London Security plc Annual Report 2020

FY2020 Annual Report · London Security plc

Loading PDF…

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

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

Parent Company statement of changes
in equity

Notes to the Parent Company
financial statements

64 Notice of Annual General Meeting

67 Group companies

London Security plc continues to deliver industry-leading profit

margins since acquiring the Ansul and Nu-Swift businesses.

The challenges for the future are to continue to grow through

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

+7.2%

7
.
3
3
1

8
.
5
3
1

6
.
5
4
1

4
.
2
1
1

7
.
6
1
1

£24.7m

+2.1%

2
.
4
2

7
.
4
2

2
.
3
2

9
.
0
2

7
.
1
2

£152.7m

+3.9%

9
.
6
4
1

7
.
2
5
1

7
.
7
3
1

9
.
5
2
1

8
.
4
1
1

Annual Report and Accounts 2020 – London Security plc

Chairman’s statement

J.G. Murray, Chairman

FINANCIAL HIGHLIGHTS

Financial highlights of the audited
results for the year ended
31 December 2020 compared with
the year ended 31 December 2019
are as follows:

revenue of £152.7 million
(2019: £146.9 million);

operating profit of £24.7 million

(2019: £24.2 million);

profit for the year of £18.0 million

(2019: £16.8 million);

cash of £37.5 million
(2019: £27.1 million);

earnings per share for the year
of £1.46 (2019: £1.36); and

a dividend per share of £0.60

(2019: £0.80).

Trading review
The financial highlights illustrate that the
Group’s revenue increased by £5.8 million
(3.9%) to £152.7 million and operating
profit increased by £0.5 million (2.1%)
to £24.7 million. These results reflect:

service providers. The Group
recognises that we can only achieve
our aims with talented and dedicated
colleagues who provide outstanding
customer service in every area of
the business.

the positive impact of acquisitions
in 2019 and 2020 in the United
Kingdom, Belgium and Germany;

a good response to the impact of
Covid-19. Many of our businesses
were severely hampered by Covid-19
particularly in the Spring, but most
were able to recover quickly through
active management of the situation;

improved performance from our

service business in continental Europe;

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

the movement in the Euro to Sterling
average exchange rate, which had
a favourable effect of £1.1 million
on reported revenue and £0.3 million
on operating profit. A more detailed
review of this year’s performance is
given in the Financial Review and the
Strategic Report.

Acquisitions
It remains a principal aim of the Group
to grow through acquisition. Acquisitions
are being sought throughout Europe
and the Group will invest at prices where
an adequate return is envisaged by the
Board. In the year under review the Group
acquired one established security
business and has grown its presence in
Germany and the UK with the acquisition
of service contracts from smaller
well-established businesses for integration
into the Group’s existing subsidiaries.

Management and staff
2020 was a year in which the staff
were required to operate under
challenging conditions, and on
behalf of the shareholders, I would
like to express thanks and appreciation
for their contribution as essential

Dividends
A final dividend in respect of 2019
of £0.20 per ordinary share was paid
to shareholders on 10 July 2020.
An interim dividend in respect of 2020
of £0.40 per ordinary share was paid
to shareholders on 27 November 2020.
The Board is recommending the
payment of a final dividend in respect
of 2020 of £0.40 per ordinary share to
be paid on 9 July 2021 to shareholders
on the register on 11 June 2021.
The shares will be marked ex-dividend
on 10 June 2021.

Covid-19 impact assessment
The Group is responsible for
maintaining, manufacturing and
supplying fire protection and fire
suppression equipment throughout
Europe and has been designated as
essential contractor status by a number
of our clients including care, health,
housing and food production services.
It was essential that we continued to
meet our obligations and continued to
operate from our factories and that our
field-based service engineers continued
to visit our customers’ sites for essential
responsive and planned maintenance.

Many of the components which we are
reliant on are sourced from China and
we therefore suffered some delays in
the delivery of such components in the
first quarter of 2020. The Chinese
government’s response to the outbreak
meant that capacity returned over the
course of March 2020. Our strategic
stockholding meant our production
impact was minimised.

With a return to relative normality on the
supply side, we focused on customer
demand. By the middle of March, the
virus had impacted all our European

London Security plc – Annual Report and Accounts 2020

STRATEGIC REPORTa full service force in the field and have
experienced a strong start to 2021.
The experience of 2020 shows the
resilience of our business.

Future prospects
As the situation continues, cash
management will be a key consideration;
the London Security Group has a healthy
balance sheet, strong cash reserves
and a track record for good cash
generation. The Board therefore considers
that the Group is well placed to navigate
through the impact of the Covid-19
outbreak and capitalise on the rebound
in the economy created by the vaccine
programmes as they gain momentum
through 2021.

Annual General Meeting
The Annual General Meeting (“AGM”)
will be held at 2 Jubilee Way, Elland,
West Yorkshire HX5 9DY, on 30 June
2021 at 11.30 am. Under the UK
government’s roadmap it is possible
that the prohibition on non-essential
travel and public gatherings will have
ended and it will be possible for
shareholders to attend the AGM in
person. However, we strongly encourage
shareholders to vote on all resolutions
by completing the enclosed form of
proxy for use at that Meeting, which you
are requested to return in accordance
with the instructions on the form.

J.G. Murray
Chairman
11 May 2021

trading territories. Throughout Europe
governments responded to the pandemic
by applying severe restrictions on
movement and introducing social
distancing measures which forced many
of our customers to temporarily close.
We prepared the business for varying
levels of sales declines by temporarily
reducing staff levels in some locations.
We took advantage of government job
retention schemes to finance this
approach in order that staff were
available to return to work as restrictions
were lifted and non-essential businesses
reopened. A claim of £1.5 million was
made under the UK Coronavirus Job
Retention Scheme and £0.4 million
under a similar scheme in Austria. In
Belgium we took advantage of their
temporary unemployment scheme
which resulted in employee cost
savings in 2020.

During this period of uncertainty we
stayed in constant contact with our
staff, customers, banks and advisers to
ensure clear and concise communication.
Our priority was to do all we could to
ensure that our offices, depots and
services were kept as safe as possible,
in order to protect our employees and
business partners at all times. Many of
our employees and customers are
experiencing very difficult circumstances
and we continue to support them in
many ways. The health and wellbeing of
our people is our highest priority. We are
thankful and proud of our team members
who continue to respond as essential
service providers.

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

Financial review

IN SUMMARY

Our acquisitive strategy continues

to add to Group profitability.

The fire security market

is experiencing increased
competition and downward
pressure on prices.

We will continue to concentrate

on the highest levels of customer
service to mitigate this.

Consolidated Income Statement
The Group’s revenue increased by
£5.8 million (3.9%) to £152.7 million.
Operating profit increased by
£0.5 million (2.1%) to £24.7 million.
These results reflect the movement in
the Euro to Sterling average exchange
rate, which has reduced from 1.14 to 1.13.
If the 2020 results from the European
subsidiaries had been translated at
2019 rates, revenue would have been
£151.6 million instead of £152.7 million,
which would represent an increase of
3.2% on the prior year. On the same
basis, operating profit would have been
£24.4 million instead of £24.7 million,
an increase of 0.8% compared to 2019.

Of the increased revenue, £1.1 million
results from the favourable movement
in exchange rates as described above.
£1.5 million was generated by Trium N.V.,
a new subsidiary acquired by the Group
in 2020. In 2019 the Group acquired
four new subsidiaries, £2.4 million of
revenue was generated in a full year
from these businesses. A further
£0.8 million of revenue was generated
through smaller acquisitions of service
contracts and organic growth in our
existing businesses. The market for
fire protection is mature and highly
competitive; as a result there is a
downward pressure on prices which
is eroding our margins. We will continue
to concentrate on the highest levels
of customer service to mitigate this.

Net finance costs are unchanged on last
year. This is due to a decrease in finance
income being matched by a decrease in
finance costs. The decrease in finance
income reflects a reduction in the return
on the surplus in the UK defined benefit
scheme. The reduction in finance costs
represents reduced interest on loans as
the outstanding balance is repaid.

The Group’s effective income tax rate of
27% is above the UK corporation tax rate
of 19% as most of the expense is incurred
in jurisdictions where the rate is higher.

Consolidated Statement
of Financial Position
The Group continues to demonstrate
consistently profitable performance and
strong cash conversion. This is illustrated
by a well-capitalised balance sheet
with net cash and a strong asset base.
The Group ended the year with cash
of £37.5 million (2019: £27.1 million).

The Group’s borrowings disclosed
in these financial statements were
refinanced in May 2018 with the Group’s
existing bankers, Lloyds Bank plc,
resulting in a new multi-currency term
loan denominated as £3 million in Sterling
and €8 million in Euros. The facility is
being repaid evenly over five years. The
total of loans outstanding at the year
end was £5.7 million (2019: £7.2 million).

In May 2020 the trustees of the Nu-Swift
International Pension Scheme entered
into a bulk purchase annuity contract
with Aviva in respect of all benefits in
the scheme. At the year end, the
retirement benefit net surplus was
£445,000 compared with £4,959,000 in
the prior year. The surplus has decreased
primarily due to the purchase of the buy-in
annuity policy, because the premium
paid for this policy is larger than the
defined benefit obligation relating to the
underlying benefits. At the year end, the
annuity policy is recorded equal to the
present value of the scheme’s liabilities
excluding the GMP equalisation liability.
In line with IAS 19 the Directors have
initially recognised the insurance policy
at the amount paid and then immediately
remeasured the policy and recognised
the actuarial loss as a component within
Other Comprehensive Income. This
transaction was undertaken to remove
the future risks inherent with a defined
benefit pension scheme.

Treasury management and policy
The Board considers foreign currency
translation exposure and interest rates
to be the main potential treasury risks.
Treasury policies and guidelines are
authorised and reviewed by the Board.

London Security plc – Annual Report and Accounts 2020

STRATEGIC REPORTTo fully address the foreign currency
translation exposure, the Group’s
borrowings, which were refinanced in
May 2018, are split between Euro and
Sterling according to the forecast
income streams. This policy acts as
a natural hedge as the effect of an
adverse exchange movement on
translation of foreign currency loans
would be offset by a positive effect of
translating income streams from Europe
and vice versa.

Regarding the interest risk, the Group
has entered into interest rate agreements
capping LIBOR at 1.50% and EURIBOR
at 0.25% to take advantage of low market
interest rates. These agreements remain
in place until the loan is repaid in 2023.

Segmental reporting
The chief operating decision maker
(“CODM”) for the London Security
Group has been identified as the
executive Board as ultimately this
function is responsible for the allocation
of resources and assessing the
performance of the Group’s business
units. The internal reporting provided
to the CODM is a combination of
consolidated financial information
and detailed analysis by brand. The
management information on which the
CODM makes its decisions has been
reviewed and is deemed to be the
consolidated result for the Group.
The Group’s companies in different
European countries operate under similar
economic and political conditions with
no different significant risks associated
with any particular area and no exchange

control risks and the Group’s operations
are managed on a Pan-European basis
with close operational relationships
between subsidiary companies.
In addition, the nature of products,
services, production and distribution is
consistent across the region. Accordingly,
the Directors have concluded that under
IFRS 8 the Group operates in a single
geographical and market segment and
that there is a single operating segment
for which financial information is
regularly reviewed by the CODM.

Key risks and uncertainties
The Group’s key risks and uncertainties
are discussed in the Strategic Report.

Covid-19 impact assessment
Please refer to the Chairman’s Statement.

Annual Report and Accounts 2020 – London Security plc

Strategic report

Principal activities
London Security plc is an investment
holding company and its Board
co-ordinates the Group’s activities.
The principal activities of the Group are
the manufacture, sale and rental of fire
protection equipment and the provision
of associated maintenance services.

Business model
The Group is a leader in Europe’s fire
security industry. We provide fire
protection through our local presence
in the United Kingdom, Belgium, the
Netherlands, Austria, France, Germany,
Denmark and Luxembourg.

The Group’s services and products
are commercialised through well and
long-established brands such as
Nu-Swift, Ansul, Premier and Master.
The unique styling of our products
makes them immediately recognisable
to both the industry and customers alike.

The Group aims to achieve the highest
levels of service and product quality
through continued training of our
employees to the most stringent servicing
standards and the development of the
highest performance-rated fire products.
These activities are performed whilst
considering the preservation of the
environment. The Group continues
to build on its reputation for service
excellence and quality to develop a
“safety solutions” business with a
well-diversified and loyal customer base.

Business review and results
The Consolidated Income Statement
shows a profit attributable to equity
shareholders of the Parent Company
for the year ended 31 December 2020
of £17.9 million (2019: £16.7 million).
The Group’s results are discussed in
detail in the Financial Review. The Group
paid dividends in the year of £7.4 million
comprising a final dividend in respect of
the year ended 31 December 2019 of
£0.20 per ordinary share and an interim
dividend of £0.40 per ordinary share in
respect of the year ended 31 December
2020. The Board is recommending the

payment of a final dividend in respect
of the year ended 31 December 2020
of £0.40 per ordinary share. The Group
ended the year with net assets of
£126.1 million (2019: £116.2 million).

Key performance indicators
Given the straightforward nature of the
business, the Company’s Directors are
of the opinion that the analysis of revenue,
operating profit and earnings per share
are the appropriate KPIs for an
understanding of the development and
performance of the business. The analysis
of these KPIs is included in the Chairman’s
Statement and the Financial Review.

S172 statement
The Board believes that the presence
and requirements of a longstanding
controlling shareholder help focus
the Group’s strategy on long-term
shareholder value creation. Decisions
are taken bearing in mind the effect on
long-term growth in revenue, operating
profit and earnings per share.

Our employees are vital in delivering
the highest levels of service in order
to mitigate the downward pressure on
prices in our market. We involve and
listen to employees to maintain strong
employee engagement and retain
talented people. We have a number of
employee representative groups across
Europe to facilitate this. Investment in
our workforce through ongoing training
is seen as essential to keep up to date
with evolving legislation and protect the
business from competition.

During the year, the Group has
responded to the impact of the Covid-19
pandemic with additional measures:

The Directors have engaged on a
regular basis with all staff to keep them
up to date with our response to the
pandemic and the progress of
the business.

The Group has taken precautions to
ensure that servicing, manufacturing
and office functions can continue in
a Covid safe environment through

implementing social distancing measures
on its premises and providing suitable
sanitising products and personal
protective equipment to all staff. This
has allowed the Group to continue to
meet the needs of its customers.

The Directors recognise the need to
foster business relationships with
suppliers and customers. We aim to
have an open, constructive and effective
relationship with all suppliers including
site visits by our staff to ensure supply
chain sustainability, responsible
sourcing and supply chain resilience.

The Directors consider the impact of the
Group’s operations on the environment.
In recent years many of our product
innovations have been focused on
limiting our environmental impact.
We have a long list of accreditations,
including ISO 9001 and ISO 14001.

The interests of different stakeholders
may not always be totally compatible.
Therefore, the Group has to weigh up
the needs and requirements of all
stakeholders and attempt to find the
right balance where decisions may
affect more than one stakeholder. The
Group remains ethical in its dealings
with stakeholders and attempts to keep
stakeholders informed of relevant
business decisions. The likely
consequences of all our long term
decision making is part of our ongoing
management process.

The culture of the business is one of
support and inclusiveness with the aim
of ensuring our business is sustainable
in the long run. We aim to be an equal
opportunities employer and deal fairly
with all stakeholders. Robust procedures
are in place for conflict resolution.

To maintain a reputation for high
standards of business conduct our
website, www.londonsecurity.org,
explains our approach to the ten
principles set out in Section 3 of the
Quoted Companies Alliance Corporate
Governance Code issued in 2018.

To limit the effect of the majority
shareholder, the Parent Company and

London Security plc – Annual Report and Accounts 2020

STRATEGIC REPORTEOI Fire SARL entered into a relationship
agreement dated 10 December 1999 in
which EOI Fire SARL provided certain
assurances to the Parent Company with
regard to its relationship with the Parent
Company. The agreement confirms that
the business and affairs of the Parent
Company shall be managed by the
Board in accordance with the Parent
Company’s Memorandum and articles
of association and with applicable laws
and all relevant statutory provisions
for the benefit of the shareholders as
a whole. Any transactions or other
relationships between any member of
the EOI Fire SARL Group and the Parent
Company would be at arm’s length and
on a normal commercial basis. The
Directors declare their interest and take
no part in decisions where appropriate.

Board performance
The Board is measured primarily with
reference to the Group’s financial
performance and the suitability of the
Group to deliver strong results in the
future. In recent years the financial
performance of the Group has been
strong which has encouraged the Board
to believe that its membership is
appropriate. The Board also considers

that the stability of its membership over
recent years has been a major
contributor to the Company’s success.
The Vice Chairman evaluates the Board
performance informally on a regular
basis and formally at least twice per year.

Principal risks and uncertainties
Increased competition, the current
economic climate and industry changes
are regarded as the main strategic risks.
These are mitigated by providing service
levels recognised as being the best in
the industry, together with a diverse
base of operations throughout Europe.

Growth through acquisition is an
important strategy of the Group. A
potential risk is not identifying unsuitable
acquisitions that fail to meet the
investment case and would be
disruptive to integrate into the Group.
This risk is mitigated by formal review by
the investment committee prior to an
offer being made. Following acquisition
the integration team implements the
integration plan and monitors
performance against that plan.

trade between the Group’s Sterling and
Eurozone subsidiaries which would be
subject to uncertainty surrounding
access to each other’s markets. No
United Kingdom subsidiaries have
customers in the Eurozone and no
Eurozone subsidiaries have customers
in the United Kingdom. The supply of
components is sourced from China
and is expected to be unaffected.

Foreign currency and interest rate risks
are discussed in the Financial Review.

Covid-19 impact assessment
Please refer to the Chairman’s Statement.

Future developments
Competition in our market looks set
to continue. However, we continue to
believe that the Group’s well-established
business model and solid financials
provide a strong foundation to weather
this challenge, and to provide profitable
growth and long-term shareholder returns.

Signed on behalf of the Board

The exit of the UK from the EU has
had little impact on the Group’s
performance. There is no significant

J.G. Murray
Chairman
11 May 2021

Annual Report and Accounts 2020 – London Security plc

Directors and Company advisers

EXECUTIVE DIRECTORS

Jacques Gaston Murray 101
Chairman
Mr. Murray’s involvement in the fire industry began in 1961
with his investment in a business which became General
Incendie S.A., one of France’s largest fire extinguisher
companies. He invested in Nu-Swift and became Chairman
in 1982 and the majority shareholder in 1984 when
Nu-Swift acquired Associated Fire Protection Limited,
which owned General Incendie S.A. He has a business
interest in, and is Chairman of, Andrews Sykes Group plc
(“Andrews Sykes”), a separately AIM-quoted UK company.

Jean-Jacques Murray 54
Vice Chairman
Jean-Jacques Murray is the son of Jacques Gaston Murray.
He graduated with a BA in Finance from Los Angeles
Pepperdine University in 1988 and obtained his master’s
degree in 1990. His responsibility is the control and strategic
direction of the Group. He is the Non-Executive Vice
Chairman of Andrews Sykes.

Xavier Mignolet 56
Managing Director
Xavier Mignolet joined the Group in 1995. He graduated
with a master’s degree in Commercial and Financial
Sciences at HEC in Liege in 1987 and started his career in
financial audit for PwC in Brussels. He is a Non-Executive
Director of Andrews Sykes.

Emmanuel Sebag 52
Executive Director
Emmanuel Sebag has responsibility for the review and
supervision of Group operations. He graduated with a
master’s degree in Industrial Administration from Carnegie-
Mellon University in 1991. He is a Non-Executive Director
of Andrews Sykes.

NON-EXECUTIVE DIRECTORS

INDEPENDENT NON-EXECUTIVE DIRECTORS

Henry Shouler 83
Senior Independent Non-Executive Director
Henry Shouler is a Director of PKL Holdings plc. He also
has a number of other directorships in private companies.
The Board believes that Henry continues to act with the
utmost independence despite his length of tenure.

Jean-Pierre Murray 52
Non-Executive Director
Jean-Pierre Murray is the son of Jacques Gaston
Murray. He graduated from Los Angeles Pepperdine
University in 1990 with a BA in Finance, and gained his
master’s degree in 1993. He is a Non-Executive Director
of Andrews Sykes and a number of private companies.

Marie-Claire Leon 57
Non-Executive Director
Marie-Claire Leon has been responsible for managing
various projects around the world with Jacques Gaston
Murray. She graduated from California State University
in 1988 with a bachelor’s degree in Business
Administration, with a particular focus on Marketing
Management, New Venture and Small Business
Management. She is a Non-Executive Director of
Andrews Sykes.

London Security plc – Annual Report and Accounts 2020

GOVERNANCECOMPANY INFORMATION

Company advisers
Company Secretary and
registered office
Richard Pollard
Premier House
2 Jubilee Way
Elland
West Yorkshire HX5 9DY

Registered number
00053417

Chartered accountants and
statutory independent auditor
Grant Thornton UK LLP
No.1 Whitehall Riverside
Leeds LS1 4BN

Registrars
Link Group
Unit 10 Central Square
29 Wellington Street
Leeds
LS1 4DL

Stockbrokers and
nominated advisers
WH Ireland Limited
24 Martin Lane
London EC4R 0DR

The majority of the Board have been
actively involved in the fire protection
industry for more than 20 years.
Financial expertise is provided to the
Board by the Company Secretary and
external advisers.

If he feels it appropriate, the Senior
Non-Executive Director is encouraged
to seek external professional advice at
the Group’s expense.

Corporate governance
The Parent Company’s and Group’s
approach to applying the ten principles
set out in Section 3 of QCA Corporate
Governance Code is set out in detail
on the Group’s website,
www.londonsecurity.org.

The Board meets on two occasions
each year. All Directors receive a
pre-meeting briefing package and
post-meeting minutes and appropriate
attachments. As a number of the
Board’s Directors are based overseas,
it is not appropriate for all Directors to
attend all meetings. Where a Director
cannot attend, he can give his
contributions to an attending Director
or the Company Secretary and relay
any comments concerning the Board
minutes before they are adopted.
Should there be anything that requires
reconvening the meeting, an all parties
telephone Board meeting is convened.

All Directors receive appropriate monthly
management information and have the
opportunity to discuss this with the
Managing Director or any member
of his team.

On an annual basis, following the Annual
General Meeting, the Board reviews the
performance of its two committees.

Board committees
The Board maintains two standing
committees comprising Executive
and Non-Executive Directors. Both
committees have written constitutions
and terms of reference.

The remuneration committee comprises
H. Shouler and J-J. Murray. The
committee is chaired by H. Shouler.
The remuneration committee reviews
the performance of Executive Directors
and sets the scale and structure of their
remuneration and the basis of their
service agreements with due regard
to the interests of the shareholders.
No Director is permitted to participate
in decisions concerning his own
remuneration. Details of Directors’
remuneration are set out in the
Directors’ Remuneration Report in
the Annual Report.

The audit committee currently comprises
H. Shouler and J-J. Murray. H. Shouler
is independent of management and EOI
Fire SARL. The committee is chaired
by H. Shouler. The audit committee
is responsible for ensuring that the
financial performance of the Group
is properly monitored, controlled and
reported on. The audit committee
considers risk and internal control as a
fundamental part of its responsibilities.
It meets the auditors to discuss the
audit approach and the results of the
audit. The audit committee considers
the need to introduce an internal audit
function each year. After taking into
consideration the current size and
complexity of the Group, the committee
believes that it would not be cost
effective to have an internal audit
function and the committee feels that
sufficient comfort is obtained through
the scope and quality of management’s
ongoing monitoring of risks.

Due to the small size of the Board, the
Directors consider that a nomination
committee need not be established.

Annual Report and Accounts 2020 – London Security plc

Report of the Directors

The Directors present their report and
the audited Group and Parent Company
financial statements for the year ended
31 December 2020. Future developments
in the business and dividends paid and
proposed are discussed in the Strategic
Report. The Group’s financial risk
management policy is discussed in
the Financial Review.

Directors
The Directors of the Parent Company,
all of whom served during the whole
of the year ended 31 December 2020,
and up to the date of signing the
Group and Parent Company financial
statements, were:

Executive Directors
J.G. Murray, J-J. Murray, X. Mignolet
and E. Sebag.

Non-Executive Directors
M-C. Leon, H. Shouler and J-P Murray.

J-J Murray, X. Mignolet and E. Sebag
retire by rotation and, being eligible,
offer themselves for re-election at the
Annual General Meeting.

None of the Directors have a service
contract with the Parent Company.

Brief biographical details of the Directors
are set out on page 8.

Directors’ liability insurance
The Parent Company has maintained a
Directors’ qualifying third party indemnity
policy throughout the financial year and
up to the date of signing the financial
statements. Neither the Company’s
indemnity nor insurance provide cover in
the event that a Director is proved to
have acted fraudulently or dishonestly.
No claims have been made under either
the indemnity or insurance policy.

Substantial shareholdings
At 11 May 2021, the Parent Company
had been notified of the following interests
of 3% or more in its share capital:

Number
of shares

Percentage
of share
capital

EOI Fire SARL

9,861,954

80.43%

Tristar Fire Corp. 2,256,033

18.40%

Insofar as it is aware, the Parent Company
has no institutional shareholders.

J.G. Murray is a Director of London
Security plc as well as EOI Fire SARL.
J.G. Murray, J-J. Murray, J-P. Murray
and M-C. Leon are Directors of London
Security plc as well as Tristar Fire Corp.

Corporate culture and
ethical values
The Group has a long-established
heritage and reputation based on sound
ethical values and the Board considers
this to be of great ongoing value. Many
companies within our market sector
envy our reputation and we frequently
optimise this commercially and by
attracting new staff.

In recent years many of our product
innovations have been focused on
limiting our environmental impact.
We have a long list of accreditations,
including ISO 9001 and ISO 14001.

We pride ourselves on providing our
staff with a good working environment
within a strong ethical culture. The local
staff handbooks are regularly reviewed
by the senior operations teams and are
provided to all staff on commencement
of employment and are available at all
times via a Company intranet site. The
Group has a large number of long-serving
staff members, many with 30 years plus
service, which is a testament to our
working culture.

London Security plc – Annual Report and Accounts 2020

Health, safety and the environment
The maintenance and improvement of
working standards to safeguard the
health and wellbeing of staff and
customers alike is a continuing priority.
Health and Safety Officers are
appointed at each Group location and
they receive periodic training to keep
abreast of both legislative requirements
and technological advances. It is Group
policy to operate in a reasonable
manner with regard to the environment.

Employment of disabled persons
The Group is committed to employment
policies that follow best practice based
on equal opportunities for all employees
and offer appropriate training and
career development for disabled staff.
If members of staff become disabled,
the Group continues employment
wherever possible and arranges
retraining if required.

Employee involvement
The Group recognises the need to
ensure effective communications with
employees to encourage involvement
in the Group’s performance and achieve
a common awareness of factors
affecting that performance. Policies
and procedures have been developed
to suit the needs of each subsidiary
undertaking, which take into account
factors such as numbers employed and
location and include newsletters and
communication meetings.

Payment to suppliers
The Parent Company and Group agree
payment terms with all suppliers when
they enter into binding purchase
contracts. The Group seeks to abide
by the payment terms agreed with
suppliers whenever it is satisfied that
the supplier has provided the goods or
services in accordance with the agreed
terms and conditions. The Group does
not follow any standard or external code
which deals specifically with the
payment of suppliers.

GOVERNANCE

At 31 December 2020 Group average
creditor days were 44 days (2019:
35 days). The Parent Company had
no trade creditors at either year end.

Stakeholder engagement
Engaging with our stakeholders is key to
our success and delivering our strategy.
We have various mechanisms that
enable the Board and management to
understand and consider stakeholder
views as part of their decision making.
The key stakeholder groups and the
ways in which we engage with them
are set out below:

Customers – feedback from customers
enables us to develop service plans and
products that better meet their needs.
Our engineers interact with customers
on a daily basis. When customers need
extra support our customer service
team is available to offer assistance.

Suppliers – we work with suppliers
worldwide which provide products that
support us in delivering high-quality and
safe products for our customers. We
aim to have an open, constructive and
effective relationship with all suppliers
including site visits by our staff.

Investors – we maintain regular dialogue
with investors to communicate our
strategy and performance in order to
promote investor confidence and ensure
our continued access to capital. We have
launched a new website to facilitate
distribution of our results and news.
There is an AGM open to all investors.

Employees – the Group recognises the
need to ensure effective communications
with employees to encourage involvement
in the Group’s performance and achieve
a common awareness of factors
affecting that performance. Policies
and procedures have been developed
to suit the needs of each subsidiary
undertaking, which take into account
factors such as numbers employed and
location and include newsletters and

communication meetings. We involve
and listen to employees to maintain
strong employee engagement and retain
talented people. We consult employees
or their representatives on a regular
basis so that their views can be taken
into account in making decisions which
are likely to affect their interests. We have
a number of employee representative
groups across Europe to facilitate this.
We encourage the involvement of our
employees in the performance of their
Company by linking their remuneration
to a series of incentive schemes.

Environment – the Group has a
long-established heritage and reputation
based on sound ethical values and the
Board considers this to be of great
ongoing value. In recent years many
of our product innovations have been
focused on limiting our environmental
impact. We have a long list of
accreditations, including ISO 9001
and ISO 14001.

Streamlined energy and
carbon reporting
The Companies Act 2006 (Strategic
Report and Directors’ Reports)
Regulations 2013 amended the Large
and Medium-sized Companies and
Groups (Accounts and Reports)
Regulations 2008 to require large
companies to report information on
greenhouse gas emissions in their
Directors’ Reports. The Directors have
concluded that no reporting is required
as none of the Group’s companies are
large companies or are overseas entities
not in scope for this reporting and
London Security plc itself is a low
energy user.

Donations
The Parent Company and the Group
made no political donations during the
year (2019: £Nil) and made charitable
donations of £1,000 (2019: £1,000).

Future developments
Future developments are discussed in
the Chairman’s Statement and in the
Strategic Report.

Post balance sheet events
Subsequent to the year end the Group
has completed the acquisition of further
service contracts for a total of
£1,359,000 (2019: £1,034,000).

Dividends
Dividends are discussed in the
Chairman’s Statement.

Purchase of own shares and
authorities to issue shares
As at 11 May 2021 there remained
outstanding general authority for the
Directors to purchase a further 500,000
ordinary shares. Resolution 9 is to be
proposed at the Annual General Meeting
to extend this authority until the 2021
Annual General Meeting.

The special business to be proposed
at the 2021 Annual General Meeting
also includes, at resolution 8, a special
resolution to authorise the Directors to
issue shares for cash, other than pro
rata to existing shareholdings, in
connection with any offer by way of
rights not strictly in accordance with
statutory pre-emption rights or
otherwise, up to a maximum nominal
value of £6,131, being 5% of the Parent
Company’s issued ordinary share
capital. This authority will expire on the
earlier of the date of next year’s Annual
General Meeting or 15 months after the
passing of the resolution. The passing of
that resolution is subject to resolution 5,
an ordinary resolution, being approved
to authorise the Directors to have the
power to issue ordinary shares.

Annual Report and Accounts 2020 – London Security plc

they have taken all the steps that they
ought to have taken as a Director in
order to make themselves aware of
any relevant audit information and to
establish that the Group and Parent
Company’s auditor is aware of
that information.

Independent auditor
A resolution is to be proposed at the
Annual General Meeting in accordance
with Section 489 of the Companies Act
2006 for the re-appointment of Grant
Thornton UK LLP as independent auditor
of the Parent Company and authorising
the Directors to set their remuneration.

Annual General Meeting
The Notice of the Annual General
Meeting is set out on pages 64 to 66.
A form of proxy is enclosed for you to
complete according to the instructions
printed on it and send to the postage
paid address. All proxies must be
received by 11 am on 28 June 2021.

By order of the Board

R. Pollard
Company Secretary
11 May 2021

Report of the Directors continued

Statement of Directors’
responsibilities in respect
of the financial statements
The Directors are responsible for
preparing the Annual Report and the
financial statements in accordance with
applicable law and regulations.

Company law requires the Directors to
prepare financial statements for each
financial year. Under that law the
Directors have prepared the Group
financial statements in accordance
with International Accounting Standards
in conformity with the requirements of
the Companies Act 2006 and Parent
Company financial statements in
accordance with United Kingdom
Generally Accepted Accounting Practice
(United Kingdom Accounting Standards,
comprising FRS 102 “The Financial
Reporting Standard applicable in the UK
and Republic of Ireland”, and applicable
law). Under company law the Directors
must not approve the financial statements
unless they are satisfied that they give a
true and fair view of the state of affairs of
the Group and Parent Company and of
the profit or loss of the Group and Parent
Company for that period. In preparing
the financial statements, the Directors
are required to:

select suitable accounting policies
and then apply them consistently;

state whether applicable International
Accounting Standards in conformity
with the Companies Act 2006 have
been followed for the Group financial
statements and United Kingdom
Accounting Standards, comprising
FRS 102, have been followed for the
Parent Company financial statements,
subject to any material departures
disclosed and explained in the
financial statements;

make judgements and accounting
estimates that are reasonable and
prudent; and

prepare the financial statements on
the going concern basis unless it is
inappropriate to presume that the
Group and Parent Company will
continue in business.

The Directors are responsible for
keeping adequate accounting records
that are sufficient to show and explain
the Group and Parent Company’s
transactions and disclose with
reasonable accuracy at any time the
financial position of the Group and
Parent Company and enable them to
ensure that the financial statements
comply with the Companies Act 2006.

The Directors are also responsible for
safeguarding the assets of the Group
and Parent Company and hence
for taking reasonable steps for the
prevention and detection of fraud
and other irregularities.

The Directors of the ultimate Parent
Company are responsible for the
maintenance and integrity of the ultimate
Parent Company’s website. Legislation
in the United Kingdom governing the
preparation and dissemination of
financial statements may differ from
legislation in other jurisdictions.

Directors’ confirmations
In the case of each Director in office at the
date the Directors’ Report is approved:

so far as the Director is aware, there is
no relevant audit information of which
the Group and Parent Company’s
auditor is unaware; and

London Security plc – Annual Report and Accounts 2020

GOVERNANCEDirectors’ remuneration report

Remuneration committee
The remuneration committee comprises H. Shouler and J-J. Murray. The committee is chaired by H. Shouler, who is an
Independent Non-Executive Director. The remuneration of Non-Executive Directors is set by a committee of the other Directors.
No Director is involved in deciding his or her own remuneration.

Policy on Executive Directors’ remuneration
It is the Parent Company’s policy to provide the packages needed to attract, retain and motivate Directors of the quality
required, bearing in mind the size and resources of the Parent Company and its position relative to other companies.

Directors’ remuneration
Directors’ emoluments totalled £597,168 (2019: £558,589). This includes an amount paid to the highest paid Director of
£408,041 (2019: £377,007).

In compliance with the amendment to AIM Rule 19, the following disclosure in respect of Directors’ remuneration is made:

J.G. Murray

J-J. Murray

X. Mignolet

E. Sebag

J-P. Murray

M-C. Leon

H. Shouler

Emoluments and compensation including
any cash or non-cash benefits received

2020

£Nil

£125,127

£408,041

£Nil

£20,000

£24,000

2019

£Nil

£117,582

£377,007

£Nil

£20,000

£24,000

None of the Directors participate in Group pension arrangements. The Company paid no contributions to any private
pension schemes.

The costs relating to the Head Office and other expenses of the Executive Directors are limited under a Services Agreement
dated 10 December 1999 and reviewed annually. The total costs amounted to £747,414 (2019: £783,344) for the year ended
31 December 2020 as per the Services Agreement.

On behalf of the Board

H. Shouler
Chairman of the remuneration committee
11 May 2021

Annual Report and Accounts 2020 – London Security plc

Independent auditor’s report

to the members of London Security plc

Opinion

Our opinion on the financial statements is unmodified
We have audited the financial statements of London Security plc (the ‘parent company’) and its subsidiaries (the ‘group’) for the year
ended 31 December 2020, which comprise the consolidated income statement, consolidated statement of comprehensive income,
consolidated statement of changes in equity, consolidated statement of financial position, consolidated statement of cashflows, parent
company balance sheet, parent company statement of changes in equity and notes to the financial statements, including a summary
of significant accounting policies. The financial reporting framework that has been applied in the preparation of the group financial
statements is applicable law and international accounting standards in conformity with the requirements of the Companies Act 2006.
The financial reporting framework that has been applied in the preparation of the parent company financial statements is applicable law
and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable
in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion:

the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 December 2020

and of the group’s profit for the year then ended;

the group financial statements have been properly prepared in accordance with international accounting standards in conformity

with the requirements of the Companies Act 2006;

the parent company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted

Accounting Practice; and

the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under
those standards are further described in the ‘Auditor’s responsibilities for the audit of the financial statements’ section of our report. We are
independent of the group and the parent company in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.

Conclusions relating to going concern
We are responsible for concluding on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the group’s
and the parent company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify the auditor’s
opinion. Our conclusions are based on the audit evidence obtained up to the date of our report. However, future events or conditions may
cause the group or the parent company to cease to continue as a going concern.

Our evaluation of the directors’ assessment of the group’s and the parent company’s ability to continue to adopt the going concern basis
of accounting included:

Obtaining management’s forecasts, covenant calculations and sensitivity analysis, covering the period to June 2022. Due to the passage

of time since Covid-19 was announced as a pandemic, ongoing expectations of the future impact of this have been factored into
management’s forecasts;

Evaluating the key assumptions applied in the forecasts for reasonableness and determining whether they had been applied

appropriately. We also considered whether the assumptions are consistent with our understanding of the business and with current
lockdown restriction guidance. In doing so we noted that the group, and the markets it operates in, demonstrated resilience during 2020.
The group generated £27.2m of cash from operating activities in the year and recorded net funds of £31.8m (£37.5m of cash less £5.7m
of bank debt) at 31 December 2020;

Assessing the reliability of management’s forecasting by comparing the accuracy of actual historical financial performance to historic

forecast information;

Evaluating the sensitivity analysis performed on the forecasts by management, including a significant reduction in forecast revenues as the

key sensitivity. This significant reduction in revenues does not result in a need for mitigating actions;

London Security plc – Annual Report and Accounts 2020

FINANCIAL STATEMENTSConclusions relating to going concern continued
Evaluating covenant compliance throughout the going concern period in both the base case and sensitised scenarios;

Performing a “reverse stress test” analysis on management’s forecasts to estimate the reduction in revenues required to eliminate the

headroom in the cash flow forecasts, were discretionary dividends to be suspended, and assessing whether such mitigating actions were
available should they be required; and

Assessing the adequacy of the going concern disclosures included within the Financial Statements by management including the Covid-19

impact assessment in the Chairman’s statement, the basis of preparation in note 2 to the financial statements and the significant
judgement disclosure in note 4 to the financial statements.

In our evaluation of the directors’ conclusions, we considered the inherent risks associated with the group’s and the parent company’s
business model including effects arising from macro-economic uncertainties such as Brexit and Covid-19. We also assessed and challenged
the reasonableness of estimates made by the directors, and the related disclosures, and analysed how those risks might affect the group’s
and the parent company’s financial resources and ability to continue operations over the going concern period.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the group’s and the parent company’s ability to continue as a going concern for a period of at least
twelve months from when the financial statements are authorised for issue.

In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation
of the financial statements is appropriate.

The responsibilities of the directors with respect to going concern are described in the ‘Responsibilities of directors for the financial
statements’ section of this report.

Our approach to the audit

Overview of our audit approach
Overall materiality:

Group: £1,000,000, which represents 4.1% of the group’s profit before taxation.

Parent company: £519,000, which represents 1% of the parent company’s total assets.

Key audit matters were identified as

Materiality

Key audit
matters

Revenue recognition – same as previous year

Scoping

Valuation of intangible assets – Non-current assets carrying value exceeds fair value – same as

previous year

Our auditor’s report for the year ended 31 December 2019 included one key audit matter that has
not been reported as a key audit matter in our current year report. This change relates to “Valuation
of intangible assets – valuation and allocation of intangibles arising on acquisitions” and is due to the
one acquisition in the current year not being assessed as sufficiently material to require significant
auditor attention.

We performed a combination of full scope audit procedures and specified audit procedures on the
financial information of certain Belgian, UK, Dutch and Austrian components. This work was
performed by the Group engagement team and component auditors located in Belgium, the
Netherlands and Austria. As part of these audit procedures 83% of revenue was subject to testing
through either a full scope audit or specified audit procedures.

Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most
significance in our audit of the financial statements of the current period and include
the most significant assessed risks of material misstatement (whether or not due to
fraud) that we identified. These matters included those that had the greatest effect on:
the overall audit strategy; the allocation of resources in the audit; and directing the
efforts of the engagement team. These matters were addressed in the context of our
audit of the financial statements as a whole, and in forming our opinion thereon, and
we do not provide a separate opinion on these matters.

Description

Audit response

K AM

Disclosures

Our results

Annual Report and Accounts 2020 – London Security plc

Independent auditor’s report continued

to the members of London Security plc

Key audit matters continued
In the graph below, we have presented the key audit matters and other significant risks relevant to the audit.

High

Potential
financial
statement
impact

Valuation of
intangible assets

The revenue cycle includes
fraudulent transactions

Management over-ride
of controls

Going concern

Accounting and valuation
of the defined benefit
pension schemes

Existence and
valuation of
trade debtors

Existence and
valuation of
inventories

Related party
transactions

Accounting
for furlough

Business
combinations

Low

Extent of management judgement

High

Key audit matter

Significant risk

Other risk

Key Audit Matter – Group

How our scope addressed the matter – Group

Improper revenue recognition
We identified improper revenue recognition as one of the
most significant assessed risks of material misstatement
due to fraud.

The group has a number of different revenue streams
with revenue either being recognised at a point in time
or over the period of time that the service is performed.

The revenue recorded by the Group is also one of the key
determinants of Group underlying profit before tax, which
is the primary financial Key Performance Indicator (KPI)
for the Group.

Under ISA 240 (UK) there is a presumed risk that revenue
may be misstated due to the improper recognition of
revenue. We have assessed this risk to reside primarily
within uncollected revenues for point in time revenue. For
the point in time revenue (representing £129m of £152m
total revenue) there is an increased risk that these
revenues did not occur if they have not been paid at the
balance sheet date.

Relevant disclosures in the Annual Report
and Accounts 2020
The group’s accounting policy on revenue recognition
and related disclosures are shown in Note 2, Summary
of significant accounting policies.

In responding to the key audit matter, we performed the following audit procedures:

Documenting our understanding of the systems and controls in place around

the recording of revenue, evaluating the design and determining
implementation of relevant controls;

Assessing the accounting policies for consistency and appropriateness with
the financial reporting framework, including IFRS 15 ‘Revenue from Contracts
with Customers’ for all significant revenue streams, and in particular that
revenue was recognised at the point where the Group satisfied its related
performance obligation to the customer;

Testing samples of revenue transactions through agreement to relevant

supporting documentation, such as proof of delivery/proof of service and cash
receipt, to confirm that revenue was recognised once the performance
obligation had been met; and

Testing a sample of transactions around the year end including any large post
year end credit notes raised to check that transactions have been recorded in
the correct financial period.

Our results
Based on our audit work, we did not identify any material misstatement in the
revenue recognised in the year to 31 December 2020.

London Security plc – Annual Report and Accounts 2020

FINANCIAL STATEMENTSKey audit matters continued

Key Audit Matter – Group

How our scope addressed the matter – Group

In responding to the key audit matter, we performed the following audit procedures:

Documenting our understanding of the key controls surrounding management’s

impairment review process, evaluating their design and determining their
implementation;

Obtaining management’s impairment model and challenging whether the
methodology and the conclusions drawn were appropriate and in line with
the requirements of IAS 36 ‘Impairment of assets’;

Evaluating the historical accuracy of forecasts used in the prior year discounted

cash flow model compared to the results achieved in the current year;

Challenging the assumptions included within the discounted cash flow model,
including gaining an understanding of key factors and judgements applied in
determining future growth rates;

Challenging whether the allocation of goodwill to the cash generating units

is appropriate;

Utilising auditor valuation specialists to assist in assessing the appropriateness

of the discount rate included in management’s impairment model;

Performing sensitivity analysis on the assumptions used and their impact on
the forecast cash flows and on the carrying value of the intangible assets; and

Assessing the adequacy of the disclosures in the financial statements.

Our results
Based on our audit work performed we are satisfied that the intangible assets
have been accounted for in accordance with IAS 36 ‘impairment of assets’.

Valuation of intangible assets – Non-current
assets carrying value exceeds fair value
We identified valuation of intangible assets as one of the
most significant assessed risks of material misstatement
due to error or fraud arising from potential bias in relation
to the key judgements applied by management.

The Group held £66.3m of goodwill and other intangible
assets held on the balance sheet at 31 December 2020.

Management has determined the recoverable amount of
goodwill and other intangible assets based on value-in-
use calculations for each of the four cash-generating
units disclosed in note 13 to the financial statements
using discounted cash flows. There are significant
judgements involved in these calculations including
forecasting the operating cashflows and deriving an
appropriate discount rate.

Relevant disclosures in the Annual Report
and Accounts 2020
The group’s accounting policy on impairment of
goodwill is shown in Note 2, Summary of significant
accounting policies.

In addition, the estimation process applied has been
described in Note 4, Significant accounting estimates
and judgements.

The related disclosures in respect of intangible assets are
included in Note 13.

We did not identify any key audit matters relating to the audit of the financial statements of the parent company.

Our application of materiality
We apply the concept of materiality both in planning and performing the audit, and in evaluating the effect of identified misstatements on
the audit and of uncorrected misstatements, if any, on the financial statements and in forming the opinion in the auditor’s report.

Materiality was determined as follows:

Materiality measure

Group

Parent company

Materiality for financial
statements as a whole

We define materiality as the magnitude of misstatement in the financial statements that, individually or in the
aggregate, could reasonably be expected to influence the economic decisions of the users of these financial
statements. We use materiality in determining the nature, timing and extent of our audit work.

Materiality threshold

£1,000,000 which is 4.1% of profit before tax.

£519,000 which is 1.0% of total assets.

Annual Report and Accounts 2020 – London Security plc

Independent auditor’s report continued

to the members of London Security plc

Our application of materiality continued

Materiality measure

Group

Parent company

Significant judgements made by
auditor in determining the
materiality

In determining materiality, we made the following
significant judgements:

the selection of an appropriate benchmark;

the selection of an appropriate percentage to apply

the selection of an appropriate percentage

to that benchmark; and

to apply to that benchmark; and

the consideration of other qualitative factors.

We determined that profit before tax was the most
appropriate benchmark for the Group as it is a measure
against which performance of the Group is assessed
both internally and externally and also a generally
accepted auditing benchmark for listed companies. This
benchmark is consistent with that used in the prior year.

Materiality was determined based on 5% of forecast
profits. Actual profits were higher than forecast resulting
in a materiality that is 4.1% of profit before tax. Materiality
for the current year is therefore lower than the level that
we determined for the year ended 31 December 2019,
despite profit before tax increasing, as the prior year
materiality was approximately 5% of profit before tax.

We determined that total assets was the most
appropriate benchmark given the activities of
the parent company primarily being a holding
company and its major activities relate to fixed
assets included in the financial statements.

The benchmark used for the year ended
31 December 2020 is the same as the benchmark
used for the year ended 31 December 2019,
however the materiality is lower due to a
reduction in total assets.

Performance materiality
used to drive the extent
of our testing

We set performance materiality at an amount less than materiality for the financial statements as a whole
to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected
misstatements exceeds materiality for the financial statements as a whole.

Performance materiality
threshold

£650,000 which is 65% of financial
statement materiality.

£337,000 which is 65% of financial
statement materiality.

Significant judgements made by
auditor in determining the
performance materiality

In determining materiality, we made the following
significant judgements:

Assessment of the strength of the control

environment of the group and the entities within is
across the UK and Europe

Consideration of control findings and misstatements

from the prior year audit

Assessment of the strength of the information
systems used for key business processes
and reporting

Performance materiality for the parent company
has been calculated to be consistent with the
Group in line with the significant judgements
made for the Group.

Communication of
misstatements to the
audit committee

Threshold for communication

We determine a threshold for reporting unadjusted differences to the audit committee.

£50,000 and misstatements below that threshold that,
in our view, warrant reporting on qualitative grounds.

£26,000 and misstatements below that
threshold that, in our view, warrant reporting
on qualitative grounds.

The graph overleaf illustrates how performance materiality interacts with our overall materiality and the tolerance for potential
uncorrected misstatements.

London Security plc – Annual Report and Accounts 2020

FINANCIAL STATEMENTSOur application of materiality continued

Overall materiality – Group

Overall materiality – Parent company

Profit before tax
£24,577,000

FSM
£1,000,000
4%

PM
£650,000
65%

TFPUM
£350,000
35%

Total assets
£51,897,000

FSM
£519,000
1%

PM
£337,000
65%

TFPUM
£182,000
35%

FSM: Financial statements materiality, PM: Performance materiality, TFPUM: Tolerance for potential uncorrected misstatements

An overview of the scope of our audit
Our audit approach was a risk-based approach founded on a thorough understanding of the group’s business, its environment and risk profile
and in particular included:

Obtaining and documenting an understanding of the design and implementation of controls in place related to significant risks;

An evaluation of the group’s internal control environment including its IT systems and controls;

Evaluation by the group audit team of UK and overseas components to assess the significance of each component and to determine the

planned audit response based on a measure of materiality, including their relative contribution to the group’s revenues and profit before taxation;

Audits were performed on the financial information of four Belgium components and one UK component using component materiality

(full scope procedures). These procedures included a combination of test of details and analytical procedures. The components subject
to full scope audit procedures cover 36% of the consolidated revenues;

The audit of the Belgium components was performed by the Belgium component auditor such that we had appropriate direction and

involvement in the work of the component auditor throughout the audit. This included briefing the component audit team, directing the risk
assessment and fraud discussions, regular communication with the component auditor, attendance at audit close meetings and directly
reviewing and evaluating the work performed by the component auditor for the purpose of the group audit;

For 10 components located in the UK, the Netherlands and Austria we carried out either specified audit procedures or audits of one

or more account balances, classes of transactions or disclosures of the component). The procedures for the Netherlands and Austrian
components were performed by component auditors. We had appropriate direction and involvement in the work of the component
auditor throughout the audit. This included briefing the component audit team, directing the risk assessment and fraud discussions,
regular communication with the component auditor, attendance at audit close meetings and directly reviewing and evaluating the work
performed by the component auditor for the purpose of the group audit;

For those components that were not individually significant to the group, we carried out analytical procedures.

Components subject to full scope or specified audit procedures contributed 83% of the consolidated revenues and 94% of consolidated
profit before tax.

There have been no changes to the components that were in scope for component audits between the prior year and current year.
The component scoping for the Group is substantially unchanged from that in the prior year.

Other information
The directors are responsible for the other information. The other information comprises the information included in the annual report and
accounts, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other
information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether
the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to
be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether
there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have
performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Annual Report and Accounts 2020 – London Security plc

Independent auditor’s report continued

to the members of London Security plc

Our opinion on other matters prescribed by the Companies Act 2006 is unmodified
In our opinion, based on the work undertaken in the course of the audit:

the information given in the strategic report and the directors’ report for the financial year for which the financial statements

are prepared is consistent with the financial statements; and

the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.

Matter on which we are required to report under the Companies Act 2006
In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit,
we have not identified material misstatements in the strategic report or the directors’ report.

Matters on which we are required to report by exception
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if,
in our opinion:

adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from

branches not visited by us; or

the parent company financial statements are not in agreement with the accounting records and returns; or

certain disclosures of directors’ remuneration specified by law are not made; or

we have not received all the information and explanations we require for our audit.

Responsibilities of directors for the financial statements
As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the financial statements
and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the group’s and the parent company’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless
the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance
but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities,
outlined above, to detect material misstatements in respect of irregularities, including fraud. Owing to the inherent limitations of an audit, there
is an unavoidable risk that material misstatements in the financial statements may not be detected, even though the audit is properly planned
and performed in accordance with the ISAs (UK).

The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

We obtained an understanding of the legal and regulatory frameworks applicable to the company, and the industry in which it operates. We
determined that the following laws and regulations were most significant; financial reporting legislation (IFRS and Companies Act 2006) and
tax compliance legislation. In addition, we concluded that there are other laws and regulations that may have an effect on the determination
of the amounts and disclosures in the financial statements including those laws and regulations relating to health and safety and employment;

We understood how the parent company and the Group is complying with those legal and regulatory frameworks by making inquiries of

management and those responsible for legal and compliance procedures. We corroborated our inquiries through inspection of board minutes.

London Security plc – Annual Report and Accounts 2020

FINANCIAL STATEMENTSExplanation as to what extent the audit was considered capable of detecting irregularities, including fraud
continued
We enquired of management whether there were any known or suspected instances of non-compliance with laws and regulations or fraud
that could have a material impact on the financial statements. We corroborated the results of our enquiries to supporting documentation
such as board minute reviews and papers provided to the Audit Committee. From the procedures performed we did not identify any
material matters relating to non-compliance with laws and regulation or matters in relation to fraud.

To assess the potential risks of material misstatement, we obtained an understanding of:

the Group’s operations, including the nature of its revenue sources, expected financial statement disclosures and business risks that

may result in risk of material misstatement; and

the Group’s control environment including the adequacy of procedures for authorisation of transactions.

We assessed the susceptibility of the Group’s financial statements to material misstatement, including how fraud might occur by evaluating
management’s incentives and opportunities for manipulation of the financial statements. This included the evaluation of the risk of
management override of controls.

Audit procedures performed by the engagement team included:

evaluating the processes and controls established to address the risks related to irregularities and fraud;

journal entry testing, in particular journals determined to have a large impact on profit or that are indicative of unusual transactions

based on our understanding of the business;

challenging assumptions and judgements made by management in its significant accounting estimates, including utilising a valuation

specialist to assess the suitability of the discount rate used by management in its impairment testing; and

identifying and testing related party transactions.

Team communications in respect of potential non-compliance with laws and regulations and fraud included the potential for fraud in
revenue recognition and areas of significant management judgement and estimation, including those related to potential impairment.
These are also reported as key audit matters in the key audit matter section of our report where the matter and the specific procedures
we performed in response to the key audit matter are described in more detail;

We assessed the appropriateness of the collective competence and capabilities of the engagement team, including consideration of the
engagement team’s knowledge and understanding of the industry in which the client operates in, and their practical experience through
training and participation with audit engagements of a similar nature.

We asked the component auditors to perform procedures to assess whether there was any non-compliance with laws and regulations,

in the overseas components, that could have a material impact of the group financial statements.

We did not identify any material matters relating to non-compliance with laws and regulation.

Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an
auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other
than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Mark Overfield BSc FCA
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Leeds, United Kingdom

11 May 2021

Annual Report and Accounts 2020 – London Security plc

Consolidated income statement

for the year ended 31 December 2020

Revenue
Cost of sales

Gross profit
Distribution costs
Administrative expenses
Net impairment losses on financial assets

Operating profit

EBITDA*
Depreciation and amortisation

Operating profit

Finance income
Finance costs

Finance costs – net

Profit before income tax
Income tax expense

Profit for the year

Profit is attributable to:
Equity shareholders of the Company
Non-controlling interest

Earnings per share
Basic and diluted

* Earnings before interest, tax, depreciation and amortisation.

The notes on pages 27 to 57 are an integral part of these consolidated financial statements.

The above results are all as a result of continuing operations.

Notes

2020
£’000

2019
£’000

152,723
(37,387)

146,920
(36,293)

115,336
(56,281)
(33,027)
(1,328)

110,627
(54,140)
(31,991)
(342)

24,700

24,154

33,547
(8,847)

32,503
(8,349)

24,700

24,154

7
8

78
(201)

(123)

142
(254)

(112)

24,577
(6,536)

24,042
(7,229)

18,041

16,813

17,853
188

16,653
160

18,041

16,813

145.6p

135.8p

London Security plc – Annual Report and Accounts 2020

FINANCIAL STATEMENTS

Consolidated statement of comprehensive income

for the year ended 31 December 2020

Profit for the financial year

Other comprehensive (expense)/income:
Items that may be reclassified subsequently to profit or loss:
– currency translation differences on foreign currency net investments
Items that will not be reclassified subsequently to profit or loss:
– actuarial (loss)/gain recognised in the Nu-Swift Pension Scheme
– movement on deferred tax relating to the Nu-Swift Pension Scheme surplus
– actuarial loss recognised in the Ansul Pension Scheme
– movement on deferred tax relating to the Ansul Pension Scheme deficit

Other comprehensive expense for the year, net of tax

Equity shareholders of the Company
Non-controlling interest

Total comprehensive income for the year

The notes on pages 27 to 57 are an integral part of these consolidated financial statements.

Notes

2020
£’000

2019
£’000

18,041

16,813

2,396

(2,389)

21
19
21
19

(4,554)
1,594
(17)
5

414
(145)
(412)
103

(576)

(2,429)

17,465
188

14,224
160

17,653

14,384

Annual Report and Accounts 2020 – London Security plc

Consolidated statement of changes in equity

for the year ended 31 December 2020

Share
capital
£’000

123

Share
premium
account
£’000

344

Capital
redemption
reserve
£’000

Merger
reserve
£’000

Other
reserve
£’000

Retained Non-controlling
interest
earnings
£’000
£’000

Total
equity
£’000

2,033

8,831

100,078

302

111,712

At 1 January 2019

Total comprehensive income for the year
Profit for the financial year
Other comprehensive (expense)/income:
– exchange adjustments
– actuarial gain on pension schemes
– net movement on deferred tax relating

to pension asset

Total comprehensive (expense)/income
for the year

Contributions by and distributions
to owners of the Company:
– dividends

Distribution to non-controlling interest

—

—
—

—

—
—

—

At 31 December 2019 and 1 January 2020 123

344

Total comprehensive income for the year
Profit for the financial year
Other comprehensive (expense)/income:
– exchange adjustments
– actuarial loss on pension schemes
– net movement on deferred tax relating

to pension deficit

Total comprehensive (expense)/income
for the year

Contributions by and distributions
to owners of the Company:
– dividends

Distribution to non-controlling interest

—

—
—

—

—
—

—

At 31 December 2020

123

344

—

—
—

—

—
—

—

—
—

—

— 16,653

160

16,813

(2,389)
—

—
2

—

(42)

—
—

—

(2,389)
2

(42)

(2,389)

16,613

160

14,384

—

(9,809)

—

(9,809)

—

(113)

2,033

6,442

106,882

349

116,174

—

—
—

—

— 17,853

188

18,041

2,396
—

—
(4,571)

—

1,599

—
—

—

2,396
(4,571)

1,599

2,396

14,881

188

17,465

—

(7,356)

—

(7,356)

—

(160)

2,033

8,838

114,407

377

126,123

The merger reserve is not a distributable reserve. The other reserve relates entirely to the effects of changes in foreign currency
exchange rates.

The notes on pages 27 to 57 are an integral part of these consolidated financial statements.

London Security plc – Annual Report and Accounts 2020

FINANCIAL STATEMENTS

Consolidated statement of financial position

as at 31 December 2020

Assets
Non-current assets
Property, plant and equipment
Right of use assets
Intangible assets
Deferred tax asset
Retirement benefit surplus

Current assets
Inventories
Trade and other receivables
Cash and cash equivalents

Total assets

Liabilities
Current liabilities
Trade and other payables
Income tax liabilities
Borrowings
Lease liabilities
Provision

Non-current liabilities
Trade and other payables
Borrowings
Lease liabilities
Derivative financial instruments
Deferred tax liabilities
Retirement benefit obligations
Provision

Total liabilities

Net assets

Shareholders’ equity
Ordinary shares
Share premium
Capital redemption reserve
Merger reserve
Other reserves
Retained earnings

Equity attributable to owners of the Parent Company
Non-controlling interest

Total equity

Notes

2020
£’000

2019
£’000

11
12
13
19
21

15
16
17

20
26
22

18
20
26
14
19
21
22

13,046
3,254
66,311
790
445

83,846

14,953
33,174
37,456

85,583

12,164
2,360
67,504
683
4,959

87,670

13,434
27,822
27,143

68,399

169,429

156,069

(27,582)
(2,074)
(2,518)
(1,451)
(16)

(23,158)
(987)
(2,048)
(1,134)
—

(33,641)

(27,327)

(941)
(3,170)
(1,851)
(36)
(1,146)
(2,349)
(172)

(850)
(5,122)
(1,256)
(47)
(2,909)
(2,215)
(169)

(9,665)

(12,568)

(43,306)

(39,895)

126,123

116,174

23
23
23
23
23

123
344
1
2,033
8,838
114,407

125,746
377

123
344
1
2,033
6,442
106,882

115,825
349

126,123

116,174

The notes on pages 27 to 57 are an integral part of these consolidated financial statements.

The financial statements on pages 22 to 57 were approved by the Board of Directors on 11 May 2021 and were signed on its
behalf by:

J.G. Murray
Chairman
11 May 2021

Annual Report and Accounts 2020 – London Security plc

Consolidated statement of cash flows

for the year ended 31 December 2020

Cash flows from operating activities
Cash generated from operations
Interest paid
Income tax paid

Net cash generated from operating activities

Cash flows from investing activities
Acquisition of subsidiary undertakings (net of cash acquired)
Purchases of property, plant and equipment
Proceeds from the sale of property, plant and equipment
Purchases of intangible assets
Interest received

Net cash used in investing activities

Cash flows from financing activities
Repayments of borrowings
Payment of lease liabilities
Dividends paid to the Company’s shareholders
Distribution to non-controlling interest

Net cash used in financing activities

Net increase in cash in the year
Cash and cash equivalents at the beginning of the year

Effects of exchange rates on cash and cash equivalents

Notes

2020
£’000

2019
£’000

32,862
(118)
(5,524)

32,363
(160)
(7,639)

27,220

24,564

(516)
(5,063)
462
(1,244)
27

(2,264)
(3,974)
329
(2,068)
27

(6,334)

(7,950)

(2,121)
(2,036)
(7,356)
(160)

(2,091)
(1,750)
(9,809)
(113)

(11,673)

(13,763)

9,213
27,143

2,851
26,110

1,100

(1,818)

Cash and cash equivalents at the end of the year

37,456

27,143

The notes on pages 27 to 57 are an integral part of these consolidated financial statements.

London Security plc – Annual Report and Accounts 2020

FINANCIAL STATEMENTS

Notes to the financial statements

for the year ended 31 December 2020

1 General information
London Security plc (the “Parent Company”) is a leader in the European fire security industry, providing fire protection for our
customers through a local presence in the UK, Belgium, the Netherlands, Austria, France, Germany, Denmark and Luxembourg.

The Parent Company is a public limited liability company incorporated and domiciled in the United Kingdom. The registered
office is Premier House, 2 Jubilee Way, Elland, West Yorkshire HX5 9DY.

The Parent Company has its primary listing on AIM, part of the London Stock Exchange.

2 Summary of significant accounting policies
The principal accounting policies applied in the preparation of these Group financial statements are set out below. These
policies have been consistently applied to all the years presented, unless otherwise stated.

Basis of preparation
These Group financial statements have been prepared in accordance with International Accounting Standards in conformity
with the Companies Act 2006, IFRIC interpretations and those parts of the Companies Act 2006 applicable to companies
reporting under IFRS. These Group financial statements have been prepared under the historical cost convention, as modified
by accounting for derivative financial instruments at fair value through profit or loss.

The Directors have prepared these financial statements on the fundamental assumption that the Group is a going concern and
will continue to trade for at least 12 months following the date of approval of the financial statements. In determining whether
the Group’s accounts should be prepared on a going concern basis the Directors have considered the factors likely to affect
future performance. The Chairman’s Statement contains a Covid-19 impact assessment detailing the effect it is having on our
business. Following a severe decline in revenue in quarter 2 of 2020 the Group experienced strong demand for its products and
services as restrictions were lifted. Although the countries in which the Group operates are subject to different and changing levels
of restrictions our business has proved resilient and at the date of this report our engineers are fully engaged. The Board approved
a budget for 2021 and forecasts for 2022 (together “the base case budget”) based on the experience gained during the course of
2020 and the reaction of the business to the impact of the pandemic. The Group’s business activities, together with factors likely
to affect its future development and performance, are described in the Strategic Report. At 31 December 2020, the Group held
cash and cash equivalents of £37.5 million. Total debt at 31 December 2020 was £5.7 million, of which £2.5 million is due for
repayment in the year to 31 December 2021.

The base case budget is based on the Directors’ current knowledge of the business, their expectation of the level of restrictions
that are likely to remain in force over this period and the anticipated level of work that the engineers could perform in the
Countries in which the group operates. The base case budget includes significant cash headroom throughout the period. The
Directors have also modelled severe but plausible sensitivities to the base case budget and demonstrated that the group would
still expect to have significant cash headroom after applying these sensitivities. To the extent that there is a significant downturn
in trading compared with expectations, the Directors are satisfied that mitigating actions could be taken, if necessary, including
suspending dividend payments. In addition, whilst the Directors expect the Group’s bankers to be supportive should the Group
request loan repayment deferrals or forgiveness of any covenant breaches should the actual impact of Covid-19 be significantly
worse than expected, the Directors consider that the Group could repay its external loans should that support not be available.

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

Accounting developments
A number of new standards, amendments to standards and interpretations are effective for the year ended 31 December 2020.
These are considered either not relevant or to have no material impact on the Group.

There are no standards that are issued but not yet effective that would be expected to have a material impact on the entity in
the current or future reporting periods or on foreseeable future transactions.

Consolidation
Subsidiaries are entities which the Group has power over, exposure or rights to variable returns and an ability to use its power
to affect those returns. All subsidiaries share the same reporting date, being 31 December, and the same accounting policies
as London Security plc.

Annual Report and Accounts 2020 – London Security plc

2 Summary of significant accounting policies continued
Consolidation continued
The acquisition method of accounting under IFRS 3 is used to account for the acquisition of subsidiaries by the Group. The
cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or
assumed at the date of exchange. The costs directly attributable to the acquisition are expensed, with the exception of those
relating to the costs to issue debt or equity securities, which are recognised in accordance with IAS 32 and IFRS 9.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at
their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition
over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill.

Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated.
Unrealised losses are also eliminated but considered an impairment indicator of the asset transferred.

Consolidated goodwill is presented at cost less any provision for diminution in value.

Segment reporting
An operating segment is a group of assets and operations for which discrete financial information is available that is regularly
reviewed by the CODM. Where operating segments share similar economic characteristics and the segments are similar in
relation to the nature of products and services, nature of the production processes and type of customers including method
of providing the service then they may be deemed to be a single operating unit. The Directors have concluded that there is a
single operating segment as defined by IFRS 8, being the provision and maintenance of fire protection and security equipment
in Europe. Consequently, the results for the year and assets and liabilities relate to this one segment and one geographical area.

Foreign currency translation
(a) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary
economic environment in which the entity operates (the “functional currency”). The Group financial statements are presented in
Sterling, which is the Parent Company’s functional and presentation currency.

(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year
end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Income Statement.

(c) Group companies
The results and financial position of all the Group entities (none of which have the currency of a hyperinflationary economy) that
have a functional currency different from the presentation currency are translated into the presentation currency as follows:

(i)

assets and liabilities for each Statement of Financial Position presented are translated at the closing rate at the date of that
Statement of Financial Position;

(ii) income and expenses for each Income Statement are translated at average exchange rates; and

(iii) all resulting exchange differences are recognised as a separate component of equity and are reported within the Statement

of Comprehensive Income.

On consolidation, exchange differences arising from the translation of the net investment in foreign operations and of
borrowings and other currency instruments designated as hedges of such investments are taken to other comprehensive
income. When a foreign operation is sold, exchange differences that were recorded in equity are recognised in the Income
Statement as part of the gain or loss on sale.

London Security plc – Annual Report and Accounts 2020

Notes to the financial statements continued for the year ended 31 December 2020FINANCIAL STATEMENTS2 Summary of significant accounting policies continued
Property, plant and equipment
Property is carried at deemed cost at the date of transition to IFRS based on the previous UK GAAP valuations. Plant and
equipment held at the date of transition and subsequent additions to property, plant and equipment are stated at purchase
cost including directly attributable costs, less accumulated depreciation.

Freehold land is not depreciated. Depreciation on all other assets is calculated using the straight line method to allocate
their cost less residual value over their estimated useful lives, as follows:

Freehold buildings

2%–6%

Plant, machinery and extinguisher rental units

10%–33%

Motor vehicles and share in aircraft

Fixtures, fittings and equipment

5%–33%

10%

The assets’ residual values and useful lives are reviewed annually and adjusted if appropriate at each Statement of Financial
Position date.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater
than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount. These are included in
the Income Statement.

Intangible assets
(a) Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the identifiable net assets
acquired. Goodwill on acquisition of subsidiaries is included in “intangible assets”. Separately recognised goodwill is tested
annually for impairment and carried at cost less accumulated impairment losses.

An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of
assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows.

Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount
of goodwill relating to the entity sold.

(b) Approval costs
Approval costs are the expenses incurred in meeting the regulatory requirements measuring the fire rating of our products.
Approval costs are shown at historical cost, have a finite useful life and are carried at cost less accumulated amortisation.
Amortisation is calculated using the straight line method to allocate their cost over their estimated useful lives (10 to 20 years).

(c) Computer software
Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific
software. These costs are amortised over their estimated useful lives (three to five years) using the straight line method.

(d) Service contracts
Acquired service contracts are capitalised on the basis of the costs incurred to acquire. Amortisation is calculated using
the straight line method to allocate the cost of the contracts over their estimated useful lives (five to ten years).

Where indicators of impairment are identified a detailed impairment review is carried out for other intangible assets and will
be impaired as required.

Annual Report and Accounts 2020 – London Security plc

2 Summary of significant accounting policies continued
Right of use assets and lease liabilities
The Group recognises a right of use asset and a lease liability at the lease commencement date.

The right of use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease
payments made at or before the commencement date less any lease incentives received. The right of use asset is subsequently
depreciated using the straight line method from the commencement date to the end of the lease term.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date,
discounted using the Group’s incremental borrowing rate.

The Group applied IFRS 16 using the modified retrospective approach. In line with the simplified approach under IFRS 16 the
Group has taken advantage of the practical expedient with right of use asset values being set equal to lease. A review of the
Group’s operating lease commitments was undertaken and identified that property and motor vehicles were the only high-value
items to which the standard applies.

The Group has estimated the incremental borrowing rate at which to discount the future lease liabilities on the multi-currency
refinancing which was completed in May 2018 in order to set a different rate for leases denominated in Sterling (2.80%) and
Euros (1.55%).

Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined using the first-in, first-out method. The
cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs and related production
overheads. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling
expenses. Inventory is reviewed annually and a provision is made for obsolete, slow-moving or defective items where appropriate.

Financial instruments recognition and derecognition
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the
financial instrument. Financial assets are derecognised when the contractual rights to the cash flows from the financial asset
expire, or when the financial asset and substantially all the risks and rewards are transferred. A financial liability is derecognised
when it is extinguished, discharged, cancelled or expired.

Financial instruments classification and measurement
Financial assets, except for trade receivables, are initially measured at fair value. The Group classifies its financial assets as
those to be measured at amortised cost except for derivative financial assets that are at fair value through profit or loss. After
initial recognition, these financial assets are measured at amortised cost using the effective interest method. Discounting is
omitted where the effect of discounting is immaterial. The Group’s financial assets include cash and cash equivalents, trade
receivables, amounts owed by related undertakings and other receivables. The carrying value of these financial assets is
disclosed in note 16 and note 17 to the financial statements.

Financial liabilities are initially measured at fair value and, where applicable, adjusted for transaction costs unless the Group
designated a financial liability at fair value through profit or loss. Subsequently, financial liabilities are measured at amortised
cost using the effective interest rate method except for derivatives, which are carried subsequently at fair value with gains and
losses recognised in profit or loss. The Group’s financial liabilities include trade payable, other payables, accruals, borrowings
and derivative financial liabilities. The carrying value of the financial liabilities is disclosed in note 14, note 18 and note 20 to the
financial statements.

The carrying value of assets and liabilities classified at amortised cost approximates to their fair value.

London Security plc – Annual Report and Accounts 2020

Notes to the financial statements continued for the year ended 31 December 2020FINANCIAL STATEMENTS2 Summary of significant accounting policies continued
Trade receivables
The Group has reviewed the composition of its trade receivables and concluded that as the expected term of the receivables
is less than one year the receivables do not have a significant financing component. Therefore the Group will initially measure
these assets at their transaction price under IFRS 15 and subsequently adjust for any allowance for expected credit loss under
IFRS 9. The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected
credit loss allowance for all trade receivables. To measure the expected credit losses, trade receivables have been grouped
based on shared credit risk characteristics and days past due. Expected loss rates are based on historical credit losses experienced.
Historical loss rates are adjusted to reflect current and forward-looking factors affecting the ability of customers to settle the
receivables. Consideration is given to the overall economic environment as well as specific indicators that the recovery of a
balance may be in doubt.

Derivative financial instruments
Derivative financial instruments are initially measured at cost at the date the contract is entered into and are remeasured at
fair value at the Statement of Financial Position date with any valuation adjustment being reflected in the Income Statement.
The fair value at the balance sheet date is calculated based on observable interest rates.

Cash and cash equivalents
Cash and cash equivalents are included in the Statement of Financial Position at cost. Cash and cash equivalents include cash
in hand, deposits held at call with banks and other short-term, highly liquid investments with original maturities of three months
or less, less bank overdrafts where there is a legal right of offset and an intention to settle. Bank overdrafts are shown within
borrowings in current liabilities on the Statement of Financial Position.

Share capital
Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax,
from the proceeds.

Where the Parent Company purchases its own shares, the consideration paid, including any directly attributable incremental
costs (net of income taxes), is deducted from equity attributable to the Parent Company’s equity holders until the shares
are cancelled.

Trade payables
Trade payables are initially recognised at fair value and subsequently at amortised cost using the effective interest method.

Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at
amortised cost.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability
for at least 12 months after the Statement of Financial Position date.

Annual Report and Accounts 2020 – London Security plc

2 Summary of significant accounting policies continued
Current and deferred income tax
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the Statement of
Financial Position date in the countries where the Company’s subsidiaries operate and generate taxable income. Management
periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to
interpretation and establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is provided in full, using the net assets approach, on temporary differences arising between the tax bases
of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is
not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that
at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax
rates (and laws) that have been enacted or substantively enacted by the Statement of Financial Position date and are expected
to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against
which the temporary differences can be utilised.

Employee benefits
Pension obligations
Group companies operate various pension schemes. The schemes are generally funded through payments to insurance
companies or trustee-administered funds, determined by periodic actuarial calculations. The Group has both defined benefit
and defined contribution plans. A defined contribution plan is a pension plan under which the Group pays fixed contributions
into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold
sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. A defined
benefit plan is a post-employment benefit plan other than a defined contribution plan. Typically, defined benefit plans define an
amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age,
years of service and compensation.

The liability and surplus recognised in the Statement of Financial Position in respect of defined benefit pension plans is the
present value of the defined benefit obligation at the Statement of Financial Position date less the fair value of plan assets,
together with adjustments for actuarial gains or losses and past service costs. The defined benefit obligation is calculated
triennially by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation
is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are
denominated in the currency in which the benefits will be paid and that have terms to maturity approximating to the terms of
the related pension liability.

The interest cost and the expected return on the assets are shown within finance cost and finance income respectively within
the Consolidated Income Statement. Actuarial gains and losses are recognised immediately in Consolidated Statement of
Comprehensive Income. The reduction in the value of the bulk annuity policy is recognised immediately in the Other Comprehensive
Income as an actuarial loss. Net defined benefit pension scheme deficit and surplus are presented separately on the Statement
of Financial Position within non-current liabilities and non-current assets respectively before tax relief. The attributable deferred
tax asset and liability is included within deferred tax and is subject to the recognition criteria as set out in the accounting policy
on deferred taxation.

For defined contribution plans, the Group pays contributions to publicly or privately administered pension insurance plans on
a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been
paid. The contributions are recognised as an employee benefit expense when they are due.

London Security plc – Annual Report and Accounts 2020

Notes to the financial statements continued for the year ended 31 December 2020FINANCIAL STATEMENTS2 Summary of significant accounting policies continued
Provisions
Provisions are recognised when: the Group has a present legal or constructive obligation as a result of past events; it is more
likely than not that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated.
Provisions are not recognised for future operating losses.

Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects risks specific to the liability.

Revenue recognition
Revenue is shown net of value-added tax and after eliminating sales within the Group.

When assessing revenue recognition against IFRS 15, the Group assesses the contract against the five steps of IFRS 15:

1. Identify the contract with a customer.

2. Identify the performance obligations.

3. Determine the transaction price.

4. Allocate the transaction price to the performance obligations.

5. Recognise revenue when/as performance obligations are satisfied.

This process includes the assessment of the performance obligations within the contract and the allocation of contract revenue
across these performance obligations once identified. Revenue is recognised either at a point in time or over time, when, or as,
the Group satisfies performance obligations by transferring the promised goods or services to its customers. Revenue is based
on their relative stand-alone selling prices and recognised as follows:

(a) Outright sale of equipment
Revenue from the outright sale of equipment is recognised upon delivery to the customer.

(b) Service
Revenue from the servicing of equipment is recognised when the service has been performed.

(c) Maintenance
Revenue from the provision of maintenance services is recognised over the term of the maintenance contract on a pro rata
basis with the unexpired portion held in deferred income.

(d) Installation
Revenue from the installation of fire protection equipment is recognised over time as an asset controlled by the customer is
created or enhanced by the Group’s performance. In such arrangements the Group provides a significant service of integrating
goods and services to provide a combined output to the customer. The amount of revenue recognised as the service is
performed is based on the assessed value of work completed using the outputs method. Should billings exceed the amount of
revenue recognised a contract liability is recognised. Should the amount of revenue recognised exceed billings a contract asset
is recognised. There were no contract assets or liabilities at the year end.

Annual Report and Accounts 2020 – London Security plc

2 Summary of significant accounting policies continued
Revenue recognition continued
(e) Equipment rental
Revenue from the equipment leased to customers under an operating lease is recognised over the term of the lease, typically
five years, on a pro rata basis, with the unexpired portion held in deferred income. All contracts are cancellable.

The Group recognises liabilities for consideration received in respect of unsatisfied performance obligations for maintenance
and equipment rental revenue and reports these amounts as deferred income in the Statement of Financial Position (see note
18 for opening and closing deferred income balances). For 2020, revenue includes £2,723,000 (2019: £2,672,000) included in
the deferred income balance at the beginning of the period. No revenue has been recognised (2019: £Nil) from performance
obligations satisfied in previous periods due to a change in transaction price.

The Group derives revenue from the transfer of goods and services over time and at a point in time in the revenue streams
previously identified.

2020

Timing of recognition:
At a point in time
Over time

Total revenue

2019

Timing of recognition:
At a point in time
Over time

Total revenue

Outright sale
£’000

Service Maintenance
£’000

£’000

Rental
£’000

Installation
£’000

Total
£’000

92,706
—

36,563
—

92,706

36,563

—
4,122

4,122

—
4,322

— 129,269
23,454

15,010

4,322

15,010

152,723

Outright sale
£’000

Service
£’000

Maintenance
£’000

Rental
£’000

Installation
£’000

Total
£’000

89,474
—

34,233
—

89,474

34,233

—
4,055

4,055

—
4,449

— 123,707
23,213

14,709

4,449

14,709

146,920

During the year management reconsidered the description of certain revenues relating to installations and concluded that it
would be more appropriate to describe these revenues as recognised “over time” rather than “at a point in time”. This change
had no impact on the amount of revenue recognised.

Although the Directors have concluded that there is one geographic segment in which the Group operates, the revenue can be
analysed across the following countries:

United Kingdom
Belgium
Netherlands
Austria
Rest of Europe

2020
£’000

32,251
55,918
38,686
18,611
7,257

2019
£’000

32,328
55,780
35,303
18,649
4,860

152,723

146,920

Cost of sales
Cost of sales includes direct material costs net of supplier rebates. Other direct costs, largely direct labour, of £53.4 million
(2019: £53.5 million) are included within distribution costs.

Government grants
Government grants relate to payments received under Coronavirus Job Retention Schemes. These receipts are recognised
in profit or loss in staff costs in the periods in which the expenses are recognised. Where the conditions for receiving the grant
are met after the related expenses have been recognised, the grant is recognised when it becomes receivable.

London Security plc – Annual Report and Accounts 2020

Notes to the financial statements continued for the year ended 31 December 2020FINANCIAL STATEMENTS2 Summary of significant accounting policies continued
Dividend distribution
Dividend distribution to the Parent Company’s shareholders is recognised as a liability in the Group’s financial statements when
paid in the case of interim dividends or in the period in which the dividends are approved by the Parent Company’s shareholders
in the case of final dividends.

3 Financial risk management
Financial risk factors
The Board considers the Group has exposure to the following risks: foreign exchange risk, interest rate risk and capital risk.
Risk management is carried out under treasury policies and guidelines authorised and reviewed by the Board of Directors.
This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and
processes for measuring and managing risk and the Group’s management of capital. The Board has also considered the
Group’s exposure to credit risk and liquidity risk.

Credit risk – the Group’s trade receivables consist of a large number of customers spread across diverse industries and
geographical locations. The Group does not have any significant credit risk exposure to any single customer. As a result
the Board has concluded that the carrying amount of financial assets recorded in the financial statements, which is net of
impairment losses, represents the Group’s maximum exposure to credit risk.

Liquidity risk – the Group manages liquidity risk by maintaining adequate cash reserves, which at 31 December 2020
amounted to £37,456,000 (2019: £27,143,000), by operating within its agreed banking facilities, by continually monitoring
forecast and actual cash flows, by matching the maturity profiles of monetary assets and liabilities and by monitoring and
discussing its covenants with its banks. The Group’s bank loans at 31 December amounted to £5,688,000 (2019: £7,170,000)
and their maturity is analysed in detail in note 20. In view of the significant level of net funds available to the Group of
£31,768,000 (2019: £19,973,000), the Board has concluded that it has minimal exposure to liquidity risk.

(a) Foreign exchange risk
The Group has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk.
Currency exposure arising from the net assets of the Group’s foreign operations is managed primarily through borrowings
denominated in the relevant foreign currencies.

The Group’s exposure to foreign currency risk is as follows. This is based on the carrying amount for monetary financial
instruments except for derivatives when it is based on notional amounts.

31 December 2020

Cash and cash equivalents
Trade and other receivables
Bank loans
Lease liabilities
Trade and other payables
Income tax liabilities

Balance sheet exposure

31 December 2019

Cash and cash equivalents
Trade and other receivables
Bank loans
Lease liabilities
Trade and other payables
Income tax liabilities

Balance sheet exposure

Sterling
£’000

4,861
8,469
(1,550)
(1,609)
(7,031)
(128)

Euro
£’000

Total
£’000

32,595
24,705
(4,138)
(1,693)
(20,551)
(1,946)

37,456
33,174
(5,688)
(3,302)
(27,582)
(2,074)

3,012

28,972

31,984

Sterling
£’000

4,831
6,546
(2,169)
(1,393)
(6,434)
(182)

Euro
£’000

Total
£’000

22,312
21,276
(5,001)
(997)
(16,633)
(803)

27,143
27,822
(7,170)
(2,390)
(23,067)
(985)

1,199

20,154

21,353

Annual Report and Accounts 2020 – London Security plc

3 Financial risk management continued
Financial risk factors continued
(a) Foreign exchange risk continued
A 5% weakening of the Euro against Sterling at 31 December 2020 would have decreased equity by £1,473,000 (2019:
£983,000). This calculation assumes that the change occurred at the Statement of Financial Position date and had been
applied to risk exposures existing at that date. A 5% strengthening of the Euro against Sterling at 31 December 2020 would
have had the equal but opposite effect, on the basis that all other variables remain constant.

There are no assets or liabilities that are denominated in a currency that is different to the functional currency of the entity in
which they are recorded. As such there is deemed to be no foreign currency market risk. The only deemed foreign currency
risk is that of translation risk as disclosed above.

(b) Interest rate risk
The Group’s interest rate risk arises from long-term borrowings. These borrowings were issued at variable rates based on
EURIBOR and LIBOR and did expose the Group to cash flow interest rate risk.

The Group manages its cash flow interest rate risk by entering into interest capping agreements. The effect of these agreements
is to fix the Group’s exposure to EURIBOR to 0.25% and LIBOR to 1.50%. The agreements took effect from May 2018 and
provide interest rate cover until the loans are repaid in May 2023.

(c) Capital risk
The Group’s objective in managing capital is to maintain a strong capital base to support current operations and planned
growth and to provide for an appropriate level of dividend payment to shareholders.

The Group is not subject to external regulatory capital requirements.

Total capital

Total cash and cash equivalents
Less: borrowings

Net funds
Total equity

Total capital

2020
£’000

2019
£’000

37,456
(5,688)

27,143
(7,170)

31,768
126,123

19,973
116,174

157,891

136,147

4 Significant accounting estimates and judgements
Estimates and judgements 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.

Significant estimates
The Group makes estimates and assumptions concerning the future. The resulting estimates will, by definition, seldom equal
the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the
carrying value of assets and liabilities within the next financial year are discussed below.

(a) Carrying value of goodwill
The Group tests annually whether the carrying value of goodwill has suffered any impairment, in accordance with its accounting
policy. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations, which includes
estimation uncertainty in relation to the assumptions about future operating results and determination of a suitable discount rate.

The value-in-use calculations have used pre-tax cash flow projections forecast over ten years based on the budget approved by the
Board for the year ending 31 December 2021. The key assumptions used in the cash flow projections were:

Growth rate: An estimated growth rate of 1% reflecting the mature nature of the market in which the cash-generating units operate.

London Security plc – Annual Report and Accounts 2020

Notes to the financial statements continued for the year ended 31 December 2020FINANCIAL STATEMENTS4 Significant accounting estimates and judgements continued
Significant estimates continued
(a) Carrying value of goodwill continued
Discount rate: The cash flows have then been discounted using a pre-tax rate of 10% (2019: 10%). The CGUs in different
European countries operate under similar economic and political conditions with no different significant risks associated with
any particular area and no exchange control risks. In addition, the nature of products, services, production and distribution is
consistent across the region. Accordingly, the Directors have concluded that a single discount rate is appropriate to discount
future cash flows.

Identification of CGUs: CGUs are identified based on the degree of integration in IT, product supply and staff expertise
between the component companies which prevents their ability to operate as independent entities.

Sensitivity analysis: The value-in-use calculations did not indicate impairment in any goodwill. If the discount rate had been
5% higher there would still have been no impairment in any goodwill.

(b) Pension scheme assumptions and mortality tables
The carrying value of the defined benefit pension scheme is valued using actuarial valuations. These valuations are based on
assumptions including the selection of the most appropriate mortality table for the profile of the members in the scheme and
the financial assumptions concerning discount rates and inflation. All these are estimates of future events and are therefore
uncertain. The choices are based on advice received from the scheme’s actuaries which is checked from time to time with
benchmark surveys. The sensitivity of these assumptions is discussed in note 21 Retirement benefit obligations.

Significant judgements
(a) Going concern
In the course of preparing the financial statements, significant judgements have been made in determining whether the Group
financial statements should be prepared on a going concern basis. Further details are set out in the basis of preparation section
in note 2 to the financial statements.

(b) Bulk purchase annuity contract
In May 2020 the trustees of the Nu-Swift International Pension Scheme entered into a bulk purchase annuity contract with Aviva
in respect of all benefits in the scheme. The accounting for the difference between the fair value of the qualifying insurance
policy and the cost of the policy is an accounting policy choice. The Group has recognised the qualifying insurance policy at
cost and then immediately remeasured the asset to its fair value. The difference has been treated as an actuarial loss and is
recognised as part of remeasurements as a component within Other Comprehensive Income.

5 Employee benefit expense

Wages and salaries
Government grants
Social security costs
Other pension costs (note 21)

2020
£’000

53,282
(1,940)
10,158
2,476

2019
£’000

48,645
—
10,215
2,145

63,976

61,005

Directors’ emoluments including employer’s national insurance totalled £668,074 (2019: £626,160). This includes an amount
paid to the highest paid Director of £408,041 (2019: £377,007). Key management personnel are deemed only to be the Directors.

The average monthly number of persons employed by the Group (including Directors) during the year was as follows:

Production
Administration and management

Total

2020
Number

46
1,360

1,406

2019
Number

46
1,191

1,237

Annual Report and Accounts 2020 – London Security plc

6 Finance income and costs

Finance income
Bank interest receivable
Expected return on pension scheme assets (note 21)
Fair value of derivative financial instruments

Total finance income

Finance costs
Bank loans, overdrafts and other loans repayable within five years
Amortisation of loan arrangement fees
Fair value of derivative financial instruments
Interest on lease liabilities
Interest on pension scheme liabilities (note 21)

Total finance costs

Net finance costs

7 Profit before income tax
Profit before income tax is stated after charging/(crediting):

Depreciation of property, plant and equipment
Depreciation of right of use assets
Amortisation of intangible fixed assets
Profit on disposal of plant and equipment
Loss on disposal of intangible assets

2020
£’000

28
40
10

(100)
(18)
—
(68)
(15)

(201)

(123)

2019
£’000

27
115
—

142

(142)
(18)
(6)
(64)
(24)

(254)

(112)

2020
£’000

3,534
1,986
3,327
(76)
13

2019
£’000

3,305
1,716
3,328
(59)
31

Services provided by the Group’s external auditor and network firms
During the year, the Group (including its overseas subsidiaries) obtained the following services from the Group’s auditor as
detailed below:

Audit services
Fees payable to the Parent Company’s auditor for the audit of the Group’s annual accounts
Fees payable to the Parent Company’s auditor and its network firms for other services:
– the audit of the Parent Company’s subsidiaries pursuant to legislation

Additional fees relating to 2019’s year end audit of £25,000 have been charged in the current financial year.

2020
£’000

142

233

375

2019
£’000

229

321

London Security plc – Annual Report and Accounts 2020

Notes to the financial statements continued for the year ended 31 December 2020FINANCIAL STATEMENTS

8 Income tax expense

United Kingdom
Corporation tax

Foreign tax
Corporation taxes

Total current tax

Deferred tax
Origination and reversal of temporary differences representing:
– United Kingdom tax
– foreign tax

Total deferred tax (note 19)

Total tax charge

2020
£’000

567

2019
£’000

478

6,294

6,861

6,931

7,409

(252)
(73)

(325)

(263)
83

(180)

6,536

7,229

The tax for the year is higher (2019: higher) than the standard rate of corporation tax in the United Kingdom of 19% (2019: 19.0%).
The differences are explained below:

Profit on ordinary activities before taxation

Profit on ordinary activities multiplied by the standard rate of corporation tax
in the United Kingdom of 19% (2019: 19.0%)
Effects of:
– expenses not deductible for tax purposes
– overseas tax rate in excess of UK standard

Total tax charge

2020
£’000

2019
£’000

24,577

24,042

4,670

4,568

510
1,356

6,536

401
2,260

7,229

The Group’s effective income tax rate of 26.6% of profit before tax is expected to increase following the announcement in the
UK Chancellor’s budget to increase the UK’s main rate of corporation tax to 25.0%. The increase is expected to take effect
from 1 April 2023.

9 Earnings per share
The calculation of basic earnings per ordinary share (“EPS”) is based on the profit on ordinary activities after taxation of
£17,853,000 (2019: £16,653,000) and on 12,261,477 (2019: 12,261,477) ordinary shares, being the weighted average number
of ordinary shares in issue during the year.

For diluted EPS, the weighted average number of shares in issue is adjusted to assume conversion of all dilutive potential
ordinary shares. There was no difference in the weighted average number of shares used for the calculation of basic and
diluted earnings per share as there are no potentially dilutive shares outstanding.

Profit on ordinary activities after taxation

17,853

145.6

16,653

135.8

2020

2019

£’000

Pence

£’000

Pence

Annual Report and Accounts 2020 – London Security plc

10 Dividends per share

Equity – ordinary shares
Final paid £0.20 (2019: £0.40) per share
Interim paid £0.40 (2019: £0.40) per share

2020
£’000

2019
£’000

2,451
4,905

7,356

4,904
4,905

9,809

The Board is recommending the payment of a final dividend in respect of the year ended 31 December 2020 of £0.40 per
ordinary share (2019: £0.20).

11 Property, plant and equipment

Cost
At 1 January 2019
Additions
On acquisitions of subsidiary undertakings
Disposals
Exchange adjustment

At 1 January 2020
Additions
On acquisitions of subsidiary undertakings
Disposals
Exchange adjustment

At 31 December 2020

Accumulated depreciation
At 1 January 2019
Disposals
Charge for the year
Exchange adjustment

At 1 January 2020
Disposals
Charge for the year
Exchange adjustment

At 31 December 2020

Net book amount

At 31 December 2020

At 31 December 2019

At 31 December 2018

Freehold
land and
buildings
£’000

10,315
22
—
—
(341)

9,996
69
—
(4)
278

Plant and
machinery
£’000

Extinguisher
rental units
£’000

4,369
275
77
(363)
(191)

4,167
266
—
(111)
132

12,050
322
—
(59)
(622)

11,691
501
—
(49)
519

Motor
vehicles
and share
in aircraft
£’000

13,186
2,776
70
(1,525)
(592)

13,915
2,915
7
(2,012)
753

Fixtures,
fittings and
equipment
£’000

5,471
579
6
(821)
(233)

5,002
651
—
(230)
205

Total
£’000

45,391
3,974
153
(2,768)
(1,979)

44,771
4,402
7
(2,406)
1,887

10,339

4,454

12,662

15,578

5,628

48,661

6,388
—
148
(275)

6,261
(1)
149
230

3,531
(361)
249
(156)

3,263
(91)
247
159

11,304
(55)
293
(582)

10,960
(46)
299
488

7,483
(1,293)
2,209
(296)

8,103
(1,653)
2,360
455

4,608
(791)
406
(203)

4,020
(229)
479
162

33,314
(2,500)
3,305
(1,512)

32,607
(2,020)
3,534
1,494

6,639

3,578

11,701

9,265

4,432

35,615

3,700

3,735

3,927

876

904

838

961

731

746

6,313

5,812

5,703

1,196

13,046

982

863

12,164

12,077

Depreciation and profit/loss on disposal have been charged to the Income Statement through administrative expenses.
Freehold land is not depreciated.

London Security plc – Annual Report and Accounts 2020

Notes to the financial statements continued for the year ended 31 December 2020FINANCIAL STATEMENTS

11 Property, plant and equipment continued
Although the Directors have concluded that there is one geographic segment in which the Group operates, the net book
amount can be analysed across the following countries:

United Kingdom
Belgium
Netherlands
Austria
Rest of Europe

12 Right of use assets

At 1 January 2019
Additions
Disposals
Exchange differences

At 1 January 2020
Additions
Disposals
Exchange differences

At 31 December 2020

Accumulated depreciation
At 1 January 2019
Disposals
Charge for the year
Exchange differences
At 1 January 2020
Disposals
Charge for the year
Exchange differences

At 31 December 2020

Net book amount

At 31 December 2020

At 31 December 2019

2020
£’000

3,384
5,920
2,385
938
419

2019
£’000

3,490
5,370
2,223
921
160

13,046

12,164

Leasehold
land and
buildings
£’000

1,289
1,016
(472)
(35)

1,798
2,049
(702)
69

Motor
vehicles
£’000

1,248
604
(111)
—

1,741
781
(473)
1

Total
£’000

2,537
1,620
(583)
(35)

3,539
2,830
(1,175)
70

3,214

2,051

5,264

—
(417)
977
(9)
551
(702)
1,284
20

1,153

—
(111)
739
—
628
(473)
702
—

858

—
(528)
1,716
(9)
1,179
(1,175)
1,986
20

2,010

1,993

1,247

1,193

1,113

3,254

2,360

Depreciation has been charged to the Income Statement through administrative expenses.

Interest charged on lease liabilities of £68,000 (2019: £64,000) is included within finance costs.

Of the net book amount, £1,574,000 (2019: £1,368,000) is in respect of assets in the United Kingdom. The remaining
£1,882,000 (2019: £992,000) is spread throughout other European countries in which the Group has operations.

Annual Report and Accounts 2020 – London Security plc

13 Intangible assets

Cost
At 1 January 2019
Additions
On acquisitions of subsidiary undertakings
Disposals
Exchange differences

At 1 January 2020
Additions
On acquisitions of subsidiary undertaking
Disposals
Exchange differences

At 31 December 2020

Accumulated amortisation
At 1 January 2019
Disposals
Charge for the year
Exchange differences

At 1 January 2020
Disposals
Charge for the year
Exchange differences

At 31 December 2020

Net book amount

At 31 December 2020

At 31 December 2019

At 31 December 2018

Goodwill
£’000

Service
contracts
£’000

70,917
19
954
—
(1,215)

70,675
6
87
—
1,004

33,390
1,784
2,309
—
(969)

36,514
1,061
514
—
848

Software
£’000

1,595
171
—
(199)
(77)

1,490
87
—
(119)
62

Approval
costs
£’000

2,276
94
—
(32)
(165)

2,173
90
—
(11)
49

Total
£’000

108,178
2,068
3,263
(231)
(2,426)

110,852
1,244
601
(130)
1,963

71,772

38,937

1,520

2,301

114,530

17,315
—
—
(1,093)

16,222
—
—
979

21,295
—
3,134
(611)

23,818
—
3,184
540

1,387
(199)
131
(67)

1,252
(117)
101
52

2,104
(2)
63
(109)

2,056
—
42
90

42,101
(201)
3,328
(1,880)

43,348
(117)
3,327
1,661

17,201

27,542

1,288

2,188

48,219

54,571

11,395

54,453

12,696

53,602

12,095

232

238

208

113

117

172

66,311

67,504

66,077

Amortisation has been charged to the Income Statement through administrative expenses. Additions are discussed in further
detail in note 27.

Impairment tests for goodwill
The recoverable amount of goodwill and service contracts is determined based on value-in-use calculations for each cash-
generating unit (“CGU”). The value-in-use calculations have used pre-tax cash flow projections based on the Board approved
budget for the year ending 31 December 2021. Subsequent cash flows are extrapolated using an estimated growth rate of 1%
(2019: 1%) reflecting the mature nature of the market in which the CGUs operate. The cash flows have then been discounted
using a pre-tax rate of 10% (2019: 10%). The CGUs in different European countries operate under similar economic and political
conditions with no different significant risks associated with any particular area and no exchange control risks. In addition,
the nature of products, services, production and distribution is consistent across the region. Accordingly, the Directors have
concluded that a single discount rate is appropriate to discount future cash flows. The value-in-use calculations did not indicate
impairment in any goodwill or service contract. If the discount rate had been 5% higher there would still have been no impairment
in any goodwill. The value of goodwill is split into four CGUs to assess indicators of impairment. Of the total goodwill £40,699,000
(2019: £40,593,000) relates to Ansul Group companies (based in Belgium, Austria and the Netherlands), £12,930,000 (2019: £12,924,000)
relates to the integrated UK companies and the balance relates to the remaining CGUs which are individually considered insignificant.
Of the total service contracts £5,328,000 (2019: £5,271,000) relates to Ansul Group companies (based in Belgium, Austria and
the Netherlands), £3,382,000 (2019: £4,935,000) relates to the integrated UK companies and the balance relates to the remaining
CGUs which are individually considered insignificant.

London Security plc – Annual Report and Accounts 2020

Notes to the financial statements continued for the year ended 31 December 2020FINANCIAL STATEMENTS

14 Derivative financial instruments

Interest rate agreements

2020

2019

Assets
£’000

—

Liabilities
£’000

Assets
£’000

—

Liabilities
£’000

The Group has entered into interest rate agreements capping LIBOR at 1.50% and EURIBOR at 0.25%. The agreements took
effect from May 2018 and remain in effect until the loans are repaid in 2023. The liability represents the forecast increase in
interest payable as a result of these agreements over the remaining life of the loans at the year end. The fair value at the year
end is calculated based on observable interest rates.

15 Inventories

Raw materials and consumables
Work in progress
Finished goods

2020
£’000

6,816
527
7,610

2019
£’000

5,988
500
6,946

14,953

13,434

The cost of inventories recognised as an expense and included in cost of sales amounted to £34,491,000 (2019: £34,066,000).
No (2019: £Nil) previous inventory write downs have been reversed.

16 Trade and other receivables

Amounts falling due within one year
Trade receivables
Less: expected credit loss allowance

Trade receivables – net
Amounts owed by related undertakings
Other receivables
Prepayments
Income tax recoverable

2020
£’000

2019
£’000

32,186
(2,652)

26,419
(1,619)

29,534
33
1,447
1,954
206

24,800
31
941
1,662
388

33,174

27,822

Amounts owed by related undertakings do not attract interest, no security is held in respect of these balances and they are
repayable on demand.

In line with our trade receivables accounting policy, the Group applies the IFRS 9 simplified model of recognising lifetime
expected credit losses for all trade receivables as these items do not have a significant financing component. In measuring
expected credit losses, the trade receivables have been assessed on a collective basis as they possess shared credit risk
characteristics. They have been grouped in months past due. On this basis the expected credit loss for trade receivables
was determined as follows:

31 December 2020 Trade receivables

Expected credit loss rate
Gross carrying amount
Lifetime expected credit loss

Current

0.1%
18,606
20

Up to
3 months

3 to
6 months

Over
6 months

Total

1.4% 11.3% 100.0%
2,132
3,484
7,964
2,132
392
108

32,186
2,652

Annual Report and Accounts 2020 – London Security plc

16 Trade and other receivables continued
31 December 2019 Trade receivables

Expected credit loss rate
Gross carrying amount
Lifetime expected credit loss

Current

0.1%
15,925
14

Up to
3 months

3 to
6 months

Over
6 months

Total

1.1%
7,056
76

5.8% 100.0%
1,411
2,027
1,411
118

26,419
1,619

The carrying amounts of the Group’s trade and other receivables are denominated in the following currencies:

Sterling
Euro

Total

These are detailed as Sterling equivalent.

Movements in the Group provision for expected credit loss allowance are as follows:

At 1 January
Increase in loss allowance recognised in the year
Receivables written off in the year as uncollectable
Unused amounts reversed

At 31 December

2020
£’000

2019
£’000

8,469
24,705

6,546
21,276

33,174

27,822

2020
£’000

1,619
1,560
(295)
(232)

2019
£’000

1,562
706
(285)
(364)

2,652

1,619

Amounts charged to the allowance account are generally written off when there is no expectation of recovering additional cash.
The other classes within trade and other receivables do not contain impaired assets. The maximum exposure to credit risk at
the reporting date is the carrying value of each class of receivable mentioned above.

The carrying value of trade and other receivables approximates to fair value.

The Group does not hold any collateral as security.

17 Cash and cash equivalents

Cash at bank and in hand

The carrying value of cash at bank and in hand represents its fair value due to its short maturity.

2020
£’000

2019
£’000

37,456

27,143

London Security plc – Annual Report and Accounts 2020

Notes to the financial statements continued for the year ended 31 December 2020FINANCIAL STATEMENTS
18 Trade and other payables

Current
Trade payables
Other payables
Other taxation and social security
Accruals
Deferred income

Non-current
Other payables

19 Deferred income tax

Deferred tax asset
Pension deficit
Decelerated capital allowances
Unrecoverable losses

Deferred tax liabilities
Pension surplus
Intangible assets
Accelerated capital allowances

2020
£’000

2019
£’000

4,476
2,330
14,695
3,240
2,841

3,515
2,752
11,703
2,465
2,723

27,582

23,158

2020
£’000

2019
£’000

941

850

Amount
unrecognised

2020
£’000

2019
£’000

—
—
1,085

1,085

—
—
1,085

1,085

—
—
—

—

—
—
—

—

Amount
recognised/(provided)

2020
£’000

587
203
—

790

2019
£’000

554
129
—

683

(157)
(710)
(279)

(1,737)
(943)
(229)

(1,146)

(2,909)

Net deferred tax liability

(356)

(2,226)

1,085

Non-current assets
Pension deficit
Property, plant and equipment

Non-current liabilities
Pension surplus
Intangible assets
Property, plant and equipment

Net deferred tax liability

Recognised
in other
comprehensive
income
£’000

Recognised
in business
combination
– see note 27
£’000

1 January
2020
£’000

Recognised
in Income
Statement
£’000

31 December
2020
£’000

554
129

683

(1,737)
(943)
(229)

(2,909)

(2,226)

(5)
—

(5)

1,594
—
—

1,594

1,589

—
—

—

—
(87)
—

(87)

38
74

112

(14)
320
(50)

256

368

587
203

790

(157)
(710)
(279)

(1,146)

(356)

Annual Report and Accounts 2020 – London Security plc

19 Deferred income tax continued
Deferred tax is measured on a non-discounted basis at the tax rates that are expected to apply in the periods in which
temporary differences will reverse, based on tax rates and laws substantively enacted at the Statement of Financial Position
date applicable to the jurisdiction in which the asset/liability is recognised. It is not anticipated that any of the deferred tax asset
or liability in respect of the pension deficit or surplus will reverse in the 12 months following the Statement of Financial Position
date. Whilst it is anticipated that an element of the remaining deferred tax assets and liabilities will reverse during the 12 months
following the Statement of Financial Position date, any such reversal is not expected to be material.

20 Borrowings

Non-current (more than one year but less than five years)
Bank borrowings:
– in one to two years
– between two and five years

Current (one year or less or on demand)
Bank borrowings

Total borrowings

The carrying value of borrowings approximates to its fair value.

2020
£’000

2019
£’000

2,112
1,058

3,170

2,518

5,688

2,048
3,074

5,122

2,048

7,170

Interest rates (including the bank’s margin) on the bank loans in existence during the year averaged 1.5% (2019: 1.5%) per
annum. Bank loans are stated net of unamortised finance arrangement costs of £43,000 (2019: £61,000), of which £24,000
(2019: £43,000) is to be amortised after more than one year.

The table below analyses the Group’s financial liabilities including interest which will be settled on a net basis into relevant
maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. The amounts
disclosed in the table are the contractual undiscounted cash flows which have been calculated using spot rates at the relevant
balance sheet date.

Financial maturity analysis

Bank borrowings:
– within one year
– in one to two years
– between two and five years

2020
£’000

2019
£’000

2,602
2,163
1,070

5,835

2,155
2,126
3,136

7,417

The estimated fair value of the interest rate agreement has been included in the Statement of Financial Position as disclosed in
note 14.

The borrowings are secured by fixed and floating charges on certain assets of the Group.

London Security plc – Annual Report and Accounts 2020

Notes to the financial statements continued for the year ended 31 December 2020FINANCIAL STATEMENTS

20 Borrowings continued
The carrying amounts of the Group’s borrowings, all of which are floating rate financial liabilities, are denominated in the
following currencies:

Currency
Sterling
Euro

Weighted
average
interest
rate
2020

2.0%
1.3%

1.5%

Total
2020
£’000

1,550
4,138

5,688

Weighted
average
interest
rate
2019

2.1%
1.3%

1.5%

Total
2019
£’000

2,169
5,001

7,170

21 Retirement benefit obligations
The Group operates a number of pension schemes. Details of the major schemes are set out below.

Nu-Swift International Pension Scheme
Nu-Swift International Limited operates a funded defined benefit pension scheme, which was closed to new entrants with effect
from 1 December 2002 and to further accrual on 30 June 2007, providing benefits based on final pensionable earnings. The
assets of the scheme are held separately from those of the Group. The total pension cost of the Group is determined by an
independent qualified actuary on the basis of triennial valuations using the projected unit method. The most recent actuarial
valuation as at 31 December 2017 showed that the market value of the scheme’s assets was £17,909,000 and that the actuarial
value of those assets represented 118% of the benefits that had accrued to members. The results of the 2017 valuation have
been projected to 31 December 2020 and then recalculated using the assumptions set out below which result in a net surplus
position of £445,000 (2019: £4,959,000). In May 2020 the trustees entered into a bulk purchase annuity contract with Aviva in
respect of all benefits in the scheme. The surplus has decreased primarily due to the purchase of the buy-in annuity policy,
because the premium paid for this policy is larger than the defined benefit obligation relating to the underlying benefits. In line
with IAS 19 the Directors have recognised the difference between the purchase cost of the policy and the fair value of the
annuity asset as an actuarial loss which has been recognised as a component within Other Comprehensive Income. The
scheme’s assets are stated at their market value at 31 December 2020.

At 31 December 2020 the scheme had a net defined benefit surplus calculated in accordance with IAS 19 using the assumptions
set out of £445,00 (2019: £4,959,000). The surplus is recognised as it is confirmed that the Group does have an unconditional
right to a refund of surplus contributions once all pensions have been applied and the scheme winds up. On this basis no liability
for minimum funding requirements has been recognised.

The Group paid no contributions to the scheme (2019: £Nil) over the year. No further contributions were payable with effect from
1 May 2015. These payments had been in respect of the recovery plan put in place following the completion of the 2011 valuation.

The financial assumptions used to calculate the liabilities of the scheme under IAS 19 are:

Discount rate
Inflation rate
Salary increase rate
Increases for pensions in payment
Revaluation of deferred pensions

2020

2019

2018

1.10%
2.60–3.20%
n/a
2.60%
2.60%

1.80%
2.30–3.20%
n/a
3.10%
2.30%

2.60%
2.50–3.50%
n/a
3.40%
2.50%

Assumptions regarding future mortality experience are set based on advice, published statistics and experience in each territory.
The average life expectancy in years of a pensioner retiring at age 65 at the Statement of Financial Position date is as follows:

Male
Female

2020

21.4
23.4

2019

21.3
23.2

Annual Report and Accounts 2020 – London Security plc

21 Retirement benefit obligations continued
Nu-Swift International Pension Scheme continued
The average life expectancy in years of a pensioner retiring at age 65, 20 years after the Statement of Financial Position date,
is as follows:

Male
Female

The assets in the scheme were:

Buy-in annuity policy
Bonds
Cash

Present value of the scheme’s liabilities

Surplus in the Nu-Swift Scheme recognised in the Statement of Financial Position

Related deferred tax liability

2020

22.4
24.6

2019

22.3
24.4

Percentage
of scheme
assets
2019

0.0%
87.0%
13.0%

Value at
31 December
2020
£’000

Percentage
of scheme
assets
2020

Value at
31 December
2019
£’000

14,618
118
429

15,165
(14,720)

445

(157)

96.4%

—
0.8% 15,957
2,385
2.8%

18,342
(13,383)

4,959

(1,737)

The present value of the scheme’s liabilities includes the GMP equalisation liability which is not covered by the annuity policy.

Analysis of the amount recognised in the Income Statement

Interest credit

Total operating credit

Movement in the defined benefit obligation over the year

Start of the year
Interest cost
Actuarial loss arising from changes in financial assumptions
Actuarial (loss)/gain arising from changes in demographic assumptions
Benefits paid

End of the year

Movement in the fair value of the plan assets over the year

Start of the year
Interest income
Return on assets (excluding amount included in net interest expense)
Benefits paid

End of the year

London Security plc – Annual Report and Accounts 2020

2020
£’000

(40)

2019
£’000

(115)

2020
£’000

2019
£’000

(13,383)
(234)
(1,461)
(400)
758

(12,773)
(325)
(1,230)
367
578

(14,720)

(13,383)

2020
£’000

2019
£’000

18,342
274
(2,693)
(758)

17,203
440
1,277
(578)

15,165

18,342

Notes to the financial statements continued for the year ended 31 December 2020FINANCIAL STATEMENTS
21 Retirement benefit obligations continued
Analysis of the amount recognised in the Consolidated Statement of Comprehensive Income

Actuarial loss on defined benefit obligation
Actual return less expected return on pension scheme assets

Gain recognised in the Consolidated Statement of Comprehensive Income

2020
£’000

(1,861)
(2,693)

(4,554)

2019
£’000

(863)
1,277

414

Sensitivity of the liability value to changes in the principal assumptions
Prior to the effect of deferred tax, the impact of a 0.1% decrease in the inflation rate would be to increase the pension surplus
by £59,000 (2019: £47,000); an increase of 0.1% in the inflation rate would decrease the surplus by £60,000 (2019: £48,000).
The impact of a 0.1% increase in the discount rate would be to increase the pension surplus by £203,000 (2019: £171,000);
a decrease of 0.1% in the discount rate would decrease the surplus by £208,000 (2019: £174,000).

Ansul Pension Scheme
Ansul S.A. operates a number of funded pension schemes, the majority of which are prescribed by the Belgian state. Included
within these is a funded pension scheme for which the majority of the Belgian employees are eligible, providing benefits based
on final pensionable earnings. The assets of the scheme are held separately from those of the Ansul Group, being invested with
Delta Lloyd Life. The total pension cost of the Ansul Group scheme is determined by an independent qualified actuary. The
most recent valuation was at 31 December 2018. The scheme’s assets are stated at their market value at 31 December 2020.

The Group paid contributions to the scheme amounting to £297,000 (2019: £246,000) over the year. There are no minimum
contribution requirements for this scheme. The Group expects to make contributions of £297,000 in the next reporting period.

The financial assumptions used to calculate liabilities of the schemes under IAS 19 are:

Discount rate
Inflation rate
Salary increase rate

2020

2019

2018

0.95%
2.00%
1.00%

0.88%
2.00%
1.00%

1.88%
2.00%
1.00%

Male
Female

2020

21.9
25.3

2019

21.9
25.3

The average life expectancy in years of a pensioner retiring at age 65, 20 years after the Statement of Financial Position date,
is as follows:

Male
Female

The assets in the scheme were:

Assets with guaranteed interest with insurer
Present value of the scheme’s liabilities

Deficit in the Ansul scheme recognised in the Statement of Financial Position

Related deferred tax asset

2020

22.0
25.4

2019

22.0
25.4

Value at
31 December
2020
£’000

Percentage
of scheme
assets
2020

Value at
31 December
2019
£’000

100%

2,674
(5,023)

(2,349)

587

2,371
(4,586)

(2,215)

554

Percentage
of scheme
assets
2019

100%

Annual Report and Accounts 2020 – London Security plc

21 Retirement benefit obligations continued
Analysis of the amount recognised in the Income Statement

Current service charge/(credit)
Interest charge

Total operating charge

Movement in the defined benefit obligation over the year

Start of the year
Current service cost
Interest cost
Actuarial loss arising from changes in financial assumptions
Actuarial gain arising from changes in demographic assumptions
Benefits paid
Exchange movement

End of the year

Movement in the fair value of the plan assets over the year

Start of the year
Return on assets
Actuarial gain
Employer contributions
Benefits paid
Exchange movements

End of the year

2020
£’000

3
14

2020
£’000

(4,586)
(300)
(38)
(116)
—
224
(207)

2019
£’000

(4)
23

2019
£’000

(4,209)
(242)
(70)
(549)
21
239
224

(5,023)

(4,586)

2020
£’000

2,371
24
25
297
(150)
107

2019
£’000

2,329
47
63
246
(187)
(127)

2,674

2,371

Analysis of the amount recognised in the Consolidated Statement of Comprehensive Income

Actual return less expected return on pension scheme assets

Actuarial loss recognised in the Consolidated Statement of Comprehensive Income

2020
£’000

(17)

2019
£’000

(412)

Sensitivity of the liability value to changes in the principal assumptions
Prior to the effect of deferred tax, the impact of a 0.1% increase in the inflation rate would be to increase the pension deficit by
£22,000 (2019: £24,000); a decrease of 0.1% in the inflation rate would decrease the deficit by £21,000 (2019: £23,000). The
impact of a 0.1% increase in the discount rate would be to decrease the pension deficit by £65,000 (2019: £70,000); a decrease
of 0.1% in the discount rate would increase the deficit by £73,000 (2019: £79,000).

UK stakeholder scheme
The contributions paid by the Group to the defined contribution stakeholder pension schemes in operation within the UK
amounted to £500,729 in the year ended 31 December 2020 (2019: £532,000).

Total pension costs charged to the Income Statement for all schemes in which the Group participates amounted to £2,476,000
for the year ended 31 December 2020 (2019: £2,166,000) and were wholly recognised in administrative expenses.

London Security plc – Annual Report and Accounts 2020

Notes to the financial statements continued for the year ended 31 December 2020FINANCIAL STATEMENTS22 Provisions

Provision at 1 January 2020
Movement in the year

Provision at 31 December 2020

Current

Rectification
provision
£’000

Non-current

Environmental
provision
£’000

—
16

169
3

172

Total
£’000

169
19

188

The rectification provision relates to after sales costs. The environmental provision relates to costs associated with soil contamination.
The cost of the decontamination is expected to be spread over a number of years and the provision is based on quotes received
from contractors. The impact of discounting is considered immaterial to the amounts provided.

23 Called up share capital

Authorised
Ordinary shares of 1p each

Allotted, called up and fully paid
Ordinary shares of 1p each

2020
Number

2020
£’000

2019
Number

67,539,188

675

67,539,188

12,261,477

123

12,261,477

2019
£’000

675

123

There are no outstanding options at 31 December 2020.

The mid-market price of the Company’s shares at 31 December 2020 was £23.20 and the range during the year was £19.00
to £23.50.

Share premium account

At 1 January 2020 and 31 December 2020

Capital redemption reserve

At 1 January 2020 and 31 December 2020

The capital redemption reserve has arisen following the purchase of own shares.

Merger reserve

At 1 January 2020 and 31 December 2020

The merger reserve is not a distributable reserve.

Other reserve

At 1 January 2020
Exchange adjustments

At 31 December 2020

The other reserve relates entirely to the effects of changes in foreign currency exchange rates.

£’000

344

£’000

2,033

£’000

6,442
2,396

8,838

Annual Report and Accounts 2020 – London Security plc

23 Called up share capital continued
Non-controlling interest

At 1 January 2020
Profit in the year attributable to non-controlling interest
Distribution to non-controlling interest

At 31 December 2020

£’000

349
188
(160)

377

The non-controlling interest has arisen following the acquisition of 75% of the share capital of Fire Industry Specialists Limited.

24 Reconciliation of operating profit to cash generated from operations

2020
£’000

2019
£’000

24,700
3,534
1,986
3,327
(76)
13
—
(11)
(3,856)
4,447
(68)
(1,134)

24,154
3,305
1,716
3,328
(59)
31
36
31
1,124
(1,268)
(24)
(11)

32,862

32,363

2020
£’000

386
76

462

2020
£’000

13
(13)

—

2019
£’000

270
59

329

2019
£’000

31
(31)

—

Operating profit
Depreciation of property, plant and equipment
Depreciation of right of use assets
Amortisation of intangible assets
Profit on disposal of property, plant and equipment
Loss on disposal of intangible assets
Exchange differences
Difference between pension charge and cash contributions
(Increase)/decrease in trade and other receivables
Increase/(decrease) in trade and other payables
Decrease in provisions
Increase in inventories

Cash generated from operations

Disposal of property, plant and equipment

Net book value
Profit on disposal of property, plant and equipment

Proceeds

Disposal of intangible assets

Net book value
Loss on disposal of intangible assets

Proceeds

London Security plc – Annual Report and Accounts 2020

Notes to the financial statements continued for the year ended 31 December 2020FINANCIAL STATEMENTS25 Reconciliation of liabilities arising from financing activities

1 January 2020

Cash flow:
– repayment

Non-cash items
New lease liabilities

31 December 2020

Long-term
borrowings
£’000

Short-term
borrowings
£’000

Lease
liabilities
£’000

Total
£’000

5,122

2,048

2,390

9,560

—

(2,121)

(2,036)

(4,157)

(1,952)
—

3,170

2,591
—

2,518

50
2,898

3,302

689
2,898

8,990

Non-cash items relate to foreign exchange movements, amortisation of finance arrangement costs and the movement between
current and non-current debt in the year.

26 Lease liabilities
The Group leases various properties and vehicles under non-cancellable operating lease agreements. The lease agreements
are between one and five years and the majority of lease agreements are renewable at the end of the lease period at market rates.

Following adoption of IFRS 16 the lease liability is initially measured at the present value of the lease payments that are not paid
at the commencement date, discounted using the Group’s incremental borrowing rate.

Maturity analysis – contractual undiscounted cash flows

Within one year
Between two and five years inclusive
More than five years

Total undiscounted lease liabilities at 31 December

Lease liabilities included in Statement of Financial Position at 31 December

Current
Non-current

2020
£’000

1,450
1,707
145

3,302

2020
£’000

1,451
1,851

3,302

2019
£’000

1,170
1,176
117

2,463

2019
£’000

1,134
1,256

2,390

Annual Report and Accounts 2020 – London Security plc

27 Acquisitions
On 1 August 2020 the Group purchased the entire share capital of Trium N.V. a company incorporated in, and which operates
in, Belgium.

The disclosure of the book and provisional fair values of net assets acquired is as follows:

Property, plant and equipment
Service contracts
Inventories
Receivables
Cash and cash equivalents
Payables
Loans
Deferred tax liabilities

Fair value of net assets acquired
Goodwill

Total consideration

Cash and cash equivalents acquired

Net consideration

Satisfied by:

Cash
Contingent consideration

Net consideration

Book value
2020
£’000

Fair value
2020
£’000

7
54
169
943
323
(681)
(436)
—

379

—
460
—
—
—
—
—
(87)

373

Total
2020
£’000

7
514
169
943
323
(681)
(436)
(87)

752
87

839

(323)

516

Provisional
consideration
2020
£’000

516
—

516

There has been no change to the provisional amounts from 2019.

The revenue and net loss of Trium N.V. since the acquisition date included in the Consolidated Statement of Comprehensive
Income for the year ended 31 December 2020 were £1,478,000 and £19,000 respectively. On a pro rata basis the revenue
and loss would have been expected to be £3,547,000 and £46,000 had the acquisition taken place on 1 January 2020.

In addition to the acquisition of limited companies, the Group acquired service contracts from a number of businesses for a
total consideration of £1,061,000. The Directors considered that the consideration equated to the fair value of the contracts
acquired and have recognised an intangible asset accordingly. The Group monitors contract retention rates for any indication
of impairment.

Due to the integration of these service contracts acquired during the year into the existing businesses and operations, the
Directors are unable to determine the contribution of the acquisitions to the revenue and net profit of the Group for the year
ended 31 December 2020 nor are they able to determine what the impact on revenues and profit of the Group for the year
ended 31 December 2020 would have been had the acquisitions taken place on 1 January 2020.

London Security plc – Annual Report and Accounts 2020

Notes to the financial statements continued for the year ended 31 December 2020FINANCIAL STATEMENTS

28 Group undertakings
The Group wholly owns the entire issued and voting ordinary share capital of all the subsidiaries listed with the exception of Fire
Industry Specialists Limited, which is 75% owned by LS UK Fire Group Limited and its wholly owned subsidiary Amberfire Limited.

AFS Fire and Security Limited
Alarm Masters S.A.
All-Protec N.V.
A.L.P.I. sarl
Amberfire Limited
Ansul B.V.
Ansul Solutions B.V.
Ansul S.A.
Ansul Belgium S.A.
APS Sprl
ASCO Extinguishers Company Limited
Braco B.V.B.A.
Beta Fire Protection Limited
Blesberger G.m.b.H.
Blusdesign B.V.
Boensma B.V.
Braho Brandpreventie B.V.
Brandpreventie Groep B.V.
City Fire Protection and Maintenance Services LLP
DC Security B.V.B.A.
Dimex Technics S.A.
Feuerschutz Hollmann G.m.b.H.
Fire Industry Specialists Limited
Fire Protection Holdings Limited
Florian Feuerschutz G.m.b.H.
GC Fire Protection Limited
GFA Premier Limited
Hoyles Limited
Hoyles Fire & Safety Limited
HP Fire Prevention Sprl
Importex S.A.
Kuhn Feuerschutz G.m.b.H.
KW Fire Protection Limited
Le Chimiste Sprl
Linde Brandmateriel Aps
LS UK Fire Group Limited
Ludwig Brandschutztechnik G.m.b.H.
L. W. Safety Limited
NL Brandbeveiliging B.V.
Noris Feuerschutzgerate G.m.b.H.
Nu-Swift (Engineering) Limited
Nu-Swift Brandbeveiliging B.V.
Nu-Swift International Limited
One Protect Sarl
PMP Manus G.m.b.H.
Prevent Brandbeveiliging B.V.
Pyrotec Fire Protection Limited
Record Brandbeveiliging B.V.
S2 Fire Solutions Limited
Security Alarm Service Company Sprl

Activity

Fire protection
Fire protection
Fire protection
Fire protection
Fire protection
Fire protection
Fire protection
Fire protection
Fire protection
Fire protection
Fire protection
Fire protection
Fire protection
Fire protection
Fire protection
Fire protection
Fire protection
Fire protection
Fire protection
Intruder alarms
Fire protection
Fire protection
Fire protection
Sub-holding
Fire protection
Fire protection
Fire protection
Sub-holding
Fire protection
Fire protection
Fire protection
Fire protection
Fire protection
Fire protection
Fire protection
Sub-holding
Fire protection
Fire protection
Fire protection
Fire protection
Fire protection
Fire protection
Fire protection
Fire protection
Fire protection
Fire protection
Fire protection
Fire protection
Fire protection
Fire protection

Country of registration or
incorporation and operation

England
Belgium
Belgium
Luxembourg
England
The Netherlands
The Netherlands
Belgium
Belgium
England
Scotland and England
Belgium
England
Austria
The Netherlands
The Netherlands
The Netherlands
The Netherlands
England
Belgium
Belgium
Germany
England
England
Austria
England
England
England
England
Belgium
Belgium
Germany
England
Belgium
Denmark
England
Germany
England
The Netherlands
Austria
England
The Netherlands
England
France
Austria
The Netherlands
England
The Netherlands
England
Belgium

Annual Report and Accounts 2020 – London Security plc

28 Group undertakings continued

Somati FIE N.V.
Total Fire-Stop G.m.b.H.
The General Fire Appliance Co. Limited
Trium N.V.
Tunbridge Wells Fire Protection Limited
TVF (UK) Limited

Activity

Fire protection
Fire protection
Sub-holding
Intruder alarms
Fire protection
Fire protection

Country of registration or
incorporation and operation

Belgium
Austria
England
Belgium
England
England

With the exception of the Parent Company’s 100% interest in Fire Protection Holdings Limited, the shares in the remaining
Group undertakings are held by subsidiary undertakings. Addresses and contact details for these subsidiaries are given
inside the back cover. LS UK Fire Group Limited’s and Fire Protection Holdings Limited’s registered address is: Premier House,
2 Jubilee Way, Elland HX5 9DY.

The following subsidiaries have taken advantage of exemption from audit under Section 479a of the Companies Act 2006:

AFS Fire and Safety Limited, ASCO Extinguishers Company Limited, Beta Fire Protection Limited, Fire Protection Holdings
Limited, GC Fire Protection Limited, GFA Premier Limited, Hoyles Limited, Hoyles Fire & Safety Limited, KW Fire Protection
Limited, LS UK Fire Group Limited, L.W. Safety Limited, Nu-Swift International Limited, Nu-Swift (Engineering) Limited, Premier
Fire Limited, Pyrotec Fire Protection Limited, S2 Fire Solutions Limited, The General Fire Appliance Co. Limited, Tunbridge Wells
Fire Protection Limited, TVF (UK) Limited, KDN Fire Protection Limited, North Staffs Fire Limited, Firebreak Fire Securities
Limited, Trafalgar Compliance Services Limited and Firex UK Limited.

In order to comply with the Companies, Partnerships and Groups (Accounts and Reports) Regulations 2015 the Group is
no longer able to take advantage of Section 410 of the Companies Act 2006 to disclose only its principal subsidiaries in the
financial statements. Additional wholly owned subsidiaries, all of which are dormant, are:

BWH Manufacturing Limited, Cowley Fire Limited, Fire Reliant Limited, Green Cross Limited, L & P Fire Safety Equipment Limited,
LS Fire Group Limited, Modern Fire Extinguisher Services Limited, Premier Fire Limited, Nu-Swift Limited, Triangle Fire Limited,
United Fire Alarms Limited and Wilts Fire Limited all share the registered address: Premier House, 2 Jubilee Way, Elland HX5 9DY.

1st Quote Fire Limited, Assured Fire Protection & Safety Limited and Swift-N-Sure (Fire Appliances) Limited all share the
registered address: Unit 1.1, Festival Court, Brand Place, Glasgow G51 1DR.

MK Fire Limited, Thames Valley Fire Protection Limited, TVF Alarms Limited, TVF Systems Services Limited and Ulysses
Fire Services Limited’s all share the registered address: 56/69 Queen’s Road, High Wycombe HP13 6AH.

Luke & Rutland Limited and Pyrotec Fire Detection Limited share the registered address: Caburn Enterprise Park, Ringmer BN8 5NP.

Amberfire Limited and Firestop Services Limited share the registered address: Unit 15, Cedar Parc, Lincoln Road, Doddington,
Lincolnshire LN6 4RR.

All of these entities have been included within the consolidation.

London Security plc – Annual Report and Accounts 2020

Notes to the financial statements continued for the year ended 31 December 2020FINANCIAL STATEMENTS29 Ultimate parent undertaking and controlling party
The Parent Company regards EOI Fire SARL, a company registered in Luxembourg, as its ultimate parent undertaking through
its 80% interest in London Security plc. The Directors regard the Eden and Ariane Trusts as the ultimate controlling parties
through their controlling interest in EOI Fire SARL and Tristar Fire Corp.

30 Related party transactions
During the year the Group incurred costs amounting to £747,414 (2019: £783,344) in respect of the Executive Directors
including the Head Office and other expenses under the Services Agreement referred to in the Directors’ Remuneration Report.

The Group recharged and was reimbursed £71,000 (2019: £86,000) in relation to the Service Agreement by Andrews Sykes.
Andrews Sykes is related through common control.

The balance disclosed in note 16 as being due from related undertakings is with EFS Property Holdings Ltd., a company
controlled by J.G. Murray. The amount outstanding at the year end relates entirely to transactions in the year.

The Group made sales to Andrews Sykes in relation to fire protection in the year of £9,271 (2019: £10,015).

The Group made sales to fire companies in Switzerland controlled by J.G. Murray in the year of £526,939 (2019: £373,372).

The Group made purchases from Fire Industry Specialists Limited in the year of £840,361 (2019: £364,057).

Fire Industry Specialists Limited declared a dividend in the year of £478,974 (2019: £338,648) to LS UK Fire Group Limited.

The Group incurred £57,000 (2019: £331,000) of expenditure on behalf of J.G. Murray during the year. This amount was
reimbursed in the year (2019: £Nil was outstanding at the year end).

The Group incurred £70,000 (2019: £Nil) of expenditure on behalf of J-J. Murray during the year. This amount was reimbursed
in the year.

31 Post balance sheet events
Subsequent to the year end the Group has completed the acquisition of further service contracts for a total of £1,359,000
(2019: £1,034,000).

Annual Report and Accounts 2020 – London Security plc

Parent Company balance sheet

as at 31 December 2020

Fixed assets
Tangible assets
Investments

Current assets
Debtors
Cash at bank and in hand

Creditors: amounts falling due within one year
Borrowings
Creditors

Net current assets/(liabilities)

Total assets less current liabilities

Creditors: amounts falling due after more than one year
Borrowings
Derivative financial instruments

Net assets

Capital and reserves
Called up share capital
Share premium account
Capital redemption reserve fund
Profit and loss account

Total shareholders’ funds

Notes

2020
£’000

2019
£’000

2
3

5
6

5
8

51
49,804

102
49,804

49,855

49,906

1,251
791

2,042

2,363
214

2,577

(619)
(318)

(937)

(619)
(2,194)

(2,813)

1,105

(236)

50,960

49,670

(931)
(10)

(941)

(1,550)
(12)

(1,562)

50,019

48,108

123
344
1
49,551

123
344
1
47,640

50,019

48,108

The Parent Company’s profit for the year was £9,267,000 (2019: £9,349,000).

The registered number of the Company is 00053417.

The notes on pages 60 to 63 are an integral part of these financial statements.

The financial statements on pages 58 to 63 were approved by the Board of Directors on 11 May 2021 and were signed on its
behalf by:

J.G. Murray
Chairman
11 May 2021

London Security plc – Annual Report and Accounts 2020

FINANCIAL STATEMENTS

Parent Company statement of changes in equity

for the year ended 31 December 2020

At 1 January 2019

Total comprehensive income for the year
Profit for the financial year

Contributions by and distributions to owners of the Company:
– dividends

At 1 January 2020

Total comprehensive income for the year
Profit for the financial year

Contributions by and distributions to owners of the Company:
– dividends

At 31 December 2020

Called up
share
capital
£’000

123

Share
premium
reserve
£’000

344

Capital
redemption
reserve
£’000

Profit
and loss
account
£’000

Shareholders’
funds
£’000

48,099

48,567

—

123

—

344

—

123

—

344

—

9,349

(9,808)

47,640

48,108

9,267

(7,356)

49,551

50,019

The notes on pages 60 to 63 are an integral part of these financial statements.

Annual Report and Accounts 2020 – London Security plc

Notes to the Parent Company financial statements

for the year ended 31 December 2020

1 Principal accounting policies
Basis of accounting
London Security plc is a public company limited by shares and incorporated and domiciled in the United Kingdom.

These financial statements were prepared in accordance with Financial Reporting Standard 102, the Financial Reporting
Standard applicable in the UK and the Republic of Ireland (“FRS 102”). The functional and presentation currency of these
financial statements is Sterling.

In these financial statements, the Company is considered to be a qualifying entity (for the purposes of this FRS) and has applied
the exemptions available under FRS 102 in respect of the following disclosures:

reconciliation of the number of shares outstanding from the beginning to the end of the year;

Statement of Cash Flow and related notes; and

key management personnel compensation.

As the consolidated financial statements of London Security plc include the equivalent disclosures, the Company has also
taken the exemptions under FRS 102 available in respect of the following disclosures:

presenting a Parent Company profit and loss account under Section 408 of the Companies Act 2006; and

the disclosures required by FRS 102.11 “Basic financial instruments” and FRS 102.12 “Other financial instrument issues”

in respect of financial instruments not falling within the fair value accounting rules of Paragraph 36(4) of Schedule 1.

These Parent Company financial statements have been prepared on the going concern basis, under the historical cost
convention as modified by revaluation of financial liabilities held at fair value through profit and loss in accordance with the
Companies Act 2006 and applicable accounting standards in the UK. The Directors have prepared these financial statements
on the fundamental assumption that the Company is a going concern and will continue to trade for at least 12 months following
the date of approval of the financial statements. In determining whether the Company’s financial statements should be prepared
on a going concern basis, the Directors have considered the factors likely to affect future performance. The Directors have reviewed
trading and cash flow forecasts as part of the going concern assessment and based on this have the expectation that the
Company has adequate resources to continue in operational existence for the foreseeable future.

A summary of the more important accounting policies, which have been consistently applied, is set out below.

Tangible fixed assets
The cost of tangible fixed assets is their purchase cost or internal production costs, together with any incidental costs of acquisition.

Depreciation is provided for on all tangible fixed assets on the straight line method at rates calculated to write off the cost
or valuation less estimated residual values over the estimated lives of the assets. The annual rates are as follows:

Share in aircraft 5%

Fixed assets are reviewed for impairment if events or changes in circumstances indicate that the carrying value may not be
recoverable. Any impairment in value is charged to the profit and loss account.

Investments
Investments in subsidiary undertakings are included at cost unless, in the opinion of the Directors, an impairment has occurred,
in which case the deficiency is provided for in and charged to the Parent Company’s profit and loss account.

Deferred tax
Deferred tax is provided on timing differences which arise from the inclusion of income and expenses in tax assessments
in periods different from those in which they are recognised in the financial statements. Deferred tax is not recognised on
permanent differences arising because certain types of income or expense are non-taxable or are disallowable for tax,
or because certain tax charges or allowances are greater or smaller than the corresponding income or expense.

Deferred tax is provided in respect of the additional tax that will be paid or avoided on differences between the amount at which
an asset (other than goodwill) or liability is recognised in a business combination and the corresponding amount that can be
deducted or assessed for tax. Goodwill is adjusted by the amount of such deferred tax.

Deferred tax is measured at the tax rate that is expected to apply to the reversal of the related difference, using tax rates
enacted or substantively enacted at the balance sheet date.

London Security plc – Annual Report and Accounts 2020

FINANCIAL STATEMENTS1 Principal accounting policies continued
Deferred tax continued
Unrelieved tax losses and other deferred tax assets are recognised only to the extent that is it probable that they will be
recovered against the reversal of deferred tax liabilities or other future taxable profits.

Finance arrangement costs and interest rate caps
Costs of arranging bank loans and interest rate caps are treated as a deduction from the loan liability and are amortised
over the lives of the relevant loans.

Derivative financial instruments
Derivative financial instruments are recognised at fair value. The gain or loss on remeasurement to fair value is recognised
immediately in profit or loss.

Dividend distribution
Dividend distribution to the Parent Company’s shareholders is recognised as a liability in the financial statements when paid,
in the case of interim dividends, or in the period in which the dividends are approved by the Parent Company’s shareholders,
in the case of final dividends.

2 Tangible assets

Cost
At 1 January 2020 and 31 December 2020

Accumulated depreciation
At 1 January 2020
Charge for the year

At 31 December 2020

Net book amount
At 31 December 2020

At 31 December 2019

3 Investments

Cost
At 1 January 2020 and 31 December 2020

The Directors believe that the carrying value of the investments is supported by their underlying net assets.

A full list of subsidiary undertakings is provided in note 28 of the Group accounts.

4 Debtors

Amounts falling due within one year
Amounts owed by Group undertakings
Other debtors

Share in
aircraft
£’000

1,019

917
51

968

102

Shares in
subsidiary
undertakings
£’000

49,804

2020
£’000

2019
£’000

1,251
—

1,251

2,348
15

2,363

Amounts owed by Group undertakings are unsecured, interest free, have no fixed date of repayment and are repayable on demand.

Annual Report and Accounts 2020 – London Security plc

5 Borrowings

Non-current (amounts falling due in more than one year)
Bank borrowings:
– in one to two years
– between two and five years

Current (amounts falling due within one year or on demand)
Bank borrowings

Total borrowings

2020
£’000

2019
£’000

619
312

931

619
931

1,550

619

1,550

2,169

Interest rates (including the bank’s margin) on the bank loans in existence during the year averaged 1.98% (2019: 2.16%) per annum.
Bank loans are stated net of unamortised finance arrangement costs of £25,000 (2019: £36,000), of which £14,000 (2019: £25,000)
is to be amortised after more than one year.

The Directors consider that the fair values of the bank loans are not materially different from their book values.

The carrying amounts of the Company’s borrowings, all of which are floating rate financial liabilities, are denominated in
the following currencies:

Currency
Sterling

6 Creditors

Amounts owed to Group undertakings
Accruals and deferred income

Weighted
average
interest
rate
2020

Total
2020
£’000

Weighted
average
interest
rate
2019

Total
2019
£’000

1,550

1.98%

2,169

2.16%

1,550

1.98%

2,169

2.16%

2020
£’000

240
78

318

2019
£’000

1,960
234

2,194

Amounts due to Group undertakings are unsecured, interest free and repayable on demand.

7 Deferred tax
The deferred tax asset comprises:

Losses

Deferred tax asset

Amount recognised

Amount unrecognised

2020
£’000

—

2019
£’000

—

2020
£’000

1,085

2019
£’000

971

The unrecoverable tax loss carried forward is £5,712,000 (2019: £5,712,000).

Deferred tax is measured on a non-discounted basis at the tax rate that is expected to apply in the periods in which timing
differences will reverse, based on tax rates and laws substantively enacted at the balance sheet date, being a rate of 19%.

London Security plc – Annual Report and Accounts 2020

Notes to the Parent Company financial statements continued for the year ended 31 December 2020FINANCIAL STATEMENTS

8 Derivative financial instruments

Interest rate agreements

2020

2019

Assets
£’000

—

Liabilities
£’000

Assets
£’000

—

Liabilities
£’000

The Company has entered into an interest rate agreement which caps LIBOR at 1.5%. The agreement took effect from May 2018
and remains in effect until the loan is repaid in 2023. The liability represents the forecast increase in interest payable as a result
of this agreement over the remaining life of the loan at the year end. The fair value at the year end is calculated based on
observable interest rates.

9 Called up share capital

Authorised
Ordinary shares of 1p each

Allotted, called up and fully paid
Ordinary shares of 1p each

2020
Number

2020
£’000

2019
Number

2019
£’000

67,539,188

675

67,539,188

675

12,261,477

123

12,261,477

123

There were no outstanding options at 31 December 2020.

The mid-market price of the Company’s shares at 31 December 2020 was £23.20 and the range during the year was £19.00 to £23.50.

The Parent Company had no employees during the year (2019: Nil).

The remuneration paid to the Parent Company auditor in respect of the audit of the Group and Parent Company financial
statements for the year ended 31 December 2020 is set out in note 7 to the Group financial statements.

The Board is recommending the payment of a final dividend in respect of the year ended 31 December 2020 of £0.40 per
ordinary share (2019: £0.20).

10 Commitments and contingent liabilities
The Parent Company had no financial or other commitments at 31 December 2020 (2019: £Nil).

The Parent Company was party to a cross guarantee under which it guaranteed the borrowings of certain of its subsidiary
undertakings. At 31 December 2020 this guarantee amounted to £3,750,000 (2019: £5,026,000). No loss is expected to arise
from this guarantee.

11 Ultimate parent undertaking and controlling party
The Parent Company regards EOI Fire SARL, a company registered in Luxembourg, as its ultimate parent undertaking through
its 80% interest in London Security plc. The Directors regard the Eden and Ariane Trusts as the ultimate controlling parties
through their controlling interest in EOI Fire SARL and Tristar Fire Corp.

12 Related party transactions
During the year the Company incurred costs amounting to £548,618 (2019: £585,976) in respect of the Executive Directors,
including the Head Office and other expenses under the Services Agreement referred to in the Directors’ Remuneration Report.

The Company recharged and was reimbursed £71,000 (2019: £86,000) in relation to the Service Agreement by Andrews Sykes.
Andrews Sykes is related through common control.

The Company incurred £57,000 (2019: £331,000) of expenditure on behalf of J.G. Murray during the year. This amount was
reimbursed in the year (2019: £Nil was outstanding at the year end).

The Company incurred £70,000 (2019: £Nil) of expenditure on behalf of J-J. Murray during the year. This amount was
reimbursed in the year.

The Company has taken advantage of the exemption available under FRS 102 “Related Party Disclosures” from disclosing
transactions between related parties within the London Security plc group of companies.

Annual Report and Accounts 2020 – London Security plc

Notice of Annual General Meeting

NOTICE IS GIVEN THAT the Annual General Meeting of London Security plc (the “Company”) will be held at 2 Jubilee Way,
Elland, West Yorkshire HX5 9DY, on 30 June 2021 at 11.30 am for the following purposes:

You will be asked to consider the following resolutions as ordinary resolutions:

1. To receive the financial statements for the year ended 31 December 2020 and the Reports of the Directors and Auditor

and the Directors’ Remuneration Report for that year.

2. To re-elect J-J. Murray as a Director, who retires by rotation under article 23.2 of the Company’s articles of association.

3. To re-elect X. Mignolet as a Director, who retires by rotation under article 23.2 of the Company’s articles of association.

4. To re-elect E. Sebag as a Director, who retires by rotation under article 23.2 of the Company’s articles of association.

5. To declare a final dividend in respect of 2020 of £0.40 per ordinary share.

6. That Grant Thornton UK LLP be re-appointed as auditors of the Company to hold office from the conclusion of this Meeting

until the conclusion of the next Annual General Meeting at which accounts are laid before the Company and that its
remuneration be fixed by the Directors.

That the Directors be generally and unconditionally authorised in accordance with Section 549 of the Companies Act 2006
(the “Act”) to exercise all the powers of the Company to allot relevant securities (as defined in Section 550 of the Act) up to
an aggregate nominal value equal to the whole of the authorised but unissued share capital of the Company immediately
following the passing of this resolution provided that such authority shall (unless and to the extent previously revoked, varied
or renewed by the Company in general meeting) expire at the conclusion of five years from the date this resolution is passed
provided that such authority shall allow the Company to make an offer or enter into an agreement which would or might
require relevant securities to be allotted after the expiry of such authority and the Directors may allot relevant securities in
pursuance of any such offer or agreement as if the authority conferred by this resolution had not expired.

You will be asked to consider the following resolutions as special resolutions:

8. That, subject to the passing of resolution 7 above, the Directors be and are empowered pursuant to Section 570 of the Act
to allot equity securities (within the meaning of Section 564 of the Act) of the Company for cash pursuant to the authority
conferred by resolution 7 above as if Section 561 of the Act did not apply to such allotment, provided that this power shall
be limited to:

(i)

the allotment of equity securities in connection with or pursuant to an offer by way of rights to the holders of ordinary
shares and other persons entitled to participate in such offer in proportion (as nearly as may be) to their respective
holdings of ordinary shares, subject only to such exclusions or other arrangements as the Directors may consider
necessary or expedient to deal with fractional entitlements or legal or practical problems under the laws of any territory
or the regulations or requirements of any regulatory body or any stock exchange in any territory; and

(ii) the allotment (other than pursuant to (i) above) of equity securities up to an aggregate nominal amount of £6,131 and
such power shall expire on the date of the next Annual General Meeting of the Company or 15 months after the date
of the passing of this resolution (whichever is the earlier) but so that the Company may before such expiry make an offer
or agreement which would or might require equity securities to be allotted after such expiry and the Directors may allot
equity securities pursuant to such an offer or agreement as if the power conferred by this resolution had not expired.

London Security plc – Annual Report and Accounts 2020

FINANCIAL STATEMENTS

9. That the Company be and is generally and unconditionally authorised for the purposes of Section 701 of the Act to make
one or more market purchases (as defined in Section 701(2) of the Act) on the London Stock Exchange of ordinary shares
of 1 pence each in the capital of the Company (“ordinary shares”) provided that:

(i)

the maximum aggregate number of ordinary shares authorised to be purchased is 500,000 shares;

(ii) the minimum price which may be paid for such shares is 1 pence per share;

(iii) the maximum price (exclusive of expenses) which may be paid for such shares is not more than 5% above the average
of the middle market quotations for the Company’s ordinary shares derived from the London Stock Exchange Daily
Official List for the five business days immediately preceding the day on which the purchase of the ordinary shares is
contracted to take place;

(iv) the authority conferred shall expire at the conclusion of the next Annual General Meeting of the Company or 15 months

after the passing of this resolution (whichever is the earlier); and

(v) the Company may make a contract to purchase its own shares under the authority conferred prior to the expiry of such
authority which will or may be executed wholly or partly after the expiry of such authority and may make a purchase of
its own shares in pursuance of any such contract.

By order of the Board

R. Pollard
Company Secretary
11 May 2021

Registered office
Premier House
2 Jubilee Way
Elland
West Yorkshire
HX5 9DY

Notes
1. Under the UK government’s roadmap it is possible that the prohibition on non-essential travel and public gatherings

will have ended and it will be possible for shareholders to attend the AGM in person. However, we strongly encourage
shareholders to vote on all resolutions by completing the enclosed form of proxy for use at that Meeting, which you are
requested to return in accordance with the instructions on the form.

2. The outcome of the resolutions will as usual be determined by shareholder vote based on the proxy votes we receive.

You are strongly encouraged to vote by proxy on the resolutions contained in the AGM Notice. Given the restrictions on
attendance, you are encouraged to appoint the “Chairman of the Meeting” as your proxy rather than another person who
will not be permitted to attend the meeting.

3. A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes for or against
the resolution. If no voting indication is given, your proxy will vote or abstain from voting at his or her discretion. Your proxy
will vote (or abstain from voting) as he or she thinks fit in relation to any other matter which is put before the Meeting.

Appointment of proxy using hard copy form of proxy
4. The notes to the form of proxy explain how to direct your proxy on how to vote on each resolution or withhold their vote.

To appoint a proxy using the form of proxy, the form must be:

(a) completed and signed;

(b) sent or delivered to Nu-Swift International Limited, Premier House, 2 Jubilee Way, Elland HX5 9DY; and

In the case of a member which is a company, the form of proxy must be executed under its common seal or signed on
its behalf by an officer of the company or an attorney for the company. Any power of attorney or any other authority under
which the form of proxy is signed (or a duly certified copy of such power or authority) must be included with the form of proxy.

Annual Report and Accounts 2020 – London Security plc

Notice of Annual General Meeting continued

Notes continued
Appointment of proxy by joint members
5. In the case of appointment of a proxy by joint shareholders, the signature of any one of them will suffice, but if a holder

other than the first-named holder signs, it will help the registrars if the name of the first-named holder is given.

Changing proxy instructions
6. To change your proxy instructions, simply submit a new proxy appointment using the methods set out above. Note that the
cut-off time for receipt of proxy appointments (see above) also applies in relation to amended instructions; any amended
proxy appointment received after the relevant cut-off time will be disregarded.

If you submit more than one valid proxy appointment, the appointment received last before the latest time for the receipt
of proxies will take precedence.

Termination of proxy appointments
7.

In order to revoke a proxy instruction you will need to inform the Company by sending a signed hard copy notice clearly
stating your intention to revoke your proxy appointment to Nu-Swift International Limited, Premier House, 2 Jubilee Way,
Elland HX5 9DY. In the case of a member which is a company, the revocation notice must be executed under its common
seal or signed on its behalf by an officer of the company or an attorney for the company. Any power of attorney or any other
authority under which the revocation notice is signed (or a duly certified copy of such power or authority) must be included
with the revocation notice.

The revocation notice must be received no later than 48 hours before the Meeting.

If you attempt to revoke your proxy appointment but the revocation is received after the time specified then, subject to
the paragraph directly below, your proxy appointment will remain valid.

Appointment of a proxy does not preclude you from attending the Meeting and voting in person. If you have appointed
a proxy and attend the Meeting in person, your proxy appointment will automatically be terminated.

Issued shares and total voting rights
8. As at 9am on 11 May 2021, the Company’s issued share capital comprised 12,261,471 shares of 1 pence each. Each

ordinary share carries the right to one vote at a general meeting of the Company and, therefore, the total number of voting
rights in the Company as at 9am on 11 May 2021 was 12,261,477.

Documents on display
9. The register of Directors’ interests will be available for inspection at the registered office of the Company from 11 May 2021

until the time of the Meeting and for at least 15 minutes prior to the Meeting and during the Meeting.

Communication
10. Except as provided above, members who have general queries about the Meeting should use the following method of

communication (no other methods of communication will be accepted):

calling 01422 372852.

You may not use any electronic address provided either:

(a) in this Notice of Annual General Meeting; or

(b) in any related documents (including the form of proxy),

to communicate with the Company.

London Security plc – Annual Report and Accounts 2020

FINANCIAL STATEMENTS

Group companies

The United Kingdom

AFS Fire and Security Limited
Buzzard Court
Mullacott Industrial Estate
Ilfracombe EX34 8PX

Tel:
Website: afsfireandsecurity.co.uk

01271 864 754

ASCO Extinguishers Company Limited
Unit 1.1
Festival Court
Brand Place
Glasgow G51 1DR

Tel:
Email:
Website: www.asco.uk.com

0141 427 1144
customer.service@asco.uk.com

Beta Fire Protection Limited
Unit 18
Western Road Industrial Estate
Stratford-upon-Avon
Warwickshire CV37 0AH

01789 292 050
Tel:
info@betafire.co.uk
Email:
Website: www.betafireprotection.com

City Fire Protection and Maintenance
Services LLP
Trenton House
59A Imperial Way
Croydon CR0 4RR

Tel:
Email:
Website: www.cityfire.co.uk

0208 649 7766
admin@cityfire.co.uk

Firestop Services Limited
Unit 15
Cedar Parc
Lincoln Road
Doddington
Lincolnshire LN6 4RR

Tel:
Email:
Website: www.firestopservices.co.uk

01507 723 322
enquiries@fire-stop.co.uk

Fire Industry Specialists Limited
Unit 15
Cedar Parc
Lincoln Road
Doddington
Lincolnshire LN6 4RR

Tel:
Email:
Website: www.fisltd.co.uk

01507 522 466
enquiries@fisltd.co.uk

Amberfire Limited
Unit 15
Cedar Parc
Lincoln Road
Doddington
Lincolnshire LN6 4RR

01673 885 229
Tel:
info@amber-fire.co.uk
Email:
Website: www.amber-fire.co.uk

GC Fire Protection Limited
Premier House
2 Jubilee Way
Elland
West Yorkshire HX5 9DY

MK Fire Limited
59/69 Queens Road
High Wycombe
Buckinghamshire HP13 6AH

Tel:
Email:
Website: www.mkfire.co.uk

01494 769 744
customer.service@mkfire.co.uk

Nu-Swift International Limited

Nu-Swift (Engineering) Limited
Premier House
2 Jubilee Way
Elland
West Yorkshire HX5 9DY

Tel:
Email:
Website: www.gcfireprotection.co.uk

0208 391 7310
customer.service@gcfireprotection.co.uk

Tel:
Email:
Website: www.nu-swift.co.uk

01422 372 852
customer.service@nu-swift.co.uk

GFA Premier Limited
Premier House
2 Jubilee Way
Elland
West Yorkshire HX5 9DY

Tel:
Email:

01422 377 521
customer.service@gfapremier.co.uk

Hoyles Fire & Safety Limited
Premier House
2 Jubilee Way
Elland
West Yorkshire HX5 9DY

Tel:
Email:
Website: www.hoyles.co.uk

01422 314 351
customer.service@hoyles.co.uk

KW Fire Protection Limited
Premier House
2 Jubilee Way
Elland
West Yorkshire HX5 9DY

Tel:
Email:
Website: kwfire.co.uk

0161 628 9379
enquiries@kwfire.co.uk

L. W. Safety Limited
Premier House
2 Jubilee Way
Elland
West Yorkshire HX5 9DY

Tel:
Email:
Website: www.lwsafety.co.uk

01422 314 350
customer.service@lwsafety.co.uk

Pyrotec Fire Protection Limited
Caburn Enterprise Park
Ringmer
East Sussex BN8 5NP

Tel:
Email:
Website: www.pyrotec.co.uk

0800 634 9953
sales@pyrotec.co.uk

S2 Fire Solutions Limited
Unit 14 Littleton Drive
Cannock WS12 4TS

Tel:
Email:
Website: S2fire.co.uk

0845 519 8186
sales@s2fire.co.uk

Tunbridge Wells Fire Protection Limited
Caburn Enterprise Park
Ringmer
East Sussex BN8 5NP

Tel:
Email:
Website: www.twfpltd.co.uk

01825 767 600
customer.service@twfpltd.co.uk

TVF (UK) Limited
59/69 Queens Road
High Wycombe
Buckinghamshire HP13 6AH

Tel:
Email:
Website: www.tvfltd.co.uk

01494 450 641
customer.service@tvfltd.co.uk

Annual Report and Accounts 2020 – London Security plc

Group companies continued

Belgium

Alarm Masters S.A.
Hekkestraat 45
9308 Aalst

00 32 5237 3409
Tel:
Email:
info@alarmmasters.be
Website: www.alarmmasters.be

All-Protec N.V.
Bogaertstraat 16
9910 Knesslare

Tel:
Email:

00 32 9375 2044
info@all-protec.be

Ansul S.A.

Ansul Belgium S.A.
Industrialaan 35
B-1702 Groot-Bijgaarden

00 32 2467 7211

Tel:
Email: mail@ansul.be
Website: www.ansul.be

Assurance Protection Service Srl
406 Chausee de Wavre
1300 Wavre

00 32 7187 7504
Tel:
Email:
info@apsprotectionincendie.be
Website: www.apsprotectionincendie.be

Dimex Technics S.A.
42 Rue de l’Eglise
4710 Lontzen Herbesthal

Tel:
Email:

00 32 8789 0401
info@dimex-technics.be

HP Fire Prevention Srl
406 Chausee de Wavre
1300 Wavre

00 32 1060 4402
Tel:
Email:
info@hpfire.be
Website: www.hpfire.be

Importex S.A.
42 Rue de l’Eglise
4710 Lontzen Herbesthal

Tel:
Email:

00 32 8788 0242
info@importex.be

Security Alarm Service Company Srl
42 Rue de l’Eglise
4710 Lontzen Herbesthal

Tel:
00 32 8645 6789
info@securityalarmservice.be
Email:
Website: www.securityalarmservice.be

Somati FIE N.V.
Industrielaan 19a
9320 Erembodegem

00 32 5385 2222
Tel:
Email:
info@somatifie.be
Website: www.somatifie.be

Le Chimiste Srl
406 Chausee de Wavre
1300 Wavre

Tel:
Email:

00 32 1086 8419
info@lechimiste.be

Braco B.V.
Hekkestraat 45
9308 Aalst

Tel:
Email:

00 32 5321 4570
info@bracofireprotection.be

DC Security B.V.
Vaartstraat 10
2235 Hulshout

Tel:
00 32 1522 5570
info@dcsecurity.be
Email:
Website: www.dcsecurity.be

Trium N.V.
Herseltsesteenweg 72,
3200 Aarschot
Belgium

00 32 78/15 8085
Tel:
Email:
info@trium.be
Website: www.trium.be

Luxembourg

A.L.P.I. sarl
10 Rue Robert Krieps
4702 Petange

00 352 2631 3013
Tel:
Email:
alpi@alpi.lu
Website: www.alpi.lu

The Netherlands

Ansul B.V.
Ansul Solutions B.V.
Platinastraat 15
8211 AR Lelystad

00 31 320 240864
Tel:
Email:
info@ansul.nl
Website: www.ansul.nl

Boensma Brandbeveiliging B.V.
Burenweg 26
7621 GX Borne

00 31 541 870040
Tel:
Email:
info@boensmabrandbeveiliging.nl
Website: www.boensmabrandbeveiliging.nl

Nu-Swift Brandbeveiliging B.V.
Ringoven 45
6826 TP Arnhem

00 31 263 630330
Tel:
Email:
info@nu-swift.nl
Website: www.nu-swift.nl

NL Brandbeveiliging B.V.
Petunialaan 1D
5582 HA Waalre

00 40 248 2196
Tel:
Email:
info@nlbrandbeveiliging.nl
Website: www.nlbrandbeveiliging.nl

Prevent Brandbeveiliging B.V.
Maasdijkseweg 107
2291 PJ Wateringen

00 31 174 526700
Tel:
info@prevent.brandbeveiliging.nl
Email:
Website: www.preventbrandbeveiliging.nl

Record Brandbeveiliging B.V.
Oostergracht 24
3763 LZ Soest

00 31 356 027966
Tel:
Email:
info@recordbrandbeveiliging.nl
Website: www.recordbrandbeveiliging.nl

Braho Brandpreventie B.V.
Maasdijkseweg 107
2291 PJ Wateringen

00 31 793 410708
Tel:
Email:
info@braho.nl
Website: www.braho.nl

Blusdesign B.V.
Bergweg 35b
3904 HL Veenendaal

00 31 318 508 369
Tel:
Email:
info@blusdesign.com
Website: www.blusdesign.com

Brandpreventie Groep B.V.
Daalderweg 22
507 DT Zaandam

0031 75 631 5558
Tel:
Email:
info@brandpreventiegroep.nl
Website: www.brandpreventiegroep.nl

Denmark

Linde Brandmateriel Aps
Industrivej 51A
4000 Roskilde

Tel:
Email:
Website: www.lindebrand.dk

0033 31 3100
lindebrand@lindebrand.dk

London Security plc – Annual Report and Accounts 2020

FINANCIAL STATEMENTSAustria

Total Fire-Stop Brandschutztechnik G.m.b.H.
Tillmanngasse 5
1220 Wien

00 431 259 36310
Tel:
Email:
info@total.at
Website: www.total.at

Blesberger Ges.m.b.H.
Hasnerstrasse 12
A-4020 Linz

Tel:
0043 732 73 32 34
Website: www.blesberger.at

Noris Feuerschutzgerate G.m.b.H.
Baumkircherstrasse 2
8020 Graz

Tel:
Email:
Website: www.noris.at

00 43 316 71 18 21
zentrale@noris.at

P.M.P. Feuerlöschgeräte Produktions- und
Vertriebsges.m.b.H
Waltendorfer Hauptstrasse 5
8010 Graz

Tel:
Email:
Website: www.pyrus-pmp.at

00 43 316 46 15 66
office@pyrus-pmp.at

Florian Feuerschutz G.m.b.H.
Dorf 19
5732 Mühlbach im Pinzgau

Tel:
Email:
Website: www.feuerschutz.at

00 43 6566 7450
office@feuerschutz.at

France

One Protect sarl
Z.I. Sainte Agathe
Rue Lavoisier
57192 Florange

Tel:
Email:
Website: www.oneprotectsarl.com

00 33 382 59 32 40
contact@oneprotectsarl.com

Germany

LUDWIG Brandschutztechnik G.m.b.H.
Gewerbestrasse 2
D-24392 Suederbrarup

Tel:
Email:

00 49 4641 8242
info@brandschutztechnik-ludwig.de

IFH Feuerschutz Hollmann G.m.b.H.
Ihmerter Strasse 211
58675 Hemer

00 49 2372 81066
Tel:
Email:
info@feuerschutz-hollmann.de
Website: www.feuerschutz-hollmann.de

Kuhn Feuerschutz G.m.b.H.
Schmückebergsweg 12,
34576 Homberg/Efze
Germany

00 49 5681 9944 10
Tel:
Email:
info@kuhn-feuerschutz.de
Website: www.kuhn-feuerschutz.de

CBP006938

London Security plc’s commitment to environmental issues is reflected in this Annual
Report, which has been printed on Symbol Freelife Satin, an FSC® certified material.

This document was printed by L&S using its environmental print technology, which
minimises the impact of printing on the environment, with 99% of dry waste diverted
from landfill. Both the printer and the paper mill are registered to ISO 14001.

London Security plc

London Security plc
Premier House
2 Jubilee Way
Elland
West Yorkshire
HX5 9DY