REG - Thorpe(F.W.) PLC - Final Results
12/10/2023 07:00
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RNS Number : 8509P Thorpe(F.W.) PLC 12 October 2023
Results
for the year ended 30 June 2023
FW Thorpe Plc - a group of companies that design, manufacture and supply
professional lighting systems - is pleased to announce its preliminary results
for the year ended 30 June 2023.
Key points:
Continuing operations 2023 2022 Exc. SchalLED/ Zemper acquisition
Revenue £176.7m £143.7m 23.0% increase 10.7% increase
Operating profit (before acquisition adjustments)* £29.8m £25.8m 15.6% increase 7.9% increase
Operating profit £27.8m £24.7m 12.6% increase 8.8% increase
Profit before tax £26.9m £24.1m 11.7% increase 10.2% increase
Basic earnings per share 18.72p 17.16p 9.1% increase 9.2% increase
* Acquisition adjustments are amortisation of acquisition related intangible
assets
· Total interim and final dividend of 6.46p (2022: 6.15p) - an
increase of 5.0%
· Final dividend of 4.84p (2022: 4.61p) - an increase of 5.0%
· Strong revenue growth across the Group, both organically with
service levels returning to normal and from the contributions of acquisitions
· Solid operating profit growth despite inflationary cost pressures
· Expanded our presence in Germany with the addition of SchahlLED
in September 2022
· Net cash generated from operating activities remained strong -
£31.9m (2022: £19.7m)
· Solid start to 2023/24, with operating performance in line with
the start of the prior year
This announcement contains inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 (MAR) as supplemented by The Market Abuse
(Amendment) (EU Exit) Regulations (SI 2019/310) ("UK MAR").
For further information please contact:
FW Thorpe Plc
Mike Allcock - Chairman, Joint Chief Executive 01527 583200
Craig Muncaster - Joint Chief Executive, Group Financial Director 01527 583200
Singer Capital Markets - Nominated Adviser
James Moat / Sam Butcher 020 7496 3000
Chairman's statement
Financial year 2022/23 was to a large extent less turbulent than the previous
few years, notwithstanding some special challenges to deal with upon occasion.
It has been the intention of the Board to make no further acquisitions whilst
the Group builds its cash reserves and fully integrates recent acquisitions,
in order to formulate more efficient Group activities whilst not losing the
ability for individual companies to be autonomous and flourish.
Financial performance overall was strong, with significant organic revenue
increases for most companies, primarily due to much improved material
availability and the consequential fulfilment of the previous year's order
backlog. All companies wrestled with inflationary effects on material and
labour costs, and some were better able than others to adjust selling prices
to maintain margins.
Group companies' service levels have returned to being good, and the order
book and forecast situation is generally fine. Whilst material inflation is
showing signs of slowing or even reversing, wage and salary inflation remains
high.
The Annual Report and Accounts contains a more detailed appraisal of each
company's individual achievements and challenges.
Group results
Group revenue increased by 23% to £176.7m (an organic 11% increase excluding
the SchalLED and Zemper acquisitions) whilst operating profit increased by 13%
to £27.8m. Operating profit before acquisition adjustments, removing the
impact of amortisation of intangible assets established at purchase, grew 16%
to £29.8m.
Revenue and operating profits were supported by the recent acquisitions of
Zemper and SchahlLED. Last year's report included only nine months of Zemper's
figures, with nine months of SchahlLED's figures included this year. Excluding
Zemper and SchahlLED acquisition effects, for comparison's sake, like-for-like
revenue increased by 11% to £159.1m and operating profit by 9% to £26.9m.
General overview
The Group's stand-out performer this year was Thorlux Lighting, which
benefitted from its ability to deliver its order backlog, which had previously
been caused by component shortages, especially microchips and electronic
components.
The Dutch operations made a wonderful contribution overall, although their
recent growth trajectory took a bit of a breather this year, with the
companies struggling to grow revenue, whilst Lightronics also saw its margins
squeezed by inflationary pressures.
Portland Lighting's profit reduced significantly because the company lacked a
typical large roll-out project for outdoor retail sign lighting and because
business costs increased as the company built its product range and operations
to diversify into road sign lighting - namely with the Portland Traffic
division. This new division has developed well, won some successful small
orders and will make a more significant contribution to 2023/24 figures.
TRT Lighting increased its profit but, at only a 3% profit-to-sales ratio,
profit remains significantly below Group expectations and must improve. In
recent months the TRT Board structure has been altered and strengthened, with
a new operations director and new sales director, and the sales team has been
refreshed. TRT is also developing some interesting technical innovations to
enhance its product portfolio. These changes have started well and will result
in further improved performance in the current financial year.
The Group welcomed Zemper for its first full year - a year of getting to know
each other better and a year for strategy and future planning. Zemper's
facility in Spain is a credit to its founding family's professionalism. The
company is very self-sufficient, with ownership of all its intellectual
property, and with its own laboratory test facilities and state-of-the-art
manufacturing equipment. In the year there were several exchange visits
between Group company engineers and executives, and some significant
technological projects are underway to harness Zemper's design, technical and
manufacturing know-how. These projects will support the Group's electronic
operations and its aspirations for premium connected technology in the
emergency lighting sector.
Zemper's profit contribution to the Group in 2022/23 was marginally lower than
forecast, with orders down in the first half year; however, various new
products and marketing supported growth in the second half to recover the full
year's numbers to be in line with the prior year's numbers. There was notable
growth in both the French and Belgian markets - which, prior to Zemper's
acquisition, were largely untapped by the Group - whilst the local Spanish
market was tighter than in the previous year.
SchahlLED, since joining the Group this financial year, has continued to grow
its customer base, primarily in the German market, for high technology
SmartScan industrial luminaires. It is a pleasure to welcome the SchahlLED
team, which excels at rooting out discerning industrial customers willing to
pay for high quality luminaires with the latest Thorlux energy saving and
controls technology. In the year, SchahlLED added nine months of revenue to
the consolidated figures of £16.9m and operating profit of £2.3m before
acquisition adjustments.
The Group's joint venture with Ratio Electric BV commenced with the opening of
a UK operation close to the Group HQ in Redditch, headed by a young Thorlux
design engineer. Investments in the year have already resulted in the UK
operation's own sales and marketing team, a website, preliminary manufacturing
capabilities, and a new pillar standalone-style twin 22kW electric vehicle
(EV) charger - the Ratio io7 - available for sale by all Group companies. The
charger, developed with common components from a Thorlux outdoor luminaire, is
widely recognised as an innovative and stylish product; it is suitable for
many applications but is mainly targeted at workplace charging, which matches
the Group's core market of professional users. Availability of the new EV
charging pillar has been limited due to production capacity restraints, but
Ratio hopes to be able to better satisfy the Group's sales teams in coming
months, who are chomping at the bit to get going. In the Netherlands, at the
Ratio HQ, operations have been adjusting to the fast moving EV marketplace,
and investments in smart charging technology and connectivity have dented
returns.
For many years some shareholders have questioned the rationale behind the
Group holding large cash reserves. The Board chooses to maintain a large
reserve as one never knows what is around the corner, as proven recently by
the COVID lockdown. The Board remains prudent, with no plans to move away from
this philosophy, and will not fund further growth unless it can do so from
cash reserves. Although reserves have reduced with recent acquisitions
activity and with stock control complexities, even with future earn-out
provisions and commitments the Board remains confident that the current
£35.0m at the year end, which remains well above its desirable minimum
target, will more than suffice.
There are targets around the Group to reduce stock - of components, in
particular. The easing of the recent supply shortage situation has now
inevitably created an overstock in most Group companies and elsewhere
throughout the extensive supply chain. Stock levels are being actively
managed, in particular to ensure agility in Group businesses and to reduce
possible obsolescence. Whilst stock increased last year from £32.8m to
£33.4m, the number reduced from an interim high of £37.9m and will fall
further.
On the capital investment front, I am pleased to report that investment at
Famostar has completed, with a new substantial factory/warehouse extension
(£1.9m) setting up Famostar for growth for some years to come. The extension
was almost entirely funded by savings from closing external rented
accommodation that had been used for storing stock. The new facility has solar
PV, in keeping with the Group's sustainability targets, the investment having
an excellent payback period due to recent increases in energy costs.
At Zemper, the Group has invested in a new and dedicated injection moulding
shop (£0.7m) next to the current electronics factory in Ciudad Real, moving
plant from an older facility some distance away. Opened in July 2023, this new
factory has already started to produce some critical parts for the Thorlux
SmartScan wireless transmitter housing and has capacity to take on more if
this idea of insourcing becomes attractive. The new plant has the capacity to
increase Zemper's productivity by 50%, and having local production cuts costs
and CO(2) emissions. The factory also has its own solar PV array, which is
particularly powerful, of course, in Spain. Finally, Zemper has purchased a
new electronic production line to improve its capacity.
Sustainability is one of the key pillars for the Group, one that interests
many of its shareholders and will continue to be a focus. All Group companies
are now certified independently to ISO 14001, an international standard for
providing a systematic framework for the continuous improvement of a company's
environmental performance. Due to the Group's renowned carbon offsetting
programme on its own land in Devauden, Wales, the Group is now independently
certified as carbon neutral for Scope 1 and 2 emissions (those emissions
produced by companies' own activities such as use of electricity, gas and
diesel). To date, since the programme's inception in 2009, the Group has
planted an amazing 179,412 trees and has now run out of land. Therefore, in
July 2023, the Group purchased a further 195 acres of land, in Longtown,
Hereford, which should satisfy its carbon offsetting plans for the next decade
or more.
Beyond carbon offsetting, the Group continually looks to lower its carbon
footprint; this is good news for the environment but also, in most cases,
lowers Group operating costs. All companies within the Group have specific
KPIs that focus on general carbon reduction objectives and increasingly move
towards the circularity of products, the impacts of the materials selected,
and reducing waste.
Early in September 2023 the Group showed its commitment to achieving net-zero,
by signing a Science Based Targets initiative (SBTi) letter of commitment and
therefore commencing the process. The Group's own emissions data has been well
accounted for many years as part of its carbon offsetting programme, but
net-zero takes a large step forward by also measuring the impact of the
Group's international supply chain and the impacts of the Group's products
when installed and in use at customers' premises. The Group has been supported
throughout the process by third party consultants, but nevertheless, to
calculate the required emissions for all Group activities, upstream and
downstream, has been an enormous task.
Now that emissions have been calculated, the SBTi commitment letter defines
both the Group's near term (2030) targets and net-zero date. By 2030 the Group
has set a target, relative to the baseline year 2020/21, to reduce Scope 1 and
2 emissions by 42%, and Scope 3 emissions by 51.6% per £m revenue. This will
be done in a variety of ways but, in particular, by decarbonisation of Group
resources and energy supplies - for example reducing gas use and switching to
greener sources such as solar PV supplied electricity, using electric vehicles
and making Group products even more efficient - together with increasing the
use of SmartScan energy saving technology. The ultimate objective is to
achieve net-zero, and the Group's target date is 2040 (ten years ahead of the
UK Government's commitment); by this date the Group needs to have reduced its
emissions by 90% (allowing for offsetting the remaining 10%). Watch this
space.
To finish on a high, Thorlux is very proud to have successfully illuminated
the famous Big Ben - or, more correctly, the Elizabeth Tower - in the City of
London. Big Ben is one of the most photographed and most iconic buildings in
the world. Thorlux developed special products between 2016 and 2022 which
provide colour-tuneable illumination of all four clock faces and the balconies
above, a new Ayrton Light (a special lighthouse style lamp used to indicate
when Parliament is sitting), illumination of the clock mechanism, the bells,
including floodlighting the Big Ben bell itself, all internal rooms, and the
340 steps, and all emergency lighting. SmartScan features heavily in the
controls for ancillary areas. The project has been kept secret until now, even
during the 2023 New Year celebrations. This year's Annual Report and Accounts
is therefore adorned with some iconic Thorlux installation photographs.
Personnel
I would like to thank all Group employees for their dedication and commitment
throughout the financial year. I would also like to thank, again, David Taylor
and Tony Cooper, who, as retiring directors, have spent a total of over 65
years serving the Group; I wish them a long and happy retirement.
Dividend
Performance as a whole for the year to 30 June 2023 allows the Board to
recommend an increased final dividend of 4.84p per share (2022: 4.61p), which
gives a total for the year of 6.46p (2022: 6.15p excluding special
dividend).
Outlook
All Group companies are forecasting some sales growth and all are charged with
keeping costs under control and a close eye on sales margins. The Board would
like to see further improvements in profitability - especially at the lower
performing companies in the Group, which need to step up and do their bit. As
the Group becomes larger, costs of managing non-value-added activities become
larger too; this means Group companies need to work harder to achieve a good
return on sales.
The Group nowadays has excellent resilience to changing conditions, having a
firm footprint in numerous geographical territories and across many market
sectors.
As a whole, the outlook from the sales teams is positive. At the start of this
new financial year, orders are slightly lower than in the same time period
last year, and there is some evidence of projects slowing. Costs are under
control and some margin improvements have been made, which will provide an
improved return on sales. Revenues, however, are expected to see slower growth
than in the recent few years.
Mike Allcock
Chairman and Joint Chief Executive
12 October 2023
Consolidated Results
Consolidated Income Statement
For the year ended 30 June 2023
Notes 2023 2022
£'000 £'000
Continuing operations
Revenue 2 176,749 143,715
Cost of sales (98,891) (80,440)
Gross profit 77,858 63,275
Distribution costs (19,214) (15,501)
Administrative expenses (31,292) (23,482)
Other operating income 480 423
Operating profit 27,832 24,715
Finance income 716 527
Finance expense (1,094) (1,367)
Share of (loss)/profit of joint ventures (520) 228
Profit before income tax 26,934 24,103
Income tax expense 3 (5,000) (4,030)
Profit for the year 21,934 20,073
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 2023 2022
pence pence
- Basic 8 18.72 17.16
- Diluted 8 18.70 17.13
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2023
Notes 2023 2022
£'000 £'000
Profit for the year: 21,934 20,073
Other comprehensive income/(expenses)
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations 231 (268)
231 (268)
Items that will not be reclassified to profit or loss
Revaluation of financial assets at fair value through other comprehensive (105) (57)
income
Movement on associated deferred tax 26 14
Actuarial (loss)/gain on pension scheme (123) 953
Movement on unrecognised pension scheme surplus 177 (1,143)
(25) (233)
Other comprehensive income/(expense) for the year, net of tax 206 (501)
Total comprehensive income for the year 22,140 19,572
Consolidated Statement of Financial Position
For the year ended 30 June 2023
2023 2022
£'000 £'000
Assets
Non-current assets
Property, plant and equipment 5 38,763 33,818
Intangible assets 6 70,891 51,865
Investments in subsidiaries - -
Investment property 1,986 1,984
Financial assets at amortised cost 1,587 1,124
Equity accounted investments and joint arrangements 5,592 6,112
Financial assets at fair value through other comprehensive income 3,364 3,470
Deferred income tax assets 382 120
Total non-current assets 122,565 98,493
Current assets
Inventories 33,437 32,758
Trade and other receivables 35,733 33,018
Financial assets at amortised cost 1,266 1,800
Short-term financial assets 7 4 5,079
Cash and cash equivalents 35,013 35,505
Total current assets 105,453 108,160
Total assets 228,018 206,653
Liabilities
Current liabilities
Trade and other payables (37,457) (35,801)
Financial liabilities (1,435) (332)
Lease liabilities (812) (506)
Current income tax liabilities (1,143) (641)
Total current liabilities (40,847) (37,280)
Net current assets 64,606 70,880
Non-current liabilities
Other payables (11,987) (12,880)
Financial liabilities (1,461) (1,830)
Lease liabilities (3,822) (2,510)
Provisions for liabilities and charges (3,299) (2,536)
Deferred income tax liabilities (6,261) (4,264)
Total non-current liabilities (26,830) (24,020)
Total liabilities (67,677) (61,300)
Net assets 160,341 145,353
Equity
Issued share capital 1,189 1,189
Share premium account 2,976 2,827
Capital redemption reserve 137 137
Foreign currency translation reserve 2,039 1,808
Retained earnings
At 1 July 139,392 131,631
Profit for the year attributable to the owners 21,934 20,073
Other changes in retained earnings (7,326) (12,312)
154,000 139,392
Total equity 160,341 145,353
Consolidated Statement of Changes in Equity.
For the year ended 30 June 2023
Notes Issued Share Capital Foreign currency translation reserve Retained Total
share premium redemption £'000 earnings equity
capital account reserve £'000 £'000
£'000 £'000 £'000
Balance at 1 July 2021 1,189 1,960 137 2,076 131,631 136,993
Comprehensive income
Profit for the year to 30 June 2022 - - - - 20,073 20,073
Actuarial gain on pension scheme - - - - 953 953
Movement on unrecognised pension
scheme surplus - - - - (1,143) (1,143)
Revaluation of financial assets at fair value through other comprehensive - - - - (57) (57)
income
Movement on associated deferred tax - - - - 14 14
Exchange differences on translation of
foreign operations - - - (268) - (268)
Total comprehensive income - - - (268) 19,840 19,572
Transactions with owners
Shares issued from exercised options - 867 - - - 867
Dividends paid to shareholders 4 - - - - (12,079) (12,079)
Total transactions with owners - 867 - - (12,079) (11,212)
Balance at 30 June 2022 1,189 2,827 137 1,808 139,392 145,353
Comprehensive income
Profit for the year to 30 June 2023 - - - - 21,934 21,934
Actuarial loss on pension scheme - - - - (123) (123)
Movement on unrecognised pension - - - 177 177
scheme surplus
Revaluation of financial assets at fair value through other comprehensive - - - - (105) (105)
income
Movement on associated deferred tax - - - - 26 26
Exchange differences on translation of - - - 231 - 231
foreign operations
Total comprehensive income - - - 231 21,909 22,140
Transactions with owners
Shares issued from exercised options - 149 - - - 149
Dividends paid to shareholders 4 - - - - (7,301) (7,301)
Total transactions with owners - 149 - - (7,301) (7,152)
Balance at 30 June 2023 1,189 2,976 137 2,039 154,000 160,341
Consolidated Statement of Cash Flows
For the year ended 30 June 2023
2023 2022
£'000 £'000
Cash flows from operating activities
Cash generated from operations 9 36,216 24,789
Tax paid (4,341) (5,049)
Net cash generated from operating activities 31,875 19,740
Cash flows from investing activities
Purchases of property, plant and equipment (7,739) (5,510)
Proceeds from sale of property, plant and equipment 535 423
Purchases of intangible assets (2,255) (2,366)
Purchases of subsidiaries (net of cash acquired) (12,602) (14,625)
Purchase of shares in subsidiaries (6,445) (15,219)
Purchase of investment property (22) (36)
Net sale of financial assets at fair value through 1 268
Other Comprehensive Income
Investment in joint venture - (4,958)
Property rental and similar income 93 113
Dividend income 209 246
Net withdrawal of short-term financial assets 5,075 18,524
Interest received 434 218
Repayment of loans 1,813 -
New loans granted (1,748) (806)
Net cash used in investing activities (22,651) (23,728)
Cash flows from financing activities
Net proceeds from the issuance of ordinary shares 149 867
Addition of lease liabilities 203 236
Proceeds from borrowings 1,039 -
Repayment of borrowings (2.532) (1,271)
Payment of lease liabilities (789) (535)
Payment of interest (339) (139)
Dividends paid to Company's shareholders 4 (7,301) (12,079)
Net cash used in financing activities (9,570) (12,921)
Effects of exchange rate changes on cash (146) 146
Net decrease in cash in the year (492) (16,763)
Cash and cash equivalents at beginning of year 35,505 52,268
Cash and cash equivalents at end of year 35,013 35,505
Notes
1 Basis of preparation
The consolidated and company financial statements of FW Thorpe Plc have been
prepared in accordance with 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 financial statements have been prepared on a going concern basis, under
the historical cost convention except for the financial instruments measured
at fair value either through other comprehensive income or profit and loss per
the provisions of IFRS 9 and contingent consideration that are measured at
fair value.
There are no other standards that are not yet effective that are expected to
have a material impact on the Group in the current or future reporting periods
and on foreseeable future transactions.
The financial statements are presented in Pounds Sterling, which is the
Company's functional and presentation currency, rounded to the nearest
thousand.
The preparation of financial information in conformity with the basis of
preparation described above requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in the
process of applying the Company's and Group's accounting policies.
The Company has elected to take the exemption under section 408 of the
Companies Act 2006 from presenting the Company income statement.
The directors confirm they are satisfied that the Group and Company have
adequate resources, with £35.0m cash to continue in business for the
foreseeable future, including the affect of increased costs caused by the
on-going Ukraine and Russia conflict, where the Group has no sales, and other
global events. The directors have also produced a severe, but plausible
downside scenario that demonstrates that the Group could cover its cash
commitments over the following year from approving these accounts. For this
reason, the directors continue to adopt the going concern basis in preparing
the accounts.
The financial information set out in this document does not constitute the
statutory financial statements of the Group for the year end 30 June 2023 but
is derived from the Annual Report and Accounts 2023. The auditors have
reported on the annual financial statements and issued an unqualified opinion.
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 FW Thorpe is organised
into twelve 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 business acquired through acquisition of Lumen Intelligence Holding GmbH
in September 2022 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 the Zemper Group.
The seven remaining operating segments have been aggregated into the "other
companies" reportable segment based upon their size, comprising the entities
Philip Payne Limited, Solite Europe Limited, Portland Lighting Limited, TRT
Lighting Limited, Thorlux Lighting 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 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 Netherlands companies Zemper Group Other Inter- Total
£'000 £'000 £'000 companies segment continuing
£'000 adjustments operations
£'000 £'000
Year to 30 June 2023
Revenue to external customers 101,859 36,226 19,328 19,336 - 176,749
Revenue to other group companies 3,601 417 - 4,667 (8,685) -
Total revenue 105,460 36,643 19,328 24,003 (8,685) 176,749
EBITDA 21,458 7,952 4,205 2,392 588 36,595
Depreciation and amortisation 4,212 983 2,307 1,261 - 8,763
Operating profit before acquisition adjustments 18,062 7,187 2,801 1,131 588 29,769
Operating profit 17,246 6,969 1,898 1,131 588 27,832
Net finance expense (378)
Share of loss of joint ventures (520)
Profit before income tax 26,934
Included in the Thorlux segment are additional revenues from SchahlLED of
£16.9m and operating profits of £1.4m. Acquisition adjustments includes
amortisation of intangible assets.
Year to 30 June 2022
Revenue to external customers 78,912 34,676 14,152 15,975 - 143,715
Revenue to other group companies 5,171 377 - 5,794 (11,342) -
Total revenue 84,083 35,053 14,152 21,769 (11,342) 143,715
EBITDA 16,887 8,514 3,107 2,692 506 31,706
Depreciation and amortisation 3,378 1,043 1,525 1,045 - 6,991
Operating profit before acquisition adjustments 13,509 7,846 2,242 1,647 506 25,750
Operating profit 13,509 7,471 1,582 1,647 506 24,715
Net finance expense (840)
Share of profit of joint ventures 228
Profit before income tax 24,103
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 elimination of
profit on transfer of assets between Group companies.
(b) Geographical analysis
The Group's business segments operate in five main areas, the UK, the
Netherlands, Germany, 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.
2023 2022
£'000 £'000
(Restated)*
UK 89,917 83,242
Netherlands 31,845 30,323
Germany 21,548 8,205
Rest of Europe 30,039 19,139
Rest of the World 3,400 2,806
176,749 143,715
* Figures are restated as a result of inclusion of Germany as separate
geographical segment in the current year.
3 Income Tax Expense
Analysis of income tax expense in the year:
2023 2022
£'000 £'000
Current tax
Current tax on profits for the year 5,515 4,717
Adjustments in respect of prior years (313) (279)
Total current tax 5,202 4,438
Deferred tax
Origination and reversal of temporary differences (202) (408)
Total deferred tax (202) (408)
Income tax expense 5,000 4,030
The tax assessed for the year is lower (2022: lower) than the standard rate of
corporation tax in the UK of 20.50%
(2022: 19.00%). The differences are explained below:
2023 2022
£'000 £'000
Profit before income tax 26,934 24,103
Profit on ordinary activities multiplied by the standard rate in the UK of 5,521 4,580
20.5% (2022: 19.0%)
Effects of:
Expenses not deductible for tax purposes 1,150 329
Accelerated tax allowances and other timing differences (145) (348)
Adjustments in respect of prior years (313) (279)
Patent box relief (1,718) (812)
Foreign profit taxed at higher rate 505 560
Tax charge 5,000 4,030
The effective tax rate was 18.56% (2022: 16.72%). Adjustments in respect of
prior years relate to refunds received for prudent assumptions on additional
investment allowances and patent box relief in the tax calculations.
The UK corporation tax rate increased from 19% to 25% from 1 April 2023, which
was substantively enacted in May 2021 and an average standard rate of 20.50%
is applicable to the Company during the current year. Deferred tax assets and
liabilities have been calculated based on a rate at which they are expected to
crystallise.
4 Dividends
Dividends paid during the year are outlined in the tables below:
Dividends paid (pence per share) 2023 2022
Final dividend 4.61 4.31
Special dividend (final) - 2.20
Interim dividend 1.62 1.54
Special dividend (interim) - 2.27
Total 6.23 10.32
A final dividend in respect of the year ended 30 June 2023 of 4.84p per share,
amounting to £5,674,000 (2022: £5,403,000) is to be proposed at the Annual
General Meeting on 16 November 2023 and, if approved, will be paid on 24
November 2023 to shareholders on the register on 27 October 2023. The
ex-dividend date is 26 October 2023. These financial statements do not reflect
this dividend payable.
Dividends proposed (pence per share) 2023 2022
Final dividend 4.84 4.61
Dividends paid 2023 2022
£'000 £'000
Final dividend 5,403 5,043
Special dividend (final) - 2,574
Interim dividend 1,898 1,803
Special dividend (interim) - 2,659
Total 7,301 12,079
Dividends proposed 2023 2022
£'000 £'000
Final dividend 5,674 5,403
5 Property, Plant and Equipment
Freehold land and buildings Plant and Right- Total
£'000 equipment of-use £'000
£'000 assets
£'000
Cost
At 1 July 2022 25,354 33,795 4,356 63,505
Acquisition of subsidiaries* - 50 134 184
Additions 2,892 4,847 1,751 9,490
Disposals - (970) (278) (1,248)
Currency translation (27) (33) (21) (81)
At 30 June 2023 28,219 37,689 5,942 71,850
Accumulated depreciation
At 1 July 2022 5,477 22,518 1,692 29,687
Acquisition of subsidiaries* - - 38 38
Charge for the year 738 2,937 614 4,289
Disposals - (685) (220) (905)
Currency translation (4) (12) (6) (22)
At 30 June 2023 6,211 24,758 2,118 33,087
Net book amount
At 30 June 2023 22,008 12,931 3,824 38,763
* Acquisition of subsidiaries are the assets acquired from the purchase of the
Lumen companies with a fair value of £146,000.
Freehold land and buildings Plant and Right- Total
£'000 equipment of-use £'000
£'000 assets
£'000
Cost
At 1 July 2021 22,094 27,662 895 50,651
Acquisition of subsidiaries* 975 3,965 3,534 8,474
Additions 2,241 3,037 232 5,510
Disposals (1) (884) (303) (1,188)
Currency translation 45 15 (2) 58
At 30 June 2022 25,354 33,795 4,356 63,505
Accumulated depreciation
At 1 July 2021 4,638 17,345 417 22,400
Acquisition of subsidiaries* 234 3,175 1,062 4,471
Charge for the year 600 2,703 456 3,759
Disposals - (714) (248) (962)
Currency translation 5 9 5 19
At 30 June 2022 5,477 22,518 1,692 29,687
Net book amount
At 30 June 2022 19,877 11,277 2,664 33,818
* Acquisition of subsidiaries are the assets acquired from the purchase of the
Zemper companies with a fair value of £4,003,000
6 Intangible Assets
Group 2023 Goodwill Development Technology Brand Customer Software Patents Fishing rights Total
name
£'000 costs £'000
relationship £'000 £'000 £'000 £'000
£'000
£'000 £'000
Cost
At 1 July 2022 32,778 16,320 2,895 3,845 9,460 3,344 159 182 68,983
Acquisition of subsidiaries* 14,624 - - 1,354 5,759 38 - - 21,775
Additions - 1,874 - - - 381 - - 2,255
Disposals - - - - - (12) - - (12)
Write-offs - (4,228) - - - - - - (4,228)
Currency translation (399) (10) (2) (35) (141) (4) - - (591)
At 30 June 2023 47,003 13,956 2,893 5,164 15,078 3,747 159 182 88,182
Accumulated amortisation
At 1 July 2022 252 10,009 2,495 1,273 473 2,460 156 - 17,118
Charge for the year - 2,152 151 434 1,350 367 - - 4,454
Disposals - - - - - (1) - - (1)
Write-offs - (4,228) - - - - - - (4,228)
Currency translation (19) (8) (3) (5) (17) - - - (52)
At 30 June 2023 233 7,925 2,643 1,702 1,806 2,826 156 - 17,291
Net book amount
At 30 June 2023 46,770 6,031 250 3,462 13,272 921 3 182 70,891
* Acquisition of subsidiaries are the assets acquired from the purchase of the
Lumen companies with a fair value of £7,151,000, excluding goodwill.
Write-offs relate to development assets where no further economic benefits
will be obtained.
Group 2022 Goodwill Development Technology Brand Customer Software Patents Fishing rights Total
name
£'000 costs £'000
relationship £'000 £'000 £'000 £'000
£'000
£'000 £'000
Cost
At 1 July 2021 14,431 7,871 2,846 1,257 - 2,811 150 182 29,548
Acquisition of subsidiaries* 18,320 6,346 45 2,588 9,468 266 6 - 37,039
Additions - 2,096 - - - 267 3 - 2,366
Currency translation 27 7 4 - (8) - - - 30
At 30 June 2022 32,778 16,320 2,895 3,845 9,460 3,344 159 182 68,983
Accumulated amortisation
At 1 July 2021 241 4,415 2,179 1,006 - 1,852 150 - 9,843
Acquisition of subsidiaries* - 3,770 - - - 250 6 - 4,026
Charge for the year - 1,820 308 262 465 358 - - 3,213
Currency translation 11 4 8 5 8 - - - 36
At 30 June 2022 252 10,009 2,495 1,273 473 2,460 156 - 17,118
Net book amount
At 30 June 2022 32,526 6,311 400 2,572 8,987 884 3 182 51,865
* Acquisition of subsidiaries are the assets acquired from the purchase of the
Zemper companies with a fair value of £14,693,000, excluding goodwill.
7 Short-Term Financial Assets
2023 2022
£'000 £'000
Beginning of year 5,079 23,603
Net withdrawals (5,075) (18,524)
4 5,079
The short-term financial assets consist of term cash deposits 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 2023 2022
Weighted average number of ordinary shares in issue 117,199,805 116,953,866
Profit attributable to equity holders of the Company (£'000) 21,934 20,073
Basic earnings per share (pence per share) total 18.72 17.16
Diluted 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, plus the number of shares earnt for share
options where performance conditions have been achieved.
Diluted 2023 2022
Weighted average number of ordinary shares in issue (diluted) 117,294,937 117,209,308
Profit attributable to equity holders of the Company (£'000) 21,934 20,073
Diluted earnings per share (pence per share) total 18.70 17.13
9 Cash Generated from Operations
2023 2022
£'000 £'000
Profit before income tax 26,934 24,103
Depreciation charge 4,289 3,759
Depreciation of investment property 20 19
Amortisation of intangibles 4,454 3,213
Profit on disposal of property, plant and equipment (192) (197)
Net finance expense 378 855
Retirement benefit contributions less current 54 (190)
and past service charge
Share of joint venture loss/(profit) 520 (228)
Research and development expenditure credit (382) (306)
Effects of exchange rate movements 952 (520)
Changes in working capital
- Decrease/(increase) in inventories 3,117 (8,986)
- (Increase)/decrease in trade and other receivables (98) (603)
- (Decrease)/increase in payables and provisions (3,830) 3,870
Cash generated from operations 36,216 24,789
10 Business Combination
On 23 September 2022, the Group acquired 80% of the share capital and hence
control of Lumen Intelligence Holding GmbH, a company that holds 100% equity
interest in SchahlLED Lighting GmbH, a turnkey provider of intelligent energy
saving lighting products for the industrial and logistics sectors. The company
was acquired for an initial consideration of €14.6m (£12.9m). There is a
fixed commitment to acquire the remaining shares, based on current best
estimates, a further €7.5m (£6.6m) could be payable, which is subject to
future performance conditions. Amounts recognised in respect of this
acquisition are shown below:
€'000 £'000
Intangible assets 8,124 7,151
Property, plant & equipment 57 50
Right of use assets 109 96
Deferred tax assets 150 132
Inventories 4,450 3,917
Trade and other receivables 3,856 3,394
Cash 324 286
Trade and other payables (4,466) (3,931)
Financial liabilities (2,563) (2,256)
Lease liabilities (549) (483)
Current income tax liabilities (729) (642)
Provisions for liabilities and charges (800) (704)
Deferred tax Liabilities (2,428) (2,137)
Total identifiable assets 5,535 4,873
Goodwill 16,616 14,624
Total purchase consideration 22,151 19,497
Total purchase consideration satisfied by:
Cash 14,643 12,888
Redemption liability 5,185 4,563
Contingent consideration 2,323 2,046
Total consideration 22,151 19,497
Net cash flow arising acquisition of subsidiaries
Cash consideration 14,643 12,888
Less cash in subsidiaries acquired (324) (286)
Cash outflow on acquisition of subsidiaries 14,319 12,602
On acquisition, a valuation exercise on the assets and liabilities of Lumen
Intelligence Holding GmbH has been performed; the book value of all assets and
liabilities except for warranties are considered to represent fair value. For
provision for warranties, additional provision of €500,000 (£440,000) was
applied to reflect the longer term nature of these commitments.
Fair value of intangible assets was assessed and determined on the basis of
brand name and customer relationships acquired. Brand name elements was
determined using an industry typical royalty rate over a ten years period and
customer relationships was determined using an industry typical royalty rate
over a six years period, all discounted to the present day.
The goodwill relates to the ongoing level of profitability of the business
model, opportunity to sell existing Group and third party products into the
German market and potential sourcing benefits for Group companies.
The acquisition of Lumen Intelligence Holding GmbH has been accounted for as
if the Group acquired 100% of its share capital as the Group has a commitment
and obligation to acquire the remaining outstanding shares in Lumen
Intelligence Holding GmbH. Therefore, any post-acquisition profits
attributable to non-controlling interests are treated as finance expense of
the Group.
For the nine months to 30 June 2023 the Lumen companies contributed €19.3m
(£16.9m) to Group revenue and €1.2m (£1.0m) to Group profit before tax for
the current financial year.
If the acquisition had occurred on 1 July 2022 the consolidated pro-forma
revenue and profit before tax for the year ended 30 June 2023 would have been
€23.9m (£20.8m) and €1.3m (£1.1m) respectively. These amounts have been
calculated using the subsidiary's results and adjusting them for:
• differences in accounting policies between the Group and the
subsidiary; and
• the additional depreciation and amortisation that would have been
charged, assuming that the fair value adjustments to property, plant and
equipment and intangible assets had applied from 1 July 2022, together with
the consequential tax benefits.
11 Events after the Statement of Financial Position date
On 17 July 2023, the Group completed its commitment to purchase a piece of
land in Wales for a consideration of £2.0m. The land will be used to plant
trees as part of the Group's effort to reduce its carbon emission footprint.
On 3 October 2023, the Group paid the third tranche of payments for the
acquisition of Electrozemper S.A. totalling €5.0m (£4.3m).
12 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.
13 Annual report and accounts
The annual report and accounts will be sent to shareholders on 16 October 2023
and will be available, along with this announcement, on the Group's website
(www.fwthorpe.co.uk) from 16 October 2023. The Group will hold its AGM on 16
November 2023.
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