REG - LPA Group PLC - Acquisition of Power Business

LPAAnnouncement

22/01/2025 07:00

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RNS Number : 1922U  LPA Group PLC  22 January 2025

22 January 2025

 

LPA Group plc

("LPA", the "Company" or the "Group")

Acquisition of Power Business

LPA Group plc, the innovation-led engineering specialist in electronic and
electro-mechanical components and systems, is pleased to announce that an
agreement has been signed to acquire the UK trade and assets of a power supply
provider (the "Acquisition").

LPA has reached agreement with Eaton Electrical Products Limited to acquire
Eaton's Powertron business. The Acquisition includes the UK trading division
and assets, including its small manufacturing capability in Cambridgeshire.
The Acquisition is complementary to a number of power supply products the
Company currently manufactures for the rail industry. Some of the components
being outsourced by the business will in future be manufactured by LPA in
Yorkshire and given LPA's existing extensive sales network, the Group
anticipates that it will increase these sales volumes over time.

The Acquisition, by way of an asset purchase agreement, results in LPA
acquiring fixed assets, current assets and liabilities, the employment of
approximately 20 members of staff, and the business including worldwide rights
to brands and product designs. The consideration for the Acquisition is in the
form of LPA, taking on the obligation to settle lease dilapidation obligations
expected to be due in 2026 estimated at £200,000, taking on liability for any
customer product warranty claims capped at in total £150,000, and a cash
payment to the seller currently estimated at c.£17,000 calculated with
reference to net working capital as at 31 January 2025. A fair value exercise
will be carried out following completion of the Acquisition, and it is
expected that this will show that the assets have been acquired at a discount
to their fair value.

The Company anticipates the Acquisition will be broadly neutral to FY25
profit, and that it will make a small and growing contribution to Group
profits over time with the expected increase in sales volumes. Importantly it
will align with the Company's strategy of transitioning its factories to
manufacture more standardised products with decreasing reliance on New Project
delivery sales.

The business the subject of the Acquisition achieved revenues for the year
ended 31 December 2023 of £2.1 million, a loss before tax of £77,000, and
net assets being acquired are estimated currently at approximately £565,000
(calculation excludes any accrual for lease dilapidation obligations) (all
unaudited).

It is expected that completion of the Acquisition will occur in Q1 calendar
2025, subject to TUPE consultations, the transfer of the buildings lease and
finalisation of net working capital.

Robert Horvath, Chairman said: "The addition of more stable month on month
product is a key part of our ongoing strategy to keep our manufacturing units
productive and this Acquisition, importantly will support our delivery against
our strategy. This Acquisition, and the acquisition of the Red Box business
announced last year, while both small, are going to make a
significant difference to monthly sales volumes that we can build upon,
supported by our international distribution network. We are also seeing good
progress in increasing the sales in the connector side of our aviation
business as well as our Channel distribution business."

For further information, please contact:

 LPA Group plc                                                       Tel: +44 (0) 1799 512800

 Robert B Horvath, Chairman

 Philo Daniel, Chief Executive Officer

 Stuart Stanyard, Chief Financial Officer

 Cavendish Capital Markets Limited (Nominated Adviser & Broker)      Tel: +44 (0) 20 7220 0500

 Corporate Finance

 Ed Frisby / Isaac Hooper / Elysia Bough

 Corporate Broking

 Tim Redfern

 Hudson Sandler (Financial PR)                                       Tel: +44 (0) 20 7796 4133

 Dan de Belder

 Nick Moore

 Francesca Rosser

 

About ​LPA

LPA Group plc (AIM: LPA) is an innovation-led engineering specialist in
electronic and electro- mechanical components and systems.

Focused on transport (rail and aviation), defence, infrastructure and
industrial markets and supplying into hostile and challenging environments,
LPA is known for engineering solutions to improve product reliability,
reducing maintenance and life cycle costs.

The Group has three sites across the UK, selling to customers in the UK and
overseas. Two of these are design and manufacturing sites: LPA Connection
Systems - electro-mechanical systems for rail, aviation and industrial, and
LPA Lighting Systems - LED lighting and electronic systems for rail and
infrastructure. The third site is LPA Channel Electric - a value added
distributer of engineered components for rail, aerospace, and defence.

With over 160 years of UK design and manufacture, and with origins in the
first ever light installed in 'Electric Avenue', Brixton; innovation is core
to LPA and to the products and services supplied to our customers worldwide.

For more information visit www. (http://www.lpa-group.com/) lpa-
(http://www.lpa-group.com/) gr (http://www.lpa-group.com/) oup.com
(http://www.lpa-group.com/)

 

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