Luceco Regulatory News (LUCE)

29 January 2019

Luceco plc

("the Group")

Full Year Trading Statement

An improved second half delivers an in-line performance

Luceco plc, the manufacturer and distributor of high quality and innovative LED lighting products, wiring accessories and portable power products, today announces its scheduled trading statement for the year ended 31 December 2018 ahead of announcing its full year results on 9 April 2019.

The Group is pleased to report good progress in the second half of the year despite challenging UK market conditions. Margins have been successfully restored and the Group therefore expects full year Adjusted Operating Profit to be in line with market expectations. The business has also been de-risked by reducing net debt, improving working capital efficiency and investing in an enhanced finance function, creating a sound foundation for future growth.

The Group expects to report full year revenue of £164m, down 2% on the prior year, largely as a result of previously reported destocking amongst consumer-facing retail customers and adverse foreign currency movements in H1. Whilst these headwinds reduced in the second half, overall progress on the revenue line was held back by slower demand from UK professional customers due to a more uncertain economic environment. The Group continued to achieve double-digit growth rates overseas. The full year effect of acquiring Kingfisher Lighting increased revenue by £8.5m, although this was offset by a £1.3m revenue reduction due to the previously reported closure of loss-making US operations.

In line with our expectations, margins improved in the second half. This reflects the benefit of a continuing strategic shift towards higher margin business in the professional channel, pricing changes and a more favourable input cost environment, aided in part by the Group's currency hedging programme. These improvements, together with overhead savings and losses avoided following the US closure, allowed the Group to deliver year-on-year growth in H2 Adjusted Operating Profit.

Net debt at 31 December 2018 was £32.3m, which is expected to represent 2.0x Adjusted EBITDA, having reduced by £9.1m in the second half due to restored profitability and a sharp improvement in inventory days. The Group recently extended the maturity of its main banking facilities to 31 December 2021 on terms which have allowed the Group to improve its liquidity position by reducing reliance on invoice financing in favour of more committed and dependable traditional bilateral bank lending. The Group is targeting a further reduction in net debt in 2019.

John Hornby, Chief Executive Officer, said:

" We are pleased to conclude what has been a challenging year for Luceco with second half trading in line with expectations, when operating margins returned close to the double-digit levels we have previously achieved. We are focused on building a stronger platform to de-risk future growth with significant investment in enhanced finance systems, processes and resources. We begin 2019 with a stronger balance sheet, improved profitability and cautious optimism, notwithstanding the current UK economic and political uncertainty."

-ENDS-

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Notes to Editors:

Luceco is a 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: 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 LED lighting brand continues to benefit from the disruptive shift away from mature lighting technologies as a result of the material advancement in LED technology in recent years. The brand continues to successfully leverage the Group's existing customer base and low cost Chinese manufacturing facility. Consequently, it remains well positioned to continue to deliver healthy organic growth. 

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.