REG - Luceco PLC - Half-year Report <Origin Href="QuoteRef">LUCEL.L</Origin> - Part 2

LucecoAnnouncement

11/09/2017 07:06

- Part 2: For the preceding part double click  ID:nRSK2920Qa 

£000         
 Non-current liabilities                                     
 Bank term loan           12,000     12,000     12,000       
 Shareholder loan notes   -          2,467      -            
 Deep discount bond       -          3,202      -            
 Eurobond                 -          6,934      -            
                          12,000     24,603     12,000       
 Current liabilities                                         
 Shareholder loan notes   -          -          247          
 Chinese mortgage loan    -          6,729      -            
 Secured bank loans       20,359     22,352     21,032       
                          20,359     29,081     21,279       
 
 
The Shareholder loan notes as at 30 June 2016 of £2.5m within non-current
liabilities, related to amounts owing to John Hornby, CEO. Post the IPO, the
balance outstanding at the year ended 2016 was £0.2m, which was fully repaid
during H1 2017. 
 
Secured bank loans are secured by a fixed and floating charge over the assets
of the Group. They include funds advanced under invoice discounting
arrangements from HSBC Finance (UK) Limited of £20.4m (six months ended 30
June 2016: £20.7m, full year ended 31 December 2016: £21.0m) and Industrial
and Commercial Bank of China Ltd of £nil (six months ended 30 June 2016:
£1.7m, full year ended 31 December 2016: £nil), which are secured by legal
charges over the Group's book debts 
 
12 2017 long term incentive plan ("LTIP") 
 
The share-based payments charge of £28,000 (H1 2016: £nil) included in the
Condensed Statement of Consolidated Income within administrative expenses is
attributable to the 2017 LTIP nominal cost options. 
 
Awards have been granted to the Chief Executive Officer and the Chief
Financial Officer and other key management personnel within the Group, under
the Luceco 2017 Performance Share Plan ("PSP"), which was approved by
shareholders at the Company's AGM held on 25 May 2017. 
 
The following awards have been granted in the form of nominal cost options
over the number of ordinary shares of 0.05 pence in the Company under the
terms of the PSP, as set out on pages 52 to 58 within the 2016 Annual Report: 
 
 Board Directors  Role                     Number of shares awarded  
 John Hornby      Chief Executive Officer  145,331                   
 David Main       Chief Financial Officer  72,665                    
 
 
Each award has a linked tax qualifying option over 12,457 shares at an
exercise price of £2.408. On exercise, the number of shares under the nominal
cost option will be reduced proportionally to take account of the exercise of
the tax qualifying option such that the individual will not receive a greater
number of shares than is subject to the nominal cost option. 
 
The awards will vest subject to the satisfaction of performance conditions
measuring the Company's earnings per share ("EPS") and total shareholder
return ("TSR") performance. The extent to which awards will vest will depend
on the extent to which the performance conditions are satisfied over the
performance period, which runs from 1 January 2017 to 31 December 2019. No
consideration was paid for any of the awards 
 
Options under the 2017 award have been valued using the Monte Carlo model
(given the increased uncertainty around potential vesting) with the following
assumptions: 
 
 Directors' and Employee share options LTIP award 2017           2017     
 3-day average share price before options were issued (pence)    238.50   
 Average expected volatility                                     34%      
 Expected life                                                   3 years  
 Risk free rate                                                  0.08%    
 
 
13 Exchange rates 
 
Average exchange rates are summarised below: 
 
                                     Unaudited  Unaudited  Audited      
                                     30 June    30 June    31 December  
                                     2017       2016       2016         
                                     £          £          £            
 Average for the period                                                 
 US Dollar: Chinese Renminbi         $6.79      $6.54      $6.64        
 GBP Sterling: US Dollar             1.29       1.43       1.36         
 GBP Sterling: Chinese Renminbi      8.70       9.38       8.98         
 GBP Sterling: Euro                  1.13       1.28       1.22         
 GBP Sterling: Arab Emirates Dirham  4.62       5.26       4.98         
 GBP Sterling: Mexican Peso          23.13      25.91      25.26        
 
 
14 Financial risk management and financial instruments 
 
The Group's activities expose it to a variety of financial risks that include
currency risk, interest rate risk, credit risk and liquidity risk. 
 
These financial statements do not include all financial risk management
information and disclosures required in the annual financial statements which
should therefore be read in conjunction with the Group's financial statements
for the year ended 31 December 2016.  There have been no changes to the risk
management policies since the year ended 31 December 2016. 
 
The Group's bankers perform the valuations of financial derivatives for
financial reporting purposes. 
 
The table below analyses financial instruments into a fair value hierarchy
based on the valuation technique used to determine fair value. 
 
·     Level 1: quoted prices (unadjusted) in active markets for identical
assets or liabilities 
 
·     Level 2: inputs other than quoted prices included within Level 1 that
are observable for the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices) 
 
·     Level 3: inputs for the asset or liability that are not based on
observable market data (unobservable inputs) 
 
There are no level 1 instruments. The only Level 2 instruments are forward
exchange contracts and interest rate swaps. 
 
                             Unaudited  Unaudited  Audited      
                             30 June    30 June    31 December  
                             2017       2016       2016         
                             £000       £000       £000         
 Foreign exchange contracts  46         277        93           
 Interest rate swaps         243        622        433          
                             289        899        526          
 
 
Except for forward exchange contracts and interest rate swaps, the fair values
of financial assets and liabilities are considered the same as the carrying
amounts for the Group. 
 
15 Related party transactions 
 
During the period a decision was taken to exit from sales to the domestic
Chinese market.  This market had not been a priority for the Group and was one
in which the Group had struggled to compete on price, given the focus on UK
and European standards of quality in the Group's product range.  In order to
give effect to an orderly transfer and exit, the rights to the Ross trademark
and relevant patent (which were carried at £nil net book value) were
transferred for £nil consideration to Jiaxing Ross Trading Limited.  Based on
a third-party valuation, finished goods inventory was sold for £0.240m,
realising a loss on sale of £0.217m to the same entity.  Jiaxing Ross Trading
Limited is a related party as at the time of the transactions it was wholly
owned by a member of the Group's key management personnel.  Since the initial
transfer and during the remainder of the period, the Group has made sales of
£0.57m including mark up to Jiaxing Ross Trading Limited.  During the period
Jiaxing Ross Trading Limited was sold on to its largest customer with no gain
to any employee of the Group. 
 
At the start of the period £247,000 was owed under shareholder loan notes to
John Hornby, CEO, this balance was fully repaid during the period no interest
was received by John Hornby CEO. No balances are owed at the period end. 
 
16 Date of Approval of financial information 
 
The interim financial information covers the period 1 January 2017 to 30 June
2017 and were approved by the Board on 8 September 2017.  Further copies of
the interim financial information can be accessed on the Luceco plc investor
relations website, www.luceco.com. 
 
Responsibility Statement 
 
We confirm to the best of our knowledge: 
 
·      the consolidated set of financial statements has been prepared in
accordance with IAS 34 Interim Financial Reporting as adopted by the EU; 
 
·      the Interim Executive Review includes a fair review of the information,
required by DTR 4.2.7R of the Disclosure Guidance and Transparency Rules,
being an indication of important events that have occurred during the first
six months of the financial year and their impact on the condensed set of
financial statements; and 
 
·      the interim results include a fair view of the information required by
DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related
party transactions that have taken place in the first six months of the
current financial year and that have materially affected the financial
position or performance of the entity during that period; and any changes in
the related party transactions described in the last annual report that could
do so. 
 
At the date of this statement, the Directors are those listed in the Group's
2016 Annual Report. 
 
Approved by the Board on 8 September 2017 and signed on its behalf. 
 
John Hornby                                                                   
     David Main 
 
Chief Executive Officer                                                       
   Chief Financial Officer 
 
Additional information 
 
Financial calendar 
 
 Ex interim dividend                     22 September 2017  
 Interim Dividend payment                27 October 2017    
 Half year end                           30 June 2017       
 Half year interim management statement  11 September 2017  
 Year end                                31 December 2017   
 Full year preliminary statement         March 2018         
 
 
Company's registered office 
 
Luceco plc 
 
Building E Stafford Park 1 
 
Stafford Park 
 
Telford 
 
TF3 3BD 
 
www.luceco.com 
 
info@luceco.com 
 
Independent auditor 
 
KPMG LLP 
 
Statutory Auditor 
 
Chartered Accountants 
 
One Snowhill 
 
Snow Hill Queensway 
 
Birmingham 
 
B4 6GH 
 
Financial advisor and broker 
 
Numis Securities 
 
The London Stock Exchange Building 
 
10 Paternoster Square 
 
London 
 
EC4M 7LT 
 
Principal Bankers 
 
HSBC Bank plc 
 
8 Canada Square 
 
London 
 
E14 5HQ 
 
Registrars 
 
Capita Asset Services 
 
The Registry 
 
34 Beckenham Road 
 
Beckenham 
 
Kent BR3 4TU 
 
Company Secretarial services 
 
Capita Asset Services 
 
1st Floor 
 
40 Dukes Place 
 
London 
 
EC3A 7NH 
 
This information is provided by RNS
The company news service from the London Stock Exchange