	(16)
		(33,714)	(33,641)
Non-current liabilities
Trade and other payables		(1,058)	(941)
Borrowings		(1,340)	(3,170)
Lease liabilities		(2,740)	(1,851)
Derivative financial instruments		(20)	(36)
Deferred tax liabilities		(1,731)	(1,146)
Retirement benefit obligations		(2,144)	(2,349)
Provision		(150)	(172)
		(9,183)	(9,665)
Total liabilities		(42,897)	(43,306)
Net assets		131,747	126,123
Shareholders' equity
Ordinary shares		123	123
Share premium		344	344
Capital redemption reserve		1	1
Merger reserve		2,033	2,033
Other reserves		5,056	8,838
Retained earnings		124,072	114,407
Equity attributable to owners of the Parent Company		131,629	125,746
Non-controlling interest		118	377
Total equity		131,747	126,123

Consolidated statement of cash flows

 for the year ended 31 December 2021

		2021	2020
	Notes	£'000	£'000
Cash flows from operating activities
Cash generated from operations		33,909	32,862
Interest paid		(106)	(118)
Income tax paid		(7,122)	(5,524)
Net cash generated from operating activities		26,681	27,220
Cash flows from investing activities
Acquisition of subsidiary undertakings (net of cash acquired)		(4,871)	(516)
Purchases of property, plant and equipment		(4,880)	(5,063)
Proceeds from the sale of property, plant and equipment		682	462
Purchases of intangible assets		(2,693)	(1,244)
Interest received		7	27
Net cash used in investing activities		(11,755)	(6,334)
Cash flows from financing activities
Repayments of borrowings		(2,119)	(2,121)
Payment of lease liabilities		(2,072)	(2,036)
Dividends paid to the Company's shareholders		(9,807)	(7,356)
Distribution to non-controlling interest		(150)	(160)
Reduction in non-controlling interest		(678)	-
Net cash used in financing activities		(14,826)	(11,673)
Net increase in cash in the year		100	9,213
Cash and cash equivalents at the beginning of the year		37,456	27,143
Effects of exchange rates on cash and cash equivalents		(1,875)	1,100
Cash and cash equivalents at the end of the year		35,681	37,456

Notes to the financial statements

 for the year ended 31 December 2021

1 Net impairment losses on financial assets

This charge relates entirely to the movement in expected credit losses in respect of trade receivables.

2 Earnings per share

The calculation of basic earnings per ordinary share ("EPS") is based on the profit on ordinary activities after taxation of £19,907,000 (2020: £17,853,000) and on 12,261,477 (2020: 12,261,477) ordinary shares, being the weighted average number of ordinary shares in issue during the year.

For diluted EPS, the weighted average number of shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. There was no difference in the weighted average number of shares used for the calculation of basic and diluted earnings per share as there are no potentially dilutive shares outstanding.

	2021			2020
	£'000	Pence		£'000	Pence
Profit on ordinary activities after taxation	19,907	162.4		17,853	145.6

3 This financial information within this preliminary announcement does not constitute the Company's statutory accounts within the meaning of Section 434 of the Companies Act 2006. The results for the year ended 31 December 2021 have been extracted from the full accounts of the Group for that year which received an unmodified auditor's report, and which have not yet been delivered to the Registrar of Companies.  The financial information for the year ended 31 December 2020 is derived from the statutory accounts for that year, which have been delivered to the Registrar of Companies. The report of the auditor on those filed accounts was unmodified and does not include a statement under section 498(2) or (3) of the Companies Act 2006.

This preliminary announcement has been prepared in accordance with the recognition and measurement principles of UK adopted international accounting standards in conformity with the requirements of the Companies Act 2006 and in accordance with the AIM rules. The financial information included in this preliminary announcement does not include all the disclosures required in accounts prepared in accordance with UK adopted international accounting standards in conformity with the requirements of the Companies Act 2006 and accordingly it does not itself comply with UK adopted international accounting standards in conformity with the requirements of the Companies Act 2006.  The accounting policies used in the preparation of this preliminary announcement have remained unchanged from those set out in the statutory accounts for the year ended 31 December 2020. They are also consistent with those in the full accounts for the year ended 31 December 2021, which have yet to be published.

The Group will post its annual report and accounts to shareholders on 27 May 2022, a copy of the annual report and accounts will be available on the company's website ( www.londonsecurity.org ).

Enquiries

London Security plc
Richard Pollard Company Secretary	Tel: [phone]
WH Ireland Limited
Chris Fielding	Tel: [phone]

 

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