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Thorpe(F.W.) PLC (TFW)

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Thursday 10 March, 2022

Thorpe(F.W.) PLC

Interim Results

RNS Number : 2678E
Thorpe(F.W.) PLC
10 March 2022
 

 

INTERIM RESULTS FOR THE SIX MONTHS TO 31 DECEMBER 2021

 

FW Thorpe Plc - a group of companies that design, manufacture and supply professional lighting systems - is pleased to announce its interim results for the six months ended 31 December 2021.

 

Financial highlights:

 

 

Exc. Zemper

Revenue

£63.5m 

£56.4m 

+13%

+4%

Operating profit

£8.8m 

£7.7m 

+15%

+10%

Profit before tax

£8.5m 

£7.4m 

+15%

+14%

Basic earnings per share

5.91p

5.05p

+17%

+17%

 

 

· Interim dividend 1.54p (Interim 2021: 1.49p) - 3.4% increase

· Special dividend 2.27p (Interim 2021: nil)

· Thorlux performance - strong orders, however, revenue and operating results suppressed by supply chain challenges and material cost inflation

· Netherlands performance - positive performance, with improved profitability as a result of first year without earn-out provisions

· Other companies - UK companies struggled, however, order backlog supports a second half improvement

· Net cash generated from operating activities - £8.9m (Interim 2021: £8.0m)

· Initial acquisition of Electrozemper (Zemper) in Spain completed in October as well as the investment in Ratio Electric in the Netherlands in December

 

Note: This announcement contains inside information for the purposes of Article 7 of Regulation 596/2014 (MAR).

For further information, please contact:  

FW Thorpe Plc

 

Mike Allcock - Chairman and Joint Chief Executive

01527 583200

Craig Muncaster - Joint Chief Executive and Group Financial Director

01527 583200

 

Singer Capital Markets - Nominated Adviser

 

Steve Pearce/James Moat

020 7496 3000

 

CHAIRMAN'S INTERIM STATEMENT

 

I am pleased to report for the period 1 July to 31 December 2021 an improved interim Group operating profit - including three months of contribution from our new addition, Zemper - of £8.8m, up 15%. Also, there was a continuing healthy increase in the order books for most companies within the Group - especially at Thorlux Lighting, where orders were up 25% at the half-year point. Unfortunately, as predicted in my full-year statement for last year, sales revenues were suppressed across the Group at +4% (excluding the addition of Zemper), because of each company's difficulty sourcing sufficient components, in particular electronic components and microchips. I would like to thank all those Group employees involved in sourcing components and re-engineering designs at short notice with alternative parts, as well as those managing our customers' expectations.

Most Group companies are looking forward to an improved second-half performance with supply chain issues easing, to some extent, especially for commodity items like steel and cardboard. Within the Group we are, however, mindful of significant cost inflation for purchased items as well as increases for labour and utilities. We have increased our prices in the market to compensate, but are only now starting to see the positive effects.

Zemper has already settled well into the Group, and, whilst it will remain an autonomous operation, Group companies have started to collaborate with Zemper in certain territorial markets and in the technical engineering of emergency lighting products.

As previously announced, in December the Group concluded its investment in a 50% interest in Ratio Electric, a Dutch manufacturer and supplier of electrical connection and distribution systems. Its results for 2021 are in line with expectations, and the Group is making progress on introducing Ratio Electric's vehicle charging products into the UK.

Also in the Netherlands, the Lightronics building reconstruction, following the fire, is well advanced and on target, with completion planned for this summer. The Board has also approved expenditure to double the size of the building for Famostar, to support its continued rapid sales growth.

As a result of this ongoing good performance and a strong balance sheet, the Board has approved an increased dividend of 1.54p (Interim 2021: 1.49p) for the six months to 31 December 2021. In addition, the Group will pay a special dividend of 2.27p (Interim 2021: nil).

Just before Christmas, external third-party auditors completed an assessment of the Group's carbon emissions and I am pleased to report that the Group is considered carbon neutral for its manufacturing operations. Within the Group we continue with vigour, nonetheless, to improve further our environmental credentials, with targets set for all Group companies. Planning permission has now been granted to complete the roll-out of a solar PV installation to the main Thorlux roof later this year, adding a further 3,000 panels to the 909 already installed; this is particularly opportune, considering that the electricity kWh price at Thorlux has recently nearly doubled. The Group continues with its Net Zero assessment and target setting assisted and validated again by a third party.

Supported by the Group's healthy order book, I foresee a good second-half revenue performance, provided the component shortages continue to improve. Operating results remain the focus and will improve once the recent headwinds experienced for most businesses subside.

 

 

 

 

Mike Allcock

Chairman

 

10 March 2022

FW Thorpe Plc

CONSOLIDATED INCOME STATEMENT

for the six months to 31 December 2021

 

 

 

 

 

 

31.12.21

(six months to)

31.12.20 

(six months to)

30.06.21 

(twelve months to)

 

 

 

 

 

(unaudited)

(unaudited)

(audited)

 

 

 

 

 

£'000  

£'000  

£'000 

 

 

 

 

Revenue

63,507  

56,374  

117,875 

 

 

 

 

Operating profit

8,836  

7,653  

20,793 

 

 

 

 

Finance income

208  

364  

615 

Finance expense

  (548) 

  (650) 

(1,267) 

 

 

 

 

Profit before income tax

8,496  

7,367  

20,141 

 

 

 

 

Income tax expense

  (1,596) 

  (1,489) 

(4,329)

 

 

 

 

Profit for the period

6,900  

5,878  

15,812 

 

 

 

 

 

 

Dividend rate per share:

 

 

 

  Interim

1.54p

1.49p

1.49p

  Final

4.31p

   Special

2.27p

2.20p

 

 

Earnings per share

- basic

5.91p

5.05p

13.57p

 

- diluted

5.88p

5.03p

13.52p

 

 

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the six months to 31 December 2021

 

 

 

 

 

 

31.12.21  (six months to)

31.12.20  (six months to)

30.06.21 

(twelve months to)

 

 

 

 

 

(unaudited)

(unaudited)

(audited)

 

 

 

 

 

£'000 

£'000 

£'000 

 

 

 

 

Profit for the period

6,900 

5,878 

15,812 

 

 

 

 

Other comprehensive (expenses)/income

 

 

 

 

 

 

 

Items that may be reclassified to profit or loss

 

 

 

Exchange differences on translation of foreign operations

(299)

(30)

(688)

 

 

 

 

 

(299)

 (30) 

(688) 

 

 

 

 

Items that will not be reclassified to profit or loss

 

 

 

Revaluation of financial assets at fair value through other comprehensive income *

115 

403 

135 

Actuarial gain on pension scheme

1,758 

Movement on unrecognised pension surplus

(1,940)

Taxation

(29)

(6)

(236)

 

 

 

 

 

86  

397 

(283)

 

 

 

 

Other comprehensive (expense)/income for the period, net of tax

(213)

367 

(971)

 

 

 

 

Total comprehensive income for the period

 6,687 

 6,245 

14,841 

 

 

 

 

 

 

All comprehensive income is attributable to the owners of the company.

 

* The gain on the revaluation of financial assets at fair value through other comprehensive income of £115,000 is due to the increase in market value of these investments.

 


CONSOLIDATED STATEMENT OF FINANCIAL POSITION

as at 31 December 2021

 

As at 

As at 

As at 

 

31.12.21 

31.12.20 

30.06.21 

 

 

 

 

 

(unaudited)

(unaudited)

(audited)

Assets

£'000 

£'000 

£'000 

Non-current assets

 

 

 

Property, plant and equipment

29,129 

26,924 

28,251 

Intangible assets

49,125 

20,368 

19,705 

Investment property

1,958 

1,982 

1,967 

Financial assets at amortised cost

537 

746 

Equity accounted investments and joint arrangements

5,678 

  - 

Financial assets at fair value through other comprehensive income

3,909 

4,175 

3,764 

 

90,336 

53,449 

54,433 

Current assets

 

 

 

Inventories

27,033 

20,664 

20,389 

Trade and other receivables

29,693 

26,457 

29,310 

Financial assets at amortised cost

1,800 

1,800 

1,800 

Short-term financial assets

15,613 

25,596 

23,603 

Cash and cash equivalents

23,636 

39,471 

52,268 

Total current assets

97,775 

113,988 

127,370 

Total assets

188,111 

167,437 

181,803

 

 

 

 

Liabilities

 

 

 

Current liabilities

 

 

 

Trade and other payables

(32,934)

(33,205)

(39,198)

Current financial liabilities

(990)

Lease liabilities

(303)

(238)

(226)

Current income tax liabilities

(308)

(150)

(1,040)

Total current liabilities

(34,535)

(33,593)

(40,464)

 

 

 

 

Net current assets

63,240 

80,395 

86,906 

 

 

 

 

Non-current liabilities

 

 

 

Non-current financial liabilities

(894)

Other payables

(11,089)

(73)

(78)

Lease liabilities

(651)

(464)

(435)

Provisions for liabilities and charges

(2,459)

(2,732)

(2,242)

Deferred tax liabilities

(1,666)

(626)

(1,591)

Total non-current liabilities

(16,759)

(3,895)

(4,346)

Total liabilities

(51,294)

(37,488)

(44,810)

 

 

 

 

Net assets

136,817 

129,949 

136,993 

 

 

 

 

Equity attributable to owners of the company

 

 

 

Issued share capital

1,189 

1,189 

1,189 

Share premium account

2,711 

1,799 

1,960 

Capital redemption reserve

137 

137 

137 

Foreign currency translation reserve

1,777 

2,734 

2,076 

Retained earnings

 

 

 

At 1 July

131,631 

122,686 

122,686 

Profit for the year attributable to owners

6,900 

5,878 

15,812 

Other changes in retained earnings

(7,528)

(4,474)

(6,867)

 

131,003 

124,090 

131,631 

Total equity

136,817 

129,949 

136,993 

 



CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the six months to 31 December 2021

 

 

Share Capital

Share Premium

Capital Redemption Reserve

Foreign Currency Translation Reserve

Retained Earnings

Total Equity

 

£'000 

£'000 

£'000 

£'000 

£'000 

£'000 

Balance at 30 June 2020

1,189 

1,526 

137 

2,764 

122,686 

128,302 

Comprehensive income

 

 

 

 

 

 

Profit for six months to 31 December 2020

5,878 

5,878 

Other comprehensive income

(30)

397 

367 

Total comprehensive income

(30)

6,275 

6,245 

Transactions with owners

 

 

 

 

 

 

Share options exercised

273 

273 

Dividends paid to shareholders

(4,895)

(4,895)

Share-based payment charge

24 

24 

Total transactions with owners

273 

(4,871)

(4,598)

Balance at 31 December 2020

1,189 

1,799 

137 

2,734 

124,090 

129,949 

Comprehensive income

 

 

 

 

 

 

Profit for six months to 30 June 2021

9,934 

9,934 

Actuarial gain on pension scheme

1,758 

1,758 

Movement on unrecognised pension surplus

(1,940)

(1,940)

Revaluation of financial assets at fair value through other comprehensive income

(268)

(268)

Movement on associated deferred tax

(63)

(63)

Impact of deferred tax rate change

(167)

(167)

Exchange rate differences on translation of foreign operations

(658)

(658)

Total comprehensive income

(658)

9,254 

8,596 

Transactions with owners

 

 

 

 

 

 

Share options exercised

161 

161 

Dividends paid to shareholders

(1,736)

(1,736)

Share-based payment charge

23 

23 

Total transactions with owners

161 

(1,713)

(1,552)

Balance at 30 June 2021

1,189 

1,960 

137 

2,076 

131,631 

136,993 

Comprehensive income

 

 

 

 

 

 

Profit for six months to 31 December 2021

6,900 

6,900 

Other comprehensive income

(299)

86 

   (213)

Total comprehensive income

(299)

6,986 

6,687 

Transactions with owners

 

 

 

 

 

 

Share options exercised

751 

-

751 

Dividends paid to shareholders

(7,617)

(7,617)

Share-based payment charge

Total transactions with owners

751 

(7,614)

(6,863)

 

 

 

 

 

 

 

Balance at 31 December 2021

1,189 

2,711 

137 

1,777 

131,003 

136,817 

 

 

 

 

CONSOLIDATED STATEMENT OF CASH FLOWS

for the six months to 31 December 2021

 

31.12.21 

(six months to)

31.12.20 

(six months  to)

30.06.21

(twelve months to)

 

(unaudited)

(unaudited)

(audited)

 

£'000 

£'000 

£'000 

Cash generated from operations

 

 

 

Profit before income tax

8,496 

7,367 

20,141 

Adjustments for

 

 

 

- Depreciation charge

1,789 

1,746 

3,316 

- Depreciation of investment property

10 

20 

- Amortisation of intangibles

1,207 

1,260 

2,328 

- Profit on disposal of property, plant and equipment

   (111)

  (46)

  (115)

- Impairment of property, plant and equipment due to fire

3,214 

- Exceptional item in respect of Lightronics fire

(1,566)

- Insurance proceeds re inventory lost in fire

- Insurance proceeds re other costs

318

- Net finance expense

340 

286 

652 

- Retirement benefit contributions in excess of current and past service charge

  (73)

  (129)

(182)

- Share-based payment charge

703 

1,429 

- Research and development expenditure credit

(144)

(130)

(289)

- Effects of exchange rate movements

350 

281 

1,114 

Changes in working capital

 

 

 

- Inventories

  (3,324)

4,634 

4,878 

- Trade and other receivables

   2,730 

  (5,546)

(7,287)

- Payables and provisions

  348

  (3,898)

964 

Cash generated from operations

11,619 

9,752 

25,726 

Tax paid

(2,670)

(1,738)

(3,853)

Cash flow from investing activities

 

 

 

Purchase of property, plant and equipment

(1,743)

(1,464)

(2,932)

Proceeds from sale of property, plant and equipment

219 

86 

290 

Purchase of intangibles

(917)

(768)

(1,756)

Purchase of subsidiaries (net of cash acquired)

(14,624)

  - 

  - 

Purchase of depositary receipts of shares in subsidiaries

(15,286)

  - 

  - 

Investment in joint venture or associate

(4,838)

  - 

  - 

Net (purchase)/sale of financial assets at fair value through Other Comprehensive Income

  - 

  (5)

205 

Insurance proceeds re: property, plant and equipment lost in fire

  - 

  - 

3,057 

Property rental and similar income

32 

26 

41 

Dividend income

124 

87 

186 

Net withdrawal/(deposit) of short-term financial assets

7,990 

(7,016) 

(5,023)

Interest received

67 

101 

105 

Net receipt of loan notes

  - 

805 

59 

Net cash used in investing activities

(28,976)

(8,148)

(5,768)

Cash flow from financing activities

 

 

 

Net proceeds from the issuance of ordinary shares

751 

273 

434 

Proceeds from loans

49 

198 

365 

Repayment of borrowings

(1,039)

  - 

(958)

Payment of lease liabilities

(148)

(129) 

(310)

Payment of lease interest

(23)

(18) 

(39)

Dividends paid to company shareholders

(7,617)

(4,895)

(6,631)

Net cash used in financing activities

(8,027)

(4,571)

(7,139)

Effects of exchange rate changes on cash

(578)

(246)

(1,120) 

Net (decrease)/increase in cash and cash equivalents

(28,632)

(4,951)

7,846 

Cash and cash equivalents at the beginning of the period

52,268 

44,422 

44,422 

Cash and cash equivalents at the end of the period

23,636 

39,471 

52,268 

 

Notes to the Interim Financial Statements

 

1.  Basis of preparation

  The consolidated interim financial statements for the six months to 31 December 2021 have been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and International Financial Reporting Standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union, IFRIC interpretations and the AIM Rules for Companies. 

  The figures for the period to 31 December 2021 and the comparative period to 31 December 2020 have not been audited or reviewed and are therefore disclosed as unaudited. The figures for 30 June 2021 have been extracted from the financial statements for the year to 30 June 2021, which have been delivered to the Registrar of Companies. The interim financial statements do not constitute statutory accounts within the meaning of the Companies Act 2006.

  The financial statements are presented in Pounds Sterling, rounded to the nearest thousand.

  The interim financial statements are prepared under the historical cost convention, modified by the revaluation of certain current and non-current investments at fair value through profit or loss.

  The accounting policies set out in the financial statements for the year ended 30 June 2021 have been applied consistently throughout the Group during the period.

 

2.  Segmental analysis

The segmental analysis is presented on the same basis as that used for internal reporting purposes.  For internal reporting FW Thorpe is organised into eleven operating segments, based on the products and customer base in the lighting market - the largest business is Thorlux, which manufactures professional lighting systems for the industrial, commercial and controls markets.  The businesses in the Netherlands, Lightronics and Famostar, are material subsidiaries and disclosed separately as Netherlands companies. The businesses in the Zemper Group are also material and disclosed separately as Zemper Group. 

The seven remaining continuing operating segments have been aggregated into the "other companies" segment based on their size, comprising the entities Philip Payne Limited, Solite Europe Limited, Portland Lighting Limited, TRT Lighting Limited, Thorlux L.L.C, Thorlux Australasia PTY Limited and Thorlux Lighting GmbH.

FW Thorpe's chief operating decision-maker (CODM) is the Group Board.  The Group Board reviews the Group's internal reporting in order to monitor and assess the performance of the operating segments for the purpose of making decisions about resources to be allocated.  The CODM reviews the performance of the business by considering the key profit measure of operating profit, including the impact of associated contingent consideration arrangements, and considers that none of the other operating segments are of sufficient size and distinction to be reviewed separately when making Group wide strategic decisions.  Assets and liabilities have not been segmented which is consistent with the Group's internal reporting.

Inter-segment adjustments to operating profit consist of property rentals on premises owned by FW Thorpe Plc, adjustments to profit related to stocks held within the Group that were supplied by another segment.

 

 

 

2.  Segmental analysis (continued)

 

 

Thorlux

Netherlands

Companies

Zemper

Group

Other

Companies

Inter-

Segment

 

Total

Continuing

Operations

 

£'000 

£'000 

£'000 

£'000 

£'000 

£'000 

Six months to 31 December 2021

 

 

 

 

 

 

Revenue to external customers

35,621 

15,810 

4,629 

7,447 

63,507 

Revenue to other Group companies

2,020 

2,454 

(4,474)

Total revenue

37,641 

15,810 

4,629 

9,901 

(4,474)

63,507 

Operating profit

5,113 

2,973 

452 

120 

178 

8,836 

Finance income

 

 

 

 

 

  208 

Finance expense

 

 

 

 

 

(548)

Profit before tax expense

 

 

 

 

 

8,496 

 

Six months to 31 December 2020

 

 

 

 

 

 

Revenue to external customers

33,470 

14,986 

7,918 

56,374 

Revenue to other Group companies

1,157 

148 

2,887 

(4,192)

Total revenue

34,627 

15,134 

10,805 

(4,192)

56,374 

Operating profit

4,918 

1,691 

684 

360 

7,653 

Finance income

 

 

 

 

 

  364 

Finance expense

 

 

 

 

 

(650)

Profit before tax expense

 

 

 

 

 

7,367 

 

Year to 30 June 2021

 

 

 

 

 

 

Revenue to external customers

69,969 

31,490 

16,416 

117,875 

Revenue to other Group companies

3,304 

290 

5,238 

(8,832)

Total revenue

73,273 

31,780 

21,654 

(8,832)

117,875 

Operating profit before exceptional item

11,694

5,402 

1,722 

409 

19,227 

Exceptional item in respect of Lightronics fire

1,566 

1,566 

Operating profit

11,694 

6,968 

1,722 

409 

20,793 

Net finance expense

 

 

 

 

 

(652)

Profit before tax expense

 

 

 

 

 

20,141 

 

 

 

3.  Acquisition

In October 2021, the Group acquired 63% of the share capital of Electrozemper S.A., an emergency lighting specialist in Spain. The company was acquired for an initial consideration of £19.9m  (€23.1m) with a deferred consideration of £1.1m (€1.3m) payable during 2022.  There is a fixed commitment to acquire the remaining shares, based on current best estimates, a further £16.1m (€18.7m) could be payable which is subject to future performance conditions.

Amounts recognised in respect of this acquisition are:

 

€'000

£'000

Total identifiable assets

9,716 

8,368 

Goodwill

33,455 

28,811 

Total purchase consideration

43,171 

37,179 

 

 

 

Total purchase consideration satisfied by:

 

 

Cash

23,125 

19,915 

Deferred consideration

1,323 

1,139 

Contingent consideration

18,723 

16,125 

Total consideration

43,171 

37,179 

 

 

 

Net cash flow arising on acquisition

 

 

Cash consideration

23,125 

19,915 

Less cash in subsidiary acquired

(6,143)

(5,291)

Cash outflow on acquisition

16,982 

14,624 



A fair value exercise has not yet been performed on the acquired assets and liabilities; this will be undertaken for the current financial year-end. The outcome of this exercise may result in changes to the fair value of the acquired assets and liabilities, as well as associated goodwill.

This acquisition is expected to make a contribution to Group profits for the current financial year.

 

4.  Purchase of depositary rights for shares in Subsidiaries

On 21 September 2021 the Group completed its commitment to purchase the outstanding share appreciation rights in the subsidiaries Lightronics Participaties B.V. and Famostar Emergency Lighting B.V. The settlement was executed by a cash payment of £15.3m (€17.9m) for the outstanding liability.

 

5.  Investment in Joint Venture

In December 2021, the Group acquired 50% in Ratio Electric B.V., a specialist in electrical power connection and distribution systems based in the Netherlands. Initial consideration paid was £4.8m (€5.8m) and a further £0.9m (€1.0m) for payment in twenty four months.

 

6.  Earnings per share

  The basic earnings per share is calculated on profit after taxation and the weighted average number of ordinary shares in issue of 116,816,601 (Interim 2021: 116,426,119) during the period. 

The diluted earnings per share is calculated on profit after taxation and the weighted average number of potentially dilutive ordinary shares in issue of 117,368,458 (Interim 2021: 116,862,079) during the period.

 

7.  Dividend

  The interim dividend is at the rate of 1.54p per share (Interim 2021: 1.49p) and based on 117,074,433 shares in issue at the announcement date the dividend will amount to £1,803,000 (Interim 2021: £1,736,000). A special dividend of 2.27p amounting to £2,658,000 (Interim 2021: £nil) will also be paid. The interim and special dividends will be paid on 1 April 2022 to shareholders on the register at the close of business on 18 March 2022, and the shares become ex-dividend on 17 March 2022.

For the year ended 30 June 2021 , a final dividend of 4.31p (2020: final 4.20p) per share and a special dividend of 2.20p (2020: special nil), amounting to £7,617,000 (2020: £4,895,000) was paid on 25 November 2021.

 

8.  Availability of interim statement

  Copies of the interim report are being sent to shareholders and will also be available from the company's registered office or on the company's website (www.fwthorpe.co.uk) from 31 March 2022.

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