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London Security PLC (LSC)

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Thursday 12 September, 2019

London Security PLC

Interim results for six months ended 30 June 2019

RNS Number : 0254M
London Security PLC
12 September 2019
 

London Security PLC

 

(the "Group")

 

Interim results for six months ended 30 June 2019

 

 

Chairman's statement

J.G. Murray, Chairman

 

Financial highlights

•     Revenue £71.7m (2018: £66.7m)

•     Operating profit £10.5m (2018: £10.1m)

•     Earnings per share 57.9p (2018: 56.2p)

 

TRADING

The financial highlights illustrate that the Group's revenue increased by £5.0 million (7.5%) to £71.7 million. The movement in exchange rates had an adverse effect of £0.5 million on reported turnover. The underlying revenue increase can largely be attributed to business acquisitions and improvements in the scheduling of service work

Operating profit increased by £0.4 million (4.0%) to £10.5 million. This increase in operating profit is again primarily caused by business acquisitions and improved service scheduling.

ACQUISITIONS

In the six months to the end of June, the Group has acquired a total of ten well established businesses at a cost of £3.0 million (2018: three businesses at a cost of £1.9 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.

 

FINANCING

In May 2018 the Group entered into a new five year multi-currency facility until 2023 comprising £3.15 million and €8.40 million. 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.

IFRS 16 "Leases" was applicable from 1 January 2019. The application of the standard has resulted in the recognition of additional right-of-use assets and lease liabilities which have been disclosed separately in the Statement of Financial Position. The standard is discussed further in note 2, Basis of preparation. The impact on the Income Statement was not material.

 

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 2019. 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 2018 of £0.40 per ordinary share was paid to shareholders on 5 July 2019.

J.G. Murray

Chairman

 

 

12 September 2019

 



 

Consolidated income statement

for the six months ended 30 June 2019

 

 

 

Unaudited

Unaudited

Audited

 

 

six months

six months

year

 

 

ended

ended

ended

 

 

30 June

30 June

31 December

 

 

2019

2018

2018

 

Note

£'000

£'000

£'000

Revenue

 

71,737

66,726

137,711

Cost of sales

 

(17,932)

(15,402)

(31,780)

Gross profit

 

53,805

51,324

105,931

Distribution costs

 

(26,253)

(25,215)

(50,593)

Administrative expenses

 

(17,025)

(15,969)

(32,163)

Operating profit

 

10,527

10,140

23,175

EBITDA*

 

14,474

13,313

29,557

Depreciation and amortisation

 

(3,947)

(3,173)

(6,382)

Operating profit

 

10,527

10,140

23,175

Finance income

 

23

28

131

Finance costs

 

(121)

(97)

(171)

Finance costs - net

 

(98)

(69)

(40)

Profit before income tax

 

10,429

10,071

23,135

Income tax expense

 

(3,237)

(3,133)

(6,945)

Profit for the period

 

7,192

6,938

16,190

Profit is attributable to

 

 



Equity shareholders of the Company

 

7,103

6,891

16,077

Non-controlling interest

 

89

47

113

 

 

7,192

6,938

16,190

Earnings per share

 




Basic and diluted

3

57.9p

56.2p

131.1p

Dividends

 




Dividends paid per share

 

Nil

Nil

80.0p

 

* 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 2019

 

 

Unaudited

Unaudited

Audited

 

six months

six months

year

 

ended

ended

ended

 

30 June

30 June

31 December

 

2019

2018

2018

 

£'000

£'000

£'000

Profit for the financial period

7,192

6,938

16,190

Other comprehensive income/(expense):

 

 

 

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

 

 

 

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

47

(418)

361

- actuarial gain recognised in the Nu-Swift pension scheme

-

-

16

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

-

-

(6)

- actuarial loss recognised in the Ansul pension scheme

-

-

(145)

- movement on deferred tax relating to the Ansul pension scheme

-

-

36

Other comprehensive income for the period, net of tax

47

(418)

262

Total comprehensive income for the period

7,239

6,520

16,452

 



 

Consolidated statement of changes in equity

for the six months ended 30 June 2019

 

 

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 2018

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

Comprehensive income for the period:









- profit for the period

-

-

-

-

-

9,186

66

9,252

- exchange adjustments

-

-

-

-

779

-

-

779

- actuarial loss on pension schemes

-

-

-

-

-

(129)

-

(129)

- movement on deferred tax relating to pension schemes

-

-

-

-

-

30

-

30

Total comprehensive income for the period

-

-

-

-

779

9,087

66

9,932

Contributions by and distributions to owners of the Company:









- dividends

-

-

-

-

-

(9,809)

-

(9,809)

Total contributions to owners of the Company

-

-

-

-

-

(9,809)

-

(9,809)

At 31 December 2018

123

344

1

2,033

8,831

98,577

302

110,211

Comprehensive income for the period:









- profit for the period

-

-

-

-

-

7,103

89

7,192

- distribution to non-controlling interest

-

-

-

-

-

-

(23)

(23)

- exchange adjustments

-

-

-

-

47

-

-

47

Total comprehensive income for the period

-

-

-

-

47

7,103

66

7,216

At 30 June 2019

123

344

1

2,033

8,878

105,680

368

117,427

 



 

Consolidated statement of financial position

as at 30 June 2019

 

 

Unaudited

Unaudited

Audited

 

as at

as at

as at

 

30 June

30 June

31 December

 

2019

2018

2018

 

£'000

£'000

£'000

Assets

 

 


Non-current assets

 

 


Property, plant and equipment

12,921

11,732

12,077

Right of use assets

2,752

-

-

Intangible assets

65,166

61,698

63,695

Deferred tax asset

807

589

811

Retirement benefit surplus

4,430

4,397

4,430

 

86,076

78,416

81,013

Current assets

 

 


Inventories

14,613

12,437

13,293

Trade and other receivables

29,129

27,725

28,732

Cash and cash equivalents

28,869

29,256

26,110

 

72,611

69,418

68,135

Total assets

158,687

147,834

149,148

Liabilities

 

 


Current liabilities

 

 


Trade and other payables

(23,808)

(21,503)

(22,713)

Income tax liabilities

(1,145)

(917)

(1,731)

Borrowings

(2,125)

(2,100)

(2,125)

Lease liabilities

(1,239)

-

-

Derivative financial instruments

-

-

-

Provision for liabilities and charges

(5)

-

(5)

 

(28,322)

(24,520)

(26,574)

Non-current liabilities

 

 


Trade and other payables

(1,026)

(995)

(922)

Borrowings

(6,379)

(8,404)

(7,441)

Lease liabilities

(1,535)

-

-

Derivative financial instruments

(54)

(34)

(41)

Deferred income tax liabilities

(1,875)

(1,886)

(1,898)

Retirement benefit obligations

(1,880)

(1,705)

(1,880)

Provision for liabilities and charges

(189)

(202)

(181)

 

(12,938)

(13,226)

(12,363)

Total liabilities

(41,260)

(37,746)

(38,937)

Net assets

117,427

110,088

110,211

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

8,878

8,052

8,831

Retained earnings

105,680

99,299

98,577

Equity attributable to owners of the Parent Company

117,059

109,852

109,909

Non-controlling interest

368

236

302

Total equity

117,427

110,088

110,211

 



 

Consolidated statement of cash flow

for the six months ended 30 June 2019

 

 

Unaudited

Unaudited

Audited

 

six months

six months

year

 

ended

ended

ended

 

30 June

30 June

31 December

 

2019

2018

2018

 

£'000

£'000

£'000

Cash flows from operating activities

 

 


Cash generated from operations

13,953

13,156

28,385

Interest paid

(74)

(97)

(147)

Income tax paid

(4,414)

(4,374)

(7,393)

Net cash generated from operating activities

9,465

8,685

20,845

Cash flows from investing activities

 

 


Acquisition of subsidiary undertakings

(1,007)

(1,537)

(4,274)

Purchases of property, plant and equipment

(2,536)

(1,898)

(3,551)

Proceeds from sale of property, plant and equipment

109

114

398

Recognition of right-of-use assets

(3,542)

-

-

Purchases of intangible assets

(2,001)

(115)

(746)

Proceeds from sale of intangible assets

-

20

-

Interest received

23

8

12

Net cash used in investing activities

(8,954)

(3,408)

(8,161)

Cash flows from financing activities

 

 


Repayments of borrowings

(1,040)

(557)

(1,614)

Payment of lease liabilities

(831)

-

-

New lease liabilities

3,542

-

-

Dividends paid to Company's shareholders

-

-

(9,809)

Distribution to non-controlling interest

(23)

-

-

Net cash used in financing activities

1,648

(557)

(11,423)

Effects of exchange rates on cash and cash equivalents

600

(116)

197

Net increase in cash in the period

2,759

4,604

1,458

Cash and cash equivalents at the beginning of the period

26,110

24,652

24,652

Cash and cash equivalents at the end of the period

28,869

29,256

26,110

 



 

Notes to the financial statements

for the six months ended 30 June 2019

 

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 2019 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 2018. 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 2018 have been extracted from the statutory accounts for the year ended 31 December 2018, 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.

IFRS 16 "Leases" was issued in January 2016 with an effective date of 1 January 2019. The standard specifies how leases are recognised, presented, measured and disclosed. The majority of the Group's lease commitments have been brought onto the balance sheet together with corresponding right of use assets. In the Income Statement, the existing operating lease charge, which is recognised within operating profit, has been replaced by a depreciation charge in respect of the right of use asset. In addition there is an interest cost in relation to the lease liability which is recognised within finance costs.

The Group has applied IFRS 16 using the modified retrospective approach and therefore the comparative information has not been restated and continues to be reported under IAS 17.

3 Earnings per share

The calculation of basic earnings per ordinary share is based on the profit on ordinary activities after taxation of £7,103,000 (2018: £6,891,000) and on 12,261,477 (2018: 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

 

2019

2018

2018

 

£'000

£'000

£'000

Profit on ordinary activities after taxation

7,103

6,891

16,077

Basic earnings per ordinary share

57.9p

56.2p

131.1p

 

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 2019. In accordance with IAS 19 such a valuation will be prepared for the purposes of the Group's Annual Report and Accounts 2019.

 

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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