TIDMLPA
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 GBP10.1m (2018: GBP13.9m)
-- Operating profit before exceptional items(1) GBP0.2m, (2018: GBP1.1m)
-- Loss before tax, after exceptional item, GBP0.2m (2018: Profit GBP1.0m)
-- Loss per share 1.20p (2018: Diluted Earnings 6.51p)
-- Interim dividend 1.10p (2018: 1.10p)
-- Strong order entry GBP15.4m (2018: GBP8.4m)
-- Growing order book GBP19m (2018: GBP16m)
-- Gearing 22%, (2018: 31%)
Notes:
(1) Exceptional costs GBP0.4m - relating to Guaranteed Minimum
Pension equalisation (2018: GBP0.1m 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
020 7213
Cairn Financial Advisers (Nominated Adviser) 0880
James Caithie / Tony Rawlinson
020 7220
finnCap (Broker) 0500
Ed Frisby / Teddy Whiley (Corporate
Finance)
Tim Redfern / Malar Velaigam
(ECM & Sales)
020 7457
Instinctif Partners (PR Adviser) 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
GBP10.1m (2018: GBP13.9m) and Operating Profit before exceptional
items of GBP0.2m (2018: GBP1.1m).
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 GBP0.4m. Thus,
the surplus on the Group's defined benefit pension scheme, which
was GBP2.4m at 30 September 2018, is reduced by GBP0.4m. 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 GBP0.2m
(2018: Profit GBP1.0m) 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 GBP15.4m
(2018: GBP8.4m) 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 GBP15.4m represents an 83%
increase (2018: GBP8.4m), with an increased order book at GBP19m
(2018: GBP16m).
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 GBP0.5m to GBP2.6m,
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 6 months
to to Year to
30 Sept
31 Mar 19 31 Mar 18 18
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
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 6 months
to to Year to
30 Sept
31 Mar 19 31 Mar 18 18
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
(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 As at As at As at
SHEET
31 Mar 19 31 Mar 30 Sept
18 18
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
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 6 months
to to Year to
31 Mar 30 Sept
31 Mar 19 18 18
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
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 6 months 6 months
STATEMENT to to Year to
31 Mar 30 Sept
31 Mar 19 18 18
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
(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 6 months
to to Year to
31 Mar 30 Sept
31 Mar 19 18 18
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
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 6 months
to to Year to
31 Mar 30 Sept
31 Mar 19 18 18
Unaudited Unaudited Audited
(Loss) / Profit for the period
- GBP000 (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 Cash and Net debt
lease obligations cash equivalents
GBP000 GBP000 GBP000 GBP000
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 (GBP000), 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 rns@lseg.com or visit www.rns.com.
END
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