LUCIBEL : Increasing growth in Q3 2015 (+31%)

Lucibel_CP_H12015Results and Q32015 Revenues_EN_clean

PRESS RELEASE

Rueil, 13 October 2015

Increasing growth in Q3 2015 (+31%) € 2.3m EBITDA loss in H1 2015, a material improvement vs H1 2014 performance

• Group revenues at € 7.8m in Q3 2015 (+31%) and at € 21.3m in the first 9 months of the year (+20%)
• 37% EBITDA loss reduction in 2015 first half (€2.3m) under the effect of significant decrease in operating expenses (-15%)
• € 0.6m positive EBITDA contribution for Cordel and Procédés Hallier
• Breakeven EBITDA target for 2015 postponed despite growth perspectives and reduction in costs, but positive EBITDA target for 2016 confirmed
• Shareholders' equity at € 13.6m and cash and cash equivalents position at € 5.0m as of 30 June 2015
• Back on the track of organic growth and now about to achieve operating breakeven, Lucibel confirms its ambitions of strong development on the LED lighting market with the combination of organic and external growth

Lucibel, a specialist of LED (light-emitting diodes) lighting solutions, reviews its activity for the nine months ended 30 September 2015 and has posted its results for the first half of 2015.

Third quarter 2015 activity: increasing growth in the third quarter 2015 under the impulsion of dynamic international sales and of good performance in France

In €m (consolidated IFRS-compliant data, unaudited)	2015	3d Quarter 2014 Change		2015	9 months 2014 Change
France	5.4	4.6	+18.3%	15.4	15.2	+1.6%
as a % of revenues	69.3%	79.7%	72.3%	85.4%
International	2.4	1.2	+101.6%	5.9	2.6	+126.4%
as a % of revenues	30.7%	20.3%		27,7%	14,6%
Group revenue	7.8	5.8	+30.7%	21.3	17.8	+20.0%

Lucibel achieved group revenues of € 7.8m for the third quarter of 2015, a strong progression in comparison to Q3 2014 (+30.7%). This performance is explained by the strong dynamic of international sales that doubled over the period and by a return to growth of French sales. Since the beginning of the year, consolidated revenues reached € 21.3m, a 20.0% increase on the same period in the previous year.

Lucibel sales in France reached € 5.4m in Q3 2015, a 18.3% increase in a traditionally low growth period that includes summer months.

This performance confirms the adequacy of the decisions taken in the first half year 2015 regarding product offer evolution (launch in April 2015 of a new product range dedicated to the office segment and expansion of the Cordel offer dedicated to retail), sales and marketing strategy and sale force (focus on a solutions approach addressing final client's specific needs). Q3 2015 revenues include a

€ 0.7m contribution of Citéclaire, Lucibel's subsidiary dedicated to the service to public authorities, of which € 0.6m linked to the contract with the town of Istres signed in October 2014. 9 first months of 2015 Group revenues in France amount to € 15.4m.

Abroad, Group activities remain on a significant growth trajectory with sales that doubled in Q3 2015 to reach € 2.4m and with a 126% growth on the first 9 months of 2015 to achieve € 5.9m sales. International activities now account for about a quarter of group revenues (27.7%) vs 15% in 2014.

This performance was triggered by sales progression on all geographies targeted by Lucibel abroad, with a specific importance to be given to the Middle East and Africa sales that account for about 61% of international Group sales with € 3.6m revenues, a threefold increase on the 2014 performance. On this area, Lucibel' Middle Eastern subsidiary, created 2013 and based in Dubai, keeps on growing with a 250% increase in its revenues on the first 9 months of 2015 at € 2.5m.

Finally, the Group experienced since the beginning of 2015 a sustained increase of Europe and Asia- Pacific activities with cumulated sales at September 30 2015 amounting to € 1.7m (+43.6%) and € 0.6m (+95%) respectively.

2015 Half year results: strong reduction of EBITDA loss under the influence of lower operating expenses, cyclical market pressure on gross margin and operational efficiency improvement plan on H2 2015

In €m (consolidated IFRS-compliant data, unaudited) (*)	H1 2015	H1 2014 % Change (**)
Revenues	13.5	12.0	+12.4%
Of which France Of which International Gross margin as a % of revenues Operating expenses	10.0	10,2	-2.0%
	3.5	1.8	+95.6%
	5.5	5,6	-
	40.9%	46.3%
	(8,8)	(10.3)	-14.8%
Current Operating Result	(3.3)	(4.8)	-31.4%
EBITDA1	(2.3)	(3.6)	-37.0%
EBIT2	(3.7)	(4.8)	-22.3%
Financial income (expense)	-	(0.8)	-100.0%
Corporate Tax income (expense)	-	0.9	-100.0%
Net result	(3.7)	(4.7)	-20.7%

(*) Unaudited data reviewed by Lucibel's Board of Directors held on 1st October 2015 (**) Variations established from figures in thousands of Euros

• Cyclical market pressure on gross margin, material reduction of the operating expenses linked to the operational efficiency improvement plan to be continued in H2 2015 and positive performance of Cordel and Procédés Hallier

  Despite the growth of activity in the first half of 2015 (+12.4%), Group gross margin is stable in value at € 5.5m, a 40.9% margin vs 46.3% in H1 2014 and 43.4% in full year 2014.

  
  

  Hence, following a substantial margin growth in the first half of 2014, gross margin evolved in the first half of 2014 (40.6% of sales) to stabilize on the second half of the year. This results comes as a negative consequence of market evolution on the last 12 months with pressure on sale prices for some lighting products, enhanced by the €/US Dollar exchange rates evolution since the summer 2014, and by remaining extraordinary costs on logistics (air cargo on some significant projects) that contributed to increased cost of Asia sourced products.

  
  

  In this environment, the key evolution in H1 2015 is the significant reduction of Group operating costs to € 8.8m, a 14.8% reduction and a € 1.5m gain vs H1 2014.

  
  

  1 EBITDA = Current Operating Result adjusted for non-cash items (notably depreciation and amortization costs, payment inshares)

  2 EBIT = Earnings before interest and corporate tax

  
  

  This data is the first effect of the operational efficiency improvement plan launched by the Group in H2 2014 with the objective to reduce Group operating expenses and streamline the acquired activities of Cordel and Procédés Hallier.

  
  

  These savings come despite the increasing costs of Lucibel Barentin since summer 2014, the Group French subsidiary and industrial site in charge of product development and assembly of high value added LED products as the site generated € 0.2m operating losses in H1'2015.

  
  

  Operational expenses reduction addressed mainly personnel costs at € 5.4m in H1 2015 vs € 6.3m in H1 2014 (-13.4%) with a decrease in Group headcount of 16% (176 people at June 30 2015). Savings have also been generated through a lesser use of external service providers at € 3.4m in H1 2015, a 10.5% decrease.

  
  

  In this environment, the Group current operating loss reached € 3.3m in H1'2015, a € 1.5m reduction on the same period in 2014 (-31.4%). Post adjustments for net depreciation and provisions (€ 0.8m) and payments in shares (€ 0.2m), EBITDA Group loss reached € 2.3m in H1 2015, a € 1.3m (-37.0%) improvement on the same period the previous year.

  
  

  With non-current operating expenses of € 0.5m, including mainly restructuring costs and impairment costs, and with no material financial and tax expenses, Group operating loss (EBIT) and Group net loss set at € 3.7m.

  
  

  Operational efficiency improvement plan having been applied across all Group business and functions, it is to be noted that the positive contribution to Group EBITDA of Cordel and Procédés Hallier in H1 2015 reached € 0.6m for revenues of € 6.9m (9.2% margin).

  
  

• Successful May 2015 capital increase

  
  

  Post deduction of the half-year consolidated net loss, Group shareholders' equity is at € 13.6m on 30 June 2015. This items also includes the effect of the May 2015 € 4.4m capital increase.

  
  

  Also, Lucibel finalized in March 2015 the refinancing of part of Procédé Hallier's acquisition price that was financed on equity at time of transaction (December 2013) with a € 1.5m 5 year bank debt structured with two french banks.

  
  

  At 30 June 2015, with a cash and cash equivalents position of € 5.0m, Group net financial debt is at

  € 5.3m (o/w € 2.8m factoring debt).

  
  

• Postponed objective for breakeven EBITDA on 2015

  
  

  Despite 2015 activity revenues growth expectations and the cost reduction actions taken since the beginning of 2015, the objective for breakeven EBITDA on 2015 is postponed, yet conditions are in place to achieve a positive EBITDA target on 2016.

  
  

  The Group is to pursue the operational expenses reduction plan in the second half of 2015 as it will address the following items:

  
  

  • Focus of investments on the development of value added products, to be marketed in 2016, of which the first LiFi solutions distributed through SLMS (Schneider Lucibel Managed Services) or directly by Lucibel (high bandwidth LiFi);

    
    

  • Focus of the sales force on high potential market segment and geographies;

    
    

  • Optimization of logistics costs thanks to the in-house management of stocks at Lucibel Barentin for the products distributed in Europe and the review of the sourcing process for the products purchased in Asia;

    
    

  • Continuous reduction of overhead costs.

Prospective view

Frédéric Granotier, Chairman and CEO of Lucibel, made the following comment: « Thanks to the team strong dedication toward our ambitious objectives, Lucibel managed to rationalize its organization while accelerating its growth. This growth acceleration should go on in 2016 thanks, notably, to the expansion of our implantations abroad and the launch of innovative products such as our LiFi solutions enabling internet access through LED light, which will be produced at our French factory of Barentin (Seine Maritime) and marketed in 2016. Having recovered a strong organic growth and now close to breakeven, Lucibel is ready to consider relaunch of its unorganic growth policy in the coming months, which remains a key element of Lucibel' ambitious development strategy. »

Next financial release

20 January 2016, post market closing: 2015 revenues

30 March 2016, post market closing: 2015 results

About Lucibel

Lucibel is a French innovative company designer of new-generation lighting products and solutions based on LED technology, and marketed in over 25 countries. For more information, please visit company's website at www.lucibel.com

Lucibel is listed on Alternext Paris/Ticker: ALUCI/ISIN code: FR0011884378 Lucibel is eligible for French equity savings plans (PEA), SME equity savings plans (PEA-PME) and innovation investment funds (FCPI)

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ANNEXES

CONSOLIDATED INCOME STATEMENT (IFRS, unaudited) SEMESTER CLOSED AT 30 JUNE 2015

Data in thousands of Euros	30/06/2015	30/06/2014
Revenues	13 516	12 012
Purchases consumed	(6 830)	(5 716)
External Expenses	(4 047)	(4 207)
Employee expenses	(5 672)	(6 409)
Taxes and duties	(191)	(168)
Net additions to amortisation, depreciation and provisions	(838)	(667)
Other income and expenses from operating activities	801	399
Operating profit (loss) from ordinary activities	(3 261)	(4 756)
Other operating income and expenses	(465)	(6)
Operational profit (loss)	(3 726)	(4 762)
Share of profit (loss) of equity accounted entities	-	(36)
Operational profit (loss) after share of profit (loss) of equity accounted entities	(3 726)	(4 798)
Income from cash and cash equivalent	4	3
Cost of gross financial debt excluding bonds	(131)	(139)
Cost of convertible bonds	-	(576)
Net cost of financial debt	(127)	(712)
Other financial income and expenses	134	(38)
Net financial income (expense)	7	(750)
Corporate Income tax	(5)	850
Net profit (loss)	(3 724)	(4 698)
Attributable to equity holders of the parent company	(3 714)	(4 701)
Attributable to non-controlling interests	10	3

CONSOLIDATED BALANCE SHEET AT 30 JUNE 2015 (IFRS, unaudited)

ASSETS - in thousands of Euros	30/06/2015	31/12/2014 adjusted
Goodwill	8 062	8 062
Intangible assets	4 771	5 176
Tangible assets	597	598
Equity accounted entities	-	-
Loans and Deposits	145	151
Other long term assets	8	-
Deferred tax assets	-	-
Total non-current assets	13 583	13 987
Inventory	6 198	6 042
Trade receivable	6 959	6 680
Other current assets	2 650	2 062
Current tax receivables	104	246
Cash and cash equivalent	5 001	4 781
Total current assets	20 912	19 811
TOTAL ASSETS	34 495	33 798

Shareholders' Equity and Liabilities - in thousands of euros	30/06/2015	31/12/2014 adjusted
Equity	8 644	7 554
Issue premiums	37 135	34 033
Treasury shares	(405)	(419)
Translation differences	(296)	(152)
Reserves and Earnings accumulated	(31 475)	(27 922)
Shareholders' equity - part of the group	13 603	13 094
Shareholders Equity - share attributable to non- controlling interests	(33)	(21)
Shareholders' equity	13 570	13 073
Borrowings and financial liabilities	8 399	7 900
Other non-current liabilities	27	216
Employee benefits	135	147
Provisions - non-current portion	20	20
Deferred tax liabilities
Total non-current liabilities	8 581	8 283
Overdrafts and other bank debt (portion maturing in less than one year)	1 907	1 180
Provisions - current portion	1 006	1 033
Trade payables	5 103	5 413
Tax liabilities	3	1
Other current liabilities	4 325	4 815
Total current liabilities	12 344	12 442
TOTAL SHAREHOLDERS'EQUITY AND LIABILITIES	34 495	33 798

CONSOLIDATED FREE CASH FLOW STATEMENT (IFRS, unaudited) SEMESTER CLOSED JUNE 30 2015

Amounts in thousands of Euro	30/06/2015	30/06/2014
Consolidated net loss (including that attributable to non-controlling interests)	(3 724)	(4 698)
Share of profit (loss) of equity accounted entities	-	36
Net depreciation expenses and provisions (excluding depreciation of current assets showed
in the variation of account receivable here under)	542	412
Share-based payments	149	478
Gains/ (losses) on disposals	196	5
Other non-monetary income and expenses	-	-
Cash flow from operations after the cost of net financial debt and taxes	(2 837)	(3 767)
Elimination of cost of net financial debt	154	712
Corporate income tax income/ (expenses)	4	(850)
Cash flow from operations before the cost of net financial debt and taxes	(2 678)	(3 905)
Corporate income tax paid	179	(123)
Change in inventory	(148)	(1 967)
Change in trade receivables	(228)	753
Change in trade payables	(388)	1 226
Change in other operating assets and liabilities	(1 304)	(524)
Cash flow from operating activities (B)	(4 567)	(4 540)
Cash flow related to the purchase of intangible assets and property, plant and equipment	(199)	(164)
Capitalised development expenses	(234)	(328)
Proceeds from the sales of intangible assets and property, plant and equipment	4	-
Cash flow related to loans and borrowings	21	(9)
Proceeds from sale of financial assets	-	-
Net Cash flow from business combinations	-	-
Cash flows used in investing activities	(408)	(501)
Capital increases	4 192	322
Trading in treasury shares	14	(281)
Repayment of borrowings and financial liabilities	(933)	(528)
Issuance of borrowing and financial liabilities	1 574	7
Cash flow from factoring	162	(505)
Net Financial interests paid	(157)	(162)
Cash flow from (used by) financing operations (D)	4 851	(1 147)
Impact of currencies variations (E)	12	2
Net Change in cash and cash equivalents (B+C+D+E)	(111)	(6 188)
Opening cash and cash equivalents	4 768	9 307
Closing cash and cash equivalents (*)	4 657	3 119

(*) Including negative bank account position included in the « Financial liabilities » item of the

financial accounts (344)(36)