FW Thorpe Plc Annual Report 2006

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FY2006 Annual Report · FW Thorpe Plc

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industrial commercial architectural emergency low energy retail heritage control gear energy conserving systems

passionate about lighting

Annual Report and Accounts 2006

designers, manufacturers and suppliers . . .

Contents

Directors and Advisers

Five Year Financial Record

Chairman’s Statement

Report of the Directors

Directors’ Remuneration Report

Statement of Directors’ Responsibilities

Independent Auditors’ Report

Consolidated Profit and Loss Account

Consolidated Statement of

Total Recognised Gains and Losses

Group and Company Balance Sheets

Consolidated Cash Flow Statement

Notes to the Accounts

Notice of Meeting

Form of Proxy

Financial Calendar

. . . of professional lighting systems

Introduction

Specialising in the design and manufacture of lighting

equipment for the specification market, the Group employs over

500 people and although each of our companies works

autonomously, our skills and markets are complementary. We

focus on long-term growth and stability, achieved by developing

market leading products, backed by excellent consumer service.

With a global business, the Group continues to work for the

benefit of our shareholders, employees and customers.

The energy, ability and loyalty of our staff ensures that we

continue to look forward to the future with enthusiasm.

F W Thorpe Plc Annual Report and Accounts 2006 1

Directors and Advisers

Directors
A B Thorpe
Chairman and Joint Chief Executive

P D Mason BSc(Eng) FCA MIEE
Financial Director and Joint Chief Executive

M Allcock FIEE
Technical Director and
Managing Director of Thorlux Lighting

D A Dimeloe BSc PhD
Managing Director of Mackwell Electronics

D M Lippold BSc ACA
Managing Director of Compact Lighting

C M Brangwin BSc CEng MIEE (aged 68)
Non-executive Director
After joining the Company in 1963, he was appointed
a Director in 1969, later as joint Managing Director and
in 1995 was appointed Chairman. He became non-executive
Chairman in 2000 resigning from this role on
30 June 2003.

I A Thorpe (aged 60)
Non-executive Director
Manufacturing Director of Thorlux Lighting from 1978 until
1993 when he became Personnel Director. He became a
Non-executive Director on 1 October 1997.

Secretary
P D Mason BSc(Eng) FCA MIEE

Auditors
PricewaterhouseCoopers LLP, Cornwall Court,
19 Cornwall Street, Birmingham, B3 2DT

Bankers
Lloyds TSB, Church Green East,
Redditch, Worcestershire, B98 8BZ

Solicitors
Martineau Johnson, No 1 Colmore Square
Birmingham, B4 6AA

Registrars
Lloyds TSB Registrars, The Causeway, Goring-by-Sea,
Worthing, West Sussex, BN99 6DA

Registered Office
Merse Road, North Moons Moat,
Redditch, Worcestershire, B98 9HH

Registered No.
317886

Web Sites
www.fwthorpe.co.uk
www.thorlux.com
www.thorlux.de
www.thorlux.ie
www.thorlux.es
www.mackwell.co.uk
www.compact-lighting.co.uk
www.p-payne.co.uk
www.sugglighting.co.uk

2 F W Thorpe Plc Annual Report and Accounts 2006

Five Year Financial Record

Turnover

Operating profit
Interest receivable and similar income

Profit before taxation
Taxation

Profit after taxation

Dividends

Net assets

Earnings per share — ordinary

Dividends per share

Net assets per share

2002
£’000

29,452

1,046
196

1,242
(513)

729

701

2003
£’000

32,677

3,487
245

3,732
(1,110)

2,622

773

2004
£’000

37,258

5,020
342

5,362
(1,479)

3,883

1,014

(Restated)
2005
£’000

41,572

5,338
378

5,716
(1,479)

4,237

1,054

19,904

21,809

24,746

25,116

6.3p

6.0p

171p

22.4p

6.6p

186p

33.1p

8.6p

210p

35.8p

8.9p

212p

2006
£’000

44,204

6,877
543

7,420
(2,224)

5,196

1,247

30,100

43.8p

10.5p

253p

Restatement of dividends and pensions have not been made for years prior to 2004.

Financial Highlights

Turnover

Operating Profit

Earnings per share

£6.8m

43.8p

£44.2m

£41.6m

£37.3m

£5.4m

£5.0m

35.8p

33.1p

2004

2005

2006

2004

2005

2006

2004

2005

2006

F W Thorpe Plc Annual Report and Accounts 2006 3

Chairman’s Statement

“In general, trading throughout the year was more buoyant
than had been expected with all Group companies turning in
an improved performance over the previous year and making
further progress in their own individual market sectors.”

The financial year 2006 produced a turnover of £44.2m for the
Group, an increase of 6% compared to the previous year.
Operating profit for the same period, after accounting for
exceptional costs at Sugg Lighting, rose from £5.3m in 2005 to
£6.9m in 2006, a 29% increase. Investment income improved
by 44%, due to higher cash reserves, to bring a resultant profit
before tax of £7.4m, a 30% increase.

In general, trading throughout the year was more buoyant
than had been expected with all Group companies turning
in an improved performance over the previous year and
making further progress in their own individual market
sectors. The concern expressed in the half yearly report in
regard to the retail sector was not really realised as any
downturns in this market area were patchy and not
generally felt.

There have been a number of new product introductions
during the year from various members of the Group; very
important as such a high proportion of Group sales
emanates from relatively new designs. In lighting, nowadays
it is not always the fitting that is important, however, but
with increasing frequency the electronic control system
behind it. Through work carried out during this financial
year, before it and after it your Company will soon introduce
a lighting system which if installed anywhere in the world
can, via GPRS technology, be monitored from anywhere else
in the world. This system will provide the possibility of an
ongoing income stream from any such installation.

Investment during the year continued at a moderate level as
regards plant and machinery but some human and “green”
credentials emerged with the installation of a roof air
venting system at the Thorlux works as well as the
installation of cardboard and general waste compacting
equipment. The largest investment took place on the last
day of the financial year in the outright purchase of a £1m+
factory for Philip Payne Ltd. This factory will replace their
current leased premises.

The Company, as was mentioned in the half yearly
statement, transferred the trading of its shares to the
Alternative Investment Market of the London Stock
Exchange (AIM) on 6 January 2006 and we are pleased to
report that after the initial dip the share price has continued
to make strong progress.

The results detailed at the start of this report lead your Board
to recommend a final dividend of 9p (2005: 7.5p) which,
taken with the interim dividend already paid, makes a total
dividend for the year of 12p (2005: 10p) being a 20%
increase compared to last year.

At this time it is the opinion of your Directors that cash
reserves are more than sufficient for the current needs of the
business even after taking into account possible
requirements for organic and non-organic growth. Your
Board has, therefore, decided to propose a special cash
distribution of 12p per share to be paid in conjunction with
the final dividend making a total dividend payment of 21p
per share to be paid on 16 November 2006.

Thorlux
Thorlux enjoyed another good year boosting turnover
by 6% and operating profit by 17% compared to the
previous year.

Incremental improvements in manufacturing performance
have been made by the increased utilisation of equipment,
especially the £1m+ Salvagnini sheet metal punching and
bending line purchased some eighteen months ago. The
wider range of products developed by Thorlux in recent
years has led to a higher level of business during the
previously quieter winter months and encouraged the
Company to maintain a higher trained workforce during
these months. Maintenance of this higher level of staff has
greatly assisted in the preparation for the normally expected
“bulge” in output requirement during the summer months
caused by the Thorlux customer profile.

The concentration of effort on the export side also seems to
be paying dividends with Thorlux, for the first time in some
years, increasing the amount of export business as a
percentage of total turnover from 6% in 2005 to 7% in 2006.
In the year to 30 June 2006, total export output was up 17%,
European export output was up 11% and our two people in
Munich managed an output increase of 107%. In regard to
the German Operation, growth rather than profit is the
motive currently and Thorlux is actively trying to bolster the
team by one full-time Sales Representative. The return to a
Thorlux employed Sales Engineer in the Republic of Ireland
is bolstering sales and the Company is looking to employ its
own representative in one further mainland European

4 F W Thorpe Plc Annual Report and Accounts 2006

market. Far East markets continued to become more difficult
and although Middle East sales increased, this is probably as
much to do with their being awash with petro-money as to
the market becoming easier for us.

Mackwell
Mackwell, the Group’s manufacturer of emergency lighting
control gear and systems, also had another successful year
increasing turnover by 7% and profit by 13% compared to
the previous financial year. It was mentioned last year that
Mackwell’s product direction was refocused and
concentration during this period has remained on suitably
profitable medium volume production traditional products
whilst at the same time the Company has been keeping
abreast of possible changes in the technology of emergency
lighting in general. A growing percentage of Mackwell’s
turnover is now products for LED (rather than fluorescent)
emergency lighting systems. During this financial year the
Company also introduced new manufacturing equipment,
some of which has assisted Mackwell in its meeting the
European ROSH Directive requirements to become a “lead
free” product supplier.

Compact Lighting
Compact Lighting, being a manufacturer of retail space
lighting, started the year with trepidation as to the
impending fate of the retail sector. The downturn in this area
has been patchy and although some of Compact’s
customers curtailed their shop refurbishment programmes
some did not and further new customers were found
amongst those still investing. Compact Lighting finished the
year with the creditable performance of an operating profit
increase of 9% on reduced turnover.

Philip Payne
Philip Payne Ltd, the manufacturer of quality specialist exit
signage and specialist hospital signage, returned to a year of
buoyant trading unlike the somewhat patchy previous year.
Results recovered as if last year had not happened to give a
record year of turnover and operating profit up by 27% and
68% respectively. The company currently occupies leased
premises and so, to take advantage of a break in the lease,
the Group has been looking for suitable premises to
purchase in its stead. Payne’s has a particularly “green”
workforce with numbers walking to work and it has been
fortuitous that a suitable building became available across

the road from the current premises. The building, as was
mentioned earlier, was purchased on the last day of the
financial year and is currently being fitted out to suit Payne’s
requirements. The company will move to the new premises
in October 2006.

Sugg Lighting
Heritage lighting manufacturer and refurbisher Sugg Lighting
improved turnover in the year to 30 June 2006 by 21% and
this performance, coupled with a further reduction in the
workforce and improved productive capacity, allowed the
company to run at only a small operating loss during the
period. Work continues improving, still further, the
performance at Sugg Lighting and meanwhile the Group’s
considerations as to a more stable platform for Sugg’s future
are moving to a conclusion.

People
Again, we owe a lot to our people who have been loyal and
hard-working throughout the year. We have quite a number
of nationalities on our workforce currently which made for
quite an interesting time during the 2006 World Cup football
tournament!

May I take this opportunity to thank all F W Thorpe Plc
employees of all nationalities for their help and further
diligence throughout the year.

The Future
Our markets appear to be fairly stable at the present time
and although it seems unlikely that higher Government
spending will be forthcoming to fuel further growth, the
impending general reduction in fuel prices should assist. In
the main growth must, therefore, come from our own efforts
to produce more products that our customers want to buy
and for us to be there to service those customers. Each
company in the Group is pursuing ideas to carefully expand
its product offering whilst particular companies in the
business continue to pursue growth by serving new markets
in a more direct manner. We will continue to try and offer
more customers better, and more.

Andrew Thorpe
Chairman
10 October 2006

F W Thorpe Plc Annual Report and Accounts 2006 5

Report of the Directors

The Directors have pleasure in submitting their annual report
and the audited accounts of the Group for the year ended 30
June 2006.

Principal activity and business review
The main activity of the Group continues to be the design,
manufacture and supply of professional lighting equipment.

A review of the business is included in the Chairman's
Statement on pages 4 and 5.

The most significant uncertainties for the business arise from
fluctuations in the macro-economic cycle.

The Group has financial risks and seeks to minimise and
manage these by incorporating controls into key functions as
part of the normal business operation.

Management reviews prices at least annually to take into
account fluctuations in costs in order to minimise the risk of
reduction in gross margin, or loss of market share from lack of
competitiveness.

There is a credit policy, which includes an assessment of the
risk of bad debt and management of higher risk customers.
The Group has underwritten a significant part of its customer
debt risk with a credit insurance policy. The Group’s cash is
managed in accordance with the treasury policy, which is
explained more fully in note 28.

Details of other risk management procedures are included
within the internal control section of this report.

Results and dividends
The results for the year are set out in detail on page 16.

On 9 May 2006 the Company paid an interim dividend of 3p
per share (2005: 2.5p). A final dividend of 9p (2005: 7.5p) per
ordinary share is proposed together with a special dividend
of 12p per ordinary share and, if approved, will be paid
together on 16 November 2006.

Adoption of FRS 17 and FRS 21
The Group has adopted FRS 17 and FRS 21 in 2006.

The Group’s financial statements for 2005 have been restated
to reflect the adoption of FRS 17 (Retirement benefits) and
FRS 21 (Events after the balance sheet date). The adoption of
FRS 17 has required that the deficit on the F W Thorpe
Retirement Benefits Scheme be shown on the balance sheet.
This has resulted in a reduction of net assets of £3,771,000 at

30 June 2005, comprising the deficit of £3,296,000 and the
original SSAP 24 pension prepayment of £475,000 which
cannot now be recognised. The adoption of FRS 21 has
required that dividends proposed are no longer shown as a
liability in the accounts. This has resulted in an increase in net
assets by £888,000 at 30 June 2005, being the value of the
proposed dividend.

Directors
The Directors of the Company at the date of this report are
set out on page 2.

The Directors retiring by rotation are M Allcock, D A Dimeloe
and D M Lippold who, being eligible, offer themselves for re-
election. Their contracts are terminable on 12 months’ notice.

Directors’ share interests
The details of the Directors’ share interests are set out in the
Directors’ Remuneration Report on pages 10 to 14.

Substantial shareholdings
At 10 October 2006 the Company had received notification of
the following interests in 3 per cent or more of the issued
share capital, excluding holdings of Directors:

Rights and Issues Trust Plc
E G Thorpe

500,000 shares
659,640 shares

(4.2 per cent)
(5.6 per cent)

Group research and development activities
The Group is committed to research and development
activities in order to maintain its market share in the
industrial and commercial lighting market. These activities
encompass constant development of both new and existing
products to ensure that a leading position in the lighting
market is maintained.

Fixed assets
The Directors are of the opinion that the market value of the
freehold land and buildings is in excess of their net book value.

Charitable gifts
During the year the Group gave £5,157 (2005: £2,260) for
charitable purposes. The Company allocates an annual
amount for charitable giving which is based on the previous
year’s profitability, and is considered appropriate in order to
help foster its business relationships including those with its
customers, suppliers, employees and the local community.

Creditor payment policy
The Group’s policy concerning the payment of its trade

6 F W Thorpe Plc Annual Report and Accounts 2006

creditors is to accept and follow the normal terms of
payment amongst suppliers to the lighting industry.
Payments are made when they fall due which is usually on
the day after the end of the calendar month following the
month in which delivery of goods or services is made. Where
reasonable settlement discount terms are offered for early
payment, these terms are usually taken up. The number of
days represented by the Company’s and the Group’s year end
trade creditors is 45 and 53 respectively (2005: 42 and 49).

Employee policies
Employees are kept informed of matters of concern to them
as employees by publication and distribution of a Company
newsletter and other notices, or by specially convened
meetings.

Committees representing the different groups of employees
meet regularly to ensure the views of employees are taken
into account in making decisions that are likely to affect their
interests.

The involvement of employees in the Group’s performance is
encouraged by various incentive schemes including a profit
related bonus scheme.

Information on the financial and economic factors affecting
the performance of the Group is made available twice yearly
at the time of publication of the interim and annual
statements to shareholders.

The Group is committed to developing a safe and healthy
working environment for all employees consistent with the
requirements of the Health and Safety at Work Act. Within
the constraints of health and safety, disabled people are
given full and fair consideration for job vacancies. Depending
on their skills and abilities, disabled people enjoy the same
career prospects as other employees, and if employees
become disabled every effort is made to ensure their
continued employment, with appropriate training where
necessary.

Policies for recruiting employees are designed to ensure
equal opportunities irrespective of colour, ethnic or national
origin, nationality, sex or marital status.

Auditors
A resolution to reappoint PricewaterhouseCoopers LLP as
auditors to the Company will be proposed at the annual
general meeting.

Directors’ authority to issue shares
The UK Listing Authority no longer requires the consent of
shareholders to each issue by the Company of equity share
capital for cash made otherwise than to existing shareholders
in proportion to their existing shareholdings. This relaxation
is subject to the Company obtaining the authority of
shareholders under Section 95 of the Companies Act 1985 to
disapply generally the provisions of Section 89 of that Act.
Ordinary resolution number 8 and special resolution number
9 would give the Directors the authority to allot ordinary
shares up to an aggregate nominal amount of £310,242, and
would further empower them to allot ordinary shares for cash
up to a maximum of £59,488 (representing 5% of the issued
equity share capital of the Company) other than pro rata to
existing members as if section 89(1) of the Companies Act did
not apply. These authorities, if approved, would expire at the
conclusion of the next Annual General Meeting, save that the
authority relating to Section 89(1) would expire 15 months
after being passed, if earlier.

Purchase of Own Shares
Resolution 10 set out in the notice of the Annual General
Meeting will, if it is approved, allow the Company to exercise
the authority contained in the Articles of Association to
purchase its own shares. The Board has no firm intention that
the Company should make purchases of its own shares if the
proposed authority becomes effective, but would like to be
able to act quickly if circumstances arise in which such a
purchase would be desirable. Purchases will only be made on
the London Stock Exchange and only in circumstances where
the Directors believe that they are in the best interests of the
shareholders generally. Furthermore, purchases will only be
made if the Directors believe that they would result in an
increase in earnings per share.

The proposed authority will be limited by the terms of the
special resolution to the purchase of 1,189,758 ordinary shares
representing 10% of the Company’s issued ordinary share
capital and a nominal value of £118,976 at 10 October 2006.
The minimum price per ordinary share payable by the
Company (exclusive of expenses) will be 10p. The maximum to
be paid will be an amount not more than 5% above the
average of the middle market quotations for ordinary shares of
the Company as derived from the London Stock Exchange
Daily Official List for the five business days immediately

F W Thorpe Plc Annual Report and Accounts 2006 7

Report of the Directors (continued)

preceding the date of each purchase. Any shares purchased by
the Company will be cancelled and the number of shares in
issue will be reduced accordingly. The maximum number of
shares and the permitted price range are stated in order to
comply with statutory and Stock Exchange requirements and
should not be taken as representative of the number of shares
(if any) which may be purchased, or the terms of such a
purchase. The authority will lapse on the date of the Annual
General Meeting of the Company in 2007. However, in order to
maintain the Board’s flexibility of action it is envisaged that it
will be renewed at future Annual General Meetings.

Corporate governance
As a company whose shares are traded on the Alternative
Investment Market of the London Stock Exchange Plc, the
Company is not required to comply with the Principles of
Good Governance and Code of Best Practice (“The Combined
Code”). However, the Board supports the standards required
by the Combined Code and fully endorses the principles of
openness, integrity and accountability of the Code. The
Directors consider the Company applies the principles of best
practice with the exception of the matters listed below.

The Board does not have an independent audit
committee.

At least half the Board does not comprise independent
non-executive Directors and the Board has not
appointed a senior independent Director.

The terminable period of the service contracts for A B
Thorpe and P D Mason exceeds one year.

The pensionable salary includes benefits in kind and/or
profit bonus for those Directors who are members of the
defined benefit scheme.

The Board has combined the roles of Joint Chief
Executive and Chairman.

The Directors believe that the exceptions, which are more
fully explained in the sections relating to the Board
constitution and the Directors’ remuneration report, are
appropriate for the size and context of the Group’s business.

8 F W Thorpe Plc Annual Report and Accounts 2006

Board constitution
The Company continues to be proprietorial in nature and the
Directors act as a unitary Board and as a consequence are
unable to see the benefits of splitting the Board into sub-
committees and in particular of constituting audit and
nomination committees, as recommended by the Code, as
matters that would normally be considered by an audit or
nomination committee are addressed by the full Board with
the non-executive Directors present and the auditors
attending as appropriate.

A remuneration committee has been established with the
following people serving on it:

C M Brangwin
Non-executive Director and Chairman of the committee

I A Thorpe
Non-executive Director

Terms and conditions for the operation of this committee are
in place and it meets as and when required. The committee’s
report is presented on pages 10 to 14.

The auditors have direct access to all members of the Board
and attend and present their reports at appropriate Board
meetings. The Board considers, at least annually, the
relationships and fees in place with the auditors to confirm
their independence is maintained.

Nomination committees are formed when it is felt to be
appropriate for senior personnel and subsidiary Board
appointments. Any appointment to a Group Board position
would involve all Board Members in the selection process.

The Board meets regularly during the year and has a schedule
of matters reserved for its approval, which only the Board
may change.

(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
Relations with shareholders
Directors are kept informed of the views of shareholders by face
to face contact at the Company’s premises on the day of the
Annual General Meeting and, if appropriate, by meeting with
major shareholders at other times during the year.

Internal control
The Board of Directors has overall responsibility for the
system of internal control and for reviewing its effectiveness
throughout the Group. The internal controls systems are
designed to meet the Group’s particular needs and the risks
to which it is exposed, and by their nature can only provide
reasonable but not absolute assurance against misstatement
or loss.

Internal financial control
The Directors have responsibility for maintaining a system of
internal control which provides reasonable assurance of the
effective and efficient operations, internal financial control
and compliance with laws and regulations.

During the year a member of the Group finance department
has visited all operating sites to assess their compliance with
a selection of key control procedures and non-compliance
has been reported to the Group Board. Significant areas of
non-compliance noted as part of this process have been
addressed.

In addition, the executive Directors regularly visit all
operating sites and review with local management financial
and commercial issues affecting the Group’s operations.
Regular financial reporting includes budgets, rolling forecasts
and monthly financial reports comparing performance
against plan. These reports are reviewed locally with a Group
representative and monitored by the Group Board.
Accordingly, the Directors do not consider that an internal
audit department is required.

Other areas of control
The Combined Code introduced a requirement that Directors
review the effectiveness of the Group’s systems of internal
controls on an annual basis. This requirement extends the
Directors’ review to cover all controls, including operational,
compliance and risk management as well as financial.

During the year and continuing after the year end the Board
has operated a formal risk identification and evaluation

programme as part of a continuous review of the Group’s
internal controls. This programme considers financial,
operational and compliance risks and includes participation
from senior executives from all operating subsidiaries. The
results of this process to date have been utilised by the Board
to focus the ongoing process for identifying, evaluating and
managing the Group’s significant risks. The programme is
utilised to monitor the potential impact of the risks identified
and, where appropriate, actions are taken to ensure they are
effectively controlled. This process is extended to include a
detailed review of risk as assessed by local senior executives,
and procedures have been established to ensure that the
Group Board is made aware of any additional significant risks
identified and to consider appropriate action. This process
culminated in the provision of a certificate, by senior
executives at the operating sites, confirming that they have
identified and addressed the risks arising in their business
and reported them to the Group Board accordingly.

Adoption of International Financial Reporting Standards
The Company is required to adopt International Financial
Reporting Standards for the financial year ending 30 June
2008. A preliminary review has shown that there will be a
minimal impact of the first time adoption of the new
accounting standards.

Going concern
The Directors confirm that they are satisfied that the Group
has adequate resources to continue in business for the
foreseeable future, and for this reason, they continue to
adopt the going concern basis in preparing the accounts.

By order of the Board

P D Mason
Company Secretary
10 October 2006

Registered Office:
Merse Road
North Moons Moat
Redditch
Worcestershire
B98 9HH

F W Thorpe Plc Annual Report and Accounts 2006 9

Directors’ Remuneration Report

The Board has prepared this report to the shareholders, taking into account the provisions in Schedule B of the Combined Code on
Corporate Governance and Directors’ Remuneration Report Regulations 2002. The Board has delegated the responsibility for the
executive Directors’ remuneration to the remuneration committee. The scope of their responsibilities includes the executive
Directors’ service contracts, salaries and other benefits, which comprise their terms and condition of employment.

Remuneration committee
The current members of the remuneration committee are the non-executive Directors C M Brangwin (Chairman of the
committee) and I A Thorpe. The committee has met as and when required during the financial year. No member of the
committee has any personal financial interest in the matters to be decided other than as shareholders. There are no conflicts of
interest arising from cross-Directorships or day-to-day involvement in running the business. The committee has access to
market data provided by Monks Partnership when considering the remuneration of the executive Directors

Remuneration policy — executive Directors
The aim of the committee is to ensure that the executive Directors are fairly rewarded for their responsibilities and contribution
to the performance of the Group. The committee seeks to achieve this with a combination of performance and non-
performance related remuneration designed to attract, retain and motivate the Directors. The performance related
remuneration is linked to both short-term and long-term goals.

In establishing the salaries of the Directors, the committee takes into account the responsibilities and performance of the
individual together with data from comparable organisations and indicative trends for the business and its economic sector.

The remuneration package consists of the following elements.

Basic salary, benefits in kind and other benefits. The salary is determined in August each year, unless there has been a
change in responsibilities, where an adjustment will be made at the same time. The benefits in kind mainly consist of the
provision of a car and health insurance. A Director may choose to take a cash allowance instead of a car. Other benefits
consist of pension arrangements and life assurance.

2. Annual bonus. The bonus is made up of two elements. The first element relates to the operating profit of the business unit for

which the Director has specific performance responsibilities. The second element relates to the operating profit of the Group as
a whole. The bonuses are paid in September and relate to the period ending on 30 June in the same year.

Share options. There are currently two executive share option schemes, and options were granted to Directors on
6 May 1999 — the majority of which are provided as part of an Inland Revenue approved scheme. Both schemes allow the
executives to participate in share price growth and are normally exercisable between 3 and 10 years after grant provided
certain performance criteria are met.

Remuneration policy — non-executive Directors
The Board as whole determines the remuneration of the non-executive Directors. The Board takes into account the contribution
made and the relative time spent on the Company’s affairs. The non-executive Directors do not receive bonuses or participate in
the executive share option scheme. Their benefits in kind consist of the provision of heath insurance.

Directors’ service contracts
The policy for Directors’ service contracts is to follow the Code for new appointments. However, for contracts in existence prior
to the date the code became effective no amendment is expected to be made in view of the predicted service lives of the
people concerned. D A Dimeloe, D M Lippold and M Allcock have service contracts terminable on one year’s notice. P D Mason
and A B Thorpe have service contracts renewed annually in March, which are terminable on three years’ notice immediately

10 F W Thorpe Plc Annual Report and Accounts 2006

after renewal and two years’ notice one year later when the contracts are considered for renewal. These contracts do not
comply with the code because they are in excess of one year. C M Brangwin and I A Thorpe do not have service contracts with
the Company.

Performance graph
The graph below shows the comparative data for the FTSE AIM share index and the FTSE Fledgling share index as these are
considered to be the most appropriate comparative indices for the Company’s business.

e
c
n
a
m
r
o
f
r
e
p
r
e
d
n
u
/
t
u
O

400.0

350.0

300.0

250.0

200.0

150.0

100.0

50.0

00.0-

F W Thorpe

FTSE Fledgling

FTSE AIM

July 00

July 01

July 02

July 03

July 04

July 05

Audited information
The audited information relating to Directors’ emoluments is set out below.

Directors’ emoluments

Executive Directors
A B Thorpe
P D Mason
M Allcock
D A Dimeloe
D M Lippold
Non-executive Directors
C M Brangwin
I A Thorpe

Total

2006
Salary/
fees
£’000

159
150
84
93
75

26
29

616

2006

Bonus
£’000

Benefits
£’000

Total
£’000

57
57
45
70
18

—
—

247

14
14
11
11
10

3
2

230
221
140
174
103

29
31

928

2005

Total
£’000

213
204
129
156
98

29
30

859

Benefits consist mainly of the provision of cars and fuel, or cash equivalent, and health insurance. The bonus for D A Dimeloe
includes a contribution of £35,000 to the pension scheme.

F W Thorpe Plc Annual Report and Accounts 2006 11

Directors’ Remuneration Report (continued)

Directors’ pension arrangements
A B Thorpe and P D Mason participated in the defined benefit section of the F W Thorpe Retirement Benefits Scheme until April
2006, and are now deferred members. M Allcock, D A Dimeloe and D M Lippold are members of the defined contribution
section of the scheme. M Allcock has a final salary guarantee as he was previously a member of the defined benefit section.
C M Brangwin and I A Thorpe are retired members of the defined benefit section.

The F W Thorpe Retirement Benefits Scheme is a funded, Inland Revenue approved occupational pension scheme. The scheme
is divided into two sections — a defined benefit scheme and a defined contribution scheme. The defined benefit section was
closed to new members on 1 October 1995. The defined benefit section aims to provide a maximum pension of two-thirds of
pensionable salary at normal retirement date. Pensionable salary for P D Mason and A B Thorpe includes profit bonus and
benefits calculated on the average of the previous three years. M Allcock’s pensionable salary includes an average of the
previous three years’ profit bonus. These definitions do not comply with the Code; however, the committee believes that they
are appropriate when looking at the remuneration package as a whole. Defined contribution members contribute up to 5% of
basic salary and the Company contributes up to 14%.

All the executive Directors are covered by life assurance benefit of 4 times pensionable salary. In addition, the defined benefit
scheme members are entitled to a spouse’s pension on death.

The following Directors had accrued entitlements under the defined benefit section of the pension scheme.

Additional

pension

Transfer

value of

earned in

additional

Change in

excess of

pension

value of

accrued

pension

inflation

(net of

over

inflation)

the year

less

Value of

accrued

Director’s

pension at contributions

since

ended

Director’s

Transfer

value of

pension

Transfer

value of

pension

Increase

in transfer

value

over

the year

net of

Normal

30 June

during

30 June

Age at

pension

year end

56
57
38

age

60
60
65

2006

£pa

90,010
78,511
20,196

the year

6,983
7,007
5,023

2005

£pa

14,356
14,941
3,318

A B Thorpe
P D Mason
M Allcock

contri-

butions

30 June

Director’s

2006

2005 contributions

2006

£pa

12,313
13,225
2,861

167,940 1,374,795 1,127,414
993,977
195,830 1,268,800
42,298
54,541

(2,750)

240,398
267,816
7,220

The following table shows the contributions paid by the Company in respect of those Directors participating in the defined
contribution section of the pension scheme.

D A Dimeloe
D M Lippold

2006
£

12,666
7,245

2005
£

12,238
5,600

12 F W Thorpe Plc Annual Report and Accounts 2006

Directors’ shareholdings
The Directors listed below were in office throughout the whole of the year. Directors’ interests in the share capital of the
Company at 30 June 2006 and 1 July 2005 were as follows:

A B Thorpe
P D Mason
M Allcock
D A Dimeloe
D M Lippold
C M Brangwin
I A Thorpe

Ordinary shares of 10p
Beneficial

2006

2005

2,786,899
171,978
18,900
16,100
11,900
773,155
2,504,712

2,785,009
171,978
16,700
11,189
16,400
773,155
2,504,712

In addition, C M Brangwin has a joint non-beneficial interest in 170,000 shares.

P D Mason sold 4,000 shares on 28 September 2006.

M Allcock sold 3,700 shares on 2 October 2006.

D M Lippold sold 1,900 shares on 5 October 2006.

Directors’ share options
Details of the share options at 30 June 2006 are as follows:

A B Thorpe
P D Mason
M Allcock
D A Dimeloe
D M Lippold

30 June
2005

Exercised
during year

Lapsed
during year

At
30 June

2006 Option price

30,000
4,359
11,200
22,500
10,000

—
—
11,200
7,500
—

—
—
—
—
—

30,000
4,359
—
15,000
10,000

117p
117p
117p
117p
117p

Date
Exercisable
from

7 May 2002
7 May 2002
7 May 2002
7 May 2002
7 May 2002

The performance criteria for the exercise of the executive share options require that the growth in the annualised earnings per
share, adjusted to a pre-tax basis, must exceed RPI by more than 3% when measured against a basis year. These criteria have
been met.

F W Thorpe Plc Annual Report and Accounts 2006 13

Directors’ Remuneration Report (continued)

Share options were exercised by the Directors as follows:

Director

D A Dimeloe
M Allcock

Date of
exercise

20 Sept 05
23 Sept 05

Number
of shares

7,500
11,200

Option
price
(pence
per share)

117p
117p

Market
price
(pence
per share)

347p
381p

Gain
(£)

17,250
29,568

The following share options were exercised on 27 September 2006:

Director
P D Mason
D A Dimeloe
D M Lippold

Number of shares
4,359
7,500
5,641

Option price (pence per share)
117p
117p
117p

Market price (pence per share)
597.5p
597.5p
597.5p

The market price of the Company’s shares at the beginning and end of the financial year was 315p and 455p respectively and
the range of market prices during the year was from 300p to 455p.

There have been no other changes in the interests of the Directors in the share capital of any Company in the Group during the
period 1 July 2005 to 10 October 2006.

Approved by the Board and signed on its behalf by:

P D Mason
Company Secretary
10 October 2006

14 F W Thorpe Plc Annual Report and Accounts 2006

Statement of Directors’ Responsibilities

Company law requires the Directors to prepare accounts for
each financial year which give a true and fair view of the
state of affairs of the Group and Company and of the profit
or loss of the Group for that period.

In preparing those accounts, the Directors are required to:

select suitable accounting policies and then apply them
consistently;

make judgements and estimates that are reasonable
and prudent;

state whether applicable accounting standards have
been followed, subject to any material departures
disclosed and explained in the accounts; and

prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
Company and Group will continue in business.

The Directors are responsible for keeping proper accounting
records that disclose with reasonable accuracy at any time
the financial position of the Company and the Group and to
enable them to ensure that the accounts comply with the
Companies Act 1985. They are also responsible for
safeguarding the assets of the Company and the Group and
hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.

The Directors confirm that, as far as they are aware, there is
no relevant audit information of which the Group’s auditors
are unaware, and all steps have been taken by the Directors
to make themselves aware of the relevant audit information,
and to establish that the auditors are aware.

The Directors confirm that they have complied with the
above requirements in preparing the financial statements.

P D Mason
Company Secretary
10 October 2006

F W Thorpe Plc Annual Report and Accounts 2006 15

(cid:2)
(cid:2)
(cid:2)
(cid:2)
Independent Auditors’ Report

We have audited the Group and parent Company financial
statements (the ‘‘financial statements’’) of F W Thorpe Plc for
the year ended 30 June 2006 which comprise the Consolidated
Profit and Loss Account, the Group and Company Balance
Sheets, the Consolidated Cash Flow Statement, the
Consolidated Statement of Total Recognised Gains and Losses
and the related notes. These financial statements have been
prepared under the accounting policies set out therein.

Respective responsibilities of Directors and auditors
The Directors’ responsibilities for preparing the Annual Report
and the financial statements in accordance with applicable law
and United Kingdom Accounting Standards (United Kingdom
Generally Accepted Accounting Practice) are set out in the
Statement of Directors’ Responsibilities.

Our responsibility is to audit the financial statements in
accordance with relevant legal and regulatory requirements
and International Standards on Auditing (UK and Ireland). This
report, including the opinion, has been prepared for and only
for the Company’s members as a body in accordance with
Section 235 of the Companies Act 1985 and for no other
purpose. We do not, in giving this opinion, accept or assume
responsibility for any other purpose or to any other person to
whom this report is shown or into whose hands it may come
save where expressly agreed by our prior consent in writing.

We report to you our opinion as to whether the financial
statements give a true and fair view and are properly prepared
in accordance with the Companies Act 1985. We report to you
whether in our opinion the information given in the Directors'
Report is consistent with the financial statements. We also
report to you if, in our opinion, the Company has not kept
proper accounting records, if we have not received all the
information and explanations we require for our audit, or if
information specified by law regarding Directors’ remuneration
and other transactions is not disclosed.

We read other information contained in the Annual Report, and
consider whether it is consistent with the audited financial
statements. This other information comprises only the
Directors’ Report, the Directors’ Remuneration Report and the
Chairman’s Statement. We consider the implications for our
report if we become aware of any apparent misstatements or
material inconsistencies with the financial statements. Our
responsibilities do not extend to any other information.

provisions of the 2003 FRC Combined Code specified for our
review by the Listing Rules of the Financial Services Authority,
and we report if it does not. We are not required to consider
whether the Board’s statements on internal control cover all
risks and controls, or form an opinion on the effectiveness of
the Group’s corporate governance procedures or its risk and
control procedures.

Basis of audit opinion
We conducted our audit in accordance with International
Standards on Auditing (UK and Ireland) issued by the Auditing
Practices Board. An audit includes examination, on a test basis,
of evidence relevant to the amounts and disclosures in the
financial statements. It also includes an assessment of the
significant estimates and judgements made by the Directors in
the preparation of the financial statements, and of whether the
accounting policies are appropriate to the Group’s and
Company’s circumstances, consistently applied and adequately
disclosed.

We planned and performed our audit so as to obtain all the
information and explanations which we considered necessary
in order to provide us with sufficient evidence to give
reasonable assurance that the financial statements are free from
material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated
the overall adequacy of the presentation of information in the
financial statements.

Opinion
In our opinion:

the financial statements give a true and fair view, in
accordance with United Kingdom Generally Accepted
Accounting Practice, of the state of the Group’s and the
parent Company’s affairs as at 30 June 2006 and of the
group’s profit and cash flows for the year then ended;

the financial statements have been properly prepared in
accordance with the Companies Act 1985; and

the information given in the Directors’ Report is consistent
with the financial statements.

We also, at the request of the Directors (because the Company
applies the Financial Services Authority listing rules as if it were
a listed company), review whether the corporate governance
statement reflects the Company's compliance with the nine

PricewaterhouseCoopers LLP
Chartered Accountants and Registered Auditors
Birmingham
10 October 2006

16 F W Thorpe Plc Annual Report and Accounts 2006

(cid:2)
(cid:2)
(cid:2)
Consolidated Profit and Loss Account
for the year ended 30 June 2006

Turnover
Cost of sales

Gross profit
Net operating expenses

Operating profit before exceptional items
Exceptional items — operating expenses

Operating profit
Interest receivable and similar income

Profit before tax

Tax on profit on ordinary activities

Profit after tax
Dividends paid

Profit after tax and dividends

Earnings per ordinary share
— ordinary

— diluted

Notes

9
9

2006
£’000

44,204
(25,681)

18,523
(11,251)

7,272
(395)

6,877
543

7,420

(2,224)

5,196
(1,247)

3,949

2005
(restated)
£’000

41,572
(25,067)

16,505
(10,745)

5,760
(422)

5,338
378

5,716

(1,479)

4,237
(1,054)

3,183

43.8p

43.5p

35.8p

35.5p

All of the above results were from continuing operations.

There is no difference between the result as disclosed in the profit and loss account and the result on a historical
cost basis.

Consolidated Statement of Total Recognised Gains and Losses
for the year ended 30 June 2006

Profit after tax

Actuarial gain/(loss)
Deferred tax

Total recognised gains and losses for the year

Prior year adjustments

a) For the adoption of FRS 17
Pension scheme deficit
Reversal of SSAP 24 pension scheme prepayment

b) For the adoption of FRS 21

Dividends proposed

Total prior year adjustments

Total gains and losses recognised since the last annual report

The notes on pages 20 to 32 form part of these accounts.

The report of the auditors is on page 16.

2005
(restated)
£’000

4,237

(1,991)
597

2,843

Notes

24
1

2006
£’000

5,196

1,414
(424)

6,186

(3,296)
(475)

888

(2,883)

3,303

F W Thorpe Plc Annual Report and Accounts 2006 17

Group and Company Balance Sheets
as at 30 June 2006

Fixed assets
Tangible assets
Investments

Current assets
Stocks
Debtors
Investments
Cash at bank and in hand

Creditors: amounts falling due within one year

Net current assets

Total assets less current liabilities
Provisions for liabilities and charges
Onerous lease obligation
Deferred taxation

Net assets excluding pension liability

Pension liability

Net assets

Capital and reserves
Called up share capital
Capital Redemption Reserve
Share premium account
Profit and loss account

Equity shareholders’ funds

Group

Company

2006
£’000

9,907
258

10,165

7,005
10,075
70
11,848

28,998
(6,851)

22,147

32,312

(471)
(412)

31,429

(1,329)

30,100

1,188
135
586
28,191

30,100

2005
(Restated)
£’000

9,335
258

9,593

7,267
9,945
70
8,414

25,696
(6,168)

19,528

29,121

(200)
(509)

28,412

(3,296)

25,116

1,184
135
545
23,252

25,116

2006
£’000

8,793
861

9,654

4,746
6,280
70
11,844

22,940
(4,536)

18,404

28,058

—
(405)

27,653

(1,329)

26,324

1,188
135
586
24,415

26,324

2005
(Restated)
£’000

8,007
861

8,868

5,189
7,477
70
8,504

21,240
(4,111)

17,129

25,997

—
(579)

25,418

(3,296)

22,122

1,184
135
545
20,258

22,122

Notes

12
13

14
15
16

18a
18b

19
20
20
20

These accounts were approved by the Board on 10 October 2006.

A B Thorpe

P D Mason

}

Directors

The notes on pages 20 to 32 form part of these accounts.

The report of the auditors is on page 16.

18 F W Thorpe Plc Annual Report and Accounts 2006

Consolidated Cash Flow Statement
for the year ended 30 June 2006

Net cash inflow from operating activities

Returns on investments and servicing of finance
Interest received
Other investment income

Net cash inflow for returns on investment and servicing of finance

Taxation
UK corporation tax paid

Capital expenditure and financial investment
Purchase of tangible fixed assets
Sale of tangible fixed assets
Sale of fixed asset investments

Net cash outflow for capital expenditure and financial investments

Equity dividends paid

Cash inflow before financing

Financing
Issue of shares

Cash inflow from financing

Increase in cash in the period

Notes

21(a)

7
7

2006
£’000

7,134

545
52

597

2005
£’000

4,239

371
69

440

(1,338)

(1,758)

(1,828)
71
—

(1,757)

(1,247)

3,389

(1,170)
56
28

(1,086)

(1,054)

781

860

21(b)

3,434

F W Thorpe Plc Annual Report and Accounts 2006 19

Notes to the Accounts
for the year ended 30 June 2006

Accounting policies

1
Basis of accounting
These consolidated financial statements have been prepared in accordance with applicable Accounting Standards in the
United Kingdom and the Companies Act 1985. A summary of the more important accounting policies, which have been
consistently applied, except where noted, are set out below.

Changes in accounting policies
The Group's financial statements for 2005 have been restated to reflect the adoption of FRS 17 (Retirement benefits) and
FRS 21 (Events after the balance sheet date).

Shareholders’ funds

At 1 July 2005 (as previously reported)
Prior year adjustment
FRS 21 Dividends proposed
FRS 17 Pension scheme deficit
Reversal of SSAP 24 pension scheme prepayment
Reversal of related deferred tax asset

At 1 July 2005 as restated

Group
2006
£’000

27,999

888
(3,296)
(677)
202

Company
2006
£’000

25,619

274
(3,296)
(677)
202

25,116

22,122

The adoption of FRS 21 has required that dividends proposed are no longer shown as a liability in the accounts. This has
resulted in an increase in net assets by £888,000 at 30 June 2005, being the value of the proposed dividend.

The adoption of FRS 17 has resulted in an increase in staff costs of £178,000 (2005: £62,000) and a decrease in other
financial income of £54,000 (2005: £62,000) and an increase of £404,000 in total recognised gains and losses (2005:
(£225,000).

Basis of consolidation
The consolidated accounts include the accounts of the Company and its subsidiaries, which are prepared to 30 June.
The results of the entities acquired are included in the consolidated profit and loss account from the date of acquisition.

Property, plant and equipment
Land and buildings, plant, equipment, furniture and fittings are stated at historical cost less depreciation.

Depreciation is calculated on the straight-line method to write off the cost of each asset to their residual values over their
estimated useful life as follows:

Freehold land
Freehold buildings
Plant, equipment, fixtures and fittings

Nil
25–50 years
2–15 years

Gains and losses on disposals are determined by comparing proceeds with carrying amount and are included in
operating profit.

Leases
Leases of property, plant and equipment where the Group has substantially all the risks and rewards of ownership are
classified as finance leases. Finance leases are capitalised at the inception of the lease at the lower of the fair value of the
leased property or the present value of the minimum lease payments. Each lease payment is allocated between the
liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding
rental obligations, net of finance charges, are included in other long-term payables. The interest element of the finance
cost is charged to the income statement over the lease period. The property, plant and equipment acquired under
finance leases is depreciated over the shorter of the useful life of the asset or the
lease term.

Leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as
operating leases. Payments made under operating leases are charged to the income statement on a straight-line basis
over the period of the lease.

Investment property
Investment properties are stated at cost. Depreciation is not provided on investment properties. The requirement of the
Companies Act 1985 is to depreciate all fixed assets, but this conflicts with the generally accepted principle set out in
SSAP 19. These properties are held for investment rather than consumption and the Directors consider that systematic
depreciation would be inappropriate. The accounting policy adopted is therefore necessary for the accounts to give a
true and fair view.

Other investments
Shares in subsidiaries and listed investments are stated at cost less any provision necessary for any permanent iminution in value.

20 F W Thorpe Plc Annual Report and Accounts 2006

Goodwill and impairment
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net assets of the
acquired subsidiary undertaking at the date of acquisition. In accordance with Financial Reporting Standard 10 (FRS 10),
goodwill arising from acquisitions after 1 July 1998 is amortised over its useful economic life, up to a maximum of 20 years.

Where an indication of impairment exists, the carrying amount of any goodwill is assessed and written down immediately
to its recoverable amount. To the extent that any further impairment is required, provision is made for any onerous leases.

Stocks
Stocks are stated at the lower of cost and net realisable value. Cost is determined by the first-in, first-out (FIFO) method.
The cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs and related
production overheads, based on normal operating capacity. Net realisable value is the estimated selling price in the
ordinary course of business, less the costs of completion and selling expenses. Provision is made against the cost of slow-
moving stock lines based on the estimated recoverable amounts.

Debtors
Trade debtors are carried at original invoice amount less an estimate made for doubtful debts based on a review of all
outstanding amounts at the year end. Bad debts are written off when identified.

Cash and cash equivalents
For the purposes of the cash flow statement, cash and cash equivalents comprise cash on hand and deposits held at call
with banks.

Interest and investment income
Interest and investment income are accounted for on an accruals basis.

Deferred taxes
Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the financial statements. Tax rates enacted or substantively enacted by the
balance sheet date are used to determine deferred income tax. Balances are not discounted.

Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is
probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can
be made.

Warranty
The Group recognises the estimated liability to repair or replace products still under warranty at the balance sheet date.
This provision is calculated based on past history of the level of repairs and replacements.

Revenue recognition
Sales are recognised upon delivery of products. Sales are shown net of value added tax and discounts, and after
eliminating sales within the Group.

Pension obligations
The cost of providing pensions is charged to the income statement so as to spread the regular cost over the service lives
of employees in accordance with the advice of the actuaries.

The Group’s contributions to defined contribution plans are charged to the profit and loss account in the period to which
the contributions relate.

Additional disclosures relating to the pension fund deficit are given in note 24 in accordance with the requirements of FRS 17.

Foreign currency translation
Foreign currency transactions are accounted for at the exchange rates prevailing at the date of the transactions; gains
and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities
denominated in foreign currencies, are recognised in the income statement.

Research and development
Research and development expenditure is recognised as an expense as incurred. Development costs previously
recognised as an expense are not recognised as an asset in a subsequent period.

Policy on derivatives and financial instruments
The Group does not hold any derivatives other than exchange swaps. Where these exist at the year end they are not
valued in the balance sheet as they are used to hedge currency movements. If foreign currency debtors and creditors
exist at the year end which have been hedged in this way the contracts and swap values are considered in valuing
these items.

Financial instruments are valued at historical cost.

F W Thorpe Plc Annual Report and Accounts 2006 21

Notes to the Accounts
for the year ended 30 June 2006

Analysis of turnover

2
The turnover attributable to each of the Group’s geographical markets is:

United Kingdom
Other European countries
Africa
North and South America
Middle East
India, Australia and Far East

2006
£’000

38,078
3,874
169
140
1,431
512

44,204

2005
£’000

36,501
3,485
35
146
811
594

41,572

All turnover, profit before taxation and net assets originate in the United Kingdom.

The business of the parent Company and its subsidiaries all relate to one segment, being designers, manufacturers and
suppliers of professional lighting systems.

3 Net operating expenses

Distribution costs
Administrative expenses
Exceptional items — Sugg

2006
£’000

2,821
8,430
395

2005
(restated)
£’000

2,597
8,148
422

11,646

11,167

Due to the trading difficulties experienced at Sugg Lighting Ltd (“Sugg”), management has undertaken a review of the Sugg
business. This has resulted in an exceptional stock provision of £12,000 (2005: £195,000) and an impairment of £383,000
(2005: £227,000) of which £271,000 (2005: £200,000) is treated as an onerous lease provision and the remaining
impairment of £112,000 (2005: £27,000) relates to fixed assets.

4 Profit on ordinary activities before taxation
Profit on ordinary activities before taxation is stated after charging/(crediting):

Depreciation of tangible assets — owned assets
Impairment of Sugg fixed assets
Auditors’ remuneration (Company £33,000; 2005: £27,000)
Leasehold land and buildings — operating leases
Hire of plant and machinery
Research and development
Profit on sale of fixed assets
Profit on sale of fixed asset investments
Rental income from investment property

2006
£’000

1,104
112
55
176
42
846
(31)
—
(4)

Remuneration of the Group’s auditors for provision of non-audit services to the Company and its subsidiaries was:

Accountancy services
Tax compliance
Other services

2006
£’000

—
6
9

2005
£’000

1,121
27
49
176
46
1,030
(26)
(5)
(5)

2005
£’000

5
6
3

22 F W Thorpe Plc Annual Report and Accounts 2006

5 Directors’ emoluments

Aggregate emoluments
Contributions to Money Purchase pension scheme

2006
Total
£’000

928
20

948

2005
Total
£’000

859
18

877

Further details are provided in the Directors’ remuneration report on pages 10 to 14.

Employee information

6
The average number of employees employed by the Group (including executive Directors) during the year is
analysed below:

Production
Selling and distribution
Administration

Employment costs of all employees (including executive Directors):

Aggregate gross wages and salaries
Employers’ national insurance contributions
Employers’ pension and related charges

Total direct costs of employment

7 Net interest and similar income

Interest receivable
Interest from current asset investments
Income from fixed asset investments

Net interest and income receivable

Interest payable
Interest on net pension scheme liabilities

Net interest and similar income

Income from investments includes £6,000 (2005: £7,000) from listed investments.

2006
Number

2005
Number

297
84
143

524

2006
£’000

11,041
1,099
797

12,937

304
84
131

519

2005
£’000

10,939
1,038
907

12,884

2006
£’000

2005
(restated)
£’000

545
52

597

(54)

543

371
69

440

(62)

378

F W Thorpe Plc Annual Report and Accounts 2006 23

Notes to the Accounts
for the year ended 30 June 2006

Taxation on profit on ordinary activities

Current tax:
UK corporation tax on profits for the period
Adjustment in respect of previous periods

Total current tax

Deferred tax:
Origination and reversal of timing differences
Adjustment in respect of previous periods

Deferred tax excluding deferred tax on pension liability

Deferred tax on pension liability

Net deferred tax liability

Taxation on profit on ordinary activities

2006
£’000

1,892
9

1,901

(111)
15

419

323

2005
(restated)
£’000

1,485
(314)

1,171

321
(13)

308

—

308

2,224

1,479

The tax assessed for the year is lower than the standard rate of Corporation Tax in the UK (30%). The differences are
explained below:

Profit on ordinary activities

Profit on ordinary activities multiplied by the standard rate in the UK 30% (30%)
Effects of:
Expenses not deductible for tax purposes
Accelerated tax allowances and other timing differences
Profits taxed at small companies rate
Adjustments to tax charge in respect to previous period

2006
£’000

7,420

2,226

(178)
(143)
(13)
9

2005
(restated)
£’000

5,716

1,715

(69)
(157)
(4)
(314)

Current tax charge

1,901

1,171

Profit for the year and dividends

9
Profit for the year
As permitted by Section 230 of the Companies Act 1985, the holding Company has not published a separate profit and
loss account. The Group profit for the year after taxation of £5,196,000 (2005: £4,237,000) includes a profit of £4,414,000
(2005: £3,656,000) in respect of the parent Company.

Dividends paid
Final dividend for 2005 of 7.5p per share (2004: 6.4p per share)
Interim dividend for 2006 of 3.0p per share (2005: 2.5p per share)

2006
£’000

891
356

1,247

A final dividend of 9p (2005: 7.5p) per share and a special dividend of 12p (2005: nil) per share are proposed and, if
approved, will be paid together on 16 November 2006.

Dividends proposed
Final dividend for 2006 of 9p per share (2005: 7.5p per share)
Special dividend for 2006 of 12p per share (2005: nil)

2006
£’000

1,069
1,425

2,494

2005
£’000

758
296

1,054

2005
£’000

888
—

888

The difference in the dividend paid and proposed in 2005 has arisen from a higher share capital due to share options
exercised in September 2005.

24 F W Thorpe Plc Annual Report and Accounts 2006

10 Earnings per share
Ordinary earnings per share is calculated by dividing the net profit attributable to shareholders of £5,196,000 (2005:
£4,237,000) by the weighted average number of ordinary shares in issue during the year of 11,869,244 (2005: 11,825,715).

For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of
all dilutive potential ordinary shares. The weighted average number of ordinary shares is calculated at 11,943,559 (2005:
11,943,559).

11 Intangible fixed assets

Group

Cost
At 1 July 2005 and 30 June 2006

Aggregate amortisation
At 1 July 2005 and 30 June 2006

Net book value at 1 July 2005 and 30 June 2006

The goodwill arising on the acquisition of Sugg Lighting Limited was impaired in 2002.

Goodwill
£’000

600

—

Goodwill of £577,000 arising on the acquisition of subsidiaries before 1 July 1999, had been written off to reserves in
prior years.

12 Tangible fixed assets

Group

Plant
and
equipment
£’000

Freehold
land and
buildings
£’000

Company

Freehold
land and
buildings
£’000

Plant
and
equipment
£’000

Total
£’000

19,088
1,828
(431)

12,022
707
(431)

12,298

20,485

8,471
977
112
(391)

9,753
1,104
112
(391)

9,169

10,578

3,129

3,551

9,907

9,335

6,918
1,121
—

8,039

1,151
113
—
—

1,264

6,775

5,767

Total
£’000

14,918
1,465
(117)

8000
344
(117)

8,227

16,266

5,760
541
—
(92)

6,209

2,018

2,240

6,911
654
—
(92)

7,473

8,793

8,007

Cost
At 1 July 2005
Additions
Disposals

At 30 June 2006

Accumulated depreciation
At 1 July 2005
Charge for the year
Impairment at Sugg (note 3)
Disposals

At 30 June 2006

Net book value
At 30 June 2006

At 30 June 2005

7,066
1,121
—

8,187

1,282
127
—
—

1,409

6,778

5,784

Depreciation has not been charged on freehold land that is stated at its cost of £1,218,000 (2005: £1,218,000).

F W Thorpe Plc Annual Report and Accounts 2006 25

Notes to the Accounts
for the year ended 30 June 2006

13 Fixed asset investments

Group

Listed on
the Stock
Exchange
£’000

Investment
property
£’000

Total
£’000

Company

Listed on
the Stock
Exchange
£’000

Investments
in
subsidiaries
£’000

Total
£’000

At 1 July 2005 and
30 June 2006

Provisions for
diminution in value
At 1 July 2005 and
30 June 2006

Net book value
At 30 June 2005 and
30 June 2006

219

258

219

2,173

2,431

—

219

—

258

219

—

1,570

603

861

The aggregate market value of the investments listed on the London Stock Exchange as at 30 June 2006 was £98,000
(2005: £87,000).

Details of the investments in subsidiaries are set out in note 25.

The investment property is based on a Director’s evaluation.

14 Stocks

Raw materials, components and consumables
Work in progress
Finished goods

15 Debtors

Trade debtors
Amounts owed by subsidiary undertakings
Other debtors
Prepayments and accrued income

16 Current asset investments

2006
£’000

2,983
1,210
2,812

7,005

2006
£’000

9,643
—
55
377

10,075

Units in cash fund — aggregate market value £344,000 (2005: £333,000)

Group

Company

2005
£’000

3,049
1,316
2,902

7,267

2006
£’000

1,430
908
2,408

4,746

2005
£’000

1,813
1,070
2,306

5,189

Group

Company

2005
(restated)
£’000

9,614
—
40
291

9,945

2006
£’000

6077
—
55
148

6,280

2005
(restated)
£’000

6,690
650
40
97

7,477

Group and Company
2006
2005
Cost
Cost
£’000
£’000

26 F W Thorpe Plc Annual Report and Accounts 2006

17 Creditors: amounts falling due within one year

Trade creditors
Corporation tax
Other taxation and social security
Other creditors
Accruals
Owed to subsidiary undertakings

18 Provisions and deferred taxation

(a) Onerous lease provision

At 1 July 2005
Charged in the year

At 30 June 2006

Group

Company

2005
(restated)
£’000

3,357
464
1,205
734
408
—

6,168

2006
£’000

1,669
1,013
467
732
219
436

4,536

2005
(restated)
£’000

1,833
493
919
711
155
—

4,111

Group

Company

2005
£’000

—
200

200

2006
£’000

—
—

—

2005
£’000

—
—

—

2006
£’000

3,787
1,027
709
742
586
—

6,851

2006
£’000

200
271

471

(b) Deferred taxation provided in the financial statements is as follows:

Tax effect of timing differences
Capital allowances
Other

Group

Company

2006
£’000

581
(169)

412

2005
(restated)
£’000

492
17

509

2006
£’000

552
(147)

405

2005
(restated)
£’000

525
54

579

There is no difference between the full potential liability for deferred taxation and the provision made in the financial
statements.

Group

Company

Movement in the provision
At 1 July 2005
(Decrease)/increase in provision

At 30 June 2006

19 Share capital

Ordinary shares of 10p per share
Authorised (15,000,000 shares)

Allotted and fully paid
At 1 July 2005
Shares issued

At 30 June 2006 11,878,076 shares (2005: 11,838,876 shares)

2006
£’000

509
(97)

412

2005
(restated)
£’000

201
308

509

2006
£’000

579
(174)

405

2005
(restated)
£’000

236
343

579

Group and Company
2006
2005
£’000
£’000

1,500

1,184
4

1,188

1,500

1,177
7

1,184

During the year options were exercised for 39,200 ordinary shares with a nominal value of 10 pence per share and a
consideration of 117 pence per share.

Options that have been granted for 10p ordinary shares remaining outstanding at 30 June 2006 are as follows:

Number of shares

65,483

Subscription price per share

Period of option

117p

7 May 2002 to 6 May 2009

Details of the Directors’ share options are given in the Directors’ Report.

Since the year end, options for 19,500 shares have been exercised.

F W Thorpe Plc Annual Report and Accounts 2006 27

Notes to the Accounts
for the year ended 30 June 2006

20 Reserves

Group

Company

Capital
premium Redemption
Reserve
account
£’000
£’000

Profit
and Loss
£’000

Capital
premium Redemption
Reserve
account
£’000
£’000

Profit
and Loss
£’000

At 1 July 2005 (as previously reported)
Prior year adjustment
FRS 21
FRS 17

Pension deficit (net)
Reversal of SSAP 24 pension
scheme prepayment

At 1 July 2005 as restated

Shares issued
Net actuarial gain/(loss)
on pension scheme
Profit for the year after taxation
Dividends paid

At 30 June 2006

545

135

26,135

545

135

23,755

—

—
—
—

545

—
—
—

586

—

—
—
—

888

(3,296)
(475)
(475)

135

23,252

—

—
—
—

—

990
5,196
(1,247)

135

28,191

—

—
—
—

545

—
—
—

586

—

—
—
—

274

(3,296)
(475)
(475)

135

20,258

—

—
—
—

—

990
4,414
(1,247)

135

24,415

21 Notes to the cash flow statement
(a) Reconciliation of operating profit to net cash inflow from operating activities

Operating profit
Depreciation and impairment
Profit on sale of fixed assets and fixed asset investments
Pension scheme contributions in excess of current and past service charge
(Increase)/decrease in stocks
(Increase) in debtors
Increase in creditors

Net cash inflow from operating activities

(b) Reconciliation of movement in net funds

Cash at bank and in hand

Finance leases and purchase contracts:
Liquid resources

(Decrease)/increase in net cash
Net funds at 1 July 2005

Net funds at 30 June 2006

2006
£’000

6,877
1,216
(31)
(1,450)
262
(130)
390

7,134

Cash flow
£’000

3,434

—

3,434

2006
£’000

3,434
8,484

11,918

2005
(restated)
£’000

5,338
1,148
(31)
(615)
(668)
(1,590)
657

4,239

30 June
2006
£’000

11,848

11,918

2005
£’000

860
7,624

8,484

1 July
2005
£’000

8,414

8,484

28 F W Thorpe Plc Annual Report and Accounts 2006

22 Capital commitments
Commitments for future capital expenditure at 30 June 2006 were as follows:

Authorised and contracted for

Group

Company

2006
£’000

190

2005
£’000

2006
£’000

130

2005
£’000

23 Operating leases
Annual commitments on operating leases, which all relate to land and buildings, expire:

Less than two years
In two to five years
Over five years

Group

Company

2005
£’000

—
173
—

173

2006
£’000

—
—
—

—

2005
£’000

—
—
—

—

2006
£’000

8
163
—

171

24 Pension scheme
The Group operates a funded combined Defined Benefits/Defined Contribution scheme for employees in the UK.
Entrants who joined after 1 October 1995 join a Defined Contribution section. The scheme is approved by the Inland
Revenue under Chapter 1 Part XIV of the Income and Corporation Taxes Act 1988. Membership is contracted in to the
second state pension.

The assets of the Scheme are held separately from the assets of the Company, being invested in Managed Funds.
Contributions by the Group to the Scheme during the year ended 30 June 2006 amounted to £2,184,000 (2005:
£1,132,000) which included a lump sum payment of £1,450,000, (2005: £500,000). Contributions are determined by an
independent qualified actuary on the basis of triennial valuations using the Projected Unit Method.

The date of the most recent actuarial valuation was 1 July 2006 and is in progress. The last full valuation was at
1 July 2004 and this has been updated by an independent qualified actuary. The value of the fund at 30 June 2006
was £13,716,000 and this was sufficient to cover 88% of the value of the benefits accrued to members after allowing
for future increases in earnings. In arriving at the actuarial valuation, the following assumptions were adopted.

Price inflation
Salary increases
Discount rate
Revaluation for deferred pensioners
Pension increases in payment of 5% pa or RPI if less
Pension increases in payment of 2.5% pa or RPI if less

3.10%
4.97%
5.30%
3.10%
3.00%
2.20%

The figures at 1 July 2005 have been updated in order to assess the additional disclosures required under FRS 17 as at
30 June 2006 by an independent qualified actuary using the following major assumptions:

Price inflation
Salary increases
Discount rate
Revaluation for deferred pensioners
Pension increases in payment of 5% pa or RPI if less
Pension increases in payment of 2.5% pa or RPI if less

30 June
2006

3.10%
4.97%
5.30%
3.10%
3.00%
2.20%

30 June
2005

30 June
2004

2.70%
4.57%
5.00%
2.70%
2.70%
2.00%

3.00%
4.78%
5.70%
3.00%
2.80%
n/a

F W Thorpe Plc Annual Report and Accounts 2006 29

Notes to the Accounts
for the year ended 30 June 2006

24 Pension scheme (continued)
On this basis, the illustrative balance sheet figures required under FRS 17 are as follows:

30 June 2006

30 June 2005

30 June 2004

Expected
long-term
rate of return

Expected
Value
long-term
£’000 rate of return

Equities
Bonds
Property
Other

7.80%
5.00%
7.50%
4.25%

Total market value of assets
Present value of scheme liabilities

Deficit in the scheme
Related tax asset

Net pension deficit

Movement in deficit during the year

7,976
3,921
9
1,810

13,716
(15,615)

(1,899)
570

(1,329)

7.25%
4.60%
7.00%
4.50%

6,451
1,917
5
1,770

10,143
(14,852)

(4,709)
1,413

(3,296)

Deficit in scheme at beginning of the year
Current service cost
Contributions
Past service costs
Other finance income
Actuarial gain/(loss) on pension scheme

Deficit in scheme at end of year
Related tax asset

Net pension deficit

Analysis of amount charged to operating profit

Current service cost
Past service cost

8.00%
5.00%
7.50%
4.50%

30 June
2006
£’000

(4,709)
(556)
2,184
(178)
(54)
1,414

(1,899)
570

(1,329)

30 June
2006
£’000

556
178

734

Value
£’000

5,290
1,553
2
941

7,786
(11,057)

(3,271)
981

(2,290)

30 June
2005
£’000

(3,271)
(517)
1,132
—
(62)
(1,991)

(4,709)
1,413

(3,296)

30 June
2005
£’000

517
—

517

The current service cost for final salary guarantee members is expected to rise from year to year as the final salary section
is closed to new entrants.

Analysis of amount credited to other financial income

Expected return on pension scheme assets
Interest on pension scheme liabilities

Net return

30 June
2006
£’000

704
(758)

(54)

30 June
2005
£’000

582
(644)

(62)

30 F W Thorpe Plc Annual Report and Accounts 2006

24 Pension scheme (continued)
Analysis of amount recognised in the Statement of Total Recognised Gains and Losses

Actual return less expected return on pension scheme assets
Experience losses arising on the scheme liabilities
Changes in assumptions underlying the present value on the scheme liabilities

Actuarial gain/(loss) recognised in the STRGL

30 June
2006
£’000

661
(164)
917

1,414

30 June
2005
£’000

680
(1,070)
(1,601)

(1,991)

History of experience gains and losses recognised in the Statement of Recognised Gains and Losses (STRGL)

30 June 2006
£’000

30 June 2005

30 June 2004

30 June 2003

£’000

Difference between the expected
and actual return on scheme assets

661

680

Percentage of scheme assets

Experience gain/(loss)
on scheme liabilities

Percentage of the present value
of scheme liabilities

(164)

(1,070)

495

(408)

—

Changes in assumptions underlying the
present value of the scheme liabilities

917

Percentage of the present value
of scheme liabilities

Amount which has been recognised
in STRGL

1,414

Percentage of the present value
of the scheme liabilities

25 Interests in Group undertakings

(1,601)

(238)

(1,018)

11%

(1,991)

322

13%

(1,426)

—

10%

14%

Name of undertaking

Mackwell Electronics Limited
Compact Lighting Limited
Philip Payne Limited
Sugg Lighting Limited
Axis Lighting Limited

Country of
incorporation

England
England
England
England
England

Description of
shares held

Ordinary £1 shares
Ordinary £1 shares
Ordinary £1 shares
Ordinary £1 shares
Ordinary £1 shares

Proportion of nominal
value of issued shares held
by Group and Company

100%
100%
100%
100%
100%

All of the above companies operated in their country of incorporation and registration, except for Axis Lighting Limited.

The principal activities of these subsidiaries are:

Mackwell Electronics Limited
Compact Lighting Limited
Philip Payne Limited
Sugg Lighting Limited
Axis Lighting Limited

— design and manufacture of lighting components
— design and manufacture of lighting solutions for retail applications
— design and manufacture of illuminated signs
— design and manufacture of traditional architectural lighting.
— non-trading

F W Thorpe Plc Annual Report and Accounts 2006 31

Notes to the Accounts
for the year ended 30 June 2006

26 Reconciliation of movements in equity shareholders’ funds

Year ended
30 June
2006
£’000

Note

Group

Year ended
30 June
2005
(restated)
£’000

Company

Year ended
30 June
2005
(restated)
£’000

Year ended
30 June
2006
£’000

At 1 July 2005 as restated

Profit after taxation
Net actuarial gain/(loss) on pension scheme
Dividends

Net increase in equity shareholders’ funds
Issue of shares
Opening equity shareholders’ funds

Closing equity shareholders’ funds

27,999

888
(3,296)
(677)
202

25,116

5,196
990
(1,247)

4,939
45
25,116

30,100

25,619

274
(3,296)
(677)
202

22,122

4,414
990
(1,247)

4,157
45
22,122

26,324

4,237
(1,394)
(1,054)

1,789
79
23,248

25,116

3,656
(1,394)
(1,054)

1,208
79
20,835

22,122

27 Related party transactions and balances
The Company has taken advantage of the exemption allowed by FRS 8 not to disclose transactions and balances with
related Company undertakings, 90% or more of whose voting rights are controlled within the Group.

28 Financial instruments
The Group has a policy of maintaining cash resources arising from its operations by balancing the day-to-day cash
requirements with those resources and by not undertaking any long-term borrowings. This policy enables the Group to
fund its future operations. To assist with this, the Group has a system of overall Group treasury management, coupled
with individual banking arrangements held by each of the Group’s subsidiaries. The Group also has a small overdraft
facility on its current account to ensure that cash is available in the current account in the event that an unforeseen
requirement arises. The Group has a policy not to trade derivatives, and this has been observed throughout the period.

The Group’s financial instruments comprise cash and liquid resources, small amounts of listed investments, and various
other items such as trade debtors, trade creditors that arise directly from its operations. The main purpose of these
financial instruments is to manage the cash available for the Group’s operations. The Group has occasionally used
forward foreign exchange contracts in order to hedge currency movements when customers pay in or suppliers require
foreign currency. The value of these contracts has not been significant.

The Group treasury function reviews the cash holding of the Group as a whole on a daily basis and considers the future
cash requirements in both £ sterling and foreign currency. Based on this assessment, cash will be placed on short-term
deposit or kept available to meet day-to-day requirements throughout the Group.

The policies for managing foreign currency risk are highlighted above. At 30 June 2006, after taking account of the
effects of foreign exchange contracts held, the Group had no significant currency exposures.

In the financial instruments disclosures made in the accounts, the Group has taken advantage of the exemption
conferred by FRS 13 to exclude short-term debtors and creditors.

Financial assets
The Group has no financial assets, other than cash and bank and in hand and an immaterial amount of listed investments.

Financial liabilities
The Group does not use finance leases to manage risk.

The Group holds currency bank accounts, which are used for receipts from customers and payments to suppliers. The
Group occasionally uses forward currency swap arrangements to manage obligations on a short-term basis. The Group
had no forward currency swap arrangements at the year end because the currency available in those bank accounts
broadly matched currency obligations at that time (2005: £nil). The related average data has not been produced
because there were no contracts in place at the time.

There is no material difference between the book value and fair values of financial assets and financial liabilities.

32 F W Thorpe Plc Annual Report and Accounts 2006

Notice of Meeting

Notice is hereby given that the seventieth Annual General Meeting of F W Thorpe Plc will be held at Merse Road, North Moons
Moat, Redditch, Worcestershire, B98 9HH on 9 November 2006 at 3.15 pm to transact the following business:

Ordinary business
1. To receive and adopt the Directors’ Report and Accounts for the year ended 30 June 2006.

2. To declare a dividend.

3. To re-elect M Allcock as a Director.

4. To re-elect D A Dimeloe as a Director.

5. To re-elect D M Lippold as a Director.

6. To reappoint PricewaterhouseCoopers LLP as auditors of the Company, to hold office until the conclusion of the next General
Meeting at which accounts are laid before the Company and to authorise the Directors to fix the auditors’ remuneration.

Special business
To consider and, if thought fit, to pass the following resolutions which will be proposed in the case of 7 and 8 as ordinary
resolutions and in the case of 9 and 10 as special resolutions.

7. That the Directors’ remuneration report (as set out on pages 10 to 14 of the Annual Report and Accounts) for the year ended
30 June 2006 be approved.

8. That the authority to allot relevant securities (within the meaning of Section 80 of the Companies Act 1985) conferred on the
Directors by Article 15 of the Articles of Association of the Company be and hereby is renewed for the period ending at the
conclusion of the Annual General Meeting of the Company to be held in 2007 and that for such period the Section 80 Amount
(as defined in said Article 15) shall be £310,242.

9. That the power to allot equity securities (within the meaning of Section 94 of the Companies Act 1985) conferred on the
Directors by Article 15 of the Articles of Association of the Company be and hereby is renewed for the period ending at the
earlier of the conclusion of the Annual General Meeting of the Company to be held in 2007 and the expiry of the period of 15
months following the passing of this resolution and that for such period the Section 89 Amount (as defined in the said Article
15) shall be £59,488.

10. That the Company be generally and unconditionally authorised to make market purchases (within the meaning of Section
163(3) of the Companies Act 1985) of ordinary shares of 10p each of the Company provided that:

a) The maximum number of ordinary shares hereby authorised to be acquired is 1,189,758;

b) The minimum price which may be paid for any such share is 10p;

c) The maximum price which may be paid for any such share is an amount equal to 105% of the average of the middle market
quotations for an ordinary share in the Company as derived from the London Stock Exchange Daily Official List for the five
business days immediately preceding the day on which such share is contracted to be purchased;

d) The authority hereby conferred shall expire on the date of the Annual General Meeting of the Company in 2007; and

e) The Company may make a contract to purchase its ordinary shares under the authority hereby conferred prior to the expiry of
such authority, which contract will or may be executed wholly or partly after the expiry of such authority, and may purchase its
ordinary shares in pursuance of any such contract.

F W Thorpe Plc Annual Report and Accounts 2006 33

Notice of Meeting (continued)

Notes
1. A member entitled to attend and vote at the meeting may appoint one or more proxies, whether a member of the
Company or not, to attend and, on a poll, vote on the member’s behalf. A form of proxy accompanies this notice.

2. The register of Directors’ share interests pursuant to Section 325 of the Companies Act 1985 and copies of the
Directors’ service contracts will be available for inspection at the Annual General Meeting.

By order of the Board

P D Mason
Company Secretary

Merse Road
North Moons Moat
Redditch
Worcestershire
B98 9HH

10 October 2006

34 F W Thorpe Plc Annual Report and Accounts 2006

Form of Proxy
(for shareholders’ use only)

I/We . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Block letters please)

of . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
being a member of F W Thorpe Plc, hereby appoint

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

or failing him the Chairman of the meeting, as my/our proxy to vote for me/us and on my/our behalf at the Annual General
Meeting of the Company to be held at the Registered Office of the Company on 9 November 2006 and at every adjournment
thereof.

Please indicate with a cross in the appropriate space how you wish your vote to be cast. If no specific direction as to voting is
given your proxy will vote or abstain at his/her discretion.

ORDINARY BUSINESS

FOR

AGAINST

To adopt the Directors’ Report and Accounts

To declare a final dividend

To re-elect M Allcock as a Director

To re-elect D A Dimeloe as a Director

To re-elect D M Lippold as a Director

To reappoint PricewaterhouseCoopers LLP as Auditors of the Company

SPECIAL BUSINESS

To approve the Directors’ remuneration report

To give the Directors authority to allot relevant securities (Section 80 C.A. 1985)

To give the Directors authority to allot equity securities (Section 94 C.A. 1985)

10 To give the Company authority to make market purchases of its ordinary shares

Dated this . . . . . . . . . . . . . . . . . . . . . . . . . . day of . . . . . . . . . . . . . . . . . . . . . . .2006

Signature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Notes:
This proxy must reach the Company’s registered office not less than forty-eight hours before the time appointed for the meeting.

Any alteration made to this form of proxy should be initialled.

If you wish to appoint a proxy other than the Chairman of the meeting please insert the name and address of your proxy (who need not be a
member of the Company).

In the case of joint holders the signature of one holder will be accepted.

In the case of joint holders, the vote of the senior who tenders a vote whether in person or by proxy shall be accepted to the exclusion of votes
of the other joint holders and for this purpose seniority will be determined by the order in which the names stand in the register of members in
respect of the joint holding.

In the case of a corporation this proxy should be under its common seal or under the hand of an officer or attorney or other person duly
authorised.

Completion of the proxy form will not prevent a shareholder attending and voting in person.

✁

F W Thorpe Plc Annual Report and Accounts 2006 35

Second fold

BUSINESS REPLY SERVICE
Licence No. SEA 10846

Lloyds TSB Registrars
The Causeway
Worthing
West Sussex
BN99 6ZL

d
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f

t
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i
F

Third fold
and tuck in flap opposite

Financial Calendar

2006

16 October
9 November
16 November

2007

March
May
September

Posting of Report and Accounts
Annual General Meeting
Payment of final and special dividends

Announcement of Interim results
Payment of Interim dividend
Announcement of results for the year

F W Thorpe Plc Annual Report and Accounts 2006 37

industrial commercial architectural emergency low energy retail heritage control gear energy conserving systems

Merse Road

Incorporating

North Moons Moat

Thorlux Lighting

Redditch

Compact Lighting

Worcerstershire

Sugg Lighting

B98 9HH

England

Mackwell Electronics

Philip Payne

Tel: +44 (0)1527 583200

Fax: +44 (0)1527 584177