Logistic Properties of the Americas Annual Report 2022

FY2022 Annual Report · Logistic Properties of the Americas

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LPA GROUP PLC
Annual Report & Accounts 2022

ANNUAL REPORT & ACCOUNTS 2022STRATEGIC REPORT | CHAIRMAN’S STATEMENTLPA 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 approximately 140 people at three locations
in the UK

Is focused 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 Alstom, Avanti, BAA, BAE Systems, CAF,
Compin, CRRC, Downer EDI, First Group, Grammer,
Heathrow Airport, Hitachi, ITW GSE, Kinki Sharyo,
Knorr Bremse, Leonardo, Omer, Shanghai Pudong
Airport, Siemens, SNCF, Stadler, Spirit Aerospace,
Taiwan Rolling Stock Company, Transport for London,
Unipart Rail and Wabtec

ANNUAL REPORT & ACCOUNTS 2022STRATEGIC REPORT | CHAIRMAN’S STATEMENTFinancial & Operational Highlights

For the Year ended 30 September 2022

Order Entry

Order Book

Revenue

Underlying Operating (Loss)*

Share Based Payments & Exceptional Items

Profit/(Loss) before Tax

Basic Earnings/(Loss) Per Share

Gearing**

2022
£000

19,689

27,762

19,325

(226)

1,310

1,074

8.99p

3.5%

2021
£000

23,163

27,350

18,265

(274)

(74)

(387)

(0.17)p

11.9%

* Operating Profit/(Loss) before Share Based Payments and Exceptional Items

** Net Debt as a % of Total Equity

Through the year to 30 September 2022, the year included the following highlights and operational developments:

Record year for our new LED tube product with significant orders from UK and worldwide customers. This is an important
step as we approach the September 2023 ban across the EU on the sale of old technology fluorescent tubes.

Excellent year for new Plane Power range of products with customers now including – Heathrow, Shanghai, Beijing,
Copenhagen, Melbourne, Auckland, Stockholm and Schiphol airports.

Appointment of first employee outside of the UK in support of growth plans for the DACH region. This is an essential
resource in support of some of the biggest rolling stock customers in the world.

Continued growth of distribution network to support growth plans for both our electronic / lighting, and electro-
mechanical business divisions.

Successful delivery of the Viaggio Nightjet / ÖBB project, which is the most technically advanced intelligent lighting system
ever undertaken by the Group. This is a flagship platform for the customer with further follow-on orders expected.

ANNUAL REPORT & ACCOUNTS 2022

ANNUAL REPORT & ACCOUNTS 2022STRATEGIC REPORT | CHAIRMAN’S STATEMENTContents

FINANCIAL & OPERATIONAL HIGHLIGHTS

STRATEGIC REPORT

Chairman’s Statement

Business Model and Strategy

Environmental, Social and Governance

Chief Executive Officer’s Review

Financial Review

Principal Risks and Uncertainties

Key Performance Indicators

BOARD REPORTS

Audit Committee Report

Remuneration Report

Corporate Governance Report

Directors’ Report

COMPANY INFORMATION

GROUP FINANCIAL STATEMENTS

Independent Auditor’s Report to the Members of LPA Group plc

Consolidated Income Statement

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

OTHER INFORMATION

NOTICE OF MEETING

FORM OF PROXY

102

107

ANNUAL REPORT & ACCOUNTS 2022STRATEGIC REPORT

ANNUAL REPORT & ACCOUNTS 2022STRATEGIC REPORT | CHAIRMAN’S STATEMENTChairman’s Statement

STRATEGIC REPORT

Overview

It has been a busy year for us as we rebuild the individual
business plans for the members of the Group that result
directly from our strategic planning exercise. These plans
cover markets, people, operations and facilities and will
naturally morph as opportunity and markets dictate.

into engineering competency generally and this should
impact the second half of the current year and beyond.
We have also been conscious that to recruit this talent
pool we need to rebase our reward mechanisms to retain
more moderate salaries and to increase the performance
related element of our remuneration packages.

We have long recognised the need to broaden our
offering as some of our operations have become too
reliant on a few large customers. A lot of our future
project work whilst still robust continues to suffer from
re-scheduling by our customers and this was reflected
in our ability to cover our overhead in the first part of the
year. We managed the second half of the year in a more
conservative way and are actively pursuing projects that
have more immediate delivery times. In the second half
we began to see the impact that the aftercare markets
for our customers could have on building resilience into
our overhead recovery and as a result, we returned to
profitability. We are set up well going forward and have
ended the year with a strong order book replacing most
of what has been delivered this year and at the time
of writing it has grown still further.

We have had a very good response to our customer
and relationship management programmes and we
have signed up a number of new distributor partners
across the globe this year as well as seeing Channel
expand its distribution products here in the UK. It was
also very encouraging to see the end of pandemic
restrictions and to attend Innotrans in Berlin this year.
We had a successful event and it was heartening to gain
the opportunity once again to be face to face and enjoy
open conversations with so many customers that have
been unable to travel.

The planning highlighted our need to recruit into a
number of key posts and some high calibre people have
been appointed to take the Group forward. The new
Managing director for our electro-mechanical systems
operations commenced in August 2022 and is now well
in post. He and the team have recruited a new Technical
Engineering director and already we are seeing the
impact on their business plans. We have struggled
to recruit an MD for our Channel business and must
go back and re-think the scope of how this operation
functions. Our new Group CFO, Stuart Stanyard, will join
the Board in March 2023 and will in place before the
AGM. We have recruited heavily into our Sales teams and

As a market leading designer and manufacturer of high
reliability electronic, electro-mechanical components
and systems, we pride ourselves on our capabilities.
Operationally, the manufacturing facilities remain
first class. We have upgraded some of our machinery
and tooling and we will look to broaden our offering
with a limited amount of Capex in the new year. We
have investment to make in our enterprise resource
planning (“ERP”) which will only enhance our ability to
manage productivity going forward. The incidence of
turnover in our staff who operate our facilities has been
manageable and throughout the last two years we have
sought to bring in apprentices and young engineers.

To ensure that we had plenty of working capital to carry
us through what is a difficult trading environment both in
the UK and in our export markets we sold some vacant
land realising a substantial £1.5m profit; the profit and
cash are reflected in these accounts. We are continuing
to look to buy and re-invent products from ours and other
businesses that will enhance our offering particularly in
the aftercare market and having a strong cash position
will make us that much more agile to move quickly.

Shareholders and Investors

We want to communicate our long-term plans to
deliver shareholder value in line with our vision and
mission and our continuing commitment to our
reputation. Therefore, the Chairman and the CEO will
continue to meet key shareholders where possible in
person and work closely with its Brokers and Advisors
to ensure regular and open dialogue.

Importantly, we have stakeholders, in the wider sense,
all over the world and we have struggled in the last
two years to see them. The Group is in the business
of long-term contracts and projects that we export
widely and this needs to be reflected in our stakeholder
relationships which must be proactive, long term,
visible and embedded into our corporate culture. Our
staff need to be able to travel and meet our customers
first hand, as much of what we do is solutions based

ANNUAL REPORT & ACCOUNTS 2022STRATEGIC REPORT

CHAIRMAN’S STATEMENT

and flows from these interactions. We have now
recruited our first senior employee who resides in our
DACH (Germany, Austria and Switzerland) market and
we believe this investment will only strengthen our
relationships further.

Dividends and Pension Fund

No dividends were declared in 2021 and no interim
or final dividends have been declared in 2022. The
Board believes in a progressive dividend policy and so
will keep the policy under review, however, given the
ongoing economic and market challenges, we believe it
continues to remain appropriate in the shorter term to
defer any resumption of the policy.

The LPA Industries Limited Defined Benefit Scheme
was part of the Deloitte Pensions Master Plan throughout
the entire year under review. This arrangement had
included the transfer of the advisory functions,
administration and the pensioner payroll to Deloitte.
The total costs of this transition have been substantial
as the Scheme has necessarily been subject to a level
of scrutiny and audit to ensure that it can be prepared
for an eventual exit to an insurance provider. The
costs of running the scheme have been borne by the
Company and this year amounted to £174,800 (2021:
£283,128 including £100,000 of Company contribution).

The rectification work is largely complete and subject
to GMP equalisation ongoing discussion we anticipate
substantially reduced costs going forward.

A full Actuarial valuation of the Scheme was carried
out in March 2021 which indicated the Scheme was
at a healthy 121% funding level. At 31 March 2022 an
actuarial report indicated that this had risen to 127%
of the actuarial funding level. The benefit of the change in
investment strategy in January 2022, when the Trustees
having undertaken a review in 2021 agreed to lock in the
gains and de risk the scheme, has been beneficial. The
key driver for the then improved funding position has
been the higher than assumed returns on the Scheme’s
assets and the changes in financial conditions which
have reduced the liabilities. It is natural for the Scheme’s
funding level to fluctuate over time reflecting changes
in the financial markets and this was apparent during
the last six months of the year under review especially
sparked by the mini-budget on 23 September 2022.
Over the year to 30 September 2022 the Scheme’s
assets, which are with Legal & General Investment
Managers in LGIM funds marginally outperformed the
benchmark return at -24.8% versus -25%.

The IAS19 actuarial surplus recognised at 30
September 2022 was £2.5m (2021 restated: £2.6m).
The Trustees, under advice, did not seek any voluntary

ANNUAL REPORT & ACCOUNTS 2022employer contributions during the year from the
Company (2021: £100,000). The ISA19 position shown
in the notes to these accounts reflects the impact of
rising interest rates on the present value of the Assets
and the liability to pay pensions in the future.

Employees

Our people and our investment in them is key to our
future success. Their skills alone are not enough without
a commitment to the style and corporate values that
the Board are committed to promoting. Our recently
appointed subsidiary directors are fully committed to
these values and we will see the impact of this in the
coming years.

The general health, and well-being of our employees
personally, cannot be underestimated. We have had a
number of retirements of long-standing staff during
the pandemic; but we are not alone in this. Senior
management time on people issues, managing our
employee numbers and the cost base is now part of daily
routine. Communication with our staff and progressive
investment in their well-being will distinguish us and we
hope to persuade more youngsters and apprentices to
join an engineering group.

We pride ourselves on our engineering skills and our
factory operations and we are committed to keeping
them intact to fulfil our record order book. We do
maintain flexibility through use of agency and temporary
contracts, but we have no zero-hour contracts.

I should like to thank all our employees, past and
present, for their hard work and diligence during yet
another challenging year.

Board and Management

Board members’ biographies and relevant experience
are set out within Company Information on pages 34-35
of the Annual Report and are published on the Group’s
website www.lpa-group.com.

Paul Curtis (CEO) heads up the Executive Team and
we have retained some interim support following the
departure of Chris Buckenham. We have secured a
contract with our new Group Finance Director who
will join before the AGM. Andrew Jenner, as Senior
Independent Director, and Chair of the Audit Committee
has been in post throughout the year under review
as has Gordon Wakeford who is chairman of our
Remuneration Committee.

We have started a broader communication programme
including a comprehensive newsletter to our Employees,
this was published shortly after the year end and will be
updated every 6 months. The Board’s belief in instilling

STRATEGIC REPORT

CHAIRMAN’S STATEMENT

our corporate values, including through induction
and regular communication, remains a priority.

Outlook

The Executive team have a strong order book to work
with, a solid balance sheet, positive cash flow and
importantly a good plan. It will take a little longer to see
the impact of such a significant change in the group’s
leadership and given the gestation period for our
engineers to turn opportunity into quality engineered
products we anticipate a strong second half to the
current financial year and thereafter. The Company
has a bright future built on our capabilities and great
customer relationships.

Robert B Horvath
Chairman
2 February 2023

ANNUAL REPORT & ACCOUNTS 2022STRATEGIC REPORT

Business Model and Strategy

The Group is a quoted Small and Medium-sized
Enterprise (SME) listed in the Electronic and Electrical
section of the AIM Market of the London Stock
Exchange.

LPA 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 supplying markets
operating within high dependency, hostile and benign
environments which focuses on 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 transportation (which
accounts for more than two thirds of Group turnover),
share resource and frequently work on the same projects.

The Group has a reputation for innovation, providing
cost effective solutions to customers’ problems, which
aim to improve reliability and reduce maintenance and
life cycle costs. Three distinct sites across the UK are
operated, namely:

LPA operations

Market segment

Products, solutions, and technologies

LPA Connection Systems

Electro-mechanical systems

• Hybrid / battery control boxes

Light & Power House
Shire Hill
Saffron Walden
CB11 3AQ, UK

+44 (0)1799 512800

enquiries@lpa-connect.com

A designer and manufacturer
of electro-mechanical systems
and components to the rail,
aircraft ground support and
niche industrial markets.

and systems

• Control panels & boxes

• Enclosures, fabrications, laser cut,

form & weld

• Rail, aircraft, ship & industrial connectors

• Shore supply systems

• Transport turnkey engineering
and manufacturing services

Engineered component
distribution

High value, high level service
distributor and added value
solutions provider to the rail and
aerospace & defence markets.

• Circuit breakers

• Connectors

• Fans & motors

• Relays & contactors

• Switches

• USB charging units

LED lighting and electronic
systems

A designer and manufacturer
of LED lighting and electronic
systems which serve the rail,
infrastructure, and other high
reliability markets.

• Electronic control systems

• Electronic monitoring systems

• Fluorescent lamp Inverters

• Complete rolling stock interior

lighting systems

• Rolling stock interior and exterior door

status indication systems

• Rolling stock seat electronics solutions

LPA Channel Electric

Bath Road
Thatcham
Berkshire
RG18 3ST, UK

Tel: +44 (0)1635 864866

enquiries@lpa-channel.com

LPA Lighting Systems

LPA House
Ripley Drive
Normanton
West Yorkshire
WF6 1QT, UK

Tel: +44 (0)1924 224100

enquiries@lpa-light.com

ANNUAL REPORT & ACCOUNTS 2022Group revenues are derived from both large value
projects and smaller value routine orders with the
route to market a combination of direct and indirect for
most products. Agents and distributors may be used,
particularly in overseas markets, although larger projects
continue to require direct contact in most cases.

A wide range of leading organisations form our
customer base, including: Alstom, Avanti, BAA, BAe
Systems, CAF, Compin, CRRC, Downer EDI, First Group,
Grammer, Heathrow Airport, Hitachi, ITW GSE, Kinki
Sharyo, Knorr Bremse, Leonardo, Omer, Shanghai
Pudong Airport, Siemens, SNCF, Stadler, Spirit
Aerospace, Taiwan Rolling Stock Company, Transport
for London, Unipart Rail and Wabtec.

It is our intention to strengthen the Group’s position
within the global marketplace by growing our customer
base, alongside the addition of new products and the
undertaking of selected strategic acquisitions. This is
underpinned by our Vision, Mission and Objectives as
detailed below and the business planning that we do
each year.

Vision, Mission & Objectives (VMO)

Vision

• To be a market leading electronic / electro-mechanical
engineering Group, supplying high quality components
and systems to customers in safety critical and
challenging markets.

Mission

• Provide sustainable growth and returns to

shareholders.

• Grow organically and by acquisition.

• Be our customers’ first choice for products

and services.

• Be an ethical and responsible employer.

Objectives

• Promote and build on the history and brand of LPA.

• Ensure all companies within the Group deliver

‘best in class’ products and services.

• Focus on reducing dependency on the

transportation market.

• Continuous innovation and product development.

•

Improved sales channels for export.

• Targeted acquisitions to bring growth, technology,

or access to markets.

STRATEGIC REPORT

BUSINESS MODEL AND STRATEGY

• Work together across the Group and maximise

opportunities.

• Exploit Group capability and technology to create

new products and service new markets.

• Be an employer of choice.

Values and Culture

Investment in our people is paramount to our success
and we have created clear communication and
development strategies to enhance skills and ensure
that we all understand and align to Group values, culture
and best practice. This is supported by the Board and
Executive teams and demonstrated by their visibility
and accessibility across the Group.

Our core values are promoted throughout the Group.
These are set out below and published on our website
www.lpa-group.com.

LPA Core Values

Leadership – you do not need to be in a position
of power to lead in what you do.

Passion – love what you do, use it to drive both yourself
and the business forward.

Accountability – whatever you do, own it and do it well.

Continuous Product Improvement – staying ahead
of the competition.

Personal Growth – always seek to learn and improve.

Diversity – everyone deserves a chance and a voice.

Fun – yes, it is work, but it does not mean we cannot
enjoy it!

Innovation – technology is everything to us, look forward
and push the boundaries.

Integrity – honesty and respect are key to who we are.

Teamwork – work with your colleagues not against them.

ANNUAL REPORT & ACCOUNTS 2022STRATEGIC REPORT

Environmental, Social and Governance

Environment. The board is committed to minimising
its impact on the environment and ensuring that
each of our sites provide a positive impact on their
local environment. The product ranges of the Group
have long been focused on long life reliability, which
reduce waste and recycling for our customers. Our
manufacturing sites are modern with efficient heating
and ventilation systems installed that assist to
minimise the carbon footprint, whilst our machinery
and processes do not require overly high energy
inputs, thus our Co2 outputs are minimised. One of our
manufacturing sites is certified under ISO 14001 and
carbon neutral, whilst our others are working towards
and committed to achieving it.

Social activities and engagement with community is
encouraged throughout the Group. Our annual charity
golf day is a key event within the calendar and one much
appreciated by attendees. Donations received are
matched by the Group and used in the support of several
charities. Within the year these activities benefitted youth
sport, engineering education at the local school and a

cancer hospice. We continue to review our marketing
activities to combine, where practical, business
promotion with support for our local communities.

Governance is outlined across our Annual Report and
remains a core value of the Group, both as an AIM listed
entity, but as part of the DNA of our activities. These
areas have long been core to the Company. Additional
areas of focus in recent years have included risks posed
through digital and cyber channels. The Group maintains
Cyber Essentials certification and contracts external IT
support to ensure current and constant IT support, with
monitoring and prevention paramount to the continuance
of our business and safeguarding of our data, assets and
those of our customers and employees.

Our Corporate and Social Responsibility (CSR) policy
sets out the basis on which the Group seeks to be a
responsible business that meets the highest standards
of ethics and professionalism. Our company’s social
responsibility falls under two categories: compliance
and proactiveness. Compliance refers to our company’s
commitment to legality and willingness to observe
community values. Proactiveness is every initiative to
promote human rights, help communities, protect our
natural environment and resources.

The full CSR policy is set out on the Group’s website
– www.lpa-group.com/investor-information/company-
information/ with other key governance policies including
the Group’s approach to ethical trading, code of conduct,
Criminal Finances Act 2017 and Whistle Blowing.

Health, Safety & Wellbeing

It is Group policy to provide and 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 its employees in improvement, awareness and
development of a safe working environment. Reporting
of opportunities for improvement and near misses,
including suggestions, observations, concerns, or
potential improvements are encouraged and requested
from all staff and visitors to our sites. Monthly reporting
outlining all accidents, matters, KPIs, are published through
use of the health and safety notice boards, together
with site committee meeting activities. Each site has
volunteer fire marshals and first aiders who are provided

ANNUAL REPORT & ACCOUNTS 2022STRATEGIC REPORT

ENVIRONMENTAL, SOCIAL AND GOVERNANCE

Applications for employment from all, regardless of
disability, ethnicity, gender or beliefs are considered
without prejudice. 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.

with the requisite training and a qualified health and safety
representative, supported by external expertise.

The wellbeing of our staff is paramount to the Group.
Provisions are in place that provide all employees and their
families direct access to wellbeing, medical and advisory
services, linked to our Group Life Assurance provisions.

The Group encourages employees to plan for their
future and provides a defined contribution pension
provision which meets or exceeds the UK’s Auto
Enrolment requirements. The Group also funds advisory
sessions, arranges onsite access to its advisors, and
facilitates induction sessions for all employees so
they can discuss their retirement provisions and fully
understand the benefits and options available to them
within the Group’s pension scheme.

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.

ANNUAL REPORT & ACCOUNTS 2022STRATEGIC REPORT

Chief Executive Officer’s Review

Trading Results

Markets

An increase in activity during H2 ensured a positive
trading period but fell short of full recovery from the
difficult trading experienced during H1, resulting in
an underlying operating loss for the full year slightly
ahead of prior year at £0.23m (2021: Loss £0.27m).
During the period, the successful sale of a piece of
unused land held by the Group, realised levels exceeding
expectations and raised a net profit of £1.51m,
resulting in a final PBT for the year of £1.07m (2021:
Loss of £0.39m).

Even though there were several delayed project awards
within the period, orders slightly edged revenues,
resulting in the orderbook increasing marginally during
the year and remaining at a solid £27.7m (2021: £27.3m).

Added Value (“AV”) for the year remained broadly in line
with expectation at 49.1% (2021: 50.5%) but suffered
from general inflationary pressure and increasing
material costs across all sectors. This is an area being
actively managed to ensure that future revenues
continue to remain at AV expectations.

2022 Summary

Order book increased to £27.7m (2021: £27.3m)

Order entry at £19.7m (2021: £23.2m)

Revenue at £19.3m (2021: £18.3m)

Underlying Operating Loss of £0.23m (2021: Loss
£0.27m)

Profit before tax (including sale of land) at £1.07m
(2021: Loss of £0.39m)

Net cash inflow from operating activities £0.1m
(2021: £1.2m).

Aviation (aircraft) build programmes have remained
steady for the year with revenues resulting at expected
levels. The Group involvement is predominantly on the
A350 and A220 aircraft and, with both these aircraft
programs intending to increase production rates, it is
forecast that the business in this area will increase as we
move through 2023 and beyond. Both these platforms
enjoy strong orderbooks, covering multiple customers,
and are scheduled to remain in production for many years.

With the rapid development of electric and other
powertrain technology there are several opportunities
developing for a new generation of flight vehicles.
This is an area of much interest to the Group and one
where we have been subsequently focusing our efforts.
This is an industry in its infancy but is one where we are
looking to be successful over the coming years as it
comes of age.

Aviation (infrastructure) performed well in the year,
with revenues increasing 96% and orders increasing
68%, when compared to 2021 levels. Export at 81%
was a strong feature within the revenue number and
demonstrates the importance of the improved sales
channels that are now in place for this segment. The
key objective of appointing distribution partners within
all 1st tier targeted countries is nearly complete and
efforts are now ongoing in expanding this further to
include 2nd tier countries and beyond. This expansion
and management of our distribution network is an
essential strategic program and crucial to our vision
of building a robust worldwide sales network of which
further developed products can be promoted through.

During the year the Group also launched the new Plane
Power cable carrying system. As with the Plane Power
connectors, the product was received well by our
customer base and initial orders for airports in the UK
and Australia were received within the period.

Rail has seen some recovery during the period but is
still experiencing minor frustrations and delays with
project new build schedules. This is however somewhat
being offset by the expansion of our sales network and
the drive towards an increased product offering. The
aftercare market remains a key area for the Group and
is one where we are now starting to see some of the
previously stalled spending being released.

ANNUAL REPORT & ACCOUNTS 2022
The expansion of our global sales network and the
addition of a dedicated LPA sales resource in the
DACH market is progressing well for our Lighting and
Electronics business. This increased support brings
better market intelligence and offers a greater level
of service and support, which is being appreciated by
both existing and potential customers. This expanded
coverage is essential for our LED tube product which is
receiving much interest as we approach the September
2023 ban across the EU on the sale of old technology
fluorescent tubes. It is envisaged that this change in
legislation will create several opportunities for this
product over the current and coming years.

Work is also underway in the standardisation of our
Rail connector range with a view of targeting the Rail
aftermarket sector within countries other than the UK.
As with our Lighting and Electronics business, this will
again rely on the development and expansion of our
sales channels in these regions. This is however fast
becoming a core skill and competence within the Group
and is a key development area receiving much focus.

Industrial market expansion is a somewhat new area
for the Group and will look to target niches such as
infrastructure, marine and energy. In support of this we
have taken on new products at our distribution business
and strengthened our sales team within our electro-
mechanical business. These are the first steps into these
markets but are steps that we believe to be essential for
growth and the development of a diverse sales profile.

Operational Review

STRATEGIC REPORT

CHIEF EXECUTIVE OFFICER’S REVIEW

markets and countries, is firmly underway. This is
however a medium-term strategy and, as such, it will
take time before the benefits of this are truly realised.

In support of this vision there has been much change
within the business units in relation to both process
and people. The complete refresh of our sales teams, in
both our distribution business and electro-mechanical
business, is now complete and coming up to speed.
Several other senior appointments across the Group
have also been concluded, which although impacting
overhead costs, they are essential in achieving the goals
of growth that the business has.

Our electro-mechanical business is well on its way to
achieving the aviation approval standard AS9100 and is
now also targeting the IS14001 certification in support
of our environmental credentials. Our distribution
business will also start the journey to achieve IS14001 in
the coming year, which will result in all Group companies
being compliant of this important standard.

Outlook

The Group has endured difficult trading over the last few
years due to dependence on a marketplace that was
severely disrupted by several global situations. During
this period however much work has been undertaken
throughout the Group to ensure the foundations for
growth and the de-risking of our customer dependence
are in place. We expect to see progression as we move
through the coming year and look forward to a more
stable and robust business for the future.

The transition of the business from a predominantly
project driven model to one that has a balance of
projects and standard products, serving multiple

Paul Curtis
Chief Executive Officer
2 February 2023

ANNUAL REPORT & ACCOUNTS 2022
STRATEGIC REPORT

Financial Review

Set out are the key drivers related to the business
performance in the year and position at 30 September
2022, together with explanation of the financial Key
Performance Indicators as summarised on page 20.

Trading Performance

Macro-economic factors

Although some improvement has been seen across our
markets in relation to clarity of customer requirements,
the 2022 year continued to see some frustration and
delays to both order placement and delivery schedules.
Whilst H1 was heavily impacted by these delays,
H2 saw some improvement and an uplift in activity,
resulting in a profitable period, highlighting that once
over a certain level, a good level of return can be
expected from the business.

Inflation was and continues to be a battle, with cost of
energy, people and materials, all moving up beyond
levels experienced prior. Efforts to mitigate these
increases have been ongoing and where possible fed
through to the market. Added Value remains broadly
inline with expectations and is expected to remain at this
level as we move forward.

Supply of material and components has also been
problematic within the period. Electronic components,
in particular, have seen the biggest disruption, with
deliveries moving out to a 52 week lead-time in some
cases. The result of this causing delays to shipments,

considerable engineering time looking for alternatives
and, in some cases, cost increases as premiums paid for
stock availability from alternate suppliers.

As the business shapes itself for the future, employment
has been a key feature of the year. Uncertainty in the
market, coupled with a low unemployment rate, has
made this somewhat difficult at times. However, the
year has seen good progress on this, and with a few
exceptions, the Group moves into the new year with a
high percentage of this change completed and plans for
others in place.

Headlines

• Order entry slightly exceeded sales at £19.7m (2021:
£23.2m) resulting in a strong order book of £27.7m
(2021: £27.3m), an increase of 1.8%;

• Revenue of £19.3m up 5.8% (2021: £18.3m) with

electro-mechanical systems revenues down £1.2m
and engineered component distribution down £0.1m,
lighting and electronic systems up £2.4m;

• Added Value reduced by 1.4% at 49.1% (2021:
50.5%) through cost pressures and the need to
source alternative suppliers; and

• Gross margins 22.8% (2021: 20.3%), was up 2.5%

primarily because of product mix and some reduction
in production overhead costs.

By comparison to 2021, H1 2022 revenues decreased
by 7.2% at £8.6m (2021: £9.3m), delivering an
underlying operating loss of £568,000 (2021: profit of
£154,000). H2 revenues were anticipated to accelerate
as customer production recovered from delayed
projects. H2 delivered revenues of £10.7m (2021:
£9.0m), representing an increase of 19.3% against H2
2021 sales. This resulted in an H2 underlying profit of
£342,000 (2021: loss of £428,000).

Distribution costs and administrative expenses
increased by 9.9% to £4.6m (2021: £4.3m). The main
contributors to this were the wider economic cost
pressures seen across the industry. Also, the UK
Government Covid support was withdrawn during 2021
leading to a reduction in other operating income.

Group employment costs reduced by £100,000 to
£6.21m (2021: £6.32m) inclusive of exceptional costs, as

ANNUAL REPORT & ACCOUNTS 2022outlined below. Included are share based payments of
£13,000 (2021: £28,000) relating to the award of share
options through the Group’s Long Term Incentive Plan,
these calculated using the Black-Scholes model.

Other operating income of £7,000 (2021: £217,000)
reduced due to support from CJRS grant receipts
during 2021.

Exceptional Costs and Non-Underlying Items

Exceptional costs in the year totalled a gain of £1,323,000,
(2021: loss of £46,000). Key items comprised:

i. sale of surplus land raising a net profit of £1,506,000

in 2022 (2021: £nil)

ii. £10,000 dual running management costs (2021:

£46,000). These costs reflect extended crossover
periods for appointments and retirements for
the Group’s directors, a transition process which
commenced in 2017 and completed on 31 December
2021.

iii. reorganisation costs in 2022 of £173,000 (2021: £nil)

– associated with cost base reductions.

Finance Costs and Income

Within finance costs, the interest on borrowings
increased to £88,000 (2021: £86,000). The weighted
average interest rate increased by 0.5% from 2.7% to
3.2%. There was no utilisation of the Group’s overdraft
facility in the year. The UK base rate increased 7 times
throughout the year, increasing through the year from
0.10% to 2.25%.

Profit before Tax, Taxation and Earnings
Per Share

After net finance costs of £10,000 (2021: £39,000)
a profit before tax of £1,074,000 was recorded
(2021: loss £387,000). A tax credit of £111,000 (2021:
£365,000) is recognised, reporting a profit after tax
of £1,185,000 (2021: loss of £22,000). This resulted
in a basic earnings per share of 8.99p (2021: loss per
share 0.17p).

Tax reflects the UK corporation tax rate of 19.0%
(2021: 19.0%). The tax credit recognised is largely
the consequence of recognition of tax losses and tax
credits on qualifying R&D expenditure.

Treasury

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.

STRATEGIC REPORT

FINANCIAL REVIEW

Balance Sheet

Shareholders’ funds increased by £1.0m (7.0%) in the
year to £14.8m (2021: £13.7m), including:

• profit for the year of £1.2m;

• a decrease in the defined benefit pension asset

recognised of £0.1m (2021: increase of £1.3m); and

• an increase in ordinary share capital of £3,000

following exercise of share options and issue of
35,000 new shares with a share premium recognised
of £14,000 (2021: share capital £79,000, share
premium £221,000).

This has resulted in an increase to the net asset value
per ordinary share to 109.4p (2021: 102.0p). Adjusted
net asset value per share (calculated excluding goodwill
and the pension asset) was 82.6p (2021: 74.4p).

• Gearing (net debt as a % of total equity) reduced to
3.5% (2021: 11.9%) assisted by the cash proceeds
from the sale of land;

• net debt decreasing by 68% to £0.52m (2021:

£1.63m);

• working capital, as defined as inventory, trade & other
receivables less trade & other payables, increasing
9.6% to £5.08m (2021: £4.63m); and

• pension asset surplus recognised reducing by 3.6%

to £2.47m (2021: £2.56m).

Shareholders’ funds include Investment in Own Shares
(Treasury Shares), unchanged at £0.32m, representing
ordinary shares held in the Company by the LPA Group
Plc Employee Benefit Trust (“EBT”).

Intangible assets, which comprise goodwill related
to the Group’s investment in Excil Electronics Ltd,
capitalised development costs and software purchases
were £1,473,000 (2021: £1,405,000). After assessment
for impairment the goodwill remains unchanged at
£1,149,000. Development costs capitalised in the
year, representing the continued development of the
Group’s technologies and new product development
(“NPD”), were £163,000 (2021: £167,000). There were no
Capitalised development assets written off in the year
(2021: loss of £53,000).

The net book value of property, plant and equipment as
at 30 September 2022, including Right of Use Assets,
totalled £5,985,000 (2021: £6,433,000), of which
property represented £3,913,000 (2021: £4,115,000),
plant, equipment and motor vehicles £2,072,000 (2021:
£2,318,000). Additions in the year increased following
the low level in the previous year of capital investment, at
£419,000 (2021: £215,000). Disposals in the year totalled
£1,666,000 with a net book value of £170,000 including

ANNUAL REPORT & ACCOUNTS 2022STRATEGIC REPORT

FINANCIAL REVIEW

sale of surplus land and Right of Use lease terminations
(2021: £368,000 with a net book value of £9,000). The
depreciation charge reduced 7.7%. reflecting prior levels
of investment at £699,000 (2021: £757,000).

Net trading assets (defined as inventories plus trade
and other receivables, plus current tax less trade and
other payables) were 9.3% higher at £5,119,000 (2021:
£4,688,000), predominantly through higher activity at
the end of the year increasing the level of debtors.

Net Debt and Financing

The Group’s main bank finance is a bank loan drawn
down in 2019 at £2.6m and repayable over 5 years.
Repayments are quarterly over the term with a
bullet repayment in March 2024 of £1.8m (quarterly
repayments calculated at draw down on a 15 year
repayment term). As at 30 September 2022 the amount
outstanding was £2.1m (2021: £2.3m). Interest is
payable at base rate plus 2.25%.

Cash Flow

Net cash inflow from operating activities was £77,000
(2021: £1,189,000) made up of a trading cash inflow
of £395,000 (2021: £601,000); an increase in working
capital of £612,000 (2021 decrease: £594,000); tax
refunds of £159,000 (2021: £77,000) and voluntary
defined benefit pension contributions of £Nil (2021:
£83,000). Overall, there was a net increase in the
Group’s cash position of £841,000 (2021: £513,000),
which included £17,000 receipts from the exercise of
share options (2021: £300,000).

Capital expenditure outflows on property, plant and
equipment reduced to £88,000 (2021: £100,000),
excluding assets financed through lease arrangements.
Capitalised development expenditure amounted to
£163,000 (2021: £167,000), including expenditure to
develop a new range of aircraft ground power support
products and further product developments focused on
smart lighting and electronic systems, including rail seat
electronics. The Group also benefitted from the sale of
surplus land raising £1,666,000.

In the year new leasing arrangements led to right of use
additions of £331,000 (2021: £115,000). Interest at 3.7%
was charged on fixed rate borrowings (2021: 3.6%).
Interest on the Group’s overdraft facility is payable at
base rate plus 2.0%. The facility was unutilised as at 30
September 2022 and 2021. The composite interest rate
across both borrowings and lease liabilities was 3.1%
(2021: 2.7%).

Capital loan repayments of £190,000 were made in the
year (2021: £187,000). Outflows repaying the principal
elements of lease liabilities were £390,000 (2021:

£420,000). Interest payments on borrowings amounted
to £88,000 (2021: £86,000).

The Group’s dividend policy was paused in 2020 as
a safeguard to secure cash reserves through the
economic downturn and supply issues, this continuing
through 2022 with no distributions.

Defined Benefit Pension Asset

The LPA Industries Limited Defined Benefit Scheme was
part of the Deloitte Pensions Master Plan throughout the
entire year under review. This arrangement had included
the transfer of the advisory functions, administration
and the pensioner payroll to Deloitte. The total costs of
this transition have been substantial as the Scheme has
necessarily been subject to a level of scrutiny and audit
to ensure that it can be prepared for an eventual exit to
an insurance provider. The costs of running the scheme
have been borne by the Group and this year amounted to
£174,800 (2021: £283,128 including £100,000 of Group
contribution). The rectification work is largely complete
and subject to GMP equalisation ongoing discussion, we
anticipate substantially reduced costs going forward.

A full Actuarial valuation of the Scheme was carried
out in March 2021 which indicated the Scheme was
at a healthy 121% funding level. At 31 March 2022 an
actuarial report indicated that this had risen to 127%
of the actuarial funding level. The result of the change in
investment strategy in January 2022, when the Trustees
having undertaken a review in 2021 agreed to lock in the
gains and de risk the scheme, has been beneficial. The
key driver for the then improved funding position has
been the higher than assumed returns on the Scheme’s
assets and the changes in financial conditions which
have reduced the liabilities. It is natural for the Scheme’s
funding level to fluctuate over time reflecting changes
in the financial markets and this was apparent during
the last six months of the year under review especially
sparked by the mini- budget on 23 September 2022.
Over the year to 30 September 2022 the Scheme’s
assets, which are with Legal & General Investment
Managers in LGIM funds marginally outperformed the
benchmark return at -24.8% versus -25%.

The IAS19 actuarial surplus recognised at 30
September 2022 was £2.5m (2021 restated: £2.6m).
This is after restricting the asset recognised by a tax
deduction of 35% which is applied to any refund from a
UK pension scheme. This change in accounting for the
surplus in the year has been recognised as a prior year
adjustment with the resulting restatements of prior year
accounts outlined in note 21 to the accounts.

The Trustees, under advice, did not seek any voluntary
employer contributions during the year from the Group
(2021: £100,000). The IAS19 position shown in the

ANNUAL REPORT & ACCOUNTS 2022STRATEGIC REPORT

FINANCIAL REVIEW

Notes to these accounts reflects the impact of rising
interest rates on the present value of the Assets and the
liability to pay pensions in the future.

creates on-shoring opportunities for the Group which
we are seeking to exploit.

Going Concern

In assessing going concern, including impacts of supply
chain shortages and inflationary pressures seen latterly,
the directors note that current economic conditions
are continuing to create uncertainty. Such uncertainties
have and continue to make forecasting extremely
challenging, with these multiple factors causing delivery
schedule delays.

In assessing the Group’s going concern the directors also
note that (i) despite reporting an underlying operating
loss in the current year and anticipating a challenging
start to the 2023 year, the Group is expected to return
to profitability in the near term; (ii) has in place adequate
working capital facilities for its forecast needs and was
cash generative through the 2022 financial year, with a
positive EBITDA and strong cash management, benefiting
from the sale of the surplus land; (iii) has a strong order
book with significant further opportunities in its market
place; and (iv) has proven adaptable in past periods of
adversity, as again proven through the 2022 challenges.
Therefore, the directors believe that it is well placed to
manage its business risks successfully.

Whilst the Group benefitted significantly from the
recent sale of surplus land, which generated £1.6m
of net cash, the support of its bank is still seen as very
important. The directors continue to develop its strong
working relationship with its bank that provides for the
funding and working capital facilities as outlined in note
15. Should there be additional significant delays in our
project-based work then there are actions available
to management to mitigate any cash need. We expect
that if required the bank would remain supportive and
a suitable agreement would be reached to provide the
Group with sufficient financing. The current loan facility
is due to expire in March 2024 and the Board foresees
that a new facility agreement will be entered into.

After making enquiries including but not limited
to compiling updated forecasts; sensitivities; and
expectations, reviewing liabilities and risks and
following confirmation of ongoing support from
the Group’s bank, the directors have a reasonable
expectation that the Company and the Group have
adequate resources to continue in operational
existence for the foreseeable future. Accordingly,
they continue to adopt the going concern basis in
preparing the annual report and accounts.

The Group continues to witness supply chain delays,
aligned with price pressures from commodities,
utilities and wage inflation. These all pose risks to UK
manufacturing businesses but supply chain delays

Paul Curtis
Chief Executive Officer
2 February 2023

ANNUAL REPORT & ACCOUNTS 2022STRATEGIC REPORT

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:

Principal Risk or Uncertainty

Mitigation

Rail market dependency including
both the UK rail market and worldwide
rail projects.

Inflationary pressures.

• The Group maintains close working dialogue with its customers,

suppliers and government agencies.

• Growth outside our traditional markets remains a key focus. However,
rail will continue to feature as a core market and remains an attractive
sector for the Group.

• The Group continues to focus on non-project work to alleviate the

effects of project delays and underpin routine workflows.

• Sales prices of products are frequently reviewed against cost
pressures and market dynamics to ensure appropriate levels
of return are achieved.

• Management of our supply chain relationships is a key activity.

• Automation is used where possible.

• Process reviews to improve efficiency are an ongoing activity.

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.

• Senior level relationships are encouraged with suppliers and

customers throughout the Group.

The 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 establish new
technologies and products to sustain its competitive position.

• Continuous efforts for cost down and efficiencies.
• Good relationships with customers are forged to ensure accurate
market intelligence is gleaned to help shape policy and practice.

The Group is exposed to several
financial market risks including liquidity
and credit risk, and through movements
in foreign exchange and interest rates.

• Forex exposure, predominantly Euros, is mitigated where possible

through natural hedging across the Group.

• Excess forward predicted currency inflows are covered, where

appropriate, by fixed exchange contracts.

• Further detail as to the Group’s approach to managing this risk 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 trustee of the scheme review these risks with
actuarial and investment advice as appropriate and take action to
mitigate the risks where possible.

ANNUAL REPORT & ACCOUNTS 2022STRATEGIC REPORT

PRINCIPAL RISKS AND UNCERTAINTIES

Principal Risk or Uncertainty

Mitigation

The Group is exposed to supply
chains across the globe which
can cause delays to product
supply and inflationary pressures.

• Additional stocks have been held through 2022 to minimise inflationary
impact and to safeguard against short term supply issues. This will
continue through 2023.

• The Group maintains a portfolio of suppliers and continues to work

closely with all, to ensure continuance of supplies.

• Products, particularly electronic systems, are subject to redesign to
ensure compatibility with suitable alterative components is achieved.

The ability to attract and retain
skills and staff.

• The Group monitors staff movements closely whilst seeking to upskill

roles to automate areas where the labour pool is challenged.

• Personal development is encouraged. The Group supports continuous

training and development of its staff.

• Communication is done at individual and Group level, incorporating,

appraisals, announcements and Group wide newsletters.

ANNUAL REPORT & ACCOUNTS 2022STRATEGIC REPORT

Key Performance Indicators

The Group uses the following key performance indicators to assess the progression in its business: factors affecting
them are discussed in the Chairman’s Statement, the Chief Executive Officers’ Review and the Financial Review on
pages 5 to 17 with an Additional Performance Measures glossary on page 101.

KPI

Basis of measurement

2022

2021

Health & Safety

Riddors

• reportable incidents of disease or danger occurrences

None

Accidents

• events that cause impact, damage or injury involving a person

or infrastructure, which are not a Riddor

Near misses

• events that occurred which have not caused an accident

Financial

Orders to revenue

• orders for the year expressed as a multiple of revenue as a

1.02

1.27

measure of prospective growth

Order entry

• order intake confirmed

£19.7m

£23.2m

Order book

• the measure of opening order book, plus order entry,

£27.7m

£27.3m

less revenue

Revenue growth

•

increase/(decrease) year-on-year as a percentage of prior year

5.8%

(11.8%)

Added value

• the margin generated on revenue after deduction of material

49.1%

50.5%

costs but before other costs of sale and conversion

Gross margin

• as a percentage of revenue

22.8%

20.3%

Profitability

• underlying operating (loss) as a return on trading activities

(1.2%)

(1.5%)

to revenue

Cash generation

• net increase in cash and cash equivalents before

£1.5m

£0.9m

financing activities

Gearing

• the measure of net debt being borrowings and lease liabilities

3.5%

11.9%

less cash balances, to net assets

This year’s comparative of accidents reflects increased level of activities at the end of covid restrictions and a greater
emphasis on the reporting within the factories.

The Strategic Report on pages 5 to 20 was approved by the Board on 2 February 2023 and signed on its behalf by:

Paul Curtis
Chief Executive Officer

ANNUAL REPORT & ACCOUNTS 2022BOARD
REPORTS

Audit Committee Report

Remuneration Report

Corporate Governance Report

Directors’ Report

ANNUAL REPORT & ACCOUNTS 2022BOARD REPORTS | CHAIRMAN’S STATEMENTBOARD REPORTS

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.

Andrew Jenner 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:

• 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;

• 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

• Monitor the integrity of the financial statements

external auditor.

Andrew Jenner
Chairman of the Audit Committee
2 February 2023

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;

ANNUAL REPORT & ACCOUNTS 2022Remuneration Report

BOARD REPORTS

This report has not been prepared in accordance with
Schedule 8 to SI 2008/410 of 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 Chairman’s
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.

receives 10% employer pension contributions to the
Group’s defined contribution scheme enhanced by NI
savings, private health insurance and he is entitled to
the provision of a car, or car allowance with insurance
and break down cover. In addition, he is eligible for
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 schemes.

Chris Buckenham, resigned as CFO and Company
Secretary on the 31 August 2022. As at 1 January 2022
Chris Buckenham had an annual salary was £151,341
and received 10% employer pension contributions
to the Group’s defined contribution scheme, and was
entitled to the provision of a car allowance and private
health insurance. He was entitled to a 6 month notice
period. Included within his salary he received a fee of
£5,000 pa, as Director of the LPA Industries Pensions
Trustees Limited. In addition, he was eligible for options
and payment under the Company’s discretionary bonus
schemes, however all his options have now lapsed. He
also received a loss of office payment within the year.

Independent 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.

Robert B Horvath, Independent Chairman from 9 August
2021, was appointed on 1 February 2021 as NED and
Chair elect. He has a term of office as set out in his letter
of appointment dated 10 January 2021, which expires
on 31 January 2024, with up to two triennial extensions.
As at 1 January 2023 he receives a fee of £60,000 per
annum (January 2022: £60,000).

Paul Curtis, CEO, has a service contract dated 26
September 2018, amended 24 March 2020 with a notice
period of 6 months. As at 1 January 2023 his annual
salary was £193,325 (January 2022: £193,325), he

Andrew Jenner was appointed on 1 September 2021
as Senior Independent Director and Chair of the Audit
Committee. He has a term of office, as set out in his
letter of appointment dated 14 June 2021, which

ANNUAL REPORT & ACCOUNTS 2022
BOARD REPORTS

REMUNERATION REPORT

expires on 31 August 2024, with up to two triennial
extensions. As at 1 January 2023 he receives fees of
£37,000 per annum (January 2022: £37,000).

Gordon Wakeford 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, with

up to two triennial extensions. As at 1 January 2023
he receives fees of £35,000 per annum (January 2022:
£35,000). He also held the position of Chair of the
Remuneration Committee from 1 January 2022.

Len Porter resigned as Senior Independent Director
and Chair of the Remuneration Committee on the 31
December 2021.

Information Subject to Audit

Directors’ Remuneration

Directors’ remuneration for the year was as follows:

Salaries
and Fees
£000

Loss of
office
£000

Bonus Benefits
£000

£000

LTIP* Pension
£000
£000

Total
2022
£000

Total
2021
£000

Peter Pollock (to 08/08/21)

Paul Curtis

Chris Buckenham (to 31/08/22)

Executive Directors

Robert B Horvath (from 01/02/ 21)

Andrew Jenner (from 01/09/21)

Gordon Wakeford (from 01/04/20)

Len Porter (to 31/12/21)

Independent Directors

Total

193

139

332

140

472

81**

248

245

493

140

633

236

180

495

108

603

*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.

** Loss of office includes payment in lieu of notice, which includes 1.5 months beyond the financial year end.

There was no exercise of share options by Directors during the year (2021: 790,000 shares, gain of £271,500 in
relation to Peter Pollock, a previous Director).

Directors’ Pension Arrangements

During the year ending 30 September 2022, Paul Curtis and Chris Buckenham received employer contributions to the
Group’s defined contribution scheme under a salary sacrifice arrangement.

ANNUAL REPORT & ACCOUNTS 2022
Directors’ Shareholdings

Shareholdings of those serving at 30 September 2022:

Paul Curtis

Robert B Horvath

Gordon Wakeford

Andrew Jenner

BOARD REPORTS

REMUNERATION REPORT

Number of Ordinary Shares

30 September 2022

30 September 2021

38,300

100,000

21,700

20,000

180,000

38,300

33,000

21,700

93,000

During the year Robert B Horvath acquired 67,000 and Andrew Jenner 20,000 ordinary shares in the Company. (2021:
Robert B Horvath acquired 30,000 and Gordon Wakeford acquired 6,700 Ordinary Shares). Since the year end Gordon
Wakeford has acquired a further 6,300 shares.

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.

Paul Curtis

PSP 2018

Date of
Grant

Option
Price (p)

Earliest
Exercise
Date

Latest
Exercise
Date

At 30
September
2022

At 30
September
2021

Aug 18

104.80

02/08/21

01/08/28

Feb 20

109.33

20/02/23

19/02/30

July 20

63.17

23/07/23

22/07/30

Mar 21

83.50

02/03/24

01/03/31

60,000

50,000

30,000

170,000

60,000

50,000

30,000

170,000

During the year Nil share options were awarded to Directors (2021: one award with a compositive average exercise
price of 83.5p).

Gordon Wakeford
Chair of Remuneration Committee
2 February 2023

ANNUAL REPORT & ACCOUNTS 2022
BOARD REPORTS

Corporate Governance Report

Section 172

The board of Directors confirm that during the year under review, it has acted to promote the long-term success of the
Company for the benefit of the shareholders, while having due regard for the matters set out in section 172(1)(a) to (f)
of the Companies Act 2006, these being:

Matter

Detail

The likely consequences of any
decision in the long term;

• Company purpose

• Business model and strategy

• Longer term viability

• Dividend policy

Referenced on
Page(s)

• 8-9

• 7, 13, 17, 28

• 6

The interests of the company’s
employees;

• Risk appetite and risk management

• 18-19, 28-29

• Pension obligations

• 6, 16

• Health, wellbeing and safety of our people

• 10-11

• Engaging our people

• Developing our people

• Board employee engagement

• Diversity and inclusion

• 9

• 7

• 9, 11

The need to foster the company’s
business relationships with
suppliers, customers and others;

• Business ethics & code of conduct

• 9, 31

• Corporate culture and ethical values

• 7, 9-11, 31

The impact of the company’s
operations on the community
and the environment;

• Environmental responsibility

• Emission and energy management

• Supporting our communities

The desirability of the company
maintaining a reputation for high
standards of business conduct;
and

• Stakeholder propositions

• Sustainability of our business model

• Values statements and our culture

• 10, 28

• 10

• 10, 28

• 27

• 9

• Our approach to a sustainable business

• 8-9

•

Internal controls

• 10, 28-29, 31

The need to act fairly between
members of the company.

•

Investor engagement

• Annual General Meeting

• 5-6, 31-32

• 31-32, 36

ANNUAL REPORT & ACCOUNTS 2022The Chairman is responsible for oversight, adoption, and
communication of the Group’s Corporate Governance
Model. Compliance is reviewed every year and updated
as necessary and appears on pages 26 to 32 of this
report and on the website www.lpa-group.com.

Despite being a micro-cap company the Group has
consistently, for a number of years, applied high
standards of Corporate Governance. In complying
with Article 26 of the London Stock Exchange rules
applicable to AIM listed entities, which requires AIM
listed companies to apply a recognised Corporate
Governance Code, the Group 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 annual reviews,
which will be recorded on the Group’s website,
www.lpa-group.com.

The Code

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. 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, supporting its growth plans. In recent years
the Group has relied upon debt funding to support its
capital investments into capacity and capabilities and
fund working capital requirements of 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.

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

BOARD REPORTS

CORPORATE GOVERNANCE REPORT

Principle 1

Establish a strategy and business model which
promote long-term value for shareholders

The code requires a disclosure of the Group’s business
model and strategy, including key challenges in their
execution in the Annual Report, which is included in
Strategic Report on pages 5 to 20.

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. The Group has
relooked at its strategy and has a plan to grow the
business recognising the difficult trading conditions
brought on by the effects of the pandemic. The Board
itself has been rejuvenated to support the business and
the management team in order to deliver the strategy and
be responsive to constantly 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 has been dominated by
founding family shareholders in the past. This is changing
but it still has only limited numbers of Institutions. Whilst
50% of our shares are owned by 5 holders there is still a
significant shareholder base of private or relatively small
holdings. The market in the shares is relatively illiquid
and there can be 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, supporting its growth plans. In recent years the
Group has relied upon debt funding to support its capital
investments into capacity and capabilities and fund
working capital requirements.

Investor liaison is the responsibility of the Chief Executive
and where necessary the Non-Executive Chairman,
supported by the Group’s Executive.

The Group gives regular updates on progress through the
year and publishes significant events via the Regulated

ANNUAL REPORT & ACCOUNTS 2022BOARD REPORTS

CORPORATE GOVERNANCE REPORT

News Service of the Stock Exchange. The aim is to
release The Preliminary Announcement at the end of
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.

The Group aims to meet Shareholders, prospective
shareholders and other interested parties, immediately
after the Interim and Final Announcements as
recommended and organised by its Nominated Broker.
The Chairman is available to shareholders throughout
the year and, subject to any rules regarding confidential
information, is able to discuss the strategic direction of
the Group.

The Board is acutely aware of its responsibility to ensure
that there is no false market in the Group’s shares and
to ensure the market is properly informed of changes
in expectations and significant events in a timely way.
The last 2 years have witnessed severe challenges for
most businesses and especially in the sectors the Group
operates in. These significant challenges are manifested
in the ability to forecast and manage expectations in
the short term as our customers struggle to keep their
projects on track and their commitments and orders
to us to the agreed upon schedules. Some of these
unforeseeable activities remain beyond the control
of the Group.

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 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 to staff
as part of a long term plan for success, notwithstanding
the ongoing challenges that the current macro-
economic climate presents.

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
maintain timely, cost effective and quality supplies.

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 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 Strategic Report, which is included on pages 18-19.
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 commentary on identified changes in risk
in their reports to Board Meetings. Internal Controls are
detailed below.

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

ANNUAL REPORT & ACCOUNTS 2022of 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 detailed 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.

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

BOARD REPORTS

CORPORATE GOVERNANCE REPORT

of the two board committees and details the time
commitment and attendance record of directors at
board and committee meetings.

The independent Directors all served throughout
the year.

Paul Curtis as Executive Director, also served
throughout the year. Chris Buckenham, resigned his
Executive Director position as at 31 August 2022 and
the replacement for this position was actively recruited.

Board Composition and Responsibility

As of 1 January 2023, the Board comprises three
Independent Directors and one Executive Director (the
CFO role has recently been filled and the appointment
contract signed with a commencement date in March
2023). There is a clear division of responsibility between
the Independent Directors, including the Chairman and
the Executive Director.

Robert B Horvath, Andrew Jenner and Gordon Wakeford
are regarded as Independent Directors. They are from
varied backgrounds and bring with them a range of
skills and experience in commerce and industry. The
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.

The Board meets at least six times during the year, with
additional meetings being convened as necessary.
The Board has two standing committees, the Audit
Committee and the Remuneration Committee, both
having written terms of reference which are published
on the Group’s website. These comprise of the Board’s
Independent Directors who served through the year.
Andrew Jenner served as Chair of the Audit Committee
and Senior Independent Director; Gordon Wakeford
served as Chair of the Remuneration Committee. Len
Porter remained a member of both Committees through
to 31 December 2021.

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 and that of the Independent

ANNUAL REPORT & ACCOUNTS 2022
BOARD REPORTS

CORPORATE GOVERNANCE REPORT

Chairman on behalf of the Board. In addition, the
committee is responsible for supervising the various
share option schemes and for the granting of options
under them.

A schedule of the Board meetings, its committees and
the Director attendance compared to the meetings held
is set out below:

Year ending 30 September 2022

Board
meetings

Audit
committee

Remuneration
committee

No. of meetings

Executive Directors

P V Curtis

C J Buckenham (resigned 31/08/22)

Independent Directors

R B Horvath

A Jenner

G Wakeford

L Porter (resigned 31/12/21)

9/9

8/9

9/9

2/2

n/a

4/4

1/1

n/a

5/5

1/1

AGM
2022

1/1

Attendance at meetings by invitation is not shown – (n/a).

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
Group CEO/CFO who performs the role of the Company
Secretary, and 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.

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 the new Independent Chairman
from 9 August, rotation of Committee Chair’s and Senior
Independent Director roles through 2022.

The Board recognises that its small size limits the
opportunity for gender balance and diversity, however,
ensures that its recruitment processes are fair,
and all candidates are considered and treated
equally. The Board is not dominated by any one
person or group of people with recent Board changes
re-enforcing independence.

The Chair will continue to evaluate the strengths and
weaknesses of the Board and seek to address these
together with other needs as the Group evolves in any
future appointments and in succession planning.

This Annual Report identifies each Director with
their biography, which outline the relevant skills,
qualifications and previous roles that each have held.
This demonstrates the adequacy of the Board and
identifies any additional experience, skills, personal
qualities, gender balance and capabilities necessary
to deliver the strategy for the benefit of shareholders
and shows how directors are maintaining their
skill sets.

ANNUAL REPORT & ACCOUNTS 2022
The Director’s achieve this requirements through
participation and reporting on activities outside
of the Company to develop and maintain their skills.
Participation 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 also detail significant matters
requiring external advice and describe any significant
advice provided internally to the Board by the Company
Secretary or Senior Independent Director.

Principle 7

Evaluate board performance based on clear
and relevant objectives, seeking continuous
improvement

The objective has been to create a board with the
necessary skills and experience to deliver the
Group’s strategy over the medium term, following a
period of relative board stagnation. The maintenance
and development of the board skills matrix assists
the Chairman in his discussions with the Senior
Independent Director (“SID”) to ensure the skills
available within the Board remain appropriate. In 2022
this led to an examination of the role of the CFO and
ultimately to the recruitment of a CFO with broader
skills able to contribute more to the Board’s overall
commercial and operational governance within its
subsidiaries. The Group considers this approach
compliant to the Code, and the Chairman will continue
to develop this area as part of the Road Map.

The Chief Executive’s individual performance has been
assessed and feedback given.

Principle 8

Promote a corporate culture that is based on
ethical values and behaviours

The Board, led by the Chair, promotes a sound
ethical culture through its own behaviour and this is
visible through the actions of the Non-Executive and
Executive teams.

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

BOARD REPORTS

CORPORATE GOVERNANCE REPORT

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. Group values are promoted
around the Group as outlined on page 9.

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

The Group maintains governance structures and
processes in line with 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.

Principle 10

Communicate how the Group 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

ANNUAL REPORT & ACCOUNTS 2022BOARD REPORTS

CORPORATE GOVERNANCE REPORT

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 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 are always discussed with its Nominated Advisor
and advice taken and followed.

Annual Reports, including the Notice of any General
Meetings published during the last five years are
included on the website: www.lpa-group.com.

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.

Robert B Horvath
Chairman
2 February 2023

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.

ANNUAL REPORT & ACCOUNTS 2022Directors’ Report

The directors present their annual report together
with the audited financial statements for the year ended
30 September 2022.

Results and Dividends

The profit for the year amounted to £1,185,000 (2021:
loss of £22,000). The directors do not recommend the
payment of a final ordinary dividend for 2022 (2021: nil p),
with no (2021: no) interim dividends paid.

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 pages 18-19 and the key
performance indicators used in assessing the
progression of the business are set out on page 20.

Principal Activities

The principal activity of the Group continues to be
designer, manufacturer and supplier of high reliability,
LED based lighting and 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 5 to 20.

BOARD REPORTS

Substantial Shareholdings

As far as the directors are aware the only shareholders with
a beneficial interest as at 1 February 2023 representing
three per cent or more of the issued share capital were:

No of Shares Percentage

Peter Gyllenhammar AB

3,241,217

24.04%

Peter Pollock

1,000,000

7.44%

Michael Rusch

960,022

7.14%

Marilyn Porter

Stephen Brett

531,053

3.99%

453,000

3.37%

Research and Development

The Group is committed to research and development
activities to ensure its position as a market leader in the
manufacture of electronic and electrical components,
and systems in its market sectors The costs incurred in
2022 totalled £163k (2021: £167k) and were capitalised
as development costs.

Directors and their Interests

The current directors of the Company and brief
biographical details are given on pages 34-35. During
the year two Directors resigned Len Porter on 31
December 2021 and Chris Buckenham on 31 August
2022 (2021: two appointments and one resignation).
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.

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.

ANNUAL REPORT & ACCOUNTS 2022
BOARD REPORTS

DIRECTORS’ REPORT

Company law requires the directors to prepare group
and company financial statements for each financial
year. The directors have elected under company law
and are required by the AIM Rules of the London Stock
Exchange to prepare the Group’s financial statements in
accordance with UK-adopted International Accounting
Standards 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).

The Group financial statements are required by law
and UK-adopted International Accounting Standards
to present fairly the financial position and performance
of the Group. The Companies Act 2006 provides in
relation to such financial statements that references
in the relevant part of that Act to financial statements
giving a true and fair view are references to their
achieving a fair presentation.

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;

•

for the Group financial statements, state whether
they have been prepared in accordance with the
UK-adopted International Accounting Standards;

for the Company financial statements state
whether applicable UK accounting standards have
been followed, subject to any material departures
disclosed and explained in the company 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.

Directors Biographies

Robert B Horvath – Independent Chairman, born
1956, has a BSc degree in Economics from the
University of Wales and is a Fellow of the Institute of
Chartered Accountants in England and Wales, and
a Fellow of Gray’s Inn. He served Articles with Price
Waterhouse and spent twelve years with the firm
including two years in the US. He has over thirty years’
experience in senior financial and general management
posts in Manufacturing Industry. He joined LPA Group
on 1 February 2021 as Chair elect and was appointed
Chairman on 9 August 2021. Previous appointments
include Chairman of Sigmat Group, Chief Executive of
Tenfore Holdings, Group Managing Director of Interior
Services Group Plc and Group Financial Director of
Higgins Group Plc and A&P Appledore Ship Builders
Ltd. Other public appointments include Advisor
to and Chairman of Worth Abbey, NED at Defence
Infrastructure Organisation and advisor to HM Treasury
on PFI contracts.

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. Paul 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 Electric 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 Chief Executive Officer on 1 April 2020.

Stuart Stanyard – Chief Financial Officer (CFO)
and Company Secretary, born 1967, holds a BSc in
Accounting and Economics from Lancaster University

ANNUAL REPORT & ACCOUNTS 2022BOARD REPORTS

DIRECTORS’ REPORT

and is a Fellow of the Institute of Chartered Accountants
England and Wales having qualified with Price
Waterhouse. Stuart is an experienced Chief Financial
Officer having held several senior finance leadership
positions in Rolls-Royce Civil Aerospace, both within
the UK and Hong Kong. More recently Stuart has
worked for a PE backed business, Eley Group, where
he concluded the successful sale of the business to an
overseas buyer. Other appointments include main board
trustee of Archway Learning Trust, where he is also
chair of the Finance and General Purposes Committee
and a member of the Audit and Risk and Remuneration
committees. Stuart will join LPA in March 2023.

Andrew Jenner – Senior Independent Director (SID),
born 1969, holds a BSc in Accounting with First Class
Honours from the University of Hull and is a Member
of the Institute of Chartered Accountants England
and Wales. Andrew is an experienced Chief Financial
Officer and Non-Executive Director having held senior
positions in a number of FTSE100, 250 and privately
held companies and has worked in different sectors
including manufacturing, services, engineering, rail
and construction. Since February 2018 he has been
CFO of Petainer, a manufacturer of sustainable plastic
packaging for the drinks industry worldwide. Petainer is

owned by Ara Partners, a private equity firm specialising
in industrial decarbonization investments. Previous
appointments include NED and Audit Committee Chair
of Galliford Try Plc, NED at E.W. Beard, CFO at Serco
Group Plc and CFO at Global Office Group. Andrew
was appointed to LPA Group on 1 September 2021,
is the Audit Committee Chair and a member of the
Remuneration Committee.

Gordon Wakeford – Independent Director, born 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 a member of the
Board’s Audit and Remuneration Committees, was Chair
of the Audit Committee from 1 April 2021 to 31 August
2021 and was appointed Chair of the Remuneration
Committee from 1 September 2021.

ANNUAL REPORT & ACCOUNTS 2022BOARD REPORTS

DIRECTORS’ REPORT

Annual General Meeting

The annual general meeting is to be held at 12:00 noon
on Thursday 23 March 2023 at the offices of finnCap, 1
Bartholomew Close, London, EC1A 7BL. The Notice of
Meeting is set out on pages 102 to 105. Special business
includes four resolutions which relate to share capital:

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.

1. an ordinary resolution to renew the authority of the

directors to allot shares generally.

Post Balance Sheet Events

2. is a special resolution to give power to the directors

to allot equity securities for cash without first offering
them to existing shareholders.

3. is a special resolution to permit the Company to make

market purchases of its own shares.

Of the four resolutions, the first three 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.

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

The Directors consider there to be no post balance
sheet events.

Auditors

RSM UK Audit LLP are willing to continue in office. 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

Paul Curtis
Chief Executive Officer
2 February 2023

LPA Group plc is registered in England No 00686429

ANNUAL REPORT & ACCOUNTS 2022COMPANY
INFORMATION

ANNUAL REPORT & ACCOUNTS 2022COMPANY INFORMATION | CHAIRMAN’S STATEMENTCOMPANY INFORMATION

Company Information

Company contacts

Directors

Robert B Horvath Independent Chairman

Paul Curtis Chief Executive Officer

Andrew Jenner Senior Independent Director

Gordon Wakeford Independent Director

Registered Office

Light & Power House, Shire Hill, Saffron Walden, CB11 3AQ, UK

Registered Number

00686429

Website

www.lpa-group.com

Nominated Adviser

finnCap

Broker

finnCap

1 Bartholomew Close

London

EC1A 7BL

London

EC1A 7BL

Auditors

RSM UK Audit LLP

Bankers

Barclays Bank Plc

2nd Floor, North Wing East

Abacus House

City House, Hills Road

Castle Park, Castle Hill

Registrars

Cambridge

CB2 1RE

Link Group

10th Floor

Central Square

29 Wellington Street

Leeds, LS1 4DL

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.

Cambridge

CB3 0AN

Solicitors Eversheds Sutherland (International) LLP

115 Colmore Row

Birmingham

B3 3AL

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

ANNUAL REPORT & ACCOUNTS 2022COMPANY INFORMATION

ANNUAL REPORT & ACCOUNTS 2022
40

ANNUAL REPORT & ACCOUNTS 2022COMPANY INFORMATION | CHAIRMAN’S STATEMENTGROUP
FINANCIAL
STATEMENTS

Independent Auditor’s Report

Consolidated Income Statement

Consolidated Statement of Comprehensive Income 51

Consolidated Balance Sheet

Consolidated Statement of Changes in Equity

Consolidated Cash Flow Statement

Notes to the Financial Statements

ANNUAL REPORT & ACCOUNTS 2022GROUP FINANCIAL STATEMENTS | CHAIRMAN’S STATEMENTGROUP FINANCIAL STATEMENTS

Independent Auditor’s Report to the
Members of the LPA Group plc

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 2022 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 Statements and notes to the financial statements, including significant
accounting policies. The financial reporting framework that has been applied in the preparation of the group financial
statements is applicable law and UK-adopted International Accounting Standards. 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 2022 and of the group’s profit for the year then ended;

• the group financial statements have been properly prepared in accordance with UK-adopted International

Accounting Standards;

• 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.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the
financial statements section of our report. We are independent of the group and the parent company in accordance
with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s
Ethical Standard as applied to listed entities and we have fulfilled our other ethical responsibilities in accordance with
these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.

ANNUAL REPORT & ACCOUNTS 2022GROUP FINANCIAL STATEMENTS

INDEPENDENT AUDITOR’S REPORT

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: £195,000 (2021: £183,000)

• Performance materiality: £146,000 (2021: £137,000)

Parent Company

• Overall materiality: £182,000 (2021: £151,000)

• Performance materiality: £136,000 (2021: £113,000)

Scope

Our audit procedures covered 100% of revenue, 100% of total assets
and 100% of profit before tax.

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.

ANNUAL REPORT & ACCOUNTS 2022GROUP FINANCIAL STATEMENTS

INDEPENDENT AUDITOR’S REPORT

Revenue recognition

Key audit matter
description

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.

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.

How the matter was
addressed in the audit

We reviewed and challenged management’s assessment of the performance
obligations identified and ensured that income was appropriately allocated
to each of the performance obligations.

We 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 1R.

Valuation of inventory

Key audit matter
description

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.

How the matter was
addressed in the audit

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 1R and note 12.

ANNUAL REPORT & ACCOUNTS 2022
GROUP FINANCIAL STATEMENTS

INDEPENDENT AUDITOR’S REPORT

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:

Group

Parent company

Overall materiality

£195,000 (2021: £183,000)

£182,000 (2021: £151,000)

Basis for determining overall
materiality

1% of revenue

2% of total assets

Rationale for benchmark
applied

Revenue was chosen as the group
monitors revenue-based metrics
in its key performance indicators.

Total assets was chosen as the entity
is a non-trading holding company.

Performance materiality

£146,000 (2021: £137,000)

£136,000 (2021: £113,000)

Basis for determining
performance materiality

Reporting of misstatements
to the Audit Committee

75% of overall materiality

Misstatements in excess of £9,750
and misstatements below that
threshold that, in our view, warranted
reporting on qualitative grounds.

Misstatements in excess of £9,100
and misstatements below that threshold
that, in our view, warranted reporting on
qualitative grounds.

An overview of the scope of our audit

The group consists of 5 components, all of which are based in the UK.

The coverage achieved by our audit procedures was:

Number of
components

Full scope audit

Total

Revenue

Total assets

Profit before tax

100%

ANNUAL REPORT & ACCOUNTS 2022GROUP FINANCIAL STATEMENTS

INDEPENDENT AUDITOR’S REPORT

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors’ use of the going concern basis
of accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment
of the group’s and parent company’s ability to continue to adopt the going concern basis of accounting included:

• understanding how the cash flow forecasts for the going concern period had been prepared and the assumptions

adopted;

• testing the integrity of the forecast model to ensure it was operating as expected;

• challenging the key assumptions within the forecast with agreement to supporting data where possible;

• reviewing the calculation and level of headroom for debt covenants including understanding and evaluating

available management actions to cover any shortfall;

• review and consideration of the appropriateness of the sensitivity analysis performed by management and available

actions should performance be behind expectations.

Management forecasts adopted by the Board show the ability to operate within existing banking facilities even if sales
are significantly below current expectations. We do however note that should there be additional significant delays in
project-based work then there is an increased risk of a covenant breach. The Directors expect to be able to mitigate
any shortfall by available actions and if required expect to receive continued support from the bank.

Based on the work we have performed, we have not identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast significant doubt on the group’s or the parent company’s ability to
continue as a going concern for a period of at least twelve months from when the financial statements are authorised
for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant
sections of this report.

Other information

The other information comprises the information included in the annual report, other than the financial statements and
our auditor’s report thereon. The directors are responsible for the other information contained within the annual report.
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.

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 course of 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 this gives rise to a material misstatement in the financial statements themselves.
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.

ANNUAL REPORT & ACCOUNTS 2022GROUP FINANCIAL STATEMENTS

INDEPENDENT AUDITOR’S REPORT

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.

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 pages 33-34, the directors are
responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view,
and for such internal control as the directors determine is necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the group’s and the parent
company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the directors either intend to liquidate the group or the parent company
or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these financial statements.

The extent to which the audit was considered capable of detecting irregularities, including fraud

Irregularities are instances of non-compliance with laws and regulations. The objectives of our audit are to obtain sufficient
appropriate audit evidence regarding compliance with laws and regulations that have a direct effect on the determination
of material amounts and disclosures in the financial statements, to perform audit procedures to help identify instances of
non-compliance with other laws and regulations that may have a material effect on the financial statements, and to respond
appropriately to identified or suspected non-compliance with laws and regulations identified during the audit.

In relation to fraud, the objectives of our audit are to identify and assess the risk of material misstatement of the financial
statements due to fraud, to obtain sufficient appropriate audit evidence regarding the assessed risks of material
misstatement due to fraud through designing and implementing appropriate responses and to respond appropriately to
fraud or suspected fraud identified during the audit.

However, it is the primary responsibility of management, with the oversight of those charged with governance, to ensure
that the entity’s operations are conducted in accordance with the provisions of laws and regulations and for the prevention
and detection of fraud.

ANNUAL REPORT & ACCOUNTS 2022GROUP FINANCIAL STATEMENTS

INDEPENDENT AUDITOR’S REPORT

In identifying and assessing risks of material misstatement in respect of irregularities, including fraud, the group audit
engagement team:

• obtained an understanding of the nature of the industry and sector, including the legal and regulatory frameworks

that the group and parent company operate in and how the group and parent company are complying with the legal
and regulatory frameworks;

•

inquired of management, and those charged with governance, about their own identification and assessment of the
risks of irregularities, including any known actual, suspected or alleged instances of fraud;

• discussed matters about non-compliance with laws and regulations and how fraud might occur including

assessment of how and where the financial statements may be susceptible to fraud.

The most significant laws and regulations were determined as follows:

Legislation / Regulation

Additional audit procedures performed by the Group audit engagement
team included:

UK-adopted IAS, FRS102
and Companies Act 2006

Review of the financial statement disclosures and testing to supporting documentation

Completion of disclosure checklists to identify areas of non-compliance

Tax compliance regulations Inspection of advice received from external tax advisors

Inspection of correspondence with local tax authorities

Health and safety

ISAs limit the required audit procedures to identify non-compliance with these
laws and regulations to inquiry of management and where appropriate, those charged
with governance.

The areas that we identified as being susceptible to material misstatement due to fraud were:

Risk

Audit procedures performed by the audit engagement team:

Revenue recognition

See key audit matters above. In addition, we reviewed revenue journals for
appropriateness.

Management override
of controls

Testing the appropriateness of journal entries and other adjustments.

Assessing whether the judgements made in making accounting estimates are
indicative of a potential bias; and

Evaluating the business rationale of any significant transactions that are unusual or
outside the normal course of business.

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.

ANNUAL REPORT & ACCOUNTS 2022GROUP FINANCIAL STATEMENTS

INDEPENDENT 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

2 February 2023

ANNUAL REPORT & ACCOUNTS 2022GROUP FINANCIAL STATEMENTS

Consolidated Income Statement

For the year ended 30 September 2022

Continuing operations

Revenue

Cost of Sales

Gross Profit

Distribution Costs

Administrative Expenses

Administrative Expenses-Exceptional Items

Other Operating Income

Underlying Operating (Loss)

Share Based Payments

Exceptional Items

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

Note

2022

£000

Restated

2021

£000

3, 20

19,325

18,265

(14,925)

(14,558)

4,400

(1,781)

(2,865)

1,323

(226)

(13)

1,323

1,084

(88)

1,074

111

1,185

3,707

(1,562)

(2,664)

(46)

217

(274)

(28)

(46)

(348)

(86)

(387)

365

(22)

1,185

(22)

8.99p

(0.17)p

The comparative financial information has been restated as detailed in note 21.

The notes on pages 56 to 88 form an integral part of these financial statements.

ANNUAL REPORT & ACCOUNTS 2022Consolidated Statement
of Comprehensive Income

For the year ended 30 September 2022

Profit/(Loss) for the Year

Other Comprehensive Income

Items that will not be reclassified to profit or loss:

Actuarial (loss)/gain on pension scheme

Restriction of pension assets

Other Comprehensive Income

GROUP FINANCIAL STATEMENTS

Note

2022

£000

Restated

2021

£000

1,185

(22)

(219)

1,849

(693)

(170)

1,156

Total Comprehensive Income for the Year

1,015

1,134

Attributable to:

- Equity Holders of the Parent

1,015

1,134

The comparative financial information has been restated as detailed in note 21.

The notes on pages 56 to 88 form an integral part of these financial statements.

ANNUAL REPORT & ACCOUNTS 2022
GROUP FINANCIAL STATEMENTS

Consolidated Balance Sheet

At 30 September 2022

Co No: 00686429

Non-Current Assets

Intangible Assets

Tangible Assets

Right of Use Assets

Retirement Benefits

Deferred Tax Assets

Current Assets

Inventories

Trade and Other Receivables

Current Tax 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

Equity Attributable to Shareholders of The Parent

Note

Restated

2022
£000

1,473

4,774

1,211

2,471

229

2021
£000

1,405

5,188

1,245

2,563

263

10,158

10,664

4,567

5,095

2,199

11,902

4,702

4,111

1,358

10,226

2020
£000

1,386

5,546

1,438

1,277

9,647

3,968

5,447

845

10,290

22,060

20,890

19,937

(190)

(356)

(4,584)

(5,130)

(1,934)

(240)

(2,174)

(7,304)

14,756

1,348

(324)

943

230

12,510

14,756

(191)

(323)

(4,180)

(4,694)

(2,123)

(354)

(2,477)

(7,171)

13,719

1,345

(324)

929

230

11,479

13,719

(188)

(406)

(4,193)

(4,787)

(2,313)

(584)

(16)

(2,913)

(7,700)

12,237

1,266

(324)

708

118

230

10,239

12,237

The notes on pages 56 to 88 form an integral part of these financial statements. The comparative financial information
has been restated as detailed in note 21.

The financial statements were approved by the Board on 2 February 2023 and signed on its behalf by:

P V Curtis Director

ANNUAL REPORT & ACCOUNTS 2022GROUP FINANCIAL STATEMENTS

Consolidated Statement
of Changes in Equity

For the year ended 30 September 2022

Investment
in Own
Shares

Share
Premium
Account

Share
Based
Payment
Reserve

Merger
Reserve

Retained
Earnings

£000

Share
Capital

£000

Total

£000

2022

At 1 October 2021*

1,345

(324)

929

230

11,479

13,719

Profit for the Year

Other Comprehensive Income

Total Comprehensive Income

Proceeds from issue of shares

Share based payments

Tax on share-based payments

Transfer on exercise of share
options

Transactions with Owners

(24)

(11)

1,185

(170)

1,015

1,185

(170)

1,015

(8)

At 30 September 2022

1,348

(324)

943

230

12,510

14,756

2021

At 1 October 2020*

(Loss) for the Year*

Other Comprehensive Income*

Total Comprehensive Income*

Proceeds from issue of shares

Share based payments

Tax on share-based payments

Transfer on exercise of
share options

Transactions with owners

Investment
in Own
Shares

Share
Premium
Account

Share
Based
Payment
Reserve

Merger
Reserve

Retained
Earnings

£000

Share
Capital

£000

Total

£000

1,266

(324)

708

118

230

10,239

12,237

221

929

(86)

(58)

(22)

1,156

1,134

1,156

1,134

300

106

348

230

11,479

13,719

At 30 September 2021

1,345

(324)

* As restated – see note 21.

The notes on pages 56 to 88 form an integral part of these financial statements.

ANNUAL REPORT & ACCOUNTS 2022
GROUP FINANCIAL STATEMENTS

Consolidated Cash Flow Statement

For the year ended 30 September 2022

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

Profit on sale of Land/Plant and Equipment

Loss on disposal of Intangible Assets

Equity Settled Share Based Payments

Operating cash flow before movements in working capital

Movements in Working Capital:

Decrease/(Increase) in Inventories

(Increase)/Decrease in Trade and Other Receivables

Increase/(Decrease) in Trade and Other Payables

Cash generated from operations

Income Taxes Received

Defined Benefit Pension Contributions less settlements

Net cash inflow from operating activities

Purchase of Software

Purchase of Property, Plant & Equipment

Proceeds from Sale of Property, Plant and Equipment

Expenditure on Capitalised Development Costs

Net cash inflow/(outflow) from investing activities

Repayment of Bank Loan

Principal elements of Lease Liabilities

Interest Paid

Proceeds from Issue of Share Capital

Net cash outflow from financing activities

Net increase in Cash and Cash Equivalents

Cash and Cash Equivalents at start of the year

Cash and Cash Equivalents at end of the year

Reconciliation of cash and cash equivalents

Cash and Cash Equivalents in Current Assets

2022

£000

1,074

(78)

1,084

497

202

(1,496)

395

135

(984)

372

(82)

159

(88)

1,666

(163)

1,415

(190)

(390)

(88)

(651)

841

1,358

2,199

2021

£000

(387)

(47)

(348)

111

484

273

601

(734)

1,336

(8)

1,195

(83)

1,189

(16)

(100)

(167)

(283)

(187)

(420)

(86)

300

(393)

513

845

1,358

2,199

1,358

ANNUAL REPORT & ACCOUNTS 2022GROUP FINANCIAL STATEMENTS

CONSOLIDATED CASH FLOW STATEMENT

£000

(1,358)

668

Net Debt

£000

1,633

309

(1,509)

Net Debt

£000

2,646

107

£000

(845)

(1)

694

(1,206)

Net Debt

An analysis of the change in net debt is shown below:

Bank Loan

Lease
Liabilities

Cash and Cash
Equivalents

At 1 October 2021

New Lease Obligations

Interest Costs

Repayment of Borrowings/Lease Liabilities

Other Cash (Generated)

£000

2,314

(254)

£000

677

309

(414)

At 30 September 2022

2,124

596

(2,199)

521

Bank Loan

Lease
Liabilities

Cash and Cash
Equivalents

At 1 October 2020

New Lease Obligations

Interest Costs

Repayment of Borrowings/Lease Liabilities

Other Cash (Generated)

£000

2,501

(244)

£000

990

107

(450)

At 30 September 2021

2,314

677

(1,358)

1,633

The notes on pages 56 to 88 form an integral part of these financial statements.

ANNUAL REPORT & ACCOUNTS 2022GROUP FINANCIAL STATEMENTS

Notes to the Financial Statements

For the Year ended 30 September 2022

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 8.

B. Basis of Preparation

The consolidated financial statements have
been prepared in accordance with UK – adopted
International Accounting Standards (IFRS) and
applicable Company Law. 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

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 model 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 5 to 20. 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, including impacts of
pandemics, supply chain shortages, recession and
inflationary pressures seen latterly, the directors
note that current economic conditions are
continuing to create uncertainty. Such uncertainties

have and continue to make forecasting extremely
challenging, with these multiple factors causing
delays to delivery schedules.

In assessing the Group’s going concern the
directors also note that (i) despite reporting an
underlying operating loss in the current year and
anticipating a challenging start to the 2023 year,
the Group is expected to return to profitability in
the near term; (ii) has in place adequate working
capital facilities for its forecast needs and was cash
generative through the 2022 financial year, with
a positive EBITDA and strong cash management,
benefiting from a policy of cash retention at this
time; (iii) has a strong order book with significant
further opportunities in its market place; and (iv)
has proven adaptable in past periods of adversity,
as again proven through the 2022 challenges.
Therefore, the directors believe that it is well placed
to manage its business risks successfully.

Supply chain delays now widely seen, aligned
with price pressures in the supply chain, covering
commodities, utilities and wage inflation all pose
risks to UK manufacturing businesses. Offsetting
these, on-shoring opportunities and the supply
chain delays and shortages themselves offer new
opportunities to the Group to assist offset some
of the project delays.

The directors recognise that the ongoing support
of its bank is a key feature to the Group’s success
which provides for the funding and working capital
facilities as outlined in note 17. We maintain
good relationships with our bank and our current
facility are in place until March 2024 before which
discussions should lead to renewal as the bank
remains supportive of our business model.

ANNUAL REPORT & ACCOUNTS 2022D. 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 2021 with no material impact.
No new standards are applicable.

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 2022, 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.

E. 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

GROUP FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

subsidiary prior to acquisition. On initial recognition,
the assets and liabilities of the subsidiary are
included in the consolidated balance sheet at their
fair values, which are also used as the bases for
subsequent measurement in accordance with the
Group accounting policies.

Goodwill is stated after separating out identifiable
intangible assets. Goodwill represents the excess
of the fair value of the consideration transferred
over the fair value of the Group’s share of the
identifiable net assets of the acquired subsidiary at
the date of acquisition. Acquisition costs are written
off as incurred.

F. Intangible Assets

Goodwill

Goodwill representing the excess of the fair value
of the consideration transferred over the fair value
of the Group’s share of the identifiable net assets
acquired is capitalised and reviewed annually
for impairment. Goodwill is carried at cost less
accumulated impairment losses.

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 separately identifiable

and can be measured reliably;

• management are satisfied as to the ultimate

technical and commercial viability of the project;
so that it will be feasible to complete and be
available for use or sale;

• management are satisfied with the availability
of technical, financial and other resources to
complete the development and use or sell the
intangible asset; and

•

it is probable that the asset will generate future
economic benefit.

Any subsequent development costs are capitalised
and are amortised, within cost of sales, from the
date the product or process is available for use,
on a straight-line basis over its estimated useful life.
The useful life for the development costs capitalised
at the current year-end is up to 3 years.

ANNUAL REPORT & ACCOUNTS 2022GROUP FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

Software

Other non-financial assets

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%

Amortisation has been expensed both within cost
of sales and administrative expenses. 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.

G. Impairment of Assets

Goodwill

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.

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.

The Group reviews the carrying amounts of its
tangible and intangible assets other than goodwill to
determine if there has been a triggering event which
indicates whether there is any indication that those
assets have suffered an impairment loss.

If any such indication exists, the recoverable amount
of the asset is estimated in order to determine the
extent of the impairment loss (if any).

Where an impairment loss subsequently reverses,
the carrying amount of the asset is increased to the
revised estimate of its recoverable amount provided
that this does not exceed the carrying amount that
would have been determined had no impairment
loss been recognised for the asset in prior years.
A reversal of an impairment loss is recognised
immediately in 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:

Freehold Buildings

Plant, Machinery and Equipment

7% – 15%

Motor Vehicles

20%

Furniture, Fittings and Office Equipment 10% – 20%

Computers

20% – 33%

Residual values are reviewed annually.

A profit or loss on disposal is recognised in the
consolidated income statement at the surplus
or deficit of disposal proceeds over net carrying
amount of the asset at the time of disposal.

I. Right of Use Assets and Lease Liabilities

Right of Use assets and their associated lease
liability are recognised at the lease commencement
date. The Right of Use asset is initially measured
at cost, comprising the initial amount of the lease
liability plus any initial direct costs incurred and
any lease payments made at or before the lease
commencement date, less any lease incentives
received. The Right of Use asset is subsequently
depreciated using the straight-line method from the
commencement date to the earlier of the end of the
useful life of the asset or the end of the lease term.

ANNUAL REPORT & ACCOUNTS 2022At the commencement date of the lease, the Group
recognises lease liabilities measured at the present
value of the lease payments to be made over the
lease term. Lease liabilities are measured at the
present value of the contractual payments due to
the lessor over the lease term, with the discount
rate determined by reference to the rate inherent
in the lease unless (as is typically the case) this is
not readily determinable, in which case the group’s
and company’s incremental borrowing rate on
commencement of the lease is used. Where a
modification, including change of lease term or
lease payments occurs, an adjustment to the lease
liability and the right of use asset is recognised.

Where a finance lease is settled and a Right of
Use asset is then acquired, a transfer to Tangible
Intangible or Tangible Assets occurs, including the
associated depreciation charge.

Payments associated with short-term leases and
leases of low-value assets are recognised on a
straight-line basis as an expense in profit or loss.
Short-term leases are leases with a lease term of
12 months or less or a value, excluding services
charged, of $5,000.

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

All financial assets are classified as either those
which are measured at fair value through the Income
Statement 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

GROUP FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

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.

Impairment of financial assets

For trade and other receivables, the simplified
approach permitted under IFRS 9 (Financial
Instruments) 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.

Trade and other receivables

Trade receivables and other receivables are initially
measured at fair value and are subsequently
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. To measure expected
credit losses, trade receivables have been grouped
on shared credit risk characteristics. The historical
loss rates are adjusted to reflect current and future
looking information. 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.

Equity Instruments

An equity instrument is any contract which
evidences a residual interest in the assets of an
entity after deducting all of its liabilities. Equity
instruments issued by the Company are recorded
at the proceeds received, net of direct issue costs.

ANNUAL REPORT & ACCOUNTS 2022GROUP FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

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.

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 revenues include,
design and engineering, certification, testing 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, design and engineering costs may be a
separate performance obligation.

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:

Identifying the contract with a customer

Identifying the performance obligations

3. Determining the transaction price

Allocating the transaction price to the
performance obligations

Recognising revenue when/as performance
obligation(s)

Revenue is recognised either at a point in time
or over time, when (or as) the Group satisfies
performance obligations by transferring the
promised goods or providing services to its
customers. At the point of recognising revenue,
the Group also recognises contract liabilities in
respect of unsatisfied performance obligations that
have been invoiced and reports these amounts as
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 1R.

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 any adjustments
in respect of prior years.

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.

Changes in deferred tax assets or liabilities are
recognised as a component of tax expense in the

ANNUAL REPORT & ACCOUNTS 2022income 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 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 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

A liability for short-term compensated absences,
such as holiday, is 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.

Defined Contribution Pension Plans

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

GROUP FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

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.

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/(loss)”
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/(loss) represents the
equivalent IFRS measure but adjusted to exclude
items that we consider would prevent comparison
of the Group’s performance both from one reporting
period to another and with other similar businesses.

Exceptional and Non-Underlying Items are not
defined under IFRS. Exceptional Costs are classified
as those which are separately identifiable by virtue
of their size, nature or expected frequency and
therefore warrant separate presentation. Non-

ANNUAL REPORT & ACCOUNTS 2022GROUP FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

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.

application of tax regulations, in particular R&D tax
credits available. 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.

Exceptional Costs and Non-Underlying Items are
detailed in note 6 to the financial statements.

Q. Grant receipts

Grants received, including the UK Governments
Covid Job Retention Scheme grants (CJRS), are
credited to the income statement within Other
Operating Income when received or the receipt
becomes unconditional.

R. 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.

Impairment of Goodwill

The determination of whether goodwill has been
impaired requires an estimate of the value in use
of the cash-generating units to which the goodwill
has been allocated. The value in use calculation
requires management to make an estimate of the
expected future cash flows of the cash-generating
units and to choose an appropriate discount rate in
order to calculate the present value of those cash
flows. The carrying amount of goodwill and the key
assumptions used in the value in use calculations
are disclosed in note 9.

R&D Expenditure and Tax Credits

Management judgement is required in assessing
the fair value of development costs capitalised
including the future economic benefit expected to
be generated by those assets and in calculating
the attributable costs. Management judgement is
also required in assessing the useful economic lives
of these assets for the purposes of amortisation.
Further information is provided in note 9.

Defined Benefit Pension Scheme

The retirement benefit position shown in the balance
sheet is sensitive to changes in the assumptions used
in the calculation of the defined benefit obligation
in particular assumptions about the discount rate,
inflation, mortality and future pension increases. The
carrying amount of assets and liabilities relating to the
defined benefit pension plan 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 tax due
on a refund of a surplus is payable to the Company
and as such the surplus shown in note 21 should be
disclosed on the Balance Sheet, without impairment.

Expected Credit Losses

In accordance with IFRS 9 (Financial Instruments) the
Group is required to assess the expected credit losses
occurring through the life of its trade receivables.
As a result, the Directors have made a judgemental
assessment of the credit losses in these financial
statements, full provision of which is disclosed in note
17 (F). The expected credit loss provision decreased in
the year to £17,000 (2021: £72,000).

Timing and Recognition of Revenue and Cost
Recognition

IFRS 15 (Revenue Recognition) requires the Group
to identify its performance obligations, determine
the transaction price and allocate this to the
performance obligations and 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 achieved or as work is performed.

The tax credit/charge for the year reflects
management’s judgements in respect of the

The main judgement is whether the design
and engineering work should be a separate

ANNUAL REPORT & ACCOUNTS 2022GROUP FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

performance obligation to the supply of products.
The design and engineering element is often a
separate performance obligation on more complex
and bespoke projects where the level of such work
is more significant.

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.

Where design and engineering is determined
to be a separate performance obligation, there
is a further judgement on the level of contractual
income to allocate to this work and whether the
contractual terms support the recognition of this
income over time, as the service is performed,
rather than when complete.

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

ANNUAL REPORT & ACCOUNTS 2022GROUP FINANCIAL STATEMENTS

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. The CODM
does not review segmental assets and liabilities by segment and therefore no reconciliations are disclosed. For
management purposes the Group comprises three product groups (in accordance with IFRS 8) – electro-mechanical,
lighting & electronics and engineered component distribution (which collectively design, manufacture and market
industrial electrical and electronic products) – less corporate costs, which operate across three market segments –
Rail; Aerospace & Defence and Other. It is on this basis that the board of directors assess Group performance. The
split is as follows:

Electro-mechanical systems

Engineered component distribution

Lighting & Electronics systems

Operational Revenue

Revenue recognised over time

Revenue recognised at a point in time

2022

£000

6,533

3,342

9,450

2021

£000

7,761

3,410

7,094

19,325

18,265

2022

£000

19,228

19,325

2021

£000

788

17,477

18,265

2021

77%

10%

13%

100%

2021

£000

12,618

3,500

2,147

18,265

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

2022

72%

13%

15%

100%

2022

£000

12,649

4,607

2,069

19,325

One individual customer (2021: three) represented more than 10% of Group revenue, combined totalling 23%
(2021: 38%).

Operational Profit

Corporate Costs

Underlying Operating (Loss)

2022

£000

768

(994)

(226)

2021

£000

652

(926)

(274)

Corporate costs and operational profit are shown excluding charges levied to subsidiary entities by LPA Group Plc
relating to management charges and where the property is held by LPA Group Plc, property rent which combined
totalled £594,000 (2021: £426,000).

ANNUAL REPORT & ACCOUNTS 2022GROUP FINANCIAL STATEMENTS

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

2022

Number

2021

Number

107

154

2022

£000

5,203

542

287

6,045

114

164

2021

£000

5,462

550

277

6,317

Detailed information concerning directors’ emoluments, shareholdings and options is shown in the Remuneration
Report. Employee costs included above and capitalised as intangible development cost additions totalled
£156,000 (2021: £120,000).

4. Finance Income

Net Pension Interest Income (note 21)

5. Finance Costs

Bank Loan and Overdraft Interest

Interest on Lease Liabilities

2022

£000

2022

£000

2021

£000

2021

£000

ANNUAL REPORT & ACCOUNTS 2022GROUP FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

6. Operating Profit/(Loss)

The following items have been charged in arriving at Operating profit/(loss).

A. Component costs in arriving at Operating Profit/(Loss)

Materials (to Added Value)

Production Overhead & Direct Labour

Cost of Sales

Selling & Distribution Costs

Administrative Expenses

Administration Expenses – Exceptional Items

Other Operating Income

B. Expenses/(credits) by nature within Underlying Operating Loss

Amortisation of Intangible Assets

Depreciation of Tangible Assets

Depreciation of Right of Use Assets

Loss on Disposal of Assets

Lease Rentals / Short Term Hire Charges – Plant, Equipment & Motor Vehicles

Foreign Exchange (Gain)/Loss

Other Operating Income:

– Covid-19 Job Retention Scheme grants (CJRS)

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

C. Within Exceptional Costs

Sale of land

Reorganisation costs / staff changes

Dual running management costs

2022

£000

9,831

5,094

14,925

1,781

2,865

(1,323)

(7)

2022

£000

497

202

(62)

(7)

2022

£000

(1,506)

173

(1,323)

2021

£000

9,036

5,522

14,558

1,562

2,664

(46)

(217)

2021

£000

111

484

273

(217)

2021

£000

Sale of land relates to the disposal of a piece of surplus land that was valued on the books at £160,000 and realised a
net gain of £1,506,000 during the year (2021: £nil).

Reorganisation costs / staff changes of £173,000 in 2022 relate to a Group wide cost base review and loss of office
payment (2021: £nil).

Dual running costs of £10,000 (2021: £46,000) relate to an extended crossover between the appointment
and retirement of Board Directors related to the board rejuvenation process commenced in 2018 and concluded
31 December 2021. Dual running and reorganisation costs are included within note 3, Employee information, and
reflect the exceptional changes that have taken place by comparison to the Group’s history. All board members
who served at the 2018 AGM retired on, or before, 31 December 2021.

ANNUAL REPORT & ACCOUNTS 2022GROUP FINANCIAL STATEMENTS

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

Deferred Taxation

Net Origination and (Recognition) / Reversal of Temporary Differences

Net Change as a Result of Rate Increase

Total Corporation Tax (Credit)

B. Reconciliation of Effective Tax Rate

Profit/(loss) Before Tax

Tax at The UK Corporation Tax Rate of 19% (2021: 19%)

Effects of:

- Tax Rate Change

- Enhanced Deduction for Qualifying R&D Expenditure

- Prior Period Adjustments
- Prior Periods Losses Recognised

- Other Differences

Total Income Tax Credit

The restatement is covered in note 21 to the accounts.

C. Current and Deferred Tax Recognised Directly in Equity

Tax Charge/(Credit) Arising on Share Options

2022

£000

(65)

(80)

(145)

(111)

2022

£000

1,074

204

(102)

(80)

(71)

(62)

(111)

2022

£000

Restated

2021

£000

(4)

(46)

(50)

(244)

(71)

(365)

2021

£000

(387)

(74)

(71)

(80)

(46)

(55)

(39)

(365)

2021

£000

(20)

ANNUAL REPORT & ACCOUNTS 2022GROUP FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

8. Earnings/(Loss) Per Share

TThe calculation of earnings per share is based upon the profit for the year of £1,185,000 (2021 restated: loss
£22,000) and the weighted average number of ordinary shares in issue during the year of 13.472m (2021: 12.89m)
less investment in own shares of 0.3m (2021: 0.3m), of 13.172m (2021: 12.59m).

2022

2021

Weighted
Average
No of Shares

Earnings
Per
Share

(Loss)
restated

Weighted
Average
No of Shares

Loss per
Share
restated

Earnings

£000

Million

Pence

£000

Million

Pence

Basic Earnings/(Loss) Per Share

Effect of Share Options

1,185

Diluted Earnings/(Loss) Per Share

1,185

13.172

0.007

13.179

8.99

(22)

12.590

(0.17)

12.590

(0.17)

Diluted earnings per share has been calculated for the year ended 30 September 2022 as the Group reported a
profit (2021: the loss was considered anti-dilutive and was ignored for the calculation). Basic earnings per share for
the year ended 30 September 2021 has been restated (see note 21). The impact of the restatement has reduced
loss per share by 0.10 pence.

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 the lighting and electronics segment
through the acquisition of Excil Electronics Ltd.

The recoverable amount of the cash-generating unit (“CGU”) 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 2% (2021: 2%) which is considered to be consistent with the long term average
growth rate for the businesses concerned. The discount rate applied was 13.2% (2021: 10.0%), 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 believes 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. Key to the assessment of impairment of Goodwill are the achievement of future revenue assumptions.
The growth rates assumed are between 12% and 17% for the next 3 years, with 2% growth thereafter.

Were the CGU to not achieve growth assumptions but trade at the levels reported in the 2022 year, the carrying
amount would still exceed the recoverable amount of goodwill.

ANNUAL REPORT & ACCOUNTS 2022GROUP FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

Goodwill

£000

Development
Costs

Software

£000

1,234

1,149

278

167

(83)

362

163

525

(30)

139

216

309

223

561

577

513

544

562

Total

£000

2,073

183

(83)

2,173

163

2,336

687

111

(30)

768

863

1,473

1,405

Cost

At 1 October 2020

Additions

Disposals

At 1 October 2021

Additions

At 30 September 2022

Amortisation and impairment

At 1 October 2020

Charge for the year

Disposals

At 1 October 2021

Charge for the year

At 30 September 2022

Net Carrying Amount

At 30 September 2022

At 30 September 2021

The amortisation charge is recognised across cost of sales and administrative expenses within the consolidated
income statement.

ANNUAL REPORT & ACCOUNTS 2022GROUP FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

10. Tangible Fixed Assets

Cost

At 1 October 2020

Additions

Transferred **

Re-presented

Disposals

At 1 October 2021

Additions

Transferred **

Disposals

Freehold
Land and
Buildings

£000

4,647

Plant,
Vehicles and
Equipment

£000

6,139

100

(13)

(280)

Total

£000

10,786

100

(280)

4,660

6,003

10,663

(160)

330

(99)

330

(259)

At 30 September 2022

4,500

6,322

10,822

Depreciation

At 1 October 2020

Charge for the year

Transferred**

Re-presented

Disposals

At 1 October 2021

Charge for the year

Transferred**

Disposals

At 30 September 2022

Net Carrying Amount

502

(48)

545

587

4,738

393

(280)

4,930

455

165

(89)

5,240

484

(280)

5,475

497

165

(89)

5,461

6,048

At 30 September 2022

3,913

861

4,774

At 30 September 2021

4,115

1,073

5,188

The depreciation charge has been recognised across cost of sales and administrative expenses within the
consolidated income statement.

** Transfers relate to right of use assets which are no long subject to lease obligations.

ANNUAL REPORT & ACCOUNTS 202211. Right of Use Assets

Cost

At 1 October 2020

Additions

Transferred**

Disposals

At 1 October 2021

Additions

Transferred**

Disposals

At 30 September 2022

Depreciation

At 1 October 2020

Charge for the year

Transferred**

Disposals

At 1 October 2021

Charge for the year

Transferred **

Disposals

At 30 September 2022

Net Carrying Amount

At 30 September 2022

At 30 September 2021

GROUP FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

Plant,
Vehicles and
Equipment

£000

1,886

115

(57)

(88)

1,856

333

(330)

(51)

1,808

448

273

(31)

(79)

611

202

(165)

(51)

597

1,211

1,245

The depreciation charge has been recognised across cost of sales and administrative expenses within the
Consolidated Income Statement.

** Assets which are no longer subject to lease obligations are transferred to tangible fixed assets (note 10).

ANNUAL REPORT & ACCOUNTS 2022GROUP FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

12. Inventories

Raw Materials and Consumables

Work in Progress

Finished Goods and Goods for Resale

Inventories are reported inclusive of the following provisions:

Opening provisions

Additional provisions

Utilised (inventory scrapped/written off)

Released (inventory utilised/sold)

2022

£000

2,087

949

1,531

2021

£000

2,051

875

1,776

4,567

4,702

2022

£000

(930)

(119)

2021

£000

(839)

(119)

Closing provisions

(938)

(930)

13. Trade and Other Receivables

Trade Receivables

Other Receivables

Prepayments

Accrued Income

2022

£000

4,666

323

2021

£000

3,540

366

141

5,095

4,111

Trade Receivables are stated after credit losses provided of:

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.

Accrued income is recognised in line with the Revenue Recognition policy, taking account of works carried out
where a contractual underwriting exists such that in the event of cancellation, the Company is entitled to recover
such costs as incurred to that point in time. All amounts are expected to be invoiced within 12 months.

Accrued income has dropped due to the level of ongoing contract activity at the year end.

ANNUAL REPORT & ACCOUNTS 202214. Trade and Other Payables

Current

Trade Payables

Other Taxation and Social Security

Other Payables

Accruals

Deferred Income

GROUP FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

2022

£000

2021

£000

2,814

3,009

662

740

336

278

501

371

4,584

4,180

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 six contracts (2021: seven), as follows:

Deferred Income at 1 October

Invoiced during the year

Sales recognised in the year

Deferred Income at 30 September

2022

£000

371

398

(433)

336

2021

£000

479

537

(645)

371

All deferred income relates to the rail sector, with 20% expected to be recognised within one year (2021: 80%) with
the remaining 80% between one and 3 years. The level of Deferred Income is due to the level of activity at the year
end with some deferred income carried forward from the previous year due to a large multi-year contract.

15. Borrowings

Current

Bank Loan

Non-Current

Bank Loan

Total Borrowings

2022

£000

2021

£000

190

191

1,934

2,124

2,123

2,314

Bank Loan and Overdraft

The Group’s principal banking facilities are with Barclays, comprising a bank loan and an overdraft facility.

The Group’s main finance is a bank loan drawn down in 2019 at £2.6m, repayable over 5 years. The loan has a 5 year
term and bullet repayment and was drawn to refinance a previous loan with the same profile. As at 30 September
2022 the amount outstanding was £2.1m (2021: £2.3m); the loan is to being repaid from October 2021 through 6
quarterly instalments of £62,000, including interest, with the residual repayable in March 2024. Interest is chargeable
at base rate plus 2.25%. The loan has a loan to value and a debt service covenant, measured annually.

The overdraft agreement provides for a facility limited to 1/3 of the value of eligible trade debtors, up to a
maximum of £1.5m. At the year-end and throughout the year the facility was unutilised, with £1.50m of facility
available (2021: £1.13m). 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
developed freehold 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.

ANNUAL REPORT & ACCOUNTS 2022GROUP FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

16. Lease Liabilities

Right of Use Liabilities

Right of use liabilities, as finance leases, typically have a four-to-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 and have an incremental borrowing rate of 3.68% (2021: 3.63%) The minimum
payments under right of use obligations, fall due as follows:

Within one year

Between one and five years

Lease payments – cash outflow in the year

Lease expenses

2022

£000

356

240

596

409

2021

£000

323

354

677

450

Future minimum rentals payable under non-cancellable operating leases or short-term hire contracts, representing
short term or minimal value Lease obligations are as follows:

Within one year

Operating lease expenses and short term hire costs – expensed through the
Consolidated Income Statement in the year

17. Financial Instruments

A. Financial Risk Management

2022

£000

2021

£000

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 plus Lease Liabilities less cash balances

Overall Financing

Gearing (Net Debt as a % of Total Equity)

2022

£000

14,756

521

15,277

3.5%

2021

£000

13,719

1,633

15,352

11.9%

ANNUAL REPORT & ACCOUNTS 2022GROUP FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

Gearing, which is the principal measure used by the Group to monitor its capital structure, reduced to 3.5%,
principally through the sale of surplus land in the year and the resulting net gain of £1.5m.

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.

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 manage risk to exchange rate movements
affecting sales and purchases by either 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. 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:

2022

2021

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

Euro

US Dollar

Aus Dollar

338

420

591

(16)

602

929

1,022

395

475

476

513

871

988

Sterling: forex rates decreased from the start to the end of the year, Euro rates by 2.1%, USD 16.8%. The Group’s
opening cash and cash equivalents would have increased by £5,100 were the 2022 rates have been in place
at 30 September 2021.

Sensitivity

At 30 September 2022 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:

2022

Effect on
Profit
Before Tax

Effect on
Equity

2021

Effect on
Profit
Before Tax

Effect on
Equity

£000

Sterling Weakens By 10% Against the Euro

Sterling Strengthens By 10% Against the Euro

103

(84)

(79)

ANNUAL REPORT & ACCOUNTS 2022GROUP FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

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 3.2% (2021: 2.4%). 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 3.7% (2021: 3.6%).
The composite interest rate across fixed and floating borrowings and liabilities was 3.0% (2021: 2.7%).

The interest rate profile of the Group’s financial (assets) and liabilities at 30 September was:

Floating Rate

Cash and Cash Equivalents

Bank Loan

Fixed Rate

Lease Liabilities

2022

£000

(2,199)

2,124

(75)

2021

£000

(1,358)

2,314

956

596

677

Sensitivity
If market interest rates on floating rate borrowings and cash deposits had been 1% (100 basis points) higher
during the year to 30 September 2022, with all other variables held constant the pre-tax profit would have been
lower by £21,000 (2021: £11,000).

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. The overdraft
facility was unused at the end of 2022 and is a revolving facility. The Group’s loan is a secured facility and
continues to be regularly monitored to ensure it is not in breach of its covenants. The valuations of the freehold
security are regularly discussed with the lender and are moderately geared. The existing facility expires in March
2024 and it is intended that a similar secured facility will be agreed.

Un-Drawn Committed Facilities

The Group’s un-drawn committed borrowing facilities available at 30 September 2022 comprise its bank overdraft
expiring in one year or less at £1.50m (2021: £1.13m), of the total overdraft facility of £1.5m (2021: £1.5m). See
note 15 for the terms of the facility.

ANNUAL REPORT & ACCOUNTS 2022GROUP FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

Maturity Profile of the Group’s Financial Liabilities

The table below summarises the maturity profile of the Group’s financial liabilities based on contractual
undiscounted payments:

Within
1 Year

£000

252

369

3,586

4,207

Within
1 Year

£000

244

341

3,531

4,116

Between 1
and
2 Years

Between 2
and
3 Years

Between 3
and
4 Years

Between 4
and
5 Years

Over
5 Years

£000

1,966

181

2,147

Between 1
and
2 Years

Between 2
and
3 Years

Between 3
and
4 Years

Between 4
and
5 Years

Over
5 Years

£000

244

285

529

1,958

2,032

Total

£000

2,218

645

3,586

6,449

Total

£000

2,446

704

3,531

6,681

2022

Borrowings – Bank Loan

Lease Liabilities

Trade and Other Payables

2021

Borrowings – Bank Loan

Lease Liabilities

Trade and Other Payables

F. Credit Risk

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.

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 2022 these totalled £4.67m (2021: £3.54m). 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 37.5% of trade receivables at 30 September 2022 (2021: 19.0%).

ANNUAL REPORT & ACCOUNTS 2022GROUP FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

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 to determine the expected credit loss. Following adoption
of IFRS 9 (Financial Instruments), the expected credit loss reflects a composite judgment of the Group’s loss
experience and the market conditions at a point in time. The Group has managed its credit facilities and based on
previous experience, a provision of £17,000 (circa 0.4%) has been applied.

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

2022

2021

Gross

£000

2,736

1,171

735

4,683

Expected
credit loss

£000

(17)

Expected
credit loss

£000

(38)

(25)

(8)

(1)

(72)

Gross

£000

1,913

1,239

417

3,612

The Group works closely with customers, which are predominantly represented by blue chip entities, 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 year

Released to the Income Statement

Balance at end of year

2022

£000

(55)

2021

£000

(10)

The impairment reduction of £55k (2021: £10k) relates to the Group’s assessment of the risk of non-recovery from
a range of customers and reference to its historical low level of bad debts.

ANNUAL REPORT & ACCOUNTS 2022
GROUP FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

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.

2022

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 Assets

2021

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

Total
Carrying
Value

£000

4,707

2,199

6,906

(2,124)

(596)

(3,586)

(6,306)

600

4,707

2,199

6,906

(2,124)

(596)

(3,586)

(6,306)

600

Amortised
Cost

£000

Total
Carrying
Value

£000

3,557

1,358

4,915

(2,314)

(677)

(3,531)

(6,522)

(1,607)

3,557

1,358

4,915

(2,314)

(677)

(3,531)

(6,522)

(1,607)

Fair
Value

£000

4,707

2,199

6,906

(2,124)

(596)

(3,586)

(6,306)

600

Fair
Value

£000

3,557

1,358

4,915

(2,314)

(677)

(3,531)

(6,522)

(1,607)

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.

ANNUAL REPORT & ACCOUNTS 2022GROUP FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

18. Deferred Tax

The assets/(liabilities) recognised are as follows:

Property, Plant
and Equiment

Tax Losses

£000

(149)

(129)

(34)

(163)

£000

302

399

470

Other

£000

(43)

(7)

(71)

(78)

Total

£000

(16)

279

263

(34)

229

At 1 October 2020*

Recognised in Income Statement*

At 1 October 2021*

Recognised in Income Statement

At 30 September 2022

* As restated – see note 21.

Deferred tax has been provided at 25.0% at 30 September 2022 (2021: 24.9%) in recognition of the UK
corporation tax increase to 25% from 1 April 2023. The rate used reflects a composite rate attributed to those
assets which are expected to be realised prior to or post the rate increase.

Deferred tax assets have all been recognised in respect of tax losses (2021: £0.71m not recognised). Trading
losses, previously excluded as an asset have been recognised as the Directors believe there is reasonable
expectation of these being utilised based on the historic and future profits achieved in the related companies.

An analysis of the deferred tax balances for reporting purposes is given below:

Property, Plant
and Equiment

£000

(209)

(163)

(164)

(129)

Tax Losses

£000

Other

£000

470

399

(78)

(29)

(7)

Total

£000

516

(287)

229

456

(193)

(263)

Deferred Tax Assets

Deferred Tax Liabilities

At 30 September 2022

Deferred Tax Assets

Deferred Tax Liabilities

At 30 September 2021*

* As restated – see note 21.

ANNUAL REPORT & ACCOUNTS 2022GROUP FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

19. Equity

Share Capital

Share capital is the total of the nominal value (10p) of shares issued.

Issued and Fully Paid

Number

£000

Number

£000

2022

2021

In Issue at the start of the year

Allotted Under Share Plans

13,448,229

1,345

12,658,229

35,000

790,000

1,266

In Issue at the end of the year

13,483,229

1,348

13,448,229

1,345

During the year 35,000 options were exercised at an average exercise price of 49.0p (2021: 790,000 shares
at 38.0p).

The market price of the Company’s shares on 30 September 2021 was 75.5p per share (2020: 72.0p) and the price
range during the year was 66.5p to 98.2p per share (2020: 64.0p to 114.0p).

Proposed Dividends

No dividends were proposed by the directors during the year or after the balance sheet date (2021: none).

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 2022 by the
EBT totalled 300,000 (2021: 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.

ANNUAL REPORT & ACCOUNTS 2022GROUP FINANCIAL STATEMENTS

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: During the year 35,000 options were exercised prior to the scheme
being closed on the 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. Any performance criteria are at the discretion of the Remuneration
Committee at each award.

Outstanding options to subscribe for ordinary shares of 10p each at 30 September 2022 are as follows:

Scheme

Date of Grant

Exercise
price

Dates when
Exercisable

Number of Options

2022

2021

2007 Employee Share Option Scheme

2018 Performance Share Plan

Feb 2012

49.0p

08/02/15 to 07/02/22

35,000

Aug 2018

Feb 2020

July 2020

Mar 2021

104.8p

02/08/21 to 01/08/28

60,000

109.3p

20/02/23 to 19/02/30

170,000

63.2p

83.5p

23/07/23 to 22/07/30

02/03/24 to 01/03/31

70,000

35,000

120,000

220,000

110,000

80,000

Total options

A reconciliation of the movement in the number of share options is given below:

335,000

530,000

335,000

565,000

2022

2021

Weighted
Average
Exercise
Price (P)

Number of
Options

Weighted
Average
Exercise
Price (P)

Outstanding at the Beginning of the Year

92.0

565,000

Granted During the Year

Exercised During the Year

Cancelled During the year

Outstanding at the End of the Year

Exercisable at the End of the Year

49.0

71.3

96.2

(35,000)

(195,000)

335,000

104.8

60,000

61.4

83.5

38.0

101.4

92.0

92.2

No share options have expired during either 2022 or 2021.

Number of
Options

1,350,000

80,000

(790,000)

(75,000)

565,000

155,000

The options outstanding at the end of the year have an exercise price in the range of 63.2p to 109.33p and a
weighted average contractual life of 7.3 years (2021: 7.8 years).

There were 35,000 options exercised during the year with an average exercise price of 49.0p (2021: 790,000 at
a price of 38.0p). 195,000 options were cancelled during the year following the awardees leaving the Group’s
employment, terminating the award agreements, with an average exercise price of 71.3p (2021: 101.4p).

During the year Nil share options (2021: 80,000) were awarded under the Performance Share Plan 2018.

ANNUAL REPORT & ACCOUNTS 2022GROUP FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

The share based remuneration expense recognised is calculated using the Black-Scholes valuation model, the
principal assumptions being:

Date of award

Share price at date of award (p)

Exercise price of option at date of award (p)

Fair value of option at date of award (p)

Weighted average vesting period (years)

Expected option life (years)

Expected forfeitures (%)

Volatility (%)

Risk free interest rate (%)

Dividend yield (%)

2021

02/03/21

82.5

83.5

22.0

5.0

42.0

0.14

1.32

The Group’s share-based remuneration expense recognised in the year was £12,500 (2021: £28,000). The
expected price volatility is based on the historical volatility adjusted for any expected changes to future volatility
due to publicly available information.

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 schemes was £285,000 (2021: £277,000).

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 113 past employees as at 31
March 2022 (2021: 139). 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.

The scheme is administered by the Section of the Deloitte Master Trust.

A full actuarial valuation was carried out as at 31 March 2021 in accordance with the scheme funding requirements
of the Pension Act 2004, by Mark McClintock of Deloitte Total Reward and Benefits, 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 at 31 March 2021 reported a surplus of £2.83m. The Group has agreed with the trustees
that it will continue to meet the expenses of the plan and levies to the Pension Protection Fund. The de-risking of
the scheme assets, was concluded in January 2022 and as there continues to be a surplus recorded through the
period to 30 September 2022, there were no voluntary contributions, (2021: £100,000).

For the purposes of IAS19 the actuarial valuation as at 31 March 2021, which was carried out by a qualified independent
actuary, has been updated on an approximate basis to 30 September 2022. There have been no changes in the
valuation methodology adopted for this period’s disclosures compared to the previous period’s disclosures.

ANNUAL REPORT & ACCOUNTS 2022
GROUP FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

Amounts included in the Balance Sheet

Fair Value of Scheme Assets

Present Value of Defined Benefit Obligation

Pension Surplus

Restriction of Pension Surplus

Asset Recognised in the Balance Sheet

Restated

2022

£000

12,435

(8,633)

3,802

(1,331)

2,471

2021

£000

17,056

(13,113)

3,943

(1,380)

2,563

2020

£000

16,596

(14,632)

1,964

(687)

1,277

Under UK tax legislation a tax deduction of 35% is applied to a refund from a UK pension scheme, before it is passed to
the employer. This tax deduction has been applied to restrict the value of the surplus recognised for the pension scheme.

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 2022.

Reconciliation of Opening and Closing Present Value of the Defined Benefit Obligation

Defined Benefit Obligation at Start of The Year

Interest expense

Actuarial loss/(gain) due to Scheme Experience

Actuarial (gain)/loss due to Changes in Demographic Assumptions

Actuarial (gain) due to Changes in Financial Assumptions

Reduction in obligation following settlements

Past service cost

Benefits Paid

Defined Benefit Obligation at End of The Year

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)

Assets distributed on settlements

Contributions by the Group

Benefits Paid

2022

£000

13,113

258

303

(62)

(4,515)

(464)

8,633

2022

£000

17,056

336

(4,493)

(464)

2021

£000

14,632

241

(1,170)

312

(286)

(170)

(451)

13,113

2021

£000

16,596

288

705

(182)

100

(451)

Fair Value of Scheme Assets at End of The Year

12,435

17,056

The actual return on the plan assets over the period ending 30 September 2022 was a reduction of £4,157,000
(2021: gain of £993,000).

ANNUAL REPORT & ACCOUNTS 2022GROUP FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

Defined Benefit Income Recognised in Income Statement

Interest Income

Interest Cost

Net Interest Income

Defined Benefit Costs Recognised in the Statement of Other Comprehensive Income

Return on Plan Assets
(excluding Amounts Included in Interest Income) – (Loss)/Gain

Experience (Losses)/Gains arising on the Defined Benefit Obligation

Effect of changes in the Demographic Assumptions Underlying the Present
Value of the Defined Benefit Obligation – Gain/(Loss)

Effect of changes in the Financial Assumptions Underlying the Present Value
of the Defined Benefit Obligations – Gain

Amount Recognised in Other Comprehensive Income – (Loss)/Gain

Assets

Equities

Corporate Bonds

Government Bonds

Diversified Growth Funds

Cash and Net Current Assets

Total Assets

2022

£000

336

(258)

2022

£000

(4,493)

(303)

4,515

(219)

2022

£000

2,835

4,000

5,520

2021

£000

288

(241)

2021

£000

705

1,170

(312)

286

1,849

2021

£000

4,770

3,937

6,472

1,822

12,435

17,056

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. The scheme holds some
assets in the form of bonds to match off certain liability risks, being interest rate and inflation sensitivity.

ANNUAL REPORT & ACCOUNTS 2022GROUP FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

Significant Actuarial Assumptions

Rate of Discount

Inflation (RPI)

Inflation (CPI)

Allowance for Pension in Payment Increases of RPI or 5% max

Allowance for Pension in Payment Increases of CPI or 3% max

Allowance for GMP equalisation – % of DBO

Allowance for Commutation of Pension for Cash at Retirement

2022
% Per
Annum

2021
% Per
Annum

5.35

3.70

3.10

3.55

2.45

2.9

2.00

3.50

2.80

3.35

2.30

2.9

The revaluation of non-GMP pensions in deferment is in line with CPI inflation subject to statutory limits.

The mortality assumptions adopted at 30 September 2022 are 100% of the standard tables S3PxA, Year of Birth, no
age rating for males and females, projected using CMI_2021 converging to 1.25% p.a. (at 30 September 2021 are
100% of the standard tables S2PxA, Year of Birth, no age rating for males and females, projected using CMI_2022
converging to 1.25% p.a.). These imply the following life expectancies:

Male Retiring In 2022:

Female Retiring In 2022:

Male Retiring In 2042:

Female Retiring In 2042:

Life Expectancy at
Age 65 (years)

2022

22.2

24.5

23.5

25.9

2021

22.3

24.7

23.6

26.1

Analysis of the Sensitivity to the Principal Assumptions of the Present Value of the Defined Benefit
Obligation

Assumption

Change in Assumption

Change in Liabilities

2022

% change

2021

% change

Discount Rate

Increase of 0.10%

Decrease by 1.2%

Decrease by 1.5%

Rate of Inflation

Increase of 0.10%

Increase by 1.1%

Rate of Mortality

Increase in Life Expectancy of 1 Year

Increase by 3.3%

Increase by 3.9%

Commutation

Members Commute an Extra 10%
of Post A Day Pension on Retirement

Decrease by 0.1%

Decrease by 0.5%

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 2022 is 12 years (2021: 15 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.

ANNUAL REPORT & ACCOUNTS 2022GROUP FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

The contributions expected to be paid by the Group to the plan for the period commencing 1 October 2022 are
£nil (2021: £nil).

Prior Year Adjustment

Under UK tax legislation a tax deduction of 35% is applied to a refund from a UK pension scheme, before it is
passed to the employer. The prior year accounts have been restated to restrict the pension scheme asset by the
35% tax which is netted off the amounts that would be refunded. Given no further taxes will be payable by the
Group, the deferred tax provision held in relation to the pension scheme has also been reversed.

There is no change in the profit before tax reported for the year ended 30 September 2022 as a result of this
change however the net assets have reduced by £380,000. There is no impact on the current and prior year cash
flow statements.

The impact of the prior year adjustment on the previously reported results and balance sheets is as follows:

Consolidated Income Statement and Statement of Comprehensive Income for the year ended
30 September 2022

Loss Before Taxation

Taxation

Loss for the Year

Other Comprehensive Income

Total Comprehensive Income for the Year

Balance sheet as at 30 September 2022

Pension Scheme Asset

Deferred Tax

Other Balance Sheet Assets and Liabilities

Net Assets

Retained Earnings

Share Capital and Other Reserves

Total Equity

Balance sheet as at 30 September 2022

Pension Scheme Asset

Deferred Tax

Other Balance Sheet Assets and Liabilities

Net Assets

Retained Earnings

Share Capital and Other Reserves

Total Equity

As originally
presented

Adjustment

Restated

£000

(387)

353

(34)

1,248

1,214

£000

(92)

(80)

£000

(387)

365

(22)

1,156

1,134

As originally
presented

Adjustment

Restated

£000

3,943

(723)

10,893

14,113

11,873

2,240

14,113

£000

(1,380)

986

(394)

£000

2,563

263

10,893

13,719

11,479

2,240

13,719

As originally
presented

Adjustment

Restated

£000

1,964

(389)

10,976

12,551

10,553

1,998

12,551

£000

(687)

373

(314)

£000

1,277

(16)

10,976

12,237

10,239

1,998

12,237

ANNUAL REPORT & ACCOUNTS 2022GROUP FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

22. Financial Commitments

Capital Commitments

Contracted for but not provided in the accounts amounted to £Nil (2021: £326,000).

Contingent Liabilities

As at 30 September 2022 Group contingent liabilities relating to guarantees in the normal course of business
amounted to £109,000 (2021: £109,000).

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

Other Related Party Transactions

2022

£000

602

700

2021

£000

660

674

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 (2021: none).

ANNUAL REPORT & ACCOUNTS 2022COMPANY
FINANCIAL
STATEMENTS

Company Balance Sheet

Company Statement of Changes in Equity

Company Notes to the Financial Statements

ANNUAL REPORT & ACCOUNTS 2022STRATEGIC REPORT | CHAIRMAN’S STATEMENTCOMPANY FINANCIAL STATEMENTS

Company Balance Sheet

At 30 September 2022

Company number: 00686429

Fixed Assets

Investments

Tangible Assets

Current Assets

Debtors

Cash at Bank and In Hand

Creditors: Amounts Falling Due Within One Year

Net Current Liabilities

Total Assets Less Current Liabilities

Note

2022

£000

5,411

2,061

7,472

471

1,275

1,746

(2,221)

2021

£000

5,411

2,328

7,739

475

133

608

(2,119)

(475)

(1,511)

6,997

6,228

Creditors: Amounts Falling Due After More Than One Year

(2,634)

(2,823)

Net Assets

Capital and Reserves

Called Up Share Capital

Investment In Own Shares

Share Premium Account

Share Based Payment Reserve

Merger Reserve

Retained Earnings †

Total Equity Shareholders’ Funds

C12

C13

4,363

3,405

1,348

(324)

943

784

1,563

4,363

1,345

(324)

929

784

611

3,405

† The Company has not presented a separate Income statement account as permitted by Section 408 of the Companies
Act 2006. The gain dealt within the financial statements of the Company amounted to £0.93m (2021: loss £0.26m).

The financial statements were approved by the Board on 2 February 2023 and signed on its behalf by:

P V Curtis
Director

ANNUAL REPORT & ACCOUNTS 2022COMPANY FINANCIAL STATEMENTS

Company Statement of Changes in Equity

For the year ended 30 September 2022

Investment
in own
shares

Share
Premium
Account

Share
Based
Payment
Reserve

Merger
Reserve

Retained
Earnings

£000

Total

£000

Share
Capital

£000

2022

At 1 October 2021

1,345

(324)

929

784

611

3,405

Profit for the Year

Total Comprehensive Income

Proceeds from Issue of shares

Share based payments

Transfer on exercise of
share options

Transactions with owners

At 30 September 2022

1,348

(324)

943

(24)

(11)

928

784

1,563

4,363

Investment
in own
shares

Share
Premium
Account

Share
Based
Payment
Reserve

Merger
Reserve

Retained
Earnings

£000

Total

£000

Share
Capital

£000

2021

At 1 October 2020

1,266

(324)

708

118

784

760

3,312

Loss for the Year

Total Comprehensive Income

Proceeds from Issue of shares

Share based payments

Tax on share based payments

Transfer on exercise of
share options

Transactions with owners

221

(86)

(58)

(255)

300

106

348

At 30 September 2021

1,345

(324)

929

784

611

3,405

ANNUAL REPORT & ACCOUNTS 2022
COMPANY FINANCIAL STATEMENTS

Company Notes to the Financial
Statements

For the year ended 30 September 2022

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’, 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 2022.

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

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.

ANNUAL REPORT & ACCOUNTS 2022COMPANY FINANCIAL STATEMENTS

COMPANY NOTES TO THE FINANCIAL STATEMENTS

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 Groupwide 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.

ANNUAL REPORT & ACCOUNTS 2022COMPANY FINANCIAL STATEMENTS

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 two (2021:
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

2022

Number

2021

Number

2022

£000

631

759

2021

£000

591

728

Detailed information concerning directors’ emoluments, shareholdings and options is shown in the Remuneration
Report within the Group Financial Statements. Employee benefits expenses include items contained within
exceptional costs of £98,000 (2021: £46,000) see note 6 within the Group Financial Statements including £10,000
(2021: £46,000) of dual running management costs and £88,000 (2021: £nil) of reorganisation costs.

C5.

Investments

Investments in Subsidiary Undertakings

At 1 October 2021 and 30 September 2022

Provision for
Impairment

Carrying
Amount

£000

(1,048)

£000

5,411

Cost

£000

6,459

ANNUAL REPORT & ACCOUNTS 2022COMPANY FINANCIAL STATEMENTS

COMPANY NOTES TO THE FINANCIAL STATEMENTS

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

Subsidiary Undertakings

Holding

Proportion
of Voting Rights
and Shares Held

Nature of Business

Channel Electric Equipment Holdings Limited Ordinary Shares

100%

Holding Company

Channel Electric Equipment Limited
t/a LPA Channel Electric

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

100%

Electrical Components

Ordinary Shares

100%

Electro-Mechanical
Components

Ordinary Shares

100%

Metal Fabrication

Ordinary Shares

100%

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
and the Group’s Life Assurance Scheme.

The registered office for all Group entities is Light & Power House, Shire Hill, Saffron Walden, CB11 3AQ, UK.

The Directors have confirmed the carrying value of the investment are suitably supported by the net assets
of the subsidiary companies and/or discounted future cash flows.

C6. Tangible Fixed Assets

Cost

At 1 October 2021

Charge for the year

At 30 September 2022

Depreciation

At 1 October 2021

Charge for the year

At 30 September 2022

Net book value

At 30 September 2022

At 30 September 2021

Freehold Land
and Buildings

£000

2,393

(160)

2,233

266

300

1,933

2,127

Plant and
Machinery

£000

716

515

588

128

201

Total

£000

3,109

(160)

2,949

781

107

888

2,061

2,328

ANNUAL REPORT & ACCOUNTS 2022COMPANY FINANCIAL STATEMENTS

COMPANY NOTES TO THE FINANCIAL STATEMENTS

C7. Debtors

Amounts falling due within one year

Amounts due from Subsidiary Undertakings

Other Receivables

Prepayments

Deferred Taxation (note C11)

Amounts due from subsidiary undertakings are interest free and repayable on demand.

C8. Creditors: Amounts Falling Due within One Year

Bank Loan

Debt

Trade Creditors

Amounts owed to Subsidiary Undertakings

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

2022

£000

176

280

471

2022

£000

190

1,440

329

205

2,221

2022

£000

1,934

700

2,634

2021

£000

115

318

475

2021

£000

191

1,758

164

2,119

2021

£000

2,123

700

2,823

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.

ANNUAL REPORT & ACCOUNTS 2022COMPANY FINANCIAL STATEMENTS

COMPANY NOTES TO THE FINANCIAL STATEMENTS

C10. Borrowings

Due Within One Year

Bank Loan

Non-Current

Bank Loan

Total Borrowings

Repayable

Within One Year

Between One and Two Years

Between Two and Five Years

2022

£000

190

1,934

2,124

190

1,934

2,124

The following security is provided to Barclays Bank plc in respect of the Company’s £2.1m term loan
outstanding at 30 September 2022 (2021: £2.3m): (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.

See Group Financial Statements Note 15 for the terms of the borrowings.

C11. Deferred Tax Asset

At 1 October 2021

Charged to profit in the year

At 30 September 2022

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

2022

£000

237

280

2021

£000

191

2,123

2,314

191

196

1,927

2,314

£000

318

280

2021

£000

262

318

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 25.0% (2021: 24.9%). Deferred tax assets are disclosed in Note C7.

ANNUAL REPORT & ACCOUNTS 2022COMPANY FINANCIAL STATEMENTS

COMPANY NOTES TO THE FINANCIAL STATEMENTS

C12. Share Capital

Issued and Fully Paid

Number

£000

Number

£000

2022

2021

In Issue at the Start of the year

Allotted Under Share Plans

13,448,229

1,345

12,658,229

35,000

790,000

1,266

In Issue at the End of the year

13,483,229

1,348

13,448,229

1,345

During the year 35,000 options were exercised at a weighted average exercise price of 49.0p, (2021:790,000
at 38.0p). At the year end, 300,000 (2021: 300,000) ordinary shares in the Company were held as Investment in
Own Shares, the shares having been acquired by the LPA Group Plc Employee Benefit Trust.

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 2022, 300,000 ordinary shares of
10p each were held (2021: 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.

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 £13,000 (2021: £28,000).

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

Security is provided to Barclays Bank plc in respect of the group overdraft facility by way of a cross guarantee
between the company and its subsidiaries. As at 30 September 2022 the company’s exposure in relation to the
overdraft facility was £720,000 (2021: £784,000).

ANNUAL REPORT & ACCOUNTS 2022OTHER
INFORMATION

Five Year Summary

Alternative Performance Measures Glossary

100

101

ANNUAL REPORT & ACCOUNTS 2022OTHER INFORMATIONFive Year Summary

Unaudited Information

Summary Income Statement

Revenue

Adjusted EBITDA †

Depreciation and Amortisation

Underlying Operating Profit/(Loss)

Share Based Payments / Exceptional Items

Net Finance Costs

Profit/(Loss) Before Taxation

Taxation

Profit/(Loss) for The Year

Summary Balance Sheet

Property, Plant and Equipment ^*

Intangible Assets – excluding Goodwill ^”

Net Trading Assets

Net Operating Assets ^^

Net Debt ^*

Deferred Taxation

Net Assets before Pension and Goodwill

Goodwill

Pension Asset (net of Deferred Tax)

2018

£000

2019

£000

2020

£000

Restated*

2021

£000

2022

£000

27,979

19,533

20,711

18,265

19,325

2,908

(664)

2,244

(175)

(45)

2,024

(253)

1,771

2018

£000

7,216

4,286

11,553

(1,971)

9,586

1,149

1,974

945

(741)

204

(406)

(35)

(237)

185

(52)

2019

£000

7,006

210

4,482

1,613

(830)

783

(167)

(65)

551

595

2020

£000

6,984

239

5,252

594

(868)

(274)

(74)

(39)

(387)

365

(22)

Restated*
2021

£000

6,433

256

4,688

568

(794)

(226)

1,310

(10)

1,074

111

1,185

2022

£000

5,985

324

5,119

11,698

12,475

11,377

11,428

(2,420)

9,320

1,149

1,855

(2,646)

(18)

9,811

1,149

1,591

(1,633)

263

10,007

1,149

2,563

(521)

229

11,136

1,149

2,471

Net Assets

12,709

12,324

12,551

13,719

14,756

Other Information

Adjusted EBITDA To Sales

Basic Earnings/(Loss) Per Share

Dividends Per Ordinary Share

Net Assets Per Ordinary Share

Net Debt/adjusted EBITDA

Gearing (Net Debt as a % of Total Equity) ^*

Key

2018

10.4%

14.34p

2.90p

102.7p

0.68

15.5%

2019

4.8%

(0.43)p

1.10p

97.4p

2.56

19.6%

2020

7.8%

4.82p

99.2p

1.64

21.1%

2021

3.3%

(0.17)p

108.9p

2.75

11.9%

2022

2.9%

8.99p

112.0p

0.92

3.5%

† – adjusted earnings before interest, tax, depreciation, amortisation of intangible assets, non-cash charges for equity-settled share

based payments and exceptional costs.

^^ 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 from 2020, excluding software assets from 2019. Net Debt inclusive of Lease Liabilities from 2020.

^” - Inclusive of software assets from 2019, previously included within Property, Plant and Equipment.

*2021 has been adjusted as detailed in note 21 but the comparative periods for 2018, 2019 and 2020 have not.

100

ANNUAL REPORT & ACCOUNTS 2022OTHER INFORMATIONAlternative Performance Measures
Glossary

The Annual report and Accounts include alternative
performance measures (“APM’s”) which are not defined
or specified under the requirements of UK-adopted
International Accounting Standards (“IFRS”). The
Company believes that these APM’s provide all readers
of the document with relevant additional information
on the Group, such measures utilised by the Group’s
management also.

Order Book

The combined value of all orders received (order intake),
representing future revenues less revenue recognised
in the period and adjustments for foreign exchange
movements.

The measure allows management to assess the future
success and visibility of potential earnings.

Order Entry

The value of contractual commitments represented by
a purchase order or comparable binding commitment
from a customer received during any period for the
delivery of the performance obligation / revenue at a
point in the future. Order intake excludes framework
agreements or contract awards representing a basis,
agreement or intention to place future orders and
reference only the product specification and basis
of agreement, without commitment or definition.

The measure allows management to assess the
achievement of its selling activities.

Pipeline

Opportunities identified and targeted to win, generating
order intake.

This measure allows management to identify the
activities that, with a sensitivity, should result in order
intake. Such activities represent defined customer
intentions or work streams that are reasonably expected
to be awarded to a level that once sensitised, is sufficient
to generate adequate Order Intake in future periods.

Funnel

Activities identified that feed the Pipeline, ultimately
leading to Order Intake.

This forward looking measure is used by management to
ensure sufficient activity and interest is identified within
the Company’s target markets and across its customer
base and those targeted that will feed the Pipeline.

Added Value

The margin generated through the conversion
of raw materials.

A standard manufacturing measure utilised by the Group
provides management comfort that sufficient margin is
available within the manufacturing processes through
the conversion of material, to fund overhead and
variable cost absorption.

101

ANNUAL REPORT & ACCOUNTS 2022OTHER INFORMATIONNotice of Meeting

NOTICE IS HEREBY GIVEN that the Sixty First Annual
General Meeting (“AGM”) of LPA Group Plc (the
“Company”) will be held at the offices of finnCap,
1 Bartholomew Close, London, EC1A 7BL on Thursday
23 March 2023 at 12.00 noon for the following purposes:

Routine Business

1. To receive the accounts for the year ended 30

September 2022, together with the reports of the
directors and the auditors thereon.

2. To re-elect as a director Gordon Wakeford

who retires by rotation, in accordance with the
Company’s Articles of Association.

3. To re-appoint as a director Stuart Stanyard,

in accordance with the Company’s Articles of
Association.

4. To re-appoint RSM UK Audit LLP as auditors to the

Company, to hold office until the end of the next
general meeting at which accounts are laid before
the Company, and to authorise the directors to fix
the auditors’ remuneration.

Special Business

Share Capital

To consider, and if thought fit, pass resolution 5 as an
ordinary resolution:

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 £154,177 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.

102

To consider and, if thought fit, pass resolution 6 as a
special resolution:

That subject to the passing of resolution 5 above,
the directors be given power pursuant to section
570 of the Companies Act 2006 to allot equity
securities (as defined in section 560 of the said
Act) for cash pursuant to the authority conferred by
resolution 5 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:

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 £134,832 (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.

ANNUAL REPORT & ACCOUNTS 2022To consider and, if thought fit, pass resolution 7 as a
special resolution:
7.

That subject to and in accordance with the
Company’s Articles of Association and pursuant
to section 701 of the Companies Act 2006, the
Company is hereby generally and unconditionally
authorised to make market purchases (as defined
in section 693(4) of the Companies Act 2006) of
any of its Ordinary Shares on such terms and in
such manner as the directors of the Company may
from time to time determine, provided that:

The maximum number of Ordinary Shares
hereby authorised to be purchased is
1,348,323 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;

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 2024 or the close of business
on the date falling 15 months after the date
of the passing of this resolution, 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 had not expired.

By order of the Board
Paul Curtis
20 February 2023

Registered office:
Light & Power House
Shire Hill, Saffron Walden
CB11 3AQ, UK

Notes:

Attending in Person

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 21 March 2023 (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

Information regarding the Meeting is available from
www.lpa-group.com.

If you wish to attend the Meeting in person, please
bring some form of identification.

Appointment of Proxies

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

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ANNUAL REPORT & ACCOUNTS 2022NOTICE OF MEETING
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 been included, but you can

also 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 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, 10th Floor, Central
Square, 29 Wellington St, Leeds LS1 4DL. 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 a Proxy Online

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

104

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 Group’s 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 via Proxymity

Proxymity Voting – if you are an institutional investor
you may also be able to appoint a proxy electronically
via the Proxymity platform, a process which has
been agreed by the Company and approved by the
Registrar. For further information regarding Proxymity,
please go to www.proxymity.io. Your proxy must be
lodged by 12.00 noon on 21 March 2023 in order to
be considered valid or, if the meeting is adjourned,
by the time which is 48 hours before the time of
the adjourned meeting. Before you can appoint a
proxy via this process you will need to have agreed
to Proxymity’s associated terms and conditions.
It is important that you read these carefully as you
will be bound by them and they will govern the
electronic appointment of your proxy. An electronic
proxy appointment via the Proxymity platform may
be revoked completely by sending an authenticated
message via the platform instructing the removal
of your proxy vote.

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 www.euroclear.com/site/ public/
EUI). CREST Personal Members or other CREST
sponsored members, and those CREST members
who have appointed a voting service provider(s),
should refer to their CREST sponsor or voting
service provider(s), who will be able to take the
appropriate action on their behalf. In order for a
proxy appointment made by means of CREST to be
valid, the appropriate CREST message (a CREST
Proxy Instruction) must be properly authenticated
in accordance with Euroclear UK & Ireland
Limited’s (EUI) specifications and must contain
the information required for such instructions, as
described in the CREST Manual. The message must
be transmitted so as to be received by the issuer’s
agent (ID: RA10) by 12.00 noon on 21 March 2023.

ANNUAL REPORT & ACCOUNTS 2022NOTICE OF MEETINGFor 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.

Termination of Proxy Appointments

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 Capital

16. As at 1 February 2023, the Company’s issued share

capital comprised 13,483,229 Ordinary Shares of
10p each (nil 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 1 February 2023
is 13,483,229. 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 meeting or before at
the registered office of the Company from the date
of this notice.

105

ANNUAL REPORT & ACCOUNTS 2022NOTICE OF MEETING

Group Directory

LPA Group Plc
Light & Power House

Shire Hill

Saffron Walden

Essex

CB11 3AQ, UK

Tel: +44 (01)1799 512800

Email: enquiries@lpa-group.com

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

Hybrid / battery control boxes and systems

Control panels & boxes

Enclosures, fabrications, laser cut, form & weld

Rail, aircraft, ship & industrial connectors

Shore supply systems

Transport turnkey engineering and manufacturing services

106

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 units

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 systems

Electronic monitoring systems

Fluorescent lamp Inverters

Complete rolling stock interior lighting systems.

Rolling stock interior and exterior door status

indication systems

Rolling stock seat electronics solutions

ANNUAL REPORT & ACCOUNTS 2022LPA Group PLC – Form of Proxy

For use at the Annual General Meeting to be held at 12.00 noon on Thursday 23 March 2023 at the offices of finnCap,
1 Bartholomew Close, London, EC1A 7BL.

I/We _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________

of __________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

being a member/members of LPA Group plc hereby appoint (note 1) __________________________________________________________________________ or failing him
the Chairman of the meeting as my/our proxy to vote for me/us and on my/our behalf at the above mentioned meeting
and at any adjournment thereof. I/We wish this proxy to be used as shown below:

Signed _____________________________________________________________________________________________________________________________ Dated _________________________________________________________________________ 2023

Please indicate with an “X” in the spaces below how you wish your votes to be cast. This proxy will be used only in the
event of a poll being directed or demanded. If the form is returned without any indication as to how the proxy shall
vote on any particular matter, the proxy will vote or abstain as he thinks fit. The “Vote withheld” option is provided to
enable you to abstain on any particular resolution. However, it should be noted that a “Vote withheld” is not a vote in
law and will not be counted in the calculation of the proportion of votes “For” and “Against” a resolution. If you select
“Discretionary”, your proxy can vote as he or she chooses or can decide not to vote. Your proxy can also do this on any
other resolution that is put to the meeting.

Please tick here if this proxy appointment is one of multiple proxies being made (and refer to Note 5 below)

If this is one of multiple proxies being made please insert the number of shares to which this form relates
and see Note 5 below

Resolution

For

Against

withheld Discretionary

Vote

1. To receive the accounts for the year ended

30 September 2022.

2. To re-elect Gordon Wakeford as a director

of the Company,

3. To re-appoint Stuart Stanyard as a director

of the Company.

4. To re-appoint RSM UK Audit LLP as auditors and to

authorise the directors to fix the auditor’s remuneration.

5. To authorise the directors to allot shares (as defined in

section 551 of the Companies Act 2006) in the Company.

6. To authorise the directors (pursuant to section 570
of the Companies Act 2006) to allot shares in the
Company for cash.

7. To authorise the Company to make market purchases

(as defined in section 693(4) of the Companies Act 2006)
of its own shares.

107

ANNUAL REPORT & ACCOUNTS 2022Notes:

If you wish to appoint as your proxy any person(s) other than the Chairman of the meeting, please insert
the full name(s) of the proxy or proxies (in block capitals) in the space above. A proxy need not be a member
of the Company and may attend the meeting in person and vote on a show of hands and on a poll.

2. To be effective a form of proxy must be in writing and signed by the member or his duly authorised attorney
or, if the member is a corporation under its common seal or signed by a duly authorised officer or attorney.
A corporation may appoint a representative to attend and vote at the meeting.

3. To be valid this proxy, together with any power of attorney under which it is signed, must be received at at Link
Group, 10th Floor, Central Square, 29 Wellington St, Leeds LS1 4DL not less than 48 hours (excluding any part
of a day that is a non-working day) before the time fixed for the meeting.

In the case of joint holdings the vote of the first-named holder in the register will be accepted to the exclusion
of the other joint holders.

5. To appoint more than one proxy you may photocopy this form. Please indicate the proxy holder’s name and

the number of shares in relation to which they are authorised to act as your proxy (which, in aggregate, should
not exceed the number of shares held by you). Please also indicate if the proxy instruction is one of multiple
instructions being given. All forms must be signed and should be returned together in the same envelope.

6. All members are entitled to attend and vote at the meeting, whether or not they have returned a form of proxy.

If two or more valid forms of proxy are delivered in respect of the same share, the one which was delivered last
(regardless of its date or the date of its execution) will be valid.

8. Appointment of a proxy will not preclude a member from attending and voting in person should he subsequently

decide to do so.

9. Any alterations made in this form of proxy should be initialled.

108

ANNUAL REPORT & ACCOUNTS 2022109

ANNUAL REPORT & ACCOUNTS 2022STRATEGIC REPORT | CHAIRMAN’S STATEMENTLPA Group Plc

Light & Power House

Shire Hill

Saffron Walden

CB11 3AQ UK

+44 (0) 1799 512800

This report is printed on FSC certified material and fully recyclable

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ANNUAL REPORT & ACCOUNTS 2022STRATEGIC REPORT | CHAIRMAN’S STATEMENT