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LPA Group PLC (LPA)

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Thursday 20 June, 2019

LPA Group PLC

Half-year Report

RNS Number : 8232C
LPA Group PLC
20 June 2019
 

LPA GROUP PLC

Interim unaudited results for the six months ended 31 March 2019

 

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 2019 and a growing order book.

 

KEY POINTS

·      Revenue £10.1m (2018: £13.9m)

·      Operating profit before exceptional items1 £0.2m, (2018: £1.1m)

·      Loss before tax, after exceptional item, £0.2m (2018: Profit £1.0m)

·      Loss per share 1.20p (2018: Diluted Earnings 6.51p)

·      Interim dividend 1.10p (2018: 1.10p)

·      Strong order entry £15.4m (2018: £8.4m)

·      Growing order book £19m (2018: £16m)

·      Gearing 22%, (2018: 31%)

 

Notes:

 

1 Exceptional costs £0.4m - relating to Guaranteed Minimum Pension equalisation (2018: £0.1m restructuring)

 

Peter Pollock, Chairman, commented:

 

In the Trading Statement dated 23 May 2019, I reported that while the delay in delivery of some contracts was disappointing, order entry remained very strong, the outlook in the medium term is improving and the Group was well placed to meet both the challenges and to take advantage of the opportunities available. The outlook has remained unchanged, and the Board is able to look to the future with sufficient confidence to maintain the Interim Dividend at the rate of 1.10p per share.

 

PETER POLLOCK

Chairman

19 June 2019

 

 

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

 

 

Enquires:

www.lpa-group.com

 

Tel:

LPA Group Plc

 

 

 

 

Peter Pollock

Chairman

 

01799 512844

 

Paul Curtis

COO

 

01799 512858

 

Chris Buckenham

CFO

 

01799 512859

 

 

 

 

 

 

Cairn Financial Advisers

(Nominated Adviser)

 

020 7213 0880

 

James Caithie / Tony Rawlinson

 

 

 

 

 

 

 

 

 

finnCap

(Broker)

 

020 7220 0500

 

Ed Frisby / Teddy Whiley (Corporate Finance)

Tim Redfern / Malar Velaigam (ECM & Sales)

 

 

 

 

 

 

 

 

 

Instinctif Partners

(PR Adviser)

 

020 7457 2020

 

Rosie Driscoll / Christine Galloway / Mark Garraway

 

 

 

 

 

 

 

 

CHAIRMAN'S STATEMENT 

In my comments to the Annual General Meeting on 21 March 2019 and the subsequent Trading Statement on 23 May 2019, I referred to the quiet start to the year and the further delays to major UK projects, including CrossRail, which had persisted longer than anticipated and which would affect not only the first half but also the year as a whole.

 

As expected, output in the first half fell short of the exceptionally strong performance last year with sales amounting to £10.1m (2018: £13.9m) and Operating Profit before exceptional items of £0.2m (2018: £1.1m).

 

The exceptional item recognised, in line with the High Court ruling in October 2018, requiring all UK companies to remove inequalities between men and women in scheme benefits that arose under Guaranteed Minimum Pensions (GMP), amounted to £0.4m. Thus, the surplus on the Group's defined benefit pension scheme, which was £2.4m at 30 September 2018, is reduced by £0.4m. This is a historical cost which as advised previously has been recognised in the current financial year.

 

This exceptional charge results in a loss before tax of £0.2m (2018: Profit £1.0m) and a loss per share of 1.20p (2018 earnings per share 6.51p) to be recorded.  Despite this loss, the Interim Dividend will be maintained at 1.10p, reflecting the board's confidence in the future. This confidence is underpinned by the significant increase in order entry in the period of £15.4m (2018: £8.4m) and the large orders subsequently won during April and May, announced in last month's Trading Update, a strong pipeline and funnel of potential future business.

 

Both Electro-mechanical and Lighting Systems suffered from the well flagged contract delays during the first half and while Electro-mechanical is expected to recover in the second half, Lighting Systems is likely to suffer further contract delays, before recovering next year as contracts already won come on stream. Engineered Component Distribution had a strong first half trading, and is well placed for this year and beyond.  Despite the delivery delays, our order intake at £15.4m represents an 83% increase (2018: £8.4m), with an increased order book at £19m (2018: £16m).

 

We are working our way through the impact of the change in DfT rolling stock procurement, which has negatively affected the supply chain, with significant restructuring among major rolling stock maintenance and refurbishment companies. The Group is fortunate not to be entirely reliant on the UK Rail Industry, but has a significant export business as well as Aerospace, Aircraft Ground Support and Industrial market exposure.

 

We are actively investing in new product lines to increase our presence in these markets; our increased R&D spend is reflective of this. We are also extremely cost conscious, having already reduced manning levels by 18% compared with last year, largely through ending temporary contracts. We are maintaining our investment in plant & equipment and management methods to improve productivity.

 

In April 2019 the Group refreshed its long-term financing, which now comprises a mortgage facility, increased by £0.5m to £2.6m, remaining secured on the Group's freehold properties, over a fifteen-year repayment period, with a refinance due by March 2024. The Group will adopt IFRS 16 (Accounting for Leases) with effect from 1 October 2019, but the board, having reviewed its impact does not consider the overall impact to be material.

 

The Group embraces the digital era and with its green credentials seeks to reduce waste. Over the next eighteen months we are planning to move shareholder communication from paper reports to digital reports available for download from our website. Indeed, all our communications are already available digitally from our website.  finnCap have been appointed stockbrokers to the Group with effect from 3 June 2019.

 

I am pleased to report that the rejuvenated board is working well together in challenging circumstances. We expect to appoint a further non-executive director during the next year and that Paul Curtis will be promoted to Chief Executive Officer in due course. The Chairman of LPA Pensions Trustees has retired, an executive role which I shall discharge until I retire in September 2021.  We have adopted the QCA Corporate Governance Code and a road map to full compliance; this is set out in our Annual Report and on our website.

 

The interim dividend will be paid on 27 September 2019 to those shareholders registered at the close of business on 6 September 2019; the ex-dividend date being 5 September 2019.  Despite the softer performance in the first half,  the Group is in fine fettle and the board looks forward to the future with confidence.
Peter Pollock - Chairman - 19 June 2019

 

 

CONSOLIDATED INCOME STATEMENT

 

 

 

 

6 months to

6 months to

Year to

 

31 Mar 19

31 Mar 18

30 Sept 18

 

Unaudited

Unaudited

Audited

 

£000

£000

£000

 

 

 

 

 Revenue

                  10,091

                 13,929

                  27,979

 

 

 

 

 Operating profit before exceptional items

                       174

                   1,122

                    2,244

 

 

 

 

 Pension; reorganisation and other nonrecurring costs 

                    (364)

                    (111)

                     (175)

 

 

 

 

 Operating (loss) / profit

                     (190)

                   1,012

                    2,069

 Finance costs

                       (43)

                      (43)

                        (80)

 Finance income

                         34

                        18

                         35

 

 

 

 

 (Loss) / Profit before tax 

                     (199)

                      987

                    2,024

 Taxation

                         50

                    (127)

                     (253)

 

 

 

 

 (Loss) / Profit for the period

                     (149)

                      860

                    1,771

 

 

 

 

Attributable to:

 

 

 

 - Equity holders of the parent

(149)

860

1,771

 

 

 

 

(Loss)/Earnings per share (see note 3)

 

 

 

 - Basic

-1.20p

6.95p

14.34p

 - Diluted

-1.20p

6.51p

13.44p

 

 

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 

 

6 months to

6 months to

Year to

 

31 Mar 19

31 Mar 18

30 Sept 18

 

 Unaudited

 Unaudited

 Audited

 

 £000

 £000

 £000

(Loss) / Profit for the period

                     (149)

                      860

                    1,771

 

 

 

 

Other comprehensive income / (expense)

 

 

 

Actuarial (loss) / gain on pension scheme

                     (516)

                    (396)

                       962

Tax on actuarial (loss) / gain

                  94

                       65

                     (178)

Other comprehensive (expense) / income net of tax

                     (422)

                    (331)

                       784

 

 

 

 

Total comprehensive income for the period

                     (571)

                      529

                    2,555

Attributable to:

 

 

 

 - Equity holders of the parent

                     (571)

                      529

                    2,555

 

 

CONSOLIDATED BALANCE SHEET

As at

As at

As at

31 Mar 19

31 Mar 18

30 Sept 18

Unaudited

Unaudited

Audited

£000

£000

£000

Non-current assets

 

 

 

Intangible assets

1,248

1,187

1,200

Property, plant and equipment

7,267

6,842

7,216

Retirement benefits

1,613

983

2,409

 

10,128

9,012

10,825

 

 

 

 

Current assets

 

 

 

Inventories

3,746

4,820

3,881

Trade and other receivables

4,800

6,041

5,540

Cash and cash equivalents

304

44

956

 

8,850

10,904

10,377

 

 

 

 

Total assets

18,978

19,918

21,202

 

 

 

 

Current liabilities

 

 

 

Bank overdraft

                           -

                   (817)

                            -

Bank loans and other borrowings

                   (355)

                   (251)

                    (322)

Current tax payable

                   (283)

                   (188)

                    (266)

Trade and other payables

                (3,602)

               (4,947)

                (4,868)

 

                (4,240)

               (6,203)

                (5,456)

 

 

 

 

Non-current liabilities

 

 

 

Bank loans and other borrowings

                (2,576)

               (2,420)

                (2,605)

Deferred tax liabilities

                   (212)

                   (159)

                    (430)

Other payables

                           -

                     (90)

                            -

 

                (2,788)

               (2,669)

                (3,035)

 

 

 

 

Total liabilities

-7,028

-8,872

-8,491

Net assets

11,950

11,046

12,711

 

 

 

 

Equity

 

 

 

Share capital

1,261

1,238

1,238

Investment in own shares

                   (324)

                          -

                    (214)

Share premium account

688

628

628

Un-issued shares reserve

123

134

122

Merger reserve

230

230

230

Retained earnings

9,972

8,816

10,707

Equity attributable to shareholders of the parent

11,950

11,046

12,711

 

 

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

 

6 months to

6 months to

Year to

 

31 Mar 19

31 Mar 18

30 Sept 18

 

Unaudited

Unaudited

Audited

 

£000

£000

£000

 

 

 

 

 Opening equity

                12,711

               10,720

                10,721

 

 

 

 

 Total comprehensive income

                   (571)

                     529

                   2,555

 

 

 

 

 Transactions with owners:

 

 

 

 Dividends

                   (222)

                   (204)

                    (339)

 Proceeds from issue of shares

                        83

                          -

                            -

 Cost of Investment in Own Shares

                   (110)

                          -

                    (214)

 Tax benefit on share based payments

                        58

                          -

                      (14)

 Share-based payments

                          1

                          -

                           2

 

 

 

 

 Closing equity

                11,950

               11,046

                12,711

 

CONSOLIDATED CASH FLOW STATEMENT

 

6 months to

6 months to

Year to

 

31 Mar 19

31 Mar 18

30 Sept 18

 

Unaudited

Unaudited

Audited

 

£000

£000

£000

(Loss) / Profit before tax

                   (199)

                     987

                   2,024

Finance costs

                        43

                       43

                         80

Finance income

                      (34)

                     (18)

                      (35)

Operating profit

                   (190)

                 1,012

                   2,069

Adjustments for:

 

 

 

Depreciation

                      361

                     319

                      652

Amortisation of intangible assets

                        12

                          6

                         12

(Gain) on sale of property, plant and equipment

                           -

                       (8)

                      (10)

Retirement benefits provisions

                      364

                          -

                            -

 

                      547

                 1,329

                   2,723

Movements in working capital:

 

 

 

Change in inventories

                      135

                   (404)

                      536

Change in trade and other receivables

                      924

                   (986)

                    (486)

Change in trade and other payables

                (1,447)

                     (22)

                    (190)

Cash generated from operations

                      159

                     (83)

                   2,583

Income taxes paid

                           -

                          -

                      (35)

Retirement benefits

                      (50)

                     (50)

                    (100)

Net cash from operating activities

                      109

                   (133)

                   2,448

 

 

 

 

Purchase of property, plant and equipment

                   (245)

                   (173)

                    (496)

Proceeds from sale of property, plant and equipment

                           -

                          8

                         10

Capitalised development expenditure

                      (60)

                       (8)

                      (27)

Purchase of Own Shares

                   (110)

                          -

                    (214)

Net cash (used in) investing activities

                   (415)

                   (173)

                    (727)

Drawdown of bank loans

                           -

                          -

                            -

Repayment of bank loans

                      (99)

                     (98)

                    (196)

Repayment of obligations under finance leases

                      (94)

                     (53)

                    (109)

Interest paid

                      (14)

                     (15)

                      (24)

Proceeds from issue of share capital

                        83

                          -

                            -

Dividends paid

                   (222)

                   (204)

                    (339)

Net cash (used in) financing activities

                   (346)

                   (370)

                    (668)

Net (decrease) / increase in cash and cash equivalents

         (652)

                 (676)

                  1,053

Cash and cash equivalents at start of the period

                      956

                     (97)

                      (97)

Cash and cash equivalents at end of the period

                      304

                   (773)

                      956

 

 

 

 

 

 

 

 

Reconciliation of cash and cash equivalents

 

 

 

 

6 months to

6 months to

Year to

 

31 Mar 19

31 Mar 18

30 Sept 18

 

Unaudited

Unaudited

Audited

 

£000

£000

£000

 

 

 

 

Cash and cash equivalents in current assets

                      304

                       44

                      956

Bank overdraft in current liabilities

                           -

                   (817)

                            -

Cash and cash equivalents at end of the period

                      304

                   (773)

                      956

           

 

 

 

NOTES

 

1 - BASIS OF PREPARATION

 

These interim consolidated financial statements are for the six months ended 31 March 2019.  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 2018.

 

They have been prepared in accordance with International Financial Reporting Standards as adopted by the EU and applicable law (IFRS) 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.

 

These consolidated interim financial statements have been prepared in accordance with the accounting policies adopted in the last annual financial statements for the year to 30 September 2018.  The accounting policies have been applied consistently throughout the Group for the purposes of preparation of these interim financial statements and are expected to be followed throughout the year ending 30 September 2019.

 

2 - Summary of Significant Accounting Policies

 

New standards and interpretation adopted by the Group

 

These statements include a historic provision for Guaranteed Minimum Pension (GMP) equalisation, which whilst remains an estimate, is believed to be a full provision.  This is in line with the High Court ruling in October 2018 requiring all UK companies to remove inequalities between men and women in scheme benefits that arose under GMP.  As the basis of calculation was not previously available the ruling is considered to create a new obligation, leading to accounting for the increase in liabilities as a past service cost, which is recognised in the current period profit and loss account as an exceptional cost.

 

 

3 - EARNINGS PER SHARE

 

The calculations of earnings per share are based upon the loss/profit 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 and warrants in issue in the period.

 

* Basic and diluted earnings per share are equal for the 6 months to 31 March 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.  As at 31 March 2019 there were 1,025,000 outstanding share options, of which 875,000 were exercisable.

 

Details are as follows:

 

 

6 months to

6 months to

Year to

31 Mar 19

31 Mar 18

30 Sept 18

Unaudited

Unaudited

Audited

 

 

 

 

(Loss) / Profit for the period - £000

                     (149)

                      860

                    1,771

 

 

 

 

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

 

 

 

12.435

12.186

12.350

Dilutive effect of share options *

-

0.995

0.813

Number of shares for diluted earnings per share

12.435

13.181

13.163

 

 

 

 

Basic (loss) / earnings per share

-1.20p

6.95p

14.34p

Diluted (loss) / earnings per share *

-1.20p

6.51p

13.44p

 

 

 

 

4 - ANALYSIS OF NET DEBT

 

 

 

 

 

 

Bank loans

Finance lease obligations

Cash and cash equivalents

Net debt

£000

£000

£000

£000

At 1 October 2018

                 2,170

                        757

                       (956)

                 1,971

New finance lease obligations

                         -

                        168

 -

                   168

Interest and arrangement fees

                      29

                             -

 

                      29

Repayment of borrowings

                   (99)

                        (94)

                         193

                       -

Cash absorbed

                         -

                             -

                         459

                   459

At 31 March 19

                 2,100

                        831

                       (304)

                 2,627

 

 

 

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 consolidated interim financial statements have been approved for issue by the Board of Directors on 19 June 2019.  The financial information for the year ended 30 September 2018 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 2018 have been filed with the Registrar of Companies.  The auditor's report on those financial statements was unqualified 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.  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).

 


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.
 
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