TIDMLSC

RNS Number : 7470N

London Security PLC

22 May 2020

London Security plc

Final Results for the Year Ended 31 December 2019

Chairman's statement

J.G. Murray, Chairman

Financial highlights

Financial highlights of the audited results for the year ended 31 December 2019 compared with the year ended 31 December 2018 are as follows:

   --     revenue of GBP146.9 million (2018: GBP137.7 million); 
   --     operating profit of GBP24.2 million (2018: GBP23.2 million); 
   --     profit for the year of GBP16.8 million (2018: GBP16.5 million*); 
   --     earnings per share for the year of GBP1.36 (2018: GBP1.34*); and 
   --     a dividend per share of GBP0.80 (2018: GBP0.80). 

* restated - see note 2

Trading review

The financial highlights illustrate that the Group's revenue increased by GBP9.2 million (6.7%) to GBP146.9 million and operating profit increased by GBP1.0 million (4.3%) to GBP24.2 million. These results reflect:

-- the positive impact of acquisitions in 2018 and 2019 in the United Kingdom, Austria, Belgium, the Netherlands and Denmark;

   --      improved performance from our service business in continental Europe; and 

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

-- the movement in the Euro to Sterling average exchange rate, which had an adverse effect of GBP1.0 million on reported revenue and GBP0.2 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 has acquired eight established fire protection businesses and has grown its presence in the Netherlands, Belgium 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

2019 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 2018 of GBP0.40 per ordinary share was paid to shareholders on 5 July 2019. An interim dividend in respect of 2019 of GBP0.40 per ordinary share was paid to shareholders on 29 November 2019. The Board is recommending the payment of a final dividend in respect of 2019 of GBP0.20 per ordinary share to be paid on 10 July 2020 to shareholders on the register on 12 June 2020. The shares will be marked ex-dividend on 11 June 2020.

Coronavirus impact assessment

It is clear that the coronavirus pandemic will have a significant impact on the business and we have taken a number of actions to weather the storm. When the pandemic first appeared in China, the initial threat was to our supply chain. It is now very clear that the risk to customer demand is by far our greatest challenge and we are prepared for a significant downturn in sales for the duration of the pandemic.

Many of the components which we are reliant on are sourced from China and we have therefore suffered some delays in the delivery of such components in the first quarter. The Chinese government's response to the outbreak has meant that capacity returned over the course of February and into March. Our strategic stockholding has meant our production impact has been minimised. We are continuing to monitor the effects on our manufacturing capability.

With a return to relative normality on the supply side, we are now focused on customer demand. By the middle of March, the virus had impacted all of our European trading territories. Throughout Europe governments are responding to the pandemic by applying severe restrictions on movement and introducing social distancing measures which have forced many of our customers to temporarily close. We have prepared the business for varying levels of sales declines by temporarily reducing staff levels in some locations.

We have evaluated the remaining demand for our services and sectors where this is deemed essential, for example in some areas including health, communications and utilities. In addition, where customers still want work carrying out and we able to work within government guidelines, we are continuing to provide our usual levels of service. This is varying by country, with the Netherlands operating at over 50% but other countries being affected more. Where we offer call out or support services under contracts, for example for fire alarms, we continue to offer these services and fulfil our contractual obligations.

During this period of uncertainty we have been in constant contact with our staff, customers, banks and advisers to ensure clear and concise communication. Our priority is to do all we can to ensure that our offices, depots and services are 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.

We have modelled the effects of this sales decline along with all the measures we can take to ensure that the Company remains within its cash and bank facilities, and have prepared cash flow forecasts for a period in excess of 12 months. Based upon this modelling, the Group has sufficient cash beyond June 2021 without renegotiating its bank facilities.

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. Debt recovery remains consistent with previous years and staff costs will be controlled using the furlough process where applicable. The Board therefore considers that its strong balance sheet and material net cash position means that it is well placed to navigate through the impact of the coronavirus outbreak, which will inevitably impact profitability while the various international lockdowns continue..

Annual General Meeting

The Annual General Meeting ("AGM") will be held at 2 Jubilee Way, Elland, West Yorkshire, HX5 9DY, on 30 June 2020 at 11.30 am. Under the UK government's current prohibition on non-essential travel and public gatherings, it will not be possible for shareholders to attend the AGM in person. We therefore 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

21 May 2020

Consolidated income statement

for the year ended 31 December 2019

 
                                                2019       2018 
                                                       Restated 
                                                          - see 
                                                           note 
                                                              2 
                                      Note   GBP'000    GBP'000 
 -----------------------------------  ----  --------  --------- 
 Revenue                                     146,920    137,711 
 Cost of sales                              (36,293)   (31,780) 
 -----------------------------------  ----  --------  --------- 
 Gross profit                                110,627    105,931 
 Distribution costs                         (54,140)   (50,593) 
 Administrative expenses                    (32,333)   (32,163) 
 -----------------------------------  ----  --------  --------- 
 Operating profit                             24,154     23,175 
 -----------------------------------  ----  --------  --------- 
 EBITDA*                                      32,503     29,557 
 Depreciation and amortisation               (8,349)    (6,382) 
 -----------------------------------  ----  --------  --------- 
 Operating profit                             24,154     23,175 
 -----------------------------------  ----  --------  --------- 
 Finance income                                  142        131 
 Finance costs                                 (254)      (171) 
 -----------------------------------  ----  --------  --------- 
 Finance costs - net                           (112)       (40) 
 -----------------------------------  ----  --------  --------- 
 Profit before income tax                     24,042     23,135 
 Income tax expense                          (7,229)    (6,623) 
 -----------------------------------  ----  --------  --------- 
 Profit for the year                          16,813     16,512 
 -----------------------------------  ----  --------  --------- 
 Profit is attributable to: 
 Equity shareholders of the Company           16,653     16,399 
 Non-controlling interest                        160        113 
 -----------------------------------  ----  --------  --------- 
                                              16,813     16,512 
 -----------------------------------  ----  --------  --------- 
 Earnings per share 
 Basic and diluted                       1    135.8p     133.7p 
 -----------------------------------  ----  --------  --------- 
 
   *     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 2019

 
                                                               2019       2018 
                                                                      Restated 
                                                                         - see 
                                                                          note 
                                                                             2 
                                                            GBP'000    GBP'000 
---------------------------------------------------------   -------  --------- 
Profit for the financial year                                16,813     16,512 
----------------------------------------------------------  -------  --------- 
Other comprehensive (expense)/income: 
Items that may be reclassified subsequently to profit 
 or loss: 
- currency translation differences on foreign currency 
 net investments                                            (2,389)        361 
Items that will not be reclassified subsequently to 
 profit or loss: 
- actuarial gain recognised in the Nu-Swift Pension 
 Scheme                                                         414         16 
- movement on deferred tax relating to the Nu-Swift 
 Pension Scheme surplus                                       (145)        (6) 
- actuarial loss recognised in the Ansul Pension Scheme       (412)      (145) 
- movement on deferred tax relating to the Ansul Pension 
 Scheme deficit                                                 103         36 
----------------------------------------------------------  -------  --------- 
Other comprehensive (expense)/income for the year, 
 net of tax                                                 (2,429)        262 
----------------------------------------------------------  -------  --------- 
Equity shareholders of the Company                           14,224     16,661 
Non-controlling interest                                        160        113 
----------------------------------------------------------  -------  --------- 
Total comprehensive income for the year                      14,384     16,774 
----------------------------------------------------------  -------  --------- 
 

Consolidated statement of changes in equity

for the year ended 31 December 2019

 
                                                                    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 2018 (previously 
 reported)                                                   123      344           1    2,033    8,470    92,408              189  103,568 
-------------------------------------------------------  -------  -------  ----------  -------  -------  --------  ---------------  ------- 
Prior year adjustment 
 (note 2)                                                      -        -           -        -        -     1,179                -    1,179 
-------------------------------------------------------  -------  -------  ----------  -------  -------  --------  ---------------  ------- 
At 1 January 2018 (as 
 restated)                                                   123      344           1    2,033    8,470    93,587              189  104,747 
-------------------------------------------------------  -------  -------  ----------  -------  -------  --------  ---------------  ------- 
Total comprehensive income 
 for the year 
Profit for the financial 
 year (restated - note 
 2)                                                            -        -           -        -        -    16,399              113   16,512 
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 (restated 
 - note 2)                                                     -        -           -        -      361    16,300              113   16,774 
-------------------------------------------------------  -------  -------  ----------  -------  -------  --------  ---------------  ------- 
Contributions by and distributions 
 to owners of the Company: 
- dividends                                                    -        -           -        -        -   (9,809)                -  (9,809) 
-------------------------------------------------------  -------  -------  ----------  -------  -------  --------  ---------------  ------- 
At 31 December 2018 and 
 1 January 2019 (restated 
 - note 2)                                                   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 income/(expense): 
- 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                                          123      344           1    2,033    6,442   106,882              349  116,174 
-------------------------------------------------------  -------  -------  ----------  -------  -------  --------  ---------------  ------- 
 

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 2019

 
                                                   2019         2018         2017 
                                                            Restated     Restated 
                                                          - see note   - see note 
                                                                   2            2 
                                                GBP'000      GBP'000   GBPGBP'000 
--------------------------------------------   --------  -----------  ----------- 
Assets 
Non-current assets 
Property, plant and equipment                    12,164       12,077       11,589 
Right of use assets                               2,360            -            - 
Intangible assets                                67,504       66,077       63,578 
Deferred tax asset                                  683          811          589 
Retirement benefit surplus                        4,959        4,430        4,397 
---------------------------------------------  --------  -----------  ----------- 
                                                 87,670       83,395       80,153 
 --------------------------------------------  --------  -----------  ----------- 
Current assets 
Inventories                                      13,434       13,293       11,749 
Trade and other receivables                      27,822       28,732       26,063 
Cash and cash equivalents                        27,143       26,110       24,652 
---------------------------------------------  --------  -----------  ----------- 
                                                 68,399       68,135       62,464 
 --------------------------------------------  --------  -----------  ----------- 
Total assets                                    156,069      151,530      142,617 
---------------------------------------------  --------  -----------  ----------- 
Liabilities 
Current liabilities 
Trade and other payables                       (23,158)     (22,713)     (19,576) 
Income tax liabilities                            (987)      (1,731)      (1,699) 
Borrowings                                      (2,048)      (2,125)     (11,125) 
Lease liabilities                               (1,134)            -            - 
Derivative financial instruments                      -            -         (54) 
Provision for liabilities and charges                 -          (5)            - 
---------------------------------------------  --------  -----------  ----------- 
                                               (27,327)     (26,574)     (32,454) 
 --------------------------------------------  --------  -----------  ----------- 
Non-current liabilities 
Trade and other payables                          (850)        (922)      (1,003) 
Borrowings                                      (5,122)      (7,441)            - 
Lease liabilities                               (1,256)            -            - 
Derivative financial instruments                   (47)         (41)            - 
Deferred tax liabilities                        (2,909)      (2,779)      (2,505) 
Retirement benefit obligations                  (2,215)      (1,880)      (1,721) 
Provision for liabilities and charges             (169)        (181)        (187) 
---------------------------------------------  --------  -----------  ----------- 
                                               (12,568)    (13,244))      (5,416) 
 --------------------------------------------  --------  -----------  ----------- 
Total liabilities                              (39,895)     (39,818)     (37,870) 
---------------------------------------------  --------  -----------  ----------- 
Net assets                                      116,174      111,712      104,747 
---------------------------------------------  --------  -----------  ----------- 
Shareholders' equity 
Ordinary shares                                     123          123          123 
Share premium                                       344          344          344 
Capital redemption reserve                            1            1            1 
Merger reserve                                    2,033        2,033        2,033 
Other reserves                                    6,442        8,831        8,470 
Retained earnings                               106,882      100,078       93,587 
---------------------------------------------  --------  -----------  ----------- 
Equity attributable to owners of the Parent 
 Company                                        115,825      111,410      104,558 
Non-controlling interest                            349          302          189 
---------------------------------------------  --------  -----------  ----------- 
Total equity                                    116,174      111,712      104,747 
---------------------------------------------  --------  -----------  ----------- 
 

Consolidated statement of cash flows

for the year ended 31 December 2019

 
                                                    2019      2018 
                                                 GBP'000   GBP'000 
---------------------------------------------   --------  -------- 
Cash flows from operating activities 
Cash generated from operations                    32,363    28,385 
Interest paid                                      (160)     (147) 
Income tax paid                                  (7,639)   (7,393) 
----------------------------------------------  --------  -------- 
Net cash generated from operating activities      24,564    20,845 
----------------------------------------------  --------  -------- 
Cash flows from investing activities 
Acquisition of subsidiary undertakings 
 (net of cash acquired)                          (2,264)   (4,274) 
Purchases of property, plant and equipment       (3,974)   (3,551) 
Proceeds from the sale of property, plant 
 and equipment                                       329       398 
Purchases of intangible assets                   (2,068)     (746) 
Interest received                                     27        12 
----------------------------------------------  --------  -------- 
Net cash used in investing activities            (7,950)   (8,161) 
----------------------------------------------  --------  -------- 
Cash flows from financing activities 
Repayments of borrowings                        (2,091)    (1,614) 
Payment of lease liabilities                     (1,750)         - 
Dividends paid to the Company's shareholders     (9,809)   (9,809) 
Distribution to non-controlling interest           (113)         - 
----------------------------------------------  --------  -------- 
Net cash used in financing activities           (13,763)  (11,423) 
----------------------------------------------  --------  -------- 
Effects of exchange rates on cash and 
 cash equivalents                                (1,818)       197 
----------------------------------------------  --------  -------- 
Net increase in cash in the year                   1,033     1,458 
Cash and cash equivalents at the beginning 
 of the year                                      26,110    24,652 
----------------------------------------------  --------  -------- 
Cash and cash equivalents at the end of 
 the year                                         27,143    26,110 
----------------------------------------------  --------  -------- 
 

Notes to the financial statements

for the year ended 31 December 2019

1 Earnings per share

The calculation of basic earnings per ordinary share ("EPS") is based on the profit on ordinary activities after taxation of GBP16,653,000 (2018: GBP16,399,000) 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    16,653  135.8     16,399   133.7 
---------------------------------------------  -------  -----  ---------  ------ 
 
   2    Prior year adjustment 

While preparing the Group's financial statements for the year ended 31 December 2019 the management of London Security plc noticed that they had failed to account for deferred tax liabilities on the acquisition of certain intangible assets arising through business combinations in accordance with paragraph 19 of IAS12 Income Taxes in previous years. Management estimates that a deferred tax liability of GBP881,000 (2017: GBP675,000) and goodwill of GBP2,382,000 (2017: GBP1,854,000) were not previously recognised at 31 December 2018. Retained earnings at 1 January 2018 have been restated by GBP1,179,000 from GBP92,408,000 to GBP93,587,000. The deferred tax liability at 1 January 2018 has been restated by GBP675,000 from GBP1,830,000 to GBP2,505, 000. Goodwill at 1 January 2018 has been restated by GBP1,854,000 from GBP61,724,000 to GBP63,578,000. The analysis below shows a reconciliation of the balance sheet at 31 December 2018 and the income statement for the year ended 31 December 2018 as previously reported and as restated.

 
 Balance sheet as at 31 December 2018 
                                Previously   Prior year adjustment   As restated 
                                 reported 
                                   GBP'000                 GBP'000       GBP'000 
 Assets 
 Non Current Assets 
  Property, plant & 
   equipment                        12,077                       -        12,077 
  Intangible assets                 63,695                   2,382        66,077 
  Deferred tax asset                   811                       -           811 
 Retirement benefit 
  surplus                            4,430                       -         4,430 
                                    81,013                   2,382        83,395 
                               -----------  ----------------------  ------------ 
 Current Assets 
  Inventories                       13,293                       -        13,293 
  Trade & other receivables         28,732                       -        28,732 
  Cash & cash equivalents           26,110                       -        26,110 
                                    68,135                       -        68,135 
                               -----------  ----------------------  ------------ 
 Total Assets                      149,148                   2,382       151,530 
                               -----------  ----------------------  ------------ 
 Liabilities 
 Current Liabilities 
  Trade & other payables          (22,713)                       -      (22,713) 
  Income tax liabilities           (1,731)                       -       (1,731) 
  Borrowings                       (2,125)                       -       (2,125) 
  Provision for liabilities 
   & charges                           (5)                       -           (5) 
                                  (26,574)                       -      (26,574) 
                               -----------  ----------------------  ------------ 
 Non Current Liabilities 
  Trade & other payables             (922)                       -         (922) 
  Borrowings                       (7,441)                       -       (7,441) 
  Derivative financial 
   instruments                        (41)                       -          (41) 
  Deferred tax liabilities         (1,898)                   (881)       (2,779) 
  Retirement benefit 
   obligations                     (1,880)                       -       (1,880) 
  Provision for liabilities 
   & charges                         (181)                       -         (181) 
                                  (12,363)                   (881)      (13,244) 
                               -----------  ----------------------  ------------ 
 Total Liabilities                (38,937)                   (881)      (39,818) 
                               -----------  ----------------------  ------------ 
 Net Assets                        110,211                   1,501       111,712 
                               -----------  ----------------------  ------------ 
 Shareholders' Equity 
  Ordinary shares                      123                       -           123 
 Share premium                         344                       -           344 
 Capital redemption 
  reserve                                1                       -             1 
  Merger reserve                     2,033                       -         2,033 
  Other reserve                      8,831                       -         8,831 
  Retained earnings                 98,577                   1,501     100,078 
 Equity attributable 
  to owners of the Parent 
  Company                          109,909                   1,501       111,410 
 Non-controlling interest              302                       -           302 
                               -----------  ----------------------  ------------ 
 Total equity                      110,211                   1,501       111,712 
                               -----------  ----------------------  ------------ 
 
 
 Income statement for the year ended 31 December 2018 
 
                             Previously   Prior year adjustment   As restated 
                              reported 
                                GBP'000                 GBP'000       GBP'000 
 Revenue                        137,711                       -       137,711 
 Cost of sales                 (31,780)                       -      (31,780) 
 
 Gross profit                   105,931                       -       105,931 
 
 Distribution costs            (50,593)                       -      (50,593) 
 Administrative expenses       (32,163)                       -      (32,163) 
 
 Operating profit                23,175                       -        23,175 
 
 Finance income                     131                       -           131 
 Finance costs                    (171)                       -         (171) 
                            -----------  ----------------------  ------------ 
 Finance costs - net               (40)                       -          (40) 
 
 Profit before income 
  tax                            23,135                       -        23,135 
 
 Income tax expense             (6,945)                     322       (6,623) 
 
 Profit for the year             16,190                     322        16,512 
                            -----------  ----------------------  ------------ 
 
 

Basic and diluted earnings per share for the prior year have also been restated. The amount of the correction for the basic and diluted earnings per share was an increase of 2.6p per share.

3 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 2019 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 2018 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 2019 and 31 December 2018 did not contain a statement under s498 (1) to (4) of the Companies Act 2006.

This preliminary announcement has been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards ("IFRS"). The financial information included in this preliminary announcement does not include all of the disclosures required in accounts prepared in accordance with IFRS and accordingly it does not itself comply with IFRS. With the exception of the adoption of IFRS16, 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 2018. They are also consistent with those in the full accounts for the year ended 31 December 2019, which have yet to be published.

The Group will post its annual report and accounts to shareholders on 4 June 2020. A copy of the annual report and accounts can be found on the company's webpage ( www.londonsecurity.org ).

The Directors have prepared this financial information on the fundamental assumption that the Group is a going concern and will continue to trade for at least 12 months following the date of approval of the financial information. In determining whether the Group's accounts should be prepared on a going concern basis the Directors have considered the factors likely to affect future performance. At 31 December 2019 the Group held cash and cash equivalents of GBP27 million. Total debt at 31 December 2019 was GBP7 million, of which GBP2 million is due for repayment in the year to 31 December 2020.

The Chairman's Statement contains a Covid-19 impact assessment detailing the effect it is having on our business. The group has seen a severe decline in turnover as social distancing and travel policies are implemented. Further to the approval of the 2020 budget in December 2019, the Directors have considered the potential impact of the Covid-19 outbreak on the Group's results and have modelled a base case reforecast. The base case reforecast, is based on the directors' current knowledge and expectation and includes a level of restrictions that would remain in force into June 2021. The base case reforecast includes significant cash headroom. In preparing the base case reforecast, there are key judgements in relation to the timing of when the engineers will be able to return to customer sites and provide fire protection services and the level of support from the Government's in which the Group operates in relation to employment costs. The Directors have concluded that while the assumptions in the base case reforecast include significant judgement, they are appropriate and as at the date of approving the preliminary announcement, our engineers are returning to work in some of the Countries that the Group operates. In addition, the directors are satisfied that further action could be taken, if necessary, including suspending dividend payments. Whilst the directors expect the group's bankers to be supportive should the group request loan repayment deferrals or forgiveness of any covenant breaches should the actual impact of Covid-19 be worse than reforecast, the Directors consider that the group could repay its external loans should that support not be available. The directors have also modelled sensitivities to the base case reforecast, which demonstrates that the group is forecast to have significant cash headroom after applying these sensitivities.

Accordingly, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future and are satisfied that it is appropriate to adopt the going concern basis in preparing this financial information.

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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END

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May 22, 2020 04:00 ET (08:00 GMT)