RNS Number:0667F
SectorGuard PLC
26 June 2006
SectorGuard Plc: SGD / Index: AIM / Sector: Support Services
26 June 2006
SectorGuard Plc
Interim Results
SectorGuard Plc, the AIM listed specialist security, announces its results for
the six months ended 31 March 2006.
Overview
* Turnover up 16% to #9,104,547 (2005: #7,857,225)
* Operating profit before goodwill up 32% to #690,222 (2005: #523,602)
* Gross margins up to 22% from 17% in 2005
* Net assets up 57% to #8,414, 821 (2005: #5,362,185)
* One of the first companies to be awarded the Security Industry Authority's
Approved Contractor Scheme status
* Record start to the year
* Successful integration of the electronics businesses, with new business
being won across the group from an integrated sales effort
* Acquisition of alarm maintenance contracts from Oakpark Alarms
Chairman's Statement
I am pleased to report on the six month period ended 31 March 2006 which has
proven to be yet another strong period of growth. This is both in financial
terms, where we have recorded record levels of turnover and gross profit, and in
operational terms where we have successfully adapted to the changing regulatory
aspects of security and integrated the electronic security system businesses
acquired in the past year to broaden the range of products and services we can
offer to new and existing clients. We have also continued our investment in our
infrastructure with a view to further improving our standards of excellence with
respect to service delivery to our clients and staff.
Finance
Turnover for the six months has increased 16% to #9,104,547, by comparison with
#7,857,225 in 2005. This turnover has generated a 45% increase in gross profit
to #1,965,702 (2005: #1,357,252). We have also increased gross margins to 22%
(2005: 17%) as a result of the successful integration of the electronic security
systems businesses and the resultant change in mix of products and services
sold. Despite the increased investment in the infrastructure of the business and
the non-recurring exceptional cost of licensing our existing workforce of
security officers, which continued until the licensing deadline on 20 March
2006, we are reporting a 32% increase in operating profit before goodwill at
#690,222 (2005: #523,602). These increased profits contributed to the 57%
increase in net assets at #8,414, 821 (2005: #5,362,185) and the cash balance at
31 March of #611,569 (2005: #207,882).
Operations
During the six months under review there have been two principal operational
projects.
The first was compliance with the Private Security Industry Act 2001. This
required us to re-train all our existing operational staff and submit a licence
application form with accompanying documentary evidence for each individual. We
also had to train and schedule substitute officers to cover client sites whilst
the regular security officers were undergoing their training. The planning and
execution of this project was highly labour intensive with a corresponding
impact both on the company's finances and normal day to day operations. I am
delighted to say that our whole team performed admirably and we consistently met
the deadlines set down by the Security Industry Authority ("SIA") for obtaining
licences. This led SectorGuard to being one of the first companies to be
accepted as a member of the SIA Approved Contractor Scheme ("ACS"). The
principal benefit of this scheme is that members are permitted to deploy
officers who have applied for a licence but whose licence has not yet been
issued. This benefit is an operational necessity for most large security
businesses, facilitating the recruitment and deployment of new security
officers.
The second project is the full integration of the electronic security businesses
into the SectorGuard business model and building SectorGuard's reputation as a "
total security solution" business. The project also involves adapting our
service excellence model to reflect the additional range of products and
services. This is a broad reaching project and encompasses staff training,
re-writing quality manuals, communicating with clients, and investment in
marketing, branding, management information systems and infrastructure. By its
very nature this project is on-going and continually adapting to reflect our
client's expectations and the constant re-definition of excellence of service
against benchmarks and targets. Our prime aim is to establish a client service
ethos that is second to none within our industry and become a service benchmark
for our competitors.
The integration is proceeding steadily with all administration functions for the
businesses being carried out at Head Office and re-branding is underway. The
integration of the various sales teams into one department has already led to
cross-selling of products and services to a number of clients.
Acquisitions
During the six months under review we completed the acquisition of the business
contracts of Oakpark Alarms. These contracts were principally for the
maintenance of intruder alarm systems. As a result of our cash surpluses and
unutilised bank facilities we are well placed to take advantage of opportunities
as they arise and will continue to look for suitable acquisitions across the
broad spectrum of the security industry. This acquisition programme remains
fundamental to our growth strategy and I look forward to reporting on further
completed acquisitions in the future to support and underpin our organic growth.
Current trading and future outlook
We continue to grow organically with contracts being awarded by new clients as
well as additional sales to existing clients. The ability to offer clients a
broader range of services and products is already producing growth and we feel
this can only be enhanced by our continued integration of the businesses.
The positive financial impact of licensing security officers should start to be
reflected in the results of the next 12 months, and as ACS members we should
obtain a commercial advantage over non-ACS members. This advantage will be
further enhanced as and when the SIA takes steps to prevent the deployment, by
others, of unlicensed security officers.
We believe that this record start to the year will continue and I look forward
to reporting on our further progress at the year-end.
David Marks
Chairman
26 June 2006
SectorGuard plc Group Consolidated Profit and Loss Account
for the six months ended 31 March 2005
Six months ended Six months ended Year ended
31 March 2006 31 March 2005 30 September 2005
(Unaudited) (Unaudited) (Audited)
# # #
Turnover 9,104,547 7,857,225 16,375,097
Cost of Sales (7,138,845) (6,499,953) (13,366,903)
Gross Profit 1,965,702 1,357,272 3,008,914
Administrative expenses before goodwill, (1,275,479) (833,670) (1852,751)
amortisation
Operating profit before goodwill, 690,222 523,602 1,155,443
amortisation
Goodwill amortisation (206,729) (133,700) (324,672)
Operating profit 483,494 389,902 830,771
Interest receivable and similar income 129 69 7,414
Interest payable and similar charges (72,181) (56,323) (118,514)
Profit on ordinary activities before 411,442 333,648 719,671
taxation
Tax on profit on ordinary activities (140,404) (101,848) (206,076)
Retained profit for the period 271,038 231,800 513,595
Equity dividends Nil Nil (305,125)
Retained profit for the financial year 271,038 231,800 208,470
Earnings per ordinary share
Basic 0.09p 0.11p 0.30p
Diluted 0.09p 0.11p 0.29p
Basic (based on pre-amortisation and 0.14p 0.15p 0.38p
impairment earnings figure)
Diluted (based on pre-amortisation and 0.14p 0.16p 0.37p
impairment earnings figure)
SectorGuard plc Group Consolidated Balance Sheet
as at 31 March 2005
Unaudited Unaudited Audited
as at as at as at
31 March 2006 31 March 2005 30 September 2005
# # #
Fixed Assets
Intangible assets 6,932,659 5,674,612 7,033,171
Listed investment 57,500 Nil
Tangible assets 476,418 259,703 295,073
7,409,077 5,991,815 7,328,244
Current assets
Stocks 194,114 137,604
Debtors 4,918,201 3,854,822 4,061,104
Cash at bank and in hand 611,569 207,882 940,434
5,723,884 4,062,704 5,139,142
Creditors: amounts falling due within one year (2,948,298) (3,612,971) (3,123,565)
Net current assets/(liabilities) 2,775,586 449,733 2,015,577
Total assets less current liabilities 10,184,663 6,441,548 9,343,821
Creditors: amounts falling due after more than (936,688) (348,885) (288,442)
one year
Provisions for liabilities and charges (833,154) (730,478) (886,555)
Net assets 8,414,821 5,362,185 8,168,824
Capital and reserves
Called up share capital 1,525,625 1,094,890 1,525,625
Share premium account 4,759,505 2,462,844 4,761,083
Merger Reserve 158,395 158,395
Own shares in employee share trust (80,863) (57,400)
Profit and loss account 2,052,159 1,804,451 1,781,121
Shareholders' funds 8,414,821 5,362,185 8,168,824
SectorGuard plc Group Consolidated Cashflow
as at 31 March 2005
Unaudited Unaudited
as at as at
31 March 2006 31 March 2005
# #
Net cash inflow from operating activities (24,912) 1,108,814
Returns on investment and servicing of finance
Interest received 129 Nil
Interest paid (72,181) (56,323)
(72,052) (56,323)
Taxation
Corporation tax paid (112,000) Nil
Capital expenditure
Payments to acquire tangible fixed assets (243,231) (42,732)
Decrease in provision for liabilities and (53,401) (187,500)
charges
(296,632) (230,232)
Acquisitions & disposals
Payments to acquire business assets (106,217) (213,896)
Payments to acquire subsidiary undertaking Nil (270,801)
Net cash acquired with subsidiary Nil 25,806
(106,217) (458,891)
Equity dividends paid (305,125) (102,878)
Net cash inflow/(Outflow) before financing (916,938) 260,490
Financing
Issue of ordinary share capital Nil 257,597
Expenses of issue of share capital (1,578) Nil
Purchase of own shares by employee share trust (23,463) (57,500)
Repayment of loans (283,282) (395,765)
Bank working capital facility (90,904) (74,399)
New treasury loan 1,000,000 Nil
Capital element of finance lease payments (12,700) (40,771)
588,073 (310,838)
Net cash outflow for the period (328,865) (50,348)
Notes
1. Financial Information
The interim results for the six months ended 31 March 2006 and six months ended
31 March 2005 are unaudited and do not constitute statutory accounts within the
meaning of section 240 of the Companies Act 1985. They have been drawn up using
accounting policies and principles consistent with those applied in the
preparation of the audited accounts for the year ended 30 September 2005. The
comparative information contained in the report for the year ended 30 September
2005 does not constitute the statutory accounts for that financial period. Those
accounts have been reported on by the Company's auditors, Nexia Audit Limited,
and delivered to the Registrar of Companies.
The report of the auditors was unqualified.
2. Taxation
The tax charge for the period is based on the anticipated effective tax rate for
the year to 30 September 2006.
3. Earnings per share
The earnings per share is based upon a profit of #271,038 (2005: #231,800) and
the weighted average number of shares ranking for dividend during the period of
303,545,861 (2005: 206,707,963).
The fully diluted earnings per share is based upon the profit as disclosed above
and the weighted average number of shares ranking for dividend during the period
of 305,583,800 (2005: 211,508,105) adjusted for the effects of all dilutive
potential shares.
The earnings per share based on earnings before amortisation of #415,748 (2005:
#327,409) reflecting the weighted average number of shares ranking for dividend
during the year of 303,545,861 (2005: 206,707,963) is 0.14p (2005: 0.15p).
The fully diluted earnings per share is based upon the profit as disclosed above
and the weighted average number of shares ranking for dividend during the year
of 305,583,800 (2005: 211,508,105) adjusted for the effects of all dilutive
potential shares.
4. Interim Report
Copies of this interim report are being sent to all shareholders and will be
available to the public from the Company's Head Office, Hanover House,
Queensgate, Britannia Road, Waltham Cross, Herts, EN8 7TF.
Contacts:
David Marks SectorGuard Plc Tel: 01992 701 940
Mob: 07734 051 547
Isabel Crossley St Brides Media Tel: 020 7242 4477
This information is provided by RNS
The company news service from the London Stock Exchange
END
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