Half Yearly Report

RNS Number : 9973Z
London Security PLC
30 September 2009
 







LONDON SECURITY PLC

Interim Statement FOR THE SIX MONTHS ENDED 30 JUNE 2009

Chairman's Statement


Financial highlights 

Financial highlights of the unaudited results for the six months ended 30 June 2009 compared with the first half of 2008 are as follows: 


  • Revenue of £42.5 million (2008: £35.6 million)
  • Operating profit of £8.4 million (2008: £8.8 million)
  • Profit on ordinary activities before taxation of £7.4 million (2008: £6.4 million)
  • Earnings per share of 40.5p (2008: 35.9p)


Trading and prospects

The Group's revenue has increased by £6.9 million (19.4%), due to businesses acquired in 2008 and a favorable exchange rate effect. The Group's operating profit has decreased by £0.4 million (4.5%) reflecting the recession experienced in all countries in which we operate.


In 2008 the Group suffered a charge of £1.8 million as a result of exchange losses on foreign currency loans. In 2009 the Group implemented a net investment hedge against this risk which permits the Group to recognise exchange rate volatility through reserves. Falling interest rates have resulted in lower interest payable and receivable within finance costs.


In mainland Europe, the Group has continued to build upon its strong position in servicing fire extinguishers and hose reels and growing our new activities through our multi-service strategy offering customers a complete range of services around the first intervention on fires and first-aid. This strategy has enabled the Group's evolution from solely an extinguisher supplier to the customers' safety partner.


In the UK, management continues to invest in training of the field force. There has been strong positive customer response to new contracts and sales initiatives. Investment in training our field service team and a changed payment package continues to maintain market penetration. 


It remains a principal aim of the Group to grow through acquisition. Acquisitions are being sought throughout Europe and the Group will invest at the upper end of the price spectrum where an adequate return is envisaged by the Board.  


Trading conditions for the second half of 2009 will continue to be difficult. We have, however, still recorded very creditable results in this testing economic environment and expect to continue to do so in the future.



J.G. Murray

Chairman

30 September 2009


Consolidated Income Statement

for the six months to 30 June 2009




Unaudited

Unaudited

Audited



Six months

Six months

Year to



to 30 June 

to 30 June 

31 December



2009

2008

2008



£'000

 £'000

 £'000

Continuing operations





Revenue


42,478

35,627

74,892

Cost of sales


(7,277)

(6,094)

(12,618)

Gross profit


35,201

29,533

62,274

Distribution costs


(16,476)

(12,820)

(27,051)

Administrative expenses


(10,288)

(7,924)

(16,346)

Operating profit


8,437

8,789

18,877

EBITDA*


10,094

9,987

21,592

Depreciation and amortisation


(1,657)

(1,198)

(2,715)

Operating profit


8,437

8,789

18,877

Finance income


333

587

1,679

Finance costs


(1,158)

(1,472)

(3,169)

Fair value of derivative financial instruments


(176)

318

(193)

Exchange loss on foreign currency loans


-

(1,791)

(7,654)

Finance costs - net


(1,001)

(2,358)

(9,337)

Profit before income tax


7,436

6,431

9,540

Income tax expense


(2,462)

(2,021)

(3,983)

Profit for the period attributable to equity shareholders of the company



4,974


4,410


5,557






Earnings per share





Basic and diluted

Note 2

40.5p

35.9p

45.2p

Dividends





Dividends paid per share


nil

130.0p

130.0p

* Earnings before interest, taxation, depreciation, amortisation and impairment charges.


Consolidated Statement of Comprehensive Income

for the six months to 30 June 2009



Unaudited

Unaudited

Audited


Six months

Six months

Year to


to 30 June 

to 30 June 

31 December


2009

2008

2008


£'000

 £'000

 £'000

Profit for the financial period

4,974

4,410

5,557

Other comprehensive income:




Currency translation differences on foreign currency net investments

(1,996)

1,123

4,053

Actuarial loss recognised in pension scheme

-

-

(708)

Movement on deferred tax relating to pension scheme

(59)

(224)

(36)

Foreign currency loan hedges net of tax

3,560

-

-

Other comprehensive income for the period

1,505

899

3,309

Total comprehensive income for the period attributable to equity shareholders


6,479


5,309


8,866




Consolidated Statement of Financial Position

as at 30 June 2009


Unaudited

Unaudited

Audited


As at

As at

As at


30 June

30 June

31 December


2009

2008

2008


£'000

£'000

£'000

Assets




Non-current assets




Property, plant and equipment

8,810

8,457

9,787

Intangible assets

52,762

47,704

53,210

Deferred income tax asset

779

508

743

Derivative financial instruments

-

299

-


62,351

56,968

63,740

Current assets




Inventories

8,243

6,239

8,545

Trade and other receivables

18,756

15,524

20,820

Cash and cash equivalents

14,382

11,439

10,875


41,381

33,202

40,240

Total assets

103,732

90,170

103,980

Liabilities




Current liabilities




Trade and other payables

(17,229)

(15,123)

(17,148)

Income tax liabilities

(2,540)

(1,527)

(1,548)

Borrowings

(7,730)

(6,015)

(7,488)

Provision for liabilities and charges

(21)

(107)

-


(27,520)

(22,772)

(26,184)

Non-current liabilities




Trade and other payables

(34)

(48)

-

Borrowings

(38,223)

(40,209)

(46,241)

Derivative financial instruments

(388)

-

(212)

Deferred income tax liabilities

(91)

-

(41)

Retirement benefit obligations

(483)

(165)

(742)

Provision for liabilities and charges

-

(19)

(46)


(39,219)

(40,441)

(47,282)

Total liabilities

(66,739)

(63,213)

(73,466)

Net assets

36,993

26,957

30,514





Shareholders' equity




Ordinary shares

123

123

123

Merger reserve

2,033

2,033

2,033

Other reserves 

6,688

2,194

5,124

Retained earnings

28,149

22,607

23,234

Total shareholders' equity

36,993

26,957

30,514


Consolidated Statement of Cash Flows 

for the six months to 30 June 2009


Unaudited

Unaudited

Audited


Six months

Six months

Year to


to 30 June 

to 30 June 

31 December


2009

2008

2008


£'000

 £'000

 £'000

Cash flows from operating activities




Cash generated from operations

11,472

9,223

15,552

Interest paid

(878)

(1,110)

(2,687)

Income tax paid

(1,986)

(2,970)

(4,826)

Net cash generated from operating activities

8,608

5,143

8,039

Cash flows from investing activities




Acquisition of subsidiary undertaking

-

-

(222)

Purchases of property, plant and equipment

(992)

(1,446)

(2,923)

Proceeds from sale of property, plant and equipment

142

209

426

Purchases of intangible assets

(757)

(564)

(5,156)

Proceeds from sale of intangible assets

-

22

31

Interest received

93

222

1,188

Net cash used in investing activities

(1,514)

(1,557)

(6,656)

Cash flows from financing activities




New long-term loans

-

15,000

18,200

Repayments of borrowings

(3,587)

(2,974)

(4,535)

Equity dividends paid

-

(15,980)

(15,980)

Net cash used in financing activities

(3,587)

(3,954)

(2,315)

Net increase/(decrease) in cash in the period

3,507

(368)

(932)

Cash and cash equivalents at beginning of the period

10,875

11,807

11,807

Cash and cash equivalents at the end of the period

14,382

11,439

10,875


1    Nature of information

The financial information contained in this Interim Statement has been neither audited nor reviewed by the auditors and does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006. The financial information for the six months ended 30 June 2009 is unaudited and has been prepared on the basis of the accounting policies set out in the Group's 2008 Annual Report and Accounts. Comparative figures for the year ended 31 December 2008 have been extracted from the statutory accounts for the year ended 31 December 2008 which have been delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified and did not contain an emphasis of matter paragraph and did not contain any statement under section 498 of the Companies Act 2006.


From 1 January 2009 the Group's policy is to hedge its international assets and has designated foreign currency borrowings as a hedge against net investment in foreign operations. The portion of the gain or loss on an instrument used to hedge a net investment in a foreign operation that is determined as an effective hedge is recognised directly in equity. Any gain or loss on any ineffective portion of the hedge is recognised immediately in the income statement.


    Earnings per share

The calculation of basic earnings per ordinary share is based on the profit on ordinary activities after taxation of £4,974,000 (2008: £4,410,000) and on 12,294,798 (2008: 12,294,798) ordinary shares, being the weighted average number of ordinary shares in issue during the period.


For diluted earnings per ordinary share, the weighted average number of shares in issue is adjusted to assume conversion of all potentially dilutive ordinary shares. The revised weighted average number of shares is 12,294,798 (2008: 12,296,487). After taking into account the effect of dilutive securities, the basic EPS and adjusted EPS figures are unaltered.



Six months

Six months

Year to


to 30 June 

to 30 June 

31 December


2009

2008

2008


£'000

 £'000

 £'000

Profit on ordinary activities after taxation

4,974

4,410

5,557

Basic earnings per ordinary share

40.5p

35.9p

45.2p


    Actuarial valuation of pension scheme

As permitted under IAS 19, the Group has not prepared an actuarial valuation of pension scheme assets and liabilities for the 2009 interim statement. In accordance with IAS 19 such a valuation will be prepared for the purposes of the Group's 2009 Annual Report and Accounts.


    Consolidated statement of changes in equity


Unaudited

Unaudited

Audited


Six months

Six months

Year to


to 30 June 

to 30 June 

31 December


2009

2008

2008


£'000

 £'000

 £'000

Profit for the financial period

4,974

4,410

5,557

Transactions with owners:




Dividends

-

(15,980)

(15,980)

Other comprehensive income:




Currency translation differences on foreign currency net investments

(1,996)

1,123

4,053

Actuarial loss recognised in pension scheme

-

-

(708)

Movement on deferred tax relating to pension scheme

(59)

(224)

(36)

Foreign currency loan hedges net of tax

3,560

-

-

Net increase in shareholders' funds

6,479

(10,671)

(7,114)

Shareholders' funds at the beginning of the period 

30,514

37,628

37,628

Shareholders' funds at the end of the period

36,993

26,957

30,514



5    Hedge of net investment in foreign subsidiaries


The Group's euro denominated borrowings totaling €32.2 million hedge the Group's investment in its European subsidiaries. The fair value of the euro borrowings at 30 June 2009 was £27.5 million. A foreign exchange gain of £3.6 million was recognised in equity during the year on translation of these loans to pounds sterling. The gain on the euro borrowings more than offset the loss on translation of foreign currency investments due to the significant value of share capital and other assets which are held at historic rates. Hedge accounting was not adopted in the prior period.


For further information, please contact:

London Security plc                                                   01422 372852

Richard Pollard

Brewin Dolphin Investment Banking

Andrew Kitchingman / Sean Wyndham-Quin        0845 270 8610

Ends






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