LUCECO PLC ANNUAL

Capital management

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 a £120.0m 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 Bank Net Debt : Bank EBITDA (“Leverage Ratio”) within a target range of 1.0 to 2.0 : 1, averaging 1.5 across each economic cycle • Maintain Bank 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 Bank Net Debt to Bank EBITDA ratio is calculated in accordance with the Group’s loan agreements, as follows: £m 2025 2024 Bank EBITDA (see note 1) 45.0 41.7 Bank Net Debt (see note 16) 52.3 68.6 Bank Net Debt : Bank EBITDA 1.2 1.6