REG - Luceco PLC - Final Results
26/03/2024 07:15
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RNS Number : 2432I Luceco PLC 26 March 2024
26 March 2024
LUCECO PLC - 2023 FULL YEAR RESULTS
Profitability at the upper end of expectations despite challenging markets.
Continued growth and strong cash generation.
Luceco plc, the supplier of wiring accessories, EV chargers, LED lighting, and
portable power products, today announces its audited results for the year
ended 31 December 2023 ("2023" or "the year").
2023 Summary results
Year ended 31 December 2023 2023 2022 Change (%)
(£m unless otherwise stated)
Revenue 209.0 206.3 +1.3%
Adjusted Results(1)
Adjusted operating profit 24.0 22.0 +9.1%
Adjusted profit before tax 21.2 19.4 +9.3%
Adjusted profit after tax 17.3 17.2 +0.6%
Adjusted basic earnings per share 11.1p 11.1p -
Statutory Results
Operating profit(2) 22.2 13.7 +62.0%
Profit before tax 18.9 11.7 +61.5%
Profit after tax 16.7 11.0 +51.8%
Basic earnings per share 10.8p 7.1p +52.1%
Metrics
Adjusted(1) operating margin % 11.5% 10.7% +0.8ppts
Covenant net debt 18.4 23.8 (22.7%)
Covenant net debt : Covenant EBITDA(3) 0.6x 0.8x (25.0%)
Adjusted(1) free cash flow 18.0 30.7 (41.4%)
Full year dividend per share 4.8p 4.6p +4.3%
1. The definitions of the adjustments made and reconciliations to the
reported figures can be found in note 1 of the consolidated financial
statements
2. Re-presented for 2022 - see note 1 of the consolidated financial
statements
3. Includes pro-forma adjustment for EBITDA of acquired businesses, as
shown in note 1 of the consolidated financial statements
Performance highlights
· 2023 results at the upper end of market expectations:
o Revenue: up 1.3% to £209.0m and like for like revenue up 1.7% versus
the prior year
o Adjusted operating profit: up 9.1% to £24.0m reflecting a return to
strong gross margins, with overall Adjusted operating margin up 80 basis
points to 11.5%
o Adjusted EPS: 11.1p - equal to the prior year due to higher UK tax
impact
o Covenant Net Debt reduced by 22.7% year on year and Covenant Net Debt :
EBITDA ratio at 0.6x remains well below the target range of 1.0-2.0x (FY 2022:
0.8x)
o Full year dividend of 4.8p up 4.3% with a 43% payout ratio, with a final
dividend of 3.2p
· Luceco's innovative products and diverse channel mix provide growth,
despite challenging markets:
o Secured market share gains with revenue growth despite falling markets
o Performance supported by our key strategic positions within our Hybrid
sales channel
o Outstanding growth in our LED Lighting projects, benefitting our
environmental achievements
· Strong free cash flow generation of £18.0m with post year end
acquisition of D-Line for £8.6m:
o Free cash generation of £90.2m since 2019 has provided optionality for
acquisitions and a strong dividend strategy
o Earnings enhancing acquisition of D-Line for £8.6m (contingent
consideration of £3.8m) - cable solutions provider with a presence in the
US/Europe which provides synergies for our UK and international territories
Outlook
· Our strong 2023 performance has continued into the start of 2024 and
we are achieving further growth
· Our order book, especially in the Retail and Trade channels, is ahead
of where it was this time last year
· We are monitoring the situation in the Red Sea, the headwind we are
seeing from additional freight costs has so far been mitigated by other
savings
· Whilst we remain mindful of the uncertain macroeconomic environment
and the potential impact it may have on our markets in 2024, the outlook for
the current financial year remains unchanged thanks to our attractive market
positions, strong business model and robust strategy
· Luceco is well positioned to benefit from operational leverage given
its integrated, resilient and agile business model
Commenting on the results, Chief Executive Officer, John Hornby said:
"Luceco has delivered a strong set of results across all key performance
metrics in the year, despite ongoing macroeconomic headwinds. With Adjusted
operating profit up 9% to £24.0m and strong free cash flow generation of
£18m, we are pleased with the Group's progress during the year.
"These results are testament to the strength of the Group's market positions,
clear strategy and business model. As a result of the team's constant hard
work, the Group is exceedingly well placed for growth through organic and
further M&A activity in 2024 with its strong operational leverage and
strong balance sheet.
"Whilst we are mindful of the economic environment in 2024, we have a number
of exciting product developments in progress, which provide us with good
medium and long-term opportunities for growth together with our bolt on
acquisition strategy, including the exciting recent acquisition of D-Line."
Results information
A meeting for analysts will be held at 9:30am GMT today, Tuesday 26 March 2024
at the offices of Liberum, 25 Ropemaker Street, London EC2Y 9LY. To register
to attend please email luceco@mhpgroup.com (mailto:luceco@mhpgroup.com) . To
register to watch a live webcast of the meeting, please follow this link:
https://stream.brrmedia.co.uk/broadcast/65d76c35994661e3abf8ad45
Luceco plc Contact
John Hornby, Chief Executive Officer 020 3128 8276 (Via MHP)
Will Hoy, Chief Financial Officer 020 3128 8276 (Via MHP)
MHP Contact
Tim Rowntree 020 3128 8004
Ollie Hoare 020 3128 8276
This announcement is released by Luceco plc and contains inside information
for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as
it forms part of the domestic law of the UK by virtue of the European Union
(Withdrawal) Act 2018 (MAR). It is disclosed in accordance with the Company's
obligations under Article 17 of MAR. Upon the publication of this
announcement, this information is considered to be in the public domain.
For the purposes of MAR and Article 2 of Commission Implementing Regulation
(EU) 2016/1055 as it forms part of the domestic law of the UK by virtue of the
European Union (Withdrawal) Act 2018, this announcement is being made on
behalf of Luceco plc by Will Hoy, Chief Financial Officer.
Note to Editors
Luceco plc - Bringing Power To Life
Luceco plc (LSE:LUCE) is a supplier of wiring accessories, EV chargers, LED
lighting, and portable power products.
Luceco plc ("Luceco", "the Group" or "the Company").
For more information, please visit www.lucecoplc.com
(http://www.lucecoplc.com) .
Forward-looking statements
This announcement contains forward‑looking statements that are subject to
risk factors associated with, among other things, the economic and business
circumstances occurring from time to time in the countries, sectors and
markets in which the Group operates. It is believed that the expectations
reflected in these statements are reasonable, but they may be affected by a
wide range of variables which could cause actual results to differ materially
from those currently anticipated. No assurances can be given that the
forward‑looking statements in this announcement will be realised.
The forward‑looking statements reflect the knowledge and information
available at the date of preparation of this announcement and the Company
undertakes no obligation to update these forward‑looking statements. Nothing
in this announcement should be construed as a profit forecast.
Use of alternative performance measures
The commentary in both the Chief Executive Officer's and Chief Financial
Officer's Reviews uses alternative performance measures, which are described
as "Adjusted". Definitions of these measures can be found in note 1 of the
consolidated financial statements. The measures provide additional information
for users on the underlying performance of the business, enabling consistent
year-on-year comparisons.
Chief Executive's review
Performance highlights
Last year I highlighted the strategic steps we are taking and how they leave
us well positioned for the future, so I am pleased our performance in 2023
demonstrated clear progress. Despite challenging market conditions we achieved
revenue of £209.0m (2022: £206.3m) and Adjusted Operating Profit of £24.0m
(2022: £22.0m). We outperformed a softer market, taking market share and
growing revenue by 1.7% on a like-for-like basis. Our performance was driven
by our key strategic positions within the Hybrid sales channel, the cessation
of post-pandemic destocking and another outstanding year of growth within our
interior LED Lighting Projects team.
I have been pleased by the improvement we have seen in our Adjusted Operating
Margin, as material and freight costs eased, albeit partially offset by
exchange rate headwinds and increasing wage costs. Our lean operating model
means we are well positioned to grow our margins further when market
conditions allow. I am also delighted that yet again, we have delivered a
strong cash flow performance, achieving Adjusted Free Cash Flow of £18.0m.
Careful working capital management and strategic capital allocation, has meant
that since 2019 the business has generated Adjusted Free Cash of £90.2m from
Adjusted Operating Profit of £115.0m. This sustained cash performance over a
four-year period highlights the strength of our business model and underscores
the Group's long‑term potential.
We end the year with Covenant Net Debt of £18.4m, which gives us good
optionality to invest in the business to drive further growth, both
organically as well as through our exciting M&A pipeline.
Macroeconomic factors
Like most businesses, since the pandemic we have experienced some rapid
changes in macroeconomic and geopolitical influences. I am delighted with the
way we have navigated these shifts, to consistently outperform whatever
conditions we face. In 2021, the combination of strong end user demand and
exceptionally constrained global supply chains caused our distributor
customers to materially increase their stock of our products, adding to our
sales, as previously reported. In 2022 and in the first half of 2023, they
largely unwound the extra inventory added as both demand and supply chain
constraints eased, reducing our sales. This temporary period of destocking
appears to have concluded in 2023, based on the analysis of EPOS data with our
customers who have returned to more normalised purchasing patterns.
The other key theme for us was how global supply and demand imbalances in the
wake of the pandemic resulted in significant industry‑wide input cost
inflation. We identified these trends early and reset selling prices
accordingly without impacting our competitive position. Lead times normalised
in 2022, following the peaks during the pandemic, and have remained consistent
in 2023. This more normalised demand has meant that we have seen cost
inflation subside, with material and freight and duty prices easing in 2023.
However, as anticipated and despite protection from hedging arrangements,
foreign exchange movements have remained a headwind. Overall, our gross margin
is beginning to return to through-the-cycle levels, and demand from key
customers now more closely reflects end market conditions with consumers.
Underlying demand
Our like-for-like revenue growth of 1.7% in 2023 is put into context when we
compare ourselves to the wider construction market, with data from the
Construction Products Association ("CPA") indicating that output of our
addressable markets reduced 5.8% in the same timeframe. Approximately 60% of
our business is focused on delivering residential repair, maintenance and
improvement ("RMI") solutions to professional installers and general consumers
performing DIY. Using CPA data, we estimate that this market's output reduced
8% in 2023, as it normalises following the RMI boom which peaked during the
pandemic. The retail sector in particular remains challenging, with the
Barclays Consumer Spending Index reporting a 4.7% average reduction in DIY
spending over the course of 2023.
Nevertheless, the strategic positions we hold within the Hybrid sales channel
in addition to the work we have done to grow our share of the professional
contractor market, has enabled us to outperform this slow market to deliver
growth of 0.8% within this sector of our business. I am pleased that the
non-residential RMI arm of our business, which makes up approximately 20% of
the Group revenue, grew by 8.5% in the year. This is supported by our
strategic investment in our Interior LED Lighting Projects team, who continue
to take market share by utilising our well‑rounded LED Lighting portfolio.
This result is even more pleasing when we consider that market output
contracted approximately 0.8% in the year, as businesses seek to make
temporary cost savings by reducing expenditure on their estates.
Although sales within our Exterior LED Lighting businesses reduced 2.4% in the
year, slightly higher than a market output reduction of 1.1%, profitability
within these businesses grew. The steps we are taking to drive synergies
within the DW Windsor business and our continued focus on higher margin
contracts has meant these businesses have taken another step forwards in 2023.
Within the new housing market, rising interest rates have led to challenging
market conditions for housebuilders, with the CPA estimating a contraction in
output of 17.1% in 2023. However, we estimate this market makes up less than
5.0% of our sales and despite market conditions, we were still able to grow
this smaller part of our business by 5.2%, aided by increasing sales of EV
chargers.
Whilst it is clear that the rising cost of living has reduced discretionary
consumer spending and placed a headwind on
the markets in which we operate, the fundamental growth drivers supporting our
industry and business remain. The drive towards net zero, consistent
regulatory change, new technology and an underlying need to invest in UK
housing stock mean we can be confident that our markets will deliver healthy
and stable growth over the long term.
Strategic highlights
Throughout 2023, we have continued to deliver on our purpose to help people
harness power sustainably in everyday life. In addition to delivering a robust
set of financial results, I am pleased with the work we have done to further
progress our strategic priorities to Innovate, Grow and Sustain.
Innovate
The key first step in us carrying out our purpose is to innovate. Our ability
to see and do things differently creates value for our stakeholders, driving
growth of the business, allowing us to sustain our competitive advantage and
contribute towards the transition to net zero. We continually focus on
developing new products and enhancing our existing range with increased
functionality that fits our customers' needs. Our global team of over 100
product development specialists, drive a development process which is
customer‑centric, rapid and carries relatively low execution risk. It has
been a key driver of the Group's success.
I am delighted by the strides we have made in 2023 to enhance our product
portfolio. We continue to make advances in the development of our EV chargers,
with 2023 bringing the launch of our second series of chargers sold under the
BG Sync EV brand. Building on the platform from our first series of chargers,
this new range is available in both 7.4kW, for home use, and 22kW for
commercial spaces. The 22kW charger is a key strategic development, enabling
vehicles to charge three times faster, and allowing us to sell our chargers
within commercial and higher-end residential markets. Furthermore, both
products are produced using the same core components and designs, allowing
them to be manufactured at scale, using the same tooling and processes, by our
team in China.
Within our LED Lighting range, we have refreshed our offering of downlights
with the launch of the new F-type range. This new range of low-profile
downlights strikes an ideal balance between functionality, design, performance
and cost. With its SpeedFit housing design for ease of installation and its
availability with colour changing functionality, the F-type range provides
practical innovation that our customers actually need. This innovation with
purpose, is key to our strategy, enabling us to both take market share and
create value through differentiated products that command higher margins.
Following significant new product launches in 2022, we continue to enhance our
portfolio of Wiring Accessories and Masterplug products. Thanks to our
vertically integrated manufacturing model, we can swiftly make low investment
adjustments within our existing ranges to suit changing market trends. We were
able to do this again in 2023, with the release of a new matt black finish
within our premium Nexus Metal socket range and the release of screwless
designs, for a sleeker finish within our core offering. I am also pleased to
report that DW Windsor is beginning to benefit from our expertise and
manufacturing capacity, both in the UK and China, which will help us transform
the business further. Following a year of transition in 2022, DW Windsor made
good progress in 2023 and we hope that over time these efforts will deliver
similar benefits to those being seen in Kingfisher Lighting.
Our bold and innovative culture extends beyond our development specialists,
with the whole business playing a part. A fantastic example of this has been
the development of our specialised interior projects customer services team in
2023.
Using their expert knowledge, this team manage the implementation of our
interior lighting projects from start to finish, allowing our sales experts to
focus on what they do best.
Grow
Despite challenging market conditions, we continue to grow the business both
organically as well as through targeted M&A. Through years of experience,
our excellent sales teams have become adept at using the innovative products
we create to extend our market reach. A prime example of this is the success
we have had in 2023 through our BG Evolve decorative Wiring Accessories range.
Launched in 2022, the modern and stylish switches and sockets of the Evolve
range provide consumers with a new premium solution for high-end builds and
retrofits. The launch of this new range has enabled us to further extend our
product portfolios by entering the adjacent premium Wiring Accessories market.
I am delighted that in 2023 we have sold over 500,000 Wiring Accessories
products from the Evolve portfolio, with strong interest across our Retailers,
Wholesalers and Hybrid channels, generating £2.6m of revenue.
Our ability to grow organically is not just limited to new product launches.
The excellent relationships we have with our customers means we can work
together to ensure the right products are being made available to the end
consumer. As we have moved through 2023, our sales teams have successfully
extended existing product ranges to generate £4m of new business wins.
Ultimately, our customers choose our products as they know they can sell them
to the end consumer, and this leaves us well placed for future organic growth.
We are also taking further steps to increase the speed of growth within our
Interior LED Lighting Projects team. Our experience has taught us that, when
given the right level of support, a new sales team member can deliver strong
annualised sales within three years. We are increasing the pace at which we
recruit within this high growth area and as a result we successfully grew
sales within this team by 24% to £12.6m in 2023. We have complemented the
Group's long history of organic growth with acquisitions funded by our
consistently strong cash flow. In 2023 we made a strategic investment of
£1.7m in eEnergy Group plc ("eEnergy"). eEnergy is a net zero energy services
provider that empowers organisations to achieve net zero by tackling energy
waste and transitioning to clean energy. The business is already an important
customer for our LED Lighting Projects business. As the economy decarbonises
it is well positioned to become an increasingly relevant channel in the
non‑residential segment, and we look forward to supporting the growth of
eEnergy and exploring the potential for increased co‑operation between our
businesses.
A further year of cash generation, driven by organic growth in addition to
synergy creation from previous acquisitions, means we end the year with
Covenant Net Debt of £18.4m. With the right foundations for a successful "buy
and build" strategy, we continue to explore M&A opportunities that have a
strong strategic fit and the potential to deliver future growth.
Sustain
Our sustain strategy is focused on taking action to contribute to society's
sustainability goals as well as investing in our people and our industry.
Taking these actions now will ensure we sustain our competitive advantage into
the future. During 2023 we received validation from the Science Based Targets
initiative ("SBTi"), targeting a 42% reduction in operational emissions and a
27.5% reduction in value chain emissions by 2031. Our operations continue to
offer one of the lowest operational carbon footprints in our industry and this
was reaffirmed with a "B" rating from the Carbon Disclosure Project in the
first quarter of 2024 relating to the 2023 year. This is our third year of
reporting to the platform, so we are delighted our progress integrating
climate-related issues into our business operations has been reflected with a
strong grade.
We generated £80m of revenue from low carbon products in 2023 and we continue
to focus on this key area as society charts its path towards net zero
emissions. The actions we are taking today to invest in our EV charging
portfolio and high efficiency LED lighting solutions, leave us well positioned
to achieve our goal of £100m revenue from low carbon products by 2025. In the
UK, we have held nearly 50 contractor continuous professional development
training events in 2023, hosted in conjunction with our major professional
wholesale customers. In particular, we have extended the training we provide
on the installation of EV chargers, and I am pleased with the positive
feedback these have received.
We continue to invest in the next generation of contractors. For the second
year running we were proud to sponsor the prestigious eFIXX 30 under 30
awards, aimed at recognising talented, young electricians in the UK. We invest
in our business model to sustain and accelerate future growth. As travel
restrictions to China have eased, it has been hugely beneficial for me and our
team of designers to visit our facility in China more regularly. I am pleased
with the progress we have made to extend and automate our production of EV
chargers and DW Windsor products, which provide us with a great platform from
which to scale as we move forwards.
I am also excited by our £2.5m investment to relocate our Kingfisher Lighting
business to an enhanced manufacturing facility in Mansfield. Since our
acquisition of Kingfisher Lighting six years ago, the business has grown sales
by 49%, and this investment in its manufacturing capability will enable the
team at Kingfisher to sustain their competitive advantage supplying low carbon
products.
In summary, I am once again hugely proud of the progress the entire Luceco
team have made in the year. Our bold and innovative culture continues to drive
the business forwards with the right actions being taken now to deliver on our
long‑term strategy.
How we create value
Our attractive markets
Over the course of the last decade, we have worked hard to grow our share of
existing markets as well as entering adjacent markets where we see a
competitive advantage. As a result, we now hold enviable positions across a
range of industries that are supported by long-term growth drivers.
Our extensive, strategically built product range, combined with our strong
sales channel access and vertically integrated model means we are able to
successfully compete within multiple markets. Moving forwards, our growing
portfolio of EV chargers in addition to innovative new ranges within our core
offering will enable us to extend our reach within new and existing markets.
Each of our four distinct construction markets has exhibited attractive
long-term growth. We are confident that the right fundamental drivers are in
place in each of our chosen markets for us to see sustained growth over the
coming years.
Although our markets are attractive, the opportunities they create can only be
harnessed by those with the correct processes and knowledge. Our advantaged
business model allows us to innovate, manufacture new products at our own
facilities and bring new ranges to market quickly and efficiently under our
trusted brands.
Outlook
Trading in early 2024 has been in line with our expectations, with improved
gross margin and lower input costs balancing less residential RMI activity.
Whilst the macroeconomic outlook for 2024 remains difficult to judge, I am
encouraged by our healthy underlying trading momentum which leaves us well
positioned to progress further during the year ahead.
JOHN HORNBY
Chief Executive Officer
25 March 2024
Chief Financial Officer's review
Summary of reported results
Summary results (£m) Reported 2023 Reported
2022
Revenue 209.0 206.3
Operating profit 22.2 13.7
Profit before tax 18.9 11.7
Taxation (2.2) (0.7)
Profit for the period 16.7 11.0
Operating profit of £22.2m was £8.5m higher than 2022 due to improving
revenue and gross margin in the year partly offset by operating cost
increases. In 2022, we have re-presented the results to show the impact of
currency hedging aligned with the associated cost of sales. This has the
effect of changing gross profit and operating profit, however, revenue, profit
before tax, profit after tax and earnings per share all remain unchanged.
Adjusting items
Certain alternative performance measures ('APMs') have been included within
this report. These APMs are used by the Board to monitor and manage the
performance of the Group, in order to ensure that decisions taken align with
the Group's long-term interests. A table summarising the reconciliation of
adjusted measures to statutory measures is included in note 1 of consolidated
financial statements.
The following adjusting items were applied in the year:
· Amortisation of acquired intangibles: £1.9m and
acquisition-related costs of £0.4m
· Fair value movements of hedging portfolio which have not completed
in the period (£0.5m credit) and interest swaps (£0.5m charge)
Adjusted Operating Profit for the year, excluding the items above, was
therefore £24.0m (2022: £22.0m).
Income statement
Revenue
Revenue of £209.0m was £2.7m (1.3%) higher than 2022 as business growth
returned:
Bridge from 2022
Revenue bridge: £m Change %
2022 206.3
Acquisitions/closures (1.4) (0.7%)
Like-for-like (decrease)/increase(1) 3.6 1.7%
Constant Currency(2) 208.5 1.1%
Currency movements 0.5 0.2%
TOTAL 209.0 1.3%
1. Like-for-like revenue increase excludes the impact of currency
movements and acquisitions, see note 10 of the consolidated financial
statements
2. 2023 revenue translated at 2022 exchange rates
Like-for-like revenue, excluding the impact of currency, increased by £3.6m
in the period, up 1.7%. On a reported basis, revenue grew by £2.7m, or
1.3%. Against the backdrop of a year when Luceco's overall addressable market
experienced a 5.8% decline, the Group's performance in 2023 compares highly
favourably.
Digging deeper into the results, the Group performed strongly in
non-residential markets, up around 8%, and within Residential RMI, up circa
1.1%. This again represents an increase in market share, noting that these two
markets fell by 0.8% and 8.0% respectively. Whilst the New Residential market
was down significantly, this represents less than 5% of Group revenue so we
have been relatively insulated from this market decline. A contributing factor
to the Group's strong relative performance has been the softer comparative in
2022 due to significant customer destocking following the exceptional pandemic
year of 2021.
We group our customers into the following sales channels:
· Retail: Distributors serving consumers only, including DIY sheds,
pure-play online retailers and grocers
· Hybrid: Distributors serving both consumers and professionals,
typically with multi-channel service options
· Professional Wholesale: Distributors serving professionals only,
largely via a branch network
· Professional Projects: Sale agreed by Luceco direct with
professionals, but largely fulfilled via Professional Wholesale
Performance by sales channel was as follows:
Like-for-like revenue by sales channel: 2023 2023 2022 Change vs 2022 %
£m % of total % of total
Retail 46.4 22.4% 27.7% (10.4%)
Hybrid 49.3 23.9% 20.2% 29.2%
Professional Wholesale 52.2 25.2% 28.9% (6.3%)
Professional Projects 59.0 28.5% 23.2% 2.4%
Like-for-like revenue 207.1 100.0% 100.0% 1.7%
Currency impact 0.5
Acquisitions/closures 1.4
TOTAL 209.0 1.3%
Our key growth channel was Hybrid, growing revenue by 29.2% during the year,
largely resulting from more significant destocking in the 2022 comparative due
to pandemic‑boosted activity across residential repair and maintenance in
DIY and professional markets. Nearly all of the destocking impact experienced
in 2022 arose within the Retail and Hybrid channels. These customers hold
greater inventory of our products relative to their size because they buy from
us on long lead times direct from China on a Free On Board basis and therefore
hold the product for longer. The amount of inventory cover they needed rose
sharply in 2021 as demand increased and delivery times from China extended. In
2023, the normalisation of stock levels has resulted in more favourable
comparatives to 2022.
The slowdown in the Professional Wholesale channel has been reflective of the
more challenging market conditions, as traditional electrical wholesalers buy
from us on short lead times in the country in which they operate, meaning they
had less need to destock in 2022. Our Professional Projects channel grew
modestly in the year with 2.4% growth, but the standout performance was from
our UK projects business which goes from strength to strength, where the UK
has seen growing demand for LED retrofits as a result of rising electricity
prices and the growing green agenda.
Revenue by geographical location of customer: 2023 2022 Change vs
£m £m 2022 %
UK 173.6 165.3 5.0%
Europe 12.9 19.7 (34.5%)
Americas 8.6 8.0 7.5%
Middle East and Africa 8.3 8.7 (4.6%)
Asia Pacific 5.6 4.6 21.7%
Total revenue 209.0 206.3 1.3%
Understanding our revenue by geography and location of the customer, we have
seen strong growth in the UK, up 5.0%, partly helped by the 2022 destocking
creating a lower comparative. European sales reduced in the year following the
closure of our operations in Germany and in Spain revenue reduced following a
change in market strategy, which should bear fruit in future years.
Sales improved in the Americas largely as a result of stronger sales in the
North American market as key customers in the US DIY channel normalised their
buying patterns. Sales in the Middle East and Africa fell by 4.6% but
increased in Asia Pacific by 21.7% helped by new customers wins.
Profitability
Adjusted Operating Profit of £24.0m for 2023 was £2.0m ahead of 2022. The
key drivers were as follows:
Bridge from Bridge from
Adjusted Operating profit 2022 2021
£m £m
2022/2021 22.0 39.0
Acquisitions/closures 0.6 1.2
Like-for-like increase/(decrease)(1) 3.5 (17,1)
Currency movements (2.1) (1.1)
2023/2022 24.0 22.0
1. Like-for-like profit movements exclude the impact of currency
movements and acquisitions/closures
The net impact of acquisitions and closures is a result of the Germany closure
in 2022, giving a £0.6m improvement year-on-year in 2023. Overall Adjusted
Operating profitability, excluding acquisitions/closures and at Constant
Currency, was an improvement of £3.5m, driven largely by the stronger
performance across the UK business channels.
The currency headwind had a £2.1m impact on Adjusted Operating Profit in the
year. Excluding the impact of currency, the Adjusted Operating Profit of the
Group would have been £26.1m, most of which is due to the impact of the
exchange rates of RMB on Chinese products and the USD on the sales of
products. Cost inflation for the Group was 11.0%, excluding the impact of
currency, which was largely wage related due to the cost of living increases
that have occurred in the UK.
Overall Adjusted Operating Margin of 11.5% is a gradual improvement on 2022
which was 10.7%, however we believe the Group's strong operating leverage can
further improve the margin to low to mid double-digits once the macroeconomic
conditions improve.
The table below provides a more detailed view of the currency impact in the
period:
Adjusted Currency impact Adjusted 2023 Constant Currency Adjusted
2023 at Constant variance to 2022 2022
actual(1) Currency(2) actual
£m £m £m
£m % £m %
Revenue 209.0 0.5 0.2% 208.5 2.2 1.1% 206.3
Cost of sales (126.7) (2.3) 1.7% (124.4) 7.6 (5.8%) (132.0)
Gross profit 82.3 (1.8) (2.4%) 84.1 9.8 13.2% 74.3
Gross margin % 39.4% (0.9ppts) 40.3% 4.3ppts 36.0%
Operating costs (58.3) (0.3) 0.5% (58.0) (5.7) 11.0% (52.3)
Operating profit 24.0 (2.1) (9.5%) 26.1 4.1 18.6% 22.0
Operating margin % 11.5% (1.0ppts) 12.5% 1.8ppts 10.7%
1. Year ended 31 December 2023 translated at 2023 average exchange
rates
2. Year ended 31 December 2023 translated at 2022 average exchange
rates
Operating costs
Adjusted Operating Costs increased by £6.0m to £58.3m. The majority of the
increase came from wage increases and associated costs (approximately £4.0m)
plus the further impact of increased travel costs as post-pandemic conditions
normalised.
Net finance expense
Adjusted Net Finance Expense increased by just £0.2m reflecting an increase
in borrowing and interest rates. In the prior year we entered into swaps to
fix the interest rate applicable to approximately 70% of our borrowings on a
rolling three‑year basis (subject to small changes driven by the impact of
debt leverage on lending margin in the future). 30% of our borrowing remains
at floating interest rates.
Taxation
The effective tax rate on Adjusted Profit Before Tax increased by 7.1ppts to
18.4% in 2023 following some advantageous tax rates in 2022. Work done over
recent years to maximise available tax incentives, particularly those relating
to research and development, had lowered this to c.15%, but the increase in
the underlying tax rate in the UK to 25% has pushed the overall Group tax
charge higher. The rate is expected to increase further in 2024 with the UK
corporation tax rate at 25% for the full year.
Adjusted Free Cash Flow
Adjusted(1) Adjusted(1) 2022
Adjusted Free Cash Flow (£m) 2023
Operating profit 24.0 22.0
Depreciation and amortisation 7.4 7.1
EBITDA 31.4 29.1
Changes in working capital 0.2 13.4
Other items 1.0 1.2
Operating Cash flow 32.6 43.7
Operating cash conversion(2) 135.8% 198.6%
Net capital expenditure (8.2) (5.6)
Interest paid (2.8) (2.7)
Tax paid (3.6) (4.7)
Free Cash Flow 18.0 30.7
Free Cash Flow as % Revenue 8.6% 14.9%
1. A reconciliation of the reported to Adjusted results is shown
within note 1 of the consolidated financial statements
2. Adjusted Operating Cash Conversion is defined as Adjusted
Operating Cash Flow divided by Adjusted Operating Profit
The Group continues to generate strong free cash flow which has been a key
feature of the business. Despite the record free cash flow generation in 2022,
the Group achieved Adjusted Free Cash Flow of £18.0m which is an outstanding
result in 2023, with second half cash generation being particularly strong.
This Adjusted Free Cash Flow was an impressive 8.6% of revenue and extremely
strong Operating Cash Conversion of 135.8%. We are not expecting this
exceptional level of cash conversion to occur going forward.
Capital expenditure
The Group's net capital expenditure consists of capitalised product
development costs and the purchase of physical assets. Capex of £8.2m (2022:
£5.6m) represented 3.9% of revenue (2022: 2.7%) which is in our target range
of 3‑4%. We continue to see opportunities to invest in low risk, high return
automation projects in our Chinese production facility and continue to invest
in R&D projects, particularly in relation to acquired businesses.
Capital structure and returns
Return on capital
Return on Capital Invested was higher than the prior year at 20.6% (2022:
18.2%) and into our target of 20% or higher. As previously flagged, our
returns will naturally reduce as Luceco transitions from a Group created
organically to one growing via M&A as well (with its required investment
in goodwill).
Capital structure
The business continues to consistently generate ample cash flow to support its
dividend policy and fund M&A activity.
£m 2023 2022 Change
Reported net debt £22.8m £29.4m (22.4%)
Less: IFRS 16 finance leases (£5.1m) (£6.3m) (18.8%)
Finance Leases - pre-IFRS 16 £0.7m £0.7m -
Covenant Net Debt £18.4m £23.8m (22.7%)
Covenant Net Debt : Covenant EBITDA 0.6x 0.8x (25.0%)
Very strong cash generation once again ensured that overall net debt fell and
resulted in the Covenant Net Debt leverage falling to 0.6x. The Group's
non‑utilised facilities totalled £58.6m, with an option (subject to lender
consent) to add a further £40.0m under the terms of its syndicated bank
facility signed in October 2021. The facility matures in September 2026. The
Group's balance sheet remains strong and provides the opportunity for
selective M&A activity.
The Company's covenant position and headroom at 31 December 2023 were as
follows:
2023 covenant position Covenant Actual Headroom
Covenant Net Debt : Covenant EBITDA 3.0 : 1 0.6 : 1 Covenant Net Debt headroom: £78.2m(1)
Covenant EBITDA headroom: £26.1m
Covenant EBITDA : Adjusted Net Finance Expense 4.0 : 1 11.5 : 1 Covenant EBITDA headroom: £21.0m
Net Finance Expense headroom: £5.2m
1. Headroom with increased facility. Current facility headroom is
£57.7m.
The key measures which management use to evaluate the Group's use of its
financial resources and capital management are set out below:
2023 2022
Adjusted(1) Earnings Per Share (pence) 11.1 11.1
Covenant Net Debt : Covenant EBITDA (times) 0.6x 0.8x
Adjusted(1) Free Cash Flow (£m) 18.0 30.7
1. Note 1 in the notes to the consolidated financial statements
provides an explanation of the Group's alternative performance measures.
The Group complied with its covenant requirements throughout the year with
significant headroom on all metrics. The Group has conducted a full going
concern review. The Group has a strong balance sheet and significant facility
headroom under even a realistic severe but plausible downside scenario. No
covenant breaches occur in any of our severe but plausible downside scenarios,
all of which are before any mitigating actions, illustrating our financial
resilience.
Dividends
The Board is proposing to pay a final dividend of 3.2p, taking the full‑year
dividend to 4.8p, representing a payout of 43% of earnings. The final dividend
will be paid on 17 May 2024 to shareholders on the registrar on 12 April 2024.
Operating segment review
The revenue and profit generated by the Group's operating segments are shown
below. Operating profits are stated after the proportional allocation of fixed
central overheads.
Wiring Accessories
Adjusted(1) Reported
2023 2022 Change 2023 2022 Change
Revenue £82.6m £73.7m 12.1% £82.6m £73.7m 12.1%
Operating profit £15.0m £13.9m 7.9% £15.3m £11.7m 30.8%
Operating margin % 18.2% 18.9% (0.7ppts) 18.5% 15.9% 2.6ppts
1. A reconciliation of the reported to Adjusted results is shown
within note 1 of the consolidated financial statements
Wiring Accessories is the Group's most profitable segment, generating 62% of
the Group's operating profit and 39% of its revenue, under a brand established
over 80 years ago.
Sales into the Wiring Accessories segment were £82.6m, which was over 12%
better than 2022, largely driven by the Hybrid channel which had normalised
following the destocking in 2022. In particular, UK core electrical switches
and sockets have been a stronger driver during the period. The Professional
channel was challenging and was behind the prior year by around 5%.
The Adjusted Operating margin was 18.2% (2022: 18.9%) which remains a key
driver for the Group's overall profitability.
LED Lighting
Adjusted(1) Reported
2023 2022 Change 2023 2022 Change
Revenue £79.0m £81.4m (2.9%) £79.0m £81.4m (2.9%)
Operating profit £4.7m £3.4m 38.2% £3.2m £0.3m 966.7%
Operating margin % 5.9% 4.2% 1.7ppts 4.1% 0.4% 3.7ppts
1. A reconciliation of the reported to Adjusted results is shown
within note 1 of the consolidated financial statements
The Group entered the lighting market in 2013 as the industry adopted LED
technology and it now represents 38% of Group revenue.
Revenue declined marginally in the year by 2.9%, but overall Adjusted
Operating Profit increased by £1.3m as Adjusted Operating Margin improved in
the period by 1.7 percentage points. The decline versus the prior year is
largely due to the impact of the closure of lower margin operations in France
and Germany in the prior year, which were LED focused. On a like-for‑like
basis and at constant exchange rates, LED sales were broadly flat
year-on-year. Demand has been particularly strong in the Professional Projects
space in the period, as demand for energy-saving retrofits within the
non-residential and infrastructure sectors continues to grow.
Portable Power
Adjusted(1) Reported
2023 2022 Change 2023 2022 Change
Revenue £47.4m £51.2m (7.4%) £47.4m £51.2m (7.4%)
Operating profit £4.3m £4.7m (8.5%) £3.7m £1.7m 117.6%
Operating margin % 9.1% 9.2% (0.1ppts) 7.8% 3.3% 4.5ppts
1. A reconciliation of the reported to Adjusted results is shown
within note 1 of the consolidated financial statements
The Portable Power segment consists of two main elements:
· Cable reels, extension leads and associated accessories sold under
the Masterplug brand
· EV chargers sold under the BG Sync EV brand
The Group enjoys a leading position in the UK portable power market. The
business generates 23% of Group revenue and 18% of Group Adjusted Operating
Profit. Revenue in the period was 7.4% lower than the prior year due to some
final destocking in the first half of 2023, largely relating to cable reel
product categories.
EV charger sales totalled just less than £8m, a growth rate of 44.4% in the
period, which was highly encouraging despite a slight slowdown in the EV
vehicle market in the second half of the year. We remain excited about the
opportunities that this new sector will provide as the vehicle market moves
towards electrification by 2035 within the UK - our current key marketplace.
During the year we launched our 22kW EV charger, which will be utilised in
many commercial operations in the future and high-end residential premises.
Going concern
The Directors have a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable future and
as such have applied the going concern principle in preparing the Annual
Report and Accounts. This is considered in more detail in note 1 of the
consolidated financial statements. The Group's Viability Statement can be
found on pages 72 to 73 and the Group's Going Concern Statement can be found
on page 130 of the Annual Report and Accounts.
WILL HOY
Chief Financial Officer
25 March 2024
Environmental, Social and Governance ("ESG") update
We continue to make progress on our ESG workstreams:
· We committed to the Science Based Targets Initiative SBT and this was
validated by the SBTi during the first half of the year. This means we have
committed to reductions in carbon emissions over the near-term consistent with
the Paris Agreement
· Achievement of an improved management-level score ("B") from the
Carbon Disclosure Project in both 2023 and 2022 from ("C") previously
· We have delivered significant progress against our low carbon product
revenue target and are on track to achieve £100m of such revenue by 2025
· We continue to improve our packaging specifications, particularly
around plastic packaging.
Key achievements by area
Products and services
· Acquisition of Sync EV and launch of single-phase Mode 3 EV chargers
under the joint BG Sync EV brand
· £80m of revenue from low carbon product categories in full year
2023, delivering significant progress against our £100m low carbon product
revenue target for 2025
· 3.5-fold increase in revenue from the sale of lighting control
devices into lighting projects in full year 2023
Supply Chain
· Insourcing of EV charger production within our China manufacturing
facility with 100% renewable electricity supply
· Evaluation of key suppliers' physical climate risk exposure to
understand vulnerabilities within our supply chain
Research and Development
· Specialist R&D function in China and the UK
· Development of higher power, three-phase EV chargers for larger homes
and commercial premises
· Investigating on-street EV charging solutions within DW Windsor
· Dedicated optical engineer focusing on improvements to lens design to
improve lighting efficiency
· Working towards the development of environmental product declarations
(EPD) and industry best practise on circular design in lighting
Operations
· Sourced renewable electricity for all group operations in 2022 and
for 2023, bringing our scope 2 emissions to zero.
· Offsetting residual Scope 1 emissions for 2022 and for 2023
· Investment into energy efficiency and automation projects within the
China manufacturing facility
· Evaluation of our key locations (manufacturing and distribution centres)
to better understand physical climate risk exposure to understand
vulnerabilities across direct operations
· All plastic packaging is recyclable with a minimum 30% recycled
content
Our ESG objectives for 2024 are as follows:
· Begin the alignment with the IFRS S2 Standard
· Start the development of the transition plan
· Development of TM65 for all new Luceco product ranges
· TM66 Target (DW Windsor)
· Respond to the CDP
· Independent assurance of GHC inventory
Principal risks and uncertainties
The Board is responsible for identifying, reviewing and managing business and
operational risk. It is also responsible for determining the level of risk
appetite it is prepared to take in the ordinary course of business to achieve
the Group's strategic objectives and to ensure that appropriate and sufficient
resource is allocated to the management and mitigation of risk.
In addition to the risk management framework, the Board has delegated
responsibility to the Audit Committee for reviewing the overall process of
assessing business risks and managing the impact on the Group. The Group's
risk management process is set out below.
The principal risks identified, and actions taken to minimise their potential
impact are included below. This is not an exhaustive list but those the Board
believes may have an adverse effect on the Group's cash flow and
profitability.
See also pages 66 to 71 in the 2023 Annual Report and Accounts.
In determining whether it is appropriate to adopt the going concern basis in
the preparation of the financial statements, the Directors have considered
these principal risks and uncertainties. The Viability Statement on pages 72
to 73 of the 2023 Annual Report and Accounts considers the prospects of the
Group should a number of these risks crystallise together.
Principal risks
Concentration risks associated with operations
Risk and impact: Mitigation
· The Group's products are overwhelmingly sourced from one country (China) UK buffer stock is held in the event of supply disruption in China
and a large proportion are made in one location (Jiaxing)
All suppliers are provided with visibility of forward orders and supply issues
· Disruption to our Jiaxing facility could compromise our ability to are discussed upfront
serve our customers
Production facilities in China are spread across multiple buildings on the
· General disruption, including to shipping routes between China and same site to mitigate risk
our selling markets (particularly the UK) could increase our costs or limit
our ability to serve our markets. There has been some disruption in the Red The Group owns its product designs and production tooling, allowing
sea in the first quarter of 2024 manufacturing to be moved between suppliers more easily
· China could be impacted by events in Ukraine/Russia, which impacts our Business Continuity Plans are in place for Jiaxing site
ability to manufacture products
Business Interruption Insurance is in place for the Jiaxing site, Telford site
and our OEM supplier of Portable Power products
Concentration risks associated with customers and products:
Risk and impact: Mitigation
· The Group has a number of key customers representing circa 50% of Key customers typically follow a tender process, providing visibility of
Group revenue. A change in demand from these customers could result in reduced business wins and losses
sales and profits
Large customers typically take 6-12 months to implement a large range change
· The Group's committed order book extends 2-3 months forward. Orders throughout their networks, giving us time to react
thereafter are uncommitted
The cost of range changes for large customers is high, reducing the likelihood
· Geopolitical instability creates prices changes and shortages of of occurrence
materials and the impact of inflation on input costs from energy and material
costs impacting product cost and profitability. This has been prevalent with Relationships with the Group's large customers are particularly established
copper based products due to increasing global demand as electrification
escalates in many sectors Capacity at our factory and at our OEM partners in China can be changed
quickly and cost effectively
· A change in energy prices could increase the Group's operating
costs, reduce profits and/or price competitiveness The Group hedges its USD:RMB and copper exposures according to a
Board-approved policy. The hedging matches the duration of any fixed selling
· The Group has a material exposure to the purchase price of copper. An price commitment offered to customers
adverse move could reduce profits and/or price competitiveness
The Group has fixed price gas and electricity contracts covering a significant
proportion of its energy use
Application of the hedging policy is reviewed by the Board
Macroeconomic, political and environmental:
Risk and impact: Mitigation
· A deterioration in trade relations between the UK and China could We have clear ESG objectives tied to management compensation plans. Our
disrupt product supply and/or increase costs progress is visible via independent bodies such as CPD and SBTi
· The Group has a concentrated exposure to the UK market. UK The Group is expanding and developing its product range of low carbon products
economic headwinds could reduce profits. (e.g. LED lighting and electric vehicle chargers)
· A failure to respond to governmental, cultural, customer or investor The Group is diversified by market segment within the UK, reducing risk
requirements on ESG in the following areas: changing customer behaviour and
demands (e.g. electric vehicle charging), increased stakeholder concern, The Group is largely exposed to the RMI cycle, which is less susceptible to
negative feedback or non-compliance on ESG strategy, increased severity and macroeconomic forces
frequency of extreme weather events accelerating ESG progress. All of which
could result in reduced profits or a reduced share price The Group's overseas businesses are expected to grow faster than the UK,
diluting the UK exposure
UK buffer stock is held in the event of supply disruption in China
A "China Plus 1" sourcing strategy is being developed
Management liaises closely with investors and customers to understand their
future ESG needs and responds accordingly
Loss of IT / data:
Risk and impact: Mitigation
· Loss of IT functionality would compromise operations, leading to Market-leading cyber security tools and monitoring are in place
increased costs or lost sales
Market-leading data backup tools are in place
· Loss of sensitive data from our IT environment would expose the
Group to regulatory, legal or reputational risk IT disaster recovery plans are in place throughout the Group
· Increased cloud server usage increases risk of data loss or We conduct regular penetration testing
compromise and cyber risk is on a upward trend impacting operations and
reputational risk We conduct regular Group-wide cyber security training for employees
IT incidents are reported to the Board
People and labour shortages:
Risk and impact: Mitigation
· Loss of key employees could damage business relationships or Key relationships are typically shared between more than one employee
result in a loss of knowledge
The Group's service offering is multi-faceted, reducing the risk that the loss
· A shortage of available labour for key roles could disrupt of an employee would result in lost sales
operations and impact long-term progress
Retention of key employees is driven by long-term personal development and
· Depending on the job role and team, COVID-19 has changed incentive plans and ensuring compensation is regularly benchmarked for
employee's and employer's work place expectations. A more fluid working competitiveness. These plans are reviewed by the Nomination and Remuneration
environment in both the office and home is more common place. The risk of not Committees
adapting to this change in working practices could lead to loss of employees
and an inability to attract talent Workforce engagement surveys ensure employee needs are identified and
addressed, promoting retention
Adoption of hybrid practices within appropriate teams and locations
Acquisitions:
Risk and impact: Mitigation
· An ill-judged acquisition could reduce Group profit and return on Our acquisition strategy is set by the Board
capital
Board members possess significant M&A experience
· Unable to grow or develop an acquired business in line with
expectations, leading to lower profits The acquisition strategy is implemented by an experienced in-house team
· The Group's acquisition strategy could compromise/distract the The Group's key markets are relatively stable, meaning acquisition targets
execution of strategy in other areas typically have an established track record
Individual acquisitions are typically small relative to the size of the Group,
reducing the impact of each deal and reducing potential distraction
The Group conducts extensive due diligence prior to acquisition
All acquisitions are approved by the Board
Legal and Regulatory
Risk and impact: Mitigation
· The Group could infringe upon the IP of others, leading to legal The Group receives IP advice from external experts
claims
The Group's products are certified for use prior to launch by external experts
· The Group's products could fail to meet regulatory requirements
or experience quality failures, resulting in legal claims and/or reputational The Group has extensive quality assurance resources in the UK and China
damage
Suppliers are required to adhere to a strict Code of Conduct
· The Group's businesses could fail to meet regulatory requirements
in their countries of operation Supplier compliance with the Code of Conduct is audited by our in-house teams
· The Group could fail to comply with local tax laws, particularly Product liability claims are reported to the Board
regarding transfer pricing
Product liability insurance is in place globally
The Group's transfer pricing policies are reviewed regularly with the help of
external experts
Finance and treasury
Risk and impact: Mitigation
· The Group could fail to provide sufficient funding liquidity for The Group hedges its currency exposures according to a Board-approved policy.
its operations The hedging matches the duration of any fixed selling price commitment offered
to customers
· The Group has a material exposure to movements in the USD and RMB
currency rates. An adverse move could reduce short-term profits and/or The Group has a clear Capital Structure policy that is designed to provide
long-term competitiveness sufficient liquidity
· The Group could fail to report its financial performance The Capital Structure policy is implemented by Treasury experts and monitored
accurately, leading to inappropriate decision-making and regulatory breaches by the Board
· The Group could suffer fraud across its widespread operations The Treasury team prepares regular cash flow forecasts
The Group's financial statements require relatively few judgements or
estimates, reducing the risk of misstatement
The Group's accounting policies and internal accounting manual are approved by
the Board
The Group operates two main accounting centres in the UK and China, which are
overseen closely by the Group Finance team
The Group has invested in market-leading financial accounting and reporting
software
Statement of Directors' responsibilities
The following statement will be contained in the 2023 Annual Report and
Accounts.
We confirm that to the best of our knowledge:
· The financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view of the
assets, liabilities, financial position and profit or loss of the Company and
the undertakings included in the consolidation taken as a whole; and
· The Strategic Report includes a fair review of the development and
performance of the business and the position of the issuer and the
undertakings included in the consolidation, taken as a whole, together with a
description of the principal risks and uncertainties that they face.
· We consider the Annual Report and Accounts, taken as a whole, is
fair, balanced and understandable and provides the information necessary for
shareholders to assess the Group's position and performance, business model
and strategy.
JOHN HORNBY
Chief Executive Officer
WILL HOY
Chief Financial Officer
25 March 2024
CONSOLIDATED INCOME STATEMENT
For the year ended 31 December 2023
2023 2022(1)
Note £m £m
Revenue 2 209.0 206.3
Cost of sales (126.2) (138.3)
Gross profit 82.8 68.0
Distribution expenses (8.6) (9.2)
Administrative expenses (52.0) (45.1)
Operating profit 2,3 22.2 13.7
Finance expense (3.3) (2.0)
Net finance expense (3.3) (2.0)
Profit before tax 18.9 11.7
Taxation 4 (2.2) (0.7)
Profit for the period 16.7 11.0
Earnings per share (p)
Basic 5 10.8p 7.1p
Fully diluted 5 10.7p 7.0p
1. Re-presented in respect of 2022 is detailed in note 1
Adjusted(1) Results
2023 2022
Note £m £m
Adjusted operating profit 1 24.0 22.0
Adjusted profit before tax 1 21.2 19.4
Adjusted profit after tax 1 17.3 17.2
Adjusted basic earnings per share 5 11.1p 11.1p
Adjusted diluted earnings per share 5 11.1p 11.0p
1. See note 1 for alternative performance measures
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2023
2023 2022
£m £m
Profit for the period 16.7 11.0
Other comprehensive income - amounts that may be reclassified to profit or
loss in the future:
Foreign exchange translation differences - foreign operations (2.5) 2.4
Other comprehensive income - amounts that will not be reclassified to profit
or loss:
Changes in the fair value of equity investments at fair value through other 0.6 -
comprehensive income
Total comprehensive income for the year 14.8 13.4
All results are from continuing operations.
The accompanying notes form part of these financial statements.
CONSOLIDATED BALANCE SHEET
At 31 December 2023
2023 2022
Note £m £m
Non-current assets
Property, plant and equipment 7 20.0 21.4
Right-of-use assets 7.6 6.1
Intangible assets 8 40.1 41.7
Investment 2.3 -
Financial assets measured at fair value through profit or loss 0.4 0.5
Deferred tax asset 2.5 0.8
72.9 70.5
Current assets
Inventories 40.8 47.5
Trade and other receivables 55.7 52.9
Financial assets measured at fair value through profit or loss 0.3 0.7
Current tax asset 2.5 1.2
Cash and cash equivalents 4.6 5.3
103.9 107.6
Total assets 176.8 178.1
Current liabilities
Trade and other payables 47.9 49.8
Financial liabilities measured at fair value through profit or loss 1.5 2.3
Other financial liabilities 2.0 2.0
51.4 54.1
Non-current liabilities
Interest-bearing loans and borrowings 9 22.3 28.4
Other financial liabilities 3.1 4.3
Deferred tax liability 3.6 2.3
Financial liabilities measured at fair value through profit or loss 0.3 -
Provisions 2.3 2.3
31.6 37.3
Total liabilities 83.0 91.4
Net assets 93.8 86.7
Equity attributable to equity holders of the parent
Share capital 0.1 0.1
Share premium 24.8 24.8
Othe reserve 0.7 2.6
Treasury reserve (8.6) (8.7)
Retained earnings 76.8 67.9
Total equity 93.8 86.7
The accompanying notes form part of these financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2023
Share Share Translation Financial Retained Treasury Total
capital premium reserve Assets at FVOCI earnings reserve equity
£m £m £m £m £m £m £m
Balance at 1 January 2022 0.1 24.8 0.2 - 69.3 (6.7) 87.7
Total comprehensive income
Profit for the period - - - - 11.0 - 11.0
Currency revaluations of investments - - 2.5 - - - 2.5
Currency translation differences - - (0.1) - - - (0.1)
Total comprehensive income for the period - - 2.4 - 11.0 - 13.4
Transactions with owners in their
capacity as owners:
Dividends - - - - (10.9) - (10.9)
Purchase of own shares - - - - - (2.4) (2.4)
Disposal of own shares - - - - (0.4) 0.4 -
Deferred tax on share-based payment transactions - - - - (1.6) - (1.6)
Corporation tax on foreign currency translation differences on investments in - - - - (0.5) - (0.5)
overseas entities
Share-based payments charge - - - - 1.0 - 1.0
Total transactions with owners in their capacity as owners - - - - (12.4) (2.0) (14.4)
Balance at 31 December 2022 0.1 24.8 2.6 - 67.9 (8.7) 86.7
Balance at 1 January 2023 0.1 24.8 2.6 - 67.9 (8.7) 86.7
Total comprehensive income
Profit for the period - - - - 16.7 - 16.7
Investment revaluation - - - 0.6 - - 0.6
Currency translation differences - - (2.5) - - - (2.5)
Total comprehensive income for the period - - (2.5) 0.6 16.7 - 14.8
Transactions with owners in their
capacity as owners:
Dividends - - - - (7.2) - (7.2)
Purchase of own shares - - - - - (1.6) (1.6)
Disposal of own shares - - - - (1.7) 1.7 -
Deferred tax on share-based payment transactions - 0.2 0.2
Share-based payments charge - - - - 0.9 - 0.9
Total transactions with owners in their capacity as owners - - - - (7.8) 0.1 (7.7)
Balance at 31 December 2023 0.1 24.8 0.1 0.6 76.8 (8.6) 93.8
The accompanying notes form part of theses financial statements.
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 December 2023
Note 2023 2022(1)
£m £m
Cash flows from operating activities
Profit for the period 16.7 11.0
Adjustments for:
Depreciation and amortisation 7,8 9.3 8.9
Finance expense 3.3 2.0
Taxation 4 2.2 0.7
Loss on disposal of tangible assets 0.2 0.1
Increase in provisions - 0.1
Share-based payments charge 0.8 1.0
Other non-cash items (0.5) 6.8
Operating cash flow before movement in working capital 32.0 30.6
(Increase)/decrease in trade and other receivables (3.1) 19.2
Decrease in inventories 5.9 12.0
(Decrease) in trade and other payables (2.2) (18.5)
Cash from operations 32.6 43.3
Tax paid (3.6) (4.7)
Net cash from operating activities 29.0 38.6
Cash flows from investing activities
Acquisition of property, plant and equipment(2) 7 (6.4) (4.1)
Acquisition of other intangible assets 8 (1.8) (1.7)
Disposal of tangible assets 7 - 0.2
Acquisition of subsidiary - (7.8)
Investment (1.7) -
Net cash used in investing activities (9.9) (13.4)
Cash flows from financing activities
(Repayment) of borrowings (6.1) (8.9)
Interest paid (2.8) (2.7)
Dividends paid (7.2) (10.9)
Finance lease liabilities (2.1) (2.2)
Purchase of own shares (1.6) (2.4)
Net cash from financing activities (19.8) (27.1)
Net (decrease)/increase in cash and cash equivalents (0.7) (1.9)
Cash and cash equivalents at 1 January 5.3 6.9
Effect of exchange rate fluctuations on cash held - 0.3
Cash and cash equivalents at 31 December 4.6 5.3
1. Re-presented in respect of 2022 is detailed in note 1
2. Includes £2.5m of Land and Buildings relating to a long lease
(999 year) property shown in Right of Use Assets
The accompanying notes form part of theses financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2023
1. Basis of preparation
Luceco plc (the "Company") is a company incorporated and domiciled in the
United Kingdom. These consolidated financial statements for the year ended 31
December 2023 comprise the Company and its subsidiaries (together referred to
as the "Group"). The Group is primarily involved in the manufacturing and
distributing of high quality and innovative wiring accessories, LED lighting
and portable power products to global markets (see note 2).
The financial information is derived from the Group's consolidated financial
statements for the year ended 31 December 2023, which have been prepared on
the going concern basis in accordance with UK adopted international accounting
standards (UK adopted IFRS) in conformity with the requirements of the
Companies Act 2006. The financial statements have been prepared on the
historical cost basis except for certain financial instruments which are
carried at fair value.
The financial information set out above does not constitute the Company's
statutory accounts for the years ended 31 December 2023 and 31 December 2022
but is derived from those accounts. Statutory accounts for 2022 have been
delivered to the Registrar of Companies, and those for 2023 will be delivered
in due course. The Auditors have reported on the 2023 statutory accounts;
their report was (i) unqualified and (ii) did not contain a statement under
Section 498 (2) or (3) of the Companies Act 2006. The text of the Auditors'
report can be found in the Company's full 2023 Annual Report and Accounts on
pages 117 to 123.
The 2023 Annual Report and Accounts and the Notice of the 2023 Annual General
Meeting will be published on the Company's website
at http://www.lucecoplc.com (http://www.lucecoplc.com/) as soon as
practicable. They will also be submitted to the National Storage Mechanism
where they will be available for inspection at:
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) .
The Group's accounting policies can be referred to in note 1 of the
consolidated financial statements in the 2023 Annual Report and Accounts.
Going concern
The Directors have concluded that it is reasonable to adopt a going concern
basis in preparing the financial statements. This is based on an expectation
that the Company and the Group have adequate resources to continue in
operational existence for at least 12 months from the date of signing these
accounts and our cash flow forecasts support this. The Group has reported a
profit before tax of £18.9m for the year to 31 December 2023 (2022: £11.7m),
has net current assets of £52.5m (2022: £53.5m) and net assets of £93.8m
(2022: £86.7m), net debt of £22.8m (2022: £29.4m) and net cash from
operating activities of £29.0m (2022: £38.6m). The bank facilities mature on
30 September 2026 as detailed below:
The capital resources at the Group's disposal at 31 December 2023 and 29
February 2024:
· A revolving credit facility of £80.0m, £22.3m drawn at 31 December
2023 and £28.4m drawn at 29 February 2024
The revolving credit facility requires the Group to comply with the following
quarterly financial covenants:
· Closing Covenant Net Debt of no more than 3.0 times Covenant EBITDA
for the preceding 12-month period
· Covenant EBITDA of no less than 4.0 times Covenant Net Finance
Expense for the preceding 12‑month period
The Directors ran scenario tests on the severe but plausible downside case.
The assumptions in this scenario were as follows: concentration risks with
associated operations (25% reduction in revenue for three months followed by
50% reduction for three months and 20% increase in shipping costs during the
period) and macroeconomic, political and
environmental risks (18-month recession with a 10% reduction in revenue and
gross profit). These severe but plausible downside scenarios do not lead to
any breach in covenants nor any breach in facility. All modelling has been
conducted without any mitigation activity. There have been no changes to post
balance sheet liquidity positions.
The Directors are confident that the Group and Company will have sufficient
funds to continue to meet its liabilities as they fall due for at least 12
months from the date of approval of the financial statements and therefore
have prepared the financial statements on a going concern basis.
Statutory and non-statutory measures of performance - adjusted measures
The financial statements contain all the information and disclosures required
by the relevant accounting standards and regulatory obligations that apply to
the Group.
The Group's performance is assessed using a number of financial measures which
are not defined under IFRS (the financial reporting framework applied by the
Group). Management uses the adjusted or alternative performance measures
(APMs) as a part of their internal financial performance monitoring and when
assessing the future impact of operating decisions. The APMs disclose the
adjusted performance of the Group excluding specific items. The measures allow
a more effective year-on-year comparison and identification of core business
trends by removing the impact of items occurring either outside the normal
course of operations or as a result of intermittent activities such as a
corporate acquisition. The Group separately reports acquisition costs, other
exceptional items and other specific items in the consolidated income
statement which, in the Directors' judgement, need to be disclosed separately
by virtue of their nature, size and incidence in order for users of the
financial statements to obtain a balanced view of the financial information
and the underlying performance of the business.
In following the guidelines on Alternative Performance Measures (APMs) issued
by the European Securities and Markets Authorities, the Group has included a
consolidated income statement and consolidated cash flow statement that have
both Statutory and Adjusted performance measures. The definitions of the
measures used in these results are below and the principles to identify
adjusting items have been applied on a basis consistent with previous years.
Nature of measure Related IFRS measure Related IFRS source Definition Use/relevance
Adjusted Gross Profit Margin Gross Profit Margin Consolidated income statement Based on the related IFRS Allows management to
measure but excluding the assess the performance
adjusting items. of the business after
A breakdown of the removing large/unusual
adjusting items from 2023 items or transactions that
and 2022, which reconciles are not reflective of the
the adjusted measures to underlying business
statutory figures, can be operations
found later in this document
Adjusted Operating Costs Operating Gross profit less Operating profit Consolidated income statement
Adjusted Operating Profit Operating profit Consolidated income statement
Adjusted Basic EPS Basic EPS Consolidated income statement
Constant Currency Current period reviewed translated at the average exchange rate of the prior Allows management
period
to identify the relative
year-on-year performance
of the business by removing
the impact of currency
movements that are outside
of management's control
EBITDA Operating profit Consolidated income statement Consolidated earnings before interest, tax, depreciation and amortisation Provides management with an approximation of cash generation from the Group's
operational activities
Low Carbon Sales Revenue Segmental operating revenue EV charger revenue and LED revenue less sales from lighting columns Provides management with a measure of low
and downlight accessories carbon sales
Adjusted EBITDA Operating profit Consolidated income statement EBITDA excluding the adjusting items excluded from Adjusted Operating Profit Provides management with an approximation of cash generation from the Group's
except for any adjusting items that relate to depreciation and amortisation underlying operating activities
Covenant EBITDA Operating profit Consolidated income statement As above definition of "Adjusted EBITDA" but including EBITDA generated from Aligns with the definition of EBITDA used for bank covenant testing
acquisitions between 1 January and the date of acquisition and excluding
share-based payment expense
Contribution profit Operating profit and operating costs Consolidated income statement Contribution profit is after allocation of directly attributable adjusted Provides management with an assessment of profitability by operating segment
operating expenses for each operating segment
Contribution margin Operating profit and operating costs Consolidated income statement Contribution margin is contribution profit, as above, divided by revenue for Provides management with an assessment of margin by operating segment
each operating segment
Adjusted Operating Cash Flow Cash flow from operations Consolidated cash flow statement Adjusted Operating Cash Flow is the cash from operations but excluding the Provides management with an indication of the amount of cash available for
cash impact of the adjusting items excluded from Adjusted Operating Profit discretionary investment
Adjusted Free Cash Flow Net increase/(decrease) in cash and cash equivalents Consolidated cash flow statement Adjusted Free Cash Flow is calculated as Adjusted Operating Cash Flow less Provides management with an indication of the free cash generated by the
cash flows in respect of investing activities (except for those in respect of business for return to shareholders or reinvestment in M&A activity
acquisitions or disposals), interest and taxes paid
Adjusted Net Cash Flow Net increase/(decrease) in cash and cash equivalents Consolidated cash flow statement Adjusted Free Cash Flow less cash flows relating to dividend payments and the Provides management with an indication of the net cash flows generated by the
purchase of own shares business after dividends and share purchases
Adjusted Operating Cash Conversion None Consolidated cash flow statement and consolidated income statement Operating Cash Conversion is defined as Adjusted Operating Cash Flow divided Allows management to monitor the conversion of operating profit into cash
by Adjusted Operating Profit
Return on Capital Invested ("ROCI") None Operating profit and Net assets Adjusted Operating Profit divided into the sum of net assets and net debt To provide an assessment of how profitability capital is being deployed in the
(average for the last two years) expressed as a percentage business
Re-presented prior year comparative
Revenue, profit before and after tax and EPS all unchanged
During the year the Group has amended its presentation of its net finance
expense line. In the 2022 Annual report and Accounts the company combined the
finance interest together with the impact of re-measurement of the fair value
of the hedging portfolio. Given that the impact of the hedging relates to the
purchase of goods bought in a foreign currency, the Board believes it is
preferable for the reader to show this as a cost of sale item rather than a
net finance expense item. This leaves the finance expense line with borrowing
and cash interest impacts only. Accordingly, the presentation of the accounts
has been restated for 2022 and the impact is as follows from the 2022 Reported
numbers:
The revised presentation has no impact on reported profit before tax, cash
flows or net assets as reported previously.
2022 2022
Reported Presentation restatement Re-presented
Revenue 206.3 - 206.3
Cost of sales (132.0) (6.3) (138.3)
Gross profit 74.3 (6.3) 68.0
Distribution expenses (9.2) - (9.2)
Administrative expenses (45.1) - (45.1)
Operating profit 20.0 (6.3) 13.7
Finance expense (8.3) 6.3 (2.0)
Net finance expense (8.3) 6.3 (2.0)
Profit before tax 11.7 - 11.7
Taxation (0.7) - (0.7)
Profit for the period 11.0 - 11.0
Earnings per share (p)
Basic 7.1p - 7.1p
Fully diluted 7.0p - 7.0p
2. Re-presented 2022 is detailed in note 1
The following is the impact on the cashflow, it has no impact on any subtotal
items, just within the Operating cash flow before movement in working capital
section.
£m 2022 Presentation restatement 2022
Reported Re-presented
Cash flows from operating activities
Profit for the period 11.0 - 11.0
Adjustments for:
Depreciation and amortisation 8.9 - 8.9
Finance expense 8.3 (6.3) 2.0
Taxation 0.7 - 0.7
Loss on disposal of tangible assets 0.1 - 0.1
Increase in provisions 0.1 - 0.1
Share-based payments charge 1.0 - 1.0
Other non-cash items 0.5 6.3 6.8
Operating cash flow before movement in working capital 30.6 - 30.6
(Increase)/decrease in trade and other receivables 19.2 - 19.2
Decrease in inventories 12.0 - 12.0
Decrease in trade and other payables (18.5) - (18.5)
Cash from operations 43.3 - 43.3
Tax paid (4.7) - (4.7)
Net cash from operating activities 38.6 - 38.6
Cash flows from investing activities
Acquisition of property, plant and equipment (4.1) - (4.1)
Acquisition of other intangible assets (1.7) - (1.7)
Disposal of tangible assets 0.2 - 0.2
Acquisition of subsidiary (7.8) - (7.8)
Net cash used in investing activities (13.4) - (13.4)
Cash flows from financing activities
Repayment of borrowings (8.9) - (8.9)
Interest paid (2.7) - (2.7)
Dividends paid (10.9) - (10.9)
Finance lease liabilities (2.2) - (2.2)
Purchase of own shares (2.4) - (2.4)
Net cash from financing activities (27.1) - (27.1)
Net decrease in cash and cash equivalents (1.9) - (1.9)
Cash and cash equivalents at 1 January 6.9 - 6.9
Effect of exchange rate fluctuations on cash held 0.3 - 0.3
Cash and cash equivalents at 31 December 5.3 - 5.3
The following table reconciles all adjustments from the reported to the
adjusted figures in the income statement:
2023 Amortisation of acquired intangibles and related acquisition costs(1) Re-measurement 2023 Adjusted
£m £m to fair value of hedging portfolio(2) Adjustments 2023
£m £m £m
Revenue 209.0 - - - 209.0
Cost of sales (126.2) - (0.5) (0.5) (126.7)
Gross profit 82.8 - (0.5) (0.5) 82.3
Distribution expenses (8.6) - - - (8.6)
Administrative expenses (52.0) 2.3 - 2.3 (49.7)
Operating profit 22.2 2.3 (0.5) 1.8 24.0
Net finance expense (3.3) - 0.5 0.5 (2.8)
Profit before tax 18.9 2.3 - 2.3 21.2
Taxation (2.2) (1.7) - (1.7) (3.9)
Profit for the period 16.7 0.6 - 0.6 17.3
1. Relating to Kingfisher Lighting, DW Windsor and Sync EV
2. Relating to currency hedges/interest swaps
2022 Amortisation of acquired intangibles and related acquisition costs(1) Re-measurement Restructuring(3) 2022 Adjusted
£m £m to fair value of hedging portfolio(2) £m Adjustments 2022
£m £m £m
Revenue 206.3 - - - - 206.3
Cost of sales (138.3) - 6.3 - 6.3 (132.0)
Gross profit 68.0 - 6.3 - 6.3 74.3
Distribution expenses (9.2) - - - - (9.2)
Administrative expenses (45.1) 3.0 - (1.0) 2.0 (43.1)
Operating profit 13.7 3.0 6.3 (1.0) 8.3 22.0
Net finance expense (2.0) - (0.6) - (0.6) (2.6)
Profit before tax 11.7 3.0 5.7 (1.0) 7.7 19.4
Taxation (0.7) (0.6) (1.1) 0.2 (1.5) (2.2)
Profit for the period 11.0 2.4 4.6 (0.8) 6.2 17.2
1. Relating to Kingfisher Lighting, DW Windsor and Sync EV
2. Relating to currency hedges/interest swaps
3. Relating to the closure of Germany and France operations
The following tables indicate how alternative performance measures are
calculated:
2023 2022
Adjusted 12 months rolling EBITDA £m £m
Adjusted Operating Profit 24.0 22.0
Adjusted Depreciation and Amortisation 7.4 7.1
Adjusted 12 months rolling EBITDA 31.4 29.1
2023 2022
Covenant EBITDA £m £m
Adjusted 12 months rolling EBITDA 31.4 29.1
EBITDA from acquisitions from 1 January to the date of acquisition and share 0.8 1.2
based payment expense
Covenant EBITDA 32.2 30.3
2023 2022
Adjusted Operating Cash Conversion £m £m
Cash from operations (from consolidated cash flow statement) 32.6 43.3
Adjustments to operating cash flow (from consolidated cash flow statement) - 0.4
Adjusted Operating Cash Flow 32.6 43.7
Adjusted Operating Profit 24.0 22.0
Adjusted Operating Cash Conversion 135.8% 198.6%
2023 2022
Adjusted Net Cash Flow as % of revenue £m £m
Adjusted Free Cash Flow (see below) 18.0 30.7
Purchase of own shares (1.6) (2.4)
Dividends (7.2) (10.9)
Adjusted Net Cash Flow 9.2 17.4
Revenue 209.0 206.3
Adjusted Net Cash Flow as % of revenue 4.4% 14.9%
2023 2022
Adjusted Free Cash Flow as % of revenue £m £m
Adjusted Operating Cash Flow (see table above) 32.6 43.7
Net Cash used in investing activities excluding acquisitions (from (8.2) (5.6)
consolidated cash flow statement)
Interest paid (from consolidated cash flow statement) (2.8) (2.7)
Tax paid (from consolidated cash flow statement) (3.6) (4.7)
Adjusted Free Cash Flow 18.0 30.7
Revenue 209.0 206.3
Adjusted Free Cash Flow as % of revenue 8.6% 14.9%
2023 2022
Return on Capital Investment £m £m
Net assets 93.8 86.7
Net debt 22.8 29.4
Capital invested 116.6 116.1
Average capital invested (from last two years) 116.4 121.0
Adjusted Operating Profit (from above) 24.0 22.0
Return on Capital Invested (Adjusted Operating Profit/average capital 20.6% 18.2%
invested)
Standards and interpretations issued
The following UK-adopted IFRS have been issued and have been applied in these
financial statements. Their adoption did not have a material effect on the
financial statements, unless otherwise indicated, from 1 January 2023:
• IFRS 17 Insurance Contracts
• Definition of Accounting Estimates - Amendments to IAS 8
• Disclosure of Accounting policies - Amendments to IAS 1
• Deferred Tax related to Assets and Liabilities arising from a single
Transaction - Amendments to IAS 12
• International Tax Reform - Pillar Two Model Rules, Amendments to IAS 12
(effective 23 May 2023)
The following UK adopted IFRS have been issued but have not been applied and
adoption is not expected to have a material effect on the financial
statements, unless otherwise indicated, from 1 January 2024:
• Non-current Liabilities with Covenants - Amendments to IAS 1 and
Classification of Liabilities as Current or Non-current, amendments to IAS 1
• Lease Liability in a Sale Leaseback - Amendments to IFRS 16
• Supplier Finance Arrangements - Amendments to IAS 7 and IFRS 7
• Lack of Exchangeability - Amendments to IAS 21 (effective 1 January 2025)
2. Operating segments
The Group's principal activities are in the manufacturing and supply of Wiring
Accessories, LED Lighting and Portable Power equipment. For the purposes of
management reporting to the Chief Operating Decision-Maker (the Board), the
Group consists of three operating segments which are the product categories
that the Group distributes. The Board does not review the Group's assets and
liabilities on a segmental basis and, therefore, no segmental disclosure is
included. Inter-segment sales are not material. Revenue and operating profit
are reported under IFRS 8 Operating Segments.
Adjusted Reported Adjusted Reported
2023 Adjustments 2023 2022 Adjustments 2022
£m £m £m £m £m £m
Revenue
Wiring Accessories 82.6 - 82.6 73.7 - 73.7
LED Lighting 79.0 - 79.0 81.4 - 81.4
Portable Power 47.4 - 47.4 51.2 - 51.2
209.0 - 209.0 206.3 - 206.3
Operating profit
Wiring Accessories 15.0 0.3 15.3 13.9 (2.2) 11.7
LED Lighting 4.7 (1.5) 3.2 3.4 (3.1) 0.3
Portable Power 4.3 (0.6) 3.7 4.7 (3.0) 1.7
Operating profit 24.0 (1.8) 22.2 22.0 (8.3) 13.7
Revenue by location of customer
2023 2022
£m £m
UK 173.6 165.3
Europe 12.9 19.7
Americas 8.6 8.0
Middle East and Africa 8.3 8.7
Asia Pacific 5.6 4.6
Total revenue 209.0 206.3
Non-current assets by location
2023 2022
£m £m
UK 57.3 52.1
China 15.3 17.6
Other 0.3 0.8
Non-current assets 72.9 70.5
3. Expenses recognised in the consolidated income statement
Included in the consolidated income statement are the following:
2023 2022
£m £m
Research and development costs expensed as incurred 2.3 1.9
Depreciation of property, plant and equipment and right-of-use assets 5.9 6.0
Amortisation of intangible assets 3.4 2.9
4. Income tax expense
2023 2022
£m £m
Current tax expense
Current year - UK 2.9 2.3
Current year - overseas - (0.9)
Adjustment in respect of prior years (0.5) (0.3)
Current tax expense 2.4 1.1
Deferred tax expense/(credit)
Origination and reversal of temporary differences 0.9 (0.2)
Adjustment in respect of prior years (1.3) (0.1)
Effect of tax rate change on opening balance 0.2 (0.1)
Deferred tax (credit) (0.2) (0.4)
Total tax expense 2.2 0.7
2023 2022
Reconciliation of effective tax rate £m £m
Profit for the year 16.7 11.0
Total tax expense 2.2 0.7
Profit before taxation 18.9 11.7
Tax using the UK corporation tax rate of 19.0% (2021: 19.0%) 4.4 2.2
Effect of tax rates in foreign jurisdictions (0.5) -
R&D tax credits (0.4) (0.4)
Non-deductible expenses 0.1 0.2
Adjustment in respect of previous periods (1.8) (0.4)
Transfer pricing adjustments (related to China) - (1.0)
Effect of rate change in calculation of deferred tax 0.3 0.1
Movement in deferred tax not recognised 0.1 -
Deferred tax on share-based payments - 0.3
Fixed asset differences related to tax and book value - (0.1)
Utilisation of unrecognised overseas brought forward tax losses - (0.2)
Total tax expense 2.2 0.7
The adjustment in respect of previous periods of a £1.8m credit relates to
differences between the Group's tax provisions at the date of the accounts
being signed and the completion of the final Group's tax returns of which
£1.2m relates to a tax deduction in respect of shares issued on the
acquisition of DW Windsor.
Factors which may affect future current and total tax charges
An increase in the UK corporation tax rate from 19% to 25% (effective 1 April
2023) was substantively enacted on 24 May 2021. This will increase the
Company's future current tax charge accordingly. The deferred tax liability at
31 December 2023 and 31 December 2022 has been calculated based on these
rates, reflecting the expected timing of reversal of the related temporary
differences.
5. Earnings per share
Earnings per share is calculated based on the profit for the period
attributable to the owners of the Group. Adjusted earnings per share is
calculated based on the adjusted profit for the period, as detailed below,
attributable to the owners of the Group. These measures are divided by the
weighted average number of shares outstanding during the period.
2023 2022
£m £m
Earnings for calculating basic earnings per share 16.7 11.0
Adjusted for:
Restructuring of European operations - (1.0)
Amortisation of acquired intangibles and related acquisition costs 2.3 3.0
Remeasurement to fair value of hedging portfolio - 5.7
Income tax on above items (0.5) (1.5)
Other tax items (1.2) -
Adjusted earnings for calculating adjusted basic earnings per share 17.3 17.2
2023 2022
Number Number
Weighted average number of ordinary shares Million Million
Basic 155.2 154.3
Dilutive effect of share options on potential ordinary shares 1.3 2.6
Diluted 156.5 156.9
2023 2022
Pence Pence
Basic earnings per share 10.8 7.1
Diluted earnings per share 10.7 7.0
Adjusted basic earnings per share 11.1 11.1
Adjusted diluted earnings per share 11.1 11.0
6. Dividend
Amounts recognised in the financial statements as distributions to equity
shareholders as follows:
2023 2022
£m £m
Final dividend for the year ended 31 December 2022 of 3.0p (2021: 5.5p) per 4.7 8.5
ordinary share
Interim dividend for the year ended 31 December 2023 of 1.6p (2022: 1.6p) per 2.5 2.4
ordinary share
Total dividend recognised during the year 7.2 10.9
7. Property, plant and equipment
During the year, the Group purchased assets at a cost of £6.4m (2022:
£4.1m); including land and buildings £2.7m (of which £2.5m relates to a
long lease (999 year) property shown in Right of Use assets), plant and
equipment £2.5m, tooling £1.4m, construction in progress £(0.4)m, and
fixtures and fittings £0.2m. Assets with a net book value of £0.2m were
disposed of (2022 £0.3m). Total depreciation for the period was £3.9m (2022:
£4.1m).
During the year there were lease additions totalling £3.5m (including land
and buildings as detailed above) and a depreciation charge of £2.0m. The net
book value of right-of-use assets at 31 December 2023 was £7.6m (2022:
£6.1m).
The Group has not included any borrowing costs within additions in 2023 (2022:
£nil). There were no funds specifically borrowed for the assets and the
amount eligible as part of the general debt instruments pool (after applying
the appropriate capitalisation rate) is not considered material.
8. Intangible assets and goodwill
Development expenditure is capitalised and included in intangible assets when
it meets the criteria laid out in IAS 38, "Intangible Assets". During the
year, the Group incurred internally generated development costs of £1.8m
(2022: £1.7m). The Group has not included any borrowing costs within
capitalised development costs. There were no funds specifically borrowed for
this asset and the amount eligible as part of the general debt instruments
pool (after applying the appropriate capitalisation rate) is not considered
material. Amortisation for the year was £3.4m (2022: £2.9m).
In the consolidated income statement these amounts have been included within
"adjustments" in calculating the Adjusted Operating Profit/loss (refer to note
1 in the Notes to the consolidated financial statements).
There have been no triggers to necessitate an impairment of goodwill since the
review undertaken as part of the year ended 31 December 2023. Goodwill has
been allocated to cash-generating units and can be referred to in the Group's
2023 Annual Report and Accounts.
9. Interest-bearing loans and borrowings
This note provides information about the contractual terms of the Group's
interest-bearing loans and borrowings, which are measured at amortised cost.
For more information about the Group's exposure to interest rate and foreign
currency risk, please refer to note 20 in the 2023 Annual Report and
Accounts.
2023 2022
£m £m
Non-current liabilities
Revolving credit facility 22.3 28.2
Overdrafts - 0.2
22.3 28.4
Bank loans are secured by a fixed and floating charge over the assets of the
Group.
10. Exchange rates
The following significant Sterling exchange rates were applied during the
year:
Average rate Reporting date spot rate
2023 2022 2023 2022
USD 1.24 1.23 1.27 1.21
EUR 1.15 1.17 1.15 1.13
RMB 8.81 8.30 9.00 8.34
11. Related party transactions
Transactions with key personnel
Key personnel include executive and non-executive Board members and the senior
management team. The compensation of key management personnel, including
executive directors is as follows:
2023 2022
£m £m
Remuneration (including benefits in kind) 5.1 5.1
Element of share-based payments expense 0.9 1.0
6.0 6.1
12. Post balance sheet events
On the 29 February 2024, the Group acquired the entire issued share capital of
D-Line (Europe) Limited ("D-Line") for £8.6m initial cash consideration and
up to £3.8m of contingent consideration. D-Line is a supplier of cable
management solutions consisting of decorative cable trunking and accessories,
fire-rated cable supports, floor cable protector and cable organisers, with
headquarters in Tyne and Wear in the UK. The business supplies retail,
wholesale and eCommerce customers mainly in the UK, Europe and North America.
The business supports its customers in North America from a sales and
distribution facility in Kentucky, USA. For the unaudited 12 month period
ended 30 November 2023 D-Line generated revenue of £17.0m and underlying
operating profit of £1.4m.
13. Annual General Meeting (AGM)
The 2024 AGM will take place on 14 May 2024 at Numis Securities, 45 Gresham
Street, London, EC2V 7BF. The notice of AGM and any related documents will
be sent to shareholders within the prescribed timescales. Shareholders will be
encouraged to submit their proxy votes online.
14. Date of approval of financial information
The financial information covers the year 1 January 2023 to 31 December 2023
and was approved by the Board on 25 March 2024. A copy of the 2023 Annual
Report and Accounts will be published on the Luceco PLC investor relations
website, www.lucecoplc.com (http://www.lucecoplc.com) as soon as practicable.
Additional information
Financial calendar
Item Date
Ex-dividend date 11 April 2024
Dividend record date 12 April 2024
Dividend reinvestment plan final date for election 25 April 2024
Annual General Meeting 14 May 2024
Dividend paid 17 May 2024
2024 Half year end 30 June 2024
2024 Half year trading update 23 July 2024
2024 Half year results 10 September 2024
2024 Q3 Trading update 24 October 2024
2024 Year end 31 December 2024
2024 Year end preliminary statement March 2025
Contacts
Type Name Address Website/Email/Phone
Company's registered office Luceco plc Building E Stafford Park 1 www.lucecoplc.com (http://www.lucecoplc.com)
Stafford Park ir@luceco.com
Telford
TF3 3BD
Independent auditor KPMG LLP Chartered Accountants www.kpmg.co.uk (http://www.kpmg.co.uk)
One Snowhill
Snow Hill Queensway
Birmingham
B4 6GH
Financial advisors and brokers Numis Securities 45 Gresham Street www.numis.com (http://www.numis.com)
London
EC2V 7BF
Liberum Capital Ropemaker Place www.liberum.com (http://www.liberum.com)
Level 12
25 Ropemaker Street
London
EC2Y 9LY
Company registrar Link Group Central Square shareholderenquiries@linkgroup.co.uk
(mailto:shareholderenquiries@linkgroup.co.uk)
29 Wellington Street
Leeds
Tel: +44 (0)371 664 0300
LS1 4DL
Company Secretary Company Matters 6(th) Floor luceco@linkgroup.co.uk (mailto:luceco@linkgroup.co.uk)
(part of Link Group) 65 Gresham Street
London Tel: +44 (0)333 300 1950
EC2V 7NQ
Financial PR MHP 60 Great Portland Street luceco@mhpgroup.com (mailto:luceco@mhpgroup.com)
London
W1W 7RT Tel: +44 (0)20 3128 8100
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