Lon.sec Regulatory News (LSC)

30 Sep 2009 16:44



LONDON SECURITY PLC

Interim Statement FOR THE SIX MONTHS ENDED 30 JUNE 2009

Chairman's Statement

Financial highlights 

Financial highlights of the unaudited results for the six months ended 30 June 2009 compared with the first half of 2008 are as follows: 

Trading and prospects

The Group's revenue has increased by £6.9 million (19.4%), due to businesses acquired in 2008 and a favorable exchange rate effect. The Group's operating profit has decreased by £0.4 million (4.5%) reflecting the recession experienced in all countries in which we operate.

In 2008 the Group suffered a charge of £1.8 million as a result of exchange losses on foreign currency loans. In 2009 the Group implemented a net investment hedge against this risk which permits the Group to recognise exchange rate volatility through reserves. Falling interest rates have resulted in lower interest payable and receivable within finance costs.

In mainland Europe, the Group has continued to build upon its strong position in servicing fire extinguishers and hose reels and growing our new activities through our multi-service strategy offering customers a complete range of services around the first intervention on fires and first-aid. This strategy has enabled the Group's evolution from solely an extinguisher supplier to the customers' safety partner.

In the UK, management continues to invest in training of the field force. There has been strong positive customer response to new contracts and sales initiatives. Investment in training our field service team and a changed payment package continues to maintain market penetration. 

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.

Trading conditions for the second half of 2009 will continue to be difficult. We have, however, still recorded very creditable results in this testing economic environment and expect to continue to do so in the future.

J.G. Murray

Chairman

30 September 2009

Consolidated Income Statement

for the six months to 30 June 2009

				Unaudited		Unaudited		Audited
				Six months		Six months		Year to
				to 30 June		to 30 June		31 December
				2009		2008		2008
				£'000		£'000		£'000
Continuing operations
Revenue				42,478		35,627		74,892
Cost of sales				(7,277)		(6,094)		(12,618)
Gross profit				35,201		29,533		62,274
Distribution costs				(16,476)		(12,820)		(27,051)
Administrative expenses				(10,288)		(7,924)		(16,346)
Operating profit				8,437		8,789		18,877
EBITDA*				10,094		9,987		21,592
Depreciation and amortisation				(1,657)		(1,198)		(2,715)
Operating profit				8,437		8,789		18,877
Finance income				333		587		1,679
Finance costs				(1,158)		(1,472)		(3,169)
Fair value of derivative financial instruments				(176)		318		(193)
Exchange loss on foreign currency loans				-		(1,791)		(7,654)
Finance costs - net				(1,001)		(2,358)		(9,337)
Profit before income tax				7,436		6,431		9,540
Income tax expense				(2,462)		(2,021)		(3,983)
Profit for the period attributable to equity shareholders of the company				4,974		4,410		5,557
Earnings per share
Basic and diluted		Note 2		40.5p		35.9p		45.2p
Dividends
Dividends paid per share				nil		130.0p		130.0p

* Earnings before interest, taxation, depreciation, amortisation and impairment charges.

Consolidated Statement of Comprehensive Income

for the six months to 30 June 2009

		Unaudited		Unaudited		Audited
		Six months		Six months		Year to
		to 30 June		to 30 June		31 December
		2009		2008		2008
		£'000		£'000		£'000
Profit for the financial period		4,974		4,410		5,557
Other comprehensive income:
Currency translation differences on foreign currency net investments		(1,996)		1,123		4,053
Actuarial loss recognised in pension scheme		-		-		(708)
Movement on deferred tax relating to pension scheme		(59)		(224)		(36)
Foreign currency loan hedges net of tax		3,560		-		-
Other comprehensive income for the period		1,505		899		3,309
Total comprehensive income for the period attributable to equity shareholders		6,479		5,309		8,866

Consolidated Statement of Financial Position

as at 30 June 2009

		Unaudited		Unaudited		Audited
		As at		As at		As at
		30 June		30 June		31 December
		2009		2008		2008
		£'000		£'000		£'000
Assets
Non-current assets
Property, plant and equipment		8,810		8,457		9,787
Intangible assets		52,762		47,704		53,210
Deferred income tax asset		779		508		743
Derivative financial instruments		-		299		-
		62,351		56,968		63,740
Current assets
Inventories		8,243		6,239		8,545
Trade and other receivables		18,756		15,524		20,820
Cash and cash equivalents		14,382		11,439		10,875
		41,381		33,202		40,240
Total assets		103,732		90,170		103,980
Liabilities
Current liabilities
Trade and other payables		(17,229)		(15,123)		(17,148)
Income tax liabilities		(2,540)		(1,527)		(1,548)
Borrowings		(7,730)		(6,015)		(7,488)
Provision for liabilities and charges		(21)		(107)		-
		(27,520)		(22,772)		(26,184)
Non-current liabilities
Trade and other payables		(34)		(48)		-
Borrowings		(38,223)		(40,209)		(46,241)
Derivative financial instruments		(388)		-		(212)
Deferred income tax liabilities		(91)		-		(41)
Retirement benefit obligations		(483)		(165)		(742)
Provision for liabilities and charges		-		(19)		(46)
		(39,219)		(40,441)		(47,282)
Total liabilities		(66,739)		(63,213)		(73,466)
Net assets		36,993		26,957		30,514
Shareholders' equity
Ordinary shares		123		123		123
Merger reserve		2,033		2,033		2,033
Other reserves		6,688		2,194		5,124
Retained earnings		28,149		22,607		23,234
Total shareholders' equity		36,993		26,957		30,514

Consolidated Statement of Cash Flows 

for the six months to 30 June 2009

		Unaudited		Unaudited		Audited
		Six months		Six months		Year to
		to 30 June		to 30 June		31 December
		2009		2008		2008
		£'000		£'000		£'000
Cash flows from operating activities
Cash generated from operations		11,472		9,223		15,552
Interest paid		(878)		(1,110)		(2,687)
Income tax paid		(1,986)		(2,970)		(4,826)
Net cash generated from operating activities		8,608		5,143		8,039
Cash flows from investing activities
Acquisition of subsidiary undertaking		-		-		(222)
Purchases of property, plant and equipment		(992)		(1,446)		(2,923)
Proceeds from sale of property, plant and equipment		142		209		426
Purchases of intangible assets		(757)		(564)		(5,156)
Proceeds from sale of intangible assets		-		22		31
Interest received		93		222		1,188
Net cash used in investing activities		(1,514)		(1,557)		(6,656)
Cash flows from financing activities
New long-term loans		-		15,000		18,200
Repayments of borrowings		(3,587)		(2,974)		(4,535)
Equity dividends paid		-		(15,980)		(15,980)
Net cash used in financing activities		(3,587)		(3,954)		(2,315)
Net increase/(decrease) in cash in the period		3,507		(368)		(932)
Cash and cash equivalents at beginning of the period		10,875		11,807		11,807
Cash and cash equivalents at the end of the period		14,382		11,439		10,875

1 Nature of information

The financial information contained in this Interim Statement has been neither audited nor reviewed by the auditors 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 2009 is unaudited and has been prepared on the basis of the accounting policies set out in the Group's 2008 Annual Report and Accounts. Comparative figures for the year ended 31 December 2008 have been extracted from the statutory accounts for the year ended 31 December 2008 which have been delivered to the Registrar of Companies. The report of the auditors 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.

From 1 January 2009 the Group's policy is to hedge its international assets and has designated foreign currency borrowings as a hedge against net investment in foreign operations. The portion of the gain or loss on an instrument used to hedge a net investment in a foreign operation that is determined as an effective hedge is recognised directly in equity. Any gain or loss on any ineffective portion of the hedge is recognised immediately in the income statement.

2  Earnings per share

The calculation of basic earnings per ordinary share is based on the profit on ordinary activities after taxation of £4,974,000 (2008: £4,410,000) and on 12,294,798 (2008: 12,294,798) 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. The revised weighted average number of shares is 12,294,798 (2008: 12,296,487). After taking into account the effect of dilutive securities, the basic EPS and adjusted EPS figures are unaltered.

		Six months		Six months		Year to
		to 30 June		to 30 June		31 December
		2009		2008		2008
		£'000		£'000		£'000
Profit on ordinary activities after taxation		4,974		4,410		5,557
Basic earnings per ordinary share		40.5p		35.9p		45.2p

3  Actuarial valuation of pension scheme

As permitted under IAS 19, the Group has not prepared an actuarial valuation of pension scheme assets and liabilities for the 2009 interim statement. In accordance with IAS 19 such a valuation will be prepared for the purposes of the Group's 2009 Annual Report and Accounts.

4  Consolidated statement of changes in equity

		Unaudited		Unaudited		Audited
		Six months		Six months		Year to
		to 30 June		to 30 June		31 December
		2009		2008		2008
		£'000		£'000		£'000
Profit for the financial period		4,974		4,410		5,557
Transactions with owners:
Dividends		-		(15,980)		(15,980)
Other comprehensive income:
Currency translation differences on foreign currency net investments		(1,996)		1,123		4,053
Actuarial loss recognised in pension scheme		-		-		(708)
Movement on deferred tax relating to pension scheme		(59)		(224)		(36)
Foreign currency loan hedges net of tax		3,560		-		-
Net increase in shareholders' funds		6,479		(10,671)		(7,114)
Shareholders' funds at the beginning of the period		30,514		37,628		37,628
Shareholders' funds at the end of the period		36,993		26,957		30,514

5 Hedge of net investment in foreign subsidiaries

The Group's euro denominated borrowings totaling €32.2 million hedge the Group's investment in its European subsidiaries. The fair value of the euro borrowings at 30 June 2009 was £27.5 million. A foreign exchange gain of £3.6 million was recognised in equity during the year on translation of these loans to pounds sterling. The gain on the euro borrowings more than offset the loss on translation of foreign currency investments due to the significant value of share capital and other assets which are held at historic rates. Hedge accounting was not adopted in the prior period.

For further information, please contact:

London Security plc 01422 372852

Richard Pollard

Brewin Dolphin Investment Banking

Andrew Kitchingman / Sean Wyndham-Quin 0845 270 8610

Ends

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