Lpa Share News (LPA)

LONDON (Alliance News) - LPA Group PLC saw its shares fall early Thursday after it warned that its current financial year had got off to "an extremely slow start", meaning it's going to be playing catch-up for the rest of the year, although it added that its medium-term prospects remain bright.

The maker of LED lighting and electronic systems for sectors like rail, roads, aerospace and defence, said it had been caught in a trough between the completion of several major road projects and the start of several new ones, and was also still suffering from a hiatus in UK rail franchise awards.

"Although the effect of the franchising hiatus appears to be coming to an end with a number of orders, large and small coming closer to fruition, the delays have left a large gap between the completion of large projects and the commencement of new large projects. This gap impacted the second half and has resulted in an extremely slow start to the current year," Chief Executive Peter Pollock said in a statement.

"The first quarter, particularly December, was very disappointing but the factory load from February onwards is encouraging. The current year will be one of two very different halves, with the remainder of the first half devoted to recovering the damage of the first quarter and the second half expected to deliver accelerating progress," he added.

LPA Group said revenue fell to GBP16.8 million in its last financial year to September 30, from GBP17.6 million a year earlier, as it was hit by the hiatus in UK rail franchise awards in the second half of the year. However, its operating profit before exceptional items rose to GBP636,000, from GBP609,000.

Its pretax profit dropped to GBP295,000, from a restated GBP1.7 million which had been boosted by an exceptional GBP2.06 million gain in property disposals minus higher resorganisation costs. Gearing increased to 21.1%, from 8.5% at the end of fiscal 2013.

It still raised its final dividend to 0.85 pence, from 0.75p a year earlier, bringing the total for the year to 1.55p, from 1.35p.

Despite the quiet start to the current financial year, LPA said its order book at the end of its last financial year was up 35% on a year earlier at GBP8.2 million. Order entry in the first quarter of the current year was strong at GBP7.0 million, it added, including the first GBP2.3 million out of the GBP3.3 million worth of contracts it announced in October plus a GBP1.3 million LED lighting contract it received in December.

It said it has also been selected for more than GBP12 million of contracts that have yet to be booked.

Chairman Michael Rusch said the company's prospects have "never looked stronger" given the potential of the UK rail market and the new high-speed rail link between London and the north, as well as in export markets.

"We have invested to rationalise and improve our electro-mechanical activities, we plan to start investment this year to modernise and expand our LED lighting manufacturing facility and our engineered product distribution activity is poised for growth. As the UK rolling stock refurbishment programme begins to gather pace, the prospects for our after-market support activity are improving strongly. We look forward to our medium and longer term future with increasing confidence," he said in the statement.

Still, LPA Group shares were down 10.9% at 78.00 pence Thursday morning, making its one of the worst-performing stocks in the AIM All-Share index.

By Steve McGrath; stevemcgrath@alliancenews.com; @stevemcgrath1

Copyright 2015 Alliance News Limited. All Rights Reserved.