Last checked at 24 Sep 2009 07:00
Preliminary Results
for the year ended 30 June 2009
FW Thorpe Plc, designer and manufacturer of professional lighting equipment for the specification market, is pleased to announce its preliminary results for the year ended 30 June 2009.
Highlights:
* Turnover £53.4m (2008: £51.8) 3% increase
* Export sales £11.1m (2008: £9.1m) 22% increase
* Operating profit of £10.7m (2008: £10.5m) 2% increase
* Profit before tax of £11.5m (2008: £11.7m) 2% decrease
* Basic earnings per share 71.4p (2008: 73.3p) 3% decrease
* Strong operating cash flow £10.6m (2008: £12.0m) 12% decrease
* Total interim and final dividend 16.2p (2008: 16.0) 1% increase
* Special final dividend 12.0p (2008: nil)
* Company purchased 220,000 of own shares
For further information please contact:
| F W Thorpe Plc |
|
| Andrew Thorpe - Chairman | 01527 583200 |
| Peter Mason - Joint Chief Executive and Finance Director | 01527 583200
|
| Brewin Dolphin Limited - Nominated Adviser |
|
| Andrew Kitchingman Sean Wyndham-Quin | 0845 270 8613 0845 270 9518 |
CHAIRMAN'S STATEMENT
The financial year ended 30th June 2009 produced a revenue of £53.4m, being 3.0% up compared to the previous year's figure of £51.8m. This is a pleasing result in view of the recent prevailing international economic climate. Operating profit also rose to £10.7m from £10.5m for the year ended 30th June 2008, an increase of 1.6%. The financial income from our investments, however, reduced compared to the corresponding previous period due to the lower interest rates on offer to give a resulting profit before taxation of £11.5m down 1.5% from 2007/2008.
Business has, for the aforementioned reasons of international instability, presented your Group with many and various challenges throughout the year, those challenges being on a much wider front to most previous years and of those challenges many have been specific to different companies within the Group. More detail concerning particular companies will be presented later in this report but to name but a few, one company has moved premises, one has had particular problems due to the sudden and unprecedented movement in the Pound Sterling to US Dollar relationship, and another suffering due to the downturn in retail fortunes causing serious cutbacks in retailers' store refurbishment programmes. These diverse challenges have kept your Group's managers busy throughout this year which has been a most interesting period!
In certain areas of the business and where practical, due to product type, the pressure has been kept on our efforts to increase exports, with a deal of success chiefly by Thorlux and Mackwell. Our efforts here are to continue in the widening of our selling platform which, it is felt, is most important at this time as there must be some concern in regard to the continuing health of the UK market after the next election, and perhaps even before it.
Investment in the business, this year has continued generally as and when replacement or new efficiency improving equipment has been required, but no major items of particular note fall into this sector. Three major investments that do fall into this reporting period are a new £1.3m factory in Horsham, West Sussex, for Sugg Lighting Ltd financed out of our own cash resources and to replace the previously occupied leased premises in Crawley which after substantial dilapidation repairs has now been handed back to the freeholder. Secondly the Group's 215 acre carbon off-setting project land in Monmouth was purchased, various governmental approvals attained and a first batch of trees planted. The Group has planted sufficient trees to offset the current carbon emissions of its own business. At this stage, whilst we cannot say that a large number of plantings have been purchased, it is true to say that our various sales staff in the field are reporting that a large amount of "green street-cred" is being gained amongst our customers. Productwise some more avant-garde offerings often take a while to produce fruit and we are confident that this investment will do likewise. The third major investment has been the purchase of Solite Lighting Europe Ltd in Denton near Manchester for £0.4m. Solite, employing some 13 people, specialises in cleanroom lighting. Cleanrooms for the uninitiated, are areas where the atmosphere is required to be virtually free of airborne contaminants and where such products as pharmaceuticals are manufactured or where certain types of medical procedures are undertaken etc.
Moving to financial affairs, your company took the opportunity to purchase 220,000 F W Thorpe Plc ordinary shares during the year of which 170,000 are held in treasury.
Your Group's results as detailed above allow your Board to recommend a dividend of 12.1p per share (2008: 12.1p) which together with the interim dividend already paid makes a total dividend per share of 16.2p (2008: 16.0p) for the year to 30th June 2009, this being an increase of 1.25% over the previous corresponding period.
Further, your Board now recommends, as it considers Group cash resources to be adequate for the foreseeable future and the timing prudent, that a special final dividend of 12.0p per share be paid together with the final dividend for the year ended 30 June 2009 on 19th November 2009.
Thorlux Lighting
Thorlux Lighting, remaining the largest individual business within in the Group, producing professional industrial and commercial lighting fittings and control systems advanced further with turnover and operating profit up 7.3% and 15.3% respectively.
The year to 30th June 2009 has proved to be another successful year but orders for normal catalogued products have been more hard fought than in previous years with competitors sharpening their pencils and customers with more time on their hands, due to the economic climate, soliciting more alternative quotations for their requirements.
Away from the "everyday" products Thorlux has furthered its success in road tunnel lighting by gaining, in association with its commercial partner in tunnel lighting PDS Systems Ltd, a contract for re-lighting of the Bell Common Tunnel on the northern sector of the M25 around London. Such projects are also hard fought but high value and other similar contracts are being pursued. Since the first contract with tunnel lighting by Thorlux contract manufacturing tunnel fittings for the tunnels underneath Hong Kong Harbour for its then agent, it has taken some fifteen years for Thorlux to be able to offer fully developed systems to this market. Such lighting is heavy duty and complex.
The export drive continues for Thorlux with Thorlux Deutschland in Munich taking one step back again in the number of people employed but an 18% advance in respect of sales to the year ended 30th June 2009. Efforts continue to make the breakthrough to find suitable sales engineers in Germany where Thorlux still finds the problem of persuading the high calibre German sales engineer to join the "new kid on the block".
In the Republic of Ireland the extra second person employed, as mentioned in last years report, along with the opening of an office in Dublin has proved successful with business activity increasing despite the Republic's financial difficulties.
Throughout 2008/2009 discussions have been held with the Thorlux Australian agent in regard to the possibilities of forming a joint venture Australian company to target sales of Thorlux Commercial Lighting Products and Systems in that market where previously market penetration has been centred very much on products suitable for the industrial and mining markets. These discussions have now concluded and I can report that a new joint venture company Thorlux Lighting Australasia Pty Ltd has been formed, after the year end, to widen the selling platform in Australia.
Mackwell
Mackwell Electronics, manufacturer of emergency lighting control gear, experienced a turbulent year sliding down from the crest of the wave with the Pound Sterling being at its highest exchange rate against the US Dollar for many years down to the trough with the Pound at its worst exchange rate to the US Dollar for many years all over a short number of months; not easy for a company whose purchases of electronic components are to a high degree in dollars, and for a company already entering a down turn in the general market.
I am pleased to report, however, that Mackwell with a combination of self sacrifice on behalf of Mackwell staff accepting temporary reduced rewards, a restricted number of redundancies, repatriation of outworked products, re-negotiations with customers in regard to pricing etc. has remained in profit for the year in question with a fall of only 18%.
I would, at this time, like to thank all the staff at Mackwell for their help and sacrifices during this period.
Compact Lighting
Compact Lighting, manufacturer of retail lighting has been the Group company to suffer most during the recession and progressively as retailers reduced, delayed, or cancelled their store refurbishment aspirations.
It was mentioned in last year's report that David Lippold stood down as MD aiming for new pastures and we would like to thank Barry Compton for his sterling performance as caretaker MD. Barry, rather than retiring, has opted to remain with the business in a support role for the time being.
In October 2008 Simon Wootton was appointed MD of Compact Lighting Ltd having previously served 12 years as Compact Manufacturing and Operations Director following some 7 years at Thorlux in various manufacturing and quality roles. Since his appointment Simon has energetically embarked on a series of cost reduction programmes, including some regrettable redundancies, to trim company costs to more reflect available business levels.
We would like to welcome Simon to his new role and wish him continued success in his programme to deliver ranges of more highly tooled display lighting products as Compact has been charged by the Group and as was mentioned in last year's report.
Philip Payne
Philip Payne, manufacturer of specialist exit signs has achieved a successful year in 2008/2009 and, although not making its usual incremental improvement has managed to provide the Group with a similar performance in turnover and profitability as within the previous corresponding period.
It was mentioned last year that a new and extra salesman had joined the one existing sales engineer and, now well embedded into Philip Payne methods and ideology he has successfully managed to help maintain current levels of business during the recession rather than to increase it.
The company is, therefore, well set to take advantage of any upturn when the economy allows.
Sugg Lighting
Sugg Lighting, the Group heritage lighting manufacturer and refurbisher, has now settled into its new factory in Horsham and has been providing significant monthly operating profits throughout most of the year to June 2009.
Any company moving to a new factory, as those who have experienced such an event will know, undergoes serious operational challenges in the period leading up to, during, and after such an event. Sugg was no different and despite, at the time of writing, now again operating profitably, the move seriously affected performance during March, April and May of 2009.
In the future, and perhaps unusually for Sugg, they should hopefully now be in for a long period of plain sailing.
To name but one interesting project for the year, particularly for theatre goers, Sugg is currently refurbishing the art deco light fittings in the Round Room and car park for the refurbished Royal Shakespeare Theatre in Stratford-upon-Avon.
Solite
Solite, mentioned earlier as a specialist in cleanroom lighting, joined the Group in March 2009 and we would like to welcome the Solite workforce of twelve people under MD Keith Bennett.
Solite performance figures have had a negligible effect on the Group during the year 2008/2009. They are currently in a phase of bringing themselves to F W Thorpe Plc standards in regard to the production of a website, new sales literature, and upgrading of production methods and controls.
Solite products will fit well within the Group and complement ranges from other Group companies especially Thorlux. Solite also has the opportunity to add other Group products to its own offering.
People
Once again it comes to that time of year when I would like to thank all those in F W Thorpe Plc for their loyalty and diligence throughout the last year. I would also like to apologise to those whom we have found it necessary to let go and to wish them every success in their future.
Future
I doubt that even one with a crystal ball could predict the future at the moment. Reading the newspapers every day it would seem that even our "rulers" do not appear to have a handle on events, especially those of a financial nature.
What I can say, however, is that your company remains in good shape to continue to capitalise upon the market that is there both home and abroad. The only question is to what extent those markets will remain with burgeoning government debt especially within the UK and an election due in the short term. We will, as ever, continue to do our best in current markets and to pursue our newer markets with verve.
A B Thorpe - Chairman
24 September 2009
CONSOLIDATED RESULTS (UNAUDITED)
Consolidated income statement for the year ended 30 June 2009
| Note | 2009 | 2008 | |
| £'000 | £'000 | ||
| Revenue | 53,356 | 51,780 | |
| Cost of sales | (29,900) | (29,247) | |
| Gross profit | 23,456 | 22,533 | |
| Distribution costs | (3,577) | (3,644) | |
| Administrative expenses | (9,209) | (8,382) | |
| Operating profit | 10,670 | 10,507 | |
| Finance income | 877 | 1,213 | |
| Profit before income tax | 11,547 | 11,720 | |
| Income tax expense | 5 | (3,072) | (2,989) |
| Profit for the year | 8,475 | 8,731 |
Earnings per share for profit attributable to the equity holders of the company during the year (expressed in pence per share).
| 2009 | 2008 | ||
| Note | Pence | Pence | |
| Basic and diluted |
| ||
| - Basic | 2 | 71.4 | 73.3 |
| - Diluted | 2 | 71.4 | 73.2 |
CONSOLIDATED RESULTS (UNAUDITED)
Consolidated statement of recognised income and expense for the year ended 30 June 2009
| Note | 2009 | 2008 | |
| £'000 | £'000 | ||
| Profit for the year: | 8,475 | 8,731 | |
| Actuarial loss on pension scheme | (2,117) | (1,624) | |
| Movement on associated deferred tax asset relating to the pension scheme | 592 | 455 | |
| Revaluation of available for sale assets | (81) | (55) | |
| Movement on associated deferred tax | 15 | - | |
| Net income recognised directly in equity | (1,591) | (1,224) | |
| Total recognised gains and losses relating to the year | 6,884 | 7,507 |
CONSOLIDATED RESULTS (UNAUDITED)
Consolidated balance sheet as at 30 June 2009
| Group | |||
| Notes | 2009 | 2008 | |
| £'000 | £'000 | ||
| Assets | |||
| Non-current assets | |||
| Intangible assets | 7 | 2,575 | 2,285 |
| Investment property | 1,028 | 184 | |
| Property, plant & equipment | 8 | 10,590 | 9,612 |
| Available for sale financial assets | 43 | 115 | |
| Deferred income tax assets | 833 | 276 | |
| 15,069 | 12,472 | ||
| Current assets | |||
| Inventories | 10,458 | 8,646 | |
| Trade and other receivables | 9,118 | 10,559 | |
| Other financial assets at fair value through profit or loss | 385 | 377 | |
| Short term financial assets - deposits | 4 | 14,489 | 13,332 |
| Cash and cash equivalents | 7,132 | 6,710 | |
| 41,582 | 39,624 | ||
| Total assets | 56,651 | 52,096 | |
| Liabilities | |||
| Current liabilities | |||
| Trade and other payables | (6,228) | (7,381) | |
| Current income tax liabilities | (1,875) | (1,916) | |
| (8,103) | (9,297) | ||
| Net current assets | 33,479 | 30,327 | |
| Non-current liabilities | |||
| Retirement benefit deficit | (2,033) | (281) | |
| Provisions for liabilities and charges | (102) | (213) | |
| Deferred income tax liabilities | (656) | (640) | |
| Total liabilities | (10,894) | (10,431) | |
| Net assets | 45,757 | 41,665 | |
| Capital and reserves attributable to equity holders of the company | |||
| Called up share capital | 9 | 1,189 | 1,191 |
| Share premium account | 9 | 656 | 624 |
| Capital redemption reserve | 9 | 137 | 135 |
| Retained earnings | 9 | 43,775 | 39,715 |
| Total equity | 45,757 | 41,665 | |
CONSOLIDATED RESULTS (UNAUDITED)
Consolidated cash flow statement for the year ended 30 June 2009
| Group | |||
| Note | 2009 | 2008 | |
| £'000 | £'000 | ||
| Cash flows from operating activities | |||
| Cash generated from operations | 6 | 10,564 | 12,040 |
| Income tax paid | (3,048) | (2,022) | |
| Net cash generated from operating activities | 7,516 | 10,018 | |
| Cash flow from investing activities | |||
| Purchases of property, plant and equipment | (2,087) | (749) | |
| Proceeds of sale of property, plant and equipment | 74 | 75 | |
| Purchase of intangibles - development costs and software | (861) | (983) | |
| Purchase of investment in subsidiary (net) | (389) | - | |
| Purchase of investment property | (844) | - | |
| Purchase of available for sale financial assets | (9) | (67) | |
| Property rental and similar income | 95 | 55 | |
| Dividend income | 4 | 7 | |
| Net purchase of deposits | (1,157) | (4,467) | |
| Interest received | 959 | 858 | |
| Net cash outflow from investing activities | (4,215) | (5,271) | |
| Cash flow from financing activities | |||
| Proceeds from the issuance of ordinary shares | 35 | 18 | |
| Purchase of own shares | (900) | - | |
| Dividends paid to company's shareholders | 3 | (1,927) | (1,655) |
| Lease payments | (87) | (116) | |
| Net cash outflow from financing activities | (2,879) | (1,753) | |
| Net increase in cash and cash equivalents in the year | 422 | 2,994 | |
| Cash and cash equivalents at beginning of year | 6,710 | 3,716 | |
| Cash and cash equivalents at end of year | 7,132 | 6,710 | |
Notes (Unaudited)
1. Basis of preparation
F W Thorpe Plc's preliminary results for the year ended 30 June 2009 have been approved by the board of Directors on 24 September 2009 and are unaudited. The financial information set out in the announcement does not constitute the Company's statutory accounts for the years ended 30 June 2009 or 30 June 2008.
The unaudited preliminary information above has been prepared on the basis of the accounting policies set out in the annual financial statements for the year ended 30 June 2008. The accounts for the year ended 30 June 2008 have been delivered to the Registrar, and the auditors' report was unqualified and did not contain a statement section 237(2) and (3) of the Companies Act 1985.
The preliminary results have been prepared on the historic cost basis as modified by the
revaluation of certain land and buildings and available for sale financial assets at fair value through profit or loss.
2. Earnings per share
Basic earnings per share are calculated by dividing the profit attributable to equity shareholders by the weighted average number of ordinary shares in issue during the period, excluding ordinary shares purchased by the Company and held as treasury shares. During the year the Company purchased 220,000 ordinary shares of which 20,000 were cancelled, and 200,000 were held in treasury, with 170,000 remaining in treasury at 30 June 2009.
Diluted earnings per share are calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Company had only one category of dilutive potential ordinary shares being share options. The outstanding share options were fully exercised during the year and there are no dilutive potential ordinary shares at 30 June 2009. For the share options, a calculation is done to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the company's shares) based on the monetary value of the subscription rights attached to outstanding share options. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share options.
Earnings per share are computed as follows:
| 2009 | 2008 | |
| Weighted average number of ordinary shares | 11,864,901 | 11,908,970 |
| Basic earnings per share (pence) | 71.4 | 73.3 |
| Adjusted weighted average number of ordinary shares | 11,864,901 | 11,932,840 |
| Diluted earnings per share (pence) | 71.4 | 73.2 |
3. Dividends
Dividends paid during the year are outlined in the table below:
| 2009 | 2008 | |
| Dividends paid (per share) | ||
| Final dividend 2008 | 12.10p | 10.00p |
| Interim dividend 2009 | 4.10p | 3.90p |
| Total | 16.20p | 13.90p |
A final dividend of 12.1p (2008: final of 12.1p) per share is proposed together with a special final dividend of 12.0 p (2008: nil) and, if approved, will be paid together on 19 November 2009.
| Dividends proposed (per share) | ||
| Final dividend 2009 | 12.10p | 12.10p |
| Special final dividend 2009 | 12.00p | - |
| 2009 | 2008 | |
| £'000 | £'000 | |
| Dividends paid | ||
| Final dividend 2008 | 1,439 | 1,190 |
| Interim dividend 2009 | 488 | 465 |
| Total | 1,927 | 1,655 |
| Dividends proposed | ||
| Final dividend (2008: final dividend) | 1,418 | 1,442 |
| Special final dividend | 1,407 | - |
| Total | 2,825 | 1,442 |
4. Short term financial assets
Short term financial assets comprise cash held on deposits maturing between 3 and 12 months.
5. Taxation
The effective tax rate is 26.6% (2008: 25.5%) due to taxable deductions, primarily in relation to research and development costs and smaller companies tax rate.
6. Cash generated from operations
| 2009 | 2008 | |
| £'000 | £'000 | |
| Profit before income tax | 11,547 | 11,720 |
| Depreciation charge | 1,019 | 1,085 |
| Amortisation of intangibles | 859 | 826 |
| Loss/(profit)on disposal of property, plant and equipment | 3 | (37) |
| Finance income (net) | (877) | (1,213) |
| Retirement benefit contributions in excess of current and past service charge | (336) | (283) |
| Changes in working capital | ||
| - Inventories | (1,773) | (155) |
| - Trade and other receivables | 1,368 | (937) |
| - Trade and other payables | (1,246) | 1,034 |
| Total | 10,564 | 12,040 |
7. Intangible assets
| £'000 | |
| Intangible assets at 1 July 2008 | 2,285 |
| Purchase of intangible assets | 861 |
| Amortisation of intangible assets | (859) |
| Acquired on purchase of subsidiary company | 3 |
| Goodwill and other intangibles on purchase of subsidiary company | 285 |
| Intangible assets at 30 June 2009 | 2,575 |
8. Property, plant and equipment
| £'000 | |
| Property, plant and equipment at 1 July 2008 | 9,612 |
| Purchase of property, plant and equipment | 2,054 |
| Depreciation charge | (1,019) |
| Net book value of disposals | (77) |
| Acquired on purchase of subsidiary company | 20 |
| Property, plant and equipment at 30 June 2009 | 10,590 |
9. Movement in equity
The movement on share capital and reserves during the year is as follows:
| £'000 | |
| Share capital at 1 July 2008 | 1,191 |
| Shares purchased and cancelled | (2) |
| Share capital at 30 June 2009 | 1,189 |
| Movements in treasury shares included in share capital | |
| Shares held in treasury at 1 July 2008 | - |
| Shares purchased and held in treasury | 20 |
| Shares issued from treasury | (3) |
| Share held in treasury at 30 June 2009 | 17 |
| The number of shares held in treasury at 30 June 2009 is 170,000 (2008: nil). |
| Movement in equity (Cont) | Share | Capital | |
| Premium | Redemption | Retained | |
| Account | Reserve | Earnings | |
| £'000 | £'000 | £'000 | |
| At 1 July 2008 | 624 | 135 | 39,715 |
| Shares issued from treasury | 32 | - | 3 |
| Cost of shares purchased and cancelled | - | 2 | (100) |
| Cost of shares purchased and held in treasury | - | - | (800) |
| Net actuarial loss on pension scheme | - | - | (1,525) |
| Profit for the year | - | - | 8,475 |
| Net revaluation of available for sale assets | - | - | (66) |
| Dividends paid | - | - | (1,927) |
| At 30 June 2009 | 656 | 137 | 43,775 |
On 27 March 2009 the company acquired 100% of the share capital of Solite Europe Ltd. The acquisition cost amounted to £405,000 and the provisional fair value of net assets acquired amounted to £120,000 resulting in goodwill and other intangibles of £285,000.
On 11th September 2009 a joint venture was established, Thorlux Lighting Australasia Pty Ltd.
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.
Dates:
AGM: 12 November 2009
Dividend payment date: 19 November 2009
Ex-dividend date: 14 October 2009
Record date: 16 October 2009