REG - LPA Group PLC - Final Results
28/01/2022 07:00
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RNS Number : 9090Z LPA Group PLC 28 January 2022
LPA GROUP PLC
LPA Group plc ("LPA" or the "Group"), the high reliability LED lighting,
electronic and electro-mechanical system designer and manufacturer, announces
its Preliminary Results for the year ended 30 September 2021.
Preliminary Results key points:
Financial
· Order Entry increased to £23.2m (2020: £21.9m)
· Order Book increased 21.3% to a record level at £27.3m (2020:
£22.5m)
· Revenue £18.3m (2020: £20.7m)
· Underlying operating loss £0.27m (2020: profit £0.78m)*
· Loss before tax amounted to £0.39m (2020: profit £0.55m)
· Basic loss per share amounted to 0.27p (2020: earnings 4.82p)
· No dividends declared or paid in 2021 or 2020
· Gearing reduced to 11.6% (2020: 21.1%)
(*) Operating loss/profit before Share Based Payments and Exceptional Costs
In the year to 30 September 2021, we announced several significant contract
awards and business developments, which are summarised below:
· Two awards with a combined value over £4m from Siemens Austria for
the design and supply of interior lighting, and door status lights for the
London Underground Deep Tube upgrade programme. These initial awards are for
94 newly designed train sets for the Piccadilly Line, with an option for a
further 216 sets for the other London Underground deep tube lines.
· An award to supply seat automation, control, diagnostics, lighting
and power electronics for an initial 50 double decker train sets for the
Avelia Horizon high speed TGV trains, under construction with Alstom France
for the French rail network SNCF. This is a significant award incorporating
the Group's new innovative electronics technology within train seats. The
contract includes an option for a further 50 trainsets.
· Two contract awards for the supply of interior lighting and,
separately, inter-car power connection systems for the new Hitachi AT300
trains. These are to be operated by the West Coast Partnership on the UK's
prestigious West Coast Mainline. The combined award value is £1.9m.
· An award for the supply of lighting systems for 165 new build
carriages on the UK's East Midlands Railway Aurora Intercity fleet. These
new trains sets are being built by Hitachi in the UK.
· A 10 year framework agreement was signed by the Group to take over
the business for manufacture and supply of bespoke inter-car connection
systems. This provides access to an additional 3,000 passenger carriages for
our UK Rail General routine business. This fits strategically within our
existing operations and sees a competitor exit this sector.
· Significant expansion of our distribution partner network in support
of a renewed focus on the Group's aviation ground power products.
Robert B Horvath - Chairman commented:
"As reported previously, our 2021 trading performance was severely impacted by
certain customers rescheduling their requirement delivery of the long term
projects they awarded us. The impact on our second half performance was to
defer revenues of c£8m into future years. The effect of short notice
deferrals, particularly in the run up to our year end, impacted our 2021
results and we are reporting an operating loss. Our ability to flex the cost
base and still retain the necessary skills and people ( even with some support
from the UK Coronavirus Job Retention Scheme) became severely tested as we
have a record order book still to deliver.
Notwithstanding our limited face to face interaction with customers around the
world we have announced six major contact awards during the year, combined
with a 10-year framework agreement, expansion of our distribution partners and
the successful launch of our Plane Power range of ground power connectors for
the aviation industry. Our order entry in the financial year remained robust
and I am pleased to report further awards and an order book increasing to
£32m as at 31 December 2021.
The 2021 year has been transitionary for the Board and we are also looking to
recruit further at senior management level. We have rotated the Board
Committee Chairs to better suit the skills of our Independent Directors and to
have a balanced and experienced Board to drive the Group forward. The
Executive Directors have relaunched the Group strategic documents following a
detailed examination and dissemination of our Vision, Mission & Objectives
statement alongside LPA Group values; they have worked hard to address our
business culture and to develop skills and competencies that will be fit for
the future.
After the last 24 months it is right that cash retention remains a constant
focus. Our gearing reduced to 11.6% through net debt reduction, and our net
asset value increased substantially following the actuarial valuation of our
(closed) defined benefit pension scheme. The trustees (of which I was
appointed Chairman from 9 August 2021) have sought, with guidance, to maintain
this position and de-risk future volatility in the assets of the scheme. We
are doing this by rebalancing the investment portfolio, following a busy and
successful year of change, without any impact on our members' benefits.
The start of our 2022 financial year has continued to provide challenges as
the project delays wash through and supply chain issues continue. We
anticipate a loss to be reported in the first half of the 2022 reporting year
but we are confident, supported by our record order book, in our second half
recovery and our overall strategy."
Enquires: www.lpa-group.com (http://www.lpa-group.com) Tel:
LPA Group Plc
Robert B Horvath Chairman 01799 512844
Paul Curtis CEO 01799 512858
Chris Buckenham CFO 01799 512859
Cairn Financial Advisers (Nominated Adviser) 020 7213 0880
James Caithie / Liam Murray
Ludovico Lazzaretti
finnCap (Broker) 020 7220 0500
Ed Frisby / Tim Harper (Corporate Finance)
Tim Redfern / Charlotte Sutcliffe (ECM)
The Directors of the Company take responsibility for this announcement.
Regulatory Information
The information contained within this announcement is deemed to constitute
inside information as stipulated under the Market Abuse Regulations (EU No.
596/2014) which is part of UK law by virtue of the European Union (Withdrawal)
Act 2018. Upon the publication of this announcement, this inside information
is now considered to be in the public domain.
Caution regarding forward looking statements
Certain statements in this announcement, are, or may be deemed to be, forward
looking statements. Forward looking statements are identified 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 reflect the
Directors' current beliefs and assumptions and are based on information
currently available to the Directors.
Chairman's Statement
Overview
We have had a busy period since I took over as Chairman in August. We have
worked hard on operational matters, which I will touch on later, whilst having
a deeper look at our Strategic plan for the next 5 years. The continuing trend
of customer delay in our project-based work has put strain on our ability to
fully recover our overhead in what are our first-class manufacturing
facilities. We have created a strategic road map to rebalance our business to
become less dependent on the timing of long-term project based work,
recognising that we have the highest order book we have ever had yet spread
over 3 financial years.
The Executive team have worked hard on the strategic map, a new business plan
for 2022 and a refresh of our vision and mission. We have relooked at our
corporate values statement and begun the process of realigning our processes
and resources in line with our plans. We are looking actively at the aftercare
market and for business opportunities that can be injected into our
facilities. We have had some success in 2021 when we acquired a revenue source
from a competitor for whom rail is not part of their strategy moving forward.
We will look for more such opportunity.
As a market leading designer and manufacturer of high reliability electronic
and electro-mechanical systems we pride ourselves on our capabilities and our
facilities, which have remained open throughout and we have retained most of
our key staff to operate those facilities. The incidence of Covid-19 amidst
our staff has been low but we continue to have a strong welfare interest in
our workplace to ensure that staff are protected as far as can be possible
whilst at work. We will continue to follow Government guidelines closely.
Our customers and suppliers have suffered and continue to suffer disruption as
they look to their own business interests. We have seen evidence of destocking
by some of our customers, assumedly to preserve cash, while nearly all are
reporting some form of broken supply chain issue and accordingly delay in
their projects. Our own supply chain has been strained and we have instances
of being forced to redesign product to get around a supply chain problem,
but in general we remain resilient.
We have a great team, good experience of our industries and we are led by
competent Executive Directors. Our customer and supplier relationship
programmes have served us well to meet the challenges and we anticipate that
our order book will grow still further over the coming months. Orders entered
during the year, amounted to £23.2m (2020: £21.9m), and the order book at
the end of the year was 21% higher at £27.3m than it was at the equivalent
time last year (2020: £22.5m).
Operationally it has been a tough year as we had budgeted for success built on
our orderbook only to find that 3 major long-term projects were put on hold in
the second half of the year leaving us little or no manoeuvrability to replace
the workflow. The projects are beginning to get going and we hope to see good
call off during the second half of our new financial year.
Shareholders and Investors
The Board ensures it is always available to its key shareholders and works
closely with its Brokers and advisers to ensure regular and open dialogue.
My predecessor, who was also Chief Executive for over 20 years, had strong
ties to a number of our shareholders that are the original family members who
founded the Plc Group. With his departure we as a Board are creating a plan
for reaching out to all our shareholders. We want to communicate our long-term
plans to deliver shareholder value in line with our vision and mission and our
continuing commitment to our reputation. Importantly, we have stakeholders, in
the wider sense, all over the world and we have struggled in the last 18
months to see them. The Group is in the business of long-term contracts and
projects that we export widely and this needs to be reflected in our
stakeholder relationships which must be proactive, long term, visible and
embedded into our corporate culture. Our staff need to be able to travel and
meet our customers first hand, as much of what we do is solutions based and
flows from these interactions.
Dividends
No dividends were declared in 2020 and no interim or final dividends have been
declared in 2021. The Board believes in a progressive dividend policy and
will keep the policy under review, however, given the ongoing economic and
market challenges, we believe it remains appropriate to defer any resumption
of the policy at this time.
Board and Management
Board members' biographies and relevant experience are published on the
Group's website www.lpa-group.com.
Following a number of years of succession planning and board retirements, the
final stage of this completed in the year when Peter Pollock retired ahead of
his 75(th) birthday from the position of Chairman. Peter held the role as
Chief Executive for 21 years ahead of his move to Executive Chairman in
2018. We remain grateful to Peter for his long service and commitment to the
Group.
The Executive Team of Paul Curtis (CEO) and Chris Buckenham (CFO) remained
unchanged through the year. Andrew Jenner was appointed to the Board on 1
September 2021, succeeding Len Porter as Senior Independent Director. Len
Porter retired on 31 December 2021 at the end of his term and I would also
like to thank him for his commitment to LPA over his tenure. Gordon Wakeford
served through the year as Independent Director.
I was appointed as Chair elect on 1 February 2021, assuming the position of
Chairman on 9 August 2021. I serve on both Board Committees alongside Andrew
and Gordon. Effective 1 September 2021, Andrew now chairs the Audit
Committee and Gordon the Remuneration Committee.
Our trading activities continue to be managed independently through local
Executive Teams, who hold local Executive meetings to govern the sites. The
principals at each site, together with the CEO and CFO regularly hold
governance meetings as the Group's Executive.
Employees
Our people are our most important asset and investment in our staff. Their
skills alone are not enough without a commitment to the style and corporate
values that the Board are committed to promoting.
The impact we experienced through Covid-19 on the business and on the general
health, and wellbeing of our employees personally, cannot be underestimated.
We have invested in external support to assess the impact on the mental health
of those of our employees who have been working at home. Generally, people
issues and managing our employee numbers and the cost base of our business
during the pandemic has been particularly difficult when our customers have
slowed down projects that we had planned to deliver. We pride ourselves on
our engineering skills and our factory operations and we are committed to
keeping them intact to fulfil our record order book. We do maintain
flexibility through use of agency and temporary contracts, but we have no
zero-hour contracts.
I should like to thank all our employees, past and present, for their hard
work and diligence during another challenging year.
Outlook
The work in this last year for the Executive team, notwithstanding all the
additional work that a new Board brings to scrutiny of long-term planning,
should not be underestimated. The Executive team have a strong order book to
work with, a solid balance sheet, tightly managed cash flow and a plan. The
Company has come through this difficult period and whilst we anticipate a
tough first half, we can foresee a bright future built on our capabilities and
great customer relationships.
Robert B Horvath
Chairman
Business Model and Strategy
The Group is a quoted Small and Medium-sized Enterprise (SME) listed in the
Electronic and Electrical section of the Alternative Investment Market (AIM)
of the London Stock Exchange.
LPA is a market leading designer, manufacturer and supplier of high
reliability, LED based lighting, electronic systems, electro-mechanical
systems and a distributor of engineered components supplying markets operating
within high dependency, hostile and benign environments which focuses on the
market segments of rail, rail infrastructure, aviation, airport infrastructure
and defence. These are viewed as stable / growth markets both in the UK and
globally. All Group activities serve the same markets (to a greater or
lesser extent), have a mutual dependence on transportation (which accounts for
more than two thirds of Group turnover), share resource and frequently work on
the same projects.
The Group has a reputation for innovation, providing cost effective solutions
to customers' problems, in both benign and hostile environments, which aim to
improve reliability and reduce maintenance and life cycle costs. Three
distinct sites across the UK are operated, namely:
LPA operations Market segment Products, solutions, and technologies
LPA Connection Systems Electro-mechanical systems · Auxiliary battery power systems
Light & Power House · Control panels & boxes
Shire Hill A designer and manufacturer of connection systems for the rail, aircraft · Enclosures, fabrications, form & weld
ground support and infrastructure markets.
Saffron Walden
· Laser cutting
CB11 3AQ, UK
· Rail, aircraft & industrial connectors
Tel: +44 (0)1799 512800 · Shore supply systems
· Transport turnkey services
Email: enquiries@lpa-connect.com
LPA Channel Electric Engineered component distribution · Circuit breakers
· Connectors
Bath Road High value, high level service distributor and added value solutions provider · Fans & motors
to the rail and aerospace & defence markets.
Thatcham · Relays & contactors
Berkshire · Switches
RG18 3ST, UK · USB charging
Tel: +44 (0)1635 864866
Email: enquiries@lpa-channel.com
LPA Lighting Systems LED lighting and electronic systems · Electronic control systems
LPA House · Electronic monitoring systems
Ripley Drive A designer and manufacturer of LED lighting and electronic systems which serve · Emergency lighting systems
the rail, infrastructure, and other industrial markets.
Normanton · Fluorescent and dichroic lighting systems
West Yorkshire · Inverters
WF6 1QT, UK · LED lighting systems
Tel: +44 (0)1924 224100 · Power supply units
Email: enquiries@lpa-light.com
Group revenues are derived from both large value projects and smaller value
routine orders with the route to market a combination of direct and indirect
for most products. Agents and distributors may be used, particularly in
overseas markets, although larger projects continue to require direct contact
in most cases.
A wide range of leading organisations form our customer base, including:
Alstom, Avanti, BAA, BAE Systems, CAF, Compin, CRRC, Downer EDI, First Group,
Grammer, Heathrow Airport, Hitachi, ITW GSE, Kinki Sharyo, Knorr Bremse,
Leonardo, Omer, Shanghai Pudong Airport, Siemens, SNCF, Stadler, Spirit
Aerospace, Taiwan Rolling Stock Company, Transport for London, Unipart Rail
and Wabtec.
It is our intention to strengthen the Group's position within the global
marketplace by growing our customer base, alongside the addition of new
products and the undertaking of selected strategic acquisitions. This is
underpinned by our Vision, Mission and Objectives as detailed below.
Vision, Mission & Objectives (VMO)
Vision
To be a market leading electronic / electro-mechanical engineering Group,
supplying high quality components and systems to customers in safety critical
and challenging markets.
Mission
· Provide sustainable growth and returns to shareholders.
· Grow organically and by acquisition.
· Be our customers' first choice for products and services.
· Be an ethical and responsible employer.
Objectives
· Promote and build on the history and brand of LPA.
· Ensure all companies within the Group deliver 'best in class'
products and services.
· Focus on reducing dependency on transportation market.
· Continuous innovation and product development.
· Improved sales channels for export.
· Targeted acquisitions to bring growth, technology, or access to
markets.
· Work together across the Group and maximise opportunities.
· Exploit Group capability and technology to create new products and
service new markets.
· Be an employer of choice.
Values and Culture
Investment in our people is paramount to our success and we have created clear
communication and development strategies to enhance skills and ensure that we
all understand and align to Group values, culture and best practice. This is
supported by the Board and Executive teams and demonstrated by their
visibility and accessibility across the Group.
We have reviewed our core values during the year to provide enhanced clarity
to all our stakeholders. These are set out below and published on our
website www.lpa-group.com (http://www.lpa-group.com) .
LPA Core Values
·
Leadership
- you do not need to be in a position of power to lead in what you do.
·
Passion -
love what you do, use it to drive both yourself and the business forward.
·
Accountability
-whatever you do, own it and do it well.
· Continuous Product
Improvement
- staying ahead of the competition.
· Personal
Growth
- always seek to learn and improve.
·
Diversity
- everyone deserves a chance and a voice.
·
Fun
- yes, it is work, but it does not mean we cannot enjoy it!
·
Innovation -
technology is everything to us, look forward and push the boundaries.
·
Integrity
- honesty and respect are key to who we are.
·
Teamwork
- work with your colleagues not against them.
Chief Executive Officer's Review
Trading Results
A slower than anticipated rebound to major projects within our customer base
resulted in revenue for the year at £18.3m (2020: £20.7m) with an underlying
operating loss of £0.27m (2020: profit £0.78m). Order entry slowed in the
second half of the 2021 year under review but it was still an increase of 32%
over H2 2020 at £9.9m (2020: £7.5m). At the end of the financial year we
generated £23.2m, (2020: £21.9m) of new business opportunity (order entry),
an overall increase on the prior year of 5.9% notwithstanding the impact of a
full year of our sales staff trying to generate new work during Covid-19.
2021 Summary
· Order book increased 21.3% at £27.3m (2020: £22.5m);
· Improved order entry at £23.2m (2020: £21.9m);
· Revenue at £18.3m (2020: £20.7m);
· Underlying Operating Loss of £0.27m (2020: Profit £0.78m); and
· Net cash inflow from operating activities £1.2m (2020: £0.8m).
Added Value (a Group KPI) for the year was ahead of expectations at 50.5%
(2020: 48.6%). Our drive to automate and gain efficiencies across all areas
of the business continued throughout the year and was supported by investment
in further capital equipment. The workforce was realigned and reduced
overall by c.11%, partially to address project delays from the market but also
reflecting the new levels of efficiency within operations. To compensate for
the delayed larger projects we sought and carried out more routine and adhoc
work, which generally attracts higher return, enhancing our Added Value.
Markets
Aviation (aircraft) build programmes were maintained for the majority of our
2021 year but at the lower levels we had experienced in the second half of the
prior year. However, some confidence has returned, and current schedules are
showing increasing volumes through to the end of 2022 and beyond. The
Group's Aviation new build work is predominantly on the A220 and A350
programmes, both of which have strong order books to deliver over the coming
years.
Aviation (infrastructure) has seen excellent progress in the year and we
welcome enthusiasm from customers in relation to the quality and performance
of our new Plane Power products. This, combined with substantial growth in the
number of distribution partners, has led to increased levels of business
beginning to be realised and confirms the strategy being undertaken for this
segment of our business. We have targeted the coming year for further product
launches within the range and this, combined with further growth and
management of our distribution network, will help transition this segment into
a more visible and resourced part of the Group.
The Rail industry is generally blighted by project delays, and this
contributed to the year finishing considerably below revenue expectations.
It has however been a more successful year for orders, with very few being
lost, and several key and substantial programmes being won throughout the
period. This success further strengthens both our technical capability and
our worldwide reputation and is an area we will continue to build on over the
coming years.
Operational review
Our 2021 financial year was a time of focusing on what we could control whilst
managing the situations we could not. Throughout the period both the Rail
and Aviation sectors experienced substantial disruption to programmes and
struggled to rebound as quickly as other market sectors across the globe.
Although these delays have impacted our results, the mass movement of people
is still seen as a key requirement of any modern society and, as such, the
transportation market remains a key sector for us.
It is, however recognised that dependency on the rail sector is a principal
risk and with that delays in major transportation projects are a factor.
This is an area we are committed to addressing as we move forward. The
development of our standard products, sold through a managed worldwide
network, is a key development for our electro-mechanical business and will
create a separate business model to work alongside that of the project model
that exists today. The Plane Power range is the first to undergo this
transformation and will be the paradigm as we move forward in the development
of both existing and new product ranges. Electro-mechanical represented 42%
of Group revenues in the year (2020: 45%).
Engineered component distribution activity remained flat following a slowdown
in H2 2020, with revenues contributing 19% to Group revenue (2020: 21%), a
decrease of £1.0m. We witnessed delays to projects across the wider market
and this was reflected in a reduced level of general business and stock levels
across our customer base. Much work, however, was then undertaken on
widening our product offering and we signed a number of new franchises in the
period. These additional franchises have been brought on with the view of
increasing our product offering to existing markets and the opening and
developing of new markets outside of our traditional sectors. It is
envisaged that, as the Rail and Aviation markets bounce back over the coming
year, the Company will continue to push new products and market sectors to
further drive growth and reduce some of the dependency on historic market
segments and products.
Our Lighting and Electronics business, which contributed 39% of Group revenues
(2020: 34%), continues to grow and strengthen its position in the worldwide
marketplace. The year enjoyed, not only prestigious contract wins for our
lighting technologies, but also substantial contracts for the design and
manufacture of electronic control systems used in other areas within a train,
a new area for us. These new contract wins are testament to the electronic
and software design skills that now reside within the company and is an area
we will look to grow further over the coming years. As we continue to
increase our global presence, we will focus on leveraging these skills and
resources across the Group to drive our product offering and portfolio
potential.
With Brexit now complete and a plethora of issues caused by Covid-19, it seems
that in-country engineering and supply has become of interest to many
companies within the UK marketplace. Our facilities have benefited from much
investment over the years and are well suited to this development. We are
therefore looking to resource accordingly to ensure we capitalise on
opportunities that may develop in both the immediate and the longer term.
Outlook
Although some improvement has been seen, and clarity on projects and schedules
is improving, it is still envisaged that the coming year will be one of
recovery and enhanced investment in our people and systems. That said, the
renewed focus on strategic development at both Group and site level -
alongside the security of a record orderbook, excellent technology, invested
capability and a respected name in our market segments - means that we are
confident in our vision for the Group.
Paul Curtis
Chief Executive Officer
Financial Review
Set out are the key drivers related to the business performance in the year
and position at 30 September 2021, together with explanation of the financial
Key Performance Indicators as summarised overleaf.
Trading Performance
Macro-economic factors
Covid-19 has continued to dominate the world through the financial year where
supply chains have contracted, stocks depleted and reigniting these in unison
worldwide has proven to be challenging for economies. The results have
delayed supplies and reduced the availability of labour and skills, combined
with the effects of Brexit. Our customer projects, in particular rail, are
complex and dependant on a significant number of components to achieve the
ultimate build. The aerospace and defence sector continued to be impacted
with reduced flights and country lockdowns affecting confidence.
The 2021 financial year has seen c£8m of expected revenues deferred into FY22
and beyond with sequential knock on. This resulted in operating losses
through H2 2021 with continued delays and short term visibility from
customers. These are levels of disruption that could not have been
anticipated as we entered the year and remain unprecedented. Short notice
delays towards year end provided limited ability to flex the cost base, whilst
a focus to retain skills and capabilities to deliver the increasing order book
and future growth aspirations resulted in higher costs. The rail market slowed
more gradually than others as we entered the first phase of Covid-19 in H2
2020 and is set to recover behind the curve seen by other markets. This has
positively impacted our order book, which with continued strong intake through
the year has reached record levels, despite challenges for our business teams
in accessing customers and opportunities. The order book and activity levels
underpin confidence for the medium term.
Rail projects continue to be awarded, with long gestation periods and a
continued demand for greener travel and enhanced customer experience driving
future demand. Aviation (infrastructure) activity continued at modest levels
through the year, new airport builds globally driving demand alongside the
gradual introduction of a new ground power connector range stimulating
activity. Electronic and lighting systems activity matched that of 2020 but
reported down on expectations through rail project delays.
Staff turnover remained higher than historical levels, in part attributable to
retirements, and in part through a desire for change, with employees assessing
their personal outlooks considering the impacts of Covid-19. Brexit
introduced a more fluid job market and inflationary pressures latterly, less
skilled opportunities affording short term gains for individuals, assisting
offset inflationary pressures which consumers have and are to bear as the cost
of the pandemic impacts. The Company has continued to upskill, mitigating
against inflationary pressures and skills shortages whilst sought to retain
skills and capabilities in the year, thus reporting a higher cost base, to
meet future demand and development.
Headlines
· Order entry remained buoyant at £23.2m (2020: £21.9m) driven by
rail projects, resulting with a record level order book of £27.3m (2020:
£22.5m), an increase of 21.3%;
· Revenue of £18.3m down 11.8% (2020: £20.7m) with electro-mechanical
systems revenues down £1.4m and engineered component distribution down
£1.0m, lighting and electronics unchanged;
· Added Value up 1.9% at 50.5% (2020: 48.6%) through reduced project
activity coupled with continued purchasing enhancements; and
· Gross margins resulted at 20.3% (2020: 22.7%), down 2.4% despite the
increase in Added Value. The measure is impacted through increased direct
labour and production overheads, up 2.9% on 2020. These increased through:
furlough leave with CJRS grant offset reflected separately in other income;
fixed overheads unable to flex with the reduced revenues; and additional
engineering resources to develop technologies, contract delivery and support
our commercial teams in new business tendering.
By comparison to 2020, H1 2021 revenues decreased by 13.8% at £9.3m (2020:
£10.8m), delivering an underlying operating profit of £154,000 (2020:
£234,000). H2 revenues were anticipated to accelerate as customer production
recovered from lockdown disruption. H2 delivered revenues of £9.0m (2020:
£9.9m), representing a decrease of 9.7% against H2 2020 sales.
Other operating expenses reduced by 3.1% to £4.3m (2020: £4.4m), a continued
focus on costs, balanced with additional areas of investment focused on
products, market and delivery of our future order book.
Group employment costs reduced by £156,000 to £6.32m (2020: £6.47m)
inclusive of exceptional costs, as outlined below. Included are share based
payments of £28,000 (2020: £36,000) relating to the award of share options
through the Group's Long Term Incentive Plan, these calculated using the
Black-Scholes model. No Executive bonuses were awarded in 2021 or 2020.
Other operating income of £217,000 (2020: £333,000) represents CJRS grant
receipts, which are not directly offset against the wage costs to which they
relate.
Exceptional costs and Non-Underlying Items
Exceptional costs in the year totalled £46,000, (2020: £131,000). Key
items comprised:
(i) £46,000 dual running management costs (2020:
£9,000). These costs reflect extended crossover periods for appointments
and retirements for the Group's directors, a transition process which
commenced in 2017 and completed on 31 December 2021.
(ii) reorganisation costs in 2020 of £122,000 (2021: nil)
- associated with cost base reductions.
Finance Costs and Income
Within finance costs, the interest on borrowings decreased to £86,000 (2020:
£106,000). The weighted average interest rate reduced by 0.2% from 2.9% to
2.7% through reduced borrowings and lease liabilities. There was no
utilisation of the Group's overdraft facility in the year. The UK base rate
was unchanged throughout the year, reducing through 2020 to 0.10%. Finance
income, which comprises the net interest income on the pension asset, was
£47,000, an increase of 14.6% (2020: £41,000).
Profit before Tax, Taxation and Earnings Per Share
After net finance costs of £39,000 (2020: £65,000) a loss before tax of
£387,000 was recorded (2020: profit £551,000). A tax credit of £353,000
(2020 recovery: £44,000) is provided, reporting a loss after tax of £34,000
(2020: profit £595,000). A loss per share of 0.27p results (2020:
earnings per share 4.82p).
Tax reflects the UK corporation tax rate of 19.0% (2020: 19.0%). The
effective tax rate is largely the consequence of tax loss utilisation and
recognition, enhanced through an increase in deferred tax rates to 25% from
19% reflecting the UK corporation tax rise from 1 April 2023, resulting in a
tax credit of £71,000 (2020: nil). Further benefits were achieved through
qualifying R&D expenditure including prior year increases on estimate and
recognition of trading tax losses from previous years.
Treasury
The Group's treasury policy remained unchanged in the year.
Balance Sheet
Shareholders' funds increased by £1.6m (12.4%) in the year to £14.1m (2020:
£12.5m), including:
· an increase in the defined benefit pension asset, net of a deferred
tax charge, of £1.4m (2020: decrease £0.3m); and
· an increase in ordinary share capital of £79,000 following exercise
of share options and issue of 790,000 new shares with a share premium
recognised of £221,000 (2020: nil).
This has resulted in an increase to the net asset value per ordinary share to
105.0p (2020: 99.2p). Adjusted net asset value per share (calculated
excluding goodwill and the pension asset net of deferred tax) was 74.4p (2020:
77.5p).
Gearing (net debt as a % of total equity) reduced 45% to 11.6% (2020: 21.1%)
through a combination of:
· net debt decreasing by 38% to £1.63m (2020: £2.65m);
· working capital reducing 10.8% to £4.69m (2020: £5.25m); and
· net pension asset increasing 85.9% to £2.96m (2020: £1.59m).
Shareholders' funds include Investment in Own Shares (Treasury Shares),
unchanged at £0.32m, representing ordinary shares held in the Company by the
LPA Group Plc Employee Benefit Trust ("EBT").
Intangible assets, which comprise goodwill related to the Groups investment in
Excil Electronics Ltd, capitalised development costs and software purchases
were £1,405,000 (2020: £1,386,000). After assessment for impairment the
goodwill remains unchanged at £1,149,000. Development costs capitalised in
the year, representing the continued development of the Group's technologies
and new product development ("NPD"), were £167,000 (2020: £100,000).
Capitalised development assets were written off in the year, replaced with new
technologies and products resulting in a loss within cost of sales of £53,000
(2020: nil).
The net book value of property, plant and equipment as at 30 September 2021,
including Right of Use Assets, totalled £6,433,000 (2020: £6,984,000), of
which property represented £4,115,000 (2020: £4,145,000), plant, equipment
and motor vehicles £2,318,000 (2020: £2,839,000). Additions in the year
were reduced following previous years of capital investment, at £215,000
(2020: £623,000). Disposals in the year totalled £368,000 with a net book
value of £9,000 including Right of Use lease terminations (2020: £577,000
with a net book value of £67,000). The depreciation charge increased 3.0%
reflecting prior levels of investment at £757,000 (2020: £735,000).
Net trading assets (defined as inventories plus trade and other receivables,
less trade and other payables and current tax) were 10.8% lower at £4,686,000
(2020: £5,252,000), predominantly because of reduced activity leading into
the financial year end and enhanced cash collections through the year.
Net debt and financing
The Group's main bank finance is a bank loan drawn down in 2019 at £2.6m and
repayable over 5 years. Repayments are quarterly over the term with a bullet
repayment in March 2024 of £1.8m (quarterly repayments calculated at draw
down on a 15 year repayment term). As at September 2021 the amount
outstanding was £2.3m (2020: £2.5m). Interest is payable at base rate plus
2.25%. No financial covenants applied following agreement with the bank to
remove the net debt service covenant for the year ended 30 September 2021.
Cash Flow
Net cash inflow from operating activities was £1,189,000 (2020: £773,000)
made up of a trading cash inflow of £601,000 (2020: £1,543,000); a decrease
in working capital of £594,000 (2020 increase: £801,000); tax refunds of
£77,000 (2020: £131,000) and voluntary defined benefit pension contributions
of £100,000, shown net of £17,000 settlement costs funded through the
defined benefit scheme (2020: £100,000). Overall, there was a net increase
in the Group's cash position of £513,000 (2020: decrease of £44,000), which
included £300,000 receipts from the exercise of share options (2020: nil).
Capital expenditure outflows on property, plant and equipment reduced to
£100,000 (2020: £150,000), excluding Right of Asset additions financed
through operating or finance leases. Capitalised development expenditure
amounted to £167,000 (2020: £100,000), including expenditure to develop a
new range of aircraft ground power support products and further product
developments focused on Smart Lighting and electronic systems, including rail
seat electronics.
In the year new lease liabilities were drawn to fund Right of Use additions of
£115,000 (2020: £506,000). Interest at 3.6% was charged on fixed rate
borrowings (2020: 3.9%). Interest on the Group's overdraft facility is
payable at base rate plus 2.0%. The facility was unutilised as at 30
September 2021 and 2020. The composite interest rate across both borrowings
and lease liabilities was 2.7% (2020: 2.9%).
Capital loan repayments of £187,000 were made (2020: £84,000). Outflows
repaying the principal elements of lease liabilities were £420,000 (2020:
£367,000). Interest payments on borrowings amounted to £86,000 (2020:
£100,000).
The Group's dividend policy was paused in 2020 as a safeguard to secure cash
reserves through the Covid-19 challenges, this continuing through 2021 with no
distributions.
Defined Benefit Pension Asset
During the year changes were made to the Group's closed defined benefit
pension arrangement ("DB Scheme") by the trustee, these included transfer to a
Master Trust structure, change of adviser for the trustee and transfer of
scheme administration externally, including pensioner payroll. These changes
incurred additional one-off costs recognised in the statement of comprehensive
income in the year. Included within the total pension costs of £190,000
(2020: £104,000), inclusive of costs related to the Group's Defined
Contribution provisions, are costs for the trustee's legal advice, Employer
legal advice, Scheme windup costs, pension and actuary advice and Winding Up
Lump settlements (WULS). These activities are expected to reduce costs going
forwards and enhance members service, whilst attributing to the increased
pension asset at year end through a reduction in membership and technical
provisions. The changes are expected to provide an enhanced members service
and administration provision, coupled with a de-risked scheme asset with a
reduced membership. Membership benefits are unaffected.
Following a strong year of asset value increments, the trustee has undertaken
a review of the investment strategy, realigning the asset match with
liabilities from January 2022 to lock in the gains and de-risk the scheme.
As a result, it was agreed with the Company that the annual voluntary
contributions paid over the past 10 years would no longer be required,
previous commitments having been satisfied.
The IAS19 actuarial surplus recognised at 30 September 2021 was £3.94m (2020:
£1.96m). Changes over the course of the year comprised an income statement
credit of £47,000 related to interest (2020: £41,000). Voluntary employer
contributions received from the Company of £100,000 (2020: £100,000) plus an
actuarial gain of £1.85m (2020: loss £0.43m) recognised in the statement of
comprehensive income, benefits paid from the scheme totalled £0.45m (2020:
£0.51m). £17,000 (2020: Nil) of cost was recognised through the
consolidated income statement in the year as one off past service WULS
settlements, these contributing to the increase in governance costs
recognised, but settled by the scheme.
Chris Buckenham
Chief Financial Officer
Key Performance Indicators
The Group uses the following key performance indicators to assess the
progression in its business: factors affecting them are discussed in the
Chairman's Statement, the Chief Executive Officers' Review and the Financial
Review.
KPI Basis of measurement 2021 2020
Health & Safety
Riddors · reportable incidents of disease or danger occurrences None None
Accidents · events that cause impact, damage or injury involving a person or 13 12
infrastructure, which are not a Riddor
Near misses · events that occurred which have not caused an Accident 15 16
Employment
Staff turnover · being leavers (excluding those through restructuring programmes) as a 13.1% 12.4%
percentage of the average total employed
Financial
Orders to revenue · orders for the year expressed as a multiple of revenue as a measure of 1.27 1.06
prospective growth
Order entry · order intake confirmed £23.2m £21.9m
Order book · the measure of opening order book, plus order entry, less revenue £27.3m £22.5m
Revenue growth · (decrease)/increase year-on-year as a percentage of prior year (11.8%) 6.0%
Added Value · the margin generated on revenue after deduction of material costs but 50.5% 48.6%
before other costs of sale and conversion
Gross margin · as a percentage of revenue 20.3% 22.7%
Profitability · Underlying Operating (Loss)/Profit as a return on trading activities to (1.5%) 3.8%
revenue
Cash generation · Net trading cash flow as the net increase in cash after capital £0.9m £0.5m
investments, before the drawdown / repayment of borrowings and issue or
acquisition of equity
Gearing · the measure of net debt being borrowings and lease liabilities less 11.6% 21.1%
cash balances, to net assets
Consolidated Income Statement
For the year ended 30 September 2021
2021 2020
Note £000 £000
Continuing operations
Revenue 2 18,265 20,711
Cost of Sales (14,558) (16,017)
Gross Profit 3,707 4,694
Distribution Costs (1,562) (1,514)
Administrative Expenses (2,711) (2,897)
Other Operating Income 3 217 333
Underlying Operating (Loss)/Profit (274) 783
Share Based Payments (28) (36)
Exceptional Costs 3 (46) (131)
Operating (Loss)/Profit 3 (348) 616
Finance Income 47 41
Finance Costs (86) (106)
(Loss)/Profit Before Tax (387) 551
Taxation 4 353 44
(Loss)/Profit for the Year (34) 595
Attributable to:
- Equity Holders of the Parent (34) 595
(Loss)/Earnings per Share 5
Basic (0.27)p 4.82p
Diluted (0.27)p 4.65p
Consolidated Statement of Comprehensive Income
For the year ended 30 September 2021
2021 2020
£000 £000
(Loss)/Profit for the Year (34) 595
Other Comprehensive Income/(Expense)
Items that will not be reclassified to profit or loss:
Actuarial gain/(loss) on pension scheme 1,849 (427)
Deferred tax on defined benefit scheme (601) 28
Other Comprehensive Income Net of Tax 1,248 (399)
Total Comprehensive Income for the Year 1,214 196
Attributable to:
- Equity Holders of the Parent 1,214 196
Consolidated Balance Sheet
At 30 September 2021
Co No: 00686429 2021 2020
£000 £000
Non-Current Assets
Intangible Assets 1,405 1,386
Tangible Assets 5,188 5,546
Right of Use Assets 1,245 1,438
Retirement Benefits 3,943 1,964
11,781 10,334
Current Assets
Inventories 4,702 3,968
Trade and Other Receivables 4,111 5,447
Current Tax Receivable 55 30
Cash and Cash Equivalents 1,358 845
10,226 10,290
Total Assets 22,007 20,624
Current Liabilities
Bank Loan (191) (188)
Lease Liabilities (323) (406)
Trade and Other Payables (4,180) (4,193)
(4,694) (4,787)
Non-Current Liabilities
Bank Loan (2,123) (2,313)
Lease Liabilities (354) (584)
Deferred Tax Liabilities (723) (389)
(3,200) (3,286)
Total Liabilities (7,894) (8,073)
Net Assets 14,113 12,551
Equity
Share Capital 1,345 1,266
Investment in Own Shares (324) (324)
Share Premium Account 929 708
Share Based Payment Reserve 60 118
Merger Reserve 230 230
Retained Earnings 11,873 10,553
Equity Attributable to Shareholders of The Parent 14,113 12,551
Consolidated Statement of Changes in Equity
For the year ended 30 September 2021
Share Capital Investment in Own Shares Share Premium Account Share Based Payment Reserve Merger Retained Earnings Total
Reserve
2021 £000 £000 £000 £000 £000 £000 £000
At 1 October 2020 1,266 (324) 708 118 230 10,553 12,551
(Loss) for the Year - - - - - (34) (34)
Actuarial gain on pension scheme (net of tax) - - - - - 1,248 1,248
Total Comprehensive Income - - - - - 1,214 1,214
Proceeds from issue of shares 79 - 221 - - - 300
Share based payments - - - 28 - - 28
Tax on share-based payments - - - - - 20 20
Transfer on exercise of - - - (86) - 86 -
share options
Transactions with Owners 79 - 221 (58) - 106 348
At 30 September 2021 1,345 (324) 929 60 230 11,873 14,113
Share Capital Investment in Own Shares Share Premium Account Share Based Payment Reserve Merger Retained Earnings Total
Reserve
2020 £000 £000 £000 £000 £000 £000 £000
At 1 October 2019 1,266 (324) 708 82 230 10,362 12,324
Profit for the Year - - - - - 595 595
Actuarial (loss) on pension scheme (net of tax) - - - - - (399) (399)
Total Comprehensive Income - - - - - 196 196
Share based payments - - - 36 - - 36
Tax on share-based payments - - - - - (5) (5)
Transactions with owners - - - 36 - (5) 31
At 30 September 2020 1,266 (324) 708 118 230 10,553 12,551
Consolidated Cash Flow Statement
For the year ended 30 September 2021
2021 2020
£000 £000
(Loss)/Profit Before Tax (387) 551
Finance Costs 86 106
Finance Income (47) (41)
Operating (Loss)/Profit (348) 616
Adjustments for:
Amortisation of Intangible Assets 111 95
Depreciation of Tangible Assets 484 494
Depreciation of Right of Use Assets 273 241
Loss on sale of Plant and Equipment - 61
Loss on disposal of Intangible Assets 53 -
Equity Settled Share Based Payments 28 36
Operating cash flow before movements in working capital 601 1,543
Movements in Working Capital:
(Increase) in Inventories (734) (144)
Decrease/(Increase) in Trade and Other Receivables 1,336 (902)
(Decrease)/Increase in Trade and Other Payables (8) 245
Cash generated from operations 1,195 742
Income Taxes Received 77 131
Defined Benefit Pension Contributions less settlements (83) (100)
Net cash inflow from operating activities 1,189 773
Purchase of Software (16) (22)
Purchase of Property, Plant & Equipment (100) (150)
Proceeds from Sale of Property, Plant and Equipment - 6
Expenditure on Capitalised Development Costs (167) (100)
Net cash outflow from investing activities (283) (266)
Repayment of Bank Loan (187) (84)
Principal elements of Lease Liabilities (420) (367)
Interest Paid (86) (100)
Proceeds from Issue of Share Capital 300 -
Net cash outflow from financing activities (393) (551)
Net increase/(decrease) in Cash and Cash Equivalents 513 (44)
Cash and Cash Equivalents at start of the year 845 889
Cash and Cash Equivalents at end of the year 1,358 845
Reconciliation of cash and cash equivalents
Cash and Cash Equivalents in Current Assets 1,358 845
Net Debt
An analysis of the change in net debt is shown below:
Bank Loan Lease Liabilities Cash and Cash Equivalents Net Debt
£000 £000 £000 £000
At 1 October 2020 2,501 990 (845) 2,646
New Lease Obligations and modifications - 107 - 107
Interest Costs 57 30 (1) 86
Repayment of Borrowings/Lease Liabilities (244) (450) 694 -
Other Cash (Generated) - - (1,206) (1,206)
At 30 September 2021 2,313 677 (1,358) 1,633
Bank Loan Lease Liabilities Cash and Cash Equivalents Net Debt
£000 £000 £000 £000
At 1 October 2019 2,585 724 (889) 2,420
Adoption of IFRS 16 - 157 - 157
New Lease Obligations - 470 - 470
Interest Costs 68 38 - 106
Repayment of Borrowings/Lease Liabilities (152) (399) 551 -
Other Cash (Generated) - - (507) (507)
At 30 September 2020 2,501 990 (845) 2,646
Notes
1. Information
In accordance with Section 435 of the Companies Act 2006, the Group confirms
that the financial information for the years ended 30 September 2021 and 2020
are derived from the Group's audited financial statements and that these are
not statutory accounts and, as such, do not contain all information required
to be disclosed in the financial statements prepared in accordance with
International Accounting Standards in conformity with the requirements of the
Companies Act 2006. The statutory accounts for the year ended 30 September
2020 have been delivered to the Registrar of Companies. The statutory accounts
for the year ended 30 September 2021 have been audited and approved but have
not yet been filed. The Group's audited financial statements for the year
ended 30 September 2021 received an unqualified audit opinion and the
auditor's report contained no statement under section 498(2) or 498(3) of the
Companies Act 2006. The financial information contained within this full year
results statement was approved and authorised for issue by the Board on 27
January 2022.
The 2021 accounts are expected to be posted to shareholders on 18 February
2022 and will be available from the Company Secretary, LPA Group Plc, Light
& Power House, Shire Hill, Saffron Walden, CB11 3AQ and on LPA's website
- www.lpa-group.com/ (http://www.lpa-group.com/) shortly thereafter.
The Group financial statements have been prepared under the historical cost
convention and under the basis of going concern. The principal accounting
policies adopted are consistent with those disclosed in the financial
statements for the year ended 30 September 2020.
2. Operating Segments
All of the Group's operations and activities are based in, and its assets
located in, the United Kingdom. For management purposes the Group comprises
three product groups (in accordance with IFRS 8) - electro-mechanical,
lighting & electronics and engineered component distribution (which
collectively design, manufacture and market industrial electrical and
electronic products) - less centre costs, which operate across three market
segments - Rail; Aerospace & Defence and Other. It is on this basis that
the board of directors assess Group performance. The split is as follows:
2021 2020
£000 £000
Electro-mechanical systems 7,761 9,195
Engineered component distribution 3,410 4,429
Lighting & Electronics systems 7,094 7,087
Operational Revenue 18,265 20,711
2021 2020
£000 £000
Revenue recognised over time 788 390
Revenue recognised at a point in time 17,477 20,321
18,265 20,711
All revenue originates in the UK. An analysis by geographical markets and
market segments is given below:
2021 2020
% %
Rail 77% 77%
Aerospace and Defence 10% 12%
Other 13% 11%
100% 100%
2021 2020
£000 £000
United Kingdom 12,618 13,929
Rest of Europe 3,500 4,402
Rest of World 2,147 2,380
18,265 20,711
Three individual customers (2020: two) represented more than 10% of Group
revenue, combined totalling 38% (2020: 30%).
2021 2020
£000 £000
Operational Profit 652 1,812
Corporate Costs (926) (1,029)
Underlying Operating (Loss)/Profit (274) 783
Corporate Costs and Operational Profit are shown excluding charges levied to
subsidiary entities by LPA Group Plc relating to management charges and where
the property is held by LPA Group Plc, property rent which combined totalled
£426,000 (2020: £594,000).
3. Operating (Loss)/Profit
The following items have been charged in arriving at Operating (loss)/profit.
2021 2020
A. Component costs in arriving at Operating (Loss)/Profit £000 £000
Materials (to Added Value) 9,036 10,653
Production overhead & direct labour 5,522 5,364
Cost of sales 14,558 16,017
Selling & distribution costs 1,562 1,514
Administrative expenses 2,711 2,897
Other operating income (217) (333)
2021 2020
B. Expenses/(credits) by nature within Underlying Operating (Loss)/Profit £000 £000
Amortisation of Intangible Assets 111 95
Depreciation of Tangible Assets 484 494
Depreciation of Right of Use Assets 273 241
Loss on Disposal of Assets 62 61
Operating Lease Rentals / Short Term Hire Charges 16 20
- Plant, Equipment & Motor Vehicles
Foreign Exchange Loss/(Gain) 96 (50)
Other Operating Income:
- Covid-19 Job Retention Scheme grants (CJRS) (217) (308)
- Other grants - (25)
Fees Payable to The Company's Auditor:
- For the Audit of The Company's Annual Accounts 22 20
- The Audit of The Company's Subsidiaries Pursuant to Legislation 71 67
2021 2020
C. Within Exceptional Costs £000 £000
Reorganisation costs - 122
Dual running management costs 46 9
46 131
Dual running costs of £46,000 (2020: £9,000) relate to an extended crossover
between the appointment and retirement of Board Directors related to the board
rejuvenation process commenced in 2018, to be concluded on 31 December 2021.
Dual running and reorganisation costs are included within Employee costs and
reflect the exceptional changes that have taken place by comparison to the
Group's history. All board members who served at the 2018 AGM retired on, or
before, 31 December 2021.
Reorganisation costs of £123,000 in 2020 related to a Group-wide cost base
review. Ongoing and adhoc reorganisation costs through 2021 are seen as
non-exceptional.
4. Taxation
2021 2020
A. Recognised in The Income Statement £000 £000
Current Tax Expense
UK Corporation Tax (4) (37)
Adjustment in Respect of Prior Years (46) (78)
(50) (115)
Deferred Taxation
Net Origination and (Recognition) / Reversal of (232) 71
Temporary Differences
Net change as a result of rate increase (71) -
Total Corporation Tax (Credit) (353) (44)
2021 2020
B. Reconciliation of Effective Tax Rate £000 £000
(Loss)/Profit Before Tax (387) 551
Tax at The UK Corporation Tax Rate of 19% (2020: 19%) (74) 105
Effects of:
- Tax Rate Change (71) -
- Enhanced Deduction for Qualifying R&D Expenditure (80) (76)
- Prior Period Adjustments (46) (78)
- Prior Periods losses recognised (71) - (55) -
- Other Differences (27) 5
Total Income Tax (Credit) (353) (44)
2021 2020
C. Deferred Tax Recognised in Other Comprehensive Income £000 £000
Deferred Tax on Actuarial Gain/(Loss) on Pension Scheme 601 (28)
2021 2020
D. Current and Deferred Tax Recognised Directly in Equity £000 £000
Tax (Credit)/Charge Arising on Share Options (20) 5
(55)
-
- Other Differences
(27)
5
Total Income Tax (Credit)
(353)
(44)
2021
2020
C. Deferred Tax Recognised in Other Comprehensive Income
£000
£000
Deferred Tax on Actuarial Gain/(Loss) on Pension Scheme
601
(28)
2021
2020
D. Current and Deferred Tax Recognised Directly in Equity
£000
£000
Tax (Credit)/Charge Arising on Share Options
(20)
5
5. (Loss)/Earnings Per Share
The calculation of earnings per share is based upon the profit for the year of
£0.02m (2020: £0.60m) and the weighted average number of ordinary shares in
issue during the year, less investment in own shares, of 12.590m (2020:
12.358m).
2021 2020
Earnings Weighted (Loss) Earnings Weighted Earnings
Average Per Average Per
No of Shares Share No of Shares Share
£000 Million Pence £000 Million Pence
Basic (Loss)/Earnings Per Share (34) 12.590 (0.27) 595 12.358 4.82
Effect of Share Options - - - - 0.442 (0.17)
Diluted Earnings Per Share (34) 12.590 (0.27) 595 12.800 4.65
Diluted Earnings Per Share
Basic and diluted earnings per share are equal for the year ended to 30
September 2021, 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. As at 30 September 2021 there
were 565,000 outstanding share options (2020: 1,350,000), of which 155,000
were exercisable (2020: 825,000).
6. Going Concern
In assessing going concern, including impacts of Covid-19, Brexit, supply
chain shortages and inflationary pressures seen latterly, the directors note
that current economic conditions are continuing to create uncertainty. Such
uncertainties have and continue to make forecasting extremely challenging,
with these multiple factors causing delivery schedule delays.
In assessing the Group's going concern the directors also note that (i)
despite reporting an operating loss in the current year and anticipating a
challenging start to the 2022 year, the Group is expected to return to
profitability in the near term; (ii) has in place adequate working capital
facilities for its forecast needs and was cash generative through the 2021
financial year, with a positive EBITDA and strong cash management, benefiting
from a policy of cash retention at this time; (iii) has a strong and record
level order book with significant further opportunities in its market place;
and (iv) has proven adaptable in past periods of adversity, as again proven
through the 2021 challenges. Therefore, the directors believe that it is
well placed to manage its business risks successfully.
The Group benefited from CJRS grants through 2021, utilising this support to
retain jobs and skills which contributes to higher wage costs reported.
Supply chain delays now widely seen, aligned with price pressures in the
supply chain, covering commodities, utilities and wage inflation all pose
risks to UK manufacturing businesses. Offsetting these, on-shoring
opportunities and the supply chain delays and shortages themselves offer new
opportunities to the Group to assist offset some of the project delays.
The directors recognise that the ongoing support of its bank is a key feature
to the Group's success which provides for the funding and working capital
facilities as outlined in note 17. Should there be additional significant
delays in our project-based work then there is an increased risk of covenant
breach. Whilst actions are available to management to mitigate any shortfall,
we expect that if required the bank would remain supportive and a suitable
agreement would be reached to provide the group with sufficient financing.
After making enquiries including but not limited to compiling updated
forecasts; sensitivities; and expectations, reviewing liabilities and risks
and following confirmation of ongoing support from the Group's bank, the
directors have a reasonable expectation that the Company and the Group have
adequate resources to continue in operational existence for the foreseeable
future. Accordingly, they continue to adopt the going concern basis in
preparing the annual report and accounts.
7. Annual General Meeting
The Annual General Meeting ("AGM") is to be held at 10:30 on Thursday 24 March
2022 at the offices of finnCap, 1 Bartholomew Close, London, EC1A 7BL.
Special business includes four resolutions which relate to share capital:
1. an ordinary resolution to renew the authority of the directors to
allot shares generally.
2. is a special resolution to give power to the directors to allot
equity securities for cash without first offering them to existing
shareholders.
3. is a special resolution to permit the Company to make market
purchases of its own shares.
4. is an ordinary resolution to increase the Company's authorised share
capital to £2,500,000 divided into 25,000,000 ordinary shares of 10 pence
each.
Of the four resolutions, the first three are the same as those sought and
approved at last year's annual general meeting, are part of the portfolio of
powers commonly granted to directors to ensure flexibility, should appropriate
circumstances arise, to either allot shares, or make purchases of the
Company's own shares in the best interests of shareholders. Each authority
will run through until the next annual general meeting.
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. END FR BIGDBSBDDGDRRecent news on LPA
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AnnouncementREG - LPA Group PLC - Standard form for notification of major holdings
AnnouncementREG - LPA Group PLC - Standard form for notification of major holdings
AnnouncementREG - LPA Group PLC - Unaudited Interim Results
AnnouncementREG - LPA Group PLC - Directorate Change - CEO Resignation
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