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Thorpe(F.W.) PLC   -  TFW   

Interim Results

Released 16:48 25-Mar-2020

RNS Number : 6243H
Thorpe(F.W.) PLC
25 March 2020
 

 

INTERIM RESULTS FOR THE SIX MONTHS TO 31 DECEMBER 2019

 

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 2019.

 

Financial highlights:


Interim

2020 (unaudited)

Interim

2019  (unaudited)


Revenue

+9.0%

Operating profit (before profit on disposal)*

£7.5m 

£7.0m 

+6.7%

Profit before tax (before profit on disposal)*

£7.4m 

£6.9m 

+7.2%

Profit before tax

£7.4m 

£8.8m 

-16.1%

Basic earnings per share

5.04p

6.14p

-17.9%

*Interim 2019 Profit before tax includes profit on disposal of property of £1.9m

·      Strong start to the year by Thorlux, supported by larger scale orders

·      Other Group companies' results improved by positive TRT and Famostar performance, dampened by smaller companies

·      Thorlux operating margin slightly impacted by larger scale orders and services

·      Interim dividend 1.46p (Interim 2019: 1.43p) - 2.1% increase

·      Strong balance sheet to support through Covid-19 disruption - £51.9m in cash/short term financial assets at period end

 

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

 

Against a backdrop of continuing uncertainty after the UK's exit from the EU and now the unfortunate ongoing coronavirus (Covid-19) pandemic, I am pleased to report an excellent ongoing order book at the Group's main division, Thorlux Lighting, and improved performance at both TRT and Famostar.  

 

Orders at Thorlux remain hard-fought; however, underlying revenue is good, and some additional one-off project work has been completed which has provided a welcome boost. The larger size of projects has consequently led to tighter margins. In some cases, projects involve services including survey work and project management, leading to increased overheads.  

 

Group operating profit (before profit on disposal) rose from £7.0m to £7.5m (+6.7%) and actions have been taken to improve margins in the second half of the financial year.   

 

Revenue generated from outside the UK remains strong, at around 40% of Group revenue.  

 

As a result of this solid performance, and many years of prudent financial management, we feel our robust balance sheet is structured more than adequately to deliver an increased interim dividend of 1.46p (Interim 2019: 1.43p) for the six months to 31 December 2019.   

 

Investment within the Group continues, and I can report that previously initiated projects have completed successfully. The Portland factory in Walsall is now fully operational. It is an impressive but appropriately proportioned facility, which will serve the Group efficiently for decades. The European Application Centre at Lightronics in Waalwijk has opened and showcases both Lightronics and Group products to customers on a frequent basis. TRT's new extension now houses a fully functional semi-automatic powder coating line, releasing Thorlux capacity and providing a measure of disaster recovery. Thorlux's new state of the art sheet metal forming machinery is firing on all cylinders - which is certainly welcome, due to the size of the company's current order book. Finally, early in March, Thorlux opened its new Quality of Light Experience room at the Group's main facility in Redditch. Interactive demonstrations will show how the quality of the spectrum of light that a luminaire produces can alter a person's health and wellbeing and attention to detail - especially important in the workplace.  

 

The current coronavirus situation provides us with further challenges that had not been anticipated at the time of previous announcements.  The initial impact related to concerns from within the supply chain. Most Group companies are in a relatively good stock position, as they increased stocks significantly during the autumn to help mitigate any Brexit-related risk.  Group companies also reacted early and took proactive measures to reduce infection risk within the workplace for the good of the employees and the business; these measures are under constant review.   

 

At the time of writing, the situation is dynamic and uncertain, but we continue to support our customers where practical, whilst being mindful of employee wellbeing and government guidance.  It is highly likely however that Group companies will see considerable disruption to delivery schedules due to customers' and government containment actions, for at least the next few months. The extent of this disruption and the period over which the impact is felt, cannot be estimated at this time.  We are prioritising the safety of our employees, suppliers and customers and acting within government advice whilst reacting swiftly to minimise the impact where possible. 

 

It is therefore difficult for us to determine the impact on second half performance and beyond. However, the Group has always maintained a strong balance sheet with sufficient cash and other liquid assets to protect business continuity from the impact of sudden economic impacts and unforeseen risks. Although the impact of the current crisis is uncertain, we cannot foresee a downside scenario where we are unable to manage business continuity for the foreseeable future by utilising our current resources.

 

Group performance in the second half of 2019 was strong and will, due to the latest circumstances, prove challenging and unlikely to improve upon in 2020. However, having a strong order book provides an excellent reservoir to smooth current turbulence. Recent investments outlined above give a significant capacity boost ready for us to satisfy those customers who can accept deliveries and for us to fulfil any pent-up future demand. Our local manufacturing capabilities, stock situation and customer portfolio give us a solid platform to perform to the extent we are able during the current turbulence and then build swiftly on when a level of trading normality returns. 

 

I would like to wish all of our staff, shareholders and other stakeholders good health, and I hope that the country can return to normality as quickly as possible. 

 

 

Mike Allcock

Chairman

 

25 March 2020

FW Thorpe Plc

CONSOLIDATED INCOME STATEMENT

for the six months to 31 December 2019

 






31.12.19

(six months to)

31.12.18 

(six months to)

30.06.19 

(twelve months to)






(unaudited)

(unaudited)

(audited)






£'000 

£'000 

£'000 





Revenue

57,412  

52,669  

110,643 





Operating Profit (before profit on disposal)

7,489  

7,019  

17,649 





Profit on disposal of property

1,917  

1,917 





Operating Profit

7,489  

8,936  

19,566 





Finance income

402  

416  

1,049 

Finance costs

  (527) 

  (574) 

(1,046)   





Profit before tax expense

7,364  

8,778  

19,569 





Tax expense

  (1,505) 

  (1,652) 

(3,429)





Profit for the period

5,859  

7,126  

16,140 





 

 

 

Dividend rate per share:




     Interim

1.46p

1.43p

1.43p

     Final

4.10p

 

 

                                                                                                           

 

 

Earnings per share

- basic

5.04p

6.14p

13.91p


- diluted

5.02p

6.10p

13.83p

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the six months to 31 December 2019

 






31.12.19    (six months to)

31.12.18    (six months to)

30.06.19 

(twelve months to)






(unaudited)

(unaudited)

(audited)






£'000 

£'000 

£'000 





Profit for the period

5,859 

7,126 

16,140 





Other comprehensive income








Items that may be reclassified to profit or loss




Changes in the fair value of available-for-sale financial assets

-

Exchange rate differences on translation of foreign operations

(558)

168

153

Taxation






(558) 

168 

153  





Items that will not be reclassified to profit or loss




Revaluation of financial assets at fair value through other comprehensive income *

168

(529)

(142)

Actuarial loss on pension scheme

(374)

Movement on unrecognised pension surplus

191

Taxation

(29)

90

24






139

(439)

(301)





Other comprehensive income for the year, net of tax

(419)

(271)

(148)





Total comprehensive income for the year

5,440 

6,855 

15,992





 

 

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 £168,000 is due to the increase in market value of these investments.



CONSOLIDATED STATEMENT OF FINANCIAL POSITION

as at 31 December 2019


As at 

As at 

As at 


31.12.19 

31.12.18 

30.06.19 






(unaudited)

(unaudited)

(audited)

Assets

£'000 

£'000 

£'000 

Non-Current Assets




Property, plant and equipment

30,317 

21,157 

25,353 

Intangible assets

20,811 

21,738 

21,687 

Investment property

1,997 

2,047 

2,006 

Loans and receivables

2,919 

4,101 

3,567 

Equity accounted investments

936 

936 

936 

Financial assets at fair value through other comprehensive income

3,838 

3,220 

3,683 

Deferred tax assets


60,820 

53,199 

57,232 

Current assets




Inventories

25,121 

22,018 

25,506 

Trade and other receivables

21,568 

22,117 

21,502 

Financial assets at fair value through profit or loss

389 

387 

Short-term financial assets

24,542 

16,837 

26,483 

Cash and cash equivalents

27,438 

36,111 

30,807 

Total current assets

98,669 

97,472 

104,685 

Total Assets

159,489 

150,671 

161,917





Liabilities




Current liabilities




Trade and other payables

(19,102)

(19,512)

(21,912)

Lease liabilities

(82)

Current tax liabilities

(274)

(2,499)

(1,935)

Total current liabilities

(19,458)

(22,011)

(23,847)





Net current assets

79,211 

75,461 

80,838 





Non-current liabilities




Other payables

(13,442)

(11,237)

(12,804)

Lease liabilities

(565)

Provisions for liabilities and charges

(2,375)

(2,195)

(2,404)

Deferred tax liabilities

(786)

(584)

(699)

Total non-current liabilities

(17,168)

(14,016)

(15,907)

Total liabilities

(36,626)

(36,027)

(39,754)





Net assets

122,863 

114,644 

122,163 





Equity attributable to owners of the company




Issued share capital

1,189 

1,189 

1,189 

Share premium account

1,526 

1,266 

1,266 

Capital redemption reserve

137 

137 

137 

Foreign currency translation reserve

1,977 

2,550 

2,535

Retained earnings




At 1 July

117,036

107,527

107,527

Profit for the year attributable to owners

5,859

7,126

16,140

Other changes in retained earnings

(4,861)

(5,151)

(6,631)


118,034 

109,502 

117,036 

Total equity

122,863 

114,644 

122,163 



CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the six months to 31 December 2019

 


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 2018

1,189

1,017

137

2,382

107,527

112,252

Comprehensive income







Profit for six months to 31 December 2018

-

-

-

-

7,126

7,126

Other comprehensive income

-

-

-

168

(439)

(271)

Total comprehensive income

-

-

-

168

6,687

6,855 

Transactions with owners







Share options exercised

-

249

-

-

-

249 

Purchase of own shares

-

-

-

-

(117)

(117)

Dividends paid to shareholders

-

-

-

-

(4,639)

(4,639)

Share-based payment charge

-

-

-

-

44 

44

Total transactions with owners

-

249

-

-

(4,712)

(4,463)








Balance at 31 December 2018

1,189

1,266

137

2,550

109,502 

114,644 

Comprehensive income







Profit for six months to 30 June 2019

-

-

-

-

9,014 

9,014

Actuarial loss on pension scheme

-

-

-

-

(374)

 (374)

Movement on unrecognised pension surplus

-

-

-

-

191

191

Revaluation of financial assets at fair value through other comprehensive income

-

-

-

-

387

387

Movement on associated deferred tax

-

-

-

-

(66)

(66)

Exchange rate differences on translation of foreign operations

-

-

-

(15)

-

(15)

Total comprehensive income

-

-

-

(15)

9,152

9,137

Transactions with owners







Dividends paid to shareholders

-

-

-

-

(1,660)

(1,660)

Share-based payment charge

-

-

-

-

42 

42 

Total transactions with owners

-

-

-

-

(1,618)

(1,618)

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)








Balance at 31 December 2019

1,189

1,526

137

1,977

118,034 

122,863 








 

CONSOLIDATED STATEMENT OF CASH FLOWS

for the six months to 31 December 2019

 


31.12.19 

(six months to)

31.12.18 

(six months  to)

30.06.19

(twelve months to)






(unaudited)

(unaudited)

(audited)


£'000 

£'000 

£'000 

Cash generated from operations




Profit before income tax

7,364 

8,778 

19,569      

Adjustments for




- Depreciation charge

1,491 

1,270 

2,508

- Depreciation of investment property

29 

58

- Amortisation of intangibles

1,276 

1,203 

2,456

- Profit on disposal of property, plant and  equipment

(41)

(2,150)

    (2,116)

- Net finance expense/(income)

125

157

(3)

- Retirement benefit contributions in excess of current and past service charge

(124)

(80)

(183)

- Share-based payment charge

419 

362 

855

- Research and development expenditure credit

(149)

(144)

(292)

- Effects of exchange rate movements

537 

(76) 

(48)

Changes in working capital




- Inventories

387 

(534)

(4,025)

- Trade and other receivables

49 

1,860 

2,428

- Payables and provisions

(2,178)

214 

3,831

Cash generated from operations

9,165 

10,889 

25,038

Tax paid

(2,958)

(1,329)

(3,476)

Cash flow from investing activities




Purchase of property, plant and equipment

(5,521)

(1,265)

(6,852)

Proceeds from sale of property, plant and equipment

83 

3,796 

3,796 

Purchase of intangibles

(1,099)

(1,145)

(2,417)

Disposal of investment property

                   12

(Purchase)/sale of financial assets at fair value through other comprehensive income

(61)

71 

70 

Proceeds from sale of other financial assets at fair value through profit and loss

387

Property rental and similar income

10 

205 

Dividend income

111 

106 

225 

Net withdrawal/(deposit) of short-term financial assets

1,941 

(1,547) 

(11,193)

Interest received

164 

180 

403 

Net receipt of loan notes

597 

2,072 

2,575 

Net cash generated from/(used in) investing activities

(3,392)

2,278 

(13,176)





Cash flow from financing activities




Net proceeds from the issuance of ordinary shares

260 

249 

249 

Purchase of own shares

(117)

(117)

Proceeds from loans

121 

Repayment of borrowings

(1,124)

(197)

Dividends paid to company shareholders

(4,770)

(4,639)

(6,299)

Net cash used in financing activities

(5,513)

(4,507)

(6,364)

Effects of exchange rate changes on cash

(671)

112 

117 

Net increase/(decrease) in cash and cash equivalents

(3,369)

7,443 

2,139 

Cash and cash equivalents at the beginning of the period

30,807 

28,668 

28,668 

Cash and cash equivalents at the end of the period

27,438 

36,111 

30,807 

      

 

Notes to the Interim Financial Statements

 

1.   Basis of Preparation

       The consolidated interim financial statements for the six months to 31 December 2019 have been prepared in accordance with the recognition and measurement principles of applicable International Financial Reporting Standards as adopted by the European Union (IFRSs as adopted by the EU), IFRIC interpretations and the AIM Rules for Companies. 

       The figures for the period to 31 December 2019 and the comparative period to 31 December 2018 have not been audited or reviewed and are therefore disclosed as unaudited. The figures for 30 June 2019 have been extracted from the financial statements for the year to 30 June 2019, 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 2019 have been applied consistently throughout the Group during the period, except for the adoption of the new pronouncement IFRS 16 "Leases".

       The Group has adopted IFRS16, "Leases", from 1 July 2019 applying the simplified transition approach, but it has not restated comparatives for the reporting period ended 30 June 2019, as permitted under the specific transitional provisions in the standard. The reclassifications and the adjustments arising from the new leasing rules are therefore recognised in the opening balance sheet on 1 July 2019. Note 4 explains the impact on the Group's financial statements. The adoption of this standard has not resulted in any material impact on reported profits.

 

2.   Segmental analysis

The segmental analysis is presented on the same basis as that used for internal reporting purposes.  For internal reporting FW Thorpe is organised into ten operating segments, based on the products and customer base in the lighting market - the largest business is Thorlux, which manufactures professional lighting systems for the industrial, commercial and controls markets.  The Lightronics business is a material subsidiary and therefore disclosed separately. 

The eight remaining continuing operating segments have been aggregated into the "other companies" segment based on their size, comprising the entities Philip Payne Limited, Solite Europe Limited, Portland Lighting Limited, TRT Lighting Limited, Thorlux L.L.C, 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.  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

Lightronics

Other

Inter-

Total




Companies

Segment

Continuing





Adjust-

Operations





ments



£'000 

£'000 

£'000 

£'000 

£'000 

6 months to 31 December 2019






Revenue to external customers

32,363

11,147

13,902

57,412

Revenue to other Group companies

1,740

86

1,931

(3,757)

Total revenue

34,103

11,233

15,833

(3,757)

57,412

Operating Profit

4,839

1,074

1,347

229

7,489 

Finance income





           402

Finance expense





(527)

Profit before tax expense





7,364 

 

6 months to 31 December 2018






Revenue to external customers

28,442

11,869

12,358

52,669

Revenue to other Group companies

1,161

1,206

(2,367)

Total revenue

29,603

11,869

13,564

(2,367)

52,669

Operating Profit (before profit on disposal)

4,659

1,066

1,220

74

7,019 

Profit on disposal of property





 1,917 

Operating Profit





 8,936 

Finance income





 416 

Finance expense





(574)

Profit before tax expense





8,778 

 

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

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 tax expense





19,569

 

 

 

 

 

3.   Property, plant and equipment

The Group has invested £5.4 million in property, plant and equipment during the period. The largest investments were:

·      £2.4 million in plant and machinery;

·      A further £1.1million in the purpose built property for Portland Lighting; and

·      £2.3 million for the property occupied by Famostar, of which £0.9 million was recognised as a right of use asset on adoption of IFRS16 on 1 July 2019. Resulting in a £1.4 million net addition to property, plant and equipment, for which the lease agreement was subsequently settled.

 

4.   Adjustments recognised on adoption of IFRS16

On adoption of IFRS16, the Group recognised lease liabilities in relation to leases which had previously been classified as 'operating leases' under the principles of IAS17. These liabilities were measured at the present value of the remaining lease payments, discounted using the borrowing rate implied in the leases of 5.5%.

 

Right-of-use assets have been measured on transition as if the new rules had always been applied with the difference to the lease liability value recognised as an adjustment to opening retained earnings at 1 July 2019. 

 

Right of use assets recognised

31 December 2019           £'000

1 July             2019        £'000

Properties

-

929

Equipment

76

31

Motor vehicles

333

397

Total right of use assets

409

1,357

 

 

 

Lease liabilities recognised on adoption

£'000

Operating lease commitments disclosed as at 30 June 2019

2,245

Discounted using the borrowing rate

(483)

Less: short-term and low value leases recognised on a straight-line basis as expense

(52)

Lease liability recognised at 1 July 2019

1,710

Of which are:


Current lease liabilities

373

Non-current lease liabilities

1,337


1,710

 

 

 

 

 

 

 

5.   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 116,215,549 (Interim 2019: 116,001,173) 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 116,779,815 (Interim 2019: 116,764,548) during the period.

      

6.   Dividend

       The interim dividend is at the rate of 1.46p per share (Interim 2019: 1.43p), and based on 116,330,497 shares in issue at the announcement date the dividend will amount to £1,698,000 (Interim 2019: £1,661,000).  The interim dividend will be paid on 21 April 2020 to shareholders on the register at the close of business on 3 April 2020, and the shares become ex-dividend on 2 April 2020.

A final dividend for the year ended 30 June 2019 of 4.10p (2018: final of 4.00p) per share, amounting to £4,770,000 (2018: £4,639,000) was paid on 29 November 2019.

 

7.   Availability of interim statement

       Copies of the interim report are being sent to shareholders and will also be available from the company's registered office or on the company's website (www.fwthorpe.co.uk) from 3 April 2020.


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Interim Results - RNS