Luceco plc|Annual Report and Financial Statements 2023
Bringing
Power
to Life
Annual Report and
Financial Statements 2023
Our competitive
advantage
Find out more on pages 6 to 8
Operating
responsibly
Find out more on pages 36 to 65
Delivering
onour strategy
Find out more on pages 20 to 28
Strategic Report
1 Highlights
2 At a Glance
4 Review of the Year
6 Our Competitive Advantage
9 Chair’s Statement
11 Chief Executive Officer’s Review
15 Our Attractive Markets
17 Our Advantaged Business Model
18 Our Business Model in Action
20 Our Strategy
21 Strategy in Action
27 Key Performance Indicators
28 Chief Financial Officer’s Review
36 Environment, Social and Governance
62 Our Stakeholders
66 Principal Risks and Uncertainties
72 Viability Statement
74 Non‑financial and Sustainability
Information Statement
Governance
76 Chair’s Introduction
77 Compliance with the 2018 UK
Corporate Governance Code
78 The Board at a Glance
79 Board of Directors
81 Corporate Governance Report
86 Nomination Committee Report
89 Audit Committee Report
94 Remuneration Committee Report
111 D ir ec t or s ’ R e p o r t
115 Statement of Directors’
Responsibilities
Financial Statements
117 Independent Auditor’s Report
124 Consolidated Income Statement
125 Consolidated Statement of
Comprehensive Income
126 Consolidated Balance Sheet
127 Consolidated Statement of Changes
in Equity
129 Consolidated Cash Flow Statement
130 Notes to the Consolidated Financial
Statements
169 Company Balance Sheet
170 Company Statement of Changes
in Equity
171 Notes to the Company Financial
Statements
175 Glossar y
177 Company Information
179 Advisers and Other Information
What’s inside
We are a leading
supplier of innovative
electrical and lighting
products that bring
Power to Life for
ourcustomers.
Highlights
Financial highlights
Revenue Adjusted
1
Free Cash Flow
£209.0m £18.0m
2022: £206.3m 2022: £30.7m
Adjusted
1
Operating Profit Operating profit
£24.0m £22.2m
2022: £22.0m 2022: £13.7m
Adjusted
1
Earnings Per Share Earnings Per Share
11.1p 10.8p
20 2 2 : 11.1p 2022: 7.1p
ESG highlights
ESG – emissions ESG – low carbon sales
Carbon neutral 38%
Operations in 2023 revenue from low carbon products in 2023
1. The definitions of the adjustments made and
reconciliations to the statutory figures can be
found in note 1 of the consolidated financial
statements on page 130 and are used throughout
this document. The measures provide additional
information for users on the underlying
performance of the business, enabling consistent
year‑on‑year comparisons.
Read more about our ESG strategy on pages 36 to 61
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Luceco plc|Annual Report and Financial Statements 2023
At a Glance
Our strategy
Reasons to invest
Our purpose
To help people
harness power
sustainably in
everyday life.
Our culture
See pages 57 to 61
Customer-driven Team-focused
Bold and innovative Principled
Innovate
Designing and manufacturing market‑leading products for our customers
Find out more on page 21
Grow
Maximising sales to an increasing customer base
Find out more on page 23
Sustain
Promoting sustainable choices to enhance our competitive advantage
Find out more on page 25
We operate in
attractive
markets
That are supported
by long‑term
growth drivers
We have an
advantaged
business
model
Which offers unique
advantages to our
customers and over
our competition
We deliver
compelling
financial
outcomes
Which we commit
to with clear
“through the cycle”
financial targets
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Luceco plc|Annual Report and Financial Statements 2023
23%
Portable Power
38%
LED Lighting
39%
Wiring Accessories
At a Glance continued
What we sell:
Who we sell to:
Revenue by
sales channel
Revenue by
distribution type
Revenue by
product
destination
22% Retail
24% Hybrid
25% Professional Wholesale
29% Professional Projects
34% Collected in China
66% Sold in end market
83% UK
6% Europe
4% Americas
4% Middle East & Africa
3% Asia Pacific
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Luceco plc|Annual Report and Financial Statements 2023
Review of the Year
Key business
achievements:
Innovate – We launched our
second series of EV chargers
Sold under the BG Sync EV brand, our latest range
of EV chargers is available in both 7.4kW, for home
use, and 22kW for commercial spaces. The 22kW
charger is a key strategic development, enabling
vehicles to charge three times faster, and allowing
us to sell our chargers within commercial and
higher‑end residential spaces.
Sustain – We increased sales
of low carbon products
We generated £80m of revenue from low carbon
products in 2023 and we continue to focus on this
key area as society charts its path towards net
zero emissions. The actions we are taking today
to invest in our EV charging portfolio and high
efficiency LED lighting solutions, leave us well
positioned to achieve our goal of £100m revenue
from low carbon products by 2025.
Grow – We outperformed our
addressable markets
Our performance in 2023 showed clear progress.
Revenue grew by 1.7% on a like‑for‑like basis,
outperforming markets where output reduced by
5.8%. Our performance was supported by our key
strategic positions within the Hybrid sales channel,
the cessation of post‑pandemic destocking and
another outstanding year of growth from our
Interior LED Lighting Projects team.
Faster charging:
x3
Times
Like-for-like revenue growth:
1.7%
Market output: ‑5.8%
Revenue from low carbon products:
£80m
2022: £78m
Luceco plc|Annual Report and Financial Statements 2023
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Luceco plc|Annual Report and Financial Statements 2023
Review of the Year continued
Innovate – We are creating
synergies with DW Windsor
DW Windsor is beginning to utilise our expertise
and manufacturing capacity, both in the UK and
China, which will help us transform the business
further. Following a year of transition in 2022, DW
Windsor made good progress in 2023 and we
anticipate that over time these efforts will deliver
similar benefits to those being seen in Kingfisher
Lighting.
Grow – We made a strategic
investment in eEnergy
eEnergy, a significant customer of our Interior LED
Lighting Projects business, is a net zero energy
services provider that empowers organisations
to achieve net zero by tackling energy waste and
transitioning to clean energy. These services are
becoming increasingly important as the economy
decarbonises, and we look forward to supporting
the businesses growth.
DW Windsor gross margin:
42.2%
2022: 36.8%
Investment in eEnergy:
£1.7m
Shareholding: 9%
Sustain – We are investing in
Kingfisher Lighting
We have invested £2.5m to move our Kingfisher
Lighting business to an enhanced manufacturing
facility in Mansfield. Since our acquisition of
Kingfisher Lighting six years ago, the business has
grown sales by 49%, and this investment in the
business’s manufacturing capability will enable
the team at Kingfisher to sustain their competitive
advantage supplying low carbon products.
Investment in Kingfisher Lighting:
£2.5m
Exterior LED Lighting
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Luceco plc|Annual Report and Financial Statements 2023
Design
Fulfil Market
Make
Our Competitive Advantage
High quality, low cost, vertically
integrated manufacturing
We leverage our fully owned, strategically invested and vertically integrated
manufacturing facility to optimise production processes, ensuring strong cost control
and maintaining consistently high quality standards. Our in‑house capabilities not only
facilitate growth, but also enable us to remain agile to changes in supply dynamics and
responsive to evolving customer needs.
Find out more on page 19
Strong product development
Through decades of experience and expertise, our design team based in the UK have
built a market‑leading portfolio of products that can be applied to meet a broad range of
customer requirements. We are constantly innovating to enhance the performance and
functionality of our products to position ourselves for future growth and sustainability.
Find out more on page 19
2023 revenue from new products:
£13.7m
2023 R&D expenditure:
£4.1m
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Luceco plc|Annual Report and Financial Statements 2023
Our Competitive Advantage continued
Strong, well invested and
expandable brands
Our enviable range of well‑established brands enable us to offer a diverse product
portfolio, all sharing the same distinct traits of enhanced functionality, quality and value.
This strong brand presence provides us with the platform to operate successfullyacross
multiple market segments from Professional Wholesalers and Projects, Retailers and the
fast‑growing Hybrid sector.
Find out more on page 3
Adjusted Operating Profit growth since 2019:
Wiring Accessories:
18%
LED Lighting:
292%
Portable Power:
5%
Entrepreneurial, can-do culture
The Group’s “can‑do” culture propels us forward with a proactive, solution‑oriented
mindset. This fosters innovation, quick problem‑solving, and heightened employee
engagement. Our culture not only enhances operational efficiency but also positions
Luceco as a resilient, customer‑focused company, securing a competitive advantage
within our markets.
Find out more on pages 57 to 61
Customer-driven Team-focused
Bold & innovative Principled
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Luceco plc|Annual Report and Financial Statements 2023
LED lighting
Power
socket
Commercial
LED lighting
Underfloor
distribution
Power and data
integration
LED lighting
Power
socket
TV bracket
Cable reel
External power
socket
EV charging
Street
lighting
Our Competitive Advantage continued
As society becomes increasingly focused on its
environmental impact, our product portfolio, combined
with our business model and experience, puts us in a
strong position to help consumers make sustainable
choices. We are proud of the progress we have made
over the last decade following the launch of our
Luceco Lighting brand, producing highly efficient,
low carbon lighting solutions, and we are excited
by the contribution we can make through further
development of our EV charger range. Demand for EV
charging solutions for homes and commercial premises
is set to increase significantly and we are well placed to
capture these opportunities.
Find out more on pages 37 to 56
Creating a net zero pathway
Annual investment required for UK
tomeet net zero
£40bn
Additional EV charging vehicles
by 2028
5 million
Milestones in our net zero journey:
2013
Luceco Lighting
brand launched,
creating highly
efficient internal
lighting products
2017
Acquisition of
Kingfisher Lighting,
providing
energy‑saving
exterior lighting
solutions
2021
Acquisition of DW
Windsor, extending
reach of high
efficiency exterior
lighting products
2021
Achieved carbon
neutral operations
2022
Acquisition of Sync
EV in EV charger
market
2022
Committed to the
Science Based
Targets initiative
2023
Generated £80m
revenue from low
carbon products
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Luceco plc|Annual Report and Financial Statements 2023
Sustained progress against our
strategic objectives has driven
a resilient performance despite
adverse market conditions
Giles Brand
Chair
Chair’s Statement
The strength of a business’s operating
model can sometimes be better gauged
by how it responds to adversity, so it is
particularly pleasing that in these tough
market conditions we have been able
to grow like‑for‑like revenue by 1.7% and
increase Adjusted Operating Profit by 9.1%.
This profitable growth has been supported
by the strategic decisions the Group has
made to invest in product development,
increase its presence within key growth
markets, and develop its team of sales and
product specialists.
Furthermore, through careful working
capital inventory management and
strategic capital allocation, the Group’s
ability to generate strong cash returns was
once again demonstrated. The Group’s
compelling track record of both growth
and cash generation leaves the business
well positioned to further invest in its
strategic priorities, and generate value for
its stakeholders.
Strategy
The Group’s key strategic priorities to
Innovate, Grow and Sustain drive our
delivery of the Group’s purpose to help
people harness power sustainably in
everyday life.
The business continues to find new ways to
innovate, to enhance its product portfolio
and the services it offers to customers. In
2023, further strides have been taken to
develop the Group’s growing range of EV
chargers in addition to development of the
Group’s core products, for example through
the release of our new F‑type range of LED
downlights. We focus on enhancements
that customers need and are pleased that
£13.7m of revenue generated in 2023 was
from new product development.
Adjusted Earnings Per Share
11.1p
20 2 2 : 11.1p
Dividend payout
43%
2022: 41%
I am pleased to introduce the Company’s
results for the year ended 31 December2023,
a year in which Luceco’s continued progress
towards its strategic priorities led to a robust
financial performance despite challenging
market conditions.
Performance
Over the last five years, Luceco has grown
into a strategically focused, profitable,
highly cash generative and well capitalised
business. This evolution is reflected in the
Group’s 2023 results, which show clear
progress against a broad spectrum of
measures.
Throughout 2023 we were challenged
by adverse market conditions and
macroeconomic uncertainty, but results
have been stronger than 2022.
Since the beginning of 2022 our customers
had been responding to changes in both
demand and easing of supply chain
constraints by unwinding extra inventory
they had purchased during the pandemic.
As expected, this temporary period of
post‑pandemic destocking appears to
have been completed in 2023. I am pleased
with how the Company responded to
these challenges by working with our key
customers to understand their needs and
ensure we continue to have strong product
availability across their stores.
Although we are confident that the
fundamental drivers within our industry
will generate growth in our markets over
the long term, underlying demand was a
headwind in 2023. In the short term, we
have found the rising cost of living has
reduced discretionary consumer spending
and placed a headwind on the markets in
which we operate.
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Luceco plc|Annual Report and Financial Statements 2023
Chair’s Statement continued
Strategy continued
The Group has been able to display strong,
above‑market organic growth in 2023.
Supported by a broad product portfolio,
our sales teams are winning in each of our
core markets, and looking forwards we are
making strategic investments in key growth
areas to further accelerate growth into the
future. Our excellent track record of cash
generation has created significant capacity
to enable us to plan with confidence.
Importantly, alongside our ability to
innovate and grow, we are investing in our
business model to sustain our performance
over the long term. This year our facilities
in China have successfully automated
production of our new range of EV
chargers as well as DW Windsor products.
Furthermore, we have invested £2.5m to
move our Kingfisher Lighting business
to an enhanced manufacturing facility in
Mansfield, increasing our capacity to deliver
low carbon lighting solutions to the external
lighting industry.
Environment, Social and Governance
(“ESG”)
As a Group, we believe we have a significant
opportunity to create a lasting positive
impact on the world around us.
During 2023, the Group’s sustainability
targets received validation from the
influential Science Based Targets initiative.
This puts Luceco’s overall CO
2
emissions on
a reduction pathway consistent with the
Paris Agreement. Given that the Group’s
operations have been carbon neutral since
2021, greater focus will continue to be
placed on delivering targeted emission
reductions elsewhere in the value chain.
Luceco grew low carbon sales to £80m
(2022: £78m) and is on track to meet its
previously announced target of £100m of
such sales by 2025.
Dividend
The Group’s dividend policy has a payout
ratio of 40‑60% of Adjusted Profit After Tax.
The Board is recommending a final
dividend of 3.2p per share which, with the
interim dividend of 1.6p, is consistent with
a 43% payout, payable on 17 May 2024 to
shareholders on the register on 12April2024.
Conclusion
As a Board we believe Luceco’s purpose is
to help people harness power sustainably
in their everyday lives. Our products make
it easier for people to make sustainable
choices. The steps the business has taken
in recent years to progress its strategic
priorities are enabling the Group to
outperform its chosen markets and deliver
on its purpose. None of this would be
possible without our employees, whom I
would like to thank for their expertise and
unwavering commitment, which have
played a pivotal role in positioning the
Group for future success.
Giles Brand
Chair
25 March 2024
10
Luceco plc|Annual Report and Financial Statements 2023
Financial StatementsGovernanceStrategic Report
In 2023 we once again outperformed
our markets, whilst taking further
steps towards our strategic goals
John Hornby
Chief Executive Officer
Chief Executive Officer’s Review
This sustained cash performance over a
four‑year period highlights the strength of
our business model and underscores the
Group’s long‑term potential.
We end the year with Covenant Net Debt
of £18.4m, which gives us good optionality
to invest in the business to drive further
growth, both organically as well as through
our exciting M&A pipeline.
Macroeconomic factors
Like most businesses, since the pandemic
we have experienced some rapid changes
in macroeconomic and geopolitical
influences. I am delighted with the way we
have navigated these shifts, to consistently
outperform whatever conditions we face.
Revenue
£209.0m
2022: £206.3m
Adjusted Operating Profit
£24.0m
2022: £22.0m
Performance highlights
Last year I highlighted the strategic steps
we are taking and how they leave us well
positioned for the future, so I am pleased
our performance in 2023 demonstrated
clear progress. Despite challenging market
conditions we achieved revenue of £209.0m
(2022: £206.3m) and Adjusted Operating
Profit of £24.0m (2022: £22.0m).
We outperformed a softer market, taking
market share and growing revenue by 1.7%
on a like‑for‑like basis. Our performance was
driven by our key strategic positions within
the Hybrid sales channel, the cessation of
post‑pandemic destocking and another
outstanding year of growth within our
interior LED Lighting Projects team.
I have been pleased by the improvement
we have seen in our Adjusted Operating
Margin, as material and freight costs eased,
albeit partially offset by exchange rate
headwinds and increasing wage costs. Our
lean operating model means we are well
positioned to grow our margins further
when market conditions allow. I am also
delighted that yet again, we have delivered
a strong cash flow performance, achieving
Adjusted Free Cash Flow of £18.0m. Careful
working capital management and strategic
capital allocation, has meant that since 2019
the business has generated Adjusted Free
Cash of £90.2m from Adjusted Operating
Profit of £115.0m.
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Luceco plc|Annual Report and Financial Statements 2023
Macroeconomic factors continued
In 2021, the combination of strong end user
demand and exceptionally constrained
global supply chains caused our distributor
customers to materially increase their
stock of our products, adding to our sales,
as previously reported. In 2022 and in the
first half of 2023, they largely unwound the
extra inventory added as both demand and
supply chain constraints eased, reducing
our sales.
This temporary period of destocking
appears to have concluded in 2023, based
on the analysis of EPOS data with our
customers who have returned to more
normalised purchasing patterns.
The other key theme for us was how global
supply and demand imbalances in the wake
of the pandemic resulted in significant
industry‑wide input cost inflation. We
identified these trends early and reset
selling prices accordingly without impacting
our competitive position.
Lead times normalised in 2022, following
the peaks during the pandemic, and have
remained consistent in 2023. This more
normalised demand has meant that we
have seen cost inflation subside, with
material and freight and duty prices easing
in 2023.
However, as anticipated and despite
protection from hedging arrangements,
foreign exchange movements have
remained a headwind. Overall, our
gross margin is beginning to return to
through‑the‑cycle levels, and demand from
key customers now more closely reflects
end market conditions with consumers.
Underlying demand
Our like‑for‑like revenue growth of 1.7% in
2023 is put into context when we compare
ourselves to the wider construction market,
with data from the Construction Products
Association (“CPA”) indicating that output
of our addressable markets reduced 5.8% in
the same timeframe.
Approximately 60% of our business is
focused on delivering residential repair,
maintenance and improvement (“RMI”)
solutions to professional installers and
general consumers performing DIY. Using
CPA data, we estimate that this market’s
output reduced 8% in 2023, as it normalises
following the RMI boom which peaked
during the pandemic. The retail sector
in particular remains challenging, with
the Barclays Consumer Spending Index
reporting a 4.7% average reduction in DIY
spending over the course of 2023.
Nevertheless, the strategic positions we
hold within the Hybrid sales channel in
addition to the work we have done to grow
our share of the professional contractor
market, has enabled us to outperform this
slow market to deliver growth of 0.8% within
this sector of our business. I am pleased that
the non‑residential RMI arm of our business,
which makes up approximately 20% of the
Group revenue, grew by 8.5% in the year.
This is supported by our strategic investment
in our Interior LED Lighting Projects team,
who continue to take market share by
utilising our well‑rounded LED Lighting
portfolio. This result is even more pleasing
when we consider that market output
contracted approximately 0.8% in the year,
as businesses seek to make temporary cost
savings by reducing expenditure on their
estates.
Although sales within our Exterior LED
Lighting businesses reduced 2.4% in the
year, slightly higher than a market output
reduction of 1.1%, profitability within
these businesses grew. The steps we are
taking to drive synergies within the DW
Windsor business and our continued focus
on higher margin contracts has meant
these businesses have taken another step
forwards in 2023.
Within the new housing market, rising
interest rates have led to challenging
market conditions for housebuilders, with
the CPA estimating a contraction in output
of 17.1% in 2023. However, we estimate this
market makes up less than 5.0% of our sales
and despite market conditions, we were
still able to grow this smaller part of our
business by 5.2%, aided by increasing sales
of EV chargers.
Whilst it is clear that the rising cost of
living has reduced discretionary consumer
spending and placed a headwind on
the markets in which we operate, the
fundamental growth drivers supporting
our industry and business remain. The drive
towards net zero, consistent regulatory
change, new technology and an underlying
need to invest in UK housing stock mean
we can be confident that our markets will
deliver healthy and stable growth over the
long term.
Strategic highlights
Throughout 2023, we have continued to
deliver on our purpose to help people
harness power sustainably in everyday
life. In addition to delivering a robust set
of financial results, I am pleased with the
work we have done to further progress our
strategic priorities to Innovate, Grow and
Sustain.
Innovate
The key first step in us carrying out our
purpose is to innovate. Our ability to see
and do things differently creates value
for our stakeholders, driving growth of
the business, allowing us to sustain our
competitive advantage and contribute
towards the transition to net zero.
We continually focus on developing new
products and enhancing our existing
range with increased functionality that fits
our customers’ needs. Our global team of
over 100 product development specialists,
drive a development process which is
customer‑centric, rapid and carries relatively
low execution risk. It has been a key driver
of the Group’s success.
I am delighted by the strides we have made
in 2023 to enhance our product portfolio.
We continue to make advances in the
development of our EV chargers, with 2023
bringing the launch of our second series
of chargers sold under the BG Sync EV
brand. Building on the platform from our
first series of chargers, this new range is
available in both 7.4kW, for home use, and
22kW for commercial spaces. The 22kW
charger is a key strategic development,
enabling vehicles to charge three times
faster, and allowing us to sell our chargers
within commercial and higher‑end
residential markets. Furthermore, both
products are produced using the same core
components and designs, allowing them to
be manufactured at scale, using the same
tooling and processes, by our team in China.
Chief Executive Officer’s Review continued
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Luceco plc|Annual Report and Financial Statements 2023
Strategic highlights continued
Innovate continued
Within our LED Lighting range, we have
refreshed our offering of downlights with
the launch of the new F‑type range. This
new range of low‑profile downlights strikes
an ideal balance between functionality,
design, performance and cost.
With its SpeedFit housing design for ease
of installation and its availability with colour
changing functionality, the F‑type range
provides practical innovation that our
customers actually need. This innovation
with purpose, is key to our strategy,
enabling us to both take market share
and create value through differentiated
products that command higher margins.
Following significant new product launches
in 2022, we continue to enhance our portfolio
of Wiring Accessories and Masterplug
products. Thanks to our vertically integrated
manufacturing model, we can swiftly make
low investment adjustments within our
existing ranges to suit changing market
trends. We were able to do this again in 2023,
with the release of a new matt black finish
within our premium Nexus Metal socket
range and the release of screwless designs,
for a sleeker finish within our core offering.
I am also pleased to report that DW
Windsor is beginning to benefit from our
expertise and manufacturing capacity, both
in the UK and China, which will help us
transform the business further. Following
a year of transition in 2022, DW Windsor
made good progress in 2023 and we hope
that over time these efforts will deliver
similar benefits to those being seen in
Kingfisher Lighting.
Our bold and innovative culture extends
beyond our development specialists,
with the whole business playing a part.
A fantastic example of this has been the
development of our specialised interior
projects customer services team in 2023.
Using their expert knowledge, this team
manage the implementation of our interior
lighting projects from start to finish,
allowing our sales experts to focus on what
they do best.
Grow
Despite challenging market conditions,
we continue to grow the business both
organically as well as through targeted M&A.
Through years of experience, our excellent
sales teams have become adept at using
the innovative products we create to
extend our market reach. A prime example
of this is the success we have had in 2023
through our BG Evolve decorative Wiring
Accessories range. Launched in 2022, the
modern and stylish switches and sockets
of the Evolve range provide consumers
with a new premium solution for high‑end
builds and retrofits. The launch of this new
range has enabled us to further extend our
product portfolios by entering the adjacent
premium Wiring Accessories market.
I am delighted that in 2023 we have sold
over 500,000 Wiring Accessories products
from the Evolve portfolio, with strong
interest across our Retailers, Wholesalers
and Hybrid channels, generating £2.6m of
revenue.
Our ability to grow organically is not just
limited to new product launches. The
excellent relationships we have with our
customers means we can work together to
ensure the right products are being made
available to the end consumer. As we have
moved through 2023, our sales teams have
successfully extended existing product
ranges to generate £4m of new business
wins. Ultimately, our customers choose our
products as they know they can sell them
to the end consumer, and this leaves us well
placed for future organic growth.
We are also taking further steps to increase
the speed of growth within our Interior LED
Lighting Projects team. Our experience has
taught us that, when given the right level
of support, a new sales team member can
deliver strong annualised sales within three
years. We are increasing the pace at which
we recruit within this high growth area and
as a result we successfully grew sales within
this team by 24% to £12.6m in 2023.
We have complemented the Group’s long
history of organic growth with acquisitions
funded by our consistently strong cash flow.
In 2023 we made a strategic investment
of £1.7m in eEnergy Group plc (“eEnergy”).
eEnergy is a net zero energy services
provider that empowers organisations to
achieve net zero by tackling energy waste
and transitioning to clean energy. The
business is already an important customer
for our LED Lighting Projects business.
As the economy decarbonises it is well
positioned to become an increasingly
relevant channel in the non‑residential
segment, and we look forward to
supporting the growth of eEnergy and
exploring the potential for increased
co‑operation between our businesses.
A further year of cash generation, driven
by organic growth in addition to synergy
creation from previous acquisitions, means
we end the year with Covenant Net Debt
of £18.4m. With the right foundations for
a successful “buy and build” strategy, we
continue to explore M&A opportunities that
have a strong strategic fit and the potential
to deliver future growth.
Sustain
Our Sustain strategy is focused on taking
action to contribute to society’s sustainability
goals as well as investing in our people
and our industry. Taking these actions now
will ensure we sustain our competitive
advantage into the future.
During 2023 we received validation from
the Science Based Targets initiative (“SBTi”),
targeting a 42% reduction in operational
emissions and a 27.5% reduction in value
chain emissions by 2031. Our operations
continue to offer one of the lowest
operational carbon footprints in our industry
and this was reaffirmed with a “B” rating
from the Carbon Disclosure Project in the
first quarter of 2024 relating to the 2023
year. This is our third year of reporting to the
platform, so we are delighted our progress
integrating climate‑related issues into our
business operations has been reflected with
a strong grade.
Chief Executive Officer’s Review continued
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Strategic highlights continued
Sustain continued
We generated £80m of revenue from low
carbon products in 2023 and we continue
to focus on this key area as society charts
its path towards net zero emissions. The
actions we are taking today to invest in our
EV charging portfolio and high efficiency
LED lighting solutions, leave us well
positioned to achieve our goal of £100m
revenue from low carbon products by 2025.
In the UK, we have held nearly 50 contractor
continuous professional development
training events in 2023, hosted in conjunction
with our major professional wholesale
customers. In particular, we have extended
the training we provide on the installation
of EV chargers, and I am pleased with the
positive feedback these have received.
We continue to invest in the next
generation of contractors. For the second
year running we were proud to sponsor
the prestigious eFIXX 30 under 30 awards,
aimed at recognising talented, young
electricians in the UK.
We invest in our business model to sustain
and accelerate future growth. As travel
restrictions to China have eased, it has been
hugely beneficial for me and our team of
designers to visit our facility in China more
regularly. I am pleased with the progress
we have made to extend and automate our
production of EV chargers and DW Windsor
products, which provide us with a great
platform from which to scale as we move
forwards.
I am also excited by our £2.5m investment
to relocate our Kingfisher Lighting
business to an enhanced manufacturing
facility in Mansfield. Since our acquisition
of Kingfisher Lighting six years ago, the
business has grown sales by 49%, and this
investment in its manufacturing capability
will enable the team at Kingfisher to sustain
their competitive advantage supplying low
carbon products.
In summary, I am once again hugely proud
of the progress the entire Luceco team have
made in the year. Our bold and innovative
culture continues to drive the business
forwards with the right actions being taken
now to deliver on our long‑term strategy.
Outlook
Trading in early 2024 has been in line with
our expectations, with improved gross
margin and lower input costs balancing
less residential RMI activity. Whilst the
macroeconomic outlook for 2024 remains
difficult to judge, I am encouraged by our
healthy underlying trading momentum
which leaves us well positioned to progress
further during the year ahead.
John Hornby
Chief Executive Officer
25 March 2024
Chief Executive Officer’s Review continued
14
Luceco plc|Annual Report and Financial Statements 2023
Financial StatementsGovernanceStrategic Report
Wiring Accessories LED Lighting Portable Power
Market
Channel
Wiring
devices
Circuit
protection Interior Exterior Masterplug
1
EV chargers
Residential RMI
Retail
Professional
Hybrid
New residential
housing
Professional
Non-residential RMI
Professional
Hybrid
New infrastructure Professional
Full product offer
Part range
1. Cable reels, extension leads and associated accessories sold under the Masterplug brand.
Our Attractive Markets
We operate in attractive markets, with healthy
and stable historic growth that are poised to
benefit from future decarbonisation efforts.
Our enviable market
positions
Over the course of the last decade, we have
worked hard to grow our share of existing
markets as well as entering adjacent
markets where we see a competitive
advantage. As a result, we now hold
enviable positions across a range of
industries that are supported by long‑term
growth drivers.
% of Group
revenue
60% Residential RMI
5% New residential housing
20% Non‑residential RMI
15% New infrastructure
Our broad
market offering
Our extensive, strategically built product
range, combined with our strong sales
channel access, and vertically integrated
model means we are able to successfully
compete within multiple markets.
Moving forward, our growing portfolio of
EV chargers, in addition to innovative new
ranges within our core offering, will enable
us to extend our reach within new and
existing markets.
Residential
RMI
New residential
housing
Non‑residential
RMI
New
infrastructure
5.5%
9.7%
6.1%
9.1%
Our markets
are growing
Each of our four distinct construction
markets has exhibited attractive long‑term
growth. We are confident that the right
fundamental drivers are in place in each of
our chosen markets for us to see sustained
growth over the coming years.
Annualised average growth since 2013
Although our markets are attractive,
the opportunities they create can
only be harnessed by those with the
correct processes and knowledge. Our
advantaged business model allows us to
innovate, manufacture new products at
our own facilities and bring new ranges
to market quickly and efficiently under
our trusted brands.
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Our Attractive Markets continued
Trends that are shaping our markets
Regulatory
change
Driver
The electrical industry undergoes frequent
regulatory changes. These are often designed to
improve safety or product efficiency and result in
both the renewal of installations and increases in
value of the electrical products used within the
installation.
Impact
+110 %
increase in the
average sales price
ofUK consumer
unitssince 2010
(ex.inflation)
+60%
increase in Luceco
consumer unit sales
during EICR
regulation change
Our response
Our advantaged business model allows us to
update our designs efficiently to meet these new
regulations, manufacture the new product in our
own facilities and bring the product to market
more quickly and effectively than our
competitors.
New
technology
Driver
Consumers are increasingly demanding greater
control and efficiency from their wiring devices
and lighting, whilst installers are demanding
technologies that simplify installation. This desire
for increased functionality drives up product
value.
Impact
+800%
Plastic socket Sales price USB – A/C
difference
Our response
We interact regularly with our consumers,
installers and distributors to understand their
emerging needs. We ensure these needs are
reflected in new product designs.
Investment in the built
environment
Driver
A limited stock of new homes combined with
consumers spending more time living and
working at home, drives long‑term house price
appreciation and existing home renovation. These
trends sustain demand for our products within
repair and remodel projects.
Impact
4 million
UK homes below
Decent Homes
Standard
40%
of UK retail
spaceneeds
re‑purposing
Our response
Whether it is our market‑leading Wiring
Accessories range, our highly efficient LED
Lighting retrofits, or our Portable Power products
helping our customers get the job done, our
products are helping people invest in their homes
and working environments using brands they
know and trust.
Climate
emergency
Driver
The electrification of household energy and
transport is a key driver of future growth within
the markets we serve, supported by specific
regulatory changes such as phasing out the sale
of new gas boilers and internal combustion
vehicles over the coming decade.
Impact
£40bn
per year
investment
required for
UK to meet
net zero
5 million
additional EV
charging
vehicles by
2028
1 millio n
homes per
year to be
converted
with low
carbon
heating
solutions
Our response
We are extending our reach within the EV
charging market. We are targeting £100m of low
carbon sales by 2025 to ensure we are at the
forefront as consumers adopt sustainable
alternatives.
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Competitive advantage
Underpinned by our culture
Find out more on pages 57 to 61
How we add value Outcomes
Our Advantaged Business Model
High quality, low cost,
vertically integrated
manufacturing
Find out more on pages 18 and 19
Strong product
development
Find out more on pages 21 and 22
Strong, well invested
andexpandable brands
Find out more on page 3
Entrepreneurial,
can-doculture
Find out more on pages 57 to 61
Creating a net zero
pathway
Find out more on pages 36 to 56
• We are the innovators
within the product
categories we serve.
Innovation allows us to
up‑sell and improve
profitability
• We bring new ideas to
market quickly
• Our designs offer great
quality at a great price
• Our designs start with the
customer in mind
• Our supply chain:
• Is flexible to customer
needs
• Offers high outbound
service levels
• Maintains a breadth of
inventory close to the
customer
• Uses the best available
technology
• Offers products as part
of a solution
• We operate a vertically
integrated manufacturing
model
• Our production output is
able to quickly adapt to
changing demand
• Our facilities are well
invested, allowing us to
make high quality, low
cost products
• We have long‑established
OEM partners
• Our customers know
where our products come
from and the conditions in
which they are made
• We have been serving our
largest customers for
many years
• We have a highly skilled
and experienced sales
team
• We operate in diverse but
synergistic sales channels
• We invest in our digital
presence and estate
• We invest in the next
generation of electrical
contractors
•
People:
1,590
Number of employees
Customers:
>2,000
Number of customers
Suppliers:
>1,000
Key suppliers
Shareholders:
40-60%
Annual dividend payout
Communities:
Actively
supporting
training of electrical contractors
Environment:
38%
Revenue from low carbon
products
Customer-driven Team-focused Bold & innovative Principled
DesignFulfil
MakeMarket
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Providing
clear quality
Our Business Model in Action
Our work this year for Battersea Power
Station provides a clear illustration of how our
integrated business model enables us to add
value throughout the customer journey by
providing clear quality and cost advantages
for our customers and rewarding our people,
partners and shareholders.
Project scope
The iconic Grade II listed Battersea Power
Station, on the banks of the River Thames,
was in need of major renovation in order
to be brought back to life as one of
London’s exciting new shopping and leisure
destinations.
Luceco was proud to be able to deliver
lighting solutions in key areas of the
renovation, including management suites,
fire control and security centres.
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Our Business Model in Action continued
The nature of the Group’s vertically integrated business model means
we are able to deliver large-scale projects within set timeframes
whilst still remaining flexible to create bespoke designs that meet our
individual customer needs.
Design
The size and scale of Battersea Power Station
meant it was key the lighting solutions provided
were high performing and reliable, whilst also
being sensitive to the original architecture of the
building and in line with architect’s vision for the
renovation. Luceco was able to meet these
challenging requirements through our flagship
Platinum and Contour LED lighting ranges.
Our recessed Platinum range delivers
market‑leading performance and efficiency,
providing the strong lighting levels that are
essential for the site. The product’s unique design
allows quick and easy installation, whilst the
ability to surface mount the light fitting
unobtrusively was important in a building of such
architectural sensitivity.
For the circulation areas, the suspended arrays of
the Contour luminaire were used. This LED
lighting system consists of connectable modules
that can be surface mounted, suspended or
recessed, forming contemporary, decorative and
highly effective illumination. With this range
offering 100,000 hours of operational life, it is ideal
for this high working hours environment.
Make
We operate a fully owned, well invested and
vertically integrated manufacturing facility which
provides us with certainty over product supply
and greater control over cost.
The scale and level of control we have over our
manufacturing output means we can be relied
upon to deliver our products in line with specific
customer requirements. In the case of Battersea
Power Station not only were we able to deliver
within the specific time windows required to
support the wider enhancements taking place,
but we were also able to adapt our production to
provide the lighting in colours specific to the
architect’s vision.
Market
Our experienced team works hard to develop
strong relationships with existing customers,
mechanical and engineering contractors,
electrical contractors and wholesalers.
Maintaining these relationships is paramount to
our business model; it means we win more
business, and it helps limit costs and protect
margins.
We were able to clearly illustrate to each of the
stakeholders involved in the Battersea Power
Station project that our solutions met their needs
using products within our portfolio that were tried
and tested.
Furthermore, having our own manufacturing
experience meant we could deliver to the scale
required. This approach helped us develop a
strong customer relationship from the outset,
helping us not only win the tender but deliver on
our commitments.
Fulfil
Having control over our supply chain is the final
critical element of our model. At Luceco we
understand that the work we do often forms part
of broader enhancements being undertaken by
the customer. We see our ability to reliably fulfil
projects on time as another opportunity to
outperform our competition.
Our flexible approach and focus on fulfilment has
meant we have created a reputation for being
able to deliver large‑scale projects both in the UK
and internationally.
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Our purpose: Creating positive impact:Our strategic priorities:
Our Strategy
To help people
harness power
sustainably in
everyday life.
Across the Group we are focused on
providing innovative, energy-efficient
electrical and lighting solutions.
Committed to sustainability and customer
satisfaction, the Company aims to enhance
lives by delivering high-quality products
that contribute to a brighter, more efficient
and environmentally conscious future.
Our innovation is enhancing lives by
allowing our customers to harness power
with efficient and sustainable solutions.
£13.7m
2023 revenue from new products
We are successfully growing our
business to deliver our purpose to a
larger customer base, for the benefit of
all our stakeholders.
44%
Adjusted Earnings Per Share growth since 2019
The work we are doing today is
contributing to society’s sustainability
goals through the sale of more efficient
and lower carbon products.
£80m
2023 revenue from low carbon products
Innovate
Innovation in action
Find out more on page 21
We use market-leading
innovation to seize our
growth opportunities. Our
Innovate strategy covers
both the products that we
design and the services that
accompany them.
Product
We constantly innovate to
meet customer needs. We
design high functioning,
higher margin devices in both
existing as well as new
product categories – such as
EV chargers. Our customer‑
driven, bold and innovative
culture is embodied within the
products we develop.
Service
We continually innovate the
services that accompany our
products to improve the
customer experience and sell
our products as part of a
solution. We have
well‑developed lighting
installation design teams to
help specifiers turn their
concepts into reality.
Grow
Growth in action
Find out more on page 23
Luceco has a proven track
record of growth. We have
complemented the Group’s
long history of organic
growth with acquisitions
funded by our consistently
strong cash flow.
Organic
We are focused on utilising
our well‑developed
infrastructure, innovative
product portfolio and strong
customer relationships to
grow organically.
Acquisitions
We have the right foundation
for a successful “buy and
build” M&A strategy, carefully
selecting opportunities that
enable the creation of
synergies while aiding our
expansion into new markets
and sectors.
Sustain
Sustainability in action
Find out more on page 25
Our Sustain strategy
ensures we maintain our
competitive advantage. We
are investing in our people
and our industry as well as
contributing increasingly
to society’s sustainability
goals.
People
Our products are designed,
made, distributed and
installed by people. We invest
in both our people and our
industry to ensure they all
have the skills they need to
help our products shine.
Planet
We aim to lead our industry
by lowering our
environmental footprint, and
in doing so help our
customers to achieve their
own sustainability targets.
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Innovate
Strategy in Action
We have a strong track
record of innovating to grow
our business. We bring our
innovations to market quickly
and are often the architects of
change in our industry.
This ongoing design philosophy is particularly evident through the further
strides we have made in development of our EV charger range.
Key stats
£4.1m £13.7m
2023 R&D expenditure 2023 revenue from new products
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Our innovative culture spans our entire
product range. Within Wiring Accessories,
we were the first in the UK market to
add USB functionality to mains sockets,
whilst our LED Lighting products provide
the consumer with both energy savings
and superior lighting levels. Our drive
for innovation remains a key part of our
strategy as it not only differentiates our
products from the competition, but it also
enables us to up‑sell what we manufacture
to maintain consistently high margins.
Through focus groups, social media
interactions and feedback gathered via our
sales teams, we are launching new products
that meet the contractor’s desire for quality,
value and ease of installation.
Our design philosophy is evident through
the launch of our second series of EV
chargers sold under the BG Sync EV brand.
The latest range builds on the platform
created from our first series of chargers
whilst also providing new functionality,
based on valuable customer and installer
feedback.
The range is available in both 7.4kW, for
home use, and 22kW for commercial spaces
such as workplaces, shopping centres
and public charging stations. The design
of this 22kW charger is a key strategic
development, enabling vehicles to charge
three times faster and enabling us to bring
our products to commercial settings with a
high throughput of vehicles.
Furthermore, both products are produced
using the same core components and
designs, allowing them to be manufactured
at scale, using the same tooling and
processes, by our team in China.
Designed with safety and ease of
installation in mind, the range is amongst
the safest on the market, with built‑in power
and grid fault protections. Furthermore,
our chargers offer full smart functionality,
allowing our customers to optimise their
EV charging for the cheapest, greenest
energy possible.
We have further enhanced the aesthetic of
the latest range, continuing to use the same
high‑quality materials, but introducing a
new, sleek design which has resonated with
our customers. The newest design is also
offered in a range of colours to enable the
chargers to be installed sympathetically to
the architecture of the surrounding area or
individual consumer preferences.
The future looks set to offer further
opportunities, with our design pipeline
having four new EV charger products
scheduled for release in 2024. This continual
drive for innovation allows us to consistently
differentiate ourselves within our markets
and underpins our future growth plans.
Strategy in Action continued
We have a long history
of leading change within
our industry, consistently
producing products with
enhanced functionality and
cutting-edge designs.
Innovate
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Grow
Strategy in Action continued
We are focused on growing
within our chosen markets
by leveraging our successful
business model, both in the
UK and overseas.
Following its launch in 2022, the BG Evolve range is a great example of how we
manage our product ranges to extend our market reach and drive growth.
Key stats
44% £27.9m
Adjusted Earnings Per Share growth
since 2019
Group M&A investment since 2019
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Strategy in Action continued
An excellent example of how we outperform
our markets through organic growth is the
success we have had in 2023 through our
BG Evolve decorative Wiring Accessories
range. Launched in 2022, the modern and
stylish switches and sockets of the Evolve
range provide consumers with a new,
premium solution for high‑end builds and
retrofits.
The launch of this new range has enabled
our sales teams to further extend our
product portfolios with our customers by
entering the adjacent premium Wiring
Accessories market. We are delighted that
in 2023 we have sold over 500,000 Wiring
Accessories products from the Evolve
portfolio, generating £2.6m of revenue at a
strong gross margin.
A key driver behind why the range has
been so successful is our enviable market
positions across multiple sales channels
and our excellent relationships with
customers operating within these markets.
Within 18 months of the product launch,
we are selling to over 250 customers, with
our reach extending from the smallest
independent retailers to our largest Hybrid
customers.
Not only do our customers appreciate our
products because of their popularity with
the end consumer, they also know that
we can be relied upon to provide excellent
product availability, a crucial factor when
choosing a decorative product such as
Evolve. Our vertically integrated operating
model allows us to respond with agility to
changes in demand and provide strong
availability from the start of a product
launch.
Furthermore, because we manufacture
these products ourselves, we are able to
utilise our existing tooling and infrastructure
with minimal additional investment. In all,
development of the Evolve range cost in the
region of £0.1m capitalised expenditure. At
maturation we are confident the range will
generate £3m of annualised sales.
Our ability to grow organically is not just
limited to new product launches. The
excellent relationships we have with our
customers means we can work together to
ensure the right products are being made
available to the end consumer. As we have
moved through 2023, our sales teams have
successfully extended existing product
ranges to generate £4m of new business
wins.
As we celebrate the achievements of
2023, we look forward to sustaining this
momentum knowing that our vertically
integrated model, agile response to market
dynamics, enviable positions within our
chosen markets and exciting product
pipeline leave us well positioned for
continued growth in the years ahead.
Through years of experience,
our excellent sales teams have
become adept at using the
innovative products we create
to extend our market reach
and drive growth.
Grow
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Sustain
Strategy in Action continued
We invest in both our business
and our industry to sustain
our competitive advantage
and to contribute to society’s
sustainability goals.
DW Windsor’s work with the City of London is a fantastic example of our
Sustain strategy in action, where we have contributed to a 57% reduction in
energy use from switching to LEDs and smart controls.
Key stats
47
Carbon neutral
2023 continuous professional development
training events
2023 operations
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Luceco plc|Annual Report and Financial Statements 2023
Strategy in Action continued
DW Windsor’s alignment with our own
strategic priorities aided our acquisition of
the business and we are pleased with the
progress they have made since joining the
Group. The work they have done with the
City of London is a fantastic example of how
our sustainability strategy both maintains
our competitive advantage as well as
contributing to society’s sustainability goals.
Previously, the City of London’s lighting
network was restrictive and used set
lighting schedules that covered all its
ageing luminaires. As a result, the City’s
lighting suffered from high energy
consumption, inefficient lighting
distribution, high maintenance costs,
limited adaptability and increasing
environmental impact.
The City of London took the major decision
to develop a new lighting strategy aiming to
fully replace and upgrade all existing street
and amenity lighting to LED luminaires with
partner DW Windsor.
Our central management system,
UrbanMaster, offered the City of London a
cutting‑edge street lighting control system
that has revolutionised the way it manages
lighting assets and infrastructure, offering
unprecedented flexibility and control, and
empowering the creation of a safer and
more efficient urban environment.
UrbanMaster has allowed the City of
London to gain full control over its street
lighting network through a cloud‑based
platform, which can be used across a variety
of devices and locations. This allows for
real‑time monitoring and management
of individual lights, using granular data to
provide accurate information on lighting
assets’ status, performance and energy
consumption.
The project has delivered street lighting
infrastructure that can be better controlled,
amended and managed, with proactive
fault finding and energy reading now and
for the future. The project has also provided
a significant reduction in energy and carbon
usage, with a 57% saving in energy usage
and a 78% reduction in CO₂ emissions.
Optimisation continues today, with light
levels being dynamically set and adjusted
where necessary by stakeholders – with
council workers able to walk the City and
use the UrbanMaster app to fine‑trim
brightness levels as and when they see fit.
This level of dynamic, granular control has
a host of potential applications for other
City of London stakeholders to leverage
the lighting network to their benefit,
including emergency services, events
and infrastructure engineering projects –
which can be better lit during night‑time
operations.
The experience of the City of London
highlights the transformative potential
of LED luminaires and lighting controls
in enhancing the energy efficiency,
sustainability, adaptability, flexibility and
cost‑effectiveness of new urban lighting
infrastructure. It serves as a valuable
resource for city planners, policymakers
and stakeholders interested in driving
similar initiatives within their own urban
landscapes.
We are delighted by the progress we have
made in the last decade in developing our
low carbon product portfolio, which leaves
us well placed to further contribute to
society’s sustainability goals in addition to
maintaining our competitive advantage.
Our investment in DW
Windsor illustrates how we
look to the future to ensure
we sustain our competitive
advantage and contribute to
society’s sustainability goals.
Sustain
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Key Performance Indicators
Grow
Increase sales to professional
customers
• Grow our sales of professional‑grade
products designed for installation by
professional contractors to complement
our existing strong presence in the retail/
DIY market
• Leverage the route to market provided by
Wiring Accessories to sell other products
via the Professional Wholesale channel,
e.g. LED Lighting and EV charging
• Sell our products as part of a design
Growth percentage (%)
Link to risk
1 3 5 6 8
Increase our sales of
low carbon products
• Leverage the opportunity presented by
electrification and therefore decarbonisation
of energy and transportation
• Grow our sales of low carbon products to
£100m by 2025
Revenue generated from low carbon
products (£m)
Link to risk
1 3 5 6 8
-2.0
2023
2022
2021
6.6
32.3
2023
2022
2021
80
78
56
Innovate
Number of new
product SKUs
• Sell adjacent products through existing
sales channels
• Sell international variants of existing UK
products
• Enhance the value of existing categories
through innovation and product
value‑add
• Leverage our own manufacturing
capabilities and relationships
Number of new product SKUs
Link to risk
2 3 5 6 7
Research and development
expenditure
• Continue to be at the forefront of
innovation in our industry
• Progressively add greater technology,
such as controls, smart functions and
connectivity, to the Group’s products
Research and development
expenditure (£m)
Link to risk
5
6
2023
2022
2021
317
249
407
2023
2022
2021
4.1
3.6
3.0
Sustain
Capital
expenditure
• Invest in the agility and efficiency of our
vertically integrated manufacturing
• Invest in our fulfilment capabilities
• Invest in our e‑commerce offering
• Invest in enabling technology
Capital expenditure (£m)
Link to risk
1 2 3 4 5
6 8
Carbon associated
with our operations
• Keep our operations carbon neutral
• Reduce our value chain emissions by
hitting science‑based targets
Carbon emissions from operations net
of carbon offsets (tCO
2
e)
Net zero
Since 2021
Link to risk
3
7
8
2023
2022
2021
8.2
5.6
6.4
Key to principal risks
1
Operational concentration risk
2
Customers and products
concentrationrisk
3
Macroeconomic, political
andenvironmental
4
Loss of IT/data
5
People and labour shortages
6
Acquisitions
7
Legal and regulatory
8
Finance and treasury
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Luceco plc|Annual Report and Financial Statements 2023
The Group is well positioned to
continue the strong progress it has
made over recent years
Will Hoy
Chief Financial Officer
Chief Financial Officer’s Review
Revenue
£209.0m
2022: £206.3m
Revenue growth
+1. 3%
2022: ‑9.6%
Adjusted Operating Margin
11. 5%
2022: 10.7%
Summary of reported results
Operating profit of £22.2m was £8.5m higher than 2022 due to improving revenue and
gross margin in the year partly offset by operating cost increases. In 2022, we have
re‑presented the results to show the impact of currency hedging aligned with the
associated cost of sales. This has the effect of changing gross profit and operating profit,
however, revenue, profit before tax, profit after tax and earnings per share all remain
unchanged.
Summary results (£m)
Reported
2023
Reported
2022
Revenue 209.0 206.3
Operating profit 22.2 13.7
Profit before tax 18.9 11.7
Taxation (2.2) (0.7)
Profit for the year 16.7 11. 0
Adjusted Operating Profit
£24.0m
2022: £22.0m
Adjusted Earnings Per Share
11.1p
20 2 2 : 11.1p
Covenant Net Debt Ratio
0.6x
2022: 0.8x
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Luceco plc|Annual Report and Financial Statements 2023
Performance Measures (“APMs”) and adjusting items
Certain alternative performance measures (“APMs”) have been included within this report.
These APMs are used by the Board to monitor and manage the performance of the Group,
in order to ensure that decisions taken align with the Group’s long‑term interests. A table
summarising the reconciliation of adjusted measures to statutory measures is included in
note 1 of the consolidated financial statements.
The following adjusting items were applied in the year:
• Amortisation of acquired intangibles: £1.9m and acquisition‑related costs of £0.4m
• Fair value movements of hedging portfolio which have not completed in the period
(£0.5m credit) and interest swaps (£0.5m charge)
Adjusted Operating Profit for the year, excluding the items above, was therefore £24.0m
(2022: £22.0m).
Income statement
Revenue
Revenue of £209.0m was £2.7m (1.3%) higher than 2022 as business growth returned:
Like‑for‑like revenue, excluding the impact of currency, increased by £3.6m in the period,
up 1.7%. On a reported basis, revenue grew by £2.7m, or 1.3%. Against the backdrop of a
year when Luceco’s overall addressable market experienced a 5.8% decline, the Group’s
performance in 2023 compares highly favourably.
Digging deeper into the results, the Group performed strongly in non‑residential markets,
up around 8%, and within Residential RMI, up circa 1.1%. This again represents an increase
in market share, noting that these two markets fell by 0.8% and 8.0% respectively. Whilst
the New Residential market was down significantly, this represents less than 5% of Group
revenue so we have been relatively insulated from this market decline. A contributing factor
to the Group’s strong relative performance has been the softer comparative in 2022 due to
significant customer destocking following the exceptional pandemic year of 2021.
We group our customers into the following sales channels:
• Retail: Distributors serving consumers only, including DIY sheds, pure‑play online
retailers and grocers
• Hybrid: Distributors serving both consumers and professionals, typically with
multi‑channel service options
• Professional Wholesale: Distributors serving professionals only, largely via a branch
network
• Professional Projects: Sale agreed by Luceco direct with professionals, but largely
fulfilled via Professional Wholesale
Performance by sales channel was as follows:
Our key growth channel was Hybrid, growing revenue by 29.2% during the year,
largely resulting from more significant destocking in the 2022 comparative due to
pandemic‑boosted activity across residential repair and maintenance in DIY and
professional markets. Nearly all of the destocking impact experienced in 2022 arose within
the Retail and Hybrid channels. These customers hold greater inventory of our products
relative to their size because they buy from us on long lead times direct from China on a
Free On Board basis and therefore hold the product for longer. The amount of inventory
cover they needed rose sharply in 2021 as demand increased and delivery times from
China extended. In 2023, the normalisation of stock levels has resulted in more favourable
comparatives to 2022.
Bridge from 2022
Revenue bridge: £m Change %
2022 206.3
Acquisition/closures (1.4) -0.7%
Like‑for‑like (decrease)/increase
1
3.6 1.7%
Constant Currency
2
208.5 1.1%
Currency movements 0.5 0.2%
2023 209.0 1.3%
1. Like‑for‑like revenue increase excludes the impact of currency movements and acquisitions, see note 20
of the financial statements for currency rates.
2. 2023 revenue retranslated at 2022 exchange rates.
Like‑for‑like revenue by sales channel:
2023
£m
2023
% of total
2022
% of total
Change vs
2022 %
Retail 46.4 22.4% 27.7% (10.4%)
Hybrid 49.3 23.9% 20.2% 29.2%
Professional Wholesale 52.2 25.2% 28.9% (6.3%)
Professional Projects 59.0 28.5% 23.2% 2.4%
Like-for-like revenue 207.1 100.0% 100.0% 1.7%
Currency impact 0.5
Acquisitions/closures 1.4
Total revenue 209.0 1.3%
Chief Financial Officer’s Review continued
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Luceco plc|Annual Report and Financial Statements 2023
Income statement continued
Revenue continued
The slowdown in the Professional Wholesale channel has been reflective of the more
challenging market conditions, as traditional electrical wholesalers buy from us on short
lead times in the country in which they operate, meaning they had less need to destock in
2022. Our Professional Projects channel grew modestly in the year with 2.4% growth, but
the standout performance was from our UK projects business which goes from strength
to strength, where the UK has seen growing demand for LED retrofits as a result of rising
electricity prices and the growing green agenda.
Understanding our revenue by geography and location of the customer, we have seen
strong growth in the UK, up 5.0%, partly helped by the 2022 destocking creating a lower
comparative. European sales reduced in the year following the closure of our operations
in Germany and in Spain revenue reduced following a change in market strategy, which
should bear fruit in future years.
Sales improved in the Americas largely as a result of stronger sales in the North American
market as key customers in the US DIY channel normalised their buying patterns. Sales in
the Middle East and Africa fell by 4.6% but increased in Asia Pacific by 21.7% helped by new
customers wins.
Profitability
Adjusted Operating Profit of £24.0m for 2023 was £2.0m ahead of 2022. The key drivers
were as follows:
The net impact of acquisitions and closures is a result of the Germany closure in 2022,
giving a £0.6m improvement year‑on‑year in 2023. Overall Adjusted Operating profitability,
excluding acquisitions/closures and at Constant Currency, was an improvement of £3.5m,
driven largely by the stronger performance across the UK business channels.
The currency headwind had a £2.1m impact on Adjusted Operating Profit in the year.
Excluding the impact of currency, the Adjusted Operating Profit of the Group would have
been £26.1m, most of which is due to the impact of the exchange rates of RMB on Chinese
products and the USD on the sales of products. Cost inflation for the Group was 11.0%,
excluding the impact of currency, which was largely wage related due to the cost of living
increases that have occurred in the UK.
Overall Adjusted Operating Margin of 11.5% is a gradual improvement on 2022 which was
10.7%, however we believe the Group’s strong operating leverage can further improve the
margin to low to mid double‑digits once the macroeconomic conditions improve.
Revenue by geographical location of customer:
2023
£m
2022
£m
Change vs
2022 %
UK 173.6 165.3 5.0%
Europe 12.9 19.7 (34.5%)
Americas 8.6 8.0 7. 5%
Middle East and Africa 8.3 8.7 (4.6%)
Asia Pacific 5.6 4.6 21.7%
Total revenue 209.0 206.3 1.3%
Adjusted Operating Profit bridge:
Bridge from
2022
£m
Bridge from
2021
£m
Adjusted Operating Profit
2022/2021 22.0 39.0
Acquisitions/closures 0.6 1.2
Like‑for‑like increase/(decrease)
1
3.5 (17.1)
Currency movements (2 .1) (1.1)
2023/2022 24.0 22.0
1. Like‑for‑like profit movements exclude the impact of currency movements and acquisitions/closures, see
note 20 of the notes to the financial statements for currency rates.
Chief Financial Officer’s Review continued
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Luceco plc|Annual Report and Financial Statements 2023
Chief Financial Officer’s Review continued
Income statement continued
Profitability continued
The table below provides a more detailed view of the currency impact in the year:
Operating costs
Adjusted Operating Costs increased by £6.0m to £58.3m. The majority of the increase came from wage increases and associated costs (approximately £4.0m) plus the further impact of
increased travel costs as post‑pandemic conditions normalised.
Net finance expense
Adjusted Net Finance Expense increased by just £0.2m reflecting an increase in borrowing and interest rates.
In the prior year we entered into swaps to fix the interest rate applicable to approximately 70% of our borrowings on a rolling three‑year basis (subject to small changes driven by the
impact of debt leverage on lending margin in the future). 30% of our borrowing remains at floating interest rates.
Taxation
The effective tax rate on Adjusted Profit Before Tax increased by 7.1ppts to 18.4% in 2023 following some advantageous tax rates in 2022. Work done over recent years to maximise
available tax incentives, particularly those relating to research and development, had lowered this to c.15%, but the increase in the underlying tax rate in the UK to 25% has pushed the
overall Group tax charge higher. The rate is expected to increase further in 2024 with the UK corporation tax rate at 25% for the full year.
Adjusted
2023
actual
1
£m
Currency impact
Adjusted
2023 at
Constant
Currency
2
£m
Constant Currency
variance to 2022 Adjusted
2022
actual
£m£m % £m %
Revenue 209.0 0.5 0.2% 208.5 2.2 1.1% 206.3
Cost of sales (126.7) (2.3) 1.7% (124.4) 7.6 (5.8%) (132.0)
Gross profit 82.3 (1.8) (2.4%) 84.1 9.8 13. 2% 74.3
Gross margin % 39.4% (0.9ppts) 40.3% 4.3ppts 36.0%
Operating costs (58.3) (0.3) 0.5% (58.0) (5.7) 11.0% (52.3)
Operating profit 24.0 (2 .1) (9.5%) 26.1 4.1 18.6% 22.0
Operating margin % 11. 5% (1.0ppts) 12.5% 1.8ppts 10.7%
1. Year ended 31 December 2023 translated at 2023 average exchange rates.
2. Year ended 31 December 2023 translated at 2022 average exchange rates.
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Luceco plc|Annual Report and Financial Statements 2023
Chief Financial Officer’s Review continued
Adjusted Free Cash Flow
The Group continues to generate strong free cash flow which has been a key feature of the business. Despite the record free cash flow generation in 2022, the Group achieved Adjusted
Free Cash Flow of £18.0m which is an outstanding result in 2023, with second half cash generation being particularly strong. This Adjusted Free Cash Flow was an impressive 8.6% of
revenue and extremely strong Operating Cash Conversion of 135.8%. We are not expecting this exceptional level of cash conversion to occur going forward.
Capital expenditure
The Group’s net capital expenditure consists of capitalised product development costs and the purchase of physical assets. Capex was £8.2m (2022: £5.6m) and represented 3.9% of
revenue (2022: 2.7%) which is in our target range of 3‑4%. We continue to see opportunities to invest in low risk, high return automation projects in our Chinese production facility and
continue to invest in R&D projects, particularly in relation to acquired businesses.
Capital structure and returns
Return on capital
Return on Capital Invested was higher than the prior year at 20.6% (2022: 18.2%) which is within our target range of 20% or higher. As previously flagged, our returns will naturally reduce
asLuceco transitions from a Group created organically to one growing via M&A as well (with its required investment in goodwill).
Capital structure
The business continues to consistently generate ample cash flow to support its dividend policy and fund M&A activity.
Adjusted
1
Free Cash Flow (£m)
Adjusted
1
2023
Adjusted
1
2022
Operating profit 24.0 22.0
Depreciation and amortisation 7.4 7.1
EBITDA 31.4 29.1
Changes in working capital 0.2 13.4
Other items 1.0 1.2
Operating cash flow 32.6 43.7
Operating Cash Conversion
2
135.8% 198.6%
Net capital expenditure (8.2) (5.6)
Interest paid (2.8) (2.7)
Tax paid (3.6) (4.7)
Free cash flow 18.0 30.7
Free cash flow as % revenue 8.6% 14.9%
1. A reconciliation of the reported to Adjusted results is shown within note 1 of the consolidated financial statements.
2. Adjusted Operating Cash Conversion is defined as Adjusted Operating Cash Flow divided by Adjusted Operating Profit.
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Luceco plc|Annual Report and Financial Statements 2023
Chief Financial Officer’s Review continued
Capital structure and returns continued
Capital structure continued
Very strong cash generation again ensured that overall net debt fell and also resulted in the Covenant Net Debt leverage falling to 0.6x. The Group’s non‑utilised facilities totalled £58.6m,
with an option (subject to lender consent) to add a further £40.0m under the terms of its syndicated bank facility signed in October 2021. The facility matures in September 2026. The Group’s
balance sheet remains strong and provides the opportunity for selective M&A activity.
The Company’s covenant position and headroom at 31 December 2023 was as follows:
The key measures which management use to evaluate the Group’s use of its financial resources and capital management are set out below:
The Group complied with its covenant requirements throughout the year with significant headroom on all metrics. The Group has conducted a full going concern review and this is
outlined on page 130. The Group has a strong balance sheet and significant facility headroom under even a severe but plausible downside scenario. No covenant breaches occur in any of
our severe but plausible downside scenarios, all of which are before any mitigating actions, illustrating our financial resilience.
2023 2022 Change %
Reported net debt £22.8m £29.4m (22.4%)
Less: IFRS 16 finance leases (£5.1m) (£6.3m) (18.8%)
Finance leases – pre‑IFRS 16 £0.7m £0.7m —
Covenant Net Debt £18.4m £23.8m (22.7%)
Covenant Net Debt : Covenant EBITDA 0.6 0.8 (25.0%)
2023 full‑year covenant Covenant Actual Headroom
Covenant Net Debt : Covenant
EBITDA
3.0 : 1 0.6 : 1 Covenant Net Debt
headroom: £78.2m
1
Covenant EBITDA
headroom: £26.1m
Covenant EBITDA : Adjusted
Net Finance Expense
4.0 : 1 11.5 : 1 Covenant EBITDA
headroom: £21.0m
Net finance expense
headroom: £5.2m
1. Headroom with increased facility. Current facility headroom is £57.7m.
2023 2022
Adjusted
1
Earnings Per Share (pence) 11.1 11.1
Covenant Net Debt : Covenant EBITDA (times) 0.6 0.8
Adjusted
1
Free Cash Flow (£m) 18.0 30.7
1. Note 1 in the notes to the consolidated financial statements provides an explanation of the Group’s alternative performance measures.
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Luceco plc|Annual Report and Financial Statements 2023
Chief Financial Officer’s Review continued
Capital structure and returns continued
Dividends
The Board is proposing to pay a final dividend of 3.2p, taking the full‑year dividend to 4.8p, representing a payout of 43% of earnings. The final dividend will be paid on 17 May 2024 to
shareholders on the registrar on 12 April 2024.
Operating segment review
The revenue and profit generated by the Group’s operating segments are shown below. Operating profits are stated after the proportional allocation of fixed central overheads.
Wiring Accessories
Wiring Accessories is the Group’s most profitable segment, generating 62% of the Group’s operating profit and 39% of its revenue, under a brand established over 80 years ago.
Sales into the Wiring Accessories segment were £82.6m, which was over 12% better than 2022, largely driven by the Hybrid channel which had normalised following the destocking
in2022. In particular, UK core electrical switches and sockets have been a stronger driver during the period. The Professional channel was challenging and was behind the prior year
byaround 5%.
The Adjusted Operating Margin was 18.2% (2022: 18.9%) which remains a key driver for the Group’s overall profitability.
LED Lighting
The Group entered the lighting market in 2013 as the industry adopted LED technology and it now represents 38% of Group revenue.
Adjusted
1
Reported
2023 2022 Change 2023 2022 Change
Revenue £82.6m £73.7m 12.1% £82.6m £73.7m 12.1%
Operating profit £15.0m £13.9m 7.9% £15.3m £11.7m 30.8%
Operating margin % 18.2% 18.9% (0.7ppts) 18.5% 15.9% 2.6ppts
1. Further details of adjustments are in note 1 of the consolidated financial statements.
Adjusted
1
Reported
2023 2022 Change 2023 2022 Change
Revenue £79.0m £81.4m (2.9%) £79.0m £81.4m (2.9%)
Operating profit £4.7m £3.4m 38.2% £3.2m £0.3m 966.7%
Operating margin % 5.9% 4.2% 1.7ppts 4.1% 0.4% 3.7ppts
1. Further details of adjustments are in note 1 of the consolidated financial statements.
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Luceco plc|Annual Report and Financial Statements 2023
Chief Financial Officer’s Review continued
Operating segment review continued
LED Lighting continued
Revenue declined marginally in the year by 2.9%, but overall Adjusted Operating Profit increased by £1.3m as Adjusted Operating Margin improved in the period by 1.7 percentage points.
The decline versus the prior year is largely due to the impact of the closure of lower margin operations in France and Germany in the prior year, which were LED focused. On a like‑for‑like
basis and at constant exchange rates, LED sales were broadly flat year‑on‑year. Demand has been particularly strong in the Professional Projects space in the period, as demand for
energy‑saving retrofits within the non‑residential and infrastructure sectors continues to grow.
Portable Power
The Portable Power segment consists of two main elements:
• Cable reels, extension leads and associated accessories sold under the Masterplug brand
• EV chargers sold under the BG Sync EV brand
The Group enjoys a leading position in the UK portable power market. The business generates 23% of Group revenue and 18% of Group Adjusted Operating Profit. Revenue in the period
was 7.4% lower than the prior year due to some final destocking in the first half of 2023 largely relating to cable reel product categories.
EV charger sales totalled just less than £8m, a growth rate of 44.4% in the period, which was highly encouraging despite a slight slowdown in the EV vehicle market in the second half
of the year. We remain excited about the opportunities that this new sector will provide as the vehicle market moves towards electrification by 2035 within the UK – our current key
marketplace. During the year we launched our 22kW EV charger which will be utilised in many commercial operations in the future and high‑end residential premises.
Going concern and viability statement
The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future and as such have applied the going
concern principle in preparing the Annual Report and Accounts. This is considered in more detail in note 1 of the consolidated financial statements. The Group’s Viability Statement can
be found on pages 72 and 73 and the Group’s Going Concern Statement can be found on page 130.
Will Hoy
Chief Financial Officer
25 March 2024
Adjusted
1
Reported
2023 2022 Change 2023 2022 Change
Revenue £47.4m £51.2m (7.4%) £47.4m £51.2m (7.4%)
Operating profit £4.3m £4.7m (8.5%) £3.7m £1.7m 117. 6%
Operating margin % 9.1% 9.2% (0.1ppts) 7.8% 3.3% 4.5ppts
1. Further details of adjustments are in note 1 of the consolidated financial statements.
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Luceco plc|Annual Report and Financial Statements 2023
Environment, Social and Governance
We believe that through
the way we act, Luceco
has a significant
opportunity to create a
lasting positive impact
on the world around us.
We aim to do this through addressing three key areas of focus:
Creating a
sustainable future
Empowering
people
Working with integrity
and transparency
Find out more on page 38 Find out more on page 57 Find out more on page 60
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Luceco plc|Annual Report and Financial Statements 2023
Empowering
people
The key to our business model operating
effectively is the “can‑do” culture created by
our fantastic teams. In order for this culture
to continue to flourish, we need our people
to feel empowered to excel in their work at
Luceco. We endeavour to recruit people from
a range of backgrounds who are passionate
about innovation and customer service. We
invest in the training and development of new
and existing employees and we make sure
we engage with our teams to improve their
experience and help them feel part of the
business.
Beyond our own teams we also look to empower
those who use our products. We provide
professionals with access to free training
resources and are supporting the development
of the next generation of electrical contractors.
Working with integrity
and transparency
We are committed to acting with integrity
and transparency at all times, not just because
it builds trust with those we work with, but
because it is the right thing to do. As a global
business, operating in markets and countries
with different cultures and practices, we maintain
consistently high ethical standards by following
our global Code of Conduct.
We follow health and safety best practices and
all local regulations, always striving to promote
the health of our people and to minimise risks
in the workplace. Our approach is supported by
strong corporate governance and zero‑tolerance
policies in relation to behaviour which does not
align to our values, and we endeavour to ensure
our suppliers share those same values. Finally, we
are keen to contribute to the communities we
operate in and encourage our people to propose
ways we can help.
Environment, Social and Governance continued
Creating a
sustainable future
Operating sustainably is a key part of the Group’s
culture and is reflected within our Purpose,
Mission and Strategy, where we have made
sustainability a central pillar of the Group’s
success. Our product portfolio, combined with
our business model and experience, puts us in
a strong position to help create a sustainable
future for all. Our immediate targets have
focused on realigning our product portfolio to
concentrate on the sale of low carbon products,
ensuring the plastic we use is recycled and
further that the packaging of the products we
sell is recyclable.
Whilst we recognise there is more to do, our
operations continue to offer one of the lowest
operational carbon footprints in our industry and
we are continuing to progress our sustainability
agenda moving forwards.
Three key
areas of focus:
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Luceco plc|Annual Report and Financial Statements 2023
Climate change
We recognise that climate change poses
both risks and opportunities for our
business. We have seen a growing mandate
from our stakeholders for meaningful
action on climate change and to tackle our
greenhouse gas emissions. Recognising
this, climate change is included within
our “Macroeconomic, political and
environmental” principal risk. As society
transitions towards a net zero future, we
are well positioned to make an increasing
contribution to society’s climate objectives
through our products and services.
Task Force on Climate-related
Financial Disclosures (“TCFD”)
Luceco plc has complied with the
requirements of the FCA’s Listing Rule
9.8.6.R(8) by including climate‑related
financial disclosures consistent with
the TCFD recommendations and
recommended disclosures. Our report
is set out under the four TCFD pillars of
Governance, Risk Management, Strategy,
and Metrics and Targets.
Governance
Board-level
The Board has overall responsibility for
climate‑related matters that affect the
Group. The “Matters Reserved for the
Board” includes Environmental, Social
and Governance (“ESG”) matters to ensure
there is clear oversight of ESG‑related
considerations, including climate change.
The Board’s key responsibilities regarding
climate change include:
• Approving the Company’s ESG Policy,
ensuring it remains aligned with the
Company’s strategic objectives
• Overseeing the Company’s process for
identifying, assessing and managing
climate‑related risks
• Monitoring the Company’s climate‑
related risks and opportunities over the
short, medium and long term, and the
actions being taken in response
• Assessing the impact of climate‑related
risks and opportunities on the Company’s
business, strategy and financial planning
• Approving the metrics and targets used
by the Company to assess and manage
relevant climate‑related risks and
opportunities and monitor performance
against targets
The Chief Financial Officer (“CFO”) has
delegated responsibility from the Board for
climate‑related matters and is responsible
for the implementation of our climate
change management strategy.
The CFO provides a monthly update to the
Board on climate and ESG‑related matters
within financial reporting and delivers a
more detailed update on a quarterly basis.
Progress against our climate‑related targets
is reported annually to the Board.
Management-level
To support the CFO in the implementation of
the strategy, and the effective identification,
assessment and management of climate‑
related risks and opportunities, we have
established three working groups. Each
working group is chaired by the CFO and
meets twice a year. Our external climate
advisers also attend these meetings to
support the development of our strategy
and the identification of emerging climate‑
related risks.
Sustainability Working Group – comprises
senior management from key business
areas including, product development,
operations, finance and supply chain.
Theyare responsible for the identification
and management of climate‑related
matters within their area of the business
and supporting the implementation of
carbon reduction measures.
Markets & Trends Group – comprises senior
management from customer‑facing roles
representing individual business units
(Kingfisher Lighting and DW Windsor)
and key sales channels (Retail, Trade and
Projects). The group is responsible for
monitoring and providing feedback on
changes in customer requirements around
climate and wider ESG matters, as well as
providing regular updates to customers on
our climate strategy.
Manufacturing Working Group –
includes senior representatives from our
manufacturing facility in Jiaxing, with
responsibility for the development of
initiatives to reduce energy consumption
and emissions.
Environment, Social and Governance continued
Creating a sustainable future
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38
Luceco plc|Annual Report and Financial Statements 2023
Environment, Social and Governance continued
Luceco plc Board
• Oversees all aspects of ESG policy, ensuring it remains aligned with the Company’s strategic objectives
• Oversees the Company’s processes for identifying, assessing and managing climate‑related risks
• Monitors performance against the metrics and targets used to manage climate‑related risks and opportunities
Chief Financial Officer
• Delegated responsibility from the Board for climate‑related matters and responsible for the implementation of our climate
change management strategy
• Updates the Board on ESG‑related matters monthly, with progress against targets reported annually
• Owner of our climate‑related risks and opportunities and chair of the three working groups
Informing
Informing
Reporting
Reporting
Manufacturing
Working Group
• Includes senior representatives from
our manufacturing facility in Jiaxing
• Responsible for the identification,
assessment and management
of climate‑related risks and
opportunities
• Development of initiatives to
reduce energy consumption and
emissions within our manufacturing
operations
Sustainability
Working Group
• Includes senior management
from key business areas including
product development, operations,
finance and supply chain
• Responsible for the identification,
assessment and management
of climate‑related risks and
opportunities
• Development of initiatives across
product development, operations
and supply chain to reduce
emissions across our value chain
Markets & Trends
Working Group
• Includes senior management
in customer‑facing roles across
individual business units and key
sales channels
• Responsible for monitoring
feedback on changes in customer
requirement around climate and
wider ESG matters
• Provides regular feedback to
customers on the actions the Group
is taking to tackle GHG emissions
Creating a sustainable future continued
Risk Management
The identification, assessment and
management of climate‑related risks is
fully integrated into our risk management
framework and mirrors the approach
detailed on pages 66 to 71.
Two sessions are held annually with each
of the working groups to appraise our
climate‑related risks and opportunities and
provide an update of how these risks are
changing. The outputs from these sessions
are integrated into our “Macroeconomic,
political and environmental risk” within the
principal risk assessment.
The risk assessment process considers a
number of categories, such as:
• Current and emerging regulations
• Legal
• Market
• Technology
• Customers
• Physical (acute and chronic)
The following categories are also considered
for climate‑related opportunities:
• Resource efficiency
• Energy source
• Products and services
• Market
• Resilience
Three principal climate‑related risks and
two principal opportunities have been
identified that impact the Group.
Task Force on Climate-related Financial Disclosures continued
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Environment, Social and Governance continued
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Task Force on Climate-related Financial Disclosures continued
Risk Management continued
Climate-related risks
CR1
Changing customer behaviour
Risk owner: CFO
Risk and impact:
• A significant proportion of our Retail and Hybrid customers have made
a commitment to achieve net‑zero emissions and/or established a
science‑based emission reduction target
• We experienced an increased demand for information on the embodied
carbon and circular design characteristics of lighting products as part of
the tendering process for professional projects
• Emerging interest shown from our large trade customers in our carbon
management strategy and emission reduction targets
• Failure to meet the increasing expectations of our customers on climate
action could lead to a loss of revenue
Mitigation:
• Management liaises closely with customers to understand their
ambitions and requirements relating to climate change
• Development of climate change strategy with an approved near‑term
science‑based target validated by the SBTi
• Responding to external data requests such as the Carbon Disclosure
Project (“CDP”) to increase transparency of our actions to address
climate change
• Proactive approach to emissions reductions including investment into
operational efficiency, sourcing renewable electricity and offsetting
residual Scope 1 emissions
• Working with our largest retail customer on the Manufacture 2030
programme to reduce emissions and improve the sustainability of
ourproducts
• Development of product information for TM65 and TM66 assessments
and looking to develop Environmental Product Declarations (“EPDs”) for
lighting products
Link to strategy:
Products & Services,
Supply Chain,
Research &
Development,
andOperations
Change in year:
Time horizon:
Short, medium and
long term
Risk appetite:
Risk accepting
Net risk level:
Low Medium High
Metric:
Total GHG emissions
% revenue under GHG target
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Environment, Social and Governance continued
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Risk Management continued
Climate-related risks continued
CR2
Increased stakeholder concern or negative stakeholder feedback
Risk owner: CFO
Risk and impact:
• ESG issues, particularly climate change, are a large concern for our key
stakeholders, including customers, consumers, investors and
employees
• Shifting focus from investors towards how we seize the opportunities
presented by the transition to net zero and how we are addressing our
customers’ agenda in this area
• Damage to our reputation in relation to climate change could lead to a
loss of revenue or negative impact on share prices
Mitigation:
• Management liaises closely with customers to understand their
ambitions and requirements relating to climate change
• Development of climate change strategy with an approved near‑term
science‑based target validated by the SBTi
• Responding to external data requests such as the CDP increases
transparency of our actions to address climate change
• Proactive approach to emissions reductions including investment into
operational efficiency, sourcing renewable electricity and offsetting
residual Scope 1 emissions
• Working with our largest retail customer on the Manufacture 2030
programme to reduce emissions and improve the sustainability of
ourproducts
Link to strategy:
Products & Services,
Supply Chain,
Research &
Development,
andOperations
Change in year:
Time horizon:
Short to medium term
Risk appetite:
Risk averse
Net risk level:
Low Medium High
Metric:
Total GHG emissions
% revenue under GHG target
CR3
Increased severity and frequency of extreme weather events
Risk owner: CFO
Risk and impact:
• Following our detailed assessment of physical risks, we have identified
that extreme weather events (precipitation and wind risk) could pose a
risk to our sites and supply chain, particularly in China
• Severe disruption to our sites or suppliers could result in a loss
ofrevenue
Mitigation:
• We have expanded the scope of our physical risk assessment to include
our top original equipment manufacturer (“OEM”) suppliers located in
China to increase visibility of our suppliers’ risk exposure
• A buffer stock is held in our UK and China warehouses in the event of
supply chain disruption
• All suppliers are provided with visibility of forward orders and supply
issues are discussed upfront
• Our production facility in China is spread across multiple buildings on
the same site to mitigate site disruptions
• The Group owns its product designs and production tooling, allowing
manufacturing activities to be moved between suppliers more easily
• Business continuity plans have been developed and business
interruption insurance put in place for our manufacturing facility,
aswellas key OEM suppliers
Link to strategy:
Operations and
SupplyChain
Change in year:
Time horizon:
Short, medium and
long term
Risk appetite:
Risk accepting
Net risk level:
Low Medium High
Metric:
Physical risk exposure rating (EarthScan rating)
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Environment, Social and Governance continued
Task Force on Climate-related Financial Disclosures continued
Risk Management continued
Climate-related opportunities
CO1
Access to new markets
Opportunity owner: CFO
Description:
• The electrification of energy presents a significant opportunity for the
Group as new markets emerge through the transition to net zero
• We expect demand for electric vehicle charging solutions for homes
and commercial premises to increase – our current 4% market share is
estimated to be worth £12m in revenue by 2025
• Increased electrification could create opportunities for new product
categories that complement our existing offering, such as battery
storage, inverters, solar PV etc.
Realising the opportunity:
• Acquisition of Sync EV to accelerate growth within the EV charger
segment. We have launched single and three‑phase chargers under the
joint BG Sync EV brand
• 61% growth in revenue from EV charging products
• Continued investment in R&D enables us to bring new and more
efficient products to market, helping to maintain competitive
advantage and grow market share
• Dedicated R&D functions in China and the UK employing 112 specialists
with an expenditure of £4.1m in 2023
• Looking forward, we are exploring opportunities within the three‑phase
supply and commercial EV and other emerging green product
categories
• We will continue to evaluate opportunities to acquire businesses poised
to benefit from the electrification of residential and commercial energy
use to accelerate our growth strategy
Link to strategy:
Products & Services,
Supply Chain,
andResearch &
Development
Change in year:
Time horizon:
Medium to long term
Net opportunity level
Low Medium High
Metric:
Revenue from low carbon products
CO2
Expansion of existing products and services
Opportunity owner: CFO
Description:
• The transition to net zero relies on the electrification of energy within
homes and commercial buildings, which could increase demand for our
existing products and services
• We anticipate an increase in demand for low carbon products and
“green home tech” solutions such as smart plugs and controls, extension
leads and ultra‑efficient LED lighting
• Increased electrification within buildings could create additional
demand for wiring accessories as building electrics are upgraded to
manage the additional electrical load
• Regulatory and technology changes are another important sales driver.
For example, there was a 60% increase in Luceco consumer unit sales
during the EICR regulation change
Realising the opportunity:
• Expanded our range of LED lighting products and services through the
acquisition of two external lighting businesses, DW Windsor (2021) and
Kingfisher Lighting (2017)
• Continued investment in R&D enables us to bring new and more
efficient products to market, helping to maintain competitive
advantage and grow market share
• Dedicated R&D functions in China and the UK employing 112 specialists
with an expenditure of £4.1m in 2023
• 317 new product SKUs in 2023 (249 in 2022) including the development
of solar‑powered off‑grid lighting products and more efficient lighting
products
• Completion of a strategic investment with our longstanding partner,
eEnergy Group plc. We are a key supply partner to the company’s eLight
business who operate within the non‑residential segment
Link to strategy:
Products & Services,
Supply Chain,
andResearch &
Development
Change in year:
Time horizon:
Short to medium term
Net opportunity level
Low Medium High
Metric:
Revenue from low carbon products
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Environment, Social and Governance continued
Task Force on Climate-related Financial Disclosures continued
Risk Management continued
Physical risk: Scenario analysis
To better understand our exposure to the physical impacts of climate change, we have conducted scenario analysis. EarthScan™ allows us to evaluate physical risk on assets critical to our
business (manufacturing facilities, warehousing and significant third‑party OEMs) for a suite of different hazards, timescales and scenarios.
We used EarthScan’s data and insights in our portfolio and asset‑level climate risk assessment for the following climate hazards: flooding, heat stress, precipitation, extreme wind, drought
and wildfire. Three Intergovernmental Panel on Climate Change (“IPCC”) scenarios have been used to assess physical climate risks:
Business as usual (SSP5/RCP8.5): Emissions continue to rise over the 21st century, in the worst‑case scenario.
Emissions peak in 2040 (SSP2/RCP4.5): Emissions do not increase beyond 2040. With current commitments, this is the climate scenario that most closely resembles current policy
commitments.
Paris aligned (SSP1/RCP2.6): Emissions are aligned with Paris Agreement targets. This is the best‑case scenario.
The results from the business‑as‑usual (“BAU”) scenario are shown below over the historical short, medium and long‑term time horizons.
• Short term: present
• Medium term: 2030
• Long term: 2050
Risk driver
Direct operations
Exposure and potential impact
Short
term
Medium
term
Long
term
Flooding
1 1 1
One of our sites in the UK is exposed to a low‑medium risk of riverine flooding. A flood event could cause damage to our facilities or
cause disruption indirectly if the local area was impacted. All other sites are considered to be low risk for both riverine and coastal
flooding.
Wind risk
2 2 2
Extreme wind events can occur during weather events such as storms, typhoons and tornadoes. These events could cause damage
to our facilities or lead to disruption if there are power outages or disruption in the local area. The overall risk is low, however our site
located in China is at a medium‑high risk.
Heat stress
4 4 4
Most locations are exposed to a medium‑high level of heat stress which will increase under the BAU scenario. Increased temperatures
over a prolonged period could lead to a loss of productivity and increased costs due to high energy demand for cooling.
Precipitation risk
3 3 3
Precipitation risk refers to the risk caused by exposure to extreme precipitation events or exceptionally high volumes of precipitation.
Three sites are exposed to a high risk which could increase the likelihood of flooding, causing damage and disruption to our sites and
the surrounding area.
Drought
2 2 3
Droughts are expected to increase under the BAU scenario. Our warehouses located in Spain and the UAE have the highest
exposure, whilst the manufacturing sites in China and the UK have a low‑risk exposure. Droughts would have an immaterial impact
on the Group.
Wildfire
1 1 1
All sites are at a low risk from wildfire events.
Risk exposure
1
Very low
2
Low
3
Medium
4
Medium high
5
High
6
Very high
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Environment, Social and Governance continued
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Risk Management continued
Physical risk: Scenario analysis continued
Risk driver
Top 15 OEM suppliers
Exposure and potential impact
Short
term
Medium
term
Long
term
Flooding
1 1 1
Supplier sites have a low risk exposure to riverine and coastal flooding events.
Wind risk
5 5 5
Our suppliers are exposed to a high level of wind risk in the form of typhoons and storms. These events could damage supplier
factories, affecting their ability to manufacture.
Indirect damage: There is also a risk that if the local area is affected, it could lead to other disruptions, such as their ability to bring in
raw materials or transport finished goods. This could impact the amount of product we have available for customers.
Heat stress
3 3 4
There is a medium risk of heat‑stress events for suppliers. Whilst there could be implications such as productivity loss or high
operating costs, the impact for the Group is thought to be immaterial.
Precipitation risk
5 5 5
Our suppliers are exposed to a high level of precipitation risk with heavy precipitation events becoming more frequent and intense
across Asia. These events could cause damage and disruption to supplier facilities through surface water flooding. This risk could
also impact the ability of suppliers to bring in raw materials or transport finished goods, which could impact the amount of product
we have available.
Drought
1 2 2
Droughts are expected to increase under the BAU scenario but still remain at a low risk level. Droughts could cause short‑term
disruption for manufacturers that are reliant on water within their manufacturing processes. However, given the risk level, the
impact on the Group is thought to be immaterial at this stage.
Wildfire
1 1 1
Supplier sites have a low risk exposure to wildfire events.
Risk exposure
1
Very low
2
Low
3
Medium
4
Medium high
5
High
6
Very high
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Environment, Social and Governance continued
Task Force on Climate-related
Financial Disclosures continued
Risk Management continued
Adaptation and mitigation measures
Our physical scenario analysis shows the
extent to which our operations and those
of our principal OEM suppliers, situated
within China, are exposed to the acute
and chronic impacts of climate change.
Extreme weather events such as extreme
precipitation and storm events represent
the most significant threat to our facilities
and suppliers.
In recognition of the potential disruptions
posed by extreme weather events, we
hold additional stock in our warehouses
in both the UK and China. This buffer
helps to bolster our resilience to any
temporary disruptions within the supply
chain. The Group has ownership of product
designs and production tooling, allowing
manufacturing activities to be moved
between suppliers more easily, should any
disruptions arise. We have established
comprehensive business continuity
plans and secured business interruption
insurance for our manufacturing facilities
and critical OEM suppliers. This ensures
our preparedness and financial protection
against unforeseen events. Due to high
levels of preparedness and resilience,
we have not experienced any significant
impacts from the physical impacts of
climate change on our operations.
Over the medium to long term, we are
looking at greater diversification of our
supplier base to further mitigate our risk
exposure and are exploring options in the
Americas and Asia, outside of China.
Strategy
We recognise that climate‑related risks and
opportunities can manifest themselves over
longer time horizons that extend beyond
traditional business planning horizons.
To develop a resilient business capable of
navigating the uncertainties introduced by
climate change, it is imperative we embed
the management of these climate‑related
considerations within our business strategy,
encompassing our short, medium and
long‑term time horizons.
• Short term: 0 to 1 year
• Medium term: 1 to 3 years
• Long term: 3 to 10+ years
Our strategic priorities of Innovate,
Growand Sustain help to ensure our
work contributes increasingly to society’s
sustainability goals:
Innovate
Through research and development, we will
continue to develop innovative products
which are more efficient and designed with
circularity in mind. As we progressively add
greater technology, such as controls, smart
functions and connectivity, we can help our
customers reduce their energy usage.
Grow
Our growth strategy focuses on continued
organic growth and targeted acquisitions to
gain access to emerging product markets
and expand our existing product offering.
We aim to leverage the opportunities
presented by the electrification of energy
which helps drive decarbonisation.
Sustain
We aim to lead the industry by lowering
our environmental footprint, and in doing
so help our customers to achieve their own
sustainability targets.
Transitioning to a low carbon economy
We recognise the UK Government’s net
zero target for 2050 and the net zero
commitments and emission reduction
targets that our customers have made.
Insetting our strategy, we have established
near‑term science‑based emission
reduction targets which have been
validated by the Science Based Targets
initiative (“SBTi”). Delivering progress
against our near‑term targets is an
important step in our transition towards a
low carbon economy.
To achieve our Scope 1 and 2 target
we will continue to source 100%
renewable electricity. We are investigating
an additional solar PV array at our
manufacturing facility in Jiaxing, to
complement the existing array. Ensuring
we use energy efficiently across
heating, manufacturing processes and
transportation will play an important role
in reducing our use of fossil fuels. Over the
medium term, we will need to consider the
transition of company vehicles to electric
and low carbon alternatives as well as
assessing the use of low carbon heating
solutions across our estate.
Our Scope 3 target focuses on the
emissions arising from the use of the
products we sell. We will continue to use
our research and development efforts
to enhance our products by improving
energy efficiency and the integration of
controls and smart functionality to reduce
energy consumption. The development
of new product ranges such as off‑grid
solar‑powered outdoor lighting solutions
demonstrate how we can offer innovative
solutions that help drive decarbonisation.
However, the key to achieving our Scope
3 target is the decarbonisation of the
electricity grid where our products are sold.
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Environment, Social and Governance continued
Task Force on Climate-related Financial Disclosures continued
Strategy continued
Products & Services Supply Chain Research & Development Operations
Our low carbon product ranges (LED lighting,
EV chargers and smart standby products) help
customers to reduce their GHG emissions and
transition towards a low‑carbon future. We
strive to develop more efficient products and
better controls to improve energy efficiency.
One of our strengths is the relationship we have
with our suppliers. We recognise that we must
work together to make more sustainable
choices across product design, material choices
and the manufacturing processes.
Our business is well placed to take advantage of
the inevitable electrification of energy as we
transition towards a low carbon economy.
Opportunities for expansion into electric vehicle
charging and other low carbon solutions such
as smart home tech.
One of our first priorities is to reduce the
emissions from our operations. By
implementing efficiency improvements, we can
reduce energy use, raw material use, waste and
water use to limit our GHG emissions.
Link to strategic priorities
Innovate, Grow, Sustain Sustain Innovate, Sustain Sustain
Link to climate-related risks and opportunities
CR1
CR2
C01
CR1
CR2
CR3
C01
C02
CR1
CR2
C01
CR1
CR2
CR3
C01
C02
Achievements during 2023
• £80m revenue generated from low carbon
product categories, delivering significant
progress against our low carbon product
revenue target for 2025
• Launch of three‑phase high power EV
charger in July for larger homes and
commercial premises
• DW Windsor awarded the “Sustainability
Project of the Year” by the Highway Electrical
Association (“HEA”) for the Wandsworth
Bridge Project (page 26)
• LED Lighting Projects revenue growth of 24%
compared to last year
• Working with one of our key customers and
their Manufacture 2030 programme to
reduce our GHG emissions
• Transformation and integration of DW
Windsor into Luceco Group model utilising
China in‑house manufacturing and 100%
renewable electricity
• Began working with suppliers in China to
develop Environmental Product Declarations
(“EPDs”) for two LED products
• Specialist R&D functions in China and the
UKemploying 112 specialists with an
expenditure of £4.1m in 2023 (£3.6m in 2022)
• Development focus on residential and
commercial EV charging solutions
• DW Windsor launched a range of innovative
solar‑ powered lighting solutions designed to
support a variety of off‑grid lighting
applications ready for sale in 2024
• Continued development of enhanced
product information for lighting products
across TM65, TM66 and EPDs in line with
industry best practice
• Sourced 100% renewable electricity for all
Group operations in 2023, for the second
consecutive year
• Offsetting residual Scope 1 emissions
for2023
• Investment into energy efficiency and
automation projects within the China
manufacturing facility
• Investment in a new Euro 6 truck to
improvethe fuel efficiency of our
Kingfisherdeliveryfleet
• Continued focus on packaging and
transitioning from plastic to cardboard
Targets and commitments
Luceco plc commits to reduce absolute Scope 3 GHG emissions
from the use of sold products by 27.5% by 2031 from a 2021
baseyear.
Luceco plc commits to generating £100m revenue from low
carbon product sales by 2025 from a 2021 base year.
Luceco plc commits to reduce absolute Scope 1 and Scope 2 GHG
emissions by 46.2% by 2031 from a 2021 base year.
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Task Force on Climate-related
Financial Disclosures continued
Strategy continued
Financial planning
Climate‑related matters influence various
elements of our financial planning process.
The potential financial impact of each risk
and opportunity is calculated to better
understand its materiality for the Group.
Acquisitions have played, and will continue
to play, a key role in our sustainable
growth strategy. We have acquired three
businesses since 2017 to gain access to
emerging product markets, such as EV
chargers through our acquisition of Sync
EV in 2022, and to expand our existing
LED lighting product offering through the
acquisitions of Kingfisher and DW Windsor.
In November 2023, we completed a strategic
investment in eEnergy, an important
customer within our LED Lighting Projects
business. eEnergy is a net zero energy
services provider, empowering organisations
to achieve net zero by tackling energy
waste and transitioning to clean energy,
without the need for upfront investment.
They are well positioned to become an
increasingly relevant sales channel within
the non‑residential segment, and we look
forward to working in collaboration to
explore growth opportunities for our LED
lighting and other products.
Whilst we have seen the majority of material
and freight costs subside over the course of
this year, copper prices have remained high.
We anticipate that demand for copper will
continue to increase, driven in part by the
electrification of energy and transportation.
We continue to use forward purchasing
strategies and hedging along with
short‑term fixed price agreements to
protect against volatility.
Our aim is to leverage our position as
the UK’s leading provider of domestic
electrical devices to seize opportunities
presented by the electrification of energy
as society charts its path towards net zero.
We generated £80m of revenue from low
carbon products in 2023, leaving us well
positioned to achieve our goal of £100m
revenue from low carbon products
1
by 2025.
Scenario analysis: Transition risks
andopportunities
In 2022, we carried out a detailed
assessment of how our main climate‑related
transition risks and opportunities could
evolve under three different scenarios
based upon the Network for Greening the
Financial System (“NGFS”) climate scenarios.
Potential impacts and their materiality were
considered across short (present), medium
(2030) and long‑term (2050) horizons. Our
medium‑term horizon is aligned with our
near‑term science‑based emission reduction
target and our long‑term horizon aligns with
the UK Government’s net zero commitment.
In 2023, we revisited the risks and
opportunities evaluated within our scenario
analysis process and are satisfied that
there were no new emerging risks or
opportunities at this stage which need to
befactored into our assessment.
In the Net Zero (“NZ”) scenario, we are
likely to be confronted by escalating risks
associated with the evolution of customer
preferences and increasing stakeholder
concern regarding climate change.
Should we fail to align with these escalating
demands for climate action, our revenue
could be impacted by falling customer
demand and our share price could be
adversely affected. The advent of carbon
pricing mechanisms and the surge in raw
material costs driven by the global shift
towards sustainable energy, may result
in higher costs. This scenario also unveils
the most substantial opportunities for the
Group, especially in the medium to long
term. The development of new markets
such as EV charging equipment and other
emerging technologies, could represent
substantial growth opportunities for the
Group. Additionally, there is potential within
existing product categories for growth,
through the electrification of energy and
a growing appetite for environmentally
conscious products.
In the Delayed Transition (“DT”) scenario, the
perceived risks appear more subdued in the
short to medium term but escalate towards
the long‑term horizon. This suggests a
delayed transition might lead to sudden
and more significant changes over a
shortened timescale later on. The potential
financial impacts from changing customer
behaviour and stakeholder concern on
revenue and share price could become
more significant if we failed to act over the
long term.
The Current Policies (“CP”) scenario, which
assumes there is no expansion in climate
policies and lowered expectations from
customers and other stakeholders, results in
a lower level of transitional risk.
We still anticipate growth prospects
within this scenario, as advances in energy
efficiency and the progression towards
the electrification of energy present viable
opportunities. However, the magnitude of
these opportunities is less pronounced than
in the NZ or DT scenarios.
Our strategic approach to sustainable
growth continues to focus on organic
growth complemented by strategic
acquisitions aimed at gaining access to
emerging markets and enhancing our
existing portfolio. Sustainability is a key
pillar of our business strategy, and we are
well positioned to seize the opportunities
presented by the transition to net zero.
We recognise and support the significant
commitments our customers are making to
reduce their carbon footprint and will work
closely with them to help them achieve
their climate aspirations.
Climate scenarios
Net Zero 2050 – an ambitious scenario
that limits global warming to 1.5°C
through stringent climate policies
and innovation, reaching net zero CO
2
emissions no later than 2050.
Delayed Transition – assumes global
emissions do not peak until 2030, followed
by strong policies that are needed to
limit warming to below 2°C. This scenario
explores the impact that a delayed and
disorderly transition could have.
Current Policies – assumes that only
currently implemented policies are
preserved, leading to a “hot‑house world”,
a higher degree of physical risk and
lower impact of transitional risk.
Environment, Social and Governance continued
Creating a sustainable future continued
1. Low carbon product revenue is defined as EV
charger revenue and LED revenue less sales from
lighting columns and downlight accessories.
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DW Windsor won the “Sustainability DW Windsor won the “Sustainability
Project of the Year” award presented by Project of the Year” award presented by
the Highway Electrical Association (“HEA”). the Highway Electrical Association (“HEA”).
The award was presented in recognition The award was presented in recognition
of our role in the refurbishment of of our role in the refurbishment of
Wandsworth Bridge in London, conducted Wandsworth Bridge in London, conducted
in partnership with VolkerLaser and in partnership with VolkerLaser and
Richmond and Wandsworth Councils. Richmond and Wandsworth Councils.
Our role in the project was the challenging Our role in the project was the challenging
restoration of the heritage lanterns and restoration of the heritage lanterns and
columns to their original condition. Our columns to their original condition. Our
aim was to retain as many of the original aim was to retain as many of the original
lanterns and columns as possible, while lanterns and columns as possible, while
replacing or repairing elements that are replacing or repairing elements that are
no longer fit for purpose. We were able to no longer fit for purpose. We were able to
restore around 95% of the original elements restore around 95% of the original elements
with only minor repairs required. with only minor repairs required.
The lighting element was upgraded to The lighting element was upgraded to
energy‑efficient LEDs to achieve energy energy‑efficient LEDs to achieve energy
savings of approximately 65%. The quality savings of approximately 65%. The quality
of the illumination was a consideration to of the illumination was a consideration to
ensure pedestrian and road safety with a ensure pedestrian and road safety with a
minimum road lighting standard of ME3. minimum road lighting standard of ME3.
The lighting also needed to minimise The lighting also needed to minimise
light spill onto the river and surrounding light spill onto the river and surrounding
areas to avoid disrupting both people and areas to avoid disrupting both people and
nocturnal animals.nocturnal animals.
This project demonstrates our This project demonstrates our
commitment to sustainability and how we commitment to sustainability and how we
can embrace the principles of the circular can embrace the principles of the circular
economy. Through refurbishment, we can economy. Through refurbishment, we can
keep existing lighting equipment in use keep existing lighting equipment in use
for longer, reducing raw material use and for longer, reducing raw material use and
landfill waste, as well as helping to lower landfill waste, as well as helping to lower
carbon emissions. carbon emissions.
Environment, Social and Governance continued
Creating a sustainable future continued
Sustainability
Project of
the Year
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Task Force on Climate-related Financial Disclosures continued
Strategy continued
Scenario analysis: Transition risks andopportunities continued
Transition risk /opportunity Description Potential financial impact Scenarios
Short
term
Medium
term
Long
term
Risk
Changing customer
demands
Trend within our retail customer base of ambitious carbon reduction
targets that requires suppliers to set similarly ambitious targets.
Failure to respond to increasing customer demand for
climate action could lead to a loss of revenue through
reduced demand for products and services.
NZ
3 4 6
DT
2 3 5
CP
2 2 2
Increased stakeholder
concern
ESG issues, particularly climate change, are a large concern for our key
stakeholders (investors, customers, employees and consumers).
Damage to our reputation in relation to climate change
could lead to a loss of revenue or negative impact on
share prices.
NZ
3 4 6
DT
2 3 6
CP
2 2 2
Increased pricing of
GHG emissions
To achieve the ambitious goal of net zero emissions by 2050, the policy
landscape around GHG emissions will need to evolve to create the necessary
environment to enable the transition to a low carbon economy.
More ambitious climate policies could increase direct
andindirect operating costs. Failure to comply with
reporting obligations could have a negative impact on
ourreputation.
NZ
4 4 4
DT
2 2 5
CP
1 1 1
Increased cost of raw
materials
Demand for critical materials, such as copper, is projected to rapidly grow
as sustainable technologies are deployed (renewable energy,
electrification, EVs etc.) in pursuit of net zero. Rapid growth in demand and
the timespan to develop new supplies of metals can affect the supply and
demand balance.
Increased raw materials costs would inevitably lead to
increased product costs, although these costs can
usuallybe passed on. Constrained supply chains could
temporarily reduce production output.
NZ
4 4 4
DT
2 2 5
CP
2 2 2
Opportunities
Access to new markets
The electrification of energy presents a significant opportunity for the
Group through the net zero transition. This predominantly relates to EV
charging solutions but could also extend to new product categories that
complement our existing offering (battery storage, inverters, solar PV etc.).
The transition to net zero presents a range of exciting
opportunities for the Group to grow revenues from new
product categories. For example, the UK EV charging
market is estimated to be worth £500m annually by 2025.
NZ
4
6 6
DT
2
4 6
CP
2
4 4
Expansion of existing
products and services
The transition to net zero relies on the electrification of energy and
efficiency gains within buildings which could increase demand for our
products. This includes low‑carbon products (LED lighting, smart plugs
and controls) and wiring accessories as building electrics are upgraded to
manage the additional electrical load.
The transition to net zero presents a range of exciting
opportunities for the Group to also grow revenues within
existing product categories.
NZ
4
6 6
DT
2
4 6
CP
2
4 4
Materiality Low Medium High
Risk
1 2 3 4 5 6
Opportunities
1 2 3 4 5 6
Environment, Social and Governance continued
Creating a sustainable future continued
Scenarios
NZ: Net Zero 2050
DT: Delayed Transition
CP: Current Policies
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Environment, Social and Governance continued
Task Force on Climate-related Financial Disclosures continued
Metrics and Targets
Greenhouse gas emissions
We are committed to measuring and reducing our greenhouse gas emissions (“GHG”),
having established 2021 as the baseline for our GHG inventory and emission reduction
targets. The Group’s emissions have been independently calculated in accordance with the
GHG protocol
1
and PCAF
2
, utilising emission factors published by the UK Government, the
International Energy Agency (“IEA”) and Exiobase.
The table below details our GHG emissions from all Group operations and our value chain
across Scopes 1, 2 and 3 for the year ended 31 December 2023, compared to the previous
year and our 2021 base year.
GHG emissions (tCO
2
e) 2023 2022 2021
Change
vs 2022
Change
vs 2021
Scope 1
Natural gas 467.0 380.1 432.7 23% 8%
LPG 8.4 5.8 5.9 45% 42%
HFCs 137.0 57. 3 46.8 139% 193%
Company vehicles 522.1 459.6 483.9 14% 8%
Scope 2
Market‑based method
(“MBM”) — — 195.3 — ‑100%
Location‑based method
(“LBM”)
3
4,999.1 4,139.8 5,240.9 21% ‑5%
Scope 3
Purchased goods
and services 69,248.7 60,900.4 83,623.0 14% ‑17%
Capital goods 1,777.8 1,596.1 2,418 .8 11% ‑27%
Fuel and energy‑related
activities 1,850.1 1,534.6 1,944.9 21% ‑5%
GHG emissions (tCO
2
e) 2023 2022 2021
Change
vs 2022
Change
vs 2021
Upstream transportation
and distribution 8,035.6 20,961.5 18,571.8 ‑62% ‑57%
Waste generated in
operations 187.3 253.8 208.0 ‑26% ‑10%
Business travel 921.8 628.5 402.0 47% 129%
Employee commuting
and homeworking 1,149.0 1,053.2 1,386.8 9% ‑17%
Use of sold products 405,258.0 430,472.0 526,774.6 ‑6% ‑23%
End‑of‑life treatment of
sold products 715.5 763.3 1,077.6 ‑6% ‑34%
Downstream transportation
and distribution 7,007.6 13 ,611. 5 20,206.4 ‑49% ‑65%
Investments 207.6 — — — —
Total Scope 1 + 2 (MBM only) 1,134.5 902.7 1,164.6 26% ‑3%
Total Scope 3 496,359.0 531,775.0 656,613.9 ‑7% ‑24%
Total GHG emissions 497,493.5 532,677.7 657,778 .5 ‑7% ‑24%
Outside‑of‑scope direct
biogenic emissions 20.0 19.7 27. 2 2% ‑26%
Emissions intensity ratio
£m revenue 209.0 206.3 228.2 1% ‑8%
Scope 1 + 2 (MBM) tCO
2
e/
£m turnover 5.4 4.4 5.1 24% 6%
Scope 3 tCO
2
e/£m turnover 2,374.9 2, 577.7 2,877.4 ‑8% ‑17%
Creating a sustainable future continued
1. The GHG Protocol Corporate Accounting and Reporting Standard and Corporate Value Chain (Scope 3)
Standard have been used.
2. The Partnership for Carbon Accounting Financials (“PCAF”) methodology has been used for Scope 3
category 15: Investments only.
3. Location‑based electricity emissions have been reported for comparison only.
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Environment, Social and Governance continued
Task Force on Climate-related Financial Disclosures continued
Metrics and Targets continued
Greenhouse gas emissions continued
During 2023, we have continued efforts to improve our emission quantification
methodology and have restated our 2022 and 2021 emissions profile to bring them in line
with our new methodology.
A significant change has arisen for emissions calculated from financial spend data.
The previous financial spend factors have been retired and replaced by Exiobase’s
environmentally extended multi‑region input output model, which provides spend‑based
factors for specific countries and regions across a broader range of industry sectors. There
have also been methodology changes for employee commuting and end‑of‑life treatment,
with a more detailed explanation provided within the methodology section.
The table below details our FY21 and FY22 GHG emissions reported in the 2022 Annual
Report. These values have now been retired following the methodology improvements
and restated emissions provided in 2023. Our Scope 1 and 2 emissions and “Use of sold
products” emissions for 2021 have remained the same under our SBTi target commitment.
2022 2021
Scope 1 886 969
Scope 2 — 195
Scope 3 582,858 684,867
Total 583,745 686,032
Out‑of‑scope biogenic emissions 20 27
Our GHG inventory has seen a year‑on‑year reduction, which is driven primarily by a
reduction in our largest emission source, the use of sold products. There are numerous
factors driving this reduction, including a reduction in the number of products sold
compared to 2021, which was an exceptional year for the Group. Changes in our product mix
(i.e. higher value and more powerful commercial lighting vs residential lighting), improving
efficiency and decarbonisation of the grid are also helping to reduce GHG emissions.
Upstream and downstream transportation emissions have fallen significantly compared
tolast year. Emissions in these categories have been calculated primarily using
spend‑based factors, where deflators are used to normalise the financial spend to align
with the emission factors. The deflators use a region‑specific average which does not
capture the significantly higher inflationary pressure that was experienced for shipping
costs since the Covid pandemic. As a result, the 2021 and 2022 emissions are likely to
be overstated due to higher freight costs over this period. We are going to review our
methodology for transportation and distribution and look to move away from spend‑based
factors as part of the 2024 GHG calculations.
Creating a sustainable future continued
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Environment, Social and Governance continued
Task Force on Climate-related Financial Disclosures continued
Metrics and Targets continued
Streamlined Energy and Carbon Reporting
The Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013 requires the Group to disclose its annual energy consumption and greenhouse gas emissions from
Streamlined Energy and Carbon Reporting (“SECR”) sources for global Scope 1 and 2 emissions. Our emissions intensity per unit of turnover is reported in the GHG inventory table on
page 50 and the narrative on energy and emission reduction measures is included in the strategy section on pages 45 to 47.
2023 2022 2021 Total change (%)
Energy use (kWh) UK Non-UK Total UK Non‑UK Total UK Non‑UK Total vs 2022 vs 2021
Natural gas 1,491,648 1,061,136 2,552,784 1,284,292 797,745 2,082,037 1,132,880 1,229,604 2,362,484 23% 8%
LPG 39,302 — 39,302 27,051 — 27,051 27,636 — 27,636 45% 42%
Company vehicles 1,914,329 158,186 2,072,515 1,652,062 159,545 1,811,607 1,618, 308 319,571 1,937, 879 14% 7%
Electricity 1,261,145 7,743,067 9,004, 212 1,245,572 6,379,885 7,625,458 1,361,995 8, 313,507 9,675,502 18% ‑7%
Total 4,706,424 8,962,389 13,668,813 4,208,977 7,337,175 11, 5 4 6 ,152 4,140, 820 9,862,681 14,003,501 18% ‑2%
2023 2022 2021 Total change (%)
Scope 1 and 2
emissions UK Non-UK Total UK Non‑UK Total UK Non‑UK Total vs 2022 vs 2021
Natural gas 272.9 194.1 467.0 234.4 145.6 380.1 207.5 225.2 432.7 23% 8%
LPG 8.4 — 8.4 5.8 — 5.8 5.9 — 5.9 45% 42%
HFCs 9.2 127.8 137.0 — 57. 3 57.3 8.0 38.8 46.8 139% 193%
Company vehicles 485.3 36.9 522.1 421. 3 38.3 459.6 407.4 76.5 483.9 14% 8%
Electricity (MBM) — — — — — — 124.2 71.0 195.3 — ‑100%
Total 775.8 358.8 1,134.5 661.5 241.2 902.7 753.1 411. 6 1,164.6 26% ‑3%
Creating a sustainable future continued
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Environment, Social and Governance continued
Task Force on Climate-related
Financial Disclosures continued
Metrics & Targets continued
Renewable electricity
We have continued our efforts to mitigate
our Scope 2 emissions and sourced 100%
renewable electricity across all operations
in 2022 and 2023. Renewable Energy
Attribute Certificates have been sourced
to cover the electricity consumption for
all operational locations, accounting for
92% of our total electricity consumption.
The solar PV array at our manufacturing
facility in China generated 8% of total
electricity consumption. As we look forward
to 2024, we are investing in a second
solar PV array in China to increase our
use of self‑generated energy at our main
manufacturing site.
Carbon neutrality
For the third year running, we have offset
our residual Scope 1 and 2 emissions to
achieve operational carbon neutrality.
Wehave retired 1,152
1
credits this
year, sourced from the Weyerhaeuser
Afforestation Project in Uruguay. The project
covers over 18,800 hectares of degraded
land which is expected to continue to
degrade in the absence of this afforestation
project. The certificates have been awarded
by the Rainforest Alliance in accordance
with the Verified Carbon Standard.
Calculation methodology
Scope 1 and 2
Natural gas – Calculated using metered
consumption from supplier invoices. Where
actual consumption data was not available,
consumption has been estimated based on
floor areas and published benchmarks or
heating degree day regression analysis.
HFCs – Refrigeration emissions have been
calculated from service records where
available. Where records were unavailable,
HFC losses have been estimated using the
screening methodology.
Company-owned vehicles – Emissions have
been calculated using fuel consumption
data where available. Vehicle type and
mileage have been used to calculate
emissions where fuel data is not available.
UK Government “SECR” kWh emission
factors have been utilised to calculate the
underlying energy use.
Electricity – Calculated primarily using
metered consumption from supplier invoices
and half‑hourly consumption data. Where
actual consumption data is not available,
consumption has been estimated based on
floor areas and published benchmarks.
Exclusions – Emissions from rented sales
offices with shared air conditioning services,
including our sales offices in the UAE and
Spain, have been excluded due to a lack of
data, however emissions are immaterial.
Kingfisher Lighting also took on a lease for
a new site in December 2023 which they
will move into during 2024. Given the short
length of time the site has been under the
control of Kingfisher and that there is no
activity taking place on site yet, we have
excluded this from our inventory for 2023.
Scope 3
Financial screening – Purchased goods and
services, capital goods, business travel and
waste generated in operations, transport
and distribution have been calculated using
a financial screening methodology which
uses high‑level environmentally extended
input output (“EEIO”) factors to estimate
associated GHG emissions from financial
spend information. We have restated these
emissions for 2021 and 2022 as the Quantis
Scope 3 Evaluator which had been used in
previous inventories has now been retired.
We have used the Exiobase EEIO factors
which are more representative (as they are
based on a 2020 dataset) than the previous
factors as we are able to use country or
region‑specific emission factors rather
than a global average. Financial values have
also been deflated using regional‑specific
index deflators to account for inflationary
pressures in each country of spend.
Use of sold products – Emissions have
been modelled based on sales data and
product information and assumptions on
the use of our products over their expected
lifespan. For LED lighting products, we
have taken the quantity of lights sold and
their individual wattages and multiplied
by 75% of their overall lifetime run hours to
estimate their lifetime energy usage. This
is then multiplied by the country of sale
electricity emission factor, provided by the
UK Government for the UK and IEA factors
for the rest of the word.
For EV chargers we have included the
standby power rating and charging losses
within their energy use calculation. Our EV
charger management system provides the
annual average energy consumption per
sold charger, which we use to approximate
the charging losses. We estimate that our
chargers have an average lifespan of eight
years. We multiply the estimated lifetime
energy use per charger by the country of
sale electricity emission factor.
For standby power products such as Wi‑Fi
or USB‑enabled wall sockets, we assume
a standby power consumption of 0.1w and
an estimated lifespan of ten years. We
multiply the estimated lifetime energy use
per product by the country of sale electricity
emission factor.
Use of sold product emissions for 2022 have
been restated due to the introduction of a
new EV charger product and discrepancies
in total units sold.
Creating a sustainable future continued
2020 2021
2022
2023
Electricity sourcing mix (%)
Standard Grid
EAC
Solar PV
1. 17 credits for the restatement of Scope 1 emissions
for 2022 and 1,135 for the 2023 reporting period.
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2021 2022
922.4
1,191.8
1,154.5
641.2
2023
2031
Scope 1+2 target (tCO
2
e)
Environment, Social and Governance continued
Task Force on Climate-related
Financial Disclosures continued
Metrics & Targets continued
Calculation methodology continued
Scope 3 continued
End-of-life treatment – We have calculated
the total weight of sold product and
packaging for the reporting period. Where
there is weight data missing, we have
used an average for the product category
to estimate the missing product and
packaging weight. Around 80% of our
products are sold within the UK, therefore
we have used UK Government waste
treatment statistics for packaging and the
Waste Electrical and Electronic Equipment
(“WEEE”) regulations to estimate the
treatment method for each waste stream.
Based on available data, an assumption on
packaging types was assumed to be 70%
paper and cardboard and 30% plastic and
UK Government emission factors were used
to estimate emissions. We have restated
our 2021 and 2022 emissions so they are
comparable with our 2023 methodology.
Fuel and energy-related activities – The
underlying energy figures used in the
Scope 1 and 2 calculations have been
multiplied by the UK Government well‑
to‑tank and transmission and distribution
emission factors.
Downstream transportation and
distribution – Where our customers
have arranged the transportation of our
products, we have estimated their shipping
costs on the basis of what we have paid in
terms of shipping costs. We have then used
the Exiobase EEIO factors to estimate the
associated emissions.
To account for the retailing and distribution
emissions associated with our customers’
operations, we have taken a sample of our
customers’ Scope 1 and 2 emissions per
revenue by sales channel. This is multiplied
by the revenue from each sales channel,
with a multiplier to account for customer
margin, to estimate the associated
emissions.
Employee commuting – For China‑based
employees, we have created a model
based on average commuting distances
within major Chinese cities and a survey on
modes of transport for commuting within
China. Within this model, UK Government
emission factors have been utilised as a
proxy, and we have applied a 15% uplift
to these factors to be conservative. The
majority of all other employees are based
in the UK and therefore the average
commuting emissions per full‑time
equivalent for a UK worker has been
used. We have restated our 2021 and 2022
emissions so they are comparable with our
2023 methodology.
Investments – As a result of our investment
in eEnergy plc, we need to include this
within our GHG inventory. To estimate
the associated emissions for eEnergy, we
have used the Partnership for Carbon
Accounting Financials (“PCAF”) Part A
guidance for financed emissions and the
section on listed equity and corporate
bonds. We have calculated our share in
eEnergy plc to work out the attribution
factor. For their emissions, we have used
the associated Exiobase emission factor
based on their SIC code and their 2023
annual turnover and multiplied this by the
attribution factor to calculate our emissions.
Carbon Disclosure Project (“CDP”)
We received a management‑level score
(B) for our response to the CDP Climate
Change questionnaire in 2023. This is our
third year of reporting to the platform,
so we are delighted to have achieved
a strong grade, reflecting our progress
integrating climate‑related issues into our
business operations. Our CDP response
contains further information on our climate
governance, risk management processes,
climate‑related risks and opportunities,
GHG emissions and business strategy.
Science Based Targets initiative
Our near‑term emission reduction targets
were successfully validated by the SBTi in
April 2023. The SBTi defines and promotes
best practice in science‑based target
setting and establishes how quickly
organisations need to reduce their GHG
emissions to prevent the worst effects of
climate change. Our targets are to:
• Reduce absolute Scope 1
1
and Scope 2
GHG emissions by 46.2% by 2031 from a
2021 base year.
• Reduce absolute Scope 3 GHG emissions
from the use of sold products by 27.5% by
2031 from a 2021 base year.
Scope 1 and 2 target
In 2023, our Scope 1 and 2 emissions
increased by 26% compared to last year but
have reduced by 3% against our base year.
Our gas consumption has increased by 23%
on last year, driven by higher manufacturing
activity at our site in China and high gas
consumption at our Telford distribution
centre. The use of company vehicles has
risen, primarily driven by the increased
activity of the Kingfisher delivery fleet as
Kingfisher continues its expansion.
We have continued to source 100%
renewable electricity using a combination of
solar PV and Energy Attribute Certificates,
maintaining zero Scope 2 emissions. Finally,
we have seen a significant increase in
emissions from refrigerant gases compared
to 2021. There were several air conditioning
units that required refrigerant gas top‑ups
during the year, resulting in a significant
increase in our HFC emissions.
To reach our target, we need to focus on
controlling our natural gas consumption
over the short term whilst we consider
economically viable alternatives to fossil
fuels. We need to enhance the maintenance
of our air conditioning systems to reduce
refrigerant gas leaks. For company vehicles,
we will look to transition our company car
and van fleet towards electric and hybrid
over the medium term. It will be more
challenging to transition the Kingfisher
delivery fleet of large goods vehicles, where
alternative technologies are still emerging.
We purchased a fuel‑efficient EURO VI LGV
in 2023 to meet the growing demand for
Kingfisher products and to improve the
overall fuel efficiency of the delivery fleet.
Creating a sustainable future continued
1. Scope 1 emissions include the biogenic elements
as per the SBTi target requirements.
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2021 2022
430,472
526,775
405,258
381,912
2023
2031
Scope 3 target (tCO
2
e)
Environment, Social and Governance continued
Task Force on Climate-related
Financial Disclosures continued
Metrics & Targets continued
Science Based Targets initiative continued
Scope 3 target
For our Scope 3 target, we have delivered
a 23% reduction against our 2021 base
year. There are a number of interacting
drivers that impact our target, such as the
quantity of products sold, changes in the
product mix, improved energy efficiency
and changes to the carbon intensity of the
electricity grid. LED lighting products are
responsible for the majority of emissions
and there has been a reduction in the total
number of lighting products sold year‑on‑
year which has reduced the total energy
use of sold products, reducing emissions.
Whilst the quantity of sold products is
lower, we have been able to maintain
comparable revenue from LED products as
there has been a shift towards higher value
commercial and project‑based lighting
products.
We continue to use our research and
development efforts to drive improvements
in the energy efficiency of our products.
Our latest generation of 7kW and 22kW
chargers have lower standby power usage
and charging losses compared to the
previous generation, helping to reduce
energy consumption. EV charging products
represent a very small part of our use of
sold product emissions at present, but we
expect sales to increase over the coming
years.
Low carbon product revenue
We generated £80m of revenue from low
carbon products in 2023 and we continue to
focus on this key area as society transitions
towards net zero emissions. We are well
positioned to achieve our goal of £100m
revenue from low carbon products by 2025
as we anticipate an increase in demand
for low carbon products and “green home
tech” solutions.
Sustainability objectives:
Our progress against our sustainability
objectives for 2023 are outlined below,
along with our next steps for 2024.
Engage with key customers to better
understand their climate ambitions and
to communicate our strategy.
We are continuing to proactively engage
with our customers who are committed to
reducing their climate impact, most notably
among our Retail and Hybrid customers
with science‑based targets or net zero
commitments. In collaboration with a
key Retail customer, efforts are underway
through the Manufacture 2030 programme
to reduce our greenhouse gas emissions
and enhance product sustainability.
Furthermore, the demand for insights into
our carbon management strategies has
started to gather momentum with some of
our professional wholesalers.
In the Professional Projects sector,
sustainability criteria are increasingly
integral to the lighting project specifications
and the tendering process, with rising
requests for detailed data on product
carbon footprint and circularity via TM65
and TM66 calculations. In response, we have
completed TM65 and TM66 assessments for
specific product lines and the more detailed
Environmental Product Declarations
(“EPDs”) are being developed as we
anticipate demand for these more detailed
assessments could increase.
Undertake detailed energy audits of UK
operations as part of the Energy Savings
Opportunity Scheme (“ESOS”).
We are on track to deliver ESOS compliance
and undertake detailed energy audits in
line with the extended deadline of 5 June
2024 (previously 5 December 2023). The
scheme administrators, the Environment
Agency, have moved to strengthen the
requirements of ESOS, including the
development of an implementation plan
following the completion of the current
phase. We will use the energy‑saving
recommendations from the audits to help
deliver progress against our Scope 1 and 2
target.
Develop a research and development
roadmap over the short, medium and
long term that will help us deliver our
Scope 3 science-based target.
We will continue to drive innovation to meet
customer needs, designing more efficient
and functional products. These efforts will
play an important role in delivering our
Scope 3 science‑based target. Over the
short and medium term, we will continue
to focus on improving the efficiency of our
LED lighting products and reducing the
standby power and losses of EV chargers,
wiring accessories and cable reels. The
integration or pairing of our products with
greater controls and smart functionality can
reduce the amount of time our products
are in use, helping to cut both costs and
emissions. Over the long term, our attention
will turn towards integrating a higher
degree of circularity into our products, to
ultimately lower the embodied emissions.
2021 2022
78
56
80
100
2023
2025
Low carbon product revenue (£m)
Creating a sustainable future continued
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Sustainability objectives: continued
Begin work to develop a set of product
design criteria that help to improve the
sustainability of our products.
As part of our drive to enhancing the
sustainability of our products we are
initially focusing on LED lighting, as this
is where we are seeing the most interest
from our customers. The first step towards
improving the sustainability of our products
is to understand the embodied carbon
within. We are increasing our use of
TM65 calculations to provide customers,
particularly from the Professional Projects
segment, with an understanding of the
embodied carbon within our internal LED
lighting product ranges. This helps our
customers make more informed choices
as they have a better understanding of the
whole‑life carbon impact of our products,
and we can use this information to make
more informed choices within product
development. We are also working to
develop EPDs, which are a more detailed
form of TM65 calculation, for two internal
LED lighting products to develop our
capabilities in this area.
Across external lighting products, the focus
from customers has been on the circularity
of products and the use of the TM66
Circular Economy Assessment Method
which assesses circularity across product
design, manufacturing, materials and
service delivery. This assessment provides
the depth of detail required to create
products that are aligned with a circular
economy and the TM66 methodology forms
part of our design brief.
Next steps
The actions that we have taken to embed
the TCFD recommendations within our
business have helped build climate
resilience into our business strategy. We
will continue our efforts to develop our
approach as regulatory requirements evolve
and the challenges of climate change
become more pronounced. As we look
towards 2024, we have set the following
sustainability objectives:
• Begin the process of aligning our
annual reporting with the new IFRS S2
Climate‑related Disclosures Standard and
the development of a detailed transition
plan to meet our targets
• Start the development of a detailed
transition plan to meet our science‑based
targets
• Seek third‑party independent verification
of our Scope 1 and 2 emissions and work
towards more accurate calculations for
Scope 3 categories such as purchased
goods and services, and transportation
and distribution
• Development of TM65 lifecycle carbon
footprint assessments for all new Luceco
project luminaries by the end of 2024
Product innovations to reduce GHGemissions
Launched second generation 7kW and
new higher‑powered 22kW EV charger.
High‑specification LED luminaire designed
for “Super Shed” distribution centres.
Optimised for high level and racking
applications, reducing the overall number
of luminaires required to deliver a
comparable lighting level.
High‑performance, energy efficient and
lightweight floodlight delivering 120lm/w
with integrated motion sensor.
Solar‑powered lighting solutions designed
to support a variety of off‑grid external
lighting applications.
Environment, Social and Governance continued
Creating a sustainable future continued
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Environment, Social and Governance continued
Our culture
Our business model is underpinned by the
“can‑do” culture of our teams. Our people
are customer‑driven, designing products
which we know our customers will love and
that will improve the customer experience.
We are team‑focused, working together
to achieve our objectives. We ensure that
we reward achievement with opportunity.
We aim to be bold and innovative, thinking
differently and trusting each other to
create great products for our customers.
Finally, alongside all these qualities, we
are principled in the way we act with our
customers and suppliers. We do what we
say and do what is right.
We recognise that in order for this “can‑do”
culture to continue to thrive, we need to
invest in our people. We focus on the training
and development of our teams, so they
have the skills to innovate and confidence
to move quickly. We carefully recruit from all
backgrounds to ensure our teams work well
together. We engage with our employees
and act on their feedback, to ensure our
teams feel part of our business and go the
extra mile for our customers. Above all else,
we treat our teams with the respect and
recognition that their hard work deserves
and apply the same principled mindset to
them as they do to our customers.
Equality and diversity
We understand the importance and
benefits of greater diversity, including social
and professional background, cognitive
and personal strengths, sexual orientation,
disability status, gender and ethnicity
throughout the organisation. We are
committed to ensuring that recruitment
and promotion of individuals at all levels
of the business is based on merit and
objective criteria and that, within this
context, each candidate is judged on their
unique combination of skills, knowledge
and experience, cognitive and personal
strengths, and there is no relevance to their
social and professional background, sexual
orientation, disability status, gender and
ethnicity.
This is reflected in our Equality and
Diversity Policy, which demonstrates our
commitment to:
• Developing an ethos which respects and
values all individuals equally
• Eliminating all forms of discrimination
• Ensuring there are no barriers based
upon colour, culture, ethnicity, race,
religion, disability, gender, sexuality or
age which limit or discourage access to
promotion, recruitment or training
• Ensuring that all aspects of employment
avoid stereotyping based upon colour,
culture, ethnicity, race, religion, disability,
gender, sexuality or age
• Promoting good understanding of
cultural, racial, ethnic and religious
diversity, good race relations, disability,
gender and age equality
• Taking positive action to encourage the
development of a more diverse workforce
The policy is available on our intranet and
all new starters are made aware of it during
their induction into the business and are
expected to subscribe to it at the time of
their appointment.
The policy is reviewed on an ongoing
basis and a full review takes place at least
annually.
We do not tolerate behaviour which
breaches the policy and encourage staff to
use our grievance procedure to report any
actual or suspected breaches. We are not
aware of any breaches during the year.
Empowering people
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Environment, Social and Governance continued
Gender diversity
We have taken a number of steps in recent years to promote the retention of female talent, including improving maternity benefits and improving flexible working. The table below
shows the gender diversity of our workforce at the year end, with there being a 24% increase in females holding Board, senior management or direct report positions in 2023.
Empowering people continued
2023 2022
Male Female Male Female
Board 5 71% 2 29% 6 75% 2 25%
Senior management
1
13 76% 4 24% 12 86% 2 14%
Direct reports
2
75 79% 20 21% 72 81% 17 19%
Other employees 691 46% 813 54% 1,015 62% 629 38%
Total 784 48% 839 52% 1,105 63% 650 37%
1. Individuals reporting directly to the CEO or CFO.
2. Individuals reporting directly to senior management.
Board
71% Male
29% Female
Senior
management
1
76% Male
24% Female
Direct reports
2
79% Male
21% Female
Other employees
46% Male
54% Female
Total
48% Male
52% Female
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Environment, Social and Governance continued
Flexible working
We appreciate the importance of flexible
working in the modern workplace and we
empower our employees to work flexibly
when possible. We have a stand‑alone
Flexible Working Policy and employees
have a right to make an application from
day one of their employment. This policy
allows employees to request a change to
the number of hours that they work, change
the pattern of hours worked or perform
some or all of the work from the employee’s
home. We also endorse hybrid working
with our Homeworking Policy and, where
circumstances allow, there is a minimum
requirement of 40% office attendance
with the remaining 60% being home
working. We recognise we have a duty of
care to employees working from home
and we ensure that working from home
risk assessments are performed in order to
ensure our teams have the correct tools and
environment to work comfortably.
Employee involvement
We know the importance of good internal
communication. The Board communicates
the strategy to employees each year and we
provide regular updates on progress and
any changes taking place in the business.
Employees are invited to contribute product
or operational ideas and are supported by
their line managers and HR department if
they have any concerns.
Employee engagement
An employee engagement survey was
undertaken in 2023. Employee satisfaction
increased in 2023 compared with 2022, with
88.7% of UK employees in 2023 reporting
they were either “fairly satisfied” or “very
satisfied” with Luceco as an employer, up
from 78.7% in 2022. The survey indicated
that employees welcomed continued
efforts to invest more in training and
development and hoped that further
progress could be made in this area.
Employees also welcomed our flexible
working policy introduced during the
pandemic.
The 2022 survey highlighted
understandable concerns regarding the
impact of inflation on the cost of living. We
responded to this with salary increases for
2023 that are on average greater than the
wider market, with the largest percentage
increases given to the lowest paid. These
actions were recognised in the 2023 survey,
where feedback regarding actions taken to
address cost of living concerns was positive.
As the Group continues to expand, the
survey has also highlighted a need to
improve the definition and internal
communication of our vision, culture and
values. Employees also hoped that more
could be done to improve diversity within
the Group. These areas will continue to be
focused upon in 2024.
Remuneration arrangements
We ensure that our remuneration
policies and practices are aligned to
our purpose and values, support the
delivery of the Group’s strategy and
promote long‑term sustainable success.
We regularly benchmark employee pay
against the external market to ensure it is
fair throughout the Group and we reward
achievement with opportunity.
All UK employees are encouraged to
participate in the Company’s performance
through our Share Incentive Plan (“SIP”).
In 2023, we made further improvements
to this scheme, increasing the employer
matching contribution of the scheme from
one to two shares, enabling our employees
to further benefit from the Group’s success.
Learning and development
We know that high quality and sustained
learning and development (“L&D”) is crucial
to the ongoing success of the business.
We are also aware that with an increase in
flexible working, it is all the more important
that we maintain consistency in our training
procedures, and this starts on day one of
an individual’s employment at Luceco.
Within their first week of employment
all staff receive a Company induction
from their Human Resources Manager,
Payroll Manager and a Health, Safety and
Facilities Coordinator. This ensures the
new team member feels comfortable in
their environment and that they know
we are available to help should they need
assistance.
We also recognise how important the line
manager’s role is in the induction process
and we ensure that all line managers are
trained in how to work with new starters,
how to identify their initial needs and how
to set clear goals and objectives.
Following induction, we continue to develop
employees for the long term. Through our
Annual Performance Review process, we do
not just look to appraise performance in the
year, we identify individual training needs
and ensure specific personal development
plans are in place to tailor to that team
member’s requirements.
Luceco has invested heavily in our L&D tools
in recent years, partnering with Hays Thrive/
Go 1 to introduce our first L&D platform,
which is available to all employees. This
platform covers compulsory training, such
as “Anti‑money Laundering” to ensure
our teams have the knowledge they
need to comply with all relevant laws and
regulations, but also includes modules
related to more personal development and
growth. We are pleased with the continued
success of this project in 2023, with 3,071
training modules completed by our
employees during the year.
Importantly, the L&D platform covers
learning regarding mental health and
general wellbeing, which is something
that we have signposted to our employees,
especially in light of the pandemic. Our
employees’ health, happiness and wellbeing
is paramount to us and we are pleased that
this platform is providing further support.
Empowering people continued
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Environment, Social and Governance continued
We act fairly in our dealings with fellow
employees, customers, suppliers and
business partners. Our global Code of
Conduct applies to all Group employees and
our external business partners. It aims to
ensure that Luceco maintains consistently
high ethical standards across the globe,
while recognising that our businesses
operate in markets and countries with
cultural differences and practices.
The Code of Conduct is available on our
intranet and all new employees are made
aware of it during their induction.
Health and safety
Our Health and Safety Policy sets out our
approach to providing attractive working
conditions for our people. We aim to
prevent harm to, and promote the health of,
all employees, by applying health and safety
programmes, rules and regulations at all of
our sites.
All employees are responsible for complying
with health and safety regulations and
we have a health and safety champion in
each operating unit, who is responsible for
ensuring compliance with best practice and
all local regulations.
Our Health and Safety Policy is made
available in local languages and all new
starters must confirm that they have read
and understood it. The policy is reviewed in
full at least annually and more regularly if
required.
We continually monitor our health and
safety performance to ensure compliance
and to enable us to take any corrective
action if issues are identified. During the
year, there were 15 non‑reportable and two
reportable accidents in our Telford facility
(2022: 19 non‑reportable and nil reportable)
and, in China, three minor accidents were
reported (2022: two minor accidents).
Anti-bribery and Corruption Policy
Our Anti‑bribery and Corruption Policy
sets out our zero‑tolerance approach,
which extends to all business dealings
and transactions in which we are involved.
The policy is widely publicised across all
our operations and is also available on
our intranet. All new starters are made
aware during their induction. It includes
a prohibition on offering or receiving
inappropriate gifts or making undue
payments to influence the outcome of
business dealings. We routinely review our
policy and guidance in this area.
We maintain a log of all hospitality and gifts
offered to and by our people, whether or
not the hospitality or gifts are accepted. The
policy also makes clear how our people can
raise concerns or report any issues, which
should be raised with the Chief Financial
Officer as soon as possible. No concerns
were reported during the year.
Working with integrity and transparency
Whistleblowing
We encourage an open culture, so any
issues can be raised and handled at a local
business level. However, we recognise
that there may be times when it is
uncomfortable or inappropriate for our
people to raise a concern through line
management.
We therefore have a Whistleblowing Policy
(“Speak Up”), which is available on the
corporate intranet. The policy is widely
publicised across our operations and sets
out clearly how colleagues should report
whistleblowing concerns.
Whistleblowing contacts are initially
received by an independent specialist
company, then passed to a nominated
Non‑Executive Director, the Chief Financial
Officer and the HR Manager for further
investigation as necessary.
The Board routinely reviews the
whistleblowing process and the reports
arising from its operation, and ensures
that arrangements are in place for
the proportionate and independent
investigation of such matters and for
follow‑up action. Matters raised during
the year were all investigated and resolved
satisfactorily.
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Environment, Social and Governance continued
Human rights
One of our business principles is that we
will support fundamental human rights,
in line with the legitimate role of business.
Our Code of Conduct sets out our policies
in respect of a range of human rights and
related issues, including child labour, forced
labour, the right to organise, collective
bargaining and participation in political life.
The Group’s operations in high‑risk
countries must perform self‑assessments,
to make sure they are aware of the human
rights impact of their operations. If a
negative impact seems possible or likely,
they are encouraged to take precautions
or find solutions that are beneficial for
employees and the communities in which
they operate.
Among our international operations,
China is the location where people’s rights
could be most at risk. By owning the
facility in China, we can directly control
the environment and conditions in which
our employees live and work, to ensure
they are treated fairly and in accordance
with our policies. Until the introduction of
pandemic travel restrictions, the Directors
and senior leadership regularly visited China
and routinely invited customers to the
facility, so they could witness the working
and living conditions of our employees. We
are pleased to say this resumed in 2023.
This helps our customers to fulfil their own
responsibility agendas.
The UK Modern Slavery Act 2015 requires
us to outline the steps we take to identify
and prevent modern slavery within our
organisation and supply chain. The latest
statement is available on our website:
www.lucecoplc.com.
Approach to taxation
We are committed to complying with
all applicable tax laws; both in the UK
and in all countries in which we operate.
It is a core principle of the Group that
deliberately failing to comply with tax
law is unacceptable; our tax affairs are
kept in good order and uncertainties are
minimised. We have a low tolerance to tax
risk, and we plan our taxes with reference
to current relevant tax legislation. When
entering into commercial transactions,
where appropriate we seek to take
advantage of available tax incentives,
reliefs and exemptions, in line with local
tax legislation, but we do not undertake
tax planning unrelated to our commercial
transactions. We apply the OECD transfer
pricing guidelines to intercompany
transactions so as to ensure the prohibition
of tax avoidance through transfer pricing.
We do not, and will not, have a presence in
a country in which we are not commercially
operating, simply to minimise the Group’s
global tax liabilities.
External tax advisers prepare tax
benchmarking analysis to support all Group
transfer pricing arrangements.
Supply chain
The Group wants to do business with
partners who endorse our values and our
social and environmental standards. We
regard the application of our business
principles as being of prime importance
in deciding whether to enter into or to
continue relationships with suppliers and
contractors.
Working with integrity and transparency continued
Our Supplier Code of Conduct is designed
to ensure that all of our business partners,
suppliers and manufacturing meet our
basic expectations of doing business
related to legal requirements, ethical
practices, human rights and environmental
management.
These standards are based on well‑respected
and recognised international standards,
including the International Labour
Organisation, United Nations Universal
Declaration of Human Rights and industry
best practices.
We source raw materials and certain
products from suppliers in close proximity
to the factory in China. The Directors and
senior leadership visit suppliers periodically,
to inspect their operations and ensure they
are satisfied by how the supply process is
managed, the quality of products produced
and the working environment of the
employees.
Communities
We are committed to contributing to the
communities we operate in and our Code of
Conduct encourages our people to actively
participate and to propose projects to site
management or site committees.
In Jiaxing, China, we are heavily involved
with the local university, establishing
a “Luceco class” where students were
selected to receive weekly lectures for
three terms. These are led by our managers
or technical experts and aim to provide
students with greater business sense and
awareness, career advice and preparation
for entering the work environment, with
exposure to marketing, management,
product knowledge and development and
project management.
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Our Stakeholders
Strong relationships with all our
stakeholders are important for us
to achieve long‑term success and
fulfil our purpose – to help people
harness power sustainably in
everyday life.
With regard to more Company‑specific
stakeholder groups, the Board has identified
those key to the Company based on each
group’s potential to a) be impacted by the
Company’s activities, and/or b) have an
impact on the Company’s activities. These
key stakeholders, as agreed by the Directors,
are set out on pages 62 to 65, together with
information about their material issues and
methods of engagement.
Whilst Directors engage directly with
some stakeholders on certain topics,
stakeholder considerations on the whole are
included in the reports and presentations
from the Executive Directors and senior
management. This is an integral element of
regular Board reporting and, in the case of
certain stakeholders such as the workforce,
may be discussed as a separate agenda
item.
As a result of these processes, the
Directors have the necessary oversight
of the Company’s engagement with
stakeholders to enable them to discharge
their duty under s172(1) of the Companies
Act 2006. Set out below are the Company’s
key stakeholders which the Board has
concluded are the key stakeholders.
Ultimately, understanding the needs of all
stakeholders is key to the long‑term success
of the Company and the Board listens and
works through such perspectives during
the course of the year.
Customers
Our customers are at the forefront of all business
decisions, from product innovation and
development to our superior customer service
offering. They can be grouped into the following
categories:
• Distributors to retail consumers
• Distributors to professional contractors
• Professional contractors
• Housebuilders
• Installers
• Influencers over the above groups, such as
designers, architects and specifiers
The Group engages to ensure customers are
satisfied with existing services and is well
positioned to meet their future needs.
Their material issues
• Product design and innovation
• Product quality
• Adherence to codes of conduct, e.g. ethical
treatment of employees
• Product availability
• On‑time delivery
• Price
• Guidance and solutions
• Payment terms
• Sustainability considerations in the supply
chain
How we engage
• Salespeople with assigned relationships who
are in continuous contact with our customers
• Attendance at trade shows
• Attendance at our customers’ supplier events
• Customer visits to our key manufacturing and
distribution sites
• Meetings with our customers’ senior
management teams to discuss
long‑term strategy
• Regular customer satisfaction surveys
2023 outcomes
• Sales growth of 21.4% since 2019
• 317 new products launched
• Increasing the proportion of deliveries made
on time and in full
• Investment in new software to promote the
success of turnkey solutions for customers
Further information
• Strategy and KPIs section on page 27
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Our Stakeholders continued
Employees
Our people are the source of our competitive
advantage. They win new business, take sales
orders, develop and manufacture our products
and ensure they are delivered to our customers
on time. It is paramount to us that we look after
our colleagues and recently we have focused on
their mental wellbeing just as much as physical.
The Group employs 1,590 people worldwide, with
the majority based in the UK and China.
It is critical that we continuously engage with
them to learn new ways to improve our business
and to develop them as individuals.
Their material issues
• Learning and development
• Health and safety
• Opportunities for career progression
• Diversity and inclusion
• Reward, including by way of internal Share
Incentive Plans (“SIP”) for eligible employees
How we engage
• Completion of annual Group‑wide employee
engagement survey
• Annual visits by the Board to major Group
locations
• Regular visits by the CEO/CFO to all Group
locations, which include employee “town hall”
meetings
• Regular visits by Julia Hendrickson, our
Non‑Executive Director responsible for
employee engagement, to Group locations to
consult with small groups of employees
• Creation of personal development plans for
each employee
• Fair remuneration benchmarked against the
external market
• Monthly employee newsletter
• Employee access to a whistleblowing helpline
• Monthly meetings with employee
representatives to discuss health and safety
matters
2023 outcomes
• Continuing to endorse hybrid working,
together with frequent communication with
our employees
• Our Learning & Development platform
delivered 3,071 learning modules to our
employees in the year
• Increasing participation in the SIP
• Presentations by CEO and CFO including Q&A
session
Further information
• Empowering people section of Environment,
Social and Governance on pages 57 to 59
• Workforce engagement section in Corporate
Governance Report on page 83
Suppliers
Strong supplier relationships are crucial in
ensuring we can fulfil our customers’ needs and
provide a high level of customer service.
We have the following types of suppliers:
• Raw material/component suppliers
• Original equipment manufacturers (“OEMs”)
• Service providers
The Group engages with suppliers to ensure
those in its supply chain work collaboratively
tomeet customer needs.
Their material issues
• Long‑term partnership
• Price
• Fair payment terms
How we engage
• Site visits by the CEO/CFO to major OEMs and
electrical component manufacturers
• Group‑wide Supplier Code of Conduct
• Supplier performance audits
• On‑site quality testing teams
• Electronic auctioning of supply contracts
• Monitoring of creditor days to ensure
payments are being made to terms
2023 outcomes
• Adjusted Gross Margin of 39.4%
• Creditor days of 68
• New quality and production manager in China
Further information
• Strategy and KPIs section on page 27
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Our Stakeholders continued
Shareholders
We favour a transparent and open conversation
with our shareholders.
The Group’s largest shareholders are listed on
page 64.
Engagement ensures there is a clear
understanding of the Group’s strategy and
performance, allowing shareholders to make an
informed investment decision.
Their material issues
• Transparent strategy and performance
• Adequate return on investment
• Appropriate governance, including ESG
matters
How we engage
• Investor Relations section of
www.lucecoplc.com
• Twice‑yearly results announcements and
subsequent shareholder visits by the CEO/
CFO
• Regular trading updates
• Liaison with research analysts
• Regulatory news announcements
• Annual General Meeting
2023 outcomes
• Strong shareholder engagement
• 49 investor meetings
• Dividend payments twice a year
Further information
• www.lucecoplc.com
• Shareholder engagement section in Corporate
Governance Report on page 85
Funding providers
Borrowings allow the Group to invest in future
growth and offset borrowing costs against
taxable profits.
The Group is currently funded by syndicated
bank debt.
Engagement maximises access to sources of
funding.
Their material issues
• Transparent strategy and performance
• Repayment in accordance with loan
agreements
• Compliance with loan covenants
• Security
How we engage
• Regular meetings between the CFO and
relationship bank(s)
• Meetings with existing and future lenders
ahead of planned refinancing
• Covenant compliance certification
2023 outcomes
• Covenant Net Debt to Covenant EBITDA ratio
of 0.6 times in the period
• Bank facilities in place to September 2026
Further information
• Financial instruments disclosures on pages
158 to 164
• Capital management notes on pages 164
and165
Local communities
We aim to have a positive impact on the
environment in locations in which we operate.
We have a vested interest in the long‐term
success of each community, from which our
workforce is drawn.
We operate in nine locations globally and
contribute in each of the local communities.
Their material issues
• Job creation
• Environmental compliance
• Contribution to the development of the wider
community
How we engage
• The enlistment of c.1,600 jobs globally
• Compliant with various recognised
environmental standards: ISO 14001, WWF
LCMP, ESOS II
• Continued commitment to local university in
Jiaxing, China
2023 outcomes
• Achieved “B” rating from the Carbon
Disclosure Project
Further information
• Environment, Social and Governance on
pages36 to 61
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Our Stakeholders continued
For the coming year, the Board
will continue to ensure effective
stakeholder engagement, ensuring
the frequency of interaction
is maintained and reviewed
(whereappropriate) over matters
that are considered material to the
Group. In particular, the Company’s
key stakeholders and methods of
engagement will be kept under
review and reported on each year
inthe Company’s Annual Report.
Section 172(1) Statement
Section 172(1) of the Companies Act 2006
(“Act”) imposes a duty on Directors to
promote the success of the Company for
the benefit of the wider Group, shareholders
and having regard to its stakeholders.
Decisions by the Board take into account
the following matters (collectively referred
to as “s172 Matters”):
• The likely consequences and risks of any
decision in the long term and the risks to
the Group and its stakeholders;
• The interests of all stakeholders including
shareholders, employees and local
communities;
• The Company’s ongoing relationships
with its suppliers and customers;
• The impact that the Company’s products
and business have on the community
and the environment; and
• Maintaining the Company’s reputation
for high standards of conduct.
The Directors confirm that they have acted
in a way that they consider, in good faith, to
be most likely to promote the success of the
Company for the benefit of its members as
a whole, and in doing so have had regard,
amongst other matters, to the s172 Matters.
The s172 Matters are included in all meeting
packs and frame Board discussions
throughout the course of the year,
which includes rigorous evaluation, risk
management and challenge to promote the
long‑term success of the Company and by
extension the s172 Matters.
This statement, together with the examples
on pages 62 to 64 and those sections of
the Annual Report incorporated by cross
reference, describe how the Directors have
had regard for s172 Matters in respect of the
year.
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Principal Risks and Uncertainties
The Board is responsible for identifying, reviewing
and managing business and operational risk.
It is also responsible for determining the
level of risk appetite it is prepared to take in
the ordinary course of business to achieve
the Group’s strategic objectives and to
ensure that appropriate and sufficient
resource is allocated to the management
and mitigation of risk.
In addition to the risk management
framework, the Board has delegated
responsibility to the Audit Committee for
reviewing the overall process of assessing
business risks and managing the impact on
the Group as described on pages 89 to 93.
The Group’s risk management process is set
out below.
The principal risks identified and actions
taken to minimise their potential impact are
included on pages 67 to 71. This is not an
exhaustive list but those the Board believes
may have an adverse effect on the Group’s
cash flow and profitability.
In determining whether it is appropriate
to adopt the going concern basis in the
preparation of the financial statements, the
Directors have considered these principal
risks and uncertainties. The Viability
Statement on pages 72 and 73 considers
the prospects of the Group should a
number of these risks crystallise together.
Risk management process
The senior leadership team maintains a
register of identified business risks (financial
and non‑financial) which it categorises
in terms of probability of occurrence and
the potential impact on the Group should
the risk crystallise. Mitigating actions
undertaken and recommendations for
further reduction of risk are also included.
Recommended actions are put forward to
the Executive Directors for consideration.
The Executive Directors review and
challenge the content of the risk register
and the recommendations. Risk mitigation
actions are agreed, and a plan is created.
Each action is assigned an owner who is
responsible for carrying out the required
action within an agreed timescale.
The Executive Directors review the progress
made against any actions that have been
carried forward.
The Audit Committee regularly reviews risk
management and is provided an update in
respect of progress made in the reduction
of existing risks, summary of newly
identified risks and the actions agreed to
reduce them to an acceptable level.
These risks are reviewed in conjunction with
the Audit Committee’s other responsibilities,
including the internal control framework,
external audit process and financial reporting.
The Audit Committee provides an update
and appropriate recommendation to the
Board, where required, for the Board to
consider in conjunction with the strategic
objectives of the Group.
Independent assurance is provided
through the annual statutory audit and the
periodic internal control reviews and the
monitoring of, and adherence to, policies
and procedures by an external assurance
provider.
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Principal Risks and Uncertainties continued
Risk management process continued
Senior management
Reviews and updates the risk register for new risks, identifies
mitigations in place and recommends actions to reduce risk.
Executive Directors
Review and challenge the risks identified and the actions
proposed to mitigate them; approve and monitor agreed
actions.
Audit Committee
Monitors and reviews the risks in conjunction with the internal
control framework, audit process and financial reporting.
The Board
Holds overall responsibility for effective internal control,
riskmanagement and the risk appetite of the Group.
Independent assurance
Periodic internal control reviews and monitoring of adherence
to policies and procedures by an external audit and assurance
provider. Statutory audit by a registered auditor.
1. China supply chain
2. Poor quality of supplied or shipped goods
3. Loss or inappropriate release of data
4. Transfer pricing
5. Talent
6. Laws and regulations
7. Intellectual property challenge
8. Foreign exchange
9. Misappropriation of Group assets by employee
10. Impact of acquisition
11. Energy costs
12. Increase in input costs
13. Accounting error – external or management
reporting
14. Disruption to key supplier facility
15. Disruption to non‑China facility
16. UK macroeconomy
17. Fail to innovate/market shift/Black Swan
18. Supply and transportation disruption
19. Loss of key customer
20. Disruption to production facility in China
21. Liquidity
22. Investor or customer pressure on ESG
Impact
Likelihood
3
2
5
1
6
4
7
8
9
10
11
12
13
14
15
16
17
18
19
23
20
21
22
Heatmap
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Principal Risks and Uncertainties continued
Concentration risks associated with operations:
Risk owner: CEO
Risk and impact:
• The Group’s products are overwhelmingly sourced from one
country (China) and a large proportion are made in one location
(Jiaxing)
• Disruption to our Jiaxing facility could compromise our ability to
serve our customers, including issues arising from a constrained
global energy market
• General disruption, including to shipping routes between China
and our selling markets (particularly the UK), could increase our
costs or limit our ability to serve our markets. There has been
some disruption in the Red Sea in the first quarter of 2024
• China could be impacted by events in Ukraine/Russia, which
impacts our ability to manufacture products
Mitigation:
• UK buffer stock is held in the event of supply disruption in China
• All suppliers are provided with visibility of forward orders and
supply issues are discussed upfront
• Production facilities in China are spread across multiple buildings
on the same site to mitigate risk
• The Group owns its product designs and production tooling,
allowing manufacturing to be moved between suppliers more
easily
• Business continuity plans are in place for the Jiaxing site
• Business interruption insurance is in place for the Jiaxing site,
Telford site and our OEM supplier of Portable Power products
Risk appetite:
Risk neutral
Change in year:
Net risk level:
Low Medium High
Concentration risks associated with customers and products:
Risk owner: CEO
Risk and impact:
• The Group has a number of key customers representing c.50% of
Group revenue. A change in demand from these customers could
result in reduced sales and profits
• The Group’s committed order book extends two to three months
forward. Orders thereafter are uncommitted
• Geopolitical instability creates price changes and shortages of
materials and the impact of inflation on input costs from energy
and material costs impacting product cost and profitability. This
has been prevalent with copper‑based products due to increasing
global demand as electrification escalates in many sectors
• A change in energy prices could increase the Group’s operating
costs, reduce profits and/or price competitiveness
• The Group has a material exposure to the purchase price of copper.
An adverse move could reduce profits and/or price
competitiveness
Mitigation:
• Key customers typically follow a tender process, providing
visibility of business wins and losses
• Large customers typically take 6‐12 months to implement a large
range change throughout their networks, giving us time to react
• The cost of range changes for large customers is high, reducing
the likelihood of occurrence
• Relationships with the Group’s large customers are established
• Capacity at our factory and at our OEM partners in China can be
changed quickly and cost effectively
• The Group hedges its USD:RMB and some copper exposures
according to a Board‐approved policy. The hedging is conducted
conscious of the duration of any fixed selling price commitment
offered to customers
• The Group has fixed price gas and electricity contracts covering a
significant proportion of its energy use
• Application of the hedging policy is reviewed by the Board
Risk appetite:
Risk neutral
Change in year:
Net risk level:
Low Medium High
Principal risks
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Principal Risks and Uncertainties continued
Macroeconomic, political and environmental:
Risk owner: CEO
Risk and impact:
• A deterioration in trade relations between the UK and China could
disrupt product supply and/or increase costs
• The Group has a concentrated exposure to the UK market. UK
economic headwinds and higher interest rates could reduce
profits
• A failure to respond to governmental, cultural, customer or
investor requirements on ESG in the following areas: changing
customer behaviour and demands (e.g. electric vehicle charging),
increased stakeholder concern, negative feedback or
non‑compliance on ESG strategy, increased severity and
frequency of extreme weather events accelerating ESG progress;
all of which could result in reduced profits or a reduced share price
Mitigation:
• We have clear sustainability objectives tied to management
compensation plans. Our progress is visible via independent
bodies such as CDP and SBTi
• The Group is expanding and developing its product range of low
carbon products (e.g. LED lighting and electric vehicle chargers)
• The Group is diversified by market segment within the UK,
reducing risk
• The Group is largely exposed to the RMI cycle, which can be less
susceptible to macroeconomic forces
• UK buffer stock is held in the event of supply disruption in China
• A “China Plus 1” sourcing strategy is being developed
• Management liaises closely with investors and customers to
understand their future ESG needs and responds accordingly
Risk appetite:
Risk accepting
Change in year:
Net risk level:
Low Medium High
Loss of IT/data:
Risk owner: CFO
Risk and impact:
• Loss of IT functionality would compromise operations, leading to
increased costs or lost sales
• Loss of sensitive data from our IT environment would expose the
Group to regulatory, legal or reputational risk
• Increased cloud server usage increases risk of data loss or
compromise and cyber risk is on an upward trend, impacting
operations and reputational risk
Mitigation:
• Market‐leading cyber security tools and monitoring are in place
• Market‐leading data backup tools are in place
• IT disaster recovery plans are in place throughout the Group
• We conduct regular penetration testing
• We conduct regular Group‐wide cyber security training for
employees
• IT incidents are reported to the Board
Risk appetite:
Risk averse
Change in year:
Net risk level:
Low Medium High
People and labour shortages:
Risk owner: CFO
Risk and impact:
• Loss of key employees could damage business relationships or
result in a loss of knowledge
• A shortage of available labour for key roles could disrupt
operations and impact long‐term progress
• Depending on the job role and team, COVID‐19 has changed
employees’ and employers’ workplace expectations. A more fluid
working environment in both the office and home is more
commonplace. The risk of not adapting to this change in working
practices could lead to loss of employees and an inability to attract
talent
Mitigation:
• Key relationships are typically shared between more than one
employee
• The Group’s service offering is multi‐faceted, reducing the risk
that the loss of an employee would result in lost sales
• Retention of key employees is driven by long‐term personal
development and incentive plans and ensuring compensation is
regularly benchmarked for competitiveness. These plans are
reviewed by the Remuneration Committee
• Workforce engagement surveys ensure employee needs are
identified and addressed, promoting retention
• Adoption of hybrid working practices within appropriate teams
and locations
Risk appetite:
Risk neutral
Change in year:
Net risk level:
Low Medium High
Principal risks continued
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Principal Risks and Uncertainties continued
Acquisitions:
Risk owner: CEO
Risk and impact:
• An ill‑judged acquisition could reduce Group profit and return on
capital
• Unable to grow or develop an acquired business in line with
expectations, leading to lower profits
• The Group’s acquisition strategy could compromise/distract the
execution of strategy in other areas
Mitigation:
• Our acquisition strategy is set by the Board
• Board members possess relevant M&A experience
• The acquisition strategy is implemented by an experienced
in‑house team
• The Group’s key markets are relatively stable, meaning acquisition
targets typically have an established track record
• Individual acquisitions are typically small relative to the size of the
Group, reducing the impact of each deal and reducing potential
distraction
• The Group conducts extensive due diligence prior to acquisition
• All acquisitions are approved by the Board
Risk appetite:
Risk neutral
Change in year:
Net risk level:
Low Medium High
Legal and regulatory:
Risk owner: CFO
Risk and impact:
• The Group could infringe upon the IP of others, leading to legal
claims
• The Group’s products could fail to meet regulatory requirements
or experience quality failures, resulting in legal claims and/or
reputational damage
• The Group’s businesses could fail to meet regulatory requirements
in their countries of operation
• The Group could fail to comply with local tax laws, particularly
regarding transfer pricing
Mitigation:
• The Group receives IP advice from external experts
• The Group’s products are certified for use prior to launch by
external experts
• The Group has extensive quality assurance resources in the UK
and China
• Suppliers are required to adhere to a strict Code of Conduct
• Supplier compliance with the Code of Conduct is audited by our
in‐house teams
• Product liability claims are reported to the Board
• Product liability insurance is in place globally
• The Group’s transfer pricing policies are reviewed regularly with
the help of external experts
Risk appetite:
Risk averse
Change in year:
Net risk level:
Low Medium High
Principal risks continued
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Principal Risks and Uncertainties continued
Finance and treasury:
Risk owner: CFO
Risk and impact:
• The Group could fail to provide sufficient funding liquidity for its
operations
• The Group has a material exposure to movements in the USD and
RMB currency rates. An adverse move could reduce short‑term
profits and/or long‑term competitiveness
• The Group could fail to report its financial performance accurately,
leading to inappropriate decision making and regulatory breaches
• The Group could suffer fraud across its widespread operations
Mitigation:
• The Group hedges its currency exposures according to a
Board‑approved policy. The hedging is conducted conscious of
the duration of any fixed selling price commitment offered to
customers
• The Group has a clear Capital Structure Policy that is designed to
provide sufficient liquidity
• The Capital Structure Policy is implemented by Treasury experts
and monitored by the Board
• The Treasury team prepares regular cash flow forecasts. The
Group’s financial statements require relatively few judgements or
estimates, reducing the risk of misstatement
• The Group’s accounting policies and internal accounting manual
are approved by the Board
• The Group operates two main accounting centres in the UK and
China, which are overseen closely by the Group Finance team
• The Group has invested in market‐leading financial accounting
and reporting software
Risk appetite:
Risk averse
Change in year:
Net risk level:
Low Medium High
Principal risks continued
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Viability Statement
Viability Statement – assessing
long-term prospects
Current position
• The Group has a significant share
of the UK market, particularly for
Wiring Accessories and Portable
Power products. It has expert market
knowledge, long‑established customer
relationships and a broad product
offering. Its high share of this market
generates significant economies of scale
• The Group has successfully penetrated
the growing LED market. Its competitive
range of high quality, affordable products
should sustain future market share gains
• The Group is using its product
experience to build profitable businesses
internationally
• The Group has a successful track record
of new product development
• The Group’s own manufacturing facility
in China allows high quality products
to be brought to market quickly and
cost‑efficiently
• The Group’s policy is to operate with
Covenant Net Debt between 1.0 and 2.0
times Covenant EBITDA to ensure the
Group has sufficient cash to reinvest
in growth and respond to changing
circumstances
Strategy and business model
Business model:
• Design: we are the innovators within the
product categories we serve. Innovation
allows us to up‑sell and improve
profitability. Our designs, starting with
the customer in mind, are brought to the
market quickly
• Make: we operate a vertically integrated
business model with an agile production
capability. We have invested in our facility
to ensure we can make high quality, low
cost products
• Market: we have been serving our largest
customers for many years. We operate in
diverse but synergistic sales channels. We
are investing in our online marketing and
academy for customers and contractors
• Fulfil: we have a supply chain which is
flexible to customer needs and offer high
outbound service levels using the best
available technology
Strategy:
• Innovate: we are led by our customers to
innovate brilliant products in an agile and
entrepreneurial manner
• Grow: to maximise sales of both existing
and new products to an increasing
customer base
• Sustain: we invest across our business
from manufacturing to customer service,
to sustain our competitive advantage
and to contribute increasingly to society’s
sustainability goals
Principal risks to strategy and business
model (in order of impact on viability)
• Macroeconomic, political and
environmental
A UK macroeconomic downturn, due
to higher interest rates and living costs
and global energy and material price
increases, could adversely affect the
demand for and pricing of our products.
The Group is facing a changing ESG
environment which impacts a number of
stakeholders from customers to investors
that could lead to loss in revenue and
profitability – although currently this
exposure is low
• Concentration risks associated with
operations
Due to an event such as a fire, flood,
power outage, or IT failure in China.
Shipping and transportation disruption
between the Group’s end markets and
its sources of product supply which are
overwhelmingly in China
• Concentration risks associated with
customers and products
The loss of a key customer would result in
a short‑term shortfall in profit and cash
whilst sales were replaced by growth
elsewhere
LUCECO PLC – VIABILITY
STATEMENT APPROACH
Viability – assessing long-term
prospects
Current position
Strategy and business model
Principal risks
Viability – assessing analysis
Scenario testing
Mitigation
Likely output
Underlying assumptions and
assessment
Viability Statement
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Luceco plc|Annual Report and Financial Statements 2023
Viability Statement continued
Viability Statement – assessment analysis
Principal risk Scenario test Likely output
Macroeconomic, political and environmental • Management have modelled the following two scenarios in UK macroeconomic
downturn:
1. Reduction in UK revenue and gross profit for 18 months from April 2024 of 10%.
Phased return by 2025, with 2025 10% down reflecting the impact of the year one
recession
2. Total loss of the Group’s largest customer range from 2024 onwards
• Management have completed this scenario test and
concluded this would not impact compliance with its
financial covenants or viability
Concentration risks associated with
operations
• Management have run a scenario in which the Group loses all of its sales of products
sourced from China for which no inventory buffer is held outside of China for six months
whilst alternative sourcing arrangements are made
• Management have also modelled the impact of disruption to shipping and transport.
This was modelled as a revenue reduction for three months relating to 35% of revenue
(FOB revenue) with shipping costs up 50% for six months starting from Q2 2024
• Management have completed this scenario test and
concluded this would not impact compliance with its
financial covenants or viability
Concentration risks associated with
customers and products
• Management have modelled the following scenario:
• Total loss of the Group’s largest customer from 2024 onwards
• Management have completed this scenario test and
concluded this would not impact compliance with its
financial covenants or viability
The Viability Statement is dependent on the following process
and assumptions
Process:
• The financial forecast on which the Viability Statement is based is aligned with the
annual corporate plan for 2024 to 2025 approved by the Board in December 2023
withinput from the Group’s senior leadership team
• Progress against financial budgets and key objectives is reviewed on a monthly basis
todetermine progress and identify any changes to the original detailed plan
Assumptions:
• Future organic growth assumptions are consistent with those recently achieved by
eachof the Group’s businesses
• Working capital as a percentage of revenue is held broadly flat
• Capex broadly equal to depreciation
• Dividends consistent with the Group’s dividend policy
• No additional investment in acquisitions (since these are discretionary and within
thecontrol of management)
The Viability Statement
• The Board considers that it is a reasonable expectation that the Company will be able
tomeet its liabilities as they fall due over a three‑year period to 31 December 2026
This assessment has been chosen for the following reasons:
• A full assessment of prospects and assessment of viability has been completed
• The financial and strategic planning period is currently three years, which is the current
level of visibility we have as a Board on the forecasts
• The Company has secured banking facilities over the period, expiring on
30September2026
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Non-financial and Sustainability
Information Statement
The table below sets out where stakeholders can find information in our Strategic Report that relates to non‑financial matters detailed under
Section 414CB of the Companies Act 2006.
Reporting requirement Where to read more in this report Page
Environmental matters Environment, Social and Governance Statement – Creating a sustainable future 38 to 47
Employees Environment, Social and Governance Statement – Empowering people, health and safety
Chief Executive Officer’s Review
Principal Risks and Uncertainties – People and labour shortages
57 to 59
11 to 14
69
Human rights Environment, Social and Governance Statement – Supply chain, human rights 61
Social matters Environment, Social and Governance Statement – Communities 61
Anti‑bribery and corruption Environment, Social and Governance Statement – Anti‑bribery and Corruption Policy 60
Business model Advantaged Business Model 17
Principal risks Principal Risks and Uncertainties 66 to 71
Non‑financial KPIs Strategy and KPIs 20 to 27
The Strategic Report on pages 1 to 74 was approved by the Board of Directors on
25 March 2024.
John Hornby
Chief Executive Officer
Will Hoy
Chief Financial Officer
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Governance
What's in this section
76 Chair’s Introduction
77 Compliance with the 2018 UK Corporate Governance Code
78 The Board at a Glance
79 Board of Directors
81 Corporate Governance Report
86 Nomination Committee Report
89 Audit Committee Report
94 Remuneration Committee Report
111 Directors’ Report
115 Statement of Directors’ Responsibilities
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Board changes and induction
On 19 January 2023, it was announced
that Matt Webb, Luceco’s Chief Financial
Officer, was stepping down to pursue
other opportunities after five years in the
role. WillHoy, formerly a Non‑Executive
Director of Luceco and Chair of the Audit
Committee, was appointed as the Chief
Financial Officer on 1 April 2023. Will
stepped down from his position as Chair
of the Audit Committee on 19 January
2023 and was succeeded in the role by
Non‑Executive Director, Tim Surridge.
Will was appointed as a member of the
Disclosure Committee on 1April2023,
replacing Matt Webb.
Board and Committee evaluation
As Chair I am also responsible for leading
the annual evaluation of the effectiveness
of the Board, Committees and individual
Directors (“Evaluation”). The 2023 Evaluation
was undertaken internally by way of a
questionnaire, a method appropriate
and proportionate to the Company, and
which yields useful results. The 2023
Evaluation considered the composition,
balance of skills, experience, knowledge,
and collaboration on the Board, as well as
other factors including diversity, ethnicity
and environmental, social and governance
(“ESG”) factors. We also received and
considered a number of suggestions
regarding growth of Luceco’s business
in 2024. Results of the Evaluation were
prepared by the Company Secretary and
provided to me for analysis. I presented the
findings to the Board, including individual
recommendations made by Directors.
My performance was appraised by the
independent Non‑Executive Directors
under the leadership of the Senior
Independent Director.
We discussed the outcomes of each
evaluation and concluded that the Board,
Committees and individual Directors were
operating effectively, whilst also noting
areas for development. The Evaluation also
assisted us in identifying our key areas of
focus for 2024, including growth of Luceco’s
business by:
• Continuing with mergers and acquisition
(“M&A”) activity
• Growing Luceco’s core business into
adjacent categories and new markets
• Focusing on an enhanced value creation
strategy for shareholders
We also agreed our strategic priorities for
2024. These are set out in the Strategic
Report on pages 1 to 74.
The year ahead
I am committed to continually monitoring
and improving the governance of our
Board and will continue to seek out ways to
enhance our corporate governance in line
with developing best practice, particularly
with regard to enhanced diversity and
ethnicity reporting and the governance
framework around climate‑related risks and
opportunities. We will also ensure that we
are in a position to implement those parts
of the 2024 UK Corporate Governance Code
that become effective from January 2025.
Giles Brand
Chair
25 March 2024
Dear Shareholder,
I am pleased to present the Corporate
Governance Report for the year ended
31December 2023 (“year”). This section of
the Annual Report describes our corporate
governance structures and processes and
how they have been applied throughout
the year.
Good corporate governance is fundamental
to the success of our business. The
Board and its Committees play a key
role in our governance framework by
providing external and independent
support and challenge, understanding
the views of shareholders and other
stakeholders and ensuring that a culture
of good governance is promoted globally
throughout the business. Our aim is to
promote and maintain an environment
of openness, transparency, accountability
andresponsibility.
My role as Chair
My role is to ensure that the Luceco
Board operates effectively in delivering
the long‑term success of the Company.
Infulfilling this role, I seek to ensure that
Board proceedings are conducted in a
way that allows all Directors to have the
opportunity to express their views openly
and that the Non‑Executive Directors can
provide support and constructive challenge
to the senior leadership team. More about
my role, and the roles of the Directors and
Committees, can be found on pages 78
to115.
The Group’s corporate governance
structureis fundamental in ensuring
wefulfilour purpose and deliver on our
strategy to Innovate, Grow and Sustain
Giles Brand
Chair
Chair’s Introduction
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The Company is required to report on
its compliance with the Principles and
Provisions of the 2018 UK Corporate
Governance Code (“Code”), a copy of which
is available at www.frc.org.uk. For the
year ended 31 December 2023, the Board
considers that it has complied in full with
the Code’s Principles and Provisions in a
manner that would enable shareholders
to evaluate how the principles have been
applied, with the exception of Provisions 9
and 19.
Provision 9 of the Code requires that
the Chair should be independent on
appointment when assessed against the
criteria set out in Provision 10. Provision 19
states that the Chair should not remain in
post beyond nine years from the date of
their first appointment to the Board.
Giles Brand was appointed as a Director of
the Company in 2010 and then appointed
Chair in 2016 when the Company listed on
the London Stock Exchange. Although Giles
would not be considered to be independent
for the purposes of Provisions 9 and 10 of
the Code, the Board is satisfied that the
Company’s ongoing relationship with
Giles and ESO Investments 2 Limited (who
together own 28.01% of the Company’s
voting rights) is governed by a relationship
agreement that serves to regulate
the relationship and deliver effective
independence.
Further information
Board leadership and Company purpose
See pages 82
Division of Directors’ responsibilities
See page 81
Composition, succession and evaluation
See pages 88
Audit, risk and internal control
See pages 84
Remuneration
See pages 96 and 97
Compliance with the 2018 UK Corporate
Governance Code
77
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The Board of
Directorshas overall
responsibility for the
Group. Its principal
aimis to enhance the
Company’s long-term
value forthebenefit
ofshareholders.
The Board at a Glance
Board balance
1. Excluding the Chair.
5 Male
2 Female
4 Independent Non-Executive Directors
2 Executive Directors
3 < 5 years
4 >5 years
Sector experience
Finance/
Capital Markets
Governance
Operational
Strategy
Manufacturing/
Industry
Consumer/
Retail
Digital
Giles Brand
John Hornby
Will Hoy
Pim Vervaat
Caroline Brown
Tim Surridge
Julia Hendrickson
Gender
diversity
Board
tenure
Independence
1
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Luceco plc|Annual Report and Financial Statements 2023
Board of Directors
Pim Vervaat
Senior Independent
Non‑Executive Director
Will Hoy
Chief Financial Officer
(from 1 April 2023)
Giles Brand
Non‑Executive Chair
John Hornby
Chief Executive Officer
Skills and experience
Giles is the founder and Managing
Partner of EPIC Investment Partners LLP,
an independent investment manager,
advisory and placement agent and
administrator. Giles is a director of its
subsidiary EPIC Investment Partners
(UK) Limited, the investment manager
of ESOInvestments 2 Limited, the
Company’s largest shareholder. Since
2001, Giles has led over 30 buyout,
turnaround, distressed and growth
capital transactions. Many of these
transactions have made multiple bolt‑on
acquisitions in the UK and overseas.
Skills and experience
John was appointed Chief Executive
Officer of the Group in 2005 having
originally joined Luceco in 1997. John
led the original management buyout
of Luceco from a listed plc in 2000 and
led the secondary buyout with EPIC
Investment Partners LLP (formerly EPIC
Private Equity LLP) in 2005. Since then,
John has led the development of the
Group’s Chinese operations. John began
his career with Knox D’Arcy Management
Consultants following his graduation
from the University of Oxford with a
degree in Economics.
Skills and experience
Will assumed the position of Chief
Financial Officer on 1 April 2023. Will
joined the Group as a Non‑Executive
Director in 2019 and was Chair of the
Audit Committee from October 2021
toJanuary 2023. Will previously held
the position of Chief Financial Officer for
GKN Aerospace, the UK‑headquartered
global aerospace technology leader.
Hehas held a number of senior finance
roles in a career with GKN that spanned
over 20 years, including nine years as
Head of Corporate Finance in which he
oversaw GKN’s M&A activities. Prior to
joining GKN, Will qualified as a Chartered
Accountant at KPMG and worked in its
Corporate Finance department.
Skills and experience
Pim joined the Board as Senior
Independent Non‑Executive Director
in 2020 and became a member of
the Audit Committee in October
2021, bringing extensive Board‑level
international manufacturing experience
to the Group. Pim is Chief Executive
Officer of the leading flexible packaging
manufacturer Constantia Flexibles.
Previously, he spent 12 years at RPC
Group Plc, initially as Chief Financial
Officer and then as Chief Executive
Officer. Pim was also Chair of the Audit
Committee and Senior Independent
Director of Avon Rubber plc from
March2015 to January 2021.
Other roles
Giles is currently the Non‑Executive
Chairof Whittard of Chelsea.
Other roles
John holds no other listed or non‑listed
directorships.
Other roles
Will holds no other listed or non‑listed
directorships.
Other roles
Pim is Chief Executive Officer
ofConstantia Flexibles.
Key to committees
Audit Committee
Disclosure Committee
Nomination Committee
Remuneration Committee
Chair
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Luceco plc|Annual Report and Financial Statements 2023
Board of Directors continued
Julia Hendrickson
Independent
Non‑Executive Director
Caroline Brown
Independent
Non‑Executive Director
Tim Surridge
Independent
Non‑Executive Director
Skills and experience
Caroline joined the Board as an
independent Non‑Executive Director and
was Chair of the Audit Committee from
October 2016 to October 2021. She has
managed divisions of FTSE 100 groups
and AIM businesses with international
industrial and technology operations
and has worked as a corporate finance
adviser with various leading banks.
She is a Fellow of the Chartered
Institute of Management Accountants
and has chaired audit committees
of listed companies for the past 20
years. She holds a degree and PhD in
Natural Sciences from the University
of Cambridge and an MBA from the
University of London.
Skills and experience
Tim joined the Group as an independent
Non‑Executive Director in 2016 and
was appointed Chair of the Audit
Committee on 19 January 2023.
Previously, Tim has served as Group
Chief Financial Officer at Olive Group
Capital Limited, a Dubai‑based security
solution provider, and as Chief Financial
Officer and an Executive Director at
Dangote Cement plc, Nigeria’s largest
cement producer. Tim joined KPMG UK
in 1991 and became a partner in the
firm’s Transactional Services business in
2006. Tim has considerable accounting
and advisory experience including
stock market listings, reverse takeovers,
management buyouts and acquisitions.
Tim is a qualified Chartered Accountant.
Skills and experience
Julia joined the Group as a
Non‑Executive Director in June2022
and became a member of the Audit
Committee and Remuneration
Committee from October 2022. Julia
has spent her career in commercial
leadership roles within large retail and
FMCG organisations. She has extensive
international experience in developing
and implementing customer‑focused
commercial strategy, including within the
e‑commerce channel. Julia is President
of Linnaeus Veterinary Limited, a leading
veterinary health business in the UK and
Republic of Ireland. Previously, she led
the Commercial & Marketing function
within the International Retail division
of Walgreens Boots Alliance and was
Managing Director of its European retail
business.
Other roles
Caroline is currently a Non‑Executive
Director of three other listed companies:
IP Group plc, CAB Payments Holdings plc
and Ceres Power Holdings plc.
Other roles
Tim is currently a Principal at NM Capital.
Other roles
Julia is President of Linnaeus Veterinary
Limited.
Key to committees
Audit Committee
Disclosure Committee
Nomination Committee
Remuneration Committee
Chair
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Chair
Giles Brand
Giles Brand has held the role of Chair
since 2 October 2016. The Chair is
Non‑Executive and is responsible for
the leadership and governance of the
Board, organising, planning and setting
the agenda of Board meetings (in
conjunction with the Chief Executive
Officer) and communicating information
to shareholders. The Chair maintains
regular contact with the independent
NEDs to discuss and address any issues
or concerns outside of formal Board
meetings. The Chair also provides
support to the Executive Directors
whererequired.
Executive Directors
Chief Executive Officer (“CEO”)
John Hornby
The CEO has delegated responsibility for the management
of theGroup’s day‑to‑day operations, including product
development, quality control, sourcing of raw materials,
customer and supplier relations, distribution and health and
safety. The CEO also prepares and communicates the strategy
of the Group and the detailed underlying operational plans to
deliver it.
Executive Director and CFO from 1 April 2023
1
Will Hoy
The CFO works closely with the CEO to ensure that strategic
plans are underpinned by strong financials and that they
deliver growth in shareholder value. The CFO is responsible
for producing budgets and forecasts to deliver and measure
against the strategy and assessing the benefit of new
investmentopportunities. He is also responsible for internal
control and risk management, in conjunction with the Audit
Committee.
Independent Non-Executive Directors
Senior Independent Director (“SID”)
Pim Vervaat
In addition to the responsibilities of an independent NED, the
SID is available to shareholders should they have concerns which
contact through the Chair or other Board members has failed to
resolve or for which such contact is inappropriate. The SID is also
responsible for conducting the annual performance evaluation
of the Chair, in conjunction with the other independent
NEDs. AllBoard members who wish to deal in the Company’s
securitiesmust seek approval from the SID.
Non-Executive Directors (“NEDs”)
Caroline Brown, Tim Surridge, Julia Hendrickson
All of the NEDs are independent and contribute to the strategic
direction of the Group, providing an independent sounding
board to the Chair and Executive Directors. They have been
appointed for their knowledge and expertise and provide healthy
debate and challenge to the Executive Directors and senior
leadership team. The independent NEDs are also members of
the Board Committees, except for the Disclosure Committee,
with responsibility for the oversight of audit, financialcontrol and
risk management, composition and remuneration of the Board.
Corporate Governance Report
The Board is fully accountable to the shareholders for the performance and conduct
of the business and recognises the importance of maintaining an open dialogue,
keeping them informed of the Group’s strategy, progress and prospects.
Board division of responsibilities
1. Matt Webb was the former CFO of the Company to 31 March 2023.
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Corporate Governance Report continued
Board composition
As at the date of this report, the Board
comprised the Chair, two Executive
Directors and four independent NEDs.
The four independent NEDs are considered
by the Board to meet the independence
criteria set out in Provision 10 of the Code
and to be independent of the Company’s
executive management and free from any
business or other relationship that could
affect their ability to exercise independent
judgement. The letters of appointment
of the Chair and independent NEDs are
available for inspection at the Company’s
registered office.
The rules concerning the appointment and
replacement of Directors are set out in the
Company’s Articles of Association (“Articles”)
and in the Companies Act 2006. There are
no agreements between the Company and
its Directors concerning any compensation
for their loss of office that occurs because
ofa takeover bid.
Re-election of Directors
In accordance with the Code and the
Articles, all Directors are subject to annual
re‑election by shareholders at the AGM.
The Directors’ biographical details are set
out on pages 79 and 80 of this report. These
demonstrate the wide range of skills and
experience that they bring to the Board.
The individual performance of each Director
standing for re‑election has been evaluated
and it is recommended that shareholders
vote in favour of their re‑election at the
AGM. Accordingly, resolutions to re‑elect
all Directors will be contained within the
2024 AGM Notice of Meeting, which will be
sent to shareholders within the prescribed
timescales.
Time commitment
Each Director’s other commitments are
disclosed and, in the case of significant
appointments, approved by the Board in
advance. The Board reviews a schedule
of Directors’ interests at each Board
meeting. The Board is satisfied that the
other commitments of the Chair and
the independent NEDs do not prevent
them from devoting sufficient time to the
Company. The Executive Directors work
solely for the Group; neither John Hornby
nor Will Hoy hold any external directorships.
Access to advice
All Directors have access to the advice
and services of the Company Secretary,
who is responsible for advising the Board
on corporate governance matters. The
Directors are able to take independent,
professional advice to assist them, if
necessary, at the Company’s expense.
Matters reserved for the Board
The Board keeps a formal schedule of
matters specifically reserved for its decision.
These include the approval of the annual
and half‑yearly results and associated
announcements, recommendation of
dividends, convening of shareholder
meetings, Board appointments, strategic
plans and budgets, ESG plans, significant
capex proposals, acquisitions, systems of
internal control and risk management
and corporate governance arrangements.
Noone Board member has the power
to make a decision without the other
members.
Committee responsibilities
The Board has formally delegated
specific responsibilities for audit, risk
management and financial control, public
announcements, Board composition and
remuneration to four standing Committees,
namely the Audit Committee, Nomination
Committee, Remuneration Committee and
Disclosure Committee. Each Committee
is chaired by the Chair or an independent
NED, enabling them to take an active role in
influencing, overseeing and challenging the
work of the Executive Directors and senior
leadership team.
Details of the Disclosure Committee
are provided below; information on the
composition, responsibilities and activities
of the other Board Committees are set out
in their respective reports on the following
pages:
• Audit Committee pages 89 to 93
• Nomination Committee pages 86 to 88
• Remuneration Committee pages 94
to110
The terms of reference of the Committees
are reviewed annually.
Disclosure Committee
The Board has delegated responsibility
to the Disclosure Committee to oversee
the Company’s compliance with the FCA’s
Listing Rules and Disclosure Guidance and
Transparency Rules, and the Market Abuse
Regulation, in respect of the disclosure
and control of inside information directly
concerning the Company.
The Committee meets as appropriate
and met six times during the year. The
Disclosure Committee is chaired by Giles
Brand and its other members are John
Hornby, Matt Webb
1
and Will Hoy.
Leadership and Company purpose
The Board is collectively responsible for
leading and controlling all activities of the
Group, with overall authority for establishing
the Company’s purpose, values and culture
and overseeing the management and
conduct of the Group’s business, strategy
and development. The Board sets the
Group’s strategic direction and approves
strategic projects, policy and investment
decisions. These decisions are underpinned
by financial reporting and a robust
approach to risk management. The Board
is also responsible for ensuring appropriate
resources are in place to enable the senior
leadership team to deliver the strategic
objectives and enact their policies and
decisions.
The Board has agreed the Company’s
purpose, as stated on page 2, and has
satisfied itself through regular reports from,
and discussions with, management that
the culture promoted by the Board and by
senior management supports this purpose.
People and culture
The Board assesses and monitors Company
culture through a number of channels,
including regular reports from the Executive
Directors and senior management,
whistleblowing reports and employee
surveys. People remained a key focus of
discussion during the year. The Company
remains committed to investing in its
people in 2024.
More about the Company’s approach to its
people and culture can be found in the ESG
section on pages 36 to 61.
1. Will Hoy replaced Matt Webb as a member of the Disclosure Committee on 1 April 2023.
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Corporate Governance Report continued
People and culture continued
Workforce engagement
In accordance with the Code, Julia
Hendrickson fulfils the role of designated
NED for workforce engagement. In 2023,
20 interviews were conducted by Julia and
the recently appointed Director of Talent
& People, with employees from across the
business, representing a variety of functions
and geographical locations.
The feedback that arose from the interviews
was broadly positive regarding the culture
and opportunities across the Group, with
most employees demonstrating a passion
for the business. Overall, the sentiment was
that employees feel respected and listened
to and there is an appetite for further
understanding of the Company’s strategy
in order to contribute to the success of the
Group.
Feedback from those surveyed identified
further opportunities for management
to focus on in 2024, including a desire for
closer collaboration and information sharing
across the Group.
The results of the annual employee
engagement survey (discussed in the
ESG section on page 59) were discussed
by the Board, the findings of which were
largely consistent with the feedback from
Julia’s sessions. In 2024, Julia will continue
to engage with the workforce, through
physical visits to both the UK and China
operations where possible. The Board will
continue to monitor the effectiveness of its
methods of workforce engagement.
Further information on the Company’s
policies with regard to its people can be
found within the Empowering people
section of the ESG Report on pages 57
to59.
Whistleblowing and compliance
The Board is responsible for monitoring
and periodically reviewing the Group’s
whistleblowing, anti‑bribery and
anti‑fraud policies. The Board considered
the policies during 2023 and into early
2024 and satisfied itself that sufficient
arrangements are in place to assist in the
prevention of fraud and enable employees
to report irregularities confidentially
and allow appropriate investigation and
follow‑up action to be taken. The Board
is also responsible for reviewing any
whistleblowing reports.
Wider stakeholder considerations
The Company’s key stakeholder groups are
set out in the Strategic Report on pages 62
to 65. Further information is included in the
Section 172(1) Statement in the Strategic
Report on page 65.
Sustainability
Full details of the Company’s sustainability
strategy and performance with regard
to sustainability are provided within the
Creating a sustainable future section of the
ESG Report on pages 38 to 56.
Board meetings
In advance of its meetings, the Board is
provided with an agenda and all relevant
documentation and financial information in
a timely manner to assist it in the discharge
of its duties and ensuring that decisions
are well informed and made in the best
interests of the Group. If any member is
unable to attend a Board meeting, they
have the opportunity to discuss any agenda
items with the Chair before the meeting.
Conflicts of interest are managed in
accordance with the procedure described
under Directors’ conflicts of interest on
page112.
Meeting attendance
The table below shows the number of scheduled Board and Committee meetings
attended by each Director during the year against the total number of possible meetings
inrespect of each Director.
Name Board
Ad hoc
Board
Audit
Committee
Nomination
Committee
Remuneration
Committee
Disclosure
Committee
Giles Brand 6/6 3/3 n/a 2/2 n/a 6/6
John Hornby 6/6 3/3 n/a n/a n/a 6/6
Matt Webb
1
2/2 n/a n/a n/a n/a 2/2
Caroline Brown 6/6 3/3 n/a 2/2 3/3 n/a
Will Hoy
2
6/6 3/3 3/3 n/a n/a 4/4
Tim Surridge 6/6 2/3 3/3 n/a 3/3 n/a
Pim Vervaat 6/6 3/3 3/3 2/2 3/3 n/a
Julia Hendrickson
3
6/6 2/3 2/3 n/a 3/3 n/a
1. Matt Webb stepped down from the role of Chief Financial Officer on 31 March 2023.
2. Will Hoy assumed the position of Chief Financial Officer on 1 April 2023.
3. Due to unforeseen circumstances, Julia regrettably was unable to attend one of the scheduled meetings for
the Audit Committee; however, Julia attended two additional ad hoc Board meetings throughout the course
of the year.
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Corporate Governance Report continued
Board activity
The Board agenda focuses on the themes of driving strategy, monitoring risk and execution of the strategy through regular business, financial and departmental updates. These are
complemented and underpinned by updates and discussions around culture, people and stakeholders, as well as corporate governance considerations including legal and regulatory
matters. A summary of the activity of the Board during the year is set out as follows:
Strategy
• Regularly received and discussed
strategic updates, proposals and
reviews from the Executive Directors
and senior management; supported
the development of strategy through
individual insights and robust challenge
• Considered and approved strategic
M&A proposals put forward to the
Board including, but not limited to,
the investment in eEnergy Group plc
(announced on 8 November 2023)
• Received and discussed updates on
performance and strategy regarding
the Group’s operations in Spain and the
Middle East
• Continued to develop the Company’s
ESG strategy and ESG targets and
considered the implementation of a
Sustainability Committee
• Reviewed the Group’s climate strategy
and TCFD Compliance Report and
discussed the status of the 2023
sustainability objectives and future
objectives
• Approved the acquisition of new
premises for various parts of the
business including Kingfisher Lighting
inMansfield
Internal control andriskmanagement
• Reviewed the Group’s approach to risk
management and carried out a robust
assessment of the Company’s emerging
and principal risks
• Received updates on the Company’s
hedging arrangements
• Considered the findings of an internal
controls review undertaken in relation
to the operations at Kingfisher Lighting
and the review undertaken by PwC
in relation to rebates and the average
costing system implemented by the
Company
• Discussed the review of an internal
controls report prepared by PwC in
relation to the Company’s operations in
Jiaxing, China
Financial
• Considered the financial performance of
the Group and key performance targets,
including a review of the monthly
management accounts at each Board
meeting
• Monitored performance through regular
presentations from the CFO
• Approved the Annual Report, half‐year
and annual results announcements,
trading statement updates and
half‑year and final dividends
• Approved the Group’s financing
arrangements
• Approved the 2024 budget and
five‑yearplan
• Reviewed and challenged
management’s going concern
assessment
Culture, people andstakeholders
• Discussed the results of the 2023 annual
employee engagement survey and
progress made as a result of actions
taken in response to the 2022 survey
• Received an update on employee
engagement meetings from the
designated Non‐Executive Director
for workforce engagement; discussed
findings in conjunction with survey
results
• Received updates on the participation
by employees in the Company’s Share
Incentive Plan
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Corporate Governance Report continued
Corporate governance
• Discussed the outcome of the
Evaluation of Board Effectiveness
and agreed actions for 2024,
including a number of suggestions
with regard to skills and experience
that would enhance the Board as a
whole, including M&A experience,
diversity, ethnic minority, senior
management succession planning
and developing the Company’s digital
and e‑commerce offering
• Considered feedback from brokers
and analysts as relevant throughout
the year
• Received regular updates on legal
and governance developments
affecting the Company, including,
among other things, UK Market Abuse
Regulation, reporting against the
diversity targets prescribed in the
Listing Rules, amendments to the
UK Corporate Governance Code 2018
and the impact of the UK financial
sanctions regime as prescribed in the
Economic Crime (Transparency and
Enforcement) Act2022
• Reviewed the established
science‑based targets in line with
requirements set out by the Science
Based Targets initiative, relating to
reduction of carbon emissions
• Reviewed and approved the slavery
and human trafficking statement (as
defined in Section 54(4) of the Modern
Slavery Act 2015
• Received training on ESG‑related
matters and considered the merit
of establishing a Sustainability
Committee. The Board will continue
to review this Committee into 2024
• Reviewed and approved the
Company’s amended Diversity
& Inclusion Policy
Board activity continued Shareholder engagement following
the 2023 AGM
At the Company’s 2023 AGM, Resolution 20
(“Resolution”) to approve the Rule 9 Waiver
approved by the Takeover Panel
1
, passed
with 79.95% of participating independent
shareholders voting in favour: however,
20.05% of participating independent
shareholders did not vote in favour
Resolution 20.
As such, and in accordance with Provision
4 of the Code, on 20 October 2023
the Company provided an update to
shareholders on the actions taken following
the outcome of Resolution 20 at the 2023
AGM.
Following the AGM, major shareholders
who did not support the Resolution were
contacted to understand the reasons for their
vote against the Resolution and to continue
a transparent and constructive dialogue on
this topic. The Board will continue to engage
as appropriate with those shareholders
regarding their views in this area.
The Board continues to consider that the
ability for the Company to buy back shares
is in the best interests of all shareholders,
particularly in light of the current share
price levels, which presents an opportunity
to generate attractive returns for all
shareholders through allocating capital
tobuying back ordinary shares.
Annual General Meeting
The 2024 AGM will take place at Numis
Securities, 45 Gresham Street, London
EC2V 7BF on Tuesday, 14 May 2024.
The AGM is the principal forum for
dialogue with shareholders and usually
includes a presentation outlining recent
developments in the business, followed by
a question‑and‑answer session to enable
shareholders to ask about specific areas
or the business in general. It is intended
that the AGM will take place in person.
Shareholders intending to attend the AGM
are asked to register their intentionas soon
as practicable by emailing the Company
Secretary at luceco@linkgroup.co.uk.
Shareholders are strongly encouraged
to register their proxy votes online.
Shareholders may also wish to send
their questions for the Board via email to
luceco@linkgroup.co.uk in advance of the
meeting. Further details will be included
in the Notice of AGM, which will be sent
to shareholders within the prescribed
timescales.
Giles Brand
Chair
25 March 2024
Shareholder engagement
The Board, led by the Chair, is committed
to maintaining an open and constructive
dialogue with shareholders, to ensure there
is a common understanding of the strategic
objectives, governance and performance of
the Group. The CEO and the CFO undertake
investor roadshows following the release
of financial results, with the presentations
made available on the Company’s website.
Any feedback gained from a roadshow is
reported to the Board, to enable Directors
tounderstand the views of shareholders.
Where appropriate, the Company consults
with shareholders on significant issues.
During 2023, major shareholders were
offered the opportunity to meet the Chair,
CEO and CFO virtually to discuss Luceco’s
strategy and governance arrangements.
In addition, the Company has appointed
financial public relations advisers and
corporate brokers to gather investor and
analyst feedback, which is presented to and
reviewed by the Board.
1. Please see the explanatory statement for the Resolution as set out at page 13 of the Notice of AGM dated 17 April 2023 for further information in relation to the Resolution.
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Key activities during the year
Mar
• Approved the Nomination
Committee Report and
appointments (election/
re‑election of Directors) to
the Board
Dec
• Reviewed Listing Rule
diversity disclosure
considerations for 2023
• Reviewed Board Diversity
Policy and succession
planning for 2024
Committee members
Chair: Giles Brand
Other members: Caroline Brown and
Pim Vervaat
Key responsibilities
The Committee’s main responsibilities,
asoutlined in its terms of reference, are:
• Reviewing the size, structure and
composition of the Board and its
Committees
• Identifying and nominating candidates to
fill Board vacancies as the need arises
• Ensuring adequate succession planning is
inplace for Directors and members of the
senior leadership team
• Overseeing the development of a diverse
pipeline for succession including
accounting for diversity targets set by the
Company’s Diversity Policy and in
consideration of the Listing Rule diversity
disclosure requirements
The Committee’s terms of reference are
available on the Company’s website.
Committee meeting attendance is set out
onpage 83.
In 2023, the Committee focused on
succession planning and how best to
meetthe Company’s diversity and
ethnicitytargets in the future
Giles Brand
Nomination Committee Chair
Nomination Committee Report
Dear Shareholder,
I am pleased to present the report of the
Nomination Committee (“Committee”),
which details the role of the Committee,
the work it has undertaken and the
matters considered during the year
ended 31December 2023. The role of the
Committee is vital to ensuring that the
Company has a strong Board with a broad
range of skills, experience and diversity.
The Committee has been engaged in a
recruitment process to ensure succession
planning is well underway for a new Chair of
the Audit Committee to take over the role
assumed by Tim Surridge in March 2023,
following Will Hoy’s appointment asan
Executive Director and CFO in 2023.
Board Diversity & Inclusion Policy
The Board Diversity & Inclusion Policy
(“Policy”) was reviewed by the Committee
in December 2023, with recommended
updates approved by the Board. Building
on the amendments to the Policy adopted
in 2022, which gave recognition to the
importance and benefits of greater
diversity, this year the Committee sought
to embed those principles and targets by
setting guidelines and objectives that an
external recruitment process would follow,
including, but not limited to (collectively
referred to as “External Guidelines”):
• All Board appointments to be made
on merit, in the context of the skills,
knowledge and experience that are
needed for the Board to be effective;
• Any advertising of positions at the
Company to state that applications from
suitably qualified candidates who would
add to the Board’s diversity would be
especially welcome;
• Any recruitment agency used would be
instructed to include diverse candidates
of appropriate merit, identified through
a search of a wide pool of potential
appointees. Candidates could be
from different backgrounds, and not
necessarily with expertise in supplying
and/or manufacturing LED lighting and
other Company products, provided they
have appropriate transferable skills;
• Any shortlist should include candidates
who, if appointed, would add to the
diversity of the Board; and
• Any lists of potential Non‑Executive
Directors should include diverse
candidates of appropriate merit.
The Committee reviews the effectiveness
of its Policy annually and recommends any
required amendments to the Board for
approval.
The Board has fully complied with the
diversity reporting disclosures required
by the Listing Rules, which require listed
companies with financial years beginning
on or after 1 April 2022 to disclose annually
their position against the following Board
diversity targets:
• At least 40% of women on the Board
• At least one woman in the position of
theChair, Senior Independent Director,
Chief Executive or Chief Financial Officer
• At least one Director from an ethnic
minority background
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Nomination Committee Report continued
Board Diversity & Inclusion Policy
continued
You will find this information in relation
to2023 below.
During its review of the Policy in
December2022, the Committee
recommended changes to the Policy to
bring it in line with Listing Rule diversity
targets (“Original Targets”), which the
Board approved at its meeting on
13December2022. Specifically, the Original
Targets were adopted by the Board to bring
its composition in line with the requirement
to have at least 40% female Directors on the
Board by 2024, to have at least one ethnic
minority Director on the Board by 2025 and
to have at least one woman in any of the
senior positions described above by 2030.
The Committee undertook several steps
throughout the course of 2023 to work
towards meeting the Original Targets,
including instituting a working group
made up of three Board members that was
focused on recruiting a new Chair of the
Audit Committee, researching, seeking out
talent and conducting several interviews
as part of that process. The Committee is
committed to finalising that process as
soon as possible in 2024.
To realistically reflect its ability to meet the
Original Targets, the Committee amended
the Policy in December 2023 by making
changes to the dates set to meet two of the
Original Targets as follows:
• At least 40% of women on the Board is to
be achieved by 2025;
• At least one Director from an ethnic
minority background to be achieved by
2026
The target to have at least one woman
in the position of the Chair, Senior
Independent Director, Chief Executive
or Chief Financial Officer by 2030 was
unchanged as part of the changes
adopted by the Nomination Committee in
December 2023.
Whilst it is recognised that periods of
change in Board composition may result
in temporary periods when balance is
not achieved, given upcoming tenure
considerations for Non‑Executive Directors
and the need to replace the Chair of
the Audit Committee, the Nomination
Committee has confirmed it is focused on
recruiting a Non‑Executive Director on or
around the half year ended 30 June 2024.
Resignations and appointments
On 19 January 2023, it was announced that
Matt Webb, who at the time was the Chief
Financial Officer of Luceco, was stepping
down to pursue other opportunities after
five years in the role. Will Hoy, formerly
a Non‑Executive Director of Luceco and
Chair of the Audit Committee, assumed
an Executive Director position from
1March2023 and became the Chief
Financial Officer on 1April 2023. Will
stepped down from his position as Chair of
the Audit Committee on 19January2023
and was succeeded in the role by
TimSurridge.
1. The reference date for the Annual Report diversity disclosures is 31 December 2023. The method for collating
the data was self‑reporting and facilitated by the Company Secretary. The Company has not met the targets
prescribed by LR 9.8.6R(9)(a)(i) & (ii) (“Targets”). The Company commenced a recruitment process for a new
Chair of the Audit Committee in the reporting period and that process has progressed substantially up to the
date of this report. The Targets will be considered as part of that recruitment process. TheBoard’s Diversity
& Inclusion Policy prescribes that the Company will aim to achieve the target set out at LR 9.8.6R(9)(a)(i) by
2025 and the target set out at LR 9.8.6R(9)(a)(ii) by 2030.
2. The reference date for the Annual Report ethnic minority disclosures is 31 December 2023. The method for
collating the data was self‑reporting and facilitated by the Company Secretary. The Company has not met
the target prescribed by LR 9.8.6R(9)(a)(iii) (“Target”). The Company commenced a recruitment process for
a new Chair of the Audit Committee in the reporting period and that process has progressed substantially
up to the date of this report. The Target will be considered as part of that recruitment process. TheBoard’s
Diversity Policy prescribes that the Company will aim to achieve the Target by 2026.
Gender balance of senior management and direct reports
Table for reporting on gender identity or sex
1
Number
of Board
members
Percentage
of the Board
Number of
senior positions
on the Board
(CEO, CFO, SID
and Chair)
Number in
executive
management
Percentage
of executive
management
Male 5 71.4% 4 13 76.5%
Female 2 28.6% — 4 23.5%
Not specified/
prefernot to say — — — — —
Table for reporting on ethnic background
2
Number
of Board
members
Percentage
of the Board
Number of
senior positions
on the Board
(CEO, CFO, SID
and Chair)
Number in
executive
management
Percentage
of executive
management
White British
or other White
(including minority‑
white groups) 7 100% 100% 16 94.1%
Mixed/Multiple
Ethnic Groups — — — — —
Asian/Asian British — — — 1 5.9%
Black/African/
Caribbean/Black
British — — — — —
Other ethnic group,
including Arab — — — — —
Not specified/
prefernot to say — — — — —
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Nomination Committee Report continued
Board composition
Each year the Committee formally reviews
the size, composition and capabilities of the
Board, including its diversity, as part of the
annual Evaluation of Board Effectiveness. The
Committee concluded in the 2023 Evaluation
that the Board had the appropriate mix
of skills and experience to provide strong
and effective leadership, noting that this
was being strengthened through ongoing
succession planning for the replacement
of the Chair of the Audit Committee and, in
due course, the Chair of the Remuneration
Committee. The standing Board Committees
were also considered, and it was agreed that
the composition of each was appropriate
and balanced. Informed by this review and
ongoing monitoring, the Committee will
continue to oversee the refreshment of the
Board and Committees and to maintain an
appropriate balance of skills, commercial
expertise and diversity to satisfy the evolving
needs of the Group.
The Board and the Committee have spent
a significant amount of time considering
Board succession during the course of the
year to ensure that the Board has the right
mix of skills and experience, as well as the
capability to provide effective challenge and
promote diversity in line with the targets
adopted by the Board in the recently
amended Policy.
Succession planning
The Board has delegated responsibility
to the Committee for leading the process
for identifying and nominating Board
candidates, as well as keeping the diversity
of the Board under review. When making a
Board appointment, the Committee seeks
to identify an individual with the skills,
knowledge and experience required to fulfil
the role, within this context taking account
of the added value that the individual
brings to the Board in terms of creating
a diverse, and therefore more effective,
decision‑making body. As mentioned,
an external recruitment process will also
now adopt and implement the External
Guidelines prescribed by the Policy.
The Committee identified the following
succession planning objectives and
considerations for 2024:
• Succession planning for Non‑Executive
Directors due to exceed nine‑year
tenure in 2025, namely Tim Surridge and
Caroline Brown who were each appointed
to the Board on 27 September2016 and
consequently may remain on the Board
until the 2026 AGM
• Succession planning for the Chair of the
Audit Committee and the Remuneration
Committee, roles currently held by Tim
Surridge
It was agreed that in catering for the
above‑mentioned objectives, the following
would be taken into account:
• Board membership to be aligned with
the current and the future five‑year
strategy of the Company
• Current tenures of the Board compared
to average tenures and balancing the
advantages of continuity and freshness
ofapproach
• Directors’ plans
• Diversity, including and beyond gender
or ethnicity, but also in terms of outlook
and approach and cognitive skills
The Committee also oversees the
development of a diverse pipeline of
potential Directors and senior managers.
This is supported by the Group’s Equality
and Diversity Policy, described on page
57, which ensures that all employees,
regardless of gender, ethnicity, age or other
factors, are provided with the opportunity to
progress within the organisation, supported
by an inclusive culture underpinned by fair
and equitable practices and procedures.
The Committee believes that this is an
appropriate and balanced approach to
facilitating the development of a diverse
pipeline.
All Non‑Executive Directors are appointed
for initial terms of three years and may
be terminated by either party upon one
month’s notice or by shareholder vote at
the AGM. The Non‑Executive Directors do
not have any entitlement to compensation
(or payment in lieu of notice) if they are not
re‑elected by shareholders following any
retirement.
Full details of the remuneration of the Non‑
Executive Directors can be found on pages
94 to 110 of this document in the Directors’
Remuneration Report.
Annual evaluation of the
NominationCommittee
As part of the Evaluation of Board
Effectiveness conducted during 2023, the
Committee undertook an evaluation of its
own effectiveness and having considered
the structure, size and composition of
the Board and its Committees as well
as reviewing its terms of reference, the
following key changes were adopted:
• Amendments were made to the
disclosures required to be made by the
Committee in line with the Listing Rules,
namely to report against gender balance
and ethnic minority representation on
the Board and in senior management
positions in the Annual Report
• To consistently reflect within the terms
of reference the External Guidelines
adopted by the Committee in the
Policy when engaging in an external
recruitment process to recruit at Board or
senior management level
Ultimately, the Committee concluded that it
was operating effectively; however, it noted
that the Committee would need to focus on
long‑term succession planning for the CEO to
deal with contingency plans if ever needed
in the future and to continue to promote
diversity on the Board. Details of the full
Evaluation of Board Effectiveness, including
how it was conducted and the actions taken
as a result, can be found on page 76.
Directors’ performance
The Directors’ biographies are set out on pages
79 and 80. The Committee has considered the
performance of each Director and concluded
that they continue to demonstrate the
necessary knowledge andcommitment to
contribute effectively to the Board.
Priorities for 2024
During the forthcoming year, the Committee
will continue with the recruitment process
to replace Tim Surridge as the Chair of the
Audit Committee (which has progressed
significantly as at the date of this Report), as
well as consider the potential recruitment of
a further Non‑Executive Director to address
tenure requirements at Board level. The
Committee will be pursuing these objectives
in line with the Company’s five‑year
strategy and is focused on continuing to
strengthen the mix of skills, diversity and
experience on the Board. The Committee
will also undertake an in‑depth review of the
diversity, development and pipeline of the
talent pool below Executive Director level to
meet the evolving needs of the business.
Giles Brand
Nomination Committee Chair
25 March 2024
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Committee members
Chair: Tim Surridge
Other members: Pim Vervaat and
JuliaHendrickson
Will Hoy was a member and Chair of the
AuditCommittee until 19 January 2023.
TimSurridge succeeded Will Hoy as Chair
ofthe Audit Committee
1
.
Key responsibilities
The Committee’s main responsibilities, as
outlined in its terms of reference, are:
• Recommending the half and full‑year
financial results to the Board
• Maintaining the integrity of all financial and
non‑financial reporting
• Monitoring the Group’s internal financial
controls and risk management systems
• Overseeing the relationship with the
external auditor and reporting the findings
and recommendations of the auditor to the
Board
The Committee’s terms of reference are
available on the Company’s website.
Committee meeting attendance is set out on
page 83.
Dear Shareholder,
I am pleased to present the report of the
Audit Committee (“Committee”) for the
year ended 31 December 2023. During
the year, the Committee was focused
on further strengthening the Company’s
internal controls environment and engaged
PwC to assist with reviews in relation to the
Company’s operations at Kingfisher Lighting,
the Company’s rebates and average costing
methodology, as well as a review of the
Company’s operations in China.
During the course of the year the
Committee ensured that the appropriate
steps were taken to ensure that a robust
audit tender process could occur in 2024
and that there were no restrictions on the
quality of the firms that are anticipated to
participate in that process.
The Committee also oversaw the rollout of a
number of training programmes focused on
building knowledge across the Group on:
• Anti‑bribery
• Modern slavery
• Money laundering
• Whistleblowing
Significant issues
The significant issues that were considered
by the Committee in 2023 and early 2024
are set out below. These were addressed
through reporting from, and discussion
with, the Chief Executive Officer, Chief
Financial Officer and KPMG LLP (“KPMG”),
allof whom are regular Committee
meetingattendees. KPMG has set out its
audit approach and the work it performed
to satisfy its audit requirements in these
areas in its independent Auditor’s Report
onpages 117 to 123.
Summary of principal activities
andfocus in 2023
Matters discussed by the Committee during
the year included:
• Consideration of budget forecasts as part
of the viability and going concern reviews
• Consideration of the integration of
businesses to be acquired in the future
• Inventory valuation and the
implementation of the average costing
model
• Destocking on Retail and Hybrid product
channels
• Receivables valuation and customer
creditworthiness following collapse of
Wilko
• The application of the Company’s
dividend policy
• Adjustments including intangibles and
acquisition‑related costs
• Finalisation of the fair value of Sync EV
• Transfer pricing
• Updates to the Whistleblowing “Speak
Up” Policy to reflect new notification
process requirements
• Rollout of a Cyber Security Policy via
online training across the Group to ensure
employees are aware of what they can do
to minimise the risk of fraud conducted
online. Other modules included
anti‑money laundering and anti‑bribery
training
• The Group’s use of alternative
performance measures, which are
included alongside IFRS measures
to provide the users of the financial
statements with a better‑informed view
of the Group’s performance and also
disclosure of one‑off items on profit
• Annual review of the Company’s
requirement for an internal audit function
Audit Committee Report
In 2023, the Committee worked to
furtherstrengthen the Company’s
internalcontrols and risk management
framework byproviding independent
challenge andoversight
Tim Surridge
Audit Committee Chair
1. Committee meetings are also routinely attended by the Chair of the Board, Chief Executive Officer,
Chief Financial Officer, senior finance team members and the external auditor. The Committee met
separately with the external auditor without management present.
Key activities during the year
Mar
• Commenced the
audit tender process
by undertaking initial
discussions with prospective
firms
Aug
• Approved and monitored
the rollout of a number
of internal training
programmes focused on
building knowledge across
the Group
Nov
• Engaged PwC to undertake
a detailed verification of
controls effectiveness
at the Group’s Chinese
operations. PwC reported
an improvement in
compliance resulting from
new management at the
operation in Jiaxing.
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Audit Committee Report continued
Summary of principal activities
andfocus in 2023 continued
Financial statements
The Committee considered in particular
the following matters, as identified by the
auditor, in relation to the Group’s half‑year
and full‑year financial statements:
• Inventory valuation, provisions and
average costing methodology
• Accounting updates including the
application of accounting standard
IFRS 17
• Research and development capitalisation
• Tax rate changes in the UK and China
• Acquisition accounting
• Impairment of goodwill
• Recoverability of intra‑group debt
• Going concern disclosure quality
• Transfer pricing relating to overseas
subsidiaries
• Revenue recognition
• Management override of controls
Summary of key Committee activities during 2023
Topic
Activity
March
2023
August
2023
November
2023
Financial
reporting
Reviewed year‑end matters including the draft
2022 Annual Report and Financial Statements,
keyaccounting judgements and the going concern
statement
Reviewed the draft half‑year statement, including
accounting judgements, materiality and the external
auditor’s report
Reviewed accounting judgements and changes to
accounting standards in preparation for year‑end
reporting
External audit Recommended to the Board the re‑appointment of
KPMG as external auditor
Reviewed KPMG’s plan for the scope of the audit of
the 2023 Annual Report and Financial Statements,
including key audit risks and progress of the audit
Disclosed relevant audit information to the external
auditor with supporting evidence
Conducted a review of the effectiveness of the year‑end
external audit process and reporting outcome for 2022
Reviewed and approved the external auditor’s
Non‑Audit Services Policy
Internal control
and risk
management
Reviewed risk management and internal control
systems, including risk management framework
Reviewed overall process of assessing business risks
andmanaging their impact on the Group
Reviewed overall approach to setting risk appetite,
tolerance levels, risk exposure and any changes to
therisk management framework
Reviewed and challenged going concern assumptions,
theViability Statement and the period of assessment
The Committee confirms that it is satisfied that the presentation of the financial statements for the year ended 31 December 2023 is
appropriate and in accordance with the Group’s accounting policies.
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Audit Committee Report continued
Summary of principal activities
andfocus in 2023 continued
Going concern
In preparation for publication of the 2023
Annual Report, the Committee and Board
conducted a comprehensive review of
the Company’s 12‑month going concern
position in March 2024. Management
considered the 12‑month assessment of
going concern, together with sensitivity
analysis results covering the period
December 2024 to December 2026 with
respect to the Viability Statement. The
full Board discussed the results in detail,
including: practicalities of the sensitivity
testing process, the rationale behind
the choice of risks subject to sensitivity
testing and the treatment of one‑off versus
recurring risks.
Internal controls
The Group conducts a rolling programme of
internal control reviews across its worldwide
operations. The scope of the programme
is approved by the Committee each year.
This year’s programme included a review
of Kingfisher Lighting by PwC which
commenced towards the end of 2023. PwC
were also engaged to complete a controls
review of rebates and the new average
costing system implemented by Luceco and
no issues wereidentified.
The Committee also assessed the findings
of a review, undertaken internally, of internal
controls across the Group, and agreed
further reviews would be undertaken in
2024 that would focus on internal audits of
the Group’s operations in Spain and Mexico.
There will be no external reviews due to the
audit tender process being conducted in
2024.
PwC undertook a detailed third‑party
verification of controls effectiveness at
the Group’s Chinese operations in 2023,
following a similar review conducted
in 2022. PwC’s review determined that
approximately 85% of the controls in China
were considered compliant and that
repeated issues from the review in 2022
remained partially compliant, including
matters relating to open commitments with
suppliers. Management have advised the
Committee that a new purchasing manager
and quality manager had and would be
recruited to address the issues identified
by PwC. Overall, PwC observed that there
had been significant progress on controls
compliance in China.
Governance
In November 2023, the Committee received
updates from the Company Secretary and
the auditor regarding the withdrawal of
draft audit reform legislation.
In March 2024, the Committee received
advice regarding the application of:
• The New UK Corporate Governance
Code 2024 (“New Code”) released in
January 2024 and the implications
that this will have on the Company,
including specifically in relation to the
new internal controls declaration (due to
come into effect in 2026) requiring the
Audit Committee to include a statement
about the effectiveness of material
controls including financial, operational,
reporting and the Company’s compliance
framework
• The Economic Crime and Corporate
Transparency Act (“the ECCTA”) and the
changes implemented by the ECCTA
including, among other things, criminal
liability being attributed to corporate
entities via the actions of associates
of the entity, which will now include
“senior managers”. Management is now
seeking advice from the Company’s legal
advisers on the application of the ECCTA
legislation for future contemplation
within the Company’s risk profile
Internal financial controls and
riskmanagement systems
The Board is responsible for the Group’s
risk management framework and the
Committee has been delegated the
responsibility to review the overall process
of assessing business risks and managing
the impact on the Group. The Board
retains overall responsibility for the level
of risk that the Group is willing to take
and for allocating sufficient resource to
the management of business risk. The risk
management process is detailed on pages
39 to 45.
The Group operates its system of internal
control by using the following key elements:
• Regular review meetings of various
groups, including business functions,
senior management, sub‑committees
and the Board, to discuss key issues
• A detailed business planning process,
combining top‑down and bottom‑up
approaches, with outputs reviewed by
the Directors
• A system of financial controls, including
preventative controls and a review
process
• Ongoing dialogue with Directors,
including financial reports and trading
updates
• Conducting root and branch reviews of
internal control systems at companies
targeted for acquisition as part of the
duediligence process
The Committee, on behalf of the
Board, hasreviewed the effectiveness
of the internal control systems and risk
management processes in place during
the year, taking account of any material
developments since the year end. The
Group’s rolling programme of internal
controls reviews are conducted using a
standardised risk‑based testing approach
introduced in 2022.
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Audit Committee Report continued
Review of half and full-year
financialresults
The Board is ultimately responsible for
reviewing and approving the Annual
Report and Financial Statements and
thehalf‑yearly reports.
At the Board’s request, the Committee
has reviewed the Annual Report and
Financial Statements and is satisfied
that the information contained therein is
fair, balanced and understandable and
provides shareholders with the necessary
information to assess the Group’s position
and performance, business model and
strategy.
Principal risks and uncertainties
In March 2023, the Committee concluded
that the principal risks identified by
the Company in the previous year
were unchanged heading into 2023.
TheCommittee considered the impact of
risk associated with concentration risks
relating to operations and associated
with customers and products (including
product, shipping cost inflation and energy
costs), macroeconomic and political and
environmental risk, loss of IT/data, loss
of key employees, acquisitions, legal
and regulatory and finance and treasury
risk. InNovember 2023, the Committee
considered and held further discussion
with the auditor with regard to the risk of
changes in foreign exchange rates.
The principal risks and uncertainties of the
Group and their mitigation are included on
pages 66 to 71. The crystallisation of these
risks has been considered in the Viability
Statement on pages 72 and 73 and going
concern assessment on page 91.
External auditor
We are required by law to tender the
statutory audit before the end of the 2026
financial year, being ten years from when
Luceco plc was first listed. KPMG has been
the Group’s auditor since 2014. In 2023, the
Board agreed to tender the audit during
2024 and seek approval for the preferred
candidate at the Company’s 2025 AGM.
The Board chose not to run a tender
process sooner, due to the appointment
of the former Committee Chair, Will Hoy,
as CFO and the rotation to a new Senior
Statutory Auditor within KPMG. In or around
November 2023, management commenced
initial discussions with the firms that had
indicated that they would participate in
the tender process in 2024. The Committee
has carefully considered its engagement
with other firms on ad hoc internal controls
work to ensure that any firm wishing to
participate in the tender is able to do so
without restriction.
The Committee regularly considers the
independence and objectivity of the auditor,
taking into consideration relevant UK
professional and regulatory requirements.
The Committee reviews an annual
statement from the auditor detailing its
independence, policies and safeguards and
confirming its independence, also taking
into account the Group’s External Auditor
Independence Policy, which incorporates
the Group’s Non‑Audit Services Policy
and relevant ethical guidance regarding
the provision of non‑audit services by the
external auditor.
The Committee has considered and
approved the terms of engagement
and fees of the external auditor for the
year ended 31 December 2024. Audit
fees payable by the Group to KPMG in
2023 totalled £0.6m (2022: £0.6m). There
were no contingent fee arrangements.
The Committee reviewed the level of
non‑audit services and fees provided
by KPMG in respect of the year ended
31December 2023; these were £0.1m
(2022: £0.1m) and related to the 2023
review of interim financial information and
providing verification of interim profits.
TheCommittee determined that KPMG
were best placed to undertake this work
in view of their historical knowledge of
the Group’s global operations. The ratio of
non‑audit fees to audit fees for the year
was1.7 (2022: 1:7).
The Committee has agreed that this
does not pose a threat to the auditor’s
independence, taking into account the
absolute level of fees incurred by the
Company in relation to KPMG revenues
asawhole.
The Committee oversees the Group’s
relationship with its external auditor
and makes recommendations to the
Board concerning the appointment,
re‑appointment and remuneration of the
auditor. The Committee reviewed the
effectiveness and quality of the external
audit process by reviewing the audit plan,
receiving reports on the results of the
audit work performed and questioning
theauditor about their findings.
Internal audit
During the year, the Group did not have
an internal audit function as it was agreed
in 2022 that the Group’s size and activities
were such that internal assurance was
achievable through other means. In
addition to reports from and discussions
with management, further assurance was
provided during the year as described
above under “Internal financial controls and
risk management systems”.
In November 2023, the Committee
considered, as it does annually, whether
the Group had a need for an internal audit
function for the financial year ended
31 December 2024. The Committee
unanimously determined that given the
external outsourcing of internal controls
was necessary for operations in China, it
was beneficial for a third party to carry out
this process for the entire Group rather
than forming an internal audit function for
the period. The Committee concluded that
given the size and complexity of the Group,
a permanent internal audit function was
therefore not required at this point in time;
however, the matter would continue to be
reviewed annually.
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Audit Committee Report continued
Annual evaluation of the
AuditCommittee
As part of the Evaluation of Board
Effectiveness conducted during 2023, the
Committee undertook an evaluation of
its own effectiveness and concluded that
it was operating effectively. The Board
has satisfied itself that Tim Surridge, Pim
Vervaat and Julia Hendrickson have recent
and relevant financial experience and that
the Committee as a whole has competence
relevant to the sectors in which the
Company operates. It was agreed that Tim
Surridge would be replaced as the Chair of
the Audit Committee in 2024.
Details of the full Evaluation of Board
Effectiveness, including how it was
conducted and the actions taken as a result,
can be found on page 76.
Climate-related financial disclosures
In reviewing and approving the Annual
Report, the Committee reviewed and
approved the TCFD disclosures set out
onpages 38 to 55.
Priorities for 2024
During the forthcoming year the
Committee will be focused on embedding
the regulatory changes that have arisen
due to the New Code and the ECCTA. It
is the intention of the Audit Committee
to review the current Non‑Audit Services
Policy to ensure the implementation of a
robust policy for the future. The Committee
expects to receive further updates from
the internal controls review programme,
specifically in relation to Spain and Mexico
and in relation to the validation of the
Company’s finance manual from the UK
finance team.
The Committee will also continue to bring
increased focus to the risks associated
with climate change and the impact of
such risks on the financial statements
through evolving environmental, social
and governance reporting requirements
including the implementation of UK‑specific
Sustainability Disclosure Standards
anticipated to be rolled out in 2024.
TheCommittee will also be seeking to
gain further assurance from management
ensuring that they action and procure
investment in cyber security to strengthen
the Company’s overall control environment.
Tim Surridge
Audit Committee Chair
25 March 2024
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Key activities during the year
Mar
• Evaluated performance
against 2022 targets and
objectives and approved the
2022 bonus
• Reviewed performance of
PSP awards due to vest in
2023
• Confirmed Executive
Remuneration Policy for 2023,
and agreed targets for the
2023 bonus and LTIP awards
Jun
• Discussed paper on latest
market practice and
shareholder guidance
• Reviewed wider workforce
pay and policies
Dec
• Held initial discussion
regarding performance
against the 2023 annual
bonus targets and PSP
awards due to vest in 2024
• Performed the annual
review of the Committee’s
terms of reference
Committee members
Chair: Tim Surridge
Other members: Caroline Brown, Pim Vervaat
and Julia Hendrickson
The Chair of the Board and other Board
members and advisers also attend Committee
meetings at the invitation of the Remuneration
Committee Chair.
Key responsibilities
The Committee’s main responsibilities, as
outlined in its terms of reference, are:
• Setting the principles, parameters and
governance framework to provide a
transparent Remuneration Policy that aligns
with the long‑term strategy of the business
• Determining the individual remuneration and
benefits package of each of the Executive
Directors and the Company Secretary,
considering the interests of relevant
stakeholders
• Monitoring the level and structure of
remuneration of senior management in
conjunction with the Executive Directors
• Reviewing the implementation and operation
of any Group share option schemes, bonus
schemes and long‑term incentive plans
The Committee’s terms of reference are available
on the Company’s website. Committee meeting
attendance is set out on page 83.
Our approach to remuneration
supports our strategy to innovate,
grow and deliver long‑term
sustainable performance for the
benefit of all our stakeholders
Tim Surridge
Remuneration Committee Chair
Remuneration Committee Report
Dear Shareholder,
On behalf of the Board, I am pleased to
present the Remuneration Committee’s
report on remuneration for the year ended
31 December 2023.
Despite challenging market conditions,
the Group has delivered a robust financial
performance in 2023. Operating in markets
where output has reduced year‑on‑year,
the Group has successfully grown revenue
by 1.7% on a like‑for‑like basis. The strategic
decisions management have made,
combined with their incredible hard work,
has meant the Group has been able to
outperform markets which have been
impacted by the rising cost of living and
reduced consumer spending. Management
have also been successful in meeting
their cash flow targets, as diligent working
capital management and strategic capital
allocation have enabled the Group to deliver
another strong cash performance.
Further progress has been made against
Luceco’s strategic priorities. The Group
continues to innovate, releasing its second
series of EV chargers featuring enhanced
functionality and faster charging for
commercial customers. Alongside this,
DW Windsor is seeing the benefit of
increased synergies with the wider Group
and automated production from Luceco’s
facilities in China. To sustain the Group’s
progress, further investments are being
made into key growth areas, including the
purchase of an enhanced manufacturing
facility for the Kingfisher Lighting business,
which will increase our capacity to deliver
low carbon lighting solutions to the external
lighting industry.
The Group has also made continued
progress against its sustainability agenda
and has committed to the Science Based
Targets initiative as planned. Operations
remain carbon neutral in the year and the
business continues to enhance its range of
low carbon products.
Approach to remuneration for 2024
Executive Directors’ remuneration
arrangements for 2024 will be largely
unchanged from prior years. Salaries have
been increased by 4% from 1January2024
in line with the increases received by
the wider workforce. The CEO’s salary is
therefore £426,550 and the CFO’s salary is
£364,000.
The maximum annual bonus opportunity
will continue to be 100% of salary. The
performance measures will be rebalanced
for 2024 to provide an equal split between
Adjusted Profit After Tax and Adjusted
Free Cash Flow. Bonuses will therefore be
based 40% on Adjusted Profit After Tax,
40% on Adjusted Free Cash Flow and 20%
on individual strategic objectives, including
measures linked to business strategy,
development and operational efficiency.
PSP awards will continue to be 150% of
salary. Vesting will be determined based
50% on TSR performance compared to
the FTSE SmallCap index over three years
from the date of grant, and 50% based
on Adjusted EPS performance for the
financial year ending 31 December 2026.
Further detail on the targets set for each
component is available on pages 104 to 105.
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Remuneration Committee Report continued
Remuneration paid for 2023
The approach to remuneration for 2023 has
been reviewed in the context of a resilient
financial performance and strong progress
against the Group’s strategic priorities in the
year.
The annual bonus targets for 2023 were
based on Adjusted Profit After Tax, Adjusted
Free Cash Flow and individual strategic
objectives, including measures linked to our
ESG strategy.
Strategic performance
• Adjusted Profit After Tax £17.3m
(2022: £17. 2m)
• Adjusted Free Cash Flow £18.0m
(2022: £30.7m)
• Adjusted EPS 3-year CAGR -10.5%
(2022: 13.0%)
• TSR 3-year performance
1
-46%
(2022: ‑16%)
1. TSR performance for 2023 has been calculated
over the three‑year period between 1 January 2021
and 31 December 2023.
Adjusted Profit After Tax performance
was £17.3m and Adjusted Free Cash Flow
was £18.0m. Adjusted Profit After Tax
was between target and the maximum,
as a result of above‑market growth and
successful leveraging of the Group’s lean
operating model. Adjusted Free Cash Flow
exceeded the maximum target set through
strategic and sustainable working capital
management.
The CEO and CFO both performed strongly
during the year and delivered good
progress against their strategic objectives
(further details are set out on page 103).
For2023, the Committee assessed the CEO
and CFO against the same objectives and
determined a payment of 10% out of a
maximum of 20% for this element.
The overall bonus payable to the CEO
is therefore 87% of maximum and the
overall bonus payable to the CFO is 87%
of maximum. The Committee believes
that this level of bonus is appropriate,
recognising the strong financial
performance in the year in challenging
market conditions and the strategic
progress of the business.
The Executive Directors were granted
PSP awards in March 2021. These awards
were based 50% on CAGR Adjusted EPS
performance in the three‑year period
ended 31 December 2023 and 50% on
TSR performance over a three‑year period
from the date of grant. CAGR Adjusted EPS
was ‑10.5% in the period, resulting in none
of this element of the award vesting. TSR
performance will be assessed to the third
anniversary of the date of award and we will
confirm performance in next year’s report.
TSR performance is currently tracking such
that this portion of the award would lapse
in full.
The Committee believes that the incentive
outcomes are a fair reflection of our
one‑year and three‑year performance and
therefore the Committee has not exercised
discretion in relation to incentive outcomes
during the year. We pride ourselves in our
enabling culture, which means that we
reward achievement, a key pillar in our
Remuneration Policy, and this supports
our decision not to exercise any downward
discretion.
TSR performance for the 2020 PSP award
was assessed over three years to the date
of vesting. In the 2022 report, we estimated
that total vesting for the 2020 PSP award
would be 26.25% of maximum, based on
Adjusted EPS performance to 31 December
2022 of 11.1p and TSR performance of
‑1% (below median) to 31 October 2022.
Following the year end, there was an
improvement in TSR performance from
‑1% to 24% (between median and upper
quartile), based on performance to the
date of vesting (13July2023). This resulted
in 47.2% of the TSR element of this award
vesting. The overall vesting of the award
therefore increased from the estimate
provided in the 2022 report to 49.84% of
maximum. As such, the value of the 2020
PSP awards has been restated in the single
figure table in this report.
Directorate changes
On 19 January 2023, we announced that
Matt Webb would be stepping down from
the Board and as CFO on 31 March 2023
after five years in the role. Full details of
Matt’s leaving arrangements, including
treatment of outstanding bonus and PSP
awards, can be found on page 106.
Matt was succeeded as CFO by Will Hoy,
who became an Executive Director on
1 March 2023 and CFO on 1 April 2023.
Will’s remuneration arrangements were
determined in line with the Remuneration
Policy and there were no buy‑out awards
made in respect of his appointment.
Wider workforce engagement
A Group‑wide employee engagement
survey was conducted in the year, the
findings of which are summarised on
page 59.
Our Non‑Executive Director responsible for
workforce engagement, Julia Hendrickson,
also conducted meetings with employees
from across the business to understand
their feedback. Her findings are summarised
on page 83.
I look forward to receiving your support for
our Annual Remuneration Report at the
AGM.
Tim Surridge
Remuneration Committee Chair
25 March 2024
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Annual Remuneration Report
The Directors’ Remuneration Report that follows has been prepared in accordance with the provisions of the 2018 UK Corporate Governance Code (“Code”), the Listing Rules,
theLargeand Medium‑sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013 and the Companies Act 2006.
Remuneration “at a glance”
How our policy was implemented in 2023
Key component Summary How we implemented in 2023
Base salary 2.5% increase to CEO’s salary, determined using the same
principles used to determine salary increases for the wider
workforce.
CFO’s salary set on appointment.
John Hornby – CEO Will Hoy – CFO
£410,140 per annum £350,000 per annum
Pension The CEO does not receive a pension allowance.
The CFO received a pension allowance of 5% of salary, in line
with the wider UK workforce rate.
n/a £17,500 p er annum
Benefits Benefits included car allowance/company car, mobile phone,
lifeinsurance and private medical insurance.
£3,938 £9,757
Annual bonus Maximum opportunity of 100% of salary in 2023.
Performance measures for the 2023 annual bonus were as
follows:
• 30% Adjusted Profit After Tax
• 50% Adjusted Free Cash Flow
• 20% individual strategic objectives
Outturn as a percentage of
maximum: 87%
£356,822
Outturn as a percentage of
maximum: 87%
£253,750
PSP An award of 100% of salary was made to the CEO in 2021. The
CFO was not in role at the time, and therefore did not receive a
2021 PSP award.
Performance measures for the 2021 award were as follows:
• 50% TSR relative to the FTSE SmallCap, excluding investment
trusts, over three years from the date of grant
• 50% CAGR Adjusted EPS in the three‑year period ended
31December 2023
Percentage of award vesting:
the Adjusted EPS target was
not met, resulting in 0%
vesting against this element.
The TSR performance will
be assessed to the third
anniversary of the date of the
award and we will confirm
performance in next year’s
report. TSR performance is
currently tracking such that
this element of the award
would lapse in full.
N/A
Shareholding requirements 200% of salary 8,814% 71%
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Summary of Remuneration Policy and implementation for 2024
The Remuneration Policy for Directors (“Policy”) was put to shareholders for approval at the AGM on 10 May 2023 and applies to payments made from this date. The following provides a
summary of the Policy along with details of how the Policy will be implemented during 2024. For full details of the Policy approved by shareholders, please refer to the 2022 Annual Report
and Accounts, which can be found at www.lucecoplc.com.
Element Operation Implementation in 2024
Base salary Normally reviewed annually. Any increases are normally effective
from 1 January.
No maximum but increases will normally be in line with the
increases awarded to other employees in the Group other than
in certain circumstances.
From 1 January 2024, salaries will be as follows:
• John Hornby – £426,550
• Will Hoy – £364,000
This represents a 4% increase, which is in line with the increases
received by the wider workforce.
Pension Executive Directors generally receive a contribution to a defined
contribution pension scheme or a cash allowance in lieu of
pension.
Maximum contribution/allowance is 5% of salary.
John Hornby does not participate in any pension arrangement.
Will Hoy will receive a pension contribution of 5% of salary, in line
with the pension opportunity for the UK workforce.
Benefits Benefits currently include: a company car or car allowance
(£9,000 p.a.), mobile phone, life insurance and private medical
insurance. Executive Directors may also participate in all
employee share plans on the same basis as other employees.
No change to operation.
Annual bonus Maximum opportunity of 100% of salary.
Normally paid in cash. Where an Executive Director has not met
the shareholding guideline, they will normally be expected to
invest 50% of their post‑tax annual bonus into Company shares.
Bonus starts accruing for threshold levels of performance. 50%
pays out for target performance, with full payout for achieving
stretching performance targets.
No change to operation or maximum opportunity level. The
performance measures will be rebalanced for 2024 to provide an
equal split between Adjusted Profit After Tax and Adjusted Free
Cash Flow.
The performance measures are therefore as follows:
• 40% on Adjusted Profit After Tax
• 40% on Adjusted Free Cash Flow
• 20% on individual strategic objectives
The Committee believes the balance of these measures
incentivises Executive Directors to continue to grow the business
and improve profit performance, to focus on operational
efficiencies and the generation of cash to fund growth, and to
achieve specific operational and strategic objectives.
Bonus targets are commercially sensitive and therefore have not
been disclosed. It is intended that targets will be disclosed in full
in the 2024 Directors’ Remuneration Report.
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Element Operation Implementation in 2024
PSP Maximum opportunity of 150% of salary.
Awards vest based on performance over a three‑year period
and are subject to a post‑vesting holding period for two years
following the end of the performance period.
No change to operation, maximum opportunity level or
performance measures.
The performance measures are as follows:
• 50% based on total shareholder return (“TSR”) relative to the
FTSE SmallCap index excluding investment trusts, measured
over three years from the date of grant. 25% of this portion
vests for median TSR, with 100% vesting for upper quartile
TSR. There will be straight‑line vesting between each point
• 50% based on the compound annual growth rate (“CAGR”)
of Adjusted Earnings Per Share (“EPS”) performance for the
financial year ending 31 December 2026. 25% of this portion
vests if the CAGR in the period is 5%, with 100% vesting if the
CAGR is 15%. There will be straight‑line vesting between each
point
The Committee believes these measures incentivise
executives to achieve excellent profit growth while generating
above‑market returns for shareholders compared to our peers.
Share ownership guidelines Executive Directors are expected to build and maintain a
holding of Luceco shares equal to at least 200% of base salary.
Following stepping down from the Board, Executive Directors
will normally be expected to maintain a minimum shareholding
of 200% of salary (or their actual shareholding if lower) for the
first 12 months following departure from the Board and 100% of
salary (or their actual shareholding if lower) for the subsequent
12 months. This guideline does not apply to any shares
purchased by the Executive Director.
No change to operation.
Malus and clawback
Annual bonus payments may be clawed back for a period of three years from the date of payment. Malus and clawback provisions apply under the PSP and CSOP from award to the
fifth anniversary of the grant date. The circumstances in which malus/clawback may apply are a material misstatement of financial results, an error in assessing performance or in the
information/assumptions used, a material failure of risk management, serious reputational damage, serious misconduct by the participant, or any other similar circumstances.
Executive Directors’ service contracts
John Hornby’s service contract is dated 14 October 2016. Will Hoy’s service contract is dated 20 February 2024. These are rolling service contracts with no fixed expiry date. The service
contract of the CEO is terminable on nine months’ written notice by either party. The service contract of the CFO is terminable on six months’ written notice by either party.
Summary of Remuneration Policy and implementation for 2024 continued
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External appointments
Executive Directors are permitted to hold Non‑Executive Director positions in other companies where it is considered appropriate and subject to approval by the Board. Disclosure of any
such earnings is required to be made to the Board, to shareholders and in the Annual Report and Financial Statements. For the year ended 31 December 2023, neither Executive Director
held any external directorship during the year.
Non-Executive Directors
Element Operation Implementation in 2024
Fees Paid in cash.
Our policy is to pay a basic fee for membership of the Board, and
additional fees for the SID and Chair of a Committee to take into
account the additional responsibilities and time commitment of
these roles.
From 1 January 2024, fees will be as follows:
• Chair – £130,000
• Non‑Executive Director base fee – £49,000
• SID, Audit and Remuneration Committee Chair fee – £11,200
This represents an increase of 20% to the Chair’s fee and an
increase of c.10% to the Non‑Executive Director base fee. It is
recognised that these increases are greater than the average
increase for the wider workforce. However, a review of Chair and
NED fees was undertaken during the year and it was concluded
that in order to more accurately reflect the time commitment,
skills and experience of our Chair and Non‑Executive Directors
that an increase was appropriate. These revised fees remain
within the lower quartile compared to other FTSE SmallCap
companies.
Benefits and expenses Reasonable costs in relation to travel and accommodation for
business purposes are reimbursed. The Group may meet any tax
liabilities that may arise on such expenses.
No change to operation.
Non-Executive Director terms of appointment
The dates of appointment for the Chair and Non‑Executive Directors are shown in the table below:
Non‑Executive Director Date of appointment
Giles Brand 1 May 2010
Caroline Brown 27 September 2016
Tim Surridge 27 September 2016
Pim Vervaat 1 September 2020
Julia Hendrickson 1 June 2022
The Chair and Non‑Executive Directors serve the Group on the basis of renewable letters of appointment which can be terminated by written notice by either party. The Chair’s
appointment is subject to three months’ notice and the other Non‑Executive Directors are subject to one month’s notice. No compensation is awarded on termination. In accordance with
the principles of the Code, the Chair, the Non‑Executive Directors and the Executive Directors are subject to voluntary re‑election by shareholders. Their appointments may be terminated
in the event of them not being re‑elected by shareholders or otherwise in accordance with the Articles.
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Alignment of our Policy with the UK Corporate Governance Code
The Committee considers that the current Remuneration Policy and its implementation appropriately address the following principles, as set out in the UK Corporate Governance Code.
Principle How the Committee has addressed this
Clarity The Committee is committed to providing open and transparent disclosures with regard to executive remuneration arrangements.
In addition, Julia Hendrickson acts as the designated Non‑Executive Director for workforce engagement and actively engages with
employees on a range of issues as part of this role.
Simplicity In determining the remuneration framework, the Committee was mindful of avoiding complexity and ensuring that arrangements are
easy to understand.
Our remuneration arrangements are simple in nature, comprising three main elements – fixed pay (comprising of base salary, pension
and benefits), variable short‑term incentives (annual bonus), and variable long‑term incentives (PSP awards). This framework is well
understood by both participants and shareholders.
Risk The Committee believes that the structure of remuneration arrangements does not encourage excessive risk‑taking.
The remuneration framework has a number of features which align remuneration outcomes with risk, including a two‑year post‑vesting
holding period applied to any PSP awards granted from 2020 onwards, and personal shareholding guidelines applying both in
employment and post‑employment.
In addition, malus and clawback provisions apply to both the annual bonus and PSP awards.
Predictability The Remuneration Policy outlines the threshold, target and maximum levels of pay that Executive Directors can earn in any given year
over the three‑year life of the approved Remuneration Policy. Actual incentive outcomes vary depending upon the level of performance
against various measures, with performance against targets normally disclosed in the Annual Report on Remuneration each year.
Proportionality The Committee is satisfied that the Remuneration Policy does not reward poor performance. Payment of the annual bonus and PSP is
subject to the achievement of stretching performance targets, which are clearly linked to the Group’s strategy.
Both the Committee and Executive Directors are cognisant of the pay and conditions for the wider workforce, and this is taken into
account when considering executive remuneration.
Additionally, the Committee retains the discretion to adjust formulaic outcomes under the annual bonus and/or PSP should it consider
that the outcome is not aligned to the underlying performance of the Company or individual.
Alignment to culture The performance measures that are used for the annual bonus and PSP are clearly linked to delivery of the Group’s KPIs. In addition,
20% of the annual bonus is based on achievement against non‑financial strategic targets, which ensures both financial and
non‑financial strategic goals are considered. Non‑financial goals reflect the Group’s sustainability objectives.
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Implementation of Remuneration Policy during 2023
Single figure of total remuneration (audited)
The table below sets out the single figure of total remuneration received by the Executive and Non‑Executive Directors for the years ended 31 December 2023 and 2022.
Director (£’000) Year
Basic
salary/fees Benefits Pension Total fixed
Annual
bonus
Long‑term
incentives
Total
variable Total
John Hornby 2023 410 4 — 414 357 —
1
357 771
2022 400 24 — 424 220 216
2
436 860
Will Hoy³ 2023 300 10 14 324 254 — 254 578
2022 54 — — 54 — — — 54
Giles Brand 2023 108 — — 108 — — — 108
2022 106 — — 106 — — — 106
Caroline Brown 2023 45 — — 45 — — — 45
2022 44 — — 44 — — — 44
Tim Surridge 2023 66 — — 66 — — — 66
2022 54 — — 54 — — — 54
Pim Vervaat 2023 56 — — 56 — — — 56
2022 54 — — 54 — — — 54
Julia Hendrickson
4
2023 45 — — 45 — — — 45
2022 25 — — 25 — — — 25
Former Director
Matt Webb
5
2023 96 3 5 104 57 — 57 161
2022 375 11 19 405 225 185
2
410 815
1. John Hornby was granted a PSP award in March 2021. The award was based 50% on CAGR Adjusted EPS performance in the three‑year period ended 31 December 2023 and 50% on TSR performance over a three‑year
period from the date of grant. The Adjusted EPS targets have not been met, resulting in 0% vesting against this element. TSR performance will be assessed to the third anniversary of the date of award and we will confirm
performance in next year’s report. TSR performance is currently tracking such that this portion of the award would lapse in full. The value disclosed in the single figure therefore assumes 0% of the award vests.
2. TSR performance for the 2020 PSP award was assessed to the date of vesting. In the 2022 report, we estimated that total vesting for the 2020 PSP award would be 26.25% of maximum, based on Adjusted EPS performance to
31 December 2022 of 11.1p and TSR performance of ‑1% (below median) to 31 October 2022. Following the year end, there was an improvement in TSR performance from ‑1% to 24% (between median and upper quartile), based
on performance to the date of vesting (13 July 2023). This resulted in 47.2% of the TSR element of this award vesting. The overall vesting of the award therefore increased from the estimate provided in the 2022 report to 49.84%
of maximum. The value of the 2020 PSP awards has been restated to reflect this, as well as the share price at vesting of 117p. The share price had decreased from 128p to 117p between grant and vesting. Therefore, none of the
value disclosed in the single figure is attributable to share price growth.
3. Will Hoy assumed an Executive Director position from 1 March 2023 and was appointed as Chief Financial Officer on 1 April 2023. Prior to this, he served as a Non‑Executive Director following his appointment to the Board on
1 September 2019. The figure shown in the basic fee/salary column for 2023 relates to his basic fee in respect of being a Non‑Executive Director to 28 February 2023 of £8,034, and his salary in respect of being an Executive
Director from 1 March 2023 of £291,667. The figures shown in the annual bonus column relate to his service as an Executive Director only. The figure shown in the basic fee/salary column for 2022 relates to his basic fee in
respect of being a Non‑Executive Director for that year.
4. Julia Hendrickson joined the Board on 1 June 2022 and fees are shown from this date.
5. Matt Webb stepped down from the Board and as Chief Financial Officer on 31 March 2023, see page 106 for further information. The remuneration shown in the table above is pro‑rated to that date.
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Explaining the single figure
Salary
For 2023, our approach was to focus salary increases on lower‑paid workers to provide additional support in the context of the macroeconomic environment. John Hornby’s salary was
increased from £400,000 to £410,140 (c.2.5% increase) and Matt Webb’s salary was increased from £375,000 to £384,375 (2.5% increase). These increases were determined using the same
principles used to determine salary increases for the wider workforce. Will Hoy’s salary was set at £350,000 on appointment as an Executive Director on 1 March 2023 and remained
unchanged when he assumed the role of CFO.
Benefits
Benefits for the year included private medical insurance, life insurance and a fully expensed car or cash equivalent.
Pension
Will Hoy and Matt Webb received pension contributions of 5% of base salary during the year, pro‑rated for their time in role. This is in line with the contribution levels available to other
employees in the UK. John Hornby did not receive a pension contribution from the Group.
Annual bonus
For the year ended 31 December 2023, the maximum annual performance bonus was 100% of base salary. The annual bonus was based on the following measures:
Measure Rationale Weighting
Adjusted Profit After Tax To incentivise executives to continue to grow the business and improve profit performance 30%
Adjusted Free Cash Flow To continue to focus executives on operational efficiencies and the generation of cash to fund growth 50%
Strategic objectives, including ESG metrics To incentivise executives to achieve specific operational and strategic business objectives 20%
Total 100%
Performance during 2023 against financial targets set was as follows:
Measure
Threshold
0% payout
Target
50% payout
Maximum
100% payout
Achievement
for 2023
Percentage of
bonus
payable
Adjusted Profit After Tax (30% weighting) £14.4m £16.0m £17.6m £17. 3m 91%
Adjusted Free Cash Flow (50% weighting) £14.7m £16. 3m £17.9m £18.0m 100%
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Strategic objectives
For 2023, the Committee assessed the CEO and CFO against the same objectives. These objectives were set at the start of 2023 and are set out in the table below.
Overview of objectives and performance Committee’s assessment of performance
• Good progress in positioning our electric vehicle charger offering for high growth,
with new EV chargers launched during 2023
• Acquisition of D-Line in February 2024, continuing strategy to secure attractive bolt-on
opportunities for the Group. Minority shareholding in eEnergy plc secured, enhancing
this existing partnership
• Strong progress in relation to the management and development of our China
operations, including improvements in productivity and product quality
• Progress in developing female leadership within the business, with the number of
women at senior management level increasing from 14% in 2022 to 24% in 2023, with
women now representing around half of our workforce (compared to 37% in 2022)
• Solid progress in developing our climate change strategy, including a “B” score for
our response to the CDP Climate Change questionnaire, sourcing of 100% renewable
energy for all Group operations in 2023, reduction in Scope 1 and Scope 2 emissions
compared to the base year of 2021, increased sales of low carbon products, and
achievement by DW Windsor of “Sustainability Project of the Year” from the Highway
Electrical Association for the Wandsworth Bridge project
The Committee judged that overall, performance against agreed objectives had been
good and that 10% out of a maximum of 20% should be paid for this element.
This performance against targets set therefore resulted in an overall bonus of 87% of maximum for both John Hornby and Will Hoy. Will Hoy’s 2023 bonus has been pro-rated for the
period he served as an Executive Director. Bonus payments are therefore as follows:
John Hornby £356,822
Will Hoy £253,750
The Committee also considered the underlying financial performance of the Company during 2023, taking into account performance against key financial and strategic performance
indicators as well as the experience of shareholders and other stakeholders during the period. The Committee also considered whether there had been a significant negative event
(suchas an ESG event) which would warrant an adjustment. The Committee concluded that the proposed outcomes were appropriate.
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Long-term incentives
John Hornby was granted a PSP award in March 2021. This award was based 50% on CAGR Adjusted EPS performance in the three‑year period ended 31 December 2023 and 50% on TSR
performance over a three‑year period from the date of grant. CAGR Adjusted EPS for the three‑year period year ended 31 December 2023 is ‑10.5% and therefore this portion of the award
will vest at 0% of maximum. The TSR performance period is not yet completed and we will provide details of final vesting in the 2024 Annual Report. TSR is currently tracking such that
there would be 0% vesting against this element.
Measure Weighting Threshold Maximum Achievement
Element
vesting
CAGR Adjusted EPS in the three‑year period ended 31 December 2023 50% 5% 15% ‑10.5% 0%
TSR relative to the FTSE SmallCap excluding investment trusts 50% Median Upper
quartile
TSR
measured
over three
years to
25 March 2024
0%
Therefore the vesting of the award shall be as follows:
Executive Director Date of grant
Number
of awards
granted
Number of
shares vesting
based on
estimated
performance
Dividend
equivalents
(number of
shares)
Total
number of
shares vesting
Total
estimated
value of award
vesting
1
John Hornby 26 March 2021 135, 347 — — — —
1. The value of the award vesting is based on the average share price over the last three months of the financial year ended 31 December 2023 being 117p. The estimated value of the vesting awards has been included within
the “single figure of total remuneration” table on page 101.
Overall, the Committee considers that the Remuneration Policy has operated as it intended during 2023 and that the pay outcomes are aligned with the experience of shareholders and
other stakeholders.
Share interests awarded during the year as long-term incentives (audited)
The following awards were granted under the PSP during the year.
Board Directors Role
Form
of award
Date
of award
Number
of shares
awarded
Face value
of award
1
Percentage
vesting for
achieving
minimum
performance
Performance
period
John Hornby Chief Executive Officer
Nil‑cost option over
ordinary shares of 0.05p
6 April
2023
492,956 £615,000 25% See below
Will Hoy Chief Financial Officer 350,561 £437,500 25% See below
1. Calculated based on a share price of 125p, being the average of the closing price for the three dealing dates preceding the date of award.
The awards will vest 50% subject to the Group’s Adjusted EPS and 50% subject to TSR performance relative to the FTSE SmallCap excluding investment trusts as outlined below.
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Performance condition
CAGR Adjusted EPS in the three‑year
period ending 31 December 2025
Rank of the Group’s TSR compared
to the comparator group
Extent to which the relevant
portion of the award vests
15% Upper quartile or above 100%
Between 5% and 15% Between median and upper quartile On a straight‑line basis between 25% and 100%
5% Median 25%
Less than 5% Below median 0%
TSR performance will be assessed based on performance over a three‑year period from the date of grant of awards. TSR is assessed based on the three‑month average at the beginning
and end of the performance period.
Shareholding guidelines
The Group encourages its Directors and employees to hold shares in the Group to strengthen their commitment to the organisation in terms of delivering the strategic objectives.
Executive Directors are expected to build and maintain a holding of Luceco shares equal to at least 200% of base salary (increased from 100% on 1 January 2020). Executive Directors
are expected to retain 50% of any shares that vest under any share incentive plans until this shareholding is reached. Where a Director has not met, or is not on course to meet, their
shareholding guideline they will also be expected to invest at least 50% of any post‑tax annual bonus earned into Luceco shares.
Directors’ shareholdings and share interests (audited)
The beneficial interests of the Directors in the ordinary shares of the Group are set out below. None of the Directors had any interest in the shares of any subsidiary company.
Executive Directors
Ordinary
shares
held at
22 March
2024
Ordinary
shares
held at
31 December
2023
Ordinary
shares
held at
31 December
2022
Nil cost
options
subject to
performance
measures
Nil cost
options not
subject to
performance
measures
Market value
options
subject to
performance
measures
Shareholding
requirement
(% of salary)
Shareholding
held at
31 December
2023
2
Requirement
met?
John Hornby 29,157,312 29,153,412 28,412, 532 824,416 — — 200% 8, 814% Yes
Will Hoy 201,263 201,263 45,000 363,852 — — 200% 71% No
Former Director
Matt Webb 715,078 715,078 215,078 — 1, 247,118 — 200% 444% Yes
1. Includes shares accrued to date in respect of dividend equivalents on unvested LTIP awards.
2. Shareholding as a percentage of salary.
Shares beneficially held count towards Executive Directors’ shareholding guidelines. Any unvested shares or unexercised nil cost options which are not subject to performance conditions
may count towards the guideline on a net of tax basis. The value of Executive Directors’ shareholding has been calculated using the share price on 31 December 2023 of 124p.
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Directors’ shareholdings and share interests (audited) continued
Non-Executive Directors
Ordinary
shares
held at
22 March
2024
Ordinary
shares
held at
31 December
2023
Ordinary
shares
held at
31 December
2022
Giles Brand
1
9,466,919 9,466,919 9,466,919
Caroline Brown — — —
Tim Surridge 63,041 63,041 44,331
Pim Vervaat 100,000 50,000 —
Julia Hendrickson — — —
1. Giles Brand is a Managing Partner of EPIC Investment Partners LLP and a director of its subsidiary, EPIC Investment Partners (UK) Limited. EPIC Investment Partners (UK) Limited is the investment manager of ESO Investments
2 Limited. ESO Investments 2 Limited owns 35,564,260 shares in the Group.
Matt Webb’s leaving arrangements
On 19 January 2023, we announced that Matt Webb would be stepping down from the Board and as CFO after five years in the role. Matt stepped down from the Board and as
ChiefFinancial Officer on 31 March 2023. He remained in the business until the end of his notice period to support the transition of the CFO role to Will Hoy. He was paid his salary, pension
and benefits for the period 1 April to 19 July 2023, equating to a total of £136,054, and received no payments in relation to his loss of office.
Matt was eligible to receive an annual bonus for 2023 for the period in employment from 1 January to 19 July 2023. He received a bonus of £127,431, which equated to 60% of his
maximum opportunity for this period. This was determined taking into account progress towards financial performance targets and his personal strategic objectives during his period of
employment. The amount shown in respect of the annual bonus in the single figure table on page 101 relates to his service as an Executive Director only.
Matt retained his 2020 PSP award as he was in employment at the date of vesting. The award vested as described earlier in this report, and is subject to the usual two‑year post‑vesting
holding period. He also retained his 2018 and 2019 PSP awards, which vested in 2021 and 2022 respectively and are subject to a two‑year post‑vesting holding period. His 2021 and 2022
PSP awards lapsed, and he was not granted a 2023 PSP award.
Payments to former Directors (audited)
There were no payments made to former Directors during the year.
Payments for loss of office (audited)
There were no payments made for loss of office during the year.
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Remuneration Committee Report continued
Performance graph and table
Review of past performance
The graph below shows the historical TSR of the Group, the FTSE SmallCap index exclusive of investment trusts and the FTSE All‑Share Electronics and Electrical Equipment index for the
period from IPO on 17 October 2016 to 31 December 2023. The Group has chosen these indices to reflect its size and the key sector in which it operates.
250
200
150
100
50
0
17 Oct
2016
31 Dec
2016
31 Dec
2017
31 Dec
2018
31 Dec
2020
31 Dec
2023
31 Dec
2022
31 Dec
2021
31 Dec
2019
Luceco
Price (p)
FTSE SmallCap ex investment trusts
FTSE All-Share Electronics and Electrical Equipment
The table below shows the CEO’s “single figure” remuneration for the ten years ended 31 December 2023.
£’000 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Total remuneration 251 314 337 365 504 726 699 1,553 860 771
Annual bonus (% of max) nil nil 50% 100% 90% 50% 55% 87%
LTIP vesting
1
(% of max) n/a n/a n/a n/a n/a 0% n/a
2
100% 49.84% 0%
3
1. No LTIPs were in place during the reporting periods 2012 to 2016. The first LTIP awards post‑IPO were granted in 2017, with vesting based on performance to 31 December 2019.
2. On 27 November 2018, John Hornby surrendered the 2018 PSP award granted to him on 27 July 2018. This award would have vested at 100% of maximum.
3. The PSP awards granted in 2021 are expected to lapse in full. The TSR performance period for these awards runs to 25 March 2024 and final vesting will be determined at this point.
The CEO received a reduced remuneration package during the period 2012 to 2014, reflective of the financial position of the Group, having undertaken extensive investment in its
Chinesemanufacturing operation and LED Lighting operation. His salary changed in 2015 and 2016 to better reflect the market rate of remuneration of a CEO in a similarly sized business.
With effect from 1 January 2018, the CEO accepted a temporary reduction in salary in response to the Group’s performance at that time. With effect from 1 January 2019, theCEO’s salary
reverted to £350,000. To recognise the increased size and complexity of the organisation, from 1 January 2022, the CEO’s salary was £400,000. From 1 January 2023, theCEO’s salary was
increased 2.5% to £410,000, applying the same principles used to determine salary increases for the wider workforce.
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Remuneration Committee Report continued
Annual percentage change in remuneration of Directors and employees
The following table sets out the change in remuneration paid to the Directors who served on the Board from 2019 to 2023 compared with the average percentage change for UK‑based
employees. The Committee considers this the most meaningful comparison as the Group does not have a harmonised salary and benefits structure across its global operations.
Furthermore, the majority of its overseas employees are based in Asia, where the pay structure is significantly different to that of the Executive Directors, which does not facilitate a
like‑for‑like comparison.
Executive Directors Non‑Executive Directors
John
Hornby
Will
Hoy
1
Matt
Webb
Giles
Brand
Caroline
Brown
2
Tim
Surridge
2
Pim
Vervaat
3
Julia
Hendrickson
4
UK
employees
2023 vs. 2022
Base salary/fees 2.5% 451.6% (74.4)% 2.5% 2.5% 22 .1% 2.5% 75.4% 7.5%
Benefits (83.8)% n/a (75.0)% — — — — — —
Bonus 62.2% n/a (74.5)% — — — — — 30.5%
2022 vs. 2021
Base salary/fees 8.3% 21.1% 18.4% 3.0% (13.2)% 3.0% 3.0% n/a 3.0%
Benefits 22.7% — 0.7% — — — — — —
Bonus 19.1% — 42.1% — — — — — (5.8)%
2021 vs. 2020
Base salary/fees 2.5% 8.9% 2.5% 2.5% (7.4)% 2.5% 207. 3% n/a 2.5%
Benefits 41.7% — (0.9)% — — — — — —
Bonus (43.1) % — (43.1) % — — — — — (4.5)%
2020 vs. 2019
Base salary/fees 3.0% 21.7% 3.0% 100% 3.0% 3.0% n/a n/a 3.0%
Benefits (44.3)% — — — — — — — —
Bonus (7. 3)% — (7. 3) % — — — — (1.5)%
1. Will Hoy assumed an Executive Director position from 1 March 2023 and was appointed as Chief Financial Officer on 1 April 2023. Prior to this, he served as a Non‑Executive Director following his appointment to the Board on
1 September 2019.
2. Will Hoy succeeded Caroline Brown as Chair of the Audit Committee in October 2021. Tim Surridge subsequently succeeded Will Hoy as Chair of the Audit Committee on 19 January 2023.
3. Pim Vervaat was appointed to the Board on 1 September 2020.
4. Julia Hendrickson joined the Board on 1 June 2022.
The main benefits provided include a company car or cash equivalent, medical cover and life assurance. There has been no change in the level of benefits provided to Group employees.
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Remuneration Committee Report continued
Relative importance of spend on pay
The table below shows the total amount paid by the Group to its employees and distributions to shareholders for 2023 and 2022.
£m
31 December
2023
31 December
2022 % change
Overall spend on pay for employees including Executive Directors
1
44.1 40.3 9.4%
Distributions to shareholders 7.2 10.9 (33.9%)
1. Figures are taken from note 4 of the consolidated financial statements.
CEO pay ratio
For the year ended 31 December 2023, the Chief Executive’s total remuneration as a ratio against the full‑time equivalent remuneration of UK employees is detailed in the table below:
Year Method
25th
percentile
pay ratio
Median
pay ratio
75th
percentile
pay ratio
2023 Option A 25 : 1 16 : 1 11 : 1
2022 Option B 27 : 1 17 : 1 11 : 1
2021 Option B 68 : 1 45 : 1 25 : 1
2020 Option B 30 : 1 21 : 1 11 : 1
2019 Option B 30 : 1 22 : 1 15 : 1
Year
25th
percentile
pay ratio
Median
pay ratio
75th
percentile
pay ratio
2023 Salary £26,675 £36,126 £54,835
Total pay £30,528 £47,265 £72,992
For 2023, the approach to calculating the ratios has been updated to Option A, as defined under the relevant regulations, rather than taking Option B as in previous years. Option A has
been applied in 2023 in order to provide the most up‑to‑date representation of the CEO’s pay relative to that of the UK workforce. The calculation utilises data analysed within our Gender
Pay Gap report, with employees at the three quartiles identified from this analysis based on the 2023‑24 snap‑shot date. Their respective single figure values for 2023 have then been
calculated. No estimates were required, and no elements of pay were omitted in calculating the relevant single figures.
The single figure values for individuals immediately above and below the identified employee at each quartile within the Gender Pay Gap analysis were also reviewed. It was determined
that the chosen individuals were representative of the 25th percentile, median and 75th percentile employees and therefore no adjustments were necessary.
The CEO pay ratio has been rounded to the nearest whole number and represents a small decrease on the 2022 ratio. This change is reflective of salary increases provided to the wider UK
workforce, where the largest increases have been given to the lowest paid. Had Option B been applied to the 2023 ratio, this change would not yet be visible as employee salary increases
given in 2023 would not have been included in the calculation. The Board has confirmed that the ratio is consistent with the Company’s wider policies on employee pay, reward and
progression. Pay for senior leaders within theGroup has a much greater emphasis on performance‑based pay through the annual bonus and the LTIP. The ratios are therefore likely to
vary year‑on‑year depending on bonus and LTIP outcomes.
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Remuneration Committee Report continued
Role of the Committee
The Committee assists the Board in determining its responsibilities in relation to the following aspects of remuneration:
• Setting the principles, parameters and governance framework to provide a transparent Remuneration Policy that aligns with the long‑term strategy of the business
• Determining the individual remuneration and benefits package of each of the Executive Directors and the Company Secretary, considering the interests of relevant stakeholders
• Monitoring the level and structure of remuneration of senior management in conjunction with the Executive Directors
• Reviewing the implementation and operation of any Group share option schemes, bonus schemes and long‑term incentive plans
The Committee is chaired by Tim Surridge. Pim Vervaat, Caroline Brown and Julia Hendrickson are also members of the Committee. There have been three meetings of the Committee
during the year. The Committee has met once since the year end and the date of issuing the Annual Report and Financial Statements to consider the implementation of the
Remuneration Policy for 2024 and to agree performance targets for 2024.
The Group Chair and other Non‑Executive Directors are invited to attend meetings. In addition, the CEO, the CFO and the HR Manager may attend meetings from time to time at the
invitation of the Committee and provide information and support as requested. Directors are not present when their own remuneration is being discussed.
During the remainder of 2024, the Committee is scheduled to meet at least twice and the areas that the Committee intends to focus attention on are as follows:
• The implementation of the Remuneration Policy for 2024 as outlined in this report
• Determining reward outcomes for 2024
• Review of remuneration trends and governance developments
Remuneration Committee advisers
During the year to 31 December 2023, the Committee engaged the services of external advisers Deloitte LLP (“Deloitte”).
Deloitte is a founding member of the Remuneration Consultants Group and adheres to its Code in relation to executive remuneration consulting in the UK. The Committee is satisfied
that the Deloitte engagement team which provide remuneration advice to the Committee do not have connections with Luceco plc or its Directors that may impair their independence.
The Committee reviewed the potential for conflicts of interest and judged that there were appropriate safeguards against such conflicts.
Deloitte’s fees are charged on a time and materials basis. During the year, Deloitte was paid £29,880 for advice provided to the Committee. Deloitte did not provide any additional
services to the Group during the year.
Shareholder voting
Shareholder voting in relation to the resolution to approve the Directors’ Remuneration Report (May 2023 AGM) and to approve the Remuneration Policy (May 2023 AGM) are as follows:
Votes for % for Votes against % against Votes withheld
To approve the Directors’ Remuneration Report (2023) 117,472,357 95.17% 5,959,262 4.83% 27,949
To approve the Remuneration Policy (2023) 117,475, 240 95.43% 5,629,767 4.57% 354,561
Tim Surridge
Remuneration Committee Chair
25 March 2024
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Luceco plc|Annual Report and Financial Statements 2023
Directors’ Report
Disclosures required under Listing Rule 9.8.4R
The information required to be disclosed under Listing Rule 9.8.4R, where applicable to
the Group, can be found in the Annual Report and Financial Statements at the references
provided below:
Listing Rule requirement
Annual Report
location
Interest capitalised Not applicable
Publication of unaudited financial information Not applicable
Details of long‑term incentive schemes Page 104
Waiver of emoluments by a Director Not applicable
Waiver of future emoluments by a Director Not applicable
Non‑pre‑emptive issues of equity for cash Not applicable
Non‑pre‑emptive issues of equity for cash by a major subsidiary Not applicable
Parent participation in a placing by a listed subsidiary Not applicable
Contracts of significance Not applicable
Provision of services by a controlling shareholder Pa g e 113
Dividend waivers Pa g e 114
Agreements with controlling shareholders Pa g e 114
Results and dividends
The Group’s profit for the year ended 31 December 2023 was £16.7m (2022: £11.0m);
details are shown in the Consolidated Income Statement on page 124. The Directors
recommend the payment of a final dividend of 3.2p per ordinary share which, subject to
the approval of shareholders at the AGM on 14 May 2024, will be paid on 17 May 2024 to
ordinary shareholders registered as members of the Company at the close of business
on 12 April 2024. The final date for elections under the Company’s dividend reinvestment
plan will be 25 April 2024. An interim dividend of 1.6p per share was paid during the year.
TheCompany’s dividend policy is to pay out between 40% and 60% of Adjusted Earnings
Per Share.
Directors
The Directors who held office during the year were:
• John Hornby
• Matt Webb (until 1 April 2023)
• Giles Brand
• Caroline Brown
• Will Hoy
• Julia Hendrickson
• Tim Surridge
• Pim Vervaat
Biographical details of the Directors appear on pages 79 and 80. Information on the
Directors’ remuneration, employee share schemes and service contracts is given in the
Remuneration Committee Report on pages 94 to 110.
Appointment and replacement of Directors
The rules about the appointment and replacement of Directors are contained in the
Company’s Articles. They provide that the Directors may be appointed by ordinary resolution
of the shareholders or by the Board. Directors appointed by the Board may only hold
office until the next AGM of the Group and then shall be eligible for election. The Group
may remove a Director by ordinary resolution where special notice has been given and
the necessary statutory procedures are complied with. In line with best practice corporate
governance, all Directors will seek election or re‑election at the AGM on 14 May 2024.
Powers of Directors
The general powers of the Directors are set out in Article 22 of the Company’s constitution.
This Article provides that the business of the Group shall be managed by the Board, which
may exercise all the powers of the Group, subject to any limitations imposed by applicable
legislation, the Articles and any directions given by special resolution of the shareholders of
the Group.
Compensation for loss of office
The Company does not have arrangements with any Director that would provide
compensation for loss of office or employment resulting from a takeover.
Future developments
In accordance with s414C(11) of the Companies Act 2006, the Group has disclosed future
developments within its Strategic Report on pages 1 to 74.
This report contains the additional information the Directors are required
to include in the Annual Report and Financial Statements in accordance
with the Companies Act 2006 and the Listing Rules.
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Directors’ Report continued
Corporate governance
A report on corporate governance and the Company’s compliance with the UK Corporate
Governance Code is set out on page 77 and forms part of this report by reference.
Post balance sheet events
On 29 February 2024, the Group acquired the entire issued share capital of D‑Line (Europe)
Limited (“D‑Line”) for £8.6m initial cash consideration and up to £3.8m of contingent
consideration. Further details can be found in note 26 of the consolidated financial
statements.
Research and development
The Directors consider that investment in research and development (“R&D”) is critical to
enable the Group to maintain its competitive advantage and continue to grow its market
share. The Group has a substantial specialist R&D function in China which works alongside
the UK R&D team. R&D expenditure in the year was £4.1m (2022: £3.6m), of which £1.8m
(2022: £1.7m) was capitalised and amortised.
Asset values
Property, plant and equipment is disclosed in note 9 of the consolidated financial
statements on pages 145 to 147. The Directors do not believe there is any material
difference between the carrying value and market value.
Financial instruments
An analysis of the Group’s financial instruments, risk management objectives and its
exposure to credit and liquidity risk are disclosed in note 20 of the consolidated financial
statements.
The Group’s exposure to fluctuations in foreign exchange rates and the steps it takes to
mitigate them are detailed in the principal risks and uncertainties on pages 66 to 71, and
the Chief Financial Officer’s Review on pages 28 to 35.
Global operations
The Group’s executive head office, accounting, domestic sales and support functions are
based in the UK. The Group has four UK sites in London, Telford, Mansfield and Hoddesdon.
The Group’s London facility serves as the Group’s head office, with the executive function
and certain sales and support functions based there. The Hoddesdon location is the
primary base for DW Windsor Group. The Mansfield location is the primary base for
Kingfisher Lighting. The Telford facility serves as the UK assembly and distribution centre,
accounting and support functions, and houses the remainder of the Group’s UK sales, as
well as a portion of the Group’s R&D function.
The Group’s manufacturing and product development functions are based in Jiaxing,
China. The Group also has sales offices with some support functions in Spain, Dubai, Mexico
and Ireland.
Political donations
No political donations were made and no political expenditure was incurred during the
year (2022: nil).
Employees
Information on how we promote employee involvement can be found on page 59. Details
of the Group’s employment policies and its approach to diversity and disability can be
found in the ESG Report on pages 57 and 58.
An explanation of the activities of the appointed Non‑Executive Director for workforce
engagement can be found on page 83.
UK employees are encouraged to participate in the Company’s performance through our
Share Incentive Plan, discussed on pages 166.
Section 172 and engagement with suppliers, customers and others
In its decision‑making, the Board has regard to each Director’s duty to promote the
success of the Company on behalf of the Company’s stakeholders, to foster the Company’s
relationships with employees, suppliers, members and others, and considers the effect of
the principal decisions taken by the Company during the financial year on the Company’s
stakeholders. This is set out in our s172 statement and the information in relation
tostakeholders on pages 62 to 65.
Greenhouse gas emissions
Details of the Group’s greenhouse gas emissions can be found in the “Creating a
sustainable future” section of the Environment, Social and Governance section on pages
38to 56.
Task Force on Climate-related Financial Disclosures (“TCFD”)
Details of the Group’s TCFD reporting, which is in line with the TCFD’s recommendations
and recommended disclosures, is outlined in the Environment, Social and Governance
section on pages 38 to 45.
Directors’ interests
During the year ended 31December2023, no Director had an interest in any third‑party
contract between the Company or any of its subsidiaries.
Directors’ shareholdings are disclosed in the Remuneration Committee Report on page
105. Details of Directors’ share options are set out in note 22 of the consolidated financial
statements.
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Directors’ Report continued
Directors’ conflicts of interest
In accordance with the Companies Act 2006 and its Articles, the Company has
arrangements in place to consider and, where appropriate, authorise any Directors’ direct
or indirect interests which may conflict with those of the Group. Authorisation is only
effective where the matter is put to a vote, excluding the Director who is subject to the
conflict authorisation. If a Director becomes aware that they or a connected party have
an interest in an existing or proposed transaction with the Group, they should notify the
Company Secretary as soon as possible. Directors have a continuing obligation to update
any changes to conflicts and the Board formally reviews any such conflicts periodically.
A register of conflicts or potential conflicts is maintained and available at Board meetings.
Directors’ liability and indemnity insurance
The Group maintains Directors’ and officers’ liability insurance, which gives appropriate
cover for legal action brought against its Directors. In addition, third‑party qualifying
indemnity provisions (as defined in s234 of the Companies Act 2006) for its Directors and
officers were in force during the year ended 31December2023 and remain in force. There
were no qualifying pension scheme indemnity provisions.
Articles of Association
A copy of the Articles of Association can beobtained from the Company’s registered office.
The Articles may only be amended byspecial resolution of the shareholders.
Share capital and waiver of pre-emption rights
The Group has one class of share in issue. The rights attached to each share are identical
and each share carries equal rights to dividends, return of capital on the winding up of the
Group and one vote at general meetings of the Group. There are no securities carrying
special rights. There are no restrictions on the transfer of shares in the Group (other than
following a service of notice under s793 of the Act) and there are no restrictions on any
voting rights or deadlines, other than those prescribed by law. The Group is not aware of
any arrangements between its shareholders which may result in the restriction on the
transfer of shares or voting rights. Further details of the rights and obligations attached
to the shares are set out in the Company’s Articles.
At the AGM on 10 May 2023, authority was given to the Directors to allot new ordinary
shares up to a nominal value of £26,800, equivalent to 33.33% of the issued share capital
of the Group. In addition, authority was given to the Directors to allot further new ordinary
shares up to a nominal value of £53,600, equivalent to 66.67% of the authorised share
capital of the Group. These authorities expire on the conclusion of the 2024 AGM. No shares
have been allotted under these authorities as at the date of this report.
At 31 December 2023, the Group had 160,800,000 fully paid ordinary shares of 0.05p each
in issue which are traded on the London Stock Exchange. Details of the share capital at
31December 2023 are disclosed in note 23 on page 167.
Authority for the Group to purchase its own shares
A resolution will be proposed at the 2024 AGM that the Company be authorised to
purchase up to approximately 6.5% of its ordinary shares at the Directors’ discretion. If the
resolution is passed, the new authority will lapse at the conclusion of the 2025 AGM or,
ifearlier, on 30 June 2025.
At the AGM held on 10 May 2023, authority was given for the Company to make market
purchases of its ordinary shares provided that the maximum aggregate number of ordinary
shares that may be purchased is limited to 10,150,000, with a minimum price of 0.05p per
share. The maximum price (exclusive of expenses) which may be paid for each ordinary
share shall be the higher of (i) an amount equal to 105% of the middle market quotations
for an ordinary share as derived from the London Stock Exchange Daily Official List for
the five business days immediately preceding the date on which the ordinary share is
purchased; and (ii) an amount equal to the higher of the price of the last independent trade
of any ordinary share and the highest current independent bid for an ordinary shareon
the trading venue where the purchase is carried out. These authorities shall expireat the
conclusion of the 2024 AGM.
Substantial shareholdings
The Company has been notified of the following disclosable interests in its issued share
capital in accordance with DTR 5 as at 31 December 2023 and at 22 March 2024 (being the
latest practicable date prior to the date of this report).
At 22 March 2024 At 31 December 2023
Shareholder
Number of
shares held % voting rights
Number of
shares held % voting rights
Apex Financial Services (Trust
Company) Limited
6,612,029 4 .11 6,570,939 4.09
Montanaro Asset Management
Limited
1
— — 5,050,000 3.14
BlackRock Inc 16,358,658 10.17 9,623,704 5.98
John Hornby
2
29,157, 312 18 .13 29,153,412 18.13
Giles Brand
2,3
45,031,179 28.00 45,031,179 28.00
1. From 31 December 2023 to 22 March 2024, the Company has not been notified by Montanaro Asset
Management Limited of any further disclosures in accordance with DTR 5.
2. Includes persons closely associated.
3. Giles Brand is a Managing Partner of EPIC Investment Partners LLP and a director of its subsidiary, EPIC
Investment Partners (UK) Limited. EPIC Investment Partners (UK) Limited is the investment manager of ESO
Investments 2 Limited. ESO Investments 2 Limited owns 35,564,260 shares in the Group.
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Directors’ Report continued
Provision of services by substantial shareholders
Giles Brand is Luceco plc’s Chair and Managing Partner of EPIC Investment Partners
(“EPIC”) LLP (formerly EPIC Private Equity LLP), which is controlled by ESO Investments 2
Limited. Giles Brand and ESO Investments 2 Limited are therefore connected parties and
substantial shareholders of the Company. Giles Brand was paid a monthly fee of £9,017
(£108,200 per annum) in respect of his services as Chair during 2023.
John Hornby has a service contract with the Group, as detailed on page 98, which is
available for inspection at the AGM and at the Group’s registered office. Further details
ofhis remuneration can be found in the Remuneration Committee Report on pages94
to110.
Significant agreements
The Group has a written and legally binding relationship agreement (in accordance with
LR 9.2.2ADR(1)) with its significant shareholders, ESO Investments 2 Limited (which controls
EPIC Investments LLP) and Giles Brand (“connected parties”), who collectively exercise or
control 28.0% of the voting rights. With respect to this agreement, both the Group and ESO
Investments 2 Limited have complied with the independence provisions and procurement
obligation as required under the UK Listing Rules.
The agreement remains in place until the connected parties cease to exercise or control
10% or more in aggregate of the total voting rights or if neither connected party has
exercised or controlled any voting rights for at least two years. The agreement would
automatically terminate if the Group’s shares ceased trading on the London Stock
Exchange or if the Group were to appoint an administrative receiver.
Change of control
Change of control provisions are included in the Group’s banking agreements. Should a
change of control event occur, the Group’s revolving credit facility would be subject to
immediate cancellation and the bank may call for immediate repayment of any balance
outstanding.
Shareholder waiver of dividends
There is an evergreen dividend waiver in place in respect of the shares held in the
Company’s Employee Benefit Trust. No dividends were paid in respect of these shares
during the year.
Directors’ statement regarding disclosure of information to theauditor
The Directors confirm that, so far as they are each aware, there is no relevant audit
information of which the Group’s auditor is unaware. The Directors also confirm that
they have taken all reasonable steps to make themselves aware of any relevant audit
information and to establish that the Group’s auditor is aware of that information.
Appointment of auditor
On the recommendation of the Audit Committee, resolutions will be proposed at the
2024 AGM to re‑appoint KPMG LLP as auditor of the Group and to authorise the Audit
Committee to set the auditor’s remuneration.
Annual General Meeting
The Group’s AGM will be held on 14May2024. Details of the resolutions to be proposed
atthe AGM are set out in the Notice of Meeting, which is provided to all shareholders.
The Directors’ Report was approved by the Board of Directors and authorised for issue
on25 March 2024.
By Order of the Board
Will Hoy
Chief Financial Officer
Company registered number: 05254883
Registered office:
Luceco plc
Building E Stafford Park
1 Stafford Park
Telford
Shropshire TF3 3BD
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Statement of Directors’ Responsibilities
The Directors are responsible for preparing
the Annual Report and the Group and
Parent Company financial statements
in accordance with applicable law and
regulations.
Company law requires the Directors to
prepare Group and Parent Company
financial statements for each financial
year. Under that law they are required to
prepare the Group financial statements in
accordance with UK‑adopted international
accounting standards and applicable
law and have elected to prepare the
Parent Company financial statements in
accordance with UK accounting standards
and applicable law, including FRS 102 The
Financial Reporting Standard applicable in
the UK and Republic of Ireland.
Under company law the Directors must not
approve the financial statements unless
they are satisfied that they give a true and
fair view of the state of affairs of the Group
and Parent Company and of the Group’s
profit or loss for that period. In preparing
each of the Group and Parent Company
financial statements, the Directors are
required to:
• select suitable accounting policies and
then apply them consistently;
• make judgements and accounting
estimates that are reasonable, relevant,
reliable and prudent;
• for the Group financial statements,
state whether they have been prepared
in accordance with UK‑adopted
international accounting standards;
for the Parent Company financial
statements, state whether applicable
UK accounting standards have been
followed, subject to any material
departures disclosed and explained in the
Parent Company financial statements;
• assess the Group and Parent Company’s
ability to continue as a going concern,
disclosing, as applicable, matters related
to going concern; and
• use the going concern basis of
accounting unless they either intend
to liquidate the Group or the Parent
Company or to cease operations, or have
no realistic alternative but to do so.
The Directors are responsible for keeping
adequate accounting records that are
sufficient to show and explain the Parent
Company’s transactions and disclose
with reasonable accuracy at any time the
financial position of the Parent Company
and enable them to ensure that its financial
statements comply with the Companies Act
2006. They are responsible for such internal
control as they determine is necessary
to enable the preparation of financial
statements that are free from material
misstatement, whether due to fraud or
error, and have general responsibility for
taking such steps as are reasonably open to
them to safeguard the assets of the Group
and to prevent and detect fraud and other
irregularities.
Under applicable law and regulations,
the Directors are also responsible for
preparing a Strategic Report, Directors’
Report, Directors’ Remuneration Report
and Corporate Governance Statement
that complies with that law and those
regulations.
The Directors are responsible for the
maintenance and integrity of the corporate
and financial information included
on the Group’s website. Legislation in
the UK governing the preparation and
dissemination of financial statements may
differ from legislation in other jurisdictions.
In accordance with Disclosure Guidance
and Transparency Rule (“DTR”) 4.1.16R, the
financial statements will form part of the
annual financial report prepared under
Disclosure Guidance and Transparency Rule
(“DTR”) 4.1.17R and 4.1.18R. The auditor’s
report on these financial statements
provides no assurance over whether the
annual financial report has been prepared
in accordance with those requirements.
Responsibility statement of the
Directors in respect of the annual
financial report
Each of the Directors whose names are
listed on pages 79 and 80 confirm that to
the best of our knowledge:
• the Group and Parent Company financial
statements, prepared in accordance
with the applicable set of accounting
standards, give a true and fair view of
the assets, liabilities, financial position
and profit or loss of the Company
and the undertakings included in the
consolidation taken as a whole; and
• the Strategic Report includes a fair review
of the development and performance
of the business and the position of the
issuer and the undertakings included
in the consolidation, taken as a whole,
together with a description of the
principal risks and uncertainties that they
face.
We consider the Annual Report and
Accounts, taken as a whole, is fair, balanced
and understandable and provides the
information necessary for shareholders
to assess the Group’s position and
performance, business model and strategy.
By Order of the Board
John Hornby
Chief Executive Officer
25 March 2024
Will Hoy
Chief Financial Officer
25 March 2024
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Financial
Statements
What's in this section
117 Independent Auditor’s Report
124 Consolidated Income Statement
125 Consolidated Statement of Comprehensive Income
126 Consolidated Balance Sheet
127 Consolidated Statement of Changes in Equity
129 Consolidated Cash Flow Statement
130 Notes to the Consolidated Financial Statements
169 Company Balance Sheet
170 Company Statement of Changes inEquity
171 Notes to the Company Financial Statements
175 Glossar y
177 Company Information
179 Advisers and Other Information
Strategic Report
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Financial StatementsGovernance
Independent Auditor’s Report
to the members of Luceco plc
1 Our opinion is unmodified
We have audited the financial statements of Luceco plc (“the Company”) for the year
ended 31 December 2023 which comprise the Consolidated Income Statement,
Consolidated Statement of Comprehensive Income, Consolidated Balance Sheet,
Consolidated Statement of Changes in Equity, Consolidated Cash Flow Statement,
Company Balance Sheet, Company Statement of Changes in Equity and the related
notes, including the accounting policies in note 1.
In our opinion:
• the financial statements give a true and fair view of the state of the Group’s and of the
Parent Company’s affairs as at 31 December 2023 and of the Group’s profit for the year
then ended;
• the Group financial statements have been properly prepared in accordance with
UK‑adopted international accounting standards;
• the Parent Company financial statements have been properly prepared in accordance
with UK accounting standards, including FRS 102 The Financial Reporting Standard
applicable in the UK and Republic of Ireland; and
• the financial statements have been prepared in accordance with the requirements of
theCompanies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK)
(“ISAs (UK)”) and applicable law. Our responsibilities are described below. We believe that
the audit evidence we have obtained is a sufficient and appropriate basis for our opinion.
Our audit opinion is consistent with our report to the Audit Committee.
We were first appointed as auditor by the shareholders on 20 February 2015 prior to
the Company’s becoming a public interest entity. The period of total uninterrupted
engagement is for the eight financial years ended 31 December 2023 as a public‑interest
entity and ten years in total. We have fulfilled our ethical responsibilities under, and we
remain independent of the Group in accordance with, UK ethical requirements including
the FRC Ethical Standard as applied to listed public interest entities. No non‑audit services
prohibited by that standard were provided.
Overview
Materiality: Group financial
statements as a whole
£1.05m (2022: £1.1m)
4.6% (2022: 4.8%) of normalised profit before tax
Coverage 97% (2022: 100%) of the total profits and losses that made
up Group profit before tax
Key audit matters vs 2022
Recurring risks Recoverability of finished goods
Parent Company: Recoverability of parent’s
debt due from Group entities
2 Key audit matters: our assessment of risks of material misstatement
Key audit matters are those matters that, in our professional judgement, were of most
significance in the audit of the financial statements and include the most significant
assessed risks of material misstatement (whether or not due to fraud) identified by
us, including those which had the greatest effect on: the overall audit strategy; the
allocation of resources in the audit; and directing the efforts of the engagement team.
We summarise below the key audit matters (unchanged from 2022), in decreasing order
of audit significance, in arriving at our audit opinion above, together with our key audit
procedures to address those matters and, as required for public interest entities, our
results from those procedures. These matters were addressed, and our results are based
on procedures undertaken, in the context of, and solely for the purpose of, our audit of the
financial statements as a whole, and in forming our opinion thereon, and consequently are
incidental to that opinion, and we do not provide a separate opinion on these matters.
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Independent Auditor’s Report continued
to the members of Luceco plc
2 Key audit matters: our assessment of risks of material misstatement continued
The risk Our response
Recoverability of finished goods
(excluding Luceco Electrical (Jiaxing)
Limited, DW Windsor Group Limited,
Kingfisher Lighting Limited and other
overseas components) included within
total finished goods of £32.4m
(2022: £36.5m)
Refer to page 89 (Audit Committee Report),
page 153 (accounting policy)
and page 13 (financial disclosures).
Subjective estimate:
The Group operates in an evolving industry in terms of technology,
legal standards and customer demand. These factors can lead to
obsolete inventory that is un‑sellable or only sellable at discounted
prices. Finished goods excluded from the key audit matter are
not considered to be materially sensitive to reasonable changes in
assumptions.
Inventories are carried at the lower of cost and net realisable value
with the result that the Directors apply judgement in estimating
the appropriate provisions for inventory based upon analysis of
inventory levels, discontinued inventory and sales margins.
The level of estimation uncertainty is not such that there is a
significant risk of material adjustment to the carrying amounts in
the next financial year, however given the nature of the operations of
the Group this is the area to which we directed our audit effort.
Our procedures included:
• Benchmarking assumptions: We assessed the Directors’
assumptions behind the provision against finished goods
against available data on selling price(s) of these goods; and
• Tests of detail: We obtained an understanding of the Directors’
process in calculating the provision and we calculated the
inventory provision using alternative methods, comparing these
results and investigating differences.
We performed the tests above rather than seeking to rely on any
of the Group’s controls because the nature of the balance is such
that we would expect to obtain audit evidence primarily through
the detailed procedures described.
Our results
• As a result of our work, we consider the recoverable amount of
finished goods excluding Luceco Electrical (Jiaxing) Limited, DW
Windsor Group Limited, Kingfisher Lighting Limited and other
overseas components to be acceptable (2022: Recoverability
of finished goods (excluding Luceco Electrical (Jiaxing) Limited,
DW Windsor Group Limited and Kingfisher Lighting Limited:
acceptable).
The risk Our response
Parent Company risk: Recoverability of
parent’s debt due from Group entity
(£75.7m; 2022: £84.5m)
Refer to page 90 (Audit Committee Report)
and page 30 (financial disclosures).
Low risk, high value:
The carrying amount of the intra‑Group debtor balance represents
93.5% (2022: 95.2%) of the Parent Company’s total assets.
Their recoverability is not at a high risk of significant misstatement
or subject to significant judgement.
However, due to their materiality in the context of the Parent
Company financial statements, this is considered to be the area that
had the greatest effect on our overall Parent Company audit.
Our procedures included:
• Test of details: For the intra‑group debtor counterparty
representing 100% (2022: 100%), evaluating the likely risk of
default with reference to the Company’s definition of default
and those subsidiaries’ performance against forecasts and
forecasts of future profitability.
We performed the tests above rather than seeking to rely on any
of the Company’s controls because the nature of the balance is
such that we would expect to obtain audit evidence primarily
through the detailed procedures described.
Our results
• We found the Group’s conclusion that there is no impairment of
the parent’s debt due from Group entity to be acceptable (2022:
acceptable).
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Normalised Group profit
before tax
£22.9m (2022: £24.3m)
Group materiality
£1.05m (2022: £1.1m)
£1.05m
Whole financial
statements materiality
(2022: £1.1m)
£0.78m
Whole financial
statements performance
materiality (2022: £0.82m)
£0.84m
Range of materiality at
three components (£0.2m to £0.8m)
(2022: Range of materiality at four
components £0.34m to £0.88m)
£0.05m
Misstatements reported to
the Audit Committee (2022: £0.05m)
Normalised PBT
Group materiality
3 Our application of materiality and an overview of the scope of our audit
Materiality for the Group financial statements as a whole was set at £1.05m (2022: £1.1m),
determined with reference to a benchmark of Group profit before tax (PBT). We normalised
PBT by adding back adjustments that do not represent the normal, continuing operations
of the Group and additionally in 2022 by averaging over four years. The items we adjusted
for were loss on remeasurement of derivative instruments of £3.9m (2022: determined
with reference to a benchmark of Group profit before tax, normalised to exclude the Sync
EV acquisition and related costs of £1.2m, reversal of restructuring expenses of £1m and
a loss on remeasurement of derivative instruments of £5.7m) of which it represents 4.6%
(2022:4.8%).
Materiality for the Parent Company financial statements as a whole was set at £0.2m
(2022: £0.34m), determined with reference to a benchmark of the Parent Company’s total
assets, of which it represents 0.26% (2022: 0.38%).
In line with our audit methodology, our procedures on individual account balances and
disclosures were performed to a lower threshold, performance materiality, so as to reduce
to an acceptable level the risk that individually immaterial misstatements in individual
account balances add up to a material amount across the financial statements as a whole.
Performance materiality was set at 75% (2022: 75%) of materiality for the financial
statements as a whole, which equates to £0.78m (2022: £0.82m) for the Group and £0.16m
(2022: £0.25m) for the Parent Company. We applied this percentage in our determination
of performance materiality because we did not identify any factors indicating an elevated
level of risk.
We agreed to report to the Audit Committee any corrected or uncorrected identified
misstatements exceeding £52,500 (2022: £55,000), in addition to other identified
misstatements that warranted reporting on qualitative grounds.
Of the Group’s 20 (2022: 22) reporting components, we subjected three (2022: four) to
full‑scope audits for Group purposes and nine (2022: eight) to specified risk‑focused audit
procedures. The latter were not individually financially significant enough to require a
full‑scope audit for Group purposes, but did present specific individual risks that needed
tobe addressed.
We subjected nine (2022: eight) components to specified risk‑focused audit procedures
over cash, six components (2022: eight) over inventory, two components (2022: one) over
revenue and two components (2022: one) over cost of sales.
The components within the scope of our work accounted for the percentages illustrated
opposite.
Independent Auditor’s Report continued
to the members of Luceco plc
Full scope for Group audit purposes 2023
Specified risk‑focused audit procedures 2023
Residual components
Full scope for Group audit purposes 2022
Specified risk‑focused audit procedures 2022
Group revenue
99%
(2022: 100%)
30
69
25
75
Group total
assets
100%
(2022: 100%)
21
79
15
82
Group profit
before tax
98%
(2022: 100%)
14
84
15
78
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Independent Auditor’s Report continued
to the members of Luceco plc
3 Our application of materiality and an overview of the scope of our audit
continued
The Group team instructed component auditors as to the significant areas to be covered
and the information to be reported back. The Group team approved the component
materialities, which ranged from £0.2m to £0.84m (2022: £0.34m to £0.88m), having regard
to the mix of size and risk profile of the Group across the components. The work on one of
the three components (2022: one of the four components) was performed by component
auditors and the rest, including the audit of the Parent Company, was performed by
the Group team. The Group team performed procedures on the items excluded from
normalised Group profit before tax.
The scope of the audit work performed was predominantly substantive as we placed
limited reliance upon the Group’s internal control over financial reporting.
The Group team visited one (2022: one) component in China (2022: China) to assess the
audit risk and strategy. Video and telephone conference meetings were also held with the
component auditors. At these visits and meetings, the findings reported to the Group team
were discussed in more detail, and any further work required by the Group team was then
performed by the component auditor.
4 Going concern
The Directors have prepared the financial statements on the going concern basis as they
do not intend to liquidate the Group or the Company or to cease their operations, and as
they have concluded that the Group’s and the Company’s financial position means that
this is realistic. They have also concluded that there are no material uncertainties that could
have cast significant doubt over their ability to continue as a going concern for at least a
year from the date of approval of the financial statements (“the going concern period”).
We used our knowledge of the Group, its industry, and the general economic environment
to identify the inherent risks to its business model and analysed how those risks might
affect the Group’s and Parent Company’s financial resources or ability to continue
operations over the going concern period. The risks that we considered most likely to
adversely affect the Group’s and Parent Company’s available financial resources and
metrics relevant to debt covenants over this period were:
• Concentration risks with associated operations
• Macroeconomic, political and environmental risks
We considered whether these risks could plausibly affect the liquidity or covenant
compliance in the going concern period by assessing the degree of downside assumption
that, individually and collectively, could result in a liquidity issue, taking into account the
Group’s current and projected cash and facilities (a reverse stress test). We also assessed
the completeness of the going concern disclosure.
Our conclusions based on this work:
• we consider that the Directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate;
• we have not identified, and concur with the Directors’ assessment that there is not,
a material uncertainty related to events or conditions that, individually or collectively,
may cast significant doubt on the Group’s or Company’s ability to continue as a going
concern for the going concern period;
• we have nothing material to add or draw attention to in relation to the Directors’
statement in note 1 to the financial statements on the use of the going concern basis of
accounting with no material uncertainties that may cast significant doubt over the Group
and Company’s use of that basis for the going concern period, and we found the going
concern disclosure in note 1 to be acceptable; and
• the related statement under the Listing Rules set out on page 111 is materially consistent
with the financial statements and our audit knowledge.
However, as we cannot predict all future events or conditions and as subsequent events
may result in outcomes that are inconsistent with judgements that were reasonable at the
time they were made, the above conclusions are not a guarantee that the Group or the
Company will continue in operation.
5 Fraud and breaches of laws and regulations – ability to detect
Identifying and responding to risks of material misstatement due to fraud
To identify risks of material misstatement due to fraud (“fraud risks”) we assessed events
or conditions that could indicate an incentive or pressure to commit fraud or provide an
opportunity to commit fraud. Our risk assessment procedures included:
• Enquiring of Directors, the Audit Committee and inspection of policy documentation as
to the Group’s high‑level policies and procedures to prevent and detect fraud and the
Group’s channel for “whistleblowing”, as well as whether they have knowledge of any
actual, suspected or alleged fraud
• Reading Board, Audit Committee, Remuneration and Nomination Committee minutes
• Considering remuneration incentive schemes and performance targets for Directors
including the EPS target for management remuneration
• Using analytical procedures to identify any unusual or unexpected relationships
• Consultation with forensic specialists to brainstorm over plausible fraud risk factors
We communicated identified fraud risks throughout the audit team and remained alert
to any indications of fraud throughout the audit. This included communication from the
Group audit team to full scope component audit teams of relevant fraud risks identified at
the Group level and request to full scope component audit teams to report to the Group
audit team any instances of fraud that could give rise to a material misstatement at the
Group level.
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Independent Auditor’s Report continued
to the members of Luceco plc
5 Fraud and breaches of laws and regulations – ability to detect continued
Identifying and responding to risks of material misstatement due to fraud continued
As required by auditing standards, and taking into account possible pressures to meet
profit targets and our overall knowledge of the control environment, we perform
procedures to address the risk of management override of controls, in particular the risk
that Group and component management may be in a position to make inappropriate
accounting entries. On this audit we do not believe there is a fraud risk related to revenue
recognition because even though there is perceived pressure to inflate revenue to meet
the incentive thresholds, the opportunity to inflate revenue does not exist as the revenue
recognition does not involve complex judgement.
We did not identify any additional fraud risks.
Identifying and responding to risks of material misstatement due to non-compliance
with laws and regulations
We identified areas of laws and regulations that could reasonably be expected to have
a material effect on the financial statements from our general commercial and sector
experience and through discussion with the Directors and other management as
required by auditing standards, and from inspection of the Group’s regulatory and legal
correspondence and discussed with the Directors and other management the policies and
procedures regarding compliance with laws and regulations.
As the Group is regulated, our assessment of risks involved gaining an understanding of
the control environment including the entity’s procedures for complying with regulatory
requirements.
We communicated identified laws and regulations throughout our team and remained
alert to any indications of non‑compliance throughout the audit. This included
communication from the Group audit team to full‑scope component audit teams of
relevant laws and regulations identified at the Group level, and a request for full scope
component auditors to report to the Group audit team any instances of non‑compliance
with laws and regulations that could give rise to a material misstatement at the Group level.
The potential effect of these laws and regulations on the financial statements varies
considerably.
Firstly, the Group is subject to laws and regulations that directly affect the financial
statements including financial reporting legislation (including related companies
legislation), distributable profits legislation and taxation legislation and we assessed the
extent of compliance with these laws and regulations as part of our procedures on the
related financial statement items.
Secondly, the Group is subject to many other laws and regulations where the
consequences of non‑compliance could have a material effect on amounts or disclosures
in the financial statements, for instance through the imposition of fines or litigation. We
identified the following areas as those most likely to have such an effect: health and
safety, anti‑bribery, employment law and certain aspects of company legislation. Auditing
standards limit the required audit procedures to identify non‑compliance with these
laws and regulations to enquiry of the Directors and other management and inspection
of regulatory and legal correspondence, if any. Therefore, if a breach of operational
regulationsis not disclosed to us or evident from relevant correspondence, an audit will
notdetect that breach.
We discussed with the Audit Committee matters related to actual or suspected breaches
of laws or regulations, for which disclosure is not necessary, and considered any
implications for our audit.
Context of the ability of the audit to detect fraud or breaches of law or regulation
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not
have detected some material misstatements in the financial statements, even though we
have properly planned and performed our audit in accordance with auditing standards.
For example, the further removed non‑compliance with laws and regulations is from the
events and transactions reflected in the financial statements, the less likely the inherently
limited procedures required by auditing standards would identify it.
In addition, as with any audit, there remained a higher risk of non‑detection of fraud,
as these may involve collusion, forgery, intentional omissions, misrepresentations, or
the override of internal controls. Our audit procedures are designed to detect material
misstatement. We are not responsible for preventing non‑compliance or fraud and cannot
be expected to detect non‑compliance with all laws and regulations.
6 We have nothing to report on the other information in the Annual Report
The Directors are responsible for the other information presented in the Annual Report
together with the financial statements. Our opinion on the financial statements does not
cover the other information and, accordingly, we do not express an audit opinion or, except
as explicitly stated below, any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether, based
on our financial statements audit work, the information therein is materially misstated or
inconsistent with the financial statements or our audit knowledge. Based solely on that
work we have not identified material misstatements in the other information.
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Independent Auditor’s Report continued
to the members of Luceco plc
6 We have nothing to report on the other information in the Annual Report
continued
Strategic Report and Directors’ Report
Based solely on our work on the other information:
• we have not identified material misstatements in the Strategic Report and the Directors’
Report;
• in our opinion the information given in those reports for the financial year is consistent
with the financial statements; and
• in our opinion those reports have been prepared in accordance with the Companies
Act 2006.
Directors’ Remuneration Report
In our opinion the part of the Directors’ Remuneration Report to be audited has been
properly prepared in accordance with the Companies Act 2006.
Disclosures of emerging and principal risks and longer-term viability
We are required to perform procedures to identify whether there is a material
inconsistency between the Directors’ disclosures in respect of emerging and principal risks
and the viability statement, and the financial statements and our audit knowledge.
Based on those procedures, we have nothing material to add or draw attention to in
relation to:
• the Directors’ confirmation on page 84 that they have carried out a robust assessment
of the emerging and principal risks facing the Group, including those that would
threaten its business model, future performance, solvency and liquidity;
• the principal risks and uncertainties disclosures describing these risks and how emerging
risks are identified, and explaining how they are being managed and mitigated; and
• the Directors’ explanation in the Viability Statement of how they have assessed the
prospects of the Group, over what period they have done so and why they considered
that period to be appropriate, and their statement as to whether they have a reasonable
expectation that the Group will be able to continue in operation and meet its liabilities
as they fall due over the period of their assessment, including any related disclosures
drawing attention to any necessary qualifications or assumptions.
We are also required to review the Viability Statement, set out on pages 72 and 73
under the Listing Rules. Based on the above procedures, we have concluded that the
above disclosures are materially consistent with the financial statements and our audit
knowledge.
Our work is limited to assessing these matters in the context of only the knowledge
acquired during our financial statements audit. As we cannot predict all future events or
conditions and as subsequent events may result in outcomes that are inconsistent with
judgements that were reasonable at the time they were made, the absence of anything
to report on these statements is not a guarantee as to the Group’s and Company’s
longer‑term viability.
Corporate governance disclosures
We are required to perform procedures to identify whether there is a material
inconsistency between the Directors’ corporate governance disclosures and the financial
statements and our audit knowledge.
Based on those procedures, we have concluded that each of the following is materially
consistent with the financial statements and our audit knowledge:
• the Directors’ statement that they consider that the Annual Report and Financial
Statements taken as a whole is fair, balanced and understandable, and provides the
information necessary for shareholders to assess the Group’s position and performance,
business model and strategy;
• the section of the Annual Report describing the work of the Audit Committee, including
the significant issues that the Audit Committee considered in relation to the financial
statements, and how these issues were addressed; and
• the section of the Annual Report that describes the review of the effectiveness of the
Group’s risk management and internal control systems.
We are required to review the part of the Corporate Governance Report relating to the
Group’s compliance with the provisions of the UK Corporate Governance Code specified
by the Listing Rules for our review. We have nothing to report in this respect.
7 We have nothing to report on the other matters on which we are required to
report by exception
Under the Companies Act 2006, we are required to report to you if, in our opinion:
• adequate accounting records have not been kept by the Parent Company, or returns
adequate for our audit have not been received from branches not visited by us; or
• the Parent Company financial statements and the part of the Directors’ Remuneration
Report to be audited are not in agreement with the accounting records and returns; or
• certain disclosures of Directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
We have nothing to report in these respects.
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Independent Auditor’s Report continued
to the members of Luceco plc
8 Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page 115, the Directors are
responsible for: the preparation of the financial statements including being satisfied that
they give a true and fair view; such internal control as they determine is necessary to enable
the preparation of financial statements that are free from material misstatement, whether
due to fraud or error; assessing the Group and Parent Company’s ability to continue as a
going concern, disclosing, as applicable, matters related to going concern; and using the
going concern basis of accounting unless they either intend to liquidate the Group or the
Parent Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether the financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to
issue our opinion in an auditor’s report. Reasonable assurance is a high level of assurance,
but does not guarantee that an audit conducted in accordance with ISAs (UK) will always
detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of the financial
statements.
A fuller description of our responsibilities is provided on the FRC’s website at www.frc.org.
uk/auditorsresponsibilities.
The Company is required to include these financial statements in an annual financial
report prepared under Disclosure Guidance and Transparency Rule 4.1.17R and 4.1.18R.
This auditor’s report provides no assurance over whether the annual financial report has
been prepared in accordance with those requirements.
9 The purpose of our audit work and to whom we owe our responsibilities
This report is made solely to the Company’s members, as a body, in accordance with
Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken
so that we might state to the Company’s members those matters we are required to state
to them in an auditor’s report and for no other purpose. To the fullest extent permitted by
law, we do not accept or assume responsibility to anyone other than the Company and the
Company’s members, as a body, for our audit work, for this report, or for the opinions we
have formed.
Gordon Docherty
(Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
One Snowhill
Snow Hill Queensway
Birmingham B4 6GH
25 March 2024
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£m | Note | 2023 | 2022 |
Revenue | 2 | ||
Cost of sales | ( | ( | |
Gross profit | |||
Distribution expenses | ( | ( | |
Administrative expenses | ( | ( | |
Operating profit | 3 | ||
Finance expense | 5 | ( | ( |
Net finance expense | ( | ( | |
Profit before tax | |||
Taxation | 6 | ( | ( |
Profit for the year | |||
| Earnings Per Share (pence) | |||
Basic | 7 | ||
Diluted | 7 | ||
| 1. Re‑presented in respect of 2022 as detailed in note 1 to the accounts. | |||
Adjusted 1 results | Note | 2023 | 2022 |
Adjusted Operating Profit | 1 | ||
Adjusted Profit Before Tax | 1 | ||
Adjusted Profit After Tax | 1 | ||
Adjusted Basic Earnings Per Share | 7 | ||
Adjusted Diluted Earnings Per Share | 7 |
1
1. See note 1 for alternative performance measures.
The accompanying notes on pages 130 to 168 form an integral part of these financial statements.
Consolidated Income Statement
for the year ended 31 December 2023
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Consolidated Statement of Comprehensive Income
for the year ended 31 December 2023
£m | 2023 | 2022 |
Profit for the year | ||
| Other comprehensive income – amounts that may be reclassified to profit or loss in the future: | ||
Foreign exchange translation differences – foreign operations | ( | |
| Other comprehensive income – amounts that will not be reclassified to profit or loss: | ||
Changes in the fair value of equity investments at fair value through other comprehensive income | ||
Total comprehensive income for the year |
All results are from continuing operations.
The accompanying notes on pages 130 to 168 form an integral part of these financial statements.
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Consolidated Balance Sheet
at 31 December 2023
£m | Note | 2023 | 2022 |
| Non-current liabilities | |||
Interest‑bearing loans and borrowings | 16 | ||
Other financial liabilities | 17 | ||
Deferred tax liability | 12 | ||
Financial liabilities measured at fair value through profit or loss | 20 | ||
Provisions | 17 | ||
Total liabilities | |||
Net assets | |||
| Equity attributable to equity holders | |||
| oftheparent | |||
Share capital | 23 | ||
Share premium | 23 | ||
Other reserves | 23 | ||
Treasury reserve | 23 | ( | ( |
Retained earnings | |||
Total equity |
The accompanying notes on pages 130 to 168 form an integral part of these financial
statements.
These financial statements were approved by the Board of Directors on 25 March 2024 and
were signed on its behalf by:
John Hornby Will Hoy
Chief Executive Officer Chief Financial Officer
Company registered number: 05254883
£m | Note | 2023 | 2022 |
| Non-current assets | |||
Property, plant and equipment | 9 | ||
Right‑of‑use assets | 9 | ||
Intangible assets | 10 | ||
Investment in equity instruments | 11 | ||
Financial assets measured at fair value through profit or loss | 20 | ||
Deferred tax asset | 12 | ||
| Current assets | |||
Inventories | 13 | ||
Trade and other receivables | 14 | ||
Financial assets measured at fair value through profit or loss | 20 | ||
Current tax asset | |||
Cash and cash equivalents | 15 | ||
Total assets | |||
| Current liabilities | |||
Trade and other payables | 18 | ||
Financial liabilities measured at fair value through profit or loss | 20 | ||
Other financial liabilities | 17 | ||
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Consolidated Statement of Changes in Equity
for the year ended 31 December 2023
| Share | Share | Translation | Retained | Treasury | Total | |
| £m | capital | premium | reserve | earnings | reserve | equity |
Balance at 1 January 2022 | ( | |||||
| Total comprehensive income | ||||||
Profit for the year | ||||||
Foreign currency translation differences on investments in overseas entities | ||||||
Currency translation differences | ( | ( | ||||
Total comprehensive income for the year | ||||||
| Transactions with owners in their capacity as owners | ||||||
Dividends | ( | ( | ||||
Purchase of own shares | ( | ( | ||||
Disposal of own shares | ( | |||||
Deferred tax on share‑based payment transactions | ( | ( | ||||
Corporation tax on foreign currency translation differences on investments in overseas entities | ( | ( | ||||
Share‑based payments charge | ||||||
Total transactions with owners in their capacity as owners | ( | ( | ( | |||
Balance at 31 December 2022 | ( |
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Consolidated Statement of Changes in Equity continued
for the year ended 31 December 2023
| Financial | |||||||
| Share | Share | Translation | assets | Retained | Treasury | Total | |
| £m | capital | premium | reserve | at FVOCI | earnings | reserve | equity |
Balance at 31 December 2022 | ( | ||||||
| Total comprehensive income | |||||||
Profit for the year | |||||||
Investment revaluation | |||||||
Currency translation differences | ( | ( | |||||
Total comprehensive income for the year | ( | ||||||
| Transactions with owners in their capacity as owners | |||||||
Dividends | ( | ( | |||||
Purchase of own shares | ( | ( | |||||
Disposal of own shares | ( | ||||||
Deferred tax on share‑based payment transactions | |||||||
Share‑based payments charge | |||||||
Total transactions with owners in their capacity as owners | ( | ( | |||||
Balance at 31 December 2023 | ( |
The accompanying notes on pages 130 to 168 form an integral part of these financial statements.
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Consolidated Cash Flow Statement
for the year ended 31 December 2023
£m | Note | 2023 | 2022 |
| Cash flows from operating activities | |||
Profit for the year | |||
| Adjustments for: | |||
Depreciation and amortisation | 9,10 | ||
Financial expense | 5 | ||
Taxation | 6 | ||
Loss on disposal of tangible assets | |||
Increase in provisions | |||
Share‑based payments charge | |||
Other non‑cash items | ( | ||
Operating cash flow before movement in working capital | |||
(Increase)/decrease in trade and other receivables | ( | ||
Decrease in inventories | |||
Decrease in trade and other payables | ( | ( | |
Cash from operations | |||
Tax paid | ( | ( | |
Net cash from operating activities |
1
£m | Note | 2023 | 2022 |
| Cash flows from investing activities | |||
| Acquisition of property, plant and equipment | ( | ( | |
Acquisition of other intangible assets | 10 | ( | ( |
Disposal of tangible assets | |||
Acquisition of subsidiary | ( | ||
Investments | 11 | ( | |
Net cash used in investing activities | ( | ( | |
| Cash flows from financing activities | |||
Repayment of borrowings | ( | ( | |
Interest paid | ( | ( | |
Dividends paid | ( | ( | |
Finance lease liabilities | 17 | ( | ( |
Purchase of own shares | 23 | ( | ( |
Net cash used in financing activities | ( | ( | |
Net decrease in cash and cash equivalents | ( | ( | |
Cash and cash equivalents at 1 January | |||
Effect of exchange rate fluctuations on cash held | |||
Cash and cash equivalents at 31 December | 15 |
1
2
1. Re‑presented in respect of 2022 is detailed in note 1.
2. Includes £2.5m of land and buildings relating to a long lease (999 year) property shown in right‑of‑use assets.
The accompanying notes on pages 130 to 168 form an integral part of these financial
statements.
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1 Introduction, other judgements and estimates, APMs and adjustments
Overview
Companies Act 2006. The Company’s registered office is Building E Stafford Park 1, Stafford
Basis of accounting
The Group financial statements have been prepared and approved by the Directors in
accordance with international accounting standards in accordance with UK‑adopted
international accounting standards (“UK‑adopted IFRS”). The Company has elected to
prepare its Parent Company financial statements in accordance with FRS 102; these are
presented on pages 169 to 174. On publishing the Parent Company financial statements
here, together with the Group financial statements, the Company is taking advantage of
the exemption in s408 of the Companies Act 2006 not to present its individual income
statement and related notes that form a part of these approved financial statements.
Basis of preparation
The financial statements are prepared on the historical cost basis except for
derivative financial instruments and financial instruments that are reported at fair value.
The consolidated financial statements include the accounts of the Company and all entities
controlled by the Company, its subsidiaries, (together referred to as “the Group”) from the
date control commences until the date that control ceases. Control is achieved where the
Company has power over the investee, is exposed or has rights to a variable return from the
involvement with the investee and/or has the ability to use its power to affect its returns.
The purchase method is used to account for the acquisition of subsidiaries. These financial
statements are presented in million pounds sterling, which is the functional currency of the
Group and Parent Company.
The principal accounting policies are set out in the notes to the consolidated financial
statements and have, unless otherwise stated, been applied consistently to all
periods presented in these consolidated financial statements.
Going concern
The Directors have concluded that it is reasonable to adopt a going concern basis in
preparing the financial statements. This is based on an expectation that the Company
and the Group have adequate resources to continue in operational existence for at least
12 months from the date of signing these accounts and our cash flow forecasts support
this. The Group has reported a profit before tax of £18.9m for the year to 31 December 2023
(2022: £11.7m), has net current assets of £52.5m (2022: £53.5m) and net assets of £93.8m
(2022: £86.7m), net debt of £22.8m (2022: £29.4m) and net cash from operating activities of
£29.0m (2022: £38.6m). The bank facilities mature on 30 September 2026 as detailed below:
The capital resources at the Group’s disposal at 31 December 2023 and 29 February 2024
were as follows:
• A revolving credit facility of £80.0m, £22.3m drawn at 31 December 2023 and £28.4m
drawn at 29 February 2024
The revolving credit facility requires the Group to comply with the following quarterly
financial covenants:
• Closing Covenant Net Debt of no more than 3.0 times Covenant EBITDA for the
preceding 12‑month period
• Covenant EBITDA of no less than 4.0 times Covenant Net Finance Expense for the
preceding 12‑month period
The Directors ran scenario tests on the severe but plausible downside case. The
assumptions in this scenario were as follows: concentration risks with associated operations
(25% reduction in revenue for three months followed by 50% reduction for three months
and 20% increase in shipping costs during the period) and macroeconomic, political and
environmental risks (18‑month recession with a 10% reduction in revenue and gross profit).
These severe but plausible downside scenarios do not lead to any breach in covenants nor
any breach in facility. All modelling has been conducted without any mitigation activity.
There have been no changes to post balance sheet liquidity positions.
The Directors are confident that the Group and Company will have sufficient funds to
continue to meet their liabilities as they fall due for at least 12 months from the date of
approval of the financial statements and therefore have prepared the financial statements
on a going concern basis.
Estimates and judgements
The Directors do not consider there to be any key estimates or key judgements in
preparing these financial statements.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2023
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The following is the impact on the cash flow, it has no impact on any subtotal items, just
within the Operating cash flow before movement in working capital section.
| 2022 | Presentation | 2022 | |
| £m | Reported | restatement | Re‑presented |
| Cash flows from operating activities | |||
Profit for the year | 11.0 | — | 11. 0 |
| Adjustments for: | |||
Depreciation and amortisation | 8.9 | — | 8.9 |
Financial expense | 8.3 | (6.3) | 2.0 |
Taxation | 0.7 | — | 0.7 |
Loss on disposal of tangible assets | 0.1 | — | 0.1 |
Increase in provisions | 0.1 | — | 0.1 |
| Share‑based payments charge | 1.0 | — | 1.0 |
| Other non‑cash items | 0.5 | 6.3 | 6.8 |
Operating cash flow before movement in working capital | 30.6 | — | 30.6 |
| Decrease in trade and other receivables | 19.2 | — | 19.2 |
| Decrease in inventories | 12.0 | — | 12.0 |
| Decrease in trade and other payables | (18.5) | — | (18.5) |
| Cash from operations | 43.3 | — | 43.3 |
| Tax paid | (4.7) | — | (4.7) |
Net cash from operating activities | 38.6 | — | 38.6 |
Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2023
1 Introduction, other judgements and estimates, APMs and adjustments
continued
Re-presented prior year comparative
Revenue, profit before and after tax and EPS all unchanged
During the year the Group has amended its presentation of its net finance expense line. In
the 2022 Annual report and Accounts the company combined the finance interest together
with the impact of re‑measurement of the fair value of the hedging portfolio. Given that the
impact of the hedging relates to the purchase of goods bought in a foreign currency, the
Board believes it is preferable for the reader to show this as a cost of sale item rather than
a net finance expense item. This leaves the finance expense line with borrowing and cash
interest impacts only. Accordingly, the presentation of the accounts has been restated for
2022 and the impact is as follows from the 2022 Reported numbers:
The revised presentation has no impact on reported profit before tax, cash flows or net
assets as reported previously.
| 2022 | Presentation | 2022 | |
| £m | Reported | restatement | Re‑presented |
Revenue | 206.3 | — | 206.3 |
Cost of sales | (132.0) | (6.3) | (138. 3) |
Gross profit | 74.3 | (6.3) | 68.0 |
Distribution expenses | (9.2) | — | (9.2) |
Administrative expenses | (45.1) | — | (45.1) |
Operating profit | 20.0 | (6.3) | 13.7 |
Finance expense | (8.3) | 6.3 | (2.0) |
Net finance (expense)/income | (8.3) | 6.3 | (2.0) |
Profit before tax | 11.7 | — | 11.7 |
Taxation | (0.7) | — | (0.7) |
Profit for the year | 11. 0 | — | 11. 0 |
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Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2023
| 2022 | |||
| 2022 | Presentation | Presentation | |
| £m | Reported | restatement | restated |
| Cash flows from investing activities | |||
Acquisition of property, plant and equipment | (4 .1) | — | (4 .1) |
Acquisition of other intangible assets | (1.7) | — | (1.7) |
Disposal of tangible assets | 0.2 | — | 0.2 |
Acquisition of subsidiary | (7.8) | — | (7.8) |
Net cash used in investing activities | (13.4) | — | (13.4) |
| Cash flows from financing activities | |||
Repayment of borrowings | (8.9) | — | (8.9) |
Interest paid | (2.7) | — | (2.7) |
Dividends paid | (10.9) | — | (10.9) |
Finance lease liabilities | (2.2) | — | (2.2) |
Purchase of own shares | (2.4) | — | (2.4) |
Net cash used in financing activities | (27.1) | — | (27.1) |
Net decrease in cash and cash equivalents | (1.9) | — | (1.9) |
Cash and cash equivalents at 1 January | 6.9 | — | 6.9 |
Effect of exchange rate fluctuations on cash held | 0.3 | — | 0.3 |
Cash and cash equivalents at 31 December | 5.3 | — | 5.3 |
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 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, although the IFRS defined measures should also be used when users of
this document assess the Group’s performance. The alternative performance measures
allow a 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 may separately
report specific items in the income statement which, in the Directors’ judgement, need
to be disclosed separately by virtue of their nature, size and incidence in order for users
of the financial statements to obtain a balanced view of the financial information and the
underlying performance of the business.
In following the guidelines on alternative performance measures 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.
1 Introduction, other judgements and estimates, APMs and adjustments
continued
Re-presented prior year comparative continued
Revenue, profit before and after tax and EPS all unchanged continued
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Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2023
1 Introduction, other judgements and estimates, APMs and adjustments continued
Statutory and non-statutory measures of performance continued
The measures used in the Chief Financial Officer’s Review are defined in the following table and the principles to identify adjusting items have been applied on a basis consistent with
previous years.
Nature of measure | Related IFRS measure | Related IFRS source | Definition | Use/relevance | ||
Adjusted Gross Profit Margin | Gross profit margin | Consolidated Income Statement | Based on the related IFRS | Allows management to assess the | ||
Adjusted Operating Costs | Operating gross profit less | Consolidated Income Statement | measure but excluding the | performance of the business after | ||
| operating profit | adjusting items. A breakdown of | removing large/unusual items or | ||||
| the adjusting items from 2023 | transactions that are not reflective | |||||
Adjusted Operating Profit | Operating profit | Consolidated Income Statement | and | 2022, | which reconciles the | of the underlying business |
Adjusted Profit for the Year | Profit for the year (profit after tax) | Consolidated Income Statement | adjusted measures to statutory | operations | ||
| figures, can be found on pages | ||||||
Adjusted Basic EPS | Basic EPS | 133 to 138 | ||||
Constant Currency | Current period translated at the | Allows management to identify | ||||
| average exchange rate of the | the relative year‑on‑year | |||||
| prior year | performance of the business by | |||||
| removing the impact of currency | ||||||
| that is outside of management’s | ||||||
| control | ||||||
EBITDA | Operating profit | Consolidated Income Statement | Consolidated earnings before | Provides management with an | ||
| interest, tax, depreciation and | approximation of cash generation | |||||
| amortisation | from the Group’s operational | |||||
| activities | ||||||
Low carbon sales | Revenue | Segmental operating | EV charger revenue and LED | Provides management with a | ||
| revenue less sales from lighting | measure of low carbon sales | |||||
| columns and downlight | ||||||
| accessories | ||||||
Adjusted EBITDA | Operating profit | Consolidated Income Statement | EBITDA excluding the adjusting | Provides management with an | ||
| items excluded from Adjusted | approximation of cash generation | |||||
| Operating Profit except for any | from the Group’s underlying | |||||
| adjusting items that relate to | operational activities | |||||
| depreciation and amortisation | ||||||
Covenant EBITDA | Operating profit | Consolidated Income Statement | As above definition of “Adjusted | Aligns with the definition of | ||
| EBITDA” but including EBITDA | EBITDA used for bank covenant | |||||
| generated from acquisitions | testing | |||||
| between 1 January and the date | ||||||
| of acquisition and excluding | ||||||
| share‑based payment expense | ||||||
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Luceco plc|Annual Report and Financial Statements 2023
Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2023
Nature of measure | Related IFRS measure | Related IFRS source | Definition | Use/relevance |
Contribution profit | Operating profit and operating | Consolidated Income Statement | Contribution profit is after | Provides management with an |
| costs | allocation of directly attributable | assessment of profitability by | ||
| adjusted operating expenses for | operating segment | |||
| each operating segment | ||||
Contribution margin | Operating profit and operating | Consolidated Income Statement | Contribution margin is | Provides management with |
| costs | contribution profit, as above, | an assessment of margin by | ||
| divided by revenue for each | operating segment | |||
| operating segment | ||||
Adjusted Operating Cash Flow | Cash flow from operations | Consolidated Cash Flow | Adjusted Operating Cash Flow | Provides management with |
| Statement | is the cash from operations but | an indication of the amount of | ||
| excluding the cash impact of the | cash available for discretionary | |||
| adjusting items excluded from | investment | |||
| Adjusted Operating Profit | ||||
Adjusted Free Cash Flow | Cash flow from operations | Consolidated Cash Flow | Adjusted Free Cash Flow is | Provides management with |
| Statement | calculated as Adjusted Operating | an indication of the free cash | ||
| Cash Flow less cash flows in | generated by the business | |||
| respect of investing activities | for return to shareholders or | |||
| (except for those in respect of | reinvestment in M&A activity | |||
| acquisitions or disposals), interest | ||||
| and taxes paid | ||||
Adjusted Net Cash Flow | Net increase/(decrease) in cash | Consolidated Cash Flow | Adjusted Net Cash Flow is | Provides management with an |
| and cash equivalents | Statement | calculated as Adjusted Operating | indication of the net cash flow | |
| Cash Flow less cash flows in | generated by the business after | |||
| respect of investing activities | dividends and purchase of shares | |||
| (except for those in respect | ||||
| of acquisitions or disposals), | ||||
| interest, taxes paid, purchase of | ||||
| shares and dividends paid | ||||
Adjusted Operating Cash Conversion | None | Consolidated Cash Flow | Adjusted Operating Cash | Allows management to monitor |
| Statement/Income Statement | Conversion is defined as | the conversion of operating profit | ||
| Adjusted Operating Cash Flow | into cash | |||
| divided by Adjusted Operating | ||||
| Profit | ||||
Return on Capital Invested (“ROCI”) | None | Operating profit | Adjusted Operating Profit | To provide an assessment of |
| Net assets | divided into the sum of net | how profitably capital is being | ||
| assets and net debt (average | deployed in the business | |||
| for the last two years) as a | ||||
| percentage |
1 Introduction, other judgements and estimates, APMs and adjustments continued
Statutory and non-statutory measures of performance continued
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Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2023
1 Introduction, other judgements and estimates, APMs and adjustments continued
Statutory and non-statutory measures of performance continued
The following table illustrates the Adjusted profit APMs used by management for the year:
| Amortisation | |||||
| of acquired | Re- | ||||
| intangibles | measurement | ||||
| and related | to fair value of | ||||
| acquisition | hedging | 2023 | 2023 | ||
£m | 2023 | costs | portfolio | Adjustments | Adjusted |
Revenue | 209.0 | — | — | — | 209.0 |
Cost of sales | (126.2) | — | (0.5) | (0.5) | (126.7) |
Gross profit | 82.8 | — | (0.5) | (0.5) | 82.3 |
Distribution expenses | (8.6) | — | — | — | (8.6) |
Administrative expenses | (52.0) | 2.3 | — | 2.3 | (49.7) |
Operating profit | 22.2 | 2.3 | (0.5) | 1.8 | 24.0 |
Finance (expense)/income | (3.3) | — | 0.5 | 0.5 | (2.8) |
Net finance (expense)/income | (3.3) | — | 0.5 | 0.5 | (2.8) |
Profit before tax | 18.9 | 2.3 | — | 2.3 | 21.2 |
Taxation | (2.2) | (1.7) | — | (1.7) | (3.9) |
Profit for the year | 16.7 | 0.6 | — | 0.6 | 17.3 |
1
2
1. Relating to Kingfisher Lighting, DW Windsor and Sync EV.
2. Relating to currency hedges/interest swaps.
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Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2023
1 Introduction, other judgements and estimates, APMs and adjustments continued
Statutory and non-statutory measures of performance continued
The following table illustrates the Adjusted profit APMs used by management for the prior year:
1
| Amortisation | ||||||
| of acquired | Re‑ | |||||
| intangibles | measurement | |||||
| and related | to fair value of | |||||
| acquisition | hedging | 2022 | 2022 | |||
£m | 2022 | costs | portfolio | Restructuring | Adjustments | Adjusted |
Revenue | 206.3 | — | — | — | — | 206.3 |
Cost of sales | (138 . 3) | — | 6.3 | — | 6.3 | (132.0) |
Gross profit | 68.0 | — | 6.3 | — | 6.3 | 74.3 |
Distribution expenses | (9.2) | — | — | — | — | (9.2) |
Administrative expenses | (45.1) | 3.0 | — | (1.0) | 2.0 | (43.1) |
Operating profit | 13.7 | 3.0 | 6.3 | (1.0) | 8.3 | 22.0 |
Finance expense | (2.0) | — | (0.6) | — | (0.6) | (2.6) |
Net finance expense | (2.0) | — | (0.6) | — | (0.6) | (2.6) |
Profit before tax | 11.7 | 3.0 | 5.7 | (1.0) | 7.7 | 19.4 |
Taxation | (0.7) | (0.6) | (1.1) | 0.2 | (1.5) | (2.2) |
Profit for the year | 11. 0 | 2.4 | 4.6 | (0.8) | 6.2 | 17.2 |
2
3
4
1. See re‑presentation of 2022 within note 1 above.
2. Relating to Kingfisher Lighting , DW Windsor and Sync EV (included within acquisition costs was a fair value loss on 100% acquisition of Sync EV).
3. Relating to currency hedges/interest swaps.
4. Relating to the closure of Germany and France operations.
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Luceco plc|Annual Report and Financial Statements 2023
Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2023
Adjusted Free Cash Flow
£m | 2023 | 2022 |
Adjusted Operating Cash Flow (see table opposite) | 32.6 | 43.7 |
Net cash used in investing activities excluding acquisitions and disposals (from Consolidated Cash Flow Statement) | (8.2) | (5.6) |
Interest paid (from Consolidated Cash Flow Statement) | (2.8) | (2.7) |
Tax paid (from Consolidated Cash Flow Statement) | (3.6) | (4.7) |
Adjusted Free Cash Flow | 18.0 | 30.7 |
Revenue | 209.0 | 206.3 |
Adjusted Free Cash Flow as % revenue | 8.6% | 14.9% |
Adjusted Net Cash Flow as % of revenue
£m | 2023 | 2022 |
Adjusted Free Cash Flow (see above) | 18.0 | 30.7 |
Purchase of own shares | (1.6) | (2.4) |
Dividends | (7.2) | (10.9) |
Adjusted Net Cash Flow | 9.2 | 17.4 |
Revenue | 209.0 | 206.3 |
Adjusted Net Cash Flow as % of revenue | 4.4% | 8.4% |
Return on Capital Invested
£m | 2023 | 2022 |
Net assets | 93.8 | 86.7 |
Net debt (see note 16) | 22.8 | 29.4 |
Capital Invested | 116 .6 | 116 .1 |
Average Capital Invested (from last two years) | 116 .4 | 121.0 |
Adjusted Operating Profit (from above) | 24.0 | 22.0 |
| Return on Capital Invested (Adjusted Operating | ||
Profit/average Capital Invested) | 20.6% | 18.2% |
1 Introduction, other judgements and estimates, APMs and adjustments
continued
Statutory and non-statutory measures of performance continued
The following tables illustrate how alternative performance measures are calculated:
Adjusted EBITDA
£m | 2023 | 2022 |
Adjusted Operating Profit | 24.0 | 22.0 |
Adjusted Depreciation and Amortisation | 7.4 | 7.1 |
Adjusted EBITDA | 31.4 | 29.1 |
Covenant EBITDA
£m | 2023 | 2022 |
Adjusted EBITDA | 31.4 | 29.1 |
EBITDA from acquisitions from 1 January to the date of acquisition and share‑based payment expense | 0.8 | 1.2 |
Covenant EBITDA | 32.2 | 30.3 |
Adjusted Operating Cash Conversion
£m | 2023 | 2022 |
Cash from operations (from Consolidated Cash Flow Statement) | 32.6 | 43.3 |
| Adjustments to cash from operations (from Consolidated Cash | ||
Flow Statement) | — | 0.4 |
Adjusted Operating Cash Flow | 32.6 | 43.7 |
Adjusted Operating Profit | 24.0 | 22.0 |
Adjusted Operating Cash Conversion | 135.8% | 198.6% |
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Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2023
| Amount (as a | |||
| percentage | Timing of satisfaction of | ||
Segment | Nature of revenue | of total revenue) | performance obligations |
| Wiring | Revenue from the supply | 39% | Largely when delivered |
| Accessories | of goods in the form of | to the customer for | |
| Wiring Accessories to trade | domestic customers. | ||
| and specialists. | For Free on Board (“FOB”) | ||
| transactions, obligations | |||
| are when legal title passes | |||
| to the customer (when | |||
| the goods are on the ship). | |||
LED Lighting | Revenue from the supply of | 38% | Largely when delivered |
| commercial and domestic | to the customer for | ||
| lighting solutions. This | domestic customers. | ||
| includes revenue from our | For Free on Board (“FOB”) | ||
| DW Windsor LED business. | transactions, obligations | ||
| are when legal title passes | |||
| to the customer (when | |||
| the goods are on the ship). | |||
| Portable | Revenue from the supply | 23% | Largely when delivered |
| Power | of goods in the form of | to the customer for | |
| Portable Power to retailers | domestic customers. | ||
| and wholesalers and EV | For Free on Board (“FOB”) | ||
| chargers. Revenue from | transactions, obligations | ||
| the supply of Ross‑branded | are when legal title passes | ||
| audio‑visual products | to the customer (when | ||
| and Sync EV and BG EV | the goods are on the ship). | ||
| chargers. |
1 Introduction, other judgements and estimates, APMs and adjustments
continued
Additional metrics
Inventory days – calculated by reference to the closing stock versus the cost of sales over
a three‑month period. Debtor days – the “countback” method is used to calculate debtor
days by reference to revenue over the prior period. Creditor days – the “countback” method
is used to calculate creditor days by reference to purchases over the prior period. Organic
revenue growth is calculated per the reconciliation on page 28 of the Chief Financial
Officer’s Review.
Standards and interpretations issued
New currently effective requirements
Effective date | New accounting standards or amendments |
1 January 2023 | IFRS 17 Insurance Contracts |
| Disclosure of Accounting Policies – Amendments to IAS 1 | |
| and IFRS Practice Statement 2 | |
| Definition of Accounting Estimates – Amendments to IAS 8 | |
| Deferred Tax related to Assets and Liabilities arising from a | |
| Single Transaction – Amendments to IAS 12 | |
23 May 2023 | International Tax Reform – Pillar Two Model Rules – |
| Amendments to IAS 12 | |
| Forthcoming requirements | |
Effective date | New accounting standards or amendments |
1 January 2024 | Non‑current Liabilities with Covenants – Amendments to |
| IAS 1 | |
| and | |
| Classification of Liabilities as Current or Non‑current – | |
| Amendments to IAS 1 | |
| Lease Liabilities in a Sale and Leaseback – Amendments to | |
| IFRS 16 | |
| Supplier Finance arrangements – Amendments to IAS 7 | |
| and IFRS 7 | |
1 January 2025 | Lack of Exchangeability – Amendments to IAS 21 |
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Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2023
2 Operating segments continued
| Adjusted | Reported | Adjusted | Reported | |||
| £m | 2023 | Adjustments | 2023 | 2022 | Adjustments | 2022 |
| Revenue | ||||||
Wiring Accessories | 82.6 | — | 82.6 | 73.7 | — | 73.7 |
LED Lighting | 79.0 | — | 79.0 | 81.4 | — | 81.4 |
Portable Power | 47.4 | — | 47.4 | 51.2 | — | 51.2 |
209.0 | — | 209.0 | 206.3 | — | 206.3 | |
| Operating profit | ||||||
Wiring Accessories | 15.0 | 0.3 | 15.3 | 13.9 | (2.2) | 11.7 |
LED Lighting | 4.7 | (1.5) | 3.2 | 3.4 | ( 3 .1) | 0.3 |
Portable Power | 4.3 | (0.6) | 3.7 | 4.7 | (3.0) | 1.7 |
24.0 | (1.8) | 22.2 | 22.0 | (8.3) | 13.7 |
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2 Operating segments continued
2023 | 2022 | ||||||
| Amortisation | Re- | Amortisation | Re‑ | ||||
| of acquired | measurement | of acquired | measurement | ||||
| intangibles | to fair value of | intangibles | to fair value of | ||||
| and related | hedging | and related | hedging | ||||
£m | Total | costs | portfolio | Total | costs | portfolio | Restructuring |
| Cost of sales | |||||||
| Wiring Accessories | 0.3 | — | 0.3 | (2.2) | — | (2.2) | — |
| LED Lighting | 0.1 | — | 0.1 | (2.5) | — | (2.5) | — |
| Portable Power | 0.1 | — | 0.1 | (1.6) | — | (1.6) | — |
Gross profit | 0.5 | — | 0.5 | (6.3) | — | (6.3) | — |
| Administrative expenses | |||||||
Wiring Accessories | — | — | — | — | — | — | — |
LED Lighting | (1.6) | (1.6) | — | (0.6) | (1.6) | — | 1.0 |
Portable Power | (0.7) | (0.7) | — | (1.4) | (1.4) | — | — |
Total | (2.3) | (2.3) | — | (2.0) | (3.0) | — | 1.0 |
| Operating profit | |||||||
Wiring Accessories | 0.3 | — | 0.3 | (2.2) | — | (2.2) | — |
LED Lighting | (1.5) | (1.6) | 0.1 | (3 .1) | (1.6) | (2.5) | 1.0 |
Portable Power | (0.6) | (0.7) | 0.1 | (3.0) | (1.4) | (1.6) | — |
Operating profit | (1.8) | (2.3) | 0.5 | (8.3) | (3.0) | (6.3) | 1.0 |
Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2023
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Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2023
£m | 2023 | 2022 |
Audit of these financial statements | 0.5 | 0.5 |
Amounts receivable by the auditor and its associates in respect of: | ||
| Additional amounts in respect of the audit of prior year’s | ||
financial statements | 0.1 | 0.1 |
Audit‑related assurance for covenant certificates and interim reviews | 0.1 | 0.1 |
Total | 0.7 | 0.7 |
4 Staff number and costs
The average monthly number of employees, including the Directors, during the year was
as follows:
| Number of employees | ||
2023 | 2022 | |
Administration and support | 566 | 577 |
Production | 1,024 | 882 |
1,590 | 1,459 |
The aggregate remuneration:
£m | 2023 | 2022 |
Wages and salaries | 37.5 | 33.8 |
Social security costs | 4.8 | 4.5 |
Other pension costs | 1.0 | 1.0 |
Share‑based payment expense (note 22) | 0.8 | 1.0 |
Total staff costs | 44.1 | 40.3 |
2 Operating segments continued
£m | 2023 | 2022 |
UK | 173.6 | 165.3 |
Europe | 12.9 | 19.7 |
Americas | 8.6 | 8.0 |
Middle East and Africa | 8.3 | 8.7 |
Asia Pacific | 5.6 | 4.6 |
Total revenue | 209.0 | 206.3 |
£m | 2023 | 2022 |
UK | 57. 3 | 52.1 |
China | 15.3 | 17.6 |
Other | 0.3 | 0.8 |
Non-current assets | 72.9 | 70.5 |
£m | 2023 | 2022 |
Research and development costs expensed as incurred | 2.3 | 1.9 |
Depreciation of property, plant and equipment and right‑of‑use assets | 5.9 | 6.0 |
Amortisation of intangible assets | 3.4 | 2.9 |
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Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2023
£m | 2023 | 2022 |
| Finance expense: | ||
Interest on finance leases | (0 .1) | ( 0 .1) |
Interest on bank borrowings | (3.2) | (1.9) |
Net finance expense | (3.3) | (2.0) |
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Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2023
Reconciliation of effective tax rate
£m | 2023 | 2022 |
Profit for the year | 16.7 | 11. 0 |
Total tax expense | 2.2 | 0.7 |
Profit before taxation | 18.9 | 11.7 |
| Tax using the UK corporation tax rate of 25% | ||
(effective from 1 April 2023, 2022: 19.0%) | 4.4 | 2.2 |
R&D tax credits | (0.4) | (0.4) |
Non‑deductible expenses | 0.1 | 0.2 |
Adjustment in respect of previous periods | (1.8) | (0.4) |
Transfer pricing adjustments (related to China) | — | (1.0) |
Effect of rate change in calculation of deferred tax | 0.3 | 0.1 |
Foreign tax differences in rates | (0.5) | — |
Deferred tax on share‑based payments | — | 0.3 |
Movement on deferred tax not recognised | 0.1 | — |
Fixed asset differences related to tax and book value | — | (0 .1) |
Utilisation of unrecognised overseas brought forward tax losses | — | (0.2) |
Total tax expense | 2.2 | 0.7 |
The adjustment in respect of previous periods of a £1.8m credit relates to differences
between the Group’s tax provisions at the date of the accounts being signed and the
completion of the Group’s final tax returns, of which £1.2m relates to a tax deduction in
respect of shares issued on the acquisition of DW Windsor.
Factors which may affect future current and total tax charges
An increase in the UK corporation tax rate from 19% to 25% (effective 1 April 2023) was
substantively enacted on 24 May 2021. This will increase the Company’s future current tax
charge accordingly. The deferred tax liability at 31 December 2023 and 31 December 2022
has been calculated based on these rates, reflecting the expected timing of reversal of the
related temporary differences.
6 Taxation continued
£m | 2023 | 2022 |
| Current tax expense | ||
Current year – UK | 2.9 | 2.3 |
Current year – overseas | — | (0.9) |
Adjustment in respect of prior years | (0.5) | (0.3) |
Current tax expense | 2.4 | 1.1 |
| Deferred tax (credit)/expense | ||
Origination and reversal of temporary differences | 0.9 | (0.2) |
Adjustment in respect of prior years | (1.3) | ( 0 .1) |
Effect of tax rate change on opening balance | 0.2 | (0.1) |
Deferred tax (credit)/expense | (0.2) | (0.4) |
Total tax expense | 2.2 | 0.7 |
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Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2023
£m | 2023 | 2022 |
| Final dividend for the year ended 31 December 2022 | ||
of | 4.7 | 8.5 |
| Interim dividend for the year ended 31 December 2023 | ||
of | 2.5 | 2.4 |
Total dividend recognised during the year | 7.2 | 10.9 |
7 Earnings Per Share
£m | 2023 | 2022 |
Earnings for calculating basic Earnings Per Share | 16.7 | 11. 0 |
| Adjusted for (see note 1): | ||
Restructuring of European operations | — | (1.0) |
| Amortisation of acquired intangibles and related | ||
acquisition costs | 2.3 | 3.0 |
Remeasurement to fair value of hedging portfolio | — | 5.7 |
Income tax on above items | (0.5) | (1.5) |
Other tax items | (1.2) | — |
| Adjusted earnings for calculating Adjusted | ||
Basic Earnings Per Share | 17.3 | 17.2 |
Number million | 2023 | 2022 |
| Weighted average number of ordinary shares | ||
Basic | 155.2 | 154.3 |
Dilutive effect of share options on potential ordinary shares | 1.3 | 2.6 |
Diluted | 156.5 | 156.9 |
Pence | 2023 | 2022 |
Basic Earnings Per Share | 10.8 | 7.1 |
Diluted Earnings Per Share | 10.7 | 7.0 |
Adjusted Basic Earnings Per Share | 11.1 | 11.1 |
Adjusted Diluted Earnings Per Share | 11.1 | 11. 0 |
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Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2023
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Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2023
9 Property, plant and equipment continued
| Land and | Plant and | Fixtures and | Motor | Work in | |||
| £m | buildings | equipment | fittings | vehicles | Tooling | progress | Total |
| Cost | |||||||
Balance at 1 January 2022 | 15.6 | 15.1 | 2.3 | 0.2 | 12.7 | 2.2 | 48.1 |
Additions | 0.3 | 2.3 | 0.1 | — | 1.2 | 0.2 | 4.1 |
Disposals | — | (0.3) | (0.1) | — | (3.1) | (0 .1) | (3.6) |
Effect of movements in foreign exchange | 0.3 | 0.3 | — | — | 0.2 | — | 0.8 |
Balance at 31 December 2022 | 16.2 | 17.4 | 2.3 | 0.2 | 11. 0 | 2.3 | 49.4 |
Additions | 0.2 | 2.5 | 0.2 | — | 1.4 | (0.4) | 3.9 |
Disposals | — | (0.4) | — | — | (0.8) | (0.2) | (1.4) |
Effect of movements in foreign exchange | (0.9) | (0.8) | (0 .1) | — | (0.6) | — | (2.4) |
Balance at 31 December 2023 | 15.5 | 18.7 | 2.4 | 0.2 | 11. 0 | 1.7 | 49.5 |
| Land and | Plant and | Fixtures and | Motor | Work in | |||
| £m | buildings | equipment | fittings | vehicles | Tooling | progress | Total |
| Depreciation | |||||||
Balance at 1 January 2022 | 5.2 | 9.6 | 2.0 | 0.2 | 9.9 | — | 26.9 |
Depreciation charge for the year | 0.6 | 1.7 | 0.1 | — | 1.7 | — | 4.1 |
Disposals | — | (0.2) | — | — | (3.1) | — | (3.3) |
Effect of movements in foreign exchange | 0.1 | 0.1 | — | — | 0.1 | — | 0.3 |
Balance at 31 December 2022 | 5.9 | 11. 2 | 2.1 | 0.2 | 8.6 | — | 28.0 |
Depreciation charge for the year | 0.5 | 1.9 | 0.1 | — | 1.4 | — | 3.9 |
Disposals | — | (0.4) | — | — | (0.8) | — | (1.2) |
Effect of movements in foreign exchange | (0.3) | (0.4) | (0 .1) | — | (0.4) | — | (1.2) |
Balance at 31 December 2023 | 6.1 | 12. 3 | 2.1 | 0.2 | 8.8 | — | 29.5 |
| Net book value | |||||||
At 1 January 2022 | 10.4 | 5.5 | 0.3 | — | 2.8 | 2.2 | 21.2 |
At 31 December 2022 | 10.3 | 6.2 | 0.2 | — | 2.4 | 2.3 | 21.4 |
At 31 December 2023 | 9.4 | 6.4 | 0.3 | — | 2.2 | 1.7 | 20.0 |
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9 Property, plant and equipment continued
The carrying values of the following right‑of‑use assets:
| Land and | Plant and | Motor | ||
| £m | buildings | equipment | vehicles | Total |
| Cost | ||||
Balance at 1 January 2022 | 8.7 | 1.5 | 0.9 | 11.1 |
Additions | — | — | 0.1 | 0.1 |
Disposals | (0.4) | — | (0.2) | (0.6) |
| Effect of movements in foreign | ||||
exchange | 0.1 | — | — | 0.1 |
Balance at 31 December 2022 | 8.4 | 1.5 | 0.8 | 10.7 |
Additions | 2.7 | 0.4 | 0.4 | 3.5 |
Disposals | (0 .1) | (0.9) | (0 .1) | (1.1) |
Balance at 31 December 2023 | 11. 0 | 1.0 | 1.1 | 13.1 |
| Land and | Plant and | Motor | ||
| £m | buildings | equipment | vehicles | Total |
| Depreciation | ||||
Balance at 1 January 2022 | 1.8 | 1.0 | 0.5 | 3.3 |
Depreciation charge for the year | 1.5 | 0.2 | 0.2 | 1.9 |
Disposals | (0.4) | — | (0.2) | (0.6) |
Balance at 31 December 2022 | 2.9 | 1.2 | 0.5 | 4.6 |
Depreciation charge for the year | 1.5 | 0.3 | 0.2 | 2.0 |
Disposals | (0 .1) | (0.9) | (0 .1) | (1.1) |
Balance at 31 December 2023 | 4.3 | 0.6 | 0.6 | 5.5 |
| Net book value | ||||
At 1 January 2022 | 6.9 | 0.5 | 0.4 | 7. 8 |
At 31 December 2022 | 5.5 | 0.3 | 0.3 | 6.1 |
At 31 December 2023 | 6.7 | 0.4 | 0.5 | 7.6 |
Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2023
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Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2023
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Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2023
10 Intangible assets continued
| Development | Customer | Tradenames | ||||
£m | Goodwill | Patents | costs | relationships | and brands | Total |
| Cost | ||||||
Balance at 1 January 2022 | 19.4 | 0.6 | 10.6 | 7. 3 | 3.0 | 40.9 |
Acquisitions through business combinations | 6.9 | — | — | 1.5 | 0.8 | 9.2 |
Other acquisitions – internally developed | — | — | 1.7 | — | — | 1.7 |
Disposals | — | — | (3.5) | — | — | (3.5) |
Balance at 31 December 2022 | 26.3 | 0.6 | 8.8 | 8.8 | 3.8 | 48.3 |
Other acquisitions – internally developed | — | — | 1.8 | — | — | 1.8 |
Disposals | — | — | (1.3) | — | — | (1.3) |
Balance at 31 December 2023 | 26.3 | 0.6 | 9.3 | 8.8 | 3.8 | 48.8 |
| Amortisation | ||||||
Balance at 1 January 2022 | — | 0.4 | 4.8 | 1.6 | 0.4 | 7. 2 |
Amortisation for the year | — | 0.1 | 1.5 | 1.1 | 0.2 | 2.9 |
Disposals | — | — | (3.5) | — | — | (3.5) |
Balance at 31 December 2022 | — | 0.5 | 2.8 | 2.7 | 0.6 | 6.6 |
Amortisation for the year | — | — | 1.9 | 1.1 | 0.4 | 3.4 |
Disposals | — | — | (1.3) | — | — | (1.3) |
Balance at 31 December 2023 | — | 0.5 | 3.4 | 3.8 | 1.0 | 8.7 |
| Net book value | ||||||
At 1 January 2022 | 19.4 | 0.2 | 5.8 | 5.7 | 2.6 | 33.7 |
At 31 December 2022 | 26.3 | 0.1 | 6.0 | 6.1 | 3.2 | 41.7 |
At 31 December 2023 | 26.3 | 0.1 | 5.9 | 5.0 | 2.8 | 40.1 |
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% | 2023 | 2022 |
Portable Power | 13.0 | 12.4 |
Wiring Accessories | 13. 3 | 12. 5 |
LED Lighting | 13.1 | 12. 3 |
DW Windsor | 13.2 | 12.4 |
Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2023
10 Intangible assets continued
| Goodwill | ||
£m | 2023 | 2022 |
Portable Power | 8.9 | 8.9 |
Wiring Accessories | 4.0 | 4.0 |
LED Lighting | 7.2 | 7. 2 |
DW Windsor | 6.2 | 6.2 |
26.3 | 26.3 |
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Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2023
Assets | Liabilities | Net | ||||
£m | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 |
Property, plant and equipment | — | — | 1.6 | 1.6 | 1.6 | 1.6 |
Intangible assets | — | — | 2.0 | 2.7 | 2.0 | 2.7 |
Losses | (1.1) | (1.0) | — | — | (1.1) | (1.0) |
Share‑based payments | (1.0) | (0.8) | — | — | (1.0) | (0.8) |
Financial assets and liabilities | (0.4) | (1.0) | — | — | (0.4) | (1.0) |
Deferred tax liability/(asset) | (2.5) | (2.8) | 3.6 | 4.3 | 1.1 | 1.5 |
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Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2023
12 Deferred tax assets and liabilities continued
| 1 January | Recognised | Recognised | 31 December | ||
| £m | 2023 | in income | in equity 2023 | ||
Property, plant and equipment | 1.6 | — | — | 1.6 | |
Intangible assets | 2.7 | (0.7) | — | 2.0 | |
Losses | (1.0) | (0.1) | — | (1.1) | |
Share‑based payments | (0.8) | — | (0.2) | (1.0) | |
Financial assets and liabilities | (1.0) | 0.6 | — | (0.3) | |
1.5 | (0.2) | (0.2) | 1.1 | ||
| 1 January | Recognised | Recognised | 31 December | |||
| £m | 2022 | Acquisition | in income | in equity 2022 | ||
Property, plant and equipment | 0.7 | — | 0.9 | — | 1.6 | |
Inventories | (0.2) | — | 0.2 | — | — | |
Intangible assets | 2.5 | 0.6 | (0.4) | — | 2.7 | |
Losses | (0.6) | — | (0.4) | — | (1.0) | |
Share‑based payments | (2.6) | — | 0.2 | 1.6 | (0.8) | |
Financial assets and liabilities | (0.1) | — | (0.9) | — | (1.0) | |
(0.3) | 0.6 | (0.4) | 1.6 | 1.5 | ||
£m | 2023 | 2022 |
Trade receivables | 53.2 | 50.4 |
Prepayments and other receivables | 2.5 | 2.5 |
55.7 | 52.9 |
Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2023
13 Inventories
£m | 2023 | 2022 |
Raw materials | 7.0 | 8.9 |
Work in progress | 1.4 | 2.1 |
Finished goods | 32.4 | 36.5 |
40.8 | 47.5 |
In 2023, inventories of £117.3m (2022: £125.8m) were recognised as an expense during the
year and are included in “cost of sales”.
The inventory charge for write‑downs was £0.1m (2022: £0.1m) in the period.
Write‑downs and reversals are included in “cost of sales”. No reversals of stock provision
occurred in the current or prior year.
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14 Trade and other receivables continued
31 December 2023 | 1 January 2023 | |||||
| Loss rate | Gross debtor | Loss amount | Loss rate | Gross debtor | Loss amount | |
| Age overdue (days) | (%) | (£k) | (£k) | (%) | (£k) | (£k) |
Current | 1.59% | 50,719 | 806 | 2.00% | 44,913 | 898 |
0‑30 | 2.67% | 2,487 | 66 | 2.00% | 4,281 | 86 |
30‑60 | 2.34% | 1,419 | 33 | 2.15% | 1,829 | 39 |
60‑90 | 2.93% | 327 | 10 | 4.19% | 341 | 14 |
90‑120 | 2.47% | 333 | 8 | 2.02% | 404 | 8 |
120 + | 61.49% | 1,015 | 624 | 6.98% | 629 | 44 |
Total | 2.75% | 56,300 | 1,547 | 2.08% | 52,397 | 1,089 |
15 Cash and cash equivalents
£m | 2023 | 2022 |
Current cash balances | 4.6 | 5.3 |
£m | 2023 | 2022 |
| Non-current liabilities | ||
Revolving credit facility | 22.3 | 28.2 |
Overdrafts | — | 0.2 |
22.3 | 28.4 |
Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2023
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Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2023
16 Interest-bearing loans and borrowings continued
| Carrying | Carrying | ||||||
| Nominal | Maturity | Face value | amount | Face value | amount | ||
£m | Currency | interest rate | date | 2023 | 2023 | 2022 | 2022 |
Revolving credit facility | GBP | 1.75% + SONIA | Sep 2026 | 22.3 | 22.3 | 28.2 | 28.2 |
Overdrafts | GBP | 1.75% + base rate | Sep 2026 | — | — | 0.2 | 0.2 |
22.3 | 22.3 | 28.4 | 28.4 |
£m | 2023 | 2022 |
| Net debt as at 31 December represented by: | ||
Revolving credit facility | 22.3 | 28.2 |
Overdrafts | — | 0.2 |
Cash and cash equivalents | (4.6) | (5.3) |
Finance leases – pre‑IFRS 16 | 0.7 | 0.7 |
Covenant Net Debt | 18.4 | 23.8 |
Finance leases – post‑IFRS 16 | 4.4 | 5.6 |
Net debt | 22.8 | 29.4 |
| Finance | ||||
£m | Cash | Borrowings | leases | Total |
| Net debt movement: | ||||
As at 1 January 2023 | (5.3) | 28.4 | 6.3 | 29.4 |
Cash (in)/outflow | 0.7 | (6 .1) | — | (5.4) |
Finance lease movements | — | — | (1.2) | (1.2) |
As at 31 December 2023 | (4.6) | 22.3 | 5.1 | 22.8 |
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| Warranty | |||
| Dilapidations | product | ||
| £m | provisions | provisions | Total |
As at 1 January 2023 | 1.4 | 0.9 | 2.3 |
Addition/(reduction) | 0.1 | ( 0.1) | — |
Utilisation | — | — | — |
As at 31 December 2023 | 1.5 | 0.8 | 2.3 |
£m | 2023 | 2022 |
| Current liabilities | ||
Lease liabilities | 2.0 | 2.0 |
| Non-current liabilities | ||
Lease liabilities | 3.1 | 4.3 |
16 Interest-bearing loans and borrowings continued
Terms and debt repayment schedule continued
| Finance | ||||
£m | Cash | Borrowings | leases | Total |
| Net debt movement: | ||||
As at 1 January 2022 | (6.9) | 36.8 | 8.2 | 38.1 |
Cash (in)/outflow | 1.9 | (8.9) | (2.2) | (9.2) |
Acquired borrowings | — | 0.5 | — | 0.5 |
Finance lease movements | — | — | 0.2 | 0.2 |
| Effect of exchange rate | ||||
fluctuations | (0.3) | — | 0.1 | (0.2) |
As at 31 December 2022 | (5.3) | 28.4 | 6.3 | 29.4 |
Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2023
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Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2023
17 Other financial liabilities and provisions continued
| Future minimum | Present value of minimum | |||||
lease payments | Interest | lease payments | ||||
£m | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 |
Less than one year | 2.0 | 2.0 | — | — | 2.0 | 2.0 |
Between one and five years | 3.4 | 4.7 | (0.3) | (0.4) | 3.1 | 4.3 |
5.4 | 6.7 | (0.3) | (0.4) | 5.1 | 6.3 |
£m | 2023 | 2022 |
Interest paid from leases under IFRS 16 | 0.1 | 0.1 |
Interest paid excluding interest from leases under IFRS 16 | 2.7 | 2.6 |
Interest paid per cash flow | 2.8 | 2.7 |
£m | 2023 | 2022 |
| Current liabilities | ||
Trade payables | 20.6 | 24.2 |
| Accrued expenses | 19.6 | 17.2 |
Other payables | 7.7 | 8.4 |
Trade and other payables | 47.9 | 49.8 |
157
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Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2023
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Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2023
20 Financial instruments continued
Accounting policy continued
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| Carrying amount | ||
£m | 2023 | 2022 |
Europe | 47.4 | 44.6 |
North America | — | 0.1 |
Rest of World | 5.8 | 5.7 |
53.2 | 50.4 |
Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2023
20 Financial instruments continued
| Carrying amount | ||
£m | 2023 | 2022 |
Trade receivables | 53.2 | 50.4 |
Cash and equivalents | 4.6 | 5.3 |
Financial assets measured at fair value through profit or loss | 0.7 | 1.2 |
58.5 | 56.9 |
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| Profit or loss | ||
| 100bps | 100bps | |
| £m | increase | decrease |
| 31 December 2023 | ||
Variable rate instruments | (0.3) | 0.3 |
Cash flow sensitivity (net) | (0.3) | 0.3 |
| 31 December 2022 | ||
Variable rate instruments | (0.5) | 0.5 |
Cash flow sensitivity (net) | (0.5) | 0.5 |
20 Financial instruments continued
| Carrying | Within | 1‑2 | 2‑5 | |
| 31 December 2022 (£m) | amount | 1 year | years | years |
| Financial liabilities | ||||
Revolving credit facility | 28.2 | — | — | 28.2 |
Overdrafts | 0.2 | — | — | 0.2 |
Financial liabilities measured at fair value through profit or loss | 2.3 | 2.3 | — | — |
Finance leases | 6.3 | 2.0 | 1.6 | 2.7 |
Trade payables | 24.2 | 24.2 | — | — |
61.2 | 28.5 | 1.6 | 31.1 |
| Carrying | Within | 1-2 | 2-5 | |
| 31 December 2023 (£m) | amount | 1 year | years | years |
| Financial liabilities | ||||
Revolving credit facility | 22.3 | — | — | 22.3 |
Financial liabilities measured at fair value through profit or loss | 1.8 | 1.5 | — | 0.3 |
Finance leases | 5.1 | 2.0 | 1.5 | 1.6 |
Trade payables | 20.6 | 20.6 | — | — |
49.8 | 24.1 | 1.5 | 24.2 |
Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2023
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20 Financial instruments continued
2023 | 2022 | |||||
£m | RMB | USD | EUR | RMB | USD | EUR |
Trade receivables | — | 16.3 | 0.8 | — | 13.2 | 0.7 |
Bank facilities | — | (13 .1) | 0.3 | (0 .1) | (12.0) | — |
Trade payables | (5.3) | (0.6) | (0.2) | (2.4) | (0.3) | (0.2) |
Net statement of financial position exposure | (5.3) | 2.6 | 0.9 | (2.5) | 0.9 | 0.5 |
Average rate | Reporting date spot rate | |||
£m | 2023 | 2022 | 2023 | 2022 |
USD | 1.24 | 1.23 | 1.27 | 1.21 |
EUR | 1.15 | 1.17 | 1.15 | 1.13 |
RMB | 8.81 | 8.30 | 9.00 | 8.34 |
Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2023
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£m | 2023 | 2022 |
| Assets carried at amortised cost: | ||
Trade receivables | 53.2 | 50.4 |
Cash and cash equivalents | 4.6 | 5.3 |
| Assets carried at fair value: | ||
Financial assets measured at fair value through profit or loss | 0.7 | 1.2 |
Financial assets measured at fair value through OCI | 2.3 | — |
Financial assets | 60.8 | 56.9 |
| Liabilities carried at amortised cost: | ||
Revolving credit facility | 22.3 | 28.2 |
Overdrafts | — | 0.2 |
Finance leases | 5.1 | 6.3 |
Trade payables | 20.6 | 24.2 |
| Liabilities carried at fair value: | ||
Financial liabilities measured at fair value through profit or loss | 1.8 | 2.3 |
Financial liabilities | 49.8 | 61.2 |
20 Financial instruments continued
£m | Equity | Profit/(loss) |
| 31 December 2023 | ||
GBP strengthens against the USD by 10% | (0.2) | (0.2) |
GBP strengthens against the EUR by 10% | ( 0.1) | (0.1) |
GBP strengthens against the RMB by 10% | 0.5 | 0.5 |
| 31 December 2022 | ||
GBP strengthens against the USD by 10% | (0.1) | ( 0 .1) |
GBP strengthens against the EUR by 10% | — | — |
GBP strengthens against the RMB by 10% | 0.2 | 0.2 |
Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2023
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21 Capital management
The Group’s primary capital resources comprise share capital, bilateral bank facilities and
operating cash flow.
The core debt requirements of the Group are met via an £80.0m revolving credit facility.
The Board’s policy is to maintain a strong capital base to maintain market confidence
and sustain the development of the business, whilst maximising the return on capital to
the Group’s shareholders. The Group’s strategy will be to maintain facilities appropriate to
the working requirements of the Group, to grow organically and through acquisition and
service its debt requirements through cash flow generation.
The Group has set the following capital structure policies:
• Maintain a Covenant Net Debt : Covenant EBITDA (“Leverage Ratio”) within a target
range of 1.0 to 2.0 : 1, averaging 1.5 across each economic cycle
• Maintain Covenant EBITDA : Adjusted Net Finance Expense (“Interest Cover Ratio”) of at
least 4.0 : 1
• Apply a progressive dividend policy, with a payout rate of 40%‑60% of adjusted earnings
• Provided it is in compliance with its Leverage Ratio, Interest Cover Ratio and dividend
policies, the Company will reinvest cash generated by the business in organic and
acquisitive growth opportunities that it believes will generate long‑term shareholder
value. If insufficient opportunities are available to reinvest cash in this way, the Company
will seek ways to return surplus cash to shareholders in order to maintain its Leverage
Ratio policy
The Covenant Net Debt to Covenant EBITDA ratio is calculated in accordance with the
Group’s loan agreements, as follows:
£m | 2023 | 2022 |
Covenant EBITDA (see note 1) | 32.2 | 30.3 |
Covenant Net Debt (see note 16) | 18.4 | 23.8 |
Covenant Net Debt : Covenant EBITDA | 0.6 | 0.8 |
20 Financial instruments continued
Accounting classifications and fair values continued
Fair values versus carrying amounts continued
| Fair value | |||
hierarchy | 2023 | 2022 | |
Financial assets measured at fair value through OCI | Level 1 | 2.3 | — |
| Currency hedging financial (liabilities) measured | |||
at fair value through profit or loss | Level 2 | (1.2) | (1.7) |
Interest swaps financial assets measured at fair value through profit or loss | Level 2 | 0.1 | 0.6 |
Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2023
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21 Capital management continued
The Covenant EBITDA : Net Finance Expense ratio is calculated as follows:
£m 2023 | 2022 | |
Covenant EBITDA (see note 1) | 32.2 | 30.3 |
Adjusted Net Finance Expense (see note 1) | 2.8 | 2.6 |
Covenant EBITDA : Adjusted Net Finance Expense | 11. 5 | 11.7 |
The Company’s covenants and headroom are summarised as follows:
2023 year‑end covenant | Covenant | 2023 actual | Headroom |
| Covenant Net Debt : | 3.0 : 1 | 0.6 | Covenant Net Debt |
| Covenant EBITDA | headroom: £78.2m | ||
| Adjusted EBITDA headroom: £26.1m | |||
| Covenant EBITDA : | 4.0 : 1 | 11. 5 | Adjusted EBITDA headroom: £21.0m |
| Adjusted Net Finance | Adjusted Net Finance Expense | ||
| Expense | headroom: £5.2m |
1
1. Headroom with increased facility. Current facility headroom is £57.5m.
The key measures which management use to evaluate the Group’s use of its financial
resources and capital management are set out below:
2023 | 2022 | |
Adjusted Earnings Per Share (pence) | 11.1 | 11.1 |
Covenant Net Debt : Covenant EBITDA (times) | 0.6 | 0.8 |
Adjusted Free Cash Flow (£m) | 18.0 | 30.7 |
Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2023
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Company Share Option Plan (“CSOP”)
At the time the free shares were awarded, all eligible employees of the Group were also
granted CSOP options. The CSOP options had an exercise price equal to the market value
of the share at the date of grant. The ordinary free shares award is subject to condition that
it will be automatically exercised at the time the CSOP option is exercised. The options can
only be exercisable after the performance period determined by the Board, being three
years. CSOP options will normally be exercisable from release until the tenth anniversary
of the grant date.
Long-Term Incentive Plan
Awards have been granted to the Chief Executive Officer and the Chief Financial
Officer, and other key management personnel within the Group, under the Luceco 2017
Performance Share Plan (“PSP”), which was approved by shareholders at the Company’s
AGM held on 25 May 2017.
The following awards have been granted in the form of nominal cost options over the
number of ordinary shares of 0.05p in the Company under the terms of the PSP, as set out
on page 95:
Executive Directors | Role | Number of shares awarded |
John Hornby | Chief Executive Officer | 492,956 |
Will Hoy | Chief Financial Officer | 350,561 |
Measurement of fair values
The 2023 LTIP awards will vest subject to the satisfaction of performance conditions
measuring the Company’s Earnings Per Share (“EPS”) and total shareholder return (“TSR”)
performance. The extent to which awards will vest will depend on the extent to which the
performance conditions are satisfied over the performance period. For the EPS condition,
this runs from 1 January 2023 to 31 December 2025. For the TSR condition, this runs for
three years from the three‑month average TSR to 6 April 2023, the date of the grant, to the
three‑month average TSR to 6 April 2026. No consideration was paid for any of the awards.
As the options under the 2023 award include a TSR performance condition, given the
increased uncertainty around potential vesting, they have been valued using the Monte
Carlo model with the following assumptions:
22 Share-based payments continued
Share Incentive Plan
All UK‑based employees are eligible to participate in the SIP. The scheme enables
employees to buy shares in the Group out of their salary, before tax deductions, up to a limit
of £1,800 per tax year. The shares acquired are called partnership shares and are held in
trust, managed by a third party, on behalf of the employee.
For every partnership share bought by the employee, the Group can award:
a) Matching shares. Two shares at nil cost
b) Free shares. Up to two shares at nil cost, the number depending on service, subject
to a maximum of £3,600 free shares per tax year
For the SIP conditions to be met, the employees must be continuously employed by the
Group for a period of at least three years from the date of the award grant. If employees
voluntarily leave the Group within the three‑year period they must take their shares out of
the plan and they will not be entitled to the matching and free shares.
| Number of partnership | ||||
| Number of free shares | and matching shares | |||
2023 | 2022 | 2023 | 2022 | |
Outstanding at 1 January | 28,981 | 36,466 | 1,055,167 | 798,586 |
Granted during the year | — | — | 450,585 | 306,824 |
Forfeited during the year | (1,106) | (4,436) | (36,480) | (3,849) |
Released during the year | (2,088) | (3,049) | (98,000) | (46,394) |
Outstanding at 31 December | 25,787 | 28,981 | 1,371,272 | 1,055,167 |
For the purposes of IFRS 2, the fair value of these matching shares and free shares is
determined as the market value of the shares at the date of grant. No valuation model
is required to calculate the fair value of awards under the SIP. The fair value of an
equity‑based payment under the SIP is the face value of the award on the date of grant
because the participants are entitled to receive the full value of the shares and there are
no market‑based performance conditions attached to the awards.
The Group recognised a total expense of £0.4m (2022: £0.2m) in the year relating to
matching and free share awards.
Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2023
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| Allotted, called up | Number of shares in issue | |||
| and fully paid | (thousands) | |||
| 2023 | 2022 | 2023 | 2022 | |
| £ | £ | Number | Number | |
At 1 January | 80,400 | 80,400 | 160,800 | 160,800 |
At 31 December | 80,400 | 80,400 | 160,800 | 160,800 |
Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2023
22 Share-based payments continued
Measurement of fair values continued
Directors’ and employee share options LTIP awards 2023 | 2022 | |
| Three‑day average share price before options were issued | ||
(pence) | 124.80 | 204.00 |
Fair value of share options | 103.78p | 158.92p |
Average expected volatility | 66.00% | 67. 50% |
Expected life | 3 years | 3 years |
Risk‑free rate | 3.45% | 1.40% |
The share‑based payments charge of £0.9m (2022: £1.0m) included in the Consolidated
Income Statement within administrative expenses is attributable to the LTIP nominal
cost options.
A summary of the number of share options under the share option programmes is
as follows:
2023 | 2022 | ||
Outstanding at 1 January | 8,127, 564 | 5,876,639 | |
Granted during the year | 2,556,361 | 3,637, 562 | |
Forfeited during the year | (1,18 | 5 , 5 21) | (1,268,568) |
Exercised during the year | (1,283,437) | (118 , 0 69) | |
Lapsed during the year | — | — | |
Outstanding at 31 December | 8,214,967 | 8,127,564 |
As at 31 December 2023, a total of 8,214,967 options were outstanding which had a
weighted average remaining contractual life to vesting of 20 months.
During the year, 633,554 tax‑qualifying share options were granted to employees (2022: nil).
The Group has previously purchased its own shares on the basis that they will be used
to fulfil the LTIP and the number of share options granted when they come to be
exercised. The purchased shares are held in a Trust which is managed by a third party.
At 31 December 2023, the Trust had 6,570,939 shares held at a cost of £8.6m (31 December
2022: 6,460,288 shares at a cost of £8.7m). These shares are held within the treasury reserve
and are shown in the Consolidated Statement of Changes in Equity.
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Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2023
27 Prior year acquisition
On 21 March 2022, the Group completed the acquisition of EV Charge Points UK T/A EVCP
Limited (“Sync EV”). This was a step acquisition as the Group acquired 20% of Sync EV in
August 2021 with the remaining 80% in March 2022 for a total consideration of £10.3m.
Sync EV, based in Surrey, UK, is a well‑regarded EV charge point brand among professional
installers. The business specialises in supplying smart charge points for residential
installations and has benefited from rapid growth in this market as electric vehicle sales
have accelerated – there are many synergies that the Group can gain with this acquisition,
these synergies make up part of the goodwill recognised.
£m 2023 | 2022 | |
Remuneration (including benefits in kind) | 5.1 | 5.1 |
Element of share‑based payments expense | 0.9 | 1.0 |
6.0 | 6.1 |
25 Ultimate Parent Company, controlling party and changes in significant
accounting policies
There is no controlling party.
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Company Balance Sheet
at 31 December 2023
£m Note 2023 2022
Non-current assets
Investments 29 5.2 4.3
Debtors 30 75.7 84.5
Net assets 80.9 88.8
Capital and reserves
Called‑up share capital 31 0.1 0.1
Share premium account 24.8 24.8
Treasury reserve (8.6) (8.7)
Profit and loss account 64.6 72.6
Equity 80.9 88.8
The accompanying notes on pages 171 to 174 form an integral part of these financial statements.
The Company reported a profit for the year ended 31 December 2023 of nil (2022: £20.0m).
These financial statements were approved by the Board of Directors on 25 March 2024 and were signed on its behalf by:
John Hornby Will Hoy
Chief Executive Officer Chief Financial Officer
Company registered number: 05254883
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Company Statement of Changes in Equity
for the year ended 31 December 2023
£m
Share
capital
Share
premium
Retained
earnings
Treasury
reserve
Total
equity
Balance at 1 January 2022 0.1 24.8 62.9 (6.7) 81.1
Total comprehensive income
Profit for the year — — 20.0 — 20.0
Total comprehensive income for the year — — 20.0 — 20.0
Transactions with owners in their capacity as owners:
Dividends — — (10.9) — (10.9)
Purchase of own shares — — — (2.4) (2.4)
Disposal of own shares — — (0.4) 0.4 —
Share‑based payments charge — — 1.0 — 1.0
Total transactions with owners in their capacity as owners — — (10.3) (2.0) (12. 3)
Balance at 31 December 2022 0.1 24.8 72.6 (8.7) 88.8
Total comprehensive income
Profit for the year — — — — —
Total comprehensive income for the year — — — — —
Transactions with owners in their capacity as owners:
Dividends — — (7.2) — (7.2)
Purchase of own shares — — — (1.6) (1.6)
Disposal of own shares — — (1.7) 1.7 —
Share‑based payments charge — — 0.9 — 0.9
Total transactions with owners in their capacity as owners — — (8.0) 0.1 (7.9)
Balance at 31 December 2023 0.1 24.8 64.6 (8.6) 80.9
The accompanying notes on pages 171 to 174 form an integral part of these financial statements.
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Notes to the Company Financial Statements
for the year ended 31 December 2023
Going concern
Note 1 of the consolidated financial statements contains the going concern statement.
Taxation
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in
the profit and loss account except to the extent that it relates to items recognised directly
in equity or other comprehensive income, in which case it is recognised directly in equity or
other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the
year, using tax rates enacted or substantively enacted at the balance sheet date and any
adjustment to tax payable in respect of previous years.
Deferred tax is provided on timing differences which arise from the inclusion of income and
expenses in tax assessments in periods different from those in which they are recognised in
the financial statements. Deferred tax is measured at the tax rate that is expected to apply
to the reversal of the related difference, using tax rates enacted or substantively enacted at
the balance sheet date. Unrelieved tax losses and other deferred tax assets are recognised
only to the extent that it is probable that they will be recovered against the reversal of
deferred tax liabilities or other future taxable profits.
Basic financial instruments
Trade and other debtors/creditors
Trade and other debtors are recognised initially at transaction price less attributable
transaction costs. Trade and other creditors are recognised initially at transaction price
plus attributable transaction costs. Subsequent to initial recognition they are measured
at amortised cost using the effective interest method, less any impairment losses in the
case of trade debtors. If the arrangement constitutes a financing transaction, for example
if payment is deferred beyond normal business terms, then it is measured at the present
value of future payments discounted at a market rate of instrument for a similar debt
instrument.
28 Accounting policies
The following accounting policies have been applied consistently in dealing with
itemswhich are considered material in relation to the financial statements, except as
notedbelow.
Basis of preparation
These financial statements were prepared in accordance with Financial Reporting Standard
102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (“FRS
102”) as issued in August 2014. All applicable amendments to FRS 102 have been applied
since its issue in August 2014. The presentation currency of these financial statements is
sterling. All amounts in the financial statements have been rounded to the nearest £0.1m.
The financial statements are prepared on the historical cost basis.
Under s408 of the Companies Act 2006, the Company is exempt from the requirement to
present its own profit and loss account. The Company did not trade during the year.
In these financial statements, the Company is considered to be a qualifying entity (for the
purposes of this FRS) and has applied the exemptions available under FRS 102 in respect of
the following disclosures:
• Reconciliation of the number of shares outstanding from the beginning to the end
oftheperiod
• Cash flow statement and related notes
• Key management personnel compensation
As the consolidated financial statements of the Company include the equivalent
disclosures, the Company has also taken the exemptions under FRS 102 available in respect
of the disclosures required by FRS 102.11 Basic Financial Instruments and FRS 102.12 Other
Financial Instrument Issues in respect of financial instruments not falling within the fair
value accounting rules of Paragraph 36(4) of Schedule 1.
The Company proposes to continue to adopt the reduced disclosure framework of FRS 102
in its next financial statements.
Amounts receivable by the Company’s auditor and its associates in respect of services
to the Company and its associates, other than the audit of the Company’s financial
statements, have not been disclosed as the information is required instead to be disclosed
on a consolidated basis in the consolidated financial statements.
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Notes to the Company Financial Statements continued
for the year ended 31 December 2023
29 Fixed asset investments
Accounting policy
Investments
These are the separate financial statements of the Company. Investments in subsidiaries are carried at cost less impairment.
Accounting policy
Share-based payments
Incentives in the form of shares are provided to employees through the Company’s Share Incentive Plan (“SIP”) and Long‑Term Incentive Plan (“LTIP”) schemes. Equity‑settled
share‑based payments are measured at fair value (excluding the effect of non‑market‑based vesting conditions) at the date of grant. The fair value determined at the grant date of
theequity‑settled share‑based payments is expensed on a straight‑line basis over the vesting period, based on the Group’s estimate of the number of shares that will eventually vest.
The grant date fair value of an equity‑settled payment under the SIP is measured as the face value of the award on the date of grant.
The grant date fair value of the awards under the Group’s LTIP is measured by the use of the Monte Carlo simulation for any market‑related performance conditions (given the
increased uncertainty around the potential vesting of share options).
The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non‑transferability, exercise restrictions and behavioural
considerations. Charges made to the income statement in respect of share‑based payments are credited to reserves.
At the end of each reporting period, the Group revises its estimates of the number of options that are expected to vest based on the non‑market‑based vesting conditions.
Itrecognises the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity.
The Group operates an employee share benefit trust as part of its incentive plans for UK‑based employees.
All assets and liabilities of the trust are recorded in the balance sheet as assets and liabilities of the Company until such time as the assets are awarded to the beneficiaries. All income
and expenditure of the trust is similarly brought into the results of the Company.
Where the Company grants options over its own shares to the employees of its subsidiaries, it recognises, in its individual financial statements, an increase in the cost of investment
in its subsidiaries equivalent to the equity‑settled share‑based payment charge recognised in its consolidated financial statements, with the corresponding credit being recognised
directly to equity.
£m 2023 2022
Balance at 1 January 4.3 3.3
Share‑based payment charge relating to subsidiaries 0.9 1.0
Balance at 31 December 5.2 4.3
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29 Fixed asset investments continued
The Company holds 100% of the share capital of the following companies (with only Luceco Holdings Limited being a direct investment) whose principal activities were as follows:
Company Registered office Principal activity
% of shares
held
Luceco Holdings Limited
1
(Reg: 05254785)
Luceco Distribution Centre
Stafford Park 1, Telford TF3 3BD, UK
Intermediate holding company 100
Luceco UK Limited
1
(Reg: 02255270)
Luceco Distribution Centre
Stafford Park 1, Telford TF3 3BD, UK
Electrical accessories importer and distributor 100
BG Electrical Limited
1
(Reg: 01388059)
Luceco Distribution Centre
Stafford Park 1, Telford TF3 3BD, UK
Electrical accessories importer and distributor 100
Luceco Electrical (Jiaxing) Limited 1,438 Jiachung Road
Xiuzhou Industrial Park
Jiaxing, Zhejiang 314000, China
Manufacturing company 100
Luceco (Hong Kong) Limited Room 2401, 24th Floor
CC Wu Building, 302‑308
Hennessy Road, Wanchai, Hong Kong
Registered office 100
Luceco Inc Batallon de San Patricio 109 Sur, Col.
Valle Oriente San Pedro Garza Garcia, Mexico
Administrative and development office 100
Luceco SAS 3 Rue de Courtalin, 77700 Magny
Le Hongre, France
Administrative and development office 100
Luceco GmbH Holstenplatz 20b, 22765 Hamburg, Germany Administrative and development office 100
Luceco Mexico Batallon de San Patricio 109 Sur, Col.
Valle Oriente San Pedro Garza Garcia, Mexico
Administrative and development office 100
BG Electrical SDN No. 2 Jalan SS 24/17, 47301 Petaling
Jaya, Selangor, Malaysia
Administrative and development office 100
Nexus Industries PTE Limited 3,791 Jalan Bukit Merah #09‑25
(E‑center@redhill), Singapore, 159471
Administrative and development office 100
Luceco Southern Europe SL CL Bobinadora 1‑5, Local 7, 08302
Mataro Barcelona, Spain
Administrative and development office 100
Luceco Middle East FZCO Building 5EB, Office 342, DAFZA
PO Box 371128, Dubai
Administrative and development office 100
Kingfisher Lighting Limited
1
(Reg: 02236337)
Luceco Distribution Centre
Stafford Park 1, Telford TF3 3BD, UK
Electrical accessories importer, installer and distributor 100
DW Windsor Group Limited
1
(Reg: 08849218)
Luceco Distribution Centre
Stafford Park 1, Telford TF3 3BD, UK
Intermediate holding company 100
D.W. Windsor Limited
1
(Reg: 01309755)
Luceco Distribution Centre
Stafford Park 1, Telford TF3 3BD, UK
Manufacture of electric lighting equipment 100
Notes to the Company Financial Statements continued
for the year ended 31 December 2023
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Notes to the Company Financial Statements continued
for the year ended 31 December 2023
Company Registered office Principal activity
% of shares
held
Pulsar Lighting Solutions Limited
1
(Re g: 00943317)
Luceco Distribution Centre
Stafford Park 1, Telford TF3 3BD, UK
Manufacture of electric lighting equipment 100
Urban Control Limited
1
(Reg: 09950591)
Luceco Distribution Centre
Stafford Park 1, Telford TF3 3BD, UK
Manufacture of electric lighting equipment 100
EV Charge Points UK T/A EVCP Limited
1
(Reg: 12454736)
Burlands, Charlwood Road, Ifield,
Crawley, England RH11 0JZ
Manufacture of electric vehicle chargers 100
1. All UK registered subsidiaries are exempt from audit, which is set out within Section 479A of the Companies Act 2006 for the year ended 31 December 2023. The Company will guarantee the debts and liabilities of each of the
UK subsidiary undertakings at the balance sheet date in accordance with Section 479C of the Companies Act 2006. The Company has assessed the probability of loss under the guarantee as remote.
Luceco Holdings Limited is the only company which is owned directly. All other companies are owned and controlled by virtue of the Company’s holding in Luceco Holdings Limited.
30 Debtors
£m 2023 2022
Amounts owed by Group undertakings 75.7 84.5
Amounts owed by the Group’s subsidiaries are repayable at the Company’s demand and attract no interest.
31 Capital and reserves
Accounting policy
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a reduction from equity, net of any tax effects.
Allotted, called up
and fully paid
Number of shares in issue
(thousands)
2023
£
2022
£
2023
Number
2022
Number
At 1 January 80,400 80,400 160,800 160,800
At 31 December 80,400 80,400 160,800 160,800
Each ordinary share carries one vote, participates equally with the other ordinary shares in distribution of dividends and capital (including on a winding up) and is not redeemable.
32 Ultimate parent and controlling party
There is no controlling party.
29 Fixed asset investments continued
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Glossary
A
AGM: Annual General Meeting
APMs: Alternative performance measures;
a table summarising the reconciliation of
adjusted measures to statutory measures
is included in note 1 of the consolidated
financial statements
Articles: The Company’s Articles of
Association
B
BAU: Business‑as‑usual
C
CAGR: Compound annual growth rate
Capex: Capital expenditure
CDP: Carbon Disclosure Project
CEO: Chief Executive Officer
CFO: Chief Financial Officer
CGU: Cash‑generating unit
CO
2
: Carbon dioxide
Code: 2018 UK Corporate Governance Code
CPA: Construction Products Association
CPI: Consumer Price Index
CSOP: Company Share Option Plan
D
DIY: Do it yourself
DTR: Disclosure Guidance and Transparency
Rules
E
EAC: Energy Attribute Certificate
EBT: Employee Benefit Trust
ECCTA: Economic Crime and Corporate
Transparency Act
ECL: Expected credit loss
EEIO: Environmentally extended input
output
EICR: Electrical Installation Condition
Report
EPD: Environmental Product Declarations
ESG: Environment, Social and Governance
ESOS: Energy Savings Opportunity Scheme
EUR: Euro, currency of the Eurozone
EV: Electric vehicle
F
FCA: Financial Conduct Authority
FOB: Free On Board, comprising products
shipped directly from our facility in China to
the customer
FRS: Financial Reporting Standards
FTSE: Financial Times Stock Exchange
FVOCI: Fair Value through Other
Comprehensive Income
G
GBP: British pound sterling
GHG: Greenhouse gas
H
HEA: Highway Electrical Association
HFC: Hydrofluorocarbon, used as coolants in
air conditioning units
HR: Human resources
I
IAS: International Accounting Standards
IEA: International Energy Agency
IFRS: International Financial Reporting
Standards
IP: Intellectual property
IPCC: Intergovernmental Panel on Climate
Change
IPO: Initial public offering
ISO: International Organisation for
Standardisation
K
KPI: Key Performance Indicator
L
L&D: Learning and development
LBM: Location‑based methodology
LCMP: Low Carbon Manufacturing
Programme
LED: Light emitting diode
LED Lighting: A type of low energy lighting
LPG: Liquefied petroleum gas
LTIP: Long‑term incentive plan
M
M&A: Mergers and acquisitions
MAR: Market Abuse Regulation
MBM: Market‑based methodology
N
NED: Non‑Executive Director
NGFS: Network for Greening the Financial
System
O
OCI: Other Comprehensive Income
OECD: Organisation for Economic
Co‑operation and Development
OEM: Original equipment manufacturer
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Glossary continued
P
PCA: Persons closely associated
PCAF: Partnership for Carbon Accounting
Financials
PPTS: Percentage points
PSP: Performance Share Plan
R
R&D: Research and development
RMB: Renminbi, currency of China
RMI: Repairs, maintenance and
improvements
RNS: Regulatory News Service
RPI: Retail Price Index
S
SBTi: Science Based Targets initiative
SECR: Streamlined Energy and Carbon
Reporting
SIC: Standard Industrial Classification
SID: Senior Independent Director
SIP: Share Incentive Plan
SKU: Stock keeping unit
Solar PV: Solar Photovoltaic, technology
which converts sunlight into electricity
SONIA: Sterling Overnight Index Average
T
tCO
2
e: Tonnes of carbon dioxide equivalent
TCFD: Task Force on Climate‑related
Financial Disclosures
TM65 and TM66 assessment: calculation
ofthe total CO
2
emitted in the production
of a product
TPT: Transition Plan Taskforce
TSR: Total shareholder return
U
UAE: United Arab Emirates
USD: United States dollar
W
WEEE: Waste Electrical and Electronic
Equipment
WWF: World Wide Fund for Nature
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Shareholder queries
Shareholders who change address, lose their share certificates, wish to amalgamate
multiple shareholdings or have payments paid directly into their bank account, or
otherwise have a query or require information relating to their shareholding, should contact
the Company’s registrar.
This can be done by writing to Link Group, Central Square, 29 Wellington Street, Leeds
LS1 4DL. Alternatively, shareholders can contact Link Group on +44 (0)371 664 0300
(calls cost 12p per minute plus network extras; lines are open 9.00am to 5.30pm Monday
to Friday), or on +44 (0)371 644 0300 if calling from overseas, or email their enquiry to
shareholderenquiries@linkgroup.co.uk, indicating they are a Luceco shareholder.
Shareholders are also able to access and amend details of their shareholding, via the
registrar’s website at www.signalshares.com. If you have not previously registered to use
this facility you will need your investor code, which can be found on your proxy card or on
any share certificate issued by Link Asset Services.
You can access the service via the investor relations section of Luceco’s website at
www.lucecoplc.com.
Online shareholder services
Luceco provides a number of services online in the investor relations section of its website
at www.lucecoplc.com, where shareholders and other interested parties may:
• View and/or download annual and half‑year reports
• Check and/or download current or historic share prices
• Check the amounts and dates of historic payments to shareholders
• Use interactive tools to calculate the value of shareholdings
• Chart Luceco ordinary share price changes against indices
• Register to receive email alerts regarding press releases, including regulatory news
announcements, Annual Reports and Company presentations
Company Information
Financial calendar
Ex‑dividend date 11 April 2024
Dividend record date 12 April 2024
Dividend reinvestment plan final date for election 25 April 2024
Annual General Meeting 14 May 2024
Dividend paid 17 May 2024
Half‑year end 30 June 2024
Half‑year end trading update 23 July 2024
Half‑year interim management statement 10 September 2024
Year end 31 December 2024
Full‑year results March 2025
Share price history
The following table sets out the reported high, low, average and financial year end
(31December or immediately preceding business day) closing middle market quotations
of Luceco’s ordinary shares on the London Stock Exchange for the period 1 January 2023 to
31December 2023.
Share price (pence) High Low Average
Financial
year end
1
2023 152.8 100.0 122 .2 124.0
2022 337. 5 66.0 148.8 98.2
1. Last trading day at the London Stock Exchange, 29 December 2023.
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Company Information continued
Protect yourself
1) Reject cold calls
If you have been cold called with an offer to buy or sell shares, it is likely to be a high‑risk
investment or scam. You should treat the call with extreme caution. The safest thing to do
is hang up.
If you are offered unsolicited investment advice, discounted shares, a premium price
for shares you own, or free company or research reports, you should get the name of
the person and organisation contacting you and take these steps before handing over
anymoney.
2) Check the firm on the Financial Services Register at www.fca.org.uk/register
The Financial Services Register is a public record of all the firms and individuals in the
financial services industry that are regulated by the FCA. Use the details on the Financial
Services Register to contact the firm.
3) Get impartial advice
Think about getting impartial financial advice before you hand over any money. Seek
advice from someone unconnected to the firm that has approached you.
REMEMBER, if it sounds too good to be true, it probably is!
If you use an unauthorised firm to buy or sell shares or other investments, you will not have
access to the Financial Ombudsman Service or Financial Services Compensation Scheme if
things go wrong.
Report a scam
If you suspect you have been approached by fraudsters, please tell the FCA using the share
fraud reporting form at www.fca.org.uk/consumers/report-scam-us#Report where you
can find out more about investment scams. You can also call the FCA Consumer Helpline
on +44 (0)800 111 6768.
If you have lost money to investment fraud, you should report it to Action Fraud on
+44 (0)300 123 2040 or online at www.actionfraud.police.uk.
Find out more at www.fca.org.uk/scamsmart.
ShareGift
Luceco supports ShareGift, the share donation charity (registered charity number 1052686).
ShareGift was set up so that shareholders who have only a very small number of shares
which might be considered uneconomic to sell are able to dispose of them by donating
them for the benefit of UK charities. Donated shares are aggregated and sold by ShareGift,
the proceeds being passed on to a wide range of UK charities. Donating shares to charity
gives rise neither to a gain nor a loss for UK capital gains purposes and UK taxpayers may
also be able to claim income tax relief on the value of the donation.
Further information about donating shares to ShareGift is available either from its website
at www.sharegift.org, by writing to ShareGift at 4th Floor Rear, 67/68 Jermyn Street,
London SW1Y 6NY or by contacting them on +44 (0)20 7930 3737.
Even if the share certificate has been lost or destroyed, the gift can be completed.
Theservice is generally free; however, there may be an indemnity charge for a lost or
destroyed share certificate where the value of the shares exceeds £100.
Unsolicited mail
The Company is obliged by law to make its share register publicly available should a
request be received. As a consequence, shareholders may receive unsolicited mail from
organisations that use it as a mailing list. Shareholders wishing to limit the amount of such
mail should either write to Mailing Preference Service, DMA House, 70 Margaret Street,
London W1W 8SS, register online at www.mpsonline.org.uk or call the Mailing Preference
Service (“MPS”) on +44 (0) 207 291 3310. MPS is an independent organisation which offers a
free service to the public.
Warning to shareholders – boiler room scams
Each year in the UK, £1.2bn is lost to investment fraud, with the average victim losing
around £20,000. What is more, it is estimated that only 10% of the people that become
victims of investment fraud actually report it.
Investment scams are becoming ever‑more sophisticated – designed to look like genuine
investments, they are increasingly difficult to spot. They are targeted at those most at risk,
typically people in retirement who are actively seeking an investment opportunity.
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Advisers and Other Information
Company’s registered office
Luceco plc
Building E Stafford Park 1
Stafford Park
Telford TF3 3BD
www.lucecoplc.com
ir@luceco.com
Independent auditor
KPMG LLP
Statutory Auditor
Chartered Accountants
One Snowhill
Snow Hill Queensway
Birmingham B4 6GH
Financial advisers and brokers
Numis Securities
45 Gresham Street
London EC2V 7BF
Liberum
Ropemaker Place
Level 12
25 Ropemaker Street
London EC2Y 9LY
Registrars
Link Group
Central Square
29 Wellington Street
Leeds LS1 4DL
shareholderenquiries@linkgroup.co.uk
Company secretarial services
Company Matters
6th floor
65 Gresham Street
London EC2V 7NQ
luceco@linkgroup.co.uk
Financial PR advisers
MHP Communications
6 Agar Street
London WC2N 4HN
luceco@mhpgroup.com
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Strategic Report and Governance
The Strategic Report, Governance and the Financial Statements form part of the Directors’
Report. In particular, the Board has taken advantage of Section 414C(11) of the Act to include
disclosures in the Strategic Report including:
• Employee involvement
• The employment of disabled people
• The future development, performance and position of the Group
• Research and development activities
Each of the Strategic Report and Governance section have been drawn up and presented
in accordance with English company law and the liabilities of the Directors in connection
with these reports shall be subject to the limitations and restrictions provided by such law.
In particular, the Directors would be liable to the Company (but not to any third party) if the
Strategic Report and/or Governance section contained errors as a result of recklessness
or knowing misstatement or dishonest concealment of a material fact, but would not
otherwise be liable.
The Strategic Report forms part of the Annual Report and Financial Statements and full
copies are available on the Group’s website at www.lucecoplc.com or from the Company’s
registered office.
Advisers and Other Information continued
Cautionary statement
This Annual Report and Financial Statements has been prepared for the shareholders of
Luceco plc, as a body, and no other persons. Its purpose is to assist shareholders of the
Company to assess the strategies adopted by the Group, the potential for those strategies
to succeed and for no other purpose. The Company, its Directors, employees, agents
or advisers do not accept or assume responsibility to any other person to whom this
document is shown or into whose hands it may come and any such responsibility or liability
is expressly disclaimed.
This Annual Report and Financial Statements contains certain forward‑looking statements
that are subject to risk factors associated with, amongst 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 Strategic Report
will be realised.
The forward‑looking statements reflect the knowledge and information available at the
date of preparation of this Strategic Report and the Company undertakes no obligation
to update these forward‑looking statements. Nothing in this Annual Report and Financial
Statements should be constituted as a profit forecast.
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The paper used in this report is produced using virgin wood fibre from
well‑managed, FSC
®
‑certified forests and other controlled sources. Allpulps
usedare elemental chlorine free and manufactured at a mill that has been awarded
the ISO 14001 and EMAS certificates for environmental management. The use of the
FSC
®
logo identifies products which contain wood from well‑managed forests and
other controlled sources certified in accordance with the rules of the Forest
Stewardship Council
®
.
Printed by an FSC
®
and ISO 14001 certified company.
Designed by
www.lyonsbennett.com
Luceco plc
Registered office
Building E Stafford Park 1
Stafford Park
Telford TF3 3BD
www.lucecoplc.com
ir@luceco.com
Company number 05254883
Luceco plc|Annual Report and Financial Statements 2023