INTERIM RESULTS FOR THE SIX MONTHS TO 31 DECEMBER 2021

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 2021.

Financial highlights:

·      Interim dividend 1.54p (Interim 2021: 1.49p) - 3.4% increase

·      Special dividend 2.27p (Interim 2021: nil)

·      Thorlux performance - strong orders, however, revenue and operating results suppressed by supply chain challenges and material cost inflation

·      Netherlands performance - positive performance, with improved profitability as a result of first year without earn-out provisions

·      Other companies - UK companies struggled, however, order backlog supports a second half improvement

·      Net cash generated from operating activities - £8.9m (Interim 2021: £8.0m)

·      Initial acquisition of Electrozemper (Zemper) in Spain completed in October as well as the investment in Ratio Electric in the Netherlands in December

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

I am pleased to report for the period 1 July to 31 December 2021 an improved interim Group operating profit - including three months of contribution from our new addition, Zemper - of £8.8m, up 15%. Also, there was a continuing healthy increase in the order books for most companies within the Group - especially at Thorlux Lighting, where orders were up 25% at the half-year point. Unfortunately, as predicted in my full-year statement for last year, sales revenues were suppressed across the Group at +4% (excluding the addition of Zemper), because of each company's difficulty sourcing sufficient components, in particular electronic components and microchips. I would like to thank all those Group employees involved in sourcing components and re-engineering designs at short notice with alternative parts, as well as those managing our customers' expectations.

Most Group companies are looking forward to an improved second-half performance with supply chain issues easing, to some extent, especially for commodity items like steel and cardboard. Within the Group we are, however, mindful of significant cost inflation for purchased items as well as increases for labour and utilities. We have increased our prices in the market to compensate, but are only now starting to see the positive effects.

Zemper has already settled well into the Group, and, whilst it will remain an autonomous operation, Group companies have started to collaborate with Zemper in certain territorial markets and in the technical engineering of emergency lighting products.

As previously announced, in December the Group concluded its investment in a 50% interest in Ratio Electric, a Dutch manufacturer and supplier of electrical connection and distribution systems. Its results for 2021 are in line with expectations, and the Group is making progress on introducing Ratio Electric's vehicle charging products into the UK.

Also in the Netherlands, the Lightronics building reconstruction, following the fire, is well advanced and on target, with completion planned for this summer. The Board has also approved expenditure to double the size of the building for Famostar, to support its continued rapid sales growth.

As a result of this ongoing good performance and a strong balance sheet, the Board has approved an increased dividend of 1.54p (Interim 2021: 1.49p) for the six months to 31 December 2021. In addition, the Group will pay a special dividend of 2.27p (Interim 2021: nil).

Just before Christmas, external third-party auditors completed an assessment of the Group's carbon emissions and I am pleased to report that the Group is considered carbon neutral for its manufacturing operations. Within the Group we continue with vigour, nonetheless, to improve further our environmental credentials, with targets set for all Group companies. Planning permission has now been granted to complete the roll-out of a solar PV installation to the main Thorlux roof later this year, adding a further 3,000 panels to the 909 already installed; this is particularly opportune, considering that the electricity kWh price at Thorlux has recently nearly doubled. The Group continues with its Net Zero assessment and target setting assisted and validated again by a third party.

Supported by the Group's healthy order book, I foresee a good second-half revenue performance, provided the component shortages continue to improve. Operating results remain the focus and will improve once the recent headwinds experienced for most businesses subside.

Mike Allcock

Chairman

10 March 2022

FW Thorpe Plc

CONSOLIDATED INCOME STATEMENT

for the six months to 31 December 2021

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the six months to 31 December 2021

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 £115,000 is due to the increase in market value of these investments.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

as at 31 December 2021

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the six months to 31 December 2021

CONSOLIDATED STATEMENT OF CASH FLOWS

for the six months to 31 December 2021

Notes to the Interim Financial Statements

1.   Basis of preparation

       The consolidated interim financial statements for the six months to 31 December 2021 have been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and International Financial Reporting Standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union, IFRIC interpretations and the AIM Rules for Companies. 

       The figures for the period to 31 December 2021 and the comparative period to 31 December 2020 have not been audited or reviewed and are therefore disclosed as unaudited. The figures for 30 June 2021 have been extracted from the financial statements for the year to 30 June 2021, 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 2021 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 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 October 2021, the Group acquired 63% of the share capital of Electrozemper S.A., an emergency lighting specialist in Spain. The company was acquired for an initial consideration of £19.9m   (€23.1m) with a deferred consideration of £1.1m (€1.3m) payable during 2022.  There is a fixed commitment to acquire the remaining shares, based on current best estimates, a further £16.1m (€18.7m) 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 depositary rights for shares in Subsidiaries

On 21 September 2021 the Group completed its commitment to purchase the outstanding share appreciation rights in the subsidiaries Lightronics Participaties B.V. and Famostar Emergency Lighting B.V. The settlement was executed by a cash payment of £15.3m (€17.9m) for the outstanding liability.

5.   Investment in Joint Venture

In December 2021, the Group acquired 50% in Ratio Electric B.V., a specialist in electrical power connection and distribution systems based in the Netherlands. Initial consideration paid was £4.8m (€5.8m) and a further £0.9m (€1.0m) for payment in twenty four months.

6.   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 116,816,601 (Interim 2021: 116,426,119) 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 117,368,458 (Interim 2021: 116,862,079) during the period.

7.   Dividend

       The interim dividend is at the rate of 1.54p per share (Interim 2021: 1.49p) and based on 117,074,433 shares in issue at the announcement date the dividend will amount to £1,803,000 (Interim 2021: £1,736,000). A special dividend of 2.27p amounting to £2,658,000 (Interim 2021: £nil) will also be paid. The interim and special dividends will be paid on 1 April 2022 to shareholders on the register at the close of business on 18 March 2022, and the shares become ex-dividend on 17 March 2022.

For the year ended 30 June 2021 , a final dividend of 4.31p (2020: final 4.20p) per share and a special dividend of 2.20p (2020: special nil), amounting to £7,617,000 (2020: £4,895,000) was paid on 25 November 2021.

8.   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 2022.