Half Yearly Report

RNS Number : 1884P
London Security PLC
30 September 2013
 



London Security plc

 

Half Yearly Report

Chairman's statement

 

Financial highlights:

Revenue

£47.8 million

2012: £47.6 million

 

Operating profit

£9.0 million

2012: £9.8 million

 

TRADING AND PROSPECTS

 

The financial highlights illustrate that the Group's revenue increased by £0.2 million (0.4%) to £47.8 million and operating profit decreased by £0.8 million (8.2%) to £9.0 million. This decline in profit arises from two main sources. Firstly, 2011 and 2012's figures benefited from legislative changes concerning PFOS foam extinguishers which resulted in higher than normal sales in those periods. This ceased in the second quarter of 2012. Secondly, the Group has been successful in replacing lost customers with new customers but generally at lower margins. However, the movement in the Sterling to Euro average exchange rate (1.21 to 1.18) has increased like for like revenue by £1.0 million and operating profit by £0.2 million.

 

The profit before income tax in 2012 of £15.5 million included £5.9 million from the sale of land in Elland, West Yorkshire. Adjusting for this item, profit before income tax would have been £9.6 million.

 

The Group's borrowings were refinanced in May 2013 and the Group has a new £20 million facility until 2018. This will be repaid at the rate of £2 million per year over five years with a £10 million repayment at maturity. The multi-currency loan will be denominated £6 million in Sterling and £14 million in Euros. The Group has entered into interest rate agreements fixing LIBOR to 1.04% and EURIBOR to 0.85% plus a margin of between 0.6% and 1.5% to take advantage of the low market interest rates prevailing at the time. The agreements took effect from May 2013 and remain in effect until the loans are repaid in 2018.

 

In the six months to the end of June the Group has acquired a total of five well established businesses in the UK and Austria at a cost of £3.3 million (2012: eight businesses at a cost of £1.2 million). In July three further acquisitions were made in the UK at a cost of £1.7 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.

 

Economic growth in the Group's market has been depressed. Despite signs of a slow recovery, our market reflects reduced customer confidence and consequent reluctance to invest in our products. However, as a leading provider in this market with a well-diversified and loyal customer base, the Board believes we are in a strong position to face further challenges in 2013.

 

DIVIDENDS

 

A final dividend in respect of 2012 of £0.38 per ordinary share was paid to shareholders on 8 July 2013.

 

J.G. Murray

Chairman

30 September 2013

 


Consolidated income statement

for the six months ended 30 June 2013

 

 

 



Unaudited

Unaudited

Audited

 



six months

six months

year

 



ended

ended

ended

 



30 June

30 June

31 December

 



2013

2012

2012

 


Note

£'000

£'000

£'000

 

Revenue

 

47,782

47,647

94,128

 

Cost of sales

 

(9,280)

(9,090)

(18,164)

 

Gross profit

 

38,502

38,557

75,964

 

Distribution costs

 

(18,196)

(18,091)

(35,268)

 

Administrative expenses

 

(11,346)

(10,685)

(21,267)

 

Operating profit

 

8,960

9,781

19,429

 

EBITDA*

 

10,842

11,629

23,041

Depreciation and amortisation

 

(1,882)

(1,848)

(3,612)

Operating profit

 

8,960

9,781

19,429

Profit on the disposal of fixed assets

3

-

5,928

5,928

Finance income

 

73

372

721

 

Finance costs

 

(242)

(566)

(965)

 

Finance costs - net

 

(169)

(194)

(244)

 

Profit before income tax

 

8,791

15,515

25,113

 

Income tax expense

 

(2,842)

(3,174)

(6,115)

 

Profit for the period attributable to equity shareholders of the Company

 

5,949

12,341

18,998

 

Earnings per share

 

 

 

 

 

Basic and diluted

4

48.5p

100.6p

154.9p

 

Dividends

 

 

 

 

 

Dividends paid per share

 

Nil

25.0p

54.0p

 

 

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

 

The above are all as a result of continuing operations.

 


Consolidated statement of comprehensive income

for the six months ended 30 June 2013

 



Unaudited

Unaudited

Audited



six months

six months

year



ended

ended

ended



30 June

30 June

31 December



2013

2012

2012



£'000

£'000

£'000

Profit for the financial period

 

5,949

12,341

18,998

Other comprehensive income/(expense):

 

 

 

 

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

 

1,001

(718)

(507)

- actuarial loss recognised in pension scheme

 

-

-

(491)

- movement on deferred tax relating to pension scheme

 

-

-

180

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

 

-

-

(573)

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

 

1,001

(718)

(1,391)

Total comprehensive income for the period

 

6,950

11,623

17,607

 

        


Consolidated statement of changes in equity

for the six months ended 30 June 2013

 

 

 







Profit



Share

Share

Capital

Merger

Other

and loss



capital

premium

redemption

reserve

reserve

account

Total


£'000

£'000

£'000

£'000

£'000

£'000

£'000

At 1 January 2012

123

344

1

2,033

5,889

57,648

66,038

Comprehensive income for the period

 

 

 

 

 

 

 

Profit for the period

-

-

-

-

-

12,341

12,341

Exchange adjustments

-

-

-

-

(718)

-

(718)

Total comprehensive income for the period

-

-

-

-

(718)

12,341

11,623

Contributions by and distributions to owners of the Company:

 

 

 

 

 

 

 

- dividends

-

-

-

-

-

(3,065)

(3,065)

- purchase of own shares

-

-

-

-

-

(5)

(5)

Total contributions by and distributions to owners of the Company

-

-

-

-

-

(3,070)

(3,070)

At 30 June 2012

123

344

1

2,033

5,171

66,919

74,591

Comprehensive income for the period

 

 

 

 

 

 

 

Profit for the period

-

-

-

-

-

6,657

6,657

Exchange adjustments

-

-

-

-

211

-

211

Actuarial loss on pension scheme

-

-

-

-

-

(491)

(491)

Movement on deferred tax relating to pension scheme

-

-

-

-

-

180

180

Net pension asset not recognised due to uncertainty over future recoverability

-

-

-

-

-

(573)

(573)

Total comprehensive income for the period

-

-

-

-

211

5,773

5,984

Contributions by and distributions to owners of the Company:

 

 

 

 

 

 

 

- dividends

-

-

-

-

-

(3,556)

(3,556)

Total contributions by and distributions to owners of the Company

-

-

-

-

-

(3,556)

(3,556)

At 31 December 2012

123

344

1

2,033

5,382

69,136

77,019

Comprehensive income for the period

 

 

 

 

 

 

 

Profit for the period

-

-

-

-

-

5,949

5,949

Exchange adjustments

-

-

-

-

1,001

-

1,001

Total comprehensive income for the period

-

-

-

-

1,001

5,949

6,950

At 30 June 2013

123

344

1

2,033

6,383

75,085

83,969


Consolidated statement of financial position

for the six months ended 30 June 2013

 



Unaudited

Unaudited

Audited



as at

as at

as at



30 June

30 June

31 December



2013

2012

2012



£'000

£'000

£'000

Assets

 

 

 

 

Non-current assets

 

 

 

 

Property, plant and equipment

 

9,947

7,997

9,511

Intangible assets

 

57,539

53,374

54,455

Deferred income tax asset

 

509

498

488

 

 

67,995

61,869

64,454

Current assets

 

 

 

 

Inventories

 

9,637

8,656

9,123

Trade and other receivables

 

21,497

22,088

18,512

Cash and cash equivalents

 

24,645

18,706

17,861

 

 

55,779

49,450

45,496

Total assets

 

123,774

111,319

109,950

Liabilities

 

 

 

 

Current liabilities

 

 

 

 

Trade and other payables

 

(17,606)

(16,057)

(15,767)

Income tax liabilities

 

(631)

(520)

(65)

Borrowings

 

(1,968)

(18,367)

(15,060)

Derivative financial instruments

 

-

(150)

(99)

Provision for liabilities and charges

 

(4)

(231)

(4)

 

 

(20,209)

(35,325)

(30,995)

Non-current liabilities

 

 

 

 

Trade and other payables

 

(494)

(505)

(427)

Borrowings

 

(17,373)

-

-

Derivative financial instruments

 

(99)

-

-

Deferred income tax liabilities

 

(394)

(254)

(333)

Retirement benefit obligations

 

(1,236)

(644)

(1,176)

 

 

(19,596)

(1,403)

(1,936)

Total liabilities

 

(39,805)

(36,728)

(32,931)

Net assets

 

83,969

74,591

77,019

Shareholders' equity

 

 

 

 

Ordinary shares

 

123

123

123

Share premium

 

344

344

344

Capital redemption reserve

 

1

1

1

Merger reserve

 

2,033

2,033

2,033

Other reserves

 

6,383

5,171

5,382

Retained earnings

 

75,085

66,919

69,136

Total shareholders' equity

 

83,969

74,591

77,019

 


Consolidated statement of cash flow

for the six months ended 30 June 2013

 

 



Unaudited

Unaudited

Audited



six months

six months

year



ended

ended

ended



30 June

30 June

31 December



2013

2012

2012



£'000

£'000

£'000

Cash flows from operating activities

 

 

 

 

Cash generated from operations

 

10,455

10,637

20,621

Interest paid

 

(212)

(229)

(419)

Income tax paid

 

(3,195)

(4,000)

(7,051)

Net cash generated from operating activities

 

7,048

6,408

13,151

Cash flows from investing activities

 

 

 

 

Acquisition of subsidiary undertakings

 

(3,095)

(276)

(1,226)

Purchases of property, plant and equipment

 

(1,212)

(2,968)

(5,402)

Proceeds from sale of property, plant and equipment

 

156

3,901

7,146

Proceeds from sale of intangible assets

 

-

-

1

Purchases of intangible assets

 

(482)

(624)

(1,162)

Interest received

 

43

89

217

Net cash (used in)/generated from investing activities

 

(4,590)

122

(426)

Cash flows from financing activities

 

 

 

 

Repayments of borrowings

 

(13,718)

(7,265)

(10,658)

New borrowings

 

17,373

-

-

Purchase of own shares

 

-

(5)

(5)

Dividends paid to Company's shareholders

 

-

(3,065)

(6,621)

Net cash used generated from/(used in) financing activities

 

3,655

(10,335)

(17,284)

Effects of exchange rates on cash and cash equivalents

 

671

(532)

(623)

Net increase/(decrease) in cash in the period

 

6,784

(4,337)

(5,182)

Cash and cash equivalents at beginning of the period

 

17,861

23,043

23,043

Cash and cash equivalents at end of the period

 

24,645

18,706

17,861

 


 

Notes to the financial statements

for the six months ended 30 June 2013

 

 

1 Nature of information

The financial information contained in this Interim Statement has been neither audited nor reviewed by the auditor 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 2013 has been prepared applying the accounting policies and presentation that were applied in the preparation of the Group's published consolidated financial statements for the year ended 31 December 2012, except for the following change.

Standard effective from 1 Jan 2013 that would be expected to impact the Group:

> IAS 19 revised, which contains the requirement to calculate net interest income or expense using the discount rate used to measure the defined benefit obligation.

Comparative figures for the year ended 31 December 2012 have been extracted from the statutory accounts for the year ended 31 December 2012 which have been delivered to the Registrar of Companies. The Independent Auditor's 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 Profit on the disposal of fixed assets

In January 2012, one of the Group's subsidiaries sold part of its site. The sale realised £7.2 million and the profit on the sale was £5.9 million.

4 Earnings per share

The calculation of basic earnings per ordinary share is based on the profit on ordinary activities after taxation of £5,949,000 (2012: £12,341,000) and on 12,261,477 (2012: 12,261,496) 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. 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.



Unaudited

Unaudited

Audited



six months

six months

year



ended

ended

ended



30 June

30 June

31 December



2013

2012

2012



£'000

£'000

£'000

Profit on ordinary activities after taxation

 

5,949

12,341

18,998

Basic earnings per ordinary share

 

48.5p

100.6p

154.9p

 

5 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 2013. In accordance with IAS 19 such a valuation will be prepared for the purposes of the Group's Annual Report and Accounts 2013.

For further information, please contact:

 

London Security plc

Richard Pollard

Company Secretary                                       Tel : 01422 372852

 

WH Ireland Limited

Andrew Kitchingman                                    Tel : 0113 394 6619

Nick Field                                                       Tel : 0207 220 1666


 


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