Last checked at 28 Jun 2010 07:00
LPA GROUP PLC
Half-Yearly Report for the six months to 1 April 2010
LPA Group PLC ("LPA" or "the Group"), the lighting, power and electronics system manufacturer and distributor, announces interim results for the six months to 1 April 2010.
KEY POINTS
·; Order book up 40% to £17.6m (2009: £12.6m); substantial load for delivery in 2011 and beyond
·; Orders entered £7.8m (2009: £11.8m)
·; Revenue £6.9m (2009: £7.0m)
·; Loss before tax £307,000 (2009: profit before tax £79,000)
·; Loss per share of 2.16p (2009: earnings per share 0.54p)
·; Interim dividend suspended (2009: 0.5p): final dividend under review
·; LED lighting market buoyant, routine activity balanced, aerospace and defence reduced
Michael Rusch, Chairman, commented:
"As I commented at the Annual General Meeting, we geared up to deliver substantial growth this year, but have experienced widespread delays in customer project delivery schedules: the actual effect of these delays on the first half was to reduce sales by £1.4m and they are anticipated to reduce sales by £2.2m for the year as a whole. Thus we have suffered a period of reduced output and consequently a loss in the first half.
"Whilst a significant recovery in sales in the second half is expected, the result for the year as a whole will nevertheless be disappointing. However, the order book for delivery in next financial year is now at a record level, which should deliver a very encouraging result in 2011."
28 June 2010
ENQUIRIES:
LPA Group plc
Peter Pollock, Chief Executive Tel: 07881 626123 or 01799 512844
Steve Brett, Finance Director Tel: 07881 626127 or 01799 512860
Nominated adviser - Religare Capital Markets Tel: 020 7444 0800
James Pinner
Ben Jeynes
Broker - Religare Capital Markets Tel: 020 7444 0500
Alan Rooke
College Hill Tel: 020 7457 2020
Adam Aljewicz
Gareth David
CHAIRMAN'S STATEMENT
Overall order entry exceeded expectation in the period at £7.8m (2009: £11.8m) but sales fell unexpectedly to £6.9m (2009: £7.0m) due to substantial (£1.4m) re-scheduling of project deliveries at customer request. The consequence has been a mismatch of cost base to output and, as a result, a significant loss before tax of £307,000 was recorded (2009: profit before tax £79,000). The loss per share amounted to 2.16p (2009: earnings per share 0.54p). Cash absorbed by operations was £0.4m (2009: cash generated £0.4m) however net debt, whilst increasing by £0.5m to £1.9m, remains significantly better than expected.
Despite further rescheduling of customer delivery requirements (£0.8m, making a total for the year of £2.2m) from this financial year into later periods, a significant recovery in sales in the second half is expected, but the result for the year as a whole will nevertheless be disappointing. However, we now have significant levels of orders on hand for delivery next year which, barring further unforeseeable events, should yield a very encouraging result. The order book at 1 April was £17.6m (2009: £12.6m).
Although the Board remains very confident about future prospects, in the light of current trading conditions, it considers it prudent not to pay an interim dividend this year (2009: 0.5p). Payment of a final dividend will be considered when the results of the first quarter of the next financial year are known.
Overall, routine orders have stabilised, albeit at lower levels than earlier years. Certain areas have actually improved although aerospace and defence has suffered a significant fall.
I have commented in the past that the gestation period for major rail projects may run for several years; two years ago I welcomed the news that the Department for Transport had issued a notice to proceed in relation to the acquisition of extra coaches for the West Coast Main Line. Last year I was pleased to report that we had received a letter of intent in respect of the lighting and that an order was expected soon and that we were also hopeful of receiving the order for the inter-car jumper equipment. I can now report that we have received lighting and jumper orders with a total value of £2.1m and that we have commenced deliveries.
Although bidding levels remain high, we must recognise that the UK Government has already announced cuts in spending and more will follow. Projects which may be affected include the Intercity Express Programme, Thameslink, Crossrail and Piccadilly Line for London Underground together with a number of smaller projects. A positive outcome of these delays may be the need to extend the life of existing rolling stock, which could generate refurbishment projects, which would be no less welcome than new-build projects.
Another outcome of the Government's spending review might be that the electrification of rail routes from London to Bristol and South Wales, announced last summer, will be delayed. This may affect the Group positively by creating a requirement for additional UK built diesel multiple units to meet the required passenger capacity.
Our LED lighting technology continues to give us access to new markets in infrastructure and in Europe. We have won significant orders and there are many opportunities in view.
We have initiated the process towards achieving planning permission for a change of use for our Saffron Walden site to residential. We will keep shareholders informed of developments.
In summary, we will spend the second half repairing, as far as possible, the damage inflicted by the project delays. We have continued to pursue and win new projects and have confidence of further wins in the near future. Our order book is at a very high level and our LED-based lighting products continue to generate a high level of interest. Although this year is disappointing, we have much confidence for the future.
MICHAEL RUSCH
Chairman
28 June 2010
Interim Unaudited Group Results for the Six Months ended 1 April 2010
CONSOLIDATED INCOME STATEMENT
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| 6 months to 1 April 2010 Unaudited £000's | 6 months to 31 March 2009 Unaudited £000's | Year to 30 Sept 2009 Audited £000's |
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| Revenue | 6,925 | 7,034 | 13,715 |
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| Operating (loss) / profit | (297) | 92 | 205 |
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| Finance costs | (310) | (336) | (663) |
| Finance income | 300 | 323 | 645 |
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| (Loss) / profit before tax | (307) | 79 | 187 |
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| Taxation | 60 | (17) | (45) |
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| (Loss) / profit for the period | (247) | 62 | 142 |
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| Attributable to: |
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| - Equity holders of the parent | (247) | 62 | 142 |
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| (Loss) / earnings per share (see note 2) |
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| - Basic | (2.16p) | 0.54p | 1.24p |
| - Diluted | (2.16p) | 0.54p | 1.24p |
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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME AND EXPENSE
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| 6 months to 1 April 2010 Unaudited £000's | 6 months to 31 March 2009 Unaudited £000's | Year to 30 Sept 2009 Audited £000's |
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| (Loss) / profit for the period | (247) | 62 | 142 |
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| Other comprehensive income |
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| Cash flow hedges: |
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| (Losses) / gains taken to equity | (3) | 66 | 74 |
| Transferred to profit or loss for the period | (21) | 6 | (60) |
| Tax on cash flow hedges | 8 | (20) | (4) |
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| Actuarial loss on pension scheme | (575) | (72) | (702) |
| Tax on actuarial loss | 161 | 20 | 197 |
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| Other comprehensive (expense) / income net of tax | (430) | - | (495) |
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| Total comprehensive (expense) / income for the period | (677) | 62 | (353) |
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| Attributable to: |
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| - Equity holders of the parent | (677) | 62 | (353) |
CONSOLIDATED BALANCE SHEET
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| As at 1 April 2010 Unaudited £000's | As at 31 March 2009 Unaudited £000's | As at 30 Sept 2009 Audited £000's |
| Non-current assets |
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| Intangible assets | 1,302 | 1,234 | 1,293 |
| Property, plant and equipment | 1,897 | 2,068 | 2,031 |
| Retirement benefits | - | 438 | - |
| Deferred tax assets | 362 | 75 | 135 |
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| 3,561 | 3,815 | 3,459 |
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| Current assets |
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| Inventories | 2,406 | 2,420 | 2,495 |
| Trade and other receivables | 3,004 | 2,953 | 2,822 |
| Cash and cash equivalents | 2 | 491 | 2 |
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| 5,412 | 5,864 | 5,319 |
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| Total assets | 8,973 | 9,679 | 8,778 |
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| Current liabilities |
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| Bank overdraft | (819) | (578) | (93) |
| Bank loans and other borrowings | (407) | (395) | (402) |
| Current tax payable | (40) | - | (40) |
| Trade and other payables | (2,425) | (2,437) | (2,630) |
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| (3,691) | (3,410) | (3,165) |
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| Non-current liabilities |
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| Bank loans and other borrowings | (702) | (1,111) | (906) |
| Provisions | (5) | (5) | (5) |
| Retirement benefits | (702) | - | (135) |
| Deferred tax liabilities | (71) | (218) | (73) |
| Other payables | (26) | (27) | (26) |
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| (1,506) | (1,361) | (1,145) |
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| Total liabilities | (5,197) | (4,771) | (4,310) |
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| Net assets | 3,776 | 4,908 | 4,468 |
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| Equity |
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| Share capital | 1,145 | 1,145 | 1,145 |
| Share premium account | 365 | 365 | 365 |
| Un-issued shares reserve | 176 | 113 | 145 |
| Revaluation reserve | 309 | 310 | 309 |
| Merger reserve | 230 | 230 | 230 |
| Retained earnings | 1,551 | 2,745 | 2,274 |
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| Equity attributable to shareholders of the parent | 3,776 | 4,908 | 4,468 |
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CONSOLIDATED CASH FLOW STATEMENT
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| 6 months to 1 April 2010 Unaudited £000's | 6 months to 31 March 2009 Unaudited £000's | Year to 30 Sept 2009 Audited £000's |
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| (Loss) / profit for the period | (247) | 62 | 142 |
| Finance costs | 310 | 336 | 663 |
| Finance income | (300) | (323) | (645) |
| Income tax (credit) / expense | (60) | 17 | 45 |
| Operating (loss) / profit | (297) | 92 | 205 |
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| Adjustments for: |
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| Depreciation | 169 | 163 | 328 |
| Amortisation of intangible assets | 2 | - | 1 |
| Loss on sale of property, plant and equipment | - | 6 | 6 |
| Derivative financial instruments | - | (14) | (2) |
| Non-cash charge for equity-settled share-based payments | 31 | 32 | 64 |
| Retirement benefits | 27 | 52 | 31 |
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| (68) | 331 | 633 |
| Movements in working capital: |
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| Change in inventories | 89 | (226) | (301) |
| Change in trade and other receivables | (199) | 301 | 379 |
| Change in trade and other payables | (212) | (15) | 160 |
| Net cash from operating activities | (390) | 391 | 871 |
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| Purchase of property, plant and equipment | (35) | (121) | (249) |
| Proceeds from sale of property, plant and equipment | - | 75 | 75 |
| Capitalised development expenditure | (11) | - | (60) |
| Interest received | - | 2 | - |
| Net cash from investing activities | (46) | (44) | (234) |
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| Repayment of bank loans | (146) | (146) | (291) |
| Repayment of obligations under finance leases | (59) | (54) | (112) |
| Interest paid | (39) | (46) | (80) |
| Dividends paid | (46) | (46) | (103) |
| Net cash from financing activities | (290) | (292) | (586) |
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| Net (decrease) / increase in cash and cash equivalents | (726) | 55 | 51 |
| Cash and cash equivalents at start of the period | (91) | (142) | (142) |
| Cash and cash equivalents at end of the period | (817) | (87) | (91) |
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Reconciliation of cash and cash equivalents | 6 months to 1 April 2010 Unaudited £000's | 6 months to 31 March 2009 Unaudited £000's | Year to 30 Sept 2009 Audited £000's |
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| Cash and cash equivalents in current assets | 2 | 491 | 2 |
| Bank overdraft in current liabilities | (819) | (578) | (93) |
| Cash and cash equivalents at end of the period | (817) | (87) | (91) |
LPA GROUP PLC
NOTES
1 - BASIS OF PREPARATION
These interim consolidated financial statements are for the six months ended 1 April 2010. 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 2009. These financial statements have been prepared under the historical cost convention, except for revaluation of financial instruments.
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 2009, except for the adoption of IAS1 "Presentation of Financial Statements" (revised 2007) and IFRS8 "Operating Segments". These accounting policies are based on the recognition and measurement principles of IFRS as adopted by the European Union. 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 2010.
The adoption of IAS1 (revised 2007) does not affect the financial policies of the Group or the Group's profits or losses but does impact presentation of the primary statements.
The adoption of IFRS8 is not expected to change the segments that are disclosed in the financial statements for the year ended 30 September 2010.
2 - 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. Details are as follows:
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| 6 months to 1 April 2010 Unaudited | 6 months to 31 March 2009 Unaudited | Year to 30 Sept 2009 Audited |
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| (Loss) / profit for the period - £000's | (247) | 62 | 142 |
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| Weighted average number of ordinary shares in issue during the period |
11.448m |
11.448m |
11.448m |
| Dilutive effect of share options | 0.000m | 0.007m | 0.015m |
| Number of shares for diluted earnings per share | 11.448m | 11.455m | 11.463m |
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| Basic (loss) / earnings per share | (2.16p) | 0.54p | 1.24p |
| Diluted (loss) / earnings per share | (2.16p) | 0.54p | 1.24p |
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3 - CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
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| 6 months to 1 April 2010 Unaudited £000's | 6 months to 31 March 2009 Unaudited £000's | Year to 30 Sept 2009 Audited £000's |
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| Opening equity | 4,468 | 4,860 | 4,860 |
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| Total comprehensive (expense) / income | (677) | 62 | (353) |
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| Transactions with owners: |
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| Dividends | (46) | (46) | (103) |
| Equity-settled share-based payments | 31 | 32 | 64 |
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| Closing equity | 3,776 | 4,908 | 4,468 |
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4 - ANALYSIS OF NET DEBT
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Bank loan £000's | Finance lease obligations £000's | Cash and cash equivalents £000's |
Net debt £000's |
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| At 1 October 2009 | 938 | 370 | 91 | 1,399 |
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| Cash absorbed | - | - | 521 | 521 |
| Repayment of borrowings | (146) | (59) | 205 | - |
| Other non-cash items | 6 | - | - | 6 |
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| At 1 April 2010 | 798 | 311 | 817 | 1,926 |
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5 - EMPLOYEE BENEFITS - DEFINED BENEFIT SCHEME
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| 6 months to 1 April 2010 Unaudited £000's | 6 months to 31 March 2009 Unaudited £000's | Year to 30 Sept 2009 Audited £000's |
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| Total (expense) income recognised in the income statement | |||
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| Within operating costs: |
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| - current service cost | (41) | (93) | (261) |
| - gain on curtailment | - | - | 156 |
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| (41) | (93) | (105) |
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| Within finance costs and finance income: | |||
| - expected return on scheme assets | 300 | 321 | 645 |
| - interest cost | (265) | (284) | (572) |
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| 35 | 37 | 73 |
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| Within taxation: |
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| - deferred tax | (2) | 4 | (12) |
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| Total recognised in the income statement | (8) | (52) | (44) |
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| Movement in the retirement benefit (liability) / asset |
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| (Deficit) / surplus at beginning of period | (135) | 525 | 525 |
| Included within the income statement | (6) | (56) | (32) |
| Included in the statement of comprehensive income and expense | (575) | (72) | (702) |
| Contributions | 14 | 41 | 74 |
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| (Deficit) / surplus at end of period | (702) | 438 | (135) |
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| Movement in the related deferred tax asset / (liability) | |||
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| Deferred tax asset / (liability) at beginning of period | 38 | (147) | (147) |
| Included within the income statement | (2) | 4 | (12) |
| Included in the statement of comprehensive income and expense | 161 | 20 | 197 |
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| Deferred tax asset / (liability) at end of period | 197 | (123) | 38 |
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6 - INFORMATION
LPA 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 Tudor Works, Debden Road, Saffron Walden, Essex, CB11 4AN. 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 28 June 2010.
The financial information for the year ended 30 September 2009 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 2009 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).