Thorpe Regulatory News (TFW)

INTERIM RESULTS FOR THE SIX MONTHS TO 31 DECEMBER 2022

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 2022.

Financial highlights:

· Interim dividend 1.62p (Interim 2022: 1.54p) - 5.2% increase

· Like for like growth, driven by Thorlux which saw supply chain challenges easing, solid revenue and operating profit increase

· Netherlands and Zemper performances suppressed by margin pressures

· Other UK companies showing overall improvement

· Net cash generated from operating activities - £9.9m (Interim 2022: £8.9m)

· Initial acquisition of SchahlLED in Germany completed in September

Note: This announcement contains inside information for the purposes of Article 7 of Regulation 596/2014 (MAR).

For further information, please contact:

CHAIRMAN'S INTERIM STATEMENT

It is pleasing to report that Group manufacturing operations have returned to a more normal and orderly situation, supply shortages have eased, and good customer service levels are returning.

Revenue for the half year ended 31 December 2022 was £81.9m compared with £63.5m for the prior half year; this increase of 29% was as a result of improvement at almost all Group companies and the addition of SchahlLED, whose revenue is seasonally strong in the last quarter of the calendar year. On a like-for-like basis, excluding the recent acquisition of SchahlLED, revenue increased 12%. Despite varying achievements at subsidiaries, operating profit increased by 24% to £11.0m. There were notable achievements at Thorlux Lighting and continued improvements at the UK companies Philip Payne and Solite, whilst some other companies struggled to some extent to cope with and react to rising costs, in particular material and wage inflation.

The Group had an excellent operational performance, allowing it to catch up on outstanding deliveries: the order backlog reduced, whilst order input generally slowed during the period. Positivity about the short-term order outlook remains, especially at Thorlux (the Group's largest business), notwithstanding some general concern about the state of the economy as a whole.

Over the last two years, supply shortages have been a significant problem for many businesses, but especially for the Group, since it tends to focus on producing more technologically advanced lighting systems. These products require the use of microprocessors and certain electronic assemblies, which have been particularly scarce in recent times and subject to especially high inflationary pressure as a result. Stock was built up to manage these shortages, taking overall stocks higher than historic norms. Now that supply shortages have mostly been resolved, the Group is in a healthy stock position and all companies have active plans to reduce stocks to more normal levels in coming months.

Thorlux's new SmartScan generation 2 is now in production and in use on several projects, with thousands of luminaires successfully exploiting the new software and improved platform. SmartScan is now also integrated into products manufactured by most Group companies.

FW Thorpe welcomed SchahlLED Lighting GmbH during the reporting period, and three months of the company's contributions are included in the operating results. Whilst revenue is consolidated from all Group companies, the headline operating profit number is suppressed by IFRS acquisition adjustments in relation to Zemper and SchahlLED.

Sustainability remains a significant activity taking some of the Group's attention. In recent months the Thorlux solar PV array has been expanded significantly, and now has a capacity of 1.5MW from 3000+ panels. The construction of the new Famostar warehouse has commenced and will benefit also from solar PV, with a target completion of this summer. Sustainability training has been given to all Group employees, and regular newsletters and cross-team meetings encourage the sharing and rewarding of best practices. Scope 3 emissions data - primarily the lifetime energy use of Group companies' luminaires at customers' premises, and upstream energy use in making components at the Group's myriad of suppliers - have now been collated Group-wide, and there is continued progress, with third-party assistance, towards an improvement plan and a Net Zero strategy.

As a result of ongoing performance as well as a strong balance sheet, the Board has approved an increased dividend of 1.62p (interim 2022: 1.54p) for the six months to 31 December 2022.

High energy costs and the imminent ban on the sale of fluorescent lamps in the UK and EU are both stimulating activity in the Group's key market sectors. The outlook for the second half remains quite positive, although the revenue growth percentage is unlikely to be maintained at such a high level due to the good performance in the second half of last year.

Mike Allcock

Chairman

16 March 2023

FW Thorpe Plc

CONSOLIDATED INCOME STATEMENT

for the six months to 31 December 2022

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the six months to 31 December 2022

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 £82,000 is due to the increase in market value of these investments.

** No interim actuarial valuation undertaken

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

as at 31 December 2022

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the six months to 31 December 2022

CONSOLIDATED STATEMENT OF CASH FLOWS

for the six months to 31 December 2022

Notes to the Interim Financial Statements

1. Basis of preparation

The consolidated interim financial statements for the six months to 31 December 2022 have been prepared in accordance with the AIM Rules for Companies, UK adopted International Accounting Standards and with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards, with future changes being subject to endorsement by the UK Endorsement Board.

The figures for the period to 31 December 2022 and the comparative period to 31 December 2021 have not been audited or reviewed and are therefore disclosed as unaudited. The figures for 30 June 2022 have been extracted from the financial statements for the year to 30 June 2022, 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 and through other comprehensive income.

The accounting policies set out in the financial statements for the year ended 30 June 2022 have been applied consistently throughout the Group during the period.

2. Segmental analysis

The segmental analysis is presented on the same basis as that used for internal reporting purposes. For internal reporting FW Thorpe is organised into eleven 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 recently acquired SchahlLED business is included in this segment in accordance with the Group's internal reporting. The businesses in the Netherlands, Lightronics and Famostar, are material subsidiaries and disclosed separately as Netherlands companies. The businesses in the Zemper Group are also material and disclosed separately as Zemper Group. 

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

FW Thorpe's chief operating decision-maker (CODM) is the Group Board. The Group Board reviews the Group's internal reporting in order to monitor and assess the performance of the operating segments for the purpose of making decisions about resources to be allocated. The CODM reviews the performance of the business by considering the key profit measure of operating profit, including the impact of associated contingent consideration arrangements, and considers that none of the other operating segments are of sufficient size and distinction to be reviewed separately when making Group wide strategic decisions. Assets and liabilities have not been segmented which is consistent with the Group's internal reporting.

Inter-segment adjustments to operating profit consist of property rentals on premises owned by FW Thorpe Plc, adjustments to profit related to stocks held within the Group that were supplied by another segment.

2. Segmental analysis (continued)

3. Acquisition

In September 2022, the Group acquired 80% of the share capital of SchahlLED Lighting in Germany, a turnkey provider of intelligent energy saving lighting products for the industrial and logistics sector. The company was acquired for an initial consideration of £12.9m (€14.6m) and could pay an additional amount to be determined by SchahlLED's EBITDA performance in the year ending 30 June 2023. The current best estimate for this is £1.1m (€1.3m).

There is a fixed commitment to acquire the remaining shares, based on current best estimates, a further £5.5m (€6.2m) could be payable which is subject to future performance conditions.

Amounts recognised in respect of this acquisition are:

A fair value exercise has not yet been performed on the acquired assets and liabilities; this will be undertaken for the current financial year-end. The outcome of this exercise may result in changes to the fair value of the acquired assets and liabilities, as well as associated goodwill.

This acquisition is expected to make a contribution to Group profits for the current financial year.

4. Purchase of shares in subsidiaries

On 12 September 2022, the Group purchased a further 13.5% of the share capital of Electrozemper S.A. with a cash payment of £5.3m (€6.1m), as part of its commitment to acquire the remaining shares.

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 117,191,586 (Interim 2022: 116,816,601) 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 117,292,983 (Interim 2022: 117,368,458) during the period.

6. Dividend

The interim dividend is at the rate of 1.62p per share (Interim 2022: 1.54p) and based on 117,191,586 shares in issue at the announcement date the dividend will amount to £1,899,000 (Interim 2022: £1,803,000). The interim dividend will be paid on 21 April 2023 to shareholders on the register at the close of business on 24 March 2023, and the shares become ex-dividend on 23 March 2023.

For the year ended 30 June 2022, a final dividend of 4.61p (2021: final 4.31p) per share and a special dividend of nil (2021: special 2.20p), amounting to £5,403,000 (2021: £7,617,000) was paid on 25 November 2022.

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 31 March 2023.