LPA Group Plc
Investing in
the future
LPA Group
•
•
•
Is a market leading manufacturer of high reliability
LED lighting & electro-mechanical systems and a
distributor of engineered components
Employs around 180 people at three locations in
the UK
Is focussed on rail, aviation, industrial, infrastructure
and defence markets
• Has developed a successful export capability, most
notably in Europe, Asia and Australia. Around a
third of turnover is exported to over 50 countries
• Has a reputation for
innovating cost-effective
engineering solutions (in benign and hostile
environments)
reduce
improve
maintenance and life cycle costs
reliability,
to
• Supplies a wide range of leading organisations
including: Airbus, Alstom Transportation, BAA,
BAE Systems, Bombardier Transportation, CAF,
Compin, CRRC, Downer EDI, First Group, Hitachi,
ITW, Kinki Sharyo, Knorr Bremse, Leonardo, London
Underground, Siemens, SNCF, Stadler, Stagecoach,
TRSC, Unipart Rail and Wabtec
LPA Group Plc
Annual Report & Accounts 2019
www.lpa-group.com
R
E
P
A
P
D
E
L
C
Y
C
E
R
%
0
0
1
N
O
D
E
T
N
I
R
P
S
I
T
R
O
P
E
R
S
I
H
T
.
.
I
K
U
O
C
N
G
S
E
D
S
T
T
E
N
R
O
H
@
A
D
N
L
I
LPA Group Plc
Light & Power House, Shire Hill,
Saffron Walden, CB11 3AQ
T +44 (0)1799 512800
’
I
–
D
T
L
N
G
S
E
D
S
T
T
E
N
R
O
H
Y
B
D
E
C
U
D
O
R
P
D
N
A
D
E
N
G
S
E
D
I
LPA Group Plc
Investing in
the future
LPA Group
•
•
•
Is a market leading manufacturer of high reliability
LED lighting & electro-mechanical systems and a
distributor of engineered components
Employs around 180 people at three locations in
the UK
Is focussed on rail, aviation, industrial, infrastructure
and defence markets
• Has developed a successful export capability, most
notably in Europe, Asia and Australia. Around a
third of turnover is exported to over 50 countries
• Has a reputation for
innovating cost-effective
engineering solutions (in benign and hostile
environments)
reduce
improve
maintenance and life cycle costs
reliability,
to
• Supplies a wide range of leading organisations
including: Airbus, Alstom Transportation, BAA,
BAE Systems, Bombardier Transportation, CAF,
Compin, CRRC, Downer EDI, First Group, Hitachi,
ITW, Kinki Sharyo, Knorr Bremse, Leonardo, London
Underground, Siemens, SNCF, Stadler, Stagecoach,
TRSC, Unipart Rail and Wabtec
LPA Group Plc
Annual Report & Accounts 2019
www.lpa-group.com
R
E
P
A
P
D
E
L
C
Y
C
E
R
%
0
0
1
N
O
D
E
T
N
I
R
P
S
I
T
R
O
P
E
R
S
I
H
T
.
.
I
K
U
O
C
N
G
S
E
D
S
T
T
E
N
R
O
H
@
A
D
N
L
I
LPA Group Plc
Light & Power House, Shire Hill,
Saffron Walden, CB11 3AQ
T +44 (0)1799 512800
’
I
–
D
T
L
N
G
S
E
D
S
T
T
E
N
R
O
H
Y
B
D
E
C
U
D
O
R
P
D
N
A
D
E
N
G
S
E
D
I
LPA Group
UK manufacturer of products designed
& built using our in-house capabilities
Electro-mechanical systems
LED lighting and electronic systems
Engineered component distribution
Fabricated metal engineering
Group Directory
LPA Group Plc
Light & Power House, Shire Hill, Saffron Walden, CB11 3AQ
Tel: +44 (0)1799 512800 Website: www.lpa-group.com
Electro-mechanical systems
LPA Connection Systems
Light & Power House
Shire Hill
Saffron Walden
CB11 3AQ
Tel: +44 (0)1799 512800
Email: enquiries@lpa-connect.com
· Rail, aircraft & industrial connectors
· Ethernet backbones
· Auxiliary battery power systems
· Shore supply systems
· Control panels & boxes
· Transport turnkey services
· Fabricated metal engineering
· Enclosures, fabrications, form & weld
· Laser cutting
Engineered component distribution
LPA Channel Electric
Bath Road
Thatcham
Berkshire
RG18 3ST
Tel: +44 (0)1635 864866
Email: enquiries@lpa-channel.com
· Connectors
· Relays & contactors
· Circuit breakers
· Fans & motors
· Switches
· USB charging
LED lighting and electronic systems
LPA Lighting Systems
LPA House
Ripley Drive
Normanton
West Yorkshire
WF6 1QT
Tel: +44 (0)1924 224100
Email: enquiries@lpa-light.com
· LED lighting systems
· Fluorescent and dichroic lighting systems
· Emergency lighting systems
· Power supply units
· Inverters
· Electronic control & monitoring
LPA Group Plc – Annual Report & Accounts 2019
FINANCIAL HIGHLIGHTS
For the year ended 30 September 2019
ORDER ENTRY
REVENUE
OPERATING PROFIT BEFORE EXCEPTIONAL AND NON-UNDERLYING ITEMS
EXCEPTIONAL AND NON-UNDERLYING ITEMS
(LOSS) / PROFIT BEFORE TAX
BASIC EARNINGS PER SHARE
DIVIDENDS PER SHARE
GEARING
2019
£000
2018
£000
27,006
20,229
19,533
27,979
201
(403)
(237)
2,244
(175)
2,024
(0.43p)
14.34p
2.90p
2.90p
19.6%
15.5%
Commentary
As previously reported the 2019 financial year proved exceptionally challenging as project delays across the rail market were
encountered in both UK and export markets. Despite a downturn in revenue of £8.5m, a modest operating profit of £0.2m
was achieved, exceeding expectations. The recommended dividend for the year is unchanged.
Orders entered during the year achieved a new record at £27m and are beginning to be reflected in output during the current
year.
The surge in orders has continued during the first quarter of the 2020 year, as evidenced by recent announcements. We
anticipate strong progress during the year and beyond.
We look forward to the future with increasing confidence.
1
CONTENTS
Financial Highlights
1
GROUP FINANCIAL STATEMENTS
OTHER INFORMATION
STRATEGIC REPORT
Chairman's Statement
Chief Operating Officer’s Review
Financial Review
Key Performance Indicators
3
5
7
9
Business and Strategy
10
Principal Risks and Uncertainties
11
BOARD REPORTS
Directors' Report
12
Corporate Governance Report
16
Remuneration Report
20
COMPANY INFORMATION
24
Independent Auditor’s Report
26
Consolidated Income Statement
32
Five Year Summary
Notice of Meeting
84
85
Consolidated Statement of
Comprehensive Income
Consolidated Balance Sheet
Consolidated Statement of
Changes in Equity
Consolidated Cash Flow
Statement
Notes to the Financial
Statements
COMPANY FINANCIAL
STATEMENTS
Company Balance Sheet
Company Statement of
Changes in Equity
Company Notes to the
Financial Statements
33
34
35
36
37
73
74
75
2
LPA Group Plc – Annual Report & Accounts 2019
CHAIRMAN'S STATEMENT
Shareholders are reminded that this final dividend is the last
to be supported by cheque remittances. As set out in the
document published and circulated, dated 5th July 2019,
“The Digital Future”, a copy of which is available at www.lpa-
group.com, future remittances and tax confirmations will only
be available electronically.
Corporate Governance
The Group adopted the Quoted Companies Alliance Corporate
Governance Code from 28 September 2018, having closely
followed the previous guidance. This places responsibility
for oversight, adoption and communication of the Group’s
Corporate Governance Model with the Chairman.
The Board considers that the Group’s Annual Report is a
Document of Record and therefore eminently suited to be the
repository of the Group’s statements on compliance with the
Code. These will be reviewed at least six-monthly and updated
as necessary and are set out on pages 16 to 19 of the Annual
Report.
Further the Board considers it helpful to have a statement on
the Group’s North Star or Guiding Light. This forms part of
our Corporate Governance and is set out on page 16 of the
Annual Report. The Annual Report and other information is
available on the Group’s website www.lpa-group.com.
During the year the Group has continued to foster a culture
which is consistent with the Group’s objectives, strategy and
business model, and which recognises the principal risks and
uncertainties facing the Group, which are contained in the
strategic report on page 11.
Overview
In my Interim Statement in June 2019 and in the subsequent
Trading Update announced on 4th September 2019, I referred
to delays in deliveries of major projects which would affect the
outcome for the year ended 30th September, and new contract
wins which would bolster output in the new financial year. This
has proved to be the case. As expected, Sales and Profits for
the year to September 2019 fell well short of that achieved in
2018, but record order entry was achieved, reinforcing our
confidence in the future.
Sales for the year decreased 30.2% to £19.5m (2018:
increase 24.5% to £28.0m) and operating profit before
exceptional and non-underlying items declined 91% to £0.2m
(2018: £2.2m). The Loss before tax, after exceptional costs
of £0.40m (2018: £0.18), amounted to £0.24m (2018 profit:
£2.0m). Basic earnings per share for the year were a loss
of 0.43p (2018: earnings 14.34p). Gearing amounted to
19.6% (2018: 15.5%).
Order entry increased 33.5% to £27.0m (2018: £20.2m)
resulting in the order book at the end of the year rising
52% to £21.0m (2018: £13.8m). The strong order entry
performance has continued in the first quarter with a further
£6.4m booked, and the orders pipeline and the prospects
funnel remain encouraging.
Dividends
Despite the poor performance during the year your board
remain sufficiently confident, subject to shareholder approval
at the forthcoming annual general meeting to be held at the
offices of LPA Lighting Systems at 12 noon on Wednesday
18th March 2020, to recommend the payment of an
unchanged final dividend of 1.80p (2018: 1.80p), making
a total for the year of 2.90p (2018: 2.90p). The dividend, if
approved, will be paid on 27th March 2020 to shareholders
registered at the close of business on 28th February 2020.
3
LPA Group Plc – Annual Report & Accounts 2019 CHAIRMAN'S STATEMENT (CONTINUED)
Board and management
Employees
We believe people are the most important asset of any
business. During the year we experienced significant
challenges through project delays and temporary downturns,
followed by surges in demand, which created significant
challenges for management. We continue to benefit from our
capital investment programme and enhanced capabilities,
which we believe our customer base continues to recognise
as exceptional in UK manufacturing in general. We continue
to upskill our workforce as we seek to maintain and increase
added value per employee. We maintain flexibility through
a number of staff on temporary contracts. We have no zero-
hour contracts. The underlying cost base is tightly managed.
I should like to thank all of our employees for their hard work
and diligence through the past, most challenging, year.
Outlook
The start of the current financial year was challenging,
but, as the quarter progressed the pace of activity has
accelerated. As previously reported, our order book has
recovered strongly, and our order pipeline and our funnel of
opportunities are encouraging at home and abroad.
We expect good progress throughout the rest of the year
and beyond. We are pleased that uncertainty over Brexit has
reduced. We have a strong long-term order book, a strong
balance sheet, a skilled workforce and valuable experience in
importing and exporting. We expect challenges, but we look
forward to the future with confidence.
Peter Pollock
Chairman
27 January 2020
Board members’ curriculum vitae and relevant experience are
set out on page 24 of the Annual Report.
Following the forthcoming Annual General Meeting on 18th
March it is anticipated that Paul Curtis will be appointed
Chief Executive Officer (CEO) with effect from 1st April 2020,
having successfully completed a period as Chief Operating
Officer (COO).
Chris Buckenham remains Chief Financial Officer (CFO) and
Company Secretary.
Len Porter remains Senior Non-Executive director and Chair of
the Audit and Remuneration Committees.
Michael Rusch, Group President and Non-Executive Director
expects to retire in June 2020 on reaching his 75th birthday,
following over 50 years of invaluable service to the Group,
including as Director, Managing Director, Chairman and
President of the Group. We are most appreciative of his wise
counsel and commitment to the Group.
Having taken on an additional executive role as Chairman of
LPA Industries Pension Trustees Ltd with effect from April 2019,
I will remain Executive Chairman for the forthcoming year and
through to my retirement in September 2021.
We are actively recruiting and expect to appoint a further
Non-executive director ahead of Michael’s retirement in the
middle of the year. Subsequently we shall be recruiting a
further Non-Executive to provide a panel of candidates from
which my successor as Chairman in September 2021 may be
selected.
Our trading activities continue to be managed independently
through local Executive Teams. Michael Raynor remains
General Manager of LPA Channel Electric and John Hesketh,
Managing Director of LPA Lighting Systems. During the
year Paul Curtis, following the departure of the MD of LPA
Connection Systems, assumed those additional responsibilities
while a successor was recruited. A candidate has been
identified who is expected to commence employment by the
end of March 2020.
4
LPA Group Plc – Annual Report & Accounts 2019 CHIEF OPERATING OFFICER’S REVIEW
Trading results
Project delays impacted the 2019 financial year leading to a
reduced sales level at £19.5m (2018: £28.0m) and a reduced
operating profit of £0.2m (2018: £2.2m). During the period
order intake increased 33.5% to £27.0m (2018: £20.2m),
which exceeds the previous highs achieved of £26.8m in 2015
and £26.1m in 2017. Significant project wins on several new
rolling stock platforms in the rail industry were fundamental
to this and, as such, we enter the new financial year with
a strong orderbook and many opportunities still to pursue.
The project delays previously communicated have all but worked
their way through and, as new projects come on stream, we
have seen activity increasing through the first quarter and expect
this to continue and accelerate throughout the rest of the year.
2019 Summary
• Order entry up 33.5% at £27.0m (2018: £20.2m)
• Sales down 30.2% at £19.5m (2018: £28.0m)
• Operating Profit, before exceptional and non-underlying
items, down 91% to £0.2m (2018: £2.2m)
Added value for the year increased to 49.3% (2018: 48.6%).
A continuous drive to automate and gain efficiencies across
all areas of the business are key to maintaining these levels
and essential in mitigating the impacts of a competitive
marketplace. These efforts will continue throughout 2020
to ensure the Group’s competitiveness going forward.
Despite flexing the cost base, the Group maintained its capabilities
to deliver the growing order book and future opportunities.
Markets
Rail, Aviation & Defence and niche industrial markets remain
strong for the Group and will continue to be the focus for the
coming year. These markets require quality products and
service, which aligns with the LPA mantra of long-life reliability
that features in the design philosophy across all our products.
Rail continues to be the Groups main segment representing
69% of sales for the financial year; aerospace and defence
16%; other 15%. Solid progress has been made in the
international marketplace with two significant export lighting
rollingstock ‘platform’ orders, one of which being for a new
European Tram, a first for LPA. These are significant wins with
the potential to bring further business beyond that already
announced and strengthens LPA’s position as a world leader
in LED technology.
The UK Rail market remains strong with full order books
for some train builders and growing orderbooks for others
providing activity for the coming year and beyond. Rail
refurbishment and maintenance demands have suffered
adjustment and consolidation but still provide opportunities
for the Group and should continue to do so for the coming
years. Rail investment increases worldwide, and with LPA’s
growing reputation for quality and innovation, this remains
a key market.
Aviation & Defence continues to be a growth market for the
world and remains a key focus area for the Group. We are
launching Plane Power, our new range of aircraft Ground
Support Equipment, during 2020 with an increased effort to
grow global market share. The Group supplies components
for aircraft such as A350 and C Series and is set to benefit
from these for several years to come.
Other markets, where product quality is important, are a
key focus going forward with efforts being made to broaden
product ranges enabling increased success in these areas.
Design and development
During 2020 we will launch our new range of Plane Power
connectors aimed at the aircraft ground power supply market,
world leading smart lighting and, various other product
developments and enhancements. The Group is focused on
smart technology which it is including as options on all its
products, where practical, as they are developed. Smart
technology is of increasing importance to our customers and a
key area of focus for product development, which is essential
in maintaining our position as a world leader in the markets
we serve.
The recently announced framework agreement with Siemens
Vienna will deliver one of the most modern and complex train
smart lighting systems in the world. This is testament to the
growing confidence shown by customers choosing LPA.
The Group continues to be a leader in mobile device charging
on trains and 2020 will see further product developments
in this area, as consumer demands becomes ever more
technologically focused.
5
LPA Group Plc – Annual Report & Accounts 2019 CHIEF OPERATING OFFICER’S REVIEW (CONTINUED)
Operations
Outlook
The strong order entry for the year gives an excellent
foundation for the future. The marketplace is stable and
continues to provide opportunities for the Group. The drive
for efficiency, product development, and worldwide customer
awareness of LPA is continuous.
We look forward to the future with increasing confidence.
Paul Curtis
Chief Operating Officer
27 January 2020
During the year the Group adjusted resources and structures
to accommodate the variable project workload and to
increase efficiency and effectiveness.
Our lighting facility achieved ISO14001 compliance, which
is a growing requirement for the international marketplace.
Plans for our other facilities to achieve this standard are also
underway. The Group retains its IRIS, AS9120 and ISO9001
certifications, which are key features of our operations.
There has been an increased effort in relation to data security
as cyber threats become more sophisticated and more
common. All businesses in the Group have strengthened
systems, controls and procedures during the year, achieving
Cyber Essentials certification and improved Business Continuity
Plans.
There has been an enhanced focus on Health & Safety across
the Group ensuring that the environment we provide for our
workforce and visitors is safe and welcoming.
2019 operational highlights
•
Integration of sheet metal manufacturing (Haswell
Engineers) operating systems into LPA Connection Systems
• New Laser Cutting System installed at LPA Connection
Systems increasing efficiency and capability
•
Lean lift storage systems installed at LPA Connection
Systems creating approximately 700m² of additional
assembly space.
• New automatic Printed Circuit Board test equipment
installed at LPA Lighting Systems improving efficiencies
and quality of inspection
•
Further work on improving flow of manufacturing cells
• 5S (lean processes) implemented at Electro-mechanical,
already in place at LPA Lighting Systems
6
LPA Group Plc – Annual Report & Accounts 2019 FINANCIAL REVIEW
Trading performance
2018 also included (2019: Nil):
Revenue in the current year reduced by £8.4m (30.2%)
to £19.53m (2018: £27.98m) with delayed rail project
activity being the main factor, as previously announced.
Gross margins fell 3.1% to 22.3% (2018: 25.4%), reflecting
the higher proportion of fixed costs borne by the Group.
(iii) extra centre costs arising from Board succession planning
including duplicated finance function costs - £74,000
(iv) professional and recruitment fees associated with the
Board succession and establishment of the Group’s
Employee Benefit Trust and corporate advice - £5,000;
Gross profit amounted to £4.36m (2018: £7.12m). Added
Value of 49.3% was achieved (2018: 48.6%), a Group KPI.
Other operating expenses reduced by £0.71m (14.7%) to
£4.16m (2018: £4.87m) – represented by decreased sales
and distribution costs of £0.34m and reduced administration
and overheads of £0.37m. Key administration cost changes
comprised pension administration and governance of
£0.10m (2018: £0.17m); grant credit of £0.09m (2018:
nil); and employment costs of £1.50m (2018: £1.70m)
inclusive of bonus awards of £8,000 (2018: £116,000) and
share option related credit of £47,000 (2018: £17,000).
An operating profit before exceptional and non-underlying
items of £0.20m (2018: £2.24m) was achieved, down £2.04m
(-91.0%). After exceptional and non-underlying items, detailed
below, a loss of £202k was incurred (2018: profit £2.07m).
In the first half of the year sales of £10.10m (2018: £13.93m),
down 27.6%, produced an operating profit before exceptional
and non-underlying items of £0.17m (2018: £1.12m), down
84.4% on the corresponding period last year. The second half
delivered sales of £9.44m (2018: £14.05m) resulting in an
operating profit before exceptional and non-underlying items
of £0.03m (2018: £1.12m).
Exceptional and non-underlying items
Net exceptional costs in the period totalled £0.40m (2018:
costs £0.18m). Key items comprised:
(i)
reorganisation costs of £70,000 (2018: £96,000) -
associated with ongoing cost base reductions at the
Group’s Electro-mechanical site;
(ii) £333,000 (2018: Nil) Guaranteed Minimum Pensions
(GMP) equalisation recognition in line with the High Court
ruling in October 2018, requiring all UK companies to
remove inequalities between men and women in scheme
benefits that arose under GMP. This is a historical cost
which has been recognised in the current financial year
as a change in basis, whilst going forward all movements
will be recognised through the Consolidated Statement of
Comprehensive Income alongside all other movements in
the Defined Benefit Pension Scheme.
Finance costs and income
Within finance costs the interest on borrowings increased by
23.7% to £0.10m (2018: £0.08m). The weighted average
interest rate increased from 2.7% to 2.9%, key drivers being:
•
•
the flow through of two 2018 UK base rate rises
refinancing of the loan borrowing at a higher margin of
0.3% and increased levels of borrowing. The term loan
average rate increased with the base rate rises included
by 0.45%.
Finance income, which comprises the net interest income on
the pension asset, was £64,000, an increase of 83% (2018:
£35,000).
Loss / Profit before Tax, Taxation and Earnings
Per Share
Loss before tax was £0.24m (2018 Profit: £2.02m) resulting in
a tax recovery of £0.19m (2018 charge: £0.25m). The effective
tax rate in the year was -78.0% (2018: 12.5%), with the UK
corporation tax rate of 19.0% (2018: 19.0%). The effective
tax rate is largely the consequence of tax loss utilisation of
4.6% (2018: 1.2%); qualifying R&D expenditure of 32.9%
(2018: 2.8%); prior year R&D expenditure claim increases
of 20.7%; share option prior period recognition 8.2% (2018:
nil); and defined benefit pension contributions 8.0% (2018:
0.9%). The effective tax rate on profit before tax, exceptional
and non-underlying items was -92.0% (2018: 11.3%).
The loss for the year was £0.05m (2018 profit: £1.77m)
representing basic earnings per share of -0.43p (2018: 14.34p).
Balance sheet
Shareholders’ funds decreased by £0.39m (-3.1%) in the year
to £12.32m (2018: £12.71m) giving a net asset value per
ordinary share of 97.4p (2018: 102.7p). The tangible net asset
value per share (calculated excluding intangibles and pension
asset, net of deferred tax) was 72.0p (2018: 78.3p). Net debt
increased £0.45m to £2.42m (2018: £1.97m) with gearing (net
debt as a % of total equity) increasing to 19.6% (2018: 15.5%).
Shareholders’ funds include Investment in Own Shares
at £0.33m including share premium (2018: £0.21m),
representing ordinary shares held in the Company by the LPA
Group Plc Employee Benefit Trust (EBT).
7
LPA Group Plc – Annual Report & Accounts 2019 FINANCIAL REVIEW (CONTINUED)
Balance sheet (continued)
Cash flow
Intangible assets, which comprise goodwill, capitalised
development costs and software purchases, were £1.36m
(2018: £1.20m). Software previously capitalised as Tangible
assets have been reclassified in the year as Intangible
assets in accordance with IAS38. The corresponding
depreciation transferred to amortisation, with no effect
on the trading results or reserves. Software additions in
the year were £0.02m. Goodwill relates to the Group’s
investment in Excil Electronics and was unchanged at
£1.15m. Capitalised development costs, associated with the
development of a new range of ground power connectors
for the aviation sector, Plane Power, and electronic and
lighting product developments were £0.12m (2018: £0.03m).
Property, plant and equipment at 30 September was £7.01m
(2018: £7.22m), of which property made up £4.25m (2018:
£4.34m) and plant and equipment £2.76m (2018: £2.87m).
Additions in the year were £0.54m (2018: £1.02m). The
depreciation charge increased 6.5% at £0.70m (2018: £0.65m).
The IAS19 actuarial surplus recognised at 30 September 2019
on the Group’s closed defined benefit pension arrangement
was £2.25m (2018: £2.41m). Changes over the course of
the year comprised an income statement credit of £0.064m
related to interest (2018: £0.035m) and within exceptional
and non-underlying items, GMP cost recognition of £0.333m
(2018: Nil). Employer contributions received of £0.10m
(2018: £0.10m) plus an actuarial gain of £0.01m (2018:
£0.96m) recognised in the statement of comprehensive
income, benefits paid from the scheme totalled £0.51m
(2018: £0.48m). The actuarial gain resulted from changes to
demographic assumptions in line with market indices (primarily
caused through overall life expectancy assumptions and
GMP equalisation being included) and changes in financial
assumptions (primarily reflecting the lower discount rate
applicable at September 2019, 1.8% as opposed to 2.8%),
a reduction in both RPI and CPI inflation measures of 0.1%
to 3.15% and 2.45% respectively, providing a return on plan
assets of £1.9m (2018: £0.06m), against which an experience
loss of £0.005m is recognised (2018: £0.25m gain).
Net trading assets (defined as inventories plus trade and
other receivables, less trade and other payables and
current tax) were 3.2% higher at £4.42m (2018: £4.29m).
Net cash inflow from operating activities was £0.66m (2018:
£2.45m) made up of a trading cash inflow of £0.87m
(2018: £2.72m) a reduction in working capital of £0.10m
(2018 increase: £0.14m), tax payments of £0.21m (2018:
£0.03m) and defined benefit pension contributions of £0.10m
(2018: £0.10m).
Capital expenditure outflows reduced to £0.4m (2018:
£0.5m). Capitalised development expenditure amounted
to £0.12m (2018: £0.03m), including expenditure at LPA
Connection Systems to develop a new range of aircraft
ground power support products and at LPA Lighting Systems,
further product developments focussed on Smart Lighting and
associated technologies.
Loan repayments of £2.2m were made (2018: £0.20m) which
included the repayment of term loan and refinance ahead of
the facility five-year term expiry in 2021. Draw down on a
new term loan, also with a five year term and bullet repayment
provided a cash inflow of £2.6m (net £0.5m refinance inflow).
Hire Purchase repayments were £0.2m (2018: £0.1m).
Interest payments on borrowings amounted to £0.03m (2018:
£0.02m). Dividend payments increased 5.5% in the year to
£0.36m (2018: £0.34m).
During the year, £0.08m (2018: £0.25m) was loaned to the
Group’s Employee Benefit Trust to facilitate the acquisition of
LPA Group plc shares. The transactions associated with the
Employee Benefit Trust are consolidated within these accounts.
£0.11m (2018: £nil) was received from the exercise of share
options. Overall there was a net decrease in the cash position
of £0.07m (2018: increase of £1.05m).
Net debt
An analysis of the change in net debt is shown below:
Bank
loans
£000
2,170
At 1 October 2018
New Hire Purchase Obligations
-
Drawdown of Bank Loan
2,626
Interest and Arrangement Fee
31
Hire
purchase
obliga-
tions
Cash
& cash
equiva-
lents
Net
debt
£000
£000
£000
757
168
-
-
(956)
1,971
-
168
(2,626)
-
-
31
-
Repayment of Borrowings
(2,242)
(201)
2,443
Cash Absorbed
-
-
250
250
At 30 September 2019
2,585
724
(889)
2,420
8
LPA Group Plc – Annual Report & Accounts 2019 FINANCIAL REVIEW (CONTINUED)
The Group’s main bank finance, a £2.63m bank loan
drawn down in 2019 is repayable over 5 years, including
a bullet repayment in March 2024 (calculated on 15 year
repayment terms). The loan was utilised to refinance
the previous loan, drawdown in 2017 and repayable in
2021. As at September 2019 the amount outstanding was
£2.58m (2018: £2.17m); the loan is to be repaid through
19 quarterly instalments of £0.06m from July 2019, with
the residual balance of £1.794m repayable in March 2024.
Interest is payable at base rate plus 2.25%.
A forecast breach of the bank loan covenant as at 30
September 2019 was identified and discussed with the Bank
ahead of the year end. The Bank have expressed their
intention to continue support for the Group and subsequently
their intention to issue a covenant waiver, at the point of
covenant measurement. The covenant is measured following
publication of the annual accounts based on the financial
position of the Group at 30 September 2019 and its financial
results for the year then ended. These post balance sheet
events, under IAS10, are deemed to be non-adjusting. As
such, the bank loan has been presented as all falling due
within one year.
In the year £0.17m of plant and equipment additions were
financed through new hire purchase finance (2018: £0.52m).
Interest on the £1.50m overdraft facility is payable at base
rate plus 2.0%. Headroom within the facility at 30 September
was £1.50m (2018: £1.50m).
Treasury
The Group’s treasury policy remains unchanged in the
year: further details on the Group’s borrowings, financial
instruments, and its approach to financial risk management
are given in notes 14 and 15 to the Annual Report.
Chris Buckenham
Chief Financial Officer
27 January 2020
The Group uses the below key performance indicators
to assess the progression in its business: factors affecting
them are discussed in the Chairman’s Statement, the Chief
Operating Officer’s Review and the Financial Review on
pages 3 to 9.
• Orders to sales (orders for the year expressed as a
multiple of sales) as a measure of prospective growth
increased to 1.38 in the current year (2018: 0.72, 2017:
1.16).
• Order entry (the measure of order intake confirmed)
£27.0m (2018: 20.2m; 2017: £26.1m)
• Order book (the measure of opening order book, plus
order entry, less sales) resulted at £21.4m (2018:
£13.9m; 2017: £21.6m).
•
Sales growth (the increase in year-on-year sales as a
percentage of prior year sales) as a measure of current
growth showed a decrease of 30.2% for the current year
(2018: increase of 24.5%, 2017: increase of 4.9%);
KEY PERFORMANCE INDICATORS
• Added Value (the margin generated on sales after
deduction of material costs but before other costs of sale
and conversion) as a measure of profitability 49.3%
(2018: 48.6%, 2017: 52.1%);
• Gross margin (gross profit as a percentage of turnover)
as a measure of profitability being 22.3% in the current
year (2018: 25.4%, 2017: 28.2%);
• Operating profit before exceptional and non-recurring
items, as a measure of return on trading activities, 1.0%
of sales (2018: 8.0% of sales, 2017: 8.4% of sales); and
• Net cash flow (net increase in cash before the drawdown
/ repayment of borrowings and issue or acquisition of
equity) as a measure of cash generation being an outflow
of £0.29m for the current year (2018: inflow of £1.57m,
2017: inflow of £0.01m).
9
LPA Group Plc – Annual Report & Accounts 2019 BUSINESS 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.
The Group has a reputation for innovation, providing cost
effective solutions to customers’ problems, in both benign and
hostile environments, which aim to improve reliability and
reduce maintenance and life cycle costs.
The Group is a market leading designer, manufacturer
and supplier of high reliability, LED based lighting, electro-
mechanical systems and a distributor of engineered components
focussed on the transportation (including rail, infrastructure
and aviation) and aerospace & defence markets. These are
growth markets in the UK and globally. All Group activities
serve the same markets (to a greater or lesser extent), have a
mutual dependence on rail (which accounts for more than two
thirds of Group turnover), share resource and frequently work
on the same projects.
The UK OEM market, which the Group endeavours to serve,
continues in a state of flux which has included privatisation,
administration, closure, acquisition, consolidation and
rationalisation. It is now set to enjoy substantial expansion
with investment in the UK by offshore OEM’s establishing a
number of new rail vehicle assembly plants. The sector, which
had shrunk substantially, now has the opportunity to expand.
Some parts of the sector are foreign owned, parts are strong,
and parts are weak. In response to historically fragile market
conditions in the UK, the Group has successfully committed
to becoming a supplier to the multi-national companies
supplying and serving the UK and to exporting to selected
markets, largely in Europe, Asia and Australia. Our market
place looks increasingly encouraging. On average over the
last five years, around a third of Group turnover has been
exported to around fifty countries (the figure was 33% in the
current year).
The Group supplies a wide range of leading organisations
including: Airbus, Alstom Transportation, BAA, BAE Systems,
Bombardier Transportation, CAF, Compin, CRRC, Downer
EDI, First Group, Hitachi, ITW, Kinki Sharyo, Knorr Bremse,
Leonardo, London Underground, Siemens, SNCF, Stadler,
Stagecoach, TRSC, Unipart Rail and Wabtec.
Worldwide, substantial government investment is planned in
rail, aviation and defence. These markets look set to expand
over the next five to ten years and the Group is well placed to
take advantage of such opportunities.
Group revenues are derived from both large value projects
and smaller value routine orders. Routes to market are 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.
The Group continues to invest in the technology, products and
facilities of its three UK operations, namely:
• Electro-mechanical: a designer and manufacturer of
connection systems for the rail, aircraft ground support
and infrastructure markets. It makes up 39% of Group
revenues (2018: 43%) and goes to market as LPA
Connection Systems, LPA Haswell Engineers and LPA
Transport+. The operation is housed at Light & Power
House in Saffron Walden, near Cambridge, a facility that
the Group refurbished and extended in 2014, which also
includes the Group’s headquarters which is reported as a
cost centre through the company LPA Group Plc;
•
Lighting systems: an electronics designer and manufacturer
of LED lighting and systems which contributes 35%
of Group revenues (2018: 40%). Marketed as LPA
Lighting Systems it serves rail, infrastructure and other
industrial markets. The operation is housed at LPA House
in Normanton, West Yorkshire, a facility that the Group
refurbished and extended in 2018; and
• Engineered component distribution: which comprises 26%
of Group revenues (2018: 17%) derived from the rail
and aerospace & defence markets. It has a focus upon
high level customer service, is marketed as LPA Channel
Electric and is located in Thatcham, Berkshire.
The Group’s intention is to strengthen its position in the UK
rail market supply chain where it is well regarded and can
build upon its reputation. The UK supply chain is very variable
in quality and is likely to consolidate in the near term. The
Group may become a focus for consolidation or an object of
consolidation.
The factors which have affected the Group’s business activities
in the current year, and which are likely to affect its future
performance are detailed in the Chairman’s Statement, Chief
Operating Officers’ Review and the Financial Review.
The principal risks and uncertainties confronting the Group
are set out on page 11 and the key performance indicators
used in assessing the progression of the business are set out
on page 9.
10
LPA Group Plc – Annual Report & Accounts 2019 BUSINESS AND STRATEGY (CONTINUED)
Principal risks and uncertainties
•
The Group’s approach to risk management is detailed
within the Corporate Governance Report. The principal risks
confronting the Group, where adverse changes could impact
results, are summarised below:
•
The Group’s sales dependence upon the rail sector in
general, and UK rail in particular. The Group monitors the
rail market for advance warning of negative developments;
has expanded into selected export markets; derives
revenues from both new-build and the aftermarket; and
benefits from the diverse nature of its non-rail products,
customers and markets served, which help mitigate the
impact of this dependence.
• Certain activities benefit from long standing commercial
relationships with key customers and suppliers. The
Group devotes resource to ensure that good customer
relationships are maintained while continuing to build
relationships with new customers across different business
sectors and geographies. The Group monitors supply-
chain risks and endeavours to develop contingency plans
to mitigate the impact of supplier failure.
• Group activities variously operate in competitive markets
which are subject to product innovation, technical
advances and intensive price competition. The Group
invests in research and development to develop new
technologies and products in order to sustain or improve
its competitive position. The Group keeps its structure
under review and takes appropriate action to ensure that
its cost base remains competitive.
•
The Group is exposed to a number of financial market
risks including liquidity and credit risk, and through
movements in foreign exchange and interest rates. A
description of these risks and the Group’s approach to
managing them is described in note 15 to the financial
statements.
Poor investment returns and longer life expectancy
may result in an increased cost of funding the Group’s
defined benefit pension arrangement. The Group and the
trustees of the scheme review these risks with actuarial
and investment advice as appropriate and take action to
mitigate the risks where possible. The scheme was closed
to future accrual in September 2009.
• Brexit remains a significant unknown risk with no
immediate conclusion to the UK’s position with the
European Union (EU). The Group trades with worldwide
customers and suppliers and could be impacted by
delays through customs and logistics should the UK exit
the EU without agreements in place. Contingencies have
been put in place within the Group and risks reviewed,
internally and with both suppliers and customers. The
Group believes this could generate opportunities in the
short term and remains confident that having imported
and exported over many decades, both with the EU and
Worldwide, it has the infrastructure and relationships in
place to manage any risks that come to fruition.
The Strategic Report on pages 3 to 11 was approved by the
Board on 27 January 2020 and signed on its behalf by:
Paul Curtis
Chief Operating Officer
11
LPA Group Plc – Annual Report & Accounts 2019 DIRECTORS’ REPORT
The directors present their annual report together with the
audited financial statements for the year ended 30 September
2019.
Results and dividends
The loss for the year amounted to £0.05m (2018 profit:
£1.77m). The directors recommend the payment of a final
ordinary dividend of 1.80p (2018: 1.80p), which together
with the interim dividend of 1.10p (2018: 1.10p) makes
a total for the year of 2.90p per share (2018: 2.90p).
Principal activities
The principal activity of the Group continues to be the
design, manufacture and marketing of high reliability
industrial electrical and electronic accessories. Descriptions
of the Group’s development and performance during the
year, position at the year end and likely future prospects
are reviewed in the Strategic Report on pages 3 to 11.
Going concern
A statement regarding the going concern of the business is set
out in accounting policies on page 37.
Substantial shareholdings
As far as the directors are aware the only shareholders with
a beneficial interest as at 31 December 2019 representing
3 per cent or more of the issued share capital were:
No. of shares
%
Canaccord Genuity Group Inc
Michael Rusch (director)
Estate of Ellen Rusch deceased
Peter Pollock (director)
Rights & Issues Investment Trust Plc
Marilyn Porter
Stephen Brett
Susan Thynne
967,500
808,000
804,044
760,000
650,000
532,651
529,000
426,674
7.64%
6.38%
6.35%
6.00%
5.13%
4.21%
4.18%
3.37%
Research and development
The Group is committed to research and development activities
to ensure its position as a market leader in the manufacture
of electronic and electrical components in its market sectors.
Employment policies
The importance of promoting and maintaining good
communications with the Group’s employees is recognised and
its policy is to keep employees regularly informed on matters
relating to their employment through circulars and team briefings.
Applications for employment from all, regardless of disability,
ethnicity, gender or beliefs are considered without prejudice,
bearing in mind the aptitudes of the applicant concerned. In
the event of members of staff becoming disabled or where
individuals require reasonable adjustment, every effort is
made to ensure that their employment with the Group
continues and that appropriate adaptation and training is
provided. It is the policy of the Group that the training, career
development and promotion of disabled persons should, as
far as possible, be identical with that of other employees.
Health, safety and the environment
It is Group policy to maintain healthy and safe working
conditions and to consider its employees wellbeing, whilst
operating in a responsible manner with regard to the
environment. The Group operates Health & Safety Committees
to encourage and facilitate participation by all of its employees
in improvement, awareness and development of a safe
working environment. Reporting of suggestions, observations
and all related KPI’s are published to all through use of health
& safety notice boards, together with the Committee meeting
actions. Each site has volunteer appointed fire marshals and
first aiders who are provided the requisite training, whilst
each site has a qualified health and safety representative,
supported by external expertise.
During the year our Lighting System business has been
certified under ISO 14001 and has been confirmed as carbon
neutral. The group continues to promote long life products
which reduces the impact of waste and recycling.
12
LPA Group Plc – Annual Report & Accounts 2019 DIRECTORS’ REPORT (CONTINUED)
Directors and their interests
The current directors of the Company and brief biographical
details are given on page 24. During the year all Directors
served throughout with one appointed on 1 October 2018
(2018: one Director was appointed and two resigned).
A statement of their remuneration and interests in the ordinary
shares of the Company and share options are set out in the
Remuneration Report. No director had any material interest in
any contract with the Group. In accordance with the articles of
association Peter Pollock retires by rotation at the forthcoming
annual general meeting, and, being eligible, offers himself for
re-election.
Board composition and responsibility
As of 1 October 2018, the Board comprises two non-executive
directors and three executive directors.
There is a clear division of responsibility between the non-
executive directors and the executive Chairman.
Both the non-executive directors, Len Porter and Michael
Rusch, are regarded as independent; Michael Rusch was an
executive director before he became non-executive Chairman
in June 2000 and President from 1 October 2018. The non-
executive directors are from varied backgrounds and bring
with them a range of skills and experience in commerce
and industry. The appointment of two further non-executive
directors in due course will reinforce the independent element
of the Board and address the forthcoming retirement of Michael
Rusch and thereafter Peter Pollock. Directors are judged to
have made the necessary time commitment to fulfil their roles.
The Board meets at least six times during the year, with
additional meetings being convened as necessary. The
Board has two standing committees, the Audit Committee
and the Remuneration Committee. These comprise the
Board’s non-executive directors who served through the
year, Len Porter, Chairman of both, and Michael Rusch.
The Audit Committee has written terms of reference and meets
at least twice a year. It is responsible for reviewing a range
of financial matters including the interim and final accounts,
monitoring the controls which ensure the integrity of the
financial information reported to the shareholders, making
recommendations to the Board in relation to the appointment
of the external auditor, and approving the remuneration and
terms of reference for the external auditor. It also meets with
the external auditor who attends its meetings when required.
The Remuneration Committee meets at least twice a year and
its principal function is to determine executive remuneration
policy on behalf of the Board. In addition, the committee
is responsible for supervising the various share option
schemes and for the granting of options under them.
A schedule of the Board meetings, its committees and the Director attendee’s is set out below:
Year ended
30 September 2019
No of meetings
Executives:
P G Pollock
P V Curtis
C J Buckenham
Non-executives:
M Rusch
L Porter
Board
meetings
Audit
committee
Remuneration
committee
AGM
2019
9
9
9
9
9
9
3
n/a
n/a
n/a
3
3
4
n/a
n/a
n/a
4
4
1
1
1
1
1
1
Attendance at meetings by invitation is not shown.
13
LPA Group Plc – Annual Report & Accounts 2019 DIRECTORS’ REPORT (CONTINUED)
The principal responsibilities of the Board are to agree overall
strategy and investment policy, to approve the annual budget,
to monitor the performance of the senior management, and
to ensure that there are proper internal financial controls
in place. There is a formal schedule of matters reserved for
Board approval. The nature and size of the Group ensures that
the Board considers all major decisions.
Directors are subject to election by shareholders at the
first opportunity after their appointment, and to re-election
thereafter at intervals of no more than three years.
All directors have access to the advice and services of the
company secretary, who is also responsible for ensuring that
Board procedures are followed. There is also a procedure in
place for any director to take independent professional advice
if necessary, at the Company’s expense.
Internal control
The Board has overall responsibility for the Group’s system of
internal control, which is designed to provide reasonable but
not absolute assurance against material misstatement or loss.
The Board has assigned day-to-day responsibility for the
continuous review of risk management to the executive
directors. The Board receives regular updates on risk
issues and reviews the effectiveness of the Group’s systems
of internal controls in relation to financial, operational
and compliance controls and risk management. Risk
management is discussed formally at each Board meeting.
In addition, the Board reviewed the requirement for an internal
audit function and having regard to the size of the Group, the costs
of such a function versus the likely benefit, sufficient assurance
as to the functioning of the system of internal control, and that
the circumstances confronting the Group remain unchanged,
considered there was no such requirement at this time.
In relation to business risk a continuous process of risk
assessment and reporting has been adopted. Executive directors
report regularly to the Board on major business risks faced by
individual operating units and by the Group and how it is
proposed that those risks be managed. Through this, business
risks are assessed according to their nature and urgency and
the Board considers what would be an appropriate response.
The Board has defined a formal schedule of matters
specifically reserved for decision by it and the delegated
authorities of its committees and the executive directors.
The Group has a clear organisation structure and reporting
framework. Whilst the management of operating units
exercise autonomy in the day-to-day running of their
activities, given the size of the Group, the executive directors
remain close to the decisions made at each operating unit.
The Group has a system of budgeting, forecasting and
reporting which enables the Board to set objectives and
monitor performance. A budget is prepared annually, which
includes projections for the next two years, for review by the
Board. Forecasts are updated twice annually. The Group’s
performance against budget and forecast is continuously
monitored by the executive directors, and by the Board at least
quarterly. The Group operates an investment approval process.
Board approval is required for all acquisitions and divestments.
Directors’ responsibilities statement
The directors are responsible for preparing the Strategic
Report, the Directors’ Report and the financial statements
law and regulations.
in accordance with applicable
Company Law requires the directors to prepare financial
statements for each financial year. Under that law the
directors have to prepare the Group’s financial statements in
accordance with International Financial Reporting Standards
as adopted by the European Union (IFRSs) and have elected
to prepare the Company financial statements in accordance
with United Kingdom Generally Accepted Accounting Practice
(United Kingdom Accounting Standards and applicable
laws) including FRS102, the Financial Reporting Standard
applicable in the United Kingdom and Republic of Ireland.
Under company law the directors must not approve the
financial statements unless they are satisfied that they give
a true and fair view of the state of affairs and profit or loss
of the Group and Company for that period. In preparing
these financial statements, the directors are required to:
•
select suitable accounting policies and then apply them
consistently;
• make judgments and accounting estimates that are
reasonable and prudent;
•
state whether applicable IFRS / UK Accounting Standards
have been followed, subject to any material departures
disclosed and explained in the financial statements; and
• prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
Company will continue in business.
.
14
LPA Group Plc – Annual Report & Accounts 2019 DIRECTORS’ REPORT (CONTINUED)
These three authorities, which are the same as those sought
and approved at last year’s annual general meeting, 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.
The Digital Future - shareholder communications
The Group is focussed on the environment and its carbon
footprint, the means by which it communicates with its
stakeholders, current technologies and its cost structure.
On the 5th July 2019 The Group published “The Digital Future”
document outlining how future shareholder communications
would move to being electronic and that payment of dividends
and completion of proxy forms would move to an electronic
basis.
Shareholders are encouraged to familiarise themselves with
this announcement which comes into effect at the 2020 AGM,
as outlined in the AGM notice of meeting herein. Copies
are available at https://www.lpa-group.com/investor-
information/regulatory-news-announcements.
Auditors
Grant Thornton UK LLP are willing to continue in office and
a resolution to reappoint them as auditors of the Company
will be proposed at the forthcoming annual general meeting.
By order of the Board
Chris Buckenham
Company Secretary
27 January 2020
LPA Group plc is registered in England No 686429
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any
time the financial position of the Company and enable
them to ensure that the financial statements comply with
the Companies Act 2006. They are also responsible for
safeguarding the assets of the Company and hence for taking
reasonable steps for the prevention and detection of fraud and
other irregularities.
The directors confirm that:
•
•
so far as each director is aware, there is no relevant
audit information of which the Company’s auditors are
unaware; and
the directors have taken all steps that they ought to have
taken as Directors in order to make themselves aware of
any relevant audit information and to establish that the
Company’s auditor is aware of that information.
The directors are responsible for the maintenance and
integrity of the corporate and financial information included
on the Company’s website. Legislation in the United Kingdom
governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
Annual general meeting
The annual general meeting is to be held at 12 noon on
Wednesday 18th March 2020 at the offices of LPA Lighting
Systems, Ripley House, Normanton, West Yorkshire, WF6 1QT.
The Notice of Meeting is set out on pages 85 to 89. Special
business includes three resolutions which relate to share capital:
•
•
•
The first is an ordinary resolution to renew the authority
of the directors to allot shares generally.
The second is a special resolution to give power to the
directors to allot equity securities for cash without first
offering them to existing shareholders.
The third is a special resolution to permit the Company to
make market purchases of its own shares.
15
LPA Group Plc – Annual Report & Accounts 2019 CORPORATE GOVERNANCE REPORT
Despite being a micro-cap company with large founder
family shareholders, the Group has consistently applied high
standards of Corporate Governance for a number of years.
Following changes to the AIM Rules on 30th March 2018,
together with changes introduced under Article 26 of the
London Stock Exchange rules applicable to AIM listed entities,
which required AIM listed companies to apply a recognised
Corporate Governance Code from 28th September 2018, the
Group adopted and complies as far as is practicable with the
Quoted Company Alliance’s Corporate Governance Code
(the Code) and where we fall short of full compliance, explain
what is required to achieve full compliance. This document is
an integral part of the Company’s Annual Report, which the
Board considers to be a ‘Document of Record’ subject to six
monthly review. The Annual Report is therefore an appropriate
repository for the corporate governance compliance report.
The Code comprises ten principles, which are listed below
together with a statement of the Group’s current position and
where this deviates from the code an element of a Road Map
to full compliance.
In addition, the Group has adopted a ‘North Star’ or ‘Guiding
Light’ principle, which is included here for the first time and
which may be considered to be a precis of the corporate
governance principle.
LPA Group Plc is subject to the UK City Code on Takeovers
and Mergers.
North Star guiding light
• Conduct our business honestly, ethically and in sympathy
with the environment
•
Innovate, design, procure and manufacture for long life,
reliability and sustainability
• Base our business in the UK
•
Provide employment, training and personal development
• Engage with local communities
• Engage with organisations representing the industries we
serve and local and national government
• Endeavour to be a good citizen
The Code
Principle 1
Establish a strategy and business model which promote long-
term value for shareholders
The code requires a disclosure of this Principle in the Annual
Report, which is included in Business and Strategy report on
pages 10 to 11.
The Group operates in markets dominated by large
multinational corporates, with a wide supplier base populated
by small and medium sized enterprises, both privately
owned and quoted. The Group has grown organically
and by acquisition and has always recognised that it will
either be a consolidator of similar SME’s by acquisition or
consolidated by a larger multinational enterprise through
being acquired. Brexit and the uncertainty that has created,
at least in the short term, has disturbed that scenario. The
Group has rejuvenated the Board to equip the business with
the management team necessary to continue to deliver a
strategy which is responsive to changing market conditions.
Principle 2
Seek to understand and meet shareholder needs and
expectations
The Group’s shareholder base is dominated by founding
family shareholders, members of the board, a very limited
number of Institutions and approximately five hundred private
or relatively small holdings. The market in the shares is
illiquid and there is usually a wide spread between the bid
and offer price, making dealing in the shares challenging.
Having rejuvenated the Board, the Group is committed
to improving liquidity and the nature of the shareholder
base to better equip the business with sources of equity
funding. Historically the Group has relied upon debt funding.
The founding families are represented on the board by Michael
Rusch, a non-executive director and President of the Group.
Investor liaison is the responsibility of Peter Pollock, who
was appointed Chairman of the Group on 1st October
2018, having joined the board in 1997 as Chief Executive,
supported by the Chief Operating Officer, Paul Curtis
the Chief Financial Officer, Chris Buckenham.
and
16
LPA Group Plc – Annual Report & Accounts 2019 CORPORATE GOVERNANCE REPORT (CONTINUED)
Principle 2 (continued)
The Group gives regular updates on progress through the
year and publishes significant events via the Regulated News
Service of the Stock Exchange. The Preliminary Announcement
is made in late January and the Annual Report is published
shortly thereafter. The Chairman normally gives an update
at the Annual General Meeting in March. The Interim
Announcement for the first half to 31st March is made, and
the Interim Report published, in late June. It has become
recent practice to give an update on trading in late October,
following the close of the financial year at 30th September.
Copies of all announcements are published on the website,
www.lpa-group.com
The Group’s brokers prepare analysis of the Group’s
performance and their expectations and make this available
to their clients.
Sponsored by the Group’s brokers, the Chairman and senior
executives usually meet with Institutional Shareholders and
other interested parties, immediately after the Interim and
Final Announcements.
The Board is well aware of its responsibility to ensure that
there is no false market in the Group’s shares and to ensure
the market is properly informed of changes in expectations
and significant events in a timely way.
The Group’s customer base is mainly comprised of large
multinationals who demand quality, reliability, value for
money and on-time delivery. We endeavour to engage
with our customers on many levels to ensure that we
understand what is expected of us. We seek customer
feedback and we use metrics to monitor our own performance.
We have developed our supplier base over many years
and measure their performance using KPI’s. In difficult
market conditions close relationships are essential to
timely, cost effective and quality supplies.
maintain
We rely on partners in our export markets to represent
us between our own visits to customers. Many of these
partnerships are long term and our export success reflects
our collective response to changing local market conditions.
We are responsive to our local communities, engaging
with schools and universities and supporting local youth
sports organisations and other charitable organisations.
The Group’s mantra is ‘Long Life Reliability does not cost
the Earth’, which means that we commit to the concept of
whole life cost not only in terms of currency but also in the
use of scarce resources including materials, energy and
labour, designing in long life rather than obsolescence.
Principle 4
Voting at recent Annual General Meetings has been
overwhelmingly in favour of all resolutions.
Embed effective risk management, considering both
opportunities and threats, throughout the Group
Principle 3
Take into account wider stakeholder and social responsibilities
and their implications for long-term success
The Board recognises its responsibility towards employees,
customers, suppliers, partners, the local community and
the environment. Our Corporate Social Responsibility
(CSR) policy details our responsibility towards our people
and the environment and is published on the website.
The Board recognises that our people are our most valuable
asset. Staff turnover across the Group remains low. Staff
surveys at each of the Group’s Sites are undertaken to
monitor and engage with our Staff and ensure their needs
are being met. Apprenticeships, degree and other courses,
support, training and personal development are offered.
The Principal Risks and Uncertainties are identified in the
Strategic Report, which is included on page 11. Each
trading entity includes a Successes, Opportunities, Failures
and Threats (SOFT) Report within its monthly progress
report, which is incorporated into the Group Performance
Review, which is circulated to the board each month. Risk
registers for entities identify key risks. Risk is considered at
the monthly Executive Meetings comprising the Managing
Directors or General Managers of the entities, the COO
and the CFO. The CFO and the COO include comment on
identified changes in risk in their reports to Board Meetings.
17
LPA Group Plc – Annual Report & Accounts 2019 CORPORATE GOVERNANCE REPORT (CONTINUED)
The Chair will continue to evaluate the strengths and
weaknesses of the board and seek to address these
together with other needs as
the company evolves
in any future appointments and in succession planning.
This Annual Report, which is included on the website,
identifies each Director with their biography, which outline the
relevant skills, qualifications and previous roles that each have
held. Future Annual Reports will demonstrate the adequacy
of the board and identify any additional experience, skills,
personal qualities, gender balance and capabilities necessary
to deliver the strategy for the benefit of shareholders and show
how directors are maintaining their skill sets. Annual Reports
will detail significant matters requiring external advice and
describe any significant advice provided internally to the Board
by the Company Secretary or Senior Independent Director.
Principle 7
Evaluate board performance based on clear and relevant
objectives, seeking continuous improvement
The board is in a period of development and has only
been in post for little over a year. Further appointments and
retirements are anticipated. New members are experiencing a
steep learning curve, and while substantial progress has been
made, further work is required. The object is to create a board
with the necessary skills and experience to deliver the Group’s
strategy over the medium term. As Chairman, I have been
required to provide support and assistance to board members
during the year. Future reports will include an assessment of
the board performance and effectiveness evaluation process
and if such an evaluation has been carried out a summary of
the criteria against which the board, committee and individuals
have been assessed, how the evaluation has evolved and
any results and recommendations and succession plans.
Principle 8
Promote a corporate culture that is based on ethical values
and behaviours
The Board, led by the Chair, promotes a sound ethical
culture through its own behaviour and this is visible through
the actions of the non-executive and executive teams.
the objectives and strategy
Corporate values guide
of
the conduct of all aspects of
the business and
business, including disclosures in this Annual Report.
Principle 5
Maintain the Board as a well-functioning, balanced team led
by the Chair
A biography of each of the Directors which identifies whether
they are executive or non-executive, together with a Directors’
responsibilities statement is included on the Groups web site
and within the Annual Report, which also describes the Board
Composition, Responsibility, Independence and the number of
Board Meetings during the year, the nature and composition of
the two board committees and details the time commitment and
attendance record of directors at board and committee meetings.
After a long period of stability, the board continues in transition
following the retirement of the long serving Finance Director
and the Senior Non-Executive Director in March 2018.
The continuing Non-Executive Director was appointed
Senior Non-Executive Director in March 2018. The Chief
Financial Officer and Company Secretary was appointed
in March 2018, succeeding the retiring Finance Director.
The Non-Executive Chair became Group President and
was succeeded by the current Chief Executive on a part-
time basis with effect from 1st October 2018. A full time
Chief Operating Officer was appointed to succeed the
Chief Executive also with effect from 1 October 2018.
The proposed appointment of an additional non-executive
director is well advanced. As this period of transition advances,
the Chief Operating Officer will become Chief Executive and
the part time Chairman further reduce his time commitment.
Two Directors
be
independent. Directors are judged to have made the
roles.
necessary
commitment
currently
judged
their
fulfil
time
are
to
to
Principle 6
Ensure that between them the directors have the necessary
up-to-date experience, skills and capabilities
The Board has a broad balance of skills and experience
as well as personal qualities. Further anticipated Board
appointments will reinforce this balance.
The Board recognises
the
opportunity for gender balance and diversity. Future
appointments may allow this to be corrected. The board
is not dominated by any one person or group of people.
its small size
limits
that
18
LPA Group Plc – Annual Report & Accounts 2019 CORPORATE GOVERNANCE REPORT (CONTINUED)
Principle 8 (continued)
The Chair’s corporate governance statement in the Annual
Reports comments upon how the culture is consistent
with the Group’s objectives, strategy and business model
contained in the strategic report, the principal risks
and uncertainties, how these are monitored and how
a healthy corporate culture is promoted and assessed.
The Group has a Code of Ethics and a Code of Conduct,
which Directors and other officers of the Group are expected
to comply with and to record such instances as required,
as part of the Group’s anti-bribery procedures. These are
published on the Website.
Principle 9
Maintain governance structures and processes that are fit for
purpose and support good decision-making by the Board
line with
The Group maintains governance structures and processes
in
its corporate culture and appropriate
to its size and complexity, and capacity, appetite and
tolerance, for risk. Its processes develop over time as
the needs of the business and its development require.
It is expected that given the small size of the Group
there will be little difference between, the Chair’s high-
level explanation of the application of the Code in the
Corporate Governance Statement in the Annual Report,
and any other description of the roles and responsibilities
of the Chair, Chief Operating Officer, Chief Financial
Officer or any other director with particular responsibilities.
The Directors Report on pages 12 to 15 describes the
roles and terms of reference of any Committees, as
well as matters reserved for the board and how these
might evolve in line with the Group’s plans for growth.
Principle 10
Communicate how the Company is governed and is
performing by maintaining a dialogue with shareholders and
other relevant stakeholders
The Board believes that a healthy dialogue does exist between
the Group and its stakeholders and shareholders, which
should allow interested parties to come to informed decisions
about the Group.
The Board believes that through appropriate use of the Stock
Exchange Regulated News Service for announcements and
the timely posting of all such announcements on the Group
Website appropriate communication and reporting structures
exist between the Group and all constituent parts of the
shareholder base.
The Preliminary Announcement, the Annual Report, the
Chairman’s remarks at the Annual General Meeting, the
Interim Announcement, the Interim Statement, any Closing
Update in October after the financial year end, together
with announcements of any significant events, are all timely
published via the RNS and posted on the website, and
routinely inform all shareholders of the Group’s progress.
All shareholders are invited to the Annual General Meeting
where there is both a formal and informal opportunity to ask
questions either on the business of the meeting or specific
matters of interest.
This Annual Report, which is posted on the website, describes
the work of the Board committees undertaken during the year.
It includes a remuneration report.
Should the Group be unable to comply with any disclosure
requirements of Principles 1-9 and omit them from the Annual
Report or the Website, they will be disclosed, and their
omission explained.
All votes at the Group’s General Meetings are announced on
the RNS immediately after the close of the meeting and posted
on the website.
Should there be a significant proportion of votes cast against
a resolution at a General Meeting the Group would announce
in a timely way by way of the RNS and on the website, the
result, what action it intends to take to understand the reasons
for the negative vote and what action, if any, it intends to take
in the light of that vote.
Annual Reports, including the Notice of any General Meetings,
published during the last five years are included on the
website www.lpa-group.com.
Peter Pollock
Chairman
27 January 2020
19
LPA Group Plc – Annual Report & Accounts 2019 REMUNERATION REPORT
This report has not been prepared in accordance with the
Companies Act 2006 because as an AIM listed company LPA
Group plc does not fall within the scope of the Regulations.
UNAUDITED INFORMATION
Remuneration policy
The Company’s policy is to design executive remuneration
packages to attract, motivate and retain high calibre directors
and to reward them for enhancing value to shareholders.
The performance measurement of the executive directors and
the determination of their annual remuneration package are
undertaken by the Remuneration Committee.
There are four main elements of the remuneration packages
of the executive directors: basic annual salary and benefits;
annual bonus payments; share option incentives; and pension
arrangements.
The Company’s policy is that a proportion of the remuneration
of the executive directors should be performance related.
Executive directors may earn annual incentive payments,
based on achievement of projections for the financial year,
together with the benefits of participation in share option
schemes. The Company does not operate any long-term
incentive schemes other than the share option schemes noted.
Executive directors are entitled to accept appointments outside
the Company, providing that the Senior Non-Executive
Directors’ permission is granted.
Executive directors’ remuneration and terms of
appointment
Executive directors’ basic salaries are reviewed by the
Remuneration Committee annually, usually in December for
implementation in January, and are set to reflect the directors’
responsibilities, experience and marketability. Regard is
also given to the level of rewards made in the year to
staff. The objectives that must be met for the financial year
if a bonus is to be paid are confirmed at the same time.
Peter Pollock has a service contract dated 19 January 2007
(amended in October 2018) with all prior amendments
consolidated), with a rolling notice period of six months and
which provides that employment under the agreement will
automatically terminate on 6 September 2021. As at 1 January
2020 Peter Pollock’s annual (part time) salary was £127,308
(January 2019: £123,600) and he is entitled to the provision
of a car allowance, car insurance and private health insurance.
On transition of the COO to CEO, his contract provides for
a further 50% reduction in salary and a further reduction in
working hours. Entitlement under the Company’s share or
discretionary bonus schemes ceased from 1 October 2019.
Paul Curtis has a service contract dated 26 September 2018,
with a notice period of 6 months. As at 1 January 2020 his
annual salary was £153,831 (January 2019: £149,350), he
receives 10% employer pension contributions to the Group’s
defined contribution scheme, private health insurance and he
is entitled to the provision of a car or allowance with break
down cover and insurance provisions. In addition, he may also
be granted options under the Company’s share schemes and,
subject to the achievement of the Group’s objectives, is entitled
to payments under the Company’s discretionary bonus scheme.
Chris Buckenham has a service contract dated 22 March
2018, with a notice period of 6 months. As at 1 January
2020 his annual salary was £140,039 (January 2019:
£135,960) he receives 10% employer pension contributions
to the Group’s defined contribution scheme, and he is
entitled to the provision of a car or allowance and private
health insurance. In addition, he may also be granted
options under the Company’s share schemes and, subject
to the achievement of the Group’s objectives, is entitled to
payments under the Company’s discretionary bonus scheme.
20
LPA Group Plc – Annual Report & Accounts 2019 REMUNERATION REPORT (CONTINUED)
Non-executive directors’ remuneration and
terms of appointment
The remuneration of the non-executive directors is determined
by the Board as a whole and the policy is to pay an
appropriate level of remuneration for their work on the Board
and its committees. Non-executive directors are normally
appointed for an initial period of three years. Appointments
are made under a letter of appointment subject to retirement
by rotation or removal under the Company’s articles of
association. Non-executive directors do not participate in
the Group’s share option arrangements or bonus schemes.
Michael Rusch (non-executive president) has a term of office
through to June 2020, as set out in his letter of re-appointment
dated 26 September 2018. As at 1 January 2020 he receives
fees of £31,531 per annum (January 2019: £30,612)
and he is entitled to the provision of a car allowance,
private health insurance and home phone reimbursements.
Len Porter (senior non-executive director) has a term of
office, as set out in his letter of re-appointment dated
16 January 2018, which expires at the conclusion of
the Company’s annual general meeting to be held in
the spring of 2021. As at 1 January 2020 he receives
fees of £37,132 per annum (January 2019: £36,050).
21
LPA Group Plc – Annual Report & Accounts 2019 REMUNERATION REPORT (CONTINUED)
INFORMATION SUBJECT TO AUDIT
Directors’ remuneration
Directors’ remuneration for the year was as follows:
Salaries
and fees
£000
Bonus
£000
Benefits
Pension
£000
£000
Total
2019
£000
Total
2018
£000
Peter Pollock
Paul Curtis (from October 2018)
Chris Buckenham (from April 2018)
Stephen Brett (to March 2018)
Executives
Michael Rusch
Len Porter
Per Staehr (to March 2018)
Non-executives
Total
124
150
136
-
410
31
36
-
67
477
-
-
-
-
-
-
-
-
-
-
26
15
9
-
50
21
-
-
21
71
-
18
15
-
33
-
-
-
-
150
183
160
-
493
52
36
-
88
250
-
98
70
418
51
28
12
91
33
581
509
Directors’ pension arrangements
During the year ending 30 September 2019 Peter Pollock and Michael Rusch were in receipt of a pension from the LPA Industries
Limited Pension Scheme: no future pension benefits are being accrued. Paul Curtis and Chris Buckenham received employer
contributions to the Group’s defined contribution scheme under a salary sacrifice arrangement.
Directors’ shareholdings
Shareholdings of those serving at:
Michael Rusch
Peter Pollock
Paul Curtis
Len Porter
Chris Buckenham
Number of ordinary shares
1 October
2018
30 September
2019
31 December
2019
808,000
760,000
38,300
25,000
5,000
808,000
760,000
38,300
25,000
5,000
808,000
760,000
38,300
25,000
5,000
1,636,300
1,636,300
1,636,300
During the year, no shares were acquired, (2018: Chris Buckenham purchased 5,000 shares in the Company at an average price
of £1.07 and Paul Curtis purchased 10,000 shares in the Company at an average price of £1.034).
22
LPA Group Plc – Annual Report & Accounts 2019
REMUNERATION REPORT (CONTINUED)
Directors’ interests in share options
The Company operates a share option scheme, the Performance Share Plan 2018 (PSP 2018) which was established during 2018.
An Employee Benefit Trust (EBT) was settled also in 2018 and is operated through a third-party trustee. The objective of the EBT is
to benefit the Group’s employees and in particular, to provide a mechanism to satisfy share option exercises and reduce dilution for
shareholders. Requests made to the EBT trustee are approved by the Remuneration Committee. Details of the share option schemes
in operation during the year are given in note 18.
Date of
grant
Option
price (p)
Earliest
exercise
date
Latest
exercise
date
At 1
October
2018
At 30
September
2019
At 31
December
2019
Jul 2007
Apr 2011
Feb 2012
Aug 2018
36.0
32.0
49.0
104.8
31 Jul 2010
1 Apr 2014
8 Feb 2015
1 Aug 2021
7 Feb 2022∞
31 Mar 2021
7 Feb 2022
1 Aug 2028
540,000
100,000
150,000
30,000
540,000
100,000
150,000
30,000
540,000
100,000
150,000
30,000
820,000
820,000
820,000
Peter Pollock
2007 Scheme
2007 Scheme
2007 Scheme
2019 Scheme
Paul Curtis
2018 Scheme
Aug 2018
104.8
1 Aug 2021
1 Aug 2028
60,000
60,000
60,000
Chris Buckenham
2018 Scheme
Aug 2018
104.8
1 Aug 2021
1 Aug 2028
60,000
60,000
60,000
940,000
940,000
940,000
∞ on 19 June 2018 the terms of 771,500 options granted in July 2007 under the 2007 Scheme were amended such that the
options would not lapse on 30 July 2018 but would instead remain exercisable until 7 February 2022.
During the year no share options were awarded, (2018: 150,000 share options were awarded under the PSP 2018 at a
discretionary value based on the three dealing day average market price of 104.83p).
Len Porter
Senior Non-Executive Director
27 January 2020
23
LPA Group Plc – Annual Report & Accounts 2019 Len Porter – Senior Non-Executive Director, born 1952,
has specific skills in technical innovation, knowledge-
based decision making, asset management and sustainable
development; over a successful career has worked in the
rail, oil & gas and marine sectors. He joined the Board in
August 2014. He is currently a non-executive director of
Angel Trains Group Ltd (a train leasing company) and a
non-executive director of Jetwing Symphony Ltd (a Sri Lankan
hotel group). Previously he was non-executive Chairman
of eAsset Management Ltd and Chief Executive of the Rail
Safety and Standards Board where he was a member of
the cross-industry Technical Strategy Steering Group and
chaired the committee responsible for the Sustainable Rail
Programme. Before this he was at Lloyd’s Register where he
was responsible for developing services in the rail sector.
He chairs the Board’s Audit and Remuneration committees.
Michael Rusch – Non-Executive Director & President, born
1945, joined the Company in 1966. He has been on the Board
since 1967. He relinquished his executive duties in 2000
having been CEO for many years and retired as non-executive
Chairman on 30 September 2018, taking up the role of non-
executive President. He is a member of the Board’s committees.
COMPANY INFORMATION
Directors
Peter Pollock – Chairman, born 1946, has an MA degree
from the University of St Andrews and is a Fellow of the
Institute of Chartered Accountants in England and Wales,
with over fifty years manufacturing industry experience. He
joined LPA Group in April 1997. Previous appointments
include Chairman of Lionheart plc, Valematic Limited and
Ferrabyrne Limited, non-executive director of Mentmore
Abbey plc and Menvier Swain plc, Chief Executive of
ML Holdings plc, Finance Director UK of Fisher Controls
International Inc. and Financial Director of Hawker Siddeley
Power Transformers Ltd. He was also member of Council
of the Society of British Aerospace Companies, a Director
of the Railway Industry Association, and a member of
Council of the Rail Supply Group representing SME’s.
Paul Curtis – Chief Operating Officer (COO) and
Chief Executive designate, born 1972, joined Channel
Electric Equipment Ltd (“LPA Channel Electric”), LPA’s highly
successful distribution and manufacturing business, as an
apprentice in September 1988 and achieved an MBA. He
has fulfilled engineering and sales management roles during
his career. He served as Sales and Marketing Director
of LPA Connection Systems from 2007 to 2010, before
returning to LPA Channel as Managing Director, when he
became a member of the Group Executive, reporting to the
Group Chief Executive. Following his appointment to COO
on 1 October 2018, the Group Executive report to him.
Chris Buckenham – Chief Financial Officer (CFO) and
Company Secretary, born 1971, trained and qualified as
a chartered certified accountant in 1996 and registered
auditor in 1998, working in accountancy practice where
he became Partner. He specialised as a Lead Advisor
with Grant Thornton’s corporate finance team in 2000,
focussed on SME’s and traditional industries, providing
advice, working with management teams alongside financial
institutions and professional advisors, before leaving the
profession in 2005. Prior to joining LPA Group in October
2018, he held Finance Director positions in privately owned
manufacturing and engineering businesses and worked
for the Smurfit Kappa Group, following their acquisition of
CRP Print & Packaging Ltd in 2013. He joined the Board
in March 2018 having joined the Group in October 2017.
24
LPA Group Plc – Annual Report & Accounts 2019 COMPANY INFORMATION (CONTINUED)
Company contacts
Secretary
Chris Buckenham
Registered
office
Light & Power House, Shire Hill,
Saffron Walden, CB11 3AQ
Registered
number
686429
Website
www.lpa-group.com
Nominated
adviser
Cairn Financial Advisers LLP
62-63 Cheapside
London
EC2V 6AX
Auditors
Grant Thornton UK LLP
101 Cambridge Science Park
Milton Road
Cambridge
CB4 0FY
Broker
Bankers
finnCap
60 New Broad Street
London
EC2M 1JJ
Barclays Bank Plc
PO Box 885
Mortlock House
Vision Park, Histon
Cambridge
CB24 9DE
Registrars
Link Asset Services
65 Gresham Street
London
EC2V 7NQ
Solicitors
Eversheds Sutherland (International) LLP
115 Colmore Row
Birmingham
B3 3AL
Trading subsidiaries
LPA Group Plc headquarters is situated at, and all LPA Group entities have their registered address at:
Light & Power House, Shire Hill, Saffron Walden, CB11 3AQ, UK.
Trading addresses:
LPA Group entities operate as distinct businesses through appointed Executive Teams.
Light & Power House, Shire Hill, Saffron Walden, CB11 3AQ, UK.
LPA Industries Ltd / Haswell Engineers Ltd
- trading as LPA Connection Systems
LPA House, Ripley Drive, Normanton, West Yorkshire, WF6 1QT, UK.
Excil Electronics Ltd - trading as LPA Lighting Systems
Bath Road, Thatcham, Berkshire, RG18 3ST, UK.
Channel Electric Equipment Ltd - trading as LPA Channel Electric
25
LPA Group Plc – Annual Report & Accounts 2019 INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF LPA GROUP PLC
Opinion
Basis for opinion
Our opinion on the financial statements is
unmodified
We have audited the financial statements of LPA Group
Plc (the ‘parent company’) and its subsidiaries (the
‘group’) for the year ended 30 September 2019,
which comprise the consolidated income statement, the
consolidated statement of comprehensive income, the
consolidated balance sheet, the consolidated statement of
changes in equity, the consolidated cash flow statement,
the company balance sheet, the company statement of
changes in equity and notes to the financial statements,
including a summary of significant accounting policies.
The financial reporting framework that has been applied
in the preparation of the group financial statements is
applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the European Union.
The financial reporting framework that has been applied
in the preparation of the parent company financial
statements is applicable law and United Kingdom
Accounting Standards, including Financial Reporting
Standard 102 ‘The Financial Reporting Standard
applicable in the UK and Republic of Ireland (United
Kingdom Generally Accepted Accounting Practice).
In our opinion:
•
•
•
•
the financial statements give a true and fair view of
the state of the group’s and of the parent company’s
affairs as at 30 September 2019 and of the group’s
loss for the year then ended;
the group financial statements have been properly
prepared in accordance with IFRSs as adopted by
the European Union;
the parent company financial statements have
been properly prepared in accordance with United
Kingdom Generally Accepted Accounting Practice;
and
the financial statements have been prepared in
accordance with the requirements of the Companies
Act 2006.
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are further
described in the ‘Auditor’s responsibilities for the audit
of the financial statements’ section of our report. We are
independent of the group and the parent company in
accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the
FRC’s Ethical Standard as applied to listed entities, and we
have fulfilled our other ethical responsibilities in accordance
with these requirements. We believe that the audit evidence
we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters
in relation to which the ISAs (UK) require us to report to you
where:
•
•
the directors’ use of the going concern basis of accounting
in the preparation of the financial statements is not
appropriate; or
the directors have not disclosed in the financial
statements any identified material uncertainties that may
cast significant doubt about the group’s or the parent
company’s ability to continue to adopt the going concern
basis of accounting for a period of at least twelve
months from the date when the financial statements are
authorised for issue.
Overview of our audit approach
• Overall materiality: £116,000, which represents 5%
of the group’s expected profit before taxation;
• Key audit matters were identified as the valuation
of manufactured inventory and revenue recognition;
and
• We have performed full scope audit procedures on
the financial statements of LPA Group Plc and on
the financial information of LPA Industries Limited,
Haswell Engineers Limited, Excil Electronics Limited,
Channel Electric Equipment Holdings Limited and
Channel Electric Equipment Limited. There were no
changes in scope from the prior year.
26
LPA Group Plc – Annual Report & Accounts 2019 INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF LPA GROUP PLC (CONT)
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not
due to fraud) that we identified. These matters included those that had the greatest effect on: the overall audit strategy;
the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed
in the context of our audit of the group financial statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters. There were no key audit matters identified for the parent company.
Key Audit Matter – Group
How the matter was addressed in the audit
Valuation of manufactured
inventory
Inventory is recognised in the balance
sheet at the cost of bringing it to its
present location and condition. The cost of
inventory includes direct materials, direct
labour and a proportion of production
overheads based on normal levels of activity.
We identified a risk that the valuation of
manufactured inventory may be misstated
due to incorrect pricing of component
costs within the bill of materials and/
or management
and
estimates involved in absorption costing.
judgements
therefore
identified valuation of
We
manufactured inventory as a significant
risk, which was one of the most significant
assessed risks of material misstatement.
Our audit work included, but was not restricted to:
• assessing whether the stated accounting policy for inventory is consistent with
the requirements of International Accounting Standard (IAS) 2 Inventories
•
testing that the stated accounting policy has been applied accurately and
consistently, by checking the cost allocated to a sample of stock lines is
appropriate
• agreeing a sample of work in progress and finished goods to the underlying bill
of materials and corroborating material costs to purchase invoice documentation
and corroborating labour and overhead costs to supporting documentation
•
•
examining labour and overhead absorption rates for reasonableness and
consistency by reperforming calculations and agreeing on a sample basis to
underlying records; and
challenging management on normal production efficiency rates within their
labour and overhead absorption rates.
The group's accounting policy on inventories is shown in note 1.I to the financial
statements and related disclosures are included in note 11.
Key observations
Based on our audit work, we did not identify any evidence of material misstatement
of manufactured inventory.
27
LPA Group Plc – Annual Report & Accounts 2019 INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF LPA GROUP PLC (CONT)
Key audit matters (continued)
Key Audit Matter – Group
How the matter was addressed in the audit
Revenue recognition
Our audit work included, but was not restricted to:
Under International Standard on Auditing
(UK) 240 ‘The Auditors Responsibilities
Relating to Fraud in an Audit of Financial
Statements’, there is a rebuttable presumed
risk that revenue may be misstated due
improper recognition of revenue.
to
The Group has adopted IFRS 15 ‘Revenue
from Contracts with Customers’ for the first
time for the year ended 30 September 2019.
The group is engaged in contracts which
are often delivered and invoiced in stages.
from
arises
repair or
obligations
sale,
the
Revenue
refurbishment,
installation
of product and comprises the value of
performance
completed
in the year representing the value of
design, manufacture and supply of
products excluding value added tax,
trade or volume discounts, or values
related to future performance obligations.
Depending on the nature of a contract
these can have one or more performance
obligations which are recognised either at
a point in time or over time depending on
the nature of the performance obligation.
therefore
identified
revenue
We
recognition as a
risk,
which was one of the most significant
assessed risks of material misstatement.
significant
• Assessing whether the Group’s accounting policy is compliant with IFRS 15;
• Obtaining management’s board paper setting out their assessment of the impact
of IFRS 15;
• Considering key judgement areas in management’s assessment of the impact
of IFRS 15. This included an assessment of management’s conclusions of
(a) revenue streams that were distinct and represent separate performance
obligations, (b) judgements over the allocation of revenue to each performance
obligation, (c) appropriate measurement of progress on performance obligations
as at the balance sheet date; and (d) calculations of revenue to be recognised
in line with these judgements;
• Challenging management as to whether their calculation is in line with IFRS15
and applies a consistent approach across all contracts;
•
•
Testing that the stated policy has been applied accurately and consistently by
examining sales terms in underlying documentation on a sample basis;
Testing management’s calculations supporting the allocation and measurement
of revenue to performance obligations
• Corroborating a sample of revenue transactions to proof of delivery or
subsequent cash receipt to verify the occurrence of the sale;
• Analysing revenue trends across the year, by month and by revenue stream, in
comparison to prior periods; and
•
Testing a sample of sales transactions in the final quarter of the year and either
side of the balance sheet date to evidence of dispatch, to assess the timing of
delivery and that revenue has been recognised in the correct period.
The group's accounting policy on revenue recognition, including revenue from
contracts, is shown in notes 1.C, 1.N and 1.Q to the financial statements and related
disclosures are included in note 2.
Key observations
.
Based on our audit work, we did not identify any evidence of material misstatement
of revenue.
28
LPA Group Plc – Annual Report & Accounts 2019 INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF LPA GROUP PLC (CONT)
Our application of materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions
of a reasonably knowledgeable person would be changed or influenced. We use materiality in determining the nature, timing and
extent of our audit work and in evaluating the results of that work.
Materiality was determined as follows:
Materiality measure
Group
Parent
Financial statements as a whole.
£196,000 which
is 1% of
estimated revenue at the planning
stage of the audit. This benchmark
is considered the most appropriate
the group monitors
because
revenue based metrics as key
performance indicators.
Materiality for the current year
is higher than the level that we
determined for the year ended 30
September 2018.
£156,000 which is 2% of total assets. This
benchmark is considered the most appropriate
because the entity is a holding company and
therefore its asset base is more relevant to the
activities of the parent company.
Materiality for the current year is higher than the
level that we determined for the year ended 30
September 2018 using the same basis.
Performance materiality used to drive
the extent of our testing.
75% of
materiality.
financial
statement
75% of financial statement materiality.
Specific materiality.
Communication of misstatements to the
audit committee.
We determined a lower level of
specific materiality for certain areas
such as directors' remuneration,
auditors remuneration and related
party transactions.
£9,850 and misstatements below
that threshold that, in our view,
warrant reporting on qualitative
grounds.
We determined a
level of specific
lower
materiality for certain areas such as directors'
remuneration, auditors remuneration and related
party transactions.
£7,000 and misstatements below that threshold
that, in our view, warrant reporting on qualitative
grounds.
29
LPA Group Plc – Annual Report & Accounts 2019 INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF LPA GROUP PLC (CONT)
An overview of the scope of our audit
Our audit approach was a risk-based approach founded on
a thorough understanding of the group's business. We took
into account the size and risk profile of each entity within the
group, any changes in the business and other factors when
determining the level of work to be performed on the financial
information of each entity, which, in particular included:
obtained in the audit or otherwise appears to be materially
misstated. If we identify such material inconsistencies or
apparent material misstatements, we are required to determine
whether there is a material misstatement in the financial
statements or a material misstatement of the other information.
If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we
are required to report that fact.
•
•
The entities in the group are based at three locations,
each with a discrete accounting function. In assessing
the risk of material misstatement to the group financial
statements we considered the transactions undertaken by
each entity where the focus of our work was required,
taking into account the operation of the three accounting
functions, and as a result we have performed an audit of
the financial information of each non-dormant entity in
the group. The group engagement team conducted all the
audit work on each entity in the group and visited each
location.
The audit risks identified for each entity are the same
audit risks identified for the group as a whole, except for
the significant risk of valuation of manufactured inventory
which does not apply to Channel Electric Equipment
Limited, Channel Electric Equipment Holdings Limited and
LPA Group Plc (the parent company).
• We performed full scope audits on the financial
information of the parent company LPA Group Plc and the
entities LPA Industries Limited, Haswell Engineers Limited,
Excil Electronics Limited, Channel Electric Equipment
Holdings Limited and Channel Electric Equipment Limited.
•
The total percentage coverage of full scope procedures
over the group’s total revenues and total assets was
100%.
• Our audit approach in the current year is consistent
with the audit approach adopted for the year ended 30
September 2018, being substantive in nature.
Other information
The directors are responsible for the other information. The
other information comprises the information included in
the annual report, other than the financial statements and
our auditor’s report thereon. Our opinion on the financial
statements does not cover the other information and, except to
the extent otherwise explicitly stated in our report, we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing
so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge
We have nothing to report in this regard.
Our opinion on other matters prescribed by
the Companies Act 2006 is unmodified
In our opinion, based on the work undertaken in the
course of the audit:
•
•
the information given in the strategic report and the
directors’ report for the financial year for which the
financial statements are prepared is consistent with
the financial statements; and
the strategic report and the directors’ report have
been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report
under the Companies Act 2006
In the light of the knowledge and understanding of the group
and the parent company and its environment obtained in
the course of the audit, we have not identified material
misstatements in the strategic report or the directors’ report.
Matters on which we are required to report by
exception
We have nothing to report in respect of the following matters
in relation to which the Companies Act 2006 requires us to
report to you if, in our opinion:
• adequate accounting records have not been kept by the
parent company, or returns adequate for our audit have
not been received from branches not visited by us; or
•
•
the parent company financial statements are not in
agreement with the accounting records and returns; or
certain disclosures of directors’ remuneration specified by
law are not made; or
• we have not received all the information and explanations
we require for our audit
30
LPA Group Plc – Annual Report & Accounts 2019 INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF LPA GROUP PLC (CONT)
Use of our report
This report is made solely to the company’s members, as
a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken
so that we might state to the company’s members those matters
we are required to state to them in an auditor’s report and
for no other purpose. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other
than the company and the company’s members as a body, for
our audit work, for this report, or for the opinions we have
formed.
Paul Brown
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Cambridge
27 January 2020
Responsibilities of directors for the financial
statements
As explained more fully in the directors’ responsibilities
statement set out on page 14 the directors are responsible
for the preparation of the financial statements and for being
satisfied that they give a true and fair view, and for such
internal control as the directors determine is necessary to
enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the group’s and the parent
company’s ability to continue as a going concern, disclosing,
as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either
intend to liquidate the group or the parent company or to
cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and
to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when
it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial
statements.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council’s website at: www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditor’s report.
31
LPA Group Plc – Annual Report & Accounts 2019 CONSOLIDATED INCOME STATEMENT
For the year ended 30 September 2019
Revenue
Cost of sales
Gross profit
Distribution costs
Administrative expenses - before exceptional and non-underlying items
Operating profit before exceptional and non-underlying items
Exceptional and non-underlying items
Operating (loss) / profit
Finance costs
Finance income
(Loss) / profit before tax
Taxation
(Loss) / profit for the year
Attributable to:
- Equity holders of the parent
Earnings per share
Basic
Diluted
All activities are continuing.
The notes on pages 37 to 72 form an integral part of these financial statements.
Note
2
2019
£000
2018
£000
19,533
27,979
(15,174)
(20,862)
4,359
(1,588)
(2,570)
201
(403)
(202)
(99)
64
(237)
185
(52)
(52)
7,117
(1,931)
(2,942)
2,244
(175)
2,069
(80)
35
2,024
(253)
1,771
1,771
(0.43p)
(0.43p)
14.34p
13.45p
6
4
5
6
7
8
32
LPA Group Plc – Annual Report & Accounts 2019 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 September 2019
(Loss) / profit for the year
Other comprehensive income / (expense)
Items that will not be reclassified to profit or loss
Actuarial gain on pension scheme
Deferred tax on actuarial gains and losses
Other comprehensive income net of tax
Total comprehensive income for the year
Attributable to:
- Equity holders of the parent
The notes on pages 37 to 72 form an integral part of these financial statements.
Note
19
16
2019
£000
(52)
10
(7)
3
(49)
(49)
2018
£000
1,771
962
(178)
784
2,555
2,555
33
LPA Group Plc – Annual Report & Accounts 2019 CONSOLIDATED BALANCE SHEET
At 30 September 2019
Non-current assets
Intangible assets
Property, plant and equipment
Retirement benefits
Current assets
Inventories
Trade and other receivables
Current Tax Receivable
Cash and cash equivalents
Total assets
Current liabilities
Bank loans and other borrowings
Current tax payable
Trade and other payables
Non-current liabilities
Bank loans and other borrowings
Deferred tax liabilities
Total liabilities
Net assets
Equity
Share capital
Investment in own shares
Share premium account
Un-issued shares reserve
Merger reserve
Retained earnings
Note
9
10
19
11
12
14
13
14
16
17
Equity attributable to shareholders of the parent
The notes on pages 37 to 72 form an integral part of these financial statements.
The financial statements were approved by the Board on 27 January 2020 and signed on its behalf by:
P V CURTIS
Director
C J BUCKENHAM
Director
34
2019
£000
1,359
7,006
2,250
2018
£000
1,200
7,216
2,409
10,615
10,825
3,824
4,437
59
889
9,209
3,881
5,540
-
956
10,377
19,824
21,202
(2,805)
-
(3,839)
(6,644)
(504)
(352)
(856)
(322)
(266)
(4,868)
(5,456)
(2,605)
(430)
(3,035)
(7,500)
(8,491)
12,324
12,711
1,266
(324)
708
82
230
10,362
1,238
(214)
628
122
230
10,707
12,324
12,711
LPA Group Plc – Annual Report & Accounts 2019 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 September 2019
2019
Share
capital
£000
Investment
in own
shares
Share
premium
account
Un-issued
shares
reserve
Merger
reserve
Retained
earnings
£000
£000
£000
£000
£000
Total
£000
At 1 October 2018
1,238
(214)
628
122
230
10,707
12,711
Loss for the year
Actuarial gain on pension scheme
Total comprehensive income
attributable to equity holders
of the parent
Dividends
Proceeds from issue of shares
Cost of Investment in own shares
Tax benefit on share-based payments
Share-based payments
Transactions with owners
-
-
-
-
28
-
-
-
28
-
-
-
-
-
(110)
-
-
(110)
-
-
-
-
80
-
-
-
80
-
-
-
-
-
-
(7)
(33)
(40)
-
-
-
-
-
-
-
-
-
(52)
3
(52)
3
(49)
(49)
(357)
-
-
25
36
(296)
(357)
108
(110)
18
3
(338)
At 30 September 2019
1,266
(324)
708
82
230
10,362
12,324
2018
At 1 October 2017
Profit for the year
Actuarial gain on pension scheme
Total comprehensive income
attributable to equity holders
of the parent
Dividends
Cost of Investment in own shares
Tax charge on share-based payments
Share-based payments
Transactions with owners
Share
capital
£000
1,238
-
-
-
-
-
-
-
-
Investment
in own
shares
Share
premium
account
Un-issued
shares
reserve
Merger
reserve
Retained
earnings
£000
£000
£000
£000
£000
Total
£000
-
-
-
-
-
(214)
-
-
(214)
628
134
230
8,491
10,721
-
-
-
-
-
-
-
-
-
-
-
-
-
(14)
2
(12)
-
-
-
-
-
-
-
-
1,771
784
1,771
784
2,555
2,555
(339)
-
-
-
(339)
(339)
(214)
(14)
2
(565)
At 30 September 2018
1,238
(214)
628
122
230
10,707
12,711
The notes on pages 37 to 72 form an integral part of these financial statements.
35
LPA Group Plc – Annual Report & Accounts 2019 CONSOLIDATED CASH FLOW STATEMENT
For the year ended 30 September 2019
(Loss) / profit before tax
Finance costs
Finance income
Operating (loss) / profit
Adjustments for:
Depreciation
Amortisation of intangible assets
Gain on sale of property, plant and equipment
Past service cost liability recognition (GMP)
Movements in working capital and provisions:
Change in inventories
Change in trade and other receivables
Change in trade and other payables
Cash generated from operations
Income taxes paid
Retirement benefits (DB pension contributions)
Net cash from operating activities
Purchase of property, plant and equipment and software
Proceeds from sale of property, plant and equipment
Capitalised development expenditure
Purchase of own shares
Net cash used in investing activities
Drawdown of bank loans
Repayment of bank loans
Repayment of Hire Purchase obligations
Interest paid
Proceeds from issue of share capital
Dividends paid
Net cash (used in) financing activities
Net (decrease) / increase in cash and cash equivalents
Cash and cash equivalents at start of the year
Cash and cash equivalents at end of the year
Reconciliation of cash and cash equivalents
Cash and cash equivalents in current assets
Cash and cash equivalents at end of the year
The notes on pages 37 to 72 form an integral part of these financial statements.
36
2019
£000
(237)
99
(64)
(202)
693
48
(2)
333
870
57
1,102
(1,059)
970
(210)
(100)
660
(399)
3
(124)
(110)
(630)
2,626
(2,242)
(201)
(31)
108
(357)
(97)
(67)
956
889
889
889
2018
£000
2,024
80
(35)
2,069
652
12
(10)
-
2,723
536
(486)
(190)
2,583
(35)
(100)
2,448
(496)
10
(27)
(214)
(727)
-
(196)
(109)
(24)
-
(339)
(668)
1,053
(97)
956
956
956
LPA Group Plc – Annual Report & Accounts 2019 NOTES TO THE FINANCIAL STATEMENTS
1.
Accounting Policies
A. Basis of preparation
The consolidated financial statements have been
prepared in accordance with International Financial
Reporting Standards as adopted by the EU and
applicable law (IFRS) and in accordance with the
provisions of the Companies Act 2006 applicable to
companies applying IFRS. The financial statements
have been prepared under the historical cost
convention with the exception of certain items which are
measured at fair value, as disclosed in the accounting
policies below. The measurement bases and principal
accounting policies of the Group are set out below.
The financial statements are presented in pounds
sterling (the Company’s functional currency), rounded
to the nearest thousand (£000).
B. Going concern
The Group’s business activities and the factors likely
to affect its future performance are set out in
the Strategic Report (which comprises information
about LPA’s Business and Strategy, the Chairman’s
Statement, the Chief Operating Officer’s Review,
the Financial Review, Key Performance Indicators
and Principal Risks and Uncertainties) on pages 3
to 11. The financial position of the Group, its cash
flows, liquidity position and borrowing facilities
are included in the Financial Review. In addition,
the Group’s treasury policy, its approach to the
management of financial risk, and its exposure to
liquidity and credit risks are outlined in note 15.
In assessing going concern the directors note that
whilst current economic conditions create uncertainty,
as the Group: (i) has traded profitably in the current
year, ahead of exceptional and non-underlying items,
and is expected to continue to do so in the near term;
(ii) has in place adequate working capital facilities
for its forecast needs; (iii) has a strong current order
book with significant further opportunities in its
market place; and (iv) has proven adaptable in past
periods of adversity, the directors believe that it is
well placed to manage its business risks successfully.
After making enquiries, inclusive but not limited
to updated forecasts and expectations, 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.
C. New standards and interpretations
adopted and those not applied
The following new standards, amendments to
standards and interpretations have been issued
but are not effective for the year to September
2019 and have not been adopted early:
Operating leases
International Financial Reporting Standard (IFRS)
16 (effective for accounting periods commencing
on or after 1 January 2019) introduces a single,
on-balance sheet accounting model for leases. A
lessee recognises a right-of-use asset representing
its right to use the underlying asset and a lease
liability representing its obligation to make lease
payments. There are optional exemptions
for
short term leases and the use of low value items.
IFRS 16 replaces existing leases guidance including
IAS 17 Leases, IFRIC 4 Determining whether an
Arrangement contains a Lease, SIC-15 Operating
Leases—Incentives and SIC-27 Evaluating the Substance
of Transactions Involving the Legal Form of a Lease.
The Group will adopt the requirements of IFRS16
for the first time for the year ending 30 September
2020. As a result, it will recognise a balance
sheet asset and corresponding obligation relating
to its use of assets classified under IFRS16. The
Group will not apply IFRS16 to its commitments
under operating leases on certain low value assets
if classed below the de-minimus value of $5,000.
37
LPA Group Plc – Annual Report & Accounts 2019 NOTES TO THE FINANCIAL STATEMENTS
1.
Accounting Policies (continued)
C. New standards and interpretations
adopted and those not applied
(continued)
Operating leases (continued)
Rental payments made under leases will be accounted
for as repayments of the balance sheet liability, which
will include an implied interest element, and the asset
recognised will be depreciated over the remaining
lease term on a straight line basis. The Group will
adopt the modified approach to transition where
the initial asset values will be equal to the present
value of the future lease payments as at the date
of transition. This will result in all existing leases
being capitalised over their remaining lives, as if
they had just been entered into, and the Group’s
accounts will reflect a higher interest charge following
adoption. It is estimated that on transition the
opening balance sheet position for 2019 will be
adjusted to include approximately £0.2m of right-of-
use assets and a corresponding lease liability. The
effect on the Group’s net profit before tax for 2019
is not expected to be material with the pre IFRS 16
rental charge being replaced by depreciation and
interest. The depreciation will be charged on a
straight-line basis; however, interest is charged on
the outstanding lease commitment by reference to
the implied liabilities and will therefore be higher in
the earlier years and will decrease over time. The
transition to IFRS16 will have no effect on cash flows.
The following new standards, amendments to standards
and interpretations have been adopted during the year:
Financial Instruments – International Financial
Reporting Standard (IFRS) 9
IFRS9 (Financial Instruments) effective for accounting
periods beginning on or after 1 January 2018
addresses the classification and measurement of
financial assets and liabilities and replaces IAS39.
The standard introduces a forward looking credit loss
impairment model whereby entities need to consider
and recognise impairment triggers that might occur in
the future – the expected credit loss model. The Board
has considered the impact of IFRS9 and determined
that it does not have a significant impact on the reported
values in these or previous financial statements.
38
Within these financial statements the Group has
classified its financial instruments as required under
IFRS9. The Group has no derivative financial
instruments either designated as cashflow or not
qualifying for hedge accounting. At 30 September
2019 The Group held a forex swap contract totalling
€904,000 (2018: nil).
Financial assets previously classified
the
“loans and receivables” category and measured
at amortised cost under IAS39 (being trade and
other receivables and amounts owed by equity
accounted investments) continue to be classified
in the “amortised cost” category under IFRS9.
in
As required by IFRS9, the Group will apply the
impairment requirements and recognise a loss
allowance for expected credit losses on its financial
assets. At each reporting date, it will always
measure the loss allowance at an amount equal
to the lifetime expected credit loss. The Group
will recognise in profit or loss, as an impairment
gain or loss, the amount of expected credit losses
(or reversal) that is required to adjust the loss
allowance at the reporting date to the amount that is
required to be recognised in accordance with IFRS9.
Revenue – International Financial Reporting
Standard (IFRS) 15
IFRS15 (Revenue from Contracts with Customers,
effective for accounting periods beginning on or
after 1 January 2018), the Standard, has been
adopted
financial
years and comparatives for prior year have been
reviewed. No adjustments were found to be required.
the current and
future
for
In the normal course, revenues arise from the sale,
refurbishment, repair or installation of product.
Product sales value include, design and engineering,
Non-Recurring Costs (NRC’s), accreditation, test
and specific tooling related to the supply. On
occasion, particularly in respect of complex or
large contracts, customers may require NRC’s to be
a specific deliverable to exclude these costs being
embedded in the price of subsequent product orders.
The nature of large procurement contracts is
evolving. Some are increasing in scope to include
a broader responsibility, for product interfaces
and compliance. Such contracts, with IFRS 15,
require a new approach to income recognition.
LPA Group Plc – Annual Report & Accounts 2019 NOTES TO THE FINANCIAL STATEMENTS
1.
Accounting Policies (continued)
C. New standards and interpretations
adopted and those not applied
(continued)
Revenue – International Financial Reporting
Standard (IFRS) 15 (continued)
To determine whether to recognise revenue, the
Group follows the 5-step process, recommended
by the Standard:
1.
Identifying the contract with a customer
2.
Identifying the performance obligations
3. Determining the transaction price
4. Allocating
the
transaction price
to
the
performance obligations
5. Recognising revenue when/as performance
obligation(s).
Revenue is recognised either at a point in time
or over time, when (or as) the Group satisfies
performance obligations by transferring the
promised goods or providing services to its
customers. At the point of recognising revenue,
the Group also recognises contract liabilities in
respect of unsatisfied performance obligations
that have been invoiced and reports these
amounts as other liabilities. Similarly, if
the Group satisfies a performance obligation
before it invoiced the customer, the Group
recognises a contract asset in its statement of
financial position.
D. Basis of consolidation
The consolidated financial statements include the
financial statements of the Company and both its
subsidiaries and the Employee Benefit Trust (the
“EBT”), (together the “Group”). Subsidiaries are
those entities over which the Company has the power
to control the financial and operating policies so as
to obtain benefits from its activities. The Company
obtains and exercises control through voting
rights. The financial statements of subsidiaries are
included in the consolidated financial statements
from the date that control commences to the
date that control ceases. The EBT is established
through a third-party Trustee and is not controlled
by the Group. However, the Trust’s objective is to
benefit the Group’s employees, activities including
acquiring shares in the Company to satisfy the
exercise of share options. The Company is required
to fund the activities and costs of the EBT and
as such is required to consolidate the accounts
of the EBT, which are prepared by the Trustee.
Intragroup balances and
transactions, and
any unrealised gains arising from intragroup
transactions, are eliminated in preparing the
consolidated financial statements.
Acquisitions of subsidiaries are dealt with by the
acquisition method. The acquisition method involves
the recognition at fair value of all identifiable assets
and liabilities, including contingent liabilities of the
subsidiary, at the acquisition date, regardless of
whether or not they were recorded in the financial
statements of the subsidiary prior to acquisition. On
initial recognition, the assets and liabilities of the
subsidiary are included in the consolidated balance
sheet at their fair values, which are also used as the
bases for subsequent measurement in accordance
with the Group accounting policies. Goodwill is
stated after separating out identifiable intangible
assets. Goodwill represents the excess of the fair
value of the consideration transferred over the
fair value of the Group's share of the identifiable
net assets of the acquired subsidiary at the date
of acquisition. Acquisition costs are written off as
incurred.
39
LPA Group Plc – Annual Report & Accounts 2019
NOTES TO THE FINANCIAL STATEMENTS
1.
Accounting Policies (continued)
Software
E. Intangible assets
Goodwill
Goodwill representing the excess of the fair value
of the consideration transferred over the fair value
of the Group's share of the identifiable net assets
acquired is capitalised and reviewed annually
for impairment. Goodwill is carried at cost less
accumulated impairment losses.
Goodwill on acquisitions prior to 1 January
1998 was deducted from reserves in the year
of acquisition. Such goodwill continues as a
deduction from reserves and is not recognised
in the income statement in the event of disposal.
Research and development
Research expenditure is expensed in the income
statement as incurred.
Development expenditure on a project is written
off as incurred unless it can be demonstrated
that the following conditions for capitalisation, in
accordance with IAS38 Intangible Assets, are met:
•
•
the intention is to complete the development of
the intangible asset and use or sell it;
the development costs are
identifiable and can be measured reliably;
separately
• management are satisfied as to the ultimate
technical and commercial viability of the
project; so that it will be feasible to complete
and be available for use or sale;
• management are satisfied with the availability
of technical, financial and other resources to
complete the development and use or sell the
intangible asset; and
•
it is probable that the asset will generate future
economic benefit.
Any subsequent development costs are capitalised
and are amortised, within cost of sales, from the
date the product or process is available for use,
on a straight-line basis over its estimated useful
life. The useful life for the development costs
capitalised at the current year-end is 3 years.
All finite-lived intangible assets, including separately
identifiable purchased software, are accounted for
using the cost model whereby capitalised costs
are amortised on a straight-line basis over their
estimated useful lives. Residual values and useful
lives are reviewed at each reporting date. In
addition, they are subject to impairment testing
as described at H. The following useful lives are
applied:
Software
25% - 33%
Amortisation has been provided within impairment
of non-financial assets. Subsequent expenditure
on the maintenance of computer software are
expensed as incurred. When an intangible asset
is disposed of, the gain or loss on disposal is
determined as the difference between the proceeds
and the carrying amount of the asset and is
recognised in the Consolidated Income Statement
within other income or expenses.
F. Property, plant and equipment
Property, plant and equipment
is stated at
cost or deemed cost, net of depreciation and
any provision for impairment. Depreciation is
calculated to write down the cost or valuation,
less estimated residual value, of all property, plant
and equipment, other than freehold land, by equal
annual instalments over their estimated useful
economic lives. The rates generally applicable are:
Freehold buildings
2%
Plant, machinery and equipment
7% - 15%
Motor vehicles
20%
Furniture, fittings and office equipment
10% - 20%
Computers
20% - 33%
Residual values are reviewed annually.
A profit or loss on disposal is recognised in the
consolidated income statement at the surplus or
deficit of disposal proceeds over net carrying
amount of the asset at the time of disposal.
40
LPA Group Plc – Annual Report & Accounts 2019
NOTES TO THE FINANCIAL STATEMENTS
In determining a cash-generating unit’s or asset’s
value in use, estimated future cash flows are
discounted to their present value using a pre-tax
discount rate that reflects current market assessments
of the time value of money and risks specific to the
cash-generating unit or asset that have not already
been included in the estimate of future cash flows.
A previously recognised impairment loss, other
than goodwill, is reversed only if there has
been a change in the previous indicator used to
determine the assets’ recoverable amount since
the last impairment loss was recognised. The
reinstated carrying amount cannot exceed the
carrying amount that would have been determined,
net of amortisation, had no impairment loss
been recognised for the asset in prior years.
I. Inventories
Inventories are stated at the lower of cost and
net realisable value. The costs of ordinarily
interchangeable items are based on a first-in,
first-out basis. Cost includes direct materials, direct
labour and an appropriate proportion of production
overheads based on normal levels of activity.
J. Cash and cash equivalents
Cash and cash equivalents comprise cash balances
and short-term deposits that are readily convertible
into known amounts of cash and which are subject
to an insignificant risk of change in value. Bank
overdrafts that are repayable on demand and form
an integral part of the Group’s cash management
are included as a component of cash and cash
equivalents for the purpose of the cash flow statement.
1.
Accounting Policies (continued)
G. Leased assets
Leases where the Group assumes substantially all
the risks and rewards of ownership are classified
as finance leases. Assets held under finance leases
or financed through hire purchase contracts are
capitalised and included in property, plant and
equipment. Assets acquired under finance leases
are capitalised at an amount equal to the lower
of their fair value and the present value of the
minimum lease payments at inception of the lease.
Assets are depreciated over their useful economic
lives. Obligations related to finance leases and hire
purchase finance agreements, net of finance charges
in respect of future periods, are included within
liabilities on the balance sheet. Lease payments
are apportioned between finance charges and a
reduction of the lease liability so as to achieve a
constant rate of interest on the remaining balance
of the liability. Finance charges are charged
directly to the consolidated income statement.
All other leases are classified as operating leases
and the payments made under them are recognised
in the consolidated income statement on a straight-
line basis over the term of the lease. Lease
incentives are spread over the term of the lease.
H. Impairment of assets
Goodwill is allocated to cash-generating units for
the purpose of impairment testing. The recoverable
amount of the cash-generating unit to which goodwill
relates is tested annually for impairment or when
events or changes in circumstances indicate that it
might be impaired. The carrying values of property,
plant and equipment and intangible assets other than
goodwill are reviewed for impairment only when
events indicate the carrying value may be impaired.
In an impairment test, the recoverable amount
of the cash generating unit or asset is estimated
to determine the extent of any impairment loss.
The recoverable amount is the higher of fair
value less costs to sell and the value in use to
the Group. An impairment loss is recognised
in the income statement to the extent that the
carrying value exceeds the recoverable amount.
41
LPA Group Plc – Annual Report & Accounts 2019
NOTES TO THE FINANCIAL STATEMENTS
1.
Accounting Policies (continued)
Derivative financial instruments
Derivative financial instruments, comprising foreign
exchange contracts, are used by the Group in the
management of its foreign currency exposures. At
each reporting date, it will always measure the
loss allowance at an amount equal to the lifetime
expected credit loss. The Group will recognise
in profit or loss, as an impairment gain or loss,
the amount of expected credit losses (or reversal)
that is required to adjust the loss allowance at
the reporting date to the amount that is required
to be recognised in accordance with IFRS9.
L. Foreign currencies
Transactions denominated in foreign currencies are
translated into sterling at the exchange rate ruling
at the date of the transaction. Foreign currency
monetary assets and liabilities are translated into
sterling at the rates of exchange ruling at the balance
sheet date. Exchange gains and losses arising are
credited or charged to the income statement within
net operating costs in the period in which they arise.
M. Taxation
Current tax represents the expected tax payable
on the taxable income for the year, using tax
rates enacted or substantively enacted at the
balance sheet date, and taking into account
in respect of prior years.
any adjustments
Deferred tax is calculated using the balance sheet
liability method on temporary differences and
provided on the difference between the carrying
amounts of assets and liabilities and their tax
bases. However, deferred tax is not provided on
the initial recognition of goodwill, nor the initial
recognition of an asset or liability, unless the
related transaction is a business combination or
affects tax or accounting profit. Deferred tax on
temporary differences associated with shares in
subsidiaries is not provided if reversal of these
temporary differences can be controlled by the
Group and it is probable that reversal will not
occur in the foreseeable future. Deferred tax is
measured at the tax rates that are expected to
apply when the temporary differences reverse,
based on the tax laws that have been enacted or
substantively enacted by the balance sheet date.
K. Financial instruments
Financial assets
IAS39
(Financial
Instruments
IFRS9 replaces
Recognition and Measurement) and makes
changes to the classification and measurement of
financial assets and introduces an “expected credit
loss” model for impairment of financial assets.
The Group has reviewed its business model for
its financial assets, which comprise only basic
receivables and concluded that they are held
for collecting contractual associated cashflows.
Therefore, under the new guidance, receivables
are initially recognised at fair value and will
subsequently be measured at amortised cost.
As required by IFRS9, the Group will apply
the impairment requirements and recognise a
loss allowance for expected credit losses on
financial assets. At each reporting date, it will
always measure the loss allowance at an amount
equal to the lifetime expected credit losses.
impairment gain or
The Group will recognise in profit or loss, as
the amount
an
of expected credit losses (or reversal) that is
required to adjust the loss allowance at the
reporting date to the amount that is required
to be recognised in accordance with IFRS 9.
loss,
Financial liabilities
Financial liabilities are obligations to pay cash or
other financial assets and are recognised when
the Group becomes a party to the contractual
provisions of the instrument. The Group’s financial
liabilities comprise trade payables and borrowings.
Financial liabilities are recorded initially at fair
value and subsequently at amortised cost using the
effective interest method, with interest related charges
recognised as an expense in finance cost within the
consolidated income and expenditure statement.
A financial liability is derecognised only when the
obligation is discharged, cancelled or expires.
42
LPA Group Plc – Annual Report & Accounts 2019 NOTES TO THE FINANCIAL STATEMENTS
1.
Accounting Policies (continued)
O. Employee benefits
M. Taxation (continued)
Deferred tax liabilities are provided in full,
with no discounting. Deferred tax assets are
recognised to the extent that it is probable
that future taxable income will be available
against which the temporary difference can be
utilised or offset against deferred tax liabilities.
Changes in deferred tax assets or liabilities are
recognised as a component of tax expense in
the income statement, except where they relate to
items that are recognised in other comprehensive
income or charged or credited directly to equity
in which case the related deferred tax is also
recognised in other comprehensive income or
charged or credited directly to equity respectively.
N. Revenue
Revenue arises from the sale, refurbishment, repair
or installation of product and comprises the value
of performance obligations completed in the year
representing the value of design, manufacture and
supply of products excluding value added tax,
trade or volume discounts, or values related to
future performance obligations. Depending on the
nature of a contract these can have one or more
performance obligations which are recognized
either at a point in time or over time depending
on the nature of the performance obligation.
Revenue is not recognised where recovery of the
consideration is not probable or there are significant
uncertainties regarding associated costs, or the
possible return of goods. See also Notes 1 C and Q.
Short-term compensated absences
for
liability
short-term
such as holiday,
compensated
A
absences,
recognised
at the amount the Group may be required to
pay as a result of the unused entitlement that
has accumulated at the balance sheet date.
is
Equity-settled share-based payments
The cost of share-based employee compensation
arrangements, whereby employees
receive
remuneration in the form of share options, is
recognised as an employee benefit expense
in the income statement, with a corresponding
reserve.
credit
the un-issued
shares
to
The total expense to be apportioned over the
vesting period of the benefit is determined by
reference to the fair value of the share options
awarded (at the date of grant) and the number
of options that are expected to vest. At each
balance sheet date, the Group revises its estimates
of the number of options that are expected to
vest, and recognises the impact of any revision
to original estimates in the income statement.
The proceeds received net of any directly
attributable
transaction costs are credited
to share capital (nominal value) and share
the options are exercised.
premium when
Defined contribution pension plans
The cost of defined contribution pension plans
is charged to the income statement as incurred.
43
LPA Group Plc – Annual Report & Accounts 2019 NOTES TO THE FINANCIAL STATEMENTS
1.
Accounting Policies (continued)
P. Exceptional and non-underlying items
O. Employee benefits (continued)
Defined benefit pension scheme
The Group’s defined benefit pension scheme is
closed to future accrual. The ongoing net liability
or asset is calculated by estimating the amount
of future benefit that employees earned in return
for their service in prior periods; that benefit is
discounted to determine its present value and then
deducted from the fair value of plan assets. The
discount rate is the yield on high quality corporate
bonds that have maturity dates approximating the
terms of the Group’s obligations. The calculation
is performed annually by an
independent
the projected unit method.
actuary using
A retirement benefit liability is shown within non-
current liabilities and the related deferred tax
asset within non-current assets on the balance
sheet. A retirement benefit asset is only recognised
to the extent that the Group can benefit from a
reduction in future contributions or refunds and is
shown within non-current assets and the related
deferred tax liability within non-current liabilities.
The net interest cost or income (the difference
between the interest cost resulting from the
increase in the present value of the defined benefit
obligation over time, and the interest income on
plan assets) is recognised in finance cost or income.
Past service cost is recognised immediately to
the extent that benefits have already vested or
is otherwise expensed on a straight-line basis
over the average period until the benefits vest.
Actuarial gains and losses arising from experience
adjustments or changes in actuarial assumptions
are charged or credited in other comprehensive
income in the period in which they arise.
Management use a range of measures to assess
the Group’s financial performance. These include
statutory measures calculated
in accordance
with IFRS together with “operating profit before
exceptional and non-underlying items” as an
adjusted measure of profitability. We report this
measure as we believe that it provides useful
the Group’s
additional
performance.
information about
“Operating profit before exceptional and non-
underlying items” represents the equivalent IFRS
measure but adjusted to exclude items that we
consider would prevent comparison of the Group’s
performance both from one reporting period to
another and with other similar businesses.
Exceptional and non-underlying items are not
defined under IFRS. Exceptional items are classified
as those which are separately identifiable by virtue
of their size, nature or expected frequency and
therefore warrant separate presentation. Non-
underlying items are other items that we consider
should be presented separately to allow a better
understanding of the underlying performance of
the business. Presentation of these measures is not
intended to be a substitute for or to promote them
above statutory measures.
Exceptional and non-underlying items are detailed
in note 6 to the financial statements.
Q. Use of judgements, estimates and
assumptions
financial statements
the
The preparation of
requires management to make judgements on the
application of the Group’s accounting policies and
make estimates about the future. Actual results
may differ from these assumptions. Other than
revenue recognition, management believe there
are no critical judgements made in arriving at
the amounts included in the financial statements.
Key sources of estimation uncertainty that have a
significant risk of causing a material adjustment
to the carrying amounts of assets and liabilities
in the next financial year are discussed below.
44
LPA Group Plc – Annual Report & Accounts 2019
NOTES TO THE FINANCIAL STATEMENTS
1.
Accounting Policies (continued)
Timing of revenue and cost recognition
Q. Use of judgements, estimates and
assumptions (continued)
Impairment of goodwill
The determination of whether goodwill has been
impaired requires an estimate of the value in
use of the cash-generating units to which the
goodwill has been allocated. The value in use
calculation requires management to make an
estimate of the expected future cash flows of the
cash-generating units and to choose an appropriate
discount rate in order to calculate the present
value of those cash flows. The carrying amount
of goodwill and the key assumptions used in the
value in use calculations are disclosed in note 9.
Defined benefit pension scheme
The retirement benefit position shown in the balance
sheet is sensitive to changes in the assumptions used
in the calculation of the defined benefit obligation
in particular assumptions about the discount rate,
inflation, mortality and future pension increases.
The carrying amount of assets and liabilities relating
to the defined benefit pension plan together with
the key assumptions used in the calculation of the
defined benefit obligation are disclosed in note 19.
Provisions for slow moving or obsolete
inventories
Inventories are carried at the lower of cost and net
realisable value (NRV), taking account of material
costs and absorbed manufacturing costs which
are inclusive of direct labour and a proportion of
production overheads. These are based on normal
levels of activity which require judgements and
estimates to apply appropriate cost absorptions to
achieve a manufactured cost. NRV is reviewed in
detail on an on going basis and provision for obsolete
inventory is made based on a number of factors
including age of inventories, the risk of technical
obsolescence and the expected future usage.
such
estimates and
Differences between
actual market conditions may have a material
impact on the amount of the carrying value
of inventories and may result in adjustments to
cost of sales. See note 11 for details of the
inventory provisions and the amounts written off
to consolidated income statement in the year.
The adoption of IFRS15, see note 1C, required
the Group to identify its performance obligations,
determine the transaction price and allocate
this to the performance obligations to recognise
revenue at the point each performance obligation
is satisfied within its contracts. The Group’s
judgement is, that where separately identified
the undertaking of Non-Recurring Costs (NRC’s),
which include bespoke engineering and design
services, accreditation, certification and
test
protocols; are ordinarily separately identifiable
performance obligations
revenue
is attributable. In such instances the Customer
requests, simultaneously receives and consumes
the outputs from each performance obligation.
to which
Where product is supplied with engineering
support, or design and engineering is not separately
identifiable and forms part of a single deliverable,
typically a non-bespoke product sale, revenues are
attributed to each of the product deliverables, with
any separately identifiable direct costs and overhead
absorption matched through work in progress.
During the year the Group recognised £279,000
as deferred income (2018: Nil), against invoiced
values of £520,000, recognising £241,000
as revenue. These revenues are a subjective
estimate of the value attributable to the services
provided against the contractual invoicing profile
within such contracts. The deferred income will
be apportioned across the contracted product
supply, recognising the engineering support of
the supply. The revenue recognised is calculated
by reference to actual engineering costs, similar
activities and the added value that would be
from such activities.
ordinarily be expected
R&D expenditure and tax credits
tax credit/charge
the year reflects
The
managements
the
application of tax regulations, in particular R&D
tax credits available.
in respect of
judgements
for
The Group’s estimates maybe different to the final
values adopted once the annual tax computations
have been finalised with the Group’s appointed
advisors, resulting in a different tax payable or
recoverable from that provided. The tax note (note
7) identifies prior year tax adjustments where R&D
spend has differed to the values provided in past
years.
45
LPA Group Plc – Annual Report & Accounts 2019 NOTES TO THE FINANCIAL STATEMENTS
2.
Operating Segments
All of the Group's operations and activities are based in, and its assets located in, the United Kingdom. For management
purposes the Group comprises three product groups (in accordance with IAS8) - Electro-mechanical, Lighting and
Distribution (which collectively design, manufacture and market industrial electrical and electronic accessories) - less
centre 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:
Electro-mechanical
Lighting
Distribution
Operational revenue
Operational profit
Corporate costs
Operating profit before exceptional and non-underlying items
2019
£000
7,516
6,921
5,096
2018
£000
12,173
11,124
4,682
19,533
27,979
1,370
(1,169)
201
3,019
(775)
2,244
Corporate costs increased in the year following group management charge and property rent waivers to Excil Electronics
Ltd and LPA Industries Ltd respectively, recognising a challenging trading year at both subsidiaries.
All revenue originates in the United Kingdom: an analysis by geographical markets and market segments is given below:
Rail
Aerospace and defence
Other
United Kingdom
Rest of Europe
Rest of World
Two individual customers (2018: two) represented more than 10% of Group revenue.
2019
2018
%
69%
16%
15%
100%
2019
£000
12,984
4,059
2,490
19,533
%
79%
13%
8%
100%
2018
£000
17,461
4,808
5,710
27,979
46
LPA Group Plc – Annual Report & Accounts 2019 NOTES TO THE FINANCIAL STATEMENTS
3.
Employee Information
The average number of people employed by the Group during the year was:
Production
Sales and distribution
Administration
The employee benefit expense for the year amounted to:
Wages and salaries
Social security costs
Pension costs - defined contribution arrangements (note 19)
Pension costs - death in service insurance premiums
2019
Number
2018
Number
122
31
25
178
2019
£000
5,336
519
244
25
6,124
137
30
25
192
2018
£000
6,077
628
194
36
6,935
Detailed information concerning directors’ emoluments, shareholdings and options is shown in the Remuneration Report.
Non-underlying employee benefit expenses included above, are reflected through the Income statement within exceptional
costs as shown in note 6.
4.
Finance Costs
Bank loans and overdrafts
Hire purchase contracts
Finance costs
5.
Finance Income
Net pension interest income (note 19)
2019
£000
69
30
99
2019
£000
64
2018
£000
63
17
80
2018
£000
35
47
LPA Group Plc – Annual Report & Accounts 2019 NOTES TO THE FINANCIAL STATEMENTS
6.
Profit before Tax
The following items have been charged in arriving at profit before tax:
A. Within operating profit before exceptional and
non-underlying items
2019
£000
2018
£000
Depreciation
Amortisation of intangible assets
Operating lease rentals - plant and equipment
Foreign exchange loss
Research and development expenditure
Fees payable to the Company's auditor for:
- the audit of the Company's annual accounts
- the audit of the Company's subsidiaries pursuant to legislation
- other assurance services
B. Within exceptional and non-underlying items
GMP Pension equalisation recognition
Reorganisation costs
Centre: duplicated finance function costs
Centre: other non-underlying costs
Exceptional and non-underlying items
693
48
117
13
566
20
41
-
2019
£000
333
70
-
-
403
652
12
131
28
613
20
40
5
2018
£000
-
96
74
5
175
The Guaranteed Minimum Pensions (GMP) equalisation recognition of £333,000 is a one off cost recognised through the
Consolidated Income Statement, in line with the High Court ruling in October 2018, requiring all UK companies to remove
inequalities between men and women in scheme benefits that arose under GMP. This is a historical cost which has been
recognised in the current financial year as a change in basis having been quantified following the High Court ruling.
The reorganisation costs of £70,000 are associated with a continued cost base review at the Group’s Electro-mechanical
site (2018: £96,000).
In 2018 exceptional costs included those incurred as part of the Board’s succession planning, with the single largest item
being duplicated finance function costs of £74,000; other associated costs, including costs related to the establishment of
the Group’s Employee Benefit Trust and corporate finance costs totalling £5,000.
7.
Taxation
A. Recognised in the income statement
Current tax expense
UK coporation tax
Adjustment in respect of prior years
Deferrred taxation
Net origination and reversal of temporary differences
Total corporation tax (credit) / expense
48
2019
£000
(57)
(68)
(60)
(185)
2018
£000
267
(31)
17
253
LPA Group Plc – Annual Report & Accounts 2019
NOTES TO THE FINANCIAL STATEMENTS
7.
Taxation (continued)
B. Reconciliation of effective tax rate
(Loss) / profit before tax
Tax at the UK corporation tax rate of 19.0% (2018: 19.0%)
Effects of:
- Utilisation of tax losses
- Retirement benefits (defined benefit scheme)
- Deduction in respect of share option exercises
- Enhanced deduction for qualifying R&D expenditure
- Prior periods deduction for qualifying R&D expenditure
- Other prior periods adjustments
- Disallowed expenditure
- Other differences
Total income tax (credit) / expense
C. Deferred tax recognised in other comprehensive income
Deferred tax on actuarial gain on pension scheme
D. Current and deferred tax recognised directly in equity
Tax (benefit) / cost arising on share options
8.
Earnings Per Share
2019
£000
(237)
(45)
-
(31)
(31)
(49)
(49)
(19)
26
13
(185)
2019
£000
7
2019
£000
(18)
2018
£000
2,024
385
(37)
(23)
-
(57)
(48)
17
7
9
253
2018
£000
178
2018
£000
14
The calculation of earnings per share is based upon the loss for the year of £0.05m (2018: profit £1.77m) and the weighted
average number of ordinary shares in issue during the year, less investment in own shares, of 12.238m (2018: 12.350m).
2019
Weighted
average
number of
shares
Earnings
per
share
Earnings
£000
Million
Pence
(52)
-
(52)
12.238
-
12.238
(0.43)
-
(0.43)
2018
Weighted
average
number of
shares
Earnings
per
share
Million
Pence
12.350
0.813
13.163
14.34
(0.89)
13.45
Earnings
£000
1,771
-
1,771
Basic earnings per share
Effect of share options
Diluted earnings per share
Diluted earnings per share
Basic and diluted earnings per share are equal for the year ended to 30 September 2019, since where a loss is incurred
the effect of outstanding share options and warrants is considered anti-dilutive and is ignored for the purpose of the loss
per share calculation. As at 30 September 2019 there were 975,000 outstanding share options (2018: 1,256,500), of
which 825,000 were exercisable (2018: 1,106,500).
49
LPA Group Plc – Annual Report & Accounts 2019 NOTES TO THE FINANCIAL STATEMENTS
9.
Intangible assets
Cost
At 1 October 2017
Additions
Disposals
At 1 October 2018
Transferred *
Additions
Disposals
At 30 September 2019
Amortisation
At 1 October 2017
Charge for the Year
Disposals
At 1 October 2018
Transferred *
Charge for the Year
Disposals
At 30 September 2019
Net carrying amount
At 30 September 2019
At 30 September 2018
Goodwill
£000
Development
costs
£000
Software
£000
1,234
-
-
1,234
-
-
-
1,234
85
-
-
85
-
-
-
85
1,149
1,149
315
27
-
342
-
124
-
466
279
12
-
291
-
20
-
311
155
51
-
-
-
-
514
25
-
539
-
-
-
-
456
28
-
484
55
-
Total
£000
1,549
27
-
1,576
514
149
-
2,239
364
12
-
376
456
48
-
880
1,359
1,200
* Software has been recognised as an Intangible Asset during the year, in accordance with IAS38, where previously
shown as a Tangible Asset. The brought forward cost and accumulated depreciation have been transferred in the
year without impact on the current or retained earnings or asset values. Prior period values are not restated as the
reclassification is not considered material.
Goodwill
Goodwill acquired in a business combination is allocated, at acquisition, to the cash-generating unit that is expected to
benefit. The Group’s goodwill solely relates to its investment in Excil Electronics Ltd.
The recoverable amount of the cash-generating unit to which the goodwill relates is tested annually for impairment,
or more frequently if there are indications that goodwill might be impaired. The recoverable amount of the cash-
generating units were determined from value in use calculations, and the key assumptions in these calculations were
the assessment of initial cash flows, the long-term growth rate of those cash flows, and the discount rate applied.
Initial cash flows reflect the most recent plans approved by management. They are based on past experience and
take into account management expectations of future developments in markets and operations. The initial cash flows
covered the first two years of the projections: thereafter cash flow projections were extrapolated into perpetuity at a
growth rate of 1.50% (2018: 1.75%) which is considered to be consistent with the long term average growth rate
for the businesses concerned. The discount rate applied was 11.0% (2018: 12.0%), a pre-tax rate that reflects an
assessment of the time value of money and the risks specific to the cash-generating units concerned. No impairment
arose in the year. Management believe that the key assumptions on which the recoverable amount is based are
appropriate and that any reasonable change in these assumptions would not lead to a materially different conclusion.
50
LPA Group Plc – Annual Report & Accounts 2019
NOTES TO THE FINANCIAL STATEMENTS
9.
Intangible assets (continued)
Goodwill (continued)
Goodwill on acquisitions prior to January 1998
The aggregate amount of goodwill arising on acquisitions prior to January 1998 which had been deducted from
retained earnings and incorporated into the IFRS transitional balance sheet as at 1 October 2006 amounted to £3.092m.
10.
Property, Plant and Equipment
Cost
At 1 October 2017
Additions
Disposals
At 1 October 2018
Transferred *
Additions
Disposals
At 30 September 2019
Depreciation
At 1 October 2017
Charge for the year
Disposals
At 1 October 2018
Transferred *
Charge for the year
Disposals
At 30 September 2019
Net carrying amount
At 30 September 2019
Freehold
land &
buildings
£000
Plant,
vehicles &
equipment
£000
4,527
87
-
4,614
-
33
-
4,647
211
60
-
271
35
95
-
401
7,185
930
(248)
7,867
(514)
509
(40)
7,822
4,650
592
(248)
4,994
(491)
598
(39)
5,062
Total
£000
11,712
1,017
(248)
12,481
(514)
542
(40)
12,469
4,861
652
(248)
5,265
(456)
693
(39)
5,463
4,246
2,760
7,006
At 30 September 2018
4,343
2,873
7,216
Included with plant, vehicles and equipment is £1.08m (2018: £0.93m) in respect of assets acquired under hire purchase.
Depreciation for the year in respect of these assets was £0.12m (2018: £0.07m).
* Software has been recognised as an Intangible Asset during the year, in accordance with IAS38, where previously
shown as a Tangible Asset, within plant, vehicles and equipment. The brought forward cost and accumulated depreciation
have been transferred in the year without impact on the current or retained earnings or asset values. Prior period values
are not restated as the reclassification is not considered material.
Depreciation includes a reclassification from plant, vehicles and equipment to freehold land and buildings recognising a
historical allocation transfer, with nil effect on the net carrying value or reserves.
.
51
LPA Group Plc – Annual Report & Accounts 2019
NOTES TO THE FINANCIAL STATEMENTS
11.
Inventories
Raw materials and consumables
Work in progress
Finished goods and goods for resale
2019
£000
1,177
637
2,010
3,824
2018
£000
1,153
644
2,084
3,881
In 2019 the cost of inventories recognised as an expense within cost of sales amounted to £16.58m (2018: £20.51m).
This included the write-down of inventories to net realisable value of £16,000 (2018: £190,000), and write-down
utilisation of £155,000 (2018: £113,000).
12.
Trade and Other Receivables
Trade receivables
Other receivables
Prepayments and accrued income
2019
£000
4,047
64
326
4,437
2018
£000
4,999
169
372
5,540
Trade receivables are stated after an allowance for impairment of:
66
74
The directors estimate that the carrying value of financial assets within trade and other receivables approximate their fair
value. Details of the Group’s exposure to credit and market risk related to trade and other receivables together with an
analysis of the movement in the allowance for impairment are disclosed in note 15.
52
LPA Group Plc – Annual Report & Accounts 2019 NOTES TO THE FINANCIAL STATEMENTS
13.
Trade and Other Payables
Current
Trade payables
Social security and other taxes
Other payables
Accruals
Deferred income
2019
£000
2,302
446
12
800
279
3,839
2018
£000
3,273
343
100
1,152
-
4,868
The directors estimate that the carrying value of trade and other payables approximate their fair value.
14.
Borrowings
This note provides information about the contractual terms of the Group’s borrowings: further information is given in note 15.
Current
Bank loan
Hire purchase obligations
Overdraft
Bank loans and other borrowings
Non-current
Bank loan
Hire purchase obligations
Bank loans and other borrowings
Total borrowings
2019
£000
2,585
220
-
2,805
-
504
504
3,309
2018
£000
142
180
-
322
2,028
577
2,605
2,927
53
LPA Group Plc – Annual Report & Accounts 2019
NOTES TO THE FINANCIAL STATEMENTS
14.
Borrowings (continued)
Bank loans and overdraft
The Group’s principal banking facilities are with Barclays and its main finance is a £2.63m bank loan drawn down in
2019 repayable over 5 years. The loan was utilised to repay the previous loan which had a maturity and bullet repayment
due in 2021. As at 30 September 2019 the amount outstanding was £2.58m (2018: £2.17m); the loan is to be repaid
from October 2019 through 18 quarterly instalments of £0.06m, with the residual repayable in March 2024: interest
is chargeable at base rate plus 2.25%. The bank loan has been classified as current and falling due within 1 year (see
Note 15B), not in accordance with the above terms, due to a breach of financial covenant as at 30 September 2019.
The position has been discussed with the Bank who have expressed their continued support for the Group.
The overdraft agreement provides for a facility limited to 1/3 of the value of under 90 day external trade debtors, up
to a maximum of £1.5m: At the year-end the Group had an overdraft of £nil (2018: £nil) and had £1.14m of facility
available (2018: £1.5m). Interest is payable at base plus 2.0%.
The following security is provided to the bank in respect of the above facilities: (i) a legal charge over the freehold
developed land and buildings owned by the Group; (ii) a debenture from each Group company; and (iii) a composite
guarantee by each Group company as guarantor in favour of the Bank.
Hire purchase obligations
Hire purchase obligations typically have a five year term and bear interest fixed at the time of the commitment. The
Group’s obligations under hire purchase are secured by the finance providers title to the asset held under hire purchase.
The minimum payments under hire purchase, and their present value, fall due as follows:
Minimum hire purchase
payments
Present value of minimum
hire purchase payments
Within one year
Within two to five years
Future finance charges
Present value of hire purchase obligations
2019
£000
220
504
724
2018
£000
180
577
757
2019
£000
2018
£000
242
530
772
(48)
724
205
613
818
(61)
757
54
LPA Group Plc – Annual Report & Accounts 2019 NOTES TO THE FINANCIAL STATEMENTS
15.
Financial Instruments
A. Financial risk management
The Group’s treasury policy seeks to ensure that adequate financial resources are available for the development of the
Group’s business whilst managing its foreign currency, interest rate, liquidity and credit risks. The Group’s principal
financial instruments comprise bank loans and overdrafts, Hire Purchase obligations, cash and cash equivalents,
together with trade and other receivables and trade and other payables that arise directly from its operations.
The main risks arising from the Group’s financial instruments and the approaches to them are detailed below.
B. Capital management
The Group’s policy is to minimise its cost of capital, by optimising the balance between equity and debt, whilst ensuring
its ability to continue as a going concern, to provide returns to shareholders and benefits for other stakeholders. In
practice decisions to fund transactions through either equity or debt are made on a case by case basis and are based
upon circumstances at the time.
The Group’s capital structure is as follows:
Equity
Net debt - bank loan & hire purchase commitments less cash balances
Overall financing
2019
£000
12,324
2,420
14,744
2018
£000
12,711
1,971
14,682
Gearing (net debt as a % of total equity)
19.6%
15.5%
Gearing, which is the principal measure used by the Group to monitor its capital structure, increased from 15.5% to
19.6%, largely as a consequence of the trading in the current year, whilst the bank loan increased following refinancing
of the facility.
The Board routinely monitors other aspects of financial performance to ensure compliance with bank borrowing
requirements. During the year the Directors forecast a breach of the debt servicing covenant and gained an intention of
support from the Bank for the continued provision of facilities on unchanged terms. The covenant is measured following
publication of the annual accounts based on the financial position of the company as at 30 September 2019 and its
financial results for the year then ended.
There were no changes in the Group’s approach to capital management during the year.
55
LPA Group Plc – Annual Report & Accounts 2019 NOTES TO THE FINANCIAL STATEMENTS
15.
Financial Instruments (continued)
C. Currency risk
Currency exposure arises on sale or purchase transactions in currencies other than sterling, the functional currency of
the companies within the Group. It is the Group’s policy to minimise risk to exchange rate movements affecting sales and
purchases by hedging or netting currency exposures at the time of commitment, or when there is a high probability of
future commitment arising, using forward exchange contracts. A proportion of forecast exposures are also hedged. The
Group does not trade in derivatives or make speculative hedges.
Currency exposures
The table below shows the Group’s currency exposure after taking into account the effect of any currency hedges entered into:
2019
2018
Cash
and cash
equivalents
Other net
monetary
assets and
liabilities
Total net
monetary
assets and
liabilities
Cash
and cash
equivalents
Other net
monetary
assets and
liabilities
Total net
monetary
assets and
liabilities
£000
£000
£000
£000
£000
£000
Euro
US Dollar
Aus Dollar
Swiss Franc
410
14
-
-
424
456
-
6
-
462
866
14
6
-
886
444
2
-
-
446
408
(9)
38
(7)
430
852
(7)
38
(7)
876
Derivative financial instruments
At 30 September 2019 the Group had commitments under non-cancellable forward exchange contracts totalling €0.90m
(2018: £Nil) taken out to hedge foreign currency sales, over and above expected purchase commitments.
Sensitivity
At 30 September 2019 if sterling had weakened / strengthened by 10% against the euro with all other variables held
constant the effect would have been to increase / (decrease) pre-tax profit and equity as a result of foreign exchange
gains / (losses) on translation by:
2019
2018
Effect on
profit
before tax
Effect on
equity
Effect on
profit
before tax
Effect on
equity
£000
£000
£000
£000
Sterling weakens by 10% against the euro
Sterling strengthens by 10% against the euro
96
(79)
-
-
95
(77)
-
-
56
LPA Group Plc – Annual Report & Accounts 2019 NOTES TO THE FINANCIAL STATEMENTS
15.
Financial Instruments (continued)
D. Interest rate risk
The Group is exposed to risk from the effect of changes in floating interest rates on the level of interest it pays on its
borrowings and receives on its cash deposits.
The only financial liabilities of the Group which are subject to interest charges are bank loans, overdrafts and hire
purchase obligations. The directors monitor the overall level of borrowings and interest costs to limit any adverse effects
on financial performance of the Group.
Interest rate risk profile
Interest rates are managed by using fixed and floating rate borrowings. Floating rate liabilities comprise bank loans and
overdrafts. During the year their weighted average interest rate was 4.1% (2018: 3.2%). Fixed rate liabilities comprise
Hire Purchases which bear interest at the negotiated market rate prevailing at the time the commitment is made. In the
year the weighted average interest rate of the fixed rate financial liabilities was 4.5% (2018: 4.5%).
The interest rate profile of the Group’s financial (assets) and liabilities at 30 September was:
Floating rate
Cash and cash equivalents
Overdraft
Bank loan
Fixed rate
Hire purchase obligations
Sensitivity
2019
£000
(889)
-
2,585
1,696
2018
£000
(956)
-
2,170
1,214
724
757
If market interest rates on floating rate borrowings and cash deposits had been 1% (100 basis points) higher during the
year to 30 September 2019, with all other variables held constant the pre-tax profit would have been lower by £23,000,
(2018: £25,000).
E. Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.
The Group’s approach is to ensure that, as far as possible, it will have adequate resources to meet its foreseeable
financing requirements, with headroom to cope with adverse market conditions. The Group’s operations are funded
through a combination of retained profits, acquiring an element of its fixed assets under Hire Purchase, medium-term
bank loans with short-term flexibility achieved through the use of overdraft facilities.
Un-drawn committed facilities
The Group’s un-drawn committed borrowing facilities at 30 September 2019 comprise its bank overdraft expiring in one
year or less at £1.14m (2018: £1.5m).
57
LPA Group Plc – Annual Report & Accounts 2019 NOTES TO THE FINANCIAL STATEMENTS
15.
Financial Instruments (continued)
E. Liquidity risk (continued)
Maturity profile of the Group’s financial liabilities
The table below summarises the maturity profile of the Group’s financial liabilities based on contractual undiscounted
payments.
2019
Overdraft
Bank loan (note 15B)
Hire purchase obligations
Borrowings
Trade and other payables
2018
Overdraft
Bank loan
Hire purchase obligations
Borrowings
Trade and other payables
F. Credit risk
Within
1 year
Between
1 and
2 years
Between
2 and
3 years
Between
3 and
4 years
Between
4 and
5 years
Over
5 years
£000
£000
£000
£000
£000
£000
-
2,585
220
2,805
3,381
6,186
-
-
222
222
-
222
-
-
155
155
-
155
-
-
115
115
-
115
-
-
12
12
-
12
-
-
-
-
-
Within
1 year
Between
1 and
2 years
Between
2 and
3 years
Between
3 and
4 years
Between
4 and
5 years
Over
5 years
£000
£000
£000
£000
£000
£000
-
198
180
378
4,425
4,803
-
198
188
386
-
386
-
1,774
189
1,963
-
1,963
-
-
121
121
-
121
-
-
79
79
-
79
-
-
-
-
-
Total
£000
-
2,585
724
3,309
3,381
6,690
Total
£000
-
2,170
757
2,927
4,425
7,352
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet
its contractual obligations and arises principally from trade receivables, but also from cash and cash equivalents, and
other financial assets.
Trade receivables
The Group’s exposure to credit risk is principally influenced by the individual characteristics of each customer as opposed
to a more general demographic of the customer base. Credit risk is managed on an ongoing basis by monitoring the
aggregate amount and duration of exposure to any one customer depending upon their credit rating. Credit risk is
minimised through cash flow management and the use of proforma remittances or guarantees where appropriate.
58
LPA Group Plc – Annual Report & Accounts 2019 NOTES TO THE FINANCIAL STATEMENTS
15.
Financial Instruments (continued)
F. Credit risk (continued)
Cash and cash equivalents
The Group monitors counterparties with whom it deposits cash and transacts other financial instruments so as to control
exposure to any one institution. The Group have assessed Barclays Bank to provide a low risk of exposure.
Exposure to credit risk
The maximum exposure to credit risk at the reporting date is the fair value of each class of receivables mentioned above.
At the end of 2019 these totalled £4.05m (2018: £5.00m). The Group held no collateral as security against any trade
receivables.
The concentration of credit risk is sensitive to the timing of larger projects. The Group’s most significant customer
accounted for 46.9% of trade receivables at September 2019 (2018: 28.9%).
Impairment losses
In determining the recoverability of trade receivables, the Group considers the ageing of each debtor and any
change in the circumstances of the individual customer. The ageing of trade receivables at the reporting date was:
Not past due
Past due 1-30 days
Past due 31-90 days
Past due 91 days to less than a year
2019
Gross
Impairment
2018
Gross
Impairment
£000
1,901
900
1,036
276
4,113
£000
(1)
-
(29)
(36)
(66)
£000
1,832
1,892
1,096
253
5,073
£000
-
(4)
(11)
(59)
(74)
The Group works closely with customers to recover all trade receivables without impairment. In circumstances where
this cannot be achieved the Group utilises third party collection agencies and specialists to recover all such receivables.
Only where there is reasonable expectation that these steps will not be successful would an impairment be written off.
The movement in the allowance for impairment in respect of trade receivables during the year was:
Balance at start of the year
Charged to the income statement
Released
Utilised
Balance at end of the year
2019
£000
2018
£000
74
-
(9)
1
66
29
45
-
-
74
The impairment release of £9,000 (2018: £Nil release) relates to the movement in the Group’s assessment of the risk of
non-recovery from a range of customers.
59
LPA Group Plc – Annual Report & Accounts 2019 NOTES TO THE FINANCIAL STATEMENTS
15.
Financial Instruments (continued)
G. Classification and fair values of financial assets and liabilities
The table below sets out the Group’s accounting classification of each class of financial asset and financial liability. The
directors consider that the carrying value of financial assets and liabilities approximate their fair values.
For cash and cash equivalents and floating rate borrowings the fair values are the same as the carrying value.
2019
Financial assets - loans and receivables
Trade and other receivables
Cash and cash equivalents
Financial liabilities - at amortised cost
Borrowings - overdraft
Borrowings - bank loan
Trade and other payables
Amortised
cost
£000
4,047
889
4,936
-
(2,585)
(3,381)
(5,966)
Total
carrying
value
£000
4,047
889
4,936
-
(2,585)
(3,381)
(5,966)
Fair
value
£000
4,047
889
4,936
-
(2,585)
(3,381)
(5,966)
Net financial liabilities
(1,030)
(1,030)
(1,030)
2018
Financial assets - loans and receivables
Trade and other receivables
Cash and cash equivalents
Financial liabilities - at amortised cost
Borrowings - overdraft
Borrowings - bank loan
Trade and other payables
Amortised
cost
£000
4,999
956
5,955
-
(2,170)
(4,425)
(6,595)
Total
carrying
value
£000
4,999
956
5,955
-
(2,170)
(4,425)
(6,595)
Fair
value
£000
4,999
956
5,955
-
(2,170)
(4,425)
(6,595)
Net financial liabilities
(640)
(640)
(640)
60
LPA Group Plc – Annual Report & Accounts 2019 NOTES TO THE FINANCIAL STATEMENTS
15.
Financial Instruments (continued)
H. Fair value hierarchy
The Group’s uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation
technique.
•
•
•
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable,
either directly or indirectly.
Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on
observable market data.
61
LPA Group Plc – Annual Report & Accounts 2019 NOTES TO THE FINANCIAL STATEMENTS
16.
Deferred Tax
Property,
plant and
equipment
Retirement
benefits
Tax losses
£000
£000
£000
Other
£000
Total
£000
(56)
(3)
-
(59)
(11)
-
(70)
(249)
(6)
(178)
(433)
46
(7)
(394)
33
(7)
-
26
52
-
78
51
2
(17)
36
(27)
25
34
(221)
(14)
(195)
(430)
60
18
(352)
At 1 October 2017
Recognised in income statement
Recognised in other
comprehensive income
At 1 October 2018
Recognised in income statement
Recognised in other
comprehensive income / equity
At 30 September 2019
Deferred tax assets of £196,000 (2018: £201,000) have not been recognised in respect of unrelieved tax losses of
£1.12m (2018: £1.12m) because of uncertainty over the timing of their recoverability. The tax losses have no expiry date.
An analysis of the deferred tax balances for reporting purposes is given below:
Property,
plant and
equipment
Retirement
benefits
Tax losses
£000
£000
£000
21
(91)
(70)
20
(79)
(59)
-
(394)
(394)
-
(433)
(433)
78
-
78
26
-
26
Other
£000
Total
£000
60
(26)
34
60
(24)
36
159
(511)
(352)
106
(536)
(430)
Deferred tax assets
Deferred tax liabilities
At 30 September 2019
Deferred tax assets
Deferred tax liabilities
At 30 September 2018
62
LPA Group Plc – Annual Report & Accounts 2019 NOTES TO THE FINANCIAL STATEMENTS
17.
Equity
Share capital
Share capital is the total of the nominal value (10p) of shares issued.
2019
2018
Number
£000
Number
£000
Issued and fully paid
In issue at the start of the year
Allotted under share plans
12,376,729
281,500
1,238
28
12,376,729
-
In issue at the end of the year
12,658,229
1,266
12,376,729
1,238
-
1,238
During the year 281,500 options were exercised (2018: nil) at a weighted average option price of 38p (2018: nil).
The market price of the Company’s shares on 30 September 2019 was 80.0p per share (2018: 111.0p per share) and
the price range during the year was 79.0p to 112.5p (2018: 95.0p to 184.0p).
63
LPA Group Plc – Annual Report & Accounts 2019 NOTES TO THE FINANCIAL STATEMENTS
17.
Equity (continued)
Proposed dividends
The directors proposed the below dividends after the balance sheet date: they have not been recognised as a liability in
the accounts.
Proposed - Final 1.80p Per Share (2018: 1.80p)
Dividends
The following dividends were declared and paid by the Group during the year:
Final - In Respect of Preceding Year 1.80p Per Share (2018: 1.65p)
Interim - In Respect of Current Year 1.10p Per Share (2018: 1.10p)
2019
£000
2018
£000
223
223
2019
£000
2018
£000
222
135
357
204
135
339
Investment in Own Shares
This reserve records the share capital acquired in the Company including share premium paid, by the Company as
Treasury Shares or by the LPA Group Plc Employee Benefit Trust.
Share premium account
This reserve records the premium for shares issued at a value that exceeds their nominal value.
Un-issued shares reserve
This reserve records the recognised costs of share-based employee payment arrangements.
Merger reserve
This reserve records the premium for shares issued, as part consideration on the acquisition of Haswell Engineers, at a
value that exceeded their nominal value, and which qualified for merger relief.
Retained earnings reserve
This reserve records the retained earnings in the current and prior periods at the balance sheet date.
64
LPA Group Plc – Annual Report & Accounts 2019 NOTES TO THE FINANCIAL STATEMENTS
18.
Share Based Payments
The Group operated two equity-settled share-based payment arrangements in the year and a summary of each of the
schemes is given below. The schemes are open to executive directors and selected senior managers within the Group.
The 2007 Employee Share Option scheme: The option price for grants under this scheme is the mid-market price on the
dealing day preceding the date of the grant. Options will normally be exercisable between three and ten years following
grant: no performance criteria apply. No further options may be granted under this scheme.
The rules of the scheme were amended to permit the period over which an option is exercisable to be extended by the
Board: at the same time the terms of 771,500 options were amended such that they would not lapse on 30 July 2017
but would instead remain exercisable until 7 February 2022.
The 2018 Performance Share Plan: The option price for grants under this scheme is nil, unless specified otherwise in the
award certificate or the award agreement. Options will normally be exercisable between three and ten years following
grant:
Outstanding options to subscribe for ordinary shares of 10p each at 30 September 2019 are as follows:
Scheme
2007 Employee Share
Option scheme
Date of
grant
Jul 2007
Apr 2011
Feb 2012
Price
Dates when exercisable
36.0p
32.0p
49.0p
31 Jan 2010 to 07 Feb 2022
1 Apr 2014 to 31 Mar 2021
8 Feb 2015 to 7 Feb 2022
Number of options
2018
2019
540,000
100,000
185,000
771,500
100,000
235,000
825,000
1,106,500
2018 Performance Share Plan
Aug 2019
104.8p
2 Aug 2021 to 1 Aug 2028
150,000
150,000
975,000
1,256,500
65
LPA Group Plc – Annual Report & Accounts 2019
NOTES TO THE FINANCIAL STATEMENTS
18.
Share Based Payments (continued)
A reconciliation of the movement in the number of share options is given below:
Outstanding at the beginning of the year
Granted during the year
Exercised during the year
Lapsed during the year
Outstanding at the end of the year
2019
2018
Weighted
average
exercise
price (p)
46.3
-
38.3
-
48.6
Number of
options
1,256,500
-
(281,500)
-
Weighted
average
exercise
price (p)
38.4
104.8
-
-
Number of
options
1,106,500
150,000
-
-
975,000
46.3
1,256,500
Exercisable at the end of the year
38.4
825,000
38.4
1,106,500
The options outstanding at the end of the year have an exercise price in the range of 32p to 104.8p and a weighted
average contractual life of 3.3 years (2018: 4.1 years).
There were 281,500 options exercised during the year (2018: Nil). The weighted average share price at the date of
exercise of share options was 38.3p (2018: Nil).
The Group’s share-based remuneration expense recognised in the year was £3,000 (2018: £2,000).
66
LPA Group Plc – Annual Report & Accounts 2019 NOTES TO THE FINANCIAL STATEMENTS
19.
Employee Benefits
A. Defined contribution schemes
The Group makes contributions to several defined contribution arrangements. The pension cost charged to the income
statement for the year in respect of these schemes was £244,000 (2018: £194,000).
B. Defined benefit scheme
The Group also sponsors a funded defined benefit pension arrangement. There is a separate trustee administered fund
holding the pension plan assets to meet long term pension liabilities for some 159 past employees as at 31 March 2018.
The level of retirement benefit is principally based on salary earned in the last three years of employment prior to leaving
active service and is linked to changes in inflation up to retirement.
The plan is subject to the funding legislation, which came into force on 30 December 2005, outlined in the Pension Act
2004. This, together with documents issued by the Pensions Regulator, and Guidance Notes adopted by the Financial
Reporting Council, set out the framework for funding defined benefit occupational pension plans in the UK.
The trustees of the plan are required to act in the best interests of the plan’s beneficiaries. The appointment of the trustees
is determined by the plan’s trust documentation. It is policy that one third of all trustees should be nominated by the
members.
A full actuarial valuation was carried out as at 31 March 2018 in accordance with the scheme funding requirements
of the Pension Act 2004 and the funding of the plan is agreed between the Group and the trustees in line with those
requirements. These in particular require the surplus / deficit to be calculated using prudent, as opposed to best estimate
actuarial assumptions.
This actuarial valuation showed a surplus of £1,064,000. The Group has agreed with the trustees that it will meet the
expenses of the plan and levies to the Pension Protection Fund. In addition, the Group has agreed with the trustees that
regardless of the Scheme being in surplus at the valuation date the payment of annual contributions of £100,000 will
continue to be made until the year ended 31 March 2021.
For the purposes of IAS19 the actuarial valuation as at 31 March 2018, which was carried out by a qualified independent
actuary, has been updated on an approximate basis to 30 September 2019. There have been no changes in the valuation
methodology adopted for this period’s disclosures compared to the previous period’s disclosures.
67
LPA Group Plc – Annual Report & Accounts 2019 NOTES TO THE FINANCIAL STATEMENTS
19.
Employee Benefits (continued)
Amounts included in the balance sheet
Fair value of scheme assets
Present value of defined benefit obligation
2019
£000
16,655
(14,405)
2018
£000
14,755
(12,346)
2017
£000
14,691
(13,380)
Asset to be recognised
2,250
2,409
1,311
The present value of scheme liabilities is measured by discounting the best estimate of future cash flows to be paid out by
the plan using the projected unit credit method. This method is an accrued benefits valuation method in which allowance
is made for projected earnings increases. The value calculated in this way is reflected in the asset to be recognised in the
balance sheet as shown above.
All actuarial gains and losses will be recognised in the year in which they occur in other comprehensive income.
Reconciliation of the impact of the asset ceiling
The Group has reviewed implications of the guidance provided by IFRIC14 and has concluded that it is not necessary
to make any adjustments to the IAS19 figures in respect of an asset ceiling or Minimum Funding Requirement as at 30
September 2019.
Reconciliation of opening and closing present value of the defined benefit obligation
Defined benefit obligation at start of the year
Interest cost
Actuarial losses / (gains) due to scheme experience
Actuarial (gains) due to changes in demographic assumptions
Actuarial losses / (gains) due to changes in financial assumptions
Benefits paid
Past service costs (GMP equalisation)
2019
£000
2018
£000
12,346
13,380
343
5
(127)
2,011
(506)
333
342
(246)
(249)
(406)
(475)
-
Defined benefit obligation at end of the year
14,405
12,346
An allowance has been made for GMP Equalisation within the scheme’s liabilities, the impact has been allowed for as a
plan amendment. There have been no curtailments or settlements in the accounting period.
68
LPA Group Plc – Annual Report & Accounts 2019
NOTES TO THE FINANCIAL STATEMENTS
19.
Employee benefits (continued)
Reconciliation of opening and closing values of the fair value of plan assets
Fair value of scheme assets at start of the year
Interest income
Return on plan assets (excluding amounts included in interest income)
Contributions by the Group
Benefits paid
2019
£000
2018
£000
14,755
14,691
407
1,899
100
(506)
377
62
100
(475)
Fair value of scheme assets at end of the year
16,655
14,755
The actual return on the plan assets over the period ending 30 September 2019 was £2,306,000 (2018: £439,000).
Defined benefit (costs) / gains recognised in profit or loss
Interest income
Interest cost
Net interest income
Past service costs (GMP equalisation)
Net (cost) / income
2019
£000
407
(343)
64
(333)
(269)
Defined benefit costs recognised in the statement of other comprehensive income
Return on plan assets (excluding amounts included in interest income) – gain
Experience (losses) / gains arising on the defined benefit obligation
Effect of changes in the demographic assumptions underlying the present value of the
defined benefit obligation - gain
Effect of changes in the financial assumptions underlying the present value of the
defined benefit obligations - (loss) / gain
Amount recognised in other comprehensive income – gain
2019
£000
1,899
(5)
127
(2,011)
10
2018
£000
377
(342)
35
-
35
2018
£000
61
246
249
406
962
69
LPA Group Plc – Annual Report & Accounts 2019
NOTES TO THE FINANCIAL STATEMENTS
19.
Employee benefits (continued)
Assets
Equities
Corporate bonds
Government bonds
Diversified growth funds
Cash and net current assets
Total assets
2019
£000
2018
£000
2017
£000
4,357
4,209
6,461
1,626
2
4,095
3,629
5,445
1,496
90
4,957
8,387
-
1,263
84
16,655
14,755
14,691
None of the fair value of the assets shown above include any direct investments in the Group’s own financial instruments
or any property occupied by, or other assets used by, the Group. All of the scheme assets have a quoted market price in
an active market with the exception of the trustee’s bank account balance.
It is the policy of the trustees and the Group to review the investment strategy at the time of each funding valuation.
The trustees’ investment objectives and the processes undertaken to measure and manage the risks inherent in the plan
investment strategy are documented in the plan’s Statement of Investment Principles.
There are no asset-liability matching strategies currently being used by the plan.
Significant actuarial assumptions
2019
2018
2017
% per annum
% per annum
% per annum
Rate of discount
Inflation (RPI)
Inflation (CPI)
Allowance for revaluation of deferred pensions
of CPI or 5.0% pa if less
Allowance for revaluation of deferred pensions
of CPI or 2.5% pa if less
Allowance for pension in payment increases of
RPI or 5.0% pa if less
Allowance for pension in payment increases of
CPI or 3.0% pa if less
Allowance for commutation of pension for cash
at retirement
1.80
3.15
2.45
2.45
2.45
3.00
2.00
2.80
3.25
2.55
2.55
2.50
3.10
2.10
2.60
3.25
2.55
2.55
2.50
3.10
2.10
80% of
Post A Day
80% of
Post A Day
80% of
Post A Day
The mortality assumptions adopted at 30 September 2019 are 100% of the standard tables S2PxA, Year of Birth, no
age rating for males and females, projected using CMI_2018 converging to 1.25% p.a. These imply the following life
expectancies:
Life expectancy at age 65 (Years)
Male retiring in 2019:
Female retiring in 2019:
Male retiring in 2039:
Female retiring in 2039:
21.8
23.6
23.1
25.2
70
LPA Group Plc – Annual Report & Accounts 2019 NOTES TO THE FINANCIAL STATEMENTS
19.
Employee Benefits (continued)
Analysis of the sensitivity to the principal assumptions of the present value of the defined
benefit obligation
Assumption
Change in assumption
Change in liabilities
Discount rate
Rate of inflation
Rate of mortality
Commutation
Decrease of 0.10% p.a.
Increase of 0.10% p.a.
Increase in life expectancy of 1 year
Members commute an extra 10% of
Post A Day pension on retirement
Increase by 1.6%
Increase by 1.0%
Increase by 3.2%
Decrease by 0.4%
The sensitivities shown above are approximate. Each sensitivity considers one change in isolation. The inflation sensitivity
includes the impact of changes to the assumptions for revaluation and pension increases. The average duration of the
defined benefit obligation at the period ending 30 September 2019 is 16 years.
The plan typically exposes the Group to actuarial risks such as investment risk, interest rate risk, mortality risk and
longevity risk. A decrease in corporate bond yields, a rise in inflation or an increase in life expectancy would result in
an increase to plan liabilities. This would detrimentally impact the balance sheet position and may give rise to increased
charges in future P&L accounts. This effect would be partially offset by an increase in the value of the plan’s bond holding.
Additionally, caps on inflationary increases are in place to protect the plan against extreme inflation.
The contributions expected to be paid by the Group to the plan for the period commencing 1 October 2019 is £100,000.
71
LPA Group Plc – Annual Report & Accounts 2019
NOTES TO THE FINANCIAL STATEMENTS
20.
Financial Commitments
Operating lease commitments
The Group has entered into commercial leases on certain motor vehicles and items of plant and equipment.
Future minimum rentals payable under non-cancellable operating leases are as follows:
Within one year
Within two to five years
Capital commitments
Plant and equipment
2018
2019
£000
£000
95
96
191
80
107
187
Contracted for but not provided in the accounts amounted to £297,000 (2018: £165,000).
21.
Related Party Transactions
Remuneration of key management personnel
The remuneration of the directors, who are considered to be the key management personnel of the Group, is set out below
in aggregate for each of the categories required by IAS24 Related Party Disclosures together with dividends received
by them. Detailed information about the remuneration of individual directors is disclosed in the Remuneration Report.
Short-term employee benefits
Post employment benefits
Share based payments
Dividends
Other related party transactions
2019
£000
2018
£000
603
37
2
642
47
575
10
1
586
50
The transactions between the Company and its subsidiaries have been eliminated on consolidation and are not disclosed
in this note. There are no other related party transactions (2018: none).
22.
Contingent Liabilities
As at 30 September 2019 Group contingent liabilities relating to guarantees in the normal course of business amounted
to £169,000 (2018: £234,000).
72
LPA Group Plc – Annual Report & Accounts 2019 Company No. 686429
Fixed assets
Tangible assets
Investments
Current assets
Debtors
Cash at bank and in hand
COMPANY BALANCE SHEET
At 30 September 2019
Note
C5
C6
C7
2019
£000
2,540
5,411
7,951
548
3
551
2018
£000
2,646
5,411
8,057
585
219
804
Creditors: Amounts falling due within one year
C8
(5,090)
(2,910)
Net current liabilities
Total assets less current liabilities
(4,539)
(2,106)
3,412
5,951
Creditors: Amounts falling due after more than one year
C9
(700)
(2,729)
Net assets
Capital and reserves
Called up share capital
Investment In own shares
Share premium account
Un-issued shares reserve
Merger reserve
Retained earnings t
Total equity shareholders' funds
C13
2,712
3,222
1,266
(324)
708
82
784
196
2,712
1,238
(214)
628
122
784
664
3,222
t The Company has not presented a separate retained earnings account as permitted by Section 408 of the Companies Act
2006. The loss dealt with in the financial statements of the Company amounted to £0.17m (2018: profit of £0.43m).
The financial statements were approved by the Board on 27 January 2020 and signed on its behalf by:
P V CURTIS
Director
C J BUCKENHAM
Director
73
LPA Group Plc – Annual Report & Accounts 2019 COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 30 September 2019
Investment
in own
shares
Share
premium
account
Un-issued
shares
reserve
Merger
reserve
Retained
earnings
£000
£000
£000
£000
£000
628
134
784
Share
capital
£000
1,238
-
-
-
-
-
-
At 1 October 2017 -
restated ^
Profit for the year
Dividends
Investment in own shares
Issue of shares
Tax cost on share-
based payments
Share based payments
At 30 September 2018 -
1,238
(Loss) for the year
Dividends
Proceeds from issue of shares
Investment in own shares
Tax benefit on share-based
payments
Share-based payments
-
-
28
-
-
-
-
-
-
(214)
-
-
-
(214)
-
-
-
(110)
-
-
-
-
-
-
-
-
628
-
-
80
-
-
-
At 30 September 2019
1,266
(324)
708
Total
£000
3,357
430
(339)
(214)
-
(14)
2
573
430
(339)
-
-
-
-
-
-
-
-
-
-
784
664
3,222
-
-
-
-
-
-
(172)
(357)
-
-
25
36
(172)
(357)
108
(110)
18
3
784
196
2,712
-
-
-
-
(14)
2
122
-
-
-
-
(7)
(33)
82
^ The Triennial review of FRS102 was early adopted in 2018. Land and buildings, previously shown as Investment Properties are
now shown at historical cost and depreciated (see note C5). The financial impact on reserves at 30 September 2018 (eliminating
the revaluation reserve and impact of brought forward depreciation in retained earnings) was £0.82m.
The Investment in own shares reserve represents the shareholding of the LPA Group Plc Employee Benefit Trust, which during the
year acquired 100,000 ordinary shares of 10p each in LPA Group Plc (2018: 200,000), at a cost of £0.110m (2018: £0.214m).
74
LPA Group Plc – Annual Report & Accounts 2019 COMPANY NOTES TO THE FINANCIAL STATEMENTS
C1.
Company Information
LPA Group plc is a public limited company incorporated in England. The address of its registered office is Light & Power
House, Shire Hill, Saffron Walden, CB11 3AQ.
C2.
Basis of preparation
These financial statements have been prepared in accordance with applicable United Kingdom accounting standards,
including Financial Reporting Standard 102 – 'The Financial Reporting Standard applicable in the United Kingdom and
Republic of Ireland' (“FRS102” as revised December 2018), and with the Companies Act 2006. The financial statements
have been prepared on the historical cost basis except for the modification to a fair value basis for certain financial
instruments as specified in the accounting policies below.
The financial statements are presented in Sterling (£).
The Company has taken advantage of the following disclosure exemptions under FRS102 on the basis that the equivalent
disclosures are included in the Group Financial Statements:
•
•
•
•
The requirements of Section 4 Statement of Financial Position 4.12 (a)(iv);
The requirements of Section 7 Statement of Cash Flows;
The requirement of Section 3 Financial Statement Presentation paragraph 3.17(d);
The requirements of Section 33; Key management and personnel paragraph 33.7 and Related Party Disclosures
paragraph 33.3; and
•
The requirements of Section 11 Basic Financial Instruments and Section 12 Other Financial Instrument Issues.
This information is included in the consolidated financial statements of LPA Group plc as at 30 September 2019.
C3.
Accounting Policies
The following are the principal accounting policies of the Company which have been applied consistently throughout the
year and the preceding year.
A. Tangible fixed assets
Tangible fixed assets are measured at cost, net of depreciation and any provision for impairment.
Depreciation is calculated to write down the cost or valuation, less estimated residual value, of all tangible fixed assets,
other than freehold land, by equal annual instalments over their estimated useful economic lives. The rates generally
applicable are:
Buildings
Plant and machinery
2%
10%
A profit or loss on disposal is recognised in the income statement at the surplus or deficit of disposal proceeds over net
carrying amount of the asset at the time of disposal.
B. Investments
Investments in subsidiaries are shown at cost less any provision for impairment.
75
LPA Group Plc – Annual Report & Accounts 2019 COMPANY NOTES TO THE FINANCIAL STATEMENTS
C3.
Accounting Policies (continued)
C. Taxation
Current tax is recognised for the amount of income tax payable in respect of the taxable profit for the current or past
reporting periods using the tax rates and laws that that have been enacted or substantively enacted by the reporting date.
Deferred tax is recognised in respect of all timing differences at the reporting date, except as otherwise indicated.
Deferred tax assets are only recognised to the extent that it is probable that they will be recovered against the reversal of
deferred tax liabilities or other future taxable profits.
If and when all conditions for retaining tax allowances for the cost of a fixed asset have been met, the deferred tax is
reversed.
Deferred tax is calculated using the tax rates and laws that that have been enacted or substantively enacted by the
reporting date that are expected to apply to the reversal of the timing difference.
Tax expense (income) is presented either in profit or loss, other comprehensive income or equity depending on the
transaction that resulted in the tax expense (income).
Deferred tax liabilities are presented within provisions for liabilities and deferred tax assets within debtors.
D. Defined contribution pension schemes
The pension costs charged against operating profits are the contributions payable in respect of the accounting period.
E. Equity-settled share-based payments
The cost of share-based employee compensation arrangements, whereby employees receive remuneration in the form of
share options, is recognised as an employee benefit expense in the profit and loss account, with a corresponding credit
to the un-issued shares reserve.
The total expense to be apportioned over the vesting period of the benefit is determined by reference to the fair value of
the share options awarded (at the date of grant) and the number of options that are expected to vest. At each balance
sheet date, the Group revises its estimates of the number of options that are expected to vest and recognises the impact
of any revision to original estimates in the profit and loss account.
The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and
share premium when the options are exercised.
F. Significant judgements and estimates
The preparation of the financial statements requires management to make judgements on the application of its accounting
policies and make estimates about the future. Actual results may differ from these assumptions. There are no critical
judgements made in arriving at the amounts included in these financial statements nor are there key sources of estimation
uncertainty that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities
in the next financial year.
76
LPA Group Plc – Annual Report & Accounts 2019 COMPANY NOTES TO THE FINANCIAL STATEMENTS
C4.
Employee Information
With the exception of the directors the number of people employed by the Company was Nil (2018: Nil). Detailed
information concerning directors’ emoluments, shareholdings and options is shown in the Remuneration Report.
C5.
Tangible Fixed Assets
Cost
Freehold land
and buildings
£000
Plant and
machinery
£000
Total
£000
At 1 October 2018 and 30 September 2019
2,393
716
3,109
Depreciation
At 1 October 2018
Charged in year
At 30 September 2019
Net book value
At 30 September 2019
At 30 September 2018
162
34
196
2,197
2,231
301
72
373
343
415
463
106
569
2,540
2,646
77
LPA Group Plc – Annual Report & Accounts 2019 COMPANY NOTES TO THE FINANCIAL STATEMENTS
C6.
Investments
Investments in subsidiary undertakings
At 1 October 2018 and 30 September 2019
Cost
£000
6,459
Provision for
impairment
Carrying amount
£000
(1,048)
£000
5,411
Details of the investments, which are all registered in England and Wales, in which the Group holds directly and indirectly
20% or more of the nominal value of any class of share capital are as follows:
Name of company
Holding
Subsidiary undertakings
Channel Electric Equipment Holdings Ltd Ordinary shares
Ordinary shares
Channel Electric Equipment Ltd
Ordinary shares
LPA Industries Ltd
Ordinary shares
Haswell Engineers Ltd
Ordinary shares
Excil Electronics Ltd
Proportion of voting
rights & shares held
Nature of business
100%
100%
100%
100%
100%
Holding company
Electrical components
Electro-mechanical components
Metal fabrication
Electrical components
The Group also holds 100% of the ordinary share capital of the following dormant companies: Niphan Limited, Light and
Power Accessories Company Limited, W M Engineering (Ramsden) Limited and Lazell Bros. Engineers Limited. All of the
above investments are held directly by LPA Group plc with the exception of Channel Electric Equipment Limited (which
is held by Channel Electric Equipment Holdings Limited) and Lazell Bros. Engineers Limited (which is held by Light and
Power Accessories Company Limited).
LPA Group plc is the sole member of LPA Industries Pension Trustees Limited, a company limited by guarantee, which acts
as trustee to two pension schemes operated within the Group.
C7.
Debtors
Amounts due from subsidiary undertakings
Other taxation and social security debtor
Prepayments and accrued income
Deferred taxation (note C11)
2019
£000
2018
£000
377
39
18
114
548
517
-
15
53
585
78
LPA Group Plc – Annual Report & Accounts 2019
COMPANY NOTES TO THE FINANCIAL STATEMENTS
C8.
Creditors: Amounts Falling Due Within One Year
Bank overdraft
Bank loans
Debt
Trade creditors
Amounts owed to subsidiary undertakings
Other creditors
Other taxation and social security
Accruals
C9.
Creditors: Amounts Falling Due After More Than One Year
Debt - bank loans
Amounts owed to subsidiary undertakings
2019
£000
24
2,585
2,609
39
2,318
3
-
122
5,090
2019
£000
-
700
700
2018
£000
-
142
142
6
2,452
-
42
268
2,910
2018
£000
2,029
700
2,729
79
LPA Group Plc – Annual Report & Accounts 2019 COMPANY NOTES TO THE FINANCIAL STATEMENTS
C10.
Borrowings
Due within one year
Bank overdraft
Bank loan
Non-current
Bank loan
Total borrowings
Repayable
Within one year
Between one and two years
Between two and five years
See Group Financial Statements Note 14 for terms and security.
2019
£000
24
2,585
2,609
2018
£000
-
142
142
-
2,029
2,609
2,171
2,609
-
-
142
142
1,887
2,609
2,171
80
LPA Group Plc – Annual Report & Accounts 2019 COMPANY NOTES TO THE FINANCIAL STATEMENTS
C11.
Provisions for Liabilities
Deferred tax
At 1 October 2018
Charged to Retained Earnings In The Year
Recognised directly in equity
At 30 September 2019
Recognised deferred tax assets and liabilities
Deferred taxation provided in the accounts is as follows:
Accelerated capital allowances
Tax Benefit on Losses
Tax benefit on share-based payments
Deferred tax assets are disclosed in note C7.
Unrecognised deferred tax
£000
(53)
(43)
(18)
(114)
2018
£000
(11)
-
(42)
(53)
2019
£000
(14)
(39)
(61)
(114)
A deferred tax asset of £0.15m (2018: £0.15m) has not been recognised in respect of unrelieved management expenses
of £0.83m (2018: £0.83m). The unrelieved management expenses have no expiry date and have not been recognised
because of uncertainty over the timing of their recoverability.
A deferred tax asset of £Nil (2018: £0.11m) in respect of the tax benefit that would arise upon the exercise of certain
outstanding share options has not been recognised because of uncertainties as to the timing of their exercise.
81
LPA Group Plc – Annual Report & Accounts 2019 COMPANY NOTES TO THE FINANCIAL STATEMENTS
C12.
Share Capital
2019
2018
Number
£000
Number
£000
Issued and fully paid
In issue at the start of the year
Allotted under share plans
12,376,729
281,500
1,238
28
12,376,729
-
In issue at the end of the year
12,658,229
1,266
12,376,729
1,238
-
1,238
During the year 281,500 options were exercised (2018: nil) at a weighted average option price of 38.3p (2018: nil).
At the year end, 300,000 (2018: 200,000) ordinary shares in the Company were held in the Company as Investment in
Own Shares, the shares having been acquired by the LPA Group Plc Employee Benefit Trust.
Dividends
Details of dividends paid and proposed in the year are given in note 17 to the Group Financial Statements.
C13.
Reserves
Called-up share capital
Called up share capital represents the nominal value of shares that have been issued.
Investment in Own Shares
This reserve records the share capital acquired in the Company, by the Company as Treasury Shares or by the LPA Group
Plc Employee Benefit Trust, at nominal value.
Share premium account
This reserve records the premium for shares issued at a value that exceeds their nominal value.
Un-issued shares reserve
This reserve records the recognised costs of share-based employee payment arrangements.
Merger reserve
This reserve records the premium for shares issued, as part consideration on the acquisitions of Channel Electric Equipment
Holdings and Haswell Engineers, at a value that exceeded their nominal value, and which qualified for merger relief.
Retained Earnings
This reserve includes all current and prior period retained profits and losses.
82
LPA Group Plc – Annual Report & Accounts 2019 COMPANY NOTES TO THE FINANCIAL STATEMENTS
C14.
Share Based Payments
Details of the Company’s share option schemes, a reconciliation of movements therein and options granted in the year
are given in note 18 to the Group Financial Statements. The fair value of services received in return for share options
granted are measured by reference to the fair value of share options granted. The Company recognised a share-based
remuneration expense in the year of £2,000 (2018: £2,000).
C15.
Related Party Transactions
Related party transactions with directors of the Company are set out in note 21 to the Group Financial Statements.
C16.
Contingent Liabilities
The following security is provided to Barclays Bank plc in respect of the Company’s £2.6m term loan facility: (i) a legal
charge over the developed freehold property owned by the Company; (ii) a debenture from the Company; and (iii) a cross
guarantee by the Company as guarantor on account of the obligations of each Group company to Barclays Bank plc.
83
LPA Group Plc – Annual Report & Accounts 2019 FIVE YEAR SUMMARY
Unaudited information
Summary income statement
2015
£000
2016
£000
2017
£000
2018
£000
2019
£000
Revenue
EBITDA †
Depreciation, amortisation, share payments
Operating profit before exceptional items
Exceptional items
Net finance costs
Profit before taxation
Taxation
Profit for the year
Summary balance sheet
Property, plant and equipment
Net trading assets
Net operating assets *
Net debt (see group note 15)
Deferred taxation
Net assets before pension and intangibles
Intangible assets
Pension asset net of deferred tax
Net assets
16,265
21,422
22,482
27,979
19,533
795
(504)
291
545
(43)
793
(99)
694
2,014
(481)
1,533
14
(31)
1,516
(54)
1,462
2,474
(579)
1,895
73
(54)
1,914
(146)
1,768
2,908
(664)
2,244
(175)
(45)
2,024
(253)
1,771
942
(741)
201
(403)
(35)
(237)
185
(52)
2015
£000
2016
£000
2017
£000
2018
£000
2019
£000
4,721
3,732
8,453
(2,717)
(74)
5,662
1,222
1,103
7,987
5,624
3,764
9,388
(2,541)
(25)
6,822
1,194
673
8,689
6,851
4,348
11,199
(2,753)
28
8,474
1,185
1,062
10,721
7,216
4,285
11,502
(1,971)
4
9,535
1,200
1,974
12,709
7,006
4,482
11,488
(2,420)
42
9,110
1,359
1,855
12,324
Other information
2015
2016
2017
2018
2019
EBITDA to sales
Basic earnings per share
Dividends per ordinary share
Net assets per ordinary share
Net debt / EBITDA
Gearing (net debt as a % of total equity)
4.9%
5.86p
1.70p
67.4p
3.42
34.0%
9.4%
12.30p
2.50p
72.7p
1.26
29.2%
11.0%
14.40p
2.70p
86.6p
1.11
25.7%
10.4%
14.34p
2.90p
102.7p
0.68
15.5%
4.76%
(0.43p)
2.90p
97.4p
2.57
19.6%
† - earnings before interest, tax, depreciation, amortisation of intangible assets, non-cash charges for equity-settled share-based
payments and exceptional items.
* - net operating assets – -the total of inventories and receivables less payables, excluding net debt.
84
LPA Group Plc – Annual Report & Accounts 2019 NOTICE OF MEETING
To consider and if thought fit pass resolution 6 as a special
resolution:
6.
That subject to the passing of resolution 5 above, the
directors be given power pursuant to section 570 of the
Companies Act 2006 to allot equity securities (as defined
in section 560 of the said Act) for cash pursuant to the
authority conferred by resolution 7 above as if section
561(1) of the said Act did not apply to any such allotment
provided that this power shall be limited to the allotment of
equity securities:
a.
b.
in connection with or pursuant to an offer by way of
rights, open offer or other pre-emptive offer to the
holders of shares in the Company and other persons
entitled to participate therein in proportion (as nearly
as practicable) to their respective holdings, subject to
such exclusions or other arrangements as the directors
may consider necessary or expedient to deal with
fractional entitlements or legal or practical problems
under the laws of any territory or the regulations or
requirements of any regulatory authority or any stock
exchange in any territory; and
(otherwise than pursuant to sub-paragraph (a) above)
up to an aggregate nominal value of £126,582
(representing 10% of the issued share capital), such
authority to expire at the end of the next annual
general meeting of the Company after the passing
of this resolution or the close of business on the date
falling 15 months after the date of the passing of this
resolution, whichever is earlier, save that the Company
may before such expiry make an offer or agreement
which would or might require equity securities to be
allotted after such expiry and the directors may allot
equity securities in pursuance of such an offer or
arrangement as if the power conferred hereby had not
expired.
NOTICE IS HEREBY GIVEN that the Fifty Eighth Annual
General Meeting of LPA Group plc (the “Company”) will be
held at the offices of LPA Lighting Systems, Ripley Drive,
Normanton, West Yorkshire, WF6 1QT on Wednesday 18
March 2020 at 12.00 noon for the following purposes:
Routine business
1.
2.
3.
4.
To receive the accounts for the year ended 30 September
2019, together with the reports of the directors and the
auditors thereon.
To declare a final dividend of 1.80p per ordinary share of 10p
each (“Ordinary Share”) for the year ended 30 September
2019, payable on 27 March 2020 to shareholders on the
register at the close of business on 28 February 2020.
To re-elect as a director Peter Pollock who retires by rotation,
in accordance with the Company’s Articles of Association.
To re-appoint Grant Thornton UK 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
Share capital
To consider and if thought fit pass resolution 5 as an ordinary
resolution:
5.
That, the directors be generally and unconditionally
authorised pursuant to section 551 of the Companies Act
2006 to allot shares in the Company and to grant rights
to subscribe for or to convert any security into shares in
the Company up to an aggregate nominal amount of
£234,177 provided that this authority shall expire at the
end of the next annual general meeting of the Company
after the passing of this resolution or at the close of
business on the date falling 15 months after the date of
the passing of this resolution, whichever is earlier, save
that the Company may before such expiry make an offer
or agreement which would or might require shares to be
allotted or rights to subscribe for or convert securities into
shares to be granted after such expiry and the directors
may allot shares or grant rights to subscribe for or convert
securities into shares in pursuance of such an offer or
arrangement as if the authority conferred hereby had not
expired.
85
LPA Group Plc – Annual Report & Accounts 2019 NOTICE OF MEETING (CONTINUED)
To consider and if thought fit pass resolution 7 as a special
resolution:
Notes:
Entitlement to Attend and Vote
7.
That subject to and in accordance with the Company’s
Articles of Association and pursuant to section 701 of the
Companies Act 2006, the Company is hereby generally
and unconditionally authorised to make market purchases
(as defined in section 693(4) of the Companies Act 2006)
of any of its Ordinary Shares on such terms and in such
manner as the directors of the Company may from time to
time determine, provided that:
1.
To be entitled to attend and vote at the Meeting (and for
the purposes of the determination by the Company of
the votes that may be cast in accordance with Regulation
41 of the Uncertified Securities Regulations 2001), only
those members registered in the Company's register of
members at close of business on 16 March 2020 (or, if the
Meeting is adjourned, close of business on the date which
is two business days before the adjourned Meeting) shall
be entitled to attend and vote at the Meeting. Changes to
the register of members of the Company after the relevant
deadline shall be disregarded in determining the rights of
any person to attend and vote at the Meeting.
Website giving information regarding the meeting
2.
Information regarding the Meeting, including the information
required by Section 311A of the Act, is available from
www.lpa-group.com.
Attending in person
3.
If you wish to attend the Meeting in person, please bring
some form of identification.
Appointment of proxies
4.
If you are a member of the Company at the time set out
in note 1 above, you are entitled to appoint a proxy to
exercise all or any of your rights to attend, speak and vote
at the Meeting. You can appoint a proxy only using the
procedures set out in these notes and the notes to the proxy
form.
5. A proxy does not need to be a member of the Company but
must attend the Meeting to represent you. If you wish your
proxy to speak on your behalf at the Meeting you will need
to appoint your own choice of proxy (not the Chairman)
and give your instructions directly to them.
6. You may appoint more than one proxy provided each
proxy is appointed to exercise rights attached to different
shares. You may not appoint more than one proxy to
exercise rights attached to any one share. To appoint more
than one proxy, please indicate on your proxy submission
how many shares it relates to.
7. A vote withheld is not a vote in law, which means that
the vote will not be counted in the calculation of votes for
or against the Resolution. If no voting indication is given,
your proxy will vote or abstain from voting at his or her
discretion. Your proxy will vote (or abstain from voting) as
he or she thinks fit in relation to any other matter which is
put before the Meeting.
a.
b.
c.
d.
The maximum number of Ordinary Shares hereby
authorised to be purchased is 1,265,823 representing
10% of the issued share capital of the Company;
The minimum price (excluding expenses) which may
be paid for an Ordinary Share is 10p;
The maximum price (excluding expenses) which may
be paid for an Ordinary Share shall not be more than
the higher of (i) five per cent above the average middle
market quotation for Ordinary Shares as derived
from the AIM appendix to London Stock Exchange
Daily Official List for the five business days before
the date on which the contract for the purchase is
made, and (ii) an amount equal to the higher of the
price of the last independent trade and highest current
independent bid as derived from the trading venue
where the purchase was carried out;
The authority hereby conferred shall, unless renewed
prior to such time, expire at the end of the annual
general meeting of the Company to be held in 2021
or on 20 March 2021, whichever is earlier, provided
that the Company may, before such expiry, make a
contract to purchase its own shares which would or
might be executed wholly or partly after such expiry,
and the Company may make a purchase of its own
shares in pursuance of such contract as if the authority
hereby conferred hereby had not expired.
By order of the Board
Chris Buckenham
Secretary
18 February 2020
Registered office:
Light & Power House, Shire Hill
Saffron Walden, CB11 3AQ
86
LPA Group Plc – Annual Report & Accounts 2019 NOTICE OF MEETING (CONTINUED)
Notes (continued):
Appointment of proxy using hard copy proxy form
Appointment of proxies through CREST
8. A hard copy form of proxy (* see page 90) has been
included within the Annual Reports and Accounts for
reference only as indicated in the Company’s publication
'The Digital Future', dated 5 July 2019. Future Annual
Report and Accounts will not include this. A detachable
form of proxy has not been sent to you, but you can
request a form of proxy, directly from the registrars Link
Asset Services’ general helpline team on Tel: 0371 664
0300, or utilise the hard copy enclosed herein. Calls cost
12p per minute plus your phone company’s access charge.
Calls outside the United Kingdom will be charged at the
applicable international rate. Lines are open between 09:00
– 17:30, Monday to Friday excluding public holidays in
England and Wales. Or via email at shareholderenquiries@
linkgroup.co.uk or via postal address at Link Asset Services,
PXS1, 34 Beckenham Road, Beckenham, Kent BR3 4ZF. In
the case of a member which is a company, the proxy form
must be executed under its common seal or signed on its
behalf by an officer of the company or an attorney for the
company. Any power of attorney or any other authority
under which the proxy form is signed (or a duly certified
copy of such power or authority) must be included with the
proxy form. For the purposes of determining the time for
delivery of proxies, no account has been taken of any part
of a day that is not a working day.
Appointment of a Proxy Online
9. You may submit your proxy electronically using the Share
Portal service at www.signalshares.com. Shareholders can
use this service to vote or appoint a proxy online. The
same voting deadline of 48 hours (excluding non-working
days) before the time of the meeting applies. Shareholders
will need to use the unique personal identification Investor
Code (“IVC”) printed on your share certificate. If you
need help with voting online, please contact our Registrar,
Link Asset Services’ portal team on 0371 664 0391.
Calls cost 12p per minute plus your phone company’s
access charge. Calls outside the United Kingdom will be
charged at the applicable international rate. Lines are
open between 09:00 – 17:30, Monday to Friday excluding
public holidays in England and Wales. Or via email at
shareholderenquiries@linkgroup.co.uk.
10. CREST members who wish to appoint a proxy or proxies
by utilising the CREST electronic proxy appointment service
may do so for the Meeting and any adjournment(s)
of it by using the procedures described in the CREST
Manual (available from https://www.euroclear.com/site/
public/EUI). CREST Personal Members or other CREST
sponsored members, and those CREST members who
have appointed a voting service provider(s), should refer
to their CREST sponsor or voting service provider(s),
who will be able to take the appropriate action on their
behalf. In order for a proxy appointment made by means
of CREST to be valid, the appropriate CREST message (a
CREST Proxy Instruction) must be properly authenticated
in accordance with Euroclear UK & Ireland Limited's (EUI)
specifications and must contain the information required
for such instructions, as described in the CREST Manual.
The message must be transmitted so as to be received by
the issuer's agent (ID: RA10) by 12 Noon on 16 March
2020. For this purpose, the time of receipt will be taken to
be the time (as determined by the timestamp applied to the
message by the CREST Applications Host) from which the
issuer's agent is able to retrieve the message by enquiry to
CREST in the manner prescribed by CREST.
CREST members and, where applicable, their CREST
sponsors or voting service providers should note that EUI
does not make available special procedures in CREST
for any particular messages. Normal system timings and
limitations will therefore apply in relation to the input of
CREST Proxy Instructions. It is the responsibility of the CREST
member concerned to take (or, if the CREST member is a
CREST personal member or sponsored member or has
appointed a voting service provider(s), to procure that his
CREST sponsor or voting service provider(s) take(s)) such
action as shall be necessary to ensure that a message is
transmitted by means of the CREST system by any particular
time.
In this connection, CREST members and, where applicable,
their CREST sponsors or voting service providers are
referred, in particular, to those sections of the CREST Manual
concerning practical limitations of the CREST system and
timings. The Company may treat as invalid a CREST Proxy
Instruction in the circumstances set out in Regulation 35(5)
(a) of the Uncertificated Securities Regulations 2001.
87
LPA Group Plc – Annual Report & Accounts 2019
NOTICE OF MEETING (CONTINUED)
Notes (continued):
Appointment of proxy by joint members
11. In the case of joint holders, where more than one of the joint
holders purports to appoint a proxy, only the appointment
submitted by the most senior holder will be accepted.
Seniority is determined by the order in which the names
of the joint holders appear in the Company's register of
members in respect of the joint holding, the first-named
being the most senior.
Changing proxy instructions
12. To change your proxy instructions simply submit a new
proxy appointment using the methods set out above. Note
that the cut-off times for receipt of proxy appointments (see
above) also apply in relation to amended instructions; any
amended proxy appointment received after the relevant cut-
off time will be disregarded. Where you have appointed
a proxy using the hard-copy proxy form and would
like to change the instructions using another hard-copy
proxy form, please contact Link Asset Services as per the
communication methods shown in note 9. If you submit
more than one valid proxy appointment, the appointment
received last before the latest time for the receipt of proxies
will take precedence.
Termination of proxy appointments
13. In order to revoke a proxy instruction, you will need to
inform the Company by sending a signed hard copy
notice clearly stating your intention to revoke your proxy
appointment to Link Asset Services, at the address shown
in note 9. In the case of a member which is a company,
the revocation notice must be executed under its common
seal or signed on its behalf by an officer of the company
or an attorney for the company. Any power of attorney or
any other authority under which the revocation notice is
signed, or a duly certified copy of such power or authority,
must be included with the revocation notice. The revocation
notice must be received by Link Asset Services no later than
48 hours before the Meeting. If you attempt to revoke your
proxy appointment but the revocation is received after the
time specified then, subject to the paragraph directly below,
your proxy appointment will remain valid. Appointment of
a proxy does not preclude you from attending the Meeting
and voting in person. If you have appointed a proxy and
attend the Meeting in person, your proxy appointment will
automatically be terminated.
CREST members and, where applicable, their CREST
sponsors or voting service providers should note that EUI
does not make available special procedures in CREST
for any particular messages. Normal system timings and
limitations will therefore apply in relation to the input of
CREST Proxy Instructions. It is the responsibility of the CREST
member concerned to take (or, if the CREST member is a
CREST personal member or sponsored member or has
appointed a voting service provider(s), to procure that his
CREST sponsor or voting service provider(s) take(s)) such
action as shall be necessary to ensure that a message is
transmitted by means of the CREST system by any particular
time.
In this connection, CREST members and, where applicable,
their CREST sponsors or voting service providers are
referred, in particular, to those sections of the CREST Manual
concerning practical limitations of the CREST system and
timings. The Company may treat as invalid a CREST Proxy
Instruction in the circumstances set out in Regulation 35(5)
(a) of the Uncertificated Securities Regulations 2001.
Corporate representatives
14. A corporation which is a member can appoint one or more
corporate representatives who may exercise, on its behalf,
all its powers as a member provided that no more than one
corporate representative exercises powers over the same
share.
Issued shares and total voting rights
15. As at 27 January 2020, the Company's issued share
capital comprised 12,658,229 Ordinary Shares of 0.10p
each (300,000 held in Treasury). Each Ordinary Share
carries the right to one vote at a General Meeting of the
Company and, therefore, the total number of voting rights
in the Company on 27 January 2020 is 12,658,229. The
website referred to in note 2 will include information on the
number of shares and voting rights.
88
LPA Group Plc – Annual Report & Accounts 2019
NOTICE OF MEETING (CONTINUED)
Notes (continued):
Questions at the meeting
16. Under Section 319A of the Act, the Company must answer
any question you ask relating to the business being dealt
with at the Meeting unless:
• answering the question would interfere unduly with the
preparation for the Meeting or involve the disclosure of
confidential information;
•
the answer has already been given on a website in the
form of an answer to a question; or it is undesirable in the
interests of the Company or the good order of the Meeting
that the question be answered.
Website publication of audit concerns
17. Under Section 527 of the Companies Act 2006, shareholders
meeting the threshold requirements set out in that section
have the right to require the Company to publish on a
website a statement setting out any matter relating to: (i) the
audit of the Company’s financial statements (including the
Auditor’s Report and the conduct of the audit) that are to be
laid before the Meeting; or (ii) any circumstances connected
with an auditor of the Company ceasing to hold office since
the previous meeting at which annual financial statements
and reports were laid in accordance with Section 437
of the Companies Act 2006 (in each case) that the
shareholders propose to raise at the relevant meeting. The
Company may not require the shareholders requesting any
such website publication to pay its expenses in complying
with Sections 527 or 528 of the Companies Act 2006.
Where the Company is required to place a statement on
a website under Section 527 of the Companies Act 2006,
it must forward the statement to the Company’s auditor not
later than the time when it makes the statement available
on the website. The business which may be dealt with at
the Meeting for the relevant financial year includes any
statement that the Company has been required under
Section 527 of the Companies Act 2006 to publish on a
website.
Documents on display
18. Copies of the letters of appointment of the Directors of the
Company and a copy of the Articles of Association of the
Company will be available for inspection at the registered
office of the Company from the date of this notice until the
end of the Meeting.
89
LPA Group Plc – Annual Report & Accounts 2019 LPA GROUP PLC - FORM OF PROXY (HARD COPY*)
For use at the Annual General Meeting to be held at 12.00 noon on Wednesday 18 March 2020 at the offices of LPA Lighting
Systems, LPA House, Ripley Drive, Normanton, West Yorkshire, WF6 1QT.
I/We .....................................................................................................................................................................................
of ..........................................................................................................................................................................................
being a member/members of LPA Group plc hereby appoint (note 1) ........................................................................................
or failing him/her the Chairman of the meeting as my/our proxy to vote for me/us and on my/our behalf at the above mentioned
meeting and at any adjournment thereof. I/We wish this proxy to be used as shown below:
Signed ................................................................................................................Dated .................................................2020
Please indicate with an “X” in the spaces below how you wish your votes to be cast. This proxy will be used only in the event of a poll
being directed or demanded. If the form is returned without any indication as to how the proxy shall vote on any particular matter, the
proxy will vote or abstain as he thinks fit. The “Vote withheld” option is provided to enable you to abstain on any particular resolution.
However, it should be noted that a “Vote withheld” is not a vote in law and will not be counted in the calculation of the proportion of
votes “For” and “Against” a resolution. If you select “Discretionary”, your proxy can vote as he or she chooses or can decide not to
vote. Your proxy can also do this on any other resolution that is put to the meeting.
Resolution
For
Against
Vote
witheld
Discreti-
onary
1.
To receive the accounts for the year ended 30 September 2019.
2.
To declare a final dividend of 1.80p per Ordinary Share for the
year ended 30 September 2019.
3.
To re-elect Peter Pollock as a director of the Company.
4.
5.
6.
7.
To re-appoint Grant Thornton UK LLP as auditors and to authorise
the directors to fix the auditors’ remuneration.
To authorise the directors to allot shares in the Company pursuant
to section 551 of the Companies Act 2006.
To authorise the directors (pursuant to section 570 of the
Companies Act 2006) to allot shares in the Company for cash.
To authorise the Company to make market purchases (as defined
in section 693(4) of the Companies Act 2006) of its own shares.
90
LPA Group Plc – Annual Report & Accounts 2019 LPA GROUP PLC - FORM OF PROXY (HARD COPY*) (CONTINUED)
Notes:
1.
If you wish to appoint as your proxy any person(s) other than
the Chairman of the meeting, please insert the full name(s) of
the proxy or proxies (in block capitals) in the space above.
A proxy need not be a member of the Company and may
attend the meeting in person and vote on a show of hands
and on a poll.
2. To be effective a form of proxy must be in writing and signed
by the member or his duly authorised attorney or, if the
member is a corporation under its common seal or signed
by a duly authorised officer or attorney. A corporation may
appoint a representative to attend and vote at the meeting.
3. To be valid this proxy, together with any power of attorney
under which it is signed, must be received at Link Asset
Services, PXS, 34 Beckenham Road, Beckenham, BR3 4TU
not less than 48 hours (excluding any part of a day that is a
non-working day) before the time fixed for the meeting.
4.
In the case of joint holdings the vote of the first-named holder
in the register will be accepted to the exclusion of the other
joint holders.
5. To appoint more than one proxy you may photocopy this
form. Please indicate the proxy holder’s name and the
number of shares in relation to which they are authorised to
act as your proxy (which, in aggregate, should not exceed
the number of shares held by you). Please also indicate if the
proxy instruction is one of multiple instructions being given.
All forms must be signed and should be returned together in
the same envelope.
6. All members are entitled to attend and vote at the meeting,
whether or not they have returned a form of proxy.
7.
If two or more valid forms of proxy are delivered in respect of
the same share, the one which was delivered last (regardless
of its date or the date of its execution) will be valid.
8. Appointment of a proxy will not preclude a member from
attending and voting in person should he/she subsequently
decide to do so.
9. Any alterations made in this form of proxy should be
initialled.
91
LPA Group Plc – Annual Report & Accounts 2019 NOTES
92
LPA Group Plc – Annual Report & Accounts 2019 LPA Group
UK manufacturer of products designed
& built using our in-house capabilities
Electro-mechanical systems
LED lighting and electronic systems
Engineered component distribution
Fabricated metal engineering
Group Directory
LPA Group Plc
Light & Power House, Shire Hill, Saffron Walden, CB11 3AQ
Tel: +44 (0)1799 512800 Website: www.lpa-group.com
Electro-mechanical systems
LPA Connection Systems
Light & Power House
Shire Hill
Saffron Walden
CB11 3AQ
Tel: +44 (0)1799 512800
Email: enquiries@lpa-connect.com
· Rail, aircraft & industrial connectors
· Ethernet backbones
· Auxiliary battery power systems
· Shore supply systems
· Control panels & boxes
· Transport turnkey services
· Fabricated metal engineering
· Enclosures, fabrications, form & weld
· Laser cutting
Engineered component distribution
LPA Channel Electric
Bath Road
Thatcham
Berkshire
RG18 3ST
Tel: +44 (0)1635 864866
Email: enquiries@lpa-channel.com
· Connectors
· Relays & contactors
· Circuit breakers
· Fans & motors
· Switches
· USB charging
LED lighting and electronic systems
LPA Lighting Systems
LPA House
Ripley Drive
Normanton
West Yorkshire
WF6 1QT
Tel: +44 (0)1924 224100
Email: enquiries@lpa-light.com
· LED lighting systems
· Fluorescent and dichroic lighting systems
· Emergency lighting systems
· Power supply units
· Inverters
· Electronic control & monitoring
LPA Group Plc
Investing in
the future
LPA Group
•
•
•
Is a market leading manufacturer of high reliability
LED lighting & electro-mechanical systems and a
distributor of engineered components
Employs around 180 people at three locations in
the UK
Is focussed on rail, aviation, industrial, infrastructure
and defence markets
• Has developed a successful export capability, most
notably in Europe, Asia and Australia. Around a
third of turnover is exported to over 50 countries
• Has a reputation for
innovating cost-effective
engineering solutions (in benign and hostile
environments)
reduce
improve
maintenance and life cycle costs
reliability,
to
• Supplies a wide range of leading organisations
including: Airbus, Alstom Transportation, BAA,
BAE Systems, Bombardier Transportation, CAF,
Compin, CRRC, Downer EDI, First Group, Hitachi,
ITW, Kinki Sharyo, Knorr Bremse, Leonardo, London
Underground, Siemens, SNCF, Stadler, Stagecoach,
TRSC, Unipart Rail and Wabtec
LPA Group Plc
Annual Report & Accounts 2019
www.lpa-group.com
R
E
P
A
P
D
E
L
C
Y
C
E
R
%
0
0
1
N
O
D
E
T
N
I
R
P
S
I
T
R
O
P
E
R
S
I
H
T
.
.
I
K
U
O
C
N
G
S
E
D
S
T
T
E
N
R
O
H
@
A
D
N
L
I
LPA Group Plc
Light & Power House, Shire Hill,
Saffron Walden, CB11 3AQ
T +44 (0)1799 512800
’
I
–
D
T
L
N
G
S
E
D
S
T
T
E
N
R
O
H
Y
B
D
E
C
U
D
O
R
P
D
N
A
D
E
N
G
S
E
D
I