TIDMLPA
RNS Number : 5898Y
LPA Group PLC
04 January 2024
4 January 2024
LPA GROUP PLC
("LPA", the "Company" or the "Group")
Acquisition of Red Box International
LPA Group plc, the innovation-led engineering specialist in
electronic and electro-mechanical components and systems, today
announces the acquisition of Red Box International Holdings Ltd
("Red Box"), a UK manufacturer of aviation ground power equipment
(the "Acquisition"). The total consideration for the Acquisition is
expected to be approximately GBP1.1m, of which GBP275,000 is being
satisfied on completion, and GBP825,000 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
GBP1,677,000, with adjusted EBIT of GBP81,000. Net assets as at 31
December 2023 were c.GBP750,000. The Acquisition is expected to be
broadly neutral to FY2024 profit, and earnings enhancing in the
Group's FY2025.
Robert Horvath, Chairman of LPA said: "The acquisition of Red
Box is a demonstration of the opportunities available to the Group
to acquire businesses with high quality products and, within a
relatively short period, high growth potential. Being part of LPA
will provide scalability to boost Red Box's success. We look
forward to welcoming Ian Harding and Red Box to the LPA Group."
Further details on the acquisition are listed below.
Enquiries:
LPA Group plc +44 (0)1799 512 800
Robert B Horvath, Chairman
Paul Curtis, Chief Executive Officer
Stuart Stanyard, Chief Financial
Officer
Cavendish Capital Markets Limited
(NOMAD and Broker) +44 (0) 20 7220 0500
Ed Frisby / Abigail Kelly (Corporate
Finance)
Tim Redfern (Corporate Broking)
Hudson Sandler (Financial PR) +44 (0) 20 7796 4133 lpagroup@hudsonsandler.com
Dan de Belder
Nick Moore
Francesca Rosser
About LPA
LPA Group plc (AIM: LPA) is an innovation-led engineering
specialist in electronic and electro-mechanical components and
systems .
Focused on transport (rail and aviation), defence,
infrastructure and industrial markets and supplying into hostile
and challenging environments, LPA is known for engineering
solutions to improve product reliability, reducing maintenance and
life cycle costs.
The Group has three sites across the UK, selling to customers in
the UK and overseas. Two of these are design and manufacturing
sites: LPA Connection Systems - electro-mechanical systems for
rail, aviation and industrial, and LPA Lighting Systems - LED
lighting and electronic systems for rail and infrastructure. The
third site is LPA Channel Electric - a value added distributer of
engineered components for rail, aerospace, and defence.
With over 160 years of UK design and manufacture, and with
origins in the first ever light installed in 'Electric Avenue',
Brixton; innovation is core to LPA and to the products and services
supplied to our customers worldwide.
For more information visit www.lpa-group.com
The following information is disclosed in relation to the
Acquisition.
About Red Box International
Red Box specializes in the manufacture of a comprehensive range
of ground power units. These have won plaudits in both the civilian
and military markets and hold ISO9001.2008 accreditation. The
majority of the products are also NATO codified. Its network of
distributors are able to provide overseas customers with local
support and sales aftercare.
For the year ended 31 December 2022, Red Box achieved revenues
of GBP1,677,000, adjusted EBIT of GBP81,000 (adjusted to exclude a
one-off exchange gain) and profit before tax of GBP75,000 (adjusted
to exclude a one-off exchange gain) all unaudited.
Based in Southampton, Red Box has been manufacturing a range of
ground power units and associated support equipment since 1993.
This includes start power units, continuous DC power supplies,
ground power units and frequency converters. Ian Harding, who
founded the business, will be retained by LPA as a consultant.
Acquisition rationale
The Acquisition is in line with the Group's strategy of
acquiring product driven businesses which are; considered by
customers as a leading brand, bring access to our target markets,
can be leveraged through our existing sales channels, and has
potential for intercompany sourcing. This will utilise our existing
manufacturing capabilities and be fully integrated into our Saffron
Walden site. The acquisition is part of a plan to increase our
product offering to the aircraft ground support market, which is
already seeing strong growth with existing lines, through our
recently enhanced sales network. We will also look to explore how
this technology / product offering can be developed and exploited
across the Group's other market sectors.
The LPA Board considers that there are long term growth drivers
for Red Box's products and services based on a growing worldwide
requirement for DC based charging technology.
Consideration for the Acquisition
Total consideration is estimated at, and capped at, GBP1.1m, and
consists of:
-- Initial consideration of GBP275,000 paid in cash on
completion (SPA entered into 4 January 2024, and completion
expected during 4 January 2024),
-- A second payment of GBP275,000 paid in cash shortly after the
successful relocation of the business to Saffron Walden, expected
to be approximately six months from Acquisition completion. This is
dependent on the net assets of Red Box delivered at completion
(being greater than GBP750,000). The net assets include plant and
machinery, and net working capital and are valued at c.GBP750,000
as at 31 December 2023 (unaudited),
-- A third payment of GBP275,000 paid in cash, payable by 31 December 2024,
-- A fourth payment of GBP275,000 paid in cash, payable by 31 October 2025.
The cash consideration will be funded from existing cash
resources and from the Group's revolving credit facility with
Barclays UK Bank. As at 31 December 2023, the Group had cash of
approximately GBP1.2m (unaudited), bank debt of GBP1.9m (unaudited)
and GBP1.5m of undrawn bank facility.
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No statement in this announcement is intended to be a profit
forecast or estimate and no statement in this announcement should
be interpreted to mean that earnings per share of the Company for
the current or future financial years would necessarily match or
exceed the historical published earnings per share of the
Company.
The information contained within this announcement is deemed to
constitute inside information as stipulated under the retained EU
law version of the Market Abuse Regulation (EU) No. 596/2014 (the
"UK MAR") which is part of UK law by virtue of the European Union
(Withdrawal) Act 2018. The information is disclosed in accordance
with the Company's obligations under Article 17 of the UK MAR. Upon
the publication of this announcement, this inside information is
now considered to be in the public domain.
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END
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