Lucy Controls

Business Overview Lucy Controls

Lucy Controls comprises Lucy Zodion, the Group’s leading street-lighting controls business, and Lawson Fuses, a longestablished specialist in low voltage fuses and fuse holders.

Vision To be the market leader in low voltage fuses and fuse holders

Lawson Fuses is a widely recognised and respected brand with a portfolio of high quality HRC fuse products and established international markets and customer base. The strategy has been to develop profitable sales within existing and new markets by strengthening the management, broadening the product range, and improving production processes and efficiencies, with support from and collaboration with Lucy Zodion and Lucy Electric to identify market opportunities and supply chain benefits both in the UK and overseas.

Creation of a firm foundation

Throughout 2021 significant steps were taken to continue the turnaround and transformation of Lawson Fuses both in India and the UK which resulted in a successful year of sales growth notwithstanding the continued presence of Covid-19 and the UK site at Ponteland suffering extensive smoke damage following a fire in May. Whilst this potentially created a major disruption to our operational activities and noting that there is recovery and repair work still outstanding, the business, due to the outstanding commitment of our people, continued on a largely uninterrupted basis.

With increased focus on product development, continued investment to strengthen the management team, including recognition of the need for appointments to commercial, financial and technical roles, and, significantly, ASTA product certification for our Indian manufacturing unit we have made good progress to create a firm base from which to grow the Lawson Fuses’ business. Projects have been undertaken to identify and deliver ongoing plant and process improvements; there has been significant investment in automated manufacturing processes and further engineering projects are planned to continue into 2022 to realise additional production efficiencies and support long-term sustainable value.

1

Product development for future growth

In recognition of the clear and substantial commercial opportunities available for products supporting renewable energy, sustainability and increasing carbon-neutral requirements, we have identified a new range of products to be added to our development pipeline and taken action to review and supplement our engineering team’s skillset and expertise to support successful development and delivery. These products will be key to the business’ future growth, and both support global plans for electricity infrastructure and electrification and attain benefits from evolving markets including those for electric vehicles.

The transformation of Lawson Fuses continues in line with our plans despite disruption during the year from the Covid-19 pandemic and smoke damage sustained at Ponteland. We firmly believe that the actions taken in 2021 will create a firm foundation for long-term value realisation and will provide a further update on progress in next year’s Annual Report.

2

3

4

Constant innovation for a smarter tomorrow

Vision To have our products on every street around the world

Commitment to supporting a connected world

We remain committed to the development of new products and systems for our customers that enable citywide connectivity and provide informed, clear and useful information whilst continuing to leverage value from our core, traditional products and markets, including electrical distribution pillars which are capable of supporting the growing electric vehicle charging market, photocells, isolators and software services for central management systems.

A challenging year

The continuing effects of the global pandemic adversely affected Lucy Zodion’s 2021 performance with the business experiencing challenging trading conditions throughout the year largely due to the global shortage of semi-conductors, supply chain issues manifesting in raw material scarcity, transport delays and increased costs together with a lower customer demand arising from the impact of Covid-19. Continuing pressures on the business from the semi-conductor shortage are expected into and, potentially, throughout 2022 as are those that arise from the economic, financial and supply-chain consequences of Covid-19 on the business’ markets.

Notwithstanding the commercial and operational difficulties encountered by the business, Lucy Zodion’s Ki smart city product was installed and sold to projects in Aberdeen and Bradford and a scheme in Bedfordshire awarded in the second half of the year which provides renewed confidence for 2022. There were continued hardware sales for Lucy Zodion’s Vizion intelligent street lighting product, which the business anticipates will be integrated into, its next generation Ki platform, and an increasing demand for electric vehicle (“EV”) charging pillars.

Pipeline for the future

Despite the challenges faced in 2021, we have moved forward significantly on our plans to unlock the potential of Ki with a number of pilot schemes and a clearly defined project pipeline of deliverable opportunities in the UK, Europe and the Middle East. A refreshed and prioritised development programme aligned to and supportive of our current projects and pipeline for Ki will ensure that we remain focused on meeting customer requirements and limiting distraction from none specified functionality which will protect our value drivers.

We benefit from the ability to leverage Lucy Electric’s international footprint and work with their sales teams to identify and deliver mutually beneficial opportunities for smart technologies. We have already seen benefits from this collaboration and anticipate that it will provide significant future value from the electricity networks and electric vehicle charging markets both in the UK and overseas.

Foundations for delivering value in 2022

Whilst it is clear that infrastructure projects have been delayed by the global pandemic there is a renewed importance of sustainability and a broadening environmental agenda for our customers, both in the public and private sectors, notably in the drive to de-carbonise transport and implement smart city networks to control, monitor, evaluate and analyse data to shape the development of cities and provide clean, safe and healthy environments for their inhabitants. A strong sales pipeline for Ki underlines the scale of opportunities available to the business with a renewed focus being on delivery of realisable project awards in 2022 and positioning of the business to capitalise on those over the longer-term.

Our clear strategic focus, supported by technical expertise and engineering capability will enable us to fulfil the commercial potential that will arise in a post pandemic, increasingly carbon neutral, world with our products able to provide customers the means to reduce their carbon footprint and energy costs. The growth in electric vehicles and resultant requirement for additional charging capacity both in the UK and internationally will provide significant market demand for electric vehicle charging pillars which we are well placed to meet.

5

6

7