Company Announcements

Half-year Report

Source: RNS
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 equity shareholders 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 pension scheme

-

-

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 to pension schemes

-

-

-

-

-

(31)

(31)

Total comprehensive income for the period

-

-

-

-

938

7,728

8,666

Contributions by and distributions to owners of the Company:

 

 

 

 

 

 

 

- dividends

-

-

-

-

-

(9,726)

(9,726)

Total contributions by and distributions to owners 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


This information is provided by RNS
The company news service from the London Stock Exchange
 
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