Source - RNS
RNS Number : 4998K
Thorpe(F.W.) PLC
22 September 2016
 

 

Preliminary Results

for the year ended 30 June 2016 (Unaudited)

 

F W Thorpe Plc, designers, manufacturers and suppliers of professional lighting systems for the specification market, is pleased to announce its preliminary results for the year ended 30 June 2016.

 

 

Key points:

Continuing operations

2016

2015

 

Excluding Lightronics acquisition

Revenue

£88.9m

£73.5m

20.9% increase

4.4% increase

Operating profit

£16.2m

£13.7m

18.1% increase

6.5% increase

Profit before tax

£16.3m

£14.4m

13.0% increase

6.3% increase

Basic earnings per share - continuing

11.24p

10.12p

11.1% increase

-

 

·      Total interim and final dividend of 4.05p (2015: 3.65p)

·      Revenue and operating profit boosted by Lightronics acquisition

·      Thorlux profitability improvement despite relatively flat revenues

·      TRT performed strongly, disappointing Compact performance

 

 

 

This announcement contains inside information for the purpose of Article 7 of EU Regulation 596/2014.

 

For further information please contact: 

F W Thorpe Plc

 

Andrew Thorpe - Chairman

01527 583200

Craig Muncaster - Group Financial Director

01527 583200 

 

N+1 Singer - Nominated Adviser

 

Richard Lindley

020 7496 3000


Chairman's statement

 

In your company's 2015/16 financial year to June 30 2016, I am pleased to report that revenue reached a new high of £88.9m increasing 20.9% over the previous year.  Similarly operating profit rose to £16.2m, an increase of 18.1% in comparison to the year to June 2015.  Once again investment income fell, due to a continuing reduction in general bank interest rates.

 

Most companies in the Group traded well during 2015/16 either maintaining or increasing revenue and profit in comparison to last year.  Again, most credit should go to TRT Lighting, our road tunnel and street lighting company and to Lightronics BV, our Netherlands lighting company purchased last year, both of whom made substantial progress.

 

Whilst striving to go forward one must also be aware of where one's tail is.  Our tail was trimmed during the 2014/15 year with the sale of Sugg Lighting.  Well, when the tail has been trimmed then there is a new end to the tail.  This new end is our Compact Lighting company; started by us in 1992 to design, produce and manufacture lighting for retailers.  Discussions are in hand as to how the company can better address the retail sector.

 

LED continues to be an increasing percentage of Group sales and for most projects now the choice is LED.  Parts of the Group still suffer inefficiencies in having to produce some "traditional" forms of lighting such as fluorescent and, less so, high intensity discharge products and this will continue until the component prices for this old technology increase further due to volume reductions.  LED component prices are still reducing but at a slower pace than in the earlier days of LED.  At some point the two costs will match and LED will be the only logical choice.  Thorlux, within the Group, suffers most from this malaise although this year it has been possible to increase the number of old technology ranges being withdrawn.  LED chip efficiency is still improving but also at a slower rate meaning that products throughout the Group are not having to be updated at quite such a furious pace as in recent years.

 

In the last financial year your Group purchased Lightronics BV in The Netherlands and this financial year we have made a €1.2m investment purchasing 40% of Luxintec SL in Spain.  This was mentioned as a Board approved intention in my six monthly report.  Times are early but good progress is being made to see how we can assist this ostensibly LED lens manufacturer move deeper into the much larger luminaire market.

 

Group exports, with the assistance of offices, agents abroad and now with the inclusion of Lightronics, have increased during this financial year.  A worthy increase considering that due to the costs of manufacturing in the UK exporters from the UK can only ever sell on attributes other than price.  Business in the Group UAE office is building and there are some "nice" jobs on the not-too-distant horizon that should be secured. The office is currently down to two people but restoration of the third is imminent. Recent discussions with our UAE partner may lead to the cementing of relations with some local companies who could provide additional regular business.

Investments in this financial year have been many and varied but only the Luxintec SL investment of €1.2m and the refurbishment of the old Thorlux loading deck into 330 square metres of office space for £0.4m are of notable individual value.  This new space allows Thorlux to increase the number of Lighting Scheme Design Engineers as the general move in the market is that many specifiers, though quite capable of producing their own lighting schemes, are preferring to ask those lighting companies being considered, to complete schemes for them.  This requirement is, therefore, a commercial necessity rather than a luxury and is one affecting other companies in the Group similarly.

 

Investments in product design and development continue across the Group without hindrance and there are a number of exciting (in lighting terms) new developments to be introduced in the next year.

 

Performance for the year to June 30 2016 allows your Board to recommend a final dividend of 2.85p per share (2015:  2.55p) which together with the interim and special dividends paid in April 2016 gives a total dividend for the year of 6.05p per share (2015:  3.65p).  Excluding the special dividend this is an increase of 11.0%.

 

Thorlux Lighting

The largest part of the Group, with three hundred and ninety one people, and manufacturer of commercial and industrial lighting systems, Thorlux Lighting's figures show a solid performance with an increase in operating profit on flat revenues. These figures must, however, be viewed in the knowledge that approximately £1.0m of regular business was lost, in essence due to an American take-over of that customer.  The new owners took a different view of how they wished to service their lighting needs.  Further, there has been a notable reduction in certain areas of government spending where the company has been strong.  Despite these setbacks Thorlux managed to maintain, although not increase, revenue.

 

The factory re-layout has been in full swing during the year and many small investments have been made renewing, updating and improving many elements of the manufacturing process.  One fairly major investment at Thorlux during 2015/16 has been the transformation of an old loading deck into 330 square metres of office space at a cost of some £0.4m, and as mentioned earlier in this report. 

 

The Thorlux Dusseldorf office in Germany with five people has performed well with sales of €2.3m in the year to June 30 2016 and it is currently actively exploring ways to also allow Thorlux to expand coverage into Switzerland and Austria, with some orders having recently been received from the former.  The office in Dublin, Ireland, with four people and revenue of €2.9m during the period also performed well.  The joint venture in Australia has disappointed again, however, and as a result of the situation re-assessment as mentioned in my six monthly report we have agreed by mutual consent with our joint venture partner, to dissolve this partnership.  This dissolution took place on 1 July 2016 with the result that F W Thorpe Plc via Thorlux Lighting is now 100% owner of Thorlux Australasia Pty.

 

I would like, at this time, to thank our Australian partner for his work and assistance in helping set up this venture and also to wish him continued success in his other business activities.

 

To counter various areas of business lacking in vitality at this time Thorlux has been concentrating on other areas of the market, with a bolstering of "Business Development" capabilities. Some areas of government spending have been squeezed but others are probably more buoyant than previously and the company has given more concentration to the latter with some notable success.

 

Further new contacts have been forged within the retail sector, not delving into Compact Lighting's sector of instore lighting but for back-of-house, warehousing and external requirements.

 

Compact Lighting

Compact Lighting is the new tail talked about in my opening remarks.  It has not performed satisfactorily over many years and has in most of those years not been a net contributor to Group results.  Its market is well served by many and various others who, like Compact, have restricted themselves to certain areas of retail lighting.  In Compact's case, to certain areas of instore lighting.

 

Your Group Board is well aware that it must be looking to the "sharp end" but, at the same time, it must be cognisant of what is happening at the tail. Discussions must be developed into how Compact Lighting Ltd can work closer with Thorlux and be turned into an entity giving better service to the Group.  There will be a concentration in this regard during 2016/17.

 

Philip Payne

"Payne's", manufacturer of specification exit signs with twenty three people has produced another set of pleasing results with another set of record revenue and profit figures.

 

UK trading has been reasonably buoyant but as mentioned last year the company has also been concentrating, via the Group UAE office, on marketing in a number of Middle East countries where incidences of fire driven disasters have led to strict regimes of design, technical ability and certification requirements for emergency lighting equipment.  Philip Payne has all these attributes and some notable successes have been gained to reward their diligence in working to meet these criteria.

 

The desire to improve and expand continues at Payne's with investments throughout the year including the purchase from Thorlux of two press-brake sheet metal bending machines, replaced last year by Thorlux, and needed to replace their one unreliable machine.  Payne's has also completed a necessary renewal of most hardware running the management system.

 

One or two notable projects supplied this year with Philip Payne exit systems are, to name but a few, The British Museum, The Palace of Westminster, Winchester Cathedral and Harrods.

 

Solite Europe

Solite, maker of cleanroom lighting and with eighteen people had its most successful year increasing revenue by 18.5% and operating profit by 71.0%.

 

Well ensconced now in their new factory occupied last year Solite has taken over one or two ranges of more specialist products from Thorlux; products that are complementary to their current offering.  These ranges have not yet really been appreciative to current performance, however.

 

Solite, to date, having looked to market their products in countries adjacent to our own are beginning to look further afield for opportunities in their specialist cleanroom sector.

 

Portland Lighting

The report on Portland Lighting, maker of lights for signs, with eighteen people, could be almost copied from last year.

 

It was recognised when we purchased Portland back in 2012 that there was a limited scope in the UK for great market strides in their niche area.  Taking this, into account, however, Portland has performed admirably and "as expected" with sales and profit only edging up but maintaining its highest-in-the-Group profit to sales ratio.

 

Product sales in LED format have increased their percentage of the whole and trials of solar powered billboard lighting have been completed during the year with some success.  I say "some success" as in many locations there are visual, space, or other locational restrictions which hamper the use of this type of technology in particular places.

 

Portland has made a move, during the year, to enter the export market but unfortunately this has met with a false start.  Start number two is under consideration.

 

TRT

TRT, your Group's UK manufacturer of road tunnel and street lighting fittings with forty two people, has continued to make swift progress with sales and profit well ahead of last year. 

 

One serious constraint has been a lack of space in the premises purchased for them at start-up and the lack of any suitable larger alternatives to purchase in the Redditch area.  Since its inception TRT has relied in no insignificant terms on technical assistance from Thorlux and for storage and paintwork assistance and so, as it moves forward, it is advisable for the former to keep close to the latter.  This arrangement has benefitted both parties as it has also made good use of spare storage and powder coating capacity at Thorlux.  There are one or two property opportunities on the horizon which we hope will move closer soon.

 

Component sourcing problems experienced during 2014/15 have to a large degree been mitigated by increasing stocks and sourcing some items nearer to home.

 

Many or most Group products end up being installed in buildings where we never enter so it is good to often see TRT products on our daily travels, lighting the streets.  To mention one of many tunnel lighting projects in which TRT Lighting are involved, this year the main entry and exit tunnels to Heathrow Airport are being re-lit using a TRT LED lighting system.

 

 

Lightronics

Lightronics BV our Netherlands manufacturer of mainly outdoor lighting with fifty one people and purchased during the 2014/15 year performed very well.  2015/16 is the first year in which a full year's figures have been included in Group figures, adding revenue of £15.6m and an operating profit of £2.1m to those figures.

 

Their projects throughout the year have been for numerous Netherlands towns and cities, as well as major road lighting projects for Amsterdam.  One may ask about synergies and possible exchange of products with TRT Lighting in particular but different countries light areas in different ways with national preferences and in this instance the Dutch often prefer more aesthetically orientated products for street lighting than the UK where a more functional approach is used.  In this product area this has actually led, so far, to more Lightronics products being added to the TRT range than vice versa.  Either way is good for the Group, however.

 

In regard to the Group wish for Lightronics to be a launch pad for Group commercial lighting systems into the Netherlands, this has started more slowly than we would have wished but times are early and a second Sales Engineer for this purpose has just been employed.

 

Luxintec

It was mentioned in the six monthly report that your Board has approved an investment of €1.2m to purchase a minority 40% shareholding in Luxintec SL and this investment has been completed.

 

Luxintec with thirty six people has designed and manufactured LED lenses for the Group with creditable success for a number of years and the majority owner and founder wished to expand his business into the much larger field of luminaire manufacture.

 

Times are very early here and, recognising that F W Thorpe Plc is a minority shareholder in this instance, talks as to how Luxintec can utilise Group designs to accomplish their wishes are ongoing. 

 

Our wish, of course, is that by using Group designs and assistance Luxintec can grow substantially selling Spanish manufactured luminaires into their market; the "made in Spain" tab seemingly being an important one for them.

 

Carbon Offsetting

There has been no increase in plantings since last year's figure of 70,324 trees planted and this pause was signalled in last year's report.  Your company is now a little behind in its carbon offset tree planting but this will most likely be made up this year as more government grants are now available!

 

The 3,000 or so trees destroyed due to the Hymenoscyphus fraxineus fungus (Ash die-back disease) have now been replaced with other types.  Regrettably the other 7,000 Ash trees will also have to be destroyed and replaced imminently.

 

Despite our best efforts, offset tree planting purchases by our customers are still somewhat muted although, this year, we will be having another campaign to try and summon up interest.

 

This investment still, however, is often respectfully mentioned by many of our existing and potential customers and "green" credentials are becoming a more important criteria for numerous firms in their purchase considerations.

 

People

Last year I said that we have a serious number of personnel who have been with us 25 years and some well over 40 years.

 

Well, this year we celebrated one gentleman who has spent 50 years at Thorlux.  Peter Corrigan started as an apprentice metal spinner at the age of fifteen years old.  He worked through to lead the section and became our "Master Spinner".  In later years he took up general and time study duties timing our various manufacturing operations.  A cricket fan, the company booked a special London weekend for him and his wife including a limited over England versus Pakistan match.  Regrettably two weeks before the weekend, he was taken ill and couldn't go. 

 

We managed to retrieve most activities for a later weekend but unfortunately, despite our best efforts, we couldn't get England to play Pakistan again at the Oval!

 

Peter is now back with us looking well and much slimmer!

 

To all those others in the Group may I express my thanks for making 2015/16 another successful year.

The Future

I seem to say it every year but, yet again, I must say that the future is uncertain but now for another and additional reason; "Brexit".  Most world economies are still not buoyant and this just adds another economic unknown.

 

We will, however, continue to concentrate on areas we think best whilst still hearing but not necessarily acting upon what others tell us!  Concentrate on selling to the BRICS our government told us!  Brazil isn't doing so well, Russia is suffering with low oil prices and sanctions, India we don't hear of much, and China has a reducing growth rate.  All of these countries, by the way, have very high protectionist import duties for foreign manufactured goods such as lighting equipment.  We do, however, remain cautiously optimistic about the year ahead.

 

We will continue to concentrate in stable areas and where we have "advantage", be it our efficient durable products and systems for high energy cost markets, our reliable rugged industrial ranges for rugged industrial uses or whatever.

 

However events play-out people will always need lights.

 

We will continue on!

 

 

 

A B Thorpe - Chairman

22 September 2016

 

Consolidated results (unaudited)

 

Consolidated income statement

For the year ended 30 June 2016

 

Notes

2016

£'000

2015
£'000

Continuing operations

 

 

 

Revenue

2

88,946

73,544

Cost of sales

 

(50,000)

(41,314)

 

 

 

 

Gross profit

 

38,946

32,230

Distribution costs

 

(8,455)

(6,181)

Administrative expenses

 

(14,532)

(12,331)

Other operating income

 

236

-

Operating profit

2

16,195

13,718

Finance income

 

702

727

Finance costs*

 

(627)

-

Share of loss of joint ventures

 

(1)

(50)

 

 

 

 

Profit before income tax

 

16,269

14,395

Income tax expense

3

(3,270)

(2,691)

 

 

 

 

Profit for the year from continuing operations

 

12,999

11,704

Loss for the year from discontinued operations

 

-

(253)

Profit for the year

 

12,999

11,451

 

*Finance expense represents payments made in relation to the acquisition of Lightronics Participaties BV.

 

 

 

 

 

 

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

Basic and diluted earnings per share

 

Notes

2016

pence


2015
pence

- Basic

Continuing operations

8

11.24

10.12

- Diluted

Continuing operations

8

11.21

10.11

- Basic

Discontinued operations

8

-

(0.22)

- Diluted

Discontinued operations

8

-

(0.22)

- Basic

Total

8

11.24

9.90

- Diluted

Total

8

11.21

9.89

 

 

Consolidated statement of comprehensive income

For the year ended 30 June 2016

 

Notes

2016

£'000


2015
£'000

Profit for the year:

 

12,999

11,451

Other comprehensive income/(expenses)

 

 

 

Items that may be reclassified to profit or loss

 

 

 

Revaluation of available-for-sale financial assets

 

 

 

- Arising in year

 

(74)

(152)

- Reclassified in year

 

-

-

Exchange differences on translation of foreign operations

 

 

 

- Arising in year

 

1,627

(21)

- Reclassified in year

 

-

-

Taxation

 

60

30

 

 

1,613

(143)

Items that will not be reclassified to profit or loss

 

 

 

Actuarial (loss)/gain on pension scheme

 

    (1,285)

(247)

Movement on unrecognised pension scheme surplus

 

1,095

18

 

 

(190)

(229)

 

 

 

 

Other comprehensive expense for the year, net of tax

 

1,423

(372)

 

 

 

 

Total comprehensive income for the year attributable to equity shareholders

 

14,422

11,079

 

 

 

 

 

 

 

Consolidated financial position

As at 30 June 2016

 

 

Group

 

Notes

2016

£'000

2015
£'000

Assets

 

 

 

Non-current assets

 

 

 

Property, plant and equipment

6

14,900

13,834

Intangible assets

5

15,183

14,349

Investment property

 

2,131

2,171

Loans and receivables

 

4,980

4,760

Investment in associates

 

936

-

Available-for-sale financial assets

 

3,348

3,018

Deferred tax assets

 

27

17

 

 

41,505

38,149

Current assets

 

 

 

Inventories

 

18,863

17,762

Trade and other receivables

 

21,914

19,698

Other financial assets at fair value through profit or loss

 

389

389

Short-term financial assets

7

14,910

9,358

Cash and cash equivalents

 

18,295

19,176

Total current assets

 

74,371

66,383

Total assets

 

115,876

104,532

 

 

 

 

Liabilities

 

 

 

Current liabilities

 

 

 

Trade and other payables

 

(16,700)

(14,656)

Current income tax liabilities

 

(1,963)

(2,051)

Total current liabilities

 

(18,663)

(16,707)

Net current assets

 

55,708

49,676

Non-current liabilities

 

 

 

Retirement benefit deficit

 

-

-

Other payables

 

(4,619)

(3,838)

Provisions for liabilities and charges

 

(1,088)

(102)

Deferred income tax liabilities

 

(799)

(1,021)

Total liabilities

 

(25,169)

(21,668)

Net assets

 

90,707

82,864

 

 

 

 

Equity

 

 

 

Share capital

 

1,189

1,189

Share premium account

 

656

656

Capital redemption reserve

 

137

137

Foreign currency translation reserve

 

1,606

-

Retained earnings

 

87,119

80,882

Total equity

 

90,707

82,864

 

Consolidated statement of changes in equity

For the year ended 30 June 2016

 

Notes

Share
capital
£'000

Share
premium
account
£'000

Capital
redemption
reserve
£'000

Foreign currency translation reserve £'000

Retained
earnings
£'000

Total
equity
£'000

Balance at 1 July 2014

 

1,189

656

137

-

75,305

77,287

Comprehensive income

 

 

 

 

 

 

 

Profit for the year to 30 June 2015

 

-

-

-

-

11,451

11,451

Actuarial gain on pension scheme

 

-

-

-

-

(247)

(247)

Movement on unrecognised pension scheme surplus

 

-

-

-

-

18

18

Revaluation of available-for-sale financial assets

 

-

-

-

-

(152)

(152)

Movement on associated deferred tax

 

-

-

-

-

30

30

Exchange differences on translation of foreign operations

 

-

-

-

-

(21)

(21)

Total comprehensive income

 

-

-

-

-

11,079

11,079

Transactions with owners

 

 

 

 

 

 

 

Dividends paid to shareholders

4

-

-

-

-

(5,552)

(5,552)

Share based payment charge

 

-

-

-

-

50

50

Total transactions with owners

 

-

-

-

-

(5,502)

(5,502)

Balance at 30 June 2015

 

1,189

656

137

-

80,882

82,864

Comprehensive income

 

 

 

 

 

 

 

Profit for the year to 30 June 2016

 

-

-

-

-

12,999

12,999

Actuarial loss on pension scheme

 

-

-

-

-

(1,285)

(1,285)

Movement on unrecognised pension scheme surplus

 

-

-

-

-

1,095

1,095

Revaluation of available-for-sale financial assets

 

-

-

-

-

(74)

(74)

Movement on associated deferred tax

 

-

-

-

-

2

2

Impact of deferred tax rate change

 

-

-

-

-

58

58

Transfer to foreign currency translation reserve

 

-

-

-

(21)

21

-

Exchange differences on translation of foreign operations

 

-

-

-

1,627

-

1,627

Total comprehensive income

 

-

-

-

1,606

12,816

14,422

Transactions with owners

 

 

 

 

 

 

 

Dividends paid to shareholders

4

-

-

-

-

(6,651)

(6,651)

Share based payment charge

 

-

-

-

-

72

72

Total transactions with owners

 

-

-

-

-

(6,579)

(6,579)

Balance at 30 June 2016

 

1,189

656

137

1,606

87,119

90,707

 

 

Consolidated statement of cash flows

For the year ended 30 June 2016

 

 

Group

 

Notes

2016

£'000

2015
£'000

Cash flows from operating activities

 

 

 

Cash generated from operations

9

18,946

13,315

Tax paid

 

(3,323)

(1,280)

Net cash generated from operating activities

 

15,623

12,035

 

 

 

 

Cash flows from investing activities

 

 

 

Purchases of property, plant and equipment

 

(2,543)

(3,271)

Proceeds from sale of property, plant and equipment

 

122

167

Purchase of intangibles

 

(1,764)

(1,621)

Purchase of subsidiary (net of cash acquired)

 

-

(6,392)

Disposal of subsidiary

 

-

(561)

Purchase of investment property

 

(28)

(36)

Purchase of available-for-sale financial assets

 

(404)

(100)

Sale of available-for-sale financial assets

 

-

371

Investment in associate

 

(936)

-

Property rental and similar income

 

74

154

Dividend income

 

177

149

Net (purchase)/sale of deposits

 

(5,552)

6,280

Interest received

 

314

301

Receipt of loan notes

 

200

1,261

Net cash used in investing activities

 

(10,340)

(3,298)

 

 

 

 

Cash flows from financing activities

 

 

 

Repayment of borrowings

 

-

(1,920)

Dividends paid to company's shareholders

4

(6,651)

(5,552)

Net cash used in financing activities

 

(6,651)

(7,472)

Effects of exchange rate changes on cash

 

487

-

Net (decrease)/increase in cash in the year

 

(881)

1,265

Cash and cash equivalents at beginning of year

 

19,176

17,911

Cash and cash equivalents at end of year

 

18,295

19,176

 

 

Notes (unaudited)

1 Basis of preparation

The consolidated financial statements of F W Thorpe Plc have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRSs as adopted by the EU), IFRIC interpretations and the Companies Act 2006 applicable to Companies reporting under IFRS. The financial statements have 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.

The group has not yet adopted certain new standards, amendments and interpretations to existing standards, which have been published but are only effective for our accounting periods beginning on or after 1 January 2016 or later periods. These new pronouncements are listed below:

Amendment to IAS 1, "Presentation of financial statements" on the disclosure initiative" (effective 1 January 2016)

Amendment to IFRS 10 and IAS 28 on investment entities applying the consolidation exemption (effective 1 January 2016)

Amendment to IFRS 10 and IAS 28 on sale or contribution of assets (effective 1 January 2016)

Amendments to IAS 27, "Separate financial statements" on the equity method (effective 1 January 2016)

Amendments to IAS 16, "Property, plant and equipment", and IAS 41, 'Agriculture', regarding bearer plants (effective 1 January 2016)

Amendment to IAS 16, "Property, plant and equipment" and IAS 38,'Intangible assets', on depreciation and amortisation (effective 1 January 2016)

Amendments to IFRS 11 " 'Joint Arrangements' on acquisition of an interest in a joint operation" (effective 1 January 2016)

Annual improvements 2014 (effective 1 January 2016)

IFRS 14, "Regulatory deferral accounts" (effective 1 January 2016)

Amendment to IAS 7, "Statement of cash flows" on disclosure initiative (effective 1 January 2017)

Amendment to IAS 12, "Income taxes" on recognition of deferred tax assets for unrealised losses (effective 1 January 2017)

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

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

IFRS 16 "Leases" (effective 1 January 2019)

The directors are currently evaluating the impact of the adoption of these standards, amendments and interpretations in future periods, although it is anticipated that the impact will be immaterial.

No new or amended standards were adopted for the year ending 30 June 2016.

The accounts for the year ended 30 June 2015 have been delivered to the Registrar of Companies, and the auditors' report was unqualified and did 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 F W Thorpe is organised into eight operating segments based on the products and customer base in the lighting market - the largest business is Thorlux, which manufactures professional lighting systems for industrial, commercial and controls markets. The recently acquired Lightronics business will be a material subsidiary, and is therefore disclosed separately. The six remaining operating segments have been aggregated into the "other companies" reportable segment based upon their size, comprising the entities Compact Lighting Limited, Philip Payne Limited, Solite Europe Limited, Portland Lighting Limited, TRT Lighting Limited and Thorlux LLC.

F W 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 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.

 

Thorlux
£'000

Lightronics

£'000

Other
companies
£'000

Inter-
segment
adjustments
£'000

Total
continuing
operations
£'000

Year to 30 June 2016

 

 

 

 

 

Revenue to external customers

54,157

15,524

19,265

-

88,946

Revenue to other group companies

2,409

60

2,401

(4,870)

-

Total revenue

56,566

15,584

21,666

(4,870)

88,946

Operating profit

11,699

2,103

2,189

204

16,195

Net finance income

 

 

 

 

75

Share of loss of joint venture

 

 

 

 

(1)

Profit before income tax

 

 

 

 

16,269

 

 

 

 

 

 

Year to 30 June 2015

 

 

 

 

 

Revenue to external customers

54,192

3,275

16,077

-

73,544

Revenue to other group companies

2,329

-

1,781

(4,110)

-

Total revenue

56,521

3,275

17,858

(4,110)

73,544

Operating profit

11,267

481

1,944

26

13,718

Net finance income

 

 

 

 

727

Share of loss of joint venture

 

 

 

 

(50)

Profit before income tax

 

 

 

 

14,395

Inter segment adjustments to operating profit consist of property rentals on premises owned by F W Thorpe Plc and adjustments to profit related to stocks held within the group that were supplied by another segment.

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.

 

2016

£'000

2015

£'000

UK

64,231

61,317

Netherlands

14,113

3,899

Europe

8,529

6,239

Other countries

2,073

2,089

 

88,946

73,544

The vast majority of assets and capital expenditure are in the UK, and cannot be split geographically in relation to the Group's revenues.

3 Income tax expense

Analysis of income tax expense in the year:

 

2016

£'000

 

2015

£'000

Current tax

 

 

Current tax on profits for the year

3,726

2,807

Adjustments in respect of prior years

(268)

(184)

Total current tax

3,458

2,623

Deferred tax

 

 

Origination and reversal of temporary differences

(188)

68

Total deferred tax

(188)

68

Income tax expense

3,270

2,691

The tax assessed for the year is higher (2015: lower) than the standard rate of corporation tax in the UK of 20.00% (2015: 20.75%). The differences are explained below:

 

2016

£'000

 

2015

£'000

Profit before income tax

16,269

14,395

Profit on ordinary activities multiplied by the standard rate in the UK of 20.00% (2015: 20.75%)

3,254

2,987

Effects of:

 

 

Expenses not deductible for tax purposes

349

72

Accelerated tax allowances and other timing differences

(158)

(181)

Adjustments in respect of prior years

(268)

(184)

Foreign profit taxed at higher rate

97

21

Other

(4)

(24)

Tax charge

3,270

2,691

The effective tax rate was 20.01% (2015: 18.7%).

Changes to the UK corporation tax rates were announced in the Chancellor's Budget on 8 July 2015 and on the 16 March 2016. These include reductions to the main rate to reduce the rate to 19.0% from 1 April 2017 and to 17.0% from 1 April 2020.

 

4 Dividends

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

Dividends paid (pence per share)

2016

2015

Final dividend

2.55

2.20

Special dividend

2.00

1.50

Interim dividend

1.20

1.10

Total

5.75

4.80

A final dividend in respect of the year ended 30 June 2016 of 2.85p per share, amounting to £3,297,000 is to be proposed at the Annual General Meeting on 17 November 2016 and, if approved, will be paid on 24 November 2016 to shareholders on the register on 28 October 2016.  The ex-dividend date is 27 October 2016.  These financial statements do not reflect this dividend payable.

 

Dividends proposed (pence per share)

2016

2015

Final dividend

2.85

2.55

Special dividend

-

-

 

Dividends paid

2016

£'000

2015

£'000

Final dividend

2,950

2,545

Special dividend

2,314

1,735

Interim dividend

1,387

1,272

Total

6,651

5,552

 

Dividends proposed

2016

£'000

2015

£'000

Final dividend

3,297

2,950

Special dividend

-

-

 

 

5 Intangible assets

Group 2016

Goodwill

£'000

Development
costs
£'000

Technology
£'000

Brand name
£'000

Software
£'000

Patents
£'000

Fishing rights
£'000

Total
£'000

Cost

 

 

 

 

 

 

 

 

At 1 July 2015

9,063

5,797

1,583

657

1,039

150

182

18,471

Currency translation

909

28

208

79

14

-

-

1,238

Additions

-

1,681

-

-

251

-

-

1,932

Write-offs and transfers

-

(1,052)

-

-

(109)

-

-

(1,161)

At 30 June 2016

9,972

6,454

1,791

736

1,195

150

182

20,480

Accumulated amortisation

 

 

 

 

 

 

 

 

At 1 July 2015

600

1,947

356

198

901

120

-

4,122

Currency translation

-

1

37

20

1

-

-

59

Charge for the year

-

1,882

182

97

86

30

-

2,277

Write-offs and transfers

-

(1,052)

-

-

(109)

-

-

(1,161)

At 30 June 2016

600

2,778

575

315

879

150

-

5,297

Net book amount

 

 

 

 

 

 

 

 

At 30 June 2016

9,372

3,676

1,216

421

316

-

182

15,183

Write-offs relate to development assets where no further economic benefits will be obtained.

 

Group 2015

Goodwill

£'000

Development
costs
£'000

Technology
£'000

Brand name
£'000

Software
£'000

Patents
£'000

Fishing rights
£'000

Total
£'000

Cost

 

 

 

 

 

 

 

 

At 1 July 2014

3,503

4,961

311

174

907

150

182

10,188

Additions

-

1,542

-

-

60

-

-

1,602

Acquisition of a subsidiary

5,560

122

1,272

483

72

-

-

7,509

Write-offs

-

(828)

-

-

-

-

-

(828)

At 30 June 2015

9,063

5,797

1,583

657

1,039

150

182

18,471

Accumulated amortisation

 

 

 

 

 

 

 

 

At 1 July 2014

600

1,491

311

174

800

90

-

3,466

Charge for the year

-

1,284

45

24

101

30

-

1,484

Impairment

-

-

-

-

-

-

-

-

Write-offs

-

(828)

-

-

-

-

-

(828)

At 30 June 2015

600

1,947

356

198

901

120

-

4,122

Net book amount

 

 

 

 

 

 

 

 

At 30 June 2015

8,463

3,850

1,227

459

138

30

182

14,349

 

 

6 Property, plant and equipment

 

Group

 

Freehold land

and buildings

£'000

Plant and
equipment
£'000

Total
£'000

Cost

 

 

 

At 1 July 2015

11,079

16,585

27,664

Currency translation

-

20

20

Additions

462

2,074

2,536

Disposals

-

(349)

(349)

Transfers

-

80

80

At 30 June 2016

11,541

18,410

29,951

Accumulated depreciation

 

 

 

At 1 July 2015

2,358

11,472

13,830

Currency translation

-

2

2

Charge for the year

209

1,246

1,455

Disposals

-

(316)

(316)

Transfer

-

80

80

At 30 June 2016

2,567

12,484

15,051

Net book amount

 

 

 

At 30 June 2016

8,974

5,926

14,900

 

 

 

Group

 

Freehold land

and buildings

£'000

Plant and
equipment
£'000

Total
£'000

Cost

 

 

 

At 1 July 2014

10,910

15,979

26,889

Additions

1,438

1,760

3,198

Acquisition of a subsidiary (note 10)

-

100

100

Disposals

(1,269)

(1,254)

(2,523)

At 30 June 2015

11,079

16,585

27,664

Accumulated depreciation

 

 

 

At 1 July 2014

2,306

11,495

13,801

Charge for the year

203

1,097

1,300

Disposals

(151)

(1,120)

(1,271)

At 30 June 2015

2,358

11,472

13,830

Net book amount

 

 

 

At 30 June 2015

8,721

5,113

13,834

 

7 Short-term financial assets

 

2016
£'000

2015
£'000

Beginning of year

9,358

15,638

Net purchases/(disposals)

5,552

(6,280)

End of year

14,910

9,358

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

2016


2015

Weighted average number of ordinary shares in issue

115,675,590

115,675,590

Profit attributable to equity holders of the company (£'000)

12,999

11,451

Basic earnings per share (pence per share) continuing operations

11.24

10.12

Basic earnings per share (pence per share) discontinued operations

-

(0.22)

Basic earnings per share (pence per share) total

11.24

9.90

 

Diluted

2016


2015

Weighted average number of ordinary shares in issue (fully diluted)

115,938,805

115,706,334

Profit attributable to equity holders of the company (£'000)

12,999

11,451

Diluted earnings per share (pence per share) continuing operations

11.21

10.11

Diluted earnings per share (pence per share) discontinued operations

-

(0.22)

Diluted earnings per share (pence per share) total

11.21

9.89

 

 

 

9 Cash generated from operations

 

 

Group

Cash generated from continuing operations

 

2016
£'000

 

2015
£'000

Profit before income tax

 

16,269

14,395

Depreciation charge

 

1,523

1,288

Amortisation/impairment of intangibles

 

2,277

1,484

Profit on disposal of property, plant and equipment

 

(89)

(104)

Finance income

 

(75)

(727)

Retirement benefit contributions in excess of current and past service charge

 

(190)

(229)

Share of loss from joint venture

 

1

50

Share based payment charge

 

193

76

Research and development expenditure credit

 

(236)

-

Effects of exchange rate movements

 

182

(28)

Changes in working capital

 

 

 

- Inventories

 

(1,128)

(1,707)

- Trade and other receivables

 

(2,094)

(3,659)

- Payables and provisions

 

2,313

2,215

Cash generated from continuing operations

 

18,946

13,054

The cash generation from discontinued operations is as follows:

Cash generated from discontinued operations

2016


2015

Profit before income tax

-

(233)

Depreciation charge

-

12

Finance income

-

7

Changes in working capital

 

 

- Inventories

-

84

- Trade and other receivables

-

189

- Trade and other payables

-

202

Cash generated from discontinued operations

-

261

 

Total cash generated from operations

2016
£'000

2015
£'000

Continuing operations

18,946

13,054

Discontinued operations

-

261

Total cash generated from operations

18,946

13,315

 

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 17 October 2016 and will be available on the Group's website (www.fwthorpe.co.uk) from that time. The Group will hold its AGM on 17 November 2016.

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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