Lon.sec Regulatory News (LSC)

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

· 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

Consolidated statement of changes in equity

for the six months ended 30 June 2017

Consolidated statement of financial position

as at 30 June 2017

Consolidated statement of cash flow

for the six months ended 30 June 2017

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.

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