LPA Group Plc
Manufacturing
the future
LPA Group
•
Is a market leading designer, manufacturer
and supplier of high reliability LED lighting,
electronic and electro-mechanical systems, and
a distributor of engineered components
•
Is known for innovating cost-effective engineering
solutions (in hostile and challenging applications)
to improve product reliability, reduce maintenance
and life cycle costs
• Employs 170 people at three locations in the UK
•
Is focussed on rail, aviation, defence, infrastructure
and industrial markets
• Has developed a successful export capability
and global distribution network. Around a third
of turnover is exported to over 50 countries
• Supplies to a wide range of leading organisations
including: Airbus, Alstom Transportation, BAA,
Transportation,
BAE Systems, Bombardier
CAF, Compin, CRRC, Downer, EDI, First Group,
Heathrow Airport, Hitachi, ITW GSE, Kinki Sharyo,
Knorr Bremse, Leonardo, London Underground,
Shanghai Pudong Airport, Siemens, SNCF,
Stadler, TRSC, Unipart Rail and Wabtec
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LPA Group Plc
Light & Power House, Shire Hill,
Saffron Walden, CB11 3AQ, UK
T +44 (0)1799 512800
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LPA Group Plc
Annual Report & Accounts 2020
www.lpa-group.com
LPA Group Plc
Manufacturing
the future
LPA Group
•
Is a market leading designer, manufacturer
and supplier of high reliability LED lighting,
electronic and electro-mechanical systems, and
a distributor of engineered components
•
Is known for innovating cost-effective engineering
solutions (in hostile and challenging applications)
to improve product reliability, reduce maintenance
and life cycle costs
• Employs 170 people at three locations in the UK
•
Is focussed on rail, aviation, defence, infrastructure
and industrial markets
• Has developed a successful export capability
and global distribution network. Around a third
of turnover is exported to over 50 countries
• Supplies to a wide range of leading organisations
including: Airbus, Alstom Transportation, BAA,
Transportation,
BAE Systems, Bombardier
CAF, Compin, CRRC, Downer, EDI, First Group,
Heathrow Airport, Hitachi, ITW GSE, Kinki Sharyo,
Knorr Bremse, Leonardo, London Underground,
Shanghai Pudong Airport, Siemens, SNCF,
Stadler, TRSC, Unipart Rail and Wabtec
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LPA Group Plc
Light & Power House, Shire Hill,
Saffron Walden, CB11 3AQ, UK
T +44 (0)1799 512800
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LPA Group Plc
Annual Report & Accounts 2020
www.lpa-group.com
LPA Group Plc
A brief history
Over 160 years of UK product
design and manufacture.
The LPA Group consists of
uniquely individual businesses,
each offering product innovation,
engineering design capabilities
and market sector expertise.
www.lpa-group.com
3 brothers set up the
company Simmonds
Brothers Ltd
Light and Power
Accessories (LPA)
was founded by
the Lott family in
East London
1861
1908
Simmonds
manufactured
marquees, flooring
and street furniture
including
chandeliers
Simmonds was
awarded the
contract to install
the first ever street
light in `Electric
Avenue’, Brixton
1861
1908
Simmonds trading
name changed to
Niphan Ltd which
is still the brand
name of LPA’s
industrial connector
range
1927
LPA designed
a range of ‘line
taps’ for N Ireland
Electricity Board,
for one of the first
overhead electricity
supply systems
1934
With the invention
of the electric light,
Simmonds
started to design
connectors
to support this
innovation
1898
Needing more
manufacturing
space, LPA moved
to Saffron Walden,
Essex
1960s
Haswell Engineers
Ltd founded by
David Adair. A tool
making and power
press component
manufacturer for
the Ford Motor Co
1971
Haswell continued
to be at the forefront
of sheet metal work
fabrication. Invested
in automation and
equipment
1980s
LPA acquired
Niphan Ltd
1981
Excil was founded
by 2 ex colleagues
from Coin Industries.
Experts in auto-
motive test
equipment for
Lotus and Luca
1983
Excil was taken
over by Telfos
(later by Jenbacher
Group). Strategic
decision to move
into the rail market
LPA acquired
Haswell Engineers
Ltd to expand
its in-house
fabrication
capabilities
1990
2000
LPA purchased
the first of its
two bespoke
manufacturing
sites, the second
one following in
2017
2014
To support the war
effort in WW2, the
Niphan factory was
staffed entirely
with women
LPA secured a
flagship rail
contract for HST,
supplying rolling
stock connectors
Channel became
an approved
supplier for many
of the UK’s military
aerospace projects
Product innovation
continued with
Channel supplying
high reliability
relays to the rail
sector
Investing in
electronics design
expertise, LPA
acquired Excil
Electronics Ltd
LPA supplied the
first passenger
USB charging units
into UK trains
Product
development
investment in its
new Plane Power
aviation product
range
1940s
1960s
1970s
1994
2000
2015
2019
Group Directory
LPA Group Plc
Light & Power House, Shire Hill, Saffron Walden, CB11 3AQ, UK
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, UK
Tel: +44 (0)1799 512800
Email: enquiries@lpa-connect.com
· Auxiliary battery power systems
· Control panels & boxes
· Enclosures, fabrications, form & weld
· Ethernet backbones
· Laser cutting
· Rail, aircraft & industrial connectors
· Shore supply systems
· Transport turnkey services
The MOD
commissioned
Niphan to design a
range of connectors
to supply
electrical power to
aeroplanes
1950s
REM Products
(Electrical) Ltd
was incorporated.
Reselling cable
glands and
accessories
1961
Channel Electric
was established to
supply specialist
electrical inter-
connection
equipment for
Concord
1967
REM expanded into
manufacturing and
became a public
but unquoted
company
1967
Haswell expanded
into sheet metal
work and was one
of the first to use a
CNC turret press in
the UK
Excil relocated
to Normanton,
Yorkshire. Product
range expanded to
security lighting
and power supplies
LPA won the first
contract for the
design and supply
of battery rafts for
the Turbostar train
LPA designed and
built the ‘Crocodile
cable carrier’. A
new and innovative
way of connecting
power to aircraft
LPA continued
to expand its
manufacturing
capabilities by
investing in new
machinery and
automation
1970s
1985
1997
2000s
2018
Awarded its first
export contract to
design, manufacture
and supply
advanced ‘at seat’
electronics system
solution for rail
2020
Engineered component distribution
LPA Channel Electric
Bath Road
Thatcham
Berkshire
RG18 3ST, UK
Tel: +44 (0)1635 864866
Email: enquiries@lpa-channel.com
· Circuit breakers
· Connectors
· Fans & motors
· Relays & contactors
· Switches
· USB charging
REM merged to
form LPA-REM
Electrical Ltd
Channel’s
innovative terminal
block product
design made it a
market leader in
the rail sector
LPA acquired
Channel, a
component
supplier to the
aerospace, defence
and rail markets
LPA was one of the
first to supply LED
lighting into train
interiors - Warahta
Sidney
1976
1986
1998
2000s
LPA won a major
contract to design,
manufacture and
supply robust
electronic control
boxes for a new
train build project
2018
LED lighting and electronic systems
LPA Lighting Systems
LPA House
Ripley Drive
Normanton
West Yorkshire
WF6 1QT, UK
Tel: +44 (0)1924 224100
Email: enquiries@lpa-light.com
· Electronic control & monitoring
· Emergency lighting systems
· Fluorescent and dichroic lighting systems
· Inverters
· LED lighting systems
· Power supply units
LPA Group Plc – Annual Report & Accounts 2020
FINANCIAL HIGHLIGHTS
For the year ended 30 September 2020
2020
£000
2019
£000
21,863
27,006
20,711
19,533
783
(131)
551
204
(403)
(237)
ORDER ENTRY
REVENUE
UNDERLYING OPERATING PROFIT*
EXCEPTIONAL COSTS
PROFIT/(LOSS) BEFORE TAX
BASIC EARNINGS/(LOSS) PER SHARE
4.82p
(0.43p)
DIVIDENDS PER SHARE
GEARING - post IFRS 16 adoption
- pre IFRS 16
nil
21.1%
19.6%
1.10p
-
19.6%
*Underlying operating profit is stated before share-based payments and exceptional costs
Commentary
In common with our Customers and Suppliers, we have been affected by Covid-19. However, we follow Government guidelines
closely, remain open for business, fully utilise the support available in the maintenance of our business and remain more
fortunate than many. Thus far our team has suffered very few Covid-19 cases and no fatalities, and led by our Executive,
has done a great job in difficult circumstances and delivered a result at least in line with expectations. Cash has been closely
controlled and gearing remains unchanged.
However due to further Covid-19 developments, we consider it prudent not to declare a dividend for the Financial year 2020
but to review the situation at the half year announcement June 2021.
Though we were fully prepared for a no deal Brexit, we are delighted that a deal has been done, which will facilitate our
continuing success in export markets within the EU and beyond. The Order Book has continued to grow and will be further
boosted by very large project awards (subject to contract) during the first quarter, which, together with our strong balance sheet,
gives us great confidence of further progress during the current year and in the longer term.
1
CONTENTS
Financial Highlights
1
GROUP FINANCIAL STATEMENTS
OTHER INFORMATION
Independent Auditor’s Report
30
Consolidated Income Statement
36
Five Year Summary
Notice of Meeting
92
93
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
37
38
39
40
42
81
82
83
STRATEGIC REPORT
Chairman's Statement
Chief Executive Officer’s Review
Financial Review
Key Performance Indicators
Business and Strategy
3
5
7
11
12
Principal Risks and Uncertainties
13
BOARD REPORTS
Directors' Report
14
Corporate Governance Report
20
Audit Committee Report
Remuneration Report
24
25
COMPANY INFORMATION
28
2
LPA Group Plc – Annual Report & Accounts 2020
CHAIRMAN'S STATEMENT
Overview
Corporate governance
In my Interim Statement in June 2020, I reported that all three
of our sites had remained operational despite the pandemic.
I am pleased to report that, thus far, this remains the case
and the incidence of Covid-19 infections among our staff
has remained very low, with no fatalities. We are following
Government guidelines closely and utilise sources of support
as widely as possible, and we shall continue to do so.
Our customers and suppliers have suffered and continue
to suffer disruption. However, we have a great team, well
led by the Executive and they have responded well to the
challenges and delivered a result in line with expectations and
a significant recovery from last year.
Despite customer delays caused by Covid-19, Sales for the
year increased 6.0% to £20.7m (2019: £19.5m). Underlying
operating profit increased 284% to £0.78m (2019: £0.20m).
Profit before tax amounted to £0.55m (2019: loss £0.24m).
Basic earnings per share amounted to 4.82p (2019: loss
per share 0.43p). Gearing remained unchanged at 19.6%,
increased to 21.1% after adoption of IFRS 16.
Orders entered during the year, like sales, were depressed
by the effects of Covid-19, but amounted to £21.9m (2019:
£27.0m), however the positive book to bill ratio delivered a
5.4% increase in the closing Order Book to £22.5m (2019:
£21.3m). A number of major contracts were delayed and
have been awarded to us during the first quarter of the current
year, strengthening the ongoing Orders Pipeline (contracts we
have been awarded without sufficient delivery information to
enable inclusion in the Order Book, or, which remain subject
to contract) and the Order book itself.
Though we were fully prepared for a no deal Brexit, we are
delighted that a deal has been done, which will facilitate
our continuing success in export markets within the EU and
beyond.
Dividends
Given the uncertainty due to Covid-19, the Board considered
it prudent to cancel the Final Dividend for the year ended
30 September 2019 and not to declare an Interim Dividend
in respect of the year ended 30 September 2020 (2019:
1.10p). Circumstances remain extremely uncertain with a
further lockdown now in operation. It must be hoped
that the Vaccination programme will succeed. However, in
such circumstances conserving cash resources to secure the
business and to maintain investment in new products and
plant and equipment is paramount. The Board believes in a
progressive dividend policy and will review this again at the
2021 half year.
The Group adopted the Quoted Companies Alliance Corporate
Governance Code in 2018 and, unless otherwise stated,
adheres to it. This provides that the Chairman is responsible
for oversight, adoption, and communication of the Group’s
Corporate Governance Model.
The Group’s Annual Report is considered to be a document
of record and together with the Group’s website www.lpa-
group.com, suitable for recording the Group’s statements on
compliance with the Code. Compliance is reviewed every six
months and updated as necessary and appears on pages 20
to 23 of this report and on the website www.lpa-group.com.
Section 172
Major shareholders have been represented on the Board for
many years. Thus, the conduct of the board has reflected
the long term goals of delivering shareholder value while
maintaining and enhancing the reputation of the Group.
Involved as the Group is, in long term contracts and exports,
good customer relationships have to be long term, and the
maintenance of good relations is dependent upon the good
conduct of the Group’s employees.
The Board also 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 20 of this
Annual Report, which is also available together with other
information on the Group’s website www.lpa-group.com. The
Guiding Light, together with our mantra ‘Long Life reliability
does not cost the earth’ has somewhat pre-empted the new
focus on Environment, Social Responsibility and Governance.
These are factors which have been important to our Corporate
Culture for many years.
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 13. The Board has long recognised
that it is in the Company’s shareholders’ and employees’ best
interest that the defined benefit pension scheme should be
appropriately funded, thus a voluntary contribution of £100k
per year has been made to the scheme to maintain and grow
the surplus and the Board has agreed to continue the payment
for a further three years. The Board have considered this a
prudent approach over the past decade to mitigate levy and
associated costs and risks, whilst striving to achieve solvency
after full provision and fully satisfy the schemes commitments
to cessation.
3
LPA Group Plc – Annual Report & Accounts 2020 CHAIRMAN'S STATEMENT (CONTINUED)
Section 172 (continued)
We continue to be committed to a long term capital investment
programme with enhanced capabilities and investment in
the skills of our workforce. The quality of our facilities, our
technology and the skills of our people we believe to be
recognised by our customers to be exceptional in the UK.
Shareholders and investors
The Board ensures it is always available to its key stakeholders
and works closely with its Brokers to ensure regular and open
dialogue.
Board and management
Board members’ curriculum vitae and relevant experience are
set out on page 28 of the Annual Report and are published
on the Group’s website www.lpa-group.com.
Michael Rusch retired from the board in June 2020 after more
than fifty years’ service to the Group.
Following the 2020 AGM, Paul Curtis was appointed Chief
Executive Officer (CEO) with effect from 1 April 2020, having
successfully completed a period as Chief Operating Officer
(COO) from October 2018.
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. He will remain a
member of the Audit Committee from 1 April 2021 but will
relinquish the Chair, remaining Chair of the Remuneration
Committee.
Gordon Wakeford was appointed Non-Executive Director
with effect from 1 April 2020 and will assume the Chair of
the Audit Committee with effect from 1 April 2021. He is a
member of the Remuneration Committee.
On the appointment of Paul Curtis as CEO, I relinquished my
main executive responsibilities, although I remain chair of the
of LPA Industries Limited Defined Benefit Pension Scheme, an
Executive role.
Managing Director of LPA Lighting Systems. In March 2020
Jonathan Rowe was appointed Managing Director of LPA
Connection Systems.
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
and the impact of Covid-19, both on business and on the
general health and wellbeing of our employees personally.
We invested in external support to assess the impacts on our
employees mental health while working at home, which we
keep under review. We continue to upskill our workforce
as we seek to maintain and increase their competitiveness
in world markets. We do maintain flexibility through use of
agency and temporary contracts, but we have no zero-hour
contracts. Covid-19 forced us to closely re-examine again our
cost base and organisation and as a consequence a number
of positions were made redundant. I should like to thank all
our employees, past and present, for their hard work and
diligence during this most challenging of years.
Outlook
It would be an understatement to say that the past year has
been challenging and it is clear that the immediate future is
likely to be similar. However, we are in the fortunate position
of having a strong order book, a strong balance sheet, tightly
managed cash flow and an executive team which has come
of age in the most difficult of circumstances, and delivered.
The Company has come through this difficult period and a
massive transition of Board and Management remarkably
unscathed thus far.
Settling Brexit with a trade deal is very good news. We
can continue to do what we do best, satisfying customer
requirements at home and in export markets. Covid-19 has
changed the transport markets we serve, at least temporarily
and perhaps permanently. Happily, we have recognised this,
and we are planning for an uncertain future.
Our essential assets are our people, technology and facilities,
strong balance sheet and, strong medium term order book
which gives us time to adjust to the changed circumstance and
the opportunity to benefit from it. I am optimistic about the
future for the Group
We confirm the appointment of Robert Bodnar-Horvath, as
an independent Non-Executive Director and Chair elect to
succeed me on my retirement later this year (2021).
Peter Pollock
Chairman
25 January 2021
Our trading activities continue to be managed independently
through local Executive Teams. John Hesketh remains
4
LPA Group Plc – Annual Report & Accounts 2020 CHIEF EXECUTIVE OFFICER’S REVIEW
Rail continues to be the Group’s main segment representing
77% of sales for the financial year (2019: 69%); aerospace
and defence 12% (2019: 16%); other 11% (2019: 15%).
Although Covid-19 has affected project timescales, it is
envisaged that worldwide investment in this sector will remain,
with Rail seen as an essential form of public transport in the
new environmentally aware world that has developed. As
such, we continue the drive to expand our worldwide presence
and product offerings in this segment.
Design and development
The 2020 year saw the launch of our new range of Plane
Power connectors, aimed at the aircraft ground power supply
market, with initial feedback being favourable. Increased
efforts are being focussed in developing this range and
associated products with a view to developing both market
share and the number of products offered to the sector.
Across the Group we continue the development of our existing
product offerings, but are also committed to investigating
new technologies, with the aim of strengthening our position
in existing markets, as well as creating opportunities in new.
The Group has expertise in both electronics and electro-
mechanical engineering. New product developments have
and are creating expertise in both software and power
electronics, and the opportunity to combine and leverage
these capabilities in new areas is a focus the Group will be
considering as we move forward.
Efforts in shortening product design cycles are ongoing with a
view to increasing the quantity of releases brought to market
in any given year, a key focus through FY2020. Awareness
of how technology is being used by our customer base and
how this can be integrated into our products is also a major
focus and will ensure our product offering stays current and
fit for purpose as market demands change around the world.
Trading results
Despite the worldwide Covid-19 impact to our customer base,
and subsequent delays to projects, sales in the year increased
6.0% to £20.7m (2019: £19.5m) with an underlying operating
profit of £0.78m (2019: £0.20m) and operating profit of
£0.62m (2019: loss £0.20m). Order entry slowed in the
second half, as customers adjusted to the Covid-19 challenge,
finishing at £21.9m, (2019: £27.0m which was a record
year), resulting in an order book of £22.5m (2019: £21.3m).
2020 summary
• Order book increased 5.4% at £22.5m (2019: £21.3m);
•
•
Satisfactory order entry at £21.9m (2019: £27.0m);
Sales up 6.0% at £20.7m (2019: £19.5m);
• Underlying Operating Profit Increased 284% to £0.78m
(2019: £0.20m).
Added Value (a Group KPI) for the year was broadly
in line with expectations at 48.6% (2019: 49.3%). Our
drive to automate and gain efficiencies across all areas
of the business continued throughout the year and was
supported by further capital equipment investments and,
at year end, a reduction in our workforce of c11%,
partially addressing project delays from the market but
also reflecting new levels of efficiencies within operations.
Markets
Aviation (aircraft) experienced a significant slowdown in the
year as customers looked to delay or cancel their orders.
This slowed supply chain requirements significantly and it is
envisaged that build rates of our main customers will continue
at current levels for the majority of this year, and that any
recovery will not impact output until next year.
Aviation (infrastructure) has also seen some Covid-19 related
slowdown. However, with many airports taking the opportunity
to catch up on maintenance, combined with increased efforts
to improve our worldwide presence, distribution network
and product offering, the impact has not been as severe
as expected and as such this remains a key target area for
development over the coming years.
5
LPA Group Plc – Annual Report & Accounts 2020 CHIEF EXECUTIVE OFFICER’S REVIEW (CONTINUED)
Operations
The agility of the Group saw its stiffest test to date with
re-schedules and delays imposed almost overnight from many
of our customers. Flexing resources, to ensure we maintain
the highest levels of service, whilst meeting these fluctuating
demands is a challenge, but one we are pleased to have come
through to date.
The period also saw several changes in key staff with the
addition of a new MD at LPA Connection Systems and the
retirement of the GM at LPA Channel Electric. The addition of
a new senior sales director, as a combined role between LPA
Channel Electric and LPA Connection Systems, plus several
other sales and engineering positions in the period, means
we enter the new year with arguably the strongest team for
quite some time.
Through the year there were several areas identified where
vertical integration could enhance Group Added Value. A
programme is now underway to implement the necessary
actions for this and it is envisaged that benefits will start to
filter through in late 2021 and continue thereafter.
Outlook
As we look to move forward, we have a strong orderbook,
enhanced resources and capabilities, improved efficiency,
and a drive to develop the Group further. There is no doubt
that Covid-19 will continue to have an impact throughout
the coming year, however, we are confident that medical
advances will start to filter through and, as such, opportunities
for our customers and ourselves will continue.
Paul Curtis
Chief Executive Officer
25 January 2021
6
LPA Group Plc – Annual Report & Accounts 2020 Trading performance
Revenue in the current year increased by £1.2m (6.0%) to
£20.7m (2019: £19.5m) despite continuing delays to rail
project activity, heightened by the impacts of Covid-19.
Aviation (aircraft) activity slowed dramatically through H2 as
a direct consequence of Covid-19, which resulted in order
intake for our distribution business falling and sales reducing,
this following a strong start to the year. Electro-mechanical
had a stronger year and continued to work through its order
book, H2 experienced delays driven by customer Covid-
19 lock down closures from April 2020, but subsequently
customers reopened in the UK and worldwide. Aviation
(infrastructure) activity continued through H2 with some
maintenance projects accelerated, a result of reduced flights.
Lighting Systems had another strong year of project wins
and product and market development, which continued into
the first quarter of the 2021 financial year. Lighting Systems
continues to build for the future, whilst current results lag
through project delays as previously announced, combined
with a continued shortfall in routine rail refurbishment activity.
Gross margins increased to 22.7% (2019: 22.3%), despite
a 0.7% reduction in Added Value reflecting the mix of
work towards skilled labour intensive rail projects, offset
through cost down activities and labour efficiencies including
automation, specifically at our Electro-mechanical site.
In the first half of the year sales increased by 6.8% to £10.8m
(2019: £10.1m), delivering an underlying operating profit of
£0.2m (2019: £0.2m), up 28.2% on the corresponding period
in 2019. The second half delivered sales of £9.9m (2019:
£9.4m), up 5.2% on the corresponding period in 2019, down
7.9% on H1 2020 (2019: down 6.4% H2 vs H1) resulting in
an underlying operating profit for the year of £0.78m (2019:
£0.20m).
Gross profit amounted to £4.7m (2019: £4.4m). Added
Value of 48.6% was achieved (2019: 49.3%), a Group KPI.
Other operating expenses reduced by 5.3% to £4.4m (2019:
£4.7m) - represented by decreased sales and distribution
costs of £0.1m, increased administration and overheads net
of exceptional costs of £0.1m and exceptional costs of £0.1m
(2019: £0.4m inclusive of GMP equalisation recognition).
Other operating income of £0.3m (2019: £0.1m) includes
Covid-19 Job Retention Scheme (“CJRS”) grants, which
are not offset against the underlying wage costs during the
furlough leave which they supported through H2. Where
furlough leave was utilised in the year, staff salaries were
paid at the higher of CJRS grants; 80% of salary or statutory
rates, whilst employer pension contributions and benefits in
FINANCIAL REVIEW
kind were maintained by the Group at their full rate. The
underlying cost base was reduced following a reorganisation
concluded towards year end. The associated £0.1m costs of
reorganisation (2019: £0.1m) are detailed within exceptional
costs.
Key administration costs and changes comprised pension
administration, governance, and defined benefit scheme
funding unchanged at £0.2m (2019: £0.2m); loss on disposal
of assets £61,000 (2019: £2,000 profit); gain on foreign
exchange recognised £50,000 (2019: loss £13,000) and
employment costs unchanged at £1.5m (2019: £1.5m)
inclusive of £36,000 share-based payment costs (2019:
£3,000). No executive bonuses were awarded in the year
(2019: £8,000). Other operating income increased to £0.3m
(2019: £0.1m), comprising predominantly CJRS grants.
An operating profit of £0.62m (2019: loss £0.20m) was
achieved, an improvement of £0.82m year on year. After net
finance costs of £0.07m (2019: £0.04m) a profit before tax
of £0.55m was recorded (2019: loss £0.24m).
Exceptional costs and non-underlying items
Exceptional costs in the period totalled £0.13m (2019:
£0.40m). Key items comprised:
•
•
•
reorganisation costs of £0.12m (2019: £0.07m) -
associated with ongoing cost base reductions across the
Group and realignment to address the effects of Covid-19
into 2021;
£0.01m dual running directors costs associated with the
ongoing Board transition (2019: nil).
2019: £0.33m (2020: 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 was recognised in the previous financial year as
a change in basis, whilst going forward all movements
are recognised through the Consolidated Statement of
Comprehensive Income alongside all other movements in
the Defined Benefit Pension Scheme. Further changes to
assumptions relating to GMP, which are not anticipated
to be material, including any that are derived from the
more recent High Court ruling in November 2020 will be
recognised in line with other actuarial movements within
the Statement of Consolidated Comprehensive Income.
7
LPA Group Plc – Annual Report & Accounts 2020 FINANCIAL REVIEW (CONTINUED)
Finance costs and income
Within finance costs, the interest on borrowings increased
by 6.9% to £0.11m (2019: £0.10m), £6,000 of which was
attributable to the adoption of IFRS 16. The weighted average
interest rate (excluding lease liabilities) reduced from 2.91%
to 2.85%, the key driver being the reduction in UK base rate
with an overall reduction in term borrowing rates of 0.45%
on average.
Finance income, which comprises the net interest income on
the pension asset, was £41,000, a reduction of 35.9% (2019:
£64,000).
Profit/(loss) before tax, taxation and earnings
per share
Profit before tax was £0.55m (2019 Loss: £0.24m) resulting
in a tax recovery of £0.04m (2019 recovery: £0.19m).
The effective tax rate in the year was 8.0% (2019: -78.0%),
with the UK corporation tax rate of 19.0% (2019: 19.0%).
The effective tax rate is largely the consequence of tax loss
utilisation of 2.0% (2019: 4.6%); qualifying R&D expenditure
of 14.2% (2019: 32.9%); prior year R&D expenditure claim
increases of 8.9% (2019: 20.7%); exercised share option
recognition nil (2019: 8.2%); and defined benefit pension
contributions 3.5% (2019: 8.0%). The effective tax rate on the
underlying profit was 5.6% (2019: -90.6%). Deferred tax rates
provided increased from 17.5% (2019) to 19.0% following
cancellation of the anticipated reduction in UK Corporation
Tax rates to 17.0%, announced in the March 2020 UK budget.
The profit for the year, after tax, was £0.59m (2019 loss:
£0.05m) resulting in basic earnings per share of 4.82p (2019:
loss of 0.43p).
Balance sheet
Shareholders’ funds increased by £0.23m (1.9%) in the year
to £12.55m (2019: £12.32m) giving a net asset value per
ordinary share of 99.2p (2019: 97.4p). Net asset value per
share (calculated excluding goodwill and the pension asset net
of deferred tax) was 77.5p (2019: 73.6p). Net debt increased
£0.04m to £2.46m (2019: £2.42m), like for like, with gearing
(net debt as a % of total equity) remaining at 19.6% (2019:
19.6%). Inclusive of IFRS 16 leases, net debt increases in total
by 9.3%, to £2.65m and gearing 1.5% to 21.1% as the new
measure.
Shareholders’ funds include Investment in Own Shares
(Treasury Shares) at £0.32m including share premium (2019:
£0.32m), representing ordinary shares held in the Company
by the LPA Group Plc Employee Benefit Trust (EBT).
Intangible assets, which comprise goodwill, capitalised
development costs and software purchases, were £1.39m
(2019: £1.36m). Goodwill relates to the Group’s investment
in Excil Electronics and after assessment was unchanged at
£1.15m. Capitalised development costs, associated with the
development of a new range of ground power connectors
for the aviation (infrastructure) sector, Plane Power, and
electronic and lighting product developments were £0.10m
(2019: £0.12m), including purchased and own labour costs
capitalised. £0.29m of previously capitalised and fully
amortised developments costs were written off following
a review of future revenue opportunities against these
technologies, resulting in no effect on the year’s results.
Property, plant and equipment as at 30 September 2020,
including Right of Use assets, which are now separately
reported following adoption of IFRS 16, were £7.0m (2019:
£7.0m), of which property made up £4.2m (2019: £4.2m)
and plant and equipment £2.8m (2019: £2.8m). Additions in
the year were £0.5m (2019: £0.5m) on a comparable basis
to 2019 inclusive of assets held on finance leases, including
assets capitalised under operating leases following adoption
of IFRS 16, £0.6m. Disposals in the year totalled £0.6m with
a net book value of £0.07m (2019: £0.04m with a net book
value of £1k), including a £0.06m loss taken on disposal of
a laser cutting machine. This asset was replaced to achieve
significantly enhanced productivity and capabilities to deliver
a key work stream for the electro-mechanical site. The
depreciation charge increased 6.3% at £0.7m (2019: £0.7m).
The IAS19 actuarial surplus recognised at 30 September 2020
on the Group’s closed defined benefit pension arrangement
was £1.96m (2019: £2.25m). Changes over the course of the
year comprised an income statement credit of £0.04m related
to interest (2019: £0.06m). Voluntary employer contributions
received from the Company of £0.10m (2019: £0.10m) plus
an actuarial loss of £0.43m (2019: gain £0.01m) recognised
in the statement of comprehensive income, benefits paid from
the scheme totalled £0.51m (2019: £0.51m).
Net trading assets (defined as inventories plus trade and other
receivables, less trade and other payables and current tax)
were 17.2% higher at £5.3m (2019: £4.5m), predominantly
because of increased activity.
8
LPA Group Plc – Annual Report & Accounts 2020 FINANCIAL REVIEW (CONTINUED)
Cash flow
Treasury
Net cash inflow from operating activities was £0.8m (2019:
£0.7m) made up of a trading cash inflow of £1.5m (2019:
£0.9m) an increase in working capital of £0.8m (2019
decrease: £0.1m), 2020 including VAT deferral under the UK
Government’s Covid-19 assistance programme of £0.14m;
tax refunds of £0.13m (2019: payments £0.21m) and defined
benefit pension contributions of £0.1m (2019: £0.1m).
Capital expenditure on property, plant and equipment reduced
to £0.2m (2019: £0.4m), net of finance lease funding with
two key assets acquired in the year:
• a laser cutter at the Electro-mechanical business (£0.35m),
replacing an older machine which was disposed of at a
loss of £0.06m; and
• a 3D quality scanner at LPA Lighting Systems, with the
initial cost reduced through a 10% local authority grant
receipt (£0.06m), netted against the asset cost.
Capitalised development expenditure amounted to £0.1m
(2019: £0.1m), 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 electronic
technologies.
Capital loan repayments of £0.08m were made (2019:
£2.2m) which in 2019 included the repayment of term loan
and refinance thereof. Repayments in 2020 were reduced
with two quarters rescheduled within the existing term of
the loan as a precautionary measure, a facility offered by
the Group’s bank, following the initial Covid-19 lockdown
in the UK. Finance lease repayments were £0.3m (2019:
£0.2m). Interest payments on borrowings amounted to £0.1m
(2019: £0.1m), with a further £0.006m attributable to right
of use obligations. Dividend payments were £nil (2019:
£0.36m) whilst the Group’s dividend policy was paused, a
further measure to secure cash reserves through the Covid-19
challenges.
During 2019, £0.08m (2020: nil) 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.
No share options were exercised in 2020. In 2019 £0.11m
was received from the exercise of share options. Overall,
there was a net decrease in the Group’s cash position of
£0.04m (2019: decrease of £0.07m).
The Group’s treasury policy remained unchanged in the
year. Further details on the Group’s borrowings, financial
instruments, and its approach to financial risk management
are given in notes 15 and 17 to the Annual Report.
Net debt
The Group’s main bank finance, a bank loan drawn down
in 2019 at £2.63m, is repayable over 5 years, including
a bullet repayment in March 2024 (quarterly repayments
calculated on 15 year repayment terms). As at September
2020 the amount outstanding was £2.5m (2019: £2.6m).
During the year, two quarterly repayments were rescheduled,
by agreement, as a precautionary measure, following the
initial UK Covid-19 lockdown. Interest continued to be paid.
The capital repayments have been rescheduled across the
loan’s original term with 14 quarterly repayments now due
of £0.06m from October 2020, with the residual balance
of £1.82m repayable in March 2024. Interest is payable at
base rate plus 2.25%.
All bank covenants are deemed to have been achieved during
the year. In 2019, the debt to service covenant was deemed
to have been breached, despite acceptance confirmed by
the bank and subsequent issue of a formal covenant waiver,
following measurement of the covenant on filing of the 2019
Annual Reports. This was deemed to be non-adjusting under
IAS 10, and the bank loan was presented as all falling due
within one year at 30 September 2019.
In the year £0.36m of new finance lease liabilities were
drawn down to fund plant and equipment additions (2019:
£0.17m) with interest charged on finance lease obligations
of £0.36m (2019: £0.03m) at an average interest rate of
3.9% (2019: 4.0%). In the year additional lease liabilities,
previously designated as operating leases, were recognised
of £0.16m, with interest applied of £0.06m at an average
rate of 3.3%. Interest on the £1.5m (cap) overdraft facility is
payable at base rate plus 2.0%. The facility was unutilised
as at 30 September 2020 and 2019. The composite interest
rate across both borrowings and lease liabilities, as defined
following adoption of IFRS 16, was 2.9% (2019: borrowings
including finance leases 2.9%).
9
LPA Group Plc – Annual Report & Accounts 2020 FINANCIAL REVIEW (CONTINUED)
Covid-19
As a result of the Coronavirus pandemic outbreak (Covid-19),
the Group conducted an early assessment on the potential
financial and operational risks. The pandemic impacted from
the 29 January 2020 leading to the WHO declaring a global
health emergency on 30 January 2020. However, whilst
little impacted the UK until 28 February 2020, the Board was
monitoring the growing risk when the stock markets recorded
their worst week since the 2008 financial crisis, following the
UK’s first confirmed case of Covid-19. The Group postponed
its investor event, due to be held on the 18 March 2020
following its 2020 AGM which was held as scheduled.
Following the AGM, a Board meeting took place where
Pandemic scenarios were considered, and strategy defined.
The Group’s Executive met on the 19 March 2020, as
scheduled, where an operational plan was actioned, following
which the Board issued a Group Pandemic Policy, introducing
a range of measures designed to safeguard the employees of
the Group, maintain employment, and ensure safe working
could be deployed at all sites. Actions introduced, included
new flexible working with the use of furlough leave and
associated measures, ensuring awareness of advice, ensuring
the Group remained compliant to UK Government guidelines
and in contact with the relevant Government bodies, including
BEISS and the DfT.
Communication protocols were put in place with cross site
application, driven by the Board, deployed through the Site’s
Executive structure. On the 20 March 2020 UK schools closed
and lockdown commenced and following the UK Governments
message for workers to stay at home, several customers
and suppliers closed for a period. Weekly pandemic calls
were put in place with the Group Executive, arranged by
the Board Executive through to July 2020 to manage and
discuss issues arising and ensure the Group adapted to
rapidly changing circumstances and requirements. While the
Pandemic Policy remains in place, working practices have
become the norm and regular review was no longer required,
however, the Board continue to monitor actions and impacts
and the three sites report these as a key risk to the Group,
regular discussion continuing, including further assessment as
lockdowns continue and the risk increased.
The Group has seen delays to projects, because of the UK
and worldwide lockdowns however to date has been able
to adapt to the changes, utilising the UK Governments CJRS
grants, supporting furlough leave for staff, keeping operations
open throughout and achieving both profitable trading and
cash generation in H2 2020. Consequently, whilst project
delays have pushed revenues back and that remains a feature
with lockdown 3.0 now in place, the Group has not seen any
significant impact from the pandemic outside of a downturn
in the aerospace sector which has a higher impact on our
distribution business. The Group continues to monitor the
potential impact on the supply chain as the pandemic remains
and the unavailability of staff within the Group, its customers
or suppliers remains a key threat. Following enforced
changes in working practices, accelerated automation through
the introduction of new software, systems and working
practices and addressing the short term delays and aerospace
downturn, a cost down programme was driven by the Board
across all sites which was concluded by 30 September 2020.
This reduced the cost base further with a reduction of 21
permanent positions, the cost of which is reflected through
exceptional costs in the year. Additionally, several positions
have been redefined to ensure the skills and focus remain
relevant to our markets and demands.
The Group has a duty of care towards all employees, and
we anticipate some absences as our staff are required to self-
isolate or recover where the illness is contracted. Slowdown
has been evident in quarter one of the 2021 financial year,
with knock on effects from earlier in the year a feature and
the new aggressive variant of the virus taking hold ahead
of the vaccination programme taking effect. We thank all
our employees for their commitment and support in these
unprecedented times.
BREXIT
The Board continued to consider and assess the impacts of
Brexit throughout the year and because the Group is an
established importer and exporter both inside and outside
of the EU, determined that the impact would be negligible,
aside from initial transit delays for goods around 1 January
2021. Ongoing delays and additional management of
imported and exported goods are anticipated alongside
forex fluctuations, providing opportunities and challenges.
The Group anticipated disruption and some additional
costs associated, in particular, logistics, tariffs, and forex
rates. However, the Group views Brexit as an opportunity
as on-shoring has become a focus, also driven by supply
issues caused by Covid-19, and UK content now a clear focus
for UK Government and OEM’s. The Group was delighted
that a deal was agreed before 1 January 2021 to confirm
trading certainty, mitigate tariffs and minimise disruption.
Chris Buckenham
Chief Financial Officer
25 January 2021
10
LPA Group Plc – Annual Report & Accounts 2020 KEY PERFORMANCE INDICATORS
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 Executive
Officers’ Review and the Financial Review on pages 3 to 10.
• Orders to sales (orders for the year expressed as a
multiple of sales) as a measure of prospective growth
increased to 1.06 in the current year (2019: 1.38; 2018:
0.72);
• Order entry (the measure of order intake confirmed)
£21.9m (2019: £27.0m; 2018: £20.2m);
• Order book (the measure of opening order book, plus
order entry, less sales) resulted at £22.5m (2019:
£21.4m; 2018: £13.9m);
•
Sales growth (the increase in year-on-year sales as a
percentage of prior year sales) as a measure of current
growth showed an increase of 6.0% for the current year
(2019: decrease of 30.2%; 2018: increase of 24.5%);
• 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 48.6%
(2019: 49.3%; 2018: 48.6%);
• Gross margin (gross profit as a percentage of turnover)
as a measure of profitability being 22.7% in the current
year (2019: 22.3%, 2018: 25.4%);
• Underlying Operating Profit, as a measure of return on
trading activities, 3.8% of sales (2019: 1.0%; 2018:
8.0%); 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 inflow
of £0.5m for the current year (2019: inflow of £0.2m;
2018: inflow of £1.6m).
11
LPA Group Plc – Annual Report & Accounts 2020 Lighting systems: a designer and manufacturer of LED
lighting and electronic systems which contributes 34%
of Group revenues (2019: 35%). 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 freehold facility that the
Group acquired and refurbished and extended in 2018;
and
• Engineered component distribution: which comprises 21%
of Group revenues (2019: 26%) derived from the rail
and aerospace & defence markets. It has a focus upon
high level customer service, is marketed as LPA Channel
Electric, located at a freehold premises in Thatcham,
Berkshire.
The Group’s intention remains to strengthen and broaden
its position, within both the UK and worldwide marketplace,
through development of customers and distribution networks,
and the development/addition of new products to the portfolio
and selected acquisitions.
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
Executive Officers’ Review and the Financial Review.
The principal risks and uncertainties confronting the Group
are set out on page 13 and the key performance indicators
used in assessing the progression of the business are set out
on page 11.
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 is a market leading designer, manufacturer and
supplier of high reliability, LED based lighting, electronic
systems, electro-mechanical systems and a distributor of
engineered components focussed at the market segments
of rail, rail infrastructure, aviation, airport infrastructure
and defence. These are viewed as stable/growth markets
both in the UK and globally. All Group activities serve the
same markets (to a greater or lesser extent), have a mutual
dependence on rail (which accounts for more than two thirds
of Group turnover), share resource and frequently work on
the same projects.
The Group supplies a wide range of leading organisations
including: BAA, BAE Systems, Bombardier Transportation,
CAF, Compin, CRRC, Downer, First Group, Heathrow Airport,
Hitachi, ITW GSE, Kinki Sharyo, Knorr Bremse, Leonardo,
London Underground, Shanghai Pudong Airport, Siemens,
SNCF, Stadler, Taiwan Rolling Stock Company, Unipart Rail
and Wabtec.
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 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 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 45% of Group
revenues (2019: 39%) and goes to market as LPA
Connection Systems. The operation is housed at Light
& Power House in Saffron Walden, near Cambridge, a
freehold facility that the Group acquired and refurbished
in 2014, which also includes the Group’s headquarters
which is reported as a cost centre in the Company;
12
LPA Group Plc – Annual Report & Accounts 2020 BUSINESS AND STRATEGY (CONTINUED)
• Group activities 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 action to ensure that its cost base remains
competitive.
•
•
•
The Group is exposed to several 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 17 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 is currently
in surplus and was closed to future accrual in September
2009.
The Group believes that Brexit, which completed on 1
January 2021, provides additional opportunities through
companies looking to on-shore previously imported
products and services. This is mostly being driven by
supply chain issues encountered through Covid-19.
The Strategic Report on pages 3 to 13 was approved by the
Board on 25 January 2021 and signed on its behalf by:
Paul Curtis
Chief Executive Officer
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:
• Covid-19 will remain a risk for the Group as the pandemic
continues to evolve through 2021 and potentially beyond.
Key risks have been stimulated through lockdowns,
which have led to supply chain and customer closures
in some cases. Staff availability, within the Group,
within its customers and suppliers, remains a key risk.
The demand across the aerospace market has seen a
significant drop as a direct result of Covid-19, and this
has been accommodated in expectations and resourcing
for the 2021 year. The Group has remained open
throughout 2020 and remains vigilant.
•
The Group’s sales have a high dependence upon the rail
sector, with UK rail forming a substantial part of this. The
Group monitors the rail market for advance warning of
negative developments; continues to expand 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. The rail
market is less affected by Covid-19, despite expectations
of reduced passenger rail travel, with committed spend on
projects continuing.
• 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. Covid-19 poses
challenges to these activities due to a reduced ability to
meet with and develop relationships face to face. Revised
strategies are being deployed to ensure the Group can
maintain its ability to service the UK and worldwide
markets through use of virtual platforms and various other
forms of IT and media.
13
LPA Group Plc – Annual Report & Accounts 2020 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 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 KPIs are
published to all through use of health & safety notice boards,
together with the Committee meeting actions. Each site has
volunteer 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.
Our Lighting System business is certified under ISO 14001
and continues to be confirmed as carbon neutral. The Group
continues to promote long life products which reduces the
impact of waste and recycling.
DIRECTORS’ REPORT
The directors present their Annual Report together with the
audited financial statements for the year ended 30 September
2020.
Results and dividends
The profit for the year amounted to £0.60m (2019 loss:
£0.05m). The directors do not recommend the payment
of a final ordinary dividend for 2020 (2019: nil), which
together with the interim dividend of nil (2019: 1.10p)
makes a total for the year of nil p per share (2019: 1.10p).
Principal activities
The principal activity of the Group continues to be designer,
manufacturer and supplier of high reliability, LED based
lighting, electronic systems, electro-mechanical systems
and a distributor of engineered components. 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 13.
Going concern
A statement regarding the going concern of the business is set
out in accounting policies on pages 42 to 43.
Substantial shareholdings
As far as the directors are aware the only shareholders with
a beneficial interest as at 30 September 2020 representing
three per cent or more of the issued share capital were:
No. of shares
%
Michael Rusch
Canaccord Genuity Group Inc
Peter Pollock (director)
Rights & Issues Investment Trust Plc
Susan Thynne
Marilyn Porter
Stephen Brett
960,022
834,172
760,000
650,000
578,696
535,751
494,500
7.58%
6.59%
6.00%
5.13%
4.57%
4.23%
3.91%
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 and systems in its market
sectors.
14
LPA Group Plc – Annual Report & Accounts 2020 Directors and their interests
The current directors of the Company and brief biographical
details are given on page 28. During the year one Director was
appointed, on 1 April 2020, and one resigned, on 19 June
2020 (2019: no changes). A statement of their remuneration
and interests in the ordinary shares of the Company and share
options are set out in the Remuneration Report. The Company
has made qualifying third-party indemnity provisions for the
benefit of its directors. The Group maintained insurance cover
during the year for its Directors and Officers and those of
subsidiary companies under a Directors and Officers liability
insurance policy against liabilities which may be incurred by
them while carrying out their duties. No director had any
material interest in any contract with the Group. In accordance
with the articles of association Len Porter retires by rotation at
the forthcoming Annual General Meeting, and being eligible,
offers himself for re-election. Robert Bodnar-Horvath (to
be appointed on 1 February 2021) and Gordon Wakeford
(appointed 1 April 2020) stand for re-appointment at their
first Annual General Meeting.
Directors’ responsibilities statement
The directors are responsible for preparing the Strategic Report,
the Directors’ Report, the separate Corporate Governance
Statement and the financial statements in accordance with
applicable law and regulations.
Company law requires the directors to prepare group and
company financial statements for each financial year. The
directors are required by the AIM Rules of the London
Stock Exchange to prepare the Group’s financial statements
in accordance with International Accounting Standards in
conformity with the requirements of the Companies Act 2006
(IFRS) and have elected under company law to prepare the
Company financial statements in accordance with United
Kingdom Generally Accepted Accounting Practice (United
Kingdom Accounting Standards and applicable law).
DIRECTORS’ REPORT (CONTINUED)
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 of the Group and
the Company and of the profit or loss of the Group for that
period. In preparing these financial statements, the directors
are required to:
•
select suitable accounting policies and then apply them
consistently;
• make judgements 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 Group
and Company will continue in business.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group
and Company’s transactions and disclose with reasonable
accuracy at any time the financial position of the Group
and 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 Group
and 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 auditor is 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.
15
LPA Group Plc – Annual Report & Accounts 2020 DIRECTORS’ REPORT (CONTINUED)
Board composition and responsibility
As of 1 October 2020, the Board comprises two non-
executive directors and three executive directors. There is
a clear division of responsibility between the non-executive
directors, the executive Chairman and the executive.
the Remuneration Committee, both having written terms of
reference which are published on the Group’s website. These
comprise the Board’s non-executive directors who served
through the year, Len Porter, Chairman of both, Gordon
Wakeford (from April 2020) and Michael Rusch (to June
2020).
Both the non-executive directors, Len Porter and Gordon
Wakeford, are regarded as independent. 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 a further non-executive director, as Chair
elect from 1 February 2021 will reinforce the independent
element of the Board and address the forthcoming retirement
of Peter Pollock. Directors are judged to have made the
necessary time commitment to fulfil their roles which is
evaluated through achievement of deadlines, commitments,
availability and attendance at meetings as required.
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 Audit Committee 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.
16
LPA Group Plc – Annual Report & Accounts 2020 DIRECTORS’ REPORT (CONTINUED)
A schedule of the Board meetings, its committees and the Director attendee’s is set out below.
All Directors attended all meetings for which they were required to attend during the year:
Year ended
30 September 2020
No of meetings
Executives:
P G Pollock
P V Curtis
C J Buckenham
Non-executives:
L Porter
G Wakeford (appointed 01/04/20)
M Rusch (resigned 19/06/20)
Attendance at meetings by invitation is not shown.
Board
meetings
Audit
committee
Remuneration
committee
AGM
2020
8
8
8
8
8
4
7
4
3
n/a
n/a
n/a
4
1
3
n/a
n/a
n/a
3
n/a
3
1
1
1
1
1
n/a
1
17
LPA Group Plc – Annual Report & Accounts 2020 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 reviewed and re-forecast at least
twice annually, rolling forecasts are updated monthly, with
interim monthly Flash reporting. 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.
Annual General Meeting
The Annual General Meeting is to be held at 12 noon on
Wednesday 17 March 2021 at the offices of LPA Connection
Systems, Light & Power House, Shire Hill, Saffron Walden,
CB11 3AQ. The Notice of Meeting is set out on pages 93 to
96. 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.
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.
18
LPA Group Plc – Annual Report & Accounts 2020 DIRECTORS’ REPORT (CONTINUED)
The Digital Future - shareholder communications
The Group is focussed on open and positive communication with
its stakeholders and maintaining appropriate developments in
line with its markets.
On the 5 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 came into effect from the 2020
AGM. Copies are available at https://www.lpa-group.com/
investor-information.
Information in other reports
The Company has chosen, in accordance with the Companies
Act 2006 s414C(11), to set out in the Chairman’s Statement,
Financial Review, Strategic Report and Corporate Governance
Statement, certain information required by the Large and
Medium-sized Companies and Groups (Accounts and Reports)
Regulations 2008 Sch. 7 to be contained in the Directors’
Report (Financial risk management disclosures are detailed
in note 17).
Post balance sheet events
Brexit and the UK’s Covid-19 lockdown 3.0 have occurred
after the balance sheet date, however the Director’s consider
both events to have been anticipated and are reflected within
these reports.
Auditors
RSM UK Audit LLP were appointed as auditor to the company
during the period to fill a casual vacancy. In accordance
with section 485 of the Companies Act 2006, a resolution
proposing that they be re-appointed will be put to the Annual
General Meeting.
By order of the Board
Chris Buckenham
Company Secretary
25 January 2021
LPA Group Plc is registered in England No 00686429
19
LPA Group Plc – Annual Report & Accounts 2020 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 30 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 28 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. No shortfalls
have been identified. 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 reviews, which
will be recorded on the Group’s website, www.lpa-group.com.
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
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 Strategic Report on pages 3 to 13.
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.
The Executive Directors are responsible for the leadership
and day-to-day management of the Group. This includes
formulating and recommending the Group’s strategy for
Board approval once approved, executing the strategy.
Principle 2
Seek to understand and meet shareholder needs and
expectations
The Group’s shareholder base is dominated by founding
family shareholders, current and former 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. In recent years the Group has relied upon
debt funding.
The founding families are no longer represented on the board.
Investor liaison is the responsibility of the Chairman, supported
by the CEO and the CFO.
20
LPA Group Plc – Annual Report & Accounts 2020 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 31 March is made, and the
Interim Report published, in late June. It has become recent
practice to give an update on trading early in the first quarter,
following the close of the financial year at 30 September.
Copies of all announcements are published on the website,
www.lpa-group.com.
The Group’s brokers prepare analyses of the Group’s
performance and make these available to their clients,
normally together with their trading expectations.
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 Chairman will endeavour to ensure
that founding family shareholders, and other substantial
shareholders, are similarly treated.
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.
Voting at recent Annual General Meetings has been
overwhelmingly in favour of all resolutions.
Principle 3
Take into account wider stakeholder and social responsibilities
and their implications for long-term success
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. At the outset of Covid-19 the board and the
executive together prepared a Covid-19 Policy, which was
described in the interim report in June and published on
the Group website. This has served the Group well thus far.
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
Embed effective risk management, considering both
opportunities and threats, throughout the Group
The Principal Risks and Uncertainties are identified in the
Business and Strategy Report, which is included on page
13. 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 CEO and the
CFO. The CEO and the CFO include comment on identified
changes in risk in their reports to Board Meetings. Internal
Controls are detailed in the Directors Report on page 18.
21
LPA Group Plc – Annual Report & Accounts 2020 CORPORATE GOVERNANCE REPORT (CONTINUED)
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 Group’s website
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 and the retirement of The President and Non-Executive
Director, Michael Rusch after over fifty years of service to the
Group in June 2020 on attaining the age of 75 years.
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 Chief Executive succeeded to the Chair on a part-time
basis on 1 October 2018. The Chief Operating Officer,
appointed on 1 October 2018, was promoted to Chief
Executive Officer with effect from 1 April 2020.
The proposed appointment of an additional non-executive
director was completed following the Annual General Meeting
in March 2020. The Chairman will retire in September 2021,
when he will have reached 75 years of age. An additional
NED has been recruited to succeed him as Chair and who will
join the board as NED and Chair elect on 1 February 2021.
The Board Composition and Responsibility are set out in the
Directors Report pages 16 to 17.
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. Recent Board appointments
have reinforced this balance, including the appointment of
a new Chair elect from 1 February 2021 and a rotation
of Committee Chair, with Gordon Wakeford assuming
the role of Audit Committee Chair from 1 April 2021.
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
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. 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.
their skills.
Participation
The Director’s achieve this requirements through participation
and reporting on activities outside of the Company to
develop and maintain
in
Continuing Professional Development courses to maintain
professional qualifications and development of knowledge;
industry and market forums; holding additional NED
appointments to broaden knowledge and engagement with
bodies including the QCA and The Deloitte Academy are
both monitored and actively encouraged. The Group
considers this approach compliant in this area to the Code.
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. Adherence to the new and rapidly changing
principles of furlough leave and HR consultancy represented
the key area of advice for the Company during the year.
Principle 7
Evaluate board performance based on clear and relevant
objectives, seeking continuous improvement
The board is in a period of development and transition. A
new NED and Chair elect, to succeed the current Chair, has
been recruited and will join the board on 1 February 2021.
New members are proceeding up a steep learning curve and
substantial progress has been made. The object is to create
a board with the necessary skills and experience to deliver
the Group’s strategy over the medium term. The maintenance
of the board skills matrix will assist in this process having
been developed in the year and forming the basis of the
Board rejuvenation process and recruitment, the skills and
qualities of the Board have been assessed to ensure the
recruitment process targeted those which would be lost through
retirements and those the Company required for the future. A
full assessment of the current and future Board skill sets has
been undertaken by the Chairman who has concluded these
to be adequate and aligned with the Group’s requirements.
The Group considers this approach compliant to the Code.
As described in the Directors Report, Board Composition and
Responsibility on pages 16 to 17, the Directors are adjudged
to have performed at least as expected and individual
performances reviewed accordingly.
22
LPA Group Plc – Annual Report & Accounts 2020 CORPORATE GOVERNANCE REPORT (CONTINUED)
Principle 8
Principle 10
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.
Corporate values guide the objectives and strategy of the
business and the conduct of all aspects of business, including
disclosures in this Annual Report.
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 Executive Officer, Chief Financial
Officer or any other director with particular responsibilities.
The Directors’ Report on pages 16 to 17 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.
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 (“RNS”) 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
25 January 2021
23
LPA Group Plc – Annual Report & Accounts 2020 • Make recommendations to the Board and the Company's
shareholders regarding the appointment, re-appointment,
and removal of the Company's external auditor. It
ensures that at least once every ten years the audit
services contract is put out to tender to enable the
Committee to compare the quality and effectiveness of the
services provided by the incumbent auditor;
• Oversee the Company's relationship with the external
auditor.
Len Porter
Senior Non-Executive Director
25 January 2021
AUDIT COMMITTEE REPORT
The Audit Committee monitors the integrity of financial
statements, oversees risk management and control, monitors
the effectiveness of internal controls and reviews external
auditor independence.
Len Porter is Chairman of the Audit Committee which
normally meets three times a year. The Committee exists to
scrutinise and clarify any qualifications, recommendations
and observations within the audited accounts and report
of the Company's auditor. When satisfied, the Committee
presents the audited accounts and report to the Company's
Board and reviews the effectiveness of resultant corrective and
preventative measures.
In performing this function, the key duties of the Committee
are to:
• Monitor the integrity of the financial statements of the
Group and any formal announcement relating to its
financial performance;
• With regards to financial reporting, review and challenge
the consistency of accounting policies, the use of
accounting methods over alternatives, whether the Group
has followed appropriate accounting standards, the
clarity of disclosure, and all material information relating
to the audit and risk management;
• Monitor the adequacy and effectiveness of the Group's
internal financial controls, including the internal control
and risk management systems. The Group’s key risks
are reviewed at each meeting of the Board whilst
a continuous oversight of internal controls and risk
management is applied by the CFO who reports any
key findings or concerns to the Audit Committee, these
including six monthly site visits to ensure sound systems
of internal control and risk management are in place. All
governance issues or unexpected outcomes are brought
to the attention of the Board;
• Ensure that the Group's arrangements for its employees
and contractors
to confidentially raise concerns
about possible wrongdoing allow proportionate and
independent investigation and appropriate follow up
action;
• Consider the need to implement an internal audit function;
24
LPA Group Plc – Annual Report & Accounts 2020 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 3 October 2018, updated 25 March 2019
consolidating all previous amendments), 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 2021 Peter Pollock’s annual (part time)
salary was £65,564, (as at April 2020 £63,654, reduced
from £127,308 at January 2020) and he is entitled to the
provision of a car allowance, car insurance and private health
insurance. On transition of the COO to CEO on 1 April 2020,
his contract provided for a further reduction in salary and
working hours. Entitlement under the Company’s share and
discretionary bonus schemes ceased from 1 October 2019.
REMUNERATION REPORT
Paul Curtis has a service contract dated 26 September 2018,
amended 24 March 2020 to reflect his appointment as CEO,
with a notice period of 6 months. As at 1 January 2021 his
annual salary was £193,325. (as at April 2020 £185,000,
increased from £153,831 at January 2020), 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 car allowance, break down
cover and 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.
Chris Buckenham has a service contract dated 22 March
2018, with a notice period of 6 months. As at 1 January
2021 his annual salary was £151,341 (January 2020:
£140,039) 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.
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.
Len Porter (senior non-executive director) has a term of office,
as set out in his letter of re-appointment dated 18 March 2020,
which expires on 31 December 2021. As at 1 January 2021 he
receives fees of £38,246 per annum (January 2020: £37,132).
Gordon Wakeford (non-executive director) has a term of
office, as set out in his letter of appointment dated 3
February 2020), which expires at the conclusion of the
Company’s Annual General Meeting to be held in the
spring of 2023. As at 1 January 2021 he receives
fees of £32,960 per annum (April 2020: £32,000).
Michael Rush (non-executive director to 19 June 2020)
received fees of £31,531 per annum (January 2019:
£30,612 per annum) and was entitled to a car allowance,
private health care and home phone reimbursement.
25
LPA Group Plc – Annual Report & Accounts 2020 REMUNERATION REPORT (CONTINUED)
INFORMATION SUBJECT TO AUDIT
Directors’ remuneration
Directors’ remuneration for the year was as follows:
Salaries
and fees
Bonus
Benefits
£000
£000
£000
LTIP*
£000
Pension
£000
Total
2020
£000
Total
2019
£000
Peter Pollock
Paul Curtis
Chris Buckenham
Executives
Len Porter
Gordon Wakeford (from April 20)
Michael Rusch (to June 20)
Non-executives
Total
95
168
139
402
37
16
23
76
478
-
-
-
-
-
-
-
-
-
27
14
9
50
-
-
15
15
65
4
12
11
27
-
-
-
-
-
21
16
37
-
-
-
-
126
215
175
516
37
16
38
91
150
183
160
493
36
-
52
88
27
37
607
581
*LTIP: Relates to the valuation attributed to the Directors share option awards under the PSP 2018 Scheme, in the current and past
years calculated by reference to the Black Scholes model.
Directors’ pension arrangements
During the year ending 30 September 2020 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 30 September 2020:
Peter Pollock
Paul Curtis
Len Porter
Gordon Wakeford
Chris Buckenham
Number of ordinary shares
30 September
2020
30 September
2019
760,000
38,300
25,000
15,000
10,000
848,300
760,000
38,300
25,000
-
5,000
828,300
During the year Chris Buckenham acquired 5,000 and Gordon Wakeford 15,000 Ordinary Shares in the Company (2019: nil).
26
LPA Group Plc – Annual Report & Accounts 2020
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 established 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 20.
Date of
grant
Option
price (p)
Earliest
exercise
date
Latest
exercise
date
At 30
September
2020
At 30
September
2019
Peter Pollock
2007 Scheme
2007 Scheme
2007 Scheme
2018 Scheme
Paul Curtis
2018 Scheme
2018 Scheme
2018 Scheme
Chris Buckenham
2018 Scheme
2018 Scheme
2018 Scheme
Jul 2007
Apr 2011
Feb 2012
Aug 2018
36.00
32.00
49.00
104.80
31 Jul 2010
1 Apr 2014
8 Feb 2015
2 Aug 2021
∞7 Feb 2022
31 Mar 2021
7 Feb 2022
1 Aug 2028
Aug 2018
Feb 2020
Jul 2020
104.80
109.33
63.17
2 Aug 2021
20 Feb 2023
23 Jul 2023
1 Aug 2028
19 Feb 2030
22 Jul 2030
Aug 2018
Feb 2020
Jul 2020
104.80
109.33
63.17
2 Aug 2021
20 Feb 2023
23 Jul 2023
1 Aug 2028
19 Feb 2030
22 Jul 2030
540,000
100,000
150,000
30,000
820,000
60,000
50,000
30,000
140,000
60,000
40,000
25,000
125,000
540,000
100,000
150,000
30,000
820,000
60,000
-
-
60,000
60,000
-
-
60,000
1,085,000
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 145,000 share options were awarded to Directors over two separate awards at an exercise price equivalent
to the previous three day average market price prior to the date of award, representing a composite average exercise price of
0.92p (2019: nil).
Len Porter
Senior Non-Executive Director
25 January 2021
27
LPA Group Plc – Annual Report & Accounts 2020 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 currently
chairs the Board’s Audit and Remuneration committees
Gordon Wakeford - Non-Executive Director born June
1962, formerly Chief Executive Officer of Siemens Mobility
Limited UK, joined the board as a Non-Executive Director
with effect from 1 April 2020. He holds a First Class Honours
Degree in Mechanical Engineering, is a Chartered Engineer
and Fellow of the Chartered Institute of Highways and
Transportation. He is highly experienced, having worked at
very senior levels within industry and with Government. He
is a former Chairman of the Railway Industry Association
and Chair of the Rail Supply Group. He was a member of
the National College for High Speed Rail Industrial Advisory
Board and the CBI Manufacturing Council. He is member of
the Board’s Audit and Remuneration Committees and will
assume the role of Chair of the Audit Committee from 1 April
2021.
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 Executive Officer (CEO), 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
Chief Operating Officer on 1 October 2018 and a period
as acting Managing Director of LPA Connection Systems,
he was appointed Group Chief Executive on 1 April 2020.
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.
28
LPA Group Plc – Annual Report & Accounts 2020 COMPANY INFORMATION (CONTINUED)
Broker
Bankers
finnCap
1 Bartholomew Close
London
EC1A 7BL
Barclays Bank Plc
PO Box 885
Mortlock House
Vision Park, Histon
Cambridge
CB24 9DE
Solicitors
Eversheds Sutherland (International) LLP
115 Colmore Row
Birmingham
B3 3AL
Company contacts
Directors
Peter Pollock
Paul Curtis
Chris Buckenham
Len Porter
Gordon Wakeford
Chairman
CEO
CFO
Senior NED
NED
Secretary
Chris Buckenham
Registered
office
Light & Power House, Shire Hill,
Saffron Walden, CB11 3AQ, UK
Registered
number
00686429
Website
www.lpa-group.com
Nominated
adviser
Cairn Financial Advisers LLP
62-63 Cheapside
London
EC2V 6AX
Auditors
RSM UK Audit LLP
2nd Floor, North Wing East
City House, Hills Road
Cambridge
CB2 1RE
Registrars
Link Asset Services
65 Gresham Street
London
EC2V 7NQ
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
29
LPA Group Plc – Annual Report & Accounts 2020 GROUP FINANCIAL STATEMENTS
Independent auditor's report to the members of
LPA Group Plc
Opinion
Basis for opinion
We have audited the financial statements of LPA Group Plc
(the ‘parent company’) and its subsidiaries (the ‘group’)
for the year ended 30 September 2020 which comprise
the Consolidated Income Statement, Consolidated Statement
of Comprehensive Income, Consolidated and Company
Balance Sheets, Consolidated and Company Statements
of Changes in Equity, Consolidated Cash Flow Statement
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 Accounting Standards in conformity with the
requirements of the Companies Act 2006. 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 2020 and of the group’s profit for the
year then ended;
the group financial statements have been properly
prepared in accordance with International Accounting
Standards in conformity with the requirements of the
Companies Act 2006;
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 SME 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.
30
LPA Group Plc – Annual Report & Accounts 2020 INDEPENDENT AUDITOR'S REPORT (CONT)
Summary of our audit approach
Key audit matters
Group
• Revenue recognition
• Valuation of inventory
Parent Company
• No key audit matters were identified
Materiality
Group
• Overall materiality: £208,000 (2019: £196,000)
•
Performance materiality: £156,000 (2019: £147,000)
Parent Company
• Overall materiality: £60,000 (2019: £156,000)
•
Performance materiality: £45,000 (2019: £117,000)
Our audit procedures covered 100% of revenue, 100% of total assets and 100% of
profit before tax.
Scope
Key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the Group
and parent company financial statements of the current period
and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified,
including those which 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
and parent company financial statements as a whole, and
in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
31
LPA Group Plc – Annual Report & Accounts 2020 INDEPENDENT AUDITOR'S REPORT (CONT)
Revenue recognition
Key audit matter description
How the matter was addressed in
the audit
Valuation of inventory
Key audit matter description
How the matter was addressed in
the audit
The Group’s revenue contracts involve the design, manufacture and supply of various
products. There is management judgement required to determine the performance
obligations in the contracts, the allocation of revenue to each of these obligations
and ensuring that income is appropriately recognised in line with the requirements
of IFRS 15.
We reviewed and challenged management’s assessment of the performance
obligations identified for a sample of contracts and ensured that income was
appropriately allocated to each of the performance obligations.
The main judgement was whether the design/engineering stage should be a separate
performance obligation or whether there is only one performance obligation for a
contract in relation to the supply of products.
We then performed cut-off testing and substantive testing procedures to validate that
the revenue recognised in the year was in line with the contractual terms and IFRS
15 requirements.
We also considered the adequacy of the Group’s revenue recognition accounting
policy as disclosed in note 1M and the key judgement disclosure in relation to
revenue recognition in note 1Q.
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.
There is management judgement involved in the calculation of the overhead rates to
be absorbed and the provision of slow moving or obsolete inventory.
We performed substantive testing over a sample of inventory items, verifying costs
to supporting documentation and ensuring a suitable allocation of labour and
overheads.
We reviewed and tested the year-end inventory provisioning calculations prepared
by management, including their arithmetic integrity. We have challenged
management on the assumptions adopted within the provisioning calculations. We
performed testing to ensure that the valuation of inventory is stated at the lower of
cost and net realisable value by comparing the sales value of the products to their
actual cost.
We also considered the adequacy of the Group’s inventory accounting policy as
disclosed in note 1J and the disclosures in relation to inventory provisions in note
1Q and note 12.
32
LPA Group Plc – Annual Report & Accounts 2020 INDEPENDENT AUDITOR'S REPORT (CONT)
Our application of materiality
When establishing our overall audit strategy, we set certain thresholds which help us to determine the nature, timing and extent of
our audit procedures. When evaluating whether the effects of misstatements, both individually and on the financial statements as a
whole, could reasonably influence the economic decisions of the users we take into account the qualitative nature and the size of
the misstatements. Based on our professional judgement, we determined materiality as follows:
Overall materiality
£208,000 (2019: £196,000)
£60,000 (2019: £156,000)
Group
Parent company
Basis for determining overall
materiality
1% of revenue (2019: 1% of revenue)
Rationale for benchmark
applied
Revenue was chosen as the Group monitors
revenue-based metrics in its key performance
indicators.
1.8% of net assets (2019: 2% of total
assets)
Net assets was chosen as the entity is a
non-trading holding company.
Performance materiality
£156,000 (2019: £147,000)
£45,000 (2019: £117,000)
Basis for determining
performance materiality
Reporting of misstatements to
the Audit Committee
75% of overall materiality
75% of overall materiality
Misstatements in excess of £10,000 and
misstatements below that threshold that, in
our view, warranted reporting on qualitative
grounds.
Misstatements in excess of £3,000 and
misstatements below that threshold that,
in our view, warranted reporting on
qualitative grounds.
An overview of the scope of our audit
Number of
components
Revenue
Total assets
Profit before tax
Full scope audit
Specific audit procedures
Total
5
0
5
100%
0%
100%
100%
0%
100%
100%
0%
100%
All component audits were performed by RSM UK Audit LLP.
33
LPA Group Plc – Annual Report & Accounts 2020 INDEPENDENT AUDITOR'S REPORT (CONT)
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.
Responsibilities of directors
As explained more fully in the directors’ responsibilities
statement set out on page 15, 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.
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
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.
We have nothing to report in this regard.
Opinions on other matters prescribed by the
Companies Act 2006
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 by
exception
In the light of the knowledge and understanding of the group
and the parent company and their environment obtained
in the course of the audit, we have not identified material
misstatements in the Strategic Report or the Directors’ Report.
34
LPA Group Plc – Annual Report & Accounts 2020 INDEPENDENT AUDITOR'S REPORT (CONT)
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: http://www.frc.org.uk/
auditorsresponsibilities. This description forms part of our
auditor’s report.
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.
Neil Stephenson (Senior Statutory Auditor)
For and on behalf of RSM UK Audit LLP
Statutory Auditor Chartered Accountants
2nd Floor, North Wing East
City House, Hills Road
Cambridge
CB2 1RE
25 January 2021
35
LPA Group Plc – Annual Report & Accounts 2020 CONSOLIDATED INCOME STATEMENT
For the year ended 30 September 2020
Continuing operations
Revenue
Cost of sales
Gross profit
Distribution costs
Administrative expenses
Other operating income
Underlying operating profit
Share-based payments
Exceptional costs
Operating profit/(loss)
Finance income
Finance costs
Profit/(loss) before tax
Taxation
Profit/(loss) for the year
Attributable to:
- Equity holders of the parent
Earnings/(loss) per share
Basic
Diluted
The notes on pages 42 to 80 form an integral part of these financial statements.
Note
2020
£000
2019
£000
2
20,711
19,533
(16,017)
(15,174)
6
20
6
4
5
6
7
8
4,694
(1,514)
(2,897)
333
783
(36)
(131)
616
41
(106)
551
44
595
595
4,359
(1,588)
(3,070)
97
204
(3)
(403)
(202)
64
(99)
(237)
185
(52)
(52)
4.82p
4.65p
(0.43p)
(0.43p)
36
LPA Group Plc – Annual Report & Accounts 2020 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 September 2020
Profit/(loss) for the year
Other comprehensive income/(expense)
Items that will not be reclassified to profit or loss
Actuarial (loss)/gain on pension scheme
Deferred tax on actuarial (loss)/gain
Other comprehensive income net of tax
Total comprehensive income for the year
Attributable to:
- Equity holders of the parent
The notes on pages 42 to 80 form an integral part of these financial statements.
Note
21
18
2020
£000
595
(427)
28
(399)
196
196
2019
£000
(52)
10
(7)
3
(49)
(49)
37
LPA Group Plc – Annual Report & Accounts 2020 CONSOLIDATED BALANCE SHEET
At 30 September 2020
Company number: 00686429
Non-current assets
Intangible assets
Tangible assets
Right of use assets
Retirement benefits
Current assets
Inventories
Trade and other receivables
Currenttax receivable
Cash and cash equivalents
Total assets
Current liabilities
Bank loan
Lease liabilities
Trade and other payables
Non-current liabilities
Bank loan
Lease liabilities
Deferred tax liabilities
Total liabilities
Net assets
Equity
Share capital
Investment in own shares
Share premium account
Share-based payment reserve
Merger reserve
Retained earnings
Note
9
10
11
21
12
13
15
16
14
15
16
18
19
19
19
19
19
19
2020
£000
1,386
5,546
1,438
1,964
10,334
3,968
5,447
30
845
10,290
2019
£000
1,359
7,006
-
2,250
10,615
3,824
4,437
59
889
9,209
20,624
19,824
(188)
(406)
(4,193)
(4,787)
(2,313)
(584)
(389)
(3,286)
(2,585)
(220)
(3,839)
(6,644)
-
(504)
(352)
(856)
(8,073)
(7,500)
12,551
12,324
1,266
(324)
708
118
230
10,553
1,266
(324)
708
82
230
10,362
Equity attributable to shareholders of the parent
12,551
12,324
The notes on pages 42 to 80 form an integral part of these financial statements. IFRS 16 has been applied for the year ended
September 2020 on a modified retrospective basis - see Note 1D.
The financial statements were approved by the Board on 25 January 2021 and signed on its behalf by:
P V CURTIS
Director
C J BUCKENHAM
Director
38
LPA Group Plc – Annual Report & Accounts 2020 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 September 2020
2020
Investment
in own
shares
Share
premium
account
Share-
based
payment
reserve
Merger
reserve
Retained
earnings
£000
£000
£000
£000
£000
Share
capital
£000
Total
£000
At 1 October 2019
1,266
(324)
708
82
230
10,362
12,324
Profit for the year
Actuarial (loss) on pension scheme
(net of tax)
Total comprehensive income
Share-based payments
Tax benefits on share-based payments
Transactions with owners
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
36
-
36
-
-
-
-
-
-
595
595
(399)
196
(399)
196
-
(5)
(5)
36
(5)
31
At 30 September 2020
1,266
(324)
708
118
230
10,553
12,551
2019
Investment
in own
shares
Share
premium
account
Share-
based
payment
reserve
Merger
reserve
Retained
earnings
£000
£000
£000
£000
£000
Share
capital
£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
(net of tax)
Total comprehensive income
Dividends
Proceeds from issue of shares
Cost of Investment in own shares
Share-based payments
Transfer on exercise of
share options
Tax benefit on share-based
payments
Transactions with owners
-
-
-
-
28
-
-
-
-
-
-
-
-
-
(110)
-
-
-
-
-
-
-
80
-
-
-
-
28
(110)
80
-
-
-
-
-
-
3
(36)
(7)
(40)
-
-
-
-
-
-
-
-
-
-
(52)
3
(49)
(357)
-
-
-
36
25
(52)
3
(49)
(357)
108
(110)
3
-
18
(296)
(338)
At 30 September 2019
1,266
(324)
708
82
230
10,362
12,324
The notes on pages 42 to 80 form an integral part of these financial statements.
39
LPA Group Plc – Annual Report & Accounts 2020 CONSOLIDATED CASH FLOW STATEMENT
For the year ended 30 September 2020
Profit/(loss) before tax
Finance costs
Finance income
Operating profit/(loss)
Adjustments for:
Amortisation of intangible assets
Depreciation of tangible assets
Depreciation of right of use assets
Loss/(profit) on sale of property, plant and equipment
Past service cost liability recognition (GMP)
Equity settled share-based payments
2020
£000
551
106
(41)
616
95
494
241
61
-
36
Operating cash flow before movements in working capital
1,543
Movements in working capital:
(Increase)/decrease in inventories
(Increase)/decrease in trade and other receivables
Increase/(decrease) in trade and other payables
Cash generated from operations
Income taxes received/(paid)
Defined benefit pension contributions
Net cash inflow from operating activities
Purchase of property, plant and equipment and software
Proceeds from sale of property, plant and equipment
Expenditure on capitalised development costs
Purchase of own shares
Net cash outflow from investing activities
Drawdown of bank loans
Repayment of bank loans
Principal elements of lease liabilities
Interest paid
Proceeds from issue of share capital
Dividends paid
Net cash outflow from financing activities
Net (decrease) 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
40
(144)
(902)
245
742
131
(100)
773
(172)
6
(100)
-
(266)
-
(84)
(367)
(100)
-
-
(551)
(44)
889
845
845
845
2019
£000
(237)
99
(64)
(202)
48
693
-
(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
LPA Group Plc – Annual Report & Accounts 2020 CONSOLIDATED CASH FLOW STATEMENT (CONTINUED)
For the year ended 30 September 2020
Net debt
An analysis of the change in net debt is shown below:
At 1 October 2019
Adoption of IFRS 16 October 2019 - note 1D
New lease obligations
Interest costs
Repayment of borrowings/lease liabilities
Other cash (generated)
At 30 September 2020
At 1 October 2018
New finance lease obligations
Drawdown of bank loan
Interest costs
Repayment of borrowings/lease liabilities
Other cash absorbed
At 30 September 2019
Bank loans
£000
2,585
-
-
68
(152)
-
2,501
Bank loans
£000
2,170
-
2,626
69
(2,280)
-
2,585
Lease
liabilities
£000
Cash and cash
equivalents
Net debt
£000
£000
724
157
470
38
(399)
-
990
(889)
-
-
-
551
(507)
(845)
2,420
157
470
106
-
(507)
2,646
Lease
liabilities
£000
Cash and cash
equivalents
Net debt
£000
£000
757
131
-
30
(194)
-
724
(956)
-
(2,626)
-
2,474
219
(889)
1,971
131
-
99
-
219
2,420
The notes on pages 42 to 80 form an integral part of these financial statements.
41
LPA Group Plc – Annual Report & Accounts 2020
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 September 2020
1.
Accounting Policies
A. General information
LPA Group Plc (the “Company”) is a public company
incorporated, domiciled and registered in England
and Wales. The Company’s registered number
is 00686433 and its registered office address is
Light & Power House, Shire Hill, Saffron Walden,
CB11 3AQ, UK. The Company operates through its
subsidiary trading entities from three locations in the
UK as detailed on page 29.
B. Basis of preparation
The consolidated financial statements have been
prepared in accordance with International Accounting
Standards in conformity with the requirements
of the Companies Act 2006 (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 and presentational
currency), rounded to the nearest thousand (£000).
C. Going concern including Covid-19
impact assessment
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 Executive Officer’s Review,
the Financial Review, Key Performance Indicators
and Principal Risks and Uncertainties) on pages 3
to 13. 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 17.
In assessing going concern the directors note that
whilst current economic conditions create uncertainty,
with a particular focus on the Covid-19 pandemic the
Group: (i) has traded profitably in the current year
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. Therefore, the directors believe that it is
well placed to manage its business risks successfully.
forward purchases.
Covid-19 impacted the Group from March 2020
onwards as the UK and worldwide lockdowns were
imposed. Consequently, several customers and
suppliers were forced to pause operations, freight
routes reduced as the airfreight market shrunk and
many businesses paused to understand and deploy
Covid-19 working practices. The Group suffered
some delays within the supply chain; however, these
were managed with resourcing, communication,
and
Limited costs were
incurred through additional transport and onshoring
requirements, whilst considerable management time
was devoted to managing the rapidly evolving
environment, maintaining all sites open and ensuring
the safety and wellbeing of all our employees.
Customer closures around the world resulted in delays
to projects and subsequently required the Group to
utilise Furlough leave and claim the UK Governments
Job Retention Scheme Grants (CJRS). Worldwide,
all customers had reopened by July 2020 and it is
expected they will remain so now Covid-19 working
is understood and despite further lockdowns into
2021. Whilst additional challenges and delays are
anticipated into 2021, the directors have assessed
these and sensitised forecasts accordingly, including
in expected aerospace activity.
a downgrade
Rail projects continue to be awarded, but with delays.
The ongoing Covid-19 lockdown and worldwide
impacts from the pandemic are not anticipated to
have any further significant impacts as manufacturing
and supply chains, on the whole, remain operational.
Staff availability within the Group, suppliers and
customers is anticipated to provide the largest
risk to trading, not least with accelerated infection
rates, however, these are expected to be short
term and as such the directors are satisfied the
forecasts are achievable and the risk mitigated.
The continuance of the UK’s CJRS scheme (to at
least 31 March 2021) provides further support to
manage resources through workflow fluctuation and
was not anticipated in the sensitised forecasts as
the scheme was due to cease on 30 October 2020.
42
LPA Group Plc – Annual Report & Accounts 2020 NOTES TO THE FINANCIAL STATEMENTS
1.
Accounting Policies (continued)
C. Going concern including Covid-19
impact assessment (continued)
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.
D. Changes in accounting policy
For the purpose of the preparation of these
consolidated financial statements, the Group has
applied all standards and interpretations that are
effective for accounting periods beginning on or after
1 October 2019. The only new standard which
has a significant impact on the reported results is
International Financial Reporting Standard (IFRS) 16
Leases.
Leases
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 (RofU)
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 adopted the requirements of IFRS 16
for the first time during the year. As a result, a
balance sheet asset and corresponding obligation
relating to its use of assets classified under IFRS 16
are recognised on the Balance Sheet. The Group
has not applied IFRS 16 to its commitments under
operating leases on certain low value assets if classed
below the de-minimus value of $5,000. Following
the adoption of IFRS 16 the Group has used the
practical expedients in applying a single discount
rate to a portfolio of leases with reasonably similar
characteristics and not reassessing at 1 October
2019 whether a contract is or contains a lease.
Rental payments made under leases are accounted
for as repayments of the balance sheet liability, which
includes an implied interest element, and the asset
recognised is depreciated over the remaining lease
term on a straight line basis. The Group has adopted
the modified approach to transition where the initial
asset values are equal to the present value of the future
lease payments as at the date of transition, 1 October
2019 with no adjustment to comparatives or reserves.
This resulted in all existing leases, within the scope
of IFRS 16, being capitalised over their remaining
lives, as if they had just been entered into, and the
Group’s accounts reflect a higher interest charge
of £6,000 following adoption. On transition the
opening balance sheet position for 2019 has
been adjusted with a transfer in of £0.16m of
RofU assets and a corresponding lease liability.
The effect on the Group’s net profit before tax for
2020 is not material, as detailed on page 44, with
the pre IFRS 16 rental charge being replaced by
depreciation and interest. There was no net effect
to the Net Assets at 1 October 2019, however the
impact through the Balance Sheet and to net debt is
detailed below. Depreciation has been charged on
a straight-line basis; however, interest is charged on
the outstanding lease commitment by reference to
the implied liabilities and is therefore be higher in
the earlier years and will decrease over time. The
transition to IFRS 16 has no effect on cash flows. The
incremental borrowing rate used to determine the
liability is dependent on the type of asset and length of
agreement. During the year, the average Right of Use
interest rate relating to Operating Leases was 3.3%
(2019: nil), comparing with the average interest rate
on finance leases in the year of 4.3% (2019: 4.5%).
43
LPA Group Plc – Annual Report & Accounts 2020 NOTES TO THE FINANCIAL STATEMENTS
1.
Accounting policies (continued)
D. Changes in accounting policy (continued)
Leases (continued)
The effects of the transition on the Group’s reporting to 30 September 2020 are summarised below:
Operating lease commitments disclosed at 30 September 2019
Discounted using the lessee’s incremental borrowing rate at the date of initial application
(Less) short term, low value and service elements to leases not recognised as a liability under IFRS 16
Lease liability recognised as at 1 October 2019
Of which are:
Current lease liabilities at 1 October 2019
Non-current lease liabilities at 1 October 2019
Reduction in operating lease costs
Additional depreciation charge
Effect on operating profit
Additional interest charge
Effect on profit before tax
2019
£000
191
(12)
(22)
157
74
83
157
2020
£000
91
(87)
4
(6)
(2)
44
LPA Group Plc – Annual Report & Accounts 2020 NOTES TO THE FINANCIAL STATEMENTS
1.
Accounting policies (continued)
D. Changes in accounting policy (continued)
Leases (continued)
The effect on the Group’s balance sheet as at 1 October 2019 is summarised as follows:
Non-current assets as reported
Right of use assets introduced
Non-current assets including RofU
Current assets as reported (unchanged)
Total assets including RofU
Total liabilities as reported
Lease liabilities introduced
Total liabilities including lease liabilities
Net assets reported as at 30 September 2019
Net assets as at 1 October 2019 after adoption of IFRS 16
Change after adoption of IFRS 16
2019
£000
10,615
157
10,772
9,209
19,981
7,500
(157)
(7,657)
12,324
12,324
-
Right of use assets are detailed in note 11. Lease liabilities are detailed in note 16. Right of use assets are separately
identified on the balance sheet and include a transfer from tangible fixed assets at 1 October 2019 of assets held under
finance leases.
The effect on the Group’s debt as at 1 October 2019 was as follows:
Borrowings as reported 30 September 2019
Lease liabilities introduced 1 October 2019
Borrowings including lease liabilities as at 1 October 2019
2019
£000
3,309
157
3,466
Finance lease commitments at 1 October 2019 are transferred from borrowings to Lease Liabilities, the associated assets
shown as a transfer from tangible fixed assets to right of use assets together with the accumulated depreciation (see notes
10 & 11).
New accounting standards and interpretations not yet adopted
No new standards, amendments or interpretations to existing standards that have been published and that are mandatory
for the Group’s accounting periods beginning on or after 1 October 2020, or later periods, have been adopted early.
The new standards and interpretations are not expected to have any significant impact on the financial statements when
applied.
45
LPA Group Plc – Annual Report & Accounts 2020 NOTES TO THE FINANCIAL STATEMENTS
1.
Accounting policies (continued)
E. Operating leases
Low value leases (less than $5,000) and leases of
less than one year are recognised on a straight-line
basis over the lease term.
In the 2019 financial year, leases of property, plant
and equipment were classified as either finance
leases or operating leases. Leases were classified
as finance leases whenever the terms of the lease
transfer substantially all the risks and rewards
of ownership to the lessee. All other leases are
classified as operating leases. Rentals payable
under operating leases were expensed in profit or
loss on a straight-line basis over the lease term.
F. Basis of consolidation
The consolidated financial statements include the
financial statements of the Company and both its
subsidiaries and the Employee Benefit Trust (“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
46
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.
G. 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
losses.
at cost
less accumulated
impairment
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.
LPA Group Plc – Annual Report & Accounts 2020 NOTES TO THE FINANCIAL STATEMENTS
1.
Accounting policies (continued)
G. Intangible assets (continued)
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 up to 3 years.
Software
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. The
following useful lives are applied:
Software
25% - 33%
expensed within
Amortisation has been
administration costs. Subsequent expenditure on
the maintenance of computer software is 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
profit or loss.
H. 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, on a straight
line basis. The rates generally applicable are:
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.
I. 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.
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.
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.
47
LPA Group Plc – Annual Report & Accounts 2020
NOTES TO THE FINANCIAL STATEMENTS
1.
Accounting policies (continued)
Trade and other receivables
J. 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. Net realisable value is based on estimated
selling price less further costs expected to be
incurred through to disposal. Provision is made
for obsolete, slow-moving and defective items.
K. Financial instruments
Classification and measurement of financial
assets
financial assets are classified as either
All
those which are measured at
fair value
through profit or loss or Other Comprehensive
Income, and those measured at amortised cost.
Financial assets are initially recognised at fair value.
For those which are not subsequently measured
at fair value through profit or loss, this includes
directly attributable transaction costs. Trade and
other receivables and cash and cash equivalents
are subsequently measured at amortised cost.
Recognition and derecognition of financial
assets
Financial assets are recognised in the Group’s
Balance Sheet when the Group becomes a party
to the contractual provisions of the instrument.
The Group derecognises a financial asset only
when the contractual rights to the cash flows
from the asset expire, or when it transfers the
financial asset and substantially all the risks and
rewards of ownership of the asset to another entity.
Trade receivables and other receivables are
measured and carried at amortised cost using the
effective interest method, less any impairment. The
carrying amount of other receivables is reduced
by the impairment loss directly and a charge
is recorded in the Income Statement. For trade
receivables, the carrying amount is reduced by the
expected lifetime losses. Subsequent recoveries of
amounts previously written off are credited against
the allowance account and changes in the carrying
amount of the allowance account are recognised in
the Income Statement.
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.
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, borrowings, and lease liabilities.
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.
Impairment of financial assets
Derivative financial instruments
For trade and other receivables, the simplified
approach permitted under IFRS 9 is applied. The
simplified approach requires that at the point of
initial recognition the expected credit loss across
the life of the receivable must be recognised.
As these balances do not contain a significant
financing element,
the simplified approach
relating to expected lifetime losses is applicable.
Derivative financial instruments, comprising foreign
exchange contracts, are used by the Group in the
management of its foreign currency exposures.
As hedge accounting is not applied, outstanding
foreign exchange contracts are fair valued at
each reporting date and recognised in other
receivables or payables with movements
in
fair values being recognised in profit or loss.
Equity instruments
Equity instruments issued by the Company are
recorded at the proceeds received, net of direct
issue costs.
48
LPA Group Plc – Annual Report & Accounts 2020 NOTES TO THE FINANCIAL STATEMENTS
1.
Accounting policies (continued)
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. Revenue
IFRS 15 (Revenue from Contracts with Customers)
requires that in the normal course, revenues arise
from the sale, refurbishment, repair or installation
of products, excluding value added tax, trade
or volume discounts, or values related to future
performance obligations. Product sales value
include, design and engineering, Non-Recurring
Costs (NRC’s), accreditation, test and specific tooling
related to the supply. 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. 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 or to utilise the
outputs in their design or accreditation procedures.
The nature of large procurement contracts is
evolving. Some are increasing in scope to include
a broader responsibility, for product interfaces and
compliance.
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)
liabilities
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
in respect of unsatisfied
contract
performance obligations that have been invoiced
and reports these amounts as deferred income.
Similarly, if the Group satisfies a performance
obligation before it invoiced the customer, the
Group recognises the asset within accrued income.
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 Note 1Q.
N. 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.
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.
49
LPA Group Plc – Annual Report & Accounts 2020 NOTES TO THE FINANCIAL STATEMENTS
1.
Accounting Policies (continued)
Defined contribution pension plans
N. Taxation (continued)
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.
O. Employee benefits
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
the share-based payment reserve.
credit
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. The Group has adopted the Black-
Scholes model for the purposes of computing the fair
value of options. At each balance sheet date, the
Group revises its estimates of the number of options
that are expected to vest. The impact of the revision
of the original estimates, if any, is recognised in
profit or loss such that the cumulative expense
reflects the revised estimate, with a corresponding
adjustment to the share-based payment reserve.
The proceeds received net of any directly
attributable transaction costs are credited to
share capital (nominal value) and the share
premium account when the options are exercised.
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
The cost of defined contribution pension plans is
charged to the income statement as they become
payable.
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. A full actuarial
valuation is carried out every three years and
updated at each balance sheet date using the
projected unit method.
A retirement benefit liability is shown within non-
current liabilities 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 deferred tax in respect of retirement benefits
is netted against other deferred tax assets and
liabilities and included in the deferred taxation
asset or liability shown under non-current assets or
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.
50
LPA Group Plc – Annual Report & Accounts 2020 NOTES TO THE FINANCIAL STATEMENTS
1.
Accounting Policies (continued)
Impairment of goodwill
P. Exceptional costs and non-underlying
items
Management use a range of measures to assess
the Group’s financial performance. These include
statutory measures calculated
in accordance
with IFRS together with “underlying operating
profit” as an adjusted measure of profitability. We
report this measure as we believe that it provides
useful additional information about the Group’s
performance.
Underlying Operating Profit
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.
represents
Exceptional and Non-Underlying Items are not
defined under IFRS. Exceptional Costs 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 Costs and Non-Underlying Items are
detailed in note 6 to the financial statements.
Q. Use of judgements, estimates and
assumptions
The preparation of the financial statements 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. The critical judgements
made in arriving at the amounts included in the
financial statements are detailed below. 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.
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.
R&D expenditure and tax credits
tax credit/charge
the year reflects
The
management’s
the
application of tax regulations, in particular R&D tax
credits available.
judgements
respect of
for
in
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.
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 and
the key assumptions used in the calculation of the
defined benefit obligation are disclosed in note 21.
IFRIC 14 requires the Directors to consider whether
the Company is entitled to any surplus reported
within the Scheme, such that on wind up, the
Company would be entitled to unconditionally
receive remaining funds. In the Directors opinion,
on a wind up to determine the Scheme, which
the Company is unilaterally able to commence as
the sponsoring employer, following full settlement
of all member benefits and all scheme liabilities,
including HMRC, any remaining surplus is payable
to the Company and as such the surplus shown in
note 21 should be disclosed on the Balance Sheet,
without impairment.
51
LPA Group Plc – Annual Report & Accounts 2020 NOTES TO THE FINANCIAL STATEMENTS
1.
Accounting policies (continued)
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 ongoing 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.
Differences between such estimates and 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. Note 12 details
the inventory provisions and the amounts written
off to consolidated income statement in the year.
Q. Use of judgements, estimates and
assumptions (continued)
Timing and recognition of revenue and cost
recognition
to
to
identify
the Group
IFRS 15 requires
its
performance obligations, determine the transaction
price and allocate
the performance
this
obligations to recognise revenue at the point
each performance obligation is satisfied within its
contracts. Judgements are involved in determining
the number of performance obligations in a contract
and at which point to recognise income for services
provided i.e. a point in time when a milestone is met
or as work is performed.
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.
These revenues are a subjective estimate of the
value attributable to the services provided against
invoicing profile within such
the contractual
contracts. 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 or gross profit that would be ordinarily
expected from such activities, with reference to the
contract deliverables as a whole.
52
LPA Group Plc – Annual Report & Accounts 2020 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 IFRS 8) - electro-mechanical, lighting and
distribution (which collectively design, manufacture and market industrial electrical and electronic products) - less centre
costs, which operate across three market segments - Rail; Aerospace and Defence and Other. It is on this basis that the
board of directors assess Group performance. The split is as follows:
Electro-mechanical
Lighting and electronics
Distribution
Operational revenue
Revenue recognised over time
Revenue recognised at a point in time
2020
£000
9,195
7,087
4,429
2019
£000
7,516
6,921
5,096
20,711
19,533
2020
£000
390
20,321
20,711
2019
£000
241
19,292
19,533
2019
%
69%
16%
15%
100%
2019
£000
12,984
4,059
2,490
19,533
2019
£000
1,157
(953)
204
All revenue originates in the UK. An analysis by geographical markets and market segments is given below:
Rail
Aerospace and defence
Other
United Kingdom
Rest of Europe
Rest of World
2020
%
77%
12%
11%
100%
2020
£000
13,929
4,402
2,380
20,711
Two individual customers (2019: two) represented more than 10% of Group revenue, combined 30%.
Operational profit
Corporate costs
Underlying operating profit
2020
£000
1,812
(1,029)
783
Corporate Costs and Operational Profit are shown excluding charges levied to subsidiary entities by LPA Group Plc
relating to management charges and property rent, which combined totalled £0.59m (2019: £0.17m).
53
LPA Group Plc – Annual Report & Accounts 2020 NOTES TO THE FINANCIAL STATEMENTS
3.
Employee information
The average number of people employed by the Group, including Directors, 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 21)
Share-based payments
2020
Number
2019
Number
127
30
23
180
2020
£000
5,627
536
273
36
6,472
122
31
25
178
2019
£000
5,430
519
244
3
6,196
Detailed information concerning directors’ emoluments, shareholdings and options is shown in the Remuneration
Report. Employee benefit expenses include share-based payments of £36,000 (2019: £3,000) and exceptional costs of
£131,000 (2019: £70,000) as shown in note 6.
4.
Finance income
Net pension interest income (note 21)
5.
Finance costs
Bank loans and overdraft interest
Interest on lease liabilities
Finance costs
2020
£000
41
2020
£000
68
38
106
2019
£000
64
2019
£000
69
30
99
54
LPA Group Plc – Annual Report & Accounts 2020 NOTES TO THE FINANCIAL STATEMENTS
6.
Profit/(loss) before tax
The following items have been charged in arriving at profit/(loss) before tax:
A. Component costs in arriving at underlying operating profit
Materials (to added value)
Production overhead and direct labour
Cost of sales
Distribution costs
Administrative expenses
Other operating income:
Covid-19 Job Retention Scheme grants (CJRS)
Other grants
B. Expenses/(credits) by nature within underlying
operating profit
Amortisation of intangible assets
Depreciation of tangible assets
Depreciation of right of use assets
Loss/(profit) on disposal of assets
Operating lease rentals/short term hire charges
- Plant, equipment and motor vehicles
Foreign exchange (gain)/loss
Other operating income (grants)
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
Fees payable to the previous auditor in respect of prior year annual accounts
C. Within exceptional costs
GMP pension equalisation recognition
Reorganisation costs
Dual running director costs
2020
£000
10,653
5,364
16,017
1,514
2,730
(308)
(25)
2020
£000
95
494
241
61
20
(50)
(333)
773
20
49
18
2020
£000
-
122
9
131
2019
£000
9,902
5,272
15,174
1,588
2,664
-
(97)
2019
£000
48
693
-
(2)
117
13
(97)
566
20
41
-
2019
£000
333
70
-
403
Reorganisation costs of £0.12m (2019: £0.07m) relate to a continued Group wide cost base review. Dual running
costs of £9,000 (2019: nil) relate to a crossover period between the appointment and retirement of NED’s as part of the
ongoing board rejuvenation process to conclude in the 2021 financial year. Dual running and reorganisation costs are
included within note 3, Employee information.
The Guaranteed Minimum Pensions (GMP) equalisation recognition of £333,000 in 2019 (2020: nil) 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 previous financial year as a change in basis having been quantified
following the High Court ruling.
55
LPA Group Plc – Annual Report & Accounts 2020 NOTES TO THE FINANCIAL STATEMENTS
7.
Taxation
A. Recognised in the income statement
Current tax expense
UK corporation tax
Adjustment in respect of prior years
Deferrred taxation
Net origination and reversal of temporary differences
Total corporation tax (credit)
B. Reconciliation of effective tax rate
Profit/(loss) before tax
Tax at the UK corporation tax rate of 19.0% (2019: 19.0%)
Effects of:
- 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)
C. Deferred tax recognised in other comprehensive income
Deferred tax on actuarial (loss)/gain on pension scheme
D. Current and deferred tax recognised directly in equity
Tax charge/(benefit) arising on share options
2020
£000
(37)
(78)
71
(44)
2020
£000
551
105
(27)
-
(76)
(83)
5
6
26
(44)
2020
£000
(28)
2020
£000
5
2019
£000
(57)
(68)
(60)
(185)
2019
£000
(237)
(45)
(31)
(31)
(49)
(49)
(19)
26
13
(185)
2019
£000
7
2019
£000
(18)
56
LPA Group Plc – Annual Report & Accounts 2020 NOTES TO THE FINANCIAL STATEMENTS
8.
Earnings/(loss) per share
The calculation of earnings per share is based upon the profit for the year of £0.60m (2019: loss £0.05m) and the weighted
average number of ordinary shares in issue during the year, less investment in own shares, of 12.358m (2019: 12.238m).
2020
Weighted
average
number of
shares
Earnings
Earnings
per
share
Earnings
2019
Weighted
average
number of
shares
(Loss)
per
share
£000
Million
Pence
£000
Million
Pence
595
-
595
12.358
0.442
12.800
4.82
(0.17)
4.65
(52)
-
(52)
12.238
(0.43)
-
-
12.238
(0.43)
Basic earnings per share
Effect of share options
Diluted earnings per share
Diluted earnings per share
Basic and diluted earnings per share were 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 2020 there were 1,350,000 outstanding share options (2019: 975,000), of which 825,000 were
exercisable (2019: 825,000).
9.
Intangible assets
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.
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 unit was 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 1.00% (2019: 1.50%) which is considered to be consistent with the long term average growth rate
for the businesses concerned. The discount rate applied was 12.0% (2019: 11.0%), 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.
57
LPA Group Plc – Annual Report & Accounts 2020
NOTES TO THE FINANCIAL STATEMENTS
9.
Intangible assets (continued)
Cost
At 1 October 2018
Transferred *
Additions
At 1 October 2019
Additions
Disposals
At 30 September 2020
Amortisation
At 1 October 2018
Transferred *
Charge for the year
At 1 October 2019
Charge for the year
Disposals
At 30 September 2020
Net carrying amount
At 30 September 2020
At 30 September 2019
Goodwill
£000
Development
costs
£000
Software
£000
1,234
-
-
1,234
-
-
1,234
85
-
-
85
-
-
85
1,149
1,149
342
-
124
466
100
(288)
278
291
-
20
311
66
(288)
89
189
155
-
514
25
539
22
-
561
-
456
28
484
29
-
513
48
55
Total
£000
1,576
514
149
2,239
122
(288)
2,073
376
456
48
880
95
(288)
687
1,386
1,359
Amortisation is charged within administrative expenses within the consolidated income statement.
*In accordance with IAS 38, where previously shown as a tangible asset, software was transferred during the year 30
September 2019 and represented as an intangible asset. The brought forward cost and accumulated depreciation were
transferred without impact on the prior year, retained earnings or asset values.
58
LPA Group Plc – Annual Report & Accounts 2020
10.
Tangible fixed assets
Cost
At 1 October 2018
Transferred *
Additions
Disposals
At 1 October 2019
Transferred **
Additions
Disposals
At 30 September 2020
Depreciation
At 1 October 2018
Transferred *
Charge for the year
Disposals
At 1 October 2019
Transferred **
Charge for the year
Disposals
At 30 September 2020
Net carrying amount
At 30 September 2020
At 30 September 2019
NOTES TO THE FINANCIAL STATEMENTS
Freehold
land and
buildings
Plant,
vehicles and
equipment
£000
£000
4,614
-
33
-
4,647
-
-
-
4,647
271
35
95
-
401
-
101
-
502
4,145
4,246
7,867
(514)
509
(40)
7,822
(1,226)
117
(574)
6,139
4,994
(491)
598
(39)
5,062
(210)
393
(507)
4,738
1,401
2,760
Total
£000
12,481
(514)
542
(40)
12,469
(1,226)
117
(574)
10,786
5,265
(456)
693
(39)
5,463
(210)
494
(507)
5,240
5,546
7,006
The depreciation charge has been recognised across cost of sales and administrative expenses within the consolidated
income statement.
*In accordance with IAS 38, software is recognised as an intangible asset where prior to 2019, it was shown as a
tangible asset. The brought forward cost and accumulated depreciation were transferred in 2019 without impact on
the prior or retained earnings or asset values. Depreciation in 2019 included 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.
** In accordance with IFRS 16, assets held under finance leases are transferred at 1 October 2019 to right of use assets
(see note 11). Included within plant, vehicles and equipment is £1.02m as at 30 September 2019 in respect of assets
acquired under finance leases. Depreciation for 2019 in respect of these assets was £0.12m.
.
59
LPA Group Plc – Annual Report & Accounts 2020
NOTES TO THE FINANCIAL STATEMENTS
11.
Right of use assets
Cost
Recognised on adoption of IFRS 16
Transferred **
Additions
Disposals
At 30 September 2020
Depreciation
Recognised on adoption of IFRS 16
Transferred **
Charge for the year
Disposals
At 30 September 2020
Net carrying amount
At 30 September 2020
At 30 September 2019
Plant,
vehicles and
equipment
£000
157
1,226
506
(3)
1,886
-
210
241
(3)
448
1,438
-
The depreciation charge has been recognised across cost of sales and administrative expenses within the consolidated
income statement.
** Assets held under finance leases at 1 October 2019, together with accumulated depreciation are recognised as a
right of use asset and shown as a transfer from tangible fixed assets (note 10).
Assets utilised under operating leases are introduced at 1 October 2019 as a right of use asset. Lease liabilities secured
on the above assets are detailed in note 16.
12.
Inventories
Raw materials and consumables
Work in progress
Finished goods and goods for resale
2020
£000
1,101
450
2,417
3,968
2019
£000
1,177
637
2,010
3,824
Cost of sales includes the write-down of inventories to net realisable value of £158,000 (2019: £16,000), write-down
utilisation of £15,000 (2019: £57,000) and a write off value of £38,000 (2019: £99,000).
60
LPA Group Plc – Annual Report & Accounts 2020 NOTES TO THE FINANCIAL STATEMENTS
13.
Trade and other receivables
Trade receivables
Other receivables
Prepayments and accrued income
2020
£000
4,819
90
538
5,447
2019
£000
4,047
64
326
4,437
Trade receivables are stated after expected credit losses of:
82
66
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 expected credit loss are disclosed in note 17.
14.
Trade and other payables
Current
Trade payables
Social security and other taxes
Other payables
Accruals
Deferred income
2020
£000
2,324
589
55
746
479
4,193
The directors estimate that the carrying value of trade and other payables is approximate to their fair value.
Deferred income recognised at year end was represented by four contracts (2019: one), as follows:
Deferred income at 1 October
Invoiced during the year
Income accrued against future invoices
Sales recognised in the year
Deferred income at 30 September
All deferred income recognised relates to the rail market.
2020
£000
279
374
90
(264)
479
2019
£000
2,302
446
12
800
279
3,839
2019
£000
-
520
-
(241)
279
61
LPA Group Plc – Annual Report & Accounts 2020 NOTES TO THE FINANCIAL STATEMENTS
15.
Borrowings
The note provides information about the contractual terms of the Group’s borrowings, excluding lease commitments
represented under Lease Liabilities from 1 October 2019. Further information is given in notes 16 and 17.
Current
Bank loan
Non-current
Bank loan
Total borrowings
2020
£000
188
2,313
2,501
2019
£000
2,585
-
2,585
Bank loans and overdraft
The Group’s principal banking facilities are with Barclays and its main finance is a bank loan drawn down in 2019 at
£2.6m, repayable over 5 years, refinancing a previous loan which also had a 5 year term and bullet repayment. As
at 30 September 2020 the amount outstanding was £2.5m (2019: £2.6m); the loan is to be repaid from October 2020
through 14 quarterly instalments of £0.06m, including interest, with the residual repayable in March 2024: interest is
chargeable at base rate plus 2.25%. During the year, Barclays provided, and the Company accepted the option to defer
two quarterly capital repayments following implementation of the UK’s Covid-19 lockdown. The quarterly repayments,
which resumed in October 2020, have been rebased across the remaining term of the loan. Interest continued to be
repaid. Interest continued to be paid during the two capital holiday quarters, culminating in total repayments of £0.15m
including interest.
At 30 September 2019 the bank loan was deemed to be repayable within one year under IAS 10 due to a technical
breach of the bank loan covenant. Whilst Barclays bank had acknowledged and accepted the covenant breach ahead
of the year end, formal measurement of the covenant is not recorded until the Annual Reports and accounts are filed at
Companies House and within 270 days of the 30 September. Barclays Bank subsequently provided a covenant waiver.
The loan covenant was achieved as at 30 September 2020.
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 (2019: £nil) and had £1.44m of facility
available (2019: £1.14m). 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.
62
LPA Group Plc – Annual Report & Accounts 2020
NOTES TO THE FINANCIAL STATEMENTS
16.
Lease Liabilities
Right of use liabilities
Right of use liabilities, as finance leases, typically have a five year term and bear interest fixed at the time of the
commitment. The Group’s obligations under right of use leases are secured by the finance providers title to the asset held
under lease. The minimum payments under right of use obligations, and their present value, fall due as follows:
Minimum lease
payments
Present value of minimum
lease payments
Within one year
Between one and five years
Future finance charges
Present value of finance lease liabilities
Lease payments - cash outflow in the year
Operating lease expenses
2020
£000
433
652
1,085
(95)
990
2019
£000
242
530
772
(48)
724
2020
£000
406
584
990
2019
£000
220
504
724
2020
£000
2019
£000
399
194
Future minimum rentals payable under non-cancellable operating leases, not reclassified as right of Use obligations in
2020 and the 2019 values before IFRS 16 adoption on 1 October 2019, are as follows:
Within one year
Within one and five years
2020
£000
4
-
4
2019
£000
95
96
191
During the year £0.02m of operating lease costs were expensed through the profit and loss account as short life or
immaterial contracts (2019: £0.12m).
63
LPA Group Plc – Annual Report & Accounts 2020 NOTES TO THE FINANCIAL STATEMENTS
17.
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, lease liabilities, 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 - borrowings and right of use liabilities less cash balances
Overall financing
Gearing (net debt as a % of total equity)
Following adoption of IFRS 16
Previous - excluding operating lease assets and liabilities
2020
£000
12,551
2,646
15,197
2019
£000
12,324
2,420
14,744
21.1%
19.6%
-
19.6%
Gearing, which is the principal measure used by the Group to monitor its capital structure, remained unchanged
(excluding Right of Use assets and liabilities recognised on the adoption of IFRS 16) at 19.6%, 21.1% inclusive, principally
as a consequence of profit generation, increased working capital at year end, reduced capital loan repayments in the
year and no dividend payments being made.
The Board routinely monitors other aspects of financial performance to ensure compliance with bank borrowing
requirements. There were no changes in the Group’s approach to capital management during the year.
64
LPA Group Plc – Annual Report & Accounts 2020 NOTES TO THE FINANCIAL STATEMENTS
17.
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:
2020
2019
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
385
14
-
399
441
2
10
453
826
16
10
852
410
14
-
424
456
-
6
462
866
14
6
886
Derivative financial instruments
At 30 September 2020 the Group had no commitments under non-cancellable forward exchange contracts (2019:
€0.90m taken out to hedge specific foreign currency sales).
Sensitivity
At 30 September 2020 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:
2020
2019
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
92
(75)
-
-
96
(79)
-
-
65
LPA Group Plc – Annual Report & Accounts 2020 NOTES TO THE FINANCIAL STATEMENTS
17.
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 lease
liabilities. 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 loan and
overdraft. During the year their weighted average interest rate was 2.6% (2019: 2.7%). Fixed rate liabilities comprise
Lease liabilities 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 3.8% (2019: finance leases 4.0%). The
composite interest rate across fixed and floating borrowings and liabilities was 2.9% (2019: 2.9%).
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
Lease liabilities
Sensitivity
2020
£000
(845)
-
2,501
1,656
2019
£000
(889)
-
2,585
1,696
990
724
If market interest rates on floating rate borrowings and cash deposits had been 1% (100 basis points) higher during the
year to 30 September 2020, with all other variables held constant the pre-tax profit would have been lower by £29,000
(2019: £23,000).
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 available at 30 September 2020 comprise its bank overdraft
expiring in one year or less at £1.44m (2019: £1.14m), of the total overdraft facility of £1.5m (2019: £1.5m). See note
16 for the terms of the facility.
66
LPA Group Plc – Annual Report & Accounts 2020 NOTES TO THE FINANCIAL STATEMENTS
17.
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 discounted payments.
2020
Overdraft
Bank loan
Borrowings
Lease liabilities
Trade and other payables
2019
Overdraft
Bank loan
Finance lease 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
-
188
188
406
3,125
3,719
-
193
193
291
-
484
-
199
199
242
-
441
-
1,921
1,921
49
-
1,970
-
-
-
2
-
2
-
-
-
-
-
-
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
3,113
5,918
-
-
222
222
-
222
-
-
155
155
-
155
-
-
115
115
-
115
-
-
12
12
-
12
-
-
-
-
-
Total
£000
-
2,501
2,501
990
3,125
6,616
Total
£000
-
2,585
724
3,309
3,113
6,422
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.
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.
67
LPA Group Plc – Annual Report & Accounts 2020 NOTES TO THE FINANCIAL STATEMENTS
17.
Financial instruments (continued)
F. Credit risk (continued)
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 2020 these totalled £4.82m (2019: £4.05m). 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 31.6% of trade receivables at 30 September 2020 (2019: 46.9%).
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
2020
2019
Gross
£000
2,256
1,485
913
247
4,901
Expected
credit loss
£000
(15)
-
-
(67)
(82)
Gross
£000
1,901
900
1,036
276
4,113
Expected
credit loss
£000
(1)
-
(29)
(36)
(66)
The Group works closely with customers to recover all trade receivables without loss. 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 expected credit loss in respect of trade receivables during the year was:
Balance at start of the year
Charged/(released) to the income statement
Balance at end of the year
2020
£000
2019
£000
66
16
82
74
(8)
66
The impairment increases of £16k (2019: £8k release) relates to the movement in the Group’s assessment of the risk of
non-recovery from a range of customers.
68
LPA Group Plc – Annual Report & Accounts 2020 NOTES TO THE FINANCIAL STATEMENTS
17.
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.
2020
Financial assets - loans and receivables
Trade and other receivables
Cash and cash equivalents
Financial liabilities - at amortised cost
Borrowings - bank loan
Lease liabilities
Trade and other payables
Net financial (liabilities)
2019
Financial assets - loans and receivables
Trade and other receivables
Cash and cash equivalents
Financial liabilities - at amortised cost
Borrowings - bank loan
Lease liabilities
Trade and other payables
Net financial (liabilities)
H. Fair value hierarchy
Amortised
cost
£000
4,863
845
5,708
(2,501)
(990)
(3,125)
(6,616)
(908)
Amortised
cost
£000
4,047
889
4,936
(2,585)
(724)
(3,113)
(6,422)
(1,486)
Total
carrying
value
£000
4,863
845
5,708
(2,501)
(990)
(3,125)
(6,616)
Fair
value
£000
4,863
845
5,708
(2,501)
(990)
(3,125)
(6,616)
(908)
(908)
Total
carrying
value
£000
4,047
889
4,936
(2,585)
(724)
(3,113)
(6,422)
Fair
value
£000
4,047
889
4,936
(2,585)
(724)
(3,113)
(6,422)
(1,486)
(1,486)
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.
69
LPA Group Plc – Annual Report & Accounts 2020 NOTES TO THE FINANCIAL STATEMENTS
18.
Deferred tax
Property,
plant and
equipment
Retirement
benefits
£000
£000
Tax
losses
£000
Other
£000
Total
£000
At 1 October 2018
Recognised in income statement
Recognised in other
comprehensive income/equity
At 1 October 2019
Recognised in income statement
Recognised in other
comprehensive income/equity
(59)
(11)
-
(70)
(79)
-
(433)
46
(7)
(394)
(7)
28
At 30 September 2020
(149)
(373)
26
52
-
78
19
-
97
36
(27)
25
34
(3)
5
36
(430)
60
18
(352)
(70)
33
(389)
Deferred tax assets of £212,000 (2019: £196,000) have not been recognised in respect of unrelieved tax losses of
£1.12m (2019: £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
£000
20
(169)
(149)
21
(91)
(70)
Retirement
benefits
£000
Tax
losses
£000
Other
£000
Total
£000
-
(373)
(373)
-
(394)
(394)
97
-
97
78
-
78
55
(19)
36
60
(26)
34
172
(561)
(389)
159
(511)
(352)
Deferred tax assets
Deferred tax liabilities
At 30 September 2020
Deferred tax assets
Deferred tax liabilities
At 30 September 2019
70
LPA Group Plc – Annual Report & Accounts 2020 NOTES TO THE FINANCIAL STATEMENTS
19.
Equity
Share capital
Share capital is the total of the nominal value (10p) of shares issued.
2020
2019
Number
£000
Number
£000
Issued and fully paid
In issue at the start of the year
Allotted under share plans
12,658,229
-
1,266
-
12,376,729
281,500
In issue at the end of the year
12,658,229
1,266
12,658,229
1,238
28
1,266
During the year no options were exercised (2019: 281,500 at a weighted average option price of 38p).
The market price of the Company’s shares on 30 September 2020 was 72.0p per share (2019: 80.0p) and the price
range during the year was 64.0p to 114.0p per share (2019: 79.0p to 112.5p).
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 nil per share (2019: nil)
2020
£000
2019
£000
-
-
The proposed Final dividend for 2019, of 1.80p per Share, was withdrawn after publication of the 2020 Annual Reports
because of Covid-19. The withdrawal was announced prior to the 2020 AGM.
Dividends
The following dividends were declared and paid by the Group during the year:
Final - in respect of preceding year nil per share (2019: 1.80p)
Interim -in respect of current year nil per share (2019: 1.10p)
2020
£000
2019
£000
-
-
-
222
135
357
71
LPA Group Plc – Annual Report & Accounts 2020 NOTES TO THE FINANCIAL STATEMENTS
19.
Equity (continued)
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 (“EBT”). Shares held at 30 September 2020 by the EBT
totalled 300,000 (2019: 300,000).
Share premium account
This reserve records the premium for shares issued at a value that exceeds their nominal value.
Share-based payment reserve
This reserve represents equity-settled share-based employee remuneration for outstanding options recognised over the
vesting period.
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.
72
LPA Group Plc – Annual Report & Accounts 2020 NOTES TO THE FINANCIAL STATEMENTS
20.
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 (540,000 of which remain unexercised) 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, or at a discretionary value as 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 2020 are as follows:
Scheme
2007 Employee Share
Option Scheme
Date of
grant
Exercise
price
Dates when
exercisable
Jul 2007
Apr 2011
Feb 2012
36.00p
31/07/10 to 07/02/22
32.00p
01/04/14 to 31/03/21
49.00p
08/02/15 to 07/02/22
2018 Performance
Share Plan
Aug 2018
104.80p
02/08/21 to 01/08/28
Feb 2020
July 2020
109.33p
20/02/23 to 19/02/30
63.17p
23/07/23 to 22/07/30
Total options
Number of options
2019
2020
540,000
100,000
185,000
540,000
100,000
185,000
825,000
825,000
150,000
255,000
120,000
150,000
-
-
525,000
150,000
1,350,000
975,000
73
LPA Group Plc – Annual Report & Accounts 2020 NOTES TO THE FINANCIAL STATEMENTS
20.
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
2020
2019
Weighted
average
exercise
price (p)
48.6
94.5
-
-
61.4
Number of
options
975,000
375,000
-
-
1,350,000
Weighted
average
exercise
price (p)
46.3
-
38.3
-
48.6
Number of
options
1,256,500
-
(281,500)
-
975,000
Exercisable at the end of the year
38.4
825,000
38.4
825,000
The options outstanding at the end of the year have an exercise price in the range of 32p to 109.33p and a weighted
average contractual life of 4.3 years (2019: 3.3 years).
There were no options exercised during the year (2019: 281,500. The weighted average share price at the date of
exercise of share options in 2019 was 38.3p).
The Group’s share-based remuneration expense recognised in the year was £36,000 (2019: £3,000).
74
LPA Group Plc – Annual Report & Accounts 2020 NOTES TO THE FINANCIAL STATEMENTS
21.
Employee benefits
A. Defined contribution scheme
The Group makes contributions to a defined contribution arrangement. The pension cost charged to the income statement
for the year in respect of these scheme was £273,000 (2019: £244,000).
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, by David Hamilton of JLT Benefit Solutions Ltd, 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 ending 31 March 2021 at which point the scheme’s next actuarial triennial review
falls due. The Group will review the ongoing commitment and is expected to agree to maintain this for a further three
years to 31 March 2024.
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 2020. There have been no changes in the valuation
methodology adopted for this period’s disclosures compared to the previous period’s disclosures.
75
LPA Group Plc – Annual Report & Accounts 2020 NOTES TO THE FINANCIAL STATEMENTS
21.
Employee benefits (continued)
B. Defined benefit scheme (continued)
Amounts included in the balance sheet
Fair value of scheme assets
Present value of defined benefit obligation
2020
£000
16,596
(14,632)
2019
£000
16,655
(14,405)
2018
£000
14,755
(12,346)
Asset to be recognised
1,964
2,250
2,409
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 IFRIC 14 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 2020.
Reconciliation of opening and closing present value of the defined benefit obligation
Defined benefit obligation at start of the year
Interest cost
Actuarial loss due to scheme experience
Actuarial (gains) due to changes in demographic assumptions
Actuarial loss due to changes in financial assumptions
Benefits paid
Past service costs (GMP equalisation)
2020
£000
2019
£000
14,405
12,346
255
13
(29)
502
(514)
-
343
5
(127)
2,011
(506)
333
Defined benefit obligation at end of the year
14,632
14,405
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 period.
76
LPA Group Plc – Annual Report & Accounts 2020
NOTES TO THE FINANCIAL STATEMENTS
21.
Employee benefits (continued)
B. Defined benefit scheme (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
2020
£000
2019
£000
16,655
14,755
296
59
100
(514)
407
1,899
100
(506)
Fair value of scheme assets at end of the year
16,596
16,655
The actual return on the plan assets over the period ending 30 September 2020 was £355,000 (2019: £2,306.000).
Defined benefit income/(costs) recognised in profit or loss
Interest income
Interest cost
Net interest income
Past service costs (GMP equalisation)
Net income/(cost)
2020
£000
296
(255)
41
-
41
Defined benefit costs recognised in the statement of other comprehensive income
Return on plan assets (excluding amounts included in interest income) - gain
Experience (losses) 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)
Amount recognised in other comprehensive income - (loss)/gain
2020
£000
59
(13)
29
(502)
(427)
2019
£000
407
(343)
64
(333)
(269)
2019
£000
1,899
(5)
127
(2,011)
10
77
LPA Group Plc – Annual Report & Accounts 2020
NOTES TO THE FINANCIAL STATEMENTS
21.
Employee benefits (continued)
B. Defined benefit scheme (continued)
Assets
Equities
Corporate bonds
Government bonds
Diversified growth funds
Cash and net current assets
Total assets
2020
£000
2019
£000
4,508
4,161
6,246
1,673
8
4,357
4,209
6,461
1,626
2
16,596
16,655
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
Rate of discount
Inflation (RPI)
Inflation (CPI)
Allowance for revaluation of deferred pensions of CPI or 5% max
Allowance for revaluation of deferred pensions of CPI or 2.5% max
Allowance for pension in payment increases of RPI or 5% max
Allowance for pension in payment increases of CPI or 3% max
Allowance for commutation of pension for cash at retirement
2020
2019
% per annum
% per annum
1.60
3.05
2.65
2.65
2.50
2.90
2.10
80%
1.80
3.15
2.45
2.45
2.45
3.00
2.00
80%
The mortality assumptions adopted at 30 September 2020 are 100% of the standard tables S2PxA, Year of Birth, no age
rating for males and females, projected using CMI_2019 converging to 1.25% p.a. (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:
Male retiring in 2020:
Female retiring in 2020:
Male retiring in 2038:
Female retiring in 2038:
78
Life expectancy
at age 65 (years)
2020
2019
21.8
23.7
23.1
25.2
21.8
23.6
23.1
25.2
LPA Group Plc – Annual Report & Accounts 2020 NOTES TO THE FINANCIAL STATEMENTS
21.
Employee benefits (continued)
B. Defined benefit scheme (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
2020
Increase by 1.6%
Increase by 1.0%
Increase by 3.2%
2019
Decrease by 1.6%
Increase by 1.0%
Increase by 3.2%
Decrease by 0.4%
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 2020 is 16 years (2019: 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 2020 is £100,000
(2019: £100,000).
79
LPA Group Plc – Annual Report & Accounts 2020
NOTES TO THE FINANCIAL STATEMENTS
22.
Financial commitments
Capital commitments
Contracted for but not provided in the accounts amounted to £0.04m (2019: £0.3m).
Contingent liabilities
As at 30 September 2019 Group contingent liabilities relating to guarantees in the normal course of business amounted
to £0.17m (2019: £0.17m).
23.
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 IAS 24 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
2020
£000
2019
£000
615
37
27
679
-
603
33
2
638
47
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 (2019: none).
80
LPA Group Plc – Annual Report & Accounts 2020 COMPANY FINANCIAL STATEMENTS - COMPANY BALANCE SHEET
Company number: 00686429
Fixed assets
Investments
Tangible assets
Current assets
Debtors
Cash at bank and in hand
At 30 September 2020
2020
£000
5,411
2,434
7,845
595
3
598
2019
£000
5,411
2,540
7,951
548
3
551
Note
C5
C6
C7
Creditors: Amounts falling due within one year
C8
(2,118)
(5,090)
Net current liabilities
Total assets less current liabilities
(1,520)
(4,539)
6,325
3,412
Creditors: Amounts falling due after more than one year
C9
(3,013)
(700)
Net assets
Capital and reserves
Called up share capital
Investment In own shares
Share premium account
Share-based payment reserve
Merger reserve
Retained earnings t
Total equity shareholders' funds
3,312
2,712
1,266
(324)
708
118
784
760
3,312
1,266
(324)
708
82
784
196
2,712
C12
C13
C13
C13
C13
C13
t The Company has not presented a separate Income statement account as permitted by Section 408 of the Companies Act
2006. The profit dealt with in the financial statements of the Company amounted to £0.57m (2019: loss of £0.17m).
The financial statements were approved by the Board on 25 January 2021 and signed on its behalf by:
P V CURTIS
Director
C J BUCKENHAM
Director
81
LPA Group Plc – Annual Report & Accounts 2020 COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 30 September 2020
Share
capital
£000
Investment
in own
shares
Share
premium
account
Share-based
payment
reserve
Merger
reserve
Retained
earnings
£000
£000
£000
£000
£000
Total
£000
At 1 October 2018
1,238
(214)
628
122
784
664
3,222
(Loss) for the year
Total comprehensive income
Dividends
Proceeds from issue of shares
Cost of Investment in own
shares
Share-based payments
Transfer on exercise of
share options
Tax benefit on share-based
payments
-
-
-
28
-
-
-
-
Transactions with owners
At 1 October 2019
28
1,266
Profit for the year 2020
Total comprehensive income
Share-based payments
Tax benefit on share-based
payments
Transactions with owners
-
-
-
-
-
-
-
-
-
(110)
-
-
-
(110)
(324)
-
-
-
-
-
-
-
-
80
-
-
-
-
80
708
-
-
-
-
-
-
-
-
-
-
3
(36)
(7)
(40)
82
-
-
36
-
36
-
-
-
-
-
-
-
-
-
(172)
(172)
(172)
(172)
(357)
-
-
-
36
25
(357)
108
(110)
3
-
18
(296)
(338)
784
196
2,712
-
-
-
-
-
569
569
569
569
-
(5)
(5)
36
(5)
(31)
At 30 September 2020
1,266
(324)
708
118
784
760
3,312
82
LPA Group Plc – Annual Report & Accounts 2020 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, UK. The principal activity is that of a holding company.
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 2017), 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 (£) which is the functional and presentational currency of the Company.
Monetary amounts in these financial statements are rounded to the nearest £’000.
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;
The requirements of section 11 basic financial instruments; section 12 other financial instrument issues; and
The requirements of section 26 share-based payments.
This information is included in the consolidated financial statements of LPA Group Plc as at 30 September 2020.
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, 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.
83
LPA Group Plc – Annual Report & Accounts 2020 COMPANY NOTES TO THE FINANCIAL STATEMENTS
C3.
Accounting policies (continued)
B. Investments
Investments in subsidiaries are shown at cost less any provision for impairment. The investments are assessed for
indications of impairment at each reporting date. If any such indication exists, the recoverable amount of the investment
is estimated in order to determine the extent of the impairment loss (if any). The recoverable amount is the higher of
fair value less costs to sell and value in use. In assessing value in use, the 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
the risks specific to the investment. If the recoverable amount of an investment is estimated to be less than its carrying
amount, the carrying amount of the investment is reduced to its recoverable amount. An impairment loss is recognised
immediately in profit or loss.
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. Timing
differences are differences between taxable profits and total comprehensive income that arise from the inclusion of income
and expenses in tax assessments in different periods from their recognition in the financial statements.
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.
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).
D. 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 share-based payment 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. The Company has
adopted the Black-Scholes model for the purposes of computing the fair value of options. The impact of the revision of
the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate,
with a corresponding adjustment to the share-based payment reserve.
The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value)
and the share premium account when the options are exercised. Where the Company grants options over its shares
to employees in subsidiaries, it recognises this as a capital contribution equivalent to the share-based payment charge
recognised in the income statement. In the financial statements of the Company, this capital contribution is recognised as
an increase in the cost of investment in subsidiaries, with the corresponding credit being recognised directly in equity.
E. Defined contribution pension schemes
The pension costs charged against operating profits are the contributions payable in respect of the accounting period.
84
LPA Group Plc – Annual Report & Accounts 2020 COMPANY NOTES TO THE FINANCIAL STATEMENTS
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 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. The critical judgements made in arriving at the amounts included in these financial
statements are detailed below.
Impairment of investments
The determination of whether investments have been impaired requires an estimate of the value in use of the cash-
generating units to which the investment relates. 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 investments are disclosed in note C5.
C4.
Employee information
With the exception of the directors the number of people employed by the Company was one (2019: one). Detailed
information concerning directors’ emoluments, shareholdings and options is shown in the Remuneration Report.
The average number of people employed by the Company during the year was:
Administration
The employee benefit expense for the year amounted to:
Wages and salaries
Social security costs
Pension costs - defined contribution arrangements
Share-based payments
2020
Number
2019
Number
6
6
2020
£000
580
61
38
36
716
2019
£000
569
40
25
3
637
Detailed information concerning directors’ emoluments, shareholdings and options is shown in the Remuneration Report
within the Group Financial Statements.
85
LPA Group Plc – Annual Report & Accounts 2020 COMPANY NOTES TO THE FINANCIAL STATEMENTS
C5.
Investments
Investments in subsidiary undertakings
At 1 October 2019 and 30 September 2020
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 Limited
Ordinary shares
Channel Electric Equipment Limited
t/a LPA Channel Electric
Ordinary shares
LPA Industries Limited
t/a LPA Connection Systems
Haswell Engineers Limited
t/a LPA Connection Systems
Excil Electronics Limited
t/a LPA Lighting Systems
Ordinary shares
Ordinary shares
Ordinary shares
Proportion of voting
rights and 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 and guarantor of LPA Industries Pension Trustees Limited, a company limited by
guarantee, which acts as trustee to the closed defined benefit pension scheme operated within the Group.
The registered office for all Group entities is Light & Power House, Shire Hill, Saffron Walden, CB11 3AQ, UK.
C6.
Tangible fixed assets
Cost
At 1 October 2019 and 30 September 2020
Depreciation
At 1 October 2019
Charged in year
At 30 September 2020
Net book value
At 30 September 2020
At 30 September 2019
86
Freehold land
and buildings
£000
Plant and
machinery
£000
2,393
196
35
231
2,162
2,197
716
373
71
444
272
343
Total
£000
3,109
569
106
675
2,434
2,540
LPA Group Plc – Annual Report & Accounts 2020
COMPANY NOTES TO THE FINANCIAL STATEMENTS
C7.
Debtors
Amounts falling due within one year
Amounts due from subsidiary undertakings
Other taxation and social security
Prepayments and accrued income
Deferred taxation (note C11)
C8.
Creditors: amounts falling due within one year
Bank overdraft
Bank loan
Debt
Trade creditors
Amounts owed to subsidiary undertakings
Other creditors
Other taxation and social security
Accruals
Amounts owed to subsidiary undertakings are interest free and repayable on demand.
C9.
Creditors: amounts falling due after more than one year
Debt - bank loan
Amounts owed to subsidiary undertakings
2020
£000
2019
£000
345
-
123
127
595
2020
£000
149
188
337
121
1,453
3
4
200
2,118
2020
£000
2,313
700
3,013
377
39
18
114
548
2019
£000
24
2,585
2,609
39
2,318
3
-
122
5,090
2019
£000
-
700
700
Amounts owed to subsidiary undertakings are interest free. The Company has confirmed that the intra-group indebtedness
above will not be called upon within 12 months from the date of these accounts and as such the Directors have deemed
it appropriate to reflect these as payable in more than one year.
87
LPA Group Plc – Annual Report & Accounts 2020 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 15 for terms and security.
2020
£000
149
188
337
2019
£000
24
2,585
2,609
2,313
-
2,650
2,609
337
193
2,120
2,609
-
-
2,650
2,609
88
LPA Group Plc – Annual Report & Accounts 2020 COMPANY NOTES TO THE FINANCIAL STATEMENTS
C11.
Deferred tax asset
At 1 October 2019
Charged to profit in the year
Recognised directly in equity
At 30 September 2020
Recognised deferred tax assets and liabilities
Deferred taxation assets recognised in the accounts are as follows:
Accelerated capital allowances
Tax benefit on losses
Tax benefit on share-based payments
£000
(114)
(8)
(5)
(127)
2019
£000
(14)
(39)
(61)
(114)
2020
£000
(18)
(54)
(55)
(127)
Deferred tax is provided at a composite rate based on enacted rates expected to apply at the year end. The rate
provided in the year is 19.0% (2019: 17.5%). Deferred tax assets are disclosed in Note C7.
Unrecognised deferred tax
A deferred tax asset of £0.16m (2019: £0.15m) has not been recognised in respect of unrelieved management expenses
of £0.83m (2019: £0.83m). The unrelieved management expenses have no expiry date and have not been recognised
because of uncertainty over the timing of their recoverability.
89
LPA Group Plc – Annual Report & Accounts 2020 COMPANY NOTES TO THE FINANCIAL STATEMENTS
C12.
Share Capital
2020
2019
Number
£000
Number
£000
Issued and fully paid
In issue at the start of the year
Allotted under share plans
12,658,229
-
1,266
-
12,376,729
281,500
In issue at the end of the year
12,658,229
1,266
12,658,229
1,238
28
1,266
During the year no options were exercised (2019: 281,500 at a weighted average option price of 38.3p).
At the year end, 300,000 (2019: 300,000) 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 19 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. As at 30 September 2020, 300,000 ordinary shares of 10p each were
held (2019: 300,000).
Share premium account
This reserve records the premium for shares issued at a value that exceeds their nominal value.
Share-based payment reserve
This reserve represents equity-settled share-based employee remuneration for outstanding options recognised over the
vesting period.
Merger reserve
This reserve records the premium for shares issued, as part consideration on the acquisitions of Channel Electric
Equipment Holdings Ltd and Haswell Engineers Ltd, 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.
90
LPA Group Plc – Annual Report & Accounts 2020 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 20 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 £36,000 (2019: £3,000).
C15.
Related party transactions
Related Party Transactions with directors of the Company are set out in note 23 to the Group Financial Statements.
C16.
Contingent liabilities
The following security is provided to Barclays Bank plc in respect of the Company’s £2.5m term loan outstanding at 30
September 2020: (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.
91
LPA Group Plc – Annual Report & Accounts 2020 OTHER INFORMATION - FIVE YEAR SUMMARY
Unaudited information
Summary income statement
2016
£000
2017
£000
2018
£000
2019
£000
2020
£000
Revenue
EBITDA †
Depreciation and amortisation
Underlying operating profit
Exceptional costs, non-underlying items and
share-based payments
Net finance costs
Profit before taxation
Taxation
Profit for the year
Summary balance sheet
Property, plant and equipment ^*
Intangible assets - excluding goodwill
Net trading assets
Net operating assets ^^
Net debt (see group note 16) ^*
Deferred taxation
Net assets before pension and goodwill
Goodwill
Pension asset net of deferred tax
Net assets
21,422
22,482
27,979
19,533
20,711
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
945
(741)
204
(406)
(35)
(237)
185
(52)
1,613
(830)
783
(167)
(65)
551
44
595
2016
£000
2017
£000
2018
£000
2019
£000
2020
£000
5,624
45
3,764
9,433
(2,541)
(25)
6,867
1,149
673
8,689
6,851
36
4,348
11,235
(2,753)
28
8,510
1,149
1,062
10,721
7,216
51
4,286
11,553
(1,971)
4
9,586
1,149
1,974
12,709
7,006
210
4,482
11,698
(2,420)
42
9,320
1,149
1,855
12,324
6,984
239
5,252
12,475
(2,646)
(18)
9,811
1,149
1,591
12,551
Other information
2016
2017
2018
2019
2020
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) ^*
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%
4.8%
(0.43)p
1.10p
97.4p
2.56
19.6%
7.8%
4.82p
-
99.2p
1.64
21.1%
† - earnings before interest, tax, depreciation, amortisation of intangible assets, non-cash charges for equity-settled share-based
payments, exceptional costs and non-underlying items.
^^ - net operating assets - the total of inventories and receivables less payables, excluding net debt and right of use liabilities.
^* - Inclusive of right of use assets/lease liabilities from 2020.
92
LPA Group Plc – Annual Report & Accounts 2020
NOTICE OF MEETING
Routine business
1. To receive the accounts for the year ended 30 September
2020, together with the reports of the directors and the
auditors thereon.
2. To re-elect as a director Len Porter who retires by rotation,
in accordance with the Company’s Articles of Association.
3. To re-appoint Gordon Wakeford as a director of the
Company.
4. To re-appoint Robert Bodnar-Horvath as a director of the
Company.
5. To re-appoint RSM UK Audit LLP as auditors to the Company,
to hold office until the end of the next general meeting at
which accounts are laid before the Company, and to
authorise the directors to fix the auditors’ remuneration.
Special business
Share capital
To consider and if thought fit pass resolution 6 as an ordinary
resolution:
6. 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.
NOTICE IS HEREBY GIVEN that the Fifty Ninth Annual General
Meeting (“AGM”) of LPA Group Plc (the “Company”) will be
held at the offices of LPA Connection Systems, Light & Power
House, Shire Hill, Saffron Walden, CB11 3AQ on Wednesday
17 March 2021 at 12.00 noon for the following purposes:
Important information: impact of Covid-19 on the
2021 AGM
The AGM is an important event in the Company’s corporate
calendar and the Board of Directors (the “Board”) appreciates
that it is one of the key ways we communicate with you, our
shareholders. It is an important opportunity for you to express your
views by raising questions and voting, and ordinarily, attending.
As a Company, the health and wellbeing of our shareholders,
employees and stakeholders remains extremely important to us
and we are closely monitoring the Covid-19 situation. It is currently
the intention of the Company to hold the AGM as planned.
However, the Board notes the UK Government's measures to restrict
travel and public gatherings currently in force. If these measures
remain in place on the date of the AGM, physical attendance
in person by shareholders of the Company will not be possible.
If the Board believes that it becomes necessary or appropriate
to make alternative arrangements for the holding of the AGM
due to Covid-19, the Company will issue an announcement
via a Regulatory News Service by 9am on 16 March 2021 at
the latest setting out any such arrangements. Given the current
guidance and the general uncertainty on what additional and/
or alternative measures may be put in place, shareholders are
strongly encouraged not to attend the AGM and instead appoint
a proxy and provide voting instructions in advance of the AGM,
in accordance with the instructions set out in the notes to the
Notice of AGM, which appear later on in this document. If
you are intending to attend the AGM in person, the Company
requires shareholders to provide prior notice using the email
address below as numbers will be restricted and so appropriate
arrangements can be made to maintain social distancing.
Further updates may be issued by the Company via a
Regulatory News Service and on the Company's website
prior to the AGM. As shareholders are encouraged not to
attend the AGM, you may raise questions by emailing to
investors@lpa-group.com where a response will be provided
either through the AGM and published outcome, on the
Company’s website or may alternatively be responded to directly.
93
LPA Group Plc – Annual Report & Accounts 2020 NOTICE OF MEETING (CONTINUED)
To consider and if thought fit pass resolution 7 as a special
resolution:
To consider and if thought fit pass resolution 8 as a special
resolution:
7. That subject to the passing of resolution 6 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 6 above and be
empowered pursuant to section 573 of the said Act to sell
ordinary shares (as defined in section 560 of the said Act)
held by the Company as treasury shares (as defined in
section 724 of the said Act) for cash, as if section 561(1)
of the said Act did not apply to any such allotment or sale
provided that this power shall be limited to the allotment of
equity securities or the sale of treasury shares:
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 £123,582
(representing 10% of the issued share capital excluding
treasury shares), 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 (and treasury shares
to be sold) after such expiry and the directors may
allot equity securities (and sell treasury shares) in
pursuance of such an offer or arrangement as if the
power conferred hereby had not expired.
8. 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:
a. The maximum number of Ordinary Shares hereby
authorised to be purchased is 1,235,823 representing
10% of the issued share capital of the Company;
b. The minimum price (excluding expenses) which may
be paid for an Ordinary Share is 10p;
c.
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;
d. 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 2022
or on 17 March 2022, 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
17 February 2021
Registered office:
Light & Power House,
Shire Hill, Saffron Walden,
CB11 3AQ
94
LPA Group Plc – Annual Report & Accounts 2020 NOTICE OF MEETING (CONTINUED)
Notes
Entitlement to Attend and Vote
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 15 March 2021 (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 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.
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 Group, 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. In the case of
an individual, the form of proxy must be signed by the
individual or their attorney. 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.
9. To be effective, the form of proxy, duly executed together
with the power of attorney or other authority (if any) under
which it is signed (or a notarially certified copy thereof)
must be lodged at the Company Registrars not less than
48 hours (excluding any part of a day which is a non-
working day) before the time appointed for the holding of
the Meeting or adjourned meeting.
Appointment of proxies
Appointment of a proxy online
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.
Appointment of proxy using hard copy proxy form
8. A form of proxy has not been sent to you, but you can
request a form of proxy, directly from the registrars Link
Group’s general helpline team on Tel: 0371 664 0300.
Calls are charged at the standard geographical rate and
will vary by provider. Calls outside the United Kingdom
will be charged at the applicable international rate. Lines
10. 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
are charged at the standard geographical rate and will
vary by provider. 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.
Appointment of proxies through CREST
11. 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.
95
LPA Group Plc – Annual Report & Accounts 2020 NOTICE OF MEETING (CONTINUED)
Appointment of proxies through CREST (continued)
Termination of proxy appointments
The message must be transmitted so as to be received by
the issuer's agent (ID: RA10) by 12 Noon on 15 March
2021. 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.
Appointment of proxy by joint members
12. 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
13. 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 Group as per the communication
methods shown in note 8. 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.
14. 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 Group, at the address shown in note 8.
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 Group 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.
Issued shares and total voting rights
Corporate representatives
15. 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 share captial
16. As at 25 January 2021, 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 25 January 2021 is 12,658,229. The
website referred to in note 2 will include information on the
number of shares and voting rights.
Documents on display
17. 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.
Shareholders requiring a hard copy Form of Proxy
should contact the Company’s Registrar - see note
8 Appointment of Proxy Using Hard Copy Proxy
Form.
96
LPA Group Plc – Annual Report & Accounts 2020
LPA Group Plc
A brief history
Over 160 years of UK product
design and manufacture.
The LPA Group consists of
uniquely individual businesses,
each offering product innovation,
engineering design capabilities
and market sector expertise.
www.lpa-group.com
3 brothers set up the
company Simmonds
Brothers Ltd
Light and Power
Accessories (LPA)
was founded by
the Lott family in
East London
1861
1908
Simmonds
manufactured
marquees, flooring
and street furniture
including
chandeliers
Simmonds was
awarded the
contract to install
the first ever street
light in `Electric
Avenue’, Brixton
1861
1908
Simmonds trading
name changed to
Niphan Ltd which
is still the brand
name of LPA’s
industrial connector
range
1927
LPA designed
a range of ‘line
taps’ for N Ireland
Electricity Board,
for one of the first
overhead electricity
supply systems
1934
With the invention
of the electric light,
Simmonds
started to design
connectors
to support this
innovation
1898
Needing more
manufacturing
space, LPA moved
to Saffron Walden,
Essex
1960s
Haswell Engineers
Ltd founded by
David Adair. A tool
making and power
press component
manufacturer for
the Ford Motor Co
1971
Haswell continued
to be at the forefront
of sheet metal work
fabrication. Invested
in automation and
equipment
1980s
LPA acquired
Niphan Ltd
1981
Excil was founded
by 2 ex colleagues
from Coin Industries.
Experts in auto-
motive test
equipment for
Lotus and Luca
1983
Excil was taken
over by Telfos
(later by Jenbacher
Group). Strategic
decision to move
into the rail market
LPA acquired
Haswell Engineers
Ltd to expand
its in-house
fabrication
capabilities
1990
2000
LPA purchased
the first of its
two bespoke
manufacturing
sites, the second
one following in
2017
2014
To support the war
effort in WW2, the
Niphan factory was
staffed entirely
with women
LPA secured a
flagship rail
contract for HST,
supplying rolling
stock connectors
Channel became
an approved
supplier for many
of the UK’s military
aerospace projects
Product innovation
continued with
Channel supplying
high reliability
relays to the rail
sector
Investing in
electronics design
expertise, LPA
acquired Excil
Electronics Ltd
LPA supplied the
first passenger
USB charging units
into UK trains
Product
development
investment in its
new Plane Power
aviation product
range
1940s
1960s
1970s
1994
2000
2015
2019
Group Directory
LPA Group Plc
Light & Power House, Shire Hill, Saffron Walden, CB11 3AQ, UK
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, UK
Tel: +44 (0)1799 512800
Email: enquiries@lpa-connect.com
· Auxiliary battery power systems
· Control panels & boxes
· Enclosures, fabrications, form & weld
· Ethernet backbones
· Laser cutting
· Rail, aircraft & industrial connectors
· Shore supply systems
· Transport turnkey services
The MOD
commissioned
Niphan to design a
range of connectors
to supply
electrical power to
aeroplanes
1950s
REM Products
(Electrical) Ltd
was incorporated.
Reselling cable
glands and
accessories
1961
Channel Electric
was established to
supply specialist
electrical inter-
connection
equipment for
Concord
1967
REM expanded into
manufacturing and
became a public
but unquoted
company
1967
Haswell expanded
into sheet metal
work and was one
of the first to use a
CNC turret press in
the UK
Excil relocated
to Normanton,
Yorkshire. Product
range expanded to
security lighting
and power supplies
LPA won the first
contract for the
design and supply
of battery rafts for
the Turbostar train
LPA designed and
built the ‘Crocodile
cable carrier’. A
new and innovative
way of connecting
power to aircraft
LPA continued
to expand its
manufacturing
capabilities by
investing in new
machinery and
automation
1970s
1985
1997
2000s
2018
Awarded its first
export contract to
design, manufacture
and supply
advanced ‘at seat’
electronics system
solution for rail
2020
Engineered component distribution
LPA Channel Electric
Bath Road
Thatcham
Berkshire
RG18 3ST, UK
Tel: +44 (0)1635 864866
Email: enquiries@lpa-channel.com
· Circuit breakers
· Connectors
· Fans & motors
· Relays & contactors
· Switches
· USB charging
REM merged to
form LPA-REM
Electrical Ltd
Channel’s
innovative terminal
block product
design made it a
market leader in
the rail sector
LPA acquired
Channel, a
component
supplier to the
aerospace, defence
and rail markets
LPA was one of the
first to supply LED
lighting into train
interiors - Warahta
Sidney
1976
1986
1998
2000s
LPA won a major
contract to design,
manufacture and
supply robust
electronic control
boxes for a new
train build project
2018
LED lighting and electronic systems
LPA Lighting Systems
LPA House
Ripley Drive
Normanton
West Yorkshire
WF6 1QT, UK
Tel: +44 (0)1924 224100
Email: enquiries@lpa-light.com
· Electronic control & monitoring
· Emergency lighting systems
· Fluorescent and dichroic lighting systems
· Inverters
· LED lighting systems
· Power supply units
LPA Group Plc
Manufacturing
the future
LPA Group
•
•
•
Is a market leading designer, manufacturer
and supplier of high reliability LED lighting,
electronic and electro-mechanical systems, and
a distributor of engineered components
•
Is known for innovating cost-effective engineering
solutions (in hostile and challenging applications)
to improve product reliability, reduce maintenance
and life cycle costs
Employs 170 people at three locations in the UK
•
Is focussed on rail, aviation, defence, infrastructure
and industrial markets
Supplies to a wide range of leading organisations
including: Airbus, Alstom Transportation, BAA,
Transportation,
BAE Systems, Bombardier
CAF, Compin, CRRC, Downer, EDI, First Group,
Heathrow Airport, Hitachi, ITW GSE, Kinki Sharyo,
Knorr Bremse, Leonardo, London Underground,
Shanghai Pudong Airport, Siemens, SNCF,
Stadler, TRSC, Unipart Rail and Wabtec
• Has developed a successful export capability
and global distribution network. Around a third
of turnover is exported to over 50 countries
LPA Group Plc
Annual Report & Accounts 2020
www.lpa-group.com
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LPA Group Plc
Light & Power House, Shire Hill,
Saffron Walden, CB11 3AQ, UK
T +44 (0)1799 512800
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