Response to Tender Offer

9 November 2006

LPA Group Plc has today written to shareholders with regard to the Tender Offer.

‘Dear Shareholder,

THE BOARD, WHICH HAS BEEN ADVISED BY TEATHER & GREENWOOD, UNANIMOUSLY RECOMMENDS THAT YOU REJECT THE TENDER OFFER

Introduction

In my letter to Shareholders of 31 October 2006, I advised you that on Thursday 26 October 2006 the Board received notice of the Tender Offer from Andrew Perloff for up to 3,095,968 Ordinary Shares at 25 pence per Ordinary Share. If the Tender Offer is accepted by the maximum number of Shareholders, Andrew Perloff will in aggregate control 29.9 per cent. of the Ordinary Shares, the maximum shareholding allowable under the City Code without making an offer for the whole of the issued share capital of the Company.

The Board believes that the Tender Offer is an opportunistic attempt to acquire a large shareholding in the Company at too low a price. The Directors believe the Tender Offer substantially undervalues the Group’s net assets as well as its trading prospects.

Net assets

Shareholders should be aware that in the interim statement published on 22 June 2006, the Group’s unaudited balance sheet as at 31 March 2006 showed net assets of £6.02 million, equating to 55.2 pence per Ordinary Share in issue at that date (1).

The Group’s net assets were made up of tangible assets (£2.74 million, equating to 25.2 pence per Ordinary Share), goodwill (£1.28 million, equating to 11.7 pence per Ordinary Share) and a pension fund surplus (£2.00 million, equating to 18.3 pence per Ordinary Share).

Property valuation

The Board has commissioned an independent valuation of the Group’s freehold properties as at 30 September 2006 which shows an increase in net book value, on an existing use basis, of £1.05 million, equivalent to an additional 9.6 pence per Ordinary Share. This valuation will be incorporated into the Group’s balance sheet as at 30 September 2006 (2).

This independent valuation does not include any potential uplift arising from the redevelopment of the Saffron Walden site for residential use. The Directors’ believe this uplift could be substantial. The Board intends to maximise this value over the next three years by continuing to migrate current activities away from the site and resolve site issues to enable it to be redeveloped.

Trading update

The Group’s financial year closed on 30 September and I undertook in my letter to Shareholders of 31 October 2006 to provide an update on the Group’s current trading and to provide further details of the Group’s forward order book.

Having suffered a loss in the first half of the last financial year, the Group returned to trading profitability in the second half, but expects to report a small loss for the year as a whole.

The current year has started strongly with sales and orders substantially ahead of the corresponding period last year. As previously reported the Group is highly operationally geared and therefore a modest increase in sales can have a significant effect on profits. The Group continues to have a number of exciting sales opportunities especially for its LED lighting technology. The order book currently stands in excess of £9 million, its highest level since 2001.

The Group has made a strong recovery from the extremely difficult situation which arose when Alstom, the Group’s largest customer at the time, ceased manufacture of new trains in the UK in 2002. The Group has enjoyed orders in excess of sales for four successive years.  The Directors believe the Group can look forward to progress this year and strong growth over the next three years.

The Group’s strategy is to concentrate on the development of proprietary products using its know-how and reduce its dependence on rail vehicle projects. The Group is introducing a number of new products, to both existing and potential customers, including LED lighting and aircraft and infrastructure connectors.

Recommendation

The Board believes that the Tender Offer is an opportunistic attempt to acquire a large shareholding in the Company at too low a price. The Directors believe the Tender Offer substantially undervalues the Group’s net assets as well as its trading prospects.

The Board, which has been advised by Teather & Greenwood, unanimously recommends that you do not accept the Tender Offer. In providing its advice to the Board, Teather & Greenwood has taken into account the commercial assessments of the Directors.

Accordingly, the Directors unanimously recommend that all Shareholders reject the Tender Offer, as they have done in respect of their entire holdings of 1,169,540 Ordinary Shares (representing approximately 10.7 per cent. of the issued share capital of the Company) and strongly urges you to do the same.

Yours sincerely,

Michael Rusch