Preliminary Results

RNS Number : 1558T

Thorpe(F.W.) PLC

23 September 2010

 



Preliminary Results

for the year ended 30 June 2010 (Unaudited)

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 2010.

Highlights:

*         Revenue £55.6m (2009: £53.4m) 4% increase

*         Operating profit of £11.2m (2009: £10.7m) 5% increase

*         Profit before tax of £11.3m (2009: £11.5m) 2% decrease

*         Basic earnings per share 70.1p (2009: 71.4p) 2% decrease

*         Strong operating cash flow £11.5m (2009: £10.6m) 9% increase

*         Total interim and final dividend 16.7p (2009: 16.2p) 3% increase

For further information please contact:                                                                                

F W Thorpe Plc
Andrew Thorpe - Chairman	01527 583200
Craig Muncaster - Group Financial Director	01527 583200
Brewin Dolphin Limited - Nominated Adviser
Matt Davis	0845 213 4730

CHAIRMAN'S STATEMENT

Your company's revenue for the financial year ended 30^th June 2010 was £55.6m, pleasingly an increase of 4.3% compared to a revenue of £53.4m for the last corresponding period. Operating profit rose by 4.6% to £11.2m compared to £10.7m for the year to 30^th June 2009. Once again interest income from company investments declined causing a reduction in profit before tax of 2.3% to £11.3m compared to £11.5m for the comparable period in 2008/09.  It is felt that the circle of reducing income from company investments has now closed and that any further change in this regard should be positive.

Generally the business environment became more stable as the financial year July 2009 to June 2010 progressed with many of the international fall-outs of the 'global crisis' having been quantified and measures to deal with them having been devised and introduced.  In the UK we enjoyed the added temporary economic stabiliser of an oncoming general election.  This stabilisation may, however, come at a price to be paid later as it would seem that the high borrowings of Mr Brown in support of that stability are soon to be curbed with the most possible effects on the economy of 'things coming home to roost'.  More of the future, however, in the report's closing paragraphs. 

Business for the Group as a whole over the past year has been very much on a level with no new factories bought, no new companies purchased, or any major investments made.  Over and above the sometimes frantic pace of everyday business in the various subsidiaries, at group level, thoughts have been very much focused on the possible scenarios of election outcomes and their potential effect on the various sectors of the business.  There are always measures that can be taken to steer the business in directions that are least likely to be affected by a change, and we trust that measures taken and yet to be taken in various companies within the group will give us advantage for the future.

A statement concerning the lighting industry would not, in this day and age, be complete without mention of LED's, and so may I confirm that your company is fully appraised in LED technology, offers LED products in certain areas, has design programmes including LED technology and offers LED lighting solutions where practicable from a performance and cost point of view.

'Time stands still for no man' they say, and as announced to the market some months ago the company must soon say farewell, at least on a full-time basis, to my friend and colleague Peter Mason.  Peter has already stepped down from his post as Joint Group Chief Executive and Group Financial Director and will retire to a non-executive role at the end of September 2010.  Peter joined F W Thorpe Plc in 1987 when the sole trading name of the company was 'Thorlux Lighting' and, if I may repeat words in the previous announcement, Peter has successfully seen the company through considerable growth and I and the F W Thorpe Plc Board would like to thank him very sincerely for his diligence, long hours, commitment and loyalty during his time in office. 

Again, as mentioned in the earlier AIM announcement the Board would like to welcome Mr Craig Muncaster to the company in his role as Group Financial Director and Company Secretary.  Craig, who gained a BA in Business Administration prior to his ACMA and subsequent FCMA, has extensive industrial experience and joined the group from his post of UK Financial Director at Durr Ltd.

Your Board would also like to offer its congratulations to Mr 'Mike' Allcock on assuming the role of Group Joint Managing Director, a position vacated by Peter Mason.  Mike who has trodden the road of 16 year old Thorlux Lighting apprentice through to Chartered Engineer is currently Managing Director of Thorlux Lighting, the largest business segment in the group.

The Group's results defined at the start of the report allow your Board to recommend a dividend of 12.6p per share (2009: 12.1p) which taken together with the interim dividend paid in April 2010 makes a total dividend per share of 16.7p (2009: 16.2p).

Thorlux Lighting

Thorlux, the Group's manufacturer of professional commercial and industrial lighting systems enjoyed further improvement with revenue up 5.0% and operating profit up 7.1%.

Thankfully the company's general market remained reasonably firm throughout the year possibly assisted by maintained government borrowing.

Over and above "everyday" products new project successes were made in gaining contracts for the provision of lighting systems for further road tunnels including the Blackwell Tunnel under the River Thames on the A102 near the O² Arena. The Thorlux "Scanlight AT" LED "interrogate from anywhere" emergency lighting system first mentioned in the 2008 report continues to gain market share and underpins the Thorlux ethos to offer new and innovative products to the market. Exciting new product ranges are, as one would expect, under development and these have a notable leaning toward LED lighting solutions.

"On a level" must also be the statement in regard to exports for the year in question. An increase of 2.8% was achieved but this should be considered as no mean feat considering the global financial turmoil that has prevailed through the 2009/10 year. The new high level operative in Germany has settled in well and is assisting us to add new directions to the slow assault on that market. We hope that these actions will quicken the pace of our penetration.

It is regrettable to say that our first Thorlux employed Swedish national has already deserted and we are assessing methods of advancements in that market. The Republic of Ireland continues to add to its market success and progress is being made with Thorlux Lighting Australasia Pty Ltd.

Mackwell

The Group emergency lighting control gear and systems maker found calmer waters during this financial year and with a more stable pound to dollar ratio has been regularising its activities to cater for the current level of exchange rate.  A mixture of product re-design, changes of customer profile and efficiency improvements have all played their part.

Commerce as it is, a sizeable contract for emergency lighting conversion work hard fought by Mackwell eventually found its way elsewhere and overseas and with this, the residual dollar problems and the current well documented worldwide shortage of electronic components, Mackwell have performed well with revenue only dropping 3.6%. 

Profitability is currently the issue and the year 2010/11 will be devoted to rebuilding margins.

Compact Lighting

Retail lighting systems supplier Compact Lighting, as commented in last year's report, got to grips with the downturn in business under the guidance of new Managing Director Simon Wootton.

Measures taken last year together with the increasing number of high quality tooled display lighting products in the range, a reasonable upturn in the retail market and new customer success has meant a much improved performance. A notable recent and sizeable order for Compact comprises substantially of their new tooled display lighting products and this success hopefully demonstrates that the Group's desire for Compact to be a high tier display lighting company may be becoming a reality.

Philip Payne

Philip Payne the Group's manufacturer of specialist exit signs enjoyed a very similar year to the last, in regard to revenue and operating profit.

Though a small company of some seventeen people it has been noted that the top management at "Payne's" comprises only of one director being the Managing Director. It is the Group's pleasure, therefore, to welcome to the Philip Payne board Mr David Ball who took up the role of Operations Director in September 2009. David joined Philip Payne Ltd over thirteen years ago rising to Works Manager before his recent appointment and we would like to take this opportunity to wish him every success in his new role.

Two notable project successes for Philip Payne during the year have been to supply emergency exit lighting for the Olympic Stadium in Stratford along with its VIP and press areas, and the supply of exit signs to Madame Tussauds.

Sugg Lighting

Heritage lantern maker and refurbisher Sugg Lighting also enjoyed a similar year's performance to the previous year. Bolstering of the sales force of two by another one in 2009 is showing signs of helping maintain a higher order book level and further plans are in place to improve northern territory coverage. Operationally it is recognised that profitability improvements must be made at Sugg and 2010/11 will see a concentration on this area of operations.

Notwithstanding the above Sugg Lighting has achieved some notable successes during the year and one to note is the current project of refurbishing the lanterns on Richmond Bridge, London and fitting the installation with energy saving control systems.

Solite

A specialist lighting supplier for "clean rooms", Solite ended the 2009/10 financial year on a high. Struggling through the earlier part of the year with little activity in their market, projects started to move as the year progressed enabling an increase in revenue.

Since F W Thorpe Plc took ownership of Solite much work has been done in the organisation of new catalogues and production of the company's first website, but with an increase in production requirement the coming year will see improvements in the efficiency of manufacturing methods.

People

I am pleased to say that after a shaky start, not knowing which way the winds of demand would blow, your Group was able to keep its staff busy at an increasing pace throughout the year and I would, therefore, once again like to thank all employees of F W Thorpe Plc for their hard work throughout the period.

I would also, this year, like to thank all those temporary agency workers, some now gone but some still with us, who bolster our work force during our busy summer period and without whom meeting peak demand would be most difficult.

The Future

Our country has, no doubt, been "feather bedded" during recent financial crises by excessive government borrowing. The new Government is determined to reduce borrowing and we cannot predict the effect this will have on us as a lighting company. Fewer "Building Schools for the Future" projects will probably mean more refurbishments! We are also gaining strength in other areas of lighting where projects will continue, such as tunnel lighting, prison lighting etc and at the same time bringing on stream new innovative products in market areas where we have not recently been strong. Whatever the project, the keynote in our lighting solutions is one of lighting in the most energy efficient way and this alone should stand us in good stead.

In recent years we have strived to be at the forefront of lighting application technology within our sector and with this aim we will continue.

A B Thorpe - Chairman

23 September 2010

CONSOLIDATED RESULTS (UNAUDITED)

Consolidated income statement
for the year ended 30 June 2010

	Note	2010	2009
		£'000	£'000
Revenue	2	55,642	53,356
Cost of sales		(31,046)	(29,900)
Gross profit		24,596	23,456
Distribution costs		(3,809)	(3,577)
Administrative expenses		(9,599)	(9,209)
Operating profit	2	11,188	10,670
Net finance income		116	877
Share of loss of joint venture	11	(27)	-
Profit before tax expense		11,277	11,547
Tax expense	6	(3,061)	(3,072)
Profit for the year		8,216	8,475

Earnings per share for profit attributable to the equity holders of the company during the year (expressed in pence per share).

		2010	2009
	Note	Pence	Pence
- - Basic	3	70.1	71.4
- Diluted	3	70.1	71.4

CONSOLIDATED RESULTS (UNAUDITED)

Consolidated statement of comprehensive income
for the year ended 30 June 2010

		2010	2009
		£'000	£'000
Profit for the year		8,216	8,475
Other comprehensive income:
Actuarial loss on pension scheme		(46)	(2,117)
Movement on associated deferred tax asset relating to the pension scheme		13	592
Revaluation of available for sale assets		5	(81)
Movement on associated deferred tax		(1)	15
Other comprehensive income for the year, net of tax		(29)	(1,591)
Total comprehensive income for the year		8,187	6,884

The above movements are recognised in the parent company statement of comprehensive income in both 2010 and 2009.

All comprehensive income is attributable to the owners of the company.

CONSOLIDATED RESULTS (UNAUDITED)

Consolidated balance sheet
as at 30 June 2010

		Group
	Notes	2010	2009
		£'000	£'000
Assets
Non-current assets
Intangible assets	8	2,683	2,575
Investment property		1,006	1,028
Property, plant & equipment	9	10,634	10,590
Investment in joint venture		156	-
Available-for-sale financial assets		78	43
Deferred tax assets		622	833
		15,179	15,069
Current assets
Inventories		11,363	10,458
Trade and other receivables		11,040	9,118
Other financial assets at fair value through profit or loss		386	385
Short term financial assets - deposits	5	16,058	14,489
Cash and cash equivalents		8,754	7,132
		47,601	41,582
Total assets		62,780	56,651
Liabilities
Current liabilities
Trade and other payables		(8,309)	(6,228)
Current tax liabilities		(1,668)	(1,875)
		(9,977)	(8,103)
Net current assets		37,624	33,479
Non-current liabilities
Retirement benefit deficit		(1,379)	(2,033)
Provisions for liabilities and charges		(102)	(102)
Deferred income tax liabilities		(684)	(656)
Total liabilities		(12,142)	(10,894)
Net assets		50,638	45,757
Equity attributable to owners of the company
Called up share capital	10	1,189	1,189
Share premium account	10	656	656
Capital redemption reserve	10	137	137
Retained earnings	10	48,656	43,775
Total equity		50,638	45,757

CONSOLIDATED RESULTS (UNAUDITED)

Consolidated statement of cash flows
for the year ended 30 June 2010

		Group
	Note	2010	2009
		£'000	£'000
Cash flows from operating activities
Cash generated from operations	7	11,474	10,564
Tax paid		(3,017)	(3,048)
Net cash generated from operating activities		8,457	7,516
Cash flow from investing activities
Purchases of property, plant and equipment		(1,045)	(2,087)
Proceeds of sale of property, plant and equipment		62	74
Purchase of intangibles - development costs and software		(1,014)	(861)
Purchase of investment in subsidiary (net)		-	(389)
Purchase of investment property		(9)	(844)
Proceeds of sale of investment property		31	-
Purchase of shares in joint venture and costs		(183)	-
Purchase of available for sale financial assets		(30)	(9)
Property rental and similar income		69	95
Dividend income		-	4
Net purchase of deposits		(1,569)	(1,157)
Interest received		159	959
Net cash outflow from investing activities		(3,529)	(4,215)
Cash flow from financing activities
Proceeds from the issuance of ordinary shares		-	35
Purchase of own shares		-	(900)
Dividends paid to company's shareholders	4	(3,306)	(1,927)
Lease payments		-	(87)
Net cash outflow from financing activities		(3,306)	(2,879)
Net increase in cash in the year		1,622	422
Cash and cash equivalents at beginning of year		7,132	6,710
Cash and cash equivalents at end of year		8,754	7,132

Notes (Unaudited)

1.  Basis of preparation

F W Thorpe Plc's preliminary results for the year ended 30 June 2010 have been approved by the board of Directors on 23 September 2010 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 2010 or 30 June 2009.  The consolidated financial statements for the year to 30 June 2010 have been prepared in accordance with the recognition and measurement principles of applicable International Financial Reporting Standards, IFRS's, as issued by the International Accounting Standards Board and the Alternative Investment Market (AIM) Rules for Companies.

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 2009 on a consistent basis, other than the adoption of IFRS 8 'Operating Segments' which was implemented at 1 July 2009 and IAS 31 'Interests in Joint Ventures' which has been adopted following the acquisition of a joint venture entity, which is accounted for on the equity basis.  The accounts for the year ended 30 June 2009 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.

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.   Segmental analysis

With effect from 1 July 2009, the group adopted IFRS 8 'Operating Segments'.  This accounting standard requires a 'through the eyes of management' approach under which segment information is presented on the same basis as that used for internal reporting purposes.  For internal reporting, F W Thorpe is organised into six operating segments based on the products and customer base in the lighting market - the largest businesses are Thorlux which manufactures professional lighting systems for industrial, commercial and controls market, and Mackwell which manufactures emergency lighting components.  The four remaining operating segments have been aggregated into the "other companies" reportable segment based upon their size, which represents the entities Compact Lighting, Philip Payne, Sugg Lighting and Solite Europe. 

F W Thorpe's chief operating decision maker 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 underlying operating profit.  The segmental information for the year ended 30 June 2009 has been restated to show Mackwell and other operating segments separately as a result of adopting IFRS 8.

Notes (continued)

2.   Segmental Analysis (continued)

	Thorlux	Mackwell	Other	Inter-	Total
			Companies	Segment
				Adjust-
				ments
	£'000	£'000	£'000	£'000	£'000
Year to 30 June 2010
Revenue to external customers	39,386	8,692	7,564	-	55,642
Revenue to other group companies	84	2,581	395	(3,060)	-
	______	______	______	______	______
Total revenue	39,470	11,273	7,959	(3,060)	55,642
	______	______	______	______	______
Operating profit	9,792	572	539	285	11,188
	______	______	______	______	______
Year to 30 June 2009
Revenue to external customers	37,492	8,776	7,088	-	53,356
Revenue to other group companies	104	2,915	354	(3,373)	-
	______	______	______	______	______
Total revenue	37,596	11,691	7,442	(3,373)	53,356
	______	______	______	______	______
Operating profit	9,119	1,168	(27)	410	10,670
	______	______	______	______	______

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 and adjustments to investment provisions relating to group companies.

Notes (continued)

3.   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.  There were no movements of treasury shares during the year.

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 does not have any dilutive potential ordinary shares; hence there is no difference between basic earnings per share and dilutive earnings per share.  

Earnings per share are computed as follows:

	2010	2009
Weighted average number of ordinary shares	11,723,559	11,864,901
Basic earnings per share (pence)	70.1	71.4
Diluted earnings per share (pence)	70.1	71.4

4.   Dividends

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

	2010	2009
Dividends paid (per share)
Final dividend 2009	12.10p	12.10p
Special dividend 2009	12.00p	-
Interim dividend 2010	4.10p	4.10p
Total	28.20p	16.20p

A final dividend of 12.6p (2009: final of 12.1p and special of 12.0p) per share is proposed and, if approved, will be paid on 18 November 2010 to shareholders on the register on 22 October 2010.  Ex dividend date, 20 October 2010. 

Dividends proposed (per share)
Final dividend 2010	12.60p	12.10p
Special final dividend 2009	-	12.00p

	2010	2009
	£'000	£'000
Dividends paid
Final and special dividend 2009	2,825	1,439
Interim dividend 2010	481	488
Total	3,306	1,927

Notes (continued)

4.     Dividends (continued)                        

Dividends proposed
Final dividend 2010 (2009: final dividend)	1,477	1,418
Special final dividend 2009	-	1,407
Total	1,477	2,825

5.   Short term financial assets

Short term financial assets comprise cash held on deposits maturing between 3 and 12 months.

6.   Taxation

The effective tax rate is 27.1% (2009: 26.6%) due to taxable deductions, primarily in relation to research and development costs and smaller companies tax rate.

7.   Cash generated from operations

	2010	2009
	£'000	£'000
Profit before tax expense	11,277	11,547
Depreciation charge	1,049	1,019
Amortisation of intangibles	906	859
Loss/(profit) on disposal of property, plant and equipment	(31)	3
Finance income (net)	(116)	(877)
Retirement benefit contributions in excess of current and past service charge	(826)	(336)
Share of loss from joint venture	27	-
Changes in working capital
- Inventories	(905)	(1,773)
- Trade and other receivables	(1,903)	1,368
- Trade and other payables	1,996	(1,246)
Cash generated from operations	11,474	10,564

8.   Intangible assets

	£'000
Intangible assets at 1 July 2009	2,575
Purchase of intangible assets	1,014
Amortisation of intangible assets	(906)
Intangible assets at 30 June 2010	2,683

Notes (continued)

9.   Property, plant and equipment

	£'000
Property, plant and equipment at 1 July 2009	10,590
Purchase of property, plant and equipment	1,124
Depreciation charge	(1,049)
Net book value of disposals	(31)
Property, plant and equipment at 30 June 2010	10,634

10.  Movements in equity

Share capital and reserves during the year are as follows:

	£'000
Share capital at 1 July 2009 and 30 June 2010	1,189
Share capital held in treasury at 1 July 2009 and 30 June 2010	17
The number of shares held in treasury at 1 July 2009 and 30 June 2010 is 170,000.

	Share	Capital
	premium	redemption	Retained
	account	reserve	earnings
	£'000	£'000	£'000
At 1 July 2009	656	137	43,775
Profit for the year	-	-	8,216
Net actuarial loss on pension scheme	-	-	(33)
Net revaluation of available for sale assets	-	-	4
Dividends paid	-	-	(3,306)
At 30 June 2010	656	137	48,656

Notes (continued)

11.   Joint Venture

During the year the Group established a joint venture in Australia with its local agent.  The venture is jointly controlled with equal voting rights with the Group holding a 51% interest.  Thorlux Lighting Australasia Pty Ltd is registered in Queensland and operates from a sales office in Melbourne.  The group has applied the equity method of accounting to recognise this interest. 

12.   Post balance sheet event

After the year end a new Finance Act was enacted which reduced the rate of Corporation Tax with effect from 1 April 2011 to 27%.  This will have an effect on the deferred tax assets and liabilities in the future, although it is neither material nor significant.

13.   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.

14.   Annual report and accounts

The annual report and accounts will be sent to shareholders on 19 October 2010 and will be available on the Group's website (www.fwthorpe.co.uk) from that time. The Group will hold its AGM on 11 November 2010.

 

END

 

 

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