Lon.sec Regulatory News (LSC)

27 Apr 2007 13:23

London Security PLC27 April 2007 LONDON SECURITY PLC 27 APRIL 2007 PRELIMINARY ANNOUNCEMENT FINANCIAL HIGHLIGHTS Financial highlights of the audited results for the year ended 31 December 2006compared with the year ended 31 December 2005 are as follows: • Turnover of £64.4 million (2005: £64.8 million) • Earnings before interest, taxation, depreciation and amortisation ("EBITDA") of £14.7 million (2005: £14.3 million) • Operating profit before amortisation of goodwill of £12.7million (2005: £12.2million). • Operating profit of £9.6 million (2005: £9.1 million) • Profit on ordinary activities before taxation of £8.3 million (2005: £8.1 million) TRADING REVIEW The Group's operating profit has increased by £529,000 (6%), despite one-offcharges relating to reorganisation consisting of onerous lease provisions of£350,000 (2005: £Nil) and redundancy costs of £379,000 (2005: £39,000). 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 of alarms, emergency lights and modular first-aid boxes. In the UK, the profit increase is largely due to reorganisation initiatives andimproved credit control. In addition, our alarm installation division hasimproved by becoming more focussed on existing customers, systems modificationsand extensions. The Group has developed new ranges of fire extinguishers and successfullylaunched these products late in 2005 and 2006. These extinguishers showimprovements in terms of fire ratings, ease of operating and discharge times,and also enabled us to achieve cost efficiencies from implementation of thesenew ranges. Group operating profit at 15% of turnover and EBITDA at 23% of turnover continueto be among industry leading results and are expected to increase further as thefull year effects of the various initiatives implemented in 2006 are realised. 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. In December 2006 we acquired SAS, a Belgian fire alarm company. We will usethis acquisition to develop the alarm market in Belgium and other continentalcountries where we have a fire activity. In 2007, we have acquired contracts to service fire equipment from Alba Fire inNairn, Scotland. MANAGEMENT AND STAFF 2006 was a year in which the staff performed well and, on your behalf, I wouldlike to express thanks and appreciation for their contribution. SHARE BUY-BACK PROGRAMME The Board continues to believe that shareholder value will be enhanced by thepurchase, when appropriate, of our own shares. The earnings per share this yearand in 2005 has benefited from the Tender Offer exercise that was completed inJuly 2005 when the company purchased 2.2 million shares for cancellation. Consequently, at the forthcoming AGM, the Board will request that shareholdersvote in favour of a resolution to renew the authority to purchase up to 500,000ordinary shares. DIVIDENDS The Board is not recommending the payment of a final dividend this year. Futuredividend policy will be reviewed regularly by the Board. FUTURE PROSPECTS The outlook for 2007 is for continued progress and this has been reflected in asignificantly improved first quarter's trading. Consolidated Profit and Loss AccountFor the year ended 31 December 2006 2006 2005 £'000 £'000Turnover 64,426 64,811 Cost of sales (11,719) (11,888)Gross profit 52,707 52,923 Distribution costs (24,490) (24,640)Administrative expenses (18,594) (19,189)Operating profit 9,623 9,094 EBITDA* 14,723 14,258Depreciation (1,987) (2,031)Operating profit before amortisation of goodwill 12,736 12,227Amortisation of goodwill (3,113) (3,133)Operating profit 9,623 9,094 Profit on disposal of fixed asset investments - 1,474Net interest payable and similar charges (1,263) (2,062)Other finance costs (70) (366)Profit on ordinary activities before taxation 8,290 8,140 Taxation (3,647) (3,663)Profit attributable to equity shareholders 4,643 4,477 Dividends (1,476) -Profit transferred to reserves 3,167 4,477 Basic and diluted earnings per ordinary share 1 37.7p 33.4p Dividend paid per ordinary share 12.0p - *Earnings before Interest, Taxation, Depreciation and Amortisation All of the above results arose from continuing operations. Consolidated Balance SheetAs at 31 December 2006 2006 2005 £'000 £'000Fixed assets Intangible assets 43,260 46,230Tangible assets 7,103 7,823 50,363 54,053Current assets Stocks 4,593 4,897Debtors 15,148 15,676Cash at bank and in hand 8,676 8,253 28,417 28,826Creditors: amounts falling due within one yearFinance debt (5,051) (5,330)Other creditors (13,962) (15,247) (19,013) (20,577)Net current assets 9,404 8,249 Total assets less current liabilities 59,767 62,302Creditors: amounts falling due after more than one yearFinance debt (30,395) (35,958)Other creditors (54) -Provisions for liabilities and charges (553) (399) Net assets excluding pension liability 28,765 25,945Pension liability (2,875) (2,999)Net assets including pension liability 25,890 22,946 Capital and reserves Called up share capital 123 123Merger reserve 2,033 2,033Profit and loss account 23,734 20,790Equity shareholders' funds 25,890 22,946 Consolidated Cash Flow StatementFor the year ended 31 December 2006 2006 2005 £'000 £'000Net cash inflow from operating activities 14,380 10,193 Return on investments and servicing of financeInterest received 147 120Interest paid (1,866) (1,326)Net cash outflow from return on investments and servicing of finance (1,719) (1,206) TaxationCorporation tax paid (3,307) (3,629)Capital expenditure Payments to acquire intangible fixed assets - (16)Payments to acquire tangible fixed assets (1,868) (1,821)Receipts from sales of tangible fixed assets 650 292Receipt from sale of investment - 1,544Net cash outflow for capital expenditure (1,218) (1) Acquisitions and disposalsPayments to acquire subsidiary undertakings (248) -Payment of deferred consideration on prior year acquisitions - (516)Net cash outflow for acquisitions (248) (516) Equity dividends paid to shareholders (1,476) -Net cash inflow before use of financing 6,412 4,841Financing Purchase of own shares - (104)New long-term loans - 30,000Tender Offer - (30,007)Repayment of long-term loans (5,858) (4,078)Capital repayment of finance leases (131) (122)Net cash outflow from financing (5,989) (4,311) Increase in cash in the year 423 530 Consolidated Statement of Total Recognised Gains and Losses 2006 2005 £'000 £'000Profit for the financial year 4,643 4,477Currency translation differences on foreign currency net investments (259) (264)Actuarial gain recognised in the pension scheme 52 469Movement on deferred tax relating to pension scheme (16) (143)Total recognised gains for the year 4,420 4,539 1 Earnings per Share The calculation of basic earnings per ordinary share ("EPS") is based on theprofit on ordinary activities after taxation of £4,643,000 (2005: £4,477,000)and on 12,303,198 (2005: 13,389,966) 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 (see note 21). The revised weighted averagenumber of shares is 12,304,394 (2005: 13,404,033). After taking into accountthe effect of dilutive securities, the basic EPS and adjusted EPS figures areunaltered. The calculation of adjusted earnings per ordinary share is based on 12,303,198(2005: 13,389,966) ordinary shares being the weighted average number of ordinaryshares in issue in the year and on adjusted earnings which are calculated asfollows: 2006 2005 £'000 pence £'000 penceProfit on ordinary activities after taxation 4,643 37.7 4,477 33.4Eliminate effect of:Amortisation of goodwill 3,113 25.3 3,133 23.4Adjusted profit on ordinary activities after taxation 7,756 63.0 7,610 56.8 The adjusted EPS figures are given in order that shareholders may understand theeffect of goodwill amortisation on the results for the year. 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 2006 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. Theresults for the year ended 31 December 2005 have been extracted from the Group'sstatutory accounts which received an unqualified auditors' report and have beenfiled with the Registrar of Companies. The accounts for the year ended 31December 2006 and 31 December 2005 did not contain a statement under s237(2) ors237(3) of the Companies Act 1985. This preliminary announcement has been prepared in accordance with applicableaccounting standards on a basis which is consistent with that applied inprevious periods. 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