Gerard Lighting Group Limited ABN 16 141 079 594
Issue One September 2010
investor
news
Message from the Managing Director
Welcome to this first edition of our quarterly
investor newsletter aimed squarely at our valued
shareholders. By any objective judgement, 2010
was not an easy year to float a company on the
ASX, even one as long established and with as
good a track record as Gerard Lighting.
54%
growth
2009 2010
$7m $10.8m
That you had the confidence to buy
shares in GLG is pleasing and we do
not take this confidence and trust
for granted.
In addition to updating you about
the business, I also want to use the
newsletter as an opportunity to canvass
some ideas and to promote some
discussion on matters of relevance to
the business.
I believe the times suit GLG. There is a
confluence of developments that have
the potential to deliver exceptional
growth to the lighting sector in Australia
and, with our market share and track
record of success, we are well placed
to capitalise.
To begin with, the so-called “greening”
of Australia is, I think, unstoppable.
There may be arguments
about timing, about the
nature and extent of a carbon
tax or an emissions trading
scheme, but the mood
is there among most
Australians for a future
in which the nation’s
total greenhouse
gas emissions are
reduced or at least
constrained as
the population
and economy
both grow.
FY10 Results Snapshot
GLG’s FY10 financial
results were announced
on 24 August, including a
pro forma FY10 net profit
after tax of $10.8 million,
up 54% on the prior year
($7.0 million) and ahead
of the Prospectus forecast
of $10.6 million. The
pro forma result included
a statutory net profit after
tax for the six months to
30 June 2010 of $5.7m.
The company also
announced a 2 cents per
share dividend, in line
with Prospectus forecast.
(Continued page 2)
Features: Pierlite, a 70 year success story p3 • GLG around the globe p4 • The TRIBE – MEMBER PROFILE p5
Gerard Lighting Group / Investor News / Issue One September 2010
Message from the Managing Director continued
....the mood is there among most Australians for a
future in which the nation’s total greenhouse gas
emissions are reduced or at least constrained as the
population and economy both grow.
The focus on more greenhouse gasfriendly power generation and renewable
energy is a part of that, as is the
desire for all consumers – residential,
commercial and industrial – to find
ways to use less power. In that context,
lighting, which accounts for some
19% of global electricity consumption,
is firmly in the mix.
Take street lighting as an example.
In Australia, there are:
–– 1.4 million residential street lights
in Australia consuming 486 GWh
of power
–– 582,000 major (vehicular) road lights
consuming 549 GWh of electricity.
We estimate that if these (nearly)
2 million street lights (currently
consuming a little over 1,000 GWh)
were to switch to currently available
advanced lighting technologies around
353 GWh less electricity would be used,
corresponding to 337,000 tonnes of
CO2 which would NOT be emitted
per annum.
And the benefits go well beyond the
environment.
Based on energy cost of 14 cents /kWh,
we estimate the savings to the national
lighting bill would be approximately
$50m p.a. While this assumed cost is
a little above current rates, it is safe
to predict significant electricity price
increases in the near future – leading to
annual savings well above this amount.
No other Australian-based lighting
company has the capacity to lead
debate on national issues such as
this. Gerard Lighting will continue to
demonstrate by innovative application
of new technology, such as our
recently launched next generation
LED down-light, that it has the ‘smarts’
and the delivery capability to make a
real difference in the quest to reduce
Australian energy consumption.
Our ongoing investment in intelligent
lighting products (iLP) and our plan to
generate 20 per cent of Group revenue
from technology-related products by
2016 place the Company in an excellent
position to capitalise on a general trend
towards lighting innovation.
Simon Gerard
Managing Director
2
Gerard Lighting Group / Investor News / Issue One September 2010
3
Business Division Profile
In each newsletter, we intend to highlight a particular arm or segment of our business.
In the first edition, we are featuring Pierlite, one of the Group’s flagship brands.
Ben Mills, Executive GM
Pierlite, a 70 year success story
Pierlite is arguably Australasia’s leader
in the design and manufacture of
architectural, industrial and commercial
lighting systems. The business operates
in two main segments – through the
trade and what it calls the “professional”
arm – i.e. by supplying major projects.
Under Gerard stewardship since the
late 1980s, the Pierlite brand has grown
from a $2m p.a. to an over $150m p.a.
operation. According to Pierlite’s
Executive General Manager, Ben Mills,
there are several critical elements to this
success. “We rejected the temptation
to move all our manufacturing
operations off-shore. This adherence to
the ‘Australian Made’ ethos has been
invaluable to the business because, at
short notice, we can adapt to supply
a solution that is needed quickly. We
could not do this if we had no local
manufacturing capability,” said Ben.
Pierlite’s success is further based
on two other major factors – a
commitment to quality underpinned
by Quality Accreditation and R&D.
“The group’s mantra is ‘form, fit and
function’ in everything it does but each
of those requirements is underpinned
with baseline quality that we will not
compromise. This gives our customers
assurance in their dealings with clients,”
said Ben.
If quality is the platform on which
Pierlite products are built, then R&D is
the lifeblood of its future.
“It is advances in technology, large and
small, that give Pierlite an advantage.
New products with new technology
for example, lights that use 70% less
electricity but offer the same illumination
– enable us to control margins and
generate profits, both for ourselves and
for our shareholders. “R&D is never
quiet at Pierlite. It is a constant hum in
the background.”
Many of our customers will already
have seen the results of Pierlite’s
capabilities. They include lighting
installations at Adelaide Airport, in
Sydney’s Cross City and Lane Cove
Tunnels, the OKI Jubilee Stadium,
Sydney’s Brookvale Oval, the
Commonwealth Games Village in
Melbourne, Brisbane’s Magistrates’
Courts and the Melbourne South Bank
development. Pierlite’s international
project portfolio currently includes
the Soorty Denim Mill Pakistan, the
Willis Building London, Changi Prison
Singapore and The ERAP project
in Mozambique.
Finally, Ben gives credit to the Pierlite
workforce. “We have around 340 staff
in Padstow (Sydney), they represent
probably 20 different nationalities.
They are a positive group of people
who concentrate, not on what our
competitors are doing, but on what
Pierlite can do. We’re proud of them
and their contribution.”
Gerard Lighting Group / Investor News / Issue One September 2010
4
GLG Around the Globe
Gerard Lighting’s
Key Investments
Strategic Assets
Franchises (non co-owned)
United
Kingdom
Italy
Pakistan
United Arab Emirates
Sharjah
India
Ahmedabad
Malaysia
Selangor Darul Ehsan
Kenya
Indonesia
Jakarta Barat
Australia
Adelaide
Brisbane
Central Coast
Darwin
Hobart
Melbourne
North Queensland
Perth
Sydney
Mozambique
New Zealand
Auckland
Christchurch
Wellington
Jakarta Conference
The Group works hard to ensure the
involvement and commitment of its
overseas operations. Part of that effort
is to hold regular business conferences,
alternately in Australia and in one of
the Group’s overseas markets. These
conferences bring together the
diverse interests and challenges of the
group’s operational managers and
business partners.
The Group’s most recent conference
was held in Jakarta in early August
and assembled people from
Australia, Indonesia, Pakistan, India,
the Middle East, Kenya and Malaysia.
“It’s an effective and efficient way for
each overseas part of the group to
present where they’ve been and where
they want to go and for a productive
exchange of views of how we go about
our business,” according to Ben Mills,
Executive GM responsible for business
operations.
The Group has a major business
operation in Indonesia with a
manufacturing plant about 20 km
outside Jakarta which manufactures
commercial and architectural products,
principally for its local market. It employs
around 200 people.
According to Ben Mills, the business
conferences play a vital part in
the overseas operations of the
Gerard Group.
“At a Group level, the exchange of
information is invaluable and delivers
many insights and helps set direction
for the foreseeable future. Generally,
the range of topics discussed includes
new product development, marketing
initiatives, sales strategies and forecasts
based on economic conditions applying
in the various markets in which the
Group is active.
“Additionally, as was the case in
Jakarta, the overseas conference
enables the Group to cement
important relationships.
On the final day of the conference
we invited a number of key customers
as well as important Indonesian
government figures. The goodwill
generated is important.
“In fact, bringing together the
international group on a regular basis is
proving to be highly effective in planning
and managing our expansion plans,”
Ben added.
Gerard Lighting Group / Investor News / Issue One September 2010
5
TRIBE Member Profile
Gerard Lighting has recently introduced a contractor loyalty program, known as ‘The TRIBE’, to reward loyalty,
assist professional development and give its members a sense of community and belonging.
TRIBE member and GLG shareholder, Dallas Fletcher,
Managing Director of J.A. Martin Electrical Pty Ltd in
Newcastle NSW, spoke to ‘Investor News’:
IN – Can you describe J.A. Martin’s
relationship with Gerard Lighting?
DF – J.A. Martin’s business relationship
with the Gerard family dates back 40
years. We have many large industrial and
mining customers in the Hunter Region
and install complex and ‘state of the art’
lighting systems. We have found Pierlite,
Sylvania, and CSE fittings to be top
quality at a reasonable price.
IN – How does your business
relationship with GLG actually work?
DF – We buy all our lighting equipment
through local wholesalers so direct
interaction with GLG staff is limited. But
there is ongoing contact with the GLG
sales management and technical teams
and there are regular visits from Pierlite’s
regional management. I am also pleased
to count John Ninos, National TRIBE
Manager, as a personal friend. I am sure
that John will do a great job in managing
the many TRIBE activities.
IN – What gave you confidence
to invest your own money in GLG
during the IPO?
DF – I have always admired what Robert
and Simon Gerard did with Clipsal,
building it into a major electrical supply
company with diversification into many
facets such as data communications,
C-Bus, etc .They are both astute, always
searching for innovation. I believe they
will grow GLG into the major player in
Australian lighting but because this will
not happen overnight I have invested on
a long-term basis.
IN – How can J.A. Martin and GLG
work together to expand both
your businesses, especially in your
local area?
DF – During the GFC, Newcastle and
Hunter Region businesses maintained
good growth. Robust and reliable
lighting systems in our ‘catchment’ area,
where mining and coal-handling are
24/7 operations, are crucial. Lighting
costs for many mines and coal-loading
facilities are prohibitive so if a lighting
manufacturer can offer innovative, costefficient and durable lighting they will
reap the benefits.
GLG is a leader in LED and plasma
lighting and the future in these areas
is exciting. Importantly, GLG offers
lighting design assistance to electrical
contractors and, with ‘duty of care’
now a major issue, lighting must be in
accordance with the relevant standards
to meet Lux levels and emergency & exit
requirements.
Professional assistance in this area is
greatly appreciated and there is a big
opportunity for GLG, the wholesaler
and the electrical contractor to provide
service far beyond just supplying the
fittings to do the job.
IN – A little personal stuff about you
– in a nutshell, what have been your
personal and career highlights?
DF – I have lived in Maitland all my life
and started as an apprentice in 1974
when John Martin and his five staff
worked out of John’s garage. Today the
firm has workshops in Newcastle and
Singleton, employs around 90 staff with
a further 15 apprentices from group
training companies and carries out major
installation projects, maintenance and
breakdown work. We are also a major
switchboard manufacturer.
I have been married to Kaylene for
30 years in October and we have three
wonderful adult children, Karlee, Peter,
Dallas Fletcher, J. A. Martin Electrical
and Ashlee. I have always loved rugby
league and am a keen supporter of the
Newcastle Knights, although 2010 has
not been our year!
Cricket, ocean-fishing from my boat
and international travel are also great
interests and my passion for Australian
war history will take me to Gallipoli at
some stage.
IN – How do you think being a
member of the GLG TRIBE will
benefit you and J.A. Martin?
DF – I remain a member of Club Clipsal
which Robert created over 10 years
ago and I have some great memories
from ‘Club’ events. I believe the Gerard
Lighting TRIBE will develop along similar
lines.
I applaud Robert for creating the TRIBE.
It’s a masterstroke by him as was Club
Clipsal. For TRIBE members it is a way to
bond, stay on top of innovation, and get
to know senior people in the GLG Group
as well as wholesaler representatives.
For GLG its 700 TRIBE contractors from
all parts of Australia act as a “think
tank” and provide an opportunity to
consolidate firm and lasting business
relationships.
Gerard Lighting Group / Investor News / Issue One September 2010
6
Recent Business Highlights
Investor Calendar
2 August 2010:
Gerard Lighting formed a joint venture company White Lite Pty Ltd with White-Lite
(NSW) Pty Ltd, to design, produce and distribute emergency lighting products.
13 October 2010:
– Dividend Record Date
19 July 2010:
Gerard Lighting entered into a Heads of Agreement to acquire Frend Lighting, a
Queensland-based manufacturer and distributor of commercial and industrial lighting.
June 2010:
Gerard Lighting launched next generation LED down-lights which consume
70% less power than existing down-lights
About Gerard
Lighting Group
Gerard Lighting Group is the leader in
the Australian lighting industry, holding
a diverse product and business portfolio
across all significant market segments,
from high volume commodity lighting
products to high value, high margin
architectural lighting products.
The Group’s brand portfolio
incorporates Pierlite, Sylvania, Crompton,
Moonlighting, Inlite and Austube,
all of which are leading lighting entities
in their respective market segments.
22 October 2010:
– Dividend Payment Date
(2.0 cents per share)
26 October 2010:
– Annual General Meeting
February 2011:
– 1st Half 2011 results announcement
March 2011:
– FY11 Interim dividend
Investor Updates
Gerard Lighting website:
www.gerardlighting.com.au
–– ASX Announcements
–– Annual Reports and financial
information
–– Share price and dividend details
–– Corporate Governance policies
Share Registry:
Telephone: 1300 556 161 or
www.computershare.com.au/investor
–– Check shareholding details
–– Change of address
–– Tax File Number notification
–– Dividend – direct debit bank account
and Reinvestment Plan
–– Elect to receive Annual Reports
via email
ASX Code: GLG
Gerard Lighting’s Investor Newsletter
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e-mail: admin@firstadvisers.com.au