Half Yearly Report

RNS Number : 5445T

London Security PLC

30 September 2010

 



LONDON SECURITY PLC

30 September 2010

INTERIM ANNOUNCEMENT

FINANCIAL HIGHLIGHTS

Financial highlights of the unaudited results for the six months ended 30 June 2010 compared with the six months ended 30 June 2009 are as follows:

·      revenue of £43.1 million (2009: £42.5 million);

·      operating profit of £8.9 million (2009: £8.4 million); and

·      profit before income tax of £9.1 million (2009: £7.4 million).

TRADING AND PROSPECTS

The financial highlights illustrate that The Group's revenue increased by £0.6 million (1.4%) to £43.1 million and operating profit increased by £0.5 million (6.0%) to £8.9 million. These results partially reflect the movement in the Sterling to Euro average exchange rate which has risen from 1.12 to 1.15. If the 2010 results from the European subsidiaries had been translated at 2009 rates, revenue would have been £44.0 million instead of £43.1 million, an increase of 3.5%.

On the same basis operating profit would have been £9.1 million instead of £8.9 million, an increase of 8.3% compared to 2009, reflecting strong growth in continental Europe. In the UK there has been greater investment in customer retention which has been reflected in lower revenue and operating profit.

In addition to the improved operating profit performance, the Group has benefited from the low level of interest rates and has repaid a further £4.5 million of borrowings. These two factors have resulted in a reduction in finance costs of £0.5 million. Finance income has also benefited from a further £0.5 million gain on the holding of foreign currency.

The Group continues its evolution from being solely an extinguisher supplier to the customers' safety partner through our multi-service strategy offering. This was achieved through a series of training and employee development programmes, which has resulted in improved customer retention and greater motivation of the workforce.

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 prospects for the second half of 2010 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 present. Therefore we expect to continue to deliver strong results in the future.

SHARE BUYBACK PROGRAMME

As previously announced, the Board continues to believe that shareholder value will be optimized by the purchase by the company, when appropriate, of its own shares.

During the period under review a total of 11,100 ordinary shares were purchased for cancellation for a total consideration of £88,800. Following 30 June 2010 and up until the date of this announcement a further 10,150 ordinary shares, for a total consideration of £91,275, have been purchased for cancellation

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.

J.G. Murray

Chairman

30 September 2010

                               Consolidated income statement

                        for the six months ended 30 June 2010

		Unaudited	Unaudited	Audited
		six months	six months	year
		ended	ended	ended
		30 June	30 June	31 December
		2010	2009	2009
	Note	£'000	£'000	£'000
Revenue		43,066	42,478	85,968
Cost of sales		(7,642)	(7,277)	(14,507)
Gross profit		35,424	35,201	71,461
Distribution costs		(16,726)	(16,476)	(32,520)
Administrative expenses		(9,804)	(10,288)	(19,177)
Operating profit		8,894	8,437	19,764
EBITDA*		10,473	10,094	23,171
Depreciation and amortisation		(1,579)	(1,657)	(3,407)
Operating profit		8,894	8,437	19,764
Finance income		775	333	560
Finance costs		(694)	(1,158)	(1,937)
Fair value of derivative financial instruments		119	(176)	(84)
Finance costs - net		200	(1,001)	(1,461)
Profit before income tax		9,094	7,436	18,303
Income tax expense		(2,613)	(2,462)	(3,772)
Profit for the period attributable to equity shareholders of the Company		6,481	4,974	14,531
Earnings per share
Basic and diluted	2	52.7p	40.5p	118.2p
Dividends
Dividends paid per share		-	-	-

* 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 2010

	Unaudited	Unaudited	Audited
	six months	six months	year
	ended	ended	ended
	30 June	30 June	31 December
	2010	2009	2009
	£'000	£'000	£'000
Profit for the financial period	6,481	4,974	14,531
Other comprehensive income:
- currency translation differences on foreign currency net investments, net of tax	(363)	(1,996)	(1,366)
- foreign currency loan hedges, net of tax	465	3,560	2,552
- actuarial loss recognised in pension scheme	-	-	(397)
- movement on deferred tax relating to pension scheme	(57)	(59)	(177)
- purchase of own shares	(89)	-	-
Other comprehensive (expense) / income for the period, net of tax	(44)	1,505	612
Total comprehensive income for the period	6,437	6,479	15,143

Consolidated statement of changes in equity

for the six months ended 30 June 2010

	Unaudited	Unaudited	Audited
	six months	six months	year
	ended	ended	ended
	30 June	30 June	31 December
	2010	2009	2009
	£'000	£'000	£'000
Profit for the financial period	6,481	4,974	14,531
- other comprehensive income:
- currency translation differences on foreign currency net investments, net of tax	(363)	(1,996)	(1,366)
- foreign currency loan hedges net of tax	465	3,560	2,552
- actuarial loss recognised in pension scheme	-	-	(397)
- movement on deferred tax relating to pension scheme	(57)	(59)	(177)
- purchase of own shares	(89)	-	-
Net increase in shareholders' funds	6,437	6,479	15,143
Shareholders' funds at beginning of the period	45,657	30,514	30,514
Shareholders' funds at end of the period	52,094	36,993	45,657

                              Consolidated statement of financial position

                       as at 30 June 2010

	Unaudited	Unaudited	Audited
	as at	as at	as at
	30 June	30 June	31 December
	2010	2009	2009
	£'000	£'000	£'000
Assets
Non-current assets
Property, plant and equipment	7,840	8,810	8,552
Intangible assets	51,787	52,762	52,427
Deferred income tax asset	611	779	604
	60,238	62,351	61,583
Current assets
Inventories	7,501	8,243	7,804
Trade and other receivables	17,985	18,756	17,849
Cash and cash equivalents	20,036	14,382	19,070
	45,522	41,381	44,723
Total assets	105,760	103,732	106,306
Liabilities
Current liabilities
Trade and other payables	(16,029)	(17,229)	(15,534)
Income tax liabilities	(652)	(2,540)	(902)
Borrowings	(6,695)	(7,730)	(7,597)
Provision for liabilities and charges	(14)	(21)	(18)
	(23,390)	(27,520)	(24,051)
Non-current liabilities
Trade and other payables	-	(34)	(18)
Borrowings	(29,615)	(38,223)	(35,596)
Derivative financial instruments	(177)	(388)	(296)
Deferred income tax liabilities	(197)	(91)	(83)
Retirement benefit obligations	(266)	(483)	(605)
Provision for liabilities and charges	(21)	-	-
	(30,276)	(39,219)	(36,598)
Total liabilities	(53,666)	(66,739)	(60,649)
Net assets	52,094	36,993	45,657
Shareholders' equity
Ordinary shares	123	123	123
Merger reserve	2,033	2,033	2,033
Other reserves	6,412	6,688	6,310
Retained earnings	43,526	28,149	37,191
Total shareholders' equity	52,094	36,993	45,657

                               Consolidated statement of cash flow

                        for the six months ended 30 June 2010

	Unaudited	Unaudited	Audited
	six months	six months	year
	ended	ended	ended
	30 June	30 June	31 December
	2010	2009	2009
	£'000	£'000	£'000
Cash flows from operating activities
Cash generated from operations	10,548	11,472	24,355
Interest paid	(560)	(878)	(1,422)
Income tax paid	(3,526)	(1,986)	(4,386)
Net cash generated from operating activities	6,462	8,608	18,547
Cash flows from investing activities
Acquisition of subsidiary undertaking	-	-	(375)
Purchases of property, plant and equipment	(885)	(992)	(1,777)
Proceeds from sale of property, plant and equipment	128	142	271
Purchases of intangible assets	(385)	(757)	(607)
Interest received	201	93	120
Net cash used in investing activities	(941)	(1,514)	(2,368)
Cash flows from financing activities
Purchase of own shares	(89)	-	-
Repayments of borrowings	(4,466)	(3,587)	(7,984)
Net cash used in financing activities	(4,555)	(3,587)	(7,984)
Net increase in cash in the period	966	3,507	8,195
Cash and cash equivalents at beginning of the period	19,070	10,875	10,875
Cash and cash equivalents at end of the period	20,036	14,382	19,070

Notes to the financial statements
for the six months ended 30 June 2010

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 2010 is unaudited and has been prepared on the basis of the accounting policies set out in the Group's Annual Report and Accounts 2009. Comparative figures for the year ended 31 December 2009 have been extracted from the statutory accounts for the year ended 31 December 2009 which have been delivered to the Registrar of Companies. The Independent Auditors' 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    Earnings per share

The calculation of basic earnings per ordinary share is based on the profit on ordinary activities after taxation of £6,481,000 (2009: £4,974,000) and on 12,293,938 (2009: 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 12,293,938 (2009: 12,294,798). After taking into account the effect of dilutive securities, the basic earnings per ordinary share and adjusted earnings per ordinary share figures are unaltered.

	Unaudited	Unaudited	Audited
	six months	six months	year
	ended	ended	ended
	30 June	30 June	31 December
	2010	2009	2009
	£'000	£'000	£'000
Profit on ordinary activities after taxation	6,481	4,974	14,531
Basic earnings per ordinary share	52.7p	40.5p	118.2p

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 Interim Statement 2010. In accordance with IAS 19 such a valuation will be prepared for the purposes of the Group's Annual Report and Accounts 2010.

For further information, please contact:

London Security plc

Richard Pollard

Company Secretary                                                            01422 372852

Brewin Dolphin

Sandy Fraser / Iain Marlow                                                0845 2134730

 

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