LONDON SECURITY PLC

Earnings Release • May 9, 2019

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RNS Number : 5069Y

London Security PLC

09 May 2019

London Security plc

Final Results for the Year Ended 31 December 2018

Chairman's statement

J.G. Murray, Chairman

Financial highlights

Financial highlights of the audited results for the year ended 31 December 2018 compared with the year ended 31 December 2017 are as follows:

•     revenue of £137.7 million (2017: £125.9 million);

•     EBITDA of £29.6 million (2017: £27.9 million);

•     operating profit of £23.2 million (2017: £21.7 million);

•     profit for the year of £16.2 million (2017: £14.3 million); and

•     a dividend per share of £0.80 (2017: £0.80).

Trading review

The financial highlights illustrate that the Group's revenue increased by £11.8 million (9.4%) to £137.7 million and operating profit increased by £1.5 million (6.9%) to £23.2 million. These results reflect:

·      the positive impact of acquisitions in 2017 and 2018 in the United Kingdom, Austria and Denmark;

·      improved performance from our service business in continental Europe;

·      continued improvement from newer service offerings (e.g. emergency lights and passive fire protection); and

·      the movement in the Euro to Sterling average exchange rate, which had a favourable effect of £1.0 million on reported revenue and £0.2 million on operating profit.

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 acquired four established fire protection businesses and strengthened its position in the passive fire protection market with the acquisition of Amberfire Limited. The Group has grown its presence in the Netherlands, Belgium, Austria and the UK with the acquisition of service contracts from smaller well-established businesses for integration into the Group's existing subsidiaries. In addition, with the acquisition of Linde Brandmateriel Aps the Group has expanded its business into Denmark.

Management and staff

2018 was a year in which the staff performed well and, on behalf of the shareholders, 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.

The Group was saddened by the sad loss of Michael Gailer following a short illness and is grateful to him for his 19 years of service.

Dividends

A final dividend in respect of 2017 of £0.40 per ordinary share was paid to shareholders on 5 July 2018. An interim dividend in respect of 2018 of £0.40 per ordinary share was paid to shareholders on 30 November 2018. The Board is recommending the payment of a final dividend in respect of 2018 of £0.40 per ordinary share to be paid on 5 July 2019 to shareholders on the register on 7 June 2019. The shares will be marked ex-dividend on 6 June 2019.

Future prospects

The Group will continue to grow and consolidate the fire protection industry with the finest customer care.

Annual General Meeting

The Annual General Meeting will be held at 2 Eaton Gate, London SW1W 9BJ, on 18 June 2018 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

8 May 2019

Consolidated income statement

for the year ended 31 December 2018

			2018	2017
		Note	£'000	£'000
	Revenue		137,711	125,873
	Cost of sales		(31,780)	(26,626)
	Gross profit		105,931	99,247
	Distribution costs		(50,593)	(47,751)
	Administrative expenses		(32,163)	(29,757)
	Operating profit		23,175	21,739
	EBITDA*		29,557	27,934
	Depreciation and amortisation		(6,382)	(6,195)
	Operating profit		23,175	21,739
	Finance income		131	237
	Finance costs		(171)	(392)
	Finance costs - net		(40)	(155)
	Profit before income tax		23,135	21,584
	Income tax expense		(6,945)	(7,239)
	Profit for the year		16,190	14,345
	Profit is attributable to:
	Equity shareholders of the Company		16,077	14,310
	Non-controlling interest		113	35
			16,190	14,345
	Earnings per share
	Basic and diluted	1	131.1p	116.7p

*     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 2018

		2018	2017
		£'000	£'000
Profit for the financial year		16,190	14,345
Other comprehensive income/(expense):
Items that may be reclassified subsequently to profit or loss:
- currency translation differences on foreign currency net investments		361	1,439
Items that will not be reclassified subsequently to profit or loss:
- actuarial gain recognised in the Nu-Swift Pension Scheme		16	734
- movement on deferred tax relating to Nu-Swift Pension Scheme surplus		(6)	(257)
- actuarial (loss)/gain recognised in the Ansul Pension Scheme		(145)	721
- movement on deferred tax relating to Ansul Pension Scheme deficit		36	(313)
Other comprehensive income for the year, net of tax		262	2,324
Total comprehensive income for the year		16,452	16,669

Consolidated statement of changes in equity

for the year ended 31 December 2018

		Share	Capital
	Share	premium	redemption	Merger	Other	Retained	Non-controlling	Total
	capital	account	reserve	reserve	reserve	earnings	interest	equity
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 1 January 2017	123	344	1	2,033	7,031	87,021	-	96,553
Total comprehensive income for the year
Profit for the financial year	-	-	-	-	-	14,310	35	14,345
Other comprehensive income/(expense):
- exchange adjustments	-	-	-	-	1,439	-	-	1,439
- actuarial gain on pension schemes	-	-	-	-	-	1,455	-	1,455
- net movement on deferred tax relating to pension asset	-	-	-	-	-	(570)	-	(570)
Total comprehensive income for the year	-	-	-	-	1,439	15,195	35	16,669
Contributions by and distributions to owners of the Company:
- dividends	-	-	-	-	-	(9,808)	-	(9,808)
Contribution from non-controlling interest on business combination	-	-	-	-	-	-	154	154
At 31 December 2017 and 1 January 2018	123	344	1	2,033	8,470	92,408	189	103,568
Total comprehensive income for the year
Profit for the financial year	-	-	-	-	-	16,077	113	16,190
Other comprehensive income/(expense):
- exchange adjustments	-	-	-	-	361	-	-	361
- actuarial loss on pension schemes	-	-	-	-	-	(129)	-	(129)
- net movement on deferred tax relating to pension asset	-	-	-	-	-	30	-	30
Total comprehensive income for the year	-	-	-	-	361	15,978	113	16,452
Contributions by and distributions to owners of the Company:
- dividends	-	-	-	-	-	(9,809)	-	(9,809)
At 31 December 2018	123	344	1	2,033	8,831	98,577	302	110,211

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 2018

		2018	2017
		£'000	£'000
Assets
Non-current assets
Property, plant and equipment		12,077	11,589
Intangible assets		63,695	61,724
Deferred tax asset		811	589
Retirement benefit surplus		4,430	4,397
		81,013	78,299
Current assets
Inventories		13,293	11,749
Trade and other receivables		28,732	26,063
Cash and cash equivalents		26,110	24,652
		68,135	62,464
Total assets		149,148	140,763
Liabilities
Current liabilities
Trade and other payables		(22,713)	(19,576)
Income tax liabilities		(1,731)	(1,699)
Borrowings		(2,125)	(11,125)
Derivative financial instruments		-	(54)
Provision for liabilities and charges		(5)	-
		(26,574)	(32,454)
Non-current liabilities
Trade and other payables		(922)	(1,003)
Borrowings		(7,441)	-
Derivative financial instruments		(41)	-
Deferred tax liabilities		(1,898)	(1,830)
Retirement benefit obligations		(1,880)	(1,721)
Provision for liabilities and charges		(181)	(187)
		(12,363)	(4,741)
Total liabilities		(38,937)	(37,195)
Net assets		110,211	103,568
Shareholders' equity
Ordinary shares		123	123
Share premium		344	344
Capital redemption reserve		1	1
Merger reserve		2,033	2,033
Other reserves		8,831	8,470
Retained earnings		98,577	92,408
Equity attributable to owners of the Parent Company		109,909	103,379
Non-controlling interest		302	189
Total equity		110,211	103,568

Consolidated statement of cash flows

for the year ended 31 December 2018

		2018	2017
		£'000	£'000
Cash flows from operating activities
Cash generated from operations		28,385	25,182
Interest paid		(147)	(368)
Income tax paid		(7,393)	(7,249)
Net cash generated from operating activities		20,845	17,565
Cash flows from investing activities
Acquisition of subsidiary undertakings (net of cash acquired)		(4,274)	(1,220)
Purchases of property, plant and equipment		(3,551)	(3,384)
Proceeds from the sale of property, plant and equipment		398	349
Purchases of intangible assets		(746)	(600)
Interest received		12	30
Net cash used in investing activities		(8,161)	(4,825)
Cash flows from financing activities
Repayments of borrowings		(1,614)	(1,809)
Dividends paid to Company's shareholders		(9,809)	(9,808)
Contribution from non-controlling interest		-	154
Net cash used in financing activities		(11,423)	(11,463)
Effects of exchange rates on cash and cash equivalents		197	773
Net increase in cash in the year		1,458	2,050
Cash and cash equivalents at the beginning of the year		24,652	22,602
Cash and cash equivalents at the end of the year		26,110	24,652

Notes to the financial statements

for the year ended 31 December 2018

1 Earnings per share

The calculation of basic earnings per ordinary share ("EPS") is based on the profit on ordinary activities after taxation of £16,077,000 (2017: £14,310,000) and on 12,261,477 (2017: 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.

	2018			2017
	£'000	Pence		£'000	Pence
Profit on ordinary activities after taxation	16,077	131.1		14,310	116.7

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 2018 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 2017 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 2018 and 31 December 2017 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 20 May 2019. 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: 01422 372 852
WH Ireland Limited
Chris Fielding	Tel: 0207 220 1666

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