Final Results

RNS Number : 4637D

London Security PLC

27 April 2017

 

London Security plc

Final Results for the Year Ended 31 December 2016

CHAIRMAN'S STATEMENT

FINANCIAL HIGHLIGHTS

Financial highlights of the audited results for the year ended 31 December 2016 compared with the year ended 31 December 2015 are as follows:

·      revenue of £114.8 million (2015: £101.2 million);

·      operating profit before depreciation and amortisation of £26.3 million (2015: £23.2 million);

·      operating profit of £20.9 million (2015: £18.5 million);

·      profit after income tax of £13.8 million (2015: £12.3 million); and

·      a dividend per share of £0.80 (2015: £0.68).

TRADING REVIEW

The financial highlights illustrate that the Group's revenue increased by £13.6 million (13.4%) to £114.8 million. However, these results are impacted by the movement in the Euro to Sterling average exchange rate, which has decreased from 1.38 to 1.23. This movement in exchange rate had a favourable effect of £9.8 million on reported revenue. If the 2016 results had been translated at 2015 rates, revenue would have been £105.0 million instead of £114.8 million (increase of 3.8% on prior year).

Operating profit increased by £2.4 million (13.0%) to £20.9 million. Adjusting for the change in the exchange rate on the same basis as above, operating profit would have been £18.7 million instead of £20.9 million (increase of 1.1%). A more detailed review of this year's performance is given in the Financial Review and the Strategic Report.

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 prices where an adequate return is envisaged by the Board. In the year under review the Group has consolidated its presence in Belgium, the Netherlands and the UK with the acquisitions of service contracts from 15 smaller well established businesses for integration into the Group's existing subsidiaries. In addition, with the acquisition of One Protect in France and Ludwig in Germany the Group has expanded its business into two new countries.

MANAGEMENT AND STAFF

2016 was a year in which the staff performed well and, on your behalf, I would like to express thanks and appreciation for their contribution. The Group recognises that we can only achieve our aims with talented and dedicated colleagues who provide outstanding customer service in every area of the business.

DIVIDENDS

A final dividend in respect of 2015 of £0.40 per ordinary share was paid to shareholders on 8 July 2016. An interim dividend in respect of 2016 of £0.40 per ordinary share was paid to shareholders on 8 December 2016. The Board is recommending the payment of a final dividend in respect of 2016 of £0.40 per ordinary share to be paid on 5 July 2017 to shareholders on the register on 9 June 2017. The shares will be marked ex-dividend on 8 June 2017.

FUTURE PROSPECTS

We are experiencing increased competition in our core market and customer care is becoming increasingly important. To retain our valued customers we need to strive to serve them at the highest possible level. We do not expect the economic environment to get any easier in 2017. Nonetheless your Group remains in a strong position and will continue to focus on meeting the needs of our customers and our shareholders.

ANNUAL GENERAL MEETING

The Annual General Meeting will be held at 2 Eaton Gate, London SW1W 9BJ on 21 June 2017 at 2 pm.  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.  Your Directors look forward to meeting you at that time.

J.G. Murray

Chairman

27 April 2017

Consolidated income statement

for the year ended 31 December 2016

			2016	2015
		Note	£'000	£'000
	Revenue		114,845	101,165
	Cost of sales		(23,638)	(20,373)
	Gross profit		91,207	80,792
	Distribution costs		(42,191)	(37,304)
	Administrative expenses		(28,154)	(25,010)
	Operating profit		20,862	18,478
EBITDA*			26,321	23,191
Depreciation and amortisation			(5,459)	(4,713)
Operating profit			20,862	18,478
	Finance income		176	179
	Finance costs		(433)	(446)
	Finance costs - net		(257)	(267)
	Profit before income tax		20,605	18,211
	Income tax expense		(6,822)	(5,942)
	Profit for the year attributable to equity shareholders of the Company		13,783	12,269
	Earnings per share
	Basic and diluted	1	112.4p	100.1p

* Earnings before interest, tax, depreciation and amortisation.

The above results are all as a result of continuing operations.

Consolidated statement of comprehensive income

for the year ended 31 December 2016

		2016	2015
		£'000	£'000
Profit for the financial year		13,783	12,269
Other comprehensive income/(expense):
Items that may be reclassified subsequently to profit or loss:
- currency translation differences on foreign currency net investments		4,441	(1,168)
Items that will not be reclassified subsequently to profit or loss:
- actuarial gain/(loss) recognised in the Nu-Swift pension scheme		263	(406)
- movement on deferred tax relating to Nu-Swift pension scheme surplus		(92)	142
- actuarial (loss)/gain recognised in the Ansul pension scheme		(200)	163
- movement on deferred tax relating to Ansul pension scheme deficit		61	(56)
Other comprehensive income/(expense) for the year, net of tax		4,473	(1,325)
Total comprehensive income for the year		18,256	10,944

Consolidated statement of changes in equity

for the year ended 31 December 2016

				Share	Capital
	Share			premium	redemption	Merger	Other	Retained	Total
	capital			account	reserve	reserve	reserve	earnings	equity
	£'000			£'000	£'000	£'000	£'000	£'000	£'000
At 1 January 2015	123			344	1	2,033	3,758	79,157	85,416
Total comprehensive income for the year
Profit for the financial year	-			-	-	-	-	12,269	12,269
Other comprehensive (expense)/income:
- exchange adjustments	-			-	-	-	(1,168)	-	(1,168)
- actuarial loss on pension schemes	-			-	-	-	-	(243)	(243)
- net movement on deferred tax relating to pension asset		-		-	-	-	-	86	86
Total comprehensive income for the year		-		-	-	-	(1,168)	12,112	10,944
Contributions by and distributions to owners of the Company: - dividends	-			-	-	-	-	(8,337)	(8,337)
Total contributions by and distributions to owners of the Company	-			-	-	-	-	(8,337)	(8,337)
At 31 December 2015 and 1 January 2016	123			344	1	2,033	2,590	82,932	88,023
Total comprehensive income for the year
Profit for the financial year	-			-	-	-	-	13,783	13,783
Other comprehensive income/(expense):
- exchange adjustments	-			-	-	-	4,441	-	4,441
- actuarial gain on pension schemes	-			-	-	-	-	63	63
- net movement on deferred tax relating to pension asset			-	-	-	-	-	(31)	(31)
Total comprehensive income for the year	-			-	-	-	4,441	13,815	18,256
Contributions by and distributions to owners of the Company: - dividends	-			-	-	-	-	(9,808)	(9,808)
- release of accrual for unclaimed dividends	-			-	-	-	-	82	82
Total contributions by and distributions to owners of the Company	-			-	-	-	-	(9,726)	(9,726)
At 31 December 2016	123			344	1	2,033	7,031	87,021	96,553

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 2016

		2016	2015
		£'000	£'000
Assets
Non-current assets
Property, plant and equipment		10,937	9,789
Intangible assets		62,749	60,594
Deferred tax asset		919	690
Retirement benefit surplus		3,574	3,196
		78,179	74,269
Current assets
Inventories		11,095	9,689
Trade and other receivables		23,138	19,901
Cash and cash equivalents		22,602	19,736
		56,835	49,326
Total assets		135,014	123,595
Liabilities
Current liabilities
Trade and other payables		(19,344)	(16,666)
Income tax liabilities		(1,180)	(1,335)
Borrowings		(1,870)	(1,679)
Provision for liabilities and charges		(35)	(35)
		(22,429)	(19,715)
Non-current liabilities
Trade and other payables		(957)	(669)
Borrowings		(10,789)	(11,417)
Derivative financial instruments		(172)	(190)
Deferred tax liabilities		(1,705)	(1,696)
Retirement benefit obligations		(2,279)	(1,684)
Provision for liabilities and charges		(130)	(201)
		(16,032)	(15,857)
Total liabilities		(38,461)	(35,572)
Net assets		96,553	88,023
Shareholders' equity
Ordinary shares		123	123
Share premium		344	344
Capital redemption reserve		1	1
Merger reserve		2,033	2,033
Other reserves		7,031	2,590
Retained earnings		87,021	82,932
Total shareholders' equity		96,553	88,023

Consolidated statement of cash flow

for the year ended 31 December 2016

		2016	2015
		£'000	£'000
Cash flows from operating activities
Cash generated from operations		26,059	20,215
Interest paid		(408)	(425)
Income tax paid		(7,213)	(5,889)
Net cash generated from operating activities		18,438	13,901
Cash flows from investing activities
Acquisition of subsidiary undertakings (net of cash acquired)		(2,222)	(1,301)
Purchases of property, plant and equipment		(2,774)	(2,363)
Proceeds from sale of property, plant and equipment		323	236
Purchases of intangible assets		(1,662)	(974)
Interest received		43	27
Net cash used in investing activities		(6,292)	(4,375)
Cash flows from financing activities
Repayments of borrowings		(1,819)	(1,663)
Dividends paid to Company's shareholders		(9,726)	(8,337)
Net cash used in financing activities		(11,545)	(10,000)
Effects of exchange rates on cash and cash equivalents		2,265	(768)
Net increase/(decrease) in cash in the year		2,866	(1,242)
Cash and cash equivalents at the beginning of the year		19,736	20,978
Cash and cash equivalents at end of the year		22,602	19,736

Notes to the financial statements

for the year ended 31 December 2016

1 Earnings per share

The calculation of basic earnings per ordinary share ("EPS") is based on the profit on ordinary activities after taxation of £13,783,000 (2015: £12,269,000) and on 12,261,477 (2015: 12,261,477) 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. 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.

	2016			2015
	£'000	Pence		£'000	Pence
Profit on ordinary activities after taxation	13,783	112.4		12,269	100.1

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 2016 have been extracted from the full accounts of the Group for that year which received an unqualified auditor's report and which have not yet been delivered to the Registrar of Companies.  The financial information for the year ended 31 December 2015 is derived from the statutory accounts for that year, which have been delivered to the Registrar of Companies. The report of the auditor on those filed accounts was unqualified.  The accounts for the year ended 31 December 2016 and 31 December 2015 did not contain a statement under s498 (1) to (4) 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 11 May 2016. 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: [phone]
WH Ireland Limited
Chris Fielding	Tel: [phone]

 

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