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REG - Thorpe(F.W.) PLC - Interim Results

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RNS Number : 6336S  Thorpe(F.W.) PLC  18 March 2021

 

INTERIM RESULTS FOR THE SIX MONTHS TO 31 DECEMBER 2020

 

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 2020.

 

Financial highlights:

                           Interim            Interim

                           2021 (unaudited)   2020  (unaudited)
 Revenue                   £56.4m             £57.4m               -1.8%
 Operating profit          £7.7m              £7.5m                +2.2%
 Profit before tax         £7.4m              £7.4m                -%
 Basic earnings per share  5.05p              5.04p                +0.2%

·      Interim dividend 1.49p (Interim 2020: 1.46p) - 2.1% increase

·      Strong start to the year by Thorlux, supported by some large
project orders

·      Netherlands performance - strong recovery following fire at
Lightronics back in September

·      Other companies - reduced revenue at overseas sales offices

·      Net cash generated from operating activities - £8.0m (Interim
2020: £6.2m)

 

 

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

 N+1 Singer - Nominated Adviser
 Steve Pearce/James Moat                                               020 7496 3000

CHAIRMAN'S INTERIM STATEMENT

 

Despite the challenging economic backdrop, the Group delivered a resilient
performance, with revenue reducing only marginally at the half year compared
with last year, and a pleasing marginal increase in profitability at an
operating level.

 

Whilst much of the business community suffers serious ongoing uncertainty
caused by the Covid pandemic, now compounded by Brexit-related operational
difficulties, it is also pleasing for the Group to report a strong order
performance, mainly attributed to its largest division, Thorlux Lighting, with
support from TRT Lighting and Famostar. Understandably, elsewhere, orders are
struggling to reach the levels of previous years, but all the main
manufacturing companies achieved profitable results at the half-year point.
Covid and Brexit are presenting some barriers to export sales, which are
likely to resolve over time.

 

As reported in last autumn's Chairman's Statement, Lightronics suffered a
devastating fire on 23 September 2020. Fortunately no one was hurt, but
unfortunately the fire destroyed the majority of Lightronics' manufacturing
facility and all of the recently completed European Application Centre,
requiring the building to be completely demolished. Giving credit to the local
management team, remarkably, within only a few weeks, manufacturing commenced
at a rented property close by. The latest update is that the site is now
cleared and ready for reconstruction of the new improved facility, insurance
claims are proceeding in accordance with expectations, and production output
and efficiency is recovering to near normal levels. I would like to
congratulate the whole team for their tremendous professionalism, and I would
also like to thank Lightronics' customers for their support during this time.

 

Following the Lightronics' fire, the Board has completed an independent
enhanced fire risk review of all its operations, and actions are continuing to
do everything possible to manage and mitigate risks of this nature.

 

Covid planning and employee safety remain a priority. The Group still has
around 200 employees working from home, with a successful IT infrastructure
helping to facilitate their excellent performance under the circumstances. For
those attending work, all the Group's Covid-secure factories in the UK have
installed infra-red temperature testing at entrances, and, furthermore, all
employees are tested at regular intervals using fast-response lateral flow
test kits. Despite the Group's rigorous planning and strict adherence to
guidelines, shortly after Christmas the TRT facility in Redditch experienced
significant disruption. Other sites, although not as seriously affected, are
coping with ongoing daily difficulties as best they can.

 

Capital investment has been significantly reduced compared to prior periods;
however, the Board recently approved the roll-out of solar PV installations on
the roofs of other UK group companies, in addition to the recently completed
and very successful Thorlux scheme, reported in the 2019 Annual Report and
Accounts. The Group expects to generate at least 40% of the electricity
consumed on these sites, saving both cost and carbon emissions, further
underpinning the Group's sustainability credentials and wish to continually
improve in this area.

 

This half year has been particularly difficult to manage with so many adverse
head winds. I would like to congratulate the whole team for what has been
achieved so far in such unusual and challenging circumstances and thank them
for their support in keeping manufacturing almost entirely operational and
satisfying customer demands, thus helping keep customers' infrastructure
projects active.

 

As a result of this solid performance and strong balance sheet, the Board has
approved an increased dividend of 1.49p (interim 2020: 1.46p) for the six
months to 31 December 2020.

 

Supported by the Group's healthy order book, I foresee a steady second-half
performance better than expected at the start of the pandemic.

 

 

 

 

 

I wish all stakeholders continued good health and I look forward to the
conclusion of the vaccination programme signalling a return to business as
usual. The Board certainly has an appetite to return to a trajectory of
sustained and profitable growth, and to that end board members hope that the
recent impacts on the economy long term will not restrict us from achieving
our goals.

 

 

 

Mike Allcock

Chairman

 

18 March 2021

FW Thorpe Plc

CONSOLIDATED INCOME STATEMENT

for the six months to 31 December 2020

 

                            31.12.20          31.12.19          30.06.20

                            (six months to)   (six months to)   (twelve months to)

                            (unaudited)       (unaudited)       (audited)

                            £'000             £'000             £'000

 Revenue                    56,374            57,412            113,342

 Operating profit           7,653             7,489             16,332

 Finance income             364               402               708
 Finance costs                (650)             (527)           (1,097)

 Profit before tax expense  7,367             7,364             15,943

 Tax expense                  (1,489)           (1,505)         (2,629)

 Profit for the period      5,878             5,859             13,314

 

 

 

 Dividend rate per share:
      Interim              1.49p  1.46p  1.46p
      Final                -      -      4.20p

 

 

 

 

 

 Earnings per share  - basic    5.05p  5.04p  11.45p
                     - diluted  5.03p  5.02p  11.40p

 

 

 

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months to 31 December 2020

 

                                                                            31.12.20    (six months to)     31.12.19    (six months to)     30.06.20

                                                                                                                                            (twelve months to)

                                                                            (unaudited)                     (unaudited)                     (audited)

                                                                            £'000                           £'000                           £'000

 Profit for the period                                                      5,878                           5,859                           13,314

 Other comprehensive income

 Items that may be reclassified to profit or loss
 Exchange rate differences on translation of foreign operations             (30)                            (558)                           229

                                                                             (30)                           (558)                           229

 Items that will not be reclassified to profit or loss
 Revaluation of financial assets at fair value through other comprehensive  403                             168                             (834)
 income *
 Actuarial loss on pension scheme                                           -                               -                               (2,039)
 Movement on unrecognised pension surplus                                   -                               -                               1,869
 Taxation                                                                   (6)                             (29)                            13

                                                                            397                             139                             (991)

 Other comprehensive income for the year, net of tax                        367                             (419)                           (762)

 Total comprehensive income for the year                                     6,245                          5,440                           12,552

 

 

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 £403,000 is due to the increase in market value of
these investments.

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

as at 31 December 2020

                                                                    As at        As at        As at
                                                                    31.12.20     31.12.19     30.06.20

                                                                    (unaudited)  (unaudited)  (audited)
 Assets                                                             £'000        £'000        £'000
 Non-current assets
 Property, plant and equipment                                      26,924       30,317       30,574
 Intangible assets                                                  20,368       20,811       21,032
 Investment property                                                1,982        1,997        1,987
 Loans and receivables                                              -            2,919        1,800
 Equity accounted investments                                       -            936            -
 Financial assets at fair value through other comprehensive income  4,175        3,838        3,772
 Deferred tax assets                                                -            2            -
                                                                    53,449       60,820       59,165
 Current assets
 Inventories                                                        20,664       25,121       25,296
 Trade and other receivables                                        26,457       21,568       21,256
 Financial assets at amortised cost                                 1,800        -            625
 Short-term financial assets                                        25,596       24,542       18,580
 Cash and cash equivalents                                          39,471       27,438       44,422
 Total current assets                                               113,988      98,669       110,179
 Total assets                                                       167,437      159,489      169,344

 Liabilities
 Current liabilities
 Trade and other payables                                           (33,205)     (19,102)     (36,185)
 Lease liabilities                                                  (238)        (82)         (220)
 Current tax liabilities                                            (150)        (274)        (831)
 Total current liabilities                                          (33,593)     (19,458)     (37,236)

 Net current assets                                                 80,395       79,211       72,943

 Non-current liabilities
 Other payables                                                     (73)         (13,442)     (67)
 Lease liabilities                                                  (464)        (565)        (417)
 Provisions for liabilities and charges                             (2,732)      (2,375)      (2,721)
 Deferred tax liabilities                                           (626)        (786)        (601)
 Total non-current liabilities                                      (3,895)      (17,168)     (3,806)
 Total liabilities                                                  (37,488)     (36,626)     (41,042)

 Net assets                                                         129,949      122,863      128,302

 Equity attributable to owners of the company
 Issued share capital                                               1,189        1,189        1,189
 Share premium account                                              1,799        1,526        1,526
 Capital redemption reserve                                         137          137          137
 Foreign currency translation reserve                               2,734        1,977        2,764
 Retained earnings
 At 1 July                                                          122,686      117,036      117,036
 Profit for the year attributable to owners                         5,878        5,859        13,314
 Other changes in retained earnings                                 (4,474)      (4,861)      (7,664)
                                                                    124,090      118,034      122,686
 Total equity                                                       129,949      122,863      128,302

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the six months to 31 December 2020

 

                                                                            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 2019                                                    1,189          1,266          137                         2,535                                 117,036            122,163
 Adjustment on first time adoption of IFRS16 (net of tax)                   -              -              -                           -                                     (265)              (265)
 Restated balance at 30 June 2019                                           1,189          1,266          137                         2,535                                 116,771            121,898
 Comprehensive income
 Profit for six months to 31 December 2019                                  -              -              -                           -                                     5,859              5,859
 Other comprehensive income                                                 -              -              -                           (558)                                 139                (419)
 Total comprehensive income                                                 -              -              -                           (558)                                 5,998              5,440
 Transactions with owners
 Share options exercised                                                    -              260            -                           -                                     -                  260
 Dividends paid to shareholders                                             -              -              -                           -                                     (4,770)            (4,770)
 Share-based payment charge                                                 -              -              -                           -                                     35                 35
 Total transactions with owners                                             -              260            -                           -                                     (4,735)            (4,475)

 Comprehensive income
 Profit for six months to 30 June 2020                                      -              -              -                           -                                     7,455              7,455
 Actuarial loss on pension scheme                                           -              -              -                           -                                     (2,039)             (2,039)
 Movement on unrecognised pension surplus                                   -              -              -                           -                                     1,869              1,869
 Revaluation of financial assets at fair value through other comprehensive  -              -              -                           -                                     (1,002)            (1,002)
 income
 Movement on associated deferred tax                                        -              -              -                           -                                     110                110
 Impact of deferred tax rate change                                         -              -              -                           -                                     (68)               (68)
 Exchange rate differences on translation of foreign operations             -              -              -                           787                                   -                  787
 Total comprehensive income                                                 -              -              -                           787                                   6,325              7,112
 Transactions with owners
 Dividends paid to shareholders                                             -              -              -                           -                                     (1,698)            (1,698)
 Share-based payment charge                                                 -              -              -                           -                                     25                 25
 Total transactions with owners                                             -              -              -                           -                                     (1,673)            (1,673)
 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

 

 

CONSOLIDATED STATEMENT OF CASH FLOWS

for the six months to 31 December 2020

 

                                                                                31.12.20                                      31.12.19            30.06.20

                                                                                (six months to)                               (six months  to)    (twelve months to)
                                                                                (unaudited)                                   (unaudited)         (audited)
                                                                                £'000                                         £'000               £'000
 Cash generated from operations
 Profit before income tax                                                       7,367                                         7,364               15,943
 Adjustments for
 - Depreciation charge                                                          1,746                                         1,491               3,221
 - Depreciation of investment property                                          10                                            9                   19
 - Amortisation of intangibles                                                  1,260                                         1,276               2,577
 - Profit on disposal of property, plant and equipment                                           (46)                         (41)                    (118)
 - Impairment of property, plant and equipment due to fire                      3,214                                         -                   -
 - Net finance expense/(income)                                                 286                                           125                 389
 - Retirement benefit contributions in excess of current and past service                           (129)                     (124)               (170)
 charge
 - Share-based payment charge                                                   703                                           419                 1,211
 - Research and development expenditure credit                                  (130)                                         (149)               (249)
 - Effects of exchange rate movements                                           281                                           537                 (219)
 Changes in working capital
 - Inventories                                                                  4,634                                         387                 238
 - Trade and other receivables                                                              (5,546)                           49                  571
 - Payables and provisions                                                                  (3,898)                           (2,178)             (182)
 Cash generated from operations                                                 9,752                                         9,165               23,231
 Tax paid                                                                       (1,738)                                       (2,958)             (3,848)
 Cash flow from investing activities
 Purchase of property, plant and equipment                                      (1,464)                                       (5,521)             (6,988)
 Proceeds from sale of property, plant and equipment                            86                                            83                  212
 Purchase of intangibles                                                        (768)                                         (1,099)             (1,719)
 (Purchase)/sale of financial assets at fair value through other comprehensive                     (5)                        (61)                (61)
 income
 Proceeds from sale of other financial assets at fair value through profit and                       -                        387                 387
 loss
 Property rental and similar income                                             26                                            6                   92
 Dividend income                                                                87                                            111                 187
 Net withdrawal/(deposit) of short-term financial assets                        (7,016)                                       1,941               7,903
 Interest received                                                              101                                           164                 322
 Net receipt of loan notes                                                      805                                           597                 1,156
 Net cash generated from/(used in) investing activities                         (8,148)                                       (3,392)             1,491

 Cash flow from financing activities
 Net proceeds from the issuance of ordinary shares                              273                                           260                 260
 Proceeds from loans                                                            198                                           121                 192
 Repayment of borrowings                                                                             -                        (1,124)             (203)
 Settlement of lease liabilities                                                -                                             -                   (1,011)
 Payment of lease liabilities                                                   (129)                                         -                   (265)
 Payment of lease interest                                                      (18)                                          -                   (36)
 Dividends paid to company shareholders                                         (4,895)                                       (4,770)             (6,468)
 Net cash used in financing activities                                          (4,571)                                       (5,513)             (7,531)
 Effects of exchange rate changes on cash                                       (246)                                         (671)               272
 Net increase/(decrease) in cash and cash equivalents                           (4,951)                                       (3,369)             13,615
 Cash and cash equivalents at the beginning of the period                       44,422                                        30,807              30,807
 Cash and cash equivalents at the end of the period                             39,471                                        27,438              44,422

 

 

Notes to the Interim Financial Statements

 

1.   Basis of preparation

       The consolidated interim financial statements for the six months
to 31 December 2020 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 2020 and the
comparative period to 31 December 2019 have not been audited or reviewed and
are therefore disclosed as unaudited. The figures for 30 June 2020 have been
extracted from the financial statements for the year to 30 June 2020, 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 2020 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 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 businesses in the Netherlands, Lightronics and Famostar, are
material subsidiaries and disclosed separately as Netherlands companies.

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  Other      Inter-    Total
                                                                              Companies  Segment   Continuing
                                                                                         Adjust-   Operations
                                                                                         ments
                                             £'000     £'000                  £'000      £'000     £'000
 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

 Six months to 31 December 2019 (restated)
 Revenue to external customers               32,363    15,485                 9,564      -         57,412
 Revenue to other Group companies            1,740     86                     1,931      (3,757)   -
 Total revenue                               34,103    15,571                 11,495     (3,757)   57,412
 Operating profit                            4,839     1,470                  951        229       7,489
 Finance income                                                                                     402
 Finance expense                                                                                   (527)
 Profit before tax expense                                                                         7,364

 Year to 30 June 2020
 Revenue to external customers               65,615    31,340                 16,387     -         113,342
 Revenue to other Group companies            3,164     234                    4,021      (7,419)   -
 Total revenue                               68,779    31,574                 20,408     (7,419)   113,342
 Operating profit                            10,150    4,125                  1,412      645       16,332
 Net finance income                                                                                (389)
 Profit before tax expense                                                                         15,943

 

 

 

3.   Insurance claim resulting from fire at the premise of Lightronics
Participaties B.V.

On 23 September 2020 the facilities of Lightronics Participaties B.V. were
damaged by fire. This resulted in the destruction of the majority of
Lightronics' manufacturing facility and the recently completed European
Application Centre, requiring the building to be completely demolished.

The figures reflected in these financial statements are not final, as the full
extent of the damage is being assessed. The financial statements reflect the
best estimate of the associated impairment and reimbursement from insurance
proceeds and the figures will be trued up by year end, but this is unlikely to
lead to a material change to the figures reported.

The cost of replacing these assets has been estimated to be €4.4m (£3.9m)
excluding any consequential loss. €2.6m (£2.3m) of this value is for the
refurbishment of the building and €1.8m (£1.6m) for replacement of plant,
equipment and inventory.

A claim for reimbursement has been filed with the insurers and an estimate for
the incremental costs relating to refurbishment and a temporary shift of
operations to other locations has been established.  The Group has assessed
the insurance reimbursement receivable of €3.6m (£3.2m) to meet the
requirements to be recognised as a contingent asset within trade receivables.

As at the date of this interim statement, €0.75m (£0.67m) has been received
from the insurers for replacing inventory and agreement reached in principle
for the replacement of the property, plant and equipment.

The table below details what is included in these financial statements for
this event:

                                            EUR (€'000)    GBP (£'000)
 Costs incurred
 Impairment of freehold land and buildings  (2,576)        (2,315)
 Impairment of plant and equipment          (1,000)        (899)
 Impairment of inventory                    (775)          (696)
 Total impairment                           (4,351)        (3,910)
 Reimbursement claim
 Insurance reimbursement receivable *       3,603          3,238
 Reimbursement received to date             748            672
 Total claim                                4,351          3,910

                * Included in trade and other receivables in
the Consolidated Statement of Financial Position

 

4.   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
116,426,119 (Interim 2020: 116,215,549) 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
116,862,079 (Interim 2020: 116,779,815) during the period.

 

5.   Dividend

       The interim dividend is at the rate of 1.49p per share (Interim
2020: 1.46p) and based on 116,551,808 shares in issue at the announcement date
the dividend will amount to £1,737,000 (Interim 2020: £1,698,000).  The
interim dividend will be paid on 23 April 2021 to shareholders on the register
at the close of business on 6 April 2021, and the shares become ex-dividend on
1 April 2021.

A final dividend for the year ended 30 June 2020 of 4.20p (2019:  final
4.10p) per share, amounting to £4,895,000 (2019:  £4,770,000) was paid on
26 November 2020.

 

6.   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 7 April 2021.

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