RNS Number:7116U
LPA Group PLC
28 January 2004
NEWS RELEASE
PRELIMINARY ANNOUNCEMENT OF RESULTS
FOR YEAR ENDED 30 SEPTEMBER 2003
LPA Group Plc, the electrical and electronic equipment manufacturer and
distributor, announces a reduced pre-tax loss of #208,000 (2002: #318,000) for
the year ended 30 September 2003.
KEY POINTS
* TURNOVER REDUCED 8.7% TO #12.6m (2002: #13.8m)
* LOSS BEFORE TAX REDUCED 35% TO #208,000 (2002: LOSS #318,000)
* LOSS PER SHARE
BASIC REDUCED 64% TO 1.14p (2002: LOSS 3.16p)
ADJUSTED (before
amortisation of goodwill) REDUCED 87% TO 0.28p (2002: LOSS 2.17p)
* DIVIDENDS FINAL RESUMED AT 0.25p
* GEARING REDUCED TO 82% (2002: 85%)
* PROFITABLE SECOND HALF, BEST START TO A NEW FINANCIAL YEAR SINCE 2000
* MORE STABLE CONDITIONS IN RAIL MARKET, BUT DELAYS STILL FRUSTRATING
PERFORMANCE, GOOD OPPORTUNITIES IN REFURBISHMENT, LONDON UNDERGROUND
AND EXPORT
* NEW GROUP STRUCTURE DELIVERING IMPROVED PERFORMANCE
* LOWER COST BASE AND IMPROVED REVENUE STREAM DELIVERING PROGRESS
* IMPROVED ORDER ENTRY AND INCREASED LEVEL OF TENDERING BEING SUSTAINED
Peter Pollock, Chief Executive, commented
"These results confirm the expectation at the interim stage that progress would
be made in the second half. The Group made operating profits in eight months of
the last calendar year. LPA Niphan is trading profitably after three difficult
years. LPA Excil Electronics is enjoying substantially improved order entry,
which, after a difficult period, should flow through to improved performance
later in the year. LPA Channel continues to progress despite more difficult
trading conditions. LPA Haswell having had a difficult year is enjoying strong
order entry for the first time in two years.
Trading conditions are much improved and the cost reduction implemented a year
ago has delivered progress which should continue this year."
ENQUIRIES
Peter Pollock LPA Group Plc 0788 1626123 or 01799 512800
Christopher Hardie Teather & Greenwood Limited 020 7426 9000
PRELIMINARY ANNOUNCEMENT YEAR ENDED 30 SEPTEMBER 2003
KEY FINANCIAL INFORMATION
FINANCIAL HIGHLIGHTS
For the year ended 30 September 2003
2003 2002
#'000 #'000
TURNOVER 12,574 13,806
OPERATING LOSS (97) (56)
LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (208) (318)
LOSS ON ORDINARY ACTIVITIES AFTER TAXATION (124) (345)
DIVIDENDS 27 27
EARNINGS PER SHARE
Basic (1.14p) (3.16p)
Diluted (1.14p) (3.16p)
Adjusted (before amortisation of goodwill) (0.28p) (2.17p)
DIVIDENDS PER SHARE 0.25p 0.25p
GEARING
Net debt to shareholders' funds 81.7% 84.5%
CHAIRMAN'S STATEMENT
Results
Trading conditions in the first half of the year proved difficult but, as
anticipated in my interim statement, improved in the second half. This trading
improvement combined with the cost reduction exercise ensured that the Group was
profitable in the second half of the year. The second half profit was
insufficient to eliminate the first half loss but reduced it to give a pre-tax
loss of #208,000 for the year (2002: loss of #318,000). The loss per share for
the year was 1.14p compared with 3.16p in 2002.
The current year has started well with sales in the first three months up 19%
and order entry up 5% over the corresponding period last year.
Dividends
Because of the progress made by the Group during the second half of the
financial year, the directors recommend the payment of a final dividend. Subject
to approval by shareholders at the Annual General Meeting of the Company to be
held at 11.00 a.m. on 11 March 2004 at the offices of Teather & Greenwood
Limited, 15 St Botolph Street, London, EC3A 7QR, a final dividend of 0.25p per
share will be paid on 19 March 2004 to Shareholders registered at the close of
business on 27 February 2004.
Board
The Board has invited me to continue as non-executive Chairman for a second
three year term, a duty that I am honoured and delighted to accept. I am pleased
to report that John Goodger has also accepted the Board's invitation to continue
as the senior independent non-executive director for a third three year term.
The directors retiring by rotation and offering themselves for re-election at
the Annual General Meeting are Michael Edmonds and John Goodger. I am pleased to
commend their re-election to the Board.
Authority to allot shares
The Annual General Meeting includes two resolutions relating to the authority of
the directors to allot shares in the Company. The first renews the authority of
the directors to allot shares generally, pursuant to section 80 of the Companies
Act 1985; the second is a special resolution to renew the limited authority of
the directors to allot equity securities for cash without first offering them to
existing shareholders, pursuant to section 95 of the Companies Act 1985. Both
authorities will run through until the next annual general meeting of the
Company. At present the directors have no intention of using such authorities,
but they provide the Company with flexibility should it wish to allot shares in
the future.
Employees
Our people remain the Group's key resource and they are highly valued. I would
be remiss if I didn't acknowledge their contribution to the Group's progress
through such trying times and on behalf of the Board I would like to thank all
of them for their diligence, hard work and commitment which has contributed so
much to the Group's improved position. We pursue an active personal development
and training programme across the Group.
Prospects
The start of the year has been encouraging but a great deal remains to be done.
The management team has introduced a rolling programme of initiatives aimed at
improving Group performance and profitability. Your Board is hopeful of progress
over the year as a whole.
Michael Rusch
Chairman
28 January 2004
CHIEF EXECUTIVE'S REVIEW
Trading results
The start of the financial year was extremely difficult but by the second half
order entry improved which led to a recovery in factory load. Sales in the first
half amounted to #5.9m, while those in the second half-year increased by 12.4%
to #6.7m. The cut back in expenses implemented in the first half together with
the improved sales output meant that the second half of the year has been
profitable, although insufficient to offset the first half loss. A loss before
tax for the year as a whole of #208,000 was suffered compared with a loss in the
previous year of #318,000.
Order entry was up 27% over the previous year. Despite the loss, and the final
deferred consideration payment due on the acquisition of Haswell, cash
generation of #337,000 was achieved through strict control of working capital
and the disposal during the first half of two surplus properties. Gearing fell
3% in the year to 82%.
The Group is now in a significantly more stable position than it was a year ago.
The first quarter of this financial year has been in line with expectation.
Markets
The chaos in Britain's railway industry has been widely reported: quite apart
from the review recently announced by the Secretary of State, in the last twelve
months a significant competitor of the Group was placed in administration. In
addition Alstom Transport, based in Birmingham and historically the Group's
largest customer, announced it is to cease building new trains in the UK. The
telecom market has been difficult and continued security concerns have
contributed to reduced demand for aircraft and airport equipment.
The Group has worked through these and other set backs, has replaced much of the
lost business and growth is now in prospect. There remain weak spots which will
require effort and careful management to overcome but overall the situation is
much more satisfactory.
Looking to the future rail vehicle refurbishment and upgrade opportunities
remain and now that the governance issue at London Underground has been resolved
we are seeing increased activity in that sector. The Group continues to be
successful in overseas rail markets; we have won business in France, for export
to the Far East, and there are further opportunities in the French market itself
and for re-export from France, Belgium and Germany to the UK; we are also making
progress in Australia and the Far East. Whilst the aerospace market remains
fragile the telecom market appears to be recovering where demand is increasing
from a low level. Overall order entry is 5% higher in the first quarter of this
financial year compared with a year ago.
Structure and cost base
As reported last year the cost base was reduced to reflect the lower sustainable
level of Group activity and this required a structural change. The new structure
has been successfully implemented during the year. The new unified sales and
marketing organisation is focussed on markets and promotes all Group products
and capabilities. The sales team is supported by product and technical
expertise. The improved order entry has been sustained and some growth has been
achieved. The new operations team has rationalised production and assembly, and
significant cost savings have been achieved. Resources are now being shared
across the Group and, in particular, progress is being made in quality
assurance, human resources and information technology.
Business units
LPA Niphan Systems returned to profitability during the year. The cost base was
reduced and some assembly work was transferred from LPA Channel Electric. Order
entry was strong, particularly during the first half and although the stream has
slowed there are many projects outstanding and bid activity is high. There are
short-term gaps in the programme, caused by yet further delays in rail and metro
projects, which will need to be managed. The re-focussed sales team is
generating renewed interest in LPA Niphan Systems' products and this should lead
to an improved level of base load.
LPA Channel Electric had a successful year. As previously reported it became
clear during the first quarter that global and pan European competition would
put pressure on margins. This has proved to be the case but the operation's
excellent customer service record has mitigated the situation. The cost
reduction exercise, under which the assembly facility closed, was completed
during the first half. LPA Channel Electric has continued to make significant
progress in the rail vehicle refurbishment market. It has also won its first
order from Network Rail for a new third rail power supply connection system and
has supplied B&Q with a fully earth leakage protected light and power outlet
called 'Readyboard' for use in domestic garages, sheds and similar situations.
LPA Excil Electronics had a frustrating year when a major opportunity was lost
and the poor start to the year persisted. Despite good order entry later in the
year a small loss was incurred. The weak workload has persisted but much
improved order entry and prospects should ensure recovery later in the year. The
cost reduction implemented last year has reduced the break-even point and this
should contribute to progress.
LPA Haswell Engineers had another poor year. The workload remained depressed and
despite a cost reduction and new management a loss was suffered. Since the year
end there has been a breakthrough and the workload has improved.
Capital expenditure
There was no significant capital expenditure during the year. A number of small
projects are under evaluation in the current year.
Cash flow
Net cash flow from operating activities amounted to #393,000. After net capital
disposals of #317,000, deferred consideration of #167,000 and debt service of
#1,027,000 (interest and capital) cash decreased by #484,000. Overall net debt
fell in the year by #241,000 and at 30 September 2003 gearing was 82% (2002:
85%).
Design and development
The Group's design and development activity has focussed on new transportation
market opportunities, updating industrial products and cost reduction.
Prospects
Sustained order entry will be key in cementing the Group's progress during the
year. The markets in which the Group operates are large but have been highly
volatile. However whilst some investment decisions are being delayed, muting
near term performance, the market fundamentals are right. There are plenty of
prospects and if the investment decisions are made in a timely manner the Group
is well positioned to take advantage of them.
Peter Pollock
Chief Executive
28 January 2004
LPA GROUP PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the year ended 30 September 2003
2003 2002
# '000 # '000
Turnover: continuing operations 12,574 13,806
Cost of sales (9,181) (10,273)
Gross profit 3,393 3,533
Net operating expenses (3,490) (3,589)
Operating loss: continuing operations (97) (56)
Profit on sale of tangible fixed assets 106 -
Profit / (loss) on ordinary activities before interest 9 (56)
Interest payable and similar charges (217) (262)
Loss on ordinary activities before taxation (208) (318)
Tax on loss on ordinary activities 84 (27)
Loss on ordinary activities after taxation (124) (345)
Dividends on equity shares (27) (27)
Transfer from reserves (151) (372)
Earnings per share
Basic (1.14p) (3.16p)
Fully diluted (1.14p) (3.16p)
Adjusted (before amortisation of goodwill) (0.28p) (2.17p)
LPA GROUP PLC
CONSOLIDATED BALANCE SHEET
At 30 September 2003
2003 2002
#'000 #'000
Fixed assets
Intangible assets 1,513 1,606
Tangible assets 2,651 3,320
4,164 4,926
Current assets
Stocks 2,647 2,350
Debtors 2,895 2,276
Cash at bank and in hand 3 5
5,545 4,631
Creditors: Amounts falling due within one year (3,707) (2,611)
Net current assets 1,838 2,020
Total assets less current liabilities 6,002 6,946
Creditors: Amounts falling due after more than one year (2,011) (2,713)
Provisions for liabilities and charges (13) (104)
Net assets 3,978 4,129
Capital and reserves
Called up share capital 1,090 1,090
Share premium account 254 254
Revaluation reserve 316 317
Merger reserve 230 230
Profit and loss account 2,088 2,238
Equity shareholders' funds 3,978 4,129
LPA GROUP PLC
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 30 September 2003
2003 2002
#'000 #'000
Net cash inflow from operating activities 393 1,596
Returns on investments and servicing of finance
Interest paid (174) (204)
Interest element of hire purchase and finance lease payments (32) (47)
(206) (251)
Taxation - -
Capital expenditure
Payments to acquire tangible fixed assets (72) (338)
Receipt from sale and leaseback arrangement 85 -
Receipts from disposal of properties 298 -
Receipts from sale of other fixed assets 6 98
317 (240)
Acquisitions
Purchase of subsidiary undertakings (167) (14)
Equity dividends paid - (81)
Net cash flow before financing 337 1,010
Financing
Repayment of loans (661) (350)
Capital element of hire purchase and finance lease payments (160) (277)
(821) (627)
(Decrease) / increase in cash (484) 383
LPA GROUP PLC
NOTES
1 - EARNINGS PER SHARE
The calculation of earnings per share is based upon the loss of #124,000 (2002:
#345,000) and the weighted average number of ordinary shares in issue during the
year of 10,903,229 (2002: 10,903,229). Due to losses in the current year no
dilution arises and diluted earnings per share is therefore shown as the same as
basic earnings per share. Adjusted earnings per share, which is disclosed to
reflect the underlying performance of the Company, has been calculated on a loss
of #31,000 (2002: loss of #237,000) being the loss for the year before the
amortisation of goodwill. Details are as follows:
2003 2002
Basic Diluted Basic Diluted
pence pence pence pence
per per per per
#'000 share share #'000 share share
Basic earnings (124) (1.14) (1.14) (345) (3.16) (3.16)
Amortisation of goodwill 93 0.86 0.86 108 0.99 0.99
Adjusted earnings (31) (0.28) (0.28) (237) (2.17) (2.17)
2 - ACQUISITION COSTS
Current year acquisition cash flows comprise deferred consideration of #167,000
(2002: #14,000).
3 - INFORMATION
The preceding information does not constitute the Company's statutory accounts
for the years ended 30 September 2003 or 30 September 2002 but is derived from
those accounts. The 2003 accounts will be posted to shareholders on 16 February
2004 and will be available from the Company Secretary, LPA Group Plc, Debden
Road, Saffron Walden, Essex, CB11 4AN, shortly thereafter. Statutory accounts
for 2002 have been delivered to the Registrar of Companies, and those for 2003
will be delivered following the Annual General Meeting. The auditors have
reported on these accounts and their reports were unqualified and did not
contain statements under section 237(2) or (3) of the Companies Act 1985.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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