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Half Yearly Report

Tue, 30th Sep 2014 07:00

RNS Number : 8721S
London Security PLC
30 September 2014

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London Security PLC

Half Yearly Report

Unaudited Interim Statement for the six months ended 30 June 2014

Chairman's statement

Financial highlights:

Revenue

£51.3 million

2013: £47.8 million

Operating profit

£9.4 million

2013: £9.0 million

TRADING

The financial highlights illustrate that the Group's revenue increased by £3.5 million (7.3%) to £51.3 million and operating profit increased by £0.4 million (4.4%) to £9.4 million. This growth is despite the movement in the Sterling to Euro average exchange rate (1.18 to 1.22) which has reduced like for like revenue by £1.3 million and operating profit by £0.3 million.

These increases reflect the contribution from two new subsidiaries within the Group:

- Noris Feuerschitzgerate G.m.b.H. acquired in May 2013 achieved sales of £2.3 million in the 6 months to June 2014 and contributed an operating profit of £0.2 million.

- GC Fire Protection Ltd commenced operations in July 2013 and this year has recorded sales of £0.9 million and operating profit of £0.1 million.

The operating profit margin of these two new subsidiaries is below that achieved in the Group's other more established businesses. As these companies are integrated into the Group's operations your Directors are confident of improving returns.

ACQUISITIONS

In the six months to the end of June the Group has acquired a total of five well established businesses at a cost of £0.6 million (2013: five businesses at a cost of £3.3 million). The integration of these businesses into the Group has, so far, been successful and results are in line with expectations. In July a further acquisition was made in the UK at a cost of £0.5 million. 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.

PENSION SCHEME SURPLUS

As at 30 June 2013 the Nu-Swift pension scheme valuation calculated in accordance with IAS 19 resulted in a surplus of £1.8 million. This asset was not recognised in the prior year's Interim Statement as it was considered that there was no unconditional right for the Group to recover the surplus. Following further consultation of the trust deeds and external advice sought in the year to 31 December 2013, the Directors have reconsidered the guidance in IAS19 and IFRIC 14 and concluded that because of the rights upon wind-up it was now appropriate to recognise this asset in the financial statements. The surplus in this scheme as at 31 December 2013 calculated in accordance with IAS 19 was £2.4 million. This has been recognised as a non-current asset in this Interim Statement.

PROSPECTS

Economic growth in the Group's market has been depressed but our business remains strong, cash generative and well developed, with positive net funds. As a leading provider in this market with a well-diversified and loyal customer base, the Board is optimistic for further success in 2014.

DIVIDENDS

A final dividend in respect of 2013 of £0.31 per ordinary share was paid to shareholders on 8 July 2014.

J.G. Murray

Chairman

30 September 2014

Consolidated income statement

for the six months ended 30 June 2014

Unaudited

Unaudited

Audited

six months

six months

year

ended

ended

ended

30 June

30 June

31 December

2014

2013

2013

Note

£'000

£'000

£'000

Revenue

51,279

47,782

101,362

Cost of sales

(9,840)

(9,280)

(19,785)

Gross profit

41,439

38,502

81,577

Distribution costs

(19,585)

(18,196)

(37,894)

Administrative expenses

(12,430)

(11,346)

(23,729)

Operating profit

9,424

8,960

19,954

EBITDA*

11,544

10,842

24,059

Depreciation and amortisation

(2,120)

(1,882)

(4,105)

Operating profit

9,424

8,960

19,954

Finance income

93

73

377

Finance costs

(435)

(242)

(475)

Finance costs - net

(342)

(169)

(98)

Profit before income tax

9,082

8,791

19,856

Income tax expense

(2,907)

(2,842)

(6,148)

Profit for the period attributable to equity shareholders of the Company

6,175

5,949

13,708

Earnings per share

Basic and diluted

3

50.4p

48.5p

111.8p

Dividends

Dividends paid per share

Nil

Nil

76.0p

* 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 2014

Unaudited

Unaudited

Audited

six months

six months

year

ended

ended

ended

30 June

30 June

31 December

2014

2013

2013

£'000

£'000

£'000

Profit for the financial period

6,175

5,949

13,708

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

(1,108)

1,001

331

- actuarial loss recognised in the Nu-Swift pension scheme

-

-

(72)

- movement on deferred tax relating to Nu-Swift pension scheme surplus

-

-

(485)

- Nu-Swift pension surplus recognised

-

-

1,794

- actuarial loss recognised in the Ansul pension scheme

-

-

(381)

- movement on deferred tax relating to the Ansul pension scheme

-

-

166

Other comprehensive income/(expense) for the period, net of tax

(1,108)

1,001

1,353

Total comprehensive income for the period

5,067

6,950

15,061

Consolidated statement of changes in equity

for the six months ended 30 June 2014

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 2013

123

344

1

2,033

5,382

69,136

77,019

Comprehensive income for the period

Profit for the period

-

-

-

-

-

5,949

5,949

Exchange adjustments

-

-

-

-

1,001

-

1,001

Total comprehensive income for the period

-

-

-

-

1,001

5,949

6,950

At 30 June 2013

123

344

1

2,033

6,383

75,085

83,969

Comprehensive income for the period

Profit for the period

-

-

-

-

-

7,759

7,759

Exchange adjustments

-

-

-

-

(670)

-

(670)

Actuarial loss on pension schemes

-

-

-

-

-

(453)

(453)

Movement on deferred tax relating to pension schemes

-

-

-

-

-

(319)

(319)

Net pension surplus recognised

-

-

-

-

-

1,794

1,794

Total comprehensive income for the period

-

-

-

-

(670)

8,781

8,111

Contributions by and distributions to owners of the Company:

-

-

-

-

-

Dividends

(9,319)

(9,319)

Release of provision for unclaimed dividends

--

-

-

-

-

50

50

Total contributions by and distributions to owners of the Company

-

-

-

-

-

(9,269)

(9,269)

At 31 December 2013

123

344

1

2,033

5,713

74,597

82,811

Comprehensive income for the period

Profit for the period

-

-

-

-

-

6,175

6,175

Exchange adjustments

-

-

-

-

(1,108)

-

(1,108)

Total comprehensive income for the period

-

-

-

-

(1,108)

6,175

5,067

At 30 June 2014

123

344

1

2,033

4,605

80,772

87,878

Consolidated statement of financial position

for the six months ended 30 June 2014

Unaudited

Unaudited

Audited

as at

as at

as at

30 June

30 June

31 December

2014

2013

2013

£'000

£'000

£'000

Assets

Non-current assets

Property, plant and equipment

9,751

9,947

9,973

Intangible assets

57,468

57,539

58,325

Deferred tax asset

604

509

632

Retirement benefit surplus

2,469

-

2,424

Derivative financial instruments

-

-

92

70,292

67,995

71,446

Current assets

Inventories

9,221

9,637

8,826

Trade and other receivables

20,117

21,497

21,153

Cash and cash equivalents

26,203

24,645

20,565

55,541

55,779

50,544

Total assets

125,833

123,774

121,990

Liabilities

Current liabilities

Trade and other payables

(17,617)

(17,606)

(16,992)

Income tax liabilities

(383)

(631)

(866)

Borrowings

(1,823)

(1,968)

(1,878)

Provision for liabilities and charges

(4)

(4)

(4)

(19,827)

(20,209)

(19,740)

Non-current liabilities

Trade and other payables

(535)

(494)

(509)

Borrowings

(14,890)

(17,373)

(16,261)

Derivative financial instruments

(86)

(99)

-

Deferred income tax liabilities

(987)

(394)

(991)

Retirement benefit obligations

(1,630)

(1,236)

(1,678)

(18,128)

(19,596)

(19,439)

Total liabilities

(37,955)

(39,805)

(39,179)

Net assets

87,878

83,969

82,811

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

4,605

6,383

5,713

Retained earnings

80,772

75,085

74,597

Total shareholders' equity

87,878

83,969

82,811

Consolidated statement of cash flow

for the six months ended 30 June 2014

Unaudited

Unaudited

Audited

six months

six months

year

ended

ended

ended

30 June

30 June

31 December

2014

2013

2013

£'000

£'000

£'000

Cash flows from operating activities

Cash generated from operations

11,764

10,455

22,913

Interest paid

(239)

(212)

(418)

Income tax paid

(2,676)

(3,195)

(5,625)

Net cash generated from operating activities

8,849

7,048

16,870

Cash flows from investing activities

Acquisition of subsidiary undertakings

-

(3,095)

(3,002)

Purchases of property, plant and equipment

(1,126)

(1,212)

(2,537)

Proceeds from sale of intangible assets

39

-

33

Proceeds from sale of property, plant and equipment

133

156

275

Purchases of intangible assets

(667)

(482)

(2,575)

Interest received

48

43

96

Net cash used in investing activities

(1,573)

(4,590)

(7,710)

Cash flows from financing activities

Repayments of borrowings

(914)

(13,718)

(16,610)

New borrowings

-

17,373

19,187

Dividends paid to Company's shareholders

-

-

(9,319)

Net cash generated from/(used in) financing activities

(914)

3,655

(6,742)

Effects of exchange rates on cash and cash equivalents

(724)

671

286

Net increase in cash in the period

5,638

6,784

2,704

Cash and cash equivalents at beginning of the period

20,565

17,861

17,861

Cash and cash equivalents at end of the period

26,203

24,645

20,565

Notes to the financial statements

for the six months ended 30 June 2014

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 2014 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 2013. The principle 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 2013 have been extracted from the statutory accounts for the year ended 31 December 2013 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 Earnings per share

The calculation of basic earnings per ordinary share is based on the profit on ordinary activities after taxation of £6,175,000 (2013: £5,949,000) and on 12,261,477 (2013: 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

2014

2013

2013

£'000

£'000

£'000

Profit on ordinary activities after taxation

6,175

5,949

13,708

Basic earnings per ordinary share

50.4p

48.5p

111.8p

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 2014. In accordance with IAS 19 such a valuation will be prepared for the purposes of the Group's Annual Report and Accounts 2014.

For further information, please contact:

London Security plc

Richard Pollard

Company Secretary

Tel : 01422 372852

WH Ireland

Andrew Kitchingman

Tel : 0113 394 6619

James Bavister

Tel : 0207 220 1677

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