London Security plc

Final Results for the Year Ended 31 December 2021

Chairman's statement

 J.G. Murray, Chairman

Financial Highlights

Financial highlights of the audited results for the year ended 31 December 2021 compared with the year ended 31 December 2020 are as follows:

•     revenue of £166.6 million (2020: £152.7 million);

•     operating profit of £27.2 million (2020: £24.7 million);

•     profit for the year of £20.0 million (2020: £18.0 million);

•     cash of £35.7 million (2020: £37.5 million);

•     earnings per share for the year of £1.62 (2020: £1.46); and

•     a dividend per share of £0.80 (2020: £0.60).

Trading review

The financial highlights illustrate that the Group's revenue increased by £13.9 million (9.1%) to £166.6 million and operating profit increased by £2.5 million (10.1%) to £27.2 million. These results reflect:

•     a good response to the impact of Covid-19. Many of our businesses were severely hampered by Covid-19 throughout 2020, but the easing of restrictions in 2021 allowed our business to capitalise on the rebound in the economies in which we operate;

•     the positive impact of acquisitions in 2021 in the United Kingdom, Denmark, Belgium, France and Germany;

•     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 £3.4 million on reported revenue and £0.7 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 established security businesses and grew its presence in Denmark, the UK, Belgium, the Netherlands, Germany and France with the acquisition of service contracts from smaller well-established businesses for integration into the Group's existing subsidiaries.

Management and staff

2021 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 health and wellbeing of our people is our highest priority. 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 2020 of £0.40 per ordinary share was paid to shareholders on 9 July 2021. An interim dividend in respect of 2021 of £0.40 per ordinary share was paid to shareholders on 26 November 2021. The Board is recommending the payment of a final dividend in respect of 2021 of £0.42 per ordinary share to be paid on 8 July 2022 to shareholders on the register on 10 June 2022. The shares will be marked ex-dividend on 9 June 2022.

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.

In 2021 there was largely a return to normality in our business although there were still some restrictions on our operations in some countries to help reduce transmission. The high level of business failures predicted by some commentators did not occur. We must be prepared for further disruption should further waves materialise in any of the countries in which we operate.

During 2021 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. At the date of this report we have a full service force in the field and have experienced a strong start to 2022. The experience of 2021 shows the resilience of our business.

Future prospects

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 capitalise on the increase in demand we are seeing for our products and services. 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 22 June 2022 at 11.30 am. On 21 February 2022 the UK government announced the end of restrictions in response to Covid -19. 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

17 May 2022

Consolidated income statement

 for the year ended 31 December 2021

*     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 2021

Consolidated statement of changes in equity

 for the year ended 31 December 2021

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 2021

Consolidated statement of cash flows

 for the year ended 31 December 2021

Notes to the financial statements

 for the year ended 31 December 2021

1 Net impairment losses on financial assets

This charge relates entirely to the movement in 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 £19,907,000 (2020: £17,853,000) and on 12,261,477 (2020: 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.

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 2021 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 2020 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 2020. They are also consistent with those in the full accounts for the year ended 31 December 2021, which have yet to be published.

The Group will post its annual report and accounts to shareholders on 27 May 2022, a copy of the annual report and accounts will be available on the company's website (www.londonsecurity.org).

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