Good morning, everybody. Thank you for attending the Luceco plc results presentation for 2025. Our highlights. Revenue was up 12%, operating profit up almost 17%, adjusted operating margin up half a percentage point. Our net debt ratio 1.2 x down from 1.6x. Our full year dividend of GBP 0.06, which is up 20% on last year, and our adjusted EPS of GBP 0.15 also up by 20% on last year. Okay, the further highlight slide. Like for like, revenue growth of 2% in the first half and actually close to 7% in the second half, which has accelerated further in Q1 of this year. This is despite subdued activity in our core overall markets.
Approximately 2/3 of last year's organic growth was from the EV charging category as a result of ongoing market share gains in a structurally growing segment. EV charger sales were up 85% in the year, and it is continuing to be strong this year. Operating profit margin was up to 12.5%, which is a half a percent increase on last year, which was a further half a point increase on the previous year. Hence, operating profit 17% higher, giving us a three-year operating profit compound average growth rate north of 15%. There was very strong cash generation of GBP 30 million. Since 2019, our free cash flow has totaled GBP 140 million on GBP 1.5 billion of sales, which equates to a free cash flow percentage of sales of approximately 9.5%.
We have achieved this in parallel with strong economic growth. As per our strategy, we can use some of the cash from this core business to invest in M&A, and our two most recent deals, i.e. D-Line and CMD, are both performing excellently with the integration work of which will be completed by the end of this year.
Thank you, John, and good morning, everybody. Let me start with a quick review of our income statement. Our revenue at GBP 271.4 million reflects the strong end to 2025, which we talked about in our recent trading update. Almost 12% up with 4.6% like-for-like growth is a creditable performance in a market like ours. Our hybrid and professional wholesale channels had an especially strong year, growing over 11% with over 8% like-for-like growth. The EV charger products that the Group now offers are clearly attractive. Growth of almost 85% year on year is ahead of the EV market and another excellent performance. Our energy transition sales, of which EV chargers are the majority, delivered GBP 18.1 million sales in 2025, up from GBP 9.8 million the year before.
The information we monitor covering demand for our products across certain customers leads us to believe that the strong performance we saw towards the end of 2025 is continuing into 2026. A year ago, I spoke of the strong performance in our overseas operations, which delivered a near 23% improvement in 2024. They found 2025 more challenging as a wider economic event that you are all aware of had an impact. Our outdoor LED lighting businesses struggled in 2024 with an impact from local authority funding. It's pleasing to see that DW Windsor has recovered strongly in 2025 following some self-help measures, and this is continuing into the new year. The house building market has been a more difficult place again this last year. It only represents approximately 5% of revenue, although our team are achieving impressive market share growth.
The 2024 acquisitions of D-Line and CMD have been integrated well, and synergies are starting to show through. CMD previously sourced a significant level of componentry from overseas third-party suppliers, and our in-house manufacturing facilities are especially well suited to the production of these components more competitively. The D-Line warehouse facility in the North of England will be closed in the summer as its operations are being integrated into the existing footprint of Luceco. Gross margin for the year was 41.8%, a year-on-year improvement and the highest annual performance we have achieved. This was delivered in spite of an uptick in some key raw material costs, for example, copper. Sea freight costs were relatively calm through much of 2025. I will speak about the current experience shortly.
Our containers from Asia to Europe have been traveling around the Cape for over 18 months, so we are not seeing a direct impact on routings as a result of the Iran conflict. However, we are clearly experiencing indirect effects. Journeys around the Cape keep our inventory goods in transit balance around double its historic levels at circa GBP 12 million. Our Jiaxing production facility continues to improve delivering productivity, benefits from operational leverage, and overhead savings, again in 2025, assisting our gross margin. The U.S. dollar represents a revenue headwind for us again in 2025. The RMB has been declining against sterling, and we saw the benefit coming through our cost base. As I have said in the past, we follow a policy to place forward cover which delays the consequences of currency movements. Overheads at circa GBP 80 million were up circa GBP 11 million on 2024.
The majority of the increase was attributable to the newly acquired D-Line and CMD businesses, representing GBP 6.6 million. We made some targeted investments in select overhead categories, notably in energy transition-related activities such as marketing, technical, and support. Our wage cost inflation was in line with that seen in the wider U.K. economy in 2025. Adjusted operating profit was GBP 33.8 million, above the indication we shared in our January trading update and over 16% ahead of the prior year. Pleasing to see that our adjusted operating profit margin has now moved from 11.5% in 2023 to 12% in 2024, and now 12.5% in 2025. Good, consistent improvement. We've managed to unlock some previously unusual losses, giving us a one-time benefit to our 2025 tax charge of some GBP 1.6 million.
We are heavily weighted to the U.K. and increasing it with further U.K.-based acquisitions. Here, the headline corporation tax rate is now 25%. We continue to take advantage of various U.K. and overseas government incentives that mitigate some of the tax burden, though I expect our rate in 2026 to be materially above that in 2025. The reduction in our tax rate in 2025 to circa 19%, together with the GBP 1.9 million increase in our finance charge, reflecting the funds used to pay for the acquisitions partway through 2024, means our adjusted operating profit improvement delivers a pleasing increase in adjusted earnings per share of 20% to GBP 0.15.
The board has consequently recommended the dividend be increased with a final of GBP 0.042, taking the total for the year to GBP 0.06, 20% ahead of the previous year. This slide provides a bit more detail on the drivers of our revenue performance. The acquisitions of D-Line and CMD have driven the most significant change in our revenue this year. Both of these fit well into our group, and the impact of a full year of ownership has increased group sales by around GBP 21 million. D-Line arrived in late February 2024 and CMD at the end of September that year. We have previously said that we will begin to see the synergy benefits in our P&L between 18 months-24 months following completion. It takes time to design, tool, and commence component production in our facilities, and we remain on plan with CMD.
We are making progress, and the benefits of the D-Line acquisition are already showing through. Focusing on organic performance, our hybrid and trade channels space, and within them specifically our EV charger offerings, recorded an excellent increase. Our non-U.K. operations performed less well in 2025 against a tough comparative given their success in 2024. The Middle East performed well in 2025, much of it weighted towards the last quarter of the year, but clearly business may be challenged in 2026. Our Mexican operations found 2025 very tough. U.S. tariffs are having an impact on the projects market that we sell to in Mexico. Back in the U.K., the new house build market had another challenging year in 2025 and appears to be recording further deterioration in early 2026. We are enjoying some good market share gains, but we remain cautious.
Infrastructure-driven external LED operations are benefiting from some good self-help measures underway. Currency impact is mainly the effect of the U.S. dollar move versus sterling on our FOB sales. Average rates across 2025 at $1.32 were 4 basis points worse than 2024 and reduced our year-on-year sales by just over GBP 3.2 million. This slide shows the key drivers of our adjusted operating profit performance. Once again, it is pleasing to share strong operating profit improvement with an increase of some 16.6% over 2024, which follows the 21% improvement in the year before. Volume helps at our gross margin levels, and the productivity initiatives at our Jiaxing, China facility are showing through in our numbers. A higher proportion of wiring accessories are manufactured in-house, so revenue growth in this segment improves utilization at Jiaxing.
Production of CMD products there further helps in the future. The full year impact of our acquisitions added some GBP 2.6 million to 2025 operating profit. We have lots of work underway to enable our factory to manufacture for their acquired businesses or to resource product for them. The team has a proven track record in delivering these types of synergy benefits. Freight costs were relatively benign in 2025. They have ticked up recently as the market experiences some indirect disruption from the Iran conflict. We saw elevated copper and silver prices towards the end of the year. I've said before that we carry a level of copper hedging that offers some short-term protection at times like this. The situation in the Red Sea means our freight between China and Europe was already going around South Africa.
This added cost and working capital, but has become the norm. Currency has helped in 2025. Average RMB to sterling at over 9.4 was almost 3% favorable. We carry forward FX contracts that taper down up to 12 months ahead at the moment. This delays the benefit when rates move in our favor. Of course, it also offers protection when they move against us. The increase in national insurance rates to 15% implemented in April 2025 added approximately GBP 1 million to our U.K. cost base. A quick look at the last three years in six-month sections. You can see the pleasing consistent profit growth improving from GBP 24 million in 2023 through GBP 29 million in 2024 and now GBP 33.8 million in 2025. A compound annual growth rate of 19%.
This also pleasingly translates to an improving trend in operating profit margin from 11.5% in 2023 through 12% in 2024 and now 12.5% in 2025. Either way, our business continues to be H2 weighted. This slide compares how the key drivers of free cash flow were different in 2025 against 2024. We delivered a lower free cash flow of just GBP 3.5 million in 2024. I explained that much of the working capital change in 2024, which caused the temporary deterioration in our traditionally strong free cash flow, was caused mainly by two key factors that year. The transition in sea freight to avoid the Red Sea increased our stock in transit by some GBP 6 million, which while now normalized, was a one-time effect on free cash flow in 2024.
The other was that we had a very impressive sales growth right at the end of 2024. Trade receivables in 2024 therefore absorbed GBP 17 million of our operating cash flow. This compared to just GBP 3 million it absorbed across the whole of 2023. We said this time last year we expected cash flow to improve, and it is pleasing to share the excellent cash generation achieved in 2025 as our working capital position corrected. It may have to some extent over-corrected because we enjoyed stronger trading in Q3 this time, which does flatter the year-end working capital position. You will note from the CFO review in this morning's RNS, a comment that Luceco has delivered an average of GBP 20 million free cash flow over the last five years.
Finishing up on the numbers, this slide summarizes our working capital cash flow and debt performance overall. Working capital management is in a good place. I mentioned the small uptick in inventory days last year, a response to the Red Sea disruption. As you can see, our debtor days metric shows a further improvement, and I appreciate our great accounts receivable team back at base. Bank net debt ratio at 1.2 x is comfortably within our 1x-2x range and shows great progress since we spent nearly GBP 38 million on acquisitions in 2024. Our bank facilities were replaced during 2025 and now run to September 2028, with two one-year extension options which would take it to September 2030. With that, I'll hand you back to John to talk through our business review and outlook.
Turning to our competitive advantages, we are well-positioned to deliver above-market growth. We have market-leading brands and distribution, especially in the U.K. We have vertically integrated manufacturing, and we have a culture of innovation and a proven product development resource. We have a highly cash-generative core business and a strong track record of accretive M&A. This, combined with the structural opportunities from the energy transition segment. Local generation via solar, local storage via batteries, electrification of heating via heat pumps, and the electrification of transport via EV chargers are the pillars of the energy transition. We, as you know, are able to offer batteries and EV chargers. We are also able to offer all the accessories needed for the other product segments. We therefore have a clear strategy to increase our presence in these markets which have high structural growth by expanding our product ranges and via M&A.
Now I will talk about some of the product innovation highlights from last year. Our Platform lighting controls offer is an app that we have been developing over many years, which allows our project and commercial lighting segment to offer energy saving via lighting controls. This has been growing year on year and is becoming a major part of our lighting business. Our Sierra Solar street lighting is a very interesting innovation. We have designed the product such that the solar panel can be angled in the direction of the sun. This is highly patented, and we're the only people offering this. Because we can angle the solar panel to the sun, we can increase the efficiency of the product by approximately 60%.
A smart Wi-Fi dimmer, updated Pro Chargers, our Flow battery system that we've spoken about before, and our Link EV Charger, where we have separated the charging socket from the charger electronics, which means on the outside of the house, you just have a flush-mounted, smart-looking EV charger, as you can see there. We spent approximately GBP 6.3 million on R&D last year. We have 96 engineers in China supporting a team of 48 in the market-facing businesses. Innovation and product development has been a core part of our growth strategy for many years. On the next slide, I can show you some of the highlights of the pipeline for this year. We have recently launched a range of DC chargers.
Up until now, we only had AC chargers, but we have more high-powered DC chargers, which we have white labeled from a Chinese manufacturer. We have vehicle-to-grid capable residential chargers. This is the way the market will be going in future. You will be able to park your car outside your house and use it as a battery from which you will be able to run the electricity supply for your house. This will mean you can charge your car when electricity is cheap, and you can use it obviously when it's expensive. This will become the standard of EV charging in the future. We have a column EV charger that we'll be selling into local authorities, particularly via our DW Windsor business that has great relationships in that space.
I'm not gonna go through all of these, but you can see some of the very exciting new product launches that we're planning for later on this year. Now I can talk about some of the long-term structural growth markets in which we are now participating. The graph on the left-hand side shows what proportion of U.K. consumer energy demand will be provided from electricity. As you can see, it increases very significantly as the path over to net zero by 2050. The big-ticket items to make this happen are heat pumps, solar panels, also batteries and EV chargers. As you know, we are actively selling batteries and EV chargers. We also sell all the downstream accessories that are used, for example, in heat pumps and solar panels.
Accessories will add approximately GBP 200-GBP 300 to the cost of a renewable house against a traditional home, and we are able to participate in all of that. On the right-hand graph, you can see U.K. EV charger installations and how they are forecast to grow. This year, we will sell approximately 75,000 residential EV chargers, giving us a market share of approximately 15%. This has increased from approximately 5% when we bought the business in 2022. You can see at maturity, the market will be approximately 6x larger than it is now. Okay, to the next slide. Recurring demand flexibility. You can see from the graph on the left-hand side, this is attempting to show what happens to peak electric demand in the U.K. without flexibility. That is the dotted line at the top.
If the grid is able to move the demand in a flexible way, we can reduce the overall peak of electricity that is required. The green section is the demand flexibility that will be provided by EV charging. The orange is gonna be provided by other devices. You can see, as a result of increasing demand flexibility, we can greatly reduce the peak electricity requirement for this country. This is why EV electric charging demand flexibility is so important. It's important to understand that a EV car requires a huge amount of electricity. For example, my car has a 100 kWh battery. The average amount of electricity used in a residential environment is approximately 10 kWh per day. My car uses approximately 10 days worth of electricity demand for a normal U.K. residential house.
Once all cars have become electric and are plugged in and charged overnight, there will be huge demand, therefore, on the grid, and the value in being able to move the charging around so we can shave the peak demand means we won't have to build more power stations, either nuclear or gas. This is obviously extremely valuable. We currently have approximately 10,000 chargers actively enrolled in the wholesale demand flexibility market, and we are adding more every month. This has the potential to be a very significant new revenue stream for Luceco. However, it is a nascent regulatory environment we are operating in, and the formula upon which the value per charge is calculated is controlled by Ofgem. It is very hard to forecast how that might change and when that might change.
It is therefore very difficult for us to forecast how much this new revenue stream may be worth, but it could be significant. As I said earlier, the core business is highly cash generative. We have the ability by 2030 to invest over GBP 100 million in M&A, and we have an experienced and proven integration capability. We can buy a combination of brands, technology, and distribution. Recent thinking is to buy international routes to market for our energy transition portfolio of products. Hence, we would pay lower multiples than if we bought an existing energy transition business, which tend to command a premium valuation. We look at a lot of opportunities, but we are not currently actively engaged in any processes. Now to the outlook. Our momentum from the end of last year has continued into the first quarter of this year.
With like-for-like double-digit revenue growth for the first two months of 2026, this has been driven by a strong performance in the majority of our categories, our channels, and our territories. While the board remains mindful of the recent global economic disruption and the impact of the conflict in the Middle East is not yet known, the group is well-placed to manage its operations with appropriate resilience and contingency measures. The impact of the growth with the benefit of operationally leveraged manufacturing and distribution, investments in manufacturing efficiency, and the delivery of acquisition synergies supports further operating margin progression. As such, the board now expects adjusted operating profit for 2026 to exceed GBP 37 million, with the potential for further significant outperformance dependent upon demand flexibility, underpinned by the strength and resilience of our core business.
Thank you very much for listening, and we look forward to updating shareholders as we proceed through the year.