Interim Results

RNS Number : 3991E
London Security PLC
26 September 2008
 



LONDON SECURITY PLC

Interim Statement FOR THE SIX MONTHS ENDED 30 JUNE 2008



CHAIRMAN'S STATEMENT



Financial highlights 

Financial highlights of the unaudited results for the six months ended 30 June 2008 compared with the first half of 2007 are as follows: 


  • Revenue of £35.6 million (2007: £32.8 million)

  • Operating profit of £8.8 million (2007: £8.1 million)

  • Profit on ordinary activities before taxation of £6.4 million (2007: £7.3 million)

  • Earnings per share of 35.9p (2007: 41.0p)


Trading and prospects

The Group's revenue has increased by £2.8 million (8.5%). This improvement is due to the full year effect of various initiatives implemented in 2007 and a favourable exchange rate. There is also an adverse effect following the sale of the Swiss businesses, as results from these companies were included in the 2007 accounts.


For the same reasons, the Group's operating profit has increased by £0.7 million (8.6%). 


Within finance costs the Group has suffered an additional charge of £1.8 million (2007: charge of £0.1 million) in respect of the exchange rate movement on its loans denominated in Euros. This is offset by a positive effect of using income streams from Europe to repay the Group's Euro borrowings. 


In mainland Europe, the Group has grown through our multi-service strategy, offering customers a complete range of services. This strategy has enabled the Group's evolution from solely an extinguisher supplier to our customers' safety partner.


In the UK, 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.  


I am pleased to inform you that, in August 2008, we purchased the fire extinguisher division of Somati in Belgium. This business, now incorporated as Somati FIE NV, has revenue of 8.5 million Euros (£6.5 million) and will contribute positively to the Group in the second half of 2008.




Dividends and financing

A first interim dividend in respect of 2008 of £0.57 per ordinary share was paid to shareholders on 25 April 2008. A second interim dividend of £0.73 per ordinary share was paid on 22 May 2008. Dividends paid totalled £16 million.

 

In order to pay the interim dividends referred to above the Group has arranged an additional £15 million of bank loans with Lloyds Bank plc.


J.G. Murray

Chairman

26 September 2008




CONSOLIDATED INCOME STATEMENT

FOR THE SIX MONTHS TO 30 JUNE 2008


 

 
 
Six months
Six months
Year to
 
 
to 30 June
to 30 June
31 December
 
 
2008
2007
2007
 
 
£’000
 £’000
 £’000
Revenue
 
35,627
32,815
66,605
Cost of sales
 
(6,094)
(5,308)
(11,351)
Gross profit
 
29,533
27,507
55,254
Distribution costs
 
(12,820)
(11,294)
(22,453)
Administrative expenses
 
(7,924)
(8,134)
(16,008)
Operating profit
 
8,789
8,079
16,793
EBITDA*
 
9,987
8,983
18,785
Depreciation
 
(1,198)
(904)
(1,992)
Operating profit
 
8,789
8,079
16,793
Profit on disposal of subsidiary undertakings
 
4,216
Finance income
 
587
478
952
Finance costs
 
(1,154)
(1,139)
(2,652)
Exchange loss on foreign currency loans
 
(1,791)
(149)
(2,097)
Finance costs – net
 
(2,358)
(810)
(3,797)
Profit before income tax
 
6,431
7,269
17,212
Income tax expense
 
(2,021)
(2,215)
(4,017)
Profit for the period attributable to equity shareholders of the company
 
4,410
5,054
13,195
Earnings per share
Basic and diluted
Note 2
35.9p

41.0p

107.3p
 
Dividends
Dividends paid per share
 
130.0p
 
 
 
 
50.0p

 

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


 CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE




Six months 

Six months 

Year ended



to 30 June

to 30 June

31 December



2008

2007

2007



£'000

£'000

£'000

Profit for the financial period


4,410

5,054

13,195

Currency translation differences on foreign currency 





net investments


1,123

(9)

1,328

Actuarial gain recognised in pension scheme


-

-

1,473

Movement on deferred tax relating to pension scheme


(224)

-

(988)

Net gains/(losses) not recognised in the income statement


899

(9)

1,813

Total recognised income for the year attributable to equity shareholders


5,309

5,045

15,008




CONSOLIDATED BALANCE SHEET

AS AT 30 JUNE 2008


 

 
 
As at
As at
As at
 
 
30 June
30 June
31 December
 
 
2008
2007
2007
 
 
£’000
£’000
£’000
Assets
 
 
 
 
Non current assets
 
 
 
 
Property, plant and equipment
 
8,457
7,246
7,863
Intangible assets
 
47,704
47,090
47,236
Deferred tax asset
 
508
1,258
743
Derivative financial instruments
 
299
132
 
 
56,968
55,726
55,842
Current assets
 
 
 
 
Inventories
 
6,239
4,990
5,687
Trade and other receivables
 
15,524
15,605
14,358
Cash and cash equivalents
 
11,439
10,249
11,807
 
 
33,202
30,844
31,852
Total assets
 
90,170
86,570
87,694
Liabilities
 
 
 
 
Current liabilities
 
 
 
 
Trade and other payables
 
(15,123)
(12,932)
(14,475)
Income tax liabilities
 
(1,527)
(2,295)
(1,891)
Borrowings
 
(6,015)
(5,071)
(5,388)
Provision for liabilities and charges
 
(107)
(166)
(49)
 
 
(22,772)
(20,464)
(21,803)
Non current liabilities
 
 
 
 
Trade and other payables
 
(48)
(43)
Borrowings
 
(40,209)
(27,964)
(27,022)
Derivative financial instruments
 
(19)
Deferred tax liabilities
 
(34)
(100)
Retirement benefit obligations
 
(165)
(4,167)
(949)
Provision for liabilities and charges
 
(19)
(130)
(130)
 
 
(40,441)
(32,295)
(28,263)
Total liabilities
 
(63,213)
(52,759)
(50,066)
Net assets
 
26,957
33,811
37,628
 
Shareholders’ equity
 
 
 
 
Ordinary shares
 
123
123
123
Merger reserve
 
2,033
2,033
2,033
Other reserves
 
2,194
(266)
1,071
Retained earnings
 
22,607
31,921
34,401
Total shareholders’ equity
 
26,957
33,811
37,628

 

  

 

CONSOLIDATED CASH FLOW STATEMENT

FOR THE SIX MONTHS TO 30 JUNE 2008




 
 
Six months
Six months
Year ended
 
 
to 30 June
to 30 June
31 December
 
 
2008
2007
2007
 
 
£’000
£’000
£’000
Cash flows from operating activities
 
 
 
 
Cash generated from operations
 
9,223
8,361
19,328
Interest paid
 
(1,110)
(1,017)
(2,033)
Income tax paid
 
(2,970)
(2,150)
(4,556)
Net cash generated from operating activities
 
5,143
5,194
12,739
Cash flows from investing activities
 
 
 
 
Acquisition of subsidiary undertaking
 
(231)
Net proceeds from sale of subsidiary undertakings
 
4,587
Purchases of property, plant and equipment
 
(1,446)
(1,289)
(2,707)
Proceeds from sale of property, plant and equipment
 
209
238
401
Purchases of intangible assets
 
(564)
(272)
(578)
Proceeds from sale of intangible assets
 
22
18
Interest received
 
222
113
278
Net cash used in investing activities
 
(1,557)
(1,210)
1,768
Cash flows from financing activities
 
 
 
 
Purchase of own shares
 
(97)
New long term loans
 
15,000
Repayments of borrowings
 
(2,974)
(2,366)
(5,133)
Capital repayment of finance leases
 
(45)
Equity dividends paid
 
(15,980)
(6,146)
Net cash used in financing activities
 
(3,954)
(2,411)
(11,376)
Net (decrease)/increase in cash in the period
 
(368)
1,573
3,131
Cash and cash equivalents at beginning of the period
 
11,807
8,676
8,676
Cash and cash equivalents at the end of the period
 
11,439
10,249
11,807



NOTES



1    NATURE OF Information

The financial information contained in this interim statement has been neither audited or reviewed by the auditors and does not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985. The financial information for the six months ended 30 June 2008 is unaudited and has been prepared on the basis of the accounting policies set out in the Group's 2007 Report and Accounts. Comparative figures for the year ended 31 December 2007 have been extracted from the statutory accounts for the year ended 31 December 2007 which have been delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified and did not contain a statement under sections 237(2) or 237(3) of the Companies Act 1985.

    Earnings per share

The calculation of basic earnings per ordinary share is based on the profit on ordinary activities after taxation of £4,410,000 (2007: £5,054,000) and on 12,294,798 (2007: 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 (2007: 12,294,798). After taking into account the effect of dilutive securities, the basic EPS and adjusted EPS figures are unaltered.



Six months

Six months

Year ended



to 30 June

to 30 June

31 December



2008

2007

2007



£'000

£'000

£'000

Profit on ordinary activities after taxation


4,410

5,054

13,195

Basic earnings per ordinary share


35.9p

41.0p

107.3p



    Actuarial valuation of pension scheme

In common with many other companies, the Group has not prepared an actuarial valuation of pension scheme assets and liabilities for the 2008 interim statement. In accordance with IAS 19 such a valuation will be prepared for the purposes of the Group's 2008 Report and Accounts.


    Consolidated statement of changes in equity



Six months 

Six months 

Year ended



to 30 June

to 30 June

31 December



2008

2007

2007



£'000

 £'000 

 £'000

Profit for the financial period


4,410

5,054

13,195

Dividends


(15,980)

-

(6,146)

Currency translation differences on foreign currency 





net investments


1,123

(9)

1,328

Purchase of own shares


-

(97)

(97)

Actuarial gain recognised in pension scheme


-

-

1,473

Movement on deferred tax relating to pension scheme


(224)

-

(988)

Net increase in shareholders' funds


(10,671)

4,948

8,765

Shareholders' funds at the beginning of the period 


37,628

28,863

28,863

Shareholders' funds at the end of the period


26,957

33,811

37,628



 


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