London Security plc Annual Report and Accounts 2020 LONDON SECURITY PLC ANNUAL REPORT AND ACCOUNTS 2020 A leader in Europe’s fire security industry. London Security plc Each year we provide fire protection for over 258,000 customers through our local presence in the United Kingdom, Belgium, the Netherlands, Austria, France, Germany, Denmark and Luxembourg. Customer focus. We continually strive to offer the highest quality of service and products to our valued customers. We employ the best trained and qualified engineers with quality products that have achieved the highest performance ratings to blue chip companies, governments or private individuals. Our services and products are commercialised through long-established brands. Nu-Swift, Ansul, Total, Premier and Master: the unique styling of our products makes them immediately recognisable to both the industry and customers alike. We aim to achieve the highest levels of service and product quality. Our employees are trained to the most stringent servicing standards and we develop the highest performance-rated fire products. These activities are performed whilst considering the preservation of the environment. More information at londonsecurity.org STRATEGIC REPORT Highlights IN THIS REPORT OUR EUROPEAN GROUP BRANDS Strategic report 01 Financial highlights ® 01 Our European group brands 02 Chairman’s statement 04 Financial review 06 Strategic report Governance 08 Directors and Company advisers 10 Report of the Directors 13 Directors’ remuneration report Financial statements 14 Independent auditor’s report 22 Consolidated income statement 23 Consolidated statement of comprehensive income 24 Consolidated statement of changes in equity 25 Consolidated statement of financial position 26 Consolidated statement of cash flows 27 Notes to the financial statements 58 Parent Company balance sheet 59 Parent Company statement of changes in equity 60 Notes to the Parent Company London Security plc continues to deliver industry-leading profit financial statements margins since acquiring the Ansul and Nu-Swift businesses. 64 Notice of Annual General Meeting The challenges for the future are to continue to grow through 67 Group companies acquisition and organically and to build upon our competitive advantage of being a complete fire protection solution provider. FINANCIAL HIGHLIGHTS Earnings per share Operating profit Revenue 145.6p £24.7m £152.7m +7.2% +2.1% +3.9% 24.7 24.2 152.7 145.6 23.2 146.9 21.7 135.8 133.7 137.7 20.9 125.9 116.7 112.4 114.8 16 17 18 19 20 16 17 18 19 20 16 17 18 19 20 Annual Report and Accounts 2020 – London Security plc 01 STRATEGIC REPORT Chairman’s statement J.G. Murray, Chairman Trading review service providers. The Group FINANCIAL HIGHLIGHTS The financial highlights illustrate that the recognises that we can only achieve Group’s revenue increased by £5.8 million our aims with talented and dedicated Financial highlights of the audited (3.9%) to £152.7 million and operating colleagues who provide outstanding results for the year ended profit increased by £0.5 million (2.1%) customer service in every area of 31 December 2020 compared with to £24.7 million. These results reflect: the business. the year ended 31 December 2019 are as follows: the positive impact of acquisitions Dividends in 2019 and 2020 in the United revenue of £152.7 million A final dividend in respect of 2019 Kingdom, Belgium and Germany; (2019: £146.9 million); of £0.20 per ordinary share was paid a good response to the impact of to shareholders on 10 July 2020. operating profit of £24.7 million Covid-19. Many of our businesses An interim dividend in respect of 2020 (2019: £24.2 million); were severely hampered by Covid-19 of £0.40 per ordinary share was paid profit for the year of £18.0 million particularly in the Spring, but most to shareholders on 27 November 2020. (2019: £16.8 million); were able to recover quickly through The Board is recommending the active management of the situation; payment of a final dividend in respect cash of £37.5 million of 2020 of £0.40 per ordinary share to (2019: £27.1 million); improved performance from our be paid on 9 July 2021 to shareholders service business in continental Europe; earnings per share for the year on the register on 11 June 2021. of £1.46 (2019: £1.36); and continued improvement from newer The shares will be marked ex-dividend service offerings (e.g. emergency on 10 June 2021. a dividend per share of £0.60 lights and passive fire protection); and (2019: £0.80). Covid-19 impact assessment the movement in the Euro to Sterling The Group is responsible for average exchange rate, which had maintaining, manufacturing and a favourable effect of £1.1 million supplying fire protection and fire on reported revenue and £0.3 million suppression equipment throughout on operating profit. A more detailed Europe and has been designated as review of this year’s performance is essential contractor status by a number given in the Financial Review and the of our clients including care, health, Strategic Report. housing and food production services. Acquisitions It was essential that we continued to meet our obligations and continued to It remains a principal aim of the Group operate from our factories and that our to grow through acquisition. Acquisitions field-based service engineers continued are being sought throughout Europe to visit our customers’ sites for essential and the Group will invest at prices where responsive and planned maintenance. an adequate return is envisaged by the Board. In the year under review the Group Many of the components which we are acquired one established security reliant on are sourced from China and business and has grown its presence in we therefore suffered some delays in Germany and the UK with the acquisition the delivery of such components in the of service contracts from smaller first quarter of 2020. The Chinese well-established businesses for integration government’s response to the outbreak into the Group’s existing subsidiaries. meant that capacity returned over the course of March 2020. Our strategic Management and staff stockholding meant our production 2020 was a year in which the staff impact was minimised. were required to operate under With a return to relative normality on the challenging conditions, and on supply side, we focused on customer behalf of the shareholders, I would demand. By the middle of March, the like to express thanks and appreciation virus had impacted all our European for their contribution as essential 02 London Security plc – Annual Report and Accounts 2020 trading territories. Throughout Europe a full service force in the field and have governments responded to the pandemic experienced a strong start to 2021. by applying severe restrictions on The experience of 2020 shows the movement and introducing social resilience of our business. distancing measures which forced many of our customers to temporarily close. Future prospects We prepared the business for varying As the situation continues, cash levels of sales declines by temporarily management will be a key consideration; reducing staff levels in some locations. the London Security Group has a healthy We took advantage of government job balance sheet, strong cash reserves retention schemes to finance this and a track record for good cash approach in order that staff were generation. The Board therefore considers available to return to work as restrictions that the Group is well placed to navigate were lifted and non-essential businesses through the impact of the Covid-19 reopened. A claim of £1.5 million was outbreak and capitalise on the rebound made under the UK Coronavirus Job in the economy created by the vaccine Retention Scheme and £0.4 million programmes as they gain momentum under a similar scheme in Austria. In through 2021. Belgium we took advantage of their temporary unemployment scheme Annual General Meeting which resulted in employee cost The Annual General Meeting (“AGM”) savings in 2020. will be held at 2 Jubilee Way, Elland, During this period of uncertainty we West Yorkshire HX5 9DY, on 30 June stayed in constant contact with our 2021 at 11.30 am. Under the UK staff, customers, banks and advisers to government’s roadmap it is possible ensure clear and concise communication. that the prohibition on non-essential Our priority was to do all we could to travel and public gatherings will have ensure that our offices, depots and ended and it will be possible for services were kept as safe as possible, shareholders to attend the AGM in in order to protect our employees and person. However, we strongly encourage business partners at all times. Many of shareholders to vote on all resolutions our employees and customers are by completing the enclosed form of experiencing very difficult circumstances proxy for use at that Meeting, which you and we continue to support them in are requested to return in accordance many ways. The health and wellbeing of with the instructions on the form. our people is our highest priority. We are thankful and proud of our team members J.G. Murray who continue to respond as essential Chairman service providers. 11 May 2021 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 Annual Report and Accounts 2020 – London Security plc 03 STRATEGIC REPORT Financial review Consolidated Income Statement Consolidated Statement IN SUMMARY The Group’s revenue increased by of Financial Position £5.8 million (3.9%) to £152.7 million.