Interim Results

LPA Group PLC 30 June 2000 LPA Group plc ('LPA' or 'the Group') MAKING THE RIGHT CONNECTION Up to £1.8m proposed acquisition of Excil Electronics Limited and unaudited interim results for the six months to 31 March, 2000 * LPA, the specialist electrical equipment manufacturer and distributor, announces the proposed acquisition of Normanton based train lighting and power supply manufacturer Excil Electronics Limited ('Excil') for a maximum total consideration of £1.8m. * Interim pre tax profits to 31 March, 2000 down 55 per cent. at £251,000. * Strong performance from Channel Electric Equipment Limited ('Channel'). * LPA Industries Limited ('LPA Industries') is suffering poor output due to continued delays in placing of orders for rail vehicles due to the re-franchising process. * Challenging year of consolidation and rationalisation. * Dividend up 7.7 per cent. to 1.40p per share. * Excellent longer term prospects from growth in rail markets. The Proposed Acquisition of Excil LPA has agreed to acquire, conditionally upon the approval of shareholders, the entire issued share capital of Excil for a maximum consideration of £1.8 million of which £1.55 million will be payable in cash on completion and £250,000 will be placed in an escrow account until completion accounts have been prepared and agreed. Following completion, completion accounts will be prepared on a basis consistent with previous audited accounts of Excil. If the net asset value of Excil as at the completion date is less than £600,000 the consideration will be adjusted downwards subject to a maximum reduction of £250,000. No upward adjustment will be made. Excil, based in Normanton Yorkshire, is a manufacturer of interior lighting for rail vehicles, power supplies and inverters, and control panels. Excil also operates as a sub contract manufacturer of printed circuit boards to the electronics and engineering industries. Excil is a fellow supplier of equipment on many large rail contracts in which the Group is already involved. The acquisition of Excil will enable the Group to strengthen its position as a leading supplier to the rapidly expanding rail sector. For the year ended 31 December 1999, being the date of the last audited balance sheet, Excil had net assets of £633,000 and achieved a loss before tax of £9,000. An Extraordinary General Meeting to consider, and if thought fit approve, the acquisition will be held at the offices of Singer & Friedlander Limited, 21 New Street, London EC2M 4HR at 10.30am on 17 July, 2000. The proposed acquisition of Excil follows the acquisition, on 22 June, 2000, of Haswell Engineers Limited ('Haswell'), a manufacturer of high quality metal enclosures used in the electronics and engineering industries. The acquisition of Haswell will expand the Group's capacity to supply enclosures and battery rafts to the rail vehicle industry. The proposed acquisition of Excil, coupled with the acquisition of Haswell, will considerably enhance the Group's ability to bid for the manufacture and supply of modules for the expanding rail vehicle market. Financial Highlights 6 months to 6 months to % change Year to 30 31 March, 2000 31 March, 1999 September, 1999 Unaudited Unaudited + (-) Audited £000's £000's £000's ---- ---- ---- ---- Turnover 4,810 4,946 (2.7) 10,297 Operating profit 257 570 (54.9) 1,095 Net interest (6) (15) (60.0) (30) payable Profit on 251 555 (54.8) 1,065 ordinary activities before taxation Earnings per share Basic 1.73p 3.77p (54.1) 7.74p Fully diluted 1.64p 3.55p (51.8) 7.23p Dividend per 1.40p 1.30p 7.7 2.70p share Commenting on the acquisitions and interim results, Michael Rusch, Chairman, said; 'These are important acquisitions for the Group consolidating our position as a leading supplier to the rail sector, which is expected to expand rapidly over the next few years. The interim results were mixed with Channel continuing to do well and LPA Industries continuing to adjust to new market opportunities. The rest of the year will remain difficult. The prospects for next year and thereafter however are very encouraging and should justify our growth strategy through expanding our scope of supply in existing markets, developing new markets, and acquisitions.' Enquiries Peter Pollock Chief Executive 01799 512800 Ian Dighe Singer & Friedlander Limited 020 7523 5804 Interim Unaudited Group Results for the Six Months ended 31 March, 2000 Profit before taxation, for the six months ended 31 March, 2000 fell 55 per cent. to £251,000 (1999 £555,000) on sales down 2.7 per cent. to £4.81m (1999 £4.95m). Operating profits showed a fall of 55 per cent. to £257,000 (1999 £570,000). Earnings per share, based on profit after taxation, fell 54 per cent. to 1.73p (1999 3.77p). The interim dividend, which has been increased 7.7 per cent. to 1.40p (1999 1.30p), is fully covered, and will be paid on 27 July, 2000 to shareholders on the register of members as at the close of business on 14 July, 2000. Strict control of working capital enabled the Group to generate £632,000 cash at the operating level. Capital expenditure amounted to £384,000 compared with depreciation of £143,000. The Group was un-geared and had net cash in hand of £139,000 on 31 March, 2000 against indebtedness amounting to £304,000 in 1999 when gearing was 7.3 per cent.. LPA Industries is suffering poor output due to the shortfall of orders caused by the delay in new contracts for rail vehicles arising from the current re-franchising process which has prevented train operating companies from placing orders for new trains. This has affected the Turbostar, Juniper and DO1 rail vehicle projects. The main manufacturing phase of Virgin West Coast, Virgin Cross Country and Fourth Generation Tangarra for Australia does not start until next year, when the other existing rail projects are expected to return to normal production thus giving an encouraging position for the future. LPA Industries also suffered from increased competition in its industrial markets and manufacturing inefficiencies. It has responded by implementing new manufacturing and management information systems, developing a new marketing strategy, designing new products and rationalising the product range, investing in new plant and equipment and extending the scope of supply to the rail vehicle manufacturing industry. The acquisition of Haswell, the high quality metal enclosure manufacturers based in Clacton will expand capacity and allow an essential reorganisation to take place at LPA Industries' facilities in Saffron Walden. The acquisition of Excil will extend the scope of Group supply into the interior of trains and give the enlarged Group the opportunity to bid for modules beyond the present capability of the individual companies. Channel continues to benefit from the strength of sterling and to turn in an excellent performance. George Renshaw, formerly managing director of Gewiss UK, has been appointed Managing Director. Overall the year to 30 September, 2000 will remain challenging with significant progress expected next year and thereafter. Our strategy is to continue to grow the Group organically by expanding the scope of our supply, improving our position in our traditional markets and developing new ones, and by further acquisitions. The continuing strength of our main markets and the opportunities before us give your board considerable confidence for the future. Michael Rusch, Chairman 30 June, 2000 LPA Group PLC Debden Road, Saffron Walden, Essex. CB11 4AN Interim Unaudited Group Results for the Six Months ended 31 March, 2000 Profit and Loss Account 6 months to 31 6 months to 31 Year to 30 March, March, September, 1999 2000 1999 Audited Unaudited Unaudited £000's £000's £000's ---- ---- ---- Turnover 4,810 4,946 10,297 Operating profit 257 570 1,095 Profit before 257 570 1,095 interest and taxation Net interest (6) (15) (30) payable Profit on 251 555 1,065 ordinary activities before taxation Tax on profit on 75 172 279 ordinary activities Profit on 176 383 786 ordinary activities after taxation Dividends 142 132 274 Retained profit 34 251 512 Earnings per share Basic 1.73p 3.77p 7.74p Fully diluted 1.64p 3.55p 7.23p Dividend per share 1.40p 1.30p 2.70p 1. The financial information contained in this interim statement does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. The financial information for the full preceding year is based on the statutory accounts for the financial year ended 30 September, 1999. Those accounts, upon which the auditors issued an unqualified opinion, have been delivered to the Registrar of Companies. 2. The calculation of earnings per share is based on the profit after tax of £176,000 (1999: £383,000) and the weighted average number of ordinary shares in issue during the period of 10,159,641 (1999: 10,159,641). 3. The interim financial information has been prepared on the basis of the accounting policies set out in the Group's statutory accounts for the year ended 30 September, 1999. Both FRS 15 and 16 will be adopted in the accounts for the year ended 30 September, 2000. Neither have had a significant impact on the interim results. 4. All of the tax charge relates to tax liabilities within the UK. Note: Copies of this Interim Report are being sent to shareholders. Copies are also available to the public from the Company's Registered Office, PO Box 15, Tudor Works, Debden Road, Saffron Walden, Essex, CB11 4AN. Group Balance Sheet As at As at As at 30 September, 31 March, 2000 31 March, 1999 1999 Unaudited Unaudited Audited £000's £000's £000's £000's £000's £000's ---- ---- ---- ---- ---- ---- Fixed assets Tangible 1,877 1,616 1,571 assets Current assets Stocks 2,285 2,552 2,177 Debtors 2,332 2,593 2,465 Cash at 656 373 397 bank and in hand ---- ---- ---- 5,273 5,518 5,039 Creditors Amounts 2,552 2,760 2,042 falling due within one year ---- ---- ---- Net current 2,721 2,758 2,997 assets ---- ---- ---- Total 4,598 4,374 4,568 assets less current liabilities Creditors Amounts 100 200 103 falling due after one year Provision 83 53 83 for liabilities and charges ---- ---- ---- 183 253 186 ---- ---- ---- Net assets 4,415 4,121 4,382 ======== ========= ========= Capital and 1,016 1,016 1,016 reserves Called up share capital Share 100 100 100 premium account Revaluation 347 348 347 reserve Profit and 2,952 2,657 2,919 loss account ---- ---- ---- Equity 4,415 4,121 4,382 shareholders' funds ======== ========= ========= Cash Flow Statement 6 months to 31 6 months to 31 Year to 30 March, March, September, 1999 2000 1999 Audited Unaudited Unaudited £000's £000's £000's ---- ---- ---- Net cash inflow from 632 83 1,018 operating activities Returns on investments (6) (15) (30) and servicing of finance Taxation (100) (146) (458) Capital expenditure (net) (358) 11 (48) Equity dividends paid (142) (132) (264) Net cash 26 (199) 218 inflow/(outflow) before financing Financing (8) (12) (25) ---- ---- ---- Increase/(Decrease) in 18 (211) 193 cash ========= ========= ========= Reconciliation of 257 570 1,095 operating profit to net cash inflow from operating activities Operating profit Depreciation and 143 104 213 amortisation Changes in working 232 (591) (290) capital and other non cash items ---- ---- ---- Cash inflow from 632 83 1,018 operating activities ========= ========= ========= Net funds Increase/(decrease) in 18 (211) 193 cash in the period Repayments of capital 8 12 25 element of finance leases and hire purchase contracts ---- ---- ---- Movement in net cash in 26 (199) 218 the period Net funds/(debt) at 1 113 (105) (105) October, 1999 ---- ---- ---- Net funds/(debt) at 31 139 (304) 113 March, 2000 ========= ========= =========

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