TIDMLUCE
RNS Number : 4797M
Luceco PLC
30 April 2018
30 April 2018
Luceco plc
("Luceco" or the "Group" or the "Company")
2017 FULL YEAR RESULTS
Luceco plc, a manufacturer and distributor of high quality and
innovative LED lighting products, wiring accessories and portable
power products, today announces its audited results for the year
ended 31 December 2017 ('FY 2017').
Financial highlights
Statutory measures
-- Group revenue increased by 25.4% to GBP167.6m (2016:
GBP133.7m). 21.7% on a constant currency(1) basis
-- Gross margin 28.9% (2016(2) : 30.3%)
-- Operating profit increased by 19.3% to GBP14.2m (2016(2) : GBP11.9m)
-- Profit for the year increased by 51.5% to GBP10.0m (2016(2) : GBP6.6m)
-- Cash flow from operations increased from GBP2.6m to GBP17.2m
-- Basic and fully diluted EPS increased by 34.8% to 6.2 pence
per share (2016(2) : 4.6 pence per share)
-- Net debt GBP36.7m (2016: GBP29.5m)
Alternative performance measures(3)
-- Adjusted(3) operating profit of GBP14.7m (2016(2) : GBP14.5m)
-- Adjusted(3) profit for the year increased by 14.1% to GBP10.5m (2016(2) : GBP9.2m)
-- Adjusted(3) basic and fully diluted EPS 6.5 pence per share (2016(2) : 6.4 pence per share)
Notes:
1. 2017 translated at 2016 average exchange rates. These were
1.36 for GBP: US Dollar and 8.98 for GBP: RMB.
2. Prior year financials restated to correct errors found in
previously reported inventory and inter-company balances - see note
1a below
3. The definitions of the adjustments made to the statutory
figures can be found in note 1 in the Notes to the Consolidated
Financial Statements
Operational and strategic highlights
-- Broad-based revenue growth across all product categories
-- Continuing investment in higher margin sales opportunities in the UK
-- Further investment in International sales presence
-- Expansion of product ranges and a strong pipeline of new product launches
-- Acquisition of Kingfisher Lighting enhances the Group's product offer and strategic position
Commenting on the results, Chief Executive Officer, John Hornby
said:
"The last few months have clearly been a particularly
challenging period for the Group but we have learned a number of
lessons from this experience and are fully committed to building a
stronger platform for future sustainable growth. We are confident
in our long-term strategy to expand the Group's product ranges and
geographic reach and believe that our profits will return to
attractive levels in due course.
The strong revenue growth achieved in 2017 did not generate the
profit growth that we had planned. Gross margins had been adversely
impacted by movements in currency and commodity prices. We have put
in place mitigating actions, which we expect will have a beneficial
effect on gross margins in 2018. Our competitive position remains
strong and we are confident that the potential margins achievable
in our business have not changed. Continued growth in our business
should provide resilience to the weak UK consumer environment."
Commenting on the results, Chairman, Giles Brand said:
"I am disappointed by the Group's performance in 2017. It has
not, however, shaken our belief in the Group's prospects. We
command enviable positions in key markets, underpinned by
long-standing customer relationships. We are successfully executing
our growth and diversification strategy, our product pipeline is
healthier than ever and we have an experienced management team and
a committed workforce.
I would like to thank our shareholders for their patience and
continued support whilst we take the necessary steps to build a
better future for Luceco. The Group's balance sheet remains strong
and the Board continues to assess opportunities to invest in the
future growth of the business."
Further enquiries:
Luceco plc via MHP Communications
John Hornby, Chief Executive 020 3128 8100
Officer
Matt Webb, Chief Financial
Officer
MHP Communications
Tim Rowntree
James White
Ollie Hoare 020 3128 8100
Numis Securities
Stuart Skinner
Oliver Hardy
Toby Adcock 020 7260 1000
Business summary
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 trade distributors, retailers, wholesalers
and project developers with a wide range of products which broadly
fall into the following market recognised brands:
-- Luceco and Kingfisher Lighting: energy efficient LED lighting
products and associated accessories;
-- British General (BG): wiring accessories (including switches,
sockets), circuit protection and cable management products;
-- Masterplug: cable reels, extension leads, surge protection,
timers and adaptor products; and
-- Ross: television wall mounts, audio visual accessories and other items.
The Luceco and Kingfisher LED lighting brands continue to
benefit from the disruptive shift away from mature lighting
technologies because of the material advancement in LED technology
in recent years. The brand has continued to successfully leverage
the Group's existing customer base and low-cost Chinese
manufacturing facility. Consequently, it remains well positioned to
build on its impressive organic growth trajectory to date.
In the electrical wiring accessories market, Luceco's BG and
Masterplug brands have continued to reinforce their market leading
positions through further new product development initiatives,
expanding into new product adjacencies and gaining market
share.
Chairman's Statement
2017 has been a challenging year for Luceco. We delivered strong
revenue growth and made good progress in executing the Group's
strategy. Despite this progress, we identified in the second half
of 2017 that our inventory valuation, which was being incorrectly
calculated, was masking underlying deterioration in our gross
margins caused by currency movements and commodity price increases.
A thorough review of the balance sheet in response to this event
has revealed errors in the Group's historic financial information,
necessitating a restatement. A more detailed explanation of these
matters is included in the Financial Review. Against this corrected
baseline, healthy revenue growth overcame margin erosion to leave
adjusted operating profits broadly in line with the prior year.
It is pleasing to report that revenues grew by 25.4% driven by
excellent progress on a broad front: LED sales grew by 41.1%, UK
revenue grew by 21.1% and International sales grew by 51.1%. Strong
top line growth reflects earlier steps taken by the management team
to diversify the business away from a challenging UK retail
environment and toward higher margin opportunities in the UK and
overseas. We are undoubtedly better placed strategically because of
these actions.
During the year we also completed our first acquisition and I am
delighted to welcome Kingfisher Lighting to the Group. Kingfisher
Lighting is led by a first-class management team and their hard-won
reputation in the UK project lighting business will be a real asset
to us in the future. I expect expansion and diversification into
attractive new markets to continue and therefore I believe the
Group's long-term growth prospects remain as attractive as
ever.
We have accelerated planned investment in the Group's finance
function. Following the Departure of David Main in February 2018,
Matt Webb was appointed as Chief Financial Officer to strengthen
the Board. Steps have already been taken to address the issues
highlighted by the accounting restatements and I am confident we
will see further rapid improvements under Matt's leadership.
Your Board is sorry that our performance has not met the high
standards that we have set ourselves and I would like to thank our
shareholders for their patience whilst we take the necessary steps
now to build a better future for Luceco.
Outlook
The Board expects revenue to grow in 2018, despite a tough UK
consumer market and adverse currency rates, as a result of the
Group's diversification strategy. We have taken the necessary steps
to improve our profit margins and the actions taken will deliver
benefits progressively in 2018 and in full in 2019.
We command enviable positions in key markets underpinned by
long-standing customer relationships. We are successfully executing
our growth and diversification strategy. Our product pipeline is
healthier than ever. We have modest net financial debt, a strong
and longstanding banking relationship and a supportive lead
shareholder. Lastly, and not least, we have an experienced
management team and a committed workforce.
Dividend
The Board has taken the difficult decision not to propose a
final dividend for the year ended 31 December 2017. The Group had
paid an interim dividend during the year of 0.8 pence per share.
The Board remains confident in the Group's strategy and will
therefore revisit the dividend policy at the half year 2018.
People
Our team is our greatest asset. Nurturing the excellence of our
colleagues is key to our success and we continue to invest in their
learning and development. The delivery of our revenue growth
despite tough trading conditions is a testament to the hard work of
the entire Luceco team. I am extremely grateful for their
enthusiasm and dedication. My thanks to them and to our
shareholders for their ongoing support.
GILES BRAND
Chairman
30 April 2018
Executive Review
Chief Executive Officer's Review
Overview
Group revenue increased by 25.4% to GBP167.6m (2016: GBP133.7m)
in the year and all product categories showed growth. International
sales have increased by 51.1% to GBP28.7m (2016: GBP19.0m) whilst
UK sales have increased by 21.1% to GBP138.9m (2016: GBP114.7m).
Ongoing investment in expanded commercial teams, product range
improvement and increased manufacturing capacity maintained the
high growth rate we experienced for the last several years.
Gross margin in 2017 reduced from last year's 30.3% to 28.9%.
The movement was principally due to higher input costs. Raw
materials such as copper increased in cost significantly in the
second half of 2017 at the same time as the Chinese Renminbi (RMB)
appreciated and the US Dollar weakened. These cost pressures will
have been experienced by all market participants and hence does not
affect our relative competitive position. We are therefore
confident of being able to recoup our margins over time.
The decline in our profit margins due to higher input costs and
currency movements was masked by accounting errors which only came
to light in the second half of the year. This did not allow us
adequate time to take mitigating actions via increased market
pricing and other activities which would have reduced the impact on
our 2017 profit. However, we still managed to deliver profit growth
compared to prior year thanks to healthy revenue growth. Reported
overheads increased by 19.6% to GBP34.2m (2016: GBP28.6m) primarily
driven by investment in expanded commercial teams and distribution
operations.
I am pleased to welcome Matt Webb as the Group's new Chief
Financial Officer. Matt is an excellent new addition to the
Board.
The last few months have clearly been a particularly challenging
period for the Group but we have learned a number of lessons from
this experience and are fully committed to building a stronger
platform for future sustainable growth.
Strategy
Our long-term strategy remains unchanged from that set out in
our 2016 Annual Report:
-- Expansion of product range to deliver growth in revenue and profits
-- Increase in market share in LED products
-- Increase in UK market share of established core brands BG and Masterplug
-- Develop international sales for all product offerings
-- Targeted acquisitions
-- Improve conversion of profit to cash
LED Lighting (Luceco and Kingfisher Lighting)
Our LED Lighting revenues grew to GBP47.4m (2016: GBP33.6m)
reflecting the ongoing expansion of the group's LED product ranges
and investment in commercial teams. In September 2017 we announced
the acquisition of Kingfisher Lighting a long-established supplier
of outdoor lighting solutions with commercial applications, which
accounted for GBP4.1m of this revenue figure. Organic growth was
30.9%. Revenue at the UK Technical Lighting Projects division grew
especially strongly as the Group focused more on technical lighting
solutions for commercial environments and less on more commoditised
segments such as residential lamps.
We were pleased with Kingfisher Lighting's performance post
acquisition in 2017 and believe the business has a strong future as
part of the Group. Synergies are available to the Group from cross
selling Kingfisher Lighting products with the Luceco sales team and
vice-versa and from bringing some current third-party production
in-house.
We believe that the higher technical requirement in commercial
applications, both within the product itself, and in the selling
process increases the barriers to entry and this together with the
highly fragmented nature of the end market results in higher
pricing power for successful market participants. It is fundamental
to the Group's long-term strategy to diversify into such higher
quality market segments serving commercial applications.
Wiring Accessories (British General)
Revenues grew to GBP72.7m (2016: GBP64.0m) due to range
expansion, UK market growth and market share gains. We continued to
add value to the category with an expanded range of wall sockets
with built in USB charging capabilities, some with the added
function of a Wifi signal repeater. We have a strong pipeline of
product launches including smart Internet of Things (IoT) enabled
accessories and new ranges suitable for European markets which we
believe will enable us to continue growing this category (until now
our Wiring Accessories have only been suitable for British Standard
markets).
Portable Power (Masterplug)
Revenues grew to GBP41.6m (2016: GBP31.1m) due to several
significant customer wins in the UK and continued growth in
International territories. However, the rapid increase in cost of
copper raw material in the second half of 2017 had a material
impact on the margins of this product category as there is a time
lag in passing higher input costs into the market.
Our KPI's reflect the key strategic highlights during the year
coupled with our strategy going forwards, which can be seen in the
Our Strategy section in the full Annual Report and Accounts. We
will continue to review and update our KPIs to reflect the needs of
the Company and the dynamic markets in which we operate as the
Group continues to grow.
Outlook
2018 will be a year of improvement for our business. Although
margins at the beginning of the new financial year were at a lower
level than previously anticipated, our competitive position remains
strong. We are therefore confident of stronger margins in the
second half of 2018 once we have completed the adjustment of our
selling prices.
Strong growth in many parts of our business and the annualising
of Kingfisher Lighting revenues should be sufficient to offset a
weak UK consumer environment (UK consumer facing retail represents
about 25% of Group total) so we are forecasting single digit
revenue growth compared to 25% year-on-year growth in 2017. This
slower growth will enable better control of working capital and
will result in higher cash conversion than in recent years where we
delivered high growth.
We are confident in our strategy to expand the Group's product
ranges and geographic reach and believe that our profits will
benefit from this in due course.
Financial review
Overview
The commentary in the financial review uses alternative
performance measures, and are identified by the prefix "adjusted",
definitions of the measures used are included in note 1.
Revenue by geography 2017 2016 Growth
GBPm GBPm
----------------------- ------ ----- -------
UK 138.9 114.7 21.1%
Europe 9.6 5.9 62.7%
Middle East 6.8 4.9 38.8%
Rest of World:
Americas 6.4 2.1 205.0%
Asia Pacific 3.9 4.2 (7.1%)
Africa 2.0 1.9 5.3%
167.6 133.7 25.4%
----------------------- ------ ----- -------
Revenue has grown by 25.4% (constant currency 21.7%), with
double digit growth across all operating geographies except Asia
Pacific and Africa where operations are still being developed.
UK revenues have grown strongly, increasing 21.1% during the
year to GBP138.9m (2016: GBP114.7m). This growth has been driven by
significant new business wins, successful new product launches in
both the Luceco and BG brand and the continuing expansion of the
product range into existing customers.
International revenues have increased 51.1% to GBP28.7m (2016:
GBP19.0m). New offices, which began trading in Hong Kong and Spain
in 2016, have gained momentum during the year.
Reported gross margin for 2017 was 28.9% compared to 30.3% in
2016, a dilution of 140 bps. The decline has been largely due to
increased commodity costs and the adverse currency impact arising
from the strengthening of the RMB versus the US Dollar, alongside
the ongoing weakness in Sterling.
Adjusted overheads have increased by 29.6% to GBP33.7m (2016:
GBP26.0m) and reflect the growth in sales and marketing costs in
both the UK and overseas.
Adjusted operating profit was GBP14.7m (2016: GBP14.5m), giving
an operating margin of 8.8% (2016: 10.8%). Operating profit on a
constant currency basis is GBP15.5m generating a margin of 9.5%,
highlighting the foreign currency headwind experienced by the Group
in the year.
Impact of foreign exchange movements
A summary of the Consolidated Income Statement on a constant
currency basis is included in the table below. Current year
balances have been translated at last year's average exchange rates
and demonstrate the impact of the volatility in exchange rates
during 2017.
2017 Constant
reported(2) currency(3) Variance
Alternative Performance Measures(1) GBPm GBPm GBPm
------------------------------------ ----------- ----------- --------
Revenue 167.6 162.7 4.9
Cost of sales (119.2) (115.0) (4.2)
Gross profit 48.4 47.7 0.7
Gross margin % 28.9% 29.3% (40 bps)
Adjusted(1) operating costs (33.7) (32.2) (1.5)
Adjusted(1) operating profit 14.7 15.5 (0.8)
------------------------------------ ----------- ----------- --------
1. The definitions of the alternative performance measures can
be found in note 1 in the Notes to the Consolidated Financial
Statements
2. 2017 translated at average exchange rates for the period.
These were 1.28 for GBP: US Dollar and 8.74 for GBP: RMB.
3. 2017 translated at 2016 average exchange rates. These were
1.36 for GBP: US Dollar and 8.98 for GBP: RMB
Sterling was on average weaker against both US Dollar and RMB in
2017 compared to 2016. The average rate for the US Dollar against
Sterling decreased from 1.36 in 2016 to 1.28 in 2017. Whilst this
increased the Sterling value of the Group's US Dollar-denominated
revenue, it also increased the Group's RMB-denominated costs by a
greater amount, leaving adjusted operating profit GBP0.8m lower due
to these currency movements. The currency movements had the
greatest impact on the business in the second half of 2017. The
Group has responded to this foreign exchange loss by expanding its
currency hedging programme for 2018 to minimise currency risks in
the future.
Prior year restatement
Following the identification of the issues announced in December
2017, the Group conducted a thorough review of its balance sheet
and financial processes, completed by the Group's new Chief
Financial Officer. The review identified two issues:
1. Inventory was incorrectly valued. Specifically, the amount of
overhead absorbed into inventory in accordance with the Group's
accounting policy was incorrectly calculated.
2. Inter-company balances were incorrectly reconciled,
principally between the Group's manufacturing facility in China and
its UK business.
Both issues have now been resolved.
The review revealed that both errors existed in the Group's
previously published financial statements. Comparative financial
information in this report has therefore been restated in
accordance with IAS 8 to correct these errors. Further details on
the prior year adjustments are given in note 1a.
The error in the inventory valuation had a further consequence
upon the Group's performance in 2017 in that it masked the impact
that currency and commodity prices were having on gross margins.
Although the rapid increase in commodity costs and the adverse
movements in currency exchange rates were identified at the time,
their impact on our profits were offset. Steps have been taken to
offset these cost pressures and these will deliver progressively
during 2018.
Both errors arose from a manual and complex process environment
which has been impacted by the Group's recent rapid growth.
Processes have now been changed in response to these events. We
have improved our inventory valuation methodology and strengthened
the process for agreement of inter-company balances. We have also
taken steps to mitigate the impact of future currency exchange rate
movements. In short, we will progressively build a high-class
finance function commensurate with the Group's long-term
potential.
Operating segment review
LED Lighting (Luceco and Kingfisher Lighting)
2017 2016(1) Growth
%
----------------------------- -------- -------- ---------
Revenue GBP47.4m GBP33.6m 41.1
Adjusted(2) operating profit GBP2.3m GBP2.5m (8.0)
Adjusted(2) operating margin 4.9% 7.4% (250) bps
----------------------------- -------- -------- ---------
The strong growth in LED Lighting follows the expansion of the
product range, the decision to move more production in-house,
thereby aiding competitive pricing and increasing investment in
project sales teams focused on LED retrofits. LED Lighting also
includes financials for the newly acquired business Kingfisher
Lighting, which specialises in exterior LED lighting products.
Kingfisher Lighting contributed revenue GBP4.1m and adjusted
operating profit of GBP0.5m in the above financials.
Adjusted operating profit of LED Lighting has declined by 8%
year-on-year and the adjusted operating margin has decreased by 250
basis points. These movements have been driven by foreign exchange
movements and continued investment in overheads, most notably
expansion of the product development and LED sales teams.
Wiring Accessories (British General)
2017 2016(1) Growth
%
----------------------------- -------- -------- --------
Revenue GBP72.7m GBP64.0m 13.6
Adjusted(2) operating profit GBP10.3m GBP9.4m 9.6
Adjusted(2) operating margin 14.2% 14.7% (50) bps
----------------------------- -------- -------- --------
Wiring Accessories saw good growth in the period due to general
market share gains and on-going product development, for example
USB charging wall sockets and circuit protection consumer units, as
well as range expansion in decorative finishes and a price increase
in the second half of the year following currency and inflationary
pressures.
Portable Power (Masterplug)
2017 2016(1) Growth
%
----------------------------- -------- -------- ---------
Revenue GBP41.6m GBP31.1m 33.8
Adjusted(2) operating profit GBP2.0m GBP2.2m (9.1)
Adjusted(2) operating margin 4.8% 7.1% (230) bps
----------------------------- -------- -------- ---------
The increase in Portable Power revenue is as a result of the
annualisation of the new business in the UK, Europe and USA
generated in the second half of 2016. The Group has invested in
expanding the cable reel product range to cover many international
territories and has gained new international distribution partners
for these new products.
The adjusted operating profit has decreased from GBP2.2m to
GBP2.0m, a reduction in adjusted operating margin of 230 basis
points, mainly due to an increase in the cost of raw materials,
most notably copper.
Ross and other
2017 2016(1) Growth
%
----------------------------- ------- ------- ---------
Revenue GBP5.9m GBP5.0m 18.0
Adjusted(2) operating profit GBP0.1m GBP0.4m (75.0)
Adjusted(2) operating margin 1.7% 8.0% (630) bps
----------------------------- ------- ------- ---------
Revenue mainly comprises TV brackets under the Group's Ross
brand, which have increased as the Group re--engineered the product
range to reduce product costs, thus enabling the Group to win some
significant new retail contracts.
Note
1. The reported comparatives have been restated to reflect a
prior year adjustment, see note 1a in the Notes to the Consolidated
Financial Statements
2. The definitions of the adjustments made to the statutory
figures can be found in note 1 in the Notes to the Consolidated
Financial Statements
Interest costs
Net finance expense at GBP1.9m (2016: GBP2.8m) is considerably
lower than the prior year reflecting the favourable full year
impact of the Group's refinancing following the IPO in October
2016.
Net debt increased to GBP36.7m (2016: GBP29.5m) largely as a
result of the acquisition of Kingfisher Lighting for consideration
of GBP9.7m.
Taxation
The amount of taxation payable for the year was GBP2.3m (2016:
GBP2.5m) representing an effective tax rate of 18.7% (2016:
27.5%).
Balance sheet
Non-current assets
Non-current assets increased during the year by GBP13.5m to
GBP47.2m (2016: GBP33.7m):
-- Intangible assets increased by GBP10.8m: GBP8.9m arising on
the Kingfisher Lighting acquisition, consisting of; Customer
Relationships GBP4.1m, Trade name GBP1.2m and Goodwill GBP3.6m.
-- Property, Plant and Equipment net additions were GBP6.9m
(2016: GBP6.0m) which includes investment to support improvements
and expansion at the Group's manufacturing facility in China and
reflects the fair value of assets acquired from Kingfisher
Lighting.
Working capital
The Group's working capital is managed by monitoring inventory
levels, trade debtors and total creditors.
-- Inventory was GBP44.2m (2016 restated: GBP35.4m), an increase
of GBP8.8m from last year. Stock days have reduced to 135 days
(2016 restated: 138 days). The Group continues to support future
growth of geographical territories organically as well as holding
sufficient inventories to fulfil the 2018 order book.
-- Trade receivables were GBP33.4m (2016: GBP26.5m) an increase
of 26.0% which is slightly ahead of revenue growth and debtor days
were broadly the same as the prior year at 63 (2016: 61) despite
the continued overseas expansion and higher proportion of
international customers.
-- Trade and other payables were GBP49.6m (2016: GBP35.4m).
Trade payables increased by 34.0% and movement is reflected in the
increase in creditor days which rose to 111 days (2016: 106). The
Group continues to enjoy good relationships with its suppliers who
remain supportive of its wider growth plans.
Net working capital at GBP28.0m (2016 restated: GBP26.5m) was
broadly comparable to the prior year. Working capital as a
percentage of revenue for the year was 16.7% (2016: 19.3%). The
acquisition of Kingfisher Lighting contributed GBP1.2m of working
capital.
Cash flow
Adjusted Reported Adjusted Reported
2017 Adjustments(1) 2017 2016 Adjustments(1) 2016
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------- --------- -------------- -------- --------- --------------- --------
EBITDA(2) 19.1 (0.5) 18.6 17.7 (2.6) 15.1
------------------------------------- --------- -------------- -------- --------- --------------- --------
Operating cash flow 20.5 (0.2) 20.3 6.4 (2.5) 3.9
Tax paid (3.1) (3.1) (1.3) (1.3)
Financing inflows 5.9 5.9 4.2 4.2
Dividends paid (1.8) (1.8) - - -
Capital expenditure net of disposals (10.0) (10.0) (7.6) (7.6)
Acquisition of subsidiary (9.7) (9.7) - - -
Net cash in/(out)flow 1.8 (0.2) 1.6 1.7 (2.5) (0.8)
Cash conversion(3) 107.3% 109.1% 36.2% 25.8%
------------------------------------- --------- -------------- -------- --------- --------------- --------
1. The definitions of the adjustments made to the statutory
figures can be found in note 1 in the Notes to the Consolidated
Financial Statements
2. EBITDA is the consolidated earnings before interest, tax, depreciation and amortisation
3. Cash conversion is defined as operating cash flow divided by EBITDA
Reduced working capital relative to revenue yield much improved
operating cash conversion of 107.3% (2016 restated: 36.2%)
Dividend
The Board has taken the difficult decision not to propose a
final dividend for the year ended 31 December 2017. The Group had
paid an interim dividend during the year of 0.8 pence per share.
The Board remains confident in the Group's strategy and will
therefore revisit the dividend policy at the half year 2018.
Funding and covenants
The Group has committed borrowing facilities in place in the UK
comprising a GBP20m revolving credit facility and a GBP30m UK
invoice financing facility.
Net debt at 31 December 2017 stood at GBP36.7m, (2016:
GBP29.5m), representing 1.92x adjusted EBITDA.
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 has applied the going concern
principle in preparing the Annual Report and Financial
Statements.
In early 2018 the Group successfully negotiated an extension in
the maturity of its RCF to 30 June 2019 and the addition of a GBP3m
overdraft from its relationship bank. It is also in the process of
extending the invoicing financing facility provided by HSBC to
Kingfisher Lighting and customers in Hong Kong. The Group remains
and expects to remain in full compliance with its banking
covenants. It therefore expects to continue to have adequate
funding liquidity to support its growth goals. The Group's
Viability Statement is found within the 2017 Annual Report.
Principal risks and uncertainties
The Group is subject to risk factors both internal and external
to its business and has a well-established set of risk management
procedures. The following risks and uncertainties are those that
the Directors believe could have the most significant impact on the
Group's business:
Disruption to operations
--------------------------------------------------------- ----------------------------------------------------------- ----------------------------------------------------------
Risk Impact Mitigation
--------------------------------------------------------- ----------------------------------------------------------- ----------------------------------------------------------
* The Group's key manufacturing operation is based in
China. Any change to China's current political
situation could impact the Group's ability to
manufacture its products. The Group is reliant on t
he
UK and Chinese sites remaining fully operational at
all times.
----------------------------------------------------------- ----------------------------------------------------------
-- The Group is reliant
on its IT systems to
ensure its operations
function efficiently.
Any loss of IT service
or compromise of IT security
(through a cyber-attack)
could adversely impact
the business.
* The Board and senior management team are in regular
liaison with their Chinese counterparts and aware of
any changing dynamics in the country
* The Group has an IT strategy and a disaster recovery
* The Group's Chinese operation and supply chain could plan in place to protect its operations
be adversely affected if there is any disruption to
legal, political, economic or social conditions in
China * The Chinese factory comprises separate buildings,
reducing disruption
* If the key operational sites went offline for any
reason or period of time, it would have a material * Appropriate precautions are taken in all factories
adverse effect upon the Group's ability to and warehouses to safeguard against theft and fire
manufacture and bring its products to market,
severely impacting its business, financial position
and future prospects * IT security systems in place, and tested regularly,
to protect commercial and sensitive data
* Loss of sensitive data as a result of an IT security
breach could negatively impact the Group's operations * IT technological and security developments are
and reputation monitored regularly
--------------------------------------------------------- ----------------------------------------------------------- ----------------------------------------------------------
Input costs
---------------------------------------------------------- ---------------------------------------------------------- -----------------------------------------------------------
Risk Impact Mitigation
---------------------------------------------------------- ---------------------------------------------------------- -----------------------------------------------------------
* Raw materials represent a significant cost to the * Copper prices are monitored regularly. Where
Group. The Group faces risks from copper price fluctuations are severe, the exposure is determined
volatility as well as other key raw materials and is and customer and supplier pricing is considered and
reliant on third parties to supply some of its adjusted accordingly
products and components.
* Price fluctuations are passed on to customers as soon
as practicable
* The Group has long--term relationships, and some
exclusive arrangements, with its suppliers who
reliably fulfil orders to the required standard
* Quality control teams are in place at all key
operational locations to ensure quality of supply
* Additional management and reporting of copper prices
to the Senior management team to help track the input
costs
----------------------------------------------------------
* Suppliers may increase product prices as a result of
copper or other commodity price fluctuations,
reducing profit margins
* Profitability will be negatively impacted if the
Group is unable to pass rapid price fluctuations on
to its customers or there is a time lag in achieving
a price increase
* Suppliers may not fulfil order requirements or
products may be of poor quality, negatively impactin
g
the Group's reputation, financial position and
contractual commitments
---------------------------------------------------------- ---------------------------------------------------------- -----------------------------------------------------------
Loss of market share
----------------------------------------------------------- ----------------------------------------------------------- ----------------------------------------------------------
Risk Impact Mitigation
----------------------------------------------------------- ----------------------------------------------------------- ----------------------------------------------------------
* The Group could lose market share through the loss of * Any reduction in the Group's revenue or market share * The Group invests heavily in R&D to remain at the
one or more of its major customers with whom it does would have a material adverse effect on the Group's forefront of capturing and delivering changing
not have long--term contracts, or if it is unable to future prospects customer requirements and market trends
maintain its innovative edge, particularly in the
competitive LED lighting market where barriers to
entry are low. * LED technology is constantly changing and customer * The Group registers its designs with the design and
demand rapidly evolving, giving risk of product patent office in the country of the market the
obsolescence product is sold in
* Any defence or claim against intellectual property * The Group has long-standing relationships with many
("IP") rights could be costly to instigate and pursue of its customers and works closely with them to meet
their requirements
* Infringement of third--party IP would limit the
Group's product offering and ability to compete * Dedicated customer support teams in all key trading
locations maintaining excellent customer service
* Customers could stop trading with the Group at short
notice as many agreements are on a rolling annual
basis
----------------------------------------------------------- ----------------------------------------------------------- ----------------------------------------------------------
Concentration of customers
----------------------------------------------------------- ----------------------------------------------------------- -----------------------------------------------------------
Risk Impact Mitigation
----------------------------------------------------------- ----------------------------------------------------------- -----------------------------------------------------------
* Approximately 83% of the Group's revenue is generated * Mitigation through innovation and product development
from the UK and profitability is directly influenced as diversification of products enables the Group to
by the UK economic climate. grow by exploiting market gaps protecting it from any
market downturn
* The Group has a large number of customers but there
is significant concentration within the customer * The economies and markets of all the Group's
base. This concentration presents a risk should one operations are reviewed regularly by the Board with
or more of the customers cease purchasing from the mitigating action taken
Group. Customer agreements are typically on a rolling
annual basis.
* Continued international expansion will lessen
reliance on any particular economy or customer
* The Group has long-standing relationships with its
customers providing a strong competitive barrier
* The Group's ability to rapidly embrace new consumer
trends and its distribution flexibility make it a
valued supplier
* The Group sets credit terms that are commensurate
with customer's ability to pay and monitors payment
terms closely.
* The Group is seeking to reduce its reliance on its
invoice finance for future funding.
-----------------------------------------------------------
* Any economic downturn in the UK economy could
adversely impact the Group's financial position if
demand for its products reduces and there are
limitations on its ability to increase or maintain
its prices
* A significant proportion of the Group's trade is with
a small number of customers that are not committed to
purchasing the Group's products on a long-term basis.
Customers could cease trading or cease to purchase
from the Group at relatively short notice negatively
impacting trading and working capital as there would
be a lag in adjusting manufacturing volumes
* The Group's funding arrangements include an invoice
finance facility applicable to UK customers only. Any
downturn in UK sales may reduce funding liquidity.
----------------------------------------------------------- ----------------------------------------------------------- -----------------------------------------------------------
Financial impact of international
operations
----------------------------------------------------------- ----------------------------------------------------------- ---------------------------------------------------------
Risk Impact Mitigation
----------------------------------------------------------- ----------------------------------------------------------- ---------------------------------------------------------
* With its Chinese operation and FOB sales, the Group * Any weakening of Sterling relative to the US Dollar * Currency fluctuations mitigated by hedging policy;
is exposed to exchange rate fluctuations of the RMB and RMB, could adversely affect profit pricing action is undertaken when appropriate
and US Dollar as a significant proportion of the
Group's revenue is invoiced in US Dollars and the
majority of costs are paid in RMB. * There will be a time lag from the change in exchange * Continued international diversification will dilute
rate to any recovery through pricing with a potential the impact of currency fluctuations
negative impact on profit
* The UK's 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 * The UK referendum decision and negotiations may cause
longer-term risks of this decision are not yet clear. further currency volatility, potentially adversely
The Board continues to monitor the position closely. impacting profits
----------------------------------------------------------- ----------------------------------------------------------- ---------------------------------------------------------
Regulatory non-compliance
--------------------------------------------------------------- ----------------------------------------------------------- -----------------------------------------------------------
Risk Impact Mitigation
--------------------------------------------------------------- ----------------------------------------------------------- -----------------------------------------------------------
* The risk of regulatory non-compliance is increasing * The Board monitors the changing landscape of laws and
as the Group is expanding rapidly into new regulations in the jurisdictions in which it operates
territories, each with its own laws and regulations.
Keeping up to date with changing laws and regulations
is also a risk that the Group faces with its current * The Board seeks appropriate advice before setting up
operations. operations in new territories and setting internal
transfer prices
* The Group has long--standing relationships with its
suppliers and the Executive Directors frequently
visit their operations
--
-----------------------------------------------------------
* Changes in the laws and regulations in the countries
the Group operates in could result in incurring costs
and adversely impact its reputation should it be
found to be non--compliant with any aspect
* The Group's third-party supply chain in China may not
meet the Group's ethical resourcing standards,
compromising its reputation
* The Group's transfer pricing arrangements may be
potentially challenged by local tax authorities,
which could lead to increasing tax liabilities
particularly in respect of product movement between
the Group's Chinese factory and its sales operations.
--------------------------------------------------------------- ----------------------------------------------------------- -----------------------------------------------------------
Pursuit of the acquisition
strategy
-------------------------------------------------------- ----------------------------------------------------------- ---------------------------------------------------------
Risk Impact Mitigation
-------------------------------------------------------- ----------------------------------------------------------- ---------------------------------------------------------
* Costs are tightly controlled and cash flow is
monitored daily
* The Board closely monitors the strategy and the
resources required to deliver it
* The Group has an experienced senior management team
(with the appointment of a new CFO Matt Webb in
February 2018) in place to ensure that the
day--to--day activities of the Group's business are
managed effectively
-------------------------------------------------------- -----------------------------------------------------------
* Expenses may be incurred, whether or not an
acquisition is completed, reducing profitability
* The acquisition strategy may incur substantial * The cost and integration of an acquisition may reduce
expense and divert management attention from the profit and increase indebtedness in the short-term
day-to-day business. The ability to pursue such a
strategy is dependent upon the retention of key
personnel to ensure that there is no disruption to * Time required in pursuit of an acquisition may divert
the Group's operations attention from other business concerns
-------------------------------------------------------- ----------------------------------------------------------- ---------------------------------------------------------
Inadequate integration
or leverage of acquired
businesses
---------------------------------------------------------- ----------------------------------------------------------- ---------------------------------------------------------
Risk Impact Mitigation
---------------------------------------------------------- ----------------------------------------------------------- ---------------------------------------------------------
* Detailed integration plan and dedicated integration
teams in place prior to acquisition
* Regular communication on progress highlighting
variations and remedial action taken
* Integrate our ERP system to enhance our ability to
integrate acquisitions
---------------------------------------------------------- -----------------------------------------------------------
* Expenses may be incurred, reducing profitability
* The cost and integration of an acquisition may reduce
profit and increase indebtedness in the short-term
* Misjudging key elements of an acquisition or failing
to integrate it in an efficient and timely manner * Time required in pursuit of an acquisition may divert
would disrupt existing operation attention from other business concerns
---------------------------------------------------------- ----------------------------------------------------------- ---------------------------------------------------------
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.
Consolidated Income Statement
for the year ended 31 December 2017
Adjusted Adjustments(2) Reported Adjusted Adjustments(2) Reported(1)
--------------------------- ---- --------- --------------- --------- --------- --------------- ------------
2017 2017 2016 2016
--------------------------- ---- --------- --------------- --------- --------- --------------- ------------
Note GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------- ---- --------- --------------- --------- --------- --------------- ------------
Revenue 2 167.6 - 167.6 133.7 - 133.7
Cost of sales (119.2) - (119.2) (93.2) - (93.2)
--------------------------- ---- --------- --------------- --------- --------- --------------- ------------
Gross profit 48.4 - 48.4 40.5 - 40.5
--------------------------- ---- --------- --------------- --------- --------- --------------- ------------
Distribution expenses (12.1) (12.1) (11.0) - (11.0)
Administrative expenses (21.6) (0.5) (22.1) (15.0) (2.6) (17.6)
--------------------------- ---- --------- --------------- --------- --------- --------------- ------------
Operating profit 3 14.7 (0.5) 14.2 14.5 (2.6) 11.9
--------------------------- ---- --------- --------------- --------- --------- --------------- ------------
Finance income 0.1 - 0.1 0.1 - 0.1
Finance expense (2.0) - (2.0) (2.9) - (2.9)
--------------------------- ---- --------- --------------- --------- --------- --------------- ------------
Net financing expense (1.9) - (1.9) (2.8) (2.8)
--------------------------- ---- --------- --------------- --------- --------- --------------- ------------
Profit before tax 12.8 (0.5) 12.3 11.7 (2.6) 9.1
Taxation 4 (2.3) - (2.3) (2.5) - (2.5)
--------------------------- ---- --------- --------------- --------- --------- --------------- ------------
Profit for the year 10.5 (0.5) 10.0 9.2 (2.6) 6.6
--------------------------- ---- --------- --------------- --------- --------- --------------- ------------
Earnings per share (pence)
Basic 5 6.5p (0.3)p 6.2p 6.4p (1.8)p 4.6p
Fully Diluted 5 6.5p (0.3)p 6.2p 6.4p (1.8)p 4.6p
--------------------------- ---- --------- --------------- --------- --------- --------------- ------------
Notes:
1. The reported comparatives have been restated to reflect a
prior year adjustment, see note 1a in the Notes to the Consolidated
Financial Statements
2. Definition of the adjustments made to the reported figures
can be found in note 1 in the Notes to the Consolidated Financial
Statements
The accompanying notes form an integral part of these financial
statements.
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2017
2017 2016(1)
GBPm GBPm
----------------------------------------------------------------------------------------------- ----- -------
Profit for the year 10.0 6.6
Other comprehensive income - amounts that may be reclassified to profit or loss in the future:
Foreign exchange translation differences - foreign operations (0.1) 1.8
----------------------------------------------------------------------------------------------- ----- -------
Total comprehensive income for the year 9.9 8.4
----------------------------------------------------------------------------------------------- ----- -------
Note 1: The reported comparatives have been restated to reflect
a prior year adjustment, see note 1a in the Notes to the
Consolidated Financial Statements
All results are from continuing operations.
The accompanying notes form an integral part of these financial
statements.
Consolidated Balance Sheet
at 31 December 2017
2017 2016(1)
Note GBPm GBPm
-------------------------------------- -------- ----- -------
Non-current assets
Property, plant and equipment 7 and 11 23.5 20.6
Intangible assets 8 23.7 12.9
Deferred tax asset - 0.2
-------------------------------------- -------- ----- -------
47.2 33.7
-------------------------------------- -------- ----- -------
Current assets
Inventories 44.2 35.4
Trade and other receivables 36.7 29.3
Cash and cash equivalents 5.6 4.1
-------------------------------------- -------- ----- -------
86.5 68.8
-------------------------------------- -------- ----- -------
Total assets 133.7 102.5
-------------------------------------- -------- ----- -------
Current liabilities
Interest-bearing loans and borrowings 42.3 21.6
Trade and other payables 49.6 35.4
Other financial liabilities 0.1 0.6
-------------------------------------- -------- ----- -------
92.0 57.6
-------------------------------------- -------- ----- -------
Non-current liabilities
Other interest-bearing loans and
borrowings - 12.0
Other financial liabilities 0.4 0.1
Deferred tax liability 1.3 -
-------------------------------------- -------- ----- -------
1.7 12.1
-------------------------------------- -------- ----- -------
Total liabilities 93.7 69.7
-------------------------------------- -------- ----- -------
Net assets 40.0 32.8
-------------------------------------- -------- ----- -------
Equity attributable to equity holders
of the parent
Share capital 0.1 0.1
Share premium 24.8 24.8
Translation reserve 1.3 1.4
Treasury reserve (1.2) -
Retained earnings 15.0 6.5
-------------------------------------- -------- ----- -------
Total equity 40.0 32.8
-------------------------------------- -------- ----- -------
Note 1: The reported comparatives have been restated to reflect
a prior year adjustment, see note 1a in the Notes to the
Consolidated Financial Statements
The accompanying notes form an integral part of these financial
statements.
Consolidated Statement of Changes in Equity
for the year ended 31 December 2017
Share Share Translation Retained Treasury Total
capital premium reserve Earnings(1) reserve equity
GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------------------------------------- ------- ------- ----------- ----------- -------- ------
Balance at 1 January 2016 0.1 0.5 (0.4) 2.4 - 2.6
Prior year restatement - - - (2.5) - (2.5)
-------------------------------------------------------- ------- ------- ----------- ----------- -------- ------
Balance at 1 January 2016 as restated 0.1 0.5 (0.4) (0.1) - 0.1
Total comprehensive income
Profit for the year as restated - - - 6.6 - 6.6
Currency translation differences - - 1.8 - - 1.8
-------------------------------------------------------- ------- ------- ----------- ----------- -------- ------
Total comprehensive income(1)
for the year - - 1.8 6.6 - 8.4
Shares issued in the year - 24.3 - - - 24.3
-------------------------------------------------------- ------- ------- ----------- ----------- -------- ------
Balance at 31 December 2016(1) 0.1 24.8 1.4 6.5 - 32.8
Total comprehensive income
Profit for the year - - - 10.0 - 10.0
Currency translation differences - - (0.1) - - (0.1)
Total comprehensive income
for the year - - (0.1) 10.0 - 9.9
Transactions with owners in their capacity as owners:
Dividends paid - - - (1.8) - (1.8)
Purchase of own shares - - - - (1.2) (1.2)
Share-based payments charge - - - 0.3 - 0.3
-------------------------------------------------------- ------- ------- ----------- ----------- -------- ------
Total transactions with owners in their capacity as
owners - - - (1.5) (1.2) (2.7)
-------------------------------------------------------- ------- ------- ----------- ----------- -------- ------
Balance at 31 December 2017 0.1 24.8 1.3 15.0 (1.2) 40.0
-------------------------------------------------------- ------- ------- ----------- ----------- -------- ------
1. The reported comparatives have been restated to reflect a
prior year adjustment, see note 1a in the Notes to the Consolidated
Financial Statements
Movements in share capital and share premium relate solely to
amounts received from issuing new shares less the legal and
professional fees incurred as part of the process.
Consolidated Cash Flow Statement
for the year ended 31 December 2017
Adjusted Adjustments(2) Reported Adjusted Adjustments(2) Reported
2017 2017 2017 2016(1) 2016 2016(1)
Note GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------ ---- --------- --------------- --------- --------- --------------- ---------
Cash flows from operating
activities
Profit for the year 10.2 (0.2) 10.0 9.1 (2.5) 6.6
Adjustments for:
Depreciation and amortisation 4.4 - 4.4 3.2 - 3.2
Financial derivatives (0.7) - (0.7) -
Financial income (0.1) - (0.1) (0.1) - (0.1)
Financial expense 2.0 - 2.0 2.9 - 2.9
Taxation 4 2.3 - 2.3 2.5 - 2.5
Share-based payments
charge 0.3 - 0.3 - - -
------------------------------ ---- --------- --------------- --------- --------- --------------- ---------
Operating cash flow before
movement in working capital 18.4 (0.2) 18.2 17.6 (2.5) 15.1
------------------------------ ---- --------- --------------- --------- --------- --------------- ---------
Increase in trade and
other receivables (4.4) - (4.4) (7.5) - (7.5)
Increase in inventories (7.8) - (7.8) (9.6) - (9.6)
Increase in trade and
other payables 14.3 - 14.3 5.9 -- 5.9
Cash from operations 20.5 (0.2) 20.3 6.4 (2.5) 3.9
Tax paid (3.1) - (3.1) (1.3) - (1.3)
------------------------------ ---- --------- --------------- --------- --------- --------------- ---------
Net cash from operating
activities 17.4 (0.2) 17.2 5.1 (2.5) 2.6
------------------------------ ---- --------- --------------- --------- --------- --------------- ---------
Cash flows from investing
activities
Acquisition of property,
plant and equipment 7 (7.2) - (7.2) (6.0) - (6.0)
Acquisition of subsidiary 11 (9.7) - (9.7) - - -
Acquisition of other
intangible assets 8 (3.1) - (3.1) (1.6) - (1.6)
Disposal of tangible
assets 0.3 - 0.3 - - -
Net cash used in investing
activities (19.7) - (19.7) (7.6) - (7.6)
------------------------------ ---- --------- --------------- --------- --------- --------------- ---------
Cash flows from financing
activities
Proceeds from new loans 8.7 - 8.7 0.1 - 0.1
Interest paid (1.9) - (1.9) (3.0) - (3.0)
Dividends paid (1.8) - (1.8) - - -
Finance lease liabilities 0.3 - 0.3 (17.2) - (17.2)
Purchase of treasury
shares (1.2) - (1.2) - - -
Net proceeds from share
issue - - - 24.3 - 24.3
------------------------------ ---- --------- --------------- --------- --------- --------------- ---------
Net cash from financing
activities 4.1 4.1 4.2 - 4.2
------------------------------ ---- --------- --------------- --------- --------- --------------- ---------
Net increase/(decrease)
in cash and cash equivalents 1.8 (0.2) 1.6 1.7 (2.5) (0.8)
Cash and cash equivalents
at 1 January 4.1 4.8
Effect of exchange rate
fluctuations on cash
held (0.1) 0.1
------------------------------ ---- --------- --------------- --------- --------- --------------- ---------
Cash and cash equivalents
at 31 December 5.6 4.1
------------------------------ ---- --------- --------------- --------- --------- --------------- ---------
Notes
1: The reported comparatives have been restated to reflect a
prior year adjustment, see note 1a in the Notes to the Consolidated
Financial Statements
2: Definition of the adjustments made to the reported figures
can be found in the Notes to the Consolidated Financial
Statements
Notes to the Consolidated Financial Statements
for the year ended 31 December 2017
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 2017 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 LED lighting products and wiring
accessories to global markets (see note 2).
The financial information is derived from the Group's
consolidated financial statements for the year ended 31 December
2017, which have been prepared on the going concern basis in
accordance with International Financial Reporting Standards (IFRS)
as adopted by the European Union. 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 2017
and 31 December 2016 but is derived from those accounts. Statutory
accounts for 2016 have been delivered to the Registrar of
Companies, and those for 2017 will be delivered in due course. The
Auditors have reported on those accounts; their report was (i)
unqualified, (ii) did not include a reference to any matters to
which the Auditors drew attention by way of emphasis without
qualifying their report 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 Annual Report
and Accounts 2017.
Copies of the Annual Report and Accounts 2017 and the Notice of
the 2018 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
Statutory and non-statutory measures of performance
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 Director's 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 measures used in this results announcement are defined in
the Annual Report and Financial Statements. The adjustments made
are summarised in the table below:
2017 Kingfisher Kingfisher 2016
Adjustments Transaction Restructuring IPO(3)
costs costs
GBPm GBPm GBPm GBPm
Administrative expenses (0.5) (0.2)(1) (0.3)(2) (2.6)
Operating profit (0.5) (0.2) (0.3) (2.6)
Profit for the year (0.5) (0.2) (0.3) (2.6)
------------------------ ------------- ------------- --------------- --------
Notes:
1. Legal and professional fees incurred in the acquisition of Kingfisher Lighting
2. Redundancy and reorganisation costs following the acquisition of Kingfisher Lighting
3. The Group's IPO took place in October 2016
Standards and interpretations issued
At the date of the approval of these financial statements, the
following Standards and Interpretations, which have not yet been
applied in these financial statements, were in issue, but not yet
effective:
-- Amendments to IAS 28: Long-term Interests in Associates and Joint Ventures
-- Amendments to IAS 40: Transfers of Investment Property
-- Amendments to IFRS 2: Amendments to clarify the
classification and measurement of share-based payment
transactions
-- Amendments to IFRS 9: Prepayment Features with Negative Compensation
-- IFRIC 22 - Foreign Currency Transactions and Advance Consideration
-- IFRIC 23 - Uncertainty over Income Tax Treatments
-- Annual improvements to IFRS 2014-2016 cycle
-- Annual improvements to IFRS 2015-2017 cycle
Based on their initial assessments, the Directors anticipate
that adoption of these Standards and Interpretations in future
periods will not have a material impact on the financial statements
of the Group.
Impact on future periods of the adoption of new standards and
interpretations
IFRS 9 - Financial Instruments
The new standard introduces a principles-based approach to the
classification and measurement of financial instruments, a new
impairment model and changes to hedge accounting.
It will be effective from 1 January 2018. The Directors have
completed their initial assessment and based on the Group's current
financial instruments and hedging strategy estimate that there will
be no material effect on the financial statements.
IFRS 15 - Revenue Recognition
IFRS 15 - Revenue from Contracts with Customers, which
supersedes IAS 18 - Revenue, will be effective from 1 January 2018.
The new standard provides a single model for revenue recognition
based on when identified performance obligations are satisfied. The
revenue recognition model now focuses on the transfer of control
rather than the transfer of risks and rewards.
The Directors have completed an initial assessment of the impact
of the new standard. Based on the current operating model the
new
standard is not expected to have a material effect on revenue
recognition, as the point at which revenue is recognised at present
is consistent with the passing of control under IFRS 15. The Group
plans to adopt IFRS 15 using the cumulative effect method, with the
effect of initially applying this standard recognised at the date
of initial application (i.e. 1 January 2018). As a result, the
Group will not apply the requirements of IFRS 15 to the comparative
period presented.
IFRS 16 - Leases
In January 2016 the IASB issued IFRS 16 - Leases. It was
endorsed by the European Union in October 2017 and will be
effective from 1 January 2019. This Standard will have a material
effect on the Group because the value of the operating leases it
has entered into will be included in the balance sheet in
future.
The Group has made progress to determine the effect of this new
Standard and implement the processes and systems necessary to
comply with its requirements. However, given the complexity of the
Standard and the volume of leases to which the Group is a party,
this exercise has not been completed at the date of these accounts
and will be adopted by the Group in January 2019.
Critical accounting judgements and estimates
The preparation of the financial statements requires management
to make judgements, estimates and assumptions that affect the
application of accounting policies and the reported amounts of
assets and liabilities, income and expense. Actual results may
differ from these estimates.
In preparing these financial statements, the significant
judgements made by management in applying the Group's accounting
policies and the key sources of estimation uncertainty were the
same as those applied to the consolidated financial statements for
the year ended 31 December 2017.
1a Prior year restatement
A number of material errors have been identified in the Group's
previously published financial statements. A quantification of the
errors is included in the table below and restated Consolidated
Income Statement and Balance Sheet have been included to show the
financial impact from the correction of these errors.
At 31 December 2016
-------------
Total Inventories Intercompany
Note (1) (2)
GBPm GBPm GBPm
Reduction in
inventory (3.1) (1.8) (1.3)
Increase in trade
payables (2.4) - (2.4)
Net assets (5.5) (1.8) (3.7)
------------------ ------ ------------ -------------
Notes:
(1) In line with the Group's accounting policy an appropriate
share of overheads is included in inventory values. This share was
incorrectly calculated at 1 January and 31 December 2016 resulting
in an over-valuation of the Group's inventory. The impact at 1
January 2016 was GBP0.4m, which has been adjusted for in opening
reserves. The impact on the Consolidated Income Statement for the
year ended 31 December 2016 is an increase to cost of sales of
GBP1.4m.
(2) Balances between subsidiaries were incompletely reconciled
and therefore not appropriately eliminated in the Group's
consolidated balance sheet. An adjustment to increase trade and
other payables by GBP3.7m is therefore required at 31 December
2016. The reconciliation was also incomplete with respect to
inter-company inventory transactions, requiring a balance sheet
only adjustment to reduce both inventories and trade payables by
GBP1.3m at 31 December 2016 leaving a net impact on trade payables
of GBP2.4m.
The cumulative impact of the adjustments at 1 January 2016 was
GBP2.1m with respect to balances between subsidiaries and GBP0.7m
at 31 December 2015 with respect to inter-company inventory
transactions leaving a GBP1.4m adjustment to trade payables at 1
January 2016. The impact on the Consolidated Income Statement for
the year ended 31 December 2016 is an increase to cost of sales of
GBP1.6m.
No tax effect has been reflected at 31 December 2016 as the
ability to claim tax deductions is uncertain.
The impact of the above errors on the financial statements is
that net assets at 1 January and 31 December 2016 and profit for
the year ended 31 December 2016 was misstated. These errors have
been corrected by restatements to the Balance Sheet and
Consolidated Income Statement as at and for the year ended 31
December 2016 as detailed below:
Consolidated Balance Sheet
2016 2015
As previously Restatement As previously Restatement
reported impact As restated reported impact As restated
GBPm GBPm GBPm GBPm GBPm GBPm
------------- ----------- ----------- ------------- ----------- -----------
Non-current assets
Property, plant
and equipment 20.6 - 20.6 15.5 15.5
Intangible assets 12.9 - 12.9 12.0 12.0
Deferred tax asset 0.2 - 0.2 - -
-------------------------- ------------- ----------- ----------- ------------- ----------- -----------
33.7 - 33.7 27.5 27.5
-------------------------- ------------- ----------- ----------- ------------- ----------- -----------
Current assets
Inventories 38.5 (3.1) 35.4 26.2 (1.1) 25.1
Trade and other
receivables 29.3 - 29.3 21.8 21.8
Cash and cash equivalents 4.1 - 4.1 4.8 4.8
-------------------------- ------------- ----------- ----------- ------------- ----------- -----------
71.9 (3.1) 68.8 52.8 (1.1) 51.7
-------------------------- ------------- ----------- ----------- ------------- ----------- -----------
Total assets 105.6 (3.1) 102.5 80.3 (1.1) 79.2
-------------------------- ------------- ----------- ----------- ------------- ----------- -----------
Current liabilities
Interest bearing
loans and borrowings (21.6) - (21.6) (26.0) (26.0)
Trade and other
payables (33.0) (2.4) (35.4) (25.5) (1.4) (26.9)
Other financial
liabilities (0.6) - (0.6) (0.7) - (0.7)
(55.2) (2.4) (57.6) (52.2) (1.4) (53.6)
-------------------------- ------------- ----------- ----------- ------------- ----------- -----------
Non-current liabilities (12.1) - (12.1) (25.5) (25.5)
-------------------------- ------------- ----------- ----------- ------------- ----------- -----------
Total liabilities (67.3) (2.4) (69.7) (77.7) (1.4) (79.1)
-------------------------- ------------- ----------- ----------- ------------- ----------- -----------
Total net assets 38.3 (5.5) 32.8 2.6 (2.5) 0.1
-------------------------- ------------- ----------- ----------- ------------- ----------- -----------
Consolidated Income Statement
2016 restatement 2016 reclassification
As previously As restated Chinese
reported costs to
Restatement be included
impact in COGS(1)
GBPm GBPm GBPm GBPm GBPm
-------------- ----------- ------------ -------------- -------
Revenue 133.7 - 133.7 - 133.7
Cost of sales (85.9) (3.0) (88.9) (4.3) (93.2)
------------------------ -------------- ----------- ------------ -------------- -------
Gross profit 47.8 (3.0) 44.8 (4.3) 40.5
Gross margin % 35.8% - 33.5% - 30.3%
------------------------ -------------- ----------- ------------ -------------- -------
Distribution expenses (11.0) - (11.0) - (11.0)
Administrative expenses (21.9) - (21.9) 4.3 (17.6)
------------------------ -------------- ----------- ------------ -------------- -------
Operating profit 14.9 (3.0) 11.9 - 11.9
Net financing expense (2.8) - (2.8) - (2.8)
------------------------ -------------- ----------- ------------ -------------- -------
Profit before taxation 12.1 (3.0) 9.1 - 9.1
Taxation (2.5) - (2.5) - (2.5)
------------------------ -------------- ----------- ------------ -------------- -------
Profit for the year 9.6 (3.0) 6.6 - 6.6
------------------------ -------------- ----------- ------------ -------------- -------
Earnings per share
(pence)
------------------------ --------------
Basic and fully
diluted 6.7p (2.1p) 4.6p - 4.6p
------------------------ -------------- ----------- ------------ -------------- -------
Note 1: In 2017 GBP4.0m of the Chinese manufacturing facility
costs were moved from Selling General and Administrative costs
where they had historically been reported and included in cost of
sales as they represent a direct cost of the goods sold rather than
an overhead. The corresponding amount for 2016 was GBP4.3m which
has been reclassified in the table above.
There is no impact from the restatement on the total operating,
investing or financing cash flows for the year ended 31 December
2016.
Operating profit in the Operating Segments, note 2, has been
restated for the GBP3.0m cost of sales adjustment and is analysed
in the table below.
As previously Restatement As restated
reported impact 2016
2016
------------------- ------------- ------------ ------------
GBPm GBPm GBPm
------------------- ------------- ------------ ------------
Operating profit
Wiring Accessories 9.2 (1.5) 7.7
Portable Power 2.5 (0.7) 1.8
LED Lighting 2.8 (0.7) 2.1
Ross and other 0.4 (0.1) 0.3
---------------------- ------------- ------------ ------------
Operating profit 14.9 (3.0) 11.9
---------------------- ------------- ------------ ------------
The movement on retained earnings is detailed below:
GBPm
------------------------------------------------------------- -----
Balance at 31 December 2015 as previously reported 2.4
Prior year adjustment (2.5)
-------------------------------------------------------------- -----
Balance at 1 January 2016 as restated (0.1)
Reported retained profit for the year ended 31 December 2016 9.6
Prior year adjustment (3.0)
-------------------------------------------------------------- -----
2016 retained earnings as restated 6.5
Dividends paid (1.8)
Share based payment 0.3
Retained profit for the year ended 31 December 2017 10.0
Balance at 31 December 2017 15.0
-------------------------------------------------------------- -----
2 Operating segments
The Group's principal activities are in the manufacturing and
supply of LED lighting, wiring accessories, portable power
equipment and Ross (home entertainment products). For the purposes
of management reporting to the Chief Operating Decision-Maker (the
Board), the Group consists of four operating segments which are the
product categories that the Group manufactures and 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 is reported under IFRS 8 'Operating Segments'.
Adjusted Adjustment(1) Reported Adjusted Adjustment(1) 2016(2)
2017 2017 2016
GBPm GBPm GBPm GBPm GBPm GBPm
------------------- -------- -------------- ----------- -------- -------------- --------
Revenue
Wiring Accessories 72.7 - 72.7 64.0 - 64.0
Portable Power 41.6 - 41.6 31.1 - 31.1
LED Lighting 47.4 - 47.4 33.6 - 33.6
Ross and other 5.9 - 5.9 5.0 - 5.0
------------------- -------- -------------- ----------- -------- -------------- --------
167.6 167.6 133.7 - 133.7
------------------- -------- -------------- ----------- -------- -------------- --------
Operating profit
Wiring Accessories 10.3 - 10.3 9.4 (1.7) 7.7
Portable Power 2.0 - 2.0 2.2 (0.4) 1.8
LED Lighting 2.3 (0.5) 1.8 2.5 (0.4) 2.1
Ross and other 0.1 - 0.1 0.4 (0.1) 0.3
------------------- -------- -------------- ----------- -------- -------------- --------
Operating profit 14.7 (0.5) 14.2 14.5 (2.6) 11.9
------------------- -------- -------------- ----------- -------- -------------- --------
Note 1: Definition of the adjustments made to the reported figures
can be found in note 1 in the Notes to the Consolidated Financial
Statements
2: The reported comparatives have been restated to reflect a prior
year adjustment, see note 1a in the Notes to the Consolidated Financial
Statements
2017 2016
------------------- -------- --------------------------- -------- -------------- --------
Total Restructuring Transaction IPO
costs costs
GBPm GBPm GBPm GBPm
------------------- -------- -------------- ----------- -------- -------------- --------
Wiring Accessories - - - 1.7
Portable Power - - - 0.4
LED Lighting 0.5 0.2 0.3 0.4
Ross and other - - - 0.1
------------------- -------- -------------- ----------- -------- -------------- --------
Total 0.5 0.2 0.3 2.6
------------------- -------- -------------- ----------- -------- -------------- --------
Revenue by location of
customer
2017 2016
GBPm GBPm
Middle East 6.8 4.9
Asia Pacific 3.9 4.2
Africa 2.0 1.9
Europe 9.6 5.9
Americas 6.4 2.1
UK 138.9 114.7
------------------------- ----- -----
Total revenue 167.6 133.7
------------------------- ----- -----
3 Expenses recognised in the Consolidated Income Statement
Included in the Consolidated Income Statement are the
following:
2017 2016
GBPm GBPm
---------------------------------------------------- ---- ----
Research and development costs expensed as incurred 1.3 0.2
Operating lease charges:
Plant and machinery 0.1 0.1
Other assets 1.1 0.6
Depreciation of property, plant and equipment 3.2 2.5
Amortisation of intangible assets 1.2 0.7
---------------------------------------------------- ---- ----
Research and development costs expensed as incurred has
increased year-on-year largely due to the increase in the R&D
team both at the Chinese Development centre and in the UK Technical
department.
4 Taxation
The tax rate has been positively impacted by losses allowed in
the year, via a loan rationalisation programme, that were
previously considered uncertain and the recognition of previously
unrecognised deferred tax assets.
UK corporation tax rate was reduced from 20% to 19% with effect
from 1 April 2017 and a further reduction to 17% will become
effective from 1 April 2020. The movement in tax rates will reduce
the Company's future current tax charge accordingly. The deferred
tax asset at 31 December 2017 has been calculated based on these
rates.
2017 2016
GBPm GBPm
-------------------------------------------------- ----- -----
Current tax expense
Current year - UK 1.6 2.7
Current year - overseas 0.5 0.6
Adjustment in respect of prior years (0.4) 0.1
-------------------------------------------------- ----- -----
Current tax expense 1.7 3.4
-------------------------------------------------- ----- -----
Deferred tax expense/(credit)
Origination and reversal of temporary differences 0.5 (0.7)
Changes in tax rate - -
Adjustment in respect of prior years 0.1 (0.2)
-------------------------------------------------- ----- -----
Deferred tax expense/(credit) 0.6 (0.9)
-------------------------------------------------- ----- -----
Total tax expense 2.3 2.5
-------------------------------------------------- ----- -----
2017 2016
GBPm GBPm
--------------------------------------------------------------- ----- -----
Profit for the year (2016 restated) 10.0 6.6
Total tax expense 2.3 2.5
--------------------------------------------------------------- ----- -----
Profit before taxation 12.3 9.1
--------------------------------------------------------------- ----- -----
Tax using the UK corporation tax rate of 19.25% (2016: 20.00%) 2.3 1.8
Effect of tax rates in foreign jurisdictions 0.1 0.1
Non-deductible expenses 0.1 0.4
Research and development credits (0.1) -
Adjustment in respect of previous periods (0.3) 0.5
Deferred tax asset recognised in respect of tax losses - (1.2)
Deferred tax not recognised 0.2 0.9
--------------------------------------------------------------- ----- -----
Total tax expense 2.3 2.5
--------------------------------------------------------------- ----- -----
5 Earnings per share
Earnings per share is calculated based on the profit for the
year attributable to the owners of the Group. Adjusted earnings per
share is calculated based on the adjusted profit for the year, 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.
2017 2016(1)
GBPm GBPm
-------------------------------------------------------------------- ---- -------
Earnings for calculating basic earnings per share 10.0 6.6
6Adjusted for:
Restructuring costs 0.2 -
-------------------------------------------------------------------- ---- -------
Transaction costs 0.3 -
-------------------------------------------------------------------- ---- -------
IPO costs - 2.6
-------------------------------------------------------------------- ---- -------
Adjusted earnings for calculating adjusted basic earnings per share 10.5 9.2
-------------------------------------------------------------------- ---- -------
2017 2016
Number Number
million million
--------------------------------------------------------------- ------- -------
Weighted average number of ordinary shares - basic and diluted 160.8 144.1
--------------------------------------------------------------- ------- -------
2017 2016(1)
Pence Pence
------------------------------------ ----- -------
Basic earnings per share 6.2 4.6
------------------------------------ ----- -------
Diluted earnings per share 6.2 4.6
------------------------------------ ----- -------
Adjusted basic earnings per share 6.5 6.4
Adjusted diluted earnings per share 6.5 6.4
------------------------------------ ----- -------
Note 1: The reported comparatives have been restated to reflect
a prior year adjustment, see note 1a in the Notes to the
Consolidated Financial Statements
Basic and diluted EPS calculations for 2016 have been restated
for the prior year adjustment.
During the year the Group purchased its own shares to fulfil
option awards when they become exercisable, consequently the share
options awarded during the year do not have a dilutive effect on
the weighted number of ordinary shares. Shares that have been
bought back are held in Treasury reserve.
There were no dilutive ordinary shares in issue at 31 December
2016.
6 Dividends
On 2 June 2017 a dividend of GBP0.5m, 0.3 pence per share, was
paid in respect of the year ended 31 December 2016.
In respect of the year ended 31 December 2017, an interim
dividend of GBP1.3m, 0.8 pence per share, was paid to shareholders
on 27 October 2017. The Board are not proposing a final dividend
for the year ended 31 December 2017. The Board remains confident in
the Group's strategy and will therefore revisit the dividend policy
at the half year 2018.
2017 2016
GBPm GBPm
------------------------------------------------------------- ---- ----
Interim dividend of 0.8 pence per ordinary share (2016: Nil) 1.3 -
Final dividend nil (2016: 0.3 pence) - 0.5
------------------------------------------------------------- ---- ----
7 Property, plant and equipment
During the year, the Group purchased assets at a cost of GBP7.2m
(2016: GBP6.0m). Expenditure related to plant and equipment and
tooling at the manufacturing facility in China. Assets acquired
from Kingfisher totalled GBP1.4m at cost and had accumulated
depreciation GBP1.2m. Total depreciation for the year was GBP3.2m.
Net Book Value at 31 December 2017 was GBP23.5m (2016:
GBP20.6m)
The Group has not included any borrowing costs within additions
in 2017 (2016: GBPnil). 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. There were no disposals during
the year.
8 Intangible assets and goodwill
Following the acquisition of Kingfisher Lighting the Group
acquired the following intangible assets:
-- Customer relationships GBP4.1m
-- Tradename GBP1.2m
-- Goodwill GBP3.6m (see note 11)
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 GBP3.0m (2016: GBP1.5m) and
externally purchased patents of GBP0.1m (2016: GBP0.1m). This
amount excludes capitalised borrowing costs. Net Book Value at 31
December 2017 was GBP23.7m (2016: GBP12.9m)
There has been no impairment to goodwill following a review
since the year ended 31 December 2017. Goodwill has been allocated
to cash-generating units and can be referred to in the Group's 2017
Annual Report and Financial Statements.
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, see note
19.
2017 2016
GBPm GBPm
------------------------ ---- ----
Non-current liabilities
Bank term loan - 12.0
- 12.0
------------------------ ---- ----
Current liabilities
Bank term loan 20.0 -
Shareholder loan notes 0.3 0.6
Secured bank loans 22.0 21.0
------------------------ ---- ----
42.3 21.6
------------------------ ---- ----
Bank loans and overdrafts are secured by a fixed and floating
charge over the assets of the Group. Bank loans and overdrafts
include funds advanced under invoice discounting arrangements from
HSBC Finance (UK) Limited of GBP22.0m (2016: GBP21.0m), which are
secured by legal charges over the Group's book debts.
10 Exchange rates
The following significant exchange rates were applied during the
year:
Average rate Reporting date
spot rate
-------------- ---------------------------
2017 2016 2017 2016
---- ------ ------ ------------- ------------
USD 1.28 1.36 1.35 1.22
EUR 1.17 1.24 1.13 1.17
RMB 8.74 8.98 8.80 8.50
---- ------ ------ ------------- ------------
11 Acquisition of subsidiary
On 18 September, the Group acquired the entire issued share
capital of Kingfisher Lighting Limited ("Kingfisher Lighting") from
its retiring founder and other minority shareholders for a total
cash consideration of GBP9.7m on a cash free debt free basis. The
acquisition was funded through an increase to the Group's existing
banking facilities. Kingfisher Lighting is a nationwide UK supplier
of exterior lighting products, including road and street LED
lighting systems and controls, and high mast LED luminaires, as
well as a provider of installation and maintenance services.
For the 3 months ended 31 December 2017, Kingfisher contributed
revenue of GBP4.1m and adjusted operating profit of GBP0.5m to the
Group's results. If the acquisition had occurred on 1 January 2017,
management estimates that the impact on consolidated revenue would
have been GBP11.7m and on consolidated operating profit for the
year GBP1.6m. In determining these amounts, management has assumed
that the fair value adjustments, determined provisionally, that
arose on the date of acquisition would have been the same if the
acquisition had occurred on 1 January 2017.
The Group incurred acquisition-related costs of GBP0.5m
comprising professional fees GBP0.3m and redundancy and
restructuring costs GBP0.2m. These costs have been included in
'administrative expenses'.
Goodwill arising from the acquisition has been recognised as
follows:
2017
GBPm
-------------------------------------------------- -----
Consideration paid 9.7
Repayment of Kingfisher Lighting's bank overdraft (1.1)
--------------------------------------------------- -----
Net consideration 8.6
Transferred to intangible assets (5.3)
Net assets acquired (1.4)
Fair value adjustment 0.8
Deferred tax liability 0.9
Goodwill 3.6
--------------------------------------------------- -----
A Group has recognised a deferred tax liability of GBP0.9m in
respect of the GBP5.3m intangible assets acquired as part of the
Kingfisher Lighting acquisition.
The following table summarises the provisional recognised
amounts of assets acquired, and liabilities assumed at the date of
acquisition:
Acquired Fair value Fair value
GBPm adjustment GBPm
GBPm
--------------------------------------- --------- ----------- -----------
Property, plant and equipment 0.4 (0.2) 0.2
Inventories 1.3 (0.3) 1.0
Trade receivables 2.9 (0.1) 2.8
Loans and borrowings (1.1) - (1.1)
Corporation tax liabilities (0.2) - (0.2)
Contingent liabilities (0.1) - (0.1)
Trade and other payables (1.8) (0.2) (2.0)
--------------------------------------- --------- ----------- -----------
Total identifiable net assets acquired 1.4 (0.8) 0.6
--------------------------------------- --------- ----------- -----------
12 Related party transactions
During the year a decision was taken to exit from sales to the
domestic Chinese market. To effect an orderly transfer and exit,
the rights to the Ross trademark and relevant patent (which were
carried at nil net book value) were transferred for nil
consideration to Jiaxing Ross Trading Limited. Based on a
third-party valuation, finished goods inventory was sold for
GBP0.2m, realising a loss on sale of GBP0.2m to the same entity.
Jiaxing Ross Trading Limited was a related party as at the time of
the transactions as it was wholly owned by a member of the Group's
key management personnel. Since the initial transfer and during the
remainder of the year the Group had made sales of GBP0.6m including
mark up to Jiaxing Ross Trading Limited. During the year Jiaxing
Ross Trading Limited was sold on to its largest customer with no
gain to any employee of the Group.
At 1 January 2017 GBP0.6m was owed under shareholder loan notes
to John Hornby, CEO. GBP0.3m was repaid during the year and no
interest was received by John Hornby. As at 31 December 2017
GBP0.3m was payable to him. The loan will be fully repaid during
2018.
13 Annual General Meeting
The 2018 AGM will take place at 11.00am on 19 June 2018 at the
offices of Numis Securities Limited, The London Stock Exchange
Building, 10 Paternoster Square, London EC4M 7LT. The notice of AGM
and any related documents will be sent to shareholders within the
prescribed timescales.
14 Date of Approval of financial information
The preliminary financial information covers the year 1 January
2017 to 31 December 2017 and were approved by the Board on 30 April
2018. A copy of the Annual Report and Financial Statements can be
accessed on the Luceco plc investor relations website,
www.luceco.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SESESUFASEIL
(END) Dow Jones Newswires
April 30, 2018 02:02 ET (06:02 GMT)
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