REG - London Security PLC - Half-year Report <Origin Href="QuoteRef">LSC.L</Origin>

London SecurityAnnouncement

20/09/2017 07:06

RNS Number : 2173R
London Security PLC
20 September 2017
Chairman's statement
Financial highlights
Revenue 60.6m
2016: 56.3m
Operating profit 9.5m
2016: 9.3m
Earnings per share 51.5p
2016: 49.6p
TRADING
The financial highlights illustrate that the Group's revenue increased by 4.3 million (7.6%) to 60.6 million. However, these results are impacted by the movement in the Euro to Sterling average exchange rate over the period, which has decreased from 1.28 to 1.16. This movement in exchange rates had a positive effect of 4.5 million on reported turnover. If the 2017 results had been translated at 2016 rates, revenue would have been 56.1 million instead of 60.6 million, an adjusted decrease of 0.4%. The revenue movement can be attributed to business acquisitions, fluctuations in service patterns and increased competition in our core market.
Operating profit increased by 0.2 million (2.2%) to 9.5 million. Adjusting for the change in exchange rates on the same basis as above, operating profit would have been 8.7 million instead of 9.5 million (an adjusted decrease of 6.5%). Operating profit as a percentage of turnover has fallen from 16.5% to 15.7% as costs including amortisation of service contracts and brands have increased.
ACQUISITIONS
In the six months to the end of June, the Group has acquired a total of six well established businesses at a cost of 1.1 million (2016: seven businesses at a cost of 1.7 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 2013 the Group entered into a new 19.7 million facility until 2018. This facility reaches maturity in May 2018 and the outstanding portion of this facility, 11.9 million is therefore disclosed as short term borrowings in this Interim Statement. Negotiations are in progress and your Board is confident of renewing this facility prior to maturity in 2018.
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 get any easier in 2017. 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 2016 of 0.40 per ordinary share was paid to shareholders on 5 July 2017.
J.G. Murray
Chairman
19 September 2017

Consolidated income statement
for the six months ended 30 June 2017
Unaudited
Unaudited
Audited
six months
six months
year
ended
ended
ended
30 June
30 June
31 December
2017
2016
2016
Note
'000
'000
'000
Revenue
60,631
56,295
114,845
Cost of sales
(12,213)
(12,053)
(23,638)
Gross profit
48,418
44,242
91,207
Distribution costs
(23,682)
(20,765)
(42,191)
Administrative expenses
(15,250)
(14,152)
(28,154)
Operating profit
9,486
9,325
20,862
EBITDA*
12,382
11,926
26,321
Depreciation and amortisation
(2,896)
(2,601)
(5,459)
Operating profit
9,486
9,325
20,862
Finance income
87
19
176
Finance costs
(187)
(258)
(433)
Finance costs - net
(100)
(239)
(257)
Profit before income tax
9,386
9,086
20,605
Income tax expense
(3,068)
(2,999)
(6,822)
Profit for the period attributable to equityshareholders of the Company
6,318
6,087
13,783
Earnings per share
Basic and diluted
3
51.5p
49.6p
112.4p
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 2017
Unaudited
Unaudited
Audited
six months
six months
year
ended
ended
ended
30 June
30 June
31 December
2017
2016
2016
'000
'000
'000
Profit for the financial period
6,318
6,087
13,783
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
836
3,503
4,441
- actuarial gain recognised in the Nu-Swift pension scheme
-
-
263
- movement on deferred tax relating to the Nu-Swift pension scheme
-
-
(92)
- actuarial loss recognised in the Ansul pension scheme
-
-
(200)
- movement on deferred tax relating to the Ansul pensionscheme
-
-
61
Other comprehensive income for the period, net of tax
836
3,503
4,473
Total comprehensive income for the period
7,154
9,590
18,256


Consolidated statement of changes in equity
for the six months ended 30 June 2017





Profit
Share
Share
Capital
Merger
Other
and loss
capital
premium
redemption
reserve
reserve
account
Total
'000
'000
'000
'000
'000
'000
'000
At 1 January 2016
123
344
1
2,033
2,590
82,932
88,023
Comprehensive income for the period:







- profit for the period
-
-
-
-
-
6,087
6,087
- exchange adjustments
-
-
-
-
3,503
-
3,503
Total comprehensive income for the period
-
-
-
-
3,503
6,087
9,590
At 30 June 2016
123
344
1
2,033
6,093
89,019
97,613
Comprehensive income for the period:







- profit for the period
-
-
-
-
-
7,696
7,696
- exchange adjustments
-
-
-
-
938
-
938
- actuarial gain on pension schemes
-
-
-
-
-
63
63
- movement on deferred tax relating topension schemes
-
-
-
-
-
(31)
(31)
Total comprehensive income for the period
-
-
-
-
938
7,728
8,666
Contributions by and distributions toowners of the Company:
- dividends
-
-
-
-
-
(9,726)
(9,726)
Total contributions by and distributions toowners of the Company
-
-
-
-
-
(9,726)
(9,726)
At 31 December 2016
123
344
1
2,033
7,031
87,021
96,553
Comprehensive income for the period:







- profit for the period
-
-
-
-
-
6,318
6,318
- exchange adjustments
-
-
-
-
836
-
836
Total comprehensive income for the period
-
-
-
-
836
6,318
7,154
At 30 June 2017
123
344
1
2,033
7,867
93,339
103,707


Consolidated statement of financial position
as at 30 June 2017
Unaudited
Unaudited
Audited
as at
as at
as at
30 June
30 June
31 December
2017
2016
2016
'000
'000
'000
Assets
Non-current assets
Property, plant and equipment
11,301
10,596
10,937
Intangible assets
62,625
62,358
62,749
Deferred tax asset
948
787
919
Retirement benefit surplus
3,574
3,196
3,574
78,448
76,937
78,179
Current assets
Inventories
12,408
11,166
11,095
Trade and other receivables
23,687
23,707
23,138
Cash and cash equivalents
27,542
25,997
22,602
63,637
60,870
56,835
Total assets
142,085
137,807
135,014
Liabilities
Current liabilities
Trade and other payables
(20,557)
(21,168)
(19,344)
Income tax liabilities
(633)
(839)
(1,180)
Borrowings
(11,940)
(1,836)
(1,870)
Derivative financial instruments
(115)
-
-
Provision for liabilities and charges
(35)
(35)
(35)
(33,280)
(23,878)
(22,429)
Non-current liabilities
Trade and other payables
(960)
(803)
(957)
Borrowings
-
(11,519)
(10,789)
Derivative financial instruments
-
(244)
(172)
Deferred income tax liabilities
(1,633)
(1,649)
(1,705)
Retirement benefit obligations
(2,339)
(1,909)
(2,279)
Provision for liabilities and charges
(168)
(192)
(130)
(5,098)
(16,316)
(16,032)
Total liabilities
(38,378)
(40,194)
(38,461)
Net assets
103,707
97,613
96,553
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
7,867
6,093
7,031
Retained earnings
93,339
89,019
87,021
Total shareholders' equity
103,707
97,613
96,553


Consolidated statement of cash flow
for the six months ended 30 June 2017
Unaudited
Unaudited
Audited
six months
six months
year
ended
ended
ended
30 June
30 June
31 December
2017
2016
2016
'000
'000
'000
Cash flows from operating activities
Cash generated from operations
12,673
14,436
26,059
Interest paid
(187)
(204)
(408)
Income tax paid
(4,310)
(4,391)
(7,213)
Net cash generated from operating activities
8,176
9,841
18,438
Cash flows from investing activities
Acquisition of subsidiary undertakings
(785)
(1,324)
(2,222)
Purchases of property, plant and equipment
(1,590)
(1,333)
(2,774)
Proceeds from sale of property, plant and equipment
162
168
323
Purchases of intangible assets
(659)
(2,024)
(1,662)
Interest received
30
19
43
Net cash used in investing activities
(2,842)
(4,494)
(6,292)
Cash flows from financing activities
Repayments of borrowings
(850)
(869)
(1,819)
Dividends paid to Company's shareholders
-
-
(9,726)
Net cash used in financing activities
(850)
(869)
(11,545)
Effects of exchange rates on cash and cash equivalents
456
1,783
2,265
Net increase in cash in the period
4,940
6,261
2,866
Cash and cash equivalents at the beginning of the period
22,602
19,736
19,736
Cash and cash equivalents at the end of the period
27,542
25,997
22,602


Notes to the financial statements
for the six months ended 30 June 2017
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 2017 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 2016. 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 2016 have been extracted from the statutory accounts for the year ended 31 December 2016, 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.
3 Earnings per share
The calculation of basic earnings per ordinary share is based on the profit on ordinary activities after taxation of 6,318,000 (2016: 6,087,000) and on 12,261,477 (2016: 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
2017
2016
2016
'000
'000
'000
Profit on ordinary activities after taxation
6,318
6,087
13,783
Basic earnings per ordinary share
51.5p
49.6p
112.4p
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 2017. In accordance with IAS 19 such a valuation will be prepared for the purposes of the Group's Annual Report and Accounts 2017.
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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