Thorpe Regulatory News (TFW)

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:

· 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).

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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 PlcCONSOLIDATED INCOME STATEMENT

for the six months to 31 December 2019

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the six months to 31 December 2019

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

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the six months to 31 December 2019

CONSOLIDATED STATEMENT OF CASH FLOWS

for the six months to 31 December 2019

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)

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.

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.