Final Results

LPA Group PLC
29 January 2003



LPA GROUP PLC

28 JANUARY 2003



                      PRELIMINARY ANNOUNCEMENT OF RESULTS

                       FOR YEAR ENDED 30TH SEPTEMBER 2002



LPA Group Plc, the electrical and electronic equipment manufacturer and
distributor, announces a pre-tax loss of £318,000 for the year ended 30th
September 2002.





KEY POINTS



-          TURNOVER                         UP 1.7% TO £13.8m (2001: £13.6m)


-          TRADING LOSS                     £56,000 (2001: PROFIT £462,000)


-          LOSS BEFORE TAX                  £318,000 (2001: PROFIT £127,000)


-          LOSS PER SHARE      BASIC        3.16p (2001: earnings of 1.63p)
                           - DILUTED        3.16p (2001: earnings of 1.58p)
                          - ADJUSTED        2.17p (2001: earnings of 2.63p)

-          DIVIDENDS          TOTAL               0.25p (2001: 0.50p)


-          GEARING                          DOWN 14% TO 85% (2001: 99%)




-          Uncertain conditions in the rail market, delays and procurement from
           overseas undermined performance at LPA Niphan Systems and LPA Excil 
           Electronics



-          Another good performance by LPA Channel Electric but future margins
           under pressure from global and pan european competition



-          LPA Haswell Engineers suffered during the year from the continuing
           weakness in the telecoms market



-          Strong cash generation has reduced gearing



-          New group structure implemented - new group wide sales team and
           operations team



-          Lower cost base and realistic revenue expectation should lead to
           progress in the second half.



-          Much improved order entry and increased level of tendering in recent
           months



Peter Pollock, Chief Executive, commented:



'These results, though disappointing, are in line with the statement made at the
interim stage. LPA Niphan Systems reduced losses and is expected to make
progress this year. LPA Channel Electric performed well but now faces increased
international competition. LPA Excil Electronics, having started well, incurred
losses in the second half but is now recovering. LPA Haswell Engineers struggled
throughout the year but now has the potential to perform well.

Poor trading conditions have continued but a major restructuring and cost
reduction has been implemented. The Group is in a stronger position to deal with
a more conservative level of anticipated revenues. Order entry is much improved
and tendering activity is higher. The Group should therefore make progress
during the second half of the year.'



ENQUIRIES

Peter Pollock
LPA Group Plc                            0788 1626123 or 01799 512800



Ian Dighe
Bridgewell Corporate Finance Limited     0207 003 3100



Mark Williams
Teather & Greenwood Limited              0207 426 9000




                           KEY FINANCIAL INFORMATION


FINANCIAL HIGHLIGHTS
For the year ended 30 September 2002


                                                                                    2002                2001
                                                                                   £'000               £'000

TURNOVER                                                                          13,806              13,570

OPERATING (LOSS)/PROFIT                                                             (56)                 462

LOSS/PROFIT ON ORDINARY ACTIVITIES BEFORE                                          (318)                 127
TAXATION

LOSS/PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION                                  (345)                 175

DIVIDENDS                                                                             27                  56

EARNINGS PER SHARE
  Basic                                                                          (3.16p)               1.63p
  Diluted                                                                        (3.16p)               1.58p
  Adjusted (before amortisation                                                  (2.17p)               2.63p
  of goodwill)

DIVIDENDS PER SHARE                                                                0.25p               0.50p

GEARING
  Net debt to shareholders' funds                                                  84.5%               99.2%
  




                              CHAIRMAN'S STATEMENT


RESULTS



As predicted in my interim statement the second half-year proved very
challenging for the Group. As a consequence the modest profit reported in the
first half was more than absorbed by the second half loss, resulting in an
overall pre tax loss of £318,000 for the year against a profit before tax of
£127,000 last year. The loss per share amounted to 3.16p compared with earnings
per share of 1.63p in 2001.



The difficult trading conditions have continued through the first quarter of the
current financial year. Although the workload based on current orders will
improve later in the year a further substantial cost reduction has been
implemented. This is reducing expenses to a level commensurate with the level of
trading activity that the Group has been experiencing, and should allow progress
later in the year. However, conditions were so severe in the first quarter that,
including the costs associated with the cost reduction exercise, progress during
the year will be limited.



DIVIDENDS



Given the loss for the year ended 30 September 2002 your directors consider it
inappropriate to recommend a final dividend. The interim dividend of 0.25p per
share paid in September 2002 was covered by earnings. We will keep the dividend
under review and restore it as soon as trading permits.



ALTERNATIVE INVESTMENT MARKET



As proposed in my statement last year the Group transferred to the Alternative
Investment Market (AIM) in May 2002. The transfer was successfully achieved
without major disruption.



THE PETER POLLOCK OPTION



Shareholders will be aware that on 21 April 1997, our chief executive, Peter
Pollock was granted an option over 750,000 ordinary shares of 10p each, at an
option price of 40p per share. This option expires on 31 March 2004. However, it
has become clear that, in the current circumstances, this early expiry date is
inappropriate in that it will prevent the option serving the intended purpose.
Consequently the Remuneration Committee has agreed with Peter Pollock that the
period, over which this option may be exercised, be extended until 20 April 2007
(i.e. ten years from the grant of the original option). All other terms of the
option (including the option price of 40p per share) will remain the same.



EMPLOYEES



Sadly, the difficult trading conditions and the consequent cost reductions have
meant that a number of positions within the Group have become redundant and some
excellent people have been casualties of this process. We wish them well in the
future.



Our people are the Group's key resource and we value them highly. On behalf of
the Board I would like to thank all of our employees for their diligence,
loyalty and hard work in difficult circumstances.



PROSPECTS



The start of the year has been difficult, but the cost reduction programme has
been implemented against a background of an improving load later in the year.
This should significantly improve Group performance during the second half.







MICHAEL RUSCH

CHAIRMAN

29 January 2003






                            CHIEF EXECUTIVE'S REVIEW





TRADING RESULTS



The final quarter of the year ended September 2001 and the first quarter of the
year ended September 2002 yielded the highest ever levels of Group activity.
Delays in customer manufacturing programmes and in the award of new contracts
then reduced Group activity to very low levels, which persisted throughout the
rest of the year and the start of the current year. In the first half of the
year to 30 September 2002 sales of £7.8m were achieved, up 27% on the same
period in the previous year. In the second half of the year sales of only £6.0m
were achieved, down 23% on the first half. The increased level of activity was
caused by several rail projects coming on stream at the same time and the down
turn in the second half by the rescheduling of requirements on West Coast Main
Line, a major programme, and delays to other follow on contracts.



Having expanded to meet the increased demand on the upswing, we then reduced the
cost base in response to the down swing. The outlook at the start of the second
half still remained positive however, but at the same time as the West Coast
Main Line programme was rescheduled, order levels fell away. As a consequence
losses were incurred in the second half. For the year as a whole sales of £13.8m
up 1.7% on the previous year were achieved, but a loss before tax of £318,000
was suffered compared with a profit before tax of £127,000 in 2001.



MARKETS



Shareholders will be well aware of the turmoil on Britain's railways. This is
reflected in the supply chain. One UK train builder has work for several years
while the other has very little. Major contracts have been placed overseas. We
have followed the work to Europe, but it has proved very difficult to dislodge
the European manufacturers' existing suppliers of our products, even on vehicles
destined for the UK. We have had more success in the Far East and Australia and
we are building alliances in that region. Despite these difficulties Rail will
remain an important market for the Group. We are enjoying success in the
refurbishment and upgrade market, which has helped to underpin recent
improvements in order entry. New opportunities are expected over the next two
years.



The attack on the World Trade Centre in September 2001 caused Bae Systems to
announce their withdrawal from the Regional Jet programme. This was an important
programme for the Group and its loss was felt in the second half. More recently
the pan European military programmes have become more global in their supply
initiatives and this will lead to increased competition from the US and Europe
where there is a price advantage due to the weakness of the dollar and Euro
versus the pound sterling. It is expected that this will adversely affect
margins in the future. The expansion of civil air travel has slowed which is
affecting the expansion and refurbishment of airports, which has a knock on
effect on Group sales of Ground Support Equipment.



The problems in the Telecommunication market are well known. BT and Marconi have
had major problems, and there has been a delay in the roll out of the new G3
Mobile Phone network. As a supplier of base station equipment and cubicles to
the Telecoms market the Group has been adversely affected.



Overall the markets for the Group's products have been quiet and orders and
sales declined from their anticipated levels during the year, in a manner
consistent with the wider industrial market. Over the last four months however a
more satisfactory level of order entry has been sustained, which together with
the work rescheduled from last year will provide a useful base load during the
rest of this year.



STRUCTURE AND COST BASE



It became clear in the Autumn of 2002 that, despite reductions, the cost base
was still too high compared with the sustainable level of Group activity and
that a structural change was required to allow for the further elimination of
cost. The Group has four subsidiaries, none of which were growing fast enough to
sustain the full management structure they enjoyed.  It was necessary to reduce
the cost base of each unit so that it could remain a viable business and to
share certain resources across the Group. A new structure has been implemented.



There is now a unified sales and marketing organisation led by George Renshaw,
the Managing Director of LPA Channel Electric who becomes Group Sales and
Marketing Executive. This has allowed the duplication of regional resources to
be eliminated. The Group sales team will now be able to sell all Group products.
Technical sales personnel will continue to support the Group's project related
business. Export effort will be co-ordinated on a territory by territory basis.
During the year all subsidiaries adopted the LPA prefix to their trading names
and LPA Industries adopted the name LPA Niphan Systems to better reflect its
offering to the markets it serves. Niphan is the name of the original range of
electrical connectors from which technology much of LPA Niphan System's current
range of connector equipment is derived.



Some Group manufacturing or assembly capabilities overlapped. Operations have
now been brought together under a single management team led by Jim Henderson,
the Managing Director of LPA Niphan Systems who becomes Chief Operating Officer.
Duplicated resources are being eliminated. A number of senior management
positions have been made redundant.



All Group administration and finance functions will report directly to Steve
Brett, the Group Finance Director, with a subsidiary responsibility to the local
operations management.



A major cost reduction programme has been achieved and the cost base will be
kept under constant review.



BUSINESS UNITS



LPA Niphan Systems started the year with a heavy workload, which evaporated
because of the rescheduling of West Coast Mainline and the delay in the award of
other follow on contracts. Whilst the order entry for standard products was
sustained it was insufficient to provide an adequate workload during the second
half, when project work was postponed. Overall losses were reduced from those
suffered in the previous year. Trading in the first quarter of this year has
been difficult but the cost base has been cut further  There is a useful
workload for the rest of the year and a high level of tendering activity, which
should lead to further progress. Demand for standard products should benefit
from the re-focussed Group sales team.



LPA Channel Electric had another good year but progress was limited by the
cancellation of the Regional Jet programme following the attack on the World
Trade Centre. During the first quarter of this year it has become clear that
global and pan European competition will be likely to put pressure on margins. A
cost reduction exercise has been carried out and the assembly facility will
close with the work to be transferred elsewhere in the Group. The company has
made progress in the rail vehicle refurbishment market and has other significant
opportunities.



LPA Excil Electronics had a year of different halves. The first was excellent
and the second very disappointing. The company benefited from a heavy project
workload in the first half that disappeared in the second.  Rescheduling and
delays in the award of follow on contracts contributed to the reduction in
activity levels but difficult conditions in the contract electronics market were
also a negative factor. Overall a modest profit was made despite losses in the
second half which have persisted in to the first quarter of the current year.
Some important new contracts have since been won which will provide a workload
during the rest of the year and there are significant opportunities for the
future. A major cost reduction has been implemented and progress is expected
during the rest of the year.



LPA Haswell Engineers had a difficult year. The workload declined during the
second half due to the continuing problems in the Telecoms market, and losses
were sustained for the year as a whole. The level of tendering activity and
order entry picked up during the first quarter of the current year and while
output is not yet satisfactory, the order book has strengthened. The cost base
has been reduced and a number of efficiencies introduced which, should allow
progress during the rest of the year.





CAPITAL EXPENDITURE



Capital expenditure during the year amounted to £365,000. Following the major
expenditure in the previous year, no new major capital projects were undertaken
during the year. There are no major capital expenditure projects planned for
this year.



CASH FLOW



Net cash inflow from operating activities amounted to £1,596,000. After
financing £240,000 of net capital expenditure, £14,000 of deferred
consideration, dividends of £81,000 and debt service of £878,000 (interest and
capital) total cash increased by £383,000. Net debt fell in the year by £972,000
and at 30 September 2002 gearing was 85% (2001: 99%).







DESIGN AND DEVELOPMENT



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



PROSPECTS



The markets in which the Group operates are large, but have been highly volatile
during the last year. The prospect of war in the Middle East, and consequent
rises in oil prices, are not an encouraging backdrop against which to consider
prospects. Overall however the restructuring and the cost reduction programme
that has been implemented should minimise the impact of any further downturn on
the Group. We have a much more conservative view of the sustainable level of
activity available to the Group. The workload over the coming months is better
than was the case during both the second half of last year and the first quarter
of this year and the tendering level is stronger. The first quarter was
difficult and the costs of the restructuring will be borne in the first half of
the year. Progress should be made during the second half.





PETER POLLOCK

CHIEF EXECUTIVE

29 January 2003






CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the year ended 30 September 2002



                                                                                                    Restated
                                                                                  2002                  2001
                                                                                £ '000                £ '000

TURNOVER: CONTINUING OPERATIONS                                                 13,806                13,570

Cost of sales                                                                 (10,273)               (9,944)


GROSS PROFIT                                                                     3,533                 3,626

Net operating expenses                                                         (3,589)               (3,164)


OPERATING (LOSS) / PROFIT: CONTINUING OPERATIONS                                  (56)                   462

Interest payable and similar charges                                             (262)                 (335)


(LOSS) / PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION                           (318)                   127

Tax on profit on ordinary activities                                              (27)                    48


(LOSS) / PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION                            (345)                   175

Dividends (all equity)                                                            (27)                  (56)


RETAINED (LOSS) / PROFIT FOR THE YEAR                                            (372)                   119


EARNINGS PER SHARE
Basic                                                                          (3.16p)                 1.63p
Fully diluted                                                                  (3.16p)                 1.58p
Adjusted (before amortisation of goodwill)                                     (2.17p)                 2.63p






CONSOLIDATED BALANCE SHEET
at 30 September 2002


                                                                                                     Restated
                                                                                    2002                 2001
                                                                                   £'000                £'000
FIXED ASSETS
Intangible assets                                                                  1,606                2,021
Tangible assets                                                                    3,320                3,632
Investments                                                                            -                    2

                                                                                   4,926                5,655


CURRENT ASSETS
Stocks                                                                             2,350                3,054
Debtors                                                                            2,276                3,814
Cash at bank and in hand                                                               5                  119

                                                                                   4,631                6,987

CREDITORS: Amounts falling due within one year                                    (2,611)              (4,535)

NET CURRENT ASSETS                                                                 2,020                2,452



TOTAL ASSETS LESS CURRENT LIABILITIES                                              6,946                8,107

CREDITORS: Amounts falling due after more than one year                           (2,713)              (3,496)

PROVISIONS FOR LIABILITIES AND CHARGES                                             (104)                (110)

NET ASSETS                                                                         4,129                4,501


CAPITAL AND RESERVES
Called up share capital                                                            1,090                1,090
Share premium account                                                                254                  254
Revaluation reserve                                                                  317                  318
Merger reserve                                                                       230                  230
Profit and loss account                                                            2,238                2,609

EQUITY SHAREHOLDERS' FUNDS                                                         4,129                4,501






CONSOLIDATED CASH FLOW STATEMENT
for the year ended 30 September 2002


                                                                                    2002                 2001
                                                                                   £'000                £'000

NET CASH INFLOW FROM OPERATING ACTIVITIES                                          1,596                  712


RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest paid                                                                      (204)                (287)
Interest element of hire purchase and finance lease payments                        (47)                 (38)

                                                                                   (251)                (325)

TAXATION
Corporation tax received                                                               -                   40


CAPITAL EXPENDITURE
Payments to acquire tangible fixed assets                                          (338)                (522)
Receipts from disposal of properties                                                   -                  122
Receipts from sale of other fixed assets                                              98                   51

                                                                                   (240)                (349)


ACQUISITIONS
Purchase of subsidiary undertakings                                                 (14)                (219)


EQUITY DIVIDENDS PAID                                                               (81)                (150)


NET CASH FLOW BEFORE FINANCING                                                     1,010                (291)


FINANCING
Increase in share capital                                                              -                  140
Repayment of loans                                                                 (350)                (564)
Capital element of hire purchase and finance lease payments                        (277)                (238)

                                                                                   (627)                (662)

INCREASE/(DECREASE) IN CASH                                                          383                (953)



NOTES



1.   EARNINGS PER SHARE



The calculation of earnings per share is based upon the loss of £345,000 (2001:
profit of £175,000) and the weighted average number of ordinary shares in issue
during the year. Due to losses in the current year no dilution arises and
diluted earnings per share is therefore shown as the same as basic earnings per
share. Adjusted earnings per share, which is disclosed to reflect the underlying
performance of the Company, have been calculated on a loss of £237,000 (2001:
profit of £283,000) being the loss for the year before the amortisation of
goodwill. Details are as follows:


                                                   2002                                 2001
                                                  Basic      Diluted                   Basic          Diluted
                                                  pence        pence                   pence            pence
                                                    per          per                     per              per
                                     £'000        share        share      £'000        share            share

Basic earnings                       (345)       (3.16)       (3.16)        175         1.63             1.58
Amortisation of goodwill               108         0.99         0.99        108         1.00             0.98
                                    ______       ______       ______      _____       ______          _______
Adjusted earnings                    (237)       (2.17)       (2.17)        283         2.63             2.56
                                    ______       ______       ______     ______       ______          _______



The weighted average number of shares used in the calculation of earnings per
share are as follows:


                                                                                     2002             2001
                                                                                   Number           Number

Weighted average shares in issue during the year                               10,903,229       10,747,339

Effect of dilutive share options                                                        -          304,801

Weighted average shares for diluted earnings per share                         10,903,229       11,052,140




2.      ACQUISITION COSTS



Current year acquisition cash flows comprise deferred consideration of £14,000
(2001: £219,000).



3.     DEFERRED TAXATION



FRS19 'Deferred Tax' has been adopted for the first time in the accounts for the
year ended 30 September 2002 and comparative figures have been restated
accordingly. FRS19 requires deferred tax assets, including those arising from
tax losses, to be recognised to the extent that they are regarded as
recoverable. The effect of adopting FRS19 is to reduce the taxation charge in
the year ended 30 September 2001 by £73,000 and to increase the taxation charge
in the year ended 30 September 2002 by £49,000. The balance sheet provision for
deferred taxation at these two dates has fallen by £73,000 and £24,000
respectively. The earnings per share have been adjusted accordingly.



4.     INFORMATION



The preceding information does not constitute the Company's statutory accounts
for the years ended 30 September 2002 or 30 September 2001 but is derived from
those accounts. The 2002 accounts will be posted to shareholders on 17 February
2003 and will be available from the Company Secretary, LPA Group Plc, Debden
Road, Saffron Walden, Essex, CB11 4AN, shortly thereafter. Statutory accounts
for 2001 have been delivered to the Registrar of Companies, and those for 2002
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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