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LPA & BRADY 23 January 2014

LPA Group delivered its preliminary results this morning for the year ended 30 September 2013.

As previously flagged, the numbers were always going to be flat, with watchers or holders perhaps more interested in the prospects  for the new financial year.

More on that in a moment, as it is worth just running over the numbers in those results.  Revenues declined by 3.9% to £17.6m against the previous

£18.3m, with pre-exceptional operating profits, coming in at £609k against the previous £921k. Reported EPS of 15.4p is of course flattered by the land sale, which also saw that exceptional  pre-tax profit of £1.79m.

 

Perhaps of more interest to me and others, is of course the forward picture, and on that front I feel LPA, could have a bright future ahead.

I particularly warmed to the fact that export sales were up some 31% to £8.49m against a corresponding £6.5m, which one hopes bodes well for the year ahead and beyond after the company embarked on broadening its reach a few years back.  

It is perhaps also worth noting, that Chief Executive Peter Pollock was out of the Country in late November for a few weeks relating to the business, which could also prove to be a positive further down the line.

 

The performance of the growing LED arm was also for me encouraging, with a 24% increase to revenues of £4.8m against £3.8m, overseas making a marked contribution. I also noted that the targeting of areas relating to infrastructure, is according to the company, bearing fruit from areas such as station concourses and tunnels.  

 LPA also picked up a £2.5m order entry in December which is the highest monthly level achieved in total since 2011 and perhaps encouragingly is mainly for UK rail projects, which the company suggests will hopefully see the end of the delays caused by the rail refranchising process.

In terms of current prospects the board look forward to the future with increasing confidence, which given that they can be a cautious bunch, is a positive for me.

There certainly appear to be plenty of opportunities, coupled with significant business previously won to be delivered over the next few years.

The balance sheet also looks a lot healthier, although while there is a pension deficit of circa £1m there are adequate plans in place to eradicate this over a projected timescale.

 

Gearing has also reduced to single figures post the land sale, with the Net Asset Value cited as being 61p per share.

It is also possible, given the price of property in Saffron Walden that the company could see a little more upside from the overage clause further down the line.  

I was hoping to speak with Peter Pollock today, but he is understandably busy doing the rounds until Monday, so that will be put on hold.

 

I should also hopefully be getting hold of a new Broker note in relation to expectations and will add more in the weekly column as soon as that is possible.

For now, the shares closed up 3.5p to 80p with an increased dividend also announced. The market cap here is now £9m, which no doubt investors or watchers will have their own opinions on.

From a purely personal perspective, if the company can deliver as expected and the refurbishment all goes according to plan as it should, then I feel LPA is well worth a continuing monitoring.  

 

 

BRADY the software company serving the commodity and risk management markets announced a Trading Statement this morning, relating to its year ending 31 December 2013.

 

Full year revenues are expected to come in at £29.3m with EBITDA before exceptional items of £3.6m.

The shares as a result, dropped 5p or 6.5% to 71p with a fair bit of trading activity. Personally, I felt it was a bit overdone, but then the shares had recovered from the low sixties back in the summer and perhaps some were expecting more, with those who were in profit electing to move on.

In the statement, the company announced that it had secured five new contracts in the last six weeks of the year concerned, taking the total of new contracts to thirteen, which will be recognized largely in 2014 and beyond.

After a record sales year in the Americas along with some decent wins relating to Russia and other East European territories, Brady does look well placed enough to cement further business and deliver growth.

As I have mentioned before though, deals and sales can be lumpy or sporadic here, so it is worth noting that when taking a look in my opinion.  

That said, the balance sheet looks healthy enough with an anticipated £6.7m of cash, while the recurring revenue stream looks solid for the year ahead after accounting for 57% of sales in 2013.

There are three Brokers covering the stock, with Edison seemingly the most widely quoted, the others being Cenkos and Panmure Gordon.

As I am meeting up with management next month, I will hopefully be able to add more and maybe even run an eye over all the latest Broker comments.

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