LPA GROUP PLC LPA GROUP PLC
Half-Yearly Report for the period to 4 April 2015
LPA Group PLC ("LPA" or "the Group"), the LED lighting and electro-mechanical system manufacturer and distributor, announces its results for the period to 4 April 2015. KEY POINTS Revenue: £7.93m (2014: £7.97m)
Profit before tax: £19,000 (2014: £186,000) reflecting the previously advised slow start to the half
Diluted earnings per share: 0.13p (2014: 1.32p)
Interim dividend: 0.70p (2014: 0.70p)
12.3% increase in order entry in the first half to £10.51m (2014: £9.36m)
Following the selection of the Group to supply electro-mechanical equipment for Crossrail vehicles advised at the AGM, initial £4m order received in May
Electro-mechanical ethernet backbone technology continues to excite interest
Michael Rusch, Chairman, comments: "In my remarks to the Annual General Meeting on 26th March I confirmed earlier reports that the year had started very quietly, particularly in our lighting activity, and this is reflected in the results for the first half. Difficulties have also been experienced in integrating our electro-mechanical activities onto one site. "Order entry has been very strong and the Group is successfully managing the start-up of four major rail projects. The strength of our order book and the outlook for both UK and export markets mean that the Group's medium and long term prospects are very positive. Our factory load is improving and we expect to make modest progress during the remainder of this year, and this progress is expected to accelerate as the major projects mature through 2016-19. "The interim dividend is being maintained, despite the challenges, as an indication of our confidence for the future." 25 June 2015 ENQUIRIES: LPA Group plc
Peter Pollock, Chief Executive Tel: 07881 626123 or 01799 512844
Steve Brett, Finance Director Tel: 07881 626127 or 01799 512860
James Caithie / Avi Robinson
WH Ireland (Broker) Tel: 0113 394 6611Tim Feather / Liam Gribben
Instinctif Partners (PR Adviser) Tel: 020 7457 2020Mark Garraway / Helen Tarbet
CHAIRMAN'S STATEMENT
In my remarks to the Annual General Meeting on 26th March I confirmed earlier reports that the year had started very quietly and these are reflected in the results for the first half, which show sales revenues of £7.93m (2014: £7.97m) generating a very modest profit before tax of
£19,000 (2014: £186,000) and diluted earnings per share of 0.13p (2014: 1.32p).
Order entry in the first half increased 12.3% to £10.51m (2014: £9.36m) and the order book at the end of the period was £10.77m, 31.7% higher than the £8.18m at September 2014. I have previously commented that we had been selected by Bombardier Transportation to supply electro mechanical equipment for rail vehicles to be used on Crossrail and am pleased to report that an initial order for £4m was subsequently received in May. Including this item the order entry to the end of May was £17m (with a further £8m of Crossrail and Intercity Express Programme still to be booked) under-pinning our expectation of future growth.
The closure of the Clacton facility and the integration of that reduced capacity into Light and Power House has proved more challenging than expected. However, as previously reported, the Group is committed to reinforcing itself to take advantage of the major opportunities available and to securing the long term benefits of focussing all of its electro-mechanical activities on one site.
The Group is successfully managing the challenges of simultaneously starting up four large long term rail projects. There is a significant amount of engineering work associated with the design of these projects and a large number of new purchase contracts to place. In addition suppliers have to be brought up to speed to meet customers' initial delivery requirements, which will be variable until they settle into a regular pattern. As a consequence the factory load has been inconsistent, particularly in lighting. The significant initial start-up costs will be recovered as the projects mature and profits begin to flow more consistently.
While routine connector orders have been relatively buoyant the hiatus in the re-franchising process has continued to affect the award of larger refurbishment contracts which have been delayed beyond this year. Orders for lighting have been affected by a reduction in demand from the oil and gas hazardous area market and lower seasonal demand from local authorities for LED replacements for fluorescent lighting. There has been a slower than anticipated take up of our high end quality LED products, an issue that is being addressed by better market segmentation and focus. Some success in export markets has been enjoyed.
In parallel with the major rail project start-ups there has been a significant increase in tendering activity particularly for retro-fitting of Ethernet Backbones to existing rolling stock. This is being driven now by the Government's commitment to install Wi-Fi for rail passengers and, in the longer term, by the implementation of the train borne European Train Control System. We expect our Transport+ installation capability to become increasingly involved in these activities. Our engineered product distribution activity continues to progress well, with a number of innovative new products being launched.
In addition to the positive outlook in the UK market, with further major opportunities currently being pursued, the export market also looks very positive with opportunities in Europe, Asia and Australasia, which we are actively following. We have made a quick start in the Gulf Area with our first order for standard LED lighting product.
Cash flow has been impacted by the closure costs of the Clacton facility, the investment in working capital caused by the project start-ups and the absence of significant profit in the first half. The pace of capital investment will be restricted until routine positive cash flow is restored. The interim dividend is being maintained at 0.70p which will be paid on 18
September 2015 to shareholders registered at the close of business on 28 August 2015.
We expect to make modest progress during the remainder of the year, which progress should rapidly accelerate as the major projects mature through 2016-19. The Group is well positioned to win further orders for rail vehicle equipment on established platforms in both the UK and export markets.
The factory load for the remainder of the year and particularly in the longer term up to 2019 is very encouraging.
Period to
4 April 2015
Unaudited
£000's
6 months to
31 March 2014
Unaudited
£000's
Year to
30 Sept 2014
Audited
£000's
Reorganisation costs (6) - (319)
Finance costs (35) (31) (68) Finance income 15 22 46
Taxation (2) (19) -
Attributable to:
- Equity holders of the parent 17 167 295
- Basic 0.14p 1.42p 2.50p
- Diluted 0.13p 1.32p 2.31p
Period to
4 April 2015
Unaudited
£000's
6 months to
31 March 2014
Unaudited
£000's
Year to
30 Sept 2014
Audited
£000's
Items that will not be reclassified to profit or loss
Actuarial loss on pension scheme (114) (6) (362) Tax on actuarial loss 13 (8) 52
Other comprehensive expense net of tax (101) (14) (310)
- Equity holders of the parent (84) 153 (15)
As at
4 April 2015
Unaudited
£000's
As at
31 March 2014
Unaudited
£000's
As at
30 Sept 2014
Audited
£000's
Intangible assets 1,237 1,245 1,235
Property, plant and equipment 4,810 3,040 4,909
Retirement benefits 695 1,026 744
6,742 5,311 6,888
Inventories 2,396 2,303 2,145
Trade and other receivables 3,291 5,139 3,473
Cash and cash equivalents 5 751 525
5,692 8,193 6,143
Bank overdraft (65) - - Bank loans and other borrowings (236) (233) (235) Provisions (341) (244) (567) Trade and other payables (3,046) (3,242) (3,179) (3,688) (3,719) (3,981)
Bank loans and other borrowings (1,666) (1,902) (1,784) Provisions - (303) - Deferred tax liabilities (149) (236) (160) Other payables (21) (22) (21) (1,836) (2,463) (1,965)
Share capital 1,185 1,183 1,184
Share premium account 464 457 461
Un-issued shares reserve 197 185 192
Merger reserve 230 230 230
Retained earnings 4,834 5,267 5,018
Period to
4 April 2015
Unaudited
£000's
6 months to
31 March 2014
Unaudited
£000's
Year to
30 Sept 2014
Audited
£000's
Opening equity 7,085 7,236 7,236
Total comprehensive income (84) 153 (15) Transactions with owners:
Dividends (101) (89) (171) Proceeds from issue of shares 4 11 16
Equity-settled share-based payments 6 11 19
Closing equity 6,910 7,322 7,085
LPA GROUP PLC Interim Unaudited Group Results for the Period ended 4 April 2015 CONSOLIDATED CASH FLOW STATEMENT
Period to
4 April 2015
Unaudited
£000's
6 months to
31 March 2014
Unaudited
£000's
Year to
30 Sept 2014
Audited
£000's
Profit for the period 17 167 295
Finance costs 35 31 68
Finance income (15) (22) (46) Income tax expense 2 19 - Operating profit 39 195 317
Adjustments for:
Depreciation 209 147 309
Amortisation of intangible assets 17 2 23 (Gain) / loss on sale of property, plant and equipment (30) (1) 11
Non-cash charge for equity-settled share-based payments 6 11 19
241 354 679
Movements in working capital:
Change in inventories (251) (131) 27
Change in trade and other receivables 182 (44) 322
Change in trade and other payables (133) (183) (325) Change in provisions (226) (121) (101)
Income tax received - 40 43
Retirement benefits (50) (50) (100)
Purchase of property, plant and equipment (145) (527) (2,489) Proceeds from sale of property, plant and equipment 65 10 1,307
Capitalised development expenditure (19) (11) (22)
Drawdown of bank loans - 600 600
Repayment of bank loans (100) - (100) Repayment of obligations under finance leases (17) (17) (33) Interest paid (35) (31) (68) Proceeds from issue of share capital 4 11 16
Dividends paid (101) (89) (171)
Net decrease in cash and cash equivalents (585) (189) (415) Cash and cash equivalents at start of the period 525 940 940
As at
4 April 2015
Unaudited
£000's
As at
31 March 2014
Unaudited
£000's
As at
30 Sept 2014
Audited
£000's
Cash and cash equivalents in current assets 5 751 525
Bank overdraft in current liabilities (65) - - Cash and cash equivalents at end of the period (60) 751 525
These interim consolidated financial statements are for the period ended 4 April 2015. They do not include all of 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 2014.
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 2014. 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 ended 30 September 2015.
2 - EARNINGS PER SHAREThe calculations of earnings per share are based upon the profit after tax attributable to ordinary equity shareholders and the weighted average number of ordinary shares in issue during the period. Details are as follows:
Period to
4 April 2015
Unaudited
6 months to
31 March 2014
Unaudited
Year to
30 Sept 2014
Audited
Profit for the period - £000's 17 167 295
Weighted average number of ordinary shares in issue during
the period 11.844m 11.802m 11.818m
Dilutive effect of share options 0.822m 0.805m 0.965m
Number of shares for diluted earnings per share 12.666m 12.607m 12.783m
Basic earnings per share 0.14p 1.42p 2.50p
Diluted earnings per share 0.13p 1.32p 2.31p
3 - ANALYSIS OF NET DEBTBank loan
£000's
Finance lease obligations
£000's
Cash and cash equivalents
£000's
Net debt
£000's
At 1 October 2014 1,900 119 (525) 1,494
Cash absorbed - - 468 468
Repayment of borrowings (100) (17) 117 -
At 4 April 2015 1,800 102 60 1,962
4 - INFORMATIONLPA Group plc is the Group's ultimate parent company. It is incorporated in England and Wales and domiciled in Great Britain. 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, Essex, 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 25 June 2015.
The financial information for the year ended 30 September 2014 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 2014 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 at the above address and will be made available on the Company's website (www.lpa-group.com).
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