REG - London Security PLC - Final Results for the Year Ended 31 December 2021
18/05/2022 07:00
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RNS Number : 9067L London Security PLC 18 May 2022
London Security plc
Final Results for the Year Ended 31 December 2021
Chairman's statement
J.G. Murray, Chairman
Financial Highlights
Financial highlights of the audited results for the year ended 31 December
2021 compared with the year ended 31 December 2020 are as follows:
• revenue of £166.6 million (2020: £152.7 million);
• operating profit of £27.2 million (2020: £24.7 million);
• profit for the year of £20.0 million (2020: £18.0 million);
• cash of £35.7 million (2020: £37.5 million);
• earnings per share for the year of £1.62 (2020: £1.46); and
• a dividend per share of £0.80 (2020: £0.60).
Trading review
The financial highlights illustrate that the Group's revenue increased by
£13.9 million (9.1%) to £166.6 million and operating profit increased by
£2.5 million (10.1%) to £27.2 million. These results reflect:
• a good response to the impact of Covid-19. Many of our businesses
were severely hampered by Covid-19 throughout 2020, but the easing of
restrictions in 2021 allowed our business to capitalise on the rebound in the
economies in which we operate;
• the positive impact of acquisitions in 2021 in the United
Kingdom, Denmark, Belgium, France and Germany;
• 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 an adverse effect of £3.4 million on reported revenue and £0.7 million
on operating profit. A more detailed review of this year's performance is
given in the Financial Review and the Strategic Report.
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 acquired established security businesses and grew its
presence in Denmark, the UK, Belgium, the Netherlands, Germany and France with
the acquisition of service contracts from smaller well-established businesses
for integration into the Group's existing subsidiaries.
Management and staff
2021 was a year in which the staff were required to operate under challenging
conditions, and on behalf of the shareholders, I would like to express
thanks and appreciation for their contribution as essential
service providers. The health and wellbeing of our people is our highest
priority. 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.
Dividends
A final dividend in respect of 2020 of £0.40 per ordinary share was paid
to shareholders on 9 July 2021. An interim dividend in respect of 2021
of £0.40 per ordinary share was paid to shareholders on 26 November 2021.
The Board is recommending the payment of a final dividend in respect of 2021
of £0.42 per ordinary share to be paid on 8 July 2022 to shareholders on the
register on 10 June 2022. The shares will be marked ex-dividend on 9 June
2022.
Covid-19 impact assessment
The Group is responsible for maintaining, manufacturing and supplying fire
protection and fire suppression equipment throughout Europe and has been
designated as essential contractor status by a number of our clients including
care, health, housing and food production services. It was essential that we
continued to meet our obligations and continued to operate from our factories
and that our field-based service engineers continued to visit our customers'
sites for essential responsive and planned maintenance.
In 2021 there was largely a return to normality in our business although there
were still some restrictions on our operations in some countries to help
reduce transmission. The high level of business failures predicted by some
commentators did not occur. We must be prepared for further disruption should
further waves materialise in any of the countries in which we operate.
During 2021 the Group traded strongly despite the interruptions caused by
varying levels of temporary restrictions imposed by the governments of the
countries in which we operate. This reflects the essential nature of the
services we provide. At the date of this report we have a full service force
in the field and have experienced a strong start to 2022. The experience of
2021 shows the resilience of our business.
Future prospects
The London Security Group has a healthy balance sheet, strong cash reserves
and a track record for good cash generation. The Board therefore considers
that the Group is well placed to capitalise on the increase in demand we are
seeing for our products and services. The Group plans to continue to grow
through acquisitions
Annual General Meeting
The Annual General Meeting ("AGM") will be held at 2 Jubilee Way, Elland,
West Yorkshire HX5 9DY, on 22 June 2022 at 11.30 am. On 21 February 2022 the
UK government announced the end of restrictions in response to Covid -19. The
Company confirms that shareholders are able to attend in person should they
wish to do so. However, we strongly encourage shareholders to vote on all
resolutions by completing the enclosed form of proxy for use at that Meeting,
which you are requested to return in accordance with the instructions on the
form.
J.G. Murray
Chairman
17 May 2022
Consolidated income statement
for the year ended 31 December 2021
2021 2020
Notes £'000 £'000
Revenue 166,634 152,723
Cost of sales (43,096) (37,387)
Gross profit 123,538 115,336
Distribution costs (59,974) (56,281)
Administrative expenses (36,740) (33,027)
Net impairment gain/(loss) on financial assets 1 350 (1,328)
Operating profit 27,174 24,700
EBITDA* 36,273 33,547
Depreciation and amortisation (9,099) (8,847)
Operating profit 27,174 24,700
Finance income 28 78
Finance costs (204) (201)
Finance costs - net (176) (123)
Profit before income tax 26,998 24,577
Income tax expense (6,990) (6,536)
Profit for the year 20,008 18,041
Profit is attributable to:
Equity shareholders of the Company 19,907 17,853
Non-controlling interest 101 188
20,008 18,041
Earnings per share
Basic and diluted 2 162.4p 145.6p
* 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 2021
2021 2020
Notes £'000 £'000
Profit for the financial year 19,907 17,853
Other comprehensive (expense)/income:
Items that may be reclassified subsequently to profit or loss:
- currency translation differences on foreign currency net investments (3,782) 2,396
Items that will not be reclassified subsequently to profit or loss:
- actuarial loss recognised in the Nu-Swift Pension Scheme (70) (4,554)
- movement on deferred tax relating to the Nu-Swift Pension Scheme surplus 25 1,594
- actuarial gain/(loss) recognised in the Ansul Pension Scheme 104 (17)
- movement on deferred tax relating to the Ansul Pension Scheme deficit (26) 5
Other comprehensive expense for the year, net of tax (3,749) (576)
Equity shareholders of the Company 16,158 17,277
Non-controlling interest 101 188
Total comprehensive income for the year 16,259 17,465
Consolidated statement of changes in equity
for the year ended 31 December 2021
Share Share premium Capital 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 2020 123 344 1 2,033 6,442 106,882 349 116,174
Total comprehensive income for the year
Profit for the financial year - - - - - 17,853 188 18,041
Other comprehensive (expense)/income:
- exchange adjustments - - - - 2,396 - - 2,396
- actuarial loss on pension schemes - - - - - (4,571) - (4,571)
- net movement on deferred tax relating to pension deficit - - - - - 1,599 - 1,599
Total comprehensive (expense)/income for the year - - - - 2,396 14,881 188 17,465
Contributions by and distributions to owners of the Company:
- dividends - - - - - (7,356) - (7,356)
Distribution to non-controlling interest - - - - - - (160) (160)
At 31 December 2020 and 1 January 2021 123 344 1 2,033 8,838 114,407 377 126,123
Total comprehensive income for the year
Profit for the financial year - - - - - 19,907 101 20,083
Other comprehensive (expense)/income:
- exchange adjustments - - - - (3,782) - - (3,782)
- actuarial gain on pension schemes - - - - - 34 - 34
- net movement on deferred tax relating to pension deficit - - - - - (1) - (1)
Total comprehensive (expense)/income for the year - - - - (3,782) 19,940 101 16,259
Contributions by and distributions to owners of the Company:
- dividends - - - - - (9,807) - (9,807)
Distribution to non-controlling interest - - - - - - (150) (150)
Reduction in non-controlling interest - - - - - (468) (210) (678)
At 31 December 2021 123 344 1 2,033 5,056 124,072 118 131,747
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 2021
2021 2020
Notes £'000 £'000
Assets
Non-current assets
Property, plant and equipment 13,990 13,046
Right of use assets 4,297 3,254
Intangible assets 70,074 66,311
Deferred tax asset 778 790
Retirement benefit surplus 380 445
89,519 83,846
Current assets
Inventories 16,423 14,953
Trade and other receivables 33,021 33,174
Cash and cash equivalents 35,681 37,456
85,125 85,583
Total assets 174,644 169,429
Liabilities
Current liabilities
Trade and other payables (28,061) (27,582)
Income tax liabilities (1,607) (2,074)
Borrowings (2,430) (2,518)
Lease liabilities (1,603) (1,451)
Provision (13) (16)
(33,714) (33,641)
Non-current liabilities
Trade and other payables (1,058) (941)
Borrowings (1,340) (3,170)
Lease liabilities (2,740) (1,851)
Derivative financial instruments (20) (36)
Deferred tax liabilities (1,731) (1,146)
Retirement benefit obligations (2,144) (2,349)
Provision (150) (172)
(9,183) (9,665)
Total liabilities (42,897) (43,306)
Net assets 131,747 126,123
Shareholders' equity
Ordinary shares 123 123
Share premium 344 344
Capital redemption reserve 1 1
Merger reserve 2,033 2,033
Other reserves 5,056 8,838
Retained earnings 124,072 114,407
Equity attributable to owners of the Parent Company 131,629 125,746
Non-controlling interest 118 377
Total equity 131,747 126,123
Consolidated statement of cash flows
for the year ended 31 December 2021
2021 2020
Notes £'000 £'000
Cash flows from operating activities
Cash generated from operations 33,909 32,862
Interest paid (106) (118)
Income tax paid (7,122) (5,524)
Net cash generated from operating activities 26,681 27,220
Cash flows from investing activities
Acquisition of subsidiary undertakings (net of cash acquired) (4,871) (516)
Purchases of property, plant and equipment (4,880) (5,063)
Proceeds from the sale of property, plant and equipment 682 462
Purchases of intangible assets (2,693) (1,244)
Interest received 7 27
Net cash used in investing activities (11,755) (6,334)
Cash flows from financing activities
Repayments of borrowings (2,119) (2,121)
Payment of lease liabilities (2,072) (2,036)
Dividends paid to the Company's shareholders (9,807) (7,356)
Distribution to non-controlling interest (150) (160)
Reduction in non-controlling interest (678) -
Net cash used in financing activities (14,826) (11,673)
Net increase in cash in the year 100 9,213
Cash and cash equivalents at the beginning of the year 37,456 27,143
Effects of exchange rates on cash and cash equivalents (1,875) 1,100
Cash and cash equivalents at the end of the year 35,681 37,456
Notes to the financial statements
for the year ended 31 December 2021
1 Net impairment losses on financial assets
This charge relates entirely to the movement in expected credit losses in
respect of trade receivables.
2 Earnings per share
The calculation of basic earnings per ordinary share ("EPS") is based on the
profit on ordinary activities after taxation of £19,907,000 (2020:
£17,853,000) and on 12,261,477 (2020: 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.
2021 2020
£'000 Pence £'000 Pence
Profit on ordinary activities after taxation 19,907 162.4 17,853 145.6
3 This financial information within 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 2021
have been extracted from the full accounts of the Group for that year which
received an unmodified auditor's report, and which have not yet been delivered
to the Registrar of Companies. The financial information for the year ended
31 December 2020 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 unmodified and does not include a statement under
section 498(2) or (3) of the Companies Act 2006.
This preliminary announcement has been prepared in accordance with the
recognition and measurement principles of UK adopted international accounting
standards in conformity with the requirements of the Companies Act 2006 and in
accordance with the AIM rules. The financial information included in this
preliminary announcement does not include all the disclosures required in
accounts prepared in accordance with UK adopted international accounting
standards in conformity with the requirements of the Companies Act 2006 and
accordingly it does not itself comply with UK adopted international accounting
standards in conformity with the requirements of the Companies Act 2006. The
accounting policies used in the preparation of this preliminary announcement
have remained unchanged from those set out in the statutory accounts for the
year ended 31 December 2020. They are also consistent with those in the full
accounts for the year ended 31 December 2021, which have yet to be published.
The Group will post its annual report and accounts to shareholders on 27 May
2022, a copy of the annual report and accounts will be available on the
company's website (www.londonsecurity.org (http://www.londonsecurity.org/) ).
Enquiries
London Security plc
Richard Pollard Tel: 01422 372 852
Company Secretary
WH Ireland Limited
Chris Fielding Tel: 0207 220 1666
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