REG - Thorpe(F.W.) PLC - Interim Results
INTERIM RESULTS FOR THE SIX MONTHS TO 31 DECEMBER 2018
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 2018.
Key points:
Interim
2019
Interim
2018
Revenue
£52.7m
£53.2m
1.0% decrease
Operating profit (before profit on disposal of property)
£7.0m
£7.8m
10.3% decrease
Profit before tax
£8.8m
£7.9m
11.4% increase
Basic earnings per share
6.14p
5.43p
13.1% increase
· Group results were affected by a slow start to the year by Thorlux, with operating profit in line with management's guidance in the November AGM trading statement
· Thorlux's order income is now back to 2018 levels after record orders for the last few months
· The majority of other Group companies' results are similar to those at the Interim 2018 - with improved results at Lightronics and TRT, but disappointing results for some international sales offices
· Results include Famostar, acquired in December 2017, which was not included in the Interim 2018 figures
· Profit before tax includes profit on disposal of £1.9m following the sale of the Thorlux Portsmouth property
· Interim dividend 1.43p (Interim 2018: 1.40p)
Note: This announcement contains inside information for the purposes of Article 7 of Regulation 596/2014 (MAR).
For further information, please contact:
F W Thorpe Plc
Mike Allcock - Chairman and Joint Chief Executive
01527 583200
Craig Muncaster - Joint Chief Executive and Group Financial Director
01527 583200
N+1 Singer - Nominated Adviser
Richard Lindley/James Moat
020 7496 3000
CHAIRMAN'S INTERIM STATEMENT
As indicated in the 2018 annual report statement and AGM update, the Group is finding it difficult to match the results of last year due to challenging trading conditions at the start of the year. Comparing interim 2019 and 2018 figures, Group revenue for the period is lower by 1.0% with operating profit lower by 10.3% before the profit on disposal. Revenue and operating profit are supplemented by the inclusion of Famostar, adding £3.6m in revenue and £0.4m in operating profit, which was not part of the interim 2018 Group results.
The Group's overall UK revenue is down by £4.0m at the half-year point, mainly due to the performance of Thorlux. Revenue from the Group's international sales offices is also down, by £1.5m. These reductions are mostly offset by revenue from overseas acquisitions, i.e. Lightronics and the inclusion of Famostar, albeit with a lower operating profit margin. There was also an improvement at TRT, the Group's street lighting business.
I am pleased to report that revenue generated from overseas operations now represents 41% of the total, providing risk mitigation in case of further turbulent economic and political times in the UK. The management team meet regularly to discuss and plan for the potential impacts arising from Brexit. We wait anxiously for matters to be resolved and business confidence to return to more normal levels.
As mentioned in the autumn AGM statement, despite a challenging start to the year, orders in October and November improved at the Group's main lighting division, Thorlux. Since then, orders have continued at record levels, which will give a much-needed boost through to the financial year-end. Overhead cost reductions made during the autumn are now expected to start flowing through to operating profit in the second half of the year.
The Thorlux Portsmouth and Sugg Lighting factories were sold in November for £4.8m, realising a £1.9m profit on disposal and supporting the increased reported profit before tax from £7.9m to £8.8m.
The Group continues to invest for the future. This includes the imminent delivery of new laser cutting metalworking machinery at Thorlux, a property extension underway at TRT to provide pre-treatment and powder coating facilities (and as a Group disaster recovery backup resource), a new factory has also been approved for Portland Lighting, and works, which are well advanced, on the Lightronics factory extension.
Thorlux Lighting has recently launched a new range of innovative lighting to reinvigorate the workplace; more detail on this will be included in the annual report later this year. Famostar is working hard to adopt SmartScan, our wireless lighting control system, into its product portfolio and TRT is set to launch two product innovations supported by Luxintec, the Group's lens specialist in Spain.
Despite the difficult trading conditions for the six months to 31 December 2018, I am pleased to announce an interim dividend of 1.43p (Interim 2018: 1.40p).
Looking forward, within the Group we remain concerned about the stability of the UK market; however, present trading conditions are more buoyant than we previously predicted, and stronger than the first half performance. Whilst our improved order book gives us confidence that we will have a strong finish to the year, underlying operating profit is still expected to be below the record operating figures of the last financial year.
Mike Allcock
Chairman
21 March 2019
FW Thorpe Plc
CONSOLIDATED INCOME STATEMENT
for the six months to 31 December 2018
31.12.18
(six months to)
31.12.17
(six months to)
30.06.18
(twelve months to)
(unaudited)
(unaudited)
(audited)
£'000
£'000
£'000
Revenue
52,669
53,170
109,614
Operating Profit (before profit on disposal)
7,019
7,829
19,466
Profit on disposal of property
1,917
-
-
Operating Profit
8,936
7,829
19,466
Finance income
416
338
819
Finance costs
(574)
(285)
(718)
Profit before tax expense
8,778
7,882
19,567
Tax expense
(1,652)
(1,598)
(3,457)
Profit for the period
7,126
6,284
16,110
Dividend rate per share:
Interim
1.43p
1.40p
1.40p
Final
-
-
4.00p
Earnings per share
- basic
6.14p
5.43p
13.91p
- diluted
6.10p
5.39p
13.81p
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months to 31 December 2018
31.12.18 (six months to)
31.12.17 (six months to)
30.06.18
(twelve months to)
(unaudited)
(unaudited)
(audited)
£'000
£'000
£'000
Profit for the period
7,126
6,284
16,110
Other comprehensive income
Items that may be reclassified to profit or loss
Revaluation of available-for-sale financial assets
-
263
189
Exchange rate differences on translation of foreign operations
168
159
119
Taxation
-
(45)
(32)
168
377
276
Items that will not be reclassified to profit or loss
Revaluation of financial assets at fair value through other comprehensive income *
(529)
-
-
Actuarial loss on pension scheme
-
-
1,459
Movement on unrecognised pension surplus
-
-
(1,615)
Taxation
90
-
-
(439)
-
(156)
Other comprehensive income for the year, net of tax
(271)
377
120
Total comprehensive income for the year
6,855
6,661
16,230
All comprehensive income is attributable to the owners of the company.
* The loss on the revaluation of financial assets at fair value through other comprehensive income of £529,000 is due to the decrease in market value of these investments.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 2018
As at
As at
As at
31.12.18
31.12.17
30.06.18
(unaudited)
(unaudited)
(audited)
Assets
£'000
£'000
£'000
Non-Current Assets
Property, plant and equipment
21,157
19,666
22,679
Intangible assets
21,738
22,873
21,596
Investment property
2,047
2,133
2,076
Loans and receivables
4,101
6,306
6,139
Equity accounted investments
936
936
936
Financial assets at fair value through other comprehensive income
3,220
-
-
Available-for-sale financial assets
-
3,893
3,820
Deferred tax assets
-
9
8
53,199
55,816
57,254
Current assets
Inventories
22,018
20,913
21,489
Trade and other receivables
22,117
22,607
23,416
Other financial assets at fair value through profit or loss
389
389
389
Short-term financial assets
16,837
9,856
15,290
Cash and cash equivalents
36,111
28,417
28,668
Total current assets
97,472
82,182
89,252
Total Assets
150,671
137,998
146,506
Liabilities
Current liabilities
Trade and other payables
(19,512)
(18,056)
(19,253)
Current tax liabilities
(2,499)
(2,015)
(1,853)
Total current liabilities
(22,011)
(20,071)
(21,106)
Net current assets
75,461
62,111
68,146
Non-current liabilities
Other payables
(11,237)
(11,463)
(10,329)
Provisions for liabilities and charges
(2,195)
(1,619)
(2,164)
Deferred tax liabilities
(584)
(706)
(655)
Total non-current liabilities
(14,016)
(13,788)
(13,148)
Total liabilities
(36,027)
(33,859)
(34,254)
Net assets
114,644
104,139
112,252
Equity attributable to owners of the company
Issued share capital
1,189
1,189
1,189
Share premium account
1,266
902
1,017
Capital redemption reserve
137
137
137
Foreign currency translation reserve
2,550
2,422
2,382
Retained earnings
At 1 July
107,527
97,047
97,047
Profit for the year attributable to owners
7,126
6,284
16,110
Other changes in retained earnings
(5,151)
(3,842)
(5,630)
109,502
99,489
107,527
Total equity
114,644
104,139
112,252
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months to 31 December 2018
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 2017
1,189
656
137
2,263
97,047
101,292
Comprehensive income
Profit for six months to 31 December 2017
-
-
-
-
6,284
6,284
Other comprehensive income
-
-
-
159
218
377
Total comprehensive income
-
-
-
159
6,502
6,661
Transactions with owners
Share options exercised
2
246
-
-
-
248
Shares transferred from treasury
(2)
-
-
-
-
(2)
Dividends paid to shareholders
-
-
-
-
(4,114)
(4,114)
Share-based payment charge
-
-
-
-
54
54
Total transactions with owners
-
246
-
-
(4,060)
(3,814)
Balance at 31 December 2017
1,189
902
137
2,422
99,489
104,139
Comprehensive income
Profit for six months to 30 June 2018
-
-
-
-
9,826
9,826
Actuarial loss on pension scheme
-
-
-
-
1,459
1,459
Movement on unrecognised pension surplus
-
-
-
-
(1,615)
(1,615)
Revaluation of available-for-sale financial assets
-
-
-
-
(74)
(74)
Movement on associated deferred tax
-
-
-
-
13
13
Exchange rate differences on translation of foreign operations
-
-
-
(40)
-
(40)
Total comprehensive income
-
-
-
(40)
9,609
9,569
Transactions with owners
Share issued from exercised options
-
115
-
-
-
115
Dividends paid to shareholders
-
-
-
-
(1,623)
(1,623)
Share-based payment charge
-
-
-
-
52
52
Total transactions with owners
-
115
-
-
(1,571)
(1,456)
Balance at 30 June 2018
1,189
1,017
137
2,382
107,527
112,252
Comprehensive income
Profit for six months to 31 December 2018
-
-
-
-
7,126
7,126
Other comprehensive income
-
-
-
168
(439)
(271)
Total comprehensive income
-
-
-
168
6,687
6,855
Transactions with owners
Share options exercised
-
249
-
-
-
249
Purchase of own shares
-
-
-
-
(117)
(117)
Dividends paid to shareholders
-
-
-
-
(4,639)
(4,639)
Share-based payment charge
-
-
-
-
44
44
Total transactions with owners
-
249
-
-
(4,712)
(4,463)
Balance at 31 December 2018
1,189
1,266
137
2,550
109,502
114,644
CONSOLIDATED STATEMENT OF CASH FLOWS
for the six months to 31 December 2018
31.12.18
(six months to)
31.12.17
(six months to)
30.06.18
(twelve months to)
(unaudited)
(unaudited)
(audited)
£'000
£'000
£'000
Cash generated from operations
Profit before income tax
8,778
7,882
19,567
Adjustments for
- Depreciation charge
1,299
997
2,195
- Amortisation of intangibles & investment property
1,203
1,313
2,400
- Profit on disposal of property, plant and equipment
(2,150)
(45)
(125)
- Finance expense/(income)
157
(53)
(101)
- Retirement benefit contributions in excess of current and past service charge
(80)
(53)
(156)
- Share-based payment expense
362
166
533
- Research and development expenditure credit
(144)
(123)
(237)
- Effects of exchange rate movements
(76)
120
163
Changes in working capital
- Inventories
(534)
2,623
1,954
- Trade and other receivables
1,860
(2,469)
(3,610)
- Payables and provisions
214
(94)
1,415
Cash generated from operations
10,889
10,264
23,998
Tax paid
(1,329)
(1,351)
(3,291)
Cash flow from investing activities
Purchase of property, plant and equipment
(1,265)
(1,848)
(6,049)
Proceeds from sale of property, plant and equipment
3,796
79
197
Purchase of intangibles
(1,145)
(939)
(1,967)
Purchase of subsidiary (net of cash acquired)
-
(5,922)
(6,313)
Disposal of investment property
-
-
67
Net sale of financial assets at fair value through other comprehensive income
71
-
-
Property rental and similar income
10
27
190
Dividend income
106
94
190
Net (purchase)/sale of short-term financial assets
(1,547)
7,125
1,691
Interest received
180
202
388
Net receipt/(issue) of loans notes
2,072
(118)
(2,022)
Net cash generated from/(used in) investing activities
2,278
(1,300)
(13,628)
Cash flow from financing activities
Net proceeds from the issuance of ordinary shares
249
248
361
Purchase of own shares
(117)
-
-
Proceeds from loans
-
-
2,337
Dividends paid to company shareholders
(4,639)
(4,114)
(5,737)
Net cash used in financing activities
(4,507)
(3,866)
(3,039)
Effects of exchange rate changes on cash
112
(8)
(50)
Net increase in cash and cash equivalents
7,443
3,739
3,990
Cash and cash equivalents at the beginning of the period
28,668
24,678
24,678
Cash and cash equivalents at the end of the period
36,111
28,417
28,668
Notes to the Interim Financial Statements
1. Basis of Preparation
The consolidated interim financial statements for the six months to 31 December 2018 have been prepared in accordance with the recognition and measurement principles of applicable International Financial Reporting Standards as adopted by the European Union (IFRSs as adopted by the EU), IFRIC interpretations and the AIM Rules for Companies.
The figures for the period to 31 December 2018 and the comparative period to 31 December 2017 have not been audited or reviewed and are therefore disclosed as unaudited. The figures for 30 June 2018 have been extracted from the financial statements for the year to 30 June 2018, 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 2018 have been applied consistently throughout the Group during the period, except for the adoption of the new pronouncements IFRS 9 "Financial Instruments" and IFRS 15 "Revenue from contracts with customers".
IFRS 9 "Financial Instruments" is effective for accounting periods beginning on or after 1 January 2018, and was adopted by the Group for the accounting period beginning 1 July 2018. The new standard replaces IAS 39 "Financial Instruments: Recognition & Measurement" and the changes introduced by the new standard can be grouped into the following three categories - Classification & Measurement, Impairment, and Hedging. The impact of the new standard in the Group was the following:
· Classification and measurement: IFRS 9 contains three principal classification categories for financial assets which are amortised cost, fair value through other comprehensive income ("FVOCI") and fair value through profit or loss ("FVTPL"). The standard eliminates the existing IAS 39 categories of held-to-maturity, loans and receivables and available-for-sale financial assets. The Group included the new classification categories for financial assets in the Statement of Financial Position and there were no changes to net assets from changes in the measurement basis of financial assets.
· Impairment: IFRS 9 introduces an expected credit loss model which requires expected credit losses and changes to expected credit losses at each reporting date to reflect changes in credit risk since initial recognition. Financial assets measured at amortised cost or FVOCI are subject to the impairment provisions of IFRS 9. The adoption of this standard has not resulted in any material changes in the level of provision for financial assets.
· Hedging: IFRS 9 introduces new hedge accounting requirements. IFRS 9 aligns hedge accounting relationships with the Group's risk management objectives and strategy. The Group does not apply hedge accounting, therefore there were no changes arising from the new standard.
IFRS15 is effective for accounting periods beginning on or after 1 January 2018, and was adopted by the Group for the accounting period beginning 1 July 2018. The standard requires entities to apportion revenue earned from contracts to individual performance obligations based on a five-step model. The adoption of this standard has not resulted in any material impact on reported profits.
The Group is currently evaluating the effect of the new leasing standard IFRS16 that will be adopted for the financial year commencing 1 July 2019. The Group does not have many leasing agreements, with the majority being for vehicles and a building in the Netherlands, subsequently the adoption of this standard is not expected to have a material impact on reported profits.
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 ten 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 Lightronics business is a material subsidiary and therefore disclosed separately.
The eight 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 LLC, Thorlux Australasia PTY Limited, Thorlux Lighting GmbH and Famostar B.V.
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. 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.
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.
The profit on disposal relates to the profit generated by the sale of the property the company owned in Portsmouth, formerly occupied by Compact Lighting Limited.
Thorlux
Lightronics
Other
Inter-
Total
Companies
Segment
Continuing
Adjust-
Operations
ments
£'000
£'000
£'000
£'000
£'000
6 months to 31 December 2018
Revenue to external customers
28,442
11,869
12,358
-
52,669
Revenue to other Group companies
1,161
-
1,206
(2,367)
-
Total revenue
29,603
11,869
13,564
(2,367)
52,669
Operating Profit (before profit on disposal)
4,659
1,066
1,220
74
7,019
Profit on disposal of property
1,917
Operating Profit
8,936
Finance income
416
Finance expense
(574)
Profit before tax expense
8,778
6 months to 31 December 2017
Revenue to external customers
32,298
10,210
10,662
-
53,170
Revenue to other Group companies
2,307
57
1,114
(3,478)
-
Total revenue
34,605
10,267
11,776
(3,478)
53,170
Operating Profit
5,948
1,102
782
(3)
7,829
Finance income
338
Finance expense
(285)
Profit before tax expense
7,882
Year to 30 June 2018
Revenue to external customers
64,645
20,860
24,109
-
109,614
Revenue to other Group companies
3,930
196
2,956
(7,082)
-
Total revenue
68,575
21,056
27,065
(7,082)
109,614
Operating Profit
13,611
2,050
3,407
398
19,466
Net finance income
101
Profit before tax expense
19,567
3. 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 116,001,173 (Interim 2018: 115,750,590) 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 116,764,548 (Interim 2018: 116,502,118) during the period.
4. Dividend
The interim dividend is at the rate of 1.43p per share (Interim 2018: 1.40p), and based on 116,120,658 shares in issue at the announcement date the dividend will amount to £1,661,000 (Interim 2018: £1,623,000). The interim dividend will be paid on 18 April 2019 to shareholders on the register at the close of business on 29 March 2019, and the shares become ex-dividend on 28 March 2019.
A final dividend for the year ended 30 June 2018 of 4.00p (2017: final of 3.55p) per share, amounting to £4,639,000 (2017: £4,114,000) was paid on 29 November 2018.
5. 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 29 March 2019.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.ENDIR URAWRKWAOUAR
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