REG - LPA Group PLC - Final Results
03/02/2023 07:00
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RNS Number : 8012O LPA Group PLC 03 February 2023
LPA GROUP PLC
LPA Group plc ("LPA", the "Company" or the "Group"), the high reliability LED
lighting, electronic and electro-mechanical system designer and manufacture,
announces its Preliminary Results for the year to 30(th) September 2022.
Preliminary Results key points:
Financial
· Order Entry at £19.7m (2021: £23.2m)
· Order Book at £27.8m (2021: £27.4m)
· Revenue £19.3m (2021: £18.3m)
· Underlying Operating Loss* £0.23m (2021: (Loss) 0.27m)
· Profit before Tax amounted to £1.07m (2021: (Loss) 0.39m)
· Basic Earnings/(Loss) per share amounted to 8.99p (2021: (Loss)
0.17p)
· No dividends declared or paid in 2022 or 2021
· Gearing** reduced to 3.5% (2021: 11.9%)
*Operating Profit/(Loss) before Share Based Payments and Exceptional Costs
** Net Debt as a percentage of Total Equity
The year to 30(th) September 2022, included the following highlights and
operational developments.
· Record year for our new LED tube product with significant orders from
UK and worldwide customers. This is an important step as we approach the
September 2023 ban across the EU on the sale of old technology fluorescent
tubes.
· Excellent year for new Plane Power range of products with customers
now including - Heathrow, Shanghai, Beijing, Copenhagen, Melbourne, Auckland,
Stockholm and Schiphol airports.
· Appointment of first employee outside of the UK in support of growth
plans for the DACH region. This is an essential resource in support of some
of the biggest rolling stock customers in the world.
· Continued growth of distribution network to support growth plans for
both our electronic / lighting, and electro-mechanical business divisions.
· Successful delivery of the Viaggio Nightjet / ÖBB project, which is
the most technically advanced intelligent lighting system ever undertaken by
the Group. This is a flagship platform for the customer with further
follow-on orders expected.
Robert B Horvath - Chairman commented:
"The year to September 2022 was challenging however, we are reporting a profit
before tax of £1.1m; albeit heavily influenced by exceptional items and a
slower than expected first half. Encouragingly the second half was much
stronger than the first half at the operating level although the business
traditionally has a stronger second half performance, not least because
December is a shorter trading month. Our order entry during the year was
robust and I am pleased to report that our order book remains resilient with
good opportunities for further growth currently in negotiation.
During the year there was a strong emphasis on rebuilding executive capability
across the Group and specifically in the operating companies. We have
recruited well for our electro-mechanical subsidiary and strengthened the
senior leadership team. We have more to do to ensure that we can deliver our
workload efficiently, but good progress has been made.
As I reported last year, we aimed to build up cash reserves recognising that
as we start to grow again following the last two years of reduced turnover
there will be pressure on working capital. The vacant land that we had
inherited and had no plans to use was sold and realised £1.7m of cash which
we are retaining in the business to create capacity and give us the agility to
respond quickly to new business opportunities to enhance the product range.
We are very alive to global supply chain issues that we and our customers are
experiencing which could delay our own ability to deliver finished product.
Additionally, where we supply to new build projects, we are only a small part
of our customer's overall project, and it is this that often causes
re-scheduling. In the face of these headwinds we are concentrating on being
more agile and to keep higher stock levels as 'just in time' is not a viable
solution to our customers' often irregular demands and call offs. The
rebalancing of the business by working closer with our customers in the
aftercare market will support a more even production flow and we continue to
actively chase down these revenue opportunities.
Our gearing fell to a modest 3.5% from 11.9% because of our strong cash
position, and our net asset value grew even after a small reduction in the
actuarial valuation of our (closed) defined benefit pension scheme. The
trustees of the defined benefit scheme (of which I remain Chairman) sought to
de-risk the scheme last year and we have been fortunate with the resultant
impact and resilience of the Trust's investments given all that has happened
in the financial markets in 2022. The pension remains in a healthy surplus.
We anticipate an overall return to operating profitability in FY 2023, with
stronger recovery thereafter, and accordingly we expect to resume dividend
payments for this financial year. The Board has confidence in the prospects
for the Group, supported by our high quality customers, growing order book,
visibility of new business and our overall strategy."
3(rd) February 2023
Enquires: www.lpa-group.com Tel:
LPA Group plc
Robert B Horvath Chairman 01799 512844
Paul Curtis CEO 01799 512858
finnCap NOMAD and Broker 020 7220 0500
Ed Frisby / Abigail Kelly
(Corporate Finance)
Tim Redfern / Charlotte Sutcliffe
(ECM)
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
It has been a busy year for us as we rebuild the individual business plans for
the members of the Group that result directly from our strategic planning
exercise. These plans cover markets, people, operations and facilities and
will naturally morph as opportunity and markets dictate.
We have long recognised the need to broaden our offering as some of our
operations have become too reliant on a few large customers. A lot of our
future project work whilst still robust continues to suffer from re-scheduling
by our customers and this was reflected in our ability to cover our overhead
in the first part of the year. We managed the second half of the year in a
more conservative way and are actively pursuing projects that have more
immediate delivery times. In the second half we began to see the impact that
the aftercare markets for our customers could have on building resilience into
our overhead recovery and as a result, we returned to profitability. We are
set up well going forward and have ended the year with a strong order book
replacing most of what has been delivered this year and at the time of writing
it has grown still further.
We have had a very good response to our customer and relationship management
programmes and we have signed up a number of new distributor partners across
the globe this year as well as seeing Channel expand its distribution products
here in the UK. It was also very encouraging to see the end of pandemic
restrictions and to attend Innotrans in Berlin this year. We had a successful
event and it was heartening to gain the opportunity once again to be face to
face and enjoy open conversations with so many customers that have been unable
to travel.
The planning highlighted our need to recruit into a number of key posts and
some high calibre people have been appointed to take the Group forward. The
new Managing director for our electro-mechanical systems operations commenced
in August 2022 and is now well in post. He and the team have recruited a new
Technical Engineering director and already we are seeing the impact on their
business plans. We have struggled to recruit an MD for our Channel business
and must go back and re-think the scope of how this operation functions. Our
new Group CFO, Stuart Stanyard, will join the Board in March 2023 and will in
place before the AGM. We have recruited heavily into our Sales teams and into
engineering competency generally and this should impact the second half of the
current year and beyond. We have also been conscious that to recruit this
talent pool we need to rebase our reward mechanisms to retain more moderate
salaries and to increase the performance related element of our remuneration
packages.
As a market leading designer and manufacturer of high reliability electronic,
electro-mechanical components and systems, we pride ourselves on our
capabilities. Operationally, the manufacturing facilities remain first class.
We have upgraded some of our machinery and tooling and we will look to broaden
our offering with a limited amount of Capex in the new year. We have
investment to make in our enterprise resource planning ("ERP") which will only
enhance our ability to manage productivity going forward. The incidence of
turnover in our staff who operate our facilities has been manageable and
throughout the last two years we have sought to bring in apprentices and young
engineers.
To ensure that we had plenty of working capital to carry us through what is a
difficult trading environment both in the UK and in our export markets we sold
some vacant land realising a substantial £1.5m profit; the profit and cash
are reflected in these accounts. We are continuing to look to buy and
re-invent
Chairman's statement (continued)
products from ours and other businesses that will enhance our offering
particularly in the aftercare market and having a strong cash position will
make us that much more agile to move quickly.
Shareholders and Investors
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. Therefore, the Chairman and the CEO will continue to meet key
shareholders where possible in person and work closely with its Brokers and
Advisers to ensure regular and open dialogue.
Importantly, we have stakeholders, in the wider sense, all over the world and
we have struggled in the last two years 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. We have now
recruited our first senior employee who resides in our DACH (Germany, Austria
and Switzerland) market and we believe this investment will only strengthen
our relationships further.
Dividends and Pension Fund
No dividends were declared in 2021 and no interim or final dividends have been
declared in 2022. The Board believes in a progressive dividend policy and so
will keep the policy under review, however, given the ongoing economic and
market challenges, we believe it continues to remain appropriate in the
shorter term to defer any resumption of the policy.
The LPA Industries Limited Defined Benefit Scheme was part of the Deloitte
Pensions Master Plan throughout the entire year under review. This arrangement
had included the transfer of the advisory functions, administration and the
pensioner payroll to Deloitte. The total costs of this transition have been
substantial as the Scheme has necessarily been subject to a level of scrutiny
and audit to ensure that it can be prepared for an eventual exit to an
insurance provider. The costs of running the scheme have been borne by the
Company and this year amounted to £174,800 (2021: £283,128 including
£100,000 of Company contribution). The rectification work is largely complete
and subject to GMP equalisation ongoing discussion we anticipate substantially
reduced costs going forward.
A full Actuarial valuation of the Scheme was carried out in March 2021 which
indicated the Scheme was at a healthy 121% funding level. At 31 March 2022 an
actuarial report indicated that this had risen to 127% of the actuarial
funding level. The benefit of the change in investment strategy in January
2022, when the Trustees having undertaken a review in 2021 agreed to lock in
the gains and de risk the scheme, has been beneficial. The key driver for the
then improved funding position has been the higher than assumed returns on the
Scheme's assets and the changes in financial conditions which have reduced the
liabilities. It is natural for the Scheme's funding level to fluctuate over
time reflecting changes in the financial markets and this was apparent during
the last six months of the year under review especially sparked by the mini-
budget on 23 September 2022. Over the year to 30 September 2022 the Scheme's
assets, which are with Legal & General Investment Managers in LGIM funds,
marginally outperformed the benchmark return at -24.8% versus -25%.
Chairman's statement (continued)
The IAS19 actuarial surplus recognised at 30 September 2022 was £2.5m (2021
restated: £2.6m). The Trustees, under advice, did not seek any voluntary
employer contributions during the year from the Company (2021: £100,000). The
IAS19 position shown in the accounts reflects the impact of rising interest
rates on the present value of the Assets and the liability to pay pensions in
the future.
Employees
Our people and our investment in them is key to our future success. Their
skills alone are not enough without a commitment to the style and corporate
values that the Board are committed to promoting. Our recently appointed
subsidiary directors are fully committed to these values and we will see the
impact of this in the coming years.
The general health, and well-being of our employees personally, cannot be
underestimated. We have had a number of retirements of long-standing staff
during the pandemic; but we are not alone in this. Senior management time on
people issues, managing our employee numbers and the cost base is now part of
daily routine. Communication with our staff and progressive investment in
their well-being will distinguish us and we hope to persuade more youngsters
and apprentices to join an engineering group.
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 yet another challenging year.
Board and Management
Board members' biographies and relevant experience are published on the
Group's website www.lpa-group.com (http://www.lpa-group.com) .
Paul Curtis (CEO) heads up the Executive Team and we have retained some
interim support following the departure of Chris Buckenham. We have secured
a contract with our new Group Finance Director who will join before the AGM.
Andrew Jenner, as Senior Independent Director, and Chair of the Audit
Committee has been in post throughout the year under review as has Gordon
Wakeford who is chairman of our Remuneration Committee.
We have started a broader communication programme including a comprehensive
newsletter to our Employees, this was published shortly after the year end and
will be updated every 6 months. The Board's belief in instilling our corporate
values, including through induction and regular communication, remains a
priority.
Chairman's statement (continued)
Outlook
The Executive team have a strong order book to work with, a solid balance
sheet, positive cash flow and importantly a good plan. It will take a little
longer to see the impact of such a significant change in the group's
leadership and given the gestation period for our engineers to turn
opportunity into quality engineered products we anticipate a strong second
half to the current financial year and thereafter. The Company has a bright
future built on our capabilities and great customer relationships.
Robert B Horvath
Chairman
2(nd) February 2023
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 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 · Hybrid / battery control boxes and systems
Light & Power House · Control panels & boxes
Shire Hill A designer and manufacturer of electro-mechanical systems and components to · Enclosures, fabrications, laser cut, form & weld
the rail, aircraft ground support and niche industrial markets.
Saffron Walden
· Rail, aircraft, ship & industrial connectors
CB11 3AQ, UK · Shore supply systems
Tel: +44 (0)1799 512800 · Transport turnkey engineering and manufacturing 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 units
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 · Fluorescent lamp Inverters
the rail, infrastructure, and other high reliability markets
Normanton · Complete rolling stock interior lighting systems
West Yorkshire · Rolling stock interior and exterior door status indication
systems
WF6 1QT, UK
· Rolling stock seat electronics solutions
Tel: +44 (0)1924 224100
Email: enquiries@lpa-light.com
Business Model and Strategy (continued)
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 and the
business planning that we do each year.
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 the 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.
Our core values are promoted throughout the Group. These are set out below
and published on our website www.lpa-group.com (http://www.lpa-group.com) .
Business Model and Strategy (continued)
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
An increase in activity during H2 ensured a positive trading period but fell
short of full recovery from the difficult trading experienced during H1,
resulting in an underlying operating loss for the full year slightly ahead of
prior year at £0.23m (2021: Loss £0.27m). During the period, the
successful sale of a piece of unused land held by the Group, realised levels
exceeding expectations and raised a net profit of £1.51m, resulting in a
final PBT for the year of £1.07m (2021: Loss of £0.39m).
Even though there were several delayed project awards within the period,
orders slightly edged revenues, resulting in the orderbook increasing
marginally during the year and remaining at a solid £27.7m (2021: £27.3m).
Added Value (AV) for the year remained broadly in line with expectation at
49.1% (2021: 50.5%) but suffered from general inflationary pressure and
increasing material costs across all sectors. This is an area being actively
managed to ensure that future revenues continue to remain at AV expectations.
2022 Summary
· Order book increased to £27.7m (2021: £27.3m)
· Order entry at £19.7m (2021: £23.2m)
· Revenue at £19.3m (2021: £18.3m)
· Underlying Operating Loss of £0.23m (2021: Loss £0.27m)
· Profit before tax (including sale of land) at £1.07m (2021: Loss of
£0.39m)
· Net cash inflow from operating activities £0.1m (2021: £1.2m).
Markets
Aviation (aircraft) build programmes have remained steady for the year with
revenues resulting at expected levels. The Group involvement is
predominantly on the A350 and A220 aircraft and, with both these aircraft
programs intending to increase production rates, it is forecast that the
business in this area will increase as we move through 2023 and beyond. Both
these platforms enjoy strong orderbooks, covering multiple customers, and are
scheduled to remain in production for many years.
With the rapid development of electric and other powertrain technology there
are several opportunities developing for a new generation of flight
vehicles. This is an area of much interest to the Group and one where we
have been subsequently focusing our efforts. This is an industry in its
infancy but is one where we are looking to be successful over the coming years
as it comes of age.
Aviation (infrastructure) performed well in the year, with revenues increasing
96% and orders increasing 68%, when compared to 2021 levels. Export at 81%
was a strong feature within the revenue number and demonstrates the importance
of the improved sales channels that are now in place for this segment. The
key objective of appointing distribution partners within all 1(st) tier
targeted countries is nearly complete and efforts are now ongoing in expanding
this further to include 2(nd) tier countries and beyond. This expansion and
management of our distribution network is an essential strategic program and
crucial to our vision of building a robust worldwide sales network of which
further developed products can be promoted through.
Chief Executive Officer's Review (continued)
During the year the Group also launched the new Plane Power cable carrying
system. As with the Plane Power connectors, the product was received well by
our customer base and initial orders for airports in the UK and Australia were
received within the period.
Rail has seen some recovery during the period but is still experiencing some
frustrations and delays with project new build schedules. This is however
somewhat being offset by the expansion of our sales network and the drive
towards an increased product offering. The aftercare market remains a key
area for the Group and is one where we are now starting to see some of the
previously stalled spending being released.
The expansion of our global sales network and the addition of a dedicated LPA
sales resource in the DACH market is progressing well for our Lighting and
Electronics business. This increased support brings better market
intelligence and offers a greater level of service and support, which is being
appreciated by both existing and potential customers. This expanded coverage
is essential for our LED tube product which is receiving much interest as we
approach the September 2023 ban across the EU on the sale of old technology
fluorescent tubes. It is envisaged that this change in legislation will
create several opportunities for this product over the current and coming
years.
Work is also underway in the standardisation of our Rail connector range with
a view of targeting the Rail aftermarket sector within countries other than
the UK. As with our Lighting and Electronics business, this will again rely
on the development and expansion of our sales channels in these regions.
This is however fast becoming a core skill and competence within the Group
and is a key development area receiving much focus.
Industrial market expansion is a somewhat new area for the Group and will look
to target niches such as infrastructure, marine and energy. In support of
this we have taken on new products at our distribution business and
strengthened our sales team within our electro-mechanical business. These
are the first steps into these markets but are steps that we believe to be
essential for growth and the development of a diverse sales profile.
Operational Review
The transition of the business from a predominantly project driven model to
one that has a balance of projects and standard products, serving multiple
markets and countries, is firmly underway. This is however a medium-term
strategy and, as such, it will take time before the benefits of this are truly
realised.
In support of this vision, there has been much change within the business
units in relation to both process and people. The complete refresh of our
sales teams, in both our distribution business and electro-mechanical
business, is now complete, and coming up to speed. Several other senior
appointments across the Group have also been concluded, which although
impacting overhead costs, they are essential in achieving the goals of growth
that the business has.
Our electro-mechanical business is well on its way to achieving the aviation
approval standard AS9100 and is now also targeting the IS14001 certification
in support of our environmental credentials. Our distribution business
will also start the journey to achieve IS14001 in the coming year, which will
result in all Group companies being compliant of this important standard.
Chief Executive Officer's Review (continued)
Outlook
The Group has endured difficult trading over the last few years due to
dependence on a marketplace that was severely disrupted by several global
situations. During this period however much work has been undertaken
throughout the Group to ensure the foundations for growth and the de-risking
of our customer dependence are in place. We expect to see progression as we
move through the coming year and look forward to a more stable and robust
business for the future.
Paul Curtis
Chief Executive Officer
2(nd) February 2023
Financial Review
Set out are the key drivers related to the business performance in the year
and position at 30 September 2022, together with explanation of the financial
Key Performance Indicators.
Trading Performance
Macro-economic factors
Although some improvement has been seen across our markets in relation to
clarity of customer requirements, the 2022 year continued to see some
frustration and delays to both order placement and delivery schedules.
Whilst H1 was heavily impacted by these delays, H2 saw some improvement and an
uplift in activity, resulting in a profitable period, highlighting that once
over a certain level, a good level of return can be expected from the
business.
Inflation was and continues to be a battle, with cost of energy, people and
materials, all moving up beyond levels experienced prior. Efforts to
mitigate these increases have been ongoing and where possible fed through to
the market. Added Value remains broadly inline with expectations and is
expected to remain at this level as we move forward.
Supply of material and components has also been problematic within the
period. Electronic components, in particular, have seen the biggest
disruption, with deliveries moving out to a 52 week lead-time in some cases.
The result of this causing delays to shipments, considerable engineering time
looking for alternatives and, in some cases, cost increases as premiums paid
for stock availability from alternate suppliers.
As the business shapes itself for the future, employment has been a key
feature of the year. Uncertainty in the market, coupled with a low
unemployment rate, has made this somewhat difficult at times. However, the
year has seen good progress on this, and with a few exceptions, the Group
moves into the new year with a high percentage of this change completed and
plans for others in place.
Headlines
· Order entry slightly exceeded sales at £19.7m (2021: £23.2m)
resulting in a strong order book of £27.7m (2021: £27.3m), an increase of
1.8%;
· Revenue of £19.3m up 5.8% (2021: £18.3m) with electro-mechanical
systems revenues down £1.2m and engineered component distribution down
£0.1m, lighting and electronic systems up £2.4m;
· Added Value reduced by 1.4% at 49.1% (2021: 50.5%) through cost
pressures and the need to source alternative suppliers; and
· Gross margins 22.8% (2021: 20.3%), was up 2.5% primarily because of
product mix and some reduction in production overhead costs.
By comparison to 2021, H1 2022 revenues decreased by 7.2% at £8.6m (2021:
£9.3m), delivering an underlying operating loss of £568,000 (2021: profit of
£154,000). H2 revenues were anticipated to accelerate as customer production
recovered from delayed projects. H2 delivered revenues of £10.7m (2021:
£9.0m), representing an increase of 19.3% against H2 2021 sales. This
resulted in an H2 underlying profit of £342,000 (2021: loss of £428,000).
Financial Review (continued)
Distribution costs and administrative expenses increased by 9.9% to £4.6m
(2021: £4.3m). The main contributors to this were the wider economic cost
pressures seen across the industry. Also, the UK Government Covid support was
withdrawn during 2021 leading to a reduction in other operating income.
Group employment costs reduced by £100,000 to £6.21m (2021: £6.32m)
inclusive of exceptional costs, as outlined below. Included are share based
payments of £13,000 (2021: £28,000) relating to the award of share options
through the Group's Long Term Incentive Plan, these calculated using the
Black-Scholes model.
Other operating income of £7,000 (2021: £217,000) reduced due to support
from CJRS grant receipts during 2021.
Exceptional Costs and Non-Underlying Items
Exceptional costs in the year totalled a gain of £1,323,000, (2021: loss of
£46,000). Key items comprised:
(i) Sale of surplus land raising a net profit of
£1,506,000 in 2022 (2021: £nil)
(ii) £10,000 dual running management costs (2021:
£46,000). 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.
(iii) reorganisation costs in 2022 of £173,000 (2021:
£nil) - associated with cost base reductions.
Finance Costs and Income
Within finance costs, the interest on borrowings increased to £88,000 (2021:
£86,000). The weighted average interest rate increased by 0.5% from 2.7% to
3.2%. There was no utilisation of the Group's overdraft facility in the
year. The UK base rate increased 7 times throughout the year, increasing
through the year from 0.10% to 2.25%.
Profit before Tax, Taxation and Earnings Per Share
After net finance costs of £10,000 (2021: £39,000) a profit before tax of
£1,074,000 was recorded (2021: loss £387,000). A tax credit of £111,000
(2021: £365,000) is recognised, reporting a profit after tax of £1,185,000
(2021: loss of £22,000). This resulted in a basic earnings per share of
8.99p (2021: loss per share 0.17p).
Tax reflects the UK corporation tax rate of 19.0% (2021: 19.0%). The tax
credit recognised is largely the consequence of recognition of tax losses and
tax credits on qualifying R&D expenditure.
Treasury
The Group's treasury policy remained unchanged in the year.
Financial Review (continued)
Balance Sheet
Shareholders' funds increased by £1.0m (7.0%) in the year to £14.8m (2021:
£13.7m), including:
· profit for the year of £1.2m;
· a decrease in the defined benefit pension asset recognised of £0.1m
(2021: increase of £1.3m); and
· an increase in ordinary share capital of £3,000 following exercise
of share options and issue of 35,000 new shares with a share premium
recognised of £14,000 (2021: share capital £79,000, share premium
£221,000).
This has resulted in an increase to the net asset value per ordinary share to
109.4p (2021: 102.0p). Adjusted net asset value per share (calculated
excluding goodwill and the pension asset) was 82.6p (2021: 74.4p).
· Gearing (net debt as a % of total equity) reduced to 3.5% (2021:
11.9%) assisted by the cash proceeds from the sale of land;
· net debt decreasing by 68% to £0.52m (2021: £1.63m);
· working capital, as defined as inventory, trade & other
receivables less trade & other payables, increasing 9.6% to £5.08m (2021:
£4.63m); and
· pension asset surplus recognised reducing by 3.6% to £2.47m (2021:
£2.56m).
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 Group's investment
in Excil Electronics Ltd, capitalised development costs and software purchases
were £1,473,000 (2021: £1,405,000). 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 £163,000 (2021: £167,000). There
were no Capitalised development assets written off in the year (2021: loss of
£53,000).
The net book value of property, plant and equipment as at 30 September 2022,
including Right of Use Assets, totalled £5,985,000 (2021: £6,433,000), of
which property represented £3,913,000 (2021: £4,115,000), plant, equipment
and motor vehicles £2,072,000 (2021: £2,318,000). Additions in the year
increased following the low level in the previous year of capital investment,
at £419,000 (2021: £215,000). Disposals in the year totalled £1,666,000
with a net book value of £170,000 including sale of surplus land and Right of
Use lease terminations (2021: £368,000 with a net book value of £9,000).
The depreciation charge reduced 7.7%. reflecting prior levels of investment at
£699,000 (2021: £757,000).
Net trading assets (defined as inventories plus trade and other receivables,
plus current tax and less trade and other payables) were 9.3% higher at
£5,119,000 (2021: £4,688,000), predominantly through higher activity at the
end of the year increasing the level of debtors.
Financial Review (continued)
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 30(th) September 2022 the amount
outstanding was £2.1m (2021: £2.3m). Interest is payable at base rate plus
2.25%.
Cash Flow
Net cash inflow from operating activities was £77,000 (2021: £1,189,000)
made up of a trading cash inflow of £395,000 (2021: £601,000); an increase
in working capital of £612,000 (2021 decrease: £594,000); tax refunds of
£159,000 (2021: £77,000) and voluntary defined benefit pension contributions
of £Nil (2021: £83,000). Overall, there was a net increase in the Group's
cash position of £841,000 (2021: £513,000), which included £17,000 receipts
from the exercise of share options (2021: £300,000).
Capital expenditure outflows on property, plant and equipment reduced to
£88,000 (2021: £100,000), excluding assets financed through lease
arrangements. Capitalised development expenditure amounted to £163,000
(2021: £167,000), 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. The
Group also benefitted from the sale of surplus land raising £1,666,000.
In the year new leasing arrangements led to right of use additions of
£331,000 (2021: £115,000). Interest at 3.7% was charged on fixed rate
borrowings (2021: 3.6%). Interest on the Group's overdraft facility is payable
at base rate plus 2.0%. The facility was unutilised as at 30 September 2022
and 2021. The composite interest rate across both borrowings and lease
liabilities was 3.1% (2021: 2.7%).
Capital loan repayments of £190,000 were made in the year (2021:
£187,000). Outflows repaying the principal elements of lease liabilities
were £390,000 (2021: £420,000). Interest payments on borrowings amounted
to £88,000 (2021: £86,000).
The Group's dividend policy was paused in 2020 as a safeguard to secure cash
reserves through the economic downturn and supply issues, this continuing
through 2022 with no distributions.
Defined Benefit Pension Asset
The LPA Industries Limited Defined Benefit Scheme was part of the Deloitte
Pensions Master Plan throughout the entire year under review. This arrangement
had included the transfer of the advisory functions, administration and the
pensioner payroll to Deloitte. The total costs of this transition have been
substantial as the Scheme has necessarily been subject to a level of scrutiny
and audit to ensure that it can be prepared for an eventual exit to an
insurance provider. The costs of running the scheme have been borne by the
Group and this year amounted to £174,800 (2021: £283,128 including £100,000
of Group contribution). The rectification work is largely complete and subject
to GMP equalisation ongoing discussion, we anticipate substantially reduced
costs going forward.
A full Actuarial valuation of the Scheme was carried out in March 2021 which
indicated the Scheme was at a healthy 121% funding level. At 31 March 2022 an
actuarial report indicated that this had risen to 127% of the actuarial
funding level. The result of the change in investment strategy in January
2022, when the
Financial Review (continued)
Trustees having undertaken a review in 2021 agreed to lock in the gains and de
risk the scheme, has been beneficial. The key driver for the then improved
funding position has been the higher than assumed returns on the Scheme's
assets and the changes in financial conditions which have reduced the
liabilities. It is natural for the Scheme's funding level to fluctuate over
time reflecting changes in the financial markets and this was apparent during
the last six months of the year under review especially sparked by the
mini-budget on 23 September 2022. Over the year to 30 September 2022 the
Scheme's assets, which are with Legal & General Investment Managers in
LGIM funds marginally outperformed the benchmark return at -24.8% versus -25%.
The IAS19 actuarial surplus recognised at 30 September 2022 was £2.5m (2021
restated: £2.6m). This is after restricting the asset recognised by a tax
deduction of 35% which is applied to any refund from a UK pension scheme.
This change in accounting for the surplus in the year has been recognised as a
prior year adjustment.
The Trustees, under advice, did not seek any voluntary employer contributions
during the year from the Group (2021: £100,000). The IAS 19 position reflects
the impact of rising interest rates on the present value of the Assets and the
liability to pay pensions in the future.
Paul Curtis
Chief Executive Officer
2(nd) February 2023
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 2022 2021
Health & Safety
Riddors · reportable incidents of disease or danger occurrences None None
Accidents · events that cause impact, damage or injury involving a person or 25 13
infrastructure, which are not a Riddor
Near misses · events that occurred which have not caused an Accident 21 15
Financial
Orders to revenue · orders for the year expressed as a multiple of revenue as a measure 1.02 1.27
of prospective growth
Order entry · order intake confirmed £19.7m £23.2m
Order book · the measure of opening order book, plus order entry, less £27.7m £27.3m
revenue
Revenue growth · increase/(decrease) year-on-year as a percentage of prior year 5.8% (11.8%)
Added value · the margin generated on revenue after deduction of material costs but 49.1% 50.5%
before other costs of sale and conversion
Gross margin · as a percentage of revenue 22.8% 20.3%
Profitability · underlying operating (loss) as a return on trading activities to (1.2%) (1.5%)
revenue
Cash generation · net increase in cash and cash equivalents before financing activities £1.5m £0.9m
Gearing · the measure of net debt being borrowings and lease liabilities less 3.5% 11.9%
cash balances, to net assets
This year's comparative of accidents reflects increased level of activities at
the end of covid restrictions and a greater emphasis on the reporting within
the factories.
Consolidated Income Statement
For the year ended 30 September 2022
Restated
2022 2021
Note £000 £000
Continuing operations
Revenue 2 19,325 18,265
Cost of Sales (14,925) (14,558)
Gross Profit 4,400 3,707
Distribution Costs (1,781) (1,562)
Administrative Expenses (2,865) (2,664)
Administrative Expenses-Exceptional Items 3 1,323 (46)
Other Operating Income 3 7 217
Underlying Operating (Loss) (226) (274)
Share Based Payments 3 (13) (28)
3
Exceptional Items 1,323 (46)
Operating Profit/(Loss) 3 1,084 (348)
Finance Income 78 47
Finance Costs (88) (86)
Profit/(Loss)Before Tax 1,074 (387)
Taxation 4 111 365
Profit/(Loss)for the Year 1,185 (22)
Attributable to:
- Equity Holders of the Parent 1,185 (22)
Earnings/(Loss) per Share
Basic 8.99p (0.17)p
Diluted 8.99p (0.17)p
Consolidated Statement of Comprehensive Income
For the year ended 30 September 2022
Restated
2022 2021
£000 £000
Profit/(Loss) for the Year 1,185 (22)
Other Comprehensive Income
Items that will not be reclassified to profit or loss:
Actuarial (loss)/gain on pension scheme (219) 1,849
Restriction of pension assets 49 (693)
Other Comprehensive Income (170) 1,156
Total Comprehensive Income for the Year 1,015 1,134
Attributable to:
- Equity Holders of the Parent 1,015 1,134
Consolidated Balance Sheet
At 30 September 2022
Restated Restated
Co No: 00686429 2022 2021 2020
£000 £000 £000
Non-Current Assets
Intangible Assets 1,473 1,405 1,386
Tangible Assets 4,774 5,188 5,546
Right of Use Assets 1,211 1,245 1,438
Retirement Benefits 2,471 2,563 1,277
Deferred Tax Assets 229 263 -
10,158 10,664 9,647
Current Assets
Inventories 4,567 4,702 3,968
Trade and Other Receivables 5,095 4,111 5,447
Current Tax Receivable 41 55 30
Cash and Cash Equivalents 2,199 1,358 845
11,902 10,226 10,290
Total Assets 22,060 20,890 19,937
Current Liabilities
Bank Loan (190) (191) (188)
Lease Liabilities (356) (323) (406)
Trade and Other Payables (4,584) (4,180) (4,193)
(5,130) (4,694) (4,787)
Non-Current Liabilities
Bank Loan (1,934) (2,123) (2,313)
Lease Liabilities (240) (354) (584)
Deferred Tax Liabilities - - (16)
(2,174) (2,477) (2,913)
Total Liabilities (7,304) (7,171) (7,700)
Net Assets 14,756 13,719 12,237
Equity
Share Capital 1,348 1,345 1,266
Investment in Own Shares (324) (324) (324)
Share Premium Account 943 929 708
Share Based Payment Reserve 49 60 118
Merger Reserve 230 230 230
Retained Earnings 12,510 11,479 10,239
Equity Attributable to Shareholders of The Parent 14,756 13,719 12,237
Consolidated Statement of Changes in Equity
For the year ended 30 September 2022
Share Capital Investment in Own Shares Share Premium Account Share Based Payment Reserve Merger Retained Earnings Total
Reserve
2022 £000 £000 £000 £000 £000 £000 £000
At 1 October 2021* 1,345 (324) 929 60 230 11,479 13,719
Profit for the Year - - - - - 1,185 1,185
Other Comprehensive Income - - - - - (170) (170)
Total Comprehensive Income - - - - - 1,015 1,015
Proceeds from issue of shares 3 - 14 - - - 17
Share based payments - - - 13 - - 13
Tax on share-based payments - - - - - (8) (8)
Transfer on exercise of - - - (24) - 24 -
share options
Transactions with Owners 3 - 14 (11) - 16 22
At 30 September 2022 1,348 (324) 943 49 230 12,510 14,756
* restated - see note 1
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 10,239 12,237
(Loss) for the Year* - - - - - (22) (22)
Other Comprehensive Income* - - - - - 1,156 1,156
Total Comprehensive Income* - - - - - 1,134 1,134
79 - 221 - - - 300
Proceeds from issue of shares
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 11,479 13,719
Consolidated Cash Flow Statement
For the year ended 30 September 2022
2022 2021
£000 £000
Profit/(Loss) Before Tax 1,074 (387)
Finance Costs 88 86
Finance Income (78) (47)
Operating Profit/(Loss) 1,084 (348)
Adjustments for:
Amortisation of Intangible Assets 95 111
Depreciation of Tangible Assets 497 484
Depreciation of Right of Use Assets 202 273
Profit on sale of Land/Plant and Equipment (1,496) -
Loss on disposal of Intangible Assets - 53
Equity Settled Share Based Payments 13 28
Operating cash flow before movements in working capital 395 601
Movements in Working Capital:
Decrease/(Increase) in Inventories 135 (734)
(Increase)/Decrease in Trade and Other Receivables (984) 1,336
Increase/(Decrease) in Trade and Other Payables 372 (8)
Cash generated from operations (82) 1,195
Income Taxes Received 159 77
Defined Benefit Pension Contributions less settlements - (83)
Net cash inflow from operating activities 77 1,189
Purchase of Software - (16)
Purchase of Property, Plant & Equipment (88) (100)
Proceeds from Sale of Property, Plant and Equipment 1,666 -
Expenditure on Capitalised Development Costs (163) (167)
Net cash inflow/(outflow) from investing activities 1,415 (283)
Repayment of Bank Loan (190) (187)
Principal elements of Lease Liabilities (390) (420)
Interest Paid (88) (86)
Proceeds from Issue of Share Capital 17 300
Net cash outflow from financing activities (651) (393)
Net increase in Cash and Cash Equivalents 841 513
Cash and Cash Equivalents at start of the year 1,358 845
Cash and Cash Equivalents at end of the year 2,199 1,358
Reconciliation of cash and cash equivalents
Cash and Cash Equivalents in Current Assets 2,199 1,358
Consolidated Cash Flow Statement (continued)
For the year ended 30 September 2022
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 2021 2,314 677 (1,358) 1,633
New Lease Obligations - 309 - 309
Interest Costs 64 24 - 88
Repayment of Borrowings/Lease Liabilities (254) (414) 668 -
Other Cash (Generated) - - (1,509) (1,509)
At 30 September 2022 2,124 596 (2,199) 521
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 - 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 2,314 677 (1,358) 1,633
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 2022 and 2021
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
UK-adopted International Accounting Standards. The statutory accounts for the
year ended 30 September 2021 have been delivered to the Registrar of
Companies. The statutory accounts for the year ended 30 September 2022 have
been audited and approved but have not yet been filed. The Group's audited
financial statements for the year ended 30 September 2022 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 2 February 2023.
The 2022 accounts, together with notice of the Annual General Meeting, are
expected to be posted to shareholders on 27 February 2023 and will be
available from the LPA website (www.lpa-group.com (http://www.lpa-group.com) )
from 15(th) February 2023. They will also be available from the Group Finance
Director, LPA Group Plc, Light & Power House, Shire Hill, Saffron Walden,
CB11 3AQ.
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 2021.
The prior year accounts have been restated to restrict the pension scheme
asset by 35% tax which is netted off the amounts that would be refunded.
Given no further taxes will be payable by the Group, the deferred tax
provision held in relation to the pension scheme has also been reversed.
There is no change in the profit before tax reported for the year ended 30
September 2022 as a result of this change however the net assets have reduced
by £380,000.
2 Operating Segments
All of the Group's operations and activities are based in, and its assets
located in, the United Kingdom. The CODM does not review segmental assets and
liabilities by segment and therefore no reconciliations are disclosed. 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 corporate 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:
2022 2021
£000 £000
Electro-mechanical systems 6,533 7,761
Engineered component distribution 3,342 3,410
Lighting & Electronics systems 9,450 7,094
Operational Revenue 19,325 18,265
2022 2021
£000 £000
Revenue recognised over time 97 788
Revenue recognised at a point in time 19,228 17,477
19,325 18,265
All revenue originates in the UK. An analysis by geographical markets and
market segments is given below:
2022 2021
Rail 72% 77%
Aerospace and Defence 13% 10%
Other 15% 13%
100% 100%
2022 2021
£000 £000
United Kingdom 12,649 12,618
Rest of Europe 4,607 3,500
Rest of World 2,069 2,147
19,325 18,265
One individual customer (2021: three) represented more than 10% of Group
revenue, combined totalling 23% (2021: 38%).
2 Operating segments (continued)
2022 2021
£000 £000
Operational Profit 768 652
Corporate Costs (994) (926)
Underlying Operating (Loss) (226) (274)
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
£594,000 (2021: £426,000).
3 Operating Profit/(Loss)
The following items have been charged in arriving at Operating
profit/(loss)/profit.
2022 2021
A. Component costs in arriving at Operating Profit/(Loss) £000 £000
Materials (to Added Value) 9,831 9,036
Production Overhead & Direct Labour 5,094 5,522
Cost of Sales 14,925 14,558
Selling & Distribution Costs 1,781 1,562
Administrative Expenses 2,865 2,664
Administration Expenses - Exceptional Items (1,323) (46)
Other Operating Income (7) (217)
2022 2021
B. Expenses/(credits) by nature within Underlying Operating Loss £000 £000
Amortisation of Intangible Assets 95 111
Depreciation of Tangible Assets 497 484
Depreciation of Right of Use Assets 202 273
Loss on Disposal of Assets 10 53
Lease Rentals / Short Term Hire Charges 22 16
- Plant, Equipment & Motor Vehicles
Foreign Exchange (Gain)/Loss (62) 96
Other Operating Income:
- Covid-19 Job Retention Scheme grants (CJRS) (7) (217)
Fees Payable to The Company's Auditor:
- For the Audit of The Company's Annual Accounts 49 22
- The Audit of The Company's Subsidiaries Pursuant to Legislation 84 71
2022 2021
C. Within Exceptional Costs £000 £000
Sale of land (1,506) -
Reorganisation costs / staff changes 173 -
Dual running management costs 10 46
(1,323) 46
Sale of land relates to the disposal of a piece of surplus land that was
valued on the books at £160,000 and realised a net gain of £1,506,000 during
the year (2021: £nil).
Reorganisation costs / staff changes of £173,000 in 2022 relate to a Group
wide cost base review and loss of office payment. (2021: £nil).
Dual running costs of £10,000 (2021: £46,000) relate to an extended
crossover between the appointment and retirement of Board Directors related to
the board rejuvenation process commenced in 2018, and concluded on 31 December
2021.
4 Taxation
Restated
2022 2021
A. Recognised in The Income Statement £000 £000
Current Tax Expense
UK Corporation Tax (65) (4)
Adjustment in Respect of Prior Years (80) (46)
(145) (50)
Deferred Taxation
Net Origination and (Recognition) / Reversal of 34 (244)
Temporary Differences
Net Change as a Result of Rate Increase - (71)
Total Corporation Tax (Credit) (111) (365)
2022 2021
B. Reconciliation of Effective Tax Rate £000 £000
Profit/(loss) Before Tax 1,074 (387)
Tax at The UK Corporation Tax Rate of 19% (2021: 19%) 204 (74)
Effects of:
- Tax Rate Change - (71)
- Enhanced Deduction for Qualifying R&D Expenditure (102) (80)
- Prior Period Adjustments (80) (46)
- Prior Period Losses Recognised (71) (55)
- Other Differences (62) (39)
Total Income Tax Credit (111) (365)
2022 2021
C. Current and Deferred Tax Recognised Directly in Equity £000 £000
Tax Charge/(Credit) Arising on Share Options 8 (20)
5 Earnings/(Loss) Per Share
The calculation of earnings per share is based upon the profit for the year of
£1,185,000 (2021 restated: loss £22,000) and the weighted average number of
ordinary shares in issue during the year of 13.472m (2021: 12.89m) less
investment in own shares of 0.3m (2021: 0.3m), of 13.172m (2021: 12.59m).
2022 2021
Earnings Weighted Earnings (Loss) - restated Weighted Loss
Average Per Average Per
No of Shares Share No of Shares Share - restated
£000 Million Pence £000 Million Pence
Basic Earnings/(Loss) Per Share 1,185 13.172 8.99 (22) 12.590 (0.17)
Effect of Share Options - 0.007 - - - -
Diluted Earnings/(Loss) Per Share 1,185 13.179 8.99 (22) 12.590 (0.17)
Diluted earnings per share has been calculated for the year ended 30 September
2022 as the Group reported a profit (2021: the loss was considered
anti-dilutive and was ignored for the calculation). Basic earnings per share
for the year ended 30 September 2021 has been restated (see note 1). The
impact of the restatement has reduced loss per share by 0.10 pence.
6 Going Concern
In assessing going concern, including impacts of 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 underlying operating loss in the current year and
anticipating a challenging start to the 2023 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
2022 financial year, with a positive EBITDA and strong cash management,
benefiting from the sale of the surplus land; (iii) has a strong 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
2022 challenges. Therefore, the directors believe that it is well placed to
manage its business risks successfully.
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. We maintain good relationships with our bank and our current
facility is in place until March 2024 before which discussions should lead to
renewal as the bank remains supportive of our business model.
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 is to be held at 12:00 noon on Thursday 23 March
2023 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 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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