Lon.sec Regulatory News (LSC)

London Security PLC

Half Yearly Report

Unaudited Interim Statement for the six months ended 30 June 2014

Chairman's statement

Financial highlights:

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

* 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

Consolidated statement of changes in equity

for the six months ended 30 June 2014

Consolidated statement of financial position

for the six months ended 30 June 2014

Consolidated statement of cash flow

for the six months ended 30 June 2014

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.

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.

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