REG - LPA Group PLC - Final Results
25/01/2024 07:00
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RNS Number : 8276A LPA Group PLC 25 January 2024
25 January 2024
LPA Group Plc
("LPA", the "Company" or the "Group")
Final Results for the year ended 30 September 2023
LPA Group plc, the innovation-led engineering specialist in electronic and
electro-mechanical components and systems, is pleased to announce its Final
Results for the year ended 30 September 2023.
Final Results key points: (
)
· Order book increased to £31.6m (2022: £27.8m)
· Order entry at £25.5m (2022: £19.7m)
· Revenue at £21.7m (2022: £19.3m)
· Underlying operating loss * of £0.1m (2022: loss of £0.2m)
· Profit before tax of £0.8m (2022: £1.1m)
· Basic earnings per share of 6.52p (2022: 8.99p)
· Proposed dividend of 1p (2022: none)
· Net debt at year end of £1.2m (2022: £0.5m)
(*) Operating Profit before Share Based Payments, Negative Goodwill and
Exceptional Items
The year to 30 September 2023, included the following highlights and
operational developments.
· Successful acquisition and integration of competitor's range of
inter-car jumper products. Thigives access to approximately 2,000 vehicles
across the UK where we can now offer product support.
· Strong order entry leading to a year end record orderbook of £31.6m.
· Continued expansion of sales partner network around the world.
· Continued development of standard products across the Group to reduce
dependence on large projects.
· First sales from LPA Lighting Systems to aviation sector with USB
charging products designed and supplied to prototype build.
Robert B Horvath - Chairman commented:
"The year to 30 September 2023 has been a strategically important one building
on the foundations of the year before and its substantive management changes.
We will again report a profit before tax (£0.8m) that has been supported by
exceptional items rather than underlying profitability, but the green shoots
are in evidence and in the last 6 months of the financial year (the second
half) we completely turned around the results of the first half.
It remains a challenge to rebalance volume levels to get more into the front
half of our reporting year especially with Christmas shutdowns at our clients
and our current dependency on a number of large 'new' projects that inevitably
are slower to start than we would want. So we will still deliver a much
stronger operating performance in the second half of the year this year than
we will in the first half. Our order entry during the year was robust and I am
pleased to report that our order book is strong with many other opportunities
out there for further growth. We must remain alive to global supply chain
issues and macro-economic factors as we are a global business selling into
many markets around the world. We must be clear though on what we try to
negotiate and win as supply chain and inflationary pressures remain stubbornly
adverse. We will manage growth in line with our capabilities and remain agile
and responsive as our management teams know this is our core strength.
During the year we purchased the trade and intellectual property for a
competitor's product line and since the year end we have entered the Battery
charging market. These 2 are planned strategic moves, one into after care
products for 2,000 plus vehicles that will we believe will have extended lives
and the other into DC battery charging to support our aviation business. These
2 will create the volume we need to underwrite our Connection Systems business
in the years to come. We will look for similar moves to strengthen our
Lighting Systems business. The progress at Channel Electric is well in line
with our plans and is experiencing increasing enquiries, orders and sales.
As I reported last year, we aimed to build up cash reserves recognising that
as we start to grow again following 2 years of modest turnover there will be
pressure on working capital. We have seen that pressure in the last 6 months
and our Bankers have been supportive in extending and renewing our facilities
to support part of our growth plans. I am pleased that we are able to restart
a dividend policy for our shareholders.
Our gearing remains a modest 7.7% (2022: 3.5%) and our net asset value grew.
The (closed) defined benefit pension scheme remains in good shape and the
impact on our balance sheet of the Trust's investment policy has been positive
again this year. The pension remains in a healthy surplus.
We anticipate an overall operating profit in FY 2024, in line with
expectations, with even better prospects thereafter all of which supports our
return to dividend distribution. The Board has confidence in the prospects for
the Group, supported by high quality customers, order book, increasing
visibility of new business and our overall strategy to diversify into other
markets and grow."
25 January 2024
For further information, please contact:
LPA Group plc Tel: +44 (0) 1799 512800
Robert B Horvath, Chairman www.lpa-group.com
Paul Curtis, 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 / Abigail Kelly
Corporate Broking
Tim Redfern
Hudson Sandler (Financial PR) Tel: +44 (0) 20 7796 4133
Dan de Belder
Nick Moore
Francesca Rosser
Share and company information
The information contained within and on the LPA website is not an invitation
to invest in shares or other securities, or any other products or services or
otherwise deal in these or enter into a contract with LPA or any other
company. The information provided should not be relied upon in connection with
any investment decision. You should always seek appropriate professional
investment advice in relation to such.
The past performance of LPA or any other company referred to within or on the
Website cannot be relied upon as a guide to its future performance. The price
of shares and the income derived from them can go down as well as up and
investors may not recoup the amount originally invested. Any reference to any
product or service which has been or may be provided by LPA or any other
company does not amount to a promise that such product or service will be
available at any time. Changes to or improvements in such products or services
may be made at any time without notice.
Chairman's Statement
Overview
We have witnessed a much improved business, a growth in our sales line and a
return to profitability in the last 6 months of the year. The individual
business plans for the members of the Group are beginning to deliver on the
Group's strategy. We have long recognised our need to broaden our offering
as some of our operations have become too reliant on a few large customers. We
have ended the year with a strong order book replacing most of what has been
delivered this year, strengthened by aftercare work rather than large new
projects.
LPA Connection Systems set out to have a more transformative year. Now, with
its stronger focus on the aftercare market and at the same time further
investment in aviation products, the strategy is starting to bear fruit. It is
looking for additional markets and products away from rail that it can make
and deliver to build resilience into its overhead recovery, an example of this
being our recently announced entry into the battery charging market for the
aviation industry.
LPA Lighting Systems will deliver over the next 18 months a lot of the extant
projects that were in development, and in some cases deferred. Our challenge
thereafter is to ensure we seek out other product lines for what is a first
class electronic engineering design and manufacturing facility.
The completion of the executive team at LPA Channel Electric has been a
welcome shift for this business as its order book increases to previous
levels, and the prospects for the business are back to better, than
pre-pandemic levels. We are consciously looking for further opportunities in
aerospace, defence and niche industrial products.
As I reported last year, we have had a very good response to our customer and
relationship management programmes and the signing up of new distributor
partners across the globe. Our sales and marketing team have been busy at a
number of exhibitions in Europe and North America; a good example was a strong
presence at InterAirport in Munich this year. We have recently attended AUS
RAIL PLUS in Australia and international Ground Support Expo in the US. This
is leading to discussions with potential partners to make and deliver products
for them in the UK.
Our new Group CFO, Stuart Stanyard, joined the Board in Spring and we continue
to recruit heavily into our Sales teams and into engineering competency
generally. We are an innovative group and in order to remain so we must
continually strive to look for talented people and where possible recruit
them, even if it means buying their nascent business opportunities. Our
innovation committee is developing connections with academia, having already
established relationships with universities and colleges, and this will
continue. To get the balance right we will rebase our reward mechanisms to
retain more moderate salaries and to increase the performance related element
of our remuneration packages.
As an innovation-led engineering specialist in electronic and
electro-mechanical components and systems we will continue to invest in our
capabilities. We have a programme of recruitment especially of apprentices and
young engineers. Operationally, the manufacturing facilities remain first
class but we need to be more agile as the Group expands and grows. We will
need to react even quicker to the data flows from the manufacturing processes
to be able to improve productivity in every sense. We have begun an investment
in a new enterprise resource planning tool ("ERP") to give our leaders better
control of our outputs; to know the cost of every process, to get it right on
time first time and to deliver a quality experience to our customers. To
compete on a global stage, as we do, we must invest in continuous improvement.
The sale of some surplus land in 2022 gave us plenty of working capital to
carry us through what we knew would be a difficult 18 months of trading. It
also enabled us to do a small acquisition during the year that we announced in
March 2023. As our turnover grows we will need working capital to fund higher
stock levels and debtors and we planned for this. The Bank facilities have
been renewed with our Bankers and with planned profitability I am pleased to
be able to report that we will pay a dividend this year and restore our policy
of paying dividends going forward.
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 Board will continue to meet its key shareholders
where possible in person and work closely with its Brokers and advisers to
ensure regular and open dialogue.
The Group exports widely and this needs to be reflected in our stakeholder
relationships which must be proactive, long term, visible and embedded into
our corporate culture. We have stakeholders, in the wider sense, all over the
world and it is heartening that the exec team are now able to visit them and
travel freely; much of what we do is solutions based and flows from personal
interactions.
Dividends and Pension Fund
A small final dividend of 1p per share (2022: nil) has been declared for the
year ended 2023. The Board believes in a progressive dividend so will
endeavour to set a reasonable expectation of growth over the coming years.
Included in our Balance sheet is an asset representing the actuarial
valuation, as at 31 March 2023, and the consequent accounting adjustment, for
our (closed) defined benefit pension scheme. I originally took over as Chair
of the scheme in the short term whilst we transferred to new Managers,
refocused our investment policies and endeavoured to maintain our surplus.
This ensured our CEO could stay focused on the core business. The rebalanced
investment portfolio has put the scheme in a very strong position and I intend
to step down as Chair leaving it to our Group CFO to govern the day to day
running of the scheme. This will allow me to be more objective as your
Chairman concerning the overall strategy of the scheme on our balance sheet
including the timing of any exit way from the fund and when are we best placed
to consider the timing of a buyout process.
Employees
Our people and our investment in them remains 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. We still have some
work to do but our more recently appointed subsidiary directors are clearly
committed to these values and we will see the impact of this in the coming
years.
We pride ourselves on our engineering skills and our factory operations and
are committed to investment to maintain this capability. We do maintain
flexibility through use of agency and temporary contracts, but we have no
zero-hour contracts. The general health, and well-being of our employees
personally, cannot be underestimated. Senior management time on people
issues, managing our employee numbers and the cost base remains part of daily
routine. Recruiting young people into a traditional engineering business and
more importantly its workspace is not easy; therefore communication with our
staff, engagement with their aspirations and progressive investment in their
well-being will distinguish us.
We continue our communication programme including a comprehensive newsletter
to our Employees, this is published twice a year. Induction programmes and the
Board's belief in instilling our corporate values and engagement remains a
priority.
I should like to thank all our employees, past and present, for their hard
work and diligence during 2023 and for their commitment to our future as we
start to look ahead at what I hope will be more encouraging times across our
worldwide markets.
Board
Board members' biographies and relevant experience are set out on the Group's
website www.lpa-group.com (http://www.lpa-group.com) .
Paul Curtis (CEO) heads up the Executive Team and he and our recently
appointed Group CFO Stuart Stanyard comprise the group Board Executive
Directors. 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.
ESG
We have reported on our Group ESG commitments for a number of years now and we
are committed as we move forward to ensuring that we stay in the forefront of
best practice for a leading engineering company. We actively manage our
carbon footprint, support greener practices and manage waste in an
environmentally transparent way. We encourage good health and wellbeing in
our staff and drive safety, innovation, as well as inclusion and diversity
into our day to day activities.
Outlook
The Executive team have an even stronger order book to work with than last
year, a solid balance sheet with renewed facilities in place, positive
operating cash flow and a clear vision. The Board has a process for looking at
identified opportunities and enhancing capability in line with the strategy
and it will consider each one on its merits. The Group has undergone
significant change in its leadership recently, and whilst there is a slight
lag in seeing measurable profit impact, there is discernible shift in
momentum. I am pleased to say that our outlook is now stronger with a bright
future that will be built on our innovation, capability and great customer
relationships.
Robert B Horvath
Chairman
Business Model and Strategy
The LPA Group plc is a quoted Small and Medium-sized Enterprise (SME),
admitted to trading on the AIM market of the London Stock Exchange, and
industry classified in the Electronic and Electrical Equipment FTSE sector.
The Group is an innovation-led engineering specialist in electronic and
electro-mechanical components and systems, supplying markets operating within
high dependency, hostile and benign environments which focuses on the market
segments of rail, rail infrastructure, aviation (aircraft and infrastructure),
industrial markets 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, rail infrastructure, aerospace infrastructure and industrial
Saffron Walden markets. · 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, aerospace aircraft and 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 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
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) .
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
The vision for LPA is being realised. A much more positive second half and a
real impetus in both LPA Channel Electric and LPA Connection Systems enabled
us to turn around the first half loss, delivering an improved second half.
LPA Lighting Systems still suffers from delays, not least, from HS2, Central
Line as well as other key projects.
Stronger trading in H2 fell short of full recovery from the slower trading
experienced during H1, resulting in an underlying operating loss for the full
year slightly ahead of prior year at £0.1m (2022: loss £0.2m). Within
the period we successfully integrated the acquisition of a competitor's
intercar-jumper product line, leading to negative goodwill of £0.9m,
resulting in a final profit before tax for the year of £0.8m (2022:
£1.1m).
Order entry improved significantly in the period to £25.5m (2022: £19.7m)
with strong contributions by LPA Channel Electric and LPA Connection Systems
offsetting a lower intake from LPA Lighting Systems which was caused primarily
by the delay in award of the HS2 scopes of work. It is envisaged that these
awards will happen during the coming year and we remain well placed to compete
for this work.
Revenues increased to £21.7m (2022: £19.3m) with LPA Connection Systems
performing strongly in the period benefitting from increased aviation product
sales and the newly acquired product line coming on stream.
The strong order entry achieved during the year resulted in the order book
increasing by £3.8m, ending the year at £31.6m (2022: £27.8m).
Added Value ("AV") for the year remained broadly in line with expectation and
slightly up on the prior year at 50.3% (2022: 49.1%).
2023 Summary
· Order book increased to £31.6m (2022: £27.8m)
· Order entry at £25.5m (2022: £19.7m)
· Revenue at £21.7m (2022: £19.3m)
· Underlying operating loss of £0.1m (2022: loss of £0.2m)
· Profit before tax at £0.8m (2022: £1.1m)
· Net cash inflow from operating activities £0.3m (2022: £0.1m).
Markets
Aerospace (aircraft) was steady for the period with main manufacture build
rates remaining at similar levels to the prior year. Airbus did however make
some progress with the A350 programme in the latter part of the period,
increasing rates from 5 to 6 aircraft per month. Aspirations for this
programme are for a build rate of 9 aircraft per month by the end of 2025.
The A220 programme maintained an average build rate of 4 aircraft per month
against aspirations of 6. Efforts by Airbus / Spirit to streamline and improve
their production process are ongoing and there is confidence from them that
build rates can be increased to 14 aircraft per month by the end of 2025.
There is also talk of a new longer version of the aircraft which would compete
against the Boeing 737-8. This however is many years in the future but shows
that confidence in this new aircraft family is growing.
Work has continued on targeting new aviation platforms with good progress
being made on projects including helicopters and EVTOL (Electric Vertical
Take-off and Landing) aircraft. These aircraft are from a new breed of
aviation companies and enjoy orderbooks of 900+ and 1,000+ aircraft
respectively. These programmes have the potential to significantly increase
LPA Channel Electric revenues once certification is received and production
commences in the coming years.
Aerospace (infrastructure) continued to deliver on its strategy with another
excellent year being achieved. The focus over the last few years of
developing our worldwide sales channels led to order entry significantly
increasing by 46% and revenues subsequently increasing 78% in the period.
This renewed range of products continue to impress our customers and are now
included in many of the busiest airports around the world. Building on this
success our engineers continue development of the range and it is envisaged
several new products will be released in the coming year.
In support of this sector the Group participated at the InterAirport show in
Munich and also took its first steps into the American market with a stand at
the GSEExpo show. Both shows resulted in good interest for the range and
confirmed the strategy for this market segment is starting to deliver tangible
results.
Rail - aftercare was strong in the period offsetting a slowdown in new build
activity in some areas of the Group. The recent product line acquisition by
LPA Connection Systems has been smoothly integrated and is delivering in all
aspects of expectations. This acquisition is an important product line for
our aftercare business and will continue to contribute for many years to come.
The legislation across the EU banning the sale of fluorescent tubes from
September 2023 is a strong positive for us, driving much interest in our LED
alternative. The Group, in preparation for this change, has been active in
this area for the last few years and, as such, enjoys good technical
experience, active sales channels and a good product offering aimed at serving
this new requirement.
The legislation mandating the use of USB-C on all phones has also recently
been agreed within the EU and UK, with all new devices needing to adhere by
the end of 2024. The Group has been a leader in providing USB-A charging
across the UK rail market and is well placed to serve its customers
requirements as they move to update their vehicles in compliance with this new
requirement.
Newbuild projects in the UK have slowed from their peak and a quieter period
is predicted as we await new funding decisions and subsequent investment. It
is pleasing however to see some of the existing projects won finally moving
into production and output for the coming years will enjoy revenues from the
prestigious Siemens Victoria Line and Alstom TGV projects amongst others.
Export remains an important part of the Group's business at 39%. In
support of this we continue our efforts in building our sales channels around
the world and in the development of products suited to this type of sales
model.
Industrial market progression was mostly achieved through our Niphan range of
specialist electrical connectors, with considerable work undertaken to update
the approvals of this range and to re-establish contact with historical
customers. As such, the range saw enhanced revenues for the period and
further progress is expected as we move forward. LPA Channel Electric also
put in place the first foundations of its entry into the industrial
marketplace and will look to enhance this further in the coming year.
Operational Review
The achievement of the Aviation quality standard AS9100 by our LPA Connection
Systems business in the period means that all sites now run with enhanced
certification and customer opportunity. Achieving these levels of quality
are key to ensuring our skilled and invested facilities continue to deliver at
the standards our customers are demanding of their supply chain.
The acquisition, announced in March 2023, of the inter-car jumper product line
has been successful. The range is now fully incorporated within our design and
manufacturing departments, and we have provided a near perfect delivery record
to our customers. This is the Group's first acquisition for 20 years and the
experience has been invaluable in assessing and growing our ability to
undertake such projects. It is envisaged that these skills will be used again
as we progress with our growth plans over the coming years.
The year saw continued investment in people as we look to build the skills and
abilities to take the Group to the next level. This is now mostly complete
and other than flexing direct labour to support increased revenues we expect
headcount to remain broadly flat over the coming period.
Capex whilst higher than last year remains relatively low. It is apparent
however that the ERP systems in some of our facilities are now struggling to
keep up as we progress with our drive on efficiency and growth. As such, the
coming year will see investment in new ERP systems at our two manufacturing
facilities.
The proceeds of the sale of surplus land in 2022 has been used wisely to
enable our Capex, restore some of our working capital and, pay for a small
acquisition. As detailed in the Chief Financial Officer's report the Group
banking facilities have been renewed, and our overall cash position supports
our longer-term plans.
Outlook
The Group has ambitious plans for the coming years and is committed to
providing growth, opportunity and returns for shareholders as well as its
wider stakeholders. In support of these plans the following activities are
key.
- Rebalancing the business with a more favourable mix of standard
products versus projects
- Organic growth across all businesses
- Development of new market segments, diversifying away from its
dependence on Rail.
- Continued development and management of worldwide sales channels
- Implementation of planned strategic acquisitions
- Enhancing the LPA brand worldwide
Excellent progress has already been made in many of these areas. And,
although we remain cautious against a backdrop of world unrest and challenges,
we are also confident that our people, invested facilities, strong balance
sheet and clear strategic goals, give us the ability to navigate these
uncertain times, and deliver the vision we hold 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 2023, together with explanation of the
financial Key Performance Indicators as summarised later.
Trading Performance
Macro-economic factors
During 2023, we saw a further improvement in the overall economy, evidenced by
a significant improvement in order entry of 30%, part of this being driven by
our acquisition of a competitor's product line. Our Lighting Systems
business continued to see some projects move to the right, but some of these
projects, the London Underground Central line in particular, have now started
to deliver. 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 slightly ahead of expectations and is
broadly expected to remain at this level as we move forward.
There has been some improvement in the supply chain and employment, although
the latter remains tight. The Group completed some key appointments in the
year.
Headlines
· Order entry exceeded sales at £25.5m (2022: £19.7m) resulting in the
order book growing further to £31.6m (2022: £27.8m), an increase of 13.5%;
· Revenue of £21.7m up 12.4% (2022: £19.3m) with LPA Connection Systems
revenues up £1.9m and LPA Channel Electric revenues up £0.7m, LPA Lighting
Systems down £0.2m;
· Added Value increased by 1.2% at 50.3% (2022: 49.1%); and
· Gross margins 22.6% (2022: 22.8%), was slightly lower because of
product mix.
By comparison to 2022, H1 2023 revenues increased by 5.8% to £9.1m (2022:
£8.6m), delivering an underlying operating loss of £0.6m (2022: loss of
£0.6m). H2 revenues were anticipated to accelerate as customer production
recovered from delayed projects. H2 delivered revenues of £12.6m (2022:
£10.7m), representing an increase of 17.6% against H2 2022 sales. This
resulted in an H2 underlying profit of £0.5m (2022: profit of £0.3m).
Distribution costs and administrative expenses increased by 11% to £5.1m
(2022: £4.6m). The main contributors to this were the wider economic cost
pressures seen across the industry. Group employment costs increased by
£0.5m to £6.7m (2022: £6.2m). The increase was primarily due to
strengthening management teams at LPA Connection Systems and LPA Channel
Electric.
During the year 255,000 share options were awarded to Directors as one award
at an exercise price of 50p subject to three increasingly targeted performance
hurdles which are related to earnings per share and market capitalisation. No
value has been attributed to these options in the accounts in line with
current assumptions (2022: Nil options awarded).
Exceptional Items and Negative Goodwill
Exceptional items and negative goodwill in the year totalled a gain of £0.8m
(2022: gain of £1.3m). Key items comprised:
(i) Negative goodwill following a fair value adjustment on the
acquisition of a product line and associated trade of £0.9m (2022: £nil)
(ii) Write off of obsolete inventory from discontinued
product line of £0.2m (2022: £nil)
(iii) Profit on sale of surplus land of £nil (2022:
£1.3m).
Finance Costs
Within finance costs, the interest on borrowings increased to £0.15m (2022:
£0.09m). The weighted average interest rate increased by 2.9% from 3.2% to
6.1%. 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 2.25% to 5.25%.
Profit Before Tax, Taxation and Earnings Per Share
After net finance income of £0.05m (2022: net cost £0.01m) a profit before
tax of £0.8m was recorded (2022: profit before tax of £1.1m). A tax credit
of £0.1m (2022: £0.1m) is recognised, reporting a profit after tax of £0.9m
(2022: £1.2m). This resulted in a basic earnings per share of 6.52p (2022:
8.99p).
The average UK corporation tax rate for the year was 22% (2022: 19%). The
main differences to the standard rate of corporation tax are due to
non-taxable negative goodwill and R&D tax credits.
Balance Sheet
· Gearing (net debt as a % of total equity) increased to 7.7% (2022:
3.5%);
· Net debt increased by £0.7m to £1.2m (2022: £0.5m);
· Working capital, as defined as inventory, trade & other
receivables less trade & other payables, increased 7% to £5.4m (2022:
£5.1m); and
· Pension asset surplus recognised increased by 8.6% to £2.7m (2022:
£2.5m).
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, the fair value of the intellectual property
purchased in the year of £1.7m, capitalised development costs and software
purchases were £3.2m (2022: £1.5m). After assessment for impairment the
goodwill on the Group's investment in Excil Electronics remains unchanged at
£1.1m. Development costs capitalised in the year, representing the
continued development of the Group's technologies and new product development
("NPD"), were £0.1m (2022: £0.2m).
The net book value of property, plant and equipment as at 30 September 2023,
including Right of Use Assets, totalled £5.8m (2022: £6.0m), of which
property represented £3.8m (2022: £3.9m), plant, equipment and motor
vehicles £1.9m (2022: £2.1m). Additions in the year increased slightly
following the low level in the previous year of capital investment, at £0.5m
(2022: £0.4m). Disposals in the year totalled £0.9m with a net book value
of £Nil including Right of Use lease terminations (2022: £0.3m with a net
book value of £0.2m). The depreciation charge remained flat at £0.7m
(2022: £0.7m).
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. This is shown as due within one year as the facility
is due to be refinanced by March 2024. This has recently been refinanced and
no repayment in full is expected in the current year, but this remains shown
as due within one year as reflective of the position at the year end.
Repayments are quarterly over the term with a bullet repayment in March 2029
of £2.0m (quarterly repayments calculated at draw down on a 15-year repayment
term). As at 30 September 2023 the amount outstanding was £1.9m (2022:
£2.1m). Interest is payable at base rate plus 2.25%.
Cash Flow
Net cash inflow from operating activities was £0.3m (2022: £0.1m) made up of
a trading cash inflow of £0.7m (2022: £0.4m); an increase in working capital
of £0.4m (2022: £0.5m) and tax refunds of £Nil (2022: £0.2m). Overall,
there was a net reduction in the Group's cash position of £1.0m (2022:
increase £0.8m).
During the year £0.25m (2022: £Nil) was spent on the acquisition of a new
product line, the balance of £0.25m will be spent next year. Capital
expenditure outflows on property, plant and equipment increased to £0.2m
(2022: £0.1m), excluding assets financed through lease arrangements.
Capitalised development expenditure amounted to £0.1m (2022: £0.2m),
primarily further product developments focused on smart lighting and
electronic systems, including rail seat electronics. Note that in 2022, the
Group benefited from a £1.7m cash receipt from the sale of land.
In the year new leasing arrangements led to right of use additions of £0.3m
(2022: £0.3m). Interest at 5.3% was charged on fixed rate borrowings (2022:
3.7%). Interest on the Group's overdraft facility is payable at base rate plus
2.0%. The facility was unutilised as at 30 September 2023 and 2022. The
composite interest rate across both borrowings and lease liabilities was 5.6%
(2022: 3.1%).
Capital loan repayments of £0.2m were made in the year (2022: £0.2m).
Outflows repaying the principal elements of lease liabilities were £0.4m
(2022: £0.4m). Interest payments on borrowings amounted to £0.2m (2022:
£0.1m).
Defined Benefit Pension Asset
The LPA Industries Limited Defined Benefit Scheme was part of the ISIO
(previously Deloitte Pensions Master Plan) throughout the entire year under
review. The costs of running the scheme have been shared between the Company
and the scheme. Costs borne by the Group this year amounted to £0.1m (2022:
£0.2m).
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 2023 an
actuarial report indicated that this had risen to 146% 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.
The Trustees, under advice, did not seek any voluntary employer contributions
during the year from the Group (2022: £Nil). The IAS 19 position shown in
these accounts reflects the impact of rising interest rates on the present
value of the liability to pay pensions in the future.
Going Concern
In assessing going concern, the main considerations have been trading, new
financing and to a lesser extent supply chain shortages and inflationary
pressures. The Group continues to witness some supply chain delays,
aligned with price pressures from commodities, utilities and wage inflation.
These all pose risks to UK manufacturing businesses but supply chain delays
creates on-shoring opportunities for the Group which we are seeking to
exploit.
In assessing the Group's going concern the directors also note that (i)
despite reporting a small underlying operating loss in the current year, the
Group is expected to return to profitability in 2024; (ii) has in place
adequate working capital facilities for its forecast needs and was cash
generative on an operational level through the 2023 financial year, with a
positive EBITDA and strong cash management; (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
2023 challenges. Therefore, the directors believe that it is well placed to
manage its business risks successfully.
The directors continue to develop its strong working relationship with its
bank that provides for the funding and working capital facilities. Should
there be additional significant delays in our project-based work then there
are actions available to management to mitigate any cash need. We expect that
if required the bank would remain supportive and a suitable agreement would be
reached to provide the Group with sufficient financing. The current loan
facility was due to expire in March 2024. This has recently been extended
for a further 5 years on the same terms.
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.
Stuart Stanyard
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 2023 2022
Health & Safety
Riddors · reportable incidents of disease or danger occurrences None None
Accidents · events that cause impact, damage or injury involving a person or 21 25
infrastructure, which are not a Riddor
Near misses · events that occurred which have not caused an Accident (1) 126 21
Financial
Orders to revenue · orders for the year expressed as a multiple of revenue as a measure 1.18 1.02
of prospective growth
Order entry · order intake confirmed £25.5m £19.7m
Order book · the measure of opening order book, plus order entry, £31.6m £27.8m
less revenue
Revenue growth · increase year-on-year as a percentage of prior year 12.4% 5.8%
Added value · the margin generated on revenue after deduction of material costs but 50.3% 49.1%
before other costs of sale and conversion
Gross margin · as a percentage of revenue 22.6% 22.8%
Profitability · underlying operating (loss) as a return on trading activities to (0.3%) (1.2%)
revenue
Cash generation · net (decrease) / increase in cash and cash equivalents before (£0.3m) £1.5m
financing activities
Gearing · the measure of net debt being borrowings and lease liabilities less 7.7% 3.5%
cash balances, to net assets
(1) As per best practice and a reinvigorated Health and Safety process, a
high number of near misses indicates an open culture of reporting possible
accidents which can be appropriately actioned.
Consolidated Income Statement
For the year ended 30 September 2023
2023 2022
Note £000 £000
Continuing operations
Revenue 2 21,712 19,325
Cost of Sales (16,646) (14,925)
Cost of Sales- Exceptional Items 3 (152) -
Gross Profit 4,914 4,400
Distribution Costs (1,910) (1,781)
Administrative Expenses (3,238) (2,865)
Administrative Expenses-Exceptional Items 3 - 1,323
Negative Goodwill 7 941 -
Other Operating Income - 7
Underlying Operating Loss (69) (226)
Share Based Payments (13) (13)
Negative Goodwill 7 941 -
Exceptional Items 3 (152) 1,323
Operating Profit 3 707 1,084
Finance Income 201 78
Finance Costs (149) (88)
Profit Before Tax 759 1,074
Taxation 4 100 111
Profit for the Year 859 1,185
Attributable to:
- Equity Holders of the Parent 859 1,185
Earnings per Share 5
Basic 6.52p 8.99p
Diluted 6.51p 8.99p
Consolidated Statement of Comprehensive Income
For the year ended 30 September 2023
2023 2022
£000 £000
Profit for the Year 859 1,185
Other Comprehensive Income
Items that will not be reclassified to profit or loss:
Actuarial gain/(loss) on pension scheme 198 (219)
Restriction of pension assets (113) 49
Other Comprehensive Income 85 (170)
Total Comprehensive Income for the Year 944 1,015
Attributable to:
- Equity Holders of the Parent 944 1,015
Consolidated Balance Sheet
At 30 September 2023
2023 2022
£000 £000
Non-Current Assets
Intangible Assets 3,156 1,473
Tangible Assets 5,083 4,774
Right of Use Assets 672 1,211
Retirement Benefits 2,683 2,471
Deferred Tax Assets - 229
11,594 10,158
Current Assets
Inventories 4,303 4,567
Trade and Other Receivables 5,870 5,095
Derivative Asset 28 -
Current Tax Receivable 30 41
Cash and Cash Equivalents 1,202 2,199
11,433 11,902
Total Assets 23,027 22,060
Current Liabilities
Bank Loan (1,949) (190)
Lease Liabilities (214) (356)
Trade and Other Payables (4,743) (4,584)
(6,906) (5,130)
Non-Current Liabilities
Bank Loan - (1,934)
Deferred Tax Liabilities (165) -
Lease Liabilities (243) (240)
(408) (2,174)
Total Liabilities (7,314) (7,304)
Net Assets 15,713 14,756
Equity
Share Capital 1,348 1,348
Investment in Own Shares (324) (324)
Share Premium Account 943 943
Share Based Payment Reserve 62 49
Merger Reserve 230 230
Retained Earnings 13,454 12,510
Equity Attributable to Shareholders of The Parent 15,713 14,756
Consolidated Statement of Changes in Equity
For the year ended 30 September 2023
Share Capital Investment in Own Shares Share Premium Account Share Based Payment Reserve Merger Retained Earnings Total
Reserve
2023 £000 £000 £000 £000 £000 £000 £000
At 1 October 2022 1,348 (324) 943 49 230 12,510 14,756
Profit for the Year - - - - - 859 859
Other Comprehensive Income - - - - - 85 85
Total Comprehensive Income - - - - - 944 944
- - - 13 - - 13
Share based payments
Transactions with owners - - - 13 - - 13
At 30 September 2023 1,348 (324) 943 62 230 13,454 15,713
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
Consolidated Cash Flow Statement
For the year ended 30 September 2023
2023 2022
£000 £000
Profit Before Tax 759 1,074
Finance Costs 149 88
Finance Income (201) (78)
Operating Profit 707 1,084
Adjustments for:
Amortisation of Intangible Assets 192 95
Depreciation of Tangible Assets 404 497
Depreciation of Right of Use Assets 285 202
Loss on Sale of Plant and Equipment/(Profit) on Sale of Land 4 (1,496)
Negative Goodwill (941) -
Equity Settled Share Based Payments 13 13
Operating cash flow before movements in working capital 664 395
Movements in Working Capital:
Decrease in Inventories 264 135
Increase in Trade and Other Receivables (775) (984)
Increase in Trade and Other Payables 87 372
Cash generated from operations 240 (82)
Income Taxes Received 45 159
Net cash inflow from operating activities 285 77
Purchase of Business (Note 7) (250) -
Purchase of Property, Plant & Equipment (196) (88)
Proceeds from Sale of Property, Plant and Equipment - 1,666
Expenditure on Capitalised Development Costs (120) (163)
Net cash (outflow) / inflow from investing activities (566) 1,415
Repayment of Bank Loan (175) (190)
Principal elements of Lease Liabilities (392) (390)
Interest Paid (149) (88)
Proceeds from Issue of Share Capital - 17
Net cash outflow from financing activities (716) (651)
Net (Decrease)/Increase in Cash and Cash Equivalents (997) 841
Cash and Cash Equivalents at start of the year 2,199 1,358
Cash and Cash Equivalents at end of the year 1,202 2,199
Consolidated Cash Flow Statement (continued)
For the year ended 30 September 2023
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 2022 2,124 596 (2,199) 521
New Lease Obligations - 253 - 253
Interest Costs 131 18 - 149
Repayment of Borrowings/Lease Liabilities (306) (410) 716 -
Other Cash Expenditure - - 281 281
At 30 September 2023 1,949 457 (1,202) 1,204
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
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 2023 and 2022
are derived from the Group's 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 in accordance with UK adopted
International Accounting Standards. The statutory accounts for the year
ended 30 September 2022 have been delivered to the Register of Companies.
The statutory accounts for the year ended 30 September 2023 have been audited
and approved but have not been filed. The Group's audited financial
statements for the year ended 30 September 2023 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 24 January 2024.
The 2023 accounts, together with notice of the Annual General Meeting, are
expected to be posted to shareholders on 1 March 2024 and will be available
from the LPA website (www.lpa-group.com (http://www.lpa-group.com) ) from 2
March 2024. They will be available from the Company Secretary, 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 2022.
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 divisions / product groups (in
accordance with IFRS 8) - LPA Connection Systems (electro-mechanical), LPA
Lighting Systems (lighting & electronics) and LPA Channel Electric
(engineered component distribution), which collectively design, manufacture
and market industrial electrical and electronic products. They operate
across three market segments - Rail; Aerospace & Defence and Other. It is
on this basis that the board of directors assess Group performance.
All revenue originates in the UK. An analysis by geographical markets and
market segments is given below:
2023 2022
£000 £000
LPA Connection Systems 8,393 6,533
LPA Channel Electric 4,070 3,342
LPA Lighting Systems 9,249 9,450
21,712 19,325
2023 2022
£000 £000
Revenue recognised over time 166 97
Revenue recognised at a point in time 21,546 19,228
21,712 19,325
All revenue originates in the UK. An analysis by geographical markets and
market segments is given below:
2023 2022
Rail 75% 72%
Aerospace and Defence 20% 13%
Other 5% 15%
100% 100%
2023 2022
£000 £000
United Kingdom 13,266 12,649
Rest of Europe 5,598 4,607
Rest of World 2,848 2,069
21,712 19,325
One individual customer (2022: one) represented more than 10% of Group
revenue, combined totalling 24% (2022: 23%).
3. Operating Profit
2023 2022
Exceptional Items £000 £000
Write-off of obsolete inventory 152 -
Sale of land - (1,506)
Reorganisation costs / staff changes - 173
Dual running management costs - 10
152 (1,323)
Write-off of obsolete inventory relates to a review of inventory held in LPA
Connection Systems which was no longer able to be sold due to relating to a
discontinued product line.
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
2022.
Reorganisation costs / staff changes of £173,000 in 2022 relate to a Group
wide cost base review and loss of office payment.
Dual running costs of £10,000 in 2022 relate to an extended crossover between
the appointment and retirement of Board Directors related to the Board
rejuvenation process commenced in 2018 and concluded in 2022.
4. Taxation
2023 2022
A. Recognised in The Income Statement £000 £000
Current Tax Expense
UK Corporation Tax (30) (65)
Adjustment in Respect of Prior Years (151) (80)
(181) (145)
Deferred Taxation
Origination and Reversal of Temporary Differences 81 34
Total Corporation Tax Credit (100) (111)
2023 2022
B. Reconciliation of Effective Tax Rate £000 £000
Profit Before Tax 759 1,074
Tax at The Average UK Corporation Tax Rate of 22% (2022: 19%) 167 204
Effects of:
- Tax Rate Change 21 -
- Enhanced Deduction for Qualifying R&D Expenditure (48) (102)
- Prior Period Adjustments (151) (80)
- Non-Taxable Negative Goodwill (192) -
- Prior Period Losses Recognised - (71)
- Losses not Recognised 103 -
- Other Differences - (62)
Total Income Tax Credit (100) (111)
5. Earnings Per Share
The calculation of earnings per share is based upon the profit for the year of
£859,000 (2022: £1,185,000) and the weighted average number of ordinary
shares in issue during the year of 13,483m (2022: 13.472m) less investment in
own shares of 0.3m (2022: 0.3m), of 13.183m (2022: 13.172m).
2023 2022
Earnings Weighted Earnings Earnings Weighted Earnings Per Share
Average Per Average
No of Shares Share No of Shares
£000 '000 Pence £000 '000 Pence
Basic Earnings Per Share 859 13,183 6.52 1,185 13,172 8.99
Effect of Share Options 21 (0.01) 7 -
Diluted Earnings Per Share 859 13,204 6.51 1,185 13,179 8.99
6. Going Concern
In assessing going concern, the main considerations have been trading, new
financing and to a lesser extent supply chain shortages and inflationary
pressures. The Group continues to witness some supply chain delays,
aligned with price pressures from commodities, utilities and wage inflation.
These all pose risks to UK manufacturing businesses but supply chain delays
creates on-shoring opportunities for the Group which we are seeking to
exploit.
In assessing the Group's going concern the directors also note that (i)
despite reporting a small underlying operating loss in the current year, the
Group is expected to return to profitability in 2024; (ii) has in place
adequate working capital facilities for its forecast needs and was cash
generative on an operational level through the 2023 financial year, with a
positive EBITDA and strong cash management; (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
2023 challenges. Therefore, the directors believe that it is well placed to
manage its business risks successfully.
The directors continue to develop its strong working relationship with its
bank that provides for the funding and working capital facilities. Should
there be additional significant delays in our project-based work then there
are actions available to management to mitigate any cash need. We expect that
if required the bank would remain supportive and a suitable agreement would be
reached to provide the Group with sufficient financing. The current loan
facility was due to expire in March 2024. This has recently been extended
for a further 5 years on the same terms.
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. Purchase of Business
The Group purchased trade and the intellectual property relating to a
competitor's product line on 24 March 2023. The book value of assets
acquired was £nil and a valuation exercise was performed using the relief
from royalty method to determine the fair value of the intellectual property
acquired. The fair value of assets acquired along with the related deferred
tax adjustment is as follows:
Fair value
£000
Intangible Assets - Intellectual Property 1,754
Deferred Tax Liability on Intangible Asset Uplift (313)
1,441
Cash Consideration (500)
Negative Goodwill 941
The cost of the acquisition was £500,000, of which £250,000 was paid during
the year and £250,000 is outstanding at the year end. The negative goodwill
arose as the competitor would have had to undertake major investment to
support the long -term viability of the product line.
The acquisition has contributed £1,478,000 to revenues and has delivered
profit in line with expectations.
8. Post Balance Sheet Event
Acquisition of Red Box International Holdings
The Group acquired the 100% share capital of Red Box International Holdings
Ltd on 4 January 2024 for a total consideration estimated and capped at
£1.1m, of which £275,000 is being satisfied on completion, and £825,000
payable post-completion.
Red Box is a leading UK manufacturer of aviation ground power equipment with
global reach and an established presence in the USA market. The Acquisition
will provide a strong addition to LPA Connection Systems, the Group's Saffron
Walden-based division, that designs, manufactures and supplies high quality
specialist products for the aviation, rail, and infrastructure markets. This
acquisition supports our long-term growth strategy whilst also lessening the
Group's dependence on rail projects.
Red Box revenues for the year ended 31 December 2022 were £1,677,000, with
adjusted EBIT of £81,000. Net assets as at 31 December 2023 were around
£750,000.
9. Annual General meeting
The annual general meeting is to be held at 12:00 noon on Wednesday 27 March
2024 at the offices of Cavendish, 1 Bartholomew Close, London, EC1A 7BL. The
following resolutions are proposed:
Routine Business
1) To receive the accounts for the year ended 30 September 2023,
together with the reports of the directors and the auditors thereon.
2) To re-elect as a director Robert Horvath who retires by rotation, in
accordance with the Company's Articles of Association.
3) To declare a final dividend of 1p per ordinary share of 10p each
("Ordinary Share") for the year ended 30 September 2023, payable on 12 April
2024 to shareholders on the register at the close of business on 15 March 2024
(record date) and an ex-dividend date of 14 March 2024.
4) To re-appoint RSM UK Audit LLP as auditors to the Company, to hold
office until the end of the next general meeting at which accounts are laid
before the Company, and to authorise the directors to fix the auditors'
remuneration.
Special Business
5) To authorise the directors to allot shares (as defined in section 551
of the Companies Act 2006) in the Company.
6) To authorise the Company to make market purchases (as defined in
section 693(4) of Companies Act) of its own shares.
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See all newsREG - LPA Group PLC - Result of AGM
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AnnouncementREG - LPA Group PLC - Director/PDMR Shareholding
AnnouncementREG - LPA Group PLC - Trading Update
AnnouncementREG - LPA Group PLC - Holding(s) in Company
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