TIDMTFW

RNS Number : 8753M

Thorpe(F.W.) PLC

19 September 2019

Preliminary Results

for the year ended 30 June 2019 (Unaudited)

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 2019.

Key points:

 
Continuing operations               2019       2018 
--------------------------------  ---------  ---------  ------------- 
Revenue                           GBP110.6m  GBP109.6m  0.9% increase 
Operating profit (before profit   GBP17.6m   GBP19.5m   9.3% decrease 
 on disposal of property) 
Operating profit                  GBP19.6m   GBP19.5m   0.5% increase 
Profit before tax                 GBP19.6m   GBP19.6m         - 
Basic earnings per share           13.91p     13.91p          - 
--------------------------------  ---------  ---------  ------------- 
 
   --      Total interim and final dividend of 5.53p (2018: 5.40p) - an increase of 2.4% 
   --      Overall, Group results were in line with management expectations 

-- Strong recovery in the second half of the year following a slow start by Thorlux, as previously reported

   --      Improved results at Lightronics, Famostar and TRT 

-- Profit before tax includes profit on disposal of GBP1.9m following the sale of the Thorlux Portsmouth property

-- Strong net cash generated from operating activities - GBP21.6m (2018: GBP20.7m), an increase of 4.1%

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 (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 
 
  N+1 Singer - Nominated Adviser 
Richard Lindley/James Moat                       020 7496 3000 
 

Chairman's statement

Despite a tremendous effort by Group employees, and as forecast in the interim results announcement, operating profit before disposals for the 2018/19 financial year took a step backwards when compared with last year's record. As reported, UK operations suffered from a significant general downturn in market conditions in the first half of the year, and despite an excellent recovery of orders in the second half and good contributions by Lightronics and Famostar in the Netherlands, revenue increased only marginally over the year. It is, however, pleasing to report that despite ongoing uncertain economic conditions in the UK, orders closed ahead of the previous year and the Group entered the new financial year with a healthy order book.

GROUP RESULTS (unaudited)

In 2018/19, Group revenue reached GBP110.6m, an increase of 0.9%, but underlying operating profit was down by 9.3% to GBP17.6m. A reduction in operating profit was experienced across a number of our UK operations, but most notably at the Group's largest company, Thorlux Lighting, as a result of costs associated with closing down the Portsmouth factory, reduced efficiency due to managing the slowdown followed by a sudden ramp-up of production, and a slight squeeze on margins. Overall, Management are pleased with the recovery and satisfied that, to the best of our judgement, the Group has gained market share in tough trading conditions.

Both revenue and operating profit are supplemented by the first full-year inclusion of Famostar; the prior year only represented six months' results for the Netherlands business. Operating profit and profit before tax were supported by the sale of the Thorlux Portsmouth and Sugg Lighting factories for GBP4.8m, realising a GBP1.9m gain on disposal. Revenue generated outside the UK was GBP42m, or 38% of the total, the majority from European countries served by Group acquisitions in the last few years. Organic growth for exporting products from the Group's UK companies remains a firm target, but this year took a step backwards despite the weak pound. In particular, Australia and the UAE suffered from a lack of significant projects, each region with its own unique set of trading and economic difficulties. The pressure remains on, and I remain committed to offsetting risk within the Group by ensuring the companies are as multinational as practical in their trading.

A detailed summary of each company's performance is included in the Annual Report and Accounts when published, but I would like to recognise the improvement in profitability at the Group's UK-based street lighting producer, TRT Lighting (GBP0.8m, up 103%), further improvements at Lightronics, and, after only a short time as part of the Group, how Famostar has made an excellent contribution, increasing its own profits considerably and making a real impact on the overall figures.

During the year, numerous acquisition opportunities have presented themselves. Each of these has been investigated, several in some detail. Within the Board, we continue to try and find the right companies that fit the Board's criteria, including for them to be non-competing, complementary, and to have potential synergies with other Group companies.

The Board has continued and committed to invest to underpin Group companies and to support growth. To that end: the construction of new facilities for Portland Lighting continues at pace (GBP1.6m); the Group acquired the present factory and offices for Famostar (GBP2.3m), after the year end, from the leaseholder, together with a significant amount of adjoining land, in anticipation of future expansion (GBP0.3m); the extension and renovation of the Lightronics building was completed (GBP1.0m); and the Group invested in the sheet metal factory at Thorlux Lighting, with new state of the art metal-piercing machines (GBP1.6m). I am proud to report that the roof of Thorlux Lighting's sheet metal factory now supports 909 solar panels, contributing 225,000 kWh of annual electricity, providing continuation of the Group's green manufacturing and distribution policy, and even charging the hybrid electric cars of myself and my colleagues with near zero-carbon electricity during our working days.

Performance as a whole for the year to 30 June 2019 allows the Board to recommend a final dividend of 4.10p per share (2018: 4.00p), which gives a total for the year of 5.53p (2018: 5.40p).

In recent years, I have reported on the difficulties in finding organic revenue growth during tough trading conditions. I believe the current challenges are caused by several factors. Among these, of course, is the Brexit situation, which is hitting general business confidence, as can be seen in our sales to certain sectors in the UK. While the Brexit debate continues, the Government is not focussed on general everyday tasks, which is also arguably affecting an amount of potential revenue from customers reliant upon government investment. Finally, customer interest in LED luminaire technology has peaked because of the smaller improvements in LED chip performance; in particular, short-payback retrofit projects are fewer.

It is pleasing that in such changing times, the Group can still produce a set of creditable figures.

The Group companies do, however, need to keep improving, and in particular be more agile. All Group companies operate on annually reviewed objectives and key performance indicators, set by each board at the start of each financial year. In addition, the Group Board has a longer term strategy and planning review.

The product life cycle of lighting products used to be long; however, LED luminaires and control systems now need updating regularly. The lighting industry should be proud of what it has achieved in recent years, with LED luminaires and control systems often using 70% less power than their conventional counterparts, and as such making a real contribution to government energy-reduction objectives. However, with such large reductions in power usage, and associated environmental impacts, control system effectiveness is less pronounced and monetary paybacks are extended. Therefore, systems now need to provide greater benefits in addition to energy saving alone.

Nowadays, within the Group we are changing our emphasis, and our sales engineers talk far more about other factors as well as energy saving. These changes are exciting whilst also a threat. If we change and adapt, like we did for the "LED revolution" years ago and the "wireless revolution" not so long ago, then our luminaires can provide data and status information for numerous reasons, including, for example, users' presence-detection profiling to determine operational efficiency improvements, and automatic emergency lighting testing to provide health and safety compliance. We can also fine-tune lighting automatically, for example its colour temperature, to follow a natural daylight rhythm. People in the workplace are expensive; if we can help people be more efficient and provide an environment in which they can be more productive, through good quality lighting, then that can deliver a return on investment more quickly than energy savings ever did.

The SmartScan emergency lighting system has found synergies across most Group companies. Using a common software "backbone" allows Thorlux to tailor the system to suit individual company needs such as branding or local testing nuances. Philip Payne and Solite already use SmartScan technology, and by the end of this calendar year SmartScan will be launched at Famostar, TRT and Lightronics. In the near future, there are plans to extend the SmartScan platform further, to bring other non-lighting devices into its web portal, for example to provide warehouse dock door monitoring and solar panel energy logging.

Thorlux introduced its new Flex System last year, but full production only started recently. This new range builds on the theme of providing lighting for workplace well-being. Please see the article in this year's Annual Report for details, or the Thorlux website. The system has several patented elements and is a rather radical approach to lighting a space. It certainly looks the part in the newly refurbished Lightronics building, and I hope customers will feel the same.

PERSONNEL

I would like to thank my whole team for their continued support and diligence. We all have objectives to meet, and whilst these are challenging, they are necessary to continue on the path of steady, sustainable and profitable growth.

Andrew Thorpe retired from executive duties on 28 June 2019. Further to my announcement at the time, I would like to repeat, on behalf of the Board and all employees, our thanks to Andrew for his diligence in his many years working for our company. Andrew will be a welcome visitor every month for board meetings and at any time in between.

I am also pleased to share with you that we have added two relative "youngsters" to the Thorlux Board; one started with us as an apprentice and the other as a trainee.

OUTLOOK

It has never been possible for the Board to predict order income beyond the next few months; in the current climate, predictions seem even more challenging. All we can do is to remain focussed and capable to flex with the times.

I strongly believe that if we, within the Group, continue to develop products that our customers desire, then that is a good starting point. Beyond that, we then have to continually assess our methods and routes to market and be prepared to change to suit the times. We also need to ensure we are showing our wares to as many customers as possible, through better marketing and targeted sales.

The Group Board has targets and plans in place for all of the Group's companies; Board members remain committed to resume a path of steady growth. We are, at this moment, however, subject to unpredictable economic conditions, particularly in the UK, with the threat of a disorderly exit from the EU and the Government in disarray. Whilst we have some plans in place to mitigate these impacts, current uncertainty only serves to weigh on our customers' confidence to invest in capital projects. We can only hope that, whatever the outcome over the next few months, any downturn in some sectors will be offset by some reinvigoration in government-led investment.

M Allcock - Chairman

19 September 2019

Consolidated results (unaudited)

Consolidated income statement

For the year ended 30 June 2019

 
                                                              2019          2018 
                                               Notes       GBP'000       GBP'000 
---------------------------------------------  -----  ------------  ------------ 
Continuing operations 
Revenue                                            2       110,643       109,614 
Cost of sales                                             (60,264)      (58,305) 
---------------------------------------------  -----  ------------  ------------ 
Gross profit                                                50,379        51,309 
Distribution costs                                        (13,182)      (11,823) 
Administrative expenses                                   (19,840)      (20,261) 
Other operating income                                         292           241 
---------------------------------------------  -----  ------------  ------------ 
Operating profit (before profit on disposal)       2        17,649        19,466 
Profit on disposal of property                               1,917             - 
Operating profit                                            19,566        19,466 
Finance income                                               1,049           819 
Finance costs                                              (1,046)         (718) 
Profit before income tax                                    19,569        19,567 
Income tax expense                                 3       (3,429)       (3,457) 
---------------------------------------------  -----  ------------  ------------ 
Profit for the year                                         16,140        16,110 
---------------------------------------------  -----  ------------  ------------ 
 

Earnings per share from continuing operations attributable to the equity holders of the company during the year (expressed in pence per share).

 
 
                                                 2019    2018 
Basic and diluted earnings per share    Notes   Pence   pence 
-------------------------------------   -----  ------  ------ 
- Basic                                     8   13.91   13.91 
- Diluted                                   8   13.83   13.81 
--------------------------------------  -----  ------  ------ 
 

Consolidated statement of comprehensive income

For the year ended 30 June 2019

 
 
                                                             2019      2018 
                                                          GBP'000   GBP'000 
------------------------------------------------------   --------  -------- 
Profit for the year:                                       16,140    16,110 
-------------------------------------------------------  --------  -------- 
Other comprehensive income/(expenses) 
Items that may be reclassified to profit or loss 
Revaluation of available-for-sale financial assets              -       189 
Exchange differences on translation of foreign 
 operations                                                   153       119 
Taxation                                                        -      (32) 
-------------------------------------------------------  --------  -------- 
                                                              153       276 
 ------------------------------------------------------  --------  -------- 
Items that will not be reclassified to profit or 
 loss 
------------------------------------------------------   --------  -------- 
Revaluation of financial assets at fair value through 
 other comprehensive income                                 (142)         - 
Actuarial (loss)/gain on pension scheme                     (374)     1,459 
Movement on unrecognised pension scheme surplus               191   (1,615) 
Taxation                                                       24         - 
-------------------------------------------------------  --------  -------- 
                                                            (301)     (156) 
 ------------------------------------------------------  --------  -------- 
 
Other comprehensive income for the year, net of 
 tax                                                        (148)       120 
-------------------------------------------------------  --------  -------- 
 
Total comprehensive income for the year attributable 
 to equity shareholders                                    15,992    16,230 
-------------------------------------------------------  --------  -------- 
 

Consolidated STATEMENT OF financial position

As at 30 June 2019

 
                                                          Group 
                                                    ------------------ 
                                                        2019      2018 
                                             Notes   GBP'000   GBP'000 
-------------------------------------------  -----  --------  -------- 
Assets 
Non-current assets 
Property, plant and equipment                    5    25,353    22,679 
Intangible assets                                6    21,687    21,596 
Investment property                                    2,006     2,076 
Loans and receivables                                  3,567     6,139 
Equity accounted investments                             936       936 
Financial assets at fair value through 
 other comprehensive income                            3,683         - 
Available-for-sale financial assets                        -     3,820 
Deferred tax assets                                        -         8 
-------------------------------------------  -----  --------  -------- 
                                                      57,232    57,254 
Current assets 
Inventories                                           25,506    21,489 
Trade and other receivables                           21,502    23,416 
Other financial assets at fair value 
 through profit or loss                                  387       389 
Short-term financial assets                      7    26,483    15,290 
Cash and cash equivalents                             30,807    28,668 
-------------------------------------------  -----  --------  -------- 
Total current assets                                 104,685    89,252 
-------------------------------------------  -----  --------  -------- 
Total assets                                         161,917   146,506 
-------------------------------------------  -----  --------  -------- 
Liabilities 
Current liabilities 
Trade and other payables                            (21,912)  (19,253) 
Current income tax liabilities                       (1,935)   (1,853) 
-------------------------------------------  -----  --------  -------- 
Total current liabilities                           (23,847)  (21,106) 
-------------------------------------------  -----  --------  -------- 
Net current assets                                    80,838    68,146 
-------------------------------------------  -----  --------  -------- 
Non-current liabilities 
Other payables                                      (12,804)  (10,329) 
Provisions for liabilities and charges               (2,404)   (2,164) 
Deferred income tax liabilities                        (699)     (655) 
-------------------------------------------  -----  --------  -------- 
Total non-current liabilities                       (15,907)  (13,148) 
-------------------------------------------  -----  --------  -------- 
Total liabilities                                   (39,754)  (34,254) 
-------------------------------------------  -----  --------  -------- 
Net assets                                           122,163   112,252 
-------------------------------------------  -----  --------  -------- 
Equity attributable to the owners of 
 the company 
Share capital                                          1,189     1,189 
Share premium account                                  1,266     1,017 
Capital redemption reserve                               137       137 
Foreign currency translation reserve                   2,535     2,382 
Retained earnings 
-------------------------------------------  -----  --------  -------- 
At 1 July                                            107,527    97,047 
Profit for the year attributable to owners            16,140    16,110 
Other changes in retained earnings                   (6,631)   (5,630) 
-------------------------------------------  -----  --------  -------- 
                                                     117,036   107,527 
-------------------------------------------  -----  --------  -------- 
Total equity                                         122,163   112,252 
-------------------------------------------  -----  --------  -------- 
 

Consolidated statement of changes in equity

For the year ended 30 June 2019

 
                                                  Share      Capital 
                                        Share   premium   redemption                                Retained     Total 
                                      capital   account      reserve             Foreign currency   earnings    equity 
                              Notes   GBP'000   GBP'000      GBP'000  translation reserve GBP'000    GBP'000   GBP'000 
----------------------------  -----  --------  --------  -----------  ---------------------------  ---------  -------- 
Balance at 1 July 2017                  1,189       656          137                        2,263     97,047   101,292 
----------------------------  -----  --------  --------  -----------  ---------------------------  ---------  -------- 
Comprehensive income 
Profit for the year to 30 
 June 2018                                  -         -            -                            -     16,110    16,110 
Actuarial gain on pension 
 scheme                                     -         -            -                            -      1,459     1,459 
Movement on unrecognised 
 pension scheme surplus                     -         -            -                            -    (1,615)   (1,615) 
Revaluation of 
 available-for-sale 
 financial assets                           -         -            -                            -        189       189 
Movement on associated 
 deferred tax                               -         -            -                            -       (32)      (32) 
Exchange differences on 
 translation of foreign 
 operations                                 -         -            -                          119          -       119 
Total comprehensive income                  -         -            -                          119     16,111    16,230 
Transactions with owners 
Shares issued from exercised 
 options                                    -       361            -                            -          -       361 
Dividends paid to 
 shareholders                     4         -         -            -                            -    (5,737)   (5,737) 
Share based payment charge                  -         -            -                            -        106       106 
----------------------------  -----  --------  --------  -----------  ---------------------------  ---------  -------- 
Total transactions with 
 owners                                     -       361            -                            -    (5,631)   (5,270) 
----------------------------  -----  --------  --------  -----------  ---------------------------  ---------  -------- 
Balance at 30 June 2018                 1,189     1,017          137                        2,382    107,527   112,252 
----------------------------  -----  --------  --------  -----------  ---------------------------  ---------  -------- 
Comprehensive income 
Profit for the year to 30 
 June 2019                                  -         -            -                            -     16,140    16,140 
Actuarial loss on pension 
 scheme                                     -         -            -                            -      (374)     (374) 
Movement on unrecognised 
 pension scheme surplus                     -         -            -                            -        191       191 
Revaluation of financial 
 assets at fair value 
 through other comprehensive 
 income                                     -         -            -                            -      (142)     (142) 
Movement on associated 
 deferred tax                               -         -            -                            -         24        24 
Exchange differences on 
 translation of foreign 
 operations                                 -         -            -                          153          -       153 
----------------------------  -----  --------  --------  -----------  ---------------------------  ---------  -------- 
Total comprehensive income                  -         -            -                          153     15,839    15,992 
Transactions with owners 
Shares issued from exercised 
 options                                    -       249            -                            -          -       249 
Purchase of own shares                      -         -            -                            -      (117)     (117) 
Dividends paid to 
 shareholders                     4         -         -            -                            -    (6,299)   (6,299) 
Share based payment charge                  -         -            -                            -         86        86 
----------------------------  -----  --------  --------  -----------  ---------------------------  ---------  -------- 
Total transactions with 
 owners                                     -       249            -                            -    (6,330)   (6,081) 
----------------------------  -----  --------  --------  -----------  ---------------------------  ---------  -------- 
Balance at 30 June 2019                 1,189     1,266          137                        2,535    117,036   122,163 
----------------------------  -----  --------  --------  -----------  ---------------------------  ---------  -------- 
 

Consolidated statement of cash flows

For the year ended 30 June 2019

 
                                                        Group 
                                                  ------------------ 
                                                      2019      2018 
                                           Notes   GBP'000   GBP'000 
-----------------------------------------  -----  --------  -------- 
Cash flows from operating activities 
Cash generated from operations                 9    25,038    23,998 
Tax paid                                           (3,476)   (3,291) 
-----------------------------------------  -----  --------  -------- 
Net cash generated from operating 
 activities                                         21,562    20,707 
-----------------------------------------  -----  --------  -------- 
 
Cash flows from investing activities 
Purchases of property, plant and 
 equipment                                         (6,852)   (6,049) 
Proceeds from sale of property, plant 
 and equipment                                       3,796       197 
Purchase of intangibles                            (2,417)   (1,967) 
Purchase of subsidiary (net of cash 
 acquired)                                               -   (6,313) 
Sale of investment property                             12        67 
Net sale of financial assets                            70         - 
Property rental and similar income                     205       190 
Dividend income                                        225       190 
Net (deposit)/withdrawal of short-term 
 financial assets                                 (11,193)     1,691 
Interest received                                      403       388 
Net receipt/(issue) of loan notes                    2,575   (2,022) 
-----------------------------------------  -----  --------  -------- 
Net cash used in investing activities             (13,176)  (13,628) 
-----------------------------------------  -----  --------  -------- 
 
Cash flows from financing activities 
Net proceeds from the issuance of 
 ordinary shares                                       249       361 
Purchase of own shares                               (117)         - 
Proceeds from loans                                      -     2,337 
Repayments of borrowings                             (197)         - 
Dividends paid to company's shareholders       4   (6,299)   (5,737) 
Net cash used in financing activities              (6,364)   (3,039) 
-----------------------------------------  -----  --------  -------- 
Effects of exchange rate changes 
 on cash                                               117      (50) 
Net increase in cash in the year                     2,139     3,990 
Cash and cash equivalents at beginning 
 of year                                            28,668    24,678 
-----------------------------------------  -----  --------  -------- 
Cash and cash equivalents at end 
 of year                                            30,807    28,668 
-----------------------------------------  -----  --------  -------- 
 

Notes (unaudited)

1 Basis of preparation

The financial information set out above has been prepared in accordance with International Financial Reporting Standards adopted by the European Union and the IFRS interpretations committee (IFRS IC) though does not constitute the Group's statutory accounts for the year ended 30 June 2019. The financial information has been prepared on a going concern basis, under the historical cost convention, as modified by available-for-sale financial assets, financial assets and financial liabilities (including derivative instruments) at fair value through the profit and loss.

The Company and Group has adopted all IAS and IFRS adopted in the EU except for IAS 34, as AIM-listed companies are not required to adopt IAS 34. The Company and Group has not early adopted any other standards or interpretations not yet endorsed by the EU.

New or amended standards adopted for the year ending 30 June 2019 are:

IFRS 9 "Financial Instruments" (effective 1 January 2018)

IFRS 15 "Revenue from contracts with customers" (effective 1 January 2018)

Amendments to IFRS 2, "Share based payments" - Classification and measurement (effective 1 January 2018)

Amendments to IFRS 4, Amendments regarding implementation of IFRS 9 (effective 1 January 2018)

Amendment to IFRS 9, "Financial instruments", on general hedge accounting (effective date 1 January 2018)

IFRS 9 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. Equity financial instruments previously classified as available-for-sale assets have been classified as Financial assets at fair value through other comprehensive income.

-- 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 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 in the Netherlands, subsequently the adoption of this standard is not expected to have a material impact on reported profits.

The results and financial information for the year ended 30 June 2019 is unaudited but the statutory accounts for the year then ended will be delivered to the Registrar of Companies in due course, and expect the auditors' report to be unqualified and will not contain a statement under section 498(2) and (3) of the Companies Act 2006.

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

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 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 Lighting 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-        Total 
                                                                 Other       segment   continuing 
                                      Thorlux  Lightronics   companies   adjustments   operations 
                                      GBP'000      GBP'000     GBP'000       GBP'000      GBP'000 
-----------------------------------  --------  -----------  ----------  ------------  ----------- 
Year to 30 June 2019 
Revenue to external customers          62,304       23,154      25,185             -      110,643 
Revenue to other group companies        3,551          366       3,573       (7,490)            - 
-----------------------------------  --------  -----------  ----------  ------------  ----------- 
Total revenue                          65,855       23,520      28,758       (7,490)      110,643 
-----------------------------------  --------  -----------  ----------  ------------  ----------- 
Operating profit (before profit on 
 disposal)                             11,578        2,357       3,661            53       17,649 
-----------------------------------  --------  -----------  ----------  ------------  ----------- 
Profit on disposal of property                                                              1,917 
-----------------------------------  --------  -----------  ----------  ------------  ----------- 
Operating profit                                                                           19,566 
-----------------------------------  --------  -----------  ----------  ------------  ----------- 
Net finance income                                                                              3 
Profit before income tax                                                                   19,569 
-----------------------------------  --------  -----------  ----------  ------------  ----------- 
 
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 income tax                                                                   19,567 
-----------------------------------  --------  -----------  ----------  ------------  ----------- 
 

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.

 
                        2019      2018 
                     GBP'000   GBP'000 
------------------  --------  -------- 
UK                    68,706    70,652 
Netherlands           28,227    22,713 
Rest of Europe        11,185    10,726 
Rest of the World      2,525     5,523 
------------------  --------  -------- 
                     110,643   109,614 
------------------  --------  -------- 
 

3 Income tax expense

Analysis of income tax expense in the year:

 
                                                        2019       2018 
                                                     GBP'000    GBP'000 
--------------------------------------------------  --------  --------- 
Current tax 
Current tax on profits for the year                    3,963      3,930 
Adjustments in respect of prior years                  (609)      (170) 
--------------------------------------------------  --------  --------- 
Total current tax                                      3,354      3,760 
--------------------------------------------------  --------  --------- 
Deferred tax 
Origination and reversal of temporary differences         75      (303) 
--------------------------------------------------  --------  --------- 
Total deferred tax                                        75      (303) 
--------------------------------------------------  --------  --------- 
Income tax expense                                     3,429      3,457 
--------------------------------------------------  --------  --------- 
 

The tax assessed for the year is lower (2018: lower) than the standard rate of corporation tax in the UK of 19.00% (2018: 19.00%). The differences are explained below:

 
                                                               2019       2018 
                                                            GBP'000    GBP'000 
---------------------------------------------------------  --------  --------- 
Profit before income tax                                     19,569     19,567 
---------------------------------------------------------  --------  --------- 
Profit on ordinary activities multiplied by the standard 
 rate in the UK of 19.00% (2018: 19.00%)                      3,718      3,718 
Effects of: 
Expenses not deductible for tax purposes                        881        648 
Accelerated tax allowances and other timing differences          55      (383) 
Adjustments in respect of prior years                         (609)      (170) 
Chargeable gains                                              (352)          - 
Patent box relief                                             (597)      (641) 
Foreign profit taxed at higher rate                             333        285 
Tax charge                                                    3,429      3,457 
---------------------------------------------------------  --------  --------- 
 

The effective tax rate was 17.52% (2018: 17.67%). Adjustments in respect of prior years relates to refunds received for additional investment allowances and patent box relief.

The change to the UK corporation tax rate from 19% to 17% from 1 April 2020 was substantively enacted on 6 September 2016 with the appropriate rate reflected within these financial statements.

4 Dividends

Dividends paid during the year are outlined in the tables below:

 
Dividends paid (pence per share)   2019  2018 
---------------------------------  ----  ---- 
Final dividend                     4.00  3.55 
Interim dividend                   1.43  1.40 
---------------------------------  ----  ---- 
Total                              5.43  4.95 
---------------------------------  ----  ---- 
 

A final dividend in respect of the year ended 30 June 2019 of 4.10p per share, amounting to GBP4,763,000 is to be proposed at the Annual General Meeting on 21 November 2019 and, if approved, will be paid on 29 November 2019 to shareholders on the register on 1 November 2019. The ex-dividend date is 31 October 2019. These financial statements do not reflect this dividend payable.

 
Dividends proposed (pence per share)   2019  2018 
-------------------------------------  ----  ---- 
Final dividend                         4.10  4.00 
-------------------------------------  ----  ---- 
 
 
                       2019      2018 
Dividends paid      GBP'000   GBP'000 
-----------------  --------  -------- 
Final dividend        4,638     4,114 
Interim dividend      1,661     1,623 
-----------------  --------  -------- 
Total                 6,299     5,737 
-----------------  --------  -------- 
 
 
                         2019      2018 
Dividends proposed    GBP'000   GBP'000 
-------------------  --------  -------- 
Final dividend          4,763     4,639 
-------------------  --------  -------- 
 

5 Property, plant and equipment

 
                                          Group 
                           ------------------------------------ 
                                 Freehold       Plant 
                                     land         and 
                            and buildings   equipment     Total 
                                  GBP'000     GBP'000   GBP'000 
-------------------------  --------------  ----------  -------- 
Cost 
At 1 July 2018                     18,676      21,328    40,004 
Additions                           3,176       3,616     6,792 
Disposals                         (2,199)     (1,116)   (3,315) 
Currency translation                   67          23        90 
At 30 June 2019                    19,720      23,851    43,571 
-------------------------  --------------  ----------  -------- 
Accumulated depreciation 
At 1 July 2018                      3,829      13,496    17,325 
Charge for the year                   546       1,962     2,508 
Disposals                           (673)       (962)   (1,635) 
Currency translation                   10          10        20 
At 30 June 2019                     3,712      14,506    18,218 
-------------------------  --------------  ----------  -------- 
Net book amount 
-------------------------  --------------  ----------  -------- 
At 30 June 2019                    16,008       9,345    25,353 
-------------------------  --------------  ----------  -------- 
 
 
                                             Group 
                              ------------------------------------ 
                                    Freehold       Plant 
                                        land         and 
                               and buildings   equipment     Total 
                                     GBP'000     GBP'000   GBP'000 
----------------------------  --------------  ----------  -------- 
Cost 
At 1 July 2017                        14,556      18,990    33,546 
Acquisition of a subsidiary              528       1,323     1,851 
Additions                              3,301       2,558     5,859 
Disposals                                  -     (1,247)   (1,247) 
Transfers                                294       (294)         - 
Currency translation                     (3)         (2)       (5) 
At 30 June 2018                       18,676      21,328    40,004 
----------------------------  --------------  ----------  -------- 
Accumulated depreciation 
At 1 July 2017                         2,789      11,920    14,709 
Acquisition of a subsidiary              435       1,188     1,623 
Charge for the year                      464       1,672     2,136 
Disposals                                  -     (1,139)   (1,139) 
Transfers                                141       (141)         - 
Currency translation                       -         (4)       (4) 
At 30 June 2018                        3,829      13,496    17,325 
----------------------------  --------------  ----------  -------- 
Net book amount 
----------------------------  --------------  ----------  -------- 
At 30 June 2018                       14,847       7,832    22,679 
----------------------------  --------------  ----------  -------- 
 

6 Intangible assets

 
                                     Development                 Brand                       Fishing 
                           Goodwill        costs  Technology      name  Software   Patents    rights     Total 
Group 2019                  GBP'000      GBP'000     GBP'000   GBP'000   GBP'000   GBP'000   GBP'000   GBP'000 
-------------------------  --------  -----------  ----------  --------  --------  --------  --------  -------- 
Cost 
At 1 July 2018               14,786        6,779       2,924     1,291     1,789       150       182    27,901 
Additions                         -        1,791           -         -       592         -         -     2,383 
Write-offs and 
 transfers                        -      (1,293)           -         -     (178)         -         -   (1,471) 
Currency translation            135           15          32        13       (1)         -         -       194 
At 30 June 2019              14,921        7,292       2,956     1,304     2,202       150       182    29,007 
-------------------------  --------  -----------  ----------  --------  --------  --------  --------  -------- 
Accumulated amortisation 
At 1 July 2018                  249        3,062       1,117       599     1,128       150         -     6,305 
Charge for the 
 year                             -        1,662         372       193       229         -         -     2,456 
Write-offs and 
 transfers                        -      (1,293)           -         -     (178)         -         -   (1,471) 
Currency translation            (3)           10          15         9       (1)         -         -        30 
At 30 June 2019                 246        3,441       1,504       801     1,178       150         -     7,320 
-------------------------  --------  -----------  ----------  --------  --------  --------  --------  -------- 
Net book amount 
-------------------------  --------  -----------  ----------  --------  --------  --------  --------  -------- 
At 30 June 2019              14,675        3,851       1,452       503     1,024         -       182    21,687 
-------------------------  --------  -----------  ----------  --------  --------  --------  --------  -------- 
 

Write-offs relate to development assets where no further economic benefits are expected obtained.

 
                                 Development                 Brand                       Fishing 
                       Goodwill        costs  Technology      name  Software   Patents    rights     Total 
Group 2018              GBP'000      GBP'000     GBP'000   GBP'000   GBP'000   GBP'000   GBP'000   GBP'000 
---------------------  --------  -----------  ----------  --------  --------  --------  --------  -------- 
Cost 
At 1 July 2017           10,282        6,448       1,875       768     1,528       150       182    21,233 
Acquisition of 
 a subsidiary             4,490            -       1,040       520         -         -         -     6,050 
Additions                     -        1,605           -         -       376         -         -     1,981 
Write-offs and 
 transfers                    -      (1,281)           -         -     (116)         -         -   (1,397) 
Currency translation         14            7           9         3         1         -         -        34 
At 30 June 2018          14,786        6,779       2,924     1,291     1,789       150       182    27,901 
---------------------  --------  -----------  ----------  --------  --------  --------  --------  -------- 
Accumulated 
 amortisation 
At 1 July 2017              262        2,588         814       442     1,050       150         -     5,306 
Charge for the 
 year                         -        1,753         299       157       191         -         -     2,400 
Write-offs and 
 transfers                    -      (1,281)           -         -     (113)         -         -   (1,394) 
Currency translation       (13)            2           4         -         -         -         -       (7) 
At 30 June 2018             249        3,062       1,117       599     1,128       150         -     6,305 
---------------------  --------  -----------  ----------  --------  --------  --------  --------  -------- 
Net book amount 
---------------------  --------  -----------  ----------  --------  --------  --------  --------  -------- 
At 30 June 2018          14,537        3,717       1,807       692       661         -       182    21,596 
---------------------  --------  -----------  ----------  --------  --------  --------  --------  -------- 
 

7 Short-term financial assets

 
                                 2019      2018 
                              GBP'000   GBP'000 
---------------------------  --------  -------- 
Beginning of year              15,290    16,981 
Net deposits/(withdrawals)     11,193   (1,691) 
---------------------------  --------  -------- 
End of year                    26,483    15,290 
---------------------------  --------  -------- 
 

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                                                                   2019         2018 
---------------------------------------------------------------  -----------  ----------- 
Weighted average number of ordinary shares in issue              116,060,378  115,834,897 
---------------------------------------------------------------  -----------  ----------- 
Profit attributable to equity holders of the company (GBP'000)        16,140       16,110 
---------------------------------------------------------------  -----------  ----------- 
Basic earnings per share (pence per share) total                       13.91        13.91 
---------------------------------------------------------------  -----------  ----------- 
 
 
Diluted                                                                 2019         2018 
---------------------------------------------------------------  -----------  ----------- 
Weighted average number of ordinary shares in issue (diluted)    116,689,595  116,692,591 
---------------------------------------------------------------  -----------  ----------- 
Profit attributable to equity holders of the company (GBP'000)        16,140       16,110 
---------------------------------------------------------------  -----------  ----------- 
Diluted earnings per share (pence per share) total                     13.83        13.81 
---------------------------------------------------------------  -----------  ----------- 
 
 
 

9 Cash generated from operations

 
                                                      Group 
                                                   2019       2018 
Cash generated from continuing operations       GBP'000    GBP'000 
--------------------------------------------   --------  --------- 
Profit before income tax                         19,569     19,567 
Depreciation charge                               2,508      2,136 
Amortisation of investment property                  58         59 
Amortisation/impairment of intangibles            2,456      2,400 
Profit on disposal of property, plant and 
 equipment                                      (2,116)      (125) 
Net finance expense/(income)                        (3)      (101) 
Retirement benefit contributions in excess 
 of current and past service charge               (183)      (156) 
Share based payment charge                          855        533 
Research and development expenditure credit       (292)      (237) 
Effects of exchange rate movements                 (48)        163 
Changes in working capital 
- Inventories                                   (4,025)      1,954 
- Trade and other receivables                     2,428    (3,610) 
- Payables and provisions                         3,831      1,415 
Cash generated from continuing operations        25,038     23,998 
---------------------------------------------  --------  --------- 
 

10 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.

11 Annual report and accounts

The annual report and accounts will be sent to shareholders on 24 October 2019 and will be available, along with this announcement, on the Group's website (www.fwthorpe.co.uk) from that time. The Group will hold its AGM on 21 November 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.

END

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