Lon.sec Regulatory News (LSC)

1 May 2008 07:01

London Security PLC01 May 2008 LONDON SECURITY PLC 1 May 2008 PRELIMINARY ANNOUNCEMENT FINANCIAL HIGHLIGHTS Financial highlights of the audited results for the year ended 31 December 2007compared with the year ended 31 December 2006 are as follows: • Turnover of £66.6million (2006: £64.4million)• Operating profit before depreciation of £18.8million (2006: £14.7million)• Operating profit of £16.8million (2006: £12.7million)• Profit on ordinary activities before taxation of £17.2million (2006: £11.3million) TRADING REVIEW The financial highlights illustrate that 2007 has been a period of profitimprovement for the Group. The Group's operating profit increased by 32% to£16,793,000. In mainland Europe, the Group has gone from strength to strength, building uponits strong position in servicing fire extinguishers and hose reels and growingour new activities through our multi-service strategy offering customers acomplete range of services around the first intervention on fires and first-aid.This strategy has enabled the Group's evolution from solely an extinguishersupplier to the customers' safety partner. In the UK, the profit increase reflects a strong customer response to newcontracts and sales initiatives implemented in late 2006. Investment intraining of the field force and a changed payment package has improved marketpenetration. In addition, we have carried out a cost review, and identifiedcost efficiencies which were successfully implemented into the Group. DISPOSAL OF SWISS SUBSIDIARIES In December 2007, the Group completed the disposal of its Swiss subsidiariesannounced in October 2007, approved by shareholders on 1 November 2007, for thecash consideration of £5,991,000 to a company owned by the Chairman. TheDirectors including the Independent Directors were advised by Brewin DolphinLimited, the company's Nominated Advisor, that the terms of the disposal werefair and reasonable insofar as all shareholders were concerned. This disposalrealised a profit of £4,216,000 which was distributed by way of a specialdividend on 30 November 2007. 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 theupper end of the price spectrum where an adequate return is envisaged by theBoard. A strategy was implemented in 2006 to replace the cold-calling field sales forcewith an acquisition team. This has started to escalate and is provingsuccessful in growing the business for the future. In 2007, we have acquired numerous contracts to service fire equipmentthroughout the UK from eight separate sources. No fixed overhead was added as aresult of these acquisitions. MANAGEMENT AND STAFF 2007 was a year in which the staff performed well and, on your behalf, I wouldlike to express thanks and appreciation for their contribution. PENSION CURTAILMENT OFFER During the financial period, an offer was made to all deferred members of ourdefined benefits pension scheme in the UK, giving them the opportunity totransfer their accrued pension rights to an alternative pension scheme provider.The financial effect of the offer has been to reduce the pension schemeliability by £3,787,000. DIVIDENDS A special dividend in respect of 2007 of £0.50 per ordinary share was paid on 30November 2007. The Board is not recommending the payment of a final dividend inrespect of 2007. A first interim dividend in respect of 2008 of £0.57 per ordinary share was paidto shareholders on 25 April 2008. A second interim dividend of £0.73 perordinary share is to be paid on 22 May 2008 to shareholders on the register at30 April 2008. Dividend policy continues to be reviewed regularly by the Board. FINANCING In order to pay the interim dividends referred to above the Group has arrangedan additional £15 million of bank loans with Lloyds Bank plc. FUTURE PROSPECTS The outlook for 2008 is for continued but steady progress consolidating upon theimprovements achieved in 2007. Consolidated Income StatementFor the year ended 31 December 2007 2007 2006 Notes £'000 £'000Revenue 66,605 64,426Cost of sales (11,351) (11,719) Gross profit 55,254 52,707 Distribution costs (22,453) (24,490)Administrative expenses (16,008) (15,481) Operating profit before depreciation 18,785 14,723Depreciation (1,992) (1,987)Operating profit 16,793 12,736 Profit on disposal of subsidiary undertakings 4,216 - Finance income 952 692Finance costs (4,749) (2,165)Finance costs - net (3,797) (1,473) Profit before income tax 17,212 11,263 Income tax expense (4,017) (3,647) Profit for the year attributable to equityshareholders of the company 13,195 7,616Earnings per share Basic and diluted 1 107.3p 61.9pDividendsDividends paid per share 50.0p 12.0p Consolidated Balance SheetAs at 31 December 2007 2007 2006 £'000 £'000AssetsNon Current Assets Property, plant and equipment 7,863 7,053 Intangible assets 47,236 46,825 Deferred tax asset 743 1,258 55,842 55,136Current Assets Inventories 5,687 4,593 Trade and other receivables 14,358 14,746 Cash and cash equivalents 11,807 8,676 31,852 28,015Total Assets 87,694 83,151LiabilitiesCurrent Liabilities Trade and other payables (14,475) (11,788) Income tax liabilities (1,891) (2,174) Borrowings (5,388) (5,051) Provision for liabilities and charges (49) (350) (21,803) (19,363)Non Current Liabilities Trade and other payables (43) (54) Borrowings (27,022) (30,395) Derivative financial instruments (19) (140) Deferred tax liabilities (100) (46) Retirement benefit obligations (949) (4,133) Provision for liabilities and charges (130) (157) (28,263) (34,925)Total Liabilities (50,066) (54,288)Net Assets 37,628 28,863Shareholders' equity Ordinary shares 123 123 Merger reserve 2,033 2,033 Other reserves 1,071 (257) Retained earnings 34,401 26,964Total Shareholders' equity 37,628 28,863 Consolidated Cash Flow StatementFor the year ended 31 December 2007 2007 2006 £'000 £'000Cash flows from operating activitiesCash generated from operations 19,328 14,380Interest paid (2,033) (1,866)Income tax paid (4,556) (3,307)Net cash generated from operating activities 12,739 9,207 Cash flows from investing activitiesAcquisition of subsidiary undertaking (231) (248)Net proceeds from sale of subsidiary undertakings 4,587 -Purchases of property, plant and equipment (2,707) (1,836)Proceeds from sale of property, plant and equipment 401 650Purchases of intangible assets (578) (32)Proceeds from sale of intangible assets 18 -Interest received 278 147 Net cash generated by/(used in) investing activities 1,768 (1,319) Cash flows from financing activitiesPurchase of own shares (97) -Repayments of borrowings (5,133) (5,858)Capital repayment of finance leases - (131)Dividends paid to company's shareholders (6,146) (1,476) Net cash used in financing activities (11,376) (7,465) Net increase in cash in the year 3,131 423Cash and cash equivalents at beginning of the year 8,676 8,253Cash and cash equivalents at the end of the year 11,807 8,676 Consolidated statement of recognised income and expensefor the year ended 31 December 2007 2007 2006 Notes £'000 £'000Profit for the financial year 13,195 7,616 Currency translation differences on foreign 1,328 (259)currency net investmentsActuarial gain recognised in pension scheme 1,473 52Movement on deferred tax relating to pension scheme (988) (16)Net income/(expenses) recognised directly in equity 1,813 (223) Total recognised income for the year attributable 15,008 7,393to equity shareholders of the company 1 Earnings per Share The calculation of basic earnings per ordinary share ("EPS") is based on theprofit on ordinary activities after taxation of £13,195,000 (2006: £7,616,000)and on 12,295,811 (2006: 12,303,198) ordinary shares, being the weighted averagenumber of ordinary shares in issue during the year. For diluted earnings per ordinary share, the weighted average number of sharesin issue is adjusted to assume conversion of all dilutive potential ordinaryshares. The only potential ordinary shares in the Group are in respect of theunapproved share option scheme. The revised weighted average number of shares is12,297,500 (2006: 12,304,394). After taking into account the effect of dilutivesecurities, the basic EPS and adjusted EPS figures are unaltered. 2007 2006 £'000 Pence £'000 PenceProfit on ordinary activities after taxation 13,195 107.3 7,616 61.9Eliminate effect of:- Profit on disposal of subsidiary undertakings (4,216) (34.3) - -Adjusted profit for the period 8,979 73.0 7,616 61.9 2 This preliminary announcement does not constitute the Company'sstatutory accounts within the meaning of Section 240 of the Companies Act 1985. The results for the year ended 31 December 2007 have been extracted from thefull accounts of the Group for that year which received an unqualified auditors'report and which have not yet been delivered to the Registrar of Companies. Thefinancial information for the year ended 31 December 2006 is derived (afteradjustments for International Financial Reporting Standards) from the statutoryaccounts for that year, which have been delivered to the Registrar of Companies.The report of the auditors on those filed accounts was unqualified.. Theaccounts for the year ended 31 December 2007 and 31 December 2006 did notcontain a statement under s237(2) or s237(3) of the Companies Act 1985. This preliminary announcement has been prepared in accordance with InternationalFinancial Reporting Standards. Enquiries: London Security plc Richard Pollard Company Secretary Tel: 01422 372852 This information is provided by RNS The company news service from the London Stock Exchange