Logistic Properties of the Americas Annual Report 2023

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FY2023 Annual Report · Logistic Properties of the Americas

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LPA GROUP PLC
Annual Report & Accounts 2023

LPA Group Plc
Manufacturing
the future

LPA GROUP

Is an innovation-led engineering specialist in electronic
and electro-mechanical components and systems

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

Is known for innovating cost-effective engineering
solutions in hostile and challenging applications,
to improve product reliability, reduce maintenance
and life cycle costs

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, Shanghai Pudong Airport, Siemens,
SNCF, Stadler, Spirit Aerospace, Taiwan Rolling Stock
Company, Transport for London, Unipart Rail and Wabtec

Financial & Operational Highlights

For the Year ended 30 September 2023

Order Entry

Order Book

Revenue

Underlying Operating Loss*

Share Based Payments, Negative Goodwill and Exceptional Items

Profit before Tax

Basic Earnings Per Share

Proposed Dividend

Gearing **

2023
£000

25,511

31,561

21,712

(69)

776

759

6.52p

7.7%

2022
£000

19,689

27,762

19,325

(226)

1,310

1,074

8.99p

–

3.5%

* Operating Profit before Share Based Payments, Negative Goodwill and Exceptional Items

** Net Debt as a % of Total Equity

Through the year to 30 September 2023, the year included the following highlights and operational developments.

Successful acquisition and integration of competitor’s range of inter-car jumper products. This gives access to
approximately 2,000 vehicles across the UK where we can now offer product support.

Strong order entry leading to a year end record orderbook of £31.6m.

Continued expansion of sales partner network around the world.

Continued development of standard products across the Group to reduce dependence on large projects.

First sales from LPA Lighting Systems to aviation sector with USB charging products designed and supplied
to prototype build.

ANNUAL REPORT & ACCOUNTS 2023

ANNUAL REPORT & ACCOUNTS 2023STRATEGIC 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

Alternative Performance Measures Glossary

NOTICE OF MEETING

LPA GROUP PLC – FORM OF PROXY

103

105

106

111

ANNUAL REPORT & ACCOUNTS 2023STRATEGIC REPORT

ANNUAL REPORT & ACCOUNTS 2023STRATEGIC REPORT | CHAIRMAN’S STATEMENTChairman’s Statement

STRATEGIC REPORT

Overview

We have witnessed a much improved business, a growth
in our sales line and a return to profitability in the last
6 months of the year. The individual business plans
for the members of the Group are beginning to deliver
on the Group’s strategy. We have long recognised
our need to broaden our offering as some of our
operations have become too reliant on a few large
customers. We have ended the year with a strong order
book replacing most of what has been delivered this
year, strengthened by aftercare work rather than large
new projects.

LPA Connection Systems set out to have a more
transformative year. Now, with its stronger focus on
the aftercare market and at the same time further
investment in aviation products, the strategy is starting
to bear fruit. It is looking for additional markets and
products away from rail that it can make and deliver to
build resilience into its overhead recovery, an example of
this being our recently announced entry into the battery
charging market for the aviation industry.

LPA Lighting Systems will deliver over the next
18 months a lot of the extant projects that were
in development, and in some cases deferred. Our
challenge thereafter is to ensure we seek out other
product lines for what is a first class electronic
engineering design and manufacturing facility.

The completion of the executive team at LPA Channel
Electric has been a welcome shift for this business as
its order book increases to previous levels, and the
prospects for the business are back to better than
pre-pandemic levels. We are consciously looking for
further opportunities in aerospace, defence and niche
industrial products.

As I reported last year, we have had a very good
response to our customer and relationship management
programmes and the signing up of new distributor
partners across the globe. Our sales and marketing
team have been busy at a number of exhibitions in
Europe and North America; a good example was a
strong presence at Inter Airport in Munich this year.
We have recently attended AusRail Plus in Australia and
International Ground Support Expo in the US. This is
leading to discussions with potential partners to make
and deliver products for them in the UK.

Our new Group CFO, Stuart Stanyard, joined the
Board in Spring and we continue to recruit heavily
into our Sales teams and into engineering competency
generally. We are an innovative group and in order to
remain so we must continually strive to look for talented
people and where possible recruit them, even if it
means buying their nascent business opportunities.
Our innovation committee is developing connections
with academia, having already established relationships
with universities and colleges, and this will continue.
To get the balance right we will rebase our reward
mechanisms to retain more moderate salaries and
to increase the performance related element of our
remuneration packages.

As an innovation-led engineering specialist in electronic
and electro-mechanical components and systems
we will continue to invest in our capabilities. We have
a programme of recruitment especially of apprentices
and young engineers. Operationally, the manufacturing
facilities remain first class but we need to be more
agile as the Group expands and grows. We will need
to react even quicker to the data flows from the
manufacturing processes to be able to improve
productivity in every sense. We have begun an
investment in a new enterprise resource planning tool
(“ERP”) to give our leaders better control of our outputs;
to know the cost of every process, to get it right on
time first time and to deliver a quality experience to our
customers. To compete on a global stage, as we do, we
must invest in continuous improvement.

ANNUAL REPORT & ACCOUNTS 2023STRATEGIC REPORT

CHAIRMAN’S STATEMENT

The sale of some surplus land in 2022 gave us plenty
of working capital to carry us through what we knew
would be a difficult 18 months of trading. It also enabled
us to do a small acquisition during the year that we
announced in March 2023. As our turnover grows we
will need working capital to fund higher stock levels
and debtors and we planned for this. The Bank facilities
have been renewed with our Bankers and with planned
profitability I am pleased to be able to report that we will
pay a dividend this year and restore our policy of paying
dividends going forward.

Shareholders and Investors

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

The Group exports widely and this needs to be
reflected in our stakeholder relationships which must
be proactive, long term, visible and embedded into our

corporate culture. We have stakeholders, in the wider
sense, all over the world and it is heartening that the
exec team are now able to visit them and travel freely;
much of what we do is solutions based and flows from
personal interactions.

Dividends and Pension Fund

A small final dividend of 1p per share (2022: nil) has been
declared for the year ended 2023. The Board believes
in a progressive dividend so will endeavour to set a
reasonable expectation of growth over the coming years.

Included in our Balance sheet is an asset representing
the actuarial valuation, as at 31 March 2023, and the
consequent accounting adjustment, for our (closed)
defined benefit pension scheme. I originally took over
as Chair of the scheme in the short term whilst we
transferred to new Managers, refocused our investment
policies and endeavoured to maintain our surplus.
This ensured our CEO could stay focused on the core
business. The rebalanced investment portfolio has put
the scheme in a very strong position and I intend to step
down as Chair leaving it to our Group CFO to govern the

LPA Group Board

ANNUAL REPORT & ACCOUNTS 2023day to day running of the scheme. This will allow
me to be more objective as your Chairman concerning
the overall strategy of the scheme on our balance sheet
including the timing of any exit way from the fund and
when are we best placed to consider the timing of a
buyout process.

Employees

Our people and our investment in them remains key to our
future success. Their skills alone are not enough without
a commitment to the style and corporate values that the
Board are committed to promoting. We still have some
work to do but our more recently appointed subsidiary
directors are clearly committed to these values and we will
see the impact of this in the coming years.

We pride ourselves on our engineering skills and our
factory operations and are committed to investment
to maintain this capability. We do maintain flexibility
through use of agency and temporary contracts, but
we have no zero-hour contracts. The general health,
and well-being of our employees personally, cannot be
underestimated. Senior management time on people
issues, managing our employee numbers and the cost
base remains part of daily routine. Recruiting young
people into a traditional engineering business and
more importantly its workspace is not easy; therefore
communication with our staff, engagement with their
aspirations and progressive investment in their well-
being will distinguish us.

We continue our communication programme including
a comprehensive newsletter to our Employees, this
is published twice a year. Induction programmes and
the Board’s belief in instilling our corporate values and
engagement remains a priority.

I should like to thank all our employees, past and
present, for their hard work and diligence during 2023
and for their commitment to our future as we start to
look ahead at what I hope will be more encouraging
times across our worldwide markets.

Board

Board members’ biographies and relevant experience
are set out within Company Information on pages 36-37
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 he
and our recently appointed Group CFO Stuart Stanyard
comprise the group Board Executive Directors. Andrew
Jenner, as Senior Independent Director, and Chair of the
Audit Committee has been in post throughout the year
under review as has Gordon Wakeford who is Chairman
of our Remuneration Committee.

STRATEGIC REPORT

CHAIRMAN’S STATEMENT

ESG

We have reported on our Group ESG commitments for a
number of years now and we are committed as we move
forward to ensuring that we stay in the forefront of best
practice for a leading engineering company. We actively
manage our carbon footprint, support greener practices
and manage waste in an environmentally transparent
way. We encourage good health and wellbeing in our
staff and drive safety, innovation, as well as inclusion
and diversity into our day to day activities.

Outlook

The Executive team have an even stronger order book
to work with than last year, a solid balance sheet with
renewed facilities in place, positive operating cash flow
and a clear vision. The Board has a process for looking
at identified opportunities and enhancing capability in
line with the strategy and it will consider each one on its
merits. The Group has undergone significant change in
its leadership recently, and whilst there is a slight lag in
seeing measurable profit impact, there is discernible shift
in momentum. I am pleased to say that our outlook is
now stronger with a bright future that will be built on our
innovation, capability and great customer relationships.

Robert B Horvath
Chairman
24 January 2024

ANNUAL REPORT & ACCOUNTS 2023STRATEGIC REPORT

Business Model and Strategy

The LPA Group plc is a quoted Small and Medium-sized
Enterprise (SME), admitted to trading on the AIM market
of the London Stock Exchange, and industry classified
in the Electronic and Electrical Equipment FTSE sector.

The Group is an innovation-led engineering specialist
in electronic and electro-mechanical components
and systems, supplying markets operating within
high dependency, hostile and benign environments
which focuses on the market segments of rail, rail
infrastructure, aviation (aircraft and infrastructure),
industrial markets and defence. These are viewed as

stable / growth markets both in the UK and globally.
All Group activities serve the same markets (to a
greater or lesser extent), have a mutual dependence
on transportation (which accounts for more than two
thirds of Group turnover), share resource and frequently
work on the same projects.

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

LPA operations

Market segment

Products, solutions, and technologies

LPA Connection Systems

Electro-mechanical systems

• Hybrid / battery control boxes and

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

Tel: +44 (0)1799 512800

enquiries@lpa-connect.com

A designer and manufacturer
of electro-mechanical systems
and components to the rail,
rail infrastructure, aerospace
infrastructure and industrial
markets.

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,
aerospace, aircraft and 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 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 2023Group 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 2023STRATEGIC 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. Two out of the
three sites now have ISO 14001 certification and one is
carbon neutral. Our remaining site is working towards
both of these.

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 mental health, animal welfare, 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 best practise 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 Group’s social
responsibility falls under two categories: compliance
and proactiveness. Compliance refers to our Group’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 or matters reported are KPIs,
published through use of health & safety notice boards,
together with site committee meeting activities.
Each site has volunteer fire marshals and first aiders

ANNUAL REPORT & ACCOUNTS 2023STRATEGIC REPORT

ENVIRONMENTAL, SOCIAL AND GOVERNANCE

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

recognised and its policy is to keep employees regularly
informed on matters relating to their employment
through circulars and team briefings.

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

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

ANNUAL REPORT & ACCOUNTS 2023STRATEGIC REPORT

Chief Executive Officer’s Review

Trading Results

The vision for LPA is being realised. A much more
positive second half and a real impetus in both LPA
Channel Electric and LPA Connection Systems enabled
us to turn around the first half loss, delivering an
improved second half. LPA Lighting Systems still suffers
from delays, not least, from HS2, Central Line as well as
other key projects.

Stronger trading in H2 fell short of full recovery from
the slower trading experienced during H1, resulting in
an underlying operating loss for the full year slightly
ahead of prior year at £0.1m (2022: loss £0.2m). Within
the period we successfully integrated the acquisition
of a competitor’s intercar-jumper product line, leading
to negative goodwill of £0.9m, resulting in a final profit
before tax for the year of £0.8m (2022: £1.1m).

Order entry improved significantly in the period to
£25.5m (2022: £19.7m) with strong contributions by
LPA Channel Electric and LPA Connection Systems
offsetting a lower intake from LPA Lighting Systems
which was caused primarily by the delay in award of the
HS2 scopes of work. It is envisaged that these awards
will happen during the coming year and we remain well
placed to compete for this work.

Revenues increased to £21.7m (2022: £19.3m) with LPA
Connection Systems performing strongly in the period,
benefitting from increased aviation product sales and
the newly acquired product line coming on stream.

The strong order entry achieved during the year
resulted in the order book increasing by £3.8m, ending
the year at £31.6m (2022: £27.8m).

Added Value (“AV”) for the year remained broadly in line
with expectation and slightly up on the prior year at
50.3% (2022: 49.1%).

2023 Summary

Order book increased to £31.6m (2022: £27.8m)

Order entry at £25.5m (2022: £19.7m)

Revenue at £21.7m (2022: £19.3m)

Underlying operating loss of £0.1m (2022: loss of £0.2m)

Profit before tax at £0.8m (2022: £1.1m)

Net cash inflow from operating activities £0.3m
(2022: £0.1m).

Markets

Aerospace (aircraft) was steady for the period with
main manufacture build rates remaining at similar
levels to the prior year. Airbus did however make some
progress with the A350 programme in the latter part
of the period, increasing rates from 5 to 6 aircraft per
month. Aspirations for this programme are for a build
rate of 9 aircraft per month by the end of 2025.

The A220 programme maintained an average build
rate of 4 aircraft per month against aspirations of 6.
Efforts by Airbus / Spirit to streamline and improve
their production process are ongoing and there is
confidence from them that build rates can be increased
to 14 aircraft per month by the end of 2025. There is
also talk of a new longer version of the aircraft which

ANNUAL REPORT & ACCOUNTS 2023
STRATEGIC REPORT

CHIEF EXECUTIVE OFFICER’S REVIEW

Systems has been smoothly integrated and is delivering in
all aspects of expectations. This acquisition is an important
product line for our aftercare business and will continue to
contribute for many years to come.

The legislation across the EU banning the sale of
fluorescent tubes from September 2023 is a strong
positive for us, driving much interest in our LED
alternative. The Group, in preparation for this change,
has been active in this area for the last few years and,
as such, enjoys good technical experience, active sales
channels and a good product offering aimed at serving
this new requirement.

The legislation mandating the use of USB-C on all
phones has also recently been agreed within the EU
and UK, with all new devices needing to adhere by the
end of 2024. The Group has been a leader in providing
USB-A charging across the UK rail market and is well
placed to serve its customers requirements as they
move to update their vehicles in compliance with this
new requirement.

Newbuild projects in the UK have slowed from their
peak and a quieter period is predicted as we await new
funding decisions and subsequent investment. It is
pleasing however to see some of the existing projects
won finally moving into production, and output for the
coming years will enjoy revenues from the prestigious
Siemens Victoria Line and Alstom TGV projects
amongst others.

Export remains an important part of the Group’s
business at 39%. In support of this we continue our
efforts in building our sales channels around the world
and in the development of products suited to this type
of sales model.

Industrial market progression was mostly achieved
through our Niphan range of specialist electrical
connectors, with considerable work undertaken to
update the approvals of this range and to re-establish
contact with historical customers. As such, the range
saw enhanced revenues for the period and further
progress is expected as we move forward. LPA Channel
Electric also put in place the first foundations of its entry
into the industrial marketplace and will look to enhance
this further in the coming year.

Operational Review

The achievement of the Aviation quality standard
AS9100 by our LPA Connection Systems business in
the period means that all sites now run with enhanced
certification and customer opportunity. Achieving these
levels of quality are key to ensuring our skilled and
invested facilities continue to deliver at the standards
our customers are demanding of their supply chain.

would compete against the Boeing 737-8. This however
is many years in the future but shows that confidence in
this new aircraft family is growing.

Work has continued on targeting new aviation platforms
with good progress being made on projects including
helicopters and EVTOL (Electric Vertical Take-off and
Landing) aircraft. These aircraft are from a new breed
of aviation companies and enjoy orderbooks of 900+
and 1,000+ aircraft respectively. These programmes
have the potential to significantly increase LPA Channel
Electric revenues once certification is received and
production commences in the coming years.

Aerospace (infrastructure) continued to deliver on its
strategy with another excellent year being achieved.
The focus over the last few years of developing our
worldwide sales channels led to order entry significantly
increasing by 46% and revenues subsequently
increasing 78% in the period. This renewed range of
products continue to impress our customers and are
now included in many of the busiest airports around the
world. Building on this success our engineers continue
development of the range and it is envisaged several
new products will be released in the coming year.

In support of this sector the Group participated at the
Inter Airport show in Munich and also took its first steps
into the American market with a stand at the International
GSE Expo show. Both shows resulted in good interest
for the range and confirmed the strategy for this market
segment is starting to deliver tangible results.

Rail – aftercare was strong in the period offsetting a
slowdown in new build activity in some areas of the Group.
The recent product line acquisition by LPA Connection

ANNUAL REPORT & ACCOUNTS 2023
STRATEGIC REPORT

CHIEF EXECUTIVE OFFICER’S REVIEW

The acquisition, announced in March 2023, of the
inter-car jumper product line has been successful. The
range is now fully incorporated within our design and
manufacturing departments, and we have provided
a near perfect delivery record to our customers. This
is the Group’s first acquisition for 20 years and the
experience has been invaluable in assessing and
growing our ability to undertake such projects. It is
envisaged that these skills will be used again as we
progress with our growth plans over the coming years.

The year saw continued investment in people as we
look to build the skills and abilities to take the Group to
the next level. This is now mostly complete and other
than flexing direct labour to support increased revenues
we expect headcount to remain broadly flat over the
coming period.

Capex whilst higher than last year remains relatively low.
It is apparent however that the ERP systems in some
of our facilities are now struggling to keep up as we
progress with our drive on efficiency and growth. As
such, the coming year will see investment in new ERP
systems at our two manufacturing facilities.

The proceeds of the sale of surplus land in 2022 has
been used wisely to enable our Capex, restore some of
our working capital and, pay for a small acquisition. As
detailed in the Chief Financial Officer’s report the Group
banking facilities have been renewed, and our overall
cash position supports our longer-term plans.

Outlook

The Group has ambitious plans for the coming years
and is committed to providing growth, opportunity
and returns for shareholders as well as its wider
stakeholders. In support of these plans the following
activities are key.

Rebalancing the business with a more favourable mix
of standard products versus projects

Organic growth across all businesses

Development of new market segments, diversifying
away from its dependence on Rail

Continued development and management of worldwide
sales channels

Implementation of planned strategic acquisitions

Enhancing the LPA brand worldwide.

Excellent progress has already been made in many
of these areas. And, although we remain cautious
against a backdrop of world unrest and challenges, we
are also confident that our people, invested facilities,
strong balance sheet and clear strategic goals, give us
the ability to navigate these uncertain times, and deliver
the vision we hold for the Group.

Paul Curtis
Chief Executive Officer
24 January 2024

ANNUAL REPORT & ACCOUNTS 2023
15

ANNUAL REPORT & ACCOUNTS 2023STRATEGIC REPORT | CHAIRMAN’S STATEMENTSTRATEGIC REPORT

Financial Review

The key drivers related to the business performance in
the year and position at 30 September 2023, together
with explanation of the financial Key Performance
Indicators as summarised on page 22.

Trading Performance

Macro-economic factors

During 2023, we saw a further improvement in
the overall economy, evidenced by a significant
improvement in order entry of 30%, part of this being
driven by our acquisition of a competitor’s product line.
Our Lighting Systems business continued to see some
projects move to the right, but some of these projects,
the London Underground Central line in particular,
have now started to deliver. Whilst H1 was heavily
impacted by these delays, H2 saw some improvement
and an uplift in activity, resulting in a profitable period,
highlighting that once over a certain level, a good level
of return can be expected from the business.

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

There has been some improvement in the supply chain
and employment, although the latter remains tight. The
Group completed some key appointments in the year.

Headlines

• Order entry exceeded sales at £25.5m (2022:

£19.7m) resulting in the order book growing further
to £31.6m (2022: £27.8m), an increase of 13.5%;

• Revenue of £21.7m up 12.4% (2022: £19.3m) with
LPA Connection Systems revenues up £1.9m and
LPA Channel Electric revenues up £0.7m, LPA
Lighting Systems down £0.2m;

• Added Value increased by 1.2% at 50.3% (2022:

49.1%); and

• Gross margins 22.6% (2022: 22.8%), was slightly

lower because of product mix.

ANNUAL REPORT & ACCOUNTS 2023By comparison to 2022, H1 2023 revenues increased by
5.8% to £9.1m (2022: £8.6m), delivering an underlying
operating loss of £0.6m (2022: loss of £0.6m). H2 revenues
were anticipated to accelerate as customer production
recovered from delayed projects. H2 delivered revenues of
£12.6m (2022: £10.7m), representing an increase of 17.6%
against H2 2022 sales. This resulted in an H2 underlying
profit of £0.5m (2022: profit of £0.3m).

Distribution costs and administrative expenses
increased by 11% to £5.1m (2022: £4.6m). The main
contributors to this were the wider economic cost
pressures seen across the industry. Group employment
costs increased by £0.5m to £6.7m (2022: £6.2m).
The increase was primarily due to strengthening
management teams at LPA Connection Systems and
LPA Channel Electric.

During the year 255,000 share options were awarded
to Directors as one award at an exercise price of 50p
subject to three increasingly targeted performance
hurdles which are related to earnings per share and
market capitalisation. No value has been attributed
to these options in the accounts in line with current
assumptions (2022: Nil options awarded).

Exceptional Items and Negative Goodwill

Exceptional items and negative goodwill in the year
totalled a gain of £0.8m (2022: gain of £1.3m). Key items
comprised:

i. Negative goodwill following a fair value adjustment on
the acquisition of a product line and associated trade
of £0.9m (2022: £nil)

ii. Write off of obsolete inventory from discontinued

product line of £0.2m (2022: £nil)

iii. Profit on sale of surplus land of £nil (2022: £1.3m).

Finance Costs

Within finance costs, the interest on borrowings
increased to £0.15m (2022: £0.09m). The weighted
average interest rate increased by 2.9% from 3.2% to
6.1%. There was no utilisation of the Group’s overdraft
facility in the year. The UK base rate increased 7 times
throughout the year, increasing through the year from
2.25% to 5.25%.

Profit Before Tax, Taxation and Earnings
Per Share

After net finance income of £0.05m (2022: net cost
£0.01m) a profit before tax of £0.8m was recorded
(2022: profit before tax of £1.1m). A tax credit of £0.1m
(2022: £0.1m) is recognised, reporting a profit after tax
of £0.9m (2022: £1.2m). This resulted in a basic earnings
per share of 6.52p (2022: 8.99p).

STRATEGIC REPORT

FINANCIAL REVIEW

The average UK corporation tax rate for the year was
22% (2022: 19%). The main differences to the standard
rate of corporation tax are due to non-taxable negative
goodwill and R&D tax credits.

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.

Balance Sheet

• Gearing (net debt as a % of total equity) increased to

7.7% (2022: 3.5%);

• Net debt increased by £0.7m to £1.2m (2022: £0.5m);

• Working capital, as defined as inventory, trade & other
receivables less trade & other payables, increased
7% to £5.4m (2022: £5.1m); and

• Pension asset surplus recognised increased by 8.6%

to £2.7m (2022: £2.5m).

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

Intangible assets, which comprise goodwill related to
the Group’s investment in Excil Electronics Ltd, the fair
value of the intellectual property purchased in the year
of £1.7m, capitalised development costs and software
purchases were £3.2m (2022: £1.5m). After assessment
for impairment the goodwill on the Group’s investment
in Excil Electronics remains unchanged at £1.1m.
Development costs capitalised in the year, representing
the continued development of the Group’s technologies
and new product development (“NPD”), were £0.1m
(2022: £0.2m).

The net book value of property, plant and equipment
as at 30 September 2023, including Right of Use
Assets, totalled £5.8m (2022: £6.0m), of which property
represented £3.8m (2022: £3.9m), plant, equipment
and motor vehicles £1.9m (2022: £2.1m). Additions
in the year increased slightly following the low level
in the previous year of capital investment, at £0.5m
(2022: £0.4m). Disposals in the year totalled £0.9m with
a net book value of £Nil including Right of Use lease
terminations (2022: £0.3m with a net book value of
£0.2m). The depreciation charge remained flat at £0.7m
(2022: £0.7m).

ANNUAL REPORT & ACCOUNTS 2023STRATEGIC REPORT

FINANCIAL REVIEW

Net Debt and Financing

The Group’s main bank finance is a bank loan drawn
down in 2019 at £2.6m and repayable over 5 years.
This is shown as due within one year as the facility is
due to be refinanced by March 2024. This has recently
been refinanced and no repayment in full is expected
in the current year, but this remains shown as due
within one year as reflective of the position at the year
end. Repayments are quarterly over the term with a
bullet repayment in March 2029 of £2.0m (quarterly
repayments calculated at draw down on a 15-year
repayment term). As at 30 September 2023 the amount
outstanding was £1.9m (2022: £2.1m). Interest is
payable at base rate plus 2.25%.

Cash Flow

Net cash inflow from operating activities was £0.3m
(2022: £0.1m) made up of a trading cash inflow of £0.7m
(2022: £0.4m); an increase in working capital of £0.4m
(2022: £0.5m) and tax refunds of £Nil (2022: £0.2m).
Overall, there was a net reduction in the Group’s cash
position of £1.0m (2022: increase £0.8m).

During the year £0.25m (2022: £Nil) was spent on the
acquisition of a new product line, the balance of £0.25m
will be spent next year. Capital expenditure outflows
on property, plant and equipment increased to £0.2m
(2022: £0.1m), excluding assets financed through lease
arrangements. Capitalised development expenditure
amounted to £0.1m (2022: £0.2m), primarily further
product developments focused on smart lighting and
electronic systems, including rail seat electronics. Note
that in 2022, the Group benefited from a £1.7m cash
receipt from the sale of land.

In the year new leasing arrangements led to right of use
additions of £0.3m (2022: £0.3m). Interest at 5.3% was
charged on fixed rate borrowings (2022: 3.7%). Interest
on the Group’s overdraft facility is payable at base rate
plus 2.0%. The facility was unutilised as at 30 September
2023 and 2022. The composite interest rate across both
borrowings and lease liabilities was 5.6% (2022: 3.1%).

Capital loan repayments of £0.2m were made in the
year (2022: £0.2m). Outflows repaying the principal
elements of lease liabilities were £0.4m (2022: £0.4m).
Interest payments on borrowings amounted to £0.2m
(2022: £0.1m).

Defined Benefit Pension Asset

The LPA Industries Limited Defined Benefit Scheme was
part of the ISIO (previously Deloitte Pensions Master
Plan) throughout the entire year under review. The costs
of running the scheme have been shared between the
Company and the scheme. Costs borne by the Group
this year amounted to £0.1m (2022: £0.2m).

A full Actuarial valuation of the Scheme was carried
out in March 2021 which indicated the Scheme was
at a healthy 121% funding level. At 31 March 2023 an
actuarial report indicated that this had risen to 146% of
the actuarial funding level. The benefit of the change in
investment strategy in January 2022, when the Trustees
having undertaken a review in 2021 agreed to lock in the
gains and de risk the scheme, has been beneficial. The
key driver for the then improved funding position has
been the higher than assumed returns on the Scheme’s
assets and the changes in financial conditions which
have reduced the liabilities. It is natural for the Scheme’s
funding level to fluctuate over time reflecting changes in
the financial markets.

The Trustees, under advice, did not seek any voluntary
employer contributions during the year from the Group
(2022: £Nil). The IAS 19 position shown in the note 21
to these accounts reflects the impact of rising interest
rates on the present value of the liability to pay pensions
in the future.

Going Concern

In assessing going concern, the main considerations
have been trading, new financing and to a lesser extent
supply chain shortages and inflationary pressures.
The Group continues to witness some supply chain
delays, aligned with price pressures from commodities,
utilities and wage inflation. These all pose risks to UK
manufacturing businesses but supply chain delays
creates on-shoring opportunities for the Group which
we are seeking to exploit.

ANNUAL REPORT & ACCOUNTS 2023STRATEGIC REPORT

FINANCIAL REVIEW

working capital facilities for its forecast needs and was
cash generative on an operational level through the
2023 financial year, with a positive EBITDA and strong
cash management; (iii) has a strong order book with
significant further opportunities in its market place; and
(iv) has proven adaptable in past periods of adversity, as
again proven through the 2023 challenges. Therefore,
the directors believe that it is well placed to manage its
business risks successfully.

The directors continue to develop its strong working
relationship with its bank that provides for the funding
and working capital facilities 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
was due to expire in March 2024. This has recently been
extended for a further 5 years on the same terms.

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

Stuart Stanyard
Chief Financial Officer
24 January 2024

ANNUAL REPORT & ACCOUNTS 2023STRATEGIC 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 2023STRATEGIC 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 2023 to minimise inflationary
impact and to safeguard against short term supply issues. This will
continue through 2024 to a lesser amount.

• 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 2023STRATEGIC 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 19 with an Additional Performance Measures glossary on page 105.

KPI

Basis of measurement

2023

2022

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(1)

126

Financial

Orders to revenue

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

1.18

1.02

measure of prospective growth

Order entry

• order intake confirmed

£25.5m

£19.7m

Order book

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

£31.6m

£27.8m

less revenue

Revenue growth

•

Increase year-on-year as a percentage of prior year

12.4%

5.8%

Added value

• the margin generated on revenue after deduction of material

50.3%

49.1%

costs but before other costs of sale and conversion

Gross margin

• as a percentage of revenue

22.6%

22.8%

Profitability

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

(0.3%)

(1.2%)

to revenue

Cash generation

• net (decrease) / increase in cash and cash equivalents before

(£0.3m)

£1.5m

financing activities

Gearing

• the measure of net debt being borrowings and lease liabilities

7.7%

3.5%

less cash balances, to net assets

(1) As per best practice and a reinvigorated Health and Safety process, a high number of near misses indicates an open

culture of reporting possible accidents which can be appropriately actioned.

The Strategic Report on pages 5 to 22 was approved by the Board on 24 January 2024 and signed on its behalf by:

Paul Curtis
Chief Executive Officer

ANNUAL REPORT & ACCOUNTS 2023BOARD
REPORTS

Audit Committee Report

Remuneration Report

Corporate Governance Report

Directors’ Report

ANNUAL REPORT & ACCOUNTS 2023BOARD 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 four 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;

• Monitor the integrity of the financial statements

• Oversee the Company’s relationship with the

of the Group and any formal announcement relating
to its financial performance;

external auditor.

Andrew Jenner
Chairman of the Audit Committee
24 January 2024

• 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. All governance issues or unexpected
outcomes are brought to the attention of the Board;

ANNUAL REPORT & ACCOUNTS 2023Remuneration 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.

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 2024 his annual
salary was £193,325 (January 2023: £193,325), he

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.

Stuart Stanyard was appointed CFO and Company
Secretary on the 1 March 2023 with a notice period
6 months. As at 1 January 2024 his annual salary was
£125,000 (March 2023: £125,000), he receives 10%
employer pension contributions to the Group’s defined
contribution scheme enhanced by NI savings, private
health insurance, an accommodation relocation allowance
and he is entitled to the provision of a car, or car allowance
with insurance and break down cover. Included within his
salary he receives a fee of £5,000 per annum as Director
of LPA Industries Pension Trustees Limited. 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.

Non-Executive Directors’ Remuneration and
Terms of Appointment

The remuneration of the Non-Executive directors is
determined by the Board as a whole and the policy is
to pay an appropriate level of remuneration for their
work on the Board and its committees. Non-Executive
directors are normally appointed for an initial period
of three years. Appointments are made under a letter
of appointment subject to retirement by rotation or
removal under the Company’s articles of association.
Non-Executive directors do not participate in the
Group’s share option arrangements or bonus schemes.

Robert B Horvath, Non-Executive Chairman from
9 August 2021, was appointed on 1 February 2021 as a
Non-Executive Director and Chair elect. The Chairman
will stand for re-election at the forthcoming AGM under
resolution 2, with one further triennial extension. As at 1
January 2024 he receives a fee of £60,000 per annum
(January 2023: £60,000).

Andrew Jenner was appointed on 1 September 2021
as Senior Non-Executive Director and Chair of the

ANNUAL REPORT & ACCOUNTS 2023
BOARD REPORTS

REMUNERATION REPORT

Audit Committee. He has a term of office, as set out in
his letter of appointment dated 14 June 2021, which
expires on 31 August 2024, with up to two triennial
extensions. As at 1 January 2024 he receives a fee
of £37,000 per annum (January 2023: £37,000).

held on 23 March 2023 and expires on 1 April 2026 with
one further triennial extension. As at 1 January 2024
he receives a fee of £35,000 per annum (January 2023:
£35,000). He also holds the position of Chair of the
Remuneration Committee.

Gordon Wakeford has a term of office, as set out in his
letter of appointment dated 3 February 2020, which
was renewed at the Company’s annual general meeting

Information Subject to Audit

Directors’ Remuneration

Directors’ remuneration for the year was as follows:

Paul Curtis

Stuart Stanyard (from 1/3/23)

Chris Buckenham (to 31/08/22)

Executive Directors

Robert B Horvath

Andrew Jenner

Gordon Wakeford

Len Porter (to 31/12/21)

Non-Executive Directors

Total

Salaries
and Fees
£000

Bonus Benefits
£000

£000

LTIP*
£000

Pension
£000

193

266

132

398

Total
2023
£000

293

110

403

132

535

Total
2022
£000

248

245

493

140

633

*LTIP (Long Term Incentive Plan): 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. Note: no valuation has
been attributed to the share option awards under the PSP 2023 scheme.

There was no exercise of share options by Directors during the year (2022: Nil).

Directors’ Pension Arrangements

During the year ending 30 September 2023, Paul Curtis and Stuart Stanyard received employer contributions to the
Group’s defined contribution scheme under a salary sacrifice arrangement.

ANNUAL REPORT & ACCOUNTS 2023
Directors’ Shareholdings

Shareholdings of those serving at 30 September 2023:

Paul Curtis

Stuart Stanyard

Robert B Horvath

Gordon Wakeford

Andrew Jenner

BOARD REPORTS

REMUNERATION REPORT

Number of Ordinary Shares

30 September 2023

30 September 2022

50,000

20,000

100,000

28,000

20,000

218,000

38,300

100,000

21,700

20,000

180,000

Directors’ Interests in Share Options

The Company operates two share option schemes, the Performance Share Plan 2018 (PSP 2018) which was
established during 2018 and the Performance Share Plan 2023 which was established during 2023. An Employee
Benefit Trust (EBT) was established in 2018 and is operated through a third-party trustee. The objective of the EBT
is to benefit the Group’s employees and in particular to provide a mechanism to satisfy share option exercises and
reduce dilution for shareholders. Requests made to the EBT trustee are approved by the Remuneration Committee.
Details of the share option schemes in operation during the year are given in note 20.

Date of
Grant

Option
Price (p)

Earliest
Exercise
Date

Latest
Exercise
Date

At 30
September
2023

At 30
September
2022

Paul Curtis

PSP 2018

PSP 2023

Stuart Stanyard

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

July 23

50.00

25/07/26

25/07/33

PSP 2023

July 23

50.00

25/07/26

25/07/33

60,000

50,000

30,000

130,000

300,000

125,000

425,000

60,000

50,000

30,000

170,000

During the year 255,000 share options were awarded to Directors as one award at an exercise price of 50p subject
to three increasingly targeted performance hurdles which are related to earnings per share and market capitalisation
(2022: Nil options awarded).

Gordon Wakeford
Chair of Remuneration Committee
24 January 2024

ANNUAL REPORT & ACCOUNTS 2023
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

• Risk appetite and risk management

• Pension obligations

Referenced on
Page(s)

• 8, 9

• 8, 9, 29

• 7, 14, 18

• 6

• 20, 30

• 6, 18

The interests of the company’s
employees

• Health, wellbeing and safety of our people

• 7, 10

• Engaging our people

• Developing our people

• Board employee engagement

• Diversity and inclusion

• 7, 9, 10

• 7, 9, 32

• 9

• 9, 11

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

• Business ethics & code of conduct

• 9, 33

• Corporate culture and ethical values

• 7, 9-11, 33

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

• Stakeholder propositions

• Sustainability of our business model

• Values statements and our culture

• 7, 10, 30

• 10

• 10, 30

• 30

• 29

• 9

• Our approach to a sustainable business

• 8, 10

•

Internal controls

• 10, 30, 31, 33

The need to act fairly between
members of the company

•

Investor engagement

• Annual General Meeting

• 6, 29, 30, 33

• 37

ANNUAL REPORT & ACCOUNTS 2023BOARD REPORTS

CORPORATE GOVERNANCE REPORT

The 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 28-34 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 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.

The Code

Principle 2

The Code comprises ten principles, which are listed
below, together with a statement of the Group’s current
position and, where this deviates from the code, an
element of a Road Map to full compliance. In addition,
the Group has adopted a ‘North Star’ or ‘Guiding Light’
principle, which may be considered to be a precis of the
corporate governance principle.

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

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 22.

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
43% of our shares are owned by 4 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 News Service of the Stock Exchange. The
Preliminary Announcement is made in late January
and the Annual Report is published shortly thereafter.
The Chairman normally gives an update at the Annual
General Meeting in March. The Interim Announcement
for the first half to 31 March is made, and the Interim
Report published, in late June. It has become recent
practice to give an update on trading early in the first
quarter, following the close of the financial year on 30

ANNUAL REPORT & ACCOUNTS 2023BOARD REPORTS

CORPORATE GOVERNANCE REPORT

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 few 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 periodically 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 20-21.
Each trading entities monthly report outlines significant
opportunities and threats to its business. Risk registers
for entities identify key risks. Risk is considered at each
Executive Meetings comprising the Managing Directors
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
of the Group’s systems of internal controls in relation
to financial, operational and compliance controls and
risk management. Risk management is discussed
formally at each Board meeting.

In addition, the Board reviewed the requirement
for an internal audit function and having regard to
the size of the Group, the costs of such a function
versus the likely benefit, sufficient assurance as to
the functioning of the system of internal control, and
that the circumstances confronting the Group remain
unchanged, considered there was no such requirement
at this time.

ANNUAL REPORT & ACCOUNTS 2023In 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, 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
of the two board committees and details the time
commitment and attendance record of directors at
board and committee meetings.

The Non-Executive Directors all served throughout
the year.

Paul Curtis as Executive Director, also served
throughout the year. Stuart Stanyard joined as Chief
Financial Officer on 1 March 2023 with a remit to
contribute more to the Board’s overall commercial
and operational governance within its subsidiaries.

BOARD REPORTS

CORPORATE GOVERNANCE REPORT

Board Composition and Responsibility

As of 1 January 2024, the Board comprises three Non-
Executive Directors and two Executive Directors. There
is a clear division of responsibility between the Non-
Executive Directors, including the Chairman and the
Executive Directors.

Robert B Horvath, Andrew Jenner and Gordon Wakeford
are regarded as Non-Executive directors. They are
from varied backgrounds and bring with them a range
of skills and experience in commerce and industry.
The Non-Executive 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 the Board’s
Non-Executive directors who served through the year.
Andrew Jenner served as Chair of the Audit Committee
and Senior Non-Executive Director; Gordon Wakeford
served as Chair of the Remuneration Committee.

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 non-executive
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. Having liaised with key shareholders the committee
has started to rebase the reward mechanisms to retain
more moderate salaries and to increase the performance
related element of our remuneration packages.

ANNUAL REPORT & ACCOUNTS 2023BOARD REPORTS

CORPORATE GOVERNANCE REPORT

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 2023

Board
meetings

Audit
committee

Remuneration
committee

No of meetings

Executive Directors

P V Curtis

S R Stanyard (from 01/03/23)

Non-Executive Directors

R B Horvath

A Jenner

G Wakeford

9/9

5/5

9/9

n/a

4/4

n/a

2/2

AGM
2023

1/1

Attendance at meetings by invitation is not shown, however each site MD is invited to present their business at least
once a year.

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. The CFO performs the role
of the Company Secretary, and 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.

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.

The Director’s achieve these 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 independent 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.

The Board recognises that its small size limits the
opportunity for gender balance and diversity, however,
ensures that its recruitment processes are fair, and

Annual Reports will also detail significant matters
requiring external advice and describe any significant

ANNUAL REPORT & ACCOUNTS 2023BOARD REPORTS

CORPORATE GOVERNANCE REPORT

advice provided internally to the Board by the Company
Secretary or Senior Non-Executive Director.

Principle 9

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 Non-
Executive Director (“SNED”) to ensure the skills available
within the Board remain appropriate. This process was
reviewed at the Board meeting on 20 December 2023
and deemed appropriate. 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 and Chief Financial Officer’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
Director teams.

Corporate values guide the objectives and strategy of
the business and the conduct of all aspects of business,
including disclosures in this Annual Report.

The Chair’s Corporate Governance statement in the
Annual Reports comments upon how the culture is
consistent with the Group’s objectives, strategy and
business model contained in the strategic report,
the principal risks and uncertainties, how these are
monitored and how a healthy corporate culture is
promoted and assessed. Group values are promoted
around the Group as outlined on page 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
website, and routinely inform all shareholders of the
Group’s progress.

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.

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.

ANNUAL REPORT & ACCOUNTS 2023BOARD REPORTS

CORPORATE GOVERNANCE REPORT

Should the Group be unable to comply with any
disclosure requirements of Principles 1-9 and omit
them from the Annual Report or the Website, they will be
disclosed, and their omission explained.

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.

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

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

Robert B Horvath
Chairman
24 January 2024

ANNUAL REPORT & ACCOUNTS 2023Directors’ Report

The directors present their annual report together with
the audited financial statements for the year ended
30 September 2023.

Results and Dividends

The profit for the year amounted to £0.9m (2022:
£1.2m). The directors recommend the payment of a
final ordinary dividend for 2023 of 1p (2022: Nil), with Nil
(2022: Nil) interim dividend 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 20-21 and the key
performance indicators used in assessing the
progression of the business are set out on page 22.

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 22.

BOARD REPORTS

Substantial Shareholdings

As far as the directors are aware the only shareholders
with a beneficial interest as at 8 January 2024
representing three per cent or more of the issued share
capital were:

No of Shares Percentage

Peter Gyllenhammar AB

3,362,015

24.93%

Peter Pollock

1,000,000

7.42%

Michael Rusch

Marilyn Porter

960,022

7.12%

524,153

3.89%

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
2023 totalled £0.1m (2022: £0.2m) and were capitalised
as development costs. Research and development
costs expensed during the year £Nil (2022: Nil).

Directors and their Interests

The current directors of the Company and brief
biographical details are given on pages 36-37. During
the year one Director was appointed, Stuart Stanyard,
on 1 March 2023 and there were no resignations (2022:
two resignations). 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 2023
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 – Non-Executive 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.

ANNUAL REPORT & ACCOUNTS 2023Stuart Stanyard – Chief Financial Officer (CFO)
and Company Secretary, born 1967, holds a BSc in
Accounting and Economics from Lancaster University
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 was appointed Chief Financial
Officer and Company Secretary on 1 March 2023.

Andrew Jenner – Senior Non-Executive 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 an 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 – Non-Executive Director born 1962,
formerly Chief Executive Officer of Siemens Mobility
Limited UK, joined the board as an 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.

BOARD REPORTS

DIRECTORS’ REPORT

Annual General Meeting

The Annual General Meeting is to be held at 12:00
noon on Wednesday 27 March 2024 at the offices of
Cavendish, 1 Bartholomew Close, London, EC1A 7BL.
The Notice of Meeting is set out on pages 106 to 109.

Information in other reports

The Company has chosen, in accordance with the
Companies Act 2006 s414C(11), to set out in the
Chairman’s Statement, Financial Review, Strategic
Report and Corporate Governance Statement, certain
information required by the Large and Medium-sized
Companies and Groups (Accounts and Reports)
Regulations 2008 Sch. 7 to be contained in the
Directors’ Report.

Financial risk management disclosures are detailed in
note 17.

Post Balance Sheet Events

The Group acquired the 100% share capital of Red
Box International Holdings Ltd on 4 January 2024
for a total consideration of £1.1m, of which £275,000 is
being satisfied on completion, and £825,000 payable
post-completion.

Red Box is a leading UK manufacturer of aviation ground
power equipment with global reach and an established
presence in the USA market. The Acquisition will provide
a strong addition to LPA Connection Systems, the
Group’s Saffron Walden-based division, that designs,
manufactures and supplies high quality specialist
products for the aviation, rail, and infrastructure
markets. This acquisition supports our long-term growth
strategy whilst also lessening the Group’s dependence
on rail projects.

Red Box revenues for the year ended 31 December
2022 were £1,677,000, with adjusted EBIT of £81,000.
Net assets as at 31 December 2023 were around
£750,000.

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

Stuart Stanyard
Company Secretary
24 January 2024

LPA Group plc is registered in England No 00686429

ANNUAL REPORT & ACCOUNTS 2023BOARD REPORTS

DIRECTORS’ REPORT

ANNUAL REPORT & ACCOUNTS 2023COMPANY
INFORMATION

ANNUAL REPORT & ACCOUNTS 2023COMPANY INFORMATION | CHAIRMAN’S STATEMENTCOMPANY INFORMATION

Company Information

Company contacts

Directors

Robert B Horvath Non-Executive Chairman

Paul Curtis Chief Executive Officer

Stuart Stanyard

Chief Finance Officer and Company Secretary

Andrew Jenner Senior Non-Executive Director

Gordon Wakeford Non-Executive Director

Registered Office

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

Registered Number

00686429

Website

www.lpa-group.com

Nominated Adviser
& Broker

Cavendish

1 Bartholomew Close

Public
Relations

Hudson Sandler

25 Charterhouse Square

London

EC1A 7BL

London

EC1M 6AE

Auditors

RSM UK Audit LLP

Bankers

Barclays Bank Plc

Blenheim House

Newmarket Road

Bury St Edmunds

IP33 3SB

Link Group

10th Floor

Central Square

29 Wellington Street

Leeds, LS1 4DL

Registrars

Trading subsidiaries

Abacus House

Castle Park, Castle Hill

Cambridge

CB3 0AN

Solicitors

Eversheds Sutherland (International) LLP

115 Colmore Row

Birmingham

B3 3AL

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.

Light & Power House, Shire Hill, Saffron Walden,
CB11 3AQ, UK
LPA Industries Ltd – trading as LPA Connection Systems

Trading addresses:
LPA Group entities operate as distinct businesses
through appointed Executive Teams.

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 2023COMPANY INFORMATION

GROUP
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 2023
GROUP FINANCIAL STATEMENTS

Independent Auditor’s Report
to the Members of 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 2023 which comprise the Consolidated Income Statement, Consolidated Statement
of Comprehensive Income, Consolidated and Company Balance Sheets, Consolidated and Company Statements of
Changes in Equity, Consolidated Cash Flow Statement and notes to the financial statements, including significant
accounting policies. 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 2023 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 2023GROUP FINANCIAL STATEMENTS

INDEPENDENT AUDITOR’S REPORT

Summary of our audit approach

Key audit matters

Group

• Revenue recognition

• Valuation of inventory

• Acquisition accounting

Parent Company

• No key audit matters were identified

Materiality

Group

• Overall materiality: £217,000 (2022: £195,000)

• Performance materiality: £162,000 (2022: £146,000)

Parent Company

• Overall materiality: £126,000 (2022: £182,000)

• Performance materiality: £94,600 (2022: £136,000)

Scope

Our audit procedures covered 100% of revenue, 100% of total assets
and 98% 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 2023GROUP 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 also ensured that subsequent variations to contracts were
suitably treated.

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 the inventory provisions in note
1R and note 12.

ANNUAL REPORT & ACCOUNTS 2023GROUP FINANCIAL STATEMENTS

INDEPENDENT AUDITOR’S REPORT

Acquisition accounting

Key audit matter
description

During the year the group purchased the trade and intellectual property relating to a
competitor’s product line. This transaction falls under the scope of IFRS 3 “Business
Combinations” which required management judgement in determining the fair value of
the intangible assets acquired.

The transaction resulted in negative goodwill of £941,000 which has been recognised in
the income statement.

How the matter was
addressed in the audit

We reviewed and challenged the reasonableness of the methodology and inputs used
to determine the acquired intangible asset value of £1,754,000 and ensured reflective
of the terms of the sale and purchase agreement. This involved the use of valuation
specialists and testing the mathematical accuracy of the valuation model to ensure it was
operating as expected.

We also considered the adequacy of the group’s intangible assets accounting policy as
disclosed in note 1F, the key judgement disclosures in relation to acquisition intangibles
in note 1R and the disclosure in note 24.

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

£217,000 (2022: £195,000)

£126,000 (2022: £182,000)

Basis for determining overall
materiality

1% of total revenue

1.6% 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

£162,000 (2022: £146,000)

£94,600 (2022: £136,000)

Basis for determining
performance materiality

Reporting of misstatements to
the Audit Committee

75% of overall materiality

Misstatements in excess of £11,000
and misstatements below that
threshold that, in our view, warranted
reporting on qualitative grounds.

Misstatements in excess of £6,000
and misstatements below that threshold
that, in our view, warranted reporting on
qualitative grounds.

ANNUAL REPORT & ACCOUNTS 2023GROUP FINANCIAL STATEMENTS

INDEPENDENT AUDITOR’S REPORT

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

Revenue

Total assets

Profit before tax

Full scope audit

Targeted audit procedures

Total

81%

19%

77%

23%

100%

60%

38%

98%

For each component in the scope of our group audit, we allocated a materiality that is less than our overall group
materiality. In addition to performing work at a component level our audit procedures included testing of the
consolidation. All full scope and targeted audit procedures were performed by the group engagement team.
Analytical procedures at the group level were performed for the remaining component.

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 have 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 the 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; and

• Agreeing that the bank loan had been refinanced in the post balance sheet period.

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

ANNUAL REPORT & ACCOUNTS 2023GROUP FINANCIAL STATEMENTS

INDEPENDENT AUDITOR’S REPORT

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.

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 35-36, 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.

ANNUAL REPORT & ACCOUNTS 2023GROUP FINANCIAL STATEMENTS

INDEPENDENT AUDITOR’S REPORT

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.

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, FRS 102
and the 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

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 matter above.

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

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 2023GROUP 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
Blenheim House
Newmarket Road
Bury St Edmunds
Suffolk
IP33 3SB

24 January 2024

ANNUAL REPORT & ACCOUNTS 2023GROUP FINANCIAL STATEMENTS

Consolidated Income Statement

For the year ended 30 September 2023

Continuing operations

Revenue

Cost of Sales

Cost of Sales – Exceptional Items

Gross Profit

Distribution Costs

Administrative Expenses

Administrative Expenses-Exceptional Items

Negative Goodwill

Other Operating Income

Underlying Operating Loss

Share Based Payments

Negative Goodwill

Exceptional Items

Operating Profit

Finance Income

Finance Costs

Profit Before Tax

Taxation

Profit for the Year

Attributable to:

- Equity Holders of the Parent

Earnings per Share

Basic

Diluted

Note

2023

£000

2022

£000

3, 20

21,712

19,325

(16,646)

(152)

4,914

(1,910)

(3,238)

941

(69)

(13)

941

(152)

707

201

(149)

759

100

859

6.52p

6.51p

(14,925)

4,400

(1,781)

(2,865)

1,323

(226)

(13)

1,323

1,084

(88)

1,074

111

1,185

8.99p

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

ANNUAL REPORT & ACCOUNTS 2023GROUP FINANCIAL STATEMENTS

Consolidated Statement
of Comprehensive Income

For the year ended 30 September 2023

Profit for the Year

Other Comprehensive Income

Items that will not be reclassified to profit or loss:

Actuarial gain/(loss) on pension scheme

Restriction of pension assets

Note

2023

£000

2022

£000

859

1,185

198

(113)

(219)

Other Comprehensive Income

(170)

Total Comprehensive Income for the Year

944

1,015

Attributable to:

- Equity Holders of the Parent

944

1,015

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

ANNUAL REPORT & ACCOUNTS 2023
GROUP FINANCIAL STATEMENTS

Consolidated Balance Sheet

At 30 September 2023

Company Registered Number: 00686429

Non-Current Assets

Intangible Assets

Tangible Assets

Right of Use Assets

Retirement Benefits

Deferred Tax Assets

Current Assets

Inventories

Trade and Other Receivables

Derivative Asset

Current Tax Receivable

Cash and Cash Equivalents

Total Assets

Current Liabilities

Bank Loan

Lease Liabilities

Trade and Other Payables

Non-Current Liabilities

Bank Loan

Deferred Tax Liabilities

Lease 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

17c

2023

£000

3,156

5,083

672

2,683

2022

£000

1,473

4,774

1,211

2,471

229

11,594

10,158

4,303

5,870

1,202

11,433

4,567

5,095

2,199

11,902

23,027

22,060

(1,949)

(214)

(4,743)

(6,906)

(165)

(243)

(408)

(7,314)

15,713

1,348

(324)

943

230

13,454

15,713

(190)

(356)

(4,584)

(5,130)

(1,934)

(240)

(2,174)

(7,304)

14,756

1,348

(324)

943

230

12,510

14,756

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

The financial statements were approved by the Board on 24 January 2024 and signed on its behalf by:

Stuart Stanyard Director

ANNUAL REPORT & ACCOUNTS 2023GROUP FINANCIAL STATEMENTS

Consolidated Statement
of Changes in Equity

For the year ended 30 September 2023

Investment
in Own
Shares

Share
Premium
Account

Share
Based
Payment
Reserve

Merger
Reserve

Retained
Earnings

£000

Share
Capital

£000

Total

£000

2023

At 1 October 2022

1,348

(324)

943

230

12,510

14,756

Profit for the Year

Other Comprehensive Income

Total Comprehensive Income

Share based payments

Transactions with Owners

At 30 September 2023

1,348

(324)

943

859

944

859

944

230

13,454

15,713

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

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

ANNUAL REPORT & ACCOUNTS 2023
GROUP FINANCIAL STATEMENTS

Consolidated Cash Flow Statement

For the year ended 30 September 2023

Profit Before Tax

Finance Costs

Finance Income

Operating Profit

Adjustments for:

Amortisation of Intangible Assets

Depreciation of Tangible Assets

Depreciation of Right of Use Assets

Loss on Sale of Plant and Equipment/(Profit) on Sale of Land

Negative Goodwill

Equity Settled Share Based Payments

Operating cash flow before movements in working capital

Movements in Working Capital:

Decrease in Inventories

Increase in Trade and Other Receivables

Increase in Trade and Other Payables

Cash generated from operations

Income Taxes Received

Net cash inflow from operating activities

Purchase of Business (Note 24)

Purchase of Property, Plant & Equipment

Proceeds from Sale of Property, Plant and Equipment

Expenditure on Capitalised Development Costs

Net cash (outflow) / inflow 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 (Decrease)/Increase in Cash and Cash Equivalents

Cash and Cash Equivalents at start of the year

Cash and Cash Equivalents at end of the year

2023

£000

759

149

(201)

707

192

404

285

(941)

664

264

(775)

240

285

(250)

(196)

(120)

(566)

(175)

(392)

(149)

(716)

(997)

2,199

1,202

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

ANNUAL REPORT & ACCOUNTS 2023GROUP FINANCIAL STATEMENTS

CONSOLIDATED CASH FLOW STATEMENT

Net Debt

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

At 1 October 2022

New Lease Obligations

Interest Costs

Repayment of Borrowings/Lease Liabilities

Other Cash Expenditure

Bank Loan

Lease
Liabilities

Cash and Cash
Equivalents

Net Debt

£000

2,124

131

(306)

£000

596

253

(410)

£000

(2,199)

716

281

£000

521

253

149

281

At 30 September 2023

1,949

457

(1,202)

1,204

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)

£000

(1,358)

668

Net Debt

£000

1,633

309

(1,509)

At 30 September 2022

2,124

596

(2,199)

521

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

ANNUAL REPORT & ACCOUNTS 2023GROUP FINANCIAL STATEMENTS

Notes to the Financial Statements

For the Year ended 30 September 2023

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 22. 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.

with price pressures from commodities, utilities
and wage inflation. These all pose risks to UK
manufacturing businesses but supply chain delays
creates on-shoring opportunities for the Group
which we are seeking to exploit.

In assessing the Group’s going concern the directors
also note that (i) despite reporting a small underlying
operating loss in the current year, the Group is
expected to return to profitability in 2024; (ii) has
in place adequate working capital facilities for its
forecast needs and was cash generative on an
operational level through the 2023 financial year, with
a positive EBITDA and strong cash management;
(iii) has a strong order book with significant further
opportunities in its market place; and (iv) has proven
adaptable in past periods of adversity, as again
proven through the 2023 challenges. Therefore, the
directors believe that it is well placed to manage its
business risks successfully.

The directors continue to develop its strong working
relationship with its bank that provides for the
funding and working capital facilities 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 was
due to expire in March 2024. This has recently been
extended for a further 5 years on the same terms.

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

D. Changes in accounting policy

For the purpose of the preparation of these
consolidated financial statements, the Group has
applied all standards and interpretations that are

ANNUAL REPORT & ACCOUNTS 2023effective for accounting periods beginning on or
after 1 October 2022 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 2023, 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 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.

GROUP FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

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. In the case of the
fair value of assets acquired exceeding the fair value
of consideration, negative goodwill arises which is
recognised as a gain the Income Statement.

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.

Other Intangible Assets

Intangible assets acquired separately from
a business are recognised at cost and are
subsequently measured at cost less accumulated
amortisation and accumulated impairment losses.

ANNUAL REPORT & ACCOUNTS 2023GROUP FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

Intangible assets acquired on business
combinations are recognised separately from
goodwill at the acquisition date where it is probable
that the expected future economic benefits that are
attributable to the asset will flow to the entity and
the fair value of the asset can be measured reliably;
the intangible asset arises from contractual or other
legal rights; and the intangible asset is separable
from the entity.

of amortisation, had no impairment loss been
recognised for the asset in prior years.

Other non-financial assets

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.

Amortisation is provided on intangible assets as to
write off the cost, less estimated residual value, over
their expected useful economic life as follows:

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).

Asset class
Intellectual Property 15 years straight line
Software

25% - 33% straight line

Amortisation method and rate

Amortisation has been expensed both within cost
of sales and administrative expenses. Subsequent
expenditure on the maintenance of computer
software is expensed as incurred.

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

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

ANNUAL REPORT & ACCOUNTS 2023commencement date to the earlier of the end of the
useful life of the asset or the end of the lease term.

At 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 US $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.

GROUP FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

Recognition and derecognition of financial assets

Financial assets are recognised in the Group’s
Balance Sheet when the Group becomes a party to
the contractual provisions of the instrument. The
Group derecognises a financial asset only when the
contractual rights to the cash flows from the asset
expire, or when it transfers the financial asset and
substantially all the risks and rewards of ownership
of the asset to another entity.

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 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.

Derivatives

Derivatives, including forward foreign exchange
contracts, are not basic financial instruments.
Derivatives are initially recognised at fair value on
the date a derivative contract is entered into and are
subsequently re-measured at their fair value with
changes in value recognised in profit or loss. The
Group does not currently apply hedge accounting.

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

ANNUAL REPORT & ACCOUNTS 2023GROUP FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

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.

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. LPA Lighting
Systems is the only division that has performance
obligations as part of its revenue recognition.

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

ANNUAL REPORT & ACCOUNTS 2023taxable income will be available against which
the temporary difference can be utilised or offset
against deferred tax liabilities.

Changes in deferred tax assets or liabilities are
recognised as a component of tax expense in the
income statement, except where they relate to
items that are recognised in other comprehensive
income or charged or credited directly to equity
in which case the related deferred tax is also
recognised in other comprehensive income or
charged or credited directly to equity respectively.

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

GROUP FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

or asset is calculated by estimating the amount
of future benefit that employees earned in return
for their service in prior periods; that benefit is
discounted to determine its present value and then
deducted from the fair value of plan assets. The
discount rate is the yield on high quality corporate
bonds that have maturity dates approximating the
terms of the Group’s obligations. A full actuarial
valuation is carried out every three years and
updated at each balance sheet date using the
projected unit method.

A retirement benefit 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.

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-
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

ANNUAL REPORT & ACCOUNTS 2023
GROUP FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

intended to be a substitute for or to promote them
above statutory measures.

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

Q. 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.

Key Estimate – 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.

Key Judgement – Acquisition Intangibles

Management judgement is required in deriving a
number of assumptions which are used in assessing
the fair value of each acquisition intangible including
the timing and amount of future incremental cash
flows expected to be generated by the asset and in
calculating an appropriate cost of capital.

Key Judgement – R&D Expenditure

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.

Key Estimate – 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.

Key Judgement – Recognition of Defined Benefit
Pension Scheme Surplus

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.

Key Judgement – 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 main judgement is whether the design
and engineering work should be a separate
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.

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.

ANNUAL REPORT & ACCOUNTS 2023GROUP FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

Key Estimate – 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 estimates
to apply appropriate cost absorptions to achieve a
manufactured cost. NRV is reviewed in detail on an
ongoing basis and provision for obsolete inventory

is made based on a number of factors including age
of inventories, the risk of technical obsolescence
and the expected future usage.

Differences between such estimates and actual
market conditions may have a material impact on the
amount of the carrying value of inventories and may
result in adjustments to cost of sales. Note 12 details
the inventory provisions and the amounts written off
to consolidated income statement in the year.

ANNUAL REPORT & ACCOUNTS 2023GROUP 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 divisions / product groups (in accordance with IFRS 8) – LPA
Connection Systems (electro-mechanical), LPA Lighting Systems (lighting & electronics) and LPA Channel Electric
(engineered component distribution), which collectively design, manufacture and market industrial electrical and
electronic products. They operate across three market segments – Rail; Aerospace & Defence and Other. It is on this
basis that the board of directors assess Group performance.

All revenue originates in the UK. An analysis by geographical markets and market segments is given below:

2023

£000

8,393

4,070

9,249

2022

£000

6,533

3,342

9,450

21,712

19,325

2023

£000

166

21,546

21,712

2022

£000

19,228

19,325

2022

72%

13%

15%

100%

2022

£000

12,649

4,607

2,069

19,325

LPA Connection Systems

LPA Channel Electric

LPA Lighting Systems

Revenue recognised over time

Revenue recognised at a point in time

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

2023

75%

20%

100%

2023

£000

13,266

5,598

2,848

21,712

One individual customer (2022: one) represented more than 10% of Group revenue, combined totalling 24%
(2022: 23%).

ANNUAL REPORT & ACCOUNTS 2023GROUP 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

Reorganisation costs / staff changes

Pension costs - Defined Contribution Arrangements (note 21)

Share based payments

2023

Number

2022

Number

103

154

2023

£000

5,772

585

315

6,685

107

154

2022

£000

5,203

542

172

287

6,217

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 £120,000
(2022: £156,000).

4. Finance Income

Net Pension Interest Income (note 21)

5. Finance Costs

Bank Loan and Overdraft Interest

Interest on Lease Liabilities

2023

£000

201

2023

£000

2023

2022

131

149

ANNUAL REPORT & ACCOUNTS 2023GROUP FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

6. Operating Profit

A. Component costs in arriving at Cost of Sales

Materials (to Added Value)

Cost of Sales - Exceptional Item (see note 6c)

Production Overhead & Direct Labour

Cost of Sales

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)

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 Items

Write-off of obsolete inventory

Sale of land

Reorganisation costs / staff changes

Dual running management costs

2023

£000

10,790

152

6,122

17,064

2023

£000

192

404

285

(27)

2023

£000

152

2022

£000

9,831

5,094

14,925

2022

£000

497

202

(62)

(7)

150

2022

£000

(1,506)

173

152

(1,323)

Write-off of obsolete inventory relates to a review of inventory held in LPA Connection Systems which was no longer
able to be sold due to relating to a discontinued product line.

Sale of land relates to the disposal of a piece of surplus land that was valued on the books at £160,000 and realised
a net gain of £1,506,000 during 2022.

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

Dual running costs of £10,000 in 2022 relate to an extended crossover between the appointment and retirement
of Board Directors related to the Board rejuvenation process commenced in 2018 and concluded in 2022.

ANNUAL REPORT & ACCOUNTS 2023GROUP 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

Origination and Reversal of Temporary Differences

Total Corporation Tax Credit

B. Reconciliation of Effective Tax Rate

Profit Before Tax

Tax at The Average UK Corporation Tax Rate of 22% (2022: 19%)

Effects of:

- Tax Rate Change

- Enhanced Deduction for Qualifying R&D Expenditure

- Prior Period Adjustments

- Non–Taxable Negative Goodwill

- Losses Not Recognised

- Prior Period Losses Recognised

- Other Differences

Total Income Tax Credit

C. Current and Deferred Tax Recognised Directly in Equity

Tax Charge Arising on Share Options

2023

£000

(30)

(151)

(181)

(100)

2023

£000

759

167

(48)

(151)

(192)

103

(100)

2023

£000

2022

£000

(65)

(80)

(145)

(111)

2022

£000

1,074

204

(102)

(80)

(71)

(62)

(111)

2022

£000

ANNUAL REPORT & ACCOUNTS 2023GROUP FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

8. Earnings Per Share

The calculation of earnings per share is based upon the profit for the year of £859,000 (2022: £1,185,000) and the
weighted average number of ordinary shares in issue during the year of 13,483m (2022: 13.472m) less investment
in own shares of 0.3m (2022: 0.3m), of 13.183m (2022: 13.172m).

2023

Weighted
Average
No of
Shares

Earnings

Earnings
Per
Share

Earnings

2022

Weighted
Average
No of
Shares

Earnings
Per
Share

£000

‘000

Pence

£000

‘000

Pence

Basic Earnings Per Share

859

13,183

Effect of Share Options

Diluted Earnings Per Share

859

13,204

6.52

(0.01)

6.51

1,185

13,172

1,185

13,179

8.99

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 LPA Lighting Systems 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% (2022: 2%) which is considered to be consistent with the long-term average
growth rate for the businesses concerned. The discount rate applied was 12.5% (2022: 13.2%), 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 2023 year, the carrying
amount would still exceed the recoverable amount of goodwill.

ANNUAL REPORT & ACCOUNTS 2023GROUP FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

Goodwill

Intellectual
Property

Development
Costs

Software

Total

£000

Cost

At 1 October 2021

Additions

At 1 October 2022

Additions

Reclassification

1,234

1,754

At 30 September 2023

1,234

1,754

Amortisation and impairment

At 1 October 2021

Charge for the year

At 1 October 2022

Charge for the year

Reclassification

At 30 September 2023

Net Carrying Amount

At 30 September 2023

1,149

1,696

At 30 September 2022

1,149

362

163

525

120

645

139

216

121

337

308

309

577

(2)

575

544

562

(3)

572

2,173

163

2,336

1,874

(2)

4,208

768

863

192

(3)

1,052

3,156

1,473

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

The intellectual property addition in this financial year represents the fair value of the competitor’s intellectual
property of a product line acquired on 24 March 2023. See Note 24 for further details.

ANNUAL REPORT & ACCOUNTS 2023GROUP FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

10. Tangible Fixed Assets

Cost

At 1 October 2021

Additions

Transferred **

Disposals

At 1 October 2022

Additions

Transferred **

Disposals

Reclassification

Freehold
Land and
Buildings

£000

Plant,
Vehicles and
Equipment

Total

£000

4,660

6,003

10,663

(160)

4,500

330

(99)

6,322

196

969

(825)

(3)

330

(259)

10,822

196

969

(825)

At 30 September 2023

4,505

6,659

11,164

Depreciation

At 1 October 2021

Charge for the year

Transferred**

Disposals

At 1 October 2022

Charge for the year

Transferred**

Disposals

Reclassification

At 30 September 2023

Net Carrying Amount

545

587

691

4,930

455

165

(89)

5,461

320

450

(824)

(17)

5,475

497

165

(89)

6,048

404

450

(824)

5,390

6,081

At 30 September 2023

3,814

1,269

5,083

At 30 September 2022

3,913

861

4,774

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 202311. Right of Use Assets

Cost

At 1 October 2021

Additions

Transferred**

Disposals

At 1 October 2022

Additions

Transferred**

Disposals

At 30 September 2023

Depreciation

At 1 October 2021

Charge for the year

Transferred**

Disposals

At 1 October 2022

Charge for the year

Transferred **

Disposals

At 30 September 2023

Net Carrying Amount

At 30 September 2023

At 30 September 2022

GROUP FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

Plant,
Vehicles and
Equipment

£000

1,856

333

(330)

(51)

1,808

265

(969)

(104)

1,000

611

202

(165)

(51)

597

285

(450)

(104)

328

672

1,211

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 2023GROUP 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

Exceptional provision

Utilised (inventory scrapped/written off)

Released (inventory utilised/sold)

2023

£000

2,078

958

1,267

2022

£000

2,087

949

1,531

4,303

4,567

2023

£000

(938)

(167)

(152)

258

2022

£000

(930)

(119)

Closing provisions

(906)

(938)

13. Trade and Other Receivables

Trade Receivables

Other Receivables

Prepayments

Accrued income

2023

£000

5,451

356

2022

£000

4,666

323

5,870

5,095

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 202314. Trade and Other Payables

Trade Payables

Other Taxation and Social Security

Other Payables

Accruals

Deferred Income

Deferred Consideration (Note 24)

GROUP FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

2023

£000

3,277

446

253

438

250

2022

£000

2,814

662

740

336

4,743

4,584

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 one contract (2022: six), as follows:

Deferred Income at 1 October

Invoiced during the year

Sales recognised in the year

Deferred Income at 30 September

2023

£000

336

268

(166)

438

2022

£000

371

398

(433)

336

All deferred income relates to the rail sector, with 33% expected to be recognised within one year (2022: 20%) with
the remaining 67% between one and three 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

2023

£000

2022

£000

1,949

190

1,949

1,934

2,124

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 2023 the amount outstanding was £1.9m (2022: £2.1m). The loan was refinanced at £2.5m on a further
five- year term in January 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 one-third 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 (2022: £1.5m). Interest is payable at base plus 2.0%.

The following security is provided to the bank in respect of the above facilities: (i) a legal charge over the
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 2023GROUP 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 5.2% (2022: 3.68%) 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

2023

£000

214

243

457

410

2022

£000

356

240

596

414

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

2023

£000

2022

£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)

2023

£000

15,713

1,204

16,917

7.7%

2022

£000

14,756

521

15,277

3.5%

ANNUAL REPORT & ACCOUNTS 2023GROUP FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

Gearing, which is the principal measure used by the Group to monitor its capital structure, increased to 7.7%,
principally due to the growth in the business during the year and acquisition of intellectual property rights.

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:

2023

2022

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

1,123

1,125

£000

799

(52)

807

£000

1,922

(50)

1,932

£000

338

420

591

(16)

602

929

1,022

Euro

US Dollar

Aus Dollar

Sterling: forex rates strengthened from the start to the end of the year, Euro rates by 1.2%, USD 9.2%. The Group’s
opening cash and cash equivalents would have decreased by £23,000 were the 2023 rates have been in place at
30 September 2022.

Forward Currency Contracts

The Group has forward foreign exchange contracts covering of €4.0 m (2022: nil) of Euro income at the year end.
The contracts all expire by 30 September 2024 with an average rate of 1.1433. At the year-end these have been
fair valued at £28,000 and an asset has been recognised.

Sensitivity

At 30 September 2023 if sterling had weakened / strengthened by 10% against the euro with all other variables
held constant the effect on pre-tax profit and equity as a result of foreign exchange gains/ (losses) on translation
would be:

2023

2022

Effect on Profit
Before Tax

Effect on
Equity

Effect on Profit
Before Tax

Effect on
Equity

Sterling Weakens By 10% Against the Euro

Sterling Strengthens By 10% Against the Euro

£000

192

(192)

£000

103

(84)

The above does not cover US Dollars and Australian Dollars where the impact is not significant.

ANNUAL REPORT & ACCOUNTS 2023GROUP 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 6.1% (2022: 3.2%). 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 5.2% (2022: 3.7%).
The composite interest rate across fixed and floating borrowings and liabilities was 5.6% (2022: 3.0%).

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

2023

£000

(1,202)

1,949

747

2022

£000

(2,199)

2,124

(75)

457

596

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 2023, with all other variables held constant the pre-tax profit would have been
lower by £21,000 (2022: £21,000).

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 2023 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 facility was renewed in January
2024 and expires in March 2029.

Un-Drawn Committed Facilities

The Group’s un-drawn committed borrowing facilities available at 30 September 2023 comprise its bank overdraft
expiring in one year or less at £1.5m (2022: £1.5m). See note 15 for the terms of the facility.

ANNUAL REPORT & ACCOUNTS 2023GROUP 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

2,009

216

3,859

6,084

Within
1 Year

£000

252

369

3,586

4,207

Between 1
and
2 Years

Between 2
and
3 Years

Between 3
and
4 Years

Between 4
and
5 Years

Over
5 Years

£000

146

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

Total

£000

2,009

466

3,859

6,334

Total

£000

2,218

645

3,586

6,449

2023

Borrowings - Bank Loan

Lease Liabilities

Trade and Other Payables

2022

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 and Contract Assets

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 2023 these totalled £5.5m (2022: £4.7m). 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 38.2% of trade receivables at 30 September 2023 (2022: 37.5%).

ANNUAL REPORT & ACCOUNTS 2023GROUP 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 £nil (2022 £17k) 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

2023

2022

Gross

£000

2,663

1,603

900

285

5,451

Expected
credit loss

£000

Expected
credit loss

£000

(17)

Gross

£000

2,736

1,171

735

4,683

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

2023

£000

(17)

2022

£000

(55)

The impairment reduction of £17k (2022: £55k) 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 2023
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.

2023

Financial Assets – Loans and Receivables

Trade and other receivables

Derivative Asset

Cash and cash equivalents

Financial Liabilities – At Amortised Cost

Borrowings – Bank loan

Lease Liabilities

Trade and other payables

Net Financial Assets

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

H. Fair Value Hierarchy

Amortised
Cost

£000

Total
Carrying
Value

£000

5,486

1,202

6,688

(1,949)

(457)

(3,859)

(6,265)

423

5,486

1,202

6,716

(1,949)

(457)

(3,859)

(6,265)

451

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

Fair
Value

£000

5,486

1,202

6,716

(1,949)

(457)

(3,859)

(6,265)

451

Fair
Value

£000

4,707

2,199

6,906

(2,124)

(596)

(3,586)

(6,306)

600

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 2023GROUP FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

18. Deferred Tax

The assets/(liabilities) recognised are as follows:

At 1 October 2021

Recognised in Income Statement

At 1 October 2022

Acquired in period

Recognised in Income Statement

Property, Plant
and Equipment

Tax Losses

£000

(129)

(34)

(163)

£000

399

470

(154)

Acquired
Intangibles

£000

Other

£000

Total

£000

(7)

263

(71)

(34)

(78)

229

(313)

(81)

At 30 September 2023

(106)

316

(298)

(77)

(165)

Deferred tax has been provided at 25% at 30 September 2023 (2022: 25%) in recognition of the UK corporation
tax increase from 19% to 25% from 1 April 2023. The rate used in prior years reflected 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. 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:

Deferred Tax Assets

Deferred Tax Liabilities

Property, Plant
and Equipment

Tax Losses

Acquired
Intangibles

£000

(182)

£000

316

£000

(298)

Other

£000

(77)

Total

£000

392

(557)

At 30 September 2023

(106)

316

(298)

(77)

(165)

Deferred Tax Assets

Deferred Tax Liabilities

At 30 September 2022

(209)

(163)

470

(78)

516

(287)

(78)

229

ANNUAL REPORT & ACCOUNTS 2023
GROUP 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

2023

2022

In Issue at the start of the year

Allotted Under Share Plans

13,483,229

1,348

13,448,229

35,000

1,345

In Issue at the end of the year

13,483,229

1,348

13,483,229

1,348

During the year no options were exercised (2022: 35,000 shares at an average exercise price of 49.0p).

The market price of the Company’s shares on 30 September 2023 was 80.5p per share (2022: 75.5p) and the price
range during the year was 72.5p to 101.5p per share (2022: 66.5p to 98.2p).

Proposed Dividends

A final dividend of 1p (2022: nil) per ordinary share is proposed by the directors.

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 2023 by the
EBT totalled 300,000 (2022: 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 2023GROUP 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 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.

The 2023 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 2023 are as follows:

Scheme

Date of Grant

Exercise
price

Dates when
Exercisable

Number of Options

2023

2022

2018 Performance Share Plan

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 23/07/23 to 22/07/30

83.5p 02/03/24 to 01/03/31

2023 Performance Share Plan

Jul 2023

50p 26/07/26 to 25/07/33

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

2023

2022

Weighted
Average
Exercise Price
(P)

96.2

50.0

76.2

97.6

Weighted
Average
Exercise Price
(P)

92.0

49.0

71.3

96.2

Number of
Options

565,000

(35,000)

(195,000)

335,000

104.8

60,000

Number of
Options

335,000

255,000

590,000

300,000

Outstanding at the Beginning of the Year

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

No share options have expired during either 2023 or 2022.

The options outstanding at the end of the year have an exercise price in the range of 63.2p to 109.3p and a
weighted average contractual life of 7.1 years (2022: 7.3 years)

There were no options exercised during the year (2022: 35,000 at an average exercise price of 49.0p).

During the year 255,000 share options (2022: Nil) were awarded under the Performance Share Plan 2023.

70,000

35,000

70,000

35,000

335,000

255,000

590,000

335,000

ANNUAL REPORT & ACCOUNTS 2023GROUP 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

During the year 255,000 share options were awarded to Directors as one award at an exercise price of 50p
subject to three increasingly targeted performance hurdles which are related to earnings per share and market
capitalisation (2022: Nil options awarded).

Note: no valuation has been attributed to the share options awarded in 2023 under IFRS2 in line with
current assumptions.

The Group’s share-based remuneration expense recognised in the year was £13,000 (2022: £13,000).
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 £315,000 (2022: £287,000). The liability to the scheme at
the balance sheet date is £Nil (2022: £Nil).

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 110 past employees as at 31
March 2023 (2022: 113). 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 Pensions Master Plan managed by ISIO.

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
to pick up statutory costs of running the scheme, with all other costs being borne by the scheme itself. The de-
risking of the scheme assets, was concluded in January 2022 and as there continues to be a surplus recorded

ANNUAL REPORT & ACCOUNTS 2023
GROUP FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

through the period to 30 September 2023, there were no voluntary contributions, (2022: £Nil).

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 2023. There have been no changes in the
valuation methodology adopted for this period’s disclosures compared to the previous period’s disclosures.

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

2023

£000

12,219

(8,092)

4,127

(1,444)

2,683

2022

£000

12,435

(8,633)

3,802

(1,331)

2,471

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 recent budget announcement noted that there is a planned decrease in this rate to 25%
which may reduce the level of the current restriction in future periods should this change be substantively enacted
into law.

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 2023.

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

Defined Benefit Obligation at Start of The Year

Interest expense

Actuarial loss due to Scheme Experience

Actuarial gain due to Changes in Demographic Assumptions

Actuarial gain due to Changes in Financial Assumptions

Benefits Paid

2023

£000

8,633

450

115

(244)

(397)

(465)

2022

£000

13,113

258

303

(62)

(4,515)

(464)

Defined Benefit Obligation at End of The Year

8,092

8,633

ANNUAL REPORT & ACCOUNTS 2023GROUP FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

Defined Benefit split by membership category

Deferred pensioners

Unsecured pensioners

Additional liability from GMP equalisation

Defined Benefit Obligation at the 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)

Expenses

Benefits Paid

2023

£000

3,257

4,602

233

8,092

2023

£000

12,435

651

(328)

(74)

(465)

2022

£000

3,328

5,057

248

8,633

2022

£000

17,056

336

(4,493)

(464)

Fair Value of Scheme Assets at End of The Year

12,219

12,435

The actual return on the plan assets over the period ending 30 September 2023 was a gain of £323,000 (2022:
reduction of £4,157,000).

Defined Benefit Income Recognised in Profit or Loss

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

Experience Losses arising on the Defined Benefit Obligation

Effect of changes in the Demographic Assumptions Underlying the Present
Value of the Defined Benefit Obligation – Gain

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

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

2023

£000

651

(450)

201

2023

£000

(328)

(115)

244

397

198

2022

£000

336

(258)

2022

£000

(4,493)

(303)

4,515

(219)

ANNUAL REPORT & ACCOUNTS 2023GROUP FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

Assets

Equities

Corporate Bonds

Government Bonds

Cash and Net Current Assets

2023

£000

3,008

3,367

4,880

964

2022

£000

2,835

4,000

5,520

Total Assets

12,219

12,435

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.

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

2023
% Per
Annum

2022
% Per
Annum

5.50

3.35

2.75

3.15

2.15

2.9

75%

5.35

3.70

3.10

3.55

2.45

2.9

75%

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 2023 are 100% of the standard tables S3PxA, Year of Birth,
no age rating for males and females, projected using CMI_2022 converging to 1.25% p.a. (at 30 September 2022 are
100% of the standard tables S2PxA, Year of Birth, no age rating for males and females, projected using CMI_2021
converging to 1.25% p.a.). These imply the following life expectancies:

Life Expectancy
at Age 65 (years)

2023

21.2

23.7

22.2

24.8

2022

22.2

24.5

23.5

25.9

Male Retiring In 2023:

Female Retiring In 2023:

Male Retiring In 2042:

Female Retiring In 2042:

ANNUAL REPORT & ACCOUNTS 2023GROUP FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

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

Assumption

Change in Assumption

Change in Liabilities

Discount Rate

Increase of 0.10%

Rate of Inflation

Increase of 0.10%

Rate of Mortality

Increase in Life Expectancy Of 1 Year

Commutation

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

2023

% change

2022

% change

Decrease 1.0%

Decrease by 1.2%

Increase 0.5%

Increase 3.5%

Increase by 1.1%

Increase by 3.3%

Decrease 0.1%

Decrease by 0.1%

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 2023 is 11 years (2022: 12 years).

The plan typically exposes the Group to actuarial risks such as investment risk, interest rate risk, mortality risk and
longevity risk. A decrease in corporate bond yields, a rise in inflation or an increase in life expectancy would result
in an increase to plan liabilities. This would detrimentally impact the balance sheet position and may give rise to
increased charges in future P&L accounts. This effect would be partially offset by an increase in the value of the
plan’s bond holding. Additionally, caps on inflationary increases are in place to protect the plan against extreme
inflation.

The contributions expected to be paid by the Group to the plan for the period commencing 1 October 2023 are £Nil
(2022: £Nil).

22. Financial Commitments

Capital Commitments

Contracted for but not provided in the accounts amounted to £379,000 (2022: £Nil).

Contingent Liabilities

As at 30 September 2023 Group contingent liabilities relating to guarantees in the normal course of business
amounted to £109,000 (2022: £109,000).

23. Related Party Transactions

The remuneration of the directors and the subsidiary Managing Directors, who are considered to be the key
management personnel of the Group, is set out below. Detailed information about the remuneration of individual
directors is disclosed in the Remuneration Report.

Short-term employee benefits

Loss of office

Share based payments

Other Related Party Transactions

2023

£000

937

947

2022

£000

729

827

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 (2022: none).

ANNUAL REPORT & ACCOUNTS 2023
GROUP FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

24. Purchase of Business

The Group purchased trade and the intellectual property relating to a competitor’s product line on 24 March 2023.
The book value of assets acquired was £nil and a valuation exercise was performed using the relief from royalty
method to determine the fair value of the intellectual property acquired. The fair value of assets acquired along with
the related deferred tax adjustment is as follows:

Intangible Assets – Intellectual Property

Deferred Tax Liability on Intangible Asset Uplift

Cash Consideration

Negative Goodwill

Fair value

£000

1,754

(313)

1,441

(500)

941

The cost of the acquisition was £500,000, of which £250,000 was paid during the year and £250,000 is
outstanding at the year end. The negative goodwill arose as the competitor would have had to undertake major
investment to support the long -term viability of the product line.

The acquisition has contributed £1,478,000 to revenues and has delivered profit in line with expectations.

25. Post Balance Sheet Event

Acquisition of Red Box International Holdings

The Group acquired the 100% share capital of Red Box International Holdings Ltd on 4 January 2024 for a total
consideration estimated and capped at £1.1m, of which £275,000 is being satisfied on completion, and £825,000
payable post-completion.

Red Box is a leading UK manufacturer of aviation ground power equipment with global reach and an established
presence in the USA market. The Acquisition will provide a strong addition to LPA Connection Systems, the Group’s
Saffron Walden-based division, that designs, manufactures and supplies high quality specialist products for the
aviation, rail, and infrastructure markets. This acquisition supports our long-term growth strategy whilst also
lessening the Group’s dependence on rail projects.

Red Box revenues for the year ended 31 December 2022 were £1,677,000, with adjusted EBIT of £81,000. Net
assets as at 31 December 2023 were around £750,000.

ANNUAL REPORT & ACCOUNTS 2023GROUP FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

ANNUAL REPORT & ACCOUNTS 2023GROUP FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

ANNUAL REPORT & ACCOUNTS 2023COMPANY
FINANCIAL
STATEMENTS

Company Balance Sheet

Company Statement of Changes in Equity

Company Notes to the Financial Statements

ANNUAL REPORT & ACCOUNTS 2023STRATEGIC REPORT | CHAIRMAN’S STATEMENTCOMPANY FINANCIAL STATEMENTS

Company Balance Sheet

At 30 September 2023

Fixed Assets

Investments

Tangible Assets

Current Assets

Debtors

Cash at Bank and In Hand

Note

2023

£000

5,166

1,965

7,131

576

Creditors: Amounts Falling Due Within One Year

(4,316)

2022

£000

5,411

2,061

7,472

471

1,275

1,746

(2,221)

Net Current Liabilities

(3,740)

(475)

Total Assets Less Current Liabilities

3,391

6,997

Creditors: Amounts Falling Due After More Than One Year

(2,634)

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

3,391

4,363

1,348

(324)

943

784

578

3,391

1,348

(324)

943

784

1,563

4,363

† 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 loss of £0.99m (2022: gain of
£0.93m).

The financial statements were approved by the Board on 24 January 2024 and signed on its behalf by:

Stuart Stanyard
Chief Financial Officer

ANNUAL REPORT & ACCOUNTS 2023COMPANY FINANCIAL STATEMENTS

Company Statement of Changes in Equity

For the year ended 30 September 2023

Investment
in own
shares

Share
Premium
Account

Share
Based
Payment
Reserve

Merger
Reserve

Retained
Earnings

£000

Total

£000

Share
Capital

£000

2023

At 1 October 2022

1,348

(324)

943

784

1,563

4,363

Loss for the Year

Total Comprehensive Income

Share based payments

Transactions with owners

At 30 September 2023

1,348

(324)

943

(985)

784

578

3,391

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

ANNUAL REPORT & ACCOUNTS 2023
COMPANY FINANCIAL STATEMENTS

Company Notes to the Financial
Statements

For the year ended 30 September 2023

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 2023.

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 2023COMPANY 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. 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. Prepayments and cash and
cash equivalents are subsequently measured at amortised cost.

Derivatives

Derivatives, including forward foreign exchange contracts, are not basic financial instruments. Derivatives
are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-
measured at their fair value with changes in value recognised in profit or loss. The Group does not currently
apply hedge accounting.

Financial Liabilities

Financial liabilities are obligations to pay cash or other financial assets and are recognised when the Company
becomes a party to the contractual provisions of the instrument. The Company’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.

D. 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.

E. 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.

ANNUAL REPORT & ACCOUNTS 2023COMPANY FINANCIAL STATEMENTS

COMPANY NOTES TO THE FINANCIAL STATEMENTS

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).

F. 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.

G. Defined Contribution Pension Schemes

The pension costs charged against operating profits are the contributions payable in respect of the
accounting period.

H. 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.

Key Judgement – Impairment of investments

The determination of whether an impairment trigger arises requires a judgment by management. If triggered an
estimate of the value in use of the cash-generating units to which the investment relates is required. 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 (2022:
two). 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

2023

Number

2022

Number

ANNUAL REPORT & ACCOUNTS 2023COMPANY FINANCIAL STATEMENTS

COMPANY NOTES TO THE FINANCIAL STATEMENTS

The employee benefit expense for the year amounted to:

Wages and Salaries

Social Security Costs

Pension Costs - Defined Contribution Arrangements

Share Based Payments

2023

£000

565

668

2022

£000

631

759

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 £Nil (2022: £98,000) see note 6 within the Group Financial Statements including £Nil (2022:
£10,000) of dual running management costs and £Nil (2022: £88,000) of reorganisation costs.

C5.

Investments

Investments in Subsidiary Undertakings

At 1 October 2022

Disposals

At 30 September 2023

Provision for
Impairment

Carrying
Amount

£000

(1,048)

£000

5,411

(245)

5,166

Cost

£000

6,459

(245)

6,214

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 Limited t/a
LPA Channel Electric

Ordinary Shares

100%

Engineered component
distribution

LPA Industries Limited t/a
LPA Connection Systems

Excil Electronics Limited t/a
LPA Lighting Systems

Ordinary Shares

100%

Ordinary Shares

100%

Electro-mechanical
Systems

LED lighting and
electronic Systems

Channel Electric Equipment Holdings Limited and Haswell Engineers Limited were subsidiaries during the year
but are currently in the process of being liquidated.

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.

ANNUAL REPORT & ACCOUNTS 2023COMPANY FINANCIAL STATEMENTS

COMPANY NOTES TO THE FINANCIAL STATEMENTS

Channel Electric Equipment Limited (company no. 00919987), LPA Industries Limited (company no. 00629433)
and Excil Electronics Limited (company no.01675128) have applied the subsidiary company exemption from
audit by virtue of S479A of the Companies Act 2006.

C6. Tangible Fixed Assets

Cost

At 1 October 2022

Additions

At 30 September 2023

Depreciation

At 1 October 2022

Charge for the year

At 30 September 2023

Net book value

At 30 September 2023

At 30 September 2022

C7.

Debtors

Freehold Land
and Buildings

£000

2,233

300

334

1,899

1,933

Plant and
Machinery

£000

716

726

588

660

128

Amounts falling due within one year

Amounts due from Subsidiary Undertakings

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 (Note 10)

Bank Overdraft

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.

2023

£000

186

318

576

2023

£000

1,949

1,606

413

311

4,316

Total

£000

2,949

2,959

888

106

994

1,965

2,061

2022

£000

176

280

471

2022

£000

190

1,440

329

205

2,221

ANNUAL REPORT & ACCOUNTS 2023COMPANY FINANCIAL STATEMENTS

COMPANY NOTES TO THE FINANCIAL STATEMENTS

C9. Creditors: Amounts Falling Due after More than One Year

Debt - Bank Loan (Note C10)

Amounts owed to Subsidiary Undertakings

2023

£000

2022

£000

1,934

700

2,634

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.

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

2023

£000

1,949

The following security is provided to Barclays Bank plc in respect of the Company’s £1.9m term loan
outstanding at 30 September 2023 (2022: £2.1m): (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.

This facility was renewed in January 2024. See Group Financial Statements note 15 for the terms
of the borrowings.

2022

£000

190

1,934

2,124

190

1,934

2,124

ANNUAL REPORT & ACCOUNTS 2023COMPANY FINANCIAL STATEMENTS

COMPANY NOTES TO THE FINANCIAL STATEMENTS

C11. Deferred Tax Asset

At 1 October 2022

Charged to profit in the year

At 30 September 2023

Recognised Deferred Tax Assets and Liabilities

Deferred Taxation Assets recognised in the Accounts are as Follows:

Accelerated Capital Allowances

Tax Benefit on Losses

£000

280

318

2022

£000

237

280

2023

£000

245

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% (2022: 25%). Deferred tax assets are disclosed in Note C7.

C12. Share Capital

Issued and Fully Paid

Number

£000

Number

£000

2023

2022

In Issue at the Start of the year

Allotted Under Share Plans

13,483,229

1,348

13,448,229

1,345

35,000

In Issue at the End of the year

13,483,229

1,348

13,483,229

1,348

During the year no options were exercised (2022: 35,000 at a weighted average of 49.0p). At the year end,
300,000 (2022: 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 2023, 300,000 ordinary shares of
10p each were held (2022: 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.

100

ANNUAL REPORT & ACCOUNTS 2023COMPANY FINANCIAL STATEMENTS

COMPANY NOTES TO THE FINANCIAL STATEMENTS

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 (2022: £13,000).

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 2023 the Company’s exposure in relation to
the overdraft facility was £nil (2022: £720,000).

101

ANNUAL REPORT & ACCOUNTS 2023COMPANY FINANCIAL STATEMENTS

COMPANY NOTES TO THE FINANCIAL STATEMENTS

102

ANNUAL REPORT & ACCOUNTS 2023OTHER
INFORMATION

Alternative Performance Measures Glossary

105

103

ANNUAL REPORT & ACCOUNTS 2023OTHER INFORMATION104

ANNUAL REPORT & ACCOUNTS 2023OTHER 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.

105

ANNUAL REPORT & ACCOUNTS 2023OTHER INFORMATIONNotice of Meeting

NOTICE IS HEREBY GIVEN that the Sixty Second
Annual General Meeting (“AGM”) of LPA Group Plc
(the “Company”) will be held at the offices of
Cavendish, 1 Bartholomew Close, London, EC1A 7BL
on Wednesday 27 March 2024 at 12.00 noon for the
following purposes:

Routine Business

1. To receive the accounts for the year ended 30

September 2023, together with the reports of the
directors and the auditors thereon.

2. To re-elect as a director Robert Horvath who retires
by rotation, in accordance with the Company’s
Articles of Association.

3. To declare a final dividend of 1p per ordinary share

of 10p each (“Ordinary Share”) for the year ended
30 September 2023, payable on 12 April 2024
to shareholders on the register at the close of
business on 15 March 2024 (record date) and an
ex-dividend date of 14 March.

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.

106

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 £151,677 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.

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

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

ANNUAL REPORT & ACCOUNTS 2023NOTICE OF MEETINGearlier, 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.

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 2025 or the close of business
on the date falling 15 months after the date
of the passing of this resolution, whichever is

By order of the Board
Stuart Stanyard
24 January 2024

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 25 March 2024 (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

107

ANNUAL REPORT & ACCOUNTS 2023NOTICE 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, 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

108

time of the Meeting applies. Shareholders will need
to use the unique personal identification Investor
Code (“IVC”) printed on your share certificate. If
you need help with voting online, please contact
our Registrar, Link 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
25 March 2024 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 https://www.euroclear.com/site/
public/EUI). CREST Personal Members or other
CREST sponsored members, and those CREST
members who have appointed a voting service
provider(s), should refer to their CREST sponsor or
voting service provider(s), who will be able to take
the appropriate action on their behalf. In order for
a proxy appointment made by means of CREST to
be valid, the appropriate CREST message (a CREST
Proxy Instruction) must be properly authenticated
in accordance with Euroclear UK & Ireland
Limited’s (EUI) specifications and must contain
the information required for such instructions, as
described in the CREST Manual. The message must
be transmitted so as to be received by the issuer’s

ANNUAL REPORT & ACCOUNTS 2023NOTICE OF MEETINGagent (ID: RA10) by 12.00 noon on 25 March 2024.
For this purpose, the time of receipt will be taken
to be the time (as determined by the timestamp
applied to the message by the CREST Applications
Host) from which the issuer’s agent is able to
retrieve the message by enquiry to CREST in the
manner prescribed by CREST.

CREST members and, where applicable, their CREST
sponsors or voting service providers should note
that EUI does not make available special procedures
in CREST for any particular messages. Normal
system timings and limitations will therefore apply in
relation to the input of CREST Proxy Instructions. It is
the responsibility of the CREST member concerned
to take (or, if the CREST member is a CREST personal
member or sponsored member or has appointed
a voting service provider(s), to procure that his
CREST sponsor or voting service provider(s) take(s))
such action as shall be necessary to ensure that
a message is transmitted by means of the CREST
system by any particular time.

In this connection, CREST members and, where
applicable, their CREST sponsors or voting
service providers are referred, in particular, to
those sections of the CREST Manual concerning
practical limitations of the CREST system and
timings. The Company may treat as invalid a
CREST Proxy Instruction in the circumstances set
out in Regulation 35(5) (a) of the Uncertificated
Securities Regulations 2001.

Appointment of Proxy by Joint Members

12.

In the case of joint holders, where more than one
of the joint holders purports to appoint a proxy,
only the appointment submitted by the most senior
holder will be accepted. Seniority is determined by
the order in which the names of the joint holders
appear in the Company’s register of members in
respect of the joint holding, the first-named being
the most senior.

Changing Proxy Instructions

13. To change your proxy instructions simply submit
a new proxy appointment using the methods set
out above. Note that the cut-off times for receipt
of proxy appointments (see above) also apply in
relation to amended instructions; any amended
proxy appointment received after the relevant cut-off
time will be disregarded. Where you have appointed
a proxy using the hard-copy proxy form and would
like to change the instructions using another hard-
copy proxy form, please contact Link Group as per
the communication methods shown in note 8. If you
submit more than one valid proxy appointment, the

appointment received last before the latest time for
the receipt of proxies will take precedence.

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 24 January 2024, 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 24 January 2024 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.

109

ANNUAL REPORT & ACCOUNTS 2023NOTICE 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

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

LED lighting and electronic systems

Hybrid / battery control boxes and systems

Control panels & boxes

Enclosures, fabrications, laser cut, form & weld

Rail, aircraft, ship & industrial connectors

Shore supply systems

LPA Lighting Systems

LPA House

Ripley Drive

Normanton

West Yorkshire

WF6 1QT, UK

Transport turnkey engineering and manufacturing services

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

110

ANNUAL REPORT & ACCOUNTS 2023LPA Group PLC – Form of Proxy

For use at the Annual General Meeting to be held at 12.00 noon on Wednesday 27 March 2024 at the offices
of Cavendish, 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 _________________________________________________________________________ 2024

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 2023.

2. To re-elect Robert Horvath as a director of the Company.

3. To declare a final dividend of 1p per Ordinary Share for the

year ended 30 September 2023.

4. To re-appoint as RSM UK Audit LLP 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 Company to make market purchases

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

111

ANNUAL REPORT & ACCOUNTS 2023

Notes:

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

2. To be effective a form of proxy must be in writing and signed by the member or his duly authorised attorney

or, if the member is a corporation under its common seal or signed by a duly authorised officer or attorney. A
corporation may appoint a representative to attend and vote at the meeting.

3. To be valid this proxy, together with any power of attorney under which it is signed, must be received at Link Group,

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 if the proxy instruction is one of

multiple instructions being given by ticking the box. Please also 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). 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.

112

ANNUAL REPORT & ACCOUNTS 2023113

ANNUAL REPORT & ACCOUNTS 2023STRATEGIC 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 2023NOTICE OF MEETING