TIDMLPA
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 GBP10.8m (2019: GBP10.1m)
-- Operating profit before exceptional items increased 28% to GBP0.23m (2019: GBP0.18m)
-- Profit before tax GBP0.2m (2019: Loss after exceptional item GBP0.2m)
-- Earnings per share 2.08p (2019: Loss 1.20p)
-- Interim dividend nil (2019: 1.10p)
-- Order book increased 29% to GBP24.7m (2019: GBP19.2m)
-- Order entry fell 8% to GBP14.2m (2019: GBP15.4m)
-- Gearing(1) 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
identi ed 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 re ect 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
020 7213
Cairn Financial Advisers (Nominated Adviser) 0880
James Caithie / Tony Rawlinson /
Ludovico Lazzaretti
020 7220
finnCap (Broker) 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 GBP10.8m (2019:
GBP10.1m) despite the impact of non-Covid-19 related customer
project delays. Operating profit increased to GBP0.23m (2019:
GBP0.18m). Profit before tax amounted to GBP0.2m (2019: loss after
exceptional item GBP0.2m). Earnings per share amounted to 2.08p
(2019: loss 1.20p).
Order entry, at GBP14.2m, fell just short of the very strong
levels achieved in the first half last year (2019: GBP15.4m) and
the order book increased 29% to GBP24.7m (2019: GBP19.2m)
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 GBP62k 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 GBP0.16m
to the Balance Sheet with an equal and opposite liability
recognised. The net effect on the results in the period is less
than GBP1k.
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 6 months
to to Year to
31 Mar 20 31 Mar 19 30 Sept 19
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
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 6 months
to to Year to
31 Mar 20 31 Mar 19 30 Sept 19
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
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
GBP000 GBP000 GBP000
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 6 months
to to Year to
31 Mar 20 31 Mar 19 30 Sept 19
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
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 6 months 6 months
STATEMENT to to Year to
31 Mar 20 31 Mar 19 30 Sept 19
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
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
Right of
Bank Finance use asset Cash and
loans lease obligations obligations cash equivalents Net debt
GBP000 GBP000 GBP000 GBP000 GBP000
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.
These 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 2019, other than
where described under new standards and interpretation adopted by
the Group. 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 2020.
2 - Summary of Significant Accounting Policies
Use of judgements and estimates
In preparing these interim financial statements management is
required to make judgements on the application of the Group's
accounting policies and make estimates about the future. Actual
results may differ from these assumptions. The significant
judgements made by management in applying the Group's accounting
policies and the key sources of estimation uncertainty were the
same as those described in the consolidated financial statements
for the year ended 30 September 2019.
New standards and interpretation adopted by the Group
IFRS16 - Leases
Adoption of IFRS16 (Leases) introduces a single on-balance sheet
accounting model for leases and replaces IAS17 - Leases. From 1
October 2019, the Group is required to recognise a Right of Use
asset and corresponding liabilities representing its obligation to
make lease payments. Short term and low value items are excluded
and continue to be reported as operating lease costs on a
straight-line basis over the lease term of the asset.
IFRS16 recognises an asset and liability on the Balance Sheet,
with interest and depreciation charged through the Income
Statement, replacing operating lease charges. The Group has adopted
IFRS16 using the modified retrospective transition approach which
introduces an equal asset value and lease liability at 1 October
2019, without adjustment to the comparative period results.
The Right of Use lease liability is measured at the present
value of the lease payments outstanding at 1 October 2019, based on
the interest rate inherent in the lease agreement or calculated
where the rate is uncertain. Depreciation is calculated on a
straight-line basis through to the termination of the lease
agreement.
Short term leases are those with an expiry or duration of less
than 12 months. Low value leases are defined under IFRS16 as assets
having a value of less than US$5,000, after deduction of service
elements within the lease.
The effect on Profit before tax through adoption of IFRS16 for
the six months ended 31 March 2020 is less than GBP1,000.
Guaranteed Minimum Pension (GMP)
The 2019 statements include a historic provision for historic
GMP equalisation which, whilst it 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 - GOING CONCERN
Currently there are uncertainties due to the Covid-19 pandemic
and Brexit which makes forecasting more difficult.
Having assessed all aspects of the business and the likely
effectiveness of mitigating actions that the Directors would
consider undertaking or have undertaken, the going concern basis
has been adopted in preparing these interim financial statements.
Actions taken include both cost reductions and a proactive policy
of cash retention achieved in part through the UK Government's Job
Retention Scheme grants, VAT deferral scheme and the
non-declaration of dividends through this period.
In reaching this conclusion, the Directors, after making
enquiries, inclusive but not limited to updated forecasts and
expectations, liabilities and risks and ongoing support from the
Group's bank, have a reasonable expectation that the Group has
adequate resources to continue in operational existence from the
foreseeable future.
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 6 months
to to Year to
31 Mar 30 Sept
31 Mar 20 19 19
Unaudited Unaudited Audited
Profit / (loss) for the period
- GBP000 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 (GBP000), 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.
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
IR EAXKPFSPEEFA
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