We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Sectorguard | LSE:SGD | London | Ordinary Share | GB0031427940 | ORD 0.5P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 1.50 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
RNS Number : 0589E SectorGuard PLC 23 September 2008 SectorGuard Plc ('SectorGuard' Or the 'Group') Results For The 18 Month Period Ended 31 March 2008 SectorGuard Plc, the AIM listed total security solutions group, announces its results for the 18 month period ended 31 March 2008. HIGHLIGHTS * Turnover of £26.8 million (12 months ended 30 September 2006: £17.8m) * Security Personnel Division - £22.9 million * Fire & Security Systems Division - £3.9 million * Gross profit of £5.5 million (12 months ended 30 September 2006: £3.7 million) * Cash flow from operations £2.2 million (12 months ended 30 September 2006: £0.2 million) * Strengthened reputation as total provider of security solutions - utilising cross selling opportunities * Climbed into the top 20 providers in the security industry * Added a number of nationwide businesses to client book * Completed three key acquisitions - broadened service offering and geographic reach, provided exposure to new market sectors * Brought new experienced security professionals into the Group * Accredited with Investors in People and became one of the first security providers to be accredited with the ISO 14001 Environmental Management Standard * Developed a number of initiatives that are seen as promoting best practice in the industry CHAIRMAN'S STATEMENT I am pleased to announce the results for the 18 month period ended 31 March 2008. This has been an exciting period in SectorGuard's continuing growth, during which we have completed three acquisitions, broken into new trading sectors, developed industry best practices and climbed into the top 20 in the industry. Operations During the period under review there have been significant changes in our operating activities; some brought about in anticipation of, and as a result of, our acquisitions, and others brought about by circumstances out of our control, such as the early retirement of our Operations Director, Jim McLeod, through ill health. It is highly rewarding to look back at this period of change and see how well our team has performed, delivering the strong business that we are running today. The acquisitions of the businesses of Protector and Euro Security Systems during the period have added considerable depth to our electro technical division. Through the increased scale in operations we have funded significant back-office investment and now have a nationwide capability. Our corporate client base has grown and we have added a number of nationwide businesses to our client book. Clients are able to select from a broad range of services covering fire and security systems and a greater number of clients are seeing us as a one stop, total security solution provider, offering bespoke security solutions covering security personnel and electro technical services. We also completed the acquisition of ManGuard Ltd ('ManGuard') in March 2008, which has significantly added to our market presence and brought a number of experienced security professionals into the Group. The chairman of ManGuard, Mark Higgins, has joined our Board of Directors with responsibility for business development and its managing director, Charlie Cleverly, has become Director of Operations, with responsibility for the Security Personnel Division. We wish them and their team of managers, support staff and officers, a long and successful career with SectorGuard. The acquisition of ManGuard has also added to our market penetration, giving us significant presence in new business sectors such as transport, shopping centres, multi-purpose retail and leisure parks and the National Health Service. These are in addition to those sectors where we have had an historic presence such as colleges of higher and further education, local authorities and supported housing providers. Corporate and Social Responsibility We have made tremendous advances within our business framework over the past year gaining Investors in People accreditation and becoming one of the first security providers to be accredited with the ISO 14001 Environmental Management Standard. However, as well as achieving these prescribed standards we have also developed a number of initiatives that are seen as promoting best practice in the industry. In October 2007 Baroness Henig, Chairman of the Security Industry Authority, opened the SectorGuard Data Protection Suite, which assists clients such as ExxonMobil in discharging their responsibilities under Section 4 of the Data Protection Act. In January 2008, our liaison with the British Immigration Agency (now the UK Border Agency) to combat the problem of controlling the deployment of illegal workers was held out as an example of industry best practice by the British Security Industry Association. Finally, in May 2008 we launched the SectorGuard Anglo American Exchange programme, a groundbreaking initiative seeking to promote the further development of the industry through sharing practices and procedures with our counterparts in America. The initiative, which was opened to the whole of the UK security industry, began with two American security officers coming to England in July 2008 and will be followed by UK officers travelling to the USA in October 2008. Financial The information is extracted from the first full Reports and Accounts prepared under International Financial Reporting Standards ('IFRS'). The accounts are for the eighteen month period to 31st March 2008. A reconciliation of the prior year's results from UK GAAP to IFRS is included as a note to this announcement. Turnover for the 18 month period to 31 March 2008 was £26.8 million (12 months ended 30 September 2006: £17.8 million), generating a gross profit of £5.5 million (12 months ended 30 September 2006: £3.7 million). The gross margin, slightly lower than the previous period at 20.6% (12 months ended 30 September 2006: 21.1%), was in part due to the increased costs of holiday pay arising from the change in statutory holiday leave from 20 days to 24 days from 1 October 2007 and a non-recurring cost of £182,000 relating to a loyalty bonus paid to security officers in November 2007. These additional costs were partially offset by increased margins achieved on the electro-technical division. Cash flow from operations in the period was £2.2 million (12 months ended 30 September 2006: £0.2 million). The financial information is discussed in further detail in the Business Review Current trading and future outlook The current economic downturn in the United Kingdom and global economies is bound to affect all businesses. The security industry, however, has historically tended to prosper during economic downturns due to the downward pressure on wage inflation and the increased requirement for security. With a large percentage of our turnover generated through clients in the education, health and welfare, local authority and transport sectors, we are well placed not only to weather the economic downturn but also to strengthen and grow over the coming year. Having completed the acquisition of ManGuard on the 20 March 2008, a few days before the period end, we have had an exceptionally busy first quarter of the current year, integrating the two businesses as well as completing the integration of the electro-technical division's back-office into our Waltham Cross office. The combination of significant growth in turnover achieved over the last quarter of the period through acquisition and organically, with economies of scale achieved through the integration of the businesses, has set us up for a record financial year to 31 March 2009. The turnover in the first quarter of the year has approached that achieved in the first six months of last period, and I am excited at the prospect of reporting in detail on this growth in my interim report. I would like to take this opportunity of thanking Jim McLeod, who retired earlier this year due to ill health, for all his hard work and commitment over the years and to wish him a happy retirement from all the team at SectorGuard. The current growth could not have been achieved without the hard work of all our staff. On behalf of the Board of Directors I would like to express our gratitude to them for contributing to this success story. David Marks Chairman 23 September 2008 BUSINESS REVIEW Turnover Turnover in the Security Personnel Division was £22.9 million (12 months ended 30 September 2006: £15.5 million) reflecting the consolidation of the Group's core client base, having withdrawn from some of its lower margin client sites at the beginning of the period. Turnover in the Fire and Security Systems Division was £3.9 million (12 months ended 30 September 2006: £2.3 million) reflecting the acquisition of the Protector and Euro Security Systems businesses during the period. Operating profit Operating profit in the period was £1.2 million (12 months ended 30 September 2006: £1.4 million). The reduction in operating profit reflects a number of non-recurring costs during the year arising from the three acquisitions and their integration into one business unit. In addition, the Group incurred non-recurring costs in excess of £100,000 on re-branding and repositioning the business as a provider of total security solutions and £180,000 on a loyalty bonus scheme following the introduction of the licensing of security officers. Share option charges The Group issues share options to all full-time permanent employees with the aim of rewarding staff equally for their loyalty to the Group. In accordance with IFRS 2, "Share Based Payments", share options are measured at fair value at the date of grant and expensed on a straight-line basis over the vesting period. The cost reflected in these financial statements is £89,866 (12 months ended 30 September 2006: £34,587). Dividend Under the current economic conditions and in order to take advantage of any opportunistic acquisitions that may be presented to the Group as a result of difficult market conditions, the Directors do not propose to pay a dividend. This position will be kept under review. Cash flow Cash flow from operations in the period was £2.2 million (12 months ended 30 September 2006: £0.2 million). This cash flow, and the cash flow generated from new term loans, were principally applied to the acquisition of the businesses of Protector, Euro Security Systems and ManGuard during the period. Banking facilities During the period the Group transferred it's banking facilities from Barclays Bank plc to NatWest Bank plc and entered into a new five-year term loan for £4 million in March 2008 to complete the acquisition of ManGuard. On drawing down this loan, the Group repaid all outstanding loans to Barclays. Acquisitions During the period the Group acquired three businesses. In February 2007 it acquired Protector, a Salford based specialist CCTV installation and maintenance business. In June 2007 SectorGuard acquired Euro Security Systems, a Hertfordshire based business focused on the installation and maintenance of electronic security systems including intruder alarms, access control and CCTV. These two acquisitions strengthened the Group's Fire and Security Systems Division, expanded its geographic reach and added to its critical mass and significant resources. In March 2008 the Group acquired ManGuard, a company specialising in the provision of security officers. This acquisition has significantly increased the size of the Security Personnel Division as well as expanded its geographic reach to the north and south of England and opened new vertical markets for the Group. The Group is now well placed to build on these acquisitions, developing each division's respective markets and cross-selling the services of each division to its counterpart's clients. The effect of the acquisitions, combined with organic growth, has been to almost double the turnover of the business when comparing it to the same period last year. If the acquisition of ManGuard had occurred on 1 October 2006 then group revenue inclusive of ManGuard would have been £44.1 million. Consolidated Income Statement For the period ended 31 March 2008 18 months to Year ended 31 March 30 September 2008 2006 Note £ £ REVENUE 3 26,844,494 17,781,897 Cost of sales (21,301,791) (14,035,107) GROSS PROFIT 5,542,703 3,746,790 Operating expenses (4,304,352) (2,305,831) OPERATING PROFIT 3 1,238,351 1,440,959 Finance income 6,012 12,143 Finance costs (253,201) (152,868) PROFIT BEFORE TAX 991,162 1,300,234 Tax expense (315,740) (289,633) PROFIT FOR THE PERIOD 675,422 1,010,601 Earnings per share for profit attributable to 4 the equity holders of the Group during the period (pence) Basic 0.22 0.33 Diluted 0.22 0.33 Consolidated Balance Sheet At 31 March 2008 18 months to Year ended 31 March 30 2008 September 2006 £ £ NON-CURRENT ASSETS Intangible assets 18,130,802 7,146,948 Property, plant and equipment 679,706 642,716 Deferred tax recoverable 36,999 26,239 18,847,507 7,815,903 CURRENT ASSETS Inventories 221,941 142,279 Trade and other receivables 7,208,500 4,511,840 Current tax recoverable 119,890 - Cash and cash equivalents 79,768 303,045 7,630,099 4,957,164 TOTAL ASSETS 26,477,606 12,773,067 CURRENT LIABILITIES Trade and other payables 6,447,109 1,695,044 Current tax liabilities 362,937 303,265 Loans and overdrafts 1,962,386 521,767 Obligations under finance leases 90,243 65,521 Provisions - 269,657 8,862,675 2,855,254 NON-CURRENT LIABILITIES Loans and overdrafts 3,152,000 588,113 Deferred tax liabilities 804,029 - Obligations under finance leases 57,110 67,908 Provisions 2,799,027 - 6,812,166 656,021 TOTAL LIABILITIES 15,674,841 3,511,275 EQUITY Share capital 1,779,254 1,547,726 Share premium account 4,787,277 4,756,463 Share-based payment reserve 156,920 67,054 Merger reserve 1,274,000 332,732 Own shares in employee trust (292,963) (201,438) Retained earnings 3,098,277 2,759,255 TOTAL EQUITY 10,802,765 9,261,792 TOTAL LIABILITIES AND EQUITY 26,477,606 12,773,067 Consolidated Statement of Changes in Equity For the period ended 31 March 2008 Share capital Share premium Share-based payment Merger reserve Own shares in Retained earnings Total account reserve employee trust £ £ £ £ £ £ £ At 1 October 2005 1,525,625 4,761,083 32,467 158,395 (57,400) 2,053,779 8,473,949 Profit after tax - - - - - 1,010,601 1,010,601 Shares issued 22,101 - - 174,337 - - 196,438 Costs associated with share - (4,620) - - - - (4,620) options Share-based payment - - 34,587 - - - 34,587 Shares acquired - - - - (144,038) - (144,038) Dividends paid - - - - - (305,125) (305,125) ------------ ------------ ------------ ------------ ------------ ------------ ------------ At 1 October 2006 1,547,726 4,756,463 67,054 332,732 (201,438) 2,759,255 9,261,792 Profit after tax - - - - - 675,422 675,422 Shares issued 231,528 39,119 - 941,268 - - 1,211,915 Costs associated with share - (8,305) - - - - (8,305) options Share-based payment - - 89,866 - - - 89,866 Shares acquired - - - - (91,525) - (91,525) Dividends paid - - - - - (336,400) (336,400) ------------ ------------ ------------ ------------ ------------ ------------ ------------ At 31 March 2008 1,779,254 4,787,277 156,920 1,274,000 (292,963) 3,098,277 10,802,765 ======= ======= ======= ======= ======= ======= ======= Consolidated Cash Flow Statement For the period ended 31 March 2008 18 months to Year ended 31 March 2008 30 September 2006 £ £ OPERATING ACTIVITIES Cash flow from operations (Note 5) 2,492,718 541,835 Taxation paid (266,828) (323,962) ------------- ------------- NET CASH INFLOW FROM OPERATING ACTIVITIES 2,225,890 217,873 ------------- ------------- INVESTING ACTIVITIES Acquisition of businesses (1,167,283) (539,065) Acquisition of subsidiaries net of cash (4,258,391) - acquired Payments to acquire tangible fixed assets (269,560) (342,627) Proceeds from disposal of tangible fixed assets 17,969 2,095 ------------- ------------- NET CASH OUTFLOW FROM INVESTING (5,677,265) (879,597) ------------- ------------- FINANCING ACTIVITIES Interest received 6,012 12,143 Interest paid (243,594) (147,734) Interest element of finance leases (9,607) (5,134) Equity dividends paid (366,400) (305,125) Issue of equity share capital 42,095 191,819 Purchase of own equity shares (91,525) (144,038) Repayment of loans (2,732,253) (471,316) New bank loans 5,600,000 1,000,000 Repayment of capital element of finance leases (143,389) (44,286) ------------- ------------- NET CASH INFLOW FROM FINANCING ACTIVITIES 2,091,339 86,329 ------------- ------------- DECREASE IN CASH AND CASH EQUIVALENTS (1,360,036) (575,395) Cash and bank overdrafts at beginning of period 274,135 849,530 ------------- ------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD (1,085,901) 274,135 ======= ======= Cash and cash equivalents at end of period comprise: Cash and cash equivalents 79,768 303,045 Bank working capital facility (1,1165,669) (28,910) ------------- ------------- (1,085,901) 274,135 ======= ======= Notes * Financial Information and accounting policies The group has elected to change the accounting reference date of all group companies to 31 March under section 225 of the Companies Act 1985. The accounting period was extended because the directors were involved in the finalisation of the acquisition of ManGuard Limited. The financial information covers the eighteen-month period to 31 March 2008. The comparative figures represent the twelve-month period to 30 September 2006. As a result of the change in accounting reference date, the comparative amounts in the income statement, statements of changes in equity, cash flow statements and related notes are not entirely comparable. The principal accounting policies applied in the preparation of these consolidated financial information are set out below. These policies have been consistently applied to all the periods presented. Both the consolidated financial information and the separate financial information of the company have been prepared in accordance with the accounting policies set out below. Basis of preparation The financial information have been prepared under the historical cost convention in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the EU applied in accordance with the provisions of the Companies Act 1985. The financial information is extracted from the first financial statements prepared by the group under IFRS, and reconciliations to IFRS from the previously published financial information under UK Generally Accepted Accounting Principles can be found at Note 8. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the accounting policies of the group. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial information, are disclosed in Note 2. Basis of consolidation The consolidated financial information incorporate the financial information of the company and all entities controlled by the company (its subsidiaries) prepared up to the accounting period. Control is achieved where the company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities. The results of subsidiaries acquired or disposed of during the period are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal as appropriate. Where necessary, adjustments are made to the financial information of subsidiaries to bring accounting policies used into line with those used by the group. All intra-group transactions, balances, income and expenses are eliminated on consolidation. Business combinations The acquisition of subsidiaries is accounted for using the purchase method. The cost of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the group in exchange for control of the acquiree, plus any costs directly attributable to the business combination. The acquiree's identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 'Business Combinations' are recognised at their fair value at the acquisition date. The cost of the acquisition is shown as an investment in the company's separate financial information. Where a business combination agreement provides for deferred consideration, the amount of this consideration is included in the cost of the acquisition to the extent it is expected to become payable. Deferred consideration is discounted to its present value based on the projected cost of meeting the obligation as it falls due. Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business combination over the group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. Goodwill Goodwill arises on the acquisition of business assets and subsidiary undertakings and represents the excess of the fair value of consideration over the fair value of identifiable net assets acquired. Goodwill is included in "intangible assets"; it is tested annually for impairment and carried at cost less accumulated impairment losses. Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose. Any impairment is recognised immediately in the income statement and is not subsequently reversed. On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss on disposal. Goodwill arising on acquisitions before the date of transition to IFRS has been carried forward as the unadjusted UK GAAP amounts after being tested for impairment at the date of transition. Goodwill written off to reserves under UK GAAP prior to 2005 has not been reinstated and will not be included in determining any subsequent profit or loss on disposal. Other intangible assets Other intangible assets are stated at cost less provisions for amortisation and impairments. Customer lists separately acquired or acquired as part of a business combination are amortised over their estimated useful lives, using the straight-line basis, from the time they are available for use. The estimated useful lives for determining the amortisation charge fall between ten and twenty years and are reviewed annually. Impairment The group reviews the carrying amounts of its tangible and intangible assets annually to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the group estimates the recoverable amount of the cash-generating unit (CGU) to which the asset belongs. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately. Goodwill is tested annually for impairment irrespective of whether there is any indication that an impairment may exist. Revenue Revenue comprises the fair value of the consideration receivable for the sale of goods and services in the ordinary course of the group's activities. Revenue is shown net of value added tax and early settlement discounts. The group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the group and when specific criteria have been met for each of the group's activities as described below. Manned guarding and mobile patrol: Revenue represents the amount earned during the period for the provision of security calculated on an hourly basis. Supply and installation of electronic security systems and consumables: Revenue represents the amount earned during the period from supplying and installing electronic security systems and consumables. Revenue is recognised once equipment is supplied to clients' premises. Electronic security systems maintenance agreements and keyholding and alarm response services: Revenue represents a non-refundable annual fixed fee charged to the group's clients during the period for the provision of services. Revenue also includes the amounts earned on call-out charges during the period arising when the group is required to attend the client's premises, and is recognised when the engineer visits the site. Segment reporting A business segment is a group of assets and operations engaged in providing products and services that are subject to risks and returns different from those of other business segments. A geographical segment is engaged in providing products and services within a particular economic environment that are subject to risks and returns different from those of other segments operating in other economic environments. The group manages its operations on a business segment basis, and this is the basis on which it reports its primary segment information. Property, plant and equipment Property, plant and equipment are stated at cost less depreciation and less impairment. Depreciation is calculated so as to write off the cost of an asset, less its estimated residual value, over the useful economic life of that asset as follows: Leasehold improvements Over the lease period Fixtures and fittings 20% straight line Motor vehicles 25% straight line Equipment 20% straight line Inventories Inventories are stated at the lower of cost and net realisable value. Cost comprises the purchase price and is determined using the first-in, first-out basis (FIFO). Due allowance is made for obsolete and slow-moving items. Trade receivables Trade receivables are recognised initially at fair value and subsequently measured at amortised cost. Appropriate allowances for estimated irrecoverable amounts are recognised in profit or loss when there is objective evidence that the asset is impaired. Cash and cash equivalents Cash and cash equivalents comprise cash-in hand, call deposits and bank overdrafts, where there is a right of set off. Bank overdrafts are presented as current liabilities to the extent that there is no right of offset with cash balances. Trade payables Trade payables are recognised initially at fair value and subsequently measured at amortised cost. Finance lease agreements Where the group enters into a lease, which entails taking substantially all the risks and rewards of ownership of an asset, the lease is treated as a finance lease. The asset is recorded in the balance sheet as an item of property, plant and equipment and is depreciated in accordance with the above depreciation policies. Future instalments under such leases, net of finance charges, are included within creditors. Rentals payable are apportioned between the finance element, which is charged to the income statement on a straight-line basis, and the capital element, which reduces the outstanding obligation for future instalments. Operating lease agreements Rentals applicable to operating leases where substantially all of the benefits and risks of ownership remain with the lessor are charged against profits on a straight-line basis over the period of the lease. Pension costs Contributions to defined contribution schemes are charged to the income statement as they become payable in accordance with the rules of the scheme. Borrowing costs Borrowing costs are recognised in the income statement in the period in which they are incurred. Taxation The tax expense represents the sum of the current tax payable and deferred tax. Deferred taxation is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial information. Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised. Deferred tax is measured at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised, based upon tax rates and legislation that have been enacted or substantively enacted at the balance sheet date. The charge for current tax is based on the results for the period, adjusted for items which are non-assessable or disallowed, and for prior period over or under provisions, at the tax rate applicable for those periods. Equity Instruments Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs. Share option schemes The group issues share options to all full-time permanent employees with the aim of rewarding all staff equally for their loyalty to the group. Share options are measured at fair value at the date of grant. The fair value is expensed on a straight-line basis over the vesting period, which is usually three years. Options are forfeited if the employee leaves before the option vests. The expected life used in the models has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations. Where relevant, the value of the option has also been adjusted to take account of market conditions applicable to the option. Employee share ownership trust The group controls an Employee Share Ownership Trust. The assets and liabilities of the trust are included in the consolidated financial information, and the costs of the group's own shares held by the trust are presented as a deduction from equity. New standards and interpretations not applied During the period and up to the date of signature of the financial statements from which the financial information has been extracted, the IASB has issued the following standards and interpretations with an effective date after the date of the financial statements: IAS1 (Amendment) - Presentation of Financial Statements (effective 1 January 2009) IAS23 (Amendment) - Borrowing Costs (effective 1 January 2009) IAS27 (Amendment) - Consolidated and Separate Financial Statements (effective 1 July 2009) IAS32 (Amendment) - Financial Instruments - Presentation (effective 1 January 2009) IFRS1 and IAS27 (Amendment) - Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate (effective 1 January 2009) IFRS2 (Amendment) - Share-Based Payment (effective 1 January 2009) IFRS3 (Amendment) - Business Combinations (effective 1 July 2009) IFRS8 - Operating Segments (effective 1 January 2009) IFRIC13 - Customer Loyalty Programmes (effective 1 July 2008) IFRIC14 - The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction (effective 1 January 2008) IFRIC15 - Agreements for the Construction of Real Estate (effective 1 January 2009) IFRIC16 - Hedges of a Net Investment in a Foreign Operation (effective 1 October 2008) "Improvements to IFRSs" was issued in May 2008 and its requirements are effective over a range of dates, with the earliest effective date being for annual periods beginning on or after 1 January 2009. This comprises a number of amendments to IFRSs, which resulted from the IASB's annual improvements project. The group is currently assessing the impact and expected timing of adoption of these amendments on the Group's results and financial position. The amendment to IFRS3 will apply to business combinations occurring on or after 1 April 2010. The revised standard introduces a number of changes in the accounting for business combinations that will impact the amount of goodwill recognised, the reported results in the period that a business acquisition occurs and future reported results. Under IFRS3, transaction costs of a business acquisition are not included in the cost of the acquisition, but expensed to the income statement in the period incurred. Assets and liabilities arising from business combinations before 1 April 2010 will not be restated and thus there will be no effect on the Group's results or financial position on adoption. However, this standard is likely to have a significant impact on the accounting for business acquisitions post adoption. 2 Critical accounting estimates and judgments Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. Goodwill impairment The estimate with the most significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year is the impairment of goodwill. The calculation of any impairment loss requires an estimate of the value in use of the cash-generating units (CGUs) to which goodwill has been allocated. This involves a forecast of the future cash flows of the CGU and the selection of appropriate discount rates in order to ascertain present values. A significant element of judgment is needed. The cash flow projections are based on financial plans approved by senior management covering a five year period. Cash flows for the following ten years are extrapolated based on an estimated growth rate of 2.25%. This rate does not exceed the average long-term growth rate for the UK. Management estimates discount rates using post-tax rates that reflect current market assessments of the time value of money and the risks specific to the CGUs. No goodwill impairment has been recognised in the period. The carrying value of goodwill at the balance sheet date is £14,904,598 (30 Sept 2006: £7,048,475) for the group and £8,546,975 (30 Sept 2006: £7,625,122) for the company. Deferred consideration The group has recognised a provision for deferred consideration for the acquisition of ManGuard Limited. This consideration will become payable if the revenue and profits of ManGuard Limited exceed given levels over the two years following acquisition. The directors are of the opinion that this will become payable in full. The carrying value of the provision in relation to the acquisition of ManGuard Limited at the balance sheet date is £2,799,027 (30 Sept 2006: £269,657 for Sector Alarm Limited). Useful life of other intangible assets Other intangible assets consist of customer lists. The estimation of the useful life of these assets involves judgement and the annual amortisation charge. The directors are of the opinion that the useful life of these assets falls between ten and twenty years. The cost of customer lists at the balance sheet £3,226,204 (30 Sept 2006: £98,473) for the group and £357,207 (30 Sept 2006: £98,473) for the company. The accumulated amortisation is £44,362 (30 Sept 2006: £4,281) for the group and the company. 3 Segmental information Primary reporting format - business segments The group is organised into two main business segments: security personnel and response services; and fire and electronic security systems and asset protection. The segment results for the period ended 31 March 2008 were as follows: Security personnel Fire & security Unallocated Total systems £ £ £ £ Revenue 22,890,440 3,954,054 - 26,844,494 ------------- ------------ ----------- ----------- Result: Operating profit 1,139,923 98,428 - 1,238,351 Finance income 5,126 886 - 6,012 Finance costs (215,906) (37,295) - (253,201) ----------- ----------- ---------- ----------- Profit before tax 929,143 62,018 - 991,162 ======= ======= ====== Tax Expense (315,740) ----------- Profit for the period 675,422 ======= The segment results for the year ended 30 September 2006 were as follows: Revenue 15,458,094 2,323,803 - 17,781,897 ------------- ------------ ----------- ----------- Result: Operating profit 990,603 450,356 - 1,440,959 Finance income - - 12,143 12,143 Finance costs (132,889) (19,979) - (152,868) ----------- ----------- ---------- ----------- Profit before tax 857,714 430,377 12,143 1,300,234 ======= ======= ====== Tax Expense (289,633) ----------- Profit for the period 1,010,601 ======= 4 Earnings per share The basic earnings per ordinary share is calculated by dividing profit for the period by the weighted average number of ordinary shares outstanding during the period. The diluted earnings per ordinary share is calculated by dividing profit for the period by the weighted average number of shares outstanding during the period after adjusting both figures for the effect of dilutive potential ordinary shares. 18 months to Year ended 31 March 2008 30 September 2006 No No Weighted average number of ordinary shares for the purpose of basic EPS 309,650,945 305,037,999 Effect of dilutive potential ordinary shares: share options 598,436 2,087,084 --------------- --------------- Weighted average number of ordinary shares for the purpose of diluted EPS 310,249,381 307,125,083 ========= ========= BASIC EPS Profit after taxation (£) 675,422 1,010,601 Earnings per share (pence) 0.22 0.33 DILUTED EPS Profit after taxation (£) 675,422 1,010,601 Earnings per share (pence) 0.22 0.33 5 Cash flow statement Reconciliation of operating profit to net cash inflow from operating activities 18 months to Year ended 31 March 2008 30 September 2006 £ £ Operating profit for the period 1,238,351 1,440,959 Depreciation of property, plant and 367,101 130,138 equipment Amortisation of intangible assets 40,081 4,281 Movement in share-based payment reserve 89,866 34,587 (Profit) on disposal of property, plant and (9,973) (2,095) equipment (Increase) in inventories (57,688) (4,675) (Increase) in receivables (26,558) (482,279) Increase/(decrease) in trade and other 851,538 (383,190) payables (Decrease) in provisions - (195,891) --------------- --------------- Cash generated by operations 2,492,718 541,835 Corporation Tax paid (266,828) (323,962) --------------- --------------- 2,225,890 217,873 ========= ========= 6 Acquisitions During the period, the following acquisitions were made: Group Company Movement in Investments £ £ ManGuard Ltd - 7,888,429 Movement in Intangibles £ £ ManGuard Ltd (after adjustment for fair value) 9,803,272 - SectorGuard Alarms Limited 53,380 53,380 Oak Park 9,319 9,319 Protector 869,672 869,672 Euro Security Systems 288,081 288,081 11,023,724 1,220,452 Less: Amortisation of Customer Lists (39,870) (39,870) 10,983,854 1,180,582 The group acquired the entire share capital of ManGuard Ltd, a company operating in the manned guarding sector, on 20 March 2008 at a cost of £7,888,429. The consideration was made up as follows: £ Cash 3,663,259 Issue of 40,000,000 new ordinary 0.5p shares in SectorGuard plc (issued at 2.5p) 1,000,000 Deferred consideration discounted to present value 2,799,027 Costs directly attributable to the acquisition 426,143 7,888,429 The issue price of the shares in SectorGuard plc was based on the market value of the shares at the time of the acquisition of ManGuard Ltd. The assets and liabilities of ManGuard Ltd recognised in the consolidated financial statements at the date of acquisition were: Fair value Acquiree's carrying amount £ £ Intangible assets 2,871,531 - Property, plant and equipment 4,465 123,929 Inventories 21,974 61,974 Trade and other receivables 2,654,423 2,803,391 Current tax assets 119,890 119,890 Trade and other payables (3,900,527) (3,882,606) Loans and overdrafts (7,467) (7,467) Deferred tax liability (804,029) - Obligations under finance leases (3,572) (3,572) 956,688 (784,461) Goodwill recognised on acquisition was £6,931,741. This goodwill is attributable to the anticipated future growth as a result of entry into new business areas, a larger customer base and wider geographical area and anticipated future operating synergies. As the acquisition date of ManGuard Limited was only a few days before the period end, the results of ManGuard Limited for those days have not been included in the consolidated income statement as they are judged not to be material. If the acquisition had occurred on 1 October 2006, group revenue would have been £44,089,202 and group profit after tax would have been £615,187 for the eighteen month period. The results of ManGuard Limited for the eighteen month period are stated after certain exceptional costs; group profit before these exceptional items would have been £983,027. The company also acquired the following unincorporated businesses during the period: Protector, a specialist CCTV installation and maintenance business, was acquired on 6 February 2007. Euro Security Systems, a business focused on the installation and maintenance of electronic security systems including intruder alarms access control and CCTV, was acquired on 20 June 2007. The costs of the unincorporated businesses and the assets recognised were as follows: Customer List Goodwill Total Cost £ £ £ Protector 214,889 654,783 869,672 Euro Security Systems 71,862 216,219 288,081 Goodwill on acquisition of Protector and Euro Security Systems is attributable to the anticipated future growth as a result of expansion of the Electro-technical division offering a wider range of product and services over a wider geographical area and anticipated future operating synergies. The cost of each business was made up of cash, except for costs of £10,117 directly attributable to the acquisition of Protector. It is not practicable to disclose the profit or loss in the company and group financial statements attributable to these unincorporated businesses, as they have not traded separately since the dates of acquisition. The following additional costs were incurred in the period relating to acquisitions effected in previous periods as follows: £ Additional consideration for Oak Park - customer lists (unincorporated business acquired in the year ended 30 September 9,319 2006) Additional consideration for SectorGuard Alarms Limited - goodwill (acquired in the year ended 30 September 2005) 53,380 7 Financial information The financial information set out above does not constitute the Group's statutory accounts for the period ended 31 March 2008 or year ended 30 September 2006 but is derived from these accounts. Statutory accounts for 2006 have been delivered to the Registrar of Companies in England and Wales and those for 2008 will be delivered following their approval by the Company's shareholders. The auditors have reported on the 2006 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 2006 financial statements, and have been restated for the adoption of IFRS, as more fully explained in note 8 below. 8 Transition to IFRS For all periods up to and including the year ended 30 September 2006, the group prepared its financial statements in accordance with UK GAAP. The group has prepared the financial statements for the eighteen-month period ended 31 March 2008 in accordance with IFRS. IFRS 1 establishes the transitional requirements for the preparation of financial statements in accordance with IFRS for the first time. The general principle is that any Standards effective at the first-time reporting date for the group (31 March 2008) are to be applied retrospectively to the opening IFRS balance sheet (1 October 2005), the comparative period (the year ended 30 September 2006) and the reporting period (31 March 2008). Outlined below is the group's position in relation to key exemptions and exceptions that are available under IFRS1. Business combinations The group has adopted the exemption not to apply IFRS 3 'Business Combinations' in respect of acquisitions occurring prior to 1 October 2005. As a result, in the opening balance sheet, goodwill arising from past business combinations remains as stated under UK GAAP at 1 October 2005. Share-based payment IFRS 2 'Share-based Payment' has been applied to all grants of equity instruments after 7 November 2002 that had not vested as at 1 October 2005. Key IFRS adjustments are outlined below: Share-based payment The previous UK GAAP approach to share-based payments was to record any intrinsic loss on grant suffered by the company. This means that for share options granted at the market price, there was no charge to the income statement. Where shares or options were granted at reduced cost to the employee, the income statement was charged with an amount equal to the difference between the exercise price and the market price on the date of the award, spread over the performance period. IFRS 2 'Share-based Payment', and its UK GAAP equivalent FRS 20 'Share-based Payment', require the fair value of the equity instruments issued to be charged to the income statement. The group receives a tax credit, as appropriate, which relates to share options and awards when exercised, based on the gains the holders make. The deferred tax asset represents an estimate of future tax relief for this gain and is based on the potential gains available to the option or award holders at the balance sheet date. The movement in deferred tax asset from one balance sheet to the next may result in either a tax credit or a tax charge recorded in the income statement. The amount of any tax credit recognised in the income statement is capped at the cumulative amount of the tax effect of the share-based payment charge. Any excess credit is taken to equity. This adjustment reduced profit before tax in the year ended 30 September 2006 by £34,587. Goodwill amortisation UK GAAP required goodwill to be amortised over its estimated expected useful life, which the group had determined to be normally no longer than 20 years. Under IFRS 3, however, goodwill is considered to have an indefinite life and so is not amortised, but is subject to impairment testing at the date of transition to IFRS and at least annually thereafter. This adjustment therefore reverses the goodwill amortisation charged under UK GAAP. This adjustment increased profit before tax in the year ended 30 September 2006 by £409,994. Intangible assets UK GAAP recognises intangible assets as identifiable when they can be disposed of separately from the revenue earning activity to which they contribute. IAS 38 'Intangible Assets' additionally recognises intangible assets when they arise from contractual or other legal rights. Of the goodwill recognised in the year ended 30 September 2006, £102,754 relates to customer lists. These were not recognised under UK GAAP but are recognised under IFRS. Customer lists are amortised over their estimated useful life, which in this case is 20 years. After goodwill of £409,994 had been added back to profit before tax (see above), amortisation of customer lists reduced profit before tax by £4,281. 8 (a) Reconciliation of equity at 1 October 2005 UK GAAP Share-based payment Goodwill IFRS amortisation £ £ £ £ Non-current assets Intangible assets 7,033,171 7,033,171 Property, plant and equipment 295,073 295,073 Deferred tax recoverable 19,060 19,060 --------------- --------------- 7,347,304 7,347,304 --------------- --------------- Current assets Inventories 137,604 137,604 Trade and other receivables 4,042,044 4,042,044 Cash and cash equivalents 940,434 940,434 --------------- --------------- 5,120,082 5,120,082 --------------- --------------- Total assets 12,467,386 12,467,386 ========= ========= Current liabilities Trade and other payables 2,078,234 2,078,234 Current tax liabilities 327,218 327,218 Loans and overdrafts 387,586 387,586 Obligations under finance 25,402 25,402 leases Provisions 886,555 886,555 --------------- --------------- 3,704,995 3,704,995 --------------- --------------- Non-current liabilities Loans and overdrafts 255,604 255,604 Obligations under finance 32,838 32,838 leases --------------- --------------- 288,442 288,442 --------------- --------------- Total liabilities 3,993,437 3,993,437 --------------- --------------- Equity Share capital 1,525,625 1,525,625 Share premium account 4,761,083 4,761,083 Share-based payment reserve - 32,467 32,467 Other reserves 100,995 100,995 Retained earnings 2,086,246 (32,467) 2,053,779 --------------- --------------- Total equity 8,473,949 8,473,949 --------------- --------------- Total liabilities and equity 12,467,386 12,467,386 ========= ========= 8 (b) Reconciliation of equity at 30 September 2006 UK GAAP Share-based Goodwill Intangible Taxation IFRS payment amortisa assets tion £ £ £ £ £ £ Non-current assets Intangible assets 6,741,235 409,994 (4,281) 7,146,948 Property, plant and 642,716 642,716 equipment Deferred tax 15,863 10,376 26,239 recoverable --------------- --------------- 7,399,814 7,815,903 --------------- --------------- Current assets Inventories 142,279 142,279 Trade and other 4,511,840 4,511,840 receivables Cash and cash 303,045 303,045 equivalents --------------- --------------- 4,957,164 4,957,164 --------------- --------------- Total assets 12,356,978 12,773,067 ========= ========= Current liabilities Trade and other 1,695,044 1,695,044 payables Current tax 263,032 40,233 303,265 liabilities Loans and 521,767 521,767 overdrafts Obligations under 65,521 65,521 finance leases Provisions 269,657 269,657 --------------- --------------- 2,815,021 2,855,254 ========= ========= Non-current liabilities Loans and 588,113 588,113 overdrafts Obligations under 67,908 78,699 finance leases --------------- --------------- 656,021 666,812 --------------- --------------- Total liabilities 3,471,042 3,526,954 --------------- --------------- Equity Share capital 1,547,726 1,547,726 Share premium 4,756,463 4,756,463 account Share-based payment reserve - 67,054 67,054 Merger reserve 332,732 332,732 Own shares in (201,438) (201,438) employee trust Retained earnings 2,450,453 (67,054) 409,994 (4,281) (29,857) 2,759,255 --------------- --------------- Total equity 8,885,936 9,261,792 --------------- --------------- Total liabilities and equity 12,356,978 12,773,067 ========= ========= 8 (c) Reconciliation of income statement for the year ended 30 September 2006 UK GAAP Share-based Goodwill Intangible Taxation IFRS payment amortisa assets tion £ £ £ £ £ £ Revenue 17,781,897 17,781,897 Cost of sales (14,035,107) (14,035,107) --------------- --------------- Gross profit 3,746,790 3,746,790 Operating expenses (2,676,957) (34,587) 409,994 (4,281) (2,305,831) --------------- --------------- Operating profit 1,069,833 1,440,959 Finance income 12,143 12,143 Finance costs (152,868) (152,868) --------------- --------------- Profit before tax 929,108 1,300,234 Tax expense (259,776) (29,857) (289,633) --------------- --------------- Profit for the period 669,332 1,010,601 ========= ========= 8 (d) Impact of IAS 1 "Presentation of Financial Statements" on the consolidated balance sheet as at 30 September 2006 This table highlights the presentational impact of IFRS on the consolidated balance sheet as at 30 September 2006. Assets, liabilities and shareholders' funds are stated under UK GAAP values and format and are mapped from this starting position to the line item classification required under IFRS. UK GAAP values and format IAS1 UK GAAP values in Presentational IFRS format changes £ £ £ Fixed assets Non-current assets Intangible assets 6,741,235 6,741,235 Intangible assets Tangible assets 642,716 642,716 Property, plant and equipment 15,863 15,863 Deferred tax recoverable -------------- --------------- ------------- 7,383,951 15,863 7,399,814 -------------- --------------- ------------- Current assets Current assets Stocks 142,279 142,279 Inventories Debtors 4,527,703 (15,863) 4,511,840 Trade and other receivables Cash at bank 303,045 303,045 Cash and cash equivalents -------------- --------------- ------------- 4,973,027 (15,863) 4,957,164 -------------- --------------- ------------- Creditors: Amounts falling due Current liabilities within one year Bank loans and overdrafts 421,767 100,000 521,767 Loans and overdrafts Other loans 100,000 (100,000) Trade creditors 135,631 1,559,413 1,695,044 Trade and other payables Finance lease agreements 65,521 65,521 Obligations under finance leases Corporation tax 263,032 263,032 Current tax liabilities PAYE and other taxes 710,911 (710,911) Other creditors 736,659 (736,659) Accruals and deferred income 111,843 (111,843) 269,657 269,657 Provisions ------------- --------------- ----------- 2,545,364 269,657 2,815,021 -------------- --------------- ------------- Creditors: amounts falling due after more than one year 656,021 - 656,021 Non-current liabilities -------------- --------------- ------------- Provisions for liabilities 269,657 (269,657) - -------------- --------------- ------------- Capital and reserves Equity Called-up share capital 1,547,726 1,547,726 Share capital Share premium account 4,756,463 4,756,463 Share premium account Merger reserve 332,732 332,732 Merger reserves Own shares in employee share (201,438) (201,438) Own shares in trust employee share trust Profit and loss account 2,450,453 2,450,453 Retained earnings -------------- --------------- ------------- Shareholders' funds 8,885,936 - 8,885,936 Total equity -------------- --------------- ------------- 8 (e) Impact of IAS 1 "Presentation of Financial Statements" on the consolidated profit and loss account for the year ended 30 September 2006 This table highlights the presentational impact of IFRS on the consolidated profit and loss account for the year ended 30 September 2006. Income and expense are stated under UK GAAP values and format and are mapped from this starting position to the line item classification required under IFRS. UK GAAP values and format IAS1 UK GAAP values in Presentati IFRS format onal changes £ £ £ Turnover 17,781,897 17,781,897 Revenue Cost of sales (14,035,107) (14,035,107) Cost of sales --------------- --------------- Gross profit 3,746,790 3,746,790 Gross profit Operating expenses (2,676,957) (2,676,957) Operating expenses --------------- --------------- Operating profit 1,069,833 1,069,833 Operating profit Interest receivable 12,143 12,143 Finance income Interest payable and similar (152,868) (152,868) Finance charges charges --------------- --------------- Profit on ordinary activities 929,108 929,108 Profit before tax before taxation Tax on profit on ordinary (259,776) (259,776) Tax expense activities --------------- --------------- Profit for the financial year 669,332 669,332 Profit for the period ========= ========= 9. Report and Accounts The report and accounts of the group for the 18 months ended 31 March 2008 will be despatched to shareholders shortly and will be available to be viewed on the SectorGuard website, www.SectorGuard.plc.uk * ENDS * * For further information visit www.SectorGuard.plc.uk or contact: David Marks SectorGuard Plc Tel: 07734 051 547 Jonathan Wright Seymour Pierce Limited Tel: 020 7107 8000 Isabel Crossley / Chris Welsh St Brides Media & Finance Tel: 020 7236 1177 Ltd This information is provided by RNS The company news service from the London Stock Exchange END FR PUUPABUPRURW
1 Year Sectorguard Chart |
1 Month Sectorguard Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions