Interim results for six months ended 30 June 2023

London Security PLC

22 September 2023

 

London Security PLC

(the "Group" or "Company")

Interim results for the six months ended 30 June 2023

Chairman's statement

J.J. Murray, Chairman

Financial Highlights

•     Revenue £108.8m (2022: £88.6m)

•     Operating profit £13.7m (2022: £10.9m)

•     Earnings per share 81.0p (2022: 68.3p)

Trading

The financial highlights illustrate that the Group's revenue increased by £20.2 million (22.8%) to £108.8 million.

Operating profit increased by £2.8 million (25.7%) to £13.7 million. This increase is partly attributed to the Group being able to recruit more direct staff.  This enabled us to address delayed inspections in the period, in turn delivering a non-recurring benefit to the business' revenue and profit.

These results reflect the favourable movement in the Euro to Sterling average exchange rate, which has decreased from 1.19 to 1.14. If the 2023 results from the European subsidiaries had been translated at 2022 rates, revenue would have been £105.2 million instead of £108.8 million, which would have represented an increase of 18.7% on the prior year. On the same basis, operating profit would have been £13.1 million instead of £13.7 million, an increase of 20.2% compared to 2022.

The period under review also reflects the impact from upward input price pressures in all of the countries in which we operate. These increases are being driven by worldwide supply chain disruption and energy and wage inflation following the recovery from the coronavirus pandemic and the war in Ukraine. These supply price increases have been passed on to our customers where possible.

Acquisitions

In the six months to the end of June, at an aggregate cost of £2.5 million, the Group acquired two companies in Belgium, and it strengthened its presence in Germany and the United Kingdom through the acquisition of service contracts which have been integrated into the Group's existing subsidiaries.

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.

Cash and financing

The Group's cash balance as at 30 June 2023 was £33.2 million. This is a decrease of £0.8 million on the 31 December 2022 balance of £34.0 million.

Prospects

Cash management is a key consideration in difficult economic times. The London Security Group has a healthy balance sheet, strong cash reserves and a track record for good cash generation. The Board therefore considers that with its strong balance sheet and material net cash position the Group is well placed to cope with any economic downturn.

Dividends

A final dividend in respect of 2022 of £0.42 per ordinary share was paid to shareholders on 7 July 2023.

J.J. Murray

Chairman

22 September 2023

Consolidated income statement

for the six months ended 30 June 2023

			Unaudited	Unaudited	Audited
			six months	six months	year
			ended	ended	ended
			30 June	30 June	31 December
			2023	2022	2022
		Note	£'000	£'000	£'000
	Revenue		108,845	88,613	188,898
	Cost of sales		(29,452)	(23,380)	(49,748)
	Gross profit		79,393	65,233	139,150
	Distribution costs		(41,304)	(33,937)	(70,565)
	Administrative expenses		(24,357)	(20,394)	(41,420)
	Operating profit		13,732	10,902	27,165
	EBITDA*		19,009	15,742	37,269
	Depreciation and amortisation		(5,277)	(4,840)	(10,104)
	Operating profit		13,732	10,902	27,165
	Finance income		5	1	31
	Finance costs		(110)	(100)	(242)
	Finance costs - net		(105)	(99)	(211)
	Profit before income tax		13,627	10,803	26,954
	Income tax expense		(3,692)	(2,423)	(6,742)
	Profit for the period		9,935	8,380	20,212
	Profit is attributable to:
	Equity shareholders of the Company		9,935	8,374	20,203
	Non-controlling interest		-	6	9
			9,935	8,380	20,212
	Earnings per share
	Basic and diluted	3	81.0p	68.3p	164.8p
	Dividends
	Dividends paid per share		Nil	Nil	84p

* 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 2023

	Unaudited	Unaudited	Audited
	six months	six months	year
	ended	ended	ended
	30 June	30 June	31 December
	2023	2022	2022
	£'000	£'000	£'000
Profit for the financial period	9,935	8,380	20,203
Other comprehensive income/(expense):
Items that will not be reclassified subsequently to profit or loss:
- currency translation differences on foreign operation consolidation, net of tax	(2,851)	1,087	3,602
- actuarial gain recognised in the Nu-Swift pension scheme	-	-	(111)
- movement on deferred tax relating to the Nu-Swift pension scheme	-	-	38
- actuarial loss recognised in the Ansul pension scheme	-	-	1,249
- movement on deferred tax relating to the Ansul pension scheme	-	-	(285)
Other comprehensive income for the period, net of tax	(2,851)	1,087	4,493
Equity shareholders of the Company	7,084	9,467	24,696
Non-controlling interest	-	-	9
Total comprehensive income for the period	7,084	9,467	24,705

Consolidated statement of changes in equity

for the six months ended 30 June 2023

	Share	Share	Capital	Merger	Other	Retained	Non-controlling
	capital	premium	redemption	reserve	reserve	earnings	interest	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 1 January 2022	123	344	1	2,033	5,056	124,072	118	131,747
Comprehensive income for the period:
- profit for the period	-	-	-	-	-	8,374	6	8,380
- exchange adjustments	-	-	-	-	1,087	-	-	1,087
Total comprehensive income for the period	-	-	-	-	1,087	8,374	6	9,467
At 30 June 2022	123	344	1	2,033	6,143	132,446	124	141,214
Comprehensive income for the period:
- profit for the period	-	-	-	-	-	11,829	3	11,832
- exchange adjustments	-	-	-	-	2,515	-	-	2,515
- actuarial gain on pension schemes	-	-	-	-	-	1,138	-	1,138
- movement on deferred tax relating to pension schemes	-	-	-	-	-	(247)	-	(247)
Total comprehensive income for the period	-	-	-	-	2,515	12,720	3	15,238
Contributions by and distributions to owners of the Company:
- dividends	-	-	-	-	-	(10,298)	-	(10,298)
Purchase of own shares	-	-	-	-	-	(13)	-	(13)
Reduction in non-controlling interest	-	-	-	-	-	(158)	(127)	(285)
At 31 December 2022	123	344	1	2,033	8,658	134,697	-	145,856
Comprehensive income for the period:
- profit for the period	-	-	-	-	-	9,935	-	9,935
- exchange adjustments	-	-	-	-	(2,851)	-	-	(2,851)
Total comprehensive income for the period	-	-	-	-	(2,851)	9,935	-	7,084
Purchase of own shares	-	-	-	-	-	(30)	-	(30)
At 30 June 2023	123	344	1	2,033	5,807	144,602	-	152,910

Consolidated statement of financial position

as at 30 June 2023

	Unaudited	Unaudited	Audited
	as at	as at	as at
	30 June	30 June	31 December
	2023	2022	2022
	£'000	£'000	£'000
Assets
Non-current assets
Property, plant and equipment	16,430	14,186	14,940
Right-of-use assets	5,531	5,297	5,975
Intangible assets	77,848	73,643	77,076
Deferred tax asset654	654	814	694
Retirement benefit surplus	276	380	276
	100,739	94,320	98,961
Current assets
Inventories	22,934	18,326	22,260
Trade and other receivables	43,907	37,800	40,699
Cash and cash equivalents	33,206	35,256	33,962
	100,047	91,382	96,921
Total assets	200,786	185,702	195,882
Liabilities
Current liabilities
Trade and other payables	(35,902)	(30,336)	(36,431)
Income tax liabilities	(1,448)	(564)	(1,440)
Borrowings	(344)	(2,437)	(1,598)
Lease liabilities	(1,228)	(1,722)	(2,040)
Derivative financial instruments	-	(20)	-
Provision for liabilities and charges	(9)	(14)	(10)
	(38,931)	(35,093)	(41,519)
Non-current liabilities
Trade and other payables	(1,016)	(1,033)	(936)
Borrowings	(228)	(431)	(236)
Lease liabilities	(4,417)	(3,627)	(4,033)
Deferred income tax liabilities	(2,213)	(1,982)	(2,211)
Retirement benefit obligations	(921)	(2,180)	(953)
Provision for liabilities and charges	(150)	(142)	(138)
	(8,945)	(9,395)	(8,507)
Total liabilities	(47,876)	(44,488)	(50,026)
Net assets	152,910	141,214	145,856
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	5,807	6,143	8,658
Retained earnings	144,602	132,446	134,697
Equity attributable to owners of the Parent Company	152,910	141,090	145,856
Non-controlling interest	-	124	-
Total equity	152,910	141,214	145,856

Consolidated statement of cash flow

for the six months ended 30 June 2023

	Unaudited	Unaudited	Audited
	six months	six months	year
	ended	ended	ended
	30 June	30 June	31 December
	2023	2022	2022
	£'000	£'000	£'000
Cash flows from operating activities
Cash generated from operations	14,608	13,501	30,489
Interest paid	(39)	(50)	(111)
Income tax paid	(4,737)	(5,617)	(7,055)
Net cash generated from operating activities	9,832	7,834	23,323
Cash flows from investing activities
Acquisition of subsidiary undertakings	(2,522)	(3,058)	(4,078)
Purchases of property, plant and equipment	(4,164)	(1,923)	(4,626)
Proceeds from sale of property, plant and equipment	273	380	730
Purchases of intangible assets	(902)	(1,661)	(3,193)
Interest received	5	1	4
Net cash used in investing activities	(7,310)	(6,261)	(11,163)
Cash flows from financing activities
Repayments of borrowings	(1,173)	(1,332)	(2,312)
Payment of lease liabilities	(1,250)	(1,057)	(2,356)
Dividends paid to Company's shareholders	-	-	(10,298)
Purchase of own shares	(30)	-	(13)
Reduction in non-controlling interest	-	-	(285)
Net cash used in financing activities	(2453)	(2,389)	(15,264)
Net (decrease)/increase in cash in the period	69	(816)	(3,104)
Cash and cash equivalents at the beginning of the period	33,962	35,681	35,681
Effects of exchange rates on cash and cash equivalents	(825)	391	1,385
Cash and cash equivalents at the end of the period	33,206	35,256	33,962

Notes to the financial statements

for the six months ended 30 June 2023

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 2023 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 2022. 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 2022 have been extracted from the statutory accounts for the year ended 31 December 2022, 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 and 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 £9,935,000 (2022: £8,374,000) and on 12,260,684 (2022: 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
	2023	2022	2022
	£'000	£'000	£'000
Profit on ordinary activities after taxation	9,935	8,374	20,212
Basic earnings per ordinary share	81.0p	68.3p	164.8p

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 2023. In accordance with IAS 19 such a valuation will be prepared for the purposes of the Group's Annual Report and Accounts 2023.

The person responsible for arranging the release of this announcement on behalf of the Company is Richard Pollard, Company Secretary of London Security plc.

This announcement contains inside information for the purposes of Article 7 of the UK version of Regulation (EU) No 596/2014 which is part of UK law by virtue of the European Union (Withdrawal) Act 2018, as amended ("MAR"). Upon the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.

For further information, please contact:

London Security plc

Richard Pollard

Company Secretary                                                                            Tel : [phone]

WH Ireland Limited

Chris Fielding                                                                                       Tel : [phone]

 

END