London Security PLC
(the "Group" or "Company")
Interim results for the six months ended 30 June 2020
Chairman's statement
J.G. Murray, Chairman
Financial highlights
• Revenue £67.2m (2019: £71.7m)
• Operating profit £7.6m (2019: £10.5m)
• Earnings per share 39.9p (2019: 57.9p)
TRADING
The financial highlights illustrate that the Group's revenue decreased by £4.5 million (6.3%) to £67.2 million
Operating profit decreased by £2.9 million (27.6%) to £7.6 million.
The period under review reflects the impact from the coronavirus outbreak, which has significantly impacted all the countries in which we operate. Although there has been some return to normality in our business some customers remain closed and there are still restrictions on our operations. We must be prepared for further disruption should a second wave materialise in any of the countries in which we operate.
ACQUISITIONS
In the six months to the end of June, the Group has made no 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.
CASH AND FINANCING
The Group's cash balance as at 30 June 2020 was £34.4 million. This is an increase of £7.3 million on the 31 December 2019 balance of £27.1 million
In May 2018 the Group entered into a new five year multi-currency facility until 2023 comprising £3.15 million and €8.40 million. To limit our exposure to increasing interest rates these loans are subject to interest rate caps of 1.5% LIBOR on the Sterling loan and 0.25% EURIBOR on the Euro loan.
PROSPECTS
As the situation continues, cash management will be a key consideration; the London Security Group has a healthy balance sheet, strong cash reserves and a track record for good cash generation. Debt recovery remains consistent with previous years and staff costs will be controlled using the furlough process where applicable. The Board therefore considers that its strong balance sheet and material net cash position means that it is well placed to navigate through the impact of the coronavirus outbreak.
DIVIDENDS
A final dividend in respect of 2019 of £0.20 per ordinary share was paid to shareholders on 10 July 2020.
J.G. Murray
Chairman
15 September 2020
Consolidated income statement
for the six months ended 30 June 2020
|
|
| Unaudited | Unaudited | Audited |
|
|
| six months | six months | year |
|
|
| ended | ended | ended |
|
|
| 30 June | 30 June | 31 December |
|
|
| 2020 | 2019 | 2019 |
|
| Note | £'000 | £'000 | £'000 |
| Revenue |
| 67,164 | 71,737 | 146,920 |
| Cost of sales |
| (16,452) | (17,932) | (36,293) |
| Gross profit |
| 50,712 | 53,805 | 110,627 |
| Distribution costs |
| (26,310) | (26,253) | (54,140) |
| Administrative expenses |
| (16,768) | (17,025) | (32,333) |
| Operating profit |
| 7,634 | 10,527 | 24,154 |
| EBITDA* |
| 11,951 | 14,474 | 32,503 |
| Depreciation and amortisation |
| (4,317) | (3,947) | (8,349) |
| Operating profit |
| 7,634 | 10,527 | 24,154 |
| Finance income |
| 21 | 23 | 142 |
| Finance costs |
| (96) | (121) | (254) |
| Finance costs - net |
| (75) | (98) | (112) |
| Profit before income tax |
| 7,559 | 10,429 | 24,042 |
| Income tax expense |
| (2,602) | (3,237) | (7,229) |
| Profit for the period |
| 4,957 | 7,192 | 16,813 |
| Profit is attributable to |
|
|
|
|
| Equity shareholders of the Company |
| 4,895 | 7,103 | 16,653 |
| Non-controlling interest |
| 62 | 89 | 160 |
|
|
| 4,957 | 7,192 | 16,813 |
| Earnings per share |
| |
|
|
| Basic and diluted | 3 | 39.9p | 57.9p | 135.8p |
| Dividends |
| |
|
|
| Dividends paid per share |
| Nil | Nil | 80.0p |
* 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 2020
| Unaudited | Unaudited | Audited |
| six months | six months | year |
| ended | ended | ended |
| 30 June | 30 June | 31 December |
| 2020 | 2019 | 2019 |
| £'000 | £'000 | £'000 |
Profit for the financial period | 4,957 | 7,192 | 16,813 |
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 | 3,196 | 47 | (2,389) |
- actuarial gain recognised in the Nu-Swift pension scheme | - | - | 414 |
- movement on deferred tax relating to the Nu-Swift pension scheme | - | - | (145) |
- actuarial loss recognised in the Ansul pension scheme | - | - | (412) |
- movement on deferred tax relating to the Ansul pension scheme | - | - | 103 |
Other comprehensive income for the period, net of tax | 3,196 | 47 | (2,429) |
Total comprehensive income for the period | 8,153 | 7,239 | 14,384 |
Consolidated statement of changes in equity
for the six months ended 30 June 2020
| 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 2019 | 123 | 344 | 1 | 2,033 | 8,831 | 100,078 | 302 | 111,712 |
Comprehensive income for the period: |
|
|
|
|
|
|
|
|
- profit for the period | - | - | - | - | - | 7,103 | 89 | 7,192 |
- exchange adjustments | - | - | - | - | 47 | - | - | 47 |
Total comprehensive income for the period | - | - | - | - | 47 | 7,103 | 89 | 7,239 |
Distribution to non-controlling interest | - | - | - | - | - | - | (23) | (23) |
At 30 June 2019 | 123 | 344 | 1 | 2,033 | 8,878 | 107,181 | 368 | 118,928 |
Comprehensive income for the period: |
|
|
|
|
|
|
|
|
- profit for the period | - | - | - | - | - | 9,550 | 71 | 9,621 |
- exchange adjustments | - | - | - | - | (2,436) | - | - | (2,436) |
- actuarial gain on pension schemes | - | - | - | - |
| 2 | - | 2 |
- movement on deferred tax relating to pension schemes | - | - | - | - | - | (42) | - | (42) |
Total comprehensive income for the period | - | - | - | - | (2,436) | 9,510 | 71 | 7,145 |
Contributions by and distributions to owners of the Company: |
|
|
|
|
|
|
|
|
- dividends | - | - | - | - | - | (9,809) | - | (9,809) |
Distribution to non-controlling interest | - | - | - | - | - | - | (90) | (90) |
At 31 December 2019 | 123 | 344 | 1 | 2,033 | 6,442 | 106,882 | 349 | 116,174 |
Comprehensive income for the period: |
|
|
|
|
|
|
|
|
- profit for the period | - | - | - | - | - | 4,895 | 62 | 4,957 |
- exchange adjustments | - | - | - | - | 3,196 | - | - | 3,196 |
Total comprehensive income for the period | - | - | - | - | 3,196 | 4,895 | 62 | 8,153 |
Distribution to non-controlling interest | - | - | - | - | - | - | (159) | (159) |
At 30 June 2020 | 123 | 344 | 1 | 2,033 | 9,638 | 111,777 | 252 | 124,168 |
Consolidated statement of financial position
as at 30 June 2020
| Unaudited | Unaudited | Audited |
| as at | as at | as at |
| 30 June | 30 June | 31 December |
| 2020 | 2019 | 2019 |
| £'000 | £'000 | £'000 |
Assets |
|
|
|
Non-current assets |
|
|
|
Property, plant and equipment | 13,308 | 12,921 | 12,164 |
Right-of-use assets | 2,382 | 2,752 | 2,360 |
Intangible assets | 67,502 | 67,548 | 67,504 |
Deferred tax asset | 779 | 807 | 683 |
Retirement benefit surplus | 4,959 | 4,430 | 4,959 |
| 88,930 | 88,458 | 87,670 |
Current assets |
|
|
|
Inventories | 15,182 | 14,613 | 13,434 |
Trade and other receivables | 32,499 | 29,129 | 27,822 |
Cash and cash equivalents | 34,422 | 28,869 | 27,143 |
| 82,103 | 72,611 | 68,399 |
Total assets | 171,033 | 161,069 | 156,069 |
Liabilities |
|
|
|
Current liabilities |
|
|
|
Trade and other payables | (29,119) | (23,808) | (23,158) |
Income tax liabilities | (2,311) | (1,145) | (987) |
Borrowings | (2,139) | (2,125) | (2,048) |
Lease liabilities | (1,169) | (1,239) | (1,134) |
Provision for liabilities and charges | - | (5) | - |
| (34,738) | (28,322) | (27,327) |
Non-current liabilities |
|
|
|
Trade and other payables | (1,275) | (1,026) | (850) |
Borrowings | (4,270) | (6,379) | (5,122) |
Lease liabilities | (1,209) | (1,535) | (1,256) |
Derivative financial instruments | (43) | (54) | (47) |
Deferred income tax liabilities | (2,873) | (2,756) | (2,909) |
Retirement benefit obligations | (2,282) | (1,880) | (2,215) |
Provision for liabilities and charges | (175) | (189) | (169) |
| (12,127) | (13,819) | (12,568) |
Total liabilities | (46,865) | (42,141) | (39,895) |
Net assets | 124,168 | 118,928 | 116,174 |
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 | 9,638 | 8,878 | 6,442 |
Retained earnings | 111,777 | 107,181 | 106,882 |
Equity attributable to owners of the Parent Company | 123,916 | 118,560 | 115,825 |
Non-controlling interest | 252 | 368 | 349 |
Total equity | 124,168 | 118,928 | 116,174 |
Consolidated statement of cash flow
for the six months ended 30 June 2020
| Unaudited | Unaudited | Audited |
| six months | six months | year |
| ended | ended | ended |
| 30 June | 30 June | 31 December |
| 2020 | 2019 | 2019 |
| £'000 | £'000 | £'000 |
Cash flows from operating activities |
|
|
|
Cash generated from operations | 12,319 | 13,953 | 32,363 |
Interest paid | (66) | (74) | (160) |
Income tax paid | (2,323) | (4,414) | (7,639) |
Net cash generated from operating activities | 9,930 | 9,465 | 24,564 |
Cash flows from investing activities |
|
|
|
Acquisition of subsidiary undertakings | - | (1,007) | (2,264) |
Purchases of property, plant and equipment | (2,344) | (2,536) | (3,974) |
Proceeds from sale of property, plant and equipment | 137 | 109 | 329 |
Purchases of intangible assets | (969) | (2,001) | (2,068) |
Interest received | 17 | 23 | 27 |
Net cash used in investing activities | (3,159) | (5,412) | (7,950) |
Cash flows from financing activities |
|
|
|
Repayments of borrowings | (1,015) | (1,040) | (2,091) |
Payment of lease liabilities | (987) | (831) | (1,750) |
Dividends paid to Company's shareholders | - | - | (9,809) |
Distribution to non-controlling interest | (159) | (23) | (113) |
Net cash used in financing activities | (2,161) | (1,894) | (13,763) |
Effects of exchange rates on cash and cash equivalents | 2,669 | 600 | (1,818) |
Net increase in cash in the period | 7,279 | 2,759 | 1,033 |
Cash and cash equivalents at the beginning of the period | 27,143 | 26,110 | 26,110 |
Cash and cash equivalents at the end of the period | 34,422 | 28,869 | 27,143 |
Notes to the financial statements
for the six months ended 30 June 2020
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 2020 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 2019. 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 2019 have been extracted from the statutory accounts for the year ended 31 December 2019, 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 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 £4,895,000 (2019: £7,103,000) and on 12,261,477 (2019: 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 |
| 2020 | 2019 | 2019 |
| £'000 | £'000 | £'000 |
Profit on ordinary activities after taxation | 4,895 | 7,103 | 16,653 |
Basic earnings per ordinary share | 39.9p | 57.9p | 135.8p |
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 2020. In accordance with IAS 19 such a valuation will be prepared for the purposes of the Group's Annual Report and Accounts 2020.
For further information, please contact:
London Security plc
Richard Pollard
Company Secretary Tel : 01422 372852
WH Ireland Limited
Chris Fielding Tel : 0207 220 1666
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