REG - London Security PLC - Final Results for the Year Ended 31 December 2018
London Security plc
Final Results for the Year Ended 31 December 2018
Chairman's statement
J.G. Murray, Chairman
Financial highlights
Financial highlights of the audited results for the year ended 31 December 2018 compared with the year ended 31 December 2017 are as follows:
• revenue of £137.7 million (2017: £125.9 million);
• EBITDA of £29.6 million (2017: £27.9 million);
• operating profit of £23.2 million (2017: £21.7 million);
• profit for the year of £16.2 million (2017: £14.3 million); and
• a dividend per share of £0.80 (2017: £0.80).
Trading review
The financial highlights illustrate that the Group's revenue increased by £11.8 million (9.4%) to £137.7 million and operating profit increased by £1.5 million (6.9%) to £23.2 million. These results reflect:
· the positive impact of acquisitions in 2017 and 2018 in the United Kingdom, Austria and Denmark;
· improved performance from our service business in continental Europe;
· continued improvement from newer service offerings (e.g. emergency lights and passive fire protection); and
· the movement in the Euro to Sterling average exchange rate, which had a favourable effect of £1.0 million on reported revenue and £0.2 million on operating profit.
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 prices where an adequate return is envisaged by the Board. In the year under review the Group has acquired four established fire protection businesses and strengthened its position in the passive fire protection market with the acquisition of Amberfire Limited. The Group has grown its presence in the Netherlands, Belgium, Austria and the UK with the acquisition of service contracts from smaller well-established businesses for integration into the Group's existing subsidiaries. In addition, with the acquisition of Linde Brandmateriel Aps the Group has expanded its business into Denmark.
Management and staff
2018 was a year in which the staff performed well and, on behalf of the shareholders, I would like to express thanks and appreciation for their contribution. The Group recognises that we can only achieve our aims with talented and dedicated colleagues who provide outstanding customer service in every area of the business.
The Group was saddened by the sad loss of Michael Gailer following a short illness and is grateful to him for his 19 years of service.
Dividends
A final dividend in respect of 2017 of £0.40 per ordinary share was paid to shareholders on 5 July 2018. An interim dividend in respect of 2018 of £0.40 per ordinary share was paid to shareholders on 30 November 2018. The Board is recommending the payment of a final dividend in respect of 2018 of £0.40 per ordinary share to be paid on 5 July 2019 to shareholders on the register on 7 June 2019. The shares will be marked ex-dividend on 6 June 2019.
Future prospects
The Group will continue to grow and consolidate the fire protection industry with the finest customer care.
Annual General Meeting
The Annual General Meeting will be held at 2 Eaton Gate, London SW1W 9BJ, on 18 June 2018 at 2 pm. You will find enclosed a form of proxy for use at that Meeting, which you are requested to complete and return in accordance with the instructions on the form. Your Directors look forward to meeting you at that time.
J.G. Murray
Chairman
8 May 2019
Consolidated income statement
for the year ended 31 December 2018
2018
2017
Note
£'000
£'000
Revenue
137,711
125,873
Cost of sales
(31,780)
(26,626)
Gross profit
105,931
99,247
Distribution costs
(50,593)
(47,751)
Administrative expenses
(32,163)
(29,757)
Operating profit
23,175
21,739
EBITDA*
29,557
27,934
Depreciation and amortisation
(6,382)
(6,195)
Operating profit
23,175
21,739
Finance income
131
237
Finance costs
(171)
(392)
Finance costs - net
(40)
(155)
Profit before income tax
23,135
21,584
Income tax expense
(6,945)
(7,239)
Profit for the year
16,190
14,345
Profit is attributable to:
Equity shareholders of the Company
16,077
14,310
Non-controlling interest
113
35
16,190
14,345
Earnings per share
Basic and diluted
1
131.1p
116.7p
* Earnings before interest, tax, depreciation and amortisation.
The above results are all as a result of continuing operations.
Consolidated statement of comprehensive income
for the year ended 31 December 2018
2018
2017
£'000
£'000
Profit for the financial year
16,190
14,345
Other comprehensive income/(expense):
Items that may be reclassified subsequently to profit or loss:
- currency translation differences on foreign currency net investments
361
1,439
Items that will not be reclassified subsequently to profit or loss:
- actuarial gain recognised in the Nu-Swift Pension Scheme
16
734
- movement on deferred tax relating to Nu-Swift Pension Scheme surplus
(6)
(257)
- actuarial (loss)/gain recognised in the Ansul Pension Scheme
(145)
721
- movement on deferred tax relating to Ansul Pension Scheme deficit
36
(313)
Other comprehensive income for the year, net of tax
262
2,324
Total comprehensive income for the year
16,452
16,669
Consolidated statement of changes in equity
for the year ended 31 December 2018
Share
Capital
Share
premium
redemption
Merger
Other
Retained
Non-controlling
Total
capital
account
reserve
reserve
reserve
earnings
interest
equity
£'000
£'000
£'000
£'000
£'000
£'000
£'000
£'000
At 1 January 2017
123
344
1
2,033
7,031
87,021
-
96,553
Total comprehensive income for the year
Profit for the financial year
-
-
-
-
-
14,310
35
14,345
Other comprehensive income/(expense):
- exchange adjustments
-
-
-
-
1,439
-
-
1,439
- actuarial gain on pension schemes
-
-
-
-
-
1,455
-
1,455
- net movement on deferred tax relating to pension asset
-
-
-
-
-
(570)
-
(570)
Total comprehensive income for the year
-
-
-
-
1,439
15,195
35
16,669
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 and 1 January 2018
123
344
1
2,033
8,470
92,408
189
103,568
Total comprehensive income for the year
Profit for the financial year
-
-
-
-
-
16,077
113
16,190
Other comprehensive income/(expense):
- exchange adjustments
-
-
-
-
361
-
-
361
- actuarial loss on pension schemes
-
-
-
-
-
(129)
-
(129)
- net movement on deferred tax relating to pension asset
-
-
-
-
-
30
-
30
Total comprehensive income for the year
-
-
-
-
361
15,978
113
16,452
Contributions by and distributions to owners of the Company:
- dividends
-
-
-
-
-
(9,809)
-
(9,809)
At 31 December 2018
123
344
1
2,033
8,831
98,577
302
110,211
The merger reserve is not a distributable reserve. The other reserve relates entirely to the effects of changes in foreign currency exchange rates.
Consolidated statement of financial position
as at 31 December 2018
2018
2017
£'000
£'000
Assets
Non-current assets
Property, plant and equipment
12,077
11,589
Intangible assets
63,695
61,724
Deferred tax asset
811
589
Retirement benefit surplus
4,430
4,397
81,013
78,299
Current assets
Inventories
13,293
11,749
Trade and other receivables
28,732
26,063
Cash and cash equivalents
26,110
24,652
68,135
62,464
Total assets
149,148
140,763
Liabilities
Current liabilities
Trade and other payables
(22,713)
(19,576)
Income tax liabilities
(1,731)
(1,699)
Borrowings
(2,125)
(11,125)
Derivative financial instruments
-
(54)
Provision for liabilities and charges
(5)
-
(26,574)
(32,454)
Non-current liabilities
Trade and other payables
(922)
(1,003)
Borrowings
(7,441)
-
Derivative financial instruments
(41)
-
Deferred tax liabilities
(1,898)
(1,830)
Retirement benefit obligations
(1,880)
(1,721)
Provision for liabilities and charges
(181)
(187)
(12,363)
(4,741)
Total liabilities
(38,937)
(37,195)
Net assets
110,211
103,568
Shareholders' equity
Ordinary shares
123
123
Share premium
344
344
Capital redemption reserve
1
1
Merger reserve
2,033
2,033
Other reserves
8,831
8,470
Retained earnings
98,577
92,408
Equity attributable to owners of the Parent Company
109,909
103,379
Non-controlling interest
302
189
Total equity
110,211
103,568
Consolidated statement of cash flows
for the year ended 31 December 2018
2018
2017
£'000
£'000
Cash flows from operating activities
Cash generated from operations
28,385
25,182
Interest paid
(147)
(368)
Income tax paid
(7,393)
(7,249)
Net cash generated from operating activities
20,845
17,565
Cash flows from investing activities
Acquisition of subsidiary undertakings (net of cash acquired)
(4,274)
(1,220)
Purchases of property, plant and equipment
(3,551)
(3,384)
Proceeds from the sale of property, plant and equipment
398
349
Purchases of intangible assets
(746)
(600)
Interest received
12
30
Net cash used in investing activities
(8,161)
(4,825)
Cash flows from financing activities
Repayments of borrowings
(1,614)
(1,809)
Dividends paid to Company's shareholders
(9,809)
(9,808)
Contribution from non-controlling interest
-
154
Net cash used in financing activities
(11,423)
(11,463)
Effects of exchange rates on cash and cash equivalents
197
773
Net increase in cash in the year
1,458
2,050
Cash and cash equivalents at the beginning of the year
24,652
22,602
Cash and cash equivalents at the end of the year
26,110
24,652
Notes to the financial statements
for the year ended 31 December 2018
1 Earnings per share
The calculation of basic earnings per ordinary share ("EPS") is based on the profit on ordinary activities after taxation of £16,077,000 (2017: £14,310,000) and on 12,261,477 (2017: 12,261,477) ordinary shares, being the weighted average number of ordinary shares in issue during the year.
For diluted EPS, the weighted average number of shares in issue is adjusted to assume conversion of all dilutive potential 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.
2018
2017
£'000
Pence
£'000
Pence
Profit on ordinary activities after taxation
16,077
131.1
14,310
116.7
2 This preliminary announcement does not constitute the Company's statutory accounts within the meaning of Section 434 of the Companies Act 2006.
The results for the year ended 31 December 2018 have been extracted from the full accounts of the Group for that year which received an unqualified auditor's report and which have not yet been delivered to the Registrar of Companies. The financial information for the year ended 31 December 2017 is derived from the statutory accounts for that year, which have been delivered to the Registrar of Companies. The report of the auditor on those filed accounts was unqualified. The accounts for the year ended 31 December 2018 and 31 December 2017 did not contain a statement under s498 (1) to (4) of the Companies Act 2006 or under s237(1) to (4) of the Companies Act 1985.
This preliminary announcement has been prepared in accordance with International Financial Reporting Standards. The Group will post its annual report and accounts to shareholders on 20 May 2019. A copy of the annual report and accounts can be found on the company's webpage (www.londonsecurity.org).
Enquiries
London Security plc
Richard Pollard
Company Secretary
Tel: 01422 372 852
WH Ireland Limited
Chris Fielding
Tel: 0207 220 1666
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