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Sector
Technology
Size
Small Cap
Market Cap £294.3m
Enterprise Value £268.9m
Revenue £142.3m
Position in Universe 734th / 1819

London Security PLC Half Yearly Report

Wed 30th September, 2009 4:44pm
TIDMLSC

RNS Number : 9973Z
London Security PLC
30 September 2009

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LONDON SECURITY PLC
Interim Statement FOR THE SIX MONTHS ENDED 30 JUNE 2009
Chairman's Statement


Financial highlights
Financial highlights of the unaudited results for the six months ended 30 June
2009 compared with the first half of 2008 are as follows:


* Revenue of GBP42.5 million (2008: GBP35.6 million)
* Operating profit of GBP8.4 million (2008: GBP8.8 million)
* Profit on ordinary activities before taxation of GBP7.4 million (2008: GBP6.4
million)
* Earnings per share of 40.5p (2008: 35.9p)



Trading and prospects
The Group's revenue has increased by GBP6.9 million (19.4%), due to businesses
acquired in 2008 and a favorable exchange rate effect. The Group's operating
profit has decreased by GBP0.4 million (4.5%) reflecting the recession
experienced in all countries in which we operate.


In 2008 the Group suffered a charge of GBP1.8 million as a result of exchange
losses on foreign currency loans. In 2009 the Group implemented a net investment
hedge against this risk which permits the Group to recognise exchange rate
volatility through reserves. Falling interest rates have resulted in lower
interest payable and receivable within finance costs.


In mainland Europe, the Group has continued to build upon its strong position in
servicing fire extinguishers and hose reels and growing our new activities
through our multi-service strategy offering customers a complete range of
services around the first intervention on fires and first-aid. This strategy has
enabled the Group's evolution from solely an extinguisher supplier to the
customers' safety partner.


In the UK, management continues to invest in training of the field force. 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.


Trading conditions for the second half of 2009 will continue to be difficult. We
have, however, still recorded very creditable results in this testing economic
environment and expect to continue to do so in the future.




J.G. Murray
Chairman
30 September 2009


Consolidated Income Statement
for the six months to 30 June 2009


+--------+--------+--------+--------+--------+--------+--------+--------+--------+--------+
| | | Unaudited | Unaudited | Audited |
+-----------------+-----------------+-----------------+-----------------+-----------------+
| | | Six months | Six months | Year to |
+-----------------+-----------------+-----------------+-----------------+-----------------+
| | | to 30 June | to 30 June | 31 December |
+-----------------+-----------------+-----------------+-----------------+-----------------+
| | | 2009 | 2008 | 2008 |
+-----------------+-----------------+-----------------+-----------------+-----------------+
| | | GBP'000 | GBP'000 | GBP'000 |
+-----------------+-----------------+-----------------+-----------------+-----------------+
| Continuing | | | | |
| operations | | | | |
+-----------------+-----------------+-----------------+-----------------+-----------------+
| Revenue | | 42,478 | 35,627 | 74,892 |
+-----------------+-----------------+-----------------+-----------------+-----------------+
| Cost of sales | | (7,277) | (6,094) | (12,618) |
+-----------------+-----------------+-----------------+-----------------+-----------------+
| Gross profit | | 35,201 | 29,533 | 62,274 |
+-----------------+-----------------+-----------------+-----------------+-----------------+
| Distribution | | (16,476) | (12,820) | (27,051) |
| costs | | | | |
+-----------------+-----------------+-----------------+-----------------+-----------------+
| Administrative | | (10,288) | (7,924) | (16,346) |
| expenses | | | | |
+-----------------+-----------------+-----------------+-----------------+-----------------+
| Operating | | 8,437 | 8,789 | 18,877 |
| profit | | | | |
+-----------------+-----------------+-----------------+-----------------+-----------------+
| EBITDA* | | 10,094 | 9,987 | 21,592 |
+-----------------+-----------------+-----------------+-----------------+-----------------+
| Depreciation | | (1,657) | (1,198) | (2,715) |
| and | | | | |
| amortisation | | | | |
+-----------------+-----------------+-----------------+-----------------+-----------------+
| Operating | | 8,437 | 8,789 | 18,877 |
| profit | | | | |
+-----------------+-----------------+-----------------+-----------------+-----------------+
| Finance income | | 333 | 587 | 1,679 |
+-----------------+-----------------+-----------------+-----------------+-----------------+
| Finance costs | | (1,158) | (1,472) | (3,169) |
+-----------------+-----------------+-----------------+-----------------+-----------------+
| Fair value of | | (176) | 318 | (193) |
| derivative | | | | |
| financial | | | | |
| instruments | | | | |
+-----------------+-----------------+-----------------+-----------------+-----------------+
| Exchange loss | | - | (1,791) | (7,654) |
| on foreign | | | | |
| currency loans | | | | |
+-----------------+-----------------+-----------------+-----------------+-----------------+
| Finance costs - | | (1,001) | (2,358) | (9,337) |
| net | | | | |
+-----------------+-----------------+-----------------+-----------------+-----------------+
| Profit before | | 7,436 | 6,431 | 9,540 |
| income tax | | | | |
+-----------------+-----------------+-----------------+-----------------+-----------------+
| Income tax | | (2,462) | (2,021) | (3,983) |
| expense | | | | |
+-----------------+-----------------+-----------------+-----------------+-----------------+
| Profit for the | | 4,974 | 4,410 | 5,557 |
| period | | | | |
| attributable to | | | | |
| equity | | | | |
| shareholders of | | | | |
| the company | | | | |
+-----------------+-----------------+-----------------+-----------------+-----------------+
| | | | | |
+-----------------+-----------------+-----------------+-----------------+-----------------+
| Earnings per | | | | |
| share | | | | |
+-----------------+-----------------+-----------------+-----------------+-----------------+
| Basic and | Note 2 | 40.5p | 35.9p | 45.2p |
| diluted | | | | |
+-----------------+-----------------+-----------------+-----------------+-----------------+
| Dividends | | | | |
+-----------------+-----------------+-----------------+-----------------+-----------------+
| Dividends paid | | nil | 130.0p | 130.0p |
| per share | | | | |
+--------+--------+--------+--------+--------+--------+--------+--------+--------+--------+
* Earnings before interest, taxation, depreciation, amortisation and impairment
charges.


Consolidated Statement of Comprehensive Income
for the six months to 30 June 2009


+----------+----------+----------+----------+----------+----------+----------+----------+
| | Unaudited | Unaudited | Audited |
+---------------------+---------------------+---------------------+---------------------+
| | Six months | Six months | Year to |
+---------------------+---------------------+---------------------+---------------------+
| | to 30 June | to 30 June | 31 December |
+---------------------+---------------------+---------------------+---------------------+
| | 2009 | 2008 | 2008 |
+---------------------+---------------------+---------------------+---------------------+
| | GBP'000 | GBP'000 | GBP'000 |
+---------------------+---------------------+---------------------+---------------------+
| Profit for the | 4,974 | 4,410 | 5,557 |
| financial period | | | |
+---------------------+---------------------+---------------------+---------------------+
| Other comprehensive | | | |
| income: | | | |
+---------------------+---------------------+---------------------+---------------------+
| Currency | (1,996) | 1,123 | 4,053 |
| translation | | | |
| differences on | | | |
| foreign currency | | | |
| net investments | | | |
+---------------------+---------------------+---------------------+---------------------+
| Actuarial loss | - | - | (708) |
| recognised in | | | |
| pension scheme | | | |
+---------------------+---------------------+---------------------+---------------------+
| Movement on | (59) | (224) | (36) |
| deferred tax | | | |
| relating to pension | | | |
| scheme | | | |
+---------------------+---------------------+---------------------+---------------------+
| Foreign currency | 3,560 | - | - |
| loan hedges net of | | | |
| tax | | | |
+---------------------+---------------------+---------------------+---------------------+
| Other comprehensive | 1,505 | 899 | 3,309 |
| income for the | | | |
| period | | | |
+---------------------+---------------------+---------------------+---------------------+
| Total comprehensive | 6,479 | 5,309 | 8,866 |
| income for the | | | |
| period attributable | | | |
| to equity | | | |
| shareholders | | | |
+----------+----------+----------+----------+----------+----------+----------+----------+






Consolidated Statement of Financial Position
as at 30 June 2009
+----------+----------+----------+----------+----------+----------+----------+----------+
| | Unaudited | Unaudited | Audited |
+---------------------+---------------------+---------------------+---------------------+
| | As at | As at | As at |
+---------------------+---------------------+---------------------+---------------------+
| | 30 June | 30 June | 31 December |
+---------------------+---------------------+---------------------+---------------------+
| | 2009 | 2008 | 2008 |
+---------------------+---------------------+---------------------+---------------------+
| | GBP'000 | GBP'000 | GBP'000 |
+---------------------+---------------------+---------------------+---------------------+
| Assets | | | |
+---------------------+---------------------+---------------------+---------------------+
| Non-current assets | | | |
+---------------------+---------------------+---------------------+---------------------+
| Property, plant and | 8,810 | 8,457 | 9,787 |
| equipment | | | |
+---------------------+---------------------+---------------------+---------------------+
| Intangible assets | 52,762 | 47,704 | 53,210 |
+---------------------+---------------------+---------------------+---------------------+
| Deferred income tax | 779 | 508 | 743 |
| asset | | | |
+---------------------+---------------------+---------------------+---------------------+
| Derivative | - | 299 | - |
| financial | | | |
| instruments | | | |
+---------------------+---------------------+---------------------+---------------------+
| | 62,351 | 56,968 | 63,740 |
+---------------------+---------------------+---------------------+---------------------+
| Current assets | | | |
+---------------------+---------------------+---------------------+---------------------+
| Inventories | 8,243 | 6,239 | 8,545 |
+---------------------+---------------------+---------------------+---------------------+
| Trade and other | 18,756 | 15,524 | 20,820 |
| receivables | | | |
+---------------------+---------------------+---------------------+---------------------+
| Cash and cash | 14,382 | 11,439 | 10,875 |
| equivalents | | | |
+---------------------+---------------------+---------------------+---------------------+
| | 41,381 | 33,202 | 40,240 |
+---------------------+---------------------+---------------------+---------------------+
| Total assets | 103,732 | 90,170 | 103,980 |
+---------------------+---------------------+---------------------+---------------------+
| Liabilities | | | |
+---------------------+---------------------+---------------------+---------------------+
| Current liabilities | | | |
+---------------------+---------------------+---------------------+---------------------+
| Trade and other | (17,229) | (15,123) | (17,148) |
| payables | | | |
+---------------------+---------------------+---------------------+---------------------+
| Income tax | (2,540) | (1,527) | (1,548) |
| liabilities | | | |
+---------------------+---------------------+---------------------+---------------------+
| Borrowings | (7,730) | (6,015) | (7,488) |
+---------------------+---------------------+---------------------+---------------------+
| Provision for | (21) | (107) | - |
| liabilities and | | | |
| charges | | | |
+---------------------+---------------------+---------------------+---------------------+
| | (27,520) | (22,772) | (26,184) |
+---------------------+---------------------+---------------------+---------------------+
| Non-current | | | |
| liabilities | | | |
+---------------------+---------------------+---------------------+---------------------+
| Trade and other | (34) | (48) | - |
| payables | | | |
+---------------------+---------------------+---------------------+---------------------+
| Borrowings | (38,223) | (40,209) | (46,241) |
+---------------------+---------------------+---------------------+---------------------+
| Derivative | (388) | - | (212) |
| financial | | | |
| instruments | | | |
+---------------------+---------------------+---------------------+---------------------+
| Deferred income tax | (91) | - | (41) |
| liabilities | | | |
+---------------------+---------------------+---------------------+---------------------+
| Retirement benefit | (483) | (165) | (742) |
| obligations | | | |
+---------------------+---------------------+---------------------+---------------------+
| Provision for | - | (19) | (46) |
| liabilities and | | | |
| charges | | | |
+---------------------+---------------------+---------------------+---------------------+
| | (39,219) | (40,441) | (47,282) |
+---------------------+---------------------+---------------------+---------------------+
| Total liabilities | (66,739) | (63,213) | (73,466) |
+---------------------+---------------------+---------------------+---------------------+
| Net assets | 36,993 | 26,957 | 30,514 |
+---------------------+---------------------+---------------------+---------------------+
| | | | |
+---------------------+---------------------+---------------------+---------------------+
| Shareholders' | | | |
| equity | | | |
+---------------------+---------------------+---------------------+---------------------+
| Ordinary shares | 123 | 123 | 123 |
+---------------------+---------------------+---------------------+---------------------+
| Merger reserve | 2,033 | 2,033 | 2,033 |
+---------------------+---------------------+---------------------+---------------------+
| Other reserves | 6,688 | 2,194 | 5,124 |
+---------------------+---------------------+---------------------+---------------------+
| Retained earnings | 28,149 | 22,607 | 23,234 |
+---------------------+---------------------+---------------------+---------------------+
| Total shareholders' | 36,993 | 26,957 | 30,514 |
| equity | | | |
+----------+----------+----------+----------+----------+----------+----------+----------+


Consolidated Statement of Cash Flows
for the six months to 30 June 2009
+----------+----------+----------+----------+----------+----------+----------+----------+
| | Unaudited | Unaudited | Audited |
+---------------------+---------------------+---------------------+---------------------+
| | Six months | Six months | Year to |
+---------------------+---------------------+---------------------+---------------------+
| | to 30 June | to 30 June | 31 December |
+---------------------+---------------------+---------------------+---------------------+
| | 2009 | 2008 | 2008 |
+---------------------+---------------------+---------------------+---------------------+
| | GBP'000 | GBP'000 | GBP'000 |
+---------------------+---------------------+---------------------+---------------------+
| Cash flows from | | | |
| operating | | | |
| activities | | | |
+---------------------+---------------------+---------------------+---------------------+
| Cash generated from | 11,472 | 9,223 | 15,552 |
| operations | | | |
+---------------------+---------------------+---------------------+---------------------+
| Interest paid | (878) | (1,110) | (2,687) |
+---------------------+---------------------+---------------------+---------------------+
| Income tax paid | (1,986) | (2,970) | (4,826) |
+---------------------+---------------------+---------------------+---------------------+
| Net cash generated | 8,608 | 5,143 | 8,039 |
| from operating | | | |
| activities | | | |
+---------------------+---------------------+---------------------+---------------------+
| Cash flows from | | | |
| investing | | | |
| activities | | | |
+---------------------+---------------------+---------------------+---------------------+
| Acquisition of | - | - | (222) |
| subsidiary | | | |
| undertaking | | | |
+---------------------+---------------------+---------------------+---------------------+
| Purchases of | (992) | (1,446) | (2,923) |
| property, plant and | | | |
| equipment | | | |
+---------------------+---------------------+---------------------+---------------------+
| Proceeds from sale | 142 | 209 | 426 |
| of property, plant | | | |
| and equipment | | | |
+---------------------+---------------------+---------------------+---------------------+
| Purchases of | (757) | (564) | (5,156) |
| intangible assets | | | |
+---------------------+---------------------+---------------------+---------------------+
| Proceeds from sale | - | 22 | 31 |
| of intangible | | | |
| assets | | | |
+---------------------+---------------------+---------------------+---------------------+
| Interest received | 93 | 222 | 1,188 |
+---------------------+---------------------+---------------------+---------------------+
| Net cash used in | (1,514) | (1,557) | (6,656) |
| investing | | | |
| activities | | | |
+---------------------+---------------------+---------------------+---------------------+
| Cash flows from | | | |
| financing | | | |
| activities | | | |
+---------------------+---------------------+---------------------+---------------------+
| New long-term loans | - | 15,000 | 18,200 |
+---------------------+---------------------+---------------------+---------------------+
| Repayments of | (3,587) | (2,974) | (4,535) |
| borrowings | | | |
+---------------------+---------------------+---------------------+---------------------+
| Equity dividends | - | (15,980) | (15,980) |
| paid | | | |
+---------------------+---------------------+---------------------+---------------------+
| Net cash used in | (3,587) | (3,954) | (2,315) |
| financing | | | |
| activities | | | |
+---------------------+---------------------+---------------------+---------------------+
| Net | 3,507 | (368) | (932) |
| increase/(decrease) | | | |
| in cash in the | | | |
| period | | | |
+---------------------+---------------------+---------------------+---------------------+
| Cash and cash | 10,875 | 11,807 | 11,807 |
| equivalents at | | | |
| beginning of the | | | |
| period | | | |
+---------------------+---------------------+---------------------+---------------------+
| Cash and cash | 14,382 | 11,439 | 10,875 |
| equivalents at the | | | |
| end of the period | | | |
+----------+----------+----------+----------+----------+----------+----------+----------+


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 2009 is unaudited and has been
prepared on the basis of the accounting policies set out in the Group's 2008
Annual Report and Accounts. Comparative figures for the year ended 31 December
2008 have been extracted from the statutory accounts for the year ended 31
December 2008 which have been delivered to the Registrar of Companies. The
report of the auditors 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.


From 1 January 2009 the Group's policy is to hedge its international assets and
has designated foreign currency borrowings as a hedge against net investment in
foreign operations. The portion of the gain or loss on an instrument used to
hedge a net investment in a foreign operation that is determined as an effective
hedge is recognised directly in equity. Any gain or loss on any ineffective
portion of the hedge is recognised immediately in the income statement.


2 Earnings per share
The calculation of basic earnings per ordinary share is based on the profit on
ordinary activities after taxation of GBP4,974,000 (2008: GBP4,410,000) and on
12,294,798 (2008: 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 (2008:
12,296,487). After taking into account the effect of dilutive securities, the
basic EPS and adjusted EPS figures are unaltered.


+----------+----------+----------+----------+----------+----------+----------+----------+
| | Six months | Six months | Year to |
+---------------------+---------------------+---------------------+---------------------+
| | to 30 June | to 30 June | 31 December |
+---------------------+---------------------+---------------------+---------------------+
| | 2009 | 2008 | 2008 |
+---------------------+---------------------+---------------------+---------------------+
| | GBP'000 | GBP'000 | GBP'000 |
+---------------------+---------------------+---------------------+---------------------+
| Profit on ordinary | 4,974 | 4,410 | 5,557 |
| activities after | | | |
| taxation | | | |
+---------------------+---------------------+---------------------+---------------------+
| Basic earnings per | 40.5p | 35.9p | 45.2p |
| ordinary share | | | |
+----------+----------+----------+----------+----------+----------+----------+----------+


3 Actuarial valuation of pension scheme
As permitted under IAS 19, the Group has not prepared an actuarial valuation of
pension scheme assets and liabilities for the 2009 interim statement. In
accordance with IAS 19 such a valuation will be prepared for the purposes of the
Group's 2009 Annual Report and Accounts.


4 Consolidated statement of changes in equity
+----------+----------+----------+----------+----------+----------+----------+----------+
| | Unaudited | Unaudited | Audited |
+---------------------+---------------------+---------------------+---------------------+
| | Six months | Six months | Year to |
+---------------------+---------------------+---------------------+---------------------+
| | to 30 June | to 30 June | 31 December |
+---------------------+---------------------+---------------------+---------------------+
| | 2009 | 2008 | 2008 |
+---------------------+---------------------+---------------------+---------------------+
| | GBP'000 | GBP'000 | GBP'000 |
+---------------------+---------------------+---------------------+---------------------+
| Profit for the | 4,974 | 4,410 | 5,557 |
| financial period | | | |
+---------------------+---------------------+---------------------+---------------------+
| Transactions with | | | |
| owners: | | | |
+---------------------+---------------------+---------------------+---------------------+
| Dividends | - | (15,980) | (15,980) |
+---------------------+---------------------+---------------------+---------------------+
| Other comprehensive | | | |
| income: | | | |
+---------------------+---------------------+---------------------+---------------------+
| Currency | (1,996) | 1,123 | 4,053 |
| translation | | | |
| differences on | | | |
| foreign currency | | | |
| net investments | | | |
+---------------------+---------------------+---------------------+---------------------+
| Actuarial loss | - | - | (708) |
| recognised in | | | |
| pension scheme | | | |
+---------------------+---------------------+---------------------+---------------------+
| Movement on | (59) | (224) | (36) |
| deferred tax | | | |
| relating to pension | | | |
| scheme | | | |
+---------------------+---------------------+---------------------+---------------------+
| Foreign currency | 3,560 | - | - |
| loan hedges net of | | | |
| tax | | | |
+---------------------+---------------------+---------------------+---------------------+
| Net increase in | 6,479 | (10,671) | (7,114) |
| shareholders' funds | | | |
+---------------------+---------------------+---------------------+---------------------+
| Shareholders' funds | 30,514 | 37,628 | 37,628 |
| at the beginning of | | | |
| the period | | | |
+---------------------+---------------------+---------------------+---------------------+
| Shareholders' funds | 36,993 | 26,957 | 30,514 |
| at the end of the | | | |
| period | | | |
+----------+----------+----------+----------+----------+----------+----------+----------+




5 Hedge of net investment in foreign subsidiaries


The Group's euro denominated borrowings totaling EUR32.2 million hedge the Group's
investment in its European subsidiaries. The fair value of the euro borrowings
at 30 June 2009 was GBP27.5 million. A foreign exchange gain of GBP3.6 million
was recognised in equity during the year on translation of these loans to pounds
sterling. The gain on the euro borrowings more than offset the loss on
translation of foreign currency investments due to the significant value of
share capital and other assets which are held at historic rates. Hedge
accounting was not adopted in the prior period.


For further information, please contact:
London Security plc 01422
372852
Richard Pollard
Brewin Dolphin Investment Banking
Andrew Kitchingman / Sean Wyndham-Quin 0845 270 8610
Ends









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