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LPA Group PLC  -  LPA   

Half-year Report

Released 15:02 22-Jun-2018

RNS Number : 2936S
LPA Group PLC
22 June 2018
 

LPA GROUP PLC

Replacement - Half-Yearly Report for the six months ended 31 March 2018

 

 

The following amendment has been made to the 'Half-Yearly Report for the six months ended 31 March 2018' announcement released on 21 June 2018 at 7.00am under RNS No 0569S.

 

The dividend record date has been corrected to 7 September 2018 and the payment date has been corrected to 28 September 2018.

 

All other details remain unchanged.

 

The full amended text is shown below.

 

LPA GROUP PLC

Half-Yearly Report for the six months ended 31 March 2018

 

LPA Group PLC ("LPA" or the "Group"), the high reliability LED lighting and electro-mechanical system manufacturer and distributor, announces a strong performance for the six months to 31 March 2018, £1.8m of LED Lighting and power socket contracts from a new customer and board reorganisation.

 

KEY POINTS

·      Revenue increased 28.9% to £13.93m (2017: £10.81m)

·      Operating profit before exceptional items increased 45.4% to £1.122m (2017: £0.77m).

·      Exceptional costs £111,000 (2017: £115,000 costs less £341,000 of property gain; net £226,000 gain)

·      Profit before tax increased 1.1% to £987,000 (2016: £976,000)

·      Diluted earnings per share decreased 0.30p to 6.51p (2017: 6.81p) due to increased profits chargeable to tax

·      Interim dividend increased 0.05p to 1.10p (2017: 1.05p)

·      Order entry decreased 43.4% to £8.40m (2017: £14.85m)

·      Order book stands at £16m (2017: £22m)

·    Gearing remains unchanged at 31.2% (2017: 31.6%) despite significant increases in working capital and plant and equipment

 

Michael Rusch, Chairman, comments:

 

"In my comments at the Annual General Meeting, I reported that output was at record levels and that this had been sustained during the first half. I am pleased to report that operating profits have also been at record levels and that this performance is continuing during the third quarter and should result in an outstanding result for the year. All parts of the Group are performing well.

However, as previously reported, the medium term maybe more challenging. Order entry in Electro-Mechanical and to a lesser extent in LED Lighting has not kept pace with sales and the Group order book has declined. Successive changes in Government procurement policy have impacted domestic supply chains for both new and refurbished trains and there is increased competition in our Asian markets. Nevertheless, we are rising to this challenge and have been selected for £1.8m of new LED Lighting and power socket export contracts for trains being imported to the UK, for delivery commencing in the next financial year.

Following the appointment of Chris Buckenham as Chief Financial Officer and Company Secretary in March 2018, we are continuing our board reorganisation. Paul Curtis, Managing Director of LPA Channel Electric Equipment Limited ("LPA Channel"), our highly successful distribution business is appointed Chief Operating Officer with effect from 1st October 2018, subject to standard due diligence. Paul was apprenticed at LPA Channel, achieved an MBA and had a successful spell as Sales and Marketing Director of LPA Connection Systems before returning to LPA Channel as Managing Director. At the same time, Peter Pollock, our Chief Executive will become Chairman in succession to me, while I become Group President, remaining a major shareholder and non-executive director. Len Porter remains Senior Non-Executive Director. Once these board appointments have bedded in, we expect to promote Paul to Chief Executive Officer and to appoint a further non-executive director. We shall be adopting the QCA Corporate Governance Code and a road map to compliance.

We have committed a further £1m to capital expenditure as a measure of our confidence in the future and we are increasing the interim dividend by 0.05p to 1.10p."

 

MICHAEL RUSCH - Chairman - 21 June 2018

ENQUIRIES:                                                                                Tel:

 

 01799 512844

 01799 512859

 

 020 7213 0880

 

 

 

WH Ireland (Broker)

 0113 394 6600

Tim Feather / James Sinclair-Ford

 

 

 

020 7457 2020

 

 

CHAIRMAN'S STATEMENT

In my comments to the Annual General Meeting, I reported that output was at record levels and that this had been sustained during the first half. I am pleased to report that operating profits have also been at record levels and that this performance is continuing during the third quarter and should result in an outstanding result for the year.

 

During the first half, Sales increased 29% to a record £13.9m (2017: £10.8m) reflecting the exceptionally strong order book at the start of the year and Operating Profit increased 45% to £1.1m, also a new record, (2017: £0.8m). Exceptional costs amounted to £0.1m (2017: Exceptional gain £0.2m). Profit before tax amounted to £0.99m (2017 £0.98m) and diluted earnings per share were 6.51p (2018: 6.81p). The dividend is increased by 0.05p to 1.10p. All parts of the Group are performing well.

 

However, as previously indicated, the medium term maybe more challenging. Order entry in Electro-Mechanical, and to a lesser extent in LED Lighting, has not kept pace with sales and while Distribution is doing well, the Group order book has declined. Government procurement policy has changed impacting domestic supply chains for both new and refurbished trains. The "long term through life" cost approach used on Cross Rail and London Overground, which favoured our reliable, long lived sustainable products has changed to one requiring only support for the franchise period, typically seven years. In addition, the procurement of 7000 new trains, significantly more than the running annual average of around 700 trains, has exceeded domestic capacity to supply, necessitating import from overseas train builders who are not yet existing customers, presenting us with the challenge of displacing existing suppliers to achieve orders.

 

The flood of new trains has meant the early retirement of some existing trains which would otherwise have required refurbishment and upgrade and provided us with more routine orders. This has particularly impacted Transport+. Some of our export markets, particularly Japan have suffered from increased competition from China and Korea in their export markets and this has presented us with additional challenges.

 

However, this scenario had been identified for some time and the Group has acted to mitigate it. We have pursued other export opportunities created by imported trains and have won £1.8m of orders for LED Lighting and power sockets from a new entrant to the UK market for delivery in the next financial year. We have identified other similar opportunities which we are pursuing. We have invested in new products development and in opening new markets.

 

We are investing £1m in processes and automation to reduce manufacturing costs.

 

We are continuing to follow a progressive dividend policy: the interim dividend will be increased by 0.05p to 1.10p (2017: 1.05p) which will be paid on 28 September 2018 to those shareholders registered at the close of business on 7 September 2018.

 

Following the appointment of Chris Buckenham as Chief Financial Officer and Company Secretary in March 2018, we are continuing our board reorganisation. Paul Curtis, Managing Director of LPA Channel Electric Equipment Limited, our highly successful distribution business is appointed Chief Operating Officer with effect from 1st October 2018. Paul was apprenticed at LPA Channel achieved an MBA and had a successful spell as Sales and Marketing Director of LPA Connection Systems before returning to LPA Channel as Managing Director. At the same time, Peter Pollock, our Chief Executive will become Chairman in succession to me, while I become Group President, remaining a major shareholder and Non-Executive Director. Len Porter remains Senior Non-Executive Director. Once these board appointments have bedded in, we expect to promote Paul to Chief Executive Officer and to appoint a further non-executive director.

 

We shall be adopting the QCA Corporate Governance Code and a road map to full compliance.

 

As previously reported the levels of sales and profits in the current year are exceptional and may be under pressure next year, but the funnel of opportunities, which leads to the pipeline of orders and order entry, is very encouraging. The Group is in robust shape and we look forward to the future with great confidence.

 

MICHAEL RUSCH

Chairman - 21 June 2018

CONSOLIDATED INCOME STATEMENT

 

 

 

 

6 months to
 31 March 2018

6 months to
 31 March 2017

Year to
 30 Sept 2017

 

Unaudited

Unaudited

Audited

 

£000

£000

£000

 

 

 

 

 Revenue

                        13,929

                      10,807

                    22,482

 

 

 

 

 Operating profit before exceptional items

                          1,122

                           772

                      1,895

 Gain on sale of property

                                  -

                           341

                         341

 Relocation and other nonrecurring costs 

                            (111)

                          (115)

                       (268)

 

 

 

 

 Operating profit

                          1,012

                           998

                      1,968

 Finance costs

                              (43)

                            (32)

                         (75)

 Finance income

                               18

                             10

                           21

 

 

 

 

 Profit before tax 

                             987

                           976

                      1,914

 Taxation

                            (127)

                            (78)

                       (146)

 

 

 

 

 Profit for the period

                             860

                           898

                      1,768

 

 

 

 

Attributable to:

 

 

 

 - Equity holders of the parent

860

898

1,768

 

 

 

 

Earnings per share (see note 2)

 

 

 

 - Basic

6.95p

7.37p

14.40p

 - Diluted

6.51p

6.81p

13.42p

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 

 

 

6 months to
 31 March 2018

6 months
 to 31 March 2017

Year to
 30 Sept 2017

 

 Unaudited

 Unaudited

 Audited

 

 £000

 £000

 £000

Profit for the period

                             860

                           898

                      1,768

 

 

 

 

Other comprehensive income / (expense)

 

 

 

Items that will not be reclassified to profit or loss

                                  -

                                -

                              -

Actuarial gain / (loss) on pension scheme

                            (396)

                           294

                         349

Tax on actuarial gain / (loss)

                               65

                            (57)

                         (77)

Other comprehensive income / (expense) net of tax

                            (331)

                           237

                         272

 

 

 

 

Total comprehensive income for the period

                             529

                        1,135

                      2,040

Attributable to:

 

 

 

 - Equity holders of the parent

                             529

                        1,135

                      2,040

CONSOLIDATED BALANCE SHEET

 

 

 

 

 

As at

As at

As at

 

31 March 18

31 March 17

30 Sept 17

 

Unaudited

Unaudited

Audited

 

£000

£000

£000

 

Non-current assets

 

 

 

 

Intangible assets

1,187

1,190

1,185

 

Property, plant and equipment

6,843

6,686

6,851

 

Retirement benefits

983

1,195

1,311

 

 

9,013

9,071

9,347

 

 

 

 

 

 

Current assets

 

 

 

 

Inventories

4,821

3,593

4,417

 

Trade and other receivables

6,041

4,721

5,054

 

Cash and cash equivalents

44

138

119

 

 

10,905

8,452

9,590

 

 

 

 

 

 

Total assets

19,917

17,523

18,937

 

 

 

 

 

 

Current liabilities

 

 

 

 

Bank overdraft

                            (817)

                          (640)

                       (216)

 

Bank loans and other borrowings

                            (251)

                          (265)

                       (277)

 

Current tax payable

                            (188)

                          (199)

                         (64)

 

Trade and other payables

                         (4,947)

                       (4,061)

                    (4,969)

 

 

                         (6,203)

                       (5,165)

                    (5,526)

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

Bank loans and other borrowings

                         (2,420)

                       (2,327)

                    (2,379)

 

Deferred tax liabilities

                            (159)

                          (251)

                       (221)

 

Other payables

                              (90)

                                -

                         (90)

 

 

                         (2,669)

                       (2,578)

                    (2,690)

 

 

 

 

 

 

Total liabilities

(8,871)

(7,743)

(8,216)

 

 

 

 

 

 

 

 

 

 

 

Net assets

11,046

9,780

10,721

 

 

 

 

 

 

Equity

 

 

 

 

Share capital

1,238

1,231

1,238

 

Share premium account

628

610

628

 

Un-issued shares reserve

134

183

134

 

Merger reserve

230

230

230

 

Retained earnings

8,816

7,526

8,491

 

 

 

 

 

 

Equity attributable to shareholders of the parent

11,046

9,780

10,721

 

               

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

 

 

6 months to
 31 March 2018

6 months to
 31 March 2017

Year to
 30 Sept 2017

 

Unaudited

Unaudited

Audited

 

£000

£000

£000

 

 

 

 

 Opening equity

                        10,721

                        8,689

                      8,689

 

 

 

 

 Total comprehensive income

                             529

                        1,135

                      2,040

 

 

 

 

 Transactions with owners:

 

 

 

 Dividends

                            (204)

                          (185)

                       (315)

 Proceeds from issue of shares

                                  -

                          141

                        166

 Tax benefit on share based payments

                                  -

                                -

                        141

 

 

 

 

 Closing equity

                        11,046

                        9,780

                    10,721

 
 

 

CONSOLIDATED CASH FLOW STATEMENT

 

 

 

 

6 months to
 31 March 2018

6 months to
31 March 2017

Year to
 30 Sept 2017

 

Unaudited

Unaudited

Audited

 

£000

£000

£000

Profit before tax

                             987

                           976

                      1,914

Finance costs

                               43

                             32

                           75

Finance income

                              (18)

                            (10)

                         (21)

Operating profit

                          1,012

                           998

                      1,968

Adjustments for:

 

 

 

Depreciation

                             319

                           230

                         543

Amortisation of intangible assets

                                 6

                             17

                           36

(Gain) on sale of property, plant and equipment

                                (8)

                          (341)

                       (321)

Loan arrangement fees

                                  -

                               4

                             4

 

                          1,329

                           908

                      2,230

Movements in working capital:

 

 

 

Change in inventories

                            (404)

                          (563)

                    (1,387)

Change in trade and other receivables

                            (987)

                            (43)

                       (376)

Change in trade and other payables

                              (22)

                           259

                      1,237

Cash generated from operations

                              (83)

                           561

                      1,704

Income taxes paid

                                  -

                                -

                       (112)

Retirement benefits

                              (50)

                            (50)

                       (100)

Net cash from operating activities

                            (133)

                           511

                      1,492

Purchase of property, plant and equipment

                            (173)

                       (1,354)

                    (1,643)

Proceeds from sale of property, plant and equipment

                                 8

                           524

                         525

Capitalised development expenditure

                                (8)

                            (13)

                         (27)

Net cash (used in) / from investing activities

                            (173)

                          (843)

                    (1,145)

Drawdown of bank loans

                                  -

                           500

                         500

Repayment of bank loans

                              (98)

                          (603)

                       (702)

Repayment of obligations under finance leases

                              (53)

                            (27)

                         (81)

Interest paid

                              (15)

                              (7)

                         (23)

Proceeds from issue of share capital

                                  -

                           141

                         166

Dividends paid

                            (204)

                          (185)

                       (315)

Net cash (used in) / from financing activities

                            (370)

                          (181)

                       (455)

Net (decrease) / increase in cash and cash equivalents

                            (676)

                          (513)

                       (108)

Cash and cash equivalents at start of the period

                              (97)

                             11

                           11

Cash and cash equivalents at end of the period

                            (773)

                          (502)

                         (97)

 

 

 

 

Reconciliation of cash and cash equivalents

 

 

 

 

6 months to
 31 March 2018

6 months to
 31 March 2017

Year to
 30 Sept 2017

 

Unaudited

Unaudited

Audited

 

£000

£000

£000

 

 

 

 

Cash and cash equivalents in current assets

                               44

                           138

                         119

Bank overdraft in current liabilities

                            (817)

                          (640)

                       (216)

Cash and cash equivalents at end of the period

                            (773)

                          (502)

                         (97)

 

 

NOTES

 

1 - BASIS OF PREPARATION

 

These interim consolidated financial statements are for the six months ended 31 March 2018. 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 2017.

 

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 2017.  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 2018.

 

2 - EARNINGS PER SHARE

 

The 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:

 

 

6 months to
 31 March 2018

6 months to
 31 March 2017

Year to
 30 Sept 2017

Unaudited

Unaudited

Audited

 

 

 

 

Profit for the period - £000

                             860

                           898

                      1,768

 

 

 

 

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

 

 

 

12.377

12.186

12.276

Dilutive effect of share options

0.831

0.995

0.903

Number of shares for diluted earnings per share

13.208

13.181

13.179

 

 

 

 

Basic earnings per share

6.95p

7.37p

14.40p

Diluted earnings per share

6.51p

6.81p

13.42p

 

 

 

 

 

3 - ANALYSIS OF NET DEBT

 

 

Bank loans

Finance lease obligations

Cash and cash equivalents

Net debt

£000

£000

£000

£000

At 1 October 2017

                 2,311

                        345

                           97

                 2,753

New finance lease obligations

                         -

                        138

 -

                    138

Draw down of bank loans

                         -

                             -

                             -

                        -

Interest and arrangement fees

                      28

                             -

 -

                      28

Repayment of borrowings

                  (98)

                        (53)

                         151

                        -

Cash absorbed

                         -

                             -

                         525

                    525

At 31 March 2018

                 2,241

                        430

                         773

                 3,444

 

 

4 - INFORMATION

 

LPA Group plc is the Group's ultimate parent company.  It is incorporated in England and Wales and domiciled in the UK.  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 21 June 2018.  The financial information for the year ended 30 September 2017 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 2017 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, 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.
 
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Half-year Report - RNS