LPA GROUP PLC LPA GROUP PLC
Preliminary results for the year ended 30 September 2014
Sales down 4.5% to £16.84m (2013: £17.63m)
Operating profit before exceptional items £636,000 (2013: £609,000)
Exceptional gain on property disposal £ nil (2013: £2.06m)
Exceptional reorganisation costs £319,000 (2013: £809,000)
Profit before tax £295,000 (2013 restated: £1.72m*)
Basic earnings per share 2.50p (2013 restated: 15.05p*)
Final dividend increased by 13.3% to 0.85p (2013: 0.75p), total for the year 1.55p (2013: 1.35p)
Gearing 21.1% (2013: 8.5%)
Order entry up 35% to £18.55m (2013: £13.72m)
26% increase in order book to £8.18m (2013: £6.47m)
Order entry in the first quarter of the current year strong at £7.0m. This includes the first £2.3m out of the £3.3m of contracts announced in October together with a £1.3m LED lighting refurbishment order received in December. Separately in excess of £12m of contracts for which we have been selected remain to be booked
Ethernet backbone technology continuing to excite great interest with initial orders received
Transport+ continuing to win orders possibly confirming end to hiatus caused by delayed franchising
Group beginning to benefit from increasingly buoyant UK rail sector and export markets
Shire Hill refurbishment and Saffron Walden move complete; move of Clacton activities planned for completion by mid-year; extension to LED lighting facility planned to commence in late summer
* restated - reported profit before tax and basic earnings per share were reduced as a consequence of adopting IAS19 which required the restatement of the pension scheme return included in the income statement.
Peter Pollock, Chief Executive, comments:
Peter Pollock, Chief Executive Tel: 07881 626123 or 01799 512844
Steve Brett, Finance Director Tel: 07881 626127 or 01799 512860
The Group achieved some remarkable milestones in the year ended 30 September 2014. The refurbishment of the renamed Light & Power House, acquired in 2012, was completed and our Saffron Walden activities were relocated to the new facility from Tudor Works after some forty years in residence. Both events were achieved remarkably smoothly. The balance of the proceeds of the sale of Tudor Works was received, which helped to fund the refurbishment. In September 2014 we initiated an employee consultation in connection with the possible closure of our Clacton facility, which has subsequently been confirmed: we will commence the transfer of activities from Clacton to Light & Power House this month with closure expected in May.
As I have previously advised, the year to 30 September 2014 started slowly and we spent the rest of it playing catch up. Several false dawns in the recovery of short term order entry, caused by the hiatus in the rail franchising process, gave us an expectation of stronger trading but these failed to materialise and as a result sales fell £0.79m to £16.84m (2013: £17.63m) although operating profit before exceptional items increased slightly to £636,000 (2013: £609,000). The year included £319,000 of exceptional reorganisation costs in contrast to the £1.17m net exceptional gain in 2013 (which included the profit on disposal of Tudor Works) and as a consequence profit before tax fell from £1.72m last year to £295,000 this. Basic earnings per share was 2.50p compared with the property-inflated 15.05p last time. Gearing amounted to 21.1% compared with 8.5% last year. Order entry grew 35% during the year to £18.55m (2013: £13.72m) as did the order book by 26% to £8.18m (2013: £6.47m).
The interim dividend was increased by 0.10p to 0.70p (2013: 0.60p). Given our confidence in the medium and longer term future and subject to shareholder approval at the forthcoming annual general meeting - to be held this year at the Group's new offices at Light & Power House, Shire Hill, Saffron Walden Essex, CB11 3AQ at noon on 26 March 2015 - your Board proposes to increase the final dividend by 0.10p to 0.85p (2013: 0.75p) which will be paid on 2 April 2015 to shareholders registered at the close of business on 13 March 2015.
I am delighted that Len Porter, previously Chief Executive of the Rail Safety and Standards Board, has joined the Board as a Non-Executive Director: a resolution confirming his appointment will be put to the annual general meeting. The Group Executive - which comprises the Group Chief Executive, the Group Finance Director and the Managing Directors of the four principal operations - has remained unchanged throughout the year.
Our people remain the backbone of our organisation. We are delighted that one hundred percent of our Saffron Walden employees relocated to our new facility but it is with regret that we recognise that it will not be possible for most of our Clacton based employees to transfer to Saffron Walden. Staff turnover across the Group is remarkably low and we are pleased that retirements are now being more closely matched by the appointment of apprentices and trainees.
The current financial year has again started very quietly. The Group has been caught in a trough between the completion of several major projects and the commencement of several new ones. As a result, output in the first quarter, particularly December, has been very low, although the factory load picks up from February and we expect to recover during the second quarter and to progress strongly in the second half of the financial year.
First quarter order entry exceeded £7.0m, including the first £2.3m out of the £3.3m of Middle East and Australian rail projects announced in October, together with a £1.3m order for the supply of LED lighting on a major upgrade of existing UK rolling stock (a possible harbinger of the end of the hiatus in UK orders caused by delayed re- franchising). These figures do not include more than £12m of contracts for which the Group has been selected but which remain to be booked.
The Group's prospects have never been stronger, with UK rail up to 2020 (and beyond with HS2) and export markets both very exciting. We have invested to rationalise and improve our electro-mechanical activities, we plan to start investment this year to modernise and expand our LED lighting manufacturing facility and our engineered product distribution activity is poised for growth. As the UK rolling stock refurbishment programme begins to gather pace, the prospects for our after-market support activity (LPA Transport+) are improving strongly. We look forward to our medium and longer term future with increasing confidence.
Chairman
22 January 2015
Chief Executive's Review Trading resultsThe year to 30 September 2014 was like its predecessor, satisfying, frustrating and challenging.
We were delighted to complete the refurbishment and transfer to our new Saffron Walden facility, Light & Power House, so smoothly and on time. We were thus able to vacate Tudor Works and receive the balance of the consideration before the year end: we retain an interest in the future success of the housing development. We were also delighted to successfully complete export projects in Australia and Taiwan. We were delighted to be selected for a number of rail projects at home and for export, notably in the Middle East and Australia. We were also selected for aircraft ground power supply equipment at Heathrow, Gatwick (for the first time), New Zealand and Mauritius. Since the year end we have been awarded a major LED lighting upgrade project for a rail vehicle fleet in the UK.
We have continued to be affected by the hiatus in short term UK rail orders caused by the delay in the rail re- franchising process, though recent enquiries, particularly for retrofitted ethernet backbones and the LED lighting upgrade mentioned above, are indicators that this may finally be easing. The delays did though affect short term order entry which held back progress during the year. Rail lighting was particularly affected by the completion of major contracts and the start of new contracts.
Reflecting the impact of the hiatus, sales during the year fell 4.5% to £16.84m (2013: £17.63m), but operating profit before exceptional items increased by 4.4% to £636,000 (2013: £609,000). Order entry and order book increased by 35% (from £13.72m to £18.55m) and 26% (from £6.47m to £8.18m) respectively.
Although we have yet to win any significant orders, Crossrail remains an exciting opportunity, which we are continuing to pursue assiduously. We are working towards agreeing the framework agreement for the Inter City Express programme for which we have been selected and which we have already supplied lighting and inter car equipment for the first three train sets. Completing the Framework Agreement will allow us to receive the substantial orders covering production of the rest of the programme amounting to several million pounds.
The UK rail transport market is the subject of major investment including the Crossrail project, Network Rail's Control Period 5, a large volume of orders for new rolling stock, refurbishment of rolling stock planned and longer term High Speed 2. There are similarly high levels of investment in our selected export and re-export rail markets. There remains a high level of interest in our products in Taiwan and Australia, and also in Japan for re-export. We are also focussing on the Gulf States, where we have identified a strong interest in our products, which have applications both for rail vehicles and infrastructure.
Our commitment to high quality and reliability continues to distinguish us from the cheaper competition. Whilst some customers still buy on the basis of lowest initial cost, increasingly whole life cost is being recognised as the most effective method to evaluate tenders and this plays to our strengths.
The worldwide air transportation market continues to grow with substantial investment in new airports and aircraft: we supply both. The advent of new larger passenger aircraft is benefitting our ground power support products.
Our design and development effort last year concentrated on the application engineering of existing electro- mechanical and LED lighting products to satisfy large project requirements. We also completed the development of a number of high quality standard lighting products which have been brought to market and figure widely at our new facility at Light & Power House.
LPA Group plc issued this content on 2016-01-22 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 2016-01-22 17:11:06 UTC
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