Last checked at 5 May 2011 10:06
LONDON SECURITY PLC
5 MAY 2011
PRELIMINARY RESULTS
FINANCIAL HIGHLIGHTS
Financial highlights of the audited results for the year ended 31 December 2010 compared with the year ended 31 December 2009 are as follows:
·; revenue of £85.5 million (2009: £86.0 million);
·; operating profit before depreciation and amortisation of £22.7 million (2009: £23.2 million);
·; operating profit of £19.3 million (2009: £19.8 million); and
·; profit before income tax of £18.7 million (2009: £18.3 million).
TRADING REVIEW
The financial highlights illustrate that the Group's revenue decreased by £0.5 million (0.6%) to £85.5 million and operating profit decreased by £0.5 million (2.5%) to £19.3 million. However these results partially reflect the movement in the Sterling to Euro average exchange rate which has increased from 1.12 to 1.16. If the 2010 results had been translated at 2009 rates, revenue would have been £87.9 million instead of £85.5 million, (increase of 2.2%).On the same basis operating profit would have been £20.0 million instead of £19.3 million, (increase of 1.0%). This performance is very satisfactory in this difficult trading environment.
Ongoing cost control, cash and working capital management have continued to be priorities for the Group. The Group has continued to focus on its stock levels and capital expenditure. Cost control has been achieved without any adverse impact on the operational structure of the business.
A more detailed review of this year's performance is given in the Operational Review and Financial Review.
ACQUISITIONS
We have continued to acquire further contracts to service fire equipment through smaller acquisitions. No fixed overhead was added as a result of these acquisitions.
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.
MANAGEMENT AND STAFF
2010 was a year in which the staff performed well and, on your behalf, I would like to express thanks and appreciation for their contribution.
FINANCING
The Group has benefited from the low level of interest rates and has repaid a further £8.3 million of borrowings. These two factors have resulted in a reduction in finance costs of £0.3 million.
DIVIDENDS
An interim dividend in respect of 2010 of £0.17 per ordinary share was paid to shareholders on 10 December 2010.
The Board is not recommending the payment of a final dividend in respect of 2010.
Dividend policy continues to be reviewed regularly by the Board.
SHARE BUY-BACK PROGRAMME
As previously announced, the Board continues to believe that shareholder value will be optimised by the purchase by the Company, when appropriate, of its own shares.
During the period under review a total of 23,850 ordinary shares were purchased for cancellation for a total consideration of £205,399.
The Directors confirm that they intend to actively continue to pursue this policy and any shareholder who is considering taking advantage of the share buyback programme is invited to contact their stockbroker, bank manager, solicitor, accountant or other independent financial adviser authorised under the Financial Services and Markets Act 2000, in order to contact Brewin Dolphin Limited who are operating the buyback programme on behalf of the company.
FUTURE PROSPECTS
In summary 2010 was a difficult year and trading prospects for 2011 will continue to be challenging but, with the effect of past and potential acquisitions and our multi-service offering, we are in a strong position to face the challenges that will invariably be present. We therefore expect to continue to deliver strong results in the future.
ANNUAL GENERAL MEETING
The Annual General Meeting will be held at 10 Bruton Street, 5th Floor, London W1J 6PX on 8 June 2011 at 11a.m. You will find enclosed a form of proxy for use at that Meeting which you are requested to complete and return in accordance with the instructions on the form. I shall, along with your Directors, look forward to meeting you at that time.
J.G. MURRAY
Chairman
4 May 2011
Consolidated Income StatementFor the year ended 31 December 2010
2010 | 2009 | ||
Note | £'000 | £'000 | |
Revenue | 85,499 | 85,968 | |
Cost of sales | (15,254) | (14,507) | |
Gross profit | 70,245 | 71,461 | |
Distribution costs | (31,755) | (32,520) | |
Administrative expenses | (19,162) | (19,177) | |
Operating profit | 19,328 | 19,764 | |
EBITDA* | 22,679 | 23,171 | |
Depreciation and amortisation | (3,351) | (3,407) | |
Operating profit | 19,328 | 19,764 | |
Finance income | 1,093 | 560 | |
Finance costs | (1,726) | (2,021) | |
Finance costs - net | (633) | (1,461) | |
Profit before income tax | 18,695 | 18,303 | |
Income tax expense | (5,613) | (3,772) | |
Profit for the year attributable to equity shareholders of the Company | 13,082 | 14,531 | |
Earnings per share | |||
Basic and diluted | 1 | 106.5p | 118.2p |
* Earnings before interest, tax, depreciation, amortisation and impairment charges.
Consolidated statement of comprehensive income
for the year ended 31 December 2010
2010 | 2009 | ||
£'000 | £'000 | ||
Profit for the financial year | 13,082 | 14,531 | |
Other comprehensive income: | |||
Currency translation differences on foreign currency net investments net of tax |
| (357) | (1,366) |
Foreign currency loan hedges net of tax | 465 | 2,552 | |
Actuarial gain/(loss) recognised in pension scheme | 151 | (397) | |
Movement on deferred tax relating to pension scheme | (21) | (177) | |
Net pension asset not recognised due to uncertainty over future recoverability | (653) | - | |
Other comprehensive income for the year, net of tax | (415) | 612 | |
Total comprehensive income for the year | 12,667 | 15,143 |
Consolidated Statement of Changes in Equity
For the year ended 31 December 2010
Profit | |||||
Share | Merger | Other | and loss | ||
capital | reserve | reserve | account | Total | |
£'000 | £'000 | £'000 | £'000 | £'000 | |
At 1 January 2009 | 123 | 2,033 | 5,124 | 23,234 | 30,514 |
Total comprehensive income for the year | |||||
Profit for the financial period | - | - | - | 14,531 | 14,531 |
Other comprehensive income: | |||||
Exchange adjustments | - | - | (1,366) | - | (1,366) |
Actuarial loss on pension scheme | - | - | - | (397) | (397) |
Movement on deferred tax relating to pension asset | - | - | - | (177) | (177) |
Foreign currency loan hedges net of tax | - | - | 2,552 | - | 2,552 |
At 1 January 2010 | 123 | 2,033 | 6,310 | 37,191 | 45,657 |
Total comprehensive income for the year | |||||
Profit for the financial period | - | - | - | 13,082 | 13,082 |
Other comprehensive income: | |||||
Exchange adjustments | - | - | (357) | - | (357) |
Actuarial gain on pension scheme | - | - | - | 151 | 151 |
Movement on deferred tax relating to pension asset | - | - | - | (21) | (21) |
Net pension asset not recognised due to uncertainty over future recoverability | - | - | - | (653) | (653) |
Foreign currency loan hedges net of tax | - | - | 357 | 108 | 465 |
Total comprehensive income for the year | - | - | - | 12,667 | 12,667 |
Contributions by and distributions to owners of the Company | |||||
Dividends | - | - | - | (2,086) | (2,086) |
Purchase of own shares | - | - | - | (205) | (205) |
Total contributions by and distributions to owners of the Company | - | - | - | (2,291) | (2,291) |
At 31 December 2010 | 123 | 2,033 | 6,310 | 47,567 | 56,033 |
The merger reserve is not a distributable reserve.
The other reserve relates entirely to the effects of changes in foreign currency exchange rates.
Consolidated Statement of Financial Position
As at 31 December 2010
2010 | 2009 | ||
£'000 | £'000 | ||
Assets | |||
Non-current assets | |||
Property, plant and equipment | 7,719 | 8,552 | |
Intangible assets | 51,960 | 52,427 | |
Deferred tax asset | 589 | 604 | |
60,268 | 61,583 | ||
Current assets | |||
Inventories | 7,611 | 7,804 | |
Trade and other receivables | 16,604 | 16,840 | |
Cash and cash equivalents | 22,286 | 19,070 | |
46,501 | 43,714 | ||
Total assets | 106,769 | 105,297 | |
Liabilities | |||
Current liabilities | |||
Trade and other payables | (14,498) | (14,525) | |
Income tax liabilities | (968) | (902) | |
Borrowings | (7,126) | (7,597) | |
Provision for liabilities and charges | (9) | (18) | |
(22,601) | (23,042) | ||
Non-current liabilities | |||
Trade and other payables | (457) | (18) | |
Borrowings | (26,730) | (35,596) | |
Derivative financial instruments | (30) | (296) | |
Deferred tax liabilities | (286) | (83) | |
Retirement benefit obligations | (632) | (605) | |
Provision for liabilities and charges | - | - | |
(28,135) | (36,598) | ||
Total liabilities | (50,736) | (59,640) | |
Net assets | 56,033 | 45,657 | |
Shareholders' equity | |||
Ordinary shares | 123 | 123 | |
Merger reserve | 2,033 | 2,033 | |
Other reserves | 6,310 | 6,310 | |
Retained earnings | 47,567 | 37,191 | |
Total shareholders' equity | 56,033 | 45,657 |
Consolidated Statement of Cash FlowFor the year ended 31 December 2010
2010 | 2009 | ||
£'000 | £'000 | ||
Cash flow from operating activities | |||
Cash generated from operations | 21,845 | 25,003 | |
Interest paid | (713) | (1,422) | |
Income tax paid | (4,900) | (4,386) | |
Net cash generated from operating activities | 16,232 | 19,195 | |
Cash flow from investing activities | |||
Acquisition of subsidiary undertakings | - | (375) | |
Purchases of property, plant and equipment | (1,746) | (1,777) | |
Proceeds from sale of property, plant and equipment | 259 | 271 | |
Purchases of intangible assets | (883) | (607) | |
Interest received | 171 | 120 | |
Net cash used in investing activities | (2,199) | (2,368) | |
Cash flows from financing activities | |||
Repayments of borrowings | (8,337) | (7,984) | |
Purchase of own shares | (205) | - | |
Dividends paid to Company's shareholders | (2,086) | - | |
Net cash used in financing activities | (10,628) | (7,984) | |
Effects of exchange rates on cash and cash equivalents | (189) | (648) | |
Net increase in cash in the year | 3,216 | 8,195 | |
Cash and cash equivalents at beginning of the year | 19,070 | 10,875 | |
Cash and cash equivalents at end of the year | 22,286 | 19,070 |
1 Earnings per Share
The calculation of basic earnings per ordinary share ("EPS") is based on the profit on ordinary activities after taxation of £13,082,000 (2009: £14,531,000) and on 12,284,170 (2009: 12,294,798) ordinary shares, being the weighted average number of ordinary shares in issue during the year.
For diluted EPS, the weighted average number of shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. The only potential ordinary shares in the Group are in respect of the unapproved share option scheme. The revised weighted average number of shares is 12,284,170 (2009: 12,294,798). After taking into account the effect of dilutive securities, the basic EPS and adjusted EPS figures are unaltered.
2010 | 2009 | ||||
£'000 | Pence | £'000 | Pence | ||
Profit on ordinary activities after taxation | 13,082 | 106.5 | 14,531 | 118.2 | |
2 This preliminary announcement does not constitute the Company's statutory accounts within the meaning of Section 434 of the Companies Act 2006.
The results for the year ended 31 December 2010 have been extracted from the full accounts of the Group for that year which received an unqualified auditors' report and which have not yet been delivered to the Registrar of Companies. The financial information for the year ended 31 December 2009 is derived from the statutory accounts for that year, which have been delivered to the Registrar of Companies. The report of the auditors on those filed accounts was unqualified. The accounts for the year ended 31 December 2010 and 31 December 2009 did not contain a statement under s498 (1) to (4) of the of the Companies Act 2006 or under s237(1) to (4) of the Companies Act 1985.
This preliminary announcement has been prepared in accordance with International Financial Reporting Standards. The Group will post its annual report and accounts to shareholders on 16 May 2011. A copy of the annual report and accounts can be found on the company's webpage (www.londonsecurity.org).
Enquiries: London Security plc
Richard Pollard
Company Secretary Tel: 01422 372852