London Security shares fell 13.3% to 2,730p in early morning trading on Friday, on the back of an operating profit decrease to £10.9 million in HY1 2022 from £12.3 million the year before.
The firm attributed its sliding profits to inflationary pressures linked to the Ukraine war and recovery from the Covid-19 pandemic, sparking price increases.
London Security said it passed some costs onto its customers while absorbing the rest, resulting in its operating profit drop.
The company noted the impact of adverse business confidence, marked by a “reduced willingness to invest by our customers.”
The group reported revenues of £88.6 million compared to £82.7 million the last year.
London Security also noted cash of £35.3 million at 30 June 2022, representing a decline of £400,000 from its cash balance of £35.7 million at 31 December 2021.
The company drew attention to its five-year multi-currency facility, entered in 2023 and scheduled to end in 2023, comprised of £3.15 million and €8.40 million.
London Security confirmed it capped interest rates at 1.5% SONIA on the Sterling loan and 0.25% EURIBOR on the Euro loan from the facility, to limit the firm’s exposure to rising interest rates.
The group highlighted its acquisition of four companies on the continent across HY1 2022, along with expansion further into Germany, Austria and the UK through its acquisition of service contracts to be integrated into its present subsidiaries.
London Security reiterated its strategy to grow via acquisition, with acquisitions currently sought throughout Europe at the upper end of the price spectrum in a move to procure strong returns.
The company noted a healthy balance sheet, strong cash reserves and a decent previous track record of cash production, positioning it to weather the macroeconomic storm and manage economic decline.
London Security paid a final FY 2021 dividend to shareholders of 42p on 8 July 2022.