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London Security PLC (LSC)

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Friday 14 September, 2018

London Security PLC

Interim Results

RNS Number : 7447A
London Security PLC
14 September 2018
 

London Security PLC

(the "Group")

 

Interim results for the six months ended 30 June 2018

 

 

Chairman's statement

 

FINANCIAL HIGHLIGHTS

Revenue £66.7m                                 2017: £60.6m

Operating profit £10.1m                       2017: £9.5m

Earnings per share 56.2p                    2017: 51.5p

 

TRADING

The financial highlights illustrate that the Group's revenue increased by £6.1 million (10.1%) to £66.7 million. The underlying revenue increase can largely be attributed to business acquisitions and improvements in the scheduling of service work. These results are also impacted by the movement in the Euro to Sterling average exchange rate over the period, which has decreased from 1.16 to 1.13. This movement in exchange rates had a positive effect of £1.3 million on reported turnover.

Operating profit increased by £0.6 million (6.3%) to £10.1 million. This increase in operating profit is again primarily caused by business acquisitions and improved service scheduling. Adjusting for the change in exchange rates on the same basis as above, operating profit would have been £9.8 million

ACQUISITIONS

In the six months to the end of June, the Group acquired a total of three well established businesses at a cost of £1.9 million (2017: six businesses at a cost of £1.1 million). The integration of these businesses into the Group has, so far, been successful and results are in line with expectations. One of these acquisitions, Linde, expanded the Group's business into Denmark.

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.

 

FINANCING

At 30 June 2017 and 31 December 2017 the Group's total borrowings had been disclosed as current liabilities as they were due for repayment in May 2018. In May 2018 the Group entered into a new five year multi-currency facility until 2023 comprising £3.15 million and €8.40 million. As a result £8.4 million of these borrowings have been disclosed as non-current liabilities. To limit our exposure to increasing interest rates these loans are subject to interest rate caps of 1.5% LIBOR on the Sterling loan and 0.25% EURIBOR on the Euro loan.

 

PROSPECTS

The fire security market is experiencing increased competition and downward pressure on prices. Our strategy is to continue to concentrate on the highest levels of customer service to mitigate this. We do not expect the economic environment to become any easier in 2018. Nonetheless your Group remains in a strong position and will continue to focus on meeting the needs of our customers and our shareholders.

 

DIVIDENDS

A final dividend in respect of 2017 of £0.40 per ordinary share was paid to shareholders on 5 July 2018.

 

J.G. Murray

Chairman

14 September 2018

 

 

Consolidated income statement

for the six months ended 30 June 2018

 

 

 

Unaudited

Unaudited

Audited

 

 

six months

six months

year

 

 

ended

ended

ended

 

 

30 June

30 June

31 December

 

 

2018

2017

2017

 

Note

£'000

£'000

£'000

Revenue

 

66,726

60,631

125,873

Cost of sales

 

(15,402)

(12,213)

(26,626)

Gross profit

 

51,324

48,418

99,247

Distribution costs

 

(25,215)

(23,682)

(47,751)

Administrative expenses

 

(15,969)

(15,250)

(29,757)

Operating profit

 

10,140

9,486

21,739

EBITDA*

 

13,531

12,382

27,934

Depreciation and amortisation

 

(3,391)

(2,896)

(6,195)

Operating profit

 

10,140

9,486

21,739

Finance income

 

28

87

237

Finance costs

 

(97)

(187)

(392)

Finance costs - net

 

(69)

(100)

(155)

Profit before income tax

 

10,071

9,386

21,584

Income tax expense

 

(3,133)

(3,068)

(7,239)

Profit for the period

6,938

6,318

14,345

Profit is attributable to

 

 

 

 

Equity shareholders of the Company

 

6,891

6,318

14,310

Non-controlling interest

 

47

-

35

 

 

6,938

6,318

14,345

Earnings per share

 

 

 

 

Basic and diluted

3

56.2p

51.5p

116.7p

Dividends

 

 

 

 

Dividends paid per share

 

Nil

Nil

80p

 

* 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 2018

 

 

Unaudited

Unaudited

Audited

 

 

six months

six months

year

 

 

ended

ended

ended

 

 

30 June

30 June

31 December

 

 

2018

2017

2017

 

 

£'000

£'000

£'000

 

Profit for the financial period

6,938

6,318

14,345

Other comprehensive (expense)/income:

 

 

 

Items that will not be reclassified subsequently to profit or loss:

 

 

 

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

(418)

836

1,439

- actuarial gain recognised in the Nu-Swift pension scheme

-

-

734

 

- movement on deferred tax relating to the Nu-Swift pension scheme

-

-

(257)

 

- actuarial loss recognised in the Ansul pension scheme

-

-

721

 

- movement on deferred tax relating to the Ansul pension scheme

-

-

(313)

 

Other comprehensive income for the period, net of tax

(418)

836

2,324

Total comprehensive income for the period

6,520

7,154

16,669

             

 

 

 

Consolidated statement of changes in equity

for the six months ended 30 June 2018

 

 

 

 

 

 

 

 

 

 

 

Share

Share

Capital

Merger

Other

Retained

Non-controlling

 

 

capital

premium

redemption

reserve

reserve

earnings

Interest

Total

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

At 1 January 2017

123

344

1

2,033

7,031

87,021

-

96,553

Comprehensive income for the period:

 

 

 

 

 

 

 

 

- profit for the period

-

-

-

-

-

6,318

-

6,318

- exchange adjustments

-

-

-

-

836

-

-

836

Total comprehensive income for the period

-

-

-

-

836

6,318

-

7,154

At 30 June 2017

123

344

1

2,033

7,867

93,339

-

103,707

Comprehensive income for the period:

 

 

 

 

 

 

 

 

- profit for the period

-

-

-

-

-

7,992

35

8,027

- exchange adjustments

-

-

-

-

603

-

-

603

- actuarial gain on pension schemes

-

-

-

-

-

1,455

-

1,455

- movement on deferred tax relating to pension schemes

-

-

-

-

-

(570)

-

(570)

Total comprehensive income for the period

-

-

-

-

603

8,877

35

9,515

Contributions by and distributions to owners of the Company:

 

 

 

 

 

 

 

 

- dividends

-

-

-

-

-

(9,808)

-

(9,808)

Contribution from non-controlling interest on business combination

-

-

-

-

-

-

154

154

At 31 December 2017

123

344

1

2,033

8,470

92,408

189

103,568

Comprehensive income for the period:

 

 

 

 

 

 

 

 

- profit for the period

-

-

-

-

-

6,891

47

6,938

- exchange adjustments

-

-

-

-

(418)

-

-

(418)

Total comprehensive income for the period

-

-

-

-

(418)

6,891

47

6,520

At 30 June 2018

123

344

1

2,033

8,052

99,299

236

110,088

 

 

 

Consolidated statement of financial position

as at 30 June 2018

 

 

Unaudited

Unaudited

Audited

 

as at

as at

as at

 

30 June

30 June

31 December

 

2018

2017

2017

 

£'000

£'000

£'000

Assets

 

 

 

Non-current assets

 

 

 

Property, plant and equipment

11,732

11,301

11,589

Intangible assets

61,698

62,625

61,724

Deferred tax asset

589

948

589

Retirement benefit surplus

4,397

3,574

4,397

 

78,416

78,448

78,299

Current assets

 

 

 

Inventories

12,437

12,408

11,749

Trade and other receivables

27,725

23,687

26,063

Cash and cash equivalents

29,256

27,542

24,652

 

69,418

63,637

62,464

Total assets

147,834

142,085

140,763

Liabilities

 

 

 

Current liabilities

 

 

 

Trade and other payables

(21,503)

(20,557)

(19,576)

Income tax liabilities

(917)

(633)

(1,699)

Borrowings

(2,100)

(11,940)

(11,125)

Derivative financial instruments

-

(115)

(54)

Provision for liabilities and charges

-

(35)

-

 

(24,520)

(33,280)

(32,454)

Non-current liabilities

 

 

 

Trade and other payables

(995)

(960)

(1,003)

Borrowings

(8,404)

-

-

Derivative financial instruments

(34)

-

-

Deferred income tax liabilities

(1,886)

(1,633)

(1,830)

Retirement benefit obligations

(1,705)

(2,339)

(1,721)

Provision for liabilities and charges

(202)

(166)

(187)

 

(13,226)

(5,098)

(4,741)

Total liabilities

(37,746)

(38,378)

(37,195)

Net assets

110,088

103,707

103,568

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

8,052

7,867

8,470

 Retained earnings

99,299

93,339

92,408

Equity attributable to owners of the Parent Company

109,852

103,707

103,379

Non-controlling interest

236

-

189

Total equity

110,088

103,707

103,568

 

 

 

Consolidated statement of cash flow

for the six months ended 30 June 2018

 

 

Unaudited

Unaudited

Audited

 

six months

six months

year

 

ended

ended

ended

 

30 June

30 June

31 December

 

2018

2017

2017

 

£'000

£'000

£'000

Cash flows from operating activities

 

 

 

Cash generated from operations

13,156

12,673

25,182

Interest paid

(97)

(187)

(368)

Income tax paid

(4,374)

(4,310)

(7,249)

Net cash generated from operating activities

8,685

8,176

17,565

Cash flows from investing activities

 

 

 

Acquisition of subsidiary undertakings

(1,537)

(785)

(1,220)

Purchases of property, plant and equipment

(1,898)

(1,590)

(3,384)

Proceeds from sale of property, plant and equipment

114

162

349

Purchases of intangible assets

(115)

(659)

(600)

Proceeds from sale of intangible assets

20

-

-

Interest received

8

30

30

Net cash used in investing activities

(3,408)

(2,842)

(4,825)

Cash flows from financing activities

 

 

 

Repayments of borrowings

(557)

(850)

(1,809)

Dividends paid to Company's shareholders

-

-

(9,808)

Contribution from non-controlling interest

-

-

154

Net cash used in financing activities

(557)

(850)

(11,463)

Effects of exchange rates on cash and cash equivalents

(116)

456

773

Net increase in cash in the period

4,604

4,940

2,050

Cash and cash equivalents at the beginning of the period

24,652

22,602

22,602

Cash and cash equivalents at the end of the period

29,256

27,542

24,652

 

 

 

Notes to the financial statements

for the six months ended 30 June 2018

 

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 2018 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 2017. The principal risks and uncertainties as disclosed in the year end accounts are considered to be consistent with those that are still applicable now.

Comparative figures for the year ended 31 December 2017 have been extracted from the statutory accounts for the year ended 31 December 2017, 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 or 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 and 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 £6,891,000 (2017: £6,318,000) and on 12,261,477 (2017: 12,261,477) 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

 

2018

2017

2017

 

£'000

£'000

£'000

Profit on ordinary activities after taxation

6,891

6,318

14,310

Basic earnings per ordinary share

56.2p

51.5p

116.7p

 

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 2018. In accordance with IAS 19 such a valuation will be prepared for the purposes of the Group's Annual Report and Accounts 2018.

 

For further information, please contact:

 

London Security plc

Richard Pollard

Company Secretary                                                                            Tel : 01422 372852

 

WH Ireland Limited

Chris Fielding                                                                                      Tel : 0207 220 1666

 

 


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