Half Yearly Report

RNS Number : 1820P
London Security PLC
29 September 2011
 



LONDON SECURITY plc

 

FINANCIAL HIGHLIGHTS

 

Financial highlights of the unaudited results for the six months ended 30 June 2011 compared with the six months ended 30 June 2010 are as follows:

 

Revenue

£47.9 million

(2010: £43.1 million)

 

Operating profit

£9.9 million

(2010: £8.9 million)

 

Profit before income tax

£9.7 million

(2010: £9.1 million)

 

TRADING AND PROSPECTS

 

The financial highlights illustrate that the Group's revenue increased by £4.8 million (11%) to £47.9 million and operating profit increased by £1.0 million (11%) to £9.9 million. These results reflect strong growth in our core market, entry into fixed suppression systems and greater investment in customer retention which has been reflected in higher revenue and operating profit. The movement in the Sterling to Euro average exchange rate (1.15 to 1.14) has increased like for like revenue by £0.3 million and operating profit by £0.1 million.

 

In addition to the improved operating profit performance, the Group has benefited from the continuing low level of interest rates and has repaid a further £3.7 million of borrowings leading to a reduction in finance costs of £0.2 million. However, finance income has reduced from £0.9 million last year to £0.3 million this year. This is mainly due to a £0.5 million gain on the holding of foreign currency last year and a £0.1 million reduction in the movement of the value of our interest rate caps. Overall this has had a £0.4 million adverse effect on net finance costs.

 

The Group continues its evolution from the sole position of extinguisher supplier, to the customers' safety partner through our multi-service strategy offering. This was achieved through a series of training and employee development programmes, which has resulted in improved customer retention and greater motivation of the workforce.

 

To date in 2011, the Group has acquired a total of ten small well established businesses in the UK, Belgium and Austria at a cost of over £2 million. The integration of these businesses into the Group has, so far, been successful and results are in line with expectations. 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 prospects for the second half of 2011 will continue to be challenging but, with the effect of past and potential acquisitions and our multi-service offering, we are in a strong position to face the challenges that will invariably present. Therefore we expect to continue to deliver strong results in the future.

 

DIVIDENDS

 

An interim dividend in respect of 2011 of £0.24 per ordinary share was paid to shareholders on 24 June 2011.

 

SHARE BUYBACK PROGRAMME

 

As previously announced, the Board continues to believe that shareholder value will be optimised by the purchase by the Company, when appropriate, of its own shares. During the period under review a total of 37,675 ordinary shares were purchased for cancellation for a total consideration of £454,800.

 

The Directors confirm that they intend to actively continue to pursue this policy and any shareholder who is considering taking advantage of the share buyback programme is invited to contact their stockbroker, bank manager, solicitor, accountant or other independent financial adviser authorised under the Financial Services and Markets Act 2000, in order to contact Brewin Dolphin Limited who are operating the buyback programme on behalf of the Company.

J.G. Murray

Chairman

29 September 2011




Unaudited

Unaudited

Audited



six months

six months

year



ended

ended

ended



30 June

30 June

31 December



2011

2010

2010


Note

£'000

£'000

£'000

Revenue


47,900

43,066

85,499

Cost of sales


(9,762)

(7,642)

(15,254)

Gross profit


38,138

35,424

70,245

Distribution costs


(17,861)

(16,726)

(31,755)

Administrative expenses


(10,402)

(9,804)

(19,162)

Operating profit


9,875

8,894

19,328

EBITDA*


11,723

10,473

22,679

Depreciation and amortisation


(1,848)

(1,579)

(3,351)

Operating profit


9,875

8,894

19,328

Finance income


319

894

1,093

Finance costs


(523)

(694)

(1,726)

Finance costs - net


(204)

200

(633)

Profit before income tax


9,671

9,094

18,695

Income tax expense


(3,067)

(2,613)

(5,613)

Profit for the period attributable to equity shareholders of the Company


6,604

6,481

13,082

Earnings per share





Basic and diluted

3

53.8p

52.7p

106.5p

Dividends





Dividends paid per share


24.0p

-

17.0p

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

 

The above are all as a result of continuing operations.



Unaudited

Unaudited

Audited


six months

six months

year


ended

ended

ended


30 June

30 June

31 December


2011

2010

2010


£'000

£'000

£'000

Profit for the financial period

6,604

6,481

13,082

Other comprehensive income/(expense):




- currency translation differences on foreign operation consolidation, net of tax

472

(363)

(357)

- foreign currency loan hedges, net of tax

-

465

465

- actuarial gain recognised in pension scheme

-

-

151

- movement on deferred tax relating to pension scheme

-

(57)

(21)

- net pension asset not recognised due to uncertainty over future recoverability

-

-

(653)

Other comprehensive income/(expense) for the period, net of tax

472

45

(415)

Total comprehensive income for the period

7,076

6,526

12,667







Profit



Share

Share

Merger

Other

and loss



capital

premium

reserve

reserve

account

Total


£'000

£'000

£'000

£'000

£'000

£'000

At 1 January 2010

123

-

2,033

6,310

37,191

45,657

Comprehensive income for the period







Profit for the period

-

-

-

-

6,481

6,481

Total other comprehensive income

-

-

-

102

(57)

45

Total comprehensive income for the period

-

-

-

102

6,424

6,526

Transactions with owners of the Company recognised directly in equity







- purchase of own shares

-

-

-

-

(89)

(89)

Total transactions with the owners of the Company

-

-

-

-

(89)

(89)

At 30 June 2010

123

-

2,033

6,412

43,526

52,094

Comprehensive income for the period







Profit for the period

-

-

-

-

6,601

6,601

Total other comprehensive income

-

-

-

(102)

(358)

(460)

Total comprehensive income for the period

-

-

-

(102)

6,243

6,141

Transactions with owners of the Company recognised directly in equity







- dividends

-

-

-

-

(2,086)

(2,086)

- purchase of own shares

-

-

-

-

(116)

(116)

Total transactions with the owners of the Company

-

-

-

-

(2,202)

(2,202)

At 31 December 2010

123

-

2,033

6,310

47,567

56,033

Comprehensive income for the period







Profit for the period

-

-

-

-

6,604

6,604

Total other comprehensive income

-

-

-

472

-

472

Total comprehensive income for the period

-

-

-

472

6,604

7,076

Transactions with owners of the Company recognised directly in equity







- issue of shares

-

345

-

-

-

345

- dividends

-

-

-

-

(2,944)

(2,944)

- purchase of own shares

-

-

-

-

(454)

(454)

Total transactions with the owners of the Company

-

345

-

-

(3,398)

(3,053)

At 30 June 2011

123

345

2,033

6,782

50,773

60,056

 

The share premium has arisen following the exercise on 9 June by Xavier Mignolet, Operations Director, of 30,000 ordinary shares of 1 pence each in the company at a price of £11.50 each under the Company's Inland Revenue unapproved share options scheme. Subsequently Mr Mignolet also sold these 30,000 ordinary shares to the Company at the prevailing market value of £14.60 per share. Following this disposal Mr Mignolet does not have a beneficial interest in the Company. The total share-based payment charged to the Consolidated Income Statement for the period relating to Directors' share options was £35,000.



Unaudited

Unaudited

Audited


as at

as at

as at


30 June

30 June

31 December


2011

2010

2010


£'000

£'000

£'000

Assets




Non-current assets




Property, plant and equipment

8,195

7,840

7,719

Intangible assets

53,711

51,787

51,960

Deferred income tax asset

623

611

589


62,529

60,238

60,268

Current assets




Inventories

8,794

7,501

7,611

Trade and other receivables

19,245

17,985

16,604

Cash and cash equivalents

20,267

20,036

22,286


48,306

45,522

46,501

Total assets

110,835

105,760

106,769

Liabilities




Current liabilities




Trade and other payables

(16,998)

(16,029)

(14,498)

Income tax liabilities

(339)

(652)

(968)

Borrowings

(7,487)

(6,695)

(7,126)

Provision for liabilities and charges

(4)

(14)

(9)


(24,828)

(23,390)

(22,601)

Non-current liabilities




Trade and other payables

(536)

-

(457)

Borrowings

(24,396)

(29,615)

(26,730)

Derivative financial instruments

(17)

(177)

(30)

Deferred income tax liabilities

(330)

(197)

(286)

Retirement benefit obligations

(672)

(266)

(632)

Provision for liabilities and charges

-

(21)

-


(25,951)

(30,276)

(28,135)

Total liabilities

(50,779)

(53,666)

(50,736)

Net assets

60,056

52,094

56,033

Shareholders' equity




Ordinary shares

123

123

123

Share Premium

345

-

-

Merger reserve

2,033

2,033

2,033

Other reserves

6,782

6,412

6,310

Retained earnings

50,773

43,526

47,567

Total shareholders' equity

60,056

52,094

56,033



Unaudited

Unaudited

Audited


six months

six months

year


ended

ended

ended


30 June

30 June

31 December


2011

2010

2010


£'000

£'000

£'000

Cash flows from operating activities




Cash generated from operations

11,010

10,548

21,845

Interest paid

(323)

(560)

(713)

Income tax paid

(3,674)

(3,526)

(4,900)

Net cash generated from operating activities

7,013

6,462

16,232

Cash flows from investing activities




Acquisition of subsidiary undertakings

(948)

-

-

Purchases of property, plant and equipment

(1,382)

(885)

(1,746)

Proceeds from sale of property, plant and equipment

142

128

259

Purchases of intangible assets

(1,065)

(385)

(883)

Interest received

106

201

171

Net cash used in investing activities

(3,147)

(941)

(2,199)

Cash flows from financing activities




Repayments of borrowings

(3,703)

(4,466)

(8,337)

Purchase of own shares

(454)

(89)

(205)

Issue of shares

345

-

-

Dividends paid to Company's shareholders

(2,944)

-

(2,086)

Net cash used in financing activities

(6,756)

(4,555)

(10,628)

Effects of exchange rates on cash and cash equivalents

871

-

(189)

Net (decrease)/increase in cash in the period

(2,019)

966

3,216

Cash and cash equivalents at beginning of the period

22,286

19,070

19,070

Cash and cash equivalents at end of the period

20,267

20,036

22,286

 

 


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 2011 is unaudited and has been prepared on the basis of the recognition and measurement requirements of adopted International Financial Reporting Standards as at 30 June 2011 that are effective as at 31 December 2011 and the accounting policies set out in the Group's Annual Report and Accounts 2010. Comparative figures for the year ended 31 December 2010 have been extracted from the statutory accounts for the year ended 31 December 2010 which have been delivered to the Registrar of Companies. The Independent Auditors' Report 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.

 

2 Basis of preparation

The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

 

3 Earnings per share

The calculation of basic earnings per ordinary share is based on the profit on ordinary activities after taxation of £6,604,000 (2010: £6,481,000) and on 12,268,014 (2010: 12,293,938) 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 12,268,014 (2010: 12,293,938). After taking into account the effect of dilutive securities, the basic earnings per ordinary share figures are unaltered.

 


Unaudited

Unaudited

Audited


six months

six months

year


ended

ended

ended


30 June

30 June

31 December


2011

2010

2010


£'000

£'000

£'000

Profit on ordinary activities after taxation

6,604

6,481

13,082

Basic earnings per ordinary share

53.8p

52.7p

106.5p

 

4 Actuarial valuation of the pension scheme

As permitted under IAS 19 the Group has not prepared an actuarial valuation of the pension scheme assets and liabilities for the Interim Statement 2011. In accordance with IAS 19 such a valuation will be prepared for the purposes of the Group's Annual Report and Accounts 2011.

 

 

For further information, please contact:

 

London Security plc

Richard Pollard

Company Secretary                                                            01422 372852

 

Brewin Dolphin

Sandy Fraser / Iain Marlow                                                0845 2134730


This information is provided by RNS
The company news service from the London Stock Exchange
 
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