REG - London Security PLC - Interim results for six months ended 30 June 2019

London SecurityAnnouncement

12/09/2019 07:00

RNS Number : 0254M
London Security PLC
12 September 2019
 


London Security PLC
 
(the "Group")
 
Interim results for six months ended 30 June 2019
 
 
Chairman's statement
J.G. Murray, Chairman
 
Financial highlights
•     Revenue £71.7m (2018: £66.7m)
•     Operating profit £10.5m (2018: £10.1m)
•     Earnings per share 57.9p (2018: 56.2p)
 
TRADING
The financial highlights illustrate that the Group's revenue increased by £5.0 million (7.5%) to £71.7 million. The movement in exchange rates had an adverse effect of £0.5 million on reported turnover. The underlying revenue increase can largely be attributed to business acquisitions and improvements in the scheduling of service work
Operating profit increased by £0.4 million (4.0%) to £10.5 million. This increase in operating profit is again primarily caused by business acquisitions and improved service scheduling.
ACQUISITIONS
In the six months to the end of June, the Group has acquired a total of ten well established businesses at a cost of £3.0 million (2018: three businesses at a cost of £1.9 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 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.
IFRS 16 "Leases" was applicable from 1 January 2019. The application of the standard has resulted in the recognition of additional right-of-use assets and lease liabilities which have been disclosed separately in the Statement of Financial Position. The standard is discussed further in note 2, Basis of preparation. The impact on the Income Statement was not material.
 
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 become any easier in 2019. 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 2018 of £0.40 per ordinary share was paid to shareholders on 5 July 2019.
J.G. Murray
Chairman
 
 
12 September 2019
 




 
Consolidated income statement
for the six months ended 30 June 2019
 



 


 


Unaudited


Unaudited


Audited




 


 


six months


six months


year




 


 


ended


ended


ended




 


 


30 June


30 June


31 December




 


 


2019


2018


2018





 




Note




£'000




£'000




£'000





Revenue


 


71,737


66,726


137,711





Cost of sales




 




(17,932)




(15,402)




(31,780)





Gross profit


 


53,805


51,324


105,931




Distribution costs


 


(26,253)


(25,215)


(50,593)





Administrative expenses




 




(17,025)




(15,969)




(32,163)






Operating profit




 




10,527




10,140




23,175





EBITDA*


 


14,474


13,313


29,557





Depreciation and amortisation




 




(3,947)




(3,173)




(6,382)






Operating profit




 




10,527




10,140




23,175





Finance income


 


23


28


131





Finance costs




 




(121)




(97)




(171)






Finance costs - net




 




(98)




(69)




(40)





Profit before income tax


 


10,429


10,071


23,135





Income tax expense




 




(3,237)




(3,133)




(6,945)






Profit for the period




 




7,192




6,938




16,190





Profit is attributable to


 


 












Equity shareholders of the Company


 


7,103


6,891


16,077





Non-controlling interest




 




89




47




113






 




 




7,192




6,938




16,190





Earnings per share


 
















Basic and diluted


3


57.9p


56.2p


131.1p




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 2019
 



 


Unaudited


Unaudited


Audited




 


six months


six months


year




 


ended


ended


ended




 


30 June


30 June


31 December




 


2019


2018


2018





 




£'000




£'000




£'000






Profit for the financial period




7,192




6,938




16,190





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


47


(418)


361




- actuarial gain recognised in the Nu-Swift pension scheme


-


-


16




- movement on deferred tax relating to the Nu-Swift pension scheme


-


-


(6)




- actuarial loss recognised in the Ansul pension scheme


-


-


(145)





- movement on deferred tax relating to the Ansul pension scheme




-




-




36






Other comprehensive income for the period, net of tax




47




(418)




262






Total comprehensive income for the period




7,239




6,520




16,452




 




 
Consolidated statement of changes in equity
for the six months ended 30 June 2019
 



 


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 2018




123




344




1




2,033




8,470




92,408




189




103,568





Comprehensive income for the period:




































- profit for the period


-


-


-


-


-


6,891


47


6,938





- exchange adjustments




-




-




-




-




(418)




-




-




(418)






Total comprehensive income for the period




-




-




-




-




(418)




6,891




47




6,520






At 30 June 2018




123




344




1




2,033




8,052




99,299




236




110,088





Comprehensive income for the period:




































- profit for the period


-


-


-


-


-


9,186


66


9,252




- exchange adjustments


-


-


-


-


779


-


-


779




- actuarial loss on pension schemes


-


-


-


-


-


(129)


-


(129)





- movement on deferred tax relating to pension schemes




-




-




-




-




-




30




-




30






Total comprehensive income for the period




-




-




-




-




779




9,087




66




9,932





Contributions by and distributions to owners of the Company:





































- dividends




-




-




-




-




-




(9,809)




-




(9,809)






Total contributions to owners of the Company




-




-




-




-




-




(9,809)




-




(9,809)






At 31 December 2018




123




344




1




2,033




8,831




98,577




302




110,211





Comprehensive income for the period:




































- profit for the period


-


-


-


-


-


7,103


89


7,192




- distribution to non-controlling interest


-


-


-


-


-


-


(23)


(23)





- exchange adjustments




-




-




-




-




47




-




-




47






Total comprehensive income for the period




-




-




-




-




47




7,103




66




7,216






At 30 June 2019




123




344




1




2,033




8,878




105,680




368




117,427




 




 
Consolidated statement of financial position
as at 30 June 2019
 



 


Unaudited


Unaudited


Audited




 


as at


as at


as at




 


30 June


30 June


31 December




 


2019


2018


2018





 




£'000




£'000




£'000





Assets


 


 








Non-current assets


 


 








Property, plant and equipment


12,921


11,732


12,077




Right of use assets


2,752


-


-




Intangible assets


65,166


61,698


63,695




Deferred tax asset


807


589


811





Retirement benefit surplus




4,430




4,397




4,430






 




86,076




78,416




81,013





Current assets


 


 








Inventories


14,613


12,437


13,293




Trade and other receivables


29,129


27,725


28,732





Cash and cash equivalents




28,869




29,256




26,110






 




72,611




69,418




68,135






Total assets




158,687




147,834




149,148





Liabilities


 


 








Current liabilities


 


 








Trade and other payables


(23,808)


(21,503)


(22,713)




Income tax liabilities


(1,145)


(917)


(1,731)




Borrowings


(2,125)


(2,100)


(2,125)




Lease liabilities


(1,239)


-


-




Derivative financial instruments


-


-


-





Provision for liabilities and charges




(5)




-




(5)






 




(28,322)




(24,520)




(26,574)





Non-current liabilities


 


 








Trade and other payables


(1,026)


(995)


(922)




Borrowings


(6,379)


(8,404)


(7,441)




Lease liabilities


(1,535)


-


-




Derivative financial instruments


(54)


(34)


(41)




Deferred income tax liabilities


(1,875)


(1,886)


(1,898)




Retirement benefit obligations


(1,880)


(1,705)


(1,880)





Provision for liabilities and charges




(189)




(202)




(181)






 




(12,938)




(13,226)




(12,363)






Total liabilities




(41,260)




(37,746)




(38,937)






Net assets




117,427




110,088




110,211





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


8,878


8,052


8,831





Retained earnings




105,680




99,299




98,577





Equity attributable to owners of the Parent Company


117,059


109,852


109,909





Non-controlling interest




368




236




302






Total equity




117,427




110,088




110,211




 




 
Consolidated statement of cash flow
for the six months ended 30 June 2019
 



 


Unaudited


Unaudited


Audited




 


six months


six months


year




 


ended


ended


ended




 


30 June


30 June


31 December




 


2019


2018


2018





 




£'000




£'000




£'000





Cash flows from operating activities


 


 








Cash generated from operations


13,953


13,156


28,385




Interest paid


(74)


(97)


(147)





Income tax paid




(4,414)




(4,374)




(7,393)






Net cash generated from operating activities




9,465




8,685




20,845





Cash flows from investing activities


 


 








Acquisition of subsidiary undertakings


(1,007)


(1,537)


(4,274)




Purchases of property, plant and equipment


(2,536)


(1,898)


(3,551)




Proceeds from sale of property, plant and equipment


109


114


398




Recognition of right-of-use assets


(3,542)


-


-




Purchases of intangible assets


(2,001)


(115)


(746)




Proceeds from sale of intangible assets


-


20


-





Interest received




23




8




12






Net cash used in investing activities




(8,954)




(3,408)




(8,161)





Cash flows from financing activities


 


 








Repayments of borrowings


(1,040)


(557)


(1,614)




Payment of lease liabilities


(831)


-


-




New lease liabilities


3,542


-


-




Dividends paid to Company's shareholders


-


-


(9,809)





Distribution to non-controlling interest




(23)




-




-






Net cash used in financing activities




1,648




(557)




(11,423)






Effects of exchange rates on cash and cash equivalents




600




(116)




197





Net increase in cash in the period


2,759


4,604


1,458





Cash and cash equivalents at the beginning of the period




26,110




24,652




24,652






Cash and cash equivalents at the end of the period




28,869




29,256




26,110




 




 
Notes to the financial statements
for the six months ended 30 June 2019
 
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 2019 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 2018. 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 2018 have been extracted from the statutory accounts for the year ended 31 December 2018, 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.
IFRS 16 "Leases" was issued in January 2016 with an effective date of 1 January 2019. The standard specifies how leases are recognised, presented, measured and disclosed. The majority of the Group's lease commitments have been brought onto the balance sheet together with corresponding right of use assets. In the Income Statement, the existing operating lease charge, which is recognised within operating profit, has been replaced by a depreciation charge in respect of the right of use asset. In addition there is an interest cost in relation to the lease liability which is recognised within finance costs.
The Group has applied IFRS 16 using the modified retrospective approach and therefore the comparative information has not been restated and continues to be reported under IAS 17.
3 Earnings per share
The calculation of basic earnings per ordinary share is based on the profit on ordinary activities after taxation of £7,103,000 (2018: £6,891,000) and on 12,261,477 (2018: 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




 


2019


2018


2018





 




£'000




£'000




£'000






Profit on ordinary activities after taxation




7,103




6,891




16,077






Basic earnings per ordinary share




57.9p




56.2p




131.1p




 
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 2019. In accordance with IAS 19 such a valuation will be prepared for the purposes of the Group's Annual Report and Accounts 2019.
 
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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