REG - Thorpe(F.W.) PLC - Final Results
11/10/2022 07:00
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RNS Number : 4059C Thorpe(F.W.) PLC 11 October 2022
Results
for the year ended 30 June 2022
FW Thorpe Plc - a group of companies that design, manufacture and supply
professional lighting systems - is pleased to announce its preliminary results
for the year ended 30 June 2022.
Key points:
Continuing operations 2022 2021 Exc. Zemper
Acquisition
Revenue £143.7m £117.9m 21.9% increase 9.9% increase
Operating profit (before 2021 exceptional item) £24.7m £19.2m 28.5% increase 20.3% increase
Profit before tax (before 2021 exceptional item) £24.1m £18.6m 29.8% increase 25.6% increase
Profit before tax £24.1m £20.1m 19.7% increase 15.8% increase
Basic earnings per share 17.16p 13.57p 26.5% increase 23.1% increase
· Total interim and final dividend of 6.15p (2021: 5.80p) - an
increase of 6.0%
· Final dividend of 4.61p (2021: 4.31p) - an increase of 7.0%
· Strong revenue and orders growth across the majority of the Group
· Solid operating profit growth despite challenges with component
supply and inflationary cost pressures
· Zemper, acquired in October 2021, has been successfully
integrated
· Entered into a joint venture investment in Ratio Electric
· Net cash generated from operating activities, despite increasing
stock levels, remained strong - £19.7m (2021: £21.9m)
· Solid start to 2022/23, with operating performance ahead of the
start of last year
This announcement contains inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 (MAR) as supplemented by The Market Abuse
(Amendment) (EU Exit) Regulations (SI 2019/310) ("UK MAR").
For further information please contact:
FW Thorpe Plc
Mike Allcock - Chairman, Joint Chief Executive 01527 583200
Craig Muncaster - Joint Chief Executive, Group Financial Director 01527 583200
Singer Capital Markets - Nominated Adviser
Steve Pearce /James Moat 020 7496 3000
Chairman's statement
Another year has passed without a return to a more stable business climate,
and with one crisis being replaced by another. Nevertheless, I am again
pleased to report that the Group has increased its revenue and profitability
(before and after the effects of its acquisition of Zemper).
This positive performance is especially admirable considering most companies
in the Group suffered severe component shortages throughout the financial
year, hampering production output and efficiency, and softening year-end
results. Most Group companies continue to face supply shortages, particularly
for electronic components and microchips, whilst having substantial order
books.
Component scarcities have inevitably affected the Group's enviably high levels
of customer service, but I hope the situation is at last improving. In
addition, of course, the Group is also contending with significant cost
inflation of materials, wages and utilities.
The Annual Report and Accounts contains a more detailed appraisal of each
company's individual achievements and challenges.
Group Results
Revenue increased by 22% to £144m, or by 10% excluding revenue associated
with the acquisition of Zemper. Operating profit increased by 29% to £25m, or
by 20% on a like-for-like basis excluding the addition from Zemper and last
year's exceptional item. A 17% operating profit return on revenue is a good
achievement, under the circumstances, but the Board thinks that improvements
can be made, and all businesses are targeted to improve.
A high proportion of growth within the Group is again attributable to Thorlux
Lighting in the UK and Famostar in the Netherlands.
There was a notable downturn at TRT Lighting due to the lack of a sizeable
one-off project during the year and some factory efficiency issues. TRT's
order book has now returned to a good level. A new operations director started
at TRT in mid-August and is addressing manufacturing performance.
Zemper made a solid start within the Group, despite facing similar issues to
other companies as referred to throughout this report.
General Overview
All companies in the Group have significantly increased their stock levels
during the year - from a low point of £20m to £29m on a like-for-like basis
- to support their large order books as well as to further mitigate the
ongoing supply chain risk. It is important that this stock is carefully
managed to avoid overshoot and obsolescence in coming months. Whilst stock has
increased significantly overall, it is rare for a fully populated bill of
materials to reach the assembly areas, causing the delays mentioned and
dampening Group performance as a whole.
Whilst order delivery lead times have increased dramatically, for example at
Thorlux Lighting, within the Group we are striving to deliver on time where
possible, notwithstanding the supplier issues mentioned.
All companies have been affected by significant cost increases. Whilst the
intention has been to recover cost increases by making selling price increases
in a fair manner, some Group companies were better than others in achieving
this in a timely fashion. Within the Group we need to be agile and react to
market conditions, being prepared to reverse price rises if the cost base
changes again, as well as driving through efficiency savings where practical.
Electrozemper S.A. (trading as Zemper) has settled nicely into the Group. The
timing of Zemper's financial reporting is now aligned with that of the Group;
consequently, only nine months of its figures are included in this year's
final results. The results presented are dampened by the required acquisition
accounting adjustments. Technical teams from around the Group have embarked on
several synergy projects and some common sustainability and circularity work.
I hope this will improve productivity and enhance margins too.
As mentioned in my interim report, in December 2021 the Group purchased a 50%
stake in Ratio Electric BV from the Netherlands - a company that designs and
manufactures electric vehicle chargers, connecting leads and electrical wiring
accessories. Figures for Ratio are not included in the operating results of
the Group, with our share of profits included within profit before tax.
Revenue growth, as expected, has been significant, even though Ratio has
experienced component shortages like other companies. Profitability has grown
only slightly, but is in line with expectations due to the investments
required to develop the more high technology chargers especially suited to the
UK market and some of the Group's commercial customers. Ratio now has a
developing UK operation with five employees, distribution and manufacturing
space, and new ranges of cloud-connected chargers which are targeted to be
ready in late autumn this year. These are exciting times for all concerned.
FW Thorpe has successfully adapted to rapid changes in its market in recent
years, including the wholesale change to LED technology, and now the change to
wireless-enabled high technology solutions that provide not only energy
savings but many other benefits such as energy and status reporting and data
collection. The Thorlux SmartScan system, for example, continues to mature
and, in my opinion, is the leading solution for the UK market and beyond. The
first-generation system was launched in 2016, and in 2019 won a Queen's Award
for Enterprise in the Innovation category. Generation 2 is now available,
following successful site trials over the last 12 months. The most recent
system offers a raft of new features to keep it ahead of the competition, and
provides customers with freedom to manage and communicate with their lights in
a much faster, more complete and even more robust way. The new generation
SmartScan system was developed in collaboration with Thorlux's biggest
customer and resulted in Thorlux winning the lighting contract for one of the
largest factories in Europe, in central Germany. The majority of the software
is developed in house with Thorlux's own engineers and, as such, is now
exclusively in use in most Group companies.
The next challenge for FW Thorpe, which is certainly topical in its industry,
is the global one of sustainability. To that end, within the Group we have a
good head start, having commenced our programme in 2010. In order to remain in
a prime position, FW Thorpe needs to continue to invest in greener solutions
for its factories, better sourcing and control of components, more circularity
to designs, and more energy efficient product solutions. Apart from the
well-publicised ongoing tree planting projects, FW Thorpe will continue to
roll out solar solutions for its numerous factory roofs. Through good
foresight and, probably, fortunate timing, last year, before the energy crisis
and availability issues, FW Thorpe bought a further 3,000 large 2.094 by 1.038
metre PV panels at a cost of around £0.9m to cover the roof of the main
Thorlux facility in Redditch. These are in a warehouse on standby for fitment.
Prior to being able to mount them to the 30-year-old roof, significant
enabling works are being completed - at a further cost of £0.7m. At the time
of writing, with such enormous rising electrical costs, it is hoped that the
panels will be commissioned soon - hopefully they will be online around the
time of this year's AGM in November.
Efforts continue within the Group to improve companies' sustainability
credentials and move sooner towards Net Zero - which, apart from being the
right thing to do, will bring commercial advantages. Initial third-party
support and assessment is now complete. I hope to be able to share the
estimated CO(2)e (total carbon footprint) number for the Group as a whole when
the Group is more certain of its direction. It has taken months of work to
collect and collate accounts for emissions from all Group activities in scope
1, 2 and 3; the estimated CO(2)e number not only includes emissions due to the
Group's sales, manufacturing and distribution activities, but also the
emissions from the Group going about its normal business - for example,
including emissions from the supply chain and from downstream use of products
by customers and the electrical energy the luminaires consume. To be able to
say the Group is Net Zero seems a distant dream, but every watt saved in Group
factories and saved by making its lights more efficient is another watt that
does not have to be reduced and offset.
Apart from electrical energy consumption, sustainability involves many other
factors such as material selection, reduction, re-use and recycling. Within
the Group, all employees are involved: they are being trained and developed,
and receive a frequent chairman's sustainability newsletter, with
contributions from around the Group; some employees have even been awarded
with a 'Net Zero Hero' tee shirt for special achievements. Many of the
efficiency gains in Group factories and at product level reduce costs, make
Group companies more successful at winning orders, and improve the Group's
reputation. For example, Thorlux was awarded Manufacturer of the Year at the
prestigious Lux Awards in 2020, with specific mention of its tree planting and
solar PV works in the judges' comments.
Acquisition
I mentioned above that, following significant design and engineering effort,
the Group won a major German factory lighting project, involving around 10,000
luminaires on the Thorlux SmartScan generation 2 platform. The German customer
for this project, SchahlLED Lighting GmbH, has rapidly become the Group's
largest customer over the last 3 years or so. SchahlLED's independent majority
shareholder approached FW Thorpe to discuss the sale of its shares; it was
natural for FW Thorpe to have a keen interest, as well as for SchahlLED's
management to want to continue to build on the trading relationship of the
last few years. Although members of the Board of FW Thorpe had planned for a
few years to be quieter on the acquisition front, we approached this situation
in both a defensive capacity to protect existing work, but also in an
opportunistic way, as we see good growth potential in SchahlLED's business
model of focusing on energy saving payback projects, and think they could be
adopted in some other territories. So, I am pleased to announce that on 26
September 2022, FW Thorpe acquired an 80% shareholding in SchahlLED GmbH, with
the remaining shares to be acquired subject to performance conditions over the
next 3 years. FW Thorpe paid an initial consideration from cash reserves, with
the remaining shares available in due course with certain earn-out conditions.
Last year, SchahlLED's revenue, which has grown rapidly in recent years, was
€15.9m, with an EBITDA of €2.8m. The company has solid growth plans and
will continue to focus on selling high technology wireless lighting systems,
in future supplied almost exclusively by the Group.
Personnel
I would like to thank all Group employees for their dedication and commitment
throughout the financial year. All areas of the business have been under
significant pressure from dealing with the current economic climate, including
issues related to sourcing difficulties and manufacturing capacity.
Engineering teams have faced the constant pressure of re-designs to
accommodate alternative components, and those facing customer service issues
have had their patience stretched. The diligence of Group employees does not
go unnoticed and is sincerely appreciated.
Dividend
Performance as a whole for the year to 30 June 2022 allows the Board to
recommend an increased final dividend of 4.61p per share (2021: 4.31p), which
gives a total for the year of 6.15p (2021: 5.80p excluding special dividend).
Outlook
The dramatic rising cost of energy is a catalyst for customers to study their
lighting energy consumption and look for ways to reduce it. In the media there
is often mention of turning lights off to reduce usage, but of course
commercially, in most cases, doing so is simply not practical and may be
dangerous. The whole Group, and especially Thorlux, is focused on designing
energy saving products; therefore, I anticipate that orders should be
resilient if a recession becomes inevitable. Customers' energy costs have
trebled in some instances, which means investment payback periods could be one
third of those a year ago.
FW Thorpe has a broad portfolio of customers; those in government or blue-chip
industries have usually found the capital to invest in their assets when times
get more difficult.
Within the Group we have taken actions to cover rising costs: we continually
strive to achieve better margins without unfairly penalising our customers,
ensuring long term retention rates. We strive for further efficiency
improvements and have the cash to invest in energy saving and sustainability
projects.
The Group has started the financial year with a robust order book and some
healthy projects on the horizon. The Group sees an improving supply and
operations picture and, as such, the Board expects a good first half
performance despite ongoing pressures on operating costs.
Mike Allcock
Chairman and Joint Chief Executive
11 October 2022
Consolidated Results
Consolidated Income Statement
For the year ended 30 June 2022
Notes 2022 2021
£'000 £'000
Continuing operations
Revenue 2 143,715 117,875
Cost of sales (80,440) (62,484)
Gross profit 63,275 55,391
Distribution costs (15,501) (13,598)
Administrative expenses (23,482) (22,855)
Other operating income 423 289
Operating profit (before exceptional item) 24,715 19,227
Exceptional item in respect of Lightronics fire - 1,566
Operating profit 2 24,715 20,793
Finance income 527 615
Finance expense (1,367) (1,267)
Share of profit of joint ventures 228 -
Profit before income tax 24,103 20,141
Income tax expense 3 (4,030) (4,329)
Profit for the year 20,073 15,812
Earnings per share from continuing operations attributable to the equity
holders of the Company during the year (expressed in pence per share)
Basic and diluted earnings per share Notes 2022 2021
pence pence
- Basic 8 17.16 13.57
- Diluted 8 17.13 13.52
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2022
Notes 2022 2021
£'000 £'000
Profit for the year: 20,073 15,812
Other comprehensive (expenses)/income
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations (268) (688)
(268) (688)
Items that will not be reclassified to profit or loss
Revaluation of financial assets at fair value through other comprehensive (57) 135
income
Actuarial gain on pension scheme 953 1,758
Movement on unrecognised pension scheme surplus (1,143) (1,940)
Taxation 14 (236)
(233) (283)
Other comprehensive expense for the year, net of tax (501) (971)
Total comprehensive income for the year 19,572 14,841
Consolidated Statement of Financial Position
For the year ended 30 June 2022
Notes
2022 2021
£'000 £'000
Assets
Non-current assets
Property, plant and equipment 5 33,818 28,251
Intangible assets 6 51,865 19,705
Investments in subsidiaries - -
Investment property 1,984 1,967
Financial assets at amortised cost 1,124 746
Equity accounted investments and joint arrangements 6,112 -
Financial assets at fair value through other comprehensive income 3,470 3,764
Deferred income tax assets 120 -
Total non-current assets 98,493 54,433
Current assets
Inventories 32,758 20,389
Trade and other receivables 33,018 29,310
Financial assets at amortised cost 1,800 1,800
Short-term financial assets 7 5,079 23,603
Cash and cash equivalents 35,505 52,268
Total current assets 108,160 127,370
Total assets 206,653 181,803
Liabilities
Current liabilities
Trade and other payables (35,801) (39,198)
Financial liabilities (332) -
Lease liabilities (506) (226)
Current income tax liabilities (641) (1,040)
Total current liabilities (37,280) (40,464)
Net current assets 70,880 86,906
Non-current liabilities
Other payables (12,880) (78)
Financial liabilities (1,830) -
Lease liabilities (2,510) (435)
Provisions for liabilities and charges (2,536) (2,242)
Deferred income tax liabilities (4,264) (1,591)
Total non-current liabilities (24,020) (4,346)
Total liabilities (61,300) (44,810)
Net assets 145,353 136,993
Equity
Share capital 1,189 1,189
Share premium account 2,827 1,960
Capital redemption reserve 137 137
Foreign currency translation reserve 1,808 2,076
Retained earnings
At 1 July 131,631 122,686
Profit for the year attributable to the owners 20,073 15,812
Other changes in retained earnings (12,312) (6,867)
139,392 131,631
Total equity 145,353 136,993
Consolidated Statement of Changes in Equity.
For the year ended 30 June 2022
Notes Share Share Capital Foreign currency translation reserve Retained Total
capital premium redemption £'000 earnings equity
£'000 account reserve £'000 £'000
£'000 £'000
Balance at 1 July 2020 1,189 1,526 137 2,764 122,686 128,302
Comprehensive income
Profit for the year to 30 June 2021 - - - - 15,812 15,812
Actuarial gain on pension scheme - - - - 1,758 1,758
Movement on unrecognised pension scheme surplus - - - - (1,940) (1,940)
Revaluation of financial assets at fair value through other comprehensive - - - - 135 135
income
Movement on associated deferred tax - - - - (59) (59)
Impact of deferred tax rate change - - - - (177) (177)
Exchange differences on translation of foreign operations - - - (688) - (688)
Total comprehensive income - - - (688) 15,529 14,841
Transactions with owners
Shares issued from exercised options - 434 - - - 434
Dividends paid to shareholders 4 - - - - (6,631) (6,631)
Share based payment charge - - - - 47 47
Total transactions with owners - 434 - - (6,584) (6,150)
Balance at 30 June 2021 1,189 1,960 137 2,076 131,631 136,993
Comprehensive income
Profit for the year to 30 June 2022 - - - - 20,073 20,073
Actuarial gain on pension scheme - - - - 953 953
Movement on unrecognised pension scheme surplus - - - - (1,143) (1,143)
Revaluation of financial assets at fair value through other comprehensive - - - - (57) (57)
income
Movement on associated deferred tax - - - - 14 14
Exchange differences on translation of foreign operations - - - (268) - (268)
Total comprehensive income - - - (268) 19,840 19,572
Transactions with owners
Shares issued from exercised options - 867 - - - 867
Dividends paid to shareholders 4 - - - - (12,079) (12,079)
Share based payment charge - - - - - -
Total transactions with owners - 867 - - (12,079) (11,212)
Balance at 30 June 2022 1,189 2,827 137 1,808 139,392 145,353
Consolidated Statement of Cash Flows
For the year ended 30 June 2022
Notes
2022 2021
£'000 £'000
Cash flows from operating activities
Cash generated from operations 9 24,789 25,726
Tax paid (5,049) (3,853)
Net cash generated from operating activities 19,740 21,873
Cash flows from investing activities
Purchases of property, plant and equipment (5,510) (2,932)
Proceeds from sale of property, plant and equipment 423 290
Purchase of intangibles (2,366) (1,756)
Purchase of subsidiaries (net of cash acquired) (14,625) -
Purchase of depositary receipts of shares in subsidiaries (15,219) -
Purchase of investment property (36) -
Net sale of financial assets at fair value through Other Comprehensive Income 268 205
Investment in joint venture (4,958) -
Insurance proceeds re: property, plant and equipment lost in fire - 3,057
Property rental and similar income 113 41
Dividend income 246 186
Net withdrawal/(deposit) of short-term financial assets 18,524 (5,023)
Interest received 218 105
Net (issue)/receipt of loan notes (806) 59
Net cash (used in)/received from investing activities (23,728) (5,768)
Cash flows from financing activities
Net proceeds from the issuance of ordinary shares 867 434
Proceeds from loans 236 365
Repayment of borrowings (1,271) (958)
Payment of lease liabilities (535) (310)
Payment of lease interest (139) (39)
Dividends paid to Company's shareholders 4 (12,079) (6,631)
Net cash used in financing activities (12,921) (7,139)
Effects of exchange rate changes on cash 146 (1,120)
Net increase in cash in the year (16,763) 7,846
Cash and cash equivalents at beginning of year 52,268 44,422
Cash and cash equivalents at end of year 35,505 52,268
Notes
1 Basis of preparation
The consolidated and company financial statements of FW Thorpe Plc have been
prepared in accordance with UK adopted International Accounting Standards and
with the requirements of the Companies Act 2006 as applicable to companies
reporting under those standards, with future changes being subject to
endorsement by the UK Endorsement Board.
The financial statements have been prepared on a going concern basis, under
the historical cost convention except for the financial instruments measured
at fair value either through other comprehensive income or profit and loss per
the provisions of IFRS 9 and contingent consideration that is measured at fair
value.
There are no other standards that are not yet effective that are expected to
have a material impact on the Group in the current or future reporting periods
and on foreseeable future transactions.
The consolidated financial statements are presented in Pounds Sterling, which
is the Company's functional and presentation currency, rounded to the nearest
thousand.
The preparation of financial information in conformity with the basis of
preparation described above requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in the
process of applying the Company's and Group's accounting policies. The areas
involving a higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the consolidated financial
information, are disclosed in the critical accounting estimates and judgements
section.
The Company has elected to take the exemption under section 408 of the
Companies Act 2006 from presenting the Company income statement.
The directors confirm they are satisfied that the Group and Company have
adequate resources, with £35.5m cash and £5.1m short term deposits, to
continue in business for the foreseeable future, including the effect of
increased costs caused by the Ukraine and Russia conflict, where the Group has
no sales, and other global events. They have also produced a severe, but
plausible downside scenario that demonstrates that the Group could cover its
cash commitments over the following year from approving these accounts. For
this reason, they continue to adopt the going concern basis in preparing the
accounts.
The financial information set out in this document does not constitute the
statutory financial statements of the Group for the year end 30 June 2022 but
is derived from the Annual Report and Accounts 2022. The auditors have
reported on the annual financial statements and issued an unqualified opinion.
2 Segmental Analysis
(a) Business segments
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 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 the Zemper
Group.
The seven remaining operating segments have been aggregated into the "other
companies" reportable segment based upon their size, comprising the entities
Philip Payne Limited, Solite Europe Limited, Portland Lighting Limited, TRT
Lighting Limited, Thorlux Lighting 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 performance of the operating segments for the purpose of making
decisions about resources to be allocated. Performance is evaluated based on a
combination of revenue and operating profit. Assets and liabilities have not
been segmented, which is consistent with the Group's internal reporting.
Thorlux Netherlands companies Zemper Group Other Inter- Total
£'000 £'000 £'000 companies segment continuing
£'000 adjustments operations
£'000 £'000
Year to 30 June 2022
Revenue to external customers 78,912 34,676 14,152 15,975 - 143,715
Revenue to other group companies 5,171 377 - 5,794 (11,342) -
Total revenue 84,083 35,053 14,152 21,769 (11,342) 143,715
Depreciation and amortisation 3,378 1,043 1,525 1,045 - 6,991
Operating profit 13,509 7,471 1,582 1,647 506 24,715
Net finance expense (840)
Share of profit of joint ventures 228
Profit before income tax 24,103
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
Depreciation and amortisation 3,509 1,182 - 973 - 5,664
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 income tax 20,141
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 and elimination of
profit on transfer of assets between Group companies.
(b) Geographical analysis
The Group's business segments operate in four main areas, the UK, the
Netherlands, the rest of Europe and the rest of the World. The home country of
the Company, which is also the main operating company, is the UK.
2022 2021
£'000 £'000
UK 83,242 74,363
Netherlands 30,323 28,879
Rest of Europe 27,344 12,499
Rest of the World 2,806 2,134
143,715 117,875
3 Income Tax Expense
Analysis of income tax expense in the year:
2022 2021
£'000 £'000
Current tax
Current tax on profits for the year 4,717 4,128
Adjustments in respect of prior years (279) (564)
Total current tax 4,438 3,564
Deferred tax
Origination and reversal of temporary differences (408) 765
Total deferred tax (408) 765
Income tax expense 4,030 4,329
The tax assessed for the year is lower (2021: higher) than the standard rate
of corporation tax in the UK of 19.00% (2021: 19.00%). The differences are
explained below:
2022 2021
£'000 £'000
Profit before income tax 24,103 20,141
Profit on ordinary activities multiplied by the standard rate in the UK of 19% 4,580 3,827
(2021: 19%)
Effects of:
Expenses not deductible for tax purposes 329 1,077
Accelerated tax allowances and other timing differences (348) 238
Adjustments in respect of prior years (279) (564)
Patent box relief (812) (686)
Foreign profit taxed at higher rate 560 437
Tax charge 4,030 4,329
The effective tax rate was 16.72% (2021: 21.49%). Adjustments in respect of
prior years' relate to refunds received for prudent assumptions on additional
investment allowances and patent box relief in the tax calculations.
The UK corporation tax rate of 19% (effective 1 April 2020) was substantively
enacted on 17 March 2020. The UK corporation tax rate increase from 19% to 25%
from 1 April 2023, was substantively enacted in May 2021. Deferred tax assets
and liabilities have been calculated based on a rate at which they are
expected to crystalise.
In the Netherlands the rate of corporate income tax was increased from 25% to
25.8%, this has resulted in an increase in tax costs of £31,000. The recently
announced intention in the UK to reverse the decision to increase the
corporation tax rate from 19% to 25% will reduce deferred tax liabilities by
£303,000.
4 Dividends
Dividends paid during the year are outlined in the tables below:
Dividends paid (pence per share) 2022 2021
Final dividend 4.31 4.20
Special dividend (final) 2.20 -
Interim dividend 1.54 1.49
Special dividend (interim) 2.27 -
Total 10.32 5.69
A final dividend in respect of the year ended 30 June 2022 of 4.61p per share,
amounting to £5,403,000 (2021: £5,028,000) is to be proposed at the Annual
General Meeting on 17 November 2022 and, if approved, will be paid on 25
November 2022 to shareholders on the register on 28 October 2022. The
ex-dividend date is 27 October 2022. These financial statements do not reflect
this dividend payable.
Dividends proposed (pence per share) 2022 2021
Final dividend 4.61 4.31
Special dividend - 2.20
Dividends paid 2022 2021
£'000 £'000
Final dividend 5,043 4,895
Special dividend (final) 2,574 -
Interim dividend 1,803 1,736
Special dividend (interim) 2,659 -
Total 12,079 6,631
Dividends proposed 2022 2021
£'000 £'000
Final dividend 5,403 5,028
Special dividend - 2,567
5 Property, Plant and Equipment
Freehold land and buildings Plant and Right- Total
£'000 equipment of-use £'000
£'000 assets
£'000
Cost
At 1 July 2021 22,094 27,662 895 50,651
Acquisition of subsidiary* 975 3,965 3,534 8,474
Additions 2,241 3,037 232 5,510
Disposals (1) (884) (303) (1,188)
Currency translation 45 15 (2) 58
At 30 June 2022 25,354 33,795 4,356 63,505
Accumulated depreciation
At 1 July 2021 4,638 17,345 417 22,400
Acquisition of subsidiary* 234 3,175 1,062 4,471
Charge for the year 600 2,703 456 3,759
Disposals - (714) (248) (962)
Currency translation 5 9 5 19
At 30 June 2022 5,477 22,518 1,692 29,687
Net book amount
At 30 June 2022 19,877 11,277 2,664 33,818
* Acquisition of subsidiary are the assets acquired from the purchase of the
Zemper companies.
Freehold land and buildings Plant and Right- Total
£'000 equipment of-use £'000
£'000 assets
£'000
Cost
At 30 June 2020 23,552 26,933 856 51,341
Additions 133 2,435 364 2,932
Disposals (1,181) (1,548) (276) (3,005)
Transfers - - - -
Currency translation (410) (158) (49) (617)
At 30 June 2021 22,094 27,662 895 50,651
Accumulated depreciation
At 30 June 2020 4,362 15,955 450 20,767
Charge for the year 617 2,487 212 3,316
Disposals (283) (1,013) (221) (1,517)
Transfers - - - -
Currency translation (58) (84) (24) (166)
At 30 June 2021 4,638 17,345 417 22,400
Net book amount
At 30 June 2021 17,456 10,317 478 28,251
6 Intangible Assets
Group 2022 Goodwill Development Technology Brand Customer Software Patents Fishing rights Total
name
£'000 costs £'000
relationship £'000 £'000 £'000 £'000
£'000
£'000 £'000
Cost
At 1 July 2021 14,431 7,871 2,846 1,257 - 2,811 150 182 29,548
Acquisition of subsidiary* 18,320 6,346 45 2,588 9,468 266 6 - 37,039
Additions - 2,096 - - - 267 3 - 2,366
Currency translation 27 7 4 - (8) - - - 30
At 30 June 2022 32,778 16,320 2,895 3,845 9,460 3,344 159 182 68,983
Accumulated amortisation
At 1 July 2021 241 4,415 2,179 1,006 - 1,852 150 - 9,843
Acquisition of subsidiary* - 3,770 - - - 250 6 - 4,026
Charge for the year - 1,820 308 262 465 358 - - 3,213
Currency translation 11 4 8 5 8 - - - 36
At 30 June 2022 252 10,009 2,495 1,273 473 2,460 156 - 17,118
Net book amount
At 30 June 2022 32,526 6,311 400 2,572 8,987 884 3 182 51,865
* Acquisition of subsidiary are the assets acquired from the purchase of the
Zemper companies, excluding goodwill.
Group 2021 Goodwill Development Technology Brand Customer Software Patents Fishing rights Total
name
£'000 costs £'000
relationship £'000 £'000 £'000 £'000
£'000
£'000 £'000
Cost
At 1 July 2020 15,116 7,357 3,000 1,323 - 2,573 150 182 29,701
Additions - 1,516 - - - 240 - - 1,756
Write-offs and transfers - (964) - - - (5) - - (969)
Currency translation (685) (38) (154) (66) - 3 - - (940)
At 30 June 2021 14,431 7,871 2,846 1,257 - 2,811 150 182 29,548
Accumulated amortisation
At 1 July 2020 248 3,902 1,908 980 - 1,481 150 - 8,669
Charge for the year - 1,508 373 74 - 373 - - 2,328
Write-offs and transfers - (964) - - - (5) - - (969)
Currency translation (7) (31) (102) (48) - 3 - - (185)
At 30 June 2021 241 4,415 2,179 1,006 - 1,852 150 - 9,843
Net book amount -
At 30 June 2021 14,190 3,456 667 251 - 959 - 182 19,705
7 Short-Term Financial Assets
2022 2021
£'000 £'000
Beginning of year 23,603 18,580
Net (withdrawals)/deposits (18,524) 5,023
5,079 23,603
The short-term financial assets consist of term cash deposits in sterling with
an original term in excess of three months.
8 Earnings Per Share
Basic and diluted earnings per share for profit attributable to equity holders
of the Company
Basic earnings per share is calculated by dividing the profit attributable to
equity holders of the Company by the weighted average number of ordinary
shares in issue during the year, excluding ordinary shares purchased by the
Company and held as treasury shares.
Basic 2022 2021
Weighted average number of ordinary shares in issue 116,953,866 116,511,580
Profit attributable to equity holders of the Company (£'000) 20,073 15,812
Basic earnings per share (pence per share) total 17.16 13.57
Diluted 2022 2021
Weighted average number of ordinary shares in issue (diluted) 117,209,308 116,938,189
Profit attributable to equity holders of the Company (£'000) 20,073 15,812
Diluted earnings per share (pence per share) total 17.13 13.52
9 Cash Generated from Operations
Cash generated from continuing operations Group
2022 2021
£'000 £'000
Profit before income tax 24,103 20,141
Depreciation charge 3,759 3,316
Depreciation of investment property 19 20
Amortisation of intangibles 3,213 2,328
Profit on disposal of property, plant and equipment (197) (115)
Exceptional item in respect of Lightronics fire - (1,566)
Insurance proceeds re inventory lost in fire - 5
Insurance proceeds re other costs - 318
Net finance expense/(income) 855 652
Retirement benefit contributions in excess of current (190) (182)
and past service charge
Share of joint venture (profit)/loss (228) -
Share based payment charge - 1,429
Research and development expenditure credit (306) (289)
Effects of exchange rate movements (520) 1,114
Changes in working capital
- Inventories (8,986) 4,878
- Trade and other receivables (603) (7,287)
- Payables and provisions 3,870 964
Cash generated from operations 24,789 25,726
10 Business Combination
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 £1.0m (€1.1m) payable during 2022. There is a fixed commitment to
acquire the remaining shares, based on current best estimates, a further
£16.3m (€18.9m) could be payable which is subject to future performance
conditions. Amounts recognised in respect of this acquisition are:
€'000 £'000
Intangible assets 17,062 14,693
Property, plant & equipment 1,783 1,531
Right of use assets 2,872 2,472
Financial assets at amortised cost 90 77
Financial assets fair value OCI 36 31
Inventories 3,879 3,341
Trade and other receivables 3,035 2,618
Cash 6,143 5,290
Trade and other payables (3,339) (2,873)
Financial liabilities (2,957) (2,546)
Lease liabilities (3,084) (2,656)
Provisions for liabilities and charges (157) (136)
Deferred tax (3,465) (2,984)
Total identifiable assets 21,898 18,858
Goodwill 21,273 18,320
Total purchase consideration 43,171 37,178
Total purchase consideration satisfied by:
Cash 23,125 19,915
Redemption liability 13,851 11,928
Deferred consideration 1,123 967
Contingent consideration 5,072 4,368
Total consideration 43,171 37,178
Net cash flow arising on acquisition
Cash consideration 23,125 19,915
Less cash in subsidiary acquired (6,143) (5,290)
Cash outflow on acquisition 16,982 14,625
A fair value exercise has been performed; the book value of all assets and
liabilities except for raw materials and warranties are considered to
represent fair value. For raw material inventories and provisions for
warranties, reductions of €0.4m (£0.3m) and €0.1m (£0.1m) were to
reflect slow moving stock lines and potential customer claims, respectively.
Fair value of intangible assets was assessed and determined on the basis of
the technology, brand name and customer relationships acquired. Technology was
determined using an industry typical royalty rate over an eight years period;
brand name elements were determined using an industry typical royalty rate
over a ten years period and customer relationships were determined using an
industry typical royalty rate over a fifteen years period, all discounted to
the present day.
The goodwill relates to the on-going level of profitability of the business
model, opportunity to sell existing Group products into the Spanish and French
markets, sale of Electrozemper products in other markets and potential
sourcing benefits for the Group companies.
For the nine months to 30 June 2022 the Electrozemper companies contributed
€16.7m (£14.2m) to Group revenue and €0.8m (£0.8m) to Group profit
before tax for the current financial year.
If the acquisition had occurred on 1 July 2021 the consolidated pro-forma
revenue and profit before tax for the year ended 30 June 2022 would have been
£148.0m and £24.6m respectively. These amounts have been calculated using
the subsidiary's results and adjusting them for:
· differences in accounting policies between the Group and the
subsidiary; and
· The additional depreciation and amortisation that would have been
charged, assuming that the fair value adjustments to property, plant and
equipment and intangible assets had applied from 1 July 2021, together with
the consequential tax benefits.
11 Events after the Statement of Financial Position date
In September 2022, FW Thorpe acquired 80% of the share capital of SchahlLED
Lighting in Germany, a turnkey provider of intelligent energy saving lighting
products for the industrial and logistics sector. The acquisition is
expected to enhance earnings per share in the financial year ending 30 June
2023, solidifying our business in Germany and providing further growth
opportunities. FW Thorpe has paid an initial consideration of €14.6m
(circa £12.8m) and could pay an additional amount to be determined by
SchahlLED's EBITDA performance in the year ending 30 June 2023. The initial
consideration has been funded from the Company's existing cash reserves, these
reserves and the cash generated from SchahlLED over the next few years will
fund the purchase of the remaining share capital in the future.
On 12 September 2022, the Group paid the second tranche of payments for the
acquisition of Electrozemper S.A. totalling €6.1m (£5.3m).
12 Cautionary statement
Sections of this report contain forward looking statements that are subject to
risk factors including the economic and business circumstances occurring from
time to time in countries and markets in which the Group operates. By their
nature, forward looking statements involve a number of risks, uncertainties
and future assumptions because they relate to events and/or depend on
circumstances that may or may not occur in the future and could cause actual
results and outcomes to differ materially from those expressed in or implied
by the forward looking statements. No assurance can be given that the
forward-looking statements in this preliminary announcement will be realised.
Statements about the Chairman's expectations, beliefs, hopes, plans,
intentions and strategies are inherently subject to change, and they are based
on expectations and assumptions as to future events, circumstances and other
factors which are in some cases outside the Company's control. Actual results
could differ materially from the Company's current expectations. It is
believed that the expectations set out in these forward looking statements are
reasonable but they may be affected by a wide range of variables which could
cause actual results or trends to differ materially, including but not limited
to, changes in risks associated with the Company's growth strategy,
fluctuations in product pricing and changes in exchange and interest rates.
13 Annual report and accounts
The annual report and accounts will be sent to shareholders on 14 October 2022
and will be available, along with this announcement, on the Group's website
(www.fwthorpe.co.uk) from 14 October 2022. The Group will hold its AGM on 17
November 2022.
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