LONDON SECURITY PLC

Earnings Release • May 19, 2023

National Storage Mechanism | Additional information

RNS Number : 0293A

London Security PLC

19 May 2023

19/05/2023

London Security plc

THIS  ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE UK VERSION OF REGULATION (EU) NO 596/2014 WHICH IS PART OF UK LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018, AS AMENDED. UPON THE PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

Final Results for the Year Ended 31 December 2022

Chairman's statement

J.G. Murray, Chairman

Financial highlights

Financial highlights of the audited results for the year ended 31 December 2022 compared with the year ended 31 December 2021 are as follows:

•     revenue of £188.9 million (2021: £166.6 million);

•     operating profit of £27.2 million (2021: £27.2 million);

•     profit for the year of £20.2 million (2021: £20.0 million);

•     cash of £34.0 million (2021: £35.7 million);

•     earnings per share for the year of £1.65 (2021: £1.62); and

•     a dividend per share of £0.84 (2021: £0.80).

Trading review

The financial highlights illustrate that the Group's revenue increased by £22.3 million (13.4%) to £188.9 million and operating profit remained at £27.2 million. These results reflect:

•     the effect of input inflation which our companies initially absorbed, but as it became clear that it was a longer term trend we passed on appropriate price increases to our customers;

•     the positive impact of acquisitions in 2022 and the full year's trading of acquisitions in 2021;

•     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 an adverse effect of £1.3 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 acquired seven security businesses and has grown its presence in Austria, the United Kingdom, Belgium, Germany and Luxembourg. The Group has also continued with the acquisition of service contracts from smaller well-established businesses for integration into the Group's existing subsidiaries.

Management and staff

2022 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.

Dividends

A final dividend in respect of 2021 of £0.42 per ordinary share was paid to shareholders on 8 July 2022. An interim dividend in respect of 2022 of £0.42 per ordinary share was paid to shareholders on 28 November 2022. The Board is recommending the payment of a final dividend in respect of 2022 of £0.42 per ordinary share to be paid on 7 July 2023 to shareholders on the register on 9 June 2023. The shares will be marked ex-dividend on 8 June 2023.

Covid-19 impact assessment

In 2022 there was largely a return to normality in our business. The high level of business failures predicted by some commentators did not occur.

Future prospects

The markets in which we operate are entering what is likely to be a period of low growth with continued high inflation. The London Security Group however has a healthy balance sheet, strong cash reserves and a track record for good cash generation. The Board therefore considers that the Group is well placed to weather any downturn. We will also continue to invest in our future and the Group plans to continue to grow through acquisitions.

Annual General Meeting

The Annual General Meeting ("AGM") will be held at 2 Jubilee Way, Elland, West Yorkshire HX5 9DY, on 29 June 2023 at 11.30 am. The Company confirms that shareholders are able to attend in person should they wish to do so. However, we strongly encourage shareholders to vote on all resolutions by completing the enclosed form of proxy for use at that Meeting, which you are requested to return in accordance with the instructions on the form.

J.G. Murray

Chairman

19 May 2023

Consolidated income statement

for the year ended 31 December 2022

			2022	2021
		Note	£'000	£'000
	Revenue		188,898	166,634
	Cost of sales		(49,748)	(43,096)
	Gross profit		139,150	123,538
	Distribution costs		(70,565)	(59,974)
	Administrative expenses		(41,420)	(36,390)
	Operating profit		27,165	27,174
	EBITDA*		37,269	36,273
	Depreciation and amortisation		(10,104)	(9,099)
	Operating profit		27,165	27,174
	Finance income		31	28
	Finance costs		(242)	(204)
	Finance costs - net		(211)	(176)
	Profit before income tax		26,954	26,998
	Income tax expense		(6,742)	(6,990)
	Profit for the year		20,212	20,008
	Profit is attributable to:
	Equity shareholders of the Company		20,203	19,907
	Non-controlling interest		9	101
			20,212	20,008
	Earnings per share
	Basic and diluted	1	164.8p	162.4p

*     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 2022

		2022	2021
		£'000	£'000
Profit for the financial year		20,203	19,907
Other comprehensive (expense)/income:
Items that may be reclassified subsequently to profit or loss:
- currency translation differences on foreign currency net investments		3,602	(3,782)
Items that will not be reclassified subsequently to profit or loss:
- actuarial loss recognised in the Nu-Swift Pension Scheme		(111)	(70)
- movement on deferred tax relating to the Nu-Swift Pension Scheme surplus		38	25
- actuarial gain recognised in the Ansul Pension Scheme		1,249	104
- movement on deferred tax relating to the Ansul Pension Scheme deficit		(285)	(26)
Other comprehensive expense for the year, net of tax		4,493	(3,749)
Equity shareholders of the Company		24,696	16,158
Non-controlling interest		9	101
Total comprehensive income for the year		24,705	16,259

Consolidated statement of changes in equity

for the year ended 31 December 2022

	Ordinary	Share	Capital redemption	Merger	Other	Retained	Non-controlling	Total
	shares	premium	reserve	reserve	reserves	earnings	interest	equity
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 1 January 2021	123	344	1	2,033	8,838	114,407	377	126,123
Total comprehensive income for the year
Profit for the financial year	-	-	-	-	-	19,907	101	20,083
Other comprehensive income/(expense):
- exchange adjustments	-	-	-	-	(3,782)	-	-	(3,782)
- actuarial gain on pension schemes	-	-	-	-	-	34	-	34
- net movement on deferred tax relating to pension deficit	-	-	-	-	-	(1)	-	(1)
Total comprehensive income/(expense) for the year	-	-	-	-	(3,782)	19,940	101	16,259
Contributions by and distributions to owners of the Company:
- dividends	-	-	-	-	-	(9,807)	-	(9,807)
Distribution to non-controlling interest	-	-	-	-	-	-	(150)	(150)
Reduction in non-controlling interest	-	-	-	-	-	(468)	(210)	(678)
At 31 December 2021 and 1 January 2022	123	344	1	2,033	5,056	124,072	118	131,747
Total comprehensive income for the year
Profit for the financial year	-	-	-	-	-	20,203	9	20,212
Other comprehensive income/(expense):
- exchange adjustments	-	-	-	-	3,602	-	-	3,602
- actuarial gain on pension schemes	-	-	-	-	-	1,138	-	1,138
- net movement on deferred tax relating to pension deficit	-	-	-	-	-	(247)	-	(247)
Total comprehensive income/(expense) for the year	-	-	-	-	3,602	21,094	9	24,705
Contributions by and distributions to owners of the Company:
- purchase of own shares	-	-	-	-	-	(13)	-	(13)
- dividends	-	-	-	-	-	(10,298)	-	(10,298)
	-	-	-	-	-	(10,311)	-	(10,311)
Reduction in non-controlling interest	-	-	-	-	-	(158)	(127)	(285)
At 31 December 2022	123	344	1	2,033	8,658	134,697	-	145,856

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 2022

		2022	2021
		£'000	£'000
Assets
Non-current assets
Property, plant and equipment		14,940	13,990
Right of use assets		5,975	4,297
Intangible assets		77,076	70,074
Deferred tax asset		694	778
Retirement benefit surplus		276	380
		98,961	89,519
Current assets
Inventories		22,260	16,423
Trade and other receivables		40,699	33,021
Cash and cash equivalents		33,962	35,681
		96,921	85,125
Total assets		195,882	174,644
Liabilities
Current liabilities
Trade and other payables		(36,431)	(28,061)
Income tax liabilities		(1,440)	(1,607)
Borrowings		(1,598)	(2,430)
Lease liabilities		(2,040)	(1,603)
Provision		(10)	(13)
		(41,519)	(33,714)
Non-current liabilities
Trade and other payables		(936)	(1,058)
Borrowings		(236)	(1,340)
Lease liabilities		(4,033)	(2,740)
Derivative financial instruments		-	(20)
Deferred tax liabilities		(2,211)	(1,731)
Retirement benefit obligations		(953)	(2,144)
Provision		(138)	(150)
		(8,507)	(9,183)
Total liabilities		(50,026)	(42,897)
Net assets		145,856	131,747
Shareholders' equity
Ordinary shares		123	123
Share premium		344	344
Capital redemption reserve		1	1
Merger reserve		2,033	2,033
Other reserves		8,658	5,056
Retained earnings		134,697	124,072
Equity attributable to owners of the Parent Company		145,856	131,629
Non-controlling interest		-	118
Total equity		145,856	131,747

Consolidated statement of cash flows

for the year ended 31 December 2022

		2022	2021
		£'000	£'000
Cash flows from operating activities
Cash generated from operations		30,489	33,909
Interest paid		(111)	(106)
Income tax paid		(7,055)	(7,122)
Net cash generated from operating activities		23,323	26,681
Cash flows from investing activities
Acquisition of subsidiary undertakings (net of cash acquired)		(4,078)	(4,871)
Purchases of property, plant and equipment		(4,626)	(4,880)
Proceeds from the sale of property, plant and equipment		730	682
Purchases of intangible assets		(3,193)	(2,693)
Interest received		4	7
Net cash used in investing activities		(11,163)	(11,755)
Cash flows from financing activities
Repayments of borrowings		(2,312)	(2,119)
Payment of lease liabilities		(2,356)	(2,072)
Dividends paid to the Company's shareholders		(10,298)	(9,807)
Purchase of own shares		(13)	-
Distribution to non-controlling interest		-	(150)
Reduction in non-controlling interest		(285)	(678)
Net cash used in financing activities		(15,264)	(14,826)
Net increase in cash in the year		(3,104)	100
Cash and cash equivalents at the beginning of the year		35,681	37,456
Effects of exchange rates on cash and cash equivalents		1,385	(1,875)
Cash and cash equivalents at the end of the year		33,962	35,681

Notes to the financial statements

for the year ended 31 December 2022

1 Earnings per share

The calculation of basic earnings per ordinary share ("EPS") is based on the profit on ordinary activities after taxation of £20,212,000 (2021: £19,907,000) and on 12,261,477 (2021: 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.

	2022			2021
	£'000	Pence		£'000	Pence
Profit on ordinary activities after taxation	20,212	164.8		19,907	162.4

2 This financial information within 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 2022 have been extracted from the full accounts of the Group for that year which received an unmodified auditor's report, and which have not yet been delivered to the Registrar of Companies.  The financial information for the year ended 31 December 2021 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 unmodified and does not include a statement under section 498(2) or (3) of the Companies Act 2006.

This preliminary announcement has been prepared in accordance with the recognition and measurement principles of UK adopted international accounting standards in conformity with the requirements of the Companies Act 2006 and in accordance with the AIM rules. The financial information included in this preliminary announcement does not include all the disclosures required in accounts prepared in accordance with UK adopted international accounting standards in conformity with the requirements of the Companies Act 2006 and accordingly it does not itself comply with UK adopted international accounting standards in conformity with the requirements of the Companies Act 2006.  The accounting policies used in the preparation of this preliminary announcement have remained unchanged from those set out in the statutory accounts for the year ended 31 December 2021. They are also consistent with those in the full accounts for the year ended 31 December 2022, which have yet to be published.

The Group will post its annual report and accounts to shareholders on 25 May 2023, a copy of the annual report and accounts will be available on the company's website (www.londonsecurity.org).

The person responsible for arranging the release of this announcement on behalf of the Company is Richard Pollard, Company Secretary.

Enquiries

London Security plc
Richard Pollard Company Secretary	Tel: 01422 372 852
WH Ireland Limited
Chris Fielding	Tel: 0207 220 1666

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.

END

FR GPURPAUPWURB