REG - London Security PLC - Interim results for six months ended 30 June 2020
London Security PLC
(the "Group" or "Company")
Interim results for the six months ended 30 June 2020
Chairman's statement
J.G. Murray, Chairman
Financial highlights
• Revenue £67.2m (2019: £71.7m)
• Operating profit £7.6m (2019: £10.5m)
• Earnings per share 39.9p (2019: 57.9p)
TRADING
The financial highlights illustrate that the Group's revenue decreased by £4.5 million (6.3%) to £67.2 million
Operating profit decreased by £2.9 million (27.6%) to £7.6 million.
The period under review reflects the impact from the coronavirus outbreak, which has significantly impacted all the countries in which we operate. Although there has been some return to normality in our business some customers remain closed and there are still restrictions on our operations. We must be prepared for further disruption should a second wave materialise in any of the countries in which we operate.
ACQUISITIONS
In the six months to the end of June, the Group has made no acquisitions. 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.
CASH AND FINANCING
The Group's cash balance as at 30 June 2020 was £34.4 million. This is an increase of £7.3 million on the 31 December 2019 balance of £27.1 million
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.
PROSPECTS
As the situation continues, cash management will be a key consideration; the London Security Group has a healthy balance sheet, strong cash reserves and a track record for good cash generation. Debt recovery remains consistent with previous years and staff costs will be controlled using the furlough process where applicable. The Board therefore considers that its strong balance sheet and material net cash position means that it is well placed to navigate through the impact of the coronavirus outbreak.
DIVIDENDS
A final dividend in respect of 2019 of £0.20 per ordinary share was paid to shareholders on 10 July 2020.
J.G. Murray
Chairman
15 September 2020
Consolidated income statement
for the six months ended 30 June 2020
Unaudited
Unaudited
Audited
six months
six months
year
ended
ended
ended
30 June
30 June
31 December
2020
2019
2019
Note
£'000
£'000
£'000
Revenue
67,164
71,737
146,920
Cost of sales
(16,452)
(17,932)
(36,293)
Gross profit
50,712
53,805
110,627
Distribution costs
(26,310)
(26,253)
(54,140)
Administrative expenses
(16,768)
(17,025)
(32,333)
Operating profit
7,634
10,527
24,154
EBITDA*
11,951
14,474
32,503
Depreciation and amortisation
(4,317)
(3,947)
(8,349)
Operating profit
7,634
10,527
24,154
Finance income
21
23
142
Finance costs
(96)
(121)
(254)
Finance costs - net
(75)
(98)
(112)
Profit before income tax
7,559
10,429
24,042
Income tax expense
(2,602)
(3,237)
(7,229)
Profit for the period
4,957
7,192
16,813
Profit is attributable to
Equity shareholders of the Company
4,895
7,103
16,653
Non-controlling interest
62
89
160
4,957
7,192
16,813
Earnings per share
Basic and diluted
3
39.9p
57.9p
135.8p
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 2020
Unaudited
Unaudited
Audited
six months
six months
year
ended
ended
ended
30 June
30 June
31 December
2020
2019
2019
£'000
£'000
£'000
Profit for the financial period
4,957
7,192
16,813
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
3,196
47
(2,389)
- actuarial gain recognised in the Nu-Swift pension scheme
-
-
414
- movement on deferred tax relating to the Nu-Swift pension scheme
-
-
(145)
- actuarial loss recognised in the Ansul pension scheme
-
-
(412)
- movement on deferred tax relating to the Ansul pension scheme
-
-
103
Other comprehensive income for the period, net of tax
3,196
47
(2,429)
Total comprehensive income for the period
8,153
7,239
14,384
Consolidated statement of changes in equity
for the six months ended 30 June 2020
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 2019
123
344
1
2,033
8,831
100,078
302
111,712
Comprehensive income for the period:
- profit for the period
-
-
-
-
-
7,103
89
7,192
- exchange adjustments
-
-
-
-
47
-
-
47
Total comprehensive income for the period
-
-
-
-
47
7,103
89
7,239
Distribution to non-controlling interest
-
-
-
-
-
-
(23)
(23)
At 30 June 2019
123
344
1
2,033
8,878
107,181
368
118,928
Comprehensive income for the period:
- profit for the period
-
-
-
-
-
9,550
71
9,621
- exchange adjustments
-
-
-
-
(2,436)
-
-
(2,436)
- actuarial gain on pension schemes
-
-
-
-
2
-
2
- movement on deferred tax relating to pension schemes
-
-
-
-
-
(42)
-
(42)
Total comprehensive income for the period
-
-
-
-
(2,436)
9,510
71
7,145
Contributions by and distributions to owners of the Company:
- dividends
-
-
-
-
-
(9,809)
-
(9,809)
Distribution to non-controlling interest
-
-
-
-
-
-
(90)
(90)
At 31 December 2019
123
344
1
2,033
6,442
106,882
349
116,174
Comprehensive income for the period:
- profit for the period
-
-
-
-
-
4,895
62
4,957
- exchange adjustments
-
-
-
-
3,196
-
-
3,196
Total comprehensive income for the period
-
-
-
-
3,196
4,895
62
8,153
Distribution to non-controlling interest
-
-
-
-
-
-
(159)
(159)
At 30 June 2020
123
344
1
2,033
9,638
111,777
252
124,168
Consolidated statement of financial position
as at 30 June 2020
Unaudited
Unaudited
Audited
as at
as at
as at
30 June
30 June
31 December
2020
2019
2019
£'000
£'000
£'000
Assets
Non-current assets
Property, plant and equipment
13,308
12,921
12,164
Right-of-use assets
2,382
2,752
2,360
Intangible assets
67,502
67,548
67,504
Deferred tax asset
779
807
683
Retirement benefit surplus
4,959
4,430
4,959
88,930
88,458
87,670
Current assets
Inventories
15,182
14,613
13,434
Trade and other receivables
32,499
29,129
27,822
Cash and cash equivalents
34,422
28,869
27,143
82,103
72,611
68,399
Total assets
171,033
161,069
156,069
Liabilities
Current liabilities
Trade and other payables
(29,119)
(23,808)
(23,158)
Income tax liabilities
(2,311)
(1,145)
(987)
Borrowings
(2,139)
(2,125)
(2,048)
Lease liabilities
(1,169)
(1,239)
(1,134)
Provision for liabilities and charges
-
(5)
-
(34,738)
(28,322)
(27,327)
Non-current liabilities
Trade and other payables
(1,275)
(1,026)
(850)
Borrowings
(4,270)
(6,379)
(5,122)
Lease liabilities
(1,209)
(1,535)
(1,256)
Derivative financial instruments
(43)
(54)
(47)
Deferred income tax liabilities
(2,873)
(2,756)
(2,909)
Retirement benefit obligations
(2,282)
(1,880)
(2,215)
Provision for liabilities and charges
(175)
(189)
(169)
(12,127)
(13,819)
(12,568)
Total liabilities
(46,865)
(42,141)
(39,895)
Net assets
124,168
118,928
116,174
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
9,638
8,878
6,442
Retained earnings
111,777
107,181
106,882
Equity attributable to owners of the Parent Company
123,916
118,560
115,825
Non-controlling interest
252
368
349
Total equity
124,168
118,928
116,174
Consolidated statement of cash flow
for the six months ended 30 June 2020
Unaudited
Unaudited
Audited
six months
six months
year
ended
ended
ended
30 June
30 June
31 December
2020
2019
2019
£'000
£'000
£'000
Cash flows from operating activities
Cash generated from operations
12,319
13,953
32,363
Interest paid
(66)
(74)
(160)
Income tax paid
(2,323)
(4,414)
(7,639)
Net cash generated from operating activities
9,930
9,465
24,564
Cash flows from investing activities
Acquisition of subsidiary undertakings
-
(1,007)
(2,264)
Purchases of property, plant and equipment
(2,344)
(2,536)
(3,974)
Proceeds from sale of property, plant and equipment
137
109
329
Purchases of intangible assets
(969)
(2,001)
(2,068)
Interest received
17
23
27
Net cash used in investing activities
(3,159)
(5,412)
(7,950)
Cash flows from financing activities
Repayments of borrowings
(1,015)
(1,040)
(2,091)
Payment of lease liabilities
(987)
(831)
(1,750)
Dividends paid to Company's shareholders
-
-
(9,809)
Distribution to non-controlling interest
(159)
(23)
(113)
Net cash used in financing activities
(2,161)
(1,894)
(13,763)
Effects of exchange rates on cash and cash equivalents
2,669
600
(1,818)
Net increase in cash in the period
7,279
2,759
1,033
Cash and cash equivalents at the beginning of the period
27,143
26,110
26,110
Cash and cash equivalents at the end of the period
34,422
28,869
27,143
Notes to the financial statements
for the six months ended 30 June 2020
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 2020 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 2019. 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 2019 have been extracted from the statutory accounts for the year ended 31 December 2019, which have been delivered to the Registrar of Companies. The Independent Auditors' 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 £4,895,000 (2019: £7,103,000) and on 12,261,477 (2019: 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
2020
2019
2019
£'000
£'000
£'000
Profit on ordinary activities after taxation
4,895
7,103
16,653
Basic earnings per ordinary share
39.9p
57.9p
135.8p
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 2020. In accordance with IAS 19 such a valuation will be prepared for the purposes of the Group's Annual Report and Accounts 2020.
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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