Interim results for six months ended 30 June 2024

London Security PLC

13 September 2024

 

London Security PLC

(the "Group" or "Company")

Interim results for the six months ended 30 June 2024

Chairman's statement

J-J. Murray, Chairman

Financial highlights

•     Revenue £110.9m (2023: £108.8m)

•     Operating profit £13.4m (2023: £13.7m)

•     Earnings per share 78.4p (2023: 81.0p)

Trading

The financial highlights illustrate that the Group's revenue increased by £2.1 million (1.9%) to £110.9 million.

Operating profit decreased by £0.3 million (2.2%) to £13.4 million.

These results include the adverse movement in the Euro to Sterling average exchange rate, which has increased from 1.15 to 1.17. If the 2024 results from the European subsidiaries had been translated at 2023 rates, revenue would have been £113.2 million instead of £110.9 million, which would represent an increase of 4.0% on the prior year. On the same basis, operating profit would have been £13.7 million instead of £13.4 million, stable compared to 2023.

The first six months of 2024 were a period of consolidation for the Group following the 26% increase in operating profit that was enjoyed in 2023. Whilst operating profit is broadly stable versus 2023, this still represents a 23% increase on 2022.

The core servicing business remains very consistent with a slight fall in special projects, the instance of which is unpredictable.

Although inflation has moderated since last year, we continue to experience upward input price pressures. These supply price increases have been passed on to our customers where possible. Interest rates which were increased to combat inflation remain high and are depressing growth and reducing our customers' appetite to invest. All the countries in which we operate are experiencing low or no growth.

Acquisitions

In the six months to the end of June 2024, the Group strengthened its presence in Belgium, the Netherlands, Germany, Austria, Luxembourg and France through the acquisition of service contracts to be 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 2024 was £39.5 million. This is an increase of £6.8 million on the 31 December 2023 balance of £32.7 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 a period of low growth.

Dividends

A final dividend in respect of 2023 of £0.42 per ordinary share was paid to shareholders on 12 July 2024.

J-J. Murray

Chairman

13 September 2024

Consolidated income statement

for the six months ended 30 June 2024

			Unaudited	Unaudited	Audited
			six months	six months	year
			ended	ended	ended
			30 June	30 June	31 December
			2024	2023	2023
		Note	£'000	£'000	£'000
	Revenue		110,864	108,845	219,705
	Cost of sales		(30,088)	(29,452)	(58,988)
	Gross profit		80,776	79,393	160,717
	Distribution costs		(41,835)	(41,304)	(81,373)
	Administrative expenses		(25,589)	(24,357)	(47,762)
	Operating profit		13,352	13,732	31,582
	Finance income		213	5	226
	Finance costs		(162)	(110)	(264)
	Finance income/(cost) - net		51	(105)	(38)
	Profit before income tax		13,403	13,627	31,544
	Income tax expense		(3,813)	(3,692)	(8,280)
	Profit for the period		9,590	9,935	23,264
	Earnings per share
	Basic and diluted	3	78.4p	81.0p	189.8p
	Dividends
	Dividends paid per share		Nil	Nil	124p

The above are all as a result of continuing operations.

Consolidated statement of comprehensive income

for the six months ended 30 June 2024

	Unaudited	Unaudited	Audited
	six months	six months	year
	ended	ended	ended
	30 June	30 June	31 December
	2024	2023	2023
	£'000	£'000	£'000
Profit for the financial period	9,590	9,935	23,264
Other comprehensive (expense)/income:
Items that will not be reclassified subsequently to profit or loss:
- currency translation differences on foreign operation consolidation, net of tax	(2,096)	(2,851)	(1,579)
- actuarial gain recognised in the Nu-Swift pension scheme	-	-	52
- movement on deferred tax relating to the Nu-Swift pension scheme	-	-	(18)
- actuarial loss recognised in the Ansul pension scheme	-	-	(171)
- movement on deferred tax relating to the Ansul pension scheme	-	-	43
Other comprehensive expense for the period, net of tax	(2,096)	(2,851)	(1,673)
Total comprehensive income for the period	7,494	7,084	21,591

Consolidated statement of changes in equity

for the six months ended 30 June 2024

	Share	Share	Capital	Merger	Other	Retained
	capital	premium	redemption	reserve	reserve	earnings	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 1 January 2023	123	344	1	2,033	8,658	134,722	145,881
Comprehensive income for the period:
- profit for the period	-	-	-	-	-	9,935	9,935
- exchange adjustments	-	-	-	-	(2,851)	-	(2,851)
Total comprehensive (expense)/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	144,627	152,935
Comprehensive income for the period:
- profit for the period	-	-	-	-	-	13,329	13,329
- exchange adjustments	-	-	-	-	1,272	-	1,272
- actuarial gain on pension schemes	-	-	-	-	-	(119)	(119)
- movement on deferred tax relating to pension schemes	-	-	-	-	-	25	25
Total comprehensive income for the period	-	-	-	-	1,272	13,235	14,507
Contributions by and distributions to owners of the Company:
- dividends		-	-	-	-	(15,196)	(15,196)
Purchase of own shares	-	-	-	-	-	(3)	(3)
At 31 December 2023	123	344	1	2,033	7,079	142,663	152,243
Comprehensive income for the period:
- profit for the period	-	-	-	-	-	9,590	9,590
- exchange adjustments	-	-	-	-	(2,096)	-	(2,096)
Total comprehensive (expense)/income for the period	-	-	-	-	(2,096)	9,590	7,494
At 30 June 2024	123	344	1	2,033	4,983	152,253	159,737

Consolidated statement of financial position

as at 30 June 2024

	Unaudited	Unaudited	Audited
	as at	as at	as at
	30 June	30 June	31 December
	2024	2023	2023
	£'000	£'000	£'000
Assets
Non-current assets
Property, plant and equipment	18,216	16,430	17,749
Right-of-use assets	7,100	5,531	6,549
Intangible assets	76,719	77,848	77,382
Deferred tax asset	740	654	749
Retirement benefit surplus	342	276	342
	103,117	100,739	102,771
Current assets
Inventories	21,401	22,934	22,143
Trade and other receivables	47,321	43,907	44,488
Cash and cash equivalents	39,452	33,206	32,737
	108,174	100,047	99,368
Total assets	211,291	200,786	202,139
Liabilities
Current liabilities
Trade and other payables	(38,326)	(35,902)	(36,403)
Income tax liabilities	(1,406)	(1,448)	(2,275)
Borrowings	(264)	(344)	(381)
Lease liabilities	(2,347)	(1,228)	(2,274)
Provision for liabilities and charges	(6)	(9)	(6)
	(42,349)	(38,931)	(41,339)
Non-current liabilities
Trade and other payables	(1,291)	(1,016)	(1,090)
Borrowings	(82)	(228)	(97)
Lease liabilities	(4,894)	(4,417)	(4,402)
Deferred income tax liabilities	(1,810)	(2,188)	(1,811)
Retirement benefit obligations	(995)	(921)	(1,021)
Provision for liabilities and charges	(133)	(150)	(136)
	(9,205)	(8,920)	(8,557)
Total liabilities	(51,554)	(47,851)	(49,896)
Net assets	159,737	152,935	152,243
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	4,983	5,807	7,079
Retained earnings	152,253	144,627	142,663
Total equity	159,737	152,935	152,243

Consolidated statement of cash flow

for the six months ended 30 June 2024

	Unaudited	Unaudited	Audited
	six months	six months	year
	ended	ended	ended
	30 June	30 June	31 December
	2024	2023	2023
	£'000	£'000	£'000
Cash flows from operating activities
Cash generated from operations	20,137	14,608	38,234
Interest paid	(162)	(39)	(256)
Income tax paid	(6,440)	(4,737)	(8,229)
Net cash generated from operating activities	13,535	9,832	29,749
Cash flows from investing activities
Acquisition of subsidiary undertakings	-	(2,522)	(1,582)
Purchases of property, plant and equipment	(3,429)	(4,164)	(7,665)
Proceeds from sale of property, plant and equipment	323	273	721
Purchases of intangible assets	(1,781)	(902)	(3,033)
Interest received	213	5	212
Net cash used in investing activities	(4,674)	(7,310)	(11,347)
Cash flows from financing activities
Repayments of borrowings	(132)	(1,173)	(1,443)
Payment of lease liabilities	(1,344)	(1,250)	(2,484)
Dividends paid to Company's shareholders	-	-	(15,196)
Purchase of own shares	-	(30)	(33)
Net cash used in financing activities	(1,476)	(2,453)	(19,156)
Net increase/(decrease) in cash in the period	7,385	69	(754)
Cash and cash equivalents at the beginning of the period	32,737	33,962	33,962
Effects of exchange rates on cash and cash equivalents	(670)	(825)	(471)
Cash and cash equivalents at the end of the period	39,452	33,206	32,737

Notes to the financial statements

for the six months ended 30 June 2024

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 2024 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 2023. 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 2023 have been extracted from the statutory accounts for the year ended 31 December 2023, 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 £9,590,000 (2023: £9,935,000) and on 12,259,877 (2023: 12,260,684) 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
	2024	2023	2023
	£'000	£'000	£'000
Profit on ordinary activities after taxation	9,590	9,935	23,264
Basic earnings per ordinary share	78.4p	81.0p	189.8p

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 2024. In accordance with IAS 19 such a valuation will be prepared for the purposes of the Group's Annual Report and Accounts 2024.

For further information, please contact:

London Security plc

Richard Pollard

Company Secretary                                                                                                            Tel : [phone]

Zeus Capital Limited

Chris Fielding / Sarah Mather                                                                                           Tel : [phone]

 

END