REG - Thorpe(F.W.) PLC - Interim Results
10/03/2022 07:01
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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:
Interim Interim Exc. Zemper
2022 (unaudited) 2021 (unaudited)
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 31.12.20 30.06.21
(six months to) (six months to) (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 115 403 135
income *
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 - - - - (268) (268)
income
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 - - - - 3 3
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 31.12.20 30.06.21
(six months to) (six months to) (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 9 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 - - 5
- Insurance proceeds re other costs - - 318
- Net finance expense 340 286 652
- Retirement benefit contributions in excess of current and past service (73) (129) (182)
charge
- Share-based payment charge 2 703 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 - (5) 205
Comprehensive Income
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 Zemper Other Inter- Total
Companies Group Companies Segment 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 (http://www.fwthorpe.co.uk) ) from 31
March 2022.
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