Interim Results

LPA Group PLC
22 June 2006

NEWS RELEASE

Interim Unaudited Group Results for the Six Months ended 31 March 2006

LPA Group Plc, the electrical and electronic equipment manufacturer and
distributor, announces a pre-tax loss of £149,000 (2005: profit of £96,000) for
the six months ended 31 March 2006.



KEY POINTS                                              2006               2005


•     TURNOVER                                         £6.7m              £6.6m

•     (LOSS) / PROFIT BEFORE TAX                   (£149,000)           £96,000

•     BASIC (LOSS) / EARNINGS PER SHARE               (1.19p)             0.76p

•     DIVIDENDS                                        0.15p              0.15p

•     GEARING                                          39.2%              49.6%

•     DIFFICULT TRADING CONDITIONS AND DELAYS IN CONTRACT AWARD WILL
      RESTRICT PROGRESS THIS YEAR

•     TENDERING ACTIVITY REMAINS AT A HIGH LEVEL

•     FOLLOWING ADOPTION OF FRS17 £2M PENION SURPLUS RECOGNISED

•     POSITIVE CASH FLOW IN THE PERIOD AND GEARING REDUCED



Peter Pollock, Chief Executive, commented


The continuing delays in contract award are very frustrating. We await a very
high level of outstanding tenders to be adjudicated. In the meantime our markets
have become more competitive and progress in the second half will be limited. In
the event of these conditions continuing we will keep strategy under review. We
have had some success in procuring components, tooling and traction batteries
from low cost country sources.





Enquiries:

Peter Pollock           Chief Executive                     01799 512844
Stephen Brett           Finance Director                    01799 512860
James Glancy            Teather & Greenwood Limited         020 7426 9000
Robert Naylor           Teather & Greenwood Limited         020 7426 9000


22 June 2006





Interim Unaudited Group Results for the Six Months ended 31 March 2006

CHAIRMAN'S STATEMENT



In my remarks to the Annual General Meeting held on 8 March 2006, I commented
that the start to the new financial year had been disappointing and that this
would be reflected in the results for the first half. A loss before tax of
£149,000 has been incurred against a profit of £96,000 in the same period last
year, on sales of £6.7m (2005: £6.6m). Basic loss per share amounted to 1.19p
against earnings of 0.76p last year. There was net cash inflow before financing
of £86,000 (2005: outflow of £18,000). The interim divided of 0.15p has been
maintained and will be paid on 29 September 2006 to shareholders registered at
the close of business on 8 September 2006.



Following the adoption in full of accounting standard FRS17 the surplus on the
final salary pension scheme is included in the results for the first time, and
previous years figures have been restated for comparison purposes. The surplus
of £2.0m (2005: £1.3m), shown in the balance sheet under pension asset, is the
difference between the market value of scheme assets and the present value of
scheme liabilities net of deferred tax. The surplus is the product of two large
numbers whose values can fluctuate widely and shareholders should not assume
that it can be realised.



I also remarked that orders received during February had been encouraging and
that these, together with a number of near term opportunities, had the potential
to deliver a better second half. The near term opportunities have not manifested
themselves as strongly as we had hoped, however the volume and value of tenders
outstanding remains very high. Only one tender of any significance has been lost
in the period, but the others have been delayed. We are awaiting the imminent
award of several million pounds worth of contracts. The cost base has been
reduced and the cost of this taken in the first half. Some limited progress is
expected in the second half of the year.



The strategy of developing relationships with Rail Rolling Stock manufacturers
supplying the UK market continues to make progress and all of Alstom Transport,
Bombardier Transportation, Hitachi and Siemens now deal with Group companies.
However this strategy is taking more time to deliver the base load required by
the Group to rebuild that lost when train building ceased in Birmingham in 2002
and more recently with the slow down in new build in Derby. The market is also
becoming ever more competitive. Progress in Europe has been encouraging and the
potential business in France is very considerable. The Group has lost further
business as a result of the globalisation of procurement in its aerospace
markets.



More positively, the Group's infrastructure products have performed better.
Aircraft Ground Power Supply Products, Relays and Industrial Connectors have
sold well. New products, based on the Group's LED technology, are evoking a lot
of interest and important new orders from defence, infrastructure and rail
vehicle markets are anticipated. The Group has been building a position in the
UK defence equipment market albeit from a low base. Initial progress has been
encouraging, with some small contracts won and invitations to tender for
multi-million pound opportunities. Efforts to source components and tooling from
low cost countries are succeeding in reducing costs. The Group has been
appointed European agent and distributor for a range of traction batteries.



Order entry just kept pace with sales during the first six months but at lower
margins. The Group has been selected for some notable projects, in some cases
more than a year ago, but the orders have not yet been placed and these have not
been included in order entry. Shareholders will share management's frustration
with these delays, which are limiting and damaging the Group's progress.



In the light of the challenging trading conditions, Management are keeping
strategy under review.



Your board expects only limited progress during the remainder of this year. In
the longer term, the award of the major projects currently under adjudication,
together with development of the shorter-term order base, will determine the
Group's progress.





Michael Rusch
Chairman
22 June 2006




LPA GROUP PLC

Interim Unaudited Group Results for the Six Months ended 31 March 2006

CONSOLIDATED PROFIT AND LOSS ACCOUNT


                                                                 6 months to     * 6 months to         * Year to
                                                               31 March 2006      1 April 2005      30 Sept 2005
                                                                   Unaudited         Unaudited           Audited
                                                                      £000's            £000's            £000's
Turnover                                                               6,668             6,614            13,469
Operating (loss) / profit                                              (181)                92               263
Net finance income                                                        32                 4                10
(Loss) / profit on ordinary activities before taxation                 (149)                96               273
Tax on (loss) / profit on ordinary activities                             19              (13)              (40)
(Loss) /profit on ordinary activities after taxation                   (130)                83               233
Basic (loss) / earnings per share                                    (1.19p)             0.76p             2.14p

* As restated. See note 3.



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 2005. Those
accounts, upon which the auditors issued an unqualified opinion, have been
delivered to the Registrar of Companies.



2.    The calculation of loss per share is based upon the loss after tax of
£130,000 (2005: profit of £83,000) and the weighted average number of ordinary
shares in issue during the period of 10.903m (2005: 10.903m).



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 2005, except that FRS17 'Retirement Benefits' will be adopted in
full for the first time in place of SSAP24 'Pension Costs', and dividends will
be accounted for in line with FRS21 'Events after the Balance Sheet Date' in the
accounts to the year ended 30 September 2006. Comparative figures have been
restated to reflect the above.



The Group previously accounted for its defined benefit pension scheme under
SSAP24. Under SSAP24 a regular pension cost was determined using actuarial
methods and charged to the profit and loss account. Variations from the regular
pension cost were spread over the average remaining service lives of employees.
The cumulative difference between the profit and loss account expense and
employer contributions was held in the balance sheet as either a prepayment or
accrual. Under FRS17 pension scheme deficits or surpluses are recognised on the
balance sheet. The profit or loss account comprises the current service cost,
the appropriate proportion of any past service cost, the interest cost and the
expected return on any plan assets. The net impact of this change in the
accounts is to increase net assets at September 2005 and March 2005 by
£1,622,000 and £1,386,000 respectively, and to increase earnings in the year to
September 2005 and the half year to 1 April 2005 by £93,000 and £48,000
respectively.



The company has changed its accounting treatment of proposed dividends. FRS21 no
longer permits proposed dividends to be included as an expense in the profit and
loss account, with the corresponding liability in the balance sheet. Dividend
distributions are not recognised in the profit and loss account, they are
disclosed as a component of the movement in shareholders' funds. A liability is
recorded for a final dividend when the dividend is approved by the company's
shareholders, and for an interim dividend when the dividend is paid. The net
impact of this change in the accounts is to increase net assets at September
2005 and March 2005 by £39,000 and £16,000 respectively.



4.    Copies of this Interim Report are being sent to shareholders. Copies are
also available to the public from the Company's Registered Office, Tudor Works,
Debden Road, Saffron Walden, Essex, CB11 4AN




LPA GROUP PLC



Interim Unaudited Group Results for the Six Months ended 31 March 2006

CONSOLIDATED BALANCE SHEET


                                                                       As at           * As at           * As at
                                                               31 March 2006      1 April 2005      30 Sept 2005
                                                                   Unaudited         Unaudited           Audited
                                                                      £000's            £000's            £000's
     Fixed assets
     Intangible assets                                                 1,281             1,374             1,327
     Tangible assets                                                   2,183             2,331             2,235
                                                                       3,464             3,705             3,562
     Current assets
     Stocks                                                            2,383             2,398             2,604
     Debtors                                                           2,996             3,146             3,085
     Cash at bank and in hand                                              3                 2                 3
                                                                       5,382             5,546             5,692
     Creditors: Amounts falling due within one year                   (3,708)           (3,698)           (3,743)

     Net current assets                                                1,674             1,848             1,949

     Total assets less current  liabilities                            5,138             5,553             5,511

     Creditors: Amounts falling due after more than one year          (1,083)           (1,368)           (1,211)

     Provisions for liabilities and  charges                             (31)              (10)              (44)

     Net assets excluding pension asset                                4,024             4,175             4,256

     Pension asset                                                     1,996             1,314             1,558

     Net assets                                                        6,020             5,489             5,814


     Capital and reserves
     Called up share capital                                           1,090             1,090             1,090
     Share premium account                                               254               254               254
     Revaluation reserve                                                 313               314               313
     Merger reserve                                                      230               230               230
     Profit and loss account                                           4,133             3,601             3,927

     Equity shareholders' funds                                        6,020             5,489             5,814

     * As restated. See note 3.






LPA GROUP PLC

Interim Unaudited Group Results for the Six Months ended 31 March 2006

CONSOLIDATED CASH FLOW STATEMENT


                                                             6 months to     * 6 months to         * Year to
                                                           31 March 2006      1 April 2005      30 Sept 2005
                                                               Unaudited         Unaudited           Audited
                                                                  £000's            £000's            £000's

Net cash inflow from operating activities                            301               238               787
Returns on investments and servicing of finance                     (86)              (93)             (183)
Taxation                                                               -                 -              (28)
Capital expenditure                                                 (90)             (130)             (223)
Equity dividends paid                                               (39)              (33)              (49)
Net cash inflow / (outflow) before financing                          86              (18)               304
Financing                                                          (214)             (222)             (448)
(Decrease) in cash                                                 (128)             (240)             (144)





RECONCILIATION OF OPERATING (LOSS) / PROFIT TO

NET CASH INFLOW FROM OPERATING ACTIVITIES


Operating (loss) / profit                                          (181)                92               263
Depreciation and amortisation                                        228               240               482
Changes in working capital and other non cash items                  197             (145)              (49)
Adjustment for pension funding                                        57                51                91
Net cash inflow from operating activities                            301               238               787

* As restated. See note 3.


RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT

(Decrease) in cash in the period                                    (128)             (240)            (144)
Cash outflow from decrease in debt and lease financing                214               222              448
Change in debt resulting from cash flows                               86              (18)              304
New hire purchase agreements                                         (38)                 -                -
Amortisation of loan costs                                            (5)               (5)             (11)
Movement in net debt in the period                                     43              (23)              293
Opening net debt                                                  (2,404)           (2,697)          (2,697)
Closing net debt                                                  (2,361)           (2,720)          (2,404)





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