RNS Number:5859N
SectorGuard PLC
11 December 2006
SectorGuard Plc / Ticker: SGD / Index: AIM / Sector: Support Services
11 December 2006
SECTORGUARD PLC
PRELIMINARY RESULTS
SectorGuard plc, the AIM listed total security solutions group, announces its
results for the year ended 30 September 2006.
Overview
* Solid growth and development - both profit and service offering
* Turnover up 9% to #17,781,897 (2005: #16,375,097)
* Gross profit up 25% to #3,746,790 (2005: #3,008,194)
* Increased gross margins to 21% (2005: 18%)
* 28% increase in operating profit before goodwill amortisation to
#1,479,827 (2005: #1,155,443).
* Proposed dividend of 0.11p per share (2005: 0.1p)
* Successfully adopted new licensing requirements
* Integrated three trading companies into one to become a total security
solutions provider
* Completed acquisition of the business contracts of Oakpark Alarms
* Continue to look for earnings enhancing acquisition opportunities
Chairman's Statement
I am pleased to announce the results for the year ended 30 September 2006, which
has proven to be yet another year of solid growth and development, both in terms
of profit and our service offering. During the course of the year we have
successfully adopted the new licensing requirements and became one of the first
companies to be accredited with the Security Industry Authority's "Approved
Contractor Scheme" status. We have also integrated the three distinct trading
companies into one company operating from new central offices; re-branded the
Group's operations to reflect this integration; and completed an acquisition.
Whilst accomplishing all the above we have achieved record levels of turnover
and profit and finished the year in an even stronger position as a leading
supplier of security solutions.
Financial
Turnover for the year has increased by 9% to #17,781,897, by comparison with
#16,375,097 in 2005, generating a 25% increase in gross profit to #3,746,790
(2005: #3,008,194). We have also increased our gross margins to 21% (2005: 18%)
as a result of the successful integration of our electronic security systems
businesses and the resultant change in mix of products and services delivered to
our clients. This increase in gross margin has been achieved despite the
increased costs incurred as a result of the new licensing regime. The growth in
gross profit and margin has led to a 28% increase in operating profit before
goodwill amortisation to #1,479,827 (2005: #1,155,443).
As a result of the continuing growth in profits we have pleasure in proposing an
increased dividend of 0.11p per share (2005: 0.1p).
Operations
During the course of the year there have been two principal operational
projects: the licensing of officers and the integration of the three trading
companies.
As reported in our Interim Report, the Private Security Act 2001 required us to
re-train and license all staff engaged in carrying out security guarding
services by 20 March 2006. SectorGuard achieved the deadline set by the Security
Industry Authority ("SIA"), the industry regulatory body, and was admitted to
its Approved Contractor Scheme ("ACS") on 20 March, the first possible date for
accreditation. The principal benefit of the ACS 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 was the integration of the trading entities into one company,
embracing SectorGuard's business model and service excellence model. This
project is now in the final stages, having re-located the businesses to one
central office where they have been split functionally as opposed to
divisionally, which helps to maintain a high degree of integration and the
offering of a total security solution. To this end, the enlarged group now has
four operating divisions:
* SectorGuard Asset Protection, which provides electronic asset tagging
solutions, principally to the retail sector;
* SectorGuard Fire and Security Systems, which installs and maintains
electronic fire and security systems including cctv, access control and
fire and intruder alarms;
* SectorGuard Response Services, which provides mobile patrol and
keyholding first response services; and
* SectorGuard Security Personnel, which provides manned guarding solutions.
We recently completed a re-branding exercise to maximise the impact of the
integration and look forward to reaping the rewards of this business
combination. Importantly, the final quarter of the financial year has already
seen the successful cross-selling of services both to new and existing clients.
The clients appear to appreciate the benefits of using a single source for their
security requirements as well as the opportunity of cost and value enhancing
solutions.
Acquisitions
During the course of the year we completed the acquisition of the business
contracts of Oakpark Alarms. These contracts were principally for the
maintenance of intruder alarm systems. We are continuing to look for earnings
enhancing acquisition opportunities and believe that acquisitions will continue
to form a key part of our future expansion.
Current Trading and Future Outlook
We are continuing to grow organically and are being awarded contracts across our
range of services by both existing and new clients. The ability to provide a
broader range of services has already led to stronger relationships with our
clients and enables us to offer a value added service where they can outsource
the full range of their security requirements.
We have started the year in a strong position to take advantage of our
accreditation as an ACS member; our new stance as a total security solution
provider; and the new business opportunities generated following the new fire
regulations, which came into effect in October 2006. The combination of these
factors, together with our ability to make further acquisitions, leads us to
believe that 2007 will be yet another year of record growth. I look forward to
reporting on this progress when we publish our interim report.
David Marks
Chairman
8 December 2006
Consolidated Profit and Loss Account
for the year ended 30 September 2006
2006 2005
Notes # #
Turnover 17,781,897 16,375,097
Cost of sales (14,035,107) (13,366,903)
Gross profit 3,746,790 3,008,194
Operating expenses before goodwill amortisation (2,266,963) (1,852,751)
Goodwill amortisation (409,994) (324,672)
Operating expenses (2,676,957) (2,177,423)
Operating profit 1,069,833 830,771
Interest receivable and similar income 12,143 7,414
Interest payable and similar charges (152,868) (118,514)
Profit on ordinary activities before taxation 929,108 719,671
Tax on profit on ordinary activities (259,776) (206,076)
Profit for the financial year 669,332 513,595
Earnings per ordinary share
Basic 4 0.22p 0.23p
Diluted 4 0.22p 0.22p
There were no gains or losses in the year other than those included in the above
Profit and Loss Account.
Consolidated Balance Sheet
As at 30 September 2006
2006 2005
(restated)
# #
Fixed assets
Intangible assets 6,741,235 7,033,171
Tangible assets 642,716 295,073
7,383,951 7,328,244
Current assets
Stocks 142,279 137,604
Debtors 4,543,382 4,061,104
Cash at bank and in hand 303,045 940,434
4,988,706 5,139,142
Creditors: amounts falling due within one year (2,550,252) (2,818,440)
Net current assets 2,438,454 2,320,702
Total assets less current liabilities 9,822,405 9,648,946
Creditors: amounts falling due after more than one year (666,812) (288,442)
Provisions for liabilities (269,657) (886,555)
Net assets 8,885,936 8,473,949
Capital and reserves
Called up share capital 1,547,726 1,525,625
Share premium account 4,756,463 4,761,083
Merger reserve 332,732 158,395
Own shares in employee share trust (201,438) (57,400)
Profit and loss account 2,450,453 2,086,246
Shareholders' funds 8,885,936 8,473,949
The accounts were approved by the board of directors on 8 December 2006 and were
signed on its behalf by:
D Marks
Director
Consolidated Cashflow Statement
For the year ended 30 September 2006
2006 2005
# #
Net cash inflow from operating activities 541,835 1,264,274
Returns on investment and servicing of finance
Interest received 12,143 7,414
Interest paid (147,734) (112,814)
Interest element of finance leases (5,134) (5,700)
(140,725) (111,100)
Taxation
Corporation tax paid (323,962) (284,914)
Capital expenditure
Payments to acquire intangible fixed assets (539,065) (2,262,053)
Payments to acquire tangible fixed assets (342,627) (174,567)
Proceeds from disposal of tangible fixed assets 2,095 55,494
Net cash outflow from capital expenditure (879,597) (2,381,126)
Equity Dividends Paid (305,125) (102,878)
Net cash outflow before financing (1,107,574) (1,615,744)
Financing
Issue of equity share capital 196,439 3,267,264
Expenses of issue of ordinary share capital (5,170) (122,298)
Share premium on issue of equity share capital 550 Nil
Purchase of own equity shares (144,038) (57,400)
Repayment of loans (533,310) (731,904)
New bank loans 1,000,000 Nil
Repayment of capital element of finance leases (44,286) (57,714)
Net cash inflow/(outflow) from financing 470,185 2,297,948
(Decrease)/increase in cash in year (637,389) 682,204
Notes:
1. The financial information set out above does not constitute the Group's
statutory accounts for the years ended 30 September 2006 or 30 September 2005
but is derived from these accounts. Statutory accounts for 2005 have been
delivered to the Registrar of Companies in England and Wales and those for 2006
will be delivered following the Company's Annual General Meeting.
The auditors have reported on the 2005 accounts and their report was unqualified
and did not contain statements under section 237 (2) or (3) of the Companies Act
1985. The figures included in this announcement have been prepared on the basis
of the accounting policies set out in the 30 September 2005 financial
statements, except for the change in policy with regard to FRS 21 which is
explained below.
2. Prior year adjustment
Under Financial Reporting Standard 21 "Events after the balance sheet date",
dividends declared after the period which no longer meet the definition of a
liability are only recognised in the period in which they are declared and
appropriately approved. The group and company have therefore been required to
restate the dividends accrued in the previous year and to include in the year to
30 September 2006 dividends of #305,125 previously shown in the annual accounts
for 2005, and #102,878 in 2005 previously shown in the accounts for 2004.
3. The directors recommend the payment of a dividend of 0.11p (2004: 0.1p)
per ordinary share payable on 23 February 2007 to ordinary shareholders on the
register at the close of business on 2 February 2007.
4. Earnings per share
The basic earnings per ordinary share is calculated by dividing profit for the
year by the weighted average number of shares outstanding during the year.
The diluted earnings per ordinary share is calculated by dividing profit for the
year by the weighted average number of shares outstanding during the year
(after adjusting both figures for the effect of dilutive potential ordinary
shares).
An adjusted earnings per share figure has been calculated in addition to the
earnings per share required by FRS 22, 'Earnings per Share'. The directors
believe that the presentation of an adjusted basic earnings per ordinary share,
being the basic earnings per ordinary share adjusted for goodwill amortisation
assists with understanding the underlying performance of the group.
2006 2005
Number of shares No No
Weighted average number of ordinary shares for the purpose of 305,037,999 226,724,448
basic EPS
Effect of dilutive potential ordinary shares: share options 2,087,084 2,046,448
Weighted average number of ordinary shares for the purpose of 307,125,083 228,770,896
diluted EPS
The calculation of basic, diluted and adjusted earnings per ordinary
share is based upon the following data:
2006 2005
Earnings Per share Earnings Per share
# amount # amount
Basic EPS
Profit after taxation 669,332 0.22p 513,595 0.23p
Diluted EPS
Profit after taxation 669,332 0.22p 513,595 0.22p
EPS before amortisation of goodwill
Basic earnings 669,332 0.22p 513,595 0.23p
Adjustment for amortisation of goodwill 359,632 0.12p 279,601 0.12p
Basic EPS after adjustment for 1,028,964 0.34p 793,196 0.35p
amortisation of goodwill
Diluted EPS after adjustment for 1,028,964 0.34p 793,196 0.35p
amortisation of goodwill
5. Integration of the subsidiary companies
During the course of the year the trading activities and all the assets and
liabilities of the two subsidiary companies were transferred to the Company.
6. Copies of the published accounts of the Company will be sent to all
shareholders and will be available during normal business hours from the offices
of Seymour Pierce Limited at Bucklersbury House, 3 Queen Victoria Street, London
EC4N 8EL.
* * ENDS * *
Contacts:
David Marks SectorGuard Plc Tel: 07734 051547
Isabel Crossley St Brides Media & Finance Tel: 020 7242 4477
This information is provided by RNS
The company news service from the London Stock Exchange
END
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