TIDMLUCE
RNS Number : 0212D
Luceco PLC
21 April 2017
21 April 2017
Luceco plc
(the "Company')
Annual Report and Accounts 2016 and Notice of 2017 Annual
General Meeting
Following the announcement on 3 April 2017 of its preliminary
results for the year ended 31 December 2016, Luceco plc announces
that it has today published its Annual Report and Accounts
2016.
The Company also announces that it will hold its Annual General
Meeting at 1.00pm on Thursday 25 May 2017 at the offices of Numis
Securities Limited, The London Stock Exchange Building, 10
Paternoster Square, London EC4M 7LT.
Copies of the Annual Report and Accounts 2016 and the Notice of
the 2017 Annual General Meeting are available to view on the
Company's website at http://www.luceco.com/investors. They have
also been submitted to the National Storage Mechanism and will
shortly be available for inspection at
http://www.morningstar.co.uk/uk/nsm.
Copies of those documents, together with a form of proxy for use
in connection with the 2017 Annual General Meeting, have been
posted or made available to the Company's shareholders.
A condensed set of Luceco plc financial statements and
information on important events that have occurred during the year
and their impact on the financial statements were included in the
Company's preliminary announcement on 3 April 2017. The information
contained in the preliminary announcement, together with the
information set out below, all of which is extracted from the
Annual Report for the year ended 31 December 2016 (the "Annual
Report") constitute the requirements of DTR 6.3.5 which are to be
communicated via a RIS in full unedited text. This announcement is
not a substitute for reading the full Annual Report. Page and note
references in the text below refer to page numbers in the Annual
Report.
Principal risks and uncertainties
Below are details of the principal risks identified and actions
taken to minimise their potential impact extracted from pages 23 to
25 of the Annual Report. This is not an exhaustive list but those
the Board believes may have an adverse effect on the Group's cash
flow and profitability.
Principal risk Impact Mitigation
----------------------- -------------------------------------------------------------- --------------------------------------------------------------
Risk 1: Disruption to operations
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The Group's key
manufacturing * The Group's Chinese operation and supply chain could * The Board and senior management team are in regular
operation is be adversely affected if there is any disruption to liaison with their Chinese counterparts and aware of
based in China. legal, political, economic or social conditions in any changing dynamics in the country.
Any change to China.
China's current
political situation * The Group has an IT strategy and a disaster recovery
could impact * If the key operational sites went offline for any plan in place to protect its operations.
the Group's ability reason or period of time, it would have a material
to manufacture adverse effect upon the Group's ability to
its products. manufacture and bring its products to market, * The Chinese factory comprises separate buildings,
The Group is severely impacting its business, financial position reducing disruption.
reliant on the and future prospects.
UK and Chinese
sites remaining * Appropriate precautions are taken in all factories
fully operational * Loss of sensitive data as a result of an IT security and warehouses to safeguard against theft and fire.
at all times. breach could negatively impact the Group's operations
The Group is and reputation.
reliant on its * IT security systems in place, and tested regularly,
IT systems to to protect commercial and sensitive data.
ensure its operations
function efficiently.
Any loss of IT * IT technological and security developments are
service or compromise monitored regularly.
of IT security
(through a cyber
attack) could
adversely impact
the business.
----------------------- -------------------------------------------------------------- --------------------------------------------------------------
Risk 2: Input costs
-------------------------------------------------------------------------------------------------------------------------------------------------------
Raw materials
represent a * Suppliers may increase product prices as a result of * Copper prices are monitored regularly. Where
significant copper or other commodity price fluctuations, fluctuations are severe, the exposure is determined
cost to the Group. reducing profit margins. and customer pricing is considered and adjusted
The Group faces accordingly.
risks from copper
price volatility * Profitability will be negatively impacted if the
and is reliant Group is unable to pass price fluctuations on to its * Price fluctuations are passed on to customers as soon
on third party customers or there is a time lag in achieving a price as practicable.
suppliers for increase.
some of its products
and components. * The Group has long--term relationships, and some
* Suppliers may not fulfil order requirements or exclusive arrangements, with its suppliers who
products may be of poor quality, negatively impacting reliably fulfil orders to the required standard.
the Group's reputation, financial position and
contractual commitments.
* Quality control teams are in place at all key
operational locations to ensure quality of supply.
----------------------- -------------------------------------------------------------- --------------------------------------------------------------
Risk 3: Loss of market share
-------------------------------------------------------------------------------------------------------------------------------------------------------
The Group could
lose market share * Any reduction in the Group's revenue or market share * The Group invests heavily in R&D to remain at the
through the loss would have a material adverse effect on the Group's forefront of capturing and delivering changing
of one or more future prospects. customer requirements and market trends.
of its major customers
with whom it does
not have long--term * LED technology is constantly changing and customer * The Group registers its designs with the design and
contracts, or demand rapidly evolving, giving risk of product patent office in the country of the market the
if it is unable obsolescence. product is sold in.
to maintain its
innovative edge,
particularly in * Any defence or claim against intellectual property * The Group has long-standing relationships with many
the competitive ("IP") rights could be costly to instigate and of its customers and works closely with them to meet
LED lighting market pursue. their requirements.
where barriers
to entry are low.
* Infringement of third--party IP would limit the * Dedicated customer support teams in all key trading
Group's product offering and ability to compete. locations maintaining excellent customer service.
* Customers could stop trading with the Group at short
notice as many agreements are on a rolling annual
basis.
------------------------- -------------------------------------------------------------- ------------------------------------------------------------
Risk 4: Concentration
-------------------------------------------------------------------------------------------------------------------------------------------------------
Approximately
86% of the Group's * Any economic downturn in the UK economy could * Mitigation through innovation and product development
revenue is generated adversely impact the Group's financial position if as diversification of products enables the Group to
from the UK and demand for its products reduces and there are grow by exploiting market gaps protecting it from any
profitability limitations on its ability to increase or maintain market downturn.
is directly influenced its prices.
by the UK economic
climate. * The economies and markets of all the Group's
The Group has * A significant proportion of the Group's trade is with operations are reviewed regularly by the Board with
a large number a small number of customers that are not committed to mitigating action taken.
of customers but purchasing the Group's products on a long-term basis.
there is significant Customers could cease to purchase from the Group at
concentration relatively short notice negatively impacting trading * Continued international expansion will lessen
within the customer and working capital as there would be a lag in reliance on any particular economy or customer.
base. This concentration adjusting manufacturing volumes.
presents a risk
should one or * The Group has long-standing relationships with its
more of the customers customers providing a strong competitive barrier.
cease purchasing
from the Group.
Customer agreements * The Group's ability to rapidly embrace new consumer
are typically trends and its distribution flexibility make it a
on a rolling annual valued supplier.
basis.
------------------------- -------------------------------------------------------------- ------------------------------------------------------------
Risk 5: Financial impact of international operations
-------------------------------------------------------------------------------------------------------------------------------------------------------
With its Chinese
operation and * Any weakening of Sterling relative to the US Dollar * The Group hedges excess CNY net outflows over US
FOB sales, the and CNY, could adversely affect profit. Dollar net inflows.
Group is exposed
to exchange rate
fluctuations of * There will be a time lag from the change in exchange * Currency fluctuations mitigated by hedging policy;
the CNY and US rate to any recovery through pricing with a potential pricing action is undertaken when appropriate.
Dollar as a significant negative impact on profit.
proportion of
the Group's revenue * Continued international diversification will dilute
is invoiced in * The UK referendum decision and negotiations may cause the impact of currency fluctuations.
US Dollars and further currency volatility, potentially adversely
the majority of impacting profits.
costs are paid
in CNY.
The UK's referendum
decision to leave
the EU also presents
a risk to the
business. In the
short term, the
Group is managing
the associated
currency volatility
but the longer-term
risks of this
decision are not
yet clear. The
Board continues
to monitor the
position closely.
------------------------- -------------------------------------------------------------- ------------------------------------------------------------
Risk 6: Regulatory non-compliance
-------------------------------------------------------------------------------------------------------------------------------------------------------
The risk of regulatory
non-compliance * Changes in the laws and regulations in the countries * The Board monitors the changing landscape of laws and
is increasing the Group operates in could result in incurring costs regulations in the jurisdictions in which it
as the Group is and adversely impact its reputation should it be operates.
expanding rapidly found to be non--compliant with any aspect.
into new territories,
each with its * The Board seeks appropriate advice before setting up
own laws and * The Group's third-party supply chain in China may not operations in new territories.
regulations. meet the Group's ethical resourcing standards,
Keeping up to compromising its reputation.
date with changing * The Group has long--standing relationships with its
laws and regulations suppliers and the Executive Directors frequently
is also a risk visit their operations.
that the Group
faces with its
current operations.
------------------------- -------------------------------------------------------------- ------------------------------------------------------------
Risk 7: Pursuit of the acquisition strategy
-------------------------------------------------------------------------------------------------------------------------------------------------------
The acquisition
strategy may incur * Expenses may be incurred, whether or not an * Costs are tightly controlled and cash flow is
substantial expense acquisition is completed, reducing profitability. monitored daily.
and divert management
attention from
the day-to-day * The cost and integration of an acquisition may reduce * The Board closely monitors the strategy and the
business. profit and increase indebtedness in the short-term. resources required to deliver it.
The ability to
pursue such a
strategy is dependent * Time required in pursuit of an acquisition may divert * The Group has an experienced senior management team
upon the retention attention from other business concerns. in place to ensure that the day--to--day activities
of key personnel of the Group's business are managed effectively.
to ensure that
there is no disruption
to the Group's
operations.
------------------------- -------------------------------------------------------------- ------------------------------------------------------------
Related party transactions
At 31 December 2016, the Group had the following liabilities
owing to EPIC Investments LLP "EPIC"), which holds 24.30% (2015:
48.89%) of the Group's issued share capital:
-- Series A notes 2017 - Eurobond - GBPnil (2015:
GBP6,935,726)
-- Loan facility 2016 - GBPnil (2015: GBP3,201,729)
During the year, interest and finance charges accrued on the
above liabilities of GBP544,924 (2015: GBP723,787). Interest and
capital payments of GBP10,682,379 (2015: GBP1,958,109) were made in
the year.
During the year, the Group incurred monitoring and rechargeable
expenses of GBP75,000 (2015: GBP100,000) from EPIC Private Equity
LLP, adviser to EPIC Investments LLP.
At 31 December 2016, the Company had the following liabilities
owing to John Hornby, CEO, who holds 20.77% (2015: 23.07%) of the
Company's issued share capital:
-- Shareholder loans of GBP246,832 (2015: GBP2,498,298)
During the year, interest accrued on the above liabilities of
GBP179,445 (2015: GBP341,594). Interest and capital payments of
GBP2,431,361 (2015: GBP1,992,532) were made in the year.
Shareholder loans due to John Hornby, as detailed above, include
GBPnil (2015: GBP1,492,311) due to Mrs P Hornby, John Hornby's
wife. Mrs P Hornby holds 1.43% of the Company's issued share
capital.
Transactions with key personnel
The compensation of key management personnel, including the
Executive Directors, is included in note 4 of the Notes to the
Consolidated Financial Statements (on pages 80-81 of the Annual
Report).
Statement of Directors' Responsibilities
The Annual Report contains the following statements regarding
responsibility for the financial statements in compliance with DTR
4.1.12.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in the UK governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
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
-- The Strategic Report includes a fair review of the
development and performance of the business and the position of the
Company 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 Financial Statements, 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
David Main, Chief Financial Officer
3 April 2017
For further information, please contact
Luceco plc via MHP Communications
John Hornby, Chief Executive Officer 020 3128 8100
David Main, Chief Financial Officer
MHP Communications
Tim Rowntree
James White
Ollie Hoare
Rossina Garcia 020 3128 8100
Numis Securities
Stuart Skinner
Oliver Hardy
Toby Adcock 020 7260 1000
Notes to the Editors
About Luceco plc
Luceco is a rapidly growing manufacturer and distributor of high
quality and innovative LED lighting products and wiring accessories
for a global customer base. The Group supplies a blue chip and
diversified customer base of trade distributors, retailers,
wholesalers and project developers with a wide range of products
which broadly fall into the market recognised brands of Luceco (LED
Lighting), British General (Wiring Accessories), Masterplug
(Portable Power) and Ross (AV Accessories).
Luceco operates a fully integrated operating model which
includes wholly-owned manufacturing and product development
facilities in the UK and China that enables the Group to maintain
strong control over its cost base and the quality of its products
while allowing Luceco to bring products to market quickly and at
low cost.
The Group is well positioned for future growth with recent
investment made in the expansion of its Chinese manufacturing
facility and sales network, both in the UK and internationally, to
support the Group's existing and new product ranges.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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