Last checked at 11 Sep 2015 07:00
11 September 2015
LONDON SECURITY PLC
INTERIM RESULTS
Chairman's statement
Financial highlights
Revenue
£50.2m
2014: £51.3m
Operating profit
£7.9m
2014: £9.4m
TRADING
The financial highlights illustrate that the Group's revenue decreased by £1.1 million (2.1%) to £50.2 million. However these results are impacted by the movement in the Euro to Sterling average exchange rate which has increased from 1.22 to 1.36. This movement in exchange rates had an adverse effect of £4.3 million on reported turnover. If the 2015 results had been translated at 2014 rates, revenue would have been £54.5 million instead of £50.2 million, an increase of 6.2%. This real growth has come from acquisitions made in the second half of 2014 and first half of 2015, principally Pyrotec and Manus, which recorded turnover of £4.2 million.
Operating profit decreased by £1.5 million (16.0%) to £7.9 million. Adjusting for the change in exchange rates on the same basis as above, operating profit would have been £8.7 million instead of £7.9 million (an adjusted decrease of 7.4%). This is covered by increased competition and downward pressure on prices being experienced in our market.
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 £1.4 million (2014: five businesses at a cost of £0.6 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.
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. There are signs of a slow recovery and, as a leading provider in this market with a well-diversified customer base, the Board is optimistic for further success in 2015 as growth improves.
DIVIDENDS
A final dividend in respect of 2014 of £0.31 per ordinary share was paid to shareholders on 8 July 2015.
J.G. Murray
Chairman
11 September 2015
Consolidated income statement
for the six months ended 30 June 2015
|
| Unaudited | Unaudited | Audited |
|
| six months | six months | year |
|
| ended | ended | ended |
|
| 30 June | 30 June | 31 December |
|
| 2015 | 2014 | 2014 |
| Note | £'000 | £'000 | £'000 |
Revenue |
| 50,191 | 51,279 | 100,876 |
Cost of sales |
| (10,105) | (9,840) | (18,638) |
Gross profit |
| 40,086 | 41,439 | 82,238 |
Distribution costs |
| (19,297) | (19,585) | (38,106) |
Administrative expenses |
| (12,872) | (12,430) | (24,451) |
Operating profit |
| 7,917 | 9,424 | 19,681 |
EBITDA* |
| 10,341 | 11,544 | 23,938 |
Depreciation and amortisation |
| (2,424) | (2,120) | (4,257) |
Operating profit |
| 7,917 | 9,424 | 19,681 |
Finance income |
| 84 | 93 | 188 |
Finance costs |
| (208) | (435) | (832) |
Finance costs - net |
| (124) | (342) | (644) |
Profit before income tax |
| 7,793 | 9,082 | 19,037 |
Income tax expense |
| (2,561) | (2,907) | (6,362) |
Profit for the period attributable to equity shareholders of the Company | 5,232 | 6,175 | 12,675 | |
Earnings per share |
|
| ||
Basic and diluted | 3 | 42.7p | 50.4p | 103.4p |
Dividends |
|
| ||
Dividends paid per share |
| Nil | Nil | 62p |
* 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 2015
| Unaudited | Unaudited | Audited |
| six months | six months | year |
| ended | ended | ended |
| 30 June | 30 June | 31 December |
| 2015 | 2014 | 2014 |
| £'000 | £'000 | £'000 |
Profit for the financial period | 5,232 | 6,175 | 12,675 |
Other comprehensive (expense)/income: |
|
| |
Items that will not be reclassified subsequently to profit or loss |
|
| |
- currency translation differences on foreign operation consolidation, net of tax | (2,194) | (1,108) | (1,955) |
- actuarial gain recognised in the Nu-Swift pension scheme | - | - | 127 |
- movement on deferred tax relating to the Nu-Swift pension scheme surplus | - | - | (518) |
- actuarial loss recognised in the Ansul pension scheme | - | - | (191) |
- movement on deferred tax relating to the Ansul pension scheme | - | - | 69 |
Other comprehensive expense for the period, net of tax | (2,194) | (1,108) | (2,468) |
Total comprehensive income for the period | 3,038 | 5,067 | 10,207 |
Consolidated statement of changes in equity
for the six months ended 30 June 2015
|
|
|
|
|
| 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 2014 | 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 |
Comprehensive income for the period | |||||||
- profit for the period | - | - | - | - | - | 6,500 | 6,500 |
- exchange adjustments | - | - | - | - | (847) | - | (847) |
- actuarial loss on pension schemes | - | - | - | - | - | (64) | (64) |
- movement on deferred tax relating to pension schemes | - | - | - | - | - | (449) | (449) |
Total comprehensive income for the period | - | - | - | - | (847) | 5,987 | 5,140 |
Contributions by and distributions to owners of the Company: | |||||||
- dividends | - | - | - | - | - | (7,602) | (7,602) |
Total contributions by and distributions to owners of the Company | - | - | - | - |
| (7,602) | (7,602) |
At 31 December 2014 | 123 | 344 | 1 | 2,033 | 3,758 | 79,157 | 85,416 |
Comprehensive income for the period | |||||||
- profit for the period | - | - | - | - | - | 5,232 | 5,232 |
- exchange adjustments | - | - | - | - | (2,194) | - | (2,194) |
Total comprehensive income for the period | - | - | - | - | (2,194) | 5,232 | 3,038 |
At 30 June 2015 | 123 | 344 | 1 | 2,033 | 1,564 | 84,389 | 88,454 |
Consolidated statement of financial position
for the six months ended 30 June 2015
| Unaudited | Unaudited | Audited |
| as at | as at | as at |
| 30 June | 30 June | 31 December |
| 2015 | 2014 | 2014 |
| £'000 | £'000 | £'000 |
Assets |
|
|
|
Non-current assets |
|
|
|
Property, plant and equipment | 9,335 | 9,751 | 9,747 |
Intangible assets | 60,603 | 57,468 | 61,400 |
Deferred tax asset | 699 | 604 | 753 |
Retirement benefit surplus | 3,283 | 2,469 | 3,283 |
73,920 | 70,292 | 75,183 | |
Current assets |
|
|
|
Inventories | 8,885 | 9,221 | 9,494 |
Trade and other receivables | 19,953 | 20,117 | 19,573 |
Cash and cash equivalents | 22,696 | 26,203 | 20,978 |
51,534 | 55,541 | 50,045 | |
Total assets | 125,454 | 125,833 | 125,228 |
Liabilities |
|
|
|
Current liabilities |
|
|
|
Trade and other payables | (18,279) | (17,617) | (18,232) |
Income tax liabilities | (636) | (383) | (1,389) |
Borrowings | (1,659) | (1,823) | (1,782) |
Provision for liabilities and charges | - | (4) | - |
(20,574) | (19,827) | (21,403) | |
Non-current liabilities |
|
|
|
Trade and other payables | (703) | (535) | (739) |
Borrowings | (11,965) | (14,890) | (13,678) |
Derivative financial instruments | (163) | (86) | (227) |
Deferred income tax liabilities | (1,667) | (987) | (1,701) |
Retirement benefit obligations | (1,687) | (1,630) | (1,843) |
Provision for liabilities and charges | (241) | - | (221) |
(16,426) | (18,128) | (18,409) | |
Total liabilities | (37,000) | (37,955) | (39,812) |
Net assets | 88,454 | 87,878 | 85,416 |
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 | 1,564 | 4,605 | 3,758 |
Retained earnings | 84,389 | 80,772 | 79,157 |
Total shareholders' equity | 88,454 | 87,878 | 85,416 |
Consolidated statement of cash flow
for the six months ended 30 June 2015
| Unaudited | Unaudited | Audited |
| six months | six months | year |
| ended | ended | ended |
| 30 June | 30 June | 31 December |
| 2015 | 2014 | 2014 |
| £'000 | £'000 | £'000 |
Cash flows from operating activities |
|
|
|
Cash generated from operations | 9,865 | 11,764 | 24,338 |
Interest paid | (208) | (239) | (472) |
Income tax paid | (3,560) | (2,676) | (5,218) |
Net cash generated from operating activities | 6,097 | 8,849 | 18,648 |
Cash flows from investing activities |
|
| |
Acquisition of subsidiary undertakings | (902) | - | (2,164) |
Purchases of property, plant and equipment | (1,125) | (1,126) | (2,304) |
Proceeds from sale of property, plant and equipment | 91 | 133 | 242 |
Purchases of intangible assets | (373) | (667) | (3,519) |
Proceeds from sale of intangible assets | - | 39 | - |
Interest received | 20 | 48 | 68 |
Net cash used in investing activities | (2,289) | (1,573) | (7,677) |
Cash flows from financing activities |
|
| |
Repayments of borrowings | (844) | (914) | (1,855) |
Dividends paid to Company's shareholders | - | - | (7,602) |
Net cash used in financing activities | (844) | (914) | (9,457) |
Effects of exchange rates on cash and cash equivalents | (1,246) | (724) | (1,101) |
Net increase in cash in the period | 1,718 | 5,638 | 413 |
Cash and cash equivalents at beginning of the period | 20,978 | 20,565 | 20,565 |
Cash and cash equivalents at end of the period | 22,696 | 26,203 | 20,978 |
Notes to the financial statements
for the six months ended 30 June 2015
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 2015 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 2014. 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 2014 have been extracted from the statutory accounts for the year ended 31 December 2014 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, 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 £5,232,000 (2014: £6,175,000) and on 12,261,477 (2014: 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 |
| 2015 | 2014 | 2014 |
| £'000 | £'000 | £'000 |
Profit on ordinary activities after taxation | 5,232 | 6,175 | 12,675 |
Basic earnings per ordinary share | 42.7p | 50.4p | 103.4p |
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 2015. In accordance with IAS 19 such a valuation will be prepared for the purposes of the Group's Annual Report and Accounts 2015.
For further information, please contact:
London Security plc
Richard Pollard
Company Secretary Tel : 01422 372852
WH Ireland Limited
Andrew Kitchingman Tel : 0113 394 6600
Liam Gribben