Final Results

LPA Group PLC
22 January 2002




                                  NEWS RELEASE

                      PRELIMINARY ANNOUNCEMENT OF RESULTS

                       FOR YEAR ENDED 30TH SEPTEMBER 2001


LPA Group Plc, the electrical and electronic equipment manufacturer and
distributor, announces a pre-tax profit of £127,000 for the year ended 30th
September 2001.


                                   KEY POINTS

  • SALES UP 31% TO £13.6m

  • TRADING PROFIT £462k (2000: LOSS £75k)

  • PROFIT BEFORE TAX £127k (2000: LOSS £155k)

  • EARNINGS PER SHARE BASIC 0.95p (2000: LOSS 1.60p)

ADJUSTED          1.95p (2000: LOSS 1.40p)

  • DIVIDENDS FINAL 0.5p (2000: 1.4p)


                                TOTAL 0.5p (2000: 2.8p)


  • RETURN TO PROFITABILITY WITH PRE-TAX PROFITS OF £127,000.


  • ANOTHER GOOD CONTRIBUTION FROM CHANNEL ELECTRIC EQUIPMENT.


  • EXCIL ELECTRONICS, ACQUIRED IN JULY 2000, RECOVERED STRONGLY IN SECOND
    HALF. NEW MANAGING DIRECTOR APPOINTED.


  • LPA INDUSTRIES' RAIL BUSINESS DECLINED A FURTHER 12% DUE TO RAIL
    INVESTMENT DELAYS. NEW MANAGING DIRECTOR APPOINTED.


  • HASWELL ENGINEERS ACQUIRED IN JUNE 2000 WEAKENED IN SECOND HALF DUE TO
    TELECOM MARKET CONDITIONS. MANAGING DIRECTOR DAVID ADAIR DIED IN SEPTEMBER
    2001. NEW OPERATIONS DIRECTOR APPOINTED.


  • MAJOR CAPITAL INVESTMENT PROGRAMME NEARING COMPLETION


  • SOUND ORDER BOOKS AND INDICATIONS THAT RAIL ORDER DROUGHT MAYBE COMING TO
    AN END WITH MANY PROSPECTS IN VIEW.


  • PLAN TO MOVE FROM OFFICIAL LIST TO ALTERNATIVE INVESTMENT MARKET IN MAY
    2002

Peter Pollock, Chief Executive, commented 'These results, while not
satisfactory, show that recovery is continuing half year over half year. There
are further signs of recovery. LPA Industries' rail orders in the first quarter
already total 71% of the amount received in the whole of last financial year and
the new team is tackling the challenges with enthusiasm. Excil Electronics and
Channel Electric Equipment are trading satisfactorily and Haswell Engineers has
tackled the problems caused by the weak Telecoms market. Further progress is now
in prospect.'


ENQUIRIES

Peter Pollock LPA Group Plc 07881 626123 or 01799 512800

Ian Dighe Bridgewell Corporate Finance Limited     0207 523 5804

Russell Cook Teather & Greenwood Limited           0207 426 9000





            PRELIMINARY ANNOUNCEMENT YEAR ENDED 30TH SEPTEMBER 2001


                       AUDITED KEY FINANCIAL INFORMATION




FINANCIAL HIGHLIGHTS

For the year ended 30 September 2001
                                                                        2001                  2000
                                                                        £'000                 £'000

TURNOVER                                                                13,570                10,366


OPERATING PROFIT / (LOSS)                                               462                   (75)


PROFIT / (LOSS) ON ORDINARY ACTIVITIES BEFORE                           127                   (155)
TAXATION

PROFIT / (LOSS) ON ORDINARY ACTIVITIES AFTER                            102                   (163)
TAXATION


DIVIDENDS                                                               56                    295


EARNINGS PER SHARE
Basic                                                                   0.95p                 (1.60p)
Fully diluted                                                           0.92p                 (1.60p)
Adjusted (before amortisation of goodwill)                              1.95p                 (1.40p)


DIVIDENDS PER SHARE                                                     0.5p                  2.80p


GEARING
Net debt to shareholders' funds - %                                     101%                  89%




CHAIRMAN'S STATEMENT


Results

Despite the continuing difficult trading conditions the Group recovered during
the year and achieved a small profit before tax of £127,000. Earnings per share
amounted to 0.95p against a loss of 1.60p in the year ended 30 September 2000.
Adjusted earnings per share (before the effect of amortising goodwill) amounted
to 1.95p (2000: loss of 1.40p). Group sales grew 31% to £13.6m.


There were further delays in new orders for rail vehicles to replace of out of
date rolling stock. We welcome the lead given by the Strategic Rail Authority in
setting out its plan for the future. We will plan accordingly. Recognising the
rail opportunities in the UK a major effort has been made with some success to
promote the Group's capabilities to Rail Vehicle manufacturers in the European
and Far East markets.


The telecommunication market was depressed while the aerospace and defence
markets were quite resilient. The terrorist attack on September 11th has
seriously affected the Civil Aerospace market with severe reductions in activity
which will have consequences during this financial year. LPA Industries again
incurred a significant loss and corrective action has been taken which should
secure a positive future. Channel Electric Equipment again made a good profit
but is adjusting to the post September 11th aerospace market conditions. Both
Haswell Engineers and Excil Electronics, acquired in 2000, made positive
contributions. Haswell has adjusted to the poor telecommunication market
conditions and Excil recovered strongly during the second half and is well
placed for the future.


Dividends and Annual General Meeting


Difficult trading conditions during the period under review caused your Board to
decide not to pay an interim dividend. While trading is not yet entirely
satisfactory we are now recommending the payment of a reduced final dividend of
0.5p per ordinary share (2000: 1.40p). This, since the interim dividend was
zero, makes a total of 0.5p (2000: 2.80p) for the year. The dividend is covered
by earnings, and subject to approval by shareholders at the Annual General
Meeting of the Company, to be held at noon on 14th March 2002 at the offices of
Teather & Greenwood Limited, 15 St Botolph Street, London, EC3A 7QR, will be
paid on 18th March 2002 to all Ordinary Shareholders on the Register at the
close of business on 22nd February 2002.


Alternative Investment Market


The Board recognises that there may be taxation advantages to shareholders if
the Group was listed on the Alternative Investment Market (AIM) rather than
remaining with a full listing on the Stock Exchange. In addition the Group will
benefit from lower costs associated with listing and transactions, and a less
onerous regulatory regime. Given the very small market capitalisation of the
Group and lack of liquidity in the shares, the Board do not believe that the
shares will be any less marketable on AIM than they are on the Official List.
Unless any overriding circumstance arise the Board plan to make the move to AIM
on the first trading day of May 2002. Shareholders should take professional
advice, particularly if they hold LPA Group shares in a PEP or ISA.


Employees


It is with deep regret that I report the death of David Adair, the founder and
Managing Director of Haswell Engineers, in September 2001. David made a
significant contribution to the Group following the acquisition of his company
in 2000.


Our people are very important to the Group and we are committed to personal
development and training. I would like to extend thanks on behalf of the Board
to all our employees for their contributions to the growth of the Group.





Prospects


The year has started more or less in line with our expectations but short of our
aspirations. Capacity adjustments and management changes have been made, and the
cost base reduced. Overall the performance has been mixed but mildly
encouraging. Further recovery is expected during the year but trading conditions
will remain challenging. Overall your Board is optimistic.







Michael Rusch

Chairman

22 January 2001




                                 LPA Group Plc

CHIEF EXECUTIVE'S REVIEW

Trading Results

Although Group sales increased 31% to £13.6m, the expected recovery in Rail
Vehicle project orders, necessary for the original plans of the Strategic Rail
Authority (SRA) to be achieved, has not materialized. As a consequence LPA
Industries had another miserable year and the recovery in Group profits was
restricted to £127,000 profit before tax against a loss of £155,000 last year.
Basic earnings per share amounted to 0.95p, against a loss of 1.60p last time,
and adjusted earnings per share (before the amortisation of goodwill) amounted
to 1.95p (2000: loss of 1.40p).


The further delay in the award of new rail vehicle projects to UK manufacturers
has been the main difficulty during the year. This was originally caused by the
re-negotiation of the rail franchises by the SRA necessary to provide fewer,
larger and longer franchises for the future. This policy was amended after the
General Election when the new Minister announced a general extension to the
existing short-term franchises of two years. This was clarified by the SRA on
19th December 2001 when the commitment to the original plan was reiterated. An
announcement further clarifying the situation was made on 14th January 2002 but
no major new commitments to investment were made. The enforced insolvency of
Railtrack has undermined confidence in Public Private Finance Initiatives and
put investment in doubt in the short term.


The only significant contract awarded during the year was by South West Trains
to the German manufacturer Siemens for Desiro rail vehicles. The Group is a
supplier to Siemens and is attempting to expand the scope of supply on Desiro.
The rail market still has the potential to be very strong with several thousand
trains required before the end of the decade. Contracts for the full replacement
of the obsolete Mark 1 slam door stock by 2004 are still outstanding.


Rail equipment output at LPA Industries fell for the second year running despite
deliveries of equipment for the Virgin West Coast Mainline and Cross Country
projects. Work on other current vehicle types virtually ceased, compared with
demand two years ago, though since the year end there has been an upturn in
enquiries and orders. Deliveries of Fourth Generation Tangarra for Sydney
Australia were delayed until the current year. As predicted LPA Industries
struggled in the first half with an inadequate load which improved later in the
year. A new Managing Director has been appointed.


Demand for aircraft products was sustained despite the strength of sterling. A
new aircraft ground power supply cable management product known as a 'crocodile'
was successfully launched during the year with 24 units now in service at
Heathrow Airport and considerable interest being expressed in home and export
markets. LPA Industries forecast load while falling short of past expectations
is adequate. The cost base has been reduced. The new management team is meeting
the challenges and recovery should follow.


Channel Electric Equipment had another good year but since 11th September 2001
the cut back in civil aviation and the cancellation of the regional jet
programme coupled with the problems in the telecom market has weakened
prospects. The current year has started satisfactorily.


Haswell Engineers, acquired in June 2000, started the year well but the
weaknesses in the telecom market undermined progress. Sadly David Adair, the
founder and Managing Director, fell ill during the year and died in September.
Interim management was installed and a permanent appointment has now been made.
Much of the telecom work was replaced by new business which otherwise would have
been additional. Market conditions have been weak but the facilities installed
during the year have proved attractive to customers and new enquiries have been
obtained. Costs are being strictly controlled. The current year has started
slowly.








CHIEF EXECUTIVE'S REVIEW (continued)




Excil Electronics, acquired in July 2000, had an unexpectedly weak start to the
year. A letter of claim under the warranties, given in the sale and purchase
agreement, has been submitted to the vendors. A new Managing Director was
appointed. Excil recovered in the second half when volume production of orders
for Virgin West Coast, Virgin Cross Country, Fourth Generation Tangarra in
Australia and Kinki Sharyo for Hong Kong commenced. Since the year end orders
have been received from London Underground. Contract manufacturing has remained
depressed.


Capital Expenditure


Capital expenditure during the year amounted to £1,067,000 compared with
depreciation of £622,000. It mainly comprised an integrated surface mount
printed circuit board assembly line at Excil, a fully automated punching line
and bending facility at Haswell and the initiation of an integrated cable
cutting and marking line at LPA Industries. Apart from the completion of this
project and the reorganisation at LPA Industries no major capital expenditure is
expected this year.


Cash Flow


Net cash flow from operating activities amounted to £712,000. After financing
£349,000 of net capital expenditure and £219,000 of deferred consideration, net
debt increased by £706,000 to £4,463,000. At 30 September 2001 gearing was 101%
(2000: 89%). Interest charges amounted to £325,000 in the year.


Design and Development


The Group's design and development activity has focussed on new transportation
and telecom market products, updating industrial products and the latest
manufacturing techniques.


Management and resources


Jeff Pyne was appointed Managing Director of Excil Electronics in February 2001
and Jim Henderson was appointed Managing Director of LPA Industries in October
2001. The Group is developing a strong team capable of delivering substantial
growth.


Prospects


The markets in which the Group operates are large. The Rail, Aerospace, Telecom
and Industrial markets suffered setbacks during 2001 and the Defence market has
its own challenges but they are all capable of substantial growth. The objective
of further recovery this year is attainable. The Group generally has a sound
order book with identified short-term opportunities, which should enable
progress to be made.







Peter Pollock

Chief Executive

22 January 2002









CONSOLIDATED PROFIT AND LOSS ACCOUNT

for the year ended 30 September 2001

                                                                                        Total          Total
                                                                                        2001           2000
                                                                                        £ '000         £ '000

Turnover - continuing operations                                                        13,570         10,366

Cost of sales                                                                           (9,944)        (8,049)



Gross profit                                                                            3,626          2,317

Net operating expenses                                                                  (3,164)        (2,392)



Operating profit / (loss) - continuing operations                                       462            (75)

Interest receivable and similar income                                                  -              9

Interest payable and similar charges                                                    (335)          (89)



Profit / (loss) on ordinary activities before taxation                                  127            (155)

Tax on profit on ordinary activities                                                    (25)           (8)



Profit / (loss) on ordinary activities after taxation                                   102            (163)

Dividends                                                                               (56)           (295)



Retained profit / (loss) for the year                                                   46             (458)



Earnings per share
Basic                                                                                   0.95p          (1.60p)
Fully diluted                                                                           0.92p          (1.60p)
Adjusted (before amortisation of goodwill)                                              1.95p          (1.40p)







CONSOLIDATED BALANCE SHEET

at 30 September 2001


                                                                              2001                2000
                                                                              £'000               £'000
Fixed assets
Intangible assets                                                             2,021               2,129
Tangible assets                                                               3,632               3,255
Investments                                                                   2                   2

                                                                              5,655               5,386


Current assets
Stocks                                                                        3,054               2,305
Debtors                                                                       3,814               3,622
Cash at bank and in hand                                                      119                 246

                                                                              6,987               6,173
Creditors: Amounts falling due within one year                                (4,535)             (3,309)

Net current assets                                                            2,452               2,864



Total assets less current liabilities                                         8,107               8,250

Creditors: Amounts falling due after more than one year                       (3,496)             (3,784)

Provisions for liabilities and charges                                        (183)               (224)

Net assets                                                                    4,428               4,242


Capital and reserves
Called up share capital                                                       1,090               1,055
Share premium account                                                         254                 149
Revaluation reserve                                                           318                 346
Merger reserve                                                                230                 230
Profit and loss account                                                       2,536               2,462

Equity shareholders' funds                                                    4,428               4,242







CONSOLIDATED CASH FLOW STATEMENT

for the year ended 30 September 2001
                                                                               2001                 2000
                                                                               £'000                £'000

Net cash inflow from operating activities                                      712                  482


Returns on investments and servicing of finance
Interest received                                                              -                    9
Interest paid                                                                  (287)                (65)
Interest element of finance lease payments                                     (38)                 (22)
Loan issue costs                                                               -                    (108)

                                                                               (325)                (186)


Taxation
Corporation tax paid                                                           40                   (294)


Capital expenditure
Payments to acquire tangible fixed assets                                      (522)                (463)
Receipts from disposal of properties                                           122                  -
Receipts from sale of other fixed assets                                       51                   29

                                                                               (349)                (434)


Acquisitions
Purchase of subsidiary undertakings                                            (219)                (1,861)
Net cash acquired with subsidiary undertakings                                 -                    (462)

                                                                               (219)                (2,323)



Equity dividends paid                                                          (150)                (289)



Net cash (outflow) before financing                                            (291)                (3,044)


Financing
New bank loan                                                                   -                  3,500
Increase in share capital                                                       140                65
Repayment of loans                                                              (564)              (329)
Capital element of hire purchase and finance lease payments                     (238)              (76)

                                                                                (662)              3,160



(Decrease) / increase in cash                                                   (953)              116


NOTES

1 - EARNINGS PER SHARE

The calculation of basic earnings per share is based on the profit after tax
attributable to shareholders of £102,000 (2000: loss of £163,000) divided by the
weighted average number of ordinary shares in issue during the year of
10,747,339 (2000: 10,275,194).


Adjusted earnings per share excluding amortisation of goodwill, which is
disclosed to reflect the underlying performance of the Group, are calculated on
a profit of £210,000 (2000: loss of £144,000) as follows:

                                                                                               2001              2000

Profit / (loss) after tax                                                                   102,000         (163,000)

Amortisation of goodwill                                                                    108,000            19,000


Adjusted profit after taxation                                                              210,000         (144,000)


                                                                                               2001              2000

Basic earnings per share                                                                      0.95p           (1.60p)

Adjustment for amortisation of goodwill                                                       1.00p             0.20p


Earnings before amortisation of goodwill per share                                            1.95p           (1.40p)


The weighted average number of dilutive shares is as follows:
                                                                                               2001              2000

Weighted average number of shares in issue during the year                               10,747,339        10,275,194

Effect of dilutive share options                                                            304,801                 -


Total number of shares used in the calculation of diluted earnings per share             11,052,140        10,275,194




2 - FINAL PROPOSED DIVIDEND

The final proposed dividend (net) of 0.5p per share (2000: 1.4p) is payable on
18th March 2002 to all Ordinary Shareholders on the Register at the close of
business on 22nd February 2002.



3 - ACQUISITION COSTS

Current year acquisition costs comprise deferred consideration of £134,000 and
other acquisition costs of £85,000 accrued at 30th September 2000.



4 - INFORMATION

The preceding information does not constitute the Company's statutory accounts
for the years ended 30th September 2001 or 30th September 2000 but is derived
from those accounts. The 2001 accounts will be posted to shareholders on the
18th February 2002 and will be available from the Company Secretary, LPA Group
Plc, Debden Road, Saffron Walden, Essex, CB11 4AN, shortly thereafter. Statutory
accounts for 2000 have been delivered to the Registrar of Companies, and those
for 2001 will be delivered, following approval by the Annual General Meeting.
The auditors have reported on these accounts and their reports were unqualified
and did not contain statements under section 237(2) or (3) of the Companies Act
1985.





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