Half-year Report

RNS Number : 4350Q
LPA Group PLC
19 June 2020
 

LPA GROUP PLC

Interim unaudited results for the six months ended 31 March 2020

 

LPA Group Plc ("LPA" or the "Group"), the high reliability LED lighting and electro-mechanical system manufacturer and distributor, announces its results for the six months to 31 March 2020 and a near record order book.

 

KEY POINTS

· Revenue increased 7% to £10.8m (2019: £10.1m)

· Operating profit before exceptional items increased 28% to £0.23m (2019: £0.18m)

· Profit before tax £0.2m (2019: Loss after exceptional item £0.2m)

· Earnings per share 2.08p (2019: Loss 1.20p)

· Interim dividend nil (2019: 1.10p)

· Order book increased 29% to £24.7m (2019: £19.2m)

· Order entry fell 8% to £14.2m (2019: £15.4m)

· Gearing1 25.6% (2019: 22.0%)

Notes:

1 Gearing excludes IFRS16 right of use assets and liabilities.  Inclusive 26.8%.

 

Paul Curtis CEO, commented:

 

"Although Covid-19 has caused significant disruption to the first half of the financial year, we are pleased to show a 7% increase in sales, a 29% increase in order book and a return to profitability.  Our sites are fully compliant with safe working guidelines and have remained open in support of our customers throughout the period.  We continue to work with our excellent staff during this difficult time and thank them all for their efforts and dedication.   The Group has significant opportunities to pursue, and, although customer demand remains fragile in some areas, confidence is slowly returning to the market and we look forward to increasing momentum over the coming 18 months."

 

Paul Curtis

CEO
19 June 2020

 

The Digital Future

The Group is embracing the digital era by moving its shareholder communication from paper to digital reports. These are available for download from our website (www.lpa-group.com). We will work with shareholders to facilitate this transition, providing only those who have requested a hard copy of our Interim Report with one.

 

 

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

 

Caution regarding forward looking statements

Certain statements in this announcement, are, or may be deemed to be, forward looking statements. Forward looking statements are identified by their use of terms and phrases such as ''believe'', ''could'', "should" ''envisage'', ''estimate'', ''intend'', ''may'', ''plan'', ''potentially'', "expect", ''will'' or the negative of those, variations or comparable expressions, including references to assumptions. These forward looking statements are not based on historical facts but rather on the Directors' current expectations and assumptions regarding the Company's future growth, results of operations, performance, future capital and other expenditures (including the amount, nature and sources of funding thereof), competitive advantages, business prospects and opportunities. Such forward looking statements reflect the Directors' current beliefs and assumptions and are based on information currently available to the Directors.

 

Enquires:

www.lpa-group.com

 

Tel:

 

LPA Group Plc

 

 

 

Peter Pollock

Chairman

 

07881 626123

Paul Curtis

CEO

 

01799 512858

Chris Buckenham

CFO

 

01799 512859

 

 

 

 

Cairn Financial Advisers

(Nominated Adviser)

 

020 7213 0880

James Caithie / Tony Rawlinson / Ludovico Lazzaretti

 

 


 

finnCap

(Broker)

 

020 7220 0500

Ed Frisby / Teddy Whiley (Corporate Finance)

Tim Redfern / Tim Harper (ECM & Sales)

 

 

 

             

 

 

CHAIRMAN'S STATEMENT

 

In our Covid-19 trading update of 1 April 2020, we reported that several UK and export customers had suspended operations leading to reduced demand and activity across the Group.  However, I am pleased to report that so far during this pandemic all three LPA Sites have remained open for business.

 

The safety of our people has been our paramount concern and we have carefully followed and implemented government guidelines on safe working. Where possible and practical, we have utilised the government economic support schemes to ameliorate the impact of the pandemic on the business. All sites have adopted flexible working practices, allowing employees to work from home where practical and furloughing where necessary. We have flexed our capacity to match, as closely as possible, extremely variable customer demand and project management requirements during the period.

 

Nevertheless, I am pleased to report an improved first half performance and that the factory load for the second half, coupled with continued careful matching of capacity to variable customer short term requirements, should deliver further progress. 

 

Sales in the first half increased 7% to £10.8m (2019: £10.1m) despite the impact of non-Covid-19 related customer project delays.   Operating profit increased to £0.23m (2019: £0.18m). Profit before tax amounted to £0.2m (2019: loss after exceptional item £0.2m).  Earnings per share amounted to 2.08p (2019: loss 1.20p).

 

Order entry, at £14.2m, fell just short of the very strong levels achieved in the first half last year (2019: £15.4m) and the order book increased 29% to £24.7m (2019: £19.2m)

 

Gearing, which otherwise would have reduced substantially, increased marginally to 25.6% (2019:22%), due to a substantial late overdue remittance received just after the half year end in early April.

 

In response to the potential cash flow impact of the Covid-19 outbreak, the proposed final dividend resolution was not put to shareholders at the AGM and thus not paid to conserve cash resources. The current cash position is very sound and in other circumstances the board would probably have considered it appropriate to confirm their confidence in the future and their commitment to a progressive dividend policy by declaring an Interim Dividend.  However, under current circumstances the board consider it sensible and prudent to defer any decision on dividends to later in the year.

 

Although Lighting Systems again suffered some project delays, significant orders, including the prestigious Siemens/OBB contract announced in January 2020, further reinforced our position as a global supplier in this market. Lighting Systems continues to invest in smart lighting products and has a near record order book.  LPA Connection Systems also suffered significant project delays in the period, but strong order intake has also resulted in a near record order book.

 

LPA Channel continued to trade very successfully.  The order pipeline remains very strong and should lead to significant order entry in the second half. However, the impact of Covid-19 on the business has been a less clear picture in the medium and long term.  The board has this matter under constant review and the executive team has been tasked with developing a flexible strategy in response.  Planned Capital Expenditure is more modest than in recent years.  However, our laser cutting facility has been substantially upgraded, increasing capacity and capability in response to increased customer demand.  A loss on disposal of £62k on the old equipment was suffered in the first half. 

 

The adoption of IFRS16 (leases) from 1 October 2019, added 1.2% to the adjusted gearing ratio of 26.8%.  All property is freehold and only minor operating leases are held predominantly related to vehicles and office equipment.  'Right of Use Assets' added £0.16m to the Balance Sheet with an equal and opposite liability recognised.  The net effect on the results in the period is less than £1k.

 

I am delighted to confirm that subsequent to the Annual General Meeting, Gordon Wakeford has joined the Board as Non-Executive Director. His experience as Head of Siemens Mobility UK and Chairman of both the Railway Industry Association and the Rail Supply Group, an industry partnership with government, will be invaluable to us.

 

I am also very pleased to welcome Jonathan Rowe as Managing Director of LPA Connection Systems.  Jonathan has an Honours Degree in Engineering from the University of Cambridge and a wealth of experience in manufacturing and business development. 

 

The current circumstances are challenging, but the Group has an excellent executive team, a very strong order book and a strong balance sheet with low gearing. We are in good condition to meet these challenges.

 

Peter Pollock

Chairman

19 June 2020

 

 

 

 

 

 

 

CONDENSED CONSOLIDATED INCOME STATEMENT

 

6 months to

6 months to

Year to

 

31 Mar 20

31 Mar 19

30 Sept 19

 

Unaudited

Unaudited

Audited

 

£000

£000

£000

 

 

 

 

 Revenue

  10,780

  10,091

  19,533

 

 

 

 

 Operating profit before exceptional items

  226

  174

 

 Pension GMP and reorganisation costs 

  -

  (364)

  (403)

 

 

 

 

 Operating profit / (loss)

  226

  (190)

  (202)

 Finance costs

  (60)

  (43)

  (99)

 Finance income

  20

  34

  64

 

 

 

 

 Profit / (loss) before tax 

  186

  (199)

  (237)

 Taxation

  70

  50

  185

 

 

 

 

 Profit / (loss) for the period

  256

  (149)

  (52)

 

 

 

 

Attributable to:

 

 

 

 - Equity holders of the parent

256

(149)

(52)

 

 

 

 

Earnings per share (see note 2)

 

 

 

 - Basic

2.08p

(1.20p)

(0.43p)

 - Diluted

2.01p

(1.20p)

(0.43p)

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 

 

6 months to

6 months to

Year to

 

31 Mar 20

31 Mar 19

30 Sept 19

 

 Unaudited

 Unaudited

 Audited

 

 000

 000

 000

Profit / (loss) for the period

  256

  (149)

  (52)

 

 

 

 

Other comprehensive income

 

 

 

Actuarial (loss) / gain on pension scheme

  (240)

  (516)

  9

Tax on actuarial (loss) / gain

  44

  94

  (7)

Other comprehensive income net of tax

  (196)

  (422)

  2

 

 

 

 

Total comprehensive income for the period

  60

  (571)

  (49)

 

 

 

 

 

 

 

 

 

CONSOLIDATED BALANCE SHEET

As at

As at

As at

31 Mar 20

31 Mar 19

30 Sept 19

Unaudited

Unaudited

Audited

£000

£000

£000

Non-current assets

 

 

 

Intangible assets

1,400

1,248

1,359

Property, plant and equipment

7,019

7,267

7,006

Right of use assets

152

  -

  -

Retirement benefits

2,080

1,613

2,250

 

10,651

10,128

10,615

Current assets

 

 

 

Inventories

4,234

3,746

3,824

Trade and other receivables

5,819

4,800

4,437

Current tax receivable

129

-

59

Cash and cash equivalents

221

304

889

 

10,403

8,850

9,209

 

 

 

 

Total assets

21,054

18,978

19,824

 

 

 

 

Current liabilities

 

 

 

Trade and other payables

  (4,806)

  (3,602)

  (3,839)

Bank loans and other borrowings

  (422)

  (355)

  (2,805)

Right of use lease liabilities

  (81)

  -

  -

Current tax payable

  -

  (283)

  -

 

  (5,309)

  (4,240)

  (6,644)

 

 

 

 

Non-current liabilities

 

 

 

Bank loans and other borrowings

  (2,968)

(2,576)

  (504)

Deferred tax liabilities

  (313)

(212)

  (352)

Right of use lease liabilities

  (72)

-

  -

 

  (3,353)

(2,788)

(856)

 

 

 

 

Total liabilities

  (8,662)

(7,028)

(7,500)

Net assets

12,392

11,950

12,324

 

 

 

 

Equity

 

 

 

Share capital

1,266

1,261

  1,266

Investment in own shares

  (324)

  (324)

  (324)

Share premium account

708

688

  708

Un-issued shares reserve

90

123

  82

Merger reserve

230

230

  230

Retained earnings

10,422

9,972

10,362

Equity attributable to shareholders of the parent

12,392

11,950

12,324

 

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

 

 

6 months to

6 months to

Year to

 

31 Mar 20

31 Mar 19

30 Sept 19

 

Unaudited

Unaudited

Audited

 

£000

£000

£000

 

 

 

 

 Opening equity

  12,324

  12,711

  12,711

 Total comprehensive income

  60

  (571)

  (49)

 Transactions with owners:

 

 

 

 Dividends

  -

  (222)

  (357)

 Proceeds from issue of shares

  -

83

  108

 Cost of investment in own shares

  -

  (110)

  (110)

 Tax benefit on share-based payments

  -

58

  18

 Share-based payments

  8

1

  3

Closing equity

12,392

11,950

12,324

 

 

 

 

 

 

 

 

 

 

 

 

CONSOLIDATED CASH FLOW STATEMENT

6 months to

6 months to

Year to

 

31 Mar 20

31 Mar 19

30 Sept 19

 

Unaudited

Unaudited

Audited

 

£000

£000

£000

Profit / (loss) before tax

  186

  (199)

  (237)

Finance costs

  60

  43

  99

Finance income

  (20)

  (34)

  (64)

Operating profit

  226

  (190)

  (202)

Adjustments for:

 

 

 

Depreciation

  367

  361

  693

Amortisation of intangible assets

  43

  12

  48

Loss / (gain) on sale of plant and equipment

  61

  -

  (2)

Equity settled share based payments

  8

  -

  -

Past service cost liability recognition (GMP)

  -

  364

  333

 

  705

  547

  870

Movements in working capital:

 

 

 

Change in inventories

  (410)

  135

  57

Change in trade and other receivables

  (1,381)

  924

  1,102

Change in trade and other payables

  968

  (1,447)

  (1,059)

Cash generated from operations

  (118)

  159

  970

Income taxes received / (paid)

  2

  -

  (210)

Retirement benefits - DB pension contributions

  (50)

  (50)

  (100)

Net cash from operating activities

  (167)

  109

  660

Purchase of software, plant and equipment

  (117)

  (245)

  (399)

Proceeds from sale of property, plant and equipment

  6

  -

  3

Capitalised development expenditure

  (76)

  (60)

  (124)

Purchase of Own Shares

  -

  (110)

  (110)

Net cash (used in) investing activities

  (187)

  (415)

  (630)

Drawdown of bank loans

  -

  -

  2,626

Repayment of bank loans

  (122)

  (99)

  (2,242)

Repayment of obligations under finance leases

  (133)

  (94)

  (201)

Payments in respect of right of use assets

  (43)

  -

  -

Interest paid

  (17)

  (14)

  (31)

Proceeds from issue of share capital

  -

  83

  108

Dividends paid

  -

  (222)

  (357)

Net cash (used in) financing activities

  (315)

  (346)

  (97)

Net (decrease) / increase in cash and cash equivalents

  (668)

  (652)

  (67)

Cash and cash equivalents at start of the period

  889

  956

  956

Cash and cash equivalents at end of the period

  221

  304

  889

 

ANALYSIS OF NET DEBT

 

 

 

 

 

 

Bank loans

Finance lease obligations

  Right of use asset obligations

Cash and cash equivalents

Net debt

 

£000

£000

£000

£000

£000

 

At 1 October 2019

 2,585

  724

  -

  (889)

 2,420

 

Introduced at 1 October 2019

-

-

  156

-

 156

 

New lease obligations

               -

  297

  37

 -

 334

 

Interest and arrangement fees

 40

  -

  3

-

 43

 

Repayment of borrowings

 (123)

  (133)

  (43)

  299

 -

 

Cash absorbed

  -

  -

-

 369

 369

 

At 31 March 2020

  2,502

  888

  153

  (221)

 3,322

 

                 

 

 

NOTES

 

1- BASIS OF PREPARATION

 

These interim financial statements are for the six months ended 31 March 2020.  They do not include all the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Group for the year ended 30 September 2019, which have been filed at Companies House with an unmodified audit report.

 

These interim financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the EU and applicable law (IFRS), in accordance with IAS 34 - Interim Financial Reporting and in accordance with the provisions of the Companies Act 2006 applicable to companies applying IFRS. These financial statements have been prepared under the historical cost convention with the exception of certain items which are measured at fair value.

 

 

2 - Summary of Significant Accounting Policies

Use of judgements and estimates

 

 

New standards and interpretation adopted by the Group

IFRS16 - Leases

Guaranteed Minimum Pension (GMP)

 

 

3 - GOING CONCERN

 

4 - EARNINGS PER SHARE

 

The calculations of earnings / (loss) per share are based upon the profit/loss after tax attributable to ordinary equity shareholders and the weighted average number of ordinary shares in issue during the period.  Diluted earnings per share are based on the weighted average number of ordinary shares; share options in issue during in the period.

 

Details are as follows:

 

6 months to

6 months to

Year to

31 Mar 20

31 Mar 19

30 Sept 19

Unaudited

Unaudited

Audited

 

 

 

 

Profit / (loss) for the period - £000

  256

  (149)

  (52)

Weighted average number of ordinary shares in issue during the period (million)

 

 

 

12.358

12.186

12.238

Dilutive effect of share options (million)

0.391

0.995

0.506

Number of shares for diluted earnings per share

12.749

13.181

12.744

 

 

 

 

Basic earnings per share

2.08p

(1.20p)

(0.43p)

Diluted earnings per share

2.01p

(1.20p)

(0.43p)

 

Basic and diluted earnings per share are equal for the 6 months to 31 March 2019 and year ended to 30 September 2019, since where a loss is incurred the effect of outstanding share options and warrants is considered anti-dilutive and is ignored for the purpose of the loss per share calculation.

 

5 - INFORMATION

 

LPA Group Plc is the Group's ultimate parent company.  It is incorporated in England and Wales and domiciled in the UK, Company Number 686429.  The address of LPA Group Plc's registered office, which is also its principal place of business, is Light & Power House, Shire Hill, Saffron Walden, CB11 3AQ.  LPA Group Plc's shares are quoted on the AIM market of the London Stock Exchange.

 

LPA Group Plc's consolidated interim financial statements are presented in Pounds Sterling (£000), which is also the functional currency of the parent company. These interim financial statements have been approved for issue by the Board of Directors on 18 June 2020.  The financial information for the year ended 30 September 2019 set out in this interim report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006.  The Group's statutory financial statements for the year ended 30 September 2019 have been filed with the Registrar of Companies.  The auditor's report on those financial statements was unmodified and did not contain statements under Section 498(2) or Section 498(3) of the Companies Act 2006.

 

Summarised copies of this Interim Report are being sent to shareholders who have requested to receive a hard copy.  Copies are also available from the Company's registered office address as above, from the Company's Registrar, or are available on the Company's website ( www.lpa-group.com ).  Shareholders are encouraged to visit our website where useful links and assistance have been provided through our Registrars to assist utilisation of digital channels.

 

 


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