Lon.sec Regulatory News (LSC)

26 Sep 2008 10:32



LONDON SECURITY PLC

Interim Statement FOR THE SIX MONTHS ENDED 30 JUNE 2008

CHAIRMAN'S STATEMENT

Financial highlights 

Financial highlights of the unaudited results for the six months ended 30 June 2008 compared with the first half of 2007 are as follows: 

Revenue of £35.6 million (2007: £32.8 million)

Operating profit of £8.8 million (2007: £8.1 million)

Profit on ordinary activities before taxation of £6.4 million (2007: £7.3 million)

Earnings per share of 35.9p (2007: 41.0p)

Trading and prospects

The Group's revenue has increased by £2.8 million (8.5%). This improvement is due to the full year effect of various initiatives implemented in 2007 and a favourable exchange rate. There is also an adverse effect following the sale of the Swiss businesses, as results from these companies were included in the 2007 accounts.

For the same reasons, the Group's operating profit has increased by £0.7 million (8.6%). 

Within finance costs the Group has suffered an additional charge of £1.8 million (2007: charge of £0.1 million) in respect of the exchange rate movement on its loans denominated in Euros. This is offset by a positive effect of using income streams from Europe to repay the Group's Euro borrowings. 

In mainland Europe, the Group has grown through our multi-service strategy, offering customers a complete range of services. This strategy has enabled the Group's evolution from solely an extinguisher supplier to our customers' safety partner.

In the UK, 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.

I am pleased to inform you that, in August 2008, we purchased the fire extinguisher division of Somati in Belgium. This business, now incorporated as Somati FIE NV, has revenue of 8.5 million Euros (£6.5 million) and will contribute positively to the Group in the second half of 2008.

Dividends and financing

A first interim dividend in respect of 2008 of £0.57 per ordinary share was paid to shareholders on 25 April 2008. A second interim dividend of £0.73 per ordinary share was paid on 22 May 2008. Dividends paid totalled £16 million.

 

In order to pay the interim dividends referred to above the Group has arranged an additional £15 million of bank loans with Lloyds Bank plc.

J.G. Murray

Chairman

26 September 2008

CONSOLIDATED INCOME STATEMENT

FOR THE SIX MONTHS TO 30 JUNE 2008

 

		Six months	Six months	Year to
		to 30 June	to 30 June	31 December
		2008	2007	2007
		£’000	£’000	£’000
Revenue		35,627	32,815	66,605
Cost of sales		(6,094)	(5,308)	(11,351)
Gross profit		29,533	27,507	55,254
Distribution costs		(12,820)	(11,294)	(22,453)
Administrative expenses		(7,924)	(8,134)	(16,008)
Operating profit		8,789	8,079	16,793
EBITDA*		9,987	8,983	18,785
Depreciation		(1,198)	(904)	(1,992)
Operating profit		8,789	8,079	16,793
Profit on disposal of subsidiary undertakings		—	—	4,216
Finance income		587	478	952
Finance costs		(1,154)	(1,139)	(2,652)
Exchange loss on foreign currency loans		(1,791)	(149)	(2,097)
Finance costs – net		(2,358)	(810)	(3,797)
Profit before income tax		6,431	7,269	17,212
Income tax expense		(2,021)	(2,215)	(4,017)
Profit for the period attributable to equity shareholders of the company		4,410	5,054	13,195
Earnings per share Basic and diluted	Note 2	35.9p	41.0p	107.3p
Dividends Dividends paid per share		130.0p	—	50.0p

 

				Six months		Six months		Year ended
				to 30 June		to 30 June		31 December
				2008		2007		2007
				£'000		£'000		£'000
Profit for the financial period				4,410		5,054		13,195
Currency translation differences on foreign currency
net investments				1,123		(9)		1,328
Actuarial gain recognised in pension scheme				-		-		1,473
Movement on deferred tax relating to pension scheme				(224)		-		(988)
Net gains/(losses) not recognised in the income statement				899		(9)		1,813
Total recognised income for the year attributable to equity shareholders				5,309		5,045		15,008

CONSOLIDATED BALANCE SHEET

AS AT 30 JUNE 2008

		As at	As at	As at
		30 June	30 June	31 December
		2008	2007	2007
		£’000	£’000	£’000
Assets
Non current assets
Property, plant and equipment		8,457	7,246	7,863
Intangible assets		47,704	47,090	47,236
Deferred tax asset		508	1,258	743
Derivative financial instruments		299	132	—
		56,968	55,726	55,842
Current assets
Inventories		6,239	4,990	5,687
Trade and other receivables		15,524	15,605	14,358
Cash and cash equivalents		11,439	10,249	11,807
		33,202	30,844	31,852
Total assets		90,170	86,570	87,694
Liabilities
Current liabilities
Trade and other payables		(15,123)	(12,932)	(14,475)
Income tax liabilities		(1,527)	(2,295)	(1,891)
Borrowings		(6,015)	(5,071)	(5,388)
Provision for liabilities and charges		(107)	(166)	(49)
		(22,772)	(20,464)	(21,803)
Non current liabilities
Trade and other payables		(48)	—	(43)
Borrowings		(40,209)	(27,964)	(27,022)
Derivative financial instruments		—	—	(19)
Deferred tax liabilities		—	(34)	(100)
Retirement benefit obligations		(165)	(4,167)	(949)
Provision for liabilities and charges		(19)	(130)	(130)
		(40,441)	(32,295)	(28,263)
Total liabilities		(63,213)	(52,759)	(50,066)
Net assets		26,957	33,811	37,628
Shareholders’ equity
Ordinary shares		123	123	123
Merger reserve		2,033	2,033	2,033
Other reserves		2,194	(266)	1,071
Retained earnings		22,607	31,921	34,401
Total shareholders’ equity		26,957	33,811	37,628

 

 

CONSOLIDATED CASH FLOW STATEMENT

FOR THE SIX MONTHS TO 30 JUNE 2008

		Six months	Six months	Year ended
		to 30 June	to 30 June	31 December
		2008	2007	2007
		£’000	£’000	£’000
Cash flows from operating activities
Cash generated from operations		9,223	8,361	19,328
Interest paid		(1,110)	(1,017)	(2,033)
Income tax paid		(2,970)	(2,150)	(4,556)
Net cash generated from operating activities		5,143	5,194	12,739
Cash flows from investing activities
Acquisition of subsidiary undertaking		—	—	(231)
Net proceeds from sale of subsidiary undertakings		—	—	4,587
Purchases of property, plant and equipment		(1,446)	(1,289)	(2,707)
Proceeds from sale of property, plant and equipment		209	238	401
Purchases of intangible assets		(564)	(272)	(578)
Proceeds from sale of intangible assets		22	—	18
Interest received		222	113	278
Net cash used in investing activities		(1,557)	(1,210)	1,768
Cash flows from financing activities
Purchase of own shares		—	—	(97)
New long term loans		15,000	—	—
Repayments of borrowings		(2,974)	(2,366)	(5,133)
Capital repayment of finance leases		—	(45)	—
Equity dividends paid		(15,980)	—	(6,146)
Net cash used in financing activities		(3,954)	(2,411)	(11,376)
Net (decrease)/increase in cash in the period		(368)	1,573	3,131
Cash and cash equivalents at beginning of the period		11,807	8,676	8,676
Cash and cash equivalents at the end of the period		11,439	10,249	11,807

NOTES

1 NATURE OF Information

The financial information contained in this interim statement has been neither audited or reviewed by the auditors and does not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985. The financial information for the six months ended 30 June 2008 is unaudited and has been prepared on the basis of the accounting policies set out in the Group's 2007 Report and Accounts. Comparative figures for the year ended 31 December 2007 have been extracted from the statutory accounts for the year ended 31 December 2007 which have been delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified and did not contain a statement under sections 237(2) or 237(3) of the Companies Act 1985.

2  Earnings per share

The calculation of basic earnings per ordinary share is based on the profit on ordinary activities after taxation of £4,410,000 (2007: £5,054,000) and on 12,294,798 (2007: 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 (2007: 12,294,798). After taking into account the effect of dilutive securities, the basic EPS and adjusted EPS figures are unaltered.

				Six months		Six months		Year ended
				to 30 June		to 30 June		31 December
				2008		2007		2007
				£'000		£'000		£'000
Profit on ordinary activities after taxation				4,410		5,054		13,195
Basic earnings per ordinary share				35.9p		41.0p		107.3p

3  Actuarial valuation of pension scheme

In common with many other companies, the Group has not prepared an actuarial valuation of pension scheme assets and liabilities for the 2008 interim statement. In accordance with IAS 19 such a valuation will be prepared for the purposes of the Group's 2008 Report and Accounts.

4  Consolidated statement of changes in equity

				Six months		Six months		Year ended
				to 30 June		to 30 June		31 December
				2008		2007		2007
				£'000		£'000		£'000
Profit for the financial period				4,410		5,054		13,195
Dividends				(15,980)		-		(6,146)
Currency translation differences on foreign currency
net investments				1,123		(9)		1,328
Purchase of own shares				-		(97)		(97)
Actuarial gain recognised in pension scheme				-		-		1,473
Movement on deferred tax relating to pension scheme				(224)		-		(988)
Net increase in shareholders' funds				(10,671)		4,948		8,765
Shareholders' funds at the beginning of the period				37,628		28,863		28,863
Shareholders' funds at the end of the period				26,957		33,811		37,628

 

ENDIR IIFIAAFIRFIT