TIDMLSC
RNS Number : 3633Y
London Security PLC
12 May 2021
London Security plc
Final Results for the Year Ended 31 December 2020
Chairman's statement
J.G. Murray, Chairman
Financial highlights
Financial highlights of the audited results for the year ended
31 December 2020 are as follows:
-- revenue of GBP152.7 million (2019: GBP146.9 million);
-- operating profit of GBP24.7 million (2019: GBP24.2 million);
-- profit for the year of GBP18.0 million (2019: GBP16.8 million);
-- cash of GBP37.5 million (2019: GBP27.1 million);
-- earnings per share for the year of GBP1.46 (2019: GBP1.36); and
-- a dividend per share of GBP0.60 (2019: GBP0.80).
Trading review
The financial highlights illustrate that the Group's revenue
increased by GBP5.8 million (3.9%) to GBP152.7 million and
operating profit increased by GBP0.5 million (2.1%) to GBP24.7
million. These results reflect:
-- the positive impact of acquisitions in 2019 and 2020 in the
United Kingdom, Belgium, and Germany.
-- a good response to the impact of Covid-19. Many of our
businesses were severely hampered by Covid-19 particularly in the
Spring, but most were able to recover quickly through active
management of the situation.
-- 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 GBP1.1 million on reported revenue
and GBP0.3 million on operating profit. A more detailed review of
this year's performance is given in the Financial Review and the
Strategic Report.
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
one established security business and grew its presence in Germany
and the UK with the acquisition of service contracts from smaller
well-established businesses for integration into the Group's
existing subsidiaries.
Management and staff
2020 was a year in which the staff were required to operate
under challenging conditions, and on behalf of the shareholders, I
would like to express thanks and appreciation for their
contribution as essential service providers. 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 2019 of GBP0.20 per ordinary
share was paid to shareholders on 10 July 2020. An interim dividend
in respect of 2020 of GBP0.40 per ordinary share was paid to
shareholders on 27 November 2020. The Board is recommending the
payment of a final dividend in respect of 2020 of GBP0.40 per
ordinary share to be paid on 9 July 2021 to shareholders on the
register on 11 June 2021. The shares will be marked ex-dividend on
10 June 2021.
Covid-19 impact assessment
The Group is responsible for maintaining, manufacturing and
supplying fire protection and fire suppression equipment throughout
Europe and has been designated as essential contractor status by a
number of our clients including care, health, housing and food
production services. It was essential that we continued to meet our
obligations and continued to operate from our factories and that
our field -based service engineers continued to visit our
customers' sites for essential responsive and planned
maintenance.
Many of the components which we are reliant on are sourced from
China and we therefore suffered some delays in the delivery of such
components in the first quarter of 2020. The Chinese government's
response to the outbreak meant that capacity returned over the
course of March 2020. Our strategic stockholding meant our
production impact was minimised.
With a return to relative normality on the supply side, we
focused on customer demand. By the middle of March, the virus had
impacted all our European trading territories. Throughout Europe,
governments responded to the pandemic by applying severe
restrictions on movement and introducing social distancing measures
which forced many of our customers to temporarily close. We
prepared the business for varying levels of sales declines by
temporarily reducing staff levels in some locations. We took
advantage of government job retentions schemes to finance this
approach in order that staff were available to return to work as
restrictions were lifted and non-essential businesses reopened. A
claim of GBP1.5 million was made under the UK Coronavirus Job
Retention Scheme and GBP0.4 million under a similar scheme in
Austria. In Belgium we took advantage of their temporary
unemployment scheme which resulted in employee cost savings in
2020.
During this period of uncertainty, we stayed in constant contact
with our staff, customers, banks and advisers to ensure clear and
concise communication. Our priority was to do all we could to
ensure that our offices, depots and services were kept as safe as
possible, in order to protect our employees and business partners
at all times. Many of our employees and customers are experiencing
very difficult circumstances and we continue to support them in
many ways. The health and wellbeing of our people is our highest
priority. We are thankful and proud of our team members who
continue to respond as essential service providers.
During the third and fourth quarters of 2020 the Group traded
strongly despite the interruptions caused by varying levels of
temporary restrictions imposed by the governments of the countries
in which we operate. This reflects the essential nature of the
services we provide. Temporary restrictions are still in place
across Europe and are subject to change at short notice. However,
at the date of this report we have almost a full service force in
the field and have experienced a strong start to 2021. The
experience of 2020 shows the resilience of our business.
Future 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. The Board therefore considers that the Group is well
placed to navigate through the impact of the Covid-19 outbreak and
capitalise on the rebound in the economy created by the vaccine
programmes as they gain momentum through 2021.
Annual General Meeting
The Annual General Meeting ("AGM") will be held at 2 Jubilee
Way, Elland, West Yorkshire HX5 9DY, on 30 June 2021 at 11.30 am.
Under the UK government's roadmap, it is possible that the
prohibition on non-essential travel and public gatherings will have
ended and it will be possible for shareholders to attend the AGM in
person. 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
11 May 2021
Consolidated income statement
for the year ended 31 December 2020
2020 2019
Notes GBP'000 GBP'000
------------------------------------------ ----- -------- --------
Revenue 152,723 146,920
Cost of sales (37,387) (36,293)
------------------------------------------ ----- -------- --------
Gross profit 115,336 110,627
Distribution costs (56,281) (54,140)
Administrative expenses (33,027) (31,991)
Net impairment losses on financial assets 1 (1,328) (342)
------------------------------------------ ----- -------- --------
Operating profit 24,700 24,154
------------------------------------------ ----- -------- --------
EBITDA* 33,547 32,503
Depreciation and amortisation (8,847) (8,349)
------------------------------------------ ----- -------- --------
Operating profit 24,700 24,154
------------------------------------------ ----- -------- --------
Finance income 78 142
Finance costs (201) (254)
------------------------------------------ ----- -------- --------
Finance costs - net (123) (112)
------------------------------------------ ----- -------- --------
Profit before income tax 24,577 24,042
Income tax expense (6,536) (7,229)
------------------------------------------ ----- -------- --------
Profit for the year 18,041 16,813
------------------------------------------ ----- -------- --------
Profit is attributable to:
Equity shareholders of the Company 17,853 16,653
Non-controlling interest 188 160
------------------------------------------ ----- -------- --------
18,041 16,813
------------------------------------------ ----- -------- --------
Earnings per share
Basic and diluted 2 145.6p 135.8p
------------------------------------------ ----- -------- --------
* 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 2020
2020 2019
GBP'000 GBP'000
------------------------------------------------------- ------- -------
Profit for the financial year 18,041 16,813
-------------------------------------------------------- ------- -------
Other comprehensive (expense)/income:
Items that may be reclassified subsequently to profit
or loss:
- currency translation differences on foreign currency
net investments 2,396 (2,389)
Items that will not be reclassified subsequently
to profit or loss:
- actuarial (loss)/gain recognised in the Nu-Swift
Pension Scheme (4,554) 414
- movement on deferred tax relating to the Nu-Swift
Pension Scheme surplus 1,594 (145)
- actuarial loss recognised in the Ansul Pension
Scheme (17) (412)
- movement on deferred tax relating to the Ansul
Pension Scheme deficit 5 103
-------------------------------------------------------- ------- -------
Other comprehensive expense for the year, net of
tax (576) (2,429)
-------------------------------------------------------- ------- -------
Equity shareholders of the Company 17,465 14,224
Non-controlling interest 188 160
-------------------------------------------------------- ------- -------
Total comprehensive income for the year 17,653 14,384
-------------------------------------------------------- ------- -------
Consolidated statement of changes in equity
for the year ended 31 December 2020
Share Capital
Share premium redemption Merger Other Retained Non-controlling Total
capital account reserve reserve reserve earnings interest equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------------------- ------- ------- ---------- ------- ------- -------- --------------- -------
At 1 January 2019 123 344 1 2,033 8,831 100,078 302 111,712
------------------------------------------------------- ------- ------- ---------- ------- ------- -------- --------------- -------
Total comprehensive income
for the year
Profit for the financial
year - - - - - 16,653 160 16,813
Other comprehensive (expense)/income:
- exchange adjustments - - - - (2,389) - - (2,389)
- actuarial gain on pension
schemes - - - - - 2 - 2
* net movement on deferred tax relating to pension
asset - - - - - (42) - (42)
------------------------------------------------------- ------- ------- ---------- ------- ------- -------- --------------- -------
Total comprehensive (expense)/income
for the year - - - - (2,389) 16,613 160 14,384
------------------------------------------------------- ------- ------- ---------- ------- ------- -------- --------------- -------
Contributions by and
distributions to owners
of the Company:
- dividends - - - - - (9,809) - (9,809)
------------------------------------------------------- ------- ------- ---------- ------- ------- -------- --------------- -------
Distribution to non-controlling
interest - - - - - - (113) (113)
------------------------------------------------------- ------- ------- ---------- ------- ------- -------- --------------- -------
At 31 December 2019 and
1 January 2020 123 344 1 2,033 6,442 106,882 349 116,174
------------------------------------------------------- ------- ------- ---------- ------- ------- -------- --------------- -------
Total comprehensive income
for the year
Profit for the financial
year - - - - - 17,853 188 18,041
Other comprehensive (expense)/income:
- exchange adjustments - - - - 2,396 - - 2,396
- actuarial loss on pension
schemes - - - - - (4,571) - (4,571)
* net movement on deferred tax relating to pension
deficit - - - - - 1,599 - 1,599
------------------------------------------------------- ------- ------- ---------- ------- ------- -------- --------------- -------
Total comprehensive (expense)/income
for the year - - - - 2,396 14,881 188 17,465
------------------------------------------------------- ------- ------- ---------- ------- ------- -------- --------------- -------
Contributions by and
distributions to owners
of the Company:
- dividends - - - - - (7,356) - (7,356)
------------------------------------------------------- ------- ------- ---------- ------- ------- -------- --------------- -------
Distribution to non-controlling
interest - - - - - - (160) (160)
------------------------------------------------------- ------- ------- ---------- ------- ------- -------- --------------- -------
At 31 December 2020 123 344 1 2,033 8,838 114,407 377 126,123
------------------------------------------------------- ------- ------- ---------- ------- ------- -------- --------------- -------
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 2020
2020 2019
GBP'000 GBP'000
-------------------------------------------- -------- --------
Assets
Non-current assets
Property, plant and equipment 13,046 12,164
Right of use assets 3,254 2,360
Intangible assets 66,311 67,504
Deferred tax asset 790 683
Retirement benefit surplus 445 4,959
--------------------------------------------- -------- --------
83,846 87,670
-------------------------------------------- -------- --------
Current assets
Inventories 14,953 13,434
Trade and other receivables 33,174 27,822
Cash and cash equivalents 37,456 27,143
--------------------------------------------- -------- --------
85,583 68,399
-------------------------------------------- -------- --------
Total assets 169,429 156,069
--------------------------------------------- -------- --------
Liabilities
Current liabilities
Trade and other payables (27,582) (23,158)
Income tax liabilities (2,074) (987)
Borrowings (2,518) (2,048)
Lease liabilities (1,451) (1,134)
Provision (16) -
--------------------------------------------- -------- --------
(33,641) (27,327)
-------------------------------------------- -------- --------
Non-current liabilities
Trade and other payables (941) (850)
Borrowings (3,170) (5,122)
Lease liabilities (1,851) (1,256)
Derivative financial instruments (36) (47)
Deferred tax liabilities (1,146) (2,909)
Retirement benefit obligations (2,349) (2,215)
Provision (172) (169)
--------------------------------------------- -------- --------
(9,665) (12,568)
-------------------------------------------- -------- --------
Total liabilities (43,306) (39,895)
--------------------------------------------- -------- --------
Net assets 126,123 116,174
--------------------------------------------- -------- --------
Shareholders' equity
Ordinary shares 123 123
Share premium 344 344
Capital redemption reserve 1 1
Merger reserve 2,033 2,033
Other reserves 8,838 6,442
Retained earnings 114,407 106,882
--------------------------------------------- -------- --------
Equity attributable to owners of the Parent
Company 125,746 115,825
Non-controlling interest 377 349
--------------------------------------------- -------- --------
Total equity 126,123 116,174
--------------------------------------------- -------- --------
Consolidated statement of cash flows
for the year ended 31 December 2020
2020 2019
GBP'000 GBP'000
-------------------------------------------------------- -------- --------
Cash flows from operating activities
Cash generated from operations 32,862 32,363
Interest paid (118) (160)
Income tax paid (5,524) (7,639)
--------------------------------------------------------- -------- --------
Net cash generated from operating activities 27,220 24,564
--------------------------------------------------------- -------- --------
Cash flows from investing activities
Acquisition of subsidiary undertakings (net of cash
acquired) (516) (2,264)
Purchases of property, plant and equipment (5,063) (3,974)
Proceeds from the sale of property, plant and equipment 462 329
Purchases of intangible assets (1,244) (2,068)
Interest received 27 27
--------------------------------------------------------- -------- --------
Net cash used in investing activities (6,334) (7,950)
--------------------------------------------------------- -------- --------
Cash flows from financing activities
Repayments of borrowings (2,121) (2,091)
Payment of lease liabilities (2,036) (1,750)
Dividends paid to the Company's shareholders (7,356) (9,809)
Distribution to non-controlling interest (160) (113)
--------------------------------------------------------- -------- --------
Net cash used in financing activities (11,673) (13,763)
--------------------------------------------------------- -------- --------
Net increase in cash in the year 9,213 2,851
Cash and cash equivalents at the beginning of the
year 27,143 26,110
--------------------------------------------------------- -------- --------
Effects of exchange rates on cash and cash equivalents 1,100 (1,818)
--------------------------------------------------------- -------- --------
Cash and cash equivalents at the end of the year 37,456 27,143
--------------------------------------------------------- -------- --------
Notes to the financial statements
for the year ended 31 December 2020
1 Net impairment losses on financial assets
This charge relates entirely to additional expected credit
losses in respect of trade receivables.
2 Earnings per share
The calculation of basic earnings per ordinary share ("EPS") is
based on the profit on ordinary activities after taxation of
GBP17,853,000 (2018: GBP16,653,000) and on 12,261,477 (2018:
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.
2019 2018
Restated -
see note 32
-------------- --------------
GBP'000 Pence GBP'000 Pence
--------------------------------------------- ------- ----- ------- -----
Profit on ordinary activities after taxation 17,853 145.6 16,653 135.8
--------------------------------------------- ------- ----- ------- -----
3 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 2020 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 2019 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 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 International Accounting Standards in conformity
with the requirements of the Companies Act 2006 and accordingly it
does not itself comply with 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 2019. They are
also consistent with those in the full accounts for the year ended
31 December 2020, which have yet to be published.
The Group will post its annual report and accounts to
shareholders on 24 May 2021. 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 Tel: 01422 372 852
Company Secretary
WH Ireland Limited
Chris Fielding Tel: 0207 220 1666
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