Lon.sec Regulatory News (LSC)

London Security plc

Half Yearly Report

Chairman's statement

Financial highlights:

Revenue

£47.8 million

2012: £47.6 million

Operating profit

£9.0 million

2012: £9.8 million

TRADING AND PROSPECTS

The financial highlights illustrate that the Group's revenue increased by £0.2 million (0.4%) to £47.8 million and operating profit decreased by £0.8 million (8.2%) to £9.0 million. This decline in profit arises from two main sources. Firstly, 2011 and 2012's figures benefited from legislative changes concerning PFOS foam extinguishers which resulted in higher than normal sales in those periods. This ceased in the second quarter of 2012. Secondly, the Group has been successful in replacing lost customers with new customers but generally at lower margins. However, the movement in the Sterling to Euro average exchange rate (1.21 to 1.18) has increased like for like revenue by £1.0 million and operating profit by £0.2 million.

The profit before income tax in 2012 of £15.5 million included £5.9 million from the sale of land in Elland, West Yorkshire. Adjusting for this item, profit before income tax would have been £9.6 million.

The Group's borrowings were refinanced in May 2013 and the Group has a new £20 million facility until 2018. This will be repaid at the rate of £2 million per year over five years with a £10 million repayment at maturity. The multi-currency loan will be denominated £6 million in Sterling and £14 million in Euros. The Group has entered into interest rate agreements fixing LIBOR to 1.04% and EURIBOR to 0.85% plus a margin of between 0.6% and 1.5% to take advantage of the low market interest rates prevailing at the time. The agreements took effect from May 2013 and remain in effect until the loans are repaid in 2018.

In the six months to the end of June the Group has acquired a total of five well established businesses in the UK and Austria at a cost of £3.3 million (2012: eight businesses at a cost of £1.2 million). In July three further acquisitions were made in the UK 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.

Economic growth in the Group's market has been depressed. Despite signs of a slow recovery, our market reflects reduced customer confidence and consequent reluctance to invest in our products. However, as a leading provider in this market with a well-diversified and loyal customer base, the Board believes we are in a strong position to face further challenges in 2013.

DIVIDENDS

A final dividend in respect of 2012 of £0.38 per ordinary share was paid to shareholders on 8 July 2013.

J.G. Murray

Chairman

30 September 2013

Consolidated income statement

for the six months ended 30 June 2013

* 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 2013

Consolidated statement of changes in equity

for the six months ended 30 June 2013

Consolidated statement of financial position

for the six months ended 30 June 2013

Consolidated statement of cash flow

for the six months ended 30 June 2013

Notes to the financial statements

for the six months ended 30 June 2013

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 2013 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 2012, except for the following change.

Standard effective from 1 Jan 2013 that would be expected to impact the Group:

> IAS 19 revised, which contains the requirement to calculate net interest income or expense using the discount rate used to measure the defined benefit obligation.

Comparative figures for the year ended 31 December 2012 have been extracted from the statutory accounts for the year ended 31 December 2012 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 and did not contain 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, income and expense. Actual results may differ from these estimates.

3 Profit on the disposal of fixed assets

In January 2012, one of the Group's subsidiaries sold part of its site. The sale realised £7.2 million and the profit on the sale was £5.9 million.

4 Earnings per share

The calculation of basic earnings per ordinary share is based on the profit on ordinary activities after taxation of £5,949,000 (2012: £12,341,000) and on 12,261,477 (2012: 12,261,496) 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.

5 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 2013. In accordance with IAS 19 such a valuation will be prepared for the purposes of the Group's Annual Report and Accounts 2013.

For further information, please contact:

London Security plc

Richard Pollard

Company Secretary Tel : 01422 372852

WH Ireland Limited

Andrew Kitchingman Tel : 0113 394 6619

Nick Field Tel : 0207 220 1666