2016 final results presentation 5[2] - luceco · 2017. 4. 6. · 2016 final results presentation...
TRANSCRIPT
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FULLYEARRESULTSPRESENTATIONWELLPOSITIONEDFORCONTINUEDGROWTH
3April2017
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AGENDA
1
¥ Introductionandoverview JohnHornby
¥ Financialreview DavidMain
¥ Strategicprogressandoutlook JohnHornby
¥ Questions
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2016OVERVIEW
¥ Strongdeliveryacrossallareasofthebusiness
¥ 10,000m2 additionalcapacitybuiltinChinaexpandingthesiteto52,500m2
¥ SuccessfulIPOhasprovideduswithstrongplatformforfurthergrowth
¥ Ambitiousstrategyforgrowthintonewsectorsandterritories
¥ FocusonexpansionopportunityinLEDlightingandwiringaccessories
¥ Tradinginthenewfinancialyearhasbeenstrongerthanexpected,newbusinesswinsandafullpipelineofnewproductlaunchesunderpinsourgrowthforecast
Lucecoremainswellplacedtodeliveranotherstrongyearofgrowthandprofitabilityinlinewithitsstrategy
Extremely strong
performance across all segments
Continued double digit
revenue growth
140 new products
brought to market
Continued LED growth
Additional manufacturing
capacity
Expansion in Spain and Hong Kong
2
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FINANCIALHIGHLIGHTSLucecoplc|Fullyearresultspresentation2016
3
Revenue (£m)
Adjusted profit after tax1 (£m)
2015
5.8
2016
12.3
2015 2016
133.8
103.1
Gross profit (£m)
2015
33.8
2016
47.8
1. StatedbeforeexceptionalIPOcosts.2. EPSreflectsthesharesubdivisionandshareissuethattookplacein2016(basicEPS6.7p).
Adjusted profit after tax growth1
112.1%
ROCE1
2015: 21.2%2016: 24.7%
Revenue growth29.8%
Gross margin2015: 32.8%
2016: 35.7%
EPS1
2015: 4.2p2016: 8.5p
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WELLPOSITIONEDFORCONTINUEDGROWTH
4
Lucecoplc|Fullyearresultspresentation2016
1 New Product Innovation
5 Ethical treatment of employees
4 Flexible distribution
2 Manufacturing agility and efficiency
3 High quality products at competitive prices
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FINANCIALOVERVIEWLucecoplc|Fullyearresultspresentation2016
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HIGHLIGHTS
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2016 2015 Growth
Revenue £133.8m £103.1m 29.8%
Grossprofit £47.8m £33.8m 41.4%
Grossmargin 35.7% 32.8% 2.9ppt
Adjusted operatingprofit1 £17.6m £11.5m 53.0%
Adjustedoperatingmargin1 13.2% 11.2% 2.0ppt
Adjustedprofitaftertax1 £12.3m £5.8m 112.1%
AdjustedEPS1,2 8.5p 4.2p 102.4%
Proposedfinaldividend 0.3p − n/a
1. Adjustedoperatingprofit,adjustedoperatingmarginandadjustedprofitaftertaxrepresentoperatingprofit,operatingmargin andprofitaftertaxadjustedforexceptionalIPOcostsof£2.6m.
2.EPSreflects thesharesubdivisionandshareissuethattookplacein2016(basicEPS6.7p).
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PROFITAFTERTAXBRIDGE
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1. BeforechargingexceptionalIPOcosts.
Allfiguresstatedin£’000.
Lucecoplc|Fullyearresultspresentation2016
Profit after tax 2015
Growth Product mix Cost engineering/economies of
scale
Overhead including
inflation and currency
Investment to support
growth
Interest and tax
Stock provision increase
Adjusted profit after
tax1
Exceptional IPO costs
Profit after tax 2016
5,817
10,069
2,674
1,882 (3,239)
(4,559)
218(570)
12,292 (2,635)
9,657
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SEGMENTALPERFORMANCE
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¥ 20newproductssuccessfullylaunchedforsaleinallterritories
¥ FurtherpenetrationoftheGroup’sproductrangeintotheexistingcustomerbase
¥ Investmentinoverhead(NPD&Sales)tosupportfuturegrowth.
¥ FurtherpenetrationoftheGroup’sproductrangeintotheexistingcustomerbase
¥ Agreementssignedwithtwomajorhousebuilders
¥ Productionbroughtin-houseandre-engineering,havereducedcosts
¥ Newretailcontractswon
¥ SignificantnewbusinesswinsinUKandEurope
¥ Continuedrangeexpansion
LED LightingRevenue £33.0m up 41.6%
Operating profit £2.3m up 27.8%
Operating profit margin 7.0% decrease of 9.1%
Wiring AccessoriesRevenue £62.2m up 29.9%
Operating profit £11.3m up 76.6%
Operating profit margin 18.2% increase of 35.8%
Portable PowerRevenue £33.2m up 15.3%
Operating profit £3.4m up 17.2%
Operating profit margin 10.2% increase of 1.0%
Ross and otherRevenue £5.3m up 71.0%
Operating profit £0.6m up 200%
Operating profit margin 11.3% increase of 73.8%
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SUMMARYCONSOLIDATEDINCOMESTATEMENT
2016 2015£000 £000
Revenue 133,753 103,055
Grossprofit 47,826 33,834OperatingprofitbeforeexceptionalIPOcosts 17,645 11,451ExceptionalIPOcosts (2,635) —Operatingprofit 15,010 11,451Netfinancingexpense (2,811) (3,184)Profitbeforetax 12,199 8,267Taxation (2,542) (2,450)Profitfortheyear 9,657 5,817
Earningspershare(pence)Basic 6.7p 4.2p
¥ Revenuegrowthof£30.7m(29.8%),£22.8m(22.1%)onaconstantcurrencybasis
¥ Grossmarginimprovedto35.8%
¥ Naturalhedgeatgrossprofitlevel,impactofcurrencymovementsis£(0.1)m
¥ Operatingprofitincludes£(1.1)mcurrencyimpactonoverheads.Nosignificantplccostsin2016
¥ Exceptionalitemsrepresentone-offIPOcostsof£2.6m
¥ InterestcostreducedduetorepaymentofshareholderloansandChinesedebt
¥ Effectivetaxratereducedfrom29.6%to20.8%astaxplanningmeasureswereexecutedintheyear
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SUMMARYCONSOLIDATEDBALANCESHEET
2016£000
2015£000
Non-currentassets 33,698 27,452
Currentassets 71,946 52,807
Totalassets 105,644 80,259
Currentliabilities 55,161 52,241
Non-currentliabilities 12,145 25,466
Totalliabilities 67,306 77,707
Netassets 38,338 2,552
Totalequity 38,338 2,552
¥ Non-currentassetsincreasedduetoinvestmentinfurthermanufacturingcapacity
¥ Increaseincurrentassetsduetorevenuegrowthandalsoinvestmentinstocktosupportfuturegrowthacrossallgeographies
¥ Currentliabilitiesarehigherasincreaseintradecreditorsispartiallyoffsetbyreductioninborrowings
¥ Non-currentliabilitiesreductionduetorepaymentofdebtfollowingtheIPO
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CASHFLOW
2016£‘m
2015£‘m
AdjustedEBITDA 20.8 14.0
AdjustedOperatingCashflow 6.6 8.3
Cashconversion 31.7% 59.3%
Taxpaid (1.3) (1.0)
Financinginflows 4.2 0.8
Capitalexpenditure (7.7) (5.3)Exchangeratefluctuations 0.1 (0.2)
NetcashflowbeforeexceptionalIPOcosts 1.9 2.6
ExceptionalIPOcostspaid (2.5) 0
Netcashflow (0.6) 2.6
¥ Fundstiedupinworkingcapitalincreasedby£14.6mto£37.7m.£5.8mincreaseduetocurrency.Workingcapitalmajorfocusfor2017
¥ Constantcurrencycashconversion59.6%
¥ NetinflowoffundsanddebtreductionpostIPO
¥ Increasedcapitalexpenditureduetoexpansionofmanufacturingfacility
¥ PreexceptionalIPOcostsnetcashflowyoydecreaseof£(0.7)m
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AdjustedEBITDA(earningsbeforeinterest,tax,depreciationandamortisationAdjustedoperatingcashflowisdefinedasadjustedEBITDAplus/minusmovementsinworkingcapitalCashconversionsdefinedasadjustedoperatingcashflowdividedbyadjustedEBITDA
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STRATEGICPROGRESSLucecoplc|Fullyearresultspresentation2016
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OVERVIEW
¥ Fullyintegratedmodel– Wholly-ownedChinesemanufacturingwithlocalknow-howandexpertise– Highquality,low-costmanufacturing;supplychainalignedtoclientneeds
¥ Establishedroutestomarket– HighlyregardedUKbusiness;qualityblue-chipcustomerbase– ExpandingUKandinternationalsalesnetworks;wellplacedforLEDgrowthopportunity
¥ RapidgrowthintheLEDmarket– Wellpositionedtocontinueimpressiveorganicgrowthtrajectory– Consolidationopportunitiesinafragmentedmarket– TotalglobalmarketopportunityofUS$70billionby2019;UKmarket£1.2billionby2019
¥ Cultureofinnovationwithfocusonexecution– DevelopmentofChinafacility,wellinvestedforfuturegrowth– Innovativeandexpandingproductrangeswithinwiringaccessoriesand
portablepower;Anglo-Chineseresearchanddevelopmentteamabletomeetcustomerdemands– Strongpipelineofnewproductstobringtomarket
¥ Trackrecordoffinancialdelivery– Significantgrowthinrevenueandoperatingprofitachieved
Lucecoplc|Fullyearresultspresentation2016
13
Number of employees
c2000
R&D2 staff
c68
Number of product
innovations 2016
140
Number of customers
c1,100
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WELLPOSITIONEDFORFUTUREGROWTH
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Manufacturing agility and efficiency
New Product In
novation
High quality products at com
petitive prices
Flexible distribution
Ethical treatment of em
ployees
CreateShareholder
Value
1
2
3
4
5
• On-going pipeline of new products suitable to multiple channels
• Differentiated design and product offering
• Track record of successful product launches
• Speed to market
• Fair and equal treatment of all employees
• Investment in people and development of skills
• Control of employment conditions for Chinese workforce
• In partnership with local Chinese community
• Ability to supply multiple brands and product categories
• 10,000m2 UK distribution centre
• Strong expertise in supply chain
• Growing localised distribution network
• Wholly-owned facility• Investment in automation
and process efficiency• High quality, low cost• Consolidation of product
categories• Quality and ethical control
• Support teams based in key locations
• Responsive marketing and digital functions
• Long-standing customer relationships
• Dedicated supply chain, sales and marketing teams in UK
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¥ RecessedArchitecturalPanelfortypicalofficeandschoolceilings.
PRODUCTINNOVATIONLucecoplc|Fullyearresultspresentation2016
¥ EmergencyExitlights,forsafeandlegallightingduringpoweroutages.
¥ ContinuousLinearLightsystemforcorridors,schoolsandoffices
¥ EcoWarehouselight,forlightingrackingandlargeareas
¥ WaterproofWarehouseLight,Usedforfoodstorageandindustrialareas
¥ CommercialHighPowerFloodlight,forlightingcarparksandoutdoorspaces
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CompellingbenefitsofLEDprovidesonceinagenerationdisruptivetechnology
GROWTHDRIVERS– LED
Efficacybylightingtechnology,Lumens/Watt
UKlightingmarket- LEDtakingmarketshare
¥ LEDistakingmarketsharefromotherlightingsources
Lifetimebylightingtechnology(‘000shours)
GlobalLEDlightingmarketandsize
¥ RapidlygrowingLEDmarket:officeandindustrialapplicationswillgrowfastestwithretrofitLEDlighting
Source:Frost&Sullivan;WorldLEDLightingMarket(2015Update) Source:GoldmanSachs;LEDlightingreport
95% 91% 85% 80% 74% 68% 61% 56% 53%
5% 9% 15% 20% 26% 32% 39% 44% 47%
£1.6bn £1.5bn £1.5bn £1.6bn £1.8bn £1.9bn £2.1bn £2.2bn £2.2bn
2010 2011 2012 2013 2014 2015F 2016F 2017F 2018FNon-LED LED Lighting
$17bn$24bn
$32bn$40bn
$47bn$54bn
$62bn$70bn
2012 2013 2014 2015F 2016F 2017F 2018F 2019F
Source:USDepartmentofEnergySSLforecasts
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GROWTHDRIVERS– LED
17
…withLucecoideallypositionedtooutperformthemarket
Lucecoplc|Fullyearresultspresentation2016
…andhowLucecotakesadvantage
¥ LEDprovidesonlyupside– Notraditionallightingbusinessunlikemanycompetitors
sonocannibalismorconflictofinterest.– Leveragingestablishedcustomerbase
¥ AlmostallcurrentcustomershavetheabilitytodistributeLED– Wholesale– AccessviaexistingUKwholesale/trade
distributionchannelsasatrustedvendor– Retail– salesofdomesticLEDlampsandfloodlightsetc.
throughexistingcustomersandexpandingcrossborder– Projects– newchannelwithsignificantpotential
¥ LowcostmanufacturingatownChinafactory– ConceptdesignsfromEurope/USProductManagers– 40+personLEDengineeringteamatownfactory– Strongpipelineofnewproductlaunchesin2016– Flexibilitytoincreaseproductioncapacitywhencurrent
siteisexpanded
Keymarketgrowthdrivers…
¥ Technologydisruptioncreatesmarketentryopportunitybothintermsofproductandpeople.
¥ LEDsincreasinglyefficientwithimprovingROIs
¥ LEDretrofit– significantadditionalactivityinthecommercialandpublicsectorlightingspace
¥ Supportivelegislation– Bansonincandescentbulbsinmanyjurisdictionsincluding
EU,USAandChina– Energyefficiencylawssettofurtherproliferate
¥ Trackrecordofgrowth:Lucecoinvoicedsales
Note:Company2011and2012financialsstatedinUKGAAP,2013-2015financialsunderIFRS.
£1.5m
£10.6m
£23.3m
£33.0m
2013 2014 2015 2016
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GEOGRAPHY
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Group Revenue by location (%)
UK 86%
Middle East 4%
Europe 4%
Rest of world 6%
Customers across
75 countries
1. Research and development (“R&D“).
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ACQUISITIONSTRATEGYLucecoplc|Fullyearresultspresentation2016
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InternationalExpansionUKExpansion
Boltonacquisitionstosupplementorganicgrowth
¥ ConsolidationofUKmarket
¥ Fragmenteddomesticelectricalsmanufacturingsector
¥ Providesadditionalproducttopushthroughexistingdistributionchannels
¥ EnablescostsavingsthroughaccessingChineseoperations
¥ MultipleopportunitiesidentifiedtosupplementorganicgrowthintheUK
¥ Chinesemanufacturingfacilities
¥ Consolidationofmanufacturingprocess/supplychainto:
¥ Control/de-risk
¥ Gaininternationalmarketaccess
¥ Achieveeconomiesofscale
¥ Accesstooverseasmarkets
¥ Allowsexistingproductstobemarketedtonewcustomerssecuringeconomiesofscale
¥ Abilitytotapintoestablishedcustomerbasesabroad
¥ De-risksentryintonewgeographies
¥ TargetsynergiesleveragingrecentlyexpandedChinafacility
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CHINAUPDATE– FACILITY’SCOMPETITIVEADVANTAGELucecoplc|Fullyearresultspresentation2016
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LUCECO’SMAINMANUFACTURINGFACILITY¥ Wholly-OwnedForeignEnterprise(“WOFE”)basedin
Jiaxing,nearShanghai¥ Decisiontakenbymanagementin2007toinvestinown
facility– startedproductionin2008¥ Wellinvestedwithc.£20minvestedtodate¥ Workforceofc.2,000employees¥ TheChinesefacilityhasbeenexpandedto52,500m2
capacity¥ Keybenefits:
– Low-costR&Dandmanufacturing– Highqualitycontrol– Supplychainefficiency– Marketingbenefitwithblue-chipretailers
¥ 60%+ofGroupproductnowmanufacturedatownfactory
¥ TheCompanyhaswellestablishedrelationshipswithChinesesuppliersincludinga15yearrelationshipwiththeothermainsupplierinNingbo
¥ LEDcommencedatownfactoryin2014andin2016managementbelievethisrepresentedapproximately30%ofChinesefactoryturnover– settogrowthroughnewproductpipelineandincreasedsalesactivity
WELLLOCATEDSITE
Jiaxing
Shanghai
¥44¥103
¥136¥211
¥283
¥362
¥461¥511
2009 2010 2011 2012 2013 2014 2015 2016
CHINESESUBSIDIARYTURNOVERGROWTH1(m)
1.GBP/RMB=9.45
Note:Company2011and2012financialsstatedinUKGAAP,2013-2015financialsunderIFRS.
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SUMMARYANDOUTLOOKLucecoplc|Fullyearresultspresentation2016
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2016SUMMARY
¥ Strongdeliveryacrossallareasofthebusiness
¥ 10,000m2 additionalcapacitybuiltinChinaexpandingthesiteto52,500m2
¥ SuccessfulIPOhasprovideduswithstrongplatformforfurthergrowth
¥ Ambitiousstrategyforgrowthintonewsectorsandterritories
¥ FocusonexpansionopportunityinLEDlightingandwiringaccessories
¥ Tradinginthenewfinancialyearhasbeenstrongerthanexpected,newbusinesswinsandafullpipelineofnewproductlaunchesunderpinsourgrowthforecast
Lucecoremainswellplacedtodeliveranotherstrongyearofgrowthandprofitabilityinlinewithitsstrategy
Extremely strong
performance across all segments
Continued double digit
revenue growth
140 new products
brought to market
Continued LED growth
Additional manufacturing
capacity
Expansion in Spain and Hong Kong
22
Lucecoplc|Fullyearresultspresentation2016
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OUTLOOK
23
Lucecoplc|Fullyearresultspresentation2016
Confidentinourabilitytobuildonourstrong2016performance
¥ Tradinginthenewfinancialyearhasstartedstrongerthanexpected
¥ GroupcontinuestogrowmarketshareintheUKandother,newermarkets,atmarginsinlinewithexpectations.
¥ Growthforecastsfor2017underpinnedby– Astrongorderbook– Newbusinesswins– Fullpipelineofnewproductlaunches
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DISCLAIMER
24
Thispresentationandinformationcommunicatedverballytoyoumaycontaincertainprojectionsandotherforward-lookingstatementswithrespecttothefinancialcondition,resultsofoperations,businessesandprospectsofLucecoplc.Thesestatementsarebasedoncurrentexpectationsandinvolveriskanduncertaintybecausetheyrelatetoeventsanddependuponcircumstancesthatmayor maynotoccurinthefuture.Thereareanumberoffactorswhichcouldcauseactualresultsordevelopmentstodiffermateriallyfrom thoseexpressedorimpliedbytheseforward-lookingstatements.
Anyoftheassumptionsunderlyingtheseforward-lookingstatementscouldproveinaccurateorincorrectandthereforeanyresultscontemplatedintheforward-lookingstatementsmaynotactuallybeachieved.Nothingcontainedinthispresentationorcommunicatedverballyshouldbeconstruedasaprofitforecastorprofitestimate.Investorsorotherrecipientsarecautionednottoplaceunduerelianceonanyforward-lookingstatementscontainedherein.Lucecoplcundertakesnoobligationtoupdateorrevise(publiclyorotherwise)anyforward-lookingstatement,whetherasaresultofnewinformation,futureeventsorothercircumstances.NeitherthispresentationnoranyverbalcommunicationshallconstituteaninvitationorinducementtoanypersontosubscribefororotherwiseacquiresecuritiesinLucecoplc.
Lucecoplc|Fullyearresultspresentation2016