REG - London Security PLC - Interim results for six months ended 30 June 2023
22/09/2023 07:00
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RNS Number : 2710N London Security PLC 22 September 2023
London Security PLC
(the "Group" or "Company")
Interim results for the six months ended 30 June 2023
Chairman's statement
J.J. Murray, Chairman
Financial Highlights
• Revenue £108.8m (2022: £88.6m)
• Operating profit £13.7m (2022: £10.9m)
• Earnings per share 81.0p (2022: 68.3p)
Trading
The financial highlights illustrate that the Group's revenue increased by
£20.2 million (22.8%) to £108.8 million.
Operating profit increased by £2.8 million (25.7%) to £13.7 million. This
increase is partly attributed to the Group being able to recruit more direct
staff. This enabled us to address delayed inspections in the period, in turn
delivering a non-recurring benefit to the business' revenue and profit.
These results reflect the favourable movement in the Euro to Sterling average
exchange rate, which has decreased from 1.19 to 1.14. If the 2023 results from
the European subsidiaries had been translated at 2022 rates, revenue would
have been £105.2 million instead of £108.8 million, which would have
represented an increase of 18.7% on the prior year. On the same basis,
operating profit would have been £13.1 million instead of £13.7 million, an
increase of 20.2% compared to 2022.
The period under review also reflects the impact from upward input price
pressures in all of the countries in which we operate. These increases are
being driven by worldwide supply chain disruption and energy and wage
inflation following the recovery from the coronavirus pandemic and the war in
Ukraine. These supply price increases have been passed on to our customers
where possible.
Acquisitions
In the six months to the end of June, at an aggregate cost of £2.5 million,
the Group acquired two companies in Belgium, and it strengthened its presence
in Germany and the United Kingdom through the acquisition of service contracts
which have been integrated into the Group's existing subsidiaries.
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 2023 was £33.2 million. This is a
decrease of £0.8 million on the 31 December 2022 balance of £34.0 million.
Prospects
Cash management is a key consideration in difficult economic times. 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 with its
strong balance sheet and material net cash position the Group is well placed
to cope with any economic downturn.
Dividends
A final dividend in respect of 2022 of £0.42 per ordinary share was paid to
shareholders on 7 July 2023.
J.J. Murray
Chairman
22 September 2023
Consolidated income statement
for the six months ended 30 June 2023
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 June 30 June 31 December
2023 2022 2022
Note £'000 £'000 £'000
Revenue 108,845 88,613 188,898
Cost of sales (29,452) (23,380) (49,748)
Gross profit 79,393 65,233 139,150
Distribution costs (41,304) (33,937) (70,565)
Administrative expenses (24,357) (20,394) (41,420)
Operating profit 13,732 10,902 27,165
EBITDA* 19,009 15,742 37,269
Depreciation and amortisation (5,277) (4,840) (10,104)
Operating profit 13,732 10,902 27,165
Finance income 5 1 31
Finance costs (110) (100) (242)
Finance costs - net (105) (99) (211)
Profit before income tax 13,627 10,803 26,954
Income tax expense (3,692) (2,423) (6,742)
Profit for the period 9,935 8,380 20,212
Profit is attributable to:
Equity shareholders of the Company 9,935 8,374 20,203
Non-controlling interest - 6 9
9,935 8,380 20,212
Earnings per share
Basic and diluted 3 81.0p 68.3p 164.8p
Dividends
Dividends paid per share Nil Nil 84p
* 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 2023
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 June 30 June 31 December
2023 2022 2022
£'000 £'000 £'000
Profit for the financial period 9,935 8,380 20,203
Other comprehensive income/(expense):
Items that will not be reclassified subsequently to profit or loss:
- currency translation differences on foreign operation consolidation, net of (2,851) 1,087 3,602
tax
- actuarial gain recognised in the Nu-Swift pension scheme - - (111)
- movement on deferred tax relating to the Nu-Swift pension scheme - - 38
- actuarial loss recognised in the Ansul pension scheme - - 1,249
- movement on deferred tax relating to the Ansul pension scheme - - (285)
Other comprehensive income for the period, net of tax (2,851) 1,087 4,493
Equity shareholders of the Company 7,084 9,467 24,696
Non-controlling interest - - 9
Total comprehensive income for the period 7,084 9,467 24,705
Consolidated statement of changes in equity
for the six months ended 30 June 2023
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 2022 123 344 1 2,033 5,056 124,072 118 131,747
Comprehensive income for the period:
- profit for the period - - - - - 8,374 6 8,380
- exchange adjustments - - - - 1,087 - - 1,087
Total comprehensive income for the period - - - - 1,087 8,374 6 9,467
At 30 June 2022 123 344 1 2,033 6,143 132,446 124 141,214
Comprehensive income for the period:
- profit for the period - - - - - 11,829 3 11,832
- exchange adjustments - - - - 2,515 - - 2,515
- actuarial gain on pension schemes - - - - - 1,138 - 1,138
- movement on deferred tax relating to pension schemes - - - - - (247) - (247)
Total comprehensive income for the period - - - - 2,515 12,720 3 15,238
Contributions by and distributions to owners of the Company:
- dividends - - - - - (10,298) - (10,298)
Purchase of own shares - - - - - (13) - (13)
Reduction in non-controlling interest - - - - - (158) (127) (285)
At 31 December 2022 123 344 1 2,033 8,658 134,697 - 145,856
Comprehensive income for the period:
- profit for the period - - - - - 9,935 - 9,935
- exchange adjustments - - - - (2,851) - - (2,851)
Total comprehensive income for the period - - - - (2,851) 9,935 - 7,084
Purchase of own shares - - - - - (30) - (30)
At 30 June 2023 123 344 1 2,033 5,807 144,602 - 152,910
Consolidated statement of financial position
as at 30 June 2023
Unaudited Unaudited Audited
as at as at as at
30 June 30 June 31 December
2023 2022 2022
£'000 £'000 £'000
Assets
Non-current assets
Property, plant and equipment 16,430 14,186 14,940
Right-of-use assets 5,531 5,297 5,975
Intangible assets 77,848 73,643 77,076
Deferred tax asset654 654 814 694
Retirement benefit surplus 276 380 276
100,739 94,320 98,961
Current assets
Inventories 22,934 18,326 22,260
Trade and other receivables 43,907 37,800 40,699
Cash and cash equivalents 33,206 35,256 33,962
100,047 91,382 96,921
Total assets 200,786 185,702 195,882
Liabilities
Current liabilities
Trade and other payables (35,902) (30,336) (36,431)
Income tax liabilities (1,448) (564) (1,440)
Borrowings (344) (2,437) (1,598)
Lease liabilities (1,228) (1,722) (2,040)
Derivative financial instruments - (20) -
Provision for liabilities and charges (9) (14) (10)
(38,931) (35,093) (41,519)
Non-current liabilities
Trade and other payables (1,016) (1,033) (936)
Borrowings (228) (431) (236)
Lease liabilities (4,417) (3,627) (4,033)
Deferred income tax liabilities (2,213) (1,982) (2,211)
Retirement benefit obligations (921) (2,180) (953)
Provision for liabilities and charges (150) (142) (138)
(8,945) (9,395) (8,507)
Total liabilities (47,876) (44,488) (50,026)
Net assets 152,910 141,214 145,856
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 5,807 6,143 8,658
Retained earnings 144,602 132,446 134,697
Equity attributable to owners of the Parent Company 152,910 141,090 145,856
Non-controlling interest - 124 -
Total equity 152,910 141,214 145,856
Consolidated statement of cash flow
for the six months ended 30 June 2023
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 June 30 June 31 December
2023 2022 2022
£'000 £'000 £'000
Cash flows from operating activities
Cash generated from operations 14,608 13,501 30,489
Interest paid (39) (50) (111)
Income tax paid (4,737) (5,617) (7,055)
Net cash generated from operating activities 9,832 7,834 23,323
Cash flows from investing activities
Acquisition of subsidiary undertakings (2,522) (3,058) (4,078)
Purchases of property, plant and equipment (4,164) (1,923) (4,626)
Proceeds from sale of property, plant and equipment 273 380 730
Purchases of intangible assets (902) (1,661) (3,193)
Interest received 5 1 4
Net cash used in investing activities (7,310) (6,261) (11,163)
Cash flows from financing activities
Repayments of borrowings (1,173) (1,332) (2,312)
Payment of lease liabilities (1,250) (1,057) (2,356)
Dividends paid to Company's shareholders - - (10,298)
Purchase of own shares (30) - (13)
Reduction in non-controlling interest - - (285)
Net cash used in financing activities (2453) (2,389) (15,264)
Net (decrease)/increase in cash in the period 69 (816) (3,104)
Cash and cash equivalents at the beginning of the period 33,962 35,681 35,681
Effects of exchange rates on cash and cash equivalents (825) 391 1,385
Cash and cash equivalents at the end of the period 33,206 35,256 33,962
Notes to the financial statements
for the six months ended 30 June 2023
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 2023 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 2022. 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 2022 have been extracted
from the statutory accounts for the year ended 31 December 2022, 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 £9,935,000 (2022: £8,374,000) and on
12,260,684 (2022: 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
2023 2022 2022
£'000 £'000 £'000
Profit on ordinary activities after taxation 9,935 8,374 20,212
Basic earnings per ordinary share 81.0p 68.3p 164.8p
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 2023. In
accordance with IAS 19 such a valuation will be prepared for the purposes of
the Group's Annual Report and Accounts 2023.
The person responsible for arranging the release of this announcement on
behalf of the Company is Richard Pollard, Company Secretary of London Security
plc.
This announcement contains inside information for the purposes of Article 7 of
the UK version of Regulation (EU) No 596/2014 which is part of UK law by
virtue of the European Union (Withdrawal) Act 2018, as amended ("MAR"). Upon
the publication of this announcement via a Regulatory Information Service,
this inside information is now considered to be in the public domain.
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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