LONDON SECURITY PLC

Earnings Release • Apr 29, 2016

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RNS Number : 7358W

London Security PLC

29 April 2016

London Security plc

Final Results for the Year Ended 31 December 2015

CHAIRMAN'S STATEMENT

FINANCIAL HIGHLIGHTS

Financial highlights of the audited results for the year ended 31 December 2015 compared with the year ended 31 December 2014 are as follows:

·      revenue of £101.2 million (2014: £100.9 million);

·      operating profit before depreciation and amortisation of £23.2 million (2014: £23.9 million);

·      operating profit of £18.5 million (2014: £19.7 million);

·      profit before tax of £18.2 million (2014: £19.0 million);

·      profit after income tax of £12.3 million (2014: £12.7 million);

·      earnings per share of 100.1p (2014: 103.4p); and

·      a dividend per share of £0.68 (2014: £0.62).

TRADING REVIEW

The financial highlights illustrate that the Group's revenue increased by £0.3 million (0.3%) to £101.2 million. However, these results are impacted by the movement in the Euro to Sterling average exchange rate, which has increased from 1.24 to 1.38. This movement in exchange rate  had an adverse effect of £8.7 million on reported turnover. If the 2015 results had been translated at 2014 rates, revenue would have been £109.9 million instead of £101.2 million (increase of 8.9% on prior year).

Operating profit decreased by £1.2 million (6.1%) to £18.5 million. Adjusting for the change in the exchange rate on the same basis as above, operating profit would have been £20.4 million instead of £18.5 million (increase of 3.6%). This performance is very satisfactory and whilst the trading environment remains difficult we are hopeful of growth returning to our market.

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, particularly in the Netherlands and the UK with the acquisitions of service contracts from ten smaller well established businesses for integration into the Group's existing subsidiaries. In addition, with the acquisition of DC Security in Belgium the Group has entered the market for intruder alarms.

MANAGEMENT AND STAFF

2015 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 2014 of £0.31 per ordinary share was paid to shareholders on 8 July 2015. An interim dividend in respect of 2015 of £0.37 per ordinary share was paid to shareholders on 30 October 2015. The Board is recommending the payment of a final dividend in respect of 2015 of £0.40 per ordinary share to be paid on 8 July 2016 to shareholders on the register on 10 June 2016. The shares will be marked ex-dividend on 9 June 2016.

FUTURE PROSPECTS

Quantitative easing, lower energy prices and loosening credit conditions are all enhancing the trading environment for our Group. Our strong profitability and sustainable business model mean we are well placed to take advantage of this trend in 2016. For the future, customer care is becoming increasingly important in this ever competitive market. To retain our valued customers we need to strive to serve them at the highest possible level.

ANNUAL GENERAL MEETING

The Annual General Meeting will be held at 10 Bruton Street, 5th Floor, London W1J 6PX on 22 June 2016 at 11 am.  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

28 April 2016

Consolidated Income Statement

for the year ended 31 December 2015

		2015	2014
	Note	£'000	£'000
Revenue		101,165	100,876
Cost of sales		(20,373)	(18,638)
Gross profit		80,792	82,238
Distribution costs		(37,304)	(38,106)
Administrative expenses		(25,010)	(24,451)
Operating profit		18,478	19,681
EBITDA*		23,191	23,938
Depreciation and amortisation		(4,713)	(4,257)
Operating profit		18,478	19,681
Finance income		179	188
Finance costs		(446)	(832)
Finance costs - net		(267)	(644)
Profit before income tax		18,211	19,037
Income tax expense		(5,942)	(6,362)
Profit for the year attributable to equity shareholders of the Company		12,269	12,675
Earnings per share
Basic and diluted	1	100.1p	103.4p

* 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 2015

		2015	2014
		£'000	£'000
Profit for the financial year		12,269	12,675
Other comprehensive (loss)/income:
Items that may be reclassified subsequently to profit or loss
- currency translation differences on foreign currency net investments, net of tax		(1,168)	(1,955)
Items that will not be reclassified subsequently to profit or loss
- actuarial (loss)/gain recognised in the Nu‑Swift pension scheme		(406)	127
- movement on deferred tax relating to Nu‑Swift pension scheme surplus		142	(518)
- actuarial gain/(loss) recognised in the Ansul pension scheme		163	(191)
- movement on deferred tax relating to Ansul pension scheme deficit		(56)	69
Other comprehensive loss for the year, net of tax		(1,325)	(2,468)
Total comprehensive income for the year		10,944	10,207

Consolidated Statement of Changes in Equity

for the year ended 31 December 2015

						Profit
	Share	Share	Capital	Merger	Other	and loss
	capital	premium	redemption	reserve	reserve	account	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 1 January 2014	123	344	1	2,033	5,713	74,597	82,811
Total comprehensive income for the year
Profit for the financial period	-	-	-	-	-	12,675	12,675
Other comprehensive income:
- exchange adjustments	-	-	-	-	(1,955)	-	(1,955)
- actuarial loss on pension schemes	-	-	-	-	-	(64)	(64)
- net movement on deferred tax relating to pension asset	-	-	-	-	-	(449)	(449)
Total comprehensive income for the year	-	-	-	-	(1,955)	12,162	10,207
Contributions by and distributions to owners of the Company: - dividends	-	-	-	-	-	(7,602)	(7,602)
Total contributions by and distributions to owners of the Company	-	-	-	-	-	(7,602)	(7,602)
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 period	-	-	-	-	-	12,269	12,269
Other comprehensive 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	123	344	1	2,033	2,590	82,932	88,023

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 2015

		2015	2014
		£'000	£'000
Assets
Non‑current assets
Property, plant and equipment		9,789	9,747
Intangible assets		60,594	61,400
Deferred tax asset		690	753
Retirement benefit surplus		3,196	3,283
		74,269	75,183
Current assets
Inventories		9,689	9,494
Trade and other receivables		19,901	19,573
Cash and cash equivalents		19,736	20,978
		49,326	50,045
Total assets		123,595	125,228
Liabilities
Current liabilities
Trade and other payables		(16,666)	(18,232)
Income tax liabilities		(1,335)	(1,389)
Borrowings		(1,679)	(1,782)
Provision for liabilities and charges		(35)	-
		(19,715)	(21,403)
Non‑current liabilities
Trade and other payables		(669)	(739)
Borrowings		(11,417)	(13,678)
Derivative financial instruments		(190)	(227)
Deferred tax liabilities		(1,696)	(1,701)
Retirement benefit obligations		(1,684)	(1,843)
Provision for liabilities and charges		(201)	(221)
		(15,857)	(18,409)
Total liabilities		(35,572)	(39,812)
Net assets		88,023	85,416
Shareholders' equity
Ordinary shares		123	123
Share premium		344	344
Capital redemption reserve		1	1
Merger reserve		2,033	2,033
Other reserves		2,590	3,758
Retained earnings		82,932	79,157
Total shareholders' equity		88,023	85,416

Consolidated Statement of Cash Flow

for the year ended 31 December 2015

		2015	2014
		£'000	£'000
Cash flows from operating activities
Cash generated from operations		20,215	24,338
Interest paid		(425)	(472)
Income tax paid		(5,889)	(5,218)
Net cash generated from operating activities		13,901	18,648
Cash flows from investing activities
Acquisition of subsidiary undertakings (net of cash acquired)		(1,301)	(2,164)
Purchases of property, plant and equipment		(2,363)	(2,304)
Proceeds from sale of property, plant and equipment		236	242
Purchases of intangible assets		(974)	(3,519)
Interest received		27	68
Net cash used in investing activities		(4,375)	(7,677)
Cash flows from financing activities
Repayments of borrowings		(1,663)	(1,855)
Dividends paid to Company's shareholders		(8,337)	(7,602)
Net cash used in financing activities		(10,000)	(9,457)
Effects of exchange rates on cash and cash equivalents		(768)	(1,101)
Net (decrease)/increase in cash in the year		(1,242)	413
Cash and cash equivalents at the beginning of the year		20,978	20,565
Cash and cash equivalents at end of the year		19,736	20,978

Notes to the financial statements

for the year ended 31 December 2015

1 Earnings per share

The calculation of basic earnings per ordinary share ("EPS") is based on the profit on ordinary activities after taxation of £12,269,000 (2014: £12,675,000) and on 12,261,477 (2014: 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.

	2015			2014
	£'000	Pence	£'000		Pence
Profit on ordinary activities after taxation	12,269	100.1	12,675		103.4

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 2015 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 2014 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 2015 and 31 December 2014 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 12 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: 01422 372 852
WH Ireland Limited
Chris Fielding / Liam Gribben	Tel: 0207 220 1666

This information is provided by RNS

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